New base 508 special 30 december 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
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NewBase 30 December 2014 - Issue No. 508 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Saudi Sipchem’s New Chemicals Plant To Start Operating In First Quarter
Reuters + NewBase
Saudi International Petrochemical Co (Sipchem) said the initial start-up of its new
polybutylene terephthalate (PBT) plant will begin in the first quarter of 2015.
The company has been testing the plant’s main equipment in preparation for the launch, it
said in a statement on Monday. The facility is located in Saudi Arabia’s Jubail Industrial City.
The plant will manufacture up to 63,000 tonnes per year of PBT resin. The material is a
highly-specialised thermal polymer used in electrical and electronic material production in the
automotive industry, as well as in the production of IT based materials.
63,000 tonnes per year of PBT resin

Iraq:Kuwait Energy Company Makes Second Oil Discovery in Block 9,
Source: Kuwait Energy operations
Dragon Oil has announced that Kuwait Energy made its second oil discovery at the Block 9 in
Iraq, in the Faihaa-1 well. The well was drilled in Northern Basra in the Yamama formation at
4,000m and flowed 35 API oil at 5 Mbbl/d and 8 Mbbl/d on 32”/64” and 64”/64” chokes
respectively.
Ownership of Iraqi Block 9: Kuwait Energy (70%, operator) and Dragon Oil (30%).
Iraq has total proven oil reserves of approximately 150.0 billion barrels and 127.12 Tcf of proven
natural gas reserves as at 31 December 2013*. Oil development is concentrated in the south of
Iraq, with the production accounting for 75% of total Iraqi production in recent years. The majority
of the gas reserves are classified as associated gas from the
southern fields.
Kuwait Energy was awarded a 20 year Gas Development and
Production Service Contract (GDPSC) for the Siba field in June
2011, granting the company operatorship and 45% revenue
interest. Simultaneously, a 20 year Gas Development and
Production Service Contract was signed for the Mansuriya field
with a 22.5% revenue interest.
In 2012, Kuwait Energy was awarded the Block-9 exploration
license in southern Iraq as operators with a 70% revenue
interest, and an Exploration, Development & Production Service
Contract (EDPSC) pertaining to the block was signed in January
2013. First exploration well in Block 9 was spud in March 2014
which lead to Kuwait Energy’s first oil discovery in September in
the same year.
The assets are close to existing infrastructure, and are governed by licenses with the highest
remuneration rates in Iraq. KEC enjoys a position of currently being one of the few regional
independent oil and gas companies to be present in southern Iraq, in the Siba and Block 9 assets.
Siba and Mansuriya working interest reserves are 59.7 mmboe and 72.9 mmboe, respectively,
which totals to approximately 132.5 mmboe and is 80% of KEC 2P working interest reserves as at
31 May 2014.
FAIHAA-1 WELL
The successful discovery was at the consortium's second target, the Yamama formation at 4,000
meters, in its Block 9 exploration well, 'Faihaa-1', located in Northern Basra, Iraq.
Preliminary tests of the Faihaa-1 Yamama formation resulted in oil flow rates of circa 5,000 and
8,000 BOPD of 35 API crude on 32"/64" and 64"/64" chokes respectively.
About Dragon Oil
Dragon Oil plc is an international oil and gas exploration, development and production company,
quoted on the London and Irish Stock exchanges (Ticker symbol: DGO). Its principal producing
asset is in the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore
Turkmenistan.

