New base 729 special 16 november 2015

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NewBase 16 November 2015 - Issue No. 729 Edited & Produced by: Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

Abu Dhabi and Irena seek renewable energy projects for low-cost funding

The National

Abu Dhabi is helping to kick off a fresh round of funding for renewable projects across the developing world. The International Renewable Energy Agency (Irena) and the Abu Dhabi Fund for Development (ADFD) are seeking applications for projects to tap the fourth round of funding amounting to about US$50 million.

“This new funding cycle provides another opportunity for developing countries to access low-cost capital for renewable energy projects to drive an energy transition and achieve sustainable development,” said Adnan Amin, Irena’s director general. The latest round is part of a $350m commitment from the ADFD that provides concessional loans to projects that Irena supports over seven funding cycles, with loan values between $5m and $15m. These concessional loans have lower interest rates than traditional market loans, with Irena receiving more than 100 applications for each tranche. For low-income countries, the interest rate runs at 1 per cent, while middle-income countries are granted loans with an interest rate of 2 per cent. The loan recipients have 20 years to repay the loan, including a five-year grace period. Although applications must be submitted by February 15, projects are required to have a government guarantee. So far the first two cycles of the Irena and ADFD partnership have resulted in $98m worth of projects expected to produce renewable energy capacity exceeding 56 megawatts. That could meet the energy needs of 600,000 people and businesses a year. The third round of funding has yet to be awarded.




Just under 30 per cent of the $98m in funding has gone to the African continent. This programme also provides a business opportunity that enables UAE companies to venture into the renewable energy sector in developing countries. For instance, a $9m loan for Sierra Leone’s solar photovoltaic park is funding an engineering, procurement and construction contract awarded to a unit of Sharjah’s Mulk Holdings.

Oasis Gulf Investment will build the $18m solar park in Freetown using solar panels made by Masdar, the Abu Dhabi government’s clean energy company. Countries across South America and the Caribbean as well as some island nations have already benefited from the programme. “The scale of current energy demand globally requires close collaboration among governments and international agencies to ensure access to clean and cost-effective energy across the developing world,” said Mohammed Saif Al Suwaidi, ADFD’s director general. And countries in the Middle East and North Africa (Mena) could be next on the list. An estimated 28 million people in the Mena region lack access to electricity, according to World Bank statistics. Iran is the only country in the region that has received funding from the Irena and ADFD programme, but new prospects could emerge. Laith Basha of the Jordan Solar Industry Association said there were many energy projects in the pipeline (ranging from 1 megawatt to 20MW) in need of financing. “Talking about [interest rates of] 1 to 2 per cent is really convincing,” he said, adding that many renewable projects in Jordan need low-cost financing. Mr Amin said: “The continued partnership between ADFD and Irena brings funding to the places where it can have the most impact and where financing is one of the greatest challenges.”




Saudi Ma’aden aspiring to be world’s largest integrated Aluminum industry in 5 years . Saudi Gazette

Eastern Province Emir Prince Saud Bin Naif inaugurated the Arab International Aluminum Conference (ARABAL) at Dhahran Exhibition Center in Dammam Sunday in the presence of Petroleum and Mineral Resources Minister Ali Al-Naimi, CEO of Ma’aden Khaled Bin Saleh Al-Mudaifer, leading businessmen, top ranking officials and prospective investors. The three-day conference is organized and hosted by Ma’aden.

In his inaugural remark, Prince Saud Bin Naif congratulated Ma’aden for making big stride in mining and aluminum sector he said Ma’aden symbolizes unprecedented growth of the industrial sector in the Kingdom and also the wise policies of the architects of the country to diversify from the oil sector.

He welcomed the delegates of the conference and hoped that their deliberations will further enhance the aluminum sector and take Ma’aden on a global map in aluminum sector.

The Emir said the nation was proud of Ma’aden Aluminum plant in Ras Al-Khair. “It translates the dream of the previous leaders like King Fahd, Prince Sultan, Prince Naif, King Abdullah and now King Salman Bin Abdul Aziz to turn Saudi Arabia into a diversified economy.”

