New base 730 special 17 november 2015

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NewBase 17 November 2015 - Issue No. 730 Edited & Produced by: Khaled Al Awadi

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Saudi Aramco: Petrofac awarded Fadhili contract Source: Petrofac

Petrofac has been awarded a contract by Saudi Aramco to undertake the engineering, procurement and construction (EPC) of a sulphur recovery plant as part of their Fadhili gas programme.

Fadhili is a greenfield development located 30 km west of the city of Jubail in the eastern province of Saudi Arabia. When completed, the gas plant will have a capacity for around 2,500 MMSCFD and will process sour gas from the Khursaniyah oil field and the Hasbah non-associated gas field.

Petrofac’s scope of work includes the construction of six sulphur recovery trains with associated facilities for the sulphur and heavy duty oil handling, loading, unloading and storage; sour water stripper, flare system and waste water treatment plant.

Marwan Chedid, Chief Executive of Petrofac’s Engineering, Construction, Operations & Maintenance (ECOM) division, commented: 'This award builds on our portfolio of projects in the Kingdom and we are delighted to have been selected by Saudi Aramco to be part of the strategically important Fadhili gas programme.

Petrofac has a strong track record of delivering projects involving sour gas handling and sulphur recovery and looks forward to bringing that experience to bear as we deliver the project.'




Oman: PDO inks contracts worth $650m Written by Oman Observer

Petroleum Development Oman (PDO) yesterday boosted Omani job and training opportunities by signing six contracts worth $650 million over the next 10 years. The deals for the supply, installation and maintenance of 29 centrifugal compressors were signed with international engineering companies Siemens LLC, General Electric International LLC and Omani firm OHI

Petroleum & Energy Services LLC and its partners MAN Diesel & Turbo Schweiz AG.

The contracts all contain In-Country Value (ICV) provisions to retain more of the oil and gas industry’s wealth in the Sultanate for the training of Omani engineers and the local manufacturing of components such as vessels, coolers and transformers.

The signings took place at the third edition of the Business Opportunities Forum at the Oman

International Exhibition Centre at Seeb under the auspices of His Highness Sayyid Haitham bin Tareq al Said.

The event, organised by the Oman Chamber of Commerce and Industry (OCCI), aims to create a platform for companies and institutions to expand business, build awareness and present investment opportunities from large firms and promote the efforts and programmes of private sector companies in the field of ICV.

PDO Managing Director Raoul Restucci said: “Despite the current difficult oil price environment, these signings show that we are committed to staying the course and making significant investments which will directly increase Omani jobs and training opportunities and build a robust and sustainable local supply chain.

“Since 2011, our ICV strategy has so far created more than 15,000 National Objectives job and training opportunities for Omani job-seekers and we are working all the time to develop and support Omani service and manufacturing capabilities.”

The compressors are planned to be installed at 11 PDO projects, including the Yibal Khuff mega project, Lekhwair, Mabrouk and the second phase of the Saih Nihayda and Kauther Depletion Compression projects.

The suppliers have committed to maximising the local content in their submitted contract plans. This should lead to the recruitment and training of a number of Omanis as engineers and technicians and maximise the use of PDO’s in-house repair workshops.

PDO received one award at the OCCI event for the largest one-off contract with Siemens LLC worth $210 million.




Egypt: SacOil commences drilling operations and steam injection at its Lagia oil field, onshore . Source: SacOil Holdings

SacOil, through its subsidiary Mena International Petroleum Company, has commenced the drilling of the Lagia 11 well on 13 November 2015, at its 100% owned Lagia oil field in Sinai, onshore Egypt. This forms part of the Phase 2 field development operations.

As reported previously, the Lagia 11 well is part of a five well drilling campaign aimed at increasing and optimising production. The Lagia wells will be drilled using the contracted Petro PDSO land rig, Shams 1. The five wells, Lagia 11, 12, 13, 14 and 15 will be targeting the main producing reservoir, the Nukhul formation at approx. 1500 feet below mean sea level.

The Phase 2 field development also includes the successful installation and commissioning of steam facilities for a thermal recovery process on the production wells.

