oil review middle east 5 2013

BG highlights Egypt investmentconcerns

Maintenance to cut Iraqi oilexports

Qatar plans energy shake-up tofuel expansion

Fujairah oil storage boomcontinues

Takreer takes the lowimpedance path to tank safety

Options for controlling sand

Industrial Internet - good newsfor the oil and gas sector?

CGG is offering clients in the region new integratedgeological, geophysical and reservoir capabilities thatis claims will bring value to many aspects f naturalresource exploration, development and production.See page 64

UK 10, USA $16.50

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Lukoil targetsmassiveregional

expansion

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Oil Review Middle East Issue Five 2013 3

Editors noteTHE RUSSIANS ARE coming, and they mean business. Russian oil giant Lukoil isconsidering undertaking a massive expansion in the Middle East region in thecoming years as part of the companys global development strategy, whichinvolves increasing its foreign production of oil and gas by two and a half timesits current level. Despite the fact that most of the companys strategic assetsare located in Russia, in recent years Lukoil has started to pay much moreattention to its overseas expansion. Among the reasons for this is the high levelof competition in Russia, limited access to promising new resources and a highfiscal burden. In addition, in recent years the company has been faced with theproblem of rapidly falling production in the domestic market, despite the factthat it utilises horizontal drilling technology, which reduces the cost ofproduction and increases well flow rates by three to four times, as wellincreasing the rate of recovery from oil fields. According to research conductedby the company, the conditions of production and development as well asthe geographical position of some of its foreign projects are associated withlower production and transport costs when compared to its domestic projects.The main focus of Lukoil in the Middle East is currently in Iraq, in particular theWest Qurna-2 oilfield, the production rights for which were awarded to Lukoil in2009. According to Lukoils president, Vagit Alekperov, the company plans tostart production at the West Qurna-2 field in 2014.

The importance of access to oil storage capacity in the region has been underscored byIranian threats to block the Strait of Hormuz. Fujairah has become a major bunkering hubfor ship refuelling and is inctreasingly becoming a trading hub for petroleum products.

ColumnsIndustry news and executives calendar 4

AnalysisLukoil 10The Russian oil giant has opportunities across the Middle East firmly in its sights.

Oil Storage 12The importance of access to oil storage capacity outside the Strait of Hormuz has seenthe UAE port of Fujairah become a major bunkering hub.

Exploration & ProductionDevelopments 16The latest exploratuion and production news from around the region.

GasAnalysis 20Its been a busy period for Dana Gas, which announced record production in Egypt andthe arrival of a new CEO.

Shale Gas 22GCC countries closely monitor shale gas production as it may effect global oil prices.

Petrochemicals & RefiningDevelopments 28How the demands of todays refinery operators have created a new wave of challenges.

Exhibition PreviewErbil Oil & Gas 37This years major show in the Kurdistan Region of Iraq promises to be the biggest so far.The world cant get enough of the recovering nations oil and gas.

Technical FocusInnovations 40Introducing some of the latest technology for the oil and gas sector.

Artificial Lift 54With ever increasing well populations being produced by artificial lift, operators arelooking for safer, more efficient and cost effective methods of managing their fields.

Storage Tank Safety 60How to reduce the risk of a lightning fire event.

Sand Control 68Options for controlling sand infiltration.

Communications & ITIndustrial Internet 72GEs Industrial Internet is mostly about energy efficiency, says Ian Roullier.

Databank/Rig Count 77

Arabic SectionNews 4Analysis - Saudi Gas 6

The Russians are coming. See page 10.

BG highlights Egypt investmentconcerns

Maintenance to cut Iraqi oilexports

Qatar plans energy shake-up tofuel expansion

Fujairah oil storage boomcontinues

Takreer takes the lowimpedance path to tank safety

Options for controlling sand

Industrial Internet - good newsfor the oil and gas sector?

CGG is offering clients in the region new integratedgeological, geophysical and reservoir capabilities thatis claims will bring value to many aspects f naturalresource exploration, development and production.See page 64

UK 10, USA $16.50

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www.oilreview.me

Lukoil targetsmassiveregional

expansion

Contents

Managing Editor: David Clancy

Editorial and Design team: Bob Adams, Prashant AP, Hiriyti Bairu, Lizzie Carroll, Andrew Croft, Ranganath GS, Kasturi Gupta, Rhonita Patnaik, Genaro Santos, Zsa Tebbit, Nicky Valsamakis, and Ben Watts

Publisher: Nick Fordham Advertising Sales Director: Pallavi Pandey

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Head Office: Middle East Regional Office:Alain Charles Publishing Ltd Alain Charles Middle East FZ-LLCUniversity House Office 215, Loft 2A11-13 Lower Grosvenor Place P.O. Box 502207London SW1W 0EX, United Kingdom Dubai Media City, UAETelephone: +44 (0) 20 7834 7676 Telephone: +971 4 448 9260 Fax: +44 (0) 20 7973 0076 Fax: +971 4 448 9261Production: Nathanielle Kumar, Donatella Moranelli, Nick Salt, and Sophia White

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12


4QATARS NEW LEADERSHIP is expected toaccelerate plans to spin off its prizedasset, Qatar Petroleum, from the energyministry to allow the worlds biggestliquefied gas producer to grow morequickly abroad at a time of rising rivalryfrom new producers.Qatars global LNG market dominance isunder threat as new producers in theUnited States, Australia and East Africawill flood the market with new volumesin the next few years.Industry sources say Qatar hopes that the

spin off will speed up decision making. The rationale behind the desire forinternational growth is the moratorium,as the growth potential at home is quitelimited, a source at Qatar Petroleumtold Reuters.Qatar Petroleums growth prospects athome are severely hampered by a self-imposed moratorium on new projects totap the worlds biggest gas reservoir, theNorth Field, leaving internationalexpansion as best chance of maintainingits gas market share.

The IMF has released its latest edition of the World Economic Outlook (WEO)and has revised down its projections for 2013 global growth by 0.2 per centpoints to 3.3 per cent, yet again pushing back the expected recovery. TheIMFs forecasts for 2013 growth were revised down in each of its last threequarterly updates to the WEO, from a peak forecast of 4.1 per cent made ayear ago. The IMF now does not expect the global economy to achieve fourper cent growth until 2014.

However, according to QNB Group, with growth in the worlds largesteconomies slowing, the IMF outlook for 2013-14 may be too optimistic and thetrend of downward revisions to forecasts is likely to continue. The euro zonecontinues to languish in recession with growth contracting at an annualisedrate of 0.6 per cent in Q4, 2012 and expected to contract at the same rate inQ1, 2013. Growth in China has been slowing consistently and Q1, 2013 year-on-year growth of 7.7 per cent disappointed as it was below expectations ofeight per cent.

Within MENA, growth in oil exporting countries has been stronger than in oilimporters. However, hydrocarbon production is likely to level off in 2013,putting a cap on regional growth.

Saudi Arabian crude oil production averaged 9.5mn barrels per day inFebruary 2013, down from its highs of over 10mn bpd in 2012 when productionwas ramped up to ensure oil markets remained well supplied.

MENA oil exporters are expected to grow by 3.2 per cent in 2013 and 3.7per cent in 2014 while oil importers are expected to grow by 2.7 per cent and3.7 per cent.

The IMF expects the US economy to expand by 1.9 per cent in 2013 andthree per cent in 2014.

CRUDE OIL EXPORTS from Iraq will be cut by between 400,000 and 500,000barrels per day (bpd) in September due to rehabilitation and maintenance workon the countrys southern ports, an oil official said.The official said a third offshore terminal would be installed as well as a

meteringstation, andthat therehabilitationwill boostexport capacityfrom Iraqssouthern portsby 900,000bpd.

Wedecided to startrehabilitationworks andmaintenance

of the southern oil ports and offshore terminals in September and that will cutexports by 400,000-500,000 bpd, said the senior South Oil Company official.

Iraqs oil exports fell to 2.328mn bpd in June from 2.484mn bpd in Maydue to a slowdown in Kirkuk oil shipments after repeated pipeline leakagesand bad weather disrupted exports in the south.

Iraq, which has the worlds fourth largest oil reserves, has ambitiousplans to increase oil exports to as much as six million bpd after decades ofsanctions and war.

