oil review middle east 3 2013

Setting training standards inIraq

SABIC seeks to capitalise onshale gas boom

Bahrain - how much candownstream deliver?

The importance of beingautomated

Regional rig count up asdemand tightens

Effective insulation of subseastructures

How to verify pipeline quality

Without real-time data response teams are in thedark when it comes to cleaning up after any incident.Gulf operators are backed up by various levels ofTiered Response Centres that can supply thisinformation promptly.See page 76

UK 10, USA $16.50

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Oil Review Middle East Issue Three 2013 3

Editors noteOMANS OIL and gas production has enjoyed something of arenaissance in recent years. And its no accident either. After a period ofstagnation, and then decline, officials took the decision to do whateverwas necessary to reverse the trend. That meant maximising thepotential of the nations comparatively limited hydrocarbon reservesthrough new and advanced extraction techniques. Oman has sincecarved out a name for itself as something of a leader in enhanced oiland gas recovery (EOR) within the Gulf. And the benefits are there tosee. Oil production increased in 2012 by a further four per cent,including condensates, to an average of 918,000 barrels per day (bpd).PDO has started work on a unique chemical injection trial at Habhab,which could lead to increased yields from complex heavy oil and tightreservoirs. The eld, discovered in 1982, has an estimated 2.4 billionbarrels of oil but the heavy nature of the crude has been an impedimentto production thus far. But now, with growing EOR experience under itsbelt, dealing with technical challenges like this is becoming almostroutine for PDO. Elsewhere in this issue, our special correspondentreports on the obstacles that need to be overcome by the governmentof newly-democratic Libya. The country has an opportunity to breakwith the past, modernise infrastructure and promote inclusive growth bydeveloping a vibrant, private-sector driven economy.

Contents

Managing Editor: David Clancy

Editorial and Design team: Bob Adams, Hiriyti Bairu, Lizzie Carroll, Andrew Croft, Ranganath GS, KasturiGupta, Prashant AP, Genaro Santos, Zsa Tebbit, Nicky Valsamakis, and Ben Watts

Publisher: Nick Fordham Advertising Sales Director: Pallavi Pandey

Magazine Sales Manager: Camilla Capece Tel: +971 4 448 9260, Fax: +971 4 448 9261, Email: [email protected]

For country contacts, see Arabic contentsHead Office: Middle East Regional Office:Alain Charles Publishing Ltd Alain Charles Middle East FZ-LLCUniversity House Office 215, Loft 2A11-13 Lower Grosvenor Place P.O. Box 502207London SW1W 0EX, United Kingdom Dubai Media City, UAETelephone: +44 (0) 20 7834 7676 Telephone: +971 4 448 9260 Fax: +44 (0) 20 7973 0076 Fax: +971 4 448 9261

Production: Donatella Moranelli, Nathanielle Kumar, Nick Salt, and Sophia White - Email: [email protected]

Subscriptions: Email: [email protected]: Derek FordhamPrinted by: Emirates Printing Press, Dubai Oil Review Middle East ISSN: 1464-9314

www.oilreview.meemail: [email protected]

Serving the world of business

ColumnsIndustry news and executives calendar 6

AnalysisRig Market 8There are signs that the regional rig count is on the way up. But more units will beneeded if the Middle East is to exploit new and alternative sources.

Interview 12Pierre Leretz, president and region division manager, Process Automation, at ABB inIndia, Middle East and Africa, discusses the benefits of automation technology.

Bahrain 16Why Bahrains hydrocarbon sector future rests with its downstream operations.

Exploration & ProductionDevelopments 20The latest exploration and production news from around the region.

GasAnalysis 28SABIC is hoping to capitalise on the shale gas boom in North America.

Exhibition PreviewPetchem Arabia 34This key downstream event is expected to be the largest gathering of downstreamprofessionals anywhere in the Kingdom this year.

Country ProfilesOman 39Has any other oil producer been as successful as Oman when it comes toenhanced oil recovery?

Libya 48Why Libya could be the ultimate emerging market for multinationals.

Technical FocusInnovations 54Introducing the latest technology for the oil and gas sector.

Pipelines 68How to accurately verify the quality of CRA-lined pipes.

Flow Assurance 72Why challenging subsea applications need robust and reliable products.

Oil Spill Management 76Without real-time data, response teams are in the dark when it comes to cleaningup after an incident.

Arabic SectionNews 4Analysis 9

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4AN INCREASE IN offshore discoveries is prompting a surge in explorationactivity across MENA and driving up the amount spent on drilling, statesthe latest report form business intelligence firm GBI Research. Thecompanys oil and gas report* forecasts offshoredrilling expenditure across the region to climbsteadily from US$13.56 billion in 2012 toUS$17.03bn in 2016. Cumulatively, the totalexpected spend for this five year period isUS$77.3bn, which represents an increase ofapproximately 22 per cent over 2007-2011 total ofUS$63.5bn. Drilling outlay is expected to grow acrossall major nations in the region, with those in WestAfrica leading in terms of exploration activity. Escalating activity incountries relatively new to the offshore drilling industry, such as SierraLeone and Liberia, may prove to be future competition for the more

established nations of West Africa. Ghana is expected to emerge as oneof the most prominent countries in West Africa for the exploration of oiland gas, with 16 offshore discoveries made between 2008 and 2012

second only to Angola, where 22 discoveries weremade during the same period. In terms of drillingexpenditure. GBI Research expects drillingexpenditure in Angola to continue climbing in thenear future, hitting US$6.67bn in 2016. Nigeria and Egypt are forecast to place second andthird, with totals of US$2.26bn and US$1.52 bn,respectively.

* Offshore Drilling Industry in Middle East and Africa to 2016 Pre-SaltPotential in West Africa and Significant Gas Finds Off the East AfricanCoast Driving Exploration Activity.

OCCIDENTAL PETROLEUM CORP (Oxy) has said that its growth will be stronglyimpacted by the success of development plans for its Permian and Californiaassets in the US, assets in Oman and the Al Hosn gas project in Abu Dhabi,where it continues to deploy significant capital.

Oxy, one of the largest US oil and gas companies, is currently the secondlargest oil producer in the sultanate after PDO.

In a recently released annual report, Stephen Chazen, president and CEO ofOxy, said the company's share of production from Oman was approximately76,000 barrels of oil equivalent (BOE) per day in 2012.

He said, During more than 30 years of operations in Oman, Oxy hascontinuously increased production and reserves, and today is the countryssecond-largest oil producer. We expect Oman to be an ongoing growth driverfor the company. At the Mukhaizna field (Block 53) in south-central Oman,where we are implementing a major steam flood project, the 2012 averagegross daily production was approximately 120,000 BOE per day - more than 15times the production rate in September 2005 when Oxy assumed operations.

In Oman, Occidental is the operator of Block 9 and Block 27, with a 65 percent working interest in each block; Block 53, with a 45-per cent workinginterest; and Block 62, with a 48-per cent interest.

Oxy signed a 30-year production sharing contract for the Mukhaizna fieldwith the Oman government in 2005, pursuant to which it assumed operation ofthe field. By the end of 2012, the company had drilled almost 1,800 new wellsand continued implementation of a major steam-flood project in Oman.

Oxys growth will be most strongly affected by the success of thedevelopment plans for our Permian, California and Oman assets and the Al Hosngas project in UAE, Chazen said.

FOLLOWING A LANDMARKagreement with the Iraqi Ministry forOil in 2011, OPITO International hasnow been awarded a contract withShell to support the development oftraining for workers on the Majnoonproject and to improve vocationaltraining centres in Basra.

The oil and gas industry bodywhich sets training standards thatimprove safety will ensure that thesecentres train Iraqis to industryexpectations and OPITO standards.

In addition, OPITO is workingwith all the international oilcompanies in Iraq to design aframework for delivering suitablyqualified Iraqi oil and gas workers tohelp the country fully exploit itsemerging oil industry and transformthe economy of the war torn country.

This contract is one of a series ofworkforce development initiativesOPITO is undertaking in several oiland gas provinces around the world.To bolster its new role as the trusted

adviser to governments,international and national oilcompanies in their quest to developindigenous oil and gas workforces,OPITO has created the new role ofdirector of international workforcedevelopment. Former director of theScottish Qualifications Authority(SQA), John McDonald, has beenappointed to lead the work withShell and build future agreementswith governments and industry,which are currently in the pipeline,

in places as far-ranging as Oman andEast Timor.

