LOGISTICS
RESEARCH & DEVELOPMENT
ART
Schenker Khimji’s – Placing Oman on Global Map
Dr. Said Salim Al-Mufarji, GM-R&D, MB Petroleum Services
Greg Evans – The 'Unconventional' Painter
Jan-Feb 2012
High Expectations
OPAL's new CEO Mohamed Al-Harthy has a task cut out
FROM THE EDITOR’S DESK No 20
Jan - Feb 2012 LOGISTICS
RESEARCH & DEVELOPMENT
ART
Schenker Khimji’s – Placing Oman on Global Map
Dr. Said Salim Al-Mufarji, GM-R&D, MB Petroleum Services
Greg Evans – The 'Unconventional' Painter
Jan-Feb 2012
UP TO THE HILT
High Expectations
OPAL's new CEO Mohamed Al-Harthy has a task cut out
I
n the last issue we talked about the different aspects of the growing importance of gas in the global energy sector. The speakers at Gas Arabia Summit, held at Muscat in December last year, reiterated similar viewpoints by calling for an urgent need to increase investments towards improvisation of technology and raise exploration and production activities apart from developing better trade practices in the gas space.
DESIGN Senior Art Director Sandesh S. Rangnekar Senior Designer M. Balagopalan Senior Photographer Rajesh Burman Production Manager Ramesh Govindraj MARKETING Business Head Jacob George Senior Advertising Manager Avi Titus Advertising Managers Sanjeev Rana Arif Abdul Bari CORPORATE Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Vice President Ravi Raman Senior Business Support Executive Radha Kumar Business Support Executive Zuwaina Said Al-Rashidi
As we move into the New Year, perhaps the greatest worry for the global energy market particularly the GCC region is not prices or investments. The changing dynamics of geopolitics with US and allies tightening the sanctions against Iran is the threat number one for the energy players and consumers across the world. Iran is threatening to block the busiest oil tanker route on the planet and Uncle Sam is not in a mood to budge from its tough stance. Are we heading for a face-off with both players ready to seize the advantage? According to experts, the situation is highly alarming but not yet reached a point of no return. The oil prices have already started moving up and if the tension leads to a military confrontation, we may see oil at $200 per barrel! It will be a catastrophe for the global economy which is still grappling with severe slowdown. We do hope that better sense will prevail and a solution could be worked-out through diplomacy. With Iran as an immediate neighbour, it is going to be a precarious year for Oman and will test the diplomacy strengths of the country to the hilt. The situational analysis on page 28 by OGR’s columnist John C.K. Daly on the subject is a must read!
Distribution United Media Services LLC Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code - 112 Muscat, Sultanate of Oman Tel: (968) 24700896, Fax: (968) 24707939 Email: akshay@umsoman.com All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for advertising content. Copyright © 2012 United Press & Publishing LLC Printed by Oriental Printing Press Correspondence should be sent to: Oil & Gas Review United Media Services LLC PO Box 3305, Ruwi 112, Sultanate of Oman Fax: (968)24707939 Email: akshay@umsoman.com
The current issue features an exhaustive interview with OPAL’s new CEO Mohamed S. Al-Harthy. The geologist par excellence in the hot seat talks about how the organization is going to change gears in 2012 and beyond. Akshay Bhatnagar Group Managing Editor akshay@umsoman.com
Read the emag: www.ogronline.com An
2
Presentation
Jan-Feb, 2012
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CONTENT
32 COVER STORY
THE GAME CHANGER Oman Society for Petroleum Services’ (OPAL) new CEO, Mohamed S. Al-Harthy, shares his views on a wide range of industry issues apart from talking about how OPAL is going to change gears under the new leadership
REGULARS:
8 51 56 57 59
60
4
Jan-Feb, 2012
Oman News Tender Watch Commercial Vehicles Events Calendar Job Postings
60 Alternative Energy 62 OPEC Market Report 67 Global Round-Up 70 Regional Round-Up 80 Book Corner
Al Hassan Engineering The Partner of Choice for Oil & Gas, Petrochemical & ReÄnery Projects Our technological expertise, commitment to Health, Safety and Environment (HSE) and quality assurance have established us as one of the major EPC Contractors/Construction partners in the Oil & Gas business.
*<99,5; 4(169 7961,*;: ¶ 603 .(: :,*;69 z Zauliyah Gas Compression Project Phase - 3 for PDO (EPC)
z Saih Nihayada Depletion Compression Project for PDO/GS E&C
z Kawther Gas Depletion Compression Project for PDO/Petrofac
z Asab-3 Gas Project for GASCO Abu Dhabi /Technip
PDO Nimr-C Full Field Water Injection Project (EPC)
;LJOUPJHS ,_WLY[PZL ¶ 6PS .HZ -HJPSP[PLZ ` EPC services for Oil and Gas production facilities comprising Process and Utility/offsite units, Åow lines, pipelines, OHL. This requires handling of various types of equipment (pumps, compressors, heat exchangers, Än-fan coolers, Åares, utility packages, etc.), piping & pipelines of various material grades, Electrical Transformer & Switchgear Control & Relay Systems as well as SCADA System. ` Complete range of Construction / Erection services when working as sub-contractor
;LJOUPJHS ,_WLY[PZL ¶ 9LÄULYPLZ 7L[YVJOLTPJHS 7SHU[Z
General Construction Works for Salalah Methanol Project
Civil, Mechanical, Piping, Electrical & Instrumentation Works for ReÄneries & Petrochemical Projects involving: ` Heavy Concreting and De-watering works, incl. foundations for Static and Rotary Equipment ` Erection of equipment for example Fired Heaters, Boilers, Reactors, Columns and other process plant equipment ` Piping erection handling various types of materials (SS, DSS, High Nickel-Chromium Steel, Titanium, Aluminum, Alloy Steel, HDPE, etc.)
Nominated amongst Top 5 in GCC Contractor of the Year Category
National Award Winner in Oil & Gas Category for 2011
Al Hassan Engineering Company SAOG PO Box 1948, Ruwi, Postal Code 112, Sultanate of Oman Tel: +968 24810575 • Fax: +968 24815953 E-mail: contracting@al-hassan.com Web: www.al-hassan.com
CONTENT UPFRONT
GEOPOLITICS
14 Curtailing Growth in the Wage Bill
28
Critical for Oman: IMF
‘Face-Off’ by John C. K. Daly
RESEARCH & DEVELOPMENT
38
GUEST COLUMNISTS 24 Dr.Salman Ghouri, Qatar Petroleum
Said Salim Al-Mufarji, GM-R&D, MB Petroleum Services
58 Shahriar Hendi, Congage China Inc. 66 Dr.Sara Vakhshouri, Independent Energy Consultant
CONTRACTING
52
LOGISTICS
Mustafa J. El Alwan Managing Director Nafal Contracting & Trading Co
44 Schenker Khimji’s 48 Oryx Metal Industries
ART Greg Evans The ‘Unconventional’ Painter
EVENT REPORTS
BEYOND OIL & GAS
18 Oman Debate
76 Auto
20 Gas Arabia Summit 54 Al Mar’a Excellence Awards 64 World Petroleum Congress
72 6
77 Property 78 Lifestyle 79 Golf
Jan-Feb, 2012
OMAN NEWS
Shell Oman Retail pumps record 1.5bn litres in 2011
Shell Oman Marketing Company crossed a record retail sales volume of over 1.5 billion litres of fuel in 2011, according to a company press release. ‘This is due to the strength of the Shell brand, quality of products and customer service. This is a clear sign of Shell Oman’s market leadership not only in retail, but also in lubricants, commercial fuel, aviation
fuel and marine fuel,’ the release further stated. Adil Ismail Al-Raisi, Managing Director of Shell Oman Marketing Company said: “We particularly thank our customers for choosing Shell products over the years. We also thank our staff, retailers and business partners for such commitment and strong delivery.”
Shell Oman reaches out to its customers through a growing network that currently consists of 144 stations across the country. An independent market research conducted in the third quarter, 2011, indicated that Shell Oman successfully covers 95 per cent of the population through its conveniently located stations.
Renaissance plans to raise new growth capital Renaissance Services SAOG has announced that its Board of Directors has approved the raising of up to RO50 million of additional capital through a quasi-equity instrument, subject to regulatory provisions and the shareholders’ approval. The offering will be open to current shareholders and new investors through private placement. The proceeds will be used to fund the company’s expansion plans, primarily in the Marine business in the GCC and Caspian regions, and will also be used to further strengthen the company’s balance sheet.
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Jan-Feb, 2012
Renaissance, through its subsidiary Topaz Marine and Engineering, has identified opportunities in the Arabian Gulf and the Caspian Sea as the focus for its near term growth. Topaz also has fledgling operations in West Africa and other new oil markets which have been targeted for growth in the longer term. Samir Fancy, Chairman of Renaissance Services, said, “This capital raising provides Renaissance with the financial flexibility to continue our expansion plans and grow our core business, which continues to deliver a strong performance.”
“We have made significant progress in addressing the challenges of 2011 and are pleased by the support shown in us by our investors. We are confident that the fundamental strengths of our business model will drive profitable growth in 2012 and beyond. The new capital will help us to take advantage of future growth opportunities available to us in our core market,” Fancy added. Renaissance has appointed BankMuscat as Financial Advisor and Arranger of the capital-raising.
FitchRatings maintains MB Holding, MB Petroleum rating at ‘BB-’stable FitchRatings has maintained the credit rating of MB Holding & MB Petroleum Services to ‘BB-’ with stable outlook in a recent statement. The financial metrics are commensurate with the ‘BB-’ credit rating and Fitch anticipates that they will stay in this range over our forecast period. The company’s issue rating on $320 million senior unsecured bond issued by its finance subsidiary MB Finance Company is also kept at BB- aligned with the parent company. The report also states that MB Holding Company has a stable outlook despite some operational difficulties at MB Petroleum Services. Stronger performances at other business units, such as oil production and mining, have offset the weaker performance at MB Petroleum Services. Fitch views MB Holding Company’s liquidity as broadly adequate. Near-term debt maturities are less of a concern than in 2010, due in part to the issuance of the $320mn Eurobond. Cash plus available credit lines are just enough to cover near-term debt maturities but additional financial flexibility is presently limited. MB Holding Company has demonstrated access to both international debt capital markets and syndicated bank financing. Access to additional financing via local banks also appears satisfactory. Fitch anticipates that MB Holding Company has some additional financial flexibility available through a reduction in Capex, if needed.
Oman Oil Marketing renews agreement with Khimji’s Mart Oman Oil Marketing Company (omanoil) has renewed its agreement to manage and operate the company’s ahlain stores with Khimji’s Mart LLC. A frontrunner in quality and convenient shopping experiences that cater to Oman’s residents, 19 of the 74 ahlain stores have been managed by Khimji’s Mart over the last five years. With particular focus in Salalah, Sharqiyah and Dakhiliyah regions, omanoil exemplifies its perseverance to grow a stronghold presence across the various Wilayats of the Sultanate. Adil Ghouse, CEO, Khimji Ramdas Consumer Products Group said, “The association with omanoil is unique because in a relatively short time span, we have successfully redefined the experience of convenience shopping. We are augmenting the industry standard for quality customer service by offering varied shopping preferences and unlimited options in both international and regional brands. Our customers are vast and diverse and we are promising to be a friend on the road by catering to the daily requirements of citizens and residents.” Ahlain convenience stores operate 24-hours every day of the week, housing a range of premium products reinforced by distinct customer service. The stores also feature onsite ATM machines and Quick Service Restaurants (QSRs) that include some of the world’s most iconic names such as Burger King, Dunkin’ Donuts and Baskin Robbins.
PDO funds three social projects Petroleum Development Oman (PDO) has recently signed three Memoranda of Understanding (MoU) with the Ministry of Social Development, Ministry of Education and the Ministry of Agriculture & Fisheries Wealth highlighting PDO’s continued commitment to support the wider Omani society. The agreement with the Ministry of Social Development was to provide Muscat Disabled Children Centre with a 24-seatfit-for- purpose bus to help transport the 137 cerebral palsy stricken children for alKhoudh-based centre. This demonstrates PDO’s commitment to HSE standards by funding for buses designed specifically for people of special needs. The bus is equipped with special lift for easier access by children from and out of the bus and straps that lock down wheelchairs to secure its movement and protect the passenger during breaking. PDO is also upgrading 58 interactive classrooms that the Company had earlier provided to various schools in Oman through an agreement with Ministry of Education. This comes in line with the government’s efforts to improve the teaching methods and enhance student achievement. Also, and as part of the government direction to promote fisheries wealth PDO signed a MOU with Ministry of Agriculture and Fisheries Wealth to provide 300 artificial reef balls at three different sites in Muscat to attract different species of fish, eliminate the safety hazards associated with fishing in the vicinity of restricted areas, expand the fishing area for the local fishermen and enhance biodiversity around the coral reefs. “These initiatives are a few examples to demonstrate PDO’s commitment to support the community where sustainable development is an integral theme of how the company conducts its operations throughout the community,” commented Suleiman bin Mohammed al Mantheri, PDO’s External Affairs and Communication Manager.
Nov-Dec, 2011
9
OMAN NEWS
Oman Oil Marketing gets CMA Corporate Governance Excellence Award The Capital Market Authority (CMA) recognized Oman Oil Marketing Company (omanoil) for corporate governance excellence in the services industry. Over the last nine years, the nation’s visionary fuel and lubricants marketing company has institutionalized a unique framework of processes and procedures that bring transparency, accountability and fairness in its transactions with all stakeholders, stated a company release on the occasion.
OCTAL installs world’s largest reactors for production of highperformance pet OCTAL Petrochemicals has installed the world’s largest reactors of Melt-to Resin technology (MTR) for the production of high-performance PET as the fourth and fifth manufacturing facilities remain firmly on track for completion in May, 2012, according to a company release. To date, one million man-hours have been successfully completed without a single lost-time-injury (LTI) which reflects OCTAL’s strong commitment to safety standards. The expansion will add an additional 527,000 tons per annum of PET bottle grade resin to OCTAL’s current production capacity of 400,000 tons per annum, making it the largest producer in the world on one site. The highly energy-efficient reactors have proven successful for the production of high viscous melts, enabling OCTAL to set the global benchmark for superior product quality and sustainability through the application of the most advanced technology available. The PET resin and sheets produced are acclaimed by international experts to have the lowest carbon footprint, paving the way for others in the industry to follow the company’s pioneering footsteps. 10
Jan-Feb, 2012
The CMA launched the Corporate Governance Excellence Award in 2010 as an innovative competition to inspire the support of Oman’s vision for an internationally recognized and resolute economy. “Year after year, we have demonstrated our ability to internalize and pursue best in class practices thus resulting in positive business returns and earning both investors’ and stakeholders’ confidence and goodwill,” said Oman Oil Marketing’s CEO Eng. Omar bin Ahmed Qatan. “As we continue to grow and evolve, we remain committed to maintaining high standards of corporate governance over-andbeyond compliance with requirements through ongoing assessment and improvement to enhance shareholder value.”
Shell Oman Marketing in a pact with Oil Tanking Odfjell Terminals Shell Oman Marketing Company has signed a 10-years agreement with Sohar Industrial Port based Oil Tanking Odfjell Terminals & Co. to receive and store lubricant raw materials known as base oils for Shell’s Mina Al Fahal Lubricants blending plant. Shell Oman lubricant blending plan is a state of art ISO 9001:2008 certified plant currently producing over 60 million liters of different types and grades of lubricants for various uses ranging from consumer cars to aviation, marine and industrial products. Currently, the plant produces various products for local market and 70 per cent is exported to over 22 countries in the Middle East, South Asia and Central Asian states. Oiltanking Odfjell Terminals & Co. LLC is located in the Port of Sohar with a current tank capacity of over 1.2 million cubic meters ideally positioned to support trade and cargo flows within the Middle East region as well as flows from the Gulf to other continents and regions. OOT is by far the most diversified terminal in the region offering flexible facilities and infrastructure for the storage and handling of petroleum products, chemicals and gases. The upcoming additional storage tanks for Shell Oman base oil products are part of a bigger expansion project adding more chemical capacities to OOT’s current operations.
Fuelling Musandam’s Growth Oman Oil Company Exploration and Production (OOCEP) has initiated the construction of a $600mn hydrocarbon project with a production capacity of 45 million cubic feet of treated gas and 20,000 barrels of oil per day in Bukha, Musandam
Musandam, Oman’s strategically important exclave overlooking the Strait of Hormuz, is all set to host a major $600mn oil and gas processing plant with huge potential to spur economic growth in the peninsula. Operated by Oman Oil Company Exploration and Production (OOCEP), the upstream subsidiary of Oman Oil Company, and situated in the Wilayat of Bukha, the Musandam Gas plant (MGP) will be part of a major integrated development project comprising the West Bukha field development, an offshore production pipeline, and crude storage and export facilities. Expected to start operation in the fourth quarter of 2013, the plant will produce the natural gas to feed Oman’s first gas-based Independent Power Project coming up in Bukha. The plant is also expected to help the Sultanate set up a new oil export terminal on its north coast. The formal construction of the green field plant started recently with a foundation-laying ceremony in Bukha, organised by OOCEP and Hyundai Engineering Company, the prime contractor to build the project. Sayyid Khalifa bin Almurdas bin Ahmed al Busaidi, Governor of Musandam, presided over the ceremony which was attended by Ahmed al Wahaibi, CEO of Oman Oil Company, and Salim al Sibani, CEO of OOCEP, Sang-Rok Sung, Senior Executive Vice-President, Hyundai Engineering Co Ltd and South Korean Ambassador Choe Jonghyun among other dignitaries. Says Salim bin Zaher Al Sibani, CEO of OOCEP, “This is a very significant project for Oman and Musandam Governorate. The Musandam Gas Plant is part of a major integrated development comprising the West Bukha field development, offshore production pipeline, crude storage, and export facilities. The gas will be used to
feed a future power plant to provide reliable electricity for Musandam. Further, the project will act as a foundation for additional oil and gas developments in the region.” According to Sang-Rok Sung, senior executive vicepresident of Hyundai Engineering Co, “This is an important deal for Hyundai Engineering, as it returns to Musandam province with local supporting services and spreads the reputation of HEC’s oil and gas project in the Sultanate.” The total capacity of the gas plant will be 20,000 barrels of oil per day and 45 million cubic feet of treated gas. This project will also entail construction of 23km of subsea pipeline to bring products from West Bukha field to the plant, storage facilities for oil, a jetty for exporting oil and eventually, another four kilometers of export pipeline for the crude oil. The plant will get its feed stock from Bukha and West Bukha oil fields operated by RAK Petroleum. At present, the Sultanate has two offshore fields adjacent to the Musandam peninsula. These
fields, Bukha and West Bukha, are operated by RAK petroleum. The Bukha field has been operating since 1994 and West Bukha since 2008. The production is currently commingled on the Bukha platform and transported via subsea pipeline to the Khor Khawair Processing Plant in Ras Al Khaimah in the UAE. Salim also noted the initial production of gas from the plant will be earmarked for power generation the additional supply will be used for industries. “In the event of gas being available more than Musandam’s requirements, we are interconnecting between the Oman gas grid, the new Musandam grid and the UAE grid via Ras al Khaimah. So there will be a gas interlink between Oman and the UAE via this project.” He also said that the development of blocks 17 and 40, which are part of Musandam governorate, would help in additional supply of natural gas for the processing plant. PetroTel is expected to execute appraisal and exploration activities at block 17 by 2012, Salim informed. Jan-Feb, 2012
11
OMAN NEWS
OIL & GAS PRODUCTION BILL TO TOUCH RO1.3BN Omanâ&#x20AC;&#x2122;s Government is expected to spend RO1.3 billion towards oil and gas production in 2012, stated Darwish bin Ismaeel al Balushi, Minister Responsible for Financial Affairs, while unveiling the budget for 2012. Excerpts of his speech:
A
s regards to the oil prices in the global markets, despite the severity of the global financial and economic crisis and its impact on the advanced economies in particular, the prices (in 2011) remained cohesive and stable at the level of $100 per barrel and it is expected that Brent average price will amount to about $111 per barrel. This stability of the oil prices is supported in terms of the demand by the strong growth of the emerging economies, especially Indian and China, and in terms of the supply by the risks, relating to the oil supplies, arising from the political turmoil in the Middle East and North Africa region. The preliminary forecasts of the Gross Domestic Product (GDP) suggest that the national economy in the year 2011 will achieve a growth of 7 per cent. This growth in national economy is based on the added value of the non-oil activities that are projected to achieve a growth rate of 10 per cent compared with 2 per cent for the oil activities. Regarding the Public Finance, the State General Budget for the fiscal year 2011 was approved with a total expenditure amounting to RO8,130 million and a deficit amounting to RO850 million and was based on the assumption of the oil price at $58, note that the average price of the Oman oil in 2011 amounted to about $102. During the year, additional financial allo-
12
Jan-Feb, 2012
cations had been approved that amounted to RO1.8 billion, most of which was concentrated on the current civil and security expenditures bringing the deficit of the budget to about RO2.6 billion. However, and as a result of the stable global oil prices at a higher level, the actual budget is expected to achieve a financial surplus that may reach about RO1 billion. The general revenues of the State for the year 2012 are estimated to be RO8.8 billion. The oil and gas revenues constitute 81 per cent of the total revenues, whereas the current and capital revenues constitute 19 per cent thereof. The oil revenues have been calculated on the basis of average price of $75 per barrel and average daily production of 915,000 barrels per day. The general expenditure approved in the budget
amounts to about RO10 billion. The investment expenses amounts to about RO2.7 billion, i.e. 27 per cent of the total general expenditure, of which an amount of RO1.4 billion for covering the spending on the development projects and RO1.3 billion for covering the expenses of oil and gas production. The budget for 2012 expects to provide about 36,000 thousand employment opportunities in the Governmentâ&#x20AC;&#x2122;s civil and military apparatuses, in addition to 2,000 jobs in the Government companies. The subsidy provided, directly and indirectly, to the nationals is estimated to be RO1.181 billion. It includes RO640 million subsidies for vehiclesâ&#x20AC;&#x2122; fuel, diesel fuel and cooking gas. The total volume of the expenditure approved within the financial framework of the plan for the years 20112015 amounts to about RO43 billion.
