Petroleum Development Oman (PDO) has announced plans to ramp up oil production to a new level of 670,000 barrels per day (bpd) in the next five years.

After setting a 550,000 bpd 10-year plateau commitment over the last decade, the Company has consistently grown production and is confident of delivery of further production growth. This comes after it confirmed that 2018 yielded its highest oil output since 2005 of 610,170 bpd, despite the impact of Cyclone Mekunu last May, which disrupted production in the south of its concession area.

Speaking at the annual Ministry of Oil and Gas Media Briefing event at the Oman Convention and Exhibition Centre, PDO Managing Director Raoul Restucci said: “Our approach has been simple: to stay the course in the face of oil price uncertainty and increasing technical and operational scale challenges. Increasing value delivery for the nation’s development and preparing the business to face changing energy expectations.

“This means more sustainable oil and gas, driving energy efficiency in all aspects of our operations, and broadening our business model to add value to Oman beyond operations in our concession.

“As we head into the next decade, we are stepping up the deployment of new technology and pursuing ever more efficient ways of working to achieve enhanced productivity in our exploration and production business.

“During 2018, we successfully delivered a combined daily oil, gas and condensate output of 1.205 million bpd.”

PDO set new milestones on the safety front, achieving a record 0.15 Lost Time Injury Frequency – a 25% fall on 2017. Total Recordable Case Frequency was also down at 0.71 with more than 214 million manhours of activity.

On the road safety front, staff and contractors drove more than 750 million kilometres without a work-related motor vehicle fatal incident, and on asset integrity, there was a 77% fall in the number of Tier 1 process safety incidents and a 50% drop in Tier 2 incidents – both the lowest since 2010.

Restucci said: “These improvements highlight the ongoing concerted effort across the Company to enhance safety and operational excellence at the frontline. This is achieved through better supervision, awareness, training, and the continuous implementation of new technologies and programmes, such as our game-changing new Ihtimam behaviour-based system.

“Regrettably, the impressive results were overshadowed by the deaths of two contractor employees at Nimr in April and Yibal in July, tragic reminders of the constant need for improved vigilance and greater rule compliance at all levels.

“In a year in which we celebrated four decades of uninterrupted gas supply, I’m pleased to report that we also successfully migrated to becoming the country’s swing producer, requiring us to operate in a highly dynamic mode, frequently compensating for third party production variations.

“However, it’s important to stress that while oil and gas will continue to be fundamental to our energy mix, we are developing innovative renewable solutions to create new growth opportunities for the Company as well as for the nation. This has us increasing emphasis on renewables, such as solar, whilst leveraging new technology and improving our overall energy efficiency.”

Restucci said “good progress” was being made on both PDO’s “mega” projects at Rabab Harweel and Yibal Khuff with the former, the largest capital project in PDO history, expected to come on stream in mid-2019, representing a reserve add of more than 500 million barrels of oil equivalent. The latter, an integrated sour oil and gas development, is scheduled for start-up in 2021, developing in excess of 327 million barrels of oil equivalent.

The Exploration Directorate set new records, providing higher quality seismic data acquisition through the deployment of sophisticated Ultra-High Productivity technology whilst delivering   impressive unit finding cost of $0.3/barrel of oil equivalent. He said: “The new seismic has enabled us to identify new plays in Central Oman, reaffirming the significant prospectivity in our Concession area”.

Restucci reported that the Company’s Field Development Centre and Front End Engineering and Design (FEED) Office were both delivering lower cost growth solutions and robust development plans.

He said: “Both of these departments rely heavily on Omani talent and are playing a critical role in ensuring we remain competitive and fit for the future. We are also looking at how we can commercialise their expertise beyond our boundaries in areas such as enhanced oil recovery, project management and training.”

PDO continued to drive a rigorous cost control and Lean business efficiency programme across the full spectrum of its business, completing a total of 142 efficiency improvement projects which secured $152 million in cost savings. A further $300 million of projected savings were identified through cost improvement reviews with our contractors and other value optimisation initiatives in response to the lower oil price environment.

Despite the increased complexity in the 2018 drilling scope, the Company’s Well Engineering Directorate delivered 600 new wells and achieved the best ever recorded cost per metre drilled in PDO’s history (4% lower than 2017). At the same time, it also managed to be more efficient in terms of drilling time per metre with a 5% improvement compared to the previous year.

By the end of 2018, the directorate had carried out 22,400 completion and well intervention activities – the highest number ever recorded with the same number of resources as previous years.

PDO ramped up its In-Country Value programme, awarding contracts worth $3.7 billion to nationally registered firms, retaining a value in country of 44%, and supporting the opening of new Oman-based workshops and factories to service the domestic oil and gas sector.

Its National Objectives team generated 17,027 employment opportunities for Omani jobseekers, consistent with the target for the year, in both the oil and non-oil sectors. For 2019, the Company is targeting the creation of 21,000 job opportunities.

Restucci said: “Against a backdrop of fluctuating trends in the global market and increasing technical, operational and financial challenges, I am pleased to announce that, in 2018, PDO exceeded performance expectations across a wide range of asset and functional targets and is well positioned to continue to play our part in support of value creation for all our stakeholders.”