Maintenance work to cut Iraqi oil exports

www.qp.com.qa

Oil Review Middle East Issue Five 2013

MENA oil exporters to grow by 2.3 percent in 2013

Qatar plans energy shake-up to fuel expansion

Basras oil export facilities are being upgraded

News

www.oilreview.me


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S02 ORME 5 2013 Calendar_Layout 1 21/08/2013 16:34 Page 5


News

8

E x e c u t i v e s C a l e n d a r 2 0 1 3 / 2 0 1 4SEPTEMBER 2013

2-5 Erbil Oil & Gas ERBIL www.erbiloilgas.com

3-6 Offshore Europe ABERDEEN www.offshore-europe.co.uk

29-2 Oct MEPEC 2013 MANAMA www.mepec.org

OCTOBER 2013

6-8 Arab Oil & Gas DUBAI www.ogsonline.com

7-9 M.E. Drilling Conference & Expo DUBAI www.spe.org/events/medt/2013

7-10 Doha International Oil & Gas Exhibition DOHA www.dioge-qatar-expo.com

8-10 Kuwait Oil and Gas Show KUWAIT www.kogs2013.com

28-30 SPE Intelligent Energy Conference & Expo DUBAI www.intelligentenergy-me.com

NOVEMBER 2013

10-13 Adipec 2013 ABU DHABI www.adipec.com

25-27 SAOGE DHAHRAN www.saoge.org

DECEMBER 2013

5-8 Basra International Oil & Gas Exhibition BASRA www.basraoilgas.com

Readers should verify dates with sponsoring organisations as this information is sometimes subject to change

INTERNATIONAL GAS AND oil producer BG Group Plc said civil unrest andleadership change in Egypt had led it to review further investments in the country,as it reported a three per cent fall in second quarter net profit.

The UK-based international gas producer depends on Egypt for about a fifthof its production - a source of revenue for its expensive new projects in Braziland Australia.

But its offshore Egyptian reservoirs are suffering decline, and the country isgearing up to consume more gas at home, increasing the possibility that BG mighthave to shut part of its two Liquefied Natural Gas (LNG) export operations there.

Meanwhile the ousting of President Mohammad Mursi by the military andthe fact BG is owed US$1.3 billion by Egypt for domestic gas sales - up fromUS$1.2 billion in Q1 have heightened the companys anxiety about investingin the country.

Events in Egypt remain a primary concern and will continue to be so as thepolitical, social and business environment evolves, said BG chief executive ChrisFinlayson in a results statement.

While our offshore operations continue unaffected, higher than agreed gasvolumes were diverted into the Egyptian domestic market during the quarter,impacting volumes available for LNG export, he said.

www.bg-group.com

BG highlights Egypt investment concerns

www.oilreview.me

THE SAUDI ARABIAN section of ISA (International Society ofAutomation), in partnership with DMS Global, are organising the ISAEurope, Middle East and Africa Automation Conference and Exhibitionfrom 8 - 12 December 2013, at the Sheraton Dammam Hotel & Towers,Saudi Arabia.National oil giants Saudi Aramco have agreed to become the TitaniumSponsor for the five day event, which will be hosted under the themeExperience the Future. Saudi Aramcos sponsorship is an importantaspect in conducting the event. Along with the technical conferences,exhibitions and training, the programme also includes workshops andtechnology debates where regional and international industry heads,professionals and specialists will share their capabilities, ideas, visionsand solution to the challenges of measurement and control inmultifaceted industrial environments.

www.isa-emea-expo.org

Aramco to sponsor automation event


S03 ORME 5 2013 Analysis_Layout 1 21/08/2013 16:37 Page 9


RRUSSIAN OIL GIANT Lukoil is consideringundertaking a massive expansion in the Middle East region in the coming years as part of the companys global

development strategy, which involves increasing itsforeign production of oil and gas by two and a halftimes its current level.

Despite the fact that most of the companysstrategic assets are located in Russia, in recentyears Lukoil has started to pay much moreattention to its overseas expansion. Among thereasons for this is the high level of competition inRussia, limited access to promising new resourcesand a high fiscal burden.

In addition, in recent years the company hasbeen faced with the problem of rapidly fallingproduction in the domestic market, despite the factthat it utilises horizontal drilling technology, whichreduces the cost of production and increases wellflow rates by three to four times, as well increasingthe rate of recovery from oil fields.

According to research conducted by thecompany, the conditions of production anddevelopment as well as the geographical positionof some of its foreign projects are associated withlower production and transport costs whencompared to its domestic projects.

Currently, the implementation of Lukoilsforeign projects is carried out by Lukoil Overseas,the companys operator of international projects.According to Andrew Kuzyayev, head of LukoilOverseas, the volume of investment in thecompanys development during the next five yearswill be US$4-5bn annually.

Kuzyayev predicts that the share ofinternational projects in the total production ofLukoil during the next five to seven years will growto 20-25 per cent, with the Middle East regionexpected to be one of the main drivers of thecompanys foreign development in the comingyears.

Growth in IraqPerhaps Lukoil's biggest hopes in the Middle Eastlie in Iraq in particular the West Qurna-2 oil field,for which the rights for development were receivedby Lukoil in 2009. According to Lukoils presidentVagit Alekperov, the company plans to startproduction on the field in 2014.

"We have already started exploitation drilling at[West Qurna-2] with commercial production to belaunched at the beginning of 2014. By 2019 weplan to reach the peak of oil production of 60mntons per year," comments Alekperov.

According to the companys plans, the volumeof investment in the development of the fieldthroughout the next 10 years will reach US$26bn,while its production will amount to 1.2mn barrelsof oil per day.

West Qurna-2 is currently in the company's listof most important projects, having fought for therights to the field since the middle of 1990s. In1997, the already-signed contract was cancelled,however, this was not to prevent it renewal in 2009as a result of the tender for its development, whichwas won by a joint bid by Lukoil and Statoil.

In May 2012, the Norwegian company left theproject through the sale of its 18.75 per cent staketo Lukoil. Lukoil's current stake in the projectstands at 75 per cent, with the remaining 25 percent owned by state-owned North Oil Company. Asa service contract, however, the terms of thecontract have proven to be tough for Lukoil, withthe Russian company only receiving fixed fees forits development and production works.

West Qurna-2 is not Lukoil's only interest inIraq, as the company plans to participate in atender for the development of the Nasiriyah oilfield.

The field's reserves are estimated at four billionbarrels of oil, while production volumes areexpected to reach 300,000 barrels per day, or theequivalent of 14mn tonnes annually.

The Government of Iraq has been trying to findan operator for the Nasiriyah project for the pastthree years after the failure of negotiations in 2010of a potential development with a Japaneseconsortium consisting of Nippon Oil, Inpex and JGC.

Meanwhile, Lukoil refused an earlier offer fromExxonMobil to purchase its stake in another Iraqi oilfield, West Qurna-1, despite the potential prospectsof the creation of synergy between the two WestQurna projects.

Kuzyayev says, "We have analysed all the risksand decided that due to the currentimplementation of West Qurna-2 project,participation in another global project without anadditional partner is a big risk for us. We shouldadmit, however, that West Qurna-1 has greatinvestment attractiveness."

Capitalising on the KingdomIn addition to Iraq, Lukoil has big hopes in SaudiArabia, where the company hopes to accelerate thedevelopment of Block A oil fields, which covers anarea of 29,900 sq km and is located close to theworld's largest oil field Al Ghawar.

The project, the rights for which were granted toLukoil in 2004, is implemented by a joint venture ofLukoil and state oil company Saudi Aramco knownas Lukoil Saudi Arabia Energy Ltd. (LUKSAR). LukoilOverseas owns an 80 per cent stake in the venture.

The first phase of the project took five years.During this period LUKSAR completed seismicsurveys and in 2007 announced the discovery of

We have already startedexploitation drilling at

West Qurna-2 withcommercial production to

be launched at thebeginning of 2014

Analysis

10

Russian oil giant Lukoil has opportunities across the Middle East firmly in its sight aspart of a huge expansion of its foreign interests, explains Eugene Gerden

Russias Lukoil targets 'massive'

Middle East expansion

www.oilreview.me

Lukoil, who recently announced that it would be moving its headquarters from Moscow to Dubai, is looking to expandits presence across the Middle East region


reserves of 85mn tonnes of oil equivalent on the Tukhman structure in thecentral part of the block. It would later announce the discovery of the Mushaibgas field.

To date, nine exploration wells have been drilled on the block during theperiod of geological survey. The company is currently preparing for appraisalworks at both fields, which will take place through the drilling appraisal wellsand conducting 3D seismic surveys. Appraisal works have been scheduled forcompletion by the end of the current year with the total cost of the projectestimated at more than US$500mn.

Competition in the Caspian The Caspian region also remains in the company's sphere of interest, withLukoil planning to accelerate its activities in Azerbaijan, which is one of thelargest countries in the region in terms of oil and gas reserves.

Alekperov claims that the Russian company is currently in talks with theAzerbaijan government over the participation in new projects in the countrysoil and gas industry.

According to Azerbaijani Caspian Barrel, Lukoil currently holds a 10 percent stake in the local Shah-Deniz gas project, which is jointly implementedby a number of companies including BP, Statoil, SOCAR and Total. In 2012,total gas production on the field amounted to 7.8bn cubic meters, of which0.6bn cubic meters was accounted to Lukoil.

