You can be sure of a partnership spirit

Assuming that the Arabian Gulf probably features the lowest costs of extraction globally, what are the particular issues and challenges of operating in this region? How have they changed?

We see a slow shift in the development of more ‘difficult' oil and gas as primary recovery processes start to come to an end and fields become mature.

This has already happened in Oman, for example, where the largest percentage of new production being developed in Petroleum Development Oman (PDO) in the coming years will come from technically-challenging enhanced oil recovery (EOR) techniques.

A growing shortage of available gas is driving operators to consider developing low-permeability gas reservoirs, sour gas fields and high pressure and high temperature (HPHT) gas (e.g. Shah, Kuwait deep gas).

Please describe how Shell's presence in the UAE and Gulf has developed, simply in terms of the key landmarks, the scale of current operations, key areas of activity, etc.

Shell has a rich history not only in the UAE and the GCC but also in the rest of the Middle East. Just recently we celebrated Shell Egypt's 100th year, on June 9 in Cairo. In Abu Dhabi we have been active since 1939, while we have also been strongly established in other countries in the region, such as Oman, Qatar, Saudi Arabia, Kuwait, and Shell's new "baby", the Majnoon oil field in Iraq.

PDO operates around 550,000 bpd oil, plus gas, on behalf of the government. Some of the gas is turned into Liquefied Natural Gas (LNG) through Oman LNG. Shell operates in the UAE through its stakes in Abu Dhabi Company for Onshore Oil Operations (ADCO) and Abu Dhabi Gas Industries (GASCO). In Saudi Arabia Shell is involved in exploration activities.

In Qatar Shell has invested almost $20 billion (Dh73.4 billion) over the past five years, making it the largest foreign investor in the country. We are also expanding this strong partnership with Qatar by signing several new agreements in the past year, such as the signing of exploration contract for block D and the MoU to develop a $6 billion petrochemicals project in Ras Laffan Industrial City.

Shell has pursued partnerships with local operators, for example ADCO. What is the particular significance of that approach, and what are the key elements to a successful joint venture in this sector?

We believe in working in a spirit of partnership — different partners bring different things. Done right, a joint venture (JV) is a "whole which is greater than the sum of the parts."

The long duration of many of these ventures is proof that the idea works. It has also led us to put particular focus on developing local and regional talent — whether by training, coaching and mentoring by our Shell secondees, or cross-assignments into companies around the Shell group from which JV staff return with their skills developed and better able to contribute to their ventures and their countries' aspirations.

In a speech earlier this year, your regional Executive Vice-President, Mark Carne, highlighted the importance of gas development. What are the essential components of that case?

Mark referred to a transition in many countries in the region towards a new era where gas is recognised as a precious resource to provide the energy that underpins economic growth and supports the region's increasing population.

By and large, the days of flaring gas as a waste product are, thankfully, over. Exporting of surplus gas will continue, but perhaps with an increasing recognition of the gas in domestic markets.

And make no mistake: gas is a great fuel. It's plentiful globally (particularly with the development of less conventional resources), it's convenient to use, and it's much cleaner than other fossil fuel alternatives. It can play a long-term role in the energy system of tomorrow, and can provide a good complement to renewable energy sources, which tend to be intermittent.

Green issues are a modern imperative. How is Shell focused in the UAE and region to these concerns? How do they impinge on the core business model?

Let me highlight CO2 emissions as a key part of the environmental challenge. In the UAE and indeed around the world, we focus on four approaches:

• Energy efficiency — A good example is the use of waste heat from power generation in Oman to generate steam for EOR, significantly reducing the greenhouse gas footprint of EOR operations. But we try to do this even on a smaller scale at our offices — where turning the lights off becomes second nature for our staff, here in Abu Dhabi!

• Supporting the use of natural gas as a lower-emission form of fossil fuel in the region — This can mean investing in difficult gas developments, or it can mean trading LNG (where Shell remains the biggest global player among the IOCs), for example our role in sourcing the first LNG cargo imported into Kuwait, which came from our project in Sakhalin in the Russian far east.

• Appropriate use of renewable energy — Globally for Shell our ‘big bet' in renewable is on biofuels, notably in Brazil. But in the Gulf we do see other applications of renewable energy; I was delighted to see Showa Shell announcing the 500 kW pilot plant for their thin film solar technology in Saudi Arabia last week, for example.

• Carbon Capture and Storage (CCS) — Where countries do continue to use fossil fuels for power generation or industrial processes, CCS can provide a real reduction in greenhouse gas impact. Shell continues to seek opportunities to grow our CCS portfolio around the world, and discussions are under way with several regional entities. This region also presents the exciting opportunity to use the captured CO2 for increasing the oil recovery from some oil reservoirs.

There are many more other local environmental issues, and our efforts in Oman and Abu Dhabi to assist ventures in better management of produced water is a good example. We leverage Shell technology for the benefit of our partners.

Corporate social responsibility (CSR) is another feature of multinational business. How does Shell meet its apparent obligations in this sense in the Gulf?

Being a good neighbour is an important part of our agenda in the countries where we are present. One of the core themes of our CSR programme has been developing human capital and creating job opportunities for locals. There is now even more focus on this aspect in Oman, to take an example, where creation of quality employment opportunities has become a national priority, and Shell is playing its part in that through a range of programmes.

Here in Abu Dhabi, where I live, we focus on three main pillars:

• Our work with the Khalifa Fund to support entrepreneurship and the creation of small businesses, using the model developed by Shell Intilaaqah.

• Investing in R&D projects in partnership with the Emirates Foundation so that young scientists and engineers get support in developing and deploying their research capabilities.

• Continuing our decade-old work with the Environment Agency to sensitise Emirati schoolchildren to the need to protect the environment. Through the Environmental Spellathon and other competitions, more than half a million schoolchildren in the Emirates have benefited from this programme.