DR. CHARLES ELLINAS Executive President. Frederick University, 19 September 2013

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1 Developments and Prospects of Oil & Gas Exploration in the Eastern Mediterranean Region and How these Translate to Employment Opportunities Training and Education Needs DR. CHARLES ELLINAS Executive President Frederick University, 19 September 2013

2 Cyprus Offshore Exploration Review Cyprus has so far leased 6 Blocks and progress is as follows: Noble Energy is conducting a second appraisal drilling in Block 12. The company will announce the revised estimates volume by October. ENI/KOGAS have Blocks 2, 3 and 9 and are about to start their seismic survey programme, with exploration drilling scheduled to start second half of Total has Blocks 10 and 11, with potential both for oil and gas. They have just complete their seismic survey programme, with exploration drilling scheduled in Key point: the Government signed the LNG MoU with Noble, Delek/Avner. Negotiations are in progress for the full LNG Project. Agreement, scheduled to be completed by December

3 Introduction A large number of workers will be needed which may peak to 7,500 during the construction of the LNG plant at Vasiliko with about 700 jobs to be created during the operation phase. Note: for every local job created during construction, three or more other local jobs will be also created for external support, secure and supplies. Government, Oil & Gas industry and academia should provide the necessary training to professionals that this new industry demands to function efficiently. Emphasis should be given to training for lower skills jobs and technicians needed for construction. Education is the driving force for the development of the oil & gas industry. Cyprus needs to invest to education if it is to become a strong energy center in Eastern Mediterranean. 3

4 LNG Plant at Vasiliko The Vasiliko Energy Centre has already been allocated, the required land, by the Government for the development of the LNG plant and it is available and sufficient initially for 3 trains. Located in the Zygi Municipality in the Southern part of Larnaca District. Is a thinly populated area (88 inhabitants/km 2 ) and because it is an existing industrial area has already most of the required infrastructure. Some very sensitive plants are also placed there, such as a Power plant, a Naval base, the Petrolina and VTTI Storage tank farms. The Zygi Police Station, the National Guard and some Special Intelligence police units are responsible for the security of the area. 4

Possible Layout of Cyprus LNG Plant in Vasilikos - Onshore facility to liquefy gas for export Pre-FEED: Τechnip have just completed the Select Phase development Concept selection studies Collection

5 Possible Layout of Cyprus LNG Plant in Vasilikos - Onshore facility to liquefy gas for export Pre-FEED: Τechnip have just completed the Select Phase development Concept selection studies Collection of site specific data for FEED Permitting and construction execution plans Technical and commercial FEED RFP bid package FEED and EPC project schedules Cost estimate One and two train options A minimum of 6 tcf is needed to make the LNG Plant viable 5

6 Development of Aphrodite and LNG Plant The key stages in the development of the Aphrodite gas field and LNG Plant are as follows: Appraisal drilling, as mentioned earlier, has already started, and by Q4 we should be able to confirm gas volumes. However, if a second appraisal is needed assessment of commerciality may have to await until well into As a result The Final Investment Decision (FID) for train 1 may be delayed until

7 Development of Aphrodite and LNG Plant (2) We hope to be able to start construction of the offshore facilities, subsea pipeline and the LNG Plant at Vasiliko in This is achievable if all preparation is carried out as planned and will provide good employment opportunities for Cypriots. Delivery of natural gas for the local market will then be expected by the end of 2019/2020. And by the end of 2020/early 2021 the LNG Plant is expected to be operational, starting LNG exports to the Far East Europe and other parts of the world. 7

8 Project Development Stages 1 MAIN PROJECT MILESTONES 2 OWNERS ACTIVITIES: IN PARALLEL WITH TRANSITION TO FEED PHASE 3 TRANSITION TO FEED PHASE 4 FEED PHASE 5 EPC PHASE 6 DETAILED ENGINEERING 7 PROCUREMENT 8 CONSTRUCTION TRAIN 1 & ASSOCIATED FACILITIES 9 Site Preparation T1 & Ass. Fac., Piling T1 10 Civil Works Train 1 & Ass. Facilities 11 Piping Works Train 1 & Ass. Facilities 12 Mechanical Erection Train 1 & Ass. Facilities 13 E & I Works Train 1 & Ass. Facilities 14 Painting & Insulation Train 1 Ass. Fac. 15 LNG Storage Tanks (2 x 180,000m3 Full Containment) 16 LNG Jetty, Loading Platf. (2 Berths) & Flare 17 Precomm./Comm/ Start up 18 FIRST LNG EXPORTS FROM TRAIN 1

9 How does Oil & Gas Industry Works UPSTREAM MIDSTREAM DOWNSTREAM Searching for potential natural gas fields Transportation by pipelines and storage Making it useful for consumers 9

