new base special 23 april 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 .

NewBase 23 April 2014 Khaled Al Awadi

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

Dubai’s Dragon Oil to launch survey in Afghanistan April Yee , The National

Dragon Oil, the Dubai-owned oil producer, is launching a geological survey of concessions in Afghanistan this year as part of a US$1.5 billion planned spending campaign. Dragon and its partners in Afghanistan, Turkiye Petrolleri and the Ghazanfar Group, will conduct two-dimensional seismic imaging over a 1,275 kilometer stretch, it announced yesterday.

Dragon, which is 51 per cent-owned by Dubai’s Emirates National Oil Company, holds a 40 per cent stake in the concession it secured last year. It will be the operator of the Sanduqli block, which borders Turkmenistan and Uzbekistan and spans 2,563 square km.

Dragon is also exploring in Tunisia, Egypt, Iraq and the Philippines in an effort to expand its production base beyond Turkmenistan, where late rig deliveries this year have delayed its drilling programme.

“Now we have three rigs drilling and one more to commence operations shortly, the pace of drilling will pick up considerably, albeit the completion of wells will be weighted more towards the second half of the year,” said Abdul Jaleel Al Khalifa, the chief executive. “We expect production to increase from now to the year end.”

The company has spent $107 million on drilling and infrastructure so far this year and expects to spend another $400m by the end of the year to grow production by 10 per cent. That means 14 to 16 wells this year, depending on how many rigs Dragon can secure.

It is targeting $1.5 billion in capital spending over the next three years to hit 100,000 barrels per day by 2016. Investors are scheduled to vote today on a year-end dividend of 18 cents a share, which would bring the year’s total to 33 cents. Shares of Dragon in London fell 0.75 per cent to 598 pence in early afternoon trading yesterday.

About Dragon Oil Operations : ( NewBase comments & research )

In November 2012, the consortium of companies including Dragon Oil, submitted the consortium’s bid for two blocks, Sanduqli and Mzar-i-Sharif, in the Afghan-Tajik Phase 1 Oil & Gas Tender. In December 2012, the consortium was selected as the winner and invited to enter into negotiations with the Afghanistan Ministry of Mines for the exploration, development and production activities in the two blocks. On 8 October 2013, the Ministry of Mines and Petroleum of Afghanistan formally signed the exploration and production sharing contracts (EPSC) for two blocks, Sanduqli and Mazar-i-Sharif, with a consortium of companies, including Dragon Oil.




Work commitments on the blocks within the initial four-year exploration period will include seismic acquisition and interpretation and drilling two exploration wells in each block. In 2014, 2D seismic acquisition is expected to take place at these two blocks.




Dragon Oil issues Interim Management Statement - updates operations Source: Dragon Oil

Dragon Oil, an international oil and gas exploration, development and production company, on Tuesday

issued its Interim Management Statement in accordance with the EU Transparency Directive. The statement

covers the period from 1 January 2014 to date. The financial, production and drilling results data are for the

period from 1 January 2014 to 31 March 2014. All other information, including details on operations, is up-

to-date as at 21 April 2014.

Key highlights

• The average gross production rate in 1Q 2014 was approx. 72,300 barrels of oil per day (bopd);

• March average gross production rate was approx. 73,400 bopd with the month's exit rate at just above

73,000 bopd;

• Capital expenditure on infrastructure, drilling and exploration assets was approx. US$107 million in 1Q 2014;

and

• The drilling of the exploration well in Iraq commenced on 25 March 2014.

Dr Abdul Jaleel Al Khalifa, CEO, commented:

'Now we have three rigs drilling and one more to commence operations shortly, the pace of drilling will pick

up considerably; albeit the completion of wells will be weighted more towards the second half of the year.

We expect production to increase from now to the year end. On the exploration front, we are pleased to

report that the drilling of an exploration well has commenced in Iraqi Block 9.'

OPERATIONAL UPDATE

Turkmenistan

Production and entitlement

Gross field production for 1Q 2014 averaged approximately 72,300 bopd (1Q 2013: 71,800 bopd). This represents a 0.7% increase compared to the level of gross production in the first quarter of last year, measured at observed temperature. One sidetrack was put into production in 1Q 2014.

The entitlement production for 1Q 2014 was approximately 47% (1Q 2013: 43%) of the gross production. The entitlement barrels are finalised in arrears and are dependent upon, amongst other factors, operating and development expenditure in the period and the realised crude oil price. Higher entitlement barrels in 1Q 2014 arose from operation of the fiscal terms of the Production Sharing Agreement and are due primarily to higher development expenditure.

