The company is also considering manufacturing equipment used in offshore exploration.
“When we decided to invest here our demand was higher than the production capacity of our plant in the US, so we wanted to expand,” says Jim Raffaele, director of operations Lufkin Romania, GE Oil&Gas. He is also the man who led the efforts to build the Lufkin plant in Aricestii Rahtivani, Ploiesti, after having supervised another investment, this time made by US-held Cameron in Ploiesti.
Lufkin officially opened the oilfield equipment plant in Ploiesti in mid last year, and $28 million of its $140 million investment came from the Romanian government as state aid.
The industrial site in Ploiesti where Lufkin’s plant is also accommodates the equipment manufacturing facility of Cameron, as well as the services centers of Halliburton and Schlumberger.
If one US company goes some place, the others usually follow, he says.
The oilfield equipment production and oil industry service hub in Ploiesti was created because of the significant US interests in the exploration sector in Romania. ExxonMobil and OMV Petrom (SNP.RO) are looking for natural gas in the Black Sea and Chevron is still trying to determine whether Romania has shale gas potential or not.
The Lufkin plant takes up 35 hectares and is divided into several sections. The number of employees in Ploiesti has reached 340, with 40 more working in Bucharest, the executive says.
Romania’s strength is its talent, Raffaele says, it has the Petroleum-Gas University of Ploiesti, and with training, the company can improve graduates’ skills. The company has even received as many as 1,000 CVs for one position.
The annual production of the plant has reached about 1,000 oil-pumping units but the plan is to boost the number thereof.
Lufkin exports about 90% of its production in Ploiesti and most of it goes to North America.
Middle East customers usually want their pumping units in specific colors. They want to look at their fields and be able to tell the new the pumping units installed year by year, the Raffaele said.
The plant in Ploiesti uses about one million tons of steel a year, some 75% of it locally sourced. The company also buys most of the parts it needs for its pumping units from the local market.
Although the buildings making up the Lufkin plant in Ploiesti may appear too big at a first glance, Jim Raffaele says investments in such facilities are long-term investments and as oil becomes harder to extract, the size the equipment increases.
The Lufkin plant in Ploiesti is now owned by General Electric, after the latter paid $3.3 billion to buy Lufkin.
“We are considering diversification so as to be able to cover the offshore area, given the developments in the Black Sea and more,” said Cristian Colteanu, chairman and chief executive officer of General Electric for Romania, Bulgaria & Republic of Moldova.
Colteanu believes GE’s exports from Romania amount to about $80 million to $90 million.
“I estimate we’ll have 30% growth next year.”
General Electric is currently employing about 600 people, and has had a local presence for thirty years now, after the signing its first contract for the first reactor of the Cernavoda nuclear power plant.
(English version by Loredana Fratila-Cristescu)