New base 722 special 05 november 2015

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NewBase 05 November 2015 - Issue No. 722 Edited & Produced by: Khaled Al Awadi

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UAE: ADNOC TO CUT OPERATING COSTS BY 25% By Gulf News - Fareed Rahman, Senior Business Reporter

Abu Dhabi National Oil Company (Adnoc) is trying to reduce operational costs by about 25 per cent, a top official of Adnoc said on Wednesday as the drop in oil prices hit the revenues of Gulf producers.

“From Adnoc’s point of view, we are trying to bring down our operational expenditure in the range of 25 per cent,” said Ali Khalifa Al Shamsi, Director of Strategy and Coordination at Adnoc, speaking to reporters on the sidelines of a news conference ahead of the Abu Dhabi International

Petroleum Exhibition and Conference (ADIPEC).

He however, said they will not cut spending on safety and maintenance of fields. “When it comes to safety and maintenance, it is red line for us. It is our top priority. We are not going to cut or slowdown on maintenance and safety,” he said.

A number of companies are slashing expenditures as oil prices go down for the past one year. From $115 (Dh422) per barrel in June last year, oil prices plunged to less than $50 in recent times. The global benchmark brent was trading at $50.63 per barrel at 2:57 PM UAE time.

A report by Reut ers said that Gulf oil producers are delaying some field maintenance until next year to keep production high and reduce costs as they forecast weaker oil prices in 2016. Speaking about oil production targets, Al Shamsi said they remain unchanged and their projects are on track.




“Our plan has not been changed. We are trying really to streamline depending on priority. All figures are almost unchanged. We are working hard trying to optimise our field developments and take advantage of the market.”

New avenues

Abu Dhabi is also focusing on developing offshore oilfields, Al Shamsi added. “We are trying to create new avenues to deal with offshore activities. If you look at worldwide about 33 per cent of the oil produced is coming from offshore.”

The UAE, which holds about six per cent of global oil reserves intends to increase the production capacity to 3.5 million barrels of oil per day by 2017 from the present capacity of around 2.8 million barrels of oil per day.

Meanwhile, fourteen National Oil Companies and sixteen International Oil Companies will take part in Adipec this year. The event will be held from November 9 to 12 at Abu Dhabi National Exhibition Centre.

The world’s leading authority on energy and Pulitzer Prize-winning author, Dr Daniel Yergin will deliver the key note address. The event will see the participation of a number of ministers, industry chiefs and top oil and gas professionals from across the globe. More than 85,000 people are expected to visit the four-day event.




Oman:PDO and GlassPoint break ground on Miraah solar project Oman Observer + NewBase

Petroleum Development Oman (PDO) and GlassPoint Solar have broken ground on their landmark solar project ‘Miraah’. The site preparation and grading for the project, located at the Amal oilfield in southern Oman, began one month ahead of schedule.

Miraah, which means mirror in Arabic, will harness the sun’s energy to produce steam used in heavy oil production. In July, the two companies announced a deal to build one of the world’s largest solar plants which at its peak will be able to generate in excess of one gigawatt of solar thermal energy.

Raoul Restucci, Managing Director of PDO, said: “The ground breaking is a significant milestone for PDO and GlassPoint as we progress towards the safe and efficient delivery of Miraah. I commend the project team and our local contractors for their tireless efforts to not only stay on track, but pushing forward ahead of schedule.”

“PDO is proud to lead the industry in deploying innovative solutions that allow us to develop our heavy oil while at the same time reduce our energy consumption and our costs. Miraah will provide a substantial amount of the steam demand at Amal, reducing our reliance on natural gas to make steam. The gas saved can be used by other industries to support Oman’s diversification and economic growth strategies,” Restucci added.

The site grading is being performed by a Local Community Contractor (LCC) owned and operated by Omanis that live in the communities surrounding the Amal field. Developing a local Omani workforce and job opportunities for local contractors and small business is part of PDO’s and GlassPoint’s joint

commitment to In-country Value.

Rod MacGregor, President and CEO of GlassPoint, added: “Miraah will be 100 times larger than our solar pilot at Amal, which has been operating successfully for nearly three years now. The pilot was built safely, on time and on budget, providing invaluable experience to ensure we achieve this same success

with Miraah at commercial-scale.”

“Miraah will generate significant value for the Sultanate by creating new opportunities in supply chain development, manufacturing capacity,

employment and training. We are committed to working with local contractors throughout the value chain, from construction to the sourcing of local materials,” MacGregor emphasised.




