ITP MEDIA GROUP / BUSINESS JUNE 2020 • VOL. 16, ISSUE 06 “CIRCULAR ECONOMY IS LAGGING BECAUSE IT IS DARING.... IT DEPENDS ON OTHERS, AND NO ONE WANTS TO DEPEND ON OTHERS” ESRA AL HOSANI, ADNOC OFFSHORE CLOSING THE LOOPJUNE 2020 / Volume 16 Issue 06 22 Special feature: Nigeria This month, we focus on Nigeria to see how the coronavirus pandemic has impacted its oil and gas production, and what the African nation has planned for the future. 34 Awards update The editors of the hosting publications for the Middle East Energy Awards make an important announce- ment about the flagship event’s much anticipated 2020 edition. 16 Cover: Circular economy This month’s cover features an ADNOC tech- nology specialist’s research on the circular economy, finding a use for waste gas and water to cut costs and improve sustainability. 10 News analysis Analysts explore different sides of the coronavirus pandemic, how tools like digital technology can help guide producers through this period, and key factors to navigate troubled times. Highlights in this issue: 16 COVER STORY 3 IN THIS ISSUE oilandgasmiddleeast.com JUNE 20204 IN THIS ISSUE oilandgasmiddleeast.com JUNE 2020 Editor’s choice: • Video: Who wins in Saudi Ara mco’s SABIC deal? • Oil & Gas Middle East Top 30 EPC Contractors • Video playlist: O&GME and Honey well SPS host roundtable • Video: O&GME and R&PME Awards achievers DOWNLOAD IT TODAY ON YOUR iOS, ANDROID OR KINDLE Also inside: App 24 34 06 / Editor’s letter Carla Sertin with her thoughts on digital technology during the pandemic 10 / News analysis: Digital Boston Consulting Group on the need to embrace digital technology while navigating COVID-19 34 / Awards update The editor releases an important announcement about the Middle East Energy Awards 2020 edition 16 / On the cover Esra Al Hosani, a technology specialist at ADNOC Offshore, discusses her research on the circular economy for oil and gas 08 / In numbers Rystad Energy says remote technology providers are the only gainers in the oil services segment www.oilandgasmiddleeast.com 12 10 16 08 KEEP UP-TO-DATE For all the latest news, check out www. oilandgasmiddleeast .com 22 / Special focus: Nigeria How this African powerhouse is coping with the coronavirus pandemic and a low oil price environment 12 / News analysis: oil price Six key considerations to help survive a low oil price environment 22 OnlineFor industrial designers, wind power manufacturers and bridge builders – the LR 11000 Stays strong when things get tight. Compact and designed for constricted spaces Low cost worldwide transport High lifting capacities and flexible boom system Innovative detailed solutions to suit your challenges Experience the Progress. Liebherr-Werk Ehingen GmbH P.O. Box 1361 89582 Ehingen/Do., Germany Phone: +49 7391 502 0 E-mail: info.lwe@liebherr.com www.facebook.com/LiebherrConstruction www.liebherr.com 2008-501_074 LWE_043_LR11000_OilGasME_INT_GB.indd 124.04.20 14:496 oilandgasmiddleeast.com JUNE 2020 EDITOR’S LETTER In between Zoom calls, I wonder if this is the crisis for which we have all been preparing. The past few years have been punctuated by digitalisa- tion deals, as companies across the industry have sought to optimise their business. Lately, many of my conversations with industry stakeholders have revolved around the effect that digital technology has had in softening the impact of the coronavirus pandemic on their own businesses. Certainly, as I type this from my own home, remotely accessing my office desktop, I can see that previous investments into digital technology have likely had a direct impact for most industries. Because of the complex nature of the upstream segment, you can multiply that impact by 100 for producers. Companies that can oversee their entire value chain from one room, or control functions in the field remotely, have inadvertently prepared for the pandemic. This just reinforces the importance of digital fluency and inte- gration in oil and gas; yes, I believe most companies in our industry would benefit from digitalisation, but it is equally important that they invest in the right technologies. Those who took a risk and bought in early are reap- ing the benefits now. Not so long ago, digital technology seemed to be a frivolous expense. Today, industry leaders count it as an essential factor in their continued stability. Carla Sertin Editor Oil & Gas Middle East Digital days SUBSCRIBETo subscribe to Oil & Gas Middle East, or other ITP Business titles, go to: www.itp.com/subscriptions. PO Box 500024, Dubai, UAE Tel: 00 971 4 444 3000 Web: www.itp.com Offices in Abu Dhabi, Dubai, London & Mumbai ITP Media Group CEO: Ali Akawi Managing Director: Sue Holt Deputy Managing Director: Anil Bhoyrul Editorial Editor: Carla Sertin Tel: +971 4444 3265 email: carla.sertin@itp.com Advertising Senior Sales Manager: Pankaj Sharma Tel: +971 4444 3510 email: pankaj.sharma@itp.com Photography Senior Photographers: Efraim Evidor, Adel Rashid Staff Photographers: Aasiya Jagadeesh, Yuliya Petrovich, Jessica Samson, Fritz John Asuro, Ajith Narendra Production & Distribution Group Production & Distribution Director: Kyle Smith Production Manager: Basel Al Kassem Senior Image Editor: Emmalyn Robles Circulation Distribution & Warehouse Manager: Praveen Nair Circulation Executive: Loreta Regencia Marketing Director of Awards & Marketing: Daniel Fewtrell Events Manager, Business Events: Teri Dunstan ITP Group CEO: Ali Akawi CFO: Toby Jay Spencer-Davies The publishers regret that they cannot accept liability for error or omissions contained in this publication, however caused. 