New base special 02 october 2014

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NewBase 02 October Khaled Al Awadi

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BP Oman awards $730m worth drilling contracts Oman Observer + NewBase

BP Oman yesterday announced the award of two long-term drilling contracts for the Khazzan project in Block 61. KCA Deutag has been awarded more than $400 million contracts for the

construction and operation of five new build land rigs for Khazzan. The rigs are being assembled in Nizwa to help maximise employment opportunities in Oman.

According to the second agreement, Oman’s Abraj Energy Service has been awarded more than $330 million contracts to supply three drilling rigs for the full field development of the Khazzan Project “We are pleased to announce these contracts which continue to progress our development of the gas resources at Block 61. Abraj Energy Service and KCA Deutag will play important roles in the massive drilling

programme ahead. The selection of Abraj Energy Services demonstrates once again BP’s commitment to In Country Value,” said BP Oman General Manager Dave Campbell.

Khalid al Kindi, Deputy General Manager for BP Oman, stated, “Building local content into our supply chain is a key focus area in BP’s procurement strategy. BP is committed to hiring and developing talented Omanis. We are also implementing a significant multi-million dollar long-term social investment strategy to support education and enterprise development in Oman. All these are part of our commitment to deliver BP’s In-Country Value Plan (ICV)”

Since the approval of the Khazzan Project development, BP has been actively awarding contracts to ensure that the project meets its deadlines. In addition to the announced contracts awarding, several contracts with a value around $90 million have been awarded to local Omani companies for civil works, including well pads and in-field roads. More recently, BP awarded contracts with a value of around $16 million to several Omani companies to supply carbon steel pipes and to manufacture, supply and install a water pipeline. The water pipeline will be manufactured in Sohar. Sanctioned in December 2013, the Khazzan Project represents the first phase in the development of one of the Middle East region’s largest unconventional tight gas plays. Khazzan has the potential to be a major new source of gas supply for Oman for many decades. BP is the Operator of Block 61 and holds a 60 per cent interest. The Oman Oil Company for Exploration and Production (OOCEP) holds a 40 per cent interest. The full field development of the Khazzan Project will involve a drilling programme of around 300 wells over 15 years to deliver plateau production of one billion cubic feet (28.3 million cubic metres) of gas per day. This volume is equivalent to an increase of around a third of Oman’s total daily domestic gas supply.




Oil prices to recover ‘slightly’ in Q4 2014 Saudi Gazette + NewBase

Oil prices were forecast to recover slightly in the fourth quarter of 2014 on the back of an uptick in demand during the winter seasons, the Riyadh-based Jadwa Investment said in its latest report on oil. But ample supply from non-OPEC sources will see global oil surplus reaching 1.73 mbpd in 2014, therefore preventing prices from rising too far beyond the $100 per barrel mark, the report noted. Furthermore, there is likely to be no let-up in the strength of the US dollar, which will hold its elevated value, and “we do not foresee any significant cuts in OPEC production taking place. However, we see any deterioration in geopolitics of Iraq, Russia/Ukraine and Libya resulting in oil prices recovering to above $105 per barrel.”

Global oil supply grew by 1.7 mbpd, year-on-year, in Q3 2014, with non-OPEC supplies growing by 1.8 mbpd as a result of increased US oil production. In Q4 2014 there will be continued output increases from non-OPEC sources, led by the US with some increases also recorded by OPEC as a partial resumption of output from Libya contributes to year-on-year increases. The shale oil revolution in the US continues apace with production

rising by 13 percent in Q3 2014, year-on-year. As economic recovery builds momentum, Jadwa expects to see increased investment in both non-conventional and conventional oil resources which will maintain output by 13 percent in Q4 2014. US production will average 8.46 mbpd in 2014 and 9.28 mbpd in 2015 and this will be accompanied by declining oil imports, which will average 7 mbpd in 2014 and 6.2 mbpd in 2015. By 2015, imports of oil will represent 36 percent of total US energy consumption, compared to 58 percent in 2010. Total output from OPEC dropped by 5.1 percent in Q3 2014, year-on-year. OPEC continues to be affected by sizable falls in Libyan output despite some improvement in output recently. Other sizable drops in Q3 2014, year-on-year, were seen in Iran (-17.7 percent), Nigeria (-5.5 percent) and Saudi Arabia (-3.1 percent). Saudi Arabian crude production was down by 3.1 percent in Q3 2014, year-on-year, to 9.8 mbpd, compared to 10.1 mbpd over the same period in 2013, due to softer global demand and rising non-OPEC supplies, in specific, US shale oil. Jadwa forecast that Saudi production will fall to an average of 9.5 mbpd in Q4 2014 as non-OPEC output continues to accelerate and global oil