Indonesia Approves KrisEnergy's Gas Project Development Plan
Kris Energy + NewBase
KrisEnergy Ltd.'s plan of development (POD) for the Lengo gas field in the Bulu PSC offshore
East Java has been approved by the Indonesian government plan of development (POD), the
company announced Monday. Approval of the POD paves the way for the company, as operator,
to pursue formal negotiations for gas sales agreements with potential offtakers.
The Bulu PSC covers 697 sq. km in three separate areas – Bulu A, Bulu B and Bulu C – over the
East Java Basin in water depths of 50 to 60 metres. The Lengo gas discovery is located in the
Bulu A area and will be developed via four development wells and an unmanned wellhead
platform. A 20-inch, 65-km export pipeline will transport the gas directly to shore. Production is
anticipated to commence approximately 24 months after the joint-venture partners declare final
investment decision and is expected to plateau at 70 million cubic feet per day.
The Bulu PSC lies adjacent to the Kris Energy-operated East Muriah PSC, which contains the
East Lengo gas discovery. The company plans to drill an appraisal well in the East Muriah PSC
and, if successful, to develop East Lengo gas via a single well tied back to the Lengo facilities.
KrisEnergy also operates the Sakti PSC, an exploration block adjacent to the Bulu A area, where
the company completed 1,202 km 2D and 401 sq. km 3D seismic acquisition programs earlier this
year.
Chris Gibson-Robinson, Director Exploration & Production commented: “This is our first
development as the operator in Indonesia and we have been building up our technical and project
management competencies in Jakarta to be ready for this moment. When on stream, the Lengo
field will bring the group’s production mix to approximately 52% gas versus 48% oil. Demand for
gas continues to grow strongly across Indonesia and long-term pipeline prices are holding firm
despite volatility in the international oil markets. Bulu is the potential aggregation hub for gas into
East Java if we are successful in the appraisal of East Lengo and exploration in Sakti.”
KrisEnergy holds a 42.5% operated working interest in the Bulu PSC and is partnered
by AWE Limited with 42.5%, PT Satria Energindo with 10% and PT Satria Wijayakusuma
with 5%.

Wentworth hits gas at Tembo-1 in Mozambique
Press Release
Wentworth, the independent, East Africa-focused oil & gas company, said that drilling
operations of the Tembo-1 well have now completed and a natural gas discovery has been
made in Cretaceous aged sands.
The well was drilled to a total depth of 4,553 meters (4,401 meters True Vertical Depth Sub Sea)
and reached TD in Jurassic aged sediments. Petrophysical analysis of the Cretaceous section
indicates 11 meters of natural gas net pay. Natural gas and some condensate was recovered by
modular formation dynamics testing confirming the petrophysical analysis. The Onshore Rovuma
Partners do not plan any further evaluation of the Tembo well at this time but will assess all the
data recovered from this well to determine the potential commerciality of this discovery.
The Tembo-1 well has been plugged and abandoned and the drilling rig is now being mobilized to
the Kifaru-1 well location. It is expected that the Kifaru-1 well, which is approximately 10
kilometers south of Wentworth’s Mnazi Bay Concession in Tanzania, will spud in Q1 2015. This
well is targeting Miocene sands, similar to the reservoirs in the Mnazi Bay and Msimbati gas fields,
as well as Eocene and Cretaceous sands.
Wentworth holds a 13.64% participation interest in exploration operations and an 11.59%
participation interest in development and production operations of the Rovuma Onshore
Concession in Mozambique. Anadarko Petroleum Corporation is operator.

Oil Price Drop Special Coverage
China's Building Materials Sector Continues to Slow
(QNA)
Beijing, December 29 (QNA) - China's building materials sector continued to slow as the property
market remained sluggish despite fewer government restrictions, latest statistics from the
country's top economic planner indicated.
Cement output rose 1.9 percent year on year to 2.3 billion tonnes in the first 11 months, pulling
back 7.3 percentage points from the rate seen during the same period last year, the National
Development and Reform Commission (NDRC) said on its website.
Output of flat glass gained 2.4 percent, retreating 9.2 percentage points from a year earlier,
according to China's (Xinhua) News Agency.
Meanwhile, the prices of cement and flat glasses dropped in November. Compared with a month
earlier, the factory price of cement edged down 0.5 percent, and flat glass moved down 4.2
percent in November.
The data comes as the property sector, a major consumer of cement and flat glass, continues to
cool despite the support of government policy adjustments. New home prices in 67 out of 70 major
cities reported month-on-month drops last month, earlier data showed, whereas prices in the cities
of Hefei, Nanjing and Shenzhen remained flat.

