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6 those who clearly spots India as key for business: Wherever there is deep water, Oceaneering comes in, he told Focus Reports. We have always gone for strategic locations, and in fact India is a standalone location. The country has a lot of open future for oil and gas and that is why India was selected. The country currently makes a significant contribution to the growth and Oceaneering is also very keen on India for the future. Kedarnath being towed by Great Offshore's anchor handling tug supply vessels Courtesy of Great Offshore The company can also provide a solution not only in deep waters but even when it comes to shallow water. Let s say where divers cannot go, we come in. We are the kind of company that can companies have to follow a fixed format and process and must participate in the tenders. With the new Open Acreage Licensing Policy, whether it happens in 2012 or 2013, there should be more opportunities for new players to come in. This would also give easy access of geological data to E&P operators, hopes D Sa. support any type of operation. For any kind of difficulty we come up with a solution, clarifies Nayyar. India is a strategic location to establish operations, agrees K.G. Remesh director of Swiber Offshore, a Singaporean company that controls a fleet of offshore support service vessels and As the government is working on more investor-friendly policies, India is quickly becoming a strategic location for global players. Parmjit Singh Nayyar, Oceaneering country manager India, is one of construction vessels, when asked what made his company come to India. We believe India to be one of the most dynamic and fastest growing markets for offshore oil and gas activities, with a big and Oil & Gas Financial Journal December 2011 energy.focusreports.net 51

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14 ization, India s PSUs are dominat- addition of new products and ing the industry both upstream services, when these are not part of and downstream. Given their size, the scope of work that was decided entering into agreements with them initially, even if they are brilliant is a must for any company wanting products that could meet their to be present in the Indian oil and objectives and more. gas industry. Contracts are often Indeed, the procurement system long-term and, given the state is very strict, as the selection of backing of these companies, safe. In their attitude to new tech- Sajiv Nath, managing director, Endress + Hauser Shishir Joshipura, managing director and country manager, SKF India suppliers, either service companies or equipment providers, is based nologies, there are major differences between India s National Oil Companies (NOCs) and International Oil Companies (IOCs), Olivier Konig, country manager India of Weatherford found. NOCs and IOCs in India have a very different approach to technologies. The IOCs are very forthcoming and open to trying new technologies exclusively on price, what is called the L1, or lowest bid. Clearly, this process has changed the landscape of the industry, influencing not only the local industry but also the international companies, which have been progressively reducing their prices in order to secure contracts with the PSUs. As Dolphin Offshore s while NOCs often have stringent procurement, he continues. Besides, with NOCs, there is not enough flexibility to allow the managing director and CEO Satpal Singh explains, the worldwide economic situation and more particularly the reduction in offshore Oil & Gas Financial Journal December 2011 energy.focusreports.net 59

15 dollars a day. It has been very difficult for Indian companies to pick up work. The same issue is faced by the equipment suppliers. The concept of L1 is hurting the industry, said Javed A Hawa, managing director of Hawa Valves, speaking on the valve industry. There is an evaluation done by engineers; however, those engineers are not valve engineers. They will look at any company and their products against some parameters that have been set by their management but Sulzer facilities, Pune oil and gas development projects forced international companies to come to India and bid competitively. They started to dump prices to get work in India, just to keep their assets deployed. As a consequence, in the last two years, the rates of construction barges have gone down from 455,000 dollars a day to 175,000 they do not have the in-depth knowledge to understand what differentiates one valve company from the next. In fact they are carrying out an evaluation, which is prior to the bid opening, but that evaluation is skewed from the beginning. The process is flawed. In order not to compromise with the quality standards, the company decided to focus on the global market, rather than the Indian one. We realized that the values that we were bringing to the investor in terms of HSE were better recognized by the global end users in the hydrocarbon sector, rather than the PSUs. However, for international companies that are setting their foothold in India, PSUs remain the first target, and one of the challenges is increasing the acceptance of new technologies. Given the importance of the public sector within the Indian market, the idea first needs to be sold to them, said Sulzer s India President B. Balaji. At the same time, as markets are developing, customers also are willing to try new technologies. This has opened up doors for us, as we are able to bring a lot of world class technology in India through the Sulzer Chemtech channel. Luckily, interest in advanced technology is increasing and the international players are capitalizing on these nascent opportunities. Endress+Hauser s managing director Sajiv Nath has seen landslide changes in the way in which the country deals with new technology. The market has predominantly consisted of PSUs but has evolved over time. I still remember the phase during the 1980s, when talking about new technologies and software was not well 60 energy.focusreports.net December 2011 Oil & Gas Financial Journal

