New base special 12 november 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 12 November 2014 - Issue No. 477 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Adnoc readies carbon capture and injection for use at oilfields
The National + NewBase
Abu Dhabi National Oil Company will soon start full implementation of the use of carbon capture
as part of plans to boost oil production at its fields while freeing up much-needed natural gas in
the recovery process, a company official said.
“We are trying to reduce reliance of gas for our oil production, so we are getting into CO2 injection
for EOR [enhanced oil recovery],” said Omar Al Suwaidi, Adnoc’s deputy director for strategy and
coordination, on the sidelines of Adipec.
Abu Dhabi Company for Onshore Oil Operations (Adco) had “already successfully completed the
[pilot] project. Offshore companies are doing the same. We actually are planning several pilots
and fairly soon after that full field implementations.”
He declined to say when the full-field implementation will start.

The ability of major international oil companies to implement such EOR techniques has been
central to their proposals to win a piece of a new operating concession in Abu Dhabi. The
companies face increased competition for the contracts from rival firms in Asia, where buyers now
account for 90 per cent of the emirate’s oil exports.
To extend the lifespan of existing oilfields, Adnoc is in the process of lifting oil recovery rates to 70
per cent – a technical challenge that requires enhanced techniques including the injection of
gases, chemicals or steam into the oil reservoir. The global average for recovery is about 35 per
cent.
It has set up a joint venture with Abu Dhabi’s renewable energy firm Masdar for carbon capture,
use and storage (CCUS) projects, which will utilise CO2 emitted from the country’s largest
steelmaker, Emirates Steel.
The Abu Dhabi CCS project, due to start in 2016, involves capturing and then piping 800,000
tonnes of CO2 emissions per year to fields operated by Adnoc. Last month the Dubai-based
Dodsal group won a Dh450 million contract to build a CO2 compression facility and a 50-kilometre
pipeline.
The EOR project in Abu Dhabi, which holds more than 90 per cent of the country’s oil reserves, is
one of the first of its kind in the Arabian Gulf.
Adco has a capacity target of 1.8 million barrels per day by the end of 2017, which will help to
boost the country’s output capacity that year to 3.5 million bpd from 2.8 million bpd now.
Abu Dhabi also has rising local demand for gas and would like to replace its use in the energy
sector with CO2 to free it up for commercial uses. The emirate also has one of the world’s highest
carbon footprints and would like to cut its emissions.
As many as 100 carbon capture projects are needed by 2020 and 3,000 by 2050 to slow the
speed of global warming, according to the Paris-based International Energy Agency. Globally,
many such projects have failed because they proved not to be commercially viable and because
of concerns about the risk of storing CO2 underground.

Saudi: Expert calls for decentralized desalination plants in Kingdom
Saudi Gaszette + NewBase
Ahead of the Saudi Water & Power Forum (SWPF) 10th edition that will be held on Jan. 12-14,
2015 at Al Faisaliah Hotel in Riyadh, the president of SWPF and an industry expert at that, issued
warning on rising dependence on central water desalination plants and at the same time called for
multiple sources of local water production near consumption centers.
Dr. Adil Bushnak, Chairman of Bushnak Group, and a global water authority in the field of
water desalination and water reuse, has warned of the growing reliance on
central desalination plants to provide drinking water in Saudi Arabia. He
suggested as an alternative opting to move from central to decentralized
solutions confirming the necessity to achieve financial sustainability and
reliance on renewable energy sources to provide drinking water.
According to Bushnak, the Saudi water sector unfortunately continues to
build larger central plants which are based on import. “It is illogical to pump
water hundreds of kilometers. This requires costly and large amounts of
energy consumed by mega desalination plants. Yet they are continually
exposed to risks or crashes, which will end up with a shortage of water in
the Kingdom,” Bushnak averred
Dr. Bushnak added that it is better to build small plants with lower costs within cities and close to
residential areas. In addition to dealing with the private sector to buy local fresh water, which costs
the state less to produce and pump water. It also helps to empower young Saudis to own and
manage these plants to localize the water industry.
Bushnak stressed the importance of adopting and implementing comprehensive, integrated, and
strategic plans for the sustainability of water, food and energy to move forward. Government
priorities should be to manage demand and ensure local financial and operational sustainability
involving diverse segments of society, through non-traditional solutions. At present there is poor
water security lack of strategic plans.
Bushnak lauded the Ministry of Water and
the National Water Company's efforts to set
up several plants near the capital Riyadh for
groundwater desalination. He has
emphasized the need to use non-renewable
groundwater as a source of drinking water
to be sufficient for hundreds of years rather
than continuing to drain it in few decades in
traditional agriculture. Also emphasized the
need to store drinking water underground
sufficient for six months not six days close
to all cities. These issues are being
discussed by experts from the Ministry of
Water & Electricity, Aqualia and Schneider
Electric during Session 6 at the Saudi Water
& Power Forum.

