new base 519 special 15 january 2014

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NewBase 15 January 2015 - Issue No. 519 Khaled Al Awadi

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

UAE: Wintershall plans to invest in Shuwaihat field GulfNews + NewBase

Wintershall is close to finding gas in Shuwaihat sour gas and condensate field in the western region of Abu Dhabi, a top executive from the company said. “At the moment we are approaching the reservoir and we are hoping that we have some good news in the coming weeks,” said Uwe Salge, general manager of Wintershall Middle East, Abu Dhabi.

Gas resources at the field are estimated to be between 28.3 billion cubic meters (bcm) and 85

bcm. The field is being developed in joint cooperation with Austrian company OMV with Abu Dhabi National Oil Company (Adnoc) being the major stake holder. It is located 25 kilometres from Ruwais. Investments are being done in a phased manner in Shuwaihat project. “The agreement we have with is that we drill a well, evaluate together then agree to the next step,

Wintershall and OMV sign agreement with ADNOC to jointly

appraise the Shuwaihat sour gas field – June - 2012




another well or two more wells.” “If we continue to be successful then the likelihood of a larger investment to develop in the sour gas field comes into place and this will be in the magnitude of a billion in future.” The company’s other project in Qatar is in a bit difficulty due to lack of accessibility to processing infrastructure facilities, he said. “We have made a gas discovery there, several tcf (trillion cubic feet) of gas and we were working already on this development, but at the moment it is stopped.” The UAE’s demand for gas is expected to rise from 2013 levels of 79 billion cubic meters (2.8 tcf) to 179 bcm (6.32 tcf) by 2020.Two major sour gas projects in the UAE are taking shape. Adnoc this week announced the starting of Shah Gas field being developed by Al Hosn gas company in partnership with Occidental petroleum. The $10 billion (Dh36.7 billion) project is expected to produce around 14.2 million cubic meter of gas per day for the domestic market, 33,000 barrels of oil equivalent per day of condensate and 4,400 tonnes per day of ethane and natural gas and liquids.

Production in Bab field being developed by Adnoc in partnership with Shell is expected to begin in 2020. The onshore project will eventually add 14.7 million cubic meters (519 mcf) per day of sulphur free sales gas to the UAE’s domestic network. Wintershall has already developed sixteen fields in Germany and recovered about 30 billion cubic meters of sour gas.The German based company is aiming to become a prime operator in the development of sour gasfields in the region. “We are trying to get into oil recovery in major oilfields in Abu Dhabi through technology, innovation and applying new chemical measures,” Salge added.




SABIC launches Innovation Award to spur development of smart plastics in Kingdom

SABIC has announced the launch of an annual innovation award, SABIC Innovation Award, a new initiative specific to Saudi Arabia that will grant cash awards of up to SR10 million, along with the necessary research and commercial support, for innovative ideas in the field of smart plastics. The award will identify promising future technologies and avenues to support downstream development in Saudi Arabia, address community interests, and meet sustainability needs.

The award program is open to both individuals and businesses in Saudi Arabia who can send in their entries through the SABIC website (www.sabic.com/innovationaward) from Jan. 15 to May 31, 2015. Applicants will need to submit their ideas relevant to the field of plastics and participate in either the SABIC Growth Fund or the SABIC Ideas Award. Commenting on the award’s pivotal role in achieving excellence and advancing science to serve Saudi society, Prince Saud bin Abdullah bin Thenayan Al-Saud, Chairman of the Royal Commission for Jubail and Yanbu and Chairman of SABIC, said this is a unique opportunity to localize innovative solutions on a national scale. He said he is proud of the company’s initiative in launching the award. “In SABIC, we continue to pursue excellence through innovation. We believe in the importance of innovation as a basis for development and achieving our goals successfully. We have opened the door to society to be part of this vision and join us in developing Saudi Arabia.” Prince Saud added that SABIC is working toward encouraging innovation locally. The award is one of the tools it employs to achieve this objective. He called on everyone to participate and register their ideas with the company, “because every project starts with an idea.” In remarks on the initiative and its role in supporting national development, Mohamed Al-Mady, SABIC Vice Chairman and CEO, said “SABIC has always played a leading role in supporting the betterment of society and economic development, not only with its strong commitment to Corporate




