Congratulations on the 50th anniversary of the first export of Omani oil and PDO’s 80th anniversary! As you look back at the success journey, what have been the key reflections?
Over the last 80 years, PDO has matured into a world-class operating company whose focus and ambition go beyond conventional oil and gas requirements. The Company has focused on developing professionals able to deliver across the full spectrum of socio-economic expectations and demands. Year-on-year growth since the first exports in 1967 continued to record production last year, but more importantly performance has been underpinned by firm foundations for a company that has consistently focused on developing and unleashing talent, value and opportunity across its full spectrum of operations, and is committed to serving Oman to its best of its ability.
Over the years, the Company has overcome significant technical and commercial challenges, and consistently seized the opportunity to deliver no matter what the obstacle. The sure and steady continuous improvement journey has enabled us to weather storms and unsettling periods, each time emerging stronger and fitter. Despite and irrespective of the low oil prices in the last two or so years, few oil and gas MDs and CEOs can stand up proudly and firmly state that whilst others retrenched, their company stayed true to its vision and its course, and increased activities and delivery of all key priorities (from safety to production, to job creation) across every directorate. Yesterday’s achievements and today’s talent provide us with the desire to face the future with much determination, capability and confidence and establish the next 80 years of legacies.
What is the message you would like to share with the nation at this time of celebration?
We are proud to serve Oman and will continue to focus on the success of all those around us before our own. No matter what the challenges all around us, PDO is well equipped and hugely committed to deliver another 80 years of community support and operational excellence, guided and led by the unwavering support and visionary leadership of His Majesty.
What makes PDO unique in Oman in terms of responsibility and expectations?
We feel and act as part of the community, first and foremost recognising that we will not succeed if communities around us don’t. We stand true to our vision, which is about being renowned and respected for the excellence of our people and the value we create for Oman and all our stakeholders. It’s about excellence and continually raising the bar; it’s about developing and unleashing people as the one and only source of sustainable advantage and it’s about creating value beyond oil and gas – that’s a given – but making sure we contribute to the success of all those around us.
You joined PDO in 2010. How has the company changed in that time?
The last seven years have seen many political, economic and social changes across the world and across the region. PDO has become more open and transparent in its dealings as public expectations and scrutiny have increased and we have significantly stepped up our engagements with external stakeholders to highlight our key activities, programmes and projects.
The scale, scope and efficiency of our operations have increased significantly as we have intensified our efforts to deliver value for Oman. For example, our well engineering teams are now performing more than 20,000 well interventions a year, compared with 11,000 in 2012, despite similar resourcing and lower expenditure levels.
There has also been a step-change on In-Country Value, where we have redoubled our efforts to create jobs and training opportunities for Omanis, both in our industry and beyond, in support of His Majesty’s government, and to Omanise our supply chain.
Continuous improvement is our way of life and we launched our Lean programme when oil prices were high, thereby enabling us to be better prepared for the lower oil price environment. Lean has transformed the way we work by stripping out waste and streamlining our practices across all aspects of our business. It’s integral to all we do internally, and there remains much scope for expanding our Lean practices across our supply chains.
So far, Lean has helped us to generate US$1.2 billion through cost saving, revenue generation and cost avoidance and, this year alone, well over 7,000 ideas for continuous improvement have been submitted by our staff. Lean has galvanised all levels of the Company, delivering tangible benefits by freeing up resources and by empowering the organisation to constantly raise our performance bar.
What’s your proudest moment at PDO?
The list is simply too long and would cover hundreds of examples of best practice, individual and collective pride, commitment and determination beyond the call of duty. But, if I had to make one choice, it is to have had the privilege to see the smiling faces and expressions full of hope and opportunity for new trainees that are given a chance to deliver their best.
Renewable energy is a big focus for PDO. Can you update us on progress?
I’m delighted that, with our partners GlassPoint Solar, we have made superb progress on our Miraah facility, one of the largest solar plants in the world, which has already shown the scale of ambition in the area of renewable energy.
Delivering up to 1,021 MW when completed, this will use concentrated sunlight to generate 6,000 tons of emissions-free solar steam each day for use in thermal enhanced oil recovery. It will save 5.6 trillion British Thermal Units of natural gas each year, which can be diverted into other high-value sectors of the economy. The installation in southern Oman will also reduce CO2 emissions by more than 300,000 tons each year, the equivalent to taking 63,000 cars off the road.
