Opal Magazine Issue 1

THE VOICE OF OMAN’S OIL & GAS INDUSTRY

February 2016

www.opaloman.org

Weathering the Oil Storm

VALUE CREATION, SUSTAINABILITY, BUSINESS IMPROVEMENT AND EXPENDITURE SAVINGS ARE THE MANTRAS SHAPING PETROLEUM DEVELOPMENT OMAN’S (PDO) RESPONSE TO THE INTERNATIONAL OIL PRICE ROUT

MARKET

PLUS

ANALYSIS

ARTICLES

INTERVIEWS

VIEWPOINT

PROJECTS

A safety-net for Oman’s oilfield industry

Oman’s government has scrambled to put in place bold measures designed to dampen any rush by employers to axe the jobs of Omani oilfield workers. – HE Salim bin Nasser al Aufy

Redeployment strategy yields early success stories

The government-sanctioned Redeployment Strategy is beginning to deliver positive results, having already salvaged several hundred jobs of Omani oilfield workers. – Musallam Al Mandhry

Creating shared value

The goal for the ICV Committee now is to build on what has already been achieved in ICV generation and establish a system of tracking where the initiative is delivering benefits

EDITOR'S WORD

Since 1926, our people and technology have been able to solve any oilfield challenge.

Combining our people’s ingenuity and industry-leading technology has been our approach for more than 80 years.

We recruit people from around the world—developing their talents through local and international experience.

With 125 research, engineering, and manufacturing centers located worldwide and the industry’s largest training commitment, our goal is to continually deliver new technology to meet every reservoir challenge.

Find out more at

slb.com © 2015 Schlumberger. 15-OF-87502

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February 2016

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CONTENTS

Issue No. 1 February 2016

QUARTERLY NEWS JOURNAL OF OMAN'S OIL AND GAS SECTOR

60 Oil glut a boon to Oman Shipping

4 Editor's word

National shipping line Oman Shipping Company SAOC (OSC) is reaping the benefits of a strong uptrend in tanker freight rates.

8 Market Highlights Snapshot of events, trends and developments in Oman's Oil and Gas sector

20 A safety-net for Oman’s oilfield industry Exclusive interview with HE Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas

26 Weathering the oil storm Value creation, sustainability, business improvement and expenditure savings are the mantras shaping Petroleum Development Oman’s (PDO) response to the international oil price rout.

34 Redeployment strategy yields early success stories The government-sanctioned Redeployment Strategy is beginning to deliver positive results...

40 Leveraging the ingenuity of the Independent Oman-Lasso Exploration & Production Karawan Ltd is bringing more than just investment and expertise to bear on the development of its newly acquired Block 54 onshore Oman.

46 A renewable solution

64 Joint Supplier Registration System A success story for Oman’s Oil & Gas industry

66 OPITO Developing a sustainable talent pool

68 The Contango Conundrum 72 Finding another Yibal or Fahud The business of finding large oilfields is becoming harder and harder with time, says Prof. Wiekert Visser.

86 SME Fund: Special schemes to support ICV.

78 OPAL: Nurturing HR Best Practice 80 OPAL Awards recognise industry excellence 94 OPAL’s growing family: 335 members and counting!

98 Upcoming events

GlassPoint has teamed up with PDO to bring to life a more economical and sustainable solution to producing heavy oil.

52 DME flagship Oman crude contract Oman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME

56 ICV: Creating shared value ICV aims to foster direct employment and local entrepreneurship through the provision of goods and services...

Impressum

Chief Executive Officer Communication Executive Manager (Magazine Executive Editor) Communication & Event Officer

Musallam bin Rashid Al Mandhry Abdullah bin Salim Al Harthy

Creative Consultant

Nenad Valentik

P. O. Box 493 / Postal Code 133 Sultanate of Oman Tel. (968) 24 605 700 Fax. (968) 24 604 255

www.opaloman.org info@opaloman.org opalmag@opaloman.org

Azza bint Hamad Al Hilaliya

Acting CEO - OEPPA and Editor in Chief (Oman Arabic Daily) Editor in Chief (Oman Daily Observer) Magazine Editor HoD Business Development Department Business Development Department

Saif bin Saud Al Mahrouqi Abdullah bin Salim Al Shueili Conrad Prabhu Fatima bint Mohammed Al Gheilaniya Prem Varghese Karen Jane Stephen Abdulaziz bin Shehab Al Shukaili

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EDITOR'S WORD

OPAL – The Magazine

A

t long last, a news magazine our industry can proudly call its own!

The Board of Directors and my colleagues at OPAL are delighted to present to you this inaugural edition of OPAL – The Magazine, a quarterly news magazine that is essential reading for those playing a part – major or minor – in the growth of Oman’s critically vital oil and gas sector.

In launching a dedicated news magazine for our industry, the underlying objective is pretty straightforward: OPAL – The Magazine is intended to serve as the Voice of the Sultanate’s Oil & Gas sector. It aims to inform, enlighten, challenge, and engage the Oil & Gas fraternity on trends, issues and developments that are imperative to our collective well-being, as well as in advancing the nation’s strategic socioeconomic objectives.

As an extension of our organisation, OPAL – The Magazine is intended to help us connect with our members. Thus, in addition to news features, interviews and analysis, the magazine also aims to reinforce our longstanding mission objectives, as Omanisation and Training, In-Country Value (ICV), such Professional Development, Best Practice, HSSE, Compliance Certification, and so on. Some of these core objectives, which are central to our organisational mandate, have been discussed in this inaugural issue.

But far from being a mere newsletter, OPAL – The Magazine is intended to be news-based reference source with a primary focus on issues and developments of topical interest. Accordingly, the launch issue deals with the impacts of the global oil price downturn on the domestic Oil & Gas industry. In exclusive interviews, His Excellency Salim bin Nasser Al Aufy, MOG Under-Secretary, and Mr. Raoul Restucci, PDO’s Managing Director, offer their respective takes on the crisis.

Also in focus is the government’s far-reaching Redeployment Strategy to help cushion the impacts of the slump on the thousands of Omanis employed in this sector.

OPAL – The Magazine is intended to be a platform for engagement with its members and other stakeholders. So we welcome feedback on the general editorial thrust of the magazine, as well as its content.

We would also appreciate your insights on issues and trends that you would like to see highlighted in the magazine. Please write in with your thoughts (at: opalmag@opaloman.org) on how we can collaborate with the industry in producing a high-quality magazine we can all be proud of.

My sincere thanks to the editorial team, as well as OPAL’s support staff, who contributed to the success of this maiden edition.

❱❱ Mr. Abdullah Al Harthy, Communication Executive Manager and Magazine Executive Editor

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February 2016

At Gulf Energy we combine the experience of personnel, first class equipment with cutting edge technology and a strong emphasis on innovation, reliability, quality, integrity and customer service. This orientation towards customer needs and expectations is our means to position Gulf Energy as one of the most dynamic and fast growing innovative solutions provider in the Energy industry in the Middle East and North Africa (MENA) region.

At Gulf Energy, we believe in developing the local capabilities with our local partners. Our In Country Value initiative does not stop at employing nationals, but involve formation of real partnerships through Joint Ventures and collaborations with top class international institutions to enrich and localize the know how and expertise. People are our main asset. Motivation and training are the main elements to promote Gulf Energy to be a leader in providing its Services, Technology and Solutions at highest standard of quality.

Gulf Energy currently works with almost all of the major operators in Oman including Petroleum Development of Oman (PDO), Occidental Oman (OXY), PTT Exploration and Production Plc (PTTEP), MEDCO, Petrogas E & P and Daleel Petroleum.

www.gulfenergy-int.com

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INTERVIEW

Rukun Al Yaqeen International L.L.C PO Box 203, PC 134, Jawaharat Al Shatie, Muscat, Sultanate of Oman Phone: +968 2 460 0420 Fax: +968 2 460 1794 Email: sales@rayoman.com

Rukun AI Yaqeen International Group of Companies LLC a wholly In Country Value Group of Companies, specializes in the following areas of business:

ENERGY

ENGINEERING

OIL & GAS

CONSTRUCTION & LOGISTICS

LEARNING & DEVELOPMENT

AUTOMOTIVE

ENVIRONMENT SOLUTIONS

PRECISION CNC FABRICATION & CONCRETE POLES

We stand proudly by our products and services as they provide innovative solutions to growing industry demands. An ISO 9001:2008 Accredited Company we maintain only the highest in International Standards and quality, yet remain local and loyal Oman Company. We are located in the Sultanate of Oman, but also have outlets in the United Kingdom, Kingdom of Bahrain, Qatar, United Arab Emirates, Saudi Arabia and Brunei. RAY International aspirers to deliver unsurpassed quality in service and products through technologically advanced and innovative solutions, thus enhancing its presence as a professional services provider in the Sultanate of Oman, the Gulf region and across the globe. At RAY we have robust policies and procedures relating to Health Safety and Environment that ensures no compromise or short cuts with respect to HSE and the well-being of the employees at the workplace.

The core businesses under the RAY Group umbrella are:

RAY International L.L.C which is more commonly known as RAY Energy. This is the flagship Company which provides energy solutions with multidiscipline in Electrical, Mechanical, Civil, Control, Automation, Facility Management and Lab Service and leading EPC contractor in Oman region. It also hosts a range of state of the art of engineering product lines that caters to the requirements of companies in the Oil and Gas, Utility, Power Plant and Infrastructure segments.

RAY International Oil and Gas provides services and products Oil and Gas sector. This includes specialization in work-over Rigs, Wire-line and extensive range of Well Services to the Oil and a Gas industry. With an innovative mind, the young professionals unlock new areas for exploration and maximize the potential to tap all Oil and Gas opportunities.

RAY Skills, with prime focus on enhancing In-Country Value by building the future of Oman through training and developing young aspiring Omani professionals.

In line with the vision of the Country, the Learning and Development facility is fully equipped to develop the national work force with the view to highly competent professionals within their own trades. RAY Skills renders unsurpassed quality in Learning and Development training. Coverages includes training in the fields of Welding, Drilling, High Voltage Electrical, Rigs, Soft Skills, Health, Safety Environment including IOSH, NEBOSH certified programmes, Well Servicing and Wireline.

These programmes are complemented by Competency Consultancy Services delivered via innovative and unique solutions.

January 2016

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• B A H R A I N

• B R U N E I

• O M A N

• S A U D I

A R A B I A

• U A E

• U N I T E D

K I N G D O M

Construction & Logistics Oil & Gas Precision CNC Fabrication & Concrete Poles

Energy

Automotive

Learning & Development

Environment Solutions Engineering

EUROPOLES Middle East is the joint venture business interest of the Group with well-known German Company Europoles GmbH & Co.KG. A manufacturing facility is located in Nizwa where spun concrete poles are produced to meet the requirements of the Oil and Gas, infrastructure and utility sectors. In addition, the business adds In Country Value for all local companies in manufacturing electricity concrete poles can be used not only in manufacturing electricity distribution, but also in telecommunication and municipality applications.

Also under the umbrella of the RAY Group are: • RAY Ecologic • RAY Precision Engineering • Ray Automotive • Seven Points International

www.rayoman.com

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NEWS

Market highlights Snapshot of events, trends and developments characterising the ebb and flow of activities across Oman’s pivotal oil and gas industry:

Agreement signed for Khazzan gas field Phase II Energy major BP, along with Oman Oil Company Exploration & Production (Oman Oil E&P), a wholly owned subsidiary of Oman Oil Company, has signed a heads of agreement with the Government of the Sultanate of Oman committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA), extending the licence area of the block and enabling a further development of the major Khazzan tight gas field. BP is the operator of Block 61 with a 60 per cent interest and Oman Oil E&P holds the other 40 per cent.

Under the amended EPSA, the extension will add a further over 1000km2 to the south and west of the original 2,700km2 Block 61. The extension will allow a second phase of development, accessing additional resources in the area that have been identified by drilling activity within the original block. Development of this additional resource is subject to final approval of the Government of Oman and of BP; both expected in 2017.

The agreement was signed by Dr Mohammed bin Hamed al Rumhy, Minister of Oil and Gas, Bob Dudley, BP Group Chief Executive, and John Malcolm, Executive Managing Director of Oman Oil E&P. (14th Feb 2016)

BANK NIZWA INKS FINANCING PACT WITH HYDROCARBON FINDER Bank Nizwa SAOG has signed an agreement to provide a structured financing facility of $50 million to Hydrocarbon Finder E&P LLC (HCF), an independent Oil & Gas exploration & production company promoted by the Services and Trade Group (S&T Group). The Bank’s Shari’a-compliant package is tailored to meet the requirements of HCF, which has been granted concession rights by the Government of Oman for oil & gas exploration, development and production within an onshore geographical area in Oman termed as Block 7.

The Facilities agreement was signed by Dr Jamil el Jaroudi, CEO of Bank Nizwa and Brig Gen (Retd) Sulaiman al Adawi, Group Chairman of the S&T Group, in the pres-

ence of Shaikh Ahmed bin Saif al Rawahi, Deputy Chairman of Bank Nizwa. The signing ceremony was also attended by Waqas al Adawi, Vice Chairman of S & T Group, and Rohit Walia, Executive Chairman of Alpen Capital, along with senior members from their respective teams.

Hydrocarbon Finder E&P LLC is part of the Services & Trade (S&T Group), a leading Oman based business conglomerate that has significant business interests in diverse sectors such as interior fit-out and contracting, information technology, healthcare, mining, FMCG, trading, and real estate across Oman and with established operating companies in GCC region, United Kingdom, Italy, India & Sri Lanka. (14th Feb 2016)

E E

9

Enabling individuals.

Empowering the nation.

February 2016

Warm felicitations to His Majesty Sultan Qaboos bin Said and the people of Oman on the occasion of the 45th National Day

Today, as part of the Babcock International Group, a leading training provider in Europe, NTI is transforming human capital in Oman through global

best practices, unmatched local insight, advanced training infrastructure, and innovative training techniques.

On the occasion of the 45th National Day, NTI renews its commitment to empower a new generation of Omani professionals to carry forward His Majesty’s vision for the nation.

www.ntioman.com

Over three decades, NTI has helped equip individuals to make a difference in their careers, their organisations – and their society.

‫ﻣـﻌـﻬـﺪ اﻟـﺘـﺪرﻳـﺐ اﻟـﻮﻃﻨــﻲ ش م م‬ National Training Institute LLC

A Babcock International Group Company An ISO 9001:2008 Certified Company

NEWS

GlassPoint appoints local CSR experts GlassPoint Solar, the leading supplier of solar to the oil and gas industry, announced a strategic partnership with local Corporate Social Responsibility (CSR) and Sustainability experts, Sustainable Square Oman. Sustainable Square will work with GlassPoint to establish its social investment strategy and launch new programs that best serve the Sultanate and the Omani people.

“We are committed to creating long-term value for Oman that extends well beyond our solar oilfield projects,” said GlassPoint President and CEO Rod MacGregor. “It’s important our social responsibility strategy aligns with GlassPoint’s vision and that of our stakeholders so we can contribute where it’s needed most. By partnering with local experts embedded across Oman’s CSR landscape, we will be able to maximize our investment and create impactful projects to benefit Oman’s society, environment and economy.” (7th Feb 2016)

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DME sets multiple records in January DME, THE PREMIER INTERNATIONAL ENERGY FUTURES AND COMMODITIES EXCHANGE IN THE MIDDLE EAST, ANNOUNCED A SET OF RECORDS FOR THE MONTH OF JANUARY 2016.

THE EXCHANGE REGISTERED A NEW RECORD FOR PHYSICAL DELIVERY VOLUMES OF 27.3 MILLION BARRELS FOR MARCH LOADING (PREVIOUS RECORD WAS 22.5mn BARRELS IN MARCH 2015), AND FOUR SUCCESSIVE OPEN INTEREST RECORDS FOR ITS OMAN CRUDE OIL FUTURES CONTRACT PEAKING AT 36,109 CONTRACTS. THE EXCHANGE ALSO SAW TRADED VOLUMES INCREASE BY 17 PER CENT YEAR-ON-YEAR AMID STRONG INTEREST IN THE DME OMAN CONTRACT FROM COMMERCIAL AND FINANCIAL FIRMS AROUND THE WORLD. OWAIN JOHNSON, MANAGING DIRECTOR, DME SAID: “WE ARE DELIGHTED TO START 2016 WITH THESE RECORDS. TODAY’S TURBULENT MARKETS CONFIRM THE NEED FOR A REGULATED EXCHANGE THAT OFFERS RISK MANAGEMENT AND HEDGING SOLUTIONS IN THIS PART OF THE WORLD. WE ARE WITNESSING A DEVELOPING APPETITE AMONG OIL SELLERS AND BUYERS TO TRADE AND GET OIL DELIVERED THROUGH DME, THE ONLY REGULATED ENERGY EXCHANGE IN ONE OF THE BIGGEST OIL PRODUCING REGIONS.” (2th Feb 2016)

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February 2016

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NEWS

OTTCO TO BUILD 25M BARRELS OF NEW OIL STORAGE A storage project with 25 million barrels of space will open in Oman in 2019, helping to keep the country’s oil flowing, Oman Tank Terminal Company (OTTCO).

The complex, which will be built at Ras Markaz, is needed as oil storage in Sohar is already full, Said Al Maawali, project director for OTTCO, told the Platts Oil Storage Conference in Amsterdam.

“It will help them (manage) unforeseen circumstances,” Al Maawali said. The tanks will help boost trading of Oman crude oil futures on the Dubai Mercantile Exchange (DME) by making more oil available that can be delivered against the futures contracts, Al Maawali said, and it would also help guard against price volatility. He said future phases of the project could expand its capacity to as much as 200 million barrels of storage.

OTTCO last year launched a floating storage on an oil supertanker with 2.1 million barrels of space, awarding contracts to China Oil, Glencore and Oman Trading International (OTI). (19th January 2016)

OMAN TO ROLL BACK SUBSIDY ON FUEL OMAN’S GOVERNMENT ANNOUNCED ITS INTENTION TO AMEND FUEL PRICES BRINGING THEM INTO LINE WITH GLOBAL PRICES WITH EFFECT FROM JANUARY 15, 2016. DARWISH BIN ISMAIL AL BALUSHI, MINISTER RESPONSIBLE FOR FINANCIAL AFFAIRS, SAID A GOVERNMENT COMMITTEE COMPRISING THE UNDERSECRETARY OF THE MINISTRY OF OIL AND GAS, THE UNDERSECRETARY OF THE MINISTRY OF FINANCE, THE UNDERSECRETARY OF THE MINISTRY OF COMMERCE AND INDUSTRY AND THE CEO OF OMAN REFINERIES AND PETROLEUM INDUSTRIES COMPANY (ORPIC), HAS BEEN TASKED WITH FIXING THE MONTHLY PRICES. THE TARIFFS WILL BE ANNOUNCED THREE DAYS BEFORE THEY COME INTO EFFECT EVERY MONTH, AL BALUSHI SAID, ADDING THAT THE PANEL WILL ALSO ENSURE THAT FILLING STATIONS ARE IN FULL COMPLIANCE WITH THE NEW PRICES. (31st December 2015)

Oman crude oil output grows 4% in 2015 Oman’s total crude oil and condensates production in 2015 grew almost 4 per cent to touch 358.10 million barrels, which is equivalent to 981,090 barrels per day. This is against a production of 344.37 million barrels in 2014, equivalent to 943,500 barrels per day.

Total crude oil exported in 2015 stood at 308.13 million barrels, a daily average of 844,207 barrels.

China topped the list of importers, offtaking 77.1 per cent of Omani crude in 2015.

Oman crude averaged $56.45 per barrel last year, against an average price of $103.23 per barrel in 2014.

According to the monthly report of the Ministry of Oil and Gas, the Sultanate produced 31.21 million barrels of crude in December 2015, yielding an average daily rate of 1,006,905 barrels, a growth of 1.12 per cent compared to the previous month. Total crude oil exports in December 2015 stood at 25.62 million barrels, resulting in an average daily export of 826,547 barrels, a growth of 0.77 per cent over the previous month.

(January 16th, 2016)

31.21 MILLION BARRELS THE SULTANATE PRODUCED

OF CRUDE IN DECEMBER 2015

February 2016

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SULTANATE OF OMAN CONCESSION BOUNDARIES

8 DNO

ARABIAN GULF

8 DNO

I S L A M I C R E P U B L I C OF I R A N

40 Petrotel

17 Petrotel MUSANDAM (Sultanate of Oman)

Open MADHA (Sultanate of Oman) BLOCK No.

BLOCK NAME

OPERATOR

AREA km 2

3

Afar

CC Energy

11,398

4

Ghunaim

CC Energy

23,212

5

Wadi Asw ad

Daleel

992

6

North, Central & South Oman PDO

90,874

7

Abu al Tubool

Petrogas

2,331

8

Bukha

DNO Oman limited

244 + 179

9

Suneinah

Occidental Oil & Gas

4,083

15

Jebel Asw ad

Oden Energi

1,389

17

Musandam

Petrotel Oman LLC

2,378

18

Batinah Coast Offshore

Open

21,140

27

Wadi Asw ad

Occidental Oil & Gas

1,254

30

Hafar

31

Open

Suneinah North

8,528

Fasad

DNO Oman limited

18,556

Mudayy

Frontier Resources Oman Limited

17,425

Salalah

Petrotel Oman Onshore LLC

11,606

40

Musandam Offshore

Petrotel Oman Offshore LLC

6,120

41

Quriyat Coast Offsho

Open

23,850

42

Sharqiyah

OCCEP

25,590

43A

Dhahirah

43B

Open

6,879

Dhahirah

Open

11,967

44

Shams

PTTEP Middle East Ltd.

