NewBase 641 special 06 july 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 06 July 2015 - Issue No. 641 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

UAE’s Dana Gas wins favourable ruling in Kurdish dispute The National + NewBase

Shares of Abu Dhabi-listed Dana Gas surged 13.7 per cent after the company won another court ruling in its long-running dispute with the Kurdish Regional Government (KRG) in Iraq over payment arrears of US$2 billion.

The shares closed at Dh0.58, their highest level this year, although they were still down from Dh0.80 this time last year.

The Sharjah-based oil and gas exploration firm said yesterday that the London Court of International Arbitration on Thursday ruled that its Pearl Petroleum consortium – which includes partners Crescent Petroleum, OMV of Austria and Hungary’s MOL – has exclusive rights to develop the Khor Mor and Chemchema concession in the Kurdish region for a period of not less than 25 years.




The court also ruled that the consortium was entitled to receive international prices for the concession’s output of liquefied petroleum gas and condensate, and that Dana Gas was solely entitled to the proceeds from selling stakes in the project to OMV and MOL.

The court’s decision means that it is quite likely that the final monetary judgment, which it is scheduled to make in September, will award Dana Gas and its partners entitlement to the full amount of arrears outstanding.

Total arrears stood at nearly $2bn at the end of May, Dana Gas said.

Thursday’s ruling is the latest in a series of decisions in favour of the consortium since it took its dispute to arbitration in late 2013.

Despite the court’s rulings, Dana Gas is likely to face a long process to recover the money it is owed.

The dispute has occurred at a time when the KRG is still deeply mired in both an unresolved tussle with Iraq’s central government over control and compensation for oil produced in the region, as well as its bitter and costly war against militants to its west and south.

According to lawyers familiar with such disputes, Dana Gas and its partners could sue the KRG in other jurisdictions to seize its export oil in lieu of payment, although that would be a messy and expensive process.

Even if the KRG was able to reach a negotiated settlement with Dana Gas and its partners – which Patrick Allman-Ward, the chief executive of Dana Gas, has repeatedly said is the company’s preferred option – the regional government currently does not have the money and has struggled even to pay its own employees in the region.

The company has had chronic problems in both its main operating areas, the KRG and Egypt. However, in Egypt it has made progress recently as the new government has moved to resolve arrears issues to unlock further investment.

Dana Gas reported in May that overall production last year was steady at 68,700 barrels of oil equivalent per day (boepd). Egyptian production fell 1,400 boepd to 37,700 boepd because of natural field depletion. Production at the Khor Mor gas field was up 1,100 boepd at 30,400 boepd.

Dana Gas executives have said they hoped to sort out their issues in the KRG so they could make further investment which, they argue, would make the region energy self-sufficient and eventually a major gas exporter.




Oman: Abraj set to become Oman’s biggest oil drilling firm Oman Observer

June 5: Abraj Energy Services, a subsidiary of the wholly government-owned Oman Oil Company Exploration and Production (OOCEP), plans to add four new drilling rigs to its already formidable fleet this year, a move that will further cement its standing as the Sultanate’s largest drilling services provider.

A well-established player in Oman’s oilfield sector, Abraj exemplifies what a wholly government-owned and operated entity can accomplish in this rapidly evolving and highly competitive industry dominated by international heavyweights, say experts. With around 2,000 employees — nearly 85 per cent of them Omani nationals — this midstream energy services specialist is poised for strong growth fuelled not only its own strategy to be a well-diversified services provider, but also the ambitions of

its parent company, OOCEP, the Sultanate’s newest gas producer with a sizable portfolio of domestic and overseas hydrocarbon assets. According to industry observers, Abraj’s growing reputation and market presence assumes significance especially in light of recent revelations by top government officials about a partial divestment by Oman Oil Company (OOC), the state-owned strategic energy investment vehicle, in some of its subsidiaries. Recent reports have identified OOC subsidiaries Oman Oil Refineries and Petroleum Industries (Orpic) and Abraj Energy Services as potential candidates for disinvestment via an Initial Public Offering (IPO). In recent years, Abraj has been ramping up its infrastructural wherewithal in line with its expanding order book. By the end of this year, the company will boast a fleet of 20 modern drilling rigs, underscoring a strongly upbeat outlook that contrasts sharply with the somewhat gloomy economic milieu created by the ongoing the slump in international oil prices. Side by side with this expansion, Abraj has also been rolling out new oilfield services. Long focused on drilling, well services and well engineering, the company added cementing Services to its list of capabilities last year. Earlier, in 2013, Abraj added fraccing to its menu of services when it deployed state of the art fracturing equipment in supporting the development of the tight gas potential of OOCEP’s Block 61 Abu Butabul field. Through the addition of coiled tubing and west testing services, Abraj began offering an end-to-end fraccing solution that earned it the distinction of becoming the first nationally owned oilfield services company in the MENA region to provide Integrated Frac Services (IFS). As for its strategy for 2015, the company plans to grow its cementing and fraccing business with the aim of carving for itself a “sizable market share” in high pressure pumping in Oman,” added OOCEP in a recently released review of Abraj’s operational performance during 2014.




