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Outlook for Abu Dhabi 2017 oil industry

May 21, 2017
5 min read
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Once the main player in the ME oil and gas market, Abu Dhabi has not been exempt from the downturn felt across the world due to lower oil prices. However, VP and General Manager at McDermott Middle East – a company who has worked in the UAE since the 1970s - Linh Austin says despite the challenges there is plenty of reason to be optimistic about the future of the local market.

Introduction
On a macro level, in 2016 we continued to experience extreme price volatility within the oil market, the long-term impact of which has led to a slowdown in project awards and much tougher competition for available work. In November OPEC members signed the production cut agreement which helped stabilise the market somewhat, but it is still a tougher market than we have been used to.
That said, the Abu Dhabi market is already showing signs of picking back up.

A period of change
In Abu Dhabi the oil sector underwent some substantial changes to mitigate the impacts of the lower oil prices, including a reshuffle in the Supreme Petroleum Council as well as leadership changes at Abu Dhabi National Oil Company (ADNOC).

The period of change continues with the initiation of the merger between ADMA, OPCO and ZADCO. Completion of the merger in 2018 is expected to increase efficiency for ADNOC and streamline processes. In the short term, it’s possible that we will see an initial slow down both in terms of work flow and project progress as new systems and procedures are put in place. However, the long-term benefits far outweigh any short-term impact.  

On a company level, the merger is also good news for us as it gives us the chance to work more closely with one entity and will ensure improved and more streamlined communication channels.

Opportunities ahead
Looking ahead, Abu Dhabi aims to significantly increase output over the next five years, and we intend to support their vision by leveraging our concept, FEED and EPCI capabilities.

The challenge and opportunity now, unlike before, is not necessarily bigger and bolder projects, but it is about investing in projects that are more cost-effective. We are coming up with solutions that allow NOC’s like ADNOC to extend their dollar. Some of these solutions are around supply chain but some are focused on helping them sequence their project program. Given our history of providing project certainty and our FEED capability, we can assist in the sequencing of work to optimise the production profile.  As we like to say, we bring global expertise to the local market.

Attracting top talent
The UAE economy is expected to grow by 4 per cent in 2017 and as it grows, one of the key challenges for our industry will be attracting more local talent within the oil and gas sector, as well as top talent from around the world.  

This isn’t an Abu Dhabi specific challenge; it is one that is important for our whole industry going forward. The advent of new technology means we can no longer just do things the way we always have – we need to innovate and transform to keep up. The millennials and generation z hold the key to unlocking this potentially game-changing trend.

Locally we need to consider how we can stimulate interest in the industry from as early as elementary school level as well as attract students into the technical degrees that underpin the industry. Once they graduate how do we attract them into the oil and gas industry rather than other tempting career paths.

Moving toward independence
Finally, another major industry challenge is ramping up gas production within Abu Dhabi, so the country can rely less on imported gas. At present, the UAE mainly imports gas to generate electricity from Qatar through the Dolphin energy pipeline. Al Hosn Gas is leading the way in terms of gas exploration efforts via gas production from Abu Dhabi’s Shah field which is set to contribute significantly to the energy needs of Abu Dhabi and the UAE for over 30 years. These are predominantly sour gas fields, which we have extensive experience in and so we are well positioned to support them in this shift.

Finally, the other consideration going forward is going to be the focus on revitalising and replacing infrastructure in what are aging fields – some of our guys remember installing many of the structures that are out there in the 70’s. As one of the few EPCI contractors who have been in the region for 50 years, we have performed extensive brownfield work on some of these older fields and know the type of project specific challenges and specialist expertise required to be successful.

All in all, the outlook is positive for the local market and we see plenty of opportunity. We are looking forward to playing a key role in the future of the Abu Dhabi market.

This interview first appeared in the May issue of Adipec News

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