1,162

47

Jebel Hammah

Open

8,524

48

Malih

Open

2,995

49

Montasar

Open

15,439

50

Masirah Bay Offshore

51

Masirah Oil Ltd Open

10,134

Juzor Al Hallaniyyat

Open

90,760

Mukhaizna

Occidental Oil & Gas

694

54

Karaw an

Oman-Lasso Exploration & Production Karaw an Limited 5,632

55

Kahil

Petrogas Kahil LLC

7,564

56

Mudaw rat

Medco Arabia LTD

5,808

57

Al Afif

Open

2,262

58

Qatbeet

Open

2,277

59

Arabian Sea

Open

40,488

60

Abu Butabul

OOCEP

61 62

Makarem Khazan Habibah

BP (Non-Associated Gas Operator)

2,796 2,269

Open

2,269

Open (Non-Associated Gas)

3,874

Government of Sultanate of Oman

1,230

66

MOL Oman LTD

4,898

Al Ghubar Qarn Alam

67 NLS

Petrotel Oman Onshore LLC

1,773

Natural Living Sanctuary

Natural Living Sanctuary

2,731

Madha

Open

63

Open

555

Open

1,529

Ghunaim

43B Open

31 Open

44 PTTEP

9 Occidental

!(

15 Odin Energi

MUSCAT

41 Open

47 Open

27 5 30 Occidental Daleel Open 65 Government of Sultanate of Oman

1,485

Occidental Oil & Gas (Non-Associated Gas Operator)

65

64

18 Open

Juzor ad Daymaniyyat

16,903

Baqlah

52 53

62 Oil

UNITED ARAB EMIRATES

1,185

Open

36 38 39

SEA OF OMAN 43A Open

62 Occidental 62 Oil Open Open

51 Open

42 OOCEP

61 BP 3 CC Energy

60 48 OOCEP Open

59 Open

64 Open

Acreages are based on spheroidal area The blue/white stripes indicate Oxy operating for NAG and open for Oil

7 Petrogas

4 CC Energy

K I N G D O M OF S A U D I A R A B I A

Masirah

50 Masirah Oil Ltd

66 MOL NLS 6 PDO

54 Lasso

53 Occidental 49 Open

55 Petrogas

36 DNO 57 Open

56 Medco

58 Open

38 Frontier

67 Petrotel 39 Petrotel

Map courtesy of OPAL

REPUBLIC OF YEMEN

ARABIAN SEA

!(

Juzor al Hallaniyyat

SALALAH 52 Open

MINISTRY OF OIL AND GAS 100

This map is not an authority on international boundaries.

50

0

100 Kilometers

Drawing No.: 108094001.mxd Date: 09 Dec 2015

14

NEWS

Takatuf signs sponsorship agreement with Mitsui Takatuf Oman, the Human Capital solutions provider, signed a sponsorship agreement with Mitsui & Co, Ltd, the diversified and comprehensive Japanese trading, investment and services enterprise to support young Omanis who participate in the Takatuf Scholars’ Programme and earn international scholarships.

Ibrahim al Harthi, Acting CEO, signed the agreement on behalf of Takatuf, and Hiroyuki Tsurugi, Managing Officer and Chief Operating Officer - Energy Business Unit 1, signed for Mitsui. Mitsugu Saito, Ambassador of Japan to the Sultanate of Oman, and Eng Isam bin Saud al Zadjali, CEO of Oman Oil Company were joined by official

representatives of both parties at the ceremony.

Mitsui is the first international company to join the network of sponsors investing in Oman’s youth to develop future leaders. In addition to sup-

porting participation in the Takatuf Scholars Programme Enrichment Programme, two students will be awarded an international scholarship for high school completion and undergraduate study in Japan. (6th Feb 2016)

ORPIC GRANTS SCHOLARSHIPS TO OMANI STUDENTS

20 STUDENTS HAVE SO FAR BEEN GRANTED SCHOLARSHIPS UNDER THE ORPIC INTERNATIONAL SCHOLARS PROGRAMME

As many as 20 students have so far been granted scholarships under the Orpic International Scholars Programme to the UK, the Netherlands, USA and Canada. This initiative is part of Orpic’s continued support to young students in North Al Batinah region as well as the Sultanate in general.

The programme calls for students from North Al Batinah Governorate to benefit from the scholarships provided based on preset criteria’s. Once applications are received, screening of candidates is carried out by Takatuf Scholars Programme and selected students are offered international scholarships for two years in a preparatory school followed by another 3 – 4 years for Bachelor Degree in one of the leading universities around the world. (3rd Feb 2016)

A & se “O D Re of al eq Pe

In – – –

15

February 2016

A BENCHMARK IN EVERYTHING WE DO

An Advanced & Comprehensive set-up that offers a “ONE STOP SHOP” for Design, Manufacturing, Repair, and Refurbishment of products and services of all mechanical and processing equipment mainly for Oil & Gas and Petro Chemical Industries.

In-house Design & Process Engineering – Fabrication – Machining – Valve Testing & Repair – Rig Maintenance – Special Coating – Welding – Man-Power Supply.

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NEWS

PDO INKS MOU WITH CENTRE FOR CORPORATE GOVERNANCE

Gas contract with Oman in final stages Iran and Oman took what would likely be the final step in sealing a long-in-the-works gas export deal worth $60 billion in a meeting between Iran’s Oil Minister Bijan Namdar Zanganeh and his Omani counterpart, Mohammed bin Hamad al Rumhy, in Muscat. The two sides discussed the financing terms of laying an approximately 260-kilometer subsea pipeline to supply 28 million cubic meters a day of natural gas (10 billion cubic metres a year) from Iran to Oman under a 25-year contract that is expected to begin in 2019.

“With sanctions lifted, the National Iranian Gas Export Company and the Omani side will hold talks over the unexploited capacity [of Oman’s LNG production] over the next 10 days,” Zanganeh said after returning from his one-day trip to Muscat, Iranian news service Shana reported.

Oman wants Iran’s gas to meet the demand of its 3.6 million population, while a portion of supplies is planned to be used as feedstock to produce liquefied natural gas. According to the latest developments concerning Tehran and Muscat’s gas deal, a 48-inch pipeline will be laid up from Jask Port in southern Iran to deliver gas to Oman in the Arabian Peninsula. Tehran and Muscat reached a preliminary agreement in early 2014 on laying the underwater pipeline at an estimated cost of $1 billion. (23rd January 2016)

IRAN AND OMAN TOOK THE FINAL STEP IN SEALING A LONG-IN-THE-WORKS GAS EXPORT DEAL WORTH Petroleum Development Oman (PDO) has signed a co-operation agreement with the Oman Centre for Corporate Governance and Sustainability (OCCGS) to ensure the Company and its contracting community continue to operate to the highest performance and ethical standards.

The agreement was signed by PDO Managing Director Raoul Restucci and OCCGS Executive Director Sayyid Hamid bin Sultan al Busaidi.

Restucci said: “PDO has always been committed to being a good corporate citizen, putting honesty, integrity and fairness at the centre of everything we do. We believe in transparency and accountability and this is another step forward in our efforts to ensure compliance to business ethics and anti-corruption policies.

Under the terms of the MoU, OCCGS will provide support and advisory services in the preparation of policies and manuals relating to corporate governance and sustainability. The organisation, which is tasked with building the infrastructure, skills and value system to transform corporate behaviours and performance in Oman, will also provide governance training for PDO staff and contractors while offering administrative technical consultations, research and studies in this area. (24th January 16)

$60 BILLION

Plexus lands $600,000 wellhead contract Scottish Oil and gas technology group Plexus Holdings has won a contract in Oman worth about $600,000. Under the deal, the Aberdeen-based firm will supply explorer Masirah Oil with its Pos-Grip wellhead system, designed to prevent the type of blowout behind the 2010 Gulf of Mexico disaster that killed 11 people. Work will begin next month, initially for one well, but Plexus said a further two wells could be drilled depending on results.

The contract falls under the territory of the Aim-quoted company’s recently appointed Chinese licencing partner, Jereh, and Cenkos analyst Ian McInally said: “This is extremely welcome news as it not only marks the first move into the Middle East through Jereh, it again serves to highlight the competitive advantage of Pos-Grip technology.”

Plexus chief executive Ben van Bilderbeek said: “This new contract in a new territory with a new customer represents another step in achieving our strategy of global expansion for Plexus and the development of our suite of Pos-Grip wellhead products at a time when the North Sea is under extreme pressure from the fall in oil prices.” (20th January 2016)

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February 2016

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NEWS

OMAN AWARDS ONSHORE BLOCK 7 In what has been hailed as a bright spot amid the continuing gloom pervading Oman’s upstream energy sector, the Ministry of Oil & Gas signed a new Exploration and Production Sharing Agreement (EPSA) with Hydrocarbon Finder, a wholly Omani owned independent energy firm, covering Block 7 in Wusta Governorate.

Dr Mohammed bin Hamed al Rumhy, Minister of Oil & Gas, inked the agreement on behalf of the Government of the Sultanate of Oman. Signing on behalf of Hydrocarbon Finder was its Chairman, Sulaiman Mohammed Yahya al Adawi.

The modest-sized 2,331 sq km concession, which is currently operated by Petrogas, will pass into the hands of Hydrocarbon Finder when the latter’s EPSA expires in early April.

According to Dr Saleh al Anboury, Director General of Petroleum Investments at the Ministry of Oil & Gas, the Block currently produces around 900 barrels per day (bpd) of crude from three oilfields – an output that is proposed to be ramped up to around 5,000 bpd over the next five years. (28th Jan 2016)

195 Omanis obtain 6G welding qualifications A total of 195 Omani jobseekers graduated to the highest international standard to work as welders on PDO’s Rabab Harweel integrated oil and gas mega project. The recruits have successfully completed 20 months’ training and are taking up positions with two of the Company’s main contractors, CCC and Al Turki Enterprises.

The graduation ceremony took place under the auspices of Mohammed bin Hamad al Rumhy, Minister of Oil and Gas in the presence of Shaikh Abdullah al Bakri, Minister of Manpower.

The PDO-funded vocational training scheme combines theory and practice and qualifies trainees up to 6G level – the most advanced – which is recognised by international accreditation bodies such as The Welding Institute (TWI) and The American Welding Society. (28th Jan 2016)

Fuel prices announced for February THE COMMITTEE IN-CHARGE OF STUDYING AND FIXING THE RETAIL PRICE OF FUEL PRODUCTS IN THE SULTANATE APPROVED A NEW SET OF PRICES FOR FEBRUARY. IN A STATEMENT TO ONA, SALIM BIN

NASSER AL AUFY, UNDER-SECRETARY OF THE MINISTRY OF OIL AND GAS, DECLARED THE NEW TARIFFS AS FOLLOWS: 153 BAIZAS PER LITRE OF M95, 137 BAIZAS PER LITRE OF M90, AND 146 BAIZAS PER LITRE OF

DIESEL. THE NEW PRICES, WHICH COME INTO FORCE ON 1 FEBRUARY, ARE LOWER BY 7, 3 AND 14 BAIZAS RESPECTIVELY COMPARED TO THE JANUARY TARIFFS. (28th January 2016)

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February 2016

LEAD INTERVIEW

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February 2016

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A safety-net for Oman’s oilfield industry As tanking oil prices put the squeeze on local oil and gas companies, Oman’s government has scrambled to put in place bold measures designed to dampen any rush by employers to axe the jobs of Omani oilfield workers

I His Excellency Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas

t all came to a boil one day in early November! Bloggers crying foul over claims that oilfield contractors were quietly laying off Omani workers while keeping expatriates in place… Trade union bosses threatening industrial action to stave off job losses… Social media agog with predictions of impending doom for the oil and gas industry – the nation’s economic lifeblood…

Then came the missive from the Council of Ministers decreeing a moratorium on unilateral layoffs of Omanis working in the oil and gas industry. Based on a proposal drafted by the Ministry of Oil and Gas with inputs from the Oil & Gas Sector Trade Union and other stakeholders, the directive set out firm caveats against employers seeking to axe national workers in the face of the crisis.

If anything, the announcement did help calm nerves in the oil and gas industry already jittery over collapsing international oil prices. Although it placed the burden of averting job losses squarely at the door of oilfield companies, the communiqué did provide reassurance that the Omani government was seized of the situation and would come up with equitable solutions that had the interests of private employers at heart as well.

At the heart of communiqué is an algorithm that any oilfield services company must adhere to before they contemplate any redundancies involving Omani workers. “It simply says that before the terminating the contract of a national worker, the subcontractor, corresponding main contractor and the operator (oil company) in question need to do due diligence to verify that there are very valid reasons for this action,” ex-

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LEAD INTERVIEW

plained His Excellency Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas. Importantly, the communiqué frowns upon any sleight-of-hand tactics to retain expatriate staff while sacrificing their Omani colleagues. Expat workers holding comparable or equivalent positions within the organisation must be terminated first before similar action is contemplated against Omani workers.

“Additionally, the employer is obliged to explore the possibility of accommodating any surplus Omani staff in other company contracts or projects being undertaken by sister companies of the group either within or outside the oilfield sector, subject to certain conditions being met.”

ADDITIONALLY, THE EMPLOYER IS OBLIGED TO EXPLORE THE POSSIBILITY OF ACCOMMODATING ANY SURPLUS OMANI STAFF IN OTHER COMPANY CONTRACTS OR PROJECTS BEING UNDERTAKEN BY SISTER COMPANIES OF THE GROUP EITHER WITHIN OR OUTSIDE THE OILFIELD SECTOR, SUBJECT TO CERTAIN CONDITIONS BEING MET The Under-Secretary heads a specially constituted Technical Committee tasked by the Council of Ministers to strategize a far-reaching redeployment roadmap designed to secure Omani jobs in the face of the worsening oil price slump and steep budget cuts. Also sitting on the panel is an Under-Secretary representing the

Ministry of Manpower, a Board Member of the Oman Chamber of Commerce and Industry (OCCI), the Chairman of the General Federation of Oman Trade Unions, the Chairman of the Oman Oil & Gas Sector Workers Union, and a representative of the Oman Society for Petroleum Services (OPAL), among other high-level officials.

February 2016

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Its mandate is to sign off on any redundancies that cannot be salvaged despite a protracted, multistage process of due diligence, retraining and upskilling, and redeployment. Any jobs losses still filtering through despite the rigorous safety-netting exercise will be more of an exception than the norm, officials insist.

Saved by the bell

Not surprisingly, several hundred Omanis threatened with the axe across a number of prominent oil and gas companies have since been assured continued employment thanks to the redeployment strategy now firmly in place in the oil and gas industry. Conceived as a ‘safety net’ for oil industry workers, the strategy has been broadly welcomed even by the Oil & Gas Sector Workers Union because of its demonstrable efficacy in safeguarding Omani jobs.

It must be stressed however that the carefully crafted redeployment strategy does not proscribe Omani job losses altogether, says HE Al Aufy. “If the subcontractor still has Omani staff on his hands despite the application of the redeployment strategy in letter and spirit, he can then formally write to the Main Contractor setting out all of the steps he has taken to preserve Omani jobs. He has to articulate the actions taken to terminate the contracts of expatriates, steps taken to redeploy Omanis to other projects within the organisation, and the efforts made, if unsuccessfully, to secure alternative employment for the remaining Omani staff not only within the oilfield sector but other sectors as well, within and outside Oman.

“The onus then falls on the Main Contractor to work with the subcontractor and challenge him to do more to accommodate any surplus Omani staff within his group operations. Perhaps, with a bit of training and upskilling, it may be possible to absorb these individuals in other fields and activ-

THE RIGOROUS LEVEL OF SCRUTINY BUILT INTO THIS ELABORATE SAFETY-NETTING PROCESS GIVES ASSURANCE THAT ANY REDUNDANCIES INVOLVING OMANI STAFF WILL BE FEW AND FAR BETWEEN, SAYS AL AUFY. EVEN THESE SMALL RESIDUAL NUMBERS WILL BE THE FOCUS OF INTENSIVE EFFORTS DRIVEN BY THE TECHNICAL COMMITTEE TO SECURE THEIR WELL-BEING ities within the group. The Main Contractor could also explore redeployment opportunities for surplus staff among other subcontractors on its rolls.

“Thus, when a company’s contract is expiring or being truncated or terminated because of the actions of the main contractor, whose actions in turn are being driven by those of the operator, it is obligatory for each of these parties to implement the actions prescribed as part of the redeployment strategy. The operator, having undertaken its own meticulous due diligence, then sends a formal letter to the Technical Committee spelling out the actions taken in line with the prescribed algorithm,” the Under-Secretary explained.

The rigorous level of scrutiny built into this elaborate safety-netting process gives assurance that any redundancies involving Omani staff will be few and far between, says Al Aufy. Even these small residual numbers will be the focus of intensive efforts driven by the Technical Committee to secure their well-being, he stresses.

“We will be looking at securing them employment outside the oilfield sector notably by retraining or upskilling them if necessary.

As a final resort, we will begin a discussion with them about terminating their employment contract with some compensation to resolve their immediate financial situation as well as help them start their own business or find another line of work.”

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LEAD INTERVIEW

High-grading skill-sets

For its part, the Ministry of Manpower is pitching in with funding support for the training of Omanis who may need some upskilling before redeploying to new contracts. Operators too have to shoulder a share of the financial burden that may accrue if compensation is payable to Omanis

“Seismic activity, for example, had picked up significantly over the last few years, but is now petering out for reasons that have less to do with the crisis than with the fact that various contracts have come to their natural end. OXY has already blanketed their fields with seismic.

PDO too has acquired all the seismic they need. So has Daleel. We

who are redeployed against lower pay benefits or are made redundant altogether.

Significantly, not all of the threatened redundancies that had social media abuzz in the lead up to the communiqué were linked to the oil price slump, according to the Under-Secretary. A sizeable number of the job cuts were the result of contracts coming to their natural end and mistakenly conflated to suggest that the downturn was leading to job losses, he said, citing a number of contracts that ran their course around the same time that the crisis began to bite.

Seismic acquisition and drilling activities in particular are worse off than other segments of the oilfield sector. This is partly the result of contracts coming to their natural end and partly a fallout of the wider oil crisis, he noted.

have thus come to a point where the industry overall does not need more than one active crew. In the circumstances, work for a second crew would be patchy at best.”

At the same time, oil rigs are being laid off for reasons that have everything to do with low oil prices and belt-tightening measures, he points out. “With prices at where they are today, companies are likely to weigh the cost benefits of drilling to make sure they will still make money from these wells based on a reasonable forecast of where oil prices are headed over the next several years. For a time, they may go back to their drilling contractors, negotiate a rate reduction, seek better efficiency, and so on, but will finally come to a point where they will not have enough wells in the pipeline to feed all the rigs. This means some rigs will have to be stacked or terminated,

and this is happening right now around the world.”

Staying the course

HE Al Aufy acknowledges that the worsening oil price situation has been a killjoy for an industry that has enjoyed high growth over the past several decades, bankrolled national economic development and provided employment to more Omanis than any other economic sector.

But with oil companies expected to stay the course in meeting their production targets, the industry must find ways to challenge itself to remain in business, he stresses.

“These are challenging times that require oil companies to do things differently from when oil prices were $105 – 110 per barrel. PDO, for example, is trying to minimise the impact of budget cuts on their oil production and the national workforce to the extent possible.

They are scrutinising every activity to see if it is really necessary or if it can be done differently. This is the time for Omani companies – within and outside the oil industry – to high-grade, to become more efficient, and to challenge the status quo.”

He further emphasised: “This is also a time for furthering Omanisation because it creates an opportunity for high-grading especially if there is an appetite for training and retraining. Now’s the time for companies to pause and realise that the hiring of low skilled Omanis is no longer acceptable because it comes with huge accountability later on, especially when the market slides.

So let’s turn a crisis into an opportunity; let’s challenge the way we’ve been doing business, strengthen the checks and balances that operators place on contractors, work collaboratively with community contractors, high-grade Omanisation plans and high-grade jobs that Omanis are performing in this sector,” the Under-Secretary added.

By Conrad Prabhu

Sa

Ph P.O

February 2016

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Salalah Methanol Company

In view of the government plans to develop the Omani economy and industrial sectors at both local and international levels, Salalah Methanol Company LLC (SMC) was established in 2006 to build a state-ofthe art methanol production facility in Salalah Free Zone.

The plant is a standalone plant designed to produce 3000 Metric Tons of methanol per day.

The Company, is one of Oman Oil Company (OOC) downstream investments , and the Company significantly contributes to the ongoing development of the national economy. With an exceptional track record in the production of methanol and adhering to the stringent Health, Safety & Environment (HSE) standards, SMC has received internationally recognized safety certifications.

Salalah Methanol achievements speak for themselves as we successfully produced and marketed more than 220 cargos of liquid methanol since May 2010, and achieved an outstanding run of 3 million working hours without Lost Time Injury (LTI) from 30th October 2013 to 30th October 2015. In addition the Company achieved 64% Omanization level with a recognized achievement towards corporate social responsibility by funding more than 100 CSR initiatives during the period of 2012-2015.

Salalah Methanol Company L.L.C

Phone: +968 23218800 Fax: +968 23218880 P.O. Box: 316, P.C. 217, Al Awqdain, Salalah, Sultanate of Oman

INTERVIEW

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Petroleum Development Oman:

Weathering the oil storm

Value creation, sustainability, business improvement and expenditure savings are the mantras shaping Petroleum Development Oman’s (PDO) response to the international oil price rout

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February 2016

"Recruitment will continue to ensure the business is properly resourced and PDO will continue to be an active champion of Omani talent, through our Graduate Development Programme, scholarships and apprenticeship schemes."

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INTERVIEW

ed they get the fundamentals right.

“We need to press ahead with a continued focus on business improvement and sustainability, operational excellence and project delivery while all the time adhering to safety as the bedrock of everything we do,” he stressed.

❱❱ Mr. Raoul Restucci, Managing Director of Petroleum Development Oman (PDO)

In the following Q&A interview, Mr. Restucci fields a wide array of questions on the implications of the oil price slump on PDO’s business:

T

he nation’s eyes are riveted on Petroleum Development Oman (PDO), the dominant producer of hydrocarbons, as it pursues a far-reaching strategy to, among other things, sustain – if not ramp up – production of oil and gas – commodities that are the lifeblood of the Sultanate’s economy.

It’s a formidable challenge given the tough market conditions, but one that the majority government-owned company is committed to delivering through a combination of enhanced efficiency and cost control – measures that promise to yield an estimated $1 billion in savings over the next five years, according to Managing Director Mr. Raoul Restucci.

Speaking exclusively to OPAL, Mr. Restucci offers his take on the challenges that the global oil price downturn – which has seen prices of crude plummet by nearly 60

per cent in just over a year – pose to PDO’s business and the wider industry.

Oil production, the Managing Director stresses, continues to be a “profitable” business, evidenced by the significant contracts PDO has signed in support of its eventual goal of achieving a new production plateau of 600,000 barrels per day by 2019.

Efforts to deliver gas – an energy resource of pivotal importance to the economy – are also continuing apace, according to Mr. Restucci. Plans for the development of the Khulud tight gas field – PDO’s maiden stab at commercial tight gas production – are being stepped up, while new depletion compression facilities at the Saih Rawl Central Processing Plant are being commissioned, he said.

Going into 2016, the Managing Director says he is optimistic that the industry, and PDO in particular, can weather the oil price storm, provid-

OPAL: Have low international oil prices begun to bite where PDO’s core operations are concerned?

RR: At the present time, PDO is working to ‘stay the course’ with a robust growth programme despite the low oil price environment. Our focus remains on delivering maximum value for the Sultanate and driving greater efficiency and cost control.

Despite the challenging market conditions, our well drilling and engineering activity levels remain high as we progress with the early monetisation of prospects, Lean business efficiency, accelerated well hook-ups and world-class well and reservoir management.

It is important to stress that the oil we produce is profitable and we are still signing significant contracts which sustain PDO and Oman for the future as we work towards a new oil production plateau of 600,000 barrels per day by 2019.

