Hatem Nuseibeh – President E&P UAE & Group Representative in the UAE, Total
Total UAE’s Hatem Nuseibeh discusses the current state of Abu Dhabi’s oil and gas industry, Total’s strategy to take advantage of the emirate’s energy diversification policies, and the company’s evolving attitudes to partnerships.
2017 represents quite an exciting time for Abu Dhabi’s oil and gas industry. ADNOC has been pushing full-steam ahead with its restructuring agenda, and we’re even witnessing a reevaluation of the role of hydrocarbons within the developmental model of the UAE. What then, are the big items on your desk during this moment of transformative change?
“This is a momentous occasion for the country and a very exciting time for Total given our deeply embedded presence in this market.”
You are absolutely right. This is a momentous occasion for the country and a very exciting time for Total given our deeply embedded presence in this market. We are proud to possess one of the broadest footprints of any of the IOCs and continue to demonstrate our profound commitment to this country, not only through our resolution in renewing the ADCO concession, but also in our sustained dedication towards participating in other areas of local energy market such as in the gas and solar segments.
At the same time, we are witnessing a sea change in the way that ADNOC and Abu Dhabi energy policy is working. I’ve always strongly believed that this country knew the meaning of a “win-win” deal, and the steps that are now being pursued herald the confirmation and validation of this belief. His Excellency, Sultan Ahmed Al Jaber’s recent remarks that he strives to remodel ADNOC so as to place the company on a par with the most performing IOCs is very welcome news to a partner like Total. What that essentially means is that there will be more for us to share in and work together on in the future.
My priority right now is to seize with both hands these newly emerging opportunities. Firstly, we hope to be part of the will be doing our very upmost to secure the renewal of the ADMA-OPCO concession which expires next year. Secondly, we will be striving to demonstrate to the UAE that we represent an authentic and obvious partner with a view to helping the country meet its future energy needs. If you make an extrapolation of the UAE’s energy supply and demand dynamics, then it becomes clear that they will need to rely upon both gas and renewables alongside oil to satisfy future demand and power growth. We are already involved in all of these sub-sectors, both globally and locally. All these elements are part of our DNA as a company and we are therefore well placed to assist the country in implementing a smooth and efficient diversification of its energy mix.
Indeed, what differentiates Total is that you are covering all of these bases simultaneously. How would you describe the strategic significance of your in-country solar and gas initiatives?
The inauguration of Shams 1, a 100-megawatt solar thermal plant, represented a major milestone in the development and deployment of renewable energy in the Middle East because it constitutes the largest concentrated solar power plant (CSP) in operation in the world. The Dolphin Gas Project, of which we are also partners, meanwhile represents another unique landmark within the region as it involves cross-boarder cooperation: namely the production and processing of natural gas from Qatar‘s offshore North Field and its transportation by subsea pipeline to both the UAE and Oman.
Being present across the full length of the value-stream form upstream exploration to downstream lubricants, and across different energy sources, actually confers an advantage upon us because it gives us a very good feel of the market and sense of what can be accomplished here. When making decisions about which projects to invest in we have an entire resource base of data and experience to draw upon. This embedded-ness and deep holistic understanding of the local energy environment also means we can act in a manner consistent with the good of the country and its future energy needs.
You’ve alluded to the local emphasis placed on “win-win” deal making. The renewal of the ADCO concession broke fresh ground by establishing an entirely new form of partnership that would essentially integrate ADCO into Total’s internal systems. Two years down the line, how has this “new style” partnership been progressing?
Indeed. The partnership concluded as part of the ADCO renewal entailed granting access to all of our technology and even our referential business processes in the same sort of manner that an affiliate might integrate into a parent company. This is a world away from conventional joint ventures and collaborations between IOCs and NOCs. I am proud to be able to say that the new formula is beginning to take shape and we are starting to see some very positive outcomes. The hardest challenge initially was to win over hearts and minds and to surmount an aversion to change. This is, of course, an entirely natural and predictable characteristic of organizational change. This sort of transformation always needs to me adeptly managed in any business context.
