new base 539 special 12 february 2015

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NewBase 12 February 2015 - Issue No. 539 Khaled Al Awadi

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

Somali Petroleum Minister Sees Start of Oil, Gas Output by 2020 Bloomberg+NewBase

Somalia may start producing oil and gas by 2020 after exploration work showed the potential for

“huge” deposits of the resources in the Horn of Africa country, outgoing Petroleum Minister Da’ud

Mohamed Omar said.

“We expect that Somalia will produce oil and

gas in 2020 and the nation will reap

enormous benefits such as alleviating the

poverty and leading the country into

prosperity,” Omar told reporters Wednesday

in the capital, Mogadishu. He didn’t identify

which oil companies are carrying out

exploration work in the country.

Somalia is considering its first bidding round for oil blocks since 2009 as increasing stability begins to attract more foreign investors. African Union-backed government forces have regained control of about 70 percent of the country that had fallen under the control of al-Shabaab, the al-Qaeda-linked militant group seeking to create an Islamic state in Somalia.

The government is in talks with companies including Royal Dutch Shell Plc, Exxon Mobil Corp., BP Plc and Chevron Corp. about reactivating dormant contracts in the country,

according to J. Jay Park, managing director of Petroleum Regimes Advisory, who provides legal advice to the government. Oil companies haven’t operated in the country since civil war erupted in 1991 and they were forced to declare force majeure.

Omar said in October that he expects the country to begin producing oil and gas within six years. He is being replaced by Mahamed Mukhtar Ibrahim, who was appointed as minister in a new cabinet announced by Prime Minister Omar Abdirashid Ali last week.

While Somalia has no proven oil reserves, drillers are betting the country has a geology similar to that of Yemen, which lies across the Gulf of Aden and has 3 billion barrels of proven oil reserves, according to the BP Statistical Review of World Energy.




Pakistan: China Gas Pipeline Bureau to Begin Laying Gas Pipeline BusinessRecorder + NewBase

China Petroleum Pipeline Bureau (CPP) will soon begin laying 700 km Gwadar-Nawabshah gas pipeline in Pakistan on government to government basis, reported Pakistani newspaper Business Recorder On Tuesday . Once complete, the pipeline will transport up to one billion cubic feet per day of regasified LNG. CPP is expected to finish the pipeline in two years, the newspaper reported . Pakistan hopes that the pipeline would also facilitate Iran-Pakistan pipeline project if international sanctions on Tehran go.

An official told Business Recorder that CPP would bring the required capital of $1.5 billion and will also construct the LNG terminal in Gwadar, costing $800 million. The terminal, which is likely to be offshore, will have a capacity of 500 mmcfd of LNG.

Cost of TAPI Gas Pipeline Could Rise to $10 bn Delay in implementation could push up cost of Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline project to $10 billion, Asian Development Bank has warned. According to Pakistan’s Express Tribune newspaper earlier estimates had put the cost at $7.5 billion, which will now go up by $2.5 billion, which officials say would also include development cost of gas fields.




Officials from the four countries met in Islamabad on Wednesday during the TAPI steering committee meeting. The committee will deliberate to finalise the award of a multi-billion-dollar contract to French energy giant Total.

Officials added that Turkmenistan had agreed to award the contract to Total as the four nations gathered to discuss the service contract agreement to be signed with the French company, which would function as a consortium leader, Express Tribune added. Under the contract, Turkmenistan will pay a service fee to Total for development of the fields and the French entity will bear the costs associated with laying the pipeline. Last year, gas companies of Turkmenistan, Afghanistan, Pakistan, and India established a company that will build, own and operate the planned 1,800-kilometer natural gas pipeline. Turkmengas, Afghan Gas Enterprise, Inter State Gas Systems, and GAIL (India) Limited own equal shares of the company. The TAPI pipeline will export up to 33 billion cubic meters of natural gas a year from Turkmenistan to Afghanistan, Pakistan, and India over 30 years.




Kenya: CAMAC Energy completes 2D seismic acquisition in Kenya Source: CAMAC Energy

CAMAC Energy has announced the successful completion of its onshore 2D seismic acquisitions

on Blocks L-1B andL-16 in the Republic of Kenya. 'The preliminary results from data processing

in the field are encouraging'.

