downstream monitor mena week 08

For analysis and commentary on these and other stories, plus the latest downstream developments, see inside…

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01 June 2011

Week 08

Issue 08 News

Analysis Intelligence

Published by

NewsBase

COMMENTARY 2

Iran’s downstream industries battle through sanctions challenge 2

Yemen on the brink of civil war 4

International funding lines up for North Africa 5

REFINING 7

OAPEC sees half of refinery projects delayed 7

Israel’s Oil Refineries announces Q1 profit 7

KNPC to issue tender for mega gas train 8

Work to begin on Iraq refinery 8

FUELS 9

Fuel trade picking up, but no real end in sight for Libya’s troubles 9

Egypt set to hike gas prices for neighbours 10

PETROCHEMICALS 10

EPC firms to submit bids for Safco urea train 10

Iran proposes ‘petchem OPEC’ 11

TERMINALS & STORAGE 11

Shell begins bunker operations at Jebel Ali Port 11

Qatar’s Barwa Bank reaches finance deal with NPS 12

NEWS IN BRIEF 12

TENDERS & CONTRACTS 22

NEWS THIS WEEK…

Iran overview In the seventh instalment of a series of Middle East and North African country profiles, Downstream MENA gives an overview of Iran’s downstream sector.

Iran hopes to bring 61 petrochemical projects onstream by 2015 at a cost of US$43 billion. (Page 2)

International sanctions have stifled Iran’s attempts to become an LNG exporter. (Page 2)

While Western ties have been depleted, Iran’s relationships with China and India are blossoming.(Page 3)

Upheaval and impact Yemen’s oil sector is becoming riskier as the country plunges into political turmoil. With heavy gun battles resuming in the capital, civil war is an ever more likely scenario.

Pipelines are being attacked, while IOCs have been pulling out. (Page 4)

Petrol imports have increased three-fold and the unrest has cost the country around US$4 billion.(Page 5)

NewsBase Downstream Monitor

–– MENA ––

Downstream Monitor MENA 01 June 2011, Week 08 page 2




Iran’s oil and gas sector is huge by almost any measure, but it could be so much more but for the bite of sanctions and its frosty relations with much of the Western world.

The Islamic Republic holds the world’s second largest natural gas reserves after Russia, an estimated 29,610 billion cubic metres (bcm), according to figures from the Organisation of Petroleum Exporting Countries (OPEC).

The country is also the cartel’s second biggest crude oil producer, with the capacity to pump around 3.5 million barrels per day. Again, according to OPEC, proven oil reserves stand at around 137 billion barrels.

As a result, the downstream sector too, from refineries to petrochemicals factories, is substantial, and growing. Refinery capacity currently stands at over 1.5 million bpd, according to OPEC data.

And there are massive plans for growth detailed in Iran’s 20-year strategic plan.

The Tehran Times reported on this last week, with the government targeting petrochemical output to reach 100 million tonnes by 2015, the end of its fifth five-year development plan.

By then, the report stated that 61 petrochemical projects would be onstream at a cost of US$43 billion.

Sanctions challenge And yet the downstream sector, much like the upstream, is faced with critical challenges and bottlenecks as a result of the international sanctions facing the country.

These have been ratcheted up in recent times amid concerns from the US and its allies that Iran’s nuclear energy programme is being used to develop nuclear weapons, an allegation denied by Tehran.

Western sanctions were tightened a year ago to exploit Iran’s lack of domestic refinery capacity, which meant it had to import 30-40% of its petrol.

Still, Iran’s massive hydrocarbon reserves, and the substantial income it receives from energy exports, have helped grow the downstream industry despite the many practical challenges that blight the sector.

These include limits on foreign companies working in the country, including a complete absence of US and some other international firms, plus reduced access to new technology and external sources of capital.

It has thrown up added complications in planning and executing certain export projects, notably Iran’s much-hyped but long-delayed hopes for establishing itself as a major liquefied natural gas (LNG) producer.

COMMENTARY

Iran’s downstream industries battle through sanctions challenge Despite international sanctions, Iran’s oil and gas industry remains of major importance. Challenges face the country’s downstream sector, however, major investments have been announced By Martin Clark OPEC pegs the country’s oil reserves at 137 billion barrels Iran hopes to bring 61 petrochemical projects onstream by 2015 at a cost of US$43 billion While Western ties have been depleted, Iran’s relationship with China and India is blossoming Note: This is the seventh in a series of country-specific commentaries, intended to give an overview of downstream activities and capabilities in the MENA region. The next instalment will cover Algeria.





Despite its enviable gas deposits, there is still no firm indication when Iran will export its first consignment of LNG, with technology constraints and access to markets holding back any development.

Tehran officials have repeatedly talked up the country’s potential to rival Qatar as a world-beating LNG seller.

So far, however, while Qatar has recently put the finishing touches on its decade-long vision to grow LNG production to a whopping 77 million tonnes per year, Iran’s production remains at zero.

Investment But that should not mask the genuine progress that has been made in other areas, with Iran – despite all the hurdles it faces – a major downstream supplier to world markets.

While local companies, led by the state-owned National Iranian Oil Company (NIOC) and its many spin-offs and subsidiaries, have led developments, foreign investment is also filtering through too.

The sensitivities associated with Iran’s sanctions mean that information on this investment, specifically who is doing what, can be hard to come by.

Last week, Iranian press reported that a Chinese company was ready to invest US$5 billion in petrochemicals projects at the Mahshahr Special Economic Zone, in the southwest of the country.

Typically, the company – which has also reportedly opened talks with Iran’s National Petrochemical Company (NPC) to build a giant methanol unit in the Pars Special Energy Zone – was not identified in the report.

What is certain, however, is that relations with China, and to a lesser degree India, have blossomed as Iran’s associations with older Western partners have deteriorated.

Iran’s oil shipments are now of

fundamental importance to China’s growing economy, and this is likely to expand further in new downstream industries, driving investment by state-backed Chinese companies.

China’s big energy companies, the likes of China National Petroleum Corp. (CNPC) and China Petroleum & Chemical Corp. Ltd. (Sinopec), already have a clutch of interests in Iran, from upstream oilfield activities to refining projects.]

Refining pressure But understanding Iran’s energy sector and its performance is rarely

straightforward. Last week, an explosion at an Abadan

oil refinery, Iran’s largest, during a visit by President Mahmoud Ahmadinejad, killed two people and injured 12.

The circumstances behind the blast remain something of a mystery, however.

Iranian media said the explosion was caused by a technical fault and did not speculate on the possibility of an attack on the president.

Industrial accidents are not uncommon in Iran’s under-performing oil and gas industry, although energy assets are also occasional targets for sabotage by rebel groups in various parts of the country.

Simultaneous explosions have damaged gas pipelines on two separate occasions in 2011, with officials either giving no explanation or ruling out technical problems, implying foul play.

It means assessing how much sanctions are hurting Iran, and affecting its fuel import needs, is something of a guessing game. An emergency plan was initiated to produce petrol at petrochemical plants as well as speed up new refinery projects.

While Iranian officials suggest the country is self-sufficient, now even exporting fuel, many analysts dismiss these claims.

President Ahmadinejad himself played down the sanctions impact last week, following the Abadan explosion.

“The enemy’s hope to exert pressure on Iran by restricting oil products has turned into complete desperation,” he was quoted as saying by local news source, IRIB.

Rhetoric is nothing new to Iran watchers, all a part of the cat and mouse game Tehran plays with its rivals, but it can also distort the true picture of the nation’s energy sector.

What is clear is that while sanctions may be having an effect, the demand for natural resources globally is such that Iran’s role in supplying downstream markets – and its future role – is not likely to diminish anytime soon.

COMMENTARY

What is clear is that while sanctions may be having an effect, the demand for natural resources globally is such that Iran’s role in

supplying downstream markets is not likely to diminish anytime soon





Recent unrest in Yemen has already seen over 50 people killed in demonstrations in the Southern city of Taiz, as well as hundreds injured, following the relentless fighting in the capital, Sana’a, between tribesmen and the forces of the president, Ali Abdullah Saleh, ending a day-long truce.

With Saleh refusing to step down despite months of protests against his rule, BBC News reported that further demonstrations were expected throughout the country.

In Sana’a, battles have again exploded; as the president’s opposition has accused Saleh of letting the city fall under al-Qaeda’s power, causing widespread fear of a potential Islamist takeover, AFP reported.

Attacks on protesters Meanwhile, government forces have launched attacks against protesters in Taiz and the coastal city of Zinjibar.

The United Nations said reports indicated that deaths in Taiz had been caused by “Yemeni army, Republican Guards and other government-affiliated elements, which forcibly destroyed the protest camp in Horriya Square, using water cannons, bulldozers and live ammunition.”

Navi Pillay, the UN High Commissioner for Human Rights, urged all parties to find a resolution. “Such reprehensible acts of violence and indiscriminate attacks on unarmed civilians by armed security officers must stop immediately. Further violence will only yield more insecurity and move the

country further away from a resolution to this political crisis,” she said.

EU Policy Chief Catherine Ashton was quoted by the Associated Press as saying she was “shocked” by the use of force and live ammunition and described attacks on medical centres as “appalling.”

Observers see the government’s recent attacks as an attempt to retain power, following the tribesmen taking control of government buildings and attempts to seize the headquarters of the ruling party, the General People’s Congress.

According to a report by IHS Global Insight, with clashes likely to escalate further, Yemen’s recent history of events could plunge it into civil war: the political and economic situation become darker every day, while Yemen’s

previously blooming oil production is facing serious disruption.

Catastrophe beyond imagination In early May, the country’s oil minister, Amir al-Aidarous, sent out a warning that the country’s lack of security had led to a major slowdown in terms of its oil production, exports and refining, which was creating “a catastrophe beyond imagination,” since Yemen relies heavily on oil exports – roughly 70% of the government’s income.

COMMENTARY

Yemen on the brink of civil war Yemen’s oil sector is becoming riskier as the country plunges into political turmoil. With heavy gun battles resuming in the capital, civil war is turning into an ever more likely scenario By Nádia Morais Fear of al-Qaeda assuming power is rife Pipelines are being attacked, while IOCs have been pulling out Petrol imports have increased three-fold and the unrest has cost the country around US$4 billion





IHS Global Insight reported that repair work on damaged pipelines was making slow progress and attacks were showing no signs of abating. Yemen also lacks the right type of crude to be sent from its Ras Isa port to its main refinery in Aden.

The resulting lack of refined products to satisfy the domestic market has led to further complications, creating widespread discontent about the government’s capabilities to deal with the situation. This has also forced the Yemeni government to use resources that could be invested elsewhere in crude imports for the Aden refinery, as well as refined products to compensate for the current shortage.

