'Staying ahead in the Turbulent Time'

Arbaaz Malik,
Managing Director,Arslan Enginery Limited.
Though the falling oil price and the volatility seen in the international oil markets since second half of 2014 have been affected the global oil & gas industry in whole, International Energy Agency forecast on its 'India's Energy Outlook' - India's energy demands will be more than double by 2040 and cumulative investment of USD 62 billion in upstream oil, USD 192 billion in refining, USD 127 billion in upstream gas is projected for Indian hydrocarbon sector by 2040 - has created ample opportunities for Oil & Gas EPC/EPCM players in India today, says Arbaaz Malik, Managing Director, Arslan Enginery Limited. He further details on Indian Oil & Gas EPC sector current state & its growth drivers and how has the project design & technical features of EPC/EPCM changed with the changing global oil & gas business environment, in an email interaction with Rakesh Roy.

How do you evaluate the Indian Oil & Gas EPC industry and its growth drivers?
As the falling global crude price has been gloomed the entire E & P activities worldwide, Indian hydrocarbon industry has also suffered like their Global peers. While EPC is considered the lion share of Oil & Gas E & P, the sector has partially affected with the drop of upstream oil & gas activities in the country. Meanwhile, International Energy Agency (IEA) on its 'India's Energy Outlook' mentioned that India's energy demands will be more than double by 2040 as the economy will grow over five times its current size. It is expected that cumulative investment of USD 62 billion in upstream oil, USD 192 billion in refining, USD 127 billion in upstream gas will be coming in Indian hydrocarbon sector by 2040.

The Oil and Gas sector plays a vital role in the economic growth of India and will provide ample opportunities to the EPC players. The rising demand of LNG for user industry like power & fertiliser and Natural Gas usage in India is also providing opportunities for EPC as operators are revamping their plants for gas usage. Exploration of untapped oil & gas reserves and CBM blocks along with the latest proposed changing policy regimes from the government will give the most-needed boost to the upstream oil & gas in the country. These developments will definitely provide opportunities and challenges as well for EPC/EPCM players.

Please apprise us Arslan Enginery's EPC/EPCM services for the entire oil & gas value chain?
By building on our success in international markets mainly MENA Region and establishing an exploration and production portfolio, Arslan Enginery aspires to become recognised as a leading international Oil and Gas EPC company.

Arslan Enginery's growth is propelled by a powerful talent pool that provides the company with business acumen, robust systems and processes and pioneering solutions that make it a competitive business. We’re committed to harnessing these talents in an environment that encourages creativity and fosters employee-driven innovation.

With guiding principles rooted in world-class customer service, innovation in energy and resource management, and commitment to human capital development, we are working diligently to contribute to the India’s economic and social progress.

Arslan Enginery provides integrated, cost-effective and sustainable oil and gas solutions. Whether we are working in the heavy oil, offshore, upgrading and refining, gas processing; our goal is always to build and sustain great customer relationships by creating long-term value for their organisations .

What determines excellence in EPC for Oil & Gas industry? What are the issues related with Oil & Gas EPC in India?
EPC (Engineering, Procurement and Construction) projects are highly schedule driven where phases are overlapped to complete the project as early as possible. Moreover, EPC projects are massive, utilise high skill and well train employee, acquires complex and complicated methodology/technology, needs fast information flow between different phases and close collaboration of multidiscipline as well. EPC projects are facing serious problems like crew idleness, rework and management dilemma which lead to cost overrun and schedule delay.

Looking at our country's long term growth trajectory and growing energy needs, India would definitely offer ample scope for the EPC as well as EPCM players; however, the sector is not without its set of problems that include bureaucratic framework; currency and commodity price fluctuations along with interest rate burden; talent acquisition and retention; shortage of labour and materials; delays in land acquisition; and difficulty in organising funding etc.

Over past few years it is observed that the many Indian EPC players are marked their entry into global oil & gas large projects with competent manpower and much more cost-effective approaches.

Still there are few Semi Government firm like EEPC (Engineering Export Promotion Council), which are guiding & helping Engineering and EPC firm of India to bid global tenders.

How has the project design & technical features of EPC/EPCM changed with the changing global oil & gas business environment?
Now a days many new IT Companies have jumped into Engineering software data base and many of them are now providing the complete Engineering suite solution - it's really a big positive point to save time and money. It is advancing day to day regularly and it is becoming back bone of EPC Company .

With 3D Plant Design Software that includes providing the basic engineering/ FEED and developing the detailed design, EPC contractor can get everything ready in 3D by creating process stimulation. While designing of necessary materials and equipment in EPC/EPCM, we can easily bring up new equipment and by a click we can convert any 3D drawing into 2D drawings with the help of advance technology.

IT and technology advancements play a vital role in today’s EPC/EPCM oil & gas in mitigating risk and minimising cost and time. With today’s technological advances, management & administration of the construction site can be up-to-date with site construction and can bring or add amendments at any part with design software.

How do you compare the EPC/EPCM contracting models in India vis-à-vis International projects for the oil & gas industry?
The MENA Region (Medial East & North Africa) is more organised market, though the entrée barrier for EPC players is high. The Indian market, on the contrary, is easily accessible to new players and thus is more price sensitive than Middle East. The Indian market has seen South East Asian players with lower credentials undercutting the market and taking jobs during the last few years resorting to price dumping. There have been cases of serious underperformance and project overruns as a result. Middle East owners have a very stringent pre-qualification process, and only companies with financial standing and performance record are allowed to pass through, and compete in their tenders - entry barrier and filtration process in combination!

Moreover, India does not have complete construction workforce to support large and turnkey projects. The civil construction field faces 40 per cent shortage of skilled manpower. The companies should focus on developing the required workforce as a strategy, providing training facilities to meet the increasing demand. Government role is also very important to support in funding for new project across India and we are expecting a new policy to be made by our Honourable PM.

While the current oil price has impacted the whole hydrocarbon industry in whole, what strategies Arslan Enginery has been adapted to protect its bottom line?
The falling oil price and the volatility seen in the international oil markets since second half of 2014 have not only impacted the global oil & gas industry but the global economy too. Indian E & P activities have certainly affected with the turmoil of global oil price and EPC sector has also faced the heat. But keeping in mind the rising downstream oil & gas developments like refinery upgradations for processing of heavy and sour crudes and to meet the new BS norms in the country, the EPC sector has ample opportunities in India today.

At Arslan Enginery, a complete EPC solutions organisation for the entire oil & gas industry, we develop our own tools and models through our Energy Insights group to generate a number of proprietary analyses and forecasts. This allows us to support our clients with market diligence, project evaluation, portfolio analyses, business planning and optimisation, among other challenging decisions.

We have an extensive global network of downstream specialists—comprising more than 130 consultants who are supported by experts, analysts, and external advisors. To stay ahead, we invest in developing approaches, tools, and data sets across the downstream value chain, including refining capacity , crude and product supply and demand, and equilibrium pricing. To bring clients the best thinking, we develop global, regional, and functional perspectives and explore industry hot topics.

What are your plans for the future of Arslan Enginery?
Arslan would be focussed on Gulf as its bread and butter market. Our secondary market is Western, followed by USA. Of course we would not hesitate in pursuing any chance win that can take place outside there. We would also take initial steps needed to enter the fast unfolding trillio -dollar deep water in Bay of Bengal (India).