newbase 618 special 03 june 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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 03 June 2015 - Issue No. 618 Khaled Al Awadi

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

Abu Dhabi opens Irena to world The National + NewBase The UAE’s response to the energy challenges of the future is to host an international organisation that pro motes renewable energy. It’s much more than a symbolic venture for one of the world’s largest oil producers.

As always with VIP openings, there is an element of theatre to this evening’s formal inauguration of the global headquarters of the International Renewable Energy Agency – Irena.

The completion of the 32,000-square-metre complex, named “the greenest office building in the UAE”, was originally announced in January during Abu Dhabi Sustainability Week, but Irena can be forgiven for wanting its day in the sun.

The UAE beat Germany and Austria to the hosting rights for the organisation’s headquarters in June 2009, but it has taken almost six years for Irena to move into its permanent Abu Dhabi home on the edge of the Masdar City campus.




Until March, Irena’s Abu Dhabi team had operated out of temporary offices in a nondescript tower in Khalidiya.

“This is the first truly international, charter-based organisation to be hosted in the entire region and there hasn’t been the experience of hosting this kind of international organisation before,” says Irena’s director general, Adnan Amin.

“This isn’t just another not-for-profit that’s out there doing a bit of renewable energy. This is the international community’s response to how we are going to deal with the challenge of sustainable energy in the future. “We have more than 170 countries either as members or applicants and for countries to become members it requires their parliaments to endorse the legal agreement on which the agency is built.”

Irena is one of the few charter-based international organisations of its type to have been established in recent decades. In terms of size, scope and aims it sits somewhere between bodies such as the World Trade Organisation (WTO) and Unctad, the United Nations Conference on Trade and Development.

Mr Amin, a Kenyan, admits that the process of establishing Irena has not been easy. “When the agency first came to Abu Dhabi, there was still a preparatory commission which was preparing the way,” he says. “I came in just before the first assembly, in 2011, and was expected to launch a new international organisation in just four months.

“I can’t remember if I slept very much, but as well as being one of the most intense experiences of my life it was eventually one of the most rewarding.”

Mr Amin, originally a development economist, has more than 25 years’ experience of working on UN-wide coordination, systems, and implementation initiatives and was also director of the New York office of United Nations’ environment programme (Unep) and special representative of the Unep executive director.

It’s a career that has prepared Mr Amin well for the diplomatic, bureaucratic and administrative challenges associated with establishing Irena. “We started off with 68 members and 10 staff members and in the four years we’ve had of growing Irena we’ve created one of the most dynamic international organisations in the world,” Mr Amin says.

“While other international organisation’s budgets have been cut, ours has grown every year for the past four years and we now have a staff of almost 200 people and a suite of activities that are now reference knowledge products about renewable energy around the world.” It’s in that last statement that Mr Amin reveals something of his many years inside the UN.

The director general’s description of Irena’s activities is full of references to policy frameworks, investment models, energy models, value-creation and capacity building, which can make its work sound a little like a dark art. But when he moves to the bigger picture, the urgency of his agency’s mission soon becomes clear.




Mauritania: Sterling Energy acquires interest in Mauritania

Block C-10 from Tullow. Source: Sterling Energy

AIM-listed Sterling Energy has has announced that its wholly owned subsidiary, Sterling Energy Mauritania Limited ('SEML'), has signed a sale and purchase agreement with Tullow Mauritania to acquire a 13.5% interest in the Production Sharing Contract (PSC) for Block C-10, located offshore in the Islamic Republic of Mauritania (the 'SPA').

The current holders of the PSC are: Tullow Mauritania Limited (Operator) 90%; Société Mauritanienne des Hydrocarbures et de Patrimoine Minier ('SMHPM') 10%

Sale and Purchase Agreement

Under the terms of the SPA, on completion:

• SEML will assume a 13.5% participating interest in the PSC from Tullow, including an entitlement to some of the past costs associated with the participating interest; and

• SEML will pay Tullow US$50,000 in cash as consideration and in repayment of interim period costs.




