oil review middle east issue 1 2012

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Kingdom’s output ‘ close to capacity’ Troubled times in Algeria Bahrain lines up major events Adnoc to tender for oil concession renewal Decommissioning - dealing with ageing assets Unlocking reservoir potential Offshore access bridges the gap PDO to tackle technology challenges Almost US$20 trillion will be required to build the global oil and natural gas infrastructure to meet expected energy demand in 2035, Abdullah Bin Hamad Al Attiyah, president of Qatar’s Administrative Control and Transparency Authority, said recently. See page 6 Vol 15 Issue One 2012 www.oilreview.me SABIC - going from strength to strength UK £10, USA $16.50 15 Serving the regional oil & gas sector since 1997 years See us these events

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Page 1: Oil Review Middle East issue 1 2012

Kingdom’s output ‘close to capacity’

Troubled times in Algeria

Bahrain lines up major events

Adnoc to tender for oil concession renewal

Decommissioning - dealing with ageing assets

Unlocking reservoir potential

Offshore access bridges the gap

PDO to tackle technologychallenges

Almost US$20 trillion will be required to build the globaloil and natural gas infrastructure to meet expectedenergy demand in 2035, Abdullah Bin Hamad Al Attiyah,president of Qatar’s Administrative Control andTransparency Authority, said recently. See page 6

Vol 15Issue One 2012

www.oilreview.me

SABIC - goingfrom strength to

strength

UK £10, USA $16.50

15Se

rving

the r

egion

al

oil &

gas s

ecto

r

since

199

7

year

s

See us these events

Oil R

eview M

iddle East - Volum

e 15 - Issue One 2012

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Oil Review Middle East Issue One 2012 5

Editor’s noteSAUDI BASIC INDUSTRIES Corporation (SABIC) is hoping to bolster itsincreasingly global reputation in 2012 - but it faces key challenges in theyear ahead, including anti dumping measures and potential feedstock issues.The Saudi downstream champion, 70 per cent owned by the Saudigovernment, is already one of the world’s top manufacturers and suppliers ofchemicals, fertilisers, plastics and metals. And it expects more of the samethis year despite the bumpy conditions in troubled markets such as Europe.Our look at the company’s prospects starts on page 42. Staying withpetrochemicals, we also look at Rabigh Refining & Petrochemicals(PetroRabigh), which has a critical year ahead with a vital decision on phasetwo expansion yet to be finalised. And we also analyse two recent reportswhich look at the growth agenda within the GCC petrochemicals sector,highlighting the development opportunities in the industry and thechallenges that lie ahead. Also of interest is a new report that predicts SaudiArabia will embark on US$215 billion worth of petroleum projects, with aheavy emphasis placed on the downstream sector. Elsewhere in themagazine, Moin Siddiqi takes a medium-term look at the region’shydrocarbons resources, noting that increasing domestic energy consumptionmay reduce export potential over the next decade.

ColumnsIndustry news and executives’ calendar 6

AnalysisColumn 14The first of what will be a regular column from specialists Exclusive Analysis looks at

recent unrest in Algeria and its effect on the oil and gas sector.

Outlook 16Our special correspondent looks at growth prospects for the regional oil and gas sector.

Decommissioning 22Why lessons learned in the North Sea can be shared in the region.

Country FocusSaudi Arabia 24The Kingdom has placed a strong emphasis on expansion of its downstream sector.

ExplorationDevelopments 28A round-up of exploration and project news from around the region.

GasNews and Developments 34The latest project and contract news from the regional gas sector.

PetrochemicalsAnalysis 38Two reports look at the new growth agenda within the GGC petrochemicals sector.

Sabic Review 42Despite the unpredictable global economic backdrop, Saudi Arabia’s downstream

champion remains in bullish mood.

Petro Rabigh Review 48The largest joint-venture Saudi petrochemical company has a critical year ahead.

Exhibitions and ConferencesSaudi Safety & Security 52The second SSS exhibition will focus on the protection of industrial, other commercial,

residential and infrastructural assets.

Kuwait Oil & Gas 56This year’s event will showcase the cutting edge technology being developed in

Kuwait’s energy sector.

Technical FocusInnovations 59Introducing some of the latest available technologies for the oil and gas sector.

Saudi Arabia’s downstreamchampion looks to the future.See page 42.

Kingdom’s output ‘

close to capacity’

Troubled times in Algeria

Bahrain lines up major events

Adnoc to tender for oil

concession renewal

Decommissioning - dealing

with ageing assets

Unlocking reservoir potential

Offshore access bridges the gap

PDO to tackle technology

challenges

Almost US$20 trillion will be required to build the global

oil and natural gas infrastructure to meet expected

energy demand in 2035, Abdullah Bin Hamad Al Attiyah,

president of Qatar’s Administrative Control and

Transparency Authority, said recently.

See page 6

Vol 15Issue One 2012

www.oilreview.me

SABIC - goingfrom strength to

strength

UK £10, USA $16.50

15Se

rvin

g th

e re

gion

al

oil &

gas

sec

tor

sinc

e 19

97

year

s

See us these events

Contents

Managing Editor: David Clancy

Editorial and Design team: Bob Adams, Andrew Croft, Prabhu Dev, Immanuel Devadoss,Ranganath GS, Prashant AP, Genaro Santos, Zsa Tebbit and Julian Walker

Publisher: Nick Fordham Advertising Sales Director: Pallavi Pandey

Magazine Sales Manager: Laetitia Mariani Tel: +971 4 448 9260, Fax: +971 4 448 9261, Email: [email protected]

Country Representative Telephone Fax Email

China Wang Ying (86) 10 8472 1899 (86) 10 8472 1900 [email protected] Tanmay Mishra (91) 80 65684483 (91) 80 40600791 [email protected] Bola Olowo (234) 8034349299 [email protected] Sergei Salov (7495) 540 7564 (7495) 540 7565 [email protected] Africa Annabel Marx (27) 218519017 (27) 46 624 5931 [email protected] Saida Hamad (974) 55745780 [email protected] UK Steve Thomas (44) 20 7834 7676 (44) 20 79730076 [email protected] Michael Tomashefsky (1) 203 226 2882 (1) 203 226 7447 [email protected]

www.oilreview.meemail: [email protected]

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

Production: Henrietta Cobbald, Donatella Moranelli, Nasima Osman, Jeremy Walters and Sophia White - Email: [email protected]

Subscriptions: Email: [email protected]

Chairman: Derek Fordham

Printed by: Emirates Printing Press, Dubai© Oil Review Middle East ISSN: 1464-9314 Serving the world of business

Reservoir Management 64ESPs used in a non-traditional role helped profile production in a carbonate oilfield to

unlock higher reservoir potential.

Pipeline Technology 69The prospect of working on a pressurised piping system can be daunting. But an

innovative new technology can save both time and money.

Offshore Access 74There’s a smarter way to work using marine access.

Information TechnologyNews and Developments 80The latest IT products and news for the regional oil and gas sector.

Rig Count 84

Arabic SectionIndustry News 4Qatar 11

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CLOSE TO US$20 trillion (Dh73.44 trillion) will be needed to build theglobal oil and natural gas infrastructure to meet expected energydemand in 2035, Abdullah Bin Hamad Al Attiyah, president of Qatar'sAdministrative Control and Transparency Authority, said in Abu Dhabirecently."On a standalone basis, the Mena [Middle East and North Africa] regionwill be asked to invest over US$100 billion every year," said AlAttiyah, a former Qatar energy minister, in his speech at an industryconference."Future production levels will be determined by the investmentdecision we make in the present. As such, we need to ensure that theindustry has a stable business environment that will give them theconfidence to make large-scale investments," Al Attiyah said, addingthat a close and loyal relationship between the national oil companiesand international oil companies is a requirement to ensure success inmulti-billion dollar projects spread over many years.He said that despite the macro-economic imbalances in Europe andthe US and the threat to global economic growth, the energy demandwill continue to grow rapidly under the leadership of emergingeconomies, especially China and India. "According to the International Energy Agency, energy demand in Asiawill almost double by 2035, while consumption in the OECD[Organisation for Economic Co-operation and Development] will remainalmost constant, Non-OECD countries lead the growth in energyconsumption," Al Attiyah said.He added: "Their rapid economic development is expected to outweighenergy efficiency gains resulting in an overall increase in energydemand. At the same time, even though hydrocarbons remain thedominant source of energy, the energy mix gradually shifts away fromoil and coal, while natural gas and renewable energies gain marketshare." If oil trades between US$85-$95 per barrel range over the next decade,it will provide an adequate economic incentive for producers such asthe UAE to continue investing in long-term sustainable productioncapacity, energy minister Mohammad Bin Dha'en Al Hameli saidduring an energy conference in Abu Dhabi yesterday."Indeed, in recent years the UAE has invested heavily across thehydrocarbon value chain and these investments are continuing," AlHameli said. "However, these investments will materialise only if pricelevels are sufficient to justify commercial production from complexreservoirs," he added.

COMPANY FORMATION SPECIALISTS Links Group anticipates demand foroil & gas support services in Qatar will accelerate over the next 12months as major contractors seek to implement long-term maintenanceagreements.

Following the completion of several oil & gas mega-projects in theGulf state, operators are now directing their attention towards facilityupkeep and are increasingly looking to the expertise of foreigncompanies to fulfil their equipment and manpower needs.As the world’s top exporter of Liquefied Natural Gas (LNG), Qatar’s realGDP is expected to soar by around 21 per cent in 2011-2012, accordingto QNB Capital. The affiliate of Qatar National Bank says the surge inthe hydrocarbon sector, combined with its anticipated budget surplus,will maintain Qatar’s position as the fastest growing economy. Oil & gasincome was put at US$26.8 billion in 2010-2011 and is projected to hitan all time high of around US$38.3 billion in 2012.

While Qatar’s oil & gas sector shows no sign of slowing down,executives at Links Group say National Oil Companies (NOCs) are nowentering a maintenance phase for their recently completed mega-projects such as RasGas, Qatargas, Shell Pearl GTL phase 1 and Dolphinproject.

Speaking on the sidelines of the recent World Petroleum Exhibitionin Doha, attended by 5,000 delegates and where some 400 internationalcompanies were exhibiting, Wayne Merrick Country Manager of LinksGroup in Qatar said there is a definite increase in interest for oil & gassupport services particularly in the midstream and downstream sectors.

INTERNATIONAL LEARNING AND skills specialist Atlas has expanded theglobal footprint of facilities capable of delivering the groundbreakingnew global training initiative IMIST for the oil and gas industry with theapproval of the first centre in Iraq. The accreditation of the Al Delmafacility in Basra City demonstrates Iraq’s commitment to developing itsenergy industry and creating a workforce trained to the globallyrecognised basic safety standard, IMIST online.The Al Delma centre will be capable of delivering the programme to upto 250 people every day.Bilal Mahmood, CEO of Al Delma said: “Long-term underinvestment inthe development of our oil and gas personnel has meant considerabletraining is needed if we are to accomplish the goal of a safe and skilledworkforce for the future.”Developed by global oil and gas training standards body OPITOInternational, IMIST brings for the first time a standardised level ofbasic safety training to an estimated 1.5mn oil and gas workersworldwide. The training assesses basic safety knowledge in nine subjectareas including risk assessment, asset integrity, the use of hazardoussubstances, working at height and mechanical lifting among othersubjects.

New training facility for Iraq

Al Attiyah

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Plenty of opportunities in support services

Global energy demand needs huge investment

The new centre will help trainIraqi oil and gas workers

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S02 ORME 1 2012 News & Calendar_Layout 1 31/01/2012 14:38 Page 7

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ARAMCO TRADING, A wholly-owned company subsidiary, geared up and began commercial operationsJan. 1, 2012, as Saudi Aramco’s downstream investment portfolio expands in-Kingdom and overseas.A statement on the company’s website said the new entity,formally established as Saudi Aramco Products TradingCompany, will replace the Product Sales and MarketingDepartment (PSMD) in importing and exporting refinedpetroleum products, commonly known in the industry as‘system balancing’ of refined petroleum products.The formation of Aramco Trading was first announced inFebruary 2011.Since then, the company has been quick off the blockspreparing to commence business, establishing internal riskmanagement and counterparty business management systemsin line with industry best practices.Aramco Trading will represent the company’s interest in salesand purchases of refined petroleum products such ascondensates, naphtha, gasoline, middle distillate fuels, fuel oiland residual products and bulk petrochemical products.The formation of Aramco Trading was first announced inFebruary 2011.

ITF, THE GLOBAL oil and gastechnology facilitator, has announcedthe challenges that its membership ofoperator and service companies wantto see tackled as priorities this year.Up to 100 per cent funding will beavailable for the right solutions tosome of the industry’s most pressingchallenges and ITF aims to securearound US$75mn investment directlyfrom its members over the next threeyears.A series of workshops will be held ininternational locations throughout theyear on the top global prioritiesincluding:

6 Unconventional reservoir charac-terisation

6 Heavy oil6 Subsea (including subsea power,

extra long tie-backs, producedwater, separation and cleaning andreplacement of valve actuators)

6 Down hole pressure and tempera-ture monitoring

The first Technology ChallengeWorkshop on unconventional reservoircharacterisation will take place inAberdeen on 13 March wheremembers will prepare a roadmap todefine the issues ahead of a furtherworkshop in Houston in June. A globalcall for proposals will then be issuedinviting technology developers tosubmit their innovative solutions. Theorganisation tasked with driving newtechnology solutions also revealedthat it will be establishingmembership clusters in the MiddleEast, Australia, US and Europe to focuson the unique regional challenges andbring forward more specific JointIndustry Projects (JIPs).

STATOIL HAS SINGLED out four business criticaltechnologies as key to achieving thecompany’s growth ambitions. Statoil isboosting its R&D investments by 27 per centand starting to plan Norway’s biggest centrefor IOR technology.In the period up to 2020 Statoil will maintaina high level of production on the Norwegiancontinental shelf while doubling itsinternational production.“The oil and gas industry is facing newtechnological challenges that differ from thosewe have dealt with so far. We will find theresources of the future at great oceanic depths,

in arctic areas where the conditions areextreme, and in new resources such as shalegas and shale oil for example. Statoil is wellpositioned to lead the continuing developmentof the oil and gas industry,” says MargarethØvrum, executive vice president forTechnology, Projects and Drilling.Statoil is now stepping up its technologyefforts in order to boost production, reduceenergy consumption and support thecompany’s growth ambitions. Specifically thiswill mean tougher technology priorities, closerco-operation and the swifter implementation oftechnology.

www.saudiaramco.com

BAHRAIN IS TO host several key international oil and gas conferences this year, once again confirming thecountry's status as a destination of repute for such events, Energy Minister Dr Abdulhussain Mirza has said.According to a preliminary list released by the National Oil and Gas Authority (Noga), eight high-calibreevents will be held from next month, beginning with the 14th Middle East Corrosion Conference andExhibition from February 12 to 15."The event will see a line-up of experts, specialists and engineers, and the participation of a number ofinternational oil companies in the exhibition," said Dr Mirza.He said two events will be held in March, led by Geo 2012 from March 4 to 7 under the patronage of HisRoyal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa. It will be followed by the PipelineOperations and Integrity Management conference and exhibition between March 19 and 21.The Middle East Petroleum and Gas Conference will be held from May 6 to 8 and will be followed by theBase Oil and Lubes Middle East (BLM 2012) Conference on May 9 and 10, a part of the Middle EastPetroleum and Gas Week.Petrotech 2012 will follow between May 20 and 23, also under the patronage of HRH the Premier.The Middle East Chemical Week will be held from September 30 to October 3, while the Middle East NonDestructive Testing Conference and Exhibition will be held from October 7 to 10.The last event of the year, Maintcon 2012, will be held from December 2 to 5."With the guidance of the wise leadership, Noga is keen to attract energy events and host them inBahrain," said Dr Mirza."This will enhance Bahrain's position as an important destination in the Gulf and the Middle East for suchglobal events that contribute to the development of professionals, particularly in the field of oil and gas."

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ITF announces plansfor technologyinvestment

Bahrain lines up major events

Aramco trading to spur global petroleum product sales

www.statoil.com

Statoil steps up technology drive

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BARTON P CAHIR has been appointed as the president and generalmanager of ExxonMobil Qatar.Cahir will be responsible for leading the interface of all ExxonMobil-affiliated activities in Qatar in partnership with Qatar Petroleum aswell as joint ventures between Qatar Petroleum International andExxonMobil abroad.ExxonMobil said it is working to realise the full potential of Qatar’senergy industry.

An Americanand Irishcitizen, Cahirholds aBachelor ofScience inPetroleum &Natural GasEngineeringfrom PennStateUniversity inPennsylvania.

He has worked for ExxonMobil for almost 20 years in the UnitedStates, Asia and the Middle East.Commenting on his appointment Cahir said: “I have been given anincredible opportunity to work in Qatar and I look forward toworking with, learning from, and sharing my experiences with, otherleaders in Qatar who are actively participating in the overalldevelopment of this country. Qatar has been blessed with naturalresources, and I believe the energy industry is a key sector forQatar’s continued economic development.”

DR. HANI AL-GHAOS, a Kuwaiti economist, said recently theestimates that put the country's proven oil reserves at 104 billionbarrels are "very realistic." "The Burgan oilfield has abundant quantities of reserves," Al-Ghaostold a symposium held by Kuwait Economic Society (KES) under thetheme of ‘Kuwait 2012 - Economic Outlook. "The exploitation of the expertise, cost-effective methods and hi-tech are the key to better development of the oil sector," hestressed."The global energy giants resort to mergers and takeovers of othercompanies in order to maximize benefit from the advancedtechnologies," Al-Ghos pointed out.He said he expects that 2012 will be the year of "unconventional oilcrudes," noting that there were very promising scientificachievements in this domain.Dealing with Kuwait's daily consumption of oil, Dr. Al-Ghaos said itamounts to 300,000 barrels out of which 50,000 barrels go to thetransport sector.On his part, CEO of Kuwait Financial Centre (Markaz) Manaf Al-Hajeri affirmed the strength of Kuwait's financial position.However, he criticised Kuwait Stock Exchange, saying it no longerplays its role as a catalyst of investment and a link betweeninvestors and capitalists. “KES is a professional and intellectual NGO initiative designed tocatalyse sustainable economic development through buildingpartnerships between civil society, private sector andpolicymakers.”

SAUDI ARABIA ISnearing itscomfortableoperationalproduction limits andmay struggle to domuch to make up forshortages that arisefrom new sanctionsimposed on Iran bythe West, Gulf-basedsources said.The kingdom, nowpumping just underrecord rates of 10mn barrels per day, has poured billions of dollars into itsvast oil fields, which on paper should ensure it has the ability to ramp up to12.5mn bpd.Long-standing oil policy by Riyadh sets aside some 1.5mn bpd as protectivespare capacity.But industry sources said pumping anywhere near the declared productioncapacity might involve extracting heavy crudes the market might not want.It would also be difficult to sustain higher rates for lengthy periods."There is very little unused capacity in the Gulf," said an oil official in theregion. "Saudi Arabia could comfortably manage an extra 500,000 barrels aday or so and, if pushed, could go up to 11mn (barrels a day)."A steady rate beyond 10mn bpd would offer immediate relief to world oilmarkets, but it would take the kingdom's production to untested levels.

Kingdom’s output close to capacity

www.exxonmobil.com

IRAN HAS NOT stored oil in tankers in the Gulf, and its crude exportshave not been disrupted due to mounting international pressure overits disputed nuclear programme, an oil official told the semi-officialMehr News Agency recently.In January, shipping sources told Reuters the volume of Iranian crudeoil stored at sea had risen to as much as eight million barrels andwas likely to increase further as the Islamic Republic struggles withsanctions and a seasonal refinery slowdown."There has been no disruption in Iran's crude exports through theGulf... We have not stored oil in the Gulf because of sanctions assome foreign media reported," Pirouz Mousavi told Mehr."We do not have even one drop of oil [stored] in the Gulf... Iran's oilexports are taking place based on the Opec's policies." Iran, Opec's second-largest oil producer after Saudi Arabia withoutput of about 3.5mn barrels per day, faces trade hurdles over itsnuclear programme, which the United States and its allies say isaimed at building bombs. Iran says it needs nuclear technology togenerate electricity.European Union countries have agreed in principle to embargoimports of Iranian crude as part of the latest Western efforts to stepup the heat on Tehran.Temporary storage of crude on tankers at sea has been an effectivemeans in recent years for Iran to hold cargoes until sales can bemade while not interrupting oil field production. Meanwhile, Iran's recent round of Gulf naval drills practised thearmed forces' ability to close the Strait of Hormuz, a lawmaker onparliament's national security committee was cited by Mehr News assaying. The elite Revolutionary Guards Corp start naval exercises onJanuary 27 in the Gulf with the aim of enhancing the country's abilityto close the chokepoint into that body of water "in the shortestpossible time when the situation requires it", Mehr cited EsmailKowsari, a member of parliament's National Security and ForeignPolicy Committee, as saying in a report

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Kuwait - 104 billion barrels “realistic”

Iran denies storing oil offshoreNew president for ExxonMobil Qatar

Could Saudi Arabia meet increased demand?

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Innovative excellence for the oil and gas industryBaumer combines original Bourdon quality with technical progress

Baumer is a reliable partner for international and demanding customers

www.baumer.com/oil-gas

Baumer Middle East FZE · JAFZA 16 · P.O. Box 261729 · UAE-Dubai · Phone +971 4 887 67 55 · Fax +971 4 887 67 56 · [email protected] · www.baumer.com

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S02 ORME 1 2012 News & Calendar_Layout 1 31/01/2012 14:38 Page 11

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Oil Review Middle East Issue One 2012

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FEBRUARY 2012

12-15 Kuwait Oil & Gas KUWAIT www.the cwcgroup.com

14-15 ME-Tech DUBAI www.europetro.com

20-22 SPE North Africa Technical Conference CAIRO www.spe.org

21-23 Offshore Asia KUALA LUMPUR www.offshoreasiaevent.com

26-29 Saudi Oil & Gas RIYADH www.recexpo.com

27-29 Offshore Arabia DUBAI www.offshorearabia.ae

28-1 March Protex Arabia JEDDAH www.thecwcgroup.com

MARCH 2012

4-6 Saudi Safety & Security DAMMAM www.sss-arabia.com

4-7 GEO 2012 MANAMA www.geo2012.com

6-7 Saudi Downstream JUBAIL www.saudidownstream.com

11-15 7th Annual Asset Integrity Management Week ABU DHABI www.iqpc.com

13-15 Interspill 2012 LONDON www.interspill2012.com

25-28 Middle East Downstream Week ABU DHABI www.wraconferences.com

25-29 SOGAT 2012 ABU DHABI www.sogat.org

27-29 SPE Intelligent Energy International UTRECHT www.intelligentenergyevent.com

APRIL 2012

2-4 SPE HSE & Security Conference ABU DHABI www.ipieca.org

2-5 Syroil 2012 DAMASCUS www.syroil.com

16-18 Oil and Gas West Asia MUSCAT www.ogwaexpo.com

30-3 May Offshore Technology Conference HOUSTON www.otcnet.org

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

THE 2ND BASRA Oil & Gas, organized by Expotim International FairOrganizations INC and Pyramids International Group, concluded lastNovember with record exhibitor and visitor numbers. The 2011 editionof the largest oil & gas show in Iraqwelcomed 17,000 visitors from over40 countries emphasising itsposition as an internationalexhibition.This was the largest oil & gas eventever held in Iraq. The top fivevisiting countries to this year’sEdition, after UAE, were, Jordan,Saudi Arabia, Iran, and Turkey.Being officially supported by theMinistry of Oil, the event had agreat impact by being the foremostplatform of the the oil & gasindustry of Iraq with both itsexhibition and conference sections.Only a handful of exhibitors failedto attend the event because ofsecurity concerns, a spokeswomanfor Expotim International told OilReview, namely Shell, ENI, BP andExxonMobil. Many of the industry’sleading players did attend however,including Samsung, Mitsubishi,Cameron, FMC Technologies,Tenaris, SGS, CNPC, EmersonProcess Management, General Electric, Honeywell and Siemens.The conference section was held concurrently with the exhibition, with

the theme ‘Iraq on Track in Contributing to Future World Energy Supply’on 26th and 27th November. The effective participation of Ministry ofOil officials as presenters in the first session attracted great interest.

