ITP MEDIA GROUP / BUSINESS APRIL 2022 • VOL. 18, ISSUE 04 NeNeNililGGunununinionon,,,CCouountry Heaed anand ViVicecePPreresisdedentt, OpOpOpereratatioioonsns,,QaQaatatar ratat McDermottteexpxlainns shis sfifrm’ss rororoleleiin n QaQaQtatar’r’s s gigianannt t NoNorth Field Expanssion nProjectC M Y CM MY CY CMY KAPRIL 2022 / Volume 18 / Issue 04 22 Standing on the precipice 30 The energy transition advantage 16 Developing the future of gas 06 The industry in numbers Highlights in this issue: 16 COVER STORY 3 IN THIS ISSUE oilandgasmiddleeast.com APRIL 20224 IN THIS ISSUE oilandgasmiddleeast.com APRIL 2022 DOWNLOAD IT TODAY ON YOUR iOS, ANDROID OR KINDLE Also inside: App 30 06 / In numbers Gas output in Sub Saharan Africa set to double 16 10 22 8 KEEP UP-TO-DATE For all the latest news, check out www. oilandgasmiddleeast .com 28 Last month 8 / Industry Outlook Gas demand to increase by nearly half by 2050 10 / Industry Outlook The essential future of predictive maintenance 32 / Project focus Everything you need to know about Saudi Aramco’s Zuluf Oilfield Expansion Offshore Package 3 42 / Five minutes with On the role the Middle East will play in the future of energy, with Baker Hughes 12 / Comment The oil and gas industry must act to turn climate-change ambition into action 22 / Sustainability Oil & Gas Middle East reconvenes its hydrogen thinktank 28 / Technology The biggest myths surrounding managing risk to industrial control systems 30 / Technology The Middle East’s inherent energy transition advantage 16 / Cover Developing the future of gas 14 / Comment It’s time for greener gas production5 oilandgasmiddleeast.com APRIL 2022 EDITOR’S LETTER H ello and welcome to the April issue of Oil & Gas Middle East. This month we spend a great deal of time discussing the future of the energy industry. Whether it be navigating the changing energy mix or adopting new technologies, the industry is alive with discussion on the energy transition. Our cover story is related to this topic to a certain extent. Neil Gunnion, Country Head and Vice President, Operations, Qatar for McDermott spoke to us following the announcement that his firm would be responsible for the offshore scope of Qatar’s giant North Field Expansion Project. A huge project, the North Field Expansion will see Qatar’s production capacity of liquefied natural gas massively increase. For insights into how McDermott won the project, and how it intends to complete it, turn to page 16 for the full interview. Demand for LNG and gas is likely to continue to grow as countries turn to less carbon-intensive fuels. Indeed, a report by the Gas Exporting Countries Forum (GECF) has found that demand will increase by nearly 50% over the next decade. The GECF said that this growth will be driven through increased use of natural gas as a more climate-friendly energy source as the world’s energy demand increases in line with population growth – turn to page 8 for the full write-up on the report. The future is also rosy for gas with its use in the creation of blue hydrogen, often touted as a future fuel. This month saw the convening of the Oil & Gas Middle East Hydrogen Thinktank for an examination of the developments in the sector over the past three months. We will continue to hold regular thinktank discussions with experts to assess the development of hydrogen, but for now you can turn to page 22 for a write-up on what the latest thoughts from our expert panel are. With that, I’ll let you get to reading. Matthew Amlôt Editor Oil & Gas Middle East Looking to the future SUBSCRIBETo subscribe to Oil & Gas Middle East, or other ITP Business titles, go to: www.itp.com/subscriptions. 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The opinions and views contained in this publication are not necessarily those of the publishers. Readers are advised to seek specialist advice before acting on information contained in this publication which is provided for general use and may not be appropriate for the reader’s particular circumstances. The ownership of trademarks is acknowledged. No part of this publication or any part of the contents thereof may be reproduced, stored in a retrieval system or transmitted in any form without the permission of the publishers in writing. An exemption is hereby granted for extracts used for the purpose of fair review. Published by and © 2022 ITP MEDIA Group FZ-LLC. GAS OUTPUT IN SUB SAHARAN AFRICA SET TO DOUBLE Relatively undeveloped deepwater developments will drive the region’s gas production increase S ub Saharan Africa’s gas output is set to double this decade as untapped deepwater developments come online, research from Rystad Energy found. In 2021, Sub Saharan Africa’s output stood at 1.3 million barrels of oil equivalent per day (boepd), but in 2030, Rystad predicts this figure will grow to 2.7 million