Once complete, Miraah will generate an average of 6,000 tons of solar steam daily for oil production. The use of solar for oil recovery is a long-term strategy to develop PDO’s viscous oil portfolio and reduce consumption of natural gas. Miraah will save 5.6 trillion British Thermal Units (BTUs) of natural gas each year, the amount of gas that could be used to provide residential electricity to 209,000 people in Oman.

The full-scale project will comprise 36 glasshouses, built in succession and commissioned in modules of four. The first module will begin generating steam in 2017. Upon completion, the total project area will span three-square kilometres, an area equivalent to more than 360 football pitches.

PDO and GlassPoint will be exhibiting together at the Abu Dhabi International Petroleum Exhibition (ADIPEC) next week. The booth will feature a 3D virtual reality tour of Miraah, transporting visitors to south Oman to see the scale of the project and technology up-close. PDO and GlassPoint are nominated for an ADIPEC Award in the “Best Oil and Gas Innovation or Technology (Surface)” category.




Saudi SABIC’s initiative promotes carbon capture Saudi Gazette + NewBase

SABIC is making a significant contribution in carbon capture and storage through initiatives, such as the world’s largest CO2 purification plant at its manufacturing affiliate United, Mohammed Al-Benyan, acting Vice-Chairman and CEO, said at the Carbon Sequestration Leadership Forum (CSLF) in Riyadh today.

“SABIC recognizes international concerns about climate change and that taking action is a priority,” Al-Benyan said during a keynote speech. “We are part of the solution because our products can help reduce CO2 emissions and help our customers to meet their sustainability goals.”

SABIC, Saudi Aramco, and the Ministry of Petroleum and Mineral Resources of Saudi Arabia are collaborating in the ongoing sixth meeting of the CSLF in Riyadh till today (Nov. 5).

“Taking action on GHG makes business sense because operational energy and resource efficiency lowers operating costs and low carbon sustainable solutions provide lower risk growth opportunities,” Al-Benyan added.

The forum included exhibition by the participants. SABIC’s contribution to the event included a new video explaining the CO2 purification plant in Jubail, the reasons for its design, and the benefits it brings to Saudi Arabia and the global drive to control carbon emissions and promote sustainability.

The plant compresses and purifies around 1,500 tons of CO2 per day from ethylene-glycol plants, which is then pipelined to SABIC affiliates for methanol and urea production. The plant is expected to save 500,000 tons of CO2 emissions every year.

Mohammed Al-Benyan (middle), acting Vice-Chairman and CEO, participates at the Carbon

Sequestration Leadership Forum in Riyadh Wednesday




SABIC encourages governmental support and policies that accelerate technology development and innovation, and sharing of best practices. The company engages internationally and provides Middle East leadership through active participation in a number of organizations that encourage collaboration and advocate for sustainability, including the CSLF, ICCA, WBCSD, GPCA and the UNGC.

SABIC supports and actively seeks participation in mechanisms that fits its business needs and helps accelerate CO2 reduction efforts, such as the CDM (Clean Development Mechanism). It works to provide the materials needed to adapt to climate changes such as piping for water shortages and materials to save energy in buildings and transport.

“Our primary short-term goal is to strengthen our business through operational efficiency, investment in new low-carbon technologies and new sustainable solutions, enabling us to decrease our environmental footprint and enable sustainable benefit for our customers,” Al-Benyan said of SABIC’s sustainability agenda.

The CSLF is a Ministerial-level international climate change initiative, with 23 members, that focuses on the development of improved cost-effective technologies for the separation and capture of carbon dioxide (CO2) for its transport and long-term safe storage.




Libya Oil Output Drops belwo 400,000 BPD-Fight Over Energy by Bloomberg + NewBase

Libya’s oil output dropped below 400,000 barrels a day after the divided country’s internationally recognized government in the east closed a port run by a rival administration in the west, in a push to assert control over more energy assets and exports.

Production fell after crude exports halted at the port of Zueitina, Mohamed Elharari, a spokesman for the National Oil Corp.’s management in the western city of Tripoli, said Wednesday by phone. Libya pumped 430,000 barrels a day in October, data compiled by Bloomberg show.

Zueitina will be closed until further notice, and tankers seeking to load crude there must now register with a rival NOC management loyal to the internationally recognized government based in eastern Libya, according to a Petroleum Guard spokesman Ali al-Hasy. Vessels registered with the NOC administration in Tripoli, seat of an Islamist-backed government, are “illegitimate” and won’t be permitted to load at Zueitina, he said.

“This is clearly an escalation” by the eastern government to make buyers deal directly with its NOC management rather than continue working with the Tripoli authorities and thus gain more control over oil revenue, Richard Mallinson, an analyst at Energy Aspects Ltd., said by phone from London. “The more interesting question is whether there’s a risk of the same action being repeated at the other terminals under the control of the eastern government,” he said, referring to the ports of Hariga and Brega.

