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Figure 4 – Market Capitali- systems global supplier. Later in the year other “first tent, but mostly because they compete on costs,
zation of OFSE players, with tier” players like Baker Hughes – General Electric with quality of equipment meeting standards
market cap > 2B$ and Technip-FMC Technologies combined their nonetheless. Figure 5 shows that, over the last
businesses with the aim of increasing competitive- decades, thanks to a leaner cost position allow-
ness on the market (ex. improved value proposi- ing for competitive pricing, local EPCs (i.e. devel-
tion to the client, wider range of products and ser- oping countries contractors) have increased their
vices,…) but also of creating cost synergies and share of Upstream projects intake by more than
efficiency improvements. 20p.p, while Italian EPCs lost 5 p.p. in the same
period.
2016 has seen the formation by
consolidation of global “mega-players
Local suppliers, competitive on
costs while still meeting acceptable
2 In the low oil price environment, Italian performance targets, have increasingly
O&G players have lost competitiveness become the partner of choice of both Oil
Companies and EPCs
Italian EPCs share decrease vs. Local EPCs
rise. In a context of greater attention to costs and
efficient solutions from clients, local suppliers have
clearly won the competition against traditional Italian vs. Korean exports. The relative contrac-
western contactors, including Italians. tion of Italian EPCs compared to local competi-
Indeed, local suppliers have increasingly become tors is significantly affecting the Italian OFSE value
the partner of choice of both Oil Companies and chain. Historically, Italian suppliers were recognised
EPCs, not only because they provide local con- as leading companies in the production of high-end

Figure 5 – EPC captured Capex by EPC nationality

Impiantistica Italiana - Gennaio-Febbraio 2017 31