Speak to just about anybody in the oil and gas industry at present and you can be sure you’ll hear buzzwords such as “improving efficiency”, “reducing downtime”, and “maximising production”. To do so, companies are putting more emphasis on ensuring their logistical operations are as effective and slick as possible.
That can be easier said than done when it comes to oil and gas, where the large-scale nature of many of the projects mean that oversized, heavy loads have to be delivered in a speedy fashion to often remote and harsh areas.
That trend is only likely to continue as operators move to even more challenging environments, whether in deep-water or exposed in the desert.
A prime example of that is the Miraah project in the Omani desert, where GlassPoint and Petroleum Development Oman are working on a 3km2 solar project, which will produce steam for thermal EOR.
Speaking to Oil & Gas Middle East about the challenges posed by the project compared with other sites around the world, Rod MacGregor, CEO of GlassPoint, said: “The main challenge that sticks out in my mind is that most of our projects in North America are close to a city; people come to work in the morning and the go home at night. If you forget something, you can either just bring it back the next day or go to a store down the road and buy it.
“In this project, as is the case with a number of projects in the Gulf, they’re in the middle of nowhere, and that means people can’t go home at night. It means you have to create work camps, so people can live and work in the middle of the desert, so you need food, air con, water, doctors – it’s a bit like a military operation and if you forget something, that’s too bad.
“It’s a ten hour drive from Muscat, so you have to make sure you have everything there, as having a load of people in the desert with nothing to do is not very cost effective. The logistical challenges are huge.”
Picking up on the theme, Vinodkumar Raghothamarao, oil and gas expert, professional services, MEAI for Epicor, said: “There are a number of challenges when it comes to logistics in oil and gas in the Middle East, including remote locations that often have inadequate infrastructure, strict regulatory compliance, and heavy or oversized equipment.
“But aside from those obvious hurdles, oil and Gas logistics presents complex supply chain challenges. Transportation involves special equipment, strict regulatory compliance and extensive safety procedures and processes. In addition, there will be inevitable spikes in demand, greater urgency and risk of rig downtime and its consequences.
“Logistics companies also have to consider managing the just-in-time requirements of drill sites or ensuring safety compliance. There are a number of critical challenges that plague the oil and gas logistics industry.”
But despite the challenges and the low price of oil, there are reasons for those in the sector to be optimistic. This was evident at the recent ADIPEC 2015 event in Abu Dhabi.
The Jebel Ali Free Zone (Jafza), the flagship free zone entity of Dubai and a trade and logistics hub for the wider Middle East region, has received huge interest from oil & gas industry leaders based in the North Sea region.
Particular interest came from the UK, Denmark and France at the recently concluded ADIPEC. These companies are looking forward to establishing their presence in the wider Middle East region, which still remains an expanding market despite significant fall in oil prices.
The trade promotion officials from Japan and Malaysia also had a meeting with Jafza officials at ADIPEC to explore opportunities for enhancing bilateral trade relations between them both in oil and non-oil sectors.
“The strong interest of companies in oil, gas and allied sectors from England, Scotland, Denmark and France in Jafza reinforces not only the Free Zone’s status as the trade and logistics hub for the wider Middle East region in the oil and gas sector but also Middle East as a dynamic region for the oil and gas industry despite steep decline in the oil prices,” said Sultan Ahmed Bin Sulayem, chairman, DP World and Ports, Customs and Free Zone Corporation.
The oil and gas sector trade in Jafza has seen 462% growth in the last 10 years growing from $3.1bn in 2005 to $14.39bn in 2014, Bin Sulayem added.
It’s impossible to reflect on the oil and gas business without analysing the effect if the oil price. Whilst it cannot be sensibly argued that the fall has been a positive thing for the industry, it does seem that some sectors – or, at least, companies in those sectors – may at least derive opportunities that they did not previously have as a result of the decline.
Speaking to Oil & Gas Middle East, William Hill, executive group vice-president – oil and gas, GAC, said: “There is some upside to the low oil price for us. There are a lot of oil and gas customers worldwide that have been doing the same thing for many years [when the oil price was high]. We’re coming in with a co-ordinated approach and we have other capabilities and services, such as warehousing and trucking.
“Companies are having to look at their costs because of the oil price, so when they go out to tender, we appear on the radar. Because of the services we have from other industries we try to find ways of being more competitive. That’s not to say we’re the cheapest, but that we approach thing in a different way than has been done before. That’s the opportunity, which is to bid for work, which wasn’t happening so much before – people weren’t bidding. Now they have to, because their prices need to come down.”