Marketing

Marketing agreements were renegotiated in January 2014 to secure a relatively better discount resulting from a closer correlation between realised oil prices and monthly average Brent prices. The discount is expected to be in the range of a 14%-17% discount to Brent in 2014. The current arrangement expires at the end of 2014 and we are examining future options for 2015 and beyond.

In 1Q 2014, Dragon Oil sold 2.7 (1Q 2013: 2.4) million barrels of crude oil, which is 13% higher than the volume sold during the corresponding period last year. Higher sales in 1Q 2014 are primarily due to an increase in entitlement barrels as compared to the corresponding period last year. In 1Q 2014, Dragon Oil exported all (1Q 2013: 100%) of its crude oil production through Baku, Azerbaijan.




Drilling

During 1Q 2014, Dragon Oil completed one sidetrack in the Dzheitune (Lam) field.

The Dzheitune (Lam) B/155A sidetrack was completed by the jack-up rig Elima as a single producer to a depth of 2,447 metres and tested in February 2014 at an initial production rate of 1,027 barrels of oil per day. Currently, the well is producing 1,175 barrels of oil per day. The jack-up rig is now drilling the Dzheitune (Lam) 4/187B well to appraise a location for a future platform.

In March 2014, the Neptune rig spudded the Dzhygalybeg (Zhdanov) 21/101 development well and Land Rig 1 is currently drilling the Dzheitune (Lam) 22/188 well. Work is ongoing on the Dzhygalybeg (Zhdanov) A platform to accept Land Rig 2, which is expected to spud the Dzhygalybeg (Zhdanov) A/102 well in 2Q 2014.

There are three drilling rigs presently operating in the Cheleken Contract Area with Land Rig 2 expected to commence drilling later this quarter. We anticipate the arrival of the Caspian Driller in 2H 2014.

Water injection project and artificial lift

The water injection pilot project is ongoing in the pilot Dzheitune (Lam) 75 area. We continue to inject at a

rate of about 3,600 barrels of water per day into the reservoir. The reservoir pressure in the pilot area is

showing a sustained rising trend. Meanwhile, the tendering process to acquire water injection facilities to

be installed at the Dzheitune (Lam) 10 and 13 platforms has been initiated to expand the waterflood

programme in the Dzheitune (Lam) main field. The aim of the water injection programme is to maintain

pressure, sustain production rates and increase reserves recovery.

The tender is ongoing to procure jet pump systems for up to 14 more wells, which are expected to be installed in 2H 2014 - 1Q 2015. The objective of this artificial lift system is to increase production and enhance recovery.

Infrastructure

In February 2014, Dragon Oil awarded a contract for the construction and installation of the wellhead and production platform Dzheitune (Lam) E and associated pipelines. The work is expected to take two years with the platform being ready in 1H 2016. The platform will have eight fitted slots with space for another four slots to be fitted later, and suitable for a jack-up drilling rig use.

Work is to commence shortly on relocation of the Dzhygalybeg (Zhdanov) B platform to the Dzheitune (Lam) field, location Lam F. Modification work and subsequent installation are expected to be completed in 4Q 2014.

The project to quadruple our crude oil storage capacity at the Central Processing Facility is progressing as planned. The tank farm is anticipated to be completed in 1Q 2016 with three tanks built and commissioned on a priority basis.

The tendering process to select a contractor to build another 30-inch trunkline from the Dzheitune (Lam) field to the Central Processing Facility is in the tendering stage. Construction is expected to take two years after the contract is awarded.

Dragon Oil has recently awarded a contract to dredge the harbour area and the Aladja export Jetty. The project is expected to take two years; the aim is to increase offshore vessel handling capacity and to enhance crude oil loading capacity.




Gas Treatment Plant

The bids for an engineering, procurement, installation and construction project of the Gas Treatment Plant are in the evaluation stage. We anticipate the construction phase to take two to three years after the contract is awarded.

EXPLORATION

Tunisia

The Hammamet West-3 well remains temporarily suspended due to difficulties experienced during testing in 2013 as a result of continuous blockage caused by lost circulation material. Alternative Sidetrack-2 of the Hammamet West-3 well will be drilled in the Abiod formation from the original Hammamet West-3 wellbore to intersect fractures and to test the formation. A new rig is expected to be secured to drill Sidetrack-2 in the near future.