UPFRONT
CURTAILING GROWTH IN
THE WAGE BILL
CRITICAL FOR OMAN: IMF In order to allow for investments in infrastructure and human capital, it is essential to contain wage expenditures, says a report on Oman by International Monetary Fund (IMF). Excerpts of the report:
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Jan-Feb, 2012
L
ooking at the current economic development, the economic activity is accelerating. Driven by new oil extraction technologies and increasing government spending, overall real GDP growth is projected to reach 5.5 percent in 2011 with 6.4 percent growth in the non-hydrocarbon sector. Price pressures have remained contained and average annual CPI inflation is projected at 4.1 percent in 2011. Despite strong economic growth, unemployment among nationals is high and a major social concern. In response, the government has raised the minimum wage for Omani workers in the private sector, established an unemployment benefit, increased the number of government jobs, and raised enrollment in higher education. Fiscal and external balances have strengthened along with higher oil prices. Due to rapid growth in oil revenue and despite an expected 17 percent increase in government expenditure, the overall fiscal and external surpluses are projected to reach 8.2 and 12.7 percent of GDP in 2011, respectively. The rise in expenditure has mainly been driven by increased hiring in response to high unemployment. The economy has been largely unaffected by recent turmoil in international financial markets. While regional unrest has created additional uncertainty, Omani banks have little exposure to the Eurozone. Credit to the private sector has continued to pick up and is projected to grow by over 11 percent in 2011. With about 80 percent of Oman’s oil-dominated exports going to Asia, the impact of the European crisis will be limited as long as it does not translate into significantly lower oil prices. The domestic banking system appears sound. The system is well capitalized, with a capital adequacy ratio of 14.3 percent as of end of September 2011 (against the regulatory limit of 12 percent), and the NPL ratio of 2.6 percent
is below the GCC average. Stress testing conducted by the CBO indicates that most banks are in a position to cope with significant macroeconomic shocks. OUTLOOK AND RISKS The economy is set for continued expansion in 2012. Given a projected 10 percent increase in government expenditure and with some slowdown in hydrocarbon output, overall real GDP growth is projected to edge down to 5 percent in 2012. Inflation is expected to remain moderate at an annual rate of about 3½ percent, and the fiscal and external surpluses are projected to stay high at about 8 percent and 10 percent of GDP, respectively. A large public investment programme is underway and will help sustain growth over the medium term. Major projects in progress include a rail network and new air and sea ports. Government plans also reflect a strong emphasis on education and social infrastructure. With civil investment by the central government projected to average about 16 percent of non-hydrocarbon GDP over 2012-16, annual non-hydrocarbon GDP growth is expected to stay at about 5½ percent over the medium term. Oil production is expected to plateau and then slightly decline, leading to small contraction in real hydrocarbon GDP. The main risk to the medium term outlook is a prolonged drop in oil prices. Higher government spending is raising the oil price that would be needed to balance the budget. The mission projects a breakeven price of $81 per barrel in 2012, rising to $105 by 2016. A drop in oil prices from the prevailing historically high levels could quickly lead to large fiscal deficits. If sustained, lower oil prices could force a pull back in spending and lead to sharply reduced growth in the non-oil economy. The longer-term outlook hinges on economic diversification. Oman’s hydrocarbon reserves are relatively modest and
cannot continue to support economic growth in the long-run. There has been progress towards diversification, with non-hydrocarbon exports – mainly petrochemicals, fertilizers, and metals – now accounting for over 20 percent of total exports. The non-hydrocarbon export industries, however, are highly energy intensive, have not generated many jobs, nor contributed much to government revenue. The overarching policy challenge is to ensure strong and sustainable growth over the long run while addressing the urgent need for jobs. Achieving this calls for (i) strengthening public finances (ii) addressing the causes of high unemployment; and (iii) maintaining macroeconomic stability and supporting financial sector development. STRENGTHENING PUBLIC FINANCES Fiscal sustainability is a key challenge. Increased public sector hiring has for now helped address pressures stemming from high unemployment. But the stepup in spending since the original budget for 2011 has long-term implications and affordability is limited. To avoid a more severe adjustment later, there is an urgent need to start taking preventive measures. Committing to a gradual improvement of the non-oil fiscal balance would help ensure fiscal sustainability. Implementing a fiscal rule targeting long-term fiscal sustainability would help anchor fiscal policy. Based on a standard model of intergenerational equity, and assuming that new discoveries will be able to provide 60 years of the current level of oil production, the projected non-oil fiscal deficit for 2011 is about 9 percent of GDP above the level consistent with constant real per capita consumption out of the country’s petroleum wealth. To eliminate the gap, the mission recommends a fiscal adjustment of at least 1 percent of GDP a year over the medium term. Curtailing growth in the wage bill will be critical. Jan-Feb, 2012
15
UPFRONT
In order to allow for investments in infrastructure and human capital it is essential to contain wage expenditures. More generally, there is scope to achieve greater value for money, including by improving processes for ex ante project evaluation and instituting regular reviews of past spending. In addition, establishing a macro-fiscal unit, casting spending in a multiyear framework, and limiting the number of in-year revisions to the budget would provide greater stability. There is also substantial scope to enhance revenues. Non-hydrocarbon revenue has been declining and currently amounts less than 11 percent of total revenue and only about 5 percent of GDP. A VAT and other steps to widen the tax base would help raise revenue as well as enhance the efficiency of the tax system. Implicit fuel subsidies could also be reduced. These subsidies, estimated at about 12 percent of GDP in 2011, have been increasing along with rapidly growing domestic consumption and higher opportunity costs. Steps to align domestic prices with those in international markets would provide for a more efficient allocation of resources and encourage the development of a less energy dependent production structure. While the bulk of fuel subsidies typically go to the better off, accompanying price increases with more targeted and cash-based forms of social protection would help offset the social impact. ADDRESSING THE CAUSES OF HIGH UNEMPLOYMENT Creating employment for the growing population is a pressing challenge. While overall job growth has been strong, most new jobs have gone to foreign workers. Strikingly, the recent census indicates that the unemployment rate among nationals reached 24.4 percent in 2010, although the high number may include many that are not truly looking for work. 16
Jan-Feb, 2012
To absorb new labour force entrants and significantly reduce unemployment, some 45,000 new positions for Omanis each year will be needed, twice the number achieved in the five years to 2010. To be sustainable, these new jobs will have to be in the private sector. Recent policy actions have led to large increase in public sector employment. From a base of 164,000 public sector jobs in 2010 (excluding security and defense personnel), 44,000 new government positions were created in 2011 and the draft budget for 2012 includes another
Addressing the root causes of joblessness calls for a multipronged approach.
36,000. These measures have alleviated short term pressures stemming from high unemployment but do not address the underlying problems. Addressing the root causes of joblessness calls for a multipronged approach. Removing labor market distortions underpinning high unemployment will require resolving the wage and benefits differentials between the public and private sectors and between Omanis and expatriates. Large-scale job creation will also require strong economic growth as well as transitioning from energyrelated industries into areas with greater employment potential. Simultaneously, there is a need to enhance education and training to ensure that new graduates and job seekers have the needed skills. Raising fees for work visas or instituting
temporary subsidies for hiring and training should be considered as ways of making employment of nationals more attractive. MAINTAINING MACROECONOMIC STABILITY Maintaining macroeconomic stability is a prerequisite for sustained economic growth. Given the peg to the U.S. dollar, ensuring macroeconomic stability rests primarily on fiscal policy, but reducing excess liquidity in the banking system will also be important. The mission encourages the CBO to continue to proactively mop up excess liquidity and be ready to apply macroprudential measures if credit growth starts to feed into higher inflation. Direct attempts at controlling market prices should be avoided. The peg to the U.S. dollar has served Oman well by providing a strong and credible monetary anchor. The mission finds that the exchange rate is broadly aligned with fundamentals and that the policy of pegging to the U.S. dollar remains appropriate. Nevertheless, in light of ongoing economic diversification and deepening trade ties with Asia, preparing for a more flexible regime in the long run would be prudent. Of particular importance will be to develop hedging instruments to enable the private sector to better manage exchange rate risk. The financial system is relatively shallow and could play a larger and more dynamic role in supporting economic growth. Regular issuance of government debt in a range of maturities would be important to establish a yield curve and help spur market development. The CBO could also consider expanding the range of maturities for CDs. Finally, at only about 2 percent, the share of bank lending to SMEs is well below that in most other countries and new initiatives to encourage bank lending in this area can potentially play a positive role.
OMAN DEBATE THROWS LIGHT ON NEW CHALLENGES
T
he who’s who of corporate and social Oman debated about the way ahead for Oman’s economy at Oman Debate 2011, the most prestigious economic forum in the country, recently at Oman Auditorium, Al Bustan Palace Ritz Carlton Hotel. A slew of riveting topics such as Omanisation, job creation, revamping education system in the country to meet the requirements of a changing business landscape and economic trends came up for deliberation during the debate. The stimulating forum organised by Oman Economic Review in cooperation with the Capital Market Authority (CMA) and anchored by renowned television host Tim Sebastian, the founder and chairman of ‘The Doha Debates’ and former BBC Hard Talk presenter, was attended by top-level officials of both public and private sectors, including heads of institutions, policy-makers and corporate captains. The strategic partners of the debate were BankSohar, Audi from Zubair Automotive, Nawras and Ominvest. The partners were Taageer 18
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Finance Company, Genetco-Canon and Glorei while the support partners were Al Habib and Sharq Sohar. The media partners were Times of Oman and Al Shabiba newspapers while the official call centre was Spanco. HE Darwish Ismail Al Balushi, Minister Responsible for Financial Affairs, who was the chief guest of the event, praised Oman Economic Review for organizing the national debate and annually recognising the efforts of the corporate world through its Top 20 awards. He
emphasized the role of private sector in transforming Oman to a modern and diversified economy. “A key element for a vibrant economy is a thriving private sector and Oman’s eighth five-year plan offered tremendous opportunities for the private sector to experience sustained growth,” said HE Darwish. An august body of panelists representing both the government and the various business sectors cutting across the industry shared their views and incisive questions about several pertinent issues
including lack of crystal clear vision in education policies, apathy of bureaucracy that hampers growth of private sector and the inability of capital intensive industries in creating employment opportunities for Omani youths. The panelists of the debate were HE Dr Salem bin Nasser Al Ismaily, Chairman, Public Authority for Investment Promotion & Export Development, HE Ahmed Al- Dheeb, Undersecretary, Ministry of Commerce and Industry, Hani Al Zubair, Executive Chairman, Zubair Automotive Group, Hussain Jawad, Chairman, W J Towell, Adil Taqi, CEO, Muriya Tourism Company, Hatem Al Shanfari, Faculty Member at the Department of Economics and Finance, Sultan Qaboos University, Dr Mohamed Abdulaziz Kalmoor, CEO, Bank Sohar, Ross Cormack, CEO, Nawras, Faisal Al Lawati, Executive Director, Genetco, Dr Brian Buckley, General Manager & CEO, Oman LNG.
has to allocate more funds as well as move fast in bringing in a paradigm shift in the quality of education. HE Dr Salem opined that huge investments for setting up capital intensive industries did not result in providing employment opportunities for a large number of Omani youths. Capital intensive industries generally need highly skilled people, he said.
HE Ahmed Al Dheeb stressed the importance of increasing the quality of education to progress and compete with countries that are trying their level best to provide best education to their citizens. â&#x20AC;&#x153;We have to go quick to match with the changes (in education) happening across the world,â&#x20AC;? he said responding to a question raised by a participant attending the panel discussion. The participants were of the view that Oman
Adil Taqi said that the government has to play an active role of a catalyst because about 40,000 to 50,000 Omani youths enter the job market every year. Hani Al Zubair, chairman of Zubair Automotive Group, said that the private sector has limitations in view of lack of availability in getting right people for certain job categories. Other topics that came up for discussion in the debate include bureaucracy, red-tapism and lack of
transparency, which hinder private sector development. The OER Top 20 trophies for year 2010 were presented to the largest listed companies on the Muscat Securities Market at the event, celebrating corporate excellence. The OER Top 20 companies are Oman Telecommunications Company, Galfar Engineering & Contracting, BankMuscat, Shell Oman Marketing Company, Renaissance Services, Al Maha Petroleum Products Marketing Co,Oman Oil Marketing Company, Oman Cables Industry,Nawras, Oman Holdings International, National Bank of Oman, BankDhofar, Areej Vegetable Oils & Derivatives, Raysut Cement Company, Al Jazeera Steel Products Company, Bank Sohar, Dhofar Power Company, OMINVEST, Al Hassan Engineering Company and Salalah Port Services Co. Jan-Feb, 2012
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EVENT REPORT
GAS IN FOCUS The recently held Gas Arabia Summit, Muscat pointed out various developments and issues that are going to shape up the future of gas in the coming decades
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man hosted the Gas Arabia Summit in December, 2011. The event was organized by UK based The Energy Exchange with support from Oman Gas Company. Yousuf Al Ojaili, CEO, Oman Gas Company (OGC) was the chairman of the steering committee for the event. The other members of the committee were Abla Al Riyami, Gas Director, Petroleum Development Oman (PDO); Dr.Brian Buckley, CEO, Oman LNG; Dr.Jonathan Evans, GM, BP Oman; and Dr.Salman AlShidi, Block 60 Manager, Oman Oil Company for Exploration &
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Development. The event attracted over 200 gas experts from all over the world. OGC CEO said: â&#x20AC;&#x153;Gas Arabia Summit succeeded in achieving many objectives as the summit was intended to develop the gas industries inside the Sultanate. The positive outcomes resulting from the summit will be availed in developing the gas industries in the Sultanate, exploring the future of gas industry in the world, challenges facing it and the possible means to overcome such challenges. Oman pays great attention to the gas industry as one of the most
important mainstays of the national economy. This summit comes as part of the efforts exerted to develop the gas industry in the Sultanate and review the intentional experiences in this vital field; especially in light of the fact that the summit showed the participation of many international companies. The share of gas as an energy resource is increasing in the world. It is a new indicator for the increasing demand on gas consumption all over the world.â&#x20AC;? Maktoom Al-Matani, GM-Engineering & Technical Services, Oman Gas Company
stated, “Oman’s natural gas demand is expected to exceed 100 MMstm3/d by 2021 excluding Duqm. The Government Strategy to open-up new gas blocks to new national and international operators has enhanced Oman’s gas reserves. With full development by BP and other small fields on-stream, complex natural gas based industry will be the focus in the incoming years. Investments on unconventional gas is becoming a must to meet the gas demand. Some key challenges in future such as gas quality will need to be managed and will have impact on the operating cost of the gas processing facilities,” on the gas scenario in Oman. In a presentation ‘Iraq as a Potential Major Gas Exporter’, Dr.Faleh Al Khayat, Former Director General Planning of Iraq Ministry of Oil, Independent Consultant and Contributing Editor to Platts, said, “Iraq is the least explored country in the region. It has an average of less than one exploration well per 2000 sq kms. More than 400 structures and hundreds of stratigraphic anomalies are not yet drilled. The current reserves, according to Ministry of Oil’s revised figures announced in early 2010, incudes oil reserves of 143 billion barrels and gas reserves of 127 trillion cubic feet (tcf ). 12 exploration blocks are expected
to be awarded in March 2012. They will add 10 billion barrels of oil and 29 tcf gas. Iraq’s gas reserves are the 10th largest in the world and the fourth largest in the Middle East Area.” He added, “The infrastructure needed for utilization is quite a task. The Shell JV needs to implement the upgrading and expansion of the Southern Gas Processing Facilities to gather and treat 2000 Mmscf/D raw gas supplied by the fields of Rumaila, Zubair and West Qurna-I, plus the construction of the 4 Mmt/Y floating LNG plant and terminal, in five years. Round Two fields developers have to construct seven gas processing plants of total capacity of around 2500 Mmscf/D within the fields and connect outputs to national grids.” He further said, “Round Three free gas fields developers have to connect the produced gas to destined power plants and gas network. The Iraqi Government have to expand and upgrade the pipeline distribution system especially the completion of dry gas pipeline system connecting the Southern Hubs at Rumaila and the Northern Hub at Baiji as well as the laying of a new strategic dry gas pipeline. The estimated volume is 2000 km for dry gas and 1000 km for LPG.
Iraq could export a potential of 15 Bcm/Y of dry gas sustainable for 20 years but there are many ifs and buts.” On the LPG scenario in the decade 20102020, Keith Aspray, Vice President & GM, UOP Middle East, said, “Significant gas derived LPG supply is expected to come online by 2020. As a result, potential future surplus of LPG is a likely scenario. There is a need to monetize LPG from natural gas. Significant quantities of LPG from Middle East could be available for export. China may develop its shale gas deposits.” Moving on, Hani Khogair, Sr. Technical Manager, GE Oil & Gas in his presentation on GE’s Jenbacher gas engines said: “Jenbacher has a wide experience in the operation with low BTU gases (3,500 engines in biogas/ landfill gas operation). More than 300 Jenbacher engines are in operation with associated petroleum gas. In the power range from 0.5 to 10 MW, the gas engine is the best economic solution for decentralized COGENERATION, compared to the gas turbine. Gas turbines have nominal output at 15°C, gas engines can be adapted to higher ambient temperatures and start with derating above 45°C.” Jan-Feb, 2012
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OMAN GREEN AWARDS
FIRST OGA NEWSLETTER RELEASED
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s a sequel to the second edition of its prestigious Oman Green Awards (OGA), United Media Services has released a newsletter highlighting some of the recent environmental initiatives in the country. The newsletter carries a report about a first-of-its-kind initiative for paper recycling at schools launched in Barka by Nomac Oman, a subsidiary of ACWA Power International. As the first step of the initiative, Nomac Oman handed over recycled drums to Al Amal Secondary School in Barka in order to collect used papers from the school premises. The company will replace the drums once it is filled to the capacity, and send the waste papers for recycling. The newsletter also sheds light on some recent green updates in the country such as the presentation of the Sultan Qaboos Prize for Environment Protection 2011 to the representative of the Nigerian Institute for Forestry Research; Environment Society of Oman (ESO)â&#x20AC;&#x2122;s contribution to the UNâ&#x20AC;&#x2122;s Billion Tree Campaign; and some important initiatives undertaken by Panasonic. Al Bustan Palace, Infoline, MB Holding Company, Panasonic and Vale are the strategic partners of the OGA, the first environmental award in the Sultanate. 22
Jan-Feb, 2012
GUEST COLUMN
PEAK OIL THEORY & TECHNOLOGY:
NEVER ENDING GAME As a result of uneven distribution of energy resources security of supplies related issues are vital for some regions/countries as compared to other regions/countries.
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henever oil prices abnormally elevate due to a variety of reasons, some of which are beyond human control and some are engineered by human interventions – the world often panics and the press is filled with articles highlighting that the World is running out of oil, peak oil theory, and oil prices are likely to increase to $250/bbl etc.
Dr. Salman Ghouri is a Senior Economist at Qatar Petroleum, Doha, Qatar
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The term “peak oil” was originally coined in the 1950s by M. King Hubbert who predicted that US oil production would peak in 1970, and decline at the same rate it arose. But in the history of the petroleum era, Matt Simmons will be remembered for calling attention to ‘peak oil’. T. Boone Pickens, another peak oil proponent said in a statement, “You had to admire his advocacy and his ability to focus on the need to better prepare for a new energy future.” In reality, like many Malthusian beliefs, the peak oil theory has been promoted by a motivated group of scientists and laymen who base their conclusions on poor analyses of data and misinterpretations of technical material. Are we really moving towards the resource exhaustion or towards “Peak Oil” theory? Is the world better off today, then we were in 1980 contrary to legacy of “Peak Oil” theory?