Bushnak has urged the ministry to use the valleys as storages to replace traditional surface dams
with groundwater dams, to reduce rainwater evaporation and increase rain harvesting.
To achieve food security, Bushnak has called for spreading the use of greenhouse and vertical
agricultural homes within cities. This will train and empower the Saudi youth to use renewable
water sources, and produce the Kingdom’s need for food.
Bushnak has also recommended reviving water endowments in cities and provinces to achieve
the financial and administrative sustainability for water provision under all circumstances. He
suggested that the Ministry of Water, in cooperation with the National Water Company, aims to
establish water endowments in each region, under the presidency of Emir from the region, with
the participation of the community leaders.
With regard to leakages and wasting water, the president of Saudi Water Power Forum (SWPF)
believes that desalinated water leakage in some districts and especially Jeddah is up to 50% or
more. The ratio may vary from one city to another, which in turn causes groundwater to rise and
the loss of sewage treated water, which must be re-used for industrial and agricultural purposes to
contribute in achieving food security.
Bushnak was surprised that despite the hard work on expanding networking projects, lots of poor
people who are not connected to the water network (and due to the shortage of services) pay
double the cost of desalinated water and disposal of sewage compared to the rich.
He expects active participation of the Secretariat of the Gulf Cooperation Council in the
forthcoming Saudi Water Power Forum to review what has been achieved in electricity
connection. The current working of the Secretariat is to set up a comprehensive strategy of water
in Gulf states. Bushnak has explained that the Gulf states electrical connection would save all Gulf
countries millions of riyals and will assist with helping to export renewable energy.
Bushnak underscored the objectives of the upcoming Forum held in Riyadh the tenth consecutive
year, confirming continuity of its successes achieved by attracting all government parties, officials,
experts and internationals. “With an increase in the number of company involvement doubling,
this edition promises to deliver and ensure the continual development and sustainability of the
water and power sectors with Saudi Arabia.”

Thailand: Mubadala Petroleum starts Manora production
Mubadala Petroleum has announced that production started at its Manora oil field in the northern
Gulf of Thailand on November 11, 2014.
Production is expected to reach a peak rate
of approximately 15,000 bopd as production
wells are completed. Up to 10 production
wells and five injection wells in the main
reservoir sequence are planned. The field is
located within the G1/48 concession,
approximately 80 kilometers offshore in 44
meters of water depth.
“The Manora project has been delivered with
a strong emphasis on safety and together
with our partners Tap Energy (Thailand) Pty
Ltd and Northern Gulf Petroleum Pte Ltd., we will have invested approximately US$300 million in
the development,” the company said.
Bakheet Al Katheeri, Chief Operating Officer, said, “The Manora
development builds on Mubadala Petroleum’s strong technical
understanding of the subsurface in this basin, which is based on the
experience gained over the years in the very successful operation of
the Jasmine oil field in concession B5/27.
The Jasmine field has already produced well over 50 million barrels
of oil, far exceeding the 7 million barrels of recoverable reserves
underpinning the original project sanction in 2004. In addition to
Jasmine and Manora, we are in the process of developing the Nong
Yao oil discovery in concession G11/48 with first oil expected by
mid-2015. By that time Mubadala Petroleum production from the
three operated fields will more than double from current rates.”
Originally discovered in 2009, Manora opened up a new oil play in
the northern Gulf of Thailand. The field was further appraised by
drilling three wells, and field development was sanctioned in July 2012.
First oil from Manora follows the hook-up and commissioning phase and parallel operations drilling
of the first four of up to 10 production wells. All platform facilities were constructed in Thai
fabrication yards. The facilities include a Wellhead Processing Platform, with water injection
facilities to maximize oil recovery, connected via subsea pipelines to a Floating Storage and
Offloading (FSO) vessel. The commercial life of the field is projected to exceed 10 years.
Proved and probable reserves contained in Manora’s primary reservoir, and recoverable by
natural depletion, are estimated to be in the order of 20 million barrels (gross). Water injection will
be implemented from start-up and once its effectiveness has been confirmed by enhanced
production performance, further reserves will be added.
Mubadala Petroleum, holds a 60 percent interest and is the operator of G1/48. Tap Energy
(Thailand) Pty Ltd holds a 30 percent interest and Northern Gulf Petroleum Pte Ltd the remaining
10 percent.

