new base special 25 march 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

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NewBase 25 March 2014 Khaled Al Awadi

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

Petrofac wins $1bn oil and gas project in Oman Sean Cronin , www.thenational.ae/business/

Petrofac has won a contract expected to be worth at least US$1 billion on a massive oil and gas project in Oman. The London-listed oilfield services contractor that operates out of Abu Dhabi and Sharjah was selected by Petroleum Development Oman (PDO).

It covers engineering and procurement on the Rabab Harweel Integrated Project, which will also include a sour gas facility. “This award underpins Petrofac’s strategy to enhance service capability in the Middle East,” said Craig Muir, the managing director for the company’s engineering and consulting services.

It is the company’s second major award in Oman in as many months. It was awarded a $1.2bn contract on the Khazzan gas project in the country last month. Despite the recent wins, the company said it expected only “flat to modest growth in net profit” this year during its results presentation last month.

Oman is ramping up oil and gas spending and investing in enhanced recovery techniques to boost production. Oil and gas spending in the country reached $10bn last year, according to government figures. PDO accounts for about 70 per cent of Oman’s oil production and almost all of its gas. It operates in a concession area that spans 100,000 square kilometres, or about one third of the

country’s land mass.

Countries including Oman and the UAE are increasingly tapping sour gas deposits, named because of their high sulphur content, which makes them more expensive to process. Rising energy demands are making the commercial development of such fields more economically viable.

Associated sulphur production from gas projects under development in the Middle East is expected to leap by 44 per cent during the next three years, creating opportunities to develop downstream industries, such as fertilizer production. Sour gas experts from across the region will descend on the capital tomorrow for the Sour Oil and Gas Advanced Technology Conference.




Shell sees ‘minor’ impact in higher US gas exports to Europe Reuters/Goyang, South Korea

Growing interest in sending more US natural gas to Europe does not hold a big threat for Asian gas markets, although such exports would help improve spot market liquidity for the super-chilled form of the fuel, a Shell executive said yesterday.

Tension over the future of Ukraine is prompting the European Union and US to look at deepening their economic ties. Europe is hoping to tap the abundant energy resources of its key ally to reduce dependence on Russia, which feeds a bulk of the region’s gas demand. It is still unclear how much US gas might eventually go to Europe because Asia is a more lucrative export market. Some US lawmakers also oppose shipping domestic gas overseas, worried prices would rise at home. Liquefied natural gas (LNG) will in the

meantime remain tight due to Japan’s post-Fukushima demand, until new supply comes onstream from Australia, Angola and Papua New Guinea, Maarten Wetselaar, executive vice president of Royal Dutch Shell’s integrated gas division, told Reuters in an interview. “The effects are relatively minor on the scale of the global gas market, even on the scale of the global energy market,” Wetselaar said of potentially higher US LNG exports to Europe. “I wouldn’t expect them to disrupt any of the short-term, medium-term flows going around Asia,” he said.

Wetselaar is in South Korea for an international gas conference this week. And while US LNG exports -

which are expected to start up from Texas and Louisiana next year - would help to relieve overall supply tightness, Wetselaar said market liquidity would not be so big as that of crude oil.

The pace of China’s gas demand growth will also be key to how markets develop over the next few years as new supplies emerge from Australia, East Africa, North America, Russia and the Middle East. “A big question mark ... is how fast China will grow, and within that, how fast the gas market will grow,” he said, noting that gas is “really low” in China’s energy mix compared with 20%-25% in Asia.

China has set a target of raising natural gas’ share of its energy mix to 8% by 2015, from around 5% now. As for the development of a spot market for LNG, Wetselaar said: “It is clear that with a rise of North American exports where many of the cargoes are not sold on a long-term basis, and have more destination flexibility, the spot market in the future will be bigger than it has been in the past.”

Gas investors will still need to sell much of their gas on a long-term basis to finance their LNG projects, and that will remain the main portion of the gas market, he said. “The (spot) volumes on the market and liquidity of the market will never be anything near crude oil markets,” he said, especially considering the technical features of LNG and the expense involved in storing and shipping the fuel.




