New base 573 special 01 april 2015

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NewBase 01 April 2015 - Issue No. 572 Khaled Al Awadi

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

UAE nuclear safety plan given mixed progress report The National + NewBase

The International Atomic Energy Agency (IAEA) gave the UAE’s nuclear safety plan a mixed report card following an 11-day review by a team of international inspectors.

The UAE has been looking to get an early clean bill of health from the UN’s nuclear watchdog as it progresses towards becoming the first country in the region to add nuclear to its energy mix, with the first units at Barakah, located about 280 kilometres south-west of Abu Dhabi city, slated to begin operation in late 2017.

“The UAE has built its nuclear emergency preparedness and response programme in an effective way on the basis of an already strong national infrastructure for crisis and emergency management,” Raoul Awad, the head of safety at Canada’s nuclear regulator, who headed the IAEA’s mission, said.




“The partnership between the National Emergency Crisis and Disasters Management Authority, the Ministry of Interior, the Federal Authority for Nuclear Regulation and the Emirates Nuclear Energy Corporation is key to the success achieved thus far,” Mr Awad added.

In its report, the IAEA praised various aspects of the UAE’s safety plan, particularly its unique co-location of onsite and offsite emergency operations centres at Ruwais, near Barakah.

This is in apparent recognition of the lessons learnt from previous nuclear accidents, especially the disaster at Fukushima, Japan, four years ago, when the risks to citizens came from evacuation rather than directly from damage to the nuclear units.

The UAE approach “can greatly enhance the effectiveness of the cooperation between the operator and the offsite emergency management authorities, a key to the success of any emergency response”, the IAEA report said.

However, it also said there was room for improvement.

Specifically, the IAEA was concerned about arrangements to protect and inform the public, as well as the training of safety staff in various relevant agencies.

Despite the shortcomings, the UAE is on track to have its safety arrangements in place well before other countries that have gone down the nuclear road, said a UAE nuclear official, who did not want to be quoted.

He noted that a previous IAEA mission in February highlighted the rapid progress on another key safety regime – the Integrated Regulatory Review Service – which was nearly complete. India, which has an advanced nuclear programme, just completed its IRRS last week.

The UAE’s nuclear programme is being closely watched as the first due to come onstream in the region, where dozens of nuclear plants are at various stages of planning.

The first of the four South Korean-designed plants in Barakah is due to be operational in 2017, with the others coming on every subsequent year to 2020, when total capacity is expected to be 5,600 megawatts.




Oman Oman’s oil refiner plans pet coke storage facility Oman Observer + NewBase

Oman Oil Refineries & Petroleum Industries Co (Orpic), the Sultanate’s refining and petrochemicals flagship, will invest in facilities for the handling and storage of petroleum coke (pet coke), large quantities of which will be produced upon the completion of the multibillion dollar Sohar Refinery Improvement Project.

A byproduct of the oil refining process, petroleum coke is typically used as a source of energy, or as a source of carbon for industrial applications. Fuel grade pet coke represents nearly 80 percent of worldwide production and is a source of fuel for cement kilns and electric power plants. Calcined pet coke has the highest carbon purity and is used to manufacture energy, as well as in the aluminium, graphite electrode, steel, titanium dioxide and other carbon consuming industries. Given the significant commercial benefits to be derived from the export of pet coke, Orpic is setting up an elaborate handling and storage system that will allow for Sohar refinery’s output of this commodity to be exported via Sohar Port. International engineering firms with experience in setting up pet coke storage facilities are expected to compete for Orpic’s contract to construct a Pet Coke Handling and Storage Facility at Sohar Port. The successful bidder will secure a contract for the detailed design, engineering, procurement and supply of materials, installation and construction, testing and commissioning of the facility. At the heart of the new facility is a pair of concrete silos with a combined capacity to hold 60,000 metric tonnes of pet coke. Tipper trucks laden with pet coke from the refinery’s Delayed Coke Unit (DCU) will travel the short distance from the refinery complex to the storage site and discharge their load into a receiving hopper. From the hopper, a belt feed and conveyor system will transfer the pet coke into the silos. For exports, pet coke from the silos will be fed into specially designed containers with openable bottom mechanisms. Flatbed trucks carrying these containers will shuttle from the storage site to the General Cargo Terminal operated by C Steinweg Oman where cranes will lift the containers and discharge their contents into the holds of a waiting ship. The empty container is then returned to the flatbed truck which then heads back to the silos to collect another load. A typical 40,000-tonne shipment of pet coke takes around 48 hours to load, according to Orpic. Following the completion of its expansion and modernisation, Sohar Refinery will be upgraded into a high conversion refinery with the majority of products being high value transportation fuels or petrochemical feedstock. Crude oil refining capacity will be ramped up from the present 116,400 barrels per day (bpd) to 198,000 bpd). The higher crude throughput will also boost yields of diesel (90 per cent), gasoline (37 per cent), jet fuel (93 per cent), LPG (91 per cent), naphtha (175 per cent) and propylene (44 per cent). The upgraded refinery is due for commissioning in 2016.




