Oil Review Middle East 2 2013 by Alain Charles Publishing

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Vol 16 Issue Two 2013

www.oilreview.me UK £10, USA $16.50

GE opens Iraq facility Regional security situation continues to deteriorate Sealing solutions for pipeline expansion joints Determining valve reliability and performance Customised corrosion protection solutions Oil firms base decisions on ‘untrustworthy data’

Is the gas pipeline industry out of its depth?

ETRM goes mobile

see us at the shows

Are IOCs taking too many risks in Iraq? See page 18

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Contents Columns

Exhibition Preview 4

Industry news and executives’ calendar

Analysis 10

Regional Security

The security situation in the region is continuing on a downward spiral, says our special correspondent.

Project Profile

Basra International Oil and Gas Hub (BIOGH) has entered into a joint venture agreement with the Iraqi Free Zone Authority to establish a free zone for oil and gas service companies at the Khor Al Zubair Port. The zone will be completed in five phases.plo

SOGAT 2013

Offshore Mediterranean 2013 (OMC)

‘Charting a course’ is the appropriately nautical theme for this year’s Offshore Mediterranean Conference. With Libya back on stream the sea unites a wide region with huge potential.

Technical Focus 40

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

Exploration & Production 18

Iraq Are IOCs taking too many risks in Iraq?

ration & Production

Pipelines Does pipeline supply of gas at extreme depths have to be limited to high priced, specially made and very thick pipes?

Corrosion Protection

Gas 22

Interview

Rashid Al-Jarwan, Executive Director and Acting CEO of Dana Gas discusses the outlook for the regional gas market, including the latest developments in Egypt and Iraq.

Dr. Daniel Keßler, Deputy Business Segment Manager TIP TOP Oberflaechenschutz Elbe GmbH, a REMA TIP TOP Group company, on the subject of corrosion protection and its necessity

Offshore Equipment Offshore Solutions has expanded its OAS operations in Qatar.

Valves & Actuators

Petrochemicals & Refining 30

Developments The latest news from the regional petrochemicals and refining markets.

The importance of force friction ratio in determining valve reliability and performance in the energy sector.

Pipeline Expansion Joints

Interview with Sherwin Damdar, whose current role is project leader for Garlock Sealing Technologies elastomer expansion joint division.

Communications & IT

www.oilreview.me email: oil@alaincharles.com

Analysis

Managing Editor: David Clancy

A survey undertaken by Oracle Corporation has revealed that close to 50 per cent of oil executives have been making decicions based on data they don’t trust.

Editorial and Design team: Bob Adams, Lizzie Carroll, Andrew Croft, Ranganath GS, Kasturi Gupta,

ETRM

Prashant AP, Rhonita Patnaik, Genaro Santos, Zsa Tebbit, Nicky Valsamakis, Julian Walker and Ben Watts

Publisher: Nick Fordham

Advertising Sales Director: Pallavi Pandey

Magazine Sales Manager: Camilla Capece Tel: +971 4 448 9260, Fax: +971 4 448 9261, Email: camilla.capece@alaincharles.com For country contacts, see Arabic contents Head Office: Middle East Regional Office: Alain Charles Publishing Ltd Alain Charles Middle East FZ-LLC University House Office 215, Loft 2A 11-13 Lower Grosvenor Place P.O. Box 502207 London SW1W 0EX, United Kingdom Dubai Media City, UAE Telephone: +44 (0) 20 7834 7676 Telephone: +971 4 448 9260 Fax: +44 (0) 20 7973 0076 Fax: +971 4 448 9261 Production: Donatella Moranelli, Nathanielle Kumar, Nasima Osman, Nick Salt, Jeremy Walters and Sophia White - Email: production@alaincharles.com Subscriptions: Email: circulation@alaincharles.com Chairman: Derek Fordham Printed by: Emirates Printing Press, Dubai © Oil Review Middle East ISSN: 1464-9314

Serving the world of business

Why competitive advantage in the energy sector is increasingly being secured by the quality of the technology deployed.

Arabic Section 4

News

Editor’s note OUR COVER STORY this issue asks whether the gas pipeline industry is out of its depth. Does pipeline supply of gas at extreme depths have to be limited to high priced, specially made and very thick pipes? Not necessarily, says our special correspondent, who discusses a new approach to deepwater pipeline supply that adapts some existing technologies and, potentially, cuts costs — without undermining safety standards. The thorny issue of the deteriorating regional security situation is covered from page 10. Our analyst says new frontier regions in other parts of the world could benefit from the volatility.