Together with its partners, Lukoil has plans to increase production at Shah-Deniz, which is expected to take place as part of the next stage of the project.It includes an additional offshore gas platform, the implementation of subseawells and an expansion to the gas plant at Sangachal Terminal, all at anestimated cost of at least US$10bn part of which will be invested by Lukoil.

Egyptian expansionFinally, Lukoil is readying itself for a more active role in Egypt as part of thelocal long-term Meleiha project, which was one of the Russian company's firstforeign projects. It entered into the project as part of the Russian-Italian jointventure Lukagip in 1995. Lukoil's share in the venture currently stands at 24per cent, with other participants made up of ENI (56 per cent) and Mitsui (20per cent). Proven oil reserves in the block have been estimated at more than30mn barrels of oil equivalent.

According to Lukoil's plans, during the next few years the company willfocus on the development of several oil fields that have been discovered inrecent years, among which are the North and Gavaher Nada (2007), Arcadia(2010), Emery Deep (2012) and North Rose (2013).

At present, Lukoil remains the most active Russian oil company in theglobal oil and gas market. The company already operates in 13 foreigncountries and has set ambitious goals to increase the share of foreign businessin its total production up to 20 per cent in the years to come.

At the same time, the expansion of its foreign operations is an acute needfor Lukoil, as the companys prospects in the domestic Russian market remainscloudy in terms of new acquisitions and production volumes, with the volumeof production on the companys key domestic oil fields in western Siberiastarting to decline in recent years.

The company does not have an access to offshore oil fields in the RussianArctic and Far East the rights to which have been monopolised by state-owned Gazprom and Rosneft. At the same time, in the case of the latter and incontrast to Lukoil, Rosneft has at present little presence in the Middle East aregion that has never been considered by Russias largest oil producer as apriority for foreign expansion.

In the case of Rosneft, three years ago the company announced its plansto start the development of the gas field in UAEs Sharjah together withCrescent Petroleum. The value of the contract was estimated at US$630mnwith first production scheduled for 2013; for various reasons, however, thisproject has yet to start.

Oil Review Middle East Issue Five 2013 11

The companys prospects in the domesticRussian market remains cloudy in terms ofnew acquisitions and production volumes

www.oilreview.me



TTHE OPENING OF the Abu Dhabi Crude OilPipeline (ADCOP) from ADNOCs Habshanfield in Abu Dhabis western desert some400km overland to Fujairah last year, has

further underlined Fujairahs strategic importance inthe global oil market.

The pipeline when it is at full capacity willallow the UAE to move as much as 1.8mn barrels ofcrude per day - around three-quarters of UAEscurrent exports - via the Gulf of Oman, and sobypassing the Strait of Hormuz altogether. It isunderstood the emirate hopes to move about1.5mn bpd via the pipeline.

A new export terminal at Fujairah serves thepipeline with storage capacity for about eightmillion barrels of crude. A new refinery planned tobe built in the port by Abu Dhabi government-owned Petroleum Investment Company (IPIC),which undertook the pipeline project, will give theFujairah hub further importance.

Fujairah has seen a boom in oil terminal storagebuilding since late 2009, with the growth receivingstrong support from the Fujairah government.According to Fujairah port data, Fujairah had some4.07mn cubic metres (cu m) of oil storage capacityat the end of 2012. This year already has seen thestart up of another new oil terminal in the port anda major expansion by an existing operator.

Fujairah port data indicates that a further twomillion cubic metres of oil capacity are expected tocome online this year, including capacity additionsfrom existing companies including GPS Chemoil,Socar Aurora Fujairah and Emirates National OilCompany (ENOC). The planned start-up of a furthertwo new terminals - if they proceed as currentlyplanned - could add another 1.5mn cu m in 2014.

There are some concerns that the tremendousinvestment in storage capacity at Fujairah is notjustified by market demand at the location at thepresent time and that the storage boom could sooncause an oversupply of capacity at the port,decreasing the value of new oil storage comingonline and of existing assets. Fujairah is also facingincreasing competition from Oman, which is alsoexpanding its storage facilities.

Mindful of all the new capacity coming onstream around them, at least two terminaloperators are taking a cautious approach to furtherexpansion. VTTI, a 50:50 joint venture betweenenergy trader Vitol Group and shipping companyMalaysias MISC Berhad, which has operated an oilstorage terminal in Fujairah since 2007, is holdingfire for the time being on pursuing any expansion ofits 1.18mn-cu m facility.

VTTIs 90 per cent owned VTTI Fujairah Terminal(VTTI FTL) recently added 250,000 square metres (sqm) of reclaimed land to its existing seafront siteand currently has several business plans understudy for the facility. These potential business planscan lead VTTI FTL to have additional storage of up

to one million cubic metres. However, VTTI recentlysaid the company has no approved timetable forthe execution of any specific expansion plan at itsFujairah terminal.

For us, any new development will not be acopy and paste exercise. It needs to be somethingthat adds value, VTTI commercial managerAernout Boot said.

Vopak Horizon Fujairah (VHF), which operatesthe largest terminal in the port with capacity of2.13mn cu m of storage and completed a 638,541-cu m expansion early last year, has also said it hasyet to take a decision on its proposals to build anadditional one million cubic metres of storagecapacity. VHF is a joint venture between Dutch

independent storage major Royal Vopak with a 33.3per cent stake, ENOC wholly-owned subsidiaryHorizon Terminals and Kuwaits IndependentPetroleum.

However, many in the industry are confidentovercapacity will not be a problem given theincreasing cargo volumes anticipated. In addition toits importance as a major bunkering hub, Fujairahport is increasingly becoming a trading hub forpetroleum products. Singapore-based ConcordEnergy is building a joint venture oil storageterminal in the port with Chinas Sinomart KTSDevelopment, a wholly owned subsidiary ofSinopec Kantons Assets Group. The new facility isplanned to start up in the fourth quarter of 2014.Concord Assets Group CEO John Stuart believesthere is little danger of storage overcapacity inFujairah.

Fujairah today is the second largestbunkering port in the world, and developingrapidly as a key logistics hub to service the GCC,he said, Even though we do not expect ourfacility to reach commercial operations until theend of next year, we already have received strongdemand for crude storage.

Socar Aurora Fujairah, a joint venture betweenthe State Oil Company of Azerbaijan (Socar), Swiss-based Aurora Progress and the Fujairah government,started up the first phase of its Fujairah terminal inMarch 2012. This initial operation of what isplanned to be a three-phase development

GPS Chemoil is expanding its Fujairah terminal

The storage capacity atFujairah Oil Terminal is

expected to be used both forin-house trading activities and

third party rental

Analysis

12

The importance of access to oil storage capacity outside the Strait of Hormuz has been underscoredby Iranian threats to block the worlds largest oil and gas shipping route. Among the ports outsidethe Strait, the UAE port of Fujairah has become a major bunkering hub for ship refuelling andincreasingly is becoming a trading hub for petroleum products. Lynda Davies reports.

Fujairah oil storage

boom continues

www.oilreview.me


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comprises three storage tanks with an aggregatecapacity of 115,000 cu m. The joint ventureultimately is targeting a 645,000 cu m capacityfacility to handle more than five million tonnes peryear of crude and refined products.

Socar Aurora Fujairah is working on the secondphase, which will add a further 11 tanks totalling235,000 cu m. Phase 2 is scheduled to come onlinein Q4 2013, while phase 3 with the final 295,000cu m across eight tanks is targeted for completionin 2014.

Sharjah-based Gulf Petrochem inaugurated thefirst phase of its planned 1.2mn-cu m Fujairah OilTerminal on 27 February. The newly-launchedfacilities comprise 17 tanks with an aggregate412,000 cu m of storage and can handle class IIIpetroleum products such as fuel oil, gas oil andcutter stock.

The new terminal sits on 112,233 sq m site,which the company says includes up to 73,269 sqm of expansion capability. Gulf Petrochem isstudying a second phase of development but hasyet to indicate the size of the expansion and projecttimeline. Some media reports have indicated thatthe company does not expect phase 2 to comeonline before 2015.

The storage capacity at Fujairah Oil Terminalis expected to be used both for in-house tradingactivities and third party rental. The FujairahPetroleum Company owns a 12 per cent stake inthe facility following a deal completed with GulfPetrochem in January 2012.

GPS Chemoil, a joint venture betweenSingapore-headquartered Chemoil Energy and GulfPetrol Supplies, a subsidiary of the Fujairah NationalGroup, has begun a large expansion of its Fujairahoil storage terminal. The project is set to raisestorage capacity at the facility from the currentnine tanks with a total of 95,000 cu m capacity to21 tanks with in excess of 600,000 cu m.

The soon to be expanded facility, which sits ona 580,000 sq m site, will be a multipurposeterminal, equipped to load and receive class II andclass III petroleum product. The facility isconnected via eight loading and receiving pipelinesrunning from the berths at Fujairah port.

