Localisation goes much further than simply training local people; it is about building capabilities in the country.

Revor VOS Former General Manager ARABIAN PIPELINE & SERVICES COMPANY

Maintenance mandates

June 7, 2017

TOGY talks to Revor Vos, former general manager of Arabian Pipeline & Services Company (ANABEEB), about different initiatives in Saudi Arabia aimed at localisation and development and the state of the downstream maintenance sector. The firm provides maintenance and oilfield services, with a 50% market share on shutdowns in the nation’s downstream market.

Established in 1986 in Riyadh, Arabian Pipeline & Services Company (ANABEEB) provides oilfield services, such as onsite maintenance services, industrial services, fabrication and repair. The company also has offices in Kuwait, Qatar, the UAE and Oman. The team’s latest technologies and techniques support refining, petrochemicals and other process industries. The company was founded by Dutch company Mourik.
Specialising in refineries and petrochemicals plants, ANABEEB provides a complete range of maintenance, repair and inspection services for all types of stationary equipment, including reactors, heat exchangers, columns, vessels, furnaces, heaters and tanks. One of the essential services that ANABEEB provides to the oil industry is turnarounds, which plays a vital role in preserving steady production capacity since it can affect an operator’s bottom line if mismanaged.

• On oil production and development: “You can pump oil out of the ground and sell it, but for Saudi Arabia, you do not add much value because it is pumped, put in a tanker and off it goes.”

• On Saudi Arabia’s maintenance market: “From a maintenance perspective, it is a really nice market for us because there are more plants getting old and new plants going live. The market is getting bigger, and older plants require more maintenance.”

• On competition: “There are three kinds of competitors: cheap companies from Asia that are purely price focused and usually from India, Western companies that compete directly in the market with local set-ups and a small number of Saudi companies.”

Vos also discusses competition within the country and his company’s long-term objectives. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Revor Vos below.

 

What kind of initiatives have been developed in Saudi Arabia in order to speed development of the country?
The IKTVA [In-Kingdom Total Value Add] programme from Aramco is all about localisation of businesses. This is a big thing for Anabeeb and many other companies in the market because it is not only about executing the job for the client, but also about developing yourself as a company in Saudi Arabia and add more value in the country itself.
In the past it was easy. You did a job, and for certain specialised activities, you brought in a specialist from abroad, perhaps Europe. However, today we are asking ourselves whether you need the specialist from Europe, or if we could develop that knowledge and capability in Saudi Arabia, maybe together with the company in Europe.
If you look back at 2015 and 2016, the oil crisis hit many companies hard. We were forced to deal with a market in which many jobs were delayed or cancelled and with lower prices. However, at the same time, there was also the tendency towards localisation. For the past two years, we were forced to think about our strategy, how to move forward and how to deal with it.
It is not only about Saudisation anymore; that is just about showing the government and the client that you have enough Saudis on your payroll. Localisation goes much further than simply training local people; it is about building capabilities in the country. This does not only mean you have to have Saudis. You can also start to bring in foreign companies. Part of it can be that you start to train people and part of it can be you start to produce things here, for which you need a factory. By doing that you start to develop local knowledge and capabilities. It is all about economic development and diversification as well.
ANABEEB’s strategy is aligned with the Saudi Vision 2030, which is all about development, localisation and diversification.

How can the country develop its downstream sector?
You can pump oil out of the ground and sell it, but for Saudi Arabia, you do not add much value because it is pumped, put in a tanker and off it goes.
A long time ago, they started building refineries to sell refined products, which are worth more than the raw oil. With refineries, you add capability in Saudi Arabia. After the refineries, you can decide to build petrochemicals installations for which the refineries are the feedstock. Then, you can go a step further because these petrochemicals installations can sell their products in the market for even more value, and you can also start to build chemical plants. This is a very simple explanation of things and reality is more complicated.
More important for ANABEEB is that we keep developing ourselves with new technologies and services in order to keep adding value to the increasingly technologically complex refineries, petrochemicals and chemical plants.

