New base 587 special 21 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 21 April 2015 - Issue No. 587 Khaled Al Awadi

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

WETEX 2015 records remarkable international participation WAM + NewBase

The 17th Water, Energy, Technology, and Environment Exhibition (WETEX 2015)

has witnessed remarkable international participation as it hosts national pavilions from many countries across the world. It also hosted a Government Pavilion, with 27 government organisations from the UAE and the General Pavilion, which hosts a large number of national and international companies.

Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority (DEWA), and Chairman and Founder of WETEX, welcomed the wide participation by international companies and organisations, noting that WETEX has become a leading regional platform for energy, water, and the environment.

"WETEX has established its position among global specialised exhibitions. It has become the meeting point for experts and specialists in energy, water, and green economy from around the world. The success of WETEX year after year, underlines Dubai’s commitment to the shift towards a green economy and sustainable development.




Field of bidders for Abu Dhabi oil concession has narrowed, says Adnoc The National + NewBase

The field of companies bidding for a stake in Abu Dhabi’s prime onshore concession has narrowed, the head of Adnoc said. Abdulla Al Suwaidi, the director general of Adnoc, however, would not say which companies were still in the running for the concession known as Adco. Speaking at the Middle East Petroleum and Gas Conference in the capital, he said that all of the planned projects to expand oil production in the emirate were progressing despite the decline in oil prices since last year.

Oil prices have recovered from their lowest levels earlier this year, but they are still well below the average of about $100 per barrel in the previous four years. This has led private sector international oil companies to cut capital expenditure by 20 per cent on average, leading to thousands of industry job losses.

The European benchmark Brent crude was up 0.3 per cent at US$63.65 early afternoon UAE time. But the Middle East has been more resilient on projects, with the national oil companies generally taking a long-term view.

“The rising source of oil supplies, including from unconventional sources in North America, has changed the role of traditional oil suppliers,” Mr Al Suwaidi said. “But it has not changed our goals: all of our committed projects are in progress and our production targets are the same.”

Abu Dhabi has a goal to increase its crude oil production capacity. “Adnoc’s current crude oil production capacity is around 3 million barrels per day and is well on its way to achieve 3.5 million bpd by 2018,” Mr Al Suwaidi said.

The UAE has been producing at a rate above 2.9 million bpd since December, up from about 2.7 million bpd in previous months, with the additional production from the offshore Umm Lulu likely accounting for the extra barrels.




The increased production capacity is coming from onshore and offshore in roughly equal proportion, with the Adco onshore fields aiming to increase output from a current level of about 1.6 million bpd to 1.8 million bpd by the end of 2017 and plateau there for a decade.

The original onshore Adco concession expired at the end of 2013 and competition for the new 40-year concession has been tough. Total of France won the prime contract this year, getting a 10 per cent stake in Adco and the most sought- after of its 15 fields, South East and Bu Hasa.

Adnoc owns 60 per cent of Adco, leaving another 30 per cent to allocate.

Of the partners in the original concession, BP and Shell have remained in the running, although ExxonMobil dropped out last year, preferring to concentrate on its offshore Upper Zakum concession.

Other bidders have included Korea National Oil Company (KNOC), PetroChina and Inpex of Japan. Rosneft of Russia and Norway’s Statoil are, according to industry sources, not in contention.

Total surprised some in the industry by meeting the fee required to enter the Adco deal, which was more than US$2 billion. Others have had to match those terms to stay in the deal.

“Whoever meets our conditions will be considered,” Mr Al Suwaidi said, adding, when asked if remaining contenders had, “some yes, but … we have no timeline”.

Adnoc has played its cards close to its chest but KNOC is considered likely to be awarded a piece as it has been a major and consistent buyer of Abu Dhabi crude oil and has recently deepened its relationship with the emirate by taking on work in a complicated marginal oilfield.

“The Koreans seem to be likely to get a stake but it won’t be above 5 per cent,” said a senior oil company executive familiar with the process. Adnoc has offered bidders either 5 per cent or 10 per cent stakes in Adco.




