new base special 21 august 2014

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NewBase 21 August 2014 Khaled Al Awadi

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‘Railway link will make Oman a gateway to Gulf’

OMAN TIMES + NEWBASE

The 'ambitious' and 'prestigious' Oman National Railway project, which is part of a wider Gulf Cooperation Council (GCC) railway network, will make Oman the gateway to the Gulf region, according to J. S. Mukul, the Indian ambassador to the Sultanate. "The project will make Oman the gateway to the Gulf, particularly for countries like India across the Arabian Sea," said Mukul at the inauguration of the two-day Rail Exhibition and Conference here Wednesday

The two-day Rail Exhibition and Conference was inaugurated in Muscat yesterday. The summit, themed ‘Connecting Oman to the Gulf Cooperation Council region’, was attended by government stakeholders and professionals. The event brought together regional and international experts from the rail sector to discuss and debate the best practices in the industry. – June Estrada/Times of Oman

The conference was organised by Silver Star Corporation, in association with Nispana InnovativePlatforms. The event brought together regional and international experts from the rail sector todiscuss and debate the best practices in the industry .




Oman's infrastructure

The Indian ambassador hailed the Sultanate's progress in all areas, noting, "We are extremelyimpressed by the infrastructure that Oman has already developed, and the railway project will adda new dimension to this infrastructure.

The Oman Railway Company (ORC), which is responsible for implementing the 2,244-km-longproject, recently unveiled the list of pre-qualified consortiums and announced that it would float atender inviting bids from these companies to construct the first section of the 170-kilometre Sohar-Buraimi route this month

As many as 18 consortiums have been pre-qualified for civil work and another five for technicalsystems and these consortiums are eligible to participate in various tender packages for fouryears, according to the ORC

Mukul said that the railway project will help develop the tourism sector, and will give a fillip to theeconomy of the entire region. "It will also provide numerous opportunities for all internationalcompanies, including those from India, in various areas," the Indian ambassador added. "With a total route network of about 64,000 kilometres spread across 7,146 stations and 19,000trains operating every day, India's railway network is recognised as one of the largest railwaysystems in the world under a single management," he said, adding, "India's expertise in therailway sector is available for partnering in Oman's prestigious railway project."




Bilateral trade

Commenting on the bilateral relations between Oman and India, he said the two countries enjoy a 'strategic partnership' and have close ties in various spheres. According to him, the latest data shows that in 2013-14, the bilateral trade increased to $5.77 billion, registering an impressive

growth over the previous year with exports from Oman growing at a much faster rate.

"Oman is an important business partner… and cooperation in the railway project offers yet anotheropportunity in this multi-faceted bilateral relationship between India and the Sultanate," theambassador noted. The speakers at the conference included Loay Gazaleh from Bahrain'sMinistry of Works and Mohammed Mohsin Al Dhuhli from Oman's Information TechnologyAuthority. According to Silver Star Corporation, ABB (Oman), BARSYL (India) and Bradken (Australia) wereamong companies that participated in the exhibition, along with BSS (Oman), Dohwa Engineering(Korea), GBM (Oman), Hill International (USA/UAE) and Oman Cables (Oman).




Iraqi Kurdistan oil pipeline export capacity to double Reuters + NewBase

The capacity of Iraqi Kurdistan's independent oil pipeline will almost double to at least 200,000 barrels per day by the end of this month, helping the semi-autonomous region increase exports and revenue, industry sources and officials said. Oil revenues are a lifeline for the Kurdish Regional Government (KRG) in northern Iraq, whose peshmerga forces are being supported by US air strikes in their battle against the radical Sunni militants of Islamic State. "Work to increase the capacity will probably be completed by the end of this month. Once it is completed, pumping can increase to up to 220,000 barrels per day (bpd),"

one Turkish official told Reuters. Industry sources also said the capacity of the pipeline to Turkey, which began operating at the start of this year, was set to rise to around 200,000-220,000 bpd from 100,000-120,000 bpd before the flow stopped for upgrade work. One of the sources said capacity could climb to 250,000 bpd in two to three months' time. "The crude flow is set to restart when the upgrade work is finished, but the 200,000 bpd to 220,0000 bpd of crude flow will be dependent on the rising oil production in northern Iraq," one official said. A joint venture of Anglo-Turkish company Genel Energy and Sinopec's Addax Petroleum is working to ramp up production in the Taq Taq oilfield, Iraqi Kurdistan's largest, to 140,000 bpd by the end of this month.