In order to assess the true picture it would be worthwhile to analyze the historical data to arrive at some rational conclusions of whether the world is really running out of oil and gas resources. From global perspectives world is better off for both oil and natural gas front. The global oil reserves during 1980/2010, increased by over 107 percent, oil production by 30 percent while consumption grew by about 43 percent. Due to substantial increase in reserves life expectancy also improves by over 17 years in 2010 as compared to 1980. As far as global natural gas are concerned, global reserves increased by 131 percent during 1980/2010 period. While both global natural gas production and consumption increased by close to 122 percent – resulting in R/P ratio edge up by close to two years. When the historical data is analyzed regionally the situation is quite different. Interesting enough the major consuming regions – North America, Europe and Asia are all experiencing growing demand for oil and gas but lack indigenous resources. Therefore, in general their import dependency over time has substantially increased. In sharp contrast, the bulk of oil and gas resources are located in Middle East, FSU, Central & South America and Africa far more as compared to their consumption.
TECHNOLOGICAL BREAKTHROUGHS Over the years, the new-state-of-theart technology played an important role in reducing cost and boosting oil and gas production from high cost deposits like deep offshore reservoirs thereby making more production to be economically possible. For example, introduction of 3-D seismic, horizontal drilling and multi-completion of wells, hydraulic fracturing has greatly increased exploration success rates, improved recovery rates, and substantially reduced the cost of producing oil and gas. With the application of new technology, oil supply in the North Sea increased significantly during 1980s. This gave a significant boost to Non-OPEC production (reducing the Call on OPEC production) and consequently oil prices plunged in 1980’s. New technology in refining, contributed to narrowing the value gap between light and sour crude thereby destabilizing the rigid price structures in favor of a market oriented pricing mechanism. Due to innovation in state-of-the-arttechnology – horizontal drilling and other innovation has substantially reduced the cost of drilling and production. The resources that were inaccessible in deep waters are now become a routine. The higher oil prices also helped the industry to improve the economics of high cost deposits. Recently due to technological advancement Central & South America recorded a substantial boost in oil reserves – increasing from 111.2 billion barrels in 2007 to 237.6 billion barrels in 2009. This increase is mainly associated with significant increase in Venezuela oil reserves that increased from 87 billion in 2007 to 211.2 billion barrels in 2009 – an increase of over 142 percent in just three years! More recently in 2011, Norway’s Statoil
has received a huge boost to its reserves with the announcement that two previous North Sea oil discoveries are connected which may represent the biggest find in the Norwegian continental shelf in 30 years. As per Statoil Aldous and Avaldsnes oil discoveries together contain between 500 million and 1.2 billion barrels of oil – “It’s probably the largest offshore oil discovery anywhere in the world during 2011 and has given the entire oil industry renewed optimism.” DISTRIBUTION OF ENERGY RESOURCES Despite substantial increase in global oil and natural gas reserves, oil prices are still hovering around $110/bbl resulting in significant economic hardship to a number of developed and developing countries. The major reason of higher energy prices is also associated with global distribution of energy resources beside many other factors (demand/ supply fundamental, dollar, speculators, civil unrest, wars, hurricanes etc). As a result of uneven distribution of energy resources security of supplies related
issues are vital for some regions/countries as compared to other regions/countries. This led us to review how global natural resources are distributed, produced and consumed. Such analysis will set the stage for discussion and also help in understanding nature of the problem. Only a few countries are dominant energy players in the world today. For example, in terms of fossil fuels - Saudi Arabia, Venezuela, Iran, Iraq and Kuwait holds 60 percent of global oil reserves. Russia, Iran, Qatar, Saudi Arabia and Turkmenistan accounting for about 62 percent of global natural gas reserves and USA, Russia, China, India and Australia are holding 75 percent of coal reserves at the end of 2010. While the remaining of proved resources are being shared by the rest of the global economies and some of them are import dependant. It is not only the skewed distribution of natural resources but a major portion of various sources of energy are also being produced and consumed by a few countries. For example, over 44 percent Jan-Feb, 2012
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GUEST COLUMN
of oil is produced and consumed by the given seven countries - Saudi Arabia, Russia, USA, China, Iran, Japan and India (across row). While over 40 percent of natural gas is produced and consumed by the given seven countries. For coal, the equation is somewhat highly biased. Over 75 percent of resources are being produced and consumed by the given seven countries. Sixteen countries altogether are the major energy players either as reserve holders, producers, consumers or combination of the three. For example, USA, India and China are the largest holder, producer and consumer of coal. Similarly, Russia and Iran are among the top natural gas reserve holders, producers and consumers. While equation for oil is somewhat different and not necessarily the largest oil reserve holder, it is among the top five oil producers and consumers. The distribution of energy resources around the world is given by Allah SWT, which human being of even most developed economies cannot change – it is given and that is the reality. The only thing we as human beings can do is to produce these resources efficiently in these countries and export to the countries of consumption – this is what we have been doing. The only concern is that some of rich resource countries are also heavily populated especially in Africa and once these economies begin to grow a large portion of indigenous resources would be consumed locally and less would be available for export purposes. This may result in conflicts of interest between the importing and exporting countries, but who will win? Past experiences witness that developed economies always win due to their technological and financial powers. That is some of the developing countries despite having enormous amount of indigenous resources, remain poor – what a pity. 26
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MATRIX OF FOSSIL FUELS PROFILE - 2010 RESERVES
PRODUCERS
CONSUMERS
OIL
SAUDI ARABIA, VENEZUELA, IRAN, IRAQ, KUWAIT (60%)
SAUDI ARABIA, RUSSIA, USA, IRAN, CHINA (44%)
USA, CHINA, JAPAN, RUSSIA, INDIA (44.83%)
NATURAL GAS
RUSSIA, IRAN, QATAR, SAUDI ARABIA, TURKMENISTAN 61.8%)
USA, RUSSIA, CANADA, IRAN, QATAR (40.1%)
USA, RUSSIA, IRAN, CHINA, JAPAN (45.4%)
COAL
USA, RUSSIA, CHINA, INDIA, AUSTRALIA (75%)
CHINA, USA, AUSTRALIA, INDIA, INDONESIA (80.2%)
CHINA, USA, INDIA, JAPAN, RUSSIA (76.8%)
Source: BP Statistical Review of World Energy – June 2011.
REDISTRIBUTION OF RESOURCES Most of the Middle East and North Africa (MENA) countries are the holders of world major oil and gas resources. It is also a fact that these countries lack local population and technology and therefore for rapid and sustainable economic growth these economies are highly dependent on expatriate work force, technology and also investment. For example, Qatar’s local population only stood at about 14 percent in 2010. This ratio is expected to further deteriorate as the country is gearing up to make over $150 billion investment now and during 2021 for the development of urban infrastructure and FIFA 2022 related investments. The construction activities are labor intensive process and therefore population is expected to more than double in the next 20 years. That is, the benefits that would incur with the rapid economic growth expected to be redistributed through workers’ remittances and profit to countries of their origins – India, Pakistan, Bangladesh, Nepal, Sri Lanka, Malaysia and Philippines. The remittances received have substantially improved the standard of living of masses and increase demand for imported oil and natural gas – creating circular flow of resources. In contrast to Asian countries, some of the African countries failed to reap benefits of their higher population and energy resources due to: - severe drought, malnutrition,
civil unrest, high illiteracy rate and people at large surviving for life. OUTLOOK Due to dynamic nature of oil and gas industry and continuous advancements in state-of-the-art-technology the world we are living in 2011 is much better than how we were living in 1980. Both oil and natural gas reserves and life expectancy during this period has improved despite substantial increase in production/ consumption. I leave up to the curious readers to make their own rational thinking/assessment to address peak oil related issues. One thing is for sure, that is that the future would be much better than our present as human ingenuity blessed by Allah SWT is unlimited – technological breakthroughs helps the humanity to find and extract shale gas & shale oil or other energy resources economically in other major consuming countries. Before these resources are exhausted we will discover something amazing and legacy of “Peak Oil Theory” remain with us for academic discussion. This process of innovation and improvement in standard of living is expected to continue till the world comes to an end. The views, findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of Qatar Petroleum.
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GEOPOLITICS
War imminent in Straits of Hormuz? $200 a Barrel Oil? The proposed Obama administration energy sanctions heighten the risk of confrontation and carry the possibility of immense economic disruption from soaring oil prices, given the unpredictability of the Iranian response, says John C.K. Daly
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he pieces and policies for potential conflict in the Persian Gulf are seemingly drawing inexorably together. Since 24 December, the Iranian Navy has been holding its 10-day Velayat 90 naval exercises, covering an area in the Arabian Sea stretching from east of the Strait of Hormuz entrance to the Persian Gulf to the Gulf of Aden. The day the maneuvers opened, Iranian Navy Commander Rear Admiral Habibollah Sayyari told a press conference that the exercises were intended to show “Iran’s military prowess and defense capabilities in international waters, convey a message of peace and friendship to regional countries, and test the newest military equipment.” The exercise is Iran’s first naval training drill since May 2010, when the country held its Velayat 89 naval maneuvers in the same area. Velayat 90 is the largest naval exercise the country has ever held.
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FACE-
The participating Iranian forces have been divided into two groups, blue and orange, with the blue group representing Iranian forces and orange the enemy. Velayat 90 is involving the full panoply of Iranian naval force, with destroyers, missile boats, logistical support ships, hovercraft, aircraft, drones and advanced coastal missiles and torpedoes all being deployed. Tactics include mine-laying exercises and preparations for chemical attack. Iranian naval commandos, marines and divers are also participating.
-OFF
The exercises have put Iranian warships in close proximity to vessels of the United States Fifth Fleet, based in Bahrain, which patrols some of the same waters, including the Strait of Hormuz, a 21 mile-wide waterway at its narrowest point. Roughly 40 percent of the world’s oil tanker shipments transit the strait daily, carrying 15.5 million barrels of Saudi, Iraqi, Iranian, Kuwaiti, Bahraini, Qatari and United Arab Emirates crude oil, leading the United States Energy Information Administration to label the Strait of Hormuz “the world’s most important oil chokepoint.” In light of Iran’s recent capture of an advanced CIA RQ-170 Sentinel drone, Iranian Navy Rear Admiral Seyed Mahmoud Moussavi noted that the Iranian Velayat 90 forces also conducted electronic warfare tests, using modern Iranian-made electronic jamming equipment to disrupt enemy radar and contact systems. Further tweaking Jan-Feb, 2012
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GEOPOLITICS
Uncle Sam’s nose, Moussavi added that Iranian Navy drones involved in Velayat 90 conducted successful patrolling and surveillance operations. Thousands of miles to the west, adding oil to the fire, President Obama is preparing to sign legislation that, if fully enforced, could impose harsh penalties on all customers for Iranian oil, with the explicit aim of severely impeding Iran’s ability to sell it.
oil sanctions Iran’s first vice president Mohammad-Reza Rahimi on 27 December said, “If they impose sanctions on Iran’s oil exports, then even one drop of oil cannot flow from the Strait of Hormuz.” Iran has earlier warned that if either the U.S. or Israel attack, it will target 32 American bases in the Middle East and close the Strait of Hormuz. On 28 December, Iranian Navy commander
Washington’s concept of squeezing a country’s government by interfering with its energy policies has a dolorous history seven decades old.
How serious are the Iranians about the proposed sanctions and possible attack over its civilian nuclear programme and what can they deploy if push comes to shove? According to the International Institute for Strategic Studies’ The Military Balance 2011, Iran has 23 submarines, 100+ “coastal and combat” patrol craft, 5 mine warfare and anti-mine craft, 13 amphibious landing vessels and 26 “logistics and support” ships. Add to that the fact that Iran has emphasized that it has developed indigenous “asymmetrical warfare” naval doctrines, and it is anything but clear what form Iran’s naval response to sanctions or attack could take. The only certainty is that it is unlikely to resemble anything taught at the U.S. Naval Academy. The proposed Obama administration energy sanctions heighten the risk of confrontation and carry the possibility of immense economic disruption from soaring oil prices, given the unpredictability of the Iranian response. Addressing the possibility of tightened 30
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Rear Admiral Habibollah Sayyari observed, “Closing the Strait of Hormuz for the armed forces of the Islamic Republic of Iran is very easy. It is a capability that has been built from the outset into our naval forces’ abilities.” But adding an apparent olive branch, Sayyari added, “But today we are not in the Hormuz Strait. We are in the Sea of Oman and we do not need to close the Hormuz Strait. Today we are just dealing with the Sea of Oman. Therefore, we can control it from right here and this is one of our prime abilities for such vital straits and our abilities are far, far more than they think.”
Iran’s oil customers, the most prominent of which is China, which would hardly be inclined to go along with increased sanctions. But one thing should be clear in Washington - however odious the U.S. government might find Iran’s mullahcracy, it is most unlikely to cave in to either economic or military intimidation that would threaten the nation’s existence, and if backed up against the wall with no way out, would just as likely go for broke and use every weapon at its disposal to defend itself. Given their evident cyber abilities in hacking the RQ-170 Sentinel drone and their announcement of an indigenous naval doctrine, a “cakewalk” victory with “mission accomplished” declared within a few short weeks seems anything but assured, particularly as it would extend the military arc of crisis from Iraq through Iran to Afghanistan, a potential shambolic military quagmire beyond Washington’s, NATO’s and Tel Aviv’s resources to quell. It is worth remembering that chess was played in Sassanid Iran 1,400 years ago, where it was known as “chatrang.” What is occurring now off the Persian Gulf is a diplomatic and military game of chess, with global implications. Washington’s concept of squeezing a country’s government by interfering with its energy policies has a dolorous history seven decades old.
There are dim lights at the end of the seemingly darker and darker tunnel. The proposed sanctions legislation allows Obama to waive sanctions if they cause the price of oil to rise or threaten national security.
When Japan invaded Vichy French-ruled southern Indo-China in July 1941 the U.S. demanded Japan withdraw. In addition, on 1 August the U.S., Japan’s biggest oil supplier at the time, imposed an oil embargo on the country. Pearl Harbor occurred less than four months later.
Furthermore, there is the wild card of
Source: www.oilprice.com
COVER STORY
THE GAME CHANGER 32
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KINDLY SHARE DETAILS OF YOUR BACKGROUND. After graduating in Geology I joined Petroleum Development Oman (PDO) in 1984. Within a week I was thrown in the deep “sea sand” as a Well Site Geologist. I was one of the few early Omani explorers in the company at that time. It was quite exciting! Very early on I got the lesson of my life. One day an expert asked me ‘why did you join the oil industry? There is hardly any oil left!’ Those days the price of a barrel of oil was equal to the price of a bottle of water. He literally gave me a shock and made me think! Did I make the right choice? Anyway, I went to the well site and one day, to my sheer delight, I saw oil coming out of the ground. It was quite exciting to be the first to witness the discovery of oil on site. Exploration is about finding something that others cannot see; it’s about optimism, perseverance and celebrating success. Two years down the line I was moved to the exploration laboratory. Thereafter I took upon the role of an evaluation geologist and later seismic interpretation, identifying and defining prospects and proposing wells. In 1998, I was posted to Shell Egypt’s new venture in Cairo for almost four years. There I had the first offshore experience. I moved back to Oman to take up a completely different role as the head of exploration staff development
training and Omanization in PDO. It was quite an interesting opportunity to develop human resources’ capabilities and soft skills. I advised the young graduates on which streams to choose and take up higher studies. Many people would agree that today’s organisational managers need leadership skills to lead the organisation’s economic recovery strategy and to make the organisation effective and achieve its strategic objectives. It is my view that for a leader to be effective and successful, one should acquire both technical and HR capability competences. I would highly encourage technical professionals to get involved in HR projects and get the exposure before taking up higher management positions. Thereafter, I took up the role of a team leader in Oil Exploration North. Later on, I took the position of Gas Exploration Manager for the Government Gas in PDO. It was an interesting experience working on tight and unconventional gas projects that required a different kind of knowledge and thinking compared to oil exploration. From there I took up my second overseas posting with Shell E&P based in Dubai assuming the role of new business opportunities in the exploration department covering the Middle East & North Africa (MENA) and Pakistan region. The exposure gave me an international perspective of the oil & gas business. That was my last assignment before I joined OPAL as the CEO. With that background, I would like to thank
all those I have worked with in the past years and influence me professionally and as a person. WHAT MADE YOU JOIN OPAL? OPAL plays a very important role in the oil and gas sector in Oman; serving Oman in general, and oil and gas sector in particular, focusing on capability building, people and serving the nation -this is close to my heart. OPAL currently has over 310 member companies which are quite diverse in nature. Aligning thoughts and ideas of the many companies and bringing them together to present them before the authorities is an interesting aspect as a challenge and opportunity. There is an opportunity to influence and make a difference. There is lot to be done. I would like our team at OPAL to be able to achieve certain objectives to become the game changer and leave a desired positive and lasting impact on the society, the nation and continue to promote investors to come in to do business in Oman. WHAT IS THE BRIEF GIVEN TO YOU? First, let me take this opportunity to thank those who trusted me with this important role, encouraged me and supported me to make the move. Now, the brief given to me was that OPAL society is currently going through a challenging time. The board, members and stakeholders were very keen that OPAL should play a very active and positive role, which could not
Oman Society for Petroleum Services’ (OPAL) new CEO, Mohamed S. Al-Harthy, in a freewheeling chat with Akshay Bhatnagar shares his views on a wide range of industry issues apart from talking about how OPAL is going to change gears under the new leadership. Excerpts of the conversation:
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COVER STORY
only fulfill the original purpose and vision of the organization but take it forward. WHAT WAS THE ‘ORIGINAL PURPOSE’ OF OPAL? OPAL was formed to act as a platform to serve the oil and gas industry in Oman. The main mission of OPAL is setting standards and providing training and building local human capability in the oil and gas sector. OPAL vision is making Oman an acknowledged oil & gas industry that is functioning at an international standard, caring for the people, the environment and assets. I believe it is a good vision, and its success is highly depended on the support of its members and stakeholders. HOW DO YOU LOOK AT THE ‘SOCIAL UNREST’ THAT TOOK PLACE IN OMAN IN THE EARLY PART OF 2011 AND THE ROLE OF OPAL UNDER THE CURRENT ENVIRONMENT? The world was hit by a global financial “tsunami” and every one is dealing and reacting to the event. I think that in one-way or another, countries around the world are undergoing similar kinds of challenges, albeit in different degrees and at different times. In my opinion, they are due to socio-economic reasons and this time, the issues have been steered by very effective technology of social media and Internet, characterized by free and easy access to information and speed. In Oman, the issues have been addressed and are being addressed effectively. We need to be careful that we don’t lose sight, continue at a progressive pace and in proactive way. The world is not static and therefore, change and doing things differently to deal with the new realities should be the only constant process. We shouldn’t live the life of today by applying the principles of yesterday. His Majesty Sultan Qaboos’ recent speech focused on developing human resources 34
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and building human capability through education and training. In OPAL, we are aligned with this direction and addressing the issue through partnership with OPAL members. A recent example is the launch of “My Job My Oath Programme”, which is a programme for the youth on ‘Work Ethics in the Oil and Gas Workforce’. As mentioned earlier, OPAL was initially established with the aim of promoting Omanization and this meant to focus on human capability building. The knowledge and skills acquired through the various training programmes offered through OPAL would increase employment opportunities for Omanis and as a result, the issue of Omanization will effectively be dealt with. Education for the purpose of getting a degree is the thing of the past. I believe that ‘today’, education should be about teaching people ‘how to teach themselves’. Training, on the other hand, is about learning and acquiring the skills that would make someone more marketable at securing a job as well as having the required competences to perform a good job in any specified role in an organization. This is an important focus for OPAL today. To address this issue, we have a ‘Training for Employment’ programme. We recently celebrated the graduation of 57 people. These Omanis were trained with specific aim in mind -- that after the training they will be employed. There was already an agreement in place with certain companies, training centers and the Ministry of Manpower that this batch will be employed after the training. This kind of change in thinking and way of work is required and that OPAL is doing it today… DON’T YOU THINK OPAL STARTED ON SUCH KINDS OF INITIATIVES IN THE BEGINNING BUT LOST MOMENTUM MID-WAY?