According to an oil ministry official quoted by Reuters, the country is now buying 280,000 tonnes of diesel and 120,000 tonnes of petrol per month in the international market, which represents a three-fold increase in diesel imports, and nearly four-fold when it comes to petrol purchases.

At present, the country can only use crude from Ma’rib in the Aden refinery, while output from the Masila area is soon expected to be improved, through a different pipeline to the Arabian Sea coast, but this will not be enough to solve the country’s refined products crisis.

Reuters reported that because of the specificity of crude that can be used in Aden, the government had opted for

purchasing refining products as “an easier choice.”

Impact of security the crisis Deteriorating security in the country is also expected to impact oil and gas production and exports further, as most International Oil Companies (IOCs) have already heavily reduced their workforces, causing a severe shortage of available skilled personnel, which will make it increasingly difficult for production levels to return to normal any time soon.

This also causes a growing need for further investment in technology and facilities, which cannot be easily done as political uncertainty soars.

According to IHS, the slowdown in production and the lack of human capital could mean the country’s remaining reserves will be lost, “potentially forever.”

And disruption is now becoming even greater, as tribes opposing the president have destroyed the pipeline that carries oil from Ma’rib, in central Yemen.

The country’s Minister of Industry and Trade, Hisham Sharaf, estimates the overall costs of the unrest on Yemen’s economy at US$4 billion. “We are talking about a deficit that will break the country… We are barely surviving, but we have not collapsed and will not collapse,” he said.

“The situation is likely to deteriorate

and further undermine oil and gas production and exports in the country,” said IHS analyst Samuel Ciszuk. And with no-one seemingly able to mediate between Sheik Sadeq al-Ahmar, the head of the most powerful tribal confederation in the country, and the government, the risk of more tribes getting involved could escalate.

Political unrest In March, al-Ahmar declared he would support the popular forces requesting Saleh’s resignation after he failed to sign a transition agreement on May 22.

Meanwhile, government security forces attacked some of the tribal chiefs who tried to mediate. The fear is now that tribal chiefs “will lose patience with the president and take matters in their own hands,” IHS reported.

Facing a stronger al-Qaeda presence, Sana’a is expected to see more widespread fighting, but the Southern and Northern regions also pose an increasingly serious risk.

If the government declines in Sana’a, Northern rebels could gain a stronger position in the capital province, while in the South, there also seems to be a conflict waiting to happen.

All of this has led to the fear that the country could sink deeper into economic crisis, hand in hand with intense political uncertainty.

Tunisia and Egypt have both undergone traumatic political changes in the first months of 2011 and have both recently received pledges of international cash. However, these two countries – and their

neighbours – face difficulties in rebalancing their books, where oil and gas production will play a strong role.

After a week of public announcements regarding funding initiatives for MENA

countries, doubts remain about how many of these will move forward in the wake of sprawling political and social change.

COMMENTARY

International funding lines up for North Africa A range of sources have lined up to pledge support for Tunisia and Egypt By Christopher Coats Tunisia and Egypt have signed up around US$20 billion in funding Economic assistance is needed to tackle high youth unemployment Instability in the area has deterred private-sector investments although there are opportunities





Over the last week, the World Bank, the G8, the International Monetary Fund (IMF) and the European Investment Bank (EIB) all set out new direct funding, loan and forgiveness programmes to help strengthen transitional governments in the Middle East and North Africa.

Driven by domestic policy plans from the US, the UK, France and Germany, among others, the entities pledged billions of dollars to support political stability and economic development across the region, specifically targeting Tunisia and Egypt.

Funding pledges Early last week, the EIB announced a US$7.6 billion support plan for the two countries as an extension of their existing Euro-Mediterranean Partnership.

This was soon followed by a World Bank programme that would provide US$4.5 billion for Egypt and US$1.5 billion for Tunisia over the next two years.

The week concluded with the gathering of the G8 in Deauville, France, where the countries’ economic and political stability took centre stage. With financial support from all but one member, the group offered an array of funding and forgiveness plans that amounted to approximately US$20 billion, according to Reuters. The exception was Canada, which refrained from pledging any money to the region.

According to the news service, specific components of the funding plans included US$250 million per year in development aid to Egypt from France and US$175 million over four years from the UK for political and economic development. In addition, the US said it would forgive US$1 billion of Egypt’s debt and provide an additional US$1 billion in loan guarantees, with Germany pledging US$40 million up front and US$130 million in the coming years.

The extent to which these pledges will be met is unclear.

While all groups have avoided offering specific plans of action about how direct funding and loans will be applied, all have made specific mention of the need to support and sustain energy production in the region.

However, as plans from the different international groups were announced, it became clear that these were likely to fall short of what the region claims it needs to sustain growth and stability in the years ahead.

Earlier in the week, Tunisia had called for international backing of US$25 billion over the next five years, while a report from the IMF earlier in the week suggested the region would need more than US$160 billion in external investment during the coming decade.

The IMF said it could provide financing of around US$35 billion to oil-importing countries in the region and that donors would be needed to contribute. Economic difficulties in the area, most notably the high unemployment rates among the young, were a contributing factor to instability earlier this year and efforts must be made in order to improve this situation.

Deficit This oil and gas deficit has emerged as a core obstacle for development and stability, according to regional analysts and the Institute of International Finance (IIF), which lowered growth rate predictions for all MENA states that stand as energy importers.

According to Reuters, growth forecasts for the Arab world by IIF show Yemen’s economy will contract the most, by 4%, while in 2011 the economies of Syria will shrink by 3%, Egypt by 2.5% and Tunisia by 1.5%.

Additionally, growth rates should stabilise and rebound somewhat by 2012 if some progress can be demonstrated in the move towards political stability, but current unrest and worries that risks will increase will keep much needed foreign investment at bay. Some of these countries do boast modest domestic reserves, but these are generally insufficient – or too under-developed – to offer any financial support for the necessary infrastructure investment.

Opportunities Although this year’s changes have limited the attention and investment from many state entities and potential investors, some have signalled their willingness to look past the slowdown and risks for longer-term projects.

Ireland’s Petroceltic International, which has run into difficulties over its exposure to North Africa, has set out plans to expand in the region.

“We’re looking at deals in Egypt, Tunisia and elsewhere, both farm-ins and new licence applications, but we’re mainly looking to get into farm-ins on development projects, which people are finding it difficult to fund,” said the minnow’s CEO, Brian O’Cathain, to Reuters last week.

Despite the ongoing conflict in Libya, Italy’s Eni has continued to pledge its

support for staying in the country, going so far as to meet with anti-government forces in the eastern part of the country to discuss the resumption of exports in the coming months. The Italian company’s CEO, Paolo Scaroni, went so far as to tell the Financial Times: “I have no doubt that one year from now the Libyan problem will be behind us.”

COMMENTARY

North African oil production

0

0.5

1

1.5

2

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

millio

n b

pd

Algeria Libya Egypt Tunisia Source: BP





Increasing competition and weak margins are affecting the investment on the refining industry in the Arab World, Platts reported.

During the 5th Annual Global Refining Summit in Rotterdam, an expert at the Organisation of Arab Petroleum Exporting Countries (OAPEC), Imad Makki, told the news agency that 51% of the refinery plans in the region had been delayed and another 26% had been cancelled.

“Only 23% [1.2 million barrels per day worth of capacity] is under construction” in Saudi Arabia, the UAE and Kuwait, he explained. The share of projects delayed represents a production capacity of 2.594

million bpd, while the schemes cancelled represent 1.315 million bpd.

According to Makki, the figures provided by OAPEC concern January 2011 and the delays are being caused by a decreasing demand justified by the economic crisis as well as changes in the price of the material needed.

However, it is already certain that the Yanbu and Jubail refinery projects will continue under construction in Saudi Arabia, with a planned processing capacity for 400,000 bpd, he added.

The new projects aim to replace low-efficiency refineries and integrate with petrochemical plants while reducing the yield of fuel oil and increasing light

products, to remove “the imbalance” as “some oil exporters import refined product”, Makki was quoted as saying by Reuters.

The members of OAPEC have a total of 53 refineries with a capacity of 7.06 million bpd, 8% of the total global refining capacity.

Capacity is expected to grow to 12.86 million bpd by 2015 once the new projects are completed, Makki added.

OAPEC’s members include Algeria, Bahrain, Kuwait, Libya, Syria, the UAE, Egypt, Iraq, Qatar, Saudi Arabia and Tunisia.

Haifa-based Oil Refineries Ltd. (ORL) posted a net profit of US$6 million for the first quarter of 2011 on May 23 against a net loss of US$4 million for the equivalent period last year.

The increase came on the back of a combination of higher prices for fuel products and improved refining margins.

During the period the company, which operates Israel’s largest refinery, saw its adjusted refining margin climb to US$3.90 per barrel from US$3.20 per barrel in the first three months of 2010. In addition, the benchmark margin fell to US$0.50 per barrel from US$3.50 per barrel.

This helped offset a fall in refining volume to 2.06 million tonnes from 2.13 million tonnes in the corresponding quarter, while the utilisation of production plants also dropped to 86% from 89%.

“Oil Refineries achieved higher refining margins than the benchmark and showed strong growth in the petrochemicals sector,” said CEO Pinhas Buchris.

“The disaster in Japan boosted demand for petrochemicals products in international markets, which Oil Refineries knew how to spot to meet market needs,” he added.

However, the news was not all positive, with the recent attacks on Egypt’s East Mediterranean Gas Co. (EMG) leading to halt in imports from

the North African country. Egypt is ORL’s main supplier of natural gas.

“There were two acts of sabotage on the Egyptian gas pipeline in recent months, and gas deliveries to Israel have not yet resumed after the second attack,” Buchris said.

“Oil Refineries has not received natural gas deliveries from [EMG], and the company [has] therefore decided to buy natural gas from another supplier,” he added.

On May 27, the firm said that it had signed a contract with the local Yam Tethys project that would see it buy US$350 million of Israeli natural gas over the next 27 months.

In a statement ORL said it had not changed its contract with EMG as a result of the agreement, and that the deal had been necessary to meet supply needs.

REFINING

OAPEC sees half of refinery projects delayed

Israel’s Oil Refineries announces Q1 profit





Kuwait National Petroleum Company (KNPC) is aiming to issue a tender for the main construction package covering a mega gas train at its Mina al-Ahmadi refinery in late 2011-early 2012, following the completion of a front-end engineering and design (FEED) work by the UK’s Amec.