Egypt: Apache reports strong results from discoveries in Western Desert A[ache Corp + NewBase

Apache Corp on Tuesday reported strong appraisal and development-drilling results from Egypt

following the previously announced discovery of two new oil fields in the Western Desert. The

initial discoveries were announced with the fourth quarter 2014 results on Feb. 12, 2015.

Development leases were approved by the Egyptian General Petroleum Corporation (EGPC) and

Ministry of Petroleum in record time, taking only 13 days from submission of the development plan

for Berenice, and only six days for Ptah.

The Berenice and Ptah fields are located in the Faghur Basin along the same fault trend in the Khalda Offset Concession. Exploration and drilling efforts are targeting rock from both the Mesozoic and deeper Paleozoic eras. These targets are a primary focus for Apache Egypt and have proven successful in this area with oil and gas discoveries made at the nearby Shu-1X, Apries-1X, Bat-1X and Geb-1X wells, although Ptah is the largest new field found in the play thus far.

Five wells, including the discovery wells, have been completed to date by Khalda Petroleum Company, Apache's joint-venture company with EGPC. All five wells are producing without the need for fracture stimulation at a combined rate of more than 13,600 barrels of oil per day (bbl/d) with first production starting in November 2014. The wells have produced approx. 1 million barrels of oil to date. Apache has invested $14 million to install production facilities and plans to invest another $35 million to handle the forecasted production increase.

Apache currently has three rigs operating in these two fields to drill development wells. All oil is being shipped via pipeline to nearby Khalda-operated processing facilities. Apache plans to continue increasing production from the two fields to 17,500 bbl/d by mid-year.




Berenice Field

The Berenice field started producing light oil from the Cretaceous-aged Alam El Buieb formations (AEB-3D and AEB-3E) in November 2014. Three wells are currently producing more than 9,500 bbl/d from a 700-acre drainage area with pay zones that range between 38 feet and 142 feet. Apache has a drilling rig dedicated to the field, which is currently drilling the Berenice-4 and will then continue on to the Berenice-5. The Berenice-4 contains a 142-foot oil pay zone in the target AEB-3D/-3E sandstones with excellent reservoir quality. Up to four additional wells are planned during the first phase of development. Drilling depth is approx. 12,000 feet with completed-well costs expected to average approx. $3 million for each of the development wells.

Ptah Field

The Ptah field started producing light oil from the

Paleozoic-aged Shiffah Formation in December 2014. This field also has substantial target zones logged in the

AEB-3D/-3E formations that have yet to be tested. In the Shiffah, the field discovery well (Ptah-1X) is currently producing 2,350 bbl/d and a second well (Ptah-3X) started

production in March 2015 at a rate of 2,000 bbl/d. Shiffah pay zones have averaged 130 feet while the AEB-3D/-3E formations yet to be completed have logged an average net oil pay section of 65 feet.

Further appraisal drilling and AEB-3D/-3E production testing will be conducted with the Ptah-4X and Ptah-6 to further define the field size and reserves. Drilling depth to the deeper Shiffah is approx. 13,800 feet, while the AEB-3D/-3E targets average a depth of 11,000 feet. Completed-well costs are expected to average around $3.7 million for Shiffah wells and $2.5 million for the AEB-3D/-3E wells.

'These recent discoveries demonstrate the inventory and upside potential Apache enjoys in Egypt,' said Apache Egypt Country Manager Tom Maher. 'By applying new technologies and advanced 3-D imaging by an integrated team, we have gained a better understanding of the Western Desert petroleum system. This has allowed us to uncover new, deeper targets in areas where we have been operating for years. These recent discoveries, coupled with several other exploration activities currently underway, highlight the significant opportunity we have for greater development of our 6.7 million gross acres.'




