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OIL & GAS

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Taking control

June 2012

With hundreds of billions of dollars-worth of oil and gas projects on the horizon, Qatar is fertile ground for Fortune 500 giant Emerson



Last month Emerson Process Management, a division of the Fortune 500 technology and engineering giant Emerson Electric, inaugurated a $3 million industrial service facility in Ras Laffan Industrial City, north of Qatar’s capital Doha.

Although fairly small change in monetary terms, Company executives nonetheless believe the service centre – located next to an array of large oil and gas-based industries – will have growing strategic significance for an organisation extending its footprint across the Middle East step by step.

“If you go to any large project database – for example the Energy Industry Council [the UK Trade Association for companies supplying the energy industry] – you will find that approximately 80 oil and gas-related projects will be executed in Qatar between now and about 2020, the total capital value of which is some $120 billion,” says Branko Pecar, Emerson Process Management’s Doha-based vice president and general manager for the Northern Region, Middle East and Africa.

For Emerson Process Management, the largest of seven business platforms within Emerson Electric and which accounts for almost a third of total group revenues – this is inevitably exciting news. Claiming to make the world’s broadest range of automation products and services – essentially products which can streamline and improve the production, processing and distribution capabilities of large industrial plants such as chemicals, oil and gas, refineries, power, water and other facilities – it has captured approximately 20 per cent market share globally.

Qatar’s energy industry – centred on Ras Laffan – is booming. The Industrial City plays host to the majority of the country’s export-orientated industries which are chiefly responsible for powering national economic growth. Pecar reckons the $120 billion-worth of projects expected up until 2020 will generate about $2 billion-worth of process management system contracts.

Emerson, which already has equipment worth about $1 billion installed in Qatari plants, hopes the Ras Laffan service centre – developed jointly with local partner Doha Petroleum Construction Company Limited (Dopet), one of the largest contracting companies in Qatar – will enable it to secure a healthy share of this future business.

“To get some of these contracts, Emerson had to establish a local service centre,” Pecar insists

Emerson believes the facility’s location in Ras Laffan is one of its main selling points. On a practical level this means its engineers based at the centre can visit a plant, identify a problem, and either repair or replace the offending parts with minimal disruption to plant operations. In an industry where time means money – usually lots of money – this is a clear tactical advantage.

“Qatar is a small country, and every drop of energy it delivers to the world is important – not just financially but also from a reputation perspective,” Pecar says.

“If you have an industry where a single day that you don’t produce is going to cost you tens of millions of dollars, it is very important that you keep these plants continuously running,” he explains.

“We call this uptime, which you want to keep as high as possible. But if anything is going to go wrong with the plant, you want to be able to predict that something is going to go wrong.”

Andrew Dennant, Emerson Process Management’s marketing director for the Middle East & Africa, points out that process management equipment in general has a “disproportionate impact” on plant operability precisely because of its predictive qualities.

“When you look at the web of steelwork in a process plant, maybe it is not immediately obvious but there are some items in there that can make or break the profitability of the plant – some individual components that can shut the whole process down,” he says.

“Traditionally, automation is maybe three or four per cent of the cost of building a new plant, yet it is the single biggest factor in terms of implementing operational excellence, and can have a double digit impact on productivity,” he explains.

“Our customers’ plants are strategically important to the countries in which they are located – Ras Laffan is a great example of that,” Dennant continues.

The Ras Laffan service centre joins a network of similar Emerson facilities in Dubai, Abu Dhabi, Kuwait, Basra (Iraq), Bahrain and Al Khobar and Jubail (Saudi Arabia). The opening comes at an important time for the parent Company, which recorded global sales of $25 billion last year, employing a whopping 120,000 people in 120 countries.

Formed more than 120 years ago, Emerson sees the Middle East as an important growth area. While last year’s regional sales revenues of $1 billion and 1,000-strong workforce pale in comparison to the global total, this gap is likely to narrow given projected economic growth and project pipeline.

By dint of the Company’s internal structure, Doha is the regional headquarters for Emerson Northern Region, headed by Pecar and covering Qatar, Kuwait, Iraq and Jordan. Business is conducted through a network of local business partners selected against strict criteria.

“We have some of the biggest process plants in the world on our doorstep in Ras Laffan – our partner here has to be significantly sized to be able to cope with that,” explains Dennant.

Local partner Dopet fits the bill, he says. It has seen its revenues grow by 700 per cent over the last 12 years, and already counts most of Ras Laffan’s big industrial hitters – RasGas, Qatargas, Dolphin Energy, Ras Laffan Power Company, Ras Laffan Olefins Company and the huge Shell Pearl gas-to-liquids (GTL) facility, commissioned last November – as customers.

According to Dennant, the partnership between Emerson and Dopet brings together what he describes as “complementary capabilities” which have generated “better than steady growth”.

“The joint opening of the service centre was the next logical step in the relationship,” he says.

The road ahead promises to be a promising one for both partners, assuming the project pipeline delivers on expectations. In any case, Emerson and Dopet are taking a long-term view of opportunities.

“When a plant goes into operation it will last decades – maybe 20 or 30 years,” Amir Khouzani, Dopet’s general manager, says. “The service centre will be the focal point during these decades.”

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