Nazery Khalid was recently a guest speaker at the Offshore Australasia Congress, 2010, in Perth, Australia. This blog is derived from his opening address.

The use of cutting edge technologies will be a key driver in facilitating exploration and production (E&P) activities in offshore areas. As the pursuit of hydrocarbon energy expands to new territories to meet voracious global demand for energy, the pressure for oil and gas majors to find new sources of these two coveted commodities will increase.

To ensure E&P activities are carried out efficiently, safely and profitably, companies will have to deploy cutting-edge technologies and creative solutions. This will require considerable amount of investments and resources, given the capital-hungry nature of the offshore industry. Amid the global recession and credit crunch, the offshore oil and gas industry has to compete with other industries for funds which are scarce and pricey. The challenge of obtaining funding will be one of the critical ones that industry players will face in the near future.

Developing new technologies and coming up with new solutions to undertake activities in farther offshore locations and more challenging environments will also test the mettle of industry players. Prospecting potential areas require state-of-the-art seismic and surveying technologies and skills to ensure a reasonably high degree of success in offshore E&P.

As the pursuit for offshore energy goes farther and deeper, greater technical capacity and technological capability will be required to undertake E&P activities in these locations. The stakes in the offshore industry are high as the costs involved are huge and the time spent considerable, hence companies and investors expect a decent return on their investments. By harnessing and leveraging the use of technologies optimally, those involved in offshore projects can increase the probability of success.

The role of governments in ensuring success of offshore oil and gas projects cannot be overemphasized. Pro-business and pro-investment policies are crucial in attracting capital and the participation of foreign players into offshore projects.

Take the example of Malaysia which has emerged as an attractive deepwater centre offering tremendous value proposition and enormous opportunities for players in the field thanks to such policies. The success of Petronas, a true Malaysian success story in the oil and gas industry, is largely attributed to its attractive production sharing contract terms. Its ability to attract major players and investment to participate in its offshore development projects has been one of the cornerstones of Petronas’ ascent up the ladder of global offshore energy players.

The shortage of skilled workers in the offshore oil and gas industry must be overcome to ensure increasingly sophisticated activities can be carried out successfully. If not addressed, the issue of shortage of human capital may become an Achilles Heel that could hamper the growth of the industry.

Funding, technology, government support and human capital are just some of the key issues in this dynamic industry. However, there are several other issues

There is a need to manage hydrocarbon resources in a responsible manner and to protect Mother Nature in the pursuit of extracting the riches from offshore locations. Companies involved in the offshore oil and gas industry must pay serious attention to the principles of sustainable development and corporate social responsibility, and not just think of profits alone.

In the wake of the COP15 summit in Copenhagen last December and in adjusting to a post-Kyoto Protocol world of lower carbon emissions, pressure is growing for industry players to curb greenhouse gas emissions and adopt green principles in their activities. Pressure is growing for the offshore oil and gas industry to reduce its carbon footprint and lower carbon emissions. They must make the mantra of extract and protect must be made a guiding principle in their operations.

Lastly, safety is paramount in this industry. Personnel work long hours in challenging and severe conditions. Huge and expensive assets are involved. In pursuit of hydrocarbon energy, safety of lives and assets can never be compromised.

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