All organisations are constantly evolving, developing and changing and OPAL is no exception. Organisations may lose momentum sometimes due to certain dynamic changes such as the financial crisis, a change or a vacuum in leadership, change in stakeholders’ position, supporters, etc. Today, there is a new reality and I believe that we should take the learnings from the past and utilize these to better perform in the future. OK. WHAT HAVE BEEN THESE LEARNINGS? OPAL was established with very good intentions and much has been achieved, however, today there is a new reality. We have to think global and act local. We need to read the developments that are taking place around us in the region and rest of the world. In our business decisions, we should give local content the focus attention it deserves. We should focus on our valued members, the oil and gas sector and the stakeholders. We just need to focus on our vision to gaining international recognition, enhancing the industry standards and setting precedence in best business practices, training initiatives, employment practices, and quality health safety and environment. WHAT’S YOUR GAME PLAN FOR OPAL? Before we dwell upon what we intend to do, let us look at what we are doing currently. We are currently working on a number of training programmes, such as ‘Training for Employment’ and OPAL is also offering a proprietary certificate programme on HR CP function. This is designed for the industry practitioners. The programme is designed for those who are already employed and focuses on enhancing their capability further so that they could progress in their career in HR. The HR strategic role is another course which is designed to primarily change the mindset from a conventional HR/admin-
functioning and operations. This is the culture embraced by OPAL where over 318 members are working with the same spirit to serve the community. This is the way I think OPAL will move forward. We just need to deepen the bonding and live this relationship on a daily basis. ARE YOU PLANNING TO INTRODUCE ANY NEW PROGRAMME(S)? We would like to increase our momentum with respect to our workshops. We want these workshops to be practical with tangible results. For example, if we take the case of new Labor Law, OPAL could facilitate a workshop and creating a platform for dialogue. istration function managing employees’ leaves, etc. to an HR which is rightly considered as ‘capability building’ function. The programme includes a section on the Oman’s Labour Laws. The programme is so popular that the batches are always full before the programme starts. The programmes such as ‘Training for Employment’ are supported by our members such as Oman Oil, PDO, Qalhat LNG, etc. These programmes target small-to-medium sized businesses operating in the oil & gas sector. We are living in a symbiotic environment where everyone is inter-connected in one way or another. In the capacity of a contractor or a sub-contractor, Small & Medium Establishments (SMEs) provide services to the large operators, the like of PDO, Oxy, BP and others. If these operators could help the SMEs to raise their standards, it will ultimately help the large companies to further improve their
As mentioned earlier, we have recently launched a new OPAL initiative along with Oman Oil Company called ‘My Job, My Oath’. This programme is focusing on elevating the work ethics. The aim of this initiative is to engage the young recruits in a dialogue on the understanding of work; why their commitment to work is important to them and their company; the consequences of their performance towards the company, the country’s economy and on themselves. If we develop this understanding very early on in their career, it will lead to a very healthy relationship between the employers and employees. We have successful launched the programme in Muscat, Sohar, Nizwa, Sur and Salalah. We are hoping that with the success of this programme, this will encourage other organisations to participate in funding similar new initiatives.
IS THE DIVERSITY AMONG THE MEMBERS ‘A CONFLICT OF INTEREST’? Not necessary. For example, encouraging local content and enhancing in country value for services and products is something that all can benefit. If services’ companies are able to further raise their standards, it will benefit the operators, exploration and production companies. And if operators become more profitable with service companies supporting them more effectively, they (operators) will be able to expand their business and provide more and better business opportunities for the service companies. It is a win-win situation for both of them. So they need not be in competition to safeguard their interests. Instead, they should work together towards a common goal. HOW DO YOU PLAN TO ACHIEVE IT? We are working on a number of programmes and once they materialize and approved by OPAL board, we will move forward with their implementation. ARE YOU LOOKING AT OTHER AVENUES FOR FUNDING APART FROM THE SUPPORT GIVEN BY MEMBERS? Yes, we are considering other options. DO YOU BELIEVE IN OMANI HUMAN CAPABILITIES TO MOVE THE INDUSTRY FORWARD? In the past, with just dates, frankincense, copper and dry lemons we rode the deep sea and flourished in far-off places. It shows that we had the human capability to withstand the challenges and overcome them successfully. We have the human capability to do the same again, meet the challenges and succeed against odds. We have many Omani oil & gas professionals who are doing exceedingly well in the international arena. We can develop human capability beyond our needs. We could Jan-Feb, 2012
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export human talent to the world. We have examples like Japan and Singapore with minimal natural resources becoming topnotch economies based on human capability alone. OPAL can assist to bridge the gap between the academia and the industry to create solid professionals who could deliver on the best international industry and business practices. OMAN NOW HAS THE CENTRE OF CULTURAL EXCELLENCE WITH ROYAL OPERA HOUSE, MUSCAT. WHAT’S STOPPING OMAN FROM CREATING A CENTRE OF EXCELLENCE FOR LEARNING IN THE OIL & GAS INDUSTRY? This is one of OPAL’s vision and dream. At present, there are a number of training institutes but they are not necessarily addressing the need of the oil and gas industry to warrant the name “Center of Excellence”. What we need to do at the moment is bring the oil & gas companies under one platform (OPAL) 36
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and align these companies and clearly define their business requirements. We need to develop clear dialogue between relevant Government authorities and the oil & gas industry to define supply and demand on skills required on short as well as long term. It is important to realize that the petroleum industry requires other skills beyond the technical fields (i.e. petroleum, well engineers, geophysicists and geologists etc.) but also finance, HR, HSE, C&P, IT and quality control and project management skills. We have the potential of exporting our talent to other GCC countries. Therefore, I would advocate that there is a need to think ‘Big’, think beyond the Omani borders, and we need such kinds of game changers. By the end of the day, we just need to do it. WHAT ROLE DO YOU THINK OPAL CAN PLAY IN MAKING LARGE OPERATORS TO ENCOURAGE LOCAL ENTREPRENEURSHIP BY OUTSOURCING CERTAIN SERVICES FROM SMES RATHER THAN DOING IT IN-HOUSE? PDO’S LOCAL COMMUNITY CONTRACTORS (LCC) PROGRAMME HAS BEEN A SHINING EXAMPLE OF IT. OPAL is playing a role in this direction with other large operators such as PDO, which is a good example. We need more of these examples, both in quality and quantity, in more systematic and sustainable manner. What is needed is to start thinking about local content in everything we do, utilize, produce, manufacture and service. We need to embrace this culture of giving more
to local contracts. There should be standards set for the products and services and effectively quality should not be compromised. We need to go beyond giving the contract to the lowest bidder. The local content should be given serious consideration and be given an advantage. There should be awareness sessions on the subject of local content, what it means to the companies and the country’s economy and the role it pays in job creation. BUT THE CONTRACTING TERMS ARE GENERALLY LOADED IN FAVOR OF MULTINATIONAL OR LARGE LOCAL CONTRACTORS, LEAVING SMES WITH MINIMAL CHANCE OF QUALIFYING OR WINNING THE CONTRACT EITHER AS A CONTRACTOR OR AS A SUB-CONTRACTOR? WHAT STEPS OPAL IS PLANNING TO TAKE TO SERVE THE INTERESTS OF SMALL SERVICE PROVIDERS? As I mentioned earlier, OPAL can support in raising awareness and encourage local content. We are thinking of planning a number of workshops with the participation of OPAL members, operators and other stakeholders to discuss this issue. We will hopefully launch the first workshop during the first quarter of 2012. I would love to see Omani companies, large or small, walking away with all the contracts in the oil & gas industry in Oman. But we have to be practical, as in reality; there are certain technologies and other considerations that are only available with international companies. Having said that, I also reiterate my previous statement that large firms need to go beyond purely conventional cost-benefit analysis in financial terms alone and award contracts to SMEs keeping in mind other factors also. We need to move step-by-step and SMEs should move up in the value chain over a period of time. We are already seeing it today and the momentum will pick-up in the coming years.
RESEARCH & DEVELOPMENT
REVIVING THE DEAD WELLS Said Salim Al-Mufarji, General ManagerResearch & Development, MB Petroleum Services LLC (MBPS) talks about the company’s major accomplishments in the research & development field in an interview with Akshay Bhatnagar 38
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TELL US ABOUT THE RESEARCH & DEVELOPMENT DEPARTMENT OF MBPS. This department initially started under the name of ‘New Technology and Production Solutions’ in June 2004. It was a joint effort of MBPS and Petroleum Development Oman (PDO). In 2008, we were rebranded as ‘Research & Development (MBPS R&D) Department’ since almost 80 per cent of our work is oriented towards research instead of just oil and gas production services. We provide high-tech production solutions to the oil & gas industry. MBPS R&D provide clients with suitable customized solutions to their conventional and unconventional production problems to improve performance cost effectively and responsibly, ensuring that health, safety and environmental integrity is uncompromised.
We provide our clients with a rich portfolio of new technologies and integrated products and services in the areas of exploration and production (E&P), drilling operations, well services, well testing services, artificial lift systems and self-optimizing pumping systems. The R&D department is proud to have a team of well-qualified and committed professionals to assist clients in maximizing profitability and provide cost effective solutions. Our combined 100 years’ experience in the industry along with the expertise of many outstanding engineers help us to solve the seemingly insolvable problems encountered in the oil & gas industry in a responsible and cost effective manner. We have pioneered new technologies, which are first of their kind, such as ‘Live Well Intervention Platform’, ‘Fully Automated Self-Optimizing System for Sucker Rod Pumps’ and ‘MB Flow Master’ to accurately measure oil, water and gas flow rates, fluid densities and water cuts without using any radioactive source material. The department strives to improve production efficiency, develop innovative methodologies to boost hydrocarbon productivity of existing oil and gas fields, and pioneer new feasible technologies. KINDLY SHARE SOME MORE DETAILS OF YOUR KEY SOLUTIONS THAT HAVE BEEN UNIQUE AND APPRECIATED IN THE INDUSTRY. There are many good examples of our unique work. To start with, Live Well Intervention Platform (LWIP) is our inhouse engineered, designed and fabricated platform structure, which enables live well entry and live surveillance to be carried out effectively. We have developed a system to allow SelfOptimizing Beam Pumping. It is a fully automated self-optimizing beam pumping unit, which enables continuous, maximum
BRIEF BIO: SAID SALIM AL-MUFARJI Has three decades of experience in the oil & gas industry as a Senior Petroleum Engineer who worked in onshore, sub-sea and general offshore environments both in the UK and Oman. He worked for PDO and Shell for 22 years (1982-2004) in various PE departments then joined MB Petroleum in 2004 as New Technology & Production Solutions’ General Manager responsible for introducing and developing new and unparalleled projects to various clients in and outside Oman. As a performance demonstration, one of his projects received PDO Chairman’s Gold Award from the Minister of Oil and Gas in 2007. As the activities henceforth focused solely on research related technologies, recently his department was re-branded as R&D. Dr. Said holds a B.Sc. in Petroleum Engineering from Tulsa University, USA; M.Sc. in Petroleum Engineering from Imperial College, London; DIC from Imperial College, London and; Ph.D. in Petroleum Engineering (Fines Migration Mechanisms in High Permeability Sands) from Robert Gordon University, UK. He is keen on developing and patenting new technologies which do not exist to help in more efficient and more economical oil and gas exploitation in Oman and overseas where MBPS operates. production, least production deferment and less operator’s intervention, hence making it safer and cost effective. We have earned accolades from the clients for High Capacity Sand Tolerant Sucker Rod Pumps we market. The field proven special plungers sizes (2”-5”) are reputed as most sand production tolerant pumps and can operate in severe abrasive conditions. These pumps can produce any rate between 50m3/d and 1000m3/d. We are also known for our Reservoir Water Shut-off Services in both carbonate and sandstone reservoirs. We can shut-off in matrix and fractured reservoirs both mechanically and chemically. These are some of our high quality unique work. We offer our clients a rich portfolio of new technologies and integrated products and services, aimed at increasing oil and gas production and simultaneously reducing costs. For example, our solutions can help the operators to open the wells that have been closed due to sand piling problem. The closed-in (dead)
wells could be revived and brought back to production depending on reservoir conditions. Currently, we have more than 150 such kind of wells in the Sultanate. The number could be more. One can imagine the benefit to the industry with our pioneering solutions. RECENTLY, YOU HAVE MADE A LOT OF NEWS WITH YOUR MULTIPHASE FLOW METER. KINDLY TELL US MORE ABOUT IT. In yet another technical first, we have become the first company in the Middle East to develop and commercially test an accurate full range (Liquid & Gas) Multiphase Flow Meter. The MB Flow Master designed and assembled within our department is a commercial multiphase flow meter based on separation technology. It uses state-ofthe-art technology to separate 100 per cent gas from the liquid (2 phases - oil & water) to measure the gas and liquid flow rates, water cuts, gas-oil-ratios, pressures and temperatures. It has been successfully tested in more than 72 oil wells in Occidental and Daleel Petroleum Jan-Feb, 2012
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fields across Oman. WHAT MAKES THIS FLOW MASTER UNIQUE? What makes it different is the fact that the gas, liquid flow rate measurements and the water cut determination are carried out independent of each other by conventionally proven meters. This allows highly accurate determination of the discrete flows and computation of the flow rates and gas fractions. It
has an advantage over other multiphase flow meters as it does not use any radioactive source to determine the flow measurements. As a result, it is safer to handle, operate and does not require special permits for transportation through public areas. It is a fully automated unit with a high standard Data Acquisition System (DAS) which logs the wells’ data in real time every second (or as required) and can store several gigabyte data for ‘n’ number of days. The data can also be
downloaded and stored as required. After extensive research in this technology, we underwent rigorous actual field testing at Occidental Oman (Oxy) at Wadi Lathem oil field where we successfully tested 64 wells. Prior to that, in Daleel Petroleum we carried out various tests in more than 8 different types of wells and as a result, we achieved the service testing certificate from Daleel Petroleum LLC. Currently, the meter is being enhanced with an automatic flow level control valve to enable operations without human intervention. We are extremely happy with its performance and we feel that this will help bring accuracy and maintain safety at oil fields. TELL US ABOUT YOUR OTHER UNIQUE SOLUTIONS THAT ARE KEEPING YOU BUSY CURRENTLY. Loss Circulation Cure is definitely on top of the list. To describe it briefly, it helps to control loss of fluid in drilling a well. It helps to minimize the fluid-loss, prevent occurrence of an uncontrollable situation say a blowout and maintain the integrity of the well by averting corrosion. Our solutions help to secure the fluid, control the well better. The loss-circulation has been a nightmare for the industry. Our solution involves two pipes running outside the casing and through these pipes we pump chemicals and cement. They fill the pores which are sometimes called the ‘thief zones’ as they steal the fluid. The pores are sealed before cementing the pipe. The solution has been successfully tested in commercial trials in PDO’s Nima fields in South Oman. This could be applied across the GCC and other areas of the Middle East also as the region shares a common geological setting and formation. We are currently in talks in Qatar for the application of this technology. In addition to this, we are also working
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on â&#x20AC;&#x2DC;Heat Tracingâ&#x20AC;&#x2122;. In winter, hydrates (or frost) develop in the pipes where gas is injected. It happens in Oman also sometimes. As a result, the gas injected gets blocked and doesnâ&#x20AC;&#x2122;t reach its destination. Conventionally, certain chemicals are injected to ensure that the frost is dissolved. We have developed an effective electrical solution requiring no chemicals. It has been successfully applied again in PDO fields by us. In addition, we have developed many other solutions which may not be entirely new but customized and developed further as per the unique requirements of the oil & gas industry. Water Shut-Off is one of them. HOW MANY INTELLECTUAL PROPERTY RIGHTS (IPRS) HAVE BEEN FILED BY YOU SO FAR?
We have filed five IPRs so far and we are working on filing more. We have started the policy of filing for an IPR in the initial stages of the development itself rather than waiting for the full solution to be developed. WHAT IS THE STRENGTH OF THE R&D DEPARTMENT? Overall we have strength of 10 people including five dedicated to our core activity of research and development. IS THIS NUMBER ENOUGH TO GROW IN THE FUTURE? We do need to grow the size of the team as well require more space. WHAT IS YOUR EXPERIENCE ON THE AVAILABILITY OF TALENT
TO STRENGTHEN YOUR TEAM AS YOUR FIELD OF WORK IS QUITE NICHE? Getting the right talent has been a challenge. We have set high standards for the senior team members. They must have a good qualification followed by at least 15 years of rich experience in the industry. They must have the affinity towards research, this is very important for us. Currently, out of five such members in the team, two are Omani nationals including myself. ARE YOU FOCUSING ON DEVELOPING SOLUTIONS FOR OMAN MARKET ONLY OR YOU ARE LOOKING AT APPLICATIONS FOR OVERSEAS MARKET ALSO AS MB GROUP HAS OPERATIONS
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RESEARCH & DEVELOPMENT
MBPS RESEARCH & DEVELOPMENT’S SERVICE PORTFOLIO y Intelligent gas lift optimization package y Intelligent well completion and intervention solutions y Stimulation & cementing services & training y Progressive cavity pumps- PCP, supply, trouble shooting and maintenance y Jet Pump ( Hydraulic Lift ) Technology
IN OVER A DOZEN COUNTRIES? No, it will be wrong to say that MBPS R&D is targeting Oman only. We have been making presentations in markets such as Saudi Arabia, Indonesia, Brunei, Malaysia, etc. Wherever MB operates, it is implied that our R&D should be able to go there as well. Oman’s oil & gas sector is quite diverse and challenging on various counts. Generally, you don’t find such variety in a single market. Oman market has offered us a unique platform to develop solutions which can be applied in similar kinds of situations in many other countries.
our own intellectual proprietary. We can’t own an IP if we take the outsourcing route. Thirdly, MB Group has so many companies and divisions across markets and disciplines. They all could leverage the talent available within the R&D. For example, we have managed to develop our own data acquisition system. Most of our Group companies need data acquisition system for their well test units, mud logging units, drilling units, etc. With our own data acquisition system, the expertise and spare parts are available in-house. We can get the solution in a much faster way as we are part of the same umbrella.
MOVING BEYOND MB, HOW IS THE SCENE ON THE R&D FRONT IN OMAN AS FAR AS OMANI COMPANIES ARE CONCERNED? I’m not aware of any other Omani company which does the kind of work we are doing in our R&D department. It is not easy for an Omani company to develop a new technology. We also started by modifying existing technologies to meet the requirements of our clients within the Group. We worked on the problems faced by our clients and presented feasible solutions to meet the challenges. As they proved successful in commercial applications, we shared them within our Group companies for usage in their operations.
We are looking at graduating from a department within MB to become a full-fledged LLC. We are already moving in that direction as we are not a typical cost-centre as we are generating decent revenue as well. Within the group, we are doing better on the revenue front compared to some of the departments which have running contracts. The transition will happen at an appropriate stage.
y Injection water treatment y Drilling fluid loss circulation prevention technology y Swelling/inflatable packers for water isolation in closed and open hole completions y Down hole valve to eliminate gas lock & fluid pound in beam pumping wells y Multiphase flow metering solutions – Supply & Service y Multiphase pumping solutions – Surface y Live well intervention platform for dual head wells with beam y Mechanical/Chemical water shutoff Solutions y Total well management solutions (acoustic survey equipment) y High sand tolerant sub surface beam pumps. y Continuous coil rod replacing sucker rods. y Motors and VFD’s y Stimuzyme EOR Technology. y MEOR (Microbial Enhanced Oil Recovery)
IS THERE A CASE FOR MB TO HAVE ITS OWN R&D DEPARTMENT? ISN’T IT BETTER TO OUTSOURCE THIS ACTIVITY AS YOU ARE A COST-CENTRE? Despite being a cost-centre, R&D is a critical area for any growth oriented company. If we look around globally, many companies have sizeable budgets allocated for the R&D activities.
y Radial Jet Drilling y Sand clean out using PCP y Hydrate prevention using electrical heating y Oil field consultancy
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There are three advantages of MB’s in-house R&D department. First and foremost is better profit margin as we don’t need to pay any fee of any kind to an outsider. Secondly, we are creating
IN ORDER TO MOVE UP IN THE VALUE CHAIN AND GROW THE R&D INDUSTRY WITHIN OMAN, DON’T YOU THINK YOU NEED TO WORK IN CLOSE CO-OPERATION WITH LIKE-MINDED ORGANIZATIONS SUCH AS SULTAN QABOOS UNIVERSITY, THE RESEARCH COUNCIL (TRC), ETC.? We are already on track on this front. Our chairman is a member of the board of directors of TRC. As far as SQU is concerned, we are in the process of signing a MoU to work jointly on a strategic research product in the field of EOR. The basic research work on a small scale has been done by SQU and we are trying to help them in developing it further at a higher scale for field application. For more information, visit www.mbpetroleum.com
LOGISTICS
SCHENKER KHIMJI’S TO PLACE OMAN ON GLOBAL LOGISTICS MAP With a joint venture in Oman and Oil & Gas Competency Centre in Dubai, DB Schenker is all set to take advantage of Oman’s rapid growth in logistics’ business
T
he logistics market is takingoff in Oman in a big way. The global majors are taking a note of it and as a result, strengthening their presence in the local market. In one of the major developments in logistics market in Oman towards the end of 2011, the global integrated
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logistics giant DB Schenker has entered into a joint venture with leading Omani business group, Khimji Ramdas, to form Schenker Khimji’s LLC. Speaking to OGR, Dr. Thomas Lieb, CEO of Schenker AG said: “We see a huge potential for the sector’s growth
in the Middle East region and Oman is one of the key markets for us here. We have been working with Khimji Ramdas Group for more than 25 years and the joint venture is the beginning of a new chapter in our relationship.” He added, “We understand that we
need to devote our attention to the high growth, emerging markets. As a result, our strategy is to strengthen the presence in these key markets by joining forces with our partners by combining their local strengths and our global knowledge and expertise.” In a statement issued to the press, M.C. Jose, CEO, Khimji Ramdas Projects and Logistics Group said: “We have been in discussion with DB Schenker on this JV for over five years. We are glad to have one of the leading global brands to associate with for providing firstclass total logistic services to the Oman market. We see the market growing steadily with new ports and airports being established in different regions. This JV partnership will enhance our position in the GCC region and it’s an important association for Khimji Ramdas moving forward. Furthermore our business focus now will also extend to Project Cargo, Aeroparts, Cultural and Sports Events”. Schenker Khimji`s will offer its customers a single point of contact within Oman for the logistics requirements and will help connect with their suppliers and customers around the globe. DB Schenker stands for the transportation and logistics activities of Deutsche Bahn and has over 91,000 employees in some 130 countries. DB’s Transportation and Logistics Division holds top positions worldwide in the industry. The logistics division of DB is the world’s second largest transportation and logistics service provider based on sales and performance. In financial year 2010, the transportation and logistics specialists generated revenues of around 18.9 billion euros. Through its Transportation and Logistics Division, DB holds top positions in global air and ocean freight and has Europe’s most extensive land transport network and the rail expertise of Europe’s largest rail freight company.
