new base 713 special 25 october 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 25 October 2015 - Issue No. 713 Senior Editor Eng. Khaled Al Awadi

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

UAE: plans to increase crude oil and gas production Source: U.S. Energy Information Administration, International Energy Statistics

The United Arab Emirates (UAE) was the world's sixth-largest oil producer in 2014, and the second-largest producer of petroleum and other liquids in the Organization of the Petroleum Exporting Countries (OPEC), behind only Saudi Arabia. Because the prospects for further oil discoveries in the UAE are low, the UAE is relying on the application of enhanced oil recovery (EOR) techniques in mature oil fields to increase production.

Using EOR techniques, the government plans to expand production 30% by 2020. EOR is an expensive process, and at current prices, these projects may not be economic. However, despite today's low oil prices, the UAE continues to invest in future production.

The Upper Zakum oilfield is one region that has been targeted for further development. The field is the second-largest offshore oilfield and fourth-largest oilfield in the world, and it currently produces about 590,000 barrels per day (b/d). In July 2012, the Zakum Development Company awarded an $800 million engineering, procurement, and construction contract to Abu Dhabi's National Petroleum Construction Company, with the goal of expanding oil production at the Upper Zakum field to 750,000 b/d by 2016. Production from the Lower Zakum field should also increase, with oil production eventually reaching 425,000 b/d, an increase from the current level of 345,000 b/d.




The UAE produced 1.9 trillion cubic feet (Tcf) of natural gas in 2013. A top-20 global natural gas producer, the UAE also holds the seventh-largest proved reserves of natural gas in the world, at slightly more than 215 Tcf. Despite its large reserves, the UAE became a net importer of natural gas in 2008 as a result of two things: the UAE reinjected approximately 30% of gross natural gas production in 2012 into its oil fields as part of EOR techniques, and the country's rapidly expanding electricity grid relies on electricity from natural gas-fired facilities. To help meet growing internal natural gas demand, the UAE has increased imports from Qatar and plans to increase domestic natural gas production. However, the UAE's natural gas has a relatively high sulfur content that makes it difficult to process, making it hard for the country to develop its extensive reserves. Advances in technology and growing demand have made the

UAE's reserves an economic alternative to imports from Qatar, and UAE has several ongoing projects that will increase the country's production in coming years.

The UAE has also announced its intention to expand non-oil energy assets, in an attempt to reduce reliance on natural gas for power. For more analysis of the UAE's energy sector, see EIA's Country Analysis Brief on

the United Arab Emirates.




Qatargas delivers 2,300 LNG cargoes to Japan since 1997 Gulf Times + NewBase

Qatargas has successfully delivered around 2,300 LNG cargoes to Japanese customers since 1997, said Qatar Petroleum president and CEO Saad Sherida al-Kaabi. He was speaking at the annual reception hosted by Qatargas for Japanese partners, clients and contracting companies in Japan recently.

Qatargas CEO Sheikh Khalid bin Khalifa al-Thani and other senior official from QP and Qatargas attended the event. Al-Kaabi and the senior delegation held talks with senior executives of major Japanese corporations during their recent visit to Japan. The meetings and discussions focused on various aspects of existing and future cooperation between Japanese clients and partner companies and Qatar Petroleum and its companies, particularly in the LNG trade.

It included the chairmen, presidents, and senior executives of Chubu Electric, Tokyo Electric (Tepco), Kansai Electric, Tohoku Electric, Bank of Tokyo – Mitsubishi UFJ, Idemitsu, Mitsui OSK Lines, Chiyoda Corp, Mitsui & Co Marubeni Corp, JX Nippon oil and gas exploration, and LNG Japan.

Discussions also included major companies such as NYK Line, JGC, Sumitomo Mitsui Banking Corp, Mizuho Bank, K Line, Itochu Corp, Cosmo Oil Company, UPD Bunduq, and Jera. Al-Kaabi hailed the strong Qatari-Japanese relations, which covered a wide spectrum of activities, and said, “The LNG trade lies at the heart of these special ties”.

