Saudi merger halted by regulatory issues

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NewBase 09 June 2014 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Saudi's Sipchem, Sahara call off proposed merger
By Reuters
Saudi International Petrochemical Co (Sipchem) and Sahara Petrochemical called off their
proposed merger on Sunday, citing an inadequate regulatory framework in the kingdom for the
collapse.
The tie-up, which would have
created a firm with a market
capitalisation of $5.7 billion at
current values, would have been
only the second ever example of a
merger between two listed Saudi
companies. Talks have been
ongoing since June last year
between the two firms, with an
announcement in December that a
share-swap agreement was likely
to be agreed in the first half of
2014.
However, in bourse filings on
Sunday, the companies said that while they still saw a merger as in the best interest of
shareholders, it couldn't be achieved under the current regulatory regime. "The companies
reached a conclusion that it is difficult to implement this merger under the current regulatory
framework using a structure acceptable to both companies where both companies will continue to
exist whilst achieving operational integration," the statement said.
They added talks had been postponed but they may look at different structures in future to see if a
tie-up was possible. The Capital Market Authority couldn't immediately be reached for comment.
Saudi Arabia's existing regulation on mergers and acquisitions was brought in by the CMA in
2007. Since then, there has been only one tie-up between listed firms: the 2009 merger by food
group Almarai and Hail Agriculture Development Company.
"There's limited precedent of such transactions between the two listed companies in Saudi
Arabia... regulatory issues could have been a concern," said Ankit Gupta, assistant vice president
of research at NBK Capital. Mergers across the Gulf are rare as consolidation is often scuppered
by major shareholders who are unwilling to cede control of businesses except for very high price
tags. However, both firms have The Zamil Holding Co Group, one of the kingdom's most
prominent family businesses, as a significant shareholder and this was expected to help the
process.

Petsec Energy increases its stake in Yemeni oil block
Press Release , Petsec
Australian oil and gas exploration firm Petsec Energy has agreed to acquire Mitsui E&P Middle
East’s 8.5 per cent stake in Yemen’s onshore Block 7 . The block is located in Al Barqa Permit in
Yemen and covers an area of 5,000 sq km, 340 km east of Yemen’s capital Sana’a.
Petsec Energy’s interest has now increased to 29.75 per cent.
The block contains the Al Meashar oil discovery and contains an inventory of leads and prospects
defined by 2D and 3D seismic surveys, which hold significant oil potential.
Terry Fern, chairman of Petsec Energy, said that Block 7 has the potential to add significant oil
reserves to the company’s resource base and significant value to its shareholders. “We look
forward to working with the operator Oil Search to further appraise the Al Meashar oil discovery
and explore the remainder of the block,” Fern added.

Iraq: LUKOIL signs addendum to West Qurna-2 contract
Source: LUKOIL
LUKOIL has signed an addendum to the contract for development and production of oil in the West Qurna-
2 field.
According to the addendum the scope of work for the West Qurna-2 project will include the Tuba-Fao
pipeline construction and will provide for changes in the procedure of the project investors’ costs recovery.
Changes concerning the cost recovery will allow investors to recover their costs within a shorter period of
time, in the same year when respective costs were incurred.
The Tuba-Fao Project provides for the construction of two pipelines, up to 120 km each, between the
existing Tuba Tank Farm, and the Fao Tank Farm, the main export hub in Iraq located on the of the Persian
Gulf coast. Pre-FEED (preinvestment study) has already been completed for the Tuba-Fao Project, which
foresees a direct connection of the pipeline to single-point mooring facilities and upgrading the pumping
systems of the Tuba Tank Farm.
'The Iraqi export system requires upgrading to accommodate growing production due to a number of
licensing rounds conducted in recent years. The construction of the Tuba-Fao Pipeline will provide for a
direct connection between the West Qurna-2 field and the country’s largest export terminal, creating
opportunities for further production growth from the field', LUKOIL President Vagit Alekperov said.

