Trends and innovation in energy
Jon Rawding, CEO of Euro Mechanical, talks to The Energy Year about the company’s contributions to the UAE’s energy industry and upcoming trends that will shape the market. Euro Mechanical provides solutions to the energy industry including technology and equipment, manufacturing, fabrication and machining services.
How is Euro Mechanical contributing to the UAE’s energy industry?
We are a 100% Emirati-owned company. We operate two distinct business units, one consisting in funnelling technology and equipment from our international OEM partners into the UAE. We represent around 50 companies and around one-third of our revenue stream comes from that.
The core expertise of our business lies in construction, manufacturing, fabrication and machining services. We own two facilities where we have our equipment and work stations. We have been manufacturing pressure vessels, heat exchangers and an array of different packaged solutions for the oil, gas, petrochemical, power and renewables industries.
What trends do you expect to see shaping the market in the coming years?
There are many new innovations and market players are making a lot of noise, but it is important to look past that and really understand which trends will end up playing a role. One market that we see ADNOC focusing on is carbon capture and reinjection and other sustainable energy generation technologies such as hydrogen and solar, for which the infrastructures are already well developed.
Other opportunities lie within disruptive technologies such as machine learning, AI and other systems that will help analyse reservoir and well data to best optimise the processes. Alternatively, there is a growing potential for virtual reality to offer training solutions within the energy industry. These technologies can immerse any employee into a virtual situation on an offshore platform, as an example.
Tell us about your key contracts and clients.
We provide equipment and services to both the upstream and downstream segments of the oil and gas sector. Our major client over the years has been ADNOC, accounting for around 95% of our revenue stream, either directly or through their subcontractors. Our work on the field is mainly subsurface, connecting the flowhead of Christmas trees to the infrastructure along the value chain, from wellheads to pipelines. We are able to provide maintenance services and repairs. We are especially active whenever shutdowns are planned and refurbishment is needed.
The equipment we supply ranges from valves and downstream hardware to AI and software company products. We focus on the equipment that is not readily available in the UAE and that provides value for our customers. In the long run, we also work with our partners to ultimately allow them to manufacture some of their products in the country. We recently helped one to build a facility here in Abu Dhabi.
How has in-country-value (ICV) shifted the UAE market in recent years?
One of the reasons I joined Euro Mechanical is the change I have witnessed over the years in ADNOC’s vision. On the one hand, there is a clear and aggressive push to increase oil and gas production, but more importantly there is now a strong commitment to ICV.
With Covid having put much pressure on international supply chains, ADNOC realised that depending on external know-how and resources can become critical. The Emiratisation process has the objective to diversify and localise industrial capabilities as much as possible, retain value in the country and build a sustainable economy for the long term.
That said, we see a clear benefit for companies such as ours to further our local manufacturing capabilities and investments because more contracts and agreements are awarded to us. Servicing valves, manufacturing vessels and offering other solutions from our local facilities will result in value addition for the company and our customers.
What are your strategies and focus for 2023?
With respect to 2023, we have two major focuses. One aspect of our work will be to develop a concrete ESG strategy. COP28 is coming this year in Abu Dhabi and we are aware of the need and opportunities that lie along that path.
On the other hand, we will work on data integrity and project delivery. We are looking to expand our manufacturing facilities to also provide maintenance and other services. We have just secured another construction contract as ADNOC is ramping up its operations significantly, which will also keep us busy.
We have doubled our revenues in the past five years and we have the same goal for the coming years. In order for us to achieve that, we will need to further develop our internal capabilities and grow as a team. We are constantly looking at ways to develop the business. In five years, I assume 50% of our revenues will come from something we are not yet doing. Lastly, we have ambitions for geographical expansion and will start visiting neighbouring countries such as Bahrain, Kuwait and Saudi Arabia.
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