New base 580 special 12 april 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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NewBase 12 April 2015 - Issue No. 580 Khaled Al Awadi

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

GCC countries urged to invest in nuclear, solar energy to lessen dependence on oil

Gulf countries should invest in nuclear and solar energy to cushion the impacts of growing domestic oil consumption costs for power generation and water desalination, an industry expert said.

Dr Mamdouh G Salameh, director of the Oil Market Consultancy Service, made the statement in a forum entitled “The Iranian Nuclear Agreement: Regional and Global Repercussions” organised by the Arab Centre for Research & Policy Studies at the Ritz-Carlton Hotel in Doha yesterday. In his presentation, Salameh said, “Arab Gulf countries consumed 6 million barrels per day (mbpd) of oil or 31% of their oil production to generate electricity and power water desalination plants.” He noted that there are currently 199 desalination plants of varied

capacities in the Gulf Co-operation Council (GCC) region. Most of these desalination plants are powered by oil, and there are plans to add 38 more facilities in the future, Salameh added. “This means that the GCC countries will have to cut their domestic oil consumption drastically or replace oil by nuclear power and solar energy in electricity generation and water desalination. “Failing to do either would result in their relegation to minor crude oil exporters by 2030 or ceasing to remain oil exporters altogether by 2032,” Salameh stressed. According to Salameh, “Arab Gulf countries could be a formidable economic bloc” with proven reserves of 645bn barrels or 39% of the world’s proven reserves and a combined GDP exceeding $1.9tn (at current prices). “Their Achilles heel is their continued dependence on the oil export revenues to the tune of 85% to 90% and their vulnerability to any decline in oil prices.

“However, the greatest threat to their oil-dependent economies actually comes from the steeply-rising domestic oil consumption for power generation and water desalination and a lack of diversification,” Salameh explained. To prevent this, he stressed that Gulf countries should accelerate the diversification of their economies. Speaking to Gulf Times on the sidelines of the event, Salameh further explained that diversification “also means heading towards that direction as a unit and not as a single GCC




country. All of them must go together because that gives them more strength.” Salameh clarified that his definition of diversification does not refer to industrialisation or “investing in hotels, casinos, and real estate.” Instead of competing with leading industrial nations, he suggested that Gulf countries should invest in food production projects in countries like Sudan by transforming it into the region’s food basket. “The world is already heading towards a future food shortage on a global scale. In the future, food prices could rival, if not, exceed those of crude oil. “Why not then invest in Sudan, which has the land and water resources not only to become the food basket of GCC countries but also a great source of food export revenues for them,” Salameh said. Asked for other suitable countries for food security,

Salameh cited China and North Korea as some of the countries that have already invested on agricultural lands in Africa. “But Sudan is an Arab country. It is a poor country but at the same time, it has the third biggest Arab land in the world with a good source of water from the Nile River, making it the ideal place for Arabs to invest in food security,” Salameh added.




Pakistan Grants Five Year Tax Holiday for LNG, Gas Import Projects Natural Gas Asia + NewBase

Pakistan’s Economic Coordination Committee (ECC) on Thursday extended five year tax holiday for LNG and gas import projects, reported local newspaper The News International. ECC also extended 23-year tax holiday for Gawadar Port by giving it the status of Gwadar Port free zone as requested by China Overseas Port Company Ltd.

Other decision that the ECC took was that Pakistan’s Oil and Gas Regulatory Authority (OGRA) would determine the price of LNG on a monthly basis without going through the process of public hearing, the newspaper reported.

Earlier this month, Pakistan received its first ever shipment of LNG from Qatargas. Qatar sold the LNG cargo to Pakistan State Oil Company Limited (PSO), Qatargas announced on April 4.

The LNG cargo was sold on a free-on-board basis and loaded at Ras Laffan Port on to the LNG vessel Excelerate Exquiste on 21 March 2015. The cargo was secured to commission the Excelerate Exquiste, the Floating Storage and Regasification Unit, a part of the Elengy LNG terminal which is the first Pakistan LNG import terminal, Qatargas said.

Also, China Petroleum Pipeline Bureau (CPP) is soon expected to begin laying 700 km Gwadar-Nawabshah gas pipeline in Pakistan on government to government basis. CPP would bring the required capital of $1.5 billion and will also construct the LNG terminal in Gwadar, costing $800 million. The terminal, which is likely to be offshore, will have a capacity of 500 mmcfd of LNG.

