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Transfer of technology for the oil industry in Pakistan: an overview based on first hand experience.

The utilization of Pakistani professionals settled in the western countries is Pakistan's best bet for acquiring modern petroleum technology and developing an indigenous technology base. In acquiring modern petroleum technology, OGDC should be in a hurry. With the current pace of technology transfer, Pakistan will always be dependent on western countries for technology. There is a need to accelerate the process of technology transfer to move quickly from acquiring the existing technology to adopting and modifying the existing technology to the stage where there is actual creation of new technology in the country. Pakistani professionals settled in the western countries provide a fast track for that process.

INTRODUCTION

The Petroleum Industry is capital intensive and technology driven. It has traditionally been faced with difficult technological problems that it has managed to solve through innovative abilities. It has been an eager promoter and consumer of modern technology. For example, the first super computer was designed for an oil company. The first peace time use of modern explosives (shaped charges) was in perforating oil wells. The 800-mile Trans Alaska pipeline transporting oil from North slope of Alaska to Southern Coast has been called the largest technological project ever undertaken by the human race.

The new technological breakthroughs of the 1970's and 1980's are changing the methods of exploring, developing, and producing petroleum resources. New developments in geology, geophysics, drilling, logging, reservoir engineering, and a trend towards integration of these disciplines for better reservoir characterization has increased the efficiency of finding and producing hydrocarbons. Most of this technology, however, has been developed and is owned by oil companies, service companies, R&D institutes and universities in the western countries. This technology is protected by international patents for the benefit of the original discoverer. It is also safeguarded by the oil/service companies for maintaining their technical superiority and to enhance their commercial interests. A typical developing country, like Pakistan, lacks modern technology needed for efficient utilization of its resources. The modern technology is available to it through foreign oil/service/consulting companies but at a price which occasionally is too high in terms of national wealth, sovereignty over natural resources and national pride. The technological dependence on developed countries involves a relationship of subordination, and it is this asymmetry that makes the theme of |transfer of technology' a central concern for the policy makers in the developing countries.

What do we mean by transfer of technology? Some in the developed world may argue that the transfer of technology merely means that the developing country does no more than open the door so that a foreign company competent in exploration/ production may enter for the purpose of carrying out a program of exploration and development determined by itself. This view, however, falls far short of the ambitions of the developing countries. They are concerned not only with where the technology is employed but also who employs the technology, for whose benefit, and the nature of the benefit. The developing countries are aware of the opportunities for having the petroleum technology applied within their borders. What they want is to be able to participate in the application of that technology. Research and Development efforts in the Petroleum industry in developed countries is partly funded by the profits earned in developing countries. However, these countries are often the last to benefit from the new technological developments. Thus, there has developed, in recent years, a loud and insistent cry for the |transfer of technology' in developing countries demanding that they no longer be deprived of an essential ingredient needed for economic growth and development.

The Concept of

"Transfer of Technology"

The common impression about |transfer of technology' is that it is fixed pool of something that can be packed and transported like a commodity. This is certainly the impression one gains from hearing government officials demanding it and the oil companies arguing about the difficulty of transferring it or bargaining for a quid pro quo. This gives an impression that they are both dealing with so many tons of some commodity. But technology is not in any sense a pool or sum of anything finite in quantity or quality. It is being constantly changed and updated. It may involve equipment and tools that can be transferred, but it is much more than this.

Technology is really a combination of factors that include all tools, equipment, processes and patents. But it also involves a certain intangible additional input - knowledge of an ability to manipulate and use those tools, equipment, or processes for the attainment of specific ends. This involves human development, a conditioning of the human mind to comprehend certain techniques and relationships, how certain things work, and why or why not. In the words of J.K. Galbraith technology means the systematic application of scientific or other organised knowledge to practical tasks. Petroleum technology may be regarded as systematic and formulated knowledge about the industrial art in the field of Petroleum. This body of knowledge is always changing, being amended, increased and improved by research, thoughts, and chance encounter of people within the industry or outside it. In order to discuss the process of technology transfer, it is necessary to differentiate between the following three stages of technological change:

a) The true invention - the radical new

idea that departs from accustomed way

of thinking and doing. b) The process of innovation - translating

invention into commercially feasible

technology or adopting known ideas or

methods in new combinations, in new

areas and with new results. c) Simple rationalization or scientific

management - the application of better

methods and techniques.