Setting training standards in Iraq

A surge in activityis predicted

THE UAE HAS managed to control oil leakages from its field pipelinesby implementing protection plans bringing such incidents to zerolevels, an industry expert said. But Yves Gunaltun, a corrosion expertat Total UAE, admitted that there are leakage problems in the Gulf andother oil producing countries of the Middle East.Authorities in the UAE apply a zero leak policy and operators have putimportant pipeline integrity programmes in place, he said in aninterview with Iris Media after a corrosion conference in Abu Dhabi. Yet,there are important pipeline corrosion problems in the Gulf, he added.Gunaltun said the problem in the Gulf, which controls over 40 percent of the worlds recoverable oil deposits, is more severe for somesmall diameter pipes as no chemical treatment has been done.Asked about the costs of repair or replacement of damagedpipelines, he said they significantly depend on the environment(onshore or offshore), pipe diameter, pipe length and production lossduring maintenance or replacement.For example, for offshore repairs the cost would be as much as a fewmillion dollars. For replacement of important large diameter/longpipelines, we are talking about tens of millions of dollars. Generallythe operator pays for the replacement and repairs, he said.For old oilfields with hundreds of pipelines it is not unusual to havefour to five leaks a year. This is the case in all regions around theworld and also in the Middle East. However, there has been nocatastrophic failure causing major damages to environment, headded. According to Gunalton, the oil industry has developedreliable pipeline corrosion control systems that have been used forseveral decades, adding that the important issue is the selection ofthe right corrosion control system.

Oil Review Middle East Issue Three 2013

Occidental says Oman assetscontribute to growth

UAE has zero pipeline leakages - expert

Annual drilling expenditure offshore MENA to top US$17 billion by 2016

www.opito.com

News

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10-13 EAGE Conference & Expo LONDON www.eage.org/events

11-13 Gas & Oil Expo CALGARY www.gasandoilexpo.com

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Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

QATAR GAS TRANSPORT (known as Nakilat)and Algerias state-run energy companySonatrach will work together on a numberof areas of common interest related to themarine transportation of hydrocarbonsunder a memorandum of understanding(MoU) signed recently.Potential areas of collaboration include

the co-ownership of gas carriers, for whichdiscussions are in progress regarding twoliquefied natural gas (LNG) vessels, eachwith a capacity of 177,000 sq m.Collaboration for vessel dry-docking, andconstruction of vessels in both countriesare also possible areas of co-operation.Nakilat and Sonatrach, which is Africas

largest oil and gas company, have agreedupon transportation collaboration forliquid petroleum gas (LPG).The two companies have also discussedthe sharing of technical informationand experience as well as collaborationwith regards to the logistical support oftheir fleets.

Nakilat and Sonatrach agree to work together on gas transportation

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AALREADY, THERE ARE signs of a gentletightening in the regions offshore rigmarket. IHS Petrodatas Weekly RigCount shows offshore rig supply in

Middle Eastern waters hovering around the 135mark, some way up on last years average of 121.

And there are other signs that demand for rigsis on the up too, with fleet utilisation rates for theregion averaging around 85 per cent thus far in2013 - above the world average, and behind onlyWest Africa and the Europe/Mediterranean region.

This is some way up on last years 81.8 per centaverage fleet utilisation rate for the Middle East zone.

It means the vast majority of rigs in the area arenow actively working and under contract, with fewsitting idle. And thats just offshore.

Onshore, where much of the Gulfs existingproduction is located, an area which draws on evenmore rigs, it is a similar story, especially in Iraq,which is now steadily raising output throughsustained and intensive drilling work.

The fact that drillers are getting busy is no moreevident than in the regions biggest oil producer,Saudi Arabia.

Rising demandHere, state-owned Saudi Aramco intends to use arecord number of rigs during 2013 as it targetsunconventional gas reservoirs, as well as continuingto exploit the kingdoms oil wealth.

The company is to deploy an additional 30 rigsthis year, taking its total to over 170, industry

sources told Reuters in late January, as the searchfor gas to meet rapidly rising domestic demandaccelerates.

At the same time, Aramco is keen to maintainthe nations oil production capacity at 12.5mnbarrels per day (bpd) as mature fields decline.

The numbers are more or less in keeping withearlier figures released by oilfield services giantSchlumberger which said in mid-January that SaudiArabia's rig count could rise by about 25 rigs thisyear to around 160.

Although Aramco has yet to comment on its2013 rig plans, it is believed the extra units are tobe deployed mostly in northwestern parts of thecountry where there are plans to explore forunconventional gas, as well as drill deep offshore inthe Red Sea, and develop new oil prospects.

Some of the additional rigs will be used formaintenance, or drilling for water to re-inject intooilfields to boost or sustain production levels.

The aim is not to grow overall crude oilproduction capacity though.

"They want to have the ability to produce more

[oil] rather than producing more," one of thesources was quoted as saying by Reuters.

Since completing a huge oil capacity expansionproject three years ago, Aramco has largely focusedon raising gas output, although it is acutely awareof the need to maintain its oil production cushionas OPECs so-called swing producer.

The Kingdom cut oil production in the lattermonths of 2012 creating more breathing space andspare capacity should the market require it.

However, there is the reality that Saudismaturing fields will still mop up greater rigresources, as technical issues force the company tocontinue to drill in order to simply sustain outputlevels.

Mixed fortunesSadad al-Husseini, a former Aramco executive, said:"If Saudi production continues at its current highlevels of output or rises further, the rig count willcontinue to go up based on technical factors, as hasbeen the case in many other oil and gas basins inthe world.

And if the Kingdom is to genuinely targetunconventional gas reservoirs in a big way then thisis going to squeeze demand for rig services evenmore acutely.

According to some industry experts, the MiddleEast needs to double the number of onshore andoffshore rigs from the current level of around 360.

Chris Faulkner, chief executive of US-basedBreitling Oil and Gas, was quoted as saying in The

Rig contractors can expect to be busy this year

If nothing else, it is plain and simple

economics that suggestscontinuing strong demand

for rigs in the Gulf

Analysis

8

There are signs that the Middle East rig count is on the way up. Buta whole load more drilling units may well be required in the years tocome if the region is to start to exploit new, alternative hydrocarbonsources, in addition to its conventional oil and gas wealth.

Rig count up as demand starts

to tighten

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S02 ORME 3 2013 Analysis 01_Layout 1 22/04/2013 15:13 Page 8

National newspaper recently that forunconventional projects such as fracking thatrequire many wells, the regional fleet would haveto expand by a factor of five to 10.

Its unlikely that the rigs market is currentlypreparing for such an eventuality.

And for the regions rig builders there have beenmixed fortunes despite the apparent uptick indemand for their services.

Core strengthsWhile there is plenty of business in the pipeline forLamprell, the UAE-based company has faced hugefinancial challenges and management upheavalduring the past year.

This includes an investigation by the UKFinancial Services Authority for its handling ofinside information; the company is listed on theLondon stock market.

At the end of 2012, chairman John Kennedy,confirmed that his company will refocus this yearon its core strengths, predominantly new-buildjack-up rigs and rig refurbishment.

In the short-to-medium term, the group's orderbook of secured contracts is expected to supportthe business' recovery through to the end of 2013,he told investors last November.

Longer-term, we are encouraged by the strongbidding activity across the business with thepipeline totalling more than US$4bn.

It delivered its first jack-up of 2013, theGreatdrill Chaaya, to its customer, Greatship GlobalEnergy Services, in mid-January.

Kennedys business outlook is also supported bygreater access to the booming Saudi market.

Last September, Lamprell joined Shoaibi Groupand Al Yusr Townsend and Bottum L.L.C to set up ajoint venture for new-build fabrication, refurbishment

and repair of land drilling rigs in the kingdom. If nothing else, it is plain and simple economics

that suggests continuing strong demand for rigs inthe Gulf.

OpportunityWhile Saudi is not looking to raise its own oilproduction capacity - and yet it is still looking toutilise a record number of rigs this year - there areplenty of other countries that are.

Kuwait, Abu Dhabi, Qatar and Oman are alllooking to expand their own oil production capacity,as well as grow the gas sector quickly andsubstantially to feed local demand

And then there is Iraq, the regions emergingproducer which could dominate business forservices companies for years to come, sucking inmore and more land-based rigs along the way.

The overhaul of the countrys big oilfields,which is already now yielding greater production,will entail drilling possibly thousands of new wellsin the years ahead.

It has opened up opportunity for local playerssuch as the Iraq Drilling Company (IDC) which haspartnered with Schlumberger for the work drillingthe super-giant Rumaila field.

And last year, for the first time since 1990,Baker Hughes included Iraq in its regularinternational rig count.

