NewBase 609 special 21 May 2015

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NewBase 21 May 2015 - Issue No. 609 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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Oman to set up four new solar power pilot projects
Oman Times + NewBase
Four solar power projects as pilot ventures have been proposed by Rural Areas Electricity
Company (Raeco) in a move to efficiently utilize renewable energy, which will reduce use of fossil fuels.
These four pilot projects are planned in different parts of the country — one each in Ibri (2,000
kilowatt), Sharqiya (2,000 kilowatt), Mudhaibi (2,000 kilowatt) and Dhofar (500 kilowatt).
Presenting a paper on 'future of renewable energy in Oman' at the Oman Energy and Water
Conference here on Wednesday, Khaleel al Mandhari, head of renewable energy at Raeco, said
renewable energy projects have several advantages, including reduction in use of fossil fuel,
energy supply security and reduction in pollution. Since Oman gets sun light round-the-year, the
country is in a better position to tap solar energy.
"Raeco is using a lot of diesel for its power plants," he added. The company, which has 35 diesel-
fired power plants and six desalination plants, has a customer base of 30,904 customers spread
across different parts of the country, including Dhofar, Musandam and Al Wusta regions.
Referring to anoter proposed wind project in Masirah, he said it will have a capacity to generate
1,600kW power. "It is in discussion stage."
Talking about the progress of a major 50 megawatt wind farm project in Harweel in Dhofar region,
he said the project is expected to generate power in the second quarter of 2017. Raeco has
signed agreements with Oman government and Abu Dhabi's Masdar to develop the project, which
is coming up at 60 kms away from Thumrait in Dhofar.
The project will help prove the feasibility of wind technology for Oman and address energy
sustainability issues. "The idea is to connect the wind farm with 132kv overhead lines of Oman
Electricity and Transmission Company."
The contribution of renewable energy in total energy production is negligible in Oman and if the
solar project becomes successful, there will be focus on setting up more and more solar energy
projects in the coming years. It is feasible to set up solar power projects, than depending on
diesel-based power due to the high price of oil in international markets. Raeco has a customer
base of 30,904 customers.

UAE: Borouge third phase expansion full capacity by 2016
Reuters + NewBase
United Arab Emirates petrochemical firm Borouge said that the third phase of its expansion, which
is set to raise its annual production capacity to 4.5 million tonnes of polyolefins, would be
fully operational by 2016.
"We have already started operations and we are up and running...It is an exciting time for us as
we are ramping up production," Abdulaziz Alhajri, Borouge's chief executive, told Reuters on
the sidelines of an oil and gas event in Abu Dhabi.
Borouge's average production for 2015 is expected to be 3.5 million tonnes. "All our plants are
running and if we had all the feedstock we would be there, but the ramp-up is a bit slow as it also
depends on the feedstock we are getting from the upstream projects like Al Hosn gas, and they
are also ramping up," Alhajri said.
Before the third phase of its expansion, Borouge was producing 2 million tonnes of polyolefins a
year. The firm, owned by Abu Dhabi National Oil Co and Borealis, an arm of Austria's OMV, is
also expanding its compounds-manufacturing plant in Shanghai, which makes products for the
automotive industry.
"We are currently at 50,000 tonnes per annum production but our bottleneck is 55,000 tonnes
because of growing demand," Alhajri said. "We are building an extension which will take our
capacity to 90,000 tonnes by the end of 2015 - it is almost ready."

UAE: Adco in $334m contract to develop Mender field
WAM+ GN + NEWBASE
The Abu Dhabi Company for Onshore Petroleum Operations (Adco) has awarded the
Engineering, Procurement and Construction (EPC) contract valued $334 million for the
development of the Mender field to China Petroleum
Engineering and Construction Corporation (CPECC).
With a production capacity of about 20,000 barrels per
day, the Mender field project is of strategic importance
since it will help boost Adco’s daily crude production
from 1.6 mbpd barrels to 1.8 mbpd by 2017.
The contract was signed at Adco’s headquarters on May
17 by Abdul Munim Saif Al Kindi, Chief Executive
Officer, and Ahmad Al Hammadi, Senior Vice President
(South East), for Adco and by Hou Haojie, the president
of CPECC, and Ji Chenglin, General Manager of CPECC Abu Dhabi.The contract covers the
construction of gathering stations, pipelines and power transmission lines, as well as sewage
systems.
The event was also attended by Adco Executive Management, Adco Engineering and Major
Projects Management, members of the Executive Management of CPECC and He Song,
Economic and Commercial Counsellor of the Chinese Embassy in the UAE.
The Mender field is part of Adco’s South-East Abu Dhabi Asset, which also includes the Asab,
Sahil, Shah and Qusahwira fields.
Mender field

