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Transcript of Downstream Monitor - MEA Week 03
Issue 190 21•January•2015 Week 3
Gulf tide turns against subsidies The time is nigh for cutting subsidies in the Middle East as governments,
feeling the pinch from low oil prices, pass the pain on to consumers.
Price bears down on major projects Budgetary constraints and changing economics have forced GCC
governments and their international partners to re-examine their planned hydrocarbons projects.
Sino-Iranian downstream ties strengthen Chinese expertise will be central to Iran’s Abadan refinery expansion, as part
of a strengthening of ties between Beijing and Tehran.
COMMENTARY 3
Gulf governments call time
on subsidies 3
Major Gulf projects at risk
from domino effect 5
China follows Russia in ramping
up Iranian investments 7
POLICY 8
Turkey and Iraq to strengthen ties 8
Solar still a slow mover in Gulf 10
Chad, Cameroon pressure
Boko Haram 11
EU considers Libya embargo 11
REFINING 12
Fujairah refinery suffers new delay 12
FUELS 13
Shell opens GTL base oil
terminal in Jebel Ali 13
PETROCHEMICALS 13
QP, Shell cancel Al-Karaana
petchem project 13
TERMINALS & SHIPPING 14
Shell bolsters base oil storage,
reduces exposure elsewhere 14
Mauritius aims to be product hub 15
TENDERS 15
Cash-strapped Yemen forced to
tender for oil products 15
NEWS IN BRIEF 16
SPECIAL BRIEFING 20
SPECIAL REPORTS 21
Downstream Monitor MEA 21 January 2015, Week 03 page 3
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Gulf Co-operation Council (GCC)
governments hit by the continuing slump
in crude prices are starting to trim their
budgets, with a particular casualty being
the fuel and power subsidies enjoyed
across the region. Kuwait, Oman and
Abu Dhabi have recently reduced
subsidies on diesel, natural gas and
utilities, risking domestic discontent but
reflecting the substantial budgetary
burden of unsustainable fuel subsidies.
The International Monetary Fund
(IMF) estimates that the energy subsidy
burden on GCC governments ranged
from 9% to 28% of revenue in 2011,
since when rising energy prices have
increased that burden.
Across the Middle East, more than
33% of power is generated using
subsidised oil, the International Energy
Agency (IEA) said in November 2014.
There has a gradual building of
consensus among Gulf monarchies on the
need to reduce subsidies, in order to
shore up their legitimacy, but the
unpopularity of turning the talk into
action was demonstrated in Yemen,
where gasoline and diesel subsidy cuts in
July provoked the Shia Houthi grouping
to march on the capital Sana’a in
September. This prompted the
dissolution of the government and a
partial reversal of the subsidy reform.
Taking a stand
The oil price fall – which was recently
below US$47 per barrel – has
nonetheless hardened regional resolve.
UAE energy minister Suhail Al-Mazroui
told reporters in mid-2014 that the
government was not happy with the
amount of electricity being consumed,
which he said was two to three times the
global average. On January 1, Abu Dhabi
raised electricity prices to curb
consumption, and ordered nationals to
pay for water for the first time. Its
neighbour Dubai – having implemented a
limited electricity tariff increase in 2011,
to counter sovereign debt concerns – has
submitted a recommendation to the
energy ministry to cut gasoline subsidies
by up to 20%.
Oman doubled natural gas prices for
businesses as of January 1. The
sultanate’s Finance Minister Darwish Bin
Ismail Al-Balushi insisted that spending
cuts are required, and argued that subsidy
reductions for basic services need to be
considered.
In Kuwait, where the per capita
electricity usage is among the world’s
highest, generating around US$16 billion
of annual subsidy, a start has been made
by eliminating subsidies on diesel and
kerosene.
The emirate has said power and
gasoline are reprieved, for now, but the
Ministry of Electricity and Water is
selling power for just 5% of the cost of
production.
COMMENTARY
Gulf governments call
time on subsidies
The time is nigh for cutting subsidies in the Middle East as governments, feeling the pinch
from low oil prices, pass the pain on to consumers
By Kevin Godier
Gulf countries are losing perks from free water to cheap fuel as governments seek to trim their budgets
Kuwait, Oman and Abu Dhabi reduced subsidies on diesel, natural gas and utilities this month
The subsidies will be gradually removed, but this will be a painful process
Downstream Monitor MEA 21 January 2015, Week 03 page 4
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The initial measures “set the stage for
further cuts,” according to Shanta
Devarajan, the World Bank’s chief
economist for the Middle East and North
Africa. “The fall in oil prices makes the
case for subsidy cuts stronger, since
governments are facing a decline in
revenue,” he told Bloomberg.
In the region’s biggest economy, Saudi
Arabia, Saudi government support to the
Saudi Electricity Co. (SEC) in 2012-13
was worth around US$40 billion,
compared to an overall subsidy bill for
electricity and gasoline of around
US$13.3 billion in 2010. Gasoline sells
at US$0.45 per gallon (US$0.12 per litre)
in the kingdom, the second cheapest
among 61 countries tracked by
Bloomberg.
Welfare or fiscal streamlining
Countries in the six-member GCC have
undoubtedly used subsidies to keep
social unrest at bay among their
ballooning populations. However, a
factor that cannot be ignored is that
cheap domestic energy prices have
triggered a surge in consumption, which
risks reducing the oil available for
export.
“With energy demand in the GCC
doubling every seven years, these
countries can no longer afford to keep
subsidising domestic consumption of
their chief export,” said Jim Krane,
author of Dubai: City of Gold and a
research fellow at Rice University’s
Baker Institute for Public Policy in
Houston, Texas. “Governments have
genuine fiscal pressure that adds punch
to their call for everyone to tighten their
belts,” he was quoted as saying by
Bloomberg.
State-run Saudi Aramco warned in
May 2014 that it will have “unacceptably
low levels” of oil to sell in the next two
decades if domestic power use keeps
rising at 8% per year.
Notwithstanding the window of
opportunity offered by low oil prices, the
World Bank has contended that action on
subsidies should be taken for another
reason. In an October 2014 report, the
bank said burgeoning energy subsidies
are partly to blame for other problems
within the GCC region, including
increasing pollution and a high rate of
road accidents.
Time to act
The plunge on oil markets has
demonstrably added to existing pressure
on the region’s rulers to implement
spending cuts proposed before the fall in
prices.
According to Arqaam Capital, a
Dubai-based investment bank, even if oil
were to recover to average US$65 a
barrel this year, the GCC nations will
post a combined budget deficit of 6% of
GDP. The GCC members can afford to
make the phase-out of subsidies at a
measured pace, due to their accumulation
of hundreds of billions of dollars in
foreign reserves able to soften the blow
of falling oil revenue.
Subsidies will be gradually removed
providing there is no major blowback
from citizens. Indeed, Al-Mazroui said
on January 13 that lifting fuel subsidies is
“just a matter of time.”
Beyond the GCC, the lower oil price is
likely to be giving Iranian politicians
another opportunity to push economic
reforms, including subsidy cuts. In
December 2010, the government ended a
subsidy regime estimated at US$70
billion, replacing it with a cash subsidy
programme. However, sanctions meant
that planned government revenues
anticipated from rising energy market
prices never materialised. President
Hassan Rouhani has already raised petrol
prices by 75% since the rapprochement
with the West.
None of this alters the reality that
subsidy reform is politically very
difficult, especially for the monarchs of
the GCC, who fear popular anger from
populations that are yet to embrace the
shift in mindset required to accept larger
utility bills.
Saudi, the UAE, Qatar and Kuwait
probably possess the financial resources
to negotiate a few years of poor
revenues, which may be required if the
OPEC policy of maintaining market
share continues. However, as the GCC
adjusts to the massive crude price fall
that appears set to continue into 2015,
Oman and Bahrain look rather
vulnerable, lacking the hard currency
reserves that their richer neighbours can
fall back on.
Differences between GCC members
will begin to emerge if oil remains under
US$50 per barrel for any length of time,
but NewsBase Research expects further
cuts to subsidy programmes before that
juncture.
COMMENTARY
Downstream Monitor MEA 21 January 2015, Week 03 page 5
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
When wealthy state-owned giant
Qatar Petroleum (QP) and
partner Royal Dutch Shell
announced the abandonment of
their planned US$6.4 billion Al-
Karaana petrochemicals project
on January 14, the move was a
shock but hardly a surprise.
The other flagship of QP’s
now-moribund petrochemicals
expansion – the similarly-sized
Al-Sejeel – had already been
shelved three months earlier
while regional giant Saudi
Aramco informed prospective
contractors at the turn of the
year that the US$3 billion
upgrade of its largest refinery at
Ras Tanura had been placed on
the backburner for a year.
On the other hand, Gulf Co-
operation Council (GCC) leaders’ loud
insistence on their resilience in the face
of sliding oil prices and their
determination to proceed with major
projects is more than empty rhetoric.
While quite naturally reassessing plans in
the light of lower disposable income,
Gulf governments are already delivering
on promises to proceed with schemes
deemed ‘strategic’ and essential for long-
term economic development.
Just days after Ras Tanura was
mothballed, Aramco tendered the main
construction contract on the US$5 billion
Fadhili gas-processing plant, while Oman
– by common consent the regional
country most harmfully affected by the
oil price collapse – is pushing ahead even
with downstream development as it looks
to long-term economic and social needs.
