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Vol 15 Issue Eight 2012

www.oilreview.me

Oil Review Middle East - Volume 15 - Issue Eight 2012

UK £10, USA $16.50

Regional petrochemical sector remains strong Iran faces further challenges as sanctions bite Gas - high demand sparks the search for new supplies Human resources - tackling the people problem

Saudi Arabia leads regional gas spending

WFES 2013 - oil giants in search of renewable energy solutions Density measurement and flow assurance Unlocking the promise of improved operational performance The risks of moving to the ‘cloud’

www.oilreview.me

“Lebanon should be on the radar of all oil companies who operate offshore,” says David Rowlands, CEO of Spectrum, which is currently carrying out multi-client seismic surveys in the area. See page 20

l na o i g re or e sect h t s 97 ing ga 19 v r & Se oil ince s

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S01 ORME 8 2012 Start_Layout 1 17/12/2012 11:43 Page 2

Falcon

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Multistage stimulation, seamless execution The Falcon* multistage stimulation system for uncemented completions enabled Wyatt Oil + Gas to complete five horizontal, multilateral wells with no service quality issues. The result: higher production, faster execution, and lower costs. “We were very pleased with the quality of the service Schlumberger provided. They were available 24/7 to make sure everything worked smoothly. Now the Falcon system is our method of choice for multistage stimulation.” —Darren Shaw, President, Wyatt Oil + Gas Inc.

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S01 ORME 8 2012 Start_Layout 1 17/12/2012 14:21 Page 3

Vol 15 Issue Eight 2012

Contents

www.oilreview.me

UK £10, USA $16.50

Regional petrochemical sector remains strong

Saudi Arabia leads regional gas spending

Iran faces further challenges as sanctions bite

Columns

Gas - high demand sparks the search for new supplies Human resources - tackling the people problem

6

Industry news and executives’ calendar

WFES 2013 - oil giants in search of renewable energy solutions Density measurement and flow assurance

Analysis

Unlocking the promise of improved operational performance The risks of moving to the ‘cloud’

10

Iran Sanctions are taking their toll in Iran.

14

Oman

“Lebanon should be on the radar of all oil companies who operate offshore,” says David Rowlands, CEO of Spectrum, which is currently carrying out multi-client seismic surveys in the area. See page 20

The Sultanate’s gas potential interests BP, but a decision regarding investment is not expected until next year

l na gio re ctor e th s se 7 9 ing ga 19 rv & Se oil nce si

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Saudi Arabia is at the forefront of regional gas investment

Exploration & Production 20

Interview Lebanon should be on everyone’s radar, says Spectrum’s CEO, David Rowlands.

Gas 26

Regional Round-Up

Saudi Arabia leads upstream gas spending as the search intensifies for new supplies.

Petrochemicals 34

Fertiliser

The global fertiliser industry may face large potential surpluses in the near future. Lynda Davies explains.

Human Resources 39

Training and Development

Access to human resources is critical for the future success of the oil and gas industry, says Willy H. Olsen of CWC School for Energy.

Profiles 42

Kuwait Petroleum Corporation Foreign technology is badly needed to assure future oil production in Kuwait.

44

Iraq Specialists from Exclusive Analysis survey the situation in Iraq’s oil and gas sector.

Editor’s note IT MAY SEEM ironic in a land rich with hydrocarbons, but parts of the world’s leading oil producing region have become vulnerable in recent years because of the growing difference between demand and supply availability in the gas segment. For the world’s biggest crude oil producer, Saudi Arabia, this has meant careful allocation of its gas resources to selected industrial areas and uses, as well as topping up any shortfall with oil. In the absence of more gas availability, the kingdom’s power sector remains heavily dependent on burning oil, a costly and dirty option; as well as the environmental cost, the high oil consumption eats away potential export dollars lost from higher crude sales. Kuwait is another gas hungry economy which, in this case, has turned to liquefied natural gas (LNG) imports from abroad to top up domestic supplies. Dubai is also buying in LNG, while Abu Dhabi has long been supplied with Qatari gas via the cross-border Dolphin gas pipeline. Qatar has played a fundamental role in feeding gas into the prosperous UAE economy, which uses gas for nearly all of its electricity production. Abu Dhabi’s gas consumption has been increasing at a rate of 11 per cent a year. It means, with gas in such high demand, but in apparently short supply, investment in new production and supply is expected to surge in the coming years, with Saudi Arabia leading the way.

48

Top 10 Oilfield Service Companies

Oilfield service companies operate in some of the most inhospitable areas of the world. We look at the recent regional activites of the top 10 companies.

74

Predictive Risk

Conferences and Exhibitions

Unlocking the promise of improved operational performance.

World GTL Congress World Future Energy Summit

Control & Instrumentation

54

Ian Ramsay-Connell, Chief Technology Officer at Yokogawa Middle East discusses the company’s latest technology.

Renewable energy solutions will be the focus at WFES in January.

57

Adipec 2012 Review

80

52

Innovation will be a key theme at the forthcoming Doha event.

This year’s event saw a number of milestones achieved.

Information Technology 82

Cloud Computing Why companies should understand the risk of moving to the cloud.

84

Project Databank/Rig Count

Technical Focus 66

Innovations Introducing some of the latest technology for the oil and gas sector.

72

Flow Assurance Why accurate measurement of density levels is critical.

Arabic Section 6 10

Developments Analysis

Managing Editor: David Clancy Editorial and Design team: Bob Adams, Lizzie Carroll, Andrew Croft, Ranganath GS, Kasturi Gupta, Prashant AP, Meenakshi Nambiar, Genaro Santos, Zsa Tebbit, Nicky Valsamakis, Julian Walker and Ben Watts

Publisher: Nick Fordham

Advertising Sales Director: Pallavi Pandey

Magazine Sales Manager: Camilla Capece Tel: +971 4 448 9260, Fax: +971 4 448 9261, Email: camilla.capece@alaincharles.com Country Representative Telephone Fax China Ying Wang (86) 10 8472 1899 (86) 10 8472 1900 India Tanmay Mishra (91) 80 65684483 (91) 80 40600791 Nigeria Bola Olowo (234) 8034349299 Russia Sergei Salov (7495) 540 7564 (7495) 540 7565 South Africa Annabel Marx (27) 218519017 (27) 46 624 5931 Qatar Saida Hamad (974) 55745780 UK Steve Thomas (44) 20 7834 7676 (44) 20 79730076 USA Michael Tomashefsky (1) 203 226 2882 (1) 203 226 7447

Email ying.mathieson@alaincharles.com tanmay.mishra@alaincharles.com bola.olowo@alaincharles.com mne@acpmos.ru annabel.marx@alaincharles.com saida.hamad@alaincharles.com stephen.thomas@alaincharles.com michael.tomashefsky@alaincharles.com

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Head Office: Alain Charles Publishing Ltd University House 11-13 Lower Grosvenor Place London SW1W 0EX, United Kingdom Telephone: +44 (0) 20 7834 7676 Fax: +44 (0) 20 7973 0076

Middle East Regional Office: Alain Charles Middle East FZ-LLC Office 215, Loft 2A P.O. Box 502207 Dubai Media City, UAE Telephone: +971 4 448 9260 Fax: +971 4 448 9261

Production: Donatella Moranelli, Nasima Osman, Devolina Pal, Nick Salt, Jeremy Walters and Sophia White - Email: production@alaincharles.com Subscriptions: Email: circulation@alaincharles.com Chairman: Derek Fordham Printed by: Emirates Printing Press, Dubai © Oil Review Middle East ISSN: 1464-9314

Serving the world of business

Oil Review Middle East Issue Eight 2012 3


News

S01 ORME 8 2012 Start_Layout 1 17/12/2012 11:43 Page 4

US set to surpass Saudi Arabia in oil output by 2020 THE INTERNATIONAL ENERGY Agency (IEA) launched the 2012 edition of its World Energy Outlook (WEO) which stated that oil output from the US is expected to overtake Saudi Arabia’s in the next decade. The US will pump 11.1mn barrels of oil a day in 2020 and 10.9mn in 2025, the IEA said. Those figures are 500,000 barrels a day and 100,000 barrels a day higher, respectively, than its forecasts for Saudi Arabia for those years. Saudi Arabia is due to become the biggest producer again by 2030, pumping 11.4mn barrels a day versus 10.2mn in the US. "Around 2017, the US will be the largest oil producer of the world, overtaking Saudi Arabia. This is of course a major development and definitely will have significant implications,” said IEA chief economist Fatih Birol. According to the IEA, the US will become a net exporter of natural gas by 2020 and will be almost self-sufficient in energy, in net terms, by 2035. This will help accelerate the switch in direction of international oil trade, with almost 90 per cent of Middle Eastern oil exports being drawn to Asia by 2035. Global oil demand is set to grow by seven million barrels per day (mbpd) to 2020 and exceed 99 mbpd in 2035, by which time oil prices are expected to reach US$125 per barrel in real terms. Iraq is expected to become the second largest global oil exporter in 2035, accounting for 45 per cent of this figure.

GCC petrochemical industry remains strong THE GCC PETROCHEMICAL industry has remained strong despite the prevailing economic climate but has to adapt to a rapidly changing market, according to the chief executive officer of Sabic, Mohammed Al-Mady. “Production capacity has grown by 13.5 per cent since last year to reach nearly 160bn tonnes up from 102bn tonnes in 2010. Sales generated by the GCC petrochemical sector reached US$100bn in 2011,” Al-Mady noted. These figures reveal the strength and remarkable resilience of the GCC petrochemical industry, but Al-Mady argued that to sustain this growth the industry needed to change. “The industry must take a technology driven approach to remain competitive in an ever changing marketplace," he said. "We need to be more focused on advanced technologies and look at even more innovative solutions." Al-Mady added that the growing shale gas industry in the US and the push for sustainable energy will have a direct and profound impact on the chemical industry in the region. “We must accept this reality and we should look beyond our feedstock base competitive advantage to compete on a global basis,” he explained. Al-Mady addeed that sustainable solutions will lead to further growth with the better utilisation of feedstocks. “We need to reduce waste and increase efficiency by replacing ageing facilities,” he said.

Siemens agrees Habshan-Fujairah oil pipeline contract SIEMENS HAS SIGNED a three-year service contract for the maintenance of the strategic Habshan-Fujairah crude oil pipeline’s automation and telecom system. Under the terms of the maintenance contract that was signed with the pipeline’s operator, Abu Dhabi Company for Onshore Oil Operations (ADCO), Siemens will provide comprehensive maintenance services for the pipeline’s automation, control and telecom system that has been installed and commissioned by the ADCO. “The Siemens system installed at the Habshan facility ensures that the pipeline operates reliably and safely in all potential scenarios, allowing the operators to swiftly control a wide range of variables, including different stations and streams, from a central location,” said Ali Vezvaei, Siemens executive vice president and general manager oil and gas division.

The 380km Habshan-Fujairah oil pipeline runs from Abu Dhabi to the emirate of Fujairah, located on the Gulf of Oman. With a nominal capacity of about 1.5mn barrels a day, the pipeline began pumping crude in June 2012 for the first time and presents the UAE with an alternative to shipping oil through the Strait of Hormuz. “Siemens was involved in this important project from the very beginning, working in harmony with a series of other contractors on a tight timescale to deliver an alternative option to shipping crude oil through the Strait of Hormuz,” he added. The automation system for the pipeline has been designed to allow the end-user to take over the operation and control of the pipeline. “A comprehensive Siemens-designed training program has already been implemented,” Vezvaei remarked.

Ali Vezvaei

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S01 ORME 8 2012 Start_Layout 1 17/12/2012 11:43 Page 6

News

ABB opens regional education centre in Abu Dhabi ABB HAS OPENED its first regional learning centre in Abu Dhabi, which is set to become a hub for the firm's training, development and collaboration activities in the Middle East. The state-of-the-art learning zone, located in the HQ building in Abu Dhabi, will showcase ABB’s products, services and solutions, and will allow ABB to share its expertise in different technologies to customers, engineers and students. “We are very proud to open this first of its kind learning centre here in the UAE, which will serve the whole region,” said Frank Duggan, head of global markets and region manager for ABB in India, Middle East and Africa. The UAE Minister of higher education and scientific research, Sheikh Nahyan Bin Mubarak Al Nahyan, officially opened the new learning centre,

from where ABB will offer more than 180 professional courses across multiple sectors led by 30 certified course instructors. “On completion of their courses, engineers and operators will gain valuable knowledge which will in turn improve effectiveness and efficiency, helping ABB customers to increase productivity, efficiency and safety of their processes,” Duggan added. The 1,000 sqm learning zone includes five training rooms with interactive whiteboards, an auditorium to accommodate 90 people and a digital display panel zone with an interactive augmented reality pod. In addition to the courses on offer, there will be a range of demonstration equipment available for customers and students to experience for themselves first hand.

Frank Duggan led Sheikh Nahyan Bin Mubarak Al Nahyan on a tour of the new education centre.

“We see this as our opportunity to collaborate further with the local community and to give something back,” noted Duggan.

Unique Maritime Group strengthens its hydrocarbon division

Inmarco embarks on expansion plan UAE-BASED INMARCO IS looking to expand its fluid sealing manufacturing business and has recently partnered with a Korean company to help provide it with the right expertise. The company was established in 2006 and by setting up local manufacturing facilities it was able to bring the sealing materials from its parent company in India to the region. The firm employs over 35 people and produces non-asbestos compression packing, non-asbestos cut gasket, spiral wound gaskets. Inmarco is embarking on a expansion programme that will see the installation of programmed gasket cutters, a braiding facility to produce up to 100mm dia. As well as packings and spiral wound gaskets up to 98”. The company currently operates from Dubai and Sharjah. It’s manufacturing base in located in SAIF-Zone, Sharjah. Inmarco is represented by a technically qualified distributor in Saudi Arabia, Qatar, Bahrain, Kuwait and Oman. The company is already approved by Qatar Petroleum and product approvals from other NOCs including PDO, ARAMCO, KOC and BAPCO are in the pipeline. A recent distributor’s agreement with a Korean company builds upon its expansion programme and helps in providing the highest level of technical expertise. A joint venture could be a possibility in the future. Inmarco is the only producer of compression packing in the region and is certified to ISO 9001-2008 and is hoping for ISO 14001 & OHSAS in the future.

UNIQUE MARITIME GROUP (UMG) has acquired a 100 per cent stake in Unique Wellube that will involve the specialist engineering service company become a wholly owned subsidiary. As such, it will help strengthen UMG's oil and gas offering. Unique Wellube FZC will continue to operate from the Group's headquarters in Sharjah and its existing support bases in Qatar and West Africa will extend UMG's reach around the world. Graham McKay, general manager of sales at Unique Wellube commented on the acquisition, "In terms of revenue generation and expansion, 2012 has been our biggest year and the acquisition by UMG is the right next step.” Unique Wellube provides its services to all sectors of industry in the region and covers both onshore and offshore, topside and subsea. The services offered include Hot Tapping and Line Stopping, Under Pressure Leak Sealing, On-Site Machining, Pipeline Repair Clamps, Pipe Freezing, Pipeline Rehabilitation, OnLine Safety Valve Testing and On-Line Valve Maintenance. McKay sees a lot of opportunities across the region for the products and services that Unique Wellube offers and Qatar is now seen as a key target market for the subsidiary. "We have done well in Qatar and we have 16 full time technicians based in the country. We see opportunities with RasGas in Qatar when they bring their new LNG trains online they will need to connect them to a new system, this is when our services comes into their own. We can connect them without the need to shut any of the systems down," he noted.

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6 Oil Review Middle East Issue Eight 2012

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S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 7

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News

S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 8

Executives Calendar 2013 JANUARY 2013

13-15

World GTL Congress

DOHA

www.worldgtlcongress.com/

15-17

World Future Energy Summit

ABU DHABI

www.worldfutureenergysummit.com

20-23

MENA LNG

MANAMA

www.lngbahrain.com

21-23

Offshore Middle East

DOHA

www.offshoremiddleeast.com

28-30

SPE Unconventional Gas Expo

MUSCAT

www.spe.org/events

FEBRUARY 2013

10-14

Digital Oilfields World Summit

ABU DHABI

www.digitaloilfieldsme.com

18-20

Middle East Technology Forum

DUBAI

www.euro-petro.com/me-tech2012

24-27

Corrosion UAE

ABU DHABI

www.theenergyexchange.co.uk

MARCH 2013

3-6

Saudi Safety and Security

DHAHRAN

www.sss-arabia.com

5-7

SPE-IADC Drilling Conference & Expo

AMSTERDAM

www.spe.org/events/dc/2013/

6-8

Offshore Asia

KUALA LUMPUR

www.offshoreasiaevent.com/

10-13

Middle East Oil Show (MEOS)

MANAMA

www.meos2013.com

20-22

Offshore Mediterranean (OMC)

RAVENNA

www.omc.it

24-27

Middle East Downstream Week

ABU DHABI

www.wraconferences.com

26-28

IPTC 2013

BEIJING

www.iptcnet.org/2013/

15-17

SPE North Africa Technical Conference

CAIRO

www.spe.org/events/natc/2013/

16-19

LNG 17

HOUSTON

www.lng17.org/

6-9

OTC

HOUSTON

www.otcnet.org/2013/

16-18

POGEE

KARACHI

www.pogeepakistan.com/

APRIL 2013

MAY 2013

Readers should verify dates and location with sponsoring organisations, as this information is sometimes subject to change.

8 Oil Review Middle East Issue Eight 2012


S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 9

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Analysis

S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 10

Iran is being hit hard by sanctions and has seen its oil exports fall by over one million bpd. This raises several short-, medium- and long-term challenges for the country’s oil and gas industry – as well as for the economy in general. Still, unless a small, very neartime window of opportunity for direct US-Iranian talks is not taken, the conflict is only likely to deepen, with exports facing further cuts and the whole first half of 2013 likely being lost. Samuel Ciszuk, Global Oil Supply Consultant at KBC Energy Economics examines the scenarios.

Iran faces further challenges as

sanctions bite I

RAN IS FACING a momentous challenge to its energy sector and overall economy, as perhaps the tightest sanctions ever – or at least since the sanctions on Iraq in the first half of the 1990s – have more than halved its oil exports and forced it to shut in much of its oil production. Having exported around 2.2mn bpd in the second half of 2011, Iran’s exports fell to around one million bpd in October 2012, although efforts to sell crude oil under the radar of traditional market actors and the international community is making an exact number hard to estimate. Not only has Iran’s main source of government revenue more than halved at a time when other sanctions, crippling Iran’s international trade and industry, are biting, but its remaining exports have to be discounted to a large degree, as banking sanctions and sanctions against the insurance of Iranian tankers are making business complicated for its counterparties. Besides, rising production from Iraq, a return of Libyan volumes to markets and efforts by Saudi Arabia, Kuwait and the UAE to more than fill any supply shortage from OPEC’s side have given Iran a weak hand to play in any pricing negotiations.

Self-sufficiency High oil prices throughout the year have been a partial saviour for the Iranian state coffers, but given that many of the projects needed to sustain its oil production capacity and arrest mature decline were already underfunded in the past decade, the little development activity which took place in Iran’s oil and gas sector, has mostly ground to a halt. Efforts in recent years to reach Iranian selfsufficiency in the supply of refined products have saved the country from what could have been immediate and dangerous domestic shortages, however its ability to provide the population with adequate gas for the upcoming winter heating needs will be tested soon. With gas production development at the offshore South Pars field progressing at snail’s pace at best – at the few phases where projects still are progressing – a price dispute has erupted with neighbouring Turkmenistan recently, threatening to shut in vital supplies to the densely populated northern parts of the country at a time when heating demand spikes in that

10 Oil Review Middle East Issue Eight 2012

High oil prices throughout the year have been a partial saviour for the Iranian state coffers

If bilateral talks can be established between the US and a representative very clearly speaking on behalf of Khamenei soon, the optimistic scenario might stand some chance part of Iran. EU pressure on Turkey to halt Iranian gas imports might from that perspective prove an ironic and timely saving grace, as the financial loss involved in the context is relatively modest. Pricing disputes with Turkmenistan have been occurring with some cyclicality in the past years, however speculation that international pressure is behind the timing of this move is likely to surface, even if the Turkmens have motive enough to want to improve pricing terms at a time when Iran’s negotiating position is strained. For its crude exports, Iran is now dependent on a very small number of remaining clients, who have been given waivers from US sanctions for 180 days. The first of these waivers will expire in early December and the last ones around New Year, raising the spectre of renewed rounds of US-

led political pressure on further import cuts, for the waivers to be renewed. In any case, the small remaining number of Iranian clients, almost entirely in Asia, means that Iran is exposed to a great deal of uncertainty and fluctuation. South Korea and Turkey’s only buyer, refiner Tupras, have both said that they will strive to completely back out Iranian crude. Taiwan has already stopped buying, while the Indian refiners who continue to buy Iranian crudes also have signalled that they are aiming to restrict or even halt purchases in 2013, provided suitable replacements are found. Japan too is a reluctant buyer, but given its own fuelpredicament post-Fukushima it might struggle to back Iranian volumes out quickly. In any case, its purchases have already diminished dramatically. China remains a key client for Iranian crude, but even though it has the best possibilities to get around US and EU sanctions, its looks reluctant. Certainly China has not been raising its imports of Iranian crude, despite the opportunities for prise discounts. For China, which is prioritising energy security in its crude imports and is ready to pay for it, getting stuck dependent on sizeable Iranian crude volumes as tensions rise and its economy might implode is


S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 11


Analysis

S02 ORME 8 2012 Analysis 01_Layout 1 17/12/2012 12:01 Page 12

risky, as the larger the purchases, the longer – and potentially more expensive – it will be to replace them with crude from elsewhere. Even China has therefore curtailed its term purchases from Iran, not to expose itself to too much supply disruption danger.

Uncomfortable situation For Iran this reliability on a small number of clients is problematic and was manifested in September this year, when liftings under its remaining term contracts fell to around 800,000 bpd, mainly due to the Chinese refinery turnaround season. Much of the not lifted volumes were deferred to October, however the fluctuation of up to 20 per cent of output in an already uncertain situation, no doubt places the Islamic Republic in a very uncomfortable situation. Unlike other producers, it can not even out seasonal fluctuations through higher or lower spot cargo sales. Moreover, Iran is now also restricted in its ability to build floating storage, as its own tanker fleet is needed to deliver crude to the buyers, since insurance sanctions have made it near impossible for most of the world’s tanker fleet to load Iranian crude. Onshore storage has been expanded lately and could have a capacity as high as 30mn barrels, however it filled up entirely as Iranian clients started cutting their purchases in the first half of 2012, in anticipation of the coming oil sanctions. Some reports indicate that Iran might have lowered its production to below 2.6mn bpd in September and October, in order to deplete some of the onshore storage and return some flexibility to the Iranian marketing position, however this remains highly uncertain. Another uncertainty is what the long-term consequence will be for Iran from the shut-in of so much of its production. Most of Iran’s producing oilfields are very mature and the country has struggled with yearly decline rates of over 10 per cent for most of the past decade. While some producing formations might benefit from being rested for a while and experience pressure build-ups, this might not be the case across the board. Wells, production, treatment and transport facilities will however be hard to maintain, particularly given the worsening budget crisis which faces Iran.