After months of fruitless talks with Iraq's central government, the KRG in May started to export crude on its own independent pipeline to the Turkish Mediterranean export terminal of Ceyhan. The KRG pipeline is located at a distance from the areas controlled by Islamic militants. The move has infuriated Baghdad, which claims the sole authority to manage Iraqi oil. It has cut allocations to the KRG in the budget and has tried to block KRG's oil sales by taking legal action. So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline, of which 6.5 million have been loaded onto tankers for export. The Kurds have managed to load seven export cargoes from Ceyhan, according to Turkish Energy Minister Taner Yildiz. EXPORTS FINDING CUSTOMERS

The tricky part for Iraqi Kurdistan has so far been to find buyers to export the oil. Baghdad's persistent efforts to block sales initially deterred some customers.Iraqi Kurdistan delivered its third major cargo of crude oil out of Ceyhan and a fourth was sailing to Croatia on Friday. Around $350 million in oil sales have been completed or are under way from shipments sent via the KRG pipeline, a Reuters analysis of satellite tracking data shows. -




Indonesia's Medco Energi Completes Acquisition of Chinook's Tunisian Oil, Gas Assets . PR

MedcoEnergi, through its wholly-owned subsidiary Medco Tunisia Petroleum, has completed the purchase of 100% of Tunisian oil and gas assets of Storm Ventures International (SVI), a

subsidiary of Chinook Energy, for $114.03 million, excluding an amount payable for working capital, the Indonesian company announced Tuesday. Amount payable for working capital is $ 13.7 million.

SVI’s interest in Tunisia comprises four exploration areas, two development areas and two production areas with concession periods of either 30 or 50 years.

Out of these eight areas, five are onshore and located in the Ghadames Basin (Adam, Sud Remada, Bir Ben Tartar, Jenein and Borj El Khadra); and three are offshore (Cosmos, Hammamet and Yasmin), located in the Pelagian Basin offthe northeast coast of Tunisia. MedcoEnergi is the operator for six blocks, i.e. Sud Remada, Bir Ben Tartar, Jenein, Cosmos, Hammamet and Yasmin.

Current production is approximately at 2,800 BOPD from Adam and Bir Ben Tatar blocks. The future production is envisaged to increase to around 16,000 BOEPD from in-fill well drilling of the existing producing blocks and the development of the Cosmos,

Yasmin and Fushia fields (scheduled for completion in 2018), Medco said.

Total estimated net recoverable resources by an independent reserves evaluator, InSite Petroleum Consultants Ltd., is approximately 33.8 MMBOE (3P reserves and contingent resources) as of 31 December 2013, the company added.




Japan LNG imports in July rise 5.7 pct LNG world + NewBase

Japan, the world’s biggest buyer of liquefied natural gas, imported 7.84 million tonnes of LNG in July, a rise of 5.7 percent from July in 2013, the country’s Ministry of Finance said on Wednesday.

The country imported 52.1 million tonnes of LNG in January-July period. Japan’s LNG imports have been rising steadily after it shut all its nuclear reactors in the aftermath of the earthquake and tsunami in 2011.




Russia-China deal will supply Siberian natural gas to China’s

northern, eastern provinces. Source: U.S. Energy Information Administration,

China's natural gas demand has been growing as the government seeks to move away from coal in favor of cleaner fuels. According to EIA's International Energy Outlook 2013 (IEO2013) Reference case, demand will more than triple from 5.2 Tcf in 2012 to 17.5 Tcf by 2040.

Russia's largest natural gas company, Gazprom, finalized a deal with the Chinese National Petroleum Corporation (CNPC) in May. Under the first phase of the new 30-year contract, Russia will supply China 38 billion cubic meters (bcm), or 1.3 trillion cubic feet (Tcf), per year of natural gas starting in 2018. Future phases could increase this volume to as much as 60 bcm (2.1 Tcf) per year. The contract links the natural gas price to international crude oil prices and operates as a take-or-pay scheme: the buyer, CNPC, must pay for the contracted natural gas even if it decides not to receive it.

New natural gas production in Russia will mainly come from fields in eastern Siberia, which currently lack export infrastructure. The planned Power of Siberia pipeline will export gas south to China and east to a liquefied natural gas (LNG) plant on Russia's east coast.

This contract is Gazprom's largest to date. Gazprom has a monopoly on pipeline natural gas export contracts made by Russia. The situation differs from that in LNG markets, where other companies such as Rosneft and Novatek may participate.

