New base special 21 july 2014

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NewBase 21 July 2014 Khaled Al Awadi

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

QP awards QR1.2bn new rig contract to GDI Gulf-Times

Gulf Drilling International (GDI) has been awarded a QR1.2bn contract by Qatar Petroleum for a new “hi-spec premium jack-up rig”, starting in the second quarter in 2016. The brand new rig,

recently named ‘Halul’, will become the 4th jack-up rig in GDI’s fleet to be under contract to QP, for an initial term of five years. GDI is a subsidiary of Gulf International Services (GIS) and the largest oilfield service company in Qatar.

The other three GDI jack-up rigs under contract to QP are ‘Al Doha’, ‘Al Zubarah’ and ‘Dukhan’. GDI has identified a renowned international shipyard with a rig suitable to QP, which will be delivered within the specified time frame and is in the process of finalising its order.

GDI chief executive officer, Ibrahim J al-Othman said: “GDI is pleased to have received this important award from QP, which will be starting work mid-2016. This new business generated by ‘Halul’ will support our growth plan in 2016, which will in turn support our long term revenue growth.

“GDI’s favourable reputation has been earned over time through the strong partnerships that have been forged with all our clients, where flexibility to customise our services to meet the client’s specific requirements has always been emphasised.

“I must also mention my appreciation and thanks to HE the Minister of Energy and Industry Dr Mohamed bin Saleh al-Sada, also QP chairman and managing director, for his continuous support to GDI and the respective departments of QP. My thanks also goes to GDI Board of Directors for their guidance and support,” al-Othman added.

The key features of the new rig ‘Halul’ will be a 1.5mn pound derrick, 150 man accommodation, 75 foot cantilever outreach, 7,500 horse power mud pumps and other customisations required by QP.

Adding another state of the art rig to GDI’s fleet will serve the dual purpose of raising the company’s technical capabilities while reducing the average age of its fleet. GDI’s versatility will also be enhanced with four of its six cyber rigs capable of operating anywhere within the offshore areas of Qatar.




Petchem prices may increase in next three years’ Says SABIC CEO Source SABIC + NewBase

The global outlook for petrochemical demand over the next three years is positive and there is room for prices to rise, the chief executive of Saudi Basic Industries Corp (Sabic) said yesterday.

Mohamed al-Mady was addressing a news conference after Sabic, one of the world’s largest petrochemicals groups, earlier reported a 7% year-on-year increase in second-quarter net income, matching analysts’ predictions.

Forecasts suggest shale gas, a potential feedstock for petrochemicals, will only be produced in large quantities from the US in 2018, leaving room for

improvement in petrochemical prices before then, he said.

For this year, Mady predicted the business outlook would remain similar to 2013, with petchrochemical product prices probably staying stable.

He added that Africa was a very promising market for Sabic and the company was focusing on opening distribution centres in a number of African countries, especially for fertilisers and plastics.

Chief financial officer Mutlaq Morished told the news conference that Sabic’s sales in the second quarter climbed to 48.15bn riyals ($12.84bn) from 44.99bn riyals a year earlier.

Sonatrach to spend $100bn on oil output




Algiers: Sonatrach to spend $100bn on oil output

Re uters + NewBase

Algerian state energy group Sonatrach has approved a $100bn investment plan for 2014-2018 to increase oil and gas output and also aims to start producing shale gas in 2020, the official APS news agency reported.

Opec member Algeria, a major gas supplier to Europe, has been struggling to raise energy output, on which it relies heavily for state funds to finance development and social programmes.

Oil and gas production has been stagnating since 2010 due to a fall in exploration activity and a lack of investment from foreign companies, which have been wary of Algeria’s contract terms and security since a 2013 militant attack on a gas plant. But energy officials are hopeful things will improve in the medium term through higher spending in the sector.

The $100bn spending for the five-year period through 2018 will be aimed at boosting reserves and increasing oil and gas production, APS said, citing an unidentified source at Sonatrach late on Saturday.

The plan allocates $42bn to help develop oil and gas fields from now through 2018. That figure includes $22bn for natural gas development.Officials have said Sonatrach is planning to start production at six gas fields with a total capacity of 74 million cubic metres per day in the next three years. The investment plan was reported as Algeria prepares to open bids for a

new oil and gas round, with 31 fields on offer in September this year. For the first time, the bidding includes blocks for unconventional resources, with tax incentives for foreign companies interested in investing in shale gas and shale oil.




Tunisia: Serinus Energy spuds Sabria field development well

onshore Tunisia . Source Serinus Energy

Serinus Energy has spudded the Winstar-12bis (WIN-12bis) development well on the Sabria field, onshore Tunisia. WIN-12bis is located in the eastern portion of the Sabria Field in central Tunisia. The planned total depth is 3,900 metres and the well is expected to take 63 days to drill. WIN-12bis is the first of a 2 well drilling program by the Company in the Sabria Field. The rig will move to the second location, Winstar-13 (WIN-13), immediately after finishing WIN-12bis.