Saudi Aramco enlists ACWA, Air Products on Jazan gas plant Saudi Gazette + NewBase

Air Products has been awarded a contract by Saudi Aramco under a joint venture of Air Products and ACWA Holding to build, own and operate the world’s largest industrial gas complex to supply 75,000 metric tons per day (20,000 oxygen and 55,000 nitrogen) to Saudi Aramco’s refinery being built in Jazan for 20 years. “We are very pleased that Saudi Aramco trusts Air Products and our partner ACWA Holding to economically and reliably supply the critical gases needed for its refinery in Jazan, ” said Seifi Ghasemi, chairman, president and chief executive officer at Air Products. “This award also demonstrates the value of our outstanding relationship with our partner in ACWA Holding, who has worked so closely with us to develop this great project,” he added. The industrial gas complex will be designed and built by Air Products using its proprietary technology. Once built, this facility will be owned by a joint venture of Air Products (25 percent) and ACWA Holding (75 percent). “We at Air Products are very excited about being awarded this very significant project,” said Seifi Ghasemi, chairman, president and chief executive officer at Air Products. “We consider it an honour and a privilege to use our proprietary technology to design and build the world’s largest industrial gas complex for an outstanding client and the largest company in the world, Saudi Aramco. “We are proud and thrilled to be selected as the partner of choice by Saudi Aramco to develop this world scale industrial gases project. This mammoth undertaking complements the portfolio of power, water, renewable energy, district cooling, integrated waste and resource recovery projects of ACWA Holding as the premier infrastructure developer in the region. The partnership with Air Products, the world leader in the field, is further testimony to ACWA Holding’s superior capability to develop large and critical infrastructure projects in Saudi Arabia and the region,” said Mohamed Abunayan, ACWA Holding chairman.




BP eyes record gas output from Oman field by 2017 Reuters + NewBase British oil major BP expects to start natural gas production from Oman's Khazzan field by 2017 at a rate of 1 billion cubic feet (bcf) a day, a senior company executive said on Monday.

"2017 is when we plan to have the first gas from the field, and that ramps up to 1 bcf a day - it may actually ramp up to 1 bcf a day very quickly," Michael Townshend, president of BP Middle East, told reporters in Abu Dhabi. The company plans to drill 20 wells in 2015, boosting that number to 50 wells in the next couple of years, and is already building a plant to handle the first 1 bcf of gas, he said. Total investment in the first phase to reach the initial gas production target will be $16 billion, he added. BP has previously said it expects to invest around $9.6 billion, in accordance with its 60 per cent stake in the project; state-owned Oman Oil Company Exploration & Production has 40 per cent. The British oil major said last October that it had awarded two drilling contracts worth $730 million for the project.




Oman seeks to utilise 10mbd of oilfield produced water efficiently Times of Oman + NewBase

Muscat: Oman is exploring ways to better utilise the 10 million barrels of water that is inevitably produced as a byproduct in its oil fields every day, said a senior official at the Ministry of Oil and Gas. The accompanying water, which is termed 'oilfield produced water', is pumped up when oil is extracted from underground, and now with the increasing amount of produced water, the Sultanate is studying various ways to use it for beneficial purposes, such as agriculture. "(On average), nine barrels of water are produced for every barrel of oil per day," Salim bin Nasser Al Aufi, Undersecretary at the Ministry of Oil and Gas, told Times of Oman in an interview. He was speaking on the sidelines of the first Middle East Oilfield Produced Water Management Conference, which opened at Golden Tulip Seeb Hotel on Monday and concludes on Wednesday. The conference, which has brought together around 100 participants including senior officials and speakers, is organised by NEFT event management company in coordination with the Ministry of Oil and Gas and is supported by the Oman Water Society. Produced water disposal

Al Aufi explained that currently the produced water is not being treated for agriculture or similar purposes but part of it is being re-used for extraction operations, and part of it goes into evaporation ponds. The issue is becoming more serious as the amount of produced water is on the rise and it costs a lot of money to dispose it, he said, adding that treating the water can be a better option than disposing it or injecting it to the reservoir again. "If you inject it back again into the reservoir, you are only increasing the water production. The aquifer also produces water so the volume of produced water is increasing," the official noted. According to him, Oman has one of the highest rates of oilfield water production in the Gulf Cooperation Council (GCC) region. Asked whether it would be economical to treat the produced water given the fact that it requires advanced technologies, Al Aufi said, "It costs us today a lot of money to dispose the water so what should be taken into account is not only how much it will cost us to treat the water but also how much money will be saved by not having to inject (it again into the reservoir)." He added that gas wells also produce water but in smaller proportion than in oil fields. In the opening speech of the conference, the undersecretary stated that the ministry is in talks with other bodies to find the best solutions for oilfield produced water treatment, including the Ministry of Agriculture and Fisheries, the Research Council, the Oman Water Society and oil producers. Hamdan Al Wahaibi, from the Ministry of Agriculture and Fisheries, said at the conference that produced water is one of the non-conventional water recourses for agriculture purposes, along with treated wastewater and saline groundwater.




