Borusan Mannesmann Sees U.S. Pipeline Demand Rising in Late 2016by
Output from company's Houston plant to reach 100,000 tons/year
Shale drillers will need to replace aging equipment, Ugur says
Borusan Mannesmann Boru Sanayi & Ticaret AS, a Turkish producer of oil and gas pipelines, expects demand to pick up in the U.S. toward the end of the year as shale producers replace aging equipment.
Borusan Mannesmann’s plant in Houston will produce 100,000 metric tons of pipes in 2016, up from about 70,000 tons last year, Agah Ugur, chief executive officer of the company’s Istanbul-based parent Borusan Holding AS, said in an interview on Thursday.
While U.S. shale-oil production is expected to fall this year and next, higher crude prices will drive a return to growth in 2018, the International Energy Agency said earlier this year, predicting that West Texas will be one of the most productive areas. Demand for rigs and pipelines will rise as the equipment used during the shale boom nears the end of its operating life, according to Borusan.
“These rigs have a lifetime of between 18 and 24 months,” Ugur said in Istanbul. “Toward the end of this year or early next year, most of the rigs in the U.S. will need replacement, which we expect will increase demand for pipes and boost our production.”
If recent gains in global steel prices are sustained, revenue at Borusan Holding, which has a steelmaking unit among other businesses, may rise as much as 7 percent to $4.7 billion this year, Ugur said. The closely held company targets a 12 percent increase in operating profit to $370 million, he said.