The Sabria Field is a very large oil accumulation, with 347 MMBbl of Original Oil in Place[1] (OOIP) of which 280 MMBbl and 67 MMBbl are associated with assigned Reserves and Contingent Resources, respectively. It was discovered in 1979 and only six wells have been drilled in the field. Four of those wells have produced 3.1 MMBbl of oil and 8.8 Bcf of solution gas to the end of December 2013. The targets are the Ordovician aged Hamra and El Atchane formations which are tight sandstones with a high degree of natural fracturing.

Sabria is 45% owned and operated by Winstar Tunisia, a wholly-owned subsidiary of Serinus. The other 55% is owned by the Tunisian state oil company, Entreprise Tunisienne D’Activites Petrolieres

('ETAP').[1] Best Estimate as determined by the Company’s independent third party evaluator as at December 31, 2013.




Russia: Schlumberger says unaffected by U.S. sanctions on Russia Reuters + NewBase

Oilfield service provider Schlumberger, which drills with Rosneft on the Russian island of Sakhalin, said there was no 'real impact' on its business in Russia, two days after the United States slapped sanctions on Rosneft. Washington imposed sanctions on Rosneft, Russia's largest oil producer, and Novatek, the country's second-largest gas producer, over Moscow's role in the Ukraine crisis.

'As of now, there is no impact from sanctions,' Schlumberger Chief Executive Paal Kibsgaard said on a post-earnings conference call. 'Whether there will be impacts in the future is a bit difficult to comment on,' he said, adding that it was 'business as usual' for now.

Schlumberger's shares fell as much as 3.5 percent in early trading on Friday. Analysts attributed this fall to 'unreasonable'

earnings expectations from the company.

Schlumberger reported better-

than-expected revenue and profit after the market closed on Thursday as drilling activity rose in the United States and offshore Gulf of Mexico.

A recovery in activity in Russia after a harsh winter also helped the company's quarterly results. 'The underlying activity outlook - both offshore and on land - in Russia continues to look solid, and with recent contract awards in, we expect to finish the year on a strong note,' Kibsgaard said.

Schlumberger signed an agreement with Russia and Gazprom Neft earlier this year to collaborate on technology for the planned Bazhenov shale development project in the Priobskoe oilfield in Western Siberia. Gazprom Neft is the oil-producing arm of Russian state gas company Gazprom, which is not facing any U.S. or European Union sanctions. Schlumberger also has offshore projects in Sakhalin.

Russia accounts for less than 5 percent of Schlumberger's total revenue, Simmons & Co International analyst Bill Herbert said. '(Sanctions against Russia are) a risk and Schlumberger is vigilant about it and I clearly think they have a contingency plan in the event that (further) sanctions do unfold,' he said.

Further sanctions against Russia are likely if an investigation establishes the country's links to the downing of a Malaysian airliner on Thursday, the Washington-based Institute of International Finance said.




Kenya: Swala Energy commits to drill in Kenya Block 12B - CEPSA withdraws from PSC Source: Swala Energy

Swala Energy has advised that the Company’s joint venture partner and the Operator in Block 12B in Kenya, Tullow Oil, has informed the Government of Kenya of their intention to proceed into the First Additional Exploration Period (Contract Years 3 and 4) of the Production Sharing Contract (PSC). Under the terms of the PSC the joint venture is obliged to acquire 300km2 of 3D seismic data or drill one

exploratory well during Years 3 and 4. The interpreted data received so far from the recently completed seismic survey over Block 12B has given Swala and Tullow firm confidence to continue the work programme and to commit to drill an exploratory well in 2015.

The third Joint venture partner, CEPSA, has opted to withdraw from the PSC saying they would have preferred more time to review the data before having to commit to a drill-or-drop decision. As the Company announced on the 10th March 2014, CEPSA farmed into Block 12B, with a

commitment to carrying the Company’s seismic costs up to a maximum of US$2.6 million and had also agreed to carry Swala through the first exploration well (should they have elected to enter this First Additional Exploration Period of the PSC).

Dr. David Mestres Ridge, CEO, said 'The recent seismic results have provided the technical comfort to both Tullow and Swala to make an informed decision to proceed into Years 3 and 4 of the PSC and we are excited at the prospect of drilling the first exploration well in this frontier basin. We do however regret that CEPSA has felt it necessary to withdraw from the licence after such a short period of time as a joint venture participant. All parties are working together to reduce the impact of this premature withdrawal constructively and we are confident that this will lead to a satisfactory outcome to the matter. With seismic campaigns due to commence over the Pangani and Kilosa-Kilombero licences in Tanzania in the coming months and the high likelihood of our maiden drilling project taking place in 2015 the Company is looking to the future with confidence.'




Mali Grants Four Exploration Permits To Qatar Mining Reuters + NewBase

Mali has awarded four mining permits to Qatar Mining, the mines minister said, as the West African country seeks to boost exploration to offset ageing mines. The International Monetary Fund forecasts a steady decline in gold output in Mali, Africa’s third-largest gold producer, from 2015 as existing mines reach maturity.

