New base special 09 february 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 09 February 2014 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
US-UAE trade grows 8.5% to record Dh98.7bn in 2013
http://www.uaeinteract.com/docs/US-
UAE remained top export destination of the US in Mena region for the 5th consecutive year in 2013 while
the total bilateral trade rose by 8.5 per cent last year. According to the US Census Bureau's Foreign Trade
Division figures released on Thursday, US-UAE trade reached record US$26.9 billion (Dh98.7 billion) in
2013 from US$24.8 billion in the
previous year. US exports to UAE
jumped 9.1 per cent to hit record
US$24.61 billion (Dh90.3 billion)
while UAE exports to US
remained stagnant at US$2.29
billion (Dh8.4 billion) last year.
March 2013 saw the highest
monthly US exports at US$3
billion (Dh11 billion) – a jump of
43.75 per cent over the same
month in the previous year.
Transportation equipment
remained the largest export
segment from US to the UAE for
another year in 2013.
The US Census Bureau's Foreign Trade Division said transportation equipment was the largest
subset of US exports to the UAE at US$9.4 billion in 2013, 38 per cent of total exports. Other top
US export sectors included computers and electronics (US$3.9 billion), non-electrical machinery
(US$1.88 billion), primary metal manufacturing (US$1.83 billion), fabricated metal products
(US$1.58 billion), chemicals (US$1.01 billion) and agricultural products (US$708.9 million).
Despite drop in exports to the UAE, Washington was the largest American state to export goods to
emirate. Washington exports to UAE dropped 20.3 per cent to US$4 billion (Dh14.8 billion),
followed by Texas at US$2.69 billion, Columbia at US$2.25 billion, Florida at US$2.21 billion, New
York at US$2bn, California at US$1.64bn, Connecticut at US$1.22bn, New Jersey at US$929.5
million, Georgia at US$789.5m and Ohio at US$680.4m. Ohio recorded highest export growth of
46.6 per cent among the top 10 US states in 2013.
Saudi Arabia was the second largest export destination of the US goods in the region with total
exports of US$19 billion (Dh 69.7 billion) in 2013, India at US$21.88 billion (Dh80.3 billion), Turkey
at US$17.1 billion (Dh62.7 billion) and Egypt at US$5.22 (Dh19.15 billion )

Woodside signs Leviathan agreementOBLE ENERGY - Luke Johnson
Australia's Woodside Petroleum has taken a major step in finalising its long-awaited farm-in to Noble
Energy's massive Leviathan gas find off Israel after signing a memorandum of understanding to acquire a
25% stake for an initial
$850 million. The non-
binding agreement
would give Woodside a
25% interest in each of
the 349/Rachel and
350/Amit petroleum
licences in the
Mediterranean Sea.
The Leviathan field
holds contingent
resources of 18.9
trillion cubic feet of
natural gas and 34.1
million barrels of
condensate.
A deal is expected to be finalised by 27 March this year.Woodside and Noble have been working on a farm-
in agreement at Leviathan since late 2012. Terms of an initial agreement have since changed, however,
since the first deal was based on contingent resources of 17 Tcf of gas, Woodside said.
Woodside had earlier agreed to buy a 30% stake for $1.25 billion.Under the terms of the latest deal,
Woodside, as originally envisaged, would operate the planned liquefied natural gas development at
Leviathan, while Noble would be the upstream operator of the field.
All gas not exported as LNG will be supplied to Israel for domestic use, and regionally to other countries.
Disagreements over export and tax policies have also held up the farm-out deal. In addition to the initial
payment of $850 million, Woodside will also be on the hook for $350 million to go towards the LNG
development or another export project.
It will also pay out 5.75% of its wellhead export revenue, capped at $1.3 billion and commencing after at
least 2 Tcf have been exported. Woodside will be charged another $50 million if Leviathan is in future
assessed to hold at least 20 Tcf.
All payments are contingent on a final agreement being reached. Leviathan is set to start up in 2017 or 2018.
The Palestine Power Generation Company (PPGC) will be the first purchaser of Leviathan gas and has
agreed to buy 167.6 billion cubic feet to feed a new power plant near Jenin in the West Bank.
All partners in the Leviathan project will contribute part of their ownership stakes to the Woodside farm-in.
Once the farm-in is finalised Noble will own 30%, with Delek Drilling and Avner Oil Exploration on
16.94% and Ratio Oil Exploration on 11.12%.

