Oil and Gas Middle East talked to the SOGAT 2010 exhibitors about the challenges facing the sour gas industry
SOGAT 2010 recently was held in Abu Dhabi and with it came a collection of sour gas experts and professionals. The diversity of the companies was impressive, with a number of different mini sectors represented. One such specialised company which was involved in the show was IPCOSAbtitude, which works in advanced process control. The firm, like many others at the show, is looking at ways to break into the Middle East market. “We are a European based company and we don’t have offices in the Middle East except Saudi Arabia, but we have agents and representatives in the UAE and Qatar, so the goal in this conference is to meet people in the gas industry where we are active and have been doing projects for about 10 years,” says Sebaian Osta, a consultant at IPCOSAptitude.
It is a view shared by other companies in the sour gas industry. “We were not present in the Arabian area and our interest is to meet new customers and possible customers and new people, we are very new in the market as Combustion Solutions so we are looking around to get a presence in the market,” explains Walter Schweinberger, proposal management, Combustion Solutions.There are a number of challenges facing the industry in the Middle East and some of these are directly linked with the firm’s inexperience of working here.
“The Middle East is not like anywhere else, projects are very large so there is a lot of bureaucracy involved, more so than you would find in small or medium sized projects. The way you make contact with clients and customers in the most part is a little different. But I suppose your success depends on how good your rep is,” reveals Dave Sikorski, products manager at HEC, a supplier of combustion equipment.
The regions which the firms want to break into are quite clear. “From a financial perspective I would say the best countries would be Qatar and Saudi Arabia followed by the UAE and we are seeing some activity in Yemen,” comments Kaaeid Lokhandwala, director, natural gas, at MTR Membrane Technology & Research. “We have a new product so the challenges of penetrating the market are the usual issues. We have had some good successes now and some very critical applications. So that has been good. The challenges will be dealing with the local way of doing business, it takes a longer time in terms of the sales side compared to the US where we have much shorter sales cycles,” adds Lokhandwala.
Another challenge facing firms here is that there are less upgrade and refurbishment projects to be had. “There is a different demand here because there is not so much in the way of big projects but there are a lot more upgrade projects. Here the big things are the new plants but our feeling is that these plants have been here long enough that some of these plants need replacements and that’s what we are looking for to meet the people who are in charge of that,” says David Hornbaker, international technology manger at Controls Southeast. “We do a lot of repair and retrofit work in other areas and wwe don’t see as much in the Middle East. I think Middle East plants put up with issues longer than they need to. In other plants in other regions, we fix a problem and they are keen for us to do more. But here trying to get into the plants to show them what can be done and show that not so many repairs need to be done is hard,” adds Sikorski.
The financial crisis has also taken its toll on companies in the sector which are looking at new builds as their main source of business. “I would say probably delays, delays in plant start ups and projects in general are the main challenges. We benefit a lot from new projects starting up and revamps. There have been a significant number of delays or even plant turndowns, where the capacity hasn’t been utilised fully and therefore there was less focus on the technology that can be incremental,” stresses Osta.
The Sulphur Problem
Adnoc is set to be among the largest sulphur producers worldwide by 2014, churning out nearly four times its current production of around 1.7 million tonnes per year.
Today around 800,000 tonnes of the emirate’s sulphur output are exported to end-users, mainly Morocco, Tunisia, Senegal and Jordan. Two years ago sulphur prices jumped more than 10 fold from the average price in the first quarter of 2007, reaching a record US$600 per metric tonne, the highest level through history. The unprecedented price rise to a sharp increase of fertiliser demand worldwide, led by the surge in bio-fuels production and the efforts to avoid shortfall in food and grain supply worldwide, which in turn contributed to a sharp growth in sulphur demand and lack of sufficient supply. Since then the sulphur price has collapsed, though is expected to rebound somewhat with the worldwide economic recovery.
