FIRST CLASS

Oman 2020 | DUQM | INTERVIEW

Tecnicas Reunidas' goal is to develop a large, highly efficient, and environmentally sustainable world-class refinery at Duqm.

Ricardo Penacho
BIOGRAPHY

Ricardo Penacho is a mechanical engineer with a MSc in engineering from Northwestern University (IL-USA) and a master's in project management from George Washington University. He has more than 30 years of international experience in the oil and gas industry, initially in refining technical support responsibilities while working for Petroleos de Venezuela (PDVSA) and later with Tecnicas Reunidas Spain, working in the US, Europe, and the Middle East in charge of major upstream and downstream projects.

Can you provide some context of Tecnicas Reunidas in Oman?
Tecnicas Reunidas was found 60 years ago in Spain and counts on vast experience of more than 1,000 projects executed in oil and gas and energy in 50 countries. In Oman, it started operations in 2005, carrying Sailh Rawl Project and establishing TR Engineering LLC. Since then, it has been awarded several other projects, the biggest of which is Duqm Refinery Project to execute the engineering, procurement, and construction (EPC), commissioning, and start-up of process units for a new 230,000-bpd refinery. The contract sees Tecnicas Reunidas in a 65% JV with South Korean firm Daewoo (JV-TRD). While developing the engineering and procurement activities in Madrid and Seoul, construction started in Duqm in November 2018. The goal is to develop a large, highly efficient, and environmentally sustainable world-class refinery through an effective combination of labor and capital held together by stringent rules of safety. Indeed, a large percentage of the 600 workers we employ directly as part of the JV-TRD team are Omanis who want to develop their careers. Through the construction and services subcontractors, another 10,000 workers will be participating in this project, a significant portion of them Omanis as well. To build the refinery, we acquired through a globalized procurement strategy materials and equipment from all around the world, including suppliers from Spain, South Korea, India, and Japan, among others, and from GCC as well with an important participation of Omani suppliers. Recently, we imported four reactors from India, and the logistics support provided by the Port of Duqm was excellent.

Why is it important for international players to take care of the social aspect when working in Oman?
While government protection of local resources is widespread around emerging markets around the world and especially the GCC, in Oman there are specific requirements to develop of local industry that is not seen in other countries. The social aspect is an extremely important factor to bear in mind for every international player seeking to work in Oman. One of the most straightforward ways to showcase commitment is employing a large share of Omanis and ensuring they acquire the necessary skills to advance in their professions. This investment in human capital not only benefits the host country but can potentially lead to future benefits under a business development point of view. For example, Oman has a refinery industry but wants to focus on the petrochemical industry. This presents a great opportunity for us, since we want to stay here long term.

What is your approach when selecting subcontractors?
The various EPC projects are more or less similar in nature, and we need to employ subcontractors with enough experience carrying similar type of work. We prepare a selection panel and judge the bids based on financial positions, experience in similar scope of works, and capacities to move people and equipment. Oman offers many local companies with experience in the civil construction sector, so there is space for us to perform a thorough technical and commercial evaluation. However, we have noticed some difficulties in contracting a highly qualified local company in the electromechanical sector with the required capacity for so huge project like this, which is a sector the country has to develop.

In what areas lie the most potential to update the existing technology?
In the construction sector, technology is of the utmost importance when it comes to accessing data or real-time information. The handling of information is paramount these days to improve efficiency and productivity, for analyzing scenarios and for making decisions. Specifically, this new way of working is providing a good way to work for the EPC industry. As for the procurement part, connectivity with suppliers is vital. In construction, knowing what is under production every day, how resources move, and the day-to-day developments are a must for setting the strategies to follow increasing the productivity and the efficiency of the resources available.