Chemoil and Gulf Petrol Supplies are expectedto retain some of the additional new tanks for theirown operations while the remaining capacity willbe leased out to third parties. Glencore, Chemoilsmajority shareholder, and active in the trading

business, could also lease storage at the facility.Glencore holds an 89.04 per cent stake in theSingapore energy group following its acquisition ofItochus entire 37.5 per cent shareholding inChemoil in February 2012.

Greece-based Aegean Marine Petroleum, asupplier of marine petroleum products in theFujairah port area, is building an oil terminal atthe port. The first phase of the new facility istargeted to come online later this year, althoughthis could not be confirmed with the company bypress time. The Aegean Oil Terminal is planned tohave an initial capacity of 465,000 cu m acrosseight tanks. Aegean Marine currently uses afloating storage facility to store the marine fuel ittrades in the port area.

ENOC owns storage space with 200,000 cu mcapacity in Fujairah port to store and blend fuel fordomestic use and is reported to be consideringadding capacity. Meanwhile, the ENOC FujairahDistribution and Trading Terminal with 240,000 cum storage is due to start up soon to boost thecompanys refined storage capacity in the port.

Two new oil terminals by more first timeinvestors in Fujairah port are planned to start up in2014. IL&FS Prime Terminal FZCO (IPTF), a jointventure between Indias IL&FS MaritimeInfrastructure Company (IMICL) and UAE-basedPrime Terminals FZC, is targeting start-up of thefirst phase of a new oil terminal in the Fujairah FreeZone for Petroleum Industry, adjacent to the port, in

early 2014. The project broke ground in September2012 and marks IMICLs first foray in to the storagesector in the region. The Indian company owns an80 per cent stake in the terminal and will be itsoperator.

The new facility is being developed in twophases. The first phase will be built with anaggregate capacity of 333,088 cu m across 14tanks. Phase 2 is planned to have capacity of299,590 cu m. IL&FS Engineering andConstruction Company has been selected as theEPC contractor for the terminal, receiving a letterof intent from IPTF in October. The new oil facilityis built to store heavy fuel oil, gas oil and diesel, jetfuel, petrol and additives. Provision for additionalfeatures such as blending have been incorporatedinto the design.

The Concord Energy and Sinopec Kantonssubsidiary Sinomart joint venture terminal is ontrack to start commercial operations in the portduring Q4 2014, according to Concord EnergyAssets Group CEO John Stuart.

Concord and Sinomart each own a 50 per centstake in the planned new facility, but at the start ofcommercial operations Concord said it will reduceits equity to 38 per cent.

The planned facility, known as Fujairah OilTerminal (FOT), will be built with a capacity1.155mn-cu m capacity. Concord confirmed theexpected investment in the project will total aboutUS$360mn. FOT reached financial closure inFebruary with a consortium of six internationalbanks for the provision of a US$252mn senior debtfacility for the project. Construction got underwayin late February. Rotary Engineering is the main EPCcontractor for the project.

The main products expected to be handled atFOT will be crude oil, fuel oil, gas oil and gasoline.The facility will also offer additional services suchas product mixing, blending and heating.

Stuart said Concord expects to utilisebetween 200,000 and 250,000 cu m of theterminals storage capacity with the remaindertaken by third parties. He added that letters ofintent had been signed by third parties butcould not provide details. Stuart did notcomment on how much space would be utilisedby the companys Chinese partner.

The FOT facility is extremely flexible and offersstorage capacity not only to meet the high existingdemand for bunkers, but also crude storage andcrude blending plus significant products for finishedproducts. Even though we do not expect our facilityto reach commercial operations until the end ofnext year, we already have received strong demandfor crude storage, Stuart said.


Analysis

14

Gulf Petrochem is studying asecond phase of development

Fujairah is also facingincreasing competition from

Oman, which is alsoexpanding its storage

facilities

www.oilreview.me

Phase Two is not expected tocome online before 2014


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S04 ORME 5 2013 E&P_Layout 1 21/08/2013 16:49 Page 15

16

DNO INTERNATIONAL HAS announced that its firsthorizontal well at the Tawke oilfield in KurdistanRegion of Iraq was flowing at the rate of 25,000 bpd.The Norway-listed oil and gas company reported thatthe Tawke-20 wells production is at a record high sincethe most productive vertical well in the Tawke field is

currently flowing at an average rate of 10,000 bpd.Bijan Mossavar-Rahmani, chairman of DNOInternational, said, Our next task is to optimiseproduction from Tawke-20 while assessing thepotential of horizontal wells in terms of drillingefficiency, well recovery factor and overall Tawkefield output capacity.A second horizontal well Tawke-23 wascurrently being drilled while preparations were alsounderway to start on a third horizontal well Tawke-21, Rahmani added.In June 2013, DNO International also reported thatoil was discovered at its Tawke-17 well, which testedat a rate of 1,500 bpd of 26 to 28 degree API crudefrom an Upper Jurassic reservoir underlying the field.The company operates the Tawke field with a 55 percent interest. Genel Energy has a 25 per cent stakewhile the Kurdistan Regional Government holds theremaining 20 per cent.

APACHE CORPORATION HAS announced that it has madeseven oil and gas discoveries across Egypts Western Desert.

The first discovery - Riviera SW-1X - test-flowed 5,800barrels of oil and 79,287 cubic metres (cu m) of gas perday from a Lower Bahariya sand with 7.3 metres of net pay.

Another find - the Narmer-1X - is a stratigraphictrap that is separated from the Neilos oil field located8km to the east.

Thomas Maher, vice president of Apaches Egyptregion, said, These seven discoveries are located in fourdifferent geologic basins and six different concessions.

The Faghur Basin yielded four of the discoveries withone each in the Shushan, Matruh and Abu Gharadig Basins.All seven discoveries have been tested and Riviera SW-1Xis already producing. Our exploration and developmentprogramme in Egypt continues, with an average of 27drilling rigs operating during the second quarter.

The Riviera SW-1X well, located in the WD 30Development Lease, is 2km south of the Riviera field,which also produces from the Upper Bahariya and AbuRoash formations.

The Narmer-1X and the Neilos field are part of anemerging Paleozoic play. Located in the Faghur Basin andthe Khalda Offset Concession, Narmer-1X well encountered25 metres of net pay in Paleozoic-aged sandstone and test-flowed approximately 1,200 barrels of oil and 11,326 cu mof gas per day with a trace of water.

The Jade N-2X well, located 2.4km to the northeast ofthe Jade field in the western Matruh Basin within theMatruh Development Lease, encountered 10 metres of netpay in the Cretaceous-aged Alam El Buieb 3G sandstone.The zone was perforated and tested over a 22-metreinterval, producing up to 146 barrels of condensate and3.1mn cu m of gas per day.

The WKAL-T-1X well, located 5.6km due south of thenearest production in the Tell field within the West KalabshaConcession in the Faghur Basin, logged a total of 9.7 metresof net pay in the Safa formation. The well was tested in oneof three zones of Upper Safa sandstone that flowed 2,900barrels of oil and 79,287 cu m of gas per day.

The WKAL-N-3X appraisal well, also in the WestKalabsha Concession, successfully extended the WKAL-N

field to the west. The well flowed on test at a rate ofapproximately 3,500 barrels of oil and 90,613 cu m of gasper day from the Safa Formation.

The SIWA-R-1X well, located in the Siwa Concession inthe Faghur Basin, tested 1,900 barrels of oil per day fromthe Safa sandstone. The well encountered 22 metres of netpay with the lowest known oil corresponding to themapped structural closure.

The Buchis W-2X well was drilled in the BuchisDevelopment Lease on the north-eastern margin of theFaghur Basin. The well tested a three-way closure adjacentand up-thrown to the Pepi oilfield with multipleCretaceous, Jurassic and Paleozoic objectives. Itencountered 13.4km of stacked pay in the Cretaceous-aged Alam El Buieb formation and additional pay in thePaleozoic-aged Zeitoun and Basur formations. The welltested approximately 1,700 barrels of oil per day from theAEB-3D sandstone.

The Falak NW-1X well, drilled in the KhaldaDevelopment Lease on the northern flanks of the ShushanBasin, logged 34.7 metres of stacked net pay in the Safasandstone. Apache tested 1,200 barrels of oil and 1.7mncu m of gas per day from multiple Safa sands. Falak NW-1X is 4.8km south of the Shams field.

Drilling and completion costs for all the wells wereestimated to be US$30.1mn.

Apache has a 100 per cent contractor interest in the allthe discoveries and owns, in total, 9.7mn gross acres in theNorth African country.