Energy efﬁcient and sustainable compressed air solutions? That’d be CompAir! Join us at ComVac - Hannover Messe on stand B54 Hall 26 from 8th to 12th April 2013. www.oilreview.me

Oil Review Middle East Issue Two 2013 3

News

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Investcorp acquires oil field services firm Hydrasun BAHRAIN-BASED INVESTCORP HAS agreed to buy a controlling stake in Scottish oil field services provider Hydrasun from Equistone Partners Europe Limited. The company did not disclose the size of the stake or the value. Mohammed Al-Shroogi, Investcorp's president for the Gulf business, said, "We are excited about acquiring a leading company in a resilient and rapidly growing segment of the oil and gas sector. We believe that Hydrasun is well positioned to continue its growth." Hydrasun is specifically engaged in the integration, manufacture and testing of hydraulic equipment and fluid connectors for the offshore oil and gas sector. Its products and services are mainly used across the offshore oil and gas sector with further application in the petrochemical sector. The company employs around 600 personnel. Bob Drummond, chief executive of Hydrasun, said, "We are delighted to partner with Investcorp given their previous success in investing in the international oil and gas sector coupled with their global network and deep rooted heritage in the Gulf. We believe this transaction will enable us to continue to grow organically and pursue strategic acquisitions to further accelerate our international footprint." Al-Shroogi added, "This acquisition is the result of a continuous effort to bridge international companies with expansion plans in the Gulf's growing oil and gas sector. Hydrasun represents an opportunity for us to fulfill our mandate from our investment partners in the Investcorp Gulf Opportunity Fund."

Saudi Arabia and Japan agree emergency oil deal JAPAN AND SAUDI Arabia have signed an agreement that allows Japan to make emergency requests for additional supplies of crude oil from Saudi Arabia. Under the agreement, a telephone hotline would be set up between the two governments, allowing Japan to quickly seek additional oil supplies in the event of extraordinary circumstances such as a spike in the price of oil, according to Japan's Nikkei. The amount of oil Japan is very oil import-dependent which could be sought by Japan has not been disclosed. Nor did it specify on what terms Japan would be able to secure more oil nor whether a request for emergency supplies would be binding on Riyadh. Saudi Arabia currently pumps approximately 9.05mn bpd and says that it has the ability to produce up to 12.5mn bpd if needed. Japan has grown increasingly reliant on fossil fuels since the Fukushima nuclear disaster, which has led to the shutdown of most of the resource-poor country's nuclear power plants. The deal represents a significant increase in co-operation between Japan, which is one of the world’s largest oil importers, and Saudi Arabia, which has been listed as the top producer in the Organisation of the Petroleum Exporting Countries (OPEC). Saudi Arabia signed a deal with Japan in June to store 3.8mn barrels of crude in the Asian nation's Okinawa Oil Base.

4 Oil Review Middle East Issue Two 2013

GE Oil & Gas opens new facility in Iraq GE Oil & Gas has established a new technology and service centre near Basra City that brings the latest GE technology and expertise to local customers to help boost production in the Rumaila oilfield. The facility will function as a base for the supply of pressure control equipment to Iraq’s drilling and production sector. The center will also provide a wide range of services including installation and maintenance, testing, inspections, repair and storage. Future services will include complete nondestructive testing capabilities, machine, welding and heat treatment, blasting and painting and API certification and recertification. Rami Qasem, president and chief executive officer for the Middle East, North Africa and Turkey of GE Oil & Gas, said, “The new Basra center provides a broad spectrum of solutions under one roof and is situated locally to meet our customers’ demands for rapid drilling and production support." The continued development of Rumaila is a key to Iraq’s long-term economic growth and more than 250 production wells are currently operating in the field. The oil produced from the field represents about 40 per cent of Iraq’s total oil production. "Through our investment in strengthening our local presence, we are able to significantly improve our delivery time for products and services, while also giving us a base for training and developing a local work force," he added. Rami Qasem

