In the midst of the world’s current turbulent oil prices, Roberto Penno, Amec Foster Wheeler’s group president, Asia, Middle East, Africa & Southern Europe talked to Pipeline about the firm’s strategy to deal with the downturn
2016 has seen oil prices dip below the US$30 mark, albeit briefly, for the first time since 2003 and international oil companies and service companies are having to deal with this new reality.
Roberto Penno said: “The low oil price environment is of course challenging. We are adapting ourselves to the situation. We are working very hard to reduce costs and increase efficiency.”
In this tough market place, Amec Foster is looking at helping its customers reduce the cost of projects.
He explained: “We are working at bringing the overheads for projects to the minimum. The most important thing is the efficiency of all the indirect costs. This means utilising the right tools for the right job.”
Penno added that on its execution model, the company firmly believe that it wants to provide services to customers that are based locally.
“Abu Dhabi is our hub in the region. We can connect this hub with our centres of execution around the world that serve different disciplines, from upstream in Aberdeen to downstream in London or Milan. This model is the backbone of our offering,” he said.
Amec Foster Wheeler also has a high value execution centre in India that shares work on a number of projects as “this is the most efficient way to minimise the costs of the products we sell to customers.”
Efficiency in design
Penno talked about Amec Foster Wheeler’s key strategy to deal with the downturn.
“We have a clear strategy. The market is difficult and some projects are moving to the right, even in the Middle East. Our response to this is to manage our resources in the most intelligent way we can.”
“It is a process led by management and we need to position ourselves accordingly in response to the market. Waste has never been acceptable in the industry, but now, more than ever, we need leaner design, lower costs of services, better tools and systems,” he added.
Middle East growth
Despite the challenges, Amec Foster Wheeler still sees potential growth in the Middle East.
“Local operators are still investing in projects in the region and we are recruiting in the Middle East as this is part of the effort to create a local hub,” Penno said.
He said that the UAE, Kuwait and Saudi are core markets for Amec Foster Wheeler.
“Iraq is a country where more projects could be funded in the future. We will also look hard at Iran now sanctions have been eased,” he said.
Penno added that the firm’s hiring in the Middle East was in line with its strategy of investing in the region and building local capabilities.
He explained: “Saudi Aramco is very insistent that 70 per cent of the cost has to come from within the Kingdom. So more and more has to be done within country.”
Another strategy that the firm is pursuing in this new business landscape is to offer its oil and gas clients environmental and infrastructure services.
Penno said: “We are offering these services as oil and gas firms are also investing in renewables. They have started their diversification programmes and so have we.”
For instance in Kuwait, Amec Foster Wheeler works on two major clean fuel projects. They are also providing remediation and environmental services to KNPC and KOC.
“This is our way of reacting to the slowdown in the oil and gas market. It provides us with an important buffer,” Penno concluded.