Global Cases

Expanding the Metal Products and Equipment Business Value Chain in the Energy Industry

global

Sumitomo Corporation has long supplied metal products and equipment to the energy sector in many countries, thus supporting the industry around the world. Starting by exporting Japanese-made tubular products, we have expanded into related business areas, including wholesale, supply chain management, maintenance and other services, thereby facilitating the “Development of local society and economy” of many countries. Recently, we have begun to implement initiatives for “Mitigation of climate change,” particularly by increasing sales of products for natural gas development with less CO2 emissions than petroleum and products for CCS(Carbon dioxide Capture and Storage)/CCUS(Carbon dioxide Capture, Utilization and Storage) projects(*) to contribute negative emission.

* Technologies to isolate, store, and utilize CO2 by burying it underground or under the seabed

Tubular products supporting the energy industry

Sumitomo Corporation has a long history and proven track record in dealing with these metal products and equipment used in the energy sector. While in Japan oil and gas production is very small and there is thus only a limited market for OCTG and line pipes, global demand for these products is huge. As a result of the harsh enviroments in which the products are used ,quality requirements of our customers are stringent.

However, Sumitomo Corporation earned a good reputation based on supplying quality products and value-added services, supported by manufacturers with high technical capabilities.

Along with the times, we have transformed ourselves to a total service provider for the energy industry.

Oil production has been expanded to offshore, thanks to technological development around method and equipmentphoto by / Harald Pettersen © Equinor ASA.

Oil production has been expanded to offshore, thanks to technological development around method and equipment

photo by / Harald Pettersen © Equinor ASA.

Reading trends and plotting a bold yet precise course forward

Sumitomo Corporation's tubular products business started with the export of products manufactured in Japan. One of the key operations back then was the supply of OCTG to the United States.

Meanwhile, from the late 1970s to the early 1980s, trade friction with the US emerged as a major issue, and exports of OCTG were gradually regulated. To overcome this situation, we founded an OCTG distributor in the US. Named Premier Pipe, the new company worked hard to win long-term supply contracts with local customers, particularly oil majors. In 1993, it signed its first SCM (supply chain management) agreement. We were thus on top of market changes and able to successfully develop new business opportunities.

Among Japanese trading companies, Sumitomo Corporation was the first to establish an OCTG distributor in the US. Entering the local distribution market, we expanded our OCTG downstream engagement, shifting from an export-focused business.

Tubular products stockyard in Norway. One of our global SCM storage bases

Global expansion and sophistication of our value chains

Based on long-term contracts with oil majors developed by its US distributors and SCM agreements for OCTG stock control, Sumitomo Corporation has established a tubular products SCM operation model. This includes functions to provide maintenance and other services.

Seeking to utilize know-how accumulated over years of engagement, we formed an SCM consulting company in the US. It specializes in upgrading operations of existing projects as well as implementing and supporting new projects. We are deploying this SCM model globally, customizing solutions to meet local and diverse needs. The unrivaled scale of our value chains and the quality of our services have gained a good reputation among many customers, including oil majors.

We have expanded this SCM business model globally, customizing solutions in line with our customer's needs. The unrivaled scale of our value chains and the quality of our services, as well as our contribution to local communities, are highly regarded by our customers, including integrated energy companies.

In Brunei, we have set up an SCM management company and the country's first pipe connector factory, providing local jobs.

In recent years, we have also been striving towards more environmentally friendly operations, such as the introduction of solar power generation at the next-generation distribution center in West Texas in the US.

For the next generation

Our value chain has further expanded to the upstream sector of oil and gas to include exploration and production (E&P). As part of this expansion, in 2019, we acquired a stake in Sekal AS, a software technology company offering real-time dynamic analytics and automated drilling process control for the oil & gas sector. In 2020, we also acquired stakes in Exebenus AS, a company that digitizes and optimizes E&P procedures, and Earth Science Analytics AS, a provider of AI based software for subsurface big data analytics in the geoscience domain.

Moving forward, we will look to reinforce this value chain in the energy-related materials and equipment business in alignment with customer needs, while aiming to improve business sophistication, efficiency and safety by employing digital and AI technologies.

As part the of the continuing efforts to minimize the impact of our activities on the environment and reduce carbon emission, we are supporting the development of energy sectors which are able to reduce emissions, in comparison to oil, by supplying tubular products for use in the transportation of natural gas and hydrogen while also supplying them for use in CO2 storage.