China's northern and eastern provinces have growing natural gas demand that cannot be met by existing pipelines or LNG, and the new Russian natural gas will mostly go to meet demand in these regions. China has also committed to purchasing 38 bcm (1.3 Tcf) per year of natural gas from Turkmenistan by 2016, increasing to 65 bcm (2.2Tcf) per year by 2020.




Although China continues to import more LNG, the government is committed to expanding Chinese domestic production, which increases from 4 Tcf in 2012 to 10 Tcf by 2040 in the IEO2013 Reference case. Developing China's shale gas reserves is also an important part of the government's natural gas strategy. According to EIA's assessment of world shale gas resources, China has 1,115 Tcf of technically recoverable shale gas. New production along with imports of LNG will meet rising demand in China's eastern and southern coastal regions.




Ensco wins jack-up rig contract in Malaysia Offshore Energy Today + NewBase

Ensco, a UK-based offshore drilling co ntractor, has secured a three-year contract for

its ENSCO 52 jack-up rig.

The ENSCO 52 jack-up, of the F&G L-780 Mod IIC design was contracted with Murphy Oil company in Malaysia. In its fleet status report issued Monday, Ensco revealed that the day rate for the contract was set in high $90.000s up from the previous day rate of mid $80.000s with the same client.

Furthermore, the rig owner used the opportunity to report on the rig’s safety record ENSCO 52 saying that the rig recently surpassed three years without a Recordable Incident. Malaysia is Murphy Oil’s main asset base producing more than 40% of the company’s total 2013 net production.

Murphy holds majority interests in seven separate production sharing contracts (PSCs): Block K, Block H, Block P, SK 309, SK 311 and SK 314A, and three gas holding agreements in PM 311. In 2013, Murphy’s Malaysia net production was about 86,000 boepd, and the company booked total proved reserves 125 MMBO and 406 BCF.

The U.S. based oil company is reportedly looking to divest around 30 per cent of its Malaysian assets. Industry players such as Japan’s Mitsubishi and Mitsui , India’s ONGC and Oil India, Vietnam’s Petrovietnam and Kuwait Petroleum Corporation have all reportedly shown interest in making a swoop for Murphy’s equity in Malaysia.




India's Reliance Plans $2 bn Investment in its US Shale Assets Press Release + NewBase

Reliance Industries Ltd (RIL) has plans to invest around $2 billion in its US shale assets, reportedMint newspaper on Tuesday. India’s biggest private company has already pumped $7.3 billion since 2010 in its US shale gas and oil business.

RIL is a partner in the shale resource base of through its three joint ventures with Chevron, Pioneer and Carrizo.

According to the company’s June quarter results announcements, its shale gas operations posted a 26% increase in revenue to $270 million and 22% rise in operating profit to $201 million from the year-ago period, Mint said.

Company sources told Mint that the $2 billion of additional capex planned for the shale ventures will be largely directed towards the Marcellus region. Most likely, the investment will flow into the Chevron shale acreage, sources told the newspaper.




Asia spot LNG prices for September delivery plummet 33.1% Platts + NewBAs

Prices of spot liquefied natural gas for September delivery to Asia plummeted 33.1% year over year to an average $10.702 per million British thermal units (/MMBtu), the latest Platts Japan/Korea Marker (Platts JKM) for month-ahead delivery showed.

The drop came as increased supply in the region continued to outweigh lackluster demand.

On a month-over-month basis, the September JKM was down 5.8% from August. The data reflects the daily Platts JKM for September assessed between July 16 and August 15, and expressed as a monthly average.

“The results of Australia’s North West Shelf LNG tender for cargoes loading in September, October and November showed a steep contango building into the traditionally high-demand winter season,” said Stephanie Wilson, managing editor of Asia LNG at Platts.“This prompted some buyers in Japan to purchase cargoes for October at prices significantly above those seen in September.”

At $10.702/MMBtu, the average Platts JKM for September was the lowest monthly average on record since April 2011, and reflected the largest year-over-year decrease in 2014. Despite the year-over-year plunge for average September-delivery prices, the month-over-month decline was the narrowest since March, when prices began their rapid descent.

After beginning the assessment period at $10.775/MMBtu July 16, spot prices bottomed at $10.525/MMBtu August 1 as a slew of supply tenders in the Asia-Pacific basin hit the market. It was the lowest daily spot price seen since Friday, March 11, 2011, when the JKM was $9.90/MMBtu. The spot JKM had spiked to $10.95/MMBtu on March 15, 2011, in the wake of the Great Eastern Earthquake and resulting Fukushima crisis in Japan.