The new facility, which is estimated to cost US$1 billion, will be the fifth gas train at the refinery. It will utilise the offgas vented during refining of crude oil to produce liquefied petroleum gas (LPG) and other associated products. The gas train will also process associated gas produced in the north and south-east of Kuwait into ethane and propane.

“Train 5 will have a capacity to process 23 million cubic metres per day of gas and 100,000 barrels per day of condensates,” said a Kuwait-based industry official, who wished not to be

identified. “Ethane and propane, to be produced from the new facility, will be supplied as feedstock for new petrochemical capacity,” he said.

The FEED package is due to be completed by November. The next stage in the project implementation will be the appointment of a project management

consultant (PMC) and the issue of the main EPC contract. The new train will take 30 months to build.

Currently, South Korea’s Daelim Industrial Company is carrying out the main EPC contract to install a fourth gas-processing train at Mina al-Ahmadi of similar capacity under a US$886 million order placed by KNPC in mid-2010. The unit is expected to be completed by late 2013.

Meanwhile, additional gas of 5 mcm per day will also come from the third-phase development of EPF 50 or the early production facilities 50 project, which was commissioned in 2008.

EPF 50 was Kuwait’s first gas project to be built on a build-own-operate (BOO) basis, as part of the Gulf state’s efforts to seek private-sector investment into the energy industry. The project now produces 10 mcm per day of natural gas and 50,000 bpd of condensates.

UOP has announced that the design of a proposed 300,000 barrel per day transportation fuel refinery in Nassiriyah in Iraq is set to start soon.

In a statement on May 25, the company – a division of US giant Honeywell – said that it had been selected by the State Company for Oil Projects (SCOP), under the Ministry of Oil for Iraq, as a main contractor for the project.

This will see UOP carry out reforming, isomerisation, fluid catalytic cracking and selective hydrotreating technologies for the new facility. In addition, it will also supply basic engineering, technology licences, catalysts and specialty equipment as part of the overall

technology package. “We are pleased to be working with

the SCOP again as Iraq focuses on doubling its oil refining capacity,” president and CEO of UOP, Rajeev Gautam, said.

“The high yields delivered by our technologies combined with our methodology for process unit integration and optimisation will enable SCOP to produce the maximum yields of high-quality petrol and diesel product while also maximising the economic value of the project,” he added.

This is the third major Iraq refinery award for UOP. In 2010 the company won a contract from South Refineries Company and North Refineries Company

for new refineries in Maissan and Kirkuk, both of which have a capacity of 150,000 bpd.

Iraq is planning to boost its existing refining capacity to 1.6 million, or more than double its current level, by 2017. This figure is expected to double again by 2030 on the back of increased domestic demand for transportation fuel.

However, many analysts have described these targets as overly ambitious, while a report released in April by the International Monetary Fund (IMF) expressed doubts over Iraq’s ability to reach this goal without significant investment in both infrastructure and facilities.

REFINING

KNPC to issue tender for mega gas train

Work to begin on Iraq refinery





Libya’s Western-backed rebels are running out of crude as Ghadaffi’s forces continue with surprise attacks on their oilfields, despite NATO’s protection. However, officials in Benghazi have decided not to hire private security firms to protect the oilfields.

“We don’t want to repeat the debacle we have seen, for example, in Iraq,” provisional minister of finance Al Tarhouni told the Financial Times. The provisional government is now low on funds, despite greater discussions about financial assistance by Western allies, and the Transitional National Council still has not succeeded in obtaining loans against frozen assets from the old regime.

While Ghadaffi’s oil and gas shipments continue to be stifled by economic sanctions, rebels are picking up shipments from Tobruk, with two tankers fulfilling earlier contracts and the latest one under a deal with Qatar, Abdel Jalil Mayouf, spokesman for Arabian Gulf Oil Co. (Agoco) told the Financial Times.

Until now, the provisional government has spent US$480 million on fuel, keeping the subsidised price of US$0.15 per litre, Mayouf added.

Last week, another tanker was scheduled to arrive in Benghazi carrying 5,000 tonnes of liquefied petroleum gas (LPG), but it was not clear whether it reached its destination. According to AIS ship-tracking data reported by Reuters, it takes one to two days to cross the Mediterranean, from North to South.

In the hope that strangling Ghadaffi’s fuel supplies will bring a speedy and peaceful resolution, NATO and Western allies continue to intensify the campaign against Ghadaffi’s regime, increasing aerial bombing attacks of Tripoli and seeking to interrupt the flow of fuel in the areas of the country that are still under his control. However, even if the end of the conflict seems to be in sight, after they run out of supplies, Petroleum Economist has raised the question of what will happen to the country, facing a weakened structure and failed economy.

Missing in action The Libyan Oil Minister Shukri Ghanem has been missing for over a week now, although he is expected to represent Libya at the meeting of the Organisation of Petroleum Exporting Countries (OPEC) on June 8, according to the

deputy foreign minister Khaled Kaim. Kaim also told The Associated Press

that the Oil Minister had been in contact with the Prime Minister’s office in the Libyan capital of Tripoli since fleeing the country, without giving further details.

This follows rising uncertainty over Ghanem’s location, after Tunisia’s Foreign Minister Mouldi Kefi said that he had escaped Libya and switched his loyalties away from Ghadaffi. He told the Oil & Gas Journal: “I believe and I suspect… Ghanem just left Libya and that he is not any more working with the Ghadaffi regime.”

Ghanem’s presence in the OPEC meeting would not be well received by rebel forces, as they are hoping to send their own representative to the encounter. OGJ quoted Mahmum Shammam, media spokesman for the rebel National Transitional Council, as saying: “We want to attend and will study the legal procedure.” In the meantime, production is at a standstill, with new authorities in eastern Libya holding major oilfields since the uprising and oil companies halting production amongst fears about the safety of their oil workers, the FT reported.

FUELS

Fuel trade picking up, but no real end in sight for Libya’s troubles





The Libyan rebels’ oil and finance minister told Reuters that oil production was not expected to resume in the near future over concerns with the security of oilfields. “As soon as I’m confident that

there is a minimum level of security, we will resume production again, but I don’t think that will happen in the next two to three weeks; it will take some time”, he said.

Libya’s crude oil reserves are now producing less than 500,000 barrels per day, the minister explained. Before the unrest, the country was producing around 1.6 million bpd.

Egypt intends to extract a higher price for its gas exports to neighbouring states, targeting increased revenues of US$3-4 billion, according to a recent note from Barclays Capital. The report said the North African state was facing a 9.4% GDP deficit for the 2011-12 fiscal year.

Subsidies would benefit from the extra cash, BarCap said, with a rise of 50% for diesel and natural gas, reaching US$10.1 billion. Around 25% would go on gas.

In addition to the economic benefits for Egyptians of such a price increase for exports, the shift also reflects changes in the political mood.

The former president, Hosni Mubarak, was a close ally of the US and had good relations to Israel, while he was also an “ardent foe” of Iran, Hamas and Hezbollah. The current administration – and the expected shape of politics after elections – has different views.

BarCap quoted a recent survey of Egyptians as showing a slight majority of those polled opposed the 1979 Israel-

Egypt peace treaty and that 79% had a negative view of the US. The interim Egyptian administration is set to pursue a course more in line with public opinion than Mubarak.

A sign of this new course is an agreement brokered earlier this month by Egypt between Hamas and Fatah – a move towards a Palestinian unity government. In addition, Cairo has re-opened the Rafah crossing allowing access to the Gaza strip. Furthermore, Egypt has indicated it may be time to re-establish diplomatic relations with Iran.

BarCap qualified these actions by noting there had not been a complete break with Mubarak’s foreign policies and that the peace agreement with Israel would remain. Egypt is highly reliant on funds from the US and Saudi Arabia, which will moderate any movements away from Israel and towards Iran.

The provision of subsidised gas to Egypt’s neighbours, though, is likely to change. A 15-year deal was signed in

2005 between Egypt’s Eastern Mediterranean Gas (EMG) and Israel Electric Corporation.

A lack of transparency over the deal, BarCap said, has led to concerns about corruption in the contract and Cairo said it had lost US$714 million as a result. A number of officials have been arrested over the deal, including the former petroleum minister, Sameh Fahmy, and Interpol has been asked to arrest a businessman, Hussein Salem, who is said to have been close to Mubarak.

Israel receives 9.3% of Egypt’s total gas exports and 31% of pipeline exports. Israel has taken steps towards self sufficiency, with gas finds made offshore and plans for a liquefied natural gas (LNG) terminal. Jordan also receives cheap gas – at US$83 per 1,000 cubic metres – from Egypt. Jordan, though, has managed to avoid most talk of pricing shortfalls, as public opinion is less opposed to the country’s government.

Seven leading engineering, procurement and construction (EPC) firms have been prequalified to submit both technical and commercial bids by June 23 to Saudi Arabian Fertiliser Company (Safco) for

the main contractor to build a fifth urea train at its facility in Jubail.

The prequalifiers are: Daelim Industrial Company and Samsung Engineering, both of South Korea;

Kellogg Brown & Root of the US; Chiyoda Corp. of Japan; Germany’s Uhde, and a team of Saipem of Italy and Paris-based Technip.

FUELS

Egypt set to hike gas prices for neighbours

PETROCHEMICALS

EPC firms to submit bids for Safco urea train





Estimated to be worth US$450-500 million, the scope of works for the EPC contract includes the construction of a new urea train, a reactor, separation units and concentrator, heat exchangers and condensers, an absorber unit, evaporation and debottlenecking plant, as well as air and carbon dioxide compressors.

The front-end engineering and design (FEED) package for the new train has been prepared by Chiyoda Corp. It will have a capacity of 3,250 tonnes per day and is targeted for completion by late 2013. Safco is aiming to award the

contract by late 2011. Non-availability of feedstock natural

gas from Saudi Aramco had proved to be a stumbling block in the proposed expansion that Safco has been planning since 2008.

Safco is the first petrochemical project to be set up in the kingdom in 1965 as a joint venture between the government and Saudi citizens. It has since grown to be the largest urea producer in the Middle East with a total annual output of more than 2.6 million tonnes. Of the total production, 13% is sold to the GCC

market and the remaining 87% is exported to Asia.

Urea is widely used as a fertiliser for agricultural production, but it also has applications in the production of melamine, urea-formaldehyde resin and acrylate plastic. At present, Safco is a subsidiary of Saudi Basic Industries Corp. (SABIC), which holds a 41% stake, while the remaining 59% is spread across company employees and Saudi investors. Feedstock natural gas for the plant is sourced from Aramco’s onshore oilfields.

Iran has put forward a proposal to establish an international petrochemical association that would be similar in scope to the Organisation of Petroleum Exporting Countries (OPEC).