From the point of view of developing countries, like Pakistan, the emphasis at this stage cannot generally be upon the first stage above. They should be most concerned about acquiring a commercially feasible technology, i.e., adopting known ideas or methods in new combination and to new environment. It is unrealistic to think that the developing countries can contribute many true inventions or radical new ideas in the short run. What they can do is to create an atmosphere conducive to the development of a pool of scientific knowledge and of persons skilled in the existing technology who are given the opportunity and freedom to borrow, adopt, and above all, to experiment with ideas until they become part of the economically usable technology.

Technology Transfer

in the Oil Industry:

Current Status in Pakistan

Oil Industry planners in Pakistan are showing increasing interest in the acquisition of modern technology for oil exploration and production. This is for a variety of reasons. First and foremost, exploration for domestic oil is becoming more and more attractive in view of ever increasing energy consumption and because there is excellent promise of finding more oil. Acquisition of modern technology is therefore needed for undertaking the exploration/development activities. Secondly, it is necessary to build up the technological capacity in the oil sector to control and manage scarce oil resources. Finally, it should be mentioned that so far only small oil deposits have been discovered in Pakistan. If this trend continues, foreign oil companies may not find it economically viable to continue to engage in Pakistan. So the only sure way to explore/develop small deposits is to be self sufficient in technology and take control. An effective program of transfer of technology from the developed countries assumes a critical role in the light of these considerations.

Let us examine various avenues available to Pakistan for the transfer of modern petroleum technology and their pros and cons. The following discussions refers in general to the Oil and Gas Development Corporation (OGDC) which is the national organization charged with the responsibility of finding and developing petroleum resources in Pakistan.

Technology Transfer Through

Foreign Oil Companies

Foreign oil companies play an important role in oil exploration/ development activities in Pakistan. There are currently 17 foreign oil companies operating in Pakistan under various forms of risk contracts. Although the predominant concern of these oil exploration contracts is limited to matters such as distribution of exploration risks, division of profits and control our production and physical oil, they do contain a provision for some amount to be spent on overseas training of Pakistani professionals in various disciplines of petroleum technology. Such provisions, however, do not provide enough motivation for the oil companies to engage in serious technology transfer efforts. Also, Most oil companies (except, of course, AMOCO & OCCIDENTAL) operating in Pakistan are in US terminology medium to large size "independents". Economies of scale prevent such companies from having a strong technical or R&D base. Unlike Exxon, Shell or Mobil, these companies do not hold or own petroleum technology. They can, therefore, only play the role of "coordinators" of operations and intermediaries between the service companies, engineering consultants and OGDC.

In the absence of specific stipulations for technology transfer in the oil exploration contracts. i.e. training requirements, technical requirements, requirement for employment of nationals or other requirements relating to technology, there is no motivation for the foreign oil companies to engage in technology transfer activities. Even if these provisions were included in the contract, experiences in other developing countries where such provisions have been tried (e.g. in Mexico and Venezuela) show them to be rather ineffective.

Thus, in the absence of specific arrangement for technology transfer in the present circumstances, foreign oil companies seem to be rather ineffective vehicles for transferring modern petroleum technology to Pakistan. It may be argued that foreign oil companies transfer technology by bringing modern equipment, technical services and processes into Pakistan. However, as discussed earlier, this is not technology transfer in the true sense.

Technology Transfer Through

Service Companies

Service companies play an important role in creation and distribution of modern oil technology. They carry out very specific tasks relating to geology, geophysics, drilling, logging, reservoir engineering etc. After the shake up of mid 80's, only two to three service companies have come to dominate the market. (Schlumberger, Halliburton, Dresser-Atlas) Each of these major players has a strong technical base and is backed by extensive R&D efforts. These companies own the technology they use and are in an excellent position to deliver the technology to developing countries like Pakistan. However, the signing of a service contract with a service company doesn't necessarily mean transfer and absorption of oil exploration/ development technology by the host country. In many cases only "leasing" of technology takes place with no opportunity for learning of the technology by nationals. Thus, special arrangements have to be made to ensure transfer of technology.