As the economy has globalized, crossborder flows of goods have increased, raw materials and products have to travel increasingly long distances and competitive pressure has grown as well. Companies in industry and trade now place greater demands on their logisticians, while they concentrate on their core business and rely on external providers for complex logistics services. DB Schenker is set up to meet these demands. Whether by freight train, truck, airplane or ship, whether storage, pre-assembly at the company or customs clearance, DB Schenker connects international markets and provides integrated logistics services. OIL & GAS EXPERTISE DB Schenker provides specialized logistic services for the oil and gas industry. It offers a comprehensive management concept and suitable solutions for all kind of logistics support required. Its network ensures that each transport is handled by DB Schenker specialists from multiple points of origin to multiple destinations worldwide. Its scope of oil field logistics service includes feasibility
studies on new onshore or offshore prospect areas. It undertakes erection and management of logistic base, waste disposal management, drilling stock inventory and management and operating of handling equipment. It follow-ups on delivery and clearance of goods in airport and port; provides airport and port services, chartering barges and supply vessel, air flight support, supply of qualified logistics personnel, local training and certification. It does welcome, ticketing and transport services for oil field personnel; camp erection and catering provision; and procurement and quality control of equipment. It offers FCL and LCL service, break bulk, part and full charters. It can organize the survey and the chartering for barging or tugging operations via – vessels in full time basis, spot hired on voyage basis, speed boat for spot delivery equipment and air charters for cargoes. DB Schenker also has access to any and all commercially available airplanes and helicopters for charters. To give dedicated services to the oil & gas sector, the company has set up oil & gas competence centers in select markets Jan-Feb, 2012
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LOGISTICS
including Houston, United States; Aberdeen, United Kingdom; Paris, France; Dubai, United Arab Emirates; Singapore; Batam & Balikpapan, Indonesia; and Perth, Australia. Dr.Lieb said, “Very soon we will nominate a global head for oil & gas vertical. Location is also currently under discussion. We have already appointed a person to manage the centre in Dubai. We have definite relationships across the world with big oil companies say based in US, France and Norway, etc. In the GCC region, we are also seeking to substantially expand our business with big national oil companies which dominate the regional oil & gas landscape. It can only be done by getting closer to them.” Few years ago, DB Schenker won a prestigious contract worth over 350 million Euros for Australian Gorgon Project. Kellogg Joint Venture, a consortium under contract of Chevron, ExxonMobil and Shell, awarded DB Schenker the contract to provide worldwide and national transport for the Gorgon Project, a major gas project in Australia. The project has a total investment volume of 25 billion Euros making it the biggest gas production undertaking in Australia, and currently one of the largest in the world. According to estimates, the Gorgon field, which is located of the northwest coast of Australia, holds 40 trillion cubic meters of gas. Plans call for a gas liquefaction plant to be built on Barrow Island to utilize the gas. The 4-year contract covers the provision of integrated logistical services by DB Schenker and has a total volume of about 350 million Euros. The contract entails transportation of more than two million freight tons of module production plants in Asia and/or directly to Australia. “We are proud to participate in such a significant enterprise. Providing logistical services for complex projects like this one is a challenge that we can master thanks to the experience and expertise of our specialists,” said Dr. Lieb. 46
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LOGISTICS
SOLID IMPACT
Oryx Metal Industries is a shining example of how Oman could be a springboard for export-oriented firms with innovative ideas to target the Middle East and Africa market
S
ohar is known for a number of large capital-intensive, heavy engineering industries. It also houses a medium sized manufacturing firm, employing 300 staff, making waves in the GCC and Africa markets with its high quality products. That’s Oryx Metal Industries (OMI) LLC manufacturing semi-trailers and rigid bodies for quality conscious public and private sector firms apart from the Government institutions. The oil & gas sector has been one of its key target industries apart from other sectors such as construction, cement & mixers, general cargo, municipality, army, etc. Talking to OGR, Oryx’s General Manager Joe Sakr said: “From the inception in 2007, we had decided that Oryx will stand for high quality and customer satisfaction to differentiate itself from Dubai based manufacturers which relies on mass production of low quality, cheap products. We source 70 per cent of raw material from Europe; have alliances with international giants such as Meiller (Germany), Lafon (France), Focal (Malaysia), etc. to provide superior quality products to our customers.” Oryx is the first and only manufacturing company of its kind in the Sultanate though there are smaller set-ups which are mainly workshops. Does Oman offer enough scope for a sustainable business driven by quality products in its segment? “It is not easy. Omani market is dominated by generic products such as tippers, flat beds and water tanks which are low value added products. This 48
Jan-Feb, 2012
segment is not quality conscious and highly price sensitive. We are struggling to introduce our high end tipper in the market. However, to ensure visibility in the market, we are selling our products even at negligible profit margins,” informed Joe. The company has been immensely successful in penetrating the African market apart from the GCC region. It has been selling its products in African countries including Senegal, Mali, Guinea, Niger, Burkina Faso, Ghana, Nigeria, Congo and Djibouti. It enjoys a good reputation internationally and is the approved supplier of Shell and Total in Africa and Middle East. It recently bagged an order for 35 tankers from Total in Mali. Oryx has been focusing its energies in expanding its product portfolio. It is betting big on its new product Aluminum Tankers. Lately, the company won the contract for 50 aluminum tankers from Jordan Petroleum Refinery Company. “We have a partnership with Focal Malaysia for manufacturing aluminum tankers. We import only the tank barrels from Focal and we do everything else say chassis, sub-frame, axles, accessories, painting, tyres, etc. at our Sohar factory,” said Joe. He added, “This is a real differentiated product from Oryx in the region. We intend to push this aggressively in the GCC market. In this segment in the region, we have a number of advantages over the competition which is mainly European firms directly serving the regional market. Being a 70 per cent local value added product in Oman, we enjoy the tag of ‘GCC Certificate of Origin’. As a result, we are exempted from paying custom duties in the region. Overall, we are 10-15 per cent cost-effective straightaway. The competition lacks good after sales service as they don’t have
an on-ground support whereas we are present on ground and just a phone call away”. But what about the quality? “We score over the competition in this aspect also. The Europeans are supplying the tankers with longitudinal welds. They weld the sheets one after the other before wrapping it. Whereas Focal uses a different wrapping technique and
each aluminum sheet is 12 meters long, wrapped around without welds. Less welding means less cracks, less problems. This is a unique selling proposition for us, ‘Wrapped, Almost Weld-Less Tank’.” Oryx is expanding its product portfolio by getting into new product segments such as silos, chemical tankers and heavy load low beds up to 100 tons. This Jan-Feb, 2012
49
LOGISTICS
is part of the company’s diversification strategy. It is also eying expanding its foothold in new markets. “We are concentrating on penetrating further in the GCC region with our added value products. Currently, 60 per cent of our products go to African markets. We are confident that our strong brand equity in West Africa could make us succeed in East African countries say Sudan, Kenya and Tanzania also. Libya is another high potential market for us provided the market gets stabilized in the new year and we manage to create the right connect there,” informed Joe. Interestingly, Oryx has been relying quite a lot on the African market for current business as well as future growth. Wasn’t it better for them to set-up their factory in Africa instead of Oman? Joe quickly replied: “We opted for the Sultanate because we believe that Oman provides a high level of the security to our investment. That was the primary concern for us. Secondly, we found reliable partners here. There had been no factories in our segment and Oman has been growing at a good pace so it was a good opportunity for us. Currently, we have a strong team of 300 staff including 120 Omanis.” 50
Jan-Feb, 2012
Despite a good show, it has not been a smooth sailing for Oryx in Oman as like any other market, the country has its share of advantages and disadvantages. Does Oryx gets preference in awarding of contracts in Oman? Joe said, “To a certain extent, yes. But the mind-set of most of the customers is to go to a truck dealer and buy the complete unit from him. In order to keep the total unit’s price at a lower level, the dealer outsources a cheap quality, low priced work on the back of the truck. For him, it is just an accessory as his primary interest is in selling his truck. So he won’t come to us as we aren’t cost-effective for him. This mind-set needs to be changed where a customer must give equal weightage to the quality of what’s behind the truck as he gives to the truck itself.” What about the impact of recent changes in the labour laws on Oryx’s business as it has a labour-intensive unit? Joe said, “We support Omanization and our Omani staff has been making a significant contribution in the success of the company. The wage increase has definitely added the pressure on the financial performance of the company. We welcome the shift to five-daysa-week system but we would have
preferred the Friday-Saturday as the weekends as most of our business is export oriented and we lose the business days due to completely different weekend systems. We are practically left with just three days (Monday to Wednesday) to do business in the international market as Europe and Africa are closed on Saturday and Sunday. It leads to operational challenges. “Things have to be looked at from both the perspectives, not just local alone as the country is giving a lot of stress on growing exports to drive the economy. On the total work-hours front, for all practical purposes, the number of working hours are reduced from 48 man hours to 42.5 man hours if we factor in the 30-minute break as well. This adds to the pressure on the business. These are some of the reasons why we cannot survive the low value game with operators from Dubai who doesn’t have such challenges. Hence, we can’t compete with them on the price fronts. Only differentiated quality could make us survive the competition in qualityoriented product categories.” For more information on Oryx Metal Industries, visit www.oryxmetal.com
TENDERS
Tender Watch WORK
COMPANY
DETAILS
Zauliha Gas Plant Project
PDO
www.pdo.co.om
Lekhwair Power System Upgrade
PDO
www.pdo.co.om
Supply of Drillling Chemicals(Salts)
PDO
www.pdo.co.om
MAF Transit Houses & Business Centre
PDO
www.pdo.co.om
Upgrade of existing Access Control System in Gas Operations,
Qatar Petroleum
www.qp.com.qa
Call-Cont for Prot Coat & Thermal Insu 5 yrs, various Qp Loc
Qatar Petroleum
www.qp.com.qa
Feed for Fiscal Metering Fac. of Ps2/3 Crude Oil/Seg Tk. Man
Qatar Petroleum
www.qp.com.qa
Feed for Third SBM Pipeline at Halul
Qatar Petroleum
www.qp.com.qa
Hiring of Services for Sub sea Production System for Vashishtha & S1
ONGC
www.ongc.co.in
Construction of Stimulation Vessel
ONGC
www.ongc.co.in
Construction of Artificial Turf Outdoor Football Pitch at Hay Al Sharooq
Oman LNG
www.oman.lng.com
Kuwait Oil Company
www.kockw.com
Kuwait Oil Company
www.kockw.com
Kuwait Oil Company
www.kockw.com
Mesaieed
Wells on LSTK Basis
(Has) Housing Complex Construction of Artificial Turf Outdoor Football Pitch at Hay Al Sharooq (Has) Housing Complex Replacement of defective valves and corroded pipes by Stoppling Techniques Feasibility study of drilling WK Jurrasic Multilaterals
Source: From different corporate and tender websites
Jan-Feb, 2012
51
CONTRACTING
15-YEARS OF EXCELLENCE Nafal Contracting & Trading Co. LLC is celebrating 15-years of successful operations. OGR spoke to the company’s Managing Director Mustafa J. El Alwan on the key achievements and the way forward TELL US ABOUT THE ESTABLISHMENT OF NAFAL? I moved to Oman in 1995 to work on the construction of Hotel Grand Hyatt in Muscat. In 1997, I joined as the Managing Director of Nafal Contracting & Trading LLC. We had taken over the company in the same year and converted it from an ‘Establishment’ to a ‘LLC’. Mr. Sarhan Ali Ahmed Al- Sarhani is the Chairman of the company. He has been a pillar of support and the guiding force behind the remarkable growth of the company. NAFAL IS GOING TO COMPLETE 15-YEARS IN MAY THIS YEAR. WHAT HAVE BEEN THE KEY ACHIEVEMENTS OF THE COMPANY IN THE PERIOD? Since beginning we have moved from strength-to-strength and it has been an excellent success journey marked by rapid growth. When we acquired the company, Nafal was into providing coating and sandblasting services only. We restructured the company. We consolidated and enhanced the previous services of Nafal into a dedicated division called ‘Corrosion and Cathodic Protection Engineering’.This division provides a wide range of corrosion protection solutions specifically designed for conditions prevalent in industrial environments. We have been associated with major paint and coating brand ‘Jotun’. We have been winning Jotun Applicators Award for many years. This division has won number of contracts including the prestigious contracts from 52
Jan-Feb, 2012
the Royal Navy of Oman. If I include the current contract with them, it makes an association of 16 years with Royal Navy for us, not a mean achievement by any yardstick. To expand the company further, we created four more divisions -- Civil, Insulation, Scaffolding and Electromechanical. The first to be added was the Insulation Division where we have carried out the insulation work as a
sub-contractor to Bechtel-Galfar for the GAS Processing Plant. Then we have been involved in various projects belonging to clients such as PDO and Occidental like Harweel, Qarn Alam and Mukhaizna. The company holds thus maintenance contracts for insulation, scaffolding and painting works for clients like Oman LNG, Muscat Refinery, Sohar Refinery, Royal Navy of Oman and others.
The Civil Division has contributed to the growth of the company by winning Government contracts for clients like Ministry of Defense, Royal Oman Police, Muscat Municipality and Ministry of Health are among our major clients. The Scaffolding Division was associated with major projects like Sohar Power Plant, Tank Farm Construction in Sohar, Majlis Oman Project, OLNG shutdown work, Muscat Refinery and Sohar Refinery term contract and shutdown work. The last division to be added is Electromechanical Division, which recently completed RO Plant project in Lima, Over Head line project for Jabal Shams Radar Station, Sharqiya Villages electrification in addition to 33 kv underground cable supply and laying, the division is expanding to include 132 and 200 kv electrical works. All divisions are supported by a central organization which covers HSE, Accounts and Administration. WHAT’S THE THOUGHT BEHIND HAVING SO MANY DIVISIONS? The idea is to be a one-stop-shop for clients. Our wide network of offerings currently meets most of the needs of our clients. Coatings, insulation, cladding, scaffolding and refractory cater to the maintenance work and shutdown of the plant. Then we have the civil and electromechanical services. Now we are trying to strengthen these disciplines in order to be a turnkey provider of services. WHAT’S THE NEXT STEP FOR NAFAL? We want to become an EPC contractor. WHAT’S THE MISSING LINK NOW IN YOUR ARRAY OF SERVICES? Right now we are only short of front end engineering design capability in order to become an EPC contractor. In the coming years, we are confident to achieve this target also.
CAN YOU TELL US MORE ABOUT YOUR SCAFFOLDING BUSINESS? We are the number one scaffolding company in Oman. We hold around 130,000 cubic metres of scaffolding. We are into industrial scaffolding only. To give you an example of our strength, let us say in the case of a plant shutdown, we have the capability, material and qualified staff to go upto 80 metres height in one go. We have recently been awarded for a shutdown activity for Oman Refinery along with another company. We are also setting-up the first of its kind manufacturing unit for scaffolding in Oman. It is coming up at Sohar Industrial Area. This unit is under a separate company called Nafal Industrial Company. The partners of Nafal Contracting & Trading are the partners in the new company also. It will be based on state-of-the-art technology with equipment sourced from Europe and Far-East markets. It will have a full-fledged production line for scaffolding targeting not just Oman but rest of the GCC region, Africa and other international markets also. It will have a capacity of 300,000 tons per annum and is expected to be operational in the first half of this year. WHAT IS YOUR OUTLOOK FOR OMAN IN THE COMING YEARS? I think Oman is going to experience a boom in the coming years. That is the reason, with 15 years of glorious past, we are building the company today to be ready for the next five years of growth in the country. IN WHICH SECTORS DO YOU FORESEE MAJOR OPPORTUNITIES COMING YOUR WAY? Omani economy is expected to continue to grow as a whole and many sectors are going to benefit from it. If we look at it from our perspective, we are quite
bullish on the power sector in addition to the water sector. Whether generation or distribution, electricity and water are going to be in increased demand for residential as well as commercial and industrial applications. If we look at specific projects or areas in the infrastructure development and oil & gas expansion, there could be many growth drivers. Oil refining is one area. We expect Duqm to witness a huge development across verticals. Musandam is also expected to be one of the focus areas for the development in the country. Construction sector will benefit a lot from the increased activities. Many infrastructure projects have been awarded in the last few months. Oman is also looking at Railways in the coming years. It will open up a new segment in the market. As an investor, these are very positive signs in terms of business growth. WHAT IS THE CONTRIBUTION OF NAFAL TOWARDS THE DEVELOPMENT OF LOCAL TALENT? We believe in promoting local talent. Since early days, we have been training Omani youth to undertake various responsibilities within the organization. I’m quite happy to say that most of them have been with us for a long time and reached supervisory positions across disciplines. In fact, many of them have been working for the last 12-15 years. With stress on development and retention of Omani human resources, we have been holding the green card and enjoy excellent relations with the Ministry of Manpower. As a management, we believe in team work. We have integrated the entire structure of the company on the principles of discipline and team work. For more information, visit www.nafalco.com Jan-Feb, 2012
53
WOMEN OF SUBSTANCE The Al Mar’a Excellence Awards recognised and honoured exemplary women achievers
T
he Al Mar’a Excellence Awards, the first-of-its-kind in the Sultanate honoured women achievers across different fields at a glittering event at The Amphitheatre, Shangri-La’s Barr Al Jissah Resort & Spa on December 5. The event was held under the auspices of Her Highness Sayyida Dr. Muna bint Fahd Al Said, Assistant Vice-Chancellor for External Co-Operation, Sultan Qaboos University. A number of other dignitaries and the who’s who of Muscat were also present at the event. The Al Mar’a Excellence Awards were presented across 12 categories; namely: Corporate Leadership, Fashion Design, Performing Arts, Fine Arts, Educational Services, Entrepreneurship and Innovation, Health Services, Science and Industry, Technology, Sports, Petroleum Services and Social Responsibility. Apart from these, two women were the recipients of the prestigious Woman of the Year and Most Promising Woman of the Year Awards. Special Awards were given to four
women who have made significant contributions in the fields they have chosen to be in. The Awards were judged on the basis of nominations received which were then reviewed by a panel of esteemed judges and the final ranking process was appraised by Ernst & Young. The Awards judged women on the basis of criteria like innovation and creativity, the impact their contributions have had in society, leadership abilities and the goals achieved. The red carpet event also featured some dazzling entertainment choreographed by Emmanuel Castis, a talented international vocalist with many music awards to his credit. The Al Mar’a Excellence Awards was a wonderful platform that not only felicitated woman achievers; but also revealed the passion and inspiration of women who have aspired to attain great accomplishments in their chosen fields and have gone that ‘extra mile’ to turn their dreams into reality.
The Al Mar’a Excellence Awards 2011 is an Al Mar’a Initiative. Strategic Partners: Mercedes-Benz (Zawawi Trading Company, the authorised general distributor for Mercedes-Benz in Oman), BankDhofar and Nawras. Support partners: Taageer Finance Company SAOG, Areej Vegetable Oils (AVOD) and Givenchy. Assessment Partner: Ernst & Young. Media Partners: Times of Oman, Al Shabiba, H! and Al Youm Al Sabe. Radio Partners: Al Wisal FM and Merge 104.8 FM. Printing Partner: Ruwi Modern Printers. Travel Partner: Travel City.
LIST OF WINNERS CORPORATE LEADERSHIP
TECHNOLOGY
Ayisha Al Mawali
Seema Al Kabi
UNVEILED
Mariam Al Alawi The Al Mar’a Excellence Awards also saw
FASHION DESIGN Anisa Al Zadjali
SPORTS
Khadija Al Lamki
Fatma Al Nabhani Muna Al Shanfari
PERFORMING ARTS Jokha Al Naabi Ilham Al Toqi FINE ARTS Budoor Al Riyami Alia Al Farsi EDUCATIONAL SERVICES H.E. Dr. Madiha Al Shaibani ENTREPRENEURSHIP AND
PETROLEUM SERVICES Abla Al Riyami Maliha Al Abri
Zainab Al Lawati
be called The Woman. It will continue in the same mould of Al Mar’a, though in a contemporary, peppy and spirited avatar. It will reflect all what a woman stands for, in pages of what they like, what they aspire to be and what inspires them to be the dreams, hopes and ambitions… and will
Yuthar Al Rawahi
of course; revel in the different shades a
Mariam Al Zadjali
woman stands for. A woman’s guide to everything she wants from life.