Speaking at an international petrochemical conference in Tehran on May 22, Abdolhossein Bayat, the director of Iran’s National Iranian Petrochemical Company (NIPC) said that while the association would not precisely be a petrochemical equivalent to the organisation, its “objectives would be similar.”

“I hereby announce in this forum that the Islamic Republic of Iran proposes the establishment of an international petrochemical association to adopt macro-policies and to conduct planning

for this industry, as well as safeguard the interests of those with stakes in this business,” he said.

“In terms of grand policies and operational activities there will be many similarities between these two organisations but we must keep in mind that the petrochemical industry’s global field of activities is much broader than OPEC’s,” he added.

The announcement could spell the end of Iran’s relationship with the Gulf Petrochemicals and Chemicals Association (GPCA), which was founded in 2006. Bayat expressed his dissatisfaction with the group, describing it as having failed to meet Iran’s “objectives.”

Bayat said: “The GPCA is not very

active. We want true co-operation and negotiation in an international association. We want to rotate the place for the headquarters of such a forum. We want it to have subsidiary centres.”

In December 2010, the GPCA said that it had refused to help its Iranian members address the international sanctions imposed on them – a decision that has seen relations cool in recent months.

During Bayat’s speech, he said that Iran was due to bring around 65 new petrochemical projects onstream by 2015, upping the country’s annual production capacity by 66 million tonnes. These include eight methanol and nine ammonia facilities as part of Iran’s plan to become the world’s leading producer of petrochemical products by 2025.

Shell Marine Products recently announced that it had started supplying marine fuels at Jebel Ali Port in Dubai.

The company said that it was the only global integrated energy company to set up operations at the port, which is the

largest container port in the Middle East, and added that the launch of these operations was a reinforcement of Shell’s selective strategy to extend its network of ports in the Gulf region.

“The strategic location of Jebel Ali

Port, a fast-growing container port, puts Shell in an excellent position to support liners operating in the Middle East,” said Shell Markets Middle East general manager, Richard Jory, in a statement in Dubai.

PETROCHEMICALS

Iran proposes ‘petchem OPEC’

TERMINALS & STORAGE

Shell begins bunker operations at Jebel Ali Port





Shell said that it had acquired several storage tanks adjacent to the main terminals at Jebel Ali Port and had set up an 8,000 tonne high-capacity bunker barge for delivering fuels and services.

Previously used in Singapore, the barge is one of the first vessels to use mass flow meters in the Middle East, according to the company.

Shell Marine said that through the implementation of the latest flow meter technology, it aimed to increase

transparency in the quality of measurement of marine fuels delivery.

“We welcome Shell’s bunker operations as an important contribution towards strengthening the services for vessels calling at Jebel Ali Port,” DP World UAE Region senior vice president and managing director, Mohammed Al Muallem, said. “On top of the assurance that our products are always vetted according to rigorous standards, the use of mass flow meter technology now

brings improved accuracy and transparency to the fuel delivery process,” he added.

Maersk Oil Trading business development manager, Jesper Rosenkrans Ødum, commented: “Integrity in the custody transfer of fuels remains an important issue in bunkering and Shell’s adoption of mass flow meter measurement in Jebel Ali promotes a greater level of transparency across the marine industry.”

National Petroleum Services Group (NPS), a Middle East-based provider of drilling, customised well services and oil and gas industry client support, has entered into a 529 million riyal (US$145 million) financing agreement with Qatar’s Barwa Bank.

NPS’ agreement with Barwa, described as Qatar’s newest Shariah-compliant banking service provider, is to refinance an existing NPS syndication and support the company’s expansion and working capital.

NPS was formed out of the merger of three multinational oil and gas service companies that had been operating in the Middle East since the early 1980s. Its products and services now span countries such as Qatar, Saudi Arabia, the UAE,

Bahrain, Syria, Brunei, Malaysia, Singapore, Libya, and Iraq. It is also currently engaged by oil companies such as Saudi Aramco, Qatar Petroleum, Mearsk, Shell, Total, ConocoPhillips and Occidental.

In a statement, head of banking at Barwa Bank, Keith Bradley, said of the deal: “NPS has a solid track record of steady growth, and we look forward to partnering with NPS to support its further expansion going forward.”

Abdul Aziz Al Delaimi, NPS’ chairman, said that Barwa Bank had structured an innovative facility that closely matched his company’s needs. “The relationship has got off to a very strong start and we are looking forward to strengthening it over the coming

months and years,” he said. Barwa Bank said it would continue to

work closely with the energy sector within Qatar and elsewhere in the region. NPS’ business plan is focused on expanding and consolidating its range of petroleum services, partly through geographical expansion and strategic mergers and acquisitions.

To this end, it has entered into a number of technical alliances with companies such as Medeng – which designs and develops flow metering equipment for the oil and gas industry – and EOR Solutions, which supplies solutions for increased oil production through enhanced oil recovery.

POLICY

UAE to enforce metric system for November After the successful implementation and replacement of gallon with liter for petroleum products in January this year, the UAE government has decided to do away with other ancient measuring units

to follow the International System of Units, or SI. According to the Emirates Authority for Standardization and Metrology (ESMA), no more feet, inches or yard, will be used as measurement units with effect from 11/11/11 – a well suited date to have a world unified system. From November 11, these units will be replaced with liter and meter along with their sub-units to comply with World Trade Organization regulations calls for

applying SI. “The decision to shift to meter in official and commercial activities, especially in the real estate sector, was announced in August last year. The move is in line with the UAE Cabinet of 2006 on the national system of measurement, which mandates the use SI as a basis for the legal units of measurement in the country,” ESMA announced on Wednesday.

TERMINALS & STORAGE

Qatar’s Barwa Bank reaches finance deal with NPS

NEWS IN BRIEF





“People should be used to the meter in response to the UAE’s decision to use a unified system, which is the metric system. In line with this, some of the software used by the UAE Land Departments must be changed. “We want to build a UAE infrastructure that is as per international best practice that is fulfilling World Trade Organization Technical Barriers to Trade (WTO-TBT) requirement,” said Mohammad Saleh Badri, ESMA Acting Director-General. A national action committee, made up of representatives of all relevant entities, including the UAE land departments, Municipalities and the Abu Dhabi Conformity and Quality Council, agreed upon the date of implementation on November 11. The UAE has been using different units of measurement due to the absence of a national regulation that mandates the use of SI. In July 2006, the UAE cabinet has approved the National Measurement System which was prepared by ESMA, in which under Article 8 mandates the use of SI as legal units of measurement. SI is an international standard system of measurement unit that is applied in most of the world countries with the exception of some most developed countries like the US where mile is used instead of kilometer, and the UK where pint and pounds are used for liquid and solid goods. In the UAE, all the SI units are commonly used with the exception of textile measurements of yard and exported goods using inches and feet. According to the market, most of the goods produced locally are labeled with the SI unit system, and it was only the imported products that have the old measurement descriptions. Ashraf Ali, Executive Director of Lulu Hypermarket chain that spreads across the GCC region, said: “Most of our products come in mixed-metric description. For instance we have most of the electric and electronic products with feet and inch description. “However, the good thing about this new rule is that there is enough time for the new rule to take place, so we have time to inform our suppliers about this. We

will inform our trade partners about the new descriptions of products that we may get from November.” He also said both the authority and business outlets now need to educate consumers about the new measurement systems that will be implemented. “Most of the textile merchants are using yard sticks to measure textile materials to sell. They may need more efforts to educate their customers who are used to yard than meter.” Shankar Lal, a textile merchant said though some of their products come with meter description, customers are used to yard or commonly known among many as ‘wall’. “It will be difficult to sell our customers in the beginning. We have to explain them about the difference between yard and meter before we could sell our textile materials,” Lal said. Another textile merchant, Kamal Khan said let alone the customers, he has to learn how to make the difference between yard and meter. “Wall (yard) is the old system we have been using for generations. It will be difficult now. Now we have to re-fix our pricing as well as we move from yard to meter,” Khan added. ESMA has been in extensive dialogue with the land departments across the country since 2009 and has been conducting educational awareness for the last two years.

TRIBUNE BUSINESS NEWS, May 27, 2011

Bahrain earmarks US$6bn for Bapco upgrade Bahrain is set to invest more than US$20 billion in the oil and gas sector in the next two decades, according to Energy Minister Dr. Abdulhussain Mirza. He said most would be used as part of a push to try and find lucrative new oil wells and the remainder on upgrading the Bapco refinery. “Nearly US$15bn will be used by oil exploration company Tatweer Petroleum at its operations in the Bahrain Field, where it will dig 3,600 new oil wells,

while US$6bn has been earmarked for the development and upgrade of the Bapco refinery,” Dr. Mirza told the GDN. He was speaking on the sidelines of a ceremony to officially inaugurate the new regional offices of primary energy business advisory firm Contax Partners in Seef. “A process to dig deeper than ever before for natural gas is also well underway as is also the US$350 million (BD 132MM) Saudi-Bahraini crude oil pipeline refurbishing project,” said Dr. Mirza. “Plans are being made in such a way that the 55km pipeline will be routed to circumvent residential and populated areas to spaces outside.” Dr. Mirza said a US$430m lube base oil project, a joint investment venture between National Oil and Gas Authority (Noga) Holding, Bapco and Finland’s NESTE Oil Company, is almost complete and would begin operations soon. “Another project in the offing is the US$120m waste water treatment project between Bapco and Korea’s GS Engineering and Construction Company, which will be completed in 2012,” he said. The minister said confidence was fast returning to Bahrain after the recent unrest. “Contax Partners setting up their regional headquarters in the country is a sure sign of that,” he said. “We are sure this step will prove to be a catalyst for more international players to set up their base in Bahrain.” Dr. Mirza said Noga welcomed foreign investment and played a vital role in attracting them to the energy field and its supporting services. “Noga also provides support to overcome difficulties in order to boost business growth and investment for the development of Bahrain,” he said. Contax Partners chief executive Filippo Fantechi said the launch of its Bahrain headquarters was another step forward for the company, which has been in the Middle East energy industry for more than 25 years.

NEWS IN BRIEF





“We look forward to take these relationships to new horizons,” he said.

GULF DAY NEWS, May 26, 2011

Arab oil faces higher ‘break-even’ price A wave of popular protests sweeping the Middle East and North Africa has toppled regimes in Tunisia and Egypt and led to civil war in Libya. It has also forced the region’s rulers including Saudi Arabia to launch expensive programs to redress public grievances. To cover the cost, energy producers have to squeeze more money from their oil fields. That means raising their “break-even” price – the amount of money they must make from each barrel of oil – to avoid fiscal deficits.