Arup Completes Design of Malampaya Platform Substructure
http://www.offshoreenergytoday.com/
Engineering and consulting firm with Arup has completed the substructure detailed
design of the Malampaya Depletion Compression Platform, a new offshore natural gas
platform to be installed in the West Philippine Sea off the coast of Palawan, Philippines.
Shell Philippines Exploration B.V. (SPEX), selected Fluor Daniel Pacific, Inc. (Fluor) to design and provide procurement
support for the Malampaya Phase 3 Project, which includes the Malampaya Depletion Compression Platform. Fluor
appointed Arup as a subcontractor to complete the Substructure Detailed Design and also provide procurement
support on substructure related matters.
With construction completion scheduled for 2014, this new facility supports extension of the life of the
Philippines only indigenous producing natural gas source, which provides 40 to 45 percent of the power
generation needs for the island of Luzon.
Arup has been involved in the field since 1998 when it was commissioned to conduct feasibility studies and
Front End Engineering Design (FEED) leading to Engineer Procure and Construction (EPC) phases for the
initial development that included the Arup concrete gravity substructure (CGS) solution. In 2010 Arup was
engaged by SPEX to develop the second fixed platform substructure. Studies were performed for floating
stability, vessel sea-tow response, installation ballasting sequence and post-installation wave and seismic
performance. The substructure design proposed by Arup was an adaption of the firm’s award-winning Arup
Concept Elevating (ACE) platform. The client wanted this specific gravity-based solution to reduce
foundation technical and construction risk.
“Arup’s experience implementing similar self-installing platform designs allowed for the rapid development
of an efficient design,” said Martyn Turner, SPEX engineering manager. “The firm’s ability to mobilize an
established local engineering team from its Manila office reduced the in-country engineering execution risk
and allowed us to come in ahead of schedule and within budget.”For this extension project, Arup
configured the length and width of the platform deck to provide sufficient
buoyancy for float-out from the fabricator’s facility and for its tow to the
site, and the structural sizing was refined to optimize efficiency and
minimize cost.
Located 43 meters deep on a prepared seabed, the platform had to be
configured to support 4,900 tonnes of facilities with enough stability to

withstand extreme storm conditions and seismic events. Due to high seismic activity in the Philippines,
detailed analyses were conducted, including a seismic hazard assessment, site response studies and
liquefaction assessments.In addition to designing the substructure, Arup developed the concept for the 43
meter bridge link connecting the platform to the existing CGS platform Arup delivered in 2000.
The Malampaya Project: The Big Picture
The discovery of an alternative and indigenous source of energy was a milestone event for
the Philippines, a country that has historically relied on imported fuel for the bulk of its
domestic and industrial power requirements.
The Malampaya Deep Water Gas-to-Power project is one of the largest and most significant
industrial endeavors in Philippine history. A joint undertaking of the Philippine national
government and the private sector, the project is spearheaded by the Philippine Department of Energy
(DOE) developed and operated by Shell Philippines Exploration B.V. (SPEX) on behalf of joint venture
partners Chevron Malampaya LLC and the PNOC Exploration Corporation.
A STORY OF POWER
The Malampaya story is a story of resilience, perseverance, and innovation spanning over a decade. In 1989,
a small gas reservoir called Camago was discovered in the area of service contract 38 (SC 38). In 1990,
upon acquisition of a 50% participating interest in SC38, SPEX joined the search for natural gas reserves.
Two years later, the Malampaya gas field was discovered, and was later found to be connected to the
Camago structure.
SPEX drilled five wells to determine the amount of gas
available in Malampaya. The findings confirmed the
presence of a formidable power source 80 kilometers
northwest of Palawan island–about 2.7 trillion cubic
feet of natural gas reserves and 85 million barrels of
condensate, located some 3,000 meters below sea level.
In 1995, after comprehensive studies, it was concluded
that Malampaya presented an extraordinary opportunity
for commercial gas development in the Philippines.
The development of Malampaya posed a myriad of
daunting logistical, social, environmental, and financial
challenges. It required the active participation and
involvement of government agencies, communities, and
both Filipino and multinational companies. The DOE
played a key role in making Malampaya a reality.
In 1998, former President Fidel V. Ramos signed the
declaration of commerciality of the venture. Three-and-
a-half years later, in October 2001, the Malampaya
Deep Water Gas-to-Power Project was inaugurated in a
special ceremony at the onshore gas plant in Batangas.

