Middle East underinvesting in ICT infrastructure
Investment in ICT in the oil & gas industry is hampering
A productive and technologically advanced hydrocarbons sector in the Middle East is crucial, not only for the success of the region itself, but for the provision of a sustainable global energy source for future generations.
With the era of easy oil coming to an end, more and more brownfield sites are requiring innovative technologies to extract every available drop of oil. As the need for greater efficiency increases, the industry will look to technological advances to provide solutions to this challenge.
According to Arthur Melet, senior researcher at International Data Corporation (IDC), the oil & gas industry’s ICT infrastructure is suffering from serious amounts of under-investment when compared with other GCC industries.
“ICT spending in the oil & gas sector currently represents 10.71% of the total ICT spending in the GCC region. Even though it may seem a high number, the O&G vertical is still behind other ICT-savvy sectors, such as telcoms [19.30%], government [16.35%] or banking & finance [14.83%],” he said.
While oil & gas companies have increased their spending on ICT infrastructure in recent years, analysts feel that the industry has been slow to replace the aged infrastructure.
“Compared to their revenues, or to their total investment budgets, the investments dedicated to ICT infrastructures in the oil & gas industry is still extremely low,” said Melet.
The consequence of years of underinvestment is that new technology is outpacing the region’s ability to keep up with other oil & gas regions implementing technology around the world.
Huawei’s principal consultant, Abdelrahman Abdellatif believes that the complexities of oil & gas companies organisational structures means that the industry will increasingly look to cutting edge communication and operating systems.
“The network across the branches and the offices of oil companies have a fragmented organisation, they have different branches; onshore and offshore oilfields, pipeline, distribution and so on. They need a robust and secure infrastructure to connect all these locations in real time. To do this is a challenge because, at the moment, they are running on an aged infrastructure,” he said.
Process automation is the next step in modernising the region’s oil fields and refineries. Whether that be in the form of remote maintenance or automated emergency response, process automation will play a key role in raising standards in the industry.
“The automation of processes will increase efficiency and cut costs. It will also improve the quality of the product. It is a solution with which we can achieve more results with far less effort,” said Abdellatif.
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A modern, reliable ICT infrastructure is also required to raise safety standards through process automation as Jens Winkleman, managing director, at Endress and Hauser, explains.
“Only with process automation can you have unmanned plants or adequately reduce staff levels. The staff go into the oilfield only if it is necessary and this greatly increases safety at the plant,” he said.
With digital field buses now able to evaluate the performance of potentially dangerous oil & gas devices from the safety of a remote control room, it is no longer necessary to send staff into the field to take manual readings.
Winkleman believes that the UAE may be lagging even farther behind than the rest of the GCC in terms of implementing cutting edge safety technology in the industry.
“Where I see a difference is in digital field buses and digital field communication. We see other areas in the world where this is more developed. You see developments in Oman but you don’t see it in Abu Dhabi, you see it in Qatar but not in Abu Dhabi. This is holding back a few developments where the customer could benefit from higher quality and get more information than is currently being obtained,” he said.
The people who suffer as a result of this inefficiency are the oil companies themselves, who miss out on vital streams of revenue.
Until now, the full effect of this underinvestment has not really been felt due to the availability of easy oil which may have created a culture of complacency among National Oil Companies (NOCs).
Winkleman believes that regional NOCs in the Middle East are losing the race to implement and develop new ICT based technologies.
According to Winkelmann, International Oil Companies (IOCs) are doing a far better job in implementing process automation technology, than the NOCs.
“On a global scale, I would say that we see differences between companies like Shell and NOCs. From a technological point of view, Shell are probably the best in the market [for process automation]. I see them as more advanced than the NOCs,” he said.
In the coming years, NOCs will need to take the lead from IOCs in order to maximise the efficiency of extracting their oil & gas reserves.
The problem of underinvestment could be being compounded by a shortage of skilled ICT professionals in the region, but ultimately it is the underinvesment in ICT infrastructure that is holding the NOCs back.
As the region’s oil & gas reserves become more and more complex, increasingly innovative technologies will be required in order to get the oil out of the ground.
The cornerstone of the regions future oil & gas industry will be the reliability of its ICT infrastructure. The Middle East will need to invest heavily if it is to become a world leader in oil & gas process automation.