Petrofac’s partnership with Oman SMEsNovember 15, 2018
Ray Richardson, country manager of Petrofac, talks to TOGY about in-country value (ICV), SMEs in the Omani oil and gas market, and the local labour market. Petrofac provides EPC and EPCM services for Omani oil and gas projects such as BP’s Ghazeer development, Orpic’s Sohar Refinery development and PDO’s Rabab Harweel Integrated Project.
• On SMEs: “The Omani market trend in 2016 and 2017 was toward further formation of SMEs – some with fewer than 50 people in the company, very small and basic. These entities have multiplied over time and there seems to be a recent developing trend in which the smaller SMEs are creating community consortiums in order to become more competitive in the market. We are also seeing some of that in terms of the supply of goods and services and in construction. The formation of these consortiums is challenging for the remaining smaller SMEs who choose to remain independent.”
• On maintaining production: “The sultanate produces around a million barrels of oil a day, of which about 20% is through enhanced oil recovery. To maintain that level of production and secure related revenues to support the economy they need to continue to move ahead with strategic projects around the oil and gas space.”
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How have you engaged with local contractors and subcontractors to develop ICV?
Over the many years that Petrofac has worked in the Sultanate of Oman, we have developed relationships with not only major international subcontractors, but with local subcontractors and SMEs as well. In our work with Orpic on their recent Sohar Refinery Improvement Project and BP’s Khazzan gas development, we carried over many of our prior relationships with SMEs and continue to develop further relationships on our current projects.
We held a roadshow in September 2017 specifically for SMEs in Salalah for our Salalah LPG project, which was well supported by local administration VIPs. We met around 120 interested companies. We engaged with some of those companies, but also transferred their details to our Duqm Refinery project team for consideration.
As a general principle we seek to roll over established project relationships in order to build up a cadre of SMEs. As these SMEs start to grow in size and maturity, we try to offer them further work opportunities.
How has the market situation changed for SMEs in Oman over the last several years?
The Omani market trend in 2016 and 2017 was toward further formation of SMEs – some with fewer than 50 people in the company, very small and basic. These entities have multiplied over time and there seems to be a recent developing trend in which the smaller SMEs are creating community consortiums in order to become more competitive in the market. We are also seeing some of that in terms of the supply of goods and services and in construction. The formation of these consortiums is challenging for the remaining smaller SMEs who choose to remain independent.
There have also been some fundamental changes in the marketplace in relation to oil and gas operating company activities. A lot of the private-sector companies have tended to focus on single client exclusively due to reasons of strategic location or historical interaction, whilst the current market dictates a more expansive focus. Essentially the quantum of oil and gas workload to share around has diminished under the current market conditions and companies need to be more widely focused.
Petrofac, for its part, in its recent frame agreement with PDO, is engaging with SMEs particularly to support [them in the face of] reduced opportunities in the marketplace.
What is your assessment of the current labour market and general talent pool in Oman, and what could be done to improve the quality of the available workforce?
Omanisation is one of the key elements of in-country value, and recent initiatives through the Ministry of Oil and Gas to validate new project employment opportunities are being first offered to the Omani employment market, and are making the process more streamlined and efficient. Work cycles, rotational durations and their relationship with other vocational provisions are some of the current key hot topics being discussed in relation to the development of Omani talent in oil and gas and other industries in general.
As per the current Ministry of Manpower focus, training and development is essential, and coupled with an increased effort and focus from the private sector to facilitate a higher level of succession planning, this will lead to a net reduction, over time, of expat numbers and an increase in associated Omani personnel employment opportunities.
Petrofac is a strong advocate and supporter of the government of Oman’s employment policies and a regular participant in related events and gatherings. Our recently opened Takatuf Petrofac Oman (TPO) technical training centre investment in Muscat Knowledge Oasis is another example of the development of Omani talent in the energy sector, and initiatives like this are playing their part in ensuring enhanced employment prospects for Omani nationals and that the resulting value creation remains in-country.