New base special 09 june 2014

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NewBase 09 June 2014 Khaled Al Awadi

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Saudi's Sipchem, Sahara call off proposed merger By Reuters

Saudi International Petrochemical Co (Sipchem) and Sahara Petrochemical called off their

proposed merger on Sunday, citing an inadequate regulatory framework in the kingdom for the

collapse.

The tie-up, which would have

created a firm with a market

capitalisation of $5.7 billion at

current values, would have been

only the second ever example of a

merger between two listed Saudi

companies. Talks have been

ongoing since June last year

between the two firms, with an

announcement in December that a

share-swap agreement was likely

to be agreed in the first half of

2014.

However, in bourse filings on Sunday, the companies said that while they still saw a merger as in the best interest of shareholders, it couldn't be achieved under the current regulatory regime. "The companies reached a conclusion that it is difficult to implement this merger under the current regulatory framework using a structure acceptable to both companies where both companies will continue to exist whilst achieving operational integration," the statement said.

They added talks had been postponed but they may look at different structures in future to see if a tie-up was possible. The Capital Market Authority couldn't immediately be reached for comment. Saudi Arabia's existing regulation on mergers and acquisitions was brought in by the CMA in 2007. Since then, there has been only one tie-up between listed firms: the 2009 merger by food group Almarai and Hail Agriculture Development Company.

"There's limited precedent of such transactions between the two listed companies in Saudi Arabia... regulatory issues could have been a concern," said Ankit Gupta, assistant vice president of research at NBK Capital. Mergers across the Gulf are rare as consolidation is often scuppered by major shareholders who are unwilling to cede control of businesses except for very high price tags. However, both firms have The Zamil Holding Co Group, one of the kingdom's most prominent family businesses, as a significant shareholder and this was expected to help the process.




Petsec Energy increases its stake in Yemeni oil block Press Release , Petsec

Australian oil and gas exploration firm Petsec Energy has agreed to acquire Mitsui E&P Middle

East’s 8.5 per cent stake in Yemen’s onshore Block 7 . The block is located in Al Barqa Permit in

Yemen and covers an area of 5,000 sq km, 340 km east of Yemen’s capital Sana’a.

Petsec Energy’s interest has now increased to 29.75 per cent.

The block contains the Al Meashar oil discovery and contains an inventory of leads and prospects

defined by 2D and 3D seismic surveys, which hold significant oil potential.

Terry Fern, chairman of Petsec Energy, said that Block 7 has the potential to add significant oil

reserves to the company’s resource base and significant value to its shareholders. “We look

forward to working with the operator Oil Search to further appraise the Al Meashar oil discovery

and explore the remainder of the block,” Fern added.




Iraq: LUKOIL signs addendum to West Qurna-2 contract Source: LUKOIL

LUKOIL has signed an addendum to the contract for development and production of oil in the West Qurna-

2 field.

According to the addendum the scope of work for the West Qurna-2 project will include the Tuba-Fao

pipeline construction and will provide for changes in the procedure of the project investors’ costs recovery. Changes concerning the cost recovery will allow investors to recover their costs within a shorter period of time, in the same year when respective costs were incurred.

The Tuba-Fao Project provides for the construction of two pipelines, up to 120 km each, between the existing Tuba Tank Farm, and the Fao Tank Farm, the main export hub in Iraq located on the of the Persian Gulf coast. Pre-FEED (preinvestment study) has already been completed for the Tuba-Fao Project, which foresees a direct connection of the pipeline to single-point mooring facilities and upgrading the pumping systems of the Tuba Tank Farm.

'The Iraqi export system requires upgrading to accommodate growing production due to a number of licensing rounds conducted in recent years. The construction of the Tuba-Fao Pipeline will provide for a direct connection between the West Qurna-2 field and the country’s largest export terminal, creating opportunities for further production growth from the field', LUKOIL President Vagit Alekperov said.




India: Oilex provides update on fracture stimulation operations at the Cambay-77H well . Source: Oilex

Oilex has announced that Schlumberger equipment for the fracture stimulation programme has started to arrive at Site from its previous contract, following an inspection and maintenance period. Other preparatory activities for the Cambay-77H Well have also commenced to ensure readiness for the Stage 1 fracture stimulation next week. These activities include:

• Acquisition of a cement bond log to ascertain the condition of the cement surrounding the 4½ inch

production casing.