PQ for Oman Railway Design and Build package soonOman Observer By Conrad Prabhu -
A tender for the prequalification (PQ) of contractors for the Design-and-Build package of the Oman
National Railway Project is due to be floated this month, Dr Ahmed bin Mohammed al Futaisi
Minister of Transport and Communications,
announced here yesterday.
Speaking to journalists after the signing of three
agreements linked to the initial development of the
rail network and the national rail organisation,
Oman Railway Company, he said the tender is one
of two prequalification requests that will be issued
during February.
In addition to the prequalification process for the main contractor to undertake the Design & Build
civil works package, the Ministry will also float a tender for the prequalification of bidders for the
systems package. However, the selected systems contractor will serve as a subcontractor to the
Design & Build contractor that will undertake the main civil works package, Dr Al Futaisi stated.
Yesterday’s agreements, coupled with the
upcoming PQ tenders, underscore efforts
by Omani government to press ahead with
the development of a national rail system
that will be integrated with the GCC rail
network.
Italian rail engineering consultancy firm
Italferr is the Preliminary Design Consultant
for the 2,244km national network. Its initial
focus is on preliminary design of the 171km
Sohar-Buraimi segment, said Lucas
Beccastrini, Middle East Area Manager.
Separately, Grant Thornton Abu Timam
Oman, part of the leading international
independent assurance, tax and advisory
firm Grant Thornton International, is
undertaking the organisational design of the
national railway organisation, Oman
Railway Company.
Significantly, contractors prequalified to bid
for the main Design & Build civil works
package will be eligible to participate in
Design & Build tenders for successive
segments for a period of four years before

the Ministry announces a new prequalification round.
Explaining the tendering system that will be set in place, Dr Al Futaisi said: “There will be two PQ
tenders – one for the Main Contractor and the other for the Systems Contractor – but they will
have to submit one (combined) package.
This PQ will be valid for at least four years. If they are prequalified, then they can bid for the first
Sohar-Buraimi segment. But when we float the other segments, say from Buraimi to Ibri, to Sinaw
to Duqm, and so on, we will not do another PQ; the same prequalified parties will be eligible to bid
for the next segments, unless four years elapse, following which we will announce
another prequalification round.” Asked about the much-awaited announcement of the Project
Management Consultancy
(PMC) award, he said the issue
is still with the Tender Board.
“They had some comments with
regard to the evaluation (of the
offers) and we are replying to
them. We are hoping it will
happen shortly. (An award) is
very much required now
because the PMC’s role is to
review the preliminary designs.
It’s clear that the Preliminary
Design Consultant is moving
very fast and is already
submitting to us the drawings
for the first segment. We need
the PMC to review and approve
them. We hope the
announcement will come very
soon.”
Five groups led by prominent international consultants have submitted offers for the PMC
package.
Commenting on the timeline for the actual start-up of the civil construction phase of the Sohar-
Buraimi segment, Dr Al Futaisi stated: “If we float the PQs this month, we expect to finalise the
winner of this project by the end of this year, which means that the civil construction phase will
commence during the first quarter of 2015.”
Announcing the 2014 State Budget, Darwish bin Ismail al Balushi, Minister Responsible for
Financial Affairs, said the government has earmarked RO 1 billion towards the implementation of
the Oman National Railway Project in the initial phases of its development. (OEPPA Business
Development Dept)

