In the face of rebounding oil demand in 2017, Middle East oil and gas firms realise that rising to the top requires a new way of thinking, and of doing business. Upstream and downstream firms are replacing traditional, time-consuming processes with the latest technology.
Delivering this digital transformation takes courage, and the Middle East – in particular Kuwait – is at the heart of the energy sector’s global digital transformation.
As the global economy rebounds, we’re seeing an increasing demand for oil – which a report by OPEC shows will grow by 1.27mn barrels per day (BPD) in 2017. Kuwait’s energy firms are leading the charge, as OPEC figures show oil and gas counts for 95% of the country’s export revenue and 60% of its gross domestic product (GDP).
At the same time, with strong competition, only the most innovative oil and gas firms will rise to the top – by enhancing production and refining, delivering cleaner fuel, and expanding export markets. Digital, cloud-based technologies are proving to be the foundation for new levels of business competitiveness.
The concept of digital oilfields is not new, but what is rapidly changing is the amount of data being generated by digital oilfields. Emerging innovative technologies such as drones that can monitor sites, and robots that can conduct underwater repairs, are seeing strong interest in the Middle East.
While chief information officers (CIOs) are identifying digital oilfields as a key priority, most Middle East oil and gas firms face two major challenges in delivering on this goal. One challenge is that organisations need to have courageous C-suite executives who can adopt the latest technologies; another is the change management and talent upskilling that is required to ensure all staff are on board with the digital transformation.
Digital drives KNPC
From the outset, Kuwait National Petroleum Company (KNPC) has been dedicated to being an early adopter of innovation, and to supporting the economic growth of Kuwait – maximising the value of Kuwaiti hydrocarbons through domestic and international refining, petrochemical, and marketing digital transformation is a priority for the company.
KNPC is committed to driving long-term, value-adding relationships that support growth and enhance operational excellence, empowering ‘agents of change’, who have the skills and power to stimulate change and create an agile, transparent, and successful organisation.
Increasingly in oil and gas companies across the Middle East, and worldwide, the role of agents of change is falling to the CIOs, who are tasked with breaking down organisational silos, developing long-term digital transformation strategies with vendors and channel partners, and bringing the whole organisation on board with new digital strategies that prioritise the mobile user experience.
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The cloud unlocks business gains
In 2014, KNPC’s IT team confronted its biggest challenges to date: how to leverage the latest technology to take its business to the next level, and how to enhance the productivity of its nearly 10,000 employees. Like many companies, KNPC’s legacy systems were holding it back from reaching its business goals, and the company needed to close the gap between IT and business by radically transforming its technological infrastructure from a cost centre into a driver of business innovation. With KNPC’s digital oilfield capabilities increasing and extending the network, it also needed to secure its infrastructure.
All of the data being generated by KNPC’s refineries and lines of business was overwhelming its physical servers and storage. The company would likely need a large number of new servers, and a greater storage cpapcity in the long-term, which would not only take up a significant amount of space, but would also place a major strain on its IT budgets.
The company, therefore, pooled its resources and built out a long-term digital transformation strategy with digital transformation enabler VMware, and used software to make hardware more efficient, in a process of virtualisation. All of the company’s business applications would now operate in a private cloud.
By putting its business applications on the cloud using the vendor-neutral VMware vRealize Suite and VMware NSX solutions, costs were significantly reduced – but, more importantly, it also allowed KNPC to develop new IT applications much more quickly. Operating in the cloud also means the company can quickly and easily expand as its business grows, which has proved vital for driving business agility and competitiveness.
Taking the cloud solutions one step further, KNPC is driving even greater operational efficiency by deploying the cloud solutions to all of the companies across its group, in what it calls the K-Cloud Community Cloud. As a result, KNPC’s sister companies also minimise costs and security concerns.
When it comes to security, KNPC’s digital transformation covers three dimensions: people, processes, and technology. Staff are being upskilled to use the latest micro-segmentation functionality enabled by NSX, which can apply granular controls to apps while building a highly resilient and natively secure software-defined data centre. Using micro-segmentation means there is no downtime, and application processes can be rolled out quickly in the K-Cloud Community.
Digital oilfield market tops $30bnÂ
Already, KNPC is seeing strong results from the cloud deployment – its IT experts say that service delivery is 60 to 70% faster than before, its resources are utilised three times better, and its operating costs have dropped by an impressive 60%. The time freed up by the improved technology solutions is spent focusing on new digital oilfield developments; money saved is being re-invested into the latest innovations; and, ultimately, KNPC is improving its customer experience.
With a study by Markets and Markets indicating that the global digital oilfield market will top $30bn by 2020, it is vital for Middle East oil and gas firms to leverage the digital partner ecosystem to drive innovation and economic growth.