India: Oilex provides update on fracture stimulation operations at the Cambay-
77H well . Source: Oilex
Oilex has announced that Schlumberger equipment for the fracture stimulation programme has started to
arrive at Site from its previous contract, following an inspection and maintenance period. Other preparatory
activities for the Cambay-77H Well have also commenced to ensure readiness for the Stage 1 fracture
stimulation next week.
These activities include:
• Acquisition of a cement bond log to ascertain the condition of the cement surrounding the 4½ inch
production casing.
• Inspection, testing and installation of the 10,000psi fracture stimulation tree
• Filling frac water storage pit with ~21,000 bbls of water
• Coiled Tubing mobilisation, with initial operations to:
o Clean and gauge the inside of the 4½ inch production casing
o Calibrate the locations of the perforation clusters for each stage
o Cambay-77H 'toe prep' including Stage 1 perforations
Oilex has been working closely with Schlumberger to monitor the progress of their prior contract in SE
India and Oilex inspected the equipment at this location. A further inspection, testing and maintenance cycle

is planned at the Site, subsequent to transporting the equipment ~1500km by road. This seeks to minimise
the risk of equipment downtime during operations but requires some additional time as equipment and
material are positioned on the Site well pad.
Cleaning and gauging the 4½ inch production casing is another risk mitigation measure arising from
Cambay-76H lessons learned. Cleaning operations are imperative prior to any perforations to ensure a high
quality operational result is achieved. Finally, Schlumberger worldwide centres of excellence have reviewed
the planned coil tubing operations and fracture stimulation programme to ensure these maximize the chance
of a trouble free result.
As previously reported, Cambay-77H intersected the primary reservoir target (Y Zone) on prognosis. A
comprehensive suite of logs has been acquired and preliminary interpretation confirms the wellbore
encountered a significant sequence of hydrocarbon-bearing reservoir similar to Cambay-76H. The Cambay-
77H logs also compare favourably to the Cambay-73 vertical well, which produced from the Y zone at
~1MMscfd (plus condensate and is located approx. 1 km from Cambay-77H.
Cambay-77H is offset ~300m from the Cambay-76H horizontal well that underwent a successful multiple
staged fracture stimulation programme along its 633m lateral section in 2012. However, this well was
suspended before testing due to downhole mechanical problems.
Cambay-77H has a modified completion with cemented 4 ½” production casing to minimise risk associated
with post-frac milling operations. A shorter lateral section (350m) in Cambay-77H coupled with a
conventional 'plug and perf' method is expected to facilitate the primary goal of the well – recording
hydrocarbon flow information at surface during a production test.
During the fracture stimulation operations, Oilex will inform the market using the following update
milestones.
• Commencement of the Stage 1 fracture stimulation
• Completion of the fracture stimulation programme (consisting of 4 Stages)
• Completion of the plug mill-out operations
Any announcements in relation to flow back and production testing will be dictated by the Well response to
the stimulation programme.
Managing Director of Oilex, Ron Miller, said;
'The drilling rig moved off site within the
forecast 3 week period and is currently stored
immediately adjacent to the Cambay-77H well
pad. The fracture stimulation mobilisation is
taking slightly longer than forecast due to the
duration of Schlumberger’s prior commitment,
which was out of Oilex’s control. The close
working relationship between Schlumberger
and Oilex has enabled activities to now
progress as planned. This should culminate
with the production testing of Cambay-77H
commencing in August 2014, after a flowback
and well clean up period. We look forward to
the next few weeks of fracture stimulation and well testing activities.'

