Muscat - As a result of initiatives taken towards improving collaboration between oil-sector operators and service providers and contractors to improve efficiencies and reduce costs, the industry in the sultanate has achieved significant reduction in costs, according to the Undersecretary of the Ministry of Oil and Gas.
H E Salim al Aufi was speaking at The Oil & Gas Year (TOGY) Oman 2016 strategic round-table at the Ministry of Oil and Gas on Tuesday.
The round-table discussion, on the theme 'Oman, Beyond the Crisis from Upstream to Downstream', was organised by TOGY in collaboration with the Ministry of Oil & Gas and was attended by officials of industry operators, service providers and contractors.
The aim is to reduce expenditure without lowering production, H E Aufi said, adding, "This means we should focus on value addition and not just cost savings. Production is not to be impacted as much as possible. We are looking at long-term prospects. We need to maintain production because we still need revenue despite the fact that oil prices are low."
"We have seen the results. There has been a significant reduction in terms of cost. We should continue with these efforts," he said.
The ministry has not set any cost-cutting targets, H E Aufi said, adding that these should have a very minimal impact on jobs for Omanis. "While we are sending a message to reduce spending we are also sending a message that jobs for Omanis are the last thing to be touched. If it needs to be touched it would be only in coordination with the ministry," he added.
H E Aufi said due to the low oil price environment many service providers and contractors in the industry are facing tough challenges and are finding it difficult to recover their costs. "They are carrying forward their losses in the hope that next year would be better for business."
He said some companies are getting to the point where they can no longer reduce costs. "We need to ensure that we [all industry stakeholders] remain together as a family and work towards understanding the constraints of other partners," he added.
In efforts to attract more international investment in the sector, H E Aufi said the ministry has started evaluating all the data available on open oil blocks. "In the past we used to put everything in a CD and go to the market to offer blocks for companies. Now, we are first evaluating the blocks. We are trying to understand the opportunities, leads and prospects in these blocks so that when we market them it makes sense to potential investors."
H E Aufi said these new efforts would help the government price a particular block better and will reduce the time spent in the process by months. "We are not just giving data to potential investors but information they can easily base their investments on. It helps, so that when we sit down to negotiate we know we are negotiating something we know the value for," he added.
© Muscat Daily 2016