Egypt: Crescent Group looking at Egypt’s gas sector Gulf News+NewBase

Crescent Group, the Sharjah-headquartered conglomerate, is exploring opportunities in Egypt’s gas sector, a board member said in Dubai on Tuesday. “We, as Crescent, are looking at opportunities in Egypt directly,” board member Neeraj Agrawal told Gulf News at the Annual Investment Meeting.

The group has an indirect presence in Egypt through subsidiary Crescent Petroleum, the single largest private shareholder in Dana Gas, which is investing $30 million (Dh110 million) in Egypt over the next 30 months.

“We’re at the stage where we’re looking at specific projects in Egypt in the hydrocarbons sector,” Agrawal said. “And it’s no more sitting in the office. We’re looking specifically at a few things,” he added.

Agrawal declined to reveal details relating to the projects the group is looking at. When asked when the company would announce the projects, he said “it will be challenging to set a timeline.”

Egypt is witnessing a resurgence among foreign investors who are looking at the most populated Arab nation in a new light after four years of instability since the revolution that resulted in the overthrow of President Hosni Mubarak in 2011.

“Egypt is the cusp of a transformation,” Agrawal said. However, ongoing issues regarding payments to international energy firms continue to be problematic.

“We’re looking at projects we’re we can get comfortable [and] where feel we’re going to get paid,” Agrawal said in reference to the millions of dollars owed to Dana Gas by the Egyptian government.

Egypt has delayed payments to oil and gas firms as its economy struggles to rebound. Last month, the government said it will repay the remaining $3.1 billion owed to foreign oil and gas firms by mid-2016.

Saudi Arabia

Meanwhile, the group wants to expand its port terminal operations in Saudi Arabia with a view to make them integrated, Agrawal said. Crescent operates terminals in Jeddah and Jubail through subsidiary Gulftainer, of which Agrawal is also an executive committee member.




Netherlands : Taqa hails Bergermeer gas project milestone Source TAQA + NewBase + The National

Abu Dhabi National Energy Company, known as Taqa, said its huge gas storage project at Bergermeer in the Netherlands, had reached a milestone and would start filling tanks with customers’ gas on Wednesday.

The project is a key plank for Taqa – which reports annual results on Wednesday – in its strategy to focus more on steady cash-earning projects and move away from riskier upstream investments, where it lost heavily in recent years.

“Gas Storage Bergermeer is the largest project ever undertaken in our history,” said Edward LaFehr, Taqa’s chief operating officer. “As a midstream asset, it is core to our strategy to increase shareholder value by shifting our portfolio towards a better risk-return balance, familiar to us from our power and water assets.”

The total project investment was about €850 million (Dh3.35 billion). Taqa holds a 60 per cent stake in Gas Storage Bergermeer and is the operator. It will also act as the marketing agent for all storage capacity that is available for third parties.

EBN, a Netherlands state-owned company, which operates independently, holds a 40 per cent stake.

Located near the city of Alkmaar, Gas Storage Bergermeer consists of the depleted Bergermeer gas reservoir, an asset acquired when Taqa bought the Dutch assets of BP in 2007. As well as storage, there is a gas treatment facility and the connecting pipeline network.

Work on the project started in 2007 and Taqa had to overcome strong objections from local residents and politicians, particularly over worries that it might cause man-made earth tremors, which had occurred four times during its gas-producing years.




But the project won backing from influential Dutch officials as it is of strategic importance to the country in its own energy plans.

The facility is Europe’s largest open access gas storage and nearly doubles the Netherlands’ gas storage capacity. That helps the country realise its objective to be north-west Europe’s most important natural gas hub – the government’s so-called “gas hub” strategy, which includes construction of a vast web of connective pipelines to take advantage of the European Union’s liberalising gas market.

Taqa said that the facility, which has storage capacity of 4.1 billion cubic metres, equivalent to the average annual gas consumption of 2.5 million Dutch households, is fully contracted for the 2015-16 storage season, which runs from the start of this month to the end of next March.

Taqa will auction capacity for the 2016 storage season in September. The facility’s launch customers include EDF, Gazprom, Statoil and Vattenfall.

“The successful launch of Bergermeer is a demonstration of our renewed and strengthened focus on efficiency and operational excellence,” said Saeed Al Hajeri, Taqa’s chairman. “It will improve the security of energy supplies for the European people for decades to come.”