The company reported that Iraq had 79 rigs outof a June international rig count of 1,285 (a figurethat excludes rigs in North America).

Barring any major new industry setback - suchas another war in the Gulf, or a collapse in oilprices - rig contractors can brace themselves for abusy period ahead.


Analysis

10

There have been mixed fortunesfor the regions rig builders

The fact that drillers aregetting busy is no more

evident than in the regionsbiggest oil producer, Saudi

Arabia

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BOOMING EXPLORATION AND Production (E&P) expenditure will see theglobal oil field services industry climb significantly in value in the nearfuture, according to business intelligence company GBI Research.According to the firms latest report*, the global oil field service industry(typically defined as any activity or service related to the finding,evaluation, development, production and abandonment of oil and gasresources) is forecast to jump in value by a massive 72 per cent in justfive years, from US$152bn in 2012 to US$213bn in 2017.Despite the global economic turndown, demand for oil and gas hascontinued to grow, due primarily to the emerging economies of Asia andSouth America. Additionally, the increase in crude oil and natural gasprices has warranted high E&P costs for areas where access is moredifficult, such as offshore deep and ultra-deep locations.Innovative hydrocarbon recovery techniques such as Enhanced OilRecovery (EOR) are also driving oil companies around the world to

return to depleted or mature reservoirs further contributing to totalE&P expenditure.Of the three segments that make up the oilfield services industry

exploration and evaluation, drilling, and completion and production itis the latter that garners the most substantial income. GBI Researchforecasts the completion and production services portion of the industryto create US$148bn in revenue during 2017, climbing from revenue ofUS$105bn in 2012.GBI Research is a market-leading provider of business intelligencereports, offering actionable data and forecasts based on the insights ofkey industry leaders to ensure you stay up-to-date with the latestemerging trends in your markets.

* Oilfield Services Industry to 2017 Technological DevelopmentsExpected to Propel Oilfield Investments by E&P Players

Oilfield services industry to top US$200 billion by 2017



M MOST OF THEconversations that wehave with our customerstoday are related to

process optimisation. Both upstream anddownstream, companies in the region are lookingto ensure that they improve efficiencies. The MiddleEast markets today offer tremendous opportunitiesfor new investments and deployment of state-of-the-art technologies.

Benefits that include improved assetproductivity and energy savings are clearlyexcellent selling points in a market constrained byfalling oil prices and rising exploration costs. Ofcourse Pierre Leretz, President and Region DivisionManager, Process Automation at ABB in India,Middle East and Africa, is in a good position tocomment on this.

ABB, founded in 1883, is today one of theworld s biggest names in power and automationtechnologies. In the oil and gas market specificallyit provides number of solutions for applications tohelp increase output in upstream, midstream and

downstream oil and gas processes.Its not surprising that companies like ABB are

finding a market for their technologies in MiddleEast oil and gas. While significant finds continueto be announced, reaching such reserves will be achallenge in the future. That challenge, however,will pave the way for the implementation of newtechnologies.

Big concernAt the same time oil and gas operators in theregion are increasingly concerned about energyefficiency and safety. According to Leretz, its ascenario that ABB is already geared up for.

Security for automation and control systemshas gained a lot of attention in the last few years,along with operator effectiveness, which is anothercrucial area because of its significant contributionto overall plant safety and reliability, he explains.He adds, What we also observe is that the markethas significantly moved into ICSS (integratedcontrol and safety systems).

Many of ABBs oil and gas customers in theregion and across the globe are implementinglarge oil and gas projects that include captivepower plants. At the same time they areincreasingly looking for integratedinstrumentation, control, and electrical solutionsto reduce overall cost and implementation timeand to increase operational efficiency.

Of course a big concern, and an opportunity forABB and similar businesses, is risk management.Oil and gas companies need partners who can helpmitigate their risk by offering the capability toexecute large multi-scope projects with professionalproject management, a global presence and theability to guarantee strict compliance to

Oil and gas operators in the region areincreasingly concerned about energyefficiency and safety. So its not surprising that companies like ABB arefinding a market for their technologies

In the field of oil and gastransportation, ABB was themain electrical vendor for amajor pipeline project in the

region

Analysis

12

Today, industries in the Middle East expect to examine and monitor the status of eventhe most remote outpost at the push of a button. And, as Pierre Leretz of ABB tells OilReview Middle East, expertise and technology offered by companies like his is helpingthem do exactly that.

The importance of

being automated

www.oilreview.me


international industry standards. The aim is toensure timely, high quality deliveries throughout allproject phases, from concept to operation, with afirm focus on health, safety, security and theenvironment.

In that regard companies with large projectsnow demand MAC (main automation contractor)and MEC (main electrical contractor) executioncapabilities, says Leretz.

Its no coincidence that he should highlight thistrend; ABB is already executing the largest MACproject in the world.

These days, in fact, automation is essential. AsLeretz points out: Today, industries in the MiddleEast expect to examine and monitor the status ofeven the most remote outpost at the push of abutton. Networks make this possible.

Networking technologies now enable thecreation of richer and more powerful applicationsthat allow organisations to achieve higheroperational efficiency but thats not all.

Cyber security, which is a key aspect ofnetworking technologies, has also gainedimportance in the last few years, Leretz points out.It is not viewed as a one-time activity, but as anintegral and continuous part of the project lifecycle, from early design and development, throughtesting and commissioning, to lifetime supportservice and future adaptations.

All of which is both a challenge and anopportunity for ABB.

Our automation business units are constantlydeveloping applications that allow plants orequipment to run at maximum output, consistentlyproducing high-quality products, Leretz says. Ourindustrial IT solutions integrate engineering,operations and maintenance activities on acommon technology platform, thus improvingoverall plant efficiency and safety.

EfficientThe fact that ABBs Asset Management andPerformance Service solutions help to minimisedowntime and to reduce variable costs such aslabour, maintenance and consumables is importanton at least two counts, he suggests.

In this era of record energy consumption, oursolutions for energy management help plantoperators to reduce both cost and environmentalimpact.

Automation is also relevant to life cyclemanagement. Obsolescence of plant is a majorconcern in the Middle East; the oil and gas industryaims to be as efficient as possible, to get themaximum amount of resources out of the ground, andto utilise them as best they can for the lowest cost.

Our customers want to increase the lifespan oftheir investment, says Leretz, so obsolescencemitigation is an essential element in assessing

business opportunities. There are many plants thatare reaching that stage in the region.

Leretz says this is an issue that ABB is alreadywell aware of.

The automation system must provide solidbusiness value based on a combination of metricssuch as enhanced asset availability, return onassets, and reduced life cycle cost. It is oftenseen that time and cost saving could make a vastdifference to output, efficiency and profitability ofthe plant. Moreover capital deployment isreduced through planned upgrades for installedsystems, he explains.

Major projectsAs for what is occupying ABB in the region rightnow, the company has been involved in a numberof major Middle East projects recently. They includethe Sadara project in Saudi Arabia - the largestpetrochemical plant in the world - for which ABBwas selected as the project s Main AutomationContractor (MAC). ABB is also involved in a sulphurhandling project elsewhere in the Gulf for which itwill supply telecommunication systems for a sourgas processing plant.

In the field of oil and gas transportation, ABBwas the main electrical vendor for a major pipelineproject in the region, offering its comprehensiveelectrical and automation system to help thecustomer to get the maximum value out of itscontrol system investment.

We have already touched on environmentalconcerns. Technical offerings that address these arealso becoming a strong part of the ABB portfolio.

We see a lot of interest in what wed termgreen or environmentally friendly solutions,Leretz says.

Among ABB offerings is one that cleans oilywastewater, by far the largest waste product in oiland gas production, quickly, cost-effectively andenergy-efficiently, ready for discharge with zeroenvironmental impact, as Leretz puts it.

Developed on behalf of a leading national oiland gas company, the solution is installed at threeoil and gas fields in North Africa.

Developed and patented by ABB, the processhas exceeded the customer s specifications forhydrocarbon content and suspended solidconcentration in the outlet water by seven and 55times respectively.

Other benefits of the solution Leretz highlightsinclude a compact footprint, the use of chemicalsthat can easily be produced on site usinginexpensive base ingredients, ease of installation (itis built on skids and then transported to the site forinstallation and commissioning), and ease ofoperation (it uses standard equipment and requiresno complex skills or operator experience).

Any readers who were at the World FutureEnergy Summit in Abu Dhabi earlier this year willknow that theres been plenty of talk aboutdeveloping greener, more environmentally friendlyprojects in the region.