MW, May 29, 2011

Pakistan, Russia sign energy MOU Pakistan President Asif Ali Zardari and Russian President Dmitry Medvedev signed a MoU during Zardari’s 4-day visit to Russia. The MOU would encourage development of Pakistan’s oil and gas infrastructure to use gas as a motor fuel. OAO Stroytransgaz, a Russian firm, expressed interest in building transnational gas pipeline projects in Pakistan from Turkmenistan, Iran, or Qatar. Similarly, Gazprom Geoservice Petroleum Co. agreed to construct oil and gas storage facilities and help train Pakistani workers.

OGJ, May 26, 2011

No direct sanctions on Iran A top Iranian energy official says the US is not able to directly impose sanctions on Iran’s oil exports due to the country’s “huge oil and gas resources.” “Iran produces four million barrels of oil per day while the daily production of crude in the world is about 80 million barrels,” Mohsen Qamsari, the head of the international affairs of National Iranian Oil Company, was quoted as saying by IRNA.

PRESSTV, May 27, 2011

Iran, India oil payments impasse Iran hopes to resolve a payments impasse with India over oil shipments by Tuesday, the country’s envoy to India, Seyed Mahdi Nabizadeh said. A delegation from Iran was in New Delhi this week in the latest attempt to try to work out a way for India to pay for its oil imports, five months after a regional clearing mechanism was unilaterally discontinued by India’s central bank under US pressure. Iran supplies India with some 400,000 barrels per day (bpd) of oil, second only to Saudi Arabia.

REUTERS, May 30, 2011

COMPANIES

GCC growth to exceed 5% in 2011: World Bank DUBAI: Gulf Cooperation Council (GCC) countries are on course to maintain a strong economic growth exceeding five% in 2011, the World Bank said in its latest forecast. However, the wider Middle East and North Africa region may face a slower growth of 3.6% as the soaring fuel and commodity prices stoke inflation , the World Bank report on “Regional Economic Outlook: MENA Facing Challenges and Opportunities” said. Revising downwards the growth forecast for the MENA region, the World Bank said current economic disruption in many countries in the region is translating into lower growth at 3.6% for 2011, down from five% previously, in the short-term. However, the opportunities in the medium-term offer new hope for an inclusive and sustainable development that has not before been seen in the region. It added that there are “historic opportunities for greater openness and citizen participation in economies across the Middle East and North Africa that, if strongly managed over the transitions ahead, could see a significant boost to economic growth and living standards in

the medium term,” World Bank Vice-President (Mena region) Shamshad Akhtar said. Government spending in the region is expected to rise in 2011, as governments move to expanding supportive policy measures and social transfers to reduce the burden of unemployment and counter high commodity prices, the report said. The bank added that the region had largely recovered from the global financial crisis, and growth rates had been expected to reach pre-crisis levels in 2011. “Events in early 2011, which led to swift regime change in Tunisia and Egypt, and ongoing challenges in Bahrain, Libya, Syria and Yemen, have affected the short-term macro economic outlook and the status and speed of economic reforms in the region,” it said. “The effects of reform tend to follow a J-curve, where things get worse before they get better. Experience from other countries which have made successful transitions has shown an initial decline of 3-4% in the first year but quickly recovering,” Chief Economist for the MENA region Caroline Freund said.

ECONOMIC TIMES, May 31, 2011

Petrochem and SIIG delay merger proposition Saudi Arabia’s National Petrochemicals Company (Petrochem) and Saudi Industrial Investment Group (SIIG) have decided to delay merger study of their assets until the start and the stabilisation of the project of the Saudi Polymers Company, the two companies said in a statement published on Saudi stock exchange “Tadawul”. The two companies said that the Saudi Polymers project is slated for production in the fourth quarter 2011. “Upon the completion of the project, we will be able to take the best expectation including the costs, sales and the profitability of the project,” said Petrochem, the owner of the Polymers project. “This will allow us to set a fair value of the company’s shares before the merger,” it added.

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During the board meeting, which took place in April, the Petrochem board have decided to approach the SIIG board of directors, to propose a study to merge both Petrochem and SIIG. The board of SIIG approved the idea of the merger. SIIG has three nearby operational downstream projects in joint venture with Chevron. It has been reported that Petrochem management wish to integrate elements of its production with the SIIG facilities, with a view to a potential merger in the future. SIIG already holds 50% of Petrochem shares. Saudi Insurance holds 16.2% and General Retirement Authority holds 16.2%, the rest of the shares are listed on the Tadawul.

ARABIANOILANDGAS, June 1, 2011

Korea’s Kogas doubles down on Iraq The Korean state-run gas company, known as Kogas, will now have a 75% stake in the Akkas gas project, up from 37.5% previously, after Kazakhstan state gas company KazMunaiGas EP JSC pulled out earlier this month. Iraq’s state-run North Oil Co. will hold the other 25%. The company plans to invest about US$2.66 billion in the Akkas project over a 20-year period, a company official said. But that estimate is based on an assumption

WSJ, May 26, 2011

EIL to partner with Saudi Group State-run engineering consultancy firm Engineers India Ltd (EIL) is tying up with a major Saudi Arabian group to jointly bid for contracts in the West Asian country that is dominated by US and European majors. This is part of a makeover plan that will see the firm turn into a one-stop concept-to-commissioning agency for large industrial projects, company chairman A K Purwaha said.

TNN, May 27, 2011

REFINING

Pearl GTL wins Gold Safety Award Qatar’s Minister of Energy and Industry Mohamed Saleh al-Sada awarded Shell’s executive vice-president and managing director Pearl GTL, Andy Brown, with the inaugural Qatar Oil and Gas Industry Safety Award. Pearl GTL was awarded the Gold Safety Award and recognised as the leader in safety in the industry. “The close co-operation between Qatar Petroleum and Shell has helped us achieve the great safety performance on the project, and we have both focused on safety since day one,” said Brown. Pearl Gas to Liquids (GTL) is the largest energy project ever launched in Qatar. It is being developed by Qatar Petroleum and Shell. The project has implemented an extensive safety programme that has created a culture in which everyone recognises their role and responsibility for ensuring the safety of themselves and everyone around them. “Pearl GTL has differentiated itself through the dual focus of caring for people and absolute compliance to safety rules, which promotes a safety culture where people know the rules and want to follow them rather than just having to follow the rules,” Brown added. At peak construction around 52,000 people were working on Pearl GTL, although that has now decreased to around 20,000. The project has taken a total of 500mn working hours to deliver. In August last year, the project achieved 77mn manhours without an injury leading to lost work time, a record for both Ras Laffan Industrial City and the Shell Group worldwide. The Pearl Village was established to support over 40,000 workers. The Pearl village leads the Middle East in terms of worker welfare, providing workers a home away from homes, where they can not only eat and sleep, but also enjoy numerous entertainment, cultural and sporting events.

An advanced health and psychological welfare infrastructure also exists in the Village.

GULF TIMES, May 29, 2011

Iran dominates Turkey’s oil imports in first quarter Turkey imported 6 million tonnes of oil in the first quarter of 2011 as Iran remains the top seller, an official report said Monday. Turkey’s Energy Market Regulatory Authority, or EMRA, released its oil market report for the first quarter of 2011, and said Iran was the main country from where Turkey imported oil in the period. Some 4.2 million tonnes of the overall 6 million tonnes of oil imports was crude oil, 1.4 million tonnes was diesel oil, 135,379 tonnes was fuel oil, 56,471 tonnes was jet fuel, 53,225 tonnes was 95 octane unleaded gasoline, and 2,082 tonnes was aviation fuel. Iran topped the list of countries from where Turkey imported oil with 1.8 million tonnes. Iraq and Russia followed. Iran’s share in Turkey’s oil imports was 30%, whereas Iraq had 12% share and the Russian Federation 11%. Turkey exported 2.4 million tonnes of oil in the first quarter of 2010. The United Arab Emirates, Egypt, Malta and Italy were the main oil exports destinations with 294,000 tonnes, 288,000 tonnes, 246,000 tonnes, and 238,000 tonnes. Turkey’s gross refinery production was 4.7 million tonnes in the same period.

ANATOLIA NEWS AGENCY, May 30, 2011

Tesoro buys cargo of Libyan rebel oil US oil refiner Tesoro has bought a cargo of crude oil from Libya’s eastern rebel movement to run in its Hawaii refinery, the company told Reuters on Wednesday. The cargo of crude, estimated at about 1 million barrels, has been sitting idle near Singapore since late April and was originally bought from Libyan rebels in early April, according to tanker tracking data and trading sources.

NEWS IN BRIEF





The crude is aboard an oil tanker chartered by Swiss oil trading giant Vitol SA. Tesoro spokesman Mike Marcy confirmed by email that San Antonio,Texas-based Tesoro has bought the Libyan crude cargo to run in its 94,000 barrel per day Hawaii refinery. Reuters tanker tracking data shows the cargo will arrive in Honolulu around June 7.“This purchase was made in strict accordance with the relevant White House Executive Order, signed by President Obama,” Marcy wrote in an email. Some Libyan crude is subject to sanctions due to the civil war in the North African country. However, the U.S. government has approved doing business with Libya’s eastern rebel movement.

REUTERS, May 25, 2011

Abadan refinery petrol production unit Tehran Times reported that the Phase I of Abadan refinery’s petrol production unit will come on stream. The unit which will produce the best ever quality petrol with the octane number of 94 is projected to produce 4.2 million litres of petrol per day. Once the refinery’s second phase comes on stream, some 2 million litres would be added to the unit’s production capacity.

TT, May 27, 2011

Iran’s oil reserves up Iran’s oil reserves have increased by 758 million barrels due to the discovery of a new deposit of light oil offshore at the Khayyam field in southern Hormuzgan province. Ahmad Qalebani, the managing director of the National Iranian Oil Company, said the value of in-place reserve of the field is estimated at US$13.6 billion based on US$80 per barrel. Qalebani said that the oil reserves of Iran reached 155 billion barrels from 151.3 billion barrels by discovering new fields.

PRESS TV, May 23, 2011

Private sector in refinery feedstock Feedstock for refinery and petrochemical complexes can be procured with the ceding of the onshore section of the South Pars gas field to the private sector, announced the managing director of National Iranian Petrochemical Company (NIPC). Abdolhussein Bayat said “Capital recovery rate in this sector is above 50 percent and this can serve as the best incentive for the private sector,” he noted.