Downstream downturn
Al-Karaana, which was conceived by QP
and Shell in 2011 to produce around 1.8
million tonnes per year (tpy) of
petrochemicals from a mixed-feedstock
steam cracker fed with gas from the
development of the Barzan gas field,
seems with hindsight a predictable
casualty.
Even before the downturn of the past
six months, Shell has been engaged on a
cost-cutting and asset-shedding drive
prompted by its first-ever profits warning
in January 2014. However, the earlier
shelving of the US$7.4 billion Al-Sejeel
polymers scheme – which was
entirely government-sponsored
through QP and affiliated
partner Qatar Petrochemical Co.
(QAPCO) – indicates Doha’s
increasing doubts as to the
viability of its planned large-
scale expansion into
petrochemicals.
At that time, the client
indicated that alternative
projects “yielding better
economic returns” would be
studied. Notice of Al-Karaana’s
fate, however, was accompanied
by news that the ethane saved
would be redistributed among
the various smaller existing
players in the sector.
For Doha, the rethink seems
driven by the demand rather
than supply side. The government, and
by extension QP, have both the financial
and gas resources to proceed, but a weak
global petrochemicals market and
subdued Asian economic growth
compromises the economic viability of
such projects.
While Qatar is blessed with an
enviable fiscal cushion to withstand
cheaper crude and enjoys one of the
region’s lowest break-even prices, such
comfort also allows selectivity in
pursuing economic diversification
projects: the tiny indigenous population
enjoys the world’s highest per capita
income, removing the job-creation
imperative driving downstream projects
in Oman and Saudi Arabia.
COMMENTARY
Major Gulf projects at
risk from domino effect
Budgetary constraints and changing economics have forced GCC governments and their
international partners to re-examine their planned hydrocarbons projects
By Clare Dunkley
Qatar’s petrochemicals ambitions have been demolished by falling global prices
Abu Dhabi and Riyadh have prioritised gas while cutting back on refining
Saudi, Kuwait, Qatar and the UAE all benefit from a buffer in the form of large foreign reserves
Downstream Monitor MEA 21 January 2015, Week 03 page 6
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Riyadh’s recent moves on three major
projects illustrate a more complex set of
imperatives – with Fadhili out to bid, the
so-called Ras Tanura Clean Fuels Project
on hold and the contractors on the
expansion of the Khurais oilfield
expansion requested to extend the
duration of the work by around 12
months to facilitate Aramco’s cash-flow
management. Like Qatar, the Saudi
government is well-endowed to
withstand a prolonged downturn in
revenues, with a reserves cushion
sufficient to fund the deficit level
envisioned for 2015 for some six years.
The expansionary budget unveiled in
late December was touted in Riyadh and
elsewhere as a signal of such resilience –
to the chagrin of struggling OPEC
counterparts such as Iran and Venezuela.
However, the expenditure increase of
0.6% to 860 billion riyals (US$229
billion) was the smallest in more than a
decade and, as elsewhere, the importance
and timing of capital projects was
prudently reviewed. This was
acknowledged by Economy & Planning
Minister Mohammed al-Jasser in early
January, when accused of deviating from
the government’s five-year plan.
“Making changes to the five-year plan
is possible if the oil price plunge
demands that,” he told a gathering in
Riyadh. “Every year we make a review
of the plan.”
Top of the pile
However, the need to raise gas
production to meet soaring domestic
demand and to fuel major planned
industrial expansion is an urgent
requirement for future economic
development to support the GCC’s
largest population and as such, gas
projects such as Fadhili top Aramco’s
priority list.
The US$5 billion scheme, which will
process sour gas from the Khursaniyah
oilfield and non-associated gas from
Hasbah, has been delayed only because
of the need to increase its planed capacity
to 2.5 billion cubic feet per day (71
million cubic metres) of gas by 2018, as
part of a wider programme to raise
production to 15 bcf (425 mcm) per day
by that year from around 10 bcf (283
mcm) in 2013. A more relaxed approach
to the US$3 billion expansion of Khurais
– on which main contractor Saipem of
Italy has reportedly been requested to
extend the construction phase by 12
months, pushing back completion to
2019 – is likewise understandable.
Aimed at raising the field’s capacity by
300,000 bpd to 1.5 million bpd, the
project’s rationale – alongside an
increment at Shaybah – is to provide for
a supply cushion enabling output to be
eased at older fields, rather than to
increase the theoretical 12.5 million bpd
national capacity.
Thus neither the glut of global supply
nor the current slump in revenue per
barrel affects the underlying logic, while
rendering the project a natural candidate
for postponement in straitened times.
Meanwhile, the US$3 billion upgrade
of the 550,000 bpd Ras Tanura refinery
in the Eastern Province, on which the
main engineering, procurement and
construction (EPC) contracts had been
tendered but not awarded, was a logical
casualty of Aramco’s cost-cutting drive.
Aimed at lowering the sulphur content of
output and diversifying the product
range, the project had already been
retendered without a planned paraxylene
(PX) unit after original bids came in well
over budget – with the more modest
resulting scheme entailing addition of a
naphtha hydrotreater, a catalytic cracking
reformer, an isomerisation unit and a
toluene unit.
The suspension before revised bids
were due in February reflects refining’s
low priority on Aramco’s spending
wishlist. CEO Khalid al-Falih spoke in
late November about the difficulty in
making refining profitable – his solution,
already being implemented before the
revenue crunch, was integration with
petrochemicals.
The prognosis for the long-troubled
greenfield refinery planned in the remote
Jazan Economic City seems poor, with
South Korea’s SK Engineering &
Construction reported to have walked off
one of the main EPC contracts in late
2014 over spiralling costs.
Priority push
Such projects elsewhere are finding out
the hard way where they lie in
governments’ priorities.
Beleaguered contractors awaiting
tenders on the much-delayed refinery
planned at Fujairah by Abu Dhabi
government-owned International
Petroleum Investment Co. appear
doomed to endure further delays, as
prospective financiers report being
informed of reassessment of the US$3.5
billion scheme’s viability in the current
oil price climate.
Such issues have as yet had little
impact on the flagship Abu Dhabi
Company for Onshore Oil Operations
(ADCO) concession.
However, in common with Saudi
Arabia, the UAE is facing a looming gas
shortage forcing it to resort to growing
reliance on imports – and thus home-
grown gas development schemes are high
on the agenda of Abu Dhabi National Oil
Co. (ADNOC).
The commissioning of the landmark
US$10 billion Shah sour gas
development in early January was
accompanied by pledges from Energy
Minister Suhail al-Mazroui to move
forward with the similarly-sized Bab
scheme, due to deliver an additional 500
million cubic feet (14 mcm) per day of
sales gas by 2020 – with contracting
progress on the ground confirming the
government’s commitment.
ADNOC is also undertaking major
oilfield expansion projects aimed at
boosting capacity to 3.5 million bpd by
2017 and Al-Mazroui was adamant that
the goal stood.
“In a time of unstable oil prices, we
remain dedicated to reaching our long-
term production goals and our
investments will remain there,” he
asserted.
Most of the main construction
contracts on the programme, on- and
offshore, were awarded before the
downturn but the award of a US$2.3
billion deal in mid-December to Italy’s
Tecnimont for third-phase expansion of
the offshore Al-Dabbiya field would
seem to validate the minister’s claim.
COMMENTARY
Downstream Monitor MEA 21 January 2015, Week 03 page 7
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Lucky for some
Able to revel in even greater fiscal
complacency, Kuwait can, like the UAE,
afford to keep up the pursuit of increased
crude output – with political rather than
economic obstacles traditionally the
hardest to surmount in the drive to boost
capacity to 4 million bpd by 2020 from
around 3.1 million bpd today.
Hence, after a delay of more than 10
years, a US$4.3 billion EPC contract was
finally awarded in early January to UK-
based Petrofac as the latest incarnation of
a project to develop heavy oil from fields
in the north.
Kuwait, where the fiscal year runs
from April 1, has posted a surplus for the
past 15 years and in the six months to
November 30 maintained this track
record, recording a 9 billion dinar
(US$30.6 billion) positive balance.
Like Qatar, Saudi Arabia and the UAE,
Kuwait’s foreign reserves buffer built up
through years of high oil prices could
cover several years of deficit should
circumstances require it.
Indeed, the state’s seeming
determination finally to implement the
decade-old plan for a US$16 billion
greenfield refinery at Al-Zour – with the
first EPC bids submitted in the past two
months – exemplifies such economic
comfort. Oman’s calculations differ
substantially from those of its better-
endowed GCC brothers, sharing the bane
of hydrocarbons dependence and scarce
natural gas while battling a long-term
decline in oil production and urgently in
need of job-creating downstream
diversification. Thus, necessarily defying
the apocalyptic warnings of fiscal
vulnerability issued by the major
international ratings agencies in
December, Muscat published an
expansionary 2015 budget at the end of
the month, setting in stone repeated
assurances from the finance and oil
ministers that strategic economic
development projects would proceed as
planned – unaffected by inevitable
trimming of expenditure on other areas.
While most in the GCC were largely
unaffected by the Arab Spring of 2011 –
bar Bahrain, where regional turmoil
merely exacerbated longstanding and
continuing tensions – protests in Oman
were sufficiently widespread to seriously
alarm the government – thus the need to
create employment for a fast-growing,
young and potentially restive population
became seen as an urgent necessity.