Largest Reserves

Libya, with Africa’s largest oil reserves, pumped about 1.6 million barrels a day of crude before a 2011 rebellion ended Muammar Qaddafi’s 42-year rule. Like the country’s leadership, the NOC has competing eastern and western administrations seeking to control energy facilities. Political strife and worker protests have curtailed output to about a quarter of what it was when Qaddafi was still in power.




Mallinson said output could dwindle to less than 100,000 barrels a day if Libya’s eastern government imposed restrictions at Hariga and Brega similar to those at Zueitina, in its drive to assert greater control over the OPEC state’s oil wealth.

“If they’re serious about this effort, that would be a logical next step, and it would risk shutting down more production,” he said.

Wintershall Suspension

The Tripoli-based NOC, which has been in charge at Zueitina, declared force majeure and said in a statement that the port was closed for all exports due to a “deteriorated security situation.” Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

A tanker moored at Zueitina for two days has been prevented from loading, the port’s workers union president, Ramadan Lefkaih, said Tuesday by phone. Wintershall AG temporarily suspended crude exports from Libya’s As-Sarah field because Zueitina is unable to load cargoes, Stefan Leunig, a company spokesman, said by e-mail.

Zueitina resumed loadings on Oct. 5, boosting the country’s export capacity after a five-month halt due to protests, a port- workers union said at the time.

Libya’s internationally recognized government plans next week to ship a 1 million-barrel cargo of crude from Hariga, east of Zueitina, said Nagi Elmagrabi, chairman of the NOC’s eastern administration. The eastern NOC, with headquarters in the city of Bayda, has reached agreements with several companies to load oil at facilities under its control, Elmagrabi said Tuesday, speaking from Bayda. Libya is currently the smallest producer in the Organization of Petroleum Exporting Countries.




Malaysia: SapuraKencana Gets Approval for SK310 B15 Gas Field Development

SapuraKencana Petroleum’s wholly-owned subsidiary SapuraKencana Energy Inc (SKE) has secured Field Development Plan (FDP) approval from PETRONAS for the SK310 B15 gas field development project.

First gas delivery targeted has been set for the fourth quarter of 2017, the company announced Wednesday.

The B15 field which was discovered in December 2010 is located within the SK310 Production Sharing Contract (PSC) area, offshore East Malaysia. The development will comprise a central processing platform with a 35-km gas evacuation pipeline to be tied into the existing infrastructure. The B15 field is expected to produce 100 MMscfd of gas for PETRONAS' LNG complex in Bintulu, Sarawak.

SKE via SapuraKencana Energy Sarawak Inc. is the operator of the SK310 PSC with a 30 percent participating interest and partners with PETRONAS Carigali Sdn. Bhd. at 40 percent and Diamond Energy Sarawak Sdn. Bhd, a subsidiary of Mitsubishi Corporation at 30 percent.




Kazakhstan: Exxon Mobil sees Kashagan oil field restarting at end-2016 Source: Reuters

Kazakhstan's vast Kashagan oil field, the world's biggest oil find in decades, is expected to restart production at the end of 2016, Exxon Mobil Production Vice President John Chaplin said on Wednesday.

The oil field is being developed by a consortium which includes KazMunaiGas, Exxon Mobil,

Eni, Royal Dutch Shell, Total, China's CNPC and Japan's Inpex. It began production in

September 2013 but output was halted a few weeks later after leaks were detected in its pipes.

'Kashagan should start at the end of 2016,' Chaplin, who is in charge of production in Europe and the Caspian Sea, told Reuters on the sidelines of an oil conference in Oslo. 'Of course, there are always uncertainties in replacing the pipelines,' he said.

Chaplin also said that Norway should provide fiscal incentives for oil companies to continue producing at the end of an oil field's lifetime. He also said the European refining sector remained a bright spot in the sector.




NewBase 05 November - 2015 Khaled Al Awadi

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

Crude oil futures edge up, but US inventory build drags Reuters + NewBase

Oil futures were up slightly in early Asian trade on Thursday after losses the previous session on official figures showing a sixth consecutive week of inventory gains in U.S. crude stockpiles.

Crude prices slumped as much as 4 percent on Thursday after the Energy Information Administration said U.S. crude inventories added 2.85 million barrels last week, in line with forecasts, despite a drop in imports to the lowest level since 1991.

U.S. crude was up 22 cents at $46.54 a barrel in thin trade by 0139 GMT. The contract fell $1.58, or 3.3 percent, to $46.32 on Wednesday. Brent crude rose 27 cents to $48.85 a barrel, after dropping 3.9 percent on Wednesday.