ZAWYA, May 29, 2011

FUELS

Fuel subsidies cost Saudi Arabia 50bn riyals per year Saudi Arabia’s fuel subsidies cost the Middle East’s biggest economy as much as 50 billion Saudi riyals (Dh48.81 billion) a year, the top official at the country’s power regulator said Monday Saudi Arabia’s fuel subsidies cost the Middle East’s biggest economy as much as 50 billion Saudi riyals (Dh48.81 billion) a year, the top official at the country’s power regulator said Monday. The figure represents the total value of energy consumed in the country minus the price at which it is sold, including both electricity and gasoline, said Abdullah Al Shehri, governor of the Electricity and Cogeneration Regulatory Authority, also known as Ecra. Al Shehri, speaking at a conference in Dubai, said electricity probably accounted for around half of the 50 billion riyals. However, he said the kingdom was not looking at raising tariffs this year after increasing prices last year for business and industrial consumers. A pilot programme last year had successfully directed fuel subsidies towards poorer families, he added. Saudi Arabia, the world’s largest oil exporter, faces soaring power demand, which analysts partly attribute to prices that fall below the cost of production.

Peak-time electricity demand will almost triple within 20 years to 120,000 megawatts by 2032 from around 46,000 MW in 2010, Al Shehri said. He added that around half the kingdom’s current power capacity uses liquid fuel including distillates, crude oil and heavy fuel oil rather than clean-burning natural gas. The availability of gas is constrained in the kingdom due to high demand also from other industries such as petrochemicals where it is used as feedstock. Due to growing concern in the kingdom over the high level of oil consumption in power plants, the government is exploring alternatives including nuclear power. Saudi Arabia will likely reveal a long-term energy strategy to include nuclear power plants by the end of the year, Al Shehri said. The King Abdullah City for Atomic and Renewable Energy, set up last year, has already carried out feasibility studies, concluded cooperation agreements with other countries and is looking at potential technologies to utilise, he added.

GULF NEWS, May 31, 2011

Aramco turns on new diesel hydrotreater plant Saudi Aramco has inaugurated its Ras Tanura diesel hydrotreater plant, after 28 months of construction work, the company said in a statement. The diesel hydrotreater is the largest of its kind in Saudi Aramco and capable of processing 105,000 barrels per day of 10-parts-per-million (ppm) ultra-low-sulfur diesel. Completed within 28 months, the plant represents a milestone in the company’s efforts to produce cleaner fuels. The project was part of Saudi Aramco’s Environmental Master Plan, which was launched in 2001 to identify and implement capital projects that lighten the environmental footprint of the company and the products it produces. The hydrotreater is situated in the middle of Ras Tanura Refinery and surrounded by operating facilities that continued to operate during construction of the hydrotreater.

NEWS IN BRIEF





Yanbu’ and Riyadh diesel hydrotreaters produce 500 ppm low-sulfur diesel. By 2015, the Kingdom’s new sulfur specification will be 10 ppm, meaning the Ras Tanura diesel hydrotreater will be able to meet the future sulfur specification without any additional capital investment, the company added.

ARABIANOILANDGAS, May 30, 2011

Sanctions underpin Iranian oil cos US-led sanctions have make Iran’s domestic oil companies gain achievements such as cutting petrol imports, said Business Monitor International (BMI) in its new report titled “Iran Oil & Gas Report Q1 2011”. The report emphasized that sanctions have had a psychological effect on Iran about disruption to the supply of refined products which in its turn has pushed Iran to significantly expand its refining

TT, May 24, 2011

Iran petrol output Iran plans to increase daily petrol production to 100 million litres by 2015, said deputy oil minister. Alireza Zeighami noted that currently the daily petrol production stands at 54 million litres and this figure will rise to 100 million litres by 2015, Fars News Agency reported. Referring to the current 1.7million-barrel production of oil and gas condensates in seven refineries, he said that the volume will increase to 2.15 million barrels in 2015.

ZAWYA, May 26, 2011

Iran petrol capacity Iran’s petrol production capacity will reach 80 million litres per day by the end of the current calendar year, according to official estimates. Some 23 million litres to 27 million litres would be added to the nation’s petrol production capacity in the mentioned period. The country’s petrol production output currently stands at 54.5 million litres per day.

TT, May 27, 2011

Iran gas for Iraq Iraq signed an initial agreement to buy natural gas from former foe Iran to fuel power plants, a spokesman for the Iraqi electricity ministry said Monday. Iraq’s electricity ministry and Iran’s oil ministry signed the five-year agreement for 25 million cubic meters a day, Iraqi electricity ministry spokesman Mussab al-Mudaris said. The gas will be used to feed two power stations in Baghdad.

WSJ, May 24, 2011

South Pars gas high Production of gas in the South Pars gas field hit 7 billion cubic meters in the first Iranian calendar month of Farvardin (ended on April 20, 2011) IRIB quoted an official with the Pars Oil and Gas Company. Farrokh Alikhani added that the amount was produced in 10 phases of the South Pars field. Referring to the fact that each phase of the field produces 25 million cubic meters of gas, Alikhani added: “40 percent of the country’s gas demand is produced in the South Pars field.”

TT, May 24, 2011

PETROCHEMICALS

Gulf petchem on firmer footing to expand After standing resilient in the face of the harsh economic downturn of 2008 and 2009, there were reasons for the Gulf region to celebrate in 2010 - albeit with plenty of caution. In general, the regional industry has reported a very good year, with higher demand and prices, generating excellent financial results. According to the Gulf Pertochemical and Chemical Asscoaition (GPCA), the region’s industry has bounced back with more vigor after cyclical downturns as a result of crucial investment pay-offs. In its Annual Report issued this week, GPCA outlined the continued expansion of the industry’s production base during the year 2010. The report highlighted several new large-

scale projects which came on stream during the year.About 6.6 million metric tonnes of ethylene capacity was added in 2010 by companies in the region, with SABIC’s SAUDI KAYAN, YANSAB and SHARQ adding about 3.3 million tonnes, Borouge II starting up its 1.5 million ton cracker in Abu Dhabi, and Ras Laffan Olefins Company commissioning its 1.3 million ton cracker in Qatar. As ethylene production went up, so did the ethylene derivatives. The five projects have added about 6 million tonnes of polyolefins to the region’s output, including polyethylenes (HDPE and LLDPE) and polypropylene. In Kuwait, a state-of-the-art complex to produce aromatics, styrene and olefins facility started up under the name of Greater EQUATE, which is a joint venture between the Petrochemical Industries Company (PIC) and Dow Chemicals. In Sohar, Aromatics Oman (AOL) commissioned its grassroots aromatics plant, designed to produce 818,000 tonnes per annum of paraxylene and 198,000 tonnes per annum of benzene, using naphtha supplied by Sohar Refinery. In Saudi Arabia, the Saudi International Petrochemical Company (Sipchem) started up its 330,000 tonnes per annum Vinyl Acetate Monomer (VAM) plant as well as two acetyls plants to produce 345,000 tonnes of carbon monoxide and 450,000 tonnes of acetic acid. Al-Waha, a joint venture between Sahara Petrochemicals and LyondellBasell, started up its propane dehydro plant and a 450,000 tonnes per year polypropylene plant in Jubail Industrial City. During 2010, there was also a string of announcements that drove home the message that the region’s petrochemical industry will continue to thrive in the coming years. As the year drew to a close, Abu Dhabi National Chemicals Company (ChemaWEyaat) awarded a major contract to develop a master plan for the Madeenat ChemaWEyaat Al Gharbia (MCAG) chemicals industrial city over a 70 sq. km land allocated to the company by the Government of Abu Dhabi.

NEWS IN BRIEF





Qatar Petroleum (QP) and Shell signed a memorandum of understanding to jointly study the development of a major petrochemicals complex at Ras Laffan. In Kuwait, the Kuwait Aromatics Company (Karo) is considering the development of a downstream project to add value to the paraxylene produced at its Shuaiba plant. Sipchem announced the awarding of a contract to build its Ethylene Vinyl Acetate (EVA) plant, which will also produce LDPE. The Gulf petrochemical and chemical industry is on firmer footing in 2011 and beyond. The Gulf region has become a significant global producer of commodity petrochemicals and its global market position will grow over the next five years due to the on-going staggering growth wave, which will add significant petrochemical capacity. As a result, the overall share of the Gulf region in the world petrochemical industry is projected to grow markedly from 15% at present to 20% by 2015. This is a significant growth by international standards and within such a short time frame.

ZAWYA, May 31, 2011

NAMA extends commission of calcium chloride plant Nama Chemicals has extended the commissioning of its new calcium chloride plant, which was supposed to be completed by the end of the first quarter 2011, the company said in a statement published on Saudi stock exchange “Tadawul”. The company said that technical problems have prevented the plant from reaching its designed capacity. “The water purification unit works at its designed capacity, but the production unit produces on spec calcium chloride with a lower designed capacity,” the company said. “We expect to reach the maximum capacity of the plant by the end of the year,” it added. The calcium chloride plant is part of Hasad Project, which started commercial production recently to produce epichlorohyrin (ECH) which is used for the production of epoxy, as well as the

caustic soda to produce caustic soda prills (pearl) and caustic soda solid.


Maaden load and unload first shipment of phosphate The Saudi Arabian Mining Company Ma’aden has successfully loaded and unloaded a trial shipment of phosphate concentrate. The company said that the phosphate shipment was transported from the plant of the phosphate concentrate in Al Jalamid mine site in the north of the Kingdom to Ras Az Zawr through railway transportation, after the completion of the 980Km railway by the Saudi Railways Company. Ma’aden Phosphate Company, a joint venture between Ma’aden and SABIC, will produce approximately 2.92 million t/y of granular DAP, plus approximately 440,000 t/y of excess ammonia for export to world markets. It is also anticipated that the Phosphate Project will generate approximately 160,000 t/y of excess phosphoric acid for sales to the domestic market.


