Why Cloud Computing is a Hot Topic in the Middle East

IMG 1558

Why Cloud Computing is a Hot Topic in the Middle East

A keen topic on my recent visit to the Middle East concerned cloud computing. Why is cloud computing a more fraught consideration in this part of the world?

Cloud Computing on the Rise

Two news stories about cloud computing and the oil and gas industry caught my eye this week. First, Cenovus finally went public with the news that it had selected Amazon Web Services (AWS) as their cloud solutions provider, and are embarking on a transition program to move their compute needs to the AWS cloud. For those not familiar with Canada’s oil and gas sector, Cenovus is one of the country’s largest oil producers.

Cenovus ran a “bake-off” (a procurement term recently borrowed by reality TV where multiple companies pitch their solutions in a competition to win a contract), involving the usual suspects. AWS apparently ran away with the win, baking an extraordinarily tasty confection of support, capability, capacity and cost that captivated the customer.

Second, Suncor announced a major cloud contract with Microsoft, to use the Azure Cloud system. Suncor is Canada’s largest oil and gas company by production volume, and runs the nation’s largest chain of gasoline stations. In much the same fashion that Cenovus has committed to AWS, Suncor has bought into Microsoft’s compelling story about the merits of their cloud offering.

Oh, and there was this other recent announcement that the US Department of Defence had awarded a cloud computing contract of some significance ($1B) to Microsoft. Amazon is expecting to launch an objection (much the same way that 260 cities who failed to win the coveted Amazon HQ2 appealed… not). Grow up, Amazon.

The merits of cloud look compelling to the larger oil and gas firms, but is this a universal phenomenon?

Why Cloud Computing

As I set out in my book, Bits, Bytes, and Barrels, cloud computing offers sufficiently compelling benefits to entice even the most hardened CIO into cloud’s embrace.


The massive cloud data centres reliably deliver compute and data storage capacity in almost unlimited amounts nearly instantaneously for whatever computational problem might be at hand. Need to crunch a dataset measured in multiple terabytes? No problem. Want to run multiple versions of a complex model (such as a refinery LP) simultaneously? Easy peasy. Need to flash assemble a highly scalable system to manage through a conflagration? Just a call away. No more waiting months and months for servers to show up from manufacturing, or requests for capital to expand the data centre.

Better security

Concentrating data and computer capacity into massive facilities must surely be enticing to cybercriminals. But it turns out that these dense facilities are more efficient at security management. The instant a mitigation action is deployed in response to a threat, that action can be propagated immediately to the other facilities in the network. Vulnerabilities can be more quickly identified and remediated. Patch management is simplified.


Big cloud service centres are more efficient. Compute loads can move around the facility in response to weather conditions, as Google found out when they subjected their energy profile in their data centers to AI analysis. Moving the loads to the shady side of the building (reducing air conditioning needs), meant that Google could save 40% of its energy bill. Cloud operators design their own servers and farms to wring out cost, along with their own management software, back up and recovery solutions, and plant optimization. Lightly used gear can be quickly deployed to meet needs.

Cost effective

More than one CIO has told me that cloud offerings are not a cheaper option than running your own data centre. The main costs of a data centre are electricity and man power, and, depending on where you locate your facility, you can possibly take advantage of power pricing and lower labour costs. However, you do sacrifice access to capacity on demand and you own the security problem. And you are likely only as efficient as enabled by the management software you purchase. Cenovus has hinted at some cost gains in the 90% range.

Surely these benefits would resonate as strongly in the Middle East?

Sunny in the Gulf

As it turns out, cloud adoption is going to be a little trickier in the Middle East. Here’s a few of the considerations that cloud companies need to anticipate.

Small countries and economies

Despite the enormous size and overall wealth of the oil and gas industry in the Middle East, the individual countries that are home to the oil and gas economy are relatively small in population and dominated by oil and gas. Between them, the UAE, Kuwait, Saudi Arabia, Qatar, and Oman produce 22 million barrels of oil a day, but have a population of only 50m. The sector accounts for as much as 50% of GDP. While these economies feature many different sectors, including agriculture, the public sector, manufacturing, and services, the economies are more concentrated, and cloud services are effectively dependent on one industry for success. Cost benefits in cloud accrue from aggregating many small pockets of demand into very large facilities. This formula doesn’t work where the demand is already concentrated.

