Edi­tor’s let­ter

Lo­cal­i­sa­tion will im­pact all parts of the oil and gas in­dus­try, and marks an in­vest­ment by pro­duc­ers into their long-term growth

Oil & Gas Middle East - - CONTENTS - Carla Sertin Edi­tor, Oil & Gas Mid­dle East [email protected]

Carla Sertin shares her thoughts on in­dus­try de­vel­op­ments.

One of the main trends to emerge in the re­gional up­stream sec­tor has been lo­cal­i­sa­tion.

Ma­jor oil pro­duc­ing na­tions like Saudi Ara­bia and the United Arab Emi­rates have been at the head of the lo­cal­i­sa­tion move­ment in the re­gion, with ini­tia­tives like Saudi Aramco’s In-king­dom To­tal Value Add (IKTVA) pro­gram push­ing com­pa­nies to base op­er­a­tions lo­cally, and to hire lo­cals, if they want to do busi­ness with Aramco.

Con­sid­er­ing Aramco’s po­si­tion as the world’s lead­ing oil and gas pro­ducer, it’s a smart move. These pro­grams en­cour­age the de­vel­op­ment of the coun­try’s en­ergy in­fra­struc­ture and sup­ply chain, and pro­vide jobs for its peo­ple.

With some over­lap be­tween man­u­fac­tur­ing and sup­ply ac­tiv­i­ties for oil & gas and other in­dus­tries, it could also help GCC coun­tries build up their in­fra­struc­ture for other in­dus­trial pro­cesses, too.

Be­cause the in­dus­try is based on col­lab­o­ra­tion, these pro­grams have a wide-reach­ing im­pact. A change in one’s poli­cies, or out­look, im­pacts ev­ery­one in­volved.

That was one key takeaway from my re­cent visit to the Abu Dhabi In­ter­na­tional Petroleum Ex­hi­bi­tion and Con­fer­ence (ADIPEC). Among the 15 halls and hun­dreds of stands for com­pa­nies from around the world, al­most all of the oil and gas pro­fes­sion­als I spoke to noted the same key mar­ket trends—lo­cal­i­sa­tion, in­creased col­lab­o­ra­tion be­tween in­dus­try play­ers and dig­i­tal­i­sa­tion.

None of these trends are in place by choice; it has al­ways been a mat­ter of sur­vival and growth. The col­lab­o­ra­tive na­ture of the mar­ket was put into fo­cus dur­ing the in­dus­try down­turn, when low prices squeezed oil and gas op­er­a­tors, in turn squeez­ing their sup­pli­ers and ser­vice providers.

As such, when key play­ers turned to dig­i­tal tech­nol­ogy as a po­ten­tial so­lu­tion dur­ing hard times, the rest of the in­dus­try had to fol­low suit; if cus­tomers want it, sup­pli­ers will pro­vide it. Dig­i­tal­i­sa­tion has seen a strong push from the oil and gas sec­tor, re­gion­ally and glob­ally, as a means to cut costs and im­prove efficiencies.

Now, lo­cal­i­sa­tion is in full swing; Saudi Aramco will in­vest $400bn into IKTVA in the next 10 years and plans to train 360,000 peo­ple to en­ter the la­bor mar­ket by 2030.

The world’s largest oil com­pany has signed up more than 400 com­pa­nies for IKTVA, in­clud­ing Sch­lum­berger and BHGE.

Bas­ing op­er­a­tions in Saudi Ara­bia might pro­vide in­ter­na­tional com­pa­nies a far­ther reach into the Mid­dle East, and a launch­pad for ex­ports to nearby na­tions.

How­ever this im­pact sup­pli­ers, pro­duc­ers are putting their growth at the fore­front; af­ter decades at the head of the up­stream oil and gas sec­tor, GCC pro­duc­ers are mak­ing long-term in­vest­ments into their own de­vel­op­ment.

THIS IS­SUE:

We re­view the in­dus­try’s land­mark event, ADIPEC (p26), and in­ter­view key in­dus­try play­ers

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