The company operates the Tawkefield with a 55 per cent interest

COOPER ENERGY HASannounced that it has found ahydrocarbon presence at theHammamet West-3 gasfield,located offshore Tunisia.Hammamet West-3 is located1.6km east of HammametWest-2, in a water depth of 54metres. The objective will nowbe to drill and test a highly-deviated wellbore through thenaturally fractured AbiodFormation reservoir to confirmoil productivity, companysources have said.The gas well has currentlycommenced drilling thehorizontal side-track section inthe primary target AbiodFormation limestone from3,011 to 3,167 mMDRT.The maximum total gas levelrecorded was 37 per cent, withonsite gas compositionalanalysis indicating the likelypresence of oil.Ultraviolet fluorescence wasalso observed in the drillcuttings over the interval 3,060to 3,092 mMDRT, which indicatedthe presence of oil. The drillingmud weight at the time of thegas influx into the wellborewas 10.6 pounds per gallon(ppg) and it has been raised to11.8 ppg, sources added.Hector Gordon, executive directorof Cooper Energy, said,Although the drilling ofHammamet West-3 has takenlonger than expected, the showsencountered in the horizontalwell section are encouragingand, at this stage, appear tovalidate the pre-drill reservoirmodel. The best fracturesidentified by pre-drill seismicstudies are yet to beencountered and we look forwardto drilling these in the comingdays. When the horizontal wellsection is complete, the jointventure may decide to conduct aproduction test which could takeanother 20 days.


Apache announces seven oil and gas discoveries in EgyptCooper Energydiscovershydrocarbonsoffshore Tunisia

DNO Internationals Tawke well hits 25,000 bpd

E&P

www.oilreview.me


17Oil Review Middle East Issue Five 2013

KUWAIT OIL COMPANY (KOC) has announced that it has discovered anew oil and gas field onshore Kabed, close to the Manageesh oilfield.Hashem Sayed Hashem, chief executive officer of KOC, however, gaveno estimates of the reserves in the field located in western Kuwait.Organisation of the Petroleum Exporting Countries (OPEC) memberKuwait is currently pumping around three million barrels per day andis expected to have about 100bn barrels of crude reserves.According to Kuwait's Ministry of Oil, the Middle East country hasearmarked around US$100bn to be invested over the next five yearson several oil projects, including the building of a large refinery andthe upgrading of two existing ones.The investment will likely form part of the state's long-term plan toboost oil production capacity to four million barrels per day by 2020.The countrys current capacity is almost three million barrels perday with an additional 200,000 bpd produced from the dividedzone shared with Saudi Arabia.Kuwait reportedly holds the worlds sixth largest oil reserves andis one of the top 10 global producers and exporters of totalpetroleum liquids.According to a media report, as of January 2013, Kuwaits territorialboundaries contained an estimated 102bn barrels of proven oilreserves, roughly six per cent of the world total.

GULF KEYSTONE HAS ANNOUNCED that the onshore Shaikan-10 oilwell located in the Kurdistan Region of Iraq has been spudded, withproduction expected to commence soon.In June this year, the independent oil and gas firm received approvalfrom the regional government for its development plan for the Shaikanfield.The Shaikan-10 well is supposed to be the start of the Regionsdevelopment campaign, which will see at least three rigs involved.Production operations for the newly-commissioned Shaikan productionfacility (PF-1) will also begin shortly, company sources said.Shaikan-10 is expected to be tied to a second Shaikan productionfacility (PF-2), which is currently under construction, and will have aninitial capacity of 20,000 bpd. Shaikan-2 and Shaikan-5 wells, whichare already in production, will also be tied back to PF-2.PF-1, when combined with PF-2 later this year, will allow the companyto achieve its immediate short-term production target of 40,000 bpd.Todd Kozel, chief executive officer of Gulf Keystone said, Thecompany is now fully permitted to commence production fromthe Shaikan field and this represents a key milestone in the

companys growth.The company plans toboost output from thefield to 150,000 bpdwithin the next threeyears and is aiming forproduction to top250,000 bpd by 2018.Situated about 85kmnorth-west of Erbil andcovering an area ofabout 283 sq km, GulfKeystone had previouslyestimated the Shaikanfield held 13.7bnbarrels of gross meanoil-in-place.

Kuwait discovers new oil and gas field

Gulf Keystone spuds Shaikan oil wellin Kurdistan Region of Iraq

The Shaikan-10 well is supposed to be the start ofthe Regions development campaign, which will seeat least three rigs involved

www.oilreview.me


18

THE LEBANESE CABINET is expected to hold asession within the coming weeks to approvetwo key decrees required to proceed with oiland gas exploration projects offshore Lebanon,according to the country's Energy MinistryGebran Bassil, Lebanon's energy minister, said,I have found the responsiveness,understanding and readiness to go ahead in thisissue as rapidly as needed.The decrees demarcating the 10 maritimeexploration blocks and establishing a revenue-sharing model must be passed by the Cabinet

before any oil and gas contracts can beawarded.Passing the decrees is critical for Lebanon toadhere to international commitments towardmajor international companies that haveinvested in the country, Bassil added.Lebanon had officially launched the first oil andgas licensing round in May this year andofficials have been since saying that any delayin issuing the decrees could postpone theoffshore drilling and exploration process.Forty-six international energy companies had

prequalified earlier this year to bid for offshorehydrocarbon exploration contracts in Lebanon.

DNO INTERNATIONAL HAS announced it has been selected as a bidder forYemens onshore Block 84 and has also entered into a farm-in agreement forOmans onshore Block 36.

DNO Yemen said it has been awarded a 59.5 per cent participating interest, 70per cent paying interest and operatorship of Yemen's Block 84, while Turkey-based Dogan Enerji Yatirimlari Sanayi ve Ticaret has been awarded a 25.5 per centparticipating interest and a 30 per cent paying interest.

State-owned Yemen General Corporation for Oil and Gas will have a 15 percent participating interest, DNO said.

The partners are expected to acquire a new 3D seismic system and drill twowells during the first exploration period.

Block 84, which covers a surface area of 731 sq km, is located in the Masila-Seiyun Basin adjacent to Block 14, where more than one billion barrels of oil have

already been discovered. The company already holds interests in five onshoreYemen Blocks, two of which - Blocks 43 and 47 - are also located in the samebasin.

The Block 36 farm-in agreement provides for the transfer of Allied PetroleumExplorations 75 per cent participating interest and 100 per cent paying interest toDNO Oman. The company will assume operatorship and acquisition of new 2Dseismic data, along with the drilling of two oil exploration wells, company sourcessaid.

The block is located in the Rub al Khali Basin and covers a surface area ofmore than 18,000 sq km. Two exploration wells previously drilled in the blockhave confirmed the presence of source rock in the basal Silurian hot shale, anorganic-rich shale that has been responsible for the majority of the oil and gasfields discovered in the Middle East and North Africa.

PETREL RESOURCES REPORTEDthat it has agreed to buy a 20 percent holding in AmiraHydrocarbons Wasit, which holds astake in exploration andproduction licenses in the Wasitprovince of Iraq.Petrel said the move willstrengthen its position in Iraqwhere it has been active since1999. The acquisition equates to afive per cent carried interestthrough to production in licensesoperated by Oryx Petroleum inWasit province. Petrel added thatit has also been given a right offirst refusal to participate in futureexploration and productionlicenses in the Iraqi provinces ofMuthanna, Karbala, Babil andNajaf.Petrel managing director David Horgan commented in a company

statement: "We are delighted to announce the expansion anddiversification of our exploration portfolio with this acquisition. Petrelhas a long-standing interest in Iraq. Following the recent farm out ofour Irish acreage, the acquisition refocuses our efforts on one of theworld's premier hydrocarbon basins."The addition of Amira's assets to our portfolio and the joint venturewith the Kayablian family provides our shareholders with greaterexposure to the world class hydrocarbon potential in Iraq."

Lebanon officially launched the first oil and gaslicensing round in May this year

AUSTRIAN OIL AND gas group OMV said its Libyan operations were notaffected by recent strikes that shut down export terminals and oilfields."We see very little impact on OMV of the strikes," Jaap Huijskes, headof OMV's exploration and production operations, told a newsconference, adding that OMV's operations were concentrated in thewest of the country, which is not affected."At the moment it's fully on," he said.OMV's Libyan operations account for some 10 per cent of the company'stotal production when running at full strength.The outages at ports and fields caused by striking employees and joblesspeople demanding work have brought the worst disruption to OPECmember Libya's oil industry since the civil war in 2011. Meanwhile, surprisingly strong refining and marketing results helpedtake the sting out of a steeper-than-expected drop in Q2 underlyingprofit at OMV.OMV said its results were hurt by lower sales volumes and crude prices,a weak dollar and write-offs, mainly in the exploration and productionareas on which it is focusingOMV said lower sales volumes in Libya, Britain and New Zealand hurt itsprofits, as had exploration expenses that rose 72 per cent to US$138mn,mainly due to write-offs in Tunisia and the UK and increased seismicactivities in Norway.Its upstream exploration and production business, which it is expanding,reported disappointing results, as did its gas and power segment, but itsdownstream refining and marketing operations reported a 24 per centrise in underlying profit.OMV said marketing - which includes the filling stations it is selling off- had made a strong contribution thanks to better cost positions andhigher margins in retail.