Qatar: Wintershall to Quit Qatari Gas Space (AlRadeef)
Wintershall
Wintershall is ceasing its activities in Qatar and is returning Block 4 North near the North field off
the Qatari coast early next week, the company announced Wednesday. The company made the
Al Radeef gas discovery off the coast of Qatar.
“During the development planning, it was always clear to us and our partners that an economic
development of the discovery, including the processing of the gas, would only be possible if we
have access to local infrastructure.
This access was not granted. That is why we have decided to take this step,” said Wintershall
board member Martin Bachmann, who is responsible for exploration and production in Europe and
the Middle East. Further activities in the Middle East region are not affected by the withdrawal
from Qatar, the company said. The current focus of Wintershall is on the United Arab Emirates.
“We are also closely following the developments in other countries in the region,” Bachmann said.

Libya: Eni makes new gas discovery offshore
Eni + NewBase
Libya’s National Oil Corporation (NOC) has announced gas & condensate discovery in the Eni
North Africa-operated exploration well A1-01/01 in Area D in Sabratah Basin, 140 km offshore
Libya.
NOC and Eni are partners in exploration in Area D in Sabratah Basin and, according to the
announcement from NOC, this is the second gas discovery well drilled by the company this year.
The first gas discovery was in March in the Bahr Essalam South exploration prospect in Area D.
According to Libya Herald, the well A1-01/01 is located about 20 km North of the massive Bouri
gas field and in testing, the find produced some 868 barrels per day of condensate.
Eni is currently active in the country’s offshore with three drilling rigs used in the exploration and
initial delineation of Contract Area D’s discoveries. This exploration success further confirms the
enormous potential of Libyan gas resources. The future development of Libyan resources will
allow supporting the growth of the domestic consumption and industry, while maintaining Libya’s
position as a strategic supplier for Italy and Europe.
Eni started production in 2004 from the area D fields of Wafa and Bahr Essalam, which supply
gas destined for domestic markets and Italy via the Greenstream sealine. These fields also yield
high percentages of associated liquids.
With an important string of development projects in its pipeline, both ongoing and planned, Eni
aims at capitalizing the significant commercial discoveries made in past years in Area D, and is
undertaking an important exploration programme to support the constantly growing domestic
demand.
This discovery in the Bahr Essalam South exploration prospect very well fits with such project
pipeline. Eni's domestic deliveries grew from around 1 billion square cubic metres (Bscm) in 2009
to 4.3 Bscm in 2014, with the potential of reaching 6.2 Bscm in 2015. Eni has been present in
Libya since 1959 and currently produces approximately 350,000 barrels of oil equivalent per day
in the country.

Thailand: $28bn Kra Canal to provide shipping shortcut
Gulf Times + NewBase
China and Thailand last week agreed on a long-proposed project, the Kra Canal (also called: Thai
Canal), which would cut across the Kra Isthmus in southern Thailand and provide a shipping
shortcut similar to the Panama Canal or the Suez Canal in their respective regions.
The canal, whose construction
costs are calculated to be
$28bn, is meant to offer an
alternative sea link between
Asia, the Middle East and
Europe, bypassing the busy
Strait of Malacca. The project
will take about 10 years to
complete, employ roughly
30,000 workers and will allow
the passage of any type of cargo
vessels up to ultra large crude
carriers, or supertankers, the
largest presently operating
cargo vessels in the world.
According to Chinese media, a
memorandum of co-operation
between the two countries has
been signed in Guangzhou on
May 15 to build the canal across
the narrowest part of the Malay
Peninsula as part of China’s
New Maritime Silk Road initiative. According to the plan, the canal will be built as a two-way 25-
metre-deep waterway between the cities of Songkhla and Satun, starting in Songkhla Lake, the
largest natural lake in Thailand, and follow the route of Highway 406 that cuts across the
peninsula’s interior mountain range.
The canal will be 102 kilometres long and, at its widest point, span over 400 metres in width. In
comparison: The length of the Panama Canal is 77 kilometres, and the Suez Canal is 192
kilometres long.
The canal, which reportedly will be completely financed by China and mainly built by Chinese
companies under the umbrella of the China-Thailand Kra Infrastructure Investment and
Development Company, is a strategically important project for Beijing in terms of energy security
and also in terms of its economic influence in Southeast Asia.
Currently, around 80% of China’s oil comes from the Middle East and most of it has to pass
through the Strait of Malacca. The Kra Canal will shorten this route by some 1,200 kilometres and
thereby significantly reduce transport costs for oil and other cargo as ships will be able to pass
from the Indian Ocean into the Gulf of Thailand and back.

