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in co-operation with Oman Society for Petroleum Services (OPAL)TRANSCRIPT
THE VOICE OF OMAN’S OIL & GAS INDUSTRY www.opaloman.org
MARKET ANALYSIS ARTICLES INTERVIEWS VIEWPOINT PROJECTS
PLUS
Weathering the Oil StormVALUE CREATION, SUSTAINABILITY, BUSINESS IMPROVEMENT AND EXPENDITURE SAVINGS ARE THE MANTRAS SHAPING PETROLEUM DEVELOPMENT OMAN’S (PDO) RESPONSE TO THE INTERNATIONAL OIL PRICE ROUT
February 2016
A safety-net for Oman’s oilfield industryOman’s government has scrambled to put in place bold measures designed to dampen any rush by employers to axe the jobs of Omani oilfield workers.
Redeployment strategy yields early success storiesThe government-sanctioned Redeployment Strategy is beginning to deliver positive results, having already salvaged several hundred jobs of Omani oilfield workers.
Creating shared valueThe goal for the ICV Committee now is to build on what has already been achieved in ICV generation and establish a system of tracking where the initiative is delivering benefits
– HE Salim bin Nasser al Aufy
– Musallam Al Mandhry
EDITOR'S WORD 2
Since 1926, our people and technology have been able to solve any oilfield challenge.
© 2015 Schlumberger. 15-OF-87502
Combining our people’s ingenuity and industry-leading technology has been our approach for more than 80 years. We recruit people from around the world—developing their talents through local and international experience. With 125 research, engineering, and manufacturing centers located worldwide and the industry’s largest training commitment, our goal is to continually deliver new technology to meet every reservoir challenge.
Find out more at slb.com
15_of_87502_Branding_ad.indd 1 11/30/15 12:49 PM
February 20163
Saif bin Saud Al Mahrouqi
Abdullah bin Salim Al ShueiliConrad PrabhuFatima bint Mohammed Al GheilaniyaPrem VargheseKaren Jane StephenAbdulaziz bin Shehab Al Shukaili
Acting CEO - OEPPA and Editor in Chief (Oman Arabic Daily)Editor in Chief (Oman Daily Observer)Magazine EditorHoD Business Development DepartmentBusiness Development Department
Musallam bin Rashid Al MandhryAbdullah bin Salim Al Harthy
Azza bint Hamad Al Hilaliya
Nenad Valentik
Chief Executive Officer Communication Executive Manager (Magazine Executive Editor)Communication & Event Officer
Creative Consultant
CONTENTSQUARTERLY NEWS JOURNAL OF OMAN'S OIL AND GAS SECTOR
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Editor's word
Market HighlightsSnapshot of events, trends and developments in Oman's Oil and Gas sector
A safety-net for Oman’s oilfield industryExclusive interview with HE Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas
Weathering the oil stormValue creation, sustainability, business improvement and expenditure savings are the mantras shaping Petroleum Development Oman’s (PDO) response to the international oil price rout.
Redeployment strategy yields early success storiesThe government-sanctioned Redeployment Strategy is beginning to deliver positive results...
Leveraging the ingenuity of the IndependentOman-Lasso Exploration & Production Karawan Ltd is bringing more than just investment and expertise to bear on the development of its newly acquired Block 54 onshore Oman.
A renewable solutionGlassPoint has teamed up with PDO to bring to life a more economical and sustainable solution to producing heavy oil.
DME flagship Oman crude contractOman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME
ICV: Creating shared valueICV aims to foster direct employment and local entrepreneurship through the provision of goods and services...
Oil glut a boon to Oman ShippingNational shipping line Oman Shipping Company SAOC (OSC) is reaping the benefits of a strong uptrend in tanker freight rates.
Joint Supplier Registration SystemA success story for Oman’s Oil & Gas industry
OPITODeveloping a sustainable talent pool
The Contango Conundrum
Finding another Yibal or FahudThe business of finding large oilfields is becoming harder and harder with time, says Prof. Wiekert Visser.
SME Fund:Special schemes to support ICV.
OPAL: Nurturing HR Best Practice
OPAL Awards recognise industry excellence
OPAL’s growing family:335 members and counting!
Upcoming events
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Issue No. 1February 2016
ImpressumSince 1926, our people and technology have been able to solve any oilfield challenge.
© 2015 Schlumberger. 15-OF-87502
Combining our people’s ingenuity and industry-leading technology has been our approach for more than 80 years. We recruit people from around the world—developing their talents through local and international experience. With 125 research, engineering, and manufacturing centers located worldwide and the industry’s largest training commitment, our goal is to continually deliver new technology to meet every reservoir challenge.
Find out more at slb.com
15_of_87502_Branding_ad.indd 1 11/30/15 12:49 PM
P. O. Box 493 / Postal Code 133Sultanate of OmanTel. (968) 24 605 700 Fax. (968) 24 604 255
[email protected]@opaloman.org
EDITOR'S WORD 4
❱❱ Mr. Abdullah Al Harthy,
Communication Executive Manager
and Magazine Executive Editor
OPAL – The Magazine
t long last, a news magazine our industry can proudly call its own!The Board of Directors and my colleagues at OPAL are delighted to present to you this inaugural edition of OPAL – The Magazine, a quarterly news magazine that
is essential reading for those playing a part – major or minor – in the growth of Oman’s critically vital oil and gas sector. In launching a dedicated news magazine for our industry, the under-lying objective is pretty straightforward: OPAL – The Magazine is in-tended to serve as the Voice of the Sultanate’s Oil & Gas sector. It aims to inform, enlighten, challenge, and engage the Oil & Gas fraternity on trends, issues and developments that are imperative to our collective well-being, as well as in advancing the nation’s strategic socioeconom-ic objectives. As an extension of our organisation, OPAL – The Magazine is intend-ed to help us connect with our members. Thus, in addition to news features, interviews and analysis, the magazine also aims to reinforce our longstanding mission objectives, as Omanisation and Training, In-Country Value (ICV), such Professional Development, Best Prac-tice, HSSE, Compliance Certification, and so on. Some of these core objectives, which are central to our organisational mandate, have been discussed in this inaugural issue.But far from being a mere newsletter, OPAL – The Magazine is intend-ed to be news-based reference source with a primary focus on issues and developments of topical interest. Accordingly, the launch issue deals with the impacts of the global oil price downturn on the domes-tic Oil & Gas industry. In exclusive interviews, His Excellency Salim bin Nasser Al Aufy, MOG Under-Secretary, and Mr. Raoul Restucci, PDO’s Managing Director, offer their respective takes on the crisis. Also in focus is the government’s far-reaching Redeployment Strategy to help cushion the impacts of the slump on the thousands of Omanis employed in this sector.OPAL – The Magazine is intended to be a platform for engagement with its members and other stakeholders. So we welcome feedback on the general editorial thrust of the magazine, as well as its content. We would also appreciate your insights on issues and trends that you would like to see highlighted in the magazine. Please write in with your thoughts (at: [email protected]) on how we can collabo-rate with the industry in producing a high-quality magazine we can all be proud of.My sincere thanks to the editorial team, as well as OPAL’s support staff, who contributed to the success of this maiden edition.
AAt Gulf Energy we combine the experience of personnel, first
class equipment with cutting edge technology and a strong emphasis on innovation, reliability, quality, integrity and customer service. This orientation towards customer needs and expectations is our means to position Gulf Energy as one of the most dynamic and fast growing innovative solutions provider in the Energy industry in the Middle East and North Africa (MENA) region.
At Gulf Energy, we believe in developing the local capabilities with our local partners. Our In Country Value initiative does not stop at employing nationals, but involve formation of real partnerships through Joint Ventures and collaborations with top class international institutions to enrich and localize the know how and expertise. People are our main asset. Motivation and training are the main elements to promote Gulf Energy to be a leader in
providing its Services, Technology and Solutions at highest standard of quality.
Gulf Energy currently works with almost all of the major operators in Oman including Petroleum Development
of Oman (PDO), Occidental Oman (OXY), PTT Exploration and Production Plc (PTTEP),
MEDCO, Petrogas E & P and Daleel Petroleum.
www.gulfenergy-int.com
February 20165
At Gulf Energy we combine the experience of personnel, first class equipment with cutting edge technology and a strong
emphasis on innovation, reliability, quality, integrity and customer service. This orientation towards customer needs and expectations is our means to position Gulf Energy as one of the most dynamic and fast growing innovative solutions provider in the Energy industry in the Middle East and North Africa (MENA) region.
At Gulf Energy, we believe in developing the local capabilities with our local partners. Our In Country Value initiative does not stop at employing nationals, but involve formation of real partnerships through Joint Ventures and collaborations with top class international institutions to enrich and localize the know how and expertise. People are our main asset. Motivation and training are the main elements to promote Gulf Energy to be a leader in
providing its Services, Technology and Solutions at highest standard of quality.
Gulf Energy currently works with almost all of the major operators in Oman including Petroleum Development
of Oman (PDO), Occidental Oman (OXY), PTT Exploration and Production Plc (PTTEP),
MEDCO, Petrogas E & P and Daleel Petroleum.
www.gulfenergy-int.com
INTERVIEW 6
• B A H R A I N • B R U N E I • O M A N • S A U D I A R A B I A • U A E • U N I T E D K I N G D O M
RAY International L.L.C which is more commonly known as RAY Energy. This is the flagship Company which provides energy solutions with multidiscipline in Electrical, Mechanical, Civil, Control, Automation, Facility Management and Lab Service and leading EPC contractor in Oman region. It also hosts a range of state of the art of engineering product lines that caters to the requirements of companies in the Oil and Gas, Utility, Power Plant and Infrastructure segments.
RAY International Oil and Gas provides services and products Oil and Gas sector. This includes specialization in work-over Rigs, Wire-line and extensive range of Well Services to the Oil and a Gas industry. With an innovative mind, the young professionals unlock new areas for exploration and maximize the potential to tap all Oil and Gas opportunities.
RAY Skills, with prime focus on enhancing In-Country Value by building the future of Oman through training and developing young aspiring Omani professionals. In line with the vision of the Country, the Learning and Development facility is fully equipped to develop the national work force with the view to highly competent professionals within their own trades. RAY Skills renders unsurpassed quality in Learning and Development training. Coverages includes training in the fields of Welding, Drilling, High Voltage Electrical, Rigs, Soft Skills, Health, Safety Environment including IOSH, NEBOSH certified programmes, Well Servicing and Wireline. These programmes are complemented by Competency Consultancy Services delivered via innovative and unique solutions.
Also under the umbrella of the RAY Group are:• RAY Ecologic • RAY Precision Engineering • Ray Automotive • Seven Points International
EUROPOLES Middle East is the joint venture business interest of the Group with well-known German Company Europoles GmbH & Co.KG. A manufacturing facility is located in Nizwa where spun concrete poles are produced to meet the requirements of the Oil and Gas, infrastructure and utility sectors. In addition, the business adds In Country Value for all local companies in manufacturing electricity concrete poles can be used not only in manufacturing electricity distribution, but also in telecommunication and municipality applications.
The core businesses under the RAY Group umbrella are:
Rukun Al Yaqeen International L.L.CPO Box 203, PC 134, Jawaharat Al Shatie,
Muscat, Sultanate of OmanPhone: +968 2 460 0420 Fax: +968 2 460 1794
Email: [email protected]
www.rayoman.com
We stand proudly by our products and services as they provide innovative solutions to growing industry demands. An ISO 9001:2008 Accredited Company we maintain only the highest in International Standards and quality, yet remain local and loyal Oman Company. We are located in the Sultanate of Oman, but also have outlets in the United Kingdom, Kingdom of Bahrain, Qatar, United Arab Emirates, Saudi Arabia and Brunei. RAY International aspirers to deliver unsurpassed quality in service and products through technologically advanced and innovative solutions, thus enhancing its presence as a professional services provider in the Sultanate of Oman, the Gulf region and across the globe. At RAY we have robust policies and procedures relating to Health Safety and Environment that ensures no compromise or short cuts with respect to HSE and the well-being of the employees at the workplace.
Precision CNCFabrication &
Concrete Poles
Energy
Oil & Gas
Learning &Development
Engineering
EnvironmentSolutions
Automotive
Rukun AI Yaqeen International Group of Companies LLCa wholly In Country Value Group of Companies, specializes in the following areas of business:
ENERGY
OIL & GAS
LEARNING & DEVELOPMENT
ENVIRONMENT SOLUTIONS
ENGINEERING
CONSTRUCTION & LOGISTICS
AUTOMOTIVE
PRECISION CNC FABRICATION & CONCRETE POLES
Construction& Logistics
January 20167
• B A H R A I N • B R U N E I • O M A N • S A U D I A R A B I A • U A E • U N I T E D K I N G D O M
RAY International L.L.C which is more commonly known as RAY Energy. This is the flagship Company which provides energy solutions with multidiscipline in Electrical, Mechanical, Civil, Control, Automation, Facility Management and Lab Service and leading EPC contractor in Oman region. It also hosts a range of state of the art of engineering product lines that caters to the requirements of companies in the Oil and Gas, Utility, Power Plant and Infrastructure segments.
RAY International Oil and Gas provides services and products Oil and Gas sector. This includes specialization in work-over Rigs, Wire-line and extensive range of Well Services to the Oil and a Gas industry. With an innovative mind, the young professionals unlock new areas for exploration and maximize the potential to tap all Oil and Gas opportunities.
RAY Skills, with prime focus on enhancing In-Country Value by building the future of Oman through training and developing young aspiring Omani professionals. In line with the vision of the Country, the Learning and Development facility is fully equipped to develop the national work force with the view to highly competent professionals within their own trades. RAY Skills renders unsurpassed quality in Learning and Development training. Coverages includes training in the fields of Welding, Drilling, High Voltage Electrical, Rigs, Soft Skills, Health, Safety Environment including IOSH, NEBOSH certified programmes, Well Servicing and Wireline. These programmes are complemented by Competency Consultancy Services delivered via innovative and unique solutions.
Also under the umbrella of the RAY Group are:• RAY Ecologic • RAY Precision Engineering • Ray Automotive • Seven Points International
EUROPOLES Middle East is the joint venture business interest of the Group with well-known German Company Europoles GmbH & Co.KG. A manufacturing facility is located in Nizwa where spun concrete poles are produced to meet the requirements of the Oil and Gas, infrastructure and utility sectors. In addition, the business adds In Country Value for all local companies in manufacturing electricity concrete poles can be used not only in manufacturing electricity distribution, but also in telecommunication and municipality applications.
The core businesses under the RAY Group umbrella are:
Rukun Al Yaqeen International L.L.CPO Box 203, PC 134, Jawaharat Al Shatie,
Muscat, Sultanate of OmanPhone: +968 2 460 0420 Fax: +968 2 460 1794
Email: [email protected]
www.rayoman.com
We stand proudly by our products and services as they provide innovative solutions to growing industry demands. An ISO 9001:2008 Accredited Company we maintain only the highest in International Standards and quality, yet remain local and loyal Oman Company. We are located in the Sultanate of Oman, but also have outlets in the United Kingdom, Kingdom of Bahrain, Qatar, United Arab Emirates, Saudi Arabia and Brunei. RAY International aspirers to deliver unsurpassed quality in service and products through technologically advanced and innovative solutions, thus enhancing its presence as a professional services provider in the Sultanate of Oman, the Gulf region and across the globe. At RAY we have robust policies and procedures relating to Health Safety and Environment that ensures no compromise or short cuts with respect to HSE and the well-being of the employees at the workplace.
Precision CNCFabrication &
Concrete Poles
Energy
Oil & Gas
Learning &Development
Engineering
EnvironmentSolutions
Automotive
Rukun AI Yaqeen International Group of Companies LLCa wholly In Country Value Group of Companies, specializes in the following areas of business:
ENERGY
OIL & GAS
LEARNING & DEVELOPMENT
ENVIRONMENT SOLUTIONS
ENGINEERING
CONSTRUCTION & LOGISTICS
AUTOMOTIVE
PRECISION CNC FABRICATION & CONCRETE POLES
Construction& Logistics
NEWS 8
Snapshot of events, trends and developments characterising the ebb and flow of activities across Oman’s pivotal oil and gas industry:
Market highlights
Agreement signed for Khazzan gas field Phase IIEnergy major BP, along with Oman Oil Company Exploration & Production (Oman Oil E&P), a wholly owned subsidiary of Oman Oil Company, has signed a heads of agreement with the Government of the Sultanate of Oman committing to amend the Oman Block 61 exploration and production sharing agreement (EPSA), extending the licence area of the block and enabling a further development of the major Khazzan tight gas field. BP is the operator of Block 61 with a 60 per cent interest and Oman Oil E&P holds the other 40 per cent.Under the amended EPSA, the extension will add a further over 1000km2 to the south and west of the original 2,700km2 Block 61. The extension will allow a second phase of development, accessing additional resources in the area that have been identified by drilling activity within the original block. Development of this additional resource is subject to final approval of the Government of Oman and of BP; both expected in 2017.The agreement was signed by Dr Mohammed bin Hamed al Rumhy, Minister of Oil and Gas, Bob Dudley, BP Group Chief Execu-tive, and John Malcolm, Executive Managing Director of Oman Oil E&P. (14th Feb 2016)
Bank Nizwa SAOG has signed an agreement to provide a structured financing facility of $50 million to Hydro-carbon Finder E&P LLC (HCF), an independent Oil & Gas exploration & production company promoted by the Services and Trade Group (S&T Group). The Bank’s Shari’a-compliant package is tailored to meet the require-ments of HCF, which has been granted concession rights by the Government of Oman for oil & gas exploration, development and production within an onshore geograph-ical area in Oman termed as Block 7.The Facilities agreement was signed by Dr Jamil el Jarou-di, CEO of Bank Nizwa and Brig Gen (Retd) Sulaiman al Adawi, Group Chairman of the S&T Group, in the pres-
ence of Shaikh Ahmed bin Saif al Rawahi, Deputy Chair-man of Bank Nizwa. The signing ceremony was also at-tended by Waqas al Adawi, Vice Chairman of S & T Group, and Rohit Walia, Executive Chairman of Alpen Capital, along with senior members from their respective teams.Hydrocarbon Finder E&P LLC is part of the Services & Trade (S&T Group), a leading Oman based business con-glomerate that has significant business interests in diverse sectors such as interior fit-out and contracting, informa-tion technology, healthcare, mining, FMCG, trading, and real estate across Oman and with established operating companies in GCC region, United Kingdom, Italy, India & Sri Lanka. (14th Feb 2016)
BANK NIZWA INKS FINANCING PACT WITH HYDROCARBON FINDER
A Babcock International Group CompanyNational Training Institute LLC
مـعـهـد الـتـدريـب الـوطنــي ش م م
An ISO 9001:2008 Certified Company
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an.c
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Over three decades, NTI has helped equip individuals to make a difference in their careers, their organisations – and their society.
Today, as part of the Babcock International Group, a leading training provider in Europe, NTI is transforming human capital in Oman through global
best practices, unmatched local insight, advanced training infrastructure, and innovative training techniques.
On the occasion of the 45th National Day, NTI renews its commitment to empower a new generation of Omani professionals to carry forward His Majesty’s vision for the nation.
Warm felicitations to His Majesty Sultan Qaboos bin Saidand the people of Oman on the occasion of the 45th National Day
Enabling individuals.Empowering the nation.
NTI Corporate AD Vertical_Final.pdf 1 11/2/15 1:21 PM
February 20169
A Babcock International Group CompanyNational Training Institute LLC
مـعـهـد الـتـدريـب الـوطنــي ش م م
An ISO 9001:2008 Certified Company
ww
w.n
tiom
an.c
om
Over three decades, NTI has helped equip individuals to make a difference in their careers, their organisations – and their society.
Today, as part of the Babcock International Group, a leading training provider in Europe, NTI is transforming human capital in Oman through global
best practices, unmatched local insight, advanced training infrastructure, and innovative training techniques.
On the occasion of the 45th National Day, NTI renews its commitment to empower a new generation of Omani professionals to carry forward His Majesty’s vision for the nation.
Warm felicitations to His Majesty Sultan Qaboos bin Saidand the people of Oman on the occasion of the 45th National Day
Enabling individuals.Empowering the nation.
