Game Plan

Construction at the Qarn Alam steam injection, enhanced oil recovery project, in Oman.
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Shell exploration and production executive vice president Raoul Restucci speaks exclusively to Peter Ward on the company’s Middle Eastern strategy

For a recent event in Dubai, Shell called on the services of Michael Schumacher to back up its road safety campaign. This type of clout demonstrates just how big the firm is – and it is oil and gas activities that provide the core of the firm’s activities.

In the Middle East the company has dealt in oil and gas for over 100 years, and is showing no signs of slowing down. Raoul Restucci executive vice president – Shell Upstream International, describes the company’s role in the Middle East region.

“We operate and have ambitions in just about every country in the Middle East and North Africa. We are actively involved in over 14 countries, in one form or another. Our key positions remain Oman and Qatar in terms of oil and gas development opportunities, and in the downstream sector there is of course Saudi Arabia,” states Restucci.

“To be honest, across the entire region we have a very significant spread and opportunities over the whole value chain,” he adds.

The company’s solid stature and reputation can offer its clients a number of advantages. “IOCs like Shell bring to the table long term win-win arrangements. Through the difficult stages we will carry on irrespective because we have a long term approach to things. Whether it is financial crises, political challenges, embargos or sanctions, we stay through thick and thin,” comments Restucci.

The rise of NOCs and their increasing capabilities has led to large international oil companies changing the way they present themselves. “In the early development and exploration stages in the 1930s, 1940s and 1950s, the IOCs brought the major capabilities and skills and then we entered a phase of nationalisation. Now you find that many of these NOCs are very well established with a very strong skills base and are excellent stewards of their natural resource base. Very often they have strong financial capacities,” explains Restucci.

“What companies like Shell bring to the table are key areas of technology and technology deployment. It’s not just about developing the special technology; it is the application of the integrated skill set that goes around it. It’s about how you bring a whole technology platform and successfully deploy it. Technology is not about having it, it is about using it,” he adds.

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Two areas where Shell is currently working most prolifically are Qatar and Oman. In Oman Shell is involved in the enhanced oil recovery (EOR) projects which the country has pinned many of its oil export hopes. “In our established positions, our largest investments are in Qatar and Oman in upstream. For downstream it is Saudi Arabia, where we have invested in excess of US$8 billion. In terms of the oil and gas stream, you’ve got in Oman an increasing shift from conventional oil to EOR activities going forward.

“In Qatar there is a massive level of investment and activity. We have got about 75 000 contractors helping us develop QatarGas 4, the LNG project there, but also the gas to liquids (GTL) project, which is the largest plant in the world. That is without doubt the largest investment at the moment that we have in the region,” Restucci affirms.

Like all of the major international oil companies, Shell has a close eye on Iraq and the potential investment opportunities there. “It is a very large resource base which is undeveloped. We have participated in round one of the licensing and we now have teams which are participating in round two,” reveals Restucci.

“We signed a Heads of Agreement in September 2008 on what we call the South Gas joint venture which is a partnership between the South Gas Company, which has 51%, Shell holds 44% and Mitsubishi, which holds 5%. The project starts by collecting the flared gas in significant volumes, processing and treating it and then resupplying the local power generation and LPG units.”

Restucci adds that any surplus volumes of gas could eventually be exported, but in the initial phase the collected gas will just be treated, processed and put back into the national economy for much needed domestic power generation.

Recently, Major IOCs Total and Chevron pulled out of Kuwait, and speculation was raised whether other major international oil companies would follow suit. However, Shell is staying put in a country where it has a long standing presence, Restucci says.

“We have been involved in Kuwait since 1948 so we have an extensive legacy of options, particularly in the downstream sector. And in the future I expect a continued working engagement with Kuwait Petroleum. It is part of a long established relationship and I think we are building our presence, and I’m quite excited about some of the discussions going on at the moment.”

Shell has supplied LNG to Kuwait and has a team in the country which is working on the development of potential upstream opportunities.