Discussions with Japanese LNG buyers focused on increasing Qatari LNG exports to Japan, and expanding cooperation in other areas of mutual interest. Al-Kaabi said, “Qatargas was started in the early 1990s as an entirely dedicated project to Japanese customers, leading to 1997 – the year of the first Qatari LNG shipment to Japan”.

“As of today, I am proud to say that we have successfully delivered around 2,300 LNG cargoes to our Japanese customers”, al-Kaabi said. He voiced his appreciation for all the Japanese partners and clients for their confidence and cooperation, and said, “We continue to place the highest priority on maintaining a safe and reliable LNG supply to our friends in Japan”, and stressing that “Qatargas will continue to be the trusted and reliable LNG supplier of choice.”




Kuwait: Equate to buy ME Global from Dow, PIC for $3.2bn The National + NewBase

Dow Chemical of the US and its Kuwaiti partner are selling a petrochemical joint venture for US$3.2 billion as part of Dow’s divestment plan aimed at funnelling capital into other activities.

Kuwait’s Equate will buy ME Global, an ethylene glycol maker, from Dow and Petrochemical Industries Company, a unit of state-run Kuwait Petroleum Corp, Dow and Boubyan Petrochemical

said in separate statements. Kuwait-listed Boubyan owns 9 per cent of Equate. The deal is expected to close by the end of this year.

Dow will receive $1.5bn in pre-tax proceeds from the sale, which is part of non-binding agreements to sell further stakes in its Kuwaiti joint ventures. Dow and PIC are partners in several petrochemical joint ventures under the name of Great Equate.

“Firstly, the Kuwait joint ventures will be restructured over the next nine months, resulting in a

different ownership structure and enabling strategic growth for these companies,” Dow said in a statement. “In the second phase, Dow will further reduce its overall ownership interest in Greater Equate. The pre-agreed with PIC target date to complete this second phase of the transaction is mid-2016.”

Dow announced last November that it plans to reduce its stakes in all of its Kuwait joint ventures as part of a $8.5bn divestiture plan. PIC plans this year to offer to the public stakes in petrochemical joint ventures with Dow, Mohammad Al Farhoud, the PIC chairman, said last December.

Separately, ME Global will build a plant on the US Gulf Coast to help expand the company’s footprint. ME Global currently markets 2.5 million tonnes of ethylene glycol per year globally. Ethylene glycol is used as raw material in the production of clothes, anti-freeze and other industrial products.

Meanwhile, Dow’s third-quarter profit soared 51.4 per cent to $1.29bn as it benefited from lower raw material costs and better margins. Sales, however, dropped 16.7 per cent to $12bn.

“In the forthcoming quarters we will continue to see growth and capture that growth in markets such as China, the US and Europe, despite challenging macros in other parts of the world, such as Brazil,” said Andrew Liveris, Dow’s chairman and chief executive.

Dow is gearing up to starting production this year from Sadara Chemical Company, its $20bn petrochemical joint venture with state-run Saudi Aramco. The project in Saudi Arabia will produce 3 million tonnes of petrochemicals a year once fully operational next year. The project is the world’s largest such facility to be built in a single phase.




Oman: 9 firms prequalified for $1bn Duqm Liquid Terminal package Oman Obserber + NewBase

Nine prominent international marine engineering firms have been prequalified by the Omani government to participate in a tender for the construction of a major Bulk Liquid Berths Terminal at the Port of Duqm.

The Special Economic Zone Authority at Duqm (SEZAD) is overseeing the competitive tendering process for the prestigious contract, in line with its broader mandate to develop a mega industrial and maritime hub at Duqm on the Sultanate’s Wusta coast.

Making the cut in the latest phase of the bid process for this project are: Boskalis Westminster Middle East Oman, Hyundai Engineering & Construction Co, Van Oord Oman; Dredging International, Tecnicas Reunidas, Consolidated Contractors Co, China Harbour Engineering Co, Huta Marine Works, and Penta Ocean Construction Co.