Since downstream development,
especially of the petrochemicals sector, is
central to the solution, such projects
cannot be abandoned according to the
simpler economic viability criterion
applied by the likes of Qatar. The
sultanate’s flagship petrochemicals
project, the US$3.6 billion Liwa Plastics
complex at Sohar being developed by
state-owned Oman Refineries &
Petroleum Industries Co. (ORPIC) has so
far progressed steadily towards the EPC
phase in recent months – with the results
of first-stage prequalification published
in the local press in early December to
hammer home the impression of
business-as-usual. An even more
concrete signal of determination came a
week later with the award of a US$320
million contract for a long-awaited multi-
products pipeline linking the northern
industrial city’s expanding refinery with
Muscat. Whether such insouciance is
sustainable as prices fall towards US$40
per barrel remains to be seen but the
finance ministry’s budget statement was
emphatic that any austerity would not be
felt by the general population: “Due to
low oil prices, it was necessary to make
some temporary measures to maintain
financial stability,” it revealed
gnomically. “These measures will not
affect the common people, their living
standards or employment.”
As veteran autocrat Sultan Qaboos’s
prolonged medical treatment abroad
raises thorny questions about the
succession process, awakening latent
fears of potential instability, the
government is acutely aware of the need
to keep the populace quiescent – at the
expense of fiscal discipline if needs be.
Others in the GCC can afford to exhibit
greater fiscal rectitude, proceeding
selectively with priority projects while
awaiting the oil market upturn all
apparently assume to be inevitable.
With Iran’s oft-repeated target of
increasing its total crude oil and
condensate production capacity to 5.7
million barrels per day by March 2019
and a swathe of recent sanctions-busting
announcements from the European
Union (EU) and Russia (see Week 01),
the move is on in Tehran to dramatically
increase adjunct refining capacity.
The target is in line with its pre-
revolution 1976/77 average of 5.5
million bpd, although production topped
6 million bpd for much of that period.
COMMENTARY
China follows Russia in ramping
up Iranian investments
Chinese expertise will be central to Iran’s Abadan refinery expansion, as part of a
strengthening of ties between Beijing and Tehran
By Simon Watkins
Downstream Monitor MEA 21 January 2015, Week 03 page 8
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Given China’s perennial disregard for
the ongoing US-led sanctions against the
Islamic republic in its desire to secure
energy supply for the future, it comes as
little surprise to learn that Beijing has
signed an agreement to bolster the
financing of Iran’s refinery sector to the
tune of at least 2.6 billion euros (US$3
billion) – to begin with – according to
deputy head of the National Iranian Oil
Refining and Distribution Co.
(NIORDC), Shahrokh Khosravani.
Expansion plans
The bulk of this amount will initially be
directed towards expanding output at the
existing Abadan refinery, which, before
being largely destroyed in September
1980 by Iraq during the initial stages of
the Iraqi invasion of Iran’s Khuzestan
province, had a capacity of 635,000 bpd,
but currently sits at around 429,000 bpd.
According to Iran’s Deputy Oil
Minister, Abbas Kazemi, last week,
Iranian engineers were working in China
with a local group of their peers on the
detailed design and logistics of the
Abadan refinery expansion project. This
will be broadly geared towards
modernising and expanding processing
technology used at the plant’s units.
More specifically, such changes are
intended at increasing production of fuels
adhering to Euro-5 Standard quality
specifications, reducing environmental
pollutants, and expanding diesel and
gasoline production by improving
production technology.
Petchem push
There are wider objectives as well,
though, once the Abadan revamp begins
in earnest.
To begin with, a Tehran-based source
close to NIORDC told NewsBase this
week that the Abadan plan is also geared
towards dramatically increasing the
refinery’s production of feedstock for
associated petrochemical plants, given
the enormous expansion of this high-
value sector planned by Iran.
In this context, the beginning of the
year saw deputy managing director of
Iran’s National Petrochemical Co.
(NPC), Mohammad Hassan Peyvandi,
saying that the country plans to increase
its annual petrochemical production to
180 million tonnes by the end of 2022,
from the current capacity of 60 million
tonnes, if sufficient feedstock is
available. Such an increase would cost
around US$30 billion, Peyvandi had said
earlier, and again it was China that
announced shortly thereafter that it
would invest up to US$4.5 billion in
Iran’s petrochemical sector (see
Downstream MEA, Week 46).
“This money is separate from the new
funding announced,” said the Tehran-
based source, “and is mainly earmarked
for beginning 12 new projects in
Tehran’s petrochemical industry,
although part of it will be used to resume
operations at the second phase of the
Assaluyeh petrochemical plant
development project.” As an adjunct to
this, according to a recent statement from
Esfandiar Zar Ali, managing director of
the Biran Arya Refinery Complex, the
north of Bushehr is also to be the site of a
new US$748 million refinery complex
for petrochemical products situated in 50
hectares (0.5 square km) of land close to
the Bahregan oilfield, again not part of
the new funding just announced.
Close co-operation
“It is no coincidence that [Iran’s Deputy
Minister of Energy for International
Affairs, Esmail Mahsouli] said [in
November last year] that the government
had raised the foreign currency quota on
China’s involvement in Iranian projects
to more than US$52 billion from its
previous US$25 billion.” This neatly
aligns with a further piece of NIORDC’s
Abadan plan, which is to build a new
210,000 bpd processing unit as part of
the Abadan project that would include
units for crude distillation, hydro-
treating, continuous catalytic reforming,
hydro-cracking, isomerisation, hydrogen
production, amine treatment, and the
construction of units for sulphur and
LPG recovery.
All of this will make the Iranian Oil
Ministry’s petrochemicals targets look
more realistic; including annual
production of 11.5 million tonnes per
year (tpy) of ethylene, 11.5 million tpy of
polymer and 3.4 million tpy of urea, with
an adjunct objective of becoming the
world’s leading producer of methanol at
7.5 million tpy, which would represent
18% of global capacity.
The visit by Turkish energy minister
Taner Yildiz to Baghdad this week was
never expected to result in any
groundbreaking agreements. Prior to
departing, Yildiz told reporters that he
would be promoting Turkey’s long-
mooted proposal for a new Iraqi export
line to carry Basra crude to Turkey’s
Mediterranean oil export hub at Ceyhan
as well as discussing relations between
Baghdad and the Kurdistan Region of
northern Iraq. However, with much of
north-west Iraq still occupied by the
forces of the Islamic State (IS) militant
group, any such project is clearly some
years away from serious discussion, even
assuming Iraq would be open to risking
transiting crude through a pipeline,
which would necessarily be prone to
sabotage. Rather, Yildiz’s visit appears to
have been aimed primarily at discussing
how energy relations between the two
countries and their respective relations
with the Kurdistan Regional Government
(KRG) can progress, given both the
KRG’s demands for increased autonomy,
and the ongoing militant insurgency.
COMMENTARY
POLICY
Turkey and Iraq to strengthen ties
Downstream Monitor MEA 21 January 2015, Week 03 page 9
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
As such it is no
surprise that only scant
details of the visit have
been released.
Pipeline posturing
Yildiz’s comments on
his trip have been
confined to emphasising
the amount of
humanitarian aid
Turkey has been
sending to Iraq to help
those made homeless by
the IS insurgency and to repeating
statements made the previous week that
the current volume of oil from Iraq’s
northern fields and for the Kurdistan
Region is flowing through the Turkish
section of the Kirkuk-Ceyhan pipeline.
Prior to departure, Yildiz had said that
flows to Ceyhan had reached around
450,000 barrels per day and are soon
expected to rise to 500,000 bpd and to
continue increasing through the year to 1
million bpd.
The only new announcement made is
that of the confirmation that Turkey and
Iraq have agreed to launch formal
technical discussions on a gas pipeline
link between the two countries.
News that the two sides will talk about
gas comes as little surprise given that
Turkey’s state gas importer BOTAS
announced late last year that it would
begin construction of a 42-inch (1,067
mm) transit line in 2015, linking its
existing transit infrastructure with the
Kurdistan border. The project is expected
to be completed within two years.
The line will have a maximum
capacity in excess of 20 billion cubic
metres per year, far in excess of demand
in Turkey’s impoverished south east, and
significantly higher than expected
demand growth for the whole country
over the coming decade, suggesting that
the line will ultimately be used to export
Iraqi gas through Turkey to markets in
Europe.
Setting the scene
Where exactly in Iraq the gas will come
from is as yet unclear. Officials from
Anglo-Turkish upstream operator Genel
Energy have said on numerous occasions
that they have gas reserves in the region
and can begin exports by 2017 or 2018 –
the same time frame suggested by
BOTAS’s planned pipeline.
In addition, Turkey and the KRG
signed a number of gas agreements in
2013 allowing for Turkish state oil
company TPAO to develop gas fields in
the region and to export the gas back to
Turkey, details of which have not bee
disclosed but any such initiative is
unlikely to be realised before 2018.
Baghdad also has gas reserves that
could be exported to Turkey, although
when they could be made available is
also unclear.
What is apparent though from the fact
that the two sides have agreed to discuss
the issue is that the new government in
Baghdad is willing to look forward to a
time when there will be a final agreement
with the KRG, allowing the export of gas
to Turkey through a line that crosses the
border from the KRG-controlled area to
Turkey.
