By Ibrahim Al Alawi , COO of Al Mansoori
2015 has been designated “the year of innovation” by the United Arab Emirates government, designated with the purpose of supporting the government’s efforts to attract national skills, increase research and position the country as a world leader in innovation. Innovative thinking is also inspiring a culture shift in the region’s oil and gas industry, and a move away from the traditional focus on cost as the primary driver of business activity.
In the early days of the industry in the Gulf there was a heavy reliance on international oil companies that were prepared to pay significant prices for services. However, with the onset of nationalisation, service price became the dominant consideration in the tendering process. The newly formed national oil companies (NOCs) were eager to ensure cost-saving measures were taken as national budgets grew. This move by the NOCs coincided with an increase in Middle East based entrepreneurs setting up relatively small companies with lower overheads to serve the local oil industry, and applying competitive pressure on prices.
However, bidding for work at ever-lower prices can create a situation where quality and potentially health and safety become the victims. These cost-cutting measures at the expense of quality can translate into sub-standard materials, inexperienced manpower and lower-grade equipment.
While cost is a critical factor, making sure the job is done well by properly trained personnel thereby creating its own cost savings is equally important. We have always believed that if you do a job right you only need to do it once, and that creates longer term cost savings than the repeat change out of lower standard products.
It appears that the value culture is growing in the Middle East oil and gas industry. Our indigenous companies have matured, gaining a wealth of experience and knowledge, aided by strong alliances and partnerships with international companies who have value-driven mind-sets.
Many fields in the region are now reaching maturity and require new technologies which can maximise production. Aging facilities, rising water cuts, falling wellhead pressure levels and decreasing production are exacerbated by the expanding industrialised economy with its ever-greater demands for power. There is a growing recognition that our hydrocarbons are a finite resource, which needs to be preserved for future generations.
The importance of maximising recovery has never been greater as exploration projects are delayed due to the current low oil price and companies are deferring expenditures until higher revenues are obtained.
The drive towards enhanced oil recovery requires advanced data collection technologies that are both highly accurate and affordable. We are supporting this move by providing such information to the industry, and other services including logging, slickline and well testing, which are now being more widely applied to regular development wells to extend field life.
Today, a focus on quality and long-term value over cost and short-term solutions is becoming more recognised as the primary factor in decision-making. This is a trend that brings the practices and business cultures of the Middle East oil and gas industry much more in line with producing regions elsewhere, and ultimately provides longer-lasting benefits. The current low oil price will inevitably create a challenge to this long term, value-led approach, but we should not be distracted by such near-sighted influences. We have made real progress in creating a new mindset: and while this is the year of innovation in the United Arab Emirates, we must ensure our own innovation extends far beyond this time.
