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The UAE oil and gas sector needs to thing long-term

UAE oil and gas sector needs to commit to long-term thinking: DNV GL

DUBAI, January 26, 2016

More senior oil and gas professionals in the UAE felt their organisation had been successful in achieving its cost-efficiency targets over the past year than the global average (83 per cent versus 74 per cent globally), according to a new report published by DNV GL, the leading technical adviser to the oil and gas industry. 
 
Despite strong cost-efficiency achievements, UAE respondents still favour more short-term responses to the downturn.
 
Short-term strategies include focusing more on onshore operations (40 per cent), shifting from Capex to Opex efficiency and favouring investments with a shorter time-frame (55 per cent) according to the report, A New Reality: the outlook for the oil and gas industry in 2016, based on a survey of 921 senior sector players.  
 
UAE respondents also believe the sector has taken a short-term approach to innovation and R&D (36 per cent) and to skills and career development (45 per cent), compared to 32 per cent and 43 per cent respectively among global respondents.
 
Cost management has fallen slightly as a top/high corporate priority, but there is expected to be growing pressure on the supply chain (31 per cent of respondents in 2016 compared to 20 per cent in 2015). Reducing the headcount will be less important in 2016 as a cost-management measure, down from 30 per cent last year to 24 per cent in 2016.
 
Anupam Ghosal, regional manager for Middle East and India, DNV GL – Oil & Gas, says: “Whilst the price remains low, some short-term cost cutting will continue with the supply chain still under pressure and it is concerning that a short-term approach is being taken to skills and innovation.  However, there are signs that the Middle East is adapting to the new reality of the low oil price and doing its homework in implementing long-term cost-management changes. Increasing standardization and collaboration are high on the agenda, and will help put the region on a sustainable growth path for the future.”
 
The UAE is receptive to standardisation and 66 per cent of respondents believe that organisations will achieve greater standardization of tools and processes, while 60 per cent think that operators will increasingly push to standardise their delivery globally. 
 
While only 17 per cent of UAE respondents plan to increase R&D spending, this is still more than the global average of 15 per cent. The most favoured strategy in order to maintain innovation within a cost-pressured environment is to increase collaboration with other industry players (43 per cent). 
 
Enhanced oil recovery (31 per cent), unconventional gas extraction technologies (29 per cent) and unconventional oil extraction technologies (28 per cent) are perceived as the new/emerging technologies that will have the greatest industry impact in 2016.
 
Elisabeth Tørstad, CEO of DNV GL - Oil & Gas, adds: "Joint innovation and smart standardization are critical to strip back complexity and, in turn, lower costs and enable rapid and efficient technology implementation. It is interesting to see that UEA respondents see operational production efficiency as the highest priority for R&D spend. 
 
“Innovation isn't just about finding the breakthrough technologies - although that's important too - it's also about making things simpler and more efficient. At DNV GL, we are continuing to invest 5 per cent of our revenue in R&D, which will ultimately help the industry to safely cut costs.”
 
 
 



Tags: UAE | Oil | costs |

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