demand is subdued due to a weaker than expected recovery in the global economy. “Overall, we forecast Saudi production to average 9.7 mbpd for 2014, up from 9.6 mbpd in 2013. Looking ahead into 2015, we see Saudi production declining slightly, but not dramatically. As the global economy recovery builds momentum in 2015, especially in the H2 2015, global oil demand should also pick up, supporting Saudi production levels at around 9.6 mbpd for the year. We also expect Saudi Arabia to maintain its current share of total OPEC production, at around 32 percent, because, as pointed out earlier, we do not see Libyan supply returning to normal levels for the short to medium term, whilst security and infrastructure issues in Iraq will prevent production from rising beyond current levels for the remainder of the year and hamper efforts to increase output in 2015,” Jadwa said in the report. Latest OPEC data shows that Iraqi crude production rose by 0.5 percent, year-on-year, in Q3 2014, to 3.1 mbpd. Southern Iraqi oil fields and infrastructure have been unaffected by civil strife in Iraq, resulting in exports increasing by 6 percent in Q3 2014, year-on-year. The loss of control of oil fields and infrastructure in the north of the country is keeping overall output broadly flat. Since an attack on the Kirkuk-Ceyhan oil pipeline in early March there have been no exports out of the north, with production from northern fields dropping to around 160 tbpd from highs of 620 tbpd in February. Jadwa believes that the current civil strife in Iraq will not further impact oil output going forward but the main threat is likely to come from small scale attacks that add to negative market perception which, in turn, have a short term impact on oil prices. It forecast that Iraqi oil production will remain around current levels for the foreseeable future. In 2014, total Russian crude production will grow by just under 1 percent. Russian oil output growth has been on a downward trend in recent years as many of the western Siberia oil fields, which yield two-thirds of total production, are maturing and require more capital intensive investment to maintain output levels. In addition, new US and EU sanctions, at the beginning of September, are likely to further impact long term oil exploration and make financing for all the major Russian energy companies more difficult. At the same, even as political tensions remain high around Crimea, Jadwa sees the likelihood of disruption on Russian oil exports, amounting to roughly 5 mbpd, as very low. Energy trade between EU and Russia is too important for both sides and will only be affected if there is a significant deterioration in the current geopolitical situation.




China, India seen driving Qatar chemicals growth By Pratap John -Chief Business Reporter

Qatar’s chemical industry expansion plans are based on the assumption that demand will continue to increase in many emerging markets such as China and India, a new report has shown. Qatar has announced plans to scale up petrochemical production from 10mn tonnes per year (tpy) to 23mn tpy, said Dun & Bradstreet in its “Qatar Economy Insight”.

The focus of growth in Qatar has shifted to the non-hydrocarbon sector and one of the key industries that are benefiting from Qatar’s need to diversify away from “upstream” hydrocarbon sector is chemicals, the report said. Future plans involve expansion in ethylene capacity and its derivatives through improving capacity in existing plants as well as building new ones with partnerships.

In addition, Qapco’s third low-density polyethylene plant has been officially opened, allowing Qatar to boost its output to 700,000 tpy. One of the key drivers of the petrochemicals industry in Qatar is the

availability of cheap gas, Dun & Bradstreet said. Additionally, the state-owned Economic Zones Company has adopted the development of three economic zones within Doha and its suburbs with an authorised capital of $1.35bn.

The new economic zones are set to target value added manufacturing including downstream petrochemicals, the report said. The manufacturing sector, including the refining and chemicals sector represented 9.9% of Qatar’s nominal GDP in 2012. The value added contribution of the manufacturing sector to economy in 2012 is estimated at $18.2bn, out of which the chemicals

sector represented 35.5% or $6.7bn, the report said.

The establishment of new producers and capacity expansions by the existing producers have led to an average increase in capacity growth of 17.5% a year from 2008 to 2012, the report said. Qatar is the second largest fertiliser producer in the GCC (Gulf Co-operation Council) region. With annual production capacity of 10.7mn tonnes in 2012, Qatar accounted for 35% of the GCC capacity.

Qatar’s fertiliser production is concentrated around nitrogen fertilisers. The country is also the largest urea and the second largest ammonia producer in the region. With two major expansions commencing production in Qatar over the past years, the country’s current




fertiliser plant is the largest single urea and ammonia facility in the world.

Qatar’s polymer production is focused on polyethylene and accounted for 8% of the GCC’s total polymers capacity in 2012. While capacity expansion in Qatar has continued over the past five years at an average rate of 10.6%, it was slower than other GCC countries. Qatar is the second largest exporter of chemicals in the GCC representing 17% of the GCC’s chemicals exports.

