NewBase 634 special 25 June 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase 25 June 2015 - Issue No. 634 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Saudi Arabia, France sign 10 agreements
Saudi Gazette + NewBase
French President Francois Hollande and Deputy Crown Prince Muhammad Bin Salman, deputy
premier, minister of defense and chairman of the Economic and Development Affairs Council
witnessed at the Elysee Palace in Paris Wednesday the signing of a number of agreements
between the Kingdom and France.
The 10 agreements include a letter of
intent for Arriva Company to conduct a
feasibility study for establishing two
nuclear reactors in the Kingdom, an
executive cooperation agreement in the
health field, and a technical cooperation
agreement in the industrial field that
includes cooperation in the
development of industrial exports,
increasing the volume of mutual trade,
exchange of commercial and industrial
information and experience related to
industrial policies and creativity in order
to contribute to support and increase
competitiveness of small, medium and
nascent establishments.
They also include the signing of a contract to supply the Saudi Border Guard with 23 helicopters
from Airbus Company at a cost of $470 million, an investment contract between the General
Investment Fund and the French Exports Credit Company according to which the fund will finance
some operations on which credit conditions apply; memorandum of understanding between Saudi
Arabian Airlines and Airbus Company on expediting the handing over of 50 Airbus planes, of
which 20 planes will be Airbus 330 regional planes.
Saudi Arabian Airlines will be the first operator of this model of planes in the world to serve
domestic and regional flights. Meanwhile, 30 planes will be Airbus-320 that have the highest
sales in the world.
French President Francois Hollande and Deputy Crown Prince Muhammad Bin Salman,
deputy premier witnessed at the Elysee Palace in Paris Wednesday the signing of a
number of agreements between the Kingdom and France. — SPA

This will also boost Saudia’s capability to serve domestic aviation. A scientific cooperation
agreement between King Abdulaziz City for Science and Technology (KACST) and the French
National Center for Scientific Research was signed.
A memorandum of investment understanding between the Kingdom and the French government
was signed. According to this memorandum, the General Investment Fund and Saudi investment
institutions will invest in privately-owned companies in France.
A memorandum of understanding for cooperation in radioactive waste management was signed
between King Abdullah City for Atomic and Renewable Energy and the French Institute for
Protection from Radioactivity and Nuclear Safety.
A memorandum of understanding for cooperation was signed between K.A.CARE and the French
Agency for the Management of Nuclear Waste in the field of development and organization of the
peaceful use of atomic energy in the field of nuclear waste.
France has been able to nurture new links with
the Gulf Arab region due to its tough stance on
Iran, similar positions on conflicts across the
Middle East and in the face of what some Gulf
countries perceive as disengagement on the part
of traditional ally the United States.
Few new contracts were announced on
Wednesday, with the core deal being the
reiteration of a firm Airbus order made at the
Paris air show last week by Saudi Arabian
Airlines worth $8 billion at list prices.
The reactor feasibility studies could signal an
opening of the Saudi market for French nuclear
group Areva, which has struggled to win export
contracts. It lost a key tender in the Middle East
in late 2009 when the United Arab Emirates
picked a consortium of Korean companies to
build the Gulf Arab region's first nuclear power
station.
"We have enabled our partnership to take a
significant step forward," a senior French
diplomat said, adding that France was the first
country to sign such an agreement with the kingdom. The Saudis also signed a nuclear waste
disposal contract and a nuclear safety accord on Wednesday.
Like other Middle Eastern oil producing countries, Saudi Arabia is looking to nuclear and solar
energy in order to minimise domestic oil and gas consumption. Contracts agreed on Wednesday
also included 23 light twin-engined Airbus H145 helicopters worth $500 million, Fabius said.
Saudi Foreign Minister Adel al-Jubeir said talks were ongoing on price for a contract for French
naval patrol boats built by DCNS, partly owned by Thales. The two sides are aiming to finalise the
majority of deals under discussion in October. "Our ties are excellent, historic and strategic,"
Jubeir said. "We are trying to take them even higher."

