Exploring new frontiers

16 July 2004
What are the prospects for the hydrocarbons industry in the Middle East?
What are the prospects for the hydrocarbons industry in the Middle East?

There is a huge prize still to be found in addition to the vast reserves already discovered in this region. We estimate there is something in the area of 230 billion barrels of oil yet to be discovered in the Middle East. Shell is actively exploring in Egypt and Oman; and finding that even in areas where exploration has been continuing for half a century there are still new plays and discoveries emerging.

Take for example our recent success with the Sheiba 18-3 discovery well in the Northeast Abu Gharadig (NEAG) concession in Egypt's western desert. In terms of new frontiers, the recent announcement of the opening of onshore exploration in Iran, gas exploration in Saudi Arabia - where Shell has a joint venture with Saudi Aramco in the Rub al-Khali basin - and opportunities arising in Iraq are all of great interest.

What is Shell's regional strategy?

Our strategy is to continue to be a key player by building on the strong relationships we have established over many decades. With 70 per cent of the world's hydrocarbons located in my region, it will clearly continue to play an absolutely central role in the global energy scene and consequently in any future Shell portfolio. Shell's core activities in the Middle East at present are in Abu Dhabi, Oman, Egypt and Syria, with new positions being developed in Iran, Libya, Qatar and Saudi Arabia. We also steer our rapidly growing activities in Russia and the CIS from Dubai.

Our aim is to continue our engagement in existing areas such as Oman and Abu Dhabi, where we believe many exciting years are still ahead for the oil and gas industry. At the same time we are working on new areas. In Iran, we will shortly bring on stream the Soroosh/Nowrooz fields, while we are committing to significant exploration ventures in Saudi Arabia and Libya. Future bookings will of course depend on many factors, not least how successful our exploration activities turn out to be.

What will be the key driver of the oil and gas industry in the Middle East over the next 10 years and how is Shell meeting that challenge?

Looking ahead we see a need for more improved oil recovery (IOR) and enhanced oil recovery (EOR) activities in the region as more and more fields mature. We have recently set up an EOR directorate in Oman and we believe that during the next few years this will develop into a regional centre of excellence. Specific examples are: enhanced water-flood management and expandable tubulars for Petroleum Development Oman (PDO); under-balanced drilling in Syria and Egypt and for PDO; and Abu Dhabi Company for Onshore Operations (Adco) is looking at the possible application of smart wells.

What will be the key roles for international oil companies (IOCs) such as Shell?

Shell can bring, and transfer, expertise and technology from other areas where it is active. Shell is also ready to invest on a large scale given the right projects and the right contractual arrangements being in place. National oil companies have highly valuable local expertise and a thorough understanding of their oil and gas fields. We believe that increased co-operation between the two will lead to greater rewards overall. We have operated many joint ventures with governments and national oil companies over the years to great mutual benefit and we are confident that we will continue to do so.

How has the recent period of high oil prices impacted the approach to exploration and the management of existing fields in the Middle East?

It depends to some extent on the specifics of the individual country. Some countries have large reserves-production ratios, and their need to find new fields may be less pressing than in other countries. Of course, either route is valid to sustain production levels and both benefit from up-to

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