Wednesday, May 25, 2016
Hit by low oil price, Sabah Shell forced to adjust expenditures
Sabah Shell Malaysia General Manager Ian Lim said due to the low price of Brent crude oil, the entire industry had had to make adjustments including deferring or stopping projects and restructuring to achieve lower costs.
"Indeed, like many, Shell is preparing for a lower for longer scenario. Here in Sabah, our challenges are, firstly, we are operating mature assets with increasing unit operating costs in an operating low oil price environment.
"Secondly, our deep water assets are prolific but they are also complex and have challenging operating environments due to the much deeper water depths," he said during his keynote address at the 5th Sabah Oil and Gas Conference and Exhibition here.
Nevertheless, Lim said, Shell is committed to staying in business for the long term in the State and this will require a new balance that focuses on growing its deep water business, being more competitive and efficient and nurturing local talents.
"On growing our Deepwater business, we took the decision to set up an additional office in Kota Kinabalu (Plaza Shell) to bring together all of our staff supporting the deep water assets that used to be working in Miri and Kuala Lumpur.
"The combination of the physical co location and implementation of Shell processes and best practices has enabled our staff working across different functions to collaborate very effectively leading to improved facility performances and excellent reservoir management practices that are critical for efficient and competitive deepwater operations," he said.
Lim added that Shell has a significant global deepwater portfolio and with its Malaysian and Sabahan talents, the company had leveraged on its global experience and expertise from operating and developing other deep water fields in the US GOM, Nigeria, Brazil.
"This has enabled us to execute projects like Malikai successfully, operate Gumusut Kakap competitively and to also bring in innovative and cost effective solutions as we pursue additional opportunities in Sabah with our joint venture partners," he said.
He said it is no surprise that in the current climate, the company is focused on being competitive and efficient.
Towards that end, he said the company is undertaking a rigorous Continuous Improvement programme that seeks to identify waste and look for opportunities to improve and be more competitive – not just locally but globally amongst its other Shell assets.
"More importantly we are also focused on a behavioural change where we seek to have every day being a better day.
"We have examples that range from minimising fugitive emissions from our large Gumusut Kakap facility to implementing new practices on our mature assets.
"Thirdly, but not least, we aspire to do our part in building local capability to support Sabah's future in the oil and gas industry," he said.
He said the company would like to play a larger role in connecting government and educational sectors with some of its key contractors in order to deliver what the industry requires and further enable the local content agenda.
The Deepwater business will hopefully provide opportunities for Sabahan companies to learn and build up capability in this niche area.
Deepwater flow assurance knowledge, operating floating facilities and sub surface engineering are amongst the areas where the company still have capability gaps both in numbers and experience.
"Having a presence here in Sabah together with Petronas Carigali and our joint venture partners will hopefully inspire more Sabahans to consider an oil and gas career especially in the sub surface disciplines.
"We would like to play a proactive role in introducing the many exciting challenges to more students and education institutions," he said.
All these three namely growing our deep water business, being competitive and efficient, and nurturing local talent, are essential ingredients for us in Shell to play our role in contributing to the success of the O&G industry in Malaysia, and Sabah in particular, he said.
Posted by wikisabah at 3:35:00 PM