ADMA-OPCO Signs $3.5 Billion Contracts for Nasr Field Development,
Additional Gas Production at Umm Shaif Field
NewBase +
Abu Dhabi: Abu Dhabi Marine Operating Company, ADMA-OPCO, has signed three major
contracts for Nasr Full Field Development Project with National Petroleum Construction Company
(NPCC), Hyundai Heavy Industries (HHI) and Technip, at an approximate total value of $3 billion
(Dh11.02 billion).
ADMA-OPCO has also awarded a forth contract
for EPC Work for Additional Gas Supply to
Onshore & Flexibility Assurance at Umm Shaif
Super Complex to NPCC at an approximate
value of USD 494 million (Dh1.8 billion).
The Nasr development is a strategic initiative of
Abu Dhabi National Oil Company (ADNOC) and
fits within the context of ADMA-OPCO’s plans to
add 270 mbpd of additional production from its
new fields Umm Lulu, Nasr and Satah Al
Razboot (SARB), as part of its overall scheme to
raise oil production.
In addition to Satah Al Razboot and Umm Lulu, Nasr is the third offshore hydrocarbon reservoir
being developed by ADMA-OPCO under its strategy to increase its production.
Ali Al Jarwan and Aqeel Al Madhi shake
hands after signing the contract

Oman: Contract award soon for Duqm Logistics Area
Omanobserver + NewBase
MUSCAT — The first phase of an ambitious initiative to position Duqm as a strategic logistics hub
on Oman’s southeastern coast will shortly get under way. The initiative is being driven by the Port
of Duqm Company (PDC) under an enlarged mandate that envisions not only the management of
the Sultanate’s newest maritime gateway on the Wusta coast, but also the development of
logistics and industrial clusters.
The latter zones fall within the limits of a 2,000-hectare site allocated to PDC under a concession
agreement concluded with the Omani government, as well as a Usufruct Agreement inked with the
Special Economic Zone Authority of Duqm (SEZAD) earlier this year.As a first step, a contract will
be shortly awarded for the preparation of a site exclusively earmarked for logistics-related
investments adjoining the Port of Duqm, according to a high-ranking executive.
“A tender is currently in hand for the development of the first tranche of around 60 hectares out of
a total 700 hectares allocated for logistics purposes. This is an area earmarked for all kinds of
open, covered and temperature-controlled warehousing, as well as a temporary storage yard for
maritime goods before they are shipped to the end-user’s location within and beyond the SEZ.
Our target is to make the first parcel available for lease and investment by around the middle of
2015,” Port of Duqm’s CEO, Rien Van de Ven (pictured), said
Speaking to the Observer, he said the Logistics Area’s location adjoining the port makes it ideal
for all kinds of warehousing and logistics related activities. “Because of its close proximity to the
port, it can be used to store foodstuff, grain commodities, perishables and electronic goods that

must be moved from the wharf into temperature-controlled warehouses as quickly as possible.
From this vantage location, foodstuff can be moved to local supermarkets, retail outlets and other
end-user locations as and when needed by the client.
Likewise, the Logistics Area
can also serve as an
intermediate storage yard for
pipelines, oilfield equipment,
construction materials, and
project cargo linked to large
ventures planned within and
outside the SEZ. “We reckon,
for example, that contractors for
the Duqm Refinery will use the
Logistics Area as a temporary
laydown area for project cargo
and machinery before it can be
transported to site,” Van de Ven
stated. Uptake of space within the Logistics Area is expected to be grow in step with the pace of
investment in large anchor industries, industrial and petrochemical projects, cement plants, and so
on, within the SEZ, he said
Demand is also projected to grown when Port of Duqm formally opens for container operations
slated sometime early next year. Container volumes loaded and discharged by Short Sea Lines
operating between Duqm and other regional ports are expected to fuel the demand for space
within the Logistics Area, the CEO added
Depending upon the uptake of plots, Port of Duqm Company plans to progress the next tranche of
around 60-70 hectares for development. All 700 hectares of land allocated for the Logistics Area
are expected to be fully prepared for investment over the next 10 years.
The Port of Duqm offers facilities for the export of industrial minerals and for setting up of mineral
related industries. A fully equipped 6,000 hectares industrial area is being developed, with its
proposed road connection towards north and south Oman. Industrial mineral resources are
abundant and diversified in Oman, and some of them are located very close to the port such as
white limestone or silica sands.