Uncertainty It is worth remembering that Iran’s production capacity stood at just under six million bpd at the outbreak of the disturbances leading up to the 1979 revolution and the following war with Iraq. Output then lingered below 2.5mn bpd until the late 1980s before recovering, but it never managed to sustainably remain over four million bpd. Giving decades of underinvestment and a technology lag, a similar cliff could be facing Iran, with a significant share of its pre-sanctions 3.7-3.8mn bpd production capacity being permanently lost. Yet another uncertainty is the immediate gas supply during the coming domestic peak-demand season. With an important part of Iran’s gas

12 Oil Review Middle East Issue Eight 2012

Khamenei - bilateral talks?

Iran’s remaining exports have to be discounted to a large degree production being associated with oil, the lower oil production might hit gas availability in some parts of the system. On the other hand, up to a third of Iran’s gas has been injected into oilfields in the past years and there should be an opportunity to prioritise the shut-in of oilfields requiring significant injection, in order to free up gas. Ultimately, this should allow Iran to balance domestic gas demand with supply, however there are still questions whether there are sufficient pipeline connections to bring gas previously earmarked for injection to treatment facilities turning it into sales gas. This is probably an issue which has been guiding Iranian operative planning over the past year and whether they have succeeded will start to become visible from December and onwards.

Clarity With the US Presidential elections out of the way, optimists on both sides are hoping that talks can get underway soon, with some Iran and US watchers seeing a window of opportunity between now and March, when electioneering for Iran’s Presidential elections in June likely will take off. While it is true that clarity on who will be the US President over the coming four years is important, it is however not unimportant for the US to have some clarity on who they will speak

to in Iran and which faction within the regime will have a stable upper hand. President Mahmoud Ahmedinejad has skilfully used the nuclear issue to impose himself onto the international arena since first coming to power in 2005, enhancing his stature at home through sloganeering abroad. This is despite the Iranian President having little real power in the strategic foreign policy area and no real authority at all over the country’s nuclear programme. That portfolio, remains under the firm control of Supreme Leader Ayatollah Ali Khamenei, who in the past two years very overtly has come to view his outspoken former protégé Ahmedinejad as a liability. If bilateral talks can be established between the US and a representative very clearly speaking on behalf of Khamenei soon, the optimistic scenario might stand some chance, although the current direction of other Middle Eastern issues like the Arab-Israeli conflict and the January elections in the latter look like they could cause too much tensions to make compromise look viable. The core problem remains that US and Iranian red lines remain too far apart and although Iran is increasingly pressured, it might look tempting for the US and EU to wait a little more – and ask Iran’s remaining crude buyers to cut their purchases a little further – given the likely impact on Iran’s economy in the first half of 2013. The logic being that Iran will only be weaker by then and the election of a new Iranian President either is likely to lead to the regime speaking with a more unified voice, and/or ignite some open dissent and protests among the population. While the former is likely, the precedent of harsh international sanctions sparking popular revolutions is not strong and the example of Iraq in the 1990s should be taken as a warning. There, what remained of a civil society was quickly submerged under a dependence on black markets for survival, which quickly fell under the control of regime elements. In Iran, the Revolutionary Guard business network’s spread through the economy could well set the stage for a similar fate. Should no bilateral US-Iran talks be established by yearend, it is far more likely that status quo, with a few further cuts to Iran’s oil exports, will prevail until mid-2013. ■

TAQA sponsors Basra event TAQA INDUSTRIAL AND Petroleum Services Limited (TAQA) was one of the bronze sponsors of Basra Oil & Gas 2012. At the exhibition, which took place from 6-9 December 2012, the company showcased its latest solutions for the oil and gas industry at stand B10. TAQA’s overall aim is to modernise and develop a range of sectors, including oil and gas, energy, petrochemicals, mechanical and rotating equipment and utilities, it said. The company’s main divisions range from instrumentation and controls to mechanical and electrical. The instrumentations division offers solutions for level measurement analysers, control and instrumentation equipment, pipeline monitoring (SCADA) and leak detection instruments such as sensors and gauges, flow measurement and metering systems. The mechanical and electrical divisions meanwhile offer valves, actuators, blowers, variable speed drives, battery chargers/rectifiers, UPS/inverter systems and industrial/traction batteries/busbars.


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Analysis

A decision from BP concerning investment in two tight gas projects in Oman could be reached before the end of next year, says Samuiel Ciszuk, Global Oil Supply Consultant at KBC Energy Economics. But the terms have to be right.

Oman looking for the gas

turnaround I

N MID-NOVEMBER BP said that it hopes to reach an agreement with Oman on gas prices and investment terms for its Khazzan & Makarem tight gas project next year, making a final investment decision (FID) possible before the end of 2013. "We are very much committed to Oman," Reuters quoted BP Chief executive Bob Dudley as saying, indicating the company’s continued optimism about the commerciality of the project – if the right terms can be achieved.

The pressure is now therefore on the Omani government to find sufficiently generous gas price terms to allow BP to develop the field to its full potential That will however not be straight forward and the Omani government’s ability to accept a move to more expensive gas will in the long run prove indicative to how quickly other states throughout the region can adapt to a higher gas cost environment. Oman, like other Gulf States, remains a very generous subsidiser of its own population’s energy consumption, offering power and fuels at prices far under their international market value. The result has been the constant feeding of wasteful consumption patterns among both private consumers, commerce, as well as industry, but also a sense among the population of entitlement to cheap energy and fuels as part of the state’s

14 Oil Review Middle East Issue Eight 2012

sharing of the national wealth. Through strong population growth and even stronger per-capita energy demand growth this state of affairs is increasingly under strain across the Middle East and North African region, as particularly domestic gas supplies are struggling to keep up with demand numbers in many countries.

Demand Gas production has traditionally been sourced from associated output being produced at virtually no cost, or cheap non-associated production from large and straight-forward formations, making it possible for the governments to purchase it at very low

costs, even in the cases where private oil and gas companies have been involved. As demand rises and cheap gas supplies no longer are enough, governments have however found themselves in a conundrum. Encouraging exploration and development – or indeed imports – of much more expensive gas would force them to agree to a much higher gas cost, which they still them are supplying to utilities and industrial customers at highly subsidised rates. Moreover, since the 1980s the switch to gas-based power generation has made the region’s economies highly gas dependent, as back then, gas was seen as a still abundant by-product of their oil wealth.


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Analysis

S03 ORME 8 2012 Analysis 02_Layout 1 17/12/2012 12:04 Page 18

Efforts to diversify economies have further entrenched most of them in this situation, as the most logical industries to develop in most states were within the petrochemical and (energyintensive) metallurgic sectors, drawing on existing hydrocarbon know-how and skills and the access to cheap product and gas feedstock. Ironically those efforts caused domestic demand growth levels to spike further, in effect negating any diversification away from hydrocarbons by making the economy even more reliant on hydrocarbons. This situation is of course well known and Oman was one of the first Gulf states to start suffer from this predicament. Having switched its power generation to be almost entirely reliant on gas in the 1990s and also decided to build two LNG export ventures, the sultanate started suffering power shortages due to the lack of feedstock as early as during the first half of the past decade. Apart from the strain on populations, the rolling blackouts proved a cap on economic growth, while the lack of future power or gas feedstock allocations forced industrial projects to be put on hold. Other countries to early face these problems in the region were Kuwait and Bahrain, who also together with a fast-moving UAE eager not to damage its strong economic growth, started importing gas. For Oman it has not been as simple. A small amount of gas has been secured from Qatar through the Dolphin Pipeline network, however politically larger import operations have been tough to launch, given Oman’s continued LNG export commitments. Instead the sultanate was hoping that domestic development would help to tide it over. This has almost happened, but at the cost of repeated seasonal power shortages and Oman’s economic growth having trailed several of its neighbours’ in the otherwise expansive past decade. Conventional Omani projects have not materialised in as prolific numbers as hoped and efforts to get large EOR projects underway in the sultanate have not resulted in much higher associated gas production – or at least not freed up enough gas, although the sultanate has been careful with projects requiring gas injections given its predicament.

BP estimates that first phase development will require an investment in the region of US$24 billion

As demand rises and cheap gas supplies no longer are enough, governments have however found themselves in a conundrum from the start been a challenging undertaking of such a calibre, that until fairly recently it was still uncertain whether there were technical grounds to view the project as commercial. From 2009-2010 and onwards comments from BP and the Omani state have been increasingly bullish from a technical perspective and as test production has come onstream, the project has looked much more certain. Oman’s gas production has for years hovered around 2-2.2 bcfd, so the development of Khazzan & Makarem, planned to yield 1-1.2 bcfd, would be a game changer for the country’s gas supply and instantly unlock further economic growth potential in the country. Prospects for further development phases have been mentioned, however they are still to be closer defined and delineated.

Solution New wells

Complexity The promise for the future, the prize in fact, is therefore its tight gas reserves. BP’s Khazzan & Makarem fields, in Oman’s Block 61 hold at least 22 tcf of proven gas reserves, although two further reservoirs could lift this number closer to 30 tcf. The tight reserves in the block should be compared to the sultanate’s overall reserves of around 35 tcf of gas. Block 61’s gas is tight however, located in rock formations with very low permeability and at quite a depth. Wells have to reach on average between 4,500-5,000 metres down into the tight rock formations, after which extensive horizontal sections have to be drilled. To add to the complexity, some of the output from the four producing zones is sour and has to be produced and transported in closed and entirely non-corrosive systems until treated and stripped of its toxic components. Developing Block 61 has

18 Oil Review Middle East Issue Eight 2012

was considerably smaller, holding approximately 8 tcf, thus starting at a disadvantage without the economics of scale, however when BG abandoned the project in June 2010 the need for a radical revision of Oman’s gas price policies was hammered home to the government. On the other hand, some have put BG’s loss of interest at least partially down to disappointment over not getting the right to export the gas as LNG through Oman’s Qalhat LNG plant, to which the government naturally was unable to agree. Regardless, a similar fate for the BP development at Block 61 has to be averted at almost any cost. The loss of time and the damage to the economy should BP withdraw and another equally skilled partner have to be found would in itself be too costly an alternative. The pressure is now therefore on the Omani government to find sufficiently generous gas price terms to allow BP to develop the field to its full potential, while simultaneously putting the price as low as possible to minimise the cost to the government coffers. Gas and power subsidy cuts remain a largely taboo topic in the Gulf in the wake of the Arab Spring in 2011 and particularly given that Oman was one of the two GCC states where protests erupted, albeit limited in scope and number.

The first phase development is estimated by BP to require an investment of around US$24 billion and the company is already underway with spending the US$700mn budgeted on the Block 61 exploration and test production development. Since mid-2010 an extended well test has produced gas from up to nine wells, sending them to Oman’s existing Saih Rawl gasfield treatment plant, however for the full development BP is eying the need for at least 330 new wells to be drilled and the construction of the project’s own treatment capacity. Given the cost of development, it is not hard to understand that Omani state’s current gas purchase price is far too low. Production prices at Khazzan & Makarem are thought to come in well above US$2/mmBtu, as were prices at another tight gas project which fell through in recent years, BG Group’s Abu Butabul development. Abu Butabul

While price increases/subsidy cuts could materialise quite quickly for heavy industries, such changes for retail clients and smaller businesses remain firmly off the agenda for some time more, despite the underlying pressing need to move towards a better energy and budget sustainability. With the much higher gas availability the Khazzan & Makarem development could give, at least one of Oman’s major systemic constraints would be solved however, making it possible to reenergize economic development and job creation. With more of that, the government will hope, attention could then more successfully be switched to the energy cost and subsidy issue. That BP and Oman last year said a price agreement would be reached in the first half of 2012 is hopefully just showing that both sides remain committed to finding a mutually acceptable solution and that breaking off negotiations is not an option. ■


S04 ORME 8 2012 E&P 01_Layout 1 17/12/2012 12:19 Page 19

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E&P

Successful bidders are likely to find substantial quantities of natural gas and possibly oil off the Lebanese coast, according to a top executive at a British company carrying out 3D Multi Client seismic surveys in Lebanon’s offshore.

Spectrum optimistic about

Lebanon’s potential “Y

OU WILL NEVER know how much gas there is until you drill a well under the sea, but you can make an assessment from the site we surveyed,” Spectrum CEO David Rowlands told Oil Review Middle East. “Our assessment so far indicates that there is a significant volume of gas to be discovered offshore Lebanon, and maybe even oil.” Rowlands said the company recently concluded the first phase of a 3D survey in order to better determine the quantities of gas and oil off the Lebanese coast. Spectrum had already carried out a 2D seismic survey off the Lebanese coast in 2000, as well as a second shallow water survey in 2002. The company has a contract with Lebanon's Ministry of Energy and Water (MEW) to acquire 3,000 sq-km. "It is our intention to fulfil these obligations," said Rowlands, stating that the second stage of the project has already commenced. Spectrum carried out the 3D survey in collaboration with the Norwegian company Dolphin Geophysical, which provided its high-capacity seismic vessel, M/V Polar Duke. The survey acquired around 2,320 sq-km of 3D data. The survey was the first stage of a project that will generate up to 3,000 sq-km of data when completed, Spectrum said.

The last hurdle to the first offshore bid round has now been cleared

The survey was fast-tracked with the first 3D data volume delivered to Spectrum in late October. The data is now available to the government of Lebanon and other interested clients. According to Spectrum there is a high level of interest from oil companies based in Europe, US and the Far East. The data processing will be completed in early 2013, which is when the Lebanese government has said it will open its first offshore licensing round. Dolphin said in a press release that the mobilisation and acquisition began in August and fitted well with the schedule for Polar Duke’s voyage to a previously announced contract in East

20 Oil Review Middle East Issue Eight 2012

The company recently concluded the first phase of a 3D survey in order to better determine the quantities of gas and oil off the Lebanese coast.

Africa, which commenced in early October. Energy and Water Minister Gebran Bassil has said that tenders for oil companies could start at the end of this year or early next year once a

technical oil committee has been formed. This Petroleum Administration was finally elected on November 6th. Consequently the last hurdle to the first offshore bid round has now been cleared.


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Significant discoveries Rowlands said several international companies had already shown "significant" interest in extracting Lebanon’s oil and gas, saying that the discovery of deposits prompted a “stampede to explore the deepwater of the Levantine Basin.”

www.spectrumasa.com

"Lebanon should be on the radar of all oil companies who operate offshore," Rowlands said. "The offshore Levantine Basin extends from Israel into Lebanon. There have been a number of significant gas discoveries (some world-class) in the southern Levantine Basin in the last five years". Lebanon’s offshore area covers a total of 22,730 sq-km in the Eastern Mediterranean and has never been previously licensed for hydrocarbon exploration, according to the Energy and Water Ministry’s website. The recent deepwater, sub-salt gas discoveries

to the south and west, which encountered high quality Lower Miocene sands, have significantly increased the industry interest in Lebanon and the Eastern Mediterranean. The Levantine basin within the Eastern Mediterranean region is [believed] to contain some of the most exciting exploration plays in the region which are being re-evaluated through advances in seismic technology. The Levantine Basin is a large deep basin estimated to contain more than 10,000 meters of Mesozoic and Cenozoic sediments. The basin contains all the key elements for successful hydrocarbon exploration with deepwater hydrocarbon plays within the Tertiary (Miocene/Oligocene sands) anticlinal structures enhanced by large potential stratigraphic traps. Nearer to shore, in relatively shallower water, hydrocarbon leads have also been recognized in the basin margin invoking new petroleum systems, according to the MEW. Industry analysts say it will take a minimum of five years until companies start extracting gas and oil off the Lebanese coast if everything goes according to plan. Spectrum are currently evaluating other projects in the Middle East. "We have a data library which includes 2D surveys in Spain, Italy, Syria and Libya," Rowlands said. ■

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E&P

Rowlands added that Spectrum focused its survey on the exclusive territorial waters of Lebanon and avoided the disputed economic maritime waters near other countries. “We did not acquire data from any disputed waters,” he said. "We ensured that the survey was 100 per cent acquired in the Exclusive Economic Zone of Lebanon." The area which Spectrum acquired is the southwest corner. The survey started 60 kilometers off the Lebanese coast and extended to the area near the maritime border with Cyprus. “We anticipate that our data will be available by the end of this year or early next year. The contract allows us to provide copies of the data to interested companies from America, Europe and the Far East. The aim is to get as many companies as possible vying for tenders, and then they will apply to drill for gas,” Rowlands explained. Spectrum has in the past sold licences for the 2D data offshore Lebanon to more than 25 oil companies.


E&P

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Total and QP extend offshore field deal

Eni restarts drilling activities in Libya

FRANCE-BASED TOTAL HAS extended by another 25 years their agreement with Qatar Petroleum (QP) to serve as operator of the al-Khalij field, located 130km off the coast of Qatar. The oil field was discovered by Total in 1991 and started production in 1997 following an exploration and production-sharing agreement (EPSA) signed in 1989 which is due to expire in early 2014, Total said in a statement. Under the new extended agreement, Qatar Petroleum will own a 60 per cent interest in the Al Khalij oilfield and Total will hold the remaining 40 per cent interest. Total will continue to operate the field. Qatar Energy and Mohammed bin Saleh Al-Sada and Yves-Louis Darricarrère Industry Minister sign the new agreement Mohammed bin Saleh Al-Sada said, "We have been working with our long-time partner, Total, on Al Khalij field since its discovery. We are pleased to sign this new agreement to further develop the field." “This new agreement exemplifies the long-standing partnerships forged with the State of Qatar, as it reflects Total’s commitment to work hand in hand with QP," stated Yves-Louis Darricarrère, Total’s upstream president. Total gave no estimates on production from the field.

ITALIAN OIL AND gas company Eni has restarted its onshore exploration activities in Libya and begun drilling the A1-108/4 well in the Sirte Basin, located around 300km south of the city of Benghazi. The well is operated by Eni's fully-owned subsidiary Eni North Africa and will reach a total depth of 4,419.6 metres. Eni will test a new geological play in the EPSA IV 2008 Contract Area A, which is the first part of an onshore drilling programme that will continue into 2013. In September 2011, Eni became the first international company to resume production in Libya at the Abu Attifel field through its offshore Mellitah Oil & Gas 50/50 joint venture with the country's NOC. The company was also the first to lift the force majeur status in Libya, in December 2011, and to resume offshore exploration activities in February 2012 by acquiring a 3D seismic survey.

Gulfsands ups stake in Tunisian permits GULFSANDS PETROLEUM HAS agreed to acquire a greater participating interest in two exploration permits in Tunisia, Chorbane and Kerkouane permits, that will also seen the firm become the operator of the Chorbane joint venture. The company will pay ADX Energy, XState Resources and Verus Investments Map of the exploration permits in Tunisia US$1.1mn, plus a further US$415,000 to cover past costs for the extra rights. Once the deals go through, which is still subject to regulatory approvals, Gulfsands will hold a 70 per cent participating interest and be operator of the Chorbane joint venture (onshore Tunisia) and hold a 40 per cent participating interest in the Kerkouane and Pantellaria joint ventures (offshore Tunisia and Italy). ADX will retain 30 per cent and 60 per cent participating interests in the onshore and offshore joint ventures respectively. Ric Malcolm, Gulfsands chief executive officer commented, “We are planning for a significant increase in exploration activity during 2013 in order to advance preparations for the drilling of exploration wells on both the onshore and offshore permits during early 2014." Gulfsands will start a seismic programme on the Chorbane permit, which is located onshore central Tunisia near the port city of Sfax, in 2013. After the test data has been processed and evaluated the firm hopes to drill at least one well on the permit during 2014.

22 Oil Review Middle East Issue Eight 2012

Eni is embarking on a drilling programme in Libya

Longreach starts seismic programme in Morocco LONGREACH OIL & Gas has started its 500km 2D seismic programme ahead of plans to drill its first well on the Sidi Moktar permit onshore Morocco next year. The survey will cover the slated drill targets of Koba and Kamar, to further de-risk and optimise the drilling location for these prospects, as well as to help convert a number of other identified leads into drillable prospects, the company said in a statement. Longreach has contracted Prospectiuni SA to deploy its advanced technology Vibroseis cable-less crew to acquire the data. This survey is part of the fulfilment of licence obligations. The 2D seismic survey is expected to take two months, with processing being undertaken in parallel with data acquisition. This approach will provide new data in a timely manner for Longreach to confirm its well locations for its 2013 well programme. Bryan Benitz, chairman and chief exectutive of Longreach commented, "This is one of the final stepping stones to drilling our first well. The company expects to be fully funded for its current multi-well programme for next year, where the aim is to target a relatively low risk prospect, which if successful, will allow to get into early production to generate near-term cash flow. This will provide additional foundations for the company's medium term plan for Morocco, where we plan to drill and bring on stream a combination of high impact and near-term producing assets." Longreach had interpreted over 4,500km of existing 2D seismic data on Sidi Moktar and has now completed the reprocessing of 1,750km with Key Seismic Solutions in Calgary. The company has also completed a comprehensive petrophysical analysis of the neighbouring wells to gain a better understanding of the reservoir and assess the potential of the entire Triassic stratigraphic section. In preparation for its 2013 drill campaign, Longreach is also launching international tenders for a rig to drill two wells and to procure the associated long-lead items.


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Block 8 in Oman records highest production levels DNO INTERNATIONAL’S OFFSHORE Block 8 concession in Oman has hit record production levels with a daily rate of 20,000 barrels of oil and condensate along with 60mn cubic feet of gas. This jump represents a near tripling of oil and condensate production and a doubling of gas production from the block. The increase was due to a twowell drilling programme conducted by DNO in the West Bukha field. Block 8 contains Oman's only offshore DNO executive chairman Bijan producing field Mossavar-Rahmani commented, "With the success of these wells we are taking a fresh look at the West Bukha and Bukha fields and our other offshore assets and believe there is further potential to grow production and reserves in this area." DNO holds a 50 per cent interest in Block 8, where it is the operator. Korea's LG International holds the remaining 50 per cent interest.

PTTEP finds oil in Algeria PTT EXPLORATION AND Production (PTTEP) has found oil from the sixth exploration well, Mouia Aissa-1, in the Hassi Bir Rekaiz Permits in Algeria, which is located onshore in the eastern part of the country and covers an area of 5,378 sq km. The well was drilled to a total depth of 3,844 metres and the discovery of petroleum occurred in formation of Triassic Argilo Greseux Inférieur (TAG-I) reservoir. A flow test was conducted and uncovered a crude oil flow of approximately 5,243 bpd, while a natural gas flow of approximately five million standard cubic feet per day was also discovered. Thailand-based PTTEP and its partners have planned in the first exploration phase of Hassi Bir Rekaiz Permits to drill nine exploration wells from late 2011 to early 2013 and, to date, six exploration wells have been drilled with five proving successful. PTTEP is the operator with 24.5 per cent interest, while its partners in the project consist of Algerian National Oil and Gas Company (SONATRACH), who holds a 51 per cent interest and China's CNOOC holding a 24.5 per cent interest.