OPEC output rises CRUDE OIL OUTPUT from OPEC countries increased in February, the first monthly increase since October, according to a Reuters and Bloomberg survey. Supply from OPEC countries was 30.3mn bpd, up from 30.21mn bpd in January, the Reuters survey showed. The Bloomberg’s survey noted that OPEC output increased by 97,000 barrels to an average 30.69mn bpd in February from a revised 30.60mn last month. Saudi Arabia boosted supply to market by 100,000 bpd in February according to the Reuters survey, to 9.2mn bpd. It had cut output sharply in the last two months of 2012, and again in January. According to the survey by Bloomberg, Libyan output increased 130,000 barrels to 1.24mn bpd in February, showing the biggest gain of any OPEC member. The rise in production was due to the reopening of the country’s Zueitina export terminal early last month. Iraq, the world's fastest-growing exporter, also increased supply. But crude exports from the Kurdistan Region of Iraq were restrained by the dispute between the central government and the Kurdistan region over payments. Iran experienced further supply decreases, which saw its crude exports fall in January to around 1.1mn bpd from a post-sanctions high of at least 1.4mn bpd in the previous month. Exports slipped further in February as well, the Reuters survey showed. Iran was OPEC’s biggest producer after Saudi Arabia a year ago but is now tied in sixth place. Algeria was another OPEC country that saw a cut in production by 70,000 barrels to 1.13mn barrels a day in February, the least since May 2003, stated the Bloomberg report. Gulf countries also saw a rise in supply, according to the Bloomberg report. The UAE and Kuwait saw output bolstered in February. The UAE increased production by 50,000 barrels a day to 2.65mn last month. Kuwaiti output climbed 50,000 barrels a day to 2.95mn, the biggest rise since September 2012.

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MARCH 2013 24-28

SOGAT

ABU DHABI

www.sogat.org

31-4 April

Digital Oilfields World Summit

ABU DHABI

www.digitaloilfieldsme.com

15-17

SPE North Africa Technical Conference

CAIRO

www.spe.org/events/natc/2013

16-19

LNG 17

HOUSTON

www.lng17.org

18-21

Iran Oil Show

TEHRAN

www.iranoilshow.org

22-25

OIL & GAS LIBYA

TRIPOLI

www.oilandgaslibya.com

6-9

OTC

HOUSTON

www.otcnet.org/2013

12-14

Petrochem Arabia 2013

DHAHRAN

www.petrochem-arabia.com

16-18

POGEE

KARACHI

www.pogeepakistan.com

5-7

Oil & Gas Asia

KUALA LUMPUR

www.oilandgas-asia.com

10-13

EAGE Conference & Expo

LONDON

www.eage.org/events

11-13

Gas & Oil Expo

CALGARY

www.gasandoilexpo.com

APRIL 2013

MAY 2013

JUNE 2013

SEPTEMBER 2013 2-5

Erbil Oil & Gas

ERBIL

www.erbiloilgas.com

3-6

Offshore Europe

ABERDEEN

www.offshore-europe.co.uk

29-2 Oct

MEPEC 2013

MANAMA

www.mepec.org

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

Iraq passes 2013 budget despite boycott THE IRAQI PARLIAMENT passed the country's 2013 budget, allocating US$650mn of central government payments to companies working in the Kurdistan Region of Iraq, a fraction of the US$$3.5bn the Kurdistan Regional Government

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(KRG) had asked for. Ibrahim Al-Mutlaq, a member of the parliamentary finance committee, was quoted by Reuters as saying that Kurdish lawmakers had boycotted the session which led to the passing of the budget.

The KRG claims that the US$3.5bn it requested includes outstanding payments covering all exports between 2010 and 2013. The budget decision adds to existing tensions between the Kurdish region and Baghdad over

oil exploration rights, the redevelopment of oil fields in a disputed territory. The dispute over the payment of oil revenues has already led to the suspension of crude oil exports from the Kurdish region since December.

Oil Review Middle East Issue Two 2013 7

Industry News & Events

Executives Calendar 2013

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Analysis

Despite a loosened oil market, security in the region continues on a downward spiral. Independent oil analyst, Samuel Ciszuk surveys the scene.

Security situation continues

to deteriorate W

HILE OIL MARKETS are shifting focus from last year’s preoccupation with perceived market tightness the fragility of the physical and political security situation in the Middle East and North Africa seems to be on the increase. Waves in the aftermath of the 2011 uprisings continue to roll across the region, raising unpredictability, while states find it increasingly hard to protect vital installations amid domestic and international challenges to their security forces. The overall story has shifted in the global oil markets in Q1 of 2013. Oil prices have continued to hold up, but unlike last year, when the focus and fear was for market tightness, it is Saudi production cuts, counterbalancing a loosened supply and demand balance, which have underpinned oil prices.