NTI Corporate AD Vertical_Final.pdf 1 11/2/15 1:21 PM
NEWS 10
GlassPoint Solar, the leading supplier of solar to the oil and gas in-dustry, announced a strategic partnership with local Corporate Social Responsibility (CSR) and Sustainability experts, Sustainable Square Oman. Sustainable Square will work with GlassPoint to establish its social investment strategy and launch new programs that best serve the Sultanate and the Omani people. “We are committed to creating long-term value for Oman that extends well beyond our solar oilfield projects,” said GlassPoint President and CEO Rod MacGregor. “It’s important our social responsibility strategy aligns with GlassPoint’s vision and that of our stakeholders so we can contribute where it’s needed most. By partnering with local experts embedded across Oman’s CSR landscape, we will be able to maximize our investment and create impactful projects to benefit Oman’s society, environment and economy.” (7th Feb 2016)
DME sets multiple records in JanuaryDME, THE PREMIER INTERNA-TIONAL ENERGY FUTURES AND COMMODITIES EXCHANGE IN THE MIDDLE EAST, ANNOUNCED A SET OF RECORDS FOR THE MONTH OF JANUARY 2016. THE EXCHANGE REGISTERED A NEW RECORD FOR PHYSICAL DELIVERY VOLUMES OF 27.3 MILLION BARRELS FOR MARCH LOADING (PREVIOUS RECORD WAS 22.5mn BARRELS IN MARCH 2015), AND FOUR SUCCESSIVE OPEN INTEREST RECORDS FOR ITS OMAN CRUDE OIL FUTURES CONTRACT PEAKING AT 36,109 CONTRACTS. THE EXCHANGE ALSO SAW TRADED VOLUMES INCREASE BY 17 PER CENT YEAR-ON-YEAR AMID STRONG INTEREST IN THE DME OMAN CONTRACT FROM COMMERCIAL AND FINANCIAL FIRMS AROUND THE WORLD.OWAIN JOHNSON, MANAGING DIRECTOR, DME SAID: “WE ARE DELIGHTED TO START 2016 WITH THESE RECORDS. TODAY’S TURBULENT MARKETS CONFIRM THE NEED FOR A REGULATED EXCHANGE THAT OFFERS RISK MANAGEMENT AND HEDGING SOLUTIONS IN THIS PART OF THE WORLD. WE ARE WITNESSING A DEVELOPING APPETITE AMONG OIL SELLERS AND BUYERS TO TRADE AND GET OIL DELIVERED THROUGH DME, THE ONLY REGULATED ENERGY EXCHANGE IN ONE OF THE BIGGEST OIL PRO-DUCING REGIONS.” (2th Feb 2016)
GlassPoint appoints local CSR experts
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February 201611
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NEWS 12
OMAN’S GOVERNMENT AN-NOUNCED ITS INTENTION TO AMEND FUEL PRICES BRINGING THEM INTO LINE WITH GLOBAL PRICES WITH EFFECT FROM JANU-ARY 15, 2016. DARWISH BIN ISMAIL AL BALUSHI, MINISTER RESPON-SIBLE FOR FINANCIAL AFFAIRS, SAID A GOVERNMENT COMMITTEE COMPRISING THE UNDERSECRE-TARY OF THE MINISTRY OF OIL AND GAS, THE UNDERSECRETARY OF THE MINISTRY OF FINANCE, THE UNDER-SECRETARY OF THE MINISTRY OF COMMERCE AND INDUSTRY AND THE CEO OF OMAN REFINERIES AND PETROLEUM INDUSTRIES COMPANY (ORPIC), HAS BEEN TASKED WITH FIXING THE MONTHLY PRICES.THE TARIFFS WILL BE ANNOUNCED THREE DAYS BEFORE THEY COME INTO EFFECT EVERY MONTH, AL BALUSHI SAID, ADDING THAT THE PANEL WILL ALSO ENSURE THAT FILLING STATIONS ARE IN FULL COMPLIANCE WITH THE NEW PRIC-ES. (31st December 2015)
A storage project with 25 million barrels of space will open in Oman in 2019, helping to keep the country’s oil flowing, Oman Tank Terminal Company (OTTCO). The complex, which will be built at Ras Markaz, is needed as oil storage in Sohar is already full, Said Al Maawali, project director for OTTCO, told the Platts Oil Storage Conference in Amsterdam.“It will help them (manage)
unforeseen circumstances,” Al Maawali said. The tanks will help boost trading of Oman crude oil futures on the Dubai Mercantile Exchange (DME) by making more oil available that can be delivered against the futures contracts, Al Maawali said, and it would also help guard against price volatility. He said future phases of the project could expand its capacity to as much as 200 million barrels of storage.OTTCO last year launched a floating storage on an oil supertanker with 2.1 million barrels of space, awarding contracts to China Oil, Glencore and Oman Trading International (OTI). (19th January 2016)
OMAN TO ROLL BACK SUBSIDY ON FUEL
OTTCO TO BUILD 25M BARRELS OF NEW OIL STORAGE
Oman’s total crude oil and condensates produc-tion in 2015 grew almost 4 per cent to touch 358.10 million barrels, which is equivalent to 981,090 barrels per day. This is against a produc-tion of 344.37 million barrels in 2014, equivalent to 943,500 barrels per day.Total crude oil exported in 2015 stood at 308.13 million barrels, a daily average of 844,207 barrels. China topped the list of importers, offtaking 77.1 per cent of Omani crude in 2015.Oman crude averaged $56.45 per barrel last year, against an average price of $103.23 per barrel in 2014.According to the monthly report of the Ministry of Oil and Gas, the Sultanate produced 31.21 million barrels of crude in December 2015, yield-ing an average daily rate of 1,006,905 barrels, a growth of 1.12 per cent compared to the previ-ous month. Total crude oil exports in December 2015 stood at 25.62 million barrels, resulting in an average daily export of 826,547 barrels, a growth of 0.77 per cent over the previous month. (January 16th, 2016)
Oman crude oil output grows 4% in 2015
THE SULTANATE PRODUCED 31.21 MILLION BARRELS OF CRUDE IN DECEMBER 2015
February 201613
THE SULTANATE PRODUCED 31.21 MILLION BARRELS OF CRUDE IN DECEMBER 2015
!(
!(
6PDO
52Open
59Open
41Open
18Open
36DNO
42OOCEP
49Open
38Frontier
43BOpen
4CC Energy
51Open
31Open
47Open
39Petrotel
43AOpen
NLS
50Masirah Oil Ltd
3CC Energy
66MOL
54Lasso
56Medco
55Petrogas
40Petrotel
64Open
61BP
48Open
58Open
57Open
9Occidental
62 OilOpen
30Open
17Petrotel
7Petrogas
67Petrotel
62Occidental
Open
60OOCEP
44PTTEP
5Daleel
27Occidental
15Odin Energi
53Occidental
8DNO
65Government of Sultanate of Oman
8DNO
Open
M U S C A TM U S C A T
S A L A L A HS A L A L A H
MINISTRY OF OIL AND GAS
This map is not an authority on international boundaries. Drawing No.: 108094001.mxd
Date: 09 Dec 2015
100 0 10050 Kilometers
A R A B I A N G U L F
R E P U B L I C O F Y E M E N
S E A O F O M A N
Juzor al Hallaniyyat
Masirah
Juzor ad Daymaniyyat
MADHA (Sultanate of Oman)
MUSANDAM(Sultanate of Oman)
A R A B I A N S E A
K I N G D O M OF S A U D I A R A B I A
U N I T E D A R A BE M I R A T E S
I S L A M I C R E P U B L I C OF I R A N
Acreages are based on spheroidal area
The blue/white stripes indicate Oxy operating for NAG and open for Oil
BLOCK No. BLOCK NAME OPERATOR AREA km23 Afar CC Energy 11,3984 Ghunaim CC Energy 23,2125 Wadi Asw ad Daleel 9926 North, Central & South Oman PDO 90,8747 Abu al Tubool Petrogas 2,3318 Bukha DNO Oman limited 244 + 1799 Suneinah Occidental Oil & Gas 4,08315 Jebel Asw ad Oden Energi 1,38917 Musandam Petrotel Oman LLC 2,37818 Batinah Coast Offshore Open 21,14027 Wadi Asw ad Occidental Oil & Gas 1,25430 Hafar Open 1,18531 Suneinah North Open 8,52836 Fasad DNO Oman limited 18,55638 Mudayy Frontier Resources Oman Limited 17,42539 Salalah Petrotel Oman Onshore LLC 11,60640 Musandam Offshore Petrotel Oman Offshore LLC 6,12041 Quriyat Coast Offsho Open 23,85042 Sharqiyah OCCEP 25,590
43A Dhahirah Open 6,87943B Dhahirah Open 11,96744 Shams PTTEP Middle East Ltd. 1,16247 Jebel Hammah Open 8,52448 Malih Open 2,99549 Montasar Open 15,43950 Masirah Bay Offshore Masirah Oil Ltd 16,90351 Baqlah Open 10,13452 Juzor Al Hallaniyyat Open 90,76053 Mukhaizna Occidental Oil & Gas 69454 Karaw an Oman-Lasso Exploration & Production Karaw an Limited 5,63255 Kahil Petrogas Kahil LLC 7,56456 Mudaw rat Medco Arabia LTD 5,80857 Al Afif Open 2,26258 Qatbeet Open 2,27759 Arabian Sea Open 40,48860 Abu Butabul OOCEP 1,48561 Makarem Khazan BP (Non-Associated Gas Operator) 2,79662 Habibah Occidental Oil & Gas (Non-Associated Gas Operator) 2,269
62 Oil Open 2,26964 Al Ghubar Qarn Alam Open (Non-Associated Gas) 3,87465 Government of Sultanate of Oman 1,23066 MOL Oman LTD 4,89867 Petrotel Oman Onshore LLC 1,773
NLS Natural Living Sanctuary Natural Living Sanctuary 2,731Madha Open 63
Open 555Ghunaim Open 1,529
SULTANATE OF OMAN CONCESSION BOUNDARIES
Map
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y of
OPA
L
NEWS 14
Takatuf Oman, the Human Capital solutions provider, signed a sponsor-ship agreement with Mitsui & Co, Ltd, the diversified and comprehen-sive Japanese trading, investment and services enterprise to support young Omanis who participate in the Takatuf Scholars’ Programme and earn international scholarships.Ibrahim al Harthi, Acting CEO, signed the agreement on behalf of Takatuf, and Hiroyuki Tsurugi, Managing Officer and Chief Op-erating Officer - Energy Business Unit 1, signed for Mitsui. Mitsugu Saito, Ambassador of Japan to the Sultanate of Oman, and Eng Isam bin Saud al Zadjali, CEO of Oman Oil Company were joined by official
As many as 20 students have so far been granted scholarships under the Orpic International Scholars Programme to the UK, the Netherlands, USA and Canada. This initiative is part of Orpic’s continued support to young students in North Al Batinah region as well as the Sultanate in general. The programme calls for stu-dents from North Al Batinah Governorate to benefit from the scholarships provided based on preset criteria’s. Once applica-tions are received, screening of candidates is carried out by Takatuf Scholars Programme and selected students are of-fered international scholarships for two years in a preparatory school followed by another 3 – 4 years for Bachelor Degree in one of the leading universities around the world. (3rd Feb 2016)
Takatuf signs sponsorship agreement with Mitsui
representatives of both parties at the ceremony.Mitsui is the first international com-pany to join the network of sponsors investing in Oman’s youth to develop future leaders. In addition to sup-
porting participation in the Takatuf Scholars Programme Enrichment Pro-gramme, two students will be awarded an international scholarship for high school completion and undergraduate study in Japan. (6th Feb 2016)
ORPIC GRANTS SCHOLARSHIPS TO OMANI STUDENTS
20 STUDENTS
HAVE SO FAR BEEN GRANTED SCHOLARSHIPS UNDER THE ORPIC INTERNATIONAL SCHOLARS PROGRAMME
A BENCHMARK IN EVERYTHING
WE DO
An Advanced & Comprehensive set-up that offers a “ONE STOP SHOP” for Design, Manufacturing, Repair, and Refurbishment of products and services of all mechanical and processing equipment mainly for Oil & Gas and Petro Chemical Industries.
In-house Design & Process Engineering – Fabrication – Machining – Valve Testing & Repair – Rig Maintenance – Special Coating – Welding – Man-Power Supply.
February 201615
A BENCHMARK IN EVERYTHING
WE DO
An Advanced & Comprehensive set-up that offers a “ONE STOP SHOP” for Design, Manufacturing, Repair, and Refurbishment of products and services of all mechanical and processing equipment mainly for Oil & Gas and Petro Chemical Industries.
In-house Design & Process Engineering – Fabrication – Machining – Valve Testing & Repair – Rig Maintenance – Special Coating – Welding – Man-Power Supply.
NEWS 16
$60 BILLION
Scottish Oil and gas technology group Plexus Holdings has won a contract in Oman worth about $600,000. Under the deal, the Aberdeen-based firm will supply explorer Masirah Oil with its Pos-Grip wellhead system, designed to prevent the type of blowout behind the 2010 Gulf of Mexico disaster that killed 11 people. Work will begin next month, initially for one well, but Plexus said a further two wells could be drilled depending on results.The contract falls under the territory of the Aim-quoted com-pany’s recently appointed Chinese licencing partner, Jereh, and Cenkos analyst Ian McInally said: “This is extremely wel-come news as it not only marks the first move into the Middle East through Jereh, it again serves to highlight the competi-tive advantage of Pos-Grip technology.”Plexus chief executive Ben van Bilderbeek said: “This new contract in a new territory with a new customer represents another step in achieving our strategy of global expansion for Plexus and the development of our suite of Pos-Grip wellhead products at a time when the North Sea is under extreme pres-sure from the fall in oil prices.” (20th January 2016)
Iran and Oman took what would likely be the final step in sealing a long-in-the-works gas export deal worth $60 billion in a meeting between Iran’s Oil Minister Bijan Namdar Zanganeh and his Omani counterpart, Mohammed bin Hamad al Rumhy, in Muscat. The two sides discussed the financing terms of laying an approximately 260-kilometer subsea pipeline to supply 28 million cubic meters a day of natural gas (10 billion cubic metres a year) from Iran to Oman under a 25-year contract that is expected to begin in 2019. “With sanctions lifted, the National Iranian Gas Export Company and the Omani side will hold talks over the unexploited capacity [of Oman’s LNG production] over the next 10 days,” Zanganeh said after returning from his one-day trip to Muscat, Iranian news service Shana reported.Oman wants Iran’s gas to meet the demand of its 3.6 million popula-tion, while a portion of supplies is planned to be used as feedstock to produce liquefied natural gas. According to the latest developments concerning Tehran and Muscat’s gas deal, a 48-inch pipeline will be laid up from Jask Port in southern Iran to deliver gas to Oman in the Arabian Peninsula. Tehran and Muscat reached a preliminary agree-ment in early 2014 on laying the underwater pipeline at an estimated cost of $1 billion. (23rd January 2016)
Petroleum Development Oman (PDO) has signed a co-operation agreement with the Oman Centre for Corporate Governance and Sustainability (OCCGS) to ensure the Compa-ny and its contracting community continue to operate to the highest performance and ethical standards.The agreement was signed by PDO Managing Director Raoul Restucci and OCCGS Executive Director Sayyid Hamid bin Sultan al Busaidi. Restucci said: “PDO has always been commit-ted to being a good corporate citizen, putting honesty, integrity and fairness at the centre of everything we do. We believe in transparency and accountability and this is another step forward in our efforts to ensure compliance to business ethics and anti-corruption policies.Under the terms of the MoU, OCCGS will provide support and advisory services in the preparation of policies and manuals relating to corporate governance and sustainability. The organisation, which is tasked with building the infrastructure, skills and value system to transform corporate behaviours and perfor-mance in Oman, will also provide governance training for PDO staff and contractors while offering administrative technical consultations, research and studies in this area. (24th January 16)
PDO INKS MOU WITH CENTRE FOR CORPORATE GOVERNANCE
Gas contract with Oman in final stages
Plexus lands $600,000 wellhead contract
IRAN AND OMAN TOOK THE FINAL STEP IN SEALING A LONG-IN-THE-WORKSGAS EXPORT DEAL WORTH
February 201617
NEWS 18
A total of 195 Omani jobseekers graduated to the highest internation-al standard to work as welders on PDO’s Rabab Harweel integrated oil and gas mega project. The recruits have successfully completed 20 months’ training and are taking up positions with two of the Company’s main contractors, CCC and Al Turki Enterprises.The graduation ceremony took place under the auspices of Mo-hammed bin Hamad al Rumhy, Minister of Oil and Gas in the pres-ence of Shaikh Abdullah al Bakri, Minister of Manpower.The PDO-funded vocational training scheme combines theory and prac-tice and qualifies trainees up to 6G level – the most advanced – which is recognised by international accred-itation bodies such as The Welding Institute (TWI) and The American Welding Society. (28th Jan 2016)
OMAN AWARDS ONSHORE BLOCK 7 In what has been hailed as a bright spot amid the continuing gloom pervad-ing Oman’s upstream energy sector, the Ministry of Oil & Gas signed a new Exploration and Production Sharing Agreement (EPSA) with Hydrocarbon Finder, a wholly Omani owned independent energy firm, covering Block 7 in Wusta Governorate.Dr Mohammed bin Hamed al Rumhy, Minister of Oil & Gas, inked the agreement on behalf of the Government of the Sultanate of Oman. Signing on behalf of Hydrocarbon Finder was its Chairman, Sulaiman Mohammed Yahya al Adawi.The modest-sized 2,331 sq km concession, which is currently operated by Petrogas, will pass into the hands of Hydrocarbon Finder when the latter’s EPSA expires in early April. According to Dr Saleh al Anboury, Director General of Petroleum Investments at the Ministry of Oil & Gas, the Block currently produces around 900 barrels per day (bpd) of crude from three oil-fields – an output that is proposed to be ramped up to around 5,000 bpd over the next five years. (28th Jan 2016)
195 Omanis obtain 6G welding qualifications
THE COMMITTEE IN-CHARGE OF STUDYING AND FIXING THE RETAIL PRICE OF FUEL PRODUCTS IN THE SULTANATE APPROVED A NEW SET OF PRICES FOR FEBRUARY.IN A STATEMENT TO ONA, SALIM BIN
NASSER AL AUFY, UNDER-SECRE-TARY OF THE MINISTRY OF OIL AND GAS, DECLARED THE NEW TARIFFS AS FOLLOWS: 153 BAIZAS PER LITRE OF M95, 137 BAIZAS PER LITRE OF M90, AND 146 BAIZAS PER LITRE OF
DIESEL. THE NEW PRICES, WHICH COME INTO FORCE ON 1 FEBRUARY, ARE LOWER BY 7, 3 AND 14 BAIZAS RESPECTIVELY COMPARED TO THE JANUARY TARIFFS. (28th January 2016)
Fuel prices announced for February
February 201619
LEAD INTERVIEW 20
February 201621
As tanking oil prices put the squeeze on local oil and gas companies, Oman’s government has scrambled to put in place bold measures designed to dampen any rush by employers to axe the jobs of Omani oilfield workers
A safety-net for Oman’s oilfield industry
t all came to a boil one day in early November! Bloggers crying foul over claims that oilfield contractors were quietly laying off Omani workers while keeping expatriates in place… Trade union bosses threatening industrial action to stave off job losses… Social media agog with predictions of impending doom for the oil and
gas industry – the nation’s economic lifeblood… Then came the missive from the Council of Ministers decreeing a mora-torium on unilateral layoffs of Omanis working in the oil and gas indus-try. Based on a proposal drafted by the Ministry of Oil and Gas with in-puts from the Oil & Gas Sector Trade Union and other stakeholders, the directive set out firm caveats against employers seeking to axe national workers in the face of the crisis.If anything, the announcement did help calm nerves in the oil and gas in-dustry already jittery over collapsing international oil prices. Although it placed the burden of averting job losses squarely at the door of oilfield companies, the communiqué did provide reassurance that the Omani government was seized of the situation and would come up with equita-ble solutions that had the interests of private employers at heart as well.At the heart of communiqué is an algorithm that any oilfield services company must adhere to before they contemplate any redundancies in-volving Omani workers. “It simply says that before the terminating the contract of a national worker, the subcontractor, corresponding main contractor and the operator (oil company) in question need to do due diligence to verify that there are very valid reasons for this action,” ex-
I
His Excellency Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas
LEAD INTERVIEW 22
plained His Excellency Salim bin Nasser al Aufy, Under-Secretary of the Ministry of Oil & Gas. Importantly, the communiqué frowns upon any sleight-of-hand tactics to retain expatriate staff while sacrificing their Omani col-leagues. Expat workers holding comparable or equivalent posi-tions within the organisation must be terminated first before similar action is contemplated against Omani workers. “Additionally, the employer is obliged to explore the possibili-ty of accommodating any surplus Omani staff in other company contracts or projects being under-taken by sister companies of the group either within or outside the oilfield sector, subject to certain conditions being met.”
The Under-Secretary heads a specially constituted Technical Committee tasked by the Coun-cil of Ministers to strategize a far-reaching redeployment road-map designed to secure Omani jobs in the face of the worsening oil price slump and steep budget cuts. Also sitting on the panel is an Under-Secretary representing the
Ministry of Manpower, a Board Member of the Oman Chamber of Commerce and Industry (OCCI), the Chairman of the General Fed-eration of Oman Trade Unions, the Chairman of the Oman Oil & Gas Sector Workers Union, and a rep-resentative of the Oman Society for Petroleum Services (OPAL), among other high-level officials.
ADDITIONALLY, THE EMPLOYER IS OBLIGED TO EXPLORE
THE POSSIBILITY OF ACCOMMODATING ANY SURPLUS
OMANI STAFF IN OTHER COMPANY CONTRACTS OR
PROJECTS BEING UNDERTAKEN BY SISTER COMPANIES
OF THE GROUP EITHER WITHIN OR OUTSIDE THE OILFIELD
SECTOR, SUBJECT TO CERTAIN CONDITIONS BEING MET
February 201623
Its mandate is to sign off on any redundancies that cannot be sal-vaged despite a protracted, multi-stage process of due diligence, retraining and upskilling, and re-deployment. Any jobs losses still filtering through despite the rig-orous safety-netting exercise will be more of an exception than the norm, officials insist.
Saved by the bellNot surprisingly, several hundred Omanis threatened with the axe across a number of prominent oil and gas companies have since been assured continued employ-ment thanks to the redeployment strategy now firmly in place in the oil and gas industry. Conceived as a ‘safety net’ for oil industry work-ers, the strategy has been broadly welcomed even by the Oil & Gas Sector Workers Union because of its demonstrable efficacy in safe-guarding Omani jobs.It must be stressed however that the carefully crafted redeploy-ment strategy does not proscribe Omani job losses altogether, says HE Al Aufy. “If the subcontractor still has Omani staff on his hands despite the application of the re-deployment strategy in letter and spirit, he can then formally write to the Main Contractor setting out all of the steps he has taken to pre-serve Omani jobs. He has to articu-late the actions taken to terminate the contracts of expatriates, steps taken to redeploy Omanis to other projects within the organisation, and the efforts made, if unsuccess-fully, to secure alternative employ-ment for the remaining Omani staff not only within the oilfield sector but other sectors as well, within and outside Oman. “The onus then falls on the Main Contractor to work with the sub-contractor and challenge him to do more to accommodate any sur-plus Omani staff within his group operations. Perhaps, with a bit of training and upskilling, it may be possible to absorb these indi-viduals in other fields and activ-
ities within the group. The Main Contractor could also explore redeployment opportunities for surplus staff among other subcon-tractors on its rolls. “Thus, when a company’s con-tract is expiring or being truncat-ed or terminated because of the actions of the main contractor, whose actions in turn are being driven by those of the operator, it is obligatory for each of these parties to implement the actions prescribed as part of the rede-ployment strategy. The opera-tor, having undertaken its own meticulous due diligence, then sends a formal letter to the Tech-nical Committee spelling out the actions taken in line with the prescribed algorithm,” the Un-der-Secretary explained.
The rigorous level of scrutiny built into this elaborate safety-netting process gives assurance that any redundancies involving Omani staff will be few and far between, says Al Aufy. Even these small re-sidual numbers will be the focus of intensive efforts driven by the Technical Committee to secure their well-being, he stresses. “We will be looking at securing them employment outside the oil-field sector notably by retraining or upskilling them if necessary. As a final resort, we will begin a discussion with them about ter-minating their employment con-tract with some compensation to resolve their immediate financial situation as well as help them start their own business or find another line of work.”
THE RIGOROUS LEVEL OF SCRUTINY BUILT INTO
THIS ELABORATE SAFETY-NETTING PROCESS GIVES
ASSURANCE THAT ANY REDUNDANCIES INVOLVING
OMANI STAFF WILL BE FEW AND FAR BETWEEN, SAYS AL
AUFY. EVEN THESE SMALL RESIDUAL NUMBERS WILL
BE THE FOCUS OF INTENSIVE EFFORTS DRIVEN BY THE
TECHNICAL COMMITTEE TO SECURE THEIR WELL-BEING
LEAD INTERVIEW 24
High-grading skill-setsFor its part, the Ministry of Man-power is pitching in with funding support for the training of Oman-is who may need some upskill-ing before redeploying to new contracts. Operators too have to shoulder a share of the financial burden that may accrue if com-pensation is payable to Omanis
who are redeployed against lower pay benefits or are made redun-dant altogether. Significantly, not all of the threat-ened redundancies that had so-cial media abuzz in the lead up to the communiqué were linked to the oil price slump, according to the Under-Secretary. A size-able number of the job cuts were the result of contracts coming to their natural end and mistak-enly conflated to suggest that the downturn was leading to job losses, he said, citing a number of contracts that ran their course around the same time that the crisis began to bite. Seismic acquisition and drilling activities in particular are worse off than other segments of the oilfield sector. This is partly the result of contracts coming to their natural end and partly a fallout of the wider oil crisis, he noted.
“Seismic activity, for example, had picked up significantly over the last few years, but is now petering out for reasons that have less to do with the crisis than with the fact that various contracts have come to their natural end. OXY has already blanketed their fields with seismic. PDO too has acquired all the seis-mic they need. So has Daleel. We
have thus come to a point where the industry overall does not need more than one active crew. In the circumstances, work for a second crew would be patchy at best.”At the same time, oil rigs are being laid off for reasons that have ev-erything to do with low oil prices and belt-tightening measures, he points out. “With prices at where they are today, companies are likely to weigh the cost benefits of drilling to make sure they will still make money from these wells based on a reasonable forecast of where oil prices are headed over the next several years. For a time, they may go back to their drilling contractors, negotiate a rate reduc-tion, seek better efficiency, and so on, but will finally come to a point where they will not have enough wells in the pipeline to feed all the rigs. This means some rigs will have to be stacked or terminated,
and this is happening right now around the world.”
Staying the courseHE Al Aufy acknowledges that the worsening oil price situation has been a killjoy for an industry that has enjoyed high growth over the past several decades, bankrolled national economic development and provided employment to more Omanis than any other eco-nomic sector. But with oil companies expected to stay the course in meeting their production targets, the industry must find ways to challenge itself to remain in business, he stresses. “These are challenging times that require oil companies to do things differently from when oil prices were $105 – 110 per barrel. PDO, for example, is trying to minimise the impact of budget cuts on their oil production and the national workforce to the extent possible. They are scrutinising every activ-ity to see if it is really necessary or if it can be done differently. This is the time for Omani companies – within and outside the oil industry – to high-grade, to become more efficient, and to challenge the sta-tus quo.”He further emphasised: “This is also a time for furthering Omanisa-tion because it creates an opportu-nity for high-grading especially if there is an appetite for training and retraining. Now’s the time for com-panies to pause and realise that the hiring of low skilled Omanis is no longer acceptable because it comes with huge accountability later on, especially when the market slides. So let’s turn a crisis into an oppor-tunity; let’s challenge the way we’ve been doing business, strengthen the checks and balances that op-erators place on contractors, work collaboratively with community contractors, high-grade Omanisa-tion plans and high-grade jobs that Omanis are performing in this sec-tor,” the Under-Secretary added.
By Conrad Prabhu Salalah Methanol Company L.L.CPhone: +968 23218800 Fax: +968 23218880P.O. Box: 316, P.C. 217, Al Awqdain, Salalah, Sultanate of Oman
Salalah Methanol CompanyIn view of the government plans to develop the
Omani economy and industrial sectors at both local and international levels, Salalah Methanol Company
LLC (SMC) was established in 2006 to build a state-of-the art methanol production facility in Salalah Free Zone.
The plant is a standalone plant designed to produce 3000 Metric Tons of methanol per day.
The Company, is one of Oman Oil Company (OOC) downstream investments , and the Company significantly contributes to the
ongoing development of the national economy. With an exceptional track record in the production of methanol and adhering to the
stringent Health, Safety & Environment (HSE) standards, SMC has received internationally recognized safety certifications.
Salalah Methanol achievements speak for themselves as we successfully produced and marketed more than 220
cargos of liquid methanol since May 2010, and achieved an outstanding run of 3 million working hours without
Lost Time Injury (LTI) from 30th October 2013 to 30th October 2015. In addition the Company achieved 64%
Omanization level with a recognized achievement towards corporate social responsibility by
funding more than 100 CSR initiatives during the period of 2012-2015.