Independent Scotland would have faced the brunt of oil price falls
+ Finanacial Times + NewBase
Scotland’s North Sea revenues would have slumped to one fifth of Holyrood’s preferred forecasts
in its first year of independence if Scots had voted ‘Yes’ in September, according to an Office for
Budget Responsibility simulation using current oil prices.
The OBR projections, which take into account a dramatically lower oil price than the one used in
Scottish government forecasts, highlight how the nation could have been saved from a crisis in its
public finances by voting ‘No’. Had Scotland voted ‘Yes’ to independence, it would now be looking
at oil revenues of £1.25 billion (Dh7.18 billion) instead of £6.9 billion in 2016-17 — its first year as
a new country — while facing a deficit of close to 6 per cent of national income, compared with a
UK forecast of 2.1 per cent.
Paul Johnson, director of the Institute for Fiscal Studies, said the OBR scenario highlighted “the
uncertainty and volatility of oil prices and their impact on Scotland, which is far more dependent on
oil revenues than the rest of the UK”.
North Sea revenues are already falling to negligible levels, after Brent crude oil prices plunged
from $97 a barrel on the day of the independence referendum to $61 last week. Meanwhile,
delays to east coast investment projects are forcing the government to consider cutting taxes
further in an attempt to stem the slide in new exploration.
The oil price collapse is partly blamed on higher shale oil supply from the US and Opec output that
has exceeded estimates. Ali al-Naimi, Saudi Arabia’s oil minister, has said the $60-a-barrel mark
is “temporary”, while other ministers have said it will be months before prices stabilise.
Professor Alexander Kemp of the University of Aberdeen said an oil price below $70 a barrel in
the longer term would damage prospects for future Scottish oil extraction. He forecast the lower
price would mean the number of probable new oilfields over the next 35 years would more than
halve from 188 to 85. “Clearly, tax revenues will come right down,” he added.

The OBR published the simulation of oil revenues in July on different price forecasts. The most
pessimistic scenario assumed crude prices higher than those today with $77 a barrel in 2015-16,
but following a path similar to the current oil futures prices with a $75-a-barrel price in 2018-19.
Under this scenario, even taking into account lower investment in the North Sea, the OBR forecast
that between 2014-15 and 2018-19, revenues broadly applicable to Scotland — 90 per cent of the
total — would reach £8 billion. That figure is less than a quarter of the Scottish government’s
preferred forecast of £34 billion for the revenues it believed it could expect over the same period
based on what it thought was a cautious estimate that oil prices remained at $110 a barrel,
encouraging stronger output.
It is half the Holyrood government’s most pessimistic scenario of 15.8 billion pounds, which was
based on the oil price drifting down to $99 with lower output.
The Scottish government’s rule of thumb is that every £1 billion lost to the exchequer in oil
revenues accounts for additional public borrowing of 0.6 per cent of Scottish national income. It
suggests that with a UK forecast for borrowing in 2016-17 of 2.1 per cent of gross domestic
product, a newly independent Scotland would have faced borrowing close to 6 per cent of national
income at current oil prices, due to the higher public spending per head that people in Scotland
receive.
Angus Armstrong, of the National Institute of Economic and Social Research, said that in these
circumstances, a newly independent country would struggle to issue debt in capital markets. “The
volatility absolutely kills you. Having to raise an additional £5 billion of debt just because the oil
price drops in the past five months would have been very serious.
“It is very hard to see how Scotland could have raised those levels of debts in year one of
independence,” he added. Instead of the burden of lower oil revenues falling largely on Scotland,
the continuation of the union ensures that those in England, Wales and Northern Ireland provide
insurance, he said.
In the longer term, OBR simulations suggest that for the UK as a whole, a falling oil price should
benefit the public finances since the additional growth in spending that it is likely to encourage will
generate more tax revenues than those lost from North Sea revenues.
Russia suffers its first contraction since 2009
Reuters+NewBase
Russia’s economy shrank sharply in November and the rouble resumed its slide yesterday as
Western sanctions and a slump in oil prices combined to inflict the first contraction in GDP since
the global financial crisis.
The economy ministry said gross domestic product shrank 0.5 percent last month, the first drop
since October 2009. With oil exports forming the backbone of the economy, analysts said the
contraction is likely to worsen.
The slide on the oil market accelerated this month after the exporters’ group Opec refused to cut
output, and prices are down almost 50 percent from a peak in June. On top of this, the sanctions
imposed over Moscow’s role in the Ukraine crisis have deterred foreign investment and led to over
$100bn flooding out of the Russian economy this year.