Welcoming the Emir, Al-Naimi said the conference comes at a time when the aluminum industry has made great strides, advancing the process of development in producing countries and adding value to their economies. The conference also coincides with the national achievement of establishing an integrated aluminum industry from the mine down to the final product in rolling mills, in addition to the recycling stages, as part of the steps taken by the Kingdom to promote the future of the aluminum industry, not only its basic components, but also its manufacturing industries.




The minister said the Kingdom has also issued and updated a mining law and made investments in surveying and exploration, which includ e geological, geochemical and geophysical mapping; mineral exploration; and excavation work in all the Kingdom’s regions, and established the Saudi Geological Society.

Al-Naimi said his ministry strives to attract foreign capital for investment in the mining sector, according to a vision for development based on making use of the Kingdom’s mineral resources and reserves, which are the largest in the Middle East.

Concessions in this regard are available over a wide area of the Kingdom. Besides being the country with the world’s largest mineral endowment, the Kingdom has an added advantage, which is the availability of infrastructure, including the services needed by

this industry such as roads and electricity, in addition to reforms to the mining laws.

The result of this integrated set of laws and new vision accumulated professional the country saw the establishment of mining industrial cities, foremost among which is Ras Al-Khair City, the first mining city in the Kingdom and the third industrial city after the Jubail and Yanbu industrial cities, with investments estimated at SR130 billion Ras Al-Khair is connected to the phosphate mines in the north of the Kingdom and bauxite mines in the middle by a 1,500-kilometer long railway, and it is from this city that the Kingdom’s first aluminum shipment was exported via the first port to be dedicated to mining products in the Kingdom. Ras Al-Khair is home to the world’s largest integrated aluminum complex aimed at achieving integration from the mine to the end product.

Welcoming the Emir, Petroleum Minister and delegates at ARABAL 2015, Al-Mudaifer said it was an honor for Ma’aden Mining Company to host a conference of such magnitude where international experts and investors will sit together and review the growth of aluminum sector in the Kingdom. He said Ma’aden since the launch of its IPO in 2008 has multiplied its area of activities I mining sector like gold, copper, phosphate and aluminum. Today it is considered as one of the largest mining companies in the world.

During the past seven years the mining company has expanded and invested billions of riyals to become the third pillar of Saudi economy after oil and petrochemicals. Its revenue rose from SR240 million I 2007 to current SR11 billion. He said the target of Ma’aden was to build its aluminum facilities as the largest integrated aluminum industry in the world in five years’ time.

He said “we now have the first series of integrated aluminum industry in the Arab world at a total cost of SR40 billion, ensuring the sustainability of the supply of aluminum in domestic and international market.”

He invited the delegates to have a tour of its integrated aluminum facility at Ras Al-Khair. Ma’aden will showcase the company’s operational facilities at Ras Al-Khair industrial city during the two-day meet. The tour will include a visit to the alumina refinery (the first in the GCC), aluminum smelter and rolling mill, the latter being the only facility of its kind in the region and among the most technically advanced in the world.




Oman: Salalah Methanol discusses ammonia project with

local stakeholders

In an engagement with local stakeholders Salalah Methanol Company (SMC) raised awareness for its ambitious and upcoming 1000 MTPD Ammonia Project which is to be built in Salalah Free Zone.

The project is part of the company’s initiative to add in-country value (ICV) and be part of the Sultanate’s sustainable growth partner. The company invited all stakeholders, dignitaries, local residents, government and non-government organisations to highlight its production milestones and CSR initiatives.

Ammonia is a key chemical for making fertilisers such as urea, ammonium nitrate and ammonium phosphate. It is a chemical used in variety of industrial applications such as synthetic resins (urea‐based), synthetic fibres (acrylics and nylons), polyurethanes and refrigeration.

The company, which is wholly owned by the government’s hydrocarbon investment arm Oman Oil Company, evaluated the opportunity of expansion keeping in mind the availability of essential raw material (natural gas) necessary for the production of ammonia and urea.

