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Growing Oil Prices Propel Demand for Prime Movers in the EMEA and FSU Oil and Gas Markets31 March 2006
Higher oil prices, new investments in expansion of oil and gas production at existing fields and continuous emphasis on discoveries are some key factors driving the prime movers markets in Europe, Middle East and Africa (EMEA) as well as the Former Soviet Union (FSU). While the enterprises involved must safeguard against over-expansion during the bubble and speculative periods, the possibility of earning greater revenues cannot be overlooked.
Increasing oil prices have resulted in petrochemical companies investing heavily in exploration and production of oil and natural gas. This development, along with the economically fast growing China, is driving the demand for prime movers across EMEA and FSU.
In such circumstances, it becomes crucial for prime mover companies to continuously measure performance to gain a competitive advantage. Some companies are making technological improvements in their prime movers in order to bring down their emission levels to within the acceptable range and thereby, satisfy the increasingly stringent emission regulations. Certain enterprises are going a step further by implementing technologies that decrease emissions to levels that are well ahead of the legislations likely to be implemented in the next few years.
"This greater emphasis on technology is reflected in increased R&D efforts and related spending, which companies need to balance with the price-focussed product approach," notes Frost & Sullivan (http://power.frost.com) Programme Manager Colin O'Hanlon. "Although this greater funding on R&D could curb the overall profit margins, companies can use their leadership in product quality as a key selling point in the long run."
While the funding could lead to superior quality, the inherent cyclical nature of the oil and gas industry makes the prime mover markets in EMEA and the FSU a tough environment to survive and sell in. The resultant imbalance between supply and demand along with the supply chain approach is leading to excessive manufacturing capacity.
Segments such as gas to liquid (GTL) as well as floating, production, storage and offloading systems (FPSOs) for deep water and frontier development are some areas where businesses expect to flourish. These areas require high initial capital, thus making returns in the medium to long-term very vital.
Both new as well as existing market participants are increasingly finding the oil and gas sector highly attractive, resulting in swelling competition, which, in turn, is adversely affecting revenues, and in many instances, escalating end users' price sensitivity. Particularly for entrants, establishing manufacturing facilities for prime movers involves huge investments. This restraint is mainly pertinent to small and medium-level equipment manufacturers that have limited resources and experience. As price becomes an increasingly important competitive factor, it will be crucial to exercise cost control as well as opt for the right manufacturing processes and source inexpensive components from developing nations.
Apart from solving prices and manufacturing facility issues, prime mover companies also need to deal with social problems, political unrest and, in certain cases, threats from terrorist activities. Despite the high potential demand for these equipment in the Middle East, Africa and the FSU - mainly on account of their vast natural gas and oil reserves - enterprises should be cautious of the changing political and social environments in these regions.
Further, companies are also focussing on providing enhanced customer value by entering long-term service agreements (LTSAs). This, along with a consistent emphasis on maintenance services and upgrades, will bring in greater revenues in future that can far outweigh the amount generated from the initial equipment sale and offer end users lower total ownership costs.
"Producing superior-quality products at competitive prices continues to remain an issue for the industry participants, especially for those competing in the Euro-strengthened western European markets," states Mr. O'Hanlon. "However, those in the EMEA and FSU markets are likely to meet this requirement and in 2011, unit shipments are likely to grow to 442, 24 and 651 for gas turbines, steam turbines as well as reciprocating engines, respectively."
Overall, opting for a decentralised approach to selling will increase the scope for new equipment sales, while simultaneously strengthening ties with existing clients. Implementing a complete network expansion structure becomes a key strategy in gaining a competitive advantage as well as in maintaining market share.
If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the latest analysis of Prime Movers in the European Middle Eastern African and Former Soviet Union Oil and Gas Markets the then send an e-mail to Magdalena Oberland, Corporate Communications at magdalena.oberland@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, and country. We will send you the information through e-mail upon receipt of the above information.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit http://www.frost.com.
Contact:
Magdalena Oberland
Corporate Communications - Europe
P: +44(0)20-7915-7876
E: magdalena.oberland@frost.com
Trisha Bradley
Corporate Communications - Americas
P: +1-210-247-3870
E: trisha.bradley@frost.com
Donna Jeremiah
Corporate Communications - Asia Pacific
P: +603-6304-5832
E: djeremiah@frost.com
Surbhi Dedhia
Corporate Communications - India
P: +91-22-2832-4705 Ext: 131
E: sdedhia@frost.com
Sharmin Jassal
Corporate Communications - Australia
P: +61-2-8247-8900
E: sjassal@frost.com
List of keywords in this press release: prime movers, Europe, Middle East, Africa, EMEA, former Soviet Union, FSU, gas to liquid, GTL, floating, production, storage and offloading systems, FPSOs, research, information, market, trends, technology, service, forecast, market share, gas, natural gas, oil, petrochemical companies, China, floating, production, storage and offloading systems, FPSO, long-term service agreements, LTSA, steam turbines, gas turbines, reciprocating engines
List of key industry participants: AB Volvo Penta, Caterpillar, Cummins, Dresser Rand, Duetz MWM, Elliot, GE Oil & Gas, GE Jenbacher, Hitachi, Iveco Aifo SpA, Kohler Power Systems, MAN, MAN Turbo, MHI, Motor Sitch, Motorostroitel, MTU, Perkins Engines Co. Ltd, Perm Motors, Peter Brotherhood, Rolls-Royce, Salute, Saturn., Scania, Siemens, Solar, Tuthill, Wartsila NSD Corp., Zorya Mashproekt
Source: prnewswire
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