MEOG - Middle East Oil & Gas Monitor

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MEOG - Middle East Oil & Gas Monitor

  1. 1. 05 February 2013 MEOG  Issue 411  News Analysis Week 05 MIDDLE EAST  Intelligence Published by OIL & GAS MONITOR  NewsBaseCOMMENTARY 2 NEWS THIS WEEK… oil officials await Exxon’s big Iraqi decision Jordan’s natural gas woes return with 2 ExxonMobil in Iraq unrest in Egypt 4MARKET COMMENTARY 5 Iraq is waiting for ExxonMobil to decide whether it will quit the country, and the West Qurna 1 project, North African risks 5 or relinquish its Kurdistan blocks.PIPELINES & TRANSPORT 7 Israel contemplates gas pipeline option to  has been suggested that Baghdad may be It Turkey 7 willing to ease its terms in order to pry the US Bidders line up for new Badra gas pipeline super-major away from the Kurdish region. (Page 2) in Iraq 8 Jordan’s gas woesINVESTMENT 9 Lebanon opens pre-qualification for offshore gas bidding round 9 A fresh wave of unrest in Egypt has further put the Cyprus to sign offshore PSCs with France’s Total 10 boot into Jordan, undermining gas supplies to thePERFORMANCE 10 energy-dependent kingdom. ‘December exports up’ Iran 10  the same time, Jordan has also faced At calls for foreign help after gas rig Iran difficulties in receiving imports of Iraqi oil because sinks in Gulf 11 of border problems. (Page 4) Saudi Aramco gears up to drill with new offshore jack-up 11PROJECTS & COMPANIES 12 Lebanon gas round Sterling Energy looks for the Kurdistan exit door 12 Lebanon is now pre-qualifying companies for its Dhabi moves on next phase of North Abu first offshore gas auction later this year. East Bab oil project 12NEWS IN BRIEF 13  Lebanese government hopes to mirror the The recent success of Israel and Cyprus by unearthingSTATISTICS 21 new offshore gas deposits. (Page 9)For analysis and commentary on these and other stories, plus the latest oil and gas developments, see inside… Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  2. 2. MEOG 05 February 2013, Week 05 page 2 COMMENTARYIraqi oil officials awaitExxon’s big decisionIraqs federal government in Baghdad is pushing US super-major ExxonMobil for adecision on whether it plans to quit the country for good, or shelve its involvement in thenorthern Kurdistan regionBy Kevin Godier super-major ExxonMobil being pressed to decide between Iraq and Kurdistan US American company is ready to relinquish control of its West Qurna 1 project The Baghdad may be willing to offer greater incentives to persuade it to stay in IraqSenior executives at ExxonMobil are forfeited its assets in the autonomous venture into KRG territory, ExxonMobilpoised to make a decision that could Kurdish region. has quite palpably cut a swathe forprove monumentally divisive for Iraq: ExxonMobil had given a series of others to follow, including France’sthe company must choose between a indications that it was set on pulling out Total SA, Russia’s Gazprom Neft andservices contract at the US$50 billion of West Qurna 1, in favour of the the US’ Chevron Corporation, whichWest Qurna 1 oilfield in the south, and a contracts signed with the KRG in 2011, recently added a third block at Qarasix-block agreement awarded by the but has declined to comment on the Dagh to its Kurdish portfolio and isKurdistan regional government (KRG). impending decision. considering further acquisitions. ExxonMobil’s choice of options sits at Baghdad undoubtedly expects These metaphorical flag plantingsthe very centre of the growing ExxonMobil to take its side, not least have afforded the government in Erbil adisagreement between Baghdad and major PR victory in its turf war with theKurdistan that threatens to fracture central government over how Iraq’s oilIraq’s uneasy federal union a year after ExxonMobil had given and gas assets will be exploited.US troops left the country. indications it was set on The Kurds have run their own A decision one way or the other is due administration and armed forces sinceimminently, Iraqi Oil Minister Abdul pulling out of West Qurna 1991, and have resolved to push aheadKareem Luaibi said on January 27. 1, in favour of the with development of their oil resources Given that Baghdad continues to insist independently of the Baghdad-basedthat it is the sole repository of authority contracts signed with the central government.to grant oil contacts in and control crude KRG The KRG contends that the right toexports from Iraq, ExxonMobil’s final dictate its own oil policy is enshrined inchoice seems set to bring to a head the because the output from West Qurna 1 the countrys federal constitution, but thegrowing friction between the central alone exceeds total current Kurdish central Iraqi government rejectsgovernment and the northern enclave, production capacity. contracts signed by the region as illegalwhich has upped the ante with recent On the other hand, KRG’s Natural and has blacklisted some firms operatingcomments that it hopes to sign contracts Resources Minister Ashti Hawrami has there.with up to three significant oil recently stated that ExxonMobil’scompanies within the next month. contentious deal to operate in the Export options autonomous region is on track, after the The real challenge now being addressedNorth and south US major restated its commitment to by the KRG is to find new ways to sellAccording to a Reuters report on what is seen widely as one of the final Kurdish oil, after it stopped contributingJanuary 30, Iraqi Prime Minister Nuri frontiers for onshore oil exploration. crude exports to the Baghdad-controlledal-Maliki hastily convened a meeting Whichever way the situation swings, pipeline from Kirkuk in the north to thewith ExxonMobil’s chief executive Rex the loss of face for the losing side will Turkish port of Ceyhan in DecemberTillerson in the second half of January, be considerable, at the very least. 2012, in retaliation for huge oil paymentand offered Tillerson substantial delays. incentives to stay in Iraq’s southern Turf waroilfields as long as the company As the first international major to Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  3. 