This by extension also bodes well for
the continuation of the current
rapprochement between Baghdad and
Erbil. While in the short term that will
likely result in the continued ramping up
of crude flows to Ceyhan as announced,
in the longer term it promises also to
boost co-operation between the three
sides to remove IS from north west Iraq
where its presence has resulted in the
permanent closure of the Iraqi section of
the Kirkuk-Ceyhan conduit, between the
Kirkuk oilfields and Baghdad’s metering
station at Fishkhabour.
The flow of crude from Kirkuk is now
being realised through
a new bypass pipeline
running through the
Kurdistan Region that
is expected to be
running at full 1
million bpd capacity by
early 2016.
Working together
The removal of IS
would free up the
existing line which
boasts a maximum
capacity of 1.5 million bpd, and when
repaired would give Iraq – both Baghdad
and Erbil – the potential to transit a total
of up to 2.5 million bpd to the Turkish
border.
The Turkish section of the line
however still has a maximum capacity of
just 1.5 million bpd, suggesting that as
and when the militants are removed
Turkey will need to expand its existing
pipeline capacity before thinking about
pressing Baghdad further to develop an
entirely new pipeline to carry crude from
Basra to Ceyhan.
In 2012, a subsidiary of Turkey’s Calik
group – Ikideniz Petrol applied for
permission to develop just such a
pipeline with a reported capacity of 1
million bpd. The current status of the
application is unclear but the
development of such a line to connect to
the existing 1 million bpd Kurdish line
and the 1.5 million bpd Kirkuk line
offers several possibilities.
Firstly, it could be used to continue to
ramp up the existing flow of mixed crude
from fields in the Kirkuk area and
Kurdistan Region. It would also offer the
possibility of increasing production of
heavy crude from the Gulf Keystone
Petroleum-operated Shaikan field – the
region’s largest – north-west of Erbil,
currently exported by truck through
Turkey. Or alternatively again, the spare
capacity could be used to carry crude
from Iraq’s southern Basra fields, should
Baghdad agree to Turkey’s offer to
develop a new pipeline from Basra to the
Iraq-Turkey border. The key to realising
any of the three is continued co-operation
between Ankara, Baghdad and Erbil.
POLICY
Downstream Monitor MEA 21 January 2015, Week 03 page 10
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Despite the ample sunshine, most of the
Middle East has remained on the
sidelines of large-scale solar
development, mainly as a result of the
cheap power provided through its
hydrocarbon reserves.
However, now the industry is
beginning to take off, as governments
grapple with the impact of a surging
demand for energy, budget-crippling oil
and gas subsidies and plummeting oil
prices. Dubai meanwhile, has been one
of the region’s keenest proponents of
solar power and has now announced
plans to double the size of a solar project
that it claims will produce some of the
world’s cheapest electricity.
The regional government of the
emirate says that the US$330 million
scheme will now have a capacity of 200
MW when it is completed in 2017. A
consortium led by Saudi Arabia’s
ACWA Power will lead construction,
reflecting both the firm and its country’s
growing presence in the Middle Eastern
solar sector.
If the price of oil remains low, then the
kingdom may welcome the ability to
displace some of its domestic energy
consumption with solar power, leaving
more oil available to export.
The electricity produced by the scheme
will be sold to Dubai’s electricity utility
DEWA for US$0.0585 per kWh, which
ACWA says will be the lowest by some
distance for solar-generated power and
among the cheapest for all sources of
energy.
The scheme is part of Dubai’s plan to
build 1,000 MW of solar capacity by
2030, enough to meet 5% of its projected
electricity demand. New solar
developments may also support the
power-hungry desalination plants, which
produce most of the region’s potable
water.
Many Middle Eastern countries have
renewable energy targets in place,
ranging from 2% of electricity generation
by 2020 in Qatar, to a 20% target by the
same date in Egypt. Saudi Arabia has an
ambitious target to source 50% of
electricity from non-hydrocarbon
resources by 2032: 54,000 MW from
renewables (of which 41,000 MW will be
from photovoltaics and CSP, 9,000 MW
from wind, 3,000 MW from waste-to-
energy and 1,000 MW geothermal) and
17,600 MW from nuclear, according to a
report from Oxford Energy.
Furthermore, the cost of solar power
has fallen to a quarter of its 2009 level
and by 2020 is expected to offer the
lowest cost power in the world,
Solairedirect president and founder,
Thierry Lepercq told a solar conference
in Saudi Arabia last September.
Indeed, he added that the kingdom
would offer some of the lowest prices of
US$0.05-0.07 per kWh. If ACWA’s
latest claims are to be believed, such a
threshold is already here but this may not
change the long-term outlook drastically.
Saudi solar?
NewsBase Research (NBR) remains
sceptical about Saudi Arabia’s ambitious
diversification plans. The commitments
are not new, and Riyadh has seemingly
made little progress in recent years. The
Kingdom still has no significant
renewable power generation capacity,
sourcing around 55% of its electricity
from oil fired power plants, and the
remaining 45% from natural gas.
NBR estimates that Saudi currently
burns around 800,000 barrels per day of
crude and products for power generation.
Although there is a clear incentive for
Saudi to reduce its dependence on oil
fired generation, lowering domestic oil
demand and freeing up volumes for
export, the scale of investment necessary
to achieve its 50% renewables target by
2032 is significant.
Given the low Saudi lifting costs
(around US$1-2 per barrel, and only
US$4-6 per barrel including capex), the
production cost per kWh is only around
US$0.01, even though the opportunity
cost of oil on the export market is
currently around 10 times that – US$40
billion per year, even at current US$50
oil prices.
However, as Saudi Aramco needs to
apply enhanced oil recovery (EOR)
techniques to ageing fields and tighter
formations to maintain production, this
will increase the lifting fees by around
US$10-20 per barrel.
But with pressure on Saudi budgets
likely to set in over the next few years,
and the market already well-supplied
without additional Saudi exports, there
will also remain a strong incentive to
defer investment in renewables in favour
of additional generation from already
established sources. State-run Aramco
warned in May 2014 that it will have
“unacceptably low levels” of oil to sell in
the next two decades if domestic power
use keeps rising at 8% per year.
As a result – and as NewsBase
understands from several senior services
sources – Riyadh is determined to
emulate the US’s shale gas success, and
despite having suffered several
disappointments – notably by Shell at
Kidan in the Rub’ al Khali (Empty
Quarter) region – emphasis remains on
gas as the silver bullet for Saudi’s
growing demand for power and
petrochemicals. It is in this final point
that the solar plan falls down. Having
spent heavily in downstream, albeit at a
more leisurely pace of late, the kingdom
is positioning itself as a major
petrochemicals player, targeting
consumers in Asia, and increasing the
value it extracts from each barrel of oil
equivalent. It remains to be seen how
successful Saudi Arabia will be in its
hunt for gas, but it is thought that the
country is home to 8.2 trillion cubic
metres – enough to rank sixth in the
world.
Furthermore, the build times of power
plants are significant. We have forecast
Saudi power generation demand to more
than double by 2032, but still expect a
large proportion (around 40%) to be
generated in oil fired power plants –
consuming 1.2 million bpd.
POLICY
Solar still a slow mover in Gulf
Downstream Monitor MEA 21 January 2015, Week 03 page 11
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
Even accounting for potential
decommissioning of some existing
plants, we have not seen any convincing
evidence that Saudi will be successful in
significantly reducing its dependence on
hydrocarbons for power generation over
the time periods currently being
discussed. Hesitation about Saudi solar
prospects was proven valid on January
20, when the King Abdullah City for
Atomic and Renewable Energy
announced it was to push back the
country’s plan to produce 33% of its
electricity from solar panels by 2032.
The goal has now been shifted to 2040.
Included in this initiative is US$109
billion worth of solar power investments,
which will be put on ice while Saudi
reassesses the programme.
Chad is stepping up its efforts against
Boko Haram, the Islamist group
operating in and around northern Nigeria,
in concert with Cameroon.
N’Djamena and Yaounde are said to be
working together to reclaim Nigeria’s
town of Baga. Some NGOs, such as
Amnesty International, have said as
many as 2,000 people may have been
killed in fighting in this area in early
January, although official Nigerian
sources put the figure at closer to 150.
The Chad-Cameroon force appears to
be acting without support from the
Nigerian army, which has struggled
against the local terrorist group.
Boko Haram captured the town at the
start of the year, sacking a military base.
The group has proved capable of
operating around northeast Nigeria,
northern Cameroon and, to a lesser
extent, western Chad and Niger.
Chad has the most capable forces in
the region and Boko Haram has mostly
avoided potential conflict with its army,
leading some to speculate that
N’Djamena has ties to the Islamist group.
Such moves have been linked to Chadian
desire to control Lake Chad, which may
hold oil and gas resources. This has not
been proved and the prospect of
exploration and production in the area is
dim. The United Nations Security
Council (UNSC) expressed support for
talks between Nigeria and its neighbours
on the issue, which are due to be held on
January 20 in Niger.
According to the UK’s Daily
Telegraph, Cameroon has sent 7,000
troops, of a total 12,500 in its army, to
the north to fight Boko Haram. On
January 18, Boko Haram appeared to
have taken around 80 people – mostly
children – from villages in northern
Cameroon. Al Jazeera has reported that
at least 24 of the hostages were freed by
Cameroonian forces.