In Pakistan, special arrangements for technology transfer exist between Schlumberger and OGDC. One is the establishment of a computing facility for interpretation of logs, well testing and reservoir data. This facility affects technology transfer mainly because of its Pakistan staff who have learned Schlumberger technology and are able to disseminate it to OGDC personnel. The other is a joint venture project between Schlumberger and OGDC for the establishment of a state-of-the art reservoir study center. This center which is now operational, is the subject of a later section. Such arrangements with service companies offer a good avenue of acquiring modern petroleum technology for developing countries and have proven quite successful in countries like Venezuela, Mexico, India and Algeria. These countries were able to build some indigenous technology capacity utilizing such technology transfer agreements in combination with other arrangements.

Technology Transfer Through

Foreign Aid/Foreign Consultants

Various international agencies are providing professional and technical assistance to OGDC. The Canadian government through its international aid agency (CIDA) has contributed significantly to technology transfer in various spheres of the petroleum sector since 1974. Their contribution in setting up OGTI (Oil and Gas Training Institute of OGDC), in helping OGDC acquire seismic technology and in providing technology needs of OGDC has been quite helpful. In addition, a number of reservoir studies are carried out by foreign consultants each year and OGDC professionals are sent overseas for short visits to participate in such studies.

As far as provision of material, equipment hardware and processes is concerned, these foreign aid based program are very helpful. But if the transfer of technology is viewed from the broader perspective of human development and confidence building than they suffer from a fundamental drawback. They imply that the technology exists only because of certain qualities inherent in those who have it and that the recipients do not have the capacity to develop that technology. Thus in an atmosphere of basic and persisting inferiority people are inhibited from utilizing their full potential. They tend to convince themselves of their inadequacy and this destroys their self confidence and restricts their capability of borrowing, adopting and experimenting with new technology. This is especially true for disciplines that require close human-interaction between individuals (i.e. interpretation of seismic, logging and well test data, reservoir engineering and reservoir studies). The above is not just a theoretical or abstract analysis. The asymmetry inherent in such programs is real and works in subtle ways. For example, more than once during the last year, I have been told by OGDC professionals that they cannot turn on a particular computer, or run a software or explore a new feature in the software because the foreign consultant under whom it works is on vacation. Some OGDC professionals are scared that doing even a minor operation (like reconfiguring a PC, reloading a software or moving a PC from one location to another) will upset the delicate (almost magical) balance under which these equipment operate and which can only be set and maintained by the foreign consultant (a magician!) If even after years of exposure, people don't have the self confidence to try a new option in a software or move a piece of hardware, where is the technology transfer? Similarly, a reservoir simulator has been available to OGDC since 1987. However, even after many years of use, OGDC professionals seem to know only a cookbook, routine approach to simulation and don't even seem to understand full capabilities of the simulator. Their standard answer to any query about the simulator is that they have been shown only such and such by the consultant and they don't know anything beyond that and that the question should really be put to the consultant (magician again!) What I am trying to get at is that in the restrictive give-and-take environment, people take what they are given and no more. They are not encouraged or given freedom to experiment, discover, modify and manipulate the technology. Numerous short overseas trips are taken by OGDC professionals each year to participate in reservoir studies. But, in the absence of clear objectives, these trips tend to degenerate into pleasure trips. I have seen people who were totally blank about what they were supposed to achieve after spending 3-4 weeks in a foreign country working on a reservoir study.

The broader objectives of human development and confidence building can be achieved in a foreign aid based technology transfer program only if enough attention is paid to these objectives and they are made an essential component of the program. A success story for achieving these broader objective is the cooperation between CIDA and OGDC in the development of human resources thru OGTI. The success of the program is due to its emphasis on teaching students how to transform latest concepts into useful and hands-on skills and then letting them apply, adopt, experiment and modify these skills for new situations on their own. This facility is bound to play an important role in the development of an indigenous technology base in Pakistan. OGDC should encourage and motivate oil companies and service companies to establish similar technology transfer facilities in Pakistan.

OGDC - Schlumberger Joint

Venture for Technology Transfer

In 1990, OGDC and Schlumberger agreed on a joint technology transfer project to establish a state-of-the-art reservoir study center in OGDC. The objective of the project is to build an inhouse capability in OGDC for the application of latest formation evaluation and reservoir simulation techniques in the exploration and development of hydrocarbon resources in Pakistan. The hardware for the project, which includes a Micro Vax 3400 computer was imported and installed initially at Schlumberger's computing center in Islamabad in January, 91. The software for the system comprises proprietary Schlumberger software (e.g. ELAN for log interpretation) and third party software ECLIPSE for reservoir simulation. The system became operation on February 1, 1991.

