new base special 03 june 2014

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Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 1 NewBase 03 June 2014 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Dolphin Energy reports zero interruption in supply, 100% plant availability Dolphin Energy has reported zero interruption in supply to customers and about 100% plant availability throughout the year, besides achieving about 23mn man-hours without a lost time incident. These, along with 52% Emiratisation and 29% Qatarisation levels, were reported by Dolphin Energy, which is involved in the production and processing of natural gas from Qatar’s North Field and transportation of the dry gas by sub-sea export pipeline from Qatar to the UAE, at its 2013 Sustainability Report. Environmental commitments saw Dolphin register a 20% reduction in flaring, a 4% in total greenhouse gas emissions, a 51% in sulphur dioxide emissions and a 12% in water consumption. “Last year emphasised the role we played in meeting the requirements of our customers, it highlighted our continued commitment to environmental stewardship and illustrated our commitment to fulfilling a responsibility to supporting the communities in which we operate,” Dolphin Energy’s CEO, Ibrahim Ahmed al-Ansaari said. Notable achievements for the year saw positive developments in the company’s economic, environmental and societal performance with the successful negotiation of a gas agreement to help meet customer requirements over the summer months. Community investment contributions crossed the $4mn mark in 2013 and included the inaugural Dolphin Energy Doha Dash, a mass community fun run held to mark Qatar National Sport Day and the first of its kind in the country. In 2013, the company further incorporated the principles of sustainability into its management system with the development of a sustainability management plan and policy. “The policy sets out five strategic objectives to focus our approach — we strive to put our people first, operate with excellence, create value, protect the environment and become a better corporate citizen. This will drive our performance in 2014 and in the years ahead,” al-Ansaari said. DEL Gas Processing Plant in Ras Laffan - Qatar

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Page 1: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 1

NewBase 03 June 2014 Khaled Al Awadi

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

Dolphin Energy reports zero interruption in supply, 100% plant availability

Dolphin Energy has reported zero interruption in supply to customers and about 100% plant availability throughout the year, besides achieving about 23mn man-hours without a lost time incident.

These, along with 52% Emiratisation and 29% Qatarisation levels, were reported by Dolphin Energy, which is involved in the production and processing of natural gas from Qatar’s North Field and transportation of the dry gas by sub-sea export pipeline from Qatar to the UAE, at its 2013

Sustainability Report. Environmental commitments saw Dolphin register a 20% reduction in flaring, a 4% in total greenhouse gas emissions, a 51% in sulphur dioxide emissions and a 12% in water consumption.

“Last year emphasised the role we played in meeting the requirements of our customers, it highlighted our continued commitment to environmental stewardship and illustrated our commitment to fulfilling a responsibility to supporting the communities in which we operate,” Dolphin Energy’s CEO, Ibrahim Ahmed al-Ansaari said.

Notable achievements for the year saw positive developments in the company’s economic, environmental and societal performance with the successful negotiation of a gas agreement to help meet customer requirements over the summer months.

Community investment contributions crossed the $4mn mark in 2013 and included the inaugural Dolphin Energy Doha Dash, a mass community fun run held to mark Qatar National Sport Day and the first of its kind in the country.

In 2013, the company further incorporated the principles of sustainability into its management system with the development of a sustainability management plan and policy.

“The policy sets out five strategic objectives to focus our approach — we strive to put our people first, operate with excellence, create value, protect the environment and become a better corporate citizen. This will drive our performance in 2014 and in the years ahead,” al-Ansaari said.

DEL Gas Processing Plant in Ras Laffan - Qatar

Page 2: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 2

Oman Oil Refineries and Petroleum Industries starts work on

Sohar refinery expansion project . BYTIMES NEWS SERVICE,

Oman Oil Refineries and Petroleum Industries (Orpic) has conducted a groundbreaking ceremony for its Sohar Refinery improvement project on Monday.

Sohar Refinery will add 82,000 barrels per day (bpd) to its existing capacity of 116,000bpd, taking the total capacity to 198,000bpd. This indicates an 70 per cent growth in fuel production- 90 per cent for diesel, 37 per cent for gasoline, 93 per cent for kerosene, 93 per cent for jet fuel, 91 per cent for LPG, 175 per cent for naphtha and 44 per cent for propylene.

The project will improve the refinery's overall efficiency and productivity by overcoming the existing technical constraints resulting from the change in Oman export blend crude quality. This will give Sohar Refinery the ability to meet the increasing demand for oil and refined products, supporting the economic development of the Sultanate. Within the company's operations, the level of integration will be raised significantly, with both the aromatics and polypropylene plants

receiving increased feedstock requirements from within the Orpic Sohar complex, replacing imports, said a company release.