Their presentations included: ‘TheIndustry’s Workflow, The OilDomain – Oil Production andRefining, The Gas Domain – GasProcessing, The Infrastructures ofthe Industry, Oil & Gas and ProductsDisposal (Local and Exports).The credibility of the event hasbeen furrther enhanced by the auditthat has been made during theevent by BPA worldwide. Being acandidate for UFI membership,Basra International Oil & GasConference and Exhibition is uniquein terms of its compliance withinternational standards. It is thefirst time in Iraq that an event hasbeen audited.The event will be held again,between 6-9 December at the samevenue, the show organisers said.Expotim International alsoorganised an oil and gas event inErbil last December. Although notas well attended as the Basra show,the organisers have scheduled

another event for this year, to be held from 3-6 September at ErbilInternational Fairground.

www.basraoilgas.com

Basra exhibitors break records

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SSPONTANEOUS AND VIOLENT unrest among disorganised groups and urban youth angry with the government is almost a daily occurrence in Algeria.

Motives include an unemployment rateunofficially estimated to be as high as 70 percent among youths, lack of affordable housing,services and infrastructure failures, rising foodprices and increasing political disengagementover a perception that political parties areineffective and that the military holds the onlyreal political power.

November 2011 alone saw fighting overaccess to housing among residents of anAlgiers suburb, protests in Tizi Ouzoudemanding road repairs and riots andlooting in Mostaghanem. Since 6thJanuary, protesters in the town ofLaghouat have been holding sit-ins anddemonstrations against the state'shousing policy. On 14 January,unemployed protesters near Hassi R'mel,Algeria's largest gas field, located inLaghouat Province, blocked the roadsleading to the offices of gas firms in thefield. We assess that, at least in the comingthree years, the Algerian government will beunable to meet the demands of protesters inLaghouat and in other Algerian provinces foremployment and better quality housing. Thismakes it likely that protests over these issueswill continue.

DisruptionProtests in towns where Laghouat residents havetribal connections, such as Ouargla, Hassi R'meland Hassi Messaoud, are increasingly likely.These would likely cause some disruption tofirms that operate in the area. These firms arelikely to come under more pressure to increasethe employment of locals. In the unlikely eventthat the state uses lethal force againstprotesters, they would very likely spread rapidlyand target water pumping facilities as well asroads to local airports. Foreign workers wouldalso be at increased risk of attack by protesters.

In major cities, a culture of youthhooliganism means that even seeminglymundane events risk degenerating into riots andproperty damage. The Algerian football team's

November 2009 defeat by Egypt, for example,prompted looting of offices belonging toEgyptian companies. Smaller towns along thecoast and in the interior are more likely to seeroadblocks or occupations of municipalbuildings. Foreign companies that employ largenumbers of non-Algerians are at particular risk ofproperty damage and disruption.

Islamist party Movement for a Society of Peace's (MSP) withdrawal from the rulingcoalition in January 2012, increases the risk ofgovernment overthrow after mid-2012. The movesuggests MSP believes the coalition with the FLNand RND parties is vulnerable to being removedfrom power, either through legislative elections inMay 2012 or large-scale, prolonged civil unrest.

Several other factors would further increasepolitical instability risks in the three-yearoutlook. First, smooth political transitions inpost-revolution Libya and Tunisia wouldencourage a broader section of the populace tojoin protests, while Algerian opposition groupswould find external support from these newly-formed governments. Second, any delay orfailure to liberalise the political arena and stagetransparent and fair legislative elections in May

2012, or Islamist parties being refusedparticipation in the new parliament, wouldpotentially trigger sustained and widespreadunrest, lead or joined by MSP and other Islamistparties. President Bouteflika has promisedreforms next year, but may well be impeded bysenior military officers protecting the status quoand have reversed previous reform efforts.Finally, Algeria is entering a succession periodduring which the government is likely to bedistracted by intra-elite fighting for control ofthe presidency and key state revenue streams(e.g. state energy company Sonatrach). An

attempt by the military-security apparatus toimpose a successor to ailing President

Bouteflika (e.g. Prime Minister Ouyahia)would risk further mobilising the publicagainst the military. Bouteflika has beenin power for almost 13 years and is thefigurehead of the military-dominatedstate that has been in power sinceAlgeria's 1962 independence.

Strategic facilitiesA combination of the above would

probably escalate the scale and intensity ofunrest. However, for political stability to be

threatened, we would also expect to see unionspoliticising their demands and takingcoordinated strike action, joined by organisationslike Algerian League for the Defence of HumanRights (LADDH), Sonatrach employees andstudent groups, targeting the energy and otherkey sectors. In such a scenario, the governmentwould be more likely to give orders to fire oncivilians to prevent blockades of strategicfacilities, raising the risk of security forcedefections. Only a subsequent security forcessplit, whereby some join protesters, would createthe conditions whereby Bouteflika, or the entirestate apparatus, could be dislodged; this processwould probably involve significant violence. ■

Exclusive Analysis Ltd is a specialist intelligencecompany that forecasts commerciallyrelevant violent and political risks. For further information see www-exclusive-analysis.com

Oil Review Middle East Issue One 201214

Continuing civil unrest and political risks in Algeria will inevitablyhave some impact on the oil and gas sector, say experts fromspecialist intelligence company, Exclusive Analysis.

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TTHE GLOBAL OIL market is likely toremain tight over the medium term,with demand projected to outpace totalsupply. By contrast, global gas supply is

projected to cover demand growth comfortably,which explains the recent decoupling of oil andgas prices.

Crude oil prices have continued to firmsince the autumn of 2010, despite volatilityof demand and heightened concerns about a‘double-dip’ recession in the Euro area. TheInternational Monetary Fund (IMF) warns:“The global economy is in a dangerous newphase. Global activity has weakened andbecome more uneven, confidence has fallensharply recently and downside risks aregrowing.” The projections for the 2012average oil price diverge from US$90/barrel(Economist Intelligence Unit); US$100 (IMF);US$120 (Goldman Sachs); and there is a “one-in-four chance of a spike” to US$150,according to Citigroup. The average price lastyear was US$103/barrel, up one-third from2009 level of US$79.

Growing tensions over Western sanctionsagainst Iran’s nuclear programme and anyserious disruption of oil exports from the Straitof Hormuz could fuel a price explosion, thusrepresenting a threat to the global economy. Onthe other hand, a lessening of geopolitical riskin the Middle East and the return of Libyanproduction, along with recession in Europe and

slowdown in China, will take the pressure offdemand, thereby allowing for price correctionsduring 2012. Looking ahead, the sustainedrobust growth of emerging Asia and theanticipated maturing of oilfields in majorproducing regions (excepting MENA) haverenewed concerns that oil markets could beentering a period of greater scarcity.

New outputGlobal production capacity is predicted toincrease by 6.82mn barrels per day (bpd) by2016, representing an average annual growth of1.2 per cent, according to the InternationalEnergy Agency (IEA), Medium-Term Oil and GasMarkets 2011. About two-fifths of the capacityhike (2.72mn bpd) is expected to derive fromnon-OPEC producers, led by the expansions ofproduction from North and South Americancountries (mainly Brazil, Canada, and the US).

Technological innovations are driving non-OPEC capacity expansion: eg US output shouldsee an average annual growth of one per cent,underpinned by the expansion of light tight oil,

which uses similar techniques to those used toextract unconventional gas. The remainder ofthe capacity hike is expected to come fromOPEC producers (4.1mn bpd), with the largestshare coming from Iraq as oil facilities aresteadily being restored. Despite a surge inoutput capacity, OPEC’s spare capacity as ashare of global oil demand will fall over themedium term, as oil demand growth outpacesthe growth in non-OPEC supply.

While current projections indicate supplytightness in the medium term, there are signsof some relief over the longer term. Firstly, oilreserves are largely adequate, indicating thatrecent oil discoveries and technologies havecontinued to evolve at a rapid pace. Thus,despite robust oil demand in the past decade(albeit until 2008), the ratio of proven reservesto oil consumption has actually risen. Secondly,the prospect of higher returns is encouraginginternational oil companies (IOCs) to investmore in upstream activities, which in turn,should lead to higher production capacity in thelong term. More specifically, the IEA estimatedthat IOCs increased their upstream investmentby 10-20 per cent in 2011 relative to 2010,with 2010 already having seen about 10 percent growth.

Demand eating into exportsThe MENA is by far the major oil-producingregion – in 2010 it produced about 36 per cent

Power generation remainsthe key driver behind gas

demand growth

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The region remains a vital player on the supply-side of the hydrocarbons industry,although swelling domestic energy consumption may reduce the region’s export potentialover the next decade, with upside future pressures on prices writes Moin Siddiqi

Medium-term outlook for

hydrocarbons resources

Table 1: Crude Oil Production & Exports (mn barrels per day) MENA Producers Average Proj. Exports Proven reserves * Reserves/Production

2006-10 2011 2012 2011 End-2010 ratio ** Algeria 1.32 1.20 1.20 0.70 12.2 18.5Iran 3.84 3.60 3.70 2.00 137.0 88. 4Iraq 2.22 2.70 3.10 2.10 115// 100+Kuwait 2.50 2.50 2.50 1.50 101.5 100+Libya 1.72 0.45 …… …… 46.4 76.7Oman 0.78 0.90 0.90 0.70 5.5 17.4Qatar 0.80 0.80 0.70 0.70 25.9 45.2Saudi Arabia 8.80 9.30 9.30 7.40 264.5 72.4UAE 2.48 2.50 2.60 2.20 97.8 94.1Yemen 0.32 0.20 0.30 0.20 2.7 27.7Regional Total 24.78 24.15 24.30 17.5 808.6 80-100

* Billions of barrels. ** R/P ratio (calculated in terms of years).// In late 2010, the Iraqi authorities announced revised figures for recoverable reserves to 143bn barrrels, based on new geological surveys and seismic data compiled by

'reputable' international oil companies (IOCs), an increase of 24 percent on BP's estimations.

Sources: National authorities; OPEC; BP; and IMF projections.

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of the world’s oil, whilst its share in global oilconsumption amounted to just one-tenth.Nonetheless, the region’s share in global oilconsumption has grown rapidly over the pastdecade – a reflection of industrialisation andrising population, but also supported by low oilprices (ie heavy fuel subsidies) in manycountries. Particularly noticeable has been theoil usage in recent years: oil consumptiongrowth in the Middle East outpaced that ofother regions in 2009 and was basically at parwith Asia’s consumption growth in 2010.

Gas market in equilibriumIn 2011, global gas supply easily met the surgein demand, despite some localised shocks.Excess gas production over 2009 coupled withrobust growth of 7.3 per cent in 2010 weresufficient to cover the incremental demand ofabout 220 billion cubic meters (Bcm) in 2010,according to BP’s Statistical Review of WorldEnergy 2011. World natural gas consumptionreached an estimated 3,169 Bcm in 2010(rebounding from a drop of 2.5 per cent in2009) – the largest increase since 1984.Liquefied natural gas (LNG) productionincreased – especially in Qatar – by 60 Bcm,and US shale gas production also rose by anestimated 50 Bcm in 2010.

Power generation remains the key driverbehind gas demand growth as replacement of‘coal fired’ power by ‘gas-fired’ power in themedium to long term is the most cost-effectiveway of reducing carbon dioxide emissionsglobally, as noted in Massachusetts Institute ofTechnology (MIT), The Future of Natural Gas –An Interdisciplinary MIT Study, 2010. The powersector is, however, sensitive to price variations,and with gas-fired plants competing in themargin with coal-fired plants; the former reactvery rapidly to price changes.

Shale gas extraction has so far beenconfined to the US, but there is growing interestin exploiting unconventional sources of gasacross the globe, including Australia, Canada,

China, Germany, Hungary, India, Poland, SaudiArabia and the UK. Moreover, empirical researchsuggests that shale gas production could affectgas prices and may explain the recentdecoupling of US oil and gas prices.

A series of external events in early 2011collectively impacted upon both supply anddemand; extra supplies from Russia (the world’ssecond-biggest gas producer, after the US) andAlgeria compensated for Libya’s disruption ofpipeline and LNG exports to Italy, and theclosure of nuclear power plants in Japan andGermany led to additional demand for naturalgas and LNG.

Global reserves ‘ample’Proven world’s gas reserves at end-2010 wereestimated at 6.609 trillion cubic feet (tcf). TheMENA region holds 45 per cent of globalnatural gas reserves, with high probabilities ofnew discoveries. Just three countries (Iran,Qatar, and Russia) possess more than half of theglobe’s reserves. At current global extractionand production rates, today’s recoverablereserves (conventional and unconventional)could sustain production for 58.6 years, whereastotal ‘probable’ resources – the recoverability ofwhich is, however, uncertain and far morechallenging – equal 250 years of currentproduction. Worldwide gas supply is expected tocomfortably meet global gas demand growth of2.4 per cent per year during 2010-16, based onthe IEA database.

Non-OECD countries are leading the surge innatural gas demand, whilst also contributing to

as much as 90 per cent of additional supplies.The Middle East is expected to represent one-fifth of the incremental gas consumption, whichis projected to rise from an estimated 370 Bcmin 2010 to 470 Bcm by 2016. On the supply-side, MENA will be the second-largestcontributor, adding 110–150 Bcm of newcapacity, expected to come online between2011 and 2016. The strongest growth will comefrom Qatar, Iran, and Saudi Arabia, but in thelatter two, increased production will be largelychannelled for domestic consumption.

Boosting regional capacityNatural gas is a vital component of the MENAenergy industry, providing a comparativeadvantage to petrochemicals and aluminiumproducers thanks to ample supplies of cheapfeedstock for these sectors. Whereas the regionas a whole should remain a ‘net’ gas exporterover the medium term, soaring domesticconsumption has meant that many producersare now facing supply constraints, which haveled to reduced volumes being available forexports and higher dependency on liquid fuelsfor power generation. Some countries (namelyKuwait, Oman, Libya and the UAE) will continueto import gas.

Saudi Arabia’s gas output has risen steadilyfrom 71.2 Bcm in 2005 to almost 84 Bcm in2010, but supply has not kept pace with annualdemand expanding at 79 per cent. The UK-based energy consultancy, Wood Mackenzie,expects total consumption to reach 15 billioncubic feet (Bcf) per day in 2025. The amount ofoil burned in power stations has increased inrecent years. To boost natural gas productioncapacity, Saudi Aramco has increasedinvestment in new gas fields.

These include the Karan project, which isexpected to yield 1.8 Bcf/day of natural gasfrom 2013; the Wasit project with anameplate capacity of 2.5 Bcf/day by mid-2014; the 1.5 Bcf /day Shaybah natural gasliquids (NGL) venture; one Bcf/day from the

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Natural gas is a vitalcomponent of the MENA

energy industry

Table 2: Global Oil Production Capacity (mn barrels per day, unless otherwise indicated)Annual growth

-------------------------------------------------Projections-------------------------------------------------------- Avg.; percent2010 2011 2012 2013 2014 2015 2016 2011-16 2006-10

Production capacityOPEC 41.1 40.2 40.8 42.6 43.9 45.0 45.3 1.6 2.3of which: Crude oil 35.7 34.3 34.4 35.9 36.9 37.7 37.9 1.0 2.1National gas liquids 5.3 5.9 6.3 6.7 7.0 7.3 7.4 5.6 3.7Non-OPEC 52.7 53.3 54.2 54.2 54.3 55.1 55.4 0.8 0.5TOTAL 93.8 93.5 95.0 96.8 98.2 100.1 100.7 1.2 1.3

Memorandum items:Oil demand 88.0 89.3 90.6 91.9 93.1 94.2 95.3 1.3Call on OPEC oil * 35.3 36.0 36.4 37.7 38.8 39.1 39.9 2.1Implied OPEC spare capacityto oil demand (percent) 6.6 4.7 4.8 5.3 5.5 6.2 5.6

* Calculated as the difference between oil demand and non-OPEC production.

Sources: IEA, Medium-Term Oil & Gas Markets 2011; and IMF projections.

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Arabiyah gas field, as well as 800mn cubicfeet per day from Hasbah gas field, expectedonline within four years.

The surge in Iran’s production from 81.5Bcm in 2003 to 138.5 Bcm in 2010 derivedfrom the completion of several phases of theSouth Pars gas field. According to the Ministryof Petroleum, South Pars (the same geologicalstructure as Qatar’s North Field) will seeinvestment of US$90 billion in both theupstream and downstream sectors and despitethe international sanctions, development atSouth Pars continues – with some US$47

billion worth of projects currently underway,two-thirds of which are for the upstream sector.

Higher productionThe longer-term production target once the 25-phase project is finished is 400 Bcm per yearand annual gas revenue from the field couldreach US$110 billion (based on oil pricesaveraging US$80/barrel), according to Iran’s OilMinister, Massoud Mirkazemi. Amid globalsanctions, Iran is relying mostly on localengineering and construction firms to completethe mega project on time.

Continuous higher production is urgentlyneeded in Iran for gas reinjection to sustain oiloutput, as well as cope with growing domesticdemand. Natural gas usage in power stations,the residential and commercial sectors andindustries (especially petrochemicals) isincreasing by seven per cent annually,underpinned by heavily subsidised prices(reported at US¢35 per million British thermalunits), which are among the lowest in the world.In 2010 Iran’s power-generating capacity of61,000 MW was 56.8 per cent gas-fired,followed by crude oil at 40.8 per cent andhydropower 2.4 per cent, respectively.

Qatar, whose production has more thandoubled since 2006 to 116.7 Bcm in 2010 (theregion’s second-largest after Iran) has imposeda moratorium on new projects (excluding theBarzan development) until 2013/14. Othercountries are developing their import capacitywith pipelines from Turkmenistan to Iran, LNGimport terminals in Dubai and Kuwait, andinterregional pipelines from Qatar to Omanand the UAE.

To sum up, the region is a vital source ofboth supply and demand for oil and gas. Thegeneral stability of the hydrocarbons industrydepends heavily upon the region. However,with burgeoning domestic consumption, energyexports from major MENA producers willprobably decline in future years, unlessmassive investments are poured into new oiland gas fields. ■

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Table 3: Major Gas Consumers in the MENA (bn cu metres/year); 2010Production Consumption Balance Proved R/P

reserves * ratioAlgeria 80.4 28.9 51.5 159.1 56.0Egypt 61.3 45.1 16.2 78.0 36.0Iran 138.5 136.9 1.6 1045.7** 100 +Kuwait 11.6 14.4 -2.8 63.0 100 +Qatar 116.7 20.4 96.3 894.2 100 +Saudi Arabia 83.9 83.9 0.0 283.1 95.5UAE 51.0 60.5 -9.5 213.0 100 +Others 59.0 49.4 9.6 232.8 62.1

Total MENA 602.4 439.5 162.9 2969.0 100 +

* Figures for end-2010 reported in trillion cubic feet.** According to the latest official statistics, Iran's natgas reserves total 33.1 trillion cu m (or 1171 trillion cu ft) -about 12 percent higher than the quoted BP figure.

Source: BP Statistical Review of World Energy, 2011.

THE UAE'S ADCO oil concessions will be put to tender when theycome up for renewal in 2014, the director-general of Abu DhabiNational Oil Company said recently.The concessions system allows oil andgas producers to acquire equityhydrocarbons from the Opec membercountry.Multinational companies,predominantly Western oil firms, haveheld large stakes in the concessions fordecades, but the upcoming expiry ofconcessions could provide anopportunity for Asian firms to boosttheir presence."Abu Dhabi Company for Onshore OilOperations (ADCO) concessions will beput to bidding because firms will bescreened and those that meet theminimum requirements would beinvited to bid," Abdulla Nasser AlSuwaidi said on the sidelines of anenergy conference in Abu Dhabi."Later, any company that submits thebest offer technically and on price, willbe chosen."He said no firms had been selected yet but existing partners are

among the potential bidders. Statoil, the Norwegian state-controlled oil and gas company, will

be among the participants in landmarkcompetitions for Abu Dhabi oilconcessions that are due to expirewithin a few years. Helge Lund, thechief executive of Statoil, said thecompany was interested in competingfor new licences to produce oil fromsome of the emirate's largest onshoreand offshore fields when the contractsexpire, in 2014 and 2018 respectively."The reason why we are here is thatthis is one of the regions in which, longterm, we would like to work towards apartnership position," Mr Lund said."We are positioning ourselves for thepotential relicensing of the 2014[onshore] concessions and the offshoreconcessions in 2018." When Abu Dhabiestablished its state oil concern, AbuDhabi National Oil Company (ADNOC),in the 1970s, the Government directedit to form joint ventures with thewestern oil companies that had held

the emirate's original oil leases since the 1930s.

www.adnoc.ae

ADNOC to tender for oil concession renewal

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SAUDI ARAMCO PLANS to build refineries in China and Indonesia as part of aUS$200 billion spending programme to double refining capacity and explore foroil and natural gas during the next decade.Aramco is preparing for talks about ‘final terms’ for a Chinese refinery and is stillwaiting for ‘good terms to be put on the table’ for a processing plant inIndonesia, Chief Executive Officer Khalid al-Falih said in an interview. Aramco willprobably decide soon about whether to invest in expanding a plant it operatesjointly with Japan's Sumitomo Chemical Company, he said on January 14.

Aramco, the world's largest crude exporter, is expanding refining andpetrochemical production to meet domestic demand and export refinedproducts that can fetch higher prices than oil. The company plans to boost itsglobal refining capacity to eight million barrels a day in 10 years, includingprojects yet to be announced, Mr al-Falih said. "It's an aspiration for a longer-term growth objective," he said of the refining-capacity target in the interviewat the company's headquarters in the eastern Saudi city of Dhahran.Aramco also plans to invest in drilling for oil and gas inside the kingdom and inpetrochemicals production and other downstream activities, he said.The company is exploring for unconventional gas, including shale and tight gas,in the nation's northwestern region, Mr al- Falih told reporters on January 14.Low gas prices are a "challenge" to developing these hard-to-reach deposits, hesaid. Aramco's capital spending will probably rise to more than US$20 billion ayear if it develops unconventional gas, he said in the interview.Aramco will invest US$90 billion in the next five years to increase refiningcapacity by 50 per cent to six million barrels a day in projects "that more or lesshave been identified," al- Falih said. Refining capacity in Saudi Arabia itself willrise to 3.46mn barrels a day in 2016 from 2.26mn barrels, according to apresentation Aramco officials made at a conference in Bahrain in October.Saudi Arabia's crude oil production rate in December was 9.76 million barrelsa day, the Opec said in a report yesterday, using the average of severalexternal estimates.Most of the capacity to be added above the five-year target will be at refineriesin Asia, with the bulk of that in China, al-Falih said. Aramco seeks to tap increasing consumption in China, Asia's biggest energyuser, by forming joint ventures with local partners.The CEO said he was confident about reaching final terms on a plant with ChinaNational Petroleum Corporation, that nation's largest energy producer, to bebuilt in China's southern Yunnan province. The two companies have agreed onthe scope of the project, including the refinery and marketing, he said.

ONCE AN OIL field has reached the end of itsviable life, arrangements must be made todecommission the oil field facilities and anysupporting infrastructure. In the North Sea,decommissioning is still a relatively new partof the industry, and with a large number ofageing assets coming to the end of their fieldlives, thorough consideration of thedecommissioning process is becomingincreasingly important. There areapproximately 470 installations in the NorthSea and around 10,000 km of pipelines and itis estimated that decommissioning thesefacilities will cost approximately US$36-45billion between 2010 and 2040.The requirements for decommissioningoffshore installations in the North Sea isdictated by the OSPAR 98/3 decision andadministered by the Department of Energy andClimate Change (DECC). It is required that allinstallations are entirely removed from theseabed, with the exception of a limitednumber that fall into a certain category whichmay be considered for derogation.Pipelines, on the other hand, may be considered for decommissioning in-situ if itcan be demonstrated through study andanalysis that the pipeline has been sufficientlycleaned and that removal is not a practicableoption. However, in all cases, it must bedemonstrated, in an officially submitted

Decommissioning Programme that is signedoff by the Government, that alldecommissioning options have beenconsidered and have been assessed based onsafety, environmental, technical, social andeconomic criteria. As the decommissioningindustry grows in the Middle East, it is likelythat similar standards and requirements willdevelop.The decommissioning process for offshoreinstallations and pipelines can be a complexone and the time taken to complete adecommissioning project should not be

underestimated. Planning fordecommissioning can start up to five yearsbefore cessation of production and if adequatecost provisioning is not made at this stage,then operators may find that when the timecomes to decommission, the required fundsare not available as money has been investedin other projects.Independent specialist Jee has over 20 yearsexperience in the oil and gas industry and canprovide expert support throughout thedecommissioning process. They have helpedmajor operators in the preliminary stages withindependent studies, provided support duringthe execution of works as clientrepresentatives offshore and can even help toupdate relevant documentation during theclose-out process at the end of a project. With a pragmatic approach, a thoroughunderstanding of subsea systems and an in-depth knowledge of decommissioninglegislation Jee continue to support majoroperators successfully implementdecommissioning projects in the North Sea.Decommissioning was heavily underestimatedin the North Sea and only now is the scale ofthe task being realised. Lessons learned fromthe North Sea can be shared across theindustry and applied in the Middle East regionto help operators prepare for the removal oftheir ever ageing assets.