Is there a specific shutdown and maintenance period in the year?

It varies from plant to plant. The first main shutdown is more or less two years after the plant goes live, but that is a very general rule. It can be up to four years. In Saudi Arabia, they do shutdowns throughout the whole year, except during Ramadan and the summer months, unless it is an emergency.
This year, we will finish our shutdowns by the end of May, the beginning of Ramadan, and then it will be quiet throughout the summer until after the second Eid.

What is the state of maintenance projects in Saudi Arabia’s downstream sector?
From a maintenance perspective, it is a really nice market for us because there are more plants getting old and new plants going live. The market is getting bigger, and older plants require more maintenance.
The new SATORP [Saudi Aramco Total Refining and Petrochemical Company] plant will get into its first main shutdown for train one in January 2018, and Anabeeb has been awarded one of the blocks for next year.
From a maintenance and shutdown perspective, the two new plants in the Jubail 2 industrial zone, run by SATORP and Sadara [Chemical Company], are adding a significant amount of additional maintenance and shutdown work to the existing work volume coming from the Jubail 1 industrial zone. Some estimates show an increase of up to 40%. Maintenance always needs to take place when looked at from a theoretical viewpoint, but especially in last quarter of 2015 and 2016, due to oil crisis, the main oil and gas and chemical companies delayed and cancelled so much that there must come a moment when this will have its effect.

How does the scope of your work differ between newer refineries and older plants?
The older the plant gets, the more leakages it has or material degeneration problems, for example. In this sense, you need to develop your services and expertise in such a way that you can better serve clients that have plants getting into the end of their lifecycle.
That is part of ANABEEB’s one-stop-shop strategy, because through our Dutch founding company, Mourik, we know very well what it takes to do maintenance and shutdowns on refineries and chemical plants in the end of their lifecycle. We also understand the increasing importance of inspection services, especially for aging plants. It is something we are developing as well as part of our one-stop-shop strategy.

What kind of value do partnerships add to your operations?
We want to be a one-stop shop for our clients. However, I also know that we cannot develop all the capabilities ourselves. As ANABEEB, I want to stay focused on my core services. For services that my clients are also requiring that I do not have myself, I will find partners. With these partners, we will work out business plans or strategies to allow them to start localised activities.
Krohne is a good example. When there is a new plant, there are many new flow meters that are needed. The older a plant gets, the more these flow meters need to be upgraded, inspected, recalibrated or replaced. For the aftermarket, for the service of these existing flow meters, and for new developments, they set up a professional partnership locally. That is how you can look at our partners; they add something to the business that we do as ANABEEB.
Apart from that, they can also develop their own activities here. That is a big difference between agents that purely represent a foreign company and us, because we want to add value to our total services package to our clients. The agents do not have their own business interests; they only represent the foreign company. We are in it ourselves and we make our partners actively part of the projects and shutdowns we do. That is also one of our competitive advantages.

How competitive is the landscape in Saudi Arabia?

There are three kinds of competitors: cheap companies from Asia that are purely price focused and usually from India, Western companies that compete directly in the market with local set-ups and a small number of Saudi companies. So there is a lot of competition, however ANABEEB as a 100% Saudi company has a well-established position and we are so far dealing well with the increasing intense competition.

What is your company’s long-term strategy?

In the whole service industry in Saudi Arabia, there is still a lot to develop. If you look at ANABEEB, if you talk about our investments and how we want to develop in the future, it is more towards diversification, as explained before, and automation so that we are less dependent on manpower. That is a long process, but with the support of our Western partners we are moving into the right direction. It will also mean a step-change in safety, because of less and higher skilled manpower due to automation. In Europe and the USA, they are further into that process than in Saudi Arabia. We want to be less manpower-dependent. Purely flying in manpower from India to do the jobs is not the future.

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