Social Responsibility, but also by encouraging innovation to develop new products to meet present and future societal needs. This new initiative has been created to extend opportunities and drive innovation within Saudi Arabia to encourage the development of specialized and advanced plastics and polymer applications for the national industry.” The SABIC Ideas Award is a cash prize for those ideas with most potential that are still at an early stage of development. The SABIC Growth Fund, represents an opportunity for the applying individual or establishment to form a long lasting business collaboration with SABIC. The SABIC Growth Fund will offer successful applicants access to SABIC’s extensive resources, including some of the world’s brightest scientists and engineers and state-of-the-art technology and innovation facilities. This includes access to the SABIC Plastics Applications Development Center (SPADC), located in the Riyadh Techno Valley, where new and exciting plastics applications are explored and developed for personal electronics, automotive, healthcare, agriculture and construction applications. Commenting on why SABIC is embarking on this initiative, Ernesto Occhiello, Executive Vice President, Technology and Innovation, said “the world needs more innovative ideas. We know that opportunities for innovation are increased significantly when experts work with experts and the very best resources available are at hand. The SABIC Innovation Award has been instituted to enable these conditions as well as to raise innovation levels and help establish Saudi Arabia as a center for creative thinking and innovation.” The initiative is a reflection of SABIC’s efforts to advance innovative technologies for societal and business applications in Saudi Arabia as well as in the markets where it operates globally. The company has significant research resources across the globe, with more than 10,000 patents and patent applications worldwide.




Somalia: ION announces 2D regional seismic survey offshore Puntland

Source: ION Geophysical + NewBase

ION Geophysical has signed an agreement with the Puntland Petroleum and Minerals Agency (PPMA) to complete a multi-client 2D regional seismic survey offshore Puntland, Somalia. The Puntland SPAN survey is the first of its kind within Puntland’s jurisdiction and will assist the PPMA in demarcating a block boundary scheme for future licensing activity. When completed, Puntland SPAN will deliver more than 7,600 km of pre-stack depth-migrated data to help explorationists gain a better understanding of both the architecture of the sedimentary basins and the hydrocarbon potential of this margin.

Puntland is considered highly prospective; regionally, it is a geologic analogue of Yemen and Oman, where oil reserves have been discovered in Cretaceous and Jurassic formations. Both areas once formed a single landmass before the Gulf of Aden rifted and separated the Horn of Africa from the Arabian Peninsula. Puntland’s eastern offshore region is also a conjugate margin to India, where recent discoveries have been made; in the Indian Ocean, the program will test the continuation of Mesozoic failed rift basins, as well as the presence of a Karoo-aged rift system perpendicular to the coast. Dr. Osman Salad Hersi, associate professor at the University of Regina and technical advisor to the Puntland Authority, attests that the Indian Ocean shelf of Somalia extends farther southward along the continental margin of Kenya, Tanzania and Mozambique. “This region has been a site of significant hydrocarbon discoveries within the past two years and has attracted the interest of many exploration companies,” he noted. Hersi also expressed that the PuntlandSPAN is 'a well-needed survey that will bolster the interest of the exploration companies and confer significant leverage for the State’s endeavour to license blocks to the oil industry.' Issa Farah, Director of PPMA, commented, 'This survey will prove a highly valuable tool as Puntland begins to promote future licensing rounds for oil and gas exploration. Although this offshore domain is largely unexplored, the international oil and gas community has recently expressed keen interest in understanding the region’s viability.' The Puntland SPAN survey is currently in planning stages, scheduled to commence in the second quarter of 2015 pending the issue of environmental and reconnaissance permits.




Algeria: Oran Sonatrach, source of pride for Africa APA + NewBase

ORAN- National oil group "Sonatrach" is a source of pride for Africa, President of Senegal, Macky Sall, declared Wednesday in Arzew (Oran), while visiting the Natural Gas Liquefaction complex "GNL 3Z".

"Sonatrach is a pride for both Algeria and Africa as a whole," said the Senegalese president at the end of a presentation session on the Sonatrach activities.

Accompanied by Minister for Maghreb and African Affairs Abdelkader Messahel and Energy Minister Youcef Yousfi, President Macky Sall said he was "very impressed" by the technical standard and the size of the liquefaction plant "GNL 3Z" which has a capacity of production of 4.7 million cubic meters per year.