Saudi Aramco wants to raise stake in Luksar JV with Lukoil
Luksar is a joint venture between Aramco and Russia's Lukoil
Reuters + NewBase
Saudi state oil company Saudi Aramco wants to raise its share in Luksar, a joint venture with
Russia’s Lukoil, to 50 per cent, the chief executive of the Russian company said on Wednesday.
“They are interested in taking their share to 50 per cent,” Vagit Alekperov, Lukoil CEO, told
reporters. Lukoil has a majority stake in Luksar but industry sources said in April the company
was likely to pull out from Saudi Arabia as the economics of its search for gas have been crushed
by the collapse in the oil price.
Followed the results of deep
exploration drilling on Tukhman
structure, Contract area Block A in
the Kingdom of Saudi Arabia
LUKSAR discovered hydrocarbon
accumulations.
LUKOIL Saudi Arabia Energy Ltd.
(LUKSAR) was established on
March 01, 2004 with eqiuty
participation of LUKOIL Overseas
(80%) and its National partner,
Saudi Aramco (20%). The office of
LUKSAR is based in Al-Khobar
(Eastern Province of Saudi
Arabia). The term of Agreement
between the Government of Saudi
Arabia and LUKSAR for
exploration periods and production
period shall not exceed 40 years
from the effective date March 07,
2004.
The Contract area is located in the
northern part of Rub Al-Khali,
south of Al-Ghawar, which is a major oil field not only in Saudi Arabia but also on a global level.
Total area of the Block A is approximately 30,000 square kilometers.
LUKSAR was officially admitted to begin its operations on this area in March 2004 following
outcomes of international tender. Purpose of the exploration works inContract area, is to find non-
associated gas and field condensate and – if commercial discovery take place – LUKSAR shall
undertake development and production operations.
Starting from the signing date and until drilling stage LUKSAR reprocessed more than 8,000
kilometers of vintage seismic data, conducted 755 square km 3D seismic, 1,700 km 2D seismic
and 3,340 square km 3D-Sparse seismic acquisition works, and subsequently all obtained data
were properly processed and successfully interpreted. The first exploration well was spudded in
January 2006, and it was drilled on a domed area of Tukhman structure, located in the central
portion of the Contract area. TVD of this well is about 5,000 m.

Jordan: BAM completes Jordan LNG work
BAM International, the operating company of Royal BAM Group active outside of Europe,
has completed the €65-million-project to construct the LNG terminal for Aqaba
Development Corporation (ADC).
BAM has handed over the project on 23 June, two months ahead of schedule, the company said
in a statement on Wednesday.
In partnership with sister company BAM Contractors from Ireland and Jordan’s engineering
company MAG, BAM International designed, built and commissioned an LNG jetty with approach
trestle, including the mechanical, engineering and piping services, buildings, infrastructure works
and tug jetty berth for attending tugs within 17 months, according to the statement.
The civil works were designed by BAM’s engineering company BAM Infraconsult. The LNG
terminal forms part of ADC’s plan for developing Aqaba’s Energy Ports. The Government has
tasked ADC to develop Jordan’s energy intake capabilities to ensure a consistent supply of energy
fuels such as oil, LNG and LPG.

Under sanctions, Iran’s crude oil exports have nearly
halved in three years
Source: U.S. Energy Information Administration, based on Lloyd's List Intelligence, Global Trade Information Services,
In early April this year, Iran and the five permanent members of the United Nations Security
Council plus Germany (P5+1) reached a framework agreement to guide negotiations targeting a
comprehensive agreement by June 30. The comprehensive agreement could result in the lifting of
crude oil-related sanctions against Iran, which in turn could result in an increase in Iran's crude oil
production and exports. However, the ultimate decision and the timing that sanctions could be
lifted are highly uncertain.
Sanctions imposed by the United States and the European Union (EU) at the end of 2011 and
during the summer of 2012, respectively, led to the displacement of more than 1.0 million barrels
per day (b/d) of Iranian crude oil on the global market.
Iran's main buyers in Asia, Europe, and elsewhere have replaced Iranian crude oil with barrels
from other members of the Organization of the Petroleum Exporting Countries (OPEC). If oil-
related sanctions are lifted, Iran will look to regain export market share, competing with other
OPEC members with similar crude oil grades.
Iranian crude oil and lease condensate purchases. Iran's crude oil and condensate exports
averaged 1.4 million b/d in 2014. In 2011, prior to sanctions, Iran exported 2.6 million b/d, most of
which went to Asia, particularly China (550,000 b/d), India (320,000 b/d), Japan (315,000 b/d), and
South Korea (250,000 b/d).
The EU was the second-largest regional buyer of Iranian oil in 2011, purchasing nearly 600,000
b/d of crude oil and condensate. Turkey (185,000 b/d), South Africa (75,000 b/d), and the United
Arab Emirates (95,000 b/d) were also significant buyers.
In 2012, as the United States and the EU imposed sanctions, almost all of Iran's buyers either
reduced their purchases or halted them. By 2013, Iran's crude oil and condensate exports
dropped to just below 1.3 million b/d, with the main importers being China, India, Japan, South
Korea, Turkey, UAE, and Syria. Iran's exports grew by almost 150,000 b/d in 2014, reflecting
increased imports by China and India.

