Inefficient equipment procurement can derail an otherwise well planned project and knock schedules way off track. In an increasingly competitive EPC environment, contractors know that more than ever, their reputations hang on the performance of suppliers and wholesalers as much as anything else in the project supply chain.
Taking a new approach to how that supply network operates and can serve project planners in a more centralized, planned fashion is UK/US-owned R&M Wholesale Electric, one of the largest independent electrical distributors providing products and services to a worldwide customer base.
At the helm of R&M’s Middle Eastern operation is regional director Jim Graham, who tells Oil & Gas Middle East that procurement and electrical and instrumentation (E&I) bulk supply management for upstream energy projects is finding a receptive and enthusiastic audience in the region.
“We began trading out of our Dubai branch in 2007, and really in the last twelve months we have seen an awful lot of growth, and we can attribute a great deal of that to the oil and gas business,” he says.
The company has recently been contracted to provide cabling and electrical consumables for a national, and arguably regionally significant strategic project, namely the ADCOP crude oil pipeline, which traverses the entire UAE, Gulf to Ocean coast.
“We have provided CPEC with the consumables for the ADCOP pipeline project, which represented in the region of $8 million worth of business for us, and the job is still going on,” explains Graham.
The contractor is China Petroleum Engineering & Construction (CPEC), a subsidiary of China’s state oil company, CNPC. The firm won the construction contract in 2008 from IPIC, after a competitive tendering process. The conceptual design of the pipeline was completed in 2006 and the construction related contracts were awarded in 2007. Construction of the pipeline started on March 19, 2008. Due to be completed last year, the Abu Dhabi authorities have recently said they anticipate a May or June completion.
Project Focus
Graham says that R&M can deliver serious cost and efficiency savings if it is brought on at the onset on a contract or project. “What we’re doing which is different from other distributors, is that we want to work very closely with the contractors and take ownership and responsibility of many aspects of the supply chain whilst ensuring our clients are able to track the progress of their orders,” he explains.
EPC contractors, historically, have approached many different traders for their consumable electrical, a hugely cost-heavy exercise, not to mention administratively time consuming, and unnecessarily complicated.
“We provide and complete solution, which could include cabling right through to all the E&I associated consumables. That model has proved appealing to several local EPC firms, and in fact we’ve been able to beat quotes from manufacturers who were going direct, because we have a bulk buying advantage, and we’ve had tremendous support from our principals who want this to work too.”
In other markets the bulk E&I route is well established and contractors typically prefer it for most large jobs.
“We’re pushing that model as hard as we can right now, and we are seeing real success coming through.”
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New business
Graham says that in addition to bolstering its position of strength in the UAE, the rehabilitation of Iraq’s oil industry is an exciting prospect.
“We recently participated in the Basra exhibition in Iraq, which really was excellent. There is such a lot of potential in that market right now. We’ve had enquiries running well above $6 million from that event alone, so I’m going back to conduct two days of seminars for the oil and gas companies there to explain what we can do for them more directly,” he enthuses.
However, the operational focus for the first half of 2012 will be getting its fledgling Abu Dhabi branch operating at full capacity. “Our long term plan involves a branch network throughout the region, and the next stop after Abu Dhabi would be Doha. But for now, we are essentially responding to incredible market demand and requests from our suppliers to establish in Abu Dhabi. The cornerstone of our business is customer service. We can’t hope to retain or build relationships with the contractors unless what we offer makes their life better, easier and cheaper. We’re confident we do that, and being close to the key clients is central to delivering on that idea.”
In addition to the project management package, Graham says R&M engages more closely with its clients than a regular wholesaler or reseller can by offering training direct to our customers and their workforce.
“That has proved really popular with clients in the UAE, especially with some of the shipyards, which are employing thousands of men. That ultimately protects their investment as there is less wastage when installation is carried out correctly. We can also provide the technical support in terms of electrical engineers which traders simply can’t, and if things go well throughout the initial project execution, then those customers, be it a refinery or a jack-up rig, will come back and deliver repeat business based on that good experience,” he concludes.