3. MEOG 05 February 2013, Week 05 page 3 COMMENTARY Fed up with waiting, Erbil has optedfor the alternative of condensate exportsby truck to Turkey. These began last summer, withoutBaghdad’s consent, and hit a high inJanuary 2013 as a result of exports ofcrude oil from Kurdistan’s Taq Taqoilfield, which started at the beginningof this year. Baghdad has repeatedly stated that itconsiders independent exports from theKRG as smuggling. Nevertheless, international oilcompanies have been increasinglyprepared to go against centralgovernment policy in return forKurdistan’s better contract terms andmore secure working environment, asopposed to the bureaucracy andinfrastructure bottlenecks that hamperoil projects in central and southern Iraq.Disputed territory Whether or not ExxonMobil backs Kurdish oil blocks and an alternativeAdding to the political complexity, three away from Kurdistan, oil market pipeline that might export 1 million bpdof ExxonMobil’s blocks are located in observers now believe that the KRG has of crude or more.the so-called “disputed areas”, a set its sights upon a new and ‘game- Baghdad has already accused Ankarahydrocarbon-rich band of territory over changing’ paradigm of financial of complicity in “smuggling” Iraqi oil,which both Baghdad and the Kurds autonomy whereby it will be paid and late last year prevented Turkeysclaim jurisdiction and where Iraqi Arab directly and in full for its exports, as energy minister from attending an oiland Kurdish troops have reinforced opposed to the existing arrangement conference sponsored by ExxonMobil inpositions in a tense standoff since last whereby Baghdad receives the proceeds Kurdistan by denying his planeyear. and then passes on 17% of the revenues. permission to land. Intriguingly, ExxonMobil and Iraqi Given that Kurdish officials have long Of course, the logistics – not toKurdistan officials were recently complained what they end up getting is mention the political ramifications – ofreported to have visited one of the three in fact closer to 10%, the target of an building a pipeline to Turkey, mean thatblocks, the Qara Hansher block, and to independent revenue stream has become such a project will not become manifesthave discussed building a camp there, increasingly attractive to senior KRG anytime soon.according to comments from local politicians. But the intensifying struggle betweenofficials. Iraq’s Sunni, Shi’ite and Kurdish Furthermore, in another move likely Turkish options factions over how to share both powerto heighten tensions further with Although the precise details of any deal and the world’s fourth largest oilBaghdad, the KRG is reportedly have yet to be sculpted, the essence of reserves, which visibly intensified innegotiating with two or three major Erbil’s strategy would appear to be a 2012, is now at the stage where a newinternational companies to operate major collaboration with Turkey to direction seems likely to burst out fromoilfields and expects to announce the transfer Kurdish oil and gas to world the stalemate.outcome in about a month. markets, via the construction of an The extent to which ExxonMobil Hawrami told reporters on the energy corridor that would reduce influences this process remains to besidelines of a late January conference in Ankara’s dependence on Russia and Iran seen, but market observers will beLondon that “we are negotiating with for oil and gas. expecting major clues within the comingtwo to three other significant companies. Analysts envisage that, as a central days or weeks. They will hopefully be announced in a component of this scenario, a Turkishmonth or so”. entity could take a stake in several Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  4. 4. MEOG 05 February 2013, Week 05 page 4 COMMENTARYJordan’s natural gas woesreturn with unrest in EgyptCivil unrest in Egypt has created havoc with Jordans energy supplies, undermining analready frail domestic economyBy Charles Coe Disruptions to gas supplies from Egypt have brought more misery for Jordan Erratic energy supplies and a struggling economy make Jordan ripe for rebellion country is building new storage capacity and contemplating an LNG import project TheThe return of civil unrest to the streets of Furthermore, Cairo was having supplies would return to the 240 mmcfEgypt has led to further energy problems trouble paying the foreign companies in (6.79 MMcm) per day rate, the officialin Jordan, which has seen natural gas Egypt producing the gas. said, adding that he expected Amman toimports through the Arab Gas Pipeline demand compensation from the(AGP) decline to around 80 million Jordan protests Egyptians.cubic feet (2.3 MMcm) per day. Jordan (and Israel) was forced to turn to This new supply disruption followed importing petroleum products at Iraq issuesan agreement made just weeks earlier international prices in order to generate Jordan’s energy problems were furtherbetween the two countries in which electricity. complicated during January with theEgypt agreed to restore pre-revolution The country’s total energy bill for closure of the border with Iraq, whichshipments of natural gas to Jordan. 2012 is likely to amount to more than prevented some 10,000 bpd of crude oil Jordan once depended on Egyptian US$6 billion. from being trucked to Jordan’s refinerygas to generate 80% of its electricity. The cost to the government for energy at Zarqa. In 2012, that slipped to about 18%. subsidies for last year is put at around Despite any good intentions that Gas deliveries from Egypt once might exist between Iraq and Jordan,amounted to some 240 mmcf per day , political unrest in a neighbouring(6.79 MMcm). Jordan once depended on country – this time Iraq – again created That changed in February 2011 after Egyptian gas to generate problems for Amman.the Mubarak regime was overthrown In December, Amman and Baghdadand Egypt’s security system broke 80% of its electricity signed an agreement for the constructiondown. of a 1 million bpd crude pipeline US$1.7 billion. Criminal elements in the Sinai, running from Haditha in Iraq to Jordan’s The crisis has brought demonstratorswhether Islamic militants or Bedouin Red