The Business Year

Yousuf Al-Ojaili

OMAN - Energy & Mining

On the Value Chain

CEO, Oman Gas Company

Bio

Yousuf Al-Ojaili is a graduate of Mechanical Engineering from the University of Tulsa in the US and he also obtained an MSc in Industrial Engineering from Sultan Qaboos University. His industrial career spans over 25 years and has been spent in positions at Petroleum Development Oman, Brunei Shell Petroleum, and Oman Gas Company. He is a Board Member of Takamul Investment Company (a subsidiary of Oman Oil Company), Board Member of Oman Oil E&P Company, and a member of the Joint Management Committees of both BP Oman and Oman Oil’s E&P Abu Tubul Gas Development. In terms of academia, he is member of the Industrial Advisory Board of the Engineering College at Sultan Qaboos University.

"OGC has evolved from a gas transportation company to a more complex gas transportation and gas value chain focus. "

Could you describe the evolution of the Oman Gas Company (OGC) since 2005?

The company was established in 2000, when it took over the pipeline transportation business from PDO at that time. The pipelines were about 900 kilometers long and we had a handful of gas consumers at that time. As of today, we have 43 gas consumer points in the country. We have almost tripled our pipeline length, we added three compression stations on the pipelines, and we are still expanding the pipeline network. OGC has evolved from a gas transportation company to a more complex gas transportation and gas value chain focus. Our largest consumer, sector-wise, is power and water. Second comes industry, and that consists of large industrial users, like the methanol, fertilizer, steel, cement, and refinery sectors, and then a good percentage of our gas goes to oil operations.

How much gas did you deliver overall in 2012?

In 2012, the average daily delivery was around 42 million cubic meters a day by OGC. Our system capacity is in fact more than 60 million cubic meters per day. We have a five-year plan, and we know where the bottlenecks will be. To conduct these reviews we have a network simulation, and we receive gas demand projections from the Ministry of Oil and Gas, which is crucial. There is a lot of interaction and cooperation with the Ministry.

What level of reliability does OGC operate under?

We have a very high level of reliability. In 2012, we were at 99.997%, which means that we only had a 0.003% interruption rate. We do not distinguish between large and small consumers, but if you shut down a big consumer the economic impact is greater. We have had a high reliability rate across our operations since 2005, and we have not fallen below 99.99% of gas availability in the network.

From where is your gas sourced?

We get our gas from four producers currently: PDO block 6, which accounts for about 70% of gas production, and then the other 30% comes from Oxy’s Safah field, PTTEP, and the Dolphin Gas import project. On average, we import about 5.5 million cubic meters per day from Dolphin, which is approximately 12% of our total supply. It is important that you do not depend on one gas supplier, especially in a country like Oman where we are heavily reliant on gas, and our gas network is quite diversified geographically. We have been dependent not only upon Dolphin Gas, but other producers like PTTEP and Oxy, especially if we have significant gas interruptions from other producers. The Dolphin connection is the first cross-GCC connection, and now we are importing Qatari gas through the UAE. That is the type of good cooperation we would like to see, especially when you talk about gas networks, electricity networks, and other forms of cooperation.

Do you provide any consultancy services for companies looking to explore for gas in Oman?

We do and we help them. We have been providing some consultancy services, especially for the newcomers to Oman, helping them to understand the gas infrastructure, the business, and the opportunities, where to tie in their plants and pipelines, and sometimes we help them on the pipeline design itself. We also provide feedback on where we can optimize the gas value chain in the country. We have a strong relationship with the Ministry of Oil and Gas, and we advise its officials and they consult us on gas-related issues. We also consult them on gas value opportunities, which has been successful, and we now have projects in the pipeline.

“OGC has evolved from a gas transportation company to a more complex gas transportation and gas value chain focus. “

How do you envisage gas prices changing in coming years?

The price has already changed for major consumers, and the country has to follow international trends. However, for new industries, the government has put in place a different set of gas prices, and that is in line with international trends. Of course, the rise of unconventional or tight gas will mean our supply will cost much more. If we go more unconventional, drill deeper, then we perhaps will need fracking technology and the price will go higher.

How much of the manufacturing and design process for pipelines is OGC involved in?

We do the feasibility and front-end design in-house, and that is to control our specifications. The pipes themselves come from outside, from China, Europe, and India, and then the local contractors are involved in the EPC part of the project.

Where is your focus regionally?

One of our largest consumer bases is Sohar, followed by Muscat, and the third region in terms of volume consumption is Salalah. Currently, we have about 320 employees across our headquarters and five operational regions, all the way from Muscat down to Salalah. We will start operations in Sur soon in 2013.

How will the Duqm development affect OGC?

We are gearing up for it. We are building the largest capacity pipeline in OGC down to Duqm, just to be ready for the Duqm development. We are quite busy on the Duqm pipeline now and I hope we will be the first main infrastructure to arrive at Duqm.

Can you tell us about your Omanization initiatives?

In April 2013 we reached two years without a lost time incident (LTI). We are doing very well, as is the case with any company that strives in Oman. The concern is road traffic and accidents, and we have been unlucky sometimes with accidents; however, we have succeeded in reaching two years without an LTI, and that is a good record on the safety side. We also have ISO certification in all the different aspects of health and safety, and quality. We are also doing very well from the environmental perspective because we do not flare gas, we only do so when there is an emergency in the compressor station. We are one of the cleanest oil and gas companies in the country. With regard to Omanization, we stand at 95% in the company, with many departments already scoring 100%. Training and development is very important to retain staff.

What is your outlook for the gas industry in Oman?

Our outlook, starting with OGC itself, will be focusing not only on expanding our gas network, but focusing on optimizing the gas value chain. Meaning, we may be burning a lot of good energy. We are currently giving it to partners to burn, for example, in their gas turbines. We want to start focusing on the extraction of these liquids and make use of its benefits. We have already secured an agreement with the Ministry of Oil and Gas and the Ministry of Finance to implement an LPG project located in Salalah, because we see economical volumes of LPG coming into our pipeline network. We will be building an almost 800 ton per day LPG plant down in Salalah, where we are very active. We are currently in discussions with the Salalah Free Zone and the Salalah Port on the location of the plant and storage facilities, and I hope to follow this with other projects in other parts of the country. In Oman, I think that OCG will continue to grow and there will continue to be growth in gas demand as the government looks favorably at projects that require gas and the value aspect associated with it. This includes the in-country value, which is becoming very important and includes employment. It is not only the volumes, the economics, or the revenue aspects, but it is also how much in-country value the project can bring, the volume of gas that it requires, and the type of employment opportunities it generates. I expect that the government will be focusing more on these three areas. I think the government will be releasing gas to more projects and so there will be a growth in gas-based industries in Oman.

© The Business Year – May 2013

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