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The business landscape for oilfield service companies across the Middle East and North Africa (MENA) region is changing, and service providers need to be innovative and creative in their offerings in order to get new deals, according to an executive with Swiss-based Weatherford International Plc.
Speaking to HartEnergy.com, Frederico Justus, president of Eastern Hemisphere at Weatherford, said that the MENA region has many opportunities to offer, but at the same time, there are many challenges that need to be addressed.
“For example, the [United Arab Emirates (UAE)] has become [a] very competitive environment, especially as one of our main clients recently entered into a strategic joint venture agreement with one of our main competitors in the domain of rigs,” Justus said.
In particular, Justus was referring to the recent strategic partnership agreement between Baker Hughes Inc., a GE company, and UAE’s state-owned oil company Abu Dhabi National Oil Co. (ADNOC).
As part of the agreement, Baker Hughes acquired a 5% stake in ADNOC’s subsidiary ADNOC Drilling. The transaction values ADNOC Drilling at roughly $11 billion.
Through the alliance, Baker Hughes became the sole provider of certain proprietary equipment and technologies related to the integrated drilling offering to support ADNOC Drilling’s growth. The companies aim to build ADNOC Drilling into a fully-integrated drilling and well construction provider.
Together, ADNOC and Baker Hughes will deliver more competitive well completion times, greater drilling efficiencies and better well economics. Additionally, the pair will capitalize on new business opportunities as ADNOC Drilling grows through its new expanded offering.
Justus believes the move has led to a shrink in the market share and the opportunities available for service providers in the UAE. As a result, he said other service companies will need to step up their games and offerings.
“Every company now is stepping [up] their game and working on increasing their in-country value,” he said. “Mainly in Saudi and UAE which requires investment, where the industry needs to find ways to increase local content in these two countries.”
Still, Justus remains optimistic about the future, not only in the UAE but also in Saudi Arabia. “Increasing rig counts in the UAE and Saudi Arabia will open new opportunities for service providers,” he said.
For Weatherford, technology innovation will be the main driver for its growth in the MENA region. Given the stiff competition it faces in the region, the company plans to differentiate itself through introducing disruptive technologies, which Justus said will address clients’ needs.
“The biggest concern for oil and gas companies right now is to do things better, quicker and cheaper, but also safe,” he said. “So, if you have a technology that is more efficient than it will be very important for clients, and highly demanded.”
Major trends in the Middle East and North Africa revolve around harnessing artificial intelligence (AI) in the service of the oil and gas industry, and using big data and automation. “Key trends that are emerging in the region are related to artificial intelligence, big data and how to handle it and using it in a remote way,” he added.
Last year, Weatherford introduced its “Vero” automated connection integrity technologies aimed at improving well integrity and mitigating risks through the application of AI.
The Vera technologies, which Weatherford said can also reduce total well construction costs, employs the AutoMakeup technology and AutoEvaluate software proprietary features. The AutoMakeup technology controls the makeup of tubular connections automatically, while the AutoEvaluate software continually assesses torque against original equipment manufacturer specifications.
“There is a Vero fever [less people in the rig floor, and sometimes there are no people at all], and every day we seal deals,” Justus said. “And we recently had some deals with Saudi Arabia. The way things are moving is very promising.”
In the North African region, Weatherford is also boosting its operations and has recently opened a new facility in Egypt.
“We used to have several bases in Egypt, and we decided to open [a] new base in the country that incorporates all the bases instead of several ones fragmented around the country for more efficiency and better serving our clients,” he said. “Egypt is [a] very important market mainly for offshore operations. Overall, There is a good trend in Egypt.”
Meanwhile, in Algeria, Justus said the company aims to capitalize on the huge infrastructure it has in the country’s Hassi Massoud area where he said the company won several contracts for drilling, wireline, pumping etc. However, he noted political uncertainty is “casting a shadow” on doing business in the country.
“The volume is lower today than what we expected, but we are optimistic,” he said. “We expected more rigs to be active by now, but when there is uncertainty there is some delay to reach the full speed.”
Additionally, Justus said Weatherford has recently reopened the business for wiring and drilling services in Algeria and is trying to grow its footprint in the country. “We are trying to bring technology to the country,” he added.
Looking ahead, Justus said technology will ultimately define the company.
“In the future, we see our self as a technology company that happens to have energy as opposed to an energy company that happens to have technology,” he said. “Technology is how we see ourselves.”
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