New base 991 special 24 january 2017 energy news

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

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NewBase 24 January 2017 - Issue No. 991 Senior Editor Eng. Khaled Al Awadi

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

UAE Barakah nuclear power plant operating by this May 2017 The National - Caline Malek

The UAE’s first nuclear power plant could begin operating by May after the industry’s regulator on Sunday approved licences to transport and store nuclear fuel – a final step in a long, careful process.

The Federal Authority for Nuclear Regulation said the fuel’s first shipment would be sent from South Korea in coming weeks before being taken to the power plant’s Barakah site in the Western Region next month.

The authority’s approval is considered to be the last step before the first nuclear reactor becomes operational in May, pending regulatory approval.

Christer Viktorsson, Fanr’s director general, said it was a "major milestone for us because we’ve worked diligently during months to make us convinced that everything is ready to transport and store fuel".




"One of the principles of the UAE’s nuclear power programme is operational transparency," Mr Viktorsson said. "This is an effort by Fanr to keep the public informed about the important decisions it is making."

The first shipment will be sent by sea and inspected on arrival in a couple of weeks, before it is moved to the reactor’s storage. "They are packing the fuel now in Korea and we had inspectors there a few weeks ago," said Ian Grant, the authority’s deputy director general for operations.

Mr Grant said the plant’s operator, the Emirates Nuclear Energy Corporation, already had power in the plant and was running systems at the plant to check its equipment. "Once we have authorisation to load the fuel, there would be a period of about another six or seven months of testing and gradually increasing power," he said.

Unit 1 of the plant will initially operate on low power as part the trial, going through phases of shutting down and increasing its power gradually until it reaches full power, also known as commercial operation, which will then feed power to the grid.

"The current schedule is May but we’re not bound by that schedule," said Mr Grant. "We expect further inspections from the International Atomic Energy Agency, which will make sure the fuel is used for peaceful purposes only."

Hamad Alkaabi, UAE ambassador to the IAEA, agreed that receiving fuel was a significant milestone.

"The UAE has worked closely with the IAEA safeguards teams to ensure all surveillance and control measures are in place and in line with IAEA requirements at the Barakah nuclear plant," Mr Alkaabi said.

"This step demonstrates that all arrangements and measures in terms of readiness, safety and security have been received and confirmed to be adequate." More than 200 experts work in Fanr in nuclear safety, security, radiation protection, safeguards and related areas such as emergency preparedness and waste management.

The plant is designed on Korea’s model, which is set to withstand major natural disasters.

"The Korean Peninsula has got stronger earthquakes than here so the Korean design is very robust against earthquakes," Mr Grant said. "It is designed to withstand twice the might that is predicted to happen at the site and we’ve studied the earthquake design extensively."

Mr Viktorsson said the public seemed to be in favour of the nuclear power plant. "When we’re out talking to the public in forums, the support for nuclear power in this country is much higher than what I am used to," he said.

"So it seems there is confidence in the leadership that this energy source is safe, secure and peaceful. That’s why so much responsibility is on us because we have to ensure all this and take the time it needs."




Saudi Aramco tax will be cut to lure investors to IPO: CEO Bloomberg/Davos

Saudi Arabia has promised it will reduce the overall tax rate paid by its national oil company to make its 2018 initial public offering – potentially one of the largest in history – more appealing to investors.

“Definitely the fiscal regime will be changed,” Saudi Arabian Oil Co chief executive officer Amin Nasser said in a Bloomberg Television interview last week in Davos, Switzerland. “When you look at the fiscal regime and the taxes, it has to be aligned with other listed companies.”

Aramco, as the company is commonly known, currently pays a 20% royalty on its revenue plus an 85% tax on income, Nasser said. He declined to say what tax rate the kingdom is considering.

Saudi officials said Aramco’s tax rate wouldn’t need to be slashed because the company - considered the crown jewel of the country’s economy - is able to make a profit even when oil prices plunge. In 2016, under the existing tax regime and with crude dipping to 12-year lows, Aramco was able to pay a dividend and fund its biggest-ever capital investment program, Nasser said.

“Based on the advice of the different banks that we use during the process of the IPO, we are setting a certain fiscal regime that will meet investors’ requirements,” Nasser said.