The company sources highlighted that eight engineering companies have been prequalified by the SMC to bid for the proposed Salalah Ammonia Project. “The proposed project consists of a 1000 MTPD Ammonia plant with storage facilities, export loading facilities and additional utilities. The feedstock would be rich hydrogen purge gas fed from the adjacent 3000 MTPD methanol plant owned and operated by the SMC.”

The project, according to SMC sources, is part of its strategic growth, which is to provide economic diversity and value addition. “It will also provide opportunity for development of further downstream industrial plants.

The project will provide greater opportunity for service providers both in construction and operation. In addition, it will support the society through direct and indirect employment.”




Liberia: ExxonMobil to drill offshore Liberia Source: Reuters / energy-pedia

ExxonMobil Corp said it plans to start drilling offshore Liberia in what President Ellen Johnson Sirleaf said was a sign of economic recovery after the Ebola epidemic. The West African country produces no oil but has awarded a number of exploration blocks offshore, following the examples of Gulf of Guinea neighbours Ghana and Nigeria.

ExxonMobil intends to start drilling late 2016 or early 2017, Steven Buck, its country manager for Liberia and Ivory Coast, said. The U.S. oil major signed for Block 13 in 2013 but put the project on hold due to the Ebola epidemic.

The worst known outbreak of the haemorrhagic fever killed 4,800 people in the country and deterred investors. Liberia was declared Ebola-free in

September but Johnson Sirleaf has said it will take two years to regain its economic footing.

'I am very excited to see Exxon Mobil here,' she said on Thursday after a meeting with Buck. 'Their presence demonstrates to the world that Liberia is once more on the move.'

The United States has lifted economic sanctions on Liberia that it had put in place against former president Charles Taylor, who is serving a 50-year sentence for atrocities committed in Sierra Leone during its civil war.

See also, earlier article: ExxonMobil planning to drill Mesurado-1 wildcat offshore Liberia in which Exxon's JV partner Canadian Overseas Petroleum (COPL) announced September 23 2015 that it had received notice from Exxon that the well to be drilled under the 2nd Exploration Phase, Mesurado-1, is planned to spud in late 2016 to early 2017 with the primary goal of proving a commercial quantity of hydrocarbons in the Cretaceous Santonian age reservoirs. The well will also provide calibration for the seismic response which can be used to evaluate other leads on the block.

The exploration well is currently estimated to be drilled for a total cost of $120M, which is the gross amount of the Company’s 17% carried interest. Long lead items have been ordered and there is an on-going effort to secure a rig of opportunity. The exact timing of the well will be dependent on rig availability and when ExxonMobil can confirm 3rd party contractor’s capability to operate in Liberia.




Norway: Lundin Petroleum granted drilling permit for well 7130/4-1 in PL708. Source: Lundin Petroleum

The Norwegian Petroleum Directorate has granted Lundin Norway a drilling permit for exploration well 7130/4-1 in production licence PL708.

Well 7130/4-1 will be drilled from the Transocean Arctic drilling facility in position 71°31’55.66" north and 30°10’07.90" east, after completing the drilling of wildcat well 6406/12-5 S in production licence PL586 for VNG Norge.

Lundin Norway is the operator of PL708 with an ownership interest of 40 per cent. The other licensees are Lukoil Overseas North Shelf (20 per cent), Edison Norge (20 per cent), Lime Petroleum Norway (10 per cent) and Pure E&P Norway (10 per cent). The area in this licence consists of Block 7130/7 and the southern half of Block 7130/4. The well will be drilled about 85 kms north of Berlevåg in Finnmark.

Production licence PL708 was awarded on 21 June 2013 (22nd licensing round). This is the first well to be drilled in the licence. The permit is contingent on the operator securing all other permits and consents required by other authorities prior to commencing the drilling activity.

According to information on the Lundin web site, the well will test the Ørnen Prospect, a combined 4 way closure/stratigraphic trap targeting a Permian Spiculites reservoir . A secondary target is located in the Ørn Fm Carbonates. The Ørnen Prospect has estimated reserves of 142 MMboe net to Lundin's 40% interest and an estimated chance of geological success of 20%.