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Aramco targets China as it looks to double refining capacity

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IIN ORDER TO continue to benefit fromprevious high oil prices, GCC countries andSaudi Arabia in particular are focused onexpanding their output by adding various

new products to their offerings. This will translateinto a greater focus on investing in thedownstream sector at home and aboard.

This new emphasis on the petrochemicalindustry has being help by the onset of theglobal economic crisis, making demand and,therefore, prices of petrochemical productsplummeted to historic lows.

According to Global, Saudi Arabia hasapproximately 147 projects upcoming in thepetroleum sector, with an estimated cumulativevalue of US$215 billion. The main bulk of theseinvestments will be destined for petrochemicalprojects. AlixPartners have estimated that Sabic'sfuture projects will total around US$48.2 billion.

Asia is set to play a crucial part of SaudiArabia’s downstream focus and petrochemicalmakers such as Sabic and Saudi Aramco areboosting their exports to and investments in Asia,notably China, to meet rapidly rising demand forchemicals and plastics used in the production ofindustrial and consumer products.

Increasing refining capacitySaudi Aramco outlined its new downstreamfocus when Khalid al-Falih, President and CEO,

Saudi Aramco, outlined the company’s plans tobuild multiple refineries across Asia as part of aUS$200 billion spending program to double itsrefining capacity to 8mn barrels per day (bpd).

To achieve this ambitious target Aramco isset to embark on an aggressive expansion of itspetrochemicals business. A key part of this willsee a greater emphasis on establishing strategicties with key partners, most notably with ChinaPetrochemical and Chemical Corp (SinopecGroup). Al-Falih said: “Saudi Aramco is in thedownstream for the long haul, and Sinopec isone company that shares our bullish outlook.”

The start of 2012 saw Aramco and Sinopecfinal sign an agreement to develop a refinery,Yanbu Aramco Sinopec Refining Co (YASREF), inthe Saudi city of Yanbu at a cost of as much asUS$10 billion. The 400,000 barrel-a-day plant

will probably begin operating in 2014. Aramco will hold a 62.5 per cent stake and

Sinopec will own the rest. According to Al-Falih: “Yasref is uniquely

placed to seize market opportunities, and itdemonstrates our unwavering commitment tosignificantly grow our downstream portfolio,and in creating win-win partnerships for us andour stakeholders.”

Other additions to capacity will involveAramco investing abroad, plans for newrefineries in Jubail and Jizan and the revival ofa plan to expand Ras Tanura, already the MiddleEast's largest refinery.

Aramco is considering expanding the RasTanura refinery al-Falih said. Ras Tanura isAramco’s largest local refinery with a capacityto refine 550,000 barrels of oil a day.

One of the major upcoming projects is theYanbu Integrated Refinery & PetrochemicalsComplex that is currently in the study phaseand has an estimated budget of US$20 billion.

Importantly, Yasref’s location next to Yanbu',and next to two of our other refineries, is idealfor supplying both overseas markets and thefast-growing western region of the Kingdom.

Another major upcoming project is the JazanRefinery Project that has an estimated budgetof US$7 billion. The plant will have a 400,000barrel-a-day capacity.

Oil Review Middle East Issue One 2012

Ras Tanura Refinery

“Saudi Aramco is in thedownstream for the longhaul, and Sinopec is onecompany that shares our

bullish outlook.”Khalid al-Falih

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A report by Global Investment House (Global) predicts that Saudi Arabiawill embark on US$215 billion worth of petroleum projects with a heavyemphasis placed on the downstream sector

Saudi Arabia focusing heavily on

downstream industry

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Asian demandEmerging markets are increasingly becoming

the drivers of growth in the global economy asmature and developed markets struggle with slowor even negative growth. This is especially true forthe petrochemicals industry, which is banking onemerging markets in Asia and elsewhereabsorbing new capacity due to come on stream inthe next few years.

Global believes “a major chunk of futuredemand growth will come from this region andshould enable the GCC petrochemicals industry tofind a ready market for the output of theaggressive capacity expansion projects currentlyunderway at various locations.”

Most of the capacity to be added above thefive-year target will be at refineries in Asia, withthe bulk of that in China, said al-Falih.

Both Aramco and Sabic are looking to tapincreasing consumption in China by forming jointventures with local partners.

Aramco and Sinopec are in early talks to add anew refinery in China that can process as much as300,000 barrels a day.

Al-Falih said he was confident about reachingfinal terms on a plant with China NationalPetroleum Corp. (CNPZ), that nation’s largestenergy producer, to be built in southern Yunnanprovince. The companies have agreed on thescope of the project, including the refinery andmarketing, he said.

Sinopec Group is also expanding its businessportfolio and entering new markets around theglobe. The company has nearly half of China’stotal refining capacity, and accounts for three-fourths of that nation’s crude oil trade.

Sabic signed a cooperation deal with Sinopecto explore opportunities in new petrochemicalprojects.

The agreement sets the foundation for a jointinvestment to build a new polycarbonateproduction complex with an annual productioncapacity of 260,000 metric tonnes. The newfacility will be located at the Sinopec Sabic TianjinPetrochemical Co., or SSTPC, complex in northernChina's Tianjin city.

“Sabic and Sinopec’s aspirations are nowfocused on establishing long-term strategiccooperation that contributes towards enrichingSaudi Arabia’s and China’s economies in the areasof scientific research, technology and innovation,

engineering and product marketing” said PrinceSaud bin Abdullah bin Thenayan Al-Saud,Chairman of SABIC and the Royal Commission forJubail and Yanbu.

Sabic, which revealed the plan first in May, lastyear, said the plant will be operational by 2015.

Other regions in Asia are also seen asimportant opportunities for Saudi companies toinvest in the downstream industry.

Indonesia is a good example. Aramco’isplanning to develop a refinery with state-run PTPertamina (PERT) and the companies may build a300,000 barrel-a-day refinery in Tuban in EastJava. The US$8.8 billion plant may start operatingin 2018. But all the final details have not beenfinalised. But “early indications are positive” saidal-Falih.

Developed marketsPetrochemicals capacity expansion in the

developed markets, especially the US, has beenmuted since 2000. Natural gas prices which hadaveraged US$2/mmbtu throughout the 1990shave shot to highs of over US$13/mmbtu in 2008and averaged around US$6/mmbtu in this decade.With oil prices staying above US$70 per barrel,naphtha prices have also risen in tandem.

According to Global, European and USpetrochemicals crackers have increasingly found itdifficult to compete with low-cost Middle Easternplayers. As petrochemicals are commodityproducts, price is often the single mostdistinguishing factor. This fact enables low-cost

producers to outmanoeuvre high-cost players. In consequence, capacity shutdowns are taking

in developed markets such as the US and the EUas companies increasingly try to rationalise theircapacity portfolio in order to compete more withthe low-cost producers, the Global report said.

Capacity to growGlobal said the total petrochemical regionalcapacity to increase at a CAGR of 2.9 per centduring 2011-13 with most of the additionalproduction capacity from Saudi Arabia followed byQatar. In terms of growth, the capacity expansionfrom Qatar is expected to increase at a CAGR of13.4 per cent during 20011-13. This will reflectpositively on the improvement in the regionalmarket share i.e. 14.2 per cent in 2013 ascompared to 10.3 per cent in 2010.

Feedstock roleThe GCC is currently experiencing a shortage

of ethane, historically the prime feedstock for itspetrochemical plants, due to the increaseddomestic demand to fuel other industries,primarily power, steel, and aluminium.

Moreover, the region is developing policies togive priority to domestic gas use over export,phase out price subsidies, and align domesticnatural gas prices with export prices.

As a result, Global argues that some projectowners such as Saudi Kayan and owners of futuredownstream petrochemical clusters in SaudiArabia are moving away from ethane-based, exportorientated petrochemical production and are nowdeveloping plans to produce a wider slate of high-value specialty chemicals for the automotive,textile, electronic, construction, agricultural, andpharmaceutical industries.

Fertiliser capacityAccording to Global, regional fertiliser capacity toincrease at a CAGR of 16.4 per cent during 2009-13 with most of the expansion of 13.3 milliontonnes expected from Saudi Arabia followed byOman and Qatar.

The major expansion in Saudi Arabia is mainlydue to:6 Availability of undisrupted supply of feedstock

gas at highly subsidised prices.6 Ongoing demand-supply gap in Asian & Far

East markets.6 Expectations of average prices of fertiliser prod-

ucts to remain strong.

These factors will lead the regional fertilisersector to continue its growth with gross marginsto remain at an average of 68 per cent during2011-13, the Global report stated.

OutlookThe downstream sector has a healthy future inSaudi Arabia and the wider GCC region. With theinvestments and refinery capacity upgrades thatare taking place in Saudi Arabia the regions bigpetrochemical players will soon become one ofthe top five petrochemical companies in the worldin the not too distant future. ■

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Khalid A. Al-Falih, President andCEO, Saudi Aramco

A graph showing the growth of petrochemical production capacity in the GCC over an eight year period

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CIRCLE OIL PLC provided an update regarding the construction of the newpipeline and associated infrastructure for its Rharb Basin permits in Morocco.The construction phase of the new Sebou (DRJ)-Kenitra pipeline has beensuccessfully completed.The pipeline is now undergoing pressure testing prior to commissioning andthe start up of increased gas delivery to local industry, which is expected tobe completed at the end of January.Construction of the new pipeline has been completed on budget. Prof Chris Green, CEO, said: "I am delighted to be able to report thecompletion of the construction phase for our new pipeline in the Rharb.Following completion of commissioning of the pipeline Circle and its partnercan look forward to significantly increasing gas supplies and associatedrevenues to local industry through 2012.”The total length of the pipeline is approximately 55km and has a designcapacity of 23.5 MMscf/d. The pipeline has been connected to seven of theten potential producing wells, with tie-in for the remaining wells scheduledfor completion during the first quarter of 2012. These wells were discoveriesmade during the two previous drilling campaigns in 2008/09 and 2010/11.Circle, through its wholly owned subsidiary, Circle Oil Maroc Ltd. holds a 75per cent interest in the Sebou and Lalla Mimouna Permit Concessions withthe remaining 25 per cent held by ONHYM.In addition, it holds a 60 per cent interest in the Oulad N'zala PermitConcession with the remaining 40 per cent held by ONHYM. Circle has a 75per cent interest in the new 8-inch pipeline with the remaining 25 per centheld by ONHYM.

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Circle Oil completes pipeline in MoroccoIRAQ'S OIL EXPORTS rose by10,000 bpd in December, to2.145mn bpd up from 2.135mnbpd in November, according todata from the State Oil MarketingOrganization (SOMO).The data was obtained by Platts,with the figures showing thatIraq's oil exports increased by273,000 bpd in 2011 to average2.165mn bpd, up from 1.892mnbpd in 2010.The latest SOMO figures show oilexports from northern Iraq slippingby 11,000 bpd in December, to 412,000 bpd from 423,000 bpd in November.Oil exports from southern terminals rose by 21,000 bpd in December, to1.733mn bpd from 1.712mn bpd in November.Although oil export from Iraq has increased the level of crude oil productionhas in fact fallen in 2011. The latest data indicates that the country's oilproduction fell by 13,000 bpd in December, to 2.652mn bpd from 2.665mnbpd in November.Crude oil production from Northern Iraq is estimated to have fallen by 55,000bpd in December, to 677,000 bpd from 732,000 bpd in November. While,production from Iraq's southern oil fields was estimated to have risen by42,000 bpd in December, to 1.975mn bpd from 1.933mn bpd in November.

Iraq’s oil exports increased in December

Iraq exported more oil in December last year

THE OMAN SUBSIDIARY ofUS oil firm Harvest NaturalResources has commencedthe drilling operations ofthe Al Ghubar North-A(AGN-A) exploration wellon the Qarn Alam Block64, onshore Oman.This is the second of atwo-well exploratoryprogramme utilising theMB Petroleum ServicesLLC Rig 113 drilling unit.The AGN-A well will testthe Al Ghubar Northstructure, which is a largesalt-supported high withstacked reservoir targetsin the Barik, Miqrat and Amin reservoirs. The targets are 10 miles tothe east and updip from the producing Barik field.Mean prospective resources of 960 billion cubic feet (Bcf) of gas and54mn barrels (MMbbls) of condensate in the Barik and 241 Bcf ofgas in the Miqrat formation have been calculated by Harvest. The geological chance of success for a discovery in this well isestimated by Harvest to be 23 per cent.The AGN-A well will be drilled to a total vertical depth ofapproximately 10,300 feet to test coincident fault bounded dipclosure at all three reservoir levels. Dry hole cost for the AGN-Awell is US$8.1mn.Harvest has an 80 per cent interest in Block 64 onshore Oman.Block 64 has an area of 3,874 sq-km and was extracted from a pre-existing block (PDO's Block 6) to accelerate exploration of gas.

A drilling wellin Oman

Drilling at Qarn Alam Block 64 beginsGENEL ENERGY WILL embark on a plant and pipeline upgrade ofthe Tawke oilfield following a significant upgrade in the grossreserves of the field.The upgrade will significantly increase the production capacity ofthe field from its current limit of 75,000 barrels a day to 100,000barrels a day by the end of this year.Daily output in November was 42,798 barrels. The Decemberfigure, still to be confirmed, was expected to be some 60,000bpd.The upgrading work will coincide with the anticipated drilling offive development wells on the field, the first of which wasspudded at the end of December. The well will test the additionalresource potential of the northern flank of the Tawke field.Genel’s drive for increased production comes on the back of areport from a US-based company which put 2P reserves at 509mnbarrels of oil, a 78 per cent leap on the 286mn barrels estimatedin a November report.“Gross proven, plus probable, plus possible reserves (3P) are nowestimated at 876mn barrels of oil, an increase of 68 per cent onthe previously reported figure,” Genel wrote in a companyannouncement.Tony Hayward, chief executive of Genel Energy said: "The majorplant and pipeline upgrade underlines our confidence in the hugepotential of the Tawke field. We are delighted by the upwardreserves revision which further reinforces our belief that theseare genuinely world-class assets in an area of outstandinggeological heritage."Genel also highlighted that there could be yet more reserveswithin the field as it and its partners plan to drill Tawke Deep inthe second half of the year, targeting another 200mn barrels ofgross unrisked mean resources.Genal added: “In addition, the current Peshkabir-1 explorationwell, which is on the West Dohuk structure area of the Tawkelicence, is targeting 304mn barrels of gross unrisked meanresources. Results are expected in the second quarter."

Genel reveals Tawke oilfield upgrade

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UAE OIL MINISTERMohamed Bin Dhaen AlHamli stated that the oilpipeline that will allowthe country to export oilvia Fujairah should beoperational within sixmonths. "The pipeline is almostcomplete but hopefullyit will be operationalwithin five months, byMay or June," Al Hamliwas quoted as saying byZawya Dow Jones. Hamli added: "the first tanker loaded will be in about five months time,ready for export," adding the project involves a lot of work as the pipelinehas to be filled with crude and tested. The pipeline is known as Abu Dhabi Crude Oil Pipeline (Adcop) and isbeing built for the Abu Dhabi government investment firm InternationalPetroleum Investment Co. (IPIC). It will cost around US$3.29 billion.The 400km pipeline will have the capacity to transport between 1.5-1.8mn barrels a day. It will enable Abu Dhabi to export as much as 70per cent of its crude from Fujairah, where tankers will be able to pick upthe oil instead of sailing into the Persian Gulf via the Strait of Hormuz,the narrow waterway watched over by Iran.

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Construction of the Adcop pipeline

UAE oil export pipeline ready in 5 monthsTHE AFGHANISTAN CABINET awarded China National Petroleum Corporation(CNPC) a contract for oil exploration and extraction across the country. The oil exploration and production deal, which will be the first given by

Afghanistan to an international oil company after several decades, is for thedevelopment of oil blocks in the Amu Darya basin in the north-west region ofthe country.CNPC in partnership with a local company Watan Group will develop three oilfields, Kashkari, Bazarkhami and Zamarudsay, which is estimated to holdaround 87mn barrels of oil."The Afghan cabinet has ordered mines minister Wahidullah Shahrani to signan oil exploration contract for Amu Darya with China National PetroleumCorporation," the Afghanistan president's office said in a statement.Under the deal, CNPC will pay a 15 per cent royalty on oil, a corporate tax of20 per cent, and up to 70 per cent of its profit from the project to the Afghangovernment. The contract is valid for 25 years. The practical work will start in October this year. CNPC will also pay rent forland used for its operations.According to the mines ministry estimates, the deal is expected to bring inUS$5 billion for the Afghan government over the next ten years. The Afgahngovernment is hoping that projects in the mining and oil sector will cut itsreliance on imports from Iran and Central Asian countries.CNPC had won the bid in early September last year after beating rival bidsfrom Buccaneer Energy, Tethys Petroleum and Shahzad International.Although the Amu Darya blocks are small compared to global standards, thedeal would put CNPC in a better position to win bigger fields like the TajikBasin, which is estimated to hold some 1.8 billion barrels of oil .

CNPC awarded first Afghan exploration deal

KUWAIT ENERGY ANNOUNCED a new oildiscovery in Egypt's Ahmad-1X well, located inthe Gulf of Suez's Area A concession.The newly discovered Ahmad-1X well wasdrilled to a depth of 2,110 meters. The initialtest recorded a flow rate of 890 barrels of oilequivalent per day from the Kareemformation level.Kuwait Energy Plc Deputy Chairman and ChiefExecutive Officer, Sara Akbar, said, "TheAhmad-1X well is located in a potentially richarea and we look forward to continuing testingand development activities in the area to reachits maximum potential. This is a furthercontribution to the productive capacity of theEgyptian energy sector and we are glad to play

a part in this success.”This discovery brings the total numberof oil, gas and condensate discoveriesmade by Kuwait Energy in Egypt, since2008, to 14 discoveries, three of whichwere made in Area A.Kuwait Energy is the operator of AreaA and holds a 70 per cent workinginterest. Omani independentPetrogas E&P holds the remaining 30per cent interest.Egyptian operations contribute the largestshare to Kuwait Energy’s working interestproduction, comprising 17,700 barrels of oilequivalent by the end of 2011. Kuwait Energyis the operator of three blocks in Egypt, namely

the Area A, Burg El Arab development leaseand the Abu Sennan concession. It also hasinterests in two other non-operated blocks:Mesaha concession and East Ras Qattaradevelopment lease.

Kuwait Energy makes another discovery in Egypt

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IRAN'S OIL MINISTRYawarded Global PetrotechCompany a contract to drilltwo appraisal wells in theSouth Pars oil layer. Thecontract is valued at aroundUS$182mn and was signedbetween Pars Oil and GasCompany and GlobalPetrotech Company in thepresence of the Oil MinisterRostam Qasemi.According to the contract, the Iranian company must drill two appraisal wellsin 40 months to assess the South Pars field's oil exploitation potential.The wells will also provide information on the amount of in-place oil reservesof the field and pave the way for the formulation of a major development planfor the offshore field.A major feature of the project is six km of horizontal drilling in the South Parsfield's oil layer aimed at gathering information and upgrading reservoir modelsof the joint oil field.The development of the Iranian side of the oil layer had been constantlypostponed. The new contract aims to produce a daily total of 35,000 barrels ofcrude oil from Section A of the field in the first phase of its development.South Pars gas and oil field covers an area of 9,700 sqm, 3,700 sqm of whichare in Iranian territorial waters and the remaining 6,000 sqm are in Qatariterritorial waters.

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Map of South Pars location

Drilling contract awarded to Global Petrotech

TESTING OPERATIONS ON Block 15 onshoreOman have restarted. A jet pump has been installed in the JAS-2well in an attempt to clear the well from waterand enable it to flow hydrocarbons. The Block15 license has been extended for three years,until October 2014.The JAS -2 well, drilled in 2008, showed thesame log response while drilling as the JAS-1drilled in 2007. Whereas the JAS-1 well flowedreasonable quantities of gas and condensate,the JAS -2 well however, tested only water.Subsequent analysis of JAS -2, including acomprehensive logging program in 2010,suggests that the water comes from a system

of fractures located at the far end of the 927metres horizontal section. Indications arethat the fracture system is limited withfinite volumes of water.The test now being conducted, will attemptto pump off the water and enable the wellto flow hydrocarbons.The Block 15 license has been extendeduntil October 2014 with a minimum workprogramme consisting of among othersadditional seismic studies and the drilling ofone more well.Tethys has a 40 per cent interest of Block15. Odin Energi A/S holds the remaining 60per cent and is operator.

TETHYS OIL ANNOUNCED that drilling of the Maha-1 exploration well onBlock 3 onshore Oman has been completed but has been suspended toenable further studies in the future.

The well encountered oil, but the oil saturation was too low to be produced.According to Tethys Oil, Maha-1 was drilled southwest of the producing

Farha trend in an area not covered by 3D seismic. The vertical well wasdrilled to a total depth of 1,465 metres below sea level, encountering theBarik Sand at 1,409 metres. There were minor oil shows encountered whiledrilling the Barik. However, the oil saturation was too low to be producedand a subsequent sidetrack encountered even less saturation. The well hasbeen suspended to enable further studies in the future.

"Oil is clearly present in the Maha part of Block 3. However, additionalseismic will be required to mature leads to prospect in this area,"commented Tethys Managing Director Magnus Nordin.

The drilling programme on Block 3 continues with two rigs currentlyoperating on wells FS-18 and FS-31 respectively. Both wells are locatedwithin the Farha trend 3D seismic area and are targeting as yet undrilledfault blocks.

Tethys has a 30 per cent interest in Blocks 3 and 4. Partners are MitsuiE&P Middle East B.V. with 20 per cent and the operator CC EnergyDevelopment S.A.L. (Oman branch) holding the remaining 50 per cent.

Test production from the Early Production System (EPS) on Blocks 3 and 4onshore of Oman continues and amounted in December to 248,031 barrelsof oil, corresponding to 8,001 barrels of oil per day (BOPD). Tethys’ share ofthe production, before government take, amounts to 30 per cent of the total,or 74,409 barrels, Tethys Oil reported.

The Block 15 license has been extended to 2014

GULF KEYSTONE GAVE an update on its ongoingexploration and appraisal programme in IraqiKurdistan.Shaikan-4 Appraisal Well:The company continues a well testingprogramme for the Shaikan-4 appraisal well,drilled six km to the west of the Shaikan-1 well,targeting several formations in the Jurassic andTriassic. One well test in the Triassic has beencompleted and six further tests are planned. Shaikan-5 Appraisal Well:The Shaikan-5 appraisal well is currently drillingat a measured depth of 1,008 meters. Afterslower than expected drilling progress due to

temporary hole stability issues encountered inthe shallow formations, the well is now drillingahead to the estimated total depth of 3,500meters subject to technical conditions.Shaikan-6 Appraisal Well:The Shaikan-6 appraisal well has drilled to ameasured depth of 362 meters and 26" casing hasbeen set. The well will drill to the estimated TD of3,800 meters subject to technical conditions.Shaikan Extended Well Test:At the end of 2011, Shaikan test productionlevels were in excess of 4,000 barrels gross ofoil per day and are due to increase furtherafter the ongoing upgrade of the Shaikan-1 &

3 EWT facility has been completed andadditional test production facilities have beendesigned and built. Akri-Bijeel Block:According to the Operator's Akri-Bijeel blockoperational update and 2012 outlook, theexploration and appraisal programme will continuewith two exploration wells (Barkman-1 and Gulak-1) and four appraisal wells (Aqra-1, Bijell-2, Qalati-1and Qandagul-1) to be drilled in 2012.

Following the completion of the Bekhme-1exploration well testing programme the rig ismoving to the Aqra-1 appraisal well drillinglocation.

