The year 2018 will require operators and contractors to continue to focus on becoming more efficient, more agile, more productive in all their key business activities, says PDO Managing Director, Raoul Restucci
What is PDO’s outlook for 2018?
Notwithstanding the recent oil price increases, Oman is projecting sustained fiscal and current account deficits and PDO will need to perform as proficiently as ever , further stepping up efforts to realise increased revenue generation.
In the near-term, you can expect PDO to stay the course on our key business activities and to continue to identify savings and cost reductions while delivering growth, excellence and sustainable value creation for Oman and our shareholders as we weather the country’s economic challenges.
We will intensify the roll-out of sustainable and diversified In-Country Value programmes and initiatives to ensure Omani employment and skills levels are positioned for the rapidly changing environment, both in the oil and gas sector and beyond our natural boundaries in other industries.
We will continue to ensure reserves and contingent resource replacement ratios are healthy but increasingly focus on high-grading and proficiently monetising our portfolio, whilst reviewing opportunities outside our concession, leveraging our expertise across both Oman and regionally in areas from services to renewables and water management.
Despite the daunting challenges, PDO is looking forward to 2018 and to making its mark, by doing, by learning, by adapting and consistently striving to exceed societal expectations. I am optimistic we have the right people in place to succeed, as we have done time and time again, across a whole range of asset and functional targets. Through all this change, one theme remains constant – the country can rest assured that everyone at PDO remains ready and proud to serve Oman to the best of our ability.
What are the new initiatives/ areas that PDO plans to foray into in 2018?
PDO is beginning its transition to a fully fledged energy company as we move away from a reliance on fossil fuels to renewables, especially solar. We have already made great strides in this direction with our 1,021 megawatt Miraah solar facility, being developed with our partners GlassPoint Solar, to produce steam for thermal enhanced oil recovery and free up gas for other sectors of the economy and society.
We are also completing a project at our Muscat headquarters to install more than 19,500 solar roof panels on car parking lots. When finished early next year, this will generate 9.5 million kWh annually to power key office buildings, with the electricity being diverted to the domestic grid during off-peak periods.
We will soon be issuing an invitation to tender for up to five 20 MW solar projects in our concession, mainly scattered in the area between Bahja and Marmul. The aim of the project is to save gas through the daytime generation of power while learning how best to support and service photovoltaic solar facilities in our operating environment.
The overall venture is expected to introduce an equivalent fuel saving of 70.5 million cubic metres of gas per annum ($17mn a year), reducing our dependency on conventional gas turbines. It will also reduce overall CO2 emissions by around 8,550 tons annually. Along with the gas saving and the environmental benefits, the enterprise will be a landmark in the country as it will be the biggest solar PV initiative to date and bolster our position and operating experience in renewable energy.
There will be a major focus on energy and water management in PDO in 2018, as we continue to reduce our environmental footprint and the expansion of our award-winning Nimr Reed Beds project to treat more produced water from our oilfields by using the power of nature, further reducing the consumption of gas which is used in conventional deepwater disposal.
As a signatory to the World Bank Zero Flaring by 2030 initiative, we are working hard towards a goal of zero routine flaring well before the target year and are seeking technology partners to help in that process
You will also see PDO aiming to leverage its expertise beyond Block 6 across both Oman and regionally in services ranging from enhanced oil recovery, engineering and design and well, reservoir and facilities management. And that’s just the start. We are also working for a more aligned research and development partnership with academia, industry and government through a new digital platform (called Ejaad), developed by, and with the great support and collaboration of the Technology Research Council to raise Omani technical capabilities and develop Omani solutions to Omani challenges.
How is Oman’s Oil & Gas sector going to shape up in 2018?
Notwithstanding the recent OPEC agreement on production to stabilise oil prices, it goes without saying that 2018 will require us all, operators and contractors, to continue to focus on becoming more efficient, more agile, more productive in all our key business activities, identifying savings and cost reductions while delivering growth, excellence and sustainable value creation for Oman and our shareholders.
I am confident that we have the expertise, the commitment, the collaborative approach and flexibility to align in key areas, such as In-Country Value and research and development, to deliver on promise and to raise the performance bar.
Can you share a few highlights of the year 2017 for PDO? What were the main challenges? And what were the factors that helped the company do well?
There are so many highlights to choose from across the business. For example, the creation of 14,000 work, training, redeployment and transfer opportunities for Omani jobseekers across both oil and non-oil sectors, a month before the end-of-year target, was a truly fantastic achievement which we hope to improve on in 2018 with 17,000 more and in 2019 with a further 21,000 (targeting more than 50,000 by 2020 over three years). Creating these opportunities for meaningful jobs for young Omanis is a national priority as we work hard with the Government on developing a stable, prosperous and diversified economy.
In terms of challenges, we continue to address personal and process safety in our operations with ever more rigorous, creative and innovative approaches on monitoring, training, compliance and investigation, which for example, are delivering fantastic results in terms of workforce driving standards.
Controlling our costs is another ongoing focus area as we seek to reduce our reliance on government funding, and there are two principal drivers that help us sustain high performance: contractor collaboration and our Lean business efficiency programme.
We have worked hard with our contractors in a collaborative and listening manner to optimise our contracts, and review how best we can help each other and investigate where we can do things more efficiently.
And Lean has transformed the way we do things and encompasses all aspects of our business. Simply put, it is a way of limiting the waste of resources, whether human or financial, or effort or time, in order to continuously improve and deliver more with fewer resources. We have become far more efficient and Lean has enabled us to generate $1.2bn in cost savings, cost avoidance or revenue generation. Above all, Lean is about empowering the organisation at the execution level and ensuring all are contributing to continuous business improvement. We had already begun on our Lean journey at a time of high oil prices, and that enabled us to be far more robust and coherent in our approach to mitigating the impact of the 2014 oil price collapse.
Please share your thoughts on the macro-economic situation and what in your opinion will be the big trends of 2018 in Oman and globally?
While the ongoing technological innovation will lead to a supply-side step-change – with long-term gains in efficiency and productivity – the revolution could yield greater inequality, particularly in its potential to disrupt labour markets. However, we can be victims and debate threats and downward circles or focus on the radiating possibilities and opportunities this revolution will bring. There are huge market and business opportunities arising in Oman and the region, and I believe these will offset and spawn from the automation substitutes, thus creating more growth, productivity and ultimately (white collar) jobs.
To ensure this happens, we need to increase our ability and speed to adapt. Integral to that is the constant real time re-assessment of our development and training needs so that leadership and our people can embrace the change and are skilled and able to redirect employment in this fast-changing world.
Closer collaboration and alignment with other stakeholders on matters ranging from regulatory enablers to the proficient deployment of new technologies will be essential.
At the same time, new technology – including digitilisation, analytics, artificial intelligence – will play an ever more important role for us to sustain and improve our operations in a cost-effective manner, and I confidently predict it will also drive a step change in enabling safer and more efficient production and service processes.
Last but not least, climate change realities are also becoming more prevalent, and, both in Oman and across the world, there has to be a greater focus on renewable energy. In the Sultanate, given the country’s ideal setting for annual solar radiation density and strong wind potential in the central and south coast of Oman, there is no reason why we cannot develop as a hub of solar and wind expertise, with potentially huge investment and employment opportunities.
As we transition away from a dependence on fossil fuels, we must support the Government in its drive to diversify the economy into areas such as tourism, logistics and mining. Building a sustainable economy which will serve generations to come remains fundamental to Oman’s progress and prosperity.