10 List of required skills Bulldozer Operators Back hoe Operators or Excavators Front end Loader or Power Shovel Operators Grader Operators Heavy Haul Truckers Shuttering Joiners Steel Rebar Fixer Concrete worker Civil Construction Engineering Technologists Materials/Geotechnical Technologists Drafting/CADD/3D Modeling Technologists Survey Technologists Crane Operator 10

11 List of required skills (2) Heavy Duty Equipment Mechanics or Technicians Industrial Electricians Industrial Mechanics/Millwrights Insulators Industrial Painters Steamfitters and Pipefitters Welders Electrical Project Technologists Control Systems/Programmable Logic Control (PLC) Programmer Mechanical Technicians Health, Safety and Environment (HSE) Advisors/Coordinators Medics/Occupation Health Nurses Emergency Response Planner 11

12 List of required skills (3) Facility Equipment and Operating Unit Maintenance Project Engineers Electrical and Instrumentation Specialist Quality Control Inspector Occupational Health and Safety Officers Process Safety Engineers Support Staff Labourers Drivers Cleaners Catering Staff Security Staff Administrative Staff 12

13 Example of skills needed during Construction Phase

14 14 CONSTRUCTION PHASE

15 Construction Phases The LNG Plant at Vasiliko will be a complex project with major construction phases as follows: 1. Preparation of the land area at the LNG Plant site. 2. Transportation, mobilization and installation of labour camps. 3. Construction of LNG Plant processing, tank storage and work areas. 4. Testing and commissioning of systems and equipment. 5. Construction of jetty and LNG exports facilities. 15

16 Details of phases of LNG Plant construction Site Preparation Secondary plant facilities Access roads Construction camp and temporary facilities Cleaning, leveling and excavation Electricity (including its related fuel storage) Water (including its related water storage) Concrete batching plants Settling and slab construction Construction dock Heliport Gas turbine electricity generator Waterhouses and laboratory Administration building Permanent housing Staff amenities Sewerage and waste treatment facilities

17 Details of phases of LNG Plant construction (2) Processing modules construction and assembly Feed gas receiving area, liquid separation, gas metering and pressure reduction Safety systems and ground flares Gas dehydration and carbon adsorption units Refrigeration and liquefaction machinery LNG, LPC and residual NGL storage tanks Refrigerant storage Ship loading pumps and piping Marine Facilities Jetty, platforms, trestle, tanker berth Piled concrete breakwater protecting shore Loading arms, unity dock Tug boat berths

18 Construction Phase Needs Materials / Supplies Construction Services Aggregate Earthworks Surveying / Design Services Cement Drainage Scaffolding Armor Rock Roads Cleaning Welding Consumables Concrete Waste Disposal Industrial Gases Piling Environmental Services Office Supplies Reclamation Public Relations Lumber Plant buildings Equipment Rental Fuels and Lubricants Marine Construction Housing Construction Consumables Heavy Duty Equipment Mechanics or Technicians Electricians Mechanisms/Millwrights Insulator Steamfitters and Pipefitters Welders Control Systems/ Instrumentation Mechanical Technicians Transportation Catering / Laundry Telecommunications Security Vehicle Maintenance Import/Export Medical

19 19 OPERATIONAL PHASE

20 Operational Phase Most of these jobs require very high skill levels as they involve operating and maintaining advanced technological equipment. Jobs that will require less skills: cleaning and simple maintenance tasks, security, catering and secretarial services (could easily be filled by locals) The operator of the LNG Plant must be required to maximize employment of local labour. This can be promoted through different methods: a) the government authorities must develop national employments policies b) award the LNG Plant to be developed and be run by companies who are genuinely concerned about local content. KRETYK must have a leading role in this. 20

21 Departments needed for the operation of Office of the Managing Director Health, Environmental and Safety LNG Project Management Team Operations Maintenance Engineering Financial Human Resources Commercial Legal Government Relations Community Relations Logistics/IT LNG Project 21

22 Operational Team Management Team Support Roles Project Manager Construction Manager Commercial Manager Engineers Environmental, Quality, Safety Officers Distribution and production managers Science technicians Industrial Relations Human Resources Procurement Planners and Schedulers Administrative personnel Clerical Superintendent Machine operators Technicians and Trade workers 22

23 Current situation of local workforce Unemployment is expected to increase significantly over the next few years. There will be difficulties in filling positions in the LNG project due to the fact that there are no relevant LNG oil & gas industry skills, experience and knowledge locally. There is a need for an effective education and training programme to train local labour for the specific requirements of the LNG Plant project. Even then, most jobs will go to skilled foreign workers, ie with more than 10 years in the sector. We must concentrate on preparing locals for unskilled, semi skilled and skilled positions. 23

24 24 WORKFORCE TRAINING STRATEGY

25 We need a Workforce and Training Strategy Cyprus must develop a Workforce and Training Strategy: This describes the Project s approach to ensure cooperative strategies are in place to meet the Project s workforce demands. The Strategy adopts a long range outlook and targets local students and existing and potential employees. 25

