ITP MEDIA GROUP / BUSINESS JULY 2021 • VOL. 17, ISSUE 07 “CEOS ARE DISCOVERING THAT SUSTAINABILITY AND PROFITABILITY HAVE BECOME SYNONYMOUS IDEAS,” SAYS NORM GILSDORF, AS HONEYWELL INTERMIXES INNOVATION AND ECO- CONSCIOUSNESS. FUTURE FOCUSED FOR A WORLD THAT’S ALWAYS ONTM DESIGNED FOR RUGGED APPLICATIONS AND CONDITIONS The need for power is global and it is growing. Cummins has looked beyond today’s challenges to help you meet your future needs by developing the next generation of power – an ever-expanding range of fully integrated power system solutions that are reliable and durable. Supported by next-level global Cummins sales and service support that ensures you’re covered no matter where you go. Learn more at cummins.com/generators.JULY 2021 / Volume 17 Issue 07 20 The Next Generation Take a look at the future of oil and gas as we release our first ever list of the Next Generation of Oil & Gas Leaders, complete with commentary on future- focused topics 30 Hydrogen challenges The energy sector is ris- ing up to the challenges posed by a quickly growing hydrogen segment, specifi- cally in terms of infrastruc- ture, as energy players seek to leverage this fuel 16 On the cover We take a deep dive into Honeywell’s drive to reduce emissions for its customers, while also making sure it is embracing sustainability while devel- oping its technologies 12 Awards update Read about our featured categories and find out who won big in 2020 as we look forward to the industry’s flagship awards ceremony on 24 November 2021 in the UAE Highlights in this issue: 16 COVER STORY 3 IN THIS ISSUE oilandgasmiddleeast.com JULY 20214 IN THIS ISSUE oilandgasmiddleeast.com JULY 2021 ITP MEDIA GROUP / BUSINESS JUNE 2021 • VOL. 17, ISSUE 06 MEET THE MOST POWERFUL PEOPLE IN THE MIDDLE EAST UPSTREAM SECTOR DOWNLOAD IT TODAY ON YOUR iOS, ANDROID OR KINDLE Also inside: App 42 08 / News update The most important news from across the region 16 / Cover interview Honeywell talks about developing technologies that promote sustainability 42 / Five minutes with McDermott’s Qatar country head answers our questions about the company’s plans 30 / Sustainability focus How energy companies are overcoming the challenges of the hydrogen economy 12 / Awards update Could you be one of the big winners at the Middle East Energy Awards this year? 16 12 20 8 KEEP UP-TO-DATE For all the latest news, check out www. oilandgasmiddleeast .com 32 / Project focus In depth information about a regional project, information courtesy of DMS Global 20 / The Next Generation We list impressive young talent in the oil and gas sector, as well as the technologies and trends of the future 30 Last month5 oilandgasmiddleeast.com JULY 2021 EDITOR’S LETTER W e all know what’s at stake if we don’t evolve and adapt to the market landscape. The oil and gas sector has to be a part of the solution to climate change, and technology will play a major role in its success. That’s why the cover story this month features Norm Gilsdorf from Honeywell, who explains how technology providers can empower oil and gas companies to boost efficiency and sustainability. But he also understands that technol- ogy providers must take steps to ensure that their own sustainabil- ity standards are in place, and that technology development is not carbon-intensive. Following with our theme of looking ahead to the future, we are unveiling our inaugural list of the Next Generation of Oil & Gas Lead- ers, featuring impressive young professionals who have already made a mark on the industry. We will need digital-savvy, innovative and ambitious minds to navigate the energy transition and find news ways to solve problems. The list is not comprehensive, but it offers a small peek into the wealth of talent that exists in our industry, and we hope to expand it further as time goes on. We cannot afford to simply focus on “now”. Executives must make choices in the best interest of the company’s future (and the indus- try’s future) if they hope to be a part of it. Carla Sertin Editor Oil & Gas Middle East Finding the future 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: Alex Reeve Editorial Editor: Carla Sertin Tel: +971 4444 3265 email: carla.sertin@itp.com Advertising Group Sales Manager: Mark Grennell Tel: +971 4444 3202 email: mark.grennell@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 Circulation Executive: Rajesh Pillai Distribution Coordinator: Avinash Pereira Marketing Director of Awards & Marketing: Daniel Fewtrell 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 © 2021 ITP MEDIA Group FZ-LLC. THIS ISSUE: Check out our list of the most powerful people in the upstream sector (p20) Our decisions today will impact the oil and gas industry’s future and longevityLNG INDECISION How a push to reduce LNG vessel emissions leaves the planet worse-off Global efforts to reduce carbon emissions are accelerating and most industries are search- ing for new ways to reduce their carbon footprint in the years and decades to come. Shipping is also under scrutiny and the International Maritime Organization (IMO) has set a carbon intensity reduction target, proposing