• Inspection, testing and installation of the 10,000psi fracture stimulation tree

• Filling frac water storage pit with ~21,000 bbls of water

• Coiled Tubing mobilisation, with initial operations to:

o Clean and gauge the inside of the 4½ inch production casing

o Calibrate the locations of the perforation clusters for each stage

o Cambay-77H 'toe prep' including Stage 1 perforations

Oilex has been working closely with Schlumberger to monitor the progress of their prior contract in SE

India and Oilex inspected the equipment at this location. A further inspection, testing and maintenance cycle




is planned at the Site, subsequent to transporting the equipment ~1500km by road. This seeks to minimise the risk of equipment downtime during operations but requires some additional time as equipment and material are positioned on the Site well pad. Cleaning and gauging the 4½ inch production casing is another risk mitigation measure arising from Cambay-76H lessons learned. Cleaning operations are imperative prior to any perforations to ensure a high quality operational result is achieved. Finally, Schlumberger worldwide centres of excellence have reviewed the planned coil tubing operations and fracture stimulation programme to ensure these maximize the chance of a trouble free result. As previously reported, Cambay-77H intersected the primary reservoir target (Y Zone) on prognosis. A comprehensive suite of logs has been acquired and preliminary interpretation confirms the wellbore encountered a significant sequence of hydrocarbon-bearing reservoir similar to Cambay-76H. The Cambay-77H logs also compare favourably to the Cambay-73 vertical well, which produced from the Y zone at ~1MMscfd (plus condensate and is located approx. 1 km from Cambay-77H. Cambay-77H is offset ~300m from the Cambay-76H horizontal well that underwent a successful multiple staged fracture stimulation programme along its 633m lateral section in 2012. However, this well was suspended before testing due to downhole mechanical problems. Cambay-77H has a modified completion with cemented 4 ½” production casing to minimise risk associated with post-frac milling operations. A shorter lateral section (350m) in Cambay-77H coupled with a conventional 'plug and perf' method is expected to facilitate the primary goal of the well – recording hydrocarbon flow information at surface during a production test. During the fracture stimulation operations, Oilex will inform the market using the following update milestones.

• Commencement of the Stage 1 fracture stimulation

• Completion of the fracture stimulation programme (consisting of 4 Stages)

• Completion of the plug mill-out operations

Any announcements in relation to flow back and production testing will be dictated by the Well response to the stimulation programme. Managing Director of Oilex, Ron Miller, said;

'The drilling rig moved off site within the forecast 3 week period and is currently stored immediately adjacent to the Cambay-77H well pad. The fracture stimulation mobilisation is taking slightly longer than forecast due to the duration of Schlumberger’s prior commitment, which was out of Oilex’s control. The close working relationship between Schlumberger and Oilex has enabled activities to now progress as planned. This should culminate with the production testing of Cambay-77H commencing in August 2014, after a flowback and well clean up period. We look forward to

the next few weeks of fracture stimulation and well testing activities.'




Indonesia: AziPac farms into Mitra Energy's Bone PSC, offshore Source: AziPac

AziPac, the Seacrest Group backed E&P company focussed on the maritime basins offshore Asia Pacific and the Bay

of Bengal,has announced that it has taken a 40% participating interest in the Bone PSC offshore Indonesia. Under

the terms of the agreement, AziPac, through its wholly owned subsidiary Azimuth Indonesia Limited, will acquire a

40% participating interest in the Bone PSC.

Upon completion of the farm-out, the participating interests in the PSC will be as follows: Mitra Energy

(Indonesia Bone) Ltd 60%; Azimuth Indonesia Limited 40%.

This farm-out remains subject to the approval of the Government of Indonesia. The Bone PSC is situated in Bone Bay, offshore South Sulawesi, and lies in water depths extending from the coast to over 2,000m. The block covers an area of 7,516 sq km, which is equivalent to approx. 327 Gulf of Mexico blocks or 31 UK Central North Sea blocks.