Salalah Methanol Company CS6.indd 1 12/17/15 8:23 AM
February 201625
Salalah Methanol Company L.L.CPhone: +968 23218800 Fax: +968 23218880P.O. Box: 316, P.C. 217, Al Awqdain, Salalah, Sultanate of Oman
Salalah Methanol CompanyIn view of the government plans to develop the
Omani economy and industrial sectors at both local and international levels, Salalah Methanol Company
LLC (SMC) was established in 2006 to build a state-of-the art methanol production facility in Salalah Free Zone.
The plant is a standalone plant designed to produce 3000 Metric Tons of methanol per day.
The Company, is one of Oman Oil Company (OOC) downstream investments , and the Company significantly contributes to the
ongoing development of the national economy. With an exceptional track record in the production of methanol and adhering to the
stringent Health, Safety & Environment (HSE) standards, SMC has received internationally recognized safety certifications.
Salalah Methanol achievements speak for themselves as we successfully produced and marketed more than 220
cargos of liquid methanol since May 2010, and achieved an outstanding run of 3 million working hours without
Lost Time Injury (LTI) from 30th October 2013 to 30th October 2015. In addition the Company achieved 64%
Omanization level with a recognized achievement towards corporate social responsibility by
funding more than 100 CSR initiatives during the period of 2012-2015.
Salalah Methanol Company CS6.indd 1 12/17/15 8:23 AM
INTERVIEW 26
Value creation, sustainability, business improvement and expenditure savings are the mantras shaping Petroleum Development Oman’s (PDO) response to the international oil price rout
Weathering the oil storm
Petroleum Development Oman:
February 201627
Weathering the oil storm
"Recruitment will continue to ensure the business is properly resourced and PDO will continue to be an active champion of Omani talent, through our Graduate Development Programme, scholarships and apprenticeship schemes."
INTERVIEW 28
he nation’s eyes are riveted on Petroleum Development Oman (PDO), the dominant producer of hydrocar-
bons, as it pursues a far-reaching strategy to, among other things, sustain – if not ramp up – produc-tion of oil and gas – commodities that are the lifeblood of the Sultan-ate’s economy. It’s a formidable challenge giv-en the tough market conditions, but one that the majority govern-ment-owned company is commit-ted to delivering through a combi-nation of enhanced efficiency and cost control – measures that prom-ise to yield an estimated $1 billion in savings over the next five years, according to Managing Director Mr. Raoul Restucci. Speaking exclusively to OPAL, Mr. Restucci offers his take on the challenges that the global oil price downturn – which has seen pric-es of crude plummet by nearly 60
per cent in just over a year – pose to PDO’s business and the wider in-dustry. Oil production, the Managing Di-rector stresses, continues to be a “profitable” business, evidenced by the significant contracts PDO has signed in support of its eventual goal of achieving a new production plateau of 600,000 barrels per day by 2019.Efforts to deliver gas – an energy resource of pivotal importance to the economy – are also continuing apace, according to Mr. Restuc-ci. Plans for the development of the Khulud tight gas field – PDO’s maiden stab at commercial tight gas production – are being stepped up, while new depletion compression facilities at the Saih Rawl Central Processing Plant are being commis-sioned, he said.Going into 2016, the Managing Di-rector says he is optimistic that the industry, and PDO in particular, can weather the oil price storm, provid-
ed they get the fundamentals right. “We need to press ahead with a continued focus on business im-provement and sustainability, op-erational excellence and project de-livery while all the time adhering to safety as the bedrock of everything we do,” he stressed.
In the following Q&A interview, Mr. Restucci fields a wide array of ques-tions on the implications of the oil price slump on PDO’s business:
OPAL: Have low international oil prices begun to bite where PDO’s core opera-tions are concerned?RR: At the present time, PDO is working to ‘stay the course’ with a robust growth programme despite the low oil price environment. Our focus remains on delivering max-imum value for the Sultanate and driving greater efficiency and cost control.Despite the challenging market conditions, our well drilling and engineering activity levels remain high as we progress with the ear-ly monetisation of prospects, Lean business efficiency, accelerated well hook-ups and world-class well and reservoir management.It is important to stress that the oil we produce is profitable and we are still signing significant contracts which sustain PDO and Oman for the future as we work towards a new oil production plateau of 600,000 barrels per day by 2019.Last but not least, whatever the oil price, we will not cut corners by compromising on our stringent personal or process safety stan-dards – a message that is reiterated to our contractors on a daily basis.
OPAL: Kindly shed light on the impacts from the oil price crash to PDO’s busi-
❱❱ Mr. Raoul Restucci, Managing Director
of Petroleum Development Oman (PDO)
T
February 201629
nesses, specifically with regard to: a) Exploration programmesAs far as Exploration is concerned, investment levels have not changed so far but our strategy has focused on further value creation, target-ing medium to low-risk prospects and prioritising segments with
the potential to deliver significant production wedges towards our 600,000 bpd target.Our Exploration Directorate’s key objective is to provide PDO with a projects portfolio that could poten-tially displace higher Unit Tech-nical Cost (UTC) production and positively impact our near-term cash flow. The accelerated mone-tisation of new field opportunities has enabled us to delay higher UTC opportunities beyond the end of the five-year plan in 2019.Meanwhile, preliminary interpre-tation from the Yibal/Al Huwaisah seismic survey – the largest survey
ever carried out in Oman – is very promising and we are due to start drilling the first wells early next year.b) Drilling activitiesThe amount of wells we drill in 2015 is expected to be consistent with re-cent years – around 500 – although
we are targeting faster hook-ups to expedite production for early mon-etisation. Our focus remains on be-coming more and more efficient, reducing non-productive time and waste and driving best practice across our significant drilling and
workover fleet. c) Enhanced oil recovery projects – ongoing and futureWe still expect EOR to account for a third of our production by 2023 and our commitment and innovation in this area will continue. The recent announcement of our world-lead-
ing Miraah solar steam project with our partners GlassPoint Solar shows the scale of our ambition re-mains undiminished in achieving sustainable production. Miraah will reduce the consumption of gas for thermal EOR in an exciting and pio-
OUR EXPLORATION DIRECTORATE’S KEY OBJECTIVE
IS TO PROVIDE PDO WITH A PROJECTS PORTFOLIO
THAT COULD POTENTIALLY DISPLACE HIGHER
UNIT TECHNICAL COST (UTC) PRODUCTION AND
POSITIVELY IMPACT OUR NEAR-TERM CASH FLOW
"Announcement of PDO's world-leading Miraah solar steam project with their partners GlassPoint Solar shows the scale of our ambition which remains undiminished in achieving sustainable production."
INTERVIEW 30
neering way by harnessing the sun’s rays to generate steam. We have just broken ground on the project at Amal and the first steam is expect-ed in 2017.Work on our other EOR projects and pilots continues apace, al-though we are re-evaluating tech-nical solutions at Habhab. The field is very complex and, irrespective
of oil prices, we have yet to resolve technical recovery challenges.
OPAL: As the largest contributor to Oman’s oil output, how do you strike a balance between maximising produc-tion (in order to enhance export reve-nues) while managing costs?RR: This is not a binary choice and it is possible to both maximise pro-duction and manage costs. Central to this objective is our Lean contin-uous business improvement pro-gramme which helps us to identify waste, strip out duplication and streamline our operations so that we do more for less.When economising, any business must assess the impact of cuts across the value chain and then be surgical and selective in its ap-proach. The most important aspect for us has been to work collabora-
tively with our contracting com-munity rather than mandating top-down cost reduction instructions. So, we have held a series of Con-tract Optimisation Reviews and lis-tened carefully to our contractors for solutions on where they believe we could enhance their perfor-mance and enable us to mutually operate more efficiently. As a result
of this collaboration, and along with procurement savings on our mega projects, we are well on our way to booking US$1 billion real and structural savings from 2016-2020. At the same time, our teams contin-ue to ramp up production by work-ing harder and smarter. For exam-ple, in October, PDO achieved its best monthly oil production since April 2006.
OPAL: What is the message you’re re-ceiving from the Ministry of Oil & Gas and the Ministry of Finance as you factor in oil price volatility into the financing of your ongoing operations?RR: PDO and other operators know their responsibilities and are in close contact with relevant Minis-tries. Value creation, sustainability, business improvement and expen-diture savings are the watchwords.
We have been securing significant efficiency and effectiveness gains as part of our Lean journey and we remain committed to securing long-term growth and maximis-ing value for the Sultanate. We are leaving no stone unturned and re-viewing all areas of expenditure in close collaboration with our con-tractors.
OPAL: Are you staying the course where PDO’s gas business is concerned, giv-en the fact that the bulk of the nation’s gas requirement is met almost exclu-sively by PDO?RR: There have been considerable efforts to deliver gas on target de-spite asset integrity issues at Kau-ther and Saih Nihayda, which we are resolving. We are stepping up our gas devel-opment plans for the tight gas in Khulud and have extensive exten-sion appraisal on our main fields. New depletion compression fa-cilities at our Central Process-ing Plant in Saih Rawl are being commissioned which will enable incremental production from low pressure wells. I’m also pleased that the Gas team has made excel-lent progress in restoring produc-tion from closed-in/liquid load-
"Miraah will reduce the consumption of gas for thermal EOR in an exciting and pioneering way by harnessing the sun’s rays to generate steam."
February 201631
ed wells, dramatically reducing non-productive time and yielding significant reductions in reservoir impairment, flaring and costs.Simpler rig-up/workover ar-rangements, reducing the level of equipment/fencing removal and accelerating well hook-up time by more than 50% have also helped us.
OPAL: What, if any, is the upside to the current oil price crisis in terms of its potential to drive productivity, com-petitiveness and innovation in the oil industry in Oman?RR: Our mantra is: never waste a crisis. In periods of difficulty and uncertainty, it’s key to get the fun-damentals right and our track re-cord and robust business plan have enabled us to absorb the impact of the price fall and continue to deliv-er key growth and development tar-
gets to our shareholders.With our contractors, we have a great opportunity to review how we do things more efficiently and effec-tively through better ways of work-ing and the deployment of new tech-nologies to address key challenges so we emerge leaner, stronger and fitter from the current difficulties. For ex-ample, our Collaborative Work En-vironments, spaces equipped with the latest digital technology, are en-abling real-time communications
between our Coastal teams and the field to identify issues, monitor per-formance and devise solutions in an integrated, multi-disciplinary, fast-er way.The current environment is en-abling us to challenge the status quo. From discretionary expen-diture to redeployment of hoists and other resources, we need to ‘serve Oman’ by ensuring we are all working to remove inefficiency and waste.
"PDO have just broken ground on the project
at Amal and the first steam is expected in 2017. Work on other
EOR projects and pilots continues apace
although they are re-evaluating technical
solutions at Habhab."
AS A RESULT OF THIS COLLABORATION, AND ALONG WITH PROCUREMENT
SAVINGS ON OUR MEGA PROJECTS, WE ARE WELL ON OUR WAY TO BOOKING
US$1 BILLION REAL AND STRUCTURAL SAVINGS FROM 2016-2020
INTERVIEW 32
OPAL: Please comment on the poten-tial impacts to oilfield contractors and service providers as oil producers are forced to curtail spending and shelve some projects.RR: We have worked assiduously with the Ministry and our contrac-tors to mitigate the impact of the downturn. Clearly, some contrac-tors will be better equipped to ab-sorb the impact of these challeng-ing conditions than others but we are doing what we can to help. In our own case, even where contracts have ended or naturally expired without renewal, we have worked with contractors to relocate per-sonnel onto other contracts wher-ever possible.
OPAL: How is PDO working with MoG and the contracting community to en-sure that the downturn is not impact-ing Omani workers, LCCs and SMEs?RR: Many established or aspiring new buinesses will be impacted by the recessionary pressures. Howev-er, we are working closely with both to ensure that Omanis are protect-ed and our support for Omani small and medium enterprises (SMEs) is as strong as ever as these are the lifeblood of any thriving, diversified economy and can provide new and sustainable employment opportu-nities.We reserve scope in our contracts for Omani SMEs and all companies bidding for our work must submit a detailed In-Country Value (ICV) plan explaining how they will maximise local content over the contract’s duration. At the same time, we are offering technical, operational and governance sup-port to help entrepreneurs to suc-ceed. Our ICV and finance experts have been conducting workshops explaining our tendering require-ments to SMEs and we have devel-oped a number of online tools so it is easier for them to do business with us.We currently have around 200 ac-tive LCCs and our Super Local Community Contractors continue to make advances. The SLCCs are providing oilfield services in Oman
and are now looking beyond its bor-ders. They have provided a fantastic opportunity to spread the benefits of our industry to local communi-ties in terms of employment and in-vestment and the combined capital value of the five SLCCs now stands at more than RO23 million. They also have around 10,000 sharehold-ers drawn from local communities in our concession area. PDO is not a fairweather friend. These are real success stories and we will contin-ue to back them.
OPAL: Do you foresee a slowing of the momentum in the Ministry’s ICV strat-egy which you have helped spearhead?RR: ICV is a marathon not a sprint and both the Ministry and PDO are in it for the long haul. Creating employment and training opportu-nities for Omanis and a supportive environment in which local compa-nies can survive and thrive are na-tional priorities.We have said from the outset that ICV in certain circumstances will mean paying a premium and that this may have to continue in the short to medium term. However, we have also said it is not ICV at any cost – whatever the oil price environment – and decisions must make commerical sense. Regardless of the current economic difficulties, it is imperative that we retain more of our industry’s wealth in the Sultanate and we must build a sustainable and productive Omani industrial/private sector base com-prised of skilled Omanis who can compete on the global stage.
OPAL: Are job losses and bankrupt-cies in the industry inevitable if the downturn spills into 2016? Should the industry be gearing to minimize the impact? RR: Nobody can predict with any certainty what will happen to the market next year although there is a global oil glut at present and any prudent business has to make con-tingencies to minimise the impact if this downturn continues.Both globally and nationally, re-dundancies are inevitable if we see
more of the same in 2016 and be-yond. At PDO, there will be reduc-tions in new or renewals of expa-triate contracts, or natural attrition through retirement, but this is as much driven by the Omani talent pool ready to take over as by the economic pressures requiring de-ferments of technical cost projects. However, recruitment will contin-ue to ensure the business is proper-ly resourced and we continue to be an active champion of Omani tal-ent, through our Graduate Devel-opment Programme, scholarships and apprenticeship schemes as well as working with our contractors on provision of training and job oppor-tunities for Omanis.In line with the sensible and prag-matic management of any company, we will continue to review staffing levels on a regular basis to ensure they allow us to conduct our busi-ness as productively and sustain-ably as possible and to deliver on our strategy.
OPAL: Your final thoughts on what the outlook is for Oman’s economic main-stay going forward.RR: I remain optimistic that the na-tion’s oil and gas sector generally, and PDO specifically, can rise to the current challenge. However, we have to ensure we get the fun-damentals right. We need to press ahead with a continued focus on business improvement and sustain-ability, operational excellence and project delivery while all the time adhering to safety as the bedrock of everything we do. Yes, we have to adapt and adopt new ways of working as we pursue cost control measures. However, we should seize the opportunity to eradicate wasteful and inefficient work practices for good, embracing new technologies and maintaining a robust pipeline of talent and ex-pertise.In doing so, we can maximise the value we create for Oman so the Sultanate can continue on the road to progress and prosperity under His Majesty’s wise and visionary leadership. Im
ages
are p
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PDO
Salalah Methanol Company CS6.indd 5 12/9/15 10:13 AM
February 201633
Salalah Methanol Company CS6.indd 5 12/9/15 10:13 AM
BLUEPRINT 34
Redeployment strategy yields early success stories
February 201635
The government-sanctioned Redeployment Strategy is beginning to deliver positive results, having already salvaged several hundred jobs of Omani oilfield workers threatened by mass layoffs in the wake of the oil price slump. Mr. Musallam al Mandhry, CEO of Oman Society for Petroleum Services (OPAL), which is playing a pivotal role in the implementation of this strategy, offers his take on the efficacy of this far-reaching workforce management blueprint
BLUEPRINT 36
As an alternative, the employer must
explore opportunities for the redeployment
of surplus Omani staff in other contracts
being undertaken by the company or group
companies either within the oil and gas
sector or beyond
❱❱ Mr. Musallam Al Mandhry, OPAL CEO
he mood at OPAL’s Al Khuwair offices is de-cidedly relaxed these days in contrast to the war-room atmosphere
that prevailed just three months earlier. Then, OPAL officials were in full-blown crisis man-agement mode triggered by the threat of industrial action called by the Oil & Gas Sector Work-ers Union fearing large-scale job losses. It was a call to action that saw top officials of the Ministry of Oil & Gas, Ministry of Manpower, and the entire line-up of oil and gas producers joining in as well.Emerging from those high-lev-el deliberations was a ground-breaking blueprint for safeguarding the jobs of Omanis at risk of retrenchment as em-ployers scrambled to cut costs or businesses were in peril of simply folding up as a consequence of the downturn. The Redeployment Strategy, as it is called, is essentially a checklist of things that employers must do before they can seek official per-
mission to lay off any Omani staff. “The strategy simply says that a contractor, before contemplat-ing any layoffs of Omani workers, must first replace expatriates per-forming comparable tasks,” Mr. Musallam al Mandhry, CEO, who led the strategy formulation effort on behalf of OPAL, explained.“As an alternative, the employ-er must explore opportunities for the redeployment of surplus Omani staff in other contracts be-ing undertaken by the company or group companies either within the oil and gas sector or beyond. The Main Contractor then comes into the picture and does due dil-igence to verify if the company in question did indeed explore ev-ery avenue to secure suitable al-ternative employment for surplus Omani workers. At this juncture, the onus is on the Main Con-tractor to explore redeployment opportunities for any surplus nationals remaining with its sub-contractor. In the third stage of the multilevel process, the corre-sponding Operator does his own
due diligence of the efforts made by the Main Contractor and fur-ther supports the redeployment effort by seeking opportunities with other contractors. Any un-skilled Omanis still remaining over from the process are then processed as candidates for train-ing and upskilling before they can be suitably redeployed. Set compensation pay-outs are a last resort where no suitable job al-ternatives are found,” he further elaborated.
Heartening resultsHappily, the strategy has begun to deliver results, says Mr. Al Mandhry. Among the early suc-
TShutterstock
February 201637
cess stories is the example of The Oman Construction Company (TOCO) which had listed as many as 587 of its Omani staff as candi-dates for redundancy. After an initial redistribution of 87 workers within TOCO, a further 374 were retained after discussions with the main cli-ent, Occidental of Oman. The latter, as part of its due diligence efforts, helped secure positions for a further 75 workers among fellow contractors. That left 49 workers, down from the original 587, who are being taken in hand by the ‘Redeployment Working Committee’ under the auspic-ies of the Ministry of Oil & Gas
with members from the Ministry of Manpower, the Union Fed-eration, in addition to OPAL, as part of its remit to resolve their individual cases. The Commit-tee, working with Occidental has so far managed to secure jobs for all the remaining TOCO staff and is in the process of redeploying them with various contractors.“The TOCO case was a resound-
ing example of how the Redevel-opment Strategy was successfully applied,” said Mr. Al Mandhry. “The learning gained from this exercise has since been success-fully employed in addressing sim-ilar mass redundancy challenges that cropped up elsewhere in the industry.”Another striking example is that of seismic survey specialist
THE REDEPLOYMENT STRATEGY, AS IT IS CALLED, IS
ESSENTIALLY A CHECKLIST OF THINGS THAT EMPLOYERS
MUST DO BEFORE THEY CAN SEEK OFFICIAL PERMISSION
TO LAY OFF ANY OMANI STAFF
BLUEPRINT 38
Ardiseis, a subsidiary of CGG-Veritas. As many as 570 Omani employees of this company, con-tracted by Petroleum Develop-ment Oman (PDO), were iden-tified as surplus when Ardiseis downsized its operations in Oman. An energetic programme of redeployments, supported by PDO, helped whittle down the number to 28 surplus Omanis who have been referred to the Redeployment Working Commit-tee for further processing. The case of Schlumberger, a prominent oilfield services con-tractor, is equally noteworthy. Saddled with around 300 Omani staff deemed surplus as a result of cost-cutting measures, the
company succeeded in redeploy-ing roughly half this number to their operations elsewhere in the Gulf region. Other measures, along with attractive redundancy packages offered to the remain-der helped pare the list down to 12 surplus staff whose individual cases are the subject of ongoing negotiations with authorities. The fate of a separate batch of 80 employees, handling its wireline and fraccing operations, is being carefully weighed with the assis-tance of PDO. Also under careful review is the case of KEYS Energy that had been preparing to wind down its operations in the Sultanate well before the Redeployment Strate-
gy was rolled out. The Ministry of Manpower, along with OPAL and other stakeholders, have suc-cessfully managed to redeploy all the redundant Omani staff.
Future challengesWhile these initial success stories are indeed heartening, the con-cern for OPAL is that the current trickle of redundancies could po-tentially turn into a tide as the crisis worsens going forward. To help tackle this potential scenar-io, the NGO is studying various professions across of the oil & gas industry that could be targeted for intensified Omanisation and upskilling.“There are professions like seismic survey crew, drilling rig operators, and so on, that are predominantly Omanised. However, other seg-ments like operational mainte-nance, construction, service com-panies etc, have Omanisation levels averaging 25 to 35 per cent. Given the fact that the industry currently employs 70,000 – 80,000 workers – Omanis and expat – the potential for Omanisation in these catego-ries is very promising. So we are looking to get suitably geared on the training and upskilling fronts to meet any redeployment demand particularly where laid-off Omanis are unskilled or semi-skilled.”A key dilemma for OPAL is to find suitable redeployment op-portunities for the large numbers of drivers being threatened with retrenchment as the crisis bites. Retraining and upskilling them is the only feasible option, provided they show a willingness to learn a new trade and pursue a dramat-ically different career, according to the CEO. “Drivers are usually among the first to be affected by a downturn, and we are seeing this play out in the current crisis. Our goal is to upgrade drivers into semi-skilled workers such as riggers, opera-tors, welders, heavy duty drivers, and so on. But we need to change mindsets first,” he stressed.
GIVEN THE FACT THAT THE INDUSTRY CURRENTLY
EMPLOYS 70,000 – 80,000 WORKERS – OMANIS AND
EXPAT – THE POTENTIAL FOR OMANISATION IN THESE
CATEGORIES IS VERY PROMISING
February 201639
UPSTREAM SECTOR 40
Oman-Lasso Exploration & Production Karawan Ltd, the newest entrant into Oman’s upstream energy sector, is bringing more than just investment and expertise to bear on the development of its newly acquired Block 54 onshore Oman. The company is counting on deploying a tried and tested independent model - the business model that built Texas oil - to inject legendary ingenuity and entrepreneurial outlook into this concession, says President & CEO Amrou A. Al Sharif
Leveraging the ingenuity of the Independent
f the Shells, BPs and Chevrons of the global oil industry are understandably shying away from investing in new up-stream acreage as a consequence of the oil price crash, the small oil and gas independents currently dominating the North American energy market are not. On the contrary,
the downturn appears to be having an opposite effect on the lat-ter; if anything, it is sparking an appetite that is rarely seen in en-ergy majors amid these challenging times.Oman-Lasso Exploration & Production Karawan Ltd, which is preparing to make its debut in the Sultanate’s upstream sector, is ‘cut from the same cloth’ as the independents that have trans-formed the United States from a major oil importer to a net ex-porter of oil in less than a decade. Its history derives from Omani entrepreneurial vision and full-blooded Texas-based oil and gas independents – part of a breed of professionals credited with, among other feats, unleash-ing the current shale-driven technological revolution in the Unit-ed States. Engineer Amrou bin Adly bin Ali Al Sharif, President
I
Oman-Lasso Exploration & Production Karawan Ltd:
❱❱ Amrou A. Al Sharif, President & CEO of Oman-Lasso Exploration & Production Karawan Ltd
February 201641
As part of its commitment to investing over $16 million in the first three years of the six-year exploration programme, the company plans to spud (drill) its first well on the Block 54 within a year.
UPSTREAM SECTOR 42
& CEO, describes that the philos-ophy of Texan energy indepen-dents is ingrained in the philos-ophy of Oman-Lasso Exploration & Production Karawan Ltd as it prepares to harness the hydro-carbon potential of Block 54 in south central Oman.“What distinguishes Oman-Las-so from other upstream players is the combination of entrepreneur-ial spirit, agility and confidence that is at the heart of our busi-ness philosophy,” said Al Sharif. “Like the small independents of the US energy sector, who ac-count for nearly 95 per cent of all of the discoveries in that country, we are able to take on what oth-ers may attribute as ‘more risk’ by continuously adapting to new information, reducing overheads, utilizing local resources, and be-ing able to quickly respond in a way which larger corporations struggle to do”
Formidable expertiseLast September, Oman-Lasso signed an Exploration & Produc-tion Sharing Agreement (EPSA) with the Ministry of Oil & Gas for Block 54, a 5,632 sq kilome-tre concession located in Wusta Governorate. Relinquished by Occidental Petroleum in 2011, the Block attracted bids from a num-ber of international players, at-testing to the appeal of upstream acreage in the Sultanate despite the oil price slump.Oman-Lasso is the creation of Austin-Texas based Oman Ener-gy & Production LLC, which was formed in 2012 by Al-Sharif and a group of independent oil and gas professionals, who are commit-ted to leveraging their formida-ble expertise and entrepreneurial mindset in operating Block 54, says Al-Sharif, who is himself a veteran entrepreneur with pi-oneering international success projects under his belt, and sec-ond-generation to Oman’s own oil and gas industry professionals and explorers.