Drilling on Maha-1 well completed

Gulf Keystone provides drilling programme update in Iraq

Testing at Oman Block 15 restarts

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MANAGING DIRECTOR OF the National Iranian Offshore Oil Company(NIOOC) says that Iran is currently extracting 2.5 times more oilfrom Hengam joint field compared to the neighboring Oman,reported Press TV.Mahmoud Zirakchian-zadeh said that Iran has been seriouslypursuing tapping from the field in recent years and based on thecurrent plans, extraction will increase during the current andupcoming years.Iran is developing its part of the offshore Hengam oil field, sharedwith Oman, on its own.Iran began tapping oil from the field about a year later than Oman,but is currently extracting about 22,000 bpd of extra light crude oilfrom the offshore field.Oman teamed up with a British company three years ago to starttapping from the joint Hengam field, called Bukha in Oman, bybuilding a 25km pipeline.According to current estimates, Iran's oil extraction from the fieldwill hit 30,000 bpd by March 2012.The National Iranian Oil Company has invested US$450mn in thefirst phase of the field's development and a total of US$800mn hasbeen allocated to the first and second phases of the field'sdevelopment.Hengam oil field is located about 45 km off Iran's Qeshm Island inthe Persian Gulf and straddles the common sea border with Oman.The field was discovered after oil was first drilled in 1975. Thesecond well was drilled in 2006 and subsequent reservoir studiesput the field's in-place oil and gas reserves at, respectively, morethan 700 million barrels and about 2 trillion cubic feet.Iran has the world's second largest gas reserves but has struggledfor years to develop them due to tightening international sanctionsthat have kept foreign energy firms away.

Claims of higher oil extraction atHengam Field

INDIA'S OIL AND Natural Gas Corp (ONGC) has awarded NationalPetroleum Construction Company (NPCC) a US$150.6mn for theengineering, procurement and construction (EPC) of Platforms 14and 16 in the Mumbai High Field.The project includes the engineering, procurement of materials,manufacturing, transportation, installation and trial run for fiveoffshore rigs, said a statement from NPCC.NPCC is targeting projects in Saudi Arabia as well as new marketsfarther afield such as Angola, Iraq, Kazakhstan and Southeast Asia,according to CEO Aqeel Madhi.

NPCC to provide EPC servicesfor offshore rigs

NPCC bags EPC contract in India

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ONE OF THE biggest and most modern ship repairyards in the Middle East, Oman Drydock Company(ODC), has recently received its first LNG carrier,the Muscat LNG,owned by OmanShipping CorporationSAOC.As part of its middleterm service, MuscatLNG underwent theservice operation atODC during 11 daysand was deliveredwithin the estimated12 days. The serviceoperation for MuscatLNG included themechanical cleaning of the main boilers and thefire sides. She was pressure tested and the LNGCargo pumps, the ballast pumps and the safetyand mounting valves for the main boiler were

overhauled. The cable hangers and cables wererenewed on flying passage (at five locations) andnew cable supports (20 sets) for the cable way

were installed duringpassage and the corewires were modified intube type fluorescentlight. As part of theregular maintenancework, the hull wasequally painted. Afterthe successful repair atODC, the ship loadedLNG at Qalhat Terminaland left for the FarEast. Since its softlaunch in April 2011,

ODC has been moving prudently towards a gradualramp-up of its operations. Starting with handling ofrelatively small vessels, ODC has since thenhandled a total of 32 ships of varying sizes.

JORDAN AND QATAR ARE discussingthe possibility of building a liquefiedgas terminal at the Red Sea port ofAqaba at an estimated cost of aboutUS$1 billion, according to officials.

Jordan currently imports 96 percent of its energy needs, costing about20 per cent of its gross domesticproduct. The Jordanian-Qatari talks onthe proposed gas terminal projectcame amid Amman-Cairo discussionson the price of natural gas that Egyptsupplies to the kingdom through apipeline that runs through the Sinai.

Under the regime of oustedstrongman Hosni Mubarak, Egyptoffered favourable prices to Jordan.However, the government in post-Mubarak Egypt has said it wants torenegotiate the agreement. Reportssay that Cairo is asking for severaltimes the favourable prices stipulatedin a 2004 agreement.

Minister of Energy and MineralResources Khaled Touqan said a Qataridelegation held talks with Jordanianofficials on the possibilities of Jordanimporting liquefied gas from Qatar.The talks focused on the proposal forsetting up an offshore gas terminal atAqaba to receive and distribute gasthroughout Jordan, he said.

Jordan and Qatar have alreadyjointly formed a technical committeeto work out how Jordan could receivenatural gas supplies from the Gulfexporter. Jordan's Minister of Energyand Natural Resources, Qutaybe Abu-Qura, told the kingdom's official Petranews agency last week that he hadagreed with Qatar's Minister ofIndustry and Energy, Mohammad al-Sada, to form the task force, whichwill examine prospects for supplyingQatari LNG to Jordan via the port ofAqaba on Jordan's Red Sea coast.

IRAN SAID THAT it would launch full-scaleunilateral development of the disputedoffshore Arash gas field in the Gulf if Kuwaitdoes not respond to its offer of jointdevelopment, according to the official Irnanews agency."Our emphasis presently is on joint partnershipstrategy rather than competition, and we arehopeful to reach a conclusion with Kuwait overthe development of the shared Arash field," theagency quoted Mahmoud Zirakchianzadeh, thehead of state Offshore Oil Company, as saying.He said Iran's policy on shared oil and gas

fields is partnership rather than confrontation.But "if Iran's positive diplomacy is turneddown, we will be carrying on our efforts atArash field unilaterally just as we did inHengam oil field," Zirakchianzadeh said, usingstronger language than Iran has usedpreviously in the dispute. Iran is developingits part of the offshore Hengam oil field, sharedwith Oman, on its own. Zirakchianzadeh saidIran has already launched its "operationalactivities" on the development and productionat Arash and was not dragging its feet inanticipation of Kuwait's response.

The Arash gas field is located on Iran-Kuwait'swater border and it is called Dorra in theKuwait part of the field.

The first LNG carrier arrives

GE OIL & Gas has signed a contract with Qatar Operating Company Limited (Qatargas) to supplyadvanced combustion technology that will reduce gas turbine emissions at the Qatargas 1 Utilitycomplex to meet new regulations from the Qatari Ministry of Environment. The deal was announcedby GE at the 20th World Petroleum Congress that was held in Doha recently.GE will provide Dry Low NOx (DLN) 1.0 combustion system designed to achieve low emissions levelsof 25 parts per million (ppm) for nitrogen oxide. The technology will be used to upgrade six GE Frame6B gas turbines that are providing the power for three onshore LNG trains at the Qatargas 1 site inRas Laffan Industry City, 70 kilometers from Doha.Qatargas, which pioneered the LNG industry in Qatar, today is the largest LNG producing company inthe world, with a capacity of 42 million tons per year. Qatargas also is a trend-setter in environmentalresponsibility and was the first company in Qatar to establish an ambient air quality program, whichhelped to set the agenda for future controls on air emissions for all Ras Laffan industries.“At the core of our environmental commitment is our objective to reduce emissions to the lowestpractical levels,” said Alae Sadic Al Hassan, Qatargas’ Ventures Manager. “After evaluating a varietyof solutions, we determined that GE’s DLN combustion system offered the optimum solution toachieve the required emission levels. James Baldwin, Environmental Manager, Qatargas, added: “Qatargas is focused on reducing ouremissions footprint and energy use to the lowest practical levels and aims to be a strong pacesetterwithin the LNG industry in this regard.”The installation of GE’s DLN systems will begin this year, with the sixth and final unit completed by2013. Equipment for the project will be provided from GE facilities worldwide, including Greenville inthe US.

Gas

Oil Review Middle East Issue One 2012

Qatar and Jordandiscuss offshore gas terminal

Qatargas to meet new emission limits

First LNG carrier to Oman Drydock

Iran may go it alone if Kuwait dithers

S07 ORME 1 2012 Gas_Layout 1 31/01/2012 14:46 Page 34

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

• Conforms to the American Petroleum Institute (API) specification – 10A Class-G- (HSR), Class-B- (HSR) and Class-A- (O) grades.

• Tested by worldwide cementing companies

• Easy to disperse resulting in considerable cost savings

• Used by major oilfield companies such as: Petroleum Development of Oman (PDO), Schlumberger, Halliburton & Occidental

• Exported to GC Countries, Iraq, Yemen, Libya, Sudan, Tanzania, Turkmenistan, Pakistan, India and Syria.

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

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

Winner of His Majesty’s Cup for the Best Five Factories in the Sultanate of Oman for the 10th time.

Oman Cement Company (S.A.O.G) Corporate Office:PO Box 560, Ruwi, PC 112, Sultanate of Oman. Tel: +968 24437070, Fax: +968 24437799Email: [email protected] Website: www.omancement.com

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A RECORD NUMBER of LNG tankers have loaded in the Year 2011 inRas Laffan Port and on 28th December 2011, the RasGas vessel“Simaisma” became the 1,000th LNG (Liquefied Natural Gas) tankerto arrive in the Port. The RasGas chartered vessel built by the KoreanDaewoo shipyard and delivered in 2006 is able to load an LNG cargoof 146,000 cubic meters. The vessel owned by a joint venture ofNakilat & Maran Gas Maritime, is on long term charter to RasGas.The 1,000th tanker bound for Europe was loaded simultaneously withthe 999th, 1001th & 1002th LNG tankers and they in total took onboard approximately just over half million cubic meters of LNG. Tomark the occasion, a ceremony was held in Ras Laffan Port withsenior representatives from RasGas, Qatargas, Nakilat and QatarPetroleum. Ras Laffan Industrial City (RLC) Acting Director, Capt.Feisal Saad presented a commemorative traditional Arabic dhow tothe “Simaisma” ship master Capt. Apanomeritakis Georgios.Speaking at the event, Capt. Saad said, “Just in June this year, thePort celebrated the 5,000th LNG loading since the start ofoperations in 1996.

THE HUGE GAS field, named Sardar Jangal, which has been recentlydiscovered in Iran's territorial waters in the Caspian Sea, has the capacityto produce 880,000 barrels per day (bpd) of crude oil, MP Asadollah Abbasitold the Fars news agency.Ali Osouli, managing director of Khazar Oil Company, announced inDecember 2011 that "the field holds an estimated eight billion barrels ofcrude oil." "An exploratory well has been drilled in the gas field to give newdetails on its hydrocarbon reserves," the Shana news agency quoted Osoulias saying.The Sardar Jangal field holds at least 50 trillion cubic feet (some 1.4 trillioncubic meters) of gas reserves. The field, in waters 700 meters deep, lieswholly within Iran's territorial waters. According to Oil Minister Rostam Qasemi, excluding Sardar Jangal, Iran has11 trillion cubic meters of proven gas reserves in the Caspian Sea. Qasemi also announced that Iran is now the sole country in the regionwhich has found access to the technology to drill wells in deep waters.Meanwhile, gas production in South Pars (SP), Bushehr province will standabove 280mn cubic meters by the end of the current Iranian year, (March20, 2012), said the managing director of Pars Oil and Gas Company.Moussa Souri added 260mn cubic meters of gas per day are currently beingextracted from 11 platforms of phases one to 10 of South Pars, IRNAreported. He said the gas extracted from the sites is purified in SP's refineries afterbeing transferred and is then injected into the nationwide gas networks.

THE UK’S DEPENDENCE on Qatari LNG has grown so stark that, last year, all buttwo cargoes of the product shipped into the UK came from Qatar. The situationis about to getworse, analysts say,raising profoundquestions over UKenergy security. Notonly is Iranthreatening to cutoff all Qatar's LNGexports by blockingthe criticalwaterway, but evenif that does nothappen, the UK willbe unable to rely soheavily on Qatar in the coming years. Unlike other European nations, Britainhas not guaranteed its LNG cargoes with long-term fixed contracts. DeutscheBank calculates that only 24 per cent of the UK's LNG coming from Qatar issecured under fixed contracts, meaning the rest can be diverted to the highestinternational bidder. The Qatari gas the UK relies on has in part taken the placeof more reliable gas from the UK's own North Sea, whose production is quicklydeclining because of the age of the fields and dwindling investment. In fact,Qatar's supply to the UK grew 67 per cent from 2010 to 2011, according to theDepartment of Energy and Climate Change.

UK ‘dependent’ on gas from Qatar

Celebrating the occasion, an award ceremony was held at Ras Laffan

ONGOING UNRELIABILITY OF Egypt gassupplies is forecast to cost Jordan over US$2billion this year as energy officials struggle tomeet the rising costs of electricity generation.A report issued by the Electricity RegulatoryCommission (ERC) projects the ongoingunreliability of Egyptian natural gas to costJordan an additional JD1.7 billion, someUS$2.4 billion, by the end of 2012.Egyptian gas supplies dipped from 220million cubic feet per day in 2010 to anaverage of 80 million cubic feet in 2011, a

drop which cost the Kingdom an additionalJD1 billion and pushed the annual nationalenergy bill to a record high JD4 billion lastyear.According to the ERC, the drop in gassupplies and increased reliance on costlierheavy fuel oil have pushed the costs for theNational Electric Power Company (NEPCO) tosustain electricity generation to 156 fils perkilowatt hour, over three times the 52 fils perkilowatt hour rate the firm sells electricity toconsumers.

"We are seeing generation costs rise eachday and this is adding to our deficit," saidGhaleb Maabreh, NEPCO director.Officials say the mounting deficit is placing"added pressure" on the Ministry of Energy tosecure alternatives to an energy source thathas been the target of both sabotage anddiplomatic wrangling over the last 12months."For too long we have relied on one energysource and now we are witnessing thenegative consequences," Maabreh said.

Gas

Oil Review Middle East Issue One 2012

Iran confident about Caspian discovery

Egyptian gas cuts cost Jordan billions

Ras Laffan welcomes 1,000th LNG carrier

The LNG shipments from Qatar are not guaranteed

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Oil Review Middle East Issue One 2012

TTHE PETROCHEMICAL INDUSTRY faces abright future in the GCC and two recentreports look at the reasons why there is agrowth agenda in the region and the

opportunities these developments can bring. The first report, ‘Breaking New Ground in the

Downstream Petrochemicals Sector,’ A.T. Kearneyprovides the analysis in a report compiled incollaboration with the Gulf Petrochemicals andChemicals Association (GPCA).

The study looks at GCC petrochemicalindustry development opportunity and the nextwave of growth in the sector.

The second report was released byAlixPartners and looks at the ‘Growth paradigm inGCC chemicals: strategic implications, projectdevelopment and performance improvement.’

AlixPartners believes that “the Middle Eastwill maintain the global hot spot forpetrochemicals.”

A.T. Kearney in the study with GPCA stated:"With one of the highest population growthrates in the world, expanding downstream willnot only contribute to the region’s overall GDPbut will create fertile ground for the many jobplacements required for the younger populationover the next decades."

Downstream ExpansionDr Jörg Fabri, a director in AlixPartners’ Dubaisaid, “Moving production further downstreamcould make sense for many GCC chemicalcompanies, but only if some requirements arefulfilled. In particular, chemical companies inthe region will need to improve operationalefficiency.”

According to the analysis by A.T. Kearneycompiled in collaboration with GPCA: “The GCCpetrochemical sector has already takensignificant steps toward moving downstream,expanding manufacturing capabilities ofcommodity materials.”

This expansion will see a wave of Green Fieldinvestments in the region. AlixPartners points outthat Sabic is set to spend US$48.2 billionbetween 2011 and 2020.

Borouge will investment is at least US$3.2billion in Borouge 3 and Aramco has alreadyannounced it will spend US$20 billion in itsjoint venture (JV) with Dow Chemical, Sadara.While, Qatar Petroleum and Shell signed a dealat the end of 2011 to develop a Petrochemicalcomplex in Qatar.

In Saudi Arabia the expansion will see more

competition in the domestic petrochemicalsector. “With Saudi Aramco becoming morecompetitive the Saudi market will no longer bedominated by one player, Sabic,” Fabri explained.

FeedstockAlixPartners stated that feedstock is key to costcompetitiveness in petrochemicals and that C2and C3 feedstock from GCC is the basement forlocal chemical production. With almost half ofthe global new capacity of some C2 basedproducts will be built in the GCC.

According to the analysis by A.T. Kearneycompiled in collaboration with GPCA:

“Competition to feedstock access is brewing.The traditional feedstock, ethane, is ultimatelylimited in certain countries and may therefore notbe a sustainable source to support the long-term

future growth of the petrochemical industry.Capturing more value along downstream chainsallows players to incorporate, economically moreexpensive, available feedstock such as those fromgas condensates and naphtha.”

A.T. Kearney added: “the opportunities spanmultiple interrelated industries and sectors fromadvanced chemicals to plastics and rubberthrough to formulated chemicals.”

Using figures sourced from Deutsche Bank,AlixPartners found that chemicals companies inthe Middle East have a cost advantage of asmuch as 90 per cent in ethane production overthose in Europe or Asia, and up to 35 per cent inliquefied petroleum gas (LPG) production.However, the cost advantage in producingnaphtha is only up to 10 per cent to 15 per cent,depending on the transfer process used andlogistics, meaning that changing marketdynamics will exert additional competitivepressure on Middle East chemicals producers.

ClustersOne key part of the petrochemical expansion willbe growth of industrial clusters. According toAlixPartners, there are around 200 differentindustrial cluster initiatives in the GCC with those

The current production and diversification planned in the GCC petrochemical sector

The Middle East will maintainthe global hot spot for

petrochemicals - AlixPartners

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Two reports look at the new growth agenda within the GCC petrochemical industry andhighlight the development opportunity in this growing sector and what challenges lieahead for GCC markets.

High growth potential for GCC

petrochemical market

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Heavy fuels, blast furnace gas, process gas, biodiesel — you name it, GE gas turbines can run on it . Better yet, they can do so with less wear and tear on the turbine. That means you can feed our turbines the widest range of alternative gas and liquid fuel available, and still trust that they will perform reliably, effi ciently and economically for years to come. You should expect nothing less from the company that’s been innovating alternative fuel technology for more than 50 years. Learn more at www.ge-energy.com/fuelfl ex.

GE Energy

Performs on just about anything you feed it.

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Honghua Golden Coast Equipment FZE (Honghua Dubai), registered in Jebel Ali Free Zone in Nov of 2006, is one of the sole corporations of Honghua Group in China(listed in Hongkong stock market in 2008). The total area of the workshop for Honghua Dubai is about 21,000m2, including 2800m2 workshop (owning lathe, boring machine, milling machine, plate shearing machine, welding machine and other equipments), 500m2 warehouse and a 17,000m2 commissioning yard.

Honghua Dubai will be the assembly, maintenance, refurbishment, spare parts supply, equipment leasing, after sales service and marketing center of Honghua Group in Middle East and Africa. In addition, new technology and new products of Honghua Group will be displayed here.

Honghua Golden Coast Equipment FZE introductionHonghua Golden Coast Equipment FZE.

(Branch Company of Sichuan Honghua Petroleum Equipment Co., Ltd)

P.O.Box. 261868 Jebel Ali Dubai-U.A.E.Tel: +009714 8807066Fax:+009714 8807061

Website : www.hhcp.com.cnwww.hh-gltd.com

around chemicals are the most important ones.A.T. Kearney highlighted these initiatives in its

analysis compiled in collaboration with GPCA:“Championed by key GCC industry stakeholders,numerous initiatives have begun supportingdownstream expansion. A common approach hasbeen to build specific industrial areas, known aschemical poles and polymer parks, wheredownstream players can cluster together in a

favourable environment.”“Industrial clusters are a great idea and are a

great way to create synergies,’ AlixPartners saidin its report.

Integration will become more and moreimportant in the future but AlixPartners believesthat the GCC is quite away from achieving fullintegration as BASF has done over the years.

“Thus master plans for the development of

integrated chemical clusters in the GCC arerequired, however, synergy level is still far belowBASF,” said AlixPartners.

Market accessAccording to AlixPartners, the GCC is inparticular well located to supply growthmarkets in Asia. The Middle East will be themain supplier to satisfy the fast growingdemand from Asian markets.

It is vital that GCC chemical companiesunderstand the trends in second and thirdmarkets of chemical client industries. AlixPartnersargued that by “understanding trends in clientindustries secures GCC chemical companies toadopt development and production to the rightdirection and avoids “sunk” investments intodeclining market segments.”

OutlookA.T. Kearney concluded in the GPCA study that:“GCC petrochemical companies are stronglypositioned to take the lead in downstreamexpansion. Existing global reach of GCCpetrochemical players has embedded the industrywith unique insight into trends and value chainsof multiple segments, which can be leveraged toshape and support local developmentdownstream.” n

Oil Review Middle East Issue One 201240

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The GCC petrochemical industry will see major expansion in the future

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SSAUDI BASIC INDUSTRIES Corporation(SABIC) is hoping to bolster itsincreasingly global reputation in 2012 -but it faces key challenges in the year

ahead, including anti dumping measures andpotential feedstock issues. The Saudi downstreamchampion, 70 per cent owned by the Saudigovernment, is already one of the world’s topmanufacturers and suppliers of chemicals,fertilisers, plastics and metals.

And it expects more of the same this yeardespite the bumpy conditions in troubled marketssuch as Europe. At the turn of the year, SABIC vicechairman Mohamed al-Mady said he was confident2012 would be another positive year for the MiddleEast region’s petrochemical sector despite concernsover Europe slipping back into recession as a resultof the ongoing euro debt crisis.

Al-Mady, who is also chairman and chiefexecutive of the influential Gulf Petrochemicals andChemicals Association (GPCA), believes that theEurozone will experience modest growth this year,while the US will also avoid a double dip recession.

Strong footing“If this growth forecast prevails in 2012, it shouldbe a good year for our industry,” he said. “Financialresults should receive an additional boost due toimproved industry operating rates in 2012 as therewill be less new capacity coming on stream.”Speaking at the sixth annual GPCA forum in Dubai

on December 13, al-Mady highlighted theprofitability enjoyed by most chemical producersduring 2011.

While 2012 will no doubt throw up plenty ofchallenges - with mixed demand indicators alsoemanating from higher growth Asian markets suchas China - SABIC has certainly entered the year onfirm ground.

The company’s assets now amount to morethan SR340 billion (US$91 billion) - up fromSR317 billion (US$85 billion) in the last publishedannual accounts, for 2010 - while last October,SABIC posted record net profits for the thirdquarter of 2011. This is just the start, however, asthe company expands into new and more complexproduction areas. Going forward, it aims toincrease total production to a massive 130 millionmetric tons by 2020, making it a true giant in theworld’s downstream industry. On the ground,SABIC finished last year in typically bullish style,with affiliate

Saudi Arabian Fertiliser Company (SAFCO)issuing a contract for the construction of theSAFCO-5 plant to Italian engineering group SaipemThe SR 2 billion (US$533 million) plant will be oneof the world’s largest urea plants, with an annualcapacity of 1.1 million tons of urea. The facility isexpected to start commercial production in thethird quarter of 2014.

Recent initiativesOther flagship projects underway inside SaudiArabia itself include the Al-Jubail PetrochemicalCompany (KEMYA) plant, a joint venture withExxonMobil. Saudi Kayan, which is 35 per centowned by Sabic and 20 per cent by Al-KayanCompany, is also building a speciality chemicalscomplex at Jubail, although it has been affectedby delays.

Like all recent initiatives, the SAFCO-5project forms part of SABIC’s long-termsustainability plans, with an aim to convert850,000 million tons carbon dioxide (CO2), thatis currently vented into the atmosphere, intourea, a valuable fertiliser. SAFCO intends to toapply for a Clean Development Mechanism(CDM) certification to gain financial credits forthe emission cuts. The project’s economies ofscale will also contribute to reducing theintensities of energy consumption by eight percent and water consumption by 11 per cent,both precious and scarce resources. The new

Oil Review Middle East Issue One 2012

Another challenge facing the company

is contesting any remaining anti dumping

measures

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Despite the unpredictable global economic backdrop, Saudi Arabia’sdownstream champion SABIC remains in bullish mood, says Martin Clark.

Going from strength

to strength

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Cargotec improves the efficiency of cargo flows on land and at sea – wherever cargo is on the move. Cargotec’sdaughter brands Hiab, Kalmar and MacGregor are recognised leaders in cargo and load handling solutions aroundthe world.

Kalmar. Supporting the pipeline withheavy duty materials handling solutionsFor materials handling solutions, designed specifically for the oil and gas industry, look to Kalmar. We have a widerange of high performance equipment with specialist attachments to handle pipes of all sizes. Plus, with the mostextensive service network in the industry, we can support your operations wherever you are located. Contact ourRegional Headquarters herewith for further information.

