LEADING engineering, procurement and construction (EPC) consultant, Mott MacDonald, which has been operating in the Middle East for over 40 years and is currently executing projects worth over $8 billion in the region, sees enormous potential for the EPC market in the coming years.
The Middle East is investing heavily not only to maintain its dominant position, but also to generate income to fund social programmes needed for an increasingly demanding population. The wise strategy of constant investments in the oil and gas sector coupled with a return to political stability will give this region and the industry a prosperous future, says Charles Ellinas, managing director of Mott MacDonald’s oil, gas and petrochemicals business.
“In addition, the opening of Iraq will generate massive opportunities, starting as early as next year,” Ellinas tells OGN in an interview.
Mott MacDonald, which is participating in over six EPC projects in the region, mostly in the UAE and Oman, has relocated its Southern Iraq operations to Iraq Energy City enabling it to be closer to its business partners in the region while improving operations efficiency.
Mott MacDonald has been present in Iraq for over fifty years, and 80 to 90 per cent of its workforce is made up of Iraqis. Expectations for Basra are high as the Iraqi government has already awarded contracts worth $50 billion to a number of oil companies to develop oil fields in the area. The city is set to become one of the main upstream destinations with many oil and gas companies located there.
Mott MacDonald’s relocation to this new development will mean it is ideally positioned to support these companies with its services and innovative solutions.
Commenting on the move, Ellinas says: “Our move to the Iraq Energy City has come at a significant time as there is enormous potential for the region with a lot of investment going into it.”
Speaking about the strength of the EPC market in the region, he says despite the political instability across several Middle East countries and the world economic problems, which can be seen as a background issue affecting businesses worldwide, the oil industry in the region is on a good footing.
“Procedures are well established and fair and understood, and materials procurement is similar to other regions. Iraq, though, is more challenging as our projects require availability of highly specialised and skilled in-country staff that are in high demand,” he says. However, year 2011 has been difficult due to the impact of the world economic problems, which have led to a degree of slow-down and volatility in some markets, he says. But, this is expected to start recovering and 2012 should be better.
“One of our most prestigious projects, which is almost complete, is the $1.2 billion Qarn Alam Steam Project in Oman to enhance heavy crude oil production,” he says.
He continues: “The current market situation is not as good as 2010. Even though the oil price remains over $100 per barrel demand volatility is having an impact which has affected businesses in the region. The EPC market is now much more competitive than in 2010. We hope that stability will return next year.”
Asked about the challenges faced by EPC contractors, he says: “The first challenge is to stay competitive and deliver value for money to the client. We believe that we can achieve this by increasing the ‘added value’ proportion of our business. Also working more collaboratively with others helps share skills and risks.About the prospects for the EPC market in the coming years, he says with the growing energy appetite of countries like India and China, the oil and gas industry will remain buoyant in the longer term and, “I don’t see why we should not expect an increase in the number of projects in the coming years”.