“With the current oil price we expect things to get worse. There is no cause for optimism,” said
Dmitry Polevoy, chief economist for Russia and CIS at ING Bank
in Moscow. “This is linked to sanctions first of all, oil and the panic
we saw on the market in December. The damage to the banking
system and consumer sentiment will take a long time to repair.”
The sanctions have severely reduced the ability of Russian
companies to borrow abroad, triggering the worst currency crisis
since Russia defaulted on its debt in 1998. The rouble, which had
strengthened on Friday, slumped over 6 percent against the dollar
in early trade yesterday in thin trade, although it later regained
some of the losses. Overall the rouble’s weakness will inevitably
lead to higher inflation next year by pushing up the cost of imports,
threatening President Vladimir Putin’s reputation for ensuring
Russia’s prosperity.
Government ministries forecast the slump in oil prices will lead to a 4 percent contraction of the
economy next year and that inflation could exceed 10 percent. The rouble had lost more than half
of its value at one stage in December, although it has recovered since then after the government
introduced informal capital controls and raised interest rates steeply. The government issued
orders to large state-controlled oil and gas exporters Gazprom and Rosneft to sell some of their
dollar revenues to shore up the rouble.
Russians have kept a wary eye on the exchange rate since the collapse of the Soviet Union.
Hyper-inflation wiped out their savings over several years in the early 1990s and the rouble
collapsed again in 1998.
At 9.00am, the rouble had lost over 3 percent against the dollar and was trading at 56, hurt by
exporters scaling back foreign-currency sales after meeting their end-of-month tax payments. The
Russian currency is much weaker than the 30-35 seen in the first half of the year but well up from
an all-time low of around 80 per dollar in mid-December.
The rouble’s slide has prompted huge buying of foreign currency in Russia and heavy withdrawals
of bank deposits, heaping pressure on a vulnerable banking sector whose access to Western
capital markets is restricted by the sanctions.
On Friday, Russian authorities also significantly scaled up rescue funds for Trust Bank, saying
they would provide up to $2.4bn in loans to bail out the mid-sized lender, the first bank to fall
victim to the crisis.