The successful bidder will secure a contract, potentially worth around $1 billion, to undertake the detailed design (based on owner-provided front-end engineering design), dredging, reclamation, and jetty works for the new Bulk Liquid Berths Terminal in the Port of Duqm.

The contract, encompassing primarily the marine infrastructure facilities, represents Package 1 of the Bulk Liquid Berths Terminal project. Topside facilities, including the installation of product storage tanks, dry bulk facilities, pipelines, buildings, road and other infrastructure, will be covered in the second package, due to be tendered out later.

According to SEZAD, the terminal will serve as the outgo port for Duqm Refinery, an ambitious 230,000 barrels per day capacity greenfield project that is currently under development at an




adjoining location. Consequently, construction of the Liquid Terminal will be schedule-driven, with handover planned in advance of the refinery’s scheduled start-up in early 2019.

Significantly, bulk liquid terminaling and storage is a key component of the infrastructure being developed at Duqm Port to support the growth of a major liquids hub as part of the SEZ’s logistics offerings.

A dedicated area along the Northern Lee Breakwater has been earmarked for the development of a number of terminals designed to the handle the SEZ’s substantial component of liquid cargoes.

International engineering consultancy services firm WorleyParsons is currently undertaking the front-end engineering design (FEED) of the Bulk Liquid Berths project, at the heart of which is a refinery products terminal with six liquid berths, and a Pet Coke berth.

The first of these terminals will be built on behalf of Duqm Petroleum Terminal Company (DPTC), which is a partnership of Oman Oil Company (90 per cent) and Port of Duqm (10 per cent).

DPTC’s facilities will handle all of the volumes flowing into and out of the refinery, as well as other related petrochemical investments at the SEZ. The company intends to build a 1 million cubic metres tank storage terminal to support the jetty’s operations at the Port of Duqm.




Morocco: Sound Energy to Buy Stake in Moroccan Gas Assets Sound Energy + NewBase

Sound Energy has agreed to purchase stake in Maghreb Petroleum Exploration’s interests in three onshore oil and gas exploration permits located in the Sidi Moktar region of Morocco.

The Sidi Moktar licences cover 2,700 Km2 in the Essaouira basin, central Morocco. The licences contain a material existing gas discovery in the Lower Liassic (Kechoula) where two wells have already been drilled and a near term well test is awaited prior to possible commercial production.

Initial Company estimates have confirmed Kechoula to have an unrisked mid case GOIP of 293 Bscf (100% working interest), Sound Energy said, adding that there is also significant (in excess of 1 Tcf of unrisked GOIP; 100%) Triassic exploration potential.

'The Option will, when granted, enable Sound Energy to secure a 25% carried interest in an already successfully drilled gas discovery with potential near term production and significant deeper exploration potential. An interest in Sidi Moktar would also represent the second material asset in Sound Energy's onshore Moroccan gas portfolio, which is underpinned by strong European gas fundamentals,” James Parsons, the Company's Chief Executive, commented.

Sound Energy now plans to work with the other partners on the Sidi Moktar licences, with a view to accelerating progress on the licence area.




India aims to reduce high electricity transmission and distribution system losses.. Source: U.S. EIA, based on International Energy Agency, electricity/heat supply and consumption data

Despite considerable improvement since the turn of the century, India has one of the highest levels of electricity transmission and distribution (T&D) losses in the world. T&D losses represent electricity that is generated but does not reach intended customers. India's T&D losses are almost 20% of generation, more than twice the world average and nearly three times as large as T&D losses in the United States.

Electricity losses are the result of technical inefficiency and theft. Technical losses occur because of the resistance of wires and equipment as electricity passes through. Some loss is inevitable, but in places with good technical efficiency and low theft, T&D losses generally range between 6% and 8%. Most of India's T&D losses result from theft, which occurs when consumed electricity is not accounted for. Electricity is typically stolen by bypassing or tampering with the meter, or by bribing utility meter readers or billing agents.