The 2D seismic program was conducted by BGP Kenya and covers approx. 700 line kms on L-1B and 325 line kms on L-16. The objective of the acquisition is to identify potential exploration targets in the Paleozoic, Jurassic, Cretaceous, and Middle to Lower Tertiary sections, which are known to be oil-bearing in the East Africa region. The seismic survey, paired with the previously completed airborne gravity and magnetic surveys, will be used to help identify potential drilling targets on the block.

'The preliminary results from data processing in the field are encouraging', commented Segun Omidele, Senior Vice President of Exploration and Production. 'These seismic surveys are fundamental to advancing our onshore Kenya work program and our understanding of the resource potential on these blocks and will help us determine potential locations to begin our exploration drilling.'




Gabon:VAALCO Energy announces production from the Etame 10-H well Source: VAALCO

VAALCO Energy has announced first production from Etame 10-H, the second development well drilled from the newly installed Etame platform, offshore Gabon. The horizontal development well was drilled to a Measured Depth (MD) of 3,144 meters while intersecting over 180m of high quality reservoir within an oil-bearing portion of the Gamba Sand. Following completion operations, the well was tested at the rate of approx. 3,200 BOPD on a gross basis with negligible amounts of water and no hydrogen sulfide (H2S). The well is currently being produced at approx. 3,000 BOPD.

'We are very pleased with the results from the Etame 10-H well and we are eager to continue our current drilling program offshore Gabon,' said Steve Guidry, CEO of VAALCO. 'VAALCO has produced over 85 million barrels of oil from the Etame Marin block and, with our two new platforms, we are well positioned to continue to deliver a growing production profile through most of 2015.'

The contracted jack up rig, the Transocean 'Constellation II', is now being mobilized to drill additional development wells from the Southeast Etame/N. Tchibala ('SEENT') platform, beginning with the Southeast Etame 2-H well in the Southeast Etame field, where the Company and its partners drilled a successful exploration well in 2010.

Following the mobilization of the jack-up rig to the SEENT platform, VAALCO is planning to conduct an extended well test of the Etame 8-H well, drilled in the fourth quarter of 2014, to confirm and quantify the presence of H2S, which was detected during the initial 17 hour flow test. The well test is expected to occur later in the first quarter of 2015.




Poland’s dream of shale gas riches begins to dim AFP + NewBase

Poland’s dream of becoming a shale gas “El Dorado”, bringing untold riches and assuring energy independence, is turning into a mirage as Western firms abandon prospecting efforts, citing poor results.

“We can no longer talk of a new El Dorado,” said Grazyna Piotrowska-Oliwa, a former president of Poland’s PGNiG gas utility. “The hopes and promises were excessive,” she said, even though the official results of the explorations have yet to be published.

Optimistic estimates

suggested Poland could have up to 1.92 trillion cubic metres (67.8 trillion cubic feet) of exploitable shale gas deposits, fuelling interest from top energy giants around the world.

But those

forecasts were “exaggerated”, and now “there’s disappointment” in Poland, according to analyst Grzegorz Kus of the consultancy PwC. Leading Polish geology scholars also say that the country’s shale deposits are structured so differently from those found in the United States that extraction technologies developed there cannot be applied in Poland.

US energy major Chevron was the latest to pull the plug on shale gas prospecting in Poland. ExxonMobil, Marathon Oil and Talisman Energy had led the exodus, followed by French oil giant Total and Italy’s Eni last year.

“It’s not a surprise and it’s not the last withdrawal,” Kus said of Chevron. “It turns out that this market is not as interesting as it was thought to be.” He attributed the retreat of global oil giants to the disappointing results of exploration, the drop in global fuel prices, more interesting extraction opportunities elsewhere in the world, Polish bureaucracy and planned tax hikes in Poland’s energy sector.

Fifteen firms are still in the game, including US major ConocoPhillips, PGNiG and Polish oil group PKN Orlen.




EIA tracking tool shows light-sweet crude oil imports to Gulf Coast virtually eliminated Source: U.S. Energy Information Administration,

The increase in U.S. shale and tight crude oil production has resulted in a decrease of crude oil imports to the U.S. Gulf Coast area, particularly for light-sweet and light-sour crude oils. These trends are visualized in EIA's crude import tracking tool, which allows for time-series analysis of crude oil imported to the United States.

