Exceeding Expectations in Value Creation

Akshay Bhatnagar24-12-2017, 12:16 AM

Petroleum Development Oman has made huge strides in supporting omani job creation, developing local supply chains and supporting the community, says the company’s External Affairs and Value Creation Director, Abdulamir Abdul-Hussein Al Ajmi, while talking to OGR. Excerpts of the interview:

 

How do you look at your journey with PDO?

I’m an out and out PDO man. After finishing my Bachelor’s degree in electronic engineering from the University of Leeds in the UK, I started my professional career with PDO in 1995 as a Construction Supervisor in Yibal field. Thereafter, I took up various positions in the areas of construction supervision, project management, sustainable development, change management, external affairs and engineering before taking up my current position.

The great thing about PDO is that it encourages you to think differently, empowers you to innovate and apply creative thinking to achieve the desired results for the organisation and society. I have been a witness to some of the milestones in the Company’s journey, such as the transition from conventional oil to enhanced oil recovery (EOR), step changes in the deployment of new technologies and HR development, and our In-Country Value (ICV) strategy roll-out to name a few. PDO to me is a university.


There is no end to the learning over here, no matter how senior you have become or how many years you have spent here. It prepares you to perform under any circumstances and achieve the desired goals. No wonder many successful leaders in the corporate sector or government bodies have their roots in PDO. It is an honour for me to work for a great institution like PDO that has enabled me to continuously develop my skills and become a productive resource for the benefit of my beloved country.
 

PDO takes great pride in serving the nation by going beyond its mandate to explore and produce oil, and operate the gas fields and processing plants for the Government of Oman. Can you elucidate further how the Company is achieving this?

Our key contribution to the nation is value creation. The exploration and production of oil and gas is definitely our core mandate but we take great pride in serving the interests of the society and economy of the Sultanate by focusing on value creation.

If you look at our performance ever since oil prices starting coming down from their historic levels in 2014, we have improved on all indicators. How have we achieved this? By doing more for less. This has helped us to manage our expenditure more effectively, leading to substantial savings for our shareholders.

Simultaneously, we have managed to create thousands of jobs directly or indirectly for Omani nationals. We take great pride in localisation of industries in Oman. We are focusing a lot on the manufacturing and supply of products that we require in our various projects within Oman. We have signed up for many agreements with Omani companies in this area. We are committed to taking all the steps that enable us to add value to the Sultanate.

For us, our most important asset is our people. We devote a sufficient amount of our budget towards training and skill development programmes across all levels and functions for the benefit of our staff so that they can move up in the value chain and continue to become more valuable for the company and the country. We are making efforts to ensure a larger number of people can benefit from such programmes. For example, we are bringing in expert trainers to Oman so that more people can benefit by attending their training programmes and upgrade their skills, just one example of how we are doing more for less.
 

PDO has been a great champion of ICV. How far have you achieved your ICV goals post the release of the ICV blueprint strategy in December 2013?

PDO’s spend with locally registered companies was around 18 per cent in 2013. The target set for us was to raise it to 38 per cent by 2018. I’m proud to say that we have not only met but exceeded the target, by managing to achieve a 41per cent spend with locally registered companies by as early as 2016. It’s also important to note that as much as 53 per cent of our well engineering contracts are awarded to Local Community Contractors (LCCs).

If we look at the markets like Norway and Nigeria that have a long history of ICV, we have managed to do better than them, and also in such a short period of time. However, we can’t sit back and celebrate our impressive achievements in ICV. Now there is an opportunity to ensure the sustainability of our ICV levels and that’s where we are focusing on currently. We are adopting various measures to realise this goal.

To give you an example, we have a large community of contractors vying for our tenders to provide services or equipment to us. That means some win and some miss out. So we are putting together contract strategies where Omani SMEs and contractors are encouraged to collaborate with each other and pool resources as a way of securing business with PDO. By adopting this approach, it makes it easier for contractors to plan for the longer term.