A significant part of the project is the training OGDC professionals on the technology being provided under the supervision of a study coordinator (the author) for a period of two years. The aim is that after this period they should be able to apply this technology on their own. A multi disciplinary team (2 geologists, 1 petrophysicist, 3 reservoir engineers) of OGDC professionals was selected for this training. This team undertook initial 3-month training at Schlumberger computing center in Islamabad. The project moved to exploitation department in OGDC on May 17, 1991. Formal training on reservoir engineering and reservoir simulation continued for four more months. The group is now actively engaged in their first reservoir study utilizing the technology learned during the last six months.

The guiding philosophy for this project has been enunciated in the first two sections of this paper. To summarize, it is that effective transfer of technology can occur only in an atmosphere of openness, equality, freedom, and close human interaction. Given below is an account of how we have incorporated these principles in the operation of our project and what has been our experience.

Openness and

Freedom to Learn

We have avoided the cookbook approach of introducing the new technology to the young professionals and, therefore, the formal training has been kept to a bare minimum. Our strategy has been to tell them about the essentials and then let them discover the details for themselves and enjoy the thrills of discovering new options and ways to use the technology. For this approach to be successful, it is necessary to have an atmosphere of openness and freedom. It has been impressed upon the members of the group that there is nothing so secret, sacrosanct or critical in the system (hardware and software) as to inhibit their curiosity or urge to experiment. People are urged to be aggressive in experimenting with the new technology without worrying about damaging something, although occasionally they are criticized for not taking that extra logical step. In this open atmosphere, our people have become quite comfortable with the provided technology and they have come close to |owning' the technology. They still have a long way to go before they achieve real innovations. But they can claim to know, to some extent, the prior art in formation evaluation and reservoir simulation. It has been our experience that young professionals of OGDC are eager to learn new technology in such open and challenging environment.

Team Work and

Informal Organization

The professionals in the project act as a team. There is no hierarchy within the group although we do have people in different grades. Major decisions about the project e.g. goal setting, identification of roles, delegation of responsibility, and use of resources are agreed upon by the team before presentation to the management for approval. This collective decision making and team work reduces the barriers that may hinder the process of technology transfer. We sometimes underestimate the ability of our young professionals to interpret and analyze once they are in possession of the necessary information. By giving them a role in the decision making, we build their confidence - which is what technology transfer is all about.

In short, in managing the project, we have adopted the theory-Z (Japanese philosophy of managing through loyalty and collective decision making) in preference to either theory-X (slave driving) or theory-Y (managing with people) styles. In our opinion, for projects involving technology transfer, this is the most effective style as is evident by the spectacular success of Japan in acquiring western technology during 1950's and 1960's. After interacting with the young professionals of OGDC for one year, I do not agree with the common perceptions that : 1) they are mediocre, 2) have inherent dislike of work, 3) have relatively little ambition or 4) want to avoid responsibility and, therefore, need to be controlled, coerced, directed and threatened with punishment to get them to put forward adequate effort towards OGDC's objectives. On the contrary, I found them generally to be bright, hard working, ambitious and willing to take responsibility. Unfortunately, the current incentive system in OGDC runs counter to motivation. Especially, the system of promotion by seniority alone discourages bright young professionals who would like to see their extra effort and talent rewarded quickly.

Human Relations

Technology transfer has been called a process that occurs between consenting adults. It happens person to person, one to one, eye to eye - with or without the help of paper or electronics. It happens between individuals who have mutual respect for each other. In short, it requires close human interaction. We have tried to interact closely with each individual involved in the project. Each individual has a distinct personality with his own needs, motivations and inhibitions. The person transferring the technology has to deal with these during the course of this work through close personal contacts.