BP and CNPC tender Iraq Rumaila Produced Water Re-Injection (PRWI)
http://www.2b1stconsulting.com
BP and its partnering national oil companies, China National Petroleum Corporation (CNPC or
PetroChina), and Iraq State Oil Marketing Organization (SOMO) have called for tenders the Produced
Water Re-Injection (PRWI) project to develop the giant Rumaila oil and gas field in the south of Iraq.
Approximately 80 kilometers long
and 20 kilometers wide, Rumaila is
one of the largest oil field in the
world. With an average production
of 1.5 million barrels per day (b/d)
of crude oil, the BP Rumaila oil
field is the major contributor to the
Iraq national production just above
3 million b/d.
So the development of the Rumaila
oil and gas field by BP and its
partners is strategic to support the
economical growth and the social
stabilization in Iraq.
Rumaila oil field had been
discovered by BP in 1953, but it is
only in November 2009 that
BP managed to take it over
together with PetroChina and
SOMO during the license rounds
organized by the Iraq Government
to award technical services
contracts (TSC) to the foreign companies willing to invest in Iraq.
With more than 20 billion barrels of crude oil recoverable reserves lying by only 2,400 meters depth,
BP and its partners could accept the very low remuneration fee of $2 per barrel in compensation of the
planned $15 billion capital expenditure to develop the field. More than 350 wells are in operations and 150
more are to be installed on the next three years.
In order to help Iraq to meet its target of 6 million b/d of production by 2017, BP and its partners, are expect
to take a leading role in developing Rumaila with the most advanced technologies of enhanced oil recovery
(EOR) by water injection.
In that perspective BP, PetroChina and SOMO share the efforts according to their working interests:
- BP holds 38% and is acting as the operating company
- PetroChina handles 37%
- SOMO keeps the remaining 25%
In 2011, BP and its partners had appointed WorleyParsons to provide Rumaila development front end
engineering and design (FEED) work for the development of Rumaila in multiple phases.

WorleyParsons completed Rumaila development FEED
From the FEED work BP, PetroChina and SOMO are planning to build for the first phase the Produced
Water Re-Injection (PWRI) project phase-1 which includes two packages:
- Integrated Processing Complex (IPC)
- Cluster Pump Stations (CPS)
The IPC package will be an oil and
gas central processing facility to separate
oil, gas, condensate and water.
This IPC package will also include the
gas compression and the water treatment
facilities.
Running with three processing trains of
150,000 b/d each, the Rumaila Integrated
Processing Complex Phase-1 will have a
total capacity of 450,000 b/d.
The CPS package covers the pumps station
for the water re-injection.
The CPS unit will receive the water from
the separation unit and water treatment
facility operated in the IPC package.
The treated water will then be sent back to
the production wells pads through infield
pipelines.
Because of the large size of Rumaila field,
two water treatment facilities for re-injection, one in the north and one in the south.
Each water treatment unit will
have a capacity of of 80,000
b/d of water. Seven
engineering companies are in
competition for these
Rumaila IPC and Rumaila
CPS engineering,
procurement and construction
(EPC) contracts that BP,
PetroChina and
SOMO should award in 2014
for a production of the
Rumaila produced water re-
injection (PWRI) by the end
of 2016.