That way everybody wins and it will also help us to provide training-for employment opportunities for Omanis. We don’t want just one or two companies to survive and thrive and the to rest to go out of business. This would be against our stated objectives of creating value for the society and nation. We want a win-win situation for ourselves, the community we serve and the country as a whole.

By and large we have been quite successful in our sustainability endeavors. This year alone, we have signed many agreements where we are actively partnering with vendors and contractors to increase In-Country Value, retaining more of the wealth of our industry in Oman. For example, we recently signed two deals worth US$253.1 million with local manufacturers and partners for the supply of valves and transformers.

We struck deals with Rusayl-based Voltamp Transformers Oman for the supply of power transformers and with Al Jizzi Transformers and Switchgears, located in Ma’abella, for the supply of well head transformers. We also penned agreements with Muscat-based Techno Fit Trading: one with Chinese concern Wuzhou Valve Company for the manufacture of ball valves, and one with Indian firm Gene-tech Controls for the manufacture of mono-flange valves. After the first three years of these deals, both of the foreign companies have agreed to establish production facilities in the Sultanate to make the key components.

In another development, a new PDO backed factory to manufacture key well equipment for the oil and gas industry has opened in Nizwa. The Omani company Gulf Energy SAOC established the Fishing & Remedial Experts Enterprise (FREE) facility. We have signed a 10-year contract with FREE. The factory will retain more than US$8.4 million in country, supplying drilling and fishing tools which were previously bought on the international market.

We also signed three contracts worth US$35 million with Omani firms for the supply and servicing of compressors. We agreed on two contracts with Bin Salim Enterprises LLC for the supply of instrument air compressor packages and the maintenance and repair of installed units. We also penned another service deal with PipeLine Supply Company LLC for an existing compressor fleet.

If we go back to the original ICV strategy blueprint, 53 ICV opportunities were identified and PDO is leading the implementation of 40 of them. So far, the Company has localised the supply and manufacture of goods and services in a number of key areas, such as scaffolding, carbon steel pipes, well engineering equipment and the provision of polymer for enhanced oil recovery.

We are always happy to support the Government. For example, we are part of the excellent Tanfeedh programme to enhance national economic diversification. Our staff have played active, and sometimes leading, roles in Tanfeedh workshops on logistics, labour, manufacturing and tourism, and we are talking with Government about the management of a few of their infrastructure projects.

 

PDO also has a robust social investment programme. What has been its focus area?

When we talk about our social investment programme, again the focus is on sustainability by adopting a strategic approach and meeting the exact requirements of the community in the areas of health, education and training, self employment, etc.

Our Banat Oman social enterprise has so far provided vocational training for hundreds of women from low-income backgrounds in skills such as tailoring, embroidery, dairy product manufacture and crafting jewellery. On the education side, we have an annual community scholarship programme in which we provide university education to scholars from our concession area so that they can acquire professional qualifications and become a productive resource for the nation.

One thing we are actively considering is a sustainable education programme to encourage scholars to train as teachers and then return to work in schools and colleges in their communities in the concession area. We believe this will improve educational standards as it will provide a more stable learning environment. If we proceed, the aim is to cover all 58 schools in Block 6.
 

Education is clearly important to PDO. What else are you doing in this area?

We work at all levels of the education system, in partnership with the Ministry of Education, from primary schools to the top universities. Over the years, we have provided equipment and learning materials for schools, and were even responsible for Oman’s first interactive classroom by installing the latest teaching technologies.

It’s not just about what happens in the schools and we have also provided vehicle maintenance and driving training for hundreds of school bus drivers to ensure they get children to and from school safely.

One other exciting area is our increasing collaboration with Omani universities on research and development. This year, we signed R&D agreements with Muscat, Sohar, A’sharqiyah Universities to pave the way for their academic experts and students help resolve some of our complex technical challenges. PDO will fund the universities to assist it in key areas, such as enhanced oil recovery, water management and energy efficiency and security, the latter by encouraging renewable energy and energy-efficient technologies.

We are also working together with the universities to encourage Omani small and medium-sized enterprises (SMEs) and entrepreneurs to carry out their basic technological research, test proof their conceptual thoughts and innovative ideas and develop early stage technology in the universities’ laboratories prior to any potential future commercial agreements. PDO will assist with the establishment of technology centres at the universities and our own experts will be given access to these research hubs and run and develop teaching programmes.