Morocco: Tangiers Petroleum preparing to drill the TAO-1 well on the Tarafaya Source: Tangiers Petroleum / energy-pedia

Tangiers Petroleum has advised that the site survey has been completed at the location of the TAO-1 well, offshore Morocco, and is compatible for the use of a jack-up rig. A Novation Agreement has been entered into by Galp Energia on behalf of the joint venture partners to secure access to the Ralph Coffman Drilling Unit to undertake exploration drilling in the Tarfaya Block. The exploration well TAO-1 is scheduled to spud 2Q 2014.

Tangiers Petroleum has announced December 13 that the Ministries of Energy and Finance in Morocco had officially approved the assignment of a 50 per cent interest in the Tarfaya Offshore Block from Tangiers to Galp Energia. See: Tangiers receives official approval for farmout of Tarfaya Offshore Block to Galp Energia At the time, according to information on the Tangiers Petroleum web site, Galp Energia had commenced the planning of the first exploration well, TAO-1 which will optimally test the Trident Prospect and tag the Assaka and TMA objectives within structural closure (see map).

JOINT VENTURE INTERESTS

• Tangiers Petroleum 25%

• ONHYM 25% (carried through exploration)

• Galp Energia (50%) Operator

LOCATION

The Tarfaya Offshore Block is located on the Moroccan Atlantic margin and was acquired by Tangiers Petroleum in 2009. The Block comprises 8 contiguous permits covering an area of 11,281 sq km (approximately 2.8 million acres). The Block is located approximately 600 km southwest of Morocco’s capital Rabat, inboard of the Canary Islands on a shallow shelf with water depths generally under 200m.




PROSPECTIVITY

The Tarfaya Block is located in an area with an already proven hydrocarbon system associated with a Jurassic carbonate fairway. The Cap Juby Field, in neighbouring acreage to the west, was discovered by Esso in 1968 and is to be appraised further by new operator Cairn Energy in 2013/14.

The Jurassic carbonate fairway has a direct link to its conjugate margin basin, offshore Nova Scotia, Canada where material discoveries have been made in analogous settings.

Prospects and Leads

Following the reprocessing of 2D seismic data and the acquisition of 3D seismic data in the Tarfaya Block a prospects and leads inventory has been matured for the block. The main exploration focus is currently the Jurassic carbonate fairway.

Tarfaya Block, Jurassic Prospects and Leads

Primary Jurassic prospects covered by 3D seismic data are: Trident, TMA , Assaka and La Dam. These prospects have been independently assessed by Netherland Sewell and Associates (NSAI) to have a combined P50 estimate of




4335 million barrels of gross unrisked original oil-in-place with a corresponding P50 prospective resource of 867 million barrels of oil (NSAI CPR, 2012).

* Independently assessed by Netherland Sewell and Associates (2012)

Galp Energia Farm-in

The international oil and gas industry has shown unprecedented interest in Morocco over the last 18 months as evidenced by the high level of farm-in transactions.

Tangiers capitalised on this interest and in December 2012 signed a farmin agreement with Galp Energia. Under the terms of the farmin agreement, Galp will earn a 50% interest in the Tarfaya Offshore Block by spending US$40.5 million, which includes a carry on the exploration well capped at US$33 million and reimbursement of US$7.5 million for past costs. Finalisation of the agreement is awaiting the approval of the Moroccan government to the transaction which is expected shortly.

TAO-1 Exploration Well

Galp Energia has commenced the planning of the first exploration well, TAO-1 which will optimally test the Trident Prospect and tag the Assaka and TMA objectives within structural closure.




Chad: Caracal Energy announces first sales oil from Badila field Source: Caracal Energy

Caracal Energy has announced that the first shipment of Badila oil for export sales has been loaded at the Kribi sea terminal offshore Cameroon. Total cargo size of the lifting was approx. 950,000 barrels of oil, and Caracal's net entitlement share was 560,000 barrels of oil. Caracal's partner, GlencoreXtrata, was entitled to

the balance of the cargo. Caracal and Glencore joint lift cargos, and Glencore markets the shipments on behalf of the partners.

Ceremonies were held in Kribi and Douala to mark this significant event. In addition to Caracal senior executives, also attending were high ranking officials from the Republic of Chad, senior executives from Société des Hydrocarbures du Tchad (SHT), the Chadian national oil company, COTCO, the operator of the Kribi offshore

terminal, and senior representatives of the Pipeline Committee of Cameroon (CPSP).