Displacement of Iranian oil. Iranian light and heavy crude oils are the country's two main crude
oil export grades. Countries that reduced or halted imports from Iran replaced those barrels with
similar quality crude grades from Saudi Arabia, Kuwait, Nigeria, Angola, and Iraq. Asian countries,
which were mostly purchasing Iranian heavy crude oil, increased their purchases of similar crude
grades from Saudi Arabia and Kuwait after 2011.
In particular, China increased purchases of oil from Angola and Iraq, while other Asian countries
imported more from Nigeria. The EU, which mostly purchased Iranian light crude oil until the
embargo in 2012, substantially increased imports from Nigeria and Saudi Arabia. South Africa,
which also halted Iranian imports in 2012, has replaced those volumes mostly with supplies from
Saudi Arabia, Nigeria, and Angola.
Differences in crude oil quality characteristics. Replacing Iranian crude oil with other grades
does not necessarily result in a one-for-one exchange. Differences in crude oil quality
characteristics (mainly density and sulfur content) can affect the volumes of petroleum products
that are produced in a refinery, also known as refinery yield.
Crude oil that is light and sweet more easily and cheaply produces highly desirable petroleum
products, such as gasoline and diesel fuel, usually resulting in higher prices for light crude than for
heavy, sour crude oil.
Although other factors, such as transportation costs, contribute to price differences, the main
factors affecting refinery operations are the quality and characteristics of the crude oil itself. The
decision to import more costly light, sweet oil or cheaper heavy, sour oil can depend on
a refinery's level of complexity and ability to manipulate the natural yields of crude oil and
maximize production of more desirable products that sell at a premium.

Total pulls out of gas project in Russia
AFP + NewBase
Total said yesterday it had pulled out of the Shtokman natural gas project in the Barents Sea, with
development of one of the world’s largest untouched gas fields apparently falling victim to Western
sanctions in Russia.
“Total has passed to Gazprom its 25% share in Shtokman Development AG and expressed its
interest to further cooperate on the project should it enter an active phase,” the French energy
company said, confirming a report in the Russian business daily Vedomosti.
The project had been frozen for two years waiting for new technology to make it profitable, but
Vedomosti said development solutions Total had recently proposed were prevented from moving
forward by sanctions. The US and European Union slapped sanctions on Russia last year over its
role in the Ukraine crisis, targeting in particular the oil and gas sector where Russia needs
Western technology to profitably access deposits in hostile climates.
At 3.8tn cubic metres of gas, the Shtokman field is one of the world’s largest untouched gas
fields. But buried underneath the Barents Sea above the Arctic Circle, developing it would require
technology breakthroughs and huge investment.
Norway’s Statoil dropped out of the project in 2013 and then Gazprom suspended it until new
technology could make it viable. Total wrote off last year $350mn (€312mn) for its stake in the
Shtokman project, but continued to work on technological solutions and did not formally renounce
the partnership with Gazprom.
Vedomosti said Total executives told Russian news agencies last year that they had proposed
new technologies to Gazprom and that work on the project was continuing. But then Western
sanctions were imposed, and Vedomosti said Total had received permission from the French
government to work on only three projects in Russia: the Yamal, Kharyaga and Termokarstovoye
projects.
The Russian newspaper said the transfer of the Shtokman stake was agreed last week at
Russia’s annual economic forum in Saint Petersburg, where Gazprom chief Alexei Miller met with
Total’s Patrick Pouyanne.
It said a Gazprom spokesman had confided that Miller promised Pouyanne during the meeting
that Total would be the first company approached to join the Shtokman project if Gazprom
decided to pursue its development. Total has in recent years launched a drive to raise its output,
in particular through operations in Russia, which should become its top production source by
2020.