They canal will also end the exposure of cargo ships to pirates in the Strait of Malacca, as well as
fears that other countries, namely the US, would block the Strait of Malacca to cut off China’s oil
supply in the case of political tensions.
For Thailand, the canal is expected to provide an economic boost for the largely impoverished and
conflict-stricken southern region whose economy mainly relies on rubber production. Together
with the canal, China is planning to build port facilities, industrial zones and even a refinery.
Thailand could further collect shipping fees for oil tankers from nations that would likely also use
the canal such as Japan and South Korea, both of which import most of its oil from the Middle
East, and for cargo ships.
For China, the Kra Canal is the second alternative new lifeline for its energy support after it
opened both an oil and a gas pipeline leading from Myanmar’s Bay of Bengal coast across the
country to Kunming in southern China, also bypassing the Strait of Malacca.
Therefore, it is questionable if the construction of the Kra-Canal would justify the huge
investments and large scale construction and excavation, only to save around 1.200 Nautical
miles in avoiding eclipsing peninsular Malaysia and Singapore. However, there is a much bigger
picture behind the idea of the Kra-Canal.
The Kra-Canal could be of an enormous economical benefit to Thailand and it could become a
centre of gravity for trade between the Pacific and Indian Ocean. The plan is to develop an
industrial zone for heavy industry, including dry-dock and ship-building facilities and a deep-sea
port at the canal entrances. This would make the Kra-Canal the ideal and major transhipment port
for Asia, comparable to Europort in Rotterdam.
Will Chinese investments bypass the Malacca Strait with the Kra-Canal in Thailand?

Kenya: Chinese Firm Wins Contract To Explore Coal in East Kenya
Kenya has awarded a consortium led by a Chinese firm a concession deal to develop two coal
blocks in the country’s
eastern region.
The ministry of energy and
petroleum said the Chinese
firm, HCIG Energy
InvestmentCompany Ltd, will
partner with Liketh
Investments Kenya to
extract and process coal
onblocks A and B in Kitui
County.
“The consortium will now be invited for negotiations with the ministry as per the
tenderrequirements on the basis of their responsiveness in the technical and financial
proposalsthey submitted,” the ministry said in a statement received Wednesday in Nairobi.
The ministry said the HCIG and Liketh consortium is one of the three technically-successful firms
for the concession of the two coal blocks whose financial proposals wereopened on March 23.
The power generation plant, which will be built near Mui basin, where huge deposits ofcoal have
been found, is projected to be ready for operation in the next 36 months.
The award follows the evaluation and acceptance by the ministry of energy and petroleumof the
consortium’s technical and financial proposals in the tender for concession of thetwo coal blocks.
“The concession also provides for construction and maintenance of minimumeconomically viable
coal fired power plant, utilizing some of the coal to generate power forown use and sale of limited
excess power to the national grid,” the ministry said.
The East African nation has a huge mineral potential but its exploration efforts have onlypicked in
the last six years with the awarding of commercial licences in prospecting for oil,gold, coal,
geothermal and rare earths.
The coal and gas fired power plants are projects under the 5000+ MW program launchedby the
energy ministry early last month, and which aims at putting an additional over 5000MW into the
national grid by 2016.