The joint venture partners (Dragon Oil 55%; Cooper Energy, 30% and operator; and Jacka Resources Ltd, 15%) applied for another year of extension taking the initial phase contract to 2Q 2015 during which time Sidetrack-2 could be performed. The estimated cost for Sidetrack-2 is approximately US$35 million of which Dragon Oil will contribute on a pro rata basis.

Iraq

In Iraq, the consortium of Dragon Oil (30%) and Kuwait Energy Corporation (70% and operator) spudded

an exploration well using a drilling rig from the Iraqi Drilling Company on 25 March 2014. The well is

targeting two prospective reservoirs and testing is expected to take place in 2H 2014.

Afghanistan

In Afghanistan, seismic acquisition and related services have been approved by the Ministry of Mines and Petroleum of Afghanistan and Dragon Oil (40%, operator of Sanduqli block), Turkiye Petrolleri A.O. (TPAO, 40% and operator of Mazar-i-Sharif block) and the Ghazanfar Group (20%) plan to commence the 2D seismic acquisition activities over a line of 1,275 kilometres in 2H 2014.

Egypt

In November 2013, we were notified by Ganoub El Wadi Holding Petroleum Company (Ganope), one of the main entities of the Petroleum Ministry responsible for all exploration and production activities in the southern part of Egypt, that the Group's offer for Block 19 East Zeit Bay, offshore the Gulf of Suez, Egypt, had been initially accepted. Dragon Oil is going through a normal process of final government approvals, which will result in an official decree awarding Dragon Oil the block in due course.

The Philippines

In January 2014, Dragon Oil signed a farm-in agreement with Nido Petroleum Philippines Limited (ASX: NDO) ("Nido") for Service Contract 63 (SC 63) NW Palawan Basin, offshore the Philippines.

We are pleased to advise that the first stage of the farm-out process involving Dragon Oil initially acquiring a 40% participating interest from Nido's current 50% participating interest in the Service Contract 63 is in the process of being approved by the Department of Energy of the Philippines.

Preparations for the Baragatan-1 well are now in the final stages with drilling expected to commence later in 2Q 2014 on location in the Philippines.




FINANCIAL UPDATE

Realised prices

With Brent averaging about US$108.2 per barrel during 1Q 2014 (1Q 2013: US$112.6), the average realised crude oil price during the quarter was approximately US$92/bbl (1Q 2013: average provisional realised crude oil price of US$92/bbl), which was at a 15% (1Q 2013: 18%) discount to Brent.

Cash and cash equivalents

The cash and cash equivalents and term deposits at 31 March 2014 were approximately US$1,895 million (31 December 2013: US$1,924 million), excluding the funds set aside for abandonment and decommissioning activities.

Capital expenditure

Capital expenditure for 1Q 2014 was around US$107 million (1Q 2013: US$57 million). Of this capital expenditure, approximately 43% was attributable to drilling (1Q 2013: 58%), 50% spent on infrastructure (1Q 2013: 36%) with the balance spent on exploration assets. The infrastructure spend during 1Q 2014 included construction of a new platform, crude oil storage tanks and other onshore and offshore infrastructure facilities.

MATERIAL EVENTS

Final dividend for 2013

The Board of Directors of Dragon Oil recommended the payment of a final dividend of 18 US cents per share. Together with the interim dividend of 15 US cents, the total dividend for the year ended 31 December 2013 is 33 US cents. The final dividend of 18 US cents is subject to shareholder approval at the Annual General Meeting to be held in London, UK on 23 April 2014. If approved, the final dividend of 18 US cents is expected to be paid on 1 May 2014 to shareholders on the register as of 4 April 2014.

The following is the dividend timetable for the shareholders' information:

18 February 2014: Declaration of final dividend 2 April 2014: Ex-Dividend Date 4 April 2014: Record Date 23 April 2014: AGM 1 May 2014: Dividend Payment Date.

OUTLOOK

During 2014, we expect to grow production at around 10% and between 10% and 15% during 2015-16. The production growth plan for this year calls for completion of between 14 and 16 wells and around 20 wells in 2015 based on the current and expected availability of drilling rigs. Drilling activity in 2014 will be weighted towards the second half of the year given a delayed start to the drilling programme at the beginning of the year. This drilling programme would allow us to reach the 100,000 bopd target late in 2015 with the aim of maintaining the average daily gross production of 100,000 bopd as a plateau for a minimum period of five years from 2016.