Uganda to sign memo with oil firms over production-ministry
Reuters - UK Focus
Uganda will sign a memorandum of understanding on Thursday with Britain's Tullow Oil , France's Total
and China's CNOOC , an Energy Ministry spokesman said, in a vital step towards starting oil production in
the country
East Africa's third-largest economy struck hydrocarbon
deposits in 2006 but commercial production has been
delayed and is not expected to start until 2016 at the
earliest. Analysts blame the delay on negotiations over a
planned refinery.
The pact is expected to detail facilities that need to be put
in place, such as pipelines and a refinery, and flow rates
for oil fields, before actual production can start. "It's the
signing of the MoU between the Ugandan government
and the three oil companies," ministry spokesman
Bukenya-Matovu Yusuf told Reuters, after the ministry
issued an invitation to a news conference.
Energy Minister Irene Muloni said last month that
developing Uganda's oil fields and building infrastructure
would cost between $15 billion and $22 billion, although
there were plans to try to reduce that. Uganda has agreed
to build a pipeline that will run to Kenya's planned new
Indian Ocean port of Lamu, which is expected to become
an export terminal for crude from Uganda, Kenya and
other regional states.

Kenya-Uganda Oil Pipeline
Special NewBase research
Key Data
• Project Type Crude oil pipeline
• Pipeline Length 352km
• Estimated Investment $302m
• Pipeline Capacity Pumping flow rate: 168 cubic metres per hour, Annual capacity: 1.2 million cubic metres
The Kenya-Uganda oil pipeline project is being jointly developed by the Kenyan and Ugandan
governments. It will replace road tankers as the primary means for transporting oil products from Kenya to
Uganda.
The new pipeline will connect Eldoret in Kenya
to Kampala in Uganda, passing through Malaba.
It will deliver white petroleum products from
Kenya to Uganda and vice-versa.
The governments of Kenya and Uganda together
hold a 49% (24.5% each) share in the pipeline
project, while private investors will have a 51%
stake. The private investors are yet to be
confirmed for the project.
"The new pipeline will connect Eldoret
in Kenya to Kampala in Uganda, passing
through Malaba."
The new pipeline will be 352km long and will interconnect the existing 14-inch-diameter pipeline that runs
from Nairobi to Eldoret. It also includes the addition of a spur line to Jinja in Uganda and construction of a
common user depot at the pipeline terminal in Kampala.
Kenya-Uganda crude oil pipeline project background
The crude oil pipeline is being developed through a public-private partnership under a 20-year build, own,
operate and transfer arrangement between Uganda and Kenya in 1995. The partnership will be handled and
operated by a joint coordinating commission (JCC).
The contract for conducting feasibility studies for the construction of the pipeline was awarded to an
international firm in 1997. The study was completed in 1998 and the report submitted the next year. The
study was funded by The European Investment Bank (EIB). It reported that the pipeline project would be
feasible to build.
Tamoil initially received a contract to build the pipeline in 2007, but the contract was later cancelled in 2012
as the company failed to implement the project.