David Sturt, Director of AziPac, commented:

‘We are very pleased to have joined Mitra in this exciting block. The Bone PSC area benefits both from a very prospective petroleum system, as well as an ideal geographical position within the regional markets. We look forward to progressing the exploration and development of this high potential asset.’




Italy: Sound Oil announces Rapagnano gas field reserve upgrade Source: Sound Oil

Sound Oil, the European / Mediterranean focused upstream oil and gas company, has confirmed an increase in its internal proven reserve estimates at the onshore Rapagnano gas field in Italy. Since achieving first gas in May 2013, the Rapagnano gas field has produced over 4 MMscm (0.14 Bscf) without a lost time incident. This is significantly ahead of the Company's original production estimates.

At the end of May 2014, the Company completed a planned maintenance shutdown which provided the opportunity to measure the bottom hole pressure in the Rapagnano production well and to use the data to revise the Company's estimates of remaining reserves and field life. After a 48 hour build-up period the bottom hole pressure survey has confirmed that gas expansion drive is active in the reservoir with no observed water influx.

Based on this data the Company has upgraded its internal estimate of proven (1P) reserves at Rapagnano to 30 MMscm, a 31% increase on the year-end 2013 estimate of 22.9MMscm (0.81 Bscf). The Company's proven and probable (2P) reserve estimate for Rapagnano remain unchanged at 36.2MMscm (1.28 Bscf), with production expected to continue on an extended plateau rate for at least another 12 years.

Chief Executive Officer James Parsons commented:

'Our strategy of monetizing our smaller production assets has been borne out by these very pleasing results at Rapagnano. Our next asset to come on stream will be the Casa Tiberi field with production start-up expected shortly.'




Norway: Statoil to boost recovery from Troll field Source: Statoil

Statoil reports that on 4 June two new compressors were lifted aboard the Troll A platform in the North Sea. Once the compressors are up and running next year, they will boost recovery from Troll by more than 83 billion standard cubic metres of gas. As gas is produced on the giant Troll field, pressure in the reservoir drops. Pressure on the platform is lowered to help the gas move up and compressors are used to keep it moving. Troll already has two compressors, which will now be joined by compressor numbers three and four. These two compressors will boost recovery from the giant field by 83 billion standard cubic metres of gas - 522 million barrels of oil equivalent. That’s more than Aasta Hansteen and Valemon put together.

The compressor module was built at Aibel's yard in Thailand, and following a short stop in Haugesund, it is now in place on Troll A. 'The new module was lifted into place in a safe and sound manner. This has been planned for a long time, and it is therefore positive that we have reached this milestone, which is important for Troll A's gas deliveries over the next 50 years. Installing new modules weighing a total of more than 6,000 tonnes on an existing platform in operation is a huge task,' says Knut Solemslie, production manager on Troll A.

The project will ensure a daily export capacity of 120 million standard cubic metres of gas and annual production of 30 billion standard cubic metres.

'This is equivalent to the consumption of more than 10 million European households. The project is therefore an important contributor to the European gas market. It will also be possible to extract the gas more quickly, while also increasing the technical lifetime of Troll A,' says Tone Kristin Børslid, asset owner representative for the project.

Statoil currently has high pressure on low pressure. In all, the new compressors on Troll, Kvitebjørn, Åsgard, Kristin and Heidrun will contribute more than 1.2 billion barrels of additional oil equivalent. A giant field in itself, just from enhanced recovery.

The project consists of three different modules. Aibel, the main supplier for the Troll compressor project, built one module in Thailand and two in Haugesund. Last summer, the EIT module (electrical, instrument and telecom) from Haugesund was lifted on board Troll. The two next modules will be installed this summer. Yet another module will be lifted on board a few weeks later. The IUM module (integrated utility




module) was prefabricated in Poland and assembled in Haugesund, where the equipment was also installed. It weighs 1,800 tonnes.