Taqa is keen to highlight the progress at Bergermeer as it deals with problems elsewhere, particularly its exposure to the oil price slump.

The company has improved its

operational performance

under Mr LaFehr, who took over from the former chief executive Carl Sheldon in April last year, with oil and gas

production hitting a record of nearly 160,000 barrels of oil equivalent per day in the third quarter.

But Taqa reported

revenues in the three months to the end of September down by about 6 per cent from the year earlier at just under Dh7 billion, with attributable profit down 27 per cent at Dh107 million, as lower oil prices began to hit the bottom line.

Oil prices have since fallen by another 45 per cent and investors are bracing for the company’s fourth quarter results..




Denmark: Maersk announces first production from the new

unmanned platform Tyra Southeast-B. Source: Maersk Oil

Maersk Oil has announced that production has started from the new unmanned platform Tyra Southeast-B, safely, on time and on budget. The platform is expected to add reserves of 50 million barrels of oil equivalent (BOE) over the next 30 years to Danish production.

'The Tyra Southeast

extension is a great example of how we extract value from the Danish North Sea by combining

intricate knowledge, long-term investments and the right

technical capabilities. Over the next three decades, the new platform will add both oil and gas to our production. This is an

important step in Maersk Oil’s growth journey and it demonstrates that Denmark continues to be a core area for us,' said Maersk Oil CEO Jakob Thomasen.

The drilling of the first well commenced in December 2014 from the Ensco 72 drilling rig. From this well alone the production is expected to be 2,600 boepd. The plan is to drill a total of 8-12 horizontal wells during 2015-2017 with each well being about six kilometres long.

'We are excited to see first production which will contribute positively to Maersk Oil’s total volumes. The initial planning began four years ago, culminating with the final construction and installation mid-2014. In total, the Danish Underground Consortiumhas invested DKK 4.5 billion and it is exactly such investments that are needed to secure the future Danish oil and gas production,' said Martin Rune Pedersen, Managing Director of Maersk Oil Danish Business Unit, the operator of the Danish Underground Consortium (DUC).

The new platform, located 220 kms off Denmark’s west coast, will produce a mixture of oil and gas and is expected to deliver approx. 20 million barrels of oil and 170 billion standard cubic feet of gas, combined reserves and resources of 50 million BOE, with peak production in 2017 of 20,000 boepd.

The total investment in the Tyra Southeast expansion of DKK 4.5 billion includes the platform with a total weight of 4,700 tonnes, pipelines and drilling of the wells. The jacket (legs) and topside were constructed by Bladt Industries, a Danish contractor located in Northern Jutland. The investment is the largest made by Danish Underground Consortium since the approval of the Phase IV development of Halfdan in 2007.




Myanmar:Eni signs PSC for the exploration of two blocks

Source: Eni+ NewBase

Eni, following its participation in the competitive International Bid Round launched by

the Republic of the Union of Myanmar, signed two Production Sharing Contracts (PSC) for

offshore blocks MD-02 and MD-04.

The contracts were signed in Nay Pyi

Taw, in the presence of the country’s

Energy Minister. The Joint Venture is

between Eni, the Operator with an

80% participating interest through Eni

Myanmar, and Petrovietnam

Exploration Production Corp (20%).

MD-2 Block is located in the southern part of the Bay of Bengal, in the Rakhine Basin, approx. 135 kms from the coast, west of the Yadana field, the major offshore discovery in Myanmar. The Block covers an area of 10,330 sq kms in water depths ranging from 500 to 2400 metres. MD-4 Block is located in the Moattama-South Andaman Basin, approx. 230 kms from the coast, west of the Yetagun gas field. The block covers an area of 5,900 sq kms in water depths ranging from 1,500 to 2,200 metres.

'With the contracts signed today, we have further expanded our exploration portfolio through new and important opportunities, which allow Eni to strengthen its presence in a Country with a significant potential and a rapidly developing economy. Today we become one of the largest operators in the exploration activities in Myanmar, taking a further step in our organic growth strategy in

Southeast Asia where we are already present in China, Vietnam and Indonesia', Eni’s CEO Claudio Descalzi said.

The contracts for the two blocks foresee a study period of two years, followed by an exploration period of six years, subdivided in 3 phases. Eni entered Myanmar in July 2014, signing the Production Sharing Contracts for the exploration of two onshore Blocks, RSF-5 and PSC-K, located in the prolific Salin Basin and the unexplored Pegu Yoma-Sittaung Basin, respectively.




