OBG talks to Yousef Omair bin Yousef, CEO, Abu Dhabi National Oil Company (ADNOC)
What kind of measures is ADNOC taking to raise crude oil production to its announced target of 4m barrels per day (bpd)?
Yousef: The increase in oil production to 4m bpd is to be met by the development of both new and old fields in the onshore and offshore areas. ADNOC has been working towards this target for a long time. Its work includes the necessary studies, seismic surveys, well drillings, project definitions, resource allocations and other efforts. The resulting increases in production will gradually build up to meet the target level.
Will the current gas shortage be remedied by the Dolphin pipeline, or will ADNOC have to boost development of gas reserves to meet demand?
Yousef: The arrival of the Dolphin gas pipeline along with ADNOC's production is expected to meet shortages. However, as the gas demand is anticipated to progressively increase, ADNOC will utilise its own gas reserves to further increase gas supply.
What do you expect to happen to the price of oil in the short to medium term? What are the factors that you look at to predict oil prices?
Yousef: Oil prices are expected to stabilise or to decrease slightly from current levels in the short term and are likely to fall further in the medium term.
Factors that are likely to contribute to oil prices in the short run include rising non-OPEC supply and a shift to non-oil energy sources. Non-OPEC supply is expected to rise by around 1.3m bpd in 2007. Global refining capacity is also increasing, but is expected to have only a marginal impact on prices. On the other hand, some countries' efforts to boost their strategic oil reserves will support prices. Without OPEC's reported determination to manage supply and achieve equilibrium in order to stabilise prices, they could fall to levels of around $50 per barrel.
In the medium term, non-OPEC supply will be the main factor driving oil prices. Non-OPEC countries are expected to boost their supply by 3m bpd by 2008 and by an additional 2-3m bpd by 2010.
OPEC's spare capacity is also likely to rise by 6-7m bpd during this period. Similarly, global refining capacity is expected to increase at a rate of 1.3m bpd over the next five years, well ahead of the oil demand growth of 1.2m bpd. The shift to non-oil energy sources like biofuels is also likely to intensify. Countries such as the US, China and India are likely to fill their strategic oil reserves now due to lower prices.
How will the ADNOC-funded Petroleum Institute Abu Dhabi (PI) help to address the shortage of qualified manpower in Abu Dhabi's energy sector?
Yousef: There is no doubt about the PI's mandate to supply ADNOC with qualified world-class engineers. I am proud to say that our first locally trained UAE engineers have taken positions within our group of companies and are already participating in the growth of the oil sector in our economy.
From in-house statistics that took into account ADNOC's future expansion, both upstream and downstream, it is clear that demand from ADNOC for PI graduates will thrive for a long time. In fact, this was one of the main reasons why PI was instituted in its current form and mission. Engineering professionals in the UAE, generally speaking, are a rare commodity and over the past two decades, they have always been in demand. They will continue to be in demand with ADNOC's expansion ambitions.
If one were to take a global view of the petroleum engineering profession and study current trends, one would find that high-quality engineers are in great demand worldwide and their role is becoming increasingly vital to the major challenges facing the energy sector as a whole, no matter where one is.
So PI not only fuels ADNOC, it will also fuel the entire industry with world-class graduates. Of course, the job market will dynamically evolve as time progresses and it is PI's job to adapt to these changes. But it is quite reasonable to state that career paths will still follow within engineering disciplines.
PI also believes that successful organisations should be driven by innovative and unique people. PI's role is not only to provide information but also to empower our young students and make them leaders in society, so they can meet the Emirate's current and future challenges. This takes a lot of persistence and work on right principles and best practices.
PI's management and faculty members also appreciate the multidisciplinary nature of many educational institutions and the importance of this to the quality of undergraduate and graduate research. Therefore PI maintains active and close relationships with both individuals and institutes worldwide. PI shares particularly productive partnerships with the Colorado School of Mines and the University of Maryland in the US, as well as the University of Linz and University of Leoben in Austria.
The crown prince stressed the importance of environmental protection in his vision for Abu Dhabi. What is ADNOC's contribution to this goal?
Yousef: ADNOC is committed to ensuring that its group of companies conduct their business with full concern for the environment. The environment is a crucial resource and its protection has become one of the main priorities of many nations, especially during economic development. This has led to the need to integrate three dimensions into one mechanism: social improvement, economic growth and environmental protection. This is referred to as sustainable development. It requires the combination of these dimensions and encourages economic growth to support clean technologies and social improvement.
ADNOC and its group of companies ensure and protect the balance of the environmental conditions and contribute to sustainable development by implementing tight health, safety and environment management systems, as well as codes of practice on their operations. Furthermore, our facilities and projects themselves are designed to the highest health, environmental and safety standards. For example, ADNOC has reduced its flaring by 75% since 1995.
How great is the challenge from the growth of renewable energy to Abu Dhabi's energy sector ?
Yousef: This question assumes that the oil and gas sector is in competition with the renewable energy sector, an assumption that has been gaining weight through media channels worldwide. I think that this, to a certain extent, is a misrepresentation. It would take longer than this interview to discuss these challenging and important issues, but I will try my best.
I would like to think that the two industries complement each other rather than compete. Both industries by definition target the energy domain and this means they work, in some respect, on the same interface. However, one should appreciate that the oil and gas industries are of course more developed for historical, geopolitical and technological reasons. On the other hand, the renewable energy sector holds a great deal of promise in terms of fuelling the rising demand for energy throughout the world in order to maintain and increase the human standard of living.
If you look at the biggest oil companies, you will find a few that represent themselves as energy companies. They are in the energy business rather than limiting their operations, research and know-how to oil and gas. Others prefer to focus on what they are good at and have been doing for decades. Every company is going to develop its own strategy and make their decisions based on many factors, including cost, technology development, ease of market penetration and government subsidisation.
From our point of view, our responsibilities dictate us to be diligent and very much on our toes. We must take the best decisions possible to maintain our environmental and social goals as well as our company's future wellbeing and economic competitiveness.
