Arja Talakar took over as CEO of Siemens Oil & Gas on April 1. Needless to say, it’s a time of uncertainty both for Siemens and the industry as a whole. Talakar, who began his career with Siemens in 1996 as a rotating equipment and automation systems engineer and has since held several roles of increasing responsibility across the globe, responded to these questions posed by Diesel & Gas Turbine Worldwide.
WW: Siemens decided to carve out and then spin off the Gas and Power Operating Company, most likely by late 2020. What are you telling customers—and potential customers—about that news?
Talakar: Spinning off the Gas and Power Operating Company into an independent, stock-listed energy company will give us the agility we need to support our customers effectively in a period of rampant change within the sector, and society at large. Meeting the ever-growing demand for energy, responsibly and sustainably, is one of the most pressing challenges the world faces today. With Siemens Gamesa Renewable Energy, as well as our gas turbines and oil and gas portfolio, we are uniquely positioned to foster a smarter energy transition and address the needs of customers across the entire energy value chain. We’ve already begun executing a detailed plan to transition to this new company with our number one goal being to ensure these internal changes don’t distract us from meeting the highest expectations of our customers, which are rightfully placed on us.
WW: During his presentation about the spinoff, Siemens CEO Joe Kaeser pointed out the new company’s headquarters may not remain in Houston. Can you list some key attributes a headquarters should have?
Talakar: The new Gas and Power Company headquarters will be evaluated and determined during the carve-out and listing process. The decision is largely contingent on input from relevant stakeholders and a thorough assessment of locations that best position us to meet the needs of our customers.
WW: What are the most pressing issues you see facing Siemens Oil & Gas as you take on the CEO role?
Talakar: Our customers face increasingly strict environmental regulations and together we must find cleaner ways of producing energy. Not all regions or industries are in the same phases of transition, so each area’s business model needs to be adaptable depending on the location. Countries with less developed infrastructure and a huge power demand require the most efficient backbone technology before they start adding capacity with renewables. This added capacity requires that the grid system be built, expanded, and upgraded.
Take, for example, Saudi Arabia, where I spent a great deal of time over the past decade. The goal in KSA is not to replace hydrocarbons, but to create a rounded approach that will reduce the amount of oil burned domestically, safeguarding this important resource for the generations to come. This is the approach that we at Siemens believe should be adopted worldwide.
As another example, in collaboration with the Egyptian Ministry of Electricity and Renewable Energy, Siemens and its consortium partners, announced in July 2018 the completion of the Egypt Megaproject in record time. With this milestone, Egypt and Siemens set a new world record for execution of modern, fast-track power projects, delivering 14.4 GW of power in only 27.5 months. The stations add a total of 14.4 GW of power generation capacity to Egypt’s national grid – enough power to supply up to 40 million people with reliable electricity. To put this into perspective, a single combined cycle power plant block with a capacity of 1200 MW typically takes approximately 30 months to construct.
And finally, we need to maintain a laser focus on customization. Customers are looking to us for consultation on each project and long-term service to keep their equipment operating reliably, securely, efficiently, and in an environmentally friendly way.
WW: You gave a presentation at OTC about fostering a smarter energy transition. Should people in the oil & gas industry be scared of what’s coming?
Talakar: No, not at all. The energy industry is challenged to shift towards a reduced carbon footprint, manage the complexity of decentralized energy systems, and adopt new digital technologies to remain competitive. Our challenge is to find the right mix of energy and hydrocarbons will remain an important source. Siemens’ solutions are already helping propel a greener future with hydrogen-enabled gas turbines and carbon capture solutions and our gas turbine technologies, which can be operated with natural gas and hydrogen, are an integral part of our greener future portfolio.
WW: Long-term, are you optimistic about the industry’s future?
Talakar: While we face a very different energy future, yes, I am optimistic about the future. The oil and gas industry is transforming itself with new technologies. The forces shaping our world – the digitalization of everything, the expanding reach of the global supply chain, the continued movement of more people from rural to urban areas, the aging demographics of the human population everywhere, and climate change – are also driving our business strategy. We’re actively working with our customers to develop solutions to navigate these shifts, based on our know-how and experience in energy, infrastructure, manufacturing and mobility.