The existing five production wells were successfully steamed with the formation reacting positively by accepting the injected steam as anticipated. The thermal recovery process yielded positive results with an increase in production rates observed after the first steam and soak cycle using progressive cavity pumps.

The five existing wells were steamed and allowed to soak for a number of days in order to heat up the reservoir and reduce the oil viscosity before starting production. The final program includes the steaming and thermal recovery of all the wells in order to achieve a targeted production rate of 1,000 bbl/day.

The company successfully procured and is in the process of installing ten new thermal well heads and tubing sucker rod pumps, which have been customised specifically for the Lagia field conditions and which will replace the progressive cavity pumps.

More details on the results of the drilling, as well as progress on the current operations, will be announced in due course, as operations progress.




Indonesia: Cue Energy signs rig contract for Naga Selatan-2 Source: Cue Energy

Cue Energy Resources has advised that its wholly owned subsidiary Cue Kalimantan Pte Ltd, the operator of the Mahakam Hilir PSC, has contracted a rig for the drilling of the forthcoming Naga Selatan-2 well in Indonesia. Cue holds a 100% interest in the Mahakam Hilir PSC which is located onshore in the Kutai Basin, Indonesia.

Naga Selatan-2 is a vertical exploration well to be drilled in the Mahakam Hilir PSC on the Pelarang anticline situated approx. 2.6 kms southeast of Naga Selatan-1. The Pelarang anticline lies approx. 10 kms west of the Sanga Sanga Anticline, which contains the prolific Mutiara, Pamaguan and Louise (Sanga Sanga) fields.

The well is designed to test the updip potential of the Late Miocene Balikpapan and Early-Middle Miocene Pulau Balang reservoirs which were penetrated by the Naga Selatan-1 well drilled by SPC Mahakam Hilir in 2012. Cue participated in that well as a 40% joint venture partner. Hydrocarbon shows were recorded in several sands throughout this interval. Recent detailed surface mapping, in conjunction with new seismic interpretation, has been used to position the Naga Selatan-2 well at or near the axial crest of the anticline in the vicinity of known oil seeps. The Naga Selatan-2 Prospect has been estimated by Cue to contain a prospective mean recoverable resource of 37.8 mmstb of oil. The technical chance of success for this prospect has been estimated to be 35%. The well is planned to spud in early January 2016 and drill to a total depth of 2240 feet (MD) in 15 days.

Forward plans include immediately applying for a 4 year extension to the exploration phase of the permit upon completion of the Naga Selatan-2 well, as well as testing and appraisal of the discovery in the success case.




Algeria to focus next year on mature oilfields Reuters + NewBase

Algeria will focus next year on maximising output at its mature fields and seek out foreign partners with the technology to explore offshore opportunities as part of its strategy to increase output, a senior energy official said.

The North African OPEC producer has struggled to increase oil and gas production and attract foreign oil investment in recent auctions. Last month, it postponed another energy bidding round because the slump in oil prices. Sonatrach state energy company Vice President Salah Mekmouche told local El Khabar newspaper the company would focus next year on developing more from older fields like Hassi Massoud, Hasi Berkine, and Illizi southwest and east.

"We will orientate around areas that are already well developed, those efforts will be on optimising the mature fields," he told the newspaper on Monday.

He said national production of oil and gas was expected to close 2015 at around 190 million tonnes of oil equivalent. Algeria's energy output peaked at 233 million tonnes of oil equivalent in 2007, before steadily declining to 187 million tonnes by 2012. But the government sees hydrocarbon output reaching 224 million tonnes of oil equivalent by 2019.

Mekmouche said the third train at the In Amenas gas plant -- which produced 11 percent of Algeria's gas before a 2013 attack by Islamists militants -- would be back in operation in the first part of next year. That would bring its gas production from 16 million cubic meters a day to 20 million.

In a bid to counter declining earnings because of the oil price slump, Sonatrach will also take steps to reduce production costs at oil and gas fields. He said the company was in talks with its foreign partners to reduce service costs.

