Raoul Restucci, Managing Director, Petroleum Development Oman (PDO): Interview

Interview: Raoul Restucci

How can the private sector, especially small and medium-sized enterprises (SMEs), help maximise efficiency in Oman’s hydrocarbons sector?

RAOUL RESTUCCI: The oil and gas industry is highly specialised, and large-scale upgrading and enhancing of scope tends to be along the vertical comparative advantage axis. Exploration, refining and petrochemical activities, for example, mostly fall outside the scope of SMEs. However, across each level on the vertical scale, there are significant business opportunities along the horizontal supply chain for SMEs to exploit. Some of the opportunities they could explore include the provision of office supplies, catering services, communication and technology services, construction, transportation, fabrication and welding services. Moreover, SMEs can and must add value by introducing new technologies and innovative solutions  to address key challenges in the industry, as well as bringing greater efficiencies and productivity in operational activities. This can help differentiate Oman by creating sustainable, internationally competitive businesses that not only help the Omani oil and gas sector become more efficient, but also provide challenging high value-added jobs and career opportunities for the nation’s youth.

Another opportunity for Omani SMEs is the solar energy sector. Oman has the potential to become a global centre for solar energy expertise. We have recently announced plans to build one of the world’s largest solar plants, called Miraah, which will generate steam for thermal enhanced oil recovery. Miraah has the potential to generate significant value for Oman, creating new opportunities in supply chain development, manufacturing capability and employment and training. Plans to localise the supply chain are currently under development, including establishing a local manufacturing centre in Oman.

Entrepreneurs need to think about gaps in the market and consider the provision of goods and services, initially for Oman, but promptly gearing up to supply international markets. They also need to establish close relationships with research and development entities and adopt internationally recognised best practices to maximise efficiency.

How can the balance be struck in terms of the cost of in-country value (ICV) for companies operating in Oman’s oil and gas sector?

RESTUCCI: We have said from the outset that ICV in certain circumstances can mean paying a premium, and that this may have to continue in the short to medium term. Incubating new strategic and high-value supply chains can take years, but this remains an essential building block in any upgrading and diversification programme. However, it is not ICV at any cost. ICV needs to be assessed on a case-by-case basis, and our focus and intent will be to award contracts to the firms that have offered the highest ICV over the contract period in their tender plans at a competitive and/or acceptable cost.

Ultimately our objective is to build a productive Omani industrial and private sector base that is able to compete on the international stage. That’s how you increase the chances of longer-term sustainability and growth. We all have to look at any additional premium we may pay in the name of ICV as an investment in the future and for the long-term good of the nation. Operators need to become smarter at recognising and rewarding those companies that create Omani supply chains  and deliver the ICV plans and promises submitted in commercial contract tenders. One of our big rules is that ICV must make good business sense to be sustainable.

Our suppliers and contractors have to look at how to attract and retain Omani talent and, to do so, they have to offer employees scope for development and growth. Our industry in general needs to enhance training and increase investment in Omani talent.