Praxair Inc. is actively looking for opportunities to expand its integrated business model into the United Arab Emirates, according to the reports of a number of news sources and the words of Chief Financial Officer James Sawyer.
The UAE, along with some other Gulf countries, has seen its economy grow rapidly, on the back of windfall revenues from record crude oil prices. In the US and other countries the company runs a packaged gas business, which sells gases in cylinders. It also operates a merchant gas business that supplies gases via tankers and an on-site business that is usually set up adjacent to a customer’s manufacturing facility.
“When we operate an integrated business, we can get a very high return on capital. If you just go over and build a single plant for a single customer, you can't get as high a return on capital,” Sawyer told Reuters.
The company supplies a range of industries from energy to health care, and the gases it produces are used in applications like metal fabrication, beverage carbonation and petroleum refining.
Sawyer apparently declined to say when the foray into the Middle East would occur, but said the company was more interested in supplying a range of industries, rather than setting up one plant that caters to the needs of a single refinery.
“Thirty percent of our sales are in emerging markets and nearly 50% of our capital spending is going into emerging markets,” said Sawyer, speaking on the sidelines of the Bank of America Basics/Industrials conference in New York.
Sawyer said it is seeing sales in Brazil, China and India driven largely by growing internal demand in those economies. The many coal gasification projects likely to be built in China present a large growth opportunity since Praxair builds the plants that supply these.
“China has to embrace coal gasification in order to provide feedstock for its chemicals and plastics industry,” Sawyer commented.