In a recent interview, Lorenzo, the CEO of Baker Hughes, shed light on the company’s strategy and the broader energy market’s trajectory. He highlighted how Baker Hughes has increased its outlook due to the strength of its portfolio, which goes beyond oilfield services, encompassing industrial sectors like rotating equipment and compression technology. As global demand rises, particularly in developing markets, the company remains optimistic about its growth potential, especially internationally.
Lorenzo noted that while the international energy market is set to grow, Baker Hughes predicts a deceleration of growth in 2025. This slowdown is attributed to developing markets’ demand, especially in countries like Saudi Arabia, where energy exports are directed toward growing economies rather than developed nations. This contrasts with the domestic U.S. market, where consolidation and operational efficiency have led to relatively flat production levels. “Capital discipline is the name of the game,” he said, explaining how U.S. operators are carefully managing their balance sheets.
Lorenzo also addressed expectations for North American production, noting that it would remain largely flat, with minor increases in gas output. He explained that Baker Hughes is focused on increasing recovery rates from mature wells, which make up about 70% of global production. By improving recovery rates even by 1%, the company can extend the life of existing assets by 2-4 years, which is vital for meeting global energy demands.
On liquefied natural gas (LNG), Lorenzo expressed optimism, especially after the recent approval of an export license by the U.S. Department of Energy, signaling future growth. He highlighted the global demand for LNG, predicting that by 2030, the world would need an installed capacity of 800 million tonnes per annum, with the U.S. contributing significantly. He emphasized that the U.S. has abundant gas resources that could help meet global energy needs.
The conversation shifted to the rising demand for electricity, driven by the growth of data centers and technologies like generative AI. Lorenzo shared that electricity consumption by data centers is expected to double by 2026, contributing to grid instability in regions like Houston, where outages are common. He pointed to the need for off-grid solutions, such as modular gas turbines, to ensure stable power for data centers. “A data center can’t go down,” he stressed, explaining the importance of consistent energy generation.
When asked about Baker Hughes’ growth prospects, Lorenzo shared that their focus on distributed power generation, particularly through industrial gas turbines, presents significant opportunities. He estimated that the company could see contributions to its revenue mix ranging from $500 million to larger amounts in the coming years as demand increases.
Cybersecurity also emerged as a critical issue during the interview. While Baker Hughes hasn’t experienced significant impacts from cyberattacks, Lorenzo emphasized that vigilance is crucial. The company regularly tests its systems and works closely with trade associations and the U.S. government to stay prepared for any potential threats.
In closing, Lorenzo reflected on the recent price volatility in the energy markets, particularly crude oil, and how demand from China continues to influence the market. However, he emphasized the importance of focusing on long-term fundamentals and making the right investment decisions. He remains optimistic about the future of energy, citing growing demand in both developing and developed nations. “It’s not just about energy transition; it’s about energy expansion,” Lorenzo concluded, emphasizing the role of gas in the global energy mix as a reliable, affordable, and secure energy source.
With Baker Hughes’ strong portfolio and forward-looking strategy, the company is well-positioned to navigate the challenges and capitalize on opportunities in the evolving energy landscape.
