Hatem Nuseibeh – President, Total UAE, Abu Dhabi
President of Total UAE, Hatem Nuseibeh, discusses the company’s award of the 10 percent ADCO concession, why ADNOC’s 70 percent EOR is feasible and why the Abu Al Bukhoosh field remains one of the most valuable for Total in the UAE.
The award of the 10 percent ADCO (Abu Dhabi Company for Onshore Petroleum Operations) concession in 2015 was without doubt the news of the year for Total. Part of the commitment involves setting up a technology hub in Abu Dhabi, and rendering all the latest technologies of Total available to ADCO. Can you tell us more about this entity and the ideas behind it?
The award of the 10 percent ADCO concession is absolutely fascinating because it represents an entirely fresh agreement quite unlike your typical oil and gas contracts such as production sharing agreements or traditional concessions. It really signals a new type of relationship between the IOCs and NOCs. The IOC and the operating company will engage with one another at a far deeper and intertwined level than ever before through the creation of a technology hub linking the two.
This hub will essentially connect ADCO into Total’s entire internal systems 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 will revolutionize the way that we collaborate and will ensure genuine technology and know-how transfer. It delivers a whole new dimension to the concept of partnership that goes way beyond merely dispatching some expats to work together on matters of joint interest.
ADNOC has many times in the past demonstrated a deep understanding of and ability to forge win-win relationships with IOCs and those capabilities actually constitute one of the major appeal factors of doing business in the UAE. For our part, we have maintained a presence in the emirate since the 1930s and learning from our various experiences on other concessions, feel the time is ripe to be entering into what we consider to be a radical new arrangement with very exciting prospects.
Out of all the managers of the MNCs, you are probably the one who best knows the emirate’s reservoirs having started out your career there. Given ADNOC’s 70 percent recovery rate target, you’ll surely need to come up with additional EOR (Enhanced Oild Recovery) development plans. How challenging will this be?
It surprises me that people seem so fixated by the 70 percent target. The idea that it is acceptable that you can have 1000 barrels worth of oil trapped under the ground, but can only manage to recover 300 frankly goes against my ingrained thinking as an engineer. My instinct tells me that we have to identify and design fresh ways to maximize our potential rather than passively accepting the status quo. Obviously global oil prices have to be factored into the equation at any given moment and you will be restricted in the techniques that you can apply if a barrel costs more towards 20 rather than 100 dollars, but nonetheless, I sense a real need to reach beyond classical thinking. That is actually what is so endearing about the people of Abu Dhabi: they are not followers of internationals trends but makers of them.
Looking back to when I first started out on my career, the expectation would be to recover between 5 percent and 30 percent of natural depletion. Nowadays there are a great many reservoirs where the operators have achieved substantially higher recovery rates. In Total’s operatorship of Abu Al Bukhoosh (ABK), for example, we find that recovery factors that go beyond 50 percent are absolutely feasible. Because of the small size of that particular field, some of the EOR techniques may well not prove especially economic, but they are nonetheless highly useful as pilot projects that could very economically be applied to the mega reservoirs of Abu Dhabi.
ABK has, in fact, served as a great testing ground for experimentation as it comprises exactly the same geological formations as all the other fields in the country, but on a miniature scale. As development manager, we started the first EOR pilots in the early 1990s starting with ‘huff and puff’, then the first gas injection pilots, horizontal wells and experimentation with selective injection production. Recently we completed a chemical injection for the first time on a carbonate reservoir that too heralded amazing results. When you aggregate these sorts of findings to Total’s overall knowledge and technology base derived from the company’s entire experiences round the world, I view the 70 percent target as highly achievable. Why not even 80 percent one day?
Abu Al Bukhoosh certainly isn’t our biggest asset in the country. Actually, in terms of pure financing it may well represent the smallest. Nevertheless it is extremely valuable to us and serves as an excellent indicator of how to go about making a success out of the UAE market. To be accepted in this market you must come in with a long-term vision, fully understand what the country seeks from you and be able to prove that you possess the capabilities to properly deliver that which is being sought. Our involvement with ABK is emblematic of all three tenets.