Last but not least, whatever the oil price, we will not cut corners by compromising on our stringent personal or process safety standards – a message that is reiterated to our contractors on a daily basis.

OPAL: Kindly shed light on the impacts from the oil price crash to PDO’s busi-

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nesses, specifically with regard to: a) Exploration programmes As far as Exploration is concerned, investment levels have not changed so far but our strategy has focused on further value creation, targeting medium to low-risk prospects and prioritising segments with

ever carried out in Oman – is very promising and we are due to start drilling the first wells early next year. b) Drilling activities The amount of wells we drill in 2015 is expected to be consistent with recent years – around 500 – although

workover fleet. c) Enhanced oil recovery projects – ongoing and future We still expect EOR to account for a third of our production by 2023 and our commitment and innovation in this area will continue. The recent announcement of our world-lead-

"Announcement of PDO's world-leading Miraah solar steam project with their partners GlassPoint Solar shows the scale of our ambition which remains undiminished in achieving sustainable production."

the potential to deliver significant production wedges towards our 600,000 bpd target.

Our Exploration Directorate’s key objective is to provide PDO with a projects portfolio that could potentially displace higher Unit Technical Cost (UTC) production and positively impact our near-term cash flow. The accelerated monetisation of new field opportunities has enabled us to delay higher UTC opportunities beyond the end of the five-year plan in 2019.

Meanwhile, preliminary interpretation from the Yibal/Al Huwaisah seismic survey – the largest survey

OUR EXPLORATION DIRECTORATE’S KEY OBJECTIVE IS TO PROVIDE PDO WITH A PROJECTS PORTFOLIO THAT COULD POTENTIALLY DISPLACE HIGHER UNIT TECHNICAL COST (UTC) PRODUCTION AND POSITIVELY IMPACT OUR NEAR-TERM CASH FLOW we are targeting faster hook-ups to expedite production for early monetisation. Our focus remains on becoming more and more efficient, reducing non-productive time and waste and driving best practice across our significant drilling and

ing Miraah solar steam project with our partners GlassPoint Solar shows the scale of our ambition remains undiminished in achieving sustainable production. Miraah will reduce the consumption of gas for thermal EOR in an exciting and pio-

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neering way by harnessing the sun’s rays to generate steam. We have just broken ground on the project at Amal and the first steam is expected in 2017.

Work on our other EOR projects and pilots continues apace, although we are re-evaluating technical solutions at Habhab. The field is very complex and, irrespective

tively with our contracting community rather than mandating topdown cost reduction instructions.

So, we have held a series of Contract Optimisation Reviews and listened carefully to our contractors for solutions on where they believe we could enhance their performance and enable us to mutually operate more efficiently. As a result

We have been securing significant efficiency and effectiveness gains as part of our Lean journey and we remain committed to securing long-term growth and maximising value for the Sultanate. We are leaving no stone unturned and reviewing all areas of expenditure in close collaboration with our contractors.

of this collaboration, and along with procurement savings on our mega projects, we are well on our way to booking US$1 billion real and structural savings from 2016-2020.

At the same time, our teams continue to ramp up production by working harder and smarter. For example, in October, PDO achieved its best monthly oil production since April 2006.

OPAL: Are you staying the course where PDO’s gas business is concerned, given the fact that the bulk of the nation’s gas requirement is met almost exclusively by PDO? RR: There have been considerable efforts to deliver gas on target despite asset integrity issues at Kauther and Saih Nihayda, which we are resolving.

We are stepping up our gas development plans for the tight gas in Khulud and have extensive extension appraisal on our main fields.

New depletion compression facilities at our Central Processing Plant in Saih Rawl are being commissioned which will enable incremental production from low pressure wells. I’m also pleased that the Gas team has made excellent progress in restoring production from closed-in/liquid load-

"Miraah will reduce the consumption of gas for thermal EOR in an exciting and pioneering way by harnessing the sun’s rays to generate steam."

of oil prices, we have yet to resolve technical recovery challenges.

OPAL: As the largest contributor to Oman’s oil output, how do you strike a balance between maximising production (in order to enhance export revenues) while managing costs?

RR: This is not a binary choice and it is possible to both maximise production and manage costs. Central to this objective is our Lean continuous business improvement programme which helps us to identify waste, strip out duplication and streamline our operations so that we do more for less.

When economising, any business must assess the impact of cuts across the value chain and then be surgical and selective in its approach. The most important aspect for us has been to work collabora-

OPAL: What is the message you’re receiving from the Ministry of Oil & Gas and the Ministry of Finance as you factor in oil price volatility into the financing of your ongoing operations?

RR: PDO and other operators know their responsibilities and are in close contact with relevant Ministries. Value creation, sustainability, business improvement and expenditure savings are the watchwords.

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ed wells, dramatically reducing non-productive time and yielding significant reductions in reservoir impairment, flaring and costs.

Simpler rig-up/workover arrangements, reducing the level of equipment/fencing removal and accelerating well hook-up time by more than 50% have also helped us.

"PDO have just broken ground on the project at Amal and the first steam is expected in 2017. Work on other EOR projects and pilots continues apace although they are re-evaluating technical solutions at Habhab."

AS A RESULT OF THIS COLLABORATION, AND ALONG WITH PROCUREMENT SAVINGS ON OUR MEGA PROJECTS, WE ARE WELL ON OUR WAY TO BOOKING

US$1 BILLION REAL AND STRUCTURAL SAVINGS FROM 2016-2020 OPAL: What, if any, is the upside to the current oil price crisis in terms of its potential to drive productivity, competitiveness and innovation in the oil industry in Oman?

RR: Our mantra is: never waste a crisis. In periods of difficulty and uncertainty, it’s key to get the fundamentals right and our track record and robust business plan have enabled us to absorb the impact of the price fall and continue to deliver key growth and development tar-

gets to our shareholders.

With our contractors, we have a great opportunity to review how we do things more efficiently and effectively through better ways of working and the deployment of new technologies to address key challenges so we emerge leaner, stronger and fitter from the current difficulties. For example, our Collaborative Work Environments, spaces equipped with the latest digital technology, are enabling real-time communications

between our Coastal teams and the field to identify issues, monitor performance and devise solutions in an integrated, multi-disciplinary, faster way.

The current environment is enabling us to challenge the status quo. From discretionary expenditure to redeployment of hoists and other resources, we need to ‘serve Oman’ by ensuring we are all working to remove inefficiency and waste.

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OPAL: Please comment on the potential impacts to oilfield contractors and service providers as oil producers are forced to curtail spending and shelve some projects.

RR: We have worked assiduously with the Ministry and our contractors to mitigate the impact of the downturn. Clearly, some contractors will be better equipped to absorb the impact of these challenging conditions than others but we are doing what we can to help. In our own case, even where contracts have ended or naturally expired without renewal, we have worked with contractors to relocate personnel onto other contracts wherever possible.

OPAL: How is PDO working with MoG and the contracting community to ensure that the downturn is not impacting Omani workers, LCCs and SMEs? RR: Many established or aspiring new buinesses will be impacted by the recessionary pressures. However, we are working closely with both to ensure that Omanis are protected and our support for Omani small and medium enterprises (SMEs) is as strong as ever as these are the lifeblood of any thriving, diversified economy and can provide new and sustainable employment opportunities.

We reserve scope in our contracts for Omani SMEs and all companies bidding for our work must submit a detailed In-Country Value (ICV) plan explaining how they will maximise local content over the contract’s duration. At the same time, we are offering technical, operational and governance support to help entrepreneurs to succeed. Our ICV and finance experts have been conducting workshops explaining our tendering requirements to SMEs and we have developed a number of online tools so it is easier for them to do business with us.

We currently have around 200 active LCCs and our Super Local Community Contractors continue to make advances. The SLCCs are providing oilfield services in Oman

and are now looking beyond its borders. They have provided a fantastic opportunity to spread the benefits of our industry to local communities in terms of employment and investment and the combined capital value of the five SLCCs now stands at more than RO23 million. They also have around 10,000 shareholders drawn from local communities in our concession area. PDO is not a fairweather friend. These are real success stories and we will continue to back them.

OPAL: Do you foresee a slowing of the momentum in the Ministry’s ICV strategy which you have helped spearhead?

RR: ICV is a marathon not a sprint and both the Ministry and PDO are in it for the long haul. Creating employment and training opportunities for Omanis and a supportive environment in which local companies can survive and thrive are national priorities.

We have said from the outset that ICV in certain circumstances will mean paying a premium and that this may have to continue in the short to medium term. However, we have also said it is not ICV at any cost – whatever the oil price environment – and decisions must make commerical sense.

Regardless of the current economic difficulties, it is imperative that we retain more of our industry’s wealth in the Sultanate and we must build a sustainable and productive Omani industrial/private sector base comprised of skilled Omanis who can compete on the global stage.

OPAL: Are job losses and bankruptcies in the industry inevitable if the downturn spills into 2016? Should the industry be gearing to minimize the impact?

RR: Nobody can predict with any certainty what will happen to the market next year although there is a global oil glut at present and any prudent business has to make contingencies to minimise the impact if this downturn continues.

Both globally and nationally, redundancies are inevitable if we see

more of the same in 2016 and beyond. At PDO, there will be reductions in new or renewals of expatriate contracts, or natural attrition through retirement, but this is as much driven by the Omani talent pool ready to take over as by the economic pressures requiring deferments of technical cost projects.

However, recruitment will continue to ensure the business is properly resourced and we continue to be an active champion of Omani talent, through our Graduate Development Programme, scholarships and apprenticeship schemes as well as working with our contractors on provision of training and job opportunities for Omanis.

In line with the sensible and pragmatic management of any company, we will continue to review staffing levels on a regular basis to ensure they allow us to conduct our business as productively and sustainably as possible and to deliver on our strategy.

OPAL: Your final thoughts on what the outlook is for Oman’s economic mainstay going forward.

RR: I remain optimistic that the nation’s oil and gas sector generally, and PDO specifically, can rise to the current challenge. However, we have to ensure we get the fundamentals right. We need to press ahead with a continued focus on business improvement and sustainability, operational excellence and project delivery while all the time adhering to safety as the bedrock of everything we do.

Yes, we have to adapt and adopt new ways of working as we pursue cost control measures. However, we should seize the opportunity to eradicate wasteful and inefficient work practices for good, embracing new technologies and maintaining a robust pipeline of talent and expertise.

In doing so, we can maximise the value we create for Oman so the Sultanate can continue on the road to progress and prosperity under His Majesty’s wise and visionary leadership.

Images are property of PDO

INTERVIEW

Salalah Met

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Salalah Methanol Company CS6.indd 5

February 2016

12/9/15 10:13 AM

BLUEPRINT

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Redeployment strategy yields early success stories

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The government-sanctioned Redeployment Strategy is beginning to deliver positive results, having already salvaged several hundred jobs of Omani oilfield workers threatened by mass layoffs in the wake of the oil price slump. Mr. Musallam al Mandhry, CEO of Oman Society for Petroleum Services (OPAL), which is playing a pivotal role in the implementation of this strategy, offers his take on the efficacy of this farreaching workforce management blueprint

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BLUEPRINT As an alternative, the employer must explore opportunities for the redeployment of surplus Omani staff in other contracts being undertaken by the company or group companies either within the oil and gas sector or beyond

❱❱ Mr. Musallam Al Mandhry, OPAL CEO

mission to lay off any Omani staff.

“The strategy simply says that a contractor, before contemplating any layoffs of Omani workers, must first replace expatriates performing comparable tasks,” Mr. Musallam al Mandhry, CEO, who led the strategy formulation effort on behalf of OPAL, explained.

“As an alternative, the employer must explore opportunities for the redeployment of surplus Omani staff in other contracts being undertaken by the company or group companies either within the oil and gas sector or beyond.

The Main Contractor then comes into the picture and does due diligence to verify if the company in question did indeed explore every avenue to secure suitable alternative employment for surplus Omani workers. At this juncture, the onus is on the Main Contractor to explore redeployment opportunities for any surplus nationals remaining with its subcontractor. In the third stage of the multilevel process, the corresponding Operator does his own

due diligence of the efforts made by the Main Contractor and further supports the redeployment effort by seeking opportunities with other contractors. Any unskilled Omanis still remaining over from the process are then processed as candidates for training and upskilling before they can be suitably redeployed. Set compensation pay-outs are a last resort where no suitable job alternatives are found,” he further elaborated.

Heartening results

Happily, the strategy has begun to deliver results, says Mr. Al Mandhry. Among the early suc-

Shutterstock

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he mood at OPAL’s Al Khuwair offices is decidedly relaxed these days in contrast to the war-room atmosphere that prevailed just three months earlier. Then, OPAL officials were in full-blown crisis management mode triggered by the threat of industrial action called by the Oil & Gas Sector Workers Union fearing large-scale job losses. It was a call to action that saw top officials of the Ministry of Oil & Gas, Ministry of Manpower, and the entire line-up of oil and gas producers joining in as well.

Emerging from those high-level deliberations was a ground-breaking blueprint for safeguarding the jobs of Omanis at risk of retrenchment as employers scrambled to cut costs or businesses were in peril of simply folding up as a consequence of the downturn.

The Redeployment Strategy, as it is called, is essentially a checklist of things that employers must do before they can seek official per-

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cess stories is the example of The Oman Construction Company (TOCO) which had listed as many as 587 of its Omani staff as candidates for redundancy.

After an initial redistribution of 87 workers within TOCO, a further 374 were retained after discussions with the main client, Occidental of Oman. The latter, as part of its due diligence efforts, helped secure positions for a further 75 workers among fellow contractors. That left 49 workers, down from the original 587, who are being taken in hand by the ‘Redeployment Working Committee’ under the auspicies of the Ministry of Oil & Gas

THE REDEPLOYMENT STRATEGY, AS IT IS CALLED, IS ESSENTIALLY A CHECKLIST OF THINGS THAT EMPLOYERS MUST DO BEFORE THEY CAN SEEK OFFICIAL PERMISSION TO LAY OFF ANY OMANI STAFF with members from the Ministry of Manpower, the Union Federation, in addition to OPAL, as part of its remit to resolve their individual cases. The Committee, working with Occidental has so far managed to secure jobs for all the remaining TOCO staff and is in the process of redeploying them with various contractors.

“The TOCO case was a resound-

ing example of how the Redevelopment Strategy was successfully applied,” said Mr. Al Mandhry.

“The learning gained from this exercise has since been successfully employed in addressing similar mass redundancy challenges that cropped up elsewhere in the industry.”

Another striking example is that of seismic survey specialist

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BLUEPRINT

gy was rolled out. The Ministry of Manpower, along with OPAL and other stakeholders, have successfully managed to redeploy all the redundant Omani staff.

Future challenges

GIVEN THE FACT THAT THE INDUSTRY CURRENTLY EMPLOYS 70,000 – 80,000 WORKERS – OMANIS AND EXPAT – THE POTENTIAL FOR OMANISATION IN THESE CATEGORIES IS VERY PROMISING Ardiseis, a subsidiary of CGGVeritas. As many as 570 Omani employees of this company, contracted by Petroleum Development Oman (PDO), were identified as surplus when Ardiseis downsized its operations in Oman. An energetic programme of redeployments, supported by PDO, helped whittle down the number to 28 surplus Omanis who have been referred to the Redeployment Working Committee for further processing.

The case of Schlumberger, a prominent oilfield services contractor, is equally noteworthy.

Saddled with around 300 Omani staff deemed surplus as a result of cost-cutting measures, the

company succeeded in redeploying roughly half this number to their operations elsewhere in the Gulf region. Other measures, along with attractive redundancy packages offered to the remainder helped pare the list down to 12 surplus staff whose individual cases are the subject of ongoing negotiations with authorities.

The fate of a separate batch of 80 employees, handling its wireline and fraccing operations, is being carefully weighed with the assistance of PDO. Also under careful review is the case of KEYS Energy that had been preparing to wind down its operations in the Sultanate well before the Redeployment Strate-

While these initial success stories are indeed heartening, the concern for OPAL is that the current trickle of redundancies could potentially turn into a tide as the crisis worsens going forward. To help tackle this potential scenario, the NGO is studying various professions across of the oil & gas industry that could be targeted for intensified Omanisation and upskilling.

“There are professions like seismic survey crew, drilling rig operators, and so on, that are predominantly Omanised. However, other segments like operational maintenance, construction, service companies etc, have Omanisation levels averaging 25 to 35 per cent. Given the fact that the industry currently employs 70,000 – 80,000 workers – Omanis and expat – the potential for Omanisation in these categories is very promising. So we are looking to get suitably geared on the training and upskilling fronts to meet any redeployment demand particularly where laid-off Omanis are unskilled or semi-skilled.”

A key dilemma for OPAL is to find suitable redeployment opportunities for the large numbers of drivers being threatened with retrenchment as the crisis bites.

Retraining and upskilling them is the only feasible option, provided they show a willingness to learn a new trade and pursue a dramatically different career, according to the CEO. “Drivers are usually among the first to be affected by a downturn, and we are seeing this play out in the current crisis. Our goal is to upgrade drivers into semi-skilled workers such as riggers, operators, welders, heavy duty drivers, and so on. But we need to change mindsets first,” he stressed.

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February 2016

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UPSTREAM SECTOR

Oman-Lasso Exploration & Production Karawan Ltd:

Leveraging the ingenuity of the Independent Oman-Lasso Exploration & Production Karawan Ltd, the newest entrant into Oman’s upstream energy sector, is bringing more than just investment and expertise to bear on the development of its newly acquired Block 54 onshore Oman. The company is counting on deploying a tried and tested independent model - the business model that built Texas oil - to inject legendary ingenuity and entrepreneurial outlook into this concession, says President & CEO Amrou A. Al Sharif

I ❱❱ Amrou A. Al Sharif, President & CEO of Oman-Lasso Exploration & Production Karawan Ltd

f the Shells, BPs and Chevrons of the global oil industry are understandably shying away from investing in new upstream acreage as a consequence of the oil price crash, the small oil and gas independents currently dominating the North American energy market are not. On the contrary, the downturn appears to be having an opposite effect on the latter; if anything, it is sparking an appetite that is rarely seen in energy majors amid these challenging times.

Oman-Lasso Exploration & Production Karawan Ltd, which is preparing to make its debut in the Sultanate’s upstream sector, is ‘cut from the same cloth’ as the independents that have transformed the United States from a major oil importer to a net exporter of oil in less than a decade.

Its history derives from Omani entrepreneurial vision and full-blooded Texas-based oil and gas independents – part of a breed of professionals credited with, among other feats, unleashing the current shale-driven technological revolution in the United States. Engineer Amrou bin Adly bin Ali Al Sharif, President

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February 2016

As part of its commitment to investing over $16 million in the first three years of the six-year exploration programme, the company plans to spud (drill) its first well on the Block 54 within a year.

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UPSTREAM SECTOR

& CEO, describes that the philosophy of Texan energy independents is ingrained in the philosophy of Oman-Lasso Exploration & Production Karawan Ltd as it prepares to harness the hydrocarbon potential of Block 54 in south central Oman.

“What distinguishes Oman-Lasso from other upstream players is the combination of entrepreneurial spirit, agility and confidence that is at the heart of our business philosophy,” said Al Sharif.

“Like the small independents of the US energy sector, who account for nearly 95 per cent of all of the discoveries in that country, we are able to take on what others may attribute as ‘more risk’ by continuously adapting to new information, reducing overheads, utilizing local resources, and being able to quickly respond in a way which larger corporations struggle to do”

Formidable expertise

Last September, Oman-Lasso signed an Exploration & Production Sharing Agreement (EPSA) with the Ministry of Oil & Gas for Block 54, a 5,632 sq kilometre concession located in Wusta Governorate. Relinquished by Occidental Petroleum in 2011, the Block attracted bids from a number of international players, attesting to the appeal of upstream acreage in the Sultanate despite the oil price slump.

Oman-Lasso is the creation of Austin-Texas based Oman Energy & Production LLC, which was formed in 2012 by Al-Sharif and a group of independent oil and gas professionals, who are committed to leveraging their formidable expertise and entrepreneurial mindset in operating Block 54, says Al-Sharif, who is himself a veteran entrepreneur with pioneering international success projects under his belt, and second-generation to Oman’s own oil and gas industry professionals and explorers.

“As the operator of Block 54, Oman-Lasso is responsible for the management and operation of the project here in Oman. The parent company in Austin-Texas is the General Partner to the Limited Partnership investment vehicle and guarantor of the Omani company’s performance.

In essence, Oman-Lasso is a new operating company that will be homegrown in the Sultanate of Oman with a strong hint of Texas’ famed true grit embedded in its DNA,” Amrou, who is an Omani citizen, explained.

Established with a specific focus on pursuing exploration and production opportunities in the Sultanate, the company’s shareholders set their sights on Block 54 in 2012 when it was tendered by the Omani government.

“What appealed to us was the large amount of background data on the Block, especially the wealth of knowledge on its geological and reservoir characteristics. In terms of its size and hydrocarbon potential, it had the hallmarks of a concession that

tion Sharing Agreement (EPSA) signed with the government, says Al Sharif. “The agreement favors the recovery of costs to the operator ahead of shared profits. Such a formula makes the Oman agreement inviting in many ways, and mitigates any market downturn that may be encountered going forward. Further the Ministry of Oil & Gas is quite a supportive team player, which is imperative to investor comfort. Consequently, you have an incentive to move aggressively in your exploration efforts because you’re assured that you can recoup your costs once you’ve made a discovery and continue investing to maximise the potential of the concession.”

Unfazed by the worsening industry downturn, Oman-Lasso is preparing to go full tilt into the development of Block 54. As part of its commitment to investing over $16 million in the first three years of the six-year exploration programme, the company plans to spud (drill) its first well on the Block within a year of this publication. In all, four wells are envis-

OMAN-LASSO SIGNED AN EXPLORATION & PRODUCTION SHARING AGREEMENT (EPSA) WITH THE MINISTRY OF OIL & GAS FOR BLOCK 54, A

5,632 SQ KILOMETRE CONCESSION LOCATED IN WUSTA GOVERNORATE suited the business mindset for the model upon which a company like ours is formed.”

Equitable EPSA model

Accentuating this affinity for Oman’s upstream sector was the structure and philosophy underlying the Exploration and Produc-

aged for drilling during the first three years.

In the build-up to the commencement of drilling on the concession, Oman-Lasso plans to undertake a comprehensive analysis of all of the data garnered during the tenures of the Block’s previous operators. For example, Occidental

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In the build-up to the commencement of drilling on the concession, Oman-Lasso plans to undertake a comprehensive analysis of all of the data garnered during the tenures of the Block’s previous operators.

Petroleum shot new seismic and reprocessed old seismic before exiting the Block in 2011. The company also drilled a total of four wells - activities that shed light on the Block’s potential, he said.

