Ahmed Al-Azkawi

OQ has been the exclusive operator and owner of materially all of Oman’s gas transportation system since 2018. What strategies has the Upstream Unit followed to help attain this?

We can proudly say that it is an integrated and evolving process that combines our competencies, capabilities, and operational excellence with our strategic approach to retain the share we currently boast of and build on it. OQ transports natural gas to 59 connected parties in Oman through a 4,000-km network of high-pressure pipelines. Our clients range from power, water desalination plants, refineries, petro-chem, fertilizer companies, cement, and steel plants. OQ, under Royal Decree 122/2020, was given exclusive rights to own and operate a system of pipelines, metering, compressor, and gas supply stations and follows the Regulatory Asset Base (RAB) Framework. This framework has supported OQ in securing long-term capital through a predictable tariff regime that has guaranteed stable and cost-effective revenue. Other than that, the core ethic that has helped us attain this is safety and sustainability in running our business in exploration, production, and the gas network.

How much do the local providers contribute to your operations, and do partnerships play an essential role in the upstream industry?

OQ’s focus is on local Omani petroleum resources and will continue to work towards expanding its reserve base in the Sultanate so that production levels grow in the coming decade with a balanced portfolio of oil and gas. Partnerships are important in the upstream industry because this segment is a major contributor to EBITDA for any producer. OQ operated blocks contribute 17% of OQ’s total upstream reserves while the remaining comes from OQ joint venture with local operating partners. OQ since its integration, has been working to bring in more expertise, collaboration, and investment into the nation. For this, it works with major companies such as Occidental, Eni, BP, Shell, Total, Petrogas, and Medco, with OQ holding participating interests ranging from 20% to 45%. OQ also has participating interest with an international operating partner in Kazakhstan’s Dunga field.

What has the digital revolution represented for OQ Upstream?

Digitalization is ushering new and innovative upstream technology. OQ is a part of this revolution and sees it as an opportunity to increase the quality, efficiency, and overall yield of our oil and gas exploration and production operations across the value chain. It has several initiatives in the pipeline. OQ is embracing the Smart field concept, which includes a centralized control room housing real-time well data. Having real time data will reduce operating costs and boost production. OQ is also leveraging the digital twins technology for its gas network through which we will have a virtual copy of real assets in the field, allowing operators to visualize what is happening in real time. Common applications of this technology include data collection and visualization, inspection, maintenance, and training. Our operations will see increasing use of AI and machine learning, which will maximize our physical asset lifecycle and performance and allow us also to monitor leading KPIs live to make the best decisions.

How do you assess the growth potential of upstream industries in the Sultanate?

The industry has always shown promised potential. There is a shift toward alternative energy, though fossil fuels will continue to play an important part in that transition. The Minister for Energy and Minerals was right about this at the recent International Energy Agency’s dialogue when he said that if we stop investing in the fossil fuel industry abruptly, there will be energy shortage, causing prices to shoot up. It is a good scenario, but only for the short run. That aside, Oman is paying more attention to local investment in the upstream industry. New discoveries and continued exploration activities are expected to provide a significant opportunity for market players. For OQ per se, the upstream segment is a key part of its growth strategy that will contribute significantly to fund the company’s strategic long-term shift toward energy transition.