Ghana: Tullow Oil Ghana Holds Investor Forum
Africa’s leading independent oil and gas exploration and production company, Tullow Oil plc, on
Wednesday said it is certain to face the future with lot of progress and fortune for its investors.
Mr Aidan Heavey, the Chief Executive Officer, Tullow Oil plc, said excellent progress continues
across West Africa with strong production from all fields, and the addition of TEN in 2016 is
expected to take production to over 100,000 barrels of oil per day.
“Progress continues across the East Africa development in Uganda and Kenya, towards the
option to sanction the project by the end of 2016,” he added. Speaking at the fourth annual
investor forum in Accra, Mr Heavey said, group average interest production for the first quarter of
2015 is in line with expectations, and that, West Africa averaged 65,800 barrel of oil per day and
Europe averaged 9,000 barrel of oil equivalent per day.
The company has been listed on the Ghana Stock Exchange since 2011. Mr Heavey noted that,
Tullow’s listing on the Ghana Stock Exchange and the annual update to Ghanaian shareholders
demonstrates the company’s long term commitment to the country and its desire for Ghanaians to
have the opportunity to participate in the industry.
“Ghana remains at the heart of our business, and we maintain benefit for Ghanaians and the
government,” he added. He said the TEN Development Project is now over 55 per cent complete
with all the wells expected to be online and remains within budget and on schedule with first oil
expected in mid-2016.
He said the most recent project milestone is the installation of the 4,500 tonne turret on the bow of
the FPSO vessel; while in-country fabrication of FPSO anchor piles, subsea manifold anchor piles,
subsea mud mats and the assembly and testing of Christmas trees for the TEN Project is on
schedule for completion later this month.
The Chief Executive Officer stated that the Jubilee field is equally performing well with production
averaging over 100,000 barrels of oil per day for the first quarter of 2015. He said the
commissioning period for the onshore gas processing facility in Ghana was complete on March
31, 2015 and the Jubilee FPSO is now exporting around 80 million standard cubic feet per day.
Tullow is a leading independent oil and gas exploration and production group, quoted on the
London, Irish and Ghanaian stock exchange. The group has interests in over 130 exploration and
production licences across 22 countries which are managed as three regional business units –
West and North Africa, South and East Africa and Europe, South America and Asia.

Russia:Termokarstovoye gas field brought on stream in N. Siberia
Total has announced the start-up of gas and condensate production from the
onshoreTermokarstovoye field, located in the Yamalo Nenets Autonomous District of the
Russian Federation. The field will produce around 6.6 million cubic meters of gas and 20 thousand
barrels of condensate per day, with a combined production capacity of 65 thousand barrels of oil
equivalent per day.
'We are delighted with the start up of Termokarstovoye, the first pro ject executed together with
our strategic partner in Russia NOVATEK, with whom we are also jointly developing the Yamal
LNG project,' commented Michael Borrell, Total’s Senior Vice President Exploration &
Production, Europe and Central Asia. 'Achieved ahead of schedule and below budget,
Termokarstovoye, the fourth start-up since the beginning of the year, will contribute to Total’s
production growth in 2015.'
The project infrastructure is adapted to arctic conditions and includes a gas gathering network, a
gas treatment plant, a gas condensate de-ethanization facility and export pipelines.
The Termokarstovoye field is operated by Terneftegas, a joint-venture between Russia’s 2nd
biggest natural gas producer NOVATEK(51%) and Total (49%).

Oil Price Drop Special Coverage
Oil edges up after US crude stocks fall; China data weigh
Reuters + NewBase
Oil edged up on today Thursday 21st
may 2015, supported by a drawdown in U.S. crude
inventories although weak China data and concerns about excess oil supply capped price gains.
Crude futures rose overnight after government data showed U.S. crude stocks last week fell for a
third straight week, but dipped in early Asian trade on Thursday following weak China data.
China's manufacturing sector contracted for a third straight month in May, hitting the lowest in 13
months, despite earlier reassurance from Chinese Premier Li that the world's second largest
economy can meet its 7 percent growth target this year.
The weak data dragged on prices, analysts from Singapore's Phillips Futures said in a note,
adding that investors will be looking ahead to more data from the U.S. and the eurozone for price
direction.
July Brent initially dipped to a low of $64.83 a barrel on Thursday, but recovered to
$65.17 by 0346 GMT, a gain of 14 cents on its last settlement. U.S. crude for July
delivery fell to $58.69 a barrel before edging up to $59.07 per barrel, up 9 cents.
Front-month Brent crude futures have seesawed in recent weeks as concerns about a tightening
oil market on the one hand and ongoing oversupply on the other take turns in dominating
sentiment. The market has largely held to a $4 price range of $64-68 per barrel since April 23.
Analysts said on Thursday that price volatility was likely to continue, but general oversupply would
prevent big price gains.

