newbase 629 special 18 june 2015

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Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase 18 June 2015 - Issue No. 629 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Dubai: ABB contracted to integrate solar energy into the grid http://www.mena.abb.com/cawp/seitp202/37e4a4cf0465ed60c1257e67002d182a.aspx ABB paves the way for more solar power in Dubai ABB, the leading power and automation technology group, has won an order worth around $20 million from Dubai Electricity & Water Authority (DEWA) , to extend a substation that will integrate more solar energy into the grid, helping diversify Dubai’s energy mix to meet growing demand. DEWA is doubling the net output capacity of phase II of the Mohammed bin Rashid Al Maktoum solar park from 100 megawatts (MW) to 200 MW. ABB previously won a substation order in 2014 to integrate 100 MW from the park into the grid. This utility scale solar photovoltaic plant, which covers 4.5 square kilometers, will produce enough electricity to power more than 30,000 homes serving 130,000 people. Its addition to the UAE system displaces the need for power from fossil fuels that would have produced about 250,000 tons of carbon emissions annually. “We are working to achieve the goals of UAE Vision 2021 and Dubai Plan 2021 to support Dubai’s economic growth, through diverse and secure Energy supply and Efficient Energy use, while meeting environmental and sustainability objectives. DEWA is also committed to achieving the Dubai Integrated Energy Strategy 2030 to generate 7 percent of Dubai’s total power output from renewable energy by 2020 and 15% by 2030,” said HE Saeed Mohammed Al Tayer, MD & CEO of DEWA. “ABB’s advanced technologies will help to efficiently integrate renewable solar energy into the grid, enhancing capacity and reliability of supplies,” said Claudio Facchin, president of ABB’s Substation extension to integrate more solar energy into UAE grid and enhance grid reliability

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Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 1

NewBase 18 June 2015 - Issue No. 629 Khaled Al Awadi

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

Dubai: ABB contracted to integrate solar energy into the grid http://www.mena.abb.com/cawp/seitp202/37e4a4cf0465ed60c1257e67002d182a.aspx

ABB paves the way for more solar power in Dubai

ABB, the leading power and automation technology group, has won an order worth around $20 million from Dubai Electricity & Water Authority (DEWA) , to extend a substation that will integrate more solar energy into the grid, helping diversify Dubai’s energy mix to meet growing demand.

DEWA is doubling the net output capacity of phase II of the Mohammed bin Rashid Al Maktoum solar park from 100 megawatts (MW) to 200 MW. ABB previously won a substation order in 2014 to integrate 100 MW from the park into the grid.

This utility scale solar photovoltaic plant, which covers 4.5 square kilometers, will produce enough electricity to power more than 30,000 homes serving 130,000 people. Its addition to the UAE system displaces the need for power from fossil fuels that would have produced about 250,000 tons of carbon emissions annually.

“We are working to achieve the goals of UAE Vision 2021 and Dubai Plan 2021 to support Dubai’s economic growth, through diverse and secure Energy supply and Efficient Energy use, while meeting environmental and sustainability objectives. DEWA is also committed to achieving the Dubai Integrated Energy Strategy 2030 to generate 7 percent of Dubai’s total power output from renewable energy by 2020 and 15% by 2030,” said HE Saeed Mohammed Al Tayer, MD & CEO of DEWA.

“ABB’s advanced technologies will help to efficiently integrate renewable solar energy into the grid, enhancing capacity and reliability of supplies,” said Claudio Facchin, president of ABB’s

Substation extension to integrate more solar energy into UAE grid and

enhance grid reliability

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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Power Systems division. “We are proud to contribute to Dubai and the UAE’s energy diversification initiative and bring clean energy to meet growing industrial, commercial and residential demand. This project reiterates our focus on growing markets and renewables in line with our Next Level strategy.”

As part of this turnkey project, ABB is responsible for the design, engineering, supply, installation and commissioning of the substation’s extension. Key products to be supplied include three bays of 400 kilovolt (kV) and eleven bays of compact 132 kV gas-insulated switchgear (GIS), power transformers, and IEC 61850-based open architecture automation and controls. The project is scheduled to be completed in 2016.

The UAE, a leader in solar power in the Middle East, was the departure point for Solar Impulse 2, the ABB-supported airplane attempting to make the first solar-powered flight around the world. The plane is due to return to the UAE this year. ABB’s heritage of technology innovation in renewables, sustainable transportation and energy efficiency makes it an ideal partner for Solar Impulse’s pioneering effort.

