PDO to invest over $20bn up to 2021 in hydrocarbon production
MOMENTOUS TRANSITION: ‘As we evolve and commercialise our expertise in years to come, there is the distinct prospect of becoming Energy Development Oman’: Raoul Restucci
Petroleum Development Oman (PDO), the biggest oil and gas producer of the Sultanate, envisions an investment of over $20 billion up to 2021 to help sustain long-term hydrocarbon production, the majority government-owned company said in its newly released Sustainability Report for 2017.
The figure is largely in trend with capital expenditure (capex) and operating expenditure (opex) levels of the company over the past several years. PDO’S capex totalled around $5.8 billion in 2017, while opex was pegged at $1.8 billion, representing a reduction of around $700 million from the 2017 expenditure projected a year earlier.
A rigorous cost management regime coupled with the implementation of Lean business principles designed to eradicate waste and streamline operations contributed to significant savings in 2017, the report said.
Around $199 million were generated in the form of oil capex savings last year, stemming from a combination of drilling efficiencies, well optimisation initiatives and various project savings. Gas capex savings pitched in another $188 million, the report said.
PDO’S budget for 2018 is $4.114 billion, which includes around $85 million of presently identified savings in oil capex and $60 million in gas capex, it stated. To help finance its expenditures, PDO says they are exploring alternative financing options for the consideration of the company’s shareholders.
“A financing option was presented to shareholders during 2017 in respect to the releasing of value from PDO’S working capital. During 2017, PDO continued to work on a significant proposal that would leverage some of PDO’S assets, with the final proposal being presented to shareholders during the first half of 2018.
Additionally, we are working closely with certain PDO contractors to further release value from our working capital for a further proposal for shareholders,” the company said in its Sustainability Report.
A $4 billion Pre-export Finance facility secured by PDO on behalf of the government in 2016 has repayments which are scheduled to start from Q3 2018.
The loan is scheduled to be repaid by the end of Q2 2021, it stated.
Commenting on PDO’S allround performance in 2017, Dr Mohammed bin Hamad al Rumhy, Minister of Oil & Gas and Chairman of the Board of Directors of PDO, said: “Against a backdrop of continuing uncertainty over oil prices, PDO performed admirably to comply with revised production targets as a result of the Opec/non-opec agreement, which has played an important part in stabilising prices across the world.
At the same time, the Company kept up its cost control and Lean business efficiency drive, supported (the efforts of His Majesty’s government) to diversify the economy, and made further substantive progress on Incountry Value, including the creation of many thousands of job, training and redeployment opportunities for Omanis in both the oil and non-oil sectors.”
Raoul Restucci, Managing Director — PDO, added: “Going forward, and in line with stakeholder expectations, we will stay the course on our strategic priorities of sustainable production. This will be in compliance with Government guidance, acting as a swing producer and meeting government gas demand, ensuring we replace reserves at a greater rate than we produce them, and generating strong revenues, through the creation of new value streams.
Likewise, we will not let up on our ICV drive, supporting economic diversification through the Tanfeedh programme and developing Omani talent and businesses.
The Board has given its full endorsement to proposals to pursue opportunities beyond our natural mandate and Block 6 concession, including services and consultancy, nationally and regionally. As we evolve and commercialise our expertise in years to come, there is the distinct prospect of becoming Energy Development Oman.”