New base special 10 november 2014

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NewBase 10 November 2014 - Issue No. 476 Khaled Al Awadi

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

EmiratesLNG import terminal tender due by early 2015 Reuters + NewBase

The result of a tender to build a liquefied natural gas (LNG) import facility at the busy oil port of Fujairah will be announced in late 2014 or early 2015, the UAE energy minister said yesterday.

In an interview with state news agency WAM, Suhail bin Mohammed al-Mazroui said the project would have a capacity of 9mn tonnes a year. EmiratesLNG, a joint venture between state-controlled International Petroleum Investment Co (IPIC) and Mubadala Petroleum, won approval for the venture in November 2013.

The company has said the new terminal will be able to accommodate the largest LNG tankers, with most of the gas destined for the UAE’S power sector. Front-end engineering design (FEED) has been done by France’s Technip.

Dubai already imports LNG through ports in the Gulf, and the UAE gets Qatari gas by pipeline, which helps feed power and desalination plants at Fujairah. Building an LNG import terminal outside the Strait of Hormuz reduces the risk that the UAE’s supplies could be affected by problems in the vital oil and gas shipping lane, which neighbouring Iran threatened to block two years ago.




Safe startup for $1bn JBOG project at Ras Laffan Saves

100MMSCFD of gas.( source Qatar Pet )

The $1bn Jetty Boil-off Gas Recovery (JBOG) Project has had a safe startup at Ras Laffan, Qatargas said on Sunday. The key pro-environment project has been designed to eliminate flaring at the LNG terminals.

The main shareholders of the JBOG Project are Qatar Petroleum, ExxonMobil, Total, ConocoPhillips and Shell, while the facilities are operated by Qatargas and RasGas, the two largest LNG producers in the world.

The JBOG facilities started up successfully during the first week of October, and have been performing safely and reliably. Around 100mn standard cubic feet per day of natural gas, which used to be burnt and wasted during LNG ship loading is now being recovered and utilised in the LNG production plants as fuel. Over a period of 30 years, the JBOG Project will save nearly 1tn cu ft of gas for Qatar.

The operation of these facilities reduces the greenhouse gas emissions to the atmosphere, and helps in maintaining a clean environment for Qatari residents. Qatar Petroleum managing director Saad Sherida al-Kaabi, also Qatargas chairman, highlighted the significance of the project as not only one of the largest environmental investments but also the largest LNG boil-off recovery project in the world.

He said, “The development of the Jetty Boil-off Gas Recovery Project was initiated by Qatar Petroleum nearly a decade ago. JBOG is set to become a landmark project for Qatar, underlining the country’s commitment to balance industrial development with care for the environment.

This huge investment by Qatar Petroleum and its partners will reduce the carbon footprint of the 77mn tonnes per year of LNG production facilities to the minimum practically possible contributing to the environmental development pillar of the Qatar National Vision 2030.”

Qatargas chief executive officer Sheikh Khalid bin Khalifa al-Thani expressed delight at the safe startup of the JBOG facilities, and said, “The completion and operation of the JBOG Project is a great achievement by the JBOG Project Management Team, its contractors and Qatargas Operating Company. The excellent result achieved by everyone associated with this environmental project is a matter of great pride for Qatar and its people.”




The engineering, procurement and construction management (EPCM) contract for the project was awarded to the US-based Fluor in February 2010. The detailed design and procurement services were carried out at Fluor’s offices in Sugar Land, Texas, and New Delhi, India. The main equipment on the project was supplied by General Electric, Emerson and ABB.

The construction of the project started in Ras Laffan City in mid-2011, with the bulk of the site work executed by some of the leading construction contractors in Qatar, namely Ammico, STFA, Qcon, Qatar Kentz and Medgulf. The work site saw a peak of around 3,000 people working hard to finish the project.

Qatargas chief operating officer (engineering and ventures) Sheikh Khalid bin Abdulla al-Thani thanked the people who made this project a reality, and was especially happy about the safety record of the project.