US: North Dakota natural gas flaring targets challenged by rapid production growth

Source: U.S. Energy Information Administration, with data from the North Dakota Industrial Commission

Increases in North Dakota's crude oil production have resulted in increased associated natural gas production from oil reservoirs, especially in the Bakken region. Because of insufficient infrastructure to collect, gather, and transport this natural gas, about one-fifth of North Dakota's natural gas production is flared rather than marketed. North Dakota's Industrial Commission (NDIC) has established natural gas capture targets in an effort to reduce the amount of flared gas, and they recently issued a revision to the flaring targets in response to faster-than-expected gas production growth in the Bakken region.

North Dakota's current target is to capture and sell at least 78% of total natural gas gross withdrawals, or flare just 22% of the state's natural gas output. Based on the targets established in April 2014, the percentage of flared gas was set to fall to 15% in January 2016 and to remain at that level until 2021. However, on September 24, the NDIC slightly loosened the restrictions in the near term, allowing 22% to be flared through the first quarter of 2016, with the decline to 15% taking place in November 2016.

By law, North Dakota prohibits natural gas venting. Natural gas is flared rather than vented without combustion for both safety and environmental reasons. Vented, unprocessed natural gas contains hydrocarbons that are heavier than air, such as propane and butane, that can be hazardous if introduced to an ignition source. Also, flaring natural gas produces carbon dioxide, which, while a greenhouse gas, has a lower global warming potential than methane, the chief component of vented (noncombusted) natural gas.

Because North Dakota's rapid natural gas production growth makes production volumes difficult to anticipate, the NDIC's targets are based on percentages rather than absolute amounts of flared gas.




In 2014, flared volumes in the state reached 0.35 billion cubic feet (Bcf) per day, equal to almost half of total volumes that were either flared or vented in the United States. Since 2014, the percentage of natural gas flared in North Dakota has fallen from 36% to 21%. However, the volume of natural gas flared in the state has remained relatively unchanged. Increased drilling productivity (more production per rig) has resulted in increases in gross withdrawals of natural gas despite decreasing drilling activity (lower active rig count) in the Bakken.

Since the beginning of 2014, growth in natural gas processing infrastructure has kept pace with overall natural gas production growth. However, existing infrastructure still faces a number of challenges.

Although new infrastructure and limits on producing from wells not connected to gathering lines have reduced the amount of flaring at unconnected wells, wells that are connected to gathering lines have flared about 15% of total gross withdrawals over the past two years. Even these wells may require compression and capacity additions to handle the region's rapid gas production growth.

In addition, natural gas processing plant capacity in North Dakota is expected to reach 1.6 Bcf/d by the end of this year, an amount on par with total gross withdrawals. But these plants are constrained by the mix of gases and liquids produced at the wellhead.

Natural gas produced at the wellhead, referred to as wet gas, contains methane and other hydrocarbon gases such as ethane and propane. From this raw stream, processing plants produce dry gas, which is delivered to interstate gas pipelines, and the plants must separate out most of the heavier hydrocarbon gases that have been condensed to liquid form.

These natural gas plant liquids (NGPL) must also be moved to market. NGPL generally cannot be left in the dry gas stream because of pipeline specifications that limit NGPL quantity and the heat content of the gas.

As of August, North Dakota had the second-highest average heat content of natural gas delivered to consumers in the United States, meaning natural gas from the Bakken has higher levels of natural gas liquids (mostly ethane).

This high heat content limits additional volumes of ethane that processing plants in the state can leave in processed gas streams. With limited NGPL storage capacity, additional pipeline capacity to move greater NGPL volumes to market is needed for processing plants in North Dakota to avoid reducing throughput volumes, allowing them to keep as much capacity as possible available to reduce volumes of flared natural gas in the future.




US: Oil Producers Hungry for Deals Drool Over West Texas `Tiramisu' Bloomberg - David Wethe

The worst oil market in decades would be hard to spot in West Texas, where two-lane county roads are still jammed with trucks and energy companies are on the prowl for deals.