Its no surprise then that, as well as respondingto the inevitable demand for the sort of efficienciesautomation offers, companies like ABB areincreasingly building a market for products thatserve the environment as well as the customer.


Analysis

14

Pierre Leretz - Companies withlarge projects now demandMAC and MEC capabilities

Of course a big concern, andan opportunity for ABB and

similar businesses, is riskmanagement

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BBAHRAIN WAS TRYING to position itselfas a regional financial hub decadesbefore Dubai became a seriouscontender. However, it lost ground in

the 1990s due to domestic strife and uncertainty aswell as a more exposed financial situation. Bycontrast, the past decade has seen more success,though not enough for Bahrain to match thedevelopment speed of its richer neighbours.

Today even this modest advance is lookinguncertain. The upheavals of early 2011 and thegovernment crackdown that followed did little forinvestor confidence in Bahrain. The kingdomseconomy - and in particular its banking sector -suffered as a consequence.

If Bahrains position as a banking hub is againunder threat can it look to oil as a more reliablesource of revenue? Its true that the hydrocarbonresources of its neighbours long since overtook itsown, much more limited supplies. In recent decades,therefore, Bahrain has traded on its proximity to theoil and industry powerhouse that is Saudi Arabia.

Upstream opportunitiesBahrain was one of the first countries to seriously tryto diversify its industrial base. Admittedly it hadlittle choice, but it has been one of the moresuccessful in doing so. Apart from early ventures inshipbuilding and aluminium, the kingdom has longbeen a net exporter of refined products. Not that itcan offer feedstock entirely on its own; its domesticproduction capacity has long been below its refiningcapacity. Therefore it has, for many years, sourcedsome of the feedstock needed by its 250,000 bpdSitra refinery from its larger Saudi neighbour.

There are both oil and gas in Bahrain of course,but they have largely been sourced from its onlyonshore oilfield. The Awali field came onstream in1932, making it the first oil discovery - and Bahrainthe first oil producer - on the southern, Arab, side ofthe Gulf. Awali foreran - and in a way foretold - theupstream opportunities possible in Kuwait, SaudiArabia, Qatar and Abu Dhabi. Ironically Awali, laterrenamed the Bahrain field, was also an earlyillustration of the mature decline that willinevitably face the oil and gas fields of its moreprolific neighbours.

The Bahrain fields oil and gas production hadfallen to around 30,000 bpd of crude and 1.5bcf/d of natural gas by 2007. In that year,however, the kingdom launched a project to

attract capable enhanced oil recovery (EOR)investors to participate in the redevelopment ofthe field and the targeting of new, deeperreservoir layers.

Given its limited upstream prospects,Bahrain has for a long time been trying todevelop its downstream potential.

But sourcing feedstock amidthe domestic decline has been

a long-standing challenge

Analysis

16

Awali was the first oilfield discovered on the Arab side of the Gulf. Now known as the Bahrain field, it was alsoone of the first oilfields to suffer major decline. Can production from this field be improved? Are other sources ofgas and oil available? Or should Bahrain focus on its downstream expertise as a more promising source ofrevenue? As independent oil analyst Samuel Ciszuk explains, there are no easy answers.

Bahrain: what can upstream offer? How much

can downstream deliver?

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Production has indeed risen since, but onlymodestly compare to targets of around 75,000bpd of crude and some 25,000 bpd of NGLs andcondensate. It is also hoped that gas productionwill rise - to over 2.7 bcf/d at full redevelopment.Reaching these targets will take time, however.The partnership redeveloping the field - a jointventure called Tatweer Petroleum - is aiming for a2024 project completion. The JV partners areOccidental Petroleum, Abu Dhabis MubadalaDevelopment and Bahrains National Oil and GasAuthority (NOGA).

Commercial reservesBut are these targets achievable? After all, overallpeak production at the field was 75,000 bpd ofcrude. A mix of much higher recovery rates enabledby the latest EOR techniques and targeting of newgeological horizons might make such levelspossible. Nevertheless, the prospects for gas seemslightly more favourable. Some deeper layers, likethe Pre-Khuff zones, which have never beentargeted before, are known to hold significantcommercial reserves elsewhere in the region.

But there has been little else of potential todevelop. Drilling in the waters surroundingBahrain has so far not produced any discoveriesof commercial interest. Much hope had beenpinned on the formerly disputed waters betweensouth-eastern Bahrain and Qatar, surroundingthe Hawar Islands. Their proximity to Qatarsmain onshore oilfield, Dukhan, may have been areason for such optimism. However, the waterswere opened up to Bahraini explorationfollowing a 2001 settlement between the twocountries in the International Court of Justice inthe Hague and, so far, different explorationventures have not produced any success. Otherexploration efforts, particularly in the kingdomstwo northern blocks, 1 and 2, close to Saudiproducing fields and Qatars giant North Fieldgas deposit, have also failed to yield anycommercial discoveries.

Limited prospectsBahrain does, however, receive half the productionfrom Saudi Arabias 300,000 bpd Abu Safah offshoreoilfield. This is based on a deal agreed somedecades ago, under which Bahrain gave up itsmaritime claim against Saudi Arabia. The 150,000bpd are a crucial backbone of the Bahraini economyand provide most of the feedstock for its Sitrarefinery. The field is operated by Saudi Aramco. Itscrude lands in Saudi Arabia and is then transportedto Bahrain through a subsea pipeline with a230,000 bpd capacity.

Given its limited upstream prospects, Bahrainhas for a long time been trying to develop itsdownstream potential. It is, after all, located in aregion with ready access to cheap feedstock.Securing cheap volumes above those it receivesfrom Saudi Arabia and the small trickle it producesitself has, however, proved difficult. This is hardlysurprising; none of its neighbours are keen on theidea of long-term crude supply contracts that givethem a lower export price than they can get in theglobal oil markets.

That may be why long-standing and oftendelayed plans to increase imports from Saudi Arabiaand to expand the 270,000 bpd Sitra refinery arebeing revived yet again. As we have mentioned,Bahrain has for decades been forced to source asignificant portion of the Sitra feedstock outside ofthe country. However, in the current politicalclimate, with significant amounts of economic andpolitical support extended to Bahrain from SaudiArabia, there are hints of a favourable long-termcontract. Talk is again of Preliminary Front EndEngineering Design (pre-FEED) being completed andFEED plans underway. In fact Khalid Sabbagh,General Manager of the Bahrain Petroleum Co.(Bapco) told business news service Bloomberg inlate January that FEED work should be completedby June and construction on a 120,000 bpdpipeline expansion should begin in the second halfof the year.

ExpansionThis pipeline expansion would be linked withrefinery expansion, lifting capacity to 450,000bpd. Bahraini Oil Minister Abdul Hussain Mirzaunveiled the plans in May 2012. Bloombergreported in its January article on Bahrain thatplans had been concretised and that Bapco wasin the process of asking HSBC and BNP Paribas toadvise it on the process of raising around US$6bnof project finance.

This fits in with estimates for expansion ofbetween US$6 and US$8bn; US$10bn is theentire upstream and downstream investmentbudget of the state company. The news agencyalso reported Bapco Chairman Adel Almolayyedas confirming the 2018 completion that hadbeen scheduled.

Will these plans make a real difference?Certainly Bahrain is resource poor compared to its

Gulf region peers. However, limited resourceavailability was an early driver for Bahrain to movenot only into industrial and general economicdiversification, but also to use its hydrocarbonknow-how to export added-value hydrocarbonproducts. In line with that strategy, itspetrochemical sector was also developed earlierthan those of most of its neighbours.

But sourcing feedstock amid the domesticdecline has been a long-standing challenge.Securing the necessary investments to maintain atechnical edge in a region investing heavily in itsfuture refining capacity has been another challenge.However, if the import pipeline and Sitra refineryexpansion do finally get under way, the Bahrainieconomy would almost certainly benefit. At the veryleast these projects would help to make up for theslowdown in investment elsewhere in the economydue to the domestic political situation. The Sitraexpansion project is also important given thesignificant youth unemployment problem, althoughit clearly won't turn things round on its own.

CompetitionThere is, however, the question of terms. At a timewhen a large number of other export-orientedrefineries and petrochemical facilities have come,or will soon come onstream - particularly in SaudiArabia - the key for an enlarged Sitra will be theterms on which it is buying crude from SaudiArabia, on top of its approximately 150,000 bpdAbu Safah allocation.