Historically, Gulf Coast refineries have imported as much as 1.3 million barrels per day (bbl/d) of light-sweet crude oil, more than any other region of the country. Beginning in 2010, improvements to the crude distribution system and sustained increases in production in the region (in the Permian and Eagle Ford basins) have significantly reduced light crude imports. Since September 2012, imports of light-sweet crude oil to the Gulf Coast have regularly been less than 200,000 bbl/d. Similarly, Gulf Coast imports of light crude with higher sulfur content (described as light-sour) have declined and have been less than 200,000 bbl/d since July 2013.




EIA's crude oil import tool can be used to examine crude oil imports by country of origin. In the Gulf Coast (defined as the Petroleum Administration for Defense District 3, or PADD 3), crude oil is imported from several countries, mainly in the Americas (Mexico, Venezuela, Colombia, and Canada) and in the Middle East (Saudi Arabia, Kuwait, and Iraq).

Imports from other countries to PADD 3 have declined significantly in recent years, from an average of 1.7 million bbl/d in 2009 to just 0.26 million bbl/d in 2014, through October. Imports from Africa in particular have declined, as those were primarily light-sweet in quality.

Because the Midwest region (PADD 2) is landlocked, imports show a much less diverse range of countries of origin.

In 2014, almost all imports of crude oil to the Midwest came from Canada. Comparing Canadian imports to the Midwest, which now surpass 2 million bbl/d, imports from other countries had been historically low (125,000 bbl/d in 2009) and are now even lower (34,000 bbl/d in 2014 through October).




Oil Price Drop Special Coverage

Halliburton axes 6400 jobsd due to fall in oil prices

Low oil prices have forced major oil companies to reduce capital expenditure, consequently hurting the oilfield services sector, including companies such as Halliburton, Schlumberger and Baker Hughes.

“We value every employee we have, but unfortunately we are faced with the difficult reality that reductions are necessary to work through this challenging market environment,” BBC has quoted Halliburton as saying.

Halliburton has a workforce of more that 80,000 employees, representing 140 nationalities in over 80 countries.

The company has said that the overall number of 6400 jobs includes the previously announced plan to reduce its international workforce by a 1000.

Halliburton, headquartered in Houston, Texas, is not the only oilfield services major forced to lay off workers due to the challenging market conditions. Schlumberger, world’s largest provider of services to the oil and gas sector, last month said it would lay off 9000 workers.

Also, Baker Hughes, soon to be taken over by Halliburton, in January said it expected to undertake a workforce reduction of 7000, most of which to take place in the first quarter of the year.

Halliburton, world’s second biggest oilfield services provider, said that the latest layoffs are not related to the takeover agreement with Baker Hughes.

6400

700




OPEC producers cut prices to Asia in battle for market Agencies + NewBase Iraq, Kuwait and Iran joined Saudi Arabia in cutting their March crude prices for Asia, signaling the battle for a share of OPEC’s largest market is intensifying. Iraq’s Basrah Light crude will sell at $4.10 a barrel below Middle East benchmarks, the deepest discount since at least August 2003, the Oil Marketing Co. said Tuesday. National Iranian Oil Co. said its official selling price for March Light crude sales will be a discount of $2.10 a barrel, the widest since at least March 2000, according to a company official who asked not to be identified because of corporate policy. Kuwait Petroleum Corp. said Wednesday its discount will be $4.10, the biggest since August 2008. The cuts come after Saudi Arabia, the largest crude exporter, reduced pricing to Asia last week to the lowest in at least 14 years. The Organization of Petroleum Exporting Countries left its members’ output targets unchanged at a November meeting, choosing to compete for market share against US shale producers rather than support prices. Iraq is the second-biggest producer in OPEC, Kuwait is third and Iran fourth.

