with Wael Sawan, Executive Vice President and Chairman, SHELL QATAR
I was appointed on the 1st of April 2012, so it has been just a few months (given the time of publication). The priority for me right now is to connect with the broader organizational structure, connecting with the entire workforce, trying to keep them focused on the delivery of our plans. From a business perspective, priority is to continue the safe ramp-up of our projects, predominantly the Pearl GTL, (QG4 is ramped up), and doing so in the safest possible way. In addition to that, it is very much about maturing the growth options we have: exploration, petrochemicals, international growth, and then finally, it is about connecting with the stakeholders that we have in Qatar, both through business relationships and more broadly with Qatari society through our social investment program, which is very active in the country.
This $20 – 21 billion investment is actually just for Pearl Gas to Liquids (GTL) and Qatargas 4 as we may well invest more on other new projects. The significance of Qatar for us is the evolution from no operations in 2002 to making it one of highest value countries for the Shell group a decade later, with roughly 10% of the overall value for the group. Qatar represents a significant part of our overall production and a significant part of our reserves and cash flow generation. It also becomes the best demonstration of what Shell can do in partnership with the major resource holder here, QP, and it allowed us to build an integrated gas platform across the entire value chain.
A word about the biggest energy project in Qatar, Pearl GTL; what have been the financial risks and the operational challenges of the project?
From a financial risk perspective, we take on the entire capital investment of this project because of the nature of the production-sharing contract, where the investor bears the entire responsibility. Of course given that this was going to be the first world scale GTL plant, there is an inherent risk involved. The technology has been evolving over the last 40 years during which we filed up to 3500 patents in all aspects of this technology. We had experienced and harnessed the GTL technology in our Bintulu project in Malaysia in 1993 but Pearl GTL was a big step forward and thankfully we have been able to demonstrate the technology performing at its best across the entire plant. From an operational perspective, we have been very pleased with the progress of the plant ramp-up. The technology is working right, our operators who have been on the plant for an excess of 3 years up to 5 years, prepared meticulously from the early days for the start up. It has been good so far.
What are the expectations of the project now that it is operational?
The expectations are about the day-to-day focus on safety, on reliability of the plant and making sure we run it well enough to deliver the promises that we have made to both our shareholders and our partner, QP.
What do you think have been the key factors of success and what are the lessons learnt on a project management side?
Undoubtedly, the one thing I would emphasize is absolute focus on people. Our worker welfare program, within Shell and within the region has been world-class, earning us many awards. This is very much built on the notion that if we focus on the welfare of our people and take care of them, then we will see them boost their productivity and deliver the safety and quality performance that we aspire to. That has been what allowed us to achieve a great record for Shell and Qatar, 77 million hours without a lost time injury (LTI), and that makes us enormously proud as an organization. The second key lesson is meticulous preparation ahead of startup; there is pre-investment in the ultimate operation of the plant, bringing operators in, going through system-by-system from all our learning of past projects in Shell. The goal is to know exactly what the potential traps are, overcoming them, mitigating them, planning for them, and therefore when you do start up you are in a position to be able to do so with minimal issues. Of course there are always some, like any plant, but in essence we removed a big part of the issues that would have occurred during start up.
When we took the decision on Qatargas 4, in 2005, we had the conviction in the future of gas market. It is a conviction that it is based on the fact that gas has what we call in Shell the 3 A’s: it is Abundant in terms of volumes, it is Affordable in comparison to other fuels in terms of the cost of being able to discharge this gas, roughly 50% to 75% cheaper than coal and it is Acceptable in its environmental footprint. The world population will grow up to 9 billion by 2050, and with emerging economies such as China and India growing at a fast pace, this is going to create a massive growth in demand, and given the qualities I was just mentioning about gas, it will play a bigger role in the energy mix.LNG allows us to take those resources from where they are in Qatar, to many of the consuming countries in mass: European markets or Asian markets and Qatar is well positioned for that.We also believe in this country; the way Qatar works with investors, the transparency that they have shown, all that gave us the conviction to go on for Qatargas 4 and it has been going smoothly with full capacity reached recently. Our markets are China, Dubai, the UK and India.
Qatar Shell established a Research & Technology Centre at QSTP with a commitment to invest $100 million on research programs over 10 years, can you tell us more about this research center and why did Shell choose to commit so highly to research in Qatar?
