As part of DNV GL’s recent Energy Transition Outlook 2018, a global and regional forecast for 2050 that is based on DNV GL’s annually updated independent model of the World’s Energy System, DNV GL underpins the Middle East and North Africa (MENA) region’s unique disposition in the global energy transition. Egypt Oil & Gas spoke to Liv Hovem, CEO of DNV GL – Oil & Gas, about her insights on Egypt’s role in this transition and learned more about the company’s activities.
Could you tell us about DNV GL’s activities in the oil and gas sector?
DNV GL is a global quality assurance and risk management company providing classification, technical assurance, software and independent expert advisory services to the maritime, oil and gas, power and renewables industries, as well as management system certification services, digital assurance and digital solutions across industries. We have operations in more than 100 countries. In Egypt, DNV GL has been operational for more than 60 years. We are a global organization, but with a local presence and an understanding of local market challenges that support us to find the best solutions for our customers.
Understanding the energy transition and its consequences for the oil and gas industry in the Middle East is critical for businesses, investors, and authorities. DNV GL is a trusted partner in supporting safe and efficient solutions for a more sustainable energy mix. From project initiation to decommissioning, we help customers around the world to enhance safety, increase efficiency and manage risk in projects and operations.
What is unique about DNV GL is that we draw on more than 150 years of deep technical experience and our position as the industry’s partner for setting standards in helping our customers face the challenges in their energy transition journey.
What makes Egypt an attractive market for DNV GL?
Egypt’s oil and gas sector has been undergoing an active transformation in the past few years. The country is expected to witness a significant growth and attract new investments in the medium to long-term future. In essence, Egypt is getting prepared to become a regional energy hub as its oil and gas industry shows comprehensive development in the upstream, midstream and downstream segments.
DNV GL is proud to be a strong partner in this journey by building trust and confidence throughout the projects and operations in Egypt, combining the best global expertise and the latest technologies the industry has to offer with our role as an independent assurance and advisory provider.
After the natural gas boom in the region, what are the company’s plans for the East Mediterranean and MENA regions?
DNV GL has a proven track record in the region, not only in the upstream segment, but also in the downstream and midstream. DNV GL’s research shows that the role of gas will require new pipelines including those for cross-border transmission as well as liquefied natural gas (LNG) terminals of varying scale. We see many opportunities to support the industry across the whole gas value chain, ensuring that the development and operations of new infrastructure is as safe and efficient as possible.
According to our latest Energy Transition Outlook report, gas demand is set to persist until at least 2050, and there will be increased costs for replacement and refurbishment of older pipeline systems in the MENA region. We also expect that more LNG terminals and pipelines will need to be built while regulations will become increasingly important in these developments. DNV GL is well positioned to help customers overcome these challenges.
DNV GL’s Energy Transition Outlook showed that the world’s energy system is going through a transition. How do you see Egypt and the MENA region contributing and being affected by this energy transition?
In our outlook, the energy world we forecast in 2050 is split almost exactly in two between fossil and non-fossil energy sources. The future seems to be a very different situation from today, where fossil fuels provide 81% of the world’s energy. Nonetheless, the region is taking serious steps to fulfill its renewable energy potential and diversify its energy sources. On one hand, Jordan, Morocco, and Tunisia have set targets to transform their energy mixes. On the other hand, Egypt, Iran, and Turkey, which are the most populous nations in the region, have streamlined their policies to progress clean energy across multiple sectors and invest in renewable power generation, all of which attracts foreign investments.
Energy consumption within the MENA region is expected to increase by 36% in 2050, driven by economic growth and heightened demand from the manufacturing, construction, and transport segments in the run-up to 2040.
As the regional population grows, domestic energy demands will change and the use of electricity will grow rapidly. Our ETO forecast predicts that much of this increase will be fulfilled by renewables. This means that even though oil and gas production will continue to play a significant role for decades to come, the shift to renewables will change the locations where energy is produced, which in return impacts the region’s economies and politics. Our forecast reaffirms that the oil and gas industry has a vital role to play in the energy transition, as more than half of conventional onshore oil production will come from the MENA region in 2050.
What are the key drivers for the oil and gas industry that, in your opinion, Egypt should start embracing more?
