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Interview

Ahmed Kenawi – Senior Vice President (MENA), Halliburton, UAE

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Ahmed Kenawi, Senior Vice President Middle East and North Africa at Halliburton, reveals how while globally the number of rigs started declining in late 2014 and today is down by about 60 percent since its peak, in contrast, the Gulf Cooperation Council (GCC) has witnessed a growth rate of 28 percent; why innovation is crucial when it comes to removing costs from the equation, and how Halliburton´s mission is focused on customizing solutions for its customers.

In May, Halliburton announced its first quarter results for 2016, which showed revenues at 4.2 billion dollars, down 40 percent from a year ago. Over what has been a difficult period for the oilfield services industry globally, how would you describe the particular environment in the Middle East?

I am convinced that the last drop of oil globally will come from this region.

I am convinced that the last drop of oil globally will come from this region. As an industry in the Middle East, we are fortunate that we are not struggling to the same extent as other regions. We have seen investments in the US oil and gas market reduced by hundreds of billions of dollars. There have been dramatic cuts to the US rigs. Globally the number of rigs started declining in late 2014 and is down by about 60 percent since its peak. In contrast, the Gulf Cooperation Council (GCC) has witnessed a growth rate of 28 percent. As a region, working with our customers is the key, with a focus on reducing the cost per BOE.

Additionally, last month, the failure of Halliburton’s merger bid for Baker Hughes was announced. What impact has such a development had in your strategy in the MENA region?

Our management’s decisions with regard to the Baker Hughes transaction had no impact on our overall strategy. Our main focus is on collaborating with the customer, understanding their challenges, and offering solutions that help to reduce the barrel of oil equivalent (BOE). Our strategy, globally, can be divided into three areas: firstly, developing unconventional assets; secondly, focusing on mature fields; and lastly, deepwater. In the Middle East in particular, there are a lot of opportunities when it comes to both unconventionals and mature fields. We have also formulated what we call our production group, composed of our chemical and artificial lift businesses. Our ambition is to grow these businesses organically in the Middle East, alongside a number of bolt-on acquisitions. This group will be a key part of our growth strategy.

The current downturn in oil prices has meant that companies working with large oil companies need to think strategically and work as solutions providers. How is Halliburton positioning itself as the service company of choice for oil & gas companies?

The lesson that we should take away from this cycle is that reducing costs is essential. We need to be innovative when it comes to removing costs from the equation. Halliburton is a leader when it comes to fracking. One of the main components of a fracturing job is the use of proppants. Today, we are attempting to use a local sand, combined with a chemically based technology that can be utilized in the wells. Such technology can reduce the costs associated with fracking by up to 40 percent. This is a great example of how costs can be dramatically reduced. Halliburton is employing such a strategy in Saudi Arabia, Oman and Egypt. Furthermore, typically, fracking requires fresh water, a rare commodity in this region. We have developed a technology called UniStimTM Hydraulic Fracturing Fluid System that allows us to utilize sea water.

By collaborating at an early stage with the customer, we can better understand the challenges of the reservoir, and can then target our services appropriately. We need to change the relationship between the service company and the customer, with a focus on close collaboration between them. Halliburton has developed what we call our CYPHER® Seismic-to-Stimulation Service, a collaborative, integrated workflow that leverages subsurface insight to know precisely where to drill, how to drill, where to frack, and how to frack. With such a service, we can help operators maximize the value of their shale asset by increasing production, lowering cost per BOE, and reducing uncertainty every step of the way.

The Abu Dhabi National Oil Company (ADNOC) has stated its goals of reaching 70 percent of enhanced oil recovery (EOR) targets in the coming years. How is Halliburton investing in EOR technology to ensure it will remain a key player in this regard?

Our global mature fields solutions team is based in Abu Dhabi. We reacted to ADNOC’s ambitious EOR targets by concentrating our leading scientists in one place, namely Abu Dhabi.

In the Middle East and North Africa, our new technologies, such as our Acoustic Conformance XaminerTM (ACXTM), help us to locate and describe communication paths and flow areas vertically and radially in real time. We are able to quickly identify leaks, helping to reduce non-productive time and operational risk, and to reinvigorate production. To discover new pay zones, Halliburton provides advanced sensor technologies that help detect and access incremental reserves. Our TMD3DTM and RMT-3DTM pulsed-neutron saturation logging services help identify remaining pay zones to extend the life of an asset. We have customized chemistry that is particularly useful when it comes to EOR. Our scientists work with ADNOC, as well as other operators across the Middle East, to enhance the recovery process. Mature fields involve much more than just EOR, including extracting EOR from the ground, integrating all aspects of product service lines, and removing cost as an obstacle to drilling. In 2015 we launched Quasar PulseSM Service, the only M/LWD service capable of operating in harsh environments up to 392°F, the highest temperature pressure tool in the world.

Many of our interviewees have stressed the importance of localization. To what extent is this, and fulfilling local content requirements, a key part of Halliburton´s strategy?

Localisation is indeed an important part of our growth strategy for the region. We have put a lot of emphasis on developing locals, who ultimately will have a better appreciation for the culture and dynamics of their country. As an Egyptian, I have benefited from working for Halliburton both in my country of origin, as well as in Houston and in the Middle East at large. I understand the culture of this region. We believe this is not only the right business model, but that it also helps to give us an edge over our competitors. Indeed, last year we received an award from Saudi Aramco for the best nationalization strategy. We believe in a diversified workforce, with an emphasis on employing people who understand the region.

The oil and gas industry in the MENA region is very much dominated by NOCs, who operate differently from IOCs. How would you describe your comparative advantages when it comes to working with the NOCs in the region?

We understand the needs of the NOCs as we have been active in this region since the 1930s. It is true that the NOCs have a different dynamic to the IOCs: they can certainly take a more long-term perspective. IOCs are also present in this region. Indeed, our major customers globally are extremely active in the Middle East. Halliburton is able to adapt its strategy for both NOCs and IOCs. For David Lesar, Halliburton´s CEO and Jeff Miller, our President, the mission is for Halliburton to be focused on customizing solutions for our customers. We customize our technological portfolio to deliver on the challenges faced by our clients. Halliburton will continue collaborating with our customers in this region, customizing their solutions to deliver lower costs for all. This is my primary focus. We are known in the industry as the execution company: we always deliver what we promise.

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