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Talisman finds oil in Kurdistan Region of Iraq CANADA'S TALISMAN ENERGY has found a significant accumulation of light oil at the onshore Kurdamir-2 well in the Kurdistan Region of Iraq. "We are very excited to have found high quality oil with significant flow rates in the lower part of the Oligocene formation," said Richard Herbert, executive vice president of exploration. The cased-hole test was conducted in the deeper part of the Oligocene formation and follows on the initial open-hole test conducted in March 2012. This zone tested at stabilised rates of up to 3,450 bbls/d of 38 degree API oil and 8.8 mmcf/d of natural gas over a two-day period. The test targeted 20 metres of fractured reservoir below the main porous zone. The results of the test confirm the presence of an oil column of at least 146 metres in the Oligocene reservoir, with no evidence yet of the oil-water contact level. The deeper extent of the oil column will be appraised by the drilling of the Kurdamir-3 well. "Plans are underway to drill an appraisal well, Kurdamir-3, adjacent to this discovery, in early 2013," Herbert added. Talisman is an operator of the Kurdamir Block, with a 40 per cent working interest. Joint venture participants include WesternZagros, who also has a 40 per cent working interest, and the Kurdistan Regional Government (KRG), which holds the remaining 20 per cent of interest.

KBR awarded FEED contract for Mansuriya project in Iraq KBR HAS WON the contract to provide the front end engineering and design (FEED) studies and Quality Control Support Services (QCSS) for the Mansuriya Full Field Development in the Diyala Province of Iraq The contract was awarded by the Turkish Petroleum Overseas Company (TPOC), a wholly owned subsidiary of Turkish Petroleum Corporation (TPAO). KBR will perform FEED studies and QCSS during the EPC phase for the field’s production and export systems. These are designed to help TPOC start the first gas production in mid-2015 and help raise the Mansuriya field raw gas production to receive a plateau level of approximately 320 MMscf/d net dry gas by mid-2017. “KBR brings the experience and expertise of working in logistically challenging areas like Diyala, so we are able to successfully navigate issues to help TPOC meet its first gas date,” said Khaled Abu-Nasrah, president of the Middle East region. The project will be based out of KBR’s offices in London and Jakarta. KBR’s Baghdad office will play a role in supporting local employee content for the project. It is scheduled to be completed in 2017. In the Mansuriya project, TPAO has 37.5 per cent interest. Other participants include Oil Exploration Company (25 per cent), Kuwait Energy (22.5 per cent) and Korea Gas Corporation (15 per cent).

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DNO targets more oil from Kurdistan region of Iraq DNO INTERNATIONAL HAS found additional oil at the Benenan-3 well it drilled on its Erbil license in the Kurdistan region of Iraq. The Norwegian oil and gas company encountered the additional 210 meter oil column in the Najmeh reservoir which is expected to more than double the Benenan field's gross 2P oil-in-place volumes from 300mn barrels to an estimated 600-700mn barrels. "Like Tawke before it, Benenan is starting to grow as we explore and appraise the field," said Bijan Mossavar-Rahmani, DNO International's executive chairman. Benenan-3 was originally designed as a horizontal producer in the Upper Najmeh formation with a deeper deviated exploratory DNO's assets in Kurdistan region of Iraq probe. The well will now be completed as a deviated well capable of producing from several Najmeh intervals as well as from the Bekhme formation. The well produced 800-1,000 bpd of 12-16 API gravity oil from an open hole test in the Lower Najmeh interval, having earlier confirmed movable oil from an open hole test in the Bekhme formation. The Bekhme formation is currently producing in the Company's Bastora-1A long-term test well in the neighbouring Bastora field and the Upper Najmeh previously tested as productive in the Benenan field discovery and appraisal wells. The Benenan and Bastora field development programme is continuing with a second development well scheduled for mid2013. DNO International holds a 40 per cent working interest and is the operator of the Erbil license.

WorleyParsons awarded contract for Qurna-2 oilfield in Iraq LUKOIL MID-EAST LIMITED awarded WorleyParsons a three year contract, worth an estimated US$82mn, to provide project management services for the West Qurna-2 oilfield development project in Iraq. WorleyParsons will provide project management, technical and construction supervision personnel to support the West Qurna-2 engineering, procurement and construction (EPC) activities. WorleyParsons’ chief executive office Andrew Wood stated, “We appreciate the significance of the West Qurna-2 development to the sustainability of the Iraqi economy, and will work closely with Lukoil to create the maximum value over the life time of the field.” The Australian-based company will also develop a project management system to manage and control the project during its execution from design engineering through to commissioning. The agreement will cover a number of facilities at West Qurna-2 including central processing facilities, gas treatment facilities, well pads and produced water treatment. The contract will be executed from WorleyParsons' offices in the UAE and Iraq. Lukoil sealed a 20 year deal to develop the West Qurna-2 oilfield in an auction in December 2009, pledging to boost output to a plateau target of 1.8mn bpd in six years.

Oil Review Middle East Issue Eight 2012 25


S06 ORME 8 2012 Gas 01_Layout 1 17/12/2012 12:21 Page 26

Gas

Saudi Arabia leads the upstream gas spending, as an emerging Iraq awakens.

High demand sparks the search for

new supplies R

ISING POPULATIONS, ECONOMIC growth, and strong industrial activity continue to put pressure on the Middle East Gulf’s precious natural gas resources. It may seem ironic in a land rich with hydrocarbons, but parts of the world’s leading oil producing region have become vulnerable in recent years because of the growing difference between demand and supply availability in the gas segment. For the world’s biggest crude oil producer, Saudi Arabia, this has meant careful allocation of its gas resources to selected industrial areas and uses, as well as topping up any shortfall with oil. In the absence of more gas availability, the kingdom’s power sector remains heavily dependent on burning oil, a costly and dirty option; as well as the environmental cost, the high oil consumption eats away potential export dollars lost from higher crude sales. Kuwait is another gas hungry economy which, in this case, has turned to liquefied natural gas (LNG) imports from abroad to top up domestic supplies. Dubai is also buying in LNG, while Abu Dhabi has long been supplied with Qatari gas via the cross-border Dolphin gas pipeline. Qatar has played a fundamental role in feeding gas into the prosperous UAE economy, which uses gas for nearly all of its electricity production. Abu Dhabi’s gas consumption has been increasing at a rate of 11 per cent a year. It means, with gas in such high demand, but in apparently short supply, investment in new production and supply is expected to surge in the coming years, with Saudi Arabia leading the way.

Caught short The striking thing is that in all of these cases, these are countries sitting on vast natural gas resources of their own. Not to the tune of Qatar’s 25 trillion cubic metres (tcm) - surpassed only in the Gulf by Iran, with 33 tcm - but impressive numbers all around nonetheless. According to BP’s most recent Statistical Energy Review, Saudi Arabia holds gas reserves of 8.2 tcm; the UAE 6.1 tcm; and Kuwait 1.8 tcm. The only other Gulf countries with reserves that can compete with these are Iraq, with 3.6 tcm, and Oman, with 0.9 tcm. Iraq is expected to see a huge surge in its reserves as more exploration investment filters through. However, not all of these reserves are straightforward to extract, with plenty of sour gas, which contains high amounts of hydrogen sulphide, found in many parts of the Gulf.

26 Oil Review Middle East Issue Eight 2012

Saudi Arabia is continuing its search for gas

Certainly when it comes to production, there has been little to compete with Qatar’s exploitation of the giant North Field, an offshore gas reservoir it shares with Iran. Qatari production tallied 147 bcm in 2011, according to the BP figures. In contrast, UAE production reached 52 bcm, while Kuwait’s stood at just 13 bcm.

Saudi Arabia needs to find additional gas not only to replace oil as the fuel for the next tranche of planned electricity plants but also to guarantee cheap feedstock for new petrochemical facilities Saudi Arabia’s production hit 99 bcm in 2011 which has risen by more than 10 bcm for each of the past two years - although much of this is associated gas from oil production. And a large quantity of this is used for gas-lift and re-injection into the nation’s huge oilfields. Of the rest, methane and ethane are consumed entirely by utilities and industry, while any excess propane, butane and natural gasoline not used by the domestic petrochemicals industry is exported. From this perspective, Qatar’s decision to focus early on gas seems positively inspired.

Despite the abundance of resources all around, it has turned the Gulf into a region of haves and have-nots; or, more simply, a few Gulf states have just been caught short.

Production challenge Not surprisingly, the region’s biggest and most populated economy, Saudi Arabia, is taking action to redress the balance. A decade ago, gas production was roughly half of what it is now in the kingdom. And state-owned energy giant Saudi Aramco is prioritising gas ventures, following a sustained period of upgrading its oil production and export capacity to meet the surge in oil demand in the run-up the global economic crisis of 2008. But while Saudi’s gas production has risen sharply in recent years, in response to the keen demand for energy, figures in the UAE and especially Kuwait have been largely static. This is changing in the UAE, where a number of major projects are underway that will significantly boost output there. Saudi Arabia remains keenly active in the gas sector with a number of big projects taking shape. These include the flagship Karan sour gas project, Aramco’s first non-associated offshore gas project, which is due to be completed in 2013. It will feed vital new offshore gas supply via a 110 kilometre subsea pipeline to the Khursaniyah gas plant. But the sour gas challenge means additional complexity and cost. The gas will be processed through three trains, and will include facilities for gas


S06 ORME 8 2012 Gas 01_Layout 1 17/12/2012 12:21 Page 27

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sweetening, acid-gas enrichment, gas dehydration and supplementary propane refrigeration. Aramco has also begun drilling in the Hasbah and Arabiya offshore gas fields, located northeast of Dhahran and major progress has been made on the new Wasit gas plant, which will be one of the largest Aramco has ever built when completed in 2014.

Kuwait is another gas hungry economy which, in this case, has turned to liquefied natural gas (LNG) imports from abroad to top up domestic supplies Wasit will be the first in the kingdom to use Sulfinol-M gas treating technology to improve the efficiency of sulphur recovery up to 99.3 per cent.

Saudi Arabia’s gas production has risen sharply in recent years

Saudi officials announced a new offshore gas field discovery 26 kilometers northwest of the port of Daba in the Red Sea in October. The gas well flowed at a rate of 10mn cubic feet per day at a depth of 17,700 feet, although work will continue at the site to evaluate the size of the field. Saudi Arabia needs to find additional gas not only to replace oil as the fuel for the next tranche of planned electricity plants but also to guarantee cheap feedstock for new petrochemical facilities.

Frontier exploration The search is also on for new gas resources that could ease the kingdom’s shortages going forward. For some years, Aramco has been working with a series of international partners targeting gas in the remote Empty Quarter desert region. Apart from some limited success with the Shell joint venture, the exercise has proved largely disappointing thus far, however. Nonetheless, Aramco chief executive Khalid alFalih said in a speech posted on Aramco's website in October that gas remains a high priority, which means securing and identifying new deposits. “We are planning to increase our conventional and unconventional gas supplies by almost 250 per cent over the coming couple of decades,” he said. Another prospective area being targeted where there are now early signs of success is the offshore Red Sea, on Saudi Arabia’s western flank.

Iraq gas emerges New production is also on the rise in other locations such as Iraq, where reserves have barely been touched. There are massive infrastructure development plans which will depend critically on a stable energy source, which means Baghdad is keen to get the gas sector going. Shell is managing the largest single project, to gather associated gas from a group of major oilfields in the south, although this scheme is at an early stage. The gas will initially be put to domestic use but could potentially make Iraq an LNG exporter. In fact, given the scale of the reserves at hand, just like the oil sector, the potential of Iraq’s gas sector is almost unlimited, though constrained by other factors, including funding, political and

security risks, infrastructure constraints, and the lack of any commercial gas market history. And there is progress in the Iraqi Kurdistan region too, where production from the Khor Mor field has reached 80,000 barrels of oil equivalent per day (boepd). Joint operators Dana Gas, the first regional private sector natural gas company, and Crescent Petroleum, the oldest Middle East private oil and gas company, recently marked their fourth year of production at the site, which feeds local industries and power stations. Cumulative investment at Khor Mor is worth some US$1 billion. Again, the potential in the Kurdish region is equally significant, and there has been early talk of feeding gas through to pipelines bound for Europe in the future. As with the rest of Iraq, the hold-up is not the reserves, but almost everything else, including current wastage through flaring, a point identified by the International Energy Agency (IEA) in an October report on Iraq’s oil and gas potential. “Natural gas can play a much more important role in Iraq’s future and a vital first step will be to reduce the amount of gas that is currently flared,” it said. Once domestic needs are met, Iraq can then provide a cost-competitive source of gas supply to neighbouring countries, to European markets and to Asia, according to the report. ■

Iraq’s impact on international gas markets AS WITH OIL, Iraq’s nascent gas sector is expected to enjoy massive growth in the coming years. Although this will be primarily used for domestic consumption, it holds great potential for regional and international export long-term. Potentially, this could make a huge impact on the Gulf’s regional supply and demand balance. According to the International Energy Agency (IEA), in its October report on Iraq’s oil and gas sector, marketed gas output in Iraq is to rise to almost 90 billion cubic metres (bcm) by 2035, a full 80 bcm higher than in 2011, under a mid-case scenario. This rate of increase is one of the fastest in the world, with the new output coming from roughly equal shares of associated and non-associated gas. There is still uncertainty over the extent to which gas will be used in the domestic market, for electricity and industrial uses, and indeed how quickly flaring will be reduced. But the report shows that cumulative production

28 Oil Review Middle East Issue Eight 2012

of associated gas is enough to cover only around 70 per cent of anticipated demand from within Iraq up to 2035. It means the development of Iraq’s nonassociated gas resources will therefore be the key to determining the prospects for, and extent of, potential gas export. Here, the geography of gas production in Iraq is important. In the southern part of the country, the story is likely to be led by associated gas although there is also the southern non-associated Siba gas project, awarded in the third national licensing round to a consortium led by Kuwait Energy. Some of Siba’s production could be allocated for export to nearby Kuwait. In the west, the main potential source of gas for export is the Akkas field, near the Syrian border, which was awarded in the third licensing round to a consortium led by Korea’s KOGAS. For the

moment, unrest in Syria has closed any debate about export here. The IEA report says the main potential for nonassociated gas production in Iraq over the projection period is in the north of the country, particularly in the Kurdistan territory, and close to a ready market in Turkey, also a conduit to markets in Europe. For the rest of the Gulf, a more likely option is that Iraq might use part of any gas surplus to generate electricity for export to neighbour countries. This could be a more palatable option for proud countries like Saudi Arabia which, while ruling out gas imports, has not been afraid to trade in the nascent cross-border Gulf power pool. Still, all of these options remain a some way off in the future. Iraq, despite its immense potential, has a long way to go to meet its own needs before it can begin to think about the needs of others.


S07 ORME 8 2012 Gas 02_Layout 1 17/12/2012 12:23 Page 29

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Gas

Dolphin Energy awards contract for gas plant upgrade DOLPHIN ENERGY LIMITED has awarded India’s Larsen & Toubro a US$250mn engineering, procurement and construction (EPC) contract for its upgrade project at its gas processing plant in Ras Laffan, Qatar. The project is expected to be completed in Q4 of 2014. Larsen & Toubro’s scope will include the detailed engineering, procurement and construction of all necessary works to facilitate the installation of three new Rolls Royce Trent gas turbine compressors, each rated at 52MW and related facilities. The US$136mn contract for Rolls Royce was announced in April 2012. Once complete, the three new compressors will join six similar Rolls Royce compressors already servicing the plant. They will improve overall reliability and availability of natural gas exports to the UAE and Oman. The Dolphin Project involves the production and processing of natural gas from Qatar’s North Field and transportation of the dry gas by subsea export pipeline from Qatar to the UAE, which began in July 2007.

Dana Gas agrees gas field deals with Sharjah and Ajman THE UAE'S DANA Gas has signed agreements with the Sharjah and Ajman governments to jointly develop a gas field located about 40 km offshore in shared territorial waters. The deal included a unitisation agreement for management of the shared field, gas sales and purchase agreements, and the joint operating agreement that covers drilling horizontal wells and installation of offshore platform for process of gas production via 25 km subsea pipeline. Initial gas production from the field is planned for the first half of 2014, the company said in a statement. The new offshore gas development will be Dana Gas first exploration and production project in the GCC region as the company traditionally produces oil and gas from onshore fields in Egypt and the Kurdistan region of Iraq. "The produced gas will be used mainly for power generation which will make significant savings in fuel cost," Rashid alJarwan, executive director said. Dana Gas has been expanding in all areas of the natural gas industry across the Middle East and North Africa region, including the upstream exploration and production for natural gas.

Dolphin Energy’s GM in the UAE and Qatar, Ibrahim Ahmed Al Ansaari and Adel Ahmed Albuainain with Larsen & Toubro’s CEO and Managing Director K. Venkataramanan

Egypt looks to import LNG in 2013 PRIVATE-EQUITY FIRM CITADEL Capital SAE (CCAP) and Qatari investors have signed a project development and shareholders' agreement to form a joint venture, arranged by QInvest, to construct and own a a Floating LNG storage and regasification unit (FSRU) in Egypt to import LNG into the country from mid-2013. According to the terms of the agreement, the joint venture will import LNG, regasify it at the FSRU, transmit it through the Egyptian national natural gas grid and market the natural gas to local high-volume end-users, the Egyptian firm said in a statement. Citadel Capital added that it expects to enter the Egyptian market by applying for a licensing process to import of natural gas, which was recently announced by the Egyptian Natural Gas Holding Company (EGAS). The planned location of the FSRU facility, the exact source of the LNG and the project's expected investment cost were not announced.

Citadel Capital chairman Ahmed Heikal commented, "We believe that Egypt is in strong need of additional natural gas to feed the power generation sector and supply Egypt’s industrial base with a reliable, clean source of energy." FSRU's are an attractive alternative to setting up permanent regasification facilities as they are cheaper and can be built in much shorter time period. Egypt has two LNG terminals and a pipeline that exports some of its large gas reserves but the country has had to divert a lot of the gas destined for exports to the local market to meet growing demand. The country reduced the LNG output at Gas Natural SDG SA (GAS)’s Damietta plant by 41 per cent in the first half of 2012 from a year earlier. The Qatari investment group will hold a 51 per cent interest in the planned joint venture, with Citadel Capital holding the remaining 49 per cent.

Gulf LPG secures financing GULF LPG TRANSPORT Company, a Qatari liquefied petroleum gas (LPG) shipping firm, has secured financing of US$200mn from Qatar National Bank (QNB) in a deal brokered by Qatari gas transporter Nakilat. Gulf LPG is jointly owned by Nakilat and Milaha and manages and operates four Qatari-flagged VLGC (Very Large Gas Carrier)-class LPG carriers – Al Wukir, Representatives from Gulf LPG, Nakilat, Milaha and Bu Sidra, Lubara and Umm Laqhab. QNB at the signing ceremony Nakilat has the lead role in the management, operations and financing of the Gulf LPG fleet. "Nakilat values the strong partnership we have with Milaha and the achievements of Gulf LPG reflect the success of this synergy. The transaction with QNB demonstrates our ability to attract significant financing to projects," said Muhammad Ghannam, chairman of Gulf LPG and managing director of Nakilat. Sheikh Ali bin Jassim Al Thani, chairman and managing director of Milaha, said, "Milaha's established strategic relationship with Nakilat is highly regarded. The successful completion of this transaction should increase the prospect for future similar transactions for both Gulf LPG and its strategic financial partners. We would also like to thank QNB for their support to the Qatari shipping industry."

30 Oil Review Middle East Issue Eight 2012


S07 ORME 8 2012 Gas 02_Layout 1 17/12/2012 12:23 Page 31

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Gas

Iran to increase gas production from South Pars IRAN WILL INCREASE gas production from its giant South Pars gas field, according to Mousa Souri the managing director of Pars Oil and Gas Company. Souri said that the development of phases 12, 15, 16, 17 and 18 of South Pars would add nearly 200mn cu/m per day of sour gas to the output on the fieldâ&#x20AC;&#x2122;s Iranian side, the the Fars News Agency reported. Iran currently produces 300mn cu/m per day of gas from South Pars. The South Pars gas field holds eight per cent of the worldâ&#x20AC;&#x2122;s total gas reserves and covers an area of 9,700 sq km, 3,700 sq km of which are in Iran's territorial waters with the remaining 6,000 sq km in Qatar's territorial waters. The South Pars gas field covers an area of 9,700 sq km

Saudi Aramcoâ&#x20AC;&#x2122;s gas flare efforts recognised SAUDI ARAMCO TAKES gas flare reduction very seriously and Aramcoâ&#x20AC;&#x2122;s effort in tackling the issue was recognised at a global forum on the issue. The forum, which took place in London, was hosted by the Global Gas Flare Reduction (GGFR) Partnership in association with the European Bank for Reconstruction and Development and the World Bank. At the forum Saudi Aramco was give a special award for "Excellence in Gas Flare Reduction Programme." "Saudi Aramco has been a pioneer in terms of reducing flaring and developing gas utilisation projects and they have avoided millions of tonnes of CO2 emissions through their efforts. This is a model for other countries in their approach to gas flaring reduction," GGFR manager Bent Svensson said of the company. "In line with the GGFR Partnership, Saudi Aramco and the Saudi Arabian government are cooperating closely to redirect flared associated gas and to optimise this valuable resourceâ&#x20AC;&#x2122;s beneficial uses,"Ahmad Al-Saadi Gas Operations vice president said during the forum. "Looking ahead, we envisage a future where waste of precious resources will be minimised toward zero-discharge, through development technologies and full minimisation program execution," he added.

Qatargas to deliver first LNG cargo to Singapore QATARGAS OPERATING COMPANY Limited (Qatargas) has said it will deliver the first ever cargo of Liquefied Natural Gas (LNG) to Singapore LNG terminal in 2013. The cargo is expected to be delivered during the first quarter of 2013 and will be used to commission Singapore LNG Corporation Pte's (SLNG) LNG terminal currently being built on Jurong Island, Singapore. The cargo will be delivered on board either a Q-Flex or a Q-Max LNG vessel, both of which can be accommodated at the LNG Terminal. Khalid Bin Khalifa Al Thani, chief executive officer of Qatargas, said, â&#x20AC;&#x153;Qatari LNG continues to have a key role to play in helping countries around the world improve the diversity of their energy supplies. We are pleased with this development which will help to meet the growing demand for energy in Singapore and help us build our relationship with a new customer." The Singapore LNG Terminal will be the second LNG terminal in South East Asia commissioned with the help of Qatargas. In June 2011, Qatargas delivered a commissioning cargo to Thailandâ&#x20AC;&#x2122;s Map Ta Phut LNG Terminal. â&#x20AC;&#x153;Qatargas is at the forefront of commissioning new LNG Terminals and is confident of its continuing ability to maintain safe, long-term reliable supplies of clean LNG energy to countries where it is needed the most,â&#x20AC;? Al Thani added. The Singapore LNG Terminal will be the first open-access, multi-user LNG Terminal in Asia.