Total’s role is emphatically not as a silent partner, merely approving the budget and work programs. Nor is it just about transferring over technology and technical knowledge. On the contrary, we are playing a highly instrumental role in shaping ADNOC’s new modus operandi for this reservoir. My role is to bring the perspective of a high performance IOC and to show them how we would do things and approach each challenge encountered. We are thus very active in the area of ideas creation. This, in turn, aligns very well with the new business rationalization of ADNOC and the company’s fresh emphasis on profitability alongside its traditional, and very necessary, role as guarantor of the national interest.
I really feel that we are now at a stage where we are beginning to really sense the fruits of our efforts. Obviously the sorts of profound changes in mentality that we are demanding cannot happen overnight. It takes a little time for new business concepts relating to profitability to percolate down and for the workforce to familiarize themselves with fresh work styles and operating processes. Nevertheless the progress is already visible. The entire structure is already much more lean, efficient and commercially minded.
Aside from Total’s historic legacy in the UAE and longstanding dedication to the country, why do you think that ADNOC has entrusted you, as opposed to one of the other IOCs, with the task of trialing out this new style of partnership?
During this period of sustained low global oil prices, we have been registering much better performance than many of the other IOCs. This success is very much the product of a highly successful cost optimization and containment program.” Our Chairman and CEO, Patrick Pouyanné, has been adamant that we must err on the side of caution with regard to a rebound in oil price, and that means being unwavering and resolute in our pursuit of competitiveness and productivity. The Emiratis are well aware of what we have managed to accomplish in rationalizing our operations and we have eagerly shared with them our experience.
The way that we interact with NOCs like ADNOC is also strikingly distinctive from our, predominantly Anglo-Saxon, competitors. Historically the challenge for Total was that we did not possess strong home production. Without home production to fall back upon, we were compelled to go to places that other IOCs recoiled from and forge deals with foreign counterparts. That exposed us to a different set of shared experiences on the ground and the NOCs very much appreciate and admire that. We can readily understand and identify the requirements and situations of the local state actors and makes for much closer partnerships.
My hope and expectation is that this latest approach to working together will become the template for many of future interactions between IOCs and the ADNOC and that Total will have, once again, been a true pioneer. The ADNOC leadership is very enlightened and leaders like HE Sultan Al Jaber properly understand how they can maximize the benefits from IOC collaboration and what private actors are seeking in return. The basis is thus set for some very fruitful working relationships.
In which areas is the UAE most in need of technical expertise? And how is Total well placed to deliver it?
The Emiratis are a very ambitious people and this spirit of audacity carries through into their energy targets such as the objective of attaining a 70 per cent oil recovery rate. I’m fundamentally a reservoir engineer and the recovery factor is ultimately a question of economics. The viability very much depends on the current and future price of oil. Under the right enabling conditions there is no reason why the EOR target cannot be even higher.
The important point to remember, however, is Total’s experiences across the world and the knowledge and technical expertise derived from participating in projects across very different geographies and topographies. Even within the UAE, our experience is formidable. We were involved in ADMA OPCO from the very start and demonstrated a willingness to develop fields outside the concession that other companies ignored at the time. One of them is, of course, Abu Al Bukhoosh (ABK) and another is Upper Zakum. The reality is we’ve learned a huge amount from both, and are now in a position to apply those learnings to some of the more prolific plays. We are currently operating Total ABK and continue to harness it as a research and development ground. One notable success has been the highly effective completion of a chemical injection for the first time on a carbonate reservoir. Armed with this sort of knowledge we are very well placed to be able to make the most out of the mega plays.
Patrick Pouyanné is targeting five percent growth year on year up to 2020 for the company overall. Just how strategically significant is Abu Dhabi in relation to the rest of Total’s global operations?
Today our in-country production registers around 300,000 barrels a day, which represent almost 12 per cent of Total’s worldwide production. In this country you can also produce at a much lower cost than in most of the rest of the world and the technical risk is considerably lower so our UAE assets become especially important in stringent times when the global price of oil has crashed.
Then there is the huge contribution that this affiliate makes in terms of innovation. Prior to my appointment, here, I was spearheading Total’s operations in volatile markets such as Yemen and Libya. Initially I was worried that this particular job would be boring, but I couldn’t have been more mistaken. The UAE is an incredibly fertile destination for engaging in testing out new methodologies, technologies and ways of doing business. The new partnership model that we are trying out is just the latest in a long series of nouvelle innovations that have originated here, before being scaled up and replicated elsewhere across the company. Today I cannot imagine having a better job. This is where it is all happening!