Sea port city of Aqaba, but when out onto the streets of Jordan’s cities,gangsters, began to attack the pipeline the project will get started remains a where despite the turmoil that otherinfrastructure in the peninsula without guess. Arab countries are enduring, peopleknowing which pipes led to Israel and The Minister of Planning and have so far maintained their restraint.which to the AGP and Jordan, Syria and International Co-operation, Jaafar The recent agreement with Cairo toLebanon. Hassan, told a recent gathering at the resume supplies suggested that Jordan The attacks continued throughout University of Jordan that 2012 had been would see some relief from high fuel2012 until Egypt’s pipeline shipments one of the most difficult years that costs this year, but that appears now notstopped altogether. Jordan had faced since the early 1990s, to be the case. The situation was complicated by the and warned that there would be no quick “There is a feeling that wheneverfact that revolutionary Egypt was fix for the country’s energy dilemma – anything goes wrong in Egypt, the firstexperiencing its own energy shortage, although efforts were under way.  thing that goes is Jordan’s gas supplies,”resulting in gas meant for export through the news agency al-Bawaba quoted athe AGP or the two LNG plants on the Jordanian government official as sayingMediterranean coast being redirected to last week.domestic use. Egypt had not indicated when gas Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  5. 5. MEOG 05 February 2013, Week 05 page 5 COMMENTARY He said that Arab and international terminal will be financed with money LNG delivery system at the Red Seadonors had come to realise the from a US$5 billion grant provided by port of Aqaba is also underseriousness of Jordan’s energy situation Gulf Co-operation Council (GCC) consideration.and had agreed to extend assistance to members Saudi Arabia, Kuwait, Qatar The money from the GCC is meant toAmman as it implemented a reform and the UAE. help Jordan and King Abdullah II copeprogramme. Each country is contributing US$1.25 with mounting problems while it is still billion. possible.Energy investments The Jordanian government will Jordan’s dire economic circumstancesHassan drew attention to plans to build a allocate US$150 million from the grant makes the country ripe for civil unrest,7 million barrel capacity crude storage to develop renewable energy sources, but its close proximity to the GCC andfacility in Aqaba – part of the pipeline particularly solar, and it is examining its border with Saudi Arabia makes theproject with Iraq, which also includes a the possibility of exploring for and prospect of an uprising in Jordan evenspur line and 3 million barrel storage developing unconventional sources of more unattractive to Riyadh than all thefacility at Zarqa. fuel. revolutions in other Arab countries.  The Aqaba tank farm and a loading The prospect of building an offshore MARKET COMMENTARYNorth African risksHigher political risk suggests crude oil prices will keep risingBy David FlanaganOman crude oil futures prices moved But these are usually characterised by With low coal, gas and power priceshigher again in Week 5, driven by a pipeline damage and interruption, or oil is the only energy commodity whichfurther intensificaton of market agitation sabotage of machinery or transport links. is clearly rising in price.regarding political risk. The Algerian situation tended to So what comes next? There are other factors at play, but the suggest something aimed more at With a steeply rising crude oil marketchief concern among traders lies in the discouraging Western participation or (and we can now see Brent futuresescalating tension in Africa, especially involvement of any kind in Middle leading the pack in terms ofMali, and whether this could spread east Eastern and North African (MENA) oil benchmarks), various effects are nowinto Middle Eastern states. and gas activity. likely to emerge. Clearly, Maghreb and Central African They therefore represented to traders a China is notorious for seeing dangernations have a certain, albeit modest, somewhat more worrying angle in terms in rapidly escalating oil prices, since it isdegree of importance in terms of oil and of trading risk with the MENA energy so dependent on imported crude oil.gas production, for example Sudan. area. Hence it will be no surprise at all if it But the real fear in the oil trading Hence the magnified effect of the now starts buying crude oil in responsemarket is that localised unrest turns into event in terms of impact of current to the escalating market to stoke up itsa wider and more threatening trend political risk evaluations on global oil reserves.across the Middle East. prices. Chinas strategic reserve policy is not A further concern on the political side entirely clear to outsiders, but one thingis the fallout from the hostage crisis at Stock markets which is certain is that it uses currentthe gas production installation in The current price rally in the oil market purchases for its strategic reserve as aAlgeria. is also mirrored in many ways by rallies means of hedging against further rapid Energy sector installations have of in various stock markets in recent days. rises in oil prices.course been targets of politically The level of speculative capital inflow Traders may well expect that Chinesemotivated action in such locations as to the oil market is obviously now crude oil imports in February begin toYemen, Iraq and other energy moving higher. rise, if they did not already start to do soproduction areas. This is not entirely surprising. in late January.  Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  6. 