Treated produced water can be used for agricultural purposes (non-food, non-feed crops) or industrial crops such as cotton, he said. According to Al Wahaibi, contaminants in produced water including heavy metals is a challenge in the face of water treatment for drinking purposes. Ratio prospects

Imad Al Amri, from the water management team of the Petroleum Development Oman (PDO), also delivered a presentation at the conference, in which he said that the current ratio of 9 barrels of water for every barrel of oil is expected to increase to 12 barrels of water per oil barrel in 10 years and 17 barrels in 20 years. The Petroleum Development Oman official said that currently 45 per cent of the produced water is re-used for 'water flood', which is the practice of pumping water into the ground around an oil well nearing depletion in order to loosen and force out additional oil. The work is in progress to convert produced water in Petroleum Development Oman from liability to opportunity, Al Amri further added.




Qatar ‘2015 Al-Attiyah Int’l Energy Awards’ to honour Total’s

Christophe de Margerie. Gulf Times + NewBase

Total’s former CEO, Christophe de Margerie, will be honoured posthumously with the 2015 Special Lifetime Achievement Award during the ‘3rd Abdullah bin Hamad Al-Attiyah International Energy Awards’ to be held in Doha on May 3.

The Abdullah bin Hamad Al-Attiyah International Energy Awards recognises individuals for their lifetime achievement in the advancement of the global energy industry. It is divided in five categories: Opec, education, journalism, Qatar energy industry, and producer-consumer dialogue This year, the trophy will be presented to de Margerie’s wife, Bernadette, in a gala dinner at the Museum of Islamic Art here. Last year’s winner was the late Rilwanu Lukman, former Opec secretary-general and Energy Minister of Nigeria.

De Margerie, who died in a plane crash in Moscow last year, was known to be influential in helping shape the French government’s energy policy, said former US Ambassador to France Craig Stapleton. Known as “big mustache” among his colleagues for his signature handlebar moustache, de Margerie was on friendly terms with heads of state and national industry leaders from across the Middle East, a region he led for Total from 1995 to 1999. “There is no doubt that Christophe de Margerie

had a sharp technical intellect, but it was this skill, combined with his celebration of the human side of business partnerships, which not only allowed him to secure much commercial success in

this region but to also make many lifelong friendships,” said HE the former Energy Minister of Qatar Abdullah bin Hamad al-Attiyah. Foreign Affairs Minister and former prime minister Laurent Fabius said, “Christophe de Margerie was passionate about his company; he knew how to internationally develop and place it at the forefront of innovation. He was an exceptional business leader, who knew how to shine light on France.” Both al-Attiyah and de Margerie have been recognised with France’s Légion d’Honneur, the National Order of the Legion of Honour. Established by Napoleon Bonaparte, it is France’s highest honour and is divided into five degrees from Chevalier to Grand Croix.




Algeria: GDF Suez, Partners Strike Gas in Touat GDF Suez, through its subsidiary GDF Suez E&P International, has made a gas discovery in the Illizi Basin located in southeast Algeria.

The TESO-2 well was drilled to a depth of 1,307 meters in the Ordovician reservoir and produced a gas flow of 175,000 cubic meters per day, the company said. Appraisal work will be conducted later to assess the size of the discovery.

TESO-2 is the first well of the second exploration program carried out under this licence, which started in January 2015. The drilling program includes at least four additional appraisal wells. Two discoveries had been made during the first exploration phase in 2012 and 2013 respectively with the TIHS-1 and TDE-1 wells.

GDF SUEZ holds 20% of the Sud-Est Illizi licence alongside the operator Repsol (52.5%) and Enel Spa (27.5 %). SONATRACH will participate with a 51% stake in the development and production phases. The Sud-Est Illizi licence is the second project of GDF SUEZ in Algeria, after the Touat project that is currently in development phase, with a 2017 production target.

Located in southwest Algeria and operated in partnership with SONATRACH, Touat is a major natural gas production project for GDF Suez, with proven and probable reserves of 68.5 billion cubic meters, plus 8.5 million barrels of condensate.




Oil Price Drop Special Coverage

Oil eases as Saudi keeps output near record high

Oil prices eased on Tuesday on expectations of another rise in US stockpiles and as Saudi Arabia keeps output near record highs, but prices remained near a 2015-peak reached last week. Crude prices have climbed around 18 per cent since the start of April on speculation about falling US output after the domestic oil rig count hit 2010 lows. They have also been supported by tension in the Middle East. Still, US commercial crude oil inventories are likely to have increased by 2.4 million barrels last week, marking a rise for the 15th consecutive week, a preliminary Reuters survey showed. Brent crude for June delivery was down 17 cents at $63.28 by 0141 GMT, after settling flat on Monday. US crude for May delivery, which expires later in the day, was down 15 cents at $56.23 a barrel,

after settling 64 cents higher. US Senator Lisa Murkowski said on Monday she would introduce legislation this year to allow US crude exports, saying the Obama

administration should not dare lift sanctions on Iran before scrapping the US crude export ban. Saudi oil minister Ali al-Naimi told