This plant has already produced 1.5 million m3 since its inauguration, last November by Prime Minister Abdelmalek Sellal.

Over the same period, fourteen LNG ships were loaded and destined to the international market, notably the Mediterranean Basin.

Totally funded by Sonatrach, the "GNL 3Z" complex allowed to create 645 direct jobs and 650 indirect jobs.

Senegalese president is paying a State visit to Algeria at the invitation of President of the Republic Abdelaziz Bouteflika.

Upon his arrival in the Ahmed-Benbella International Airport Wednesday, the President of Senegal was greeted by Minister for Maghreb and African Affairs Abdelkader Messahel and Energy Minister Youcef Yousfi.




Japan:Spot LNG contracted in Dec at U$D 11.6/ mmBtu LNG World News Staff; Image: Tokyo Gas

Japan’s price of spot LNG that is contracted in December averaged $11.6 per mmBtu on

DES basis, the country’s Ministry of Economy, Trade and Industry (METI) said in a

statement.

“The average price of spot LNG imported into Japan that arrived in December is $15.1 per mmBtu,” according to the report.

Only spot LNG cargoes are taken into account in this

assessment, excluding short, medium and long-term contract

cargoes, as well as those linked to a particular price index.

Japan, the world’s biggest buyer of liquefied natural gas, imported 87.73 million tonnes

of LNG in the fiscal year ended in March, up 1 percent compared to the same period a year ago.




Egypt: SacOil commences development operations at the Lagia oil field, onshore Egypt.. Source: SacOil

SacOil Holdings, through its subsidiary Mena International Petroleum Company, has announced the commencement of field development operations at its 100% owned Lagia oil field in Sinai, onshore Egypt. Mena has contracted Schlumberger Egypt to conduct an initial phase of development, which includes the hydraulic stimulation of the Lagia 6, 7, 8, 9 and 10 wells, specifically targeting the intersected productive Nukhul geological formation. Schlumberger is one of the leading international oil field services companies, with a proven track record of success in Egypt.

Operations commenced on the 4th January 2015 and well results are expected by the end of January 2015. The Company anticipates total daily production of approx. 350 barrels of oil per day, provided the completion of operations at each of these wells is successful. In addition to these hydraulic stimulation operations, a thermal recovery process is being planned for the first half of 2015, which should further enhance oil production and recovery of the reserves from the Lagia oil field.

SacOil is preparing and planning a second phase of development operations to start by June 2015, which includes the drilling of up to five additional wells in the Lagia oil field. More details of this phased development, as well as progress on the current operations, will be announced in due course.




Statoil exits three Greenland licenses Statoil + NewBase

Norway’s Statoil has confirmed that the company has handed back three of its four oil and gas exploration licenses located offshore Greenland.

Namely, three licenses off the west coast of Greenland were handed back by the end of 2014, but the company kept one license off the east coast where the deadline for drilling is longer.

In an e-mail sent to Offshore Energy Today, Statoil’s spokesperson confirmed that the company has made a decision to exit three licenses on the west coast of Greenland.

When asked about the reason behind this decision, Statoil’s spokesperson said: “Our licence commitments have been filled. Given the subsurface potential, the general cost picture and corporate priorities we have decided to exit the licences.”

Furthermore, regarding the one remaining license, the spokesperson noted, “the licence in block 6 on the east coast of Greenland remains in our portfolio”.

In addition to Statoil, Danish newspaper Politiken reports that French GDF Suez and Danish DONG Energy have also handed back their exploration licenses explaining that it is too risky and too expensive.

Offshore Energy Today recently reported that Maersk Oil postponed a decision on whether to drill for oil off the coast of Greenland.

DONG Energy’s spokesperson said: “We have pulled out of the Qamut-license located offshore West Greenland. The remaining owners of the license are ConocoPhillips (operator) and Nunaoil.”




Market expectations of oil price uncertainty have increased in recent months. Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2015

December was the sixth consecutive month in which monthly average Brent crude oil prices decreased, falling $17/barrel (bbl) from November to a monthly average of $62/bbl, the lowest since May 2009. The December price decline, and its continuation into early January, reflects continued growth in U.S. tight oil production, strong global supply, and weakening outlooks for the global economy and oil demand growth.

