Wϋrth Gulf, a subsidiary of German materials supplier conglomerate Wϋrth Group, intends to expand its oil and gas business.
The company is seeking to win supply contracts from Abu Dhabi’s ADNOC and Saudi Aramco, the world’s largest oil producing company, Oil & Gas Middle East can reveal.
“We are working to get ourselves to sell to ADNOC. In Saudi, we are planning to have our own warehouse, and may be with our new operations we will be able to target Aramco. We are in talks now with them,” Ghassan Assaf, Managing Director of Wϋrth Gulf FZE, said.
Assaf added that Wϋrth Gulf already supplies Aramco with ‘consumable materials from our warehouse in Dubai’.
Assaf spoke to Oil & Gas Middle East during the opening of Wϋrth Gulf’s new and bigger warehouse facility, which will also serve as its headquarters. Located in JAFZA, the new logistics centre has a total area of 15,000 square meters (sqm) and has been built at a cost of over $4mn.
Wϋrth Gulf’s decision to grow in the oil and gas sector comes at a time when not just fuel producers, but service providers too have been hit hard by the declining crude oil prices, which is currently trading at around $49 a barrel (brent crude).
However, Assaf said his company has relatively been lesser impacted by the situation. “Present of course, due to low oil prices, investments from the oil and gas industry is not pooling in. A lot of companies are rolling back investments. This means lower demand for our products as well,” he said.
“However, we are not too dependent on the oil and gas industry because it forms a small share of our business. We have only started probably ten years ago to go deeper into the oil and gas sector,” Assaf explained.
Wϋrth has an impressive oil and gas clientele that includes Cameron, NOV, Weatherford and Schlumberger.
With regards to the low oil prices affecting the company’s profitability, Assaf says that Wϋrth’s diversified business allows it to compensate for losses incurred, if any, from the oil and gas vertical.
“Our offer to the market is far wide and there is not much influence (of low oil prices) on our profitability. We can cover this decline (in profits) from other verticals. We have an advantage from being in many different divisions; the automobile market, the metal market, for example,” he said.
“We have a diversified portfolio. So even if the oil and gas is going down, the other markets are booming. So we can switch back and forth and cover losses in one department,” he stated.
As far as other verticals are concerned, Wϋrth Gulf is working on major projects such as the Abu Dhabi airport and with companies such as Jebel Ali Freezone Authority (JAFZA.)
Wϋrth Gulf, which accounts for just 2-3% of Wϋrth Group’s global business, is looking to expand in the GCC. “We are looking at Saudi Arabia, and we already have presence in Qatar, Kuwait and Oman, Bahrain through our business partners. Future is to expand our businesses there,” Assaf said.
The company has planned to build another logistics facility at a plot adjacent to its current centre in JAFZA. The planned warehouse will however be smaller, spanning 4,000sqm, but will cost around $4mn- 5.44mn. The company expects to start building it next year and make it ready in ‘one and a half years’ time’.
Assaf said that the ease of doing business in JAFZA was one of the key factors why Wϋrth Gulf is pressing ahead with its expansion plans in the industrial area.
“When we started (in 2000), there was only JAFZA. We didn’t attract JAFZA, they followed us. They are very active, they kept visiting our HQ in Germany. They facilitated everything and we established our company in 2 weeks,” he said.