Data sensitivity

Most businesses will argue that their data is highly sensitive and unsuitable for a public cloud environment. But in the case of the Middle East oil economies, this is amplified by the importance of oil to the national treasury. In Canada, the oil industry is a tiddling 6% of GDP, and Suncor, who are about 25% of the Canadian sector, is just 1.5% of GDP. Compare that to 50% in the Gulf countries, and the remaining 30% is somewhat co-dependent on oil receipts. Gulf CIOs will be that much more circumspect and cautious about the sensitivity of their data and operations, and the potential for that data to be accessed by outsiders or their OPEC peers via a cloud window.

Business value

The benefits of cloud really come to the fore in a rapidly changing world with hot competition, fickle markets, and hyper-scaling solutions. Oil and gas in general is not characterised in this way. However, Middle Eastern oil and gas is now dealing with broader market changes (the emergence of the US as a market competitor, climate pressures, and slowly shifting transportation demand). The cost pressures on the national oil companies, driven by lower realised oil prices, slowly growing petroleum markets, and the need to improve receipts to shore up the national treasuries, may well be the key to growing cloud demand.

Geopolitical setting

Finally, the geopolitical challenges of operating in the Middle East pose a demanding new requirement for any company that aims to work successfully in the region. It’s one thing to locate a warehouse that holds spare parts, but quite another if that warehouse holds sensitive data. Where would you locate a cloud datacenter to serve the region? What if a cloud computing data centre were the target of a missile drone attack instead of oil processing infrastructure? Could a data centre be brought back on line in just 5 weeks?

What Happens Next

The major oil producing countries in the Middle East have embarked on their own respective drives to adopt digital tools, and cloud computing will inevitably become a feature of the future environment. The costs and capabilities of cloud are already compelling, the software companies whose products run the industry are assuming cloud deployments in the future, and most of the innovations coming to the industry are based on cloud availability.

As I see it, cloud computing can achieve its initial scale by aggregating the compute and data storage load demand from across one of these oil and gas giants. If securing Suncor and Cenovus is considered a win by the cloud companies, then surely a contract that is four times larger would have to be appealing. An attractive and very large future market includes the operating technologies or SCADA environments that often run separately from commercial IT landscapes, but are also becoming more digital and more cloud.

Cloud companies will need to sharpen their messages about how they deliver better security and data privacy than any one company, or even country. In my view, the national oil companies of the Middle East are of such scale and importance, and endowed with such resource depth, that they should well be viewed as countries.

As a new element, cloud computing firms will need to address regional concerns about geopolitical vulnerabilities, facility recovery, full plant redundancy, and cyber concerns, that are at a fundamentally different level than what cloud firms find in rural Idaho.

The oil and gas companies of the Middle East should take some comfort that the US Pentagon has decided to entrust its future data and compute needs to the cloud companies. Agencies such as the CIA are already significant cloud customers, as are major banks. Security and privacy concerns are being satisfied for other equally discerning customers.


It’s all too easy to assume that every market will embrace new digital innovations such as cloud computing, but closer inspection reveals subtle differences between markets. Cloud innovators will need to be flexible with their offerings to capture the attention of the oil industry leaders in the Middle East.


Check out my book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, available on Amazon, iTunes, Audible, and other on-line bookshops.

Mobile: ☎️ +1(587)830-6900
email: 📧 geoff@geoffreycann.com
website: 🖥 geoffreycann.com
LinkedIn: 🔵 www.linkedin.com/in/digitalstrategyoilgas

1 Comment
  • Abhijit Singh
    Posted at 06:15h, 29 March Reply

    Geoffrey Cann,

    What a fantastic post! This is so chock full of useful information I Can’t wait to dig deep and start utilizing the resources you have given me. Your exuberance is refreshing

Post A Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.