Sheikh Khalid said, “Qatargas prides itself on its high safety standards. It is a matter of immense satisfaction for us that the JBOG Project Team completed the project with zero lost time incident (LTI).

Considering that the project spent three years in construction and spent over 22mn man-hours, the zero LTI is a fantastic record. I would also like to congratulate the JBOG Project Team, Qatargas Operations Development Department and all the relevant contractors for producing a facility, which has started up safely and smoothly”.

The project design is based on the collection of the LNG boil-off gas from the LNG carriers and the transfer of this gas to a Central Compression Area via large diameter stainless steel pipelines. At the Central Compression Area, the gas is compressed and sent to the LNG trains for use as fuel gas or for conversion into LNG.

A significant part of the JBOG Project was devoted to upgrading nearly 85 LNG carrier ships to make them ready for recovering the boil-off gas. Ships ranging from Qmax, Qflex, conventional Membrane and Moss type were covered successfully. This complicated work is largely complete, resulting in the achievement of the gas recovery target of 90%.




Libya's El Feel oil field shut down, third site within days By Ayman al-Warfalli and Ulf Laessing

Nov 9 (Reuters) - An oil field in southwest Libya has closed down, officials said on Sunday, becoming the third oil facility in the chaotic country to shut within a week. The El Feel field, operated by Libya's National Oil Corporation (NOC) and Italy's ENI, shut down due to a power outage after armed men forced the closure of the major El Sharara field in south Libya last Wednesday, an NOC spokesman said.

OPEC member Libya is in turmoil as two governments and parliaments vie for legitimacy three years after the ouster of strongman Muammar Gaddafi. The internationally-recognised government works from Tobruk in the east since an armed group seized the capital Tripoli in August.

Libya hopes both closed fields, which share one power supplier, will resume work by Monday, said an NOC spokesman, which would gradually bring back up to 300,000 barrels a day.

"We expect El Feel and El Sharara to return to work on Sunday or Monday," Harari said.

The El Sharara field, co-run by NOC and Spain's Repsol , closed when gunmen stormed it, stealing vehicles and equipment. It has a capacity of 340,000 bpd but recently produced less as wells were lost due to two previous closures by protesters, according to previous Libyan comments.

The El Feel used to pump 80,000 bpd in the past but NOC has not provided any update recently.




Libyan state security guards have also blocked all exports from the eastern Hariga port, located in Tobruk near the Egyptian border, an oil official said on Saturday.

The protesters at Hariga are part of a state security oil force that has gone on strike over pay several times this year.

BOMB EXPLOSION

Libya is grappling with a sharply deteriorating security as the country is effectively controlled by former rebels who helped topple Gaddafi but now use their guns to fight for power.

At least one bomb exploded on Sunday in the eastern town of Shahat, where U.N. special envoy Bernadino Leon was meeting the internationally recognised Prime Minster Abdullah al-Thinni, said security officials who reported up to five people were slightly injured.

"According to our colleagues, no one at the meeting was hurt," a U.N. spokesman said, contradicting that report. "The U.N. delegation has returned safely to Tunis."

The United Nations has been trying to mediate between the conflict parties in Tripoli and the east but no progress has been reported publicly.

In the main eastern city of Benghazi, 300 people have been killed in three weeks of clashes. The recent turmoil has also lowered Libya's oil exports to below 500,000 barrels per day, based on previous published figures.

In Tripoli, in the west, gunmen stormed a branch of Sahara commercial bank, robbing 1.7 million dinars ($1.3 million), a central bank spokesman said.




UK: Cluff Natural Resources awarded 11 Promote Licences in UK 28th Offshore Licensing Round. (Source: Cluff Natural Resources + NewBase)

Cluff Natural Resources has provisionally been awarded promote licences foreleven blocks by

the Department of Energy and Climate Change (DECC) on the UK Continental Shelf in

the UK's 28th Offshore Licensing Round.