strict technical requirements that are scheduled to be approved this year and take effect from 2023. One of the effects of these new requirements is likely to involve slow-speeding – a reduction of the maximum cruising speed of deep- sea vessels in a bid to reduce emissions. Despite the regulator’s good inten- sions, a Rystad Energy investigation 6 IN NUMBERS oilandgasmiddleeast.com JULY 2021reveals that if the IMO’s proposed technical requirements are applied on the world’s fleet of liquefied natural gas (LNG) carriers, the net result for the planet will be negative, as the global savings in the vessels’ CO2 emissions will be dwarfed by the pollution from gas-to-coal switching that the move would cause in Asia. To comply with the requirements and achieve the IMO’s goal to reduce the carbon intensity of the shipping industry by 40% by 2030 compared to 2008 levels, Rystad Energy finds the most viable and cheapest option for steamers and slow-speed diesel (SSD) vessels is to limit their maxi- mum speed to 15 knots, as these types of vessels constitute the highest emission rate per ton-mile travelled. Any of the other possible alternatives – such as scrapping and replacing ves- sels or modifying them – would be significantly more expensive. The requirement is a considerable hurdle for the LNG shipping industry as approximately half of its current global fleet of 600 carriers are steam- ers or SSD vessels, and empirical data shows that an aver- age LNG tanker travels at above 15 knots about 50% of the time. Although the speed limit would result in lower emission levels for the global fleet, it would also lead to a 3% average yearly shortfall in relation to the vol- ume of ton-miles needed to satisfy LNG demand from 2023 to 2030. Even if the fleet’s utilization improves by reducing the idle time for LNG carri- ers to a minimum – which could nearly nullify the effect on LNG deliveries to storage-flexible and well-interconnect- ed Europe – it would still lead to an av- erage yearly reduction of at least 1% in ton-miles that would affect the deliver- ies to Asia, the world’s largest consumer of LNG at continent level. Meeting Asian LNG demand in the future will already be a challenge prior to any new emission restrictions by the IMO*. Rystad Energy’s analysis shows that if the global LNG carrier fleet meets the growing ton-mile demand to satisfy Asia’s needed LNG imports this decade, adopting the IMO’s proposal would then strip Asia of at least 9 bil- lion cubic meters (Bcm) of LNG for the three-year period between 2023 and 2025 and by 13 Bcm from 2026 through 2030. Rystad Energy’s research shows that the accumulated emission savings from LNG vessels in the 2023-2025 period will amount to about 10 million tonnes (Mt) of CO2, far lower than the extra 26 Mt of CO2 that replacing the missed LNG imports with coal will generate. For 2026-2030, the fleet’s emission sav- ings would total 15 Mt of CO2, still low when compared with the extra 38 Mt of emitted CO2 that will be caused by the increased burning of coal to substitute lost LNG volumes. “To offset the emitted CO2 from gas-to-coal switching and actually make IMO’s target meaningful for LNG vessels, a very large proportion of the lost LNG would need to be replaced through further expansion of renewable energy capacity in Asia,” says Oddmund Føre, vice president in Rystad Energy’s energy service research team. Rystad Energy’s scenario is rather conservative, Føre points out, and the IMO target could likely result in an even worse net footprint: “It is also likely that the proposed regulations would lead to the retirement of numer- ous LNG carriers. Scrapping would re- move fleet capacity and exacerbate the problem in Asia, as even less gas would arrive and more gas-to-coal switching would take place. Furthermore, this would cause higher utilization and day rates for LNG vessels, thus lifting LNG delivery prices and potentially contrib- uting to even greater consumption of coal for cost reasons.” 7 IN NUMBERS oilandgasmiddleeast.com JULY 20218 NEWS UPDATE oilandgasmiddleeast.com JULY 2021 • SABIC integration with Aramco won’t require asset disposals After Saudi Aramco’s acquisition of a 70% stake in SABIC, it will be integrated as Aramco’s chemicals unit without asset disposals. • Tech collaborations push O&G into quantum computing Quantum computers and their optimization algorithms could deliver gains in a much shorter time. • Microsoft Cloud marks two years in the Middle East Microsoft Cloud launched two of its datacentres in the UAE in 2019, the first global hyper-scale cloud in the Middle East part of a network of 60. Aramco closes $12.4 billion infrastructure deal Aramco and an international investor consortium, including EIG and Mubadala, closed the acquisition of a 49% stake in Aramco Oil Pipelines Company for $12.4 billion. The consortium consists of inves- tors from North America, Asia and the Middle East. As part of the transaction, first announced in April 2021, Aramco Oil Pipelines Company and Aramco entered into a 25-year lease and leaseback agree- ment for Aramco’s stabilized crude oil pipelines