Isam bin Saud Al Zadjali, CEO, Oman Oil Company shares his thoughts on the company’s achievements, challenges and future direction in an exclusive interview to Mayank Singh.
In 2017 Oman Oil Company completed 20 years of operations. As you look back, what have been the major milestones and challenges for the company?
Oman Oil Company (Oman Oil) is a state owned company, which was set up with a mission to diversify the national economy by creating value from hydrocarbon molecules. In addition, Oman Oil is also tasked to have a presence internationally by partnering or acquiring international assets in upstream, downstream and midstream. I am proud to say that over the last 20 years, Oman Oil has achieved most of what it desired both in terms of international presence and setting up projects to support the government mission to diversify the national economy. Almost 65 per cent of our investments are in Oman within the value chain of Oil and Gas sector. We have had challenges like being financially self-sufficient, but overall I am satisfied about our journey and I would like to thank those people in administration, running the various roles who participate in the growth of Oman Oil Company, as well as the previous board members and the Ministry of Finance for their steer and guidance.
What role is Oman Oil Company playing in ICV generation, promotion of national talent and SMEs development?
The concept of In-Country Value (ICV) is really new when you think about it, but Oman Oil has been in the forefront in several areas when it comes to ICV. Let me break it down in terms of talent development, Oman Oil is proud that most of its senior management be it in the head office or in various companies, are all Omanis. We have set up a special purpose vehicle to train and develop Omanis by offering them scholarships, training opportunities etc. The company which is spearheading this initiative within the Oman Oil fold is Takatuf.
Another front of ICV is supporting SMEs as a goal, wherein we help and support SMEs and the various programmes that we have introduced and the work that we are doing with various government organisations is a testimony of these efforts. For example, the CELL programme which is an incubator programme helps local entrepreneurs to set up their own businesses. Having said that it is our responsibility to continue and improve such efforts and this is by no means an A plus, if we were to look at it from a point of view of satisfaction with such work. We have to devote a lot of attention to create job opportunities for Omanis, which is what ICV should mean at the end of the day and we will play our part in setting up new businesses, new projects etc. Keeping this in mind, we will definitely help SMEs, but this has to be worked upon in collaboration with various other government organisations, that are working on achieving similar goals.
Besides, we give great attention to setting targets, policies and strategy for ICV, and promoting made in Oman goods services as well as allocation of specific scope of work for SMEs.
In 2016, Oman Oil Company restructured itself to focus on four verticals within Oman. Do you think the company has emerged stronger and become more efficient after the restructuring?
The restructuring was carried under the theme of ‘One Company.’ Oman Oil was in the past following a decentralised approach, wherein we set up businesses and let them be with a little involvement from the centre. With the challenges that the world is facing, you have to be more efficient and need to be speaking in one voice and that is the idea going forward. The purpose of the restructuring is to be more efficient, cost effective and at the same time do things together in various areas like contracting, recruitment, operation philosophy etc. All of this could not be achieved as a part of the old business model, necessitating the restructuring. The current business model which streamlines all our assets under four verticals makes it easy for our board to have a complete oversight of the company and its business activities.
Are you looking at further restructuring of the business given the changing economic environment within Oman and the international market?
For every initiative that you take one needs to test the positives and the negatives after a while. Since we started the project in 2016, probably we will take a relook at it in 2018 to understand from various businesses as to what is working and what is not. We are still in a restructuring mode as the integration in 2016 requires policies and guidelines to be in line with the new business model. So we have not actually stopped restructuring.
What’s the way forward for Oman Oil Company in 2017 and beyond?
From a financial point of view things have been challenging, but I am glad to say that 2016 was a profitable year.In 2017 we have to continue doing the same and become more efficient. Moreover, we have to find new sources of financing and deliver on what is in the pipeline – specifically the Duqm Refinery and the associated projects as these are critical and I am glad to say that we are on our way to closing all these deals this year. The year 2018 will be a continuation, wherein we are talking about getting into the construction phase of various projects. We have to put the right people, ensure that projects are delivered on time and financing still looms large above our heads, but we are confident that the current restructuring and the new thought processes within the organisation will help us achieve our goals. We are a state owned company and sometimes it is confused with getting funded by the government. Oman Oil is mandated to develop and invest in businesses within Oman and internationally and we need to be self-sustainable. This message goes to every person in this organisation and outside. We have been moving in this direction and it is not something that we are
Public sector companies in the region are working towards going public, raising debt or inviting cross-border investments to either meet their internal needs or to promote economic development. Are you looking at such options and what challenges do you foresee in this pursuit?
We are looking at all these options. Privatisation is an initiative that is being discussed right now, for the last few months. We have every intent to privatise some of our companies or to go the IPO route, but these require certain pre-requisites to be fulfilled. For example, there are requirements before you float an IPO and we are gearing ourselves to meet those requirements. This does not mean that there are no challenges, of course there are challenges, but we want to be comfortable and confident that when we float a company it has a proven track record, a robust structure and a clear growth strategy, otherwise we should not IPO for the sake of doing it. As far as partnerships with various international companies is concerned, we have been doing this and you will see more of this happening as we move forward. We may also look at a partial divestment of some of our assets to secure funding, so we are open about all financial tools that you can think of. We have been discussing them internally and have also divested some assets in Europe this year to secure finance. So it is an ongoing effort.
Are there any companies that you looking at divesting or going private within your portfolio?
I cannot disclose the names of companies, but if you look at our current structure, you will see that there are some companies which do not fit in with the structure and therefore we would need to seriously think about restructuring, IPO or divesting them completely. This is an ongoing exercise and we have been instructed by the Board to look at various assets and I am hoping that by early next year we will have a plan for this.
Has there been any implications of Qatar rift on Oman Oil Company’s investment plans or business operations?
No, it has not had any impact on us.