Salem Bin Ashoor – Chief Representative & General Manager, BP UAE
Salem Bin Ashoor, the chief representative and GM of BP in the UAE, discusses the company’s 76-year history in the country, the many ways in which their services and activities have evolved over the years, as well as their commitment to Abu Dhabi, both today and in the long term.
What have been your immediate priorities since stepping into your role as General Manager and Chief Representative for the UAE, and what would you say have been the main challenges encountered so far?
“Technology and innovation is a key player in the oil and gas industry, particularly here in Abu Dhabi, with a target to achieve recovery factors of 70% from its world-class oil fields.”
I have been leading BP’s business in Abu Dhabi for over eight months, and my focus has been to renew our business and long-standing partnerships here. BP has played a significant role in the Abu Dhabi oil industry since the 1930s and was at the forefront of the discovery of oil in the Emirate in 1958. Our partnership with Abu Dhabi has endured over seven decades, contributing to the growth of the nation, while providing value to BP. Therefore, my priorities have focused on strengthening our relationships in the country and creating strategic value-add partnerships to deliver long-term growth for BP in Abu Dhabi, that are mutually beneficial to BP and our partners, while introducing a new dynamic in the way the industry creates partnerships.
BP is the top International Oil Company (IOC) investor in the Middle East & North Africa, according to an important Wood Mackenzie report in 2016. BP is also managing over 5.5 million barrels/day in the Middle East with our oil company partners, and we are on a journey to producing over 1.5 billion cubic feet of gas per day in Oman. Our shareholdings in the country’s operating companies include joint venture partnerships with Abu Dhabi National Oil Company (ADNOC) and shareholdings in Abu Dhabi Company for Onshore Petroleum Operations Ltd (ADCO) (BP share 10%), Abu Dhabi Marine Operating Company (ADMA-OPCO) (BP share 14.67%), Abu Dhabi Gas Liquefaction Company (ADGAS) (BP share 10%), and the National Gas Shipping Company (NGSCO) (BP share 10%). Abu Dhabi plays a key role in our regional portfolio, and is an important investor in BP: the Abu Dhabi Government holds 2% stake in BP
When we met with your predecessor last year he noted that Abu Dhabi is currently contributing 94,000 barrel per day to BP’s global production. Has that level changed at all of the past year, and where do you see it in the coming years?
Abu Dhabi is an important location for BP. Our net share of production from Abu Dhabi is around 260,000 barrels of oil per day (bopd) of which 160,000 bopd from ADCO and 100,000 bopd from ADMA-OPCO, representing around 10% of BP’s global production excluding Rosneft.
In December of last year BP announced a concession agreement with ADNOC worth some USD 2.2 billion. How were you able to position yourself as the partner of choice for ADNOC to secure this agreement?
We were delighted to sign the ADCO deal between BP and ADNOC. It’s a strategic and value-added partnership for both companies – it makes the government of Abu Dhabi a significant 2% shareholder in BP in exchange for BP becoming a 10% shareholder in the major ADCO concession. Further, it brings BP’s global scale, technology and know-how to help Abu Dhabi meet its ambitious production targets.
Speaking to this agreement as well, BP’s global CEO Mr. Dudley recently stated that, “We will bring our people, cutting-edge technology and experience of managing mature giant fields around the world to help maximize recovery from these assets.” Specifically, how is BP working to maximize recovery from assets here in the UAE?
Technology and innovation is a key player in the oil and gas industry, particularly here in Abu Dhabi, with a target to achieve recovery factors of 70% from its world-class oil fields. We are working in partnerships with ADNOC and our Joint Ventures to maximize resource discovery and recovery through the application of our global expertise and upstream technology. This includes the need for smart and tailored technology to maintain the plateau production rate in giant fields, such as enhanced oil recovery (EOR) techniques and technologies. This will be required to achieve the stated goal, coupled with the right expertise and experience to execute these technologies efficiently and in a commercially viable way. We can see the opportunity in the long term to raise recovery rates from oilfields in Abu Dhabi to 60-70 percent from current levels of around 30-40 percent.
BP is a leader in deploying EOR schemes and has developed several proprietary technologies, such as low salinity water injection (LoSal), to help recover more oil from reservoirs. Additionally, BP is a leader in water flood technology, a type of enhanced oil recovery (EOR). We are maximizing recovery from some of the world’s largest reservoirs and from maturing fields such as in Azerbaijan, Iraq, Russia and the US.
In 2015, Middle East energy consumption grew by 4.2 percent, faster than any other region. Does this growth make the region even more strategically important for BP?
The Middle East Region is important for BP. We are managing over 5.5 million barrels/day in the Middle East with our oil company partners, and we are on a journey to producing over 1.5 billion cubic feet of gas per day (bcf/d) in Oman. BP upstream is active in the Middle East in Oman, Iraq, Kuwait and UAE. Additionally, BP downstream is active throughout the region as well.