6. MEOG 05 February 2013, Week 05 page 6 MARKET COMMENTARY Chinas monthly import data are not quick and meaningful increases inreleased until a week or so after the OPEC output are realistic. On the marketsmonth-end. The Dubai Mercantile Exchange (DME) So we will not know for sure how Not all bad news Oman futures contract for March 2013China will react. It is not all bad news. Saudi Arabian and delivery began the week on January 28 But if its previous behaviour is United Arab Emirates production levels at a settlement price of US$108.71 peranything to go by, China may emerge as are viewed optimistically in the market, barrel.a big buyer of crude oil in February. based on offshore rig development and The March contract expired soon output trends. after, and the April delivery future tookOPEC reaction But this optimism is of course based over as front month contract.Another consequence lies in the reaction partly on predictions, and therefore The April contract then escalatedof the Organisation of Petroleum traders are wary of being too reliant on gradually, first to a settlement price ofExporting Countries (OPEC). such optimism. US$110.61 per barrel on February 1. High prices are great news for A further question mark for the oil Then after the weekend the contractproducers, up to a point. trading market is now emerging from climbed again on February 4 to a This is especially true for smaller the corporate sector. settlement price of US$111.53 perOPEC members, whose reliance on With weaker performance in certain barrel.revenues from crude oil production is areas from such operators as Shell, This latest trading session has seengreater. ExxonMobil, Chevron, and indeed from DME Oman crude oil futures prices But OPEC does not like volatility, and the upstream engineering sector such as climbing above the US$110 per barrelits smaller members lose out most if Italian operator Saipem, global oil mark for the first time in a number ofprices fall back as quickly as they have majors and service providers may also weeks, and reflects the agitation nowrisen. reign in activity. pervasive in the Middle Eastern oil So will this mean an upturn in OPEC This will send shivers down many trading sector.output? spines in the oil trading market, if they DMEs oil trade volumes, in terms of The key question here is whether think that future output growth prospects average daily trades, have beenOPEC can expand output rapidly if oil are no longer looking quite as rosy as extremely healthy in December andprices continue to rise. they were. January, with trades of around 5,000 lots Back in December 2012, OPEC And the old-fashioned problem of or higher each day.elected not to change output quotas, and how to calm the nerves of oil traders, February has started slowly, althoughmay now, with hindsight, be thinking and quell their herding mentality will with only a couple of days to take intothat it should have been more also now arise. consideration, few conclusions can beperspicacious. Many of these features are bullish for drawn. But with oil output already running at oil prices, so we should be prepared for However, it seems virtually certainhistorically quite high levels (and for a some further hikes in oil prices in the that volumes will escalate as marketlong time), many will be wondering if coming days. activity intensifies.  Settlement price - DME Oman Futures, Monday February 4, 2013Product Price ($) Change* ($)Oman crude 111.53 0.92Apr 2013 (bbl) Source: Dubai Mercantile Exchange (*Change on previous trading day’s settlement price) Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  7. 7. MEOG 05 February 2013, Week 05 page 7 MARKET COMMENTARY Market Projections for Week 07 Various features now point to a bull market for oil in the days ahead. Higher political risk, oil majors seeing more volatile returns, and the possible output volatility, which we may see as a result of these features, all look like bullish price signals for the oil market. Added to that is the likely influx of speculative cash flows into oil trading, as well as hedging behaviour (on the buy side) by such players as China. All in all, Week 7 is likely to show a further bullish mood in the oil trading market. Accordingly, we should expect the price of the DME Oman crude oil future for April delivery to rise. Price Projection for Week 7, 2013: DME Oman crude oil futures (April delivery): US$110-US$115 per barrel PIPELINES & TRANSPORTIsrael contemplates gaspipeline option to TurkeyThere is one country in the East economical way for Israel to export its The largest foreign operator in Israel –Mediterranean that could serve as an gas discoveries, which are currently in fact, the company that has made allanchor to receive Israeli gas by pipeline, estimated at some 28 trillion cubic feet the gas discoveries in Israel – is NobleShaul Zemach, Director-General of the (792 billion cubic metres). Energy of the US, and it is also operatorMinistry of Energy and Water, stated at The Israeli government has yet to of Block 12 in Cyprus.a conference in Israel on January 29. determine its export policy. Noble and the government of Cyprus According to a report in Globes Last year, Zemach headed a are discussing the development of BlockOnline, Zemach did not openly mention committee that delivered a report on 12, where 5-8 trillion cubic feet (142-Turkey by name, but said it was clear export policy and made 223 bcm) of natural gas was discoveredwhich country the Israeli official was recommendations. in December 2011, and the creation onreferring to. With annual demand expected to an LNG plant on the island’s southern Zemach suggested that despite the reach 50 bcm in the coming years, coast.political tensions between Israel and Turkey is keen to secure new sources of Noble would like to use the planned[Turkey], the idea of gas exports to natural gas supply. Cypriot facility to export natural gas[Turkey] via a subsea pipeline through It has been negotiating with Iraqi from the Leviathan field, which is inthe East Mediterranean was practical, Kurdistan for gas supplies, even though Israeli territory and which it discoveredGlobes said. the Turkish army continues to be in December 2010. “This isn’t out of the question,” engaged in a war with Turkish Kurds. During the recent Eurasian EconomicGlobes quoted Zemach as saying. While there are indeed a number of Summit in Istanbul, Turkey’s Deputy “There are quite a few geopolitical geopolitical barriers hindering an Minister for Energy and Naturalbarriers, but if we know how to create Israel/Turkey gas pipeline project, the Resources Murat Mercan told Israelithe right conditions, it is possible. Gas big stumbling block for Ankara is envoy Michael Lotem that any co-should be used as a stabilising factor Cyprus. operative venture between Turkey andwhich leads to co-operation between Turkey has made it clear that any deal Israel would be hindered by Israel’scountries and includes multinationals it makes with Israel would mean that natural gas development co-operationand international parties with an interest Israel would have to stop its energy with Cyprus.in regional stability.” association with Cyprus. But it remains to be seen if a subsea Recently, a top ranking Turkish gas pipeline from Israel to Turkey reallyofficial sent a message to Israel saying Complications is possible. that a pipeline might be the most That wouldn’t be easy. Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  8. 8. MEOG 05 February 2013, Week 05 page 8 PIPELINES & TRANSPORT If it is legal for one country to lay a A pipeline stretching from Israel to But how could it do that if Israelpipeline through the EEZ of another Turkey would have to pass through the ended energy co-operation with Cypruscountry then it might work, but that offshore territories of Lebanon and to do business with Turkey?doesn’t mean that the offended country Syria, Israel’s staunch enemies. As Zemach said: “The gas should bewould not resent having an enemy’s If it were unable to pass through those used as a stabilising factor which wouldpipeline running through its territorial waters, then the pipeline would have to help bring about co-operation betweenwaters. pass through Cypriot waters. the countries.” Bidders line up for newBadra gas pipeline in IraqSix international and regional companies in three main packages: pipeline; tank International oil companies operatingare preparing to submit technical and farm and central processing facility in Iraq are planning mega investments tocommercial bids by 19 February for an (CPF). utilise associated gas for powerengineering, procurement and While the UK’s Petrofac has already generation, rather than flaring it.construction (EPC) contract to fabricate been awarded a US$2 billion contract At present, Iraq flares 23 mcm perand install a natural gas pipeline in Iraq. for the CPF, construction bids are due to day. The companies are: Larsen and be submitted by mid-February for the Ali Khudhier, director-general of theToubro and Dodsal, both of India; storage tank contract, and to assist in state-owned South Gas Company (SGC)Athens-based Consolidated Contractors evaluating EPC contracts for the said last year at an industry event inInternational Company; Saipem of Italy; pipeline tender. Dubai that Iraq was keen on purchasingParis-based Technip and CAT of The tank farm will consist of two new equipment for investment inLebanon. reducing gas flaring in both old and new Estimated to be worth US$250 fields.million, the scope of works for the The pipeline will transport “We need US$12 billion over a six-contract includes a 105-km pipeline of year period,” he said then, adding a18 inches (457 mm) in diameter that will associated gas produced major part of this would be invested bybe laid between the Badra oilfield and from the oilfield to be used those companies now operating withinthe 150-MW Zubeida power plant. the licensing rounds. Both places are located in the southern as feedstock for power According to him, SGC has alreadyWasit province. generation prepared a plan to tap the gas and use it The pipeline will transport associated for power generation and petrochemicalgas produced from the oilfield to be storage units, each of 35,000 cubic production domestically.used as feedstock for power generation. metres, and will also entail the “The vast bulk of gas flared in Iraq It will have a nameplate capacity of 4 installation of booster pumps and slug comes from the Rumaila, West Qurna 1million cubic metres per day, which will catchers. and Zubair oilfields in Basra Province.be increased at a later date. The contract is estimated to be worth These fields, on the basis of The UK’s Mott MacDonald has US$450 million. development deals signed with consortiaprepared the front-end engineering and Gazprom plans to complete all onsite led respectively by BP, ExxonMobil anddesign (FEED) package for the planned facilities by the third quarter of 2015. Eni, are set to more than triple outputfacility and will also act as project The Russian energy company leads over the next seven years. There will bemanagement consultant to the client, the development of the 3 billion barrel a need to invest in infrastructure toRussia’s Gazprom. Badra oilfield, along with Turkey’s harness the gas. Our current capacity is The Badra oilfield is being developed TPAO, Malaysia’s Petronas and South just about 12 mcm per day,” Khudhierat an estimated cost of US$2.75 billion Korea’s KOGAS. said.  Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  9. 9. MEOG 05 February 2013, Week 05 page 9 INVESTMENTLebanon opens pre-qualificationfor offshore gas bidding roundLebanon is this week to begin acceptingpre-qualification applications frominternational oil companies that want toplace bids in the country’s first licensinground, which is scheduled to open inMay. The pre-qualification round was dueto open on February 4. Criteria for pre-qualification must beapproved by the Lebanese cabinet beforebidding opens. According to the Ministry of Energyand Water website, only qualifiedcompanies will be invited to apply foran “Exploration and ProductionAgreement” in the first licensing round. Bids will be accepted from approvedcompanies that have formed themselvesinto consortia of at least three members. companies. square kilometre area. The website states that the purpose of The Petroleum Administration is not In December Rowlands said the datapre-qualification is to establish the fact authorised to communicate with the suggested that reserves in the area couldthat the company is a legal entity, the press or with the companies placing amount to 25 trillion cubic feet (708company’s financial strength and its bids. billion cubic metres).capacity to finance ongoing and Pre-qualified companies or consortiaprospective oil and gas activities, to Interest high will be announced on March 31.demonstrate the company’s technical Meanwhile, interest among international The licensing round is to open on Maycompetence, and to determine the oil firms in the Lebanon offshore is 2 and last for six months.company’s quality, health, safety and reported to be growing. The ministry is looking to sign its firstenvironment standards. An energy conference in Beirut last offshore exploration agreements by Companies may pre-qualify as December was attended by more than March 2014.operator or non-operator/rights holder. 