Energy Focus Summer 2019 by Redactive Media Group

ISSUE 36 SUMMER 2019

F RO M T H E E N E RGY I N D U S T R I E S C O U N C I L VIEW FROM THE TOP Dr Liam Fox, former Secretary of State for International Trade, on UK export growth

GOING GLOBAL Tips and advice for UK businesses wanting to break into new markets

CASE STUDIES Members’ export success stories utilising EIC Launchpad across the globe

OIL AND GAS Spotlight on key markets as Africa emerges from the downturn

Want to grow your business? Exporting oﬀers a world of opportunity but how do you make your mark overseas? Inside, top tips and investment hotspots to help get you started

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Contents ISSUE 36 SUMMER 2019

Dr Liam Fox

FROM THE EIC

OIL AND GAS

5 Foreword

32 Attention turns to Africa

From the Chief Executive

6 View from the top Dr Liam Fox, former Secretary of State for International Trade

Market spotlights on Algeria, Angola, Mauritania and Senegal

Top tips for exporting

10 News and events Updates from the EIC

14 The big question We ask trade advisers: What do companies need to know before exporting?

POWER

17 Case studies

39 Full steam ahead

Members share their export journeys

22 Special report: Localisation is the key to success in overseas markets

Steam turbine aftermarket in India and Malaysia

Oil and gas opportunities in Mauritania and Senegal

Jeremy Bowden on understanding local content

26 Are you ready to go global? Nicholas Newman oﬀers tips for getting started in exporting

50 My business

NUCLEAR

Dr Chris Webborn, Delta Controls

42 Decommissioning Europe’s nuclear ﬂeet

Renewables tender watch in South America

Oliver Barnes, EIC Senior Energy Analyst, looks at Germany and Sweden

Nuclear decommissioning in Europe

RENEWABLES 47 Hotspot for renewable development Tendering activity in Argentina, Brazil and Chile

The Energy Industries Council 89 Albert Embankment, London SE1 7TP Tel +44 (0)20 7091 8600 Email info@the-eic.com Chief executive: Stuart Broadley Should you wish to send your views, please email: info@redactive.co.uk

Editors Sairah Fawcitt +44(0)20 7880 6200 sairah.fawcitt@redactive.co.uk Lucy Chakaodza +44(0)20 7091 8638 lucy.chakaodza@the-eic.com Account director Will Hurrell Production director Jane Easterman Senior designer Gary Hill Picture editor Akin Falope Content sub-editor Kate Bennett

Energy Focus is the oﬃcial magazine of the Energy Industries Council (EIC). Views expressed by contributors or advertisers are not necessarily those of the EIC or the editorial team. The EIC will accept no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this publication.

Publisher Redactive Media Group, Level 5, 78 Chamber Street, London E1 8BL Tel: +44(0)20 7880 6200 www.redactive.co.uk

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www.the-eic.com | energyfocus

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Foreword Stuart Broadley CEO

From the Chief Executive In this issue of Energy Focus we explore exporting as an essential growth strategy for UK businesses, at a time of rapid global economic change Approximately 90% of global economic growth in the next 10 to 15 years will be generated from outside the EU. Exports only constitute 30% of our GDP. Given the UK has one of the largest economies in the world, the potential for the UK energy supply chain to export is astonishing, yet so few companies are investing in export growth. Less than 10% of companies in the recent downturn exported their way out of the crisis. EIC research shows for the third year running in 2019, developing new export markets is the least used growth strategy by small to large British companies alike, across the entire energy spectrum; they are preferring instead to innovate with existing UK-based customers, to diversify from new energy projects (CAPEX) into brownﬁeld service (OPEX), and also to diversify into renewables. As part of the digital transformation we are witnessing in the energy sector, owners, operators and EPCs are also moving towards a more digital culture. At a time when the British government is committing to improve the UK’s international competitiveness, exporting is regarded by many businesses as the hardest of all growth strategies because of the upfront costs required, the risks involved with entering a new market and the perceived long wait before proﬁts are returned. Looking ahead, what is the government doing to make Britain a 21st-century exporting superpower and increase total exports as a proportion of the UK’s GDP to 35%? Our ‘View from the top’ interview with International Trade Secretary Rt Hon Dr Liam Fox (page 6) provides an informative outlook on how far the Department for International Trade (DIT) has come in helping to shape the

UK’s future trade policy during the last three years, and how effective the ‘Exporting is GREAT’ programme has been in raising awareness of export opportunities for UK companies in a post-Brexit environment. As the leading trade association for energy companies that want to expand into new markets around the world, the EIC was delighted to take part in the DIT Hub Energy Exports Tour, opened by Dr Fox in Glasgow at the end of May. We were on hand to highlight emerging markets and global projects which require UK products and services, explain how to win work on these developments, and provide practical advice on how to do business in different countries globally. Many SMEs are still not scaling up, driven by many factors – including Brexit uncertainty, business exhaustion after the oil downturn, and lack of targeted government support and funding for scale up. Specifically, a business needs to be either an exporter, a start-up or carrying out R&D to get scale up support. For any other UK business, help with scaling up is less easy to find. To counter this lack of support for business scale up, in 2019 we launched our Fit4Energy (F4E) programme in partnership with Robert Gordon University in Aberdeen to help ambitious companies within the oil, gas and energy supply chain develop their management teams with specific skill sets to support growth. Exporting may not suit every business or market, but through our vast network and wide range of events, the EIC can provide a full picture of opportunity by connecting our members with global project decision-makers. In June we were delighted to welcome government ministers, senior executives,

top-level managers and some of the world’s biggest operators and contractors – such as Aramco, BP, Shell, Petronas, Wood, Bechtel and Petrofac – to our first ever Energy Exports Conference. It provided the perfect platform to highlight the exciting country and regional opportunities available to the UK supply chain. More than US$150bn worth of project opportunities were presented to delegates. Aramco plans to invest US$500bn over the next 10 years in the global energy market and diversify away from oil, presenting an unparalleled opportunity for the UK supply chain to win significant work on global projects with one of the largest national operators in the world. Change is not simple, yet EIC members are embracing change and adapting their business strategies to survive and thrive in new market conditions. The EIC has the expertise and know-how to help business leaders identify CAPEX and OPEX new projects, as well as operations and maintenance opportunities, through our EICDatastream and EICAssetMap database tools. Now more than ever, the UK energy supply chain must be entrepreneurial, flexible, agile, smart and determined, to ensure it takes advantage of the global opportunities awaiting it.

Stuart Broadley EIC CEO stuart.broadley@the-eic.com

www.the-eic.com | energyfocus

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From the EIC Q&A Dr Liam Fox

View from the top Q&A: Dr Liam Fox, former Secretary of State for International Trade

Major new opportunities are emerging in developing markets with booming energy demands 6 energyfocus | www.the-eic.com

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Q&A Dr Liam Fox: From the EIC

Dr Liam Fox, former Secretary of State for International Trade, talks to Energy Focus about supporting the UK energy supply chain and global exporting opportunities What is the government doing to help make Britain a 21st-century exporting superpower and increase total exports as a proportion of GDP to 35%? Since the Department for International Trade (DIT) was founded in 2016, the UK has exported £1.7tn worth of goods and services. The UK has achieved 37 consecutive months of export growth on an annual rolling basis – with exports totalling £645.8bn in the year to April 2019. We can do more to help British businesses realise their global potential, especially with economic headwinds on the horizon. Between 428,000 and 604,000 businesses self-identify as having goods or services which could potentially be exported. The Export Strategy sets out how we help businesses of all sizes to make the most of the opportunities presented by global markets. One example central to our strategy is UK Export Finance (UKEF). UKEF unlock ﬁnance in emerging markets for British exporters with the capacity to secure £50bn of loans.

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Do you see the UK energy sector as being able to help meet this target? The energy sector will have a key role to play in this. Major new opportunities are emerging in developing markets with booming energy demands; economies crying out for precisely the capacities, expertise and experience the UK energy sector has. There is huge potential in our renewable energy sector. We are building on our strength as the world’s largest producer of oﬀshore wind, with UK capacity expected to reach 30GW by 2030. Fossil fuels will remain a signiﬁcant contributor to the energy mix for decades to come. New opportunities have arisen in places such as Senegal, Mauritania and the East coast of Africa, which will become major new areas of supply, particularly of gas. How will the Export Strategy help meet the oil and gas industry’s Vision 2035 goal to double the market share of supply chain exports? With global GDP expected to double by 2040, developing nations will need more energy in the future. Fossil fuels are helping deprived communities grow

their economies to a level we take for granted. DIT helps to put UK companies at the forefront of those efforts. With teams in 108 countries, we can improve access to finance, open diplomatic channels and offer expert market advice through energy trade officers and appointed trade commissioners. In the last year alone, DIT helped UK companies achieve oil and gas new business worth nearly £9bn. In 2018–19, UKEF provided £6.8bn of backing for exporters across the world, and connected more than 300 UK suppliers with international opportunities. What is UKEF doing to help suppliers in the nuclear and renewables industries to succeed in securing more overseas contracts? In the last two years, UKEF has supported £310m worth of contracts in the renewable energy sector, which was identified as a priority in its business plan. In the nuclear sector, UKEF is in discussions with potential exporters to a range of markets. Involving UKEF in the development of the nuclear sector deal’s export strategy will also be key to delivering the strategy as a whole. DIT is working with industry to raise awareness of UKEF’s offer to the nuclear sector, and to identify projects and markets where UKEF assistance would be best deployed. However, UKEF’s aim is to provide support only where there is a lack of private sector finance. As there is significant liquidity in the private sector finance market for investment in renewables projects – as the offshore wind sector’s export success shows – private sector sources are readily available. As UK suppliers mature and begin to look for overseas opportunities, UKEF stands ready and able to provide support. What will Brexit mean for British energy exporters? Brexit is not the occasion to ‘pull up the drawbridge’, but to embrace the opportunities that the changing pattern of global trade presents. Around 90% of global economic growth in the next 10 to 15 years is expected to be generated outside the European Union. We must adapt to be part of that change

About Dr Liam Fox Dr Liam Fox was Secretary of State for International Trade and President of the Board of Trade from July 2016 to July 2019. He was elected as the Conservative MP for North Somerset in 1992, having worked as a GP and a civilian army medical GP. He has held numerous positions in the Conservative Party, including Shadow Health Secretary, Conservative Party chairman, Shadow Foreign Secretary and Shadow Defence Secretary. Following the 2010 election, he became Secretary of State for Defence from May 2010 to October 2011. Dr Liam Fox studied medicine at the University of Glasgow Medical School, graduating with MB ChB degrees in 1983.

www.the-eic.com | energyfocus

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From the EIC: Q&A Dr Liam Fox

Between 428,000 and 604,000 businesses self-identify as having goods or services which could potentially be exported