“Not only are we coming in with a fresh set of eyes to look at the available data and try to discern opportunities that may have been obscured in the past. There’s a wealth of new data and ideas that have emerged and been proven by history making success stories in the immediate vicinity of Block 54. Applying this to the existing 400 sq km of 3D seismic, thousands of km of 2D seismic, the positive promise in the existing well data, the utilization of local expertise and knowledge of the area, presents atypical potential and gives a unique opportunity to be the first to pick the low

hanging fruits. So we will start by narrowing down on the most potential prospects – and we’re confident there will be quite a few.

That’s where the attraction is for independent oil and gas professionals like us.”

Promising potential

Amrou is upbeat about the Block’s hydrocarbon prospects. Fuelling this optimism is the discovery of producing oilfields in all of the concessions surrounding Block 54, he points out. Just north of Block 54, Consolidated Construction Exploration & Development (CCED) is already producing from Block 3 and 4, which were relinquished by previous operators after drilling 30-plus wells over decades without success.

“We have no doubt that Block 54 has a substantial amount of pos-

sible oil; the question is who will discover it first,” Mr. Al Sharif remarked. “In one of the wells drilled in 1992, there was evidence of hydrocarbon shows. A few kilometers west of us lies Oman’s famous Mukhaizna oilfield, producing over 120,000 barrels of oil per day. A few miles north east, is Oman’s first off-shore discovery, an historical milestone for Oman.

South of us is Block 55 where the operator is shooting seismic and is quite excited about its potential. If they are successful in their endeavours and when the offshore block goes into production, we will be completely surrounded by producing blocks.”

While discounting the likelihood of any large gas discoveries, Oman-Lasso is pinning its hopes on uncovering a combination of light and heavy liquid hydrocar-

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UPSTREAM SECTOR

Well depths vary from 3,000 to 6,000 feet, making the potentials reservoirs relatively easy to target.

OMAN-LASSO’S PRIMARY OBJECTIVE IS TO OPTIMIZE THE POTENTIAL OF THE BLOCK BY EXAMINING “EVERY NOOK AND CRANNY” TO UNCOVER ANY HIDDEN HYDROCARBONS bons in the Block. In particular, the company is wagering on prospects for heavy oil of the kind that is currently being produced by Occidental Mukhaizna in the adjoining Block 53. “We see the potential for a good buffet of opportunities in Block 54 that are similar to Mukhaizna, as well as in CCED’s concessions,” he pointed out.

Adding to the Block’s hydrocarbon potential is the presence of “good quality” reservoir rock that can be targeted via conventional primary production techniques as opposed to tight formations that would require expensive unconventional production methods. Well depths vary from 3,000

to 6,000 feet, making the potentials reservoirs relatively easy to target. Nevertheless, Oman-Lasso’s primary objective is to optimize the potential of the Block by examining “every nook and cranny” to uncover any hidden hydrocarbons, he noted.

Furthermore, in line with its commitment to optimizing In-Country Value (ICV) which is already arguably off to a great start given the Omani interests in the project, Oman-Lasso aims to source all or the majority of its resource requirements from within Oman.

“All of the shareholders are very clear about this objective: we will be looking to build and nur-

ture Omani talent, while sourcing Omani expertise during the exploration and development phases. Oman has developed quite the expertise over its relatively short period in oil & gas and my partners are quite impressed.

Historically, the success of the Independent model is leveraging local services and expertise. My Texas partners owe much of their success stories to local expertise so ICV is a natural component of model. Texas gives us the historical knowhow and comfort in going about the business of exploration, Oman gives us the means to do so. This is a judgment call I made in 2012, and with our first discovery, I’m quite confident this will place Oman ahead of the game in attracting international and local private investment in Oman’s oil and gas industry, especially in exploration.”

By Conrad Prabhu

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February 2016

FEATURE

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February 2016

A renewable solution GlassPoint has teamed up with Petroleum Development Oman (PDO) to bring to life a more economical and sustainable solution to producing heavy oil.

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FEATURE

Once fully operational, Miraah will save 5.6 trillion British Thermal Units (BTUs) of natural gas each year, the amount of gas that could be used to provide residential electricity to 209,000 people in Oman.

I

magine rows and rows of large mirrors enclosed in glasshouses spanning across three square kilometers of desert sand. The sun is shining bright overhead. This is not a mirage, this is Miraah.

At Petroleum Development Oman’s Amal oilfield in southern Oman, one of the world’s largest solar projects is starting to come to life. Known as Miraah, which means mirror in Arabic, the solar project is far from the typical solar facility used to generate electricity. In this desert landscape, with abundant sunshine, Miraah will use concentrated sunlight to produce steam needed to recover Oman’s heavy oil. The one-gigawatt solar thermal plant is currently under construction.

American company GlassPoint Solar has developed a technology that harnesses the sun’s rays to recover our energy resources sustainably.

The company established its regional headquarters in Oman and is backed by strategic investors including Shell and the Sultanate’s largest sovereign wealth fund, the State General Reserve Fund. GlassPoint is partnering with Oman’s energy leaders to demonstrate how the solar and oil industries can work together to reduce costs and achieve long-term energy goals.

Much of the world’s easy oil has al-

ready been recovered. Mature fields are depleting and oil extraction is becoming more expensive and energy intensive. 70% of the world’s remaining oil is thick, tar-like crude, known as heavy oil.

A lot of energy is consumed in the extraction of heavy crude. Typically, for every five barrels of heavy oil, the energy equivalent to one barrel is consumed in the production process.

The leading method of producing heavy oil is steam flooding, a thermal enhanced oil recovery (EOR) process that injects steam into a reservoir to heat the oil and reduce viscosity, making it easier to pump to the surface. Steam for thermal EOR is typically produced by burning vast amounts of natural gas.

Companies worldwide burn an estimated 1.4 trillion cubic feet (TCF) of natural each year—that’s more than 10% of all liquefied natural gas (LNG) traded globally. This number continues to increase each year as more heavy oil fields are developed.

Oman alone uses more than 20% of its gas resources at its oilfields, primarily for EOR. Gas demand will continue to rise alongside EOR projects. PDO, Oman’s largest producer of oil and gas, has been a pioneering force in EOR for a number of years and EOR will play an increasingly important part in the Company’s

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portfolio, accounting for around a third of its production by 2023.

Teaming up

GlassPoint teamed up with PDO to bring to life a more economical and sustainable solution to producing heavy oil. GlassPoint solar steam generators have been designed to meet the unique needs of the oil and gas industry. The company’s enclosed trough technology houses thin curved mirrors inside a glasshouse. The mirrors track the sun throughout the day, focusing heat on pipe containing oilfield water. The concentrated sunlight boils the water to generate steam, which is then injected into the oil reservoir just like steam produced by burning fuel.

PDO successfully piloted GlassPoint’s technology proving solar steam is a viable alternative to burning natural gas for EOR. The solar EOR pilot was commissioned in early 2013, safely, on time and on budget. It’s been in regular operation for nearly three years, exceeding all performance targets, even during severe dust and sandstorms.

The success of the pilot led to the two companies announcing plans

to build Miraah in July, a project that is poised to bring considerable change to Oman’s oil and gas sector.

Once complete, Miraah will be a 1,021 megawatt solar thermal facility generating 6,000 tonnes of steam per day. The steam will be used in thermal EOR to extract heavy and viscous oil at the Amal oilfield in southern Oman. Miraah will deliver the largest peak energy output of any solar plant in the world. The scope of this landmark project underscores the massive market for deploying solar in the oil and gas industry.

The project broke ground in November 2015, one month before schedule, with steam generation from the first glasshouse module

expected in 2017. The full-scale project will comprise 36 glasshouse modules, built and commissioned in succession in groups of four.

Once fully operational, Miraah will save 5.6 trillion British Thermal Units (BTUs) of natural gas each year, the amount of gas that could be used to provide residential electricity to 209,000 people in Oman.

The project is expected to reduce CO2 emissions by over 300,000 tonnes annually, the equivalent of taking 63,000 cars off the road.

Oman, like many other nations in the region, is currently a net gas importer with an increasing amount of its gas resources being allocated to the oilfield. With GlassPoint’s solar steam generators, the gas used for

ONCE COMPLETE, MIRAAH WILL BE A 1,021 MEGAWATT SOLAR THERMAL FACILITY GENERATING 6,000 TONNES OF STEAM PER DAY. THE STEAM WILL BE USED IN THERMAL EOR TO EXTRACT HEAVY AND VISCOUS OIL AT THE AMAL OILFIELD IN SOUTHERN OMAN. MIRAAH WILL DELIVER THE LARGEST PEAK ENERGY OUTPUT OF ANY SOLAR PLANT IN THE WORLD

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SOLAR POWERED OIL PRODUCTION WILL CONTRIBUTE TO OMAN’S PLANS FOR ECONOMIC DIVERSIFICATION. THE LARGE AMOUNT OF GAS DIVERTED FROM THE OILFIELD CAN INSTEAD BE EXPORTED OR USED FOR HIGHER VALUE APPLICATIONS SUCH AS POWER GENERATION, AND FEEDSTOCK FOR NEW INDUSTRIES RANGING FROM PETROCHEMICALS TO BUILDING MATERIALS heavy oil extraction can be slashed by up to 80%.

Solar powered oil production will contribute to Oman’s plans for economic diversification. The large amount of gas diverted from the oilfield can instead be exported or used for higher value applications such as power generation, and feedstock for new industries ranging from petrochemicals to building materials. If more gas were available then more new industries would be created. Each new factory would have its own direct employees and its own

supply chain, which would in turn generate employment and increased activity to diversify the local economy.

Commitment to Generating In-Country Value

Miraah has the potential to generate significant value for Oman, creating new opportunities in supply chain development, manufacturing capability, and employment and training. Plans to localize the supply chain are currently under development.

Developing a local Omani workforce and new opportunities for local contractors and small businesses is part of GlassPoint’s and PDO’s shared commitment to In-country Value. Miraah’s site grading is being performed by a Local Community Contractor (LCC) owned and operated by Omanis that live in the communities surrounding the Amal field.

As more solar EOR projects are deployed, Oman’s workforce will develop greater expertise across solar technology innovation, project implementation and manufacturing. Experience with solar EOR will transfer to other energy-related sectors, fostering broader economic growth and diversification.

Through pioneering technologies such as solar EOR, the Sultanate of Oman has cemented its position as a regional leader in oil and gas production. Oman is now working to build a world-class solar power industry alongside its world-class oil and gas industry.

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Dedicated to Servicing Oman’s Oil & Gas Industry since 2004 51

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FUTURES CONTRACT

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DME flagship Oman crude contract takes centre stage Oman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME — the first government anywhere in the world to fully price its oil revenues against an index derived from a futures Exchange

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FUTURES CONTRACT

f

❱❱ Mr. Owain Johnson, Managing Director of the Dubai Mercantile Exchange (DME)

ketplace. The DME was conceived to offer a viable Middle East/Asia contract for trading and risk management opportunities and leverage on the terrific economic growth throughout the region.

Oman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME -- the first government anywhere in the world to fully price its oil revenues against an index derived from a futures Exchange.

This switch by the MoG cemented Oman crude as the most important benchmark grade for the Middle East and Asia, while also helping to make Oman one of the most popular crude grades among customers.

Since launch the Oman futures contract has enjoyed an average yearly growth of 25% in average daily volume terms (ADV) and in October of this year reached the nine billion barrel mark in terms of barrels of Oman crude traded on the Exchange during the last eight

of which over 90 are companies totally independent of each other.

These are a combination of commercial companies, which typically encompass entities that have a presence in the physical oil markets such as trading houses and refiners, plus financial entities such as professional proprietary traders. The key DME trading activity during the day takes place during the five-minute period running from 12.25-1230pm Dubai/Muscat time, which is colloquially known as the DME Window. The average price of this trading activity underpins the DME Marker Price and is used in compiling the Oman and Dubai governments’ Official Selling Price on term contracts to customers.

A significant ingredient for Oman’s success as the most prominent benchmark grade in Asia has been the sharp increase in production and exports over recent years, which has enabled

and half years, and offers enormous potential as the oil benchmark of choice in the coming years.

A successful pricing mechanism needs sufficient liquidity underpinned by wide array of industry participants and not biased towards any one sector of the industry. So far this year over 120 entities have traded on the DME,

the DME contract to become the largest physical delivery of any commodities futures contract in the world, delivering between 15 and 22 million barrels of Oman crude every month via the DME’s delivery mechanism. Over 30 customers typically lift physical Oman crude via the Exchange delivery mechanism every month,

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around 200 types of crude oil that can be classified as significant streams or blends, only three of those can be can be categorized as Benchmark grades underpinned by a Futures contract – Brent in Europe, WTI in the Americas and the newest addition to that very select group, Oman, serving the Asian and the Middle East markets The flagship Oman futures contract on the Dubai Mercantile Exchange (DME) was launched in 2007, joining the more-established Brent and WTI which were launched back in the 1980s in London and New York. The DME was the vision of Oman and Dubai, along with its Exchange partner the New York Mercantile Exchange (NYMEX), later acquired by CME Group, which is the world’s leading and most diverse derivatives mar-

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WITH THE GROWTH OF ENERGY TRADING ALONG THE CRUDE OIL CORRIDOR BETWEEN THE MIDDLE EAST AND ASIA AND THE BACKING OF MAJOR FINANCIAL PLAYERS AND CLEARING MEMBERS FROM ASIA, THE EXCHANGE HAS SEEN A STEADY RISE IN VOLUMES THAT HAVE REINFORCED DME OMAN’S POSITION AS THE MOST CREDIBLE TRADING BENCHMARK FOR THE ASIAN CRUDE OIL MARKETS shipping the oil to refineries across Asia. Oman crude production recently hit 1 million barrels per day, making it by far the largest benchmark crude grade anywhere in the world.

With the growth of energy trading along the crude oil corridor between the Middle East and Asia and the backing of major financial players and clearing members from Asia, the Exchange has seen a steady rise in volumes that have reinforced DME Oman’s position as the most credible trading benchmark for the Asian crude oil markets.

The DME has also been conducting a feasibility study for refined products futures contracts in the region, as the growth of refining in the Middle East will see a significant increase in trade flows and demand for risk management tools. While refined products will have a broader production base across the Middle East, the ability to price against a contract that reflects regional supply and demand economics will provide a major boost for Omani refining, particularly with the major upgrading work at Sohar and the new Duqm plant,

increasing production of refined products.

The DME will initially focus on a Middle East fuel oil contract in 2016, but the market is already looking longer term at the potential for gasoil, jet and gasoline futures contracts for the region. With regards to the latter, the deregulation of local gasoline markets means there will be keen interest for local pricing mechanisms that reflect fundamentals of the region, and not be totally reliant on pricing benchmarks that are generated in London or Singapore, which is the case as things stand.

The Middle East sits on nearly half of the world’s proven reserves and almost all of the incremental oil demand growth of the last decade has come from Asia, so the potential for the Oman futures contract is enormous. While DME Oman is for now the little brother of the more established Brent and WTI contracts, Oman will continue its rise and establish a place as one of the world’s top commodity benchmarks.

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NATIONAL PRIORITY

In-Country Value (ICV)

Creating shared value ICV aims to, among other things, foster direct employment and local entrepreneurship through the provision of goods and services, promote efficient and sustainable use of resources and progressively diversify the economy away from a current dependence on hydrocarbons as its primary source of revenue

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ocal content development – since rejigged as ‘In-Country Value’ (ICV) – is a mantra that is at the heart of the Omani government’s efforts to build a competitive and long-term sustainable resource-based economy in the Sultanate.

ICV aims to, among other things, foster direct employment and local entrepreneurship through the provision of goods and services, promote efficient and sustainable use of resources and progressively diversify the economy away from a current dependence on hydrocarbons as its primary source of revenue.

Since its unveiling in 2013, In-Country Value development has gained traction as an imperative that is not on the margins of what companies do, but has moved to the core of their corporate philosophy. It enjoins companies to take steps to ensure that Oman’s resource wealth and underlying appeal as an investment destination translate into meaningful and lasting social and economic progress for all of its citizens.

ICV takes its inspiration from the Royal address of His Majesty the Sultan to the Council of Oman in 2012 when he advocated for an increase in the “total spend retained in-country that benefits business development, contributes to human capability development and stimulates productivity in Oman’s economy”.

Within the oil and gas industry, ICV development is being overseen by a committee of high level representatives from the Ministry of Oil & Gas, Ministry of Commerce and Industry, Ministry of Manpower, and the Supreme Council for Planning. HE Salim Al Aufy,

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Under-Secretary of the Ministry of Oil & Gas, chairs this panel. Also represented on the ICV Committee are operators, while the contracting and vending community is collectively represented by the Oman Society for Petroleum Services (OPAL).

This apex panel is supported by two subcommittees: (i) Contracting & Procurement Managers ICV Committee to drive all goods and services related ICV opportunities, and (ii) HR Managers ICV Committee to drive all workforce development ICV opportunities. Rolled out across the Oil and Gas value chain – upstream, midstream and downstream – the programme has since led to the appointment of full-time ICV Managers and even ICV Teams in all of the oil and gas companies, and a significant number of contrac-

ICV TAKES ITS INSPIRATION FROM THE ROYAL ADDRESS OF HIS MAJESTY THE SULTAN TO THE COUNCIL OF OMAN IN 2012 WHEN HE ADVOCATED FOR AN INCREASE IN THE “TOTAL SPEND RETAINED IN-COUNTRY THAT BENEFITS BUSINESS DEVELOPMENT, CONTRIBUTES TO HUMAN CAPABILITY DEVELOPMENT AND STIMULATES PRODUCTIVITY IN OMAN’S ECONOMY” tors, vendors and service providers.

Steadfast commitment

Since the formal rollout of the ICV blueprint strategy, the ICV Committee has affirmed that the oil and gas industry, as well as the contracting services sector, are ready for further ICV

development. After all, according to the panel, the industry has long made good on key aspects of ICV, notably Omanisation and direct local sourcing. The operators, for example, are already 64 per cent Omanised on average, while statistics reveal that around 80 per cent of local companies directly source their

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NATIONAL PRIORITY

OIL AND GAS ICV GOVERNANCE Government Ministries: Chairman H.E Undersecretary of MOG

Ministry of Oil and Gas (MOG) Ministry of Finance Ministry of Manpower Ministry of Commerce and Industry

OPAL CEO Secretary Operators & Producers Project Management Office HR Managers Sub-Committee

Government Ministries

MOG ICV Project Management Office

Oil & Gas Contracting Community

Sub-committees Contracts and Procurement Managers Sub-Committee

Other (Vendor Development Program, Support, Studies, Forums, etc)

The ICV governance is set to guarantee the collaborative approach and the focus on the strategic streams

requirements through local contractors. Consequently, ICV has been ingrained in the DNA of operators, as well as the growing majority of contractors. The goal for the ICV Committee now is to build on what has already been achieved in ICV generation and establish a system of tracking where the initiative is delivering benefits.

To help with the effective formulation of a robust ICV Strategy, the well-known global professional services firm Accenture was tapped to undertake a deep analysis of the current level of ICV spend in the industry. Based on its findings and recommendations, the ICV Committee has since focused on bringing about a convergence of the Oil & Gas ICV agenda towards a common programme. Further, with the aim of tightening collaboration across the industry and beyond, it has sought to coordinate efforts and initiatives to maximise the return on value creation.

Additionally, it has endeavoured to leverage the expertise and capacity of ICV Committee members in promoting efficient ICV development.

THE GOAL FOR THE ICV COMMITTEE NOW IS TO BUILD ON WHAT HAS ALREADY BEEN ACHIEVED IN ICV GENERATION AND ESTABLISH A SYSTEM OF TRACKING WHERE THE INITIATIVE IS DELIVERING BENEFITS

As part of its analysis of ICV-related activities, the panel looked at the supply and demand pic-

ture in terms of goods and services, the number of Omanis versus expatriates in the sector,

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their respective professional skills, and the importance of extrapolating these findings across the total value chain.

The analysis of the spend breakdown of the Oil and Gas industry (including Tier 2 suppliers) reveals that currently, on average, 82 per cent of the spend is externalized against only 18 per cent accounted as ICV. This is based on OPEX and CAPEX plans known as of end 2012. Significantly, it identified a gross value pool of $64 billion representing the projected ICV potential waiting to be tapped. Of this figure, $51 billion represent local resourcing opportunities, while $12 billion is the value associated with the employment of Omanis.

Bonanza of opportunities

With a view to addressing a maximum value out of the estimated

$64 billion in potential ICV opportunities in the sector, the ICV Committee outlined an integrated ICV development programme encompassing all of the relevant stakeholders. The blueprint identified as many as 53 opportunities to increase local sourcing, as well as around 40 enabling initiatives to enhance the ICV environment. Additionally, it pinpointed the potential to support the training of an estimated 36,000 young Omanis to help develop a world-class workforce necessary to sustain the growth of the industry through to 2020.

As can be expected of any major national initiative, ICV development has its share of challenges.

It requires a mindset change – internal and external – that ICV makes good business sense. Additionally, companies should be ready to shoulder higher supply

22,369

OMANIS WORKING IN THE OIL AND GAS

chain costs over the next several years, while also investing in resources and dedicated staff to deliver on ICV. Ensuring transparent and objective bid evaluation, while aligning with other operators and government are imperatives as well.

With the industry fully focused on ICV, notwithstanding the oil price slump, there is optimism that the programme will generate concrete results over the coming years. To the ICV Committee, however, success means nothing short of the following: (i) achieving a doubling of the industry’s ICV contribution; (ii) achieving the creation of a competitive oil and gas supply chain for goods and services (iii) ensuring that Omani companies are not only able to meet the requirements of the domestic oil and gas sector, but also export markets, and (iv) addressing the current skills deficit in the oil and gas sector, so that Omanis having been trained to international standards, should be able to work overseas if they choose to do so.

DISTRIBUTION OF THE OIL AND GAS WORKFORCE THE STUDY SHOWS THAT THE CURRENT OMANISATION LEVELS ARE DIVERSE DEPENDING ON THE SECTOR AND THE SKILL LEVEL Number of Omanis and Omanisation level per skill level (1)

Number of Omanis and Omanisation level per sector (1) Construction

12.160

4.050 25% 9,494

Service Providers

Oil and Gas Companies

5.630

59%

6.497

3.361 63%

Manufacturing

xxx xxx

Number of Omanis in 2012 Number of expatriates in 2012

xx%

Level of Omanisation in 2012

Note(s): (1) based on 2012 job distribution

Semi-Skilled

27%

Engineer

39%

Technician

58%

Operator Supervisor

76%

3.606 2.219 987 32%

1.988

Managerial

261

78%

Inspector

918

17%

Unskilled

6.488

46%

5.131

60

SHIPPING

Oil glut a boon to Oman Shipping Amid the gloom pervading the Sultanate’s mainstay oil and gas sector wracked by plunging international crude prices, at least one major stakeholder remains in a buoyant mood. National shipping line Oman Shipping Company SAOC (OSC) is reaping the benefits of a strong uptrend in tanker freight rates as the oil glut continues to stoke demand for cheap crude, in turn driving up the demand for crude tankers, says CEO Tariq Al Junaidi

O ❱❱ Mr. Tariq Al Junaidi, CEO of Oman Shipping Company SAOC (OSC)

ne industry’s pain is another’s gain’ is a refrain that aptly reflects the utterly contrasting impacts that the oil crisis is having on two distinct, yet inextricably linked, sectors of the Omani economy. While the fortunes of the domestic hydrocarbon industry have plummeted – like much of the energy sector worldwide – by low crude prices, the national tanker shipping business operated by Oman Shipping Company (OSC) has never been brisker.

