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Kuwait 2017 | ENERGY | VIP INTERVIEW

TBY talks to Ziad Jeha, Vice President & General Manager of Schlumberger Kuwait, on defying trends in the energy sector, advancing technology, and the consequences of the Paris Agreement.

Schlumberger's results from 4Q2016 show a revenue increase despite global volatility on the commodities market, partly due to strong testing and process activity for reservoir characterization in Kuwait. What was behind these activities?

The last two years were challenging, as they were for any other company in the oil and gas industry. The effects on the Middle East were not as dramatic as in North and Latin America. In fact, the activities in Kuwait have increased for us, party due to a tender we won from KOC to build early production facilities. We made our bids in the beginning of 2016, and we were awarded with three projects; one in heavy oil and the other two in Jurassic oil and gas. These projects are progressing well, and that is also the result of the great synergy between Schlumberger and Cameron, which became part of our company and has brought manufacturing expertise. We strive to deliver the first gas facility this year, and the second before the end of the year.

Have you seen a strong appetite for new technology from KOC?

KOC has always been thirsty for technologies, and for the past 78 years we have been in Kuwait, we have been a major supplier of technology in the country. It is my personal ambition to get Kuwait to be the first users of the new technologies that Schlumberger bring to the market. There have been several projects that we executed with KOC, where part of the technological development took place in collaboration with them, thus creating great value. For example, in directional drilling, we have deployed our PowerDrive, which increases the efficiency of drilling into these high temperature and high pressure reservoirs, delivering wells much faster. We have introduced new highway and broadband technologies to frack tight reservoirs and bring extra oil from existing wells, and we have received a number of awards from KOC for exceeding production expectation, mainly because we fracked wells that they had already given up on.

What are your expectations for the future of the discovery of natural resources in Kuwait, especially as the number of rigs had been announced to grow from 80 to 120? Do you anticipate offshore drilling?

Schlumberger and KOC have jointly developed a new seismic technology bringing a very high resolution for the sub surface geological formations. This has contributed to the discovery of the new fields in Kuwait, still mainly onshore. The offshore is not fully explored yet, but KOC is planning to venture into this and we happily join it on these explorations. There certainly will be rigs and other IPM activities. Offshore has not been the top priority for KOC for some time, though it is not the first time that Kuwait will be exploring the offshore; there have been some wells already drilled. KOC is currently looking into two rigs to be contracted, so we are awaiting the tender to come out.

In December, OPEC producers agreed to cut production, leading Kuwait to reduce total output by 130,000bpd. What are your expectations for this agreement for the industry, and what is your strategy?

We do not expect the strategy of KOC to change or that the activity will be affected with the new agreement. Post-agreement, most activities have been maintained. It is a challenging target for KOC to produce 4 million barrels in 2020, which is their main objective, so to steer in that direction, most activities are continuing. They could utilize the production cut as an opportunity to do some extra maintenance, but as far as surface and sub-surface activities for Schlumberger and for other service companies are concerned, there has not been much of an impact.

Schlumberger has embarked on an ambitious global transformation plan to reduce inventory, increase asset utilization, increase human productivity, and decrease unit support costs. How does this plan translate into you strategy in Kuwait?

The transformation itself is our CEO's vision. We want to be the best-run company in the entire world; not the best oil and Gas Company but best company in the whole world. Here, in Kuwait, we want to deliver the best service quality, and for that we are always looking at creating more efficiency and limiting any service issues that may arise. With the transformation plan, we are looking at every aspect of our operations, the procurement cycle and the organization. The lower oil price has incentivized us to increase our competitiveness. Although this Schlumberger initiative came before the global downturn in the market, we see there are a lot of improvements that we can make by following the program in our organization on the ground.

How will the commitments made by the Kuwaiti government toward the Paris Agreement influence government policy?

It has surprised me how quickly the government introduced initiatives here, and KOC has already inaugurated the solar electricity generation project to fuel the oil production operations. This project is the first of its kind in Kuwait and has the potential to drive other projects in the field of green power generation. The industry is one of the largest consumers in the country, and with well-organized projects, the energy cycle can be internalized with the usage of green energy.

What are your ambitions for the year ahead?

Schlumberger operates 15 of its global business lines in Kuwait at the moment, and over the past three years we have added two more. The drilling rigs services is an integrated part of our portfolio. Today, the flagship project for Schlumberger is the Rig of the Future, which is intended to revolutionize the way and the efficiency of the drilling process. The prototype should be out in 1Q2017, and it is my ambition to have KOC be the first user. We have recently conducted a workshop for KOC and see good momentum and opportunity to have this new project here, as well as to showcase the robustness and efficiency of the new technology.