Completion of the transaction remains subject to the approval by the Government of the Islamic Republic of Mauritania.

Following completion, the holders of the PSC will be: Tullow Mauritania Limited (Operator) 76.5%; Sterling Energy Mauritania 13.5%; SMHPM 10%

SEML will finance the acquisition through existing cash resources. Tullow Mauritania Limited is a subsidiary of Tullow Oil Plc.

Block C-10

The PSC, awarded in 2011, is in the second phase of the exploration period ('Phase 2') and covers Block C-10, offshore Mauritania, comprising an area of approx. 10,725 km2. The current phase will expire on 30 November 2017 and has a minimum work obligation of 1 exploration well. The block surrounds the Chinguetti field and lies in water depths of 50m to 2,400m with full 3D seismic coverage. Block C-10 lies within a proven petroleum basin and offers exposure to multiple play-types from the under-explored Jurassic and lower Cretaceous carbonates to Cretaceous and Tertiary clastic plays. The potential for the extension of the Cenomanian and Albian plays recently established by the Tortue-1 well drilled by Kosmos in Block C-8 will be investigated on Block C-10.

The operator has identified a drill ready Neocomian carbonate prospect in water depth of approximately 100m. Technical work will focus on maturation of the prospect inventory following the receipt of recently merged, reprocessed and depth migrated, 3D seismic.

The joint venture anticipates that the exploration well will be drilled in 2016. The gross cost of the well is anticipated at $77m ($11.55m net to SEML). Should the joint venture not fulfil the minimum work obligation, the joint venture's gross liability to the Government would be $7.5m ($1.125m net to SEML).

Following the completion of Phase 2, the joint venture may elect to enter into Phase 3 (with a 3 year term) with a minimum work obligation of 2 wells. SEML and Tullow will carry SMHPM's ten percent (10%) interest proportionally during the exploration period of the PSC.

Eskil Jersing, the Company's Chief Executive Officer said:

'We are very pleased to be joining Tullow and SMHPM in Block C10 in Mauritania, in addition to the recently announced inboard C3 block entry. We consider the block highly prospective with a drill ready prospect in an untested play segment. We look forward to working with Tullow in the exploration of this block on what is proving to be an exciting emerging margin.'




Gulf’s water revolution rich with opportunities & challenges SG+ www.menawaterconference.com/ + NewBase Radical changes in the GCC water industry that offer the region the possibility of attaining sustainable water self-sufficiency by the middle of this century are creating enormous opportunities and major challenges for the i ndustry’s supply chain. “Everyone knows that Arabia is one of the world’ most water-poor regions. It has no permanently

flowing rivers, practically no rain, limited groundwater reserves that are being overused and soaring demand. But the forum will concentrate on the extraordinary organizational

and technological developments that could finally reverse the negative trends in the GCC’s water balance,” said Edmund O’Sullivan, chairman of the MENA Water Forum being organized by MEED that is scheduled to take place on June 8-10, 2015 at the Sofitel Abu Dhabi Corniche hotel. The conference will highlight three key issues facing the GCC water industry, including the decoupling of power generation from desalination production. “The way water has been produced in the Gulf has been typically done in co-production with power,” said vice president for research and interim associate provost at Abu Dhabi’s Masdar Institute Steve Griffiths. “It is now time to bring in new ways of producing water and we are looking at technologies that involve the use of membranes.” Electricity will still be used to produce desalinated water, but the energy-intensity will be lower and water output won’t depend so heavily upon the quantity of power produced. The decoupling could be one of the most important developments in the history of the region’s utilities sector, water experts say. Corrado Sommariva, managing director of ILF Consulting Engineers Middle East, will speak about the potential for clean energy desalination.

Another issue that will be discussed is the increasing use of treated sewage effluent (TSE). Abu Dhabi is committed to the goal of 100 percent use of TSE within five years. All GCC states are investing in the processing systems and the pipeline networks needed to purify and distribute it to potential users. “We are looking at different types of technology for water reuse,” said Griffiths. “To achieve the reuse targets you have to understand first what is in it and how to use it.”