ABB (www.abb.com) is a leader in power and automation technologies that enable utility, industry, and transport and infrastructure customers to improve their performance while lowering environmental impact. The ABB Group of companies operates in roughly 100 countries and employs about 140,000 people.

Key products to be supplied include three bays of 400 kilovolt (kV) and eleven bays of compact 132 kV gas-insulated switchgear (GIS), power transformers, and IEC 61850-based open architecture automation and controls, said the company in a statement. The project is scheduled to be completed in 2016, it added.

Dewa is doubling the net output capacity of phase II of the Mohammed bin Rashid Al Maktoum solar park from 100 megawatts (MW) to 200 MW. ABB had previously won a substation order in 2014 to integrate 100 MW from the park into the grid. This utility scale solar photovoltaic plant, which covers 4.5-sq-km, will produce enough electricity to power more than 30,000 homes serving 130,000 people, said the ABB in its statement. Its addition to the UAE system displaces the need for power from fossil fuels that would have produced about 250,000 tons of carbon emissions annually. "Dewa is committed to achieving the Dubai Integrated Energy Strategy 2030 to generate seven per cent of Dubai’s total power output

from renewable energy by 2020 and 15 per cent by 2030,” said its managing director & CEO Saeed Mohammed Al Tayer. “We are proud to contribute to Dubai and the UAE’s energy diversification initiative and bring clean energy to meet growing industrial, commercial and residential demand. This project reiterates our focus on growing markets and renewables in line with our Next Level strategy,”

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 3

Abu Dhabi pumps up oil investment on oil production © Oxford Business Group 2015 + Zawya + NewBase

Plans by Abu Dhabi to invest more than $25bn over the next five years to increase offshore oil production capacity look set to secure the emirate's position as a leading oil producer, amidst a global decrease in oil and gas capital expenditure.

The increased investment flow will involve some $2.5bn being spent annually on new offshore drilling activities, combined with an expansion of infrastructure to bring new wells on line, according to Qasem Al Kayoumi, manager of the offshore division of the exploration and production directorate of the Abu Dhabi National Oil Company ( ADNOC ).

The investments form part of a medium-term programme to boost output from the present level of around 3m barrels per day (bpd) to 3.5m bpd by 2019, with ADNOC planning to drill some 160 wells annually for the next few years, Al Kayoumi told media. "It is a considerable increase - the

number of rigs has built up considerably in offshore, it could be more than a 50% increase," he said.

The state-owned oil company had initially aimed to increase capacity by 500,000 bpd by 2017, but the company announced in early June that it would reach only 3.4m bpd by the end of 2017 with the expansion project potentially not completed until 2019. "This is because of some normal delays in such a large project," Al Kayoumi told reporters at a conference. "There have been changes in scope."

Much of the investment to expand production capacity will be directed through the Abu Dhabi Marine Operating Company (ADMA-OPCO) - an ADNOC -led joint venture - and the Zakum Development Company ( ZADCO ), which is managing the opening of the Upper Zakum reserves, among the world's largest oil fields. At present the ADMA-OPCO and the ZADCO fields account for 1.2m bpd, a figure ADNOC has estimated will rise to 1.6m bpd by 2017 or 2018.

Price plunge no deterrent to investment

The move by the emirate to ramp up investment to increase production is in line with regional players such as Kuwait and Saudi Arabia, but runs contrary to global trends. Oil services company Petrofac estimates that spending on new capacity is down by 20% or more globally after oil prices plunged from their highs of two years ago, but spending in the GCC remains solid. "In the Middle East ... we are seeing national oil companies maintaining strategic spending and therefore flat to modest growth in investment across the region," said Tim Well, CFO at Petrofac, quoted in May by regional media.

Nor has the recent decline in prices deterred the emirate's offshore energy producer from reducing investment levels, according to ADMA-OPCO CEO Ali Al Jarwan. "Despite the fall in oil price we have no plans to slow down in terms of our long term investment strategy, Al Jarwan told OBG. "We are still very much on track in terms of raising our production levels in order to achieve our targets."

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These include continued investment in offshore rigs to support production growth and using advanced technology to help manage reservoirs and achieve recovery rates of 70%, he said.