We expect to spend US$1.5 billion on capital expenditure for infrastructure and drilling in 2014-16. The infrastructure spend in 2014 is expected to amount to approximately US$200 million with about US$300 million to be spent on drilling.




Prysmian secures Zakum field subsea cable contract Press Release, Prysmian .

Prysmian Group, world leader in the energy and telecom cable systems industry, has been

awarded a new contract worth approximately € 30 million (USD 41,4 million) by UAE-based

construction company Emirates Holding on behalf of major offshore oil and gas producer

ADMA-OPCO (Abu Dhabi Marine Operating Company).

The contract is for the design and manufacture of submarine cable links for the replacement of power

feeding systems to Zakum offshore oil field, in Abu Dhabi.

The Zakum oil field is the first submarine electrification project planned by ADMA-OPCO and will be the

benchmark for future projects aimed at developing and implementing a power distribution and transmission

network among owned offshore oil fields, in order to increase capacity and improve reliability of their oil

production facilities.

In detail, the project includes the design and supply of about 200 km of XLPE (Cross-Linked Polyethylene)

insulated Medium Voltage submarine cables for the distribution of energy to oil towers and platforms, plus

accessories and network components. The project will be implemented by the Group’s established offices in




the UAE, using production from Pikkala (Finland) with first 70 km batch delivery in November 2014 and

final delivery due by mid-2015.

The Zakum project provides further confirmation of the validity of the Group’s know-how and technologies

for application both in submarine power transmission and distribution and in the Oil and Gas industry. This

new project also reconfirms Prysmian’s leadership role in a strategic region like the Middle East, where the

Group can rely on a number of projects completed or currently ongoing including the Barzan oil field

submarine power interconnection in Qatar, the first-ever submarine power transmission link serving Doha,

the GCC Saudi-Bahrain submarine interconnection and the 400 kV power transmission system for

TRANSCO connecting the Bahia and Saadiyat Grid Stations in Abu Dhabi.

About Prysmian Group:-

Prysmian Group is world leader in the energy and telecom cables and systems industry. With

sales of over €7 billion in 2013, about 19,000 employees across 50 countries and 91

plants, the Group is strongly positioned in high-tech markets and provides the widest range

of products, services, technologies and know-how.

In the Energy sector, Prysmian Group operates in the business of underground and

submarine power transmission cables and systems, special cables for applications in many

different industrial sectors and medium and low-voltage cables for the construction and

infrastructure industry.

In the Telecom sector, the Group manufactures cables and accessories for the voice, video

and data transmission industry, offering a complete range of optical fibres, optical and copper

cables and connectivity systems.

Prysmian is listed on the Milan Stock Exchange in the FTSE MIB index.




Qatari Nakilat fleet up to 65 Source: Gulf Times

Nakilat has added some three new LNG vessels to its fleet through its joint venture Maran Nakilat Company, which has closed $807.4mn of refinancing provided by QIB and Barwa Bank.

The refinancing deal was signed during a ceremony held here yesterday and attended by senior representatives from Nakilat, QIB and Barwa Bank. The contracts were signed by Abdullah Fadhalah al-Sulaiti, Nakilat managing director; Bassel Gamal, QIB Group CEO; and Khalid al-Subeai, Barwa Bank acting chief executive officer.

The three new LNG carriers will be added to Maran Nakilat Company, Nakilat’s joint venture with Greek shipping company Maran Ventures. These new vessels increase the joint venture’s total fleet from eight vessels to 11 and will be used in international trade, growing Nakilat’s LNG fleet from 58 vessels to 61, and expanding Nakilat’s total fleet — including both LNG and LPG carriers — from 62 vessels to 65.

Maran Nakilat Company has grown its fleet’s capacity over three different stages. The initial fleet of four vessels had a cargo capacity of 580,000 cubic-metres. The expanded fleet of 11 vessels now has a cumulative capacity of 1.7mn cubic metres.

In June 2013, Nakilat also increased its ownership of the joint venture from 30% to 40%.

Al-Sulaiti said: “We are thankful for this excellent addition to our company, through refinancing and adding new ships to our fleet, which in turn, will definitely strengthen the role of Nakilat as a leader in the global gas transportation market. We are dedicated to the continual enhancement of Nakilat’s position as the world’s leading LNG shipping company and the support from Qatar’s financial institutions enables us to achieve this goal.