KARACHI: A shipment of 147,000 cubic feet of Liquefied Natural Gas (LNG) from Qatar arrived at the Karachi anchorage today in a Floating Storage Regasification Unit (FSRU). The FSRU, after going through clearance, is expected to dock at Engro Corporation's Elengy Terminal Pakistan Limited (ETPL), where the cargo will undergo 'regasification' before being injected into the Sui Southern Gas Company Ltd (SSGCL) network. The FSRU will take approximately five hours to reach the terminal, and will begin offloading the cargo at 6:30pm this evening, an official said.




Equatorial Guinea:WorleyParsons chosen as for FLNG Ophir + NewBase

WorleyParsons said it has been awarded by Ophir Equatorial Guinea (Block R)

an agreement for provision of engineering and project management services for their

Equatorial Guinea Block R project (The Fortuna project).

Also awarded by Ophir Holdings is a master services agreement to provide engineering support to any of Ophir’s worldwide assets, Worley Parsons said in a statement.

Block R is a gas development located offshore Equatorial Guinea 140km southwest of Bioko Island and covers an area of 2,450 sq. km with water depths ranging from 1400m to 1900m. Ophir and its partners are planning to develop the gas reserves through phased installation of a 20 well subsea production system supplying dry gas to a locally moored FLNG facility with a capacity of 3 MTPA.

The scope of engineering and project management services provided by WorleyParsons and its specialist deepwater division, INTECSEA, includes overseeing the front end engineering and design scopes and tendering and evaluation of related engineering, procurement, construction, installation and commissioning packages.




Norway:Faroe Petroleum finds gas at Skirne East (Shango) Source: Faroe Petroleum

Faroe Petroleum has announced the results of the Total-operated Skirne East exploration well (Faroe 20%) in Norway. Highlights:

• The Total E&P Norge operated Skirne East exploration well 25/6-5S, in the Norwegian North Sea is a gas discovery, which encountered a net 10 metre gas column in the high quality Middle Jurassic Hugin formation

• The preliminary volumetric gross estimate of the size of the discovery is 3 to 10 million barrels of oil equivalent ("mmboe") recoverable (0.6 to 2.0 mmboe net to Faroe)

• The partnership will now consider the potential for development of the Skirne East discovery.

Exploration well 25/6-5S has encountered a net gas-bearing reservoir section estimated at 10m in the Middle Jurassic Hugin formation, confirming hydrocarbons at the same reservoir level as in the adjacent producing Skirne field. Reservoir properties were found to be excellent and

extensive data gathering has been conducted. The

preliminary resource estimate for the Skirne East discovery is in the range of 3 to 10 mmboe gross (0.6 to 2.0 mmboe net to Faroe). The Skirne East exploration well 25/6-5S spudded on 13 March 2015 and was drilled to a total depth of 2,366 metres below sea level. The Skirne East discovery in

Licence PL 627 is located in the Norwegian North Sea on the northern part of the Utsira High approx. 5 kms from the Total operated producing Skirne field. The partners are Total(40%), Centrica Resources Norge (20%) and Det norske oljeselskap (20%). The Skirne East exploration well will now be plugged and abandoned as planned. Graham Stewart, Chief Executive of Faroe Petroleum commented:

'We are pleased to announce the result of the Skirne East well which, although smaller than predicted, is a promising discovery particularly in light of the nearby Atla field which was recently developed with reserves within the resource range of the Skirne East discovery. During the coming months we expect to start drilling the first of two follow-up wells at the significant Pil discovery (Faroe 25%) on the Blink and Boomerang prospects, and also the Bister prospect to follow up on our recent significant Snilehorn discovery located close to the producing Njord field infrastructure.




UK: Iona Energy reports Huntington field ready for full ramp up

Source: Iona Energy

Partner Iona Energy, a Canadian independent oil and gas company with assets in the UK North Sea, has made the following operational update regarding production from the EON-operated Huntington field.

The Huntington field has been operating under gas export rate restrictions since October 2014 which has reduced the rate of oil production from the field. The Company has been advised by the Huntington field operator, EON, that the CATS operator has confirmed a resumption of normal operations. Management of Iona understands that different fields which use CATS are being brought on line. EON has confirmed to Iona that the Huntington field is ready for full ramp up when unrestricted access to CATS is made available. Iona will update the market when that occurs.

Iona's net production (Huntington 15%, Trent & Tyne 20%) for the first three months of the year is shown in the table below.

The increasing Huntington production rate over the 3 months period was delivered by two wells which were choked back to comply with prevailing restrictions. The availability of the Huntington FPSO has been excellent through the first three months of 2015.