Cargotec LLC, P.O.Box 30029, Dubai, United Arab Emirates.Email: [email protected]

www.cargotec.com www.kalmarind.com

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SAFCO-5 facility fits with SABIC’s drive toreduce its overall environment footprint, saysal-Mady, also SAFCO chairman. He challengedthe wider petrochemical industry to providemore sustainable solutions as it increases itsscale and capacity.

Sustainability“The Gulf petrochemical suppliers must possessthe most material and energy efficientprocesses and we must produce products thatenable the entire value chain to be moresustainable,” he said.

Key measures include the GPCA establishingthe Responsible Care initiative in the MiddleEast and Gulf region, an attempt to address keysustainability issues, and to build a link withpeer associations around the world.

Tough tests But there are, no doubt, toughtests coming too, both for SABIC and otherSaudi and Middle Eastern downstreamproducers. Management will be watching keydemand indicators closely, especially thosefrom China. Some 50 per cent of SABIC's salesgo to global emerging markets, with 30-40 percent to China alone, making it arguably thegroup’s single most important overseas territory.

Another challenge facing the company iscontesting any remaining anti dumpingmeasures, which have been enacted in someoverseas markets as global economic growthhas withered through the past year. Indiaimposed a 6.5 per cent duty in November 2010on polypropylene imports from SABIC and a fewother producers, saying the suppliers sold theirproducts below cost. While India has nowwithdrawn such measures, Saudi officials stillstarted this year locked in talks with Turkey,where SABIC is accused of dumping monoethylene glycol. As of mid-January, the Turkishclaim was the only such case outstandingremaining against the company.

Cost advantageA similar anti dumping case in China datingback to 2010 has also since been scrapped.The accusations arise largely from Saudi Arabiaselling gas at greatly subsidised rates to localdownstream product manufacturers, includingSABIC. Riyadh has set a gas price of US$0.75 a

million British thermal units, NCB Capital, theinvestment arm of Saudi Arabia’s largest bankby assets, said in a December report, one of thelowest prices anywhere in the world. This pricewas set in 1998 when the average price ofcrude oil was a mere US$13 per barrel; theaverage price of oil is now in excess of US$100per barrel.

By contrast, US natural gas prices averagedUS$4.028 a million BTU last year. With itsintegrated production flow, feedstock costadvantage and wide production base, SABIC istherefore able to post globally leading margins,as it has repeatedly done so in recent years.

But the prospect of higher gas prices may bea far greater challenge to SABIC long-term, thanshort-term anti dumping battles. Saudi

downstream producers are now facing difficultygaining new allocations of ethane at the currentsubsidised price for capacity expansion plans,due to rising domestic gas needs.

Global demandAlthough SABIC benefits from a fairly diversifiedfeedstock and product mix, NCB Capitalbelieves ethane costs still account for seven percent of the group’s total production cost for thepetrochemical segment. The company’s effortsto extend growth opportunities outside SaudiArabia have already diluted some of this naturalcost advantage, although this has been anecessary step in deepening its involvement innew territories such as China.

This strategy has placed SABIC at the heartof the world’s petrochemicals industry, however,a move that will stand it in good stead in theyears ahead, whatever the economic headwindsbring, or any potential future shifts in gaspricing. With global demand red light indicatorsflashing, it means SABIC remains as well placedas any downstream player in the Middle Eastand beyond in 2012. n

Oil Review Middle East Issue One 2012

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SABIC benefits from a fairlydiversified feedstock andproduct mix

Like all recent initiatives, theSAFCO-5 project forms part of

SABIC’s long-termsustainability plans

TECHNOLOGY REMAINS INTEGRAL to all thatSABIC does, as it extends its global footprintfar and wide. The company is now among theworld’s market leaders in the production ofpolyethylene, polypropylene and advancedthermoplastics, glycols, methanol, andfertilisers – and one of the largest producersof steel in the Middle East. It now has 18international tech centres, manned by 1,500scientists and researchers. These facilitieshave enabled the company to amass around7,000 patents. At the end of last year, SABICeven set up a new venture capital arm, SABIC

Ventures, based in the Netherlands, to investin new and innovative technologies andbusinesses. The venture capital firm will targetnew technologies primarily in the USA, Europeand Asia. Among the company’s more recentinvestments, SABIC Innovative Plasticsopened a new facility at its Mt. Vernon site inthe USA - a hub for major innovationbreakthroughs and the source of some 500patents - to facilitate chemistry and processdevelopment for the high performancepolymers product line. The new site willenable SABIC to more rapidly produce new

polymers, particularly custom formulations,for its customers. The intention is also toincrease customer access to SABIC researchscientists and product developmentspecialists. “It takes us to a new level of high performancepolymers technical innovation and dedicatedsupport that our customers expect of us,especially those in growing, high-demandsectors like aerospace and healthcare,” saidSanjay Mishra, global high-performancepolymers technology leader, specialty andperformance, SABIC Innovative Plastics.

Investing in the best

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Oil Review Middle East Issue One 201246

Quality is the heart of our Business

When qualitycountsGEYAD showsthe way

Geyad, established in 1980, has grown over the years to become one of Saudi Arabia’s leading steel fabricators. The company is accredited with ISO 9001:2008 as well as with the prestigious certificates of authorization and code symbol “U” stamp from the American Society of Mechanical Engineers (ASME).

Geyad delivers on five main categories: Structural Steel, Pressure Vessels ASME “U” specified and the repair and alteration of pressure vessels “R” NBBI specified, Storage Tanks, Pipe Spools, and an array of miscellaneous steel items, such as handrails (straight and stair), ladders (with and without safety cages), gratings, chequered plates, stair and stair treads, buckstay holders and electrostatic precipitator components, skids and ducts.

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MR MOSAED AL-OHALI, Executive Vice President,Manufacturing, Sabic spoke to Oil Review aboutSabic’s sustainability drive and ambition tobecome innovation leaders. Al-Ohali was one ofthe plenary speakers at MEPEC in Bahrain. Al-Ohaliexpanded on the main themes of his speech,saying: “My speech was a reflection of ourrealisation at Sabic. What are the focus areas forus? Sustainability is coming to be a very importantsubject for us going forward. It is becoming a veryimportant theme. Our approach will not be legalcompliance but instead we aim to embracesustainability as a way to create value for us.” Headded that some people think sustainability meansinvestments in energy optimisation andinvestment in Co2 reduction – from a certainperspective, this is true. That is the cost side of it.“What we are looking at is the value side of it.Because as we spend capital, we gain businessbenefits far in excess of our sustainability costs. Soas we drive more sustainability, we aim to gainmarket leadership, we are not compromising oureconomic viability we still want projects that areeconomically viable on their own but alsoachieving our sustainability goals.”

Al-Ohali went on to discuss the importance ofinnovation which, “we firmly believe that we can

not meet our corporate objectives by just being asmart follower as has served us very well in thepast. But going forward, we need to be technologyinnovator and we need to be a recognizedinnovation leader. We do not want to innovate ineverything, but we want to have innovationleadership in our core business.”

This does not mean that in the future Sabicwill not enter into joint ventures, far from it. “Westill have a lot of room for a lot of partners andthere are many things we can do together,”observed Al-Ohali.

Training is very important to Sabic. As Al-Ohaliexplained: “Knowledge sharing is very important forus. We have a number of initiatives on trainingongoing, both in-house and with third parties. Weare trying to move from formal kind of training intotraining that is competence based. We are engagedin a big project where we are mapping out thecompetency needed for all our career paths andthen what we do in terms of training anddevelopment, work experience that we want to giveto our professionals to achieve the competenciesprescribed for the career path they choose.”

Al-Ohali believes this provides a verycomprehensive, total approach to training anddevelopment.

Al-Ohali talked about his positive outlook forthe downstream industry. “In terms of buildingtechnical capabilities I think we are definitely inthe right place and on the right track. We aremoving to be more efficient and, in a way, we areoptimising our costs. So from that aspect we aredoing the right thing in terms of organisationalstructures and in terms of selecting the types oftechnologies we want to use. Now this is only onthe manufacturing capabilities side. Al-Ohali didadd that to succeed Sabic will need other things,such as a favourable market.

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Al Ohali (centre) pictured at the MEPC event in Bahrain

Sustainability a key driver - Al-Ohali

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SABIC PLANS TO take advantage of gaps left in the Germanmarket by dominant local BASF SE (BAS) by offering customers afuller range of plastics and chemicals.Sabic is marketing itself as a one-stop shop for makers ofmaterials used in goods from cars to medical-gear, KonradHellmann, head of the Riyadh-based company’s Germanoperation, said in an interview. Sales volumes inEurope’s biggest economy increased about 10 percent last year.The Saudi company bought General Electric Co.(GE)’s plastics unit in 2007 and is building up itspolymers operation. By contrast, BASF sold itsBasell plastics venture in 2005 and shiftedstyrene operations into a venture last year. Sabichas an opportunity to battle rivals in Germanythat can’t supply a full array of plastics,Hellmann said.“Most global companies don’t want 100suppliers, instead they want just one supplierthat can provide a wide range of products,”Hellmann said. “We can offer the customereverything from a high-performance polymerdown to polyethylene and everything inbetween. Only a few others can do that.” Sabic, which runs its European operations fromSittard in the Netherlands, in Septemberappointed country leaders across Europe to

coordinate polymer, thermoplastic and chemical sales. Customers ofone business unit are being introduced to products from other units,Hellmann said.“At the big companies, the original equipment manufacturers, thedecisions on which plastics should be used in a product are made

in Germany,” Hellmann said. “It’s an advantage when you have abig portfolio and a solution for every materials problem.”Sabic, which was founded in 1976 to find a use for flare gas

burned off during oil extraction, recently reportedQ4 profit that missed analysts’ estimates. As wellas Germany, Chief Executive Officer Mohamed Al-Mady is driving expansion in the faster-growingmarkets of Asia and Latin America, he said.Growth may come from acquisitions, as well asinternal investment and innovations, Hellmannsaid. Sabic, which is 70 per cent state owned,looks at potential targets that come on themarket and wants to expand in specialtychemicals, he said. Sabic bought HuntsmanCorp. (HUN)’s U.K. polymer and chemical unitsin 2006 for US$810mn, adding plants thatmake ethylene and polyethylene plastics aswell as benzene-related chemicals for theEuropean market. A year later it followed withthe purchase of GE’s plastics unit for US$11.6billion, gaining operations in the U.S., Asia andEurope.

SABIC seeks to widen sales in Germany

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PPETRORABIGH WAS SET up inSeptember 2005 and is a leading jointventure petrochemical company basedin Saudi Arabia run by Saudi Aramco

and Sumitomo Chemical of Japan.Sumitomo Chemical is a founding shareholder

with ownership of 37.5 per cent along with SaudiAramco who are also founding shareholders owning37.5 per cent as well; the remaining 25 per cent isowned by the general public and is traded on theSaudi Stock Exchange (TADAWUL).

Petro Rabigh is one of the largest fullyintegrated oil refinery and petrochemicalproduction facilities in the region and it is thelargest integrated refinery in the World built in asingle stage.

The company has the highest component ofinward FDI in the Kingdom and it started operationsat its US$10.1 billion complex in 2009.

Platts have ranked the company among theworld’s fastest growing energy companies and in itsannual Top 250 Global Energy Company Rankings,PetroRabigh 167.5 per cent compound growth rate(CGR) gave it second place in the top 50 improvedcompanies as it jumped from 228th to 75th in theoverall rankings.

PetroRabigh experienced a frustrating 2011which saw long bouts of maintenance works hinderrefining capacity levels which had a direct impacton seeing the company post lower end of year,fourth quarter results.

The petrochemical firm is actively looking atthe option of issuing new stocks to help fundexpansion of the complex which revolves aroundRabigh II which was supposed to have beenfinalised between Aramco and Sumitomo by theyear end but did not meet that deadline.

Leading complexThe world beating PetroRabigh complex iscomprised of 23 plants that produce 18.4mn tonnesper annum (mpta) of petroleum-based products and2.4 mpta of ethylene and propylene- based derivatives.

Its facility includes a 400,000 barrel per dayrefinery, a 700,000 tonnes a year polypropyleneplant, a 600,000 tonnes a year linear low densitypolyethylene unit, and a 200,000 tonnes yearpropylene oxide facility. This accounts for about 19per cent of Saudi Arabia's total refining capacity.

This refinery was upgraded to include a higholefin fluid catalytic cracking unit (HOFCC) forconverting heavy and light oils to gasoline andother distillates, which added new annual capacitiesof 2.8mn tonnes of gasoline and 900,000 tonnes of

propylene, a feedstock for petrochemical products.It produces 1.3mn tonnes of ethylene a year as

primary feedstock to produce a variety of refinedpetroleum products and petrochemical products.The refinery has mainly been producing eightmillion tonnes of heavy oil, 5.3mn tonnes of lightoil, three million tonne of naphtha and 2.6mntonnes of kerosene annually.

The company’s product portfolio includesrefined products comprising liquefied petroleumgas, naphtha, gasoline, gas oil, fuel oil, and kerosene.

It also offers polymer products comprisingLLDPE, HDPE, homopolymer polypropylene, andimpact copolymer polypropylene products; andmonomer products consisting of propylene oxideand mono ethylene glycol products.

The refinery caters mainly to the Saudi,European and North African markets. But thecompany is looking at focusing on the fast-growingmarkets of China and India in the future.

Q4 2011 resultsPetroRabigh’s fourth-quarter saw a 4.4 per centdrop in net profit which was due in large to lowerrefining margins.

The company made a net profit of US$13.4mnin the three months ending Dec. 31, compared withUS$14mn during the same period a year earlier.

The reason for the decrease in net profit duringthe fourth quarter of 2011 versus the same periodof the previous year is due to low refining marginsduring the fourth quarter of 2011. The reason forachieving net profit during the fourth quarter of2011 versus a loss for the previous quarter of thesame year is due to the extension of the periodicalmaintenance (T&I) throughout the previous quarter,which resulted in low production volumes.

Rabigh II The ambitious phase two expansion includes a newaromatics facility and a number of value-addedderivatives. The Rabigh II project is due to becompleted in the first quarter of 2015.

The project involves expanding the 1.3mntonnes/year cracker by 300,000 tonnes/year,thanks to an additional 30mn scf/day ethaneallocation from Saudi Aramco. The aromaticscomplex, based on 3mn tonnes/year of naphtha,will house a paraxylene (PX) plant of 800,000-850,000 tonnes/year and a benzene unit with acapacity of 200,000-400,000 tonnes/year.

Oil Review Middle East Issue One 2012

The PetroRabigh complexstarted in 2009

The complex is comprised of23 plants that produce 18.4mpta of petroleum-basedproducts and 2.4 mpta ofethylene and propylene-

based derivatives

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Rabigh Refining and Petrochemical (Petro Rabigh), the large joint venture Saudipetrochemical company, has an critical year ahead with a vital decision on theimportant phase two expansion yet to be finalised

Key role in Saudi’s

petrochemical drive

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Utilities to:

Power

Industrial

Muncipal

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The Reward

Total Customer Satisfaction

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Chemical Injection / Dosing

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www.aesarabia.com

S10 ORME 1 2012 Petro Rabigh_Layout 1 31/01/2012 14:58 Page 49

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In addition, a third party will establish a newmanufacturing facility at the Rabigh site for a purifiedterephthatic acid (PTA) unit that produces 500,000-700,000 tonnes/year and a polyethyleneterephtalate (PET) unit that produces 200,000-400,000 tonnes/year, the report said.

With the expansions, Petro Rabigh would be ableto produce 2.5mn tonnes/year of ethylene andpropylene-based derivatives.

The venture received engineering andconstruction bids for the project last year and was setto award work contracts this year.Constructiontenders for seven packages were issued and biddingwas due to close on 1 October. But this did nothappen and the final investment decision is nowmeant to be made by the end of 2011.

The main talking at the end of last year revolved

around Aramco and Sumitomo missing their year-end target for deciding whether to invest US$6billion to US$8 billion to enlarge the facility.

Aramco stated that it was going to meet withSumitomo Chemical at the start of 2012 to discuss“where to go from here” on the planned expansion.“When we said year-end, we meant more or less thatdate,” Khalid Al-Falih, President and CEO of SaudiAramco, said.

Saudi Aramco is committed to make theexpansion of Phase Two of PetroRabigh happen andal-Falih said he’s confident that both companies willcome to an agreement on the enlargement.

Sumitomo spokesman Hironori Mizushima said inDecember that the company was still conducting afeasibility study on the project. The study wasdelayed due to financial constraints from its

originally scheduled completion date of the thirdquarter 2010.

Operational milestonePetroRabigh did have some good news to shout outabout at the end of 2011 when the companyreached a significant operational and financialmilestone at midnight on Dec. 31 with thesuccessful completion of the Lenders Reliability Test(LRT) in all plants at its refining and petrochemicalcomplex.

Successful completion of the LRT, which requiresthat no single stoppage should exceed 72 hours, sawthe complex operate for 210 days with averagefeedstock consumption at over 90 per cent of designand average production at over 80 per cent.

PetroRabigh was able to vastly exceed minimumrequirements by maintaining an operating factor of97 per cent for the tenure of the LRT. The safe andsuccessful LRT marks the completion of the physicaltesting of the PetroRabigh Complex and means thatit is now fully operational and optimised.

2012 PetroRabigh’s Phase Two expansion programme andhigher product prices are prime growth drivers for thecompany. But plant shutdowns last year and thefailure to finalise the investment package for thePhase Two expansion remain concerns. n

Oil Review Middle East Issue One 201250

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AES ARABIA’S MANAGER International Sales, MrAsad Iqbal Khan spoke to Oil Review Middle onthe company’s development and recentachievements.AES Arabia Ltd is a subsidiary of AmericanEngineering Services Inc., based in Tampa,Florida. This Middle Eastern division arrived inSaudi Arabia in 1993 and sought an expansionthat could follow local trends and operateindependently from its parent company in theUS.“When we saw potential in the area weestablished our independent office here inRiyadh to capture Middle Eastern and NorthAfrican markets,” explains Mr Khan.AES provides design and fabrication of industrialwater and waste water treatment systems aswell as specialist chemicals for reverse osmosis,wastewater treatment and cooling systems. The company has sincegrown to focus more on the oil, gas and petrochemical markets. It hasbeen growing consistently and in 2008, to sustain its development, AESmoved into a new regional headquarters in Riyadh. This 3,000 squaremetre complex was set up to accompany AES’s 18,000 square metreproduction and warehousing facility. The company also maintains branchoffices in Jeddah and Khobah and has been awarded ISO 9000:2008accreditation along with the ASME certification.While the company’s operations centre around Saudi Arabia, its businessactivities and reputation are widespread throughout the GCC & MENAregion, with representation in key areas such as Abu Dhabi, Dubai,Bahrain, Kuwait, Qatar, Algeria etc through its business partners. InAlgeria, for example, it was provided an order by Japan Gas Corporation.

More recently, the company has focused on theoil, gas and petrochemical markets – mainlysupplying water filtration to power plants andrefineries where the chemical content of evenrelatively clean water can have destructiveeffects on a plant’s systems. AES’s clients in thisfield include Saudi Aramco, PetroleumDevelopment Oman, Total, the Saudi BasicIndustries Corporation, Khafji Joint Operation(KJO), Technip, JGC, Petrofac, SamsungEngineering, SK Engineering and many more.“We are cooperating with them in their processindustries and even for exploration,” says MrKhan, who adds that the company provides theindustry with water desalination equipment andwastewater treatment, whether sanitary orprocess.When it comes to its customers, AES views its

strongest attribute to be the after-sales service that it provides. Mr Khanoutlines: “We are involved with oil and gas companies and we havespecialists from a chemical background who contact our clientsregularly.”The workforce itself is mostly homegrown, as Mr Khan confirms:“There is enough in-house capability. We have almost 300 people andmost of them are indigenous.” Much of AES’s employee developmentis also administered in-house, seeking outside help only whenabsolutely required.AES Arabia has dedicated Quality Assurance/Quality Control and Safetydepartment that focuses on maintaining high standards throughout thefacility, from inspection of the materials and components, to thefinished treatment plants.

AES Arabia provides special treatment for oil, gas & petrochemical industries

Mr Asad Iqbal Khan, AES Arabia’s Manager-International Sales

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Oil Review Middle East Issue One 2012

SSAUDI SAFETY & SECURITY (SSS 2012) will open its doors inDhahran from 4th-6th March, bringing a wide range ofspecialised products including fire detection, suppression andprotection equipment to the Kingdom's most concentrated region

of energy and industrial infrastructure. All events will be taking place under the patronage of the Governor of

Eastern Province and the KSA Dept of Civil Defence will again beproviding full support.

The exhibition itself – there were 40 clients for last year's inauguralevent, which attracted more than 1500 visitors in all – will feature thefollowing three business themes, including large-format equipmentoutside where appropriate:

Safety products and services – to protect the Kingdom's ongoingmulti-billion public construction programme and ensure the safety of allworkers massive investment is needed in HSE equipment and training.Current standards have recently been independently described byinternational comparison as “mediocre but improving”. Assessing risks,managing them and raising standards in construction procedures andadherence to the building code are specific targets in what is easily theMiddle East's largest single market for items like machinery guards otheraccident-prevention equipment.

Expenditure increasesSecurity – like all other energy states undergoing a substantial expansionand privatisation programme in both its utility and industrial sectors, theKingdom now faces a range of internal and external threats, which isalready resulting in pro-active expenditure increases of up to 10 per centannually.

All sectors of the economy are affected. Total procurement ofcommercial security equipment and services such as intruder detectionequipment between 2011-2014 is estimated to be of the order of US$10billion or more.

Fire – the Kingdom's massive building programme – housing,industrial facilities, education and healthcare facilities, together with allforms of necessary supportive infrastructure – is resulting in a rapidincrease in demand for fire detection and prevention installations, and thecapital equipment needed to fight this ever-present threat. A wide rangeof items like sprinkler systems will be on display as well as the capitalequipment needed to fight a large-scale outbreak.

As the Kingdom's leading exhibition of safety, security and fireequipment SSS 2012 will provide a splendid opportunity to see all theseand the commercial services that support them under one roof.

Commented a representative of exhibitors Satel Co last year: “A goodvenue to meet clients as well as competitors and understand newtechnologies coming to the market.”

By general consent the inaugural SSS conference last year was bothtimely and a resounding success, meeting the need for an event in thebusy Eastern Province that encourages discussions about civilian security,safety and fire prevention/fighting issues with acknowledged industryexperts from far and wide, including crucially the Civil Defenceauthorities.

Wisely it was local infrastructure protection issues that wereconcentrated on by the select group of 75 who attended the 2011 event,most of them nationals of the GCC states and many representing other

local interested parties like the National Guard, the Red CrescentAuthority and the King Abdulaziz Port Authority.

Afterwards Alan Chen, a VP of China's Sinopec (a national oil companywith wide international interests), commented on an “Opportunity to learnabout the latest information in the field of safety and security as well asto network and exchange business-related information.”

Key presentersLocal NOC representative Engineer Hamed Rashed al-Rashed of SaudiAramco referred favourably on his feedback report to “A good chance toexplore many new innovative solutions to new challenges.”

And the HSE Manager at Group Five Pipe Saudi made a key point aboutkeeping abreast of changes in the rules – both local and international.Rodello Rimando said “It was valuable to keep up to date with theexisting safety standards and regulations in the Kingdom.”

This observation has been picked up in planning this year's follow-upprogramme with the insertion of a special introductory session on“Understanding changing security regulations, new security threats andhow they impact on your business” fronted jointly by the HigherCommission for Industrial Security and the Saline Water Conversion Co.Recent changes in safety requirements will be covered in a separatesession, too.

www.sss-arabia.com

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The second SSS exhibition and conference will focus on the protection of industrial,other commercial, residential and infrastructural assets.

Meeting the needs of

hazardous industries

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Key presenters this year will include at least three senior executivesfrom Saudi Aramco, representatives of the local downstream and utilitiesindustries, the Saudi railway organisation and the Al-Khodari Group(construction).

TechnologiesThe conference opening ceremonies take place on 4th March with akeynote speech on securing Saudi's industrial infrastructure, and afollowing discussion on assessing the evolving challenges facing localS&S professionals. The “Changing regulations” session will lead into areview of technologies in what organisers BME Global call “The securityspace”, such as centralised remote monitoring, protecting Saudi Aramco'sinvestments and ROI in this field generally, and the increasing use of“smart” technologies such as maintaining cyber security.