Russia, Iran sign nuclear construction deal
By Reuters + NewBase
Russia will build two new nuclear power plant units in Iran under an agreement signed in Moscow
on Tuesday between subsidiaries of the two countries' state atomic agencies.
The agreement precedes a November 24
deadline for a deal at talks between Iran and
world powers that would curb Tehran's
nuclear programme, which the West says
may be aimed at building atomic weapons
but Iran says is for peaceful purposes.
Russia, which is involved in those talks, will
also cooperate with Tehran on developing
more nuclear power units in Iran, and
consider producing nuclear fuel components
there, according to a memorandum signed
by the heads of the state atomic bodies,
Sergey Kirienko of Russia's Rosatom and Ali
Akbar Salehi of Iran's Atomic Energy
Organisation (AEOI).
Iran already runs one Russian-built reactor in its Bushehr power plant.

UK: ABS gives nod for cylindrical FLNG by Sevan
ABS group
ABS, a provider of classification services to the global offshore industry, has granted approval in
principle (AIP) for the Sevan cylindrical floating LNG (FLNG) production unit concept for offshore
production, storage and transfer of LNG, LPG and condensate.
The next generation FLNG design concept is based on the proven circular and geostationary
Sevan FPSO design, which is being used in the Norwegian and Central UK North Sea and
offshore Brazil and is under construction as the first application of an FPSO unit to be installed in
the Barents Sea.
ABS says that the full scope of design review for the FLNG concept includes an assessment of
the feasibility of the structural strength of the equipped FLNG hull and process topside structure
as well as a global performance and safety analysis conducted in accordance with the ABS Rules
and Guides for floating LNG units.
“By awarding Sevan AIP, we have acknowledged that the company’s innovative approach to
designing and constructing a first-of-its-kind FLNG production unit is based on sound engineering
practices and ABS classification standards,” said Tor-Ivar Guttulsrød, Director of FLNG, Global
Gas Solutions, at
ABS.
“ABS continues to
support new FLNG
concepts that, when
fully developed and
implemented, will
strengthen the
emerging FLNG
market.”
The Sevan FLNG
production unit will have a proprietary cylindrical hull capable of operating in more than 3,000 m
(10,000 ft) water depth and in harsh environments, such as extreme North Atlantic and cyclonic
conditions. The unit design is based on environmental load calculations for a 100-year return
storm in the Barents Sea. Similar to the Sevan FPSOs, the FLNG unit’s axio-symetric hull shape
enables high capacity for LNG storage and deck loads and tolerance for weather spreading and
eliminates the need to weathervane in rough seas. The unit can be designed to have gas
processing and liquefaction up to 4 MTPA and store up to 240,000 m3 of LNG and 36,000 m3 of
condensate.
According to Sevan, some of the most significant advantages of a cylindrical hull design are the
elimination of the need for a turret and swivel and the favorable motions with very little roll and
pitch, as well as reduction of typical wave induced fatigue loads and minimized hull deflection,
which simplifies the topsides design.
“High availability, inherent safety and simple operation should be the main criteria when selecting
technology offshore,” said Lars Ødeskaug, Chief Operating Officer at Sevan Marine ASA and
responsible for Sevan’s LNG efforts.
“Sevan’s cylindrical FLNG solution meets these criteria at an attractive cost. We are proud to have
been granted AIP for our unique design concept, which we believe will introduce a better option
for producing, storing and offloading LNG in challenging operating areas.”

Nigeria: Afren announces Nigeria operations update
Source: Afren
Afren has provided an update on its operations at Ebok, Okwokand OML 115, all located offshore
Nigeria. Ebok Central Fault Block Extension platform jacket installed
At the Ebok field, following a favourable weather window, Afren and its Partner, Oriental Energy
Resources, are pleased to announce that the jacket for the Ebok Central Fault Block Extension
(CFBx)
platform has now
been installed. The
installation of the
decks and bridge
will complete in
early January 2015
once the wellhead
jacket at Okwok has
been installed;
following which the
Partners will
commence the hook
up and
commissioning of
the CFBx platform.
The work
programme at the CFBx will include up to 9 new wells to be drilled and brought on-stream by the
end of 2015 targeting both producing and undeveloped reservoirs. Elsewhere at the North Fault
Block (NFB), the Partners continue to make good progress and are targeting completion of the
third new producer by mid-December 2014. The forward programme at the NFB will incorporate
up to an additional 5 wells by year-end 2015.
The Company remains on-track to deliver full year net production at the lower end of guidance
between 32,000 to 36,000 bopd (excluding Barda Rash).
Drilling commences on the Ameena East Prospect
Afren and its Partner Oriental have spudded the Ameena East well located on OML 115, offshore
Nigeria. The well is being drilled with the Shelf Adriatic I drilling rig. The Ameena East prospect
will be targeting 65 mmbbls of gross unrisked resources in zones of prospectivity in the Biafra
intervals that are productive north of the acreage, with secondary objectives in the Qua Iboe
reservoirs equivalent to those at the Ebok and Okwok fields. The drilling campaign at Ameena
East is expected to be completed in December, 2014.
Drilling at the Ebok Deep exploration tail targeting 50 mmbbls of gross unrisked resources in the
deeper Qua Iboe and Biafra reservoirs is expected to commence in Q4 2014 following the
completion of the third new producer at the NFB.