SABIC, SK Global Chemical seal joint venture Saudi Gazette

SABIC and the Korean petrochemical company SK Global Chemical have successfully concluded negotiations for a 50-50 joint venture that will purchase the unique Nexlene solution technology and a plant that manufactures a range of high-performance ethylene/alpha-olefin copolymers products in Ulsan, Republic of Korea. The aggregate purchase price for the technology and plant is approximately $640 million.

The closing of the deal on Friday (July 3) in Seoul was presided over by Abdulrahman Al-Fageeh, Polymers Executive Vice President, and Hwa Youp Cha, SK Global Chemical CEO. The joint venture holding company, SABIC SK Nexlene Company (SSNC) is headquartered in Singapore. Its wholly-owned subsidiary Korea Nexlene Company (KNC) owns the plant in Ulsan, which has an annual capacity of 230,000 tons. The parties intend to further expand capacity with the construction and operation of additional plants globally.

The plant will produce metallocene based linear low-density polyethylene, polyolefin plastomers, and polyolefin elastomers to meet the growing needs of diverse industries such as flexible packaging, industrial and agricultural film, automotive, consumer products (footwear), medical, and construction.

Yousef Al-Benyan, SABIC’s Acting Vice Chairman and CEO, said “we are very pleased to launch this partnership with SK Global Chemical, which is the latest stage in SABIC’s global expansion. By growing our presence in Republic of Korea we are opening up new markets globally and reinforcing our position as a global leader – a major goal of our 2025 strategy. Al-Fageeh said the new venture would enable both partners to grow in the highly specialized polyethylene market by providing high-value polymer products to global customers. “The solidification of our partnership with SK Global Chemical will complement our polymers portfolio and enable us to offer a more varied, cost-effective, and customer-focused selection of products,” he said.

Nexlene will offer customers better performance, manufacturability, and final product properties, including excellent impact strength, enhanced toughness, superior transparency, low heat-seal temperature, incremental output, and improved organoleptic properties. These unique properties and characteristics offer a range of possibilities for the development of innovative product applications. The packaging industry will benefit from lighter versions of Nexlene (mLLDPE) for producing films to manufacture flexible food packaging and wrapping materials. They can also be used in pipes and consumer goods, such as roto-moulded articles. Metallocene Polyolefin elastomers have applications in a number of industries where elasticity is important, including impact modifiers in the automotive industry, footwear in consumer markets, and wire coatings in the utilities and construction industries.




Norway: Statoil installs first subsea wet gas compressor in the world at Gullfaks Source: Statoil

Statoil has announced that, after several years of technology development, construction and testing the first

subsea wet gas compressor in the world is now installed at the Gullfaks C platform in the North Sea.

Subsea wet gas compressor

In May and June Gullfaks subsea compressor project (GSC) completed successful structure and module

installation campaigns for the subsea station. The compressors were installed at the end of June. Subsea wet

gas compression at Gullfaks C will add 22 million barrels of oil equivalent, and extend plateau production

by about two years.

'The installation campaigns have been successfully performed by Subsea Seven,' says project manager Bjørn

Birkeland. The project has now entered the last phase, testing and preparing for hand-over and start-up in

the last quarter of this year. 'This is the first compressor of its kind in the world. It is a milestone, not just

towards the compressor start-up, but also for Statoil’s subsea factory visions,' says Steinar Konradsen,

owner representative for the project.

Testing of the complete

compressor station still remains,

but this work is underway and the

project is on schedule.

Considerable preparations for the

start-up of the subsea compressor

have been made on Gullfaks C as

well. This work, performed by

Apply Sørco, is now in the final

stages.

The compressor represents a

robust and flexible measure to

improve oil recovery (IOR) for

the Gullfaks licence. The

compressor will now be hooked

up between the L and M subsea

templates and Gullfaks C. It is

also possible to tie in other subsea wells to the compressor through existing pipelines. This may have

benefits far beyond the assumptions at the basis for the project decision




'Subsea wet gas compression is a game changer for subsea processing, and an important technology to

increase recovery also on other fields,' Konradsen emphasises.