The first day, devoted to Security issues, will conclude with twinsessions on optimising strategy (audits, planning and prevention ratherthan response strategies) and improving the security of industrial facilities(in the construction phase, identifying hazards and through use of smartID cards).

Day two issues come under the Safety Focus heading, starting withhow to encourage the compliance of employees, improving national“safety culture” (especially in construction), and the ever-present issue ofensuring contractor and direct-employee safety levels match up. Thespecial challenges of ensuring safety standards in the simultaneousconstruction of the Kingdom's multiple Industrial Cities – one of theworld's largest ongoing projects - will be looked at.

The special needs of hazardous local industries like petrochemicalswill be covered on the same morning, with special emphasis on buildingsafety culture and management planning to take account of change ingeneral.

The first-half sessions of this specifically Safety day will focus on thevery specific needs of planning fire safety design and equipment forprotection of all new buildings, and the special hazards arising fromtransportation, of both supplies and products.

Transport issues will be followed up after lunch too, with specificattention to accident prevention, securing facilities against piracy, andcountering other maritime threats.

A series of pre-conference training workshops are being offered on 4thMarch covering off-the-job safety programmes, developing a behaviouralsafety culture, technology selection, and security auditing. ■

For more information visit www.sss-arabia.com or call +966 (3) 859 1888(Exhibition Centre) or +44 203 328 6526 (Conference). All events arebeing sponsored by leading Gulf fire equipment manufacturer NAFFCO.

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By general consent the inaugural SSSconference last year was both timely and a

resounding success

S11 ORME 1 2012 Saudi S&S_Layout 1 31/01/2012 14:59 Page 54

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Cudd Energy Services offers a broad range of specialized oilfield services and equipment to businesses engaged in the exploration and production of oil and natural gas worldwide. Our team of experienced professionals will design a solution, provide the engineering, and mobilize the resources to safely execute the planned objective in both onshore and offshore environments. CES’ integrated services make us the preferred choice for proven solutions designed to enhance the performance of each well.

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The First Stainless Steel Welded Pipe Mill in the Middle East

Outokumpu Armetal StainlessPipe Company (OASP) is theleading manufacturer of high qualityEFW (Electric Fusion Welding)stainless pipe with diameters rangefrom ½” to 8”, Sch10s & Sch40s;Grade 304L, 316L& Duplex. OASPpipes are suitable for a wide rangeof industries, such as, Oil & Gas,Petrochemical, Desalination, watertreatment and general construction.

Outokumpu Armetal Stainless Pipe Company.Second Industrial City, Riyadh, Saudi ArabiaTel: +966-1-265-2030, Fax: +966-1-265-0350E-mail: [email protected]

Oil Review Middle East Issue One 2012

THE KUWAIT OIL and Gas (KOG) Summit & Exhibition 2012 runs over threedays and runs from February 12th-15th at the Exhibition Hall at the RegencyHotel. The event is being hosted by KPC and being organised by the CWCGroup Limited.

The 2011 event was a huge success with the inaugural event seeing over500 participants from over 120 different organisations attending across theentire value chain.

The organisers, CWC, have announced a raft of new activities for KOG 2012.The main new addition is the introduction of Technical Seminars at theExhibition. These will be showcasing the cutting edge technology beingdeveloped in Kuwait’s energy industry.

SummitKOG 2012 will once again host a premier forum for doing oil and gas businessin Kuwait. The summit will explore the opportunities and challenges of Kuwaitoil and gas in a global context, focusing on sharing knowledge and discussingnew technologies and best practices.

The programme will address the critical issues and discuss the strategies forfuture development and prospects for future ETSA agreements, regional cooperationin energy security and the opportunities in Kuwait’s downstream market.

The 2012 summit will also see new panels which will be an interactivepanel discussion focused on Regional Cooperation and one focused onEnvironmental Sustainability.

ExhibitionThe Exhibition at KOG 2012 will provide a cost-effective platform for companiesto showcase technologies, products and services. With 1000sqm of exhibitionspace available and free visitor passes for trade professionals, the exhibition isan ideal way to expand business in the oil and gas sector in Kuwait.

NetworkingNetworking is at the heart of the event, including an evening reception and agala dinner on February 12th. Participants will benefit from the opportunity tomeet face-to-face with the new Kuwaiti and international stakeholders andengage in real dialogue with key decision makers, government officials andindustry experts to drive their business interests.

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KOG 2012 to focus on collaboration and innovation

www.cwckuwait.com/

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SPE is what you need.

Upcoming Middle East EventsRegister now for these upcoming SPE events and meet with other professionals to learn about and discuss the latest E&P technical advancements:

SPE EOR Conference at Oil and Gas West Asia

16–18 April 2012 Muscat, Oman

www.spe.org/events/ogwa

SPE Oil and Gas India Conference and Exhibition

28–30 March 2012Mumbai, India

www.spe.org/events/ogic

North Africa Technical Conference and Exhibition

20–22 February 2012Cairo, Egypt

www.spe.org/events/natc

Middle East Health, Safety, Security and Environment Conference and Exhibition

2–4 April 2012 Abu Dhabi, UAE

www.spe.org/events/mehsse

For information about other SPE events in this region visit www.spe.org/middleeast.

Exhibit space and sponsorship opportunities are available. For information visit the conference websites.

www.spe.org/events/ogwa

SPE EOR Conference16–18 April 2012

Golden Tulip Hotel

Muscat, Sultanate of Oman

EOR: Building Towards Sustainable Growth

OGWA Organiser:

In Association with OGWA Exhibition

Society of Petroleum Engineers

Supported by:

Ministry of Oil and GasSultanate of Oman

Titanium Sponsor:

www.spe.org/events/natc

Society of Petroleum Engineers

SPE North Africa Technical Conference and Exhibition

(NATC)20–22 February 2012

InterContinental Citystars Cairo, Egypt

Managing Hydrocarbon Resources in a Changing Environment

SPE Oil and Gas India Conference and Exhibition

28–30 March 2012Mumbai, India

Society of Petroleum Engineers

www spe org/events/mehsse

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Sustaining World Energy through an Integrated HSSE and Business Approach

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S12 ORME 1 2012 Innovations_Layout 1 31/01/2012 15:10 Page 58

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ANTECH LIMITED, HAS significantlyexpanded its Wellhead Outletrange. In addition, theentire range is now fullyIECEx-certified. Since2001, AnTech has beensupplying ATEX-certified,single and dual conductorWellhead Outlets. Thecompany announced twonew options: the tripleconductor and the fibre opticline. The Wellhead Outlet isused in permanent completionswhere pressure and temperaturemust be continuously monitored. Itconnects the downhole cable to thesurface telemetry system, and isattached to the wellhead to provide asafe connection between the cablesand seal against downhole pressure.The configuration ensures that the integrity of the wellhead ismaintained, even if the downhole cable is flooded.

BAKER HUGHES’ ECO-CENTRE CR, a mobile and portable onshorewaste facility, offers operators a one-stop solution to processing awide range of drilling fluids and solids in close proximity to shaleformations. This eliminates the need to take waste to separatefacilities while reducing environmental impacts and transportationrisks. This new processing center, which has been used in theMarcellus Shale, is modular in design and uses the best availabletechnology to deliver a 100 per cent reusable, recycled fluid. Thesystem works by destabilizing the fluid, the solids then are broughttogether and separated out using a centrifuge that allows formaximum return of the solids-free liquid to the fluid system.“Operators are facing water shortages and increased restrictions onraw water use and disposal in many areas of the world. Our portableEco-Centre CR can be located where operators need it, reducing costsand efficiently recycling drilling waste for future use,” says ScottSchmidt, Baker Hughes’ President of Drilling and Evaluation. “Thismobile facility allows operators to process a greater variety of drillingwaste streams with a higher throughput, while reducing the impact onthe environment.” The Eco-Centre CR centralized recycling wastemanagement service offers the best available technology to:6 Reduce the amount of water pulled into the waste stream, avoid-

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CATERPILLAR ANNOUNCED THErelease of the new Cat® C280-16 generator set with 10 percent increased power. TheC280-16 60 Hz generator set isnow available at 5359 ekW,900 rpm and featuresnumerous electronic upgrades.This increased power providesindustry-leading power densitywhile maintaining its provenreliability and durability for offshore environments. This new rating joins thealready existing C280 product line that is rated from 1820 to 5200 ekW at900 and 1000 rpm and is available in 6, 8, 12, and 16 cylinder configurations.The C280 engine family meets EPA Marine Tier 2 and IMO Tier II emissionsand is ideally suited for semi-submersible rigs, offshore supply and servicevessels, drillships, and pipelayers.

“Our engines have a proven track record for reliability and durability in theharsh offshore environments,” said Antti Ekqvist, Caterpillar InternationalBusiness Development Manager, Offshore Oil and Gas. “With the C280generator set, we’ve taken 20 years of proven component reliability andcombined it with our offshore expertise to create an engine and supportnetwork that the industry can rely on.”

The C280-16 features several key electronic upgrades to provide simplifiedrig and vessel integration and improve user ability for the operator. The C280-16 integrates the next generation package monitoring system which allowsthe data from multiple generator sets to be monitored through the overall rigor vessel control system. The display panel is Marine Classification Society(MCS) approved, with a color display that allows complete customizablescreens and alarm settings. The generator sets also feature dual ADEM™ A4electronic control systems, which provide redundancy to maximize uptime andreliability. The ADEM A4 also provides tighter control over key parameters forcleaner, more efficient operation; simplified diagnostics and troubleshooting,and expanded monitoring capabilities.

PARKER HANNIFIN CORPORATION has signed an Enterprise FrameworkAgreement (EFA) with Shell as a single source supplier for the provisionof instrumentation valves, manifolds, process-to-instrument valves,fittings, tubing, protective enclosures and related products. Under theterms of Shell's EFA - which runs for an initial period of five years –Parker's Instrumentation Group will supply Shell and its affiliatesworldwide with a broad range of process instrumentation products."We are delighted to win this contract with such a major player in the oiland gas business, and are confident that our manufacturing resources onthree continents and our global Parker Sales Company support networkwill meet the enormous challenges of this supply agreement," says IanHuggins, General Manager of Parker Hannifin's Instrumentation ProductsDivision in Europe. "We see this agreement marking the start of a sustained period ofprogress in instrumentation technology,” adds Sheldon Banks, EMEASales and Marketing Manager of Parker Hannifin InstrumentationProducts Division in Europe. “We believe that such a cooperativerelationship between major players in their respective spheres willhelp to establish many new standards for performance, safety andcost reduction."Over the last decade, Parker has invested heavily in innovation, and hasmade many significant advances in areas including safety, speed ofinstallation and maintenance, and lowering emissions. In particular,Parker's new products can dramatically reduce the number of potentialleak paths in a fluid flow system, and improve ergonomics forinstrumentation and maintenance engineers.

CAMCON OIL’S APOLLO digital intelligent artificial lift solution can deliver asmuch as 1,000 BOPD (Barrels of Oil per Day) more oil production from a

typical well and, in onescenario, a 110 per centincrease in productioncompared to traditional gas liftequipment. These were thefindings of a recent report byproduction technologyconsultants, Laing EngineeringTraining Services (LETS), whoevaluated a number of differentgas lift solutions at variousstages of the productivelifecycle based on a typical

subsea well scenario. The report found that APOLLO, part of Camcon’s DigitalIntelligent Artificial Lift (DIAL) solutions, led to increased production rates andoffered much greater flexibility than conventional gas lift equipment based onwireline retrievable valves and side pocket mandrels. This was due to theAPOLLO’s ability to set real-time injection rates in response to changingreservoir conditions over the life of the well.When assessing the APOLLO unitsunder a number of life cycle well scenarios – from one day to three years –APOLLO’s ability to move injection depth up and down the well in response tochanges in well production chracteristics, such as reservoir pressure and watercut, was clearly seen to yield increased production with, at times, incrementalproduction of over 1,000 BOPD.

Delivering oil production increases

www.catoilandgasinfo.com

THE WORLD’S FIRST high pressure (HP) retrievable bridgeplug capable of withstanding a differential pressure of15,000psi was unveiled by high-technology wellintervention specialist Interwell.Interwell developed the ultra slim, 2.2” OD, HP bridge plug toprovide a reliable barrier in extremely high pressure conditions.The ISO 14310 qualified tool contains an innovative packerback-up design which both compresses and constrains theelement, reducing the risk of extrusion in extreme conditionsand enables its operation to 15,000psi.“We have established a new standard with this tool as we arethe only company in the industry to develop a plug which canwithstand such high pressures and is fully retrievable after use,”says Interwell’s UK managing director, Andrew Louden.“This tool is a significant development in terms of its globalapplicability in ultra-deepwater environments, and from ourperspective is a further major design and engineeringachievement in a portfolio which already includes the highest-expansion ultra-slim bridge plugs available.”The ultra-slim design of the patented element back-upsegments of the HP plug reduces the risk of deployment andretrieval through narrow wellbore restrictions, a crucialoperational benefit in high pressure high temperature(HPHT) wells.Efficiency is further enhanced by each plug taking just one runto set and one to retrieve, providing a reliable and cost effectivesolution for well interventions.Jim Laidlaw, business development director at InterwellAberdeen, says: “Intervening in deepwater and HPHT wells isvery demanding. Our key design aim was to develop theslimmest HP plug solutions in the market whilst also minimisingoperational complexity in these challenging well conditions.Interwell has offices in Saudi Arabia, Abu Dhabi and Oman, inaddition to its operations in Norway and the UK.”

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Shell opts for Parker Hannifin

Raising the bar in well interventionIncreased power for offshore applications

www.camcon-oil.com

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GLOBAL JOINT INTEGRITY and engineering services companyHydratight has formed a strategic partnership with one of theworld’s leading commercial diver training schools.Hydratight and the UK-based Professional Diving Academy willcollaborate on specialist courses aimed at improving both subseajoint integrity and skills, as well as diver safety.The partnership aims to fill a gap in the current training provision forindustrial divers,initially offering a course on the subsea use ofbolting tools with extensive underwater practical tuition – the onlycourse of its kind in the world.

AGR CONFIRMED IT has been awarded a frame agreement whichincludes the possibility for total well management services with Statoilworth approximately 100-130mn NOK per year (US$17-21mn per year).The contract period is for two years with the possibility for anadditional two plus two years extensions.AGR is the world’s largest independent well management organisationand is one of two service providers awarded this type of contract fromStatoil. The primary scope of the contract includes the possibility ofexecuting, planning, operations and post well activity for drilling andwell operations out of Stavanger, Stjørdal and the northern areas inNorway. The frame agreement also includes well management supportto Statoil's international operations where AGR also can providesupport from its international offices including Aberdeen, London,Houston, Perth and Dubai/Abu Dhabi.“This is a very encouraging start to the year, responds Executive VicePresident in AGR Sjur Talstad. We are looking forward to supportingStatoil in their drilling and well operations in a time with increaseddrilling activity for the industry. Our well management teams areexceptionally experienced when it comes to this type of activity,ensuring our clients achieve enhanced operational performance withina safe environment.Sjur Talstad, AGR’s Executive Vice President, commented: “We areknown for operating within very challenging environments across theglobe where we provide an innovative and effective approach to ourclients. We look forward to supporting Statoil throughout the course ofthis contract. He adds that this contract will also result instrengthening of our organisations in Stavanger, Oslo and Trondheim.”

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L-R Hydratight's global competencyleader Jason Barnard and PDA'straining manager Neil MacMillan

Hydratight forms strategic partnership AGR secures well management deal

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S. MOHARIR, SALES Director EAME & ISC, of Inova, recently spoke to Oil ReviewMiddle East about the company’s growth plans for the region and its latestofferings of land seismic products.

Inova was formed in March 2010 as a joint venture company between IONGeophysical and BGP.

Moharir explained: “We have acquired the best of both companies and bothcompanies land seismic equipment have basically become part of Inova. Wehave a huge range of expertise and products on offer in all segments of the landseismic acquisition business”

Inova sees the digital market as one of their biggest growth markets,especially here in the Middle East as having big growth potential.

“Inova is striving to be technology innovators: we already have a name indigital technology and we intend to push this aspect,” stated Moharir.

He pointed out that Inova are the leaders of digital technology in theindustry and we were the first to come out with our digital sensor, VectorSeis,which is the leading digital sensor in the market.”

In Q4 of last year Inova launched five new products which meant that thequarter “was the most important phase so far in our growth strategy,” MrMoharir said.

Moharir argued that the launching of five new land seismic products wasquite an achievement and it “gives us a new impetus for new customers andthat is really the main drive.” He also hinted that Inova was continuouslydeveloping its product portfolio and a new innovative product, specificallytargeted for the Middle East region would be the next focus point for Inova.

The new products are targeted for all markets with some products aimed atexisting customers and others targeting new customers.

Inova launched two new types of cable technology, one was an

enhancement on an existing system, the redesigned FireFly DR31 and theyalso brought out a completely new autonomous node system called the HawkSN11 recording system, which is based on a wireless platform.

Inova also came out with a new digital sensor, VectorSeis ML21, which is anenhancement to our main product and involves a 17 per cent reduction onpower consumption as compared to the previous model.

To help promote these new products in the region Inova held a technicalforum in Dubai early December last year for key customers– which introducedall the new products. It was Inova’s first technical forum and Moharir expects itwill be the start of an annual event

Henalso sees the Middle East as a very good market and expects strongdemand for seismic products.

“We see a growing demand for our products in the Middle East and some ofthe recent trends which are coming out of the region point to this growth. Weexpect to see real growth in this sector in Saudi Arabia.”

Inova is active in most Middle East countries and the company expectsgrowth in the Saudi and Omani market. But it is in the Iraqi market that Moharirexpects to see the biggest demand.

“Iraq is major target area for us and it is turning out to one of our biggestmarkets. We are focused in both Southern Iraq and Iraqi Kurdistan. We haveour systems working in Iraq and we have one of the largest crews near Basrausing an Inova product. Iraq is a real focus point and we have eight projectscoming up this year,” he concluded.

MICROTEST AG SPECIALISES in the measurement of internaldiameters. Through permanent optimisation, constant furtherdevelopment and improvement, its measuring instruments havereached a high standard of precision, reliability and universalityfor the requirements of its customers. MICROTEST® high-precision mechanics are refined with high-tech electronics. As aresult of intensive development it has now been possible toimplement a digital module that enables even higher accuraciesto be achieved than with analogue equipment. Themeasurement shaft, supported in two sets of ball bearings,carries a highly accurate sensor that generates 10,000increments per rotation. The recording of values measured in100nm steps improves the accuracy significantly. The housing is manufactured from a glass fiber reinforcedplastic and is fitted with cooling water-resistant seals at allentry points. The module meets the IP 67 standard of protection,is impact resistant, and can also withstand complete immersionin a swarf trough.

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Innovative Inova

Your partner for precision monitoring

www.inovageo.com

Make sure you visit our new website with updated news coverage in the Middle East and North Africa.

You can also view our digital edition on www.oilreview.me

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AACOMPLEX CARBONATE OILFIELD inSaudi Arabia required pressure supportto sustain production. Saudi Aramcowas looking to achieve sustained

production using the best-in-class reservoirmanagement practices. The natural drivemechanism came from an aquifer screened fromthe overlying reservoir by a semi-impermeabletar mat, the geometry of which was relativelyunknown, although it was thought to becontinuous.

Even so, it was suspected that the tar matmight not be completely sealing. Accordingly,any enhanced oil recovery (EOR) plan usingtraditional water injection would not beeffective.

This article describes a comprehensive, long-term injectivity test whose objective was tocharacterize reservoir sweep patterns so theoptimum number and location of injectors couldbe determined.

Well placement was criticalThe initial approach to avoiding the tar matissue was to geosteer horizontal injector wellsso they landed just above the tar mat, in thetransition zone between the heavy and light oil.Geologist and reservoir engineers were facedwith the challenge of placing the injectorsoptimally, so injection water would drive crudeoil to the producing wells, leaving no movableoil residuals behind.

Before the entire reservoir pressure supportscheme was committed, two pilot tests weredesigned involving a single injector well and sixproducers located at varying distances anddirections. The six producers were intended tobe utilized for observation and to monitor therate of pressure build up with time for each. Theproducers/observation wells were equippedwith downhole permanent and/or retrievable,high-accuracy, long-lasting, battery-poweredelectronic gauges. It was decided to perform along-term injectivity (LTI) test with the objectiveof mapping the sweep pattern and effectiveness

of the injection scheme, in addition toqualifying the injection wells placementstrategy. Therefore, to obtain supportableresults, a massive test was envisioned involvingsome 3mn bbl of injected water over a 200-dayperiod. Reliability, resolution and accuracy ofthe downhole gauges were absolutely essentialbecause it was predicted that changes due toinjection water could be quite subtle,particularly on the most remote wells in the

observation pattern. At the same time,reliability of the injection setup and equipmentwas equally important. Any breakdowns couldcompletely mask the data transients theengineers were trying to measure.

Design anticipates tough conditionsWith such reservoir conditions, properplacement of injection wells relative toproducing wells was of paramount concern to

Figure 1: Pilot test well layout includes distance and direction from injection well to observation wells along withobserved pressure increase over the test interval. [SOURCE: OTC 21130, Figure 3]

A comprehensive test methodology

was planned

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ESPs used in a non-traditional role helped profile production in a carbonate oilfield tounlock higher reservoir potential, by Mubarak A Dhufairi, Saudi Aramco, and PaulDocherty, Schlumberger.

Reliability key to long-term

objectivity test

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deliver production targets with the highestsweep efficiency model. Robust dual memoryelectronic gauges capable of withstandingsustained high temperatures for at least 31weeks were specified. The observation wellswere equipped with electronic gauges tomonitor reservoir pressure response during theLTI test to confirm reservoir lateral connectivityand possible vertical communication betweenreservoir layers.

In an effort to aid the overall reservoir

characterization, the injection well water profilewas planned to identify the contributing zonesacross the horizontal section and map out thecrossflow areas. Furthermore, plans were put torecord an II/fall off test, which would beanalyzed and compared to several pressuretransient measurements recorded in severalappraisal wells drilled during the projectplanning period. These measurements served toidentify the fluid profiles in those wells alongwith any anomalies such as crossflow betweenreservoir levels that might skew pilot testresults. The fact that the pilot test wasconducted in a dynamic field environmentmeant that each pressure disturbance had to beaccounted for so the final analysis would truly

represent the interaction of the pilot test modelof a single injector with six observation wellsand no outside effects.

A comprehensive test methodology wasplanned. Pre-and post-injection measurementswould be taken that would include bothinjection and fall-off tests. Thorough transientanalyses were planned including:6 Crossplots of differential pressure vs. loga-

rithmic Horner time6 Crossplots of differential pressures and the

square root of time6 Crossplots of logarithmic differential pres-

sure and the log of time6 Crossplots of the log of the pressure deriva-

tive and the log of time derivative.Using derivatives is a traditional technique

because the derivative is directly representedby one term of the diffusivity equation, thegoverning equation for models of transientpressure behavior in well test analysis.

Injection wellbore conditioning A complicating challenge lay in attempting toreturn injectors to their original status. Duringdrilling, several of the injection wellsexperienced lost circulation into naturalfractures in the carbonate sequences. Thesewere mitigated by pumping viscous pills ofhydroxyethylcellulose (HEC) polymers. As a

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Figure 2: Injection wellhead pressure (red) and injection rate (blue) are plotted as a function of time. [SOURCE: OTC 21130, Figure 4]

At the same time, reliability of the injection setup and equipment

was equally important

Figure 3: Test schematic illustrates redundancy and integration of reliable ESPs at the seawater intake andat the wellhead HPS [SOURCE: OTC 21130, Figure 1]

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result, many, if not most, permeable zones hadhigh skin damage. To clean up the damage andrestore the original skin effect, acid treatmentswere pumped. To maintain control over the testdata, pre- and post-treatment injectivity testswere run. The skin mitigation program was notwithout its challenges. Deployed into thelateral using coiled tubing pulled by adownhole tractor, the tools became cloggedwith lost circulation material. A solution wasimplemented involving bullheading 300 bbl ofsolvent to dissolve the material that wasaffecting the control assembly of the tractor.

The post-treatment injection measurements,made using downhole gauges deployed onslickline, consisted of pumping 20,000 bbl oftreated seawater into the formations; thenpausing to conduct a pressure fall-off test. Thefall-off test, which took 96 hours, provided vitalinformation regarding the parameters of theinjection scheme. Near-wellbore skin, interwellaverage reservoir pressure and permeabilitywere determined.