But international competition is going to makethe downstream operating climate tough in theGulf region as it has in so many other areas. Themargins achieved will be the key to industrialgrowth - or even survival. Of course Bahrain stillneeds to get expansion under way, but an earlyindication of its prospects will be whether and onwhat terms it manages to secure project finance.

Whatever happens, realistically Bahrainshydrocarbon sector future rests with its downstreamoperations rather than upstream production. In theopinion of most observers, however, that has beenthe case for a very long time.


Analysis

18

Plans to expand the 270,000 bpd Sitra refinery are being revived - again

Bahrain was one of the firstcountries to seriously try todiversify its industrial base

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AACCORDING TO A statement from SaudiAramco, the first phase of production atthe Manifa field has begun threemonths ahead of schedule and well

within the programmes approved budget.The Manifa fields production capacity is

expected to reach 500,000 bpd by July 2013, andis planned to reach its full design capacity of900,000 bpd of Arabian Heavy crude oil by theend of 2014, while Saudi Aramcos maximumsustained capacity will be maintained at the levelpreceding Manifa production.

Last October, Ali Al-Naimi, minister ofPetroleum and Mineral Resources and SaudiAramcos chairman of the board of directors, led theboard members on a review tour of the Manifa fieldproduction facilities and inaugurated reservoir waterinjection along the perimeter of the Manifa field.

The Manifa project is unique in many ways withits innovative engineering design to develop thefields optimum production capacity, while caringfor the environment and optimizing its budget.

The Manifa field includes dry-land rigs linked bya total of 41km of causeways with a number ofelevated bridges designed to maintain naturalwater flow in the Manifa Bay and preserving naturalmarine nurseries.

Multiple successesIncluding a 420 MW heat and electricity plant, theproject employed best in class technologies ininfrastructure, drilling and production activitiesconsuming more than 80mn man hours without alost time injury, one of the best safety records inthe industry, which qualified the project to receivethe Innovative Oil Project of the Year award.

Speaking to Saudi Aramcos leadership and

employees, president and chief executive officer,Khalid A. Al-Falih, congratulated the Manifa Projectteam on their multiple successes by bringingManifa on stream three months ahead of schedulein line with operational excellence, safety andenvironmental stewardship and reaching high level

of Saudization in operations, mainly attributable toSaudi Aramcos investments in human resources,operations and infrastructure developments.

The Manifa story will be a very bright andshining example in our corporate history, he said.

It really opens a new page in terms ofovercoming various hurdles and complexities mostnotably through human and technologicalinnovation, said the CEO.

It is a testimony to the companys values,particularly citizenship, by caring for theenvironment, Saudization and relying on nationalvendors to the maximum extent.

Al-Falih also praised training programmesoffered by the company to its employees on thelatest techniques in the design, construction, andoperation of mega and advanced oil projects.

Manifa, discovered back in the 1950s, will notboost the kingdoms sustainable productioncapacity beyond its stated 12.5mn bpd becauseSaudi Aramco plans to ease production at some ofits mature reservoirs to increase their ultimaterecovery rates in the long term, Falih haspreviously said.

Manifa will help the state-run companymaintain export levels without running its olderfields so hard, while supplying a new 400,000-bpd refinery run by Aramco and Frances Total atJubail on the OPEC heavyweights east coast withArabian heavy crude.

You will not see a change in export andproduction capacities, a Saudi industry source said,adding Production capacity will continue as 12.5(mn bpd) for Saudi Arabia.

The Manifa field will also be used to supplycrude to an Aramco joint-venture refinery withChinas Sinopec in Yanbu, on the Red Sea coast. n

Views of Saudi Aramcos Manifa field

The Manifa project is uniquein many ways with its

innovative engineeringdesign to develop the fields

optimum production capacity

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20

Saudi Aramco said the first phase production start-up at the Manifa field commencedrecently.

Manifa starts first phase

of production

www.oilreview.me

Khalid Al-Falih



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22 www.oilreview.me

IRAQ HAS RAISED its estimated crude oil reservesto 150bn barrels from 143bn barrels, with more oildiscovered in oilfields being upgraded by oilcompanies and from a new oilfield in southern Iraq.Iraqi oil minister Abdul Kareem Luaiby said, Thecalculations that we have carried out indicate thatour oil reserves have increased to 150bn barrels.Luaiby added that the new reserves come fromDima oil field, located in Missan province on thesoutheast of Baghdad, and from other fields. If thenew added reserves are confirmed, Iraq, a member

of the Organisation of the Petroleum ExportingCountries, will rank third in global crude oilreserves after Saudi Arabia and Canada. Iraqsproven oil reserves do not include those of theKurdistan Region of Iraq, where many internationaloil companies are carrying out exploration andearly development. Kurdish officials have estimatedsome 40bn barrels of oil in the region.

Luaiby also said Iraq is currently producing some3.15mn barrels a day now and it is expected to addaround 200,000 barrels a day by the end of this year

from fields such as Majnoon and Garraf which isbeing developed by consortia led by Royal DutchShell and Malaysias Petronas, respectively.

CANADA-BASED OIL EXPLORATION firm Valeura Energy hasannounced that it has been awarded a new exploration licence,Banarli Licence 5104, on a 100 per cent working interest basis in theThrace Basin of northwest Turkey.The Banarli Licence 5104, which was awarded to Valeura by theGeneral Directorate of Petroleum Affairs Turkey, has a four-year initialterm and covers an area of more than 479 sq km spread over 185sections located near the centre and deepest part of the Thrace Basin. The company has said that the licence is ideally located to test fora potential basin-centre gas play and explore unconventional tightgas and shale gas in those areas where the Mezardere shale sourcerocks are at depths below 3,000 metres and may be at pressures

and temperatures sufficient to create an active kitchen forhydrocarbon generation. It added that the overlying Ergene, Danismen and Osmancikformations, which were also deeply buried across the licence, mayalso be prospective for conventional gas exploration.Under the Banarli licence terms, a well will be required to be spud withinthe first year to keep the licence in good stead. Valeura Energy has plansto initially carry out a targeted 2D seismic program to complement theexisting 2D seismic coverage on the licence. The licence is unexplored with only two relatively shallow wellsdrilled, of which the latest, Karaca-1, was plugged and abandoned ata depth of 1,026 metres in November 2010.

Valeura Energy awarded Thrace Basin licence

Iraq increases reserves again

Iraq is also increasing its oil production



IRAN HAS STARTED drilling four wells at the offshore section of the Phase 1of the South Pars gas field in the Gulf. According to a report on IRNA,National Iranian Drilling Company official Mohammadreza Takaidi said thatthe South Pars Oil and Gas Company will drill the wells within 280 days.

The managing director of Pars Oil and Gas Company Mousa Souri hadsaid in September 2012 that Iran will be able to earn US$8bn in revenuefrom every phase of the South Pars gas field. Souri had noted that the gasfield accounted for eight per cent of the global gas reserves and that thedevelopment of each of the 24 phases could cause a one per cent growthin the national economy.

South Pars project manager Farhad Izadjou said, The South Pars gasfield phases 22-24 will produce around 12.5mn cu/m of natural gas oncethe phases become operational by May 2013. More than US$5.1bn will beinvested to develop the three phases, which will hopefully produce 56.6mn cu/m of sour gas, 75,000 barrels of gas condensates, 400 tonnes ofsulphur and 870 tonnes of LPG.

Iran, which sits on the worlds second largest natural gas reserves afterRussia, has been trying to enhance its gas production by increasing foreignand domestic investments, especially in the South Pars gas field.

The South Pars gas field covers an area of 9,700 sq-km, 3,700 sq-km ofwhich are in Irans territorial waters in the Gulf. South Pars is the world'slargest gas field, shared between Iran and Qatar.

According to the International Energy Agency (IEA), the field holds anestimated 1,800 trillion cubic feet (51 trillion cubic metres) of in-situnatural gas and some 50 billion barrels (7.9 billion cubic metres) of naturalgas condensates.

WINSTAR RESOURCES PROVIDED an update on its Tunisianproduction. The company's daily production is within its range ofexpectations. Winstar's daily production has ranged from 1,350 to2,050 net barrels of oil equivalent per day (boepd). Variability indaily production is reflective of workover logistics and variations innatural gas nominations, at the Chouech Essaida Concession, fromSTEG (the Tunisian National Utilities Company). The companyestimates its current stabilised production at 1,600 to 1,700 boepd.This rate does not include incremental production expected fromChouech Essaida Triassic Well #11 ('CS #11') which is nowexpected to be completed before the end of April. The successfulrecompletion of CS #11 is anticipated to increase dailyproduction to 1,800 to 1,900 boepd. Current production also doesnot include approxmately 80 boepd from the Sanrhar Concession,which remains shut-in due to its location and related logisticalissues. There continues to be no estimated date, for theresumption of production at the Sanrhar Concession.The installation of a surface pump at Chouech Essaida Silurian Well#10 ('CS Sil #10') was completed in early April 2013. To date,pumping activities have generated what is interpreted to beformation water which invaded the Triassic reservoir, with sometraces of gas, which is consistent with the company's expectations.Pumping is expected to continue for several weeks, if not more, tohopefully establish oil production from the virgin, or the notinvaded, portion of the Triassic TAGI Formation.