Statoil installs first subsea wet gas compressor in the world at Gullfaks

The protective structure and compressor station were installed in early May by the heavy lift vessel Oleg

Strashnov. On 26 June the compressor and cooling modules were lowered into place from the Seven Viking.

The plant will be tied back to the Gullfaks C platform in the late summer and autumn.

Two important projects

The Gullfaks technology solution is a wet gas compressor which does not require any treatment of the well

stream before compression. Subsea compression provides a greater effect than a conventional topside

compressor. In addition the platform avoids extra weight and space required by a topside compression

module. Statoil is currently implementing two subsea compression projects at Åsgard and Gullfaks on the

Norwegian continental shelf (NCS) together with its licence partners. The projects represent important

pieces of the jigsaw puzzle of designing the subsea factories of the future.




U.S. rig count swells

Weekly U.S. offshore rig count, as well as the overall U.S. rig count rose when compared to the previous week, the

Baker Hughes weekly rig count report reveals. The report was issued Thursday, July 2, due to the US Independence

Day holiday on July 3.

BHI Rig Count: U.S. +3 to 862 rigs

U.S. Rig Count is up 3 rigs from last week to 862, with oil rigs up 12 to 640, gas rigs down 9 to 219, and miscellaneous rigs unchanged at 3.

U.S. Rig Count is down 1012 rigs from last year at 1874, with oil rigs down 922, gas rigs down 92, and miscellaneous rigs up 2.

The U.S. Offshore rig count is 29, up 1 rig from last week, and down 25 rigs year over year. BHI Rig Count: Canada +4 to 139 rigs

Canadian Rig Count is up 4 rigs from last week to 139 rigs, with oil rigs down 4 to 72, and gas rigs up 8 to 67.

Canadian Rig Count is down 170 rigs from last year at 309, with oil rigs down 118, and gas rigs down 52.




Oil Price Drop Special Coverage

Oil prices tumble after Greece vote, China stock market turmoil Reuters + NewBase

Oil prices fell sharply early today Monday after Greece rejected austerity measures demanded in return for bailout money and as China rolled out an unprecedented series of steps to prevent a full-blown stock market crash.

The result of the Greek referendum put in doubt its continued place in the single currency, pulling down the euro EUR= in early trading on Monday. "With Greece reserves running low and no immediate bailout funds on the horizon, Greece is on a straight path out of the euro zone," said Howie Lee of Singapore-based brokerage Phillip Futures.

International benchmark Brent futures were down around half a dollar at $59.80 per barrel at 0200 GMT, and U.S. crude futures CLc1 were at $55.07 a barrel, down almost $2 since they last traded before the July 4 4 national holiday.

The euro slid more than 1 percent against the dollar and European stock and bond markets were poised to take a sharp hit with the resumption of trade on Monday, stunned European leaders called a summit for Tuesday to discuss their next move.

In China, brokerages and fund managers agreed to buy massive amounts of stocks to support markets which saw 30 percent falls since June, helped by China's state-backed margin finance company which in turn would be aided by a direct line of liquidity from the central bank.

Meanwhile, U.S. drilling increased for the first time after 29 weeks of declines, data showed on Thursday, the strongest sign yet that higher crude prices are coaxing producers back to the well pad.

Production in Russia and the Organization of the Petroleum Exporting Countries (OPEC) is also at near records.




Oversupply meets rising demand in quietest crude market since ’13 Bloomberg The sleepiest oil market since 2013 will probably limp through the second half of the year as well. Crude traded in a $5 range in June, the narrowest in 19 months. Volume was the lowest since December and open interest — the number of futures contracts outstanding — was the least since January. New York-traded futures, which have swirled around $60 a barrel for the past two months, will average about $59 in third quarter and $63 in the fourth, according to forecasts of 22 analysts compiled by Bloomberg.

