EUROPIPE: The tube station

31 March 2006
At its new headquarters in Muelheim an der Ruhr, in Germany's industrial heartland, pipeline manufacturer Europipe is hardly at the centre of the world political arena. But international politics is very much on the company's agenda. With a major share of its orders coming from the Middle East, any new developments are watched closely. And in recent months, all eyes have been on Iran. The Islamic republic is a keen buyer of Europipe's high-strength, large-diameter steel pipelines, which can handle sour gas and oil in the most extreme offshore conditions. For Europipe, as for many other companies doing business with Tehran, the possibility of sanctions is not the best of news.

'If it came to sanctions it wouldn't make us very happy, of course,' says Michael Drewek, sales manager for Africa and the Near & Middle East. 'But all we can do is sit back and wait to see what happens.'

But for now, business continues to run smoothly. Iran's need for specialist pipelines is acute, as it moves ahead with the development of its South Pars offshore natural gas field and the expansion of its domestic gas network. Production of more than 200,000 tonnes a year (t/y) of 56-inch-diameter pipeline, equivalent to a length of 510 kilometres and the largest order from Iran so far for Europipe, started in early March. To be manufactured in its Muelheim and Dunkerque mills, the pipeline sections will be delivered over a period of 12 months to National Iranian Gas Company (NIGC) for its fifth Iranian gas trunkline (IGAT ) project, linking southern Iran with the central and northern regions. In total, the Islamic republic will receive more than 430,000 tonnes of pipeline from Europipe this year. And with a large number of projects in the South Pars development still to come to the market, the business potential on the face of it remains positive.

Although a prime trading partner for Europipe, the Islamic republic is not the only important market in the region. The influx of oil income to regional governments has led to an unprecedented spending spree in the past three years, with existing oil and gas infrastructure being upgraded and expanded, and new projects being added. 'The Middle East continues to be our core market,' says Rainer Terlinden, Europipe's senior sales manager for Africa and the Near & Middle East. 'Iran, Qatar and also the UAE are very important for us. About 60 per cent of our orders for 2006 come from the region - although the centre of gravity could change fast if a major new pipeline project is announced elsewhere.'

For now, there is plenty to watch out for in the region. The number of opportunities arising from large-scale liquefied natural gas (LNG), gas-to-liquids (GTL) and pipeline projects has risen in recent years. Many of these projects are technically demanding, incorporating major offshore elements that require high-strength steel pipelines with large diameters to transport often highly sulphuric oil and gas in the Middle East.

The company is one of only three manufacturers worldwide capable of producing steel pipe designed to withstand corrosion cracking from sour hydrocarbons, while also resisting extreme offshore conditions at depths of up to 3,500 metres. This expertise will continue to be in demand, in the Gulf in particular.

In Qatar, opportunities will arise from the Qatargas 3 and 4 LNG projects, developed by consortiums comprising Qatar Petroleum (QP) with the US' ConocoPhillips and Japan's Mitsui & Company, and the Royal Dutch/Shell Group respectively. Europipe has already submitted offers to companies bidding for the platform package on the estimated $7,000 million integrated Pearl GTL project at Ras Laffan, being promoted by Shell.

Elsewhere in the Gulf, Europipe has submitted proposals to contractors bidding for the main engineering, procurement and construction (EPC) contract on the offshore assoc

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