Walid Hadi

What are the defining features of Shell’s operations in Oman, and what are some of the highlights of the past year?

We have been present in Oman for a long time, having entered the country in the 1930s. Over the years, we have created what we like to call a Heartland position in partnership with the government. So, Oman is in fact one of the most material countries in our portfolio across the value-wide cross-section of businesses. That history has manifested itself predominantly through the joint ventures that we co-created with the Government of the Sultanate of Oman. Elaborating on our position in Oman, we own 34% interest in PDO, which produces around 65% of the country’s oil production. This is a joint venture that we started with the Government many decades ago. Now, it has grown into becoming one of the most capable operating companies in oil and gas production globally, not only in Oman. We also have a 30% interest in Oman LNG, a liquefaction plant that liquefies gas and sells it in the international market. It benefits from the special position of Oman as a country that is stable, neutral, and equidistant from global players, which affords us a sense of stability and partnership in the market. We have just below a 50% stake in Shell Oman marketing Company, one of Oman’s most prominent companies in the sector. Under this line of business, we have close to 200 fuel stations, a business that services the aviation sector, and a heavy industry sector. This is what we have achieved with Oman to date. Today, we are writing a new chapter of that partnership, which involves creating new ventures in the energy transition and the new energies sphere. We started writing the new chapter over the past couple of years by signing a concession agreement with the Government in December 2021. That will enable us to bring significant production volumes into the Omani market within one year from signing the agreements, in what is a multibillion-dollar investment. It aims to boost the country’s ability to produce more gas, obviously a vital fuel for its industrial and economic growth. We are also significantly laying the groundwork for material investments in new energies, such that low carbon value chains like blue hydrogen, renewable-based hydrogen, and investments in renewables. We have already launched the first industrial-scale solar plant in Oman, a 25MW facility in Sohar Freezone. We intend to replicate this solar business model through multiple forms of generation capacity over the coming years.

How is your business model evolving to adjust to renewable targets?

Everybody is talking about 2050 as the year to resolve global warming and reduce emissions. In 2050, my son will be my age today. That makes it personal for you if you truly believe in climate science, and all the factual data that indicates that this planet is becoming a hotter planet by the day. . There is also today’s reality and where we want to be in the next 20 or 30 years. And there is the energy of this country, which is still significantly dependent on hydrocarbon energy for its economic and financial health, as well as the aspirations of future generations. We are aware that oil and gas are critically important for Oman today and are likely to remain so over the coming decades. It is also likely to remain part of the energy mix in the long term.
While we try to transition this country into a more sustainable energy future, we should not forget the critical role that Oil and Gas will continue to play over the coming two decades. That does not mean that we produce Oil and Gas at any cost, particularly at any carbon cost. We, along with our Omani Joint Ventures, respond to the needs of our Government partners in terms of economic growth and tackling issues like unemployment, meanwhile, we also work towards transitioning towards a Net-zero carbon future. That makes the Oil and Gas sector cleaner and more resilient and ensures that we continue contributing to Oman’s economic stability as we start investing in the energies of the future at the same time. We are also investing in solar, wind, and renewable-based hydrogen when it comes to renewables. Today, we are working to set up partnerships in green hydrogen. My vision is that by 2050, 60% to 80% of the value that we generate in Oman, and for Omanis, derives from those clean energy sources. And that the remaining hydrocarbon stream, decades down the line, is one of the most carbon resilient hydrocarbons worldwide. If we can achieve this, we not only maintain Oman’s current position but can actually improve its status as an energy player.

What innovative technologies are you currently exploring and deploying to boost sustainable production across your operations?

There are numerous examples of this. We, at Oman Shell, are trying to introduce some of the latest technological solutions from our global portfolio to traditional businesses. An example is horizontal wells technology, which is considered one of the most drilling technology that enhances the reservoir performance. These technologies were not necessarily required before in Oman, and they are now becoming the industry’s bread and butter. Although this is not the most attractive technological side of our business, it is quite a complex one in terms of drilling réservoirs, we look at this from the angle of of efficiency, speed and maximization of production. In addition, we undertake considerable work in technology, particularly in the safety space. Recently, we created what we call a digital twin of Oman LNG facility – Shell’s first digital plant twin globally. This digital twin enables us to better view optimization and reliability through running the plant virtually and understanding its physical kit state. This is an exciting proposition as it helps optimize maintenance, reliability, uptime, and more. With all that, I believe that we have not even scratched the surface of it yet. This industry will probably have an exponential rate of change over the next 10 to 20 years, particularly in electrolysis and technology.

What are your short-term targets and growth priorities for the year ahead?

We certainly want to make sure that block 10, the central component, is at full strength. In Oman’s current macroeconomic climate, it would be a significant contribution to the country. So, bringing that on stream safely and in an orderly fashion, sometime by the end of 2022 or early 2023, is quite an important milestone for us. We will also start exploring for more gas in block 11; another milestone itself. Growth in gas is strategic for this country and for Shell. And we are hoping in the near future to pass the next milestone in maturing our blue hydrogen ambitions in Oman. We are also hoping to have already announced entry into renewable-based hydrogen in a material way by the time this interview is published. And if we can achieve those three things, we would be well underway to assembling the building blocks of our business in terms of what it will resemble in the 2030s and 2040s. And as per vision 2040 and Shell’s strategic intent of #PoweringProgress, the energy transition and the requirements for mitigating climate change remain in sharp relief.