Saudi Arabia is looking at markets including Hong Kong, London, New York and possibly even Canada as international venues for the sale. The kingdom will offer 5% of the world’s biggest oil producer as part of a plan by Deputy Crown Prince Mohammed bin Salman to set up a giant biggest sovereign wealth fund and help reduce the economy’s reliance on hydrocarbons.

Nasser said the kingdom was considering whether to do a double listing, with shares sold in the domestic market in Riyadh and a foreign exchange, or a triple-listing, with two foreign locations on top of the local bourse.

In his most extensive comments yet about the IPO plans, Nasser said the Aramco IPO will include the so-called concession, which comprises the oil and gas reserves of the kingdom. Saudi Arabia sits on almost a fifth of the oil world’s reserves.

“The listing is based on Saudi Aramco maintaining the concession,” Nasser said. “If you have the concession, you have the physical oil.”

Nasser said the IPO will take most likely take place in the second half of 2018, narrowing the window from earlier comments by Saudi officials who said a flotation was planned for some point through 2018.

In the past, Saudi officials have said the flotation would value the company at as much as $2tn – which, if true, will make it the world’s most valuable. Selling just 5% could raise $100bn, ranking it as the biggest ever IPO.

However, some investors have cautioned that Aramco is unlikely to be worth as much, noting that other national oil companies that have sold shares have achieved relatively low valuations.




Nasser said that Aramco wasn’t planning as yet to increase its production capacity, currently at about 12mn bpd, saying the matter would be decided after the IPO. The company has “ample” spare capacity to meet any incremental demand, he added.

Instead, Nasser said the focus is in expanding the company’s refining capacity to 8mn to 10mn bpd, up from 5.4mn bpd currently. Saudi Arabia invested in the 1980s in refineries in the US and more recently has been spending money in South Korea and Indonesia.

“This is an area of interest for us: Expand our refining capacity globally and also our petrochemicals,” he said. The IPO is the cornerstone of a much wider and ambitious plan to re-tool the Saudi economy, called Vision 2030, expanding the non-energy sector.

“We will like to have less reliance on the hydrocarbons,” said Nasser, who was appointed CEO in 2015 and climbed the ladder after starting 1982 as graduate in oil engineering from the King Fahd University.

Still, Nasser insisted that Saudi Arabia wasn’t turning its back on hydrocarbons. “The kingdom is trying to diversify – at the same time, we are retaining our strength in oil and gas and expanding it,” he said.




Kuwait oil emergency over oil leak on shore later contained * Associated Press

Kuwait’s national oil company has declared a state of emergency following an oil leak in one of its southwestern fields. Monday’s statement by the Kuwait Oil Company did not identify the onshore field affected by the leak, which began on Sunday.

The state-run Kuwait News Agency said the leak hit the al-Maqwa field. The company said there was no sign of a toxic gas leak. It provided no details about how many barrels of oil had been spilled.

Kuwait's national oil company says it has contained an oil leak at one of its southwestern oil fields. Monday's statement by the Kuwait Oil Co. did not identify the onshore oil field affected by the leak, which began Sunday.

The state-run Kuwait News Agency said the leak hit the al-Maqwa field. It offered no details about how many barrels of oil had been spilled. OPEC member Kuwait is a major oil producer. The U.S. Energy Information Administration says Kuwait produces some 2.7 million barrels of crude oil a day and holds the world's sixth-largest oil reserves.

In August, Kuwait announced a spill at its Ahmadi field. A February fire struck another oil well after a spill. A 2015 fire at a workers residence at al-Maqwa injured three people.

Opec member Kuwait is a major oil producer. The US Energy Information Administration said Kuwait produces about 2.7 million barrels of crude oil a day and holds the world’s sixth-largest oil reserves. In August, Kuwait announced a spill at its Ahmadi field. A February fire struck another oil well after a spill.




Russian Gazprom mulls $6 billion asset sales, dividend freeze Gazprom needs to increase borrowing to ‘ensure liquidity and cover obligations’ Bloomberg

Gazprom PJSC, the world’s biggest natural gas producer, is considering asset sales, freezing dividends and increasing its borrowing as export earnings wane, according to its three-year budget.

The Russian state-controlled company aims to raise 350 billion roubles (around $6 billion) from asset sales this year, while borrowing may climb to 288 billion roubles and more than double from that level next year, a copy of the document obtained by Bloomberg News show. Dividend payments are forecast at the 2016 level through 2019, according to the plan, approved by the board in December.