The terrorist group gained some
prominence in April 2014 after fighters
abducted more than 200 girls from a
school in Chibok, in Nigeria’s Borno
State. Despite global pressure, the Abuja
administration of Nigerian President
Goodluck Jonathan has failed to take
substantive action in tackling the Boko
Haram threat. US offers of assistance, for
instance, came to nothing on human
rights concerns linked to the Nigerian
army. Jonathan did visit Maiduguri, the
capital of Borno, last week during his
election bid.
AKE Intelligence, in a note on January
19, warned that “large-scale attacks and
kidnappings” by Boko Haram “have
become a near daily occurrence and the
country has fast become the site of the
world's most deadly terrorist incidents”.
The group, AKE said, controls 70% of
Borno while also holding a number of
towns in neighbouring Yobe and
Adamawa states.
“Jonathan's expected win in the
upcoming presidential elections will
likely further entrench north-south
divisions, especially if swathes of the
north are unable to vote due to rising
violence,” it said. Security in the north
will continue to deteriorate and there is a
risk of terrorist attacks in Abuja or Lagos
during the election cycle, which may run
until mid-March.
The European Union is considering an
oil embargo on Libya as a way of
supporting the United Nations’ special
envoy, Bernardino Leon’s, efforts to
broker a solution to the political crisis in
the oil-rich North African country.
Talks have started in Geneva with the
aim of reaching a peace deal.
This could lead to the development of
a unity government, at a time when a
self-declared government in Tripoli is
vying for power with the internationally
recognised government, based in Tobruk,
led by Prime Minister Abdullah al-
Thinni.
According to a discussion paper drawn
up by the EU’s diplomatic service, an oil
embargo is one of a range of tactics that
might speed a solution to the Libyan
crisis.
Seen by Reuters, the options paper
served as the basis for talks between EU
ministers in Brussels on January 19.
POLICY
Chad, Cameroon pressure
Boko Haram
EU considers Libya embargo
Downstream Monitor MEA 21 January 2015, Week 03 page 12
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
It said that the possibility of an oil
embargo as a means of applying pressure
for a resolution has been discussed by the
EU’s 28 member states. However, it also
warned that pushing for the UN to adopt
an oil embargo would be a risky strategy,
Reuters reported on January 17.
“This ... would put pressure on parties
to cease hostilities and participate in the
dialogue process. However, this option
should be considered with the greatest
caution as it would take a heavy toll on
the Libyan economy and society, and
may trigger unforeseen reactions,” the
paper said.
Such steps would have drawbacks,
with the UN already having banned
illegal exports of oil from Libya.
It estimated Libyan oil production at
200,000 barrels per day, down from
900,000 bpd in November. The “worst-
case scenarios of civil war and the
disintegration of Libya itself” were
possible outcomes.
Leon said at the outset of the UN-
brokered talks on January 15 that he
hoped armed factions would observe a
ceasefire to support the process, which he
hoped the Tripoli-based faction would
join. “Libya is falling really very deeply
[into] chaos,” Leon said in Geneva
before the meeting.
The Tripoli-based General National
Congress (GNC), on January 18,
expressed interest in participating in
peace talks, on the proviso that these be
held in Libya, not Geneva. Meanwhile,
the Tobruk-based House of
Representatives’ (HoR) armed forces
declared a unilateral ceasefire, apparently
in response to the peace talks.
The problem for the talks continues to
be one of how inclusive they will be.
Even if the GNC and HoR reach some
sort of understanding, which seems
unlikely, a number of armed militias are
operating within the country and may not
be willing to lay down their weapons.
As of January 20, the talks appear to
have broken down and the ceasefire is
faltering.
The longstanding plan for Abu Dhabi
government-owned International
Petroleum Investment Co. (IPIC) to
construct a greenfield refinery at the
eastern port of Fujairah appears to have
fallen victim once again to global market
conditions.
Prospective financiers have been
informed of a new delay while the client
assesses the project’s viability and
funding structure in light of falling prices
for oil prices.
A deal had been expected to be
launched to the banking market in late
2014, but no word has been heard on the
engineering, procurement and
construction (EPC) contracts since the
repeatedly postponed submission of
technical bids in July.
While the ongoing evolution of
Fujairah as a world-scale oil storage and
trading hub and the completion in 2012
of the Abu Dhabi crude pipeline have
improved the refinery’s logic since first
conceived, immediate factors are more
bearish – most obviously the oil price,
but more specifically the slowing
demand from key prospective Asian
consumers, as well as international and
regional rapprochement with Iran
decreasing the incentive for traders to
bypass the Straits of Hormuz.
The structure of the funding
arrangement to be offered to lenders is
reported to be undergoing some re-
examination to ensure that sufficient
safeguards would be in place to cope
with further oil price falls.
However, whether the project will
proceed at all appears somewhat
doubtful, with other downstream projects
in the region – notably the Ras Tanura
refinery expansion in Saudi Arabia and
both of Qatar’s flagship petrochemicals
schemes – being suspended or shelved.
Technical bids for two main EPC
packages covering the process units and
the offsites and utilities on the estimated
US$3.5 billion, 200,000 barrel per day
facility were submitted in July by firms
from an exclusively Asian shortlist, 10
months after the tender was floated, but
no deadline was set for commercial
offers.
The list includes GS Engineering &
Construction, Hyundai Engineering &
Construction, Hyundai Heavy Industries,
Samsung Engineering and SK
Engineering & Construction.
France’s Technip completed the front-
end engineering and design in 2013.
HSBC is the financial adviser.
The scheme has a troubled history.
When first launched in 2006, oil prices
were on a steep upward trajectory and
IPIC signed up super-major
ConocoPhillips as partner on a 500,000
bpd facility at a forecast cost of around
US$5 billion, to tie in with the Emirati
company’s planned 1.8 million bpd
pipeline to transport Abu Dhabi’s crude
from Habshan – Abu Dhabi Crude Oil
Pipeline (ADCOP) – to an alternative
export outlet at Fujairah. Conoco
withdrew a year later, citing soaring
project costs.
POLICY
REFINING
Fujairah refinery suffers new delay
Downstream Monitor MEA 21 January 2015, Week 03 page 13
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The pipeline was completed in 2012,
providing the refinery with cheap and
easily accessible feedstock, and the
downstream scheme remained on IPIC’s
slate – albeit scaled back to 200,000 bpd
– as part of a wider drive to almost
double refining capacity to 1.35 million
bpd by 2017. The expansion of the
biggest refinery, at Ruwais, to take
capacity to 817,000 bpd from 400,000
bpd, was commissioned last year.
Meanwhile Fujairah has also been
developed by the federal government into
a major hydrocarbons trading hub, with
storage capacity approaching 10 million
cubic metres and EPC bidding under way
for a 9 million tonne per year LNG
import and regasification terminal – the
central importance of which to the
UAE’s future fuel supply plans Energy
Minister Suhail al-Mazroui emphasised
in mid-January.
However, the refinery is evidently
regarded as less than urgent and a
considerable further delay pending
improved economic conditions is
regarded as highly probable.
Shell announced last week that it opened
a GTL base oil hub in Jebel Ali in Dubai
and that the first delivery to the storage
facility was made in late December.
In partnership with Qatar Petroleum
(QP), Shell operates the Pearl GTL plant
at Ras Laffan in northern Qatar, the
largest GTL plant in the world. The
US$18 billion facility draws on 1.6
billion cubic feet (51 million cubic
metres) per day of natural gas from
Qatar’s North Field and is designed to
produce 140,000 bpd of GTL through
two trains and 120,000 bpd of natural gas
liquids (NGLs) and ethane.
The plant came into operation in mid-
2011.
The new facility at Jebel Ali is Shell’s
fourth GTL base oil storage hub
alongside existing hubs at Houston,
Hamburg and Hong Kong, the company
said in a statement, adding that the new
UAE hub gives it global reach and
coverage to supply GTL base oil.
GTL base oil is a key component in
finished oils, particularly premium oils
for engines, process oils and transmission
fluids. Pearl also produces clean diesel
and kerosene, naphtha and normal
paraffin.
Shell said the Jebel Ali hub will supply
customers in the Middle East and also to
India and Pakistan. “Shell is the only
company with a dependable supply of
GTL base oil,” Dennis Cheong, Shell
Vice President Supply Chain, said in a
statement. “This new hub accomplishes
the full integration of our transportation
and storage of GTL base oil globally.”
State oil company Qatar Petroleum (QP)
and the Royal Dutch Shell have
cancelled their planned multi-billion-
dollar Al-Karaana petrochemicals project
at Ras Laffan, blaming the prevailing oil
market climate.
When abandoning the other, even
larger, flagship Al-Sejeel polymers
scheme in September, QP said it was
seeking alternative options yielding
better returns, but on this occasion the
company said that the ethane allocated
for Al-Karaana would be redistributed
among existing producers – thus
essentially sounding the death knell for
the state’s major petrochemicals
expansion ambitions in the medium-term.
While oil and gas-based projects are
being reassessed across the region and
the world in the light of lower upstream
and downstream prices, QP’s move is
nonetheless surprising since the small
wealthy country is regarded as one of the
least vulnerable to the recent market
shock – with a relatively low break-even
oil price and healthy government
finances.
However, such economic wellbeing
also renders less urgent than elsewhere
economic development and
diversification projects, while Shell is
heavily exposed to the worldwide
industry downturn.
