First Omani national takes reins from Shell MD at 'refreshed' PDO joint venture

Petroleum Development Oman has its first Omani managing director after Aflah al-Hadhrami took over from Shell's Steve Phimister in a changing of the guard at one of the Middle East's oldest oil and gas partnerships, sources said.

The change of leadership comes after a strategy revamp led by Phimister, who took up the post of managing director in May 2021, and as efforts to stem falling oil output have shown some success.

Oman is one of the Middle East's largest oil producers outside of OPEC, with around 1 million b/d of production, while being a member of the wider OPEC+ alliance.

PDO was formed in 1937 and has Shell as the largest foreign partner, with a 34% stake, alongside TotalEnergies on 4% and Thailand's PTTEP on 2%.

Hadhrami previously headed Oman's Integrated Gas Company. Despite Phimister's relatively short tenure in Oman, Shell said leadership changes were normal, and highlighted work on boosting production and supporting LNG exports; the latter reached 15.5 Bcm/year in 2022 and 2023.

"The relationship between Oman and Shell is strategic and has further strengthened... with Shell investing in new value chains and deepening its Oman position, including in PDO," a Shell spokesperson said.

"Shell shares the same goal as the government and other partners: to sustain and where possible grow liquids production and reduce the carbon intensity of PDO's portfolio. The company's performance has been strong under Steve Phimister... and PDO has become more competitive. Shell looks forward to PDO's continued success under Dr Aflah."

Hadhrami formally took up his post on June 1, PDO noted in its own LinkedIn post. "PDO has redefined its purpose, refreshed its strategy, renewed its operating model and implemented a cultural transformation" in a multi-year process, PDO said.

Output support

Oman's oil output dipped in the second half of the 2010s, falling to 953,000 b/d in 2020 as production was reined in globally, before increasing by around 100,000 b/d to 1.05 million b/d in 2023, according to S&P Global Commodity Insights data. However, oil output is forecast to plateau or fall in the coming years, with some evidence of decline in the first half of 2024.

The latest Platts OPEC+ survey estimated Oman's crude oil production in May at 760,000 b/d, below its quota under the OPEC+ accord of 801,000 b/d. Condensate, which falls outside the OPEC+ accord, accounted for more than a fifth of Omani oil output in 2023.

Shell underlined that it recently extended its LNG joint venture with Oman by 10 years to 2034, as well as starting up gas production in 2023 at the Block 10 Mabrouk North East field, which it operates outside of the PDO structure.

Platts, part of S&P Global Commodity Insights, assessed August cash Dubai and cash Oman at a premium of $1.075/b to same-month Dubai futures on June 14, both up 46.5 cents/b on the day.