Cover Story: Integrated approach
Boris van Thiel, CEO, Regional Cluster Gulf States, Thyssenkrupp Industrial Solutions, discusses innovations and trends in the Middle East petrochemical industry, in an interview given to Martin Menachey during the 11th Annual GPCA Forum in Dubai.
Thyssenkrupp – a technology-based EPC contractor – is a diversified group of companies, offering a wide range of industrial solutions, including technology and machinery. The company’s core competency lies in fixing industrial plants – particularly petrochemical and fertiliser plants – on lump-sum / turnkey basis. Thyssenkrupp has certain solutions for the refining sector as well.
The Middle East was one of the most important regions for Thyssenkrupp group in the past and Boris van Thiel, CEO, Regional Cluster Gulf States, Thyssenkrupp Industrial Solutions, thinks that it will be a very important region for the company in the future also.
The main clients of Thyssenkrupp in the Middle East are the state-owned companies like Sabic, Adnoc, Qatar Petroleum and PIC. There are also certain clients with private investments in smaller plants, seeking mainly solutions in chlor-alkali electrolysis. Thyssenkrupp is doing business in the region mainly with national oil companies and their affiliates.
Talking about the advantages of doing business in the Middle East, Boris said, “Our main advantage here is the strong legacy of doing projects for more than 80 years in the region. We have a very strong foot-print here. In Egypt, Saudi Arabia, Qatar and the UAE, we have long-lasting and vibrant partnerships with clients. This is our strength in the Middle East.”
“We have cheap and competitive feedstock available in the region. Even though we have the oil price crisis going on at the moment, we feel that there is a lot of potential for the region in the future. The focus of the industry in the region is shifting now from adding more capacities to becoming more energy-efficient as well as revamping existing plants to become more productive. We are helping our clients with solutions in this direction at the moment,” Boris added.
Explaining the challenges facing his company in the region, Boris observed, “The real challenge faced by us in the Middle East right now is the cost competition since there are only limited number of large-scale projects. And, we have a large number of major players here from around the world – the US, Europe and Asia. They all have the same goal and are eyeing for the same projects to grow and perform in the region.”
“We are trying to find solutions and strategies to become more cost competitive in the region. One of our strategies in this direction is to partner with other companies in the region, especially the Asian companies, to bring down the construction costs without compromising on our technology,” Boris explained.
Answering a question on how Thyssenkrupp is trying to stay ahead of competition in the region, Boris emphasised, “Being with the customers very closely is the best strategy to stay ahead of the competitors in the region. As a part of our business strategy for the region, we are strengthening our local set up in the Middle East. We already have very strong presence in Egypt. We are strengthening our presence in Saudi Arabia, the UAE and Qatar. To be successful in the region, it is necessary to understand what the customers think, know their needs exactly, and be ready to fulfil those needs.”
Boris was satisfied with the outcome of the 11th GPCA Forum. He said, “This is the first time we are sponsoring a GPCA event. We find it as an excellent opportunity to bring in awareness about our capabilities for our future customers and collaboration partners. It is also an excellent platform for networking. We found all our existing customers and partners together in the forum and within two days, we could meet them all. We will further promote GPCA events in the future.”
Boris explained in detail the innovative solutions offered by his company for the petrochemical industry in the Middle East. “We are very strong in chlor-alkali electrolysis business where we could achieve, within the last 15 years, over 10 percent energy savings with our membrane technology,” Boris revealed.
“We have introduced a revolutionary process in the chlor-alkali electrolysis, which allows reduction of power consumption by 25 percent. For this, the capital expenditure is higher. But, considering the current increased energy price – most of the countries in the region stopping subsidising the energy and energy price becoming more and more an alarming issue – saving energy cost by 25 percent is an added value for the customers,” Boris pinpointed.
Another innovative approach Thyssenkrupp has succeeded is in the fertiliser industry. The company has developed a technology together with Shell to enhance the value of urea granules. “In the normal process, we produce ammonia and further go into urea granulation. By blending the urea granules with elements of sulphur, we are able to add value to the product. Here, there is a big advantage for the farmers, who are the end users, because the crop yield is much better for the same amount of urea granules with sulphur compared to the one without the element,” Boris explained.
The big advantage for this technology in the Middle East is that large quantity of sulphur is available here because of the oil and gas processing. The sulphur availability in the region is going to increase further because of the sour gas processing in the regions. “By adding a little amount of sulphur, we can increase the selling price of urea granules from roughly US$200 to US$300 per tonne at the moment. We are spending only US$6 per tonne on adding sulphur in the urea granules,” Boris revealed.
The other advantage of this process is that it could be easily coupled with the normal standardised urea granulation process so that the customer has flexibility on using the process – it is used only based on demand.
“The capital expenditure is very limited for this technology. This gives added value to us as well as to the industry. While it gives an opportunity for the region’s sulphur producers to get rid of the product, the urea producers have a higher flexibility level and price, and the farmers have a higher crop yield. So, our innovative technology offers a win-win situation for all,” Boris explained.
Detailing on the current status of the petrochemical industry in the Middle East, Boris said, “Petrochemical industry needs continuous supply of feedstock, which is abundantly available in the region. We are changing our focus now more into specialties. We will also have more integration of projects in order to reduce or better utilise by-products. This is the current trend in the petrochemical industry in the region and this trend is in the right direction.”
“Companies like ours who are serving the customers in the region have to offer additional benefits to them, and optimise the process plants by innovation to get the best out of it. We have to do more with less resources. The petrochemical industry in the region will be resurgent in the next couple of years,” Boris added.
“And, we will play a very important role in the Middle East in the future as we have done in the past. The big advantage of the region is the feedstock. The US and Europe are presently benefitting from the low oil and commodity prices, while we are suffering in the Middle East. But, the region has all the elements to have a successful petrochemical industry in the near future,” Boris opined.
Boris saw a promising role for his company in the Middle East petrochemical sector in the future. “We will be a very strong player in the petrochemical industry in the Middle East. We are now focusing on solutions to integrate processes used by the industry, which can add value in the performance of the plants. While the region will shift its focus into petrochemical specialties, energy efficiency will become the norm of the business,” Boris observed.
Explaining the impact of the oil price crisis on Thyssenkrupp, Boris said, “Of course, we are affected because lot of the projects in the region are cancelled, delayed and shifted. We have designed strategies to overcome this situation until the next wave of huge capex projects is coming up in the region.”
“One of the strategies in this direction is to focus on the service business. Offering services is a very good business in the region since more and more companies are outsourcing services. We are also focusing more on integrated asset management, revamps, refurbishments and capacity extensions. We are focused now on an integrated approach to become a part of the customer organisation.”