ABB supplies a comprehensive range of products, systems and services to the global oil, gas and petrochemicals industries, from onshore and offshore exploration technologies to the design and supply of production facilities, refineries and petrochemicals plants. ABB is a leading company in many of the upstream and downstream markets.
Performance in 2001
Crude oil prices were lower in 2001. Nonetheless, we recorded a strong increase in orders from upstream markets. This was offset by a slowdown in downstream markets, caused by overall weakening of the world economy. Revenues increased by 25 percent, and order backlog remains at the healthy level established at the end of 2000. Earnings before interest and taxes (EBIT) were $ 79 million, 50 percent lower than in 2000, due to provisions for cost overruns and project delays.
Major orders and contracts
Upstream, major oil companies BP, ExxonMobil and Shell awarded ABB contracts for developing offshore fields in West Africa and the Gulf of Mexico.
Major contracts included the $180-million Bonga subsea development off the coast of Nigeria and the deepwater floating system at Exxon’s Kizomba project off Angola. BP awarded ABB a five-year frame agreement to supply equipment for their deepwater development in the Gulf of Mexico.
In modification and maintenance (M&M), an area in which ABB has established market leadership, Norsk Hydro awarded ABB a two-year, $110-million order and extended a five-year frame agreement. M&M contracts were also received in several new markets including Australia, Brazil and Nigeria.
In Russia, ABB won the contract for front-end engineering of the multi-billion-dollar onshore and offshore oil and gas development project on Sakhalin Island.
Our downstream business reported significant achievements in refining and petrochemicals with contracts in China and Brazil for our ethylene technologies, and in Saudi Arabia for our proprietary solutions in propane dehydrogenation and polypropylene. In Algeria, ABB won a $ 93-million contract to build a gas compressor station.
ABB was also awarded the front-end work, including a feasibility study, by BP and Sinopec, for a planned petrochemical complex in Shanghai, China.
In May, we formed a joint venture company with Schlumberger, called Syntheseas, to improve the efficiency and profitability of subsea oil and gas development. We also signed an alliance agreement with BP and Chevron to carry out collaborative research in seafloor processing for deepwater oil and gas reserves. Downstream, the Chevron Lummus Global partnership expanded the scope of cooperation to include a wider range of hydroprocessing technologies and catalysts.
New products and new technologies
Another product in Subsea Electrical Power Distribution System (SEPDIS™) was released in April. It is the first full-size frequency converter for the subsea market and joins other ABB innovations such as the subsea transformer and high-voltage connector, which make up the SEPDIS system.
ABB’s new Extended Tension Leg Platform, which is between 40 and 50 percent lighter than previous tension leg platforms, was selected by ExxonMobil for a deepwater field off Angola.
In olefins, ABB signed a technology development agreement with Sinopec, the largest petroleum and petrochemicals company in China. The agreement is projected to significantly improve the economics of olefins production, a field in which ABB is the world leader.
Our activities in oil, gas and petrochemicals are wide-ranging and enable us to leverage our expertise to sell the products and technologies of the whole ABB Group. That applies particularly to power and automation technologies, which will continue to play a major role in our product development and market offering.
ABB’s oil, gas and petrochemicals division is very well placed in both upstream and downstream markets to take advantage of the growth trends and opportunities.
Customer success story
Recovering oil from hostile environments
Clean fuels for Russia
ABB technology is helping Russian refineries produce cleaner transportation fuels for domestic and European markets. In 2001, we were awarded the engineering contract for the hydrocracking complex at the Kirishi Refinery near St. Petersburg.
As oil and gas companies explore fields in deeper and deeper waters, the need for technologies and systems that can withstand the enormous pressure of working underwater at depths of up to 2,100 meters and high operating temperatures is growing.
ABB is a leading supplier of deepwater and subsea technology and is focusing on developing cost-effective and reliable solutions that will help companies recover resources efficiently and safely in areas that were once considered uneconomical.
In 2001, we received a number of high-profile orders that confirm our position. One of these, from Shell and valued at $190 million, is for a subsea production system for the Bonga development project located 120 kilometers off the coast of Nigeria.
Key orders for offshore projects in West Africa in 2001
The Sendje Ceiba FPSO (Floating Production, Storage and Offloading) has been equipped with ABB oil processing units as well as control and automation systems. It first produced oil off Equatorial Guinea in January 2002.