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SLB predicts record Middle East oilfield services revenue

SLB has secured contracts with Saudi Aramco Aramco
Aramco workers at an oil plant. SLB has secured contracts with the giant Saudi oil producer
  • Global revenue up 12% to $6.6bn
  • Middle East and Asia up 22%
  • Opportunities from increased output

SLB, the world’s largest oilfield services company, is predicting record revenue growth in the Middle East this year, as the region’s oil and gas companies ramp up capacity levels.

The US company reported that international revenue rose 12 percent to $6.6 billion in the third quarter, its highest level since 2015. Opportunities in the GCC, Egypt and Iraq offset weaker results in North America, it said.

The Middle East accounts for about 30 percent of SLB’s overall revenue, according to Morgan Stanley.

The company’s CEO, Olivier Le Peuch, said in an earnings call that the Middle East and Asia together posted 22 percent year-on-year growth, “led by significant growth in Saudi Arabia, the UAE, Kuwait and Egypt.”

Tarek Rizk, SLB’s president for the Middle East and North Africa, told AGBI that he saw many opportunities in the core oil and gas business as countries such as Saudi Arabia, the UAE and Qatar expand their output capacities.

“Saudi Arabia is moving its maximum sustained capacity from 12 million to 13 million barrels per day [bpd], the UAE is expanding it from 4 million to 5 million bpd, while Qatar is pushing its liqueified natural gas production from 77 million tonnes to 127 million tonnes per year,” he said.

Rizk said SLB’s rig count had now rebounded, and drilling and evaluation were at a record high.

He said: “We see a massive shift in investment, especially in 2023. It is very strong now, and we expect further rig count increases.”

Last year, SLB signed a five-year framework agreement for drilling-related services with the Abu Dhabi state oil business, Adnoc, valued at $482 million, and a five-year deal with QatarEnergy for wireline services (the use of cable to acquire data and perform construction tasks in oil fields).

In Saudi Arabia, SLB landed a service agreement for the Jafurah unconventional gas scheme, the Middle East’s largest liquid-rich shale gas play. A play is an area in which hydrocarbons of a given type accumulate.

Tarek Rizk SLBSupplied
SLB’s Tarek Rizk says the company expects ‘more focus on low carbon and decarbonisation projects’

More recently, Rizk said, SLB landed an exclusive deal with Qatargas to deliver digital drilling solutions, as well as a contract for logging-while-drilling services for oil and gas fields for Saudi Aramco, the world’s largest producer.

Rizk also believes the $27 billion deal signed by the French company TotalEnergies in Iraq opens new opportunities: “It fits well to our strategic portfolio, because it will include services in the core and digital business, and could include new energy business as well,” he said.

SLB also sees opportunities in Egypt, after announcements this year involving the government and major energy players.

“There is a strong and renewed interest for gas, whether it is for local consumption or LNG exports, as Egypt has excellent access to Europe,” Rizk said.

The oil ministry of Egypt launched an international bidding round for exploration in 23 blocks by oil and gas companies in September.

A few weeks earlier, Eni, BP and Chevron announced they would invest $7.7 billion, $3.5 billion, and $3 billion, respectively, in production and exploration over the next two to four years.

New business

SLB, which is based in Texas, rebranded from Schlumberger last year. It is seeking to position itself as more of a technology company. 

The company announced in 2021 that it aims to be net zero by 2050, and Rizk believes this offers opportunities. “We expect more focus on low carbon and decarbonisation projects,” he said.

Rizk said that digital technologies and the new energy portfolio, which includes carbon capture, utilisation and storage (CCUS), hydrogen, geothermal, and energy storage, are part of the company’s growth strategy.

Oman, for example, is looking to develop its geothermal resources, and SLB is collaborating on a national strategy with its ministry of energy and minerals and the investment authority.

Rizk said the carbon capture and sequestration project developed with Saudi Aramco and Germany’s Linde “will be one of the largest CCUS plants in the region, sequestering about 9 million tonnes of CO2 per year”. The plant will be a part of the industrial hub in Jubail.

The oil and gas industry is responsible for around half of global methane emissions, and Rizk said eliminating them was another opportunity for SLB: “Here in the region, our customers focus on eliminating methane by 2030.”

Rizk said that striking a balance between security, affordability, and sustainability will be the biggest challenge for the industry, but, at the same time, it could also pose a big opportunity for the company.