Day one of gasworld’s MENA Conference has drawn to a close here in Dubai, after exploring dynamics across the region and the rising trends shaping the face of the Middle East industrial gas market.
Over 270 delegates from 40 countries gathered at the striking Jumeirah Beach Hotel, situated in the pristine shores of the Arabian Gulf, investigating and discussing critical topics under the conference theme of Partnerships – A Route to Success.
No less than seven industry experts delivered engaging keynote presentations throughout the day, covering a vast array of subjects from the global impact of mergers to the very real behemoth that is digitisation in the industrial gas industry.
The conference kicked-off by exploring Sourcing and Supply Partnerships, this was chaired by Mike Huggon, CEO of Gulf Cryo, and focused on the Share vs. Compete debate presented by gasworld founder and CEO John Raquet, as well as the Make vs. Buy debate in specialty gases from Director of Global Strategy for Air Liquide-Calgaz, Chris Street.
Richard Boocock, President of Middle East, Egpyt, Turkey and India, Air Products, presented to a clearly captivated audience the Supply Scheme Value Proposition as part of a session dedicated to Sourcing/Supply Partnerships. Boocock, delivered an engaging keynote speech, setting the scene of the Middle East industrial gas industry.
He said, “Since President and CEO Seifi Ghasemi’s arrival three years ago, we’ve gone through a lot of change. We’ve become an industrial gases industry. His plan was very simple, let’s be the safest and most profitable gas company in the world – three years on and I think we can say that we have achieved that. We’re a $7.5bn company with over 16,000 employees spread among 50 countries.”
He continued, “In terms of our Middle East businesses, we have a combination of wholly-owned and joint venture companies. We’ve always placed a great deal of importance on partnerships and joint ventures throughout the years and we can proudly say that we were here, in this part of the world, during the early stages of the markets development.”
“And today, for example, our biggest project in Jazan, the largest industrial gas complex with a capacity of 75,000 tonnes per day, is on schedule to come on-stream in the coming months.”
”But what has been our approach? Our approach has been to simply work with people around the world, combining each of our respective strengths, to be the best we can possibly be.”
”We have a global presence, but we operate locally – and that’s crucial. If you can’t work out how to operate locally, then you’re missing my point. Local companies should be run by local people. In the Jazan project for example, we are well into the process of recruiting, and we are now at 70% Saudisation. This will progressively move towards 100% Saudisation.”
Boocock concluded, “Seifi’s key message, if he were here, would be that the only sustainable element of a long-term competitive advantage, is the degree of commitment and motivation of the people in the company.”
James Barr, gasworld Senior Business Analyst, proceeded to review the global impact of Praxair-Linde, stating, “Globally, we estimate that Linde-Praxair will have to divest assests that collectievly generated revenues of $2.5bn to $3bn in 2016.” He continued, ”This merger will provide opportunities for smaller companies to gain an upper hand on the Tier One players.”
The rationale, Barr explains, “is that slow growth has caused companies to look to M&A to develop further. Partnerships create greater shareholder value and we believe that the coming together of these two companies will create the biggest R&D spend ever experienced.”
Barr explained that the share exchange offer for the deal must be complete by mid to late October, while the deal itself is not expected to be complete until Q4 2018.
gasworld’s Publisher and CEO John Raquet, went on to discuss ‘Share vs. Compete’, with a focus on sourcing and supply relationships.
He began, “The realities of the MENA region, is that the Middle East industrial gas business has developed over the past 60 years. This is from a mix of state involvement – the tonnage side of the industrial gases business – and of state and private investment. The private sector has mainly developed from companies involved in a variety of industries and has had a ‘me too’ mentality until recently.”
“Investment and focus of large international/global gas companies in the Middle East began to present opportunities and threats – to both state and privately owned industrial gas businesses,” he continued.
To conclude, Raquet provided a summary of some of the key challenges that the MENA region faces today:
He said, “There is a current over-supply of gas products within the MENA region, the region is not yet fully optimised and therefore profits are suffering, and finally there is a lack of trust. The MENA region needs to collaborate more on sourcing, supply infrastructure and safety for a ‘win-win’ scenario. Joint production facilities don’t mean your reducing the competitive environment, It means two companies are coming together to build one plant and to reap the benefits of the lower costs. This isn’t seen as anti-competitive. Most importantly, you will avoid surpluses that occur.”
Next up was Director of Global Strategy for Air Liquide-Calgaz, Chris Street, discussing the ‘Make vs. Buy’ debate in the specialty gases market, both globally and in MENA.
He began, ”The entrepreneur spirit, which I think is in most of us, kicked in 2007 when I bought Scientific and Technical Gases (STG). It was a small, family run, specialty gases company, and I got the opportunity to take that and develop it. One of the parts that I though was very important as I was running STG, was to work in partnership. So, I very much like to practice what I preach and I’ve worked with some of the companies that are gathered here today and have developed partnerships in Qatar and Saudi Arabia, among others.”
The global specialty gas market is predicted to grow to approximately $7bn globally by 2018, with Asia-Pacific predicted to show the fastest growth. MENA’s current market value is at $198m, 2.8% of the global market. However, there’s one question which specialty gas companies must deliberate – should they make or buy? Both Tier One companies and new local entrants need to decide whether to invest locally in infrastructure or to develop partnership. Street weighed up the many pros and cons to help delegates decide.