Winstar registers productionincrease in Tunisia

24

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New wells being drilled at South Pars

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Oil Review Middle East Issue Three 2013 25www.oilreview.me



HUNDREDS OF LOCAL protesters blocked amain entrance of Iraqs giant southern WestQurna-2 oilfield, operated by RussiasLUKOIL, demanding jobs in a sign of thegrowing challenges facing foreign firmsoperating in the south.Local communities and tribes in Iraq, whereforeign oil companies are developing the OPECnations vast energy reserves, periodicallyprotest to squeeze companies for jobs andother work benefits.Around 500 angry protesters gathered at the

main entrance, demanding Lukoil supply jobsand compensation for land where it operates. We are protesting to get our rights. We havedecided to block the entrance until fieldofficials address our demands, said Mizhir Al-Rwemi, a spokesman for protesters.An official at the state-run South OilCompany said it was not the first suchprotest. We are trying to deal discreetly withthem, the official said.Iraqi oil police officials said security measureswere tightened around the oilfield to prevent

protesters from getting inside whereemployees, including from Russias Lukoil,were working on developments operations.

OMV HAS ANNOUNCED the completion of importantmilestones in the Kurdistan Region of Iraq. Anextended well test (EWT) commenced productionfrom the Bina Bawi-3 well on 20 March.

Furthermore, the contractor group hassubmitted a Declaration of Commerciality for thefield to the Ministry of Natural Resources of theKurdistan Regional Government (KRG).

The initial capacity of the EWT from Bina Bawi-3is around 5,000 boe/d with the potential to expandbeyond this level to approximately 10,000 boe/d, asfuture wells become available. The Bina Bawi field,located east of Erbil, is operated by OMV which holds

a 36 per cent stake, 44 per cent are held by GenelEnergy and further 20 per cent by KRG.

A further extensive testing programme will beplanned on the Bina Bawi-4 and -5 wells during thecourse of Q2/13, and the contractor group will bemoving ahead with the preparation of a FieldDevelopment Plan for submission to the Ministry ofNatural Resources of the KRG in Q3/13.

Jaap Huijskes, OMV Executive Board Memberresponsible for Exploration and Production said:We are very pleased with this result. The progressof the development of Bina Bawi as well as theDeclaration of Commerciality are important

milestones to further expand our business in thisregion. In accordance with our partners, Genel andKRG, we will continue our work to fully appraise thepotential of this promising field. OMV sees theKurdistan Region of Iraq as an important area forgrowth and the progress on the Bina Bawi fieldunderlines our ability to execute our strategy.

Genel Energy acquired an additional 21 per centinterest in the Bina Bawi exploration block fromHawler Energy for US$240mn late last year. TheTransaction was in addition to the company'sacquisition of an initial 23 per cent interest in theBina Bawi block.

OMV says Bina Bawi is commercial

26

West Qurna protesters demand jobs

E&P

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AACCORDING TO MOHAMED Al-Mady,SABICs CEO, the firm is in talks withpartners to invest in at least one or twoprojects in the US shale gas business to

seize opportunities in the shale revolution.We are talking about a cracker, building a new

cracker, Reuters quoted Al-Mady as saying on thesidelines of a forum in south China.

We are looking at least at one or twoinvestments.

He ruled out venture capital as a source offinancing. Crackers are used to converthydrocarbons into simpler molecules.

Asia is todays global engine of growth and oneof the worlds largest economic power houses. Thecontinents sustainable development and growthwas in focus during a discussion this week at theBoao Forum for Asia (BFA) Annual Conference inHainan, China.

Mohamed Al-Mady, vice chairman and CEO,along with leaders from government, business andacademia in Asia and other continents, were atthe forum to share their vision and perspective onthe most pressing issues in this region and theworld at large.

With the goal of building and sustainingdevelopment and growth in mind, Al-Mady said:The economic trends in Asia are not dissimilar tothose found in Saudi Arabia and the rest of theMiddle East. The success we both enjoy are aresult of exports on a global scale translating intorapidly growing economies with a strong andexpanding middle class. Higher wages andconsumption are the natural outcome, which alsobring about challenges for us to produce more,waste less, and insure a sustainable future for ourenvironment and society.

SABIC has become an integral part of the socialand economic fabric of each country in which itoperates and has shared ambition with localcommunities to enhance quality of living throughdelivery of material sustainability.

Central to its sustainability strategies, thecorporation has clear and measurable objectivesfocused on reducing its carbon footprint andenergy consumption through its managementculture and practices globally; helping customersdesign products to enable positive contribution toworld sustainability; and investing in newmanufacturing processes that do more with lessraw material, water, energy and produce lesserwaste and emission.

Our future growth and development isdependent on creating solutions for the major

issues facing society today and tomorrow successful solutions that create value forsociety and in turn, growth for our business,Al-Mady added.

One such solution is the emergence of shalegas as a viable natural gas source.

Speaking at the keynote roundtable on Shalegas: the changing landscape of energy security, Al-Mady touched on the potential for its developmentin Asia, and how it would create global shifts ineconomic power.

Asia is SABICs largest market and we remainupbeat about the regions economic growth in theyears ahead charted by positive forces spurringsustainable development and growth, he said.

China will continue to play a major role inenabling Asian economies growth and steering theglobal economy stability, he added.

Clearly reflected in the countrys 12th Five-Year Plan, it states an increasing focus on reducing

environmental impact, increasing its value additionthrough efficiency and technology whilemaximizing growth of its domestic consumption.The rise of the Next-11 Asian economies will alsolead to an expanded presence in terms ofopportunities and growth, for example, in Indonesiagiven its major oil and gas resources and the sheersize of its market, he said.

On SABICs firm commitment toward fosteringenvironmental sustainability where its interest inshale gas is related to utilisation in manufacturingof petrochemicals, not exploration and exploitation,Al-Mady asserted: We believe the answer lies inbringing sustainability and innovation together. Tous, sustainability requires innovation, andinnovation finds its value in sustainability. There isno sustainability without addressing thefundamental business challenges that we will facein the years to come. Novel concepts towardadditive manufacturing tightly connect innovation,manufacturing, supply chain, and commercialisationthat have been pioneered by the chemicals industrywill result in more efficiency and less waste. Thiscreates a virtuous cycle that will benefit countries,people and the environment for future generations.

In its commitment to Asias growth anddevelopment, SABIC stated and its journey startedin 1976 when the Kingdom formed the company to

The shale gas business in the US offers numerous investment opportunities

To help spur innovation andtap local talent, SABIC has set

up technology andinnovation centers around

the world

Gas

28

Saudi Basic Industries Corp. (SABIC) is planning to build a new cracker in the US tocapitalise on the countrys growing shale gas sector.

SABIC looks to capitalise on

shale gas boom

www.oilreview.me

S06 ORME 3 2013 Gas_Layout 1 22/04/2013 16:36 Page 28

move from hydrocarbon extraction and low-valueprocessing to high value manufacturing of specialtychemicals and engineering plastics.

Today SABIC materials are the building blocks ofvarious industries, including automotive, construction,electrics and electronics, and packaging.

Across Asia, SABIC has built long termcommitment and business relationships in themarkets it operates in since the 1980s creatinglocal partnerships and investment to servecustomers; hiring and training its workforce todevelop innovative mindsets; transferringtechnologies and expertise; fostering environmentalsustainability and contributing to socialdevelopment in local communities to achieve win-win outcomes.

To help spur innovation and tap local talent,SABIC has set up technology and innovationcenters around the world.

Today there are 18 research facilities globally,including four upcoming centers in Shanghai,Bangalore, and two in Saudi Arabia which should beready this year.

These technology centers, are part of SABICsefforts at a country level to improvemanufacturing processes, develop new and betterproducts, and contribute to sustainableenvironment for the communities.

The development work being done aims to driveingenuity forward to meet specific needs ofcustomers as well as the wider society.