SABIC to build largest ever MMA plant in KSA Saudi Basic Industries Corporation (SABIC) and Mitsubishi Rayon Company (MRC) have announced the formation of a 50/50 joint venture company, to build and operate two plants – one for Methyl Methacrylate (MMA), and the other for Polymethylmethacrylate (PMMA) – at one of SABIC’s manufacturing affiliates in Jubail, Saudi Arabia. The next phase of this project will focus on the basic engineering design, completion of: supply agreements, regulatory approvals and necessary details for the JV incorporation, implementation and execution activities. The MMA plant will be the largest ever built, with a 250,000-

metric- ton annual capacity. It will use Lucite International’s (LI) Alpha technology, which was first commercialised with its Alpha 1 plant which began operation in Singapore in November 2008. LI is a subsidiary of MRC acquired in 2009. The PMMA plant will be based on MRC technology and will have an annual capacity of 40,000 metric tonnes. SABIC and MRC have entered into this new partnership to further their strategic goals. SABIC will broaden its specialty portfolio by drawing on the technological expertise of MRC. MRC, the global leader in the methacrylates industry, will strengthen its leadership position by utilizing readily available raw materials in Saudi Arabia and building up a new production facility in the Middle East region. Commenting on the partnership deal, Koos Van Haasteren, SABIC Executive Vice President, Performance Chemicals, said the joint venture operation will be the basis for a strategic entry into the acrylics business. “We will be building on a breakthrough technology, with a strong partnership and integrated feedstock,” he said. “Moreover, the global market for MMA is growing at a rapid pace. New applications are driving this increase in demand and we are committed to meeting our customer growth requirements worldwide”. Masanao Kambara, MRC President, commented, “This partnership with SABIC will help us to meet long term supply commitments to our MMA and PMMA customers. As the global leader we have a responsibility to ensure reliability of supply and this investment will enable us to deliver continuous improvement.” The MMA/PMMA joint venture will introduce new high-value products, manufactured for the first time in the Middle East. These will diversify materials used in industrial clusters, thus allowing expansion and further diversification in Saudi Arabia’s industrial sector; creating new opportunities in the downstream industries such as construction, automotive, electronics, medical technologies and appliances.

NEWS IN BRIEF





It can therefore be concluded that this project will have a positive impact on value creation in Saudi Arabia, enabling industry to move further downstream.


China invests in Iran’s petrochemicals A Chinese firm has announced readiness to invest US$5 billion in petrochemical projects at Mahshahr Special Economic Zone, southwest of Iran. The Asian company has also started negotiations with National Petrochemical Company of Iran for construction of a giant methanol producing unit in Pars Special Energy Zone. Iran’s 20-Year Outlook Plan envisions the petrochemical output to reach 100 million tonnes by 2015. TEHRAN TIMES, May 27, 2011

Iran Petrochem centers in China Iran will set up two new petrochemical centers in China to increase exports to this Asian nation, announced managing director of Iran’s Petrochemical Commercial Company (PCC). Reza Hamzehlou told Mehr News Agency that India and China would be the major destinations for Iran’s petrochemical and polymer products.

ZAWYA, May 30, 2011

PIPELINES

No compensation in wake of Egyptian pipeline explosion There is no reason for the company responsible for natural gas exports to Israel to file a lawsuit against the Egyptian government, a senior Egyptian Petroleum Ministry official has said. The East Mediterranean Gas Company (EMG) experienced financial losses as a result of the government’s decision to suspend pumping operations. Authorities cut supplies to Israel after bombings at the Egyptian gas pipeline in

the Sinai in February and April. Two companies holding shares in EMG threatened international arbitration against the government if suspension continued. The ministry official told Al-Masry Al-Youm that Egypt was not responsible for the suspension of gas exports, which was caused by “force majeure” event. He said force majeure events include sabotage bombings, natural disasters and basic problems hampering the operation oil producing wells, all of which are stipulated in the contract agreement. The official, who requested anonymity, said that while the EMG partners have the right to protest against the suspension of pumping operations and the losses arising from it, it should be recognized that the government announced its commitment to the contract. He added that the Petroleum Ministry is working to repair the pipeline. The official confirmed that the ministry would not be paying any compensation to the EMG partners or to the countries benefiting from export operations, including Israel, Jordan, Syria and Lebanon, as Egypt was not responsible for the suspension of pumping operations. He explained that if the government paid compensation, such a move would confirm Egypt’s responsibility for something it is not guilty of, which would then give these parties a legal basis by which to sue Egypt.

ALMASRYALMYOUM, May 31, 2011

Exploration eyed near Meskala gas field Longreach Oil & Gas Ltd., Toronto, signed a formal agreement to take a farmout from Maghreb Petroleum Exploration SA to earn a 50% operated stake in the Sidi Moktar development licence in the Essaouira basin in central Morocco. Longreach seeks to raise funds for the drilling of as many as five wells across the Longreach portfolio. The agreement enhances Longreach’s existing Moroccan-focused asset

portfolio by providing a 50% working interest and operatorship of three more exploration licences. The Sidi Moktar licences have produced 30.5 bcf of gas, according to Morocco’s state ONHYM. Consulting engineers found in March 2011 that four existing fields in Sidi Moktar could have undiscovered gas initially in place in Silurian-sourced Triassic targets of a low estimate of 111 bcf, a best estimate of 292 bcf, and a high estimate of 776 bcf. The Sidi Moktar licence surrounds Meskala onshore field, and a gas pipeline runs through the permit area. Tie in to this pipeline is believed possible, with gas expected to be piped to the town of Youssoufia, where major phosphate plants exist with unmet natural gas demand. Longreach has interests in four other onshore and offshore licences in southern Morocco totaling 11.8 million acres. Longreach will fully fund MPE’s commitment program to shoot 100 sq km of 3D seismic and drill two wells. Longreach expects to shoot seismic on its Zag and Tarfaya licences. Subject to available funding, the exploration program also allocates a portion of the proceeds of a Canadian public offering to fund the drilling of one exploratory well on Zag, one on Tarfaya, and one on either of the offshore Sidi Moussa or Foum Draa licences. Kechoula field, which is shut-in, was discovered in 1957 and has produced 19 bcf of gas from Jurassic. It surrounds Meskala, one of Morocco’s major producing fields now making 3.5 MMscfd based on information provided by ONHYM, the current operator. Of four other fields that are Jurassic gas discoveries, three have produced and are also shut-in. Well, geological, and geophysical data from previous operators are expected to help identify further opportunities in the licence. Longreach’s Zag licence is in the Zag-Tindouf basin complex in southern Morocco and is on trend with what are believed to be large gas discoveries in Algeria. The company holds a 30% interest in the Zag licence. It holds a 30% interest in the Tarfaya licence.

NEWS IN BRIEF





Multiple prospective structures have been identified based on current 2D seismic, and a 500 line-km 2D seismic shoot is under way. Longreach has a 10% interest in each of the Sidi Moussa and Foum Draa licences. Multiple prospects have been identified on each.

OGJ, May 27, 2011

TDW aids Egypt gas line connections T.D. Williamson (TDW) has completed a subsea hot tap intervention in the Egyptian sector of the Mediterranean Sea. The operation was performed for main subsea contractor Technip Norge to facilitate tie in of a new 36-in. (91.4-cm) gas export pipeline to an existing 26-in. (66-cm) export line. The new pipeline will serve Burullus Gas Co.’s West Delta Deep Marine (WDDM) Phase VII development. TDW’s main goal was to achieve the tie-in without shutting down production. The program called for two conventional 16-in. (40.6-cm) hot tap operations on the existing 26-in. line. Additionally, a 20-in. (51-cm) hot tap on the new 36-in. line was performed on a blind weld-neck “tappable flange” made from duplex stainless steel. To prepare for hot tap operations in water depths of up to 95 m (311 ft), TDW conducted engineering, design, and testing at its facility in Nivelles to customize a special hot tap tool known as a “cutter” to effectively cut the duplex plate. This cutter, which is more rigid than the standard tool, is vibration-free, the company says, and has a removable cutting tooth system for use on specific duplex tools. For three weeks TDW personnel worked from Technip’s DSV Wellservicer to implement all three hot taps. The task on the duplex tappable flange took six days to complete. Throughout, a pressure of 100 bar (1,450 psi) was maintained in the 26-in. export pipeline. In 2009, TDW provided similar services on parts of the onshore pipeline system that form part of the WDDM in Egypt.

OFFSHORE, May 27, 2011

Jordan, Egypt still apart on gas deal Despite weeks of negotiations, Amman and Cairo have yet to reach an agreement on resuming natural gas supplies to Jordan, a senior energy official has said. According to Minister of Energy and Mineral Resources Khaled Toukan, talks between Jordan and Egypt are ongoing following an April 27 attack in Al Arish disrupted supplies -- the second attack on the Arab Gas Pipeline in less than three months. In a statement issued through the Egyptian press on Thursday, Cairo’s ministry of oil indicated that the hold-up in resuming gas supplies to the Kingdom was over gas quantities rather than higher prices, which have become a stipulation in resuming supplies to the Kingdom. In a phone interview on Thursday, Toukan declined to elaborate on the nature of the talks, adding only that the government was reviewing an Egyptian request. Earlier this month, Egypt proposed a staggered price increase putting an end to a favorable pricing deal under which Amman received natural gas at less than half of the market price. It is believed that under the proposal, a certain%age of the previous gas supply, which Jordan relies on for 80% of its electricity generation needs, would be supplied at favorable prices, with the remaining sold at international rates. Prior to the attack, Jordan received 150 million cubic feet of natural gas each day from Egypt – half of the amount it received in 2009 – and well below the 240 million cubic metres stipulated in the 12-year agreement, which runs through 2016. Jordanian energy officials now hope to resume supplies to an “urgent” 200 million cubic meters per day in order to alleviate pressure on the energy sector. Last month’s attack has forced the country’s power plants onto their heavy oil and diesel reserves, costing Jordan some US$3 million per day and forcing authorities in Amman to explore liquefied gas imports as a long-term alternative. The Kingdom imports 96% of its energy

sources at a cost of around one-fifth of the gross domestic product.

TRIBUNE BUSINESS NEWS, May 31, 2011

Iran-Bahrain pipeline off Manama said yesterday it had frozen plans to import fuel from Iran’s biggest gas-field through a proposed undersea pipeline because of Iranian meddling in the country’s internal affairs. “The project to import Iranian gas is currently halted because of the blatant Iranian interference,” said Sheikh Khalid bin Ahmed bin Mohammed Al Khalifa, the Bahraini foreign minister, according to Bahrain’s official news agency, BNA.

NATIONAL, May 23, 2011

Froozan pipeline underway The pipe-lay vessel Abouzar 1200 has started the shore-pull operation for a pipeline for the Froozan oil field in the Persian Gulf, according to Iranian Offshore Engineering Co. The 600-m (1,968-ft) long, 24-in. (61-cm) sour gas line was pulled from the sea to the shore. Thereafter, the vessel was due to lay the main 103-km (64-mi) pipeline. An IOEC official added: “This pipeline will deliver the extracted sour gas to Khark Island refinery.”

OFM, May 28, 2011

TERMINALS AND STORAGE

ICTSI makes an offer for Portek to add terminals International Container Terminal Services Inc. (ICT), the largest Philippine port operator, offered to buy the rest of Portek International Ltd. (PORT) for S$171 million (US$139 million) to add terminals in Asia, Africa and Europe. ICTSI offered S$1.20 a share for Singapore-based Portek, a 69% premium to the last traded price, according to a statement today.