DNO International signs onshore oil block deals in Yemen and Oman

OMV says no impact from Libya strikes

Lebanese Cabinet set to pass oil and gas decrees for exploration projects

www.petrelresources.com

E&P

www.oilreview.me

Petrel acquires stake in Iraqi licenses


S05 ORME 5 2013 Gas Feature_Layout 1 21/08/2013 16:54 Page 19


DDANA GAS, THE Middle East's leadingregional private sector natural gascompany, announced that it hasachieved record production in 2013 in

Egypt of 39,000 boepd, including 190 mmscfd ofgas and 8,500 barrels of liquids per day.

The company has made substantial capitalexpenditure investments to its Nile Deltaoperations over the last 18 months. These includenew compression facilities, new fields beingbrought on stream and work to increase itsnumerous gas plants throughput.

As a result of investments made since February2012 production levels have reached a peak of39,000 boepd, an increase of 13 per cent over theyear 2012. The average output year-to-date hasbeen 34,000 boepd.

Monitoring developmentsThe companys core operations in the Nile Deltaand its Egyptian Bahrain Gas Derivatives Company(EBGDCo) Natural Gas Liquids extraction plant inRas Shukheir have not been impacted by thecurrent events in Egypt. However, the companycontinues to closely monitor developments.

Dana Gas announced the Begonia-1 discoveryon 30 June and has submitted a proposedDevelopment Plan to the Egyptian authorities aspart of a Development Lease application. Thesubmission remains on track and followingapprovals, gas from the Begonia-1 will be tied intothe existing gas gathering and production system.

Dana Gas continues to engage with relevantgovernment authorities regarding its overduereceivables and its future capital expenditure plans.It welcomes and actively supports the governmentsdesire to increase local hydrocarbon production inorder to meet growing domestic demand.

Discussions of fiscal support by the internationalcommunity will also play a significant role inaddressing investment decisions by key internationalinvestors. During Q1 2013, Dana Gas collectedUS$41mn with a 100 per cent revenue collection.

A Dana Gas spokesman said: Our Egyptianoperations continue to perform well despite thedifficult fiscal environment oil and gas companieshave faced in the country over the last two years.

We have made four successful discoveries over thelast year and increased our local productionsignificantly.

The recent important announcements ofsignificant financial support for Egypts from a numberof GCC states coupled with the governments desireto increase local gas production dramatically, isfavourable to companies such as ours.

We are also talking with the government toresolve the outstanding receivables situation asquickly as possible. In addition, we have planned amulti-well appraisal drilling programme for thesecond half of 2013 and we hope to be able toimplement this successfully.

ActiveDana Gas has a successful track record of gasdiscoveries in Egypt over the last six years and inJune 2013, announced its 25th discovery with theBegonia-1well in the Nile Delta. Total investmentsby Dana Gas in Egypt have exceeded US$1.8bn.

Dana Gas is among the most active oil and gasinvesting companies in the region and has grown tobecome the sixth largest gas producer in Egypt. Thecompany remains committed to making

investments that will bring benefits to both thecompany and the country.

Meanwhile, Dana Gas has announced theappointment of Dr Patrick Allman-Ward as the newGroup CEO for the company with effect from 1September 2013.

The incoming CEO Dr Allman-Ward is anaccomplished international energy executive withmore than 30 years of experience in the oil and gasindustry, in many senior positions including in theMiddle East and the Gulf Region in particular.

He also brings with him an in-depth knowledgeof Dana Gas as the current general manager ofDana Gas Egypt, having joined the company in2012 after a successful career with ShellInternational.

Through his responsibilities in managing allaspects of Dana Gas operations in Egypt,including exploration, production, businessdevelopment and government relations, DrAllman-Ward successfully achieved newexploration discoveries, increasing production anddeveloping new business opportunities.

He will continue as general manager for Dana GasEgypt until a suitable replacement has been found.

www.danagas.com

Dana Gas is among the mostactive oil and gas investing

companies in the region

Gas

20

Its been a busy month for Dana Gas, which announced record production in Egypt anda new CEO.

Dana Gas achieves record

production in Egypt

www.oilreview.me



TTHE ISSUE OF shale gas oil production still raises controversy, especially in European countries, both in terms of its impact on future energy supplies

and oil prices as well as its harmfulenvironmental effects. Thus, environmentalorganisations warned of the risks that shale gasproduction may pose to the naturalenvironment and called for ceasing it.

The stands by European countries havevaried with regard to shale gas production. It isimperative here to point to the statement madeby French President Francois Hollande onBastille Day when he ruled out shale gasexploration under his administration.

Harmful emissionsHollande was quoted as saying: As long as Iam president, there will be no exploration forshale gas in France which means there willbe no shale gas exploration in the upcomingthree years of his first term, or eight years ifhe is re-elected.

On the other hand, Britain provides massivefacilities to companies operating in the shaleoil and gas production; it recently decided toreduce taxes on the production of shale gas at asignificant percentage from 26 to 30 per cent,which is one of the worlds lowest tax rates ongas production, despite protests by

environmentalists and warnings about harmfulgas emissions.

Meanwhile, the process of shale gas productionis progressing rapidly in the United States, whichhas turned into a gas exporter thanks to the rapiddevelopment of gas production in the past fewyears. Unlike the USA and Britain, Germany andJapan are reluctant as environmental concerns stillconstitute an obsession for decision-makers in thetwo countries.

In fact, this heated debate is justified asthese countries need to diversify their energysources and reduce their dependence on exportsfrom abroad, especially from the volatile MiddleEast. Besides that, breaking and smashing rockswill have disastrous environmentalconsequences represented in air pollution due togas leak and poisoning of the groundwater aswell as earthquakes measuring up to five (on theRichter scale) because of the way the productionprocess is carried out, leaving spaces andcausing pressure on the Earths layers.

ControversyAlthough the GCC countries may not have toresort to oil and gas production due to theirlarge reserves and the high cost of shale gasproduction, they must be closely watching andmonitoring the controversy over shale gasproduction, which may affect oil prices inglobal markets. This may lead oil prices todrop - a fact that has already happened whengas prices saw a big drop after the US doubledits shale gas production.

For other developing countries, includingthe non-Arab ones, it seems that despite theavailability of shale oil and gas production,most do not have the funds necessary toinvest in this area in spite of the high demandfor energy. This simply means that shale oiland gas production will be limited to the richcountries, which have financial capabilities atpresent.

Major discoveryThey include some emerging countries such asChina, India, Brazil and South Korea, whereenvironmentalists apply strong pressure, as isthe case in Europe and the USA, which will helpin the expansion of gas production.

The world is on the threshold of a majordiscovery in energy production, thanks totechnological development. If developedcountries manage to take final decisions andalign their stands with environmentalorganisations, there will be major effects on theenergy industry. But, if these organisations areable to hinder expansion of production, theseeffects will be less.

Through this gap between the French andBritish positions as well as other unclearEuropean positions, it is obvious that this battlebetween supporters and opponents of the shaleoil and gas production will be long andcomplicated.

This is especially because environmentalistshave become influential players who cannot beignored in elections in European countries.

The US Secretary of Energy was quoted assaying that the shale oil and gas production willchange the form of energy trading and willcreate many geo-political implications.

*The writer is a UAE economic expert andspecialist in economic and social developmentin the UAE and the GCC countries.

Does shale gas production pose environmental risks?

Meanwhile, the process ofshale gas production is

progressing rapidly in theUnited States

Gas

22

GCC countries closely monitor production as it may affect global oil prices, MohammedAl Asoomi told Gulf News.

Shale gas development

divides opinion

www.oilreview.me


S06 ORME 5 2013 Gas News_Layout 1 21/08/2013 16:56 Page 23

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SIEMENS HAS ANNOUNCED that it hasreceived an order for power plantcomponents from Saudi Aramco.The US$977.8mn contract from Siemens isfor the manufacturing and supply ofcomponents for a combined cycle powerplant to be built in Saudi Arabia, thecompany said in a statement.

The power station is expected to deliverelectricity to the Jazan Industrial city areain and to the refinery of Jazan, whereprocess steam will also be delivered.

According to Siemens, the refinery-basedplant will use advanced technology for therefinery residue gasification process to helppreserve the countrys energy resources.

Our flexible, efficient and proventechnology will further contribute to supportSaudi Arabia, said Michael Suess, memberof the managing board of Siemens AG andCEO of the energy sector.

Siemens signs power plant deal with Saudi Aramco

FRENCH ENERGY COMPANY GDF Suez hasannounced that it will begin to deliver LiquefiedNatural Gas (LNG) to Dubai.