Construction of the Kenya-Uganda pipeline
The Ugandan and Kenyan governments agreed to aim for construction of the pipeline to begin in June. The
construction is expected to be completed within a timeframe of 27 to 32 months so that the pipeline is
commissioned by 2016.
The JCC invited bids for construction of the pipeline in January and received bidding proposals from 14
companies. These included a consortium of the National Oil Corporation of Kenya and Indian Oil
Corporation, a consortium of Punjloid Infrastructure and Inpex Construction of Japan, a consortium of
Eiffage and Consolidated Contractors Group, Oil India and a consortium of Kalpataru Power Transmission
and China Petroleum Pipeline Bureau.
Other companies that bidded for the project were Turner & Townsend, Mota-Engil, Engenharia e
Construção of Portugal, Oasis Consortium Group Denys of Belgium, Alfaraa Jihind Consortium, Vitol of
France, the National Gas Company of Trinidad and Tobago and Orascom Construction Industries of Egypt.
"The Ugandan and Kenyan governments agreed to aim for construction of the pipeline
to begin in June."
Kenya-Uganda pipeline terminal details
The pipeline will use a common user depot, expected to be located to the east of Kampala. The terminal will
have a capacity of 72,000m3
and will transport products to and from Kampala and Eldoret.
The terminal will include construction of two tanks with a capacity of 32,500m3
for MPS products, two
tanks with a capacity of 5,654m3
for BIK products, two tanks with a capacity of 10,544m3
for JET products,
and two more tanks with 22,570m3
capacity for AGO products. It will also include construction of four
interface tanks with a capacity of 904m3
.
Future extension plans for Kenya-Uganda pipeline
The oil pipeline will extend to Kigali in Rwanda and Bujumbura in Burundian in the future. The feasibility
study for the pipeline extension was awarded to East African Community (EAC) in September 2011. The
study was funded with $600,000 by the African Development Bank (ADB). The pipeline extension was
accepted in principle by the Kenyan, Ugandan and Rwandan goverments.
NewBase research summary “ Uganda Oil “
• The first commercial oil discovery was made in the Lake Albert Rift Basin in 2006. Since then, successful well
appraisals have boosted Uganda's proven crude oil reserves from zero in 2010 to 2.5 billion barrels as of
January 1, 2013, according to the Oil & Gas Journal. Proven natural gas reserves were 500 billion cubic feet
(Bcf) as of January 1, 2013.
• Currently, Uganda does not produce any hydrocarbons, but oil production is expected to start within the
next five years. The United Kingdom-based Tullow, Paris-based Total, and the China National Offshore Oil
Corporation (CNOOC) are leading exploration and development activities in the Lake Albert area.
• Small-scale oil production may begin within the new few years to power local electricity plants. However,
since Uganda does not have a refinery or an export crude oil pipeline, full-scale oil production will depend
on when infrastructure is built.
• In 2011, the country consumed 23,000 bbl/d of petroleum products. Since Uganda is landlocked, it imports
petroleum products via neighboring countries.

China’s scramble for African mineralshttp://main.omanobserver.om/?p=54707
It is undeniable: China’s presence in Africa is growing. Asia’s largest nation has been
systematically cultivating enormous influence across the resource-rich continent. If the trend
continues, China could sideline European and American investors entirely, experts warn.
“China has a strong
appetite to invest in
mining in Africa,”
Lauren Patlansky,
managing director of
advisory firm Grant
Thornton’s Asia unit,
told 8,000 delegates
at the 19th African
Mining Indaba, the
world’s largest
mining investment
conference, in South
Africa’s Cape Town
this week.
China’s economy is
extremely powerful: its gross domestic product reached $9.4 trillion last year, contributing to 11
per cent of the world’s GDP. That’s almost equal to the combined GDPs of France, the UK and
Germany, and more than four times larger than that of Africa.
And when the 2008 global financial crisis forced the United States and the European Union to
slow down their foreign investment in Africa, China jumped at the opportunity by drastically
increasing its spending on the continent.
Western investors must watch out. China became
Africa’s top trading partner in 2009, with trade
exceeding 166 billion dollars today, although still
closely followed by the EU with 150 billion dollars,
according to the Organisation for Economic
Cooperation and Development.
In uncertain economic times, when private investors
shied away from the many challenges Africa poses – lack of infrastructure, frequent power
outages and high taxation — Chinese state-owned enterprises were bullish, said Patlansky,
having the funds to withstand these risks.