Over the past several years, India has made capacity additions and efficiency upgrades to its transmission grid in an attempt to lessen technical losses. In 2009, the National Load Dispatch Center began supervising regional load dispatch centers, scheduling and dispatching electricity, and monitoring operations of the national grid.

By the end of 2013, each of the country's five regional grids was interconnected to operate at a synchronous frequency in an effort to more efficiently transfer power from generation sources to load centers. India has also more than doubled the mileage and capacity of high-capacity, high-voltage, direct-current lines since 2002, as these lines experience fewer losses over long distances than alternating-current lines.

In 2014, the Indian government initiated the Integrated Power Development Scheme to further strengthen urban distribution networks with information technology-based systems to meter distribution transformers, feeders, and urban consumption. The National Smart Grid Mission




works with state distribution companies and financing agencies to plan advanced communications grid projects.

Many of India's utilities also lose significant electricity-related revenue because of poor collection efficiency. Commercial losses occur when utilities are unable to collect customer bills, either because customers are unable to pay or because the utility is not reimbursed for state-mandated subsidies.

The Ministry of Power launched the Restructured Accelerated Power Development and Reform Program in July 2008 specifically to reduce both technical and commercial losses. Loans and grants were provided to utilities with the goal of establishing baseline data, setting up information technology-based energy accounting and auditing systems, establishing consumer service centers, and upgrading the distribution grid. Supervisory control and data acquisition systems have been installed to monitor the energy flowing through power lines and substations.

After a government financial bailout of state distribution companies in 2011, the Indian government approved a utility restructuring plan and set up a $1.3 billion National Electricity Fund to promote investment in the power distribution sector. The National Electricity Fund financially rewards companies that surpass targets to reduce technical and commercial losses and that meet state regulatory goals.

Additionally, many of India's state governments have now adopted new regulations and technologies to improve tariff billing and collection practices. To help combat losses due to theft, government programs have funded the installation of information technology-based and tamper-proof energy monitoring, metering, and accounting systems and equipment.

While loss levels are still high, electricity losses in India are decreasing. The Indian Ministry of Power released its evaluation of 40 power distribution companies in August 2015, which reported that 21 power distribution companies showed a reduction in their technical and commercial loss levels during the 2014 fiscal year compared to the previous year's levels.




Germany: E.ON’s Amrumbank West offshore wind farm fully operational Source: E.ON

E.ON has reported that the construction of Amrumbank West offshore wind farm is completed. All 80 turbines are connected to the network. With its full installed capacity of 288 megawatts now operational, Amrumbank West can produce enough climate-friendly power to meet the needs of 300,000 households and to displace more than 740,000 metric tons of carbon emissions annually.

Amrumbank West is in the German North Sea about 40 kms from Helgoland island, where the operations and maintenance center for the wind farm is located. E.ON invested €1 billion in the project. Offshore construction began in January 2014, and the first turbine began generating electricity in May 2015. Amrumbank West is wholly owned by E.ON.

'We’ve commissioned two large offshore wind farms - Amrumbank West and Humber Gateway off the U.K. coast - in just one year,' E.ON Management Board member Bernhard Reutersberg said. 'Both were completed on time and on budget, which underscores our ability to expand renewables.'

E.ON continues to enlarge its offshore portfolio. In May the company announced its decision to move forward with Rampion, a 400 megawatt project off the south coast of England. Construction will begin in January 2016. E.ON ranks among the world’s three leading offshore wind power companies.




NewBase 25 October - 2015 Khaled Al Awadi

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

Oil down as dollar offsets China move; glut hits prompt U.S. crude Reuters + NewBase

Oil fell on Friday, erasing early gains as traders dismissed a rate cut by China to focus on a surging dollar and weaker spot prices for U.S. crude as a glut weighed on prompt supplies. A rally in U.S. stocks, however, bolstered risk appetite across financial markets, limiting the downside in oil.