He stated, “My personal view, of what the current situation is here within the MENA region for specialty gases is that, I believe there is an oversupply in specialty gas suppliers and distributors. In certain niches, I see that pricing is being driven down but still the quality and services for individual suppliers can be variable.”
“All overseas investment and local investment brings significant risks, and companies need to determine their resilience as pressures continue to increase on supplying high levels of product quality and service. But, where do we go from here? The way forward for us, I believe, is to find new ways of doing business. We need to look at new paradigms, where we work in partnership with each other, whilst being aware of anti-completive and anti-trust rules that govern many of us. We do not need to in any way to breach those or have any concern, we just need to look at ways at working in partnership for the benefit of both parties,” Street enthused.
Session Two, chaired by Frank Brunsdon of Buzwair Gases, explored Technological/Safety Partnerships and homed in on Strategic Partnerships to Advance Innovation in Small Business, Improving Safety Culture and Limits, and the growing realm of Digitisation.
Kareem Afzal, Vice-President, PDC Machines, was first to the stage as he discussed Strategic Partnerships to Advance Innovation in Small Business. He stated,“Strategic partnerships are driven by the ideal of shared creative value, and that can mean very different things to different companies, for us, we are of course driven by the selling of more compressors, for others it may be the idealistic vision of a clean energy future, or, it could simply be to transform their company into a profitable venture.”
He continued, “Collaborative innovation in the hydrogen fuelling space needs community partnerships, inclusive of fire departments, schools, businesses and individuals. This close partnership enables us to gain permits very quickly.”
Next, Mike Huggon, Gulf Cryo/MEGA, delved into Improving Safety Culture and Limits on behalf of MEGA and urged, “We must work with the industry and with the authorities to achieve the level of safety desired.”
Some key safety issues that MEGA addresses include those geographies with large, complex footprints with many diverse cultures and operating models; geographies that lack consistent regulatory control by authorities and have limited cross border exchanges; and those geographies that are experiencing increasingly challenging economic conditions with restricted resources.
He said, ”We take the very best standards and we localise them for operations in our own geography in the Middle East.”
In regard to packaged gas, MEGA is addressing issues such as cross filling cylinders, cross coding and labelling, cylinder testing, medical quality standards, gases with dangerous properties, and distribution. So far, the company has made significant achievements in cylinder colour coding, medical gas cylinder colour coding and cylinder product labelling.
Huggon concluded, “This point I’m going to make goes back to my experiences in Asia. When we started our journey there, people said to me, Mike, you will never get world class safety in Asia, because the culture won’t take it on board. That is fundamentally wrong. Don’t let anybody tell you that life in the Philippines, or a life in Saudi Arabia, or a life in Dubai, is any more or any less worthwhile than a life in the US or the UK. A life is a life. You can get world class safety anywhere you operate in the world, if you approach it properly.”
MEGA is working with GCC National and Federal authorities and organisations for their guidance in the preparation of laws, regulations and standards which are both practical and effective.
Last but certainly not least, gasworld’s Global Managing Editor, Rob Cockerill wrapped up the session with the topic of Digitisation.
He began his presentation, stating, “We are, very much, in the digital age. We are more digitised and connected than ever before…. The digital phenomenon has transformed our everyday lives and often in more ways than we even realise.”
”…industry is being urged to strategise now”
Rob Cockerill, gasworld Global Managing Editor
Cockerill then proceeded to describe Industry 4.0, the current trend of automation and data exchange in manufacturing technologies – and why it is set to become the next Industrial Revolution.
“Now a Fourth Industrial Revolution – Industry 4.0 – is building on the third. We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another – all based upon digitisation.”
“This is no longer just industry white noise,” he added, “this is happening, and industry is being urged to strategise now.”
This, he explained, is because first movers in wider industry (and manufacturing) are already transforming. For the gases industry, the first moves are also being made, from production plants to filling plants, and from smart cylinders to asset tracking systems. “The industrial gases business is already in the midst of a digital transformation throughout the supply chain,” Cockerill said.
Cockerill then moved to the central point of his presentation – whether the inherently traditional gases industry is truly ready to take the next step forward.
“The industrial gases business is a very traditional industry. The industry is based upon strong cultural and organisation paradigms. It is still very customer-facing if I can call it that – the behaviours, interactions and relationships in our industry are still very personal in nature.”
Cockerill explains that these are all robust and reliable traditions of the industry. So where does tradition meet digitisation? Cockerill explained.
”It’s a leadership challenge,” he concluded. “This change has to start from the top… Digitisation also creates new partnership opportunities. One of the things technology firms do well is to build an ecosystem and not do everything independently. So perhaps partnerships – both commercial and academic – could be the key building block here towards a digitised gases industry in the future, and particularly in an emerging market like the Middle East.”
Delegates will now turn their attentions to the conference lunch, a prime networking opportunity supported by Gold Sponsors, Middle-East Logistics company, Prime Link.
This is then followed by the drinks reception, before heading over to the Events Arena for the gala dinner. This will comprise of a sit-down international buffet with fire entertainers, courtesy of gasworld in celebration of its decennial year of hosting industrial gas conferences around the globe.
Tomorrow, the conference resumes with Session Three, exploring Geographical Collaboration and beginning with the hot topic that is Qatar: Helium Supply Update.
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A full review of the conference will be published in the upcoming November edition of the gasworld magazine