Despite a rebound in crude oil, which dictates the price for most of Gazprom’s export contracts, the proposed budget shows the company remains under financial pressure as it tries to finance new pipelines to Europe and Asia. Gazprom needs to increase borrowing to “ensure liquidity and cover obligations” at oil prices close to current levels, according to the budget.

No final decision has been made on asset sales and there is no set time frame, two people with knowledge of the issue said, asking not to be identified because the information isn’t public. Gazprom’s press service declined to comment. The stock lost as much as 1.7 per cent in Moscow to the lowest intraday level since Nov. 18.

Management plans to sell Gazprom’s stake in Gascade Gastransport GmbH, which operates more than 2,400 kilometres of gas pipelines across Germany, possibly this year, Interfax reported, citing unidentified people. There are several potential bidders, the newswire said. The Moscow-based exporter acquired 49.98 per cent in the grid through an asset swap with Germany’s BASF SE in 2015.

Gazprom hasn’t sold such a large amount of assets since 2010. Back then, it disposed of 9.4 per cent of its largest domestic competitor, Novatek PJSC, for 57.5 billion roubles (about $1.9 billion at the time), classifying its remaining 9.9 per cent stake as an asset for sale. The shares, which currently have a market value of about 215 billion roubles based on Moscow trading, could be a candidate, said Raiffeisen Centrobank AG analyst Andrey Polischuk.

GROWING THE VALUE OF GAS TRANSPORTATION ASSETS




US oil & Gas Industeries - Robots Are Taking Over Oil Rigs Bloomberg - David Wethe

The robot on an oil drillship in the Gulf of Mexico made it easier for Mark Rodgers to do his job stringing together heavy, dirty pipes. It could also be a reason he’s not working there today.

The Iron Roughneck, made by National Oilwell Varco Inc., automates the repetitive and dangerous task of connecting hundreds of segments of drill pipe as they’re shoved through miles of ocean water and oil-bearing rock. The machine has also cut to two from three the need for roustabouts, estimates Rodgers, who took a job repairing appliances after being laid off from Transocean Ltd.

“I’d love to go back offshore,” he says. The odds are against him. As the global oil industry begins to climb out of a collapse that took 440,000 jobs, anywhere from a third to half may never come back. A combination of more efficient drilling rigs and increased automation is reducing the need for field hands. And therein lies a warning to U.S. President Donald Trump, who has predicted a flood of new energy-sector jobs under his watch.

Automation, of course, has revolutionized many industries, from auto manufacturing to food and clothing makers. Energy companies, which rely on large, complex equipment for drilling and maintaining oil wells, are particularly well-positioned to benefit, says Dennis Yang, chief executive




officer of Udemy, a company in San Francisco that trains workers whose careers were derailed by advanced machinery.

“It used to be you had a toolbox full of wrenches and tubing benders,” says Donald McLain, chairman of the industrial-programs department at Victoria College in south Texas. “Now your main tool is a laptop.” McLain, who worked as a rig hand for 25 years, is helping to retrain laid-off oil workers for more technical jobs.

Dangerous Talk

During the boom, companies were too busy pumping oil and gas to worry about head count, says James West, an analyst at investment bank Evercore ISI: “We got fat and bloated.” He says the two-and-a-half-year downturn gave executives time to rethink the mix of human labor and automated machinery in the oil fields.

Still, in the current political climate, they’re proceeding cautiously. More robotic drilling ultimately means lower labor costs and fewer workers near some of the most dangerous tasks. But oil companies probably will frame their cost-cutting technologies simply as a way to be more competitive around the world, says West.

“They’ll more likely brag about the automation rather than these head counts,” West says. “It’s kind of dangerous to talk about jobs in the Trump administration.”




Yet Trump is seen as the great hope for more shale-job creation than ever before, says Jay Colquitt, founder of OilfieldTrash.com, an online news portal catering to oilfield workers. As more federal lands open up for drilling, the jobs will follow, he adds.

“Even though modern technology is great, you can’t eliminate the person,” says Rodgers. “To make sure it never fails, you’ve got to have somebody there watching it, to verify it.”

The industry is acutely aware of the heavy reliance on manpower, after the world’s four largest oil-service companies spent $3.12 billion in severance costs during the past two years, says Art Soucy, president of global products and technology for Baker Hughes.