Nakilat’s LNG vessels are chartered through long-term time

charter agreements with Qatargas and RasGas

Nakilat is a Qatari marine transport company providing the essential transportation link in Qatar’s LNG supply chain. Its LNG shipping fleet is the largest in the world, comprising some 61 LNG vessels.

Nakilat also manages and operates four large LPG carriers. Through two strategic joint ventures, Nakilat Keppel Offshore & Marine (N-KOM) and Nakilat Damen Shipyards Qatar (NDSQ), Nakilat operates the ship repair and construction facilities at Erhama Bin Jaber Al Jalahma Shipyard.




CompactGTL to build first world small-scale GTL plant in Kazakhstan Source : CompactGTL Ltd.

Chaired by ex BP CEO, Tony Hayward, the innovative company CompactGTL Limited (CompactGTL) signed a memorandum of co-operation with the Ministry of Oil and Gas in Kazakhstan to build in this country the first small-scale gas-to-liquid (GTL) facility in the world.

With this project Kazakhstan is willing to monetize the associated gas released by its upstream sector from the oil and gas processing facilities.

Because of the marginal quantities of gas and the distance, the natural gas separated from the oil in the central processing facilities may be just wasted by flaring.

In parallel, Kazakhstan is running short of refined products as most of emerging countries. Since the profitability of a gas-to-liquid facility is made from the spread between the prices of the natural gas as feedstock and the crude oil barrels price on the sales market, Kazakhstan appears as a targeted country due to its available quantity of flared gas. In this context, a GTL plant comes as a perfect opportunity. But the gas-to-liquid process is complex and usually requires large and expensive facilities.

In Qatar where large quantities of gas are available on the same location, GTL has been a preferred choice along with the liquefied natural gas (LNG) plants. In Kazakhstan the situation is slightly different as such large scale GTL facilities would suppose to gather and transport enough quantities of flared gas at huge costs to supply a GTL plant.

That is where the concept of CompactGTL is innovative and provides a small-scale GTL unit that can be commercially viable with a minimum of gas as feedstock. Petrobras runs in Brazil first CompactGTL pilot unit

Headquartered in the UK, CompactGTL developed a fully integrated GTL process including:

- Gas treatment - Gas reforming - Synthetic gas (syngas) generation - Fischer Tropsch process - Syncrude production

Focusing on the marginal fields or the associated gas, CompactGTL optimized its design for small production units. Established in 2006, CompactGTL started the operations of its demonstration GTL unit in Wilton, Teeside , UK in 2008.

Then CompactGTL built a pilot GTL facility at Aracaju in Brazil with Petrobras.




All the crude oil fields developed in Brazil contain a significant proportion of associated gas partly at the root cause of the delays and costs issues of Petrobras upstream programs.

In the case of Kazakhstan, the frame size proposed by CompactGTL should have a capacity of 820,000 cubic meters per day (cm/d) of associated gas.

Therefore the Kazakhstan GTL project should produce 3,000 barrels per day (b/d) of synthetic diesel.

In respect with the rising demand of the domestic market for transportation fuels, the investment to monetize this quantity of associated gas being flared appears commercially viable.

The design phase should take 12 months so that CompactGTL is planning its first small-scale GTL plant in Kazakhstan by 2017.

About Compact GTL Units : ( by NewBase research ) :-

CompactGTL offers a proven solution for the conversion of stranded, shale and associated

gas into synthetic liquids at the point of production. The technology features a modular plant

design, incorporating mass produced reactors connected in parallel, providing a flexible,

operable solution.

The CompactGTL modular gas solution, incorporating both CompactGTL SMR and FT

technology, enables oil companies to resolve the issue of associated gas handling. For larger

scale projects CompactGTL’s reforming units can be replaced with conventional reforming

technology enabling monetization of stranded and shale gas.

This solution is ideally suited for:

• Fields producing 5 –150 million standard cubic feet (MMscf) of gas per day

• Fields where flaring is being phased out or heavily taxed

• Fields with sustained gas flow rates

• New fields where re-injection is not viable because of the low volume of associated gas, high

reservoir pressure, the distance to market, a lack of on-shore solutions and the location of

reservoirs

• Onshore fields where the distance to market, a lack of alternative solutions and the location of

reservoirs restricts development of the field

• Onshore fields where production is not economically viable as the local gas market is saturated

By incorporating CompactGTL’s proprietary SMR and FT reactor modules commercial plant designs range

from 2 – 50MMscf/d producing 200 – 5,000 bpd of syncrude

One of th GTL plant installed in Brazil

.

