Piping hot

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Yaseen Jaffer, CEO of Proclad explains how the oil and gas industry is working more closely to overcome supply side shortages for steel pipes.

High tensile steel pipes used in the oil and gas industry are in record demand, and supply side shortages have led to lead times exceeding a year.

This lack of supply is proving a major constraint in the development of hydrocarbon processing and transportation facilities. Here in the Middle East, a push for rapid development and plant refurbishment is exacerbating the problem.

Surprisingly, the worldwide pinch on supply is having some surprisingly positive effects on the industry worldwide, and from a producing perspective, this region in particular says Yaseen Jaffer, CEO of the Proclad Group.

"People used to complain when lead times were five months, then it jumped to eight months, and now we're in a situation where some of the pipes for this sector are realistically 18 months to delivery, which has had an obvious knock-on impact on project completion," says Jaffer.

However, because of these the long lead times all of the various organisations involved in refurbishing or building installations from scratch, are working together much sooner in the development phase.

"The oil and gas industries are incorporating more comprehensive planning at an early stage and we're seeing contractors, developers and end clients coming together and working more closely at a more advanced level than in the past," he adds.

To cope with the piping shortage, the key elements involved in plant and pipeline are moving towards a more coordinated and direct approach. "The issue of forward planning and decision-making is becoming more streamlined, more focused and much quicker as a result of this.

"This is in everyone's interest as a three month delay on certain items could quite easily translate to a one year delay on final delivery of the overall project.

Ultimately the specialised piping needed for oil and gas work is a vital part of the development, so by planning much further ahead projects can remain on-track."

The global shortage of high tensile steel piping is one that Jaffer sees the industry stuck with for a while yet.

The situation has come about because of unprecedented demand, and we don't see that dropping off in the short term, however, building the plants necessary to fabricate these pipes also has a long lead, so supply will increase, just not to demand level for five years.

Construction of the smelters and factories is underway but these facilities are not yet ready to meet the voracious appetite of an industry looking to capitalise on the current price environment.

"For the industry to take full advantage of the oil price being where it is, it needs its infrastructure up and ready as soon as possible.

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