Everybody thought there would be a decline in demand along with the oil price, so most of the traders did not bring enough equipment.

Rabie RUZIEK Executive Manager TERRANAUT TECHNOLOGY

Evolved demand

May 18, 2017

TOGY talks to Rabie Ruziek, executive manager of Terranaut Technology, about the company’s current projects, the evolving demand for equipment and the use of new drilling technologies in the country. Terranaut Technology is a construction subcontractor servicing the oil and gas industry in Kuwait.

Established in Kuwait in 2009, Terranaut Technology is a trenchless services provider in the sanitation, electricity, oil and gas and pipeline markets. The company also provides microtunneling, horizontal directional drilling, pipeline construction, welding, steel fabrication, excavations, steel and concrete works.

• On demand: “There are many companies in our field, but in 2016 there has been high demand for equipment and not enough supply. Everybody thought there would be a decline in demand along with the oil price, so most of the traders did not bring enough equipment. What happened was the opposite; Kuwait went against the flow. KNPC has the biggest budget ever from 2016-2018. Everybody is looking for equipment now and every equipment company is booked for the next six months to bring in equipment from abroad.”

• On horizontal directional drilling (HDD): “HDD has been utilised in Kuwait for 20 years. Firstly, it is environmentally friendly and does not disturb the environment very much. Even in the city centre, we can cross road cables while traffic is flowing with no disturbance at all. Secondly, you are making sustainable passage for a pipeline. If the pipeline has something wrong with it next year, you can easily pull it out and replace it without disturbing the surface because a permanent sleeve was built underground.
Another advantage is the speed. For example, if you cut a highway for a pipeline, it will disturb traffic and take weeks. With HDD, we can do it in three days, working on the side of the road with no effect on traffic.”

Rabie Ruziek also discusses Kuwait’s hydrocarbons construction market. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Rabie Ruziek below.

 

Is there enough technology and labour in the market to support Kuwait’s hydrocarbons projects?
The knowledge is there, but big companies in Kuwait do not have stable financial capabilities. Many large companies are not paying people, and Kuwait National Petroleum Company (KNPC) and the Central Tenders Committee had to warn several international companies and local firms to pay their subcontractors.
Over the past 20 years, many projects were awarded to international companies, and whoever did not win was recommended for the next project. The government has opened pre-qualification for more companies to create competition among international firms.
There are many companies in our field, but in 2016 there has been high demand for equipment and not enough supply. Everybody thought there would be a decline in demand along with the oil price, so most of the traders did not bring enough equipment. What happened was the opposite; Kuwait went against the flow. KNPC has the biggest budget ever from 2016-2018. Everybody is looking for equipment now and every equipment company is booked for the next six months to bring in equipment from abroad.

What major challenges do you face while working Kuwait’s oil and gas market?
Sustainability in Kuwait depends on having knowledge and knowing how to manage it. Most companies entering the market will not be able to sustain themselves for many years. In Kuwait, you need to have good public relations, understand how to obtain visas and process all the documentation.
In 2016, more regulations were introduced for the labour force. This really makes our lives difficult, as it takes a lot of effort to get qualified people on time. We had finished 80% of our most recent project and were still waiting for visas for workers. We got them in December 2016 and are starting to bring people over and get visas to do the next project. We are preparing for the future.

How do you see the construction industry in Kuwait evolving in the future?

There are some major projects in the pipeline, such as the Al Zour refinery, partially awarded to Hyundai Heavy Engineering. We are expecting some road crossings for them. It is a big project, and our part is worth KWD 800,000 [USD 2.61 million] for the road crossing alone. There is a corridor from Al Zour crossing many roads up to Mina Al Ahmadi and Burgan for the pipelines. The project is slated for completion in 2018.
Another major endeavour is the Clean Fuel Project, which is currently in the first stage of infrastructure development. Later stages will connect the pipelines. This presents a big opportunity for us.
Another project to be awarded shortly is the pipeline from the Burgan area to refining facilities in Kuwait. The main contract went to Dodsal Engineering [and Construction]. The road crossing contract alone is worth more than KWD 1 million [USD 3.26 million]. As [Dodsal’s] preferred subcontractor, we hope we will be on the project too.