“As the operator of Block 54, Oman-Lasso is responsible for the management and operation of the project here in Oman. The parent company in Austin-Tex-as is the General Partner to the Limited Partnership investment vehicle and guarantor of the Omani company’s performance. In essence, Oman-Lasso is a new operating company that will be homegrown in the Sultanate of Oman with a strong hint of Texas’ famed true grit embedded in its DNA,” Amrou, who is an Omani citizen, explained.Established with a specific focus on pursuing exploration and pro-duction opportunities in the Sul-tanate, the company’s sharehold-ers set their sights on Block 54 in 2012 when it was tendered by the Omani government. “What appealed to us was the large amount of background data on the Block, especially the wealth of knowledge on its geological and reservoir charac-teristics. In terms of its size and hydrocarbon potential, it had the hallmarks of a concession that
suited the business mindset for the model upon which a company like ours is formed.”
Equitable EPSA modelAccentuating this affinity for Oman’s upstream sector was the structure and philosophy under-lying the Exploration and Produc-
tion Sharing Agreement (EPSA) signed with the government, says Al Sharif. “The agreement favors the recovery of costs to the oper-ator ahead of shared profits. Such a formula makes the Oman agree-ment inviting in many ways, and mitigates any market downturn that may be encountered going forward. Further the Ministry of Oil & Gas is quite a supportive team player, which is imperative to investor comfort. Consequent-ly, you have an incentive to move aggressively in your exploration efforts because you’re assured that you can recoup your costs once you’ve made a discovery and continue investing to maximise the potential of the concession.”Unfazed by the worsening in-dustry downturn, Oman-Lasso is preparing to go full tilt into the development of Block 54. As part of its commitment to investing over $16 million in the first three years of the six-year exploration programme, the company plans to spud (drill) its first well on the Block within a year of this publi-cation. In all, four wells are envis-
aged for drilling during the first three years.In the build-up to the commence-ment of drilling on the concession, Oman-Lasso plans to undertake a comprehensive analysis of all of the data garnered during the ten-ures of the Block’s previous op-erators. For example, Occidental
OMAN-LASSO SIGNED AN EXPLORATION & PRODUCTION
SHARING AGREEMENT (EPSA) WITH THE MINISTRY
OF OIL & GAS FOR BLOCK 54, A
5,632 SQ KILOMETRE CONCESSION LOCATED IN WUSTA GOVERNORATE
February 201643
Petroleum shot new seismic and reprocessed old seismic before ex-iting the Block in 2011. The com-pany also drilled a total of four wells - activities that shed light on the Block’s potential, he said.“Not only are we coming in with a fresh set of eyes to look at the available data and try to discern opportunities that may have been obscured in the past. There’s a wealth of new data and ideas that have emerged and been proven by history making success stories in the immediate vicinity of Block 54. Applying this to the existing 400 sq km of 3D seismic, thou-sands of km of 2D seismic, the positive promise in the existing well data, the utilization of local expertise and knowledge of the area, presents atypical potential and gives a unique opportuni-ty to be the first to pick the low
hanging fruits. So we will start by narrowing down on the most po-tential prospects – and we’re con-fident there will be quite a few. That’s where the attraction is for independent oil and gas profes-sionals like us.”
Promising potentialAmrou is upbeat about the Block’s hydrocarbon prospects. Fuelling this optimism is the discovery of producing oilfields in all of the concessions surrounding Block 54, he points out. Just north of Block 54, Consolidated Construc-tion Exploration & Development (CCED) is already producing from Block 3 and 4, which were relinquished by previous opera-tors after drilling 30-plus wells over decades without success. “We have no doubt that Block 54 has a substantial amount of pos-
sible oil; the question is who will discover it first,” Mr. Al Sharif remarked. “In one of the wells drilled in 1992, there was evidence of hydrocarbon shows. A few ki-lometers west of us lies Oman’s famous Mukhaizna oilfield, pro-ducing over 120,000 barrels of oil per day. A few miles north east, is Oman’s first off-shore discovery, an historical milestone for Oman. South of us is Block 55 where the operator is shooting seismic and is quite excited about its poten-tial. If they are successful in their endeavours and when the off-shore block goes into production, we will be completely surround-ed by producing blocks.”While discounting the likeli-hood of any large gas discoveries, Oman-Lasso is pinning its hopes on uncovering a combination of light and heavy liquid hydrocar-
In the build-up to the commencement of drilling on the concession, Oman-Lasso plans to undertake a comprehensive analysis of all of the data garnered during the tenures of the Block’s previous operators.
UPSTREAM SECTOR 44
bons in the Block. In particular, the company is wagering on pros-pects for heavy oil of the kind that is currently being produced by Oc-cidental Mukhaizna in the adjoin-ing Block 53. “We see the potential for a good buffet of opportunities in Block 54 that are similar to Mukhaizna, as well as in CCED’s concessions,” he pointed out.Adding to the Block’s hydrocar-bon potential is the presence of “good quality” reservoir rock that can be targeted via conventional primary production techniques as opposed to tight formations that would require expensive un-conventional production meth-ods. Well depths vary from 3,000
to 6,000 feet, making the poten-tials reservoirs relatively easy to target. Nevertheless, Oman-Las-so’s primary objective is to opti-mize the potential of the Block by examining “every nook and cran-ny” to uncover any hidden hydro-carbons, he noted. Furthermore, in line with its com-mitment to optimizing In-Coun-try Value (ICV) which is already arguably off to a great start given the Omani interests in the proj-ect, Oman-Lasso aims to source all or the majority of its resource requirements from within Oman. “All of the shareholders are very clear about this objective: we will be looking to build and nur-
ture Omani talent, while sourc-ing Omani expertise during the exploration and development phases. Oman has developed quite the expertise over its rela-tively short period in oil & gas and my partners are quite impressed. Historically, the success of the Independent model is leveraging local services and expertise. My Texas partners owe much of their success stories to local expertise so ICV is a natural component of model. Texas gives us the histor-ical knowhow and comfort in go-ing about the business of explo-ration, Oman gives us the means to do so. This is a judgment call I made in 2012, and with our first discovery, I’m quite confident this will place Oman ahead of the game in attracting international and local private investment in Oman’s oil and gas industry, es-pecially in exploration.”
By Conrad Prabhu
OMAN-LASSO’S PRIMARY OBJECTIVE IS TO OPTIMIZE
THE POTENTIAL OF THE BLOCK BY EXAMINING
“EVERY NOOK AND CRANNY” TO UNCOVER ANY
HIDDEN HYDROCARBONS
Well depths vary from 3,000 to 6,000 feet, making the potentials reservoirs relatively easy to target.
February 201645
FEATURE 46
February 201647
A renewable solutionGlassPoint has teamed up with Petroleum Development Oman (PDO) to bring to life a more economical and sustainable solution to producing heavy oil.
FEATURE 48
magine rows and rows of large mirrors enclosed in glasshouses spanning across three square kilometers of desert sand. The sun is shin-
ing bright overhead. This is not a mirage, this is Miraah. At Petroleum Development Oman’s Amal oilfield in southern Oman, one of the world’s largest solar projects is starting to come to life. Known as Miraah, which means mirror in Ar-abic, the solar project is far from the typical solar facility used to generate electricity. In this desert landscape, with abundant sunshine, Miraah will use concentrated sunlight to produce steam needed to recover Oman’s heavy oil. The one-gigawatt solar thermal plant is currently un-der construction. American company GlassPoint So-lar has developed a technology that harnesses the sun’s rays to recover our energy resources sustainably. The company established its re-gional headquarters in Oman and is backed by strategic investors in-cluding Shell and the Sultanate’s largest sovereign wealth fund, the State General Reserve Fund. Glas-sPoint is partnering with Oman’s energy leaders to demonstrate how the solar and oil industries can work together to reduce costs and achieve long-term energy goals. Much of the world’s easy oil has al-
ready been recovered. Mature fields are depleting and oil extraction is becoming more expensive and en-ergy intensive. 70% of the world’s remaining oil is thick, tar-like crude, known as heavy oil. A lot of energy is consumed in the extraction of heavy crude. Typical-ly, for every five barrels of heavy oil, the energy equivalent to one barrel is consumed in the produc-tion process. The leading method of producing heavy oil is steam flooding, a ther-mal enhanced oil recovery (EOR) process that injects steam into a reservoir to heat the oil and reduce viscosity, making it easier to pump to the surface. Steam for thermal EOR is typically produced by burn-ing vast amounts of natural gas. Companies worldwide burn an es-timated 1.4 trillion cubic feet (TCF) of natural each year—that’s more than 10% of all liquefied natural gas (LNG) traded globally. This number continues to increase each year as more heavy oil fields are developed.Oman alone uses more than 20% of its gas resources at its oilfields, pri-marily for EOR. Gas demand will continue to rise alongside EOR proj-ects. PDO, Oman’s largest producer of oil and gas, has been a pioneering force in EOR for a number of years and EOR will play an increasingly important part in the Company’s
Once fully operational, Miraah will save 5.6 trillion British Thermal Units (BTUs) of natural gas each year, the amount of gas that could be used to provide residential electricity to 209,000 people in Oman.
I
February 201649
portfolio, accounting for around a third of its production by 2023.
Teaming upGlassPoint teamed up with PDO to bring to life a more economical and sustainable solution to producing heavy oil. GlassPoint solar steam generators have been designed to meet the unique needs of the oil and gas industry. The company’s enclosed trough technology hous-es thin curved mirrors inside a glasshouse. The mirrors track the sun throughout the day, focusing heat on pipe containing oilfield water. The concentrated sunlight boils the water to generate steam, which is then injected into the oil reservoir just like steam produced by burning fuel. PDO successfully piloted Glas-sPoint’s technology proving so-lar steam is a viable alternative to burning natural gas for EOR. The solar EOR pilot was commissioned in early 2013, safely, on time and on budget. It’s been in regular opera-tion for nearly three years, exceed-ing all performance targets, even during severe dust and sandstorms. The success of the pilot led to the two companies announcing plans
to build Miraah in July, a project that is poised to bring considerable change to Oman’s oil and gas sector. Once complete, Miraah will be a 1,021 megawatt solar thermal fa-cility generating 6,000 tonnes of steam per day. The steam will be used in thermal EOR to extract heavy and viscous oil at the Amal oilfield in southern Oman. Miraah will deliver the largest peak ener-gy output of any solar plant in the world. The scope of this landmark project underscores the massive market for deploying solar in the oil and gas industry. The project broke ground in No-vember 2015, one month before schedule, with steam generation from the first glasshouse module
expected in 2017. The full-scale project will comprise 36 glasshouse modules, built and commissioned in succession in groups of four. Once fully operational, Miraah will save 5.6 trillion British Thermal Units (BTUs) of natural gas each year, the amount of gas that could be used to provide residential elec-tricity to 209,000 people in Oman. The project is expected to reduce CO2 emissions by over 300,000 tonnes annually, the equivalent of taking 63,000 cars off the road.Oman, like many other nations in the region, is currently a net gas im-porter with an increasing amount of its gas resources being allocated to the oilfield. With GlassPoint’s solar steam generators, the gas used for
ONCE COMPLETE, MIRAAH WILL BE A 1,021 MEGAWATT
SOLAR THERMAL FACILITY GENERATING 6,000 TONNES
OF STEAM PER DAY. THE STEAM WILL BE USED IN
THERMAL EOR TO EXTRACT HEAVY AND VISCOUS OIL AT
THE AMAL OILFIELD IN SOUTHERN OMAN. MIRAAH WILL
DELIVER THE LARGEST PEAK ENERGY OUTPUT OF ANY
SOLAR PLANT IN THE WORLD
FEATURE 50
heavy oil extraction can be slashed by up to 80%. Solar powered oil production will contribute to Oman’s plans for economic diversification. The large amount of gas diverted from the oilfield can instead be export-ed or used for higher value appli-cations such as power generation, and feedstock for new industries ranging from petrochemicals to building materials. If more gas were available then more new in-dustries would be created. Each new factory would have its own direct employees and its own
supply chain, which would in turn generate employment and increased activity to diversify the local economy.
Commitment to Generating In-Country ValueMiraah has the potential to gener-ate significant value for Oman, cre-ating new opportunities in supply chain development, manufacturing capability, and employment and training. Plans to localize the sup-ply chain are currently under de-velopment.
Developing a local Omani work-force and new opportunities for local contractors and small busi-nesses is part of GlassPoint’s and PDO’s shared commitment to In-country Value. Miraah’s site grading is being performed by a Local Community Contractor (LCC) owned and operated by Omanis that live in the commu-nities surrounding the Amal field. As more solar EOR projects are deployed, Oman’s workforce will develop greater expertise across solar technology innova-tion, project implementation and manufacturing. Experience with solar EOR will transfer to other energy-related sectors, fostering broader economic growth and di-versification. Through pioneering technologies such as solar EOR, the Sultanate of Oman has cemented its po-sition as a regional leader in oil and gas production. Oman is now working to build a world-class so-lar power industry alongside its world-class oil and gas industry.
SOLAR POWERED OIL PRODUCTION WILL CONTRIBUTE
TO OMAN’S PLANS FOR ECONOMIC DIVERSIFICATION.
THE LARGE AMOUNT OF GAS DIVERTED FROM THE OILFIELD
CAN INSTEAD BE EXPORTED OR USED FOR HIGHER
VALUE APPLICATIONS SUCH AS POWER GENERATION,
AND FEEDSTOCK FOR NEW INDUSTRIES RANGING FROM
PETROCHEMICALS TO BUILDING MATERIALS
winner of
VEC is a ISO Certified Company
ISO 9001:2008
Head Office:
Block #262, Building #1/115,Way #196 , Grand Mosque Street,
Ghala Industrial Area, Muscat.Ph: +968-2208 6800 | +968-2208 6900
Websites:
www.ibd.om | www.vec.omwww.menahrs.om | www.zajel.om
PDO ICV Award 2014
Middle East O&G Award 2015
OPAL Best Practice Award 2015
To be a trustedInternational Business Group
delivering sustainable growththrough motivated staff and
satisfied business partners
our vision
Dedicated to ServicingOman’s Oil & Gas Industrysince 2004
Resources & EnergyEngineering firm specialised in Feasibility Studies, Concept Development,FEED and Detailed Design for Oil and Gas facilities and Power Infrastructure.
Representative for renowned MNCs in the Energy and Industrial equipmentdomain, management services for O&G Mega Projects and component fabrication & servicing.
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C
M
Y
CM
MY
CY
CMY
K
IBD_OPAL_220X307_Final_T4.pdf 4/1/2016 10:00:59 AM
February 201651
winner of
VEC is a ISO Certified Company
ISO 9001:2008
Head Office:
Block #262, Building #1/115,Way #196 , Grand Mosque Street,
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IBD_OPAL_220X307_Final_T4.pdf 4/1/2016 10:00:59 AM
FUTURES CONTRACT 52
Oman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME — the first government anywhere in the world to fully price its oil revenues against an index derived from a futures Exchange
DME flagship Oman crude contract takes centre stage
February 201653
FUTURES CONTRACT 54
f
around 200 types of crude oil that can be classified as significant streams or blends,
only three of those can be can be categorized as Benchmark grades underpinned by a Futures con-tract – Brent in Europe, WTI in the Americas and the newest addition to that very select group, Oman, serving the Asian and the Middle East markets
The flagship Oman futures con-tract on the Dubai Mercantile Exchange (DME) was launched in 2007, joining the more-estab-lished Brent and WTI which were launched back in the 1980s in Lon-don and New York. The DME was the vision of Oman and Dubai, along with its Exchange partner the New York Mercantile Exchange (NYMEX), later acquired by CME Group, which is the world’s leading and most diverse derivatives mar-
ketplace. The DME was conceived to offer a viable Middle East/Asia contract for trading and risk man-agement opportunities and lever-age on the terrific economic growth throughout the region.
Oman’s Ministry of Oil and Gas took the landmark decision in 2007 to migrate all of its oil pricing to the DME -- the first government any-where in the world to fully price its oil revenues against an index derived from a futures Exchange. This switch by the MoG cemented Oman crude as the most important benchmark grade for the Middle East and Asia, while also helping to make Oman one of the most popu-lar crude grades among customers.
Since launch the Oman futures contract has enjoyed an average yearly growth of 25% in average daily volume terms (ADV) and in October of this year reached the nine billion barrel mark in terms of barrels of Oman crude traded on the Exchange during the last eight
and half years, and offers enormous potential as the oil benchmark of choice in the coming years.
A successful pricing mecha-nism needs sufficient liquidity underpinned by wide array of in-dustry participants and not biased towards any one sector of the in-dustry. So far this year over 120 entities have traded on the DME,
of which over 90 are companies totally independent of each other. These are a combination of com-mercial companies, which typi-cally encompass entities that have a presence in the physical oil mar-kets such as trading houses and re-finers, plus financial entities such as professional proprietary trad-ers. The key DME trading activity during the day takes place during the five-minute period running from 12.25-1230pm Dubai/Mus-cat time, which is colloquially known as the DME Window. The average price of this trading activ-ity underpins the DME Marker Price and is used in compiling the Oman and Dubai governments’ Official Selling Price on term con-tracts to customers.
A significant ingredient for Oman’s success as the most prominent benchmark grade in Asia has been the sharp increase in production and exports over recent years, which has enabled
the DME contract to become the largest physical delivery of any commodities futures contract in the world, delivering between 15 and 22 million barrels of Oman crude every month via the DME’s delivery mechanism. Over 30 customers typically lift physical Oman crude via the Exchange de-livery mechanism every month,
O
❱❱ Mr. Owain Johnson, Managing Director
of the Dubai Mercantile Exchange (DME)
Shut
tersto
ck
February 201655
shipping the oil to refineries across Asia. Oman crude produc-tion recently hit 1 million barrels per day, making it by far the larg-est benchmark crude grade any-where in the world.
With the growth of energy trad-ing along the crude oil corridor between the Middle East and Asia and the backing of major finan-cial players and clearing mem-bers from Asia, the Exchange has seen a steady rise in volumes that have reinforced DME Oman’s position as the most credible trading benchmark for the Asian crude oil markets.
The DME has also been con-ducting a feasibility study for re-fined products futures contracts in the region, as the growth of refining in the Middle East will see a significant increase in trade flows and demand for risk man-agement tools. While refined products will have a broader pro-duction base across the Middle East, the ability to price against a contract that reflects regional supply and demand economics will provide a major boost for Omani refining, particularly with the major upgrading work at So-har and the new Duqm plant,
increasing production of refined products.
The DME will initially focus on a Middle East fuel oil contract in 2016, but the market is already looking longer term at the poten-tial for gasoil, jet and gasoline fu-tures contracts for the region. With regards to the latter, the deregu-lation of local gasoline markets means there will be keen interest for local pricing mechanisms that reflect fundamentals of the region, and not be totally reliant on pric-ing benchmarks that are generated in London or Singapore, which is the case as things stand.
The Middle East sits on near-ly half of the world’s proven re-serves and almost all of the incre-mental oil demand growth of the last decade has come from Asia, so the potential for the Oman fu-tures contract is enormous. While DME Oman is for now the little brother of the more established Brent and WTI contracts, Oman will continue its rise and establish a place as one of the world’s top commodity benchmarks.
WITH THE GROWTH OF ENERGY TRADING ALONG THE
CRUDE OIL CORRIDOR BETWEEN THE MIDDLE EAST AND
ASIA AND THE BACKING OF MAJOR FINANCIAL PLAYERS
AND CLEARING MEMBERS FROM ASIA, THE EXCHANGE HAS
SEEN A STEADY RISE IN VOLUMES THAT HAVE REINFORCED
DME OMAN’S POSITION AS THE MOST CREDIBLE TRADING
BENCHMARK FOR THE ASIAN CRUDE OIL MARKETS
NATIONAL PRIORITY 56
ocal content development – since rejigged as ‘In-Country Value’ (ICV) – is a mantra that is at the heart of the Omani government’s efforts to build a competitive and long-term sustainable resource-based economy in the Sultanate.
ICV aims to, among other things, foster direct employment and lo-cal entrepreneurship through the provision of goods and services, promote efficient and sustainable use of resources and progres-sively diversify the economy away from a current dependence on hydrocarbons as its primary source of revenue.Since its unveiling in 2013, In-Country Value development has gained traction as an imperative that is not on the margins of what companies do, but has moved to the core of their corporate philos-ophy. It enjoins companies to take steps to ensure that Oman’s re-source wealth and underlying appeal as an investment destination translate into meaningful and lasting social and economic progress for all of its citizens.ICV takes its inspiration from the Royal address of His Majesty the Sultan to the Council of Oman in 2012 when he advocated for an increase in the “total spend retained in-country that benefits busi-ness development, contributes to human capability development and stimulates productivity in Oman’s economy”.Within the oil and gas industry, ICV development is being overseen by a committee of high level representatives from the Ministry of Oil & Gas, Ministry of Commerce and Industry, Ministry of Man-power, and the Supreme Council for Planning. HE Salim Al Aufy,
ICV aims to, among other things, foster direct employment and local entrepreneurship through the provision of goods and services, promote efficient and sustainable use of resources and progressively diversify the economy away from a current dependence on hydrocarbons as its primary source of revenue
Creating shared value
L
In-Country Value (ICV)
February 201657
Under-Secretary of the Minis-try of Oil & Gas, chairs this pan-el. Also represented on the ICV Committee are operators, while the contracting and vending community is collectively rep-resented by the Oman Society for Petroleum Services (OPAL).This apex panel is supported by two subcommittees: (i) Con-tracting & Procurement Manag-ers ICV Committee to drive all goods and services related ICV opportunities, and (ii) HR Man-agers ICV Committee to drive all workforce development ICV opportunities. Rolled out across the Oil and Gas value chain – upstream, midstream and downstream – the programme has since led to the appoint-ment of full-time ICV Manag-ers and even ICV Teams in all of the oil and gas companies, and a significant number of contrac-
tors, vendors and service pro-viders.
Steadfast commitmentSince the formal rollout of the ICV blueprint strategy, the ICV Committee has affirmed that the oil and gas industry, as well as the contracting services sec-tor, are ready for further ICV
development. After all, accord-ing to the panel, the industry has long made good on key aspects of ICV, notably Omanisation and direct local sourcing. The operators, for example, are al-ready 64 per cent Omanised on average, while statistics reveal that around 80 per cent of local companies directly source their
ICV TAKES ITS INSPIRATION FROM THE ROYAL
ADDRESS OF HIS MAJESTY THE SULTAN TO THE
COUNCIL OF OMAN IN 2012 WHEN HE ADVOCATED
FOR AN INCREASE IN THE “TOTAL SPEND
RETAINED IN-COUNTRY THAT BENEFITS BUSINESS
DEVELOPMENT, CONTRIBUTES TO HUMAN
CAPABILITY DEVELOPMENT AND STIMULATES
PRODUCTIVITY IN OMAN’S ECONOMY”
NATIONAL PRIORITY 58
requirements through local con-tractors. Consequently, ICV has been ingrained in the DNA of operators, as well as the grow-ing majority of contractors. The goal for the ICV Committee now is to build on what has already been achieved in ICV generation and establish a system of track-ing where the initiative is deliv-ering benefits. To help with the effective formu-lation of a robust ICV Strategy, the well-known global profes-sional services firm Accenture was tapped to undertake a deep analysis of the current level of ICV spend in the industry. Based on its findings and recommenda-tions, the ICV Committee has since focused on bringing about a convergence of the Oil & Gas ICV agenda towards a common programme. Further, with the aim of tightening collaboration across the industry and beyond, it has sought to coordinate ef-forts and initiatives to maximise the return on value creation. Additionally, it has endeavoured to leverage the expertise and ca-pacity of ICV Committee mem-bers in promoting efficient ICV development.