With capacity expansions taking place over the past decade, Qatar’s chemicals exports have grown at an average rate of 13.7% a year since 2002. Fertilisers and

petrochemicals account for the majority of Qatar’s chemicals exports. Qatar imported 1.8mn tonnes of chemicals in 2012, the majority of which are inorganic chemicals and

specialties, particularly industrial additives and paints and inks. The chemicals import growth rate in Qatar is one of the highest in the region – over the past decade it has grown at an average 19.8% a year. The chemicals sector in Qatar, according to Dun & Bradstreet, employed more than 9,600 employees in 2012, accounting for 7% of the region’s total workforce in the sector




BP starts drilling Atoll-1 offshore well in Egypt Source : BP + NewBase

BP Egypt has started drilling the Atoll-1 well offshore, which is the second exploration well in the North Demietta Offshore concession discovered by the firm last year.

The deepwater exploration well will be drilled using the sixth generation rig ‘Maersk Discoverer’ at water depth of 923 metres and reaching a total depth of around 7400 metres targeting Oligecene Channels, said a statement. The well spudded on September 12 and the drilling is expected to last into next summer, it said. Hesham Mekawi, BP North Africa regional president, said: “The significant investment in Atoll-1 is another great example that demonstrates our commitment to meeting Egypt’s energy needs by exploring the deep offshore potential of the Nile Delta, which we believe to be a world class gas basin that requires substantial investments to unlock its potentials. “We look forward to continuing to play a key role in the development of Egypt’s energy sector and maximising the use of our existing resources to help meet the country's growing energy demands for years to come.” Atoll-1 is a high pressure/high temperature (HP/HT) well located north of Damietta city, said the statement. BP has 100 per cent working interest in this well. Atoll - 1 well is named after a coral reef, sometimes called a coral atoll, which is a ring-shaped coral reef, it added. -




PTT to build third LNG receiving terminal in Myanmar

Third LNG terminal in Myanmar is strongly in plans of Thailand’s PTT as a gateway to further security to

the country’s energy supply.

LNG is used to produce 70% of

Thailand’s power generation with 25%

of it being imported from Myanmar.

According to Nuttachat Charuchinda,

chief operating officer for PTT’s

upstream business, the company is

looking to build an LNG receiving

terminal with a capacity of 5 million

tonnes per year reports Reuters.

PTT already owns a 5 million ton per

year, Map Ta Phut LNG terminal with

a second one of the same capacity

scheduled for completion in 2017.

Philippines energy mix plans might open door for new LNG imports

The Philippines said it will turn to natural gas in its energy mix to increase the share to a third over the next

16 years which would open doors for LNG imports. This new market would be welcomed by the major

LNG producers such as Chevron and Total

who face uncertainty over long-term

demand from Japan and South Korea.

Because of the country’s commitment to

low carbon emissions, natural gas will

increase to more than 30 percent of the

mix, according to Energy Undersecretary

Zenaida Monsada, reports Reuters.

The country is set to start using imported

gas to fuel energy producers in 2015 once

the LNG hub in Pagbilao province opens.




N. Sea Siri oil now flows to subsea tank, not tanker Press Release

The oil from DONG Energy’s oil fields in the North Sea: Siri, Nini, Nini East, Cecilie and Stine-1,

is now sent directly to the oil tank below the Siri platform. This takes place after completion of

extensive repair work lasting several years.

Flemming Horn Nielsen, Country Responsible for DONG Energy’s Danish oil and gas activities, said:

“It’s a milestone that we’ve resumed producing to the oil tank. The Siri repair work has been a huge project

for the organisation. We were faced with a complex offshore project where we had to optimise the design

and construction solutions on a regular basis. Throughout the period, our employees have delivered a

fantastic job.”

The Danish Energy Agency’s final approval of the repair solution is still pending.

The background for the repair work is that DONG Energy during a routine inspection in August 2009

discovered cracks in the nose of the subsea oil tank of the Siri platform. No pollution happened but the

production was shut down for five months as a safety measure and re-started January 2010 after a temporary

solution had been installed.

In May 2011, the concept of a permanent repair solution was selected. Production was shut down again in

July 2013, because a crack was discovered in a critical area. In January 2014, as a temporary solution, the

satellite fields connected to Siri, ie Nini, Nini East and Cecilie, started producing via Siri’s processing

facilities directly to a tanker.

In July 2014, Stine Segment-1 and some of the Siri wells started producing again. In September 2014, the

final pipework was performed so that the oil can run into the subsea tank.