Indonesia: AziPac farms into Mitra Energy's Bone PSC, offshore
Source: AziPac
AziPac, the Seacrest Group backed E&P company focussed on the maritime basins offshore Asia Pacific and the Bay
of Bengal,has announced that it has taken a 40% participating interest in the Bone PSC offshore Indonesia. Under
the terms of the agreement, AziPac, through its wholly owned subsidiary Azimuth Indonesia Limited, will acquire a
40% participating interest in the Bone PSC.
Upon completion of the farm-out, the participating interests in the PSC will be as follows: Mitra Energy
(Indonesia Bone) Ltd 60%; Azimuth Indonesia Limited 40%.
This farm-out remains subject to the approval of the Government of Indonesia. The Bone PSC is situated in
Bone Bay, offshore South Sulawesi, and lies in water depths extending from the coast to over 2,000m. The
block covers an area of 7,516 sq km, which is equivalent to approx. 327 Gulf of Mexico blocks or 31 UK
Central North Sea blocks.
David Sturt, Director of AziPac, commented:
‘We are very pleased to have joined Mitra in this exciting block. The Bone PSC area benefits both from a
very prospective petroleum system, as well as an ideal geographical position within the regional markets.
We look forward to progressing the exploration and development of this high potential asset.’

Italy: Sound Oil announces Rapagnano gas field reserve upgrade
Source: Sound Oil
Sound Oil, the European / Mediterranean focused upstream oil and gas company, has confirmed an increase
in its internal proven reserve estimates at the onshore Rapagnano gas field in Italy. Since achieving first gas
in May 2013, the Rapagnano gas field has produced over 4 MMscm (0.14 Bscf) without a lost time incident.
This is significantly ahead of the Company's original production estimates.
At the end of May 2014, the Company completed a planned maintenance shutdown which provided the
opportunity to measure the bottom hole pressure in the Rapagnano production well and to use the data to
revise the Company's estimates of remaining reserves and field life. After a 48 hour build-up period the
bottom hole pressure survey has confirmed that gas expansion drive is active in the reservoir with no
observed water influx.
Based on this data the Company has upgraded its internal estimate of proven (1P) reserves at Rapagnano to
30 MMscm, a 31% increase on the year-end 2013 estimate of 22.9MMscm (0.81 Bscf). The Company's
proven and probable (2P) reserve estimate for Rapagnano remain unchanged at 36.2MMscm (1.28 Bscf),
with production expected to continue on an extended plateau rate for at least another 12 years.
Chief Executive Officer James Parsons commented:
'Our strategy of monetizing our smaller production assets has been borne out by these very pleasing results
at Rapagnano. Our next asset to come on stream will be the Casa Tiberi field with production start-up
expected shortly.'

Norway: Statoil to boost recovery from Troll field
Source: Statoil
Statoil reports that on 4 June two new compressors were lifted aboard the Troll A platform in the North Sea.
Once the compressors are up and running next year, they will boost recovery from Troll by more than 83
billion standard cubic metres of gas. As gas is produced on the giant Troll field, pressure in the reservoir
drops. Pressure on the platform is lowered to help the gas move up and compressors are used to keep it
moving. Troll already has two compressors, which will now be joined by compressor numbers three and
four. These two compressors will boost recovery from the giant field by 83 billion standard cubic metres of
gas - 522 million barrels of oil equivalent. That’s more than Aasta Hansteen and Valemon put together.
The compressor module was
built at Aibel's yard in
Thailand, and following a short
stop in Haugesund, it is now in
place on Troll A. 'The new
module was lifted into place in
a safe and sound manner. This
has been planned for a long
time, and it is therefore positive
that we have reached this
milestone, which is important
for Troll A's gas deliveries over
the next 50 years. Installing
new modules weighing a total
of more than 6,000 tonnes on
an existing platform in
operation is a huge task,' says
Knut Solemslie, production
manager on Troll A.
The project will ensure a daily
export capacity of 120 million
standard cubic metres of gas
and annual production of 30
billion standard cubic metres.
'This is equivalent to the consumption of more than 10 million European households. The project is
therefore an important contributor to the European gas market. It will also be possible to extract the gas
more quickly, while also increasing the technical lifetime of Troll A,' says Tone Kristin Børslid, asset owner
representative for the project.
Statoil currently has high pressure on low pressure. In all, the new compressors on Troll, Kvitebjørn,
Åsgard, Kristin and Heidrun will contribute more than 1.2 billion barrels of additional oil equivalent. A
giant field in itself, just from enhanced recovery.
The project consists of three different modules. Aibel, the main supplier for the Troll compressor project,
built one module in Thailand and two in Haugesund. Last summer, the EIT module (electrical, instrument
and telecom) from Haugesund was lifted on board Troll. The two next modules will be installed this
summer. Yet another module will be lifted on board a few weeks later. The IUM module (integrated utility

