The Swedish engineering firm Sandvik expects regional offshore activity to pick up after setbacks from low oil prices with new multimillion-dollar deals signed in Abu Dhabi and Egypt.
Sandvik has signed a contract for a “major offshore project” in Abu Dhabi, Phil Cherrie, the company’s regional sales director, said yesterday in Dubai.
The company supplies stainless steel products such as tubing, which help in the extraction of sour oil and gas. These products help to protect against corrosion that can occur from high levels of sulphuric acid.
The company will deliver its products to the Abu Dhabi field over the next six months.
Sandvik did not provide further information. Mr Cherrie said that the company has received 10 to 20 per cent more inquiries for offshore supplies compared to last year.
“Clearly the last two years have been a tough environment in the oil and gas industry, I don’t think anyone could pretend otherwise,” he said.
But while some Sandvik projects have been cancelled or delayed, the Mena region has remained a key area for sales.
“The GCC market in general is extremely important and we’re targeting projects in all of those countries on an ongoing basis,” Mr Cherrie said.
The Middle East and Africa make up 15 per cent of the group’s €9 billion (Dh35.21bn) turnover. “Even though globally it’s been a tough time for the industry, the Middle East has been a bright spot,” he said.
Lynn Morris-Akinyeme, the Mideast research analyst for Wood Mackenzie, said “the Middle East offshore activities are definitely a development story versus exploration”.
She said that this could be seen by monitoring the jackup rigs. Market utilisation was at 74 per cent for offshore drilling compared to 55 per cent for the rest of the world.
Standout countries that have been driving activities and will continue to do so for the next three to four years are Saudi Arabia, the UAE, Qatar and Iran.
“The market has remained robust with many contractors seeing it as a place that’s ripe for business,” she said.
The firm also signed major deals in Egypt worth over €100 million. Sandvik began delivering products to Egypt at the end of last year for two major offshore fields, including the country’s mega gas discovery.
Zohr is considered one of the largest gas finds in the Mediterranean at 30 trillion cubic feet. The US$12bn project, discovered by Italy’s Eni, is scheduled to start producing 1 billion cubic feet per day of gas this year.
lgraves@thenational.ae
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