Sonatrach will next year resume exploration operations in Niger where it has halted activities in 2014 after the expiration of a production-sharing contract. He said Sonatrach is also ready to carry out operations in countries such as Mozambique, Ghana, South Africa and Egypt.




NewBase 17 November - 2015 Khaled Al Awadi

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

Oil prices give up early gains as market glut persists Reuters + NewBase

Oil prices turned away from slight gains on Tuesday as the risk premium following the Paris attacks and the French airstrikes in Syria faded and traders began to focus on the global oversupply in petroleum products again. Analysts said that despite the Paris attacks and resulting French airstrikes in Syria, prices would remain low for the rest of the year and into 2016 as oil markets stay oversupplied, with most estimates for 2015 ranging from production outpacing demand by 0.7-2.5 million barrels per day. Front-month U.S. crude futures initially rose towards $42 per barrel in early trading but then dipped back to $41.75 a barrel by 0320 GMT, almost flat with its last settlement. Internationally traded Brent crude futures rose towards $44.80 before dipping back to $44.62 a barrel.

"The well supplied crude market, record high inventories in OECD and lack of a material threat to the oil facilities in the Middle East from the military escalation against IS in Syria are going to prevent geopolitical premiums building in oil prices in the aftermath of the Paris terrorist attacks," BMI Research said.

Oil price special

coverage




On the supply side, ANZ bank said that U.S. shale oil production, which many analysts said would fall sharply as a result of lower oil prices, would only dip. "We estimate crude oil production from U.S. shale fields will fall just 2.5 percent (in Q4)," the bank said, adding that this was a result of falling shale production costs and healthy refined oil product sales. Money managers cut their net long U.S. crude futures and options positions to the lowest in three months during the week to Nov. 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Monday. The speculator group cut its combined futures and options position in New York and London by 27,456 contracts to 127,351 during the period. The cut in bets on higher prices has come in parallel to soaring amounts of contracts actively betting on a further fall in oil. U.S. crude oil prices have now been lower than $50 per barrel for longer than they were during the height of the global credit crunch in late 2008/early 2009, when they were under that level for 74 straight days and another 14 intermittent days before and after. This year, U.S. crude has been below $50 a barrel for 84 days since July as well as another 44 days earlier in the year.

Oil Approaching $40 Deepens Investor Pessimism on Recovery Bloomberg - Mark Shenk

Hedge funds have turned more pessimistic on oil as prices flirted with $40 a barrel for the first time since August.

"The speculators keep trying to pick the bottom and keep getting burned," Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone.

Money managers’ short bets in West Texas Intermediate crude surged 21 percent in the week ended Nov. 10, according to data from the Commodity Futures Trading Commission. The net-long position dropped 16 percent. The release of the figures was delayed because of Veterans Day on Nov. 11.

Oil inventories in developed countries have expanded to a record of almost 3 billion barrels because of massive supplies from both OPEC and non-OPEC producers, the International Energy Agency said in a report on Nov. 13. WTI slipped to the lowest level since August before the CFTC release Monday.

Thirty-nine oil tankers are waiting near Galveston, Texas, up from 30 in May, according to vessel-tracking data compiled by Bloomberg. "There’s been concern about excess supply in the market for a while now and that’s been strengthened by the IEA report," Lynch said.

WTI fell 7.7 percent in the report week on the New York Mercantile Exchange. Futures were down 0.1 percent at $41.68 a barrel at 11:48 a.m. in Singapore. Prices touched $40.06 on Monday, the least since Aug. 27, before rebounding to close 2.5 percent higher.




Global Output

Oil inventories surged because of increased global production, the Organization of Petroleum Exporting Countries said on Nov. 12. U.S. crude supplies rose to 487 million barrels as of Nov. 6, the highest for this time of year since 1930, the Energy Information Administration reported on Nov. 12.

"We think the next few months will be very weak," Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone. "The market is focused on inventories. Prices shouldn’t rally in the coming year unless we have a disruption."

Speculators’ net-long position in WTI dropped by 27,198 contracts to 144,854 futures and options, the biggest decline since the week ended July 21, CFTC data show. Shorts climbed by 23,766 contracts while longs decreased by 3,432.