India Cuts domestic Gas Price by 8% to $ 4.66 India on Tuesday reduced the price of domestically produced natural gas by 8 percent to $4.66 per mmBtu. Petroleum Pricing and Analysis Cell (PPAC), pricing wing of India’s oil ministry, said gas will cost $4.66 per mmBtu from April 1 to September 30 on gross clarofic value basis (GCV) as opposed to $5.05 per mmBtu currently.

On net clarofic value (NCV) basis, the rate would be $5.1726 or $5.18 as compared to $5.61 currently.

"In accordance with Para 8 of the 'New Domestic Natural Gas Pricing Guidelines, 2014' issued by Ministry of Petroleum and Natural Gas, Government of India, the price of domestic natural gas for the period April 1, 2015 to September 30, 2015 is given hereunder: $4.66 per mmBtu on GCV basis," PPAC said in a statement.

The new rates are as per the formula approved by the government in October last year. The rates were raised to $5.61 per mmBtu from $4.2 per mmBtu effective November 1, 2014.




Oil Price Drop Special Coverage

Oil markets react negatively to Iran nuclear talks

Oil prices went down by more than two per cent on Tuesday as Iran held discussions with six major world powers over easing of sanctions related to its controversial nuclear enrichment programme.

Brent, the international benchmark for crude oil was trading around $55 (Dh202) per barrel at around 6pm. Analysts said they are waiting for an official announcement to understand where the oil prices are headed to.

“At the moment oil prices are reacting negatively to the talks. In the morning, oil prices went decreased

by more than two per cent as the negotiations began and went up slightly later in the day,” said Dominic Haywood, an oil analyst from Energy Aspects in London.

“If there is an official announcement, we might see a jump or decline in oil prices by two dollars,” he added. Iran, one of the major oil producers was put under sanctions since more than a decade due to its nuclear ambitions.

In its daily update on oil prices, Asiya Research investments said oil prices extended their losses as the Iran nuclear deal is expected to be finalised, which could lift sanctions on Iran. It said Oil WTI declined 1.4% to $48 a barrel, and Brent price fell around 1.0% to $55.8 a barrel.

Oil prices have been dropping for the past few months due to

oversupply and weak demand. From a peak of $115 in June last year, oil prices reduced to less than $50 in January. Organisation of the Petroleum Exporting Countries (Opec), which met in Vienna last year refused to cut production to prop up prices. Analysts predicted volatility to continue all through the year owing to weak demand.




OPEC output hits highest since Oct. Reuters + NewBase

OPEC oil supply has jumped in March to its highest since October as Iraq’s exports rebounded after bad weather and Saudi Arabia pumped at close to record rates, a Reuters survey found, a sign key members are sticking to their effort to regain market share.

The increase from the Organization of the Petroleum Exporting Countries adds to excess supply in the market, despite some signs that the halving of crude prices since June 2014 is encouraging higher oil demand. OPEC supply has risen in March to 30.63 million barrels per day (bpd) from a revised 30.07 million bpd in February, according to the survey based on shipping data and information from sources at oil companies, OPEC and consultants. “Demand might be a bit stronger than expected at the beginning of the year, but I don’t think it is strong enough to absorb the entire oversupply,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. “There’s still oversupply in the market, which is reflected in the inventory builds.” The main reasons for the rise are the resolution of involuntary outages – Iraq lifted exports due to improved weather and Libya managed to nudge production higher despite unrest. If the total remains unrevised at 30.63 million bpd, March’s supply would be OPEC’s highest since 30.64 million bpd in October 2014, based on Reuters surveys. OPEC holds its next meeting in June, and comments from OPEC officials suggest it will not alter the policy. In March, the largest increase has come from Iraq, whose southern oil exports recovered following bad weather that delayed tanker loadings, according to shipping data and industry sources. Northern exports were slightly lower. Based on this survey, Iraq’s exports have come close to December’s record high of 2.94 million bpd, depending on whether tankers at the southern ports on earlier on Tuesday actually depart in March. Iraq was hoping to reach 3 million bpd of exports this month. Saudi Arabia has increased output to within a whisker of 10 million bpd on average in March, sources in the survey said, due to higher demand from export customers and an increased local requirement in new oil refineries. “The Saudis say they are responding to higher demand and I tend to believe that, looking at the strong refining margins in Singapore,” said an oil consultant. Margins are well above the annual average in Asia, which buys the bulk of Saudi Arabia’s exports. Saudi Oil Minister Ali Al-Naimi said on March 22 output was “around” 10 million bpd. The highest known Saudi output is 10.05 million bpd in 2013, according to figures from the US Energy Information Administration.