network. Aramco Oil Pipelines Company will receive a tariff payable by Aramco for stabilized crude oil flows, backed by minimum volume commit- ments. Aramco continues to hold a 51% majority stake in Aramco Oil Pipelines Company and retains full own- ership and operational control of its stabilized crude oil pipe- line network. The transaction does not impose any restric- tions on Aramco’s crude oil production volumes, which are subject to production decisions made by the Kingdom. Aramco President & CEO, Amin H. Nasser, said: “The interest we have received from investors shows strong confidence in our operations and the long-term outlook for our business. It is a significant milestone...” IN BRIEF CRUDE ON THE MOVE The deal will not impact Saudi Aramco’s crude oil output, which is linked to government directives. /10 Around the region /11 Play/Pause /11 In quotes /13 #Trending For the latest news and analysis, visit oilandgasmiddleeast.com Coming up: Aramco sold a 49% stake in its subsidiary, Aramco Oil Pipelines Company, to a consortium of American, Asian, and Middle Eastern companies SAUDI ARABIA QATAR UAE KUWAIT OMAN BAHRAIN Saudi Aramco successfully raised $6 billion, following the sale of US dollar-denominated Shariah-compliant securities to leading institutional investors. ExxonMobil, Royal Dutch Shell, TotalEnergies, ConocoPhillips, Chevron, and Italy’s Eni have submitted bids for Qatar’s $30 billion LNG expansion project, which Qatar Petroleum has, to date, undertaken on its own. ADNOC awarded the contract for a blue ammonia production facility to Wood. The 1 million tonne per year ammonia production facility will be built at Abu Dhabi’s new TA’ZIZ industrial and chemicals complex. Kuwait appointed long-time OPEC representative Mohammad al-Shatti as OPEC governor, and the country’s national representative will be Sheikh Abdullah al-Sabah. Oman Vision 2040’s digital transformation will boost the Sultanate’s ICT market to $5.6 billion (OMR 2.2 billion) by 2024, and drive new levels of citizen engagement, according to SAP research. Bahrain’s project market will be based on the development of of its public-private sector partnership initiative, as the government grapples with its response and recovery to the coronavirus pandemic. AROUND THE REGION9 NEWS UPDATE oilandgasmiddleeast.com JULY 2021 After experiencing its third price collapse in 12 years, the oil and gas industry has quickly evolved. Fuel consumption in the region is regaining strength while the International Energy Agency is calling for the cartel to boost supplies. Yet, the Saudi Arabian energy minister said “we still are not out of the woods.” Prince Abdulaziz bin Salman told the Robin Hood Investors Conference: “Many claim that I’m excessively cautious.. Well, it’s paying off.” Crude oil is now trading at a two-year high above $70 a barrel, boosting the cof- ‘Cautious’ approach to OPEC oil out- put ‘paying off’: Prince Abdulaziz KSA’s cautious approach to reviving OPEC+ output has proved helpful fers of the Organisation of Petroleum Ex- porting Countries and its allies, of which Saudi Arabia is a leading member. The OPEC+ alliance, which held almost 7 million b/d of production offline in April to speed the market’s rebalancing, reduced its output quotas last month, withholding as much as 5.8 million barrels a day of pro- duction from the market, in anticipation of rising summer oil demand and a healthier global economy. Prince Abdulaziz has previously said that he wants to see clear evidence of a strong demand recovery before restoring more of that idle capacity. US MUST ADDRESS EARTHQUAKES Rystaed Energy analysis found that the number of noticeable earth- quakes in key US oil producing regions has been increasing year on year since 2017. SHELL CONSIDERS SELLING US ASSET Shell could sell some or all of its assets in the Permian Basin, which accounted for 6% of the company’s total oil and gas output last year, worth about $10 billion. SUSTAINABLE BUILDING AWARD King Salman Energy Park received the 2021 US Green Building Council Leadership Award for the Middle East, recognising sustainable building. SHAH PLANT EPC CONTRACT ADNOC awarded a $510 million EPC contract to Saipem in order to expand the capacity of the Shah Sour Gas Plant, expected to be completed in 2023. PLAY/PAUSE: Who’s moving up in the oil and gas world this month, and who’s falling away? “... It’s collaborations, not necessarily integrations, but there are some assets that we need to look at how we will integrate them. We are looking at synergies that can be leveraged between both organisations...” Yousef Al-Benyan, CEO of SABIC “ ...The Shah Gas Expansion Project is an excellent example of how ADNOC is growing its gas production at existing fields to deliver a more sustainable gas supply and support the UAE’s gas self-sufficiency objective.” Yaser Saeed Almazrouei, ADNOC’s upstream executive director IN QUOTES “...I want the guys on the trading floors to be as jumpy as possible. I’m going to make sure whoever gambles on this market will be ouching like hell...” Prince Abdulaziz bin Salman, Saudi Arabian Energy MinisterNext >