US: EIA tracks oil and natural gas production by both surface location
and geologic formation. Source: U.S. Energy Information Administration, Drilling Productivity Report
EIA uses two differing methods to determine production from major and minor oil and natural gas plays
onshore in the United States. One method takes a geographic approach, focusing on surface-level
analysis, and the other method uses a geologic approach, focusing on formation-level details. The
differences between these two approaches can provide information on potentially emerging plays.
EIA's Drilling Productivity Report (DPR) examines surface activity to analyze production.
Production from counties overlying major producing regions, as well as pipeline flow and drilling
rig movement, are used to estimate total production. The DPR is focused on analyzing the
relationships between drilling efficiency in a region—such as production volumes compared to rig
counts—and the oil and natural gas production from that region.
The DPR's focus on surface activity means that these production volumes do not distinguish
between the specific geologic formations into which individual rigs are drilling. Formations can
overlap each other like layers of a cake. For instance, production in the Permian Basin region of
Texas shows production from the Spraberry, Wolfcamp, Bone Spring, Delaware, Glorieta, and
Yeso formations, reflecting various drilling depths associated with each formation within the basin.
EIA also tracks production from specific formations. Using geologic formation information from
producing wells, this approach reveals exactly which plays or formations are associated with the
production. Once a well is completed, operators in most states report the formation or reservoir to
their respective state agencies, as this information may not be known (or disclosed) before drilling
or completing a well.
When results from these methods are combined, the geologically derived production volume per
play or formation is compared to the geographically derived production level. Because the DPR
regions include all counties overlying the producing formations, the geologically derived

production level is always less than the geographically derived production level. If the difference
between the two remains constant or decreases, it implies that EIA is capturing the important
sources of production in the region.
However, if the difference between the two increases, this indicates production activity that is
emerging and is not yet identified. In these cases, further analysis is done to identify the source of
the increasing production.
For example, the gap between production estimates for the Niobrara-Codell formation and
Niobrara-Codell region has been growing. This led EIA to analyze the region further, and it was
determined that the emerging production was from formations in the Powder River Basin.
Formations in this region—the Frontier, Parkman, Shannon, Sussex, and Turner—have recent
production increases because of the application of advanced completion techniques, specifically
horizontal drilling and hydraulic fracturing.

Oil Price Drop Special Coverage
Brent oil falls belwo $82 after hitting four-year low
London: Brent crude traded close to $82 per barrel on Tuesday after hitting a four-year low, as a
firm dollar and robust production from US shale fields outweighed a drop in Libyan output.
Brent for December fell
$1.11 to $81.23 per barrel,
its lowest since October
2010, and was around
$82.10 by 1235 GMT. US
crude was down 15 cents
at $77.25 per barrel. The
US dollar hit a seven-year
high against the yen and
was up 0.2 per cent on the
day against a basket of
currencies.
A strong dollar suppresses
demand for oil and other
dollar-priced commodities by making them more expensive for purchasers using other currencies.
“The path of least resistance is lower, until the Opec meeting,” said Michael Wittner, an analyst at
Societe Generale, in a research note.Brent has fallen nearly 30 per cent since late June due to
rising production, slowing global demand, and the
absence of clear signals from the Organization of
the Petroleum Exporting Countries that it will cut
output at a Nov. 27 meeting.
Falling prices have had little impact on drilling in
the United States, with output from the fastest-
growing and largest shale fields showing no sign
of slowing, the Energy Information Administration
said. A supply shock in Libya lent some support
to prices, as a rival government that has seized
the capital took control of the country’s biggest
oilfield, El Sharara.
El Sharara and the eastern oil port of Hariga,
which was shut by protests on Saturday, remain closed. Most analysts believe production in 2015
will be significantly lower than the peak of over 900,000 barrels a day, achieved in September.
There was no breakthrough in negotiations between Iran and Western powers to resolve the
dispute over Iran’s nuclear ambitions after talks in Muscat, officials said, but talks continued on
Tuesday. A deal could result in the lifting of Western sanctions, paving the way for increased
Iranian oil exports.