Oman Gas to upgrade gas network

Yousuf Bin Mohammad Al-Ojaili

OMAN GAS COMPANY (OGC) will invest US$780mn during the current Five-Year Plan to upgrade its gas network, according to OGCâ&#x20AC;&#x2122;s chief executive officer Yousef bin Mohammed al-Ojaili. The company plans to extend its 2,300km long pipeline to 2,500km within the next two years and is currently preparing the gas supply tender to Al Duqm Economic Zone, which is expected to receive gas by 2016. The capacity of the pipeline will be 25 million cubic metres per day, Oman Daily Observer quoted AlOjaili as saying. He added that the gas transported through Oman Gas and POD networks is about 85mn cubic metres per day.

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S08 ORME 8 2012 Petrochems_Layout 1 17/12/2012 12:25 Page 33


Petrochemicals

S08 ORME 8 2012 Petrochems_Layout 1 17/12/2012 12:25 Page 34

The global fertilizer industry may face large potential surpluses in the near future as new production capacity comes on stream after historically high prices attracted an investment boom in the sector, particularly in the nitrogen fertilizer and potash sectors. Lynda Davies reports.

Nitrogen fertilizer sector heading for a

potential surplus? M

ANY FERTILIZER PRODUCTS are still trading at historically high levels although they have come down significantly from the peaks seen in 2008. Urea, a type of nitrogen fertilizer, for example, reached record highs in AugustSeptember 2008 of around US$740 a tonne, FOB, for Middle East granular product, and US$770 a tonne, FOB Black Sea prilled product, both key benchmarks. Urea out of the key export destinations is currently trading at between US$390 and US$410 a tonne, FOB, still substantially above the 2005 level of around US$200 a tonne, FOB. The high fertilizer prices have attracted both new entrants and existing producers to splurge on a US$90 billion investment programme on new capacity since 2008. In its Fertilizer Outlook 20122016 report released in June, the Paris-based International Fertilizer Industry Association (IFA) said that close to 250 new fertilizer plants were projected to come on stream during the next five years. In the nitrogen fertilizer sector alone, IFA estimated the expansion plans will boost global capacity by between 17 per cent and 25 per cent by 2015 compared with 2011, which may eventually lead to potential large surpluses.

With large gas reserves and low gas prices, Algeria remains an attractive location for nitrogen capacity investment Suppy forecast However, in the near term improving demand is expected to absorb short-term incremental supply, the industry group said. “But, the emergence of new production capacity and consequently of supply from production ramp-up by 2015 would result in a rising potential annual surplus above 16mn tonnes N in 2016,” IFA indicated in its Outlook 2012-2016. “Under a slow-growth supply scenario, the potential surplus would be close to 10mn tonnes N in 2016, equating to six per cent of potential supply," the report said. According to IFA’s 2012 global capacity survey published in June, projected global

34 Oil Review Middle East Issue Eight 2012

Orascom Construction Industries is heavily involved in the Sorfert Algerie ammonia and urea facilities at Arzew. OCI holds a 51 per cent interest in the operation.

ammonia production capacity is set to increase 17 per cent to 230.4mn tonnes of ammonia in 2016 from 196.2mn tonnes in 2011. Potential world urea supply, meanwhile, was estimated to reach 195 million tonnes in 2016 growing at a projected average annual rate of 4.4 per cent compared with 2011. IFA’s supply forecast is based on the completion of all announced projects as announced by companies and their given timelines, before 2016. “It is most possible that several of these projects will not be completed before 2016, and a few may even be cancelled,” Michel Prud’homme, Director of the IFA Production and International Trade Committee, said this week. “It is also expected that new nitrogen capacity will emerge in the USA from the development of shale gas; in fact, several announcements have been made since June 2012,” he said “These US-based developments will certainly impact urea and ammonia trade in the near term.” The Middle East’s ammonia industry is taking the global lead in terms of capacity growth.

According to London-based consultants CRU International, the region (excluding supply from producers in Libya, Algeria and Egypt) currently holds an eight per cent share of world ammonia supply; by 2020, this is expected to increase to 11%. For the most part, ammonia plants are built to feed associated urea units, and this trend is expected to continue, as the majority of new ammonia projects under construction have been chosen with this configuration. Some 60 new urea plants are planned to come on stream between 2011 and 2016, with potential world supply estimated to reach 195 million tonnes in 2016, growing at a projected average annual rate of 4.4 per cent compared with 2011, according to IFA’s 2012-2016 Outlook. As noted earlier, it is possible, however, that some of these projects may be delayed or a few cancelled, as well as new projects emerging. Algeria and Qatar are seeing the completion of two major nitrogen-fertilizer projects, which at full ramp-up will add around a further 800,000 tonnes/year of merchant ammonia capacity and 3.74mn tonnes/year of urea capacity.


S08 ORME 8 2012 Petrochems_Layout 1 17/12/2012 12:25 Page 35

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Petrochemicals

S08 ORME 8 2012 Petrochems_Layout 1 17/12/2012 12:25 Page 36

Under development Algeria’s state-owned gas producer and distributor Sonatrach and Egypt’s Orascom Construction Industries (OCI) in May finally started production at the first of two lines at their greenfield joint venture ammonia and urea complex Sorfert Algerie - at Arzew, after some delays. Line 1 comprises an integrated ammonia and urea facility with capacity for the annual production of 726,000 tonnes of ammonia and 1.2mn tonnes of granular urea. All the ammonia produced at Line 1 will be used captively for the production of urea. However, technical issues continue to delay the start-up of the second line, which consists of a stand-alone 726,000 tonnes/year ammonia facility, with output all designated for export sale. OCI, which holds a 51 per cent interest in Sorfert, expects mechanical completion of this second line during Q4 and both lines to achieve full production in 2013.

In the nitrogen fertilizer sector alone, IFA estimated the expansion plans will boost global capacity by between 17 per cent and 25 per cent by 2015 A second ammonia and urea project is under development at Arzew, a joint venture between Sonatrach (49 per cent) and Oman Suhail Bahwan Group Holding LLC (51 per cent). The latter company is the owner of the SIUCI ammonia and urea plant in Oman, which was commissioned in 2009. The Arzew project comprises two ammonia lines each with 660,000 tonnes/year capacity and two urea units of 1.15mn tonnes/year each. Start-up is anticipated in 2013. All of the ammonia is expected to be consumed on-site in the production of urea while the urea is designated for export.

36 Oil Review Middle East Issue Eight 2012

GPIC’s Sitrah Island production site – Image courtesy of GPIC


S08 ORME 8 2012 Petrochems_Layout 1 17/12/2012 12:25 Page 37


Petrochemicals

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With large gas reserves and low gas prices, Algeria remains an attractive location for nitrogen capacity investment, and in addition to the Sorfert and the Sonatrach-Oman projects, Sonatrach and Spanish fertilizer producer Fertiberia have looked at building a joint stand-alone ammonia plant in the country, but much uncertainty surrounds this latter development.

Favourable policy Despite its rapidly expanding presence in the global LNG market, Qatar continues with its favourable policy towards the allocation of gas for fertilizer projects. Qatar Fertilizer Company (Qafco), which is 75 per cent owned by Qatar Industries and 25 per cent by Norwegian fertilizer major Yara International, continues to add to its nitrogen production capacity with the recent completion of the Qafco 5 and Qafco 6 expansions at Messaieed. The new Qafco 6 ammonia line and urea unit started up in February, and, according to Yara, the Qafco 6 ammonia line is producing the equivalent of some 700,000 tonnes a year. The new Qafco 5 ammonia line, however, which was first commissioned in August 2011, experienced technical issues and operations were halted after just one week. Yara reports the issues have now been resolved. The new Qafco 5 urea train is also reported to be running at rated capacity of 1.27mn tonnes/year, with ammonia from the Qafco 6 line supplementing the shortfall from the Qafco 5 ammonia unit. The new Qafco 6 urea unit was commissioned two months ahead of schedule and is reported to be running at rated capacity of 1.27 million tonnes/year. Currently about 75 per cent of ammonia produced by Qafco is consumed onsite in the production of urea, melamine and aqueous ammonia. There is some speculation that Qafco may build a further ammonia plant. Iran, which is the second largest country after Russia in terms of global gas reserves, continues with a massive expansion of its nitrogen industry, despite US and UN sanctions against the country. A new 677,000 tonnes/year ammonia and 1.08mn tonnes/year urea plant at Shiraz is commissioning and three further firm gas-based nitrogen projects are in progress. The four projects are being developed under the management of the National Petrochemical Corporation (NPC) and Petrochemical Commercial Company (PCC). Completion the three other projects underway - at Golestan/Agh Ghala, at Lordegan/Chahar Mahall Va Bakhtiari, and at Zanjan/Ajroud – will add another 2.03mn tonnes/year of ammonia capacity and 3.23 tonnes/year for urea. However, a number of industry sources doubt these facilities will be commissioned before 2016. Iran is also looking at developing other ammonia and urea projects as well as ammonia and methanol projects as joint ventures with Indonesian or Omani parties. In Saudi Arabia, Saudi Arabian Mining Company (Ma’aden) affiliate Ma’aden phosphate Company (MPC) - brought on stream its new greenfield 1.09 million tonnes/year ammonia plant at Ras Al-Khair, some 90 km north of Al-Jubail, in mid-February 2011. Some 60 per cent of the ammonia output is destined for use as feedstock for the production of diammonium phosphate (DAP) fertilizer at the Ras Al-Khair complex. Initial DAP production began in the third quarter of 2011, with commercial production beginning in February this year. At full capacity operation of both the ammonia and DAP plants, MPC has up to 440,000 tonnes/year of ammonia available for export. MPC is 70 per cent owned by Ma’aden while Saudi Basic Industries Corp. (Sabic) holding the remaining 30 per cent interest and handles the marketing of the merchant ammonia from Ras Al-Khair.

Final approval Ma’aden is now looking to expand ammonia and phosphate fertilizer production at Ras Al-Khair, although few details on planned capacities have been released. Saudi Arabian Fertilizer Company (Safco), in which Sabic holds a 42.99 per cent interest, is building a new urea plant at its Al-Jubail complex. The new unit will have capacity for 1.1mn tonnes/year of granular urea, and start-up is targeted in the third quarter of 2014. In Bahrain, gas availability is one of the biggest challenges to Gulf Petrochemicals Industries Company’s (GPIC) plans for a second phase expansion of its nitrogen fertilizer facilities at its Sitrah Island production site. The company is looking at setting up additional plants with annual capacities of

38 Oil Review Middle East Issue Eight 2012

www.qafco.com

726,000 tonnes of ammonia and 1.155 million tonnes of urea. Subject to securing the required gas allocation and final approval for the expansion from the kingdom’s government, GPIC is understood to be currently targeting the new plants to be operational by 2017. In the UAE, Ruwais Fertilizer Industries - ‘Fertil’ - is adding another ammonia plant with 660,000 tonnes/year capacity and an adjacent new urea unit with1.16mn tonnes/year at its existing Ruwais site. This Fertil II project is expected to start up in early 2013. In Iraq, resurgence in production volumes of oil and gas in recent times has seen interest in further investment in related industries. Mitsui & Co. has partnered with the Japanese government and others to jointly build and operate a natural gas-based ammonia and urea plant at Basra. The respective parties are reported to be targeting a 2018 start-up date for the development. First Global Company is working on the revamp and restart of ammonia production at the North Fertilizer plant in Baiji, some 200-km north of Baghdad, and awarded a contract to US technology supplier KBR for the work in December 2011 The revamp is aimed at raising installed capacity by about 20 per cent to some 396,000 tonnes/year. In Egypt, production at the Misr Fertilizers Production Company (MOPCO) ammonia and urea plants at Damietta restarted on 28 August after a ninemonth shutdown amid alleged pollution concerns.

Competitiveness But construction at the MOPCO II plant, which is a joint venture between MOPCO and Canadian fertilizer major Agrium Inc. (25 per cent interest) and located about 1 km from the existing plants, remains suspended. The development was more than 90 per cent complete at the time of the stoppage, and if work restarts before the end of 2012, production could begin during the first quarter of 2013. On completion, the new complex will provide for an approximate additional 792,000 tonnes/year of ammonia and about 635,000 tonnes/year of urea. Although gas prices in Egypt are two-to-three times higher than their North African neighbours, such as Algeria, the competitiveness of Egyptian gas prices on a wider global scale makes the country attractive for nitrogen investments in downstream fertilizer expansions and new projects. Egypt’s Carbon Holdings Limited and Egypt Japan Petrochemical Corporation in March 2011 announced their plans for an integrated methanol and ammonia complex in the Ain Sokhna industrial area, targeted for start-up in 2016. In Libya, the Lifeco ammonia and urea complex at Marsa el-Brega, which is a joint venture between Yara (50 per cent stake) and Libya’s National Oil Corporation and the Libyan Investment Authority, is reported to be producing ammonia again after the operation was shutdown in February 2011 amid the violent unrest in the country. One of the two urea lines at the complex is reported to have been tested but has since been halted. The second line remains shut down. The two urea lines have a combined rated capacity of some 940,000 tonnes/year of prilled product. Under normal operations the plant has about 150,000 tonnes/year of ammonia available for export. ■


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Access to human resources is critical for the future success of the oil and gas industry, says Willy H Olsen* Human Resources

Tackling the

people problem T

HE ROLE OF human capital, competence and people issues is ascending on the strategic agenda of both public and private enterprises. We have been through a period with heavy focus on capital efficiency, asset values and shareholder returns. Human capital management is becoming critical for all oil and gas producing environments. The importance in the mature provinces in North America, the Middle East, Malaysia, Indonesia, UK and Norway, are equally as important as in the new oil and gas producing countries in Africa such as Ghana, Uganda, Tanzania and Mozambique. Employment in the US oil and gas industry has increased with close to 40 per cent over the past decade as a result of the shale oil and gas revolution. Shell’s external recruitment demand has tripled over the last 18 month, Sander Nieuwenhuizen, Shell’s vice president for recruiting told the Upstream newspaper recently. The oil companies cannot buy their talent. They have to increase their own efforts to develop the talent.

Corporate culture “We need to focus on transforming today's oil wealth into a broader framework, investing in our people - particularly our youth - with a focus on technical skills, training and creating technical professionals who are qualified and capable of working both here and abroad,” to quote HE Nasser bin Khamis al Jashmi, Undersecretary for the Ministry of Oil and Gas in Oman, a country that has launched its in-country value programme where development of people is a major element. The King Abdullah Scholarship Programme supports overseas studies of over 100,000 young Saudi Arabian men and women. They will return to participate in the modernising of the economy. Saudi Aramco, the world’s largest oil producer, has made training a signature element of its corporate culture. Saudi Aramco has a huge programme of training people and have also introduced young people into a key role in its strategic process. Qatar, UAE and Kuwait have substantial training programmes to attract and keep talent in the oil and gas industry. Access to well trained people is critical for Brazil to reach its very ambitious targets for growing its oil production, and they have a training programme to match. The country is determined to use the large oil reserves to generate local jobs, but face a skill shortage in the short term. The Brazilian president has signed agreements with several

The skills shortage in the oil and gas sector needs to be quickly addressed

Employers in future can no longer rely solely on new graduates or labour market entrants as the primary source of new skills and knowledge countries, including the United States, France and Britain, opening the way for foreign universities to provide slots for Brazilian students. The scholarship plan is part of the Science without Borders programme announced by President Dilma Rousseff to support students who pursue degrees abroad. The programme is expected to assist 100,000 university students by 2014 at a cost of about US$2 billion. Petrobras will provide 5,000 scholarships over the next six years to Brazilian students, many of them will go abroad. The company has its own

training and educational facilities with a highly successful corporate university and heavy investments in its own world-class R&D facilities.

Essential In India leading institutions are focusing on nurturing talent for the oil and gas industry. India has become an attractive location for international engineering firms using India as an engineering center. But India also has to tackle the outflow of talent, especially to the Middle East. Young Indians are looking for opportunities that enable them to expand their capabilities through challenging jobs in an international environment. Training and development programmes are essential in the hydrocarbon industry where the evolution and advancement of knowledge, information and technologies are constant and swift. Projects have become larger and more costly as complexity has grown. Project management is now a core industry skill. In the past, very large project management has been within the capability of a few companies; and the major oil companies in particular. With more and more companies

Oil Review Middle East Issue Eight 2012 39


Human Resources

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executing larger and larger projects, often in remote or complex environments, the need to train project managers is becoming acute. The path-breaking development of new technologies is no longer limited to the technology, media and telecom industries. New innovations have made their way into virtually all sectors of the modern economy, not at least the oil and gas industry. Oilfield services are built on science and technology. The industry is using some of the most advanced services and products in the world to address the most challenging engineering problems on land and in increasingly deeper waters under huge salt layers. The oil industry moves to tougher and tougher environments, especially in the Arctic, where the environment has to be protected. As the industry moves to these environments, these challenges will not get easier. The focus on unconventional oil and gas resources has changed the technical capabilities demanded by oil and gas companies. People and competence are crucial for the productivity of these technologies. High-skill labour is an increasingly scarce input for competitive firms and organisations. To attract and develop talent for key positions and leadership, individual incentive schemes and performancebased remuneration has become increasing popular. The oil and gas industry is facing a big crew change. The generation that entered the sector in the late 1970s and 1980s is retiring. Schlumberger Business Consulting global survey data show that strong efforts have been made to recruit in the last decade, but the effect of the retiring generation still hitting hard. More than

22,000 senior petro-technical professionals are set to leave the industry by 2015. The number of inexperienced industry professionals will have increased significantly and could become a major headache in the light of the challenges that the industry faces.

The oil companies cannot buy their talent. They have to increase their own efforts to develop the talent Untapped resource The oil and gas industry has not been on the top of the wish list for the young generation in the UK, Europe or the USA. Few have looked to math and science as their priority. Asia stands out – with more students with relevant backgrounds emerging and with energy high on the priority list of the new Asian talent, with a higher share of women looking to the energy sector. The number of females in the industry is still far too low, but the industry has realised that women are an untapped resource. “Empowering women to advance in the sciences, engineering and technology forms a significant advantage to solving many of the challenges faced by both the developing and the developed world," says Mr. Sola Oyinlola, Vice Chairman of the Schlumberger Foundation. The industry and the education sector are upgrading capacity for training. Petronas, the national oil company in Malaysia, has long been a

The focus on unconventional oil and gas resources has changed the technical capabilities demanded by oil and gas companies.

leader in training its people and is expanding its activities to bring in more people from the countries around the world where Petronas is operating. Petrofac has opened an advanced training center in Singapore where the students will be able to work in a ‘live’ environment similar working on a platform or process plant. Robert Gordon University in Scotland is launching a new programme to address the growing skills gap in the prospering Energy industry, particularly for oil, gas and renewables expertise. A new Masters programme will be created through direct contribution and collaboration with energy industry experts. The programme has been developed to create technical expertise coupled with management skills within the oil and gas industries. Many energy professionals with relevant technical industry experience are looking to develop essential commercial skills including risk management and supply chain vulnerability in order to enhance their current careers or following a change in job role.

Quality control Employers in future can no longer rely solely on new graduates or labour market entrants as the primary source of new skills and knowledge. They need workers who are willing and able to update their skills throughout their lifetime. Lifelong learning is now more than just a slogan. It has become a necessity for everyone. Information and communication technologies (ICTs) are opening up entirely new avenues for pedagogy, for interinstitutional networking around research, and for on-line and virtual learning. Access to the Internet allows for self-paced knowledge and skills acquisition. Prepared courses, even professional certification now can take place on-line, with adequate quality control and monitoring to facilitate individualised tutoring and graduated, step-by-step instruction and achievement. Schools, colleges and universities, as well as individual students (and faculty) can engage in networked academic activities across institutional, even beyond national boundaries. All players will have to engage with academia and education authorities to ensure that the disciplines needed by the industry are available at the education facilities around the world. ■

*Senior Advisor INTSOK, Norway, Senior Associate, the CWC School for Energy, UK, Former advisor to Statoil’s CEO. Willy Olsen has held a number of senior positions, including Managing Director of Statoil UK and head of Statoil’s activities in in the former Soviet Union. Olsen is now the Senior Advisor to INTSOK, a foundation owned by the Norwegian government and Norwegian oil industry. INTSOK is coordinating efforts of expanding the internationalisation of the Norwegian petroleum cluster. Olsen is also a course leader at CWC School for Energy. For more information please visit: www.cwcschool.com

40 Oil Review Middle East Issue Eight 2012


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Oil Review Middle East Issue Eight 2012 41


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Kuwait

The northern Gulf state’s estimated proven oil reserves stand at 104 billion barrels, but foreign investment and technology is vital to secure future production.

Unsteady

progress “O

UR LONG-TERM GOAL is really to be secure supplier of oil,” said Farouk Hussein Al-Zanki, Deputy Chairman of the Board of Directors and Chief Executive of the Kuwait Petroleum Corporation (KPC), said recently at the Kuwait International Petroleum Exhibition and Conference. KPC is the state-owned entity responsible for Kuwait’s hydrocarbon interests throughout the world. The bulk of Kuwait’s oil is located in the Burgan field, south of the capital Kuwait City. Ninety-five per cent of the government’s fiscal budget comes from oil revenue. The dominance of the energy industry overwhelms nearly all other segments. Kuwait is in the comfortable situation of dealing with a low fiscal break-even price in oil at US$44 per barrel, according to data compiled by the International Monetary Fund (IMF). In comparison, Saudi Arabia’s fiscal break-even level is much higher, at US$72 per barrel. “For gas, it is almost the same, except that in the United States, gas production is already increasing through oil shale discoveries and production,” said Walid K. Al- Hashash, chairman of energy investment firm AREF Energy. “The supplies are immense and accordingly, the prices are going down. Overall, I do not expect 2012- 2013 to be much different from 2011. The price will remain around 100-110, more or less.”

Talks Al-Zanki believes that the current balance between supply and demand in global oil markets means there is no need to change the production quota of OPEC member states. Oil production in the country is progressing steadily according to the strategy of the state-run corporation, he said. KPC’s projects are also being carried out according to plan, including a jointly-owned refinery in Vietnam, he said at the event, which was organised by the Society of Petroleum Engineers and Kuwait University. Taking part in international events, organised by professional international organisations — such as the Society of Petroleum Engineers — is important, as talks have been taking place with international counterparts on the uses of advanced oil and gas related technologies, he said. These technologies can be used in Kuwaiti oil fields, he added. The Kuwaiti oil sector faces a number of challenges in its plans to increase production to four million barrels-a-day by 2020, the most important of which are specialised labour, he noted.