As oil prices have sharply declined, market expectations of uncertainty in the price outlook have increased as reflected in the current values of futures and options contracts. West Texas Intermediate (WTI) futures contracts for April 2015 delivery, traded during the five-day period ending January 8, averaged $51/bbl, with the value of options contracts establishing the lower and upper limits of the 95% confidence interval for the market's expectations of monthly average WTI prices that month at $34/bbl and $76/bbl, respectively. The 95% confidence interval for market expectations widens considerably over time, with lower and upper limits of $28/bbl and $112/bbl for prices in December 2015. The growing uncertainty surrounding oil prices presents a major challenge to all price forecasts. EIA's JanuaryShort-Term Energy Outlook (STEO), released yesterday, forecasts Brent crude oil prices averaging $58/bbl in 2015 and $75/bbl in 2016, with annual average WTI prices expected to be $3/bbl to $4/bbl below Brent. These price projections reflect a scenario in which supply is expected to continue to exceed demand, leading to inventory builds through the first three quarters of 2015. With increased demand and weakening supply, the market becomes more balanced beyond mid-2015, and prices begin to rise. Recent global economic data outside the United States has generally been below expectations. With most of the projected increases in future global petroleum consumption expected in developing countries, disappointing international economic news had more downward influence on crude oil prices than positive U.S. economic data.




EIA expects global petroleum and other liquids demand to grow by 1.0 million bbl/d in both 2015 and 2016 from an average of 91.4 million bbl/d in 2014. Nearly all the forecast demand growth comes from non-OECD (Organization for Economic Cooperation and Development) countries. The biggest reduction in forecast non-OECD consumption growth in 2015 comes from a 0.2 million bbl/d decline in Russia's consumption because of its economic downturn. Russia's consumption is expected to decline by a similar amount in 2016. China is the leading contributor to projected global consumption growth, with consumption expected to increase by an annual average of 0.3 million bbl/d over the next two years.

EIA estimates that non-OPEC (Organization of the Petroleum Exporting Countries) production grew by 2.0 million bbl/d in 2014, averaging 56.2 million bbl/d for the year. Growth of non-OPEC supply is expected to slow over the next two years mostly because of lower projected oil prices. EIA expects non-OPEC production to grow by 0.7 million bbl/d in 2015 and by 0.5 million bbl/d in 2016, with the United States as the leading contributor. Given the rapid growth in oil production throughout 2014, the year-over-year comparisons between 2015 and 2014 oil production overstates projected growth in 2015 relative to levels at the end of 2014. For example, U.S. oil production in December 2014 is estimated at 9.2 million barrels per day, only slightly below the average daily 2015 production level in EIA's STEO forecast. Oil prices could deviate significantly from current projections under different supply and demand conditions. Weaker-than-expected global demand growth would increase the supply overhang and would require larger production cuts to bring the market into balance. Producers' responsiveness to lower prices will determine how soon production is cut. The price decline and lag time required to cause a reduction in forecast non-OPEC supply growth, particularly U.S. tight oil, vary by producer and are also difficult to gauge.




Oil Price Drop Special Coverage

Qatar Petroleum, Shell halt $6.4 bln petrochemical project

Qatar Petroleum and Shell said they had decided not to proceed with their $6.4 billion (Dh23.53 billion) Al Karaana petrochemical project in the Gulf state, the region’s second big energy project to be shelved since oil prices began to plunge late last year.

Prices quoted by contractors to build the huge complex showed the project was “commercially unfeasible, particularly in the current economic climate prevailing in the energy industry”, the two companies said in a joint statement on Wednesday.

State-owned Qatar Petroleum and Shell had agreed on the project in December 2011; they were to build a petrochemical complex in the Ras Laffan Industrial City, with the Qatari company owning 80 per cent and Shell 20 per cent.

The Al Karaana project had appeared to face delays even before oil prices started to tumble. Requests for banks to help finance it were due to be sent out by the end of the first quarter last year, but this did not happen.

That suggests the oil price tumble may be prompting companies formally to shelve projects that were in any case looking uncertain because of changes in the industry and shifting demand projections.

Early this month, industry sources told Reuters that Saudi Arabia’s state oil giant Saudi Aramco had suspended plans to build a $2 billion clean fuels plant at its largest oil refinery in Ras Tanura.

