The Power is on

The Middle East is now the world leader in the development and implementation of IT systems for use in the oil and gas sector. ACN looks at some of the most ambitious projects in the world built on and around innovative technology.

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By  Sherief Younis Published  April 8, 2007

|~|Conference-200.gif|~|Energy City Qatar is a massive collaborative project.|~|The Middle East is synonymous with the booming oil and gas industry. While Saudi Arabia is widely considered the frontrunner of the global oil and gas industry, producing approximately 10 million barrels of oil a day as well as sitting on a reported 25% of the world’s oil reserves, it is easy to overlook the wealth of oil producing countries in its shadow, and even easier to overlook the prominent role IT plays at the front and back end of energy operations.

Neighbouring countries like the United Arab Emirates, Oman, Bahrain, Kuwait and Qatar – despite producing a fraction of Saudi’s output – are no small fry when it comes to energy.
Qatar unveiled Energy City Qatar, a US$2.6 billion project in 2006, to entice major players in the energy industry to base operations in the country. Armed with the incentives of strategic geographical placement and a revolutionary IT platform, Qatar hopes its new development will put the country on the industry map.

Ambitious projects like Energy City Qatar (ECQ) are a prime example of the grand aspirations the rest of the region has to develop the energy industry further. A multi venture project between Microsoft, Cisco and a number of, as yet unannounced, integrators, Energy City will provide the industry with the means to incorporate, accommodate and sustain the entire energy supply chain.

ECQ aims to take advantage of the wealth of natural oil and gas reserves in the Middle East and transform Qatar into a regional and international energy hub. Clustering all aspects of the industry – both upstream and downstream distributors, construction companies and even law firms associated with the sector will have the opportunity to establish themselves at Energy City and service their client companies needs on site.

“We have a number of companies looking to establish themselves at ECQ on a local and global scale. The project isn’t exclusive to oil and gas companies, we’re looking at the whole supply chain. Companies who provide services to oil and gas companies: financial institutions, law firms, geo-technical consultants, and engineering firms. It’s a comprehensive outlook,” explains Khalid Al Khudayri, who is the chief technical officer at Energy City Qatar.

Split into a corporate block and a residential block, the project is built on the technological premise of the ‘e-city’ objective: to create a unified environment using IT as the foundation and platform from which the project can develop.
A key feature of the project is the utilisation of the technology to bridge the gap between the home and the workplace through a fully automated technology portal.

Business and resident workers will be able to take advantage of the technology in both the residential and corporate developments being planned through a variety of interactive services including telephone, internet, television and interactive kiosks. Using these mediums residents will eventually be able to order and purchase services like laundry and food delivery interactively.

“ECQ’s an ongoing project and we – Microsoft, Cisco and Energy City – all work together. We call it the IT consortium and the aim is to build a city with a brain,” Khudayri says.

||**|||~|khud-200.gif|~|Khudayri: “What we’re trying to do is demonstrate the value of IT because it represents big value for the future.”|~|With projects as large as ECQ, it would be all too easy to focus on the gargantuan amount of planning and construction required, or the dizzying cost of the project, and overlook the considerable technological foundation it is built upon. Tasked with outlining the necessity of IT within the project framework, as well as breaking it down into laymen’s terms, Khudayri is keen to emphasise the simplicity of the technological concept behind the whole project.

“Companies can come in, buy and develop the land, and have their buildings sitting on this IT infrastructure that allows them to plug in and start playing, working and communicating,” he explains.

“When you’re dealing with IT providers and consultants, they all have their own objectives, and my role is to try and bring them together. I think the biggest challenge is divisional and getting a general consensus between companies. You have to get everyone to work to a clear goal because not everyone understands IT and the importance of IT - my challenge was trying to consolidate all the information and explain it in a language the client could understand.

“What we’re trying to do is demonstrate the value of IT because it represents big value for the future,” Khudayri says.

The first phase of construction was announced last year and will begin in October 2007 with the corporate offices and IT infrastructure to be put in place. Companies can base operations in the corporate sector in the second half of 2009 while work on the residential sector is scheduled to commence early in 2008. The entire project should be completed by 2010.

“We’ve started construction of the infrastructure, including the IT infrastructure we’re going to be building our first corporate offices which will include the integrated operation centre. The offices will start going up around October 2007 and this phase will take between 18 and 20 months,” Khudayri says.

“There’s a gap of about four to five months between the residential and corporate construction. We start the corporate construction, called ECQ1, first and about five months after that the residential will start. Companies can base operations from Q4 of 2009 with the site fully operational by 2010,” he adds.

Uptime and organisation are essential, and, in such a demanding vertical industry, there are very unique demands being made of IT and the technology available. Too much emphasis can be placed on the implementation of cutting edge technology - from computer-aided design to supercomputing technology used in oil and gas exploration – but while the oil and gas companies are actively incorporating these developments, the necessity of implementing robust, durable back end IT frameworks is becoming increasingly prominent as companies recognise the business benefits that can be reaped.