Production at ADMA-OPCO's new offshore Nasr field began in late January, with a maximum output of 65,000 bpd forecast when the field − located about 130 km to the north-west of Abu Dhabi City − is fully developed. The company is also working to open up its Satah Al Razboot (SARB) offshore field, also to the north-west of the capital, with the facility to be operational by 2017. Earlier this year, oil services company Schlumberger was granted a $185m contract to provide well construction services

for the SARB development, which is expected to add 100,000 bpd to the emirate's output.

The increased pace of investment and demand for rigs and services by Abu Dhabi will be welcome news for firms in the oil technology and support sector. Earlier this year ratings agency Moody's estimated that earnings in the oilfield services sector would fall by 12-17% if oil prices average $75 per barrel this year. Earnings could fall to as low as 30% should the average price be less than $60 - Brent crude was trading at $65 per barrel at the start of June.

Extending ageing fields

While working on new deposits, producers are also investing in technology to extend the operational life of mature fields. Both gas and water injection are amongst techniques that can be used to boost pressure in older wells and enhance recovery. One further option that is being

explored in Abu Dhabi is using CO2 injection rather than gas or water due to limited gas reserves, with feasibility studies being conducted to see if this route can be used as a long-term measure.

The move towards enhanced extraction will offer additional opportunities for companies able to deploy advanced recovery technology, with demand for such solutions set to grow in coming years as more of Abu Dhabi's established fields approach the later

stages of their productive life.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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UAE: Enec installs second reactor vessel at Barakah The National

The UAE completed another milestone on Wednesday in its groundbreaking nuclear power programme. Enec, the Emirates Nuclear Energy Corporation, has installed the plant’s second reactor vessel, which is where energy production takes place, in Barakah in the Western Region.

The installation ceremony was attended by Sheikh Hamdan bin Zayed, the Ruler’s Representative in the Western Region, who said the UAE attached great importance to transparency in the development and operation of its nuclear programme.

“That principle is one of the main elements of national policy and I am proud to be here in Barakah today to witness the delivery of yet another safe and on-time milestone in the UAE’s peaceful nuclear energy programme,” Sheikh Hamdan said.

“Safe, clean and reliable nuclear energy has an important role to play in the future of our nation and in the Western Region in particular.

“The role of the peaceful nuclear energy programme in the Western Region is instrumental and will bring many benefits, from the creation of high-value job opportunities to the emergence of a sophisticated new industrial sector to support operations in Barakah.”

Hamad Alkaabi, UAE Ambassador to the International Atomic Energy Agency, said the event demonstrated that the project was on track.

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“The vessel is the main component in the nuclear reactor,” he said. “It is designed to contain the fuel assembly and coolant where the nuclear reaction takes place to produce energy. Installation of the pressure vessel indicates the advanced stage of construction.”

Experts say it the most important part of a reactor.

“The installation is very significant,” said Lady Barbara Judge, former head of the UK Atomic Energy Agency. “The reactor vessel houses all the technological parts of the reactor.

“This shows that the lessons that have been learnt around the world, especially at Barakah 1, have been well-integrated into the construction of Barakah 2, which is why the Abu Dhabi nuclear power project can be considered one of the best in the world.

“The technology, construction and the safety culture are of the highest standards.”

Mohammed Al Hammadi, chief executive of Enec, said: “It is the culmination of many months of hard work and dedication from our team.

“In 2017, these reactors will begin producing the vital electricity needed to meet the country’s rapidly growing energy demands and support our continued social and economic growth.”

During the event, Sheikh Hamdan was updated on the developments since his visit last July. This included reports on Enec’s progress in construction and industrial development that supports local companies.

Sheikh Hamdan signed the base of the reactor vessel before it was lifted inside the Unit 2 reactor containment building. He also met Emirati nuclear engineers. “The UAE puts its hopes and aspirations in generations like yours, who are equipped with modern scientific knowledge,” he said.

“Imparting this knowledge to the people of the UAE is the first and chief pillar of these plans, and therefore developing a workforce of scientifically and culturally qualified Emiratis is the primary concern of the UAE leadership.”

Unit 1 is now more than 73 per cent complete and expected to enter commercial operations in 2017. Unit 2 is 50 per cent complete and expected to follow in 2018, pending regulatory approval from the Federal Authority on Nuclear Regulation.

The event was also attended by Sheikha Lubna Al Qasimi, Minister of International Cooperation and Development, and Khaldoon Al Mubarak, Chairman of the Executive Affairs Authority.