Rigs have gotten so much more efficient that the shale industry can use about half as many as it did at the height of the boom in 2014 to suck the same amount of oil out of the ground, says Angie Sedita, an analyst at UBS Corp. Nabors Industries, the world’s largest onshore driller, says it expects to cut the number of workers at each well site eventually to about five from 20 by deploying more automated drilling rigs.

The impact of technology extends well beyond the wellhead. Automation-related jobs for software specialists and data technicians are in demand as the oil industry recovers, said Janette Marx, chief operating officer of Airswift, an oilfield recruiter. She sees explorers and service companies being much more methodical and selective in their hiring this time around.

“To me, it’s not just about automating the rig, it’s about automating everything upstream of the rig,” says Ahmed Hashmi, head of upstream technology for BP PLC. “The biggest thing will be the systems.”

That means an engineer can design an oil well at his desk. With the press of a button, an automated system would identify the equipment needed from a supplier, create a 3D model and send instructions for building it out into the field, Hashmi says. “That is automation.”




Natural gas prices in 2017 and 2018 are expected to be higher than last year.. Source: U.S. Energy Information Administration, Short-Term Energy Outlook

In its January 2017 Short-Term Energy Outlook (STEO), EIA expects the Henry Hub natural gas spot price to average $3.55 per million British thermal units (MMBtu) in 2017 and $3.73/MMBtu in 2018, both higher than the 2016 average of $2.51/MMBtu. Higher prices in 2017 and 2018 reflect natural gas consumption and exports exceeding supply and imports, leading to lower average inventory levels.

The confidence interval range for natural gas prices is a market-derived range that reflects trading in New York Mercantile Exchange (NYMEX) futures markets and is not directly based on EIA's supply and demand estimates. The values for the upper confidence interval increase during the winter months compared with the rest of the year, which reflects the higher probability of an increase in natural gas consumption for space heating use as a result of colder weather. By February 2018, the 95% confidence interval ranges from $1.78/MMBtu to $7.22/MMBtu.




In 2016, the annual average Henry Hub natural gas price was the lowest since 1999 as a result of a very mild winter that left natural gas inventories at a record high for the end of March. However, high natural gas use for electricity generation during the summer and declining production contributed to Henry Hub natural gas prices rising from an average of $2.00/MMBtu in the first quarter of 2016 to an average of $2.88/MMBtu in the third quarter of 2016.

Cold weather across much of the northern United States in mid-December led to an increase in demand for space heating (much of which is provided by natural gas), contributing to natural gas inventories ending the month below the five-year average. As a result, Henry Hub spot prices increased to a monthly average of $3.59/MMBtu in December, the first month in which prices averaged above $3.00/MMBtu since December 2014.

In 2017, Henry Hub prices are expected to remain near the levels in December 2016, leaving annual average prices in 2017 higher than those in 2016. Prices are expected to be higher again in 2018. The higher prices are the result of forecasted consumption and exports exceeding forecasted production and imports, which implies that the difference will be supplied from inventories. Because natural gas use for space heating in the residential and commercial sectors depends significantly on winter weather, any significant discrepancy between weather assumptions used in the forecast and actual weather could significantly affect both consumption and prices.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook




EIA expects natural gas consumption to be higher in 2017 and 2018 than in 2016, based on a return to more typical winter temperatures. In 2017, use of natural gas for electric power generation is expected to decline from the record level in 2016 because of higher natural gas prices. Natural gas-fired power generation is forecast to rise in 2018 because of overall growth in electricity generation, but it is expected to remain below the 2016 level.

After declining in 2016 for the first time since 2005, dry natural gas production is forecast to increase in both 2017 and 2018. The return to increasing production reflects a forecast of higher Henry Hub natural gas spot prices as well as pipeline infrastructure buildout, particularly in the Marcellus and Utica natural gas producing regions in and around Ohio and Pennsylvania.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook

Natural gas exports are also expected to increase. Export growth in 2017 largely reflects additional capacity coming online at Cheniere’s Sabine Pass liquefied natural gas (LNG) liquefaction plant in Louisiana.

The 2018 growth is driven by the expected start of Cove Point LNG in Maryland in December 2017 and new projects at Cameron LNG and Freeport LNG on the U.S. Gulf Coast during the second half of 2018. A small increase in pipeline exports to Mexico is expected in both years.

