Destination Dubai

The site represents a US$80 million commitment, and houses an extensive screen manufacturing plant, which is scheduled to begin operations in a few months time.

From this facility the company will produce the well screens and production management systems for sand control and optimised recovery from long horizontal wells, which are widely applied in the Middle East.

David Barr, group president, MEAP, spoke exclusively to Oil & Gas Middle East about what the company’s vision for 2008 and beyond. “All of out division are growing nicely and its been an explosive world in the last few years,” says Barr.

“Things really changed in 2001, there was a noticeable sea change in our business. We saw a noticeable blip, and then since 2002 it’s been pretty consistent and ongoing. That’s quite remarkable for this sector. I’ve been in the industry for 35 years and this is the first time I’ve seen the growth be so consistent.

The company remains bullish about what the next few years has in store, and decided the business unit and education sector at Techno Park was a necessary investment to adequately prepare the Eastern Hemisphere business for more busy years ahead.

“Our firm belief is that this will continue for many years to come, and we need to equip our staff for the challenges of working in a rapidly expanding market.

The company’s North America division has witnessed sustained growth for eight years, says Barr, but that growth has been largely sustained by natural gas, whereas the rest of the world, similar growth has been primarily fuelled by oil activities.

“We still expect the non-North America sector to grow in a very healthy fashion for the next four to five years at least, because there is still industry expansion and investment pouring in, but we’re seeing the growth decelerate to a degree. The market will certainly grow there over the coming years, but there is greater potential for that to flatten somewhat too.

With development and investment at unprecedented levels, Barr is certain that business expansion can be sustained even if the oil price drops off.

“Most projections of the oil price, in terms of developing current and upcoming projects is significantly below the market price we have at the moment. So there can even be a pretty steep drop in the market price that would still support very nice growth for the oil industry.

As the industry reaches for more difficult oil Baker Hughes anticipates more and more work being carried out offshore, and in deepwater, which will present challenges throughout its business.

“In terms of future demand we foresee very strong growth in the deepwater sector, and that will be a key component to the business over the next three to five years. Most of the deepwater work requires the highest end technology that the industry has. Some of the deepwater work being carried out now, or set to start in the near future is working right at the top-end of the capability spectrum, so that’s quite an exciting and challenging aspect of the years to come.

“We will have to continue to develop technology at the cutting edge, which we are capable of, to meet all of the complex challenges we will face in that environment.

As China, India and the Middle East have simultaneously seen an economic boom, construction and industrial infrastructure investment has seen demand on raw materials skyrocket, forcing the base fixed costs of many manufacturing firms to spike.

“We have definitely seen base cost increases because of the raw materials price situation. We are sharing the burden of those cost increases with our customers, but we have also been able to offset those costs with increased productivity. We use a lot of high-end steel, copper and lead and the cost has gone up fast across the board,” says Barr.

Global reach

Wherever the international major and super-majors are active Baker Hughes is working with them, but obviously the national oil companies have come to form a hugely important part of the business now.

“These companies are maturing and really coming into their own, so work with them has certainly been one of the fastest growing sectors of our business, and a great opportunity. We’re working very diligently to ensure our business can provide what these companies are after, and support them in achieving their ambitious goals.

Looking ahead, Barr sees the major challenges of his role will come from managing staff in a highly competitive recruitment market. “Key in terms of my job is really working to enhance our output, but also our staff. Nurturing career development is absolutely vital to how I see the
company moving forward.

The future of our company is based on, and in the hands of, many of the new recruits and employees we have.

The newly inaugurated education centre in Dubai will prove crucial to upskilling workers from the entire geographical footprint outside of the North American remit. The facility will support the company’s business units from 31 countries, from Oman and the UAE to India, Malaysia, Indonesia, China and Australia.

“The centre will provide technical, and non-technical instruction for up to 300 students at a time. Particularly in the Eastern Hemisphere we are working especially hard to enhance our local employee capability, and that’s a big challenge for me personally, and Baker Hughes as an organisation, but its one that we are striving to meet.