Norway: Det norske drills dry well near the Visund field in the N.Sea - 34/7-36 S . Source: NPD

Det norske oljeselskap, operator of production licence PL 553, has concluded the drilling of wildcat well 34/7-36 S. The well was drilled about 10 kms west of the Visund field in the North Sea. The primary and secondary exploration targets for the well were to prove petroleum in

Upper Jurassic reservoir rocks (Intra Draupne and Intra Heather formation sandstones, respectively).

Well 34/7-36 S did not encounter any reservoir in the Draupne formation, while thin reservoir sands of poor quality were encountered in the Heather formation. There are also traces of petroleum in sandstones in the Lista formation from the Palaeocene Age. The well is dry. Data acquisition and sampling have been carried out.

This is the first exploration well in production licence 553, which was awarded in APA 2009. The well was bored to a vertical depth of 3639 metres below the sea surface and was terminated in the Etive formation from the Middle Jurassic Age. Water depth is 304 metres. The well has been permanently plugged and abandoned.

Well 34/7-36 S was drilled by the Borgland Dolphin, which has now returned to land for its five-year classification.




US Natural gas storage injections continue beyond the end of October Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report

In natural gas markets, analysts refer to the storage injection season as running from April 1 through

October 31 of each year, but these dates are not strict cutoff points. In each of the past 11 years, going back

to the first full year of EIA's weekly gas storage surveys, there have been net injections during one or more

weeks in November. In 6 of those years, there have been multiple weeks of net injections. There have also

been multiple weeks within the injection season when the weekly change resulted in a net withdrawal.

In two of the past five years, 2009 and 2011, inventories on the last day of November have been greater than

the tallies for October. In 2012, there was a week with net injections as late as December. Similarly, the

nominal beginning of the injection season is April 1 each year, but for 6 of the past 11 years, there have

been net injections in March.

In the past 12 years, May, June, and September have been the only months that did not have any weeks with

net withdrawals. In 2006, there were weekly net withdrawals in July and August, as natural gas was used in

the electric power sector to meet high levels of summer air-conditioning demand.

The U.S. Energy Information Administration (EIA) has been surveying and reporting weekly gas storage

data since March 15, 2002. Before that, going back to 1994, weekly storage was surveyed by the American

Gas Association between 1994 and early 2002. The weekly survey covers 80 companies, which account for

about 90% of gas storage volumes.

The Weekly Natural Gas Storage Report (WNGSR) is one of the U.S. government's Principal Federal

Economic Indicators (PFEI). Most of these indicators, which include metrics like employment, international

trade, housing construction, and crop production, are released on a quarterly or monthly basis. The WNGSR

is one of only three PFEIs published on a weekly basis.




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Your partner in Energy Services

Khaled Malallah Al Awadi, Energy Consultant

MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

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

Khaled Al Awadi is a UAE National with a total Khaled Al Awadi is a UAE National with a total Khaled Al Awadi is a UAE National with a total Khaled Al Awadi is a UAE National with a total

of 24 yearsof 24 yearsof 24 yearsof 24 years of experience in theof experience in theof experience in theof experience in the Oil & Gas Oil & Gas Oil & Gas Oil & Gas

sector. Currently working as Technicsector. Currently working as Technicsector. Currently working as Technicsector. Currently working as Technical Affairs Specialist for al Affairs Specialist for al Affairs Specialist for al Affairs Specialist for

Emirates General Petroleum Corp. “Emarat“ with external Emirates General Petroleum Corp. “Emarat“ with external Emirates General Petroleum Corp. “Emarat“ with external Emirates General Petroleum Corp. “Emarat“ with external

voluntary Energy consultation for the GCC area via Hawk voluntary Energy consultation for the GCC area via Hawk voluntary Energy consultation for the GCC area via Hawk voluntary Energy consultation for the GCC area via Hawk

Energy Service as a UAE operations base , Most of the Energy Service as a UAE operations base , Most of the Energy Service as a UAE operations base , Most of the Energy Service as a UAE operations base , Most of the

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EmaEmaEmaEmarat , responsible for Emarat Gas Pipeline Network Facility rat , responsible for Emarat Gas Pipeline Network Facility rat , responsible for Emarat Gas Pipeline Network Facility rat , responsible for Emarat Gas Pipeline Network Facility

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agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas 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 andConferences held in the UAE andConferences held in the UAE andConferences held in the UAE and Energy Energy Energy Energy program broadcasted internationally , via GCC leading satellite Channels . program broadcasted internationally , via GCC leading satellite Channels . program broadcasted internationally , via GCC leading satellite Channels . program broadcasted internationally , via GCC leading satellite Channels .

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NewBase 02 October 2014 K. Al Awadi

Economy & Finance

New base special 02 october 2014