Lastly, forum speakers and experts will focus on water resource management. GCC countries are intensifying research into the scale and structure of their groundwater reserves and Bahrain has already taken firm steps to half further depletion of its reservoirs. Attention is now growing in initiatives designed to maintain the sustainability of seawater used in desalination, particularly in the Gulf. This encompasses the impact of the growing use of seawater in desalination, the disposal of brine, pollution caused by oil and other industries and the management of seaborne effluent crossing marine borders. GCC countries are intensifying research into the scale and structure of their groundwater reserves and Bahrain has already taken firm steps to half further depletion of its reservoirs. Attention is now growing in initiatives designed to maintain the sustainability of seawater used in desalination, particularly in the Gulf. This encompasses the impact of the growing use of seawater in desalination, the disposal of brine, pollution caused by oil and other industries and the management of seaborne effluent crossing marine borders. Speakers at the MENA Water Forum include Tawfig Ja’afreh, secretary general of the Water Authority of Jordan; Dr Mahmoud Abu-Zeid, president of the Arab Water Council; and Atter Ezzat Hannoura, Director of the PPP Central Unit in Egypt’ Ministry of Finance. With the falling oil & gas prices, there is increasing concern about the impact on the water and wastewater sector across the GCC and wider Middle East. The question remains on whether this will result in reduced government spending and delays in projects. Government stakeholders in the region have maintained that expansion initiatives and new projects will proceed due to the demand resulting from the region’s rapid population growth and diversified economies. With over $116.9 billion worth of water and wastewater projects across the GCC and emerging markets including Egypt and Jordan in the near to mid-term, MENA Water Forum brings the region’s water authorities and engineering consultants together to share exclusive updates on some of the most exciting opportunities across the entire water cycle and initiatives to achieve sustainability and sustainable development.




Qatar:LNG key to ensuring sustainable energy future,Qatargas CEO

Qatargas CEO Sheikh Khalid bin Khalifa al-Thani has said LNG will play a major role in a sustainable energy future as it represents an “attractive” alternative to “unsustainable, higher priced, higher polluting, and less reliable” energy options. He was delivering a keynote speech on the theme “Natural Gas: A Core Pillar of a Sustainable Energy Future” at the World Gas Conference 2015 in Paris.

As the global focus on climate change continues, countries around the world are seeking to diversify their energy mix with a focus on clean-burning fuels. Qatargas is proud to play an important role in meeting this global demand for reliable and cleaner sources of energy, Sheikh Khalid said. In his speech, he dwelt upon Qatargas’ commitment to responsible resource utilisation and the highest standards of environmental protection, which are fundamental requirements enshrined in Qatargas’ direction statement and vision. He outlined the various initiatives through which Qatargas continues to promote the use of state-of-the-art solutions to further improve the environmental performance of its production facilities. As the world’s population continues to grow, the demand for power generation will rise, Sheikh Khalid pointed out. However, at a time when there is an increasing focus on climate change, and specifically, on the need to reduce greenhouse gas emissions, the use of fossil fuels needs to be properly managed. He called for greater use of natural gas as a key solution to this challenge. The increased use of natural gas-fired power plants is inevitable due to their significantly lower emissions. Sheikh Khalid’s speech also forecast increasing synergy between renewable energy and natural gas, allowing for reduced dependence on coal and resulting in a low-carbon, clean environment. He said the wide availability and comparatively lower cost of coal were greatly outweighed by the serious negative impacts of its use on people’s health and the environment. “Renewable energy sources alone cannot meet the world’s demand for sustainable, clean energy. No energy portfolio can be considered reliable without natural gas. “The increasing use of natural gas is indispensable to ensuring the supply of cost-effective, clean and reliable energy to the world,” Sheikh Khalid said. In addition to the keynote speech by the CEO, Qatargas, the principal sponsor of the conference, is also presenting five other papers, covering various topics including LNG supply and demand, long-term sustainability of LNG markets and greenhouse gas emissions study. Qatargas is also participating as part of the Qatar Petroleum pavilion in the exhibition being held in parallel with the conference.