“Today, China is the most important, single biggest driver of the resource industry,” agreed Kobus
van der Wath, group managing director of international advisory and procurement firm The Beijing
Axis. So much so that Africa’s medium- and long-term future now hinges on China’s growth, he
believes: “Don’t view China as a far-off place.
You need to look east, and that’s a story that won’t change.” Over the past decade, China has
cemented its presence in Africa. It invested 75
billion dollars in the past decade and opened
21 mining bureaus on the continent, according
to Aid Data, a public database of Chinese
development finance in Africa.
Almost 80 per cent of Chinese imports from
Africa are minerals, because China’s fast
population growth and urbanisation are
causing rapidly increasing demand in
commodities. Although China’s mining
investments currently focus on only a few
countries, including South Africa, the
Democratic Republic of Congo, Sierra Leone,
Zambia, Namibia, Liberia and Eritrea,
economists predict it will soon expand into
other African nations.
Already, more than 2,000 Chinese companies
are backing some 1,700 projects in 50 African countries, according to Aid Data, including in
finance, aviation, agriculture, tourism, energy,
construction and manufacturing.
China has also made various smart, political
investments that will demand long-term gratitude
from African governments. It has financed the
building of a huge tower block for the
Organisation of African States in the Ethiopian
capital Addis Ababa, for example, and paid for
Malawi’s parliament building and Namibia’s state
house. — dpa

Panama Canal crisis threatens jobs, economyWritten by Oman Observer + AFP
A $1.6 billion dispute over cost overruns paralysed the Panama Canal’s expansion for a second
day on Thursday, with analysts warning that thousands of jobs and the economy are on the line.
Talks between the Panama Canal Authority
and a consortium led by Spanish builder
Sacyr broke down on Wednesday as the
two sides failed to bridge their differences
over who should foot the bill. Canal Minister
Roberto Roy confirmed to AFP that the
project was still halted. Construction cranes
stood still above half-finished walls in silent
work sites after the negotiations collapsed.
“The future of workers and the project is in
doubt. There is a crisis here and we don’t
know how it will end,” Saul Mendez,
secretary general of the powerful Suntracs
construction union, said.
Union officials say around 3,000-3,500
workers were involved in the construction of
new locks in the Pacific and Atlantic sides
of the waterway, which handles five per
cent of global maritime trade. Before the
dispute erupted in December, some 10,000
workers were employed in the project,
which was already nine months behind
schedule. Canal administrator Jorge
Quijano insisted that the project would be
completed as planned “in 2015 with or
without” the consortium known as Grupo
Unidos por el Canal (GUPC), which includes Italy’s Salini-Impregilo company. GUPC wants the
canal authority to compensate the firms for unforeseen costs of $1.6 billion beyond the initial $3.2
billion value of the contract. The authority says it will take any step necessary, including tearing up
the contract, to ensure that the project is completed next year.
“I don’t believe in this date. It can easily be (delayed) until in 2016,” economist Francisco
Bustamante, a former Inter-American Development Bank official, said. The canal facilities are
being widened to permit the passage of ships carrying up to 12,000 containers, almost triple the
current capacity. The work began in 2009 and was originally due to be finished this year,

coinciding with the 100th anniversary of the canal’s inauguration on August 15, 1914. The delay
will also be a fiscal nightmare for the government because it will have to wait longer to reap the
financial benefits, experts say. The use of the canal brings $960 million per year to government
coffers, representing almost 10 per cent of its revenue. The expansion was expected to bring
$300 million in the first year of operation,
$400 million in the second year and $2 billion
in the third year.
Panama is not the only country that would
suffer from a further delay. Ports in the United
States have invested millions to
accommodate the new super-cargo ships that
will travel across the isthmus. “The United
States has a lot of interest to see this
expansion completed. They don’t want to
have facilities harmed and waiting,” Quijano
said. The European Union’s industry
commissioner, Antonio Tajani, who has been
mediating in the dispute, warned that the
work stoppage was “bad news for
employment, for the worldwide economy, for
the expansion works of the canal.” Experts
say the overall cost of the project will end up
way more than the original estimate of $5.2
billion. Bustamante estimates that it will cost
an additional $2 billion. “Whoever builds it,
the canal will cost more,” he said. Economist
Horacio Estrivi said there is “already a de
facto increase in cost and time. The canal is
taking more time than planned.”
The extra costs will result from the arbitration
fight that the canal authority and GUPC will likely face and the probability that a new builder would
set conditions to take over. “Finishing the work with another contractor will have a higher cost
because it will start from scratch and will demand a different price because it is coming in to
resolve a problem,” said analyst Ebrahim Asvat.
Consortium suspends work
Meanwhile, a Spanish-led consortium said it has halted work on expanding the Panama Canal,
which handles five per cent of world sea trade, in a row about cost overruns. The multi-billion-
dollar project to build extra locks on the 80-kilometre waterway linking the Atlantic and Pacific
Oceans ground to a halt because of a dispute over who will pay for $1.6 billion (1.2 billion euros)