Around 90% of global economic growth in the next 10 to 15 years is expected to be generated outside the European Union

and that is what our Export Strategy aims to do. The government has taken a number of measures to ensure that the UK can continue to trade with key partners in Europe and further afield following our departure from the EU. In the civil nuclear sector, for instance, the government has put in place appropriate regulatory arrangements and completed preparations for a new domestic nuclear safeguards regime which will address the UK’s departure from the Euratom treaty with or without an exit deal. We’ve also agreed new Nuclear Cooperation Agreements (NCA) with Australia, Canada and the US, and confirmed the operability of an existing NCA with Japan, thereby ensuring civil nuclear trade can continue with these international partners in any scenario. What bilateral trade deals have already been secured by the UK? We have laid the groundwork needed to secure an orderly exit from the European Union. We’ve announced a Day 1 tariff policy, rolled over more than half of existing trade agreements and fully-established the Trade Remedies Investigations Directorate so we can take our independent seat at the WTO at the earliest opportunity. We’ve secured trade continuity agreements with both individual countries and trading blocs that account for 63% of trade we are seeking continuity for, while also signing Mutual Recognition Agreements with other countries including the US, Australia and New Zealand. Looking ahead, we are talking to a further 21 countries on a variety of future trading options. What key global markets have been identified by DIT as having the most potential for UK energy supply chain opportunities? The UK oil and gas supply chain generates £30bn annually, 41% from exports. Analysis indicates an opportunity to double this global market share from £350bn to £500bn. Key global markets include Brazil, Oman, Iraq, Nigeria, Azerbaijan, Kazakhstan and India, who all want new, innovative technologies to reduce cost and extend the life of existing assets. The industry has world-leading expertise in offshore and subsea engineering, high-temperature, high-pressure field developments, process machinery equipment and integrated services for operations and maintenance. Decommissioning is a growth sector, with emerging opportunities in markets such as South East Asia. Nuclear new build is taking place across a global landscape, with China, India, the Middle East and other emerging economies leading the way. The UK enjoys strong relationships in nuclear with Canada and the US, and all three countries are at the cutting edge of next-generation nuclear technologies, including small and advanced modular reactors and fusion. As existing nuclear fleets across the world come to the end of their lifecycles, there is a growing market for

the UK’s extensive expertise in decommissioning and waste management, in countries such as Japan, South Korea and Taiwan. Perhaps the most exciting opportunity is the global shift towards clean energy solutions – a challenge for almost all markets. With a strong government commitment to clean growth, London as the global centre for green finance and a world leader in offshore wind deployment, British solutions to this global challenge are in high demand. Exports from the UK’s low carbon and renewable energy sector were £5bn in 2017. We have world-leading capabilities in areas including offshore wind, smart energy systems, sustainable construction, precision agriculture, green finance and electric vehicle manufacture. We are actively working to support a wide range of companies in many markets – from solar developers delivering projects in Chile to creating energy from waste in Indonesia. What is the government doing to encourage investment in the UK’s energy industry? Energy is a major driver of our growth. The Oil & Gas UK’s Economic Report 2018 states that the UK’s offshore oil and gas industry currently supports more than 280,000 jobs across the UK, contributing billions in tax revenues each year. The UK is one of the best places in the world to invest in renewable energy. We offer significant supply chain opportunities across the sector, including waste energy, electrical networks and offshore wind. We are making long-term investments to advance this technology, such as the £246m allocated to battery research through the Faraday Institute. The Nuclear Sector Deal includes initiatives to encourage investment in the UK, including support for the development of a robust skills base to guarantee the long-term future of the nuclear supply chain. Government has also said that developers of new build projects will be required to publish Supply Chain Plans, which are designed to give better visibility to the UK supply chain of opportunities to compete for contracts in those projects, thereby encouraging further investment in UK companies. The government is investing £2.5bn into clean growth innovation by 2021, as set out in the Industrial Strategy. What are the benefits of working with the EIC? DIT works closely with the EIC. We welcome their insight into the industry and ability to reach a wide network of companies. The recent Energy Exports Conference hosted by EIC and supported by a consortium of industry bodies and government, including DIT, focused on supporting the UK supply chain to export its products, services and expertise into global markets, and demonstrated the value of industry and government collaboration.

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news&events introduce members to regional energy markets and their major players.

Worldwide business support

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About the EIC Established in 1943, the EIC is the leading trade association for companies working in the global energy industries. Our member companies, who supply goods and services across the oil and gas, power, nuclear and renewables sectors, have the experience and expertise that operators and contractors require. As a not-for-proﬁt organisation with oﬃces in key international locations, the EIC’s role is to help members maximise commercial opportunities worldwide. We do this in a variety of ways:

Enabling members to expand into markets across the globe

Market insight Helping members to track global energy projects and assets Our projects database, EICDataStream, provides extensive information on more than 8,750 active and future projects in all energy sectors. By tracking full project lifecycles from feasibility to construction and then completion, it helps members to identify opportunities and plan their business development strategies. Our operations and maintenance database, EICAssetMap, puts the details of more than 4,000 energy facilities across Asia Paciﬁc, Europe and the Middle East at your ﬁngertips.

High-profile international events Connecting members with buyers and partners The EIC hosts ﬂagship industry events that bring together supply chain companies with global energy contractors and operators, and bespoke events that keep members informed about projects, sector developments and markets. Our overseas trade delegations and EIC-run pavilions at international exhibitions

Member companies who want to do business outside the UK can rely on our global network of oﬃces to provide regional market knowledge, one-to-one advice and practical support. We also provide virtual and rental oﬃces, and facilities for hotdesking, meetings, conferences and corporate events.

Business intelligence Keeping members informed and raising their proﬁle We help our members to stay connected with the world of energy through informative online news, e-bulletins, market reports and industry publications. Our comprehensive directory of member supplier services is also a useful resource for operators and contractors.

Industry courses Enhancing members’ skills and knowledge Our quality courses, which can be delivered oﬀ-site or in-house, are led by highly experienced trainers with industry backgrounds. We tailor our training to suit a variety of levels and also work with member companies to run programmes, some of which include tours to manufacturing companies.

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From the EIC News and events

Energy Exports Conference 2019

ore than US$150bn of global projects requiring UK products and services were discussed in Aberdeen by over 20 major operators, including Aramco, BP, Ørsted and Shell, at the Energy Exports Conference (EEC) on 18–19 June 2019. Organised by the EIC, the two-day conference included high-level discussions oﬀering ﬁnancial, practical and in-country support to UK companies in the oil and gas, power and renewable sectors that are looking to export or expand into new markets around the world. The agenda was packed with lively panel sessions and presentations featuring 100 speakers from companies such as ADNOC, Bechtel, BP, Pertamina, Petronas, Shell, Subsea UK and Uganda National Oil Company. A plenary session featured government ministers and CEOs from export agencies and specialists including the Department for International Trade, UK Parliament, Scottish Development International and UK Export Finance, and Oil and Gas Authority opened the conference. Speaking at the conference, EIC CEO Stuart Broadley said, ‘Helping UK companies export is a passion of the EIC. Going global can seem daunting. It needn’t be. We are committed to enabling the UK energy supply chain to export its products, services and expertise into global markets. ‘This is the biggest event we have ever organised. It is vital that UK companies take advantage of global opportunities out there. By attending the EEC, energy service

ﬁrms potentially did three months’ worth of business, having had access to project updates, market intelligence and networking, in just two days. ‘Success at the event could contribute to one of the key planks of the UK oil and gas industry’s “vision” for the next 15 years.’ Vision 2035 envisages a doubling of the UK supply chain’s share of the global export market, which would bring in an additional £150bn in revenues over the period. Sir Ian Wood, Chair, Opportunity North East, commented, ‘As we enter a period of transition, we are witnessing a huge move to diversiﬁcation and a shift from oil to gas to wider energy markets, such as tidal and carbon capture and storage. The best way for the UK supply chain to take advantage of such opportunities is to talk to people in these new markets.’ He said this conference was the perfect opportunity to do just that. During the keynote plenary session focusing on bilateral trading links between Aramco and the UK, Talal Al-Marri, President and CEO of Aramco, said, ‘Aberdeen is the centre of excellence in oil and gas. Aramco has ambitious growth plans over the next 10 years as we

transition to become the world’s leading integrated energy and chemicals company. ‘In order to achieve this, we need to work with best-in-class partners – many of whom are based here in the UK. I believe the level of collaboration between the UK and Aramco can be higher and there are still huge opportunities within mainstream and downstream projects.’ Aramco plans to invest US$500bn over the next 10 years in the global energy market and to diversify away from oil, presenting an unparalleled opportunity for the UK supply chain to win significant work on global projects with one of the largest national operators in the world. Also speaking at the conference, Andy Samuel, Chief Executive, Oil and Gas Authority, emphasised the importance of global and innovative partnerships. ‘The UK has world-class supply chain capabilities. The UK makes up 40% of global subsea exporting capabilities, with the North East and Aberdeen leading the way. It’s essential we work together with global partners to tap into the vast potential on offer.’ He said the inaugural event had turbo-charged such opportunities. The exhibition hall at EEC was a bustling hub of activity. Companies had the opportunity to raise their profile, showcase new products and services to buyers and position themselves as a leading voice in the global energy industry – to a crowd of more than 500 UK supply chain delegates, tier one contractors and leading global operators. It is hoped that the EEC will become a regular event, with another instalment to be placed in the calendar in 2020, then returning every two years. www.the-eic.com | energyfocus

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EVENTS COMING UP

Overseas delegation to Algeria When: 28–31 October 2019 Where: Algiers Why attend? With oil and gas being one of Africa’s main energy sources, Algeria is one of the continent’s major energy hubs and an important location for the latest energy developments. We will be organising an exciting oil and gas delegation to Algeria this autumn. Delegates will have the unique opportunity to attend preorganised group meetings with local players and international companies including KBR,

Petrofac and Sonatrach, as well as to strengthen existing business relationships. Our delegations are an excellent introduction to a new market in a supportive environment where meetings and logistical needs are taken care of by the EIC. Key networking opportunities will also be available at the evening reception hosted at the Embassy. For the full itinerary please visit www.the-eic.com/Events/ OverseasDelegations/Algeria

EIC Connect Energy 2019

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When: 10 September 2019 Where: Old Trafford Stadium, Manchester, UK Why attend? EIC Connect 2019 returns to Manchester at the iconic Old Trafford stadium, home of Manchester United football club. Ørsted, MHI Vesta and Vattenfall are just some of the leading, international companies already confirmed to participate this year. Whether you want to grow your network, find your next project or pitch directly to global operators and major contractors, the event will convene global operators, top EPC contractors and the UK’s supply chain together to generate new business opportunities in the power, nuclear and renewables sectors. The UK government will open the conference in a keynote session, followed by a mix of conferences and round table discussions and seminars for end users to outline their future capital project requirements and ongoing maintenance opportunities to the supply chain. For more information please www.the-eic.com/EICConnect/Energy

EIC National Awards Dinner When: 3 October 2019 Where: London Why attend? The EIC National Awards Dinner, the most exclusive event in the UK energy supply chain calendar, is the perfect occasion to network and celebrate the wonderful achievements of EIC member companies with a drinks reception and ﬁrst-class menu. Well-known comedian and entertainer Dara Ó Briain will host this year’s awards

dinner, which will once again be held in 8 Northumberland Avenue – one of London’s most iconic venues. The dinner and celebration are only available to EIC members and their guests. For more information and to book your place: www.the-eic.com/Events/ EICNationalAwardsDinner/Awards

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From the EIC Experts’ comment

The

BIG question

What do UK energy companies need to know before exporting to…?

Thinking of exporting? International markets oﬀer huge potential to grow your business but developing a clear understanding of the local business landscape is vital to success. Energy Focus asks four international trade advisers in Brazil, Malaysia, the UAE and the US for their top tips when doing business in these markets

Renato Cordeiro Commercial Manager at the Department of International Trade (DIT) Brazil … Brazil? Brazil oﬀers huge opportunities for UK companies active in the oil and gas and renewable energy sectors. There are around 200 British companies already doing business in the country through local representatives such as agents or distributors, or producing parts of their products locally with Brazilian partners. However, the market does have its challenges. Brazilian tax law can be complicated. We always recommend that British companies interested in exporting to Brazil ﬁnd a good partner, not only with knowledge of the market demands but also

with deep experience on taxation. An export to Brazil can cost a lot more without the assistance of an experienced local expert. A second tip is relationships matter. Do not believe that good contracts can be secured from behind a desk in the UK. We strongly recommend British companies visit the market regularly to build a relationship with your costumers. Major events including Rio Oil and Gas, OTC Brazil and the annual ‘UK&BR: Partners in Energy’ conference – the last one promoted by the DIT with EIC support – are excellent opportunities to network and meet buyers. The DIT Energy team based in Rio can support British companies to meet the right contractors and partners on the ground, as well as provide market intelligence to help them enter the market successfully. The UK’s DIT helps businesses export, drives inward and outward investment, negotiates market access and trade deals, and champions free trade. As well as providing trade and investment services, DIT Brazil oﬀers practical support to help UK companies succeed in Brazil, and Brazilian companies set up and invest in the UK. For more information please email renato.cordeiro@mobile.trade.gov.uk

Hezrie Musa Trade Manager at the British Malaysian Chamber of Commerce Berhad (BMCC) … Malaysia? Accounting for 20–30% of the national GDP, oil and gas is a priority sector in Malaysia and plays a vital role in the economy, despite the low price of global crude oil. Supported by over 3,500 oil and gas companies, comprising local and international players, the growth rate of this sector is expected to be 5% annually. This multi-billion industry is vested with state-owned company PETRONAS, which acts as both operator and regulator for Malaysia’s oil and gas industry. Companies therefore need to comply with PETRONAS requirements if they wish to venture into the industry.

