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Sun 28 Nov 2010 12:00 AM

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The Chinese are coming! Truce, or dare to compete?

Huge interest in Sinopec at SAOGE is a taste of things to come.

The growing stature and importance of Far Eastern companies to
the regional energy business has long been a talking point among those based here.
No doubt a record showing of Chinese, Japanese and South Korean firms at this month’s
ADIPEC will reignite the great debates once again.

I’m sure a lot of visitors will use ADIPEC to check out international
competitors, and I expect a huge amount of interest and buzz around the Chinese
Pavillion. If the Saudi Arabian International Oil and Gas Exhibition (SAOGE 2010),
in Dhahran last month is an accurate indicator of local appetite, then other country
pavillions will have their work cut out to extract visitors from the
gravitational pull generated by our Far Eastern guests.

The giant Sinopec Services stand, pictured above, complete with
live guzheng player (a Chinese plucked zither), was busier than a Beijing bus station. And not
just on day one. As other people were packing up their stands there was still a
queue of people hoping to be hosted and grab an all important five minutes with
the senior representatives. The company clearly had ambitions beyond winng the coveted
best stand award (which it did), and were in Dhahran to make a statement of intent.
The official line was to meet local vendors and suppliers and foster better relationships
with the companies they will use as sub contractors.

But there’s the rub of it. When companies like Sinopec tend to
win big projects, it seems that they take on the entire job lot, rather than rely
on local suppliers. Vendors at SAOGE all had common enough grumbles about what happens
when the giant PMC firms from the East win contracts here in the Gulf region.

“They don’t let anyone else get a look in. All the work goes
to their own preferred suppliers, which are invariably from their own country,”
chimed the discontented masses. It’s not just in the upstream these companies are
operating either. Sinopec is involved in building bridges, roads and major infrastructure
developments in the Eastern
Province. In Al Khobar, Dammam
and Dhahran its civil works projects are dominating the local construction sector.
Not exactly the typical remit for a national oil company.

This all leaves a bit of a conundrum for local business managers.
If, or rather when, cheaper vendors and service providers match the quality expectations
of discerning NOCs, how will established businesses compete? Of course, competition
drives innovation, and keeping one step ahead of your competitors, wherever they
are from is what keeps companies in business, and makes trade shows a goldmine for
the observant. That said, it is highly likely the pavillions hosting companies from
the Eastern Hemisphere will be focal points at
ADIPEC, so maybe put aside a few moments to drop by before the crowds have a chance
to gather.

Daniel Canty is the Editor of Oil & Gas Middle East.

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