As a result, Sohar Refinery will take its place as one of the high capacity manufacturing operations in the region, and thanks to the current Residue Fluid Catalytic Cracker (RFCC) unit and the additional five new units such as the Hydrocracker, it will be able to refine crude oil of a much greater range of quality. The new additions will also enable the refinery to further increase utilisation of each barrel of Omani crude.

The refinery will be able to handle all primary initial quantities entering its units, allowing the output of refining operations to be high-quality fuel and high-value petrochemical products. The project will also enable the refinery to cope with unforeseen changes in crude oil quality, demonstrating the project's importance at the national level in enhancing the extracted value from an oil barrel.

The event was organised under the patronage of Muhana bin Saif Al Malki, Governor of Al Batina North Governorate, and in the presence of Musab bin Abdullah Al Mahruqi, chief executive officer of Orpic.

"This is a highly significant moment for all of us at Orpic, and for the nation. The first of our three major projects is now officially under construction. On completion Sohar refinery Improvement Project (SRIP) will begin the fulfilment of Orpic's mission and vision by ensuring the nation's fuel needs are met and that our plants environmental performance is significantly better. It will ensure deeper conversion of the Omani crude barrel and extract more value that currently the case." It marks a major step forward in Orpic's future plans as it will significantly improve environmental performance and help Sohar Refinery overcome constraints resulting from changes in the quality of Oman export blend crude oil. A key outcome of SRIP will be the guarantee that the Sultanate's

Page 3: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 3

increasing demand for fuel will be met. Orpic has recently awarded the engineering, procurement and construction (EPC) contracts to Daelim of South Korea and UK based Petrofac, and signed a contract for supply of the long lead equipment required for the project with a number of companies, all of which have long experience in implementing such projects.

Employment opportunities

SRIP will also offer more than 500 new jobs. To staff the project a blended approach will be used, with new graduates and diploma holders being appointed to compliment experienced employees from the Sohar and Mina Al Fahal refineries, who will in turn have to be replaced by a new intake of talent. The company recently announced over 250 job opportunities for Omani graduates, continuing its mission to empower Omani youth and provide them with the necessary skills and knowledge needed for specialised jobs. Omanisation in the company currently stands at nearly 73 per cent.

Environmental improvements

Enhancement of environmental performance will be a key benefit that SRIP will bring to Sohar Refinery. The new units will ease the pressure on the existing set-up in the refinery which currently operates at maximum capacity to meet the growing fuel demand in the Sultanate. With the new units online emissions resulting from capacity pressure will be reduced. After the improvement, the refinery will be also able to process high density crude oil effectively, which will in turn increase performance efficiency and operational utilisation and reduce the potential for technical failures as a result of the challenge of processing high density crude oil, and for resulting emissions and odours.

In-country value support

In-country value (ICV) is a key theme for Orpic, so the company has developed frameworks and insights to support ICV within SRIP,

offering the maximum benefit to local business owners from the economic value of the various elements of the project. Meetings have already been held between the SRIP contractor and the local vendors in the Al Batinah North Governorate. These meetings will continue to engage with potential local and national suppliers throughout the project execution stage in order to maximise the value from the project.

Orpic currently provides 100 per cent of the Sultanate's needs of fuel, so with SRIP raising the refinery's productivity, Orpic will be able to meet growing local demand (10 per cent per annum) and increase profitability.

Page 4: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 4

Oman LNG: 2013 Revenues at USD 4.49 Billion

Oman LNG said that the company’s revenues were at $4.49 billion in 2013, $149 million higher when compared to 2012. The company operates 3 liquefaction trains with a capacity of 10.4 mtpa ( 1,500

CF/day or 1,600,000 MMBTU /day )) at its site in Qalhat near Sur. Two of the trains are owned by Oman LNG and one by Qalhat LNG.

Oman LNG’s net income after tax was $2,018 million in 2013, an increase of $68 million from 2012, the company said in its annual report for 2013. According to the report, 139 cargoes were loaded from Oman LNG’s plant in Sur last year, 90 for Oman LNG and 49 for Qalhat LNG. Oman’s LNG industry entered a new era in September of 2013 with the fusion of the country’s only two liquefied natural gas companies, Oman LNG and Qalhat LNG, into one fully integrated entity.

