We, the man (or woman) on the street have very little knowledge and understanding of the oil and gas industry that is so important to the Sultanate, but I have been fortunate in recent times to develop my knowledge a bit further than the price of petrol when I fill up my car.
I always thought, you see, that oil was lying like an underground sea, and once you drill down into it the pressure within that oil reservoir is what pushes it to the surface, and then all you have to do is put a tap on it until you get a
hose (pipe) to carry the oil away. Simple huh!
Today I know differently, and even getting an ‘oil production for dummies’ level of understanding has made me very much wiser, with words like steam, sand, pressure, horizontal and viscosity, key elements.
I have been made aware of the differences in oil produced in Venezuela to that of Saudi Arabia, which is different again from Oman, which is different again to that of the North Sea, and the United States.
I’ve also gained a basic understanding of the different production costs around the world, and the different methods used. I now know what ‘fracking,’ is, and how it works, and the learning experience has given me a new appreciation of the industry. It has led me to be able to converse more easily with oil and gas industry figures, and to understand the issues facing them.
Yes! I know, you’re thinking, “a little knowledge is a dangerous thing Ray,” and you’re so very right, but no knowledge is even worse in my book.
Among the interesting points raised over recent weeks in conversation included that while the fall in oil prices a couple of years back was much more severe than most expected, there was an industry expectation that technological developments would at some time allow greater exploitation of the Permian Basin, in the South West of the United States of America, thus greatly reducing America’s reliance on external oil supplies.
So industry research and forecasts indicated that the oil ‘shock’ would occur, however its magnitude was not foreseen, and was probably a response to banking and finance fragility at the time.
Closer to home there appears to be a measure of disappointment that, having committed significant investment to the oil and gas industry within the Sultanate, forming mutually beneficial partnerships with local companies, and embracing Omanisation and In-Country Value (ICV), production materials and technology are currently being sourced from lower quality suppliers to help ‘balance the books.’
Now, from the layman’s perspective, we always have the conundrum when we go to the supermarket or to buy clothing and the like, and our choices will not always be for the cheapest. We all have our little peccadillos, or faults if you like, and will buy something because of colour or on impulse, and unless it’s perishable, or a consumable, will usually focus on quality. So the choice we always have to make is, which do I buy, the cheapest or the best?
The oil and gas industry is very different though, in that it has such high investment in plant capital costs, in expertise, and is particularly supportive of Omanisation, so it makes sense to maintain some form of ‘brand loyalty,’ to maintain levels of material quality, supply and logistics, employment levels, and so ICV can be maintained.
Again, from the layman’s perspective we could probably look askance and say ‘sink or swim,’ but when jobs could be put at risk, I believe it’s appropriate to listen to what the service industries are saying, and stay with quality. Or some would put it more cynically, saying, “Better the devil you know...”.
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