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Experts’ comment: From the EIC

To maintain global competitiveness, PETRONAS, together with the Malaysian government, has embarked on several initiatives to reinvigorate the oil and gas industry, and there are huge opportunities available for UK companies. The country has worked hard on a number of reforms to improve the business climate, including the introduction of an online registration system for the goods and service tax to make starting a business easier. Malaysia has also strengthened access to credit by adopting a new law that established a modern collateral registry, improved minority investor protection through the requirement for more corporate transparency, and made importing and exporting easier through the infrastructure and equipment improvements at Port Klang. Most exporters find that using a local distributor or agent is the best first step for entering the Malaysian market. At BMCC, we have the local knowledge to help you get started. BMCC works closely with key stakeholders in Malaysia’s energy industry, including Malaysian Oil & Gas Services Council (MOGSC) and EIC Asia Pacific, based in Kuala Lumpur. BMCC is the official delivery partner of DIT Malaysia and has the capabilities to support UK exporters and services providers into Malaysia. If you are interested in doing business in Malaysia, please contact hezrie@bmcc.org.my for assistance or further information.

Euan MacKinven Senior Executive – Energy at Scottish Development International … the UAE? Setting up a new entity in another country can be a daunting task for any company. The Middle East and in this case, the UAE, holds signiﬁcant opportunity for UK exporters but

understanding the realities of doing business in these markets is essential. Not only are the laws and language different, but the business standards are, too – including local content requirements. In February 2018, ADNOC announced its In-Country Value Certification Programme (ICV), meaning that all business partnerships with ADNOC must now include an ICV assessment as part of the tender evaluation and award process. The ADNOC ICV strategy seeks to stimulate private sector partnerships and opportunities resulting from their 2030 growth strategy, which looks at: Socio-economic development Improved knowledge transfer Emiratisation. Going forward, localisation programmes will play a pivotal role for companies seeking to trade with major national oil companies in the region since their implementation across the GCC. Saudi ARAMCO has its IKTVA Programme, Oman has Omanisation and Qatar has Tawteen. It should be noted that all localisation programmes operate independently from one another. Therefore, companies should first assess where the best opportunities for their business are prior to committing to a market. With the right support from government organisations, proper due diligence and long-term commitment from companies, the rewards in this market can be great. Scottish Development International (SDI) is the international arm of the Scottish government’s economic development agency, Scottish Enterprise. With over 30 offices worldwide, SDI’s role is twofold: to help grow Scottish exports, and to increase inward investment to the country. In the Middle East, SDI has offices in Dubai, Abu Dhabi and Al Khobar in Saudi Arabia. If you are thinking of exporting to the UAE or the Middle East, for more information please email euan.macKinven@scotent.co.uk

What do new exporters need to know when exporting?

Cristina Pirela International Trade and Investment Associate – Energy, Environment and Infrastructure at DIT Houston …the US? The United States has long been a world leader in energy production and supply, and maintains its position as one of the largest energy consumers. From oil and gas to renewables, including solar, wind and energy storage, US market opportunities have continued to grow, with investments in the energy sector reaching US$276bn in 2016. The re-emergence of the US as an energy powerhouse is seen in the transition from a natural gas deficit to a net exporter of oil. The Houston economy stands at the forefront of these opportunities, with the headquarters for companies in all segments of upstream, midstream and downstream, employing 4,600 energy-related firms. Similarly, clean energy in the US witnessed a rise of 12% to US$64.2bn in 2018 due to solar and onshore wind. More growth is expected due to the emerging offshore wind market in the north-east region, which has a project pipeline of 19GW to be installed by 2030. With these opportunities, the US still faces import barriers for companies in the UK, such as local content requirements, recent steel and aluminium tariffs, and political uncertainty. The UK’s DIT is here to support your business in manoeuvring through export barriers and opportunities. The DIT US team is charged with transatlantic trade development between the UK and the US, as well as assisting US companies looking to invest in the UK. For all questions, concerns, and support, please email the Houston team at cristina.pirela@mobile.trade.gov.uk www.the-eic.com | energyfocus

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From the EIC Case study

LOC Group Entering the Brazilian market can be very rewarding but it will require time and perseverance, says Andrew Johnstone, Senior Consultant at LOC Group

stablished in London in 1979, LOC – a marine and engineering consulting and survey firm – opened its first overseas office in Norway in 1984. The business focuses on all aspects of transportation and construction in the marine environment, and upon the accidents and disputes that sometimes arise.

The journey By its very nature, LOC’s energy and shipping business is very international. ‘Exporting is in our DNA,’ says Andrew Johnstone. Oﬀshore oil and gas construction projects often involve worldwide construction sites and installation locations, and LOC’s marine casualty business ‘requires us to be present at all the world’s major underwriting centres, and be able to attend ships anywhere in the world at short notice,’ he explains. LOC’s Brazilian export journey started in 2001, having formed a company with a local, part-time representative. ‘We won a major contract for Enterprise Oil (taken over by Shell) in 2003,’ says Mr Johnstone. ‘This involved work in Houston, Singapore and Brazil, and I managed the contract from Houston.’ The ﬁrst project with Petrobras followed in 2006.

At a glance Countries served 30 oﬃces in 20 countries

Export as a percentage of revenue (2018) LOC’s non-UK oﬃces (71%) Brazil (3%)

EIC products used EIC Launchpad Rio UK pavilion EICDataStream

As most of the work was in Brazil, opening a full-time office seemed attractive, ‘and I moved to Brazil full-time in August 2009,’ says Mr Johnstone. ‘We recruited a very experienced Brazilian naval architect as office manager and the office expanded gradually.’ Currently, LOC Brazil employs six technical staff full-time and 10 freelance consultants.

Doing business in Brazil Looking back to his move to Brazil in 2009, Mr Johnstone says that taking LOC’s business to the marketplace was made easier by utilising

EIC Launchpad services in Rio. ‘Being able to move into an office and connect to the internet and telephone on day one was a huge help, as well as the local team’s invaluable advice and access to events,’ he explains. In addition, ‘the EIC has been able to assist with finding trusted suppliers, such as visa consultants.’ When it comes to challenges, Mr Johnstone notes that being a service provider, the withholding taxes on services procured overseas are probably the biggest. ‘When we opened our office in Mexico, obtaining work permits for Houston-based staff was straightforward, and the Mexican subsidiary could contract Houston to provide most of the manpower, undertaking design review and analysis, to execute contracts. In Brazil the withholding tax is very high, so we needed to know that LOC Brazil would be able to be much more self-sufficient from the outset.’

ANDREW’S TOP TIP

Advice for new exporters While keen to encourage new exporters to Brazil, Mr Johnstone cautions: ‘Brazil is not a low-cost economy, certainly for professional services. The labour law is cumbersome and understanding the risks and costs of diﬀerent employment models is important.’ However, there has been some liberalisation with relation to autônomo (selfemployed) consultants, he adds.

Next stop Trading internationally has been essential in LOC flourishing to celebrate its 40th anniversary, and 10 years in Brazil, this year. Mr Johnstone notes that while the energy industry in Brazil has suffered a down-turn in recent years, he is optimistic that the business environment is improving. But entering new markets doesn’t stop there; the company is expanding services offered in the renewables market and recently received an enquiry about launching space rockets!

Brazil has a complex bureaucracy that requires careful navigation. It is, however, fairly predictable. Good advice is required and, often, the quality of the advice is unrelated to the cost. Corruption is a concern, but we have never paid any dubious commissions.

Get help: Companies looking for support to do business in South America should contact Clarisse Rocha, Head of Americas. Email: clarisse.rocha@ the-eic.com energyfocus

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From the EIC: Case study

Amarinth Pumps

A solid market entry plan is crucial for expanding into Malaysia, says Alex Brigginshaw, Commercial Director at Amarinth

uﬀolk-based Amarinth specialises in the design, application and manufacture of centrifugal pumps and associated services and equipment. The business, which provides clients with made-toorder, customised solutions, was formed in 2002 following the closure of Girdlestone Pumps. After initially concentrating on building its reputation in the UK industrial market, the company quickly expanded overseas, developing a range of American Petroleum Institute (API) standard pumps. In 2018, Amarinth derived about 70% of its revenue from exports – 15% of which came from Malaysia.

The journey In 2008, Amarinth – utilising EIC’s Dubai Launchpad services – successfully established itself in the Middle East, meeting demand for API standard pumps in Abu Dhabi and Dubai, says the company’s Commercial Director Alex Brigginshaw. ‘Our business model very much lends itself to developing new territories’, says Mr Brigginshaw, explaining the company’s approach to breaking into a new market. Only by establishing a need for its niche products and by being active in the region to gradually build up

ALEX’S TOP TIP

business Doing contacts and business in Take time to understand win projects Malaysia exactly what the stages, ‘will we make To be milestones and steps are the ultimate successful in to get onto approved vendor lists, and when decision as to Malaysia, says the review cycle is. whether we Mr Brigginshaw, invest into ‘you need to be having an actual associated with a international company that has licensing company presence.’ to supply to (your preferred) In 2013, Amarinth became end user’, and for Amarinth, in specifically interested in Malaysia, they have a supplier Malaysia, says Mr Brigginshaw. arrangement with Terra Energy. ‘We’d been looking to move into ‘It can be difficult to navigate the Malaysian market for some Malaysia without being on the time, as our range of API pumps Petronas Global Frame are well proven within the oil Agreement (GFA),’ says Mr and gas industry.’ Brigginshaw. ‘That is definitely a Amarinth explored Malaysia’s challenge. There’s no question market potential using about that.’ EICDataStream, and researched Mr Brigginshaw also advises how to gain Petronas approved not ‘to expect things to happen vendor status – the certification overnight’, and for businesses necessary to provide equipment using any of the international EIC into the majority of the oil and gas Launchpad services to take the projects in the Malaysia region. time to build a relationship up In 2015, after two years of with EIC staff. ‘If you invest in the researching and obtaining time to get them to understand orders, Mr Brigginshaw says your business, and what you’re Amarinth decided to establish about, and what you require, it’s an office in Kuala Lumpur. To do more likely for them to have you this, Amarinth utilised EIC on the forefront of their mind Launchpad services and when talking with stakeholders.’ networks to interview for local staff. ‘Throughout the whole Advice for new exporters process, the EIC team’s insight ‘You’ve got to do your research,’ and industry knowledge was says Mr Brigginshaw, as it can be invaluable,’ he says. Amarinth is difficult to determine when GFA now in its third year of a branded review cycles are, or what the office agreement with the EIC. correct processes and

At a glance Countries served Africa, Asia Paciﬁc, Europe, the Middle East and the Americas

Export as a percentage of revenue (2018) Malaysia 15%, RoW 55%

EIC products used EIC Launchpad Kuala Lumpur EIC Launchpad Dubai EICDataStream

requirements are for setting up in Malaysia. Also take the time to understand cultural diﬀerences in export markets.

Next stop With a focus on controlled growth and R&D, Amarinth is currently developing interests in the Caspian market, including Kazakhstan and Uzbekistan; however, it also has its ‘eye on Africa and the Americas’, says Mr Brigginshaw. Get help: Companies looking for support to do business in Malaysia should contact Azman Nasir, Head of Asia Paciﬁc. Email: azman.nasir@the-eic.com

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Case study: From the EIC

FoundOcean

Capitalising on six years of utilising EIC Launchpad services in Houston, Managing Director, Jim Bell, shares FoundOcean’s US export success story

ounded in 1966 and headquartered in the UK, FoundOcean provides specialist subsea and oﬀshore cementing services to the global energy construction industries. The company’s primary business is mixing and pumping cement into oﬀshore and subsea structures such as oil and gas platform foundations, wind turbine foundations and pipeline supports.