It’s a paradox that Tariq Al Junaidi, CEO of the wholly government owned shipping line, says goes to the heart of the current turmoil in international oil markets.

“The present low oil prices are actually benefitting the freight rates and the shipping business in general, as the trading volumes are continuously increasing due to low crude prices and also the cost of fuel has declined substantially which is a major cost component in any transportation,” said Tariq.

“Due to low crude oil prices, traders and refiners are securing more volumes. Hence, the freight rates for crude oil transportation are robust as also for refined products. LNG and Petrochemical freight rates, however, are passive due to excess supply of tonnage over demand and, therefore, have no relation to the declining oil prices,” he explained in an exclusive interview to OPAL – The Magazine.

OSC’s strategy, going forward, is to capitalize on the buoyant state of tanker freight rates to maximize revenues for the company. Towards this end, it aims to deploy its substantial tanker

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61

fleet in the most profitable areas of the tanker business, said Tariq.

Furthermore, in a bid to hedge its risks against the likely decline of the current attractive spot rates in the crude transportation, the company is also exploring the possibility of medium or long term time charters of some of its Very Large Crude Carriers (VLCCs), he noted.

Positive outlook

Demonstrating a strong appetite for continued growth, the company recently announced plans for a sizable investment in MR2 product tankers. The newbuildings will capitalize on a projected uptick in demand for tanker transportation services.

“Since the Product Tanker market is expected to be better due to the increasing demand and increased distances for such maritime transport, our future thrust will be on Product and Petrochemical movements.

With this in view, we have invested in 10 MR2 Product Tankers of about 50,000 dwt each, which will be dedicated to Shell International in the initial period of their life cycle and, thereafter, we contemplate to induct them in the national trade of petroleum products,” said Al Junaidi.

Further business prospects for the state-owned shipping line are expected to emerge once a major grassroots crude oil refinery comes on stream at Duqm on Oman’s Wusta coast by around 2019. The Duqm Refinery project is being jointly developed by Oman Oil Company (the wholly Omani government owned strategic investment vehicle) and IPIC (the investment arm of the Abu Dhabi government).

Affirming OSC’s commitment to supporting the project’s maritime transportation requirements, the CEO said: “We look forward to Duqm Refinery as one of our major customers in future and also from the point of view of increasing our contribution to the value chain of oil and petrochemical products and consequently adding to the ‘In Country Value’ (ICV) in general for the country’s economy. We are

Energy-centric transportation Incorporated in 2003, Oman Shipping Company owns and operates a highly diversified and young fleet of 46 vessels aggregating to about 8 million tonnes of cargo carrying capacity. Of this number, 36 are tankers dedicated to the carriage of crude oil, petroleum products and chemicals totalling approximately 35 million tonnes per year.

The remaining 10 vessels cater to the dry cargo business of OSC amounting to about 13 million tonnes per year. In essence, OSC’s maritime transportation business is predominantly focused on oil, gas and petrochemicals commodities, according to the CEO. OSC’s role as the nation’s preeminent maritime transportation services provider encompasses virtually all aspects of the hydrocarbon value chain. Transportation of crude accounts for a significant chunk of the company’s business. OSC owns 16 Very Large Crude Carriers (VLCCs) which can carry about 280,000 tonnes crude on each voyage. Of this number, 15 VLCCs are currently taking advantage of the buoyant spot market, while one is deployed on Time Charter, said Mr. Al Junaidi.

“These vessels operate internationally carrying about 28 million tonnes of crude oil per year from the producing countries to the user countries. They load from Arabian Gulf, West Africa, North Africa, Baltic Sea and Caribbean and discharge in US, Europe, China, India, and so on. Since the parcel size of Omani crude oil exports is smaller than the VLCC optimum load of 2 million barrels, our carriage of Omani crude is limited,” he pointed out.

Equally prestigious is OSC’s role in the transportation of refined petroleum products. OSC currently transports 100 per cent of the coastal volumes of refined petroleum products in Oman mainly from Sohar to Salalah and also from Sohar to Mina Al Fahal and from Sur/Qalhat to Sohar and Mina al Fahal. “Approximately 2 to 2.4 million tonnes petroleum products are moved via our ships on the coast of Oman comprising of gas oil, gasoline, jet fuel, diesel and other petroleum products,” he said.

LPG transportation, while modest in volume terms, is nevertheless an important aspect of OSC’s core business. Three small LPG carriers of capacities ranging from 5,000 to 7,000 cbm handle Omani LPG exports on behalf of Omani Trading International (OTI) from Sohar Refinery to India, Sri Lanka and Pakistan destinations. This aggregates to around 180,000 to 200,000 tonnes of LPG per year.

Handling the company’s LNG transportation business is a fleet of six LNG carriers of capacities ranging from 145,000 cbm to 162,000 cbm trading internationally. The vessels carry about 5.5 million tonnes of Oman’s LNG exports, mainly to Japan, South Korea and Spain. The latest state-of-the-art LNG ship ‘Adam LNG’ is being used in the spot market, but will be diverted to carry Omani LNG exports as and when additional LNG will be available for exports, according to the CEO. In the petrochemicals category, OSC tankers carry around 500,000 tonnes per year of methanol, representing 50 per cent of the annual output of Salalah Methanol. These volumes, freighted on behalf of Oman Trading International (OTI), are usually shipped to South Korea and China in the East and to Rotterdam in the West.

Not surprisingly, OSC has emerged as one of the largest, reputable tanker and gas carrier owners in the world patronized by topnotch customers including Exxon Mobil, Shell, BP, Total, Chevron, and so on, Mr. Al Junaidi remarked.

62

SHIPPING

Oman Shipping Company owns and operates a highly diversified and young fleet of 46 vessels aggregating to about 8 million tonnes of cargo carrying capacity.

in constant communications with Duqm Refinery officials to support them in their shipping strategy and with a view to offering them the best logistical solutions for their imports and exports. However, since the project completion is planned by 2019, the project authorities are yet to finalise the nitty-gritty of many of the parameters more accurately such as volumes, product ranges, refinery customers, exports needs etc. which will eventually lead to deciding about the sizes and type of vessels required. Therefore, it will require some more time to crystalize these thoughts jointly with Duqm Refinery in this regard,” he noted.

Also boding well for OSC’s business growth is a major energy infrastructure related venture under development not far from the site of the Duqm Refinery. The Ras Markaz Crude Oil Park, promoted

by Oman Tank Terminal Company (OTTCO), a joint venture of Oman Oil Company (90 per cent) and Takamul Investment Company (10 per cent), will rank among the largest storage depots of its kind in the world with a capacity of around 200 million barrels.

“The Ras Markaz Crude Oil Park will be one of the leading crude

oil storage facilities in the Gulf area and we would be only too happy to be associated wherever possible in terms of contributing to their future success. As a first step towards this, we have been supporting Oman Tank Terminal Company (OTTCO) in their latest ‘Floating Storage Project’ by providing them one of our VLCCs for storage. Commencement of this floating storage facility will prove

Omani staff, according to the CEO. “We are placing heavy emphasis on the training and re-training of our manpower both afloat and ashore, as well as boosting Omanisation in the company. Currently, we have reached an Omanisation level of 86 per cent, which we are endeavoring to improve upon without sacrificing the quality and productivity of our service, to match the best international stan-

OSC TANKERS CARRY AROUND

500.000

TONS PER YEAR OF METHANOL, REPRESENTING 50 PER CENT OF THE ANNUAL OUTPUT OF SALALAH METHANOL to be the stepping stone for the Ras Markas Crude Oil Park later on,” said Mr. Al Junaidi.

Human development

In parallel with this remarkable growth in fleet capacity and the overall transportation business, OSC is also focused on building the skills and capacities of its

dards. We have rigorous training programs to train our personnel in order to maintain the present exacting standards and the level of professionalism in the company with the necessary skills and experiences, including leadership programs.”

Importantly, Omanis are being trained under the guidance of well

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63

Importantly, Omanis are being trained under the guidance of well qualified and experienced international experts in the field.

THE COMPANY HAS PROVIDED TO DATE MORE THAN 220 SEA TRAINING POSITIONS ON BOARD THE COMPANY’S VESSELS. MOREOVER, THE COMPANY SPONSORS 30 CADETS ANNUALLY WITH FULLY SPONSORED ‘MARITIME SCHOLARSHIPS’ FOR THEM TO STUDY MARINE ENGINEERING AND NAUTICAL SCIENCES BOTH IN LOCAL AND INTERNATIONAL COLLEGES qualified and experienced international experts in the field, he further explained. The company has provided to date more than 220 sea training positions on board the company’s vessels. Moreover, the company sponsors 30 cadets annually with fully sponsored ‘Maritime Scholarships’ for them to study marine engineering and nautical sciences both in local and international colleges, eventually leading to the Certificate of Competency (CoC) for a sea career after their graduation.

“The company also offers an opportunity to all local seafarers to continue their studies and be certified in order to be promoted to the higher ranks on board the vessels. The office staff is also trained using various types

of training programs such as ‘on the job’ training, classroom based training, cross-postings, job shadowing, e-learning, and so on,” he said.

With a sizable proportion of OSC’s fleet under in-house technical management, floating staff are assured of robust hands-on exposure. As many as 31 vessels of the 46-strong fleet are technically managed in-house – a move that enables the company to, among other things, keep a closer control over its operations, focus on safety, ensure cost control, and importantly, to create a growing pool of technically experienced and trained Omani seafarers and shore personnel under the guidance of internationally reputed professionals.

Health, Safety, Quality and Environment, he further stressed, continue to be top priority objectives for the company and all its stakeholders. These are recognized as an integral part of OSC’s continuous improvement culture, he said.

The safety statistics of the company’s fleet indicates that the company is consistently operating at high standards. It has recently renewed its ISO 9001 and ISO 14001 certifications by passing a thorough and in-depth audit conducted by ABS, establishing that the company is operating in a responsible manner towards ‘Quality Management Systems’ (QMS) and Energy Resource Consumption.

“OSC Group is continuously working hard not only in maintaining the international standards, but also exceeding the same in a pro-active manner with highly efficient operations and technical management.

Also, all our activities have a tremendous customer focus and we always live up to our responsibilities towards the Society at large, as a responsible Corporate Citizen,” the CEO added in conclusion.

64

PORTAL

Joint Supplier Registration System:

A success story for Oman’s Oil & Gas industry The Joint Supplier Registration System is to be a National initiative that would encourage credible suppliers – national and international, to register in the common pool

❱❱ Mr. Hemant Murkoth, CEO of Business Gateways International

I

n 2013, the In-Country Value (ICV) Committee comprising of major oil & gas operating companies (Operators) in the Sultanate of Oman came together under the leadership of the Oman Ministry of Oil & Gas (MOG) to create a ‘Single Window’ supplier registration system for the benefit of both operators and suppliers. This unique initiative amply demonstrated the unity and resolve among the operators who got together to understand the critical needs of the suppliers, pain areas that needed improvement and importantly, evolve a simplified process of supplier registration that was acceptable by all operators.

We at Business Gateways International (BGI) implementing the Oman National Business Framework (NBF) was tasked to come up

February 2016

65

with the design to implement this national oil & gas supplier registration system. After many rounds of brainstorming with all stakeholders, the overall architecture of the registration system was finalized and the Joint Supplier Registration System (JSRS) was born.

Hosted on the Business Gateways portal (www.businessgateways. com) the project went live in July 2014 and has been picking up speed and popularity ever since.

Today, the JSRS is a mandatory system for suppliers to be registered and certified in order to be eligible for business opportunities from the operators.

The process of inducting a company in JSRS begins through an online registration and payment of subscription fee. The supplier company is then provided with an admin login credential on the National Business Framework (Tier 1) through which they can configure and integrate their departments and users (up to 50 per company). The Tier 1 philosophy is based on providing the Supplier with a B2B connectivity platform to help them stimulate their business by connecting with other companies (national and international) for new partnerships, better supply chain and to connect with Governmental bodies as well. Companies are also given a detailed profile which can double up as their website; a feature that is critical for SMEs in Oman.

On completion of Tier 1, they are taken to Tier 2 which is specifically related to the Oil & Gas Industry and a detailed online Supplier Validation Form ought to be filled up. The submittal is then validated by BGI through our internal process and on approval, the supplier is deemed registered on the JSRS with an e-certificate issued to them.

There is also a Tier 3 built in the JSRS that handle the supplier approval process of Operators and we are in discussions with all stakeholders on how best to go about implementing this Tier

in an unified manner within the Operator community.

The Operator’s Contract & Procurement teams using the JSRS can view the complete detail of each supplier such as their company profile, products & services,

being implemented regularly for the smooth operation of the system. We want to ensure that the system is updated in technology and features and that the supplier’s usage of the system is as productive as possible. We work

THE JOINT SUPPLIER REGISTRATION SYSTEM TODAY IS A SUCCESS STORY WITH AROUND 17 OPERATORS UTILIZING THE SYSTEM FOR THEIR PROCUREMENT REQUIREMENTS WHILST CONNECTING TO THOUSANDS OF SUPPLIERS ONLINE WHO ARE CLASSIFIED AS SME, LARGE AND INTERNATIONAL certifications, ICV performance etc. They can also identify supplier document and compliance expiry triggers live on the system. The supplier list for their procurement can be downloaded based on an extensive search engine to meet their individual requirements. The JSRS houses a powerful analytics engine that help Operators graphically drill down to slice and dice supplier data based on various metrics in order to create supplier sets for their potential procurement events.

The JSRS today is a success story with around 17 operators utilizing the system for their procurement requirements whilst connecting to thousands of Suppliers online who are classified as SME, Large and International. The platform hosts more than 40,000 registered products & services of suppliers across different categories with hundreds of companies visiting the portal daily. Business Gateways in the background, proactively engages with the suppliers to understand their needs, monitor their progress and handle supplier support through a wide range of support systems in constant coordination with MOG and Operators.

So, is the work done? Not at all! On the contrary, it has just started!

The JSRS is a continuous workin-progress with refinements

closely with the Operators, OPAL and the Project Management Office (PMO) of MOG to find out ways and means to connect better with the supplier community.

Business Gateways is also acutely aware of the fact that the JSRS must be propagated to the world community and we strive to do that through regular Roadshows, Seminars and Supplier Training programs within various regions in Oman and in other countries as well. Keeping in line with our mandate, the JSRS plans to be the vehicle to propel Omani companies to the international markets and efforts are underway to implement this.

For us at Business Gateways, it has been a tremendous challenge and learning experience, not just in designing and developing a unique IT Portal of this nature but also in implementing and maintaining this powerful system. As an Omani IT company whose workforce comprises more than 70% Omanis, we owe our gratitude to the Ministry of Oil & Gas and the Operators who showed their confidence in us and constantly given us the motivation and encouragement to implement a challenging project of this nature.

The JSRS is truly a success story for Oman’s Oil & Gas Industry!

66

FEATURE

Developing a sustainable talent pool In making sure that the people of Oman gain the most from its natural resources, government and industry have come together to help Omanis gain the skills to obtain the jobs and benefit from the opportunities that hydrocarbons present

O â?ąâ?ą David Doig is the CEO of OPITO

man is blessed with hydrocarbon resources. The nation and its people should gain the benefits of such a natural resource. Without a skills infrastructure and a skills strategy that looks to the future, local benefits will be limited and labour import costs will remain high and prone to significant escalation.

In making sure that the people of Oman gain the most from its natural resources, government and industry have come together to help Omanis gain the skills to obtain the jobs and benefit from the opportunities that hydrocarbons present.

Earlier this year, OPITO signed a milestone agreement with the In Country Value Committee in Oman, facilitated by OPAL. By doing so, both industry and government have accepted ownership of the skills agenda and together will be able to deliver a collective and collaborative solution to developing a learning infrastructure that will support the needs of industry, but also maximise the country’s oil and gas reserves and create employment opportunities for the Omani people.

Whilst employer-led training schemes meet specific industry skills needs, there is a broader context to be considered around industry attraction and influencing education to focus on the uptake of science, technology, engineering, mathematics (STEM) subjects and informing on the exciting career opportunities this industry has to offer.

A long term skills agenda must focus on creating a larger and sustainable skills pool and this cannot happen without the intervention and commitment of employers. The ability for the industry to support and influence the education system and Government

February 2016

67 (and its agencies) become critical to building a long term sustainable supply chain of people with the skills needed by the industry. Such a skills and education infrastructure provides training and education that is aligned to the needs of the industry. However it must be recognised that developing a sustainable talent pool is at least a ten year journey.

Independent industry role

The role of an independent industry owned and industry led skills body is crucial and Oman has recognised the role OPITO can play in achieving this. The OPITO model used in the UK and other countries has proven to be an excellent conduit for the industry to engage with multi stakeholders because it represents the collective will of the industry.

Without the involvement of such an independent industry owned organisation it is difficult for the industry to lead the skills agenda and form long-term collaborative initiatives especially as key stakeholders will undoubtedly change over the long term so a constant is required.

With a track record in helping oil and gas provinces to build indigenous workforces to exploit their oil and gas reserves, OPITO is al-

ready working on a phased plan that will provide the Omani Government with a sustainable solution to the employment needs of its people and to the demands of its growing oil and gas industry.

The first phase was an analysis of the current provision of vocational and non-vocational training throughout Oman. OPITO has visited vocational training centres and colleges to identify the standard of training and

and employers, OPITO will help build a learning infrastructure in Oman which will be able to deliver industry-designed and industry-recognised qualifications underpinned by technical training standards, occupational standards, a robust assessment process and accredited certification and qualifications. This will ensure that the training is delivered in the correct way, by the right people, using the right equipment

OPITO IS ALREADY WORKING ON A PHASED PLAN THAT WILL PROVIDE THE OMANI GOVERNMENT WITH A SUSTAINABLE SOLUTION TO THE EMPLOYMENT NEEDS OF ITS PEOPLE AND TO THE DEMANDS OF ITS GROWING OIL AND GAS INDUSTRY then provide recommendations on how technical training provision can be improved to deliver a framework of qualifications which will meet current and future skills demands and improve competence in the operations and maintenance activities associated with the extraction of hydrocarbons.

Right way of training

By working with the government

THE STRATEGY FOR DEVELOPING A SUSTAINABLE TALENT POOL

in a safe and well-managed environment and that competence can be effectively measured.

As a result of OPITO’s ground-breaking work in Oman hundreds of Omanis will be able to be trained to recognised industry qualifications in electrical and mechanical maintenance and instrumentation and controls, allowing them to work in the oil and gas industry. This will open-up new economic opportunities for the Omani people, impacting positively on the economy and giving the oil industry confidence in the competence of their technicians.

Increasing the productivity Continual Workforce Development

Inform, Influence and excite Education partnerships creating the talent pool of the future

Stakeholder Aignment & Support (FR/HE/ Government and Industry

The aim is to increase the competency levels and productivity of the local workforce coming into the industry by aligning existing vocational and technical training with industry requirements and accrediting it to international standards.

As a not for profit organisation, owned by the industry, OPITO will reinvest the revenues generated by this contract in the continuous development of educational products and services for the benefit of Oman and the wider industry.

68

FEATURE

The Contango Conundrum Marine insurers are becoming increasingly concerned about the issue of “contango” and its potential to affect bulk carrying vessels, most notably oil tankers. However, it is a term that many in the maritime industry could be excused for never having heard of before, seeing as it is one that is more readily understood in the commodity futures markets

W

hat is contango?

People buy futures contracts when the expectation is that the future open market, or “spot” price, will be higher at the time of delivery than the price that was agreed under the futures contract, thereby enabling a profit to be made by that investor when the goods are then sold on. (Of course, there is always a risk that market prices at delivery time will be unexpectedly lower than the contractually agreed purchase price.

The seller may then be effectively locked into the agreed purchase price, regardless of the actual market or spot price at the time of delivery, unless protected by a “stop loss” or similar clause).

A gradual, long-term increase in prices is the normal way of markets and, in this state, a market is said to be in a state of “backwardation.” However, prices don’t always rise and there is no guarantee that the future spot price will be higher at the time of delivery.

When a market has unexpectedly weakened, to the point that the market price for that commodity is lower on delivery than it was

when the price was agreed within futures contracts, the market is said to be “in contango.”

The impact on the maritime World

Crude oil is a commodity that is widely traded on the global futures markets. In January 2015, we saw the price of brent crude oil plummet to below US$50, having been around US$100 just a few months earlier. Although there was a slight rally in prices during the first few months of 2015, it eased down again, touching just $40 at one point in August 2015.

Investors and/or traders and/or their financiers who had bought “long” suddenly found their market to be in contango. When the delivery date arrived, they had to accept that, if they then tried to sell the oil they had purchased, they would have to realize a substantial loss as the spot price was considerably lower. Therefore, rather than sell it immediately, oil traders opted to keep possession and wait for the oil price to rise again, before then selling the oil on. There are, however, the following problems with this approach:

Problem 1 – Where do traders keep the oil in the meantime?

Problem 2 – If purchasing the oil under the futures contract requires the trader to obtain financing from banks or other institutions, are those financiers aware of the risks associated with the long-term storage of crude oil at sea?

One of the attractions of a futures contract is that until the delivery date, the buyer is not in possession of the commodity, and so does not have to worry about storing it.

However, once that delivery date arrives, it becomes their property and will remain so until the oil is sold on to others.

It is no coincidence that, at times when crude oil prices fall, maritime freight prices for the carriage of oil also often fall. This is due to there being a glut of oil on the international markets (as indeed was the case in 2014), which depresses oil freight rates. Oil tanker operators often find it difficult to obtain good charters for their vessels at exactly the time when oil traders are looking for somewhere to keep their newly delivered (or about to be delivered) oil. Not for the first

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69

Oil tanker operators often find it difficult to obtain good charters for their vessels at exactly the time when oil traders are looking for somewhere to keep their newly delivered oil.

