80TH ANNIVERSARY IN THE UAE

Abu Dhabi 2020 | ENERGY | VIP INTERVIEW

TBY talks to Ali Al-Janabi, Country Chairman of Shell Group of Companies - UAE Shell, on what makes Abu Dhabi operations different, joint ventures, and a diversified workforce.

Can you tell us about the defining features of Shell's operations in Abu Dhabi and the significance of the UAE for Shell?

This year we will celebrate our 80th anniversary in the UAE. This is a journey we started back in 1939, and our relationship in the UAE began in Abu Dhabi, but expanded to include Dubai. Historically, we had a 9.5% stake in ADCO until the license expired in 2013, In 1978 we established the ADNOC Gas Industries, or GASCO, a joint venture with Total and Partex. We hold 15% alongside Total's 15% with Partex having 2% and ADNOC maintaining a 68% share. Two years ago, we celebrated 50 years in Dubai, where we have been supplying aviation fuel with a significant market share of that going to Dubai's airports to this day. With 500 plus staff across the Emirates, we are firmly committed to the UAE. We have a significant presence across the full value chain including upstream, midstream and downstream. With trading offices for some of our products, we supply chemicals, lubricants and commercial fuels. Strategically, we deliver regional support to areas such as Iraq and other joint ventures in markets such as Oman and Kuwait. While our concession continues for another ten years or so, we explore other opportunities in which we can partner. Our discussions with ADNOC aim to uncover how we can best align their priorities with our financial framework.

Where do you see opportunities to further deepen this relationship with the UAE, and what are some of the issues that you are exploring?

Beyond the joint ventures we have been involved in with ADNOC in a number of ways, R&D and enhanced oil recovery (EOR) competency has led to senior Shell experts based here supporting ADNOC in related projects. There is also very strong support upstream as well as for midstream and downstream activity. Additionally, we are also involved in human capital support with ADNOC Gas Processing, and have secondees in various ADNOC departments such as finance or HR. Our gas research center was set up in 2010 with several ongoing projects, in conjunction with the Petroleum Institute, today a part of Khalifa University. Shell is a lot more involved with gas when we compare our portfolio to other IOCs, which was by design. Shell has made bold commitments with regards to greenhouse gas emissions. Regarding collaborations we will continue to look at where other projects can develop in step with ADNOC, and Shell's collaborations over the past three years have been very focused.

How are you working in EOR projects and how do you assess Abu Dhabi's EOR targets?

Shell has vast expertise in EOR built over 40 years, and is probably the leader in EOR. This experience has been developed in neighboring countries. ADNOC's oil target goes from 3.5 million barrels to 4 million barrels to 5 million barrels. They are very well managed reservoirs, but the question is how do you extract more from them, and with gas injections of CO2 can they be effective? There are a number of pilot schemes being deployed regarding CO2 and polymers, which is a segment of our research and development activities. Getting more out of the existing reservoirs and exploration efforts around the new reservoirs also helps to achieve production of five million bbl/d. From an EOR perspective going from gas injection to water flood should free up quite a lot of gas, which could help achieve ADNOC's gas self-sufficiency target, which is within reach. There is a combination of new gas exploration, the unconventional as well as switching from gas injection to water flooding that should release some of the gas already injected, potentially developing some of the gas caps that ADNOC has drawn attention to.

What will be fundamental for the UAE to achieve gas self-sufficiency?

Today ADNOC Gas Processing probably supplies at least 65 to 70% of Abu Dhabi's gas need. This is for the domestic market for power and water, but also for gas injection and exports through LNG, and amounts to almost 6.5 BCF per day. ADNOC Gas Processing is world class in terms of size and complexity. I call it the refinery equivalent, if there is a refinery equivalent in terms of gas, because there are multiple streams of gas that come into it, and we are very proud to be a shareholder. I see that there will be more gas becoming available and the decision is now for ADNOC to determine the optimal solution to process this gas based on its gas master plan which may channeling through existing capacity at ADNOC Gas Processing. If it is ultra-sour gas and we have seen some of the new concessions that have just been announced which is the Ghasha gas to ENI, Wintershall and OMV, then we will probably require different sets of gas processing capacity. I can see a solution where the different gas processing plants can be utilized based on technical ranges and varying levels of (gas) “sourness” whether it is ADNOC Gas Processing, ADNOC sour gas or a the new offshore ultra-sour gas hub as they will all have different requirements. Shell has deep experience and expertise in sour gas treatment both from an operational capability as well as technology deployment in non-Shell joint ventures that we support.

Can you tell us about your engagement with the in-country value (ICV) program and what is your assessment on working closely with local SMEs?

In-country value has been a well thought out program, it was great to see some of the vendors at ADIPEC displaying ICV certification on their booths. ADNOC are targeting a minimum of 40% local content, which is achievable given the supply chain base in country, and this number is set to increase over the years. As an international company we do not get involved in the tendering opportunities as its done by the operating companies through ADNOC procurement. We have however provided support to both ADNOC by sharing best practice from our JVs in the region.

Can IOCs really hope to be taken seriously as players in the energy transition when so much public opinion is weighted against them, and oil production continues to increase globally?

Shell is committed to the energy transition and our CEO is very visionary and wants to thrive in the transition. Shell is not a follower, we are a part of it, the BG acquisition is part of this strategy with specific ambitions for greenhouse emissions. Last year we released our Sky Scenario, which set out a path to achieving the COP 21 agenda by 2070. To get there, we will require more collaboration between government and private entities to achieve this. Shell has announced its aim to reduce the net carbon footprint by 20% by 2035 and by 50% by 2050 which is quite a significant ambition. Shell has also linked the executive pay to carbon reduction targets, making it a first in the industry to do so.

What can be done to attract younger people and women into the energy industry?

In general, Shell perhaps has a much younger workforce than others, but this is an issue in the industry. I remember when I was working for one of the energy services companies and the average age at the time in the early 2000s was 58 or 59. Therefore it is not a story that is built now but one that started a long time ago as every time there is boom and bust people leave the industry and few get replaced. However, Shell continues to recruit through the down cycle. Millennials want to work for employers who are committed to values and ethics, and given our commitment to playing a leading role in the energy transition where we are a lot more involved in gas and new energies businesses compared with others, this tends to attract more graduates. In terms of women in energy, as a father of three young girls yet to explore the world, gender balance and diversity at the work place is deeply rooted in my DNA and I am really proud that at Shell we have the industry's first female CFO. Can we do more as an industry, yes, we can! It's about providing the space to create the environment for female talent to develop their careers, and at Shell we are set on a journey to getting gender equality.