Brent Positions

Traders increased their bullish stance in Brent crude to the highest level in a month during the period. Speculators raised Brent net-longs to 187,479 contracts, according to data from ICE Futures Europe.

In other markets, net bearish wagers on U.S. ultra low sulfur diesel decreased 5.2 percent to 30,818 contracts. Diesel futures slipped 5.1 percent in the period to $1.4865 a gallon. Net bullish bets on Nymex gasoline fell 14 percent to 15,434. Futures dropped 5.8 percent in the period covered by the CFTC report to $1.3618 a gallon.

Oil rose Monday after failing to drop below $40 as French fighter planes dropped bombs on Syria, heightening tensions in Europe and the Middle East in the wake of deadly terrorist attacks in Paris on Nov. 13. French President Francois Hollande vowed to boost security spending, limit constitutional protections and win a war against Islamic terrorism.

"It doesn’t look like this will have any impact on oil supply," Tim Evans, an energy analyst at Citi Futures Perspective in New York, said by phone. "It’s hard to distinguish between the unstable mess we had in the Middle East on Thursday and what we are looking at today. The overriding concern in the market right now is excess supply."




NewBase Special Coverage

News Agencies News Release 17 Nov.. 2015

GCC countries must restructure, broaden revenue sources Saudi Gazette

While lower oil prices are expected to slow down the GCC economies, it should be seen as an opportunity for countries to restructure and broaden revenue sources. According to speakers at a panel discussion organized by ICAEW’s Corporate Finance Faculty in the UAE, there is a pressing need to raise taxes in GCC countries in order to diversify revenues and strengthen their fiscal positions.

ICAEW members and guests gathered at The Oberoi in Dubai recently to discuss how fiscal reform will affect businesses in the GCC countries. Panellists included Jeanine Daou, partner and head of indirect taxes at PwC; Gary Dugan, managing director – Global Wealth, CIO and head of investment strategy at NBAD; Trevor McFarlane, Chief Executive Officer of Emerging Markets Intelligence and Research; and Ashok Hariharan, partner and regional head of tax MESA at




KPMG. The discussion was moderated by David Staples, managing director corporate finance EMEA at Moody’s.

Following an introduction by Sanjay Vig, managing director at Alpen Capital and Chair of ICAEW’s Corporate Finance Faculty network in the Middle East, panellists and invited guests debated what fiscal reform would mean for business in the region.

Panellists agreed that the lower oil price is not a problem for GCC counties as they have more than $2.5 trillion in reserves and very low percentages of debt. However, for long-term economic sustainability, GCC countries must continue, and accelerate diversifying their revenues.

Panellists agreed that imposing tax is the best solution for GCC countries to broaden revenues as other approaches, such as cutting subsidies or spending, will be difficult to implement at this stage.

Michael Armstrong, FCA and ICAEW regional director for the Middle East, Africa and South Asia (MEASA), said: “There is growing international focus on taxation. Countries are looking for more information on multinational companies who are shifting their profits to countries with lower tax rates. Now is therefore a perfect time for GCC countries to start levying taxes. This will be in step with international trends and will also help to diversify revenues.”

Speakers said that GCC countries have been discussing a common tax framework for the past 10 years, which is now reaching its final stages. Based on the core principles of the framework, each country will have the choice to implement its own tax legislation and system.

Panellists explained that value added tax (VAT) is a viable option — and some form is expected to be introduced in the near future. This could be at a 3-5% rate initially, but there are likely to be some exceptions to the levy. If introduced, VAT could generate up to 4-5% of GDP. Speakers also noted that countries most likely to impose VAT are the UAE and Oman. Other GCC countries are likely to follow, although Qatar is unlikely to introduce taxes at this stage.

However, speakers agreed that the GCC countries are not ready to start imposing taxes right now as they are currently at different stages of preparation. The biggest challenge they are facing is resources, both in terms of infrastructure and expertise. Finally, panellists warned that if the tax systems were not well designed there would be the potential for aggressive tax avoidance as has been seen in some countries in the West.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

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.

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

NewBase 17 November 2015 K. Al Awadi