Neither the potential return of Iranian crude to the market nor the long-anticipated decline in US production is stirring a reaction. While gasoline demand has increased faster than projected, keeping the oil glut from growing, record production from Opec’s biggest members and potential for a quick increase in US shale output have capped a rebound in prices from the biggest drop since 2008. “The market has found its equilibrium point and I don’t see any reason for us to break out of the range,” Michael Hiley, head of over-the-counter energy trading at New York-based LPS Partners,a futures brokerage, said by phone last week. “It’s a tug of war between gasoline demand and crude supplies.” The current conditions contrast with what the market saw a year ago. West Texas Intermediate crude fell almost 60% from $107.26 in June 2014 to $43.46 in March before rebounding about 40% into the current trading range. The US benchmark grade lost 21to $56.72 a barrel in electronic trading on the New York Mercantile Exchange at 11:49am Singapore time on Friday. Volume topped 800,000 contracts a day in the first four months of this year. It fell to 636,128 last




month, down 40% from February’s record high of 1.07mn, according to exchange data compiled by Bloomberg. Open interest fell to 1.612mn on June 22, the lowest since January. The CBOE Crude Oil Volatility Index, which measures oil price fluctuations using options of the US Oil Fund, closed at 29.01 on June 26, the lowest level since October. The US fund, the biggest exchanged-traded fund that follows oil, holds front-month WTI futures. Investors pulled $1.02bn from the ETF last quarter, the biggest outflow since the three months ended June 2009, according to data compiled by Bloomberg. After rallying from March’s six-year low, crude’s upside has been capped by the Organisation of Petroleum Exporting Countries’ pledge to keep pumping more crude and rising US output despite the unprecedented drop in drilling rigs. Opec produced 32.1mn barrels a day in June, above its 30mn quota for a 13th month, according to data compiled by Bloomberg. US output was 9.6mn barrels a day last week, close to a weekly record, according to the Energy Information Administration. “We are more likely to continue trading in a range until we see a material shift in US production,” Harry Tchilinguirian, BNP Paribas’ London-based head of commodity markets strategy, said by phone. US gasoline demand increased to 9.54mn barrels a day in the four weeks ended June 26, the highest level since 2007, according to the EIA. Oil could break the current range and move lower if Greece exits from the eurozone or a nuclear deal with Iran is signed, Seth Kleinman, head of energy strategy at Citigroup, said by phone June 29. Greek Prime Minister Alexis Tsipras and his creditors sparred heading into the referendum yesterday on austerity, deepening Greece’s financial misery. Iran has urged Opec to make way for it to pump 4mn barrels a day, back to the level of about 3.8mn before Western sanctions intensified. The country produced 2.85mn in June, according to data compiled by Bloomberg. Some investors expected oil to move higher as the US rig count decreased. Rob Thummel, a managing director at Tortoise Capital Advisors in Leawood, Kansas, which oversees $16.9bn, said oil may move above $65 in the second half and into a $65-to-$80 range eventually as US production slows. Rigs drilling for oil rose 12 this week to 640, according to Baker Hughes. That’s up from the previous week’s 628, the least since August 2010. “We will remain range bound until we get greater clarity around two factors: a sustained decline in US production and a resolution to an Iran deal,” said Paul Crovo, a Philadelphia-based oil analyst at PNC Capital Advisors.




Oil companies play hardball in bid to defeat climate outsiders Reuters + Oman Observer

Petty legal filings. Diversionary ballot measures. Counting abstentions as no votes. These are just some of the tactics US oil companies used this spring to quash efforts by investors to win the right to nominate climate experts for board seats. Led by New York City Comptroller Scott Stringer and proposed at 75 US companies in various industries this year, the so-called proxy access measure would give investor groups who own 3 per cent of a company for more than three years the right

to nominate directors. At the 19 oil and gas companies targeted, the aim was to demand more accountability on global warming. While the non-binding measure passed at two-thirds of all the companies targeted, and at 15 of the 19 energy

companies, some took unusual steps to block it. Oilfield services provider Nabors Industries Ltd, for example, counted non-votes from brokers as votes against the proposal.Still, the measure passed at Nabors, which didn’t respond to requests for comment. Shale oil company Pioneer Natural Resources Co filed a last-minute counterproposal calling for a higher ownership threshold of 5 per cent, which institutional investors say is much harder to obtain. Pioneer said it gave shareholders extra time to vote. Stringer’s proposal failed. Exxon Mobil Corp and Chevron Corp tried to block the proposal by arguing the New York City pension funds behind it had not shown proof of owning their shares for a full year. The proposal passed at Chevron and narrowly failed at Exxon. The 15 victories at energy companies show that investors think the companies must do more to address climate change risks — which range from shortages of water needed for drilling to hefty carbon taxes governments could impose on fossil fuel producers, fund managers said. “ExxonMobil received this (proxy access) proposal due to its exposure to risk related to climate change,” James Andrus, a representative from Calpers, told Exxon’s annual meeting. The outcome also shows companies miscalculated the groundswell of support for more climate accountability ahead of the UN conference on global warming in December, fund managers said. A simple majority was needed for the non-binding proposal to pass. Of the 19 targeted energy companies, all opposed the measure, except for shale oil producers Apache Corp and Whiting Petroleum Corp. The other two companies where the measure failed were Cabot Oil and Gas Corp and Noble Energy Inc. Stringer characterised Chevron and Exxon’s manoeuvres as “petty legal actions” in a statement made in February. The US Securities and Exchange Commission sided with New York. Because the measures are non-binding, corporate boards can either ignore the results of the votes or decide to change their bylaws.