Imports of natural gas are expected to remain relatively stable over the forecast period at slightly more than 8 Bcf/d. With expected growth in exports and stable import levels, the United States is expected to become a net exporter of natural gas on an annual basis in 2018.




NewBase 24 January 2017 Khaled Al Awadi

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

Oil prices rebound on weaker dollar, production cuts

Oil climbed on Tuesday as a weaker U.S. dollar and production cuts announced by OPEC and other producers buoyed the market, but an increase in drilling activity in the United States is likely to keep a lid on prices.

Brent crude LCOc1, the international benchmark for oil prices, rose 30 cents to $55.53 a barrel by 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 added 27 cents to $53.02 a barrel.

The dollar wallowed near seven-week lows, pressured by concerns about the impact of U.S. President Donald Trump's protectionist trade stance.[USD/]

A weaker dollar makes greenback-priced commodities cheaper for importers holding other currencies.

Ministers representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on Jan. 1, 1.5 million bpd had already been cut.

Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of last year from the previous quarter. Still, this amounts to about 60 days of world oil consumption.

Oil price special

coverage




"This is the biggest quarterly decline since the fourth quarter of 2013, confirming that inventory builds are now reversing as the market shifts from oversupply to undersupply," it said in a note.

Iraq's oil minister said on Monday that most oil majors working on its territory were participating in oil output reductions agreed as part of the deal.

The reduction in supply by oil majors is being offset by an increase in U.S. production.

U.S. drillers added the most rigs in nearly four years, data from energy services company Baker Hughes showed on Friday, extending an eight-month drilling recovery.

The country's oil production has risen by more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak. It is back to levels seen in late 2014, when strong U.S. crude output contributed to a crash in oil prices.

Fawad Razaqzada, an analyst for Forex.com, said it could take a while before the impact of higher U.S. production is felt in the market.

"Shale producers may allow the oil market to fully rebalance before increasing production once again," he said.

Clarifying Opec’s production ceiling agreement Oman Observer in Business

The oil market is well aware that Opec set a production ceiling at its meeting on November 30th of 32.5 million barrels per day. But based on comments to a recent article I wrote, there is a lot of confusion about how that ceiling applies.

A news story said, “Opec production dropped to 33.09 million barrels per day in December from 34.2 the previous month.” This is a misunderstanding of the situation. In particular, there is an issue about Indonesia. At the meeting, this member decided to suspend its membership in Opec.

As Opec’s only net importer of oil, it could not agree to join the group in agreeing to limit its output, which is understandable. It could have signed the agreement anyway, as I believe some countries may have, not intending to honour the agreement, but it did not. To me, that reflects integrity.

But less than two months later, there is confusion about the ceiling. To clarify, Opec included Indonesia’s production in the ceiling, even though it had suspended its membership in Opec. I suppose that happened because the deal was negotiated on the day of the meeting, and there was a certain amount of chaos.

“Indonesia is in it, at the October level.” According to Opec’s December Monthly Oil Market Report, Indonesia’s production level was 750,000 b/d. In Opec’s most recent MOMR, Opec reported its production at 33.085 million barrels per day. But Indonesia’s production is no longer included.

One might get the impression that Opec’s production is getting closer to its 32.5 ceiling. But if Indonesia’s production is included, estimated to be 730,000 b/d by the Energy Information Administration (EIA), then the Opec-14 actually produced 33.8 in December.

If Opec is going to quote its output without Indonesia, which seems appropriate, it should clarify its ceiling without Indonesia. And that would be 32.5 minus 0.7, which is 31.8. And so the December volume is actually 1.3 million barrels above that ceiling.




Why Saudi Arabia May Unravel OPEC's Big Deal By Julian Lee

Saudi Arabia's oil minister Khalid Al-Falih says it may not be necessary to extend the deal reached by the group and some non-member nations to cut oil supply by around 1.8 million barrels a day beyond its initial six months, and that doing so could create a shortage. That seems a very quick and painless solution to an oversupply problem that has bedeviled the oil market for the past two years, brought several producers to the brink of collapse and tipped others over it.

It took a lot for the Saudis to agree to this deal in November, but the rationale seemed at least to make sense. Brimming supply had created financial difficulties for the kingdom, and also complicated the forthcoming IPO of a small part of Saudi Aramco.