We started as the anchor tenant, the first of all companies to open a research center in QSTP.We did so because of the belief that this was going to be a place that was going to support Qatar in its vision, and support our own activities here in Qatar given the fact that we had Pearl GTL and other activities coming through.It was an opportunity to enhance our presence and deliver value to the country. We differentiate ourselves from other research centers because we identify and focus on our key strengths where we will really invest our resources in.We have a commitment of $100 million to support our research programs; there is a whole range of activities. One that I am particularly proud of is a partnership with QP and Imperial College in the London to spend $70 million, one of the largest R&D efforts between government, academia and corporate in what we call carbonate reservoir research and specifically around carbon capture and sequestration into those reservoirs. That initiative has been going on for several years, working between Qatar and the UK through the Imperial College campus to try to really drive this research forward. It is a front-end and game-changing research on a global level, because this has not been done before. There is also a water unit that focuses on the water coming out of pearl GTL as well as a mini GTL reactor that we use to analyze catalysts that go into Pearl GTL.
Let’s have a word on your social dimension; Shell is involved in sports sponsoring, education, human capital development, Qatarization and safety in Qatar. Can you give us an overview of Shell’s commitment to the community and does it strengthen the relationship between Shell and Qatar?
It is all related to the Qatar National Vision 2030; we began to build our own program on that national vision.Areas we chose to focus on are for instance the capability building. We launched an initiative for a Management Center of excellence, which has since been named Tafawoq that is using the best project academy available in Shell. It also allows us to offer courses both virtual and face-to-face. We also want to start supporting in the building of the vision that Qatar has for World Cup 2022 where a lot of infrastructure will be required. We do this in partnership with QP. Beyond that, one of the big initiatives we have is road safety. We work very closely with the ministry of interior, we take expertise from other road safety initiatives we have around the world, such as Oman, Malaysia and Brunei, and we have developed something we bring to the table through that experience. We have been blessed in having applied some of our learning for Pearl GTL where we have driven an excess of 300 million km without a significant incident yet. We work towards safety along with the Ministry of Interior; we do some surveys to understand the behaviors of drivers on the road, looking at developing publications, leaflets, information, going out to the media, and trying to work with schools for inclusion in their curricula. .We have also looked at universities. Last year we started helping Qatari teams join Shell Eco-marathon, which is a global activity that Shell sponsors with 3 races each year in the Americas, Europe and Asia. Qatar was the first country in the MENA region to have put two cars, one from Qatar University and one from Texas A&M. The race is about helping engineering students; they need to build cars that can run as long as possible with only one litre of fuel.We are also the lead sponsor for football; sponsoring his Highness Emir’s cup but also trying to work with the society at large and trying to install a mindset of healthy lifestyle associated with football.There is quite a raft of initiatives and we feel that we have a significant responsibility in that area given that we are the largest foreign investor but also because we have some specific capabilities that we can bring to the table. On Qatarization, we have taken it very seriously since the first day we came into Qatar and that is something we are proud of. We have 250 Qataris in the organization today, and we are proud of the fact that we were the only IOC to have won his Excellency The Minister of Energy and Industry’s annual Qatarization award 3 years in a row. This is special to us because a lot of efforts are being made and we continue to launch new initiatives to get even better; so we have accelerated development programs for Qatari staff, developing them through tailor-made programs to test their leadership capabilities. We also offer international assignments for our staff where they can go to assignments in other Shell locations such as the Philippines, Holland, Malaysia, etc to get that exposure outside. We focus on competence development, and building the framework to encourage empowerment of staff in their jobs to really develop their capability and experience.
To enlarge the picture based on your expertise of the sector, where do you see Qatar in the next 3 to 4 years?
In the energy sector, the Minister of Energy and Industry His Excellency Dr. Mohamed bin Saleh al Sada has said that the focus in the coming years will be on safely and reliably operating the massive oil and gas infrastructure currently in place. As for growth, the 3 main areas are exploration, petrochemicals, and international expantion through Qatar Petroleum International.In the exploration sector, Qatar has opened the Pre-Khuff horizons, and Shell has been lucky along with our partner CNPC to be awarded block D on that project. In petrochemicals: we have been awarded the first Greenfield petrochemical project that has come up, so we will be part of that growth area as well, and the third element of it is QPI, which purchased some Shell assets in Singapore in 2009. We are also involved in a refinery, petrochemical and retail station in China; it is a multibillion dollar development, which we will progress together with QPI and CNPC, so that is the growth agenda.
What is your final message to our readers?
We have been blessed to achieve a lot in a short period of time here in Qatar, and we are proud of how our partnership with QP has grown through that time. But I would like to recognize the role that Qatar has played in these achievements, in that it is one of the unique locations in the world where the government and the oil and gas sector really value what the IOCs bring. They allow us to bring the areas that complement their strength, their whole way of dealing with multinationals is based on transparency, trust, and through that mechanism we are able to build assets that are the most technologically advanced in the world. I think what they have done in terms of creating this environment and having the leaders they have in the oil ad gas sector has really been the reason why we have been able to do what we have done, all under the very clear vision of His Highness the Emir. We can now see the success of that in Ras Laffan for instance.