Sheikh Khalid delivering the keynote speech at the World Gas

Conference in Paris. Qatargas plays an important role in meeting the

global demand for reliable and cleaner sources of energy, he said.

77 Million ton LNG/Year




Oman: PDO, Oman to reach 2019 production target early

Gulf News + NewBase Petroleum Development Oman (PDO) is likely to lift crude production to 600,000 barrels per day (bpd) before 2019, the company’s managing director said in an interview

on Sunday. Oman’s major oil and gas explorer and producer said last month it plans to increase production by 5 per cent to an average of 600,000 bpd for ten years from 2019.

“I would be disappointed if we didn’t [reach it early],” Raoul Restucci told Gulf News at PDO’s offices in Muscat without stating how early.“Very strong WRFM [Wells, Reservoir and Facilities Management] and EOR [enhanced oil

recovery] gives us confidence in delivery of higher production,” he said. The state-controlled company’s planned average for 2015 is 570,000 bpd, although it has exceeded that so far this year. “At the moment we’re on the average of about 580,000 [bpd],” Restucci said.

On Monday, Oman’s Minister for Oil and Gas, Mohammad Bin Hamad Al Rumhy, told the Oman Tribune that the country will produce between 980,000 bpd and 990,000 bpd this year. Oman produced 943,000 bpd in 2014.

PDO is spending half of the $40 billion (Dh146.9 billion) it is investing on projects over the next five years on its “oil investment plan,” Restucci said.PDO is owned 60 per cent by the Omani government, 24 per cent by Royal Dutch Shell, 4 per cent by Total and 2 per cent by Portugal’s Partex, according to its website.

Restuci also said the “oil price is not affecting” plans to increase production.“$50, $60, $70, $80 a barrel, whatever number you choose, our target from 2019 is 600,000 for a plateau period of 10 years,” he said. Brent Crude, the international market for oil, was trading at $65 a barrel on Sunday, better than January’s $45 a barrel but still down on the $115 a barrel high a year ago.

PDO previously said it has identified over $120 million in savings with contractors over the next two years. Restucci did not state a savings target amount but said that PDO “will continue to build” on what has already been found.

“We’ve only just started,” he said. Last month, Restucci announced pauses to the Habhab oilfield, an ultra-heavy oilfield, and the Budour gasfield. “[Habhab is] a very, very difficult field,” Chris Breeze, Shell’s country chairman for Oman, told Gulf News.

PDO will make “very small investments” over the next five to ten years in Habhab, Restucci said, as it tries to unlock an estimated 2.4 billion barrels of oil, according to the company’s 2012 annual results. “It’s not a commercial issue. It’s a technical recovery issue we’re trying to unlock,” he said.

Budour has been paused because of the discovery of a larger amount of gas than expected. “We’ve got additional upgrades this year that will confirm the size of the accumulation, then a concept and detailed design studies will carry on next year. So you’re looking at an 18 month- to two-year [period] of potential pause,” Restucci said.




Russia: NOVATEK concludes long-term LNG contract with ENGIE Source: NOVATEK + NewBase

NOVATEK has announced that Novatek Gas & Power, a wholly owned trading subsidiary of NOVATEK, concluded a long-term contract with ENGIE (formerly GDF SUEZ) on the supply of LNG from the Yamal LNG project.

The 23-year contract stipulates annual supply of one (1) million tons of LNG from the volumes that Novatek Gas & Power will purchase from Yamal LNG according to the previously signed contract. The LNG will be supplied FOB Montoir-de-Bretagne (the western coast of France), where it will be transferred to the LNG vessels of the ENGIE’s fleet.

