Look to local capabilities

Qatar

Amit Singh, managing director for Qatar at Schlumberger, talks to The Energy Year about the impact of the Covid-19 pandemic on the company’s operations and Qatar’s prospects as a gas supplier. Schlumberger supplies a comprehensive range of products and services, from exploration through production, and integrated pore-to-pipeline solutions that optimise hydrocarbon recovery.

How well has Qatar managed the pandemic situation?
We had absolutely no idea how things would shape up, but the past three months have been remarkable. Several efforts stand out for me, including the role that QP [Qatar Petroleum] has played in bringing a very senior leadership team to manage the emergency response and work very closely with the government, authorities and the industry as a whole to make sure that the industry moves forward.
To give you an example, airports were shut down quite some time ago, so mobilising people has been increasingly dependent upon a special exemption process. As a result, the supply chain has been affected and offices have been closed. But frankly, the collaboration and communication that were set up at the beginning are still going on and have made things easier. It would have been a lot more difficult without having that level of collaboration and leadership from QP.

How has your operation shifted as a result of Covid-19?
If you look at each company, they all have their business plans, new rigs coming in and new projects starting. We started investing in the North Field East project last year because a factory can’t just be set up overnight. The first rig started in April 2020, and the whole investment cycle of technology, people, assets and facilities has happened before. We were ready before Covid-19 hit us.
Thankfully, the local footprint and capacity building was almost there. What was missing was the mobilisation of people and resources to manage and man the rigs, as well as some other equipment that we still had to bring. However, a large portion of the work was already done. It is fair to say that Schlumberger was one of the most prepared companies because we had already built capacity and had a footprint in the country, so we have a very sizeable organisation to work with QP and support its projects.
There are also multiple bases and operation centres we built and expanded. One of them is still being designed and constructed, which is going to be our flagship base in Ras Laffan. Until we get into that one, we have acquired about 50,000-60,000 square metres of land where we have put our machinery and set up our offices to be able to operate and expand. So, all of this had already happened by March 2020 because it was also in line with the timelines of the North Field East project.
There was obviously a learning curve for us to re-engage and re-establish our footprint and to do our own maintenance and technical work internally, so we had to rewrite our code of operations. We had to reduce the number of people working at one place at the same time.
We adopted two very distinct strategies to accomplish this. First, we created two or three different shifts so that people can exercise social distancing. We do this by not mixing the population at the same time. On each of these shifts, we also created different zones within our facilities so that people don’t engage with each other. Even if the virus comes in, our people will have very limited exposure to it.
We also worked with local authorities to get desk kits for our staff. So, we work with the national and global authorities and with medical associations to see how we can be ahead of the curve and be the most prepared to keep our people safe, which is key, and to continue our operations.

How can Qatar rely on local capabilities in the midst of the crisis?
For me, relying on local capabilities has become the way to do business going forward. If a company wants to bring reliability and cost efficiency to the supply chain, it is important to rely on local resources and use local engineering and manufacturing as much as possible.
Last year, we signed a strategic partnership with QP in this regard and made a lot of commitments and plans to use more local content, and we have made good progress on both. We have hired approximately 50 young engineers from Qatar over the past year who will go through an extensive training programme. On Christmas tree manufacturing, we work with a local company to see how we can share our design, experience and technique and get the manufacturing work done in-country for the project.
In the past, we used cement from outside of Qatar, but now we have a local company that manufactures cement for us based on the specifications we have given them. It took a good couple of years to develop that cement, but it is now ready, so we are going to use that cement more and more for the wells. Given the effect of the Covid-19 pandemic, I think this localisation effort will move even faster and there will be a lot more emphasis on this, both by QP and Schlumberger.

How receptive are Qatari companies to utilising cost optimisation technologies rather than asking for rate reductions?
The downturn in price this time is different than what happened during the previous crisis. We just passed through a very steep downturn in 2014 and 2015 and the oil price has climbed back up a little, but oilfield service rates stayed at that relatively low level because there was excess capacity in this sector. As a result, price reduction in 2020 is extremely difficult. In some places we can, and we try to look at what we can do. But most of this is driven by localisation. If you can localise your supply chain, at some point the cost will get lower.
The second big question now relates to how we can reprogram the well construction process so that we can improve the efficiency of drilling and reduce the cost of operations. This has become more relevant and is a key for every programme. This works very well with Schlumberger because we are one of the biggest R&D spenders on the technology side globally within the oil and gas industry.
Over the past several years, we have invested a lot in Qatar and made technologies specifically for Qatari reservoirs. If you create something for global use, you may not be able to optimise the technology for being the most efficient in the reservoir. With these new drilling technologies, we are able to reduce the drilling time per well by four or five days based on our fast drilling techniques and our technologies for collecting data and drilling the well itself.
We also work on technologies to capture the condensate instead of burning it. By doing this, we reduce the carbon footprint of our operations and increase the economic output of the project.

What is Schlumberger’s long-term objective in Qatar?
We started in Qatar in 1948 and drilled our seventh well in Dukhan in that same year. Since then, we have been here offering different capabilities and services. We have drilled some of the longest wells in the Al Shaheen field here, which were world records. We are here to operate for a very long time, as Qatar is blessed with the single biggest gas reservoir and the highest recoverable gas reserves in the world.
Because of the reservoir characterisation, Qatar enjoys one of the lowest lifting costs for gas. This allows a much more competitive pricing mechanism for the operator, and I feel very comfortable and confident with the long-term outlook for Qatar and for our projects in Qatar. If I look at the medium and long terms, Qatar is in a very good position for being both a reliable and a cost-competitive source of supply.
On the other hand, gas is considered to be a cleaner source of energy. Before the world completely transitions to renewables, there will be a transition via gas. The gas demand is going to continue to rise in Asia and even in Europe, as coal-fired power plants are being shut down. In addition, the industrial usage of gas in China and India is rising.
If you look at it both in micro- and macro-economic terms, Qatar is in a unique position to continue to provide gas supplies to the world. As one of the leading service companies, we are proud to continue to invest and be part of this success story.

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