What were Terranaut Technology’s primary projects in Kuwait in 2016?

In 2016, we bid on some of the largest projects in Kuwait’s oil and gas history. The Kuwait Oil Company [KOC] is now building three big oil gathering centres in the north of the country. These three gathering centres all have pipelines connecting them to the GC-31 oil gathering centre. The contract for GC-31 was awarded in 2016 to Dodsal Engineering and we were awarded work for non-destructive road crossing and HDD [horizontal directional drilling].
Dodsal Engineering is our largest client; the two contracts are worth KWD 300 million [USD 979 million] and our part of the project is valued at KWD 300,000 [USD 979,000]. We are KOC’s approved sub-contractor for this specialised, non-destructive road crossing and HDD. We have completed 80% of this project.
Another project we are involved in is KOC’s Effluent Water Treatment and Injection Plant [EWTIP] in northern Kuwait. This project also requires some road crossing work. We have just started the commissioning phase and have completed two or three crossings.
EWTIP is also a big contract. Originally awarded at KWD 280 million [USD 914 million], it has already exceeded this budget. They have changed the roads and are planning to expand the network to all water wells in northern Kuwait. Our contract for EWTIP is now KWD 290,000 [USD 946,000].
In 2016, we were also awarded work on the Lower Fars heavy oil contract being undertaken by Petrofac in a joint-venture with Consolidated Contractors Company. It is slated to begin in January 2017. Our contract for the project is worth KWD 350,000 [USD 1.14 million].
Due to this demand for our work, we increased our assets in 2016 and invested more in equipment. We bought a 45-tonne Vermeer horizontal directional drill. This is a big addition to our team. Previously in Kuwait, KOC had been limited in its drilling to only 26 inches [66 centimetres]. It would then opt for microtunnelling.
In 2016, we drilled up to 42 inches [106 centimetres] by HDD, which was the new standard for KOC. Microtunnelling is triple the cost and takes up to one month. With HDD, the time to execute one road crossing is two to three days, maximum. This is a big achievement.
Last month our team even went further, using HDD rig to pull 56-inch CS pipe (three lines for GC-31 of 120 feet [36.6 metres] each). We managed to finish a three-month job in 28 days. The client was thrilled by our performance on that site.

What are the advantages of HDD technology?
HDD has been utilised in Kuwait for 20 years. Firstly, it is environmentally friendly and does not disturb the environment very much. Even in the city centre, we can cross road cables while traffic is flowing with no disturbance at all. Secondly, you are making sustainable passage for a pipeline. If the pipeline has something wrong with it next year, you can easily pull it out and replace it without disturbing the surface because a permanent sleeve was built underground.
Another advantage is the speed. For example, if you cut a highway for a pipeline, it will disturb traffic and take weeks. With HDD, we can do it in three days, working on the side of the road with no effect on traffic.

How competitive is the market for HDD and microtunnelling in Kuwait?
There are more than three or four companies offering HDD and microtunnelling services in Kuwait. We consider ourselves the most specialised, because we do not do anything else. Other companies have one or two rigs and maximum one crew to operate it, which gives them no options to compete.
We also have good backup. We have more rigs and are using Vermeer products, which are very durable and reliable. We provide options that other people would not take the risk to give. For example, in December 2016 a contractor was executing a crossing for KNPC and, after finishing 80% of the contract, could not complete it. We were called in to finish the job. We develop our reputation from these situations. That incident helped us be awarded an LFHO [Lower Fars Heavy Oil] project from the same client which worth KWD 350 000 [USD 1.16 million].
In terms of work outside of Kuwait, we have already registered a company in Egypt via a joint venture with a local company and are in the process of qualifying it. We will send equipment and begin activities there in early 2017.
We also have plans to expand into Saudi Arabia, but have not taken steps towards that yet. We need to wait because the market there is not as good as it is in Kuwait. With 2016 being such a busy year, we did not have the time to expand. We thought it better to concentrate on Kuwait for the moment. However, we thinking seriously about approaching the UAE and Oman markets as well.

For more information on Terranaut Technology in Kuwait, including the company’s latest operations in the country, see our business intelligence platform, TOGYiN.
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