The journey For Jim Bell, FoundOcean’s Managing Director, the company’s US export journey began ‘having captured a large share of a niche market in the UK and Europe with a small customer base’. He explains, ‘We decided to push further aﬁeld, to give us access to a larger market and a more diversiﬁed customer base to reduce risk and achieve growth.’ The business has in fact been exporting in a small way since the 1960s. ‘We were always ready to export,’ says Mr Bell. ‘The real question was why export wasn’t a core strategy. Readiness for one export market doesn’t mean readiness for all, so it was a matter of choosing the right market. ‘We viewed the US as having a similar business culture to the UK with purchasing decisions being based primarily on

Doing business in the US

At a glance Countries served The Americas, APAC, Europe, India, the Middle East and West Africa, with oﬃces, logistics facilities and partners in the UK, Houston, Dubai, India, Indonesia, Malaysia and Australia

Export as a percentage of revenue (2018) UK 41%, Europe 43%, US 10%, RoW 6%

EIC products used EIC Launchpad Houston EIC delegation to Mexico UK pavilions EICDataStream

The company started by taking the low-risk approach of locating a single sales engineer in the EIC offices in Houston, and budgeted for two years without revenue. But as FoundOcean’s business is so niche, ‘it wasn’t possible to recruit a sales engineer with the right knowledge locally, and we experienced challenges in securing the necessary employment visa for our expat employee,’ says Mr Bell. Like the UK, the US benefits from ‘light-touch’ business regulation. Corporate tax is transparent and low, importing equipment is relatively hassle-free, and you are unlikely to experience significant problems getting paid, says Mr Bell. However, ‘you should allow plenty of time to secure visas if you need to bring expat workers into the US, and bear in mind that US state law is different from English/Scottish law so

contractual documents can feel unfamiliar.’

Advice for new exporters For businesses that want to export to the US, Mr Bell says the starting point must always be detailed market research to establish whether there is sufficient demand for the product or service you provide. ‘Only when you are confident of your market can you justify the effort and expense of working out how to do it and moving to implementation.’ Another key consideration, he says, ‘is how will you do business, if like FoundOcean you are a service company. Challenges like personnel, training and insurance are all worth investigating’.

Next stop

FoundOcean has been in the US competence rather than since September 2013 and aims networks,’ he explains. ‘Our to continue to develop its CEO had previously worked international presence in the US for a US-based company in the energy market, with a keen focus offshore sector so had some on offshore wind. familiarity with the market and business culture, and Get help: FoundOcean had already Companies looking done various ad hoc for support in doing contracts in the US business in North and Customers in the US like to do business with during the previous 30 Central America should companies that are local, so you must have a years. Market research contact Amanda Duhon, local presence. No matter how many US trade also showed that there EIC Regional Manager shows you attend, or how frequently you visit were sufficient project Houston. Email: US customers, it will be difficult to convince opportunities to justify amanda.duhon@ someone to buy from you if your business market entry.’ the-eic.com card has a foreign address and phone number.

JIM’S TOP TIP

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From the EIC: Case study

Wolf Safety Lamp Company The UAE is an oasis of opportunity, says Graeme Aittis, Regional Director (Middle East & Caspian) at Wolf Safety, but choosing the right partner is key

riginally set up as a distributor for a German mining lamp manufacturer in the 1880s, Wolf Safety was acquired in 1912 to develop safety lamps more suited to British mining and quarrying methods and regulations. Today, the company designs and manufactures portable and temporary lighting and temporary power distribution for use in hazardous locations.

Caspian region in March 2018. When Wolf was looking to establish a presence in the Middle East, ‘the EIC was able to oﬀer valuable advice and professional guidance, which led to us using their serviced oﬃce facility in Dubai,’ says Mr Aittis. ‘From our experience, this option is ideal for initially establishing a presence, especially in this region, where the high level of bureaucracy can be time consuming. The EIC is able to assist in making the processes involved easier, both initially and on an ongoing basis.’

At a glance Countries served All GCC countries, Azerbaijan and Kazakhstan

EIC products used EIC Launchpad Dubai UK pavilion

and experience of both the industry and the region. However, he acknowledges the The journey challenges he faced finding the Wolf Safety has exported for right partners to work with to many years, says Graeme Aittis. roll out the company’s strategy ‘Due to the nature of our Doing business for growth in the region. He product range, our client base in the UAE advises that new exporters spans a number of sectors, Getting started in Dubai was ‘identify and appoint a local including oil and gas, mining, also made easier as Mr Aittis, distributor that knows your marine, civil defence and having been based in the emirate target market intimately’. This aviation – all very much for the past 10 years, brought should be someone who has the international industries.’ This, with him extensive knowledge influence to be able to support combined with the international your product in the market, he recognition of the ATEX and says, and to whom your business IECEx certifications that Wolf is meaningful so that your products hold, means ‘there is business does not get lost large potential for our in their other activities. products outside of the Regarding meeting UK market’. Choose the right partner – this can local content demands Having been active in have a major impact on your success. Try in the region, Mr Aittis the UAE for more than to find a partner that has complementary says: ‘We are fortunate 25 years, Wolf opened products to yours, within the sectors in the sense that we its first overseas sales you wish to target, and try to take advice operate in a niche office to serve the from trade organisations and other market. As we sell Middle East and companies working in the region.

GRAEME’S TOP TIP

through local distribution, we can in fact beneﬁt from the distributor’s local presence, such as in the UAE where our distributor has an In-Country Value score with ADNOC.’

Advice for new exporters Doing business in the UAE will take patience and perseverance, Mr Aittis notes. ‘Local approvals and acceptance can take time, especially for a new product entering the market, so it is important to plan and to remain committed to the market.’

Next stop ‘The Wolf brand is strong in the UAE, and we are excited about future opportunities,’ says Mr Aittis. The priority now, he says, is to signiﬁcantly grow the business in the region during the next three years. ‘I continue to see the services and support of EIC as being important to our future growth path, as we develop our business to match the needs of countries within the GCC.’ Get help: Companies looking for support to do business in the Middle East, Africa and CIS regions should contact Ryan McPherson, Director, Middle East, Africa and CIS. Email: Ryan.McPherson@ the-eic.com

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The EIC

EXPORT SUITE The EIC is the leading trade association for companies who want to expand into new markets. The EIC Export Suite enables members to take their business global. EICLaunchpad Available in Aberdeen, Dubai, Houston, Kuala Lumpur and Rio de Janeiro, the EICLaunchpad service oﬀers a low-cost, low-risk entry into these markets. We can provide oﬃce facilities, hot desk, conference suites and meeting rooms – everything you need to start your business in these regions.

EIC Connect conferences Taking place all over the world, EIC Connect events allow suppliers to meet with major operators and contractors active in the country to discuss how they can work together on energy projects in the region.

UK pavilions at worldwide energy events We manage the UK pavilion at every major energy event around the world including ADIPEC, OTC and WindEnergy Hamburg. Not only do we ensure a prime location on-site, our UK lounge activities guarantee high footfall and lots of networking opportunities.

Overseas delegations Our overseas delegations to emerging and established markets are a great way to meet a country’s key players, make contacts and ﬁnd local partners, in a supportive environment with the logistics and agenda taken care of for you.

EIC Country Reports If you are thinking about entering a new country these reports are essential reading. You’ll ﬁnd out about the major projects, who the key contacts are for each, as well as advice on doing business and support available for new entrants.

EICDataStream By tracking the full lifecycle of over 8,500 active and future CAPEX energy projects across the world, EICDataStream allows you to plan your global business development strategy. Updated daily, you’ll never miss an opportunity, no matter where it is.

EICAssetMap Our O&M database maps operational energy facilities across all sectors in Europe, the GCC and ASEAN with more regions being added soon. Tablet friendly, it puts facility operator contacts and asset information at your ﬁngertips.

T BRINHGE EIC ING A ORLD OPPW YOUORRTUNITOF Y TO www .the- BUSI N eic.c E Abou om/ M SS tMem emb er b ersh

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ship /

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Special Report Localisation

Localisation

is the key to success in overseas markets Many UK exporters and potential exporters are not fully aware of the opportunities that local content rules can hold. By adopting the appropriate approach, expansion into attractive overseas markets may be easier than expected, writes Jeremy Bowden

£150bn Localisation is key to meeting the Oil & Gas Authority’s Vision 2035 target to double the UK’s share of exports from 3.7% to 7.4% – generating an additional £150bn in revenues 22 energyfocus | www.the-eic.com

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Localisation: Special Report

he UK oil and gas supply chain exports about £12.3bn of goods and services per year, but only 20% of UK supply chain firms export – leaving plenty of potential for growth. Indeed, the Oil & Gas Authority’s (OGA) Vision 2035 has set an ambitious target to double the UK’s share of exports from 3.7% to 7.4% — generating an additional £150bn for the UK economy. However, overseas markets with strict local content rules are often seen as tough to access by UK exporters, especially smaller ones. Some companies tend to avoid the detail, placing it in the ‘too difficult to think about’ box, according to Paul Yates of Efficio Consulting – the firm commissioned by the government of Saudi Arabia to develop the country’s national Local Content Programme.

Changing practices This may now be changing, partly as a result of a redesign of many local content regimes, along with a changing approach from UK exporters. Dr Michael Warner, Director, Centre for Local Content Innovation, says that some entrepreneurial UK companies are now beginning to switch from seeing local content regulations as a barrier to entry, towards a view that if the regulations are better understood, they may aﬀord an opportunity for market access. Most countries seek several key elements from outside investors or suppliers, including compliance with local content rules, a local supply base and use of local labour – and, increasingly, the willingness to demonstrate a long-term commitment to the country’s development.

Securing a competitive advantage A growing number of governments are establishing local content policies that require multinational companies to stimulate broad-based economic development through local purchasing and hiring. Local content can include the procurement of goods and services from local vendors, employment and training of national workers, development of local business institutions, improvement of local technological capabilities, and joint ventures and other types of partnerships. www.the-eic.com | energyfocus

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Special Report: Localisation

More and more, UK exporters must offer local investment and opportunities for local suppliers in their bids. By offering a strong local content, there is an increasing chance of gaining a competitive advantage in the tender process, according to Dr Warner, although there can be some trade-off between market access and revenue. Companies therefore need to understand how they are going to be assessed, and factor that into their proposals.

IMAGES: GETTY

Local designed solutions To establish a company as a trusted longterm partner, Mr Yates says a deep local understanding of the market in question is required: ‘Companies need to understand what the local market wants, and not just meet the basic requirements – what are the host government’s objectives, and what do I have to offer to help meet those objectives?’ Providing clear, quantifiable benefits to the local economy enhances relationships with host governments, increasing the likelihood of competitive differentiation in bidding rounds and negotiations. Providing jobs to local communities is also important in helping to establish a social licence to operate. Operators must, of course, recognise the quality of the local content provision in any bid. But national oil companies (NOCs) should be well primed, and most international companies (IOCs) and majors are already experts at the local content process, having long recognised that it is essential to becoming a trusted partner of government and minimising political risk. ‘All IOCs now understand this, it’s not just a ‘nice to have’… local content is fast becoming the new compliance regime, with rules codified in legislation and regulation, even though not yet standardised across the industry,’ says Dr Warner. He adds that many smaller UK companies are not fully aware of the opportunities these regulatory rules offer. Mr Yates says that Norwegian companies have the reputation of being the ‘poster-boys’ of local content strategy, having been extremely successful in accessing overseas markets. However, he notes that this may also have been influenced by their offering, which tends to be technology driven with high-end skills and services; this may also be an avenue for UK firms. There are other advantages to both NOCs and IOCs of having local firms partner with

Increasingly, UK exporters must oﬀer local investment and opportunities for local suppliers in their bids international suppliers, including improved supply chain resilience and lower costs and risks. ‘Building local content can take time and investment, but done well can create cheaper and quicker supply chains,’ says Dr Warner – by, for example, using lower cost labour and land. However, additional costs can result from the quality of the local industrial base and strength of regulation. And ‘if local content targets are excessive, it probably won’t work – investment costs must be passed through.’

Local ownership, or just local value? When it comes to local content, there tends to be a division between countries favouring local ownership, and those that are primarily focused on value to the local economy. Brazil, Mexico, Pakistan and Saudi Arabia fall into the latter category, whereas in Africa, ownership is more important. In Angola, for example, the priority is to buy from local suppliers, but if they are not available, purchases can be from joint ventures (JV) or another form of alliance. ‘There’s no cookie-cutter approach, as all regulations are slightly diﬀerent,’ says Dr Warner. For example, whether a JV is 50% locally owned or 51% locally owned very much aﬀects the degree of control, and therefore the willingness of international suppliers to invest. And when deciding whether to

establish local facilities, longer-term prospects are key. For example, a pipeline coating company funded a bid in east Africa on the basis that it would set up local coating facilities, says Mr Yates. But it was only possible because people need pipes and wires coating for all sorts of reasons, so a viable long-term market was available once the initial contract was complete. He also notes that Tullow Oil has a strong brand around local content and social responsibility – ‘it was an important diﬀerentiator for them, and self-sustaining.’ There is a particularly strong push for local content in the Middle East, sometimes referred to as in-country value, where a number of countries are seeking to diversify reliance away from oil revenues. This is true in Saudi Arabia, where the local content policy is explicitly laid out in the government’s Vision 2030 document, released in 2016. The Saudi government believes this will help to create 450,000 jobs in the non-government sector by 2020, reducing the country’s reliance on sourcing labour from overseas, and increasing the job opportunities for a growing population of Saudis for which the public sector can no longer satisfy. Exporters also need to be aware that new local content rules could squeeze them in established markets. For example, Saudi Arabia’s largest mining company has been told to raise local content, so those with existing contracts will need to develop local supply chains – albeit without the necessity of local ownership.