The Permian Basin, the biggest of the shale oil regions that ignited the U.S. energy boom, is also the only one where production is increasing even as drillers idle more than half the rigs in the country during the longest price slump since the 1980s.

That’s drawn the interest of companies from Exxon Mobil Corp. to Anadarko Petroleum Corp., that have hunted for assets in the hot, arid flatland that spans an area the size of Syria. Anadarko’s bid for Apache Corp. was seen driven by Apache’s vast holdings in the Permian. Rising output from the region has helped buoy U.S. production after OPEC’s decision to pump more oil to maintain market share sent crude prices into a tailspin.

“We’re already seeing a lot of people that are targeting the Permian,” Allen Gilmer, chief executive officer of Austin-based Drilling Info Inc., said in an interview in Houston. “If you were to look for the most stable area today to go do anything, it’s got to be there. Today you might even argue it’s more stable than Saudi Arabia.”

Exxon, the largest publicly traded energy company in the world, bought 48,000 acres in the Permian in two deals in August, and is meeting with small, closely held producers to discuss additional purchases and joint ventures. Anadarko made an unsolicited, all-stock offer to purchase Apache, which has one of the largest Permian positions with 3.2 million acres, before withdrawing it, Anadarko Chief Executive Officer Al Walker said last week.

Rising Output

Oil production in the Permian is forecast by the government to rise 0.6 percent in December to 2.02 million barrels a day, even as drillers have idled 59 percent of the rigs there in the past year.




Output in rival shale fields like the Bakken and Eagle Ford has fallen 12% and 25%, respectively, as drillers pulled out after oil prices crashed last year.

The Permian’s multiple layers of oil- and gas-soaked rocks, in some places stacked 5,000 feet thick, contain plenty of places to drill that will yield 30 percent to 40 percent rates of return with crude prices as low as $40 a barrel, Laird Dyer, a Royal Dutch Shell Plc energy analyst, said at a conference in Toronto Nov. 10.

A single layer in the Permian, the Spraberry, probably holds 75 billion barrels of recoverable oil, Dyer said. That’s enough to supply the entire world for more than two years.

‘Richest Land’

“Somebody described it to me once as a tiramisu, it’s just lots of layers of beauty over there,” Gilmer said. “Everyone recognizes that the Permian Basin is by far the richest land on earth. The only thing holding it back from more and more is the engineering, and I think this is an industry that’s really proven that the engineering gets better every year.”

The region seems to be the place where new companies continue to look to expand, he said. Roughly $50 billion in private equity capital is funding more than 80 management teams focused on the Permian Basin, Will Giraud, chief commercial officer at Concho Resources Inc., told a crowd of 1,100 attendees on Nov. 10 at the Hart Energy Executive Oil Conference in Midland, Texas. Concho has about 700,000 acres in the basin.

“It’s the last oil basin standing,” Giraud said. “It’s still the last place you can put together a material position. It’s the last place you can drill in this environment and make money. It’s the last place where there’s still a tremendous amount of resources to be discovered.”




NewBase 12 November - 2015 Khaled Al Awadi

NewBase For discussion or further

Oil prices seen under pressure, edges up in high turnover as Paris attacks spark demand worries

REUTERS + NEWBASE

Prices of oil and other commodities will come under renewed pressure on Monday on fears that Friday night's deadly attacks on Paris will further slow the global economy.

Oil is already trading near its six-year lows and healthy demand has been a major factor preventing the prices from sliding any lower amid a worsening global oil glut due to abundant supplies.

Crude oil futures edged up in early trading on Monday following the deadly attacks on Paris, but prices remained near August lows and oil and other commodities are expected to continue under broad pressure in nervous trading.

Front-month U.S. crude futures were trading at $40.91 a barrel at 0121 GMT, up 17 cents from their last close. Internationally traded Brent was at $44.66 a barrel, up 19 cents.

Both crude benchmarks, which lost 8 percent last week, saw high levels of activity in early trading as commodity traders looked nervously for direction following the deadly attacks in Paris on Friday.