Norway: Lundin Petroleum spuds two appraisal wells and one
exploration well offshore Norway. Lundin Petroleum
Lundin Petroleum has announced that its wholly owned subsidiary Lundin Norway has
commenced the drilling of its second Alta appraisal well in the Barents Sea South and the
drilling of anappraisal well on the Edvard Grieg field in the Norwegian North Sea. Drilling has
also commenced on the partner-operated Zeppelin exploration well in the southern North Sea.
The second Alta appraisal well 7220/11-3 in PL609is located 4.3 km south of the Alta
discovery well 7220/11-1 and 3.4 km northeast of the recently completed appraisal
well 7220/11-2. The main objectives of well 7220/11-3 are to confirm the reservoir model and
prove the presence of hydrocarbon columns and fluid contacts similar to those established in the
Alta discovery well, and to test the reservoir properties of the Permian carbonates.

The planned total depth is 2,070 metres below mean sea level (MSL) and the well is being drilled
using the drilling rig Island Innovator. Drilling is expected to take approx. 60 days. Lundin
Norway is the operator of PL609 with 40 percent working interest. The partners are DEA
Norge and Idemitsu Petroleum Norge with 30 percent working interest each.
The Edvard Grieg appraisal well 16/1-23 S is located in PL338 in the southeastern part of the
Edvard Grieg field and approx. 2.4 km southeast of the Edvard Grieg platform location. The
objectives of the well are to confirm the geological model at this part of the field in order to
optimize drainage strategy and the placement of development wells, and to test for upside
reserve potential in the field which is estimated to be up to gross 50 million barrels of oil
equivalents (MMboe).
The planned total depth is approx. 2,200 metres below MSL and the well will be drilled using the
jack-up rig Rowan Viking. The drilling operation is expected to take approx. 60 days. Lundin
Norway is the operator of PL338 with 50 percent working interest. The partners are OMV
Norgewith 20 percent, Statoil with 15 percent working interest and Wintershall Norge with 15
percent working interest.
The Zeppelin exploration well 10/4-1 in PL734 is operated by Wintershall and located in the
southern North Sea 35 km southeast of the Yme field. The main objectives of well 10/4-1 are to
prove the presence of hydrocarbons in sandstones of the Middle to Late Jurassic Vestland
Group.
Lundin Petroleum estimates the Zeppelin prospect to have the potential to contain unrisked,
gross prospective resources of 152 MMboe. The planned total depth is approx. 2,300 metres
below MSL and the well will be drilled using the drilling rig Borgland Dolphin. The drilling
operation is expected to take approx. 30 days.
Lundin Norway holds a 30 percent working interest in PL734. Wintershall Norge is the operator
and holds a 4o percent working interest with Centrica Resources (Norge) holding a 30 percent
working interest.

Oil Price Drop Special Coverage
Crude prices steady, U.S. oil stocks data disappoints
Reuters + NewBase
Oil prices were steady on Thursday as an unexpected build in U.S. gasoline inventories offset a
higher than forecast draw in crude stocks, while Brent was supported by a stronger euro. Brent
crude for August delivery LCOc1 had risen 17 cents to $63.66 a barrel by 0329 GMT (1129 EDT),
after ending the previous day down 96 cents, or 1.5 percent.
U.S. crude for delivery in August CLc1 was unchanged at $60.27 a barrel, after finishing
Wednesday down 74 cents, or 1.2 percent. "The market is disappointed with last night's numbers,"
said Mike McCarthy, chief market strategist at Sydney's CMC Markets. "The spread (between
Brent and U.S. crude) had narrowed so it's not surprising it's diverging." The gap between Brent
and West Texas Intermediate tightened towards $3 on Wednesday, but was widening in early
trade on Thursday.
"For today, we continue to expect prices to move sideways with a strong resistance at $61.80 and
$65 for West Texas Intermediate and Brent, and support at $59 and $62.38," Phillip Futures said
in a note on Thursday.
Vyanne Lai, an analyst at National Australia Bank said that oil had been trading in a very narrow
range. "Even though U.S. production has been slowing, the gap is filled by OPEC production," she
said. Brent has been supported as the euro rose on Thursday on expectations Greece would
agree a fiscal plan with euro zone countries, Lai said.
U.S. gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19, data from
the U.S. Department of Energy's Energy Information Administration showed on Wednesday. A
Reuters poll had indicated a 304,000-barrel drop.
That was despite U.S. gasoline demand in the week to June 19 being at the highest level for the
period since 1991 and a larger than expected fall in U.S. crude inventories. U.S. crude stocks
dropped for the eighth straight week, by 4.9 million barrels to 462.99 million, in the week ending
June 19, compared with analyst expectations of a 2.1 million barrel draw, the EIA said.

