ADIPEC 2016 review: Key talking points from the world's most influential oil and gas event
COSTS AND OIL PRICES
Global crude oil prices dropped to record levels in 2015, prompting the industry to call for reform and aim for greater efficiency throughout a field’s life. “I hope it is the beginning of more reform,” the former UAE Ministry of Energy Suhail Al Mazroui said at the opening ceremony last year.
At this year’s ADIPEC, some of the world’s premium international and national oil companies were quick to deliver their message on how low oil prices had affected them over the last 12 months. Eni’s CEO Claudio Descalzi described how the company’s exploration strategy had changed as a result.
“We have to go towards simple projects and try to avoid big ones, maintaining cash flow for each. We have to find a win-win contract to be able to invest with some guarantee that we can recover our investment. What we plan and what we see for the future is to be more efficient and more cost-effective”.
This sentiment was echoed by Qatar Petroleum’s President and CEO Saad Sherida Al Kaadi.
“At QP, we’ve been trying to optimise wherever we can in order to be more efficient. Every element of our production has been optimised to produce at the lowest cost possible while maintaining our HSE standards.”
With forecasts that crude oil is set to slip back to $45 per barrel, the base work that national oil companies (NOCs) and international oil companies (IOCs) have implemented in 2016, stands them in good stead for a ‘lower for longer’ oil price industry.
MAINTAINING THE SKILLS PIPELINE
Following up on their successful ‘Young ADIPEC’ initiative that was launched last year at the event, the organisers introduced a new forum to inspire the next generation of engineers to take STEM subjects (science, technology, engineering, and mathematics) and think about a career in the oil and gas industry.
Last year’s event saw an astonishing 33% increase in students aged 14-17 taking part in the oil and gas event. More students than ever attended this year. Patron of ADIPEC, H.E. Sheikh Nayan Bin Mubarak Al Nahyan explained:
“The Young ADIPEC Forum is a very important platform for us, as the UAE is working hard to empower youth, develop their leadership capabilities, and invest in their innovative skills to successfully enter a rapidly changing world.”
The continuation of developing the next generation of oil and gas engineers is vital, as a recent report by professional services company, EY explains. Their report, which featured in our blog in November 2016, showed that while the perception of the industry is that it has an ‘ageing workforce’, this isn’t entirely true. In fact, under 25 year-olds now comprise 15% of the oil and gas industry’s workforce.
Bigger and better youth initiatives, such as the forum at ADIPEC, is just one way the industry is helping to maintain the skills pipeline required for years to come. And the report by EY has shown that these initiatives are helping to boost the percentage of under 25 year-olds in the industry.
THE CALL FOR COLLABORATION
“Collaboration” was another buzzword used across the various events and speaker slots at ADIPEC 2015. The requirement for the industry to work together was being pushed to ultimately share costs of exploration and decommissioning projects, as well as work on innovations to reduce operating costs in the future.
This requirement for a collaborative approach was made even stronger after the International Energy Agency estimated in 2016 that the world would need to invest $68 trillion in the energy sector by 2040 – $45 trillion of which will need to be pumped into the oil and gas industry.
In order to meet the world’s energy demands, it was no surprise when ExxonMobil’s CEO Rex Tillerson repeated the need for collaboration at ADIPEC 2016.
“We must be resilient and willing to adapt to the ever-changing nature of the industry. Today’s environment requires strong partnerships to ensure that there is an incentive to make significant, sustained investment in research, development, and deployment of new technologies to meet the energy demand challenge.”
Rex also pointed towards the work they are doing on the Upper Zakum field in UAE with joint venture partners as evidence of their new, collaborative approach.
STAND BEHIND STRONG LEADERS
The oil and gas industry, since the downturn in 2014, has been a challenging period. Adapting to lower-for-longer pricing of crude oil, the industry is learning to work together in order to reduce capital and operating expenditure into the future – and this begins with standing behind the opinions and strategies of the industry’s strong leaders.
To achieve this, ADIPEC’s Global Business Leaders’ session this year called for ‘stronger leadership’ in order to ride through the industry’s transformation together. Mark Garrett, CEO at Borealis said:
“Leadership can’t be taught, but it can be improved. You have to look for every opportunity to stretch every dollar of value out of every barrel of crude oil that you produce. This involves a lot of hard work but at $45-$55 per barrel, you have to be willing to do it”.
With 75% of global power generation by the year 2030 still relying on fossil fuels, the long-term future of the industry still looks promising. With strong leadership, better collaboration, and a continual focus on the skills pipeline, the industry can continue to work towards a more efficient and profitable future – as flagged by the industry leaders at ADIPEC in 2016.
Photo Credits: ADIPEC
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