Middle East success for Linde

05 December 2005 00:00  [Source: ICB]

Germany-based Linde has had considerable success in winning contracts in the Middle East this year, and is already operating at the limit of its capacity.  Dede Williams reports

FROM HIS spacious glass-walled office at Linde’s headquarters in Wiesbaden, Germany, Aldo Belloni has a panoramic view of an attractive park. But the managing board member who oversees the gases and engineering division spends little time there. The Middle East ‘is where I prefer to be at the moment,’ he says.

But this is hardly surprising in view of the wealth of projects the Middle East has to offer western engineering contractors.

Among contractors, Linde has been one of the more successful, winning five new contracts in 2005 alone, four in Saudi Arabia and one in Iran. There are so many projects that even a contractor with the resources of Linde has to be selective. ‘There were several we could have bid for this year, but didn’t,’ Belloni remarks.

Linde is already operating at the limit of its capacity. Even though personnel have been added, its engineering staff is working overtime and outside manpower is being tapped.

In its bidding, Linde concentrates on Saudi Arabia, Iran and the United Arab Emirates (UAE). Its signature technologies for ethylene and air separation are much in demand from companies such as Saudi Arabia’s Sabic and Iran’s NPC. Polyethylene is the realm of east German subsidiary Linde-KCA-Dresden.

There are big rewards for western contractors in newly industrialising markets, and up to now little has interfered with the flow of orders from Sabic, NPC and the new private investor groups. Even the Iraq war has had scant effect on Middle East building.

But no market is without risk, even if this is ‘merely’ a cooling or overheating economy. The red-hot construction economy in the Gulf, which has shown up the region’s dearth of skilled workers, has led some projects to be stretched. Another reason often cited for delays is the local content requirement of some contracts.

Where foreign engineering firms are involved, ‘chances are good the plant will be finished on time,’ Belloni observes. If Linde has a turnkey contract, ‘delays do not usually occur, unless there are local bottlenecks.’

Political disputes are beyond a contractor’s control, but these can get in the way of business, even without armed conflict. US contractors, for example, are officially barred from working in Iran. Although it seems unlikely the EU would support a unilateral embargo to counter a threat from Iran’s nuclear enrichment programme, ‘European contractors have to consider what could happen if an embargo did occur,’ says Belloni. As one of the established western contractors there, Linde plans to ‘stay on the ball’, says Belloni.

The group is in the ‘final negotiating phase’ for two 1 800 tonne/day oxygen plants for Mobin Petrochemicals, to supply a methanol plant set to go onstream in 2008 at Bandar Assaluyeh. In the UAE, Linde has ‘a good starting position’ to handle Borouge’s planned $2.5bn increase in ethylene capacity in Abu Dhabi from 600 000 tonne/year to 2m tonne/year, says Belloni.

In Saudi Arabia, the group is ‘observing attentively’ the development of the 1.3m tonne/year cracker project (total cost of $8.5bn) planned by Saudi Aramco and Sumitomo Chemical at Rabigh.

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