But Iran has repeatedly refused to let a United Nations atomic energy official into the country,
diplomats said, indicating continued mistrust between the two sides. JPMorgan slashed its 2015
Brent price forecast by $33 to $82 per barrel on Monday, citing supply pressures in the Atlantic
Basin and the apparent inability of Opec member states to work cohesively to restrain production.
Bidding reforms for big oil projects urged over spiralling costs
The National + NewBase
The head of National Petroleum Construction Company says reform is needed on bidding for big
oil and gas projects to curb rampant cost inflation in the industry. The steady rise in costs is a
particular worry at a time when oil prices are showing further signs of weakness.
In Dubai on Tuesday, Oman crude futures on the Dubai Mercantile Exchange traded below
US$80 a barrel for the first time in more than four years, with the contract for January delivery
closing down $1.85 at $79.93 a barrel. Prices have fallen by about 30 per cent since the summer
highs, when North Sea Brent was near $115 a barrel, putting pressure on oil-producing countries
and companies.
In this environment of squeezed margins, “we urgently need to develop a more flexible approach
to share both the risks and the benefits of large projects,” said Aqeel Madhi, the chief executive of
NPCC.
While prices are still well above the budget break-even levels for the lower-cost producing
countries such as the UAE, many of the higher-cost producers are feeling the pinch, especially
countries such as Venezuela.
Among the major oil companies, those with a bias toward exploration and production suffered with
their third-quarter earnings as lower oil prices outweighed gains in refining margins. While most of
those with big projects say they are unlikely to adjust their capital spending budgets in the near
future, they do expect pressure on spending if prices stay at, or below, $80 a barrel for a
prolonged period.
“If prices were to stay at $80 a barrel for a long time it would challenge future projects, but ones
that are already on the way I see no immediate pressure,” said Arnaud Breuillac, head of
exploration and production at the French oil company Total. But he added: “It does put pressure
on cost management, and we need to address this issue even at $80.”
It is something that both the big contractors, such as NPCC and the leading oil services company
Schlumberger, as well as the large international oil majors agree upon: rampant cost inflation on
ever bigger and more complex projects is a threat to the industry. They also agree that both
contractors and oil companies are to blame.
“We in the industry have been slow to adapt while the projects have become much more complex
and larger,” said Andy Brown, the head of upstream at Royal Dutch Shell. One of the underlying
causes is that the industry has been slow to adapt to new technologies, especially information
technology.
“Over the past 10 years, total [exploration and production] spending has grown by $650 billion a
year, but the only part that has grown is liquid production in the US,” said Paal Kibsgaard, the
chief executive of Schlumberger. This, he said, was because of a prolonged period of
underinvestment by the industry in research and development during the 1980s and ‘90s.

Meanwhile the explosion of unconventional sources of hydrocarbons, such as deep offshore and
shale oil and gas, has meant more complex and expensive projects.
“We have to move from being a hardware-focused industry to be more of a software-focused one,”
Mr Kibsgaard said.
While projects have grown more unwieldy and costly in all regions, none has done worse than the
Middle East, where about 89 per cent of current projects are overdue and over budget, according
to Choong Heum Park, the chief executive of Samsung Engineering.
“We have mega-projects now with the kind of complexity that is unprecedented, and with much
shorter delivery times – from 29 months to 24 months just in the last three years,” Mr Park said.
“ While the demands of the oil companies have become dramatically more challenging, the
engineering firms have not changed their methods sufficiently. “We need to develop better tools.”
The contractors are also pushing for a different approach to bidding so that competition for
business does not lead to cost overruns and delays. For Abu Dhabi, Mr Madhi suggested a move
toward a model similar to Saudi Aramco’s long-term agreements, with contractors and oil
companies sharing risks in a project partnership.
The fall in oil prices could hit some projects based on $100 crude, said the Minister of Energy
Suhail Al Mazrouei. “What worries us is that some investors will not continue to invest,” he said.
“Not us, others, are not going to continue to invest. And in a few years, we’re going to face
difficulties finding enough investments in the market.”
TPP aims at disrupting Mideast-E Asia oil trade
Gulf Times Correspondent
Malaysia’s Prime Minister Najib Razak takes part in a meeting with leaders from the Trans-Pacific
Partnership at the US embassy in Beijing on Monday.
The goals of the Trans-Pacific Partnership (TPP), a
much-delayed but significant trade agreement between
12 countries in Asia-Pacific and the Americas pushed by
the US are increasingly becoming clearer after ongoing
talks reveal some of the intentions Washington is
pursuing with this pact.
One policy of the TPP could directly affect oil and gas
trade of the Middle East with East Asian countries,
which are currently heavily dependent on hydrocarbon
imports especially from the Gulf.
Given the political backing in his homeland, US President Barack Obama could push through oil
and natural gas export contingents to potential TPP member states (probably also including
China), thus disrupting the petroleum flow from the likes of Saudi Arabia, Qatar, the UAE and
Iran. This would allow many East Asian countries to reduce their dependence on fuel from the
Middle East.