Gross production from the Badila field during March has averaged 14,100 barrels of oil per day (up from 12,000 bopd on 20 January 2014), and Caracal is on schedule to expand the production processing and shipping facilities during Q3 of 2014.




Japan's Chubu in deal with India's GAIL to consider joint LNG buy Source: Reuters

Japan's Chubu Electric Power said on Monday it has signed a deal with India's GAIL to consider cooperation in joint procurement of liquefied natural gas (LNG), as Asian buyers look for stable and lower prices of the fuel. Rising demand for LNG in Asia, already the top destination for the fuel, has helped push its price to near-record levels and now buyers such as India, Japan and South Korea are trying to find ways to cut their soaring gas import bills. The two firms had been considering a preliminary deal on joint purchases since January. India, Japan and other Asian countries that together import 70 percent of the world's LNG met in December to discuss forming a buyers' club to get a better deal from suppliers.

State-run Korea Gas Corp (KOGAS) and a Japanese company bought natural gas jointly on Monday and such cooperative purchases will become more common, the head of state-run Japan Oil, Gas and Metals

National Corp (JOGMEC) said. Asian prices LNG-AS are at least three times the cost of natural gas in the United States, where a boom in shale oil and gas has sharply reduced prices.

Asian importers say they are charged an excessive premium over other regions because of a practice of linking LNG contracts to oil prices. They also want more flexibility in contracts over ship destinations to free up the market.




Anadarko Has Sold Two-Thirds of Mozambique LNG Project Capacity http://www.naturalgasasia.com/anadarko-has-sold-two-thirds-of-mozambique-lng-project-capacity-12093

Anadarko Petroleum Corp has sold two-thirds of the capacity of its planned Mozambique LNG project to Asian customers and hopes to have the rest sold soon, news agency Reuters reported its chief executive as saying on Monday.

"We think we have financially de-risked the project," Anadarko CEO Al Walker said in an interview to Reuters at the Howard Weil energy conference in New Orleans. "We expect to make a final investment decision on the project later this year."

Anadarko and its partners are advancing a commercial LNG development onshore Mozambique with first cargoes planned in 2018. The joint venture has drilled more than 20 deepwater wells within Mozambique Offshore Area 1 Block discovering an estimated 45 to 70 trillion cubic feet (Tcf) of recoverable natural gas.

Walker said he expects the remaining third of the Mozambique capacity to be sold to Asian customers, not European customers, despite recent tensions between Europe and Russia over Ukraine, added Reuters.

About MLNG :- Mozambique LNG is emerging as a leader in the global LNG industry, with up to 65 trillion cubic feet (Tcf)

of estimated recoverable natural gas (approaching 100 Tcf of original gas in place (OGIP)) discovered to

date in Mozambique's Offshore Area 1. In cooperation with the Government of Mozambique and the

operator of the adjacent Offshore Area 4, the partners are advancing an LNG development initially

consisting of four 5-million-tonnes-per-annum liquefaction trains with significant expansions in future

years. Mozambique LNG has the expertise, skills and knowledge to safely deliver one of the world's most

significant LNG projects with first LNG cargoes expected in 2018.




US : Jordan Cove gets export approval Jordan Cove Energy

The US Department of Energy on Monday approved liquefied natural gas exports from the proposed

Jordan Cove facility in the US state of Oregon.

The export license, which authorises shipments of up to 800 million cubic feet per day of LNG to countries

without free trade agreements with the US, is conditional upon further approval from the Federal Energy

Regulatory Commission. Jordan Cove, located in Coos Bay, becomes the the seventh project to be granted

non-FTA export authorisation by the Energy Department.

Canadian junior Veresen Energy, which will own and operate Jordan Cove, received the green light last

month from Canada's National Energy Board to export LNG from the US facility. Veresen, which operates

pipelines and gas-processing facilities, will ship gas via existing pipelines to the Malin Hub in southern

Oregon, from which point it will be sent to the Jordan Cove site through a planned 232-mile.

The LNG export facility is expected to supply 6 million tonnes per annum of gas to Asian markets.

Commercial LNG production at that capacity is targeted for early 2019. Legislators on both sides of the

aisle in the US praised the federal approval, while Alaska senator Lisa Murkowski urged the Energy

Department to move forward with approvals of other projects in the queue.