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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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Iraq crude exports hit record so far in June Reuters + NewBase

Iraq’s oil exports have averaged 3.2mn bpd so far in June, according to loading data and an industry source, setting shipments from Opec’s second-largest producer on course for a record high.

Another boost from Iraq underlines the focus of major members of the Organisation of the Petroleum Exporting Countries in keeping market share, not restraining supply to support prices. Opec met on June 5 and kept its policy unchanged.

Exports from Iraq’s southern terminals have averaged 3mn bpd in the first 15 days of June, according to shipping data seen by Reuters and an industry source, up from 2.69MBD in May. Shipments have jumped after Iraq’s decision to split the crude stream into two grades, Basra Heavy and Basra Light, to resolve quality issues. Some companies working at Iraqi oilfields have increased production following the move. “Today after the introduction of Basra Heavy exports, curtailment of our production no longer exists,” Gati al-Jebouri, senior vice president from Lukoil Overseas, told a London Iraq oil conference on June 9. Lukoil operates the West Qurna II field in Iraq. The southern fields produce most of Iraq’s oil. Located far from the parts of the country controlled by Islamic State, they have kept pumping despite the conflict. But exports from Iraq’s north via Ceyhan in Turkey, comprising Iraq’s Kirkuk crude and Kurdish oil, have averaged 200,000 bpd so far in June, according to loading data, less than half of May’s 451,000 bpd. Northern exports were offline for most of 2014 and resumed in December following a deal between Baghdad and the

Kurdistan Regional Government, which has since shown some signs of strain. Kurdistan stopped sending oil for a few days in early June, but the two sides blamed technical difficulties for the delays and say they remain committed to the deal. The June exports are in line with figures given on June 9 by Falah Alamri, the head of Iraq’s State Oil Marketing Organisation (SOMO), at the London conference. Iraq said its exports in May were a record 3.15MBD. Iraq is targeting a further increase in exports in 2015 to 3.3mn bpd, a level Iraqi officials say is within reach. Risks include bad weather, technical problems and unrest, which can disrupt flows.

A worker walks in West Qurna oilfield in Iraq’s southern province of Basra (file).

The southern fields produce most of Iraq’s oil. Located far from the parts of the

country controlled by Islamic State, they have kept pumping despite the conflict.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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Turkey Imported 49 bcm of Natural Gas Last Year Daily Sabah + NewBase

Turkey imported 49.2 billion cubic meters (bcm) of natural gas in 2014, up 8.82 percent on year. The biggest supplier was Russia which exported 26.9 bcm, corresponding to 54.7 percent of all imports, Daily Sabah reported Wednesday citing Energy Market Regulatory Authority (EMRA) data.

Other important supplier were Iran and Azerbaijan exporting 8.9 bcm and 6 bcm of natural gas respectively. Turkey's 7.2 bcm of LNG imports in 2014 constitutes 14.78 percent of all natural gas imports for the year, the data showed. Of LNG imports, little over three fourth was bought by state-owned energy company BOTAŞ from Algeria and Nigeria, while the rest was imported on a spot basis. Meanwhile, natural gas production

declined by 10.8 percent to 479 million cubic meters, Daily Sabah reported citing the data.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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Malaysia: MEO Australia signs cooperation agreement with Brooke for Malaysia opportunities… Source: MEO Australia

MEO Australia and Malaysian based Brooke Dockyard & Engineering Work Corporation (Brooke) have signed an agreement to form a consortium to cooperate to identify and jointly bid on oil and gas exploration and development opportunities within Sarawak and the whole of Malaysia.

Under the agreement, MEO will provide technical assistance and opportunity evaluation assistance to Brooke and in return Brooke will fund the evaluation activities and the exploration component of joint bids for successfully screened opportunities that meet the collective criteria of the partners. For the initial opportunity to be considered under the agreement, Brooke will have a 75% participating interest and MEO a 25% participating interest. Brooke will bring strong local Malaysian content to MEO having access to local fabrication and construction capability, for both onshore and offshore facilities. The parties have also agreed to work together in a suitable framework to develop and operate oil and gas prospects to the mutual benefit of their stakeholders, shareholders, local community and people of Sarawak.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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Oil Price Drop Special Coverage

Oil prices dip on U.S. gasoline build, but supported by weak dollar Reuters + NewBase

Oil prices slipped on Thursday after U.S. government data showed gasoline stocks and distillate inventories rose last week, although the falls were checked by continuing Middle East geopolitical tensions and a weaker U.S. dollar.