The agreements will run for three years and also pave the way for PDO staff to enrol on BSc, MSc and PhD degrees and other courses at the universities. This is a reciprocal relationship which represents a win-win for PDO and the universities, and the Sultanate more generally. We have further built on this approach by working with the Ministry of Oil and Gas and The Research Council on a protocol to align the government, academia and industry more closely so we are all pulling in the same direction, and have even launched an online system called Ejaad, where we can post our complex challenges and researchers can access them electronically to propose alternative solutions.

 

How else does PDO help external stakeholders?

We are constantly in touch with external shareholders, to gain their valuable feedback while also extending our best practice where it help them progress. In a nutshell, we only succeed if the communities in which we operate succeed.

We regularly host or participate in visits, meetings and workshops to explain what we are doing and proffer advice and assistance. One area is our Lean business efficiency programme which has delivered $1.2 billion in cost avoidance and control and generating added value by stripping out waste and streamlining our work processes.

PDO is now very much viewed as a centre of Lean excellence and we are spreading our message to a wide variety of organisations - including government ministries and NGOs with seminars, awareness sessions and actual projects - to help them embark on their continuous improvement journeys. PDO is a role model in many areas - workplace diversity and inclusion, technological innovation and personal and process safety, for example – and we are now building our offering in energy and water management, which could be adopted or followed by other organisations as energy efficiency and conservation become ever more important in the face of mounting climate change realities.

For example, we are currently installing solar energy panels on the rooftops in our parking area in Mina Al Fahal. This single environmentally friendly move will save more than 3.1 million cubic metres of gas a year, enough to provide electricity for almost 1,000 homes. It will also cut carbon dioxide emissions by 6,662 tonnes annually, the equivalent of taking more than 1,400 cars off the road or planting almost 173,000 trees.

The 5.92 MWp (megawatt peak) solar project will generate 9.480 million KWh (electrical units) per year. The generated power will be connected to three of the main office buildings at our Mina Al Fahal headquarters. Many organisations are now studying and or utilising our expertise to install similar energy saving facilities in their assets. That’s what we call value creation, not just for ourselves but for the entire nation and environment.
 

How will PDO’s value creation policy and programmes change with the Company’s move towards becoming a fully fledged energy company?

Although oil and gas will remain core to our activities for a number of years, we are beginning the transition to becoming a fully fledged energy company with a focus on renewables, especially solar where this is a fantastic opportunity for PDO and Oman.

We are working on how we could translate this new vision into an actionable plan. It is a bit early to talk about it in detail now as we are working with our shareholders on it. However, value creation will continue to be an integral component of our business plans. What I can say is that with the formulation of a new strategy to meet the new vision of the Company, we will be better placed to share our expertise in a wide range of areas including ICV, Lean, training, FEED, core operations and technical services, etc. to best serve the interests of the country and our communities.

Apart from organisations within Oman, many national oil companies (NOCs) from the GCC region as well as large International Oil Companies (IOCs) regularly visit us to learn from our experience in these areas and we can leverage such expertise as a consultancy or service provider both within Oman and beyond our borders.

As mentioned, one area we are strongly focusing on is renewable energy, especially solar. We have been encouraged by the success of our Miraah 1.021 GW solar energy project, being developed with partner GlassPoint Solar, and our solar roof panel installation in our parking areas. We also plan to embark on a number of solar generation projects in the near future, and are working on setting up the required supply chain for optimally harnessing the Sultanate’s solar energy potential.

According to MEED reports, the Middle East and North Africa (MENA) region has more than 67GW of clean energy projects at various stages of the design and study stage requiring an investment of over $200 billion. There is also the potential to create 200,000 jobs. This shows the changing energy landscape in the region. With our proven credentials in this domain, we want PDO to be a part of this transformation and benefit from the emerging opportunities.

This will help us to serve the nation’s interests more effectively in the coming decades and take our value creation contribution to a new high

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