Russia vows cooperation with OPEC to keep oil market balanced

Russian President Vladimir Putin and the chairman of the Board of Eni oil and gas company, Emma Marcegaglia, attend an annual VTB Capital ‘Russia Calling!’ Investment Forum in Moscow on Wednesday. (Reuters)
Updated 21 November 2019

Russia vows cooperation with OPEC to keep oil market balanced

  • Moscow not aiming to be world’s No.1 crude producer, Putin tells annual investment forum

MOSCOW: President Vladimir Putin said on Wednesday that Russia and the Organization of the Petroleum Exporting Countries (OPEC) have “a common goal” of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important — and I want to underline this — predictable,” Putin told a forum on Wednesday.

In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal. Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the US is the world’s top oil producer.

“Russia has a serious impact on the global energy market but the most impact we achieve (is) when working along with other key producers,” he said. “There was a moment not that long ago when Russia was the world’s top oil producer — this is not our goal.”

Russia plans to produce between 556 million and 560 million tons of oil this year (11.17-11.25 million bpd), Energy Minister Alexander Novak said separately on Wednesday, depending on the volume of gas condensate produced during cold months.

Russia will aim to stick to its commitments under the deal in November, Novak told reporters.

Russia includes gas condensate — a side product also known as a “light oil” produced when companies extract natural gas — into its overall oil production statistics, which some other oil producing countries do not do.

As Russia is gradually increasing liquefied natural gas production (LNG), the share of gas condensate it is producing is also growing. Gas condensate now accounts for around 6 percent of Russian oil production.

Novak told reporters that in winter, Russia traditionally produces more gas condensate as it is launching new gas fields in the freezing temperatures.

“We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” he said.

Three sources told Reuters on Tuesday that Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extend existing curbs to support Saudi Arabia.

On Wednesday, Novak declined to say that Russia’s position would be at upcoming OPEC+ meeting. Reuters uses a conversion rate of 7.33 barrels per ton of oil.


Technology will not replace labor despite rapid digital transformation

Updated 28 January 2020

Technology will not replace labor despite rapid digital transformation

  • Hayman said he believes technology should help people and offer them support rather than replace them
  • The UAE is among the top performers in the Middle East in terms of digital transformation in industrial sectors

ABU DHABI: Digital technology will not replace labor; the aim of it is to improve areas of inefficiency in different industrial sectors, CEO of AVEVA Group plc Craig Hayman told Arab News.

Most sectors around the world from retail to financial services and telecommunication, have been digitized in some way, according to Hayman.

But while this widespread introduction of digital technology inevitably reduces costs and increases efficiencies in the workplace, it is also seen by many as the death knell for their jobs.

A 2019 report by the Organization for Economic Co-operation and Development (OECD) estimates that approximately 14 percent of workers globally will face a high risk of their jobs one day becoming automated and “32 percent face major changes in the tasks required in their job and, consequently, the skills they would need to do their job.”

Another 2017 McKinzy&Company report said up to 800 million workers around the world could be replaced by robots by 2030.

But Hayman said he believes technology should help people and offer them support rather than replace them.

“In the industries AVEVA serves, there are so many areas of inefficiency that we are delivering improvement for without any replacement of labor. It is more about giving the people more tools to effectively do their jobs,” he added.

For example, Hayman said, a worker who is doing maintenance repair is given the tools to know more about the correct isolation procedures around this repair.

OECD’s 2019 report said the effect of digitization on labor will not be evenly distributed nor happen at a steady pace. “It is most likely to be concentrated in certain jobs, selected sectors and particular geographical areas, and may move in fits and starts,” the report adds.

While digital technology around the world began to witness a transformation in the last decade across different industrial sectors, the Middle East has become a major contributor to this transformation.

The UAE is among the top performers in the Middle East in terms of digital transformation in industrial sectors, Hayman said.

A 2016 report by McKinzy&Company also said the UAE ranks the top in adopting digital technology and it matches the world’s digital leaders on several metrics.

Hayman said he believes there is a strong digital ambition in the region. “I think some of the digital projects in the Middle East are starting to yield good results. We have seen this with customers like Al-Marai and Abu Dhabi National Oil Company (ADNOC).”

In the UAE’s oil and gas sector for example, there is ADNOC’s Panorama Digital Command Centre which is a real-time data visualisation centre that offers insights and identifies new ways to improve performance. “The Panorama Digital Command Centre is known around the world; that was an eight-week project for us almost two years ago,” Hayman said.

Abu Dhabi's Crown Prince Sheikh Mohamed bin Zayed Al Nahyan inaugurated ADNOC's advanced Panorama Command Centre and Artificial Intelligence (AI) platform on Nov 12, 2017. (WAM)

Saudi Arabia’s Aramco has also established tech projects such as “the use of robots and self-guided autonomous devices in remote inspection and maintenance in plant areas, and the installation of smart sensors with advanced analytic capabilities,” according to a 2018 report by Aramco.

When asked how much companies spend to digitize their services in the oil and gas sector, Hayman said about $250 billion a year was spent in capital expenditure in the oil and gas sector.

Saudi Arabia has adopted a digital transformation strategy that began in 2019 and is expected to conclude in 2022. The strategy’s “main components are digital health, digital education, e-commerce, and smart cities,” a 2019 report by the Saudi National Platform said.

On health, the Kingdom launched a telemedicine technology in which in 2019 it saved a million lives out of which 10,000 were critical, the Kingdom’s Minister of Communication and Information Technology Abdullah bin Amer Al-Swaha said in a panel discussion held in Davos at this year’s World Economic Forum.

Telemedicine is a technology that provides electronic clinical services to patients without an in-person visit.

In the digital education sector, Saudi Arabia established the Saudi Digital Library (SDL), which is said to be the largest collection of academic information resources in the Arab world, according to the Kingdom’s Ministry of Education. “SDL includes over 310,000 scientific references covering the different academic disciplines. The content of the library is continuously updated, providing huge resources of knowledge in the long run.”

When asked about the opportunities and challenges the digital trend creates for entrepreneurs, Hayman said if an entrepreneur can deliver technology in the context of trust and partnership, he or she is definitely moving on the right track.

A 2019 report by the World Economic Forum said digital technology can help the government and private sectors to create initiatives that form “a holistic global entrepreneurial ecosystem that enables sharing, learning and access to resources at a mass scale and at low cost.”