Dynamics in Oman’s pipe manufacturing market

Oman

Subramanian Shanmugam, general manager of Composite Pipes Industry (CPI), talks to The Energy Year about how the company is positioning itself to face challenges in Oman’s pipe manufacturing market and its strategy to extend its footprint within the region and beyond. CPI is a manufacturer of glass reinforced epoxy (GRE), glass reinforced polyester (GRP) and glass reinforced vinylester (GRV) piping systems.

How is the positive oil and gas market impacting the regional pipes manufacturing industry?
The global pipes market reached USD 127 billion in 2022 and is expected to hit USD 200 billion in 2032. As we speak, the price of oil is above USD 90 per barrel and there seem to be several upstream and downstream developments currently ongoing within both Oman and the wider GCC region.
There is a gap between the rise in oil prices and their capacity to impact infrastructure projects on the ground, and this has always been the case in the oil and gas industry. Turning positive bases for progress into tangible developments is a process which takes time, usually from six to nine months.

Has the pandemic slowed this process further?
The lack of an available workforce has been a major issue. When you have good projects in the country, you need people to make those projects happen – meaning a ready and skilled workforce. During the pandemic, oil companies, given both the slump in oil prices and the lack of activities, found themselves in the position of having to either release or furlough workers, in the end losing a lot of people.

How has CPI positioned itself to face those challenges by maximising the potential of its business offer?
Since we couldn’t afford to make projects happen, we have been trying to look for different revenue streams and one of the main ones has been providing further maintenance services for our clients’ projects. Within this segment, the biggest ones we are currently dealing with are OQ and PDO, but we also have smaller players, such as companies operating in desalination plants and industries that have a demand for firefighting systems.
We cover most of the value chain when it comes to piping systems. Besides pipeline maintenance, we are able to deliver corrosion protection, coating, pipeline integrity and leakage detection, on-field installation and testing of GRP piping systems, in-house inspection and composite repairs done to sustain critical infrastructures. Moreover, we are improving the quality of our installations, engineering and consulting services, which we carry on thanks to our in-house design capabilities.

Can you give us an overview of your current projects, clients and asset production capacity in Oman and beyond national borders?
Our current clients include PDO, OQ, BP, etc., and few others in the Gulf region. We have the capacity to produce approximately 400 kilometres of pipes and 15,000 pieces of fittings of assorted sizes annually. Then, we are currently working on a couple of projects in Africa and see potential growth there in the future.

What is CPI’s strategy to extend its footprint within the region and beyond?
In Oman, the market is steady and has reached a plateau that makes the size of our projects more or less the same from year to year. We are also looking for markets outside: we just got a project in Angola and we are bidding for new ones in Africa, where we see significant momentum market-wise, particularly in Nigeria.
Having said that, CPI’s main focus at the moment is the penetration of the Saudi market, where we have already been awarded a small project. Saudi Arabia’s production of oil is huge and that is one of the reasons why the demand for the kind of services we provide is consistently growing there, backed by a market growth that is moving at a faster pace than the growth of the players themselves.
For example, their plan is to become a non-metallics hub, promoting the development of projects which deploy non-metallic rather than metallic products, mainly for pipelines, but also for infrastructure and construction materials. This is what will drive the demand for GRP, GRE and GRV [glass reinforced vinylester] piping systems in the coming five years.
However, Saudi Arabia is a difficult market to enter because it encourages local manufacturers, hence we are planning to establish a local facility in the KSA. The plan is to start the operations within two years. We have been operating in the pipes manufacturing, supply and services segment for the last 25 years and are very confident that we should be able to compete with anyone and benefit from the stimulating and positive dynamics happening there.

How important is Oman’s geographical strategic location for your business activities?
It plays a significant role, for two main reasons. First of all because transportation turns out to be very expensive, and when you deal with a business that entails many kilometres of pipes, you feel the costs. So, the natural thing would be to locate next to your consumers.
Secondly, you need to take into consideration where the raw material for the pipes’ construction is coming from. Again, being close to these supplies is a big advantage, as it allows you to save both time and costs. Currently, it comes mainly from Saudi Arabia, China and Europe, and we have seen some materials imported from India.
Therefore, Oman’s position at the crossroads of both our products’ demand and raw material suppliers – as well as global trade routes – is an important advantage for our business.

Lately, there have been discussions regarding the introduction of next-generation hydrocarbon testing solutions able to detect microbes that cause damage to oil and gas infrastructure. What kind of innovative solutions is CPI bringing to the table to combat corrosion issues within the industry?
Our products precisely offer solutions to the aforementioned challenges and serve as an alternative to conventional metallic piping solutions. CPI’s thermosetting plastic pipes are lightweight and non-corrosive in nature.

What is CPI’s contribution to the development of local capabilities, particularly with regard to graduates?
In our philosophy, it is crucial to build knowledge within the country. In line with this long-term perspective, we have agreed with Muscat University that we will take on board three to five students every year, sticking with the institution’s mandate that each student needs to spend nine months in an industry field before graduation. We will welcome them, provide them with the tools to perform in our business, and if we see potential, we will invite them to stay.

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