OBG talks to Abdulla Nasser Al Suwaidi, Director-General, Abu Dhabi National Oil Company (ADNOC)

Interview: Abdulla Nasser Al Suwaidi

What can be done to lower the capital input costs involved in oil and gas extraction?

ABDULLA NASSER AL SUWAIDI: We have a rigorous value assurance process to control the cost of developments. Over the years, we acquired a unique expertise in project execution to enable ADNOC to deliver such projects in a timely and cost-effective manner. Of course, we put a lot of effort into the planning stage, particularly in the feasibility studies, and start with the end results in mind. This is very important in order to avoid costly revisions, and rework at later stages of the projects. Front-end engineering and design include value engineering studies, maximising the value generated from development. The lessons that are learnt and shared among ADNOC and the international oil company partners do increase value and bring about cost efficiencies. One important factor is that we maintain transparency throughout the tendering process. Our commercial processes maximise the number of qualified bidders and set solid competition strategies, which helps to reduce the cost of capital projects.

In what ways is the government incentivising clean and sustainable energy investments in the emirate? How is ADNOC supporting these initiatives?

AL SUWAIDI: The Abu Dhabi Economic Vision 2030 includes an environmental protection plan and is being steered by the Environmental Agency-Abu Dhabi. The project will establish five priority areas with sector-specific imperatives and threshold requirements. One imperative is to develop and transit to renewable and low-carbon energy and utilities. The 2030 target calls for 30% of the emirate’s annual electricity to be generated using low-carbon and renewable energy sources. ADNOC supports these policies by promoting renewable energy use and introducing these techniques into our operations, like solar energy panels.

ADNOC works closely with Masdar, and our major initiatives aim to reduce carbon emissions from Abu Dhabi’s oil and gas facilities. This partnership utilises a clean development mechanism (CDM), set out by the Kyoto Protocol, and several CDM projects are under way. We are keen to realise better mechanisms for CO injection in our fields. This has significant potential and added value for Abu Dhabi and could be a replacement for gas injections, allowing gas to be used instead for power generation.

Finally, Masdar Institute of Science and Technology and the Petroleum Institute, an affiliate of ADNOC, have a collaborative agreement to strengthen Abu Dhabi’s research and development efforts in the energy field. Faculty members will work together on research projects and exchange lectures and insights from across the spectrum of energy.

How can capacity in the oil and gas sector be increased to keep pace with rising domestic and global energy demand?

AL SUWAIDI: ADNOC is committed to meeting the government’s target of increasing crude oil and gas production. The local economy relies on gas for fuel, so we aim to raise production through an ambitious development programme that caters for the short, medium and long terms. A fine example of this is the large Shah sour gas field project. Additionally, numerous undeveloped reservoirs are currently being appraised in preparation for future extraction.

Gas plays a critical role in supporting ADNOC’s activities and revenues. It is used to support our enhanced oil recovery mechanism in oilfields; as fuel for power generation and industrial applications; and as feedstock to some of ADNOC’s downstream companies engaged in the petrochemicals and fertiliser industries. In terms of oil production, ADNOC continues to carry out projects to expand our production capacity. This is done by increasing output from existing reservoirs together with additional oil from other undeveloped fields. The extra oil will help satisfy the growing global demand and can also be used to make feedstock for our planned refinery expansion scheme.