"The U.S. data was a negative and there is not much chance of further improvement at this stage in the demand/supply balance, with inventories heading up and production basically steady," said Ric Spooner, chief market analyst at CMC Markets in Sydney. Contributing to the general bearish sentiment was an internal OPEC document published by Reuters that showed weaker demand in the next few years for oil from the producer group. OPEC oil ministers are due to meet on Dec. 4 to decide whether to extend the strategy of allowing prices to fall to slow higher-cost rival supply. Since November 2014, when the group adopted that policy, OPEC production has risen but prices have deepened their collapse, hurting oil revenue. Saudi Arabia, the biggest OPEC producer, has been pumping near record levels to protect its market share, but has seen oil revenues slump.

Oil price special

coverage




Gulf countries should plan well for post-oil era Said Al Attiyah

Gulf countries should “plan well” for the post-oil era, said HE Abdullah bin Hamad al-Attiyah, chairman of the Abdullah Bin Hamad Al Attiyah Foundation for Energy and Sustainable Development. Al-Attiyah’s statement appeared in a special interview published in the 114th issue of the Industrial Co-operation in the Arabian Gulf Magazine published by the Gulf Organisation for Industrial Consulting (GOIC).

In the interview, al-Attiyah called on GCC governments to focus on technological industries and technical education in order to create technically-educated people capable of coping with the post-oil and gas era. He noted that income source diversification is necessary, but GCC countries must adopt a clear and specific mechanism to achieve desired objectives. The former Minister of Energy also stressed on the importance of sovereign funds as means to reinvest money, and highlighted the necessity to focus on quality investments, guaranteed investments, and good return on investment, while avoiding non-secured investments. Al-Attiyah elaborated on means to improve the Gulf investment ecosystem, overcome hurdles hampering foreign investments and channel foreign investments in accordance with GCC strategic plans to achieve development goals and maximise the benefit from these investments. He also underlined the need to enact clear and transparent laws, in addition to tax policies guaranteeing returns. GOIC secretary general Abdulaziz bin Hamad al-Ageel emphasised in the magazine the attempts to draw more foreign investments to the region. He said the United Nations Conference on Trade and Development’s (UNCTAD) foreign direct investment attraction index revealed that the GCC region is receiving less investment than projected according to GCC countries’ ranks. “Forecasts show an opportunity to achieve additional growth of FDIs should the global economy steer away from major tremors in the coming years. Thus, GOIC decided that the theme of the 15th Industrialists’ Conference would be Foreign Direct Investment in GCC and its impact on industry,” he said. The conference will be hosted by the State of Kuwait at the Sheraton Hotel on November 25 and 26, al-Ageel said.




The magazine also features a comprehensive dossier on the First Gulf Metrology Forum organised by GOIC, in collaboration with Qatar’s Ministry of Environment, the GCC Standardisation Organisation (GSO), and GULFMET. The event will take place at the Hilton Hotel in Doha December 14 and 15, he added. Al-Ageel said studies estimate that the size of the global metrological services market valued at $824.6mn by 2020. GCC markets are ranked among emerging markets in the area of international metrological services paralleling the rapid growth of the technological challenges.

The magazine also includes a detailed report on the latest updates on the 15th Industrialists’ Conference in terms of sponsors and initial schedule. The issue’s industrial report discusses the paints industry in the Gulf and highlights GOIC’s 2014 data revealing 217 factories with about $887mn worth of cumulated investments and employing more than 17,000 workers. “GOIC has made available valuable industrial information that can be reached with the push of a button. It is another achievement for GOIC in line with its efforts to develop and expand its range of advisory and technical services,” said Abir Adel Jaber, the magazine’s editor-in-chief. A full version of the

magazine is available on www.goic.org.qa.




NewBase Special Coverage

News Agencies News Release 05 Nov.. 2015

Opec report sees market share squeeze until 2019 Reuters + NewBase

Global demand for Opec’s crude oil will remain under pressure in the next few years, the producer group said in an internal report, potentially fuelling a debate on its strategy of defending market share rather than prices.

The confidential draft report of Opec’s long-term strategy, seen by Reuters, forecasts crude supply from Opec - which has an output target of 30mn bpd - falling slightly from 2015’s level until 2019, unless output slows faster than expected in rival producers. Opec governors, official representatives of the 12 members of the Organization of the Petroleum Exporting Countries, met




at the group’s Vienna headquarters yesterday to approve the final draft of the report. The 44-page report includes an annex containing comments from two members, Iran and Algeria, suggesting Opec return to its old policy of propping up prices at a desired level by adjusting supplies.

