A new wave of digitalisationJuly 22, 2020
Ayman Khattab, vice-president for the Gulf, North Africa and India at Baker Hughes, talks to The Energy Year about what the current crisis means for oilfield services providers and for the energy industry’s ongoing digital transformation. Baker Hughes is a provider of energy technology services.
How is Baker Hughes managing in the current industry landscape?
The global oil and gas industry is used to coping with crises and downturns. This one is different because it’s a double crisis; we have the coronavirus pandemic and its implications, which impacted the supply and demand for oil and gas.
We are familiar with what needs to be done when dealing with an oil price shock. However, this time we’ve had to change the way we work in a very short period due to Covid-19. Our objective has been very clear: keep our people safe and continue our operations while taking the required safety measures. I am proud to say that we have not stopped our operations anywhere and we have been supporting our customers to bring energy forward all around the world in the midst of these difficult times.
Every downturn ends with an upturn and brings forward opportunities; it’s only a matter of when that happens. Demand and activity are going to increase and once again we will be needing people and equipment. That’s just the nature of the industry.
In response to the coronavirus pandemic, we have put in place local, regional and global crisis management teams. For the past few months, these teams have been meeting regularly to discuss the challenges and opportunities in every region and country where we operate. The intensity of this exercise has been vigorous, and it has played an instrumental role in our ability to successfully navigate the crisis.
The dual shock’s impact on our region, which enjoys some of the lowest production costs in the world, has not been as significant as in North America. We are looking at how we can adjust to the new environment and to be prepared for when activity picks up.
How can the digital transformation create new opportunities for modernising oil and gas E&P?
There is no doubt that digital is going to be the future currency of the energy industry. Even though everyone has been talking about it, the true potential of digitalisation is underestimated. We’re currently exploring with our customers and partners how it will shape operations and the nature of the industry’s ecosystem.
At Baker Hughes, we are one of the leaders in artificial intelligence (AI) with our BHC3.ai portfolio. For us, there are many areas where we can positively contribute to our clients’ operations. One of them is supporting remote operations and minimising the manpower on site.
The Covid-19 crisis is helping expedite the adoption of digitalisation in our industry as the concepts of AI and remote operations are becoming more accepted by customers. They realise that they can take important operational decisions remotely, from their offices.
The crisis has been an eye-opener for everyone. Today, it is much easier for us to explain the benefits of digital transformation. As an industry, we have terabits of data; companies that can utilise this data can predict failure on their operations before it occurs. Subsequently, they will be able to improve efficiency, reduce their costs and increase their yields and profits. The entire industry is in a cost saving mode and if AI is properly used, it will achieve better cost efficiency in new ways compared to the past.
How do government approaches to digital transformation differ in resilience and flexibility across the region?
We are actively involved in discussions around digitalisation across the region. In the UAE, we are in discussions with ADNOC, which has been at the forefront of digital transformation. The UAE has even created a ministry for artificial intelligence, which meant that they really understand that this is a new space that can transform the entire energy industry and we all must embrace it.
Qatar is another good example; today, QP, for instance, is currently exploring ways to deploy digital solutions.
Another example is Egypt, which possesses a lot of talent in the digital space and probably has the highest number of skilled programmers in the region. Egypt’s MoP is making remarkable progress and they are serious about transforming their oil and gas sector through the Modernisation Programme.
How can income squeezes galvanise the strategy for NOCs to enter into more framework agreements with the services industry?
Most of the framework agreements we have in place are well designed and were signed long ago. As a first reaction to the crisis, there were requests for discounts, but we are happy to see the discussion shifting to jointly exploring new ways of cost optimisation. It’s all about identifying all those areas where savings can be made through technology, meaning cost optimisation via higher efficiency and productivity.
How may the current crisis affect the UAE’s journey toward self-sufficiency in gas production?
The UAE has very ambitious plans when it comes to achieving gas self-sufficiency. This is a country objective and they have the reserves in place. I have no doubt the UAE will achieve its target; it’s only a matter of time. Exploration started and they have already declared discoveries. We have been strategic partners with ADNOC Drilling since October 2018, and our partnership has exceeded anyone’s expectations. We look forward to further strengthening this collaboration and contributing to the NOC’s ambitious development plans, especially when it comes to gas exploration.
How is Baker Hughes supporting the region’s local content development?
We have been heavily involved with embracing local content everywhere we work. Algeria was one of the first countries where we localised. Our JV with Sonatrach and Sonalgas goes a long way back. We are establishing a manufacturing facility for wellhead equipment that increases local capacity and boosts exports.
In Egypt, we are actively working with the MoP, which is moving ahead with its modernisation plans. The Ministry of Petroleum has become a great example of how the state can best navigate collaboration with the private sector and international companies. They have been doing an amazing job and we have partnered with them on human capital development; 25 of the ministry’s middle management leaders worked side by side with our employees for three months as part of the MoP’s Middle Management Training Program.
We have also been very focused on localisation in Oman, where we established the country’s first artificial lift systems facility in 2018. As a country, Oman has always embraced a culture of efficiency, and the country is extremely privileged in terms of its qualified human capital. We will continue to identify new opportunities in the sultanate on the localisation front.
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