The company announced that it has delivered itsfirst cargo in the LNG carrier 'BW GDF Suez Boston'to the Dubai Supply Authority's Jebel Ali terminal .

GDF Suez, whose headquarters are based inParis, is able to adapt to tap into gas sectors in theMiddle East and Asia-Pacific region, it said.

The company said that the ship had the ability toload 4.8mncf, with the delivery arriving on 4 August.

This new LNG delivery is in line with GDF Suez'ambition in high growth regions, especially in theAsia Pacific basin and in the Middle East, thecompany said.

GDF Suez has entered into a deal with India forthe shipment of nearly one million tonnes of LNGthrough 2014.

The company, which is the main LNG importer inEurope operates a fleet of 17 LNG carriers and has asignificant presence in regasification terminalsaround the world.

By 2016 the French company said it aims todeliver more LNG to its regional partners in Asia.

xxx

25

GDF said it has delivered its first cargo of LNG to Dubai

Gas

www.oilreview.me

GOLAR LNG HAS announced it hasentered a US$213mn deal to provide afloating storage and regasification unit(FSRU) to the Kuwait NationalPetroleum Company (KNPC) at Mina AlAhmadi.

The New York-listed vessel ownerhas signed a five year agreement toprovide its newbuild FSRU Golar Igloofor the Liquefied Natural Gas (LNG)project at Mina al Ahmadi.

The five-year contract covers the170,000-cubic metre newbuild GolarIgloo for nine months of every year andthe vessel is due for shipment bySamsung Heavy Industries in Q4 2013.

Golar LNG CEO Doug Arnell said, "Asthis is a five year charter the vesselwill be offered to Golar LNG PartnersL.P. to acquire providing for anotherpotential acquisition.

Golar LNG wins Kuwaitcontract

GDF Suez supplies Dubai with liquefied natural gas cargo



AMETEK PROCESSINSTRUMENTS has beenawarded a US$4.6mncontract to supply UVprocess gas analysers forthe Abu Dhabi GasDevelopment Companys(Al Hosn Gas) Shah GasField project. Theanalysers will be used inthe Sulphur RecoveryUnits (SRU) and Tail GasTreating Units (TGTU),expected to be thelargest complex of itstype in the world.

Saipem, the projectmanagement company,apparently selectedAmetek because of itsextensive experience insulphur recovery operations worldwide and the performance of itsanalysers on similar projects.

The US$10bn Shah Gas Field project is among the largest green fieldgas development projects ever undertaken. It is expected to processapproximately one billion cubic feet per day (bcf/d) of sour gas into 0.5bcf/d of usable gas.

DANA GAS HAS announced that its Q2 net profit dropped after prices for oiland sales of liquefied petroleum gas fell.

The Sharjah-based energy company recorded a net profit of US$27.2mn,the company said in a statement.

According to Dana Gas, profit fell by 45 per cent compared to the sameperiod last year.

The main reason is the LPG production in Kurdistan as well as oil prices,Rashid Al-Jarwan, acting CEO of Dana Gas stated.

The company said that last month its total spending in Egypt was morethan US$1.8bn and it had achieved record production this year in Egypt of39,000 barrels of oil equivalent per day (boepd).

The company has made a lot of capital expenditure investments to its NileDelta operations over the last 18 months; including new compressionfacilities, new fields being brought on stream and work to increase itsnumerous gasplants throughput, it said.

Following investments made since February 2012, production levels haveincreased by 13 per cent over 2012.

The company reported an average output of 34,000boepd, with fuel salesrising in Iraq after a production facility begun last month and may benefit fromhigher sale prices for gas in Egypt if the government raises the cost to buyers.

Good progress is being made on our drilling programme in Egypt. InKurdistan, we have completed the reconstruction of the loading bay which willenable resumption of LPG and enhance revenue,commented Rashid AlJarwan, acting CEOof Dana Gas.

The company has now continued production of liquefied petroleum gas inthe Kurdistan Region of Iraq after an explosion there halted output last year.

Dana net profit falls by 45 per cent in Q2

26

www.ametekpi.com

Ametek wins Al Hosn project contract

Gas

www.oilreview.me


S07 ORME 5 2013 Petrochemicals Feature_Layout 1 21/08/2013 16:59 Page 27


TTHE DEMANDS ON todays refineryoperators have created a new wave ofchallenges. More and more, refineries arerequesting a single toolset that

rationalises production throughput and qualitywhile simultaneously managing the intricacies ofenergy demand and creation.

The push for such a solution is understandable.There are many easily understood benefits to aholistic approach to refinery-wide optimisation.With these solutions in place, weve seen refiningcompanies add from US$0.25-0.40 per barrel - andoften more - to the bottom line margin at eachrefinery. What this can mean for a highly complex,100,000 barrels per day (bpd) refinery, is as much asUS$15mn per year in additional benefits, with thevalue rising proportionately when considering therefinerys throughput and complexity. To respond tothe industrys changing needs, Invensys OperationsManagement has developed a solution set calledRefinery-wide Performance Solutions.

There are many benefits stemming from aholistic refinery-wide approach, which can bebroken down into four key drivers: measurement,empowerment, control and optimisation. Thesedrivers help define the solutions main capabilities,including:6 Improved mass balance accuracy across the re-

finery (Measure)6 Model-based performance monitoring to im-

prove personnel/operations effectiveness (Em-power)

6 Optimal regulatory and advanced process con-trol (APC) (Control)

6 Unit and refinery-wide optimisation for agilityand responsiveness to changing market condi-tions (Optimise)

6 Evaluate and adjust energy production and uti-lization (Empower and Optimise)

6 Enable optimal refinery planning and scheduling(Measure and Empower)

6 Provide ready and timely access of performancedata to all stakeholders (Measure and Empower)

Identifying and removing faulty or inaccuratedata from the plant system before it can negativelyimpact a refinerys operations and profitability is acritical but often overlooked area of businessprocess improvement. There are many benefits ofimproved and more accurate data including a bettermass balance around a process unit or refinery andbetter identification of performance metrics such asmaterial losses, emissions, equipment performance.

Improving this accuracy is a core objective of

Invensys Refinery-wide Performance Solutions. Wehave seen many customers reap substantialbenefits from having better data, like a majorrefining company in North America which used thiscomponent of the overall solution to analyse morethan 300 flow metres across one of its refineries.

Using the Mass Balance Module within theInvensys Refinery-wide Performance Solution set,the company saw a wide range of improvementssuch as:6 Achieving tighter unit mass balances for yield,

energy and profit monitoring6 Identifying metres in gross error very quickly6 Reducing the number of faulty metres from 25

per cent to less than five per cent6 Achieving a satisfactory heat and material bal-

ance across the refinery as a starting point forthe optimisation process

6 Providing more accurate mass flows to the ac-counting team to assist with monthly mass bal-ance closure and to the site business planninggroup to help with the LP monitoring tool

Integrating financial and economic dataalongside process information is a necessity inachieving optimal refinery operations. Thereforewell-run and profitable refineries rely on havingstaff knowledgeable of the process from both atechnical and business perspective, armed with theright tools to make informed decisions. Access tosuch knowledge equips staff with ability to pre-emptively head off costly unplanned disruptionsand shutdowns.

Invensys model-based performance monitoringsystem uses rigorous engineering models andcombines process information with real-time

financial and economic data together with thederived performance measurements to createquantifiable and actionable information. Thistranslates into continuous performanceimprovement by informed and thereby empoweredfrontline personnel, armed with an understanding ofthe financial performance of current operations andthe impact of driving operations to a higher andmore profitable state.

The applications included in this system are:crude pre-heat train monitoring and foulingcalculations; compressor and gas turbine monitoring;and distillation tray efficiency calculation.

Multivariable model predictive or APC strategiesare a central component of any refinery-wideoptimisation programme. The benefits ofimplementing such a strategy are many: fromimproving process stability to reducing productquality variability to improving energy efficiency.But perhaps, most importantly, it can allow a plantto operate even closer to product specification andprocess or equipment limits.

Part of the initial phase of either installing anew APC solution or upgrading an existing systemis the deployment of advanced diagnostic methodsto document control system performance. Throughusing these tools, it is easier to identify areas forimprovement and establish the necessary actions.

Process control performance analysis tools anddiagnostic service provide a comprehensiveapproach that includes information on processconstraints, field actuator problems, loop interactionand model identification for improved tuning.

Building from the tighter operational controlallowed by APC, a refinery is often able to improveits energy efficiency, product yields and throughput.

Better data can reap substantialbenefits for customers

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The demands on todays refinery operators have created a new wave ofchallenges. More and more, refineries are requesting a single toolset thatrationalises production throughput and quality while simultaneouslymanaging the intricacies of energy demand and creation.