boepd. “Production in Sub Saharan Africa is expected to increase significantly in the coming years, with natural gas output in particular set to see a boom in output,” Siva Prasad, senior upstream analyst with Rystad Energy said in the report. Primarily, this growth will be driven by developing the region’s deepwater developments. Currently, deepwater output averages around 6 IN NUMBERS oilandgasmiddleeast.com APRIL 202250% of annual production, with gas output from these fields at a minimal level, but Rystad says that gas output from these fields will “surge” in the coming years. “Although there have been notable onshore finds, the development of deepwater offshore resources is going to usher in a period of rapid growth for the region,” Prasad added. The firm predicts that production from deepwater developments will increase from 120,000 boepd in 2021, or 9% of total output including shelf and land production, to 1 million boepd in 2030, accounting for 38% of all output. This increase will have a corresponding impact on greenfield investments, with gas and liquids greenfield capital expenditure growing in Sub Saharan Africa from $12 billion in 2021, of which $8 billion was allocated to deepwater developments, to $40 billion in 2030, of which $24 billion (60%) will go to deepwater projects. A HISTORIC CHANGE Sub Saharan Africa has historically been a low producer of natural gas. However, this is likely to change as significant undeveloped deepwater finds in countries in the region, including South Africa, Mozambique, and Mauritania, will drive future production, Rystad said. In Mozambique, TotalEnergies’ Area 4 liquefied natural gas (LNG) project holds an estimated 2.3 billion barrels of oil equivalent (boe) in gas reserves. Trains 1 and 2 are expected to start production in 2028. South Africa’s Brulpadda field, which TotalEnergies’ is also operating, is estimated to hold 715 million boe. Meanwhile, the Greater Tortue Ahmeiym floating LNG development, which straddles the maritime border between Mauritania and Senegal, is estimated to hold 300 million boe. BP is operating the Greater Tortue Ahmeiym project. According to Rystad, around 60% of the current potential recoverable reserves across the region lie in deepwater areas, of which around 60% is gas. The firm pointed to Mozambique as the most dominant, holding 52% of total recoverable gas resources in Sub Saharan Africa, followed by the Senegal-Mauritania region, with 20%, and Tanzania with 12%. Nigeria, currently Africa’s number one oil producer, will also play a role in the output hike, as the country holds significant recoverable reserves of gas, Rystad said. However, while gas production is expected to surge, Rystad believes that Sub Saharan Africa’s liquids production will drop over the next decade, falling for the first time in 20 years, until 2028, and then return to 2020 levels of production, of around 4.4 million barrels per day (bpd), by 2030. From there, liquids production is expected to grow, reaching approximately 5 million bpd in 2035. Of deepwater resources in Sub Saharan Africa, around 40% are liquids, with Nigeria holding the most with a 33% share, followed by Angola at 31%. Ghana and Mozambique also hold significant untapped resources, Rystad noted, with 8% and 7% respectively, of the region’s deepwater liquids reserves. The firm warned, however, that while the opportunity for gas and liquids in the region is high, significant challenges face deepwater projects in Sub Saharan Africa. In particular, Rystad said that projects can be risky, delayed, or unsanctioned due to “high development costs, challenges accessing financing, issues with fiscal regimes and other above- ground risks.” Many deepwater projects will “face challenges getting off the drawing board” while international majors continue to focus on reining in upstream costs, reducing emissions, increasing renewables, and engaging with the energy transition. “Majors are, overall, focused on cutting upstream costs, reducing emissions, increasing renewables and the energy transition, meaning such deepwater projects often have to take a backseat when it comes to apportioning investment. European banks are tightening regulations for funding high-emission hydrocarbon projects, and African banks could struggle to provide the necessary financing. This leaves Asian banks – mainly Chinese – with comparatively less strict regulations on funding fossil fuel developments,” the firm concluded in its report. 