Brent crude oil was down 21 cents at $47.87 a barrel by 1:27 p.m. EDT, after falling as much as 63 cents earlier. U.S. West Texas Intermediate (WTI) crude was down 70 cents, or 1.5 percent, at $44.68, after hitting a three-week low at $44.20.

Both Brent and WTI have lost about 5 percent on the week, sliding for a second straight week. Earlier on Friday, oil prices rose about 1 percent on expectations the Chinese rate cut might prompt the No. 1 energy consumer to import more oil.

Gains, however, faded as the dollar index hit two-month highs, making oil, copper and a host other commodities, less affordable for holders of other currencies.

"It's terrible price action considering China's rate cut," said Scott Shelton, energy broker and commodities specialist for ICAP in Durham, North Carolina. "It shows this is not the solution the market is seeking for crude demand."

Oil price special

coverage




A stubborn global oil glut, partly due to record pumping by the biggest producers in OPEC, has prevented crude prices from staging a meaningful rebound despite a few sharp intermittent rallies since early September.

U.S. crude stockpiles have risen for four straight weeks amid reduced refining activity during the autumn maintenance season. The latest reading for the U.S. oil rig count showed drillers idling just one rig this week.

The rig count indicates whether oil production will rise or fall in the next several months. This week's decline was the smallest in eight weeks, suggesting the count go up if prices remain where they are or move higher.

In spread play of oil contracts, prompt WTI was at its largest discount in five months to the nearby contract, Reuters data showed, as weak spot prices pushed traders to store more crude for later delivery.

The discount, known as contango, has been widening since Wednesday, reaching a May 19 high of 87 cents.

"We've had massive builds. The whole spread curve in WTI is getting weaker, encouraging people to put oil into storage," said Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors in Laurel Hollow, New York .




Oil price may rise beyond USD 60 in 2017: QNB Gulf Times - Qatar

Oil prices will stabilise around an average of $55 in both 2015-16 before picking up to $60.2 a barrel in 2017 as the supply glut gets gradually eliminated, QNB has said in a report. “The adjustment in the market is working as expected, but the process is slow and protracted,” the report said.

According to QNB the oil markets have been over-supplied since the beginning of 2014. As supply growth outpaced that of demand, markets have become imbalanced, leading to a large build-up of inventories and a sharp fall in prices.

But oil markets, like other markets, have a tendency to adjust, and to clear excess supply. The adjustment was expected to take the form of supply cuts among high-cost producers (mainly in the US) as well as a pickup in demand as low prices encourage higher consumption. The latest data suggest that the adjustment process is already underway, although the market is not expected to clear until the second half of 2016.

US oil production has so far been resilient to the decline in oil prices, but less resilient than previously thought. In August, the US Energy Information Administration (EIA) changed its methodology for estimating US crude production, QNB said.

The new methodology is based on surveying producers directly rather than relying on incomplete state-level data. The new estimates show that the US is pumping less oil than previously reported. For example, in the month of June, the difference is around 149,000 barrels per day (bpd).

Both the old and new methodology show US oil production peaking in April this year, but the speed of subsequent decline is higher under the new methodology.




The fall in rig count, which has resumed again after stalling mid-year, also confirms that US shale oil production might already be past its peak. QNB has previously argued that there is no link between rig count and oil production because producers tend to first shut down wells in the least productive regions.

However, the EIA data now show accelerating output declines at the seven most productive regions. Furthermore, due to the large cuts in capital expenditure, any rebound in drilling activity is unlikely to happen in the short term.

Consequently, the International Energy Agency (IEA) forecasts that the US production of light tight oil will fall by 0.4mn bpd from 2015 to 2016.

On the demand side, the IEA expects additional demand to rise to a five-year high in 2015, reaching 1.7mn bpd. This is remarkable given that global economic growth is forecast to hit a six-year low this year, according to the International Monetary Fund.