Saudi Crude Exports

Crude oil exports hit a 13-year high in November, as OPEC met to agree output cuts

The latest numbers from the Joint Organisations Data Initiative offer a different, and compelling, narrative. It turns out that, as the deal was being thrashed out, Saudi Arabia was enjoying a 35-year high in total oil exports.

One big factor was a huge drop in the amount of oil the country needs to burn to generate electricity. The punishing Saudi summers boost demand for electricity -- mostly to run air-conditioners -- to a level that previously required vast amounts of oil-fired generating capacity to




be brought into use. The direct burning of crude oil in power stations would roughly double to about 900,000 barrels a day at the height of the season.

Burning Crude

Saudi oil usage has dropped as natural gas replaces around a third of what it uses for power generation

But that changed last year. The start-up of the Wasit gas plant allowed the kingdom to slash the use of crude in power generation by as much as a third -- freeing that oil up for export. In addition, the kingdom cut fuel subsidies, pushing down oil consumption by 2 percent year-on-year in the first eleven months of 2016. That's the first dip since at least 2003, when JODI records begin.

This left Saudi Arabia with an embarrassment of riches as the OPEC negotiations were underway last year. Unless it cut output, it would start flooding the market during the first half of 2017. The stars were aligned for it to solve the problem by persuading others to share the burden in a way that has not been seen since the financial crisis of 2008, while at the same time restoring its credentials as a team player within OPEC.

DEMAND CONTRACTION

We really don't know, and never will, what the true Saudi motivation for agreeing to production cuts was or is. But this new read on the Saudis' motivations for agreeing to the deal has the benefit of explaining why Al-Falih is looking for a six-month time line and why the kingdom has been prepared to make such a deep cut in its production. Its surplus will have disappeared by that time, at which point it can start to boost production again in order to get exports back to the level it wants to maintain.




Such a move could easily be the catalyst for the whole deal to fall apart by June. And there's no way the global backlog of inventory will be dealt with at that time. This seems a situation designed to antagonize the rest of the group and create a raft of bad feeling.

If maintaining exports is more important to Saudi Arabia than balancing the market, then so is a willingness to back out on a hard-won deal that took the kingdom and its partners a lot of political capital to achieve.




NewBase Special Coverage

News Agencies News Release 24 Jan. 2017

Bahrain Nogaholding marks close of $741m LNG terminal financing NOGAS

Nogaholding, the investment and business development arm of Bahrain’s National Oil and Gas Authority (Noga), has marked the financial close of its LNG Terminal Project with Bahrain LNG, the developer and owner of the first LNG receiving and regasification terminal to be developed on a PPP basis in the Middle East.

Held under the patronage of Shaikh Mohamed bin Khalifa bin Ahmed Al Khalifa, the Minister of Oil, the dinner was hosted at the Four Seasons Hotel, Bahrain Bay.

More than 150 guests attended including representatives from the management of the consortium, participating banks, members of the board of Bahrain LNG WLL, as well as senior management of nogaholding, and members of the press.

Jointly owned by the Oil and Gas Holding Company (nogaholding – 30 per cent) and a consortium consisting of Teekay LNG Partners LP (30pc), Gulf Investment Corporation (24.5pc) and Samsung C&T (16.5pc), the Bahrain LNG Terminal is a key component of the further expansion of the energy and related sectors of the kingdom.

Shaikh Mohamed said in his speech: “The security and reliability of our gas supply is very important to us. The importance of Noga providing reliable and economic supplies of gas gave us a strong incentive to develop the LNG import terminal as a means of accessing the booming and increasingly competitive international LNG markets.”

Dr Dafer Al Jalahma, CEO of nogaholding, said: “We are incredibly proud of this significant milestone achievement. I would like to thank the partners of the consortium, Korea Trade Insurance Corporation (K-SURE) and the lending banks for making this financing a great success. Against the backdrop of current economic market conditions, we are pleased to have successfully sourced finance for the project of this size and complexity.”

“Led by K-SURE, this well-structured LNG regasification terminal transaction attracted high quality project finance lending of $741 million for a tenor of 20 years. This reflects their confidence in investing in Bahrain and further fueling growth of the energy development projects in the country.”




