Shell eyes growth in OmanJuly 24, 2018
Chris Breeze, country chairman of Shell in Oman, talks to TOGY about the company’s strategic alliances with PDO, its outlook on the country embracing renewables and its interest in investing in Omani gas. Shell is active in Oman across the oil and gas industry and is involved in joint-venture and independent activities ranging from R&D and E&P to trading and retail.
• On the energy transition: “The supply of renewable energy will steeply increase, becoming a much greater proportion of the energy mix, but at the same time we foresee a significant global demand for fossil fuels. The energy transition is underway globally, but its speed and outcomes will vary significantly from country to country depending on local policies and available resources for example.”
• On opportunities in Oman: “The possibilities for Oman are enormous. There are many oil and gas resources to be explored and developed, and solar and wind offer a lot of potential as well. There are also significant opportunities to use digital technologies to interact with customers to enhance the energy efficiency of the electricity network. There are such large quantities of in-country resources available and we have only just begun to unlock the potential of energy efficiency.”
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How is Shell collaborating with PDO?
Shell is the largest private shareholder in PDO, with a 34% share. We have several strategic alliances with PDO where we combine forces to tackle key issues for our industry. One of those is in enhanced oil recovery (EOR), chemical EOR to be specific, techniques used to maximise oil recovery from maturing oilfields.
Other strategic alliances include in fibre-optics, which is a key surveillance tool that allows cost-effective and real-time well data without interventions; in materials and corrosion, which looks to simplify the technical standards and expand the operating envelope of several materials in addition to de-risking several innovative technologies that monitor for corrosion in pipelines; and in geophysical technologies, where we seek to use the power of computers to visualise the subsurface.
This last strategic alliance has opened up opportunities for PDO in areas where they have already drilled the main reservoir but know there are other smaller reservoirs nearby. We recently concluded a strategic alliance on smart fields which enabled PDO to roll out Collaborative Work Environments across all assets.
Outside the strategic alliances, we collaborate with PDO on technologies in various other areas. We have been particularly focused this past year on our energy efficiency surveillance tool, which is aimed at improving the efficiency of all rotating equipment. The remarkable thing about this is that it saves money instantly. We agreed with PDO that they would only pay for the technology if it delivered more saving than additional cost – which it did very easily.
Do you work in other areas with PDO for bringing technologies into the country?
Another big focus is digitalisation, which is about applying new digital solutions to further improve our industry. We identify companies in the Shell group around the world that are leading on a particular topic, for example in using artificial intelligence to find the optimum way to predict when preventative maintenance of equipment, such as compressors or valves, is required.
These companies focus on developing and demonstrating their digitalisation technology, which we then seek to replicate in other Shell-associated companies around the world. We call it the digital lighthouse approach, whereby value is generated thematically from several rapidly deliverable projects. PDO is currently on a visit to see some of our lighthouse companies, to see what they want to replicate in Oman.
PDO already applies cutting-edge technologies in a number of different areas, such as the solar steam project Miraah with GlassPoint Solar and the water treatment project with Bauer Nimr. These are highly innovative initiatives which demonstrate PDO’s willingness to take on the energy transition.
How significant is Shell’s strategy to transition the Gulf region towards a more renewable future?
We are convinced that global and regional energy demand will grow at such a pace that both fossil fuels and renewable energy will be in high demand for quite a long time. The supply of renewable energy will steeply increase, becoming a much greater proportion of the energy mix, but at the same time we foresee a significant global demand for fossil fuels. The energy transition is underway globally, but its speed and outcomes will vary significantly from country to country depending on local policies and available resources for example.
For Oman and the region, we see great potential in renewable energy but also in improving energy efficiency. We certainly aim to contribute to the energy transition in Oman and work collaboratively to unlock the business opportunities it offers.
On the mobility front, we are for instance active in developing hydrogen for transport. If you run an electric car on hydrogen, using an on-board fuel cell, the only thing coming from the exhaust pipe is water. And if you use renewable energy to produce the hydrogen, you really contribute to lowering the carbon footprint of transport. Currently the technology is still expensive, but one could see a cost curve whereby this becomes an attractive option for the future, also for Oman.
What opportunities does Oman offer in the energy landscape?
The possibilities for Oman are enormous. There are many oil and gas resources to be explored and developed, and solar and wind offer a lot of potential as well. There are also significant opportunities to use digital technologies to interact with customers to enhance the energy efficiency of the electricity network. There are such large quantities of in-country resources available and we have only just begun to unlock the potential of energy efficiency.
What is the outlook for growth of the natural gas market in Oman?
We think there are significant resources available for development. In May 2018, we signed a memorandum of understanding with the government of Oman for the exploration for and development of recently discovered gas resources, combined with downstream investments. We think the gas outlook for Oman is strong and we are interested as a company in investing in gas development.
What are the prospects for growth in training of Omanis?
We are on a business growth trajectory in Oman. As a consequence, the opportunities for Omanis to join Shell in the country will increase significantly in the coming years. In the last year or so, we provided training to 789 Omani prospective entrepreneurs.
Through our Shell Intilaaqah programme, which provides training for Omanis to start and maintain their own businesses, we placed many potential Omani entrepreneurs into training and upskilling. We also run programmes for government, private-sector, NGO and SME participants in a range of soft professional skills, such as finance and marketing. We invest time and effort in training and upskilling Omanis and these efforts will increase along with our business growth in-country.
What is the significance of Oman for Shell in the region?
We have a proud history in Oman and Oman is a heartland for Shell. We have been active in the country since the 1930s and we will remain committed to the country throughout the energy transition that lies ahead of us.
We recently farmed in to Block 42, where we will be the operator. It will be the first time Shell has effectively been an operator since 1974, when the government bought 60% of PDO, so this is quite a milestone for us. We hope to obtain other upstream acreage in the near future and to expand our operating footprint in Oman significantly. We also plan to expand into the downstream and into renewables.
We have a very clear growth aspiration in Oman, and I hope the first steps of that growth will materialise already in 2019.