What is your outlook for the oil and gas sector?
With OPEC cutting production and global demand continuing to strengthen, we had hoped an international recovery was in sight. However, the complexity of the supply side where there are different dynamics across various producers and regions has come into play. Unfortunately, this is creating further oil price instability and is resulting in a stagnating global business environment. Our goal is to defy the gravity of the industry.
How have you fared in 2017?
As with most years, 2017 has had both opportunities and challenges. In terms of opportunities, we are fortunate here in the Middle East–with an area of tremendous proven oil reserves coupled with the ambition of our host countries. We have found plenty of ways to prove to our customers the value of our technology and integration capabilities. The challenge comes down to how to economically develop the needed oil and gas resources. We are working closely with our customers to develop business models that allow us to increase efficiency but still reduce the cost of service delivery, for example, through remote operations and multi-skilling.
How do you feel you have adapted to the new energy landscape?
We are fortunate to have deep and long-standing relationships with our customers. Across the region we are seeing a move towards higher levels of integration as customers recognise the benefits–including lower HSE exposure and significantly reduced well delivery times. For example, in Iraq, we have entered into multi-well, multi-year Lump Sum Turn Key contracts, which give our customers certainty on their well costs, while providing the opportunity to deploy our integrated solutions to deliver the wells.
How important is the Middle East’s drilling market to Schlumberger?
The Middle East forms a vital part of our overall business. We can trace our presence in the region back almost 80 years. In terms of drilling, the Middle East remains active–most countries have increased their rig count over the past two to three years, which is in stark contrast to what happened in other parts of the world. Our customers appreciate that we have always been receptive to new technologies. For example, with one of our customers in the GCC region, the PowerDrive vorteX Max high-powered rotary steerable system, along with our cutting mud motor modelling technology, enabled us to increase ROP by 25 per cent– the best performance to date for an integrated drilling service project.
Are you seeing the Middle East market picking up?
As mentioned previously, a number of Middle Eastern countries are increasing their drilling activity, driven primarily by conventional activity. In the region we are also seeing increased focus on unconventional activity and this will be a significant source of growth in the coming years.