In periods of difficulty and uncertainty, Petroleum Development Oman (PDO) continues to focus on value creation, business improvement and sustainability.
Raoul Restucci
Managing Director
Petroleum Development Oman
Despite falling oil prices, the oil we produce is still lucrative and we have continued to perform impressively. Our well engineering and project activity levels continue to grow and we are pursuing early monetisation of prospects where possible. We have just drilled the fastest well in our history at Amal – 3.25 days – which is just one indication of how efficiently our teams are working to unlock value. We continue to work steadily towards a new long-term oil production plateau of 600,000 barrels per day and there is some truly world-class Well and Reservoir Management work going on across our concession to maximise production in the most efficient way.
There are many highlights across our portfolio. For example, our Nimr-C field has achieved a six-fold production increase in four years through a pioneering water-flood project. Greater Birba set a new production record in May and Harweel is exceeding expectations after an outstanding turnaround last year when the full plant capacity was commissioned, along with a major overhaul of booster compressors, and inspection of vessels and columns, all of which have laid the foundation for a strong production performance. As far as exploration is concerned, investment levels are being reviewed but our strategy has focused on further value creation, targeting medium to low-risk prospects and prioritising segments with the potential to deliver significant production wedges towards our 600,000 bpd target.
In terms of activities, our exploration programme is very diverse and our strategy is to strike a good balance between long-term growth and short to mid-term value creation. Discoveries span geographically from the North to the South, both oil and gas. Specific results are set to be announced at the annual Ministry of Oil and Gas media briefing early next year. Meanwhile, preliminary interpretation from the Yibal/Al Huwaisah seismic survey – the largest seismic survey ever done in Oman – is very promising and we are due to start drilling the first wells around 2016-2017.
RESPONSE TO THE LOWER OIL PRICE ENVIRONMENT
In periods of difficulty and uncertainty, it’s key to get the fundamentals right and our track record and robust business plan have enabled us to absorb the impact of the price fall and to ‘stay the course’, with a continued focus on value creation, business improvement and sustainability.
At the same time, we are relentlessly pursuing even stricter cost control and have identified a number of great opportunities to execute work more efficiently and reduce waste. The current environment is enabling us to challenge the status quo. From discretionary expenditure to redeployment of hoists and other resources, we need to ‘serve Oman’ by ensuring we are all working to remove inefficiency and waste. We are working collaboratively with our contractors, not mandating them, to identify mutually beneficial efficiencies. We have so far undertaken many Contract Optimisation Reviews and with more to come. Alongside procurement savings in our mega projects, we are well on our way to identifying $1 billion worth of real and structural savings over the period 2016-2020.
Further initiatives include the launch of our “Every Rial Counts” campaign, a wide-ranging initiative focused on savings and efficiencies across the Company (including right down to the amount of printing we do, and the level of food that is wasted) which emphasises that everybody has a responsibility to treat PDO’s money as if it were their own. We are also progressing well with our Lean continuous business improvement strategy which extends right across the business and is aimed at eradicating duplication, streamlining operations and cutting wasteful work processes.
IN-COUNTRY VALUE (ICV)
ICV is a marathon not a sprint but retaining more of the wealth of our industry in the Sultanate by developing local employment, training and supply chain opportunities remains a fundamental strategic goal for PDO. I am pleased to say that, despite the challenging economic environment, we remain, with our contractors, on course to deliver a further 7,000 job and training opportunities for Omani jobseekers. One great example of this is our 6G Welder Programme which was launched to train young Omanis to the highest, internationally recognised welding standards. The first batch of around 200 is due to graduate and they will work with our contractors on projects such as our Rabab Harweel mega project. We are also broadening our support for Omani SMEs by reserving scope for them in our contracts and offering technical, operational and governance expertise, and supporting our Super Local Community Contractors, which are Omani-owned companies providing essential oilfield services. The SLCCs have provided an opportunity to spread the benefits of our industry to local communities in terms of employment and investment and the combined capital value of the five SLCCs now stands at more than RO23 million. They also have around 10,000 shareholders drawn from local communities in our concession area, spreading the benefits from our sector.
Social investment also remains important to us as a means of embedding ICV and one marvellous example of this is our Banat Oman social enterprise, where PDO has funded the vocational training of hundreds of low-income women in traditional Omani skills so they can make a sustainable living for themselves and their families.