“This is an effort by some producers to protect market share,” Sarah Emerson, managing principal of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts, said by phone Tuesday. “It’s really straightforward; cutting prices is how you keep your foot in the door.” Middle Eastern producers are increasingly competing with cargoes from Latin America, Africa and Russia for buyers in Asia. Oil prices have dropped about 45 percent in the past six months as production from the US and OPEC surged. The International Energy Agency said Tuesday that the US will contribute most to global growth in oil supplies through 2020 as OPEC’s attempts to defend its market share will hurt other suppliers including Russia more. “If they go out and sell at a higher price, they won’t sell much,” John Sfakianakis, Middle East director at Ashmore Group Plc, a London-based investment manager, said in an interview in




Dubai Tuesday. “For the Saudis, it’s market share at any cost. Saudi (Arabia) is the leader in this and the others have to follow the leader.” Iran’s output rose to 2.78 million barrels a day in January from 2.77 million a month earlier as Iraq boosted supply to 3.9 million from 3.7 million, according to a Bloomberg survey of oil companies, producers and analysts. Saudi Arabia won’t balance global crude markets by itself even as prices fall “too low for everybody,” Khalid Al-Falih, the chief executive officer of Saudi Arabian Oil Co., said at a conference in Riyadh on Jan. 27. The Kingdom’s Oil Minister Ali Al-Naimi has said producers outside of the group should trim their output first. “This is a global market that’s oversupplied,” Emerson said. “Late March and early April are in normal times a period of weak demand, so you have to be rather aggressive now if you want to sell your oil.” Crude demand is improving amid signs prices are stabilizing, the state-run Saudi Press Agency reported, citing Saudi Arabia’s Oil Minister Ali Al-Naimi. Al-Naimi discussed a “relative improvement in the market” with Algeria’s Minister of Justice Al-Tayeb Louh at a meeting in Riyadh on Wednesday, the Saudi Press Agency reported. Increased demand, stability of prices and the importance of cooperation among oil producers were mentioned, according to the report. Algeria and Saudi Arabia are members of the Organization of Petroleum Exporting Countries. Al-Naimi discussed cooperation among oil producers from OPEC and from outside the group with Gazprom Chairman and presidential envoy Viktor Zubkov, according to the Saudi Press Agency. Al-Naimi has said producers outside of OPEC should trim their output first.

Global economic growth will boost demand, Al-Naimi said at a conference in Abu Dhabi in December. Economic growth will accelerate to 3.5 percent this year from 3.3 percent last year, the International Monetary Fund on Jan. 19. Iraq, Kuwait and Iran joined Saudi Arabia this month in lowering their crude prices for Asia, signaling OPEC is seeking to defend market share rather than support prices. Brent crude, the benchmark for pricing more than half of the world’s oil, climbed the past two weeks on signs US drillers were cutting. Oil demand growth will accelerate to 1 percent this year from 0.7 percent last year, partly on faster economic growth, the Paris-based International Energy Agency said on Tuesday. Brent crude slumped 48 percent last year as increased production from the U.S. to Russia and stagnating economic growth helped global output to exceed demand. Oil fell toward $55 a barrel on Wednesday, under pressure from expectations of persisting




oversupply in world markets and an industry report saying US crude stocks rose further from a record high. The American Petroleum Institute said on Tuesday crude stocks increased by 1.6 million barrels last week. The US government’s Energy Information Administration (EIA), which issues its latest report on Wednesday, already shows stocks at a record high. Crude had come under pressure on Tuesday from International Energy Agency (IEA) forecasts of continued supply growth in the United States to 2020 despite lower prices, and of a possible further rise in stocks this year. “The supply growth in 2015 is likely to continue unabated, albeit at a somewhat lower rate,” Fereidun Fesharaki at Facts Global Energy said in a market note. “This all means a weak market in 2015 and even lower oil prices. Demand rebound will not save the oil market.” Brent crude futures LCOc1 were down $1.37 cents at $55.06 by 1415 GMT (09:15 a.m. EST). US crude CLc1 traded at $49.22, down 80 cents, having reached a high of $51.14 earlier in the session. After more than halving since June, oil prices have rallied by over 20 percent in the last four weeks. Kuwaiti Oil Minister Ali Al-Omair said on Wednesday crude prices could rise to $60 a barrel by the end of the year. But analysts agreed with IEA predictions that following the crash, oil prices would stabilize well below the highs of more than $100 a barrel seen in the last three years. Jefferies Bache analysts said Brent and US crude, known as West Texas Intermediate (WTI), would fall in the short term. “We still expect fresh WTI lows and an ultimate decline towards the $40 area,” they said in a note to traders. “Assuming our $40 WTI target is achieved, a nearby Brent price in the $48 area would be implied.” “All in all, we are maintaining a bearish stance.” Adding further pressure on prices, the EIA kept its 2015 and 2016 domestic oil output forecasts virtually unchanged from the previous month. The EIA expects US oil production in 2015 to be 9.3 million barrels per day, slightly lower than the 9.31 million bpd forecast in last month’s short-term energy outlook.