In China, SABIC collaborates with educationalinstitutions to bring academia and industry togethersuch as with the Dalian Institute of ChemicalPhysics, and the Fudan University. Our closepartnerships with the universities and institutionsalso put us near sources of fresh talent and ideas.

A supporter of BFA for the fourthconsecutive year since 2009, SABIC is aplatinum sponsor and Mohamed Al-Mady is amember of the board of BFA.

The founding of the Boao Forum, whichpromotes regional economic integration and bringsAsian countries even closer to their developmentgoals, was driven by China and officially launchedby 26 national states in 2001, with its first meetingheld in 2002. n


Gas

30

Al-Mady - looking at one or two investments inNorth America

SABIC has become anintegral part of the social

and economic fabric of eachcountry in which it operates

www.oilreview.me

QATARGAS HAS DELIVERED its first ever cargo of liquefied natural gas(LNG) to Singapore. The cargo was delivered on board the Q-Max LNGcarrier UMM SLAL to Singapore LNG Corporation Pte Ltds (SLNG)first LNG receiving terminal at Jurong Island. The UMM SLAL beganher voyage from Ras Laffan Port on 17 March with approximately200,000 cubic meters of LNG onboard and on 27 March, she safelyberthed and commenced discharging her cargo at Jurong Island LNGterminal, marking the first delivery of LNG from Qatargas toSingapore. This delivery will further strengthen the relationshipbetween Qatar and Singapore as well as between the two companiesover the long-term.The Singapore LNG Terminal is the second LNG terminal in South EastAsia to procure commissioning cargo from Qatargas. In June 2011,Qatargas delivered a commissioning cargo to Thailands Map Ta PhutLNG Terminal. Qatargas has developed considerable expertise insupporting the commissioning of new LNG Terminals globally. To

date, the company has provided commissioning cargoes to nine LNGterminals, with Singapore being the tenth such arrangement.

The cargo is delivered

Qatargas delivers first LNG cargo to Singapore

KUWAIT COULD LOOK to tap unconventionalresources as it begins investigating theprospect of extracting shale gas, accordingto a report.The oil-rich Middle Eastern nation is lookingat the possibility of tapping into what couldprove a reserves base in its northern fields, alocal oil sector official told Reuters recently.The official, speaking on condition ofanonymity, told the news wire that the Opecnation could produce up to between 150million to 200 million cubic feet per day ofshale gas.If Kuwait were to pursue shale gasproduction, it would look to work a companyspecialised in this field, the official told

Reuters. No time frame was given, however,and discussions on shale gas investigationare at an early stage.As early as November 2010, East WestPetroleum Corp sealed a deal with KuwaitEnergy covering the use of itsunconventional oil and gas technologies atthe company's concessions across theMiddle East, North Africa and Eurasia.The purpose of the agreement is to identifyunconventional resource plays such as shalegas, shale oil and tight gas sands for futuredevelopment, East West said at the time.The agreement covered a total of 13exploration and production licenses acrossfour countries in which Kuwait Energy holds

exploration and production interests.Meanwhile, growing production from US shaledeposits is not a threat to Kuwait due to itshigher costs, the country's oil minister HaniHussein said in recently published remarks."There is no effect on Gulf crudes from shaleoil in the United States as it will take a longtime for this crude to have an impact becauseof its high cost," Mr. Hussein said, according tothe official Kuwait News Agency, or KUNA."Gulf countries have huge reserves that canbe produced at simple costs," he added. Analysts have previously said that producingoil from US shale is estimated to cost aroundUS$50-75 a barrel, while in the Gulfproduction costs are often less than US$20.

Kuwait sees opportunities to join the shale gas revolution



AMGAS SERVICES INC. (AMGAS) haslaunched its new Sour Crude Oil Recovery(SCOR) process, apparently in response tothe increased development of sour oil andgas in the Middle East. Sour oil and gas wellintervention is difficult to handle and treatdue to lack of infrastructure, technology andexperience in the Middle East, the companysaid in a statement. As a result, those cruderesources, laden with hydrogen sulfide(H2S), have been routinely flared, leading toa loss of commercial goods as well aspresenting environmental and safetyhazards. AMGAS SCOR process providesmultiple avenues for treating, storing,recovering or transporting sour crude oil.The process fulfills the sustainabilityrequirements of the triple bottom line inthat it protects people, environment andinvestment, the company added.We have been handling and treating H2S inCanada for years. With sour crude oil nowbeing produced in the Middle East we needto use our expertise and capabilities to

handle H2S in ways that simultaneouslyprotect people, their commercial interestsand the planet, says Sheldon McKee,Director of Business and ProductDevelopment at AMGAS. The SCOR processis truly a sustainable solution.The SCOR process integrates processes,service and equipment with dependabletechnological innovations that meetAMGASs exacting standards. It is a costeffective way to manage risks to pollutingemissions and other contaminations in souroil and gas. To ensure the highest level ofservice AMGAS has partnered with RutledgeE&P Pte Ltd. that provides services fordrilling and exploration. Rutledge is basedin Singapore and has operations throughoutthe Middle East. Our goal is to take the best practicesestablished over the years in Canada andmake them a global standard, says McKee.It is a win-win situation for everyone.Producers save money and time and there isprotection for people and the environment.

The SCOR process allows recoveryopportunities for extended well tests, whichimprove well/zone evaluation and drillingplans. Extended well tests are now possiblebecause of the elimination of burning crudeand the consequences associated with it.Recovered sour crude oil is loaded,transported and treated safely in the SCORTransport TankTM allowing commercialrecovery of the oil. This also allows forextended testing parameters due to the costsavings of recovered crude oil.

31

www.rutledgeh2s.com

A cost-effective alternative to flaring

Gas

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EXXONMOBIL AND BHP Billiton are planningto build the worlds largest floating liquefiednatural gas (LNG) processing and export plantoff the northwestern shore of Australia,despite growing concerns about the costcompetitiveness of the countrys LNGprojects. At around half a kilometre long, thevessel would be nearly as long as fivefootball fields laid end-to-end and would bethe largest floating facility in the world. Theplant would bump up Australias current LNGproduction by nearly 30 per cent, producing

6mn to 7mn tonnes per annum (mtpa),enough to fuel the LNG needs of Japan, theworlds largest importer of the gas, for abouta month. Exxon and BHPs decision to

develop the Scarborough field using floatingLNG is another vote of confidence in the asyet untried technology, which energycompanies hope will help cut down on theballooning costs of developing gas. Exxon,which detailed the plan in a filing withAustralias environment department, did notgive a cost estimate for the plant. Australiacurrently has US$190bn worth of LNGprojects under way and is on track to replaceQatar as the worlds largest LNG exporter bythe end of the decade.

GLOBAL MARKETS ARE preparing themselves for surges in gas supplies,as companies increasingly look to natural gas as the fuel of the future.

One of the major technological advances that has revolutionised thegas industry is Liquefied Natural Gas (LNG), as well as the potential cost-saving benefits to consumers and operators of Floating LNG (FLNG).

Yet it is the processing segment of the natural gas industry that rarelyreceives public attention, despite its enormous importance to the entiresupply chain. Since the early days of the energy industry in the 1800s,natural gas and gas liquids have supplied about one-half of totalpetroleum energy production in the US alone.

The light hydrocarbons industry plays a vital role in meeting theincreasing energy consumption demands of the world.

It is an exciting time to be involved in the gas processing section ofthe energy industry but one that comes with a multitude of challenges,according to John Sheffield, of the Gas Processors Association Europe(GPAE).

Sheffield said: The gas market has grown beyond recognition inrecent years and while a major part of that revolution has been LNG, it isclear that the dawn of FLNG will lead to new and exciting opportunities.

Advances in technology have made the production previouslyeconomically unviable opportunities commercially attractive, and we arenow seeing global majors investing heavily in the FLNG process.Preparations for the worlds first FLNG projects are now well underwayand it is critical that we as an industry take the time to understand thechallenges presented by this great opportunity.

SAUDI ARABIA WILL drill about seven test wells for shale gas this year. It willpush ahead with exploratory drilling of shale and other unconventional gasreserves which could be twice the size of its conventional gas reserves, whichtotal 286 trillion cubic feet, according to Minister of Petroleum and MineralResources Ali Al-Naimi.

We know where the areas are,Al-Naimi said at a conference inHong Kong recently. We haverough estimates of 600 trillioncubic feet of unconventional shalegas. The potential is very huge andwe plan to exploit it, he saidduring a Credit Suisse conference.Al-Naimi said the Kingdom willnot stint in ensuring that itscustomers oil needs are met.