150 international and Lebanese A map of designated blocks has yet to Once pre-qualification status is companies. appear on the ministry’s website.granted, the ministry website says, it David Rowlands, CEO of Spectrum, According to the US Geologicalshall remain valid for three years. which conducted a large seismic survey Survey, the Levant Basin, in which All pre-qualified companies are of Lebanon’s southern waters last Lebanon’s East Mediterranean offshorerequired to notify the Petroleum autumn, was quoted by Beirut’s Daily acreage lies, has estimated natural gasAuthority whenever there is an adverse Star on January 31 as saying a reserves of 122 trillion cubic feet (3,455material change in their status. reassessment of the 3-D data showed bcm) and crude oil deposits of some 1.7 The six-member Petroleum that Lebanon’s offshore hydrocarbon billion barrels.Administration, formed late last year, reserves could be larger than originally Some 35 trillion cubic feet (991 bcm)will prepare all the technical and legal anticipated. of natural gas has been discovered bywork prior to negotiating with the He said there was a growing list of US company Noble Energy in Israelicompanies and to review applications, companies that had expressed an interest and Cypriot waters. but the Ministry of Energy and Water in the Lebanon offshore.will carry out negotiations with the Spectrum’s survey covered a 3,000- Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  10. 10. MEOG 05 February 2013, Week 05 page 10 INVESTMENTCyprus to sign offshorePSCs with France’s TotalCyprus expects to sign two production- The contracts are expected to be plans to see the start of construction ofsharing contracts (PSCs) with France’s similar to three PSCs signed with a joint an LNG export facility by 2015.Total for two offshore blocks this week, venture between Italy’s Eni and South Sylikiotis said the country’s objectivethe head of the Cyprus Energy Service Korea’s KOGAS in late January. was for a Cyprus LNG facility to exporttold MEOG during a recent interview. Those agreements call for more 2-D not only Cypriot natural gas, but also Solon Kassinis, Director of the Energy and 3-D seismic to be acquired and for that produced by Israel and Lebanon.Service, an arm of the Ministry of one well to be drilled during the initial The Cyprus National HydrocarbonCommerce, Industry and Tourism, said three-year exploration period. Company, known by its Greek acronymthe contracts would first be approved by If the well is successful, Eni/KOGAS KRETYK, is negotiating with Noblethe Council of Ministers and then they will be obliged to drill another. Energy about the development of Blockwould be signed with representatives The PSCs can be extended twice for 12, where the gas resource in thefrom Total, who are arriving in Cyprus two years, and with each extension 25% Aphrodite field has been estimated at 5-this week. of the block must be relinquished. 8 trillion cubic feet (142-227 bcm). Total will be awarded PSCs for Once Cyprus awards the PSCs to Noble will build an underwater gasBlocks 10 and 11, which lie at the Total it will have six offshore blocks pipeline to the island’s southern coast,southern edge of Cyprus’s exclusive under contract counting Block 12, which where the planned LNG plant will beeconomic zone (EEZ) along the was awarded to Noble in 2008. located at Vassilikos. Noble will also bemaritime border with Egypt and west of Meanwhile, Minister of Commerce involved in creating the LNG facility,Block 12, where natural gas was Neoklis Sylikiotis told a press which is due to come on stream in 2019.discovered in December 2011 by Noble conference in Nicosia on February 1 that Energy. the government was proceeding with PERFORMANCEIran ‘December exports up’Following reports that Iran’s December 1.45 million bpd following several that is far from pushing Iran in acrude exports hit 1.4 million barrels per interviews with analysts and shipping corner."day – their highest level since fresh sources. According Reuters, higher Decembersanctions were introduced by the Prior to the introduction of the exports were driven by demand fromEuropean Union (EU) in July – a sanctions, Iran was exporting around 2.2 Asia, with countries such as China, Indialeading analyst has said that in million bpd. and Japan continuing to purchase largecombination with high oil prices, this is In a report on January 30 Olivier volumes, as well as the expansion oflikely to mean that the sanctions are Jakob, managing director of consultants Iran’s tanker fleet.currently ineffective. Petromatrix in Switzerland, said that The latter has helped the Islamic On January 18, the International "with exports close to 1.5 million bpd republic bypass restrictions that haveEnergy Agency (IEA) said in its and Brent crude above US$110 a barrel made insuring its cargoes difficult, whilemonthly release that Iran’s crude Iran does not really care anymore about gaining accurate export figures hasshipments were 1.2 million bpd during the sanctions". become harder as the country has turnedthe month. He added: "The export revenues from off satellite tracking signals on the However, on January 31, Reuters Iran are now equivalent to exporting at majority of its vessels. claimed that this figure actually stood at full capacity in a market at US$81 and Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  11. 