REFINING
FUELS
Shell opens GTL base oil
terminal in Jebel Ali
PETROCHEMICALS
QP, Shell cancel Al-Karaana
petchem project
Downstream Monitor MEA 21 January 2015, Week 03 page 14
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
The US$6.4 billion Al-Karaana
complex, in which Shell was to take a
20% stake alongside QP, had reached the
engineering, procurement and
construction (EPC) bidding stage, with
contractors and technology providers
bidding on a mixed-feedstock steam
cracker and three process units producing
1.5 million tonnes per year (tpy) of
monoethylene glycol (MEG), 300,000
tpy of linear alpha olefins (LAO) and
250,000 tpy of oxo-alcohols. The
partners signed a heads of agreement
(HoA) in 2011 for the project, which
with Al-Sejeel formed part of a huge
expansion into petrochemicals in an
effort by Doha to diversify away from
LNG exports and move down the gas
value chain.
Al-Sejeel, an entirely local US$7.4
billion joint venture (JV) of QP and
Qatar Petrochemical Co. (QAPCO), was
to have produced high-density
polyethylene (HDPE), linear low-density
polyethylene (LLDPE), polypropylene
(PP) and butadiene – and was at the EPC
prequalification stage when shelved.
Output from the Barzan gas development
project – the last to be approved for the
supergiant North Field before a
moratorium imposed in 2005 – has been
reserved for domestic use, primarily in
power and petrochemicals.
“The decision came after a careful and
thorough evaluation of commercial
quotations from EPC bidders, which
showed high capital costs rendering it
commercially unfeasible, particularly in
the current economic climate prevailing
in the energy industry,” QP and Shell
said in a statement, which emphasised
their continued strong relationship by
noting Shell’s shareholdings in the
Qatargas 4 LNG and Pearl GTL (gas-to-
liquid) ventures.
While Doha might be relatively
insulated from the worst ramifications of
the plunging price of oil, Shell by
contrast had embarked on a cost-cutting
and asset-selling drive even before the
slump, following the firm’s first-ever
profits warning a year ago. In October,
the European super-major cancelled a
polyurethane (PU) plant JV planned with
Saudi Basic Industries Corp. (SABIC) on
the grounds of unfavourable project
economics.
In the same week that Royal Dutch Shell
cancelled its involvement in Qatar’s
US$6.5 billion Al Karaana
petrochemicals project (see previous
story), it announced the completion of its
newest global gas-to-liquid (GTL) base
oil storage hub, in Dubai’s Jebel Ali.
This appears to be an entirely shrewd
piece of commercial logic, given the
contango that is building in the oil
futures markets.
With spot prices still looking
vulnerable to the downside, whilst
longer-term forecasts are for a lift to
US$60-80 per barrel average by year-end
2015 (see chart), there is every reason to
believe that the major spot/six-month
contango that became a hallmark of the
2008-09 global recession will re-assert
itself. NewsBase expects the 2015
average price to be at the lower end of
this range.
The onus looks to have shifted from
engaging in very capital-intensive new
projects to simply completing lower-
capital ones that are already near to
finalisation, and storing as much
hydrocarbons assets as possible.
According to global shipbrokers, in
order to cover the costs associated with
storing oil at sea – including hiring a
ship, fuel, insurance, and finance – the
gap between the spot crude oil price and
the six-month futures contract needs to
be at least US$6.50 per barrel. Currently
it is edging up to a point just below that,
for both Brent and WTI.
The initial stages of the 2008/09
contango were marked by a dramatic rise
in ship-based storage but, given very big
stock-build forecasts for the first half of
this year at least – more than 1.5 million
barrels per day, in fact – Mike Wittner,
head of oil market research for Societe
Generale, in New York, predicts not only
that the contango markets are here to stay
for the foreseeable future but also that we
could see a super-contango in the first
half. “This will encourage all kind of
stock-building in whatever tank is
available, be it on ships or on land,” he
said recently.
This new storage hub for base oil – a
key component in finished oils, with
GTL base oil specifically enabling the
development of premium oils for
engines, as well as in speciality products,
including process oils and transformer
fluids – is Shell’s fourth, adding to those
already in Houston, Hamburg, and Hong
Kong. According to Dennis Cheong,
Shell Lubricants Supply Chain vice
president, in Singapore, the new hub will
cater to customers in the Middle East and
to certain markets beyond, such as Egypt,
India, Pakistan, and South Africa.
PETROCHEMICALS
TERMINALS & SHIPPING
Shell bolsters base oil storage,
reduces exposure elsewhere
Downstream Monitor MEA 21 January 2015, Week 03 page 15
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Keen to make use of its strategic
location, Mauritius has entered into an
agreement for the construction of an oil
terminal on the island, allowing it to
import and re-export crude oil and
petroleum products.
The deal took the form of a
Memorandum of Understanding (MoU)
between Mangalore Refinery and
Petrochemicals Ltd (MRPL), STC
Mauritius and Indian Oil Corp. (IOC).
The joint venture (JV) terminal would
be constructed through an investment of
around US$130 million, facilitating the
re-export of petroleum products from
Mauritius to other islands in the Indian
Ocean and mainland Africa, thereby
making it a petroleum hub while also
increasing the country’s oil security.
Mauritius is keen to become a “real
bridge” for India to invest and connect
with the rest of Africa and Europe,
according to the island’s vice prime
minister Showkutally Soodhun. “We
want that Mauritius be a bridge for India,
a real bridge for India, and through
Mauritius they can come and invest and
go to Europe and Africa: This is very
important,” he added, noting that
bilateral relations between India and
Mauritius were getting “even more
cemented, and our economic, social and
political links are getting even closer.”
Last week, Soodhun announced that
India would provide 100% of Mauritius’
petroleum products for the next three
years, in a deal worth US$1 billion.
Seychelles and Mauritius announced in
2013 that they were to jointly explore for
petroleum in an area in the Indian Ocean
that both countries own, but updates on
progress have been scant.
According to the CEO of Seychelles
upstream regulator PetroSeychelles, an
authority established to deal with the
licensing and to oversee the activities in
the area, all revenues would be split
50:50.
The two islands received permission in
2012 from the United Nations to ‘extend’
their continental shelves off their
respective coasts to forestall any future
maritime territorial disputes.
Aden Refinery Co. (ARC) in early
January issued its latest fuel import
tender, seeking supplies from February to
April, its second such call and reflecting
former supplier Saudi Arabia’s
withdrawal of much of its support since
the government’s effective takeover in
September by Iran-backed Shia Houthi
forces.
Feedstock for the refinery itself, by far
the country’s largest, with notional
capacity of 140,000 barrels per day, has
been cut off by repeated attacks on the
pipeline which runs from the main
producing Ma’arib fields to the Ras Isa
terminal on the Red Sea coast – from
where some crude would in the past be
shipped to Aden in the south for
processing. Such attacks and the security
problems faced by producers – as the
Houthis, residual government forces, Al-
Qaeda militants and local Sunni
tribesmen battle for supremacy – have
stymied the country’s oil exports and
rendered it close to bankruptcy, with
Riyadh left in a quandary over whether to
continue its emergency support.
ARC’s latest tender calls for a total of
900,000 tonnes of products – nine,
60,000-tonne cargos of gasoil and 12,
30,000 shipments of 90-octane gasoline.
Tenders last month for 240,000 tonnes of
gasoil and 120,000 tonnes of gasoline
were the first since August, the
intervening months having been covered
by grants – presumably from Saudi
Arabia, which had been supplying
products in the period between the fall of
former President Ali Abdullah Saleh in
2011 and the recent Houthi incursion.
In 2012, Riyadh deposited US$1
billion at the Central Bank of Yemen to
shore up reserves while providing an
additional US$1.2 billion-worth of oil
and oil products.
In July, shortly before the Shia rebels’
takeover – ironically sparked by Sana’a’s
efforts to control the budget by reducing
fuel subsidies – the kingdom again
stepped in with a further US$1.2 billion
to purchase fuel and US$435 million to
contribute to the government’s Social
Security Fund, following a visit by
beleaguered new President Abdu Rabu
Mansour Hadi to Saudi King Abdullah.
How far Riyadh has gone in
withdrawing support is unclear. The
ARC tenders demonstrate that
guaranteed direct donations have ceased,
but December’s terms stipulated that
delivery could be deferred from the
agreed date for those grants that might be
forthcoming, while also requesting that
the cargoes not be of Iranian origin –
perhaps to avoid the impression of being
bankrolled by Tehran.
TERMINALS & SHIPPING
Mauritius aims to be product hub
TENDERS
Cash-strapped Yemen forced
to tender for oil products
Downstream Monitor MEA 21 January 2015, Week 03 page 16
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The situation presents an obvious
dilemma for Saudi Arabia, which, while
loath to prop-up an ally of Iran, is also
fearful of instability on its doorstep and
of strengthening by default either Iran or
Al-Qaeda militants. The closing
communiqué from the Gulf Co-operation
Council (GCC) summit in Doha in
December condemned both the Houthis
and the Islamists, calling on the former to
restore all civil and military institutions
to ‘State authority’ and to withdraw its
militia from all territories.
However, in a further potential risk to
remaining oil production, the Houthis in
early January were threatening to invade
the oil-rich Ma’arib province – ostensibly
to protect it from Al-Qaeda-linked
forces. Fighting in the area not only
bodes ill for sustained operation of the
sabotage-prone 120,000-bpd export
pipeline but also for foreign producers
feeding it with crude.
