34% STAKE IN PETROLEUM DEVELOPMENT OMAN

Oman 2019 | ENERGY | VIP INTERVIEW

TBY talks to Chris Breeze, Country Chairman of Shell Development Oman, on future growth, enhanced oil recovery, and long-term commitment to the country.

What new projects or future growth are you expecting to come from the MoU Shell recently signed with the government of Oman?

Today we are looking towards a new chapter in our partnership with the Sultanate of Oman. As part of Oman's new strategy for gas, we are proud to have signed a memorandum of understanding (MOU) with the Government of Oman that was announced earlier this year. It covers upstream gas exploration and development, gas-to-liquids (GTL), LNG and renewable energies. We hope this MoU leads to exploring and developing important new sources of gas. And if so, it will pave the way to monetising the country's natural gas sources. In particular, I am referring to GTL. As we know from Shell's experience in this space, developing a GTL project is highly complex and investment-intensive, but the end result is worth it. Shell's GTL technology converts natural gas – the cleanest-burning fossil fuel – into high-quality liquid products that would otherwise be made from crude oil. These products include transport fuels, motor oils and the ingredients for everyday necessities like plastics, detergents and cosmetics. GTL products are crystal-clear, colourless and odourless. They contain almost none of the impurities – sulphur, aromatics and nitrogen – that are found in crude oil. Today, GTL products are used in airplanes, cars and even Formula 1's Ferrari cars. GTL in Oman would generate valuable revenue and create wider social and economic opportunities for Omanis in the process. The government of Oman has rightly placed emphasis on new energy projects that focus on economic growth and job creation, on developing Omani talent and contributing to In-Country Value. Our company is keen to build on the things we have achieved with our partners in Oman. Throughout our history, we have experienced how strong partnerships are the bedrock for successful projects, benefiting our partners and shareholders alike. Oman is no exception and the accomplishments of Petroleum Development Oman (PDO) and Oman LNG speak for themselves. They are world class companies and we are proud to be part of them.

How is shell using enhanced oil recovery (EOR) technologies within Oman?

Our 34% stake in PDO is our biggest involvement in EOR, and we have had a long strategic alliance with PDO on EOR technologies. We have strategic alliances on a range of technical issues, but EOR is the centerpiece. PDO is interesting because it has chemical, thermal and gas EOR. Oman is the only country that is using all three techniques at a full scale. There are another 19 or 20 pilot projects that PDO is working on, and we are helping with several of those. We are now looking at ways to make these techniques cheaper so that EOR technologies become more robust in periods of low oil prices. Soon, we will operate in Oman ourselves, with our 50% stake in block 42, but at the moment we are only involved in non-operated joint ventures.

How does Shell support efforts to improve production efficiency and cost efficiency within Oman?

This is essentially the core purpose of our work in Oman. We are trying to enhance the abilities of our joint ventures and make them even more world class organizations than they already are. We do that by leveraging our global expertise and by learning from our partners, so it is a collaborative relationship. Our interactions cover the areas of people, technology, processes, and more. All in all, we bring in our Shell expertise and share knowledge with our joint ventures, and where necessary we support them in delivering improvement programs.

What is Shell's strategy for reaching Omanization targets?

We fully support the increase in employment prospects for Omanis. One of the key drivers for putting together our proposals for the projects that were mentioned in the MoU was employment creation, and we want to maximize the number of Omani jobs. That is our objective, which is why we proposed a GTL plant and extending the longevity of Oman LNG beyond 2025. It is also why we are looking at renewables as an area that is particularly well suited to Omani SMEs. Shell Oman Marketing Company has been awarded for its Omanisation efforts, and they are close to 90% Omanisation rate, putting them way beyond the targets established for fuel marketing companies. In oil and gas sector, the Omanisation target is 90% and both PDO and Oman LNG are on their way to hitting that. The potential downside for PDO is that they might lose experienced expatriate hires; therefore, we are focusing on a good set of programs for transitioning people into positions of technical independence. What I like about the Omanization targets is that they really focus on talent development. It is a pipeline, and you need to start the pipeline early if you are going to get the talent that you need at the top. We have also been training SMEs on how to build their own companies and increase their employment numbers as a direct result of the contact they have with us.

How has Shell's Solar into Schools initiative impacted the schools it targets?

We developed the project in 2015 as our Gift to the Nation. The first five schools are up and running, and soon we will be able to find out exactly how much the program contributed to the energy requirements of the schools. One of the great upsides of the program has been helping the Authority for Electricity Regulation introduce regulations that allow people to feed electricity back into the grid from rooftop solar, or what is now called “Sahim” initiative. Though the solar panels do not necessarily meet the schools' daily energy requirements in full, the fact that they pump electricity into the grid during holidays reduces energy bills in the long-term; we will have the exact results of these programs very soon. There are another four schools in the pipeline. Reverse metering and other new advantageous energy usage schemes are key in allowing schools to put energy back into the system.

What are Shell's long-term commitments to Oman?

We have plans in place for 20-30 years. We are proud of our history in Oman, and completely committed to the country's future. We see the new business in block 42, the upstream gas and related projects in GTL, and renewables as setting a growth agenda for Shell in Oman. This growth agenda is aligned and integrated with Oman's own growth projections and perspectives.