"The big question is, given that there is so much uncertainty with thesecurity issue if borders in Europe start to close, what economic impact could that have? That would probably be a very damaging factor," said Dominic Schnider, analyst at UBS Wealth Management in Hong Kong.

Oil price special

coverage




ANZ bank bank said that oil prices would remain under pressure from fundamentals as production remains high despite slowing global economic growth.

"Surprisingly, U.S. drillers are putting rigs back to work in the oil fields after more than two months. Baker Hughes reported the U.S. oil rig count gained by 2 to 574," ANZ bank said on Monday, but added that "we believe the low oil price environment will lead to a decline in drilling activity in the coming weeks."

Oil prices have dropped more than 60 percent since June last year as high production has coincided with an economic slowdown in Asia, particularly in China but also Japan, which slipped back into recession in the third quarter.

Looking at the broader financial repercussions, global stocks are set for a short-term sell-off on Monday but few strategists expect a prolonged economic impact or change in prevailing market directions.

ActivTrades chief analyst Carlo Alberto de Casa and Ed Meir, analyst at INTL FCStone, both said they expect a moderate rebound in gold prices given that equities and commodities were poised to be hit.

"People in France are in shock. They are not doing much shopping and that could last for a few days," said Olivier Jakob from Petromatrix consultancy. "The rest of the world is not as deeply affected to change consumer behavior," said Jakob adding that the bearish impact of Paris attacks would likely be short-lived.

"The attack could however result in a re-calibration of France's foreign policy and positioning in the Middle East," he added.

An OPEC delegate from a Gulf producing country said he also believed that in the mid-term oil prices could get some in support due to rising geopolitical tensions especially if the international community takes additional steps to reduce smuggling of oil and hits oil facilities under Islamic State's control in Syria and Iraq.

But the short-term impact could see prices remain under pressure, the OPEC delegate agreed: "Certainly any more controls -- though it ensures safety of travelers -- will reduce transport. Look at what happened after the September 11 attacks," he said.

He added the markets would react depending on details of how severe and prolonged any restrictions across France and the rest of Europe are. ING Bank energy analyst Hamza Khan said the Western coalition could now begin targeting IS-run oil fields and refineries but the risk would be destruction of already perilous Syrian supplies.




NewBase Special Coverage

News Agencies News Release 16 Nov.. 2015

Fresh doubts over Shell and BG merger as Qatar sells £1bn stake By Ben Marlow | Telegraph

The QIA has sold 43m shares in BG Group and a further 24m shares in Shell. The Qatar Investment Authority has offloaded shares in Shell and BG worth nearly £1bn in recent weeks, raising fresh questions over whether the oil giants’ proposed mega-merger has the support of major shareholders.

The sovereign wealth fund, led by Sheikh Abdullah bin Mohammed Al Thani, a member of the Qatari royal family, has sold around 43m shares in BG Group, worth roughly £550m, and a further 24m shares in Shell, with a value of approximately £421m.

The sell-off, over a period of less than three weeks between the end of October and the first week of November, will be a blow to Shell’s chief executive, Ben van Beurden.

The Dutchman has had to fend off persistent questions about the logic of pressing ahead with Shell’s mammoth £43bn takeover of BG Group despite the dramatic slump in the price of oil.

The QIA is one of Shell’s biggest investors, with a 4.88pc stake, and also holds a 1.76pc stake in BG. Qatar is also one of the world’s biggest producers of liquid natural gas, meaning its support for the bumper tie-up will be of huge importance to both sides.




Analysts at Olivetree Financial said: “The market is concerned that these sales have been discriminatory towards BG, and therefore suggesting some underlying reason which might be worrying for the fate of the transaction.”

Sources close to the deal sought to play down the significance of Qatar’s share sell-off, arguing that it has been driven by the Gulf state’s attempts to free up cash in the face of big losses on positions in other large European companies.

The QIA has taken big hits on its stakes in the troubled German carmaker Volkswagen , where it is one of the largest shareholders, and in Glencore , the mining giant.

The value of those two holdings has plummeted by billions of dollars in recent months as Qatar’s infrastructure bill for hosting the football World Cup in 2022 piles up.