26 This should be supported by: Social Impact Management Plan for the LNG Facility Stakeholder and Community Engagement Plan Project Training Plan LNG Project Employee Relations Management Plan 26

27 Workforce and Training objectives To ensure an adequate and timely supply of labour to the Vasiliko LNG Project by: Maximizing employment opportunities for locals to meet Project needs. Developing and increasing the available pool of skilled labour. To seek to address local workforce and training related concerns by: Increasing employment, retention and career development for local people. 27

28 Vasiliko LNG Approach Vasiliko LNG s approach to developing and delivering the Workforce and Training Strategy should be to collaborate with relevant education establishments, industry, government and community stakeholders in order to support a targeted and coordinated approach to workforce and training related issues. Eventually this should be done in collaboration with the main Contractor and in accordance with the Engineering Procurement and Construction (EPC) agreement for the Project as it relates to labour procurement. The challenge is to build local workforce through training and development initiatives of local trades and professions that are currently not directly related to the LNG industry. 28

29 Local Education and Training Program Should aim to increase the profile of the Gas and LNG Industry as a career opportunity through the following: Partnering in education establishments based traineeship and apprenticeship programs. Supporting industry specific projects in educational establishments. Participating in education seminars and workshops. Providing industry familiarization to educators. Scholarship programs and professional pathways. 29

30 Workforce Development Vasiliko LNG Project recognises the importance of building the local workforce. The Workforce Development Plant aims to create local jobs and train people in technical and professional skills that are needed during the construction phase of the Project and future employment opportunities during the operation phase of the Project. At peak almost 7,500 workers will be employed on Project activities. We hope to fill 25% of these positions by locals. In addition, for every job on the project three or more will be employed in support roles and in providing services and supplies to the project. In total we hope to create 10,000 jobs through this development. In addition we should train locals who will be responsible for operating and maintaining the LNG Plant when production commences in 2020/

31 Workforce Development Plan We need a LNG Workforce Development Plan to advise the industry as well as the Government of the skill requirements and numbers of workers required to be trained. The maximize the benefits from this opportunity we need to form a Gas and LNG Skills Taskforce. The Taskforce should work with Government and other key stakeholders to ensure the availability of a competent and sustainable workforce to support the current and future development of the LNG Industry. The Taskforce should undertake strategic workforce development planning to prepare for the considerable increase in skills demand over the next ten years. 31

32 Workforce Development Plan (2) This should include assistant to and re orientation of existing unemployed graduates who would like to follow up a career in the Oil & Gas sector. 32

33 Prepare students to work in the oil and gas industry Public and private universities should strengthen and upgrade their related courses, to meet the industry's expectations. Early preparation is crucial to be ready for construction in Education establishments should specifically design programs to prepare students to work in the oil & gas industry. Example: courses should require students to do an internship abroad to gain field experience. Companies will be looking for people with relevant experience. They will provide additional training where they needed to be more specialized. Universities should regularly ask industry experts for their input to ensure graduates are meeting industry needs. 33

34 Prepare students to work in the oil and gas industry (2) Oil and gas industries should demonstrate their support for training and education by providing financial help with facilities, equipment and scholarships. Also they could provide paid internships for selected students during summer. The Cyprus Productivity Centre as a training and productivity center could offer pre employment training to help and prepare students that are looking to break into oil and gas industry. It could provide students knowledge and hand on training to start working in LNG Project specific areas. Our students are our most important asset and education establishments should provide the best education and the right guidelines. 34

35 Strategies to build a competent workforce Attract people to the industry. Develop right skills for the industry. Develop the right systems and procedures. Establish a sustainable model. Establish a LNG Career Advisory Center. There is enough time between now and LNG Plant operation, for people to be educated and trained, to gain the required skills and experience. Companies and government should provide all the necessary support. Training should be provided by the companies operating the plant. 35

36 Benefits Creation of long term sustainable employment opportunities. Improving schools and universities on technical matters. New skills will be developed with new opportunities for future generations. The construction and operation of an LNG plant can provide the impetus and startup funding for small local businesses of various kinds, as subcontractors for goods or services to the LNG project and late to LNG Plant. 36

37 Conclusions Jobs in the Oil & Gas industry will depend very much on the training policies we implement now. Funds should be increased in technical education and training, and local educational institutions should include relevant subjects in their curricula, a start has already been made. The expertise of contractors should be used not just to construct and operate the facility but also to train local workers and this will be made part of the requirements for winning the contract to build and operate the LNG Plant at Vasilikos. We have a lot to achieve in a short time but we owe it to the people of Cyprus. All should benefit from this exciting opportunity. 37

Employment Opportunities in the Oil & Gas Industry. Professor, Panos Papanastasiou Dean of the Engineering School University of Cyprus

Employment Opportunities in the Oil & Gas Industry Professor, Panos Papanastasiou Dean of the Engineering School University of Cyprus Block-12, Aphrodite field Natural Gas Discovery, 28 Dec. 2011 5-8 tcf