Agenda
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Bumi Armada Company Profile Market Geography Macro Economic Factors Turkmenistan Key Economical Data Factors Impacting Supply and Demand Current Supply and Demand Market Participants Market Power Market Entry PEST Analysis SWOT Analysis Price, Supply and Demand Forecast Reference List
2. Market Geography
- 5 countries bordering the Caspian Sea - Land-locked sea with only Volga canal providing accessibility - Region rich in hydro carbon resources
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Although the global GDP growth will not reach the previous height of 2006/2007 in the foreseeable future, driven by the emerging and developing countries, an average of 4.5% until 2015 is nevertheless seen as healthy.
The end result of such rapid growth is a higher demand and need for energy, which primarily will still come from traditional energy sources such as oil, gas and coal.
It is generally accepted that an oil price above USD 70/barrel will lead oil companies to increase investments.
UN forecasts that by 2030 the world population has grown to not less than 8 billion people, much of the growth coming from developing countries.
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Inflation Rate Unemployment Oil Production Oil Export Gas Production Gas Export
In this market there is no possibility to change existing resources (capacity is fixed) and the price depends solely on demand.
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7. Market Participants
Bumi Armada Malaysia Barge: Armada Installer Build year: 2010 Derrick Lay Barge Max. lifting capacity: 850 tons www.bumiarmada.com
Momentum United Arab Emirates Barge: IsrafilGuseynov Build year: 1990 Derrick Lay Barge Max. lifting capacity: 250 tons www.momentumdubai.com
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8. Market Power
HerfindahlIndex (HHI): H = S12 + S22 + + Sn2 H = 602 + 402 = 5,200 >1,800 CR3 = S1 + S2 CR3 = 60 + 40 = 100 >80 : high concentration market
Market Share
Off-shore Pipe Laying Caspian Sea Market Analysis Gozel Rahmanova 15
Momentum 40%
Our market is a pure oligopoly, non-cooperativemarket, reason being: - Only 2 competitors - Product is homogeneous - Market power is high - Barriers to entry are high
9. Market Entry
High Capital Costs Our market is highly capital intensive, and the min. investment required to enter the market will be USD 250 mill. At the same, the lead time for construction of a pipe laying barge is min. 18 months. Specialized Expertise It takes highly qualified and experienced personnel to operate a barge, and the success of the operation depends as much on the people as the barge itself. Expertize can be bought, but the pool of talent is limited and it will be difficult for a new player to attract people from established companies. Advanced Technology To construct a barge it is required to partner with one of the reputed technology suppliers in the market. These companies normally have long lead times for delivery, and will prefer to work with well known players in the market. Track Record and Reputation Customers will normally prefer a reputable supplier with a proven track record.
Off-shore Pipe Laying Caspian Sea Market Analysis Gozel Rahmanova 16
Social Local content Corporate Social Responsibility Increased middle class Global population growth Development of 3rd world
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All macro economic factors point towards a higher demand long-term, and also local and regional factors within the Caspian Sea favouran increasing demand. High barriers to entry will prevent or limit the influx of increased capacity, and hence the existing market players can expect higher utilization rates and better prices.
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