More Iranian oil for Asia may hurt Iraq Reuters + NewBase

A possible surge in Iranian oil exports from an end to sanctions will reboot a struggle between top Middle East producers for Asian buyers, with Iraq looking the most vulnerable. The latest twist to the saga of aggressive marketing is the world oil glut and low prices, likely to fall more with added Iranian crude, making Tehran’s battle for market share tougher.

“You cannot produce without demand. There is a limit in any market and also long-term contracts between Gulf oil producers and Asian refiners,” said a Gulf oil source. “That’s why it is hard to imagine big volumes just eating into the market share just like that. Even if the Iranians offered discounts and sold on the spot market, there is a limit.” Under sanctions Iran became adept at offering discounts, easy credit and free shipping to keep in the game, recalling Iraq’s tactics to re-enter the market after the fall of Saddam Hussein. Baghdad’s position remains arguably more tenuous than the established might of top oil exporter Saudi Arabia.

State oil giant Saudi Aramco has also been slashing its prices for its crude to Asia. Fellow Opec members Iraq and Kuwait have followed suit. “Everyone is after market share,” said an Iraqi oil source. “Iraq is the one who is disadvantaged as it is trying to place new volumes and take new market share. If Iran would start to return it is almost inevitable that there would be some form of price war between them,” said Samuel Ciszuk, senior adviser on security of supply to the Swedish Energy Agency. “You want to have the bulk of reliance by suppliers that are seen as much more stable,” he added. “The Gulf states have a natural edge in that, they would not have to sell their crudes at a discount like the Iraqis or the Iranians.” International negotiators are still working out details of the deal on Iran’s nuclear programme, but it would almost certainly lift sanctions only in stages, deferring even a partial return of Iranian crude exports until at least 2016. Sanctions have halved Iran’s oil exports to just 1mn barrels per day from 2.5mn bpd in 2012. Sources familiar with Iranian oil policy say other Opec members have benefited by taking more market share when Tehran’s crude exports fell and expect them to make room for Iran, when sanctions against it end. Big Asian refiners, some with plants used to dealing with Iranian oil grades, see themselves buying more from Tehran if sanctions hurdles are removed. They remain customers but the scale of their purchases has been limited by logistical, insurance and diplomatic factors linked to sanctions.




China is the main buyer of both Iraqi and Iranian crude. “If they reach a consensus on the nuclear issue... and the US, the West relax controls on Iran’s oil sales, I believe China’s crude imports from Iran will increase,” Wang Dongjin, vice chairman and president of PetroChina, said on Thursday.

“If that happens, it will provide more bargaining power to China in terms of importing oil from the entire Middle East,” he said. However, with Chinese demand growth slowing and its storage tanks near full, the room for a sharp increase in Iranian supplies is limited. The Petrochina boss said he expected crude imports from Iran this year to stay “roughly the same” as in 2014. Iranian oil exports to China has been near pre-sanction levels at around 550,000 barrels per day since last year. Earlier this month, Iran’s oil minister said Tehran was ready to increase oil exports by up to 1mn bpd when sanctions are lifted. But market experts and Gulf Opec sources estimate an increase in production ranging from 200,000 – 600,000 bpd within six months after a conditional and gradual lifting of economic sanctions, and do not see a full return of Iranian crude until the second half of 2016. Iran already has more than 20mn barrels in floating storage ready to be sold and has leased crude storage facilities in Asia. India’s state refiner Hindustan Petroleum Corp has said it can replace some Iraqi oil it buys through France’s Total, with Iranian crude if terms offered are better. “I will definitely consider Iranian oil based on economics. If current terms and conditions are retained then we may buy,” said BK Namdeo, head of refining at HPCL. Vijay Joshi, head of refinery operations at India’s Mangalore Refinery and Petrochemicals Ltd (MRPL) said: “We would like to lift more and more heavy crude from Iran as that suits my refinery configuration.”




The Saudis Are Losing Their Lock on Asian Oil Sales Bloomberg + NewBase Ships carrying oil from Mexico docked in South Korea this year for the first time in more than two decades as the global fight for market share intensifies.