Achieving business and operational success

by optimising refining

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However, APC alone is not sufficient in respondingto changing market conditions.

Leveraging first principle process modelsalongside economic data enables real-timeoptimisation programmes to meet changingeconomic and market conditions. It is up to eachrefinery to determine the objective of a programme such as maximising profit from optimal productslate or minimising costs at the production rate.The combination of APC and real-time optimisationcan realise benefits in the US$0.5-2.5mn andgreater range.

Todays refineries have new pressures stemmingfrom business, energy and environmental concerns.Properly managing energy costs for a refinery arenow, more than ever, a deciding factor indetermining a plants profitability. Refinery-wideoptimisation solutions enable better oversight of allutility processes from the steam and power systemto the hydrogen supply and demand.

Todays business constraints prioritise the use ofutility process modelling to make more informedand profitable decisions with new issues like therapid management of steam and power generationand importation and distribution now factoring intoan optimisation programme.

Rigorous CO2 emissions monitoring is alsoincreasingly important for refineries to take intoaccount, managed boiler modelling and electricity

import concerns. In what can be described as adelicate balancing act, the costs of externalelectricity need to be compared with the internalcosts of generation and the overall environmentaland regulatory costs of CO2 emission.

There are many benefits to be derived from betterintegrating planning and operational departmentswhen analysing linear planning (LP) models. Whilethese groups of staff often operate in relative isolationfrom each other, the decisions taken on which crudeoils to process and how to operate a refiners processunit to meet end-product demands are better madethrough close co-ordination.

A refinery-wide performance optimisationsolution helps bring together these functions,supporting planning departments in making moreinformed decisions and driving better performance.These solutions will continually track theperformance and changes in the refinery over time,adapting as it goes. As the optimisation model re-tunes itself in response to changing processconditions, it maintains the most accuraterelationships across the process units and helpsplanning departments prepare for the future.

To ensure an optimisation solution fully reachesits potential, it must enable and automate a businessimpact feedback loop for stakeholders. Theenterprise manufacturing intelligence feedback loopin the solution acquires critical process and optimal

performance data from the optimiser and aggregatesit with data from other refinery data sources.

This allows for staff to track, report and explainon the benefits of solution throughout theorganization demonstrating the importance ofinvesting in further solutions. For example, Invensyshas worked with one leading international companywhich reported US$1000 in benefits fromoptimisation for every US$25 it spends onmaintenance and support of its optimisers. Withsuch clear benefits, it is easy to justify investmentin optimisation solutions.

ConclusionA holistic approach to refinery management enablesa closer coordination and understanding betweenthe operational and commercial sides of the plant.As new demands from financial, regulatory andenvironmental perspectives are added, solutionswhich illuminate the opportunity for greaterefficiencies are more sought after than ever.

With solutions like Invensys Refinery-WidePerformance Solution the payback on a properlystructured and implemented solution can often bewell under a year. The key themes of measurement,empowerment, control and optimisation showcasethe broad range of benefits such a solution canbring a refinery leading to better informed andprofitable decisions.


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RELIABILITY INOIL WELL CEMENTS

Oil Well Cement (OWC) produced by Oman Cement Company (S.A.O.G) under accurate temperatures is an obvious choice for oil well cementing worldwide and now it is ready to face the challenges of highly specialized arctic and horizontal cementing:

Conforms to the American Petroleum Institute (API) specification 10A Class-G- (HSR), Class-B- (HSR) and Class-A- (O) grades. Tested and used by worldwide cementing companies Easy to disperse resulting in considerable cost savings First choice of major oilfield companies Exported to GC Countries, Iraq, Yemen, Libya, Sudan, Tanzania, Turkmenistan, Ethiopia, Pakistan, India and Syria.

Oman Cement manufacturing facility operates on world class qualitymanagement system ISO 9001 and environmental management system ISO 14001. Quality control is online and laboratory automation systems consist of online x-ray spectrometers and robotic samplers, linked to process controllers and a raw mill proportioning system.

OCC has an enduring commitment to customer satisfaction, continual improvement and a stronger foundation for tomorrow.

Winner of His Majestys Cup for the Best Five Factories in theSultanate of Oman for 10 times.

Oman Cement Company (S.A.O.G) Corporate Office:PO Box 560, Ruwi, PC 112, Sultanate of OmanTel: +968 24437070 Fax: +968 24437799

Email: [email protected]: www.omancement.com

CERTIFIED COCERT NO. IND13.3020/U/Q

CERTIFIED COCERT NO. IND10.7570

API CERTIFIED COLICENSE NO. 10A-0059

S08 ORME 5 2013 Petrochemicals A-B_Layout 1 21/08/2013 17:01 Page 31


IRAN HAS WITNESSED a 46 per cent increase in exports of variouspetrochemical products in the past calendar year compared to the previousyear, according to the deputy head of Irans Trade DevelopmentOrganization, Kioumars Fatollah Kermanshahi.

Fatollah Kermanshahi, who made the announcement when speaking toIrans Islamic Republic News Agency (IRNA), said that exports of Iranspetrochemical products had increased despite international pressures andsanctions imposed on the country in 2012.

Fatollah Kermanshahi also claimed that Iran had exported various tarproducts to more than 50 countries.

BADGER LICENSING HASannounced that it has beenawarded a contract by AramcoServices Company and SumitomoChemical to provide its proprietarytechnology for a 384,000 metrictonne per annum cumene plant aspart of the Rabigh Phase II Projectin Saudi Arabia.

The contract includestechnology license, engineering,training and start-up services forthe cumene plant, due to startoperations in 2016.

Mark Healey, president ofBadger Licensing, said, RabighPhase II is an impressive project inthe growing petrochemical industryin the Middle East and Badger isproud to be associated with it.

I believe Badgers provencumene technology will enable theRabigh Phase II Project to achieve alow cost of ownership by leveraginglong catalyst cycles and highoperational reliability, he added.

Cumene is a precursor to theproduction of phenol andsubsequently bisphenol A andpolycarbonate.

According to Badger Licensing,almost ten million metric tonnesper annum of cumene capacity hasbeen licensed by the company andits predecessor companies since thetechnology was introduced in 1995.

Based in Boston, USA, BadgerLicensing is principally engaged inmarketing, licensing anddeveloping technologies forethylbenzene, styrene monomer,cumene and bisphenol A.

GRAHAM CORPORATION, A global company whichengineers, manufactures and sells critical equipment forthe oil refining, petrochemical and power industries, hasannounced that it was awarded five orders totallingUS$10mn during July 2013, including two in the MiddleEast.

The projects are expected to ship at various times overthe next nine to 15 months, from Q1 through to Q3 of thefiscal year ending 31 March 2015.

Two of the orders were for new ejector systems in theMiddle East, with one for an oil refinery and the other for anew petrochemical production plant.

The contracts represent the companys third win forthe new 400,000 barrels per day (bpd) refineries beingbuilt in the region.

James Lines, president and CEO of Graham Corporationsaid, We believe that the benefit of our diversegeographic and end markets is validated by these ordersthat represent the oil refining, petrochemical, edible oiland nuclear power generation markets. We further believethe reliability of our products and responsive customerservice drove the three significant orders for replacementequipment and having a large installed base supportsfuture aftermarket revenue opportunity.

Lines added, We believe that our order patternconfirms an improvement in our markets for large new andreplacement equipment projects, as well as short cycleprojects. While we are encouraged with this progress, wecontinue to expect our order rate will vary from quarter toquarter in these early stages of recovery.

Graham Corporation awarded Middle East contracts

EGYPTS PETROCHEMICALINDUSTRY is currently witnessinga tenfold increase, according to anewly-released report fromresearch firm Research andMarkets.According to the study, the fourpetrochemical projects inprogress throughout the countryare expected to produce 2.6bntons of petrochemicals over thenext five years.The ongoing projects are part ofthe Egyptian governments 20-year master plan to produce

petrochemicals for export, inaddition to covering the demandsof the local market.The US$10bn three-phase masterplan, launched by state-ownedEgyptian General Petroleum Corp(EGPC) in 2002, predicts thatmore than 20 greenfield facilitieswill be in operation by 2022.This will include 50 productionunits with a total capacity ofaround 15mn tons per year ofintermediates and final products,alongside olefins and polyolefinscomplexes and plants producing

aromatics and methanol, EGPCsaid.A methanol-to-olefins facilitywith downstream polyolefinsfacilities is also part of Egyptsvision.The Egyptian PetrochemicalsHolding Co (Echem) is executingthe programme, which is to bespread across seven sites in thenorth of the country and to coverapproximately 30mn squaremetres, creating an estimated100,000 direct and indirect jobs,the report said.

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Aggreko operates from over 190 locations throughout the world. For all global locations, please go to: www.aggreko.com/contact

Aggreko, Power Specialists in Oil and Gas

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