Reuters in Seoul that the No. 1 crude exporter expected to produce at near record highs of around 10 million bpd in April. Despite near record production, analysts warn that Opec's ability to cope with an unexpected surge in demand is diminishing fast. "If the demand and non-Opec supply responses to lower price are similar to what was experienced in the 1980s, the very low level of spare capacity carries a risk of a price spike in the not too distant future," said analysts at PIRA Energy. Opec's spare capacity could halve to as low as 1.7 million barrels per day (bpd) this year, much below the more than 10 million bpd in the 1980s, when Saudi Arabia last opted for market share over price. – Reuters




Oil demand to swell ‘over coming months’ News Agencies + NewBase

Demand for oil will rise during 2015, OPEC said in its Monthly Market Report issued April 16. “Higher global refinery runs, driven by increased (summer) seasonal demand, along with the improvement in refinery margins, are likely to increase demand for crude oil over the coming months,” the report said. OPEC forecasts demand at an average of 29.27 million barrels per day in the first quarter 2015, a rise of 80,000 bpd from its previous prediction made in its March report. At the same time, it said, OPEC’s own total output will increase by only 680,000 barrels per day, less than the previous expectation of 850,000 barrels per day, due to lower US and other non-OPEC production. At its November meeting in Vienna, its members agreed to maintain production at 30 million barrels per day despite falling prices caused by an oversupply of oil. Average global oil prices began plunging in late June 2014 from more than $110 per barrel to a low of around $50 in January. They’ve now settled to around $60, and Laurence Fink, the CEO of Black Rock, the world’s largest asset manager, said in an interview April 16 on CNBC that the price of a barrel of oil probably would go no lower than $60 this year, but also rise no higher than $80.

The initial oversupply came mostly from a boom in US shale production, which was turning Americans from OPEC’s biggest customer into a competitor. But shale oil extraction requires hydraulic fracturing, or fracking, which is more expensive than conventional drilling and isn’t profitable if the price of oil falls below a threshold of about $60 per barrel.




As a result, OPEC said, it expects that US supplies of oil will increase to around 13.65 million barrels a day in this year’s second quarter, but then flatten and begin to turn down for the rest of the 2015. This applies to Canadian production as well. “US tight oil and Canadian oil sands output are expected to see lower growth following the recent strong declines in rig counts,” the report said. OPEC produced 30.79 million barrels of oil per day in March, 800,000 more barrels than in February, the report said, citing not its own members but independent sources including industry sources, oil analysts and shippers.

As for global demand for OPEC’s own crude oil, the report said it would rise only marginally to an average level of about 29.3 million

barrels a day this year. “Almost two thirds of 2015 oil demand growth is seen coming from China, Other Asia [Indonesia, Malaysia, the Philippines and Thailand] and the Middle East,” the report said. Brent crude LCOc1 was trading down $1.20 at $62.25 by 1147 GMT, down from an intraday peak of $64.34. US crude for May delivery CLc1 was down 74 cents at $55 a barrel, down from an early high of $56.65. The dollar was up 0.47 percent against a basket of currencies. A strong greenback makes dollar-traded commodities like crude oil less attractive for holders of other currencies. Production in the world's biggest crude exporter would stay near record peaks around 10 million bpd in April, Saudi Arabian Oil Minister Ali Al-Naimi told Reuters on Monday in Seoul, where he is due to attend a board meeting of the state oil firm Saudi Aramco. "I have said many times we will always be happy to supply to our customers with what they want. Now they want 10 million," he said. Naimi earlier this month said Saudi Arabia produced 10.3 million bpd of crude in March, eclipsing a previous record of 10.2 million bpd, in what is seen as a move to defend market share against non-OPEC competition, including the United States. US oil drilling rigs fell for a record 19th straight week to the lowest since 2010, data from oil services firm Baker Hughes showed, which has helped lift prices from six-year lows reached in January. Since the beginning of April, oil prices have risen around 17 percent, pushed up by reports of a possible dip in US output, but Morgan Stanley warned that Saudi production could be more important than developments in the United States. "We worry about the market's fixation on the US ... OPEC production may be more important as production increased 1 million barrels per day month-on-month in March. Saudi Arabia alone added the equivalent of half of Bakken (the largest US shale oilfield) production in a matter of months – far beyond any US slowdown," the bank said in a note.




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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

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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.

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

NewBase 21 April 2015 K. Al Awadi




Economy & Finance

New base 587 special 21 April 2015