The 4th IATMI TALK – Current global condition in Oil Industry

The 4^th IATMI TALK – Current global condition in Oil Industry

Aviandy Widya Ismanto *

The IATMI-Talk is a monthly event collaboration between PPMI Dhahran (Indonesian Student Association in Dhahran) and IATMI-KSA (Society of Indonesian Petroleum Engineers in Kingdom of Saudi Arabia) to share and establish a bridge between academic (students as well as lecturers) and industry. The fourth (4th) IATMI-Talk-Alhamdulillah-was successfully organized last week, 6th October 2016 at building 59 KFUPM Main Campus, Dhahran. However, last week’s event was discussing the recent issues in Oil and Gas industry, the decreasing of oil price, seemingly do not make any progress to increase the value until the end of this year. Mr. Ardian Nengkoda, PhD, Senior Petroleum Engineer from Saudi Aramco who already have experienced more than 20 years in oil and gas industry and got bunch of awards under his name was the speaker of this event. He pursued his bachelor degree in University of Indonesia, Jakarta, and then continued his PhD in University of Boras in Boras, Sweden with background in Chemical Engineering (specialized in offshore methane gas hydrate production research). He was also a former president of IATMI KSA (Society of Indonesian Petroleum Engineers in Kingdom of Saudi Arabia) period 2014-2016.

Mr. Sonny, president of IATMI KSA with Mr. Lamda, technical vice president of IATMI KSA opened and welcomed attendances for this event.

Mr. Ardian during his talk pointed out about various concerns in oil and gas industry in consequence of the falling of oil price

The presentation started with the history of oil price from late 40’s till now. He explained that the world without oil is the greatest vision of some researchers who establish their research in renewable energy. Though, it needs lot of work because most of the countries around the world tried to escape from fossil fuel energy and slowly rely on renewable energy, yet it still does not work in that way. The reserve of fossil fuel is dominated by OPEC (Organization of Petroleum Exporting Countries) members, which include the United States and Saudi Arabia as two major countries produced fossil fuel with approx. 11 million barrel per day (OPEC Annual Statistical Bulletin, 2016). The member of OPEC mainly relies on fossil fuel energy as their main income. At this moment, those countries are looking for another options to maintain their income as the continuing weakness in oil prices such as tourism object and other commodities. In Middle East area, several major oil produced countries (i.e. UEA, Qatar, Saudi Arabia, Iran, Iraq, and Kuwait) do not fear for the conventional oil lifting cost since it is cheaper than other areas (America and Europe) about 30 USD per barrel oil.

Mr. Ardian was explaining about a result of economic analyst research that predicts the phenomena of falling of oil price at this moment is not an astonishing object. Although, this trend is a normal continuing cycle called the super cycle of sale common commodities in the market. Caused by falling demand following the 1970s energy crisis in early 80’s, the price slightly rose up to 100 USD per barrel, then started stable at 60-70 USD per barrel after that in 2 years and downed to 29 USD in mid-80’s. When Gulf War started in early 90’s, the oil price slowly increased to 61 USD, then stable at 30-40 USD per barrel till the 20th century. While in early July 2008, the price reached its peak at 145.3 USD per barrel, then the price jumped down to level 40 USD in early 2009. An economic analyst stated that the decreasing of oil price was affected by oversupply in the global market. OPEC meeting in Algeria last week, announced some solutions to raise the price, one of them decreases the production rate by 500.000 – 700.000 BPD (barrel per day) and expect oil price will start increasing by the end of 2016. They also predicted that the stable price of oil is likely 60-75 USD per barrel and expected to increase within 10-24 months.

"As a professional, we have to learn and develop various new skills. Whatever it is, as long as it is essential for your life in the future", said Mr. Ardian.

In the end of his talk, Mr. Ardian gave us motivation about how do we respond with respect to the weakness of oil price.

"Slow but sure, renewable energy will take place as the major energy in the future. For example, UEA had a huge project in solar cell system which cheaper than oil to generate electricity. Yet, oil remains as the major energy now."

Mr. Dicky, Saudi Aramco's employee, said in a response to Mr. Ardian’s statement about what should we do as a professional nowadays. Mr. Khairul, Mr. Ardian’s colleagues in Saudi Aramco also added,

“For especially in Saudi Arabia, the decreasing of oil price does not much affecting because Saudi Aramco is the only operator for the whole country. Though, in other countries which have numerous operators, international oil companies have to rethink if they have to invest in a country which has small total hydrocarbon reserve."