42 Oil Review Middle East Issue Eight 2012

www.kpc.com.kw

The bulk of Kuwait’s oil is located in the Burgan field, south of the capital Kuwait City In order to achieve these aims contracts to bring in foreign expertise have to be carried out periodically, and the biggest challenge of all is how to best utilise these capabilities, he concluded. Meanwhile, Chairman and Managing Director of Kuwait Oil Company (KOC) Sami Al-Rasheed said the success rate of the company’s exploration for oil reserves in 2011 topped 100 per cent. “KOC’s operations led to the discovery of large quantities of light crude and associated gas,” he confirmed. “This success is the fruit of the strategy of the company which prioritises the human resources and manipulates the latest hi-tech achievements in

collaboration with global companies,” he noted. Kuwait plans to expand its oil output capacity to four million barrels a day by 2020 and maintain this level through 2030.

Environment “The country also plans to increase the free gas output capacity to 2.5 billion cubic feet per day, the heavy oil to 270,000 barrels daily which means adding to its daily production 750,000 barrels of oil, 1.5 billion cubic feet of free gas by 2030,” AlRasheed explained. Commenting on KOC’s efforts to protect the environment, he said the company managed last year to reduce the burning of associated gas to just 1.3 per cent compared to 17 per cent five years ago “which constitutes an all-time record low.” The GPCE-2012 is an opportunity to interact with key player in the hydrocarbon industry in Kuwait and the GCC countries, as well as prominent decision and policy-makers in this vital sector. ■

A show of strength OES ALL WORLD Exhibitions wll stage the inagural Kuwait Oil & Gas Show and Conference (KOGS) between 8-10 October, 2013. KOGS 2013 incorporates an international exhibition of oil and gas hardware and services and a broad spectrum technical conference programme. The three-day exhibition serves all areas of the oil and gas industry; including petroleum geosciences, exploration & production and refining & petrochemical products and services. The parallel multi-disciplinary conference programme focuses on science and engineering factors facing those working in Kuwait, the Divided

Neutral Zone (shared with Saudi Arabia) and the Southern oil fields in Iraq. The conference agenda is co-ordinated by a committee of senior NOC and IOC representatives, major operators and academia active in the region. Together, the conference and exhibition combine to form the single biggest gathering of the oil and gas industry ever seen in Kuwait.. Oil production currently stands at approximately 2.5mn bpd. By 2020, Kuwait aims to reach a capacity of four million bpd and has announced a series of large-scale ventures to make this happen.


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Iraq

TPAOâ&#x20AC;&#x2122;s expulsion from Iraq indicates a growing trend of politically motivated contract cancellations by the Iraqi government, say experts at Exclusive Analysis.

Contract cancellation risks give

cause for concern

Iraq believes that current crude oil prices are acceptable for both producers and consumers

E

ARLY IN NOVEMBER, the Iraqi cabinet expelled Turkish state-run energy company Turkiye Petrolleri AO (TPAO) from Block-9 in Basra province, where the company held a 30 per cent stake. TPAO and its partners Kuwait Energy and Dragon Oil won the rights to operate the field in May 2012. The announcement of TPAO's expulsion was likely motivated by Prime Minister al-Maliki's displeasure with Turkish actions in Iraq, including support for his Sunni political rivals and the continuation of cross-border raids in the north. Prior to TPAO's expulsion, TPAO's international arm, Turkish Petroleum International Company

Contract cancellation risks are high for other foreign investors like Russia's Gazprom Neft, with interests in Kurdish fields

44 Oil Review Middle East Issue Eight 2012

(TPIC) signed a US$350mn agreement with the Iraqi government to carry out drilling activity in Basra. While Maliki expressed interest in improving relations with Turkey, this would be contingent on Turkey handing over fugitive Vice President Tariq alHashemi and ceasing alleged support of Kurdish and Arab Sunni political rivals to Maliki. Our sources report that Turkish officials still refused to hand over Hashemi to Iraqi officials.

Opposition Maliki publicly expressed his opposition to Turkey's cross-border operations against the PKK insurgents in northern Iraq. Despite Maliki's opposition, there were renewed Turkish military operations into northern Iraq in early November 2012. The Turkish stance on al-Hashemi and continued cross-border operations are likely to have motivated the cancellation of TPAO's contract. On 7 November, Iraqi Oil Minister Abdul Kareem alAmeedi confirmed that TPAO's expulsion was not for technical reasons, implying purely political considerations. While we believe that TPAO is unlikely to lose its right to operate the remaining four projects

(Badra and Maysan oilfields and gas fields in Diyala and Basra), any TPAO involvement in projects in the Kurdistan Region would increase cancellation risks. Media reports suggest that TPAO, together with the Turkish government is working on creating a separate state-run company to cooperate with foreign investors in KRG projects. Contract cancellation risks are high for other foreign investors like Russia's Gazprom Neft, with interests in Kurdish fields. Iraqi authorities issued an ultimatum to Gazprom Neft on 11 November. If Gazprom Neft ignores this then it is certain to be forced out. France's Total also expanded its KRG interest by acquiring a 20 per cent stake in Taza oil exploration block from Canada's Shamaran Petroleum in August 2012. Total is the Iraqi government's partner in southern Halfaya field and is likely to face pressure from the government to limit its KRG interests in order to remain in the project. â&#x2013; 

Exclusive Analysis is a specialist intelligence company that forecasts commercially relevant political and violent risks worldwide. For additional information, visit www.exclusive-analysis.com


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Iraq in no hurry to adjust production CURRENT CRUDE OIL prices are acceptable for both producers and consumers and Opec member Iraq does not see a need to adjust its production levels to help maintain current prices, the country’s oil minister said recently, echoing comments by Saudi Arabia and the UAE. “For us [the price] is acceptable and it’s now... still acceptable for all-the producers and the other side,” federal oil minister Abdul Kareem Luaiby told Zawya Dow Jones on the sidelines of an industry event. “Now there is a balance in the market. That’s why the price is steady.” Asked if the country needed to adjust its production to maintain the current prices, he said: “From Iraq? No.” Luaiby’s comments echo remarks made by Saudi Arabia’s oil minister Ali al Naimi and UAE energy minister Mohammad Al Hamli who said earlier that the crude oil markets are balanced and prices are stable. Iraq is currently producing about 3.2-3.25mn barrels per day and could hike its output to 3.4mn barrels per day by early next year, and 3.5mn barrels per day by the end of 2013, Luaiby said. About 100,000 barrels per day will come from Majnoon oilfield, while the rest will come from Rumaila and other fields, he said. Iraq is the only member of the Organisation of Petroleum Exporting Countries exempt from output quotas. It relies on crude revenues to rebuild its economy after years of war and economic sanctions.

Revolutionising high temperature insulation through innovation In the last two decades there has been tremendous growth in the variety of insulation materials. Energy Conservation has become the buzz word for industries today who are eyeing at Green insulations options. HYSIL, a leading brand of HIL Limited, India, a flagship company of the US$2 billion C K Birla Group is used to insulate high-temperature pipes and as refractory back end insulation. HYSIL’s inherent low thermal conductivity provides enormous energy savings, performing consistently. HYSIL Pre- formed Blocks/ Pipes fit very well into the global goals of low maintenance having a life of more than 15 years. It is a green product with no hazardous contents and can be safely reused. Enhanced operational efficiencies, lower energy costs and ecofriendliness make HYSIL a revolutionary product in industrial insulation. It is noted for its high strength, corrosion-inhibiting properties, and hightemperature structural integrity. B.S.Rao, associate vice president, HYSIL, pointed out that HYSIL has a market share of over 70 per cent in India with presence in segments like cement plants, oil refineries and thermal power plants. With enhanced capacity, the company is looking to increase its global footprint and is focusing aggressively on exports, especially in Europe. The company already has a presence in the Middle East, Asia, Africa and Australia having clients like the Al Ahmadi Refinery, NASS Industrial Services, Petrokenya Petrochemicals Co., and Koniambo Nickel SAS to name a few. HYSIL has now received the prestigious ISO 9001:2008 and CE Certification serving as a testimony to its Product Quality & Green Philosophy.

Sabin appointment announced BRADFORD M. COOK HAS been appointed general sales manager at Sabin Metal Corp., East Hampton, NY refiner of precious metals serving a variety of industrial processes, according to an announcement from Kevin M. Beirne, Sabin's vice president sales and marketing. In this newly-created position, Cook will be responsible for sales for the Americas and Asia, according to Beirne. Cook joins Sabin with an extensive background in the precious metals industry, having served for the past 22 years at Inspectorate America Corp, Houston, TX where he began as a field representative for the northeastern U.S. and Canada and advanced to sales and marketing management positions in both North America and Europe.

Oil Review Middle East Issue Eight 2012 45


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Top 10 Oilfield Service Companies

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Oilfield service companies operate in some of the most inhospitable areas of the world. Here, in no particular order, we look at the recent regional activities of the top ten companies.

Supporting the

region Halliburton The US oil services giant has played a role in many of the region’s biggest oilfields and maintains a strong presence in all of the key producing states, notably Saudi Arabia, where it has partnered national champion Saudi Aramco for decades. Halliburton has showcased its drilling and well technology on a large number of Saudi oil and gas fields, including the Most of the top 10 oilfield service companies super-giant Ghawar field, the world’s biggest single have been established in the region for years oilfield. It is still working on a multi-year contract to develop wells at South Ghawar, on behalf of Aramco. This project, which runs to operator Eni of Italy hopes to raise output from around 200,000 bpd to 1.2mn 2014, includes a further five-year extension option. Up to four rigs are being bpd by 2017. used to develop between 153 and 185 oil production, water injection and evaluation wells. Apart from the project’s scale, the contract is significant in Schlumberger that it marks Aramco's first-ever integrated turnkey drilling award, as part of a Schlumberger’s skills have been in demand in the Gulf for decades. Nothing has strategy to increase collaboration with major oilfield service providers, such as changed there, with the company recently reporting solid workover and Halliburton. Saudi Arabia’s Ghawar field is estimated to produce over five development activities in Saudi Arabia. It is also currently active on the Umm million bpd. Sheif and Zakum Phase 1 development plan for the Abu Dhabi Marine Operating Company. As well as mature markets, the company has also directed Petrofac business to an emerging Iraq, where it is now using pioneering technology for If there was a new entrant contender for the Gulf, then UK-based Petrofac would the first time on fields such as Rumaila. The Schlumberger Wireline Dielectric be among the clear leaders. Not that the company is new anymore with a Scanner multifrequency dielectric dispersion technology was recently deployed footprint that spans the Gulf and many other world oil hotspots. After to evaluate one unconventional Iraqi reservoir. It identified three additional establishing a formidable presence in the GCC region, the company has seen its reservoir columns that could have been missed with conventional formation Iraq strategy pay off big time in 2012 with a string of major contract awards. evaluation methods. The technology tests through direct determination of Most recently, it landed a further inspection, maintenance and repair job from hydrocarbon saturation in an unknown formation water salinity environment as BP, worth US$229mn, for the Rumaila field with its joint venture partner, China well as texture in a complex carbonate environment. The use of such advanced Petroleum Engineering & Construction Corporation. Petrofac’s Marwan Chedid methods will ultimately help to unlock the true potential of Iraq’s oil sector for said the November award underscored the company’s Iraq success over the past the very first time. year. Separately, it is working for Gazprom on the Badra oilfield development. In August, Petrofac also secured a role from Iraq’s South Oil Company to provide offshore operations and maintenance services for the Iraq crude oil expansion project, which is boosting the south’s export infrastructure. During the year, Petrofac also landed major new projects in Saudi Arabia and Kuwait.

Schlumberger’s skills have been in demand in the Gulf for decades Weatherford The US-based company has been established in the Gulf for years, working on some of the region’s largest and most important oilfields such as Burgan in Kuwait. It sees a turnaround in the Middle East oil and gas sector, with increased spending and investment on new projects and maintaining production, driven by Saudi Arabia, Iraq and Kuwait. And it clearly wants more of the action after launching a new Petroleum Consulting business unit at a Bahrain geosciences conference earlier this year. Big contract wins in 2012 came from Iraq, where the company landed a US$843mn project to install six power generation plants at the Zubair field. Field www.slb.com

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Another of the big US-based players, Baker Hughes has invested heavily in its Middle East infrastructure in recent years with the opening of its new Dharan operations centre in Saudi Arabia in 2010. The huge facility houses laboratories, offices, repair and maintenance operations and a remote collaboration centre. It means for the first time in the kingdom all Baker Hughes product lines are housed in the same facility, under one management team, aiding consistency and efficiency. The investment is also designed to boost collaboration and links with local entities and Saudi nationals. More recently, the company followed this investment with the construction of a multi-million dollar research and technology centre in Dhahran. The centre is designed to integrate the competencies of engineers and scientists from the Saudi oil and gas industry, King Fahd University of Petroleum and Minerals and Baker Hughes to explore new technologies for complex reservoirs, including the tight sand plays of Saudi Arabia.

Advanced technology is helping to unlock the true potentiasl of Iraq’s oil sector.

Fluor Wood Group UK-based Wood Group has been another big services contractor that has developed a strong reputation in the mature Gulf oil markets. In Oman, it has enjoyed rapid expansion, seeing headcount rise by 17 per cent from 24,000 in June 2011 to 28,000 in June 2012, including around 2,500 people in respect of a big mobilisation contract with Petroleum Development Oman. More recently, it has turned its attentions to Iraq. This November, it was awarded an engineering and support contract by Norway’s DNO for the Tawke field expansion, in the northern Kurdistan region. The field could be producing 100,000 bpd by the end of 2012. Wood Group is assigning a team of 30 engineers to the project, based in Abu Dhabi and mobilised into Kurdistan as required.

US-based Fluor Corporation has enjoyed plenty of success in the Gulf’s buoyant downstream market of late. Most recently, this includes a big contract in Saudi Arabia on behalf of metals giant Alcoa and local joint venture partner Ma'aden. Fluor is to provide engineering, procurement, and construction management for an automotive sheet facility at Ras al-Khair in the kingdom. The facility will produce a range of products suitable for further downstream aluminum manufacturing, including automotive heat-treated and non-heat-treated sheet, building and construction sheet and foil stock sheet. Fluor also has a number of global strategic partnerships with major energy companies such as Shell and Dow Chemical that entail various Middle East assignments. For Dow, it is currently providing front-end loading services for a coatings and water treatment project in Jubail, Saudi Arabia.

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Oil Review Middle East Issue Eight 2012 49

Top 10 Oilfield Service Companies

Baker Hughes


Top 10 Oilfield Service Companies

S09 ORME 8 2012 KPC - Top 10 Oil - WFES_Layout 1 17/12/2012 10:39 Page 50

Saipem Italy’s Saipem, part of the Eni group, has long been present in the key Gulf states. This means it maintains a strong footprint in the region’s biggest oil economies. At the end of November, it signed further contracts with Saudi Aramco, reinforcing an already strong relationship, for the charter of various drilling rigs over a three-year period, starting in 2013. The deal includes rigs already operational in the kingdom as well as the transfer of rigs from other areas, plus new purpose-built units. In the country’s dynamic downstream segment, Saipem also bagged the naphtha and aromatics package on the Rabigh II refinery and petrochemicals expansion project, north of Jeddah, led by Aramco and Sumitomo Chemical. The project will be completed by the fourth quarter of 2015. Elsewhere, the company also secured work with Abu Dhabi’s National Drilling Company for the charter of the Perro Negro 3 rig for offshore drilling work, for three years, starting in the Q1 of 2013.

China Oilfield Services Ltd A sign of the times, Asia-based players are starting to make a bigger impact on the Gulf’s energy landscape, a business traditionally dominated by European and American corporations. That includes the services sector, as well as upstream. China

50 Oil Review Middle East Issue Eight 2012

China is increasingly keen to develop its links with the world’s leading oil [producing region.

Oilfield Services Ltd (COSL), a part of the CNOOC empire, is among the largest and is keen to grow its expertise in new locations, with the Middle East an obvious choice. China has become increasingly keen to grow its links with the world’s leading oil producing region in order to secure fuel for its fastgrowing domestic economy. As well as scoring for more work in the area, COSL is also thought to be looking to expand its Gulf footprint through possible corporate acquisitions.

Transocean There hasn’t been much call for the deeper water services of Transocean, the world’s largest offshore drilling contractor, but the Middle East has still

provided some work and opportunity through the years. In fact, one of the offshore fleet, the GSF High Island IX, a standard jack-up rig is currently active in Saudi Arabia, working on a contract for Saudi Aramco until mid-2015. The unit is drilling in water depths of 250 feet, and drilling to a total depth of about 20,000 feet. It’s a profitable business too with Aramco paying fees of around US$117,000 per day for the rig. It may be that as Aramco targets deeper prospects on its western flank, in the Red Sea, Transocean may see more growth potential. The emergence of the eastern Mediterranean could also provide some new deepwater opportunities for drillers like Transocean. ■


S09 ORME 8 2012 KPC - Top 10 Oil - WFES_Layout 1 17/12/2012 10:39 Page 51

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S09 ORME 8 2012 KPC - Top 10 Oil - WFES_Layout 1 17/12/2012 10:39 Page 52

Innovation a key theme in Doha QATAR PETROLEUM IS to host the inaugural World GTL Congress in Doha from 13-15 January 2013, focusing on global innovation and development in the gas-to-liquid (GTL) industry. The summit, organised by International Quality & Productivity

Center (IQPC), will examine the economic viability of GTL projects as a solution for monetisation of gas for countries with vast natural gas reserves. With presentations from key government and energy officials, technology leaders, international organisations and R&D institutions, the congress features high level cutting edge discussions on GTL legal and financial framework, strategies and technological innovations that will drive the development of the industry. Showcasing new technologies and solutions from national and international oil companies, technology providers and EPC contractors and consultants, the event will also offer advice and updates on industry developments. Leading figures Topics under examination will include risk mitigation, project profitability, emerging markets, impact on the refining industry and GTL consumer markets. The role of Qatar Petroleum and its partners in the development of the Shell Pearl and ORYX GTL plants in Qatar will also be discussed. Leading industry figures at the congress will include Ramzi Salman Abdul Hussain, senior advisor at Qatar Petroleum, Rob Overtoom, technology manager Pearl GTL from Qatar Shell GTL Limited, and Niels Fabricius, senior technical advisor at Qatar Shell. Organisations supporting the event will include Tasweeq, Sasol, CCC, Qatar University, Veolia Water Solutions, Gasal and Gulf Warehousing Company.

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S09 ORME 8 2012 KPC - Top 10 Oil - WFES_Layout 1 17/12/2012 10:40 Page 54

WFES 2013

The sixth World Future Energy Summit will return in 2013 and will be the centerpiece of Abu Dhabi Sustainability Week (ADSW) and will be co-located with the inaugural International Water Summit.

Oil giants in search of renewable

energy solutions T

ITLED ‘POWERING FUTURE Energy Innovation’, WFES 2013 will be colocated with the first International Water Summit from 15 – 17 January 2013 and is also partnering with REN21, the Renewable Energy Policy Network for the 21st Century, to host the International Renewable Energy Conference in Abu Dhabi (ADIREC). WFES, hosted by Masdar, will once again bring together investors, project developers and innovators to enable firm progress on developing the infrastructure needed to produce more power for urban and rural areas from renewable sources and lessen the environmental impact of economic growth. WFES will take place during Abu Dhabi Sustainability Week, running from January 13, which is expected to draw 30,000 people to the UAE capital, including world leaders, official government delegations, business executives, academics, scientists and innovators. In addition to more than 400 individual exhibitors, twenty countries have committed to setting up national pavilions at WFES 2013 to showcase their country’s innovations including Japan, USA, Russia, Germany, Norway, France, Italy, India, China, Korea and much more. WFES is a key platform in Abu Dhabi’s strategy to contribute to the global challenges of energy security and sustainable growth through collaboration, cooperation and convening. Since its first edition in 2008, which attracted 5,000 participants, the event has inspired international collaboration in sustainable energy on an ever-growing scale. Naji El Haddad, show director for the World Future Energy Summit, has witnessed growing participation in the summit from the world’s leading oil and gas companies over the years. “In 2008, there was a handful of what we would consider to be energy companies, those directly involved in the oil and gas sector,” stated El Haddad. “Contrast this with next year’s event, and the increase in participation is marked. We are seeing the energy giants increasingly contribute to the advancement of renewable energy and energy efficiency. Global companies such as Total, Exxon, Occidental, Statoil, Sky Fuel and Shell and regional leaders like ADNOC, Dolphin Energy and Qatar Petroleum have all committed to participating at WFES 2013,” he added. El Haddad believes that WFES 2013 will highlight the role of existing energy companies in scaling up the intake of more renewable energy

54 Oil Review Middle East Issue Eight 2012

www.worldfutureenergysummit.com/

40 cleantech and renewable energy projects will be showcased at the sixth World Future Energy summit and emphasise the energy transformation that is changing the way existing energy companies are doing business. “A number of sessions at WFES 2013 will address this issue, and we will hear many encouraging examples of new business models centered on renewable energy. There will also be intense discussions about the types of policy or regulatory support mechanisms that could help energy companies proactively lead the transition to renewable energy,” he remarked.

Other attractions WFES 2013 will also be the host venue for the prestigious biennial International Renewable Energy Conference in Abu Dhabi (ADIREC). ADSW will open with the third session of the Assembly of the International Renewable Energy Agency (IRENA). Dedicated exclusively to the renewable energy sector, IREC is a high-level political conference

series hosted by alternate governments every two years and convened by REN21. IREC acts as a common platform for government, private sector and civil society leaders to jointly address the goal of advancing renewable energy. The keynote speakers in 2013 will include the Chinese Premier Wen Jiabao, Prime Minister of South Korea Kim Hwang-Sik and the Secretary General of the United Nations, Ban Ki-Moon. The Project and Finance Village at WFES 2013 will be a venue dedicated to this task, showcasing renewable energy projects from around the Middle East, Africa and the world. The Project & Finance Village was introduced in 2011, and this year’s Village at WFES 2012 attracted 27 projects worth over US$5bn from the Middle East, India, North Africa and other regions, providing an influential platform for project developers, entrepreneurs, banks and financiers to connect. El Haddad expects 40 projects to be exhibited during next January’s Project & Finance Village under the theme ‘Powering the Future of Cleantech and Renewable Energy Investments’. ■ For more information – please visit www.worldfutureenergysummit.com and www.abudhabisustainabiltyweek.com


S10 ORME 8 2012 ADIPEC 01_Layout 1 17/12/2012 10:09 Page 55

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S10 ORME 8 2012 ADIPEC 01_Layout 1 17/12/2012 10:10 Page 57

Adipec Review

The 15th edition of Adipec, the largest oil and gas show outside North America, returned with a bang with visitor numbers up 20 per cent on 2010, showing a real buzz in the region’s oil and gas industry.