Page 5: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 5

Iraq: Gazprom Neft begins production at the Badra oil field Source: Gazprom Neft

On 31 May, Gazprom Neft began production at the Badra oil field in Iraq. The central gathering station (CGS) is currently undergoing complex testing of its crude oil processing system. Testing will be completed in three months once enough oil has been accumulated for commercial production to begin. The Badra field

will then be ready to reach planned production levels of 15 thousand barrels per day. The Badra oil field is located in Wasit Province in Eastern Iraq

New infrastructure for the field’s commercial development has been put in place. The CGS’s first line has been constructed with a capacity of 60 thousand barrels per day and in March 2014 the Badra field was connected to the 165–kilometre-long main Iraqi oil pipeline system. Production in the field will reach its peak of 170 thousand barrels per

day (around 8.5 million tonnes per year) in 2017 and then remain the same for a period of 7 years.

Vadim Yakovlev, First Deputy CEO of Gazprom Neft said:

'Development at the Badra field is one of Gazprom Neft’s first international assets in oil production. We launched this project from scratch and over a short period of time have completed all of the complex work necessary for the industrial development of the Badra field. The experience of being an operator on this project has further strengthened Gazprom Neft’s expertise, which will contribute to work on other new projects, for example in the Near East and other regions where the company is exploring opportunities for further development.'

Background

The Badra oil field is located in Wasit Province in Eastern Iraq. According to preliminary estimates, geologic reserves at the Badra field amount to 3 billion barrels of oil. The contract with the Iraqi government for development of the oil field was signed in January 2010 upon completion of a bid process. The winning bid was submitted by a consortium of companies consisting of Gazprom Neft, KOGAS (Korea), PETRONAS (Malaysia), and TPAO (Turkey).

Gazprom Neft is the project operator. Gazprom Neft’s share in the project is 30 percent, while KOGAS has 22.5 percent, PETRONAS has 15 percent, and TPAO has 7.5 percent. The share of the Iraqi government, represented in the project by the Iraqi Oil Exploration Company (OEC), is 25 percent. Under the contract, investors will be reimbursed for costs incurred and paid a fee of $ 5.5 per barrel of oil equivalent produced. The Badrah development project has a projected lifetime of 20 years with a possible extension of five years.

Page 6: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 6

Nigeria: Seadrill secures commitment from Total for newbuild ultra-

deepwater unit West Jupiter . Source: Seadrill

Seadrill has secured a contract with Total Upstream Nigeria for employment of the newbuild ultra-deepwater drillship West Jupiter, in support of the EGINA ultra-deep offshore project in Nigeria. The contract is for a firm period of 5 years and has a total revenue potential for the primary contract term of approx. US$1.1 billion inclusive of mobilization. Seadrill's total consolidated backlog stands at approx. US$20 billion with the execution of this contract.

The West Jupiter is one of eight 6th generation drillships currently under construction for Seadrill and is expected to be delivered from the Samsung Heavy Industries shipyard in Geoje, South Korea in August 2014. The rig will be outfitted to work in up to 10,000 ft of water and is capable of water depths up to 12,000 ft and drilling depths up to 37,500 ft.

Per Wullf, Seadrill CEO commented, 'We are very pleased to have been chosen by Total and its partners for this important project. This contract provides an opportunity to deepen our relationship with a key customer and strategically increase our rig fleet in Nigeria, adding the West Jupiter alongside the West Capella which has been operating in the Usan field Offshore Nigeria since 2008. Seadrill takes pride in continuing to build its presence in the Nigerian oil & gas industry'.

Page 7: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 7

Norway: Faroe Petroleum announces spudding of Centrica-operated

Butch South West exploration well 8/10-6S .. Source: Faroe Petroleum

Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in Norway, the Atlantic margin and the North Sea, has announced the spudding of the Centrica-operated Butch South West exploration well 8/10-6S (Faroe 15%).

Butch South West, which is adjacent to the Company's 2011 Butch

discovery, is situated in approx. 65 metres water depth in the Norwegian North Sea, close to significant existing infrastructure with the giant Ula field approx. seven kilometres to the north-west, Tambar approx. ten kilometres to the south west and Gyda approx. 20 kilometres to the south.

The significant Butch Main oil

discovery (Faroe 15%) was made in late 2011 and contains a light crude oil in a high quality reservoir, the Upper Jurassic reservoir of the Ula formation. The Butch South West exploration well is located in a separate segment from both the Butch

East well, the results of which were announced on 12 May 2014, and the Butch Main well.