Think global, act local By eﬀectively analysing the latest approaches and underlying objectives of local content policy in countries around the world, UK oil and gas exporters can better expand access to overseas markets – ensuring long-term growth and bringing total exports closer to the OGA’s Vision 2035 target.

24 energyfocus | www.the-eic.com

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PRESENCE ALL AROUND THE WORLD

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Feature Going global

For the ďŹ rst-time exporter, or before entering a new market, research is vital 26 energyfocus | www.the-eic.com

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Going global: Feature

Are you ready to go

gl bal? Exporting can be one of the best ways to grow your business, but the prospect of going global can be intimidating. As the low-carbon transition continues to drive energy export growth, Nicholas Newman oﬀers seven tips for getting started

he global energy industry is big business. The renewable energy market alone is now worth more than US$300bn a year, while the oilfield services market is valued at around US$154bn and the energy consultancy market accounts for US$102.08bn. As a world leader in offshore wind and deep sea oil exploration and field development, there is a global demand for UK energy sector equipment, staff, training and consultancy services. For current and new exporters, contracts can vary from just a few thousand pounds to many millions. A recent study by RenewableUK, covering a sample of 43 British companies exporting energy-related goods and services to 44 countries, reveals that the UK struck 445 deals to work on 434 wind, wave and tidal energy projects throughout Europe, North and South America, Africa, the Middle East, Asia, Australia

and Antarctica in 2017. The contracts were worth up to £7.5m each, but some companies earned £20m overall from their wind and marine energy exports. Exports ranged from onshore wind turbines to 80-metre blades and cables for offshore wind farms. It is not only energy hardware that is being exported, but also UK expertise, provided by consultants for developing wind, wave and tidal energy projects worldwide. In addition, the UK government reported that £12.3bn of goods and services were exported from the UK oil and gas supply chain in 2016. According to Ernst and Young’s ‘Future of energy series’, the market is looking for solutions to meet five key needs: goods and services that deliver or aid decarbonisation, strategies for decentralisation, and incentives for innovation, efficiency and interconnectedness. Fortunately, there are many UK companies able to provide useful solutions in these areas. www.the-eic.com | energyfocus

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Feature: Going global

Here are some top tips for energy firms considering exporting: Do your market research Each country has its own set of market challenges. While there are some similarities between countries, quite often each is different in its own right, notably from a political, legislative and technological perspective. Particularly in energy, many nations operate strict countryspecific local content and labour laws. For the first-time exporter, or before entering a new market, research is vital. The Department for International Trade’s (DIT) website contains detailed information on foreign markets. There are also specialist industry and networking groups, such as the EIC, that can provide practical advice. Specialist guides on selling overseas can be purchased from Amazon, Waterstones and Blackwell, and the government’s guide on selling overseas can be downloaded for free. Help in market selection and training is also available from the DIT. In addition, attending major trade fairs, or participating in organised overseas trade visits, can be invaluable for making new contacts and present opportunities for promotion to potential customers. Please visit www.the-eic.com/Events/Overseas Delegations for details on UK pavilions at the major industry events and overseas delegations.

knowledge of the local supply chains in the regions it operates in around the world. Entering a new market requires an audit or review of the company’s market oﬀering, covering not only the product itself but also its price, distribution and promotion. Very often, enhancing your marketing eﬀectiveness will only require tweaks.

Create an export plan The export plan crystallises the company’s aims from exporting but also identiﬁes in-house resources and clariﬁes the need for the additional resources and skills that are needed to implement the export strategy. Help in devising an export plan is available from regional agencies including the Northern Powerhouse, Invest Northern Ireland, Scottish Enterprise and Business Wales; these can also advise on appropriate product or service adaptation or,

Keep in mind potential cultural and language issues To avoid common pitfalls when entering a market for the ﬁrst time, it is best to seek advice from not only the DIT and Chambers of Commerce but also the EIC, as well as specialist books and downloads.

more commonly, suggest ways to internationalise the company website. Making your ﬁrst steps The DIT’s website and workshops help companies to select the best market access route for their product. Some companies enter a new market with an established business friend, others hire an agent or distributor, but an e-commerce or franchise approach might be best for a ﬁrst-timer. In addition, the EIC Launchpad is a business incubator service that aims to support companies entering or expanding into global markets.

Thinking about product sales, marketing and distribution Flexibility in marketing, promotion, distribution and customer service is essential to accommodate the different operating conditions of markets and customers. It is important to make use of local partners, as well as the EIC, which can offer support given its first class network and

The EIC Launchpad is a business incubator service that aims to support companies entering or expanding into global markets

A matter of money Banks and the DIT provide guidance on how to obtain a secure, legal and reliable method of payment for exports. The government’s UK Export Finance department offers loans, insurance and bank guarantees to help UK exporters win, fulfil and get paid for export contracts. Its national network of export finance managers can direct companies to the right support.

A matter of risk The energy sector has particular risks related to bribery and corruption. Given the stringent anti-bribery laws in the UK and the US, it is essential for UK energy companies to train their staff in compliance. Putting integrity at the heart of your business strategy and practice will drive commercial success, and diversifying geographically will help to mitigate this risk. For all exporters, commercial risks such as non-payment, insolvency, contract disputes, overdue payments, and theft of intellectual property, brand or reputation are ever present. Operating in foreign markets also carries political risks (such as change of government, war, riots, terrorism, border disputes and changes in law). There are also country-specific issues, such as exchange and inflation rates. For further information on this, take a look at the government’s Overseas Business Risk website, the World Bank’s Doing Business programme, and Transparency International’s guidance on corruption.

28 energyfocus | www.the-eic.com

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*SV QSVI XLER Ƥ ZI HIGEHIW /373 /IRX -RXVSP LEW FIIR GSQQMWWMSRIH F] GYWXSQIVW JVSQ EVSYRH XLI KPSFI XS HIPMZIV XLSYWERHW SJ FIWTSOI GLSOI ERH GSRXVSP ZEPZI TVSNIGXW )EGL MW YRMUYI ERH HVE[W YTSR XLI I\TIVXMWI SJ SYV TISTPI JVSQ HIWMKR WXEKI MRXS TVSHYGXMSR ERH SR[EVHW MRXS PMJI SJ Ƥ IPH WYTTSVX In more recent years, our contract wins have been clear signs of a growing success story at KOSO Kent Introl. From our base in West Yorkshire, we achieve global reach, thanks in part to our network of agents and our parent company Nihon KOSO group. The relationships give us a base of local partners in all the major Oil & Gas production regions around the globe. Through these partnerships we can offer local WYTTSVX JYPƤ P HSGYQIRXEXMSR VIUYMVIQIRXW UYMGOP] GSQTPIXI WMXI [SVO SR WGLIHYPI ERH typically deploy technical and servicing teams within 48 hours to any part of the world.

25/07/2019 10:41

396 6)')28 463.)'8 ;-27 JOHAN SVERDRUP 8LI .SLER 7ZIVHVYT ƤIPH MW SRI SJ XLI ƤZI FMKKIWX SR XLI 2SV[IKMER GSRXMRIRXEP shelf, with expected resources of between 1.7 – 3.0 billion barrels of oil. Phase 1 of the development comprises four platforms, TVSHYGXMSR HVMPPMRK VMWIV ERH PMZMRK UYEVXIVW with production start-up for Phase 1 is scheduled for the end of 2019. KOSO Kent Introl supplied 420 control and surface GLSOI ZEPZIW XS XLI ƤVWX TLEWI SJ XLI TVSNIGX during 2016 and we are now supporting )UYMRSV ERH MXW TEVXRIVW [MXL 4LEWI SJ XLMW development supplying over 200 control and choke valves for the additional processing platform that will result in a processing capacity of 660 000 barrels of oil per day. JOHAN CASTBERG The Statoil Johan Castberg project will GSRWMWX SJ E PEVKI *473 ƥSEXMRK TVSHYGXMSR WXSVEKI ERH SJƥSEHMRK ZIWWIP PSGEXIH approximately 240km north-west of Hammerfest at the northern tip of Norway. KOSO Kent Introl have been awarded over 175 control valves associated with the FPSO hull and topsides by the various project

TEVXRIVW 8LI LYPP MRGPYHMRK PMZMRK UYEVXIVW MW being fabricated for Statoil by Sembcorp in Singapore and will be delivered to Kvaerner’s facility at Stord in the autumn of 2020. The installation of all modules and integration will start immediately after arrival of the hull. The FPSO will be fully completed including commissioning and testing at Stord before XLI TPERRIH WEMP E[E] XS XLI ƤIPH MR XLI ƤVWX UYEVXIV SJ GUYANA KOSO Kent Introl were recently awarded XLI GSRXVSP ZEPZI TEGOEKIW JSV XLI ƤVWX major upstream project to be deployed in Guyana. The scope consisted of over 170 valves ranging from 1” to 20” and pressure classes ANSI 150 up to API10k. We have WYFWIUYIRXP] FIIR WIPIGXIH JSV GSRXVSP valves for the second phase that will be HITPS]IH SR XLI ƤIPH

“Our focus at all times is on optimising the throughput and life span of valve equipment, by designing and maintaining them to withstand the most demanding conditions. Our reputation gives our customers XLI GSRƤHIRGI XLI] RIIH XS XVYWX YW XMQI ERH XMQI EKEMR ű Stuart Billingham – Sales Director

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Oil and Gas Africa

Emma Wade-Smith Her Majesty’s Trade Commissioner for Africa, UK Department for International Trade (DIT)

Africa’s oil and gas industry holds huge potential. Historically a primary driver of economic growth, the sector is once again attracting interest. A combination of improving oil prices, recent discoveries and the push towards using gas as an environmentally friendly energy source is driving activity as investors line up to secure exploration and drilling rights across the region. Ahead of the EIC-organised delegations later this year to Algeria, Angola, Mauritania and Senegal, Energy Focus spotlights the four key markets

Africa’s proven oil and gas reserves account for 7.5% and 7.1% of global reserves respectively. The region’s comeback on the global oil and gas map is not only due to its vast natural resources and recent oil and gas discoveries, but also to regulatory changes and fastgrowing energy demand from expanding local consumer markets. All of this means that there are signiﬁcant opportunities across the region for the UK oil and gas supply chain. With more than 50 years’ experience in the North Sea, the UK’s global expertise in oﬀshore oil and gas production is unrivalled and British businesses have earned an international reputation as trusted, valuable partners on the African continent.

Attention turns to The EIC lists current projects in Africa and contact details on EICDataStream. Further details can be found at: www.the-eic.com/EICDataStream/ AboutEICDataStream

32 energyfocus

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Africa 25/07/2019 08:07

Africa: Oil and Gas

Algeria Key opportunities Engineering Research Training Petrochemical and reﬁning Development drilling Horizontal drilling Hydraulic fracturing Processing and compression facility Project management

Algeria is the largest country in Africa, with substantial oil reserves and a growing young population (more than half the estimated population of 42 million are under 30). Although the country is going through a period of political change, it remains stable and oﬀers a fast-growing market. The country holds an estimated 12.2bn barrels of proved crude oil reserves, 4.5tn cubic feet (cf) of proved natural gas reserves and 707tn cf of technically recoverable shale gas. In June 2019, daily crude output was 1.01m barrels per day. Algeria’s economy is heavily reliant on hydrocarbon revenues, which accounted for 35% of GDP and 95% of export earnings in 2018. To encourage exploration, Algeria has been working on reforming the sector by revising its hydrocarbons law. The country intends to attract more international oil companies (IOCs) by easing taxes, simplifying licence procedures and shortening the agreement timeframe. Once the new law is passed later this year, a licensing round is planned.