As part of its analysis of ICV-re-lated activities, the panel looked at the supply and demand pic-
ture in terms of goods and ser-vices, the number of Omanis versus expatriates in the sector,
ChairmanH.E
Undersecretary of MOG
OPAL CEOSecretary
HR ManagersSub-Committee
Contracts and Procurement ManagersSub-Committee
Other (Vendor Development Program, Support, Studies, Forums, etc)
Operators & Producers
Government Ministries
Sub-committees
MOGICV Project
Management Office
Oil & Gas Contracting Community
ProjectManagement Office
The ICV governance is set to guarantee the collaborative approach and the focus on the strategic streams
OIL AND GAS ICV GOVERNANCE
Government Ministries: Ministry of Oil and Gas (MOG)
Ministry of Finance
Ministry of Manpower
Ministry of Commerce and Industry
THE GOAL FOR THE ICV COMMITTEE NOW IS TO
BUILD ON WHAT HAS ALREADY BEEN ACHIEVED
IN ICV GENERATION AND ESTABLISH A SYSTEM
OF TRACKING WHERE THE INITIATIVE IS
DELIVERING BENEFITS
February 201659
their respective professional skills, and the importance of ex-trapolating these findings across the total value chain.The analysis of the spend break-down of the Oil and Gas indus-try (including Tier 2 suppliers) reveals that currently, on aver-age, 82 per cent of the spend is externalized against only 18 per cent accounted as ICV. This is based on OPEX and CAPEX plans known as of end 2012. Sig-nificantly, it identified a gross value pool of $64 billion repre-senting the projected ICV poten-tial waiting to be tapped. Of this figure, $51 billion represent local resourcing opportunities, while $12 billion is the value associated with the employment of Omanis.
Bonanza of opportunitiesWith a view to addressing a max-imum value out of the estimated
$64 billion in potential ICV op-portunities in the sector, the ICV Committee outlined an integrat-ed ICV development programme encompassing all of the relevant stakeholders. The blueprint identified as many as 53 opportu-nities to increase local sourcing, as well as around 40 enabling initiatives to enhance the ICV environment. Additionally, it pinpointed the potential to sup-port the training of an estimated 36,000 young Omanis to help develop a world-class workforce necessary to sustain the growth of the industry through to 2020.As can be expected of any major national initiative, ICV develop-ment has its share of challenges. It requires a mindset change – internal and external – that ICV makes good business sense. Ad-ditionally, companies should be ready to shoulder higher supply
chain costs over the next sever-al years, while also investing in resources and dedicated staff to deliver on ICV. Ensuring trans-parent and objective bid evalu-ation, while aligning with other operators and government are imperatives as well. With the industry fully focused on ICV, notwithstanding the oil price slump, there is optimism that the programme will generate concrete results over the coming years. To the ICV Committee, however, success means nothing short of the following: (i) achiev-ing a doubling of the industry’s ICV contribution; (ii) achieving the creation of a competitive oil and gas supply chain for goods and services (iii) ensuring that Omani companies are not only able to meet the requirements of the domestic oil and gas sector, but also export markets, and (iv) addressing the current skills defi-cit in the oil and gas sector, so that Omanis having been trained to international standards, should be able to work overseas if they choose to do so.
Construction
Number of Omanis and Omanisationlevel per sector (1)
THE STUDY SHOWS THAT THE CURRENT OMANISATION LEVELS ARE DIVERSE DEPENDING ON THE SECTOR AND THE SKILL LEVEL
Number of Omanis and Omanisation level per skill level (1)
Semi-Skilled
Engineer
Technician
Operator
Supervisor
Managerial
Inspector
Unskilled
Service Providers
Oil and Gas Companies
Manufacturing
Number of Omanis in 2012
4.050 12.16025%
9,494 6.49759%
5.630
xxx
xxx
xx%
3.36163%
27% 6.488
3.60639%
58% 2.219
76%
32%
78%
17%918
261
1.988
46%5.131
987
Number of expatriates in 2012
Level of Omanisation in 2012
Note(s): (1) based on 2012 job distribution
DISTRIBUTION OF THE OIL AND GAS WORKFORCE
OMANIS WORKING IN THE OIL AND GAS22,369
SHIPPING 60
ne industry’s pain is another’s gain’ is a refrain that aptly reflects the utterly contrasting impacts that the oil crisis is having on two distinct, yet inextricably linked, sectors of the Omani economy. While the fortunes of the domestic hydrocarbon industry have
plummeted – like much of the energy sector worldwide – by low crude prices, the national tanker shipping business operated by Oman Shipping Company (OSC) has never been brisker. It’s a paradox that Tariq Al Junaidi, CEO of the wholly govern-ment owned shipping line, says goes to the heart of the current turmoil in international oil markets. “The present low oil prices are actually benefitting the freight rates and the shipping business in general, as the trading vol-umes are continuously increasing due to low crude prices and also the cost of fuel has declined substantially which is a major cost component in any transportation,” said Tariq. “Due to low crude oil prices, traders and refiners are securing more volumes. Hence, the freight rates for crude oil transpor-tation are robust as also for refined products. LNG and Petro-chemical freight rates, however, are passive due to excess supply of tonnage over demand and, therefore, have no relation to the declining oil prices,” he explained in an exclusive interview to OPAL – The Magazine.OSC’s strategy, going forward, is to capitalize on the buoyant state of tanker freight rates to maximize revenues for the com-pany. Towards this end, it aims to deploy its substantial tanker
O
❱❱ Mr. Tariq Al Junaidi, CEO of Oman Shipping Company SAOC (OSC)
Oil glut a boon to Oman Shipping
Amid the gloom pervading the Sultanate’s mainstay oil and gas sector wracked by plunging international crude prices, at least one major stakeholder remains in a buoyant mood. National shipping line Oman Shipping Company SAOC (OSC) is reaping the benefits of a strong uptrend in tanker freight rates as the oil glut continues to stoke demand for cheap crude, in turn driving up the demand for crude tankers, says CEO Tariq Al Junaidi
February 201661
fleet in the most profitable areas of the tanker business, said Tariq. Furthermore, in a bid to hedge its risks against the likely decline of the current attractive spot rates in the crude transportation, the com-pany is also exploring the possibil-ity of medium or long term time charters of some of its Very Large Crude Carriers (VLCCs), he noted.
Positive outlookDemonstrating a strong appetite for continued growth, the compa-ny recently announced plans for a sizable investment in MR2 prod-uct tankers. The newbuildings will capitalize on a projected uptick in demand for tanker transportation services.“Since the Product Tanker market is expected to be better due to the in-creasing demand and increased dis-tances for such maritime transport, our future thrust will be on Prod-uct and Petrochemical movements. With this in view, we have invested in 10 MR2 Product Tankers of about 50,000 dwt each, which will be ded-icated to Shell International in the initial period of their life cycle and, thereafter, we contemplate to induct them in the national trade of petro-leum products,” said Al Junaidi.Further business prospects for the state-owned shipping line are expected to emerge once a major grassroots crude oil refinery comes on stream at Duqm on Oman’s Wus-ta coast by around 2019. The Duqm Refinery project is being jointly de-veloped by Oman Oil Company (the wholly Omani government owned strategic investment vehicle) and IPIC (the investment arm of the Abu Dhabi government). Affirming OSC’s commitment to supporting the project’s maritime transportation requirements, the CEO said: “We look forward to Duqm Refinery as one of our major customers in future and also from the point of view of increasing our contribution to the value chain of oil and petrochemical products and consequently adding to the ‘In Country Value’ (ICV) in general for the country’s economy. We are
Energy-centric transportationIncorporated in 2003, Oman Shipping Company owns and operates a highly diversified and young fleet of 46 vessels aggregating to about 8 mil-lion tonnes of cargo carrying capacity. Of this number, 36 are tankers dedicated to the carriage of crude oil, petro-leum products and chemi-cals totalling approximately 35 million tonnes per year. The remaining 10 vessels ca-ter to the dry cargo business of OSC amounting to about 13 million tonnes per year. In essence, OSC’s maritime transportation business is predominantly fo-cused on oil, gas and petrochemicals commodities, according to the CEO.OSC’s role as the nation’s preeminent maritime transportation services provider encompasses virtually all aspects of the hydrocarbon value chain. Transporta-tion of crude accounts for a significant chunk of the company’s business. OSC owns 16 Very Large Crude Carriers (VLCCs) which can carry about 280,000 tonnes crude on each voyage. Of this number, 15 VLCCs are currently taking advantage of the buoyant spot market, while one is deployed on Time Charter, said Mr. Al Junaidi. “These vessels operate internationally carrying about 28 million tonnes of crude oil per year from the producing countries to the user countries. They load from Arabian Gulf, West Africa, North Africa, Baltic Sea and Caribbean and discharge in US, Europe, China, India, and so on. Since the parcel size of Omani crude oil exports is smaller than the VLCC optimum load of 2 million barrels, our carriage of Omani crude is limited,” he pointed out.Equally prestigious is OSC’s role in the transportation of refined petroleum prod-ucts. OSC currently transports 100 per cent of the coastal volumes of refined petroleum products in Oman mainly from Sohar to Salalah and also from Sohar to Mina Al Fahal and from Sur/Qalhat to Sohar and Mina al Fahal. “Approximate-ly 2 to 2.4 million tonnes petroleum products are moved via our ships on the coast of Oman comprising of gas oil, gasoline, jet fuel, diesel and other petroleum products,” he said. LPG transportation, while modest in volume terms, is nevertheless an important aspect of OSC’s core business. Three small LPG carriers of capacities ranging from 5,000 to 7,000 cbm handle Omani LPG exports on behalf of Omani Trading International (OTI) from Sohar Refinery to India, Sri Lanka and Pakistan desti-nations. This aggregates to around 180,000 to 200,000 tonnes of LPG per year.Handling the company’s LNG transportation business is a fleet of six LNG carri-ers of capacities ranging from 145,000 cbm to 162,000 cbm trading internation-ally. The vessels carry about 5.5 million tonnes of Oman’s LNG exports, mainly to Japan, South Korea and Spain. The latest state-of-the-art LNG ship ‘Adam LNG’ is being used in the spot market, but will be diverted to carry Omani LNG exports as and when additional LNG will be available for exports, according to the CEO.In the petrochemicals category, OSC tankers carry around 500,000 tonnes per year of methanol, representing 50 per cent of the annual output of Salalah Meth-anol. These volumes, freighted on behalf of Oman Trading International (OTI), are usually shipped to South Korea and China in the East and to Rotterdam in the West.Not surprisingly, OSC has emerged as one of the largest, reputable tanker and gas carrier owners in the world patronized by topnotch customers including Exx-on Mobil, Shell, BP, Total, Chevron, and so on, Mr. Al Junaidi remarked.
Oil glut a boon to Oman Shipping
SHIPPING 62
in constant communications with Duqm Refinery officials to support them in their shipping strategy and with a view to offering them the best logistical solutions for their imports and exports. How-ever, since the project completion is planned by 2019, the project au-thorities are yet to finalise the nit-ty-gritty of many of the parameters more accurately such as volumes, product ranges, refinery custom-ers, exports needs etc. which will eventually lead to deciding about the sizes and type of vessels re-quired. Therefore, it will require some more time to crystalize these thoughts jointly with Duqm Refin-ery in this regard,” he noted.Also boding well for OSC’s busi-ness growth is a major energy in-frastructure related venture under development not far from the site of the Duqm Refinery. The Ras Markaz Crude Oil Park, promoted by Oman Tank Terminal Compa-ny (OTTCO), a joint venture of Oman Oil Company (90 per cent) and Takamul Investment Compa-ny (10 per cent), will rank among the largest storage depots of its kind in the world with a capacity of around 200 million barrels.“The Ras Markaz Crude Oil Park will be one of the leading crude
oil storage facilities in the Gulf area and we would be only too happy to be associated wherever possible in terms of contributing to their future success. As a first step towards this, we have been supporting Oman Tank Terminal Company (OTTCO) in their latest ‘Floating Storage Project’ by pro-viding them one of our VLCCs for storage. Commencement of this floating storage facility will prove
to be the stepping stone for the Ras Markas Crude Oil Park later on,” said Mr. Al Junaidi.
Human developmentIn parallel with this remarkable growth in fleet capacity and the overall transportation business, OSC is also focused on building the skills and capacities of its
Omani staff, according to the CEO. “We are placing heavy emphasis on the training and re-training of our manpower both afloat and ashore, as well as boosting Oman-isation in the company. Currently, we have reached an Omanisation level of 86 per cent, which we are endeavoring to improve upon without sacrificing the quality and productivity of our service, to match the best international stan-
dards. We have rigorous training programs to train our personnel in order to maintain the present exacting standards and the level of professionalism in the compa-ny with the necessary skills and experiences, including leadership programs.”Importantly, Omanis are being trained under the guidance of well
Oman Shipping Company owns and
operates a highly diversified and young
fleet of 46 vessels aggregating to about 8 million tonnes of cargo
carrying capacity.
OSC TANKERS CARRY AROUND
TONS PER YEAR OF METHANOL, REPRESENTING
50 PER CENT OF THE ANNUAL OUTPUT OF
SALALAH METHANOL
500.000
February 201663
qualified and experienced inter-national experts in the field, he further explained. The company has provided to date more than 220 sea training positions on board the company’s vessels. Moreover, the company sponsors 30 cadets annually with fully sponsored ‘Maritime Scholarships’ for them to study marine engineering and nautical sciences both in local and international colleges, eventually leading to the Certificate of Com-petency (CoC) for a sea career af-ter their graduation. “The company also offers an op-portunity to all local seafarers to continue their studies and be certified in order to be promot-ed to the higher ranks on board the vessels. The office staff is also trained using various types
of training programs such as ‘on the job’ training, classroom based training, cross-postings, job shadowing, e-learning, and so on,” he said.With a sizable proportion of OSC’s fleet under in-house tech-nical management, floating staff are assured of robust hands-on exposure. As many as 31 vessels of the 46-strong fleet are techni-cally managed in-house – a move that enables the company to, among other things, keep a closer control over its operations, focus on safety, ensure cost control, and importantly, to create a growing pool of technically experienced and trained Omani seafarers and shore personnel under the guid-ance of internationally reputed professionals.
Health, Safety, Quality and En-vironment, he further stressed, continue to be top priority ob-jectives for the company and all its stakeholders. These are recognized as an integral part of OSC’s continuous improvement culture, he said. The safety statistics of the com-pany’s fleet indicates that the company is consistently oper-ating at high standards. It has recently renewed its ISO 9001 and ISO 14001 certifications by passing a thorough and in-depth audit conducted by ABS, estab-lishing that the company is op-erating in a responsible manner towards ‘Quality Management Systems’ (QMS) and Energy Re-source Consumption. “OSC Group is continuously working hard not only in main-taining the international stan-dards, but also exceeding the same in a pro-active manner with highly efficient operations and technical management. Also, all our activities have a tre-mendous customer focus and we always live up to our respon-sibilities towards the Society at large, as a responsible Corporate Citizen,” the CEO added in con-clusion.
THE COMPANY HAS PROVIDED TO DATE MORE THAN 220
SEA TRAINING POSITIONS ON BOARD THE COMPANY’S
VESSELS. MOREOVER, THE COMPANY SPONSORS 30
CADETS ANNUALLY WITH FULLY SPONSORED ‘MARITIME
SCHOLARSHIPS’ FOR THEM TO STUDY MARINE
ENGINEERING AND NAUTICAL SCIENCES BOTH IN LOCAL
AND INTERNATIONAL COLLEGES
Importantly, Omanis are being trained under the guidance of well qualified and experienced international experts in the field.
PORTAL 64
A success story for Oman’s Oil & Gas industry
The Joint Supplier Registration System is to be a National initiative that would encourage credible suppliers – national and international, to register in the common pool
n 2013, the In-Country Value (ICV) Committee comprising of major oil & gas operating companies (Operators) in the Sultanate of Oman came together under the leadership of the Oman Ministry of Oil & Gas (MOG) to create a ‘Single Window’ supplier registration system for the benefit of both
operators and suppliers. This unique initiative amply demonstrat-ed the unity and resolve among the operators who got together to understand the critical needs of the suppliers, pain areas that needed improvement and importantly, evolve a simplified process of supplier registration that was acceptable by all operators. We at Business Gateways International (BGI) implementing the Oman National Business Framework (NBF) was tasked to come up
❱❱ Mr. Hemant Murkoth, CEO of Business Gateways International
I
Joint Supplier Registration System:
February 201665
with the design to implement this national oil & gas supplier registra-tion system. After many rounds of brainstorming with all stakehold-ers, the overall architecture of the registration system was finalized and the Joint Supplier Registration System (JSRS) was born.Hosted on the Business Gateways portal (www.businessgateways.com) the project went live in July 2014 and has been picking up speed and popularity ever since. Today, the JSRS is a mandatory system for suppliers to be regis-tered and certified in order to be eligible for business opportuni-ties from the operators.The process of inducting a com-pany in JSRS begins through an online registration and payment of subscription fee. The supplier company is then provided with an admin login credential on the National Business Framework (Tier 1) through which they can configure and integrate their de-partments and users (up to 50 per company). The Tier 1 philosophy is based on providing the Suppli-er with a B2B connectivity plat-form to help them stimulate their business by connecting with other companies (national and inter-national) for new partnerships, better supply chain and to con-nect with Governmental bodies as well. Companies are also given a detailed profile which can double up as their website; a feature that is critical for SMEs in Oman.On completion of Tier 1, they are taken to Tier 2 which is spe-cifically related to the Oil & Gas Industry and a detailed online Supplier Validation Form ought to be filled up. The submittal is then validated by BGI through our internal process and on ap-proval, the supplier is deemed registered on the JSRS with an e-certificate issued to them. There is also a Tier 3 built in the JSRS that handle the supplier approval process of Operators and we are in discussions with all stakeholders on how best to go about implementing this Tier
in an unified manner within the Operator community.The Operator’s Contract & Pro-curement teams using the JSRS can view the complete detail of each supplier such as their com-pany profile, products & services,
certifications, ICV performance etc. They can also identify suppli-er document and compliance expi-ry triggers live on the system. The supplier list for their procurement can be downloaded based on an ex-tensive search engine to meet their individual requirements. The JSRS houses a powerful analytics engine that help Operators graphically drill down to slice and dice supplier data based on various metrics in or-der to create supplier sets for their potential procurement events. The JSRS today is a success story with around 17 operators utilizing the system for their procurement requirements whilst connecting to thousands of Suppliers on-line who are classified as SME, Large and International. The platform hosts more than 40,000 registered products & services of suppliers across different catego-ries with hundreds of companies visiting the portal daily. Business Gateways in the background, pro-actively engages with the sup-pliers to understand their needs, monitor their progress and han-dle supplier support through a wide range of support systems in constant coordination with MOG and Operators. So, is the work done? Not at all! On the contrary, it has just started! The JSRS is a continuous work-in-progress with refinements
being implemented regularly for the smooth operation of the sys-tem. We want to ensure that the system is updated in technology and features and that the sup-plier’s usage of the system is as productive as possible. We work
closely with the Operators, OPAL and the Project Management Of-fice (PMO) of MOG to find out ways and means to connect better with the supplier community. Business Gateways is also acute-ly aware of the fact that the JSRS must be propagated to the world community and we strive to do that through regular Roadshows, Seminars and Supplier Training programs within various regions in Oman and in other countries as well. Keeping in line with our mandate, the JSRS plans to be the vehicle to propel Omani compa-nies to the international markets and efforts are underway to im-plement this.For us at Business Gateways, it has been a tremendous chal-lenge and learning experience, not just in designing and devel-oping a unique IT Portal of this nature but also in implementing and maintaining this powerful system. As an Omani IT compa-ny whose workforce comprises more than 70% Omanis, we owe our gratitude to the Ministry of Oil & Gas and the Operators who showed their confidence in us and constantly given us the mo-tivation and encouragement to implement a challenging project of this nature. The JSRS is truly a success story for Oman’s Oil & Gas Industry!
THE JOINT SUPPLIER REGISTRATION SYSTEM TODAY
IS A SUCCESS STORY WITH AROUND 17 OPERATORS
UTILIZING THE SYSTEM FOR THEIR PROCUREMENT
REQUIREMENTS WHILST CONNECTING TO THOUSANDS
OF SUPPLIERS ONLINE WHO ARE CLASSIFIED AS SME,
LARGE AND INTERNATIONAL
FEATURE 66
man is blessed with hydrocarbon resources. The na-tion and its people should gain the benefits of such a natural resource. Without a skills infrastructure and a skills strategy that looks to the future, local benefits will be limited and labour import costs will remain
high and prone to significant escalation. In making sure that the people of Oman gain the most from its natural resources, government and industry have come together to help Omanis gain the skills to obtain the jobs and benefit from the opportunities that hydrocarbons present.Earlier this year, OPITO signed a milestone agreement with the In Country Value Committee in Oman, facilitated by OPAL. By doing so, both industry and government have accepted owner-ship of the skills agenda and together will be able to deliver a collective and collaborative solution to developing a learning in-frastructure that will support the needs of industry, but also max-imise the country’s oil and gas reserves and create employment opportunities for the Omani people.Whilst employer-led training schemes meet specific industry skills needs, there is a broader context to be considered around industry attraction and influencing education to focus on the up-take of science, technology, engineering, mathematics (STEM) subjects and informing on the exciting career opportunities this industry has to offer. A long term skills agenda must focus on creating a larger and sus-tainable skills pool and this cannot happen without the interven-tion and commitment of employers. The ability for the industry to support and influence the education system and Government
In making sure that the people of Oman gain the most from its natural resources, government and industry have come together to help Omanis gain the skills to obtain the jobs and benefit from the opportunities that hydrocarbons present
Developing a sustainable talent pool
O
❱❱ David Doig is the CEO of OPITO
February 201667
Developing a sustainable talent pool
(and its agencies) become critical to building a long term sustainable supply chain of people with the skills needed by the industry. Such a skills and education infrastruc-ture provides training and educa-tion that is aligned to the needs of the industry. However it must be recognised that developing a sus-tainable talent pool is at least a ten year journey.
Independent industry roleThe role of an independent in-dustry owned and industry led skills body is crucial and Oman has recognised the role OPITO can play in achieving this. The OPITO model used in the UK and other countries has proven to be an excellent conduit for the in-dustry to engage with multi stake-holders because it represents the collective will of the industry. Without the involvement of such an independent industry owned organisation it is difficult for the industry to lead the skills agenda and form long-term collaborative initiatives especially as key stake-holders will undoubtedly change over the long term so a constant is required.With a track record in helping oil and gas provinces to build indig-enous workforces to exploit their oil and gas reserves, OPITO is al-
ready working on a phased plan that will provide the Omani Gov-ernment with a sustainable solu-tion to the employment needs of its people and to the demands of its growing oil and gas industry.The first phase was an analysis of the current provision of voca-tional and non-vocational train-ing throughout Oman. OPITO has visited vocational training centres and colleges to identi-fy the standard of training and
then provide recommendations on how technical training pro-vision can be improved to deliv-er a framework of qualifications which will meet current and fu-ture skills demands and improve competence in the operations and maintenance activities asso-ciated with the extraction of hy-drocarbons.
Right way of trainingBy working with the government
and employers, OPITO will help build a learning infrastructure in Oman which will be able to de-liver industry-designed and in-dustry-recognised qualifications underpinned by technical train-ing standards, occupational stan-dards, a robust assessment pro-cess and accredited certification and qualifications. This will en-sure that the training is delivered in the correct way, by the right people, using the right equipment
in a safe and well-managed envi-ronment and that competence can be effectively measured.As a result of OPITO’s ground- -breaking work in Oman hun-dreds of Omanis will be able to be trained to recognised industry qualifications in electrical and mechanical maintenance and in-strumentation and controls, al-lowing them to work in the oil and gas industry. This will open-up new economic opportunities for the Omani people, impacting pos-itively on the economy and giving the oil industry confidence in the competence of their technicians.
Increasing the productivityThe aim is to increase the compe-tency levels and productivity of the local workforce coming into the industry by aligning existing vocational and technical train-ing with industry requirements and accrediting it to international standards.As a not for profit organisation, owned by the industry, OPITO will reinvest the revenues generated by this contract in the continuous development of educational prod-ucts and services for the benefit of Oman and the wider industry.
Inform,Influence and excite
Education partnerships creating the talent pool of the future
Stakeholder Aignment& Support (FR/HE/Government and Industry
ContinualWorkforceDevelopment
THE STRATEGY FOR DEVELOPING A SUSTAINABLE TALENT POOL
OPITO IS ALREADY WORKING ON A PHASED PLAN
THAT WILL PROVIDE THE OMANI GOVERNMENT
WITH A SUSTAINABLE SOLUTION TO THE
EMPLOYMENT NEEDS OF ITS PEOPLE AND TO THE
DEMANDS OF ITS GROWING OIL AND GAS INDUSTRY
FEATURE 68
hat is contango? People buy futures contracts when the expectation is that
the future open market, or “spot” price, will be higher at the time of delivery than the price that was agreed under the futures con-tract, thereby enabling a profit to be made by that investor when the goods are then sold on. (Of course, there is always a risk that market prices at delivery time will be un-expectedly lower than the con-tractually agreed purchase price. The seller may then be effectively locked into the agreed purchase price, regardless of the actual mar-ket or spot price at the time of de-livery, unless protected by a “stop loss” or similar clause). A gradual, long-term increase in prices is the normal way of mar-kets and, in this state, a market is said to be in a state of “backward-ation.” However, prices don’t al-ways rise and there is no guaran-tee that the future spot price will be higher at the time of delivery. When a market has unexpected-ly weakened, to the point that the market price for that commodity is lower on delivery than it was
when the price was agreed with-in futures contracts, the market is said to be “in contango.”