U.S. July crude CLc1 lost 42 cents to $59.50 a barrel as of 0219 ET after falling 5 cents in the previous session. Brent August crude LCOc1 declined 30 cents to $63.57 a barrel after it settled 17 cents higher on Wednesday at $63.87.

Data from the U.S. Energy Information Administration (EIA) showed crude inventories USOILC=ECI fell more than expected last week, but gasoline stocks USOILG=ECI rose by 460,000 barrels, beating analysts' expectations for a 314,000-barrel drop. The EIA report also showed that operating capacity at U.S. refineries fell to 93.1 percent last week from 94.6 percent. "Expectations were for an increase ... the reaction to this (inventory) data shows that the reasoning behind such price support is fragile," ANZ bank said in a report.

After the Federal Reserve signaled it may wait until late this year to raise interest rates, the U.S. dollar slid while Wall Street stocks rose in volatile trading. Asian equities also rose early on Thursday.

"Oil prices were revived by a weakening USD as a result of a bearish FOMC," Phillip Futures said. "Since we expect the FOMC meeting to be the main card this week, we believe that prices should move sideways for the rest of the week."

China's new home prices rebounded nationwide for the first time in 13 months in May from April, suggesting the property downturn is bottoming out, although the overhang of inventory and new building could continue to drag on the economy this year.

In the United States, tropical depression Bill drenched large parts of Texas on Wednesday, but oilfields in the Gulf of Mexico and near the coast were unaffected. Refineries also ran normally.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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OPEC Revenues Slump Below $1 Trillion for First Time Since 2010 Bloomberg + NewBase

OPEC nations’ revenue from petroleum exports plunged below $1 trillion last year for the first time since 2010, highlighting how slumping crude prices hurt countries reliant on oil sales to fund their economies.

The group’s 12 members earned $993.3 billion in 2014, a decrease of 11 percent from a year earlier, according to the Organization of Petroleum Exporting Countries’ annual report published Tuesday. Their combined current account balance slumped by 35 percent to $273.6 billion as the drop in exports was accompanied by an increase in imports.

The revenue drop shows the strain on the group’s members as they increase pumping at a time of oversupply, following a Saudi Arabia-led strategy of defending market share instead of prices.

OPEC nations agreed on June 5 to keep a production limit of 30 million barrels a day, a level they have exceeded every month since June last year, according to data compiled by Bloomberg.

If OPEC keeps pumping at current rates through the third quarter, production will have exceeded demand for the longest period in at least three decades, International Energy Agency data show. Almost all the group’s members aren’t earning enough from current oil prices to balance their budgets, according to data compiled by Bloomberg.

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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Oil & Gas UK urges North Sea industry to be sustainable at $60 oil Oil & Gas UK + OffshoreEnergy + NewBase

Oil & Gas UK’s chief executive, Deirdre Michie, warned today, June 17, 2015, that the UK offshore oil and gas industry must become sustainable ‘in a world of $60 oil’.

The rallying call was made before an audience of over 500 people in Aberdeen at the opening of the trade association’s annual conference, sponsored by EY. First Minister of Scotland, the Rt Hon Nicola Sturgeon MSP, and chief executive of the Oil and Gas Authority, Andy Samuel, also addressed delegates.

Deirdre Michie commented: “Here in Aberdeen and throughout the UK, from Teesside to Truro, from Aberdeen to Anglesey, we have built an industrial powerhouse for the UK – the offshore oil and gas industry. In

terms of our economic contribution and value to the country, this industry stands head and shoulders above the rest. We have paid more to the Treasury than most other industrial sectors, we generate hundreds of thousands of skilled jobs, we have a vibrant supply chain, at home and abroad, and make a key contribution to the UK’s security of energy supply. It is an industry that has grown and evolved for 50 years.

“…we know that as an industry we have been part of the problem; now we need to be part of the solution.”

“However, we now face real and present threats that are challenging our future. At $60 oil, 10 per cent of our production is struggling to make money and there is a shortage of capital and a

shortage of investors willing to place their money here. While demand for our products remains strong, critical for our transport and heating our homes and giving us a whole host of everyday products, our productivity as an industry has fallen – and fallen rapidly.

“In relation to our escalating cost base, we know that as an industry we have been part of the problem; now we need to be part of the solution.