Key players The Algerian national oil company (NOC), Sonatrach, comp plays a key role in both the upstream and downstream ups POINTS TO oil and gas industries. It is oi CONSIDER rresponsible for exploration 18 days to start a business and production, transport, 51/49 rule for joint ventures reﬁning, processing, Personal contact matters to Algerians marketing and distribution – prospective UK exporters and investors should visit Algeria and – owning roughly 80% take their time to understand the of total hydrocarbon nature of the system production in Algeria. IOCs p including Anadarko, BP, – in Enel, Equinor, Neptune Energy, Enel Petroceltic, Petrofac, Repsol, Petro

Shell and Total – account for the remaining 20%. During the past 12 months, several signiﬁcant contracts have been awarded to international contractors including L&T Hydrocarbon Engineering, Emerson, Fores Engineering, Cosider Group and KBR.

Future plans Sonatrach’s medium-term development plan outlines total investments of US$56bn, of which US$44bn will be dedicated to exploration and production – about two-thirds of Algerian territory remains unexplored or largely underexplored. The NOC is looking to increase investment in natural gas and to partner with international companies that are experienced in processes such as horizontal drilling and hydraulic fracturing, to develop its unconventional shale gas resources. Another priority for Algeria is to diversify its downstream portfolio and develop its petrochemicals industry. The Algerian government publishes tenders on the Baosem website at www.baosem.com/v3/en/ index.php

MAJOR PROJECTS TO WATCH Trans-Saharan Gas Pipeline TSGP (Nigeria to Algeria) Value: US$12bn Startup: 2022 Stage: Pre-FEED Status: Planning consent applied Operators: Nigerian National Petroleum Corporation; Sonatrach Eastern Algeria Phosphate Integrated Complex Value: US$10bn Startup: 2022 Stage: Feasibility Status: Planning Operator: Sonatrach Hassi Messaoud Peripheral Fields Development Value: US$2bn Stage: EPC Startup: 2020 Status: Contract awarded Operator: Sonatrach

UK–Algeria trade The UK–Algeria trading relationship was worth £2.78bn in 2018 – an increase of 47.6% on 2017. Algeria ‘wants’ to do business with the UK; companies are keen to form mutually beneﬁcial partnerships and joint ventures, with a focus on local content and manufacture to optimise opportunities for all. UK Export Finance (UKEF) has up to £3bn of capacity to support UK exports to Algeria.

Dates for your diary 2019 13–15 October Future Energy Conference and Exhibition, Algiers 28–31 October Overseas delegation with the EIC

www.the-eic.com | energyfocus

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Africa: Oil and Gas

POINTS TO CONSIDER English is not widely spoken All payments must be made in Kwanza Investors no longer need an Angolan partner

IMAGES: ALAMY

Angola Angola is the second-largest oil-producing country in sub-Saharan Africa, with an output of approximately 1.5m barrels per day and an estimated 17.9m cubic feet (cf) of natural gas production. Limited investment has led to current daily lifts being 1,000 barrels of oil below capacity, but the country holds 9bn barrels of proven oil resources and 11tn cf of proven natural gas reserves, representing great potential for further development and business opportunities. To spur growth in the sector and boost the country’s competitiveness, President João Lourenço is eager to attract foreign investment by encouraging exploration in development areas, improving operation eﬃciencies, reducing taxes and empowering the private sector. In addition to the revision of oil and gas legislation, reforms include the reorganisation of the state oil company, Sonangol, and the creation of a new oil and gas regulator – the National Oil and Gas Agency. The reforms, which have also addressed the downstream sector, appear to be working. The World Bank’s economic outlook for Angola predicts GDP

MAJOR PROJECTS TO WATCH

Future plans

Key opportunities High quality, cost-saving and operations’ optimisation technology solutions Exploration and production equipment and services Environmental protection and monitoring technologies Seismic data reporting and releasing Education and training

will grow by 2.2% in 2019 – the ﬁrst time the country will have seen positive growth since 2014. An improved investor environment is listed as a cause for the improvement.

Key players Major international oil exploration and production companies active in Angola include BP, Chevron, Eni, Equinor, ExxonMobil and Total. Sonangol operates through its subsidiary Sonangol E&P. International contractors that have been successful in Angola include Aker Solutions, DNV GL, Fugro, ITC, Subsea 7, TechnipFMC, Welltec and Wood Group.

The new regulator recently launched the first phase of its brand new six-year oil licensing strategy, which will see as many as 55 blocks put up for public bidding or direct negotiations until 2025. Government targets for natural gas to supply 21% of Angola’s energy needs by 2025 mean its natural gas industry will require significant investment to capture its full economic potential. Meanwhile, with the country currently importing about 80% of its refined petroleum products, the focus downstream is on building new refineries.

UK trade In 2018, the trading relationship was £750m. Angola is going through transition, and the UK is increasingly well positioned to partner with the emerging market in its drive towards reforming its oil and gas sector and the ‘skilling up’ of its workforce. DIT, alongside the EIC and the UK Angola Chamber of Commerce, can organise visits to market and make introductions to key players and potential partners. UKEF currently has up to £750m in funding available to support projects in Angola.

Namibe Refinery Complex Value: US$12bn Startup: 2028 Stage: Feasibility Status: Government approved Operator: Namref Sonaref Lobito Refinery Value: US$8bn Startup: 2022 Stage: EPC Status: Planning Operator: Sonangol Angola-Zambia Refined Petroleum Multi-Product (AZOP) Pipeline Value: US$5bn Startup: 2022 Stage: FEED Status: MOU Operator: Zambia Development Agency

Dates for your diary 2019 9–12 December Overseas delegation with the EIC

www.the-eic.com | energyfocus

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Oil and Gas: Africa

Mauritania and Senegal Mauritania and Senegal represent new, emerging energy markets oﬀshore West Africa. Both countries have attracted the interest of oil and gas companies for many decades, but until recently this led to only very small oil and gas discoveries. This picture changed dramatically when Cairn Energy announced two concurrent exploration successes in 2014, complemented by Kosmos Energy’s announcement of two gas discovery wells in 2015.

Innovative cross-border development In 2015, Kosmos Energy made a world-class gas discovery – the Grand Tortue Ahmeyim (GTA) ultra-deep offshore gas field, which straddles the maritime boundary between Mauritania and Senegal. To speed development, the governments of both countries have pledged to work together to split production and share the resource 50-50. Following a positive final investment decision (FID) for Phase 1 of the GTA development from BP and partners

in December 2018, this discovery has the potential to transform both countries’ economies, and could be a game-changer for British investment. The Tortue floating liquefied natural gas (FLNG) facility will produce 2.5m tonnes of LNG per year. The field is estimated to hold about 15trn cubic feet of recoverable gas and is due to come online in 2022. The total acreage, at 33,000km2, could contain a further 50trn cubic feet.

IMAGES: GETTY/ISTOCK

Mauritania Mauritania holds an estimated 600m barrels of proved crude oil reserves and 1.2tn cubic feet (cf) of proved natural gas reserves, but has struggled to capitalise on its untapped assets. To date, only one ﬁeld – Chinguetti – has come onstream (in 2006), but its complicated geology and low production rates led to a considerable downgrade in recoverable reserves and production ceased in 2017. The permanent abandonment programme for the wells in the ﬁeld will start this year. In 2014, the government amended the Hydrocarbon Code to provide more incentives that favour foreign investment in the oil and gas sector. Improving the business climate has been a priority for the government, and this can be seen in the country’s elevated ranking in the World Bank’s Doing Business Report: in 2019 Mauritania was ranked at 148 out of 190 countries, up from ranking 176 in 2014. The new president, Mohamed Ould Ghazouani, is expected to maintain the principle lines of the previous government’s policy, ensuring a continued stable framework for the

the potential to recover approximately 460m barrels of crude oil reserves and 1bn cf of natural gas reserves. With its political and economic stability and strategic geographical position, Senegal has great ambitions and promises to improve its competitiveness. For several years, the country has carried out numerous reforms to improve the business climate, facilitate the work of entrepreneurs and increase its attractiveness to investors. In February 2019, the country revised its Petroleum Code to safeguard national interests in the oil chain, while maintaining the attractiveness of the region to foreign investment.

Key players In addition to BP, Kosmos Energy, Cairn Energy, FAR Ltd and Woodside’s exploration and production activities, ExxonMobil, CNOOC, Total and Shell continue to expand their presence offshore Mauritania and Senegal with exploration programmes. NOCs Société upstream hydrocarbons sector. While Mauritania is a very undeveloped market, in the longer term DIT will be working with its government to create a regulatory and investment climate that will ensure the revenues from the GTA complex and other potential fields are used effectively to improve public services and stimulate private sector development.

Senegal While Senegal’s oil and gas reserves remain modest, the country has in recent years been moving closer to becoming a large-scale oil and gas producer, following the successful

exploration and appraisal activities of SNE and FAN fields. The SNE oil field, located in the Sangomar Deep Offshore block, is being developed by Cairn Energy, Woodside and partners to include a stand-alone floating production storage and offloading vessel and subsea infrastructure designed to allow future tiebacks. The recent decision to commence front-end engineering and design activities is a significant step towards the development of Senegal’s first oil project. FID is expected later this year. The field development of SNE requires a total investment of US$5.83bn for three phases, with

36 energyfocus | www.the-eic.com

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Africa: Oil and Gas

MAJOR PROJECTS TO WATCH Mauritanienne des Hydrocarbures et de Patrimoine Minier (Mauritania) and Petrosen (Senegal) currently have a 10% stake in all contracts. Tier 1 contractors on the Tortue project include TechnipFMC, Eiﬀage-Saipem Consortium, KBR, McDermott and BHGE.

Future plans Looking ahead, it is believed that these recent significant gas finds have enough resources to support two additional worldclass gas hubs in the region – one near the Bir Allah discovery offshore Mauritania, and the other near the Yakaar/Teranga discoveries offshore Senegal. Following the passage of Senegal’s new Petroleum Code, it is anticipated that the government of Senegal will schedule a new licensing round for offshore, ultra-deep offshore and onshore fields. As exploration continues, there are opportunities to develop mature fields as well as to provide supplies and logistical support to companies working in the sector.

UK trade

Senegal

In 2018, UK exports to Mauritania were worth about £8m, and imports around £3m. Led by BP, British investment in Senegal has grown signiﬁcantly in recent years, with bilateral trade between the two countries hitting £418m last year. With the desire to work with African nations, the UK government has committed £3.9m to the ‘English Connects’ programme for the teaching and learning of English in sub-Saharan Africa countries where English is not currently widely spoken. UKEF has up to £750m in funding available to support UK companies trading in Senegal.

SNE deepwater oil ﬁeld phase I Value: US$3bn Startup: 2022 Stage: FEED Status: Contract awarded Operator: Woodside Petroleum

Dates for your diary 2019 22–27 September Overseas delegation with the EIC

POINTS TO CONSIDER Underdeveloped infrastructure Improving business climate Six days to start a business

Key opportunities Civil works and dredging Drilling and drilling-related services Engineering and consultancy services Fabrication, construction and modiﬁcation Health, safety, environmental, quality assurance and quality control services Inspection, maintenance, repair, hook up and commissioning services Materials and equipment suppliers/manufacturers Personnel services, training and education Pipeline and oﬀshore installation activities Research and development activities Gas to power

Yakaar FLNG Value: US$2bn Startup: 2024 Stage: Conceptual design Status: Planning Operator: BP

Senegal/Mauritania Greater Tortue-Ahmeyim FLNG phase 1 Value: US$2.1bn Startup: 2022 Stage: EPC Status: Contract awarded Operator: BP Greater Tortue-Ahmeyim phase 1 Value: US$1.7bn Startup: 2022 Stage: Multi-contract Status: Contract awarded Operator: BP Greater Tortue-Ahmeyim phases 2 and 3 Value: US$1.5bn Startup: 2024 Stage: Pre-FEED Status: Contract awarded Operator: BP

Thinking of doing business in Africa? Get help from... Department for International Trade (DIT) Email: DITAfricaTrade@mobile.trade.gov.uk

EIC Dubai The EIC team is on hand to support you in doing business in Africa Email: dubai@the-eic.com

UK Export Finance (UKEF) www.gov.uk/government/publications/ﬁndan-export-ﬁnance-manager

energyfocus

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FROG-XT CREW TRANSFER

+44 1872 321155 info@reﬂexmarine.com www.reﬂexmarine.com

Your Best Option P38-41 PW-Opportunities_EF36-Summer19_Energy Focus.indd 38

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Power Asia Paciﬁc

Full steam ahead Electricity systems worldwide are changing as climate change concerns continue to shape regulation. But while heavy industry turns to renewables in its drive to go green, the demand for older methods of power generation and aftermarket support is not dwindling in India and Malaysia

IMAGES: ALAMY/ISTOCK

he future of the steam turbine maintenance, repair and overhaul (MRO) market looks promising, with major growth drivers including increasing thermal power generation capacity in developing countries, particularly in South East and southern Asia, and an ageing ﬂeet of steam turbines. With the total stock of units higher (and older) than ever before, the global steam turbine MRO market is expected to reach an estimated US$31.7bn by 2023 – after growing by 5.6% per year for

five years, presenting a sharp rise in export opportunities for UK companies involved in the sector. Although the region’s biggest market, China, is beginning to cut coal capacity, especially around cities, there are still major pockets of expansion in developing Asia, (although the Asia Pacific power boilers market as a whole is expected to shrink by 7% per year to 2022, according to research firm Global Data). India, the highest-growth market, is expected to see a compound annual growth rate of 9.1% out to 2022.