“Reaching agreement on a fair and reasonable price of oil for the next six to 12 months” is one of the steps that Iran recommends Opec take. “Opec production ceiling should be set for six or 12 months intervals.”

Opec oil ministers meet on December 4 to decide whether to extend the strategy of allowing prices to fall to slow higher-cost rival supply. Since November 2014, when the group adopted that policy, Opec production has risen but prices have deepened their collapse, hurting oil revenue.

The report sees only a gentle recovery over the next few years in oil prices, which have more than halved to $50 a barrel since June 2014 due to plentiful supply. Opec’s basket of crude oils is assumed in the report at $55 in 2015 and to rise by $5 a year to reach $80 by 2020.

Saudi Arabia, supported by other relatively wealthy Gulf members, led the change in strategy last year. Riyadh shows no sign of changing course, seeing the approach as long-term.

The draft report supports the view that Opec’s market share will rise in the long run as output of shale oil, also known as tight oil, and natural gas liquids (NGLs) is curbed. “It is ... assumed that tight crude and unconventional NGL supply will reach a maximum at some point after 2020 and then start to decline slightly,” the report said. “As a result of non-Opec supply developments, Opec crude is expected to rise over the long term, reaching 40.7mn bpd in 2040. Moreover, the share of Opec crude in the world liquids supply in 2040 is 37%, which is above current levels of around 33%.”

Over the long run, as non-Opec supply growth fades, the report assumes oil will rise further and its nominal price will reach $162, or $95 in 2014 dollars. But a chart in the report also presents a scenario in which non-Opec supply is more resilient, putting increased downward pressure on the group’s market share and highlighting the uncertainty over future demand for Opec oil.

“Opec crude production would reach its lowest point in this scenario at 28.7mn bpd in 2023,” the report said. “The resulting range for Opec crude in 2040 amounts to 9.4mn bpd, which highlights the challenges for member countries’ long-term investment decisions.”

Opec publishes long-term strategy reports every five years. Its 2010 report did not mention shale oil as a serious competitor, highlighting the dramatic change the oil market has undergone in the past few years.

The long-term report, prepared by Opec’s research team in Vienna, traditionally cautions that it does not articulate the final position of Opec or any member country on any proposed conclusions it contains.




Wood Mackenzie: What lies ahead for oil & gas majors in 2016? Source: Wood Mackenzie

After assessing the third quarter results from the major oil and gas companies, Wood Mackenzie, an energy intelligence group, has identified four key themes to look out for in 2016.

Wood Mackenzie says the latest round of earnings results offered the industry an early glimpse at what lies ahead in 2016 in terms of companies’ budgets and strategies. The stand out themes that Wood Mackenzie notes include: weak financial performance in Q3, surging production levels, deep cost cutting; and tighter allocation of limited capital.

Tom Ellacott, Head of Corporate Upstream Analysis at Wood Mackenzie explains: “The crash in oil prices this year is having a transformative impact on the industry. The majors are now making real progress in reshaping their investment strategies for a sustained period of low prices.” Earnings fall sharply

Upstream earnings were weak for the fourth quarter in succession, the effect of a 50% year-on-year fall in oil prices accentuated by over $9 billion of impairments. Another stellar quarter for refining provided some support, and further reinforced the benefits of the integrated business model. A strong quarter for production, but growth will flatten out Production surged as the benefits of the last investment cycle, the impact of low prices on production sharing contract (PSC) volumes and reduced maintenance downtime, flowed through. Total was the top performer, delivering double digit production growth. Eni, Statoil and Shell also had strong quarters. But longer-term growth prospects are starting to suffer from lower investment. Chevron and Total have now downgraded their 2017 production targets and longer-term growth trajectories will be flatter as companies focus on value not volume. A new phase of cost cutting is under way Deeper cost cutting was a core theme as the Majors adapt to a scenario of lower oil prices for longer. The aim is to fund dividends through organically generated cash flow. Chevron’s revised capex projection for 2016 – 2017 alone could be up to $17 billion lower than the guidance in its 2015 Analyst Day earlier this year. Spending levels in 2017 could be down by around 30% versus guidance prior to the oil price crash as more projects are deferred and underlying costs continue to fall.

Capital discipline being tightened up BP provided a barometer of how companies are adjusting planning assumptions in the new world of lower prices, announcing that it is using a mid-teen hurdle rate for major greenfield projects at an oil price of US$60/bbl. Wood Mackenzie expects other Majors to be screening pre-FID projects under similar hurdle rates.




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

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

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

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

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

NewBase 05 November 2015 K. Al Awadi