Digitalization is comfortably the leading research and development (R&D) priority for the oil and gas industry in 2019 in the MENA region, with 34% of the respondents to our industry outlook survey in MENA investing in it, compared to the second-ranked priority, subsea technology (23%). The value that can be created by applying digital technologies to projects and operations has become increasingly tangible in recent years as increased investment in digitally-enabled technologies is needed to support faster and more cost-effective production in the coming decades. Within the MENA region, efforts to reduce costs and bring decarbonization of operations into full focus are already being made today and will only continue to flourish.
Next to optimizing existing operations through digitalization, Egypt’s appetite for natural gas will ensure its role as gas importer in the next six to seven years. Meanwhile, Egypt holds a central position in East Mediterranean gas developments and is aiming to become a regional gas export ‘hub’ to monetize its own natural gas resources and to re-export gas from existing and potential sources of gas supply in neighboring East Mediterranean countries. Egypt’s future vision includes reaching natural gas self-sufficiency and adding value to its robust petrochemical industry. The vision further includes turning Egypt into a regional energy hub on several levels that comprise electricity, gas, and other energy resources. DNV GL is thrilled to be a part of this exciting development.
How can the oil and gas sector be sustainable amidst the increasing necessity for more environment-friendly energy sources?
Until recently, the oil and gas industry regarded the energy transition as a transformation on the horizon. However, it has become clear that this significant change is already upon us and it is influencing the entire oil and gas value chain. In 2017, more gigawatts of renewable energy were added in new power generation than those from fossil fuels, which is reflected in where lenders are putting their money.
Thus, industry leaders should be fixed on the dramatic energy transition that is unfolding. There are so many fascinating things going on in the industry right now and I see the oil and gas industry needing to look at digitalization, automation, energy efficiency, electrification and carbon capture – these technologies are causing rapid changes for oil and gas companies and their suppliers.
It is our sector’s responsibility to maintain a sharp focus on decarbonization, sustainable production, cost management, and the need to embrace innovative technologies to secure long-term supply of sustainable and affordable energy. Consequently, oil and gas operations will become faster, leaner and cleaner towards the mid-century as gas fuels the energy transition.
The oil and gas industry cannot work in silos anymore. These technological leaps mean industries that were previously separate must work more closely together and learn from each other. We have to think differently about collaboration and system integration to ensure a more sustainable industry to achieve climate goals. It is our sector’s responsibility to maintain a sharp focus on decarbonization, sustainable production, cost management, and the need to embrace innovative technologies to secure long-term supply of sustainable and affordable energy.
How does DNV GL Oil & Gas ensure the health and safety of its people?
I have always emphasized to DNV GL employees that our work is never so important that we cannot take the time to do it in a safe way and without jeopardizing our health.
In practice, this means taking the time to ensure our teams understand the health and safety risks associated with their work and what precautions need to be taken. This may involve taking time to thoroughly assess risks and draft plans, taking time to reevaluate significant changes or uncertainties, and ultimately stopping work altogether if you think you are being exposed to, or could be exposed to, danger. Finally, it also means taking time to report incidents, especially near misses, which provide us with valuable learning opportunities.
DNV GL’s culture and business is built on managing risks, and we have established systems and routines in place for that. But it all starts with health, safety and environment (HSE) leadership – this includes ensuring an awareness of HSE risks and precautions/safe working procedures, formal training for higher risk activities and the potential consequences of not following safe working measurements. Field workers are issued with a personal copy of the Oil & Gas HSE Handbook and are required to complete an e-learning module.
The staff is involved in the development of work procedures to help develop ownership and ensure they are practical to implement, and managers are required to set a personal example. The employees’ awareness is reinforced through tool box talks, pre-job discussion, routine observation/supervision and workplace inspection.
HSE behaviors are monitored through the informal observation of staff and contractors where practical.
How does the company promote diversity and develop its human resources?
As a global business, it is a priority for DNV GL to secure sustainable diversity in terms of gender and nationality in customer services and operational roles. We strive for the diversity of our workforce to be reflected at all management levels. We conduct mentoring programs, including the reverse mentoring of senior leaders by ‘next generation’ colleagues. We also hold an annual global summit for up-and-coming talent. We also offer ‘knowledge booster’ programs to enable people to experience and work with other colleagues in different territories to learn and exchange ideas.