However, while sources close to the QIA declined to comment on the Shell and BG share sales, they played down suggestions that one of the world's largest sovereign wealth funds needed to raise cash. Although it's recent paper losses have been large, they are relatively minor when compared to the size of the QIA's fund, estimated to be around $250bn.

Royal Dutch Shell has seen its share price slump by 25pc since April , when the oil major unveiled its bid for BG. Shares in BG Group have fallen 17pc over the same period.

Mr Van Beurden originally said for the deal to work, the oil price needed to be $67 a barrel in 2016, $75 in 2017 and $90 by 2018. Brent crude is currently hovering around $43 a barrel.




All that money, but nobody’s finding much oil these days The National + ( Robin Mill )

‘Oil is first found in the mind,” said Wallace Pratt, the American geologist, writing in 1952. It takes special skills to divine correctly where petroleum may be found, before a well is ever drilled. But either today’s geologists are looking in the wrong places, or company management is flawed.

Despite record spending levels, soaring from US$20 billion in 2004 to more than $90bn last year, and the application of technologies undreamed of in the 1950s, the results have been disappointing.

With the world consuming almost 34 billion barrels of oil each year, only between 6 billion and 7 billion barrels of oil were found annually from 2012 to last year, and only about 2 billion barrels so far this year, although that will be boosted by end-of-year reports.

This poor performance is not entirely the industry’s fault. There is little exploration in promising areas such as Iran, Iraq and Russia. Between 2006 and 2013, Brazil’s “pre-salt” area contributed mega-billion barrel discoveries, but political and contractual wrangles have slowed down new exploration.

Most new discoveries are in deep-water areas, large but expensive to drill and develop. And many companies are replacing their crude reserves with shale oil rather than new conventional finds.

Some new frontiers prove that success is not impossible: the Kurdish region of Iraq, the extension of Brazil’s pre-salt to West Africa, the Falkland Islands, Kenya and Newfoundland have paid off.

Gas has been a much brighter spot. Kosmos Energy, which began by finding oil in Ghana in 2007, has followed up with reportedly large gas discoveries in Mauritania, including Marsouin announced last week. Among the oil majors, Eni, which unearthed Egypt’s giant gasfield Zohr in August, as well as big fields in Mozambique, has done best. But gas, of which there is a global glut, takes longer to develop and is less valuable than oil.

A recent study by the Boston Consulting Group on the dismal record of exploration for minerals and metals reveals uncanny similarities: a tenfold increase in spending from 2002 to 2012 yielded no increase in the number of discoveries. Their interviews with a number of mining legends suggest some key lessons for oil explorers too.

The winners pursued districts with clear signs of minerals (or oil and gas) – not “moose pasture”, in industry vernacular. But they did not simply drill timidly near existing discoveries, a strategy that eventually runs into diminishing returns. They were prepared to venture out into greenfield, frontier areas.

They committed to “boots and hammer” – getting in the field to understand the geology. That might be most applicable in areas such as the Kurdish region, where oil literally oozes from the ground. But in any area, there is no substitute for hands-on knowledge of the rocks – even though now that is combined with the most sophisticated computer power, remote sensing and geophysical data.

Having identified attractive areas, they were not afraid to drill. “I’ve found a deposit for the wrong reason. Everybody has – if they are being honest,” said Andy Wallace, who made a string of notable gold finds in Nevada.




The best explorers developed their people, realising that the in-depth knowledge required to extend proven trends is different from the broad expertise of finding new frontiers.

And they won full commitment from their management and board. Mineral and petroleum explorers these days are badly squeezed for funding, and it takes courage from company leadership to keep spending after a string of failures.

But this has to be balanced with avoiding obstinate persistence in unpromising areas, or drilling in difficult environments where even large discoveries will simply not be economic to develop.

There are still mineral-rich areas out there, but the similarly poor performance of explorers for oil and metals suggest common failings. Companies need to get their strategies right, assemble the best teams, and bet on their brains instead of gambling on geology.

Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis.




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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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New base 729 special 16 november 2015