The pick-up in demand is due to lower oil prices, which are encouraging higher consumption, particularly among US motorists. The demand was also boosted by a cold European winter in the first quarter of this year and China’s continued purchases of crude oil despite its economic slowdown and financial market turmoil, partly to fill up its strategic reserves.

“Despite the strong demand growth, markets are still expected to be oversupplied by 1.5mn bpd in 2015, reflecting additional production from both Opec and non-Opec countries. The continued demand growth in 2016 (1.2mn bpd according to the latest IEA’s forecasts) and production cuts in non-Opec countries (0.4mn bpd, mostly from US shale oil) should tip the market back into balance in the second half of 2016.

“However, potential increased Opec production due to the lifting of economic sanctions on Iran could delay the re-balancing until 2017.”




NewBase Special Coverage

News Agencies News Release 25 Oct.. 2015

Low oil prices make industry cooperation more important than ever John Wishart

Companies’ revenues have fallen by about two thirds because of the collapse of the oil price over the past year. What is more, exploration is getting trickier and more hazardous, yet demand for energy will only rise. These are challenging times for the industry but, historically, downturns lso throw up opportunities. The industry has for decades lived in a bubble of high prices, which has stifled innovation. Those days are gone for now, opening the door to a new era where disruptive technologies can transform an industry in need of modernisation. Some technologies are already in use, while others are in the embryonic stages. Digital oilfields, drones, unmanned underwater vehicles and the Internet of Things can all play a part in helping the industry develop. Which of these are most deployable in the short term? Aerial drones with high-resolution cameras are already simplifying and reducing inspection times on offshore oilrigs. A flood of new start-ups specialising in this work is entering the market, and a host of oil majors is already using the technology. Other technology such as the Internet of Things is changing how data is analysed in real time at oil drilling platforms. Electrical pumps operating at variable speeds are connected to the Cloud so they can be monitored hundreds of miles away from a control room. Data is collected using sensors and fed to engineers, providing real-time information on temperature and flow rates. What is more, engineers will be alerted instantly when a problem is detected. Real time analytics are also being used in enhanced oil recovery technology, maximising output at ageing fields. More uncertain is how technologies that require an internet connection would be deployed. Cost and safety issues have so far meant there is a reluctance to install Wi-Fi on the some of the hazardous offshore platforms. It is true, though, that deployment presents big innovation challenges for upstream companies. Nearly 75 per cent of companies say the difficulty of using technology is a key barrier to innovation, according to this year’s Lloyd’s Register Oil and Gas Technology Radar survey. While most companies rate themselves as better than their peers at conceptualising and developing new technologies, more than half rate themselves as no better than, or below, average at deploying them.




Why is this? Oil and gas companies must meet ambitious objectives in a tighter cost environment, making the price of innovation failure very high. This risk means that there is not yet the collective will in the industry to move forward, because companies do not want to be first to use new technologies in case they go wrong. The oil industry also needs more time to adjust to a low price era. With prices only having fallen in the past year, there has hardly been enough time for any great shift in innovation to take place. With oil sitting at under US$50 per barrel, there has never been a greater need for the industry to collaborate – not just with itself, but with other sectors. Collaboration between upstream companies has been limited. This must change. Crossover technologies must also flourish from aerospace, defence and even the automobile, IT and telecoms sectors. Aerospace is of particular interest to oil and gas companies because both industries require equipment that can withstand huge pressure and extreme conditions. Upstream companies have only scratched the surface when it comes to innovation, and they must adapt to and embrace technology that will improve safety and maximise returns. But it is not as straightforward as that – the industry needs, in tandem, to develop new ways of interpreting and integrating data to drive quicker and more accurate decisions. This will lead to

myriad benefits, not least finding resources at time when it is getting harder to do so. John Wishart leads the Energy business of Lloyd’s Register, where he is responsible for worldwide operations as well as strategy and business development.




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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 25 Octopber 2015 K. Al Awadi

new base 713 special 25 october 2015

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