I’m very pleased to say that steam has now been successfully delivered into our Amal West oilfield for the first time from Miraah, and we have also completed construction on the first block of the installation safely, on schedule and on budget.
We are currently actively implementing a number of other solar ventures in both our hydrocarbon and non-hydrocarbon portfolios. For example, we are almost two thirds of the way through a project at our Muscat headquarters to install more than 19,500 solar roof panels on car parking lots. When finished early next year, this will generate 9.5 million kWh annually to power key office buildings, with the electricity being diverted to the domestic grid during off-peak periods.
In our Ras Al Hamra development project, we have also implemented solar lighting and heating and grey water recycling, to name but a few of the environmentally friendly initiatives which characterise the scheme.
We will soon be issuing an invitation to tender (ITT) for up to five 20 MW solar projects in our concession, mainly scattered in the area between Bahja and Marmul. The aim of the project is to save gas through the daytime generation of power while learning how best to support and service photovoltaic (PV) solar facilities in our operating environment.
The overall venture is expected to introduce an equivalent fuel saving of 70.5 million cubic metres of gas per annum (US$17 million a year), reducing our dependency on conventional gas turbines. It will also reduce overall CO2 emissions by around 8,550 tons annually. Along with the gas saving and the environmental benefits, the enterprise will be a landmark in the country as it will be the biggest solar PV initiative to date and bolster our position and operating experience in renewable energy.
What is the outlook for PDO’s natural gas production for 2017 and 2018?
We are optimistic about the outlook and are continually working to meet the gas demand for Oman and our customers. As new production from projects like BP’s Khazzan ramps up, we will increasingly shift to a swing producer. Overall, we see a great opportunity to monetise the surplus gas over the next five or more years, further supported by new exploration finds, through gas solar swaps that could truly kick-off the solar industry in Oman.
Meanwhile, our first mega project at Rabab Harweel, the most complex and largest in our history, is set for first gas export next year. The complex comprises the installation of sour gas processing facilities and associated gathering, injection systems and export pipelines. It paves the way for the export of one trillion cubic feet of non-associated shale gas, as well as 240 million barrels of oil and 100 million barrels of condensate.
Likewise, our second mega project at Yibal Khuff is continuing apace. When fully completed in 2020, this will not only help bolster PDO’s future oil production, but also deliver associated gas for power generation and enhanced oil recovery operations.
Our Gas Exploration team continues to drive early monetisation with notable projects including Mabrouk phase 3 on stream next year, Tayseer (A1C), with the early development facility on stream in 2019 and the Khulud tight gas project due in Q4 2019.
We continue to push forward with low unit technical cost developments, such as Mashari (on stream this year), Mabrouk North East (2018), Tawf Dahm (2020) and Burhaan North (2023).
What can we expect in the future?
In the near-term, you can expect PDO to stay the course on our key business activities and to continue to identify savings and cost reductions while delivering growth, excellence and sustainable value creation for Oman and our shareholders as we weather the country’s economic storm.
We will continue to ensure reserves and contingent resource replacement ratios are above one (one new barrel explored/ developed for every barrel produced) but we will also begin the transition to becoming a fully fledged energy and water management company with a greater focus on renewables, especially solar.
At the same time, as a signatory to the World Bank Zero Flaring by 2030 initiative, we are working hard towards a goal of zero routine flaring well before the target year and are seeking technology partners to help in that process.
You will see PDO aiming to leverage its expertise beyond Block 6 across both Oman and regionally in areas such as Lean, enhanced oil recovery, engineering and design and well, reservoir and facilities management.
New technology – including digitisation, Big Data, analytics, artificial intelligence – is a key enabler to the Company to sustain and improve our operations in a cost-effective manner. I confidently predict it will also drive a step change in safer and more efficient production processes.
Last but not least, the roll-out of sustainable and diversified In-Country Value programmes and initiatives will continue to ensure Omani employment and skills levels are raised, both in the oil and gas sector and beyond our natural boundaries in other industries.
We will also ramp up our support for Omani entrepreneurs to boost the Sultanate’s SME sector and help spur the greater diversification of the national economy through the Government’s excellent Tanfeedh initiative.
Notwithstanding the daunting challenges, PDO is looking forward to 2018 and to making our mark, by doing, by learning, by adapting and consistently striving to exceed societal expectations.
Through all this change, one theme remains constant - the country can rest assured that everyone at PDO remains ready and proud to serve Oman to the best of their ability.