The country’s major players, among
them Calvalley and Nexen of Canada and
Norway’s DNO International, have
frequently been forced to cease work
over security concerns.
Exports in 2014 averaged only around
100,000 bpd, down from more than
400,000 bpd a decade ago – with severe
month-to-month fluctuations dependent
on the pipeline’s status.
POLICY
Mega projects drive
demand for Saudi
industrial gases
sector
The industrial gases sector continues to
witness growth in Saudi Arabia, buoyed
by expansionary spending and mega
infrastructure projects, a new study has
confirmed. Saudi Arabia’s industrial gas
infrastructure will continue to grow in
support, not only of the energy sector,
but also in the developing non-energy
sector including the industrial, gas and
chemical sectors, said a report released
by the National Commercial Bank.
As the market continues to be
fragmented, the pricing of gases differs
across the regions due mainly to
logistical factors. According to industry
insights, project funding comes mainly
from shareholders and local banks, with
long-term bank loans being a preference
amongst the sources of financing. Over
the forecasted period, future investments
will continue in the production of
nitrogen, hydrogen and oxygen.
The report also said that growth in the
international industrial gases sector is
driven by growth in Asia (namely China,
India and Korea), overall high energy
costs and climate change initiatives. In
the Middle East, SABIC is the largest
producer of air separation gases, with a
market share of 27.8%.
ARAB NEWS, January 17, 2015
COMPANIES
Oil slump slashes
SABIC profit
Saudi Basic Industries Corp (SABIC),
one of the world’s largest petrochemicals
groups, reported a 29% plunge in fourth-
quarter net income, widely missing
analysts’ forecasts because of the tumble
of global oil prices. Chief executive
Mohamed al-Mady said his company’s
outlook for 2015 depended on oil prices
and was therefore unpredictable, but that
SABIC faced challenges early in the
year. The Gulf’s largest listed company
earned 4.36 billion riyals (US$1.16
billion) in the three months to December
31 compared to 6.16 billion riyals a year
earlier, SABIC said as sales sank 10%
from a year ago to 43.4 billion riyals.
Profit was well below the average
forecast of analysts polled by Reuters,
who had predicted earnings of 5.5 billion
riyals. It was also below the company’s
third-quarter net profit of 6.18 billion
riyals. Mady said his company, which is
70% state-owned, would stick to its long-
term strategy of focusing investments in
China, North America and Saudi Arabia,
to be close to raw materials or SABIC’s
markets. He said it would continue to
look hard at acquisition opportunities in
the United States and at investing in the
US shale gas industry. A year ago, he
said the company expected to enter the
shale market in 2014.
REUTERS, January 18, 2014
Sasol plans saving
amid low oil
Sasol, which is building an US$8-billion
US petrochemical complex, said it wants
to conserve cash after oil, to which its
revenue is linked, more than halved over
the past six months. The world’s largest
producer of motor fuel from coal said in
October it approved the decision for the
Lake Charles, Louisiana plant in October
and completed a US$4-billion credit
facility two months later. The cracker
will convert ethane, a natural-gas liquid,
into ethylene used to make chemicals
that go into antifreeze and water bottles.
Sasol expects to decide on a gas-to-
liquids plant at the same site within two
years. In 2012, it said the GTL facility
would cost as much as US$14 billion.
Developments for the US project come
as oil has fallen more than 50% over the
last six months. Some plans have not
survived the decline, with Qatar
Petroleum and Shell last week saying
they’ve ended plans for a US$6.5 billion
petrochemical plant in the Middle East
nation. Sasol is looking to save “in the
context of the current oil-price
environment,” spokesman for the
Johannesburg-based company Alex
Anderson said. “Opportunities being
evaluated include further cost reductions
in addition to the 4-billion-rand (US$345
million) cash-cost savings from our
business performance enhancement
programme, as well as the reprioritisation
of capex plans.”
BLOOMBERG, January 19, 2015
TERMINALS & SHIPPING
NEWS IN BRIEF
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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
REFINING
Kuwait controls
minor fire at refinery
A minor fire broke out at the heavy oil
unit of Kuwait National Petroleum Co’s
(KNPC) Shuaiba refinery but was
quickly controlled, state news agency
KUNA reported. “The fire has been put
under control at a record time of 30
minutes,” a KNPC spokesman said.
GULF BUSINESS, January 15,
2015
NNPC to boost
domestic refining
capacity
The refining capacities of the local
refineries are expected to be boosted by
the arrival of new equipment for their
turn around maintenance, the Nigerian
National Petroleum Corporation has said.
This comes as the corporation has
frowned at the continued politicisation of
its operations. The Group General
Manager, Group Public Affairs Division
of the NNPC, Ohi Alegbe, said that the
report on 152 billion naira being spent on
revival of the ailing refineries is untrue
and politically-induced. The corporation
noted that as a public entity with
fiduciary responsibility to the
government and people of Nigeria, the
NNPC is focused on its mandate and
would not be distracted by the spate of
politically inspired polemics against its
operations.
ALL AFRICA, January 13, 2015
Nigeria plans gas
turbines to revive
refinery
As a measure to breathe new life into the
petroleum sector, Nigeria has revealed
plans to construct three 25-MW gas
turbines at Port Harcourt Refining
Company Limited (PHRC) to improve
production, NNPC’s Group General
Manager, Group Public Affairs Division,
Ohi Alegbe in Abuja said in a statement.
According to him, the gas turbines will
be installed and operated by an
independent power producer, to boost
productivity through uninterrupted power
supply at the refinery. It stated that the
turbines to be installed had the capacity
to generate 72 MW of power, exceeding
the amount of megawatts required by
PHRC. “The arrangement with the
independent power producers is aimed at
ensuring steady power supply to the
refinery. With the installation, PHRC
would focus majorly on the core mandate
of refining petroleum products for the
public,” the statement said.
STAR AFRICA, January 18, 2015
New Saudi-Sinopec
oil refinery starts
exports
A major new joint-venture refinery in
Saudi Arabia shipped its first clean diesel
cargo, the company Yanbu Aramco
Sinopec Refining Co (Yasref) said. The
start-up of the refinery is expected to
weigh on diesel prices as the rise in
supply will far outweigh demand, which
has been sluggish because of weak
economic growth, traders said. The
400,000-bpd refinery, a joint venture
between Saudi Aramco and China’s
Sinopec, started trial runs in September
and had originally planned its first
exports by November.
Yasref said it loaded 300,000 barrels of
diesel from the refinery, located in
Yanbu on the Red Sea coast. Yasref is
the second refinery to start up in Saudi
Arabia in the past two years and will
complete state company Saudi Aramco’s
transformation into a leading exporter of
diesel. The company did not specify
where the shipment headed to but one
trader said that it was likely being sold
into Egypt. The cargo was being sold as a
500 ppm sulphur gasoil grade, although it
most likely had a lower sulphur
specification of 75 ppm, two traders said.
Once production is stable and secondary
units are running, the refinery will likely
export the 10 ppm sulphur diesel grade,
which is compatible with European
standards, traders said. Yasref will
produce 263,000 bpd of diesel, 90,000
bpd of petrol, 6,200 tonnes per day of
petroleum coke, 1,200 tonnes per day of
pelletised sulphur and 140,000 tonnes a
year of benzene, according to the
company website.
REUTERS, January 15, 2015
Kenya acquires
stake in Uganda
refinery
Kenya has agreed to acquire a 2.5% stake
in the planned Uganda oil refinery for an
estimated 5.6 billion shillings. Energy
and Petroleum PS Joseph Njoroge said
Kenya would take up the stake as part of
a commitment among East African
Community (EAC) member states to
close ranks on projects that benefit the
bloc. “In line with the spirit of regional
integration we committed to support each
other in key infrastructure projects and
we shall lend support to the Ugandan
one. We shall take up a minimal 2.5%
stake in the refinery project,” Mr Njoroge
said. The facility is slated to process
60,000 bpd of oil and much of Uganda’s
projected crude output is expected to be
exported via a pipeline through Kenya,
which is yet to be built. Either a
consortium headed by South Korea’s SK
Energy or another led by Russia’s RT-
Global Resources, which are both
currently locked in bidding for the
refinery, will take up a 60% stake in the
project as well as develop and operate it.
The Ugandan government had invited
both Kenya and Rwanda to buy shares in
the remaining 40% stake. Kenya will
contribute capital equivalent to its 2.5%
stake, which is 5.6 billion shillings based
on the US$2.5 billion set as the initial
construction cost of the refinery.
BUSINESS DAILY, January 19,
2015
FUELS
Kuwait misses clean
diesel deadline
Bangladesh has begun importing cleaner
diesel with less sulphur contents to
ensure a better environment by way of
averting pollution, a top official said
Saturday.
NEWS IN BRIEF
Downstream Monitor MEA 21 January 2015, Week 03 page 18
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However, Kuwait, a major supplier of the
petroleum fuel, is going to miss the
January 2015 timeline on the excuse of
necessary changes to its refinery.
The first consignment of 0.05% sulphur-
content diesel reached country’s main
seaport in Chittagong on January 5 with
20,000 tonnes of diesel from the
Philippine National Oil Company
(PNOC), a senior BPC official said. He
said the second cargo ship carrying
similar quantity of gasoil with the same
sulphur content will reach Chittagong
seaport next week from Petco, the trading
arm of Malaysia’s Petronas.