Global Trends in Power Generation 2015-2035 (http://www.researchandmarkets.com/research/whkx9x/global_trends_in) has announced the addition of the "Global Trends in Power Generation" report to their offering. This research service explores the rising energy demand across the globe and analyzes the key

energy resources that will be increasingly used, up until 2035. It explores the drivers and restraints of key energy sources such as coal, gas, and renewables, and features a short discussion of the key geographical trends influencing the growth of the energy market. A brief snapshot of the utilization of gas plants

in Europe, focused mainly on the United Kingdom and Germany, is followed by a summary of the key findings of the top three energy resource markets, namely, coal, gas, and renewables. Gas will increasingly replace coal in OECD countries as commercial carbon dioxide capture and storage (CCS) is a long way off. In non-OECD markets, investment will be undertaken in both gas and coal. Oil is expected to be slowest growing fuel (heavy fuel oil [HFO] will be used as a reserve fuel in most countries) over the forecast period. Renewables are likely to exhibit strong growth across geographies. Key Topics Covered:

1. Global Trends in Power Generation - Executive Summary-Key Trends in the Global Economy - Executive Summary-Global Energy Consumption Snapshot Till 2035 2. Power Generation - Global Energy Demand Set to Grow Over the Next Decades - Gas Generation to Significantly Increase but Coal will Dominate up to 2030 - Power Generation-Installed Capacity Fuel Mix - Global Power Generation Fuel Mix 3. Coal Market - Drivers and Restraints for the Coal Power Market - Geographical Trends in Coal Generation 4. Gas Market - Drivers and Restraints for the Gas Power Market - Geographical Trends in Gas Generation - Low Utilization of Gas Plants in Europe - Declining Loads of Gas Plants-United Kingdom - Declining Loads of Gas Plants-Germany

5. Renewables Market - Drivers and Restraints for the Renewables Market - Geographical Trends in Renewable Market 6. Other Markets and Industries - Power Plant Financing is Becoming a Greater Challenge - Chinese Equipment and Finance Driving Success in Europe

For more information Visit http://www.researchandmarkets.com/research/whkx9x/global_trends_in




PetroChina Catches Exxon as World’s Most-Valuable Oil Company Bloomberg + NewBase

PetroChina Co. passed Exxon Mobil Corp. today as the biggest energy company by market value

for the first time since 2010.

As the attached chart shows, Exxon’s capitalization was $352.6 billion through yesterday, compared with PetroChina’s $352.8 billion as of 1:36 p.m. on Thursday in Shanghai. The Chinese company’s A shares surged about 61 percent the past year, versus Exxon’s 14 percent drop. PetroChina was larger by value most recently at the close of trading on June 25, 2010, data compiled by Bloomberg show.

The Shanghai Composite Index has gained about 88 percent over the past year, the best performance among major indexes tracked by Bloomberg, amid speculation the central bank will extend cuts in borrowing costs and on increased use of leverage to buy stocks. The Chinese yuan has declined 0.1 percent versus the dollar the past year even as most currencies weakened.

“PetroChina has multiple positives at the moment: it’s got a reform story, it’s also listed in Hong Kong, and China has more freedom for mainland fund managers in the works,” said Mark Matthews, head of Asia research and a managing director of Bank Julius Baer & Co. in Singapore. “China is also planning to transfer stakes in state-owned enterprises away from their regulator, which will on the whole be positive for SOEs.”

Earnings of both companies have been squeezed by the plunge in the price of oil. Exxon’s adjusted net income of $6.3 billion in the fourth quarter was the lowest since a loss in the final three months of 2009, according to data compiled by Bloomberg. PetroChina’s profit was 11.1 billion yuan ($1.8 billion) in the same period.

Almost all the operating profit in 2014 of PetroChina, which is 86.5 percent owned by state-controlled China National Petroleum Corp., came from the exploration and production sector, with small contributions from its natural gas and pipeline unit. The refining and chemicals unit had an operating loss last year.