7 IN NUMBERS oilandgasmiddleeast.com APRIL 20228 INDUSTRY OUTLOOK oilandgasmiddleeast.com APRIL 2022 underscores that investment in natural gas is critical for the stability of global energy systems. It projects that by 2050, total upstream and midstream investments will reach a heft y $8.7 trillion,” Eng. Mohamed Hamel, secretary general of the GECF said in a statement. The group, using UN projections, expects the global population to rise from 7.8 billion in 2020 to 9.7 billion in 2050, creating signifi cant upward pressure on energy demands, with almost all of the additional population living in urban areas. Hamel wrote in the report: “Consequently, and despite energy effi ciency improvements, global energy needs will grow. All energy sources will contribute to satisfying these needs. There is no one-size-fi ts-all model. Future energy pathways will vary from one country to another. Understandably, the energy transition in India cannot be the same as in Europe. “Natural gas is energy that fi ts most pathways. It helps to transition away from the use of wood and dung for cooking; thus alleviating the adverse impacts of indoor pollution and reducing G lobal natural gas demand will rise by 46% from 3,840 billion cubic metres (bcm) in 2020 to 5,625 bcm in 2050, the Gas Exporting Countries Forum (GECF) said in a report released in March. The report, titled Global Gas Outlook 2050, also found that the Asia Pacifi c region, Middle East, and Africa would responsible for the biggest source of this growth. In the Asia Pacifi c region, GECF expects consumption to almost double. “The GECF Global Gas Outlook 2050 Global demand will increase as natural gas and renewables lead the energy transition, the GECF said in a new report GAS DEMAND TO INCREASE BY NEARLY HALF BY 20509 INDUSTRY OUTLOOK oilandgasmiddleeast.com APRIL 2022 package, natural gas is still seen as having a future in the Union, especially for lending balance to the power system and displacing coal in several central and eastern European countries,” the report read. The Middle East will play an important role in providing the gas of the future, delivering 32% of the global gas supply increase, according to the report. The outlook used for this scenario also expects deepwater off shore production to grow strongly, contributing more than 1,000 bcm of annual output by 2050, nearly a 500% increase from current levels. Meanwhile, conventional associated gas is expected to decline from a 12% share of global gas production in 2020 to 7% by 2050 in line will declining oil production. Unconventional gas production is expected to rise from 25% in 2020 to 30% in 2030 and then maintain the same level from there onwards. In the GECF, the report expects countries to expand their gas production by more than half, reaching around 2,600 bcm by 2050, a 1.4% annual growth rate, leaving the group with a 47% share of global gas production. Hydrogen has also been touted as a future fuel, with countries in the Middle East placing big bets on the technology. Natural gas can be used to create one form of hydrogen – blue hydrogen – and the GECF expects that in its hydrogen scenario, almost 46% of total hydrogen production will be sourced from blue hydrogen. The report noted that in the hydrogen scenario, GECF members “boast a compelling potential” to export nearly half of all global hydrogen trade. The scenario also foresees around 145 mt of hydrogen, more than 23% of total supply, traded annually by 2050. “The key take-away of this new edition of the GGO is quite straightforward: natural gas will play a pivotal role in alleviating energy poverty, fuelling economic growth, improving living standards and expanding prosperity, whilst contributing to the protection of the environment. In short, natural gas is the energy for sustainable development,” Hamel wrote in the report. The GECF is an intergovernmental organisation consisting of 19 member countries that together represent 71% of proven gas reserves, 43% of its marketed production, 52% of pipeline, and 58% of LNG exports in the world. deforestation. It contributes to improving air quality, notably in densely populated megacities and urban sprawls. It is a partner of renewables; providing much- needed backup and stability to power grids. Available, reliable, fl exible and with a diversity of producers, natural gas is a true pillar of energy security.” With demand for energy likely to continue increasing, countries and companies have increasingly been turning to natural gas for energy as a cleaner alternative to oil while calls for sustainability increase. GECF says that natural gas’s share of the global energy mix will increase from over 23% now to 27% in 2050. “Environmental policies are a key driver of the projections contained in the outlook. In this context, whilst upholding that natural gas is the cleanest of hydrocarbon fuels, the outlook explores the state of technologies that will make it even cleaner,” Hamel added. The role of gas in the future, however, will be challenged by developed economies and economic blocs, such as the EU, US, and Japan, according to the report. “Despite aggressive decarbonisation actions under the EU’s proposed ‘Fit for 55’ Next >