The CompactGTL technology features proprietary

catalysts and reactor designs derived from plate and

fin heat exchanger manufacturing techniques




Repsol nears Namibia spud www.upstreamonline.com

Repsol is finally nearing the spud of a keenly-watched well off southern Africa where it has been

delayed for more than two months. The Spanish player will spin the bit on the Welwitschia-1

wildcat on PEL 0010 in Walvis Bay off Namibia on Friday, partner Tower Resources said. The

Rowan Companies-owned new build drillship Rowan Renaissance was originally due to be

delivered from South Korean

yard Hyundai Heavy

Industries by the end of

December but was handed

over to the US rig contractor

last month.

In early March a spud date of 18 April was then set. However, this has been pushed back due to prolonged acceptance-testing of the unit by Repsol, Tower said.

The Welwitschia prospect is believed to have multi-billion barrel upside potential, with Tower targeting net risked recoverable resources of 496 million barrels of oil equivalent based on its 30% interest in the block, held by local subsidiary Neptune Petroleum.

The well will be drilled to a total depth of 3000 metres to evaluate primary and secondary target reservoirs in both the Maastrichtian and Aptian-Albian reservoir sequences. Up to five reservoir targets will be intersected.

The ultra-deepwater Rowan Renaissance, chartered by Repsol on a three-year contract at a dayrate of $619,000, is the third in a series of four new builds ordered at the yard by Rowan, which has yet to line up a charter for the fourth unit, Rowan Relentless, amid a softening of the rig market.




Petronas targets international expansion Press release Petronas

Malaysia’s state-run oil company Petronas is looking to expand in Brazil, Russia, India, China and South Africa, according to reports. Malaysian daily Business Times cited unnamed sources as saying Petronas was targeting the five countries which have a combined nominal gross domestic product of more than $16 billion. “Brazil, Russia, South Africa and China have huge land base and there are a lot of opportunities for exploration and production works in these markets,” the source was quoted as saying.

“ But the first hurdle Petronas has to go through is the political and country risk. That is what Petronas is concerned about. “Once that is done, the next step is to move in. It sounds easy, but there will be a lot of work involved. The last is, of course, the cost.”

In India, the source said Petronas was targeting the energy sector but noted that there were a

number of barriers to do doing business in the country .The source also told the paper that

Petronas was looking to balance is portfolio from about 30% oil and 70% gas, currently, to a more

balanced 50:50 mix.

Business Times also quoted its source as saying the company was confident on prospects in

Myanmar and Iraq. “Petronas is already a big investor in Myanmar and has started to produce oil

there,” the source was quoted as saying.

“It also has service contracts in Iraq, which are contributing very well to its bottom line. Petronas is

upbeat it will continue to do well in Iraq, as well as in other parts of the world.”




Kenya seeks Qatar natural gas for power station project By Reuters

Kenya will negotiate the import of natural gas from Qatar Gas to fuel a power station it wants built

in the Indian Ocean port city of Mombasa, the president's office said on Tuesday. The gas-powered

power plant is part of the government's plans to add

5,000 MW to Kenya's existing 1,664 MW generation

capacity by 2017 to accelerate economic growth, which

is expected to push Kenya's power demand up to 15,000

MW by 2030.

The Ministry of Energy and Petroleum is evaluating bids from investors interested in developing the 700-800 MW natural gas-fired plant near Mombasa, as well as a 900-1,000 MW coal-power plant at Lamu.

The announcement was made during a visit by President Uhuru Kenyatta to Qatar. "The President noted that Kenya Pipeline had already signed a Non-Disclosure Agreement with Qatar Gas to start negotiation for the supply of 1 million metric tonnes per annum of LNG to Kenya to power the 700-megawatt gas plant in the port city of Mombasa," Kenyatta's press office said in a statement.

The statement provided no further details on when the negotiations were expected to start. The Nairobi government wants to halve the cost of electricity within three to four years from between 17 and 18 U.S. cents per kilowatt hour, mainly by increasing supply from cheaper energy sources, phasing out diesel generation.




About Kenya Energy & Prospective : ( NewBase Research ) :- + eia.org

Country Analysis Note

• Although Kenya currently produces no crude oil or natural gas, the country is a prospective oil

producer as exploration has accelerated recently on the back of successful discoveries.