WOMAN OF THE YEAR Lujaina Mohsin Darwish MOST PROMISING WOMAN OF THE YEAR Hana Syed
HEALTH SERVICES Dr. Adhra Al Mawali
Al Mar’a English edition which will now
best. The Woman is a symbol of a woman’s SOCIAL RESPONSIBILITY
INNOVATION Etab Al Zadjali
the unveiling of the new look of
SPECIAL AWARDS Khawla Khalifa Al Amri
SCIENCE AND INDUSTRY
Sheila Jamal
Nisreen Jaffer
Dr. Fatma O. Ali
Bushra Al Abdwuani
Mrunal Khimji
COMMERCIAL VEHICLES
FUSO LAUNCHES 2012 MODEL OF CANTER TRUCK Fuso introduced the 2012 model of the company’s popular and versatile Canter truck in Oman. It is available in a 3.5-tonneand 4.6-tonne configuration and can be adapted to specific customer needs. According to a company statement to the press, the 2012 Canter is set to reinforce the model’s reputation as the most reliable truck of its kind available in this size with a rapidly growing customer base in the Sultanate with companies like PDO and Oasis Water recognising the versatility and quality the vehicle can bring to their operations.
version. The light duty truck can be used for a wide range of uses and its 4 x 4 capabilities ensure the truck can operate in the most challenging conditions for its customers all over the Sultanate. Commenting on the introduction of the 2012 model, Fuso’s National Sales Manager Jamal Wasti said: “The new 2012 canter offers the owner
a superb mix of onsite capability mixed with on street agility, provided by an engine that is suitable for all the individual’s needs and requirements. Their proven performance comes hand in hand with durability, fuel efficiency, reliability and clean emissions for the environment.
Distributed exclusively in Oman by the General Automotive Company, part of the Zubair Automotive Group, the 2012 edition of the Canter, is available in either a double cab, single cab or chassis
ZAWAWI GROWS MERCEDES-BENZ COMMERCIAL VEHICLE DIVISION SALES BY 42PC The Commercial Vehicle division of the authorized general distributor for Mercedes-Benz in Oman - Zawawi Trading Company (ZTC) – witnessed a significant increase in performance in 2011, growing year on year sales by an unprecedented 42 per cent in the Sultanate, as per a press release issued by the company. Taking place during Mercedes-Benz’ 125th Anniversary since its invention of the automobile, the significant sales increase was achieved thanks to a concerted effort by ZTC to improve sales and marketing processes within its Commercial Vehicles division. The growth was also bolstered by ZTC’s new stock planning facilities, which allowed the company to achieve a more focussed and robust sales approach for the German automotive manufacturer’s products in the Omani market place. New customer servicing initiatives - such as 56
Jan-Feb, 2012
the Mercedes-Benz ‘Field Force’ mobile workshop team - were also implemented by Zawawi to deliver Commercial Vehicle fleet clients with a more personalised experience, and included on-site vehicle checks, inspections, and Driver Training Programmes to improve core competencies such as defensive and economic driving. Craig Hardie, CEO –
Automotive, Zawawi Trading Company, said: “2011 was a year of great change in the Commercial Vehicle division of ZTC, as we continue to improve and expand our services and customer experience. This is a trend that we strongly intend to continue well into 2012, with numerous new and exciting projects planned for introduction this year.”
EVENTS CALENDAR
TITLE
DATES
LOCATION
SPE Workshop - Marginal Fields and Small Discoveries: Unlocking the Potential
16-18 January 2012
Cairo, Egypt
SPE Workshop - Development of Sour Fields: Addressing Business and Technology
22-23 January 2012
Abu Dhabi, UAE
SPE Middle East Unconventional Gas Conference (12UGAS)
23-25 January 2012
Abu Dhabi, UAE
Petrochemicals - Strategic & Investment Considerations
23-25 January 2012
Jubail, Saudi Arabia
Gulf Petroleum Conference & Exhibition
30 Jan â&#x20AC;&#x201C; 1 Feb 2012
Kuwait
Hydrocarbon Technology Congress
7-9 February 2012
Macao
SPE Workshop - The Changing Role of Petrophysics in Characterising and Producing
20-22 February 2012
Dubai, UAE
AOG 2012 - Australasian Oil & Gas Exhibition & Conference
22-24 February 2012
Perth , Australia
SPE IADC/SPE Drilling Conference and Exhibition
6-8 March 2012
San Diego, California, USA
Unconventional Gas Forum 2012
13-14 March 2012
Barcelona, Spain
Optimising Enhanced Oil Recovery
13-14 March 2012
Abu Dhabi, UAE
Oil & Gas Africa 2012
13-15 March 2012
Cape Town, South Africa
SPE Workshop - Field Redevelopment to Maximise Asset Value: Develop Strategies to
19-20 March 2012
Doha, Qatar
10th China International Offshore Oil & Gas Exhibition
19-21 March 2012
Beijing, China
SPE Workshop - Petroleum Economics: Beyond NPV (12ADU3)
26-28 March 2012
Dubai, UAE
Reserve Estimation For Unconventional Resources Emea
27-28 March 2012
London, UK
Corrosion Management Asia 2012
2-4 April 2012
Kuala Lumpur, Malaysia
OGWA 2012
16-18 April 2012
Muscat, Oman
MOC - Mediterranean Offshore Conference & Exhibition
22-24 May 2012
Alexandria, Egypt
74th EAGE Conference & Exhibition incorporating SPE EUROPEC 2012
4-7 June 2012
Copenhagen, Denmark
The 25th World Gas Conference
4-8 June 2012
Kuala Lumpur, Malaysia
World National Oil Companies Congress
18-22 June 2012
London , UK
Challenges
Middle East Reservoirs: Uncovering What is Myth and What is Reality?
Extend Life Cycle and Optimise Production (12ADO2)
Source: Industry Websites
Jan-Feb, Jaann-Fe Ja -F Feeb, 2012 F 200112 20
57 57
GUEST COLUMN
US VS. CHINA MIDDLE EAST POLICY
For several years to come, both China and the United States will maintain high interests in the Middle East, with “Energy Security” being the main key driver for the former, and “Geopolitics of Energy” for the latter
D
ue to a phenomenal economic growth rate of 8-10 per cent a year, China’s thirst for energy is growing rapidly and is expected to double by 2020 and even quadruple by 2050. China is expected to outpace US as the world’s top oil importer sometime after 2030. For the time being, Chinese economy is mainly coal-based (70 per cent). However, drastic CO2 emissions is pushing China towards energy substitution, i.e., from coal to oil and gas at the first stage (to 2030), and to renewable energy at a later stage (to 2050).
Shahriar Hendi, President of Congage China Inc.
58
Jan-Feb, 2012
The US vs. Chinese Middle East policy is passing through a very crucial stage and such conditions are expected to continue until 2030. Dependence on oil means dependence on the Middle East, where 70 per cent of the world proven reserves exists. According to IMF forecasts, China’s economy is expected to surpass that of America in real terms by 2016. The United States is not in a position to halt or even slow down China’s economic growth, but as the world’s top military power, the US is in a position to exercise control over China’s main source of oil imports, i.e. the Middle East. The United States will implement such control through its military presence in the Middle East as well as keeping a constant eye over strategic chokepoints to supervise China’s imported oil maritime routes. Meantime and for the years to come, the US will also be busy with a widespread “stabilization” plan within the
Middle Eastern societies, which is already underway under the title of “Arab Spring”. Chinese, on the other hand, would probably leapfrog from oil, if they can, until they manage to efficiently reduce dependence on fossil fuels and turn into a clean energy based economy. Such a goal seems to be viable only after 2030. Until then, China would concentrate on a conditional coexistence with the US, while benefiting from its position as the largest creditor nation and foreign holder of US public debt. The likely related developments in 2012 are expected to be further US efforts to expand its military and non-military presence in the Middle East through extending the “Social Engineering” plans to Syria, Iran and Saudi Arabia. Iran, Iraq and the Arabian Peninsula are at the core of oil and gas reserves in the Middle East. The United States put an end to its military presence in Saudi Arabia 10 years ago and will do the same in Iraq by the end of 2011. However, in both cases, American forces were and are being evacuated to the neighboring Kuwait and US would maintain a strong military and political presence in the area as before. The drums of war with Iran are being played and it seems US plans to extend her influence in the Middle East even further. For several years to come, both China and the United States will maintain high interests in the Middle East, with “Energy Security” being the main key driver for the former, and “Geopolitics of Energy” for the latter.
JOB POSTINGS
POSITIONS
COMPANY
LOCATION
DETAILS
Community Relations Officer
PDO
Oman
www.pdo.co.om
Control & Automation Engineer
PDO
Oman
www.pdo.co.om
Electrical Engineer
PDO
Oman
www.pdo.co.om
Medical Officer
PDO
Oman
www.pdo.co.om
Well Servicing Specialist
Oxy
Oman
www.oxy.com
Well Servicing Planner
Oxy
Oman
www.oxy.com
Well Services Superintendent
Oxy
Oman
www.oxy.com
Well Services Filed Engineer
Oxy
Oman
www.oxy.com
Drilling Supervisor / Well Site Leader
BP
Azerbaijan
www.bp.com
Maintenance Engineer
BP
South Africa
www.bp.com
Process Safety Engineer
BP
Brazil
www.bp.com
Senior Interventions Engineer
BP
Angola
www.bp.com
HR Advisor
BP
Oman
www.bp.com
Project Services Team Lead (Wells)
BP
Oman
www.bp.com
Human Capital Consultant
OOCEP
Oman
www.oocep.com
Director Supply Chain Management
OOCEP
Oman
www.oocep.com
Instrument Line Training Coordinator & Workshop
Shell
Qatar
www.shell.com
Reservoir Engineer
Shell
Qatar
www.shell.com
(Senior) Process Engineer Front End
Shell
UK
www.shell.com
Senior Reservoir Geophysicist
Shell
UK
www.shell.com
Equipment Facilitator
Source: From different corporate, recruitment and social networking websites
Jan-Feb, 2012
59
ALTERNATIVE ENERGY
INVESTMENT IN AFRICAN RENEWABLE ENERGY REACHES $3.6 BN Africa with modern efficient technologies could build a renewable energy infrastructure that could bypass the inefficient, fossil fuel-centered energy infrastructure systems of the developed world, says, John C.K. Daly
FIRST, THE BAD NEWS. Although Africa has vast fossil and renewable energy sources, only 20 per cent of its population has direct access to electricity and in some rural areas, four out of five people are completely without power. According to the UN, over 600 million Africans currently do not have access to electric power. A depressing 70 percent of Sub-Saharan Africa’s population is living without access to clean and safe energy for their basic needs such as cooking, lighting and heating, making energy poverty among the most urgent issues facing Africa. Worldwide, more than 1.4 billion people have no access to electricity, and 1 billion more only have intermittent access. Over 2.5 billion people, almost half of humanity, rely on traditional biomass – wood, coal, charcoal, or animal waste to cook their meals and heat their homes, exposing themselves and their families to smoke and fumes that damage their health and kill nearly two million people a year. More than 95 per cent of these people are either in sub-Saharan Africa or developing Asia. THE GOOD NEWS? According to the Managing Director of Nigeria’s Bank of Industry (BOI), Evelyn Oputu, total investments in renewable energy in Africa rose from $750 million in 2004 to $3.6 billion in 2011. To put this in a global context, worldwide investment in renewable energy has risen from $33 billion in 2004 to $211 billion in 2011. 60
Jan-Feb, 2012
AND THE FUTURE? According to a report issued in August 2011 by Frost & Sullivan entitled “Mega Trends in Africa: A bright vision for the growing continent,” investment in renewable power in Africa is set to grow from the 2011 total of $3.6-billion in 2010 to $57-billion by 2020, a staggering 1,583 percent increase in nine short years. According to the document, “The key growth sectors will be wind power, solar power, geothermal power and foreign direct investment (FDI) into energy and power infrastructure.” The reason for the spectacular projections? Africa’s combination of a massive unmet demand, including remote communities, allied to an abundance of renewable power potential in the form of solar, wind and geothermal potential. To give but one example, only seven percent of Africa’s hydropower capacity has been developed up to now. Africa is not yet locked into the inefficient, oft-polluting infrastructure of many Western countries. Accordingly, Africa with modern efficient technologies could build a renewable energy infrastructure that could bypass the inefficient, fossil fuel-centered energy infrastructure systems of the developed world. Modest starts in renewable energy have already begun across the continent. Wind power projects in Africa are planned or under way in Egypt, Ethiopia, Kenya, Morocco, Nigeria, Tunisia and Tanzania – including Kenya’s 0.3 gigawatt Lake Turkana project and 0.7 gigawatt of capacity under construction in Morocco, while Cameroon, Kenya, Tanzania and Uganda all have existing biomass power capacity or plans for future development. Solar? South Africa has its planned solar park in Upington, intended to contribute 5,000 megawatts to the national electrical grid, while North Africa’s Desertec is the largest solar power project ever conceived,
designed at a potential cost of $500 billion to provide a significant portion of the electricity needs of participating countries in the Middle East and North Africa (MENA) region and up to 15 per cent of Europe’s electricity needs by 2050. Africa’s ambitions have the support of the United Nations, where in 2010 the General Assembly unanimously endorsed a resolution d esignating 2012 as “The International Year of Sustainable Energy for All.” UN Secretary-General Ban Kimoon has set three inter-linked objectives to support the goal of achieving “Sustainable Energy for All” by 2030, which are ensuring universal access to modern energy services, doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix.
capacity, 500 megawatts of solar energy capacity and tripling the capacity of other renewables, such as geothermal, and modern biomass. The downside to this picture? Three things - the need for massive amounts of investment capital, a problem attendant to massive amounts of cash – corruption, and the continent’s changing political landscape, which is already impacting the Desertec North African solar initiative as the Arab Spring roils the south coast of the Mediterranean. But both the need and potential are there – all that are currently lacking to make the future predictions a reality are cash and political will.
The UN Sustainable Energy for All incorporates a number of initiatives focusing on Africa, including World Bank Group’s Lighting Africa, the ParisNairobi Climate Initiative, the AfricaEuropean Union Energy Partnership, and the Global Alliance for Clean Cookstoves, as well as the EU’s decision to make access to sustainable energy a development priority through its “Agenda for Change.” A number of countries, including South Africa, are also leading the way with national initiatives. But these initiatives are relatively recent and need financial support to prosper. It was only in September 2010 that African and European leaders launched the Africa-EU Renewable Energy Cooperation Program (RECP) at the First High-Level Meeting of the Africa-EU Energy Partnership (AEEP) in Vienna. AEEP’s agenda is nothing if not ambitious, as its targets on renewable energy to be reached by 2020 include 10,000 megawatts of hydropower facilities, 5,000 megawatts of wind power
Source: www.oilprice.com Jan-Feb, 2012
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MARKET REPORT
CAUTIOUS MODE Global oil demand in 2012 is now expected to grow by 1.1 mb/d to average 88.9 mb/d, representing a downward revision of 0.1 mb/d from the previous assessment
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he OPEC Reference Basket increased in November to settle above the $110 mark for the first time since July in 2011. The upward movement of the Basket, which began gradually in the first half of the month, was supported by efforts to address the Euro-zone crisis, renewed geopolitical concerns, and US data showing a slight improvement in the economy. In November, crude oil
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futures markets were up significantly, particularly the WTI front-month which registered the highest month-on-month gain since March. Nymex WTI jumped $10.73/b to average $97.16/b for the month, while ICE Brent rose $1.70/b to average $110.49/b. WTI was up 15.2 per cent y-o-y and ICE Brent 28.2 per cent higher than a year ago. On 12 December, the OPEC Reference Basket stood at $107.33/b.
The world economic growth remains at 3.6 per cent for both 2012 and 2011. However, the 2012 forecast for the OECD has been revised down from 1.7 per cent to 1.5 per cent, with Developing Countries helping to compensate for this shortfall. US growth is now forecast at 1.7 per cent for 2012 compared to 1.8 per cent previously. The Euro-zone remains the center of uncertainty and therefore 2012 has been revised down from 0.7
per cent to 0.4 per cent. Japan is forecast to expand by 1.9 per cent in 2012, following a downward adjustment of 0.3 percentage points. Chinaâ&#x20AC;&#x2122;s development remains relative resilient so far and 2012 growth expectations have been increased to 8.7 per cent from 8.5 per cent. Indiaâ&#x20AC;&#x2122;s momentum is decelerating and growth for 2012 was lowered to 7.5 per cent from 7.6 per cent. The downside risk for the world economy is evident and close monitoring will be needed on developments in the Euro-zone debt crisis, slowing activity in developing economies, and the still relatively weak situation of the US economy.
mixed performance with the middle and heavy parts of the barrel maintaining the recovery shown in the previous months. The bullish sentiment in middle distillates was fuelled by the tightening market with the start of the winter season. However, this was not sufficient to offset the substantial decline in the crack spread for light distillates, which plummeted to the lowest level so far in 2011, not only due to lackluster gasoline demand in the Atlantic Basin but also weaker demand in the petrochemical industry. Thus, refinery margins fell across the globe.
to fall for the third consecutive month in November, declining by 20.3 mb to stand at 1,044.5 mb. The drop was attributed to both products and crude which fell by 15.6 mb and 4.7 mb, respectively. With the decline in total US commercial oil inventories, the surplus with the five-year average in the previous months switched to a deficit of 9.1 mb in November. In Japan, the most recent monthly data for October shows that commercial oil inventories declined slightly by 0.6 mb to stand at 178.2 mb. At this level, crude stocks still showed
Quarterly world oil demand growth The world oil demand in 2011 is estimated to grow by 0.9 mb/d, unchanged from the previous assessment. Global oil demand in 2012 is now expected to grow by 1.1 mb/d to average 88.9 mb/d, representing a downward revision of 0.1 mb/d from the previous assessment. The adjustment reflects slowing growth in the OECD, which is expected to have spillover effects for China and India, and hence impact oil consumption over the coming year. Non-OPEC oil supply is estimated to increase 0.2 mb/d in 2011 following a downward revision of about 50 tb/d from previous month. The main contributors to the adjustment are Australia, Syria, Sudan, and Azerbaijan. In 2012, nonOPEC oil supply is forecast to increase by 0.7 mb/d over 2011, around 0.1 mb/d lower than the previous assessment. The bulk of the increase will come from the US, Brazil, Canada, Colombia, and Russia. OPEC NGLs and nonconventional oils are expected to add 0.4 mb/d in 2012 following the same increase in 2011. In November, OPEC crude production averaged 30.37 mb/d, according to secondary sources, an increase of 560 tb/d over a month earlier. Product market sentiment showed a
On the tanker market, the increased tonnage demand driven by winter requirements supported VLCC spot freight rates in November from the persistently low levels seen over the previous months. VLCC spot freight rates from the Middle East to the East increased 28 per cent over the previous month. OPEC spot fixtures increased 1.0 mb/d in November to average 11.9 mb/d, supported by winter demand. OPEC sailings increased in November by 0.65 mb/d to average 23.1 mb/d. US commercial oil inventories continued
a surplus of 7.6 per cent over a year ago, while the deficit with the five-year average has widened to 5.3 per cent. This stock draw was attributed to the 1.7 mb fall in products, as crude oil stocks rose 1.1 mb. The demand for OPEC crude in 2011 remained unchanged at 30.0 mb/d compared to the previous assessment and around 0.3 mb/d higher than in 2010. In 2012, the demand for OPEC crude is projected to average 30.1 mb/d, about 0.1 mb/d higher than in the previous report and indicating growth of about 0.1 mb/d over the current year. (Excerpts from the OPEC market Report released in December 2011.)