The LNG Terminal will comprise a Floating Storage Unit (FSU), an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, a subsea gas pipeline from the platform to shore, an onshore gas pipeline and gas receiving facility, and an onshore nitrogen production facility. The project will supplement local gas production to meet peak seasonal gas demand, industrial growth and procure internationally-traded LNG on a competitive basis. It is due for completion in early 2019 and will have a capacity of 800 million standard cubic feet per day.

It will be owned and operated under a 20-year agreement by Bahrain LNG. GS Engineering and Construction was awarded the EPC contract. Teekay LNG will supply the Floating Storage Unit (FSU) which will be modified specifically for this project, through a 20-year time-charter agreement.

For this project, K-SURE will provide commercial and political risk cover for approximately 80 per cent of the financing. Standard Chartered Bank, Arab Petroleum Investments Corporation (Apicorp), and the Korea Development Bank acted as lead arrangers.

A syndicate of nine international and regional banks is participating to fund this project. The banks include: Apicorp, Standard Chartered Bank DIFC, Korea Development Bank, Ahli United Bank, Banco Santander, Crédit Agricole Corporate and Investment Bank, ING Bank, Natixis, and Société Générale

Bahrain LNG Import Terminal Project Description

In order to supplement the natural gas supply from existing fields in Bahrain and meet the growing domestic demand, Nogaholding, the business and investment arm of the National Oil and Gas Authority (NOGA), is developing a project that will enable the import of Liquefied Natural Gas (LNG) into Bahrain.




Bahrain LNG W.L.L, a company formed by Samsung C&T Corporation, Teekay LNG Operating LLC, and Gulf Investment Corporation together with the Bahrain National Oil and Gas Holding Company (Nogaholding), will construct and operate an LNG import terminal for a period of 20 years on behalf of the National Oil & Gas Authority (NOGA) of Bahrain. Bahrain LNG W.L.L. is a limited liability company incorporated under the laws of the Kingdom of Bahrain.

Nogaholding has opted to develop an offshore LNG import terminal, which includes a Floating Storage Unit (FSU) that can be re-deployed when not needed for the import of LNG in Bahrain. The Project has been initially sized to send out 400 million standard cubic feet per day (mmscfd) of natural gas with the possibility to expand to 800 mmscfd in the future.

Nogaholding, in collaboration with other government agencies, conducted site evaluations for an offshore LNG terminal and concluded that the terminal should be built off-shore from Khalifa Bin Salman Port (KBSP), approximately 4.3 km east from the existing breakwater at the KBSP. The offshore components will be situated within Port authority boundaries in an area that is actively dredged to support commercial marine vessel navigation. The terminal location was identified by the Urban Planning Authority and included in the development plan of the industrial area of Hidd.

Project Benefits

The supply of LNG to supplement domestic natural gas production will support the expansion of economic activities in Bahrain. This will ultimately boost economic growth of Bahrain and its ability to support population growth.

The construction and operations of Bahrain LNG (BLNG) is anticipated to generate direct and indirect employment opportunities at local, regional and national levels.

Construction

Construction is scheduled to commence in late 2016 and complete in early 2019. The following onshore activities are anticipated during the construction phase:

An onshore construction site and laydown area will be established to act as the main logistics hub supporting both onshore and offshore construction works. This will require an area of approximately 9 hectares (ha) and will house site offices and be used for the temporary storage of construction materials (e.g., pipes, piles, etc.) and in which some prefabrication works (including welding) is likely to take place.

Construction and installation of onshore facilities which consist of a temporary jetty, onshore pipeline, cables, and an Onshore Receiving Facility (ORF). The temporary jetty will be approximately 100 m x 40 m. The onshore pipeline will be a 24-inch diameter 5.4 km long high pressure natural gas pipeline underground from the ORF to a tie-in at the BAPCO gas grid at the Hidd metering station.

Construction of wastewater infrastructure to collect and contain all wastewater. Tanks will be emptied regularly by a contractor.

Solid wastes generated during construction such as cement and concrete waste, metal scrap, wood scrap, cardboards and tires will be reused, recycled and disposed of accordingly.

The maximum manpower for the construction phase of the project is anticipated to peak in 2018 with around 1,000 to 1,100 total staff and construction workers onsite. Construction labour (anticipated to be largely expatriate workers) will be provided accommodation at existing permanent facilities.

The following offshore activities are anticipated during the construction phase:

• Dredging of the offshore terminal area and pipeline trench. Dredged material will be temporarily stored and reused to refill the pipeline trench, or disposed of appropriately onshore.