Russia Seen as Biggest Oil-Market Loser When Iran Comes Back by Angelina RascouetJavier Blas

In Iran’s push for a nuclear deal, it’s had few better allies than Moscow. But if an agreement is reached this week,

President Vladimir Putin’s regime will have at least one reason to reflect on its support.

Russia, which vies with Saudi Arabia and the U.S. to be the world’s largest oil producer, has the most to lose when

Iran returns to the global energy market, according to a dozen analysts and executives at oil companies, banks and

trading houses interviewed by Bloomberg.

“Iran is going to be competing in Europe head-on with Russia,” said Ed Morse, head of commodities research at

Citigroup Inc.

Iran has been barred from selling oil in Europe since 2012 when the European Union imposed a ban on oil imports.

Coupled with tougher U.S. sanctions making it more difficult to buy Iranian oil with dollars, that caused output to

drop from 3.6 million barrels a day in 2011 to 2.6 million barrels last year.

Russia, whose benchmark export grade is similar to Iran’s flagship blend, has been the main beneficiary of that

decline. Exports into Iran’s main markets in Asia and Europe have more than doubled, growing by 420,000 barrels a

day from 2011 to 2014, according to data compiled by Trade Map, a database of trade flows between nations.

Although they’re competitors in the energy world, the countries have been close allies politically. Russia has provided

Iran with weapons and atomic-energy know-how, as well as pushing other world powers for a deal on nuclear

research that will end sanctions.

Vienna Agreement

That agreement could be reached in Vienna during the next few days, and while the return of Iran to the global oil

market is still at least six to nine months away, the oil industry is already trying to calculate the impact.

On top of Russia, countries from Nigeria and Angola to Colombia and Iraq would face extra competition in Europe

and Asia, the traders said. They asked not to be identified to avoid jeopardizing commercial relationships.

Traders said other factors could affect their estimates: Syrian oil exports have stopped because of the civil war, Iraqi

exports via pipeline into the Mediterranean are erratic, and Libyan and South Sudanese oil exports are sharply down

due to conflicts in both African nations.

Nonetheless, Iran’s made it clear it will aim to get its traditional customers back.

Clear Intentions

In May Last month, the Iranian oil minister Bijan Namdar Zanganeh said his country’s priority markets were Asia and

Europe. Zanganeh also made Iran’s intentions known at the June 5 meeting of the Organization of Petroleum

Exporting Countries in Vienna when he presented a letter to fellow members urging them to make way for his country

to pump 4 million barrels a day, the level in 2008.

Russia’s flagship crude, known as Urals, bears similar specifications to the Iranian crude Europe’s refiners used to

import before sanctions.




“It’s probably Urals to a certain extent that would be competing with resumed Iranian exports into Europe,” said

David Fyfe, head of market research and analysis at oil-trading house Gunvor Group Ltd. in Geneva.

Iraq’s Kirkuk crude, which is of similar quality to Urals and Iranian oil, may also face competition in Europe, Fyfe

said.

Gunvor, originally founded by Russian billionaire Gennady Timchenko, is one of the five largest independent oil

traders and known for expertise in the Russian oil market.

Shale Production

Extra oil from Iran will also compete with suppliers in West Africa, already under pressure from the growth in shale

production in the U.S., where they used to be a key supplier.

Nigeria and Russia both tend to rely on spot-market sales making them more vulnerable to competition from Iran, said

Eugene Lindell, a senior analyst at Vienna-based consultant JBC Energy GmbH.

Oil refiners in Europe are already preparing to resume buying Iranian crude.

“Saras would look to buy Iranian crude again both on a spot and term basis,” said Marco Schiavetti, director of supply

and trading at Mediterranean-based refiner Saras SpA, adding the company is in regular contact with Iran.




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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 [email protected] [email protected]

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 06 July 2015 K. Al Awadi

NewBase 641 special 06 july 2015

Business

Transcript of NewBase 641 special 06 july 2015