Cheaper oil won’t fuel economic growth: Moody’s SG/Agencies + NewBase A fall in world oil prices over the next two years won’t support global economic growth, as economic and political tension in the Eurozone, China, Russia and Japan constrain activity, Moody’s international rating agency said in a report. “Lower oil prices should, in principle, give a significant boost to global growth,” said Marie Diron, a Moody’s Senior Vice President and author of the report. “However, a range of factors will offset the windfall income gains from cheaper energy.” While in theory lower oil bills should spur economic growth in Europe, however a number of economic issues, like high unemployment and deflation are outweighing most of the benefits of cheaper crude. The agency predicts that GDP growth of the euro zone will reach 1 percent this year despite low oil prices and 1.3 percent in 2016.




Lower energy prices will not stop the continued slowdown of the Chinese economy, as higher energy taxes and state control of prices in various sectors will weaken the effect of cheap oil. Moody’s expects China’s GDP growth will be below 7 percent in 2015 and 6.5 percent in 2016, Moody’s says.

Brazil, which imports and exports roughly the same volumes of oil, is expected to have its slowest growth period since the early-1990s between 2014 and 2016 with the country’s GDP growth around zero in that period. The recession in Russia will be deeper and longer than in 1998 and 2009 and last until 2017, according to the report. The country’s GDP will lose more than 8 percent in 2015-2016, while the drop in domestic demand will be sharper than the decline in GDP as a whole. At the same time government spending in Saudi Arabia will support economic growth and compensate for the negative effects of lower oil prices. Moody’s expects the price of North Sea Brent blend to be at $55 per barrel by the end of 2015 and up to $65 per barrel in 2016. The agency explains it is not expecting any changes in supply and demand in the near future. However, despite a large number of downside risks, there won’t be any serious threat to the world economy, Moody’s analysts say. Moody’s said it will leave the forecast unchanged for the G20 countries. “For the G20 economies, we expect GDP growth of just under 3 percent each year in 2015 and 2016,” the report said. The current oil prices will have a positive impact on the economies of India and the US, with its GDP expected to increase by 3.2 percent in 2015 and 2.8 percent in 2016. “The US is one of the main beneficiaries of cheaper oil,” Diron said. “The favorable economic environment in the US will encourage consumers and companies to spend part of the gains in real income that come from lower energy costs.”




Algeria increases initiatives to address drop in oil prices APS + NewBase

ALGIERS- Algeria’s initiatives to find a consensual platform likely to stop the drop in oil prices are increasing towards oil producing countries, including those which are not members of the Organization of the Petroleum Exporting Countries (OPEC).

In the face of the persistent rejection of some OPEC’s members to hold an urgent meeting devoted to the recovery in oil prices, Algeria started an initiative aimed at organizing consultations with the OPEC and non-OPEC members to reach a consensus for the control of oil prices.

It is in this regard that President of the Republic Abdelaziz Bouteflika tasked Prime Minister Abdelmalek Sellal to hand over letters to heads of State of the member countries of the African Petroleum Producers Association (APPA) to consult each other following the drop in oil prices.

The concerned countries are Nigeria, Gabon, Angola, Congo and Equatorial Guinea. Azerbaijan, which is a major regional oil power of the Caucasus, also received a message from President of the Republic.

Minister of Energy Youcef Yousfi was received Wednesday in Baku by Azerbaijani President Ilham Aliyev, to whom he handed over a message from President Abdelaziz Bouteflika, about particularly the situation of the global oil market.

President Bouteflika’s message is also about the “need to hold consultations” between the producing countries OPEC and non-OPEC members.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile : +97150-4822502 [email protected] [email protected]

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

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

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

NewBase 12 February 2015 K. Al Awadi

new base 539 special 12 february 2015

Economy & Finance

china gas pipeline bureau

cost of tapi gas pipeline

gwadarnawabshah gas

gas output

oil blocks

iranpakistan pipeline

oil companies havent

barrels of proven oil