• The United Kingdom-based Tullow is leading exploration activities in Kenya's South Lokichar basin.

The company consecutively drilled seven successful wells over the past two years, increasing

discovered resources for the basin to more than 600 million barrels of oil, according to Tullow's

2013 annual report. The company estimates that Kenya's South Kokichar basin has the potential to

produce more than 100,000 barrels per day (bbl/d) of oil, but development studies are still

underway.

• Kenya plays a critical role as a transit country in East Africa because its neighboring countries

depend on crude oil and refined products imported at Kenya's Mombasa Port. The Mombasa Port

also hosts a 35,000-bbl/d refinery. The refinery operates below capacity and processes Murban

heavy crude from Abu Dhabi and other heavy Middle-Eastern crude grades.

• In October 2013, India's Essar Energy said it planned to sell its 50% share in Kenya Petroleum

Refineries Limited to the Kenyan government, which owns the remaining 50% share of the

Mombasa refinery. The refinery's future is uncertain as the government is considering taking in a

new investor or converting it into a storage plant.

• In 2012, Kenya imported almost 20,000 bbl/d of crude oil almost entirely from the United Arab

Emirates, according to the Kenya National Bureau of Statistics. Preliminary data suggest that

Kenya's crude imports significantly dropped to an average of 12,000 bbl/d from January to

November 2013, down from more than 35,000 bbl/d in 2011 because of refinery problems.

• Kenya imported 66,000 bbl/d of refined oil products in 2012, 10,000 bbl/d more than the previous

year. Product imports come mostly from India and Persian Gulf countries. Kenya has a product

pipeline system that transports petroleum products from Mombasa to inland areas. Most of the

imported and domestically refined products are sold in Kenya's major cities, and the remainder is

sent to neighboring countries via trucks.

• According to the World Bank's latest data, 18% of Kenya's population has access to electricity.

Electricity net generation was 7.6 billion kilowatt-hours (KWh) in 2011, of which 68% derived from

renewable sources (hydro, geothermal, biomass, and wind) and 32% from fossil-fuel sources. The

vast majority of the population relies on traditional biomass and waste (typically consisting of

wood, charcoal, manure, and crop residues) for household heating and cooking.

•

• Kenya is one of two countries (including Ethiopia) that produce geothermal energy in Africa. In

2011, geothermal accounted for 19%

of Kenya's total electricity net

generation, and geothermal installed

capacity was 200 megawatts. The

country has the potential to produce

10,000 megawatts of geothermal

powered electricity, according to

Kenya's state-owned Geothermal

Development Company.

The Olkaria 280 Megawatt (MW) geothermal project

will raise Kenya Electricity Generating Company's

total electricity capacity by 25 percent




Kenya: Tullow Oil acquiring 2D seismic in Kenya Block 12B Source: Swala Energy

JV partner Swala Energy has announced that the 2D seismic acquisition programme in Block 12B, Kenya

(Figure 1) has commenced. The work will be carried out by BGP International. Swala and its Joint Venture

partner Tullow Kenya, a wholly-owned subsidiary of Tullow Oil, will acquire approx. 350km of 2D seismic

over the coming weeks and the data will be processed as the survey progresses. The Programme is designed

to identify the main structural lineation in the basins and has the potential to identify structural leads for

follow-up infill seismic and/or possible drilling.

Block 12B lies in the Neogene Nyanza basin, an off-shoot of the East African Rift System (EARS) where

large quantities of oil have been proven in recent years by Tullow in Uganda and in Kenya. The seismic data

will be vital in determining the forward exploration programme in the block. Although the basin has been

under explored to date, with only 50 km of low quality seismic data recorded in 1989, reprocessing of this

data by Swala has revealed a possible Tertiary basin fill of over 3,000m, supported by Passive Seismic work

carried out by the Joint Venture in 2013.

Figure 2 shows one of the reprocessed 1989 lines together with an interpreted Depth to Basement Map

generated from the 2012 gravity work and the 2013 Passive Seismic results. The seismic line lies along the

edge of the basin. The new seismic lines will be acquired over the basin centre and over structural highs




interpreted from the gravity work. The new data will be acquired using a high quality dynamite source

compared with the very low impact vibrator source in 1989 and should provide a much better representation

of the basin geometry and potential drilling candidates.