Latin American producers are providing increasing amounts of heavy crude to bargain-hungry Asian refiners in a challenge to Saudi Arabia, the world’s largest exporter and the region’s dominant supplier.

“By diversifying, more Asian refiners will be able to reduce the clout that Saudi Arabia has on the market,” said Suresh Sivanandam, a refining and chemical analyst with Wood Mackenzie Ltd. in Singapore. “They will be getting more bargaining power for sure.”

The U.S., enjoying a surge of light oil from shale formations, has raised imports of heavy grades from Canada, displacing crude from nations such as Mexico and Venezuela. That’s boosting South American deliveries to Asia even

after Saudi Arabia cut prices for March oil sales to the region, its largest market, to the lowest in at least 14 years.

The shale boom also has transformed the flow of oil to Asia. South Korea received its first shipment of Alaskan crude in at least eight years as output from Texas and North Dakota displaces oil that fed U.S. refineries for years. The country was one of the first to receive a cargo of the ultralight U.S. crude known as condensate after export rules were eased. Brazilian Shipments Petroleo Brasileiro SA and partner operators are also shipping to Asia and were scheduled to load nine tankers bound for the region in March, according to Energy Aspects Ltd., as Latin American oil’s discount to Middle East benchmark Dubai widens to almost double the average of the past year.

Asian-Pacific refiners are forecast to add 5.4 million barrels a day of capacity in the next five years, according to Gaffney, Cline & Associates, a petroleum consultant. Many of the new plants are being built to process cheaper oils to increase margins, raising demand for heavier crudes from Latin America, said Ehsan Ul-Haq, a consultant with KBC Energy Economics in London. Saudi Arabian Oil Co. declined to comment. The state oil company, known as Saudi Aramco, shipped 53.8 percent of its 2013 oil exports to Asia, according to the company’s latest annual report. It may be keeping more heavy oil for its new Yanbu and Jubail refineries, according to Ul-Haq and Sivanandam. Once Yanbu is fully operational this year the two plants will have a combined capacity of 800,000 barrels a day.




Less Heavy “There is less and less heavy crude coming from Saudi Arabia,” said Ul-Haq. “They are using more and more of it in their own refineries.”

Latin American crude exports to Northeast Asia are increasing, analysts including Erik Nikolai Stavseth at Oslo-based Arctic Securities ASA said in a March 12 note. Crude shipments to China in March are estimated at as much as 6.8 million barrels a day, up from “strong” February deliveries of 6.69 million, the analysts wrote, citing industry sources.

South Korea’s imports from Colombia, Ecuador and Bolivia surged to about 8 million barrels last year from just 329,000 in 2013, according to data from state-run Korea National Oil Corp.

Petroleos Mexicanos, the national oil producer, sold its Isthmus light crude in February to Asian buyers at $7.85 a barrel below the average of the benchmark Oman and Dubai grades. That was the biggest discount since at least 1995, data compiled by Bloomberg show. The discount for its Maya heavy grade in January was the most in six years.

Chinese Demand West Texas Intermediate for May delivery fell 22 cents to $47.38 a barrel in electronic trading on the New York Mercantile Exchange at 12 p.m. Singapore time. Brent lost 8 cents to $55.03.

China Petroleum and Chemical Corp.’s Yangzi refinery in the country’s east processed Brazil’s Lula oil for the first time on March 15, the company said on its website on March 30.

Hyundai Oilbank Co., which operates the Daesan refinery in South Korea, ordered at least four shiploads of oil from Mexico for delivery this year.

Essar Oil Ltd., which operates a 400,000-barrels-a-day refinery in western India, gets about 35 percent of its crude from Latin America, Chief Executive Officer Lalit Kumar Gupta said by phone March 12 from Mumbai.

Essar and Mumbai-based Reliance Industries Ltd. are among Indian refiners who started importing Talam, a Mexican heavy crude, this year, according to tanker-tracking data compiled by

Bloomberg.

Asia will account for two-thirds of the increase in global oil demand this year, according to the Paris-based International Energy Agency, which advises 29 nations. Daily consumption of 31.2 million barrels will take the region above the Americas at 31.1 million barrels.

Latin American producers are seeking to diversify and capture some of that Asian growth, said Victor Shum, a Singapore-based vice president at IHS Inc. “They want to get a slice of the market,” he said.




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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.

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NewBase 01 April 2015 K. Al Awadi







Economy & Finance

New base 573 special 01 april 2015