Chairman of the Management Board of NOVATEK, Leonid Mikhelson stated: 'Signing another long-term binding agreement on LNG supply from the Yamal LNG Project ensures well balanced LNG sales portfolio and contributes to closing the Project’s external financing. ENGIE is a reliable partner, and we expect that this cooperation will enable us to gain additional expertise in LNG marketing'.

Gerard Mestrallet, Chief Executive Officer of ENGIE, declared: 'The signature of this SPA is a great achievement for ENGIE and NOVATEK. These volumes will complement and diversify ENGIE long term supply portfolio. They will allow us to address the growing LNG demand, as well as our customers concern for a reliable, environmental-friendly energy'.




Gazprom Pursues Russian Shale Boom Ambitions Amid U.S Sanctions

Reuters + NewBase

Gazprom Neft, the oil arm of Russia’s state-run gas exporter, said commercial production from its Bazhenov shale formations could start in three years amid U.S. sanctions limiting the transfer of fracking technology.

The company aims to produce about 40,000 barrels of crude a day from the deposits from 2018, Kirill Strizhnev, head of unconventional projects for Gazprom Neft, told reporters in Moscow. That’s about 2.7 percent of Gazprom Neft’s daily first-quarter output of 1.5 million barrels of oil equivalent.

Russia’s efforts to replicate North Dakota’s Bakken shale boom are being hindered by the U.S. ban on exports of equipment and technology after Vladimir Putin’s annexation of Crimea and the insurgency in Ukraine. While that has stalled ventures involving Exxon Mobil Corp., Total SA and Royal Dutch Shell Plc, Russia can still extract smaller volumes through hydraulic fracturing.

“Foreign companies are stronger in this type of drilling so it’s faster to do it with western help,” said Alexei Vashkevich, head of geological exploration and resource base development at Gazprom Neft. “Can they be excluded? Yes, they can. Can we do it without them? Yes, we can. It will be a little harder and will take a little longer, but it’s possible.’

Bazhenov is a layer of ancient organic matter that’s the source rock for most of the crude pumped in West Siberia. That gives the formation the advantage of being close to pipelines serving Russia’s largest oil-producing region.




Field Development

Gazprom Neft estimates that it has more than 70 million metric tons of potentially recoverable reserves from Bazhenov, Strizhnev said. Bazhenov as a whole could contain as much as 22 billion tons, according to Russia’s Energy Ministry.

The large players that control Bazhenov need to do a huge amount of ‘‘theoretical work” before they can show the layer is profitable to develop, unlike at Bakken, said Vashkevich, who worked in North Dakota before joining Gazprom Neft in 2013. Bakken has been drilled for about five decades because dozens of “Mom and Pop” firms took on the risks, he said.

The company, which has drilled nine wells at Bazhenov, expects extraction costs to be similar to those of conventional deposits, Strizhnev said. Gazprom Neft may need to drill 20 to 30 wells and start developing one or two fields before devising a full investment program, Vashkevich said. There won’t be “quick victories” at Bazhenov, he said. “Everything should be done in right way this time.”

f Russia is able to successfully plumb its Siberian depths for shale oil and gas, it could leverage its energy holdings towards its ambition of becoming a Great Power once again. But a long list of hurdles needs to be cleared, and no one—not the UK, not Poland, not even China—has been able to follow in America’s footsteps. Russia is just now drilling its first exploratory well, so it’s still far too early to tell whether or not it will fall to the same pitfalls, but it has a lot going for it. Most importantly, it has the experience, service industry, and infrastructure that comes with being one of the world’s major producers of hydrocarbons.




Oil Price Drop Special Coverage

Oil prices drop as oversupply weighs on markets Reuters+NewBase

Crude oil prices fell today Wednesday 03 June 2015, as oversupply weighed on markets, with OPEC not expected to announce a production cut at its meeting on Friday.

Front-month Brent futures had dropped 26 cents from their last settlement to $65.23 a barrel by 0314 GMT on Wednesday. U.S. crude futures were down 35 cents at $60.91 a barrel.