The BPC earlier used to import only
0.25% sulphur-containing diesel to meet
country’s mounting demand in transport
sector, power plants, irrigation and in
industries.
FINANCIAL EXPRESS, January
18, 2015
Nigeria announces
drop in petrol prices
The Nigerian government has announced
a cut in petrol prices a month before
presidential and parliamentary elections
in the country, which is considered
Africa’s largest oil producer.
The price of a litre of petrol will fall from
97 naira to 87 naira (US$0.47), said
Nigerian Oil Minister Diezani Alison-
Madueke. Nigerian President Goodluck
Jonathan, who will compete in the
February 14 polls, approved the measure,
the minister added.
Crude oil exports account for 70% of
Nigeria’s revenue and some 90% of its
foreign exchange earnings. The country
extracts nearly 2 million bpd of crude but
imports most of its fuel because it does
not have refining capacity. To keep
prices low at petrol stations, the
government pays subsidies. Jonathan
tried to remove the subsidies in late
2011; however, it caused a general strike
and mass protests which forced the
government to reintroduce the subsidies
to a lesser extent.
The development comes as oil prices
have plunged by over 50% since June of
last year because of oversupply by a
number of oil producing countries such
as Saudi Arabia as well as lacklustre
global economic growth.
PRESS TV, January 19, 2015
Nigeria under
pressure to cut
petrol prices further
Nigeria’s government was under pressure
to cut petrol prices further, with unions
saying people were being “short-
changed” over the global crude price
plunge. The main opposition accused the
government of tokenism before the
February 14 elections, after Petroleum
Minister Diezani Alison-Madueke
announced a 10-naira (US$0.05)
reduction. A litre of fuel at the pump in
Africa’s most populous nation and top oil
producer now costs 87 naira. But the
opposition and unions said the price of
petrol as well as diesel and kerosene
should be slashed further. The All
Progressives Congress said that the new
price of petrol was “mere tokenism at a
time the price of crude oil has crashed by
about 60%”.
AFP, January 20, 2015
Saudi research on
fuel flexibility to
enhance gas
turbines
GE has signed a co-operative research
agreement with King Abdullah
University of Science & Technology
(KAUST) to undertake cutting-edge
research on enhancing the fuel flexibility
of GE’s advanced gas turbines. The
collaborative research, led by Saudi-
based international professionals and
students from KAUST along with GE’s
global team, will focus on the impact of
using heavy liquid fuels on advanced gas
turbines. The goal of this ground-
breaking study is to help advance the
overall fuel flexibility of gas turbines,
which in turn can positively impact
power plant availability, enabling power
producers to meet the growing demand
for electricity in the Kingdom.
According to Director at KAUST Clean
Combustion Centre Bill Roberts, the
university’s co-operative research with
GE is a strong example of the academic-
industry linkages KAUST fosters. “Our
goal is not only to shape a future
generation of energy and industry-skilled
professionals but also contribute to
innovative technologies that are
developed in the Kingdom,” Roberts
said. “The research collaboration with
GE will further strengthen our
contribution to the Kingdom’s energy
sector.”
SAUDI GAZETTE, January 18,
2015
PETROCHEMICALS
Nigeria plans to stop
petchem imports by
2018
Nigeria’s Minister of Industry, Trade and
Investment Olusegun Aganga has said
that Nigeria will stop importing
petrochemical products by 2018. Aganga
said that with the Nigeria Industrial
Revolution Plan imports of
petrochemical products, which currently
costs the nation about US$10 billion
annually would be a thing of the past.
“The message of this administration is
very clear. We can no longer be a
country that is import dependent
especially on product we can produce in
this country. There are many sectors we
should have developed as a country but
we relied for decades on exporting raw
materials which is oil. That era is gone
and this is why the president launched
the Nigeria Industrial Revolution Plan in
2012,” Aganga said. According to
Aganga, if the investment goes according
to plan, by 2018, we will no longer
import petroleum products into the
country and that will save us a minimum
of about US$10 billion. “We spend about
US$3 billion importing steel, we spend
about US$6 billion importing cars and
spare parts and also spend about US$1.7
billion importing sugar where we can
grow sugar cane to get sugar. Jonathan is
actually the solution to the debacle we
have had for decades and the idea is a
matter of time to let him get the plan
completed,” he added.
STAR AFRICA, January 13, 2015
NEWS IN BRIEF
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Industries Qatar may
expand petchem
output
Industries Qatar, the Gulf’s second-
largest petrochemicals firm, is
considering expanding production to take
advantage of excess feedstock left by a
project’s cancellation, the company said.
State firm Qatar Petroleum and Shell said
they had decided not to proceed with the
US$6.4-billion Al-Karaana
petrochemical project in the Gulf state,
deeming it “commercially unfeasible”
given weaker oil prices. Industries Qatar
said that it was conducting feasibility
studies to “take advantage of the ethane
feedstock available following the
decision not to proceed with the
proposed Al-Karaana Petrochemical
Project”.
The company said it would conduct the
studies in collaboration with Qatar
Petroleum, Qatar Chemical Co and Ras
Laffan Olefins Cracker Co. The studies
would aim to “develop and expand the
number of petrochemical plants with
beneficial returns for these companies,
and to the petrochemical sector in
general,” Industries Qatar said. The
company’s board recommended a 2014
dividend of 7 riyals per share, down from
the 11 riyals paid in 2013 and below
analysts’ average forecast of 11.13 riyals.
REUTERS, January 15, 2015
PIPELINES
Iran hopeful of IPI
pipeline project
Iran is keen to “develop” business
relations with India and is hopeful that
Iran-Pakistan-India Pipeline project will
be back on track, said Representative of
Iran’s Supreme leader Ayatollah
Khamenei in India Mehdi Mahdavipour.
Iran is keen to “develop” business
relations with India and is hopeful that
Iran-Pakistan-India Pipeline project will
be back on track, said Mahdavipour.
“Once the pipeline is completed, the
direct supply of petroleum will be
available at a very low cost to Indians
and will prove helpful to generate power
in the country,” he said.
The representative of Khamenei was
speaking at a function on January 17.
“Installation of gas and oil pipeline has
been completed up to the Pakistan
border,” he said. Dialogue with Pakistan
for its further installation are on and hope
the pipeline will reach India very soon,
Mahdavipour said.
DNA, January 18, 2015
NNPC to intensify
battle against oil
pipeline sabotage
State-owned Nigerian National
Petroleum Corp said it remained
committed to end to the frequent
sabotage attacks on oil pipelines that
criss-cross the Niger Delta, which
continues to pose a major threat to
Nigeria’s economy. “It is quite a pity that
the activities of vandals persist in spite of
the efforts being made by the
government and security agents to
address the problem. The menace does
not only disrupt our operations, it also
introduces huge losses to the national
economy and toll on human capital,”
NNPC spokesman Ohi Alegbe said.
The NNPC spokesman said that apart
from the revenue loses attacks on
pipelines were also a major source of
pollution and a health hazard. Theft from
crude oil pipelines has grown into a
major problem for Nigeria, which derives
some 80% of government revenue from
the oil industry. Besides robbing the
country of an estimated US$6 billion per
year in revenue, it causes pipeline
shutdowns since thieves often sabotage
the lines before tapping the crude.
PLATTS, January 14, 2015
Tanzanian
committee pushes
for oil pipeline
network
Tanzania’s Parliamentary Energy and
Minerals Committee has directed the
government to scout for investors to put
up a pipeline network to transport
petroleum products to upcountry regions
as well as making use of Mtwara and
Tanga ports to offload the commodity.
Members of the committee also want the
state to beef up security on existing oil
offloading facilities at the Port of Dar es
Salaam, particularly the single point
mooring and pipelines transporting fuel
to oil depots around the city.
“Transporting fuel through pipelines is
both cheap and secure as compared to
trucks. It is high time the government
considered this option,” the committee’s
Vice-Chairman, Jerome Bwanausi,
explained.
TANZANIA DAILY NEWS,
January 16, 2015
UAE to import more
fuel from Qatar via
Dolphin pipeline
The United Arab Emirates seeks to
import more fuel via the Dolphin gas
pipeline amid concerns about securing
the best price possible for its natural
resources. The UAE gas supply crunch
continues to thwart the future of the
country’s power needs, but the emirati
government recently announced plans to
imports more gas from Qatar, as
extremely low gas prices makes imports
through the Dolphin Pipeline a more
attractive proposition for the country than
developing the relatively-expensive-to-
produce domestic gas reserves.
Energy Minister Suhail Al Mazouei
addressed this issue at an industry
presentation in Abu Dhabi, where he
announced plans for UAE including
boosting imports of LNG and developing
the country’s deposits. The Dolphin
brings natural gas from Qatar offshore
fields via undersea pipeline from the Ras
Laffan processing plant to receiving
facilities at Taweeleh, where it can then
be shipped on to Fujairah and Oman via
overland pipeline.
ICN.COM, January 14, 2015
NEWS IN BRIEF
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Downstream Monitor MEA 21 January 2015, Week 03 page 21
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
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Downstream Monitor MEA 21 January 2015, Week 03 page 22
Have a question or comment? Contact the editor – Ian Simm ([email protected]) Copyright © 2015 NewsBase Ltd.
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All
reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
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