POINTS TO CONSIDER India – 17 days to start a business Malaysia – 14 days to start a business English widely spoken

Key opportunities Concept, design and engineering services Supply of power equipment, Balance of Power, smart meters and technology, highly efficient power generation turbines, steam turbines Environmentally friendly technology, techniques to increase plant load factor, efficient management of entire thermal power generation projects from coal handling to fly ash management

www.the-eic.com | energyfocus

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Power: Asia Paciﬁc

India India has the world’s fifth largest coal reserves. The power sector is heavily reliant on the fuel, with about two thirds of capacity coal-fired. Favourable coal pricing for the power sector has helped boost demand, although there have often been shortages. For India, the priority is to get cheap power to consumers (some of whom are yet to be connected to the grid) in a fast-growing market to help avoid black-outs, and coal is still seen as the cheap and (most) reliable local option, despite the shortages. During the past six years, India has added more than 120GW of power capacity to the grid, with more than half of that coal-fired. This brought the total installed coal-fired capacity up to almost 200GW in 2018, which provides considerable opportunity for maintenance. This is especially true given the ageing nature of much of the fleet, although there can be problems with importation and payment among cash-strapped generators. Most existing coal-fired power plants in India use subcritical technology.

Key players The share of private-sector ownership is on the rise, with key investors including Reliance Power, Tata Power and Essar Power, along with state players

Malaysia dominated by National Thermal Power Corp (NTPC). The government is particularly keen for private investment in its Ultra-Mega Power Plants programme, which involves installing large-scale, supercritical coal-ﬁred power plants near domestic mines. International companies active in this market include Doosan Heavy Industries & Construction and Toshiba, while GE Power’s low nitrogen oxide boiler technology has been selected to make India’s thermal power plants eﬃcient and environmentally friendly.

Future plans Although the focus has now switched to renewables in India (175GW of which are targeted between 2015 and 2022), there is still room for coal, with another 60GW planned by 2025, while many older plants are slated for closure (demand permitting).

In Malaysia, coal accounts for about a third of total installed capacity and half of total generation – up from about a quarter and 41% respectively in 2015. The consequent rise in end-user power prices has pushed generators to seek lower cost generation sources, and cleaner coal has been a popular choice, especially in Peninsular Malaysia. Its first ultra-supercritical coal-fired power plants (Manjung 4 and Tanjung Bin) began operations in 2015 and 2016, respectively, and added 2GW of coal-fired capacity. Then, in late 2017, Manjung 5 added a further 1GW. And most recently, a joint venture consisting of Mitsui of Japan and a subsidiary of Malaysia’s Ministry of Finance (Malaysia Development BhD) constructed a 2GW ultra-supercritical coal-fired plant, Jimah East Power, which was completed this year.

Key players The main companies involved are TNB, the state generator in Peninsular Malaysia, along with a variety of independent power

producers and the respective state providers in Sabah and Sarawak in East Malaysia. Toshiba, IHI, Hyundai Engineering and Jacobs have won contracts in recent years.

Future plans Older coal-ﬁred power plants across South East Asia will increasingly be phased out as modern plants are switched on, although plans to keep some in reserve may generate ongoing maintenance opportunities.

MAJOR PROJECTS TO WATCH India Patratu Coal Fired Power Plant 4GW Value: US$5.49bn Stage: EPC Startup: 2021 Status: Contract awarded Operator: NTPC Ltd

Department for International Trade (DIT)

UK Export Finance (UKEF)

Mota Layja (Kutch) Coal Fired Power Plant 3.96GW Value: US$4bn Stage: Feasibility Startup: 2023 Status: Government approved Operator: NTPC Ltd

Email: ditindia@fco.gov.uk Email: Trade.KualaLumpur@fco.gov.uk

www.gov.uk/government/publications/ﬁnd-an-exportﬁnance-manager

Malaysia

Thinking of doing business in Asia Pacific? Get help from...

EIC Kuala Lumpur The EIC team is on hand to support you in doing business in Asia Paciﬁc Email: azman.nasir@the-eic.com

The EIC lists current projects in Asia Paciﬁc and contact details on EICDataStream. Further details can be found at: www.the-eic.com/EICDataStream/ AboutEICDataStream

Afmaco Energy CFRC Lignite Power Plant 440MW Value: US$500m Stage: Feasibility Startup: 2021 Status: Planning consent applied Operator: Afmaco Energy Berhad

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Nuclear Europe

Decommissioning Europe’s

Andrew Mitchell Her Majesty’s Trade Commissioner for Europe, UK Department for International Trade (DIT)

nuclear fleet

Europe is one of the most active and dynamic markets for nuclear in the world today. It is home to 133 operational reactors, which provide approximately 28% of the continent’s electricity, and is unique in oﬀering commercial opportunities across the whole nuclear lifecycle. At the backend of the lifecycle, decommissioning is an imperative for Germany especially, where nuclear power is being completely phased out by 2050. Other countries with ongoing decommissioning programmes include the UK, Belgium, Spain, Sweden and Switzerland, and decommissioning is an emerging priority for markets including France. As a pioneer of nuclear power, the UK’s nuclear industry has the experience to meet the demands of these opportunities. The DIT has a dedicated network of civil servants and specialists helping UK nuclear businesses to export their cuttingedge products, services and technologies to Highly competitive marketplace the rest of Europe. Language barrier, We look forward especially at the level of to working with technical conversations you on identifying Early engagement the best is imperative to opportunities for securing work your business, to help you win work overseas.

Europe is set to become the world’s largest market for nuclear decommissioning over the coming years, with the sector estimated to be worth €60bn by 2025. While much of this spend will take place in Germany, Sweden is a key decommissioning market too, writes POINTS TO Oliver Barnes, CONSIDER EIC Senior Energy Analyst

uclear power is the secondlargest source of low-carbon electricity in the world today, with 449 reactors generating enough power to meet 10% of the world’s total electricity needs. In the European Union (EU), this ﬁgure grows to 28.2% (Q2 2019), with half of the EU’s 28 nations utilising the technology within their respective energy mixes. As such, it is evident that not only is nuclear power important for electricity security in the region, but it also plays a key part in ambitions to reduce carbon emissions and meet international climate targets.

A new era However, nuclear energy is entering a critical period of development – one which will determine the shape of the sector in Europe over the next several decades. While 11.2GW of new nuclear capacity was connected to electricity grids in 2018, all of this was in Russia and China. The last nuclear plant to be grid connected within the EU was in 2007 at the Cernavoda plant in Romania. Meanwhile, the ﬂeet of nuclear power plants already operating in the region are ageing,

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Europe: Nuclear

MAJOR PROJECTS TO WATCH Germany Philippsburg 2 Nuclear Power Plant Decommissioning Value: US$500m Stage: Feasibility Status: Planning Operator: EnBW AG Brunsbüttel Nuclear Power Plant Decommissioning Value: US$500m Stage: Feasibility Status: Planning Operator: KKW Brunsbüttel GmbH

IMAGES: ALAMY/ISTOCK/SHUTTERSTOCK

Sweden

with most constructed during 1970s and 1980s – meaning they are reaching, or in some cases have already reached, the end of their 40-year designed life, pending any life extension investment. The situation is further exacerbated by decisions to phase out nuclear power such as those taken in Belgium, Germany, Sweden and Switzerland. Spain recently joined these countries by announcing in February 2019 that it would close all seven of its operational nuclear plants by 2035 as part of plans to generate all the country’s electricity from renewable sources by 2050. Moreover, France, the EU’s largest generator of nuclear power with 58 reactors, has pledged to reduce the share of nuclear in the country’s domestic electricity mix from 75% to 50%, citing an overreliance on the technology and a broader shift towards renewable generation. A total of 14 reactors will close by 2035 under the country’s long-term energy strategy, which will also see all coal-ﬁred generation cease by 2022.

Opportunities abound The projects will require international collaboration and expertise in order to

successfully carry out the many complex challenges that nuclear decontamination and decommissioning (D&D) programmes present. With competition from a wealth of nuclear organisations and growing pressures to reduce costs and deliver on time, supply chains will need to be eﬃcient, organised and proactive to win a slice of the €60bn decommissioning and waste management market developing across Europe by the middle of the next decade.

Key opportunities Planning and strategic development Bespoke technological solutions to challenging problems in hazardous environments Site management Decommissioning operations Decontamination and dismantling guidance Environmental assessment and restoration Radiation mapping and waste characterisation Transportation of waste and spent fuel Robotics and autonomous systems for decommissioning R&D into new and innovative techniques

Barsebäck Nuclear Power Plant Decommissioning Value: US$550m Stage: Engineering, preparation, removal and disposal (EPRD) Status: Contract awarded Operator: Barsebäck Kraft AB Oskarshamn Nuclear Power Plant Decommissioning Value: US$550m Stage: EPRD Status: Contract awarded Operator: OKG AB

Dates for your diary World Nuclear Exhibition 23–25 June 2020 EIC-organised UK pavilion, Paris Nord Villepinte The EIC lists current projects in Europe and contact details on EICDataStream. Further details can be found at: www.the-eic.com/EICDataStream/ AboutEICDataStream

www.the-eic.com | energyfocus

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Nuclear: Europe

Germany

Sweden

Following the Fukushima incident in 2011, Germany implemented a decision to phase out nuclear power by 2022. The announcement to shut down an entire sector that generated a quarter of the country’s electricity was unexpected, but political and public pressure to move away from nuclear power has been present for many years in Germany. The result is that, as of 2019, only seven reactors are operating, with 10 already shut down.

Sweden is also a key decommissioning market in Europe thanks to ageing plant and profitability pressures due to falling electricity prices and a controversial nuclear tax imposed on utilities. Four units are currently undergoing decommissioning at Uniperowned Barsebäck and at Oskarshamn, operated by OKG, a joint-owned enterprise of Uniper and Fortum. A further two units are due to come offline at Ringhals in 2019 and 2020, after Vattenfall and E.ON agreed in 2015 to shut the units due to declining profitability.

Key players The utilities – EnBW AG, PreussenElektra (E.ON), RWE and Vattenfall – are now planning their decommissioning strategies, with all obliged to proceed with immediate dismantling, whereby reactors will be dismantled over a 15–20-year period following shut-down. This will result in a congested period in the 2020s and 2030s, when Germany’s decommissioning programme will be in full swing. It is here where industry experts have raised significant concern – capacity. D&D projects have previously been one-off, smaller scale schemes and not in-parallel, large multi-site programmes. While there is significant

decommissioning know-how in Germany with established companies such as Energiewerke Nord (EWN), Gesellschaft für Nuklear-Service mbH (GNS), and NUKEM, experience from international players will be essential in completing the number of projects on time and on budget. This is an important consideration to the German nuclear utilities, which have had the operating periods of their nuclear assets prematurely cut short, hence contributions to decommissioning funds truncated. Successful entry into the market has the potential to provide a long-term pipeline of work and also the possibility of broader work in other markets such as Sweden due to the crossover in utility operations, like that of Vattenfall, which operates in both the German and Swedish nuclear sectors.