In Oman, the Khazzan Project is progressing very well, and we have signed an extension agreement last February to our license area. Phase 1 of the Khazzan Project is over 90% complete, with ten rigs in operation, and close to 50 wells drilled. We are on track for delivery of first gas and Phase 1 of the project by the end of 2017. Eventually we would like to be producing 1.5 bcf/d which would be equivalent to ~33% of Oman’s gas supply. Khazzan is one of the Middle East region’s largest unconventional tight gas accumulations, which has the potential to be a major new source of gas supply for Oman over many decades. In Iraq, we are working with our partners PetroChina and the South Oil Company of Iraq to develop the supergiant Rumaila field. Production is at ~1.4m/d, 40% above the ~1m/d that it was seven years ago. We are doing our best to maintain production in this difficult low oil price environment and aim to continue to raise production.
In Abu Dhabi, BP continues to actively support ADNOC. We are a shareholder in ADCO, ADMA, ADGAS and NGSCO. We remain committed to make important contributions to Abu Dhabi’s operating companies; we believe BP’s global scale, expertise and technology makes us the right partner for the long term, as we continue to play a key role in Abu Dhabi’s oil industry for many years to come. In Kuwait, we are supporting the Kuwait Oil Company to increase production and maximize the value of the giant Burgan field through an Enhanced Technical Service Contract for South Kuwait, and we hope to deepen our cooperation in country. Earlier this year, BP also signed a strategic agreement with KPC to explore opportunities for investment and cooperation in oil, gas, trading and petrochemicals in Kuwait and abroad.
Currently, over 75% of Middle Eastern oil exports head to Asia Pacific. Do you see that region as being a driver for growth for BP in the long-term as well?
The Asia Pacific countries are definitely important customers for BP. It’s a region that is important for UAE exports and for the UAE oil industry, of which BP is a partner.
BP works to promotes leadership and develop skills across the Gulf, specifically with the company’s “Young Adventurers program”. Can you expand further on this program and other ways in which BP works to develop not just their operations in the Gulf, but the region as a whole?
BP Young Adventurers Program is our flagship social investment program, developed and managed by BP since 2000. As part of our contribution to youth and development, we have funded adventure training and leadership programs for young people from the GCC (Gulf Countries). When this program was started, everyone was talking about 60 percent of the population in the region being under the age of 20. We realized it was all about youth, providing them with more experiences than simply what they were getting in the classroom, to take their potential to the next level. Our goal was to mix the development of skills with adventure!
More than 7,000 Emirati, Omani, Kuwaiti and Saudi students have enjoyed physical challenges, leadership training and teamwork development provided by the BP Young Adventurers Camp. Throughout this program, participants take part in a variety of activities such as climbing and abseiling, mountain biking, sea kayaking, raft building and team building activities.
You began working for BP back in 2000, holding a variety of positions within the company. Over the course of your career, what have been some of the key ways that you have seen the industry evolve?
With the weak and rebalancing of demand and supply accelerated by OPEC and the low oil price that the industry has been going through since June 2014, much of the oil and gas industry has survived given the change of culture and focus. Cost efficiency and profitability require a significant shift in corporate culture and outlook, and there have been some cutbacks in reserve development projects over the last few years. There has also been a focus on differentiated capabilities in a diverse range of operating environments i.e. unconventional reservoir production and frontier exploration in increasingly challenging and remote environments, and the emergence of operating models built around specific capabilities and therefore the mergers of various companies. One example of this is GE’s recent acquisition of Baker Hughes.
New business models and forms of partnership have formed as well to leverage the specific skill sets of each organization. The model of a single integrated company discovering and developing an oil or gas field and operating it until it is depleted, is being replaced by alliances and changes in ownership models designed to ensure that the company most able to extract value manages the field at the relevant stages of its life. Additionally, portfolios have been reviewed for coherence and resilience; the focus is now on the opportunity to radically restructure the business based on forecasts of future conditions and to ensure that the projects an organization undertakes matches its capabilities. Oil price volatility has made it difficult for buyers and sellers to come to agreement on oilfield valuations, but with oil price recovering at around $50, the pace of deal-making is picking up.
We have also seen companies exploring new forms of technology deployment: the role that digital technologies are playing in improving performance, productivity and efficiency in the field. For instance, robotics is likely to become more commonplace in the industry. Lastly, there is a focus on retaining and improving talent, which is essential for long-term success; despite the downsizing cycles that has scared some new recruits, there are still opportunities in the industry and we must look at innovative ways to attract recent graduates and capable candidates.
Looking forward to the coming three to five years, what are your ambitions for BP in the UAE?
BP has a long standing and strategic partnership with Abu Dhabi for over 76 years. We are committed to Abu Dhabi and the UAE for the long term, and we are interested in other opportunities such as the offshore concession next year, which we have a soft spot for in our hearts. We want to be part of that future – the future of modernization and the future journey of ADNOC.