The impact on the maritime World Crude oil is a commodity that is widely traded on the global futures markets. In January 2015, we saw the price of brent crude oil plum-met to below US$50, having been around US$100 just a few months earlier. Although there was a slight rally in prices during the first few months of 2015, it eased down again, touching just $40 at one point in August 2015.Investors and/or traders and/or their financiers who had bought “long” suddenly found their mar-ket to be in contango. When the delivery date arrived, they had to accept that, if they then tried to sell the oil they had purchased, they would have to realize a substantial loss as the spot price was consider-ably lower. Therefore, rather than sell it immediately, oil traders opt-ed to keep possession and wait for the oil price to rise again, before then selling the oil on. There are, however, the following problems with this approach:
Problem 1 – Where do traders keep the oil in the meantime? Problem 2 – If purchasing the oil under the futures contract requires the trader to obtain fi-nancing from banks or other in-stitutions, are those financiers aware of the risks associated with the long-term storage of crude oil at sea? One of the attractions of a futures contract is that until the delivery date, the buyer is not in posses-sion of the commodity, and so does not have to worry about storing it. However, once that delivery date arrives, it becomes their property and will remain so until the oil is sold on to others. It is no coincidence that, at times when crude oil prices fall, mari-time freight prices for the carriage of oil also often fall. This is due to there being a glut of oil on the in-ternational markets (as indeed was the case in 2014), which depresses oil freight rates. Oil tanker opera-tors often find it difficult to obtain good charters for their vessels at exactly the time when oil traders are looking for somewhere to keep their newly delivered (or about to be delivered) oil. Not for the first
The Contango Conundrum
W
Marine insurers are becoming increasingly concerned about the issue of “contango” and its potential to affect bulk carrying vessels, most notably oil tankers. However, it is a term that many in the maritime industry could be excused for never having heard of before, seeing as it is one that is more readily understood in the commodity futures markets
February 201669
time, we have a situation where there are two willing partners in what becomes a maritime contan-go marriage of convenience. Oil traders charter idle oil tankers to store their oil and shipowners find a cheap way of employing their tankers, simply anchoring the ves-sels and offering these otherwise idle ships to be used as floating storage units.
Crude oil is not a liquid — it is a suspension of numerous hydro-carbon compounds, among other things. If stored for long periods of time, undisturbed crude oil will begin to settle. The heavier hydro-carbons (such as bitumen) sink and coalesce at the bottom, while the lighter hydrocarbons (such as methane and ethane) rise to the top and, if permitted, escape the crude
oil altogether as vapor. As such, the crude oil starts to degrade. This can lead to both quality claims as well as shortage claims due to ex-cessive sediment (or sludge) form-ing at the bottom of the cargo, which becomes unpumpable, lead-ing to residues remaining on board (ROB) issues. Oil tankers used as storage units are exposed to the climatic condi-tions where they are anchored. In many locations, there can be con-siderable variations between day-time and nighttime temperatures, which may lead to a loss of car-go due to venting (the release of gases into the atmosphere). This may well lead to cargo “short-ages,” as the volume of the cargo
CRUDE OIL IS A COMMODITY THAT IS WIDELY TRADED
ON THE GLOBAL FUTURES MARKETS. IN JANUARY 2015,
WE SAW THE PRICE OF BRENT CRUDE OIL PLUMMET TO
BELOW US$50, HAVING BEEN AROUND US$100 JUST A
FEW MONTHS EARLIER
Oil tanker operators often find it difficult to obtain good charters for their vessels at exactly the time when oil traders are looking for somewhere to keep their newly delivered oil.
FEATURE 70
on board is slowly reduced due to this constant temperature change. The longer the oil is in storage on the vessel, the greater the possible loss from this cause. The mixing or “blending” of car-goes at sea is not permitted under the International Convention for the Safety of Life at Sea (SOLAS), but such mixing may occur acci-dentally, leading to claims of the cargo being “off-spec” when it is eventually discharged. With current international con-cerns over the origin of oil car-goes, resulting from international sanctions, any blending that oc-curs will make it increasingly dif-ficult to prove that a cargo’s origin remains legal, especially in areas of the world where sanctioned oil cargoes may be present. If any ship-to-ship transfers of the car-go occur, this risk of blending and of contamination only increases each time.
Traders and their financiers While it may widely be true that liability following a pollution event at sea would fall on the vessel operator (often strictly so, as, for example, under the Civil Liability Convention [CLC]), un-der some jurisdictions, it is by no means certain that such clear-cut responsibility on the vessel opera-tor would always be applied. This is especially true in countries like the US, where the laws on respon-sibility for marine oil spillage are somewhat different. If a major oil spill were to occur from a vessel engaged in this oil-storage activ-ity, oil traders and/or their finan-
ciers who are seen to be the own-ers of the oil might not escape legal action and could at least in-cur defense costs, maybe even an actual liability in some jurisdic-tions. It is therefore not surpris-ing that increasing numbers of traders and their financing banks are seeking oil traders’ liability in-surance cover.
Marine hull insurance The evidence from earlier eco-nomic downturns and shipping slumps in the 1970s and 1980s, where large numbers of unem-ployed tankers were often moored together for many months (some-times years), is that considerable problems were encountered when those vessels were finally reacti-vated. In such instances, damage occurred both to the hull (due to the excessive fouling and degra-dation of the hull) and the ma-chinery (never designed for long
periods of idleness) of the ships in question. Both main engines and auxiliaries often developed prob-lems that only became apparent when those vessels had started to work again. Cargoes of oil, carried for long pe-riods of time, can also cause con-siderable harm to the steel of the tanks they are carried in. Some of the naturally occurring constitu-ents of crude oil, such as hydro-gen sulphide, can be particularly harmful, as their corrosive effects, over long and sustained periods, can additionally cause damage to all the pipes and pumps they come into contact with. The proportion of hydrogen sulphide within the stored crude oil varies consider-ably, depending on where it was drilled. While in most places it is a relatively low percentage (be-tween 2%-4%), oil and gas extract-ed from wells in Kazakhstan, for example, is known to be consid-erably more “sour,” with a much higher hydrogen sulphide content (sometimes in excess of 10%). The buildup of cargo “sludge” at the bottom of cargo tanks sus-tained during long periods of off-shore oil storage use, can cause issues when tankers are then re-activated for normal use, neces-sitating considerable and expen-sive cleaning. Hull underwriters learned during previous shipping downturns that crude oil washing
THE IMPACT ON THE MARITIME WORLD
Price of Brent Crude Oil (US$ Per Barrel)Source: MoneyAM.com
115.00110.00105.00100.00
95.0090.0085.0080.0075.0070.0065.0060.0055.0050.00
(GB @IB.1)
May 2013 Jan 2015Sep 2014May 2014Jan 2014Sep 2013
The lightest alkane, methane, will try to leave the suspension as vapor.
Lighter alkanes such as methane, ethane, and butane rise to the top.
Heavier, more viscous alkanes such as bitumen and
tar sink to the bottom.
Long-term settling of oil cargoes can result in degradation and increased viscosity at the base.
Crude oil is a suspension. If the lighter compounds are allowed to escape, then, to maintain the balance of the suspension, small quantities of the heaviest compounds will also leave the suspension to compensate, so that the remaining compounds maintain a suspended balance. The heaviest compounds can then coat the lining of storage tanks with thick sticky residues that are very similar in nature to the tarmacadam used to make roads.
WITH CURRENT INTERNATIONAL CONCERNS OVER
THE ORIGIN OF OIL CARGOES, RESULTING FROM
INTERNATIONAL SANCTIONS, ANY BLENDING THAT
OCCURS WILL MAKE IT INCREASINGLY DIFFICULT
TO PROVE THAT A CARGO’S ORIGIN REMAINS LEGAL,
ESPECIALLY IN AREAS OF THE WORLD WHERE
SANCTIONED OIL CARGOES MAY BE PRESENT
February 201671
(COW) operations and inert gas systems (IGS) are vulnerable to failure after long periods of inac-tivity, and the need for extensive tank cleaning can actually cause damage to the tanks themselves. As mentioned previously, tem-perature changes in and around the vessel may either lead to vac-uums in the tanks or, conversely, pressure buildup. Unless strict adherence to approved venting procedures is undertaken, the risk of explosion will be increased, as external air mixing with the fumes from the cargo could result in a highly explosive cocktail. One of the more traditionally un-derstood risks to hull involves the ship-to-ship transfer of stored oil between tankers. Such operations, having two or more vessels very close to each other, increase the possibility of collision, with a con-sequential increase in the risk of damage to the insured vessel’s hull and a possible liability to the oth-er vessel (assuming primary colli-sion liability is insured under the hull policy). The mooring arrange-ments of a long-term lay-up of a tanker with cargo on board is also another area of concern, as period-ical weather and sea states may ex-pose the vessel to unusual strains
on its anchoring systems. Should the vessel go adrift, then the per-ils occasioned by long periods of inactivity of its machinery may cause additional problems. Where storage vessels are anchored is another important factor, as quiet locations that might pose reduced collision risk may also suffer from a lack of nearby adequate salvage and rescue services.
Protection and indemnity (P&I) Employing tankers as floating storage units would usually rep-resent a material change in infor-mation and so the P&I Club ought to be promptly advised of any such plans. Underwriters could take the view that this is a material change in
information and may, under the Rules, seek to impose new pre-miums, terms or deductibles. There may also be risk manage-ment concerns and conversations would need to be had with the Club along these lines. In extre-mis, the Club managers could cancel the entry. On the face of it, the reduction in voyages might make the P&I risk appear re-duced. To some extent, this argu-ment is persuasive but there are other aspects to consider. Liability to cargo interests due to shortage would be a major con-cern and the exposure would only increase with the length of the storage period. As well as the potential liability, fines may be imposed on the vessel opera-tor, under some jurisdictions, for
cargo shortage. Possible liability for contamination of the cargo is another risk that shipowners (and their P&I clubs) might have to face. Pollution liability poses a constant threat for laden tankers, and the long-term use of vessels as oil-storage vehicles can only increase the risk of a pollution event occurring or resulting from other events (such as a collision or breaking adrift in bad weather and grounding). If ship-to-ship transfers are involved, then the pollution liability risks increase further. Long-term employment of oil tankers as floating storage units may also lead to disputes under the charterparty such that FD&D cover, if purchased, may also need to be utilized.
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THE IMPACT ON THE MARITIME WORLD
Price of Brent Crude Oil (US$ Per Barrel)Source: MoneyAM.com
115.00110.00105.00100.00
95.0090.0085.0080.0075.0070.0065.0060.0055.0050.00
(GB @IB.1)
May 2013 Jan 2015Sep 2014May 2014Jan 2014Sep 2013
The lightest alkane, methane, will try to leave the suspension as vapor.
Lighter alkanes such as methane, ethane, and butane rise to the top.
Heavier, more viscous alkanes such as bitumen and
tar sink to the bottom.
Long-term settling of oil cargoes can result in degradation and increased viscosity at the base.
Crude oil is a suspension. If the lighter compounds are allowed to escape, then, to maintain the balance of the suspension, small quantities of the heaviest compounds will also leave the suspension to compensate, so that the remaining compounds maintain a suspended balance. The heaviest compounds can then coat the lining of storage tanks with thick sticky residues that are very similar in nature to the tarmacadam used to make roads.
WITH CURRENT INTERNATIONAL CONCERNS OVER
THE ORIGIN OF OIL CARGOES, RESULTING FROM
INTERNATIONAL SANCTIONS, ANY BLENDING THAT
OCCURS WILL MAKE IT INCREASINGLY DIFFICULT
TO PROVE THAT A CARGO’S ORIGIN REMAINS LEGAL,
ESPECIALLY IN AREAS OF THE WORLD WHERE
SANCTIONED OIL CARGOES MAY BE PRESENT
INTERVIEW 72
The business of finding large oilfields is becoming harder and harder with time – a scenario that somewhat reflects the reality in the Omani upstream sector, says Prof. Wiekert Visser, a 40-year veteran of the petroleum geosciences industry, in this exclusive interview for ‘OPAL – The Oil & Gas Magazine’
Finding another Yibal or Fahud
Musings of a veteran geologist:
❱❱ Prof. Wiekert Visser, Head of MSc Petroleum Geosciences at the German University of Technology (GUtech)
redicting peak oil has long been a tricky business as history has shown. In 1905 or so, it was pre-dicted that the United States would run out of oil within 10 years. A hundred years on, it still hasn’t
happened. Actually, global peak oil production was predicted to happen just about now (the original prediction was for 2010!), but it hasn’t panned out either. Indeed, throughout the history of oil, we see peak oil being deferred over time, which I think, is a testament to the commendable success of the global hydro-carbon community in uncovering more reserves and bringing more oil on stream than people ever imagined. But let’s face it, the business of finding large oilfields is becom-ing harder and harder with time – a scenario that somewhat reflects the reality in the Omani upstream sector. Here is an area that has been explored exceptionally well. And if you talk to the petroleum experts at PDO and elsewhere, you will hard-ly find anyone who expects that another Yibal or Fahud – one of the big finds of Oman – will be replicated. Of course, there could be surprises, but the sense that if there was any Yibal or Fahud still hidden somewhere in the ground, it would likely have been found by now.What about prospects offshore, one may ask! Well, offshore the Batinah it is my impression that reservoir and structure
P
February 201673
Finding another Yibal or Fahud
abound, but that source and seal are unreliable. Offshore the Batain plains, the main ingredi-ents are essentially in place, but I think the source rock is not deep enough to have generated any oil and gas. Those who have seen the data may be in a better position to offer some conclusive analy-sis. Then there is, of course, the interesting revelation made by Masirah Oil about Masirah Bay. It would be a new play altogether. But whether it is extensive or not, time will tell!
Game-changerThe big game-changer for Oman, however, lies in uncovering an-other Yibal or Fahud with multi-ple billion barrels of oil in place. The chances don’t seem very bright, but you can never tell! The smaller discoveries, say of 15 mil-lion barrels, are welcome because they help shore up output levels incrementally.Shale oil and shale gas, while potentially promising, exist at depths of 4km-plus, which makes the drilling of wells very expen-sive and the output per well rel-atively modest. Consequently, the economics of targeting these formations are quite challeng-ing. Perhaps, while oil prices rebound, these deposits become more viable for development. The big reserves additions, in my view, will come via Enhanced Oil Recovery (EOR). But on the down-side of this method, a lot of natu-ral gas is being consumed for the thermal heating of the reservoirs in order to make the heavy and vis-cous oil to flow to producing wells. According to a report by The Re-search Council of Oman, at some point, the gas required to recover this heavy oil will be more than the country can supply. This scenario poses a significant challenge for the country’s decision-makers, be-cause we will come to a point when there will be just not enough gas to produce oil. This presents an incredibly interesting challenge to the government.
INTERVIEW 74
Exciting petroleum geologySo what’s exciting about Oman’s ge-ology? For one, there’s an enormous diversity in the types of source rock that one encounters here: the relatively young (Cretaceous) Na-tih petroleum system is important in North Oman, and the Silurian Safiq formation is the likely source of some hydrocarbons discovered around the Umm al Samim area of western Oman. But drillers have had a lot less luck finding hydro-carbons sourced by this unit as they approach the Yemen and Saudi bor-
ders. Oil companies have come and gone over the years in those areas.In the northwest, we have the Ju-rassic source rocks which we know is somewhat active in the Lekhwair area of PDO’s Block 6 concession. Further south are the various very old (Cambrian and Proterozoic) source rocks of the Huqf where the South Oman Oil Basin sustains the Marmul and Nimr fields. The source rocks below the salt are just as important in the south as they are in the north. Of particular inter-est are the rocks on top of the salt, which are curiously referred to as Q’s source rock – in the Ghaba salt basin mainly. But there are far deep-er objectives, which we know exist but nobody has yet targeted them yet. They represent an interesting carrot to go after and hold some po-tential in certain areas at least. Clearly, Oman is home to a great deal of diverse petroleum systems that have been the source of a lot of oil and gas generated over the last 400 million years or so. We’re talking about a very long geological history: about 700 million years in terms of sediments, with the key source rocks going back 550 – 600 million years.
And there are lots of different res-ervoirs too: limestone reservoirs – particularly in the north – for oil and a bit of gas; sandstone reser-voirs in the Ghaba oil basin, as in the eastern flank of the south Oman oil basin, where it’s all about oil. Then you have a series of sands, such as the Haima Group dating some 400 million years, which are largely gas targets in the Ghaba salt basin. Abutabul, Khazzan and Khulud are the big tight gas fields found in this group. So there is a multiplicity of source rocks, reservoirs and seals, with plenty of saturation to boot.
But at the same time, there has been a lot of drilling too over the past decades. If you look at the history of discoveries in Oman, the big oil finds – Fahud, Yibal, Marmul, Rima and so on – were uncovered in the 1970s or earliest. Nearly fifty years on, Fahud, and Yibal are still pro-ducing. These have been extreme-ly good fields with an enormous amount of reserves. As is typical in exploration history, the big fields are usually found first. But belated surprises are not un-common! Look at the United States, for example. When shale was first discovered two decades ago, every-one knew there was oil waiting to be produced, but they figured a way to produce it only quite recently. And lo and behold, the US is sud-denly almost self-sufficient, while prices go into a tailspin. Closer home, Oman could still strike a big one, but you wonder how great the chances are. All of the interesting ingredients are there in the geology. But let’s not forget that we have worked on in-dustry for over 60 years. If you take 1956 – the year when oil was first discovered in the Sultanate – as the starting point, and if you
compare our production history with that of other countries, you will find a similar pattern: the big fields are usually found first. Glob-ally, most of the oil and gas was discovered in the 60s and 70s, with some exceptions.Of course, Oman could consider looking at deeper targets. But let’s not forget, the deeper one goes, the porosity of the reservoirs be-come worse and harder to produce. Deeper wells are still okay when it comes to gas, but for oil, you would need a good, porous reservoir too.
Crystal-gazingBecause the easy reservoirs have already been found, my hunch is that Oman may go after relatively harder targets, such as unconven-tional or frontier plays. Clearly, if there was no optimism about Oman’s geological prospects, then you wouldn’t see new investment in exploration. But new explora-tion has been happening because the geological pundits are con-vinced there are resources worth going after, especially the kind of resources that were overlooked in the quest for easier hydrocar-bons. After all, it’s human nature to focus on the easier things first! So there are still lots of opportuni-ties to go after, but whether these efforts produce another Yibal or Fahud is another story. As long as new finds can help sustain pro-duction at current levels is a good thing for Oman.Never say never in this complex game of geology! We have seen predictions of peak oil come and go. Although the United States went through peak oil in 1979, they went on 40 years later to unleash shale oil. A new peak oil, while lower than the first, is now upon them. At some point, peak oil will be upon us as well. Whether it hap-pens in two years or 20 years, no-body can tell. But because geology affords us wide latitude in the way we make our predictions, we never say never in this business!
By Conrad Prabhu
OMAN IS HOME TO A GREAT DEAL OF DIVERSE
PETROLEUM SYSTEMS THAT HAVE BEEN THE
SOURCE OF A LOT OF OIL AND GAS GENERATED
OVER THE LAST 400 MILLION YEARS OR SO
February 201675
Special schemes to support ICV
SME Development Fund
The government and the oil and gas industry have already launched several initiatives aimed at developing SMEs through ICV. These have started showing good results
SME DEVELOPMENT 76
The ContextOver the past decade and a half, with the unveiling of the Vision 2020 Charter, the Sultanate has been seeking to diversify its economy and invest in income and employment generating activities. The develop-ment of SMEs is a key element, as is the enhancement of In Country Val-ue (ICV).The government and the oil and gas industry have already launched several initiatives aimed at develop-ing SMEs through ICV. These have started showing good results. PDO’s Local Community Contractor (LCC) programme is a particularly success-ful example. The industry has also set about making ICV a priority; the initiatives that have been launched include implementation of a joint supplier registration system, stan-dardization and inclusion of ICV in tenders, and a reporting and moni-toring system for ICV.
OpportunitiesAs per the ICV Strategy 2013-2020, the opportunity for incremental ICV is estimated to be USD 64 billion. Of
the 53 areas identified for enhancing ICV, about 20 possible areas have been identified for SMEs. However the challenge is that there are only a limited number of SMEs that have the capability or capacity to accept or tap the available opportunities. This is reflected in the Joint Sup-plier Registration data which has around 2100 SMEs registered in all. Informal discussions with players in the oil and gas sector indicate that only half of these may be considered
to be serious players. Thus 1000 or
so SMEs will need to take on an esti-mated $6 billion of ICV work, which is impossible. Capacity and capabil-ity have to be built up and the num-ber of SMEs in the sector enhanced.
SME Development FundThe SME Development Fund (SMEF) has been established with an authorized capital of RO 100 million, under the Sultanate’s off-set programme, with the objective of developing entrepreneurship
and supporting and financing
Infrastructure
37%Tourism
17%
Others
16%
Logistics
8%
Oil & Gas
22%
SMEF CURRENT SECTORAL FOCUS
❱❱ Mr. Raphael Parambi, CEO of the SME Fund
SMEF’s special support for Oil & Gas under the ICV Initiative
In keeping with the Nation’s priority, the development of SMEs in the ICV value chain has been identified as a thrust area for SMEF and these al-ready constitute 22% of the total portfolio. Based on the experience so gained, the prior experience of our team, who have worked on the LCC programme earlier, and on discussions with a cross section of the play-ers in the sector, SMEF has a put together special programmes to sup-port the country’s objective of SME development and ICV enhancement. The details are as follows:
February 201677
SMEs in the Sultanate. In addition to its capital, it receives grants to support its Four Point Programme, which seeks to develop entrepre-neurship, finance SMEs and to ad-dress the causes of failure of exist-ing SMEs. SMEs training The common requirement of SMEs is for upgrading their technical and managerial ability to meet the re-quirements of prime contractors and grow. Recognizing this, SMEF has designed a training programme in business areas comprising ac-counting, marketing, legal and HR etc., by our specialized trainers. In addition, we propose to offer train-
ing in technical areas, HSE, project management, etc. with the support of the oil and gas majors.
Subsidized finance facility A major challenge faced by SMEs is prompt access to finance for the timely execution of projects. Non-availability of finance when needed also leads to inefficient purchases and poor performance. SMEF has tailored a set of products specially designed to provide SMEs with flexible funding to meet their needs.
Account and IT supportYet another cause of failure is the im-proper maintenance of books of ac-counts. This results in errors in judg-ment of profits, cash flow, receivables etc., and affects the ultimate success of the SME. To help SMEs overcome this problem SMEF has tied up with a major accounting firm to provide outsourced accounting services to SMEs at their premises.
Nurturing The clients will be monitored reg-
ularly by a dedicated team and will be provided light touch advice based on the accounts provided by them and identify training needs based on the input for training. This will be done in co-ordination with all stakeholders in the Oil & Gas industry, which will enable the SMEs to conduct the business in a more efficient way to grow and succeed.
Stronger SME value chainA key challenge that large corpo-rates face is in ensuring reliabil-ity and adequate quality of their SME suppliers and sub-contrac-tors. The SMEF’s training pro-gramme, in conjunction with
OPAL’s training, will enhance the quality of the supplier value chain. In addition, SMEF will be setting up a dedicated team to monitor the SME supplies and providing feedback to enable large corporate clients to keep track of their SME performance.
Timely service and supply One of the major concerns of large corporates is the delay in supply and project execution by SME suppliers and sub-con-tractors. These delays are often caused when the SME supplier faces a cash crunch. The SMEF liquidity enhancement products enable the SMEs to avoid a cash crunch and thus adhere to the tight delivery schedule expected by the Oil & Gas industry.
Expanding supplier base A frequent complaint of large Oil & Gas majors is that there is an insufficient number and quality of suppliers within the country for them to achieve their ICV objectives. Recognizing this, the
SMEF is launching a large-scale entrepreneurial development drive. Designed to expand the supplier base, this initiative will be presented to the ICV sector shortly at a major meet.
CostDue to inadequate liquidity, SMEs are unable to bulk purchase raw materials or to avail of cash dis-count from their suppliers. The SME Fund financing programme will inject timely liquidity en-abling SMEs to avail of cash and bulk purchases discounts and, in turn, pass these benefits on to their clients.