Many other multibillion dollar projects in the region are still going ahead, however, including the Sadara joint venture petrochemical complex of Aramco and Dow Chemical, which has an estimated value of around $20 billion.

Existing partnerships between Qatar Petroleum and Shell include Pearl GTL, the world’s largest integrated gas-to-liquids plant, located at Ras Laffan in the Gulf state.




Qatar Petroleum／Shell Al Karaana Petrochemicals Complex

Qatar Petroleum (QP) holds an 80% share in the project, and Shell holds the remaining 20% share.

The complex, on its commissioning, will be capable of processing 1.1 million tonnes per year (mtpa) of

ethylene, 170,000mtpa of propylene, 1.5mtpa of MEG, 300,000mtpa of LAO and 250,000mtpa of OXO.

Russian finance minister warns on spending as crisis deepens Reuters

Russia’s finance minister called yesterday for a cut in planned spending to weather an economic

crisis, warning of a more than $45bn drop in revenues this year if the average oil price is $50 a

barrel.

In comments underlining the government’s growing concern at the downturn, Finance Minister Anton Siluanov said all budget expenditure should be cut by 10% except defence, a priority for President Vladimir Putin. Adding to the gloom, Economy Minister Alexei Ulyukayev said there was a “pretty high” chance Russia’s credit rating would be downgraded to junk and a deputy, Alexei Vedev, said he expected inflation to peak at 15-17% in

March/April.

A steep fall in the rouble, low prices for its main oil export and Western sanctions over Moscow’s role in the Ukraine crisis have hit Russia’s economy hard, and Siluanov said overall expenditure in 2015 must increase by 5%, not the 11.7% previously budgeted.

“The state cannot have the kind of spending it used to have with economic growth ... (and) with the oil price at $100 per barrel,” Siluanov told a conference of state officials, economists and business chiefs. But with Russia being starved of investment, pressure is mounting for stronger government action to pull it out of crisis.

“We need a radical turn in economic policy,” said German Gref, the head of Russia’s biggest bank, Sberbank, demanding a “breakthrough” to improve the dire investment climate, stymied by state pressure on business and weak rule of law. Ulyukayev also highlighted the problems facing small and medium businesses, saying they must be supported to try to spur Russia’s oil-dependent economy, which the World Bank expects to contract by 2.9% this year. “The global economy will never again be what it used to be in 2000-07 and the situation in Russia will never be the same,” Ulyukayev said, referring to the economic boom years under Putin when the global oil price soared. “It will be much more complicated. It already is much more.” Russia’s 2015 budget was based on an oil price of $100 a barrel but prices are now close to six-year lows at just above $46 a barrel. “Regardless of having already curbed 2015 spending, we will ask parliament to cut by 10% all expenditure apart from defence spending,” Siluanov added.




He said Russia needed to husband its reserves to overcome difficulties as the price of oil looked set to continue at low levels. The rouble, which fell about 40% against the dollar in 2014, has also continued its decline this year.

“We think that with the (average) oil price at $50 per barrel (in 2015) ... we will lose some 3tn roubles in revenues,” he said. Siluanov said the Reserve Fund, a rainy day fund of around $90bn to cover budget holes, would be increased by 370bn roubles ($5.60bn) from last year’s savings, but Russia would need to spend more than 500bn roubles from it in 2015 to cover the budget gap. The 500bn, currently invested in foreign currency assets, would be converted gradually on the forex market. Siluanov said the ministry could invest part of the Reserve Fund in rouble bank accounts to take advantage of the weak rouble and earn high interest. “We need to have a lot more resources so as not to spend, not to burn up the reserve funds,” he said. Russia’s Finance Minister Anton Siluanov attends the Gaidar Forum 2015 ‘Russia and the World: New Dimensions’ in Moscow yesterday. Russia’s budget for next year will lose 3tn roubles (£30bn) in revenues if the oil price averages $50 a barrel, Siluanov 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.

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

NewBase 13 January 2015 K. Al Awadi

new base 519 special 15 january 2014

Economy & Finance

shuwaihat sour gas field

natural gas

gas discovery

gas resources

cubic meters of sour

cubic feet of gas

cubic meter of gas

starting of shah gas