Opportunities ahead

Saudi Arabia

Floris van Straaten, general manager of Citec Saudi, talks to TOGY about engineering services the company provides to clients in Saudi Arabia, potential in the country’s downstream sector and new developments the company has been working on. Citec Saudi was established in 2016 to provide multi-discipline engineering, project management and information management services.

• On opportunities in Saudi Arabia: “The power generation market is rather silent at the moment and there are many projects on hold. In oil and gas, many new developments have been significantly reduced. However, we see a lot of potential in petrochemicals because there are many refurbishments on smaller projects.”

• On the state of the market: “Saudi Arabia is a huge market, taking up 50% of the total GCC market. They had some issues in 2015 and 2016. Although 2017 will remain tough for many people, we expect it to pick up.”

What work does Citec undertake in Saudi Arabia and the region?
Citec has its headquarters in Finland and works in different industries including oil and gas, energy, water, petrochemicals, process and manufacturing, and civil and technical documentation. Our local partner is a Saudi company focused on infrastructure. Our relationship is complementary in that we use our partner’s services when it comes to infrastructure and our partner uses Citec Saudi internationally when it comes to work such as plant engineering, process engineering, mechanical engineering and piping engineering.
Citec is a multi-disciplinary engineering company.
Since 2011, we have worked in the oil and gas sector and have carried out a number of projects. Our biggest project was the whole field supply pipeline for the Yanbu Phase 2 Expansion MED [multi-effect distillation] Seawater Desalination Plant, which was a long running project for us that we are currently finalising. We have also done smaller projects via our local partner for Saudi Aramco.
From a Citec Saudi perspective, we focus on local clients including Aramco and SABIC [Saudi Arabia Basic Industries Corporation]. We are an approved vendor for Aramco and SABIC as well as with the Royal Commission of Jubail and Yanbu.
In the UAE, we have carried out projects through engineering companies in which we provided engineering services. We do specific engineering packages where we provide the know-how and the capacity. Our big projects in the country are predominantly captive power plants and this is overseen by Citec Finland because they work very closely with key customers.

What sectors in Saudi Arabia have the most opportunities?
The power generation market is rather silent at the moment and there are many projects on hold. In oil and gas, many new developments have been significantly reduced.
However, we see a lot of potential in petrochemicals because there are many refurbishments on smaller projects. This is perfect for a company such as ours. We don’t go for the real multi-million dollar big engineering projects, but for smaller projects where we can utilise our global resources.

What specific services can you offer a company such as Saudi Aramco?
We have a Norwegian organisation that focuses on offshore oil and LNG. They have very specific experience and use a tool called Ciesta [Citec Estimation Assessment Tool], with which we can calculate the cost and weight of a topside platform. This is very helpful for Saudi Aramco when they need to do an estimation of an offshore platform and also for EPC contractors for planning and budgeting.
We have carried out projects where we were within 1% of the final weight estimation of the topside. It is a tool we have developed in the past and it has been validated by existing platforms. We have a deep knowledge of everything that is on the topside of a ship or platform, particularly in Norway.
We have also been heavily involved in the multipurpose vessel, which is a new development in offshore drilling, specifically deep offshore. This is of no interest in the Arabian Gulf, but is of interest in the Red Sea. While Aramco has done some exploration in the Red Sea, the company put this on hold in 2015. We have developed a vessel that can be positioned there and can do drilling, production and storage.
Typically, one can do drilling and production on a ship, but not storage. We have now developed a ship with partners in Norway that does just that. Now that the oil price is where it can allow deep drilling, we think our concept could be of interest, especially for when Aramco wants to go into the Red Sea.

How can you ensure costs are minimised in today’s challenging environment?
We are very flexible with our resources. This allows us to bring our resources very quickly to a project, not only in our own offices, but also in the client’s office. If it is a tight schedule, our engineers can go into the client’s offices to work with their engineers. This reduces engineering time, especially in the conceptual phase. Most companies are not that flexible, but this is something we see as a necessity if time is limited.

Is Saudi Arabia currently worth investing in or do you think it is worth waiting?
It is difficult to say. We expected the market to recover at the beginning of 2017, but it is still slow. Now we are approaching Ramadan and the summer and we are therefore not anticipating much activity until September. Then, however, it will be interesting.
Because of the budgets they have here in Saudi Arabia, people are wondering what they are going to do with the money. If they are going to utilise it, from September until November there will be a huge amount of projects. However, they could also try to save money to keep the deficit low.
Previously in Saudi Arabia, you had a budget and you spent it.

What are your goals going forward?
We want to grow with the market and we want to provide international-quality engineering for smaller and medium-sized projects. In this way, when the market picks up, there will be a place for us. We have the infrastructure and we have a good basis here. We have made good progress. After the summer, it will be time to make the next step and work on project execution.
I think we have a good chance of succeeding in this country. We are looking at international-quality engineering that is competitive. Saudi Arabia is a huge market, taking up 50% of the total GCC market. They had some issues in 2015 and 2016. Although 2017 will remain tough for many people, we expect it to pick up. We have to be realistic and expect an oil price of USD 50-60 [per barrel] as the new normal.

Read our latest insights on:

• Saudi Arabia
• UAE