The operator is currently working on a development plan for the Butch Main discovery, in parallel with drilling the Butch South West well. If Butch South

West is successful the development has the potential to become a stand-alone design, with its own dedicated facility, instead of a sub-sea tie-back to existing nearby infrastructure.

The Butch licence drilling operations are operated by Centrica (40%) using the Maersk Giant jack-up drilling rig, together with the other joint venture partners Suncor Norge AS (30)% and Tullow Oil Norge AS (15)%.

Graham Stewart, Chief Executive of Faroe Petroleum commented:

'We are pleased to announce the spudding of the Butch South West exploration well which, if successful, offers the potential to add substantially to the volumes and value of the Butch field, as the adjacent Butch Main field is already on track for near-term development. In the near term we also look forward to reporting the results from exploration drilling on the Bue prospect (Faroe 25%) in the Norwegian Sea in close proximity to the recently announced significant Pil oil and gas discovery.'

Page 8: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 8

The Challenges that face Mediterranean leviathan By: Dirk Frame, T.A. Cook Consultants, Germany

Economic advancement, population growth and with it, a sudden increase in energy demand mean that recent offshore natural gas developments in the eastern Mediterranean could engineer a power shift in the region, ultimately resulting in a new Eastern Mediterranean Energy Corridor.

However, continuing political tensions between the key players pose a serious threat to the success and even the very existence of regional upstream projects.

This article will examine the recent offshore natural gas discoveries in the region, with particular focus on Cyprus, Turkey and Israel to explore how energy infrastructure is the focal point upon which the entire success of upstream development in the region pivots.

Recent discoveries

In 2009, Texas-based Noble Energy announced the discovery of 250 billion m3 of gas in offshore Israel: the Tamar field. Shortly afterwards, Noble then announced the discovery of the Leviathan field (worth 476 billion m3) in offshore Israel, as well as the Aphrodite field, which lies in offshore Cyprus. These findings were then supported by the United States Geological Society: in 2010 it published a report on the Levant Basin, which lies underneath Syria, Lebanon, Israel, Jordan, Palestine and the waters between those countries and around Cyprus and Turkey.

The report concluded that a total of 1.7 billion bbls of undiscovered oil and 122 trillion ft3 of undiscovered gas resources

lay in the basin as a whole, adding a whole new angle to the investment interest in the area.

According to a report by the US Energy Information Administration (EIA), those discoveries “could meet current regional demand almost indefinitely.”

The fact that Israel alone consumed 90.5 billion ft3 of gas in 2011 but only produced 87.5 billion ft3, thus forcing the country to import energy from its neighbours, means that both the financial and economic value of these discoveries is significant.

Leviathan politics While Israel has traditionally filled the gap between oil supply and demand via imports, its gas needs had been accounted for by the El Arish-Ashkelon Pipeline running between Israel and Egypt, and owned and operated by the East Mediterranean Gas Company (EMG). However, following the 25 January revolution in Egypt in 2011, many Egyptians called for the ending of gas exports to Israel, some even accusing it of breaching its obligations and of having stopped payments a few months prior. In 2012, gas supplies to Israel were unilaterally halted, representing a new low in political relations between the countries.

Page 9: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 9

As Israel has begun to receive supplies from its Tamar and Mari-B fields since the beginning of 2013, it no longer needs the El Arish-Ashkelon Pipeline. Indeed, according to current forecasts the Leviathan and Tamar fields together can meet Israel’s domestic needs for up to 25 years and may transform the country into a net exporter of gas. As Tamar is considered to be able to fulfil Israel’s

domestic requirements alone, it is likely that Leviathan outputs will be pushed towards export.

However, two obstacles currently hamper such a golden future for Israel. Firstly, the fact that the Leviathan spoils lie beneath more than 5000 ft of water means that significant investment will be required in order to remove the oil and gas that lies there safely and profitably. That investment not only depends on the security of the region, but also on the clarity of Israeli policy towards exports.

Currently, the ownership of the Leviathan field is split between Texas-based Noble Energy, Israel’s Delek Drilling and Avner Oil Exploration, Ratio Oil Exploration and Australia’s Woodside Petroleum Limited, to whom the partners sold a stake earlier this

February. However, following the US$ 2.3 billion investment from Woodside, some uncertainty has prevailed over the future of the project, due largely to the reluctance of the Israeli government to clarify exactly how much of the recoverable resources they will allow the partners to export. In an analyst conference presentation given on 17 December, 2013, Noble stated that the figure stood at 40% of the total, but the delays had already caused the company to postpone their production start-date for a year to Q4, 2017.

