This first ever conference of its type in the region presented a unique platform for speakers and delegates alike to address the fact that the region remains one of the last and largely untapped world markets for industrial gas supplies and services.
With the aim of exploring growth-related opportunities, challenges and issues presented by the Middle East to both suppliers of gas and equipment, delegates were provided with news of some of the latest trends in technology and markets. It was also an occasion for industry leaders within the region to come together to discuss the challenges they face in this emerging market.
The “New Industrial Gas Frontier Conference” saw a broad range of topics presented and discussed amongst the almost 180 delegates from 32 countries who attended.
Under the opening chairmanship of John Raquet of Spiritus Consulting, Dr Aldo Belloni, executive board member of The Linde Group, expressed his delight at being invited to open the conference. He went on to set the tone by highlighting the importance of such an event and pointing to the predicted project boom, which would result in a regional surge in demand for a whole variety of industrial and medical gases.Proven reserves of oil and gas, together with an increasing requirement for jobs and new industries, were cited as special reasons for exploring the Middle East market and as drivers of demand for industrial and medical gases in the region.
Dr Belloni told delegates that advantageous feedstocks, close proximity to burgeoning Asian markets and an investment-friendly climate (in terms of loans and funds) were all positive factors for future development in the region. He noted that construction and development require extensive cutting, welding, other related services and the relevant gases that accompany these – thus also attracting the interest of engineering industries, confirming this by saying, “if you’re in the engineering arena, you’ve got to be in this part of the world.”
The second speaker was Alastair Hensman, a senior consultant of Nexant ChemSystems who delivered an outline and a review of current market conditions in the refining and petrochemical industry. His presentation described strong growth in the petrochemicals sector due to lower feedstock costs balanced by a belief that oil prices will remain high for the next 5 years before declining.
This was followed by BJ Services’ John Grover, who presented a lively and very informative overview of the offshore oil and gas services industry and of the extraordinary logistic demands involved. He emphasized the important role played by industrial gases and said that supply had to be improved in some regions around the world – especially in Central Asia.
Summarising how BJ Services assessed opportunities for growth in the Middle East, Grover said “It’s gas really. It’s all about gas. We use an awful lot more nitrogen, be it down a hole, or purging facilities, or leak testing for gas developments than we do for oil developments. So, for us, that currently means more of a focus in Qatar, India, Egypt and the Caspian than, perhaps, here in the UAE, where a lot of the developments are still oil related.”
Pierre Dufour, senior vice president of Air Liquide Group and president and CEO of their American business, Air Liquide Holdings Inc, rounded off a successful morning of presentations as he discussed the company’s vision for the Middle East and enthused about the region, describing it as having ‘lots of potential’, emphasizing just how much promise the region affords as he described it as a ‘booming’ area and spoke of future investment in the market.
“We already have a long history in the region of being flexible to the needs of the market. We already have, with our partners, invested more than $300m in the region (Air Liquide includes Northern Africa in that figure), either in the ground or under construction and, with our partners, we intend to invest much more in the coming few years to accompany the growth of our customers, both big and small.”
“The Middle East is a great region. I’ve been around it for many, many years as most of you have, and it’s an absolutely great region with lots of potential,” he added. “Our history in the region and our current position, I think, make us an important player in the industrial gas market here – and we intend to keep it that way. The region has a bright future and we all know that you only have to drive from here to the airport to see that the region is booming.”
Dufour closed by saying that he believed the industrial gases industry to be a great industry – supporting, as it does, just about every other industry in the world, and absolutely essential to talk about in every part of the world.
Invited to return to the stage by Walid Kouatli (Senior VP of Gulf Cryo and moderator of the first afternoon session), Aldo Belloni, set about addressing the make-or-buy issue concerning tonnage gases.
The supply of large volumes of industrial gases such as oxygen, nitrogen and hydrogen (tonnage gases) requires production to be as close to the point of consumption as possible, preferably on-site. And for setting up such a production facility, the customer has to decide between captive production or a supply contract through a gas company.
Such a ‘make versus buy’ decision is influenced by various criteria, depending on the individual situation including synergies with other customers; operation, maintenance risk & process safety; plant concept, design & execution and financing aspects.
Leveraging the benefits of supply schemes, the Americas and Europe have almost completely adapted the outsourcing trend for tonnage gases. In Asia, supply schemes are beginning to achieve market penetration especially with privately owned companies choosing this concept.