The two new compressors on Troll A will be supplied with power from shore, more specifically from Kollsnes in Hordaland county, Norway. The two compressors can deliver an output of 50 megawatts each when in maximum operation mode. Statoil has been granted a licence for this and the power grid has been reinforced in order to deliver the power needed by the compressors. While the compressor module was en

route from Thailand, power cables were laid from Troll A to shore. Five cables, each totalling about 70 kilometres, were laid between Kollsnes and the platform. Four of these cables are direct current (DC) and were installed in

pairs.

'A transformer station has been constructed at Kollsnes which converts alternating current into direct current to reduce energy loss when the electricity is transported over long distances. On Troll A, the direct current is converted back into alternating current,' says marine installation manager Tom R. Guttormsen.

The final cable is an alternating current cable with fibre optics which will back up existing power deliveries to the platform, and will also provide the possibility of additional signal transmission between Kollsnes and Troll A. The first cable was connected to the Troll A platform on 21 April. The installation of cables toward shore began afterwards. The work is carried out under an ABB contract with the Lewek Connector vessel, which is operated by EMAS. Lewek Connector is one of the largest and most modern cable installation vessels in the world.




Norway: Lundin provides update on the Brynhild project, Source: Lundin Petroleum

Lundin Petroleum reports that the Brynhild project is progressing at a slower pace than anticipated due to commissioning issues related to the FPSO operated by Shell on the Pierce Field in the UK sector. The upstream portion of the Brynhild project operated by Lundin Petroleum is progressing satisfactorily but the production start-up is now expected late in the third quarter of 2014.

The Brynhild

field offshore Norway is a subsea tie-back

to the Pierce field, operated by Shell (Enterprise Oil Ltd), in the UK sector. The production facility for the Pierce and Brynhild production is the Haewene Brim FPSO owned and operated by Bluewater owned Pierce Production

Company Limited. A comprehensive modification programme has been carried out on the Haewene Brim FPSO by owner Bluewater on behalf of the Pierce operator Shell in order to prepare for introduction of hydrocarbons from the Brynhild field commingled with the existing Pierce field. The completed scope for the modifications include upgrading of the topside heaters, significant upgrades of metering systems, installation of upgraded subsea control system and replacement of the risers. Whilst the upgrades of the topside and subsea equipment as well as the risers’ installations have been completed, ongoing commissioning activities for start-up have taken longer than anticipated to be completed prior to the reintroduction of hydrocarbons into the FPSO. As a result of the revised Brynhild first oil date, Lundin Petroleum’s net production for 2014 is now expected to be in the range 25,000 – 30,000 barrels of oil equivalent per day (boepd). Ashley Heppenstall, President and CEO of Lundin Petroleum, commented: 'We are disappointed and frustrated that the Haewene Brim FPSO is still not ready to accept Brynhild production. Nevertheless we remain confident regarding the productivity of the Brynhild reservoir and the project delays have had no impact on Brynhild reserves. The delay in first production has clearly impacted our 2014 production guidance but we still retain our production guidance for 2015 of approximately 50,000 boepd'. Lundin Norway, a wholly owned subsidiary of Lundin Petroleum, is the operator of PL148 with a 90 percent interest. The partner is Talisman Energy Norge with a 10 percent interest.




Big risks seen in Putin’s idea to beef up Gazprom Reuters + Oman Observer

PRESIDENT Vladimir Putin’s idea of a massive boost to Gazprom’s share capital has taken bankers and the energy industry by surprise, with some fearing it could further strain Russia’s sanctions-hit economy and undermine the rouble. Putin floated the unexpected suggestion on Wednesday, hinting that a recapitalisation of the state gas giant could be funded from Russia’s gold and foreign currency reserves. Since then, sources have suggested the money could come from a ‘rainy day’ fund meant to cover the state pension deficit.

On Friday he elaborated on the idea, saying the state could buy into a possible Gazprom share issue with the reserves, but adding that it was just one of several options. The Kremlin has declined to give details of the plan, and analysts are questioning not only how it would be implemented, but whether Gazprom actually needs the extra funds at all.

“The Gazprom story is rouble-negative. The use of forex reserves to recapitalise Gazprom will decrease the safety cushion held by the central bank,” said Tatiana Orlova, strategist at RBS in London. Russia’s gold and forex reserves, the world’s fourth largest, have shrunk by $42 billion since last year to $466.9 billion, mostly due to central bank intervention to curb the rouble’s fall since the crisis over Ukraine erupted.