ConclusionThe oil and gas sector has set very ambitious ICV and SME support targets. In response to this, SMEF has developed a comprehensive package to support both the SMEs and the large firms. A number of firms are benefiting and the num-ber is expected to grow rapidly to the benefit of the nation and the sector.
ICV AND SME DEVELOPMENT ARE THE ECONOMIC
FEATURE OF OMAN AND SME DEVELOPMENT FUND IS
COMMITTED TO WORKING WITH ALL STAKEHOLDERS
TO MAKE THIS A SUCCESS
OPAL TRAINING 78
As part of its mandate to promote standards and best business practices among member companies, OPAL has unveiled a suite of training programmes specifically designed for human resources practitioners
Nurturing HR Best Practice
OPAL Human Resource Training Programmes:
OPAL Human Resource Foundation Programme
OPAL Human Resource Certificate Programme Practitioner Level (HCRP Level 1)
Overview Operational and transactional HR Follow a structured programme covering all 6 HR modules from inception to separation i.e. the entire employee life cycle.
Aim Enhance HR professionalism by raising and developing credibility and confidence in delivering. HR services to line managers and employees.
Objectives
• Enhance HR competence awareness level in all HR domains.• Learn and apply HR best practices in all the 6 modules.• Generate self-confidence in business partnership with the line.• Complete the programme successfully and attain OPAL HRCP Level 1 Certification.• Provide HRCP feedback to HR Leadership Team.
Modules
1. Resourcing Management2. Performance Management3. Learning and Development4. Total Rewards Management5. Employee and Industrial Relations6. Organisation Design
Audience• Fresh graduates upon entry to HR career.• Existing HR practitioners wishing to progress and develop higher up the ladder.• Candidates who successfully completed Foundation Level.
Prerequisite• Should have successfully completed Foundation level by passing final examination, for individual with no experience in HR field and with good level of English.
Programme fees 550/RO
Programme duration 5 days
Overview Establish academic foundation required for pursuing OPAL Human Resource Certification Programme (HRCP).
Aim Prepare and develop candidates capacity to cope with OPAL Human Resource Certification Programme Practitioner Level (HRCP Level 1).
Objectives
• Learn HR vocabulary and expressions used in delivering HR services.• Apply active verbs in the formation of statements.• Report situations using acceptable business communication style.• Appreciate officialize language.• Attain the pre requisite for HRCP Level 1.
Training methodology • Lesson and coaching methodology.
Audience Employees who wish and are being developed to pursue HR career. This will include admin support staff e.g. receptionists and secretaries and admin assistants, public relation officers clerks etc.
Prerequisite • Must demonstrate customer service orientation and passion for people.• With good level of English.
Programme fees 550/RO
Programme duration 5 days
February 201679
OPAL Human Resource Certificate Programme Practitioner Level (HCRP Level 2)
Health, Safety and Environment Certification Programme (HSECP)
Overview Strategic HR and HR strategy covering high level intervention in adding value to all stakeholders.This covers HR Trends, Employee Engagement developing HR Business cases for business sustainability.
Aim Raise the bar of HR professionalism by making optimal contribution to the development and execution of business strategy.
Objectives
• Enhance HR competence Knowledge level in all HR domains.• Deliver advanced professional presentations.• Participate in developing a concept and follow it up to its implementation.• Follow GCC HR trends by networking with GCC Talents.• Create employee engagement culture.• Apply people analytics to present a business case to management team and beyond.• Attain HRCP successfully complete HRCP Level 1 with a high score of 75%.• HR practitioners who successfully completed HRCP level 1 with some relevant years of experience.• Existing HR professionals with more than five years of relevant experience level 2.
Modules
Highly interactive and candidates deliver presentations throughout the week. The participants work in groups on case studies and in the end are supposed to prepare a presentation to the management team on HR improvements within their own organizations thereby raising the bar of HR professionalism by adopting best practices.
Audience• Certified HRCP practitioners.• Existing HR Professionals wishing to update their skills level.• Line Managers.
Prerequisite • With five years of relevant HR experience, or 2 years after complitation of HRCP Level 1.
Programme fees 750/RO
Programme duration 5 days
Overview
The Health, Safety and Environment Competence Programme (HSECP) is about establishing professional integrity and encouraging Health, Safety and Environment development in Oman’s Oil & Gas (O&G) industry. OPAL’s vision is to have, in Oman, an acknowledged world class O&G industry which operates to the highest standards with no harm to people, environment or assets.
Aim The aim of the OPAL HSECP is to set a standard for Oman’s HSE Professionals recognized by industry which will allow them to competently deal with the increasing demands of all aspects of successful safety management.
Objectives The programme will encourage the development of core skills and knowledge of HSE Professionals in Oman expanding experience of safety techniques and safety management through competency-based training modules.
Modules
1. Occupational Health and Safety Management System & Regulations.2. Identifying Hazards (an extended module).3. Hazard Control System.4. Site Visit, Risk Assessment and Report4. OH&S Safety Procedures.5. Safety Audits / Inspections.6. Accident Prevention.7. Environmental Management.
Audience • All who desire a career in HSE in Oman or in the initial phase of their development in the field of HSE.• Participants are expected to have reasonable English language capabilities as the program will be in English.
Prerequisite
• Good level of English.• A pre-course written assessment must be taken at the OPAL offices, and passed, before being allowed on the course.• PPE for site visit – safety boots, full sleeve cotton overalls, safety goggles, safety helmet.
Programme fees 600/RO (OPAL memebers) 650/RO (Non-OPAL memebers)
Programme duration 2 weeks
OPAL 80
The Best Practice Awards recognise members who raise the bar on best practice in three principal categories: Human Resources, Technical & Operational Excellence, and Health-Safety- -Environment (HSE)
Outstanding initiatives exemplifying best practice in the Sultanate’s oil and gas industry vied for top honours at the awards.
OPAL Best Practice Awards recognise industry excellence
welve outstanding ini-tiatives exemplifying best practice in the Sultanate’s oil and gas
industry vied for top honours at an awards ceremony organised by Oman Society for Petroleum Services (OPAL) at Crowne Plaza Hotel Muscat last December.His Excellency Salim bin Nasser al Aufy, Under-Secretary of the
Ministry of Oil and Gas, was the Chief Guest at the Best Practice Awards 2015, which recognises members who raise the bar on best practice in three principal categories: Human Resources, Technical & Operational Excel-lence, and Health-Safety-Envi-ronment (HSE).In opening remarks, OPAL Chief Executive Officer Musallam al
Mandhry said the annual awards programme sought to encourage members – who make up the great majority of oilfield companies, contractors and service providers at the heart of Oman’s mainstay economic sector – to bring their operations into alignment with global best practice standards.In contention for the Best Prac-tice Award in the Health & Safe-
T
February 201681
Human Resources Technical HSE
ty category were the following three oilfield companies: (i) Galfar Engineering & Contract-ing - showcasing its Mechanised Water Sprinkler for Water Tank-ers which obviates the need for workers to hang on to the back of a moving tanker while spray-ing water; (ii) Seeh Al Sarya En-gineering LLC – highlighting its Forklift Sleeve Attachment Locking System, a novel safe-ty system which ensure that the sleeve will not accidentally slide off and cause harm to humans or property; and (iii) Al Ghalbi In-ternational Engineering & Con-tracting LLC – spotlighting its monthly competition in support of its In-Vehicle Monitoring Sys-tem (IVMS).Initiatives by five prominent companies competed for the Best Practice Award in Human Resources: (i) Petroleum De-velopment (PDO) – High-tech
interactive learning centre that help build wells capability to improve process safety in the Sultanate; (ii) RAY Skills Devel-opment (Developing world-class technical capabilities of Omanis through its training facilities in Halban and Ghala); (iii) Oman Cables Industry (Implementing e-Learning Training); (iv) Oman KCV Deutag Drilling Co (Glob-al Competence System); and (v) Value Engineering Centre (Hire, Develop & Deploy).Finally, the category for Tech-nical & Operational Excellence
attracted four entries: (i) Water Recycling Plant (Galfar Engi-neering & Contracting); (ii)Yibal Field water flood management (PDO); (iii) Safe & Efficient Driv-ing Scheme (Hamdan Trading Group); and (iv) Integrated Prob-lem Solving Solution (IBD Group of Companies.After brief presentations by each of the contestants, a jury panel went into a huddle to choose the winners. They were: (i) Al Ghal-bi International Engineering and Contracting LLC for Health & Safety (iii) PDO for Technical & Operational Excellence, and (iii) Value Engineering Centre LLC for Human Resources The glit-tering event, which also featured live demos of the initiatives in competition for the awards, con-cluded with the distribution of certificates to the winners.
DOWNSTREAM SECTOR 82
alalah Methanol Company LLC (SMC) owns and oper-ates the methanol production facility in the Salalah Free Zone located near the Port of Salalah. The company is jointly owned by Oman Oil Company SAOC and Takam-ul Investment Company with 90 per cent and 10 per cent
stakes respectively.Oman Oil Company is a commercial company wholly owned by the Government of Oman, which was incorporated specifically to pursue investment opportunities in the energy sector both inside and outside Oman. As such, OOC plays an important role in helping diversify the Omani economy and to promote Omani and foreign private sector investment.The plant has been designed as per the latest specification and world-class standards meeting all environmental requirements. The objective of Design Safety is to ensure that the Health and Safety aspects of the design with regard to personnel, property and the environment are maintained at the relevant acceptable levels.
Aim to transformOne of the main aims of the methanol project is to transform the raw materials (natural gas) into a high-value product (methanol) which can be used in many basic industries. The natural gas is supplied to the facility through a 24-inch pipeline provided by the Ministry of Oil and Gas through Oman Gas Company.
Since its launch, SMC has continued to impress with its performance. A Methanol Plant Benchmarking Study carried out by Johnson Matthey/ABB for 17 plants places SMC in the top five globally. It has also been recognized as the best company amongst Oman Oil subsidiaries based on performance
A flagship model of excellence
❱❱ Awadh Al Shanfari, Managing Director
of Salalah Methanol Company
S
February 201683
The company contributions to val-ue-addition through the sale, mar-keting, transportation and use of natural resources, in addition to
creating job opportunities for spe-cialized Omani nationals who are trained by the company in the tech-nologies used in these industries.
Omanisation currently stands at over 64 per cent. To date, the company has been in-volved in several corporate social responsibility programmes, as it continues to work closely with the local community, government in-stitutions and non-governmental organizations. The company has funded more than 100 corporate so-cial responsibility (CSR) initiatives from 2012-2015. SMC considers CSR as a value and principle driven by Oman Oil Company, the owner, and such values are integrated into the company’s business process-es which reflect in its employees’ working culture. It is a culture with-in SMC that goes beyond business integration to cover economic, envi-ronmental, and social aspects. SMC was recognized as a pioneer in CSR initiatives in December 2014 at the 6th Gulf CSR event held in Kuwait.The company markets its prod-ucts in a number of world markets through Oman Trading Interna-tional (OTI), which ships methanol products on board two carriers (Al Muttrah and Al Amerat) owned by Oman Shipping Company. Construction at a total cost of $900 million, the facility’s commercial production started in May 2010. By November 2015, less than six years after start-up, SMC had achieved six million tons of methanol pro-duction. This is a world-class per-formance for a new plant. In the first year itself in 2010, plant capac-ity utilisation was at around 100 per cent.On average the facility has the abil-ity to produce 3000 tons a day of methanol. Alongside the plant it-self, the site consists of related util-ities, off-sites, and export facilities. The company also maintains wa-ter desalination, boiler feedwater preparation, auxiliary steam gener-ation, condensate/water treatment facilities, instrument air/plant air and nitrogen generators, and efflu-ent and sewage treatment plants.
Impressive performanceSince its launch, SMC has con-tinued to impress with its per-
ON AVERAGE THE FACILITY HAS THE ABILITY TO PRODUCE
A DAY OF METHANOL3000 TONS
One of the main aims of the methanol project is to transform the raw materials (natural gas) into a high-value product (methanol) which can be used in many basic industries.
Shut
tersto
ck
DOWNSTREAM SECTOR 84
formance. A Methanol Plant Benchmarking Study carried out by Johnson Matthey/ABB for 17 plants places SMC in the top five globally. It has also been recognized as the best company amongst Oman Oil subsidiaries based on performance. Our lend-ers and competitors have also recognized our efforts for project management and on achieving different production milestones.Health and safety for all employ-ees and contractors at the plant site is the highest priority for SMC. It has achieved an outstand-ing run of 3 million man-hours without lost time injury (LTI) as
of October 2015. The company has been recognized internationally for its safety and environments efforts: Global Green Award 2014 received at the Green Economy Forum held in Berlin-Germany, USA International Safety Asso-ciation on reaching one and two million man-hours without Loss time Injuries. During the con-struction phase, SMC achieved around 16 million man-hours without an LTI.
Environmental careFrom an environmental per-spective, even during the design stage, SMC invested heavily in
measures to minimize the impact of its activities on environment. This includes an effluent treat-ment plant (ETP), ambient air quality monitoring station and a fully equipped state of the art on-site laboratory for regular envi-ronmental checks. All the treated process water in the ETP is used in green belt development with the complex.During the last couple of years, SMC has implemented various improvement programmes in-cluding Operational Excellence, Corporate Risk Management, Enterprise Performance Man-agement Systems (EPMS), Lab Integrated Managements System (LIMS) and Integrated Manage-ment Systems to improve pro-cesses and enhance the perfor-mance even further.These initial years certainly seem to have put SMC well on the way to achieving its vision of being globally recognized as the Omani flagship model of excellence in the hydrocarbon industry, with sustainable growth and best re-turns for all stakeholders.
DURING THE LAST COUPLE OF YEARS, SMC HAS
IMPLEMENTED VARIOUS IMPROVEMENT PROGRAMMES
INCLUDING OPERATIONAL EXCELLENCE, CORPORATE
RISK MANAGEMENT, ENTERPRISE PERFORMANCE
MANAGEMENT SYSTEMS (EPMS), LAB INTEGRATED
MANAGEMENTS SYSTEM (LIMS) AND INTEGRATED
MANAGEMENT SYSTEMS
From an environmental perspective, even during the design stage, SMC invested heavily in measures to minimize the impact of its activities on environment.
Imag
es ar
e pro
perty
of Sa
lalah
Meth
anol
Comp
any
February 201685
Schlumberger is the leading provider of oilfield services today, focusing on innovative technologies for reservoir characterization, drilling, and production
Bringing value to Omani customers
chlumberger is the world’s leading suppli-er of technology, inte-grated project manage-ment and information
solutions to customers working in the oil and gas industry world-wide. It operates in the most diffi-cult areas, whether politically, lo-gistically, or technologically, and it is a world leader in the technol-ogies required to get fossil fuels out of the ground – with 36,000 patented ways to help its clients do just that.
In the Sultanate of Oman, the company started its operations in 1955, and over the past 60 years Schlumberger has grown with the oil and gas industry. Today the company has its presence at multiple locations and offers most of the business lines.The development and growth of Schlumberger as a company has, in many ways, paralleled the de-velopment and growth of Oman as a nation. Both have achieved success based on hard work, dil-igence and determination.
High quality products and servicesThe Schlumberger strategy has always been to bring value to its Omani customers by offering the latest state-of-the-art technologies. These high-quality products and services have been delivered in a safe and environmentally friendly way by a committed and motivated work force. For example, Schlumberger to-gether with its Omani customers has successfully introduced sever-al new Wireline resistivity tools as
Schlumberger facilities in Nizwa
S
OILFIELD SERVICES 86
them to perform to world stan-dards”, he informs.
Focus on inovationSchlumberger is the leading pro-vider of oilfield services today, fo-cusing on innovative technologies for reservoir characterization, drilling, and production. “We are also a leading employer in our sector—with a reputation for hiring the best and the bright-est people and keeping them at the top of their game through re-warding career-long development opportunities”, says Al Hadhrami.The upgrading of technical skills in the oil and gas sector is a key part of our strategy to empower Omanis to be active participants in the Sultanate’s economy. “Enriching industrial skills and knowledge transfer of technology, in particular, will go a long way in enabling Omanis and the country to be regionally, as well as, globally competitive,” he says.“We intend to continue our jour-ney in Oman and maintain an uninterrupted presence. We will do this with an attitude that em-bracing the local communities and businesses not only increase in-country value but also make good business sense for Schlum-berger. This combination is the best way to ensure sustainable growth for all parties involved, says Al Hadhrami.
the first commercial application worldwide.The first Schlumberger wireline log in the Dhofar Concession, as it was then called, was run in De-cember 1955 in Dauka-1. In April of the following year Schlumberg-er ran the first log in the Oman Concession in Fahud-1.Schlumberger’s operational bases in Oman today provide a comprehen-sive range of services and products with a diligent workforce of which 80 per cent are Omani nationals.
“The development and growth of Schlumberger as a company has, in many ways, paralleled the development and growth of Oman as a nation. Both have achieved success based on hard work, diligence and determina-tion,” says Mohsin al Hadhrami, Vice-president & General Man-ager.“During the coming years we will continue to invest in our em-ployees, providing opportunities to Omani graduates and training
THE UPGRADING OF TECHNICAL SKILLS IN THE OIL
AND GAS SECTOR IS A KEY PART OF OUR STRATEGY
TO EMPOWER OMANIS TO BE ACTIVE PARTICIPANTS
IN THE SULTANATE’S ECONOMY
The development and growth of Schlumberger as a company has, in many ways, paralleled the development and growth of Oman as a nation.
February 201687
Adding Oman to global footprintHaving clinched deals worth over $100 million in the supply of drilling rigs to the Omani oilfield industry, Petro Kerui LLC – a wholly owned subsidiary of Chinese oilfield industrial services giant Kerui Petroleum – has made a robust start to its operations in the Sultanate
Petro Kerui LLC:
88OILFIELD SERVICES
mid the harsh condi-tions of Fahud, Nimr and Marmul, a fleet of six drilling rigs pay testimony to the for-
midable technological capabilities of a company that has ambitions to make significant inroads into Oman’s upstream hydrocarbons in-dustry. Described as hardy desert work-horses by their crew, the machines have been manufactured and sup-plied by Petro Kerui LLC, part of Kerui Group – an internationally renowned provider of integrated industrial oilfield solutions head-quartered in Dongying City in Chi-na. Designed and built to suit the extreme climatic, as well as the challenging geological conditions that characterise most of the oilfield regions of the Sultanate, the perfor-mance of the rigs bear witness to Kerui’s commitment to quality and dependability. In all, six drilling rigs manufactured by Kerui are currently in operation in the Sultanate, according to Mr. Bray Hao, General Manager, Petro
Kerui LLC. The fleet is owned by well-known Omani drilling con-tractor Dalma Energy, which pro-cured the rigs from Kerui in a deal worth over $100 million. They in-clude a 2,000hp machine supplied in February 2014, while the rest are 1,000hp systems installed and de-ployed in August this year. So why would a local drilling con-tractor opt for Chinese-made drill-ing rigs in a market dominated by leading Western brands? Mr. Hao explains: “Kerui is in fact an inter-national brand owned by the largest private oilfield products and ser-vices provider in China with busi-ness operations in over 50 countries around the globe. In the Arabian Gulf alone, we have around 40 drill-ing rigs currently in operation, and the number keeps growing. So the Kerui brand has being rapidly em-braced not only in this region, but across the world.”
Value propositionAdding to the value proposition associated with the brand are the attractive financing options, says Mr. Hao. “In marketing our drilling rigs, as indeed our other products, we offer not only custom-designed hardware solutions, but easy fi-nance as well. Customers are re-quired to come up with as little as 15 per cent of the equipment cost upfront, while the remainder is fi-nanced by Chinese state lenders against convenient long-term loan arrangements. This combination of guaranteed performance and easy finance is one of our strengths.”After-sales support is an integral part of Kerui’s commitment to customers. Citing the example of Dalma Energy’s order for six drill-ing rigs, the General Manager said: “Kerui despatched a contingent of 30 technicians to support the de-livery and installation of the rigs at site – an exercise that was com-pleted in under four weeks in a re-cord of sorts for this type of tasks. Installation and commissioning was also undertaken at the peak of summer. And to assure our client of our steadfast technical support, we have deputed a pair of Kerui engi-
neers for each rig at our cost. They will be available 24x7 to assist in tackling any contingencies involv-ing the smooth operation of the rig.”Yet another factor that adds to the appeal of Kerui’s drilling rigs is their ability to the rapidly moved and redeployed – a feature that con-tributes to the bottom line of cus-tomers, according to the executive. “Mobility is a key consideration for oil companies like Petroleum De-velopment Oman (PDO), and so on, when choosing drilling contractors. Hence, the preference for Kerui rigs, which offer excellent mobility for redeployment.”A new entrant to the Omani oilfield services industry, Kerui received a license to set up a local firm only last year. Petro Kerui LLC operates from a spacious office in the Watta-yah area of Muscat from where it oversees an operation that Mr. Hao hopes will eventually encompass a diverse spread of activities. After all, Kerui Group’s capabilities span not only oilfield equipment manu-facturing, but also oilfield integra-tion engineering, EPC turnkey proj-ect execution, and R&D. The Group ranks among the largest equipment manufacturers, technical service providers, and project contractors in the field of oil and gas explora-tion and production in China.Mr. Hao also sees prospects for the marketing of Kerui-branded wellheads, gas compressors and other equipment manufactured by the Group’s massive facilities in Dongying City. Equally promis-ing, he says, is the potential for the introduction of Kerui’s specialist expertise in, among other areas, coiled tubing services, fracturing and nitrogen foaming.
Technical knowhowBut it is the Group’s unbeatable expertise in tertiary oil recovery that offers significant promise for business growth in the Sultanate, the General Manager points out. “Unlike PDO, which has embraced embraced Enhanced Oil Recovery (EOR) only of late, China has been using tertiary recovery methods for a long time. Kerui has refined some
❱❱ Mr. Bray Hao, General Manager,
Petro Kerui LLC
A
February 201689
of these technologies to make it suitable for deployment in Oman. Our nitrogen foam technology, for example, can be a cost-effective alternative to polymer-based EOR currently applied in Oman. We have successfully used this tech-nology to boost hydrocarbon out-put in Iraq by 40 per cent.”Petro Kerui envisions a gradual and long-term strategy in make inroads into the lucrative EOR sector in Oman. “We want to work with oil companies in Oman, as well as with the Ministry of Oil and Gas, to initially acquaint them with the benefits associated with Kerui’s expertise in EOR. We aim to also achieve this by collabo-rating with PDO’s EOR centre, as
well as with researchers at Sultan Qaboos University.”Having already established an op-erational presence in the Sultan-ate, Kerui now plans to invest in suitable facilities to support its lo-cal clientele. In the works is a new warehouse currently under con-struction in Misfah in Muscat Gov-ernorate. Offering a combination of covered and open yard space, the facility will be equipped to offer mi-nor maintenance services, as well as storage for spares.But in a signal of its long-term com-mitment to Oman, Petro Kerui is weighing the feasibility of setting up a major maintenance facility in Oman that will serve its customers across the wider Gulf and MENA region. The company is currently in discussion with a local Omani firm to explore the potential for a joint venture partnership in this regard – part of Kerui’s support for In-Country Value (ICV) develop-ment, says Mr. Hao.“We are serious about ICV, which was evident when top officials from Kerui visited Oman last year to explore avenues for establishing a full-fledged workshop in Oman.
With the growth of the rig business in the Sultanate, we see significant potential for maintenance facilities, and even the manufacture of small spare parts. A workshop in Muscat will also serve as a maintenance hub for our clients in countries as far afield as Iran, Iraq and Saudi Arabia. The investment will obvi-ate the need for parts to be shipped all the way to China for repairs and maintenance – a move that will also bode well for the growth of our re-gional business.”Sohar, with its expansive free zone, as well as Nizwa, which hosts a large industrial park, are seen as potential venues for the proposed workshop, the general manager adds.From its headquarters in Dongy-ing City, which adjoins the mas-sive Shengli oilfield – China’s sec-ond largest field – Kerui Group oversees a global enterprise span-ning 57 countries and regions of the world, including the Amer-icas, Middle East, Asia Pacific, Africa and Europe. The Group’s 8,000-strong workforce includes around 2,000 engineers and 800 after-sales specialists.
Kerui despatched a contingent of 30 technicians to support the delivery and installation of the rigs at site – an exercise that was completed in under four weeks in a record of sorts for this type of tasks.