“Over the last 20 years, the price has averaged at $62 per barrel and the forward curve is between $65 and $75. Therefore it is not unreasonable for the North Sea to set out its stall at being sustainable in a $60 world. As a target, it’s one that we as a trade association

can champion, Government can align with and the regulator can pursue as an enabler, for example, to focus on key infrastructure.”

“We must avoid doing the same things in the same way and expecting a different outcome.”

Deirdre Michie called for a change in mindset: “To succeed with this approach, we have to be open to change. We must avoid doing the same things in the same way and expecting a different outcome. We have had a decade of escalating costs, so we can be sure that our current approach

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doesn’t work. We need to think about this from an investor’s point of view. Given that we compete for investment dollars on a global basis, we must ensure the UK is a commercially attractive and predictable place in which to invest.

“Learning from our mistakes, we know that our focus cannot merely be on ‘cutting costs’, but must more fundamentally address the efficiency of the basin. Focusing on efficiency means that, if or when the oil price bounces back, we will be best placed to seize new opportunities. And let’s not forget, efficient management is also safe management – and I know safety remains the top priority for everyone in this room.”

Deirdre Michie gave examples of efficiency improvements already happening within the industry, highlighting the gains Total and Nexen have made by engaging with the workforce to help drive positive change, adding:

“In order to be successful in the future, we too must raise the bar in terms of co-operating. We must work together to secure the future of this industry – for this country. There is a role for everyone – client, customer, employer and employee. For unions, for governments, for regulators and for trade associations. This is not a time for conflict or entrenched positions. We don’t need to wait for consensus, but we do need leadership in this industry to drive co-operation and an ‘early adopter’ culture from companies willing to rise to the challenge.”

“And in working together I am very confident that we will be successful in delivering a safe and competitive industry that is indeed sustainable in a $60 world.”

Concluding with comments on the prize to be won through the industry’s efficiency drive, Deirdre Michie said: “With over 20 billion barrels of oil and gas still to play for, there’s plenty of opportunity to ensure an indigenous supply for the country. On a global-scale we might be a small player, but we’re also a world-leader. Our technical expertise is unsurpassed and reflected in the quality, the capability and the success story that is our supply chain.

“I’m pleased to be able to say that we have come together, aligned as to the prize our industry still offers. In keeping together, we have already made progress with the OGA being set up, positive fiscal change being delivered and industry working hard to improve its competitiveness. And in working together I am very confident that we will be successful in delivering a safe and competitive industry that is indeed sustainable in a $60 world.”

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Low oil price hits $200 billion in mega-projects Reuters + NewBase

Deepwater oil projects and complex gas facilities worth around $200 billion have been cancelled or put on hold worldwide in recent months due to the sharp drop in oil prices over the past year, consultancy Ernst and Young said on Tuesday.

Further project cuts and delays are likely as the industry braces for an extended period of lower oil prices as a result of a supply glut.

“The mind set in the industry at the moment is that prices are unlikely to be bouncing up materially in the near term,” the consultancy’s Andy Brogan said in a presentation. “There is an expectation that volatility is with us for a reasonable period of time to come and companies need to cope with that.”

The delays in multi-billion dollar projects that can take up to 10 years to develop, and needed to support rising global demand for energy, could create a shortage in the future.

International companies have responded rapidly to the near halving of oil prices since last June, slashing tens of billions of dollars in capital spending in order to boost their balance sheets and maintain dividend payouts to investors.

“A total of $200 billion of oil and gas projects have been deferred or cancelled,” said Brogan, global oil and gas transactions leader at Ernst and Young.

“Portfolios reviews are happening more frequently and probably with more rigour,” Brogan told the World National Oil Companies Congress. “There isn’t anywhere for projects to hide.”

The main 24 mega projects that have been put on ice or scrapped are spread across the globe, according to EY.

For oil, many of the projects are complex, deepwater fields in the Gulf of Mexico, the North Sea, West Africa and Southeast Asia with budgets of up to $20 billion.

Among the most expensive are liquefied natural gas facilities such as the Arrow liquefied natural gas (LNG) project in Australia, operated by Royal Dutch Shell’s and PetroChina and BG Group’s Prince Rupert LNG project in Canada.

Though often just as expensive, most oil mega-projects benefit

from the advantage of returning value within 3 to 4 years from first investment, compared with up to 12 years for LNG projects, Brogan said.

“We have seen IOCs (international oil companies) already go through one rigorous review of their portfolio. We are now seeing them turning their attention to see how flexibility can be embedded in their portfolios and businesses”.

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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering &

regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 17