Eyes on Everything: Instrumentation market review

Demand for instrumentation continues to grow with petchem spend

The growing scale of downstream projects in the Middle East has created a vast market for international instrumentation providers.
The growing scale of downstream projects in the Middle East has created a vast market for international instrumentation providers.

The global automation and instrumentation markets are booming, supported by a rapidly growing oil & gas, and refining & petrochemicals industry. The upward trend could not be more noticeable in any other region than here in the Middle East where instrumentation suppliers continue to ride the oncoming wave of massive refining and petrochemical plants in need of the most sophisticated process management solutions.

This market for instrumentation consists of gas monitors, analysers, transmitters, flow meters, control valves and gauges, technology which the region’s upcoming projects are in much need of. Such technologies provide for higher productivity, lower down time, improved product quality, reduced energy costs and enhanced safety through improved responsiveness.

According to Virein Kumar Yadlapalli from the Industrial Automation & Process consulting practice, MENA & South Asia at Frost & Sullivan, the overall maket opportunity for instrumentation products was estimated to be more than $1.8 billion 2013, with the Kingdom of Saudi Arabia constituting over 45% of the market.

“The KSA will continue to present maximum opportunities for instrumentation products in the next 4-5 years, while those in the UAE, Kuwait and Qatar are expected to gradually increase their contribution,” he says.

“In 2013, the GCC oil and gas sector, including upstream, midstream and refining, presented the biggest opportunity for instrumentation products with about 49% revenue share,” adds Yadlapalli. “The Petrochemicals sector, including fertilisers and chemicals, accounted for about 15%.”

“The growing operational demands placed upon control systems and instrumentation by rising complexity of the process and increasing safety requirements, has necessitated a gradual migration towards better, albeit more expensive, technologies,” he says.

Emerson Electric Company, for example, saw its process management division increase sales by $711 million, or 9% between 2012 and 2013, a reflection of continued global oil and gas investments and demand in chemical and power end markets.

The company saw global sales increase, including the Middle East/Africa region where they climbed by 16%. While the company’s Industrial Automation group saw a 6% decline in sales, primarily due to weak demand for industrial goods in Europe, the same segment reported that its Middle East/Africa business saw sales climb 6% in 2013.

Admittedly, these generally positive results, and those by Emerson’s competitors are primarily the result of increased sales towards the exploration and production sector within the Middle East’s hydrocarbon industry.

But the growing supply of crude oil and natural gas on global markets, has encouraged the development of regional refining and petrochemical sectors, and thus demand for instrumentation and automation technologies to go along with it.

Last year, Honeywell was awarded four major contracts worth a combined $40 million over 18-month duration for the Borouge petrochemicals complex in Ruwais, Abu Dhabi.

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“We continue to see countries in the Middle East, such as the UAE, invest in growing their petrochemical capacity, as part of economic diversification strategies,” says Mansour Belhadj, sales director, Honeywell Process Solutions, Middle East. When it comes to the heavy industrial projects being built, this directly means more demand for instrumentation.

“With the Gulf region’s share in the global petrochemical market expected to grow to 20% by 2015, there is also a corresponding need for reliable, cost-effective processes, such as the solutions selected for Borouge 3, which can ensure that operational efficiencies are an integral part of the growth process,” adds Belhadj.

The company was also recently awarded another contract by the Kuwait National Petroleum Company, to provide the Integrated Control and Safety System for its 615,000 bpd Al Zour refinery.

A market that produces a sizeable percentage of the world’s hydrocarbons, with plenty of new projects on the way, the Middle East has proven itself to be a fertile region to grow instrumentation and automation companies.

In a region where the majority of companies are owned by sovereign or government institutions with easy access to capital, quality and brand recognition have become critical for success.

“Companies like Borouge, Sabic etc, we tend to choose the best. Because money is in abundance, we don’t tend to be cheap on what we buy,” says Alan Izzard, vice president of corporate HSE for Borouge.

With the high risks that are involved on a refining or petrochemical facility, it’s no surprise that companies in this region are willing to invest in the best technology.

Which is why an increasing number of companies are spending heavily on automating their industrial processes, selecting technology providers that not only provide instruments that constantly monitor plant operations, but also ones that can rapidly respond to any possible threats or emergencies.

“Eliminating manual processes as far as possible is our goal,” adds Azizi Ahmad, Petrofac’s Manager, Instrumentation, Control & Telecommunication. “Automation not only saves time and effort, it eliminates many sources of errors so we can increase quality as well as save money.”

Izzard also believes that instrumentation can be a process safety challenge. Failing to realise that a piece of safety-controls equipment is malfunctioning can lead to disastrous consequences, a risk that the region’s operators have tried to minimise by increased spending on instrumentation.

The relatively small size, of the GCC’s petrochemical market has also meant that instrumentation vendors have been particularly careful to ensure their products are working effectively.

“These companies rely on their reputation,” muses Izzard. “If they get things wrong once, well bad news travels fast. You do something wrong at Borouge, and there are 18 other companies with networks and they all talk to each other.”

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Without doubt, this can prove to be a significant challenge especially considering the environmental factors that the Middle East presents for delicate technology such as a de-salter level measurement used in the oil & gas industry, or a pressure swing absorber for catalyst re-generation in Fluid catalytic cracker units in a refinery.

“The key thing is that when you specify a piece of equipment you have to ensure that its suitable for the environment,” says Izzard. With temperatures that climb above 50 Celsius in the summers, and sand-storms that can completely cloud visibility, engineers must ensure that oversight is never impaired.

“Heat and dust do affect instruments in a major way and decrease life span of electronic components and instruments,” adds Yogesh Madnani, VP of ABB’s Measurement Products business in India, Middle East and Africa region.

“In automation and wireless instruments, the major concern is battery life which can degrade as a result of temperature gradients.” Fortunately most instrumentation, particularly on a refinery or petrochemical project, is connected to the main power supply.

Such issues can easily be resolved with the correct planning, which most often comes as a whole package with the technology vendor. These days, operators are not just looking to invest in new instruments, but are picking the vendors who can provide missioning and maintenance service as well.

“It’s key that you select the right instrumentation for the right service, and that’s not always obvious, your instrumentation manufacturers play a key role in that, they’re the experts,” adds Izzard.

Not only does this help to distinguish various instrumentation companies in an increasingly saturated market, but it could also serve to minimise the operational costs that a refining and petrochemical company faces by passing a larger portion of the maintenance work to the supplier, while also ensuring that assets are properly maintained.

“Our instrumentation people tend to be generalists, where instrumentation companies, are specialists. Having them involved in the set-up of products, the commissioning and maintenance thereafter is key,” says Izzard.

Naturally, this raises another major challenge when dealing with so many players in a niche market. Often times, a petrochemical facility will have dozens of instrumentation, automation and process management technology vendors.

Integrating all these different technologies into one manageable system can become a challenge. But it seems that most vendors in the region are willing to go the extra mile to ensure that their products can be easily integrated into an existing system, in such a close-knit industry. After all, failure to do so could be disastrous to the company’s reputation.

In Numbers:
- 49% The hydrocarbon industry accoutns for this much of the market’s revenue.
- 15% More specifically, the downstream sector accounted for this much.
- 16% Emerson saw sales in the MEA region grow this much.
- 45% The KSA’s share of the region’s instrumentation market in 2013.

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