GE OIL & GAS: Steaming ahead in the region

02 December 2005
There are not many company names with as much historical and economic resonance as Nuovo Pignone, now GE Oil & Gas. For the residents of Florence, where it is headquartered, the company is both a symbol of Italian engineering excellence and the lifeblood of a city in which it is the largest private sector employer.

Established in the 1920s as part of Italian oil titan Eni, the company - the name Nuovo Pignone is derived from a district of Florence - evolved to become one of the world's leading compressor, turbine and pump manufacturers. In 1994, the company was acquired by the US' GE, becoming the central element of its newly created oil and gas business.

Being absorbed by the world's ninth largest company did not result in a loss of identity. Rather it resulted in the adoption of best practices from the mother company. 'In the past, before we joined GE, we were more like artisans,' says Piero Salvadori president of Nuovo Pignone, part of GE Oil & Gas. 'But now, we have learnt a lot of processes and rigours from GE, and there are greater possibilities to invest and use GE research and development centres, as well as benefit from the GE brand name, globally.'

In common with many Italy-based firms, the company is strikingly active in the Middle East and North Africa (MENA), with almost half its revenues originating in the region. In Qatar alone, Nuovo Pignone has clocked up orders of more than $500 million since 2000.

'Our business spreads right across the range of production, from upstream to downstream, and of course as the Middle East is the main producer of oil and gas, it's obvious that most of the opportunities are there,' says Salvadori. 'The region has an impressive amount of projects, especially as both upstream and downstream sectors are active at the same time, which is something we haven't seen before.' The company estimates there will be $12,000 million worth of business opportunities in the turbine and compressor markets from the Gulf over the next 10 years, and a further $1,000 million from North Africa.

Such opportunities are not without challenges. Projects in the region have taken on new, larger dimensions as national oil companies seek to ramp up production, requiring turbine and compressor suppliers to manufacture even bigger units. 'For example, the average general size of liquefied natural gas [LNG] trains has doubled to 7 million-8 million tonnes a year [t/y], while air separation units have gone from 250 tonnes a day [t/d] to 5,000 t/d,' says product leadership manager Silvio Sferruzza. 'So, to be more cost-effective, clients want compressors of up to 150 MW, but this presents us with our own investment dilemma.'

The issue is compounded by the cutting-edge technology utilised on many regional projects, especially in the gas-to-liquids (GTL) field. Considerable technological investment and lead-in time is required to stay in step as the market evolves, and balancing current demand against future requirements can be tricky. Says Salvadori: 'We have to be careful with the outcome, given the energy sector's cyclical nature. We have to leverage our outsourcing so as not to be underbilled in three years' time, when the boom ends.'

Other parameters have to be taken into consideration. The region's harsh environment places additional pressures on equipment not faced elsewhere. High temperatures can result in performance degradation, while more design focus is required on auxiliary systems such as air conditioning.

Clients demand greater operating efficiencies, with an increasing focus on equipment life-cycle and reliability. There has also been an increasing focus on lifetime costs, fuel efficiency and maintenance costs, while clients want only scheduled shutdowns with no unscheduled outages.

Project sponsors are taking a more active interest in the compressor and turbine elements.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications