Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page one

CONTAXrsquoS CAPEX CORNEREmerging trends in the energy project landscape within the GCC

As the GCC Energy market picks up steam with major announcements by governments and project owners we explore the trends that have shaped the industry in

the first eight months of 2012 Between January and August 2012 US$ 125bn worth of new projects were announced in the GCC while US$ 57bn worth of projects were awarded (Figure 1) Saudi Arabia and the UAE combined accounted for c81 and c83 of all the new announcements and project awards made in the year respectively

Within Saudi Arabia and the UAE the sectors of oil and gas production and petrochemicals accounted for over c50 of all project awards in 2012 Kuwait on the other hand saw 63 of its awards made in the power generation sector The largest project awarded in 2012 was the US$ 3bn Jazan Power and Desalination Plant in Jazan Saudi Arabia

Looking deeper into the projects announced in the two domi-nating markets we notice that Saudi Arabia has primarily (c46) focused on projects within the oil amp gas production sector while the UAE has announced the majority (c80) of its projects within the alternative energy sector The largest project announced in Saudi Arabia was Saudi Aramcorsquos US$ 25bn Red Sea Off-Shore Development Project whilst the US$ 35bn Solar Park announced by DEWA (Dubai Electricity and

Water Authority) was the largest project announced in the UAE in the first eight months of 2012

Most of the new projects announced in 2012 are in line with the long-term plans that the GCC governments have set for themselves A closer look at the award dates of the an-nounced projects reveals that only c30 of the announced

projects are likely to be awarded in either 2012 or 2013 while most of the large scale projects are expected begin develop-ment in the next 3-4 years gt continued on page 2

Kalpesh Ramwani

SeniorConsultant

October - December 2012 Issue 19

GCC Energy Sectors New Projects

Announcements amp Awards Jan-Aug 2012 (US$ bn)

l Projects Announced1 l Projects Awarded

Figure 1 In the first eight months of 2012 cUS$ 57bn worth of projects were award--ed in the GCC Projects announced during the same period equalled US$ 125bn

Source Contax Partners Database

70

60

50

40

30

20

10

0Oman Qatar BahrainKuwait

GCC Energy Sectors New ProjectsAnnouncements amp Awards Jan-Aug 2012 (US$ bn)

Saudi Arabia UAE

c81 of Projects Announcedc83 of Projects Awarded

AlternativeEnergies 34

Oil Gas Production 26

Power11

Metal7

Refining5

Water ampWaste 5

Industrial4

Others8

GCC Energy Project AnnouncementsJan-Aug 2012 (US$ bn)

100 = US$125bn

l Planned for 2011 l Awarded in 2011

Figure 2 Of the US$ 125bn worth of projects announced in the GCC in the first 8 months there is a noticeable shift towards exploring alternative energy sources Others includes fertilizers petrochemicals gas processing LNG oil amp gas explora-tion mining Source Contax Partners Database

ldquothe sectors of oil and gasproduction and petrochemicals

accounted for over c50 ofall project awards in 2012rdquo

CAPEX CORNER [continued]

A sector wise breakdown of announced projects shows that alternative energy followed by oil amp gas production and power will account for 70 of all projects (Figure 2) While the oil and gas production sector and power have historically been the focus sectors within the GCC alternative energy has gained prominence within the region over the last few years Sec-ondary sectors that will see a fair share of investments in the coming years include metals and waste and water which ac-count for 7 and 5 of announced projects respectively As commodity prices increase world over GCC countries have started investing in mining activities in order to source metals locally while investments in waste and water facilities is part of the GCCrsquos broader strategy to combat water shortages and provide safe drinking water in an energy efficient way to its ever increasing population

A comparison of projects announced and projects awarded shows that while projects within alternative energy account for the largest share (c34) of the announced projects the sec-tor accounts for only c5 of the projects awarded in 2012 Projects within the oil and gas production and petrochemicals sectors account for c51 of all awarded projects followed by power at c17 It is noticeable that across the board all GCC countries are shifting focus towards higher margin products within the petrochemicals sector while also investing heavily in meeting their power consumption needs

Comparing the same time periods in 2011 and 2012 we see that projects announced in 2012 have reduced by c50 (Fig-ure 3) Whilst approximately US$240bn worth of project CA-PEX was announced in the first eight months of 2011 only

US$ 125bn were announced during the same time period in 2012 This might be due to the poor realisation rates of his-torical project announcements and governments focusing on awarding historical projects as opposed to announcing new ones

In 2011 Saudi Arabia and Qatar accounted for c75 of all announced projects in the first eight months whilst in 2012 the UAE has overtaken Qatar as the second largest market for announcements In fact Qatar has announced the sec-ond fewest projects this year representing only cUS$ 7bn in value compared to US$ 435bn by the UAE Other sectors of focus between 2011 and 2012 have not shifted much Alterna-tive energy still represents the largest sector in terms of an-

nouncements in 2012 however projects announced are down c130 compared to 2011 Other sectors that saw a substan-tial drop in projects announced in 2012 compared with 2011 include petrochemicals (-c475) to US$ 33bn and power (-c240) to US$ 13bn Sectors that have seen a sharp rise in project announcements as compared with 2011 include Fer-tilizer (+c2000) to US$ 35bn Refining (+c365) to US$ 67bn and Industrial (+c125) to US$ 5bn

The data described here has immense significance for con-tractors and service providers pursuing opportunities in the region and highlights the question Are you focused on the right sectors and markets and how are you preparing your-self to take advantage of the upcoming trends Having a good understanding of the historical awards and announcements would help companies better plan their business development and resource allocation process n

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page two

HAVE A QUESTION Need help understanding the project landscape Want to know the potential realisation rates and likelihood to proceed tiers for your projects To get the answers to these and any other questions you may have contact Ann-Marie AnnMarieCarberycontaxpartnerscom

ldquoall GCC countries are shiftingfocus towards higher margin

products within the petrochemicals sector while also investing

heavily in meeting their power consumption needsrdquo

ldquoIn 2011 Saudi Arabia and Qatar accounted for c75 of all announced

projects in the first eight months whilst in 2012 the UAE has overtaken Qatar as the second largest market for

announcementsrdquo

l Jan - Aug 2011 l Jan - Aug 2012

Figure 1 Nearly twice as many projects were announced in the first 8 months of 2011 as compared to 2012 Of the approx US$ 240bn projects announced in the first 8 months of 2011 c42 was in alternative energy While the trend has continued to-wards investments in alternative energy the size of planned investments in the sector is nearly 50 of that in 2011

Source Contax Partners Database

120

100

80

60

40

20

0Metal RefiningPower

GCC Project Announcements in Key Energy Sectors Jan-Aug 2011 Vs 2012 (US$ bn)

AlternativeEnergies

Oil GasProduction

The future of GCC economies depends heavily on the output capacity of major oil producing countries however the transit of petroleum products from this

region remains of equal importance as nearly 17 million barrels of oil are shipped daily through a single source the Strait of Hormuz Contax Partners believes that the changing political and economic landscape has been and shall continue to be influenced by developments in the oilfield One such noteworthy development has been the inauguration of the Habshan-Fujairah pipeline in the UAE which promises to change the way oil is transported from the Middle East and reflects positively on the stability of oil and gas supply

The Strait of HormuzThe Strait of Hormuz is a 21-nautical mile wide passage and accounts for approximately 20 of the entire worldrsquos oil flows sourced from the Middle East region and 35 of all petroleum traded via sea The criticality of this passage cannot be easily

dismissed because of its strategic geographic location and lack of any routing alternatives Only a width of 3 kilometers in each direction is accessible for deep-water vessels and for regional economies these channels alarmingly fall within Iranian territorial waters Following intense global pressure and sanctions on Iran the use of the Strait as a bargaining tool has become a harsh reality and fears exist that this could become a vital chokepoint affecting oil trade

Hypothetically if Iran did block the Strait of Hormuz countries that supply as much as 85 of their oil to South East Asia and the subcontinent would be impaired in meeting their obligations Abu Dhabi holding approximately 90 of the UAErsquos 97 billion barrels of oil reserves would also be jeopardized as a supplier in global petroleum markets In a recent and very favorable outcome however the commissioning of the Habshan-Fujairah oil pipeline (also referred to as the Abu Dhabi Crude Oil Pipeline or ADCOP) has eased fears of a supply impasse and has greatly reduced the significance of Iranrsquos potential threat Abu Dhabi may now transport up to 56 of the UAErsquos total daily output of 27 m

bpd through the Eastern port of Fujairah and circumvent any threat of a supply blockade Once the pipeline is upgraded to its total intended capacity of 18 m bpd it will account for transport of approximately 67 of the countryrsquos oil capacity

Habshan-Fujairah pipeline Spanning 362 kilometers and capable of carrying 15m bpd of crude oil from the Habshan collection point in Abu Dhabi to the port of Fujairah the Habshan-Fujairah pipeline (Figure 1) has given great leverage to the UAE in securing

the future of its supply routes Built by the China Petroleum Engineering amp Construction Corporation at a cost of $33 billion the pipeline includes a 14 kilometer offshore section oil storage tanks terminals and offshore mooring devices The pipeline will help offset reliance on regional oil terminals and enable the UAE government to avoid shipping congestion through the Strait of Hormuz Subsequently by catering to deep water vessels in the open sea it would make cargo operations more efficient and less risk-prone vessels would therefore be subject to reduced insurance and freight costs Some analysts estimate that transport costs may fall by approximately 25 when the Habshan-Fujairah pipeline becomes fully operational due to lower maritime terrorism risks and wartime premiums gtcontinued on page 4

In focus Habshan-Fujairah PipelineWe look at the impact of the pipeline in the Strait of Hormuz Fujairahrsquos economy and relationships with Iran

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page three

Arsalan IqbalSenior

Consultant

Figure 1 ndash The Habshan-Fujairah pipeline delivers crude oil to the Fujairah port which enables the UAE to bypass the Strait of Hormuz

ldquoFollowing intense global pressure and sanctions on Iran the use of the

Strait as a bargaining tool has become a harsh reality and fears exist that

this could become a vital chokepoint affecting oil traderdquo

TITLE OF PIE CHART HERE

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page four

IN FOCUS HABSHAN-FUJAIRAH PIPELINE [continued]

EDITORrsquoS NOTEA warm welcome from Ann-Marie Carbery Antoun

Ann-Marie Carbery Antoun

Director of Business Advisory

Welcome to the 19th Issue of the Flare In this quarterrsquos CAPEX article Kalpesh Ramwani analyses the trends of awarded and announced projects between January and August 2012 During this period US$ 125bn worth of new projects was announced in the GCC while US$ 57bn worth of projects was awarded Saudi Arabia and the UAE combined accounted for c81 and c83 of all the new announcements and project awards made respectively in the year to date Looking deeper into the projects announced the article identifies new trends for 2012 that differ quite significantly from the previously announced project trends in earlier years

In addition to the CAPEX review we bring you another three new feature articles In the first article Arsalan Iqbal writes a very interesting in focus article about the impact of the Habshan-Fujairah pipeline on the Strait of Hormuz Fujairahrsquos economy and relationships with Iran In the second article Vinodkumar Rao provides

a round-up of the development of various upstream oil and gas technologies including RFID-DOTS directional drilling slim hole drilling smart wells and others Finally in the third article I look at how Saudi Aramco is preparing for the next generation through its Accelerated Transformation Program (ATP) and the impact this initiative may have on other NOCs around the region as the role of NOCs expand in todayrsquos world and as NOCs continue to face obligations which seem to pull them in different directions

This quarter the Contax team reviews the following two books The first lsquoInfluence ndash The Psychology of Persuasionrsquo by Robert B Cialdini provides interesting findings on the psychology behind decision-making and how people are influenced by the world around them This is particularly insightful for marketers and business owners while shaping their message designing their products and building their business The second lsquoThe Power of Habitrsquo by Charles Duhigg examines

the science of habit formation in our lives in companies and in communities estimating that habits make up 40 of our daily routine markets

Contax Partnersrsquo consulting team has worked on a range of exciting market studies this quarter including labour trends in a MENA country and opportunities emerging in Mozambique The highlight of our calendar this quarter was our attendance at the NOCs amp Governments Summit in Dubai which brought together leaders from the various organisations to discuss and debate in particular some of the local content challenges that the MENA region faces As we enter into the fourth and final quarter of 2012 momentum across the region seems to be at a peak We look forward to reporting in next quarterrsquos Flare how this momentum translates in results and business opportunities and to providing insights into the outlook for 2013

Greater Role of FujairahThe development of the Habshan-Fujairah pipeline was originally intended as an internal strategic move to aid in the development and economic integration of the Fujairah emirate within the UAE As a weak economy Fujairah was reliant on the federal government for development through

subsidies and grants In a far-sighted move by the UAE to capitalise on favorable geography and consolidate Fujairahrsquos position as a leading oil bunkering port the new pipeline will help the UAE diversify its supply routes The Strait of Hormuz chokepoint can now be circumvented altogether and at the same time economic sustainability may be pursued in Fujairah Domestically while this emirate does not produce any oil or gas of its own it handles approximately 1 million tonnes per month of marine transportation including fuel and

related products Furthermore the Abu Dhabi government has also commissioned a refinery in Fujairah to process 200000 bpd at a total cost of US$3 bn In turn this promises to be the catalyst to generate new activity employment and opportunities for future expansion in the region The clustering effect is already somewhat visible with the construction of a new $817 million hotel and resort project underway to boost tourism

Repercussions for IranSoon after the commissioning of the Habshan-Fujairah Pipeline on 21st June 2012 the European Union imposed an oil embargo on Iran on 1st July 2012 which resulted in an immediate ban on oil imports into 27 European countries from Iran This included ending all exemptions for contracts that were signed before 2012 barred international insurance for Iranian oil shipments and heavily restricted the countryrsquos ability to do business with the rest of the world In response it is reported that the Iranian government has resorted to continuing sale of petroleum to its preferred partners and accepting payments through the following alternate mechanisms

bull India After initially banning Iranian tankers inits waters to comply with international sanctions on Iran it is reported that India has agreed to trade for Iranian oil with payments for rice medicine engineering supplies and steel to be made in the Indian rupee A few Iranian financial institutions have subsequently been allowed to open accounts in the local rupee denomination gtcontinued on page 5

ldquoThe development of the Habshan-Fujairah pipeline was originally

intended as an internal strategic move to aid in the development and economic

integration of the Fujairah emirate within the UAE As a weak economy Fujairah was reliant on the federal

government for development through subsidies and grantsrdquo

TITLE OF PIE CHART HERE

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page four

IN FOCUS HABSHAN-FUJAIRAH PIPELINE [continued]

HAVE A QUESTION If you have any questionsabout any of the topics you have read today contact Ann-Marie AnnMarieCarberycontaxpartnerscom

Imtiaz AhmedTerritory Sales Manager

MEET THE TEAMGain an insight into the professional background of one of our experts each issue

Role at Contax Partners Imtiaz is part of the Business Investments team He is responsible fordeveloping agencies in the Middle East for East Asian European and American manufacturers ofoil and gas equipment

Education Bachelor of Engineering Degree (Mechanical) Osmania University Hyderabad India

Experience 19+ years hands-on experience in marketing and business development of rotating equip-ment having successfully increased product visibility and revenues for some of the leading manufacturersof pumps turbines compressors and accessories in the Middle East and South Asia Extensive knowledge of the hydrocarbonsindustrial sector gained through direct participation during shutdowns and mainte-nance operations

Favourite Quote ldquoDifficulties mastered are opportunities wonrdquo Winston Churchill

bull China Iran has been relying on state-backed insurance for its own tankers to supply to China which is its number one customer This mechanism while costly and time-consuming also adds an element of increased risk by placing faith in the Iranian government for insurance payouts

bull Japan Due to the fallout from the Fukushima nuclear reactor the Japanese have reduced their reliance on nuclear power and thus have a renewed appetite for petroleum products ndash the Japanese government has granted maritime sovereign insurance worth US$76 bn to continue delivery of Iranian crude oil

Despite securing some of its biggest customers Iran has suffered nearly US$133 mn a day in lost sales whereas daily shipments have plunged by 12 million barrels a day After losing its status as the worldrsquos second largest producer in the world the Persian state is continually struggling to keep its economy afloat It is feared that existing or increased pressure might force a retaliatory measure such as closure of the Strait of Hormuz With the Habshan-Fujairah pipeline coming online however the UAE governmentrsquos initiative will help reinvigorate confidence in the future of the UAErsquos oil supply and reinforce its long-term objectives to protect and develop its domestic oil and gas assets n

ldquoDespite securing some of its biggest customers Iran has suffered nearly

US$133 mn a day in lost sales whereas daily shipments have plunged by 12

million barrels a dayrdquo

ldquoAfter losing its status as the worldrsquos second largest producer in the

world the Persian state is continually struggling to keep its economy afloatrdquo

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page six

Upstream Oil amp Gas TechnologiesBrief Round-Up

The demand for oil and gas has steadily increased during the past few decades and this

trend is expected to continue in the coming decades The question arises With plummeting discovery volumes where will the supply come from As producers are forced to drill deeper into the ground and venture into deeper waters in areas more remote from the consumers how will the demand be met Contax Partners strongly believes that technology will play a crucial role in meeting the worldwide burgeoning demand for oil and gas Technology will prove to be the reckoning force for enhanced oil recovery and increased production In this article Contax Partners provides a brief insight about the evolving upstream oil and gas technologies the end userrsquos approach towards the same and the challenges grappling the industry

The average recovery rate of a hydrocarbon reservoir is 40 This means that of all the current and no longer active wells 60 of their bounty will remain in the ground ndash unless extraction methods are improved If only a fraction of the untapped 60 is made available and an equivalent increase to the recovery rate of undeveloped and yet to be found fields is gained it is perfectly feasible that supply can keep up with demand in the coming

years The recovery and extraction rates can be improved by the advent of new upstream oil and gas extraction technologies New upstream oil and gas technologies can be better understood by patent trends The number of new patents related to the extractive industry

has more than doubled during the five year period 2005-2010 as per Figure 1

From the Figure 1 above we realize the growing importance of oil and gas technology innovation This implies that the project owners and independent oil and gas technology companies are focused on oil and gas technology Research and Development (RampD) efforts Contax Partners understands that within the oil and gas industry technology has reduced the risk of exploration and cut the time required to drill a well Oil and gas technologies are often destined for hostile hard-to-reach environments such as deep offshore waters or in the high temperature and pressure encountered at the bottom of a well There has been a paradigm shift in the way oil companies have embraced new technologies or shown interest in new technologies

National oil companies are aggressive users of new technology that is aligned with particular local needs as a result of less stringent investment criteria and a primary responsibility to most effectively exploit national resources Large operators focus on lower-risk technologies that reduce cost and provide access to new resources whereas independent operators generally seek opportunities that are of higher risk and hence greater reward Strategic investors in OampG technology include Chevron BP Energy Technology Ventures (JV between GE NRG and

Conoco Philipprsquos) Statoil Ventures and KPC Ventures

The oil and gas industry exhibits time-to-market characteristics that are consistent with other heavy industries such as mining steel production and

power generation While consumer goods might progress from concept to store shelves in two years oilfield technologies consistently require 10 to 15 years to complete the same maturation cycle Some of the early technologies which took a long time for the industry to embrace include directional drilling and seismic surveys

Horizontal wells are designed to increase the production and reduce the drilling and completion cost of a well by offering a greater contact with the productive layer of a reservoir A horizontal well typically costs 30 to 80 per cent more than a vertical well but offers the potential of dramatically higher production compared to a vertical well

The introduction of a down-hole steerable motor that could be controlled from the surface and introduction of measurements while drilling (MWD) complement the development of horizontal or directional drilling Even though the higher cost coupled with higher risk of horizontal drilling remain a deterrent to many companies with time acceptance of horizontal drilling methods have increased as more and more companies report success with the use of horizontal drillingThe decade-long adoption of horizontal wells is a classic example of adoption of a new technology as costs come down technology improves and risks are better gtcontinued on page 7

ldquoAs producers are forced to drill deeper into the ground and venture into deeper waters in areas more

remote from the consumers how will the demand be met Contax Partners strongly believes that technology will play a crucial role in meeting the worldwide burgeoning demand for oil and gasrdquo

Vinod RaghothamaraoManager Business

Advisory

Source Contax Research Analysis 2012 Oil and Gas Investor The chart above is based on the following patent classes L Solid Anti-friction Devices Earth Boring Well Treating Oil Field Chemistry Mineral Oils Apparatus Chemistry of Hydrocarbon Compounds deforming bars and steel pipes

1600

1400

1200

1000

800

600

400

200

02008 20092007

Figure 1) Extractive Industry Patents

2005 2006 2010

UPSTREAM OIL amp GAS [continued]

understood and mitigated Early 3D seismic surveys were expensive to acquire and process but as the industry gained familiarity with the needed technologies then costs and processing and interpretation times for seismic 3D came down 3D seismic surveys produce much more detailed information than was previously possible and have been revolutionary in the oil and gas exploration arena

The above two are just examples of technologies that took a longer time for the overall oil and gas industry to embrace and adapt Currently some of the upcoming areas wherein significant efforts to develop andor improvise technologies include but not limited to

bull Advanced and integrated database with interactive visual and communication tools for oil and gas real time informationbull Enhanced oil recovery reservoir modelling monitoring and managementbull Improved oil and gas exploration rates in tougher regions bull Deep water exploration

Oil gas and mineral deposits buried deep underground can pose a greater challenge in uncovering them especially in terms of time effort and money The concept of airborne gravity gradiometry could give oil and gas companies rapid access to detailed information about geological structures and could be a valuable tool for the rapid identification of oil and gas deposits Airborne gravity gradiometry surveys enable a large area to be surveyed more quickly and in a cost effective manner

The term digital oil field (DOF) can be defined as a suite of interactive and complementary technologies that enable companies to gather and analyse data throughout the job site More specifically digital oil field technologies allow companies to capture data with greater frequency from all parts of the oil and gas value chain and analyse it in real or near-real time thus optimizing reservoir well and facility performance The most common challenge in the deployment of DOF is the underestimation of the level of customization required Each DOF implementation has to be tailored to its specific need and there is no one-

size fits all solution when it comes to DOF implementation Hence many end users do not appreciate the importance of customisation and as such there is a serious need for empowerment and education of end users

More advanced exploration and production technologies are continuously being developed in order to find more reserves and maximise cost reduction Some of the initiatives are 4D seismic surveys new logging techniques control systems and down-hole sensor coiled tubing for well work overs completions and flow lines and intelligent or smart well completions

The main driving force behind these new upstream technologies is the desire to

bull Increase access to economically exploitable new liquid and gas reservesbull Improve recovery rates of existing reservesbull Reduce exploration development and production costsbull Mitigate adverse environmental efforts and risks to public health and safety from exploration and production activitiesbull Develop production and conversion technologies for clean liquid fuels from unconventional resources gas and coal

The below table (Table 1) showcases and summarizes some of the developments in oil and gas technologies with their respective benefits

From the above Table 1 we realise that Radio Frequency Identification Device (RFID) has found its way in Drilling Operations (DOTS) This results in

optimised drilling operation and capture of real-time drilling measurements The development of Solar EOR enables companies to extract more oil from mature fields especially without the need for gas-fired steam Even though there are advancements in oil and gas technologies there are still many challenges to be faced Some of these challenges are

bull Improving recovery efficiencybull Developing huge amounts of known unconventional depositsbull Realising technology breakthroughs for improved or new gas-to-liquids (GTL) processes

Going forward one has to wait and watch as to how the technology landscape evolves The large operators are refocusing their research development and deployment efforts on technology areas relevant to the competition Some such examples include but are not limited to the exploitation of difficult gas resources and the sustainable production of resources heavily contaminated with hydrogen sulphide and carbon dioxide

On some levels adopting new technology can be viewed as an economic risk The cost may be higher and the result less certain than existing technology On the positive side the payoff from a new technology can be huge both for the individual company and for national energy security Contax Partners believes that in the next few decades to come advancements in oil and gas technologies will continue to be a key and critical driver to find more reserves that will secure the future oil supply n

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page seven

HAVE A QUESTION If you have any questions about any of the topics you have read today contact Ann-Marie AnnMarieCarberycontaxpartnerscom

Table 1) Brief summary of Upstream Oil and Gas Technologies and Benefits

Technology Category Value Add

Distributed Temperature Sensor Surface amp Subsea surveillance Real time data capture and monitoring

RFID - DOTS Smart Oilfield Real time data capture and monitoring

Directional Drilling Drilling Operations Better access and more efficient production

Slim hole drilling Drilling Operations Lower rig costs

3D4D Seismic imaging Seismic Mapping Optimized reservoir management

Smart Well Intelligent Completion Improves ultimate recovery

Solar Microbial and Chemical EOR

Enhanced Oil Recovery(EOR) Optimal recovery

Source Contax Partners Research Analysis 2012 A brief snapshot of the current advancements in the oil and gas industry and the immense benefits that the end user can avail of

amp

Find out what we can do for youCall +971 4 369 5520 or visit wwwcontaxpartnerscom

Identifying amp winning new projects and opportunities

Developing amp implementing

growthstrategies

Setting up and sustainingnew business

ventures

Keeping youinformed of the market and your

competitors

Planning ampexecuting

project ventures successfully

Benefit from more than 25 years of access to and practical knowledge of the market - let Contax Partners help you win

IS WINNING MIDDLE EAST ENERGY SECTOR OPPORTUNITIES PART OF YOUR GROWTH STRATEGY

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page nine

SAUDI ARAMCOrsquoS ATP PROGRAMPreparing for the next generation through its Accelerated Transformation Program (ATP) Ann-Marie

Carbery AntounDirector of Business

Advisory

Saudi Aramco is the national oil company of Saudi Arabia and in 2005 was estimated to be worth US$781 bn making it one of the worldrsquos most valuable

and most important companies Saudi Aramco has one of the largest proven crude oil reserves in the world in addition to the largest daily oil production Since its inception in the 1930rsquos Saudi Aramco has transformed itself from a single oil business to a multi business company now having interests in gas production (since the 1970rsquos) refining (since the 1980s although some assets also date back to 1940) power generation (since the 1980rsquos) and chemicals (since the turn of the millennium) Since 2002 Saudi Aramco has continually reviewed its strategic direction launching its strategic imperatives in the same year then reviewing and adjusting four years later before launching its Accelerated

Transformation Program (ATP) in 2011 The ATP is driving future transformation in an accelerated manner so that by 2020 Saudi Aramco realises its ambition to be lsquoa fully integrated global energy and chemicals companyrsquo Sixteen months on Contax Partners provides an update on the progress to date of the ATP and looks at how it may shape not only the future of the company and the country but also the transformation that may be required or that may be in progress in other National Oil Companies (NOCs) across the region and beyond

Underlying the intent of the ATP is lsquounlocking the companyrsquos full human potentialrsquo by broadening and deepening the involvement of the Kingdomrsquos burgeoning young population Fourteen initiatives have been developed across four themes being governed by a Strategy Council which sets the overall strategic direction (Figure 1) The Young Leaders Advisory Board has been developed to sit under the Strategy Council and has 14 members each assigned to a particular initiative These 14 members have been carefully selected from hundreds of interested young applicants to drive the implementation of the various initiatives Thus not only is the ATP about driving the transformation of Aramco but it is also about achieving that objective with strong involvement from the countryrsquos youth There is also a Strategic Transformation Office which acts as a PMO to integrate collective requirements and ensure sustainability The four themes defined within the ATP range from lsquoshaping business portfoliorsquo to lsquocountry enablersrsquo lsquodelivering agility flexibility and efficiencyrsquo and lsquocapacity building knowledge and skillsrsquo Initiatives under these themes are around crude

oil production mix unconventional gas chemicals refining and marketing domestic energy operational excellence leadership and others Over the coming years Contax Partners believes that these initiatives will culminate into having quite an accelerated impact on Aramcorsquos 2020 vision compared to if the company was to continue driving its 2020 vision at a business as usual pace Thus it is anticipated that the ATP will have a significant impact on the companyrsquos future

Since its launch sixteen months ago the ATP has been going through a process of defining critical decisions that need to be made and once these have been defined and concluded the implementation of the various initiatives will move forward at full steam The ATP plans to move Saudi Aramco from lsquobusiness as usualrsquo transformation to lsquoacceleratedrsquo transformation and the expectation is that over the coming few years this initiative will be critical to the development of the company and the overall country The impact that the initiative is expected to have on the country

is to stimulate young Saudirsquos to be part of its countryrsquos most important business transformation In fact they will not only to be part of the journey but rather will actively drive it After all these young leaders will be the future leaders of Saudi Aramco and as the role of an NOC becomes more complex this will be a critical journey for the young leaders involved

As one considers the importance of the ATP and its gtcontinued on page 10

ldquoSaudi Aramco has one ofthe largest proven crude oil

reserves in the world in additionto the largest daily oil

productionrdquo

Strategy Council

Strategic Transformation

Office

Young Leaders Advisory Board

Initiative 1 Initiative 2 Initiative 3

Initiative 4 Initiative 5 Initiative 6

Initiative 7 Initiative 8 Initiative 9

Initiative 10 Initiative 11 Initiative 12

Initiative 13 Initiative 14

Figure 1 The execution structure of the Accelerated Transformation Program (ATP)

ldquoThe ATP is driving future trans-formation in an accelerated manner so that by 2020 Saudi Aramco realises its ambition to be lsquoa fully integrated global

energy and chemicals companyrsquordquo

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page ten

October 2012

3rd Annual Waste Management Middle East Forum ndash Dubai UAEOctober 1st - 2nd 2012

Visit the website

3rd Annual Global Petrochemicals Technology Conference ndash Doha QatarOctober 1st - 3rd 2012

Visit the website

Global IWPP Summit ndash RAK UAEOctober 1st - 3rd 2012

Visit the website

World Independent Oil Companies Congress ndash London UKOctober 2nd - 4th 2012

Visit the website

2nd Annual Smart Grids and Smart Meters Summit ndash Abu Dhabi UAEOctober 8th - 9th 2012

Visit the website

Gastech Conference amp Exhibition 2012 ndash London UKOctober 8th - 10th 2012

Visit the website

HSE Forum in Energy ndash Doha ndash Qatar October 8th - 10th 2012 Visit the website

2nd Annual Plant Shutdown and Turnaround Management ndash Doha Qatar

Flare Management amp ReductionSummit 2012 ndash Abu Dhabi UAENovember 14th - 17th 2012

Visit the website

OPITO Safety amp Competence Confer-ence 2012 - Managing the Safety Chain ndash Abu Dhabi UAENovember 14th - 17th 2012

Visit the website

International Professionals in Energy Conference (IPEC) ndash Kuwait City KuwaitNovember 25th - 26th 2012

Visit the website

Political and Commercial Risk in Oil and Gas ndash London UKNovember 26th - 28th 2012

Visit the website

OampG Pipes Global Conference ndash London UKNovember 27th - 29th 2012

Visit the website

IADC Critical Issues Middle East 2012 Dubai UAEDecember 4th - 5th 2012

Visit the website

8th Middle East Energy Security Forum Dubai UAEDecember 4th - 8th 2012

Visit the website

Contax Partners will be speaking

October 9th - 11th 2012 Visit the website

Global Smartfields Summit ndash Abu Dhabi UAEOctober 17th - 18th 2012

Visit the website

The MENA Mining Show ndash Dubai UAEOctober 21st - 23rd 2012

Visit the website

World Energy Forum 2012 ndash Dubai UAE ndash DubaiOctober 22nd - 24th 2012

Visit the website

Small Scale LNG Forum ndash Istanbul TurkeyOctober 23rd - 24th 2012

Visit the website

19th Africa Oil Week ndash Cape Town South AfricaOctober 29th - 2nd November 2012

Visit the website

Middle East Oil amp Gas ContractConference 2012 ndash Abu Dhabi UAENovember 5th - 7th 2012

Visit the website

ADIPEC 2012November 11th - 14th 2012

Visit the website

SAUDI ARABIArsquoS ATP PROGRAM [continued]

HAVE A QUESTION If you have any questions about any of the topics you have read today contact Ann-Marie AnnMarieCarberycontaxpartnerscom

December 2012

November 2012

progress one cannot help but to appreciate the importance of such initiatives as the role of NOCs expand In todayrsquos world NOCs have obligations which seem to pull them in different directions For example NOCs typically have the mandate to maximise profit whilst at the same to provide energy solutions to global markets to support the domestic economy to develop national obligations and others Whilst some of these seem to be contradictory for example using a local workforce to drive in-country employment can often mean delivery at a higher cost Saudi Aramco seems to be

attempting to demonstrate through its ATP that increasing local content and training local workforce in the short term may increase cost in the short term but in the long term will help it be more competitive Contax Partners believes that we are embarking on interesting times with regards to the role of NOCs in a global context As NOCs continue to have different pulls it will be interesting to see how other NOCs in the Middle East adapt change and innovate in order to lead their own journey of transformation n

Industry conferences

Contax Partnersrsquo Director of Business Advisory had the pleasure to attend NOCs amp Governments Summit 2012 held on the 17-19 September in Dubai

The conference which brought together the oil and gas industry leaders governments and regulators was aimed to facilitate discussions about how strategies can drive job creation and skills development local content and capacity building innovation and technology transfer and the role of the industry in encouraging economic growth and development within resource holding nations

During the event Contax Partners was impressed with the quality of the discussions that took place with regards to the role of NOCs and IOCs in overcoming local content challenges and the exchange of lessons

learned that took place particularly coming out of Africa on how to develop and embrace local SMEs and stimulate local employment n

WHAT HAS CONTAX PARTNERSBEEN UP TO THIS QUARTERContax Partners attended the NOCIOC summit in Dubai

Contax Partners has officially presented equipment to American Mission Hospital as part of its commitment to health care in the community

Victoria Cox acting Marketing Manager at Contax Partners presented the equipment to AMH CEOCMO Dr

George Cheriyan The equipment purchased with the donation was a CTG Machine for the ObGyn Clinic at AMH purchased with Contax Partnerrsquos sponsorship of the 15th annual AMH Island Classic Charity Golf tournament as a Hole sponsor

Victoria Cox said ldquoContax Partners are very pleased to sponsor this charitable event that will help AMH continue to provide its excellent medical services to the community The health of our employees and the health of the community is a top priority for us and we hope this contribution will be successful in helping to provide the equipment neededrdquo

AMH Senior Manager Fundraising Community and Marketing Bahnaz Abbas added ldquoWe thank Contax Partners for their continued support of American Mission Hospital and our efforts to update and advance our services to our patients With the support of companies like Contax Partners we are able to purchase much needed equipment to diagnose and treat our patients so that we can continue what is over a century long commitment to the community of Bahrainrdquo n

Contax Partners presents the equipment to American Mission Hospital Bahrain

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page eleven

Contax Partners launches new GCC operation - Aman water - game-changing water disinfection technology now available in the Middle Easthellip

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page twelve

WHAT HAS CONTAX PARTNERS BEEN UP TO THIS QUARTER [continued]

Contax Partnersrsquo Business Investment division has established a proven track record of empowering its clients to achieve successful partnerships in the

Middle East and Africa

We are committed to actively identifying new and innovative technologies worldwide and enable their successful launch in the region working closely with the patent rights owners as they grow into profitable ventures Today we are proud to announce an exciting addition to our business investmentsrsquo portfolio ndash Aman Water which owns exclusive rights to CLO2Ix technology for the Middle East region

This is a unique and US-patented process of water disinfection allowing production of Chloride Dioxide in a safe effective non-hazardous and environmentally friendly way - without any by-product or residues It is currently the most advanced and most reliable ClO2 generating technology in the world

Chlorine Dioxide (ClO2) is a very effective oxidizer and biocide that can be used in almost any water disinfection applications ndash from the reservoir to the tap and for diverse purposes varying from recovering ldquosouredrdquo oil wells to disinfecting poultry houses

Historically however it has been extremely difficult if not impossible to produce chlorine dioxide in a safe manner and in a pure form without unwanted by-products

ClO2iX offers an innovative solution to these problems

through a catalytic CLO2 production system which safely dispenses the required amount of the pure CLO2 solution free of by-products and without the need for storage

Tony Mitchell General Manager for Aman Water has said ldquoI am very encouraged by the levels of interest in the CLO2IX technology we have seen from this region so far and by the diverse range applications in which ClO2IX can provide excellent solutions for our clients Since the launch of the technology we have already installed ClO2IX systems in various institutions including King Hamad University Hospital (Bahrain) and Al-Rai Foods (KSA) amongst others We are looking forward to continue to offer this unique solution to serve local water treatment and disinfection needs and we have ambitious growth plans for the Middle Eastrdquo

Filippo Fantechi the CEO of Contax Partners added ldquoWe are dedicated to introducing those niche and innovative technologies that would help our local clients save costs time and effort We will be strengthening this exciting venture with our local operational support and business development capabilities in the Middle East energy arenardquo n

ldquoThis is a unique and US-patented process of water disinfection allowing

production of Chloride Dioxide in a safe effective non-hazardous and

environmentally friendly wayrdquo

Contax Partners launches new GCC operation - Aman water - game-changing water disinfection technology now available in the Middle Easthellip

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page twelve

WHAT HAS CONTAX PARTNERS BEEN UP TO THIS QUARTER [continued]

Contax Partnersrsquo Business Investment division has established a proven track record of empowering its clients to achieve successful partnerships in the

Middle East and Africa

We are committed to actively identifying new and innovative technologies worldwide and enable their successful launch in the region working closely with the patent rights owners as they grow into profitable ventures Today we are proud to announce an exciting addition to our business investmentsrsquo portfolio ndash Aman Water which owns exclusive rights to CLO2Ix technology for the Middle East region

This is a unique and US-patented process of water disinfection allowing production of Chloride Dioxide in a safe effective non-hazardous and environmentally friendly way - without any by-product or residues It is currently the most advanced and most reliable ClO2 generating technology in the world

Chlorine Dioxide (ClO2) is a very effective oxidizer and biocide that can be used in almost any water disinfection applications ndash from the reservoir to the tap and for diverse purposes varying from recovering ldquosouredrdquo oil wells to disinfecting poultry houses

Historically however it has been extremely difficult if not impossible to produce chlorine dioxide in a safe manner and in a pure form without unwanted by-products

ClO2iX offers an innovative solution to these problems

through a catalytic CLO2 production system which safely dispenses the required amount of the pure CLO2 solution free of by-products and without the need for storage

Tony Mitchell General Manager for Aman Water has said ldquoI am very encouraged by the levels of interest in the CLO2IX technology we have seen from this region so far and by the diverse range applications in which ClO2IX can provide excellent solutions for our clients Since the launch of the technology we have already installed ClO2IX systems in various institutions including King Hamad University Hospital (Bahrain) and Al-Rai Foods (KSA) amongst others We are looking forward to continue to offer this unique solution to serve local water treatment and disinfection needs and we have ambitious growth plans for the Middle Eastrdquo

Filippo Fantechi the CEO of Contax Partners added ldquoWe are dedicated to introducing those niche and innovative technologies that would help our local clients save costs time and effort We will be strengthening this exciting venture with our local operational support and business development capabilities in the Middle East energy arenardquo n

ldquoThis is a unique and US-patented process of water disinfection allowing

production of Chloride Dioxide in a safe effective non-hazardous and

environmentally friendly wayrdquo

Working for a major project owner in the GCC Contax Partners identified all possible challenges and constraints that the client may face while

undertaking projects and flagged potential risks arising out of the possible in-country gaps

Contax Partners analysed the countryrsquos infrastructure logistics availability of project materials manpower resources and construction equipment and provided risk mitigation strategies to address the risks associated with successful project execution n

WHAT OUR CONSULTING TEAMHAS BEEN WORKING ON THIS QUARTERGap analysis of in-countryresources

Contax Partners conducted a survey of peaks and troughs in construction in a MENA country between 2005-2015 and identified how these peaks

are correlated to movements in labour wage rates and productivity

The project involved an in-depth analysis of the peaks and troughs in construction for the period 2005 to 2012 Furthermore our experts were able to break down the data on wage rates by construction discipline and respective trades and correlate this data with the peaks and troughs in construction activity n

GCC workload analysis wage rates and productivity trends

Contax Partners completed a survey of the potential requirements to build the entire LNG value chain in Mozambique to transform Mozambique into a major

LNG producer

Benchmarking against Ras Laffan Industrial City (RLIC) in Qatar Contax Partners undertook a detailed gap analysis identifying Mozambiquersquos development needs across three key levels macro (country infrastructure) midi (LNG support infrastructure) and micro (LNG value chain) n

Mozambique country infrastructure LNG infrastructure amp value chain

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page thirteen

Influence The Psychology of Persuasion

By Robert Cialdini

This in-depth scientific research into the human psyche uncovers the subconscious mental shortcuts that human brains often take during the decision-making process

The book is a result of more than 30 years of study by Dr Cialdini into the principles of the underlying tactics which are designed to lead a customer

to agree to a proposition These tactics are divided into 6 main categories which are proven to work and are often used by sales and marketing professionals to influence people reciprocity consistency liking authority scarcity and social proof

This marketing classic illustrates which techniques work and why telling how to use persuasion as well as how to guard against it

It is written from a neutral perspective and would appeal to anyone who wants to better understand themselves and how they are influenced by the world around them

The insight into the psychology of influencing is key for marketers and business owners - shaping their message designing their products and building their businesses n

The Power of Habit

By Charles Duhigg

The author looks into the science of habit formation in our lives companies and communities estimating that habits make up 40 of our daily routine

Duhigg believes that in order to succeed in life we should be able to change our habits He then shows the reader how habits are formed and how we can introduce new habits to take the place of the old

The book is a good balance of innovative research and fascinating anecdotes revealing how habits operate in the brain how companies use them and how retailers use habits to manipulate consumersrsquo patterns

The book is divided into three sections first focusing on the individual then companies and finally societies The first section reveals how habits shape our lives and how we can shape our habits The second illustrates how simple behavioural changes in an organisation can drastically change the functionality of a business

And the third one looks into the habits of societies A good read to learn how to make positive practical changes in our lives n

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page fourteen

THE READING ROOMContax Partnersrsquo current reading fodder

TO REGISTER FOR THE FLARE VISIT WWWCONTAXPARTNERSCOM

WE HOPE YOU ENJOY THE FLARE AND WE WELCOME YOUR FEEDBACK AND SUGGESTIONS AT theflarecontaxpartnerscom

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page one

CONTAXrsquoS CAPEX CORNER

Emerging trends in the energy project

landscape within the GCC

As the GCC Energy market picks up steam with major

announcements by governments and project owners

we explore the trends that have shaped the industry in

the first eight months of 2012 Between January and August

2012 US$ 125bn worth of new projects were announced in

the GCC while US$ 57bn worth of projects were awarded

(Figure 1) Saudi Arabia and the UAE combined accounted for

c81 and c83 of all the new announcements and project

awards made in the year respectively

Within Saudi Arabia and the UAE the sectors of oil and gas

production and petrochemicals accounted for over c50 of

all project awards in 2012 Kuwait on the other hand saw 63

of its awards made in the power generation sector The largest

project awarded in 2012 was the US$ 3bn Jazan Power and

Desalination Plant in Jazan Saudi Arabia

Looking deeper into the projects announced in the two domi-

nating markets we notice that Saudi Arabia has primarily

(c46) focused on projects within the oil amp gas production

sector while the UAE has announced the majority (c80) of

its projects within the alternative energy sector The largest

project announced in Saudi Arabia was Saudi Aramcorsquos US$

25bn Red Sea Off-Shore Development Project whilst the US$

35bn Solar Park announced by DEWA (Dubai Electricity and

Water Authority) was the largest project announced in the

UAE in the first eight months of 2012

Most of the new projects announced in 2012 are in line with

the long-term plans that the GCC governments have set

for themselves A closer look at the award dates of the an-

nounced projects reveals that only c30 of the announced

projects are likely to be awarded in either 2012 or 2013 while

most of the large scale projects are expected begin develop-

ment in the next 3-4 years

gt continued on page 2

Kalpesh Ramwani

SeniorConsultant

October - December 2012 Issue 19GCC Energy Sectors New Projects

Announcements amp Awards Jan-Aug 2012 (US$ bn)

l Projects Announced1 l Projects Awarded

Figure 1 In the first eight months of 2012 cUS$ 57bn worth of projects were award--

ed in the GCC Projects announced during the same period equalled US$ 125bn

Source Contax Partners Database

70

60

50

40

30

20

10

0 Oman Qatar BahrainKuwait

GCC Energy Sectors New Projects

Announcements amp Awards Jan-Aug 2012 (US$ bn)

Saudi Arabia UAE

c81 of Projects Announced

c83 of Projects Awarded

Alternative

Energies 34

Oil Gas

Production 26

Power11

Metal7

Refining5

Water amp

Waste 5

Industrial4

Others8

GCC Energy Project Announcements

Jan-Aug 2012 (US$ bn)

100 = US$125bn

l Planned for 2011 l Awarded in 2011

Figure 2 Of the US$ 125bn worth of projects announced in the GCC in the first 8

months there is a noticeable shift towards exploring alternative energy sources

Others includes fertilizers petrochemicals gas processing LNG oil amp gas explora-

tion mining

Source Contax Partners Database

ldquothe sectors of oil and gas

production and petrochemicals

accounted for over c50 of

all project awards in 2012rdquo

Influence The Psychology of Persuasion

By Robert Cialdini

This in-depth scientific research into the human psyche uncovers the subconscious mental shortcuts that human brains often take during the decision-making process

The book is a result of more than 30 years of study by Dr Cialdini into the principles of the underlying tactics which are designed to lead a customer

to agree to a proposition These tactics are divided into 6 main categories which are proven to work and are often used by sales and marketing professionals to influence people reciprocity consistency liking authority scarcity and social proof

This marketing classic illustrates which techniques work and why telling how to use persuasion as well as how to guard against it

It is written from a neutral perspective and would appeal to anyone who wants to better understand themselves and how they are influenced by the world around them

The insight into the psychology of influencing is key for marketers and business owners - shaping their message designing their products and building their businesses n

The Power of Habit

By Charles Duhigg

The author looks into the science of habit formation in our lives companies and communities estimating that habits make up 40 of our daily routine

Duhigg believes that in order to succeed in life we should be able to change our habits He then shows the reader how habits are formed and how we can introduce new habits to take the place of the old

The book is a good balance of innovative research and fascinating anecdotes revealing how habits operate in the brain how companies use them and how retailers use habits to manipulate consumersrsquo patterns

The book is divided into three sections first focusing on the individual then companies and finally societies The first section reveals how habits shape our lives and how we can shape our habits The second illustrates how simple behavioural changes in an organisation can drastically change the functionality of a business

And the third one looks into the habits of societies A good read to learn how to make positive practical changes in our lives n

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page fourteen

THE READING ROOMContax Partnersrsquo current reading fodder

TO REGISTER FOR THE FLARE VISIT WWWCONTAXPARTNERSCOM

WE HOPE YOU ENJOY THE FLARE AND WE WELCOME YOUR FEEDBACK AND SUGGESTIONS AT theflarecontaxpartnerscom

Copyright copy Contax Partners 2012 Reproduction is prohibited unless authorised PO Box 500104 Dubai United Arab Emirates wwwcontaxpartnerscom Page one

CONTAXrsquoS CAPEX CORNER

Emerging trends in the energy project

landscape within the GCC

As the GCC Energy market picks up steam with major

announcements by governments and project owners

we explore the trends that have shaped the industry in

the first eight months of 2012 Between January and August

2012 US$ 125bn worth of new projects were announced in

the GCC while US$ 57bn worth of projects were awarded

(Figure 1) Saudi Arabia and the UAE combined accounted for

c81 and c83 of all the new announcements and project

awards made in the year respectively

Within Saudi Arabia and the UAE the sectors of oil and gas

production and petrochemicals accounted for over c50 of

all project awards in 2012 Kuwait on the other hand saw 63

of its awards made in the power generation sector The largest

project awarded in 2012 was the US$ 3bn Jazan Power and

Desalination Plant in Jazan Saudi Arabia

Looking deeper into the projects announced in the two domi-

nating markets we notice that Saudi Arabia has primarily

(c46) focused on projects within the oil amp gas production

sector while the UAE has announced the majority (c80) of

its projects within the alternative energy sector The largest

project announced in Saudi Arabia was Saudi Aramcorsquos US$

25bn Red Sea Off-Shore Development Project whilst the US$

35bn Solar Park announced by DEWA (Dubai Electricity and

Water Authority) was the largest project announced in the

UAE in the first eight months of 2012

Most of the new projects announced in 2012 are in line with

the long-term plans that the GCC governments have set

for themselves A closer look at the award dates of the an-

nounced projects reveals that only c30 of the announced

projects are likely to be awarded in either 2012 or 2013 while

most of the large scale projects are expected begin develop-

ment in the next 3-4 years

gt continued on page 2

Kalpesh Ramwani

SeniorConsultant

October - December 2012 Issue 19GCC Energy Sectors New Projects

Announcements amp Awards Jan-Aug 2012 (US$ bn)

l Projects Announced1 l Projects Awarded

Figure 1 In the first eight months of 2012 cUS$ 57bn worth of projects were award--

ed in the GCC Projects announced during the same period equalled US$ 125bn

Source Contax Partners Database

70

60

50

40

30

20

10

0 Oman Qatar BahrainKuwait

GCC Energy Sectors New Projects

Announcements amp Awards Jan-Aug 2012 (US$ bn)

Saudi Arabia UAE

c81 of Projects Announced

c83 of Projects Awarded

Alternative

Energies 34

Oil Gas

Production 26

Power11

Metal7

Refining5

Water amp

Waste 5

Industrial4

Others8

GCC Energy Project Announcements

Jan-Aug 2012 (US$ bn)

100 = US$125bn

l Planned for 2011 l Awarded in 2011

Figure 2 Of the US$ 125bn worth of projects announced in the GCC in the first 8

months there is a noticeable shift towards exploring alternative energy sources

Others includes fertilizers petrochemicals gas processing LNG oil amp gas explora-

tion mining

Source Contax Partners Database

ldquothe sectors of oil and gas

production and petrochemicals

accounted for over c50 of

all project awards in 2012rdquo