The Platts JKM began its rebound on August 8, gaining a total of 40 cents before ending the assessment period at $11.025/MMBtu August 15. This brought a close to five consecutive months of declines and reversed the downtrend in spot prices.

“The removal of deferment clauses on cargoes loading from train 1 of the new ExxonMobil-led Papua New Guinea integrated LNG project also fuelled the more bullish sentiment, as traders and sellers can now compete for these cargoes too,” Wilson explained. “On the other hand, end-user inventories remained high despite higher temperatures in Japan and South Korea in recent weeks, giving buyers flexibility in their delivery schedules. Numerous projects in Asia also

continued to offer additional supply to the spot market, which could suggest a cap to potential price increases.”

The prices of possible competing fuels were both down month over month: Fuel thermal coal and fuel oil were down 6.0% and 2.6%, respectively, over the July 16 to August 15 assessment period.




Hawaii and U.S. Territories aim to increase fuel diversity with LNG imports

Source: U.S. Energy Information Administration, State Energy Data System and International Energy Statistics

Unlike the rest of the United States, energy consumption in island states and territories is almost entirely petroleum-based. These islands may soon be able to diversify their energy sources to include natural gas, because relatively low natural gas prices and new shipping technology may allow these islands to import liquefied natural gas (LNG).

America's islands—the state of Hawaii and the territories of Guam, the Northern Mariana Islands, and American Samoa in the Pacific and Puerto Rico and the U.S. Virgin Islands in the Caribbean—face unique energy challenges because of their physical isolation and lack of fossil fuel resources. They have long depended on imported petroleum products, which are easier to transport than other fossil fuels, to meet most of their energy needs, including electricity generation. As a result, given relatively high crude oil prices in recent years, residential electricity prices on the islands have been three to five times the average residential prices of electricity on the mainland (Lower 48 states).

High electricity prices on U.S. islands have also encouraged distributed generation from technologies such as rooftop solar panels and solar thermal collectors, as well as energy efficiency improvements that reduce consumption.

Both Hawaii and Puerto Rico have diversified their electric generation mix with the addition of coal plants, and Puerto Rico has one independent power plant operating on natural gas, imported as LNG at a terminal adjacent to the plant. The Puerto Rico Electric Power Authority has also converted a nearby petroleum-fired generating station to use LNG imported to that terminal and is planning to convert a second petroleum-fired station if federal approvals are received for a separate floating off-shore LNG receiving terminal. But LNG has not been an option for most islands because it is typically shipped in bulk carriers in quantities far greater than many island economies could absorb. Furthermore, LNG requires expensive regasification and distribution infrastructure.

The combination of relatively low natural gas prices and the development of standardized cryogenic (refrigerated) shipping containers means small amounts of LNG can now be trucked, railed, and shipped




like other containerized cargo. Once received by ship, the LNG is connected to portable regasification units adjacent to electric power plants or industrial facilities. The containers are typically filled on the mainland at utility peak-shaving units or, more recently, at small-scale liquefaction plants built to serve transportation, industrial, and marine uses.

Utilities in Hawaii and industry in Puerto Rico are now testing the economics of small-scale LNG imports. Hawaii's first shipment using a standardized cryogenic container was completed in April, taking approximately 7,100 gallons (about 0.67 million cubic feet) of LNG from a liquefaction plant in Boron, California, through the port of Los Angeles to Honolulu, where it was regasified and injected into the Hawaii Gas distribution system. This LNG was the first nonsynthetic gas ever put into the system. Hawaii Gas typically makes a synthetic gas from a naphtha feedstock produced in one of Hawaii's two crude oil refineries.

Also this spring, power utility Hawaiian Electric took bids on having LNG delivered in similar standardized containers to eight generating plants on Hawaii's five main islands, requesting 800,000 metric tons (about 39 billion cubic feet) annually. The utility is evaluating whether LNG prices are sufficiently favorable to justify switching away from diesel and residual fuel oils currently used at some of its generating capacity.

In Puerto Rico this fall, two privately owned bottling plants in the island's industrial north will begin receiving containerized LNG shipments. The LNG will be procured through third-party suppliers from southeastern U.S. peak-shaving plants, shipped from Jacksonville, Florida.

For more information on the energy profile of U.S. islands, see EIA's recently updated analytical narrative for Hawaii, as well as the Territory Energy Profiles for Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands.




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

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[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 & Gas sector. Currently working as Oil & Gas sector. Currently working as Oil & Gas sector. Currently working as Oil & Gas sector. Currently working as

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NewBase 21 August 2014 K. Al Awadi

new base special 21 august 2014

Economy & Finance