What strategy is PDO currently following to mitigate the impact of low oil prices?
There is a comprehensive effort to leave no stone unturned in our drive for cost control and efficiency and value creation, including far greater collaboration with our contractors. Throughout 2016, we staged 24 Contract Optimization Reviews (CORs) focused on multi-day workshops where, together with the relevant contractor, we identified opportunities for enhancing efficiency and eliminating waste. This resulted in USD64 million in cost savings for the year and important efficiency and productivity gains for PDO and our contractors. Our strategic partnership with Petrofac has enabled us to save in excess of USD480 million on key equipment and other purchases for our Yibal Khuff mega project. For 2017, we have set an aggressive target of 30 CORs. Of this total, 20 had already been completed by the end of August resulting in savings of around USD185 million. What's more, our second Focused Results Delivery (FRD) program has identified an opportunity to simplify the regulations around our small oil and gas facility projects that could save more than USD100 million a year. We undertook this after the success of our first FRD program in 2016, which identified over 500 cost-saving improvements through the removal of “nice-to-haves" in our engineering standards. One particular area I would like to highlight is our Lean Program, which has transformed the way we work by stripping out waste and streamlining our practices across all aspects of our business. So far, Lean has helped us to generate around USD1 billion in savings, revenue generation, and cost avoidance, not to mention the more-than 5,000 ideas for continuous improvement that have been submitted by our staff. Lean has galvanized all levels of the company, delivering tangible benefits by freeing up resources and ratcheting down costs.
Although PDO has 178 producing oil fields, 10,000 active wells, and had its highest oil production in 2016, does it have any plans to expand exploration or drilling?
We have to work within the mandatory parameters laid down by the government in light of the OPEC production agreements. However, our focus remains on delivering our growth program with ever-increasing efficiency and staying the course in our key strategic priorities. We remain bullish about our growth prospects, as our portfolio remains healthy and profitable. We are capable of ramping up our long-term production plateau to at least 650,000bpd in the next three years but are being guided by the Ministry of Oil and Gas on future targets. I'm particularly proud of the approach taken by our exploration team, which has proficiently hooked up and monetized all exploration discoveries, enabling it to fully recover its exploration spending within the same year.
What main initiatives is PDO currently rolling out across its multiple operations?
In January 2017, we launched an in-house behavior-based safety system called Ihtimam in three pilot areas, which is providing a drastic change in how we manage personal safety and associated behavior. Another pillar of this is our In-Vehicle Monitoring System, which provides a combination of online monitoring, structured analysis and reporting, and consistent consequence management, and has led to significant falls in the number of road safety violations from speeding, seatbelt under-usage, and harsh braking. In February 2016, there were 14.76 violations per vehicle in the 8,500-plus PDO and contractor fleet. However, by August this year, this had fallen to 1.65 with improved compliance of around 89%.
What are PDO's main objectives for 2018?
In a nutshell, delivering on promises and meeting our stakeholders' demands and expectations more safely, efficiently, and responsibly. We will continue our drive for the early monetization and hook-up of low unit technical cost prospects while maintaining our overarching focus on personal and process safety as we strive for Goal Zero—no harm to our people, environment, or assets. At the same time, to guarantee our future sustainability and that of the nation, we must ensure reserves and contingent resource replacement ratios are above one.