The Business Year

Neri Askland

UAE, ABU DHABI - Energy & Mining

Great Impact

Vice-President Middle East & Country Manager of Abu Dhabi, Statoil

Bio

Neri Askland is the Vice-President Middle East & Country Manager of Abu Dhabi at Statoil. He has an MBA from BI in Norway and NTU in Singapore. He joined Statoil ASA in 1997. Prior to that, he worked for 10 years in the contracting industry. He has extensive project experience from a range a positions in the international portfolio, which have included expatriate assignments in Venezuela, Iran, and the US.

"For an oil company, it is important that you have some technology in house."

Statoil has been in Abu Dhabi since 2010. How would you describe your presence in the UAE to date?

Achieving things in the energy business requires a long-term focus, and our presence in Abu Dhabi is linked to what we are trying to achieve. We are a small office here and are still in the business development stage. Most of our technical work is done outside of the country. We are pursuing our goals and looking for a long-term partnership with ADNOC in Abu Dhabi. With our regional office in Abu Dhabi, our main goal is to establish a substantial and sustainable presence here. We are focusing on business opportunities where we believe we can add value to the Emirate. The areas we are looking for are, of course, upstream oil and gas opportunities, both onshore and offshore, as that is where we add value, and where we have to position ourselves. So far, we strongly believe we are achieving our objectives.

Statoil is well known for investing in carbon capture and storage (CCS) technology. What is your strategy in terms of transferring that technology to Abu Dhabi and marketing your position in this segment of the energy industry?

We have four areas in our Statoil toolbox where we believe we have a strong base, technology-wise, that is needed in Abu Dhabi. One is developing strong gas value chains. Statoil is the second largest supplier of gas to Europe. We supply gas from Norway, the Caspian Sea, and North Africa. Statoil has a long history of developing robust, gas value chains. Since Abu Dhabi is short of gas, developing a local gas value chain is an area where we can add value. The other area where we believe we can add value is by managing oil and gas in bio-sensitive areas. There are areas here where oil and gas are situated in bio-sensitive areas, which means you have to operate in a responsible manner by applying practices and technology to carefully extract the resources without interfering with the bio-systems, which is something we have a lot of experience doing. This goes back to our heritage in Norway, where a lot of the resources are situated in extreme habitats with several types of species at risk. We are essentially fishing for oil where fishermen are fishing for fish, which is why we have practices and technology to extract the resources in a systematic, responsible manner. Ultimately, it is about achieving increased oil recovery. It is our eternal fight to ensure that we really get the most out of the resources from the reservoir, and we have developed practices and technology to maximize the recovery of our fields. Today, we have some of the highest recovery rates in the world. Additionally, we have had a favorable tax regime in Norway in support of R&D in the field of enhanced oil recovery (EOR). The last of our four key areas is CCS. The tax system in Norway taxes our CO2 emissions offshore, and, therefore, it is in our financial interest to find solutions to reduce the emission of greenhouse gases. We now have a research center in Norway outside of Bergen focused on removing CO2 from exhausts gases looking at how we can take out that CO2 economically. Currently, there are no international framework conditions in place, as the world cannot agree on a common system for how to manage CO2. However, in Abu Dhabi, there is a situation where it is short of gas, and, thus, the gas that it has, it also needs for the recovery of the oil. Abu Dhabi is still experimenting and has research projects looking into replacing natural gas with CO2, using CO2 as a drive mechanism, which is also a gas. As we have a long background in managing in CO2, both in storage and capture, this is where we believe we can add value.

“For an oil company, it is important that you have some technology in house.”

In addition to your oil recovery systems, what other technologies are you bringing to the Abu Dhabi energy market?

For an oil company, it is important that you have some technology in house; yet, the most important thing is that you are architectural, which means you know when you need to develop a technology and you know when you need to bring in a technology—either something you have developed yourself or from a service provider. The role of an oil company is to have the ability to be the one that pulls those things together. It is not to come in with a big bag of technology, although sometimes it is portrayed that way. We have a good understanding of which technology to apply to certain situations because each reservoir has its own characteristics and needs to be developed in a different manner. Using technology is one thing, but it is also about the methods and how you responsibly develop the technology over time to take out the resources in the most economical manner and operate in the most environmentally friendly way. Doing so safely goes without saying. Another area that we have been part of developing and supporting is seismic studies. Seismic technology is like goggles that allow us to see what is happening 3,000 meters under the ground. We spend 50% of our money on R&D, together with industry, contractors, and suppliers to develop the technology that we need.

How do you see supply and demand evolving in the oil industry in the near future?

In the short term, oil prices are probably on the border of the breakeven price when it comes to breaking out to new fields. Fields in especially more demanding settings require a high oil price in order to develop. This is why some areas have a lower cost of development—because of the conditions in place. Here in the UAE, it is more cost efficient to develop capacity and produce than it is in the North Sea or all the way up north in the Arctic. Sooner or later, oil prices will pick up again as the world’s population continues to increase. The real uncertainty going forward is the price of gas. It is really about how gas prices will impact the oil price. The US is now producing the same amount that it was producing 27 years ago and its internal production will impact the flow of oil and gas. The question is how will the US use its shale gas? Will consumers and producers in the US be able to convert their gas into the transport sector? If so, then they are hitting oil market territory, where it used to be oil that was meeting the demand and now it is suddenly gas. The more transport gets gasified, the greater the impact we will see in the economy and in the prices of products. For this region, the fastest growing market is in the East. Sooner or later the price for oil will go up, but I think it will stay where it is for a while.

What is your perspective on the importance of education to innovation in the oil and gas industry?

The oil and gas industry has a high demand for scientists and engineers, and it is important for us to focus on making sure students in school choose science and technology subjects, meaning we are able to get the best heads as future employees. We have programs where we work with kids very early on. One program we have is called, “Heroes of Tomorrow,” which has been successful in Norway. They are also doing a lot here in Abu Dhabi. The economy in Abu Dhabi is similar to Norway, as it is a resource-based economy with a small population that has developed into a knowledge-based economy. If you are going to develop advances in CCS technology, you are going to need good, smart people to find new solutions that can bring the cost down. Abu Dhabi is trying to focus more on using its knowledge-based economy as a funnel for innovation. Education is extremely important for the industry.

© The Business Year – November 2014

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