module) was prefabricated in Poland and assembled in Haugesund, where the equipment was also installed.
It weighs 1,800 tonnes.
The two new compressors on Troll A will be supplied with power from shore, more specifically from
Kollsnes in Hordaland county, Norway. The two compressors can deliver an output of 50 megawatts each
when in maximum operation mode. Statoil has been granted a licence for this and the power grid has been
reinforced in order to deliver the power needed by the compressors. While the compressor module was en
route from Thailand,
power cables were
laid from Troll A to
shore. Five cables,
each totalling about
70 kilometres, were
laid between
Kollsnes and the
platform. Four of
these cables are
direct current (DC)
and were installed in
pairs.
'A transformer station has been constructed
at Kollsnes which converts alternating
current into direct current to reduce energy
loss when the electricity is transported over
long distances. On Troll A, the direct
current is converted back into alternating
current,' says marine installation manager
Tom R. Guttormsen.
The final cable is an alternating current
cable with fibre optics which will back up
existing power deliveries to the platform,
and will also provide the possibility of
additional signal transmission between
Kollsnes and Troll A. The first cable was
connected to the Troll A platform on 21
April. The installation of cables toward
shore began afterwards. The work is
carried out under an ABB contract with the
Lewek Connector vessel, which is operated
by EMAS. Lewek Connector is one of the
largest and most modern cable installation
vessels in the world.

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

Big risks seen in Putin’s idea to beef up Gazprom
Reuters + Oman Observer
PRESIDENT Vladimir Putin’s idea of a massive boost to Gazprom’s share capital has taken
bankers and the energy industry by surprise, with some fearing it could further strain Russia’s
sanctions-hit economy and undermine the rouble.
Putin floated the unexpected suggestion on Wednesday, hinting that a recapitalisation of the state
gas giant could be funded from Russia’s gold and foreign currency reserves. Since then, sources
have suggested the money could come from a ‘rainy day’ fund meant to cover the state pension
deficit.
On Friday he elaborated on the idea, saying the state could buy into a possible Gazprom share
issue with the reserves, but adding that it was just one of several options. The Kremlin has
declined to give details of the plan, and analysts are questioning not only how it would be
implemented, but whether Gazprom actually needs the extra funds at all.
“The Gazprom story is rouble-negative. The use of forex reserves to recapitalise Gazprom will
decrease the safety cushion held by the central bank,” said Tatiana Orlova, strategist at RBS in
London. Russia’s gold and forex reserves, the world’s fourth largest, have shrunk by $42 billion
since last year to $466.9 billion, mostly due to central bank intervention to curb the rouble’s fall
since the crisis over Ukraine erupted.
“Reserves are needed to support the rouble. We should not forget about 2008 when oil prices
more than halved… I think this is a very tricky path,” said Sergei Zhavoronkov of the Moscow-

