Caspian Energy (CE): Mr. Ziesemer, how does the current global market condition impact the business of Endress+Hauser, especially considering the low oil price?
Michael Ziesemer, Chief Operations Director, Endress+Hauser AG: In the moment the market condition is mixed, so to say. Of course low oil price is slowing down the business in all oil producing countries, particularly in the oil-gas upstream business. We have significant turndown in the business. On the other hand, the upstream oil-gas business for Endress+Hauser is roughly 15% of Endress+Hauser, therefore is not heavily impacting our results, it is simply slowing down. And we have to see now how the oil price will develop further. It is very difficult to predict. The downstream side is still sizable business. It is noteworthy that low oil prices promote attraction of investments into the downstream sector, which preconditions the growth of the industrial sector of economy, for instance in the USA. So it is a problem but I would not call it a crisis what we have. It is simply a slowdown in the business, so from that point of view it is not really impacting our engagement here in Azerbaijan and other oil producing countries. It is a name of the game that markets are going up and down.
CE: What values and principles are applied by Endress+Hauser when elaborating process solutions for the customers?
Michael Ziesemer: First of all and most important - listen to the customer. I think that is very important. We always see our relation to the customer as a dialogue and the listening is even more important than the talking. That is sometimes not so easy because sales people try to talk a lot but listening is very important. Of course it needs competencies in engineering particularly, in project management, project execution and it needs technologies. The heart of good process solutions are always advanced technology. As an example I can take our Coriolis Mass Flow Meters that is surely one of the leading technologies in the world and by means of that one can establish highly accurate loading, unloading applications, for instance, for crude oil, and even do custody transfer where requires high accuracy. So, dialogue, listening to the customer, competencies in people, and technology, I would say that are key ingredients for good process solutions.
CE: Which services is Endress+Hauser now ready to offer its customers around the globe?
Michael Ziesemer: Well all services need it to keep process automation and instrumentation equipment modern and healthy throughout the lifecycle and the lifecycle of plants of our customers today, that are 20, 30 even 40 years. So all what is necessary, to keep these installations in good shape. Services in that direction are currently provided. So, what kind of services are they? They start with engineering services in order to have the right design in the solution. It involves supervision of construction services, start up and commissioning services, documentation and project management services, and it is ending with all kinds of after sales services. Take as an example recalibration services because instruments undergo recalibration after a certain period of time in order to set full accuracy. So, we provide all kinds of services to our customers.
CE: What is the difference between your and other companies’ services, provided at the market?
Michael Ziesemer: Well, it is starting of course with the qualification of people. So we do this with our own service people. They are particularly trained on a regular basis. We care a lot about health and safety compliance rules of these people. The further point, which is important of course, is the right tooling. When I say tools, I don’t talk about a screw-driver or a hammer, I mean software tools. Basically all of our instruments have micro-computer inside, which make a self-diagnosis of certain instruments. Our service people have these IT tools to get the information out of instrument and interpret it. So, good service today has to do a lot with IT. Apart from this, it is possible to improve quality of services by extracting precise data by means of latest technologies and their appropriate maintenance.
CE: Which are the key industries of Endress+Hauser? How important are the sectors as oil, gas, energy?
Michael Ziesemer: Fundamentally, we want to serve all the different sectors of process industries. So by purpose we don’t limit ourselves just to one sector. Why is it so? There are two reasons. Number one: to focus on the totality of the process industries gives us the best scale effect so that we can increase the volume of instruments we produce. So customers in all sectors are benefiting because of that. Second point is stability because not all sectors are in crisis in the same time, so we focus on the different sectors. So, specifically to your question, if you take oil and gas, and chemical and petrochemical together it is 40% of our business.
CE: Which solutions can be in demand in the Caspian region, given its geographical features and climate patterns?
Michael Ziesemer: Well, fundamentally, the oil-gas industry is a global industry today. So the solutions here in the Caspian region from our point of view do not differ fundamentally from the solutions we provide in other regions of the world into the oil-gas industry. Now what are other demands of customers specifically: I would like to mention safety as one point. I think safety is of importance. It is noteworthy that emergency shutdown systems where process automation instrumentation plays a very fundamental role for ensuring functional safety and environmental protection. Think about the danger of spills when oil is getting into the ground water or getting into the soil. Now what can the process automation do in that instance. For instance we supply for many years overfill prevention systems which independently monitor all kinds of containers. When the level in the container is reaching certain volumes, the operation of a facility automatically shuts down. So, safety is very important project.
