The chief executive of German industrial group Siemens is worried a weak oil price is discouraging investment in big infrastructure projects among oil exporters.
“That’s something we are seeing already. It’s not cancellation but it’s pushing out orders, and the bid activity has become quite ... slow,” Joe Kaeser said yesterday.
State-run oil companies including Petronas in Malaysia, PetroChina and the Chinese firm CNOOC said that they were likely to significantly cut investment expenditures this year, The Wall Street Journal reported in February. Mr Kaeser said that Russia, central Asia and Opec member states were beginning to cut government spending, which posed a risk to the company.
About 8 per cent of Siemens’ revenue is exposed to the oil sector, Mr Kaeser said.
This will increase to 11 per cent after the company completes its US$7.6 billion acquisition of Dresser-Rand, an oilfield equipment manufacturer.
“I’m not as concerned about those 8 per cent as about the so-called secondary effects,” Mr Kaeser said. Reduced private investment and state expenditures would be likely to depress growth in markets in which Siemens is active. Low energy prices have hurt Siemens’ sales of large gas turbines.
Mr Kaeser attended the Egypt The Future investment conference at Sharm El Sheikh last weekend, where more than $30 billion of investments in the country’s energy sector were announced. Siemens signed a deal with the Egyptian government for the construction of the 4.4 gigawatt Beni Suef power plant in Upper Egypt.
Siemens will also construct and install 2GW of wind power capacity, and locate a wind turbine manufacturing plant in the country. The company estimates that this will create up to 1,000 jobs.
* With Reuters
abouyamourn@thenational.ae