An integrated solution in Kuwait

• On KOC’s shift towards digitisation: “KOC is moving towards using more technology. Digitisation is key for them and you see that today. We work with them in oil and gas, and they have a digital centre through which they can do monitoring and controlling activities. They are bringing digitisation on in different business units, and it is definitely the way they are heading.”

• On Kuwait’s future: “The oil slump we witnessed over the past couple of years is definitely over. We have passed it and it will not come back. Kuwait is going to grow significantly.”

Most TOGY interviews are published exclusively on our business intelligence platform, TOGYiN, but you can find the full interview with Shaima Salmeen below.

Could you give us an overview of the biggest projects in which you are currently involved in the country?
The two main ones relate to how KOC is changing its business model. The first is the lump-sum turnkey project we are doing with the integrated drilling services we provide. We proved that we can cut the drilling time in half, from 42 to 23 days. That is a huge achievement for that project.
The other project that we are a part of is the early production facilities (EPFs) for gas. We have three of them with KOC. One is for heavy oil and the other two are for gas. KOC’s preferred model is to have small, accelerated projects. This proven concept has been very successful.

To what degree has the lump-sum turnkey pilot project been a success?
This business model has added a lot of value driven by the efficiency resulting from an integrated service delivery approach. The complexity of the reservoirs is increasing and the day-to-day business is not the same. The integrated solution is what KOC is looking at and they have seen the value of it.
Additionally, KOC is moving towards using more technology. Digitisation is key for them and you see that today. We work with them in oil and gas, and they have a digital centre through which they can do monitoring and controlling activities. They are bringing digitisation on in different business units, and it is definitely the way they are heading.

Are your competitors adopting the integrated approach?
The model of an integrated approach in an oil and gas service delivery context was created by Schlumberger. The beauty of it is that you have the freedom of making decisions and selecting fit-for-purpose technology. It is about the ability to have the knowledge, technology and ownership to focus on what answers more efficiently and effectively a specific challenge.
The way we are doing it is different from how the competition does it. Firstly, technology is a differentiator for Schlumberger. We have very advanced fit-for-purpose technologies. Secondly, our knowledge, experience, track record and history in Kuwait is beyond that of the competition.
We logged the first producing well in Kuwait. With this new approach, we reduced the regular drilling time by 50%. It took us a year to reach this point. The client knows their reservoir and field best and we know our technology best. When you put them together, this is where you get the value.

Is KOC interested in attracting new technologies from the big oilfield services companies?
Their appetite for technology changed a lot. Four years ago, it was not as strong, but now the value of technology is more attractive for them. KOC sees it as an enabler for achieving their very ambitious targets. They look forward to our support in bringing value to their drilling and production targets through our technologies.

Are you optimistic about winning the onshore and offshore bidding rounds?
Since we have proven the integrated approach concept, KOC has floated one tender for West Kuwait and they will do the same for some of their other assets. They also floated a tender for the offshore.
We will win the West field asset, not only because we have the experience, technology and integration, but also because we have already proven ourselves in that area. The experience plays a role and there are many components that come together to make it work.
I am equally optimistic about the offshore tender. Firstly, we are the only company that has done drilling for offshore exploration. I am sure there are others that have drilled offshore, but not in exploration. Secondly, Schlumberger did all the studies to identify offshore locations that were released in the tender. This was a two-year project that we participated in with WesternGeco. We know where to drill and we know how to get the oil.
I expect the awarding of the contract to be pushed back beyond June because we are still at the clarification stage. We are in the process of receiving the final clarifications from KOC, even though there is a sense of urgency from the government about starting drilling in 2018. Operations will likely start in 2019.

What is your assessment of upstream activity and demand for upstream services in Kuwait?
To begin with, the oil slump we witnessed over the past couple of years is definitely over. We have passed it and it will not come back.
Kuwait is going to grow significantly. KOC’s vision is to produce 3.65 million bopd and 1 bcf [28.3 mcm] per day of NAG [non-associated gas] by 2020. From today’s production, one of the areas to achieve the growth is s through a very strong push to accelerate drilling in 2018. There was a tender for 85 rigs and those rigs will be active in the country between Q4 2018 and 2019. That is massive. We will have 160-plus rigs in Kuwait by the end of the year. That tells you why there is a new strategy for 2040.

Beyond the availability of projects, what makes Kuwait an attractive market for Schlumberger?
Kuwait represents our eighth-biggest client worldwide. We like Kuwait because our partnership goes back a long time. We have been here for 80 years. We are proud that we logged the first producing well, which is in a museum here.
What makes it even more attractive is the country’s growth, the challenges that they have and the solutions that we can provide to support them in addressing these challenges. They are changing their scope and strategy now. They are focusing more on heavy oil and gas, EPFs and the activities of KIPIC [Kuwait Integrated Petrochemical Industries Company], and Schlumberger has a lot of expertise that we can bring in to add value.

In 2017, Schlumberger bought the remaining stake in Saxon. Could you provide an update on your plans to bring drilling rigs into the country for the first time?
We participated in the tender for [85] rigs but were capped at a maximum of six. As a new player, the number of rigs we can bring in is capped. They can also tell companies which rig and which size they can bid for. We have submitted bids in three categories and we are awaiting the results.

What makes Schlumberger a preferred partner for KOC?
We have been involved in many strategic projects. For example, when KOC started thinking about producing gas, Schlumberger was the partner. We have done the conceptual field development planning, or FDP, and we have started the first well.
We have been through the full cycle. When there is a challenge, such as EPF, a new business avenue or a new strategy for KOC, we have always been the preferred partner and we are proud of this. That puts me under pressure to make sure that we are up to that standard.

What are the key differentiators between you and your competitors?
The success of Schlumberger has always been linked to our historical differentiation on two key variables: our people and our technology. One comes with the other as the best people in the market will develop the state-of-the-art technology. It is part of who we are as a company. We recruit where we work and focus on fresh-out talents that we then develop from within thanks to our training programmes.
We also never stop investing in technology to protect this competitive advantage. We are proud of it. We invested a lot of money during the downturn and we never cut investment in technology.

Could you describe your involvement in helping KOC hit the 270,000-bopd target for heavy oil by 2030?
We put together a case for KOC to show them how they can optimise the cost when it comes to heavy oil. We are very well aligned with their heavy oil strategy.
We participated in studying the reservoirs. Looking at the heavy oil challenges they have today, we have the technology that can help KOC optimise production. The challenge in heavy oil is not only producing it, but it is the cost. Heavy oil is a long-term strategy, so the technology might be a little more expensive today but the production that they will gain will be significant.
There are many opportunities in the market, and there is room for everybody.

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