Baker Hughes in Mideast expansion drive
Posted: 12 February 2008
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Baker Hughes, the world's third-largest oilfield services company after Schlumberger and Halliburton has earmarked an $80 million investment in the MidEast and Asia Pacific region, the company announced on Monday.
 The investment comprises of a new 25-acre regional headquarters in Dubai Techno Park , an education centre that will cater to the company’s eastern hemisphere operations and a site manufacturing plant that will employ more than 800 full-time employees.
The Middle East and Asia Pacific headquarters in Dubai will support the company’s business in 31 countries, including Egypt , Saudi Arabia , India , Indonesia , Malaysia , China and Australia .
The education centre, which will cater to the company’s entire eastern hemisphere, will have the capacity to provide technical and non-technical instruction for up to 300 students at a time.
The manufacturing plant, on the other hand, will begin operations by the end of this year. It will produce well screens and production management systems for sand control and optimised recovery from long horizontal wells, which are widely applied in the Middle East . The plant will supply these systems for installation in wells throughout the eastern hemisphere.
The new facility - which houses all these - will be officially opened on Thursday, February 14.
Baker Hughes expansion in the region is the latest in a string of international oilfield service providers seeking more prominence in the region.
Halliburton last year stunned not only the Middle East energy circle but also members of the congress and its home city Houston when it announced it will move its headquarters to Dubai .
One day after Halliburton announced its corporate office move to Dubai , arch rivals Schlumberger officially launched the world’s largest oil field training centre in neighbouring Abu Dhabi .
“Dubai is the gateway of the eastern hemisphere, and logistics here is excellent,” says David Barr, Baker Hughes Group President, Completion and Production. Eastern hemisphere, the common term used by most US-based companies, refers to Middle East, Asia Pacific, Europe, Africa, Russia and Caspian regions or simply put, everywhere except the Americas.
Baker Hughes has recorded Dh38 billion ($10.4 billion) revenue in 2007, around $2 billion or 20% of which is derived from its Middle East and Asia Pacific operations.
“North America is still the largest market for the Houston-based company but this region is our fastest growing market,” Barr told Pipeline.
Like Halliburton, Baker Hughes maintains that the investment in eastern hemisphere will balance its portfolio as the region is an oil-targeted market whereas the US is a gas-focused market.
“The Middle East is the fastest growing business because if you look at the drivers, North America ’s activities are driven by local natural gas. And the rest of the world’s activities are driven by oil. The natural gas business in the US has started to flatten out while the worldwide demand for oil is continuous,” Barr added.
Energy economists agree that the largest industry expansion in the next two decades is expected in the region. Relocation or expansion makes “perfect sense”, says Anas AlHajji, an energy economist who frequents the region, as this will help companies gain access to the largest oil reserves in the world.
Amy Myers Jaffe, a fellow for energy studies at Rice University ’s James A. Baker III Institute for Public Policy shares that view.
She said Dubai represented a convenient location for an oil service company in rtrying to win businesses from national oil companies – the entities that control future production. Currently, national oil companies like Adnoc and Saudi Aramco control around 90% of the world’s proved oil reserves while Western international oil companies such as ExxonMobil, BP and Shell hold less than 10% of the global oil and gas resource base. |
