Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Oil is holding near a seven month high as investors
Speaker 2: away the next round of US Iran talks on Thursday.
Speaker 2: Concerns about potential fallout from a US strike on Iran
Speaker 2: or Iran closing the straight of horror moves have helped
Speaker 2: drive oil higher this year despite expectations of a global glut.
Speaker 2: Baker Hughes CEO Lorenzo Seminelli joins US now from Washington,
Speaker 2: d C, where he is attending the Transatlantic Gas Security
Speaker 2: Forum and Energy Aspects Conference. Lorenzo, thanks very much for
Speaker 2: your time. What do you make, first of all, the
Speaker 2: of the market right now. I mean, prices have been
Speaker 2: driven higher, but we're still looking at a six handle
Speaker 2: on NIMEX, and it seems like if there is a
Speaker 2: conflict in the Middle East, that can go much higher
Speaker 2: very quickly.
Speaker 3: Well, great to be with you, and I I think
Speaker 3: we all know that the aspect of price is very
Speaker 3: much driven by geopolitics and also what's happening day to day,
Speaker 3: and it's hard to predict what's going to take place.
Speaker 3: I think what we look at from a Baker use
Speaker 3: perspective is the fundamentals and when we look at the
Speaker 3: long term. Demand is increasing, and we're going to need
Speaker 3: to see the supply come online as we look at
Speaker 3: the back half of twenty six into twenty seven, so
Speaker 3: it will be range bound, but again it's going to
Speaker 3: be driven by other factors than just the demand and
Speaker 3: supply at this moment, and you're seeing it increase based
Speaker 3: on the geopolitics situation at the moment.
Speaker 2: Well, from a fundamental perspective, it seems like there's an
Speaker 2: absolute glot of oil on Planet Earth. I mean, the
Speaker 2: supply side seems to be winning out here, Lorenzo. Do
Speaker 2: you see that differently?
Speaker 3: I see that being a moment in time, And as
Speaker 3: we've said previously, as we look at the twenty seven
Speaker 3: twenty eight, we've got strong demand signals and actually twenty
Speaker 3: six will be a year where we trough and we
Speaker 3: see a recovery in the second half of the year
Speaker 3: going into twenty seven. You've already got early indications from
Speaker 3: what we're seeing from our customers in the Middle East
Speaker 3: in particular relative to rig activation and also the expectation
Speaker 3: that that supply demand comes into balance. And I think
Speaker 3: again you've got to look at the fundamentals longer term
Speaker 3: and whereas there's maybe oversupply at the moment, you see
Speaker 3: that coming correction into twenty seven twenty eight, and the
Speaker 3: fundamentals with population increasing, energy demand increasing, AI, oil and
Speaker 3: gas is on the rise, and you're going to need
Speaker 3: more supply.
Speaker 1: How is that balance right now, Lorenzo, specifically with the
Speaker 1: AI demand, is it yet outstripping the availability of these
Speaker 1: new projects to come online and power them, be it
Speaker 1: renewables or it be some parts of your business that
Speaker 1: might be used in order to power it.
Speaker 3: So at the moment, I think there's a bifurcation again.
Speaker 3: You've got a good supply of oil. If you look
Speaker 3: at gas, gas is the winner longer term. And as
Speaker 3: you look at the fundamentals as well, we see gas
Speaker 3: growing significantly over the course of now and twenty forty,
Speaker 3: an increase in natural gas by twenty percent, and that's
Speaker 3: what's going to be fueling a lot of the data centers.
Speaker 3: And also as we look at the energy demand being
Speaker 3: supplied by natural gas and the electrons being made by
Speaker 3: the gas turbines that we supply and others supply, and
Speaker 3: also the LNG that we're liquefying around the world and
Speaker 3: going to the various locations, So there's a good supply
Speaker 3: of base oil, and gas is the winner.
Speaker 2: Talk to us about the data center demand. We all
Speaker 2: see the incredible capex being dolled out right now from
Speaker 2: the big hyperscalers. And you're a big player in this segment.
Speaker 2: How much of your business is this driving?
Speaker 3: Again, we recently took up our estimate from a turbine
Speaker 3: perspse active to three billion of orders during twenty five
Speaker 3: to twenty seven. That's a doubling of what we previously saw.
Speaker 3: We just announced a nice win last week also with
Speaker 3: regards to providing gas turbans our Frame five to a
Speaker 3: data center operator, and again today announcing on the generator side.
Speaker 3: So if you look at spend twenty twenty five, about
Speaker 3: five hundred billion we're spent on data centers. We see
Speaker 3: that increasing by twenty thirty to a trillion dollars, and
Speaker 3: it is very much a meeting the demand at the moment,
Speaker 3: and we are making sure we've got the right capacity
Speaker 3: in place and we're serving our customers appropriately.
Speaker 1: Well, you're in DC right now, where there's been a
Speaker 1: big political focus on energy dominance for the United States, Lorenzo,
Speaker 1: to what degree has that talk been followed up with action.
Speaker 1: Is policy actually accelerating project approvals? Yet?
Speaker 3: You know, we've seen this administration be very supportive and
Speaker 3: as we look at the events today also, we're celebrating
Speaker 3: the first cargo of LNG from the United States, and
Speaker 3: I think it's important to note that ten years ago
Speaker 3: we didn't have any LNG being exported, and today we're
Speaker 3: one of the largest producers and exporters of LNG around
Speaker 3: the world. And as you look at this administration definitely
Speaker 3: supportive of continuing to see deregulation, continuing to see faster permitting.
Speaker 3: Is everything solved yet, No, but they're working towards that
Speaker 3: and continuing to be an energy supplier to the world
Speaker 3: for affordable, secure, sustainable energy.
Speaker 2: Yes, I mean amazing how much we've managed to ship
Speaker 2: to Europe help them get off their dependence of Russian energy.
Speaker 2: How much further do you think we have to go there, Lorenzo,
Speaker 2: And how much is that being talked about in Washington.
Speaker 3: The US is definitely a place that's abundant in natural gas,
Speaker 3: and as has been said by Mini, there's many decades
Speaker 3: ahead of plentiful supply, and so we've got several opportunities,
Speaker 3: incremental projects that are currently going through final investment decision.
Speaker 3: And as you look at the marketplace again, we see
Speaker 3: there needing to be an installed based capacity of LNG
Speaker 3: by twenty thirty five of nine hundred and fifty mtpa,
Speaker 3: and so there's a long runway here out into the
Speaker 3: next decade.
Speaker 1: Lorenzo, thank you so much for joining us this morning,
Speaker 1: and joy the rest of your time in Washington, DC.
Speaker 1: Lorenzo Simonelli, CEO of Baker Hughes