11. MEOG 05 February 2013, Week 05 page 11 PERFORMANCE Although fresh sanctions are due to be step up pressure on China to lower its relationship,” she said.imposed by the US next month Elena Iranian purchases in the near future. “I would be very surprised if ObamaMcGovern, oil and gas analyst at “The implications of preventing were to take China to task on IranianBusiness Monitor International, told Chinese imports from Iran would be too imports.” Reuters that Washington was unlikely to damaging to the (US-China) bilateralIran calls for foreign helpafter gas rig sinks in GulfAn Iranian rig has sunk to the Gulf sea- international assistance to help recover near the site and in Tehran to plot stepsbed after an accident during installation. the gas platform, the Mehr news agency to recover the giant structure. According to reports, the US$40 reported last week. The official told Mehr that calls formillion platform’s huge metal support Iran’s energy sector is currently help had been put out to severaljacket plunged 80 metres below the subject to a wide range of international international firms that might have thesurface after a crane broke during sanctions, which means the country is expert equipment needed to recover theinstallation. typically used to going it alone. rig to the surface. Workers rushed to get off the rig – “Without the help of foreign The structure was one of four plannedwhich belongs to a company linked to companies ... it is forecast that it won’t for a project in the giant South Pars gasIran’s Revolutionary Guard – as it be possible to retrieve the jacket for field, led by a NIOC subsidiary anddisappeared into Iran’s South Pars gas several months,” an unidentified services company Sadra, and weighsfield in about 10 seconds. National Iranian Oil Company (NIOC) more than 1,000 tonnes.  And, following the incident, Tehran official told Mehr.has taken the unusual step of asking for Crisis groups have also been set upSaudi Aramco gears up to drillwith new offshore jack-upSaudi Arabia’s state-owned oil giant rig ahead of schedule in October compared with the traditional air-Saudi Aramco is gearing up to start following its construction at the Keppel cooling of other facilities.drilling with its latest and recently FELS shipyard in Singapore. Aramco is expected to use a recordacquired rig, underscoring the group’s The new offshore jack-up will be the number of rigs this year, both onshoreintentions of exploring in ever deeper second to be owned and fully operated and offshore, for all aspects of work.waters. by Aramco. Local industry analysts anticipate the The new rig is capable of It is also the first offshore jack-up rig company might use as many as 170 rigsaccommodating 114 personnel and is that the company ordered to be built this year, up from 133 at the end ofequipped with jack-up legs more than from scratch to fit the Gulf’s unique 2012.400 feet (124 metres) long, which will offshore fields. Schlumberger has said it too expectsallow it to operate in the Gulf’s deepest The new rig is equipped with six the rig count to grow, but from 134 tofields of Marjan, Karan, Arabiya and engine/generator sets, plus a 54-motor 160, driven by “continued shallow-waterHasbah. jacking system that will allow it to carry exploration, along with Saudi Aramco The state-of-the-art rig has the ability a greater load than the normal 36-motor starting a deepwater rig in the Redto drill as deep as 30,000 feet (9,300 rigs. Sea”.metres). The rig’s water-cooling system will Saudi Aramco took possession of the also enable quicker heat removal Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  12. 12. MEOG 05 February 2013, Week 05 page 12 PROJECTS & COMPANIESSterling Energy looks forthe Kurdistan exit doorNot all companies have struck it lucky and adding to, our remaining high sector.in Iraq’s northern Kurdistan region. potential exploration interests in UK-listed Afren plc may also be A succession of disappointing results Africa,” said Sterling’s chief executive looking for a buyer for its Kurdishin the field mean the UK’s Sterling officer Angus MacAskill. assets.Energy is looking to quit. The London-listed company The company has hired a corporate The company has now told the commenced seismic work on the block finance firm, Steen Associates, to lookKurdish Regional Government that in 2012. into selling its projects in Kurdistan andseismic data from the Sangaw North Test rates from five early wells found eastern Africa, to focus on its mainblock provided little justification to natural gas but not in commercial assets in Nigeria, The Sunday Timescontinue with drilling operations there. quantities. reported at the weekend. The Sangaw North block sits about 80 The semi-autonomous Kurdish China’s Sinopec and US oil companymiles (128km) south of the Kurdish government placed restrictions on oil ExxonMobil could be interested incapital Erbil. exports in response to ongoing political buying the assets, which could fetch up “While we are naturally very battles with the central government in to US1.6 billion, the newspaperdisappointed to have been unsuccessful Baghdad over the oil sector. Ongoing reported. in our exploration efforts in Kurdistan, political turmoil is in part to blame forwe now look forward to focusing on, restrictions on Iraqs post-war energyAbu Dhabi moves on next phaseof North East Bab oil projectAbu Dhabi Company for Onshore Oil and export, gas compression, gas at 2.5 million bpd and which is sourcedOperations (Adco) is moving ahead with dehydration and a utilities system. from Adco, Abu Dhabi Marinethe next phase development of its North The additional water and gas injection Operating Company (Adma-Opco) andEast Bab (NEB) oilfield, with the facilities will be required to sustain Zakum Development Company.appointment of the UK’s Mott reservoir pressure and allow carbon Overall, Abu Dhabi has set a target ofMacDonald as the project management dioxide-based enhanced oil recovery attaining total production capacity of 3.5consultant. (EOR) techniques. million bpd by 2017. Called NEB phase 3, the project will The development is estimated to cost A large chunk of Adco’s new outputaim at further development of the