“Reserves are needed to support the rouble. We should not forget about 2008 when oil prices more than halved… I think this is a very tricky path,” said Sergei Zhavoronkov of the Moscow-




based Gaidar Institute for Economic Policy. During the 2008 global financial crisis, Russia haemorrhaged about $200 billion, or a third of its reserves, to prop up the currency.

Following a landmark $400 billion agreement last month to sell natural gas to China, Russian officials estimate Gazprom now needs some $55 billion to build up pipelines and bring two giant fields — Kovykta and Chayanda — on stream. It was against that background that Putin told an energy industry conference that a recapitalisation could help Gazprom pay for the required infrastructure. “It came as a total surprise to us,” said an aide to one of the participants at the meeting.

Hit by Ukraine-related sanctions that have triggered nearly $70 billion in capital outflows so far this year, the Russian economy is expected to grow only by around 0.5 per cent in 2014, compared to an initial government forecast of 2.5 per cent. The rouble is 5 per cent down since the start of the year against the dollar. Even after rebounding from a steep fall when Russia annexed Ukraine’s Crimean peninsula in March, it is still underperforming other currencies in the BRICS group of developing nations.

The leaders of Russia and Ukraine met on Friday for the first time since Moscow annexed Crimea, even as fighting continued in eastern Ukraine between government forces and pro-Russian separatists. “This crisis is much worse than in 2008. At that time, everyone was in the same

boat. Now it’s only Russia, and everyone wants to sink it in addition to dealing with their own problems,” said a senior banker from a Russian state-owned bank. “It will be a very hard year.” Ukraine-related volatility has brought a spike in borrowing costs for Russian companies, leaving the domestic market or the government to serve all the needs of Russia’s $2 trillion economy unless Moscow can raise funds in Asia. Analysts, business and government sources asked by Reuters about the Gazprom idea said a recapitalisation could be carried out via loans from state entities or by government purchases of new shares.

Putin mentioned a possible share issue on Friday. “If the construction costs roughly $55 billion, maybe more, this is a fail-safe option for investing money,” he told journalists when asked about the possible recapitalisation during a visit to France for D-Day commemorations. But he added: “This is just one of the possible options. There are others.” Under current law, the central bank cannot invest its reserves in equity. Several sources said the cash could come from one of Russia’s ‘rainy day funds’ that have amassed windfall oil revenue.

“There is an understanding that either the Reserve Fund or the National Wealth Fund” will be used, said a government source. Both are managed by the Finance Ministry and their foreign currency holdings are part of the central bank’s reserves.




Russia: Polarcus mobilizes for Fedynsky in the Russian Arctic Source: Polarcus

Polarcus, in collaboration with Russia's Dalmorneftegeophysica ('DMNG'), has mobilized for the 3,000 sq km high-density broadband Fedynsky 3D survey in the Russian Barents Sea. Polarcus Nadia departed Kirkenes, Norway, on 07 June for the project area.

This project forms part of the Company's existing backlog that has been previously announced through the Oslo Stock Exchange.




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

Your partner in Energy Services

Khaled Malallah Al Awadi, MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

Energy Services & Consultants Mobile : +97150-4822502

[email protected]

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Khaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 years of experience in theof experience in theof experience in theof experience in the Oil & Gas sector. Currently working as Oil & Gas sector. Currently working as Oil & Gas sector. Currently working as Oil & Gas sector. Currently working as

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Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed as compressor stations . Through the years , he has developed as compressor stations . Through the years , he has developed as compressor stations . Through the years , he has developed

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routes. Many years were spent drafting, & compiling gas routes. Many years were spent drafting, & compiling gas routes. Many years were spent drafting, & compiling gas routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for transportation , operation & maintenance agreements along with many MOUs for transportation , operation & maintenance agreements along with many MOUs for 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 andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted Energy program broadcasted Energy program broadcasted Energy program broadcasted

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NewBase 09 June 2014 K. Al Awadi

Economy & Finance

New base special 09 june 2014