A new energy axis The resulting drop in partners’ share prices that followed has no doubt caused some to carefully consider their investment, while further disputes with Lebanon over a maritime border between the two countries could lead to further instability. The risk that ongoing troubles in Syria could spill over into Lebanon exists and contributes strongly to the pressing need to find a way of transporting oil and gas from these fields safely to Europe. As the extension of the Arab Gas Pipeline through Syria to Turkey is unlikely to happen in the near future and taking into account the unrest in Egypt, not to mention the number of jihadist attacks on the pipeline in Sinai over recent years, another way of connecting the fields in the eastern Mediterranean sea to Europe is urgently needed.

Page 10: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 10

This is where Cyprus, Greece and Turkey come into the picture. Noble, again a key player in the region, gained the exploration rights of Block 12 in Cyprus’ Exclusive Economic Zone (EEZ) in 2008, where it then went on to discover the Aphrodite field. Following its finds there, Total of France went on to pay Cyprus €24 million for the license to explore Blocks 10 and 11, while Italy’s ENI and South Korea’s KoreaGas Corp. (Kogas) gained access to Blocks 2, 3 and 9. Production is not expected to start until 2018 for domestic use and 2019 for export, but that still leaves little time for the transport problem to be solved.

The first and most cost-friendly option would be to build a pipeline to Turkey in order to feed into existing infrastructure there, but Turkey claims the waters in which Aphrodite lies as its own and therefore rejects the Cypriot claim to it. Cypriots worry that even if an agreement could be reached with Turkey as to ownership and use, Turkey would use it as a political tool against them.

As a result, in November 2012 Cyprus, Greece and Israel agreed to set-up an Eastern Mediterranean Energy Corridor, which would connect gas from offshore fields in Israel and Cyprus to a liquefying plant at Vassilikos, Cyprus and to ship it on from there to Greece. This project contains a number of advantages: firstly, Leviathan and Aphrodite are only 34 km apart from each other, meaning connecting their supplies would not be too difficult; and secondly, it conveniently bypasses Turkey. Additionally, some domestic resistance in Israel against building LNG plants at Ashdod, Ashkelon and Eilat mean that building the plant at Vassilikos Cyprus handily gives Israel access to the EU without too many problems on home soil.

There are however, some drawbacks to this project. The cost of building the LNG plant at Vassilikos is estimated at US$ 6 billion, which Noble, Delek, Avner and the Cypriot government

Page 11: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 11

will share in parts, perhaps supported by ENI, Kogas and Total at some point in the future. The area at Vassilikos is, though, only approximately 2 km2 and some question whether it will be able to support the level of exports the investors plan. For Israel, there is some concern as to how to control export revenues, which as mentioned above, is a key issue for the Israeli government. Equally, should Cyprus become further entangled in deeper political tensions with Turkey, the security of the plant and the whole project could be jeopardised.

Perhaps the most appealing option of all ,until tensions in the area relax is a floating liquefied natural gas (FLNG) installation. The Tamar FLNG project, which attempts to draw on volumes from the Tamar field is estimated to cost around US$ 5 billion, but would allow the export of

almost 144 billion ft3 per year.

The skills required not only to make such projects materialise but to function safely and profitably demand a high level of staff expertise and advance planning though, which can sometimes mean huge cultural barriers need to be overcome. Operating in an area riddled with political and religious dispute and occupied by military forces, which are sometimes hostile towards one another makes employee safety perhaps

the most important issue. This factor alone will likely deter the influx of skills from abroad, adding handsomely to the cost of employment and employee protection. Where skilled workers can be recruited locally, the probability that deep cultural tensions would exist between them is high and could require some nifty managerial footwork to keep operational peace.

Furthermore, the inherently dangerous nature of working offshore with resources that lie so deep means that particularly stringent safety operations and transport logistics processes must be put in place. External factors such as wind speed, direction and currents must also be taken into account, while traffic concentration and helicopter or boat utilisation will need to be regularly scrutinised. If space is limited, poor platform and deck space organisation can further add to costs: operators will need to be extremely vigilant if blocks are to be made – and kept – profitable.

Worldwide influence

Taking into all of these aspects into account, it is likely to take some time before any of the fields connect with EU soil. The EU has a vested interest in the development of the Eastern Mediterranean Energy Corridor due to its current dependence on the Russian Federation, Norway and Algeria for gas. Obviously, the Russian Federation is keen to remain prominent in the area and has so far been the largest foreign direct investor in Cyprus, bailing out the island’s banking sector at the end of December 2011. It has also been actively collaborating with Israel, with whom it signed an initial agreement to export LNG from Tamar early last year.