Inter Disciplinary Approach

Different disciplines of petroleum exploration/development (Geology, Geophysics, Logging, Reservoir Engineering) have become so vast that it is not possible for an individual to be fully conversant with all of them. On the other hand, for proper reservoir characterization it is necessary to integrate data from all disciplines which requires geologists, geophysicists and reservoir engineers to work closely. Therefore, we need professionals who are specialists in their own discipline, but, at the same time, have a basic working knowledge of other disciplines. For example, a geologist should know how his maps will be used to generate a simulation grid and a reservoir engineer should have basic knowledge of geology underlying his simulation model. In view of this required synergy of disciplines for modern reservoir characterization, we decided to give basic training in each discipline (formation evaluation, well testing and reservoir simulation) to each member of the group irrespective of their own discipline i.e. geologists were trained in basic reservoir simulation and reservoir engineer were given basic training in petrophysics. After the basic training, each member continues to work in his original area and gain expertise in it. The exposure to other discipline has definitely broadened their vision and made them well-rounded professionals. For some of them, this aspect of training has been a big motivating factor. People do not want to work pigeon holes and with black boxes. There is a natural urge to know about other related disciplines and when an opportunity is provided, people tend to work extra hard to avail it.

Work Environment

and Professionalism

There is an innate human need for belonging to a group and being proud of one's association. Every employee wishes to look for points of pride in his organization. Good working environment, professional atmosphere, and bonhomie on the job are excellent motivators for young petroleum professionals. We have made extra effort in our project to provide proper working atmosphere to OGDC professionals. The office space has been designed and built to western standards. People are often reminded of their professional status and responsibilities. A code of conduct has been agreed upon to instill work ethics in the group. Team work is emphasized. Due to these measures, members of the group feel proud of their association with the group and it is a big motivating factor for most of them.

Mandate from Management

To achieve success, a technology transfer project must have underlying corporate and individual commitment. In the OGDC/Schlumberger Project, we enjoy total support and encouragement of OGDC's top management. They are committed to technological advancement of OGDC. However, this commitment needs to be reflected in the policies and practices of the middle management and supporting departments (procurement, audit, accounts, etc. etc.) of OGDC. A corporate culture where supremacy of technology is recognized, and cooperation and team work is emphasized, will go a long way in modernizing OGDC for the twenty-first century.

Overseas Pakistanis - A

Potential Source for

Technology Transfer

Pakistani professionals working in the oil industry in the western countries (especially in USA and Canada) are a potential and untapped source of modern petroleum technology for Pakistan. They are attractive for technology transfer because:

a) They have contributed significantly to

the development of modern petroleum

technology in the last three decades.

There are well known Pakistani experts

in all disciplines of the petroleum

industry. They have a genuine claim of

owning the technology that they can

transfer to petroleum professionals in

Pakistan who will then tend not to think

of technology as something coming

from far away for which they are not

suited or have the capacity to absorb. b) Cultural, social and language

differences, that present significant

barriers to technology transfer through

foreigners, will not hinder the process

of technology transfer. c) Most Pakistani professionals, who have

lived outside for considerable period

and are well established, would like to

give something back to their original

homeland. They are willing partners for

technology transfer and yearn for an

opportunity to do so. d) They are Pakistan's permanent link to

the cutting edges of the western

technology.

What will be an effective arrangement of technology transfer through overseas Pakistani professional? The overseas Pakistani professionals are so well established, so technically productive and so accustomed to the western environment that it is unrealistic to expect them to move to Pakistan and contribute effectively to developing a technology base in Pakistan. Rather their services can be utilized more effectively in the form of a loosely organised network of key petroleum professionals working in the US and Canada who are willing to contribute to the development of petroleum technology in Pakistan. This contribution can be in the form of instant transmission of available technical information, advice on specific projects or problems, short visits to Pakistan for well defined training programs, and joint technical publications with OGDC professionals in western technical journals, etc. etc. In return, OGDC should pay this small group of professionals nominal retainer fee and provide some other incentives as well. This arrangement can be effective only when each participant sees the exchange to be in his personal benefit as well.

The utilization of Pakistani professionals settled in the western countries is Pakistan's best bet for acquiring modern petroleum technology and developing an indigenous technology base. In acquiring modern petroleum technology, OGDC should be in a hurry. With the current pace of technology transfer, Pakistan will always be dependent on western countries for technology. There is a need to accelerate the process of technology transfer to move quickly from acquiring the existing technology to adopting and modifying the existing technology to the stage where there is actual creation of new technology in the country. Pakistani professionals settled in the western countries provide a fast track for that process.
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Author:Tariq, Syed M.
Publication:Economic Review
Date:Feb 1, 1992
Words:4501
Previous Article:An overview of exploration and production of oil and gas in Pakistan.
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