Further one is of course accuracy, because today very often we have not just one company but a number of companies working in the supply chain of oil. So ownership of products is changing. For instance when you pump crude from the land into a ship, it can change an ownership and if you think about the price of barrel of oil, it is quite important if you have an accuracy of 1% or 0.1%. So the precision of all kinds of metering is the second subject we see.
As a further one I would mention operational costs, particularly now with lower oil prices. All operators are under stress by means of operational costs.
So we try to help customers by getting earlier and more appropriate information on maintenance so that they can do the maintenance pinpointed on the needs. Again, better information out of the plant by means of sensors and instrumentation is going to help them.
So I think safety, precision of metering solutions, improvement of operational costs are important goals of our customers where we can lend them support by means of automation and instrumentation.
CE: Which products and solutions would you offer for lowering system risks upon oil-gas production?
Michael Ziesemer: Of course now when it comes to the accident which currently happened in the Caspian, we have to wait for evaluation which will be done by the authorities so that we really can pinpoint solutions on that. But fundamentally you can say a safe installation today is an installation which on one hand is well done from the engineering point of view. It is all starting with the proper engineering, a then proper supervision of all kinds of risks. Solutions have to be developed out of the risk assessment. As an example, we can take again spills. Basically, you have to know gradation of all kinds of fluids which are dangerous and where do we need now supervisory systems which can be used to shut down, maybe not the total operation, but the operation in the certain part of the plant.
Also more generally, today when we develop and produce products, safety integrity level is inherent in the instrument. So today when you take one of our pressure transmitters or level meters, there is an inherent safety in that. So that when you use that in a safety shutdown application that you can be sure that this instrument is fulfilling task. But of course, at the end of the day we have to conduct, as I said, risk assessment and then pinpointed solutions for all kinds of risks.
CE: You have been working in Kazakhstan for a long time. What success have you achieved throughout this period?
Michael Ziesemer: Of course when we talk about Kazakhstan, maybe my colleagues from Almaty can say even more about that. When we started our support in Kazakhstan, fundamentally the point was that we saw a necessity to support our customers in a better way. We know that even today if you have internet you can get information, local support, local service, be close to the customer, speak the language of the customer as the language is not always English. There are other languages as well. This was important. And in the meantime we got a number of sizable projects not just in Kazakhstan, but in the total region, also here in Azerbaijan. In the meantime we have a good installed base.
CE: What kind of new developments can customers expect in the next years? Which trends are considered being important for Process Automation?
Michael Ziesemer: Of course there are a number of trends. But let’s take just a few. Number 1: internet of things. We see that internet technologies are travelling more and more into process automation. It means that more and more internet communication is used. For instance, more and more we see wireless instruments. So we are a wi-fi communication. We also see certain functions of process automation are travelling into the cloud. So cloud applications, cloud computing becomes more important. Data analysis, big data applications become more and more important. So that is one trend I would say. Internet of things, internet technologies, travelling into process, automation is that we continue in the next years.
Second trend which I think is important more advanced analytics. Very often we measure and automate what we can measure. So we measure pressure, flow rate, temperature, but very often the real goal is to see certain molecule, for instance in the refinery. So, basically you want to know what is the composition of the different molecules in the mixture in your process. It was impossible to measure that in the past. It was necessary to take a sample, bring it to the lab, there you have an analytical equipment, and you find out the composition of the molecules and then you go back to your process and adjusting the accordance, which will take hours. What we need is technology detecting such molecules both during the technological process and online. For two years we have been applying spectroscopy technology where you can measure with a laser beam from outside through a glass window into the process and you can find out the composition of molecules. In the past it was possible to do only in the lab. Now we can do it more and more in the process itself. So spectroscopic principles are travelling into process control and other what we call advanced analytical systems as well. So not just measuring process conditions, and also controlling process conditions (like temperature, pressure) but also direct measurement of quality, content, composition of molecules. That is also a very important trend. So more and more optical systems will be applied, and Romans spectroscopy is one example for that.
CE: Which projects does the company find priority in Azerbaijan?
Michael Ziesemer: Well I think Azerbaijan will get in future more importance for Endress+Hauser group. We see the country in a position where it can play even more important role in the world. We see a lot of investments of SOCAR in other countries, for instance in Turkey. We are also working on the SOCAR projects in Turkey. We see that SOCAR in the meantime is becoming a global company, it is not anymore a company just in Azerbaijan. So but also when we see the downstream activities, more and more petrochemicals are used. So all that is indicating that this country in the concert of oil-gas producing countries will play a more important and more dominant role. And of course we want to support and gain out of this development. So that is a reason why we are here and we will strengthen our engagement for the industry in Azerbaijan.
