Microsoft sees impact of lower IT spend in oil industry

Firms in the industry are holding back on software upgrades amid the global slowdown.

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By  Tom Arnold Published  February 19, 2009

Oil companies cutting back IT budgets due to declining crude revenues had impacted on Microsoft’s business in the hydrocarbon sector, the Dubai-based managing director of the software firm’s oil and gas industry operations has said.

Firms in the industry were holding back on software upgrades, Albrecht Ferling, MD of worldwide oil and gas industries for Microsoft, said in an interview with Arabian Business.

Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), Kuwait Oil Company (KOC) Qatargas, and Saudi Basic Industries Corporation (SABIC) were among its customers in the oil and gas sector in the Middle East, he said.

From all-time highs of $147 in July last year, the price of a barrel of oil has nosedived to $34.

“Oil companies are reducing their IT budgets, at least some of them are” Ferling said.  “Many oil companies are reviewing their budgets and reviewing their suppliers.  

“I look at this as difficult but as a good opportunity.  Oil companies are coming to us and expecting more and more from Microsoft and that is what I like.”

He said a key technology the US firm provided were Office Business Applications (OBA) which allowed a fast and easy visualisation of data on oil depositaries.

Speaking about the state of the hydrocarbon industry generally, he said: “If you look at the results of the fourth quarter for a lot of the oil companies they were ugly because of the reevaluation of their assets.  

“What we see are a lot of delays and re-questioning.”

Microsoft decided to shift its global operations serving customers in the hydrocarbon sector from Vienna, Austria, to Dubai in July 2008 to take advantage of future growth rates for oil and energy demand in China, India and the Middle East and because the emirate’s location offered good connections, he said.

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