If things go that way, the US could emerge as a strong competitor to Middle East oil and gas
exports to Asia Pacific in the mid-term.
With oil extraction from shale rock formation in the US soaring due to new sophisticated
technologies, the US this year overtook Saudi Arabia as the world’s biggest oil producer. It has
been the world’s biggest natural gas producer since 2010, according to the International Energy
Agency, but did not sell much of it abroad.
While the vast majority of home-produced oil and natural gas has been used on the domestic
market so far to reduce the burden on the country’s energy budget (and the rest exported only to
Canada), the US is now increasingly seeking to export hydrocarbons worldwide as it is playing the
cards against established oil and gas producing nations.
In July this year, the Obama administration loosened a 40-year old ban on US oil exports other
than to Canada and is working on overcoming Republican resistance against a further trade
liberalisation. In the same month, the US exported 401,000 barrels per day of crude as per the
latest data available from the US Census Bureau. It was the highest level of petroleum exports in
57 years. Some of the oil was re-exported over Canada to Europe and at a growing rate to
Singapore.
The move comes at a time when global oil prices are in a prolonged slide. The price for one barrel
of Dubai/Oman crude oil, the benchmark in the Gulf region, is currently hovering around $80, and
if dropping further, it could fall below the break-even levels of oil-producing Gulf countries’
budgets, having negative effect on government spending on the many ongoing mega-projects in
the region.
Obama’s East Asia pivot, for which the TPP is a vehicle, could have a further negative impact on
Gulf economies.
At least the UAE has already made steps to counter this development. In a historic decision, the
Abu Dhabi National Oil Company (Adnoc) last week for the first time allowed bids from Asian oil
companies for a major 40-year oil concession in the emirate in an attempt to attract more
partners from East Asia besides the traditional Western oil multinationals it had been working with
in the past.
Reportedly, China National Petroleum Corporation, the Korean National Oil Corporation and
Japan’s Inpex Corporation are among the bidders, companies of nations that all have shown
interest to join the TPP.
Qatar, UAE least vulnerable to oil fall’ says S&P
Qatar and the UAE are the least vulnerable to the present weakening crude, even as lower oil
price could slow economic growth for the Gulf Co-operation Council (GCC) and weaken the
operating environment for the corporate and infrastructure sectors, according to global credit
rating agency Standard & Poor’s (S&P).