The specific licence blocks provisionally awarded to CNR are as follows:

41/5, 41/10, 42/1; 42/14b; 43/3, 43/4, 43/5; 43/7, 43/8, 43/9; 43/11 All of the blocks are located in the Southern North Sea in close proximity to the Breagh Gas Field. The Company believes this is an under-explored, emerging area which is potentially responsive to the latest seismic and drilling technology, where fields can be developed quickly and infrastructure is evolving rapidly.

Algy Cluff, Chairman and Chief Executive of CNR, commented:

'I am delighted to report that DECC has provisionally awarded CNR these new licences within the Southern North Sea area of the UK. Whilst CNR already has a portfolio of eight offshore Underground Coal Gasification ('UCG') Licences totalling 61,274 hectares in the UK, securing eleven North Sea licences is a major achievement for our Company and further establishes our position as a natural resources focussed investing company and reflects our commitment to the UK and to the North Sea. This Company has a particular interest in the conventional gas sector as well as a determination to safely and cleanly convert offshore coal to gas.'




UK:Rathlin Energy announces plans for further drilling onshore Yorkshire Source: Hull Daily Mail

Rathlin Energy has announced plans for another gas exploration site in the East Riding, Yorkshire. The company insists it still has no plans to carry out the controversial process of fracking at its West Newton andCrawberry Hill sites, despite heavy criticism from anti-fracking

campaigners. Both sites have attracted protest camps.

The company has suspended work at West Newton and is planning to start drilling at a new location in Aldbrough.

Rathlin chairman David Montagu-Smith said: 'We have just completed testing operations at the first site at West Newton and we have suspended the work, however, we may in the future go back to look at it. We were testing the conventional sand and limestone formations that are our main targets. We were not working at any level deeper than that and, specifically, we were not carrying out any form of fracking activity.'

'We are now looking at another well location, sited about a mile from the first West Newton one, and that will only drill down to the bottom of the conventional sands. We will not be drilling any deeper than that.'

The company insists it has no plans to carry out any fracking, which involves drilling deep underground and releasing a mix of water, sand and chemicals to crack rocks and release shale gas stored inside.

Project manager Tom Selkirk said: 'We are looking for reserves of oil and gas that we can produce to either wind up in the National Grid and wind up in people's homes, or oil products that will wind up migrating their way to the petrol tank of your car or in the diesel tank of your truck.'

Rathlin hopes to submit a planning application for the second West Newton well at the beginning of next year.

Mr Montagu-Smith said: 'We have to stress that we are at the exploration stage of the operation. At the exploration stage we are here, potentially, only for a short length of time, but we can say that in the past three years Rathlin has spent more than £7.5m investing in the Yorkshire economy by employing local people, by buying local services , by retaining local construction engineers – a very significant sum of money.'




Oil Price Drop Special Coverage

Oil price slide threatens energy subsidies in Arabian Gulf states The National + NewBase

Low oil prices may lead Arabian Gulf states to issue additional debt and cut energy subsidies, according to the ratings agency Standard and Poor’s. “If there’s a prolonged oil price correction, corporate and government-related entities may have to change the way they fund infrastructure, development and investment] projects,” said Tommy Trask, director of corporate ratings in the Middle East at Standard and Poor’s.

A temporary reduction in oil prices is likely to force Gulf states to tap into their reserves, but “a prolonged period of lower government revenues … may push up sovereign and government-related entity capital market issuance”, the agency’s report states.

The benchmark oil price Brent crude has fallen by 29 per cent in the last nine months, from US$107.76 per barrel, to $83.39 per barrel on Friday. Capital Economics predicts that the oil price will hit $85 next year before falling to $80 in 2016.

The UAE’s break-even oil price is $81.3 per barrel, according to Standard and Poor’s. However, Abu Dhabi’s break-even oil price is $45 per barrel, meaning that the capital’s fiscal plans should be unaffected by the recent fall in oil prices.

