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CEO Challenge - Khaled Alshehhi

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49 views5 pages

CEO Challenge - Khaled Alshehhi

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badboy-101-
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© © All Rights Reserved
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CEO Challenge: Energy Transition and its impact

on the Oil and Gas Contractual sector


Khaled Alshehhi – NPCC

Introduction:
Over the past 10 years or so, NPCC witnessed vast changes to adapt to market needs, as

well as introduction of many technological disruptors in the Oil and Gas contractual disruptors.

Upgradation of yard facilities, upgrading vessel fleet, and recently undergoing a strategic

merger/acquisition with NMDC. Along with the operational and organizational transformation,

foreseeing different threats and capturing opportunities is critical to ensure that it remains to have

the competitive advantage. Referring to the Porters five forces framework, the five forces which

define competition in any sector are 1. Threat of new entrants, 2. Threat of competitive rivalry, 3.

Bargaining power of buyers, 4. Bargaining power of suppliers, and lastly, 5. The threat of

substitutes. In this paper we will tackle this very important threat of substitutes due to the

transition of energy demand. Energy transition is defined as “global energy sector’s shift from

fossil-based systems of energy production and consumption — including oil, natural gas and

coal — to renewable energy sources like wind and solar, as well as lithium-ion batteries” (S&P

GLOBAL, 2020). The fossil-based systems of energy take up a massive share of the energy

market, which is around 80%, but it is very important to act fast since fossil fuel reserves will

always remain scarce, while renewables prove to be the sustainable future source of energy

(EESI, 2020).
Renewables in the region and key investors:

Renewables which own the biggest chunk of investments in the GCC region are wind and

solar, with a total of 90% of renewables investment (Ahmed Elrahmani, 2021). Two key

investors in renewables in the UAE are Mubadala and ADNOC, with over $20 billion invested

by Mubadala since 2006 (Jones, 2022). Moreover, Saudi Arabia is in the process of expanding

and developing its wind farm grid to supply up to 58 Gigawatts of electricity by the end of 2030

( en:former, 2022). Lastly, the regions first wind turbine was installed on Sir Bani Yas Island

with a production capacity of 850 kW/hr, where the aim of Masdar and Abudhabi tourism

development and investment strive to push it up to 30 MW (u.ae, 2023).

Policy management in the region and its impact on renewables development:

Effective policy management plays a crucial role in expediting the adoption of

renewable energy in the GCC region. The successful integration of renewable energy relies on a

harmonious blend of renewable energy objectives and comprehensive policies that promote

sustainable, long-term management of the energy sector. By adopting forward-thinking energy

policies and regulations, the GCC can encourage the utilization of renewable energy sources,

encourage the development of energy-efficient products and buildings, improve the

management of energy supply, and stabilize fuel prices (Ahmed Elrahmani, 2021).
Problem statement:
As mentioned earlier, energy transition translates to explain a demand shift from fossil-

based fuels to renewables. Knowing that the core business of NPCC is the design, procurement,

and offshore installation of oil and gas retrieval facilities, the challenge is how to modify the

NPCC model to adapt to the change in energy demand. While we know that EPC contracting is

very challenging and to have the right technical expertise, the supply chain, and the

implementation model/system, it requires decades of experience and learning opportunities to

ensure successful application of projects. That’s why the synergy between teams is important but

is it enough to start-up a new business unit.


Current, and Proposed solutions:
It is well recognized by the Company the importance of capturing this threat and

transforming it into an opportunity. Quite recently, an agreement between Masdar and NPCC

was signed to explore the development of renewable energy technologies to collaborate in two

prominent areas which are offshore windfarms, and green hydrogen (D. Nair, 2022). My first

proposed solution will be to bring together a research and development team with diverse

experiences to explore renewable energy and the potential of the company to pursue this field

to know the required types of partnerships. Knowing the impact of inconsistent branding on the

business could lead to damaging the trust between the Company and its audience. NPCC will

have to create a subsidiary or a separate business unit with sustainable business-oriented

mission statement.
References:

S&P Global. (n.d.). What is energy transition?. S&P Global Homepage.

Environmental and Energy Study Institute (EESI), E. (n.d.). Fossil fuels. EESI.
https://www.eesi.org/topics/fossil-fuels/description

Jones, R. (n.d.). The hottest investor in Renewables is a big oil producer. Spectra.
https://spectra.mhi.com/partner-the-hottest-investor-in-renewables-is-a-big-oil-producer

u.ae. (n.d.). Water and energy - the official portal of the UAE Government.
https://u.ae/en/information-and-services/environment-and-energy/water-and-energy

Shuo Chen a, a, b, c, & AbstractPhotoelectrochemical (PEC) cells involved with semiconductor


electrodes can simultaneously absorb solar energy and perform chemical reactions. (2021,
September 9). Recent progress and perspectives on SB2SE3-based photocathodes for solar
hydrogen production via photoelectrochemical water splitting. Journal of Energy Chemistry.
https://www.sciencedirect.com/science/article/abs/pii/S2095495621004940

Nair, D. (2022, May 13). Masdar and NPCC team up to explore renewable energy opportunities.
The National. https://www.thenationalnews.com/business/energy/2022/05/13/masdar-and-npcc-
partner-to-explore-renewable-energy-opportunities/

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