Injection well performance was assessedusing Hall-effect plots, based on injectionvolume and surface injection pressures.

Surface facilities designed for reliabilityTo avoid further complications, considerableforethought was built-in to the surface system.Basically the plan was to use treated seawater,pumped through a 1.9 mile (3 km) 6-in.diameter pipeline. At the injection well site,

two, 2-micron, Vortisand™ sand filters weredeployed plus a chemical injection modulebefore the water was pumped into eight, 500bbl skid-mounted holding tanks. The tankssupplied a set of electrically powered triplexcharge pumps providing input to the horizontalabove-ground ESP pumping system (HPS). Thepumps were energized using a Schlumbergervariable speed drive (VSD) powered by three500 kVA generator sets.

At the intake, duplex diesel-powered pumpsdrew seawater from a shallow seaside location.These proved to be unreliable and werereplaced by duplex submerged ESPs suppliedby a motor generator. To assure the LTI test asa reliable source of injection water, the ESPswere determined to be the best solution. Theoriginal diesel pumps were retained onsite asbackup. System design capacity was 20,000bbl/day. At the wellhead, the HPS delivered10,000 bbl/day of filtered, treated seawater atup to 2,500 psi.

During the design and construction of thesurface facility, several important lessons werelearned:6 Ensure pump intakes were deep, clean and

clear of sand and debris6 Ensure pump is not deadheaded into a

closed valve6 Address careful alignment of shafts6 Provide a compressor to facilitate system

maintenance6 Install tank supports to keep bottom valves

accessible

6 Use duplex pumps to provide system in-tegrity and backup

6 Provide concrete bases for rotating equip-ment

6 Install a subsurface safety valve to blockH2S flowback from well

6 Perform full review of generators and VSDsfor compatibility

Injectivity tests reduce uncertainties, save moneyThe pilot injectivity tests were successful.Dynamic data, including pressure transientanalysis removed several faults from thegeological model. At least 13 injector wellswere dropped from the field development plan,largely because uncertainties about the tar matsealing were redefined. System design issueswere successfully resolved to address testgoals and result in almost 96 per cent uptime.It was determi ned that lower powered waterinjector pumps were required because theinjectivity index turned out to be better thanexpected, and ESPs proved more reliable thandiesel-powered pumps. Schlumberger pressuregauge systems and permanent downholemonitors proved both rugged and reliable overthe 31-week test period in a hot and highlycorrosive environment.

Importantly, data integration with othersources such as drilling data, field productionhistory, available geology and petrophysicalanalysis from well logs all helped to mitigaterisks of skewed interpretation. ■

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Figure 4: The use of modular equipment facilitated transportation and setup in the desert and added flexibility to thesystem design as items were substituted to improve reliability. [SOURCE: OTC 21130, Figure 2]

PETROFAC AND SCHLUMBERGER announced that their Integrated EnergyServices (IES) and Schlumberger Production Management (SPM) divisionsrespectively have signed a Co-operation Agreement under which thesedivisions will establish a working relationship to deliver integrated andhigh-value production projects in the emerging and growing productionservices and production enhancement market.

Schlumberger and Petrofac have complementary skill sets and executioncapabilities. Both have built these through subsurface knowledge, facilitiesexpertise and operational experience in integrated asset management with IEShaving particular strengths in facilities, engineering and O&M and projectmanagement while SPM has particular strengths in subsurface knowledge,production engineering, well construction, and project and asset management.

Both companies will deploy their own capital in these productionenhancement projects and neither company will seek to book reserves orproduction. The market opportunity for the collaboration is significant as majorresource holders seek to develop discovered low-risk reserves against anindustry environment characterized by a shortage of capability and capacity.

Miguel Galuccio, president of Schlumberger Production Management,said: “Schlumberger’s subsurface knowledge, production engineering,well construction and project management services coupled withPetrofac’s surface facility design, installation and ongoing operationalfield management create a life-of-field approach coupled with aperformance-focused commercial model to optimize asset developmentand overall value.”

Schlumberger and Petrofac to address new market opportunities

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TTHE PROSPECT OF working on apressurized piping system is daunting.Pipeline operators are acutely aware ofthe risks involved, knowing that they

must take the utmost care to ensure that the line iseffectively isolated before work of any kind cantake place.

The safe operation of every piping systemdemands ongoing maintenance, repair and, attimes, intervention in order to modify the line fortie-in to a new addition to the network. Tocomplicate matters, piping systems exist in everyconceivable environment: from deepwater seabeds and remote mountain valleys to congestedurban areas. Those responsible for their continuedoperation are keen to employ methods that willsafely isolate the line in order that work canproceed, efficiently and cost-effectively. This iscompounded by the fact that they are expected toachieve this without interrupting service.

Fortunately, isolation technology continues toevolve, bringing good news to operators of pipingsystems, both offshore and onshore. Safe isolationof systems found in hydrocarbon processingfacilities, such as refineries, poses a uniquechallenge. Refineries, which typically require alarge staff to operate and are by definition highlyvolatile environments, require a double block andbleed to safely isolate a pressurized line. Today’srefinery operators prefer this method because itallows them to install two barrier surfaces,including a bleed port for pressure and productevacuation, between work such as welding or pipecutting being performed downstream of the line’spressurized contents.

STOPPLE Train plugging system = reduced costs, improved safetyTo provide operators with a faster, more cost-effective way to create a double block and bleedwith minimal intrusions to the line, T.D. Williamson,Inc. (TDW) has developed the patent-pending

STOPPLE Train plugging system. The system reliesupon TDW’s field-proven plugging technology totemporarily block sections of active piping systems.The STOPPLE Train plugging system is the onlysystem that links two plugging heads to form a“train” that provides a double block and bleedfunction. Traditionally, other methods have been

used to achieve double block and bleed, includingthe use of two separate valves with a bleed portbetween them. Other common approaches involvecombining a valve and a plugging head with a portbetween them, a plugging head and an isolationplug with a port between them, or two pluggingheads and a bleed port. Each method employs the

TDW hot tap & plugging site throughfittings welded on pipeline

The STOPPLE Train pluggingsystem is the only system thatlinks two plugging heads to

form a “train” that provides adouble block and bleed

function

By Enzo Dellesite, General Manager, T.D. Williamson Middle East FZE

Innovative technology facilitates double block,

saving time and money

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dual barrier concept. Regardless of what is used asa barrier - valves, plugging head seals or acombination of these - the second barrier acts as afailsafe for the first.

One hot tap and fitting provides benefit of two in-line plugs“What sets the STOPPLE Train plugging systemapart is that while traditional methods require morethan one hot tap and fitting to achieve doubleblock and bleed, the STOPPLE Train system requiresonly one,” said Laurent Fabry, Director - LineIntervention & Flow Assurance for TDW.

The linked plugging heads are inserted intothe line through just one opening. As a result, asingle hot tap and fitting provides the benefit of adouble block that has, until now, been achievedwith two in-line plugs. By positioning thepressure bleed port between the two pluggingheads, a void is created between the heads thatallows the line to be bled down. This produces azone of “zero energy.”

An added bonus is that the pressure bleed portalso makes it possible to verify and monitor the

primary seal. When TDW engineers set out todesign a system that would offer improved doubleblock functionality, it was critical that the systemnot only be safe; the system had to be failsafe. Byusing the tap between the two seals, the area canbe continually monitored for leakage prior to – andduring – work being carried out on the pipelinedownstream. If, for any reason, the primary sealwere to leak, the secondary seal will hold the linepressure. The secondary plugging head providesdouble block features at pressures to 1,480 psi.

Reliable in low and high pressure environmentsBecause piping systems operate in low and highpressure environments, the STOPPLE Train system isdesigned to be extremely robust. Tests illustratethat when operating at low pressures, compressionbetween the pipe internal diameter (ID) and thesealing elements creates an extremely effectivebarrier. At 0.5 psi to 5 psi, the compression fitalone is sufficient, meaning that the sealingelement need not be energized in order to seal.However, after the seal is energized, it will remainsecurely intact until it is broken by an externalforce; for example, by retracting the plugging head.

With regard to higher pressure environments,each plugging head in the system is rated to 1,480psi at 180°F. The plugging heads have beensuccessfully pressure-tested with a safety factortogether, as well as independently.

Costs reduced, safety enhancedWith just one hot tap and one standard fittingrequired to use the STOPPLE Train method, the risk

of potential leak paths remaining on the pipingafter work is finished is greatly reduced. Thisrepresents a dramatic improvement over traditionaldouble block and bleed methods, which normallyrequire double the number of line penetrations toachieve. Costs associated with the purchase andwelding of fittings are reduced by 50 per cent, dueto the fact that only one set is required. Furthersavings are realized by customers because lessexcavation is necessary, which reduces the overalltime required to complete the job. Shorter jobsalso translate to improved safety: the less timethat personnel spend performing the job, the lesslikely they are to be exposed to potential hazards.On-site, the need to provide physical site support,such as cranes and scaffolding, is reduced, as arethe number of permits and inspections required.

For refineries, where space is minimal, the factthat fewer fittings are required means that there ismore space in the pipe rack. This is particularlyrelevant, given that the STOPPLE Train pluggingsystem performs properly, whether positionedhorizontally or vertically. It can be operated,regardless of the pipe rack configuration.

Line isolated, costs reduced at Italian refinery Initially launched in North America, the STOPPLETrain plugging system has been successfully usedto create double block and bleed isolations foroperators around the world. Recently, TDWperformed its first double block and bleed isolationwith the STOPPLE Train plugging system in Europe.The operation, which took place at a refinery inItaly’s Po Valley, illustrates how the method

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TDW operation completed. Fitting for hot tap operation isclosed with the flange. Pipeline isolated.

The STOPPLE Train pluggingsystem has been successfullyused to create double block

and bleed isolations foroperators around the world

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THE 4TH SAUDI ARABIA INTERNATIONALOIL & GAS EXHIBITION

24-26 SEPTEMBER 2012DAMMAM, KINGDOM OF SAUDI ARABIA

WWW.SAOGE.ORG

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facilitates scheduled line maintenance. Inpreparation for planned line maintenance, TDW wasretained to ensure that a key hydrogen sulphur linecould be cut, plugged and safely isolated withoutshutting it down. The only other alternative wouldhave been to shut the line and production unitdown, resulting in a complete halt in production,which was deemed unacceptable.

With equipment from the company’s base inNivelles, Belgium, a team of TDW technicians fromItaly, Belgium and the United States used astandard 660 tapping machine to hot tap the line,and inserted one six-inch STOPPLE Train double-block and bleed plugging system to plug the line.The operation was successfully completed in justone day, creating a secure environment in whichcritical maintenance and servicing could be carriedout. The fact that the line was isolated with aminimum amount of equipment and required onlyone fitting meant that costs associated withwelding and fittings were significantly reduced.

“The fact that the company’s first ever STOPPLETrain plugging system intervention operation inEurope went so smoothly, and that the customerbenefitted in terms of enhanced safety and reduced

costs is extremely heartening,” said Georges Andrei,Hydrocarbon Process Industry Sales Manager -Europe for T.D. Williamson SA. “The ability to createa safer working environment, reduce the timerequired to complete the job, and cut costs bodeswell for operators everywhere.”

Preparing for valve change-out in Illinois, USAFurther afield in Illinois, USA, TDW completedan isolation operation using the STOPPLE Trainplugging system on a 10-inch dieseltransmission pipeline that typically transports1200 barrels per hour.6 The isolation was necessary in order to prepare

for safe and speedy replacement of an isolation valve on the line. After hydrotesting the equipment, TDW performed three downstream taps: one 2-inch equalization tap, one 10-inch tap for installing the STOPPLE Train plugging heads, and one half-inch tap for the purpose of bleeding the isolated section.

After removing the tapping machine, TDW mountedthe STOPPLE Train system and connected theequalization and hydraulic hoses. The team thenstopped product flow and closed two valves locatedapproximately ½-mile north of the work area. Asingle bleed port was then opened between thetwo valves, providing double block and bleed onthe upstream side of the work area. The STOPPLETrain plugging heads were inserted, the isolatedsection drained and the bleed valve opened toprovide double block and bleed on the downstreamside of the work area. The isolation valvescheduled for replacement was removed andreplaced with the new valve. The upstream valves

were then opened and the line pressureequalized before removing the STOPPLE Train

plugging heads. The plugging heads werethen fully retracted, the housing removedand a completion plug set in the fitting.The entire process required just two daysto complete. As a result, the customerwas extremely pleased, particularly withthe efficiency of the process.

Line tie-in goes to plan in Louisiana

When operators prepare to tie-in anew line to one that is

operating, they must ensurethat the live section of thepiping system is properlyisolated before work can

proceed.

Such was the case when TDW was called in toassist another customer near Lafayette, Louisiana.This customer needed to add a new isolation valveand replace part of an existing 8-inch natural gasliquids (NGL) pipeline. To facilitate this, TDW usedtwo STOPPLE Train systems - placed upstream anddownstream - to isolate a 1.3 mile section of thepipeline. The customer used pipeline batching pigsto replace the NGL with nitrogen through thesection of the line to be replaced. The pigs werelaunched at intervals to create a 1,000-foot bufferzone of nitrogen on each side of the work area.

First, the downstream STOPPLE Train pluggingheads were set, followed by the upstream pluggingheads. The customer then depressurized and bleddown the 1.3 miles of nitrogen from the pipeline.After verifying that no product had leaked past thesecondary seals of the STOPPLE Train pluggingheads, the bleed valves were opened to ensure thata proper primary seal had been achieved. Followingthese critical verifications, the line was deemedsafe to cut and open. Each end of the pipeline wascut within approximately six feet of each STOPPLETrain plugging head. The customer then tied in thenew line and installed an 8-inch block valve 50feet downstream from the plugging heads locatedupstream. After completing these modifications, thecustomer closed the new block valve, and TDWproceeded to equalize between each of theSTOPPLE Train systems and the valve. Both systemswere retracted and each completion plug was set.The customer was so impressed with the qualityand efficiency of the operation, the companyordered two STOPPLE fittings to serve as part of itsemergency response preparedness program.

Multiple applicationsAs these examples illustrate, the STOPPLE Trainplugging system has been used successfully foroperators seeking to carry out a broad range ofapplications. Enhanced safety and reduced costsare just two benefits that customers have realizedwhen this innovative approach to piping systemisolation has been used to prepare for scheduledmaintenance, emergency repair work or tying in anew line.

“The success of these and many other doubleblock and bleed isolations achieved with theSTOPPLE Train plugging system is paving the wayfor further use of this technology,” said Fabry. “Thisis especially important as TDW moves forward withplans to carry out operations on behalf of pipeline,refinery and petrochemical plant operatorsthroughout Europe, Africa and the Middle East.”

Building upon its impressive track record inthe United States—where TDW

has carried out STOPPLE Trainplugging system operationsfor nearly every majoroperator—the company ispoised to dramaticallyexpand this service.Currently, TDW is in activenegotiations with operatorsto carry out a number ofSTOPPLE Train intervention

operations in 2012. ■

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TDW STOPPLE Train Cutaway

Currently, TDW is in activenegotiations with operators

to carry out a number ofSTOPPLE Train intervention

operations in 2012

Oil Review Middle East Issue One 201272

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Oil Review Middle East Issue One 2012

TTHE EVER INCREASING demand for oiland gas reserves from fast-growtheconomies in regions such as Asia,coupled with the technological

advancements being leveraged by many companieshas seen an increase in the number of operatorsdeveloping resources in increasingly challengingenvironments such as the deepwater offshore.

Meanwhile, production from many existingfields is in decline, with a greater number ofmarginal prospects being exploited as a result.These challenging resources often require greaterinvestment; in research and development,personnel and exploration and production costs.This means that more than ever, operators andservice companies alike must come up with newways of working to improve operational efficiencyand reduce costs in other areas, while maintaininghigh levels of safety.

More than 10mn crew transfers take placeannually across the world in the offshore oil andgas sector, either by helicopter, vessel, crane andbasket, making it one of the highest cost activitiesin the industry. With the addition of a high riskfactor, personnel transfer is an area that oftencomes under scrutiny.

Suitable vesselOperators rightly demand that transfer methodsbeing used are inherently safe, proven, reliable andcapable of handling the changeable conditions that

occur in the offshore environment. Supplierstherefore, must provide solutions that are bothtechnically and economically feasible.

Recognising all of these factors, market leader

Offshore Solutions (OSBV), based in IJmuiden, TheNetherlands, developed the Offshore AccessSystems (OAS).

Conceived in 2003, the OAS is a 21-metrehydraulically operated telescopic gangway, fittedwith an active heave-compensation system. Itincorporates a motion reference unit in its activehydraulic system which, when engaged, maintainsthe walkway tip at a constant height relative to thehorizon. This allows the gangway to safely connectto a fixed offshore structure in sea states of up tothree-metre significant wave height (Hs) wheninstalled on a suitable vessel.

The gangway connects to a landing stationinstalled on the offshore structure by means of ahydraulically operated gripper-head. Onceconnected, the heave compensation is disengaged,allowing the transfer of personnel to commence.

With its own independent power source, theOAS can remain operational, even in the event ofvessel power failure. The OAS has the unique abilityto offer 24-hour connectivity, enhancing operationalefficiency by allowing sustained personnel transferto take place, 24 hours a day.

Should an emergency disconnection berequired, the gripper-head has a fail-safemechanism that allows automatic release fromthe landing station’s connection pole. This systemallows an emergency vessel sail-away to beperformed without the need for operatorintervention. In the event of this situation, thewalkway automatically reactivates the heavecompensation system, allowing a controlled andsafe retrieval of the gangway to its boom-rest onthe vessel.

In July this year, OSBV launched its free-standing OAS, designed to allow further efficiencyand cost reduction through a decrease in the timerequired to install the system on a vessel. The newdesign allows quayside installation to be completedin a day, eliminating the need for structuralmodifications to the vessel (previously required toaccommodate the pedestal both above and belowthe deck). The free-standing OAS is pre-commissioned and, once installed on a suitablevessel, is ready for immediate operation.

Offshore Solutions is widely-recognised as beingable to offer one of the safest methods offacilitating personnel access to offshore

The Bourbon Gulf Star 3

There are furtheropportunities to explore inthe development of marine

personnel transfer

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There’s a smarter way to work using marine access.

Offshore access bridges

the gap

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essential.

www.marellimotori.com

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installations, having completed over 7,500successful connections and in excess of 90,000transfers since operations began in 2006, withzero recorded incidents.

During 2011, in the Gulf alone, the OAS hasrun for more than 2,500 hours with 100 per centavailability. During this period, more than 20,000personnel transfers have taken place without anysafety incidents.

Cost savingsOperating and maintaining normally unmannedinstallations (NUIs) in harsh offshore conditionsusing helicopters to transfer the workforce, meansthat many hours are lost through shuttlingprocedures and downtime due to adverse flyingconditions.

Having an OAS-equipped vessel withaccommodation in the field, means that personnelcan be transferred to the installation at the startof their 12-hour shift. Several installations can beserviced by one vessel and with available man-hours on each installation increasing by up to 70percent by using an OAS, this equates to verysignificant cost savings for the operator.

The cost per bed is also less than a Jack-Upaccommodation unit and with multi-functioncapability, the OAS vessel can also be used as astandby vessel, to facilitate ROV or dive spread,dive support, workshops, materials storage andplatform supply.

Track recordMost recently, Offshore Solutions has beenproviding 24/7 personnel access in the MiddleEast for Qatar Shell GTL Ltd. (Qatar Shell), operatorof the world’s largest gas to liquids plant – theworld’s first heave-compensated access system towork in the region. The OAS has been used to

transfer crews to the Pearl 1 Platform, positionedin The Gulf, since the completion of sea trials inDecember 2010. Pearl 1 is one of two platformsproviding offshore gas to the Pearl Gas to Liquids(GTL) project in Qatar.

Using the 21-metre OAS mounted on theBourbon Gulf Star vessel, the Qatar Shelloperations, project and maintenance personnelwere able to access the platform 24-hours a day.The OAS’ continuous connection capability was akey element of this marine access success story.As well as the robust physical connection, thisOAS was specifically adapted to perform forextended periods in demanding climaticconditions.

Despite a challenging environment affected bya range of weather conditions and sea states, theunique continuous 24-hour connection capabilityallowed staff to leave the platform for the vesselduring periods of high temperature and humidity;returning to work during cooler periods of the day- a demonstration of the flexibility and efficiencyof the OAS.

The Bourbon Gulf Star with OAS mountedonboard will also enable personnel transfer toPearl 2, aiding Qatar Shell in bringing the secondplatform on line.

The contract was awarded based on the OAS’proven technology, safety record and the potentialto increase operational efficiency.

Step change The development of the OAS has brought a stepchange to access solutions for the offshore oil &gas and wind industries. Since commencingcommercial operations five years ago, operatorsnow have a safe and cost effective solution forundertaking construction, maintenance anddecommissioning work.

The OAS has been widely recognised for itsinnovative technology winning numerous awards;The IChemE Merck, Sharpe and Dhome award forexcellence in safety in 2006, the EnergyInstitute's award for innovation and cost-effectiveness with major applications for the oiland gas industry 2006, The American Society ofMechanical Engineers (ASME) Woelfel BestMechanical Engineering Award at the OffshoreTechnology Conference in Houston 2009 andmost recently (together with GDF SUEZ E&PNederland B.V.) the GDF SUEZ Grand Prix deL’innovation, in the category of Field Operations.

DevelopmentsThere are further opportunities to explore in thedevelopment of marine personnel transfer andOffshore Solutions is committed to the continuousadvancement of marine access.

Design has now been completed for adevelopment to the standard OAS. The elephant’sfoot connection has already been successfullytrialled at OSBV’s factory facility using a prototypeunit. As a result of this, OSBV has commencedproduction, and certification has been applied foron this additional connection methodology. Thisnew technology will expand the ability of the OASto be utilised on installations with little or no pre-installation requirements.

The connection detail for the elephant’s foot isbased on friction interface, which defines thecontact area used for the foot itself - 1m x 1m.Proximity sensors are fitted to the foot to sensewhen it is grounded. This allows the system tochange from active to passive.

Meanwhile, the overriding design principles ofthe OAS are being retained in terms of a robustconnection and minimal disruption to theoperation. The production model will be inoperation by end of 2011.

Delivering flexible and safe marine accesssolutions is Offshore Solutions’ core business, aswell as continuing to maintain its reputation forproviding a credible, efficient and cost effectivealternative to current transfer methods.

Offshore Solutions is convinced that marineaccess systems will be increasingly used in thetransfer of personnel to offshore structures in thefuture and is noticing that operators worldwideare beginning to challenge their existingoperating models.

Moving towards marine access as an alternativeway of liquidating man-hours offshore will increasepersonnel availability on location, improveproductivity and with a multi function vessel, willhelp operators to reduce the cost of construction,maintenance and decommissioning work atoffshore work sites. ■

Oil Review Middle East Issue One 201276

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Free standing OAS

With its own independentpower source, the OAS canremain operational, even in

the event of vessel power failure

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Oil Review Middle East Issue One 201278

PETROLEUM DEVELOPMENT OMAN (PDO) has joined ITF, the technologyfacilitator for the global oil and gas industry, to help drive new solutionsforward with other major oil and gas players in the region. Thegovernment and industry owned company believes technology is the keyto securing and maximising reserves and delivering Enhanced OilRecovery (EOR).

Sultan Al-Shidhani, study centre manager for PDO said: “Joining ITFprovides us with the opportunity to address the technology challenges weare facing in a joined up approach with other operators.

“Oil in Oman is becoming more challenging to develop with a risingnumber of EOR and sour (hydrogen sulphide) projects, so technology has agrowing role to play. We believe that collaborating on joint industryprojects will help to bring forward the technologies that can assistcontinued recovery.”

The company joins other high-profile Middle East members includingKuwait Oil Company (KOC) and Saudi Aramco in joining ITF in order tosupport international technology development.

The agreement reinforces ITF’s commitment to the Middle East after itset up an office in Abu Dhabi in 2011.

Ryan McPherson, ITF’s regional director in the Middle East and AsiaPacific welcomed PDO’s membership. He said: “This is an importantsigning for us as growing our membership in the Middle East is crucial tofunding the game-changing technologies that will make the biggestdifference in this environment. We understand that operators are facingthe prospect of increasingly complex projects and believe that ITF willplay a major role in solving some of those challenges.”

ITF is planning to launch a Gulf Co-operation Chapter this year withMiddle East operators, with the task of focusing mainly on setting andsolving regional technology challenges.