Oil Price Drop Special Coverage aded

Iran’s return to market to delay oil price recovery Syed Rashid Husain + NewBase

With Iran and the West reaching an understanding on the nuclear issue, questions about impact of the deal on Iran’s crude output and the global energy balance continued to confound the pundits. Speculation is rampant, adeal would result in further softening of the crude markets. But the question is if yes, then, to what extent? If oil-related sanctions against Iran are lifted, world oil prices next year could be $5 to $15 a barrel lower than the current forecasts, the US Energy Information Agency is now saying. In its latest short-term energy outlook released last week, the agency left its current price forecasts unchanged, putting Brent at $59 this year and $75 a barrel next year underlining downside risks from Iran’s return. “A lifting of sanctions against Iran, should a comprehensive nuclear agreement be concluded, could significantly change the forecast for oil supply, demand, and prices,” EIA Administrator Adam Sieminski said in a statement. It added that Iran is believed to hold at least 30 million barrels of crude in storage, and that the nation could ramp up crude production by at least 700,000 barrels per day (bpd) by the end of 2016. Most analysts too agree that output would likely recover next year if and indeed when the sanctions are eased. Iran, the world’s fifth-largest oil producer, is claiming it could nearly double its exports from just

Brent oil prices traded last on end of day Friday

the 10th April 2015 at 57.9 U$D/B




over 1 million barrels per day (bpd), in two months once sanctions are lifted. Most analysts though are of the view; doubling the exports would take longer.

As per the International Energy Agency estimates, Tehran is currently producing 2.8 million bpd. Unconstrained by sanctions, however, it is of the view that Iran could increase that to 3.6 million bpd, in as few as six to 12 months. However, in order to go beyond 3.6 million bpd, it would need foreign investment. A decade ago, it was able to pump 4.5 million bpd and output peaked at about 6 million bpd in 1974. Consequent to the Washington-led sanction on Iran’s oil industry, however, Tehran’s oil exports was cut down by more than half to around 1.1 million bpd from a pre-sanctions level of 2.5 million bpd. Now with the possibility of the sanctions being lifted, Iran is looking to ramp-up its exports and rather quickly. Iran’s Oil Minister Bijan Zanganeh has been meeting Western oil executives discussing their return into the Iranian oil sector, once sanctions are lifted. The oil majors Zanganeh met in Vienna during his last Opec outing included Italy’s Eni, Royal Dutch Shell and Austrian oil and gas group OMV. In order to achieve its immediate objectives, Iran is also seeking to resolve differences with Chinese energy companies. Iranian officials were in China last week to discuss Chinese investments in oil and gas developments in Iran, as well as oil sales. Iran also wanted the Chinese companies to use the latest technology and equipment in any resumption of work to get fields pumping, Amir-Hossein Zamaninia, Iran’s deputy oil minister for commerce and international affairs was quoted as saying. The officials were soon followed by a visit to Beijing, the world’s largest crude importer, by Iranian Oil Minister Bijan Zanganeh, his first since assuming his post two years ago. This flurry of visits to Beijing from Tehran is to be seen in the backdrop of the fact that some of the enhanced output is expected to come from projects that the Chinese state companies China National Petroleum Company (CNPC) and Sinopec Group have contracted to develop.




China’s investments in Iran include projects such as the $4.7 billion development of the giant offshore South Pars gas field and the North Azadegan and Yadvaran oilfields. Activity on these developmental projects were stalled o r scaled back in late 2010 as Western sanctions tightened. Among oilfields Chinese companies have worked on, the Yadavaran project has progressed relatively well, with 95 percent of the work completed and the field, operated by Sinopec, ready from about September, Zamaninia added. He further said the field, in the southwestern province of Khuzestan, once developed will have a 75,000 bpd capacity in phase one. Sinopec agreed in late 2007 to a $2 billion deal to develop the field. CNPC, China’s top energy group, has an agreement to take on other projects, including a $2 billion contract to turn North Azadegan into a 120,000 bpd field. Iranian officials are now saying that CNPC, which pulled out of Iran’s giant South Pars natural gas field in 2012, now seems interested in returning to the offshore project. Iran was also China’s sixth-largest crude oil supplier last year, behind Saudi Arabia, Angola and others, with sales up 28 percent from 2013 to 27.46 million tons, or about 550,000 bpd, according to Chinese customs data. Iran now wants the volume of sales to Beijing to go up too. A new condensate deal between Zhuhai Zhenrong and NIOC is set to lift China’s total crude oil contract volumes to above 600,000 bpd later this year. However, Iran’s full return to the oil markets may not be very easy and straightforward. It would be hindered by strong competition for investment dollars from rival producers including Iraq, Mexico and Brazil, among others, Javier BlasBradley Olson underlined in his story on the issue. In a world of surplus supply, prices hovering around $50 a barrel and deep cuts to capital expenditures by oil companies, Iran will be challenged to find investors should it finalize a nuclear agreement that leads to a lifting of sanctions. Other jurisdictions have already seen super-major oil companies walking away as returns were deemed inadequate. Exxon Mobil Corp. has rejected renewing a concession in Abu Dhabi because of less attractive returns and BP Plc has told Mexico it needs better terms to attract foreign investments as it reopens fields. Even if all the obstacles are resolved, “negotiations could take a year” once sanctions are lifted, Nader Sultan, who ran state-owned Kuwait Petroleum Corp. for over a decade, told an interviewer. Iran’s return as a dominant power in the international market place is “not going to be immediate,” Gianna Bern, an energy consultant who teaches international finance at the University of Notre Dame in Indiana was quoted as saying. “European companies such as BP that have a long storied history in Iran are likely to take the first crack at coming back into the country, although some may be wary initially.” Tehran still has a long way to go! Yet one has to concede, the potential of additional barrels of Iranian crude to the market holds the promise of delaying any substantial recovery in oil market prices.