CRUDE OIL IS A COMMODITY THAT IS WIDELY TRADED ON THE GLOBAL FUTURES MARKETS. IN JANUARY 2015, WE SAW THE PRICE OF BRENT CRUDE OIL PLUMMET TO BELOW US$50, HAVING BEEN AROUND US$100 JUST A FEW MONTHS EARLIER time, we have a situation where there are two willing partners in what becomes a maritime contango marriage of convenience. Oil traders charter idle oil tankers to store their oil and shipowners find a cheap way of employing their tankers, simply anchoring the vessels and offering these otherwise idle ships to be used as floating storage units.

Crude oil is not a liquid — it is a suspension of numerous hydrocarbon compounds, among other things. If stored for long periods of time, undisturbed crude oil will begin to settle. The heavier hydrocarbons (such as bitumen) sink and coalesce at the bottom, while the lighter hydrocarbons (such as methane and ethane) rise to the top and, if permitted, escape the crude

oil altogether as vapor. As such, the crude oil starts to degrade. This can lead to both quality claims as well as shortage claims due to excessive sediment (or sludge) forming at the bottom of the cargo, which becomes unpumpable, leading to residues remaining on board (ROB) issues.

Oil tankers used as storage units are exposed to the climatic conditions where they are anchored. In many locations, there can be considerable variations between daytime and nighttime temperatures, which may lead to a loss of cargo due to venting (the release of gases into the atmosphere). This may well lead to cargo “shortages,” as the volume of the cargo

70

FEATURE

WITH CURRENT INTERNATIONAL CONCERNS OVER THE ORIGIN OF OIL CARGOES, RESULTING FROM INTERNATIONAL SANCTIONS, ANY BLENDING THAT OCCURS WILL MAKE IT INCREASINGLY DIFFICULT TO PROVE THAT A CARGO’S ORIGIN REMAINS LEGAL, ESPECIALLY IN AREAS OF THE WORLD WHERE SANCTIONED OIL CARGOES MAY BE PRESENT on board is slowly reduced due to this constant temperature change.

The longer the oil is in storage on the vessel, the greater the possible loss from this cause.

The mixing or “blending” of cargoes at sea is not permitted under the International Convention for the Safety of Life at Sea (SOLAS), but such mixing may occur accidentally, leading to claims of the cargo being “off-spec” when it is eventually discharged.

With current international concerns over the origin of oil cargoes, resulting from international sanctions, any blending that occurs will make it increasingly difficult to prove that a cargo’s origin remains legal, especially in areas of the world where sanctioned oil cargoes may be present. If any ship-to-ship transfers of the cargo occur, this risk of blending and of contamination only increases each time.

ciers who are seen to be the owners of the oil might not escape legal action and could at least incur defense costs, maybe even an actual liability in some jurisdictions. It is therefore not surprising that increasing numbers of traders and their financing banks are seeking oil traders’ liability insurance cover.

Marine hull insurance

The evidence from earlier economic downturns and shipping slumps in the 1970s and 1980s, where large numbers of unemployed tankers were often moored together for many months (sometimes years), is that considerable problems were encountered when those vessels were finally reactivated. In such instances, damage occurred both to the hull (due to the excessive fouling and degradation of the hull) and the machinery (never designed for long

periods of idleness) of the ships in question. Both main engines and auxiliaries often developed problems that only became apparent when those vessels had started to work again.

Cargoes of oil, carried for long periods of time, can also cause considerable harm to the steel of the tanks they are carried in. Some of the naturally occurring constituents of crude oil, such as hydrogen sulphide, can be particularly harmful, as their corrosive effects, over long and sustained periods, can additionally cause damage to all the pipes and pumps they come into contact with. The proportion of hydrogen sulphide within the stored crude oil varies considerably, depending on where it was drilled. While in most places it is a relatively low percentage (between 2%-4%), oil and gas extracted from wells in Kazakhstan, for example, is known to be considerably more “sour,” with a much higher hydrogen sulphide content (sometimes in excess of 10%).

The buildup of cargo “sludge” at the bottom of cargo tanks sustained during long periods of offshore oil storage use, can cause issues when tankers are then reactivated for normal use, necessitating considerable and expensive cleaning. Hull underwriters learned during previous shipping downturns that crude oil washing

Traders and their financiers

While it may widely be true that liability following a pollution event at sea would fall on the vessel operator (often strictly so, as, for example, under the Civil Liability Convention [CLC]), under some jurisdictions, it is by no means certain that such clear-cut responsibility on the vessel operator would always be applied. This is especially true in countries like the US, where the laws on responsibility for marine oil spillage are somewhat different. If a major oil spill were to occur from a vessel engaged in this oil-storage activity, oil traders and/or their finan-

THE IMPACT ON THE MARITIME WORLD Price of Brent Crude Oil (US$ Per Barrel) Source: MoneyAM.com 115.00 110.00 105.00 100.00 95.00 90.00 85.00 80.00 75.00 70.00 65.00 60.00 55.00 50.00

(GB @IB.1)

May 2013

Sep 2013

Jan 2014

May 2014

Sep 2014

Jan 2015

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71

Long-term settling of oil cargoes can result in degradation and increased viscosity at the base.

The lightest alkane, methane, will try to leave the suspension as vapor.

Heavier, more viscous alkanes such as bitumen and tar sink to the bottom.

Lighter alkanes such as methane, ethane, and butane rise to the top.

[Reproduced courtesy of Marsh, a global leader in insurance broking and risk management services (www.marsh.com)]

Crude oil is a suspension. If the lighter compounds are allowed to escape, then, to maintain the balance of the suspension, small quantities of the heaviest compounds will also leave the suspension to compensate, so that the remaining compounds maintain a suspended balance.

The heaviest compounds can then coat the lining of storage tanks with thick sticky residues that are very similar in nature to the tarmacadam used to make roads.

(COW) operations and inert gas systems (IGS) are vulnerable to failure after long periods of inactivity, and the need for extensive tank cleaning can actually cause damage to the tanks themselves.

As mentioned previously, temperature changes in and around the vessel may either lead to vacuums in the tanks or, conversely, pressure buildup. Unless strict adherence to approved venting procedures is undertaken, the risk of explosion will be increased, as external air mixing with the fumes from the cargo could result in a highly explosive cocktail.

One of the more traditionally understood risks to hull involves the ship-to-ship transfer of stored oil between tankers. Such operations, having two or more vessels very close to each other, increase the possibility of collision, with a consequential increase in the risk of damage to the insured vessel’s hull and a possible liability to the other vessel (assuming primary collision liability is insured under the hull policy). The mooring arrangements of a long-term lay-up of a tanker with cargo on board is also another area of concern, as periodical weather and sea states may expose the vessel to unusual strains

information and may, under the Rules, seek to impose new premiums, terms or deductibles.

There may also be risk management concerns and conversations would need to be had with the Club along these lines. In extremis, the Club managers could cancel the entry. On the face of it, the reduction in voyages might make the P&I risk appear reduced. To some extent, this argument is persuasive but there are other aspects to consider.

Liability to cargo interests due to shortage would be a major concern and the exposure would only increase with the length of the storage period. As well as the potential liability, fines may be imposed on the vessel operator, under some jurisdictions, for

WITH CURRENT INTERNATIONAL CONCERNS OVER THE ORIGIN OF OIL CARGOES, RESULTING FROM INTERNATIONAL SANCTIONS, ANY BLENDING THAT OCCURS WILL MAKE IT INCREASINGLY DIFFICULT TO PROVE THAT A CARGO’S ORIGIN REMAINS LEGAL, ESPECIALLY IN AREAS OF THE WORLD WHERE SANCTIONED OIL CARGOES MAY BE PRESENT on its anchoring systems. Should the vessel go adrift, then the perils occasioned by long periods of inactivity of its machinery may cause additional problems. Where storage vessels are anchored is another important factor, as quiet locations that might pose reduced collision risk may also suffer from a lack of nearby adequate salvage and rescue services.

Protection and indemnity (P&I)

Employing tankers as floating storage units would usually represent a material change in information and so the P&I Club ought to be promptly advised of any such plans.

Underwriters could take the view that this is a material change in

cargo shortage. Possible liability for contamination of the cargo is another risk that shipowners (and their P&I clubs) might have to face. Pollution liability poses a constant threat for laden tankers, and the long-term use of vessels as oil-storage vehicles can only increase the risk of a pollution event occurring or resulting from other events (such as a collision or breaking adrift in bad weather and grounding). If ship-to-ship transfers are involved, then the pollution liability risks increase further.

Long-term employment of oil tankers as floating storage units may also lead to disputes under the charterparty such that FD&D cover, if purchased, may also need to be utilized.

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INTERVIEW

Musings of a veteran geologist:

Finding another Yibal or Fahud The business of finding large oilfields is becoming harder and harder with time – a scenario that somewhat reflects the reality in the Omani upstream sector, says Prof. Wiekert Visser, a 40-year veteran of the petroleum geosciences industry, in this exclusive interview for ‘OPAL – The Oil & Gas Magazine’

P ❱❱ Prof. Wiekert Visser, Head of MSc Petroleum Geosciences at the German University of Technology (GUtech)

redicting peak oil has long been a tricky business as history has shown. In 1905 or so, it was predicted that the United States would run out of oil within 10 years. A hundred years on, it still hasn’t

happened.

Actually, global peak oil production was predicted to happen just about now (the original prediction was for 2010!), but it hasn’t panned out either. Indeed, throughout the history of oil, we see peak oil being deferred over time, which I think, is a testament to the commendable success of the global hydrocarbon community in uncovering more reserves and bringing more oil on stream than people ever imagined.

But let’s face it, the business of finding large oilfields is becoming harder and harder with time – a scenario that somewhat reflects the reality in the Omani upstream sector. Here is an area that has been explored exceptionally well. And if you talk to the petroleum experts at PDO and elsewhere, you will hardly find anyone who expects that another Yibal or Fahud – one of the big finds of Oman – will be replicated. Of course, there could be surprises, but the sense that if there was any Yibal or Fahud still hidden somewhere in the ground, it would likely have been found by now.

What about prospects offshore, one may ask! Well, offshore the Batinah it is my impression that reservoir and structure

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abound, but that source and seal are unreliable. Offshore the Batain plains, the main ingredients are essentially in place, but I think the source rock is not deep enough to have generated any oil and gas. Those who have seen the data may be in a better position to offer some conclusive analysis. Then there is, of course, the interesting revelation made by Masirah Oil about Masirah Bay. It would be a new play altogether.

But whether it is extensive or not, time will tell!

Game-changer

The big game-changer for Oman, however, lies in uncovering another Yibal or Fahud with multiple billion barrels of oil in place.

The chances don’t seem very bright, but you can never tell! The smaller discoveries, say of 15 million barrels, are welcome because they help shore up output levels incrementally.

Shale oil and shale gas, while potentially promising, exist at depths of 4km-plus, which makes the drilling of wells very expensive and the output per well relatively modest. Consequently, the economics of targeting these formations are quite challenging. Perhaps, while oil prices rebound, these deposits become more viable for development.

The big reserves additions, in my view, will come via Enhanced Oil Recovery (EOR). But on the downside of this method, a lot of natural gas is being consumed for the thermal heating of the reservoirs in order to make the heavy and viscous oil to flow to producing wells.

According to a report by The Research Council of Oman, at some point, the gas required to recover this heavy oil will be more than the country can supply. This scenario poses a significant challenge for the country’s decision-makers, because we will come to a point when there will be just not enough gas to produce oil. This presents an incredibly interesting challenge to the government.

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INTERVIEW

Exciting petroleum geology

So what’s exciting about Oman’s geology? For one, there’s an enormous diversity in the types of source rock that one encounters here: the relatively young (Cretaceous) Natih petroleum system is important in North Oman, and the Silurian Safiq formation is the likely source of some hydrocarbons discovered around the Umm al Samim area of western Oman. But drillers have had a lot less luck finding hydrocarbons sourced by this unit as they approach the Yemen and Saudi bor-

And there are lots of different reservoirs too: limestone reservoirs – particularly in the north – for oil and a bit of gas; sandstone reservoirs in the Ghaba oil basin, as in the eastern flank of the south Oman oil basin, where it’s all about oil. Then you have a series of sands, such as the Haima Group dating some 400 million years, which are largely gas targets in the Ghaba salt basin.

Abutabul, Khazzan and Khulud are the big tight gas fields found in this group. So there is a multiplicity of source rocks, reservoirs and seals, with plenty of saturation to boot.

OMAN IS HOME TO A GREAT DEAL OF DIVERSE PETROLEUM SYSTEMS THAT HAVE BEEN THE SOURCE OF A LOT OF OIL AND GAS GENERATED OVER THE LAST 400 MILLION YEARS OR SO ders. Oil companies have come and gone over the years in those areas.

In the northwest, we have the Jurassic source rocks which we know is somewhat active in the Lekhwair area of PDO’s Block 6 concession.

Further south are the various very old (Cambrian and Proterozoic) source rocks of the Huqf where the South Oman Oil Basin sustains the Marmul and Nimr fields. The source rocks below the salt are just as important in the south as they are in the north. Of particular interest are the rocks on top of the salt, which are curiously referred to as Q’s source rock – in the Ghaba salt basin mainly. But there are far deeper objectives, which we know exist but nobody has yet targeted them yet. They represent an interesting carrot to go after and hold some potential in certain areas at least.

Clearly, Oman is home to a great deal of diverse petroleum systems that have been the source of a lot of oil and gas generated over the last 400 million years or so. We’re talking about a very long geological history: about 700 million years in terms of sediments, with the key source rocks going back 550 – 600 million years.

But at the same time, there has been a lot of drilling too over the past decades. If you look at the history of discoveries in Oman, the big oil finds – Fahud, Yibal, Marmul, Rima and so on – were uncovered in the 1970s or earliest. Nearly fifty years on, Fahud, and Yibal are still producing. These have been extremely good fields with an enormous amount of reserves. As is typical in exploration history, the big fields are usually found first.

But belated surprises are not uncommon! Look at the United States, for example. When shale was first discovered two decades ago, everyone knew there was oil waiting to be produced, but they figured a way to produce it only quite recently.

And lo and behold, the US is suddenly almost self-sufficient, while prices go into a tailspin.

Closer home, Oman could still strike a big one, but you wonder how great the chances are. All of the interesting ingredients are there in the geology. But let’s not forget that we have worked on industry for over 60 years. If you take 1956 – the year when oil was first discovered in the Sultanate – as the starting point, and if you

compare our production history with that of other countries, you will find a similar pattern: the big fields are usually found first. Globally, most of the oil and gas was discovered in the 60s and 70s, with some exceptions.

Of course, Oman could consider looking at deeper targets. But let’s not forget, the deeper one goes, the porosity of the reservoirs become worse and harder to produce.

Deeper wells are still okay when it comes to gas, but for oil, you would need a good, porous reservoir too.

Crystal-gazing

Because the easy reservoirs have already been found, my hunch is that Oman may go after relatively harder targets, such as unconventional or frontier plays. Clearly, if there was no optimism about Oman’s geological prospects, then you wouldn’t see new investment in exploration. But new exploration has been happening because the geological pundits are convinced there are resources worth going after, especially the kind of resources that were overlooked in the quest for easier hydrocarbons. After all, it’s human nature to focus on the easier things first!

So there are still lots of opportunities to go after, but whether these efforts produce another Yibal or Fahud is another story. As long as new finds can help sustain production at current levels is a good thing for Oman.

Never say never in this complex game of geology! We have seen predictions of peak oil come and go. Although the United States went through peak oil in 1979, they went on 40 years later to unleash shale oil. A new peak oil, while lower than the first, is now upon them. At some point, peak oil will be upon us as well. Whether it happens in two years or 20 years, nobody can tell. But because geology affords us wide latitude in the way we make our predictions, we never say never in this business!

By Conrad Prabhu

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February 2016

SME Development Fund

Special schemes

to support ICV The government and the oil and gas industry have already launched several initiatives aimed at developing SMEs through ICV. These have started showing good results

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SME DEVELOPMENT

❱❱ Mr. Raphael Parambi, CEO of the SME Fund

The Context

Over the past decade and a half, with the unveiling of the Vision 2020 Charter, the Sultanate has been seeking to diversify its economy and invest in income and employment generating activities. The development of SMEs is a key element, as is the enhancement of In Country Value (ICV).

The government and the oil and gas industry have already launched several initiatives aimed at developing SMEs through ICV. These have started showing good results. PDO’s Local Community Contractor (LCC) programme is a particularly successful example. The industry has also set about making ICV a priority; the initiatives that have been launched include implementation of a joint supplier registration system, standardization and inclusion of ICV in tenders, and a reporting and monitoring system for ICV.

the 53 areas identified for enhancing ICV, about 20 possible areas have been identified for SMEs. However the challenge is that there are only a limited number of SMEs that have the capability or capacity to accept or tap the available opportunities.

This is reflected in the Joint Supplier Registration data which has around 2100 SMEs registered in all.

Informal discussions with players in the oil and gas sector indicate that only half of these may be considered

so SMEs will need to take on an estimated $6 billion of ICV work, which is impossible. Capacity and capability have to be built up and the number of SMEs in the sector enhanced.

SME Development Fund

The SME Development Fund (SMEF) has been established with an authorized capital of RO 100 million, under the Sultanate’s offset programme, with the objective of developing entrepreneurship

SMEF’s special support for Oil & Gas under the ICV Initiative In keeping with the Nation’s priority, the development of SMEs in the ICV value chain has been identified as a thrust area for SMEF and these already constitute 22% of the total portfolio. Based on the experience so gained, the prior experience of our team, who have worked on the LCC programme earlier, and on discussions with a cross section of the players in the sector, SMEF has a put together special programmes to support the country’s objective of SME development and ICV enhancement.

The details are as follows:

Infrastructure

37% Logistics

Tourism

17%

8% Oil & Gas

22%

Others

16%

Opportunities

As per the ICV Strategy 2013-2020, the opportunity for incremental ICV is estimated to be USD 64 billion. Of

SMEF CURRENT SECTORAL FOCUS

to be serious players. Thus 1000 or

and supporting and financing

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SMEs in the Sultanate. In addition to its capital, it receives grants to support its Four Point Programme, which seeks to develop entrepreneurship, finance SMEs and to address the causes of failure of existing SMEs.

SMEs training

The common requirement of SMEs is for upgrading their technical and managerial ability to meet the requirements of prime contractors and grow. Recognizing this, SMEF has designed a training programme in business areas comprising accounting, marketing, legal and HR etc., by our specialized trainers. In addition, we propose to offer train-

ularly by a dedicated team and will be provided light touch advice based on the accounts provided by them and identify training needs based on the input for training.

This will be done in co-ordination with all stakeholders in the Oil & Gas industry, which will enable the SMEs to conduct the business in a more efficient way to grow and succeed.

Stronger SME value chain

A key challenge that large corporates face is in ensuring reliability and adequate quality of their SME suppliers and sub-contractors. The SMEF’s training programme, in conjunction with

ICV AND SME DEVELOPMENT ARE THE ECONOMIC FEATURE OF OMAN AND SME DEVELOPMENT FUND IS COMMITTED TO WORKING WITH ALL STAKEHOLDERS TO MAKE THIS A SUCCESS ing in technical areas, HSE, project management, etc. with the support of the oil and gas majors.

Subsidized finance facility

A major challenge faced by SMEs is prompt access to finance for the timely execution of projects.

Non-availability of finance when needed also leads to inefficient purchases and poor performance.

SMEF has tailored a set of products specially designed to provide SMEs with flexible funding to meet their needs.

Account and IT support

Yet another cause of failure is the improper maintenance of books of accounts. This results in errors in judgment of profits, cash flow, receivables etc., and affects the ultimate success of the SME. To help SMEs overcome this problem SMEF has tied up with a major accounting firm to provide outsourced accounting services to SMEs at their premises.

Nurturing

The clients will be monitored reg-

OPAL’s training, will enhance the quality of the supplier value chain. In addition, SMEF will be setting up a dedicated team to monitor the SME supplies and providing feedback to enable large corporate clients to keep track of their SME performance.

Timely service and supply

One of the major concerns of large corporates is the delay in supply and project execution

by SME suppliers and sub-contractors. These delays are often caused when the SME supplier faces a cash crunch. The SMEF liquidity enhancement products enable the SMEs to avoid a cash crunch and thus adhere to the tight delivery schedule expected by the Oil & Gas industry.

Expanding supplier base

A frequent complaint of large Oil & Gas majors is that there is an insufficient number and quality of suppliers within the country for them to achieve their ICV objectives. Recognizing this, the

SMEF is launching a large-scale entrepreneurial development drive. Designed to expand the supplier base, this initiative will be presented to the ICV sector shortly at a major meet.

Cost

Due to inadequate liquidity, SMEs are unable to bulk purchase raw materials or to avail of cash discount from their suppliers. The SME Fund financing programme will inject timely liquidity enabling SMEs to avail of cash and bulk purchases discounts and, in turn, pass these benefits on to their clients.

Conclusion

The oil and gas sector has set very ambitious ICV and SME support targets. In response to this, SMEF has developed a comprehensive package to support both the SMEs and the large firms. A number of firms are benefiting and the number is expected to grow rapidly to the benefit of the nation and the sector.

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OPAL TRAINING

OPAL Human Resource Training Programmes:

Nurturing HR Best Practice

As part of its mandate to promote standards and best business practices among member companies, OPAL has unveiled a suite of training programmes specifically designed for human resources practitioners

OPAL Human Resource Foundation Programme Overview

Establish academic foundation required for pursuing OPAL Human Resource Certification Programme (HRCP).

Aim

Prepare and develop candidates capacity to cope with OPAL Human Resource Certification Programme Practitioner Level (HRCP Level 1).

Objectives

• Learn HR vocabulary and expressions used in delivering HR services.

• Apply active verbs in the formation of statements.

• Report situations using acceptable business communication style.

• Appreciate officialize language.

• Attain the pre requisite for HRCP Level 1.

Training methodology

• Lesson and coaching methodology.

Audience

Employees who wish and are being developed to pursue HR career. This will include admin support staff e.g. receptionists and secretaries and admin assistants, public relation officers clerks etc.

Prerequisite

• Must demonstrate customer service orientation and passion for people.

• With good level of English.

Programme fees

550/RO

Programme duration

5 days

OPAL Human Resource Certificate Programme Practitioner Level (HCRP Level 1) Overview

Operational and transactional HR Follow a structured programme covering all 6 HR modules from inception to separation i.e. the entire employee life cycle.

Aim

Enhance HR professionalism by raising and developing credibility and confidence in delivering. HR services to line managers and employees.

Objectives

• Enhance HR competence awareness level in all HR domains.

• Learn and apply HR best practices in all the 6 modules.

• Generate self-confidence in business partnership with the line.

• Complete the programme successfully and attain OPAL HRCP Level 1 Certification.

• Provide HRCP feedback to HR Leadership Team.

Modules

1. Resourcing Management 2. Performance Management 3. Learning and Development 4. Total Rewards Management 5. Employee and Industrial Relations 6. Organisation Design

Audience

• Fresh graduates upon entry to HR career.