“Qatar Mining has opened its Mali entity. We will be granting them four mining concessions – greenfield projects – that they will develop in the next few years,” Mines Minister Boubou Cisse said in an email to Reuters.

The agreement follows a meeting between Malian President Ibrahim Boubacar Keita and a visiting Qatari investment delegation last month. Officials at state-owned Qatar Mining could not be reached for comment. Qatar sent relief aid to thousands of displaced people in northern Mali in 2012 after a Tuareg uprising, later hijacked by Islamist fighters, plunged the country into chaos.

A French military intervention last year helped restore order, although both Islamic fighters and armed Tuareg separatists are still present in the desert north. “This company (Qatar Mining Mali Greenfield) will represent the interests of Qatar in Mali and the region as they say




they would like to make Mali their base for West Africa,” Lassana Guindo, a mines ministry official, said.

A document outlining Qatar Mining’s investments showed that the permits cover four zones named as Tabako, Mininko Nord, Netekoto and Linguekoto, located in the west and south. It also showed that Qatar Mining planned to take a share in a mining site in Mali that is already operational, without giving further details.

Qatar Mining was established four years ago to invest in mining and metals. It has so far said little about its strategy, although industry sources say it is focused on Africa and is also reviewing a mining opportunity in Burkina Faso. In 2012, Qatar

International, a joint venture by Qatar Steel and Qatar Mining, secured a deal to build, own and operate a $2 billion steel plant in Algeria.




Brazil eyeing Japan’s help in oil project AFP + NewBase

TOKYO: Brazil plans to use Japanese technology in building a floating structure and ships for its huge offshore oil development project, media reports said yesterday.

Japanese Prime Minister Shinzo Abe and Brazilian President Dilma Rousseff will announce the use of Japanese technology in building a so-called “logistics hub” for the project when they meet in Brazil on August 1, according to a draft of their joint statement, Kyodo news agency said. The massive floating structure under consideration would be about 300 metres long and 100 metres wide, Kyodo said, citing government sources.

Abe is scheduled to leave on a tour of Central and South America on Friday. Abe and Rousseff will also announce that Brazil will launch a programme this year to upgrade its shipbuilding industry by training experts with Japanese help, according to the draft. The business daily Nikkei said the leaders are expected to reach agreement during their talks on cooperation in the project to develop the field off Brazil.

Petrobras, Brazil’s government-affiliated oil company, aims to start production by 2020 at the field which is estimated to hold more than 50 billion barrels worth of oil reserves, Nikkei said.




Pemex to stop depletion in giant Cantarell in Gulf of Mexico

The wholly state-owned company Petroleos Mexicanos (Pemex) is planning to invest up to $6 billion capital expenditure to stop the depletion of its giant Cantarell oil and gas field on the Mexican Continental Shelf of the Gulf of Mexico.

Located 80 kilometers offshore in the Bay of Campeche, Cantarell lies in the shallow waters of the southern part of the Gulf of Mexico.Discovered by fishermen in 1972, its easy access and light crude oil quality enabled Pemex to undertake the fast track development of a discovery which appeared as the largest field in Mexico and one of the largest in the world.

Cantarell field is split in multiple reservoirs including Akal, Chac, Kutz and Nohoch. With the first oil commercially produced in 1979, Pemex managed to ramp up the production up to the exceptional level of 2.21 million barrels per day (b/d) in 2003 representing more than half of Mexico total production.

Because of the quality of its crude oil and easy access in the shallow water of Gulf of Mexico, Cantarell appeared to be very productive at low costs leading Mexico and its spearhead company Pemex to feel confident in standing self sufficient in developing oil

and resources in Mexico.

But this lack of technological challenges during some decades has left Pemex unable to develop the expertise to explore deep offshore field or to implement enhanced oil recovery (EOR) techniques required to maintain national oil and gas production while Cantarell started to deplete naturally.

Mexico Round Zero allocation expected in September Since 2003 peak, the production continuously declined from Cantarell down to the current 340,000 b/d. To stop this decline and restore its production capacity, Mexican Authorities has decided, after years of intense debates, to change constitution to allow foreign companies to

invest in Mexico.

In this perspective, the Government is preparing legal ground for Pemex to establish joint venture with foreign companies in order to develop existing and new fields. Among Cantarell main reservoirs, Akal has been identified as the most promising for enhanced oil recovery (EOR) investment in order to compensate the additional foreseeable lose of 100,000 b/d.

Stopping Cantarell depletion is ranked as the first priority in Pemex agenda. With capital expenditure estimated around $6 billion, Pemex expects to maintain Akal production around 200,000 b/d. Considering that the first allocation of licences to foreign companies should occur in September 2014 through the so called Round Zero process, Pemex should proceed with Cantarell Akal EOR project in 2017.





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

Energy Services & Consultants Mobile : +97150-4822502

[email protected] [email protected]

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

NewBase 21 July 2014 K. Al Awadi

Economy & Finance

New base special 21 july 2014