A show of

strength A

DIPEC 2012, WHICH took place from November 11-14 at the Abu Dhabi National Exhibition Centre, was a real success and showed that there is a strong appetite in the region for an oil and gas show of this size. This year's event was inaugurated by Hazza bin Zayed Al Nahyan, Vice Chairman of the Abu Dhabi Executive Council. More than 1,600 exhibiting companies and 13 national pavilions attended the four day show, with national oil companies from around the world represented along with leading multinationals and small to medium-sized businesses. According to the organisers dmg::events, 2012 was the most successful ADIPEC to date with more exhibitors, more features, more conference sessions and more visitors over the four days. They added that attendance at the 2012 show was 20 per cent higher than the total achieved at the 2010 show. Ali Rashid Al Jarwan, chief executive officer of Abu Dhabi Marine Operating Company (ADMAOPCO) and chairman of the ADIPEC 2012, said, “The show has been an enormous success, once again – and it is growing every year.” Involvement from Middle East countries was also higher than before, with delegations from Saudi Arabia, Qatar and the wider region. “ADIPEC has hosted energy ministers from the UAE, Saudi Arabia, Iraq, Norway, the United Kingdom and Canada and seen more business conducted than ever before,” said Simon Mellor, senior vice president, dmg::events, organisers of ADIPEC. This year’s show also saw a number of new milestones been achieved, including the largest ever outdoor exhibition complex and the first ever UAE oil and gas museum.

Strong conference The conference programme supporting ADIPEC 2012, organised by the Society of Petroleum Engineers (SPE), saw the contribution of 235 speakers including global CEOs and government decision makers. Al Jarwan noted that this year’s itinerary was the most comprehensive to date, with more than 400 presentations and technical papers shown over the four days. “The feedback I have has been enormously positive. The plenary sessions set the scene with great energy and we were lucky to have

Attendance at ADIPEC 2012 was 20 per cent higher than the total achieved at the 2010 show

ten of the industry’s leading players speaking,” Al Jawan commented. Mohamed Bin Dha’en Al Hamli UAE Minister of Energy opened the ADIPEC conference programme and said the scale of ADIPEC and its setting in Abu Dhabi made it an ideal platform to address the complex technical and logistical challenges of exploring for and producing oil and gas at a time of increasing global energy demand. Al Jarwan moderated the first executive plenary session on the first day, titled Growth and Sustainability. Speaking on the challenges and priorities of responding to growing global energy demand were Christophe de Margerie, CEO of Total; Antonio Costa Silva, chaiman of the management commission, Partex Oil and Gas; Robert Dudley, Group CEO, BP; and Sami Al Rushaid, chairman and managing director, Kuwait Oil Company.

ADIPEC 2012 received 50,000 visitors from 91 countries Energy awards success The 2nd ADIPEC awards were also deemed a success and they received the highest number of entries to date. Five winners were chosen from a field of 170 applications by 21 senior executives from the oil and gas industry The awards recognised projects implemented or operational over the last 18 months that have

raised the bar for excellence in the oil and gas industry. The judging process took place over four months and the Regional Select Jury (RSJ) comprised senior executives of the ADNOC Group, Saudi Aramco, Bahrain Petroleum Company, Petroleum Development Oman, Shell, Total, as well as representatives from leading academic institutions and professional associations.

Adipec 2013 ADIPEC will now become an annual event from 2013 and the dates have already been set for November 10-13, 2013. Mohammad Sahoo Al Suwaidi, gas director of ADNOC has been appointed Chairman of ADIPEC 2013. Increasing the frequency of ADIPEC will accommodate the growing significance of natural gas in the global energy mix, said Al Suwaidi. “Natural gas is therefore assuming greater prominence as an energy source and the conference programme next year will bring these developments into clearer focus,” noted Al Suwaidi. All 13 national pavilions have already confirmed their presence at ADIPEC 2013 and 15,000 sqm of exhibition space has already been booked for next year’s show. “For 2013 we will continue to broaden the appeal of ADIPEC and make it even more inclusive from a regional perspective, introducing topics and components that reflect the diversification of the energy sector and the increasing attention on sustainability,” stated Mellor. ■

Oil Review Middle East Issue Eight 2012 57


Adipec Review

S10 ORME 8 2012 ADIPEC 01_Layout 1 17/12/2012 10:13 Page 58

Dow to target refining boom in the region OIL REVIEW SAT down at ADIPEC with Larry Ryan, business director for Dow Oil and Gas, and Antoine Samaha, commercial director for Dow Oil and Gas in the Middle East and Africa, to hear about the latest trends in the oil and gas industry and the target markets for The Dow Chemical Company's oil and gas division. Ryan, who joined Dow from Halliburton in 2011 with more than 20 years industry experience, said Dow's oil and gas division was doing well and that it was on a good growth path. He expects the Middle East to be very strong. Dow sees a tremendous amount of opportunity in the Middle East and North Africa (MENA) region, and has plans for expanding its regional involvement. Ryan believes that refining and gas processing will be the two main areas of growth. As a response, the US-based company plans to specifically target both areas in its upcoming expansion drive, which is designed to bring new technologies and solutions to the region. "The refining industry, with a focus on gas treating, is very important to Dow and to our business. In fact, we have more than 200 years of combined experience in this arena," Ryan stated. The AMINE MANAGEMENT Programme is Dow’s full-service offering aimed at maximising

58 Oil Review Middle East Issue Eight 2012

efficiencies in the gas treating process. As part of this programme, a team of Dow experts works to understand a site’s specific needs, simulates on-site conditions through a proprietary simulation tool, delivers tailored recommendations to meet the site’s requirements and periodically checks in to help ensure consistent results. In Ryan’s view, one of the major global upstream industry trends is the expansion of deep water exploration, resulting in deeper offshore wells and therefore higher temperature, higher pressure environments. Temperature variations, caused by high temperature extraction processes in very cold subsea environments, make it necessary to have effective insulation for the piping. In response, Dow launched the NEPTUNE™ Advanced Subsea Flow Assurance Insulation System, which "is specifically designed to capture that piece of the market for higher temperature and more demanding applications." Neptune’s uniqueness stems from a proprietary polymer technology developed by Dow, which differentiates it from other materials in the market. The company launched the system this year after a Dow-led multi-million-dollar and multi-year R&D effort, and is in the process of qualifying the material. According to Ryan, Dow is receiving

excellent feedback on the trials and tests conducted to date, and it is now ready for launch in the marketplace. Dow has also launched its new enhanced oil recovery (EOR) solution, ELEVATE™, which aims to address the shortcomings in the CO2 EOR process. Ryan hopes to make this technology available in the region in the near future. According to Samaha, Dow's primary focus across the MENA region is Qatar, the United Arab Emirates and Saudi Arabia. "The UAE is an important market for us and we have won several significant projects in Abu Dhabi. We are also expanding into North Africa and in addition to getting good traction in Libya, we are targeting Algeria having recently opened an office there," Samaha explained. In Libya, Dow started work late last year and has picked up opportunities there as the post-revolutionary country looks for global expertise to help get its hydrocarbon industry back on track. “We are very optimistic about the opportunities in the industry, particularly as countries are moving to develop their gas fields and downstream operations. There’s a great deal of demand for improved efficiencies in gas treating and refining and Dow’s chemistry fuels solutions in a real way,” Samaha concluded.


S11 ORME 8 2012 ADIPEC 02_Layout 1 17/12/2012 11:16 Page 59

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Adipec Review

S11 ORME 8 2012 ADIPEC 02_Layout 1 17/12/2012 11:16 Page 60

AVEVA focused on the Middle East AVEVA'S NEWLY DUBAI-BASED COO and head of Enterprise Solutions talked to Oil Review at Adipec about the reasons behind running the company's global Enterprise Solutions operations from Dubai and how the IT solution adoption in the downstream industries is increasing. Derek Middlemas was joined by Naji Atallah, regional manager Middle East AVEVA, who outlined AVEVA's Middle East projects and growth plans. Atallah commented, "Adipec was good for us. A lot of our clients and prospects are here and it is important that we have a presence among them." Middlemas explained that the Middle East is a very important region for AVEVA and to build its base in the region, it was very important to establish a hub in Dubai. "Dubai is a fantastic location and a great hub to run our global business line for the company," he explained. AVEVA's biggest market in the region is the UAE and the company is now targeting the Saudi Arabian market heavily. To this effect, it is now recruiting for its office in Al Khobar in the Eastern Province. "Our largest growth opportunities now lie within the Kingdom," underlined Atallah. The importance of Saudi Arabia was seen earlier in the year when Saudi Aramco Total Refinery and

60 Oil Review Middle East Issue Eight 2012

Petrochemical Company (SATORP) selected AVEVA NET Portal and AVEVA Data & Document to provide a core digital information hub and an engineering document management solution. "The SATORP deal was a great win for us in the Middle East and we are performing well on it. It is going well and we think it will act as a very good reference for us in the future" observed Middlemas. He added that AVEVA is seeing the business changing with higher adoption in the downstream industry which traditionally lagged behind upstream. "We are seeing a drive for software spend is faster in the Middle East region and emerging markets," he said. AVEVA has a greater opportunity to work directly with the owners in the Middle East and importantly these owners have a real vision of how they want to look after their assets across the life cycle of a project. Atallah provided the example of, UAE's ADMAOPCO, an owner which is currently as-building some of their existing assets. Other than the authoring applications, AVEVA is now providing ADMA-OPCO with an Engineering Information Management System for this project. AVEVA Enterprise is currently in the implementation stage.

Derek Middlemas

In October this year, AVEVA launched its new premium plant design solution AVEVA Everything3D. The whole strategy behind the new product is that it supports lean practices to better tie engineering and design to fabrication and construction. AVEVA Everything3D is backward compatible with AVEVAâ&#x20AC;&#x2122;s current PDMS. "It has been very well received and its first production release will be available in December. We see a lot of potential for this product in the region," Middlemas stated.


S11 ORME 8 2012 ADIPEC 02_Layout 1 17/12/2012 11:16 Page 61

FRANCE-BASED SCHNEIDER ELECTRIC is optimistic about growth in the oil and gas sector and feels that it is well placed, with new additions to the oil and gas division, to meet this demand for greater energy efficiency in the hydrocarbon sector. Patrick Albos the vice president of oil and gas solutions spoke to Oil Review at Adipec about the importance of the Middle East for the energy management firm's operations and why opportunities in the downstream sector and transportation is playing to Schneider's strengths. Albos emphasised the importance of being present at Adipec which is seen more and more as a regional event and is the region's major oil and gas platform. "It is important for us to be here at Adipec. We want to show our customers our commitment to the oil and gas market,â&#x20AC;? he added. â&#x20AC;&#x153;The Middle East is a dynamic market and Schneider Electric has always looked at ways to get closer to its customer, especially Adnoc, by providing more support through their partners. "We now have a more direct presence in the oil and gas sector," argued Albos. Schneider Electric central hub for its oil and gas division is based out of Abu Dhabi and serves the whole region. The UAE is the firm's biggest market

for oil and gas, but is well balanced across the region. "The Iraqi market is re-booming and there is a lot of investment going into Iraq. We are engaged in many projects in Iraq and we see it as a big opportunity for us. It is not only an important market for regional investment but will become a major investment hub for our global customers, like BP and ExxonMobil," he noted. Ahmed Sfar, Infrastructure Business VP - UAE & Oman and Right: Patrick Albos Albos highlighted the significance of winning the Zayed Future Energy Prize award at the start of the year, There is still a lot to do in terms of oil extraction which he claimed stands "as a testimony to our and getting better efficiency and Schneider Electric presence and commitment to this market. It also are working hard on trying to tackle this. affirms our commitment to sustainable Transportation is another major issue and there can development." be a lot of saving and efficiency to manage on the A trend that Albos sees as increasing in transport side. importance is energy efficiency and energy Albos sees a major opportunity for Schneider management in the oil and gas industry. Electric's business in the region's new focus on the "We are leaders in this field and we are ahead of downstream sector, which is growing fast and is in our competition when we talk about oil extraction, real need of greater energy efficiency. pipeline management or refinery. Energy efficiency is Albos concluded optimistically, â&#x20AC;&#x153;We see a strong a major concern of our customer and we are ready to outlook of growth and many opportunities in energy serve them," he stressed. management."

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Oil Review Middle East Issue Eight 2012 61

Adipec Review

Energy efficiency to play a key role in oil industry


Adipec Review

S11 ORME 8 2012 ADIPEC 02_Layout 1 17/12/2012 11:16 Page 62

Unconventional resources challenge the paint industry JOTUN'S GLOBAL CONCEPT director for the hydrocarbon processing industry (HPI) told Oil Review at Adipec about the Norwegian-based company's Middle East operations, and the main challenges in the oil and gas field that the paint industry faces. Miles Buckhurst, who has been the global head of Jotun's HPI protective coatings concept for two and half years, is excited about what the future holds for the paint sector in the oil and gas industry. He explained that Jotun is focused on understanding customer needs and that a major part of his role is to listen and learn. This is why Adipec is such a good event for Jotun. Buckhurst feels that all the small presentations which take place on many of the stands are the perfect way to learn. "They are short but you get a lot of precise information in a short period of time and you can then approach the speaker afterwards and exchange views," he said. Jotun pays a lot of attention to presenting itself as a local company in many of the markets that it operates in , but still maintains a strong global support network that enables it to be both local and global at the same time.

"We are very focused on being as local as possible but utilising our global competence and knowledge to benefit the markets we operate in," Buckhurst noted. Abu Dhabi is Jotun's number one market, and has a major market share. "We always class Abu Dhabi as our learning ground. The key for us in the Middle East, in general, was that we entered the UAE market very early and that has paid dividends." Buckhurst sees growth in the oil and gas market for Jotun coming in Qatar and Kuwait, which have been more challenging markets before. "Libya will be an important market and we are back in there building a new factory just outside of Tripoli. This will be a fantastic place for us in the future as it has been in the past," he argued. The target is open the factory sometime next year. One of the main challenges that the region will face soon will be from unconventional resources. "We are very focused on how we can deal with unconventional gas and oil as it is not the same as conventional resources and is much harsher." Sour conditions, in particular, will pose a real challenge for paint companies. However, Buckhurst feels that this in fact provides Jotun with an

Miles Buckhurst

opportunity to improve the quality of its paints and to seek new innovations. The other big mover in the region will be maintenance. Abu Dhabi is looking to extend, improve and make itself more flexible. "Maintenance will be Abu Dhabi's future. Both Qatar and Abu Dhabi are probably leading the world in technology in terms of quality of workmanship," he stated. Buckhurst added, "Project wise there is less going on next year but the region is strong and we are looking to do better in other markets.â&#x20AC;?

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62 Oil Review Middle East Issue Eight 2012

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Adipec Review

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UAE committed to oil growth

Local capabilities key for GE oil and gas

THE UAE IS committed to increasing oil production to 3.5mn bpd by 2017, according to the general manager and vice president of Schlumberger UAE. Hussein Fouad El Ghazawy spoke to Oil Review at Adipec about Schlumberger's commitment to the UAE and what he sees as the main drivers in the UAE market. Hussein Fouad El Ghazawy El Ghazawy said that the UAE had set itself a significant and challenging plan to increase its oil and gas production by 2017. "If you add the gas you would be looking at 5mn barrels of equivalent oil and gas by that time," he noted. This ambitious target is the reason behind Adnoc and Adco's ramping up of additional rigs in Abu Dhabi. Schlumberger has seen a lot of requests for offshore projects in the UAE and he believes the company has the right tools to meet the demand. "Easy oil is over and we are now after the difficult oil, which will require innovation and technological advancements," stated El Ghazawy. There are various projects that Adnoc is undertaking on this front, like the development of Sour Gas from Shah and the Upper Zakum development project with the four artificial islands. "On Sour Gas we have our own technology that can deal with high H2s levels and Co2 content and was developed to meet the rising demand for dealing with sour gas," El Ghazawy said. “We are working with ZADCO on the start up for Upper Zakum integrated services island project while leveraging from our experience on Sakhlin project,” he noted. El Ghazawy explained that Schlumberger was overcoming these new challenges in the industry by opening the Geoscience and Petroleum Engineering (GPE) centre in Abu Dhabi earlier this year. The consulting hub serves Abu Dhabi but it also caters for the entire region. "This will help bring in more technical people from reservoir engineering, geology and petroleum engineering domains to Abu Dhabi with up to 30 experts in place at any one time," he added. El Ghazawy underlined Schlumberger's commitment to the UAE, which it has operated in for over 62 years. In 2007 the firm established a Middle East learning centre in Abu Dhabi. Since that time, Schlumberger has made a total investment of US$200mn and the centre can accommodate up to 700 students, on 115,000 sqm facility. This training centre also accommodates Adnoc and its group of companies customised training.

GE OIL AND gas has invested heavily in building up its local capabilities and has focused on the training aspect that it believes is instrumental to its localisation drive. At Adipec, Oil Review discussed the importance of training with Rami Qasem, CEO of GE Oil & Gas for Middle East, North Africa & Turkey. He explained that the oil and gas division has been fortunate to receive strong support from GE leadership to build its local capability in the region. "At GE oil and gas we have been fortunate because of the overall company investment in this sector, where we have now built our portfolio to serve the market whether it is in drilling and surfaces, pipelines, subsea, measurement and control, refining, or petrochemical industry," noted Qasem. GE's localisation drive started several years ago and a major component of it is the training aspect. "We see a true need for training in the market but also as a commitment from us to transfer knowledge and help countries build local skills," remarked Qasem. GE is focusing on building training facilities across the region. This started when GE launched a branch of the GE Oil & Gas University in Abu Dhabi. It also has one in Doha. In 2012 so far, GE has conducted 34,000 hours of customers’ training and Qasem expects this to rise to 50,000 hours in 2013. Qasem talked about opportunities for GE in the region with the company re-building its strategic partnerships and presence in Libya and already having a strong operation in Algeria, working with Sonatrach. "Iraq is a big market for us and we are looking at building up our capabilities there. There is a lot of investment going on, with ground staff and three offices now open, and hopefully we will be able to get a strong Iraqi foot hold," he added. On the technology side, the biggest demand GE has is that more than half of the installed base is 25 years old and that provides a challenge for all OEMs to get the latest technology installed, which will increase efficiency and extend the life cycle of a plant. Human Resources is another major issue and "we need to figure out as a company how to partner with the NOCs and IOCs to enhance the skills of the new generation,” he added. “Technology transfer, building manufacturing facilities and investing in the new generation capabilities are the three key pillars of GE’s oil and gas division,” Qasem summarised.

Jesco sees growing demand for seamless pipes JESCO SEES THAT demand for seamless pipes in the region is set to grow and that the Saudi Arabian manufacturing company will be able to take advantage of this by expanding its product line. John Blomberg, pipe and tube division director and Vasile Gavrila, project director, spoke to Oil Review during Adipec about the company’s expansion plans and how its new sour service will meet industry demand for quality pipes. “Things are going well and 2012 has been a strong year for us,” Blomberg stated. The Jubail Energy Services Company’s (JESCO) seamless pipe mill is located in Jubail Industrial City and has a capacity of 400,000 metric tonnes year. Since the start of 2011 the plant has operated at 70 per cent of its production capacity. Through 2011 and 2012, Jesco has been manufacturing 16 inch line pipe. Additionally, Jesco has developed ‘JPC 2’, the company’s new interchangeable metal

64 Oil Review Middle East Issue Eight 2012

to metal connection, to supply to significant end-users in the market. An important milestone for the Saudi company is the development of a new premium connection called JPC3, and seeing this connection pass Cal IV tests. This has now been completed for two sizes, and the Saudi company continues testing more sizes, to meet market requirements. Jesco has found success with the development of its line pipe steels for sour service in grades X60 and above. “We have now sold this new product to many people in the region. We are seeing a big demand for this kind of product. When we started this project we did not even think that much about line pipe…It turned out to have a big demand and it is going to expand,” Blomberg said. The launch of new products means that Jesco is now qualified for supply to Aramco, the

National Saudi Oil Company - for both OCTG and Line Pipe. Additionally, the firm has been recommended by many local and international oil companies, and is continually pressing for more approvals. It works with many NOCs in the region, and has gained the approval of Petroleum Development Oman. It is also approved by Adco, a subsidiary of Adnoc. “We are also under evaluation from ADMA, which is quite demanding as it is offshore for both line pipe and OCTG,” noted Blomberg. Jesco is not sitting on its laurels, and the Saudi firm is looking at expanding its facilities in the finishing area. “We will add one more finishing line, dedicated to plain end pipes such as line piping and casing. This will add 100,000 tonnes of finishing capacity. This will be completed before the end of next year,” Vasile expanded.


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Innovations

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Tailored to your business ARMATURENFABRIK FRANZ SCHNEIDER GmbH + Co. KG has several decades of experience in manufacturing high-quality sealing systems for reducing emissions like bellows upper parts or special packing systems. With its new ISO FE-Series, AS-Schneider has developed a new valve technology that complies with the highest ISO15848-1 tightness class "A". With a maximum permissible leak rate of 1,3 • 10-7 mbar • l/s (for a stem diameter of 7.5mm), this class even exceeds the requirements of TA-Luft (well-known in the German and European processing industries as the guarantee for high-quality stem sealings). Type testing of the AS-Schneider ISO FE-Series was carried out by TÜV Süd and lasted two weeks. The ISO FE-Series is the result of months of development and numerous tests on the company's own industrial valve test stand. An initial cause for concern was the requirement of the high pressure of 420bar (ASME Class 2500) and the large number of switching cycles. However, by careful selection and surface treatment of the materials used, the company managed to overcome this hurdle too. ISO 15848 entitled "Industrial Valves - Measurement, test and qualification procedures for fugitive emissions" consists of two parts: Part 1: Classification system and qualification procedures for type testing of Industrial Valves Part 2: Production acceptance test of Industrial Valves By contrast with TA-Luft, this standard does not just consider the sealing system of the stem/shaft seal; rather, it takes into account the entire Industrial Valve including the housing seals. Due to a type test, the Industrial Valve is classified into the following performance categories: Tightness class/endurance class/temperature class. Specifying an Industrial Valve according to ISO 15848 provides the following benefits for purchasers:

AS-Schneider Five-Valve Manifold from the new ISO FE-Series

Industrial Valves made by different manufacturers can be directly compared on the basis of the classification. The complete Industrial Valve meets the requirements. This also applies in particular to the highly loaded stem thread with needle valves. TA-Luft only deals with the sealing system of the stem passage. The specified mechanical and thermal load cycles ensure that the sealing elements demonstrate adequate leaktightness even after several heating and cooling phases. Tightness class "A" allows a leak rate that is lower by a factor of ten than with TA-Luft at temperatures of less than 250°C.