Today, the situation in the Middle East is quite different as, until now, most major plants have been captive with little penetration of supply schemes. Continuing growth in the region presents significant opportunities, and the industry has to further elaborate on the make versus buy decision. From the point of view of a company like The Linde Group, being globally successful in both areas, the pros and cons for both solutions are reflected.
The current speed of growth in the Middle East is a huge challenge to the industry in the sense of quickly implementing operational best practices and lessons learned. This significant requirement for operational know-how transfer offers a basis for providing value to customers in the region through the establishment of supply schemes.
Due to its rate of growth, the region faces significant shortages of skills and experience – especially in project development. Supply schemes provided by experienced gas companies with global operations, project development capabilities and established best practices could, therefore, contribute to the solution of this problem through supply concepts.
Today, there are signs that future supply schemes will have an increasing role in fulfilling the challenges in the Middle East.
John Raquet, Managing Director of Spiritus Consulting, addressed both the dynamics of the global and the Middle Eastern industrial gases business.
Raquet explained how the region, at present, is largely dominated by the packaged gases market and currently accounts for only 2% of the global market – the appeal of the region clearly being its great promise and potential. He commented that the market is generally underdeveloped and consumer (rather than technology) – driven (see Regional Analysis page 40 for further coverage).
An important issue for the region was the lack of consistent technical and safety standards used across the region. Frank Finger, General Secretary of the European Industrial Gases Association (EIGA) was invited to the conference to present the work and initiatives of the various regional associations that are striving to harmonize standards across the globe. He was preparing the way for a discussion on the second day for the need for a Middle East Gases Association.
Just such a practical tone was continued after a brief break, when Air Products’ Richard Boocock addressed the audience, stressing a need for consistency, support and understanding in the region, in order for it to be able to develop, while also highlighting the fundamental factor of proximity to significant markets.
He said, “You can fly from Mumbai to Dubai in 2-3 hours; it’s a good place to be.” He did highlight that challenges exist within the Region and that some remaining cultural differences between member states in the GCC will present hurdles that need to be overcome if ideas such as a Gulf pipeline network of the size of the US Gulf Coast could become a reality.
Eric Johnson an independent consultant with SRI / Atlantic Consulting, provided the final speech of a stimulating first day, delivering an overview of carbon capture and storage and both the issues and merits associated with this. Entitled “Stash the Gas” this was an entertaining finale to the day’s presentations.
There were smiles all round as delegates left the conference centre for further networking discussions ahead of a cocktail party and conference dinner. At the dinner, Global Gases announced an agreement between themselves and Matheson Tri-Gas Inc to pursue an exclusive business alliance to market speciality gas products in the Middle East.
Under the chairmanship of Khalid Hashim, CEO of Abdullah Hashim Group, the first morning session of the second conference day was designed to explore the theme of industrial gases – What’s Needed in the Middle East?
Dr Rohintan (Roy) Irani (until recently with BOC, now an independent consultant) presented the opening speech, focusing on his field of unique expertise in developments in gas cylinder technology. Roy spoke about the rapid growth of composite cylinders and the challenges faced in the production and safety of high pressure (700 bar), yet lightweight, cylinder packages.
A lively presentation by Rick Kowey, VP and General Manager for Matheson Tri-Gas Inc., followed in which he described the production of speciality gas mixtures as both an art-form and a science.
Explaining the complexities of delivering business value whilst offering advice for those approaching the speciality gases business for the first time, he highlighted how rapidly growing markets such as the Middle East are changing the speciality gases market. Gross margins of up to 60% can be achieved in the region but, Kowey highlighted, money and resources alone are not enough to ensure success.
Following a break for coffee, Roy Irani took over the chair for the second morning session when John Raquet of Spiritus Consulting tackled one of the currently hot issues – the tight supply of helium and its impact on global demand. He advised the audience that helium supply will remain tight over the next 4 years until 2011 and as such, prices are expected to remain high which may have a dampening influence on demand growth.
The Middle East market for helium is currently growing at 5-7% per annum, which he stressed was a conservative figure for the region, with its main applications being MRI scanners, use as a carrier gas and in leak detection and as an inert bulking agent for diving gases. The helium supply situation within the Middle East should improve during 2008, with production at the Qatar plant rising by 50% to reach 90% of its capacity.
Andrew Brown, Director of Bestobell LNG, addressed the issue of LNG and its relevance to the industrial gases sector, answering with a resounding ‘yes’ the question as to whether our industry should really be interested and involved.
