00:00Oil is holding near a seven-month high as investors await the next round of U.S.-Iran talks on
00:05Thursday. Concerns about potential fallout from a U.S. strike on Iran or Iran closing the Strait
00:12of Hormuz have helped drive oil higher this year, despite expectations of a global glut.
00:17Baker Hughes CEO Lorenzo Simonelli joins us now from Washington, D.C., where he is attending the
00:22Transatlantic Gas Security Forum and Energy Aspects Conference. Lorenzo, thanks very much
00:28for your time. What do you make, first of all, of the market right now? I mean, prices have been
00:33driven higher, but we're still looking at a six-handle on NYMEX, and it seems like if there
00:39is a conflict in the Middle East, it could go much higher very quickly. Well, great to be with you,
00:46and I think we all know that the aspect of price is very much driven by geopolitics and also what's
00:53happening day to day, and it's hard to predict what's going to take place. I think what we look
00:59at from a Baker Hughes perspective is the fundamentals, and when we look at the long term, demand is
01:05increasing, and we're going to need to see the supply come online as we look at the back half of
01:1026 into
01:1127. So it will be range-bound, but again, it's going to be driven by other factors than just the
01:17demand
01:18supply at this moment, and you're seeing it increase based on the geopolitics situation at
01:23the moment. Well, from a fundamental perspective, it seems like there's an absolute glut of oil on
01:29planet Earth. I mean, the supply side seems to be winning out here, Lorenzo. Do you see that
01:34differently? I see that being a moment in time, and as we said previously, as we look at the 27,
01:4328,
01:43we've got strong demand signals, and actually 26 will be a year where we trough, and we see a recovery
01:50in the second half of the year going into 27. You've already got early indications from what we're seeing
01:57from our customers in the Middle East in particular relative to rig activation, and also the expectation
02:03that that supply-demand comes into balance, and I think, again, you've got to look at the fundamentals
02:09longer term, and whereas there's maybe oversupply at the moment, you see that coming correction into
02:1527, 28, and the fundamentals with population increasing, energy demand increasing, AI, oil and gas
02:23is on the rise, and you're going to need more supply. How is that balanced right now, Lorenzo, specifically
02:28with the AI demand? Is it yet outstripping the availability of these new projects to come online
02:34and power them, be it renewables or it be some parts of your business that might be used in order
02:40to power it? So at the moment, I think there's a bifurcation. Again, you've got a good supply of oil.
02:47If you look at gas, gas is the winner longer term, and as you look at the fundamentals as well,
02:54we see
02:54gas growing significantly over the course of now and 2040, an increase in natural gas by 20 percent,
03:01and that's what's going to be fueling a lot of the data centers and also as we look at the
03:07energy
03:07demand being supplied by natural gas and the electrons being made by the gas turbines that we supply and
03:13others supply, and also the LNG that we're liquefying around the world and going to the various locations.
03:20So there's a good supply of base oil, and gas is the winner.
03:25Talk to us about the data center demand. We all see the incredible CapEx being doled out right now from
03:32the big
03:33hyperscalers, and you're a big player in this segment. How much of your business is this driving?
03:41Again, we recently took up our estimate from a turbine perspective to 3 billion of orders during 25 to 27.
03:52That's a doubling of what we previously saw. We just announced a nice win last week also with regards to
04:01providing gas turbines, our frame five, to a data center operator, and again today announcing on the
04:09generator side. So if you look at spend 2025, about 500 billion was spent on data centers. We see that
04:16increasing by 2030 to a trillion dollars, and it is very much a meeting the demand at the moment,
04:23and we are making sure we've got the right capacity in place, and we're serving our customers
04:28appropriately. Well, you're in D.C. right now where there's been a big political focus on energy
04:33dominance for the United States. Lorenzo, to what degree has that talk been followed up with action?
04:38Is policy actually accelerating project approvals yet?
04:44You know, we've seen this administration be very supportive, and as we look at the events today,
04:50also we're celebrating the first cargo of LNG from the United States, and I think it's important to
04:58note that 10 years ago we didn't have any LNG being exported, and today we're one of the largest
05:03producers and exporters of LNG around the world, and as you look at this administration, definitely
05:10supportive of continuing to see deregulation, continuing to see faster permitting. Is everything
05:16solved yet? No, but they're working towards that, and continuing to be an energy supplier to the world
05:23for affordable, secure, sustainable energy.
05:25Yes, I mean, amazing how much we've managed to ship to Europe, help them get off their dependence
05:34of Russian energy. How much further do you think we have to go there, Lorenzo, and how much is that
05:39being talked about in Washington? The U.S. is definitely a place that's abundant in natural gas,
05:48and as has been said by many, there's many decades ahead of plentiful supply, and so we've got several
05:56opportunities, incremental projects that are currently going through final investment decision, and as you
06:03look at the marketplace, again, we see there needing to be an installed base capacity of LNG by 2035, of
06:10950
06:12MTPA, and so there's a long runway here out into the next decade.
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