Congressional calls have grown louder in recent weeks for the White House to expedite LNG approvals in

order to weaken Russia's grip on European gas markets amid the row over Crimea. “Given the situation in

Ukraine, this license sends a positive signal to our allies and to energy markets that the United States is

ready to join the growing global gas trade,”Murkowski said in a statement.

“While this license moves us in the right direction, I would be strongly opposed to any ‘pause for further

study’, as some have proposed.” Senator Mary Landrieu said the approval would help "solidify the US as an

energy superpower". "A quick and efficient approval process to responsibly export natural gas from our

shores will also reduce the stronghold that countries, like Russia, currently exercise over their neighbours,”

Landrieu said on Monday.




Indonesia: Santos commences first gas from Peluang project ahead of schedule Source: Santos

Santos has announced that natural gas production has commenced ahead of schedule and on budget from the Peluang gas project offshore East Java in Indonesia. Sanctioned in February 2013, Peluang is a tie-back to the existing facilities at the Maleo gas field and is located in the Madura Offshore Production Sharing

Contract (PSC). The project is expected to have gross peak production of 25 million standard cubic feet per day. Santos Vice President Asia, WA&NT John Anderson said Peluang first production represented the delivery of another project into the company’s expanding Asian portfolio. 'Peluang is the fourth operated asset for Santos in South East Asia. The success of first gas ahead of schedule and on budget with Peluang represents another significant milestone in the company’s delivery of a strong growth strategy in Asia,' he said. 'In addition to Peluang, Santos is also focused on progressing our recently acquired position in the Ande Ande Lumut oil field in the West Natuna Basin.'

Santos President Indonesia Marjolijn Wajong said Peluang gas will be used by domestic consumers in East Java, Indonesia, as is the case with other gas produced by Santos in East Java. 'We already have gas production from the Oyong, Wortel and Maleo fields in offshore East Java, so this builds

on our capacity in the region. Peluang also demonstrates our ability to deliver new projects in Indonesia,' she said.

Santos has a 67.5% interest and is the operator of the Madura Offshore PSC. Other partners are PC

Madura Ltd and PT Petrogas Pantai Madura.




India: Oilex encounters mechanical problems drilling the Cambay-77H production well Source: Oilex

Oilex has provided information regarding the Cambay-77H well. Drilling of the 12 ¼ inch hole section reached 1,626.5m MD which is approx. 26.5m above the planned casing point for the 9 5/8 inch casing. While pulling out of hole (POOH) to service a mud pump, the Essar Land Rig #4 (Rig) experienced mechanical issues and is currently on equipment downtime at no cost ($0.00 day rate) to the Cambay Joint

Venture. Some of the required replacement parts have been ordered and are being airfreighted from Houston while others have been locally sourced. This reflects the fastest delivery option for special parts not normally included as onsite spares for drilling rigs. It is anticipated the Rig will be operational within 10 - 12 days. Synthetic Oil Based Drilling Mud (SOBM) is being circulated to keep the well bore clean and the drill pipe is being rotated on a regular basis. The use of SOBM was highlighted as the appropriate mud system to use in the forensic engineering analysis of Cambay-76H which is 300m offset to Cambay-77H. Contingency plans are in place to ensure that this effort can continue uninterrupted while the rig is being repaired. Managing Director of Oilex, Ron Miller, said:

'While this is untimely, drilling rigs do experience mechanical issues from time to time. We are working closely with Essar to expedite the return of the Rig to operational status. Excluding the instances of delays associated with rig mechanical issues, the operational activities have been completed in line with the anticipated durations.'




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Khaled Malallah Al Awadi, MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

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Khaled Al Awadi is a UAE National with a total of 24 Khaled Al Awadi is a UAE National with a total of 24 Khaled Al Awadi is a UAE National with a total of 24 Khaled Al Awadi is a UAE National with a total of 24

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agreements along with many MOUs for the local authorities. He has become a referencagreements along with many MOUs for the local authorities. He has become a referencagreements along with many MOUs for the local authorities. He has become a referencagreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the e for many of the Oil & Gas Conferences held in the e for many of the Oil & Gas Conferences held in the e for many of the Oil & Gas Conferences held in the

UAE andUAE andUAE andUAE and Energy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satelliteEnergy program broadcasted internationally , via GCC leading satellite ChannelsChannelsChannelsChannels . . . .

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NewBase 25 March 2014 K. Al Awadi

new base special 25 march 2014

Economy & Finance