INDUSTRY EXCELLENCE 90
Stepping up to the plate with pride
Ray International LLC:
The ‘Made in Oman’ units are a testament to the ingenuity latent in one of Oman’s most energetic and well-diversified oil and gas service providers, RAY International LLC
February 201691
t a time when the in-dustry is hunkering down in the face of a punishing downturn, Rukun Al Yaqeen
(RAY) International has succeeded in leveraging the prodigious tech-nical skills of its local Omani staff in designing and manufacturing a unique set of wireline units.In-Country Value (ICV) in every sense of the term, the state-of-the-art units were proudly unveiled at a ceremony held at the premises of the Ministry of Oil and Gas on December 22, 2015. In attendance were His Excellency Dr Moham-med bin Hamed al Rumhi, Minister of Oil and Gas, and His Excellen-cy Salim bin Nasser al Aufi, Un-der-Secretary of the Ministry of Oil and Gas, as well as the CEOs and
Managing Directors of oil compa-nies, contractors and service pro-viders.The ‘Made in Oman’ units are a tes-tament to the ingenuity latent in one of Oman’s most energetic and well-diversified oil and gas service providers, RAY International LLC. Founders Dr Tahir al Kindi, Chair-man, and Tameem al Mahrouqi, Managing Director, credited the in-novations to the company’s young Omani employees who were driven by a desire to come up with an inte-grated solution for multiple work-over problems. Two types of wireline products were showcased on this proud De-cember day. The first, branded as the Hormuz series, are 180-degree rotating units geared with dual drums and designed for combined E-line and slick line operations. Multitaskers in their own right, the units are equipped with advanced data acquisition technology and the latest operation control systems. Taking centre-stage however was the Hormuz-45, a new conceptual well services product customized for the Oman oil and gas market. It has been designed to provide inte-grated workover solutions by de-livering E-Line logging, slick line
operations, integrity testing, crane lifting and continues rod running services all in one unit, according to Majid al Shandoudi, General Man-ager – RAY International Oil & Gas. As a creative solution that offers both timewise and cost-wise effi-ciency, the units are being pitched as timely given the current chal-lenging oil & gas market environ-ment.Distinguishing features of the wire-line units as follows: 180-degree unit cabin rotational movement feature; Automated speed control; Automated cable slack and ten-sion control; Wellhead / flow line pressure recording; Real-time data transmission and Remote data ac-cess through internet; Well com-pletion schematics embedded in the system during operation; and Compatibility with other acquisi-tion system brands to meet custom-er preferences.
Laudable featFor RAY International LLC, the wireline units represent anoth-er feather in the cap of a wholly Omani company that has been held up as an unrivalled success story in Oman’s oil and gas sector. Launching operations in 2005 as a
A
RAY Ecologic helps clients conform to environmental safety standards and the management of industrial wastes and effluents, among other pollution related challenges.
INDUSTRY EXCELLENCE 92
training services startup with only five employees, RAY Internation-al has evolved over the ensuing 10 years to become a well-diversified business corporation with inter-ests spanning Technology, Design & Environmental Engineering, Construction, Services, Manufac-turing, Trading, Training and Lo-gistics.With over 2,000 employees on its rolls, RAY International LLC is also one of the largest private sec-tor firms in the Sultanate. And as it grows its regional and internation-al presence, the size of its overseas workforce continues to burgeon as well. Branches are currently in op-eration in the GCC and Thailand. Plans are afoot to open new over-seas offices in other countries as well. From the outset, RAY Interna-tional’s growth has been dictated by an underlying philosophy that champions, among other things, employment generation for Omani nationals, In-Country-Value (ICV) generation, import substitution, and the utilisation of locally avail-
able resources. All of these objec-tives form the essential bedrock upon which the LLC’s subsidiaries and joint venture partnerships have been established over the past de-cade-and-a-half. To date, there are six core business verticals that form part of the RAY’s expanding portfolio. They are as follows:
RAY International LLCPopularly referred to as RAY Ener-gy, this division forms the flagship of the Group with activities span-ning various engineering disci-plines, construction, and services. The subsidiary also distributes a
wide array of high-tech engineer-ing products and services targeting at the utility, infrastructure, and oil and gas segments of the economy. RAY International Oil and GasFocused exclusively on the oil and gas industry, this subsidiary special-ises in operating workover rigs, and providing wireline as well as a wide range of well services to oil and gas
companies. A well-motivated and innovation-minded team of profes-sionals helps clients unlock the full potential of their energy resources. RAY International Skills and De-velopmentDelivering on its remit to prepare
RAY INTERNATIONAL’S GROWTH HAS BEEN DICTATED BY
AN UNDERLYING PHILOSOPHY THAT CHAMPIONS,
AMONG OTHER THINGS, EMPLOYMENT GENERATION
FOR OMANI NATIONALS, IN-COUNTRY-VALUE (ICV)
GENERATION, IMPORT SUBSTITUTION, AND THE
UTILISATION OF LOCALLY AVAILABLE RESOURCES
February 201693
management solutions have been well-received by the industry.RAY Seven Points InternationalThe trading, logistics and main-tenance arm of the group, Seven Points International caters to the requirements of not only RAY sub-sidiaries but also clients across the industry. The division operates a fully furnished workshop that is equipped to undertake engineering support services for heavy equip-ment, body shop repairs, and vehi-cle modification to meet Oil & Gas industrial specs. RAY AutomotiveLaunched in 2014, this relatively new outfit is the authorised deal-er in the Sultanate for the King Long brand luxury and semi luxu-ry coaches, and other automotive products.Europoles Middle EastA joint venture between RAY and Europoles GmbH of Germany, Eu-ropoles Middle East operates an in-dustrial facility in Nizwa Industrial Estate where spun concrete poles are manufactured for the Oil and Gas, infrastructure and utility sec-tors. Jobson Middle EastMarine services, repair & main-tenance, spare parts supplier for yachts, commercial ships, defense, etc.Terratech International – Poly-mer stabilization chemistry:Bonds soil particles and aggregates together, polymer evaporates and forms a film in the soil matrix. The resultant matrix is hard and wear resistant, develops cohesion be-tween large and small particles, and durable and wear resistant, easy to install using standard construction methods, long lasting with low cost maintenance, creates a durable hy-drophobic wear layer which is de-
signed to bio degrade unless main-tained.Commitment to excellenceGiven the scope and scale of its op-erations, RAY International over-sees an expanding network of sup-port infrastructure and facilities established at key locations around the Sultanate. In Ghala in the cap-ital region, the company operates a roughly 1,000 sq metre site that serves as a warehouse for the stor-age and forwarding of a variety of energy and oilfield related equip-ment. Also in Ghala, the company operates an API certified lab that is specifically designed to test insu-lating fluid used in transformers, as well as industrial oils used in gear-boxes, pumps, hydraulic, motors and turbine systems. Additionally, a strategically located yard at Adam doubles as a stopover point for staff en route to oil and gas fields located further south. A base camp suitably equipped with all amenities and services houses a number of RAY staff. Elsewhere in central Oman, a 20,000 sq metre facility at Mukhaizna is equipped for workover rig, wireline and ve-hicle repair. A 300-member camp located on the premises has won a number of awards from Occidental of Oman for its high standards.As one of Oman’s most acclaimed private sector corporations, RAY International LLC has amassed an array of international, regional and national awards in recent years. The most prestigious is His Majes-ty’s Factory Cup, a hugely coveted award that goes to the top five in-dustrial firms in the Sultanate. Eu-ropoles Middle East, a joint venture partnership, won the honour for three consecutive years during 2011 – 2013.Earlier, in 2011, RAY Internation-al LLC scooped the highly sought after ‘Asia’s Best Employer Brand Award’ for the Asian region. A year later in 2012, the Group was rec-ognised for its commitment to qual-ity and excellent at the 14th Inter-national Quality Convention held at Geneva, Switzerland.
young Omanis for rewarding ca-reers in the oil and gas industry, this division is central to RAY’s goal of supporting local employ-ment and ICV generation. It oper-ates a one-of-a-kind training com-plex at Halban which is equipped to train nationals in a variety of skills linked to oil and gas opera-tions. Of late, the facility has been in the news for its success in the training of Omanis as 6G welders. RAY Ecologic ServicesA specialist in environmental solu-tions, RAY Ecologic helps clients conform to environmental safety standards and the management of industrial wastes and effluents, among other pollution related chal-lenges. The company’s total waste
RAY International Skills and Development is central to RAY’s goal of supporting local employment and ICV generation.
OPAL FRATERNITY 94
335 members and counting!
OPAL’s growing family:
1 Ali Al-Aufy Trading Company LLC
2 Abraj Energy Services LLC
3 Advanced United Technical Services LLC
4 Advanced Oilfield Technology Co. LLC
5 AIB Vincotte International & Partners LLC
6 ANWAAR FAHUD TRADING CO
7 A’ Sharqiya Energy Service LLC
8 AIRMECH OMAN LLC
9 Ajib Trading LLC
10 Schlumberger Oman & CO. LLC
11 Al Amjad Trading Company (TRACERCO)
12 Al Athnain Co. LLC
13 Al EZ Trading,Transport & Contracting Co. LLC
14 Al Ghalbi International Engineering & Contracting LLC
15 Al Hajiry Trading LLC
16 Al Harsoosy Trading& Cont.Co
17 Al Hassan Engineering Co. SAOG
18 Al Katheery Trading & Cont EST
19 Al Khalij Heavy Equipment & Engineering LLC
20 Al Khatma Transport & Trading Co.
21 Al Madina Logistics Services
22 Al Maha Petroleum Products Marketing Co. SAOG
Be a proud member of the OPAL fraternity! If you are vendor of products and services catering to the oil and gas sector, join OPAL and benefit from the Society’s expertise and reach to achieve your strategic and business growth objectives. Register now!
23 Al Naba Supplies & Catering Services LLC
24 AL Ramooz National LLC
25 Al Romal Golden Petroleum Services LLC
26 Al Safa Environmental & Technical Services LLC
27 Al Saj Al Abiyad Trading & CONT CO
28 Al Sumri Trad. & Cont. Est.
29 Al Tasnim Enterprises LLC
30 Al Turki Enterprises LLC
31 Al Watanyiah Oil & Gas LLC
32 Al Watanyiah United Engineering & Contracting Co.
33 Akzo Nobel Oman SAOC
34 AMAL PETROLEUM SERVISES CO
35 Amlaak Asharqyya LLC
36 Amran Establishment LLC
37 Arab Sand OasisTrad.&Cont.Est.
38 Arab Sea Line Trading & Contracting
39 Arabian Drilling Services LLC
40 Arabian Industries Manufacturing LLC
41 Arabian Industries Projects LLC
42 Arabian Industries Technical Support LLC
43 Arabian Training & Safety Co.
44 Arabian Training Center LLC
45 Ardiseis -Oman Branch
46 Asali Oil & Gas Services
47 Asha Enterprises LLC
48 Axis Engineering
49 Ba Omar Oil Field Services Co.
50 S.J Abed & AL Sulaimi Catering Group LLC
51 Bahwan Engineering Co. LLC
52 Bahwan Exel LLC
53 Bahwan IT LLC
54 Bahwan Lamnalco SAOC
55 Bahwan Logistics LLC
56 Bahwan Projects & Telecom LLC
57 Baker Hughes LLC
58 Bauer Nimr LLC
59 Benon Oil Services LLC
60 Best Oil & Gas Solution LLC
61 BGP Oil & Gas Services LLC
62 Bin Muqadam Engineering LLC
63 Bishara Establishment L.L.C
64 BP Exploration (Epsilon) LTD. Oman Branch
65 Bureau Veritas Middle East Co. LLC
66 Cactus Premier Drilling Services
Company Name Company Name Company Name
February 201695
67 Cadres Oil Tools And Services
68 Challenges Oilfield Services LLC
69 Cape East & Partners LLC
70 Carillion Alawi LLC
71 Catering & Supplies Co. LLC
72 CC Energy Development S.A.L (Oman)
73 CEVA Logistics LLC
74 Citrine Trading & Services LLC
75 CGG Services (Oman)
76 Compass Oil Services L.L.C
77 Consolidated Contractors Co. Oman L.L.C
78 Dar Al Ataa Trading & Services
79 Dar AL Sahra Energy Services
80 Dawood Contracting LLC
81 Dawood Engineering Consultancy
82 Delta International Projects & Engineering LLC
83 Desert Byrne Drilling L.L.C
84 Desert Shield Co LLC
85 Dekra Oman LLC
86 DODSAL Engineering & Construction LLC
87 Douglas OHI LLC
88 Dover Middle East LLC
89 Draieh Catering & Services LLC
90 Drake&Scull International
91 Electroman L.L.C
92 Enerflex Middle East LLC
93 Exceed IT Services
94 Exova Limited LLC
95 Exterran Middle East LLC
96 Fahud Desert Trading Co. LLC.
97 Fairdeal Trade & Contg. Est. LLC
98 Falcon Oilfield Services LLC
99 Fast Track Services
100 Fire & Safety Equipment Trading Co. LLC
101 First Filter LLC
102 Fishing Remedial Expert
103 FOS Energy LLC
104 Fugro Middle East & Partners LLC
105 Galfar Engineering & Contracting SAOG
106 Gemini Energy LLC
107 General Electric International LLC
108 Geo Chem Middle East LLC
109 GeoMax Energy Systems LLC
110 Geo-Resources Consultancy
111 Germanischer Lloyd Muscat LLC
112 Glass Point Solar Muscat LLC
113 Global Computer Services LLC
114 Global Industrial Services LLC
115 Global Institute for Management & Technology LLC
116 Golden Global Logistics LLC
117 Great Wall Drilling Co.
118 Gulf Agency Company (Oman) LLC
119 Gulf Beijing Hengju LLC
120 Gulf Business Machines Co. LLC
121 Gulf Construction Co. LLC
122 Gulf Drilling LLC
123 Gulf Energy LLC
124 Gulf Petrochemical Services & Trd. LLC
125 Gulf Polymer Technology LLC
126 Haimo Technologies & Co. LLC
127 Hal Services LLC
128 Halliburton
129 Hasan Juma Backer Trading & Contracting Co.LLC
130 Hema Oil and Gas LLC
131 Hatat Polyclinic LLC
132 Heavy Equipment Maintenance & Trading L.L.C
133 Hitech Inspection Services LLC
134 Hofincons & Company LLC
135 Ibhar Integrated LLC
136 IMTAC LLC
137 Indian Oiltanking Engineering & Construction Services LLC
138 Industrial X-Ray & Allied Radiographers LLC
139 Inma Technologies LLC
140 Intaj LLC
141 Integrated Petroleum Services Company LLC
142 Intelligent Drilling Services LLC
143 Intergrated Drilling Fluids Solutions LLC
144 International Business Development Co. LLC (IBD)
145 International Desalination & Water Treatment LLC
146 International College of Engineering & Management
147 International Drilling Services LLC
148 Insight for Financial & Busines Consulting LLC
149 International Information Technology Co.LLC
150 ION Exchange & Company LLC
151 Jahanpars International LLC
152 Jalmood National
153 Joannou & Paraskevaides Oman L.L.C
154 Khatib & Alami and Partners
155 Knowledge Grid LLC
156 KPMG
157 Lamor Middle East LLC
158 Larsen & Toubro (Oman) LLC
159 Larsen & Toubro Limited Hydrocarbon ( Oman Branch)
160 Lin Scan Nationl Pipe Line Services LLC
161 Legend Worldwide LLC.
162 Loay International LLC
163 Maskn Construction & Development LLC
164 Majan Shipping & Transport Co.LLC
165 Majees Technical Services LLC
166 Manadher Al Sahra Trading LLC
167 Maqshan Oil & Gas Services SAOC
Company Name Company Name
Company Name
OPAL FRATERNITY 96
168 Marine Technology Co. LLC
169 Marmul Falcon Trad & Co LLC
170 MB Petroleum Services L.L.C
171 Medco LLC
172 Middle East Bridge LLC
173 MHD Training isstitute LLC
174 Middle East Consulting & Engineering LLC
175 Mideast Data Systems LLC
176 Midwest Oilfield Services LLC
177 Modern Arab Laboratories LLC
178 Modern Salt Industries & Trading Co. LLC
179 Mohsin Haider Darwish LLC
180 Mott MacDonald & Co. LLC
181 Mud Industries LLC
182 Mustafa Sultan Security and Communication Co LLC
183 Nadhira Enterprises LLC
184 Naseem Al Salam Trad& Cont Est
185 National Automotive Higher Institute
186 National Drilling & Services Co. LLC
187 National Hospitality Institute SAOG
188 National Oilfield Supply Co. LLC
189 National Oilwell VARCO Muscat LLC
190 National Petroleum Construction Co.
191 National Training Institute LLC
192 Nimr Contracting Company LLC
193 Norris Production Solutions Middle East LLC
194 Oasis Trading & Equipment Co. LLC
195 Occupational Training Institute
196 OFSAT Limited Company LLC
197 OHI Petroleum & Energy Services LLC
198 OHI Telecommunication Co.LLC
199 OHL Industrial and Partners LLC
200 Oilfield Inspection Services LLC
201 Oman KCA Deutag Drilling Company
202 Oman Air (Oman Aviation Services Co.) (SAOG)
203 Oman Drilling Systems LLC
204 Oman Fiber Optic Co. A.O.G
205 Oman Gas Company S. A. O. C.
206 Oman Gulf Company LLC
207 Oman Industrial Coating Centre LLC
208 Oman International Group (OIG) LLC
209 Oman Mechanical Services Company Ltd. LLC
210 Oman Metal Industries & Contracting Co. L.L.C
211 Oman National Engineering & Investment Co.(SAOG)
212 Oman Oil Company Exploration & Production LLC
213 Oman Oil Marketing Co.
214 Oman Oil Industry Supplies & Services Co. LLC
215 Oman Pumps Mfg.& Engineering Services Co.SAOC
216 Oman Sea PetroServices LLC OSPS
217 Oman TradaNet LLC -OTN
218 Operation Excellence L.L.C
219 Orbital Projects & Services LLC
220 Oryx Oil & Gas Services LLC
221 Overseas Projects & Equipment Co. LLC
222 Overseas Technical Inspection Services LLC
223 Parsons International & Co.LLC
224 Pentagon Oman LLC
225 Petrofac E & C Oman LLC
226 Petrogas Rima LLC
227 Petro Kerui LLC
228 Petroleum Polymer Co. L.L.C
229 Petron Gulf LLC
230 Petrospec Engineering LLC
231 PIH Services ME LLC
232 Pioneers Petroleum Services
233 Powertech Engineering LLC
234 Prime Teknica LLC
235 Process Instruments LLC
236 Proscape LLC
237 PSA marine Qalhat SAOC
238 Qalhat Real Estate Investment &Services LLC
239 Qarn Muscat LLC
240 Ras Al-Hamra LLC
241 Reem Scientific and Energy Technology and Trade LLC
242 Rees Oil & Gas Services LLC
243 Riyam Engineering & Services LLC
244 Rukun Al Yaqeen International Oil & Gas LLC
245 Rukun AL Yaqeen Skills Development
246 Ryboa Haima Trading Co.LLC
247 Bahwan Cybertek LLC
248 Saeed Bin Masoud International
249 Sahil Martoub Trading LLC
250 Saih Al Rawl Gas Co. LLC
251 Samara United
252 Sanaa Desert Trading LLC.
253 Sarooj Construction Company
254 Saud Bahwan Automotive LLC
255 Schenker Khimjis LLC
256 Scomi Oiltools Oman LLC
257 Sea and Land Drilling Contractors Inc.
258 Seeh Al-Sarya Engineering LCC
259 Seven Points International LLC
260 SGS Gulf Limited
Company Name Company Name
Company Name
February 201697
261 Seven Seas Petroleum LLC
262 Shaher United Trading & Cont. Co.
263 Shaleem International LLC
264 Shaleem Petroleum Co. SAOC
265 Sheida International Co. LLC
266 Shell Oman Marketing SAOG
267 Shuram Oil & Gas
268 Sievert Technical Inspection LLC
269 Sinogulf Energy Enterprises LLC
270 Smith International Oman LLC
271 Waleed Catering & Services Company
279 Steamtech & Co. LLC
280 STEP Oiltools Services LLC
281 Sultan Bin Sood Bin Ahmed AL Shidhany
282 Svitzer Sohar LLC
283 Tamkeen Fracking LLC
284 Tarban Trad.& Services LLC
285 Target LLC
286 Tawoos Industrial Services Co. LLC
287 Technical & Administrative Training Institute
288 Technical Trading Co. LLC
289 The Oman Construction Co. LLC (TOCO)
297 TR Engineering LLC
298 Training & Development Institute (TDI) LLC
299 Travel City LLC
300 TRC Engineering LLC
301 Trowers & Hamlin
302 TruckOman North
303 TruckOman LLC
304 Tuboscope & Co. LLC
305 TUV SUD Middle East LLC
306 Unique Energy LLC
307 United Engineering Projects Co. LLC
308 United Facilities Managements Services LLC (COMO)
309 United Gulf Shadows LLC
310 United Media Services LLC
311 UNITED SYSTEMS
312 Unity Fire & Safety Services LLC
313 Value Engineering Center LLC
314 Vanguard Oil Tools Services LLC
315 Vanguard Reservoir Surveillance Services LLC
316 Vanguard System & Services International LLC
317 Velosi LLC
318 Vijay Tanks & Company LLC
319 Vision Advanced Petroleum Solutions LLC
320 Waleed Associates LLC
321 Weatherford Drilling International (Oman) LLC
322 Weatherford Oil Tool Middle East Ltd
323 Weir Solution FZE-Oman Branch
324 Well Maintenance Servies LLC
325 Well Solution Services LLC
326 Wipro Gulf LLC
327 Worley Parsons Oman Engineering LLC
328 Writer Relocations & Partners LLC
329 Zawawi Business Development LLC
330 Zubair Oil & Gas (ZOGAS)
331 Ali Al-Aufy Trading Company LLC ‘
332 Arabian Oil & Gas field Services LLC
333 Descan Engineering Oman LLC
334 Khazan Logistics LLC
335 Nafal Contg. & Tradg. Co. LLC
272 SNF Oman LLC
273 Socat LLC
274 Sohar Ashapura Chemicals LLC
275 Space-Tech Trading Est
276 Special Oilfield Services CO. LLC
277 Special Technical Services LLC
278 Speed House Building Construction Asso
290 The Petroleum Projects (Petrojet & Partners LLC)
291 Thomassen Services & Contracting Co. LLC
292 TMK/Gulf International Pipe Industry LLC
293 TMTEC Trad & Technical Services LLC
294 Torque Trade & Control Systems LLC
295 Vanguard Engineering & Oilfield Services Co. LLC
296 Taylor Woodrow Oman LLC
Company Name Company Name Company Name
CALENDAR 98
Upcoming events
INVESTINGFOR GROWTH
www.shelloman.com.om
Shell Oman is consistently investing for growth, across our business.
From an expanding network of service stations and a portfolio of world-class products and services, to a strong presence at air and sea ports, Shell Oman’s investments do more than increase our market share. It also fuels the development of local community businesses across the Sultanate – and contributes to the overall growth of the nation’s economy.
13 – 15 March 2016
The Oman Refining and Petro-chemical Exhibition & Conference, organized by Omanexpo LLC, will take place at the Oman International Exhibition Centre in Muscat.
Nov 2016OPAL Business Best Practice Awards(Details to be announced)
6-9 March 201611th Annual Asset Integrity Management Summit, organised by IQPC Middle East with the support of Petroleum Development Oman and Orpic, and set to take place at Al Bustan Palace – A Ritz Carlton Hotel, Muscat. The theme: ‘Maintaining Asset Integrity in a Low $/Barrel Price Environment’.
21-23 March 2016
10th Edition of Oil & Gas West Asia Oil & Gas Exhibition & Conference, organised by the Society of Petroleum Engineers (SPE) in collaboration with Oman Expo, un-der the auspices of the Ministry of Oil & Gas. The venue is the Oman International Exhibition Centre, Muscat. (www.ogwaexpo.com)
27 March 2016
OPAL Annual General Meeting at Crowne Plaza Hotel, Muscat, 11am.
9 - 12 October 2016
EAGE/SPE Workshop on Tar Mats and Heavy Oil, or-ganised by SPE International. The theme: Fluid Character-ization and Development / Operational Challenges. Venue to be announced.
January 201699
INVESTINGFOR GROWTH
www.shelloman.com.om
Shell Oman is consistently investing for growth, across our business.
From an expanding network of service stations and a portfolio of world-class products and services, to a strong presence at air and sea ports, Shell Oman’s investments do more than increase our market share. It also fuels the development of local community businesses across the Sultanate – and contributes to the overall growth of the nation’s economy.
Petroleum Development Oman (PDO) is the leading oil & gas exploration and production company in the Sultanate of Oman. It accounts for around 70% of the country's crude oil production and nearly all its natural gas supply. We operate some of the most technically challenging fields in the world, and have pioneered a range of Enhanced Oil Recovery (EOR) techniques.
Our approach to business is based on the concept of good corporate citizenship. We operate in an environmentally responsible and sustainable fashion; we deal transparently and ethically with contractors and partners; and we invest and participate meaningfully in social initiatives.
We endeavour to be renowned and respected for the excellence of our people and the value we create for our nation and our stakeholders.