Industry, including the oil and gas sector, is undergoing a sea change. The fourth industrial revolution, or Industry 4.0, is upon us with every aspect of performance, from operational expenditure to safety, being disrupted by new technologies. German conglomerate Siemens, a provider of digital solutions and automation, is in a sweet spot right now.
It was surely just a coincidence that Siemens Innovation Day in Dubai was held recently beneath the glass and stainless steel glare of the Burj Khalifa, the world’s tallest structure – itself a testament to the continual pursuit of endeavour dating right back to the days of the pyramids.
Dietmar Siersdorfer, the company’s CEO in the Middle East, has spent three decades with the firm working across multiple sectors and regions and has witnessed seismic change during that time as technology has emerged from the pre-Internet age to the possibilities of artificial intelligence (AI).
Speaking to Oil & Gas Middle East after an event that looked with optimism towards the technologies of the future, Siersdorfer also sees upside potential in the hydrocarbon sector as oil prices remain healthy and regional governments are once again tempted to invest in future projects and opportunity.
“The oil price is close to $70, which is good news, and we see investment coming mostly in downstream at the moment. Also, when you talk to downstream companies active in the segment, when they look back at the last fiscal year, they all report very good figures even when there was a low oil price.”
By contrast, Siersdorfer doesn’t expect to see too many new upstream projects taking shape although he expects the Abu Dhabi National Oil Company (ADNOC) to invest in the “gas infrastructure” to reduce the UAE’s reliance on other countries and to maximise its own resources.
The demand for natural gas to drive power supplies is accelerating and Siemens Energy Outlook 2018, released earlier this year, emphasises that gas will remain the region’s number one source for power generation through to 2035 and beyond, “representing 60% of installed capacity”. But the report predicts that the use of renewables, an area Siemens is increasingly active in, will more than triple in the same period.
For Siersdorfer, investing in the exploitation of natural gas, if a country possesses that resource and can then remove a dependency on third parties, helps to offset the steep expense of some gas extraction techniques, like sour gas sweetening and gas liquefaction units, or trains, vital for liquefied natural gas projects. He feels a recent spike in the price of gas also allows “headroom” for further investment in the infrastructure required to exploit gas supplies.
But for an instinctive innovator like Siersdorfer, a lack of technical know-how and a missed opportunity is a tangible frustration, as Iraq’s energy sector demonstrates.
“Look, for example, to a country like Iraq, they have a huge amount of gas which they flare every day. If they would build some infrastructure to capture the gas from flaring, that would give them a huge amount of gas just to build power stations and use the gas efficiently, which today is just creating emissions and nothing is done with it.”
Siemens has certainly recognised the increasing influence renewables will have over the coming decades but Siersdorfer thinks natural gas will maintain a dominant hold on the regional power supply as clean energy alternatives cannot replicate the sheer magnitude of 200 gigawatt projects alone, although “scaling” renewables with natural gas is most definitely an option. This energy mix works by utilising renewables, like solar, when the sun is shining and tapping into gas at night or when it’s cloudy, as a go-to foundation power source.