16 accepted, he explained. Today it country impacted the reputation is the innovative technical geeks of Indian manufactured products, who drive the Indian market. In fact, fairly or not. Indian technologies are more driven Up until 1990, there was not by the end users than by EPCs. much of a market scope for the Endress+Hauser has been success- Indian industry, especially as far as fully able to identify certain geeks valves were concerned, Jagdish amongst these end users who have Prajapati, managing director of been receptive to technological change. Javed A. Hawa, managing director, Hawa Valves B. Balaji, president, Sulzer India valve manufacturer Panam Engineers recalls. Indeed, the purchas- This aspect has been confirmed by Konig from Weatherford, who is currently at his second stint in India. Over the years the country s O&G business has evolved and the country is today much more open to new technologies, which supports Weatherford s growth strategy, he said. The opening up of the market has been ing mentality abroad was laden with a few prejudices in terms of region, business ethics, etc. But once they came to the realization that products from countries like India can be of high quality, they began wanting to trade with us more. While the situation has changed for the better and Indian prod- supported by the entry of international companies There have been several new private Indian companies that have secured blocks in the latest NELP rounds. From price to quality: the Indian re-evolution As historically many of the local manufacturers have been focusing on lower prices in order to guarantee an access to a very priceconscious market, for many years the image of India as a cost killer ucts are sold on foreign markets, Indian companies still have a gap to close, Prajapati said. There is still a little gap [between Indian and international quality], as far the industry world is concerned. The acceptance of Indian products is much more prominent now as compared to 10 years ago, admits Nath of Swiss-based Endress+Hauser. To him the ability of Indian engineers to learn and integrate new technologies has much to do with this success: The Indian workforce has tremendous technical skills. Thanks to the Oil & Gas Financial Journal December 2011 energy.focusreports.net 61

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18 capabilities, said community should look global and C.E. Fernandes, accept companies which are com- chairman and ing up aggressively to meet the managing direc- demand in these areas, especially tor of GEI. There large multinationals such as Chev- was a time when ron, Shell, ExxonMobil. They should Indian qual- open up in such a way that compa- ity was neither nies from the developing countries, Panam Engineers manufacturing facility appreciated nor accepted in most like GEI, can get a good participation to join in their progress. C.E. Fernandes, chairman & managing director, GEI Industrial Systems countries; however, in the last decade or so a lot has changed. There has been a shift in perception in recent years and many are now confident of the quality and technology of Indian products, which are at par with European vendors, he continues. With JVs in Oman, Brazil, Singapore, and plans to enter South Africa, Fernandes has a word of advice on how the international O&G industry should deal with companies like his. The O&G Refining, the future of India? Even though India has been undoubtedly developing its offshore sector, as well as a vibrant manufacturing industry, the most promising sector in the O&G industry still seems to be refining. India already contributes to 4% of the world refining, with an installed capacity of almost 200 million tons per annum in 2011, and showcase the Oil & Gas Financial Journal December 2011 energy.focusreports.net 63

19 addition to expanding capacity at its Kochi refinery, has commissioned the Bina refinery, which will have a capacity of 120,000 barrels per day with the potential to raise it to 300,000 barrels. The other Mumbai-based stateowned refinery, HPCL, plans to Hydrocracker project, Haldia refinery, Courtesy of Punj Lloyd largest single-complex refinery in the world, the Jamnagar complex by Reliance Industries. Notwithstanding these impressive figures, the country is continuously adding new capacity and is expected to reach 300 million tons per annum by Most of the state owned players are adding capacity. The PSU Indian Oil has recently completed the expansion of its Panipat refinery to 300,000 barrels a day, from 240,000. State-owned BPCL, based in Mumbai, with a refining capacity of 30 million tons per annum, in Rabindranath Burman, director and country head, ITT Corporation India expand capacity of its Visakh Refinery by 9 million tons as well as a relocation of the Mumbai refinery, which currently refines 6.5 million tons, to the west coast of India. The company furthermore commissioned its first refinery in the north of the country, in Bathinda in the state of Punjab, through a joint venture with Mittal Energy. The HPCL Mittal Energy Limited (HMEL) grass root refinery will be commissioned by March 2012 and is expected to produce 9 million tons per year. The expansions in the country s major refineries have also allowed the service industry to increase its capacities. Swiss manufacturer Sulzer for instance has been expanding its capacity in order to support the boom in the refinery industry. In fact, Sulzer India has carried out a significant portion of the mega projects in refineries in 2006 and petrochemical in 2007 & Considering we expanded our plant s capacity in 2005 and 2006, so before the booming really started, the timing was excellent. Successful execution of large projects has given a lot of confidence to our customer for future collaborations also, Sulzer s president of Indian operations B. Balaji said. The new projects have also created a shift in the structure of the industry, as there has been a shift from a PSU dominated market to a number of private partnerships. For instance, the biggest refineries in India are not PSUs but Reliance and HMEL, which is a partnership with the Mittal Group, ITT s managing director Burman pointed out. Indeed, these major expansion projects have created a number of opportunities for the service industry and Burman believes that the extra A. Basheeruddin, managing director and co-founder, Furnace Fabrica 64 energy.focusreports.net December 2011 Oil & Gas Financial Journal

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