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 © 2020 ITP MEDIA Group FZ-LLC. THIS ISSUE: An ADNOC technology specialist outlines the importance of circular economy for oil and gas (p14)MATCHING BUYERS WITH SUPPLIERS AND GROWING BUSINESSES OILANDGASMIDDLEEAST.COMThere are no hard numbers yet to illustrate the extent to which the Covid-19 pandemic has af- fected the oil and gas industry’s digitization. However, a Rystad Energy analysis of service companies’ earnings calls reveals a clear growth in cost-sav- ing remote work technologies. Given the limited options of low-hang- ing cost savings in the current downturn, operators and suppliers are looking to- wards digital technologies to realize cost efficiencies. For operators whose cash balances are not under short-term strain, the low oil-price environment is an ideal testing ground for new technologies as the opportunity costs of implementing these are lower. “Despite being positive news for suppliers offering digital technologies, spending by operators may have been ac- celerated as a result of Covid-19 instead of actual business needs. Growth seems to have mostly centered around remote work, while technologies focusing on optimization of drilling and production seem to have hit some speed bumps,“ says Daniel Holmedal, energy service analyst at Rystad Energy. Recent earnings calls have given us a taste of how digital technologies have fared during the start of the downturn. Despite recent market events that have forced operators and sup- pliers to turn their focus towards cash conservation, development on this digital revolution still seems to be relatively robust. In fact, both Schlumberger and Hal- liburton noted in their earnings calls for the first quarter of 2020 that the current downturn could accelerate the adoption of digital technologies. This is especially true for technologies that enable remote operations, which remains an area where great cost efficiencies could be realized with more efficient operations. Covid-19 has already accelerated remote operations due to the movement restrictions imposed in many countries to limit the outbreak. Schlumberger recently deployed its DELFI platform for Woodside so that the operators’ asset team and geoscientists could have full access to their data while working from home. Schlumberger, in its first quarter earnings call, underlined intentions of doubling down its digital strategy in the years ahead, with over 60% of the OFS provider’s drilling operations in March being conducted remotely. At a more general level, Covid-19 has also paved the path for key decision makers to get more first-hand experience with digital tools. This could eventually increase their willingness to fully buy in on the digital revolution in other parts of their companies. Halliburton, similarly, noted during its first-quarter earnings call that demand REMOTE WORK TECHNOLOGY: THE ONLY OIL AND GAS SERVICES SEGMENT GROWING DUE TO COVID-19 Source: Rystad Energy Cost Service Analytics 8 IN NUMBERS oilandgasmiddleeast.com JUNE 2020for cloud infrastructure services saw an uptick in April 2020. In late February, Halliburton helped Pertamina deploy a large portion of its processes and appli- cations to the iEnergy cloud, which has allowed for well data to be structured and analyzed to improve drilling perfor- mance, increase production and allow for better data-driven decisions along the well life-cycle. National Oilwell Varco (NOV), one of the largest suppliers within the drilling tools and services segment, also reported updates on its digital technologies in the latest earnings call. Using its Tracker- Vision augmented reality technology, which streams real-time audio and video, NOV is able to provide instruc- tions on rig repairs remotely. Despite the growth in remote work digital solutions, not all is well for suppli- ers of digital technology, warns Holmedal. “Our activity forecast for 2020 indi- cates that spending on new technologies in the well services market will come under significant pressure. We expect the number of wells drilled globally this year to drop by 21% from 2019, ending up at around 56,000 wells, with 2,200 of the wells being drilled offshore,“ Hol- medal notes. Service companies also warned of a downturn, with some already taking ac- tion such as furloughing some employ- ees related to research and development and cutting back on sales, general and administrative expenses. Schlumberger noted in its first quar- terly report for 2020 that discretionary spending and activity was cut towards the end of the quarter in several mar- kets. Lower drilling activity, more shut- ins and stretched balance sheets among operators could hurt spending on digital technologies going forward. Baker Hughes noted in its earnings call that its Digital Solutions business, which also covers segments outside of oil and gas, saw revenues and margins come under significant pressure during the first quarter. 9 IN NUMBERS oilandgasmiddleeast.com JUNE 2020Next >