three US$1.5-2 billion and the next stage in will come from the Qusahwira, Bida al-onshore fields of al-Dabbiya, Rumaitha the project implementation will be the Qemzam and the NEB fields.and Shanyel to produce an additional selection of a front-end engineering and Called a 1.8 million bpd project,110,000 barrels per day of crude oil by design (FEED) contractor. engineering, procurement and2016. The NEB project is part of Adco’s construction (EPC) tenders worth a total Scope of works for phase 3 of NEB plans to increase a production capacity of about US$1.5-2 billion have alreadywill include the installation of oil of 1.8 million bpd over the next five been awarded.gathering, water injection, gas injection years. The project aims to develop the threeand water supply systems, as well as Adco accounts for 65% of the UAE’s onshore acreages, increasing to 1.8facilities for oil processing, oil storage total oil production, currently estimated million bpd.  Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  13. 13. MEOG 05 February 2013, Week 05 page 13 NEWS IN BRIEFThe following news items are sourced benefited from Irans reduced exports. In Iraq’s January crude shipments from thefrom local and international news addition to Saudi Arabia and Iraq, also southern oilfields were higher by aroundsources. Angola, Venezuela and Russia are seen 75,000 bpd compared to previousNewsBase is not responsible for the as countries which have ramped up monthlevels of 2.02 million bpd.contents of the stories and gives no shipments to plug the shortfall from Iraq has set a target to export around 2.2warranty for their factual accuracy. Iran. million bpd from the south, but bad Saudi production cuts at the end of the weather and maintenance work at Iraq’sOIL year (700,000 bpd) have been largely giant Rumaila oilfield have disrupted caused due to weak global demand. exports, oil officials said.Iran to face 12% OPEC’s latest report indicated world OPEC member Iraq has the world’sdecline in Asian oil supply will comfortably outstrip demand in the first half of 2013. fourth-largest oil reserves and is targeting exports of 6 million bpd byimports Iranian exports to China have been 2017.Asian crude oil imports from Iran have reduced by 21% to 438,448 barrels per REUTERS, January 3, 2013fallen around 25% in 2012. Analysts day (bpd) in 2012, while the deepestexpect that overall Iranian crude oil reduction was made by Japan, which cut Kurds warn BP notshipments to Asia will decrease by 40% of imports to 189,076 bpd. to drill for Baghdadanother 12% in 2013, largely due to U.S. South Korea cut imports by 36% to The escalating dispute between Iraqssanctions pressure. 153,400 bpd and India reduced central government and the Kurds overAsian customers will however be able to purchases by 1.7% to 315,200 bpd. oil and land went up a notch after thesource their refineries due to alternative Some analysts expect that China’s Kurdistan Regional Government warnedsupply options. Iranian crude imports will be cut by oil giant BP not to help BaghdadNews agency Reuters stated that Asias another 5-10% in 2013. upgrade an oil field in disputed territory.main oil buyers cut imports from Iran to REUTERS, February 1, 2013 BP, which appears to be committed toan average of 1.09 million barrels perday in 2012, Available government and Iraq oil exports rise Iraq, secured a major production-sharing to 2.359 million bpd contract from Baghdad in 2009 toindustry data shows that there are also develop the Rumaila superfield in theplanned cuts in term contracts for 2013 in January south.which point to further reductions of at Iraq’s oil exports climbed to 2.359 Now its reported to be close to anleast 135,000 bpd. million barrels per day (bpd) in January agreement with Baghdad to upgrade theSome analysts warn that overall cuts from 2.340 million bpd the previous declining Kirkuk oil fields in the north.would have to be deeper to secure month, oil ministry officials said. These straddle the border betweenfurther waivers from the U.S. sanctions Iraq shipped 2.095 million bpd from the Kurdistan and territory controlled bythat are aimed at forcing Iran to halt its southern oil hub of Basra and 264,000 Baghdad.nuclear programme and which have bpd from the northern fields around The semiautonomous Kurds claim themade shipping and paying for Iranian oil Kirkuk, including 11,000 barrels trucked Kirkuk region is historically part of theirdifficult, cutting overall exports by more to Jordan, they said. turf and want to get their hands on its oilthan half in 2012. Slowing exports from the Kurdish reserves, which constitute about one-Total costs for Iran are becoming region and repeated attacks on the major third of Iraqs proven reserves of 143.1staggering. Reuters reports that Asian export line to Ceyhan port in Turkey billion barrels.cuts have already cost Iran US$14 have significantly reduced Iraq’s So the last thing they want is for BP --billion worth of oil exports for the year. shipments from the north. or anyone else -- to arrest the fieldsThe implications for Asian refiners are The Kurdish Regional Government decline to strengthen Iraqs claim.expected to be minimal, as there is an (KRG) and the central government in "Iraqs citizens are simply tired ofabundance of alternative supplies, Baghdad have been locked in a lengthy Baghdads ... language of threat andmainly from the Middle East. Almost all dispute over oil payments to producers intimidation, which in the cynicalof Irans exports flow to Asia. in the Kurdish area. pursuit of narrow political agendas only REUTERS, January 31, 2013 serves to create division and strife," said The dispute was further aggravated atIranian crude cuts the start of January with the beginning KRG President Massoud Barzani. support Arabian of independent crude oil exports by the KRG via truck to Turkey, a blow toexports Baghdad’s claim to full control overIn 2012, Arab crude oil producers have Iraqi oil. Copyright © 2013 NewsBase Ltd. www.newsbase.com Edited by Martin Clark All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

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