“The UAE has a comparatively diversified economy by Gulf standards, making it less vulnerable to lower oil prices,” states a recent report from Capital Economics. “We expect the non-oil economy to grow at a solid pace supported by stronger global demand and rising credit growth.”




The federal fiscal surplus is projected to fall to 9.5 per cent of GDP this year, from 10.8 per cent last year, when the oil price was $96.90 per barrel on average. Low oil prices have led to new calls from GCC ministers to reduce subsidies for domestic energy consumption.

Energy and water tariffs in Abu Dhabi are set to rise, as the government reduces spending on consumer subsidies. Tariff support is set to cost the emirate Dh17.5 billion this year, according to the Abu Dhabi Executive Council.

Producers in energy-intensive industries, such as aluminium, could lose out if energy subsidies are reduced, Mr Trask said. “There are strategic reasons why the UAE Government provides subsidies to energy-intensive industries,” he said. “But many of these producers have high margins, so there is room for the Government to reduce subsidies, even while these companies continue to be profitable.”

Lower government revenues may lead to increased corporate and state fixed income issuance – which would be good news for the country’s capital markets. In April, the Securities and Commodities Authority relaxed sukuk issuance regulations in a bid to encourage more issuers to list on the UAE’s bourses.

Global sukuk issuance hit $21 billion in 2013, while Nasdaq Dubai has attracted about $6bn of new listings this year. Private sector fixed-income issuance in the UAE is equal to about 0.7 per cent of GDP as of this year – considerably lower than in the UK and US, where private sector bond issuance is equivalent to 29 per cent and 44.5 per cent of GDP respectively.

This means there is room for the UAE to grow its fixed-income capital markets, S&P said, which could improve prospects for corporate financing, and the wider economy. “Developing fixed-income markets should lead to more resilient and stable financial sectors, and more diversified funding structures,” the report states. This would encourage “economic and private sector employment growth”.

LNG prices may recover on rising winter heating demand Gulf Times+ NewBase

Liquefied natural gas prices may recover this winter as heating demand gains in many countries including Japan boost demand for LNG spot purchases, Bank of America Merrill Lynch (BOAML) has said in a report.

“Japanese nukes will mostly be offline this heating season and LNG burn may exceed last year’s when the weather was mild. As heating demand rises, so will spot purchases in Asia,” Bank of America Merrill Lynch said in its weekly global energy report.

“The risk to spot LNG prices near term is also skewed to the upside if oil prices find support on an Opec cut and a slowdown in US shale oil output, as we expect,” BOAML said.

In a move entirely out of sync with the seasonal norm where demand and prices strengthen into winter, Asian LNG spot prices sold off in October to $13/MMBtu (million British thermal unit), opening an astonishing $5 gap to where prices traded last year. Clearly, the collapse in oil prices is reverberating across the energy complex, and is now filtering through to LNG prices.

“Yet, we still expect LNG prices to recover this winter,” BOAML said.




Nonetheless, any seasonal price recovery may be muted with the PNG project producing at full capacity, demand looking weak in Asia Pacific, especially China, and major LNG consumers well stocked.

PNG LNG is an integrated development that is commercialising the gas resources of Papua New Guinea. Gas will be exported as LNG to customers around the world. The project will produce 6.9mn tonnes of LNG a year.

“We doubt LNG prices can trade above $18 /MMBtu this winter as the balance is significantly weaker than last year, barring an unusually cold winter. After that, the combination of Japanese and Korean nuke restarts, which coincide with the start-up of new LNG supplies in Australia, will result in considerably weaker balances from Q2, 2015 onwards, earlier than we previously expected.

“In our view, this may lead to another big seasonal summer price plunge next summer. The lumpiness of new LNG supply next year implies a more volatile environment,” BOAML said.

Looking further ahead, BOAML sees large ramp-ups of Australian projects currently under construction until 2017. After that, the Australian supply growth tails off to make room for lower cost US projects.