Drawing delegates’ attention to the fact that it is cryogenic technology which enables huge volumes of liquefied methane to be shipped safely all over the world and that, with the next ten years the size of the LNG ocean transport fleet will more than double to 400+ specialist tankers and that the global LNG market will, by then, be worth a projected $200bn annually.
Phillippe Fauvel of Cryostar presented a look into the future with the company’s vision for a complete LNG supply chain – from production sites to consumers. The company produces compressors, turbines and pumping systems for the natural gas market as well as equipment for LNG and LNCG refuelling stations and the software to control and operate them. It has also designed and installed the high-pressure injection systems for heavy transport engines with a cryogenic pump immersed in the LNG tank.
Day 2 Afternoon
The afternoon session was organized to be a technical breakout session in which speakers from the support industries to the gases business discussed the advancements in technology and trends in equipment use. The main auditorium was used for the speakers while a side conference facility was used to have the discussion on the status of the Middle East Association.
Michael Blondin of Cryolor described his company’s commitment and its 50+ years in designing and manufacturing cryogenic trailers for the safe transportation of cryogenic gases. The list of required special safety criteria, applicable to all such manufacturers but handled uniquely by each, ranged from fail-safe filling and discharging systems and requirements to warning, braking and stability systems as well as roll-over prevention.
Keith Stewart of Herose, addressed the vitally important subject of cryogenic valve efficiency and safety, convincingly demonstrating the financial, operational and human-related costs of investing in low-cost, low-technical-efficiency and inappropriate hardware solutions versus the relative economies achieved by doing the job properly with the correct equipment, regular inspection, scheduled servicing or replacement and thorough examination and review of all reported and observed faults and problems.
Jan Van Houwenhove of VRV addressed the vital subject of the distribution of industrial gases using mobile cryogenic equipment and highlighted the view that optimization is vital and demonstrated that transporting liquid gas is more efficient than transporting it in its gaseous state. He went on to illustrate the variety of cryogenic mobiles and on-site storage facilities and to illustrate how optimum solutions can be selected to meet users’ needs.
Dmitri Ermolov of Cryogenmash explained that his company was Russia’s largest specialist engineering company addressing the cryogenic needs of a wide range of industry. With revenues of $140m and almost 3000 employees, the company provides industrial gas storage, transportation, gasification, LNG systems and equipment. They also supply helium and hydrogen plants along with space refuelling systems. Approximately 50% of the business is metal fabrication, one third of revenues come from petrochemicals and one third of production is exported.
Neil Amber of Universal Industrial Gases shared his company’s wealth of experience in the processes concerned with deciding if an ASU plant is suitable for renovation, upgrading and, perhaps, relocating – or really only fit for scrapping. Relocating essentially worthless plant is commercial suicide. With years of design and management experience in the field of tonnage oxygen plants around the world, such decisions concerning complex installations are, themselves, always complex, must be totally objective, professional and, ideally, accompanied by a positive recommendation.
Savir Julka of Inox India outlined the immensely broad range of industrial gas-related products, services and systems available through what the company bills as ‘total cryogenic solutions’. These range from individual LIN, LOX, LAR, LCO2 and LNG storage, vapourisation and distribution systems to total project management including storage tanks, pressure, pumping, instrumentation and control systems.
Roy Irani of Gas Package Solutions discussed 21st Century re-qualifying / testing techniques for pressure vessels covering destructive, semi-destructive and non-destructive methods and demonstrating how new technologies and methods have made this essential process both safer and much faster / productive. He reviewed the advantages and disadvantages of hydraulic and ultrasonic testing by pointing, amongst other things, to the high energy requirement and water consumption of the former and the relative lower lifetime cost of the latter.
Hector Villareal of Weldcoa covered the major subject of the optimization of cylinder filling, illustrating the key aspects of small ‘manual’ to very large automated systems and demonstrating the benefits of, and recent developments in, palletization and filling options. An information-packed presentation covered safety, highlighting one major contributor, the simple valve guard, now fitted to most cylinders. Distribution, modular and linear filling systems, plant layout and project management were also outlined as key elements of Welcoa’s capability.
The conference was brought to a close, the delegates that remained were delighted that the conference had taken place in Dubai and were surprised by the large number of companies that had attended.
Over 80 delegates then mounted buses to head into the desert for an entertaining cultural evening amongst the sand dunes. The evening was kindly sponsored by cryogenic equipment manufacturer – Cryolor of France.