Russia could help up oil price, says its former Opec mediator
Reuters + NewBase
Russia may help Opec to prop up global oil prices by slightly cutting exports in favour of domestic
refining, its ex-energy minister and a former negotiator with Opec, Igor Yusufov ( Russain oil
Expert ), told Reuters. Yusufov, who says he is still regularly meets Gulf Opec oil ministers, no
longer holds any major official position and
runs an energy investment company.
He led a delegation which discussed co-
operation with Opec in 2001-2002 to support
global oil prices and agreed modest cuts
although Russian state and private
producers never followed through—
increasing exports instead. Russia, which is
pumping an average 10.5mn bpd, is not an
Opec member. Its production has peaked in
recent years after steep rises in early 2000s.
“We have stable volumes - the question is
whether we will increase production... I do not rule out that if we for example slightly cut exports it
won’t be something terrible. It is a question for each particular company which let’s say may refine
more in Russia and sell on the domestic market,” he said.
Moscow needs oil prices of $100 a barrel and above to balance its budget. Its finances have been
severely hit by Western sanctions over the Russian role in the Ukraine crisis. Unlike its closest
peer Saudi Arabia, leading Opec player, Moscow says it cannot easily cut oil output due to severe
weather conditions and a lack of storages. It may increase domestic refining or postpone bringing
new fields on stream, says Yusufov.
Russia is gradually cutting crude supplies to the global market as it is increasing domestic refining
capacity. Russian oil exports are seen down by a total 12mn tonnes between 2013 and 2015. In
November, Russia sent a delegation led by its Energy Minister Alexander Novak and Rosneft’s
CEO Igor Sechin to Vienna ahead of an Opec meeting.
No agreement was reached and Opec kept its output targets unchanged, triggering a further sell
off in oil prices which are now down almost a half to $60 per barrel from this year’s peaks in June.
Yusufov said he did not expect prices to fall further, staying in the range of $60-$80 per barrel in
2015. “This is a reasonable corridor which will suit everyone,” he said. Yusufov added that Russia
needed a special envoy to co-ordinate dialogue with Opec and global energy firms.
Energy minister in 2001-2004, he made headlines in 2012 when his bid to save the Coryton
refinery in Britain was rejected and it was closed. Yusufov said he was still looking to buy a
refinery and turn it into a terminal to help deliver Russian oil to Europe. He also said he was
looking to invest in filling stations. In Russia, Yusufov’s Fund Energy works with US oil services
firm Halliburton to develop a $900mn Yamal project due to start in 2017-2018 with output peaking
at 3mn tonnes of oil and 1bn cubic metres of gas a year.

Oil near 5-year low, set to post biggest annual drop
Reuters + NewBase
Brent oil extended losses into a fourth session on Tuesday, with prices hovering close to a more
than five-year low above $57 per barrel, as persistent worries about a global supply glut offset
concerns about output disruptions in Libya.
However, forecasts for
a 900,000-barrel
drawdown last week
in oil stocks in top
consumer the United
States, following a rise
to highest recorded
December level in the
week ended on Dec.
19, checked losses in
crude prices . Brent
for February delivery
fell 8 cents to $57.80
as of 0323 GMT, after
tumbling to $57.37 in
the previous session, the lowest level since May 2009. US crude for February delivery fell 3 cents
to $53.58 after it settled down $1.12 on Monday, when it hit an intraday low of $52.90 - also the
lowest since May 2009. "There's no sign of any reduction of output by Opec," said Ken Hasegawa,
commodity sales manager at Tokyo's Newedge Japan.
Traders are now eyeing the weekly US inventory data. The industry group the American
Petroleum Institute is scheduled to release its report later in the day, while the US Department of
Energy's Energy Information Administration will release its data on Wednesday.
"A potential surprise draw in US oil stocks would give a short-term fillip to the upside," said
Michael McCarthy, chief market strategist at Sydney's CMC Markets. Supply disruptions in Libya,
which is producing 128,000 barrels per day from fields linked to the eastern port of Hariga after
fighting halted operations at the key export ports Es Sider and Ras Lanuf, also supported oil
prices.
"Libya is not a major producer but the disruption could be a trigger for a mini-rally," McCarthy said.
Oil prices this year have been hammered by rising global supply and more recently OPEC's
reluctance to cut output. Brent is heading for its biggest annual drop while US crude is set to post
its biggest decline since 2008.

Your Guide to Energy events in your area

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NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Mobile : +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years , he has developed great
experiences in the designing & constructing of gas pipelines, gas metering & regulating stations
and in the engineering of supply routes. Many years were spent drafting, & compiling gas
transportation , operation & maintenance agreements along with many MOUs for the local
authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE
and Energy program broadcasted internationally , via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 30 December 2014 K. Al Awadi

New base 508 special 30 december 2014

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