“We still see 68mn tonnes per year (9.1 billion cubic feet a day) of US LNG exports by 2020, starting with the Sabine Pass terminal starting up in late 2015. Strong US supply growth will likely put downward pressure on LNG prices over the next few years, though long term we still see price support for Asian LNG at the Australian total cost breakeven of $13-14/MMBtu,” BOAML said.

OPEC says oil price to rebound by Q2 next year By Reuters

Evolution of Asian LNG spot prices (Japanese benchmark) 2012 – 2014 Reuters




Fundamental factors do not justify the sharp drop in oil prices, OPEC Secretary-General Abdullah al-Badri has said, forecasting a price rebound by the second half of 2015.

“We are concerned but we are not panicking," he told reporters at a news conference on the group's 2014 World Oil Outlook.

"We don't see that much of change in fundamentals. The decline is 28 percent, it's a little bit too much," he said, adding the group was evaluating the situation to gauge how events might develop.

OPEC meets on Nov 27 and Badri said OPEC had not invited any other producers to attend. Brent crude futures have fallen 27 percent since the start of July and 12 percent in the last month.

"I think the price will rebound by the second half of next year. But I don't know by how much. This situation of low prices cannot continue," he said, adding speculation was playing a role in the price drop.

Badri had told reporters in September that he thought oil prices would come back up by the end of this year. He said it was up to OPEC member countries to decide how to respond to the oil price drop. The next ministerial meeting is on Nov. 27.

OPEC's oil market share is set to be 5 percent smaller by 2018 as supply of U.S. shale oil grows faster than previously thought, giving the 12-member exporter group little comfort from rising world demand, its market outlook found.

Asked about the impact if oil prices stay low for a long time, Badri pointed to the heavy investments OPEC members were making in their energy sectors. "If we stop this I am sure the supply will decline very soon and the price will shoot up and volatility will be causing the oil industry...a lot of problems," he said.




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, Energy Consultant

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

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

Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a

total of 24 yearstotal of 24 yearstotal of 24 yearstotal of 24 years of experience in theof experience in theof experience in theof experience in the Oil & Oil & Oil & Oil &

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for Emirates General Petroleum Corp. “Emarat“ with for Emirates General Petroleum Corp. “Emarat“ with for Emirates General Petroleum Corp. “Emarat“ with for Emirates General Petroleum Corp. “Emarat“ with

external voluntary Energy consultation for the GCC area via external voluntary Energy consultation for the GCC area via external voluntary Energy consultation for the GCC area via external voluntary Energy consultation for the GCC area via

Hawk Energy Service as a UAE operations base , Most of Hawk Energy Service as a UAE operations base , Most of Hawk Energy Service as a UAE operations base , Most of Hawk Energy Service as a UAE operations base , Most of

the experience were spent as the Gas Operations Manager the experience were spent as the Gas Operations Manager the experience were spent as the Gas Operations Manager the experience were spent as the Gas Operations Manager

in Emaratin Emaratin Emaratin Emarat , responsible for Emarat Gas Pipeline Network , responsible for Emarat Gas Pipeline Network , responsible for Emarat Gas Pipeline Network , responsible for Emarat Gas Pipeline Network

Facility & gas compressor stations . Through the years , he Facility & gas compressor stations . Through the years , he Facility & gas compressor stations . Through the years , he Facility & gas compressor stations . Through the years , he

has developed great experiences in the designing & has developed great experiences in the designing & has developed great experiences in the designing & has developed great experiences in the designing &

constructingconstructingconstructingconstructing of gas pipelines, gas metering & regulating of gas pipelines, gas metering & regulating of gas pipelines, gas metering & regulating of gas pipelines, gas metering & regulating

stations and in the engineering of supstations and in the engineering of supstations and in the engineering of supstations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & ply routes. Many years were spent drafting, & compiling gas transportation , operation & ply routes. Many years were spent drafting, & compiling gas transportation , operation & ply 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 & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil &

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

NewBase 10 November 2014 K. Al Awadi

Economy & Finance

New base special 10 november 2014