A prolonged period of lower government revenue amid GCC governments’ high infrastructure
spending plans may push up sovereign and government-related entity capital market issuance
and place a greater responsibility on the private sector to fund investments, it said.
On average, hydrocarbon revenues constitute 46% of nominal GDP (gross domestic product) and
three-quarters of total exports for the GCC. Therefore, the recent drop in hydrocarbon prices, if
sustained, could have a significant impact on the region’s economic and financial indicators.
“We view Bahrain and Oman as most vulnerable to a decline in the hydrocarbon market, and
Qatar and the UAE as the least vulnerable. While the Gulf countries’ significant oil and gas
reserves are key supports for their sovereign credit ratings, their economies’ concentration in the
hydrocarbon sector is also a significant vulnerability,” it said.
Expecting total credit in the GCC banking system to grow by about 10% annually in 2014 and
2015 as banks take advantage of growing economies, recovering corporate asset quality, and
ample financing opportunities, it said the system’s asset base will likely climb to roughly $2tn by
year-end 2015, by its estimates, up from $1.7tn as of year-end 2013.
Low production costs continue to support the credit quality of GCC commodities producers, the
report said, adding the recent fall in oil prices and resultant pressure on government budgets is
likely to bring this issue to the fore. It may result in higher feedstock costs for commodities
producers in the region over the coming years.
Lower oil prices are likely to have a bigger impact on private players in the Middle East and North
Africa’s oil and gas industry than on government-related entities. That said, upstream players
typically operate under production-sharing agreements that cushion the impact of lower prices,
and the production cost is very low.
The fiscal pressures Gulf sovereigns are facing as a result of recent commodity price declines,
and the consequent potential for energy subsidy reform, could pave the way for more cost-
reflective tariffs in GCC markets.
“If oil prices remain above $80/barrel over the next few years, as we expect, they will continue to
benefit RasGas projects. This is because about 60% of liquefied natural gas sale contracts are
indexed to crude oil prices,” it said.
The reduction in oil prices over the past six months does not markedly dampen the success of the
RasGas projects because of the compellingly low breakeven pricing for oil on these deals (in the
low double digits for Brent).
“We believe that GCC transportation companies may keep tapping the sukuk market to fund
infrastructure development, as they have done historically through entities such as the Civil
Aviation Authority,” it said.
Islamic finance lends itself naturally to project finance (particularly when it is asset-backed in
nature) because of the need under Shariah to have an asset linked to a transaction. Project
finance sukuk are potentially attractive not just to investors in more conventional project finance
instruments but also to those looking specifically at Islamic assets. The implementation of the
Basel III framework for banks makes it more difficult for banks to fund long-term and large
projects. Saudi Arabia has adopted new regulations for financial services firms, and “we anticipate
that Kuwait and Qatar will soon introduce similar controls,” it added.

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Your partner in Energy Services
Khaled Malallah Al Awadi,
Energy Consultant
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Mobile : +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with aKhaled Al Awadi is a UAE National with aKhaled Al Awadi is a UAE National with aKhaled Al Awadi is a UAE National with a
total of 24 yearstotal of 24 yearstotal of 24 yearstotal of 24 years of experienceof experienceof experienceof experience in thein thein thein the Oil &Oil &Oil &Oil &
Gas sector. Currently working as Technical Affairs SpecialistGas sector. Currently working as Technical Affairs SpecialistGas sector. Currently working as Technical Affairs SpecialistGas sector. Currently working as Technical Affairs Specialist
for Emirates General Petroleum Corp. “Emarat“ withfor Emirates General Petroleum Corp. “Emarat“ withfor Emirates General Petroleum Corp. “Emarat“ withfor Emirates General Petroleum Corp. “Emarat“ with
external voluntary Energy consultation for the GCC area viaexternal voluntary Energy consultation for the GCC area viaexternal voluntary Energy consultation for the GCC area viaexternal voluntary Energy consultation for the GCC area via
Hawk Energy Service as a UAE operations base , Most ofHawk Energy Service as a UAE operations base , Most ofHawk Energy Service as a UAE operations base , Most ofHawk Energy Service as a UAE operations base , Most of
the expthe expthe expthe experience were spent as the Gas Operations Managererience were spent as the Gas Operations Managererience were spent as the Gas Operations Managererience were spent as the Gas Operations Manager
in Emarat , responsible for Emarat Gas Pipeline Networkin Emarat , responsible for Emarat Gas Pipeline Networkin Emarat , responsible for Emarat Gas Pipeline Networkin Emarat , responsible for Emarat Gas Pipeline Network
Facility & gas compressor stations . Through the years , heFacility & gas compressor stations . Through the years , heFacility & gas compressor stations . Through the years , heFacility & gas compressor stations . Through the years , he
has developed great experiences in the designing &has developed great experiences in the designing &has developed great experiences in the designing &has developed great experiences in the designing &
constructingconstructingconstructingconstructing of gas pipelines, gas mof gas pipelines, gas mof gas pipelines, gas mof gas pipelines, gas metering & regulatingetering & regulatingetering & regulatingetering & regulating
stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operationstations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operationstations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operationstations 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 omaintenance agreements along with many MOUs for the local authorities. He has become a reference for many omaintenance agreements along with many MOUs for the local authorities. He has become a reference for many omaintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil &f the Oil &f the Oil &f the Oil &
Gas Conferences held in the UAE andGas Conferences held in the UAE andGas Conferences held in the UAE andGas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels .Energy program broadcasted internationally , via GCC leading satellite Channels .Energy program broadcasted internationally , via GCC leading satellite Channels .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 12 November 2014 K. Al Awadi

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