Oil price: Samba forecasts $60 per barrel
Gulf Times
With market outlook remaining uncertain, Samba Financial Group has reduced its oil price
projections for 2016 and 2017 even as it maintained its $60/b average this year.
Samba has cut its projections for 2016 and 2017 to $67 and $78/barrel respectively due to many
“downside risks” and said the number of “hard to predict” factors seem likely to drive the market
over the coming months.
The impact of US shale output on the crude price is among these, Samba said.
In its latest economic monitor, Samba said many questions remained “hard to answer” including
whether the current Brent price between $60 and $65 were sufficiently high to prompt a
resumption of shale oil drilling and a resultant pick-up in supply.
According to Samba, there was a “significant risk” of resumption in US shale growth that would put
downward pressure on prices. Such pressure would be accentuated by any deal with Iran,
possible further strengthening of the US dollar, and of course any softening in global demand
growth.
The latter, in any case is not expected to grow by more than 1mn barrels per day a year from
2016 onwards. Given that negotiations are due to end this month on a potential agreement on
Iran’s nuclear programme, which could lead to a relaxation of oil sanctions, there seems to be a
surprising lack of concern in the market. Although an agreement is not certain, it is looking more
likely than before. Admittedly, even if there is a deal, there is unlikely to be an immediate easing of
sanctions, which will no doubt be contingent on meeting conditions.

But it seems prudent to start pricing in some significant return of Iranian supply during the next 6-
12 months, possibly in the region of 600,000bpd. With Opec not expected to curb output to make
room for Iranian supply, this will have a significant bearing on market fundamental balances.
While higher cost supplies from other non-Opec producers are expected to be curtailed in the new
lower price environment, this will not happen overnight and some increases (e.g. from Canada)
are already baked in.
“Combined with unconstrained supply from Opec, it is hard to see where support for much higher
prices will come from. This is certainly the view of futures markets, which are not expecting prices
to hit $75/b until 2020.
“We are not so downbeat, and see considerable scope for supply disruptions and a less robust
production path for non-Opec producers, including US shale,” Samba said.
Kuwait oil minister says oil price drop unlikely
Reuters
Kuwait's oil minister said on Tuesday he expected oil prices to continue rising, predicting gains in
the final quarter of 2015 on the back of global growth.
"All indicators point to an improvement in prices ... today we have reached the stage where a fall
is difficult, a fall has now become unlikely," H.E. Ali Saleh al-Omair, Kuwait OM , told reporters.
Omair also said costs for the country's al-
Zour refinery were expected to increase by
around 1 billion Kuwaiti dinars ($3.31 billion)
pushing up total cost to more than 5 billion
dinars.
A Kuwait National Petroleum Company
spokesman had said on Monday the start-up
of the refinery would be delayed as the
company was seeking more financing on the
back of rising construction costs.
The 615,000 barrel per day oil refinery,
originally planned more than a decade ago,
would be the biggest in the Middle East, but
the project has been repeatedly delayed by
bureaucratic and political issues, including tensions between Kuwait's parliament and cabinet.
Omair also confirmed that the board of state-owned energy giant, Kuwait Petroleum Corp (KPC)
had been expanded to include a total of 15 members and that a board meeting had taken place
earlier on Tuesday.
The board previously had nine members.
Sources told Reuters last week several changes were under consideration for the KPC board and
that expanding members was one of them. ($1 = 0.3021 Kuwaiti dinars)

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 June 2015 K. Al Awadi

NewBase 634 special 25 June 2015

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NewBase 634 special 25 June 2015