based Gaidar Institute for Economic Policy. During the 2008 global financial crisis, Russia
haemorrhaged about $200 billion, or a third of its reserves, to prop up the currency.
Following a landmark $400 billion agreement last month to sell natural gas to China, Russian
officials estimate Gazprom now needs some $55 billion to build up pipelines and bring two giant
fields — Kovykta and Chayanda — on stream. It was against that background that Putin told an
energy industry conference that a recapitalisation could help Gazprom pay for the required
infrastructure. “It came as a total surprise to us,” said an aide to one of the participants at the
meeting.
Hit by Ukraine-related sanctions that
have triggered nearly $70 billion in
capital outflows so far this year, the
Russian economy is expected to
grow only by around 0.5 per cent in
2014, compared to an initial
government forecast of 2.5 per cent.
The rouble is 5 per cent down since
the start of the year against the
dollar. Even after rebounding from a
steep fall when Russia annexed
Ukraine’s Crimean peninsula in
March, it is still underperforming
other currencies in the BRICS group
of developing nations.
The leaders of Russia and Ukraine
met on Friday for the first time since
Moscow annexed Crimea, even as
fighting continued in eastern Ukraine
between government forces and
pro-Russian separatists. “This crisis
is much worse than in 2008. At that
time, everyone was in the same
boat. Now it’s only Russia, and everyone wants to sink it in addition to dealing with their own
problems,” said a senior banker from a Russian state-owned bank. “It will be a very hard
year.” Ukraine-related volatility has brought a spike in borrowing costs for Russian companies,
leaving the domestic market or the government to serve all the needs of Russia’s $2 trillion
economy unless Moscow can raise funds in Asia. Analysts, business and government sources
asked by Reuters about the Gazprom idea said a recapitalisation could be carried out via loans
from state entities or by government purchases of new shares.
Putin mentioned a possible share issue on Friday. “If the construction costs roughly $55 billion,
maybe more, this is a fail-safe option for investing money,” he told journalists when asked about
the possible recapitalisation during a visit to France for D-Day commemorations. But he added:
“This is just one of the possible options. There are others.” Under current law, the central bank
cannot invest its reserves in equity. Several sources said the cash could come from one of
Russia’s ‘rainy day funds’ that have amassed windfall oil revenue.
“There is an understanding that either the Reserve Fund or the National Wealth Fund” will be
used, said a government source. Both are managed by the Finance Ministry and their foreign
currency holdings are part of the central bank’s reserves.

Russia: Polarcus mobilizes for Fedynsky in the Russian Arctic
Source: Polarcus
Polarcus, in collaboration with Russia's Dalmorneftegeophysica ('DMNG'), has mobilized for the 3,000 sq
km high-density broadband Fedynsky 3D survey in the Russian Barents Sea. Polarcus Nadia departed
Kirkenes, Norway, on 07 June for the project area.
This project forms part of the Company's existing backlog that has been previously announced through the
Oslo Stock Exchange.

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Your partner in Energy Services
Khaled Malallah Al Awadi,
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Energy Services & Consultants
Mobile : +97150-4822502
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 & Gas sector. Currently working asOil & Gas sector. Currently working asOil & Gas sector. Currently working asOil & Gas sector. Currently working as
Technical Affairs Specialist for Emirates General Petroleum Corp. “EmaTechnical Affairs Specialist for Emirates General Petroleum Corp. “EmaTechnical Affairs Specialist for Emirates General Petroleum Corp. “EmaTechnical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation forrat“ with external voluntary Energy consultation forrat“ with external voluntary Energy consultation forrat“ 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 Operationsthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operationsthe GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operationsthe 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 & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gManager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developedas compressor stations . Through the years , he has developedas compressor stations . Through the years , he has developedas compressor stations . Through the years , he has developed
great experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructinggreat experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supplyof gas pipelines, gas metering & regulating stations and in the engineering of supplyof gas pipelines, gas metering & regulating stations and in the engineering of supplyof gas pipelines, gas metering & regulating stations and in the engineering of supply
routes. Many years were spent drafting, & compiling gasroutes. Many years were spent drafting, & compiling gasroutes. Many years were spent drafting, & compiling gasroutes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs fortransportation , operation & maintenance agreements along with many MOUs fortransportation , operation & maintenance agreements along with many MOUs fortransportation , operation & maintenance agreements along with many MOUs for
the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andthe local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcastedEnergy program broadcastedEnergy program broadcastedEnergy program broadcasted
internationally , via GCC leading satelliinternationally , via GCC leading satelliinternationally , via GCC leading satelliinternationally , via GCC leading satellitetetete ChannelsChannelsChannelsChannels ....
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Saudi merger halted by regulatory issues

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