Brent prices have been trading in a relatively narrow price range between $60-70 per barrel since mid-April as strong demand, especially from Asian refiners has been countered by oversupply.

Core Gulf members of the Organization of the Petroleum Exporting Countries (OPEC), which controls over 40 percent of the world's crude production, have a consensus to maintain the group's oil output at its meeting this week, a senior Gulf OPEC delegate told Reuters in Vienna on Tuesday.

"There is consensus among Gulf OPEC countries, and others, to keep the (production) ceiling unchanged," the source said. "Nobody wants to rock the boat. The meeting is expected to be smooth sailing."

High production by OPEC, but also from other regions like U.S. shale producers and Russia, has contributed to oversupply and left tankers filled with millions of barrels of oil without buyers. Some analysts said there was a chance OPEC could increase its production target.

"With heightened geopolitical risk threatening oil supplies in the Middle East and North Africa, it is highly unlikely that OPEC will reduce the quota, but an increase is possible," Barclays said in a preview note of Friday's meeting.

"Demand is strong but so is supply .Even with crude markets tightening in second half 2015, large volumes of crude in storage will require time spreads remunerating storage," Pira Energy said.




Oil rally loses steam in May but outlook calls for further gains Paul Young + The National + NewBase

The strong upwards momentum seen in crude oil markets since early this year initially carried into May as concerns over the conflict in Yemen destabilising the region underpinned prices, hitting a 2015 high of US$66.55.

Continuing unrest in Libya, including oil tankers being targeted in the bitter dispute between rival factions, also underpinned prices last month. But with Saudi oil production at a multiyear high of well over 10 million barrels per day and US production at its highest since the early 1970s, the oil price rally finally ran out of steam.

Additionally, the strong dollar, which gained about 2.5 per cent against a basket of other major currencies in May made US dollar-denominated oil more expensive for holders of other currencies – which typically dents demand.

Oman crude oil trading on the Dubai Mercantile Exchange (DME) hit a five-month high of more than $66 per barrel last month before easing off during the second-half on concerns of a possible oversupply in the market and the strength of the US dollar.

The monthly average price of the DME for May, which is used by Oman and Dubai to set their official selling price was $63.62 per barrel. It was up more than 8 per cent from the April average of $58.68 – and the highest since December. July-loading Oman crude closed at $61.62, a small drop from the $62.95 contract settlement price in April.

Looking ahead to the Opec meeting later this week in Vienna, Saudi Arabia is widely expected to stick with its policy of maintaining market share, supported by its GCC allies looking at the longer-term strategy of keeping supply-demand fundamentals in check.

Discussion points for Opec are likely to include accommodating growing exports from Iraq, plus the possible easing of sanctions against Iran. On the demand side, despite slower GDP growth in China, oil purchasing remain healthy with crude imports hitting a record 7.4 million barrels per day in April.

Asian refinery margins generally remain healthy, and June-loading Middle East cargoes found no shortage of buyers despite the increased exports.

Beyond the Opec meeting, the markets will also be looking at wider economic fundamentals, namely Greece’s possible debt default and subsequent impact on the currency and financial markets, plus Iran’s nuclear deal, which would potentially lead to a sharp hike in Iranian oil exports later in the year.

The new front-month August-delivery DME contract ended the month on a strong footing, with a late rally spurred by a weaker dollar and oil-rig data from the US keeping Oman crude prices well above $60. US oil production is still on the increase but with the number of operational drilling rigs falling every week for the last half year, many analysts expect production to peak by the end of the year and ease back in 2016.




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

Your partner in Energy Services

NewBase energy news is produced daily (Sunday to Thursday) and

sponsored by Hawk Energy Service – Dubai, UAE.

For additional free subscription emails please contact Hawk Energy

Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile: +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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

NewBase 03 June 2015 K. Al Awadi

newbase 618 special 03 june 2015

Business

uae abu dhabi

energy challenges

international organisations

khaled al awadi newbase

irenas abu dhabi team

national newbase

pro motes renewable

permanent abu dhabi