A leading supplier’s take on the EPC market, from water treatment specialist AES Arabia’s Asad Iqbal Khan
How would you evaluate the last year in supplying to EPC customers?
It was very good year for us for supplying to the EPC contractors, especially in energy. We responded well in time strategically according to the changes in the tendering environment by being very specialized in accurate in our field.
One of our highlights was being approved by Saudi Aramco as an ASME pressure vessel manufacturer in September. Gaining approval is tough, and approvals for the design and manfacture of pressure vessels are rare, so it is a boon for us.
We have been one of the leading suppliers in our scope of supply last year to Aramco through EPC contractors, for all the major projects such as Wasit, Shaybah, and Karan. We have supplied to the Samco, Rabigh, and Habshan projects, and many more.
There are changes in the EPC contracting environment, with more South Korean companies not only in the oil & gas, petrochemicals and energy sector but also across all sectors in the Middle East. I believe their strategy is to be very aggressive commercially in order to develop long term strategic business relationships with strategic customers.
Has the EPC market bounced back from the 2008 crisis? What is the legacy of the crisis?
Yes it has bounced back but not everywhere, only selected countries who are well placed in energy sectors, have seen this trend.
For the non-Korean EPC contractors, there is a light of hope as they shift their strategies to compete in what has been a tough market. Many companies are reviewing bidding activities and strategies.
The current economic situation has impacted many aspects of the EPC market, from cost through to bidding processes. Many EPC companies race to each contract tendered now, as the Middle East offers growth while other markets look stagnant. It’s truly a global market now; all the major contractors are available and competing.
What have been the healthiest markets for AES in the last year, and which countries can you see your business doing best in 2012?
Saudi Arabia and the UAE were the healthiest markets for us last year. We retain our focus on both countries, as well as Algeria, Oman and Qatar.
What are your main concerns for the few years ahead? Are you optimistic?
The main concern ahead is facing competition from the inexperienced suppliers who jump in with a low-ball tender once or twice, make the market volatile, and then leave.
In the energy EPC business, quality and reliability is vital – which is not always easy to focus on given how cost-competitive the sector has become. Something poorly supplied It can jeopardize a whole project if not executed properly and in time. My big tip is for EPC companies and end users to take care when deciding suppliers for EPC contracts.