• Existing HR practitioners wishing to progress and develop higher up the ladder.

• Candidates who successfully completed Foundation Level.

Prerequisite

• Should have successfully completed Foundation level by passing final examination, for individual with no experience in HR field and with good level of English.

Programme fees

550/RO

Programme duration

5 days

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OPAL Human Resource Certificate Programme Practitioner Level (HCRP Level 2) Overview

Strategic HR and HR strategy covering high level intervention in adding value to all stakeholders.

This covers HR Trends, Employee Engagement developing HR Business cases for business sustainability.

Aim

Raise the bar of HR professionalism by making optimal contribution to the development and execution of business strategy.

Objectives

• Enhance HR competence Knowledge level in all HR domains.

• Deliver advanced professional presentations.

• Participate in developing a concept and follow it up to its implementation.

• Follow GCC HR trends by networking with GCC Talents.

• Create employee engagement culture.

• Apply people analytics to present a business case to management team and beyond.

• Attain HRCP successfully complete HRCP Level 1 with a high score of 75%.

• HR practitioners who successfully completed HRCP level 1 with some relevant years of experience.

• Existing HR professionals with more than five years of relevant experience level 2.

Modules

Highly interactive and candidates deliver presentations throughout the week. The participants work in groups on case studies and in the end are supposed to prepare a presentation to the management team on HR improvements within their own organizations thereby raising the bar of HR professionalism by adopting best practices.

Audience

• Certified HRCP practitioners.

• Existing HR Professionals wishing to update their skills level.

• Line Managers.

Prerequisite

• With five years of relevant HR experience, or 2 years after complitation of HRCP Level 1.

Programme fees

750/RO

Programme duration

5 days

Health, Safety and Environment Certification Programme (HSECP) Overview

The Health, Safety and Environment Competence Programme (HSECP) is about establishing professional integrity and encouraging Health, Safety and Environment development in Oman’s Oil & Gas (O&G) industry.

OPAL’s vision is to have, in Oman, an acknowledged world class O&G industry which operates to the highest standards with no harm to people, environment or assets.

Aim

The aim of the OPAL HSECP is to set a standard for Oman’s HSE Professionals recognized by industry which will allow them to competently deal with the increasing demands of all aspects of successful safety management.

Objectives

The programme will encourage the development of core skills and knowledge of HSE Professionals in Oman expanding experience of safety techniques and safety management through competency-based training modules.

Modules

1. Occupational Health and Safety Management System & Regulations.

2. Identifying Hazards (an extended module).

3. Hazard Control System.

4. Site Visit, Risk Assessment and Report 4. OH&S Safety Procedures.

5. Safety Audits / Inspections.

6. Accident Prevention.

7. Environmental Management.

Audience

• All who desire a career in HSE in Oman or in the initial phase of their development in the field of HSE. • Participants are expected to have reasonable English language capabilities as the program will be in English.

Prerequisite

• Good level of English.

• A pre-course written assessment must be taken at the OPAL offices, and passed, before being allowed on the course.

• PPE for site visit – safety boots, full sleeve cotton overalls, safety goggles, safety helmet.

Programme fees

600/RO (OPAL memebers)

Programme duration

2 weeks

650/RO (Non-OPAL memebers)

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OPAL

OPAL Best Practice Awards recognise industry excellence The Best Practice Awards recognise members who raise the bar on best practice in three principal categories: Human Resources, Technical & Operational Excellence, and Health-Safety-Environment (HSE)

T

welve outstanding initiatives exemplifying best practice in the Sultanate’s oil and gas industry vied for top honours at an awards ceremony organised

by Oman Society for Petroleum Services (OPAL) at Crowne Plaza Hotel Muscat last December.

His Excellency Salim bin Nasser al Aufy, Under-Secretary of the

Outstanding initiatives exemplifying best practice in the Sultanate’s oil and gas industry vied for top honours at the awards.

Ministry of Oil and Gas, was the Chief Guest at the Best Practice Awards 2015, which recognises members who raise the bar on best practice in three principal categories: Human Resources, Technical & Operational Excellence, and Health-Safety-Environment (HSE).

In opening remarks, OPAL Chief Executive Officer Musallam al

Mandhry said the annual awards programme sought to encourage members – who make up the great majority of oilfield companies, contractors and service providers at the heart of Oman’s mainstay economic sector – to bring their operations into alignment with global best practice standards.

In contention for the Best Practice Award in the Health & Safe-

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ty category were the following three oilfield companies: (i) Galfar Engineering & Contracting - showcasing its Mechanised Water Sprinkler for Water Tankers which obviates the need for workers to hang on to the back of a moving tanker while spraying water; (ii) Seeh Al Sarya Engineering LLC – highlighting its Forklift Sleeve Attachment Locking System, a novel safety system which ensure that the sleeve will not accidentally slide off and cause harm to humans or property; and (iii) Al Ghalbi International Engineering & Contracting LLC – spotlighting its monthly competition in support of its In-Vehicle Monitoring System (IVMS).

Initiatives by five prominent companies competed for the Best Practice Award in Human Resources: (i) Petroleum Development (PDO) – High-tech

interactive learning centre that help build wells capability to improve process safety in the Sultanate; (ii) RAY Skills Development (Developing world-class technical capabilities of Omanis through its training facilities in Halban and Ghala); (iii) Oman Cables Industry (Implementing e-Learning Training); (iv) Oman KCV Deutag Drilling Co (Global Competence System); and (v) Value Engineering Centre (Hire, Develop & Deploy).

Finally, the category for Technical & Operational Excellence

Human Resources

attracted four entries: (i) Water Recycling Plant (Galfar Engineering & Contracting); (ii)Yibal Field water flood management (PDO); (iii) Safe & Efficient Driving Scheme (Hamdan Trading Group); and (iv) Integrated Problem Solving Solution (IBD Group of Companies.

After brief presentations by each of the contestants, a jury panel went into a huddle to choose the winners. They were: (i) Al Ghalbi International Engineering and Contracting LLC for Health & Safety (iii) PDO for Technical & Operational Excellence, and (iii) Value Engineering Centre LLC for Human Resources The glittering event, which also featured live demos of the initiatives in competition for the awards, concluded with the distribution of certificates to the winners.

Technical

HSE

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DOWNSTREAM SECTOR

A flagship model of excellence Since its launch, SMC has continued to impress with its performance. A Methanol Plant Benchmarking Study carried out by Johnson Matthey/ABB for 17 plants places SMC in the top five globally. It has also been recognized as the best company amongst Oman Oil subsidiaries based on performance

S â?ąâ?ą Awadh Al Shanfari, Managing Director of Salalah Methanol Company

alalah Methanol Company LLC (SMC) owns and operates the methanol production facility in the Salalah Free Zone located near the Port of Salalah. The company is jointly owned by Oman Oil Company SAOC and Takamul Investment Company with 90 per cent and 10 per cent stakes respectively.

Oman Oil Company is a commercial company wholly owned by the Government of Oman, which was incorporated specifically to pursue investment opportunities in the energy sector both inside and outside Oman. As such, OOC plays an important role in helping diversify the Omani economy and to promote Omani and foreign private sector investment.

The plant has been designed as per the latest specification and world-class standards meeting all environmental requirements.

The objective of Design Safety is to ensure that the Health and Safety aspects of the design with regard to personnel, property and the environment are maintained at the relevant acceptable levels.

Aim to transform

One of the main aims of the methanol project is to transform the raw materials (natural gas) into a high-value product (methanol) which can be used in many basic industries. The natural gas is supplied to the facility through a 24-inch pipeline provided by the Ministry of Oil and Gas through Oman Gas Company.

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One of the main aims of the methanol project is to transform the raw materials (natural gas) into a high-value product (methanol) which can be used in many basic industries.

ON AVERAGE THE FACILITY HAS THE ABILITY TO PRODUCE

3000 TONS

Shutterstock

A DAY OF METHANOL

The company contributions to value-addition through the sale, marketing, transportation and use of natural resources, in addition to

creating job opportunities for specialized Omani nationals who are trained by the company in the technologies used in these industries.

Omanisation currently stands at over 64 per cent.

To date, the company has been involved in several corporate social responsibility programmes, as it continues to work closely with the local community, government institutions and non-governmental organizations. The company has funded more than 100 corporate social responsibility (CSR) initiatives from 2012-2015. SMC considers CSR as a value and principle driven

by Oman Oil Company, the owner, and such values are integrated into the company’s business processes which reflect in its employees’ working culture. It is a culture within SMC that goes beyond business integration to cover economic, environmental, and social aspects. SMC was recognized as a pioneer in CSR initiatives in December 2014 at the 6th Gulf CSR event held in Kuwait.

The company markets its products in a number of world markets through Oman Trading International (OTI), which ships methanol products on board two carriers (Al Muttrah and Al Amerat) owned by Oman Shipping Company.

Construction at a total cost of $900 million, the facility’s commercial production started in May 2010. By November 2015, less than six years after start-up, SMC had achieved six million tons of methanol production. This is a world-class performance for a new plant. In the first year itself in 2010, plant capacity utilisation was at around 100 per cent.

On average the facility has the ability to produce 3000 tons a day of methanol. Alongside the plant itself, the site consists of related utilities, off-sites, and export facilities.

The company also maintains water desalination, boiler feedwater preparation, auxiliary steam generation, condensate/water treatment facilities, instrument air/plant air and nitrogen generators, and effluent and sewage treatment plants.

Impressive performance

Since its launch, SMC has continued to impress with its per-

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DOWNSTREAM SECTOR

DURING THE LAST COUPLE OF YEARS, SMC HAS IMPLEMENTED VARIOUS IMPROVEMENT PROGRAMMES INCLUDING OPERATIONAL EXCELLENCE, CORPORATE RISK MANAGEMENT, ENTERPRISE PERFORMANCE MANAGEMENT SYSTEMS (EPMS), LAB INTEGRATED MANAGEMENTS SYSTEM (LIMS) AND INTEGRATED MANAGEMENT SYSTEMS formance. A Methanol Plant Benchmarking Study carried out by Johnson Matthey/ABB for 17 plants places SMC in the top five globally. It has also been recognized as the best company amongst Oman Oil subsidiaries based on performance. Our lenders and competitors have also recognized our efforts for project management and on achieving different production milestones.

Health and safety for all employees and contractors at the plant site is the highest priority for SMC. It has achieved an outstanding run of 3 million man-hours without lost time injury (LTI) as

of October 2015. The company has been recognized internationally for its safety and environments efforts: Global Green Award 2014 received at the Green Economy Forum held in Berlin-Germany, USA International Safety Association on reaching one and two million man-hours without Loss time Injuries. During the construction phase, SMC achieved around 16 million man-hours without an LTI.

Environmental care

From an environmental perspective, even during the design stage, SMC invested heavily in

measures to minimize the impact of its activities on environment.

This includes an effluent treatment plant (ETP), ambient air quality monitoring station and a fully equipped state of the art onsite laboratory for regular environmental checks. All the treated process water in the ETP is used in green belt development with the complex.

During the last couple of years, SMC has implemented various improvement programmes including Operational Excellence, Corporate Risk Management, Enterprise Performance Management Systems (EPMS), Lab Integrated Managements System (LIMS) and Integrated Management Systems to improve processes and enhance the performance even further.

These initial years certainly seem to have put SMC well on the way to achieving its vision of being globally recognized as the Omani flagship model of excellence in the hydrocarbon industry, with sustainable growth and best returns for all stakeholders.

Images are property of Salalah Methanol Company

From an environmental perspective, even during the design stage, SMC invested heavily in measures to minimize the impact of its activities on environment.

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Bringing value to Omani customers Schlumberger is the leading provider of oilfield services today, focusing on innovative technologies for reservoir characterization, drilling, and production

Schlumberger facilities in Nizwa

S

chlumberger is the world’s leading supplier of technology, integrated project management and information solutions to customers working in the oil and gas industry worldwide. It operates in the most difficult areas, whether politically, logistically, or technologically, and it is a world leader in the technologies required to get fossil fuels out of the ground – with 36,000 patented ways to help its clients do just that.

In the Sultanate of Oman, the company started its operations in 1955, and over the past 60 years Schlumberger has grown with the oil and gas industry. Today the company has its presence at multiple locations and offers most of the business lines.

The development and growth of Schlumberger as a company has, in many ways, paralleled the development and growth of Oman as a nation. Both have achieved success based on hard work, diligence and determination.

High quality products and services

The Schlumberger strategy has always been to bring value to its Omani customers by offering the latest state-of-the-art technologies.

These high-quality products and services have been delivered in a safe and environmentally friendly way by a committed and motivated work force.

For example, Schlumberger together with its Omani customers has successfully introduced several new Wireline resistivity tools as

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OILFIELD SERVICES

The development and growth of Schlumberger as a company has, in many ways, paralleled the development and growth of Oman as a nation.

THE UPGRADING OF TECHNICAL SKILLS IN THE OIL AND GAS SECTOR IS A KEY PART OF OUR STRATEGY TO EMPOWER OMANIS TO BE ACTIVE PARTICIPANTS IN THE SULTANATE’S ECONOMY the first commercial application worldwide.

The first Schlumberger wireline log in the Dhofar Concession, as it was then called, was run in December 1955 in Dauka-1. In April of the following year Schlumberger ran the first log in the Oman Concession in Fahud-1.

Schlumberger’s operational bases in Oman today provide a comprehensive range of services and products with a diligent workforce of which 80 per cent are Omani nationals.

“The development and growth of Schlumberger as a company has, in many ways, paralleled the development and growth of Oman as a nation. Both have achieved success based on hard work, diligence and determination,” says Mohsin al Hadhrami, Vice-president & General Manager.

“During the coming years we will continue to invest in our employees, providing opportunities to Omani graduates and training

them to perform to world standards”, he informs.

Focus on inovation

Schlumberger is the leading provider of oilfield services today, focusing on innovative technologies for reservoir characterization, drilling, and production.

“We are also a leading employer in our sector—with a reputation for hiring the best and the brightest people and keeping them at the top of their game through rewarding career-long development opportunities”, says Al Hadhrami.

The upgrading of technical skills in the oil and gas sector is a key part of our strategy to empower Omanis to be active participants in the Sultanate’s economy.

“Enriching industrial skills and knowledge transfer of technology, in particular, will go a long way in enabling Omanis and the country to be regionally, as well as, globally competitive,” he says.

“We intend to continue our journey in Oman and maintain an uninterrupted presence. We will do this with an attitude that embracing the local communities and businesses not only increase in-country value but also make good business sense for Schlumberger. This combination is the best way to ensure sustainable growth for all parties involved, says Al Hadhrami.

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February 2016

Petro Kerui LLC:

Adding Oman to global footprint Having clinched deals worth over $100 million in the supply of drilling rigs to the Omani oilfield industry, Petro Kerui LLC – a wholly owned subsidiary of Chinese oilfield industrial services giant Kerui Petroleum – has made a robust start to its operations in the Sultanate

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OILFIELD SERVICES

❱❱ Mr. Bray Hao, General Manager, Petro Kerui LLC

Kerui LLC. The fleet is owned by well-known Omani drilling contractor Dalma Energy, which procured the rigs from Kerui in a deal worth over $100 million. They include a 2,000hp machine supplied in February 2014, while the rest are 1,000hp systems installed and deployed in August this year.

So why would a local drilling contractor opt for Chinese-made drilling rigs in a market dominated by leading Western brands? Mr. Hao explains: “Kerui is in fact an international brand owned by the largest private oilfield products and services provider in China with business operations in over 50 countries around the globe. In the Arabian Gulf alone, we have around 40 drilling rigs currently in operation, and the number keeps growing. So the Kerui brand has being rapidly embraced not only in this region, but across the world.”

Value proposition

A

mid the harsh conditions of Fahud, Nimr and Marmul, a fleet of six drilling rigs pay testimony to the formidable technological capabilities of a company that has ambitions to make significant inroads into Oman’s upstream hydrocarbons industry.

Described as hardy desert workhorses by their crew, the machines have been manufactured and supplied by Petro Kerui LLC, part of Kerui Group – an internationally renowned provider of integrated industrial oilfield solutions headquartered in Dongying City in China. Designed and built to suit the extreme climatic, as well as the challenging geological conditions that characterise most of the oilfield regions of the Sultanate, the performance of the rigs bear witness to Kerui’s commitment to quality and dependability.

In all, six drilling rigs manufactured

by Kerui are currently in operation in the Sultanate, according to Mr. Bray Hao, General Manager, Petro

Adding to the value proposition associated with the brand are the attractive financing options, says Mr. Hao. “In marketing our drilling rigs, as indeed our other products, we offer not only custom-designed hardware solutions, but easy finance as well. Customers are required to come up with as little as 15 per cent of the equipment cost upfront, while the remainder is financed by Chinese state lenders against convenient long-term loan arrangements. This combination of guaranteed performance and easy finance is one of our strengths.”

After-sales support is an integral part of Kerui’s commitment to customers. Citing the example of Dalma Energy’s order for six drilling rigs, the General Manager said: “Kerui despatched a contingent of 30 technicians to support the delivery and installation of the rigs at site – an exercise that was completed in under four weeks in a record of sorts for this type of tasks.

Installation and commissioning was also undertaken at the peak of summer. And to assure our client of our steadfast technical support, we have deputed a pair of Kerui engi-

neers for each rig at our cost. They will be available 24x7 to assist in tackling any contingencies involving the smooth operation of the rig.”

Yet another factor that adds to the appeal of Kerui’s drilling rigs is their ability to the rapidly moved and redeployed – a feature that contributes to the bottom line of customers, according to the executive.

“Mobility is a key consideration for oil companies like Petroleum Development Oman (PDO), and so on, when choosing drilling contractors.

Hence, the preference for Kerui rigs, which offer excellent mobility for redeployment.”

A new entrant to the Omani oilfield services industry, Kerui received a license to set up a local firm only last year. Petro Kerui LLC operates from a spacious office in the Wattayah area of Muscat from where it oversees an operation that Mr. Hao hopes will eventually encompass a diverse spread of activities. After all, Kerui Group’s capabilities span not only oilfield equipment manufacturing, but also oilfield integration engineering, EPC turnkey project execution, and R&D. The Group ranks among the largest equipment manufacturers, technical service providers, and project contractors in the field of oil and gas exploration and production in China.

Mr. Hao also sees prospects for the marketing of Kerui-branded wellheads, gas compressors and other equipment manufactured by the Group’s massive facilities in Dongying City. Equally promising, he says, is the potential for the introduction of Kerui’s specialist expertise in, among other areas, coiled tubing services, fracturing and nitrogen foaming.

Technical knowhow

But it is the Group’s unbeatable expertise in tertiary oil recovery that offers significant promise for business growth in the Sultanate, the General Manager points out.

“Unlike PDO, which has embraced embraced Enhanced Oil Recovery (EOR) only of late, China has been using tertiary recovery methods for a long time. Kerui has refined some

February 2016

89

Kerui despatched a contingent of 30 technicians to support the delivery and installation of the rigs at site – an exercise that was completed in under four weeks in a record of sorts for this type of tasks.

of these technologies to make it suitable for deployment in Oman.

Our nitrogen foam technology, for example, can be a cost-effective alternative to polymer-based EOR currently applied in Oman. We have successfully used this technology to boost hydrocarbon output in Iraq by 40 per cent.”

Petro Kerui envisions a gradual and long-term strategy in make inroads into the lucrative EOR sector in Oman. “We want to work with oil companies in Oman, as well as with the Ministry of Oil and Gas, to initially acquaint them with the benefits associated with Kerui’s expertise in EOR. We aim to also achieve this by collaborating with PDO’s EOR centre, as

well as with researchers at Sultan Qaboos University.”

Having already established an operational presence in the Sultanate, Kerui now plans to invest in suitable facilities to support its local clientele. In the works is a new warehouse currently under construction in Misfah in Muscat Governorate. Offering a combination of covered and open yard space, the facility will be equipped to offer minor maintenance services, as well as storage for spares.

But in a signal of its long-term commitment to Oman, Petro Kerui is weighing the feasibility of setting up a major maintenance facility in Oman that will serve its customers across the wider Gulf and MENA region. The company is currently in discussion with a local Omani firm to explore the potential for a joint venture partnership in this regard – part of Kerui’s support for In-Country Value (ICV) development, says Mr. Hao. “We are serious about ICV, which was evident when top officials from Kerui visited Oman last year to explore avenues for establishing a full-fledged workshop in Oman.

With the growth of the rig business in the Sultanate, we see significant potential for maintenance facilities, and even the manufacture of small spare parts. A workshop in Muscat will also serve as a maintenance hub for our clients in countries as far afield as Iran, Iraq and Saudi Arabia. The investment will obviate the need for parts to be shipped all the way to China for repairs and maintenance – a move that will also bode well for the growth of our regional business.”

Sohar, with its expansive free zone, as well as Nizwa, which hosts a large industrial park, are seen as potential venues for the proposed workshop, the general manager adds.

From its headquarters in Dongying City, which adjoins the massive Shengli oilfield – China’s second largest field – Kerui Group oversees a global enterprise spanning 57 countries and regions of the world, including the Americas, Middle East, Asia Pacific, Africa and Europe. The Group’s 8,000-strong workforce includes around 2,000 engineers and 800 after-sales specialists.

INDUSTRY EXCELLENCE

90

Ray International LLC:

Stepping up to the plate with pride The ‘Made in Oman’ units are a testament to the ingenuity latent in one of Oman’s most energetic and well-diversified oil and gas service providers, RAY International LLC

February 2016

91

A

t a time when the industry is hunkering down in the face of a punishing downturn, Rukun Al Yaqeen (RAY) International has succeeded in leveraging the prodigious technical skills of its local Omani staff in designing and manufacturing a unique set of wireline units.

In-Country Value (ICV) in every sense of the term, the state-of-theart units were proudly unveiled at a ceremony held at the premises of the Ministry of Oil and Gas on December 22, 2015. In attendance were His Excellency Dr Mohammed bin Hamed al Rumhi, Minister of Oil and Gas, and His Excellency Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil and Gas, as well as the CEOs and

RAY Ecologic helps clients conform to environmental safety standards and the management of industrial wastes and effluents, among other pollution related challenges.

Managing Directors of oil companies, contractors and service providers.

The ‘Made in Oman’ units are a testament to the ingenuity latent in one of Oman’s most energetic and well-diversified oil and gas service providers, RAY International LLC. Founders Dr Tahir al Kindi, Chairman, and Tameem al Mahrouqi, Managing Director, credited the innovations to the company’s young Omani employees who were driven by a desire to come up with an integrated solution for multiple workover problems.

Two types of wireline products were showcased on this proud December day. The first, branded as the Hormuz series, are 180-degree rotating units geared with dual drums and designed for combined E-line and slick line operations.

Multitaskers in their own right, the units are equipped with advanced data acquisition technology and the latest operation control systems.

