Oil & Gas Middle East surveys the region’s leading valve suppliers and finds that demand is coming back and responsiveness to customer demands is separating the winners from the losers
Valve suppliers to the oil and gas industry are witnessing a bounceback in demand as upstream projects and drilling operations get the green light in the Middle East
The valve industry plays a vital role in oil and gas upstream production, a role which is valued ever increasingly by project operators as they look to ensure operations run smoothly and effectively, with as little downtime as possible.
But with many of the technologies and services provided having existed for many years, how does the industry continue to improve its services and cater for a changing energy industry?
Not only is demand and investment in oil and gas production continuing to grow, pushing demand for valves, there are also issues of increasingly arduous practices involved in harsher upstream environments, with more corrosive products coming up the well.
Even further downstream these corrosive elements can wreak havoc unless the right materials are selected right from the start.
Valve specialists are under increasing pressure to provide products that can not only perform under such circumstances, but also which will have a long operating life and require as little servicing as possible.
Valves essentially are used to stop, regulate and divert the flow of liquids, gas, slurries or dry material. They can be operated remotely and can control various parameters like flow, temperature, pressure and volume.
The global valve market is estimated to be worth around US$45 billion, with an annual growth of 4-5%. Out of this market oil and gas makes up 18%, with refining operations taking a 14% share. In terms of demand it is no secret that projects in the oil and gas industry have been slower coming through to execution phase, and providers had to compete for a smaller market in 2009, and the start of 2010. Project owners have also been rathcheting up increasing cost pressure, whilst keeping their service and quality expectations as high as ever.
The level of expectation to meet these demands has been constant, and superior quality still attracts a premium from oil and gas buyers. There is nothing worse for a project manager than when a valve designed and built ten years ago develops a sudden problem. The knock-on effects are huge.
On top of cost and delivery pressures, new frontiers in the Middle East are delivering technical challenges which the region is just becoming accustomed to. Operators are seeing ever increasing amounts of water produced in the wells and also volumes of hydrogen sulphide and carbon dioxide, which are necessitating, in certain instances, deployment of exotic materials which include super duplex materials, monels, hastelloys and even titanium in some cases.
If that wasn’t challenging enough, there is also the desire for valves that can cope with much higher pressures.
Operators are also discovering that they are as much the victims of legacy as any other industry.
There are examples in this part of the world where the end-user has got old products which were perhaps supplied to the correct specification when ordered, but because of the changes to the wells, the actual product coming from the fields is not as easy to work with as when the product was specified. Inventories have largely been replenshined following the massive boom in demand experienced in 2008 and early 2009, and the validity of valve pricing at early tender stages in more reliable than when the industry was working at break-neck pace. However, a sustained high oil price has shown that the energy industry will be the first to come out of the recessionary cycle for valve suppliers, and as our market survey shows, for the leading brands appetite remains strong.