Most IOC’s would overlook an asset like ABK. Such a small producing asset would not be considered economically attractive and they would fail to understand the importance and meaning attached to the field by the host nation. Total, by contrast, had the foresight to realize that this was an ideal opportunity for demonstrating our worthiness as a trusted partner. We understood how we could harness the field as a test-ground for breakthrough technology that could ultimately be applied to great effect elsewhere in the UAE. We also realized the symbolic value of an oilfield situated so close to the Iranian border. We even established the ABK academy training up Emiratis for deployment in the field as operators, which means not only as engineers and geologists, but for all the requisite technical and mechanical categories.
You therefore demonstrated that Total is a partner unlike any other.
Precisely. We have demonstrated full and unwavering dedication and commitment. Total maintains the broadest footprint in the country out of any of the IOCs encompassing both onshore and offshore production, gas importation and exportation, gas treatment, lubricants and fertilizer manufacturing, water desalination, even solar power generation. We are present in all aspects of the country’s energy sector and Abu Dhabi today represents around 12 percent of our overall worldwide production.
The way that we interact with NOCs like ADNOC is also strikingly distinctive from our competitors. Historically the challenge for Total was that we did not possess strong home production. The super majors all enjoyed vast assets within their home markets and we were like the smaller brother who had to fight to gain a place at the IOC high table all over the world. We essentially had to come up with contractual setups that were different from those used at the time. ABK, for example, was politically sensitive because the oil formation straddled two rival countries and the field itself was even attacked several times during the Iran-Iraq conflict. Nevertheless without home production to fall back on we were compelled to go to places that other IOCs recoiled from. That exposed us to a different set of shared experiences on the ground.
Furthermore the bulk of world reserves back then lay firmly in the hands of the NOCs and if we wanted to gain access to those assets, it was critical that we forge excellent working relationships with countries’ state oil champions. That meant learning how to listen to their needs and define win-win solutions based on trust and enduring partnership. Being small and needing to compete, we dared to go where other feared to tread and got ourselves into the habit of interacting constructively with NOCs all round the world. These experiences make us today a partner unlike any other and, I dare say, an attractive and reliable collaborator for many NOCs.
As you say, the UAE represents around 12% of Total’s global production, demonstrating the strategic importance of the Abu Dhabi market to your company. How would you define your strategy looking forward?
We are entering a period where many of our concessions are reaching expiry date and requiring renewal. The first one was the ADCO concession in 2014 and ADMA-OPCO and ABK will also both be coming up for review at end of 2018. The first important step is therefore to maintain our presence. We are keen to continue in all areas and very much hope we will be invited to extend our participation.
Secondly, we are keen to partner with Abu Dhabi in identifying solutions to their own energy issues such as their need for gas and a generally more sustainably managed energy mix. We believe we have a real contribution to make and can add tangible value whether by bringing in gas from outside in conjunction with Dolphin Energy, or though promoting the embracement of solar power via the Shams Power Company joint venture where we maintain a 20 percent stake. As such we can foresee many new areas of activity where we could potentially assist the UAE in satisfying their energy needs.
The strategic importance of our UAE operations should not be underestimated. What goes on here will be instrumental to shaping the future of Total as a company and I am immensely proud and excited to be playing a role in all of this. Our in-country assets form an excellent anchor point to our global portfolio providing us with easy, long-term stable production in a country with minimal political, economic or technical risk and a very professional counterpart in ADNOC. Nor do we have any worries about the longevity of the reservoirs. The ADCO concession alone delivers us 160,000 bpd and that is projected to rise as high as 180,000 bpd with time. All in all, this is a remarkable country to be working in and we are always on the look out for new areas of collaboration.