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EVENT REPORT
EXXONMOBIL GETS THE COVETED
WPC EXCELLENCE AWARDS Qatar successfully hosted the 20th World Petroleum Congress which attracted over 5,000 delegates from all over the world
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he 20th World Petroleum Congress took place in Qatar from the 4-8 December, 2011. It was the first time the Congress comes to the Middle East in its 75 year history. The World Petroleum Council was founded in London in 1933. It is an international, unbiased, nonpolitical organisation that provides a forum for discussing world issues facing the oil and gas industry. The WPC is dedicated to scientific advances in the oil
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and gas industries, technology transfer and the promotion of the management of the world’s petroleum resources for the benefit of mankind. Every three years, the World Petroleum Council hosts an international oil and gas congress hosted by one of its member countries. In the opening remarks, the Council’s President Dr. Randy Gossen said: “We come together at a time of dramatic change across the globe. Whether it’s the so-called “Arab Spring” here in the Middle East, the Occupy Wall Street movement, or the European debt crisis, we are reminded again that world events are constantly in flux and political and economic upheavals are often the norm, rather than the exception. For those of us in the oil and gas business — and for all who seek to create a more sustainable global energy
future — these are challenging times. But with great challenges, comes even greater opportunities. The theme for the Congress, ‘Energy Solutions for All – Promoting Cooperation, Innovation and Investment’ could not be more relevant or timely.” On the occasion, His Highness Sheikh Hamad Bin Khalifa Al-Thani, Emir of the State of Qatar, said, “Meeting the growing needs for oil and gas requires enormous investments by the exporting countries. The financing of these investments and securing their profitability require the most accurate information possible about the factors affecting the global demand for these two commodities to reduce the degree of risk that these investments may be subjected to. It is not reasonable to ask the Exporting Countries to meet the future
needs for these two commodities while at the same time the consumer countries carryout unilateral activities that augment the risks facing these investments.” World Energy Council (WEC) presented a study ‘Global Transport Scenarios 2050’ at the WPC. The report highlighted the role of governments in providing a sustainable future for the global transport sector. According to the report, WEC expects that transport fuel demand in the next 40 years will come mainly from developing countries such as China and India, where demand will grow by 200 per cent to 300 per cent. In contrast, the transport fuel demand for the developed countries will drop by up to 20 per cent, mainly due to increased efficiencies. The demand of the developing countries is expected to surpass that of the developed countries by the year 2025. The report also sets out that oil may still fuel more than 80 per cent of the global transport sector for the next 40 years due to strong demand growth from the heavy duty sector, shipping and air traffic. By 2050, WEC projects that global fuel demand in all transport modes could increase by 30 to 82 per cent compared to 2010 levels. The result of this yearlong study describes potential developments in global transport fuels and technology systems on the basis of two distinct scenarios; “Freeway” and “Tollway.” The “Freeway” scenario envisages a world where pure market forces prevail to create a climate for
open global competition and solutions which are driven by lowest cost and the private sector. The “Tollway” scenario describes a more regulated world where governments decide to intervene in markets to promote early adoption of alternative technology solutions and invest in public transport infrastructure putting common interests at the forefront. “The Freeway and Tollway scenarios describe two extreme ends of the potential future of transport. The reality will inevitably be between these two scenarios with regional differences playing a major role,” said Prof. Karl Rose, Director of Policy and Scenarios at the World Energy Council. “It is, however, evident that the transport sector is about to go through a radical change. The light duty vehicle sector in OECD countries will be almost completely transformed in terms of fuel mix and we will see a pronounced shift of demand for transport fuels to the developing countries. The effect of the penetration of new technologies seems to be less profound than many have predicted, mainly due to the exceptional growth in heavy transport demand,” Prof. Rose added. The event also hosted the WPC Excellence Awards. A big surprise awaited ExxonMobil’s CEO Rex Tillerson, when he was called twice to the stage to receive a WPC Excellence Award on behalf of his company. Having submitted several outstanding projects
for both Social Responsibility and for Technical Development, he was delighted when ExxonMobil was announced as the winner for both categories by HE Abdulla Bin Hamad Al Attiyah, Deputy Prime Minister and Chief of the Control and Transparency Authority in Qatar. The Deputy Prime Minister was particularly thrilled when he handed the Excellence Award in Technical Development to QAPCO, a company he himself chaired until 2010. He congratulated QAPCO CEO Dr Mohammed Al Mulla for the project Recovering waste hydrocarbon streams, which had been selected as the best project in the group for small to medium sized enterprises. Due to the high number of outstanding paper submissions received from young people for the technical programme of the Congress, the World Petroleum Council presented a special WPC Excellence Award for Youth to the best young presenters of the Congress. Twenty percent of all WPC programme papers and posters came from young people under 35, who joined some of the top experts of the oil and gas sector in the Forum sessions. Recognising their outstanding achievements, the Qatari member of the WPC Youth Committee and organiser of the youth programme for the 20th WPC, Mishal Al Thani announced the four finalists. Anup Roy from India won the first place with his paper on Innovative technology for LNG regasification. The 20th World Petroleum Congress was hosted by Qatar Petroleum on behalf of the State of Qatar and it took place at the brand new Qatar National Convention Centre (QNCC) in Doha. The QNCC, which boasts an iconic design and cutting-edge facilities in a green technology venue, is the first facility of its kind in the Middle East being built to the gold certification of the U.S. Green Building Council’s Leadership in Energy and Environment Design (LEED). Over 5000 delegates participated in the event. Jan-Feb, 2012
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GUEST COLUMN
ENERGY SECURITY CONTINUES TO BE A WORRY
The decision of OPEC members to increase their production to cover the production cuts in Libya and maintain OPEC’s production of 30 million barrels per day in December 2011 were both pieces of good news for oil market, there are still many unsolved, significant issues that loom for 2012. perhaps not), Mubarak’s fall occurred on the same day the Shah of Iran fell over 30 years ago. And in both instances, the simple departure of a sovereign led to a spike in crude oil prices. The political unrest in Libya that finally led to a change of the government also resulted in oil production cut in this country and highly affected the global energy market to an extend that the IEA members had to release their strategic reserves in order to control the prices.
Dr. Sara Vakhshouri is a former advisor to the director of National Iranian Oil Company International (NIOCI) and currently is an independent energy consultant based in Washington DC.
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ince the beginning of 2011, we have witnessed various uprisings and change in the Middle East and North Africa (MENA). These regions possess immense crude oil resources. The democracy-seeking movements in Tunisia quickly spread to Egypt, which saw Hosni Mubarak’s three decades of rule collapse. Echoes of these uprisings have been felt in other MENA countries, namely Bahrain, Libya and, to a smaller degree, in Iran. Coincidentally (or
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The obvious geopolitical unrest, combined with the region’s huge energy resources, underscore the importance of these countries’ role in the global security of energy supplies. In the end, their supplies contribute disproportionally to global energy security. If we look at the historical events that led to political instability in the MENA region and its implications on the global energy supply, we realize how crucial this region is for global energy security. Thus, 2012 looks to greatly shape global energy markets and secure supplies. The recent energy outlook released by Exxon Mobil demonstrates that oil, gas and coal will continue to be the most widely used fuel about 80 percent of total energy use by 2040. Oil and gas
will demand 60 percent of the global demand by that time. Persian Gulf resources have a key role in supplying the mentioned amount of oil and gas. The Fukushima Daiichi nuclear power plants disaster in Japan in March 2011, for our purposes here, greatly changed the dynamics of energy demand. After that incident nuclear energy had higher consequences and risks and this resulted to an increase of demand for natural gas as a substitute of nuclear energy for generating electricity in power plants. Demand for natural gas is expected to rise by more than 60 percent through 2040. Therefore stability and security are the main requirements to guarantee supplies from the MENA region. Although the decision of OPEC members to increase their production (to cover the production cuts in Libya) and to maintain OPEC’s production of 30 million barrels per day in December 2011 were both pieces of good news for oil market, there are still many unsolved, significant issues that loom for 2012. The political turmoil in Syria, continued pressure from the international community on Iranian nuclear ambitions, unrest in Egypt, Libya, and the future of Iraq without a US military presence all present real worries and concerns for energy markets.
GLOBAL ROUND-UP
Shell sells stakes in Nigerian oil leases The Shell Petroleum Development Company of Nigeria Limited (SPDC), a subsidiary of Royal Dutch Shell plc (Shell), has completed the assignment of its 30 per cent interest in two oil mining leases and related facilities in the Niger Delta. Total cash proceeds for SPDC amount to some $488 million. These divestments are part of Shell’s strategy of refocusing its onshore interests in Nigeria and in line with the Federal Government of Nigeria’s aim of developing Nigerian companies in the country’s upstream oil and gas business. “As we refocus our portfolio we are strengthening our position for the future,” said Peter Voser, Chief Executive Officer of Royal Dutch Shell plc. “The improvement in the security situation in the Niger Delta coupled with continued progress on key projects provides the foundation for further investment and growth.” Shell has been in Nigeria for more than 50 years and remains committed to keeping a long-term presence there – both onshore and offshore. Through SPDC and its other Nigerian companies, it responsibly produces the oil and gas needed to fuel the economic and industrial growth that generates wealth for the nation and jobs for Nigerians. Oil Mining Lease 26 was assigned to the Nigerian company FHN26 Limited, an affiliate of Afren plc, for an amount of some $98 million (SPDC share). Oil Mining Lease 26 covers an area of some 480 square kilometres and is currently producing around 6,000 barrels of oil per day (100 per cent) from two fields. Oil Mining Lease 42 was assigned to Neconde Energy Limited, a majority Nigerian-owned consortium consisting of Nestoil Group, Aries E&P Company Limited, VP Global, Kulczyk Investments and Kulczyk Oil Ventures, for an amount of some $390 million (SPDC share). OML 42 covers an area of some 814 square kilometres and includes the Batan, Egwa, Odidi, Jones Creek fields and related facilities.
Google Reins in Spending on Renewable Energy Technology Back in July Larry Page became Google’s new chief executive and immediately began a campaign to reign in Google’s projects and focus their resources. This was due to the stiff competition they were facing in mobile computing and social networking from Apple and Facebook, and also investor sentiment towards increasing expenditure on none core businesses. One of the latest casualties of this “spring cleaning” was the big green initiative, RE<C (Renewable Energy cheaper than Coal), which was an ambitious idea to make renewable energy cost competitive with coal-fired power plants. The plan was to build cheaper and more efficient heliostats, mirrors that reflect the sun rays onto water-filled boilers in order to create steam and generate electricity in turbines. However this set back does not signify that Google is moving away from championing greener energy, it is merely going to use its bank account to further the cause rather than its brainpower. In fact they have already increased their investment in renewable technologies, granting $850 million of investment into solar power, wind farms and other projects.
Sun-Believable – A Solar Breakthrough Researchers have reduced the preparation time of quantum dot solar cells to less than an hour by changing the form to a one-coat quantum dot solar paint. How? Titanium dioxide (TiO2) nanoparticles are coated with cadmium sulfide (CdS) or cadmium selenide (CdSe.) The composite nanoparticles, when mixed with a solvent, form a paste that can be applied as onestep paint to a transparent conducting material, which creates electricity when exposed to light. Although the paint form is currently about five times less efficient than the highest recorded efficiency for the multifilm form, the researchers predict that its efficiency can be improved, which could lead to a simple and economically viable way to prepare solar cells. The scientists responsible for the research breakthrough, Mathew P. Genovese of the University of Waterloo in Canada, with Ian V. Lightcap and Prashant V. Kamat of the Radiation Laboratory and Department of Chemistry and Biochemistry at the University of Notre Dame in Indiana, will be publishing their study in an upcoming issue of the American Chemical Society’s publication Nano. Potential uses could include painting electronic devices such as cell phones to recharge their batteries, along with larger electrical devices such as computers, while rooftops, windows, and cars could be coated as well. Professor Kamat said: “If we can improve the efficiency somewhat, we may be able to make a real difference in meeting energy needs in the future. That’s why we’ve christened the new paint, SunBelievable.”
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GLOBAL ROUND-UP
Schlumberger and Petrofac in Co-operation Agreement
Kazakhstan Now World’s Largest Uranium Miner
Petrofac and Schlumberger have announced that their Integrated Energy Services (IES) and Schlumberger Production Management (SPM) divisions respectively have signed a Co-operation Agreement (‘the Agreement’) under which these divisions will establish a working relationship to deliver integrated and highvalue production projects in the emerging and growing production services and production enhancement market. “Schlumberger’s subsurface knowledge, production engineering, well construction and project management services coupled with Petrofac’s surface facility design, installation and ongoing operational field management create a life-of-field approach coupled with a performancefocused commercial model to optimize asset development and overall value,” said Miguel Galuccio, president, Schlumberger Production Management. “Schlumberger and Petrofac share a common global culture that promotes the complementary nature of their respective products and services and together will provide a onestop shop for clients in emerging field development and asset management services.”
Kazakhstan’s international energy image is now that of one of the world’s rising oil exporters, an extraordinary feat given that, two decades ago its hydrocarbon output was beyond insignificant when the USSR collapsed. The vast Central Asian nation, larger than Western Europe, has now quietly passed another energy milestone. Kazakhstan produces 33 percent of world’s mined uranium, followed by Canada at 18 percent and Australia, with 11 percent of global output. Kazakhstan contains the world’s second-largest uranium reserves, estimated at 1.5 million tons. Until two years ago Kazakhstan was the world’s No. 3 uranium miner, following Australia and Canada. Together the trio is responsible for about 62 percent of the world’s production of mined uranium. According to Kazakhstan’s State Corporation for Atomic Energy, Kazatomprom, during JanuarySeptember, the country mined 13,957 tons of uranium. “The volume of uranium mining in the Republic of Kazakhstan (for January - September) comprised 13,957 tons, which is 11 percent higher than the same period last year.” Even more impressive, Kazatomprom’s revenues soared 72 percent year-on-year. Kazatomprom is the state-owned Kazakh national operator for the export of uranium, as well as rare metals, nuclear fuel for nuclear power plants, special equipment, technologies, and dual-purpose materials. To put Kazakhstan’s accomplishment in context, a mere five years ago Kazakhstan produced 5,279 tons of uranium. Source: www.oilprice.com
Total Awarded Two Exploration Licenses in Mauritania Total has signed two exploration licenses with the Mauritanian government that gives it, as operator, a 90 per cent interest in the blocks -Block C 9 in ultra deep offshore and Block Ta 29 onshore in the Taoudeni basin. The national oil company SMH will hold the remaining 10 per cent. The block C 9 is located approximately 140 kilometers offshore Western Mauritania, covering an area of more than 10,000 sq km, 68
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in water depths ranging from 2,500 to 3,000 metres. The Block Ta 29 is located in the Saharan desert, 1,000 kilometers east from Nouakchott and north of the Block Ta 7 in which Total is already conducting exploration activities. For both blocks, a seismic acquisition campaign is planned as the first phase of the exploration programme. “With this ultra deep offshore award, we are entering into a high-
potential, frontier play, known as the abrupt margin, in which major discoveries have been made recently, like in French Guyana” said Marc Blaizot, Total’s Senior Vice President, Exploration. “The license award is aligned with Total’s strategy of expanding its exploration operations into high-potential geological plays while leveraging the Group’s globally recognized ultra-deepwater expertise.”
BP Grows Deepwater Exploration Portfolio in Angola BP has gained access to five more deepwater exploration and production blocks offshore Angola. These give BP a leading position in Angola, with interests in nine blocks accounting for a total acreage of 32,650 square kilometres. In a ceremony in Luanda, in the presence of state oil company Sonangol’s president Manuel Vincente and BP group chief executive Bob Dudley, the production sharing agreements were signed for four new blocks covering 19,400 km2 in the Kwanza and Benguela basins. Separately, BP has recently taken a 40 per cent stake in the 4,840 sq km Block 26 in the Benguela basin, by agreeing a farm-in deal with Brazilian national oil company, Petrobras, which operates the block. ‘In October, we told the markets we would build on our strengths in exploration and in the deepwater to provide future growth for BP. This new access builds on the major presence we have developed in Angola over the past 10 years, investing a total of $21 billion in the business. We plan to double our global spend on exploration and this huge new acreage gives us more great opportunities. We look forward to working with Sonangol in the Kwanza and Benguela basins,’ said Bob Dudley. ‘The last 14 months have been our most successful for a decade in gaining new access for exploration – with 69 new exploration licences in 11 countries.’ BP was awarded operatorship of Blocks 19 and 24 with 50 per cent interest, and additional nonoperating interests in Blocks 20 (20 per cent) and 25 (15 per cent). With Block 26, the five new blocks cover a total area of 24,000 sq km in water depths from 200 to 2500 metres, and increase BP’s total Angolan acreage by 275 per cent.
Shell, ENI contracts to stand in Libya Libyan oil minister Abdelrahman Benyezza has assured Dutch Ambassador Gerard Steeghs that Royal Dutch Shell’s existing contracts in Libya will be honored, the country’s National Oil Company has disclosed. Benyezza told Steeghs during a recent meeting in Tripoli that Libya’s ministry of oil would respect all existing contracts signed with the regime of ousted Libyan leader Moammar Qadhafi, including Shell’s. The meeting followed comments by interim prime minister, Abdel-Rahim el-Keeb, in late December suggesting that Libya might review its existing contracts with international oil companies. Libya’s National Transitional Council issued its own statement recently aimed at clarifying earlier communications on its stance on Qadhafiera contracts with Italy’s Eni. The new statement said the NTC only planned to review memorandums of understanding between Eni and the previous Libyan regime, not final contracts. “The intended review and audit are (of) projects included (in) memorandums of understanding between Eni and Libya in the field of sustainable development, not including oil and gas agreements signed between the two parties,” the NTC statement said. In a previous statement issued in 28 December following a meeting between Keeb and Eni CEO Paolo Scaroni, the NTC said agreements between the company and the previous Libyan regime would be re-examined.
Chevron to invest $32.7Bn
Chevron Corporation has announced a $32.7 billion capital and exploratory spending programme for 2012. Included in the 2012 programme are $3 billion of planned expenditures by affiliates, which do not require cash outlays by Chevron. Total investments for 2011 are estimated at $33 billion, reflecting approximately $28 billion in capital and exploratory expenditures and $4.5 billion for the acquisition of Atlas Energy, Inc., which closed in early 2011. “We continue to develop an unparalleled project queue,” said Chairman and CEO John Watson. “Our 2012 capital programme covers a number of multi-year projects currently in the construction phase, including two world-class Australian LNG projects and multiple deepwater developments. We believe these investments will yield significant production growth and reward our shareholders for years to come. By 2017, we expect our net crude oil and natural gas production to grow about 20 percent to 3.3 million barrels per day. This growth profile, along with our current financial strength, supports our priority of continuously growing our dividends.” Approximately 87 percent of the 2012 spending programme is budgeted for upstream crude oil and natural gas exploration and production projects. Another 11 percent is associated with the company’s downstream businesses that manufacture, transport and sell gasoline, diesel fuel and other refined products, fuel and lubricant additives, and petrochemicals.
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REGIONAL ROUND-UP
QP completes funding for the Barzan Gas Project Qatar Petroleum (QP) has announced the successful closing of the financing of the $10.4-billion Barzan Gas Project, one of the most significant projects ever undertaken in the State of Qatar to supply the country’s growing domestic energy demand. The project will be financed with up to 30 per cent equity and the remaining 70 per cent by a combination of banks and export credit agencies in the form of a syndicated loan expected to total $7.2 billion. ExxonMobil, which is QP’s partner in the project, also provided a pro rata portion of the senior debt. Dr. Mohammed Bin Saleh Al-Sada, Qatar’s Minister of Energy & Industry and Chairman and Managing Director of QP, described the results of the financing as ”overwhelming,” given that the project was able to raise more than $8 billion when the third-party financing target was set at only US$6.6 billion. The financing of the Barzan Gas Project is the world’s largest project financing to close in 2011 and one of the largest oil and gas project financings ever concluded. It comprises a commercial bank facility of $3.34 billion, a $850-million Islamic facility and $2.55 billion of export credit agency (“ECA”) financing. RasGas, the project manager and operator, will develop and operate the Barzan Gas Project on behalf of its shareholders, Qatar Petroleum and ExxonMobil, which have a 93 per cent and 7 per cent stake in the project, respectively. When finished, the Barzan Gas Project will consist of onshore and offshore gasprocessing facilities with the initial gas production line, Train 1, expected to be completed in 2014 and Train 2 scheduled for completion in 2015. Barzan will eventually produce 1.4 billion cubic feet of sales gas a day. The project is designed to accommodate a maximum of six trains.
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Iraq to export oil from new terminal next month Iraqi oil ministry spokesman, Asim Jihad has said the country plans to start shipping crude from the first of its three new offshore export terminals in the Gulf at the start of February, Reuters has reported. The move will boost Iraq’s crude export capacity by 900,000 barrels per day. Iraqi officials had expected to open the tap at the first of three new single-point moorings (SPMs) on January 1, but testing of new export pipelines has not been completed. “The final work of checking the new export pipelines and other export facilities linked to the first floating terminal is expected to be finished by the end of this month,” Jihad said.