Strong’ Saudi economy can cope with declining oil prices
for now: SAMA
Saudi Arabia’s efforts to deepen its financial sector are gaining pace, with key developments such
as an expansion of the non-bank segment and greater resource mobilization serving as signs that
the market is maturing, the Governor of the Saudi Arabian Monetary Agency (SAMA) Fahad Al
Mubarak said.
Speaking in an interview he gave to the global publishing, research and consultancy firm Oxford
Business Group (OBG), Al Mubarak said the authorities were also intensifying their focus on
financial inclusion.
“Meanwhile, the Capital Market Authority (CMA) has announced the potential opening up of the
Saudi capital market to qualified foreign institutional investors sometime in 2015,” he said. “Efforts
are also under way to facilitate debt issuance and settlement procedures to promote the corporate
bonds and sukuk market.”
Al Mubarak pointed to data for the Saudi financial sector which he said highlighted its growth
story. Total market capitalization registered a compound annual growth rate (CAGR) of 10%
during 2009-13 to $467.5 billion, while the number of listed companies rose from 135 to 163 in the
same period. Saudi banks’ assets showed a CAGR of 8.4% over 2009-13, largely on account of
enhanced deposit and credit flows.

SAMA’s governor remains confident that the Saudi economy will weather the current storm of
declining oil prices in the medium term, supported by years of strong economic growth, which
averaged 5.5% annually, and a wave of spending on capital projects.
Historical high oil prices had strengthened public finances, he said, while enabling the government
to reduce its debt-to-GDP ratio to 1.6 % in 2014 from around 97% in 2002. “The key contribution
came from the non-oil sector, which on average expanded by 6.8% per year, compared to oil
sector growth of 1.6 %,” Al Mubarak told OBG. “The government budget for 2015 has already
envisaged a record projected spending of $229.3 billion, with 51.2% of this allocated to health,
education and infrastructure development.”
During the interview, Al Mubarak also highlighted SAMA’s plans to boost the part played by small
and medium-sized enterprises (SMEs) in the Saudi economy. Steps taken included facilitating
access to credit and establishing dedicated small business units in banks, he said.
Al Mubarak was interviewed by OBG’s representatives in Saudi Arabia as the Group prepares to
publish its forthcoming report on the Kingdom’s economic activity and investment opportunities.
The full interview will appear in The Report: Saudi Arabia 2015. The publication will be a vital
guide to the many facets of the country, including its macroeconomics, infrastructure, banking and
other sectoral developments.

Low crude oil prices, increased gasoline demand lead to
high refiner margins
Source: U.S. Energy Information Administration,
Gasoline crack spreads in the United States, especially on the U.S. East Coast, have reached
several-year highs in recent months. Crack spreads, which reflect the difference between
wholesale product prices and crude oil prices, are a good indicator of refiner profitability.
For example, in April 2015, wholesale conventional gasoline in New York Harbor averaged $1.79
per gallon (gal), and the Brent crude oil spot price averaged $1.41/gal ($59.39 per barrel, divided
by 42 gallons per barrel). The difference in prices results in a crack spread of 38 cents/gal, the
highest crack spread for the month of April since 2007.
Strength in gasoline crack spreads can also be seen in regions beyond the United States. In the
European gasoline market, the Northwest Europe gasoline-Brent crack spread averaged 35
cents/gal in April, the highest since at least April 2010. In Asia, the Singapore gasoline-
Dubai/Oman crack spread averaged 39 cents/gal in April, similar to levels last year and 3
cents/gal below the recent high in April 2012.
Because gasoline specifications, refinery maintenance schedules, and seasonal demand patterns
are not uniform across the world and can influence gasoline crack spreads at different times of the
year even within a region, comparing crack spreads on a year-over-year basis allows for a better
understanding of the strength of gasoline prices in a given region.
The main factors contributing to the global rise in gasoline crack spreads this year are the lowest
crude oil prices in several years, robust U.S. gasoline consumption and exports, and higher-than-
expected demand for liquid fuels in Europe and some countries outside the Organization for
Economic Cooperation and Development (OECD).
Refiners in many regions of the world have been processing larger volumes of crude oil to take
advantage of these higher gasoline crack spreads. On the U.S. East Coast, average gross

inputs to refineries in April were the most for that month of the year since 2010. Refineries in
Europe, where, for years, the refining sector had low profitability, now have increased refining
utilization rates amid improving margins.
Although April gasoline crack spreads in Asia did not exceed recent record highs, Asian refineries
have been processing more crude oil compared to the same time last year as margins from
gasoline and other petroleum products in that region have remained strong since the first quarter
of 2015.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 21 May 2015 K. Al Awadi

NewBase 609 special 21 May 2015

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NewBase 609 special 21 May 2015