ITF members share funding and risk on bringing forward new solutionsthrough joint industry projects (JIPs). Innovators are offered up to 100 percent funding to develop their technology and retain full intellectualproperty rights. To date ITF has launched more than 170 JIPs from earlystage projects through to field trials and commercialisation. ITF aims tosecure a further US$75mn to launch 40 JIPs per year by 2015.For more information on ITF, visit: www.oil-itf.com

PDO to tackle technology challenges with ITF membership

Left to right: Ryan McPherson, ITF’s regionaldirector in the Middle East and Asia Pacific meetsDr Riyadh Moosa and Sultan Al-Shidhani fromPetroleum Development Oman in Aberdeen

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DGB EARTH SCIENCES, the leadingprovider of open source seismicinterpretation software to the oil &gas industry, and Argentineangeosciences company, Geoinfo SRLhave announced the launch of anew OpendTect plug-in for theincorporation of petrophysical properties into the seismicinterpretation process.The CLAS (Computer Log Analysis Software) plug-in, developed byGeoinfo and through which well log petrophysics can be performedwithin OpendTect rather than having to be imported, will result inimproved well-to-seismic ties, the enhanced calibration of seismicattributes to reservoir properties, more robust models, and the moreaccurate interpretation of 3D seismic data.With CLAS, seismic interpreters can edit well logs and generate vitalinformation on oil in place through data on the saturation, clay volume,porosity, lithology and fluid content of the reservoir. CLAS will also allownet pay to be estimated from seismic attributes and will be able to usedGB’s neural networks plug-in to generate acoustic logs. The result willbe the building of accurate models and improved acoustic and elasticimpedance inversion.

INOVA GEOPHYSICAL ANNOUNCED the introduction of five new productsdistinctly designed to infuse greater flexibility into land seismic operations.These technological advancements will provide geophysical contractors andE&P companies with more options while addressing key challenges around theindustry's emerging trends. Together, all of these new or redesignedtechnologies address common industry concerns and offer opportunities forproductivity gains.The announcement marks the beginning of the most significant product launchsince the formation of the company in 2010. INOVA Geophysical is a globalindependent land seismic equipment manufacturer formed as a joint venture ofBGP, the world's largest land seismic contractor, and ION Geophysical, a leadingtechnology-focused seismic solutions company. Though a relatively youngcompany, by leveraging the array of ION's state-of-the-art, pioneering landseismic technology combined with BGP's operational experience, INOVA hasbeen able to quickly produce advanced seismic land technology with realpositive impact. This is an exceptional quantity of new products for ageophysical equipment manufacturer and demonstrates the company'scommitment to listening to its customers and quickly providing viable solutionsto their problems. Of interest to the geophysical community is the launch of anew cableless platform of land acquisition systems. Equipment operators areincreasingly turning to cableless seismic operations to overcome obstacles,reduce footprint and comply with environmental regulations. Following thistrend, INOVA now offers two cableless systems: the redesigned FireFly® DR31and a new autonomous node Hawk™ SN11 recording system.

COMMVAULT ANNOUNCED THAT Kuwait PetroleumCorporation (KPC), a leader in providing safe andclean energy to the global markets, has replacedits legacy Symantec NetBackup software withCommVault® Simpana® 9 to meet expandingbusiness, compliance and data managementrequirements. According to KPC, Simpana Backupand Recovery software delivers the performance,reliability and manageability to better protectcritical data, which they expect will double withina year, while accommodating an ever-shrinkingbackup window.

With Simpana software, KPC now reports beingable to safeguard vital applications, includingMicrosoft Exchange and Oracle ERP, along with an

expanding VMware environment, and enablingdata recoveries in minutes, not hours or days, as ittook previously. KPC’s IT team also relies onSimpana Archive software to streamlinemanagement of 15,000 Microsoft Exchangemailboxes and has reported a 30 per cent decreasein storage consumption. This significant decreasein storage consumption is in part due toCommVault's embedded deduplication softwarewhich has reduced redundant data by 60 per cent.

“Prior to CommVault software, we faced a lot ofdifficulties managing our backups and restoringdata was a nightmare, so we had a poor RPO andRTO window. Not any more, though, as Simpanasoftware’s intuitive GUI makes backup and

recovery as easy as a click of a button”, said Mr.Qais AlDoub, senior IT systems analyst, KuwaitPetroleum Corporation.

Simpana software delivers data managementimprovements across the company’s entire datacenter comprising both physical and virtual servers.This has proved to be highly beneficial given thefact that KPC has virtualised nearly 70 per cent ofits environment. The company also creditsCommVault’s centralised, unified managementplatform with increasing operational efficienciesthrough simpler, faster daily backups and restores.Meanwhile, integrated reporting has streamlinedcompliance audits in keeping with KPC’s evolvinginformation governance requirements.

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Oil Review Middle East Issue One 2012

New land seismic products

KPC keeps pace with data management

New plug-in for petrophysics interpretation

FERN COMMUNICATIONS LTD, a leadingprovider of two-way radio communicationssystems to the international upstream oil andgas industries, today announced that for thefirst time its FRX-1 radio repeater hasundergone field trials conducted offshoreQatar. The outstanding performance of FernCommunications’ radio technology forQatargas led the company to purchase FRX-1radio repeater systems as part of its standardsuite of radio communications equipment foruse offshore. Qatargas contacted FernCommunications with an offshorecommunications problem they hoped the FRX-1 might help them to solve. It seemed thatwhile loading condensate from the various natural gas condensate fixed pointmooring (FPM) outlets offshore, it was necessary to position the bow of thetanker directly in front of the FPM. Unfortunately, the radio communicationssignals used while carrying out these manoeuvres was repeatedly attenuated bythe steel structure of the tanker, which lies within the line of sight between the

bridge of the vessel and the FPM, located at sealevel. This was causing the radio signal to breakdown, making communications between thebridge and vessel crew haphazard at best.Because radio communications are essential totimely and accurate communication of thetanker’s position in relation to the FPM, it isextremely important that the radio signalremain strong.In an effort to provide uninterrupted radiocommunications between the bridge and thecrew, Qatargas welcomed Fern Communications’offer to test the effectiveness of the FRX-1onboard a tanker while normal loadingoperations were being carried out.

During a four-day period, the Fern Communications team worked with membersof the crew onboard a condensate tanker to demonstrate two FRX-1 units, bothUHF and VHF. By positioning the FRX-1 unit at strategic points on the vessel,the radio signal was able to travel from one crew member’s radio around thesteel structure to the receiving crew member’s radio.

Pictured with the Qatargas crew during field trials conducted offshoreQatar is (third from right) Clive Cushion, Technical Director of FernCommunications, with the FRX-1 radio repeater, which provideduninterrupted radio communications during loading operations.

Improving communications in Qatar

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10th Middle East Geosciences Conference and Exhibition

Bahrain International Exhibition and Convention Centre 4 – 7 March 2012

The Middle East's Premier Geoscience Event

Under the patronage of His Royal Highness Prince Khalifa bin Salman Al KhalifaPrime Minister of the Kingdom of Bahrain

www.Geo2012.com

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PARADIGM ANNOUNCED THAT GeoproTechnology Limited (www.geoprotech.com) hasselected the Paradigm™ Sysdrill® suite as theirinternal drilling engineering solution. Thedecision was made after a comprehensiveevaluation process conducted by the company.Geopro, a provider of engineering solutions tothe oil and gas industry, will use Sysdrill toaccurately model challenging wells to reducecost and improve safety for the benefit of itsoperating company customers.The Paradigm Sysdrill suite of drilling engineeringmodules is delivered in a single applicationrunning within Paradigm’s Epos® integratedgeoscience and engineering data managementsystem. Sysdrill maintains a robust, scalabledatabase from wellsite to corporate data store,including an option for rigorous user accesscontrol suited to large organizations.

INOVX SOLUTIONS, INC., which claims to be the leader in Asset Virtualization® solutions for the processindustries, announces the release of version 5.5 of its RealityLINx® software. RealityLINx v5.5 includes a numberof performance, functional, and usability enhancements. This release features improvements such as reducedmemory usage allowing for display of significantly larger models. The new RealityLINx release also supportsopening multiple projects enabling users to perform most display, query and authoring functions in more than oneproject in a single RealityLINx session. Combined the enhancements constitute a significant performance increase.Users will also discover a number of functional and usability improvements in this release such as ‘Fixed FrameRate’ to provide a more fluid user interaction while navigating large virtual plant models as well as the ability tocustomize the units of measure differently than the default for the Project. The use of 3D laser scanning tocapture as-built geometry of complex facilities has grown rapidly.This technology is driving improvements in the accuracy and completeness of Asset Documentation, providingcustomers with a foundation for better safety and environmental compliance. In addition, industry is increasinglytaking advantage of intelligent 3D models developed from laser scan data in order to drive new efficiencies inwork processes.

LOGICA, A LEADING business and technologyservice company, has signed an AlliancePartnership Agreement with OpenText and theEPIM association (Exploration & ProductionInformation Management) to allow joint venturesof oil and gas companies to share information andbenefit from EPIM’s world-class workflows througha new collaboration architecture. EPIM is anindustry driven association of 38 exploration andproduction companies operating on the NorwegianContinental Shelf that exists to facilitate theworkflows of joint venture operations and activityreporting to authorities.

EPIM’s role is to facilitate the best possibleflow of information between the partners that

operate a joint venture. Joint ventureadministration can represent an administrativeburden with complexity easily spiralling. EPIMchose Logica¹s expertise to make substantialupgrades to its existing information platform andmove it to a cloud-based managed service.

EPIM’s best practises involve the joint ventureadministration of exploration permits, productionreports and transport licences, which means thatEPIM participants can be confident that theirlicenses to operate are up to date and compliant.The new architecture, License2Share, is based onOpenText¹s ECM Suite 10 for enterprise contentmanagement and incorporates role-basedworkflows and directories.

Keeping companies compliant

ARKEX, THE PROVIDER of geophysical imaging services, has completed a G-Qube airbornegravity gradiometry survey in Tajikistan for Tethys Petroleum Limited. The G-Qube survey,incorporating gravity, gravity gradiometry and magnetic data, covers the majority of the 35,000sq.km Bokhtar Production Sharing Contract (PSC) area. The Bokhtar PSC lies to the south-westof Tajikistan bordering Uzbekistan and Afghanistan and has great potential. G-Qube is the ideal technology for surveying prospective areas that are located in remote andinaccessible terrain. The survey will help map the areal distribution of salt, provide depth tobasement/basement surface architecture and image sub-salt carbonates. When integrated withthe 2D seismic data, which is already in place, Tethys will have a more robust structural modelfrom which to develop the area further.

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Sysdrill suite selected Enhancing virtualisation solutions

Aiding exploration in Tajikistan

www.arkex.com

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84 Oil Review Middle East Issue One 2012

THIS MONTH VARIANCE LAST MONTH LAST YEAR

Country Oil Gas Misc Total Oil Gas Misc Oil Gas Misc Total

Middle EastABU DHABI 17 2 0 19 -3 -1 0 20 3 0 23

BAHRAIN (1) 4 0 0 4 0 0 0 4 0 0 4

CYPRUS (1) 0 1 0 1 0 0 0 0 1 0 1

DUBAI 0 0 0 0 0 0 0 0 0 0 0

IRAN 0 0 0 0 0 0 0 0 0 0 0

IRAQ 0 0 0 0 0 0 0 0 0 0 0

ISRAEL (1) 1 1 0 2 0 -1 -1 1 2 1 4

JORDAN 0 0 0 0 0 0 0 0 0 0 0

KUWAIT 27 5 0 32 -1 -1 0 28 6 0 34

OMAN 39 11 0 50 2 0 0 37 11 0 48

PAKISTAN 6 6 0 12 -1 -2 0 7 8 0 15

QATAR 6 2 0 8 3 -1 0 3 3 0 6

SAUDI ARABIA 48 28 0 76 0 2 0 48 26 0 74

SUDAN 0 0 0 0 0 0 0 0 0 0 0

SYRIA 27 0 0 27 0 0 0 27 0 0 27

YEMEN 2 0 0 2 -1 0 0 3 0 0 asas

TOTAL 117 56 0 289 0 -3 -1 178 60 1 236

North AfricaALGERIA (1) 23 9 1 33 2 -2 0 21 11 1 33

EGYPT 53 18 0 71 1 1 0 52 17 0 69

LIBYA*** 0 0 0 0 0 0 0 0 0 0 0

MOROCCO (1) 0 0 0 0 0 0 0 0 0 0 0

TUNISIA 1 0 0 1 0 -1 -1 1 1 1 3

TOTAL 77 27 1 105 3 -2 -1 74 28 2 105

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.

Source: Baker Hughes

Middle East & North African Rig Count

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GdÈj˘˘˘£˘˘˘Éf˘˘˘«˘˘˘á J˘˘˘î˘˘˘ƒV¢ S°˘˘é˘˘É’k b˘˘Éf˘˘ƒf˘˘«˘˘É V°˘˘ó T°˘˘ôc˘˘á

JôGfù¢ GChT°É¿, Gdû°ôcá GŸÉdμá Ÿü°ØÉI OjÖ hhJô

gƒQGjõh¿, hGdà» Jàƒ¤ Jû°¨«∏¡É.

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GGCNÑ````````ÉQ

’RG∫ GdæõG´ eù°àªôG Mƒ∫ MÉOKá OjÖ hhJô gƒQGjõh¿

Hôjàû¢ HÎhd«ƒΩ Jù°©≈ d∏ëü°ƒ∫ Y∏≈ J©ƒj†¢ eø gÉd«ÈJƒ¿

GCY∏æâ GEjôG¿ GCf¡É Hü°óO GEWÓ¥ Yª∏«á J£ƒjô GBMÉOjá G÷ÉfÖ, hcÉe∏á

Gdæ£É¥ ◊≤π Gd¨ÉR GdÑëô… GCQGT¢ GŸàæÉR´ Y∏«¬ ‘ Gÿ∏«è, eÉ ⁄ Jù°àéÖ

Gdμƒjâ d©ôV°¡É HÉdࣃjô GŸû°Î∑, hPd∂ ha≤É ŸÉ GCY∏æଠhcÉdá G’CfÑÉA

GdôS°ª«á, GEjôfÉ. hcÉfâ GdƒcÉdá bó f≤∏â Yø

fiªƒO Rjôc«é«É¿ RGO√, QF«ù¢ T°ôcá fا

G÷ô± GŸª∏ƒcá d∏óhdá bƒd¬: ''cπ eÉ fƒDcó

Y˘˘˘˘˘˘∏˘˘˘˘˘˘«˘˘˘˘˘˘¬ ‘ Gd˘˘˘˘˘ƒbâ G◊É‹ g˘˘˘˘˘ƒ GS°ÎGJ˘˘˘˘˘«˘˘˘˘˘é˘˘˘˘˘«˘˘˘˘˘á

T°ôGcá eû°Îcá Hó’k eø GdàæÉaù¢, hfÉCeπ ‘

GdƒU°ƒ∫ GE¤ GJØÉ¥ e™ Gdμƒjâ Mƒ∫ J£ƒjô

M≤π GCQGT¢ GŸû°Î∑''.

hGCV°˘˘˘É± b˘˘˘ÉF˘˘˘Ók GE¿ S°˘˘˘«˘˘˘ÉS°˘˘˘á GEj˘˘˘ôG¿ GŸ©˘˘˘æ˘˘«˘˘á

H˘˘˘ë˘˘˘≤˘˘˘ƒ∫ Gd˘˘˘æ˘˘˘Ø˘˘˘§ hGd˘˘˘¨˘˘˘ÉR GŸû°Îc˘˘˘á J˘˘˘à˘˘˘Ñ˘˘™ f˘˘¡˘˘è

Gdû°ôGcá hd«ù¢ GŸƒGL¡á.

Kº GS°àîóΩ Rjôc«é«É¿ RGO√ d¡éá GCcÌ

M``óI Yø Gdà» GYà```ÉOä GEjôG¿ GS°àîóGe¡É ‘ Gdù°ÉH≥ Hû°ÉC¿ gòG GdæõG´

b˘˘˘ÉF˘˘˘Ók: ''d˘˘˘μ˘˘˘ø GEPG aû°˘˘˘∏â G÷¡˘˘˘ƒO Gd˘˘˘óH˘˘˘∏˘˘˘ƒe˘˘ÉS°```«˘˘á G’Ej˘˘é˘˘ÉH˘˘«˘˘á, aù°˘˘æ˘˘©˘˘à˘˘ª˘˘ó Y˘˘∏˘˘≈

L¡ƒOfÉ ‘ Jû°¨«π M≤π GCQGT¢ eæØ````ôOjø “```ÉeÉ cª`````É a©∏æÉ e™ M≤````π

Gd˘˘˘æ˘˘˘Ø˘˘˘§ g˘˘˘æ˘˘˘é˘˘˘ÉΩ'', M˘˘˘«å J˘˘˘≤˘˘˘ƒΩ GEj˘˘ôG¿ H˘˘à˘˘£˘˘ƒj˘˘ô

G÷õA Gÿ````ÉU¢ H¡É eø M≤π Gdæا GdÑëô…

g˘˘˘˘˘˘˘˘˘˘æ˘˘˘˘˘˘˘˘˘é˘˘˘˘˘˘˘˘˘ÉΩ, GŸû°```Î∑ e˘˘˘˘˘˘˘˘˘™ Y˘˘˘˘˘˘˘˘˘ª˘˘˘˘˘˘˘˘˘É¿, Hü°˘˘˘˘˘˘˘˘˘ƒQI

eæØôOI.

hGChV°˘˘˘˘˘˘í Rj˘˘˘˘˘˘ôc˘˘˘˘˘˘«˘˘˘˘˘é˘˘˘˘˘«˘˘˘˘˘É¿ RGO√ GC¿ GEj˘˘˘˘˘ôG¿ b˘˘˘˘˘ó

GCW˘˘˘∏˘˘˘≤â H˘˘˘Éd˘˘˘Ø˘˘˘©˘˘˘π ''GCfû°˘˘£˘˘à˘˘¡˘˘É Gd˘˘àû°˘˘¨˘˘«˘˘∏˘˘«˘˘á'' Hû°˘˘ÉC¿

Gdࣃjô hG’EfàÉê ‘ M≤π GCQGT¢ h⁄ J©£π

fØù°¡É ‘ Gfà¶ÉQ GdôO Gdμƒjà». hj≤™ M≤π

Gd˘˘˘˘¨˘˘˘˘ÉR GCQGT¢ Y˘˘˘˘∏˘˘˘˘≈ G◊óhO GŸÉF˘˘˘˘«˘˘˘˘á Gd˘˘˘˘μ˘˘˘˘ƒj˘˘˘˘à˘˘˘˘«˘˘˘á

G’Ej˘˘˘ôGf˘˘˘«˘˘˘á hjo˘˘£˘˘˘∏˘˘≥ Y˘˘∏˘˘≈ G÷ÉfÖ Gd˘˘μ˘˘ƒj˘˘à˘˘» e˘˘ø

G◊≤π GS°º OQI.

GEj```ôG¿ S°``ƒ± Jæé``õ GŸ¡ª``á ÃØ``ôOg``É

M≤π GCQGT¢ d∏¨ÉR

S17 ORME 1 2012 Arabic_Layout 1 31/01/2012 15:41 Page 93

Page 94: Oil Review Middle East issue 1 2012

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Country Representative Telephone Fax Email

China Wang Ying (86)10 8472 1899 (86) 10 8472 1900 [email protected] Tanmay Mishra (91) 80 65684483 (91) 80 40600791 [email protected] Camilla Capece (39) 06 97619380 [email protected] Bola Olowo (234) 8034349299 [email protected] Sergei Salov (7495) 540 7564 (7495) 540 7565 [email protected] Africa Annabel Marx (27) 218519017 (27) 46 624 5931 [email protected] Saida Hamad (974) 55745780 [email protected] UK Steve Thomas (44) 20 7834 7676 (44) 20 79730076 [email protected] Michael Tomashefsky (1) 203 226 2882 (1) 203 226 7447 [email protected]

GCNÑ````ÉQ

J≤ÉQjô NÉU°á:ÙÉä Yø H©†¢ GdÑ∏óG¿: GŸª∏μá Gd©ôH«á Gdù°©ƒOjá.

–∏«Óä�d«Ñ«É, J≤ôjô Yø T°ôcá S°ÉH∂.

Gdàæ≤«Ö hG’EfàÉê:

HÎhc«ªÉhjÉä, ZÉR, GHàμÉQGä, eù°ÉFπ aæ«á, G’Ceø hGdù°Óeá.

JμæƒdƒL«É GŸ©∏ƒeÉä:

Jîõjø GdÑ«ÉfÉä, GCNÑÉQ hJ£ƒQGä.

–∏«```Óä

4

01

Company ......................................................................................PageAES Arabia ..................................................................................................................49Al Mansoori ................................................................................................................15ALAA Industrial Equipment Factory ......................................................................59All World Exhibitions (MEP 2012)..........................................................................19All World Exhibitions (GEO 2012) ..........................................................................81Asturi Metal Builders (M) SDN BHD ......................................................................57Baumer Group ............................................................................................................11Bredero Shaw ............................................................................................................13Cansco Dubai LLC ......................................................................................................51Cargotec Fzco ............................................................................................................43Cudd Energy Services ..............................................................................................55CWC Associates Ltd ..................................................................................................90Dome Exhibitions (SOGAT 2012) ............................................................................85Draeger Safety............................................................................................................46Duferco ........................................................................................................................23Emerson Process Management ................................................................................7Emirates ........................................................................................................................2Etihad Airlines ............................................................................................................27Eugen Seitz Middle East ..........................................................................................61Expotim International Fair ORG. INC (Basra Oil & Gas 2012) ..........................63Gates Engineering & Services ................................................................................47GE Energy ....................................................................................................................39Geyad For Commerce & Import Co. Ltd. ..............................................................46GRACO BVBA..............................................................................................................45Hempel Paints Bahrain ............................................................................................77Hi-Force Ltd ................................................................................................................25Honghua Golden Coast Equipment FZE ................................................................40Hydroflow Pump Rental Est ....................................................................................59IIR Exhibitions (MEE 2012) ......................................................................................73

International Exhibition Services Srl (SAOGE 2012) ..........................................71Jotun Paints U.A.E. Ltd (LLC)......................................................................................3Kaeser Kompressoren FZE ......................................................................................67Kohler Power Systems..............................................................................................57Marelli Motori S.p.A. ................................................................................................75Metscco Heavy Steel Industries Company Limited............................................95Microtest AG ..............................................................................................................79MSA Middle East ......................................................................................................53National Pipe Company............................................................................................55Oil Country Tubular Ltd (OCTL)................................................................................65Oman Cement Company ..........................................................................................35OmanExpo ..................................................................................................................83OutoKumpu Armetal ................................................................................................56Petrotech Enterprises (L.L.C.) ..................................................................................87Prakash Steelage Ltd. ..............................................................................................37Sabin Metal Corporation ..........................................................................................29Saga PCE Pte Ltd ......................................................................................................31Schlumberger Technical Services, Inc. ....................................................................4Schneider Electric IT Logistic Europe....................................................................41Shree Steel Overseas FZCO ....................................................................................30Sin Hiap Chuan Hardware and Engineering Pte Ltd ..........................................55Society of Petroleum Engineers ............................................................................58SOUTHERN CALIFORNIA VALVE ..............................................................................78Specialized Oilfield Products ....................................................................................9Suraj Limited ..............................................................................................................25Tenaris..........................................................................................................................21TMK ..............................................................................................................................17Veritas-MSI China Company Limited ....................................................................82VF Imagewear/Bulwark............................................................................................33

ADVERTISERS INDEX

y p p

China Wang Ying (86)10 8472 1899 (86) 10 8472 1900 [email protected]

India Tanmay Mishra (91) 80 65684483 (91) 80 40600791 [email protected]

Italy Camilla Capece (39) 06 97619380 [email protected]

Nigeria Bola Olowo (234) 8034349299 [email protected]

Russia Sergei Salov (7495) 540 7564 (7495) 540 7565 [email protected]

South Africa Annabel Marx (27) 218519017 (27) 46 624 5931 [email protected]

Qatar Saida Hamad (974) 55745780 [email protected]

UK Steve Thomas (44) 20 7834 7676 (44) 20 79730076 [email protected]

USA Michael Tomashefsky (1) 203 226 2882 (1) 203 226 7447 [email protected]

S17 ORME 1 2012 Arabic_Layout 1 31/01/2012 15:51 Page 94

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