First downhole drilling chip developed
Saudi Aramco’s EXPEC ARC Drilling Technology Team (DTT) recently achieved the first major field test milestone of its four-year project to develop industry’s first downhole drilling microchip. “This important stage of the microchip technology development has proven that the project is on the right track to deploy such a miniature device for practical and useful applications in the near future,” said Nasser Al-Khanferi, DTT chief technologist. “This is a strong achievement for our Drilling Technology Team, and the future holds even greater opportunities for more technologies to come.” “Our dream was to develop a low-cost and alternative downhole data acquisition system capable of recording measurements such as pressure and temperature along the circulating path of drilling fluids,” said Zhou. “Such a technology would optimize mud and cement formulations while drilling and further reduce well cost by providing an alternative low cost data acquisition system.” The function test successfully proved the basic concept of the microchip system, a batch of seven mm prototypes, which travelled about 6.6 km in the 8-3/8 inch wellbore to a depth of 11,050 feet and returned to the surface successfully. Meaningful and realistic data was retrieved from this environment for the first time and downloaded from the returned microchip that showed the dynamic bottom-hole pressure of 7,500 psi and circulating bottom hole temperature of 190 degrees Fahrenheit, consistent with static bottom hole pressure of 6,700 psi due to mud weight and wireline tool recorded static bottom hole temperature at 235 degrees. The field test also identified several areas for further improvements. The next step will be to continue optimizing the microchips and further miniaturize the size while at the same time investigating the potential for various measurement sensors and optimizing the surface recovery method to achieve a commercially viable product in the near future.
Kuwait, PetroVietnam reaffirm cooperation for refinery JV Kuwait Petroleum Corporation (KPC) Chief Executive Officer Farouk Al-Zanki and PetroVietnam President and CEO Do Van Hau has reaffirmed their concerted efforts to resolve outstanding issues of the planned refining and petrochemical joint venture.
Qatar Signs New Agreement with CPC Corporation Taiwan RasGas Company Limited (RasGas) has announced that Ras Laffan Liquefied Natural Gas Company Limited (3) (RL 3) has entered into a new long -term liquefied natural gas (LNG) sales and purchase agreement (SPA) with Taiwan state - owned energy company CPC Corporation, Taiwan (CPC). The agreement was signed by His Excellency Dr Mohammed Bin Saleh Al Sada, Minister of Energy and Industry for the State of Qatar, and Chairman of RasGas and RL 3, and Mr Shao-Hua Chu, Chairman of CPC. Commenting on the occasion, His Excellency Dr Al Sada said: “This latest agreement with our long-time partner, CPC, is a perfect example of how Qatari LNG producing ventures continue to respond to our customer needs through the capabilities and flexibility they have. “ Under the terms of the SPA, RL 3 will deliver 1.5 million tonnes per annum (Mta) of Qatari LNG for 20 years starting in 2013, in addition to incremental volumes from 2012 to 2016. This agreement is the second long-term SPA between a RasGas venture and CPC. It complements an existing SPA, under which deliveries commenced in 2008 for the supply of 3 Mta of LNG for a period of 25 years.
Zayed Future Energy Awards in January The Selection Committee of the Zayed Future Energy Prize, comprising 11 of the world’s foremost energy experts, have chosen the final 14 candidates out of a record 425 entries, who will get a chance to compete for the award in January 2012. The candidates shortlisted demonstrate a wide geographic coverage in their activities and represent the potential in addressing the global demand for energy efficiency, sustainable and equal access to energy and novel approach to policymaking. The Selection Committee closely scrutinised candidates on areas such as their carbon footprint and the impact of their projects on local communities. The awards are based on three new categories for exceptional candidates in the renewable energy and sustainability field: Large Corporations, Lifetime Achievement, and Small and Medium Enterprises (SMEs) & Non-governmental Organisations (NGOs). Candidates are judged on the four keystones of the Zayed Future Energy Prize: Innovation, Impact, Leadership and Long-term vision. The Zayed Future Energy Prize was created in honour of the legacy of the late Founding Father and President of the United Arab Emirates, Sheikh Zayed bin Sultan Al Nahyan. The prize aims to inspire the next generation of global energy innovators to create solutions for the future.
“Mr. Do pledged his full support to secure Vietnamese government’s guarantee for foreign exchanges for lenders of the project,” Al-Zanki informed. “The Kuwaiti government is committed to this project, which is also in line with KPC’s strategy to expand downstream business,” he said, adding that KPC will supply 100 percent crude oil for the vital joint venture with Vietnam and Japan. The state-of-the-art refinery will have an annual oil processing capacity of 10 million tons, or 200,000 barrels per day (bpd), with a view to going online in 2015. “The contract for Engineering, Procurement and Construction (EPC) will be awarded once outstanding issues, including finance, are resolved,” Al-Zanki said. The Nghi Son Refinery Petrochemical Complex, the largest and most important refining project in energy-hungry Vietnam, will be located in the northern province of Thanh Hoa, some 180 kilometers south of Hanoi. The facility will also include a petrochemical complex, energy facilities, a pipeline and storage systems, along with an informatics system.
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THE ‘UNCONVENTIONAL’ PAINTER
Greg Evans took up painting as a ‘winter sport’ and is now a globally acclaimed artist specializing in oil & gas paintings. The Landman-turned-niche painter shared details of his passion for art in an email interview with Akshay Bhatnagar
YOU HAVE SPENT 35 YEARS IN THE OIL & GAS INDUSTRY. TELL US ABOUT YOUR BACKGROUND. I am currently Vice President, Land of Amadeus Petroleum Inc. in Denver, Colorado, USA. This is an Australian owned oil & gas exploration and 72
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development company handling assets in Texas. I graduated from The University of Texas with a BBA (Bachelor of Business Administration) in Petroleum Land Management. I previously had a 25-year career with Texaco Inc., working in Houston, Texas; Los
Angeles, California; and Denver, Colorado. I also worked for Rosetta Resources and Enerplus Corporation in Denver. I spent three years working as a full-time professional artist. During college, every summer was spent working in the oil fields of Texas. I have been a Landman my entire career. I consider a Landman to be the “businessman” of oil and gas exploration. He leases oil and gas minerals from farmers and ranchers, negotiates deals and writes contracts with other oil companies, and has a solid understanding of geology and engineering.
HOW LONG YOU HAVE BEEN PAINTING? WHICH MEDIUMS YOU HAD EXPERIMENTED IN THE INITIAL STAGES? WHAT WERE YOUR MAIN SUBJECTS IN THE EARLY YEARS? I’ve been painting seriously for about 22 years. But, I’ve been drawing my entire life. When I was living in Los Angeles, I played a lot of golf and tennis year round. When I moved to Denver 22 years ago, it was too cold to play golf and tennis in the winter, so I took up painting, which became my “winter sport”. It soon turned into a year-round obsession. I’m a self-taught artist. I started painting in watercolour. Most artists will tell you watercolour is the hardest medium to paint because it is so unforgiving and unpredictable. But, when I would walk into an art gallery, the watercolor paintings always caught my eye first. Now, I have a large collection of paintings, and probably 70 per cent are painted in acrylic on
canvas. I moved to acrylics for brighter, more dynamic colours. I also paint in oil on canvas and pastel. However, my latest series of paintings has been in watercolour, which I’ve been enjoying very much. I particularly love to paint people in watercolour. My artwork has always been impressionist, regardless of the medium. Each medium is like playing a different musical instruement – you have the same musical background, but each instruement has unique challenges, characteristics and techniques. I first started painting Sports Art - mostly athletes at the Olympic games. Then, I specialized in Golf and Horses for many years. I always tried to paint with action and motion. I love to paint people, so I’ve also painted portraiture. I also love to paint dynamic landscapes behind some of my oil rig scenes.
WHEN DID YOU START PAINTING ON THE OIL & GAS RELATED SUBJECTS? HOW IT ALL HAPPENED? About 15 years ago, Texaco commissioned me to paint a large painting for the lobby of the corporate office in Denver. I had never even considered painting an oil and gas themed painting. I thought, the roughneck on a drilling rig isn’t so different from an athlete in motion. So, I painted “Making Hole”, which is 5 foot x 4 foot, acrylic on canvas. It is still one of my favorite paintings. It shows two roughnecks working side by side on the rig. TELL US ABOUT YOUR MOST POPULAR AND YOUR OWN FAVOURITE OIL & GAS RELATED PAINTINGS? “Making Hole” has a good story. It hung in the Texaco lobby for about seven years. In 2002, Chevron bought Texaco,
and immediately closed down the Texaco Denver office. (I was offered a job in Houston, or a severance package, and I decided to stay in Denver because my family and I love it so much here.) I had painted a Texaco logo on one of the two roughnecks. I asked the VP at Chevron if she wanted me to paint a Chevron logo on the other roughneck. She thought that was a great idea! I painted the Chevron logo, and then the painting was moved to the lobby of one of the Chevron Houston headquarters office, and it is still hanging there in Houston. So, the two logos became symbolic of Chevron and Texaco working together and merging into one company. The VP later gave me a great testimonial – “The painting hangs in the lobby… It has become an icon for the company.” Chevron ordered a large framed print for 35 of their field offices, and a 16 inch x 20 inch print for each of their 1200 Jan-Feb, 2012
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employees in one of the offices. I now take the “Making Hole” digital image, photoshop out the Chevron and Texaco logos, and put another company’s logo on the hardhat(s) to personalize the painting. HOW YOUR OIL & GAS RELATED WORK HAS CHANGED OVER THE DECADES? HAVE YOU EXPERIMENTED WITH YOUR WORK IN THE RECENT YEARS? In many ways, the oil and gas industry is similar to what it has been for the last 100 years. Sure, the equipment has changed some, and different formations are being drilled and developed. But, my painting style has not changed. I still paint oil and gas with the same action and passion that 74
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I painted sports. My “talent” in painting oil and gas, is taking a pretty dirty and drab scene, and transforming it into a colourful, exciting and dynamic painting. I bring out the strength of the roughneck, the reflection of the drill pipe, the beauty of the sunset. DO YOU THINK BEING AN OIL & GAS PROFESSIONAL HAS HELPED IN YOUR ART WORK RELATED TO THE INDUSTRY? Working in the oil fields during college brought my paintings into focus. I can still smell the oil in my clothes and feel the summer heat of Texas. Even though I spend most of my time in the office, I constantly listen to geological presentations and read drilling reports.
TELL US ABOUT THE EXHIBITIONS ORGANIZED BY YOU OR THE MAJOR ONES IN WHICH YOU HAVE PARTICIPATED? ALSO SHARE DETAILS IN CASE YOUR WORK HAS BEEN DISPLAYED IN ANY MAJOR GALLERY? I have been in several galleries, but I’m really a “niche” artist. From a marketing standpoint, I mostly target Oil and Gas, Golf and Horses. Most artwork has a broad appeal; anybody might buy a pretty landscape painting. But, people don’t walk into a gallery looking for oil and gas art. I’ve exhibited at the Geological National Convention, and the PGA International Golf Expo in Orlando, Florida, and Las Vegas, Nevada.
I’ve exhibited at horse shows and race tracks. I’ve painted “live” at golf courses and equestrian centers. Most of my sales come through my website (www. EvansArt.com). I’m lucky, I think I’m the only person in the country, and even internationally, that paints oil and gas images. That’s a pretty good niche. Most people that are looking for Oil and Gas Art can find me on the internet.I have also been on television and the cover of magazines. I’ve had several articles written about me. WHAT HAS BEEN THE REACTION FROM THE OIL & GAS INDUSTRY TO YOUR WORK? The oil industry has loved my paintings. I have companies that call me up and want
to decorate their entire office, without ever seeing my paintings in person. Many companies like my canvas prints, which look very close to an original painting, but cost much less than an original. Some companies like a commissioned original showing their company name or logo, and then canvas prints throughout the office. I am now just working on expanding the exposure to my Oil and Gas Art. Advertising in oil and gas magazines is very expensive. But, I have a new marketing idea. I have designed calendars that have one of my oil and gas images for each month. I’m very excited about the way they came out. I find oil industry companies that wish to advertise their services, and I put their name, logo and
contact information on the cover and each calendar month. I have my name and website under each image every month. I design the calendars, use my images, and the company pays the calendar cost (without any mark-up) and ships it out to their mailing list. It’s a win-win situation. Calendars are a great marketing tool. In my 35 years of working for oil companies, there has always been a calendar in the coffee room, and it stays there all year. I’m sending out about 1000 calendars this year, and I hope to increase each year. For more information on Greg Evans and his work, visit www.EvansArt.com or email greg@EvansArt.com Jan-Feb, 2012
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AUTO
PERFECT DUO
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ercedes-AMG and Ducati staged joint appearance at the Bologna Motor Show with visible signs of exchange of ideas between the designers and the engineers of the two companies. The new Mercedes-Benz SLK 55 AMG and the new Ducati Streetfighter 848 – both finished in “Streetfighter yellow” – made the auto enthusiasts breathless. Both models complement each other not only visually but also technically. Both models are the perfect embodiment of distinctive driving dynamics, expressive design and intense driving pleasure. Inspired by the Ducati Streetfighter 848, the “streetfighter yellow” colour of the SLK 55 AMG ensures an exciting appearance from all angles: the exceptional paint finish is guaranteed to provide a high level of appeal. The 76
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SLK 55 AMG is the most powerful SLK of all time. Its newly developed AMG 5.5-litre naturally aspirated V8 engine with cylinder shut-off system combines ultimate performance with the lowest possible consumption levels.It accelerates from zero to 100 km/h in just 4.6 seconds, and reaches a top speed of 250 km/h (electronically limited). The new Ducati Streetfighter 848 provides unbridled biking pleasure in its purest form, while
combining innovative technology with an outstanding appearance: a revised 848 Testastretta 11 engine with 132 hp and an exciting 93.5 Nm of torque as well as a modified frame geometry help to guarantee safe, agile handling. With the exciting new Streetfighter 848, Ducati has succeeded in combining stateof-the-art technology and skeletal styling in a contemporary design.
PROPERTY
QURM HILLS
THE LATEST UPMARKET PROPERTY DEVELOPMENT IN TOWN
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largan International Real Estate Company, a Kuwait-based real estate developer, has unveiled its latest project, Qurm Hills. The new development, comprising of 109 plots, includes road networks, service facilities and landscaped park areas with a variety of residential units in addition to retail, commercial and office space. Alargan has appointed Parsons as the project’s design and construction consultants. David Mitchell, Operations Manager at Parsons stated: “Qurm Hills is situated in a prime location which enjoys easy accessibility to the main
road network and direct connectivity to public utility services. The project’s infrastructure has been designed according to the highest standards to ensure the protection of the project site from any possible flooding. This is in addition to the Muscat Municipality implementing measures to further
enhance the safety of the plots during potential natural disasters.” The project covers a total land area of 165,000 sq m where infrastructure work has already begun. Qurm Hills is situated in the heart of Muscat behind Al Harthy Complex and The Sultan Centre. Jan-Feb, 2012
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LIFESTYLE
KHIMJI’S WATCHES BRINGS MIKIMOTO’S FINEST PEARLS TO OMAN Khimji’s Watches has introduced the people of Oman to some of the most elegant pearls in the world. It has partnered up with Mikimoto, the world’s foremost producer of the finest quality cultured pearls and a leading designer of exceptional jewellery. These beautiful pieces can now be viewed and purchased from Khimji’s Watches. A piece from this exclusive collection is sure to be a gift of a lifetime and one which can be enjoyed and celebrated. The owner of such a piece will be in the company of some of the greatest style icons such as Marilyn Monroe who was a great admirer of Mikimoto jewellery. Indeed, she was photographed many times with her Mikimoto Pearl necklace adorning her regal neck. The exclusive collection is available at Khimji’s Watches at Shatti Al Qurum.
JUWEIRA BOUTIQUE HOTEL COMING UP AT SALALAH offer 65 guestrooms, including 21 spacious suites that reflect an elegant yet understated style in its orient decor and furnishings. It exudes a sense of luxury and serenity that is in harmony with the natural splendor of the place. Poised along the Salalah Beach Marina promenade, the Hotel faces the idyllic waterfront, promising guests scenic views from the privacy of the outdoor terraces that overlook the majestic Indian Ocean. All the rooms are equipped with top class facilities aimed at the most discerning travellers, and offer comfortable and spacious areas to help unwind and relax.
Muriya’s impressive Salalah Beach destination will soon have a new landmark to boast with the grand opening of Juweira Boutique Hotel, a premier 78
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property that will play a major role in experiencing tropical Salalah. Designed with a classic oriental theme by Egyptian designer Adel Mokhtar, the Hotel will
With the opening of the Hotel, Salalah Beach destination, spread over 15.6 million sq m - a mere 20 minutes from the Salalah Airport - will offer new vistas for guests and visitors to experience Salalah in its pristine glory.
GOLF UPDATE
READY FOR A FAIR TEE-OFF The eighth edition of OER CEO Golf, the most awaited corporate event in the country, is happening on January 12, 2012, at the Muscat Hills Golf and Country Club
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t’s that time of the year, when you need to carry your networking skills along with your glove and golf club. And this will happen on January 12 at the OER CEO Golf 2012, the much sought after business-cum-leisure premium networking event, which is brought to you by Oman Economic Review, the Sultanate’s number one business magazine. The event offers revitalisation for Oman’s corporate heavy weights, giving them an opportunity to network and compete on the greens. The event will host the top echelons of corporate Oman at the country’s most exciting greens of Muscat Hills Golf & Country Club. OER CEO Golf has become the biggest and most memorable event in Oman’s corporate calendar with golfers and golfers to be enthusiasts taking part in this not-to-be-missed action-packed day. There are few events that can boast of such variety and all-round entertainment. High profile business leaders, top CEOs and managers will network over a game of 18-hole golf. While golfers vie to win, beginners get an expert initiation to the game and participate in a competition for winning the crowning glory – a ROLEX WATCH. OER CEO Golf 2012 is being presented by Nawras Business Solutions while the associate presenter is INFINITI. The official timekeeper of the event is ROLEX from Khimji’s Watches. Samsung is the prize partner. Publicity partners are Times of Oman and Al Shabiba while media sponsors include Hi and Al Youm Al Sab’e. The category partners of the event are AXA; Oman
Printers & Stationers; OUA; Infoline; Aggreko; and Travel City Travel Point. EXCITING DAY It’s going to be non-stop entertainment the whole day with the Golf Day beginning at 7.00am and ending at 2.00pm while the evening entertainment function will be held between 6.30pm to 10.30pm. The most exhilarating time for Golfers at the OER CEO 2012 will begin when they compete with their fellow golfers for the thrilling new format known as the 18-hole Texas Scramble golf. Generally, the Scramble is one of the primary forms of tournament play for golf associations, charity events and the like. A scramble is usually played with 4-person teams, but 2-person scrambles are popular, too. In a scramble, each player tees off on each hole. The best of the tee shots is selected and all players play their second shots from that spot.
The best of the second shots is determined, then all play their third shots from that spot, and so on until the ball is holed. Trick-shot specialist Michael Scholz will be on hand to display his magical skills with the ball and the swing. Apart from the high powered business networking while swinging the golf club, an elegant red carpet evening has been arranged complete with world-class entertainment, socialising, fine dining, a glittering awards ceremony and loads of exciting entertainment and prize giving. The highlight of the evening’s entertainment will be Daniela Maxova, renowned international illusionist. For the golfers to be, a special programme has been arranged apart from the golf clinic. Leadership consultant, John Mitchell, will deliver a talk on ‘Driving Change from the fairway to the boardroom’. Jan-Feb, 2012
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APPLIED HYDRO-AEROMECHANICS IN OIL AND GAS DRILLING Hydromechanical processes underlie the majority of technology operations in drilling, and present a crucial concern as the pace and depth of drilling increases in today’s energyhungry world. Applied Hydroaeromechanics in Oil and Gas Drilling, authored by Eugeniy G. Leonov, offers a unique resource for properly modeling and understanding the hydrodynamic forces affecting a drilling site. Combining hydrodynamic theory with specific drilling applications, this coverage provides readers with a comprehensive reference for designing, planning, and optimizing drilling operations.
THE GLOBAL OIL AND GAS INDUSTRY: MANAGEMENT, STRATEGY, AND FINANCE Despite its size and importance, a surprising lack of basic knowledge exists about the oil and gas industry. With their timely new book, authors Andrew Inkpen and Michael H. Moffett have written a nontechnical book to help readers with technical backgrounds better understand the business of oil and gas. They describe and analyze the global oil and gas industry, focusing on its strategic, financial, and business aspects and addressing a wide range of topics organized around the oil and gas industry value chain, starting with exploration and ending with products sold to consumers. The Global Oil & Gas Industry is a single source for anyone interested in how the business of the world’s largest industry actually works: business executives, students, government officials and regulators, professionals working in the industry, and the general public.
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FOSSIL FUELS IN THE ARAB WORLD: FACTS AND FICTION: GLOBAL AND ARAB INSIGHTS OF OIL, NATURAL GAS & COAL
Is the Arab world an indispensable energy source without which our civilisation will come to a halt? Is this the cause of political and military meddling in the Arab world’s affairs? Is the world really this vulnerable? Assessment of mankind’s dependence on fossil fuels, particularly the position of the Arab world, is performed by analysing the three types (oil, natural gas, and coal), which are in essence convertible. Fossil fuels are tackled from two angles: clarifying the terminology used by the media, politicians, scientists, and so-called experts, when discussing fossil fuels; evaluating the hard facts and separate them from fiction by analysing the numbers and scrutinise them impartially to come with a definitive quantitative answer. Finally, a further investigation examines fossil fuels in relation to alternative energy, and from political perspective. This book by Basel Nashat Asmar is a must read.