Experts discuss impact of Iran nuclear deal in Doha forum Gulf Times

A large group of speakers and subject matter experts gathered in Doha to discuss regional and global repercussions of the Iranian nuclear agreement in a forum held at the Ritz-Carlton Hotel yesterday.

Entitled “The Iranian Nuclear Agreement: Regional and Global Repercussions,” the forum was organised by the Arab Centre for Research & Policy Studies (ACRPS) following the announcement of the framework agreement between Iran and the P5+1 countries in Lausanne, Switzerland, on April 3. The P5+1 is a group of world powers namely, China, France, Russia, the UK, and the US, which are permanent members of the UN Security Council. The other country is Germany. In 2006, these countries joined the diplomatic efforts with Iran with regard to its nuclear programme. The ACRPS said, “The framework agreement has brought more than 12 years of intense international debate surrounding Iran’s nuclear programme to a close. “The panellists will address the effects of the framework agreement on the balance of power within Iran’s domestic political scene, as well as its impact on the region and the world at large.” The centre added, “This agreement is a political watershed, which rules out the prospect for greater developments related to Iran’s nuclear capabilities. It will also impinge on the balance of powers within the Iranian regime, echo in the country’s relations with global powers, and inevitably have repercussions of no lesser significance on the regional arena.” The speakers in yesterday’s workshop included ACRPS general director Azmi Bishara, Iraqi nuclear scientist Imad Khadduri, oil market consultant Mamdouh Salameh, ACRPS researchers Abdulwahhab al-Qassab and Marwan Kabalan, Hagop Kevorkian professor Hamid Dabashi, Saudi Arabian researcher Khaled al-Dakheel, Brookings Institute Foreign Policy fellow Ibrahim Sharqieh, Jordanian researcher Fatima Smadi, Georgetown University School of Foreign Service in Qatar assistant professor Birol Baskan, ACRPS associate researcher Mahmood Muhareb, Qatar University Humanities department chair

Regional and Global Repercussions of the Iranian Nuclear Agreement Forum




Mahjoob al-Zweiri, and columnist and author Camelia Entekhabifard. The ACRPS also said while the framework agreement guarantees Iran’s right to enrich uranium within its borders, it also stipulates that Iran will abandon 98% of its present stockpile of enriched uranium, decommission two-thirds of its centrifuges, restrict enrichment activities to the reactor at Natanz, and convert all other facilities to research labs. In return, international sanctions imposed on Iran will be lifted. “Even if sanctions were lifted today, it will take Iran more than two years to deploy the enhanced oil recovery (EOR) technology and try to increase production. Even then it might only succeed in limiting the fast depletion in its oilfields rather than increasing production,” said Salameh in his presentation entitled “Oil and Iran’s Nuclear Programme: Impact on Oil Prices and the Global Oil Market.” He added that for the past 15 years Iran was unable to meet its Opec (Organisation of the Petroleum Exporting Countries) production quota of 4mn barrels per day (mbpd). “My view is that even if the sanctions are lifted and Iran was able to import the latest American oil technology, Iran could add no more than 200,000 to 300,000bpd to its production but even this may not translate into added exports because of the steeply-rising domestic consumption,” Salameh stressed. He added, “As a result, lifting the sanctions against Iran will hardly affect the global oil prices or the global oil market against a projected growth in global demand estimated at 913,000bpd in 2015 and 1.13mbpd by 2016, according to the International Energy Agency.”




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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 12 April 2015 K. Al Awadi







Economy & Finance

New base 580 special 12 april 2015