As I mentioned earlier, companies are looking for comprehensive, end-to-end solutions. The Braskem project is a perfect example of how we can configure and optimize each customer’s system individually, from the initial design to the final component. Braskem recently entered into an agreement with us to modernize a cogeneration power and steam plant at its Petrochemical Complex in Sao Paulo, Brazil. Siemens is responsible for implementation and the 15-year operation of an electric and steam cogeneration plant that will combine high energy efficiency and extreme operational reliability with low emissions. We’re implementing a fully integrated and redundant equipment solution, including two SGT-600 gas turbines, an E-house, and an extension of the existing high-voltage substation, three reciprocating compressors, an advanced load-shedding system, and associated software for plant control.
WW: Digitalization has gained steady traction in the oil and gas industry. How much will digitalization alter the industry years down the road?
Talakar: Going digital is not an overhaul – it’s a process that’s changing the world. Most energy professionals understand digitalization’s potential. In the future, digitalization – along with renewables – will further transform the energy landscape. Data is at the center of that transformation.
In a digital enterprise, data obtained from equipment can provide deeper insights than what’s available through everyday operation, inspection, and maintenance. The main challenge we face is how to extract the most value from that data to optimally manage critical assets across the energy value chain. The struggle is where and how to start. Data gathering, big data analysis, and data storage are critical for new business models and value generation. The key is to seek modular solutions that can be gradually scaled up. This minimizes risk and interruptions, enables the investment to be spread out over time, and enhances the “comfort level” at all levels of an organization.
Digitalization brings knowledge and insight…but requires more than just individuals innovating in a silo. We need open ecosystems in which various stakeholders – customers and suppliers, customers and other customers, even customers and competitors – are willing to co-create and innovate on the best way to solve a problem and are willing to share data and lessons learned. That’s the only way we’ll be able to best use digitalization as a force in reshaping our industry for the future.
Our MindSphere Application Center, recently opened in Gurgaon, is the first in the world specifically aimed at digital solutions for coal and steam-based power plants. MindSphere is Siemens open, cloud-based IoT operating system that lets customers connect machines and physical infrastructure to the digital world and their thermodynamic digital twins.
Our Topsides 4.0 digital solution transitions offshore operations to a fully digital enterprise. It provides shorter, safer turnaround times, due to early warning signs of any issues with equipment or system failure, making maintenance more proactive. Topsides 4.0 covers the entire lifecycle of our customers’ rotating equipment and modules, as well as their electrical and automation systems.
WW: You started with Siemens in 1996. Looking back, what has changed the most in the industry?
Talakar: Quite a lot! Since that time, a shift from conventional to unconventional has taken place. Now there are remote gas fields and subsea fields, and we’re finding ways to make sustainable use of the resources (monetizing reserves). Natural gas—abundant, inexpensive, and relatively clean— is a bridge fuel. But we currently lack the requisite infrastructure (LNG, regasification, pipelines) to bring natural gas to destination markets to be used as a power feedstock. We need to accelerate gas pipeline and LNG infrastructure development with integrated compression solutions, like those available through our Pipelines 4.0 offering, which reduces project lead times by combining turnkey equipment solutions for pump and compressor stations with digital services such as data analytics, life cycle, and cybersecurity services.
Also, in the past, customers looked for products; today, they seek comprehensive solutions. Predictions show that by 2050, the world population will be ~9.8 billion (up from 7.6 billion today). Accordingly, investments in urban infrastructure are booming and will continue to do so. Managing this growth requires us to think about how we will transform from today to tomorrow’s energy landscape by improving the security and affordability of our energy supply; making energy cleaner; dealing with increasingly more decentralized energy systems; and effectively using digitalization to better manage the rising complexities associated with all of the above.
WW: What keeps you up at night?
Talakar: Our energy system is no longer “linear;” instead, it requires integrated ecosystems that span the entire value chain. That means traditional and new elements across generation, transmission, distribution, and consumption must be seamlessly integrated to realize their full potential. Our constant quest of addressing the key challenges of our customers is highly interesting and my team and I are looking forward to closely work together with the key stakeholders in our industry.