Page 12: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 12

The entire issue as well as all of the projects associated with these discoveries depends fundamentally on the growth of demand for gas in the EU and the willingness of Israel to co-operate in terms of exports. While some predict gas demand to continue to increase steadily after a sudden decrease following the financial crisis, the EIA expects demand growth to slow to levels seen before the recession. If the latter scenario occurs, then the viability of any of the projects outlined above will be crucially undermined.

Equally, if Israel decides to change its policy towards the amount of gas that it allows to be exported, the return could prove to be too low for key investors, without whom the fields will remain untapped for an indefinite period of time. Even if policy remains stable, the delays that Leviathan has already suffered are estimated to be costing the country almost US$ 1 billion a month in savings, according to estimates from Mr. Silvan Shalom, Minister of Energy and Water Resources in Israel.

Wider impact Regardless of the above speculations as to what form the Eastern Mediterranean Energy Corridor may take, the fact that energy majors such as ENI and Total are willing to invest such large sums means that the risk is likely, at least in their eyes, to be worth taking. As long as the key players can find a way to work together without becoming embroiled in the many and varying regional conflicts in the area, the corridor could provide a way for Cyprus and Greece to climb out of debt and for Israel to take on a new role as energy supplier. That in itself could have a major impact not only on relations between Israel and its neighbouring countries, but also on the wider energy market.

Dependence on Norwegian imports and the impending vote in September as to Scottish independence from the United Kingdom (implicating the natural reserves of the North Sea at the same time) could all lead the EU to lean favourably towards supporting growth in the eastern Mediterranean. That so many factors affect the development of the Levantine fields and that their development in turn has such wide-reaching effects – both politically and economically – makes it an unusually unique case. Whether it actually materialises though remains dependent on the ability of all parties to work together: a Leviathan task.

Page 13: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 13

EIA: 84% of U.S. Energy Demand Satisfied by Domestic Production Press Release, June 2, 2014

Total U.S. energy production reached 81.7 quadrillion British thermal units (quads) in 2013, enough to satisfy 84% of total U.S. energy demand, which totaled 97.5 quads.

Natural gas was the largest domestically produced energy resource for the third year in a row and, together with the other fossil fuels (coal, crude oil, and hydrocarbon gas liquids), accounted for more than three quarters of U.S. energy production. In total, the United States consumed 97.5 quads of energy, 82% of which was fossil fuels. Renewable and nuclear energy made up 10% and 8%, respectively, of U.S. energy consumption.

The portion of U.S. energy consumption supplied by domestic production has been increasing since 2005, when it was at its historical low point (69%). Since 2005, production of domestic resources, particularly natural gas and crude oil, has been increasing as a result of the application of technologies that can develop harder-to-produce resources. At the same time, reduced road travel, improved vehicle efficiency, and competition among fuels for electric power generation have limited consumption of petroleum and coal.

Page 14: New base special  03 june 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content . Page 14

The last significant rise in the ratio of domestic production to consumption occurred from 1978 to 1982. During that period, oil consumption declined in response to higher prices and changing policies, and production rose as oil started to flow from Alaska’s North Slope. At the same time, domestic coal production was increasing.

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redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

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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]

Khaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 years of experience in theof experience in theof experience in theof experience in the Oil &Oil &Oil &Oil & Gas sector. Currently working as Gas sector. Currently working as Gas sector. Currently working as Gas sector. Currently working as

Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for 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 sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were sthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations pent as the Gas Operations pent as the Gas Operations pent as the Gas Operations

Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , heManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed has developed has developed has developed

great experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructing of gas pipelines, gas metering & regulof gas pipelines, gas metering & regulof gas pipelines, gas metering & regulof gas pipelines, gas metering & regulating stations and in the engineering of supply ating stations and in the engineering of supply ating stations and in the engineering of supply ating stations and in the engineering of supply

routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many Mroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for OUs for OUs for OUs for

the local authorities. He has become a reference for many of the Oil & Gasthe local authorities. He has become a reference for many of the Oil & Gasthe local authorities. He has become a reference for many of the Oil & Gasthe 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 program broadcasted Energy program broadcasted Energy program broadcasted Energy program broadcasted

internationally , via GCC leading satelliteinternationally , via GCC leading satelliteinternationally , via GCC leading satelliteinternationally , via GCC leading satellite ChannelsChannelsChannelsChannels . . . .

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NewBase 03 June 2014 K. Al Awadi