Dr. David Mestres Ridge, Swala’s CEO said 'The start of the 12B seismic programme underlines the Joint

Venture’s commitment to explore this frontier basin - an offshoot of the highly prospective East African Rift

System. Our technical re-evaluation of the legacy seismic data is encouraging and we look forward to seeing

the results of the seismic survey that has now commenced.'




Nigeria favors local firms in $40 billion oil contract awards BY EMMA FARGE AND TIM COCKS (Reuters) –

Nigeria has awarded most of its long-term oil contracts worth an estimated $40 billion a year to local companies, according to a confidential list seen by Reuters, meaning global traders need to partner with them to access crude from Africa's top producer.

Global commodity traders, refiners and Nigerian dealers jockey at an annual tender for access to the OPEC member's prized crude oil, which is easy to refine and produces more high-value fuels. The contracts cover around 340 million barrels of oil, worth close to $40 billion annually based on current Brent prices, and run for a year, though they can be renewed. They were allocated to just 28 companies, versus around 50 in 2012, the last time they were awarded.

In a break with tradition, no contracts were given directly to global trading houses Glencore Xstrata, Vitol, Trafigura or Gunvor, with only Switzerland's Mercuria winning a contract, according to a list that four industry sources verified as accurate. The trading companies that missed out on direct oil contracts declined to comment.

The list, released by the Nigeria National Petroleum Corporation (NNPC), is preliminary and subject to revision. NNPC officials did not immediately respond to requests for comment. "It's incredible to have an OPEC member selling its oil this way. There's one international trading house and barely any refiners on the list," said a senior oil trading source who formerly bought Nigerian crude oil.

Instead, several Nigerian oil companies featured on the annual list for the first time, such as oil trading company Hyde Energy, oil and gas firm Springfield, and Barbedos Group, a conglomerate that also provides luxury aviation services. Long-established Nigerian oil trading firms Taleveras and Aiteo were also named on the list, which was circulated to winners last week.

Nigeria's policy has been to increase the role played by local firms, both in operating oil blocks and trading, with the official aim of ending decades of control over the business by foreign majors. However, several industry sources said the allocations favored powerful businessmen close to President Goodluck Jonathan's administration ahead of what are likely to be closely fought presidential elections set for February next year.

SHARING THE PIE

Nigeria is one of a small group of major oil producers that allocates its crude directly to trading houses, offering middlemen an opportunity to make margins through reselling the crude. Although many large trading houses were absent from the list, they may have other ways of accessing the oil. As in Nigeria's upstream sector, where Glencore recently submitted a bid as part of a consortium of local companies for $3 billion in energy assets, partnerships with domestic firms can help global traders get a share of the business.




Vitol may have indirectly won a share of the Nigerian exports to market via a Bermuda-based firm called Calson, in which it is a minority shareholder. "It's not that the Swiss traders are being left

out, it's that they're forcing them to share their pie with the indigenous companies," said an industry source in Nigeria.

Another way for traders to access oil is to buy the contract off a winning firm at a premium.

A number of other former winners were also absent from the 2014/2015 list, which will take effect from June. China's Unipec, the trading arm of top Asian refiner Sinopec Corp as well as Azeri state oil company

Socar, were former contract holders and did not feature on the new list.

West African governments such as Ghana, Senegal, Burkina Faso, Sierra Leone and Ivory Coast, which used to refine Nigerian oil in domestic refineries, formerly had contracts that were not renewed, according to the provisional list.

"BRIEFCASE TRADERS"

Non-governmental organizations, such as Switzerland's The Berne Declaration, have criticized Nigeria's sales method, saying it is opaque and offers no guarantee the oil is sold at fair value. The government has repeatedly denied there is any lack of transparency in the process.

London-based think-tank Chatham House estimated in a report on Nigerian oil last year that local traders could score up to 40 cents a barrel, amounting to around $5 million a year on 12 cargoes,

just by "flipping" the contract to a bigger trading company.

A 2012 study commissioned by Nigeria's Oil Minister Diezani Alison-Madueke and headed up by former head of the anti-corruption agency Nuhu Ribadu criticized the sales system whereby contracts were given to "briefcase traders with little or no commercial or financial capacity".

Diezani Alison-Madueke said at the time that there were no informal contracts and everything

was done on official tender, not by any discretionary awards. A portion of Nigerian oil is also sold via swap deals whereby crude oil is given in exchange for imported fuels.

Producers operating in the West African country such as Italian oil group Eni and oil major Royal Dutch Shell also sell some oil directly or refine it themselves.




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