Taking centre-stage however was the Hormuz-45, a new conceptual well services product customized for the Oman oil and gas market. It has been designed to provide integrated workover solutions by delivering E-Line logging, slick line

operations, integrity testing, crane lifting and continues rod running services all in one unit, according to Majid al Shandoudi, General Manager – RAY International Oil & Gas. As a creative solution that offers both timewise and cost-wise efficiency, the units are being pitched as timely given the current challenging oil & gas market environment.

Distinguishing features of the wireline units as follows: 180-degree unit cabin rotational movement feature; Automated speed control; Automated cable slack and tension control; Wellhead / flow line pressure recording; Real-time data transmission and Remote data access through internet; Well completion schematics embedded in the system during operation; and Compatibility with other acquisition system brands to meet customer preferences.

Laudable feat

For RAY International LLC, the wireline units represent another feather in the cap of a wholly Omani company that has been held up as an unrivalled success story in Oman’s oil and gas sector.

Launching operations in 2005 as a

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INDUSTRY EXCELLENCE

training services startup with only five employees, RAY International has evolved over the ensuing 10 years to become a well-diversified business corporation with interests spanning Technology, Design & Environmental Engineering, Construction, Services, Manufacturing, Trading, Training and Logistics.

With over 2,000 employees on its rolls, RAY International LLC is also one of the largest private sector firms in the Sultanate. And as it grows its regional and international presence, the size of its overseas workforce continues to burgeon as well. Branches are currently in operation in the GCC and Thailand.

Plans are afoot to open new overseas offices in other countries as well.

From the outset, RAY International’s growth has been dictated by an underlying philosophy that champions, among other things, employment generation for Omani nationals, In-Country-Value (ICV) generation, import substitution, and the utilisation of locally avail-

able resources. All of these objectives form the essential bedrock upon which the LLC’s subsidiaries and joint venture partnerships have been established over the past decade-and-a-half.

To date, there are six core business verticals that form part of the RAY’s expanding portfolio. They are as follows:

wide array of high-tech engineering products and services targeting at the utility, infrastructure, and oil and gas segments of the economy.

RAY International Oil and Gas Focused exclusively on the oil and gas industry, this subsidiary specialises in operating workover rigs, and providing wireline as well as a wide range of well services to oil and gas

RAY INTERNATIONAL’S GROWTH HAS BEEN DICTATED BY AN UNDERLYING PHILOSOPHY THAT CHAMPIONS, AMONG OTHER THINGS, EMPLOYMENT GENERATION FOR OMANI NATIONALS, IN-COUNTRY-VALUE (ICV) GENERATION, IMPORT SUBSTITUTION, AND THE UTILISATION OF LOCALLY AVAILABLE RESOURCES RAY International LLC Popularly referred to as RAY Energy, this division forms the flagship of the Group with activities spanning various engineering disciplines, construction, and services.

The subsidiary also distributes a

companies. A well-motivated and innovation-minded team of professionals helps clients unlock the full potential of their energy resources.

RAY International Skills and Development Delivering on its remit to prepare

February 2016

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RAY International Skills and Development is central to RAY’s goal of supporting local employment and ICV generation.

young Omanis for rewarding careers in the oil and gas industry, this division is central to RAY’s goal of supporting local employment and ICV generation. It operates a one-of-a-kind training complex at Halban which is equipped to train nationals in a variety of skills linked to oil and gas operations. Of late, the facility has been in the news for its success in the training of Omanis as 6G welders.

RAY Ecologic Services A specialist in environmental solutions, RAY Ecologic helps clients conform to environmental safety standards and the management of industrial wastes and effluents, among other pollution related challenges. The company’s total waste

management solutions have been well-received by the industry.

RAY Seven Points International The trading, logistics and maintenance arm of the group, Seven Points International caters to the requirements of not only RAY subsidiaries but also clients across the industry. The division operates a fully furnished workshop that is equipped to undertake engineering support services for heavy equipment, body shop repairs, and vehicle modification to meet Oil & Gas industrial specs.

RAY Automotive Launched in 2014, this relatively new outfit is the authorised dealer in the Sultanate for the King Long brand luxury and semi luxury coaches, and other automotive products.

Europoles Middle East A joint venture between RAY and Europoles GmbH of Germany, Europoles Middle East operates an industrial facility in Nizwa Industrial Estate where spun concrete poles are manufactured for the Oil and Gas, infrastructure and utility sectors.

Jobson Middle East Marine services, repair & maintenance, spare parts supplier for yachts, commercial ships, defense, etc.

Terratech International – Polymer stabilization chemistry: Bonds soil particles and aggregates together, polymer evaporates and forms a film in the soil matrix. The resultant matrix is hard and wear resistant, develops cohesion between large and small particles, and durable and wear resistant, easy to install using standard construction methods, long lasting with low cost maintenance, creates a durable hydrophobic wear layer which is de-

signed to bio degrade unless maintained.

Commitment to excellence Given the scope and scale of its operations, RAY International oversees an expanding network of support infrastructure and facilities established at key locations around the Sultanate. In Ghala in the capital region, the company operates a roughly 1,000 sq metre site that serves as a warehouse for the storage and forwarding of a variety of energy and oilfield related equipment. Also in Ghala, the company operates an API certified lab that is specifically designed to test insulating fluid used in transformers, as well as industrial oils used in gearboxes, pumps, hydraulic, motors and turbine systems.

Additionally, a strategically located yard at Adam doubles as a stopover point for staff en route to oil and gas fields located further south. A base camp suitably equipped with all amenities and services houses a number of RAY staff. Elsewhere in central Oman, a 20,000 sq metre facility at Mukhaizna is equipped for workover rig, wireline and vehicle repair. A 300-member camp located on the premises has won a number of awards from Occidental of Oman for its high standards.

As one of Oman’s most acclaimed private sector corporations, RAY International LLC has amassed an array of international, regional and national awards in recent years.

The most prestigious is His Majesty’s Factory Cup, a hugely coveted award that goes to the top five industrial firms in the Sultanate. Europoles Middle East, a joint venture partnership, won the honour for three consecutive years during 2011 – 2013.

Earlier, in 2011, RAY International LLC scooped the highly sought after ‘Asia’s Best Employer Brand Award’ for the Asian region. A year later in 2012, the Group was recognised for its commitment to quality and excellent at the 14th International Quality Convention held at Geneva, Switzerland.

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OPAL FRATERNITY

OPAL’s growing family:

335 members and counting!

Be a proud member of the OPAL fraternity!

If you are vendor of products and services catering to the oil and gas sector, join OPAL and benefit from the Society’s expertise and reach to achieve your strategic and business growth objectives.

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Company Name

Company Name

Company Name

1

Ali Al-Aufy Trading Company LLC

23

Al Naba Supplies & Catering Services LLC

45

Ardiseis -Oman Branch

2

Abraj Energy Services LLC

24

AL Ramooz National LLC

46

Asali Oil & Gas Services

3

Advanced United Technical Services LLC

25

Al Romal Golden Petroleum Services LLC

47

Asha Enterprises LLC

4

Advanced Oilfield Technology Co. LLC

26

Al Safa Environmental & Technical Services LLC

48

Axis Engineering

5

AIB Vincotte International & Partners LLC

27

Al Saj Al Abiyad Trading & CONT CO

49

Ba Omar Oil Field Services Co.

6

ANWAAR FAHUD TRADING CO

28

Al Sumri Trad. & Cont. Est.

50

S.J Abed & AL Sulaimi Catering Group LLC

7

A’ Sharqiya Energy Service LLC

29

Al Tasnim Enterprises LLC

51

Bahwan Engineering Co. LLC

8

AIRMECH OMAN LLC

30

Al Turki Enterprises LLC

52

Bahwan Exel LLC

9

Ajib Trading LLC

31

Al Watanyiah Oil & Gas LLC

53

Bahwan IT LLC

10

Schlumberger Oman & CO. LLC

32

Al Watanyiah United Engineering & Contracting Co.

54

Bahwan Lamnalco SAOC

11

Al Amjad Trading Company (TRACERCO)

33

Akzo Nobel Oman SAOC

55

Bahwan Logistics LLC

12

Al Athnain Co. LLC

34

AMAL PETROLEUM SERVISES CO

56

Bahwan Projects & Telecom LLC

13

Al EZ Trading,Transport & Contracting Co. LLC

35

Amlaak Asharqyya LLC

57

Baker Hughes LLC

14

Al Ghalbi International Engineering & Contracting LLC

36

Amran Establishment LLC

58

Bauer Nimr LLC

15

Al Hajiry Trading LLC

37

Arab Sand OasisTrad.&Cont.Est.

59

Benon Oil Services LLC

16

Al Harsoosy Trading& Cont.Co

38

Arab Sea Line Trading & Contracting

60

Best Oil & Gas Solution LLC

17

Al Hassan Engineering Co. SAOG

39

Arabian Drilling Services LLC

61

BGP Oil & Gas Services LLC

18

Al Katheery Trading & Cont EST

40

Arabian Industries Manufacturing LLC

62

Bin Muqadam Engineering LLC

19

Al Khalij Heavy Equipment & Engineering LLC

41

Arabian Industries Projects LLC

63

Bishara Establishment L.L.C

20

Al Khatma Transport & Trading Co.

42

Arabian Industries Technical Support LLC

64

BP Exploration (Epsilon) LTD. Oman Branch

21

Al Madina Logistics Services

43

Arabian Training & Safety Co.

65

Bureau Veritas Middle East Co. LLC

22

Al Maha Petroleum Products Marketing Co. SAOG

44

Arabian Training Center LLC

66

Cactus Premier Drilling Services

February 2016

95

Company Name

Company Name

67

Cadres Oil Tools And Services

107 General Electric International LLC

68

Challenges Oilfield Services LLC

108 Geo Chem Middle East LLC

69

Cape East & Partners LLC

109 GeoMax Energy Systems LLC

70

Carillion Alawi LLC

110

Geo-Resources Consultancy

71

Catering & Supplies Co. LLC

111

Germanischer Lloyd Muscat LLC

72

CC Energy Development S.A.L (Oman)

112

Glass Point Solar Muscat LLC

73

CEVA Logistics LLC

113

Global Computer Services LLC

74

Citrine Trading & Services LLC

114

Global Industrial Services LLC

75

CGG Services (Oman)

115

Global Institute for Management & Technology LLC

76

Compass Oil Services L.L.C

116

Golden Global Logistics LLC

77

Consolidated Contractors Co. Oman L.L.C

117

Great Wall Drilling Co.

78

Dar Al Ataa Trading & Services

118

Gulf Agency Company (Oman) LLC

79

Dar AL Sahra Energy Services

119

Gulf Beijing Hengju LLC

80

Dawood Contracting LLC

120 Gulf Business Machines Co. LLC

81

Dawood Engineering Consultancy

121

82

Delta International Projects & Engineering LLC

122 Gulf Drilling LLC

83

Desert Byrne Drilling L.L.C

123 Gulf Energy LLC

84

Desert Shield Co LLC

124

85

Dekra Oman LLC

125 Gulf Polymer Technology LLC

86

DODSAL Engineering & Construction LLC

126 Haimo Technologies & Co. LLC

147

87

Douglas OHI LLC

127

148 Insight for Financial & Busines Consulting LLC

88

Dover Middle East LLC

128 Halliburton

149 International Information Technology Co.LLC

89

Draieh Catering & Services LLC

129 Hasan Juma Backer Trading & Contracting Co.LLC

150 ION Exchange & Company LLC

90

Drake&Scull International

130 Hema Oil and Gas LLC

151

91

Electroman L.L.C

131

152 Jalmood National

92

Enerflex Middle East LLC

132 Heavy Equipment Maintenance & Trading L.L.C

153 Joannou & Paraskevaides Oman L.L.C

93

Exceed IT Services

133 Hitech Inspection Services LLC

154 Khatib & Alami and Partners

94

Exova Limited LLC

134 Hofincons & Company LLC

155 Knowledge Grid LLC

95

Exterran Middle East LLC

135 Ibhar Integrated LLC

156 KPMG

96

Fahud Desert Trading Co. LLC.

136 IMTAC LLC

157

97

Fairdeal Trade & Contg. Est. LLC

137

158 Larsen & Toubro (Oman) LLC

98

Falcon Oilfield Services LLC

138 Industrial X-Ray & Allied Radiographers LLC

159 Larsen & Toubro Limited Hydrocarbon ( Oman Branch)

99

Fast Track Services

139 Inma Technologies LLC

160 Lin Scan Nationl Pipe Line Services LLC

100 Fire & Safety Equipment Trading Co. LLC

140 Intaj LLC

161

101

141

162 Loay International LLC

First Filter LLC

Gulf Construction Co. LLC

Gulf Petrochemical Services & Trd. LLC

Hal Services LLC

Hatat Polyclinic LLC

Indian Oiltanking Engineering & Construction Services LLC

Integrated Petroleum Services Company LLC

Company Name International Drilling Services LLC

Jahanpars International LLC

Lamor Middle East LLC

Legend Worldwide LLC.

102 Fishing Remedial Expert

142 Intelligent Drilling Services LLC

163 Maskn Construction & Development LLC

103 FOS Energy LLC

143 Intergrated Drilling Fluids Solutions LLC

164 Majan Shipping & Transport Co.LLC

104 Fugro Middle East & Partners LLC

144 International Business Development Co. LLC (IBD)

165 Majees Technical Services LLC

105 Galfar Engineering & Contracting SAOG

145 International Desalination & Water Treatment LLC

166 Manadher Al Sahra Trading LLC

106 Gemini Energy LLC

146 International College of Engineering & Management

167 Maqshan Oil & Gas Services SAOC

96

OPAL FRATERNITY

Company Name 222 Overseas Technical Inspection Services LLC 223 Parsons International & Co.LLC 224 Pentagon Oman LLC 225 Petrofac E & C Oman LLC 226 Petrogas Rima LLC 227 Petro Kerui LLC 228 Petroleum Polymer Co. L.L.C 229 Petron Gulf LLC 230 Petrospec Engineering LLC 231 PIH Services ME LLC 232 Pioneers Petroleum Services Company Name

Company Name

233 Powertech Engineering LLC

168 Marine Technology Co. LLC

195 Occupational Training Institute

234 Prime Teknica LLC

169 Marmul Falcon Trad & Co LLC

196 OFSAT Limited Company LLC

235 Process Instruments LLC

170 MB Petroleum Services L.L.C

197 OHI Petroleum & Energy Services LLC

236 Proscape LLC

171

Medco LLC

198 OHI Telecommunication Co.LLC

237 PSA marine Qalhat SAOC

172

Middle East Bridge LLC

199 OHL Industrial and Partners LLC

238 Qalhat Real Estate Investment &Services LLC

173

MHD Training isstitute LLC

200 Oilfield Inspection Services LLC

239 Qarn Muscat LLC

174

Middle East Consulting & Engineering LLC

201 Oman KCA Deutag Drilling Company

240 Ras Al-Hamra LLC

175

Mideast Data Systems LLC

202 Oman Air (Oman Aviation Services Co.) (SAOG)

241

176 Midwest Oilfield Services LLC

203 Oman Drilling Systems LLC

242 Rees Oil & Gas Services LLC

177

204 Oman Fiber Optic Co. A.O.G

243 Riyam Engineering & Services LLC

178 Modern Salt Industries & Trading Co. LLC

205 Oman Gas Company S. A. O. C.

244 Rukun Al Yaqeen International Oil & Gas LLC

179 Mohsin Haider Darwish LLC

206 Oman Gulf Company LLC

245 Rukun AL Yaqeen Skills Development

180 Mott MacDonald & Co. LLC

207 Oman Industrial Coating Centre LLC

246 Ryboa Haima Trading Co.LLC

181

208 Oman International Group (OIG) LLC

247 Bahwan Cybertek LLC

182 Mustafa Sultan Security and Communication Co LLC

209 Oman Mechanical Services Company Ltd. LLC

248 Saeed Bin Masoud International

183 Nadhira Enterprises LLC

210 Oman Metal Industries & Contracting Co. L.L.C

249 Sahil Martoub Trading LLC

184 Naseem Al Salam Trad& Cont Est

211

250 Saih Al Rawl Gas Co. LLC

185 National Automotive Higher Institute

212 Oman Oil Company Exploration & Production LLC

251 Samara United

186 National Drilling & Services Co. LLC

213 Oman Oil Marketing Co.

252 Sanaa Desert Trading LLC.

187 National Hospitality Institute SAOG

214 Oman Oil Industry Supplies & Services Co. LLC

253 Sarooj Construction Company

188 National Oilfield Supply Co. LLC

215 Oman Pumps Mfg.& Engineering Services Co.SAOC

254 Saud Bahwan Automotive LLC

189 National Oilwell VARCO Muscat LLC

216 Oman Sea PetroServices LLC OSPS

255 Schenker Khimjis LLC

190 National Petroleum Construction Co.

217

256 Scomi Oiltools Oman LLC

191

218 Operation Excellence L.L.C

257 Sea and Land Drilling Contractors Inc.

192 Nimr Contracting Company LLC

219 Orbital Projects & Services LLC

258 Seeh Al-Sarya Engineering LCC

193 Norris Production Solutions Middle East LLC

220 Oryx Oil & Gas Services LLC

259 Seven Points International LLC

194 Oasis Trading & Equipment Co. LLC

221 Overseas Projects & Equipment Co. LLC

260 SGS Gulf Limited

Modern Arab Laboratories LLC

Mud Industries LLC

National Training Institute LLC

Oman National Engineering & Investment Co.(SAOG)

Oman TradaNet LLC -OTN

Reem Scientific and Energy Technology and Trade LLC

February 2016

97

Company Name

Company Name

Company Name

261 Seven Seas Petroleum LLC

279 Steamtech & Co. LLC

297 TR Engineering LLC

262 Shaher United Trading & Cont. Co.

280 STEP Oiltools Services LLC

298 Training & Development Institute (TDI) LLC

263 Shaleem International LLC

281 Sultan Bin Sood Bin Ahmed AL Shidhany

299 Travel City LLC

264 Shaleem Petroleum Co. SAOC

282 Svitzer Sohar LLC

300 TRC Engineering LLC

265 Sheida International Co. LLC

283 Tamkeen Fracking LLC

301 Trowers & Hamlin

266 Shell Oman Marketing SAOG

284 Tarban Trad.& Services LLC

302 TruckOman North

267 Shuram Oil & Gas

285 Target LLC

303 TruckOman LLC

268 Sievert Technical Inspection LLC

286 Tawoos Industrial Services Co. LLC

304 Tuboscope & Co. LLC

269 Sinogulf Energy Enterprises LLC

287 Technical & Administrative Training Institute

305 TUV SUD Middle East LLC

270 Smith International Oman LLC

288 Technical Trading Co. LLC

306 Unique Energy LLC

271

289 The Oman Construction Co. LLC (TOCO)

307 United Engineering Projects Co. LLC

Waleed Catering & Services Company

308 United Facilities Managements Services LLC (COMO) 309 United Gulf Shadows LLC 310 United Media Services LLC 311

UNITED SYSTEMS

312 Unity Fire & Safety Services LLC 313 Value Engineering Center LLC 314 Vanguard Oil Tools Services LLC 315 Vanguard Reservoir Surveillance Services LLC 316 Vanguard System & Services International LLC 317

Velosi LLC

318 Vijay Tanks & Company LLC 319 Vision Advanced Petroleum Solutions LLC 320 Waleed Associates LLC 321 Weatherford Drilling International (Oman) LLC 322 Weatherford Oil Tool Middle East Ltd 323 Weir Solution FZE-Oman Branch 324 Well Maintenance Servies LLC 325 Well Solution Services LLC 326 Wipro Gulf LLC 327 Worley Parsons Oman Engineering LLC 328 Writer Relocations & Partners LLC 272 SNF Oman LLC

290 The Petroleum Projects (Petrojet & Partners LLC)

329 Zawawi Business Development LLC

273 Socat LLC

291 Thomassen Services & Contracting Co. LLC

330 Zubair Oil & Gas (ZOGAS)

274 Sohar Ashapura Chemicals LLC

292 TMK/Gulf International Pipe Industry LLC

331 Ali Al-Aufy Trading Company LLC ‘

275 Space-Tech Trading Est

293 TMTEC Trad & Technical Services LLC

332 Arabian Oil & Gas field Services LLC

276 Special Oilfield Services CO. LLC

294 Torque Trade & Control Systems LLC

333 Descan Engineering Oman LLC

277 Special Technical Services LLC

295 Vanguard Engineering & Oilfield Services Co. LLC

334 Khazan Logistics LLC

278 Speed House Building Construction Asso

296 Taylor Woodrow Oman LLC

335 Nafal Contg. & Tradg. Co. LLC

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CALENDAR

Upcoming events 6-9 March 2016 11th Annual Asset Integrity Management Summit, organised by IQPC Middle East with the support of Petroleum Development Oman and Orpic, and set to take place at Al Bustan Palace – A Ritz Carlton Hotel, Muscat. The theme: ‘Maintaining Asset Integrity in a Low $/Barrel Price Environment’.

13 – 15 March 2016 The Oman Refining and Petrochemical Exhibition & Conference, organized by Omanexpo LLC, will take place at the Oman International Exhibition Centre in Muscat.

27 March 2016 21-23 March 2016

OPAL Annual General Meeting at Crowne Plaza Hotel, Muscat, 11am.

10th Edition of Oil & Gas West Asia Oil & Gas Exhibition & Conference, organised by the Society of Petroleum Engineers (SPE) in collaboration with Oman Expo, under the auspices of the Ministry of Oil & Gas. The venue is the Oman International Exhibition Centre, Muscat. (www.ogwaexpo.com)

9 - 12 October 2016

Nov 2016

EAGE/SPE Workshop on Tar Mats and Heavy Oil, organised by SPE International. The theme: Fluid Characterization and Development / Operational Challenges. Venue to be announced.

OPAL Business Best Practice Awards (Details to be announced)

January 2016

99

INVESTING FOR GROWTH Shell Oman is consistently investing for growth, across our business.

From an expanding network of service stations and a portfolio of world-class products and services, to a strong presence at air and sea ports, Shell Oman’s investments do more than increase our market share. It also fuels the development of local community businesses across the Sultanate – and contributes to the overall growth of the nation’s economy.

www.shelloman.com.om

Petroleum Development Oman (PDO) is the leading oil & gas exploration and production company in the Sultanate of Oman. It accounts for around 70% of the country's crude oil production and nearly all its natural gas supply.

We operate some of the most technically challenging ďŹ elds in the world, and have pioneered a range of Enhanced Oil Recovery (EOR) techniques.

Our approach to business is based on the concept of good corporate citizenship. We operate in an environmentally responsible and sustainable fashion; we deal transparently and ethically with contractors and partners; and we invest and participate meaningfully in social initiatives.

We endeavour to be renowned and respected for the excellence of our people and the value we create for our nation and our stakeholders.