ADNOC has ambitious plans to grow oil production by 70% by 2030, with AI and digitalisation key to this strategy
Already the world’s 12 largest oil producer, the UAE’s Abu Dhabi National Oil Company (ADNOC) has ambitions to grow its oil production capacity by almost 70% by 2030. Key elements of that strategy include the increased use of digitalisation and artificial intelligence (AI) in its operations and expanding its international partnerships.
In order to align with ADNOC’s 2030 strategy, ADNOC Offshore, its logistics arm, needed to gain better control and have better insight into its logistics supply chain. At last year’s Annual Middle East Offshore Support Journal Conference in Dubai, ADNOC Offshore marine specialist for marine support Hussam F Suyyagh provided a glimpse into how the state-owned oil company was transforming its logistics supply chain, via digitalisation that will allow data-driven decisions in a newly created logistics operations centre (LOC).
ADNOC Offshore was formed by the consolidation of two of ADNOC’s upstream oil and gas companies: Abu Dhabi Marine Operating Company (ADMA-OPCO) and Zakum Development Company (ZADCO). Japan's JODCO, the UK's BP and France's Total are all minority stakeholders in ADMA-OPCO, while ZADCO’s shareholders are ADNOC, Exxon Mobil, and JODCO.
“As the logistics entity within ADNOC, we need more efficiencies coming from our partners that will make our business model more sustainable,” said Mr Suyyagh. “We are trying to embrace technology by introducing and adopting IT solutions.”
He pointed out that improving insight into the logistics supply chain is especially critical when you have hundreds of vessels that are being operated by multiple companies working in your offshore fields. The waters of the offshore oil production area can be a beehive of activity, marked by short, speedy vessel transits.
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“We have about 206 vessels operating in our fields, of which 93 are under long-term contract and another 113 contracted on a project capacity,” said Mr Suyyagh. “There are another 11 barges on long-term contracts and seven others chartered on a project capacity working in ADNOC concessions,” he added.
Responsible for the development and delivery of oil and gas resources in Abu Dhabi waters, ADNOC Offshore’s logistics mandate also covers 33 support drilling rigs, 13 fixed wing aircraft and helicopters and 14 passenger vessels. There are also 350 landings areas for aircraft, two airports, two passenger and cargo terminals and 10 ports on six artificial and three natural islands over six fields in an area of 23,310 km2.
“Improving insight into the logistics supply chain is critical when you have hundreds of vessels operated by multiple companies working in your offshore fields”
ADNOC’s own fleet has 15 platform supply vessels, four anchor-handling tug supply vessels, three ferries, nine water taxis, four crew and crew utility boats, three multi-purpose support vessels, five emergency response and rescue vessels and two cargo landing craft.
Through additional ADNOC licencing agreements with international partners, oil and gas activity and vessel traffic in the region will only increase. In order to advance its plans to grow from its current capacity of 3M barrels of oil per day (bopd) to 4M bopd by the end of 2020 and 5M bopd by 2030, ADNOC is expanding its development in the first phase of licencing through six new concessions, two offshore and six onshore. As a result, ADNOC’s concessions will increase in area by 50%, making improved logistics even more critical.
At the time of the conference, Mr Suyyagh said there would be a number of opportunities for OSV owners beyond just oil and gas production. “There’s also exploration and development and infrastructure that needs to be built, which will definitely have a major impact on the industry,” he said.
This past February, for instance, ADNOC awarded a US$1.36Bn contract for the construction of 10 new artificial islands and two causeways, as well as the expansion of an existing island, Al Ghaf, to UAE’s National Marine Dredging Company. The land reclamation, dredging and marine construction project is the first phase of the development of the Ghasa Concession, which consists of the Hail, Ghasa, Dalma Nasr and Mubarraz offshore sour gas fields. The project is a key part of the UAE’s plans to become gas self-sufficient and grow to become an exporter of natural gas.
The project will take 38 months to complete and will provide the infrastructure required to further develop, drill and produce gas from the sour gas fields in the Ghasha Concession. At peak construction, the project will employ over 3,500 workers.
With its oil and gas operations growing, ADNOC formed a new logistics operations centre (LOC) to provide better visibility into its expanding supply chain. The LOC controls and coordinates strategic decisions based on data, while collaborating with customers, vendors and third-party logistics companies. Mr Suyyagh said ADNOC Offshore is trying to build a common logistics system to fulfil the quality guidelines of international oil and gas companies.
The LOC tracks personnel, vessels, equipment and materials through its four units: marine, which coordinates marine traffic, provides real-time vessel tracking and compiles automated vessel utilisation statistics; personnel transportation, the centralised hub for all travel requests via air or water transport; shipping, which controls material handling for shipping for drilling and production; and drilling, which plans all drilling material movement and tracks vessels movements in real time.
Mr Suyyagh emphasised that while the goal of the new technology was to increase efficiency and productivity, this would not be at the expense of safety.
“One of our mandates is to have critical emergency preparedness,” he said. Logistical preparedness is at the core of disaster planning, allowing transportation planning, reception and distribution of emergency supplies and management of personnel and equipment resources.
Mr Suyyah looks at technology as an enabling tool, not a solution: “We rely on our experienced manpower as the driver of our model.”
Implementing the technology solutions at the LOC was expected to take about 24 months. Prior to the consolidation into ADNOC Offshore, ZADCO and ADMA-OPCO used different logistics models, said Mr Suyyah. “Now that we are all under the same roof, we saw productivity and operational efficiencies even before introducing technology into the process.”
Mr Suyyagh reported that the average monthly non-productive days for drilling operations have been reduced from 1.16 days in 2016 to 0.29 days in 2017. Productivity also improved on cargo handling, with increased monthly tonnage totals outbound and reduced monthly tonnage totals inbound. Marine productivity time as expressed by vessel utilisation rose from 63% in Q1 2017 to 70% in Q4 2017.
Mr Suyyah said there was a need to get a better balance on day rates that is more sustainable for both owners and charterers. “We want to have a healthier relationship with our partners,” he said.
That healthier relationship starts with a better understanding of each other’s businesses. “We want more engagement between our company and OSV owners, which will drive the business forward. There needs to be a better understanding of the charter business model and OSV owners. This is how you can review your strategy and build a resilient company. We appreciate long-term contracts,” he said.
Mr. Suyyagh, ADNOC Offshore team leader logistics operation centre, will present at the Middle East Offshore Support Journal in Dubai 24-25 April 2019.