“A number of companies embark on ERP initiatives without a proper business case. If they look at implementing IT on a large scale, aspects like total cost of ownership (TCO) can be reduced through integrating the enterprise and eliminating the need for an expensive point solution,” says Erkan Gulec, director of pre-sales at SAP Arabia.

“From an IT perspective, companies are losing the ‘four walls’ mentality because they are unable to do the project themselves - they have to extend these services and they also have to be supported. Integration is the keyword,” he adds.
||**|||~|el-hamedi-200.gif|~|Al Emadi: "E-city is a showcase not only for the region but for the world."|~|A project with SAP saw Saudi Aramco implement the largest ERP system in the world. It consisted of a number of the vendor’s ongoing developments. Responsible for efficiently organising Aramco’s logistical operation, the project is one of many in the region according to SAP as oil and gas companies look to leverage their IT investments.

“We are engaged with a number of companies in the oil and gas sector. In addition to Saudi Aramco, Qatar Petroleum runs SAP and we are in the process of upgrading them to the next level. We also have a project with Petroleum Development Oman and we’re engaged in several emerging markets like Libya and Iran,” according to Gulec .

Implemented by Atos Origin, the Aramco project entailed the oil giant replacing over 170 systems and consolidating its entire back end enterprise with a single, integrated SAP R/3 system. It is responsible for the companies core IT functions and the SAP modules.

Having implemented the new systems in 40 plants simultaneously, they were then required to service 23,000 Aramco employees across 200 locations worldwide seamlessly and instantaneously, covering Aramco’s on-shore and off-shore oil fields – the largest in the world refineries, natural gas liquid (NGL) plants, three marine terminals, 11 airports, pipelines, a fleet of crude oil carriers, and its various service stations.

“If you look at oil and gas companies in the region, traditionally they have put ERP into their back offices; finances, human resources and to a lesser extent site or project maintenance and procurement areas.

"What oil and gas companies are finding is that as the demand to increase reserves and production peaks, in an effort to minimise costs, they are using IT as a means to form a more collaborative environment. Through partnerships and joint ventures they are being encouraged to leverage their ERP and IT investments across their operations,” Gulec adds.

At ECQ the prospect of servicing a cluster of companies as well as a 40,000-strong residential workforce would put extreme demands on any IT infrastructure. However, ECQ’s established partnerships with both Mirosoft and Cisco leaves Khudayri confident the systems will be implemented in the right way.

“The partnerships with Microsoft and Cisco are involved at a very high-level. Cisco has designed and developed a robust IT highway that enables us to integrate other applications very easily. We worked with Cisco on the networking, but you have to look at it as two layers. For the first layer you have things like electrical networking and then the layer that sits on top of that is the IT infrastructure – things like the servers, switches and bridges,” says Khudayri.

“The layer that comes on top of that will be the application and that’s what Microsoft is responsible for. It will be building management systems for the oil and gas companies and we’re looking at large data centres to process and store high volumes of information. The emphasis is very much on communication,” he says.

Mark Fuller, IT project manager at ECQ is keen to outline that despite the technological emphasis of the e-city concept, ECQ will look to keep its IT presence to a minimum.

“The whole idea of what we’re trying to do is not to build a huge IT department in Energy City: we’re looking to outsource functions. We are developing a sourcing model to gauge how we’re going to use the hands and feet of other companies much more capable of doing the legwork and we’ll concentrate on the brainwork of ECQ.

"We will define the architectures, guidelines and the policies of how we want to operate and then we’ll outsource the responsibility of provision and delivery to other people. Part of what we’re building is an integrated operation centre. Instead of just building an ordinary NOC, we’re building a security and facilities operation that’ll centralise everything into one location,” he says.

Fuller identifies the importance of generating global interest in the project to ensure that once it is established, ECQ will continue to grow. He also explains ECQ’s plans to outsource various functions, such as system integration, are underway and should contribute to the long term success of the project.

“Part of what we’re doing at the moment is we’re looking at how we can identify key organisations because within the region there are as many players as in Europe, so we’ve got to look at how we build and identify organisations to support us in Qatar,” says Fuller.

“We have strategic relationships with our partners Cisco and Microsoft, and we won’t tender that out, but we’re looking for system integrators and other products that will be competitive and beneficial to ECQ and that will be put out as part of an open tender.

“We are very close to a lot of other MOUs (memoranda of understanding) as part of our strategic plan and these should hopefully be finalised before the end of 2007,” he adds.

Vendors expect companies in the sector will increase their investment in back end infrastructure as they look to regulate their environment and maximise business benefits.

“We are seeing a shift from best of breed towards a more integrated approach in the industry. It’s a highly regulated industry and companies are focusing on securing their environments as well as addressing issues such as risk and compliance,” Gulec concludes.||**||

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