in overruns. “While awaiting an agreement to enable the finalisation of construction, work has
been suspended on the project,” said a statement by the GUPC consortium, led by Spanish
construction group Sacyr. The project to widen the canal so massive cargo ships can pass
through it — one of the biggest civil engineering operations in the world — was due to be
completed next year. But GUPC has said completion may be delayed by up to five years, as each
side has accused the other of breaking the deal.
The European Union’s industry commissioner, Antonio Tajani, who has mediated the dispute,
warned that the interruption of the dig would be “bad news” for the world economy. The
consortium accused the Panama Canal Authority of breaking off negotiations. It says the authority
failed in obligations to pay a $50 million bill and to help pay workers and subcontractors. GUPC
had offered to split the cost of finishing the dig with the canal authority and then let arbitrators
decide who pays for the overrun. It said late on Thursday it had submitted a further new proposal
to settle the dispute. “The GUPC continues as always to seek an agreement on co-financing in
line with the contracts and relevant legislation, with the aim of a joint and immediate resolution,”
the consortium said.
The canal authority had claimed on Wednesday that the builders had already stopped work, but
Sacyr denied that at the time, insisting it was seeking to avoid a shutdown. The canal is being
widened to permit the passage of ships carrying up to 12,000 containers, twice the current limit.
But the disputed contract to build a third set of locks, due initially to be completed this year, was
already running nine months late and since the beginning of this year work has slowed down
further. GUPC is in dispute with the canal authority in part over geological difficulties which have
obliged the builders to spend much more on cement than expected.

Your partner in Energy Services
Khaled Malallah Al Awadi,
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Energy Services & Consultants
Mobile : +97150-4822502
khalid_malallah@emarat.ae
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 years of experience in theof experience in theof experience in theof experience in the Oil &Oil &Oil &Oil & Gas sector. Currently working as Technical AffairsGas sector. Currently working as Technical AffairsGas sector. Currently working as Technical AffairsGas sector. Currently working as Technical Affairs
Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via HSpecialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via HSpecialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via HSpecialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energyawk Energyawk Energyawk Energy
Service as a UAE operations base , Most of the experience were sService as a UAE operations base , Most of the experience were sService as a UAE operations base , Most of the experience were sService as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gaspent as the Gas Operations Manager in Emarat , responsible for Emarat Gaspent as the Gas Operations Manager in Emarat , responsible for Emarat Gaspent 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 designinPipeline Network Facility & gas compressor stations . Through the years , he has developed great experiences in the designinPipeline Network Facility & gas compressor stations . Through the years , he has developed great experiences in the designinPipeline Network Facility & gas compressor stations . Through the years , he has developed great experiences in the designing & constructingg & constructingg & constructingg & constructing of gas pipelines,of gas pipelines,of gas pipelines,of gas pipelines,
gas metering & regulgas metering & regulgas metering & regulgas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation &ation &ation &ation &
maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gasmaintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gasmaintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gasmaintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAEConferences held in the UAEConferences held in the UAEConferences held in the UAE
andandandand Energy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satellite ChannelsChannelsChannelsChannels ....
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 09 February 2014 K. Al Awadi

New base special 09 february 2014

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