The Kingdom may hold as muchas 645 trillion cubic feet oftechnically recoverable shale gas,

the worlds fifth-largest deposits behind China, US, Argentina and Mexico,according to estimates by Baker Hughes Inc.

The Kingdom also has about 282.6 trillion cubic feet of provenconventional gas reserves, according to Aramcos 2011 annual report. Al-Naimi didnt say how quickly Saudi Arabia might begin commercial productionof shale gas or shale oil, or describe how it will supply the large amounts ofwater used in hydraulic fracturing, or fracking, the process used to extract oiland gas from shale.

Kingdom to drill shale gas wells

But will it be cost competitive?

PETROLEUM DEVELOPMENT OMAN (PDO) hasemployed an unmanned aerial vehicle (drone) toundertake its first ever live flare inspection atone of its interior oilfield locations, thecompany has announced.According to a report in the Oman Daily Observer,the drone is designed to survey live flare emissionsat the Petroleum Development Omans (PDO)facilities and is one of several achievementsreported by the company last year.According to the report, the aerial mission was

part of PDOs ongoing efforts to minimise itsimpact on the environment, productioninterruptions and HSE exposure.Our innovative approach means PDO has continuedto embrace new ways of thinking and working. Both inour coastal operation and in the interior, the latest

technology is being deployed to discover newreservoirs, improve recovery from unconventionalwells, reduce energy consumption and increasecollaboration, the newspaper quoted thecompany as saying.The company also rolled out equipments last

year including an innovation, known as Nibras,which is described as a web-based wellmonitoring tool developed in-house for welland reservoir management.Equipped with smart alarms, this tool is usefulin identifying the cause of an alarm. The biggesthighlight of last year for the company was anongoing pilot study involving the use ofconcentrated thermal energy from the sun toproduce low-cost, low-emission steam toextract heavy oil, said the report.


Why gas processing is key for theenergy industry

PDO employs drone technology to monitor flaring

Exxon, BHP plan worlds largest floating LNG plant

Al Naimi - rough estimates

Gas

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TESCO is a joint venture company between foreign partners that includesTharawat Foundry and Industrial Co (TFIC), Tharawat Development Company(TDC) and Zonke Engineering.

TESCOs service and repair facility is situated in the heart of Jubail IndustrialCity and focuses on pump refurbishment, mechanical seal retrofitting forequipment not achieving desired (MTBF) targets, and maintenance and cleaningof vahterus plate and shell heat exchangers. With its trained and experiencedtechnicians, TESCOs goals are to provide the highest level of service to itsclients in the industry.

The companys workshop capabilities apparently include pumprefurbishments, the maintenance and cleaning of Vahterus Plate and Shell Heatexchangers, mechanical seal refurbishments and testing, milling, turning (up toone metre), fabrication, arc welding and TIG welding, drilling, cutting,breakdown repairs, general maintenance.

TESCOs Engineering department is also able to reverse engineer criticalrotating equipment components to OEM specifications to avoid plant downtime.These repairs ensure extended mean time between failures (MTBF) and help toreduce total cost of ownership.

The company also claims it can give new life to seal that is no longerperforming in the field.

Our quality control process produces a mechanical seal that is bothprecision tested and reliable, said a spokesman.

He added that TESCO believes its repair facility is unique. We have made a commitment to repair all mechanical seal styles

regardless of manufacturer. We repair to a like-new condition. If the seal is notrepairable, we will quote a new Trem Engineering seal as replacement. We alsooffer a range of exchange programmes to suit the customer's needs.

TESCO has designed the repair facility to combine state of-the-artengineering and manufacturing capabilities.

We view this commitment as a necessity to properly service our end usersin today's market. Each seal component is decontaminated and evaluated indetail: faces, secondary seals and bellows testing, metallurgical examination,and critical dimensions evaluation, the spokesman said.

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www.tharawatengineering.com

TESCO to highlight capabilities

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S07 ORME 3 2013 Petrochem Arabia_Layout 1 23/04/2013 15:28 Page 34

AAS THE GULFS petrochemical hub Saudi Arabias Eastern Province isnow home to some of the worlds largest processing companies,operating in all sectors (listed briefly below) and accounting formore than one-half of the GCC regions total petrochemicals output.

These key intermediates and finished products include the full range ofolefins, aromatics and synthesis-gas products produced by this huge globalindustry today.

Major petrochemical-related products now emerging from the EasternProvince cluster include ammonia/urea, methane, ethylene, propylene,benzene, butadiene and other by-products of the steam cracking process,products within the complex benzene/toluene/xylene (BTX) family, individualhigh-spec coolants used in internal combustion engines, polyesters, polymersand PVC.

For an up-to-date analysis of the prospects of just one sector of thisbusiness, the ammonia-based industry fertilizer-grade urea was one of thevery first products to be produced on a really large scale within the Kingdom -see Issue 8/2012 of Oil Review.

And propylene itself is of course the key building block for a wide range ofacrylic polymers and epoxy resins used in manufacturing activities of mosttypes for which Saudi Arabia (with its overseas investors) is now a majorglobal source.

Saudi-produced benzene is also used to make adhesive resins along withpolystyrene, polycarbonate, various polyurethanes, detergents and varioussynthetic fibres of which the best known is of course nylon.

The thriving industry represented in total by these exceedingly valuableproducts within the Kingdom as a whole (i.e. including the important WestCoast facilities) now employs nearly 60,000, and rising, according to theregional industry association GPCA (Gulf Petrochemicals and ChemicalsAssociation).

Supported by the Royal Commission for Jubail & Yanbu, the SAGIAInvestment Authority, the authorities controlling the Industrial Clusters, and ahost of individual industrial operators the two-yearly Petrochem Arabiatechnical/strategic conference and business exhibition has established itselfas a major downstream forum, drawing attendance from all over the world.

More than one hundred exhibitors are expected at this years combinedevent which runs from 19-21 May (open until 1800 hrs daily, and much lateron the first evening).

The venue is again the Dhahran International Exhibitions Center inDammam. With over 160 delegates expected this year the conference at theheart of this event will be bringing together a wide range of professionalsfrom the processing, refining and all-forms energy industries to discuss keyissues and future plans, affecting the Kingdom in particular, but of interest todownstream professionals from all over MENA as well.

These include the impact of shale gas and other unconventionalhydrocarbon resources, the topic of a special presentation at 1600 hrs on 13May. The ammonia industry cited above, for example, is already being widelyaffected by this, as our correspondent emphasised in our end-2012 edition.Fortunately gas is not the key feedstock for most other petrochemicals

produced within the Kingdom, but the importance of other unconventionals isalmost certainly on the way up.

Key themes being discussed this year are as follows; much fuller detailswith individual presentation timings and the credentials of speakers can befound on the website under various categories within the Conference pages:6 Industry outlook - Impacts of global developments, gaining a

competitive advantage through strategic growth; the proceduresand activities of the Royal CommissionProven/emerging technologies/processes Sipchems PAD Center;SHEMS development and implementation; optimising existingassets/developing new production processes

6 Catalysts Using developments to improve output; evaluatinginnovations; process improvementsFeedstocks, availability and alternatives Impact of shale gas andunconventionals; generating highest value in output terms

6 Industry expansion via collaboration Various aspects of jointventuringIncreasing efficiency through strategic/operational improvements Planning; a local case study

6 Specialty products and their conversion Creating value chains;consumer market insights; sustainable green solutions forproduction of plastics; value/employment creation in general.Key speakers at this years Petrochem Arabia conference include theSecretary-General of OAPEC, HE Abbas Ali Al-Naqi, the GM (Polymers) ofSaudi Kayam Petrochemical Co, Essam A Al-Muwallad, and a representativeof the Board of Zamil ChemPlast, Eng Osama Abdulaziz Al Zamil.

Oil Review is delighted to have again been selected as an official mediapartner for this major regional event.

www.petrochem-arabia.com for all details or [email protected] (venue) [email protected] (both exhibition and conference)


www.petrochem-arabia.com

Major petrochemical-relatedproducts are now emerging from

the Eastern Province cluster

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A key downstream event is being held in SaudiArabias Eastern Province in May expected tobe the largest gathering of downstreamprofessionals anywhere in the Kingdom this year.

Key themes to be

discussed

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S07 ORME 3 2013 Petrochem Arabia_Layout 1 24/04/2013 10:30 Page 35

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DO YOU SHIP your chemicals in 55 gallon drums, super sacks (bigbags), 25kg bags an

oil review middle east 3 2013

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