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Fri 26 Sep 2008 04:00 AM

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Drilling demand

Journey to the centre of the Middle Eastern business.

Journey to the centre of the Middle Eastern business.

What does your IDM Group specialise in?

We build land-based drilling rigs of various horsepower and their component parts. We specialise in, and focus on, providing rigs that have maximum mobility. Typically, our competitors' rigs will drill at roughly the same speed and efficiency, but ours are much more mobile.

Why have you entered the regional market now?

In total the company has being going for 24 years. Our lack of expansion outside of North America was simply the choice of the two Houston-based guys who own the company. Only since I joined 24 months ago did we decide to enter the Middle East and North Africa market.

With that said, about five years ago they did sell their first complete land-rigs into Egypt. In recent years we have seen the offshore oil rig market plateau, whereas the onshore market is growing tremendously worldwide. Demand for rigs has been absolutely huge in the Middle East so we decided it was time to move out here.

Which countries in the region will you target initially?

We undertook a large amount of market research prior to coming over to the Middle East. Based on our calculations of current and future demand we have decided to focus on marketing our products in Saudi Arabia, Kuwait, Oman, Libya, Algeria and Egypt.

So why Dubai?

We set-up an office in Jebel Ali, Dubai, six months ago along with a smaller office in Cairo, Egypt. Dubai was chosen because we see it as the centre of business in the Middle East, and significantly, three of our major clients are based here.

Do you envision any challenges working in the Middle East?

Just like our business in North America, we sell mainly to international drilling contractors so I do not see there being any particular challenges. We have employed people who are very familiar with the Middle Eastern market so that will certainly help us. Ultimately, the major challenge we face is getting to know the region as quickly as possible and establishing a strong brand-identity here.

How do you plan to expand in the Middle East?

We have a very aggressive merger/acquisition programme under way. We have identified rig building and component part companies active in the Middle East as targets. Acquiring these would help us to increase our product offering, whilst complementing our exiting product line.

We are also working on a marketing and advertising campaign to be specifically focused on the Middle East and North Africa markets. I think we will concentrate on the rigs at first and then after our installation base grows, we will expand into after market services. We will potentially carry spare parts and inventory in the region.

How is business going in the region so far?

We have already sold seven rigs in the last few months to international drilling contractors. They are working in Oman and Algeria. We also sold to a company based in Dubai, but they are going to be operating the rigs in Russia.

Are you looking to expand outside of the Middle East?

We are going to be opening an office in Moscow in the next couple of weeks so that we can expand our work there. We plan to hire three people to concentrate on Russia and the CIS. They will still report to the Dubai office since it is essentially our international hub. Then from there we will expand into the Asia-Pacific market.

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