ICV in Oil & Gas is important, but let’s not overdo it: Aufi

https://www.omanobserver.om/icv-in-oil-gas-is-important-but-lets-not-overdo-it-aufi/

 14/12/2019 Conrad Prabhu

MUSCAT, DEC 14 – Localisation, while beneficial to the national economy, can be counterproductive if pursued to the detriment of efficiency and cost-effectiveness, a top official of the Ministry of Oil and Gas has warned. Salim bin Nasser al Aufi (pictured), Ministry Under-Secretary, cautioned against the creation of “barriers” between countries in the Gulf and the wider Middle East region as individual states aggressively pursue localisation policies that require Oil & Gas companies and service providers to invest in local manufacturing and repair capabilities.

Localisation – which is also called ‘In-Country Value’ (ICV) in the Sultanate – seeks to maximise the hydrocarbon industry’s contribution to social and economic development in the country. Oman’s Ministry of Oil and Gas oversees an energetic ICV programme in the Sultanate which has contributed to, among other things, the proliferation of investments in factories and workshops specialising in the manufacture, servicing and repair of a range of oilfield equipment and accessories.

But localisation at any expense can be disadvantageous, according to the Under –Secretary. Speaking at the opening of the 9th Middle East Artificial Lift Forum (MEALF), which was held at the Grand Millennium Muscat Hotel last week, he explained: “Every one of the countries in our region is demanding that everything be done locally. So we have to build ESPs (Electric Submersible Pumps – used in heavy oil production) locally, service them locally, and check them when they fail locally – which is good and we should do it. But we should be careful not to overplay the game because otherwise we create artificial boundaries between the countries. If something can be done very efficiently and cost effectively, say in Saudi Arabia or Kuwait or Oman, we should capitalise on that opportunity and not lock our minds to the fact that it’s not happening locally.”

More than 300 industry executives from across the Middle East attended the three-day event, which focused on the increasing use of artificial lift technologies in oil production operations throughout the region. Al Aufi, while emphasising the importance of ICV to local growth and development, advised against a “blind” pursuit of the programme. “As chair of the ICV committee in Oman, I am pro-localising a lot of manufacturing and services, but we should not do it blindly without addressing the real challenges. Can you get (something) more efficiently from within the GCC or the Middle East region?” he asked.

The Under-Secretary further noted: “I’ve heard this raised many times that we seem to be creating boundaries. Service providers are now challenged with setting up industries or workshops in practically every country, and if we are not careful, we will probably ask them to set up workshops in every region within the country to try and distribute their activities. And that costs them a lot of money. On the one hand we ask them to be efficient and cost-effective, and at the same time, we ask them to do it (locally), which may not necessarily (align) the two messages. We support ICV, but let’s not overdo it!”

In this regard, Al Aufi called for collaboration between countries in the GCC “to make this industry more efficient”. “Let’s embrace what’s happening in each other’s country and capitalise and build on the opportunity. And if something is missing, let’s complement it. If something already exists and can be made available efficiently, cheaply and at a fast pace, let’s break all the barriers that don’t allow us to complement each other and work with each other,” he added.