A growing footprint in speciality products
Anurup Kumar, executive director of Oren Hydrocarbons, talks to The Energy Year about the company’s footprint within the chemicals market and market trends that have guided its strategy. Oren Hydrocarbons is a manufacturer and supplier of drilling fluids, with manufacturing and distribution stock points in the UAE, Iraq and Egypt.
What is the company’s footprint within the chemicals market?
The company was founded in 2001 as a small chemicals trader. With our growing success, we started backward integration to begin manufacturing products, opening our first plant in Ras al Khaimah. We expanded our model across the region and penetrated Egypt and Iraq with manufacturing and distribution capabilities.
The products we manufacture are typically used for E&P purposes and the clients we cater to are some of the world’s biggest services companies that have a global presence.
We manufacture high-quality speciality products for water-, oil- and synthetic-based drilling fluids. As we grew, we invested in the enhancement of our R&D capabilities, which gave us the competence in offering superior products as per our customers’ needs.
What market trends have guided your strategy?
Since 2014, the oil and gas industry has been in decline due to the underinvestment from the market in hydrocarbons. With Covid, the industry suffered a strong decline in demand. It’s only a matter of time, however, before demand hits pre-Covid levels, and OPEC members are working on both their production capacity and their pricing in order to have the capacity to supply this returning demand.
We are witnessing a critical need from the market for high-quality speciality products that will enhance and optimise oil and gas recovery in their assets. For us, the shift to speciality chemicals was a strategic decision based on our technology, know-how and existing presence in the markets.
As there are a number of players that can provide commodity chemicals, we decided to focus on specialty viscosifiers, filtration control chemicals, polymers, lubricants, emulsifiers, etc., to name a few. Markets such as Saudi Arabia, Oman, the UAE, Iraq, Kuwait, Mexico and Canada are our largest consumers but we also supply to Thailand, Australia, Bahrain and Colombia.
How key is your relationship with your partners in supporting business growth?
We work with the world’s largest and leading services providers, with whom we have a transparent and constructive relationship. Most importantly these long-term relationships have been developed over recent decades through mutual trust and consistency. Often, we manufacture products based on their IP [intellectual property], which we distribute worldwide in addition to our own trade name portfolio. There are a lot of logistics behind this process and we continuously receive their projections as to the volume of products needed by respective regions.
We don’t work with end users such as national and international oil companies precisely because we would not want any conflict with the oilfield services providers. From a commercial point of view, Saudi Aramco can only buy a portion of the capacity, which one of our top client demands for worldwide operations. This adds to the importance of the relationship with these partners.
How do you envision the further expansion of the company moving forwards?
Our first concern is always client satisfaction and making sure they feel comfortable working with us. We are continuously improving and have been trustworthy, and these are the main reasons for which our clients have stuck with us over the decades.
That said, we are very ambitious for the future. Our R&D budget stands at 5% of annual revenue and for the Middle Eastern region alone we are targeting over USD 150 million. We have a highly talented workforce and invest in the latest technologies.
We see opportunities ahead through increasing our efforts in providing speciality chemicals, which we expect will grow from 50% of our revenue to around 70% in the next year. We are also looking to expand along the value chain and start catering to the downstream sector. So far, around 85% of our production supplies the upstream segment, but we are aiming for a 60-40 ratio in the next three years.
We are already among the largest manufacturers for certain products worldwide. We have existing capabilities to manufacture in excess of 100,000 tonnes per annum. Currently we are expanding our production capacity at the Ras Al Khaimah plant in Egypt.
Our multi-product approach and our geographical reach and expansion gives us the required edge to play a larger role catering to the rising demand from the market and we are looking at a fourfold increase of our business in the next three years.
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