Global Growth in Offshore Fuels Local Procurement
Worldwide, offshore oil production is set to rise by about 43% in the next five years, with global offshore gas production projected to increase by 83% within four years. Malaysia, Indonesia and China will see major growth in offshore investment and production, driven by new finds, improved technologies and diagnostics, and continuing high fuel prices.
This is good news for offshore service-providers such as safety, asset optimization and technical training companies, as well as engineering, procurement and construction companies (EPCs), equipment fabricators and shipyards. Industrial automation and equipment companies, steel companies and logistics providers all stand to benefit from the offshore boom as well.
To win contracts worth millions of dollars, these suppliers need to be attuned to shifting supply chain dynamics. Naturally, cost is one major consideration. Changes might be made to equipment design during the fabrication stage and to avoid the high cost of new equipment procurement, fabricators might be made responsible for equipment procurement instead of the more usual EPC.
The traditional division of roles between EPCs and fabricators is more ambiguous in Asia, with many local fabricators reported to be taking a larger proportion of the contract award and ‘EPC-type’ responsibilities, often at the instigation of the oilfield-owning government.
International industrial equipment suppliers with local partner companies, joint ventures or local offices are therefore in a better position to bid for awards in Asia, where preference is often given to ‘local content’.
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