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66 Oil Review Middle East Issue Eight 2012


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Innovations

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A unique approach to EMAT inspection T.D. WILLIAMSON (TDW), a world leader in pipeline services and equipment, announced that it has completed its first inline inspection using a unique new approach to Electro Magnetic Acoustic Transducer (EMAT) technology. The EMAT inspection took place in late September on 33 miles of a 12-inch diameter pipeline in Texas. The project was successfully executed, and the data is currently in analysis. “Leveraging our patent-pending SpirALL™ Magnetic Flux Leakage technology, and know-how from our sensor partner, TDW has developed a unique approach to EMAT technology,” said Eric Rogers, TDW director of strategy and business development for its Pipeline Integrity Solutions division. “EMAT is designed to detect cracking features such as stress corrosion cracking. The TDW approach requires minimal transmitters and receivers, and is compact in design.” TDW conducted hundreds of pull tests at its Global Pipeline Integrity Center in Salt Lake City, UT, to validate the approach. Multiple passes through its test loop in Tulsa, OK, confirmed the technology was field ready. The new EMAT technology continues a TDW tradition of introducing ground-breaking inline inspection technology to assist pipeline operators in improving pipeline integrity. SpirALL™ MFL technology was introduced in 2009, followed shortly by the Multiple DataSet (MDS) platform. This technology allows geometry, metal loss, seam assessment, mechanical damage prioritisation, bending strain, and more, all in a single inspection. Founded in 1920, TDW delivers safe integrity solutions for onshore and offshore applications. Experts provide hot tapping and STOPPLE® plugging, pipeline cleaning, integrity inspection, pigging and nontethered plugging, and pig technology services for any pressurised pipeline system in the world.

Measuring on the move WELDING ENGINEERING SPECIALISTS Arc Energy Resources has invested in a Faro portable co-ordinate measuring arm (CMM), advancing the companies inspection facilities for its weld overlay cladding and fabrication services. It enables the company to precisely measure the complex geometries often encountered in the valves, pumps, pipe work and fittings produced for the oil & gas, nuclear, renewable and related industries, even during the manufacturing process. The investment supplements Arc Energy’s ability to handle ‘difficult-to-weld’ items for fabrication or cladding of a huge range of component sizes. Ultimately, it confirms for customers the quality of the process and of the finished components. The advanced software provides powerful features enabling a full range of geometrical and form tolerances to be verified. The device is also capable of www.arcenergy.co.uk being moved during use to give an unlimited range of measurement, the largest component measured at Arc Energy to date being over six metres long. Arc Energy Resources is now able to produce full 3D ‘as built’ models of finished components providing quality assurance data for clients. Reports can be tailored to customer requirements on dimensional accuracy, for components of unlimited size, without the need for the items to leave the workshops.

Improved level control performance MAGNETROL INTERNATIONAL, INCORPORATED has launched the ECLIPSE Model 706 guided wave radar (GWR) transmitter, a best-in-class level control solution that advances guided wave radar technology with improved performance for a wide range of level and interface control applications. The ECLIPSE Model 706 is designed to provide outstanding accuracy, reliability and safety for virtually all process industries. Latest-generation features include: Enhanced Signal Performance – The ECLIPSE Model 706 innovative GWR circuitry achieves both a higher transmit pulse amplitude and improved receiver sensitivity, resulting in a signal-to-noise ratio (SNR) that is nearly 300 per cent higher than competitive GWR devices. This assures precise, dependable control for every level application, including extremely low dielectric media, extended measuring ranges, and punishing conditions where foaming, boiling or flashing can occur. Overfill Capable Probes – Magnetrol offers the only guided wave radar transmitter on the market with a complete line of overfill capable probes. Unlike other GWR transmitters that use algorithms to infer level

68 Oil Review Middle East Issue Eight 2012

readings in top-ofthe-probe dead zones, the ECLIPSE Model 706 measures true level to within specification all the way up to the process flange. Coaxial and single rod overfill capable probes can be installed in various configurations on the vessel, even when the risk of www.magnetrol.com flooding exists. Advanced Diagnostics – The ECLIPSE Model 706 takes the user interface experience to new levels of convenience and functionality. The LCD diagnostics convey critical real-time waveform and trend data with outstanding ease of use. Additionally, the ECLIPSE Model 706 can be preconfigured online prior to shipment, to ensure plug-and-play transmitter commissioning and automatic capture of echo curve during upsets. The ECLIPSE Model 706 transmitter provides safe, efficient and cost-effective liquid level

and interface control, and is virtually unaffected by fluctuating process conditions including density, dielectric, viscosity and specific gravity. The ECLIPSE Model 706 introduction represents the latest GWR innovation from Magnetrol, the company that introduced the original ECLIPSE Model 705 – the very first 2-wire, loop-powered GWR transmitter for industrial liquid level applications. For more information about the ECLIPSE Model 706, visit: eclipse.magnetrol.com.


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005


Innovations

S12 ORME 8 2012 Innovations_Layout 1 17/12/2012 11:35 Page 70

Complete bulk terminal control

Emerson invests heavily in Saudi Arabia

HONEYWELL RECENTLY ANNOUNCED its next generation of Terminal Manager server software that will allow bulk terminal operators to integrate any disparate business, operations, safety, security and access control systems into a single control and operating solution. Built on Honeywell’s award-winning Experion® platform, Terminal Manager R620 provides full integration with fire and gas, CCTV, access control, Digital Video Manager and Enterprise Building Integrator systems. The latest release includes the industry’s first configurable workflows for quicker set-up, making Terminal Manager R620 the new standard in terminal integration. Incorporating more than six decades of Terminal Manager provides full integration experience providing solutions to terminal operators, Honeywell Enraf’s Terminal Manager is a web-based solution for managing the entire operation in bulk terminals. Built on Microsoft® Windows, it is designed to monitor and control all critical processes from receipt to dispatch and interfaces with enterprise resource planning (ERP), access control, loading and unloading, workflow management, inventory management, product reconciliation and documentation systems.

EMERSON UNDERLINED ITS commitment to the Middle East and Africa market with the announcement of a US$25mn investment to create a technology and innovation centre in partnership with the King Fahd University of Petroleum and Minerals in the Kingdom of Saudi Arabia. Emerson signed an agreement to lease land in the Dhahran Techno Valley for the Emerson Centre for Technology and Innovation, which will train technologists and innovation leaders of the future. The move by Emerson accelerates the company’s presence and growth in Saudi Arabia. Developed in conjunction with the King Fahd University of Petroleum and Minerals, the work that will take place in the Emerson Centre for Technology and Innovation will provide Emerson and its customers with access to groundbreaking innovation, helping them solve the technical challenges of tomorrow and providing them with access to a skilled pool of talent. Commenting on the agreement, Dr. Khaled Al-Sultan, Rector of King Fahd University of Petroleum and Minerals said that Dhahran Valley today is the best valley in the world in quality and quantity, and considered the largest science oasis specialising in oil and gas. “The aim of Dhahran Techno Valley, is not financial profit but we are focusing on the developmental aspects; patents, contribute to building factories, establishing companies that attract Saudi employees, all of which results in economic and developmental returns for the Kingdom in general and these investments puts the Kingdom on the forefront in international scientific research.” He further stated that Dhahran Techno Valley is an integral part of the King Fahd University, and by converting it into a private company, it would be managed in a private sector manner and thus give it more flexibility.

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Southern California Valve is a respected USA manufacturer and “go-to” source for standard commodity valves and hard-to-find specialty valves. SCV offers a complete line of gates, globes, checks, balls, plugs, and sub-sea designs in all sizes, pressure classes, and metallurgical compositions. SCV valves are built to meet and exceed the most rigorous quality and production standards. SCV operates under the API Q1 Quality Management System and holds API 6A, API 6D, ISO: 9001:2008, CE-PED, and CRN certifications.

V Visit isit us on the web web @ w www.scvvalve.com. ww.scvvalve.com. Middle Middle East/North East/North A Africa frica Sales Sales Office: Office: +962 (79) 660-3333

70 Oil Review Middle East Issue Eight 2012


S13 ORME 8 2012 Tech Focus 01_Layout 1 17/12/2012 11:52 Page 71

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Technical Focus

S13 ORME 8 2012 Tech Focus 01_Layout 1 17/12/2012 11:52 Page 72

The accurate measurement of density at the correct conditions of temperature and pressure is critical since oil flow in pipelines is largely measured by volume, and conversions involving density are necessary for accurate financial reporting, fair trade and taxation. *Norman Glen explains.

Density measurement and

flow assurance T

HE DISCOVERY OF an error in densitometer measurements by the UK’s DTI Energy Group, Licensing and Consents Unit in 2004 led to a loss of confidence in the measurement of density throughout the UK upstream oil industry, resulting in the potential for disputes and increased financial exposure for companies. The UK Government’s Oil & Gas regulator stated that “these errors could constitute the biggest single mis-measurement issue in the history of the North Sea and could run to million of dollars per annum and possibly amount to hundreds of millions over the last 20 years”. NEL’s facilities, for the accurate measurement of the density of fluids and gases at high pressure and temperature, were therefore used to provide a solution. Supported by the UK Government’s National Measurement System and with the help of the Government’s Oil & Gas Regulator, a solution was developed through a joint industry project (JIP) which was supported by almost 90 per cent of UK offshore operators. The Department of Energy & Climate Change (DECC), as the UK regulator for petroleum measurement and allocation, requires that all critical elements of fiscal measurement systems are traceable to national standards. In considering calibration frequencies, the cost of re-calibration is balanced against the financial exposure. Calibration should take place at the anticipated operating conditions unless it can be shown that additional measurement uncertainty is not thereby introduced. Density measurement is a key element of both mass and volume flowrate measurement in the oil industry and is fundamental to the commercial operation of facilities. The most widely implemented approach for mass flow measurement is to use a volumetric flow meter and a densitometer, both of which require periodic calibration. To ensure the highest accuracy, best practice requires that: calibrations should only be carried out using instruments that form part of a calibration chain traceable to national standards and devices should be checked and calibrated regularly at actual operational conditions. All commercial densitometers, for use on gases or liquids, operate on an oscillatory principle and as such are not independent of other fluid properties. However, the theory of such methods is not rigorously established and even with careful design it is not possible to uncouple fully the effects of density from the other physical properties of the calibration fluids. To maximise the accuracy attainable with such densitometers, it is therefore

72 Oil Review Middle East Issue Eight 2012

www.tuvnel.com

necessary to calibrate them against reference fluids with similar physical characteristics to the fluids that the densitometer will see in service (such as speed of sound and viscosity). Conventionally, the calibration of most

Calibration of densitometers to the new procedure is an important step in reducing the uncertainty of oil density measurement industrial densitometers is undertaken using fluids whose physical characteristics are significantly different to the actual working or operational fluids. Furthermore, the range of pressures and temperatures at which the instruments are normally calibrated is limited to near ambient conditions. However, many densitometers, particularly those used in offshore applications, operate under high pressure, high temperature conditions. In addition, as fields mature, quantities of produced water generally increase, resulting in higher process operating temperatures and the increased chance of slugs of water being carried through to the metering station, all of which can be significant sources of error in density measurement. Ideally, calibration should be undertaken at

metering pressures and temperatures using fluids whose volumetric properties are known accurately across the full temperature and pressure range required for the calibration. It has been accepted industry practice to quote a calibration at only a single reference temperature (generally 20°C) and apply correction factors to account for the influence of temperature and pressure on both the calculated density and its uncertainty. However, recent work has raised a number of issues with regard to the whole calibration process, in particular the practice of determining the temperature coefficients for each densitometer only at atmospheric pressure and the pressure coefficients only at the reference temperature. Due to the cross-coupling between the temperature and pressure coefficients, and depending on the fitting method used, small systematic errors in the fluid densities used to calculate the correction coefficients could lead to significant errors when a densitometer is operated at temperatures and pressures different from the reference conditions [2, 3]. Furthermore, following initial calibration of a densitometer and determination of its temperature and pressure coefficients, most densitometers only receive an annual check at 20°C and ambient pressure. This approach is unable to detect shifts in densitometer performance at the non-ambient conditions at which most units operate. All of these issues have significant implications


S13 ORME 8 2012 Tech Focus 01_Layout 1 17/12/2012 11:52 Page 73

Norman Glen, NEL

UK North Sea oil production for example, the mismeasurement is of the order of US$80mn per annum to operators.

Density measurement is a key element of both mass and volume flowrate measurement in the oil industry In addition there are taxation implications. Offshore UK oil production amounted to 45mn tonnes in 2011 and oil and gas production as a whole accounted for a government revenue of US$18 bn in 2011/12. However, the fiscal regime is not uniform across North Sea assets - some pre1993 fields continue to pay Petroleum Revenue Tax (PRT). Allocation between PRT- and non-PRTpaying fields in shared pipelines is on a mass basis and hence depends on measurement of density. Any errors in density measurement will therefore affect the total amount of tax recovered and its fair allocation. Calibration of densitometers to the new

procedure is an important step in reducing the uncertainty of oil density measurement. By the end of 2012, almost 30 densitometers used in the UK sector of the North Sea will have been calibrated to the new procedure. However, as with any other measurement system, calibration uncertainty is only one component of the overall uncertainty for the system. For flow measurement systems there is a considerable body of knowledge on additional sources of uncertainty including upstream flow disturbances, fluid properties, vibration and mechanical stress, allowing the development of complete uncertainty budgets for any installation. However, the corresponding information is not complete for densitometer installations. For example, preliminary work being undertaken by NEL has shown the influence of mechanical stress on densitometer performance, and the Energy Institute (through its HMC-1 Upstream Measurement Sub-Committee) is encouraging further research. ■

[1] Glen, N. F. and Johns, A. I. Determination of the Density of Toluene in the Range from (293 to 373) K and from (0.1 to 30) MPa. J. Chem. Eng. Data, 54, 2538–2545, 2009. [2] Griffin, D. and Glen, N.F. The Impact of Mismeasurement on UK Oil Production. Energy & Low Carbon Measurement Conference, London, 18-19 September 2012. [3] Spearman, E. P. Operational Measurement Experiences in North Sea Applications. 30th International North Sea Flow Measurement Workshop, Fairmont St Andrews, 23-26 October 2012. *Norman Glen, Service Leader for densitometers and physical properties of fluids at NEL. NEL’s history as a global centre of excellence for flow measurement and fluid flow systems extends over half a century. NEL, part of the TÜV SÜD Group, maintains and develops the UK's National Flow Measurement Standards on behalf of the UK Government and owns some of the most modern and sophisticated test, analysis and experimental facilities in the world.

Oil Review Middle East Issue Eight 2012 73

Technical Focus

for fields operating in common transportation systems, where the mass allocations are based on densitometer readings. As part of previous research programmes, the National Measurement System supported the establishment of density standard facilities at NEL [1, 2] consisting of two primary standard densitometers, one each for liquids and gases, plus a facility for the calibration of liquid densitometers. Using these facilities, standard reference fluids were characterised, allowing calibration houses and manufacturers to use these as traceable transfer standards, and recommendations were produced for traceable calibration of liquid densitometers at high pressures and temperatures. On the basis of the work undertaken in the JIP (including detailed characterisation of two densitometers using the four standard reference fluids), a number of recommendations were made. The most important was that densitometers should be calibrated at their anticipated operating conditions, (i.e. simultaneously at temperature and pressure), using one or more transfer fluids, the density of which has been determined across the required temperature and pressure range with an uncertainty not exceeding 0.01 per cent, directly traceable to national standards. DECC has incorporated the JIP recommendations in the current version of the Guidance Notes - “Guidance Notes for Petroleum Measurement, Issue 8., Aberdeen, July 2012”. A conservative estimate of the average error of densitometers calibrated with the previous procedures is of the order of 0.15 per cent and this will translate directly into an allocation error in a pipeline system. For a field with a production of 5,000 barrels per day, 0.15 per cent error in allocation due to a 0.15 per cent error in fluid density measurement will lead to an annual error of 2,738 barrels. Taking an average price of US$120 per barrel, this leads to a potential exposure of approximately US$328,000 per annum, i.e. many times the cost of calibration of a densitometer. For a field producing 200,000 barrels per day, the potential exposure increases to over US$13mn. Furthermore, it should be noted that this error could be positive or negative. Taken over the whole of the


Technical Focus

S14 ORME 8 2012 Tech Focus 02_Layout 1 17/12/2012 11:24 Page 74

With operational risk management a board level challenge in hazardous industries, stakeholder expectations of operational performance have never been higher. Scott Lehmann, Vice President Product Management, Petrotechnics, outlines a solution.

Unlocking the promise of improved

operational performance T

HE MACONDO DISASTER in the Gulf of Mexico, Fukushima and the recent gas leak incident in the North Sea have all served to reinforce the need for improvement of operational performance in hazardous industries. As a result, senior management are questioning their existing approaches to managing performance and are looking for ways of gaining greater insight and assurance over operational performance and risk. Traditionally, organisations respond to this challenge with better rulebooks, further integration of IT systems, new leading indicators and more robust procedures. Despite these measures, more often than not there is limited decrease in the number of high potential incidents (HiPoâ&#x20AC;&#x2122;s), the number of incidents and there is very little improvement in operational performance. While these efforts are part of the overall solution, they donâ&#x20AC;&#x2122;t have the consistent impact that we expect. Is there something else that, if addressed, could tie everything together? Senior management across hazardous industries need a lever to pull to significantly improve operational performance and develop an understanding of the relationship between delivering performance and operational risk.

The heart of the problem Improving operational performance and its contributing business processes is a priority for all organisations. Continuous improvement is the key to an optimised business process. However in order to improve, we need access to the actual data on the outputs of our process in order to provide the more informed inputs to the process. In this way, we have a feedback loop allowing us to improve decision making, organisational learning and optimisation of the overall process. The feedback must be relevant, timely and have some degree of automation if we are to obtain the improvement we require. When we look closely at the industryâ&#x20AC;&#x2122;s typical end-to-end work management business process, it encompasses a range of maintenance, planning and work execution activities. However there is an important gap. Traditionally, we use electronic systems to manage maintenance, work identification and planning but often use paper systems to manage the execution of the work. Where we do use electronic systems such as EPTW or ISSoW to manage frontline work, they are generally standalone systems with little to no technical or business process integration into the larger planning to execution process. This gap complicates any effort to improve and optimise operational performance.

74 Oil Review Middle East Issue Eight 2012

The lack of end-to-end integration in the work management planning to execution business process is at the heart of the problem. Its impact is far bigger than we believe, even though we are well aware of its symptoms. When the industry struggles with work or maintenance plan accuracy, below optimum plan attainment results, seemingly unavoidable costs of contractor wait time and significantly, the difficulty in understanding the relationship between delivering performance and operational risk, the gap is rarely identified. IT often receives the majority of the blame for the poor integration of the business process. However it is usually less of a technology issue and more of a lack of understanding of how the different systems within the business process must interface with each other. This lack of clarity of the business process interfaces understandably impacts the shared understanding and expectations from each of the stakeholders. To better understand the gap, we need to look at the context of frontline operations. In the diagram below we can see a representation of the business process. The process starts with the identification of work which is often a combination of regularly scheduled maintenance work that is held within corporate IT applications such as a maintenance management or ERP system. Additional work not associated with maintenance is also identified and sent directly to the planning system. The planning system is then used by the planners to create a 14 day frozen schedule encompassing scheduled maintenance work and other work. The planners account for the resource and logistics constraints and then issue the plan to operations. The work orders for the maintenance are subsequently updated and issued to operations. Operations then need to build out the plan to a level where it accounts for all of the additional activity scheduled on the plant to ensure that the work can be done safely. This results in a safe work plan where all of the additional tasks, sub-tasks, permits, isolations and any other safety dependencies or constraints are incorporated. Many organisations have made efforts to get the planners closer to the frontline in order to improve planning, however it is really only in the operations time and space that interdependencies between jobs and associated tasks can be identified and managed (i.e. common isolations, common LOTO). This safe work plan must also account for other emerging work that was not part of the 14 day plan.


S14 ORME 8 2012 Tech Focus 02_Layout 1 17/12/2012 11:24 Page 75

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Technical Focus

S14 ORME 8 2012 Tech Focus 02_Layout 1 17/12/2012 11:25 Page 76

Typically the systems that operations use to manage the execution phase of the business process are largely paper based. As such, these systems provide no data, visibility or integration with other corporate IT applications. Even when they are electronic, little useful data is generated, as they cannot complete the feedback loop necessary to measure and improve performance. The data from the actual work performance such as; the complete work breakdown and the relationships between the work order, tasks, sub tasks, permits and safety dependencies, along with the actual time it took to complete the jobs, are rarely, if ever sent back as feedback and improved inputs to the systems at the start of the business process. This lack of feedback created by the gap in the business process has a direct impact on an organisation’s ability to improve its operational performance. Without end-to-end integration and the ability to close the planning – execution gap in enterprise IT architecture, organisations have little ability to improve operational performance.

systems to provide end-to-end system integration. More importantly, as it governs the execution phase of the business process, the data and information it collects as a part of routine work allows it to provide the critical feedback loop back to the other IT systems in the enterprise architecture. Proscient completes the Gap in the Work Planning to Execution Business Process. The Proscient process is triggered when work orders and plans created in maintenance management, planning and ERP systems are delivered to the system. These work orders are then decomposed through a risk assessment driven process to identify any further tasks, sub-tasks, isolations etc. required to safely perform the work. This process considers plant conditions, environmental and human factors at the frontline along with the mechanisms (permits) that will subsequently be used to control activities. At the end of the process we have a full and holistic understanding of ‘all of the job’ for the work order. The diagram below depicts this process.

Completing the gap Petrotechnics’ Proscient, an enterprise Operational Performance and Predictive Risk software platform, completes this critical gap. A fully integrated system, Proscient intelligently links safe work planning and risk management to safe work control, providing the means to monitor, report and feedback valuable data and enable improved organisational learning. Proscient integrates with maintenance management, ERP and planning

76 Oil Review Middle East Issue Eight 2012

How Proscient decomposes the work order Using Proscient, frontline supervisors can then visualise this holistic picture including all of the work required both in time and space and with the associated cumulative risk. They can optimise the safe work plan which includes “all of the jobs”, their dependencies and interactions. These valuable tools can better structure and improve their decision making.


S14 ORME 8 2012 Tech Focus 02_Layout 1 17/12/2012 11:25 Page 77

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Technical Focus

S14 ORME 8 2012 Tech Focus 02_Layout 1 17/12/2012 11:25 Page 78

With visible conflict detection capabilities, certain combinations of work are flagged to supervisors as being in conflict, as well as hard rules to prevent specific combinations of work from occurring at the same time. By moving jobs on the safe work plan in time, they can see the impact of the change in terms of the overall cumulative risk for the shift or day. In this way they can plan and manage their plant to optimal performance while reducing operational risk.