• Construction activities will include pile driving, as well as construction and installation of the jetty, regasification platform, and offshore terminal topsides equipment. Offshore facilities will be constructed on piled structures topped with precast concrete platforms.

• Construction material will be supplied by transport barges.

• Construction activities for the subsea pipeline will include trenching and installation of an approximately 6.8 km long, 24 inch diameter steel subsea pipeline. Two electrical cables will be installed to supply power to the jetty.

• An approximately 600 m long breakwater will be constructed with rock material and Accropodes. Breakwater construction material will be delivered using marine barges.

Operations

The operations phase is scheduled to begin in early 2019. The terminal and subsea pipeline will have a design life of 40 years. At an operating capacity of 400 mmscfd, roughly 30 LNG cargo deliveries are anticipated annually.

LNG will be delivered by LNG Carriers and transferred over the jetty to the FSU. The LNG will be temporarily stored before being sent to the regasification platform adjacent to the jetty where it will be regasified in a series of Open Rack Vaporizers (ORVs).

The regasified LNG will be sent at high pressure and temperature through a subsea pipeline to the Onshore Receiving Facility. After treatment by nitrogen injection to meet the natural gas specifications of Bahrain, the natural gas will be returned to a subsea pipeline through the inner port area to a point near the Bahrain Steel property.

The natural gas will then be transferred via a buried onshore pipeline to the tie-in point with the BAPCO grid at the Hidd Metering Station. A general schematic of the project is shown below

For the operations phase, the offshore jetty and ORF are designed to be manned on a 24 hour basis.

Simplified Flow Diagram




Offshore Facilities

An overview of offshore facilities is shown

Offshore facilities include:

• A dual berth jetty capable of receiving LNG carriers with a capacity between 135,000m3 and 266,000m3. The jetty will provide moorings for both the FSU and an LNG Carrier. Cryogenic marine loading arms mounted on the jetty will transfer LNG between the LNG Carrier and the FSU.

• A Floating Storage Unit will be permanently berthed at the offshore jetty to receive and provide storage for cargoes of LNG offloaded from LNG Carriers. Pumps on the FSU will send LNG to the regasification platform for vaporization prior to export to shore via the subsea pipeline. A Boil Off Gas (BOG) system will collect and manage natural gas vapours generated within the FSU and offshore terminal to prevent or any loss to the atmosphere.

• A pipe trestle linking the jetty and the regasification platform will support cryogenic pipelines for sending LNG between the regasification platform and the jetty.

• A regasification platform will use seawater as a heat source to warm the LNG and convert it from a liquid to a gas. Seawater flows around the outside surface of Open Rack Vaporizers (ORVs) and vaporizes the LNG inside the ORV.

• A flare will be secured to the regasification platform to safely burn off any natural gas that must be vented from the offshore terminal in an emergency.




• A 600m long (at the base) breakwater will provide protection from waves and current and provide a safe mooring environment for both the FSU and LNG Carriers.

• A subsea 24-inch diameter high pressure pipeline for delivering natural gas from the regasification platform to the Onshore Receiving Facility. Electrical and integrated fiber optic cables will be buried beside the subsea pipeline to provide electrical power to the offshore terminal and provide communication between the jetty and ORF. The pipeline will have a leak detection system and will be continuously monitored for leaks. The total length of the subsea natural gas pipeline from the regasification platform to the landfall point near the Bahrain Steel property is approximately 6.8km.

Onshore Facilities

Onshore facilities include:

• An Onshore Reception Facility (ORF) will include the main terminal control room, administrative offices, a nitrogen production and storage plant, electrical substation, spare parts store and workshop, and a car park.

• A water line, power cable, and a transformer step-down will be provided by the Bahrain Electricity and Water Authority (EWA) to supply power and water to the ORF.

• A 30-meter-high vent tower at the ORF will safely vent natural gas from the ORF in the event of an emergency.

• An onshore buried pipeline to deliver natural gas to the BAPCO (Bahrain Petroleum Company) gas grid. The onshore route commences near the Bahrain Steel property and travels northwest to a point near the Bahrain Praxair facility and then west / southwest along a corridor wherein BAPCO is laying an existing pipeline to a tie-in at the Hidd Metering Station.




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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 January 2017 K. Al Awadi