NEWS IN BRIEF





The Manila-based company and affiliates already own about 5% of the terminal operator. ICTSI jumped 4.5%, the biggest gain on the benchmark Manila index, to 52.35 pesos on speculation the deal will pare its reliance on the Philippines, whose economy grew at the slowest pace since 2009 in the first quarter. Portek controls terminals in countries including Indonesia, Algeria, Malta and Gabon, according to the statement. Portek was suspended from trading in

Singapore today. It declined 2.7% to S$0.71 yesterday, giving the company a market value of US$87 million, according to Bloomberg data. Portek has 150.3 million shares outstanding, according to ICTSI’s statement.

BLOOMBERG, June 1, 2011

World’s biggest oil tanker The world’s biggest oil tanker is expected to enter the Persian Gulf’s fleet

soon, announced Iranian Offshore Oil Company (IOOC), a subsidiary of NIOC. The oil tanker is an FSU (Floating Storage and Unload vessel) and is at the final stage of manufacture in South Korea, said Mahmoud Zirakchian-zadeh, the managing director of IOOC. The oil tanker has a storage capacity of 2.2 million barrels of crude oil, for which about 300 million euros have been invested.

OV, May 22, 2011

NEWS IN BRIEF





PROJECT Iran Chemical Project

Project Sector DownstreamLocation Middle East, Iran, East AzarbaijanAreaProject Holder/Operator NPC - National Petrochemical Co/SFC - Shiraz Fertiliser Company Sco pe of work EPC - Engineering, Procurement & Construction Contracts Current / Past Phase The project had been on a completion phaseContract Value Estimate Over US$280 millionStart up Timing From 2010Development Stage Operational ProjectBrief The project is associated with the development of Shiraz ammonia and

u rea complexFuture & Potential Sales Prospects

FC - Framework Contracts LSTK - Lump Sum Turnkey Contracts MC - Multi Contracts PMC - Project Management Contracts TC - Term Contracts

PRO JECT Oman Methanol Construction

Project Sector DownstreamLocation Middle East, Oman, Al BatinahAreaProject Holder/Operator Methanol Holdings/Helm AG/Oman Methanol Holding Company / MAN

Ferrostaal/HERMESScope of work EPC - Engineering, Procurement & Construction Contracts Current / Past Phase The project had been on a completion phaseContract Value Estimate Over US$485 millionStart up Timing From 2010Development Stage Operational ProjectBrief The project is associated with the development of Sohar methanol unit

Future & Potential Sales Prospects

TC - Term Contracts C - Consultancy ContractsFC - Framework ContractsLSTK - Lump Sum Turnkey ContractsMC - Multi ContractsO&M - Operations and Maintenance Contracts

PROJECT United Arab Chemical Development

Project Sector DownstreamLocation Middle East, UAE, Sharjah EmirateAreaProject Holder/Operator OCPC - Oman Chemicals & Pharmaceuticals Company Scope of work EPC - Engineering, Procurement & Construction Contracts C urrent / Past Phase The project had been on a completion phase Contract Value Estimate Over US$185 millionStart up Timing From 2010Development Stage Operational ProjectBrief The project is associated withdevelopment of Sharjah a mmonia and

u rea factoryFuture & Potential Sales Prospects

PMC - Project Management ContractsFC - Framework Contracts LSTK - Lump Sum Turnkey Contracts MC - Multi Contracts TC - Term ContractsCC - Consultancy Contracts

TENDERS & CONTRACTS





PROJECT Kuwait Coking Project

Project Sector DownstreamLocation Middle East, Kuwait, Al Ahmedi AreaProject Holder/Operator PCI - Petroleum Coke Industries Co/KPC - Kuwait Petroleum

Corporation/Oxbow Carbon and Minerals LLCScope of work EPC - Engineering, Procurement & Construction Contract s Current / Past Phase The project had been on a completion phaseContract Value Estimate Over US$140 millionStart up Timing From 2010Development Stage Operational ProjectBrief The project is associated with the PCIC development of Coke

Calcinationrefinery



PROJECT United Arab Emirates Midstream Feasibility

Project Sec tor Mid streamLocation Middle East, United Arab Emirates, Abu Dhabi Area, Offshore Project Holder/Operator A DGAS - Abu Dhabi Gas Liquefaction Company Scope of work FS - Feasibility Study Contracts

Current / Past Phase Working contracts have been wonContract Value Estimate Over US$100 millionStart up Timing From 2010 - 2011Development Stage Potential ProjectBrief The project is associated with the storage facilities development of Das

Island LNG loading jetty and pentane storage tanks

Futur e & Potential Sales Prospects

Pre - FEED - Preliminary Design and Engineering Contracts FEED - Front End Engineering Design ContractsEPC - Engineering, Procurement & Construction Contracts EPCC - Engineering, Procurement, Construction and Commissioning Con tractsEPCM - Engineering, Procurement, Construction & Management ContractsEPIC - Engineering, Procurement, Installation & Commissioning Contracts

PROJECT Kuwait Pipeline Replacement

Project Sector Mid streamLocation Middle East, Kuwait, Al Ahmedi AreaProject Holder/Operator TKOC - Kuwait Olefins Company Scope of work EPC - Engineering, Procurement & Construction Contracts Current / Past Phase The project had been on a completion phaseContract Value Estimate Over US$390 millionStart up Ti ming From 2010Development Stage Operational ProjectBrief The project is associated with the oil pipeline replacement between

North and South Tank Farms



TENDERS & CONTRACTS





PRO J E C T S o ut h Africa Compressor Unit Construction

Pr o jec t Sector DownstreamLoca t i o n Afric a, South Africa, Mpumalanga RegionPr o jec t H o l d er / Ope rator Moz a mbique Government / Sasol / iGasSc o p e of w o rk E PC - Engineering, Procurement & Construction Co nt r acts Curr e nt / P ast P hase Proje c t had been on the completion stage

Contrac t Va l u e Est im ate

Over US$145 million

Start u p Tim i n g Fro m 2010

Deve l o p m e nt Stag e Opera t ional ProjectBrief The project is associated with the construction of Ko m a tipoo r t gas

compression unitFutu r e & Pot e ntial S a les P r o s pects

MC - Multi ContractsO & M - Operations and Maintenance ContractsP MC - Project Management ContractsLS TK - Lump Sum Turnkey ContractsFC - Framework Contracts

PROJECT Egypt Refinery Feasibility

Project Sector Downstream Location Africa, Egypt, Al Iskandariyah Area Project Holder/Operator AMOC - Alexandria Mineral Oils Company Scope of work FS - Feasibility Study Contracts

Current / Past Phase Job contracts had been won

Contract Value Estimate Over US$285 million Start up Timing From 2013 - 2014

Development Stage Operational Project

Brief The project is associated with the feasibility of AMOC refinery expansion


PreFEED - Preliminary Design and Engineering Contracts FEED - Front End Engineering Design Contracts EPC - Engineering, Procurement & Construction Contracts EPCC - Engineering, Procurement, Construction and Commissioning Contracts EPCM - Engineering, Procurement, Construction & Management Contracts EPIC - Engineering, Procurement, Installation & Commissioning Contracts

PROJECT Algeria Fertiliser Feasibility

Project Sector Downstream Location Africa, Algeria, Guelma Area Project Holder/Operator Somiphos / Engro Energy (Pvt) Ltd Scope of work FS - Feasibility Study Contracts

Current / Past Phase Planning consent had been applied

Contract Value Estimate Over US$1.4 billion Start up Timing From 2011 - 2012

Development Stage Potential Project

Brief The project is associated with the feasibility of AMOC refinery expansion



TENDERS & CONTRACTS





PROJECT Morocco Downstream Development

Project Sector Downstre am Location Africa, Morocco , El Jadida Region Project Holder/Operator Fauji Group / La Societe Pakistan Maroc Phosphore SA / OCP - Office

Cherif ien des Phosp hates Scope of work EPC - Engineering, Procurement & Construction Contracts

Current /Past Phase Project had been on a completion stage

Contract Value Estimate

Over US$215 million

Start up Timing From 2010

Development Stage Operational Project Brief The project is associa ted with the development of Jorf Lasfar fertiliser

and phosphoric a cid facilities Future & Potential Sales Prospects

MC - Multi Contracts O&M - Operations and Maintenance Contracts PMC - Project Management Contracts LSTK - Lump Sum Turnkey Contracts FC - Framework Cont racts

PROJECT Algeria Pipeline Construction

Project Sector Midstream Location Africa, Algeria, Tiaret Area Project Holder/Operator Sonatrach Scope of work EPC - Engineering, Procurement & Construction Contracts

Current /Past Phase Job contracts had been on the completion stage

Contract Value Estimate

Over US$225 million

Start up Timing From 2010

Development Stage Operational Project Brief The project is associated with the construction of Sougueur to Hadjret

Ennous gas pipeline Future & Potential Sales Prospects

MC - Multi Contracts O&M - Operations and Maintenance Contracts PMC - Project Management Contracts LSTK - Lump Sum Turnkey Contracts FC - Framework Contracts

PROJECT Egypt Pipeline Feasibility

Project Sector Midstream Location Africa, Egypt, Al Bahr al Ahmar Region Project Holder/Operator EGAS - Egyptian Natural Gas Holding Company Scope of work FS - Feasibility Study Contracts

Current / Past Phase Government and local authority approvals had been received

Contract Value Estimate Over US$90 million Start up Timing From 2010

Development Stage Operational Project

Brief The project is associated with the development of Shukeir to Hurghada gas pipeline



TENDERS & CONTRACTS

Downstream Monitor MENA 01 June 2011, Week 08 Back Page

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HEADLINES FROM A SELECTION OF NEWSBASE MONITORS THIS WEEK

Oil and Gas Sector

AfrOil Tullow has struck a deal to buy a local partner in Ghana, increasing its stake in the Jubilee oilfield.

AsianOil Indonesia expects to generate US$31 billion in oil and gas revenues this year.

ChinaOil CNPC is to buy an extra 2% of PetroChina’s stock over the next 12 months.

FSU OGM Turkmenistan's South Yolotan-Osman field has been confirmed as the second largest gas deposit in the world.

GLNG The US Department of Energy has given approval to Cheniere Energy to export LNG

LatAmOil Petrobras plans to increase its deepwater rig fleet from 15 to 53 by 2020.

MEOG Dubai plans to reduce gas-fired power generation from the current level of 90% to 70% by 2030.

NorthAmOil El Paso intends to spin off its exploration and production unit by the end of 2011.

Unconventional OGM Lithuania’s environment minister has said that the country could begin exploring for shale gas by the end of 2012.

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