Abu Dhabi: Occidental Petroleum is looking at the possibility of the expansion of Al Hosn sour gas project in Abu Dhabi which reached its full production capacity last year.
“Abu Dhabi would like to have additional gas. We would certainly want to make that happen. The expansion would add about 25 per cent to 50 per cent production to the plant,” said President and Chief Operating Officer of Occidental Petroleum Vicki Hollub speaking to Gulf News in an exclusive interview at the company’s office in Abu Dhabi.
She said they are doing engineering evaluation of the project now and will take a decision on the expansion in a year or two.
Al Hosn gas project began operations last year and reached its fill capacity of one billion cubic feet per day (bcf) in the second quarter.
The multibillion dollar project is being developed by Abu Dhabi National Oil Company (Adnoc) in partnership with Occidental petroleum to produce usable gas from Shah’s high-sulphur field. Occidental Petroleum has 40 per cent share in the project.
“The project came online in January last year. It is full capacity now, running a little bit over capacity. It’s been a great partnership with Adnoc. We were able to merge our expertise and the expertise they have to make that project get done on time and on budget.”
“Al Hosn not only is one of the largest gas plants of its type processing sour gas but also we get the sulphur to the port by rail. We move about 10,000 tonnes a day of sulphur.”
At one time, about 30,000 people were working on the project located in the remote desert, about 210 kilometres from Abu Dhabi. The project is likely to contribute significantly to the energy needs of Abu Dhabi and the UAE for over 30 years.
No plans to reduce stake
Speaking about Dolphin energy project, which the company is involved in the transportation of gas by subsea pipeline from Qatar to the UAE, she said it is an important project and they don’t have any plans to reduce their stake.
“We are dividend paying company. It is important for us to have good reliable cash flow. Both Al Hosn and Dolphin provide two sources of free cash flow. We are not considering reducing our interest in Dolphin.”
On low oil prices and impact on the company, she said they are in a much better position when compared to many other oil companies because of its diversified business including chemicals and the gas projects in the UAE.
“We have a strong balance sheet. We ended last year with a significant amount of cash and very low debt. Our debt-cash ratio is only 22 per cent, which is much lower than lot of other companies.”
“We have a portfolio of projects and types of oil and gas assets that enable us to go down to very low oil price to continue operations. We wouldn’t consider this price scenario to cut back on production. We have lot of different opportunities for development.”
The low oil price environment had been wake up call for the industry, she said.
“We as an industry got used to high prices and a lot of inefficiency had crept into our business. So I think now it is the time to sit back and take a look at where we are and what we need to do to get our business back to a point where we can be successful in low oil price environment.”
However, the company is undertaking cost cutting measures as oil prices plummet to record low levels.
“We as a company striving to do all we can to significantly lower our cost structure. In all the areas we operate, we are reducing our costs to bare minimum as we can and be efficient.”
Opportunity
On the lifting of 40 year ban by the US government on crude exports, she said it certainly creates an opportunity for the companies in the US.
“The refineries in the US are not really built to process lighter crude so there will be an opportunity for lighter crude to be exported.”
The company bought a naval station from the US government a few years at Ingleside for $80 million and it intends to use the facility to move not only their products but also products from other companies.
“The facility would be valuable to us as ban on crude exports is lifted.”
The company is now working on to develop Al Hail and Ghasha oilfields project with Adnoc in the UAE. Both companies will cooperate in carrying out a number of activities that reach up to $500 million (Dh1.83 billon) in investment.
“Right now it is a technical evaluation stage but we will love to finish the technical evaluation and move into some sort of development programme.”
The company currently doesn’t have bids submitted for Abu Dhabi concessions, according to Hollub. The company did not expand further.
Adnoc last year granted 10 per cent stake to French oil major Total, 5 per cent to Japan’s Inpex and 3 per cent to South Korea’s GS Energy. It is yet to take a decision on the remaining companies to be part of the new concession.