The ability to visualise and optimise the safe work plan As work is planned and executed, Proscient feeds this holistic picture back to the originating maintenance management, planning and ERP systems. The accuracy of subsequent plans is therefore improved for the next time the work order is issued, as they can now be made with full knowledge of what will be required when the work reaches the frontline. Thus the ‘planning to execution’ business process is completed, providing for the first time, a means for continuous improvement of operational performance. Given that a significant amount of work is repeat work (up to 80%), the gains in plan accuracy can be substantial.

78 Oil Review Middle East Issue Eight 2012

Conclusion Petrotechnics’ Proscient platform completes the critical gap in the operations work planning to execution business process in the Enterprise IT Architecture. With the actual data generated from the execution phase of the business process, Proscient enables the feedback loop providing for improved decisionmaking, organisational learning and optimisation of the overall process. Proscient unlocks the ROI that the business process could be delivering to the industry. Plan accuracy and plan attainment are improved by default as the planners have the actual details of what it took to do the job in terms of the work breakdown with the safety constraints and the actual time. This provides the necessary inputs to improve the plan the next time the work orders are executed. It also provides frontline supervisors with the tools to optimise of the safe work plan to reduce non-productive time and operational inefficiencies. Completing the gap is one of the most important levers senior management can pull to significantly improve operational performance. With the tools to optimise the work management business process, for the first time they can start to understand the relationship between delivering performance and operational risk. ■


S15 ORME 8 2012 IT_Layout 1 17/12/2012 12:54 Page 79

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Technical Focus

S15 ORME 8 2012 IT_Layout 1 17/12/2012 10:52 Page 80

Yokogawa supplies measurement and control instrumentation in thousands of advanced production processes. Oil Review recently spoke to Ian Ramsay-Connell, Chief Technology Officer at Yokogawa Middle East about the company’s latest technology.

Delivering customer centric

solutions Yokogawa recently launched a new version of the well established EJA pressure transmitter, the EJA-E series. Where does this fit in the Yokogawa Pressure Transmitter range? The EJA-E is the latest series of our enhanced DPharp pressure transmitter. It embodies the basic construction of the existing EJX series combined with the improved specifications of the EJA-A series.

So how does it differ from the EJX series since they physically look very similar? Although the basic construction of the EJA-E is similar to the EJX series, the manufacturing process for the sensor characterisation, calibration, verification, etc. are different, consequently the two models have different performance levels which provides for a wider range of applications and pricing options.

The EJA-A has a large installed base, so why should customers already using your EJA-A series pressure transmitters consider the new Yokogawa EJA-E? The EJA-E series has additional benefits over the EJA-A including accuracy, stability, safety certification, multi-sensing and more, which delivers increased value for the investment. Further, existing EJA-A transmitters can be replaced with EJA-E devices easily as devices become due for replacement.

The corrosion rate of aluminum alloy is greatly influenced by the copper content. Ian Ramsay-Connell

You mention safety certification, does this mean the EJA-E can be used for safety critical applications? Yes, the EJA-E is already certified as standard for use in applications up to SIL 2 in single device configuration and for applications up to SIL 3 with a fault tolerance of 1, i.e. 1 out of 2 or 2 out of 3 configurations. This is the same as for the EJX and it is possible to use a combination of the two types in the same safety function if desired. The certification is provided by the globally recognized TuV organisation.

The specification for the EJA-E includes an AA365 material housing, what are the benefits of this feature? The corrosion rate of aluminum alloy is greatly influenced by the copper content. Due to the very low copper content (<0.03 per cent) of AA365 alloy, minor damage to the surface painting, which can happen in industrial locations, does not cause severe corrosion.

Yokogawa have installed a transmitter assembly locally in Bahrain to service the Middle East region. What is the reasoning behind this investment? The objective is to provide improved customer service by speeding up the delivery of transmitters to specific customer configurations. Providing this facility locally allows much faster delivery of less than two weeks. This is achieved by removing factory scheduling, transportation and customs delays and ensures rapid turnaround of change requests.

80 Oil Review Middle East Issue Eight 2012

Sounds like a good initiative, but what products are available via the assembly line in Bahrain? At this time, Pressure and Differential Pressure transmitters EJA-A and EJX, plus Temperature transmitters type YTA are available for assembly and shipment. In future other ranges such as flow may be accommodated.

You didn’t mention the new EJA-E. Is that range not available via the local assembly line? The necessary equipment to support the new EJA-E is being prepared such that the EJA-E will be incorporated in the local assembly line in early 2013.

Yokogawa have a strong reputation for product quality. Is the quality of the products processed on the assembly line in Bahrain compromised by localisation? Absolutely not. All the machines and instruments used for transmitter assembly are identical to those used in our production centre in Japan and the same manufacturing standards are maintained.

Can the transmitters assembled in the local assembly line satisfy the hazardous area certification requirements? Yes, ATEX and IEC Ex approvals are available for the Yokogawa transmitter assembly line in Bahrain. ■


S15 ORME 8 2012 IT_Layout 1 17/12/2012 10:52 Page 81


Communications & IT

S15 ORME 8 2012 IT_Layout 1 17/12/2012 10:52 Page 82

Despite the several advantages of cloud computing, organisations in the region should tread carefully and examine all the potential underlying risks when migrating to the cloud.

Understand the risks of moving to

the cloud P

OST RECESSION THE trend that companies in the Middle East have been following has been to reassess their operations and examine where efficiencies can be made without reducing productivity. The advent of cloud computing has been seen by many as a means to achieve this. The cloud minimises capital expenditure and at the same time offers easy upgrade of systems and permits staff to work remotely. Shaheen Haque, Territory Manager, Middle East & Turkey at Interactive Intelligence says that while on the face of it the cloud might offer savings, failure to properly analyse the inherent risks can lead to far greater expenses. Therefore, it is wise to look at all aspects of a cloud service to see if it truly offers the best return on investment and efficiencies for business. One of the first areas that companies need to examine before moving into the cloud is how much of the IT infrastructure they should actually transfer. Some might think that basing all their telephony systems in the cloud would save money, with services being accessed through a public network or a VoIP, meaning that there is no carrier relationship onsite. This would eliminate capital expenditure costs for their phone system, requiring only a monthly rental or per use payment. While this appears to offer better long-term budgeting, it is worth noting that if the VoIP connection is lost then so is all access to data or calls, which can be very costly indeed. The safest option to remedy this would be to deploy an on-premise private cloud but this comes at a price. A more cost-effective solution then would be to opt for a hybrid model that offers the best of both worlds. Companies need to look out for the onsite equipment - who owns it and what does it cost? Some vendors might just rent out the equipment for a monthly tariff that could be supplementary to the service charge while others will offer the opportunity to buy the equipment for a lump sum or a payment plan spread out over a certain period. Again, it is worth checking how these are priced. Enterprises are now required to handle and retain vast amounts of data. As this is expensive to store in-house, many believe that storing information in the cloud is a more cost effective solution. And while this may hold true, organisations must be aware that through economies of scale, they can encounter similar overhead constraints and data costs as with an inhouse solution. For instance, many providers will

82 Oil Review Middle East Issue Eight 2012

Shaheen Haque

set an agreed data limit on what can be stored each year and if an organisation happens to exceed this – which is easy to do– the price can quickly escalate with additional data capacity costing upwards of US$1,650 per year per Terabyte. It is a similar story with the number of users. Many vendors will set a contract that limits the maximum number of users. As the organization grows over time, exponential expanding its workforce, it could easily outgrow its contract and end up paying a hefty price tag for these additional users.

The safest option to remedy this would be to deploy an on-premise private cloud but this comes at a price In terms of data center hardware, the cheapest up-front solution is multi-tenant hardware, wherein many customers share the same server and hard drives. However, as there exist no barriers between accounts, if one customer's infrastructure becomes

infected with a virus, this can quickly spread to all the other customers on that machine. The result is that the network can go down, through no fault of the customer, meaning that valuable work can be lost and communications severed. To avoid such a catastrophe, the business may opt to entrust its critical IT infrastructure to a dedicated server in the vendor’s data center. However the known expense is high, making it only viable for organisations that have extremely large IT budgets. The newer, cost-effective way of offering cloud infrastructure is through the use of virtual machines. The customer then benefits from a highlevel of security and integrity comparable to having dedicated hardware, while at the same time reaps the reward of the lower upfront costs of the multi-tenant model. However, organisations should bear in mind that virtual machines have a limited data capacity and if this is exceeded, the vendor may well move the account to its own dedicated machine which negates the cost savings of virtualisation. Finally, is worth considering how a business is going to connect to the cloud. Some cloud providers will want customers to use a partner ISP, with the cost incorporated into the monthly bill for the cloud service. While this sounds like a great deal, many companies are tied into existing ISP contracts that they will either have to keep paying until the contract expires or be liable for a hefty get-out fee. In relation to telephony, in a true cloud-based scenario all that comes into the building are the broadband circuits. The phone lines are connected into the cloud provider’s data center, for which a customer will be charged a premium. The great rates a business has negotiated with its existing Telco for making calls to certain codes may not be offered by the cloud provider, particularly with calls to mobile numbers. Undoubtedly there are risks that businesses need to be aware of to avoid any nasty surprises, but looking carefully through a contract will reveal several of these. The most important piece of advice for anyone looking to move to the cloud is to research. Make sure all the facts and possible eventualities have been considered, for example being tied into a long contract just because it is cheaper is not necessarily the most cost effective option. Moving to the cloud can create significant efficiency savings for companies but only if they are aware of all the risks involved. ■


S16 ORME 8 2012 DMS_Layout 1 14/12/2012 12:57 Page 83

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S16 ORME 8 2012 DMS_Layout 1 18/12/2012 10:41 Page 84

Project Databank Compiled by Data Media Systems

OIL, GAS AND PETROCHEMICAL PROJECTS Project Date Centrifugal Air Compressor System for Mesaieed Refinery Dolphin Energy - Export Gas Compression Facilities Upgrade KLJ Organic-Qatar - Chlorinated Paraffin Waxes Laffan Refinery Company - Ras Laffan Condensate Refinery Expansion Mesaieed Refinery to BSV3 Station Jet Fuel Pipeline Old Salwa RPS Reconstruction and Upgrade Project Oryx GTL Gas-to-Liquids (GTL) Plant Debottlenecking Oryx GTL Gas-To-Liquids (GTL) Plant Phase 2 QAPCO - Ethylene Plant Expansion 3 (EP3) - Phase 1 Qatar Petroleum Fuel Gas Supply to Dukhan Qatar Petroleum Linear Alkyl Benzene (LAB) Plant

Sector

Facility

Budget

Status

Start Date

Completion

Refining

Refinery

50000000

EPC ITB

Q2-2011

Q2-2014

Gas

Gas Production

250000000

EPC ITB

Q1-2013

Q4-2015

Petrochemicals Chlor Alkali Refining Refinery

83000000 1000000000

EPC EPC ITB

Q3-2009 Q4-2011

Q2-2014 Q4-2015

Pipeline Pipeline Gas Gas Petrochemicals Pipeline Petrochemicals

Gas Water Gas to Liquids (GTL) Gas to Liquids (GTL) Ethylene Gas Linear Alkyl Benzene (LAB) Gas Treatment Plant

100000000 500000000 100000000 1500000000 214000000 110000000 250000000

EPC Q1-2010 EPC ITB Q4-2010 EPC ITB Q3-2011 FEED Q2-2011 EPC Q3-2010 EPC Q4-2008 Feasibility StudyQ4-2010

Q3-2013 Q4-2012 Q2-2015 Q4-2015 Q3-2014 Q1-2012 Q2-2015

200000000

EPC

Q1-2010

Q2-2013

Pipeline

ethylene

80000000

completed

Q4-2009

Gas Gathering Liquefied Natural Gas (LNG) Gas

1000000000 EPC 2000000000EPC

Q1-2009 Q1-2008

Q4-2014 Q2-2013

Gas Processing

50000000

EPC ITB

Sulphur Recovery

1000000000

EPC

Q1-2008

Q3-2013

Gas Processing

27000000

EPC

Q1-2009

Q2-2012

Gas Processing Exploration

100000000 500000000

EPC ITB EPC

Q1-2011 Q4-2009

Q3-2014 Q2-2015

Aromatics

2000000000

Q2-2012

Q4-2016

Hydrotreating

1000000000

Feasibility Study EPC

Q2-2010

Q1-2014

Petrochemicals Petrochemical Plant 7000000000 Gas Gas Field Development

FEED Q3-2011 8600000000 EPC

Q1-2017 Q4-2007

Gas

Gas Field Development

800100000

Q1-2007

Oil, Gas

Gas Production

700000000

Feasibility StudyQ1-2013 Q1-2017

Oil, Gas

Gas Production

300000000

Gas

Gas Field Development

Feasibility Q1-2017 Study 1700000000 EPC

Gas

Gas Production

2000000000

Oil, Gas

Gas Production

3000000000

Qatar Petroleum Mesaieed Gas Integrated Gas Sweetening Project (GISP) Qatar Petroleum Mesaieed Industrial Area Gas Pipelines Q2-2012 QATARGAS - Jetty Boil Off Gas Recovery Gas QATARGAS - Plateau Maintenance Project Gas QP - Air Compressor Replacement at Mesaieed Refinery Q2-2012 Q2-2014 QP - Combined SRU and AGR Projects at Gas Mesaieed and Dukhan QP - Low Pressure Associated Gas Gas Compressor at Halul Island QP - NGL 1 & NGL 2 Plants Upgrade Gas QP - SHELL/PETROCHINA - Block D Natural Gas Gas ExplorationGas Ras Laffan Aromatics plant Petrochemicals Ras Laffan Diesel Hydrotreater and Sulphur Recovery Unit Ras Laffan Olefins Complex (Overview) RasGas - Qatar Barzan Gas Field Q4-2021 Development Project (Overview) RasGas - Qatar Barzan Gas Field Q4-2016 Development Project - Offshore - Phase 1 RasGas - Qatar Barzan Gas Field Development Project - Offshore - Phase 2 RasGas - Qatar Barzan Gas Field Development Project - Offshore - Phase 3 RasGas - Qatar Barzan Gas Field Q4-2015 Development Project - Onshore - Phase 1 RasGas - Qatar Barzan Gas Field Development Project - Onshore - Phase 2Oil, RasGas - Qatar Barzan Gas Field Development Project - Onshore - Phase 3 RasGas Company - Qatar Helium 2 Project Shell Ras Laffan Petrochemical Complex QP - Wellhead Scada & Cathodic Protection In Dukhan Field

Refining

Gas Helium Petrochemicals Petrochemical Plant Oil Oil Production

500000000 6000000000 225000000

Feasibility Study Feasibility Study EPC FEED ITB EPC ITB

EPC

Q4-2022 Q1-2007

Q1-2013

Q3-2017

Q1-2017

Q1-2021

Q3-2009 Q2-2004 Q2-2012

Q1-2013 Q4-2018 Q4-2014


S16 ORME 8 2012 DMS_Layout 1 14/12/2012 12:57 Page 85

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S16 ORME 8 2012 DMS_Layout 1 18/12/2012 10:42 Page 86

Project Databank Compiled by Data Media Systems

Project Summary Project Name

Laffan Refinery Company - Ras Laffan Condensate Refinery Expansion

Name of Client

Laffan Refinery Company Limited

Budget ($ US)

1,000,000,000

Award Date

Q1-2013

Facility Type

Refinery

Status

EPC ITB

Start Date

Q4-2011

End Date

Q4-2015

Location

Ras Laffan, Qatar

Project Backgrounds Qatar Petroleum (QP) plans to build Phase 2 of the condensate refinery at Ras Laffan. The expansion will double the refinery's capacity to produce fuel products from 146,000 barrels a day (b/d) to 292,000 b/d. The Ras Laffan plant currently produces 24,000 bpd of gas oil, 52,000 bpd of kerosene and jet fuel and 8,000 bpd of liquefied petroleum gas (LPG). Qatar Liquefied Gas Company and Ras Laffan Liquefied Natural Gas Company will provide feedstock as well as run the refinery.

Project Status Sep 2012

Tender document has been issued, the deadline to submit bids is 17 November 2012.

Aug 2012

Tender for the EPC contract delayed from May 2012 and expected September 2012.

May 2012

A tender document has been issued.

May 2012

The engineering, procurement and construction (EPC) contract expected to be awarded in Q4 2012.

April 2012

The FEED study was ongoing. The FEED is scheduled to be completed in May 2012 (delayed from Q1 2012)

18 Aug 2011

France's Technip was awarded the front-end engineering design (FEED) contract.

Jul 2011

The ITB for the FEED contract is expected to be issued.

Project Scope The scope of the work is likely to include:

■ Naphtha hydrotreater

■ Olefins hydrogenation

■ Paraxylene unit

■ Transalkylation unit

■ Reformer unit

■ BT extraction unit

■ Splitter to divide heavy and light naptha

■ Isomerisation unit

■ Total 10%

Project Finance Laffan Refinery Company Limited is the project client. Shareholdings in the project are:

■ Qatar Petroleum, 51%

■ Mitsui and Company 4.50%

■ Idemitsu Kosan Company, 10%

■ ExxonMobil Corporation, 10%

■ Cosmo Oil Company, 10%

■ Marubeni Corporation, 4.50%

Project Contractors PQ - Chiyoda Corp. - GS Engineering & Construction Corporation - Hyundai Engineering & Construction - Daewoo Engineering Corp.

Bidders

Awarded -Not yet appointed


S16 ORME 8 2012 DMS_Layout 1 14/12/2012 12:57 Page 87


S16 ORME 8 2012 DMS_Layout 1 14/12/2012 12:58 Page 88

Middle East & North African Rig Count The Baker Hughes Rig Count tracks industry-wide rigs engaged in drilling and related operations, which include drilling, logging, cementing, coring, well testing, waiting on weather, running casing and blowout preventer (BOP) testing.

Country

Land

THIS MONTH OffShore Total

LAST MONTH Land OffShore Total

Land

LAST YEAR OffShore Total

Middle East ABU DHABI DUBAI IRAN JORDAN KUWAIT OMAN PAKISTAN QATAR SAUDI ARABIA SUDAN SYRIA YEMEN TOTAL

18 0 0 0 33 48 21 3 69 0 27 7 226

7 1 0 0 0 1 0 5 17 0 0 0 31

25 1 0 0 33 49 21 8 86 0 27 7 257

18 0 0 0 32 46 14 2 69 0 27 5 213

7 1 0 0 0 1 0 4 19 0 0 0 32

25 1 0 0 32 47 14 6 88 0 27 0 240

14 0 0 0 34 48 15 1 62 0 27 3 204

9 0 0 0 0 0 0 5 12 0 0 0 26

23 0 0 0 34 48 15 6 74 0 27 3 230

37 14 4 55

0 9 0 9

37 23 4 64

39 12 3 54

0 10 0 10

39 22 3 64

33 3 13 49

0 0 1 1

33 3 14 50

North Africa ALGERIA LIBYA TUNISIA TOTAL

Source: Baker Hughes

88 Oil Review Middle East Issue Eight 2012


S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 10:33 Page 89


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22-25 April 2013 Tripoli International Fairground

International showcase and conference for oil exploration, production, refining and petrochemicals, where service and supply companies meet oil and gas producers and refiners. Exhibit sectors include:

‡ Exploration and production technology ‡ LNG ‡ Pipelines ‡ Refinery development ‡ HSE ‡ Training The exhibition runs alongside Infrastructure Libya 2013 – the International Exhibition & Conference for Libya’s Rebuilding Programme. For further information go to:


S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 10:34 Page 95

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GULF OIL & GAS CRUISE 2013 INTERNATIONAL CONFERENCE AND EXHIBITION Abu Dhabi U.A.E 21 - 22 October

Doha QATAR 23 - 24 October

Manama BAHREYN 26 - 27 October

Dammam SAUDI ARABIA 28 - 29 October

Kuwait City KUWAİT 30 - 31 October

Discover Oil & Gas Route of Middle East

21 - 31 OCTOBER 2013 Unique Opportunities • Attending 5 exhibitions in 10 days in 1 place • Covers 5 crucial oil & gas countries • Meet public & private sector professionals from each country • Combination of leisure activities with business • Region-specific conference topics • Luxurious accommodation alternatives • The first & unique Cruise Exhibition in the world • High quailty of visitor's profile • Immense networking opportunities • Effective participation of ministries and state companies • Time efficiency: No waste of time with transfers, stand building and logistics

www.oilgascruise.com | info@oilgascruise.com www.expotim.com info@expotim.com Fulya Mah. Vefa Deresi Sk. No: 9 34394 Sisli - Istanbul / TURKEY Tel: +90 212 356 00 56 | Fax: +90 212 356 00 96

EXPOTİM ULUSLARARASI FUAR ORGANİZASYONLARI A.Ş. EXPOTIM INTERNATIONAL FAIR ORGANIZATIONS INC.


QÉ````ÑNGC

S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 10:34 Page 97

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S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 14:17 Page 98

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Expotim International Fair ORG. INC (Gulf Oil & Gas)..................................................................96 Garda World........................................................................21 Gates Engineering & Services ......................................79 GE Energy ............................................................................19 Global Pipe Company......................................................60 Gulf Trub Tech FZE............................................................52 Hempel Paints Bahrain....................................................33 Hi-Force Ltd.........................................................................25 Hyderabad Industries Ltd................................................45 Hydroflow Pump Rental Est ..........................................32 IIR Exhibitions (MEE 2013) ............................................83 Inmarco Industries FZC......................................................4 Inova Geophysical Equipment Ltd...............................81 IQPC Middle East ..............................................................53 Jotun Paints U.A.E. Ltd. (LLC) ..........................................5 Marelli Motori S.p.A. ........................................................77 Megarme..............................................................................41 Metscco Heavy Steel Industries Co. Ltd. ..................69 Montgomery (Oil & Gas Libya)......................................94 MSA Middle East ..............................................................59 Oman Cement Company ................................................35

Pace Group..........................................................................46 Paqell....................................................................................75 Peri LLC ................................................................................71 Petrotech Enterprises (L.L.C.)..................................73, 79 Sabin Metal Corporation ................................................29 Safehouse Habitats ..........................................................49 Saudi Arabian Development Co. Ltd...........................65 Saudi Steel Pipe Company â&#x20AC;&#x201C; Dammam ....................99 Schlumberger Technical Services, Inc. ........................2 Schneider Electric IT Logistic Europe..........................27 Schoeller - Bleckmann UK ............................................55 Shree Steel Overseas FZCO..............................................8 Southern California Valve ..............................................70 Stevens Supply International ........................................15 Sulzer Pumps Middle East ............................................61 Suraj Limited ......................................................................41 Techma FZCO ....................................................................36 TMK Middle East ..............................................................75 Top Oil Field Industries Ltd FZC ..................................63 Trans Asia Pipeline Services FZC ................................14 Ward Leonard Electric Company, Inc. ........................31 Yokogawa Middle East....................................................51


S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 10:34 Page 99


S17 ORME 8 2012 Arabic_Layout 1 17/12/2012 10:34 Page 100


Oil Review Middle East 8 2012  

Oil Review Middle East 8 2012

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