Thinking of doing business in Europe? Get help from... Department for International Trade (DIT) Email: michael.lindsay@trade.gov.uk

EIC London The EIC team is on hand to support you in doing business in Europe Email: info@the-eic.com

UK Export Finance (UKEF) www.gov.uk/government/publications/ﬁnd-an-export-ﬁnance-manager

Key players Sweden is home to recognised nuclear organisations with D&D experience, such as Studsvik, and also a growing cluster of multi-national companies setting up subsidiaries or forming partnerships to take advantage of decommissioning activities in the country. GE Hitachi Nuclear Energy and Bechtel announced an alliance in March 2017 to pursue decommissioning opportunities in both Sweden and Germany, while EDF-owned Cyclife and Finnish energy company Fortum formed a partnership in May 2018 to take advantage of D&D opportunities across the Nordic market. Challenges exist in the Swedish sector with regard to optimising logistics across the various sites and managing supply and demand of skills, equipment and technologies, dealing with the larger nuclear components within the nuclear island and waste management. However, while the parallel, multi-site decommissioning programmes of Germany and

The rest of Europe Outside of Germany and Sweden, there is a vast pipeline of decommissioning projects to come across Europe. In the west of the region, 33 units will close in Belgium, France, Spain and Switzerland by 2035, as well as the 22 Magnox reactors already undergoing decommissioning and 14 advanced gas-cooled reactors to close by 2030 in the UK. In the east, D&D work is continuing across Armenia (one unit), Bulgaria (four units), Lithuania (two units), Slovakia (three units) and Ukraine (four units), all Russian-designed reactors initially grid connected in the 1970s–80s.

Sweden may present problems pertaining to capacity, lessons learned can be transferred into future projects, resulting in economies of scale and significant efficiencies which can decrease the likelihood of delays to schedules and resulting cost overruns. This ‘lead and learn’ approach has been taken at the Barsebäck and Oskarshamn plants in Sweden, with a framework contract awarded across both projects to dismantle the two reactor pressure vessels located at each site. The Uniper Anlagenservice-led consortium with NUKEM Technologies was awarded the work in April 2019 and will firstly carry out dismantling at Barsebäck, starting in early 2020 following the receipt of a dismantling licence, before moving across to mirror the work at Oskarshamn. The contract is expected to be completed in 2024. GE Hitachi Nuclear Energy and Westinghouse were awarded contracts for dismantling the reactor pressure vessel internals at Oskarshamn and Barsebäck respectively.

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Renewables South America

Hotspot for renewable energy developments

Joanna Crellin Her Majesty’s Trade Commissioner for Latin America and the Caribbean, UK DIT

Across the region, scaling up the contribution of renewable energy to the future energy mix is a major policy priority. With Argentina, Brazil and Chile leading the way, Energy Focus provides snapshots of tendering activity

It is a pivotal moment for the energy sector in the region as countries are responding to deal with unprecedented increases in energy demand while reducing carbon emissions. Across the continent, governments are opening up their energy sectors to international competition and encouraging a transition to renewable energy – creating massive commercial opportunities. The renewable energy sector is one of our main priorities at the DIT as we see the potential for UK business to enter the market. We are present in 19 British expertise is countries throughout generally highly regarded Latin America and the Identify reliable local partners Caribbean and we have Invest in face-to-face experts who understand meetings the local markets, and can support businesses ﬁnd the right opportunities.

POINTS TO CONSIDER

Key opportunities Wind

IMAGES: ALAMY/GETTY

Argentina Argentina is on track to become Latin America’s most attractive renewable energy market, as the country sets its sights on 20% renewables by 2025. To achieve these targets, a series of renewable energy auctions are expected to take place over the next few years. The government is expected to auction 10GW of renewable energy capacity by 2025. Its ﬁrst renewable auction in

2016–2017 resulted in more than 2.4GW of wind power being contracted. The country has plans to contract 1GW of renewable energy in a new tender round at the end of this year. Round 4 of the Latin American country’s renewable energy programme RenovAr plans to contract 750MW of wind and 250MW of solar PV projects, as well as new transmission lines and

substations to allow for a much-needed expansion of Argentina’s 45,000km grid. Argentina is currently holding a small-scale renewable energy tender – known as MiniRen, or Round 3 – which is contracting 350MW of small wind and solar projects and 50MW of other technologies with 10MW maximum capacity. MiniRen is expected to be concluded in July 2019.

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Renewables: South America

Brazil During 2019–2030, installed renewable capacity (excluding small hydro) in Brazil is slated to increase from 34.2GW to 60.8GW at a compound annual growth rate of 5.4%. Solar and onshore wind are expected to grow at rates of 14% and 6%, respectively, making renewables the second largest contributor to the country’s energy mix by 2030. The country’s first energy auction since President Jair Bolsonaro took office in January 2019 was the first round of biannual tenders to be held until 2021. One A-4 auction, in which successful developers must build their projects within four years, and one A-6 tender – in which they must build within six years – will be held in each of the next three years. In June, 15 energy projects with a combined capacity of 401.6MW were awarded contracts in the tender. Iberdrola’s Brazilian subsidiary Força Eolica won two contracts for two 37.1MW wind farms in Piauí, while French

developer Voltalia added 21MW for a wind farm in Rio Grande do Norte – both in the north-east of the country. Six solar PV projects (combined capacity 203.7MW) were awarded 20-year contracts. Some 163MW of the total was reaped by five projects of Enerlife Energias Renováveis in the northeastern state of Ceará. Meanwhile, CEI Renováveis will be developing the 40MW Jaiba SE1 project in the inland state of Minas Gerais. Other A-4 contracts secured 81.3MW across five small hydropower schemes and a 21.4MW biomass plant slated for construction in Mato Grosso do Sul. Overall, all renewable projects will require financing of almost US$500m. The A-6 new energy auction is scheduled for 17 October 2019, and has registered more than 1,800 renewable projects with total bids of 101GW.

Chile The host country of the next UN climate talks (COP25) in December 2019 has announced its ambition to reach carbon neutrality by 2050, phasing out all coal-fired plants by 2040. In order to meet its clean energy goals and keep up with rising demand, Chile needs to add between 6.5GW and 11GW of renewable capacity in the next few years. And since these energy sources are variable, the system needs to greatly increase its flexibility to be able to switch between different energy sources. Chile has been a pioneer in technology-neutral auctions, enabling renewables to compete with fossil-fuel plants in calls for tenders, thereby allowing wind and solar to actually lead the recent power capacity expansion thanks to their competitive cost. With a total of around 5GW of

Thinking of doing business in South America? Get help from... Department for International Trade (DIT) Email: DIT.LATAC@mobile.trade.gov.uk

EIC Rio de Janiero The EIC team is on hand to support you in doing business in South America Email: clarisse.rocha@the-eic.com

UK Export Finance (UKEF) www.gov.uk/government/publications/ﬁnd-an-exportﬁnance-manager The EIC lists current projects in South America and contact details on EICDataStream. Further details can be found at: www.the-eic.com/EICDataStream/ AboutEICDataStream

renewables, including 2.3GW of solar and 1.5GW of wind, about 19% of current power supply comes from renewables – close to Chile’s 2025 target of 20%. For the first time since 2017, Chile’s Ministry of National Property has launched a public tender, offering almost 90km2 of state land for the development of renewable energy, targeting wind and solar projects. A total of 179 land plots will be offered, primarily in the northern and southernmost regions of Chile. According to Chile’s Renewable Energy Association (ACERA), more measures to boost renewables are expected to be announced, and Chile is already discussing the possibility of reaching 70% renewable power supply by 2050, and even 100% by 2070.

MAJOR PROJECTS TO WATCH Argentina Gastre Wind Power Project Value: US$3.5bn Startup: 2020 Stage: EPC Status: Contract Awarded Operator: Generadora Eólica Argentina del Sur S.A. (GEASSA)

Brazil Lagoa dos Ventos Wind Farm Complex Value: US$780.00m Startup: 2021 Stage: Multi-contract Status: Contract awarded Operator: Enel Green Power

Chile Bundang-Gu Calama CSP Project Value: US$2.5bn Startup: 2023 Stage: Conceptual design Status: Planning Operator: Andes Green Energy

48 energyfocus | www.the-eic.com

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O NO KI W NG

EIC

NATIONAL DINNER 2019

3 OCTOBER

The venue 8 Northumberland Avenue is one of central London’s hidden gems. It was originally the residence for the Percy family in the 1600s and has been immaculately restored, boasting high ceilings, impressive chandeliers, and ornate detailing. Accommodation is also available at the Club Quarters Hotel at 8 Northumberland Avenue.

THE MOST EXCLUSIVE EVENT IN THE UK ENERGY I N D U S T R Y ’ S S U P P LY CHAIN CALENDAR Join us at the most prestigious event in the UK energy industry’s supply chain calendar as we celebrate the achievements and successes achieved by YOU, our members.

Your guest speaker Dara Ó Briain will host the 2019 EIC Awards Ceremony. Dara is a celebrated stand-up comedian and host of well known TV shows including Mock the Week and Have I Got News For You. In addition to comedy, Dara has a love of all things science, co-hosting Stargazing with Professor Brian Cox.

Take advantage of this exclusive platform to host and entertain your own VIP guests at an unforgettable evening. Cost Table of twelve: £4,200+VAT Individual place: £365+VAT

Awards ceremony

Most of the major Tier 1 and Tier 2 EPC contractors, OEMs, operators and developers are represented within the audience, making this a unique opportunity to promote your brand. Please contact:

The EIC Awards Ceremony will recognise individuals and companies which offer a product or service with a positive and signiﬁcant effect on the UK energy supply chain.

Jamie Lowes, EIC Sales Executive +44 (0)1429 874 453

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Details of award categories and how to enter will be announced soon.

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EIC Member Section Head Focus Delta Controls Feature heading

MY BUSINESS

Dr Chris Webborn, Delta Controls gas companies in the 1950s. We were approved by all the majors and as they developed their own overseas operations, Delta would be a nominated supplier for instrumentation. So, we were able to build on this in many diﬀerent countries around the world. And as our aftermarket grew, we set up oﬃces and distributors overseas to support our customers locally.

Can you tell us a little bit about Delta Controls? Delta Controls designs and manufactures pressure, temperature, level and ﬂow instruments for process control applications. We work in the oil, gas and power sectors and have a growing presence in the nuclear power market. How did Delta Controls start out? Originally set up as a private company in 1950, Delta later became part of the Concentric Group. After a few changes of ownership, we’re now privately owned and have recently acquired the Mobrey business from Emerson, adding huge capability in our level-measuring instrumentation. We employ 150 people worldwide and export over 60% of our products. Being around at the start of the North Sea developments and the dawn of UK nuclear power, we’ve established ourselves with every major oil company and have products installed on the entire ﬂeet of nuclear reactors.

IMAGES: ISTOCK/SHUTTERSTOCK

What’s a typical day like? Every day is diﬀerent. We are very customer focused and spend a good deal of time solving their process control or alarm signal issues. Specialising in bespoke solutions for our customers has helped us win business all over the world. If you weren’t working at Delta Controls, what do you think you’d be doing? Perhaps photography – but I doubt I could have made a career of it! What’s been Delta Controls’ biggest highlight to date? The integration of the Mobrey business must be right up there. A great team of people,

Director Dr Chris Webborn takes Energy Focus behind the scenes at Delta Controls

and like Delta, dedicated to customer service. We are very excited about the future together. And yours? Helping our company develop our nuclear business in China. We have a long history in China but with limited success in recent years we set about a strategy to really understand our customer needs, and it seems to be working. We have now won some signiﬁcant business with the Chinese nuclear operators and the future is looking bright. Can you tell us a bit about Delta Control’s export journey? Delta started its export journey working with major UK oil and

What were the biggest challenges you faced? Understanding doing business with different cultures and adapting our offerings to suit. In instrumentation, product certification is vital and this needs to reflect the local markets requirements as well as the technical qualifications – especially so in nuclear. We have a huge number of different qualifications, including Russian, Chinese, American, Canadian and, of course, EU. What’s your advice for other companies thinking about exporting? Research your market – know your specifiers and users, and of course the competition. Find a good partner to help with local issues and language, and try and size the potential early. Understand the barriers to entry. You won’t get it right first time, so be prepared for failure and learn from your mistakes – then persevere… How can the UK government help with exporting? Focused trade missions to help new entrants find the right contacts and provide post-visit support at the appropriate levels. Get the regional and sectoral UK trade bodies to act as a unified group under a UK banner. Why should UK companies export? There is a huge appetite for good quality products and services. With the right team and approach, your exports can become a healthy part of your business mix.

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