Underlying risks The improved supply and demand balance has led the market actors to relax somewhat about security issues, although it is not escaping market watchers that the underlying risks remain high. Indeed, while talk about the risk for a large conflagration between Iran and the US or Israel, has diminished so far this year, the underlying risks connected to the Islamic Republic’s nuclear programme remain the same, while elsewhere direct threats to stability - and the oil and gas sector in particular - seem to proliferate. Saudi Arabia, OPEC’s swing producer, again has a more substantial spare capacity ready to compensate for eventual crude production disruptions elsewhere. This tends to mean that industry risk issues to a lesser degree make it onto news headlines. That does however not mean that industry actors are in an improved position, whether NOCs from large producers, or IOCs working in the region, in one shape or another.

Outages Looking across the MENA region, three overarching security issues, all with a bearing on the oil and gas industry, stand out: Iran continues to be a problem, with sanctions hurting its economy and shutting more than one million barrels per day of its production capacity; Syria is sinking ever deeper into civil war and sectarian violence, keeping all neighbours on their toes and creating some severe instability spill-over; and Libya largely remains a in power vacuum, particularly from a security point of view, at a time when Islamist militants active in the Sahel region are relocating given the Western military

10 Oil Review Middle East Issue Two 2013

Recent events at In Amenas drew Algeria into the circle of high-risk areas

Looking further east, the Syrian civil war is in itself creating only a limited impact on oil and gas production support to Mali’s government. These three main areas of concern have all in some ways deepened since 2012. The increased room for manoeuvre Saudi Arabia has today, after throttling back on its production to just more than nine million bpd from 10mn bpd in mid-2012 is only a partial consolation. It means that significant further outages can be compensated by the kingdom, however it does not resolve anything with regards to the long-term instability to both the market’s production and risk calculations, as well as the industry’s own operational worries.

workers and damaged two of the complex’ three one billion cubic metres (bcm) capacity gas trains, which still remain offline. The attack raised the North African region’s threat levels to new heights, as it drew in Algeria into the circle of high-risk areas, despite the country’s history of very successfully protecting its oil and gas installations, even during its bloody civil war in the 1990s. Operations in Algeria were seen as fairly safe, given its army’s capabilities and the inaccessibility and remoteness of its oil and gas fields in the Sahara desert. Over the past decades, it was the national HQ and government relations operations of oil companies in Algeria, naturally located in Algiers, which were seen as high risk, due to the country’s problems with Islamist insurgents. This problem tended to be fairly urban in its nature and thereby confined to its cities and the densely populated countryside in its north. It was not spilling into its oil regions.

Offline The latter again came into focus in January, with the attack by militant Islamists on Algeria’s BPoperated In Amenas gas field. The attack and following hostage situation tragically killed 38

Overshadowed In Amenas was partly triggered and directly connected to the French-led intervention in Algeria’s southern neighbour Mali, repulsing a

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Analysis

historically fractioned relations with its large Palestinian minority.

Main concern

Improved security has been adopted at many of the region’s oil, gas and petrochemical installations

Saudi Arabia, OPEC’s swing producer, again has a more substantial spare capacity ready to compensate for eventual crude production disruptions elsewhere successful militant Islamist takeover of much of that country’s north and centre. Piggybacking and then upstaging a long-standing rebellion among Mali’s northern Tuareg population, al-Qaidarelated elements were able to create a safe haven in a large swathe of the sparsely populated Malian hinterland. As they suddenly were being forced to relocate, a spill over into Libya, where the central power remains very weak vis-à-vis local and regional tribal and political militias, seemed inevitable, but was overshadowed in media reports by the daring In Amenas raid. It has later transpired that the In Amenas attacks were staged from across the Libyan border, underlining the new nature of the threat and exposing a new (long and hard-to-monitor) frontier for the Algerian’s to try to control. To complicate matters, there is no buffer region of hundreds of kilometres of empty desert and mountains between oil and gas installations and the border with Libya, as is the case with the southern border with Mali. Still, the In Amenas attack, while opening a new 'threat-frontier', took a lot of specific planning and cost the militants a significant amount of manpower and resources, which might mean that, given the Algerian security forces’ capabilities, other attacks might not follow immediately, making this more of a one-off, rather than a wave.

Potential bastions For Libya, this is less likely. The central government remains fragmented and largely unable to build the strong institutions the country would need, but which the former regime, under leader Muammar Qadhafi, kept it deprived of. That means that a Libya increasingly infiltrated by

12 Oil Review Middle East Issue Two 2013

al-Qaida-affiliated elements and awash with weapons in the wake of the 2011 uprising and civil war, easily could deteriorate into a situation similar to Mali’s, threatening the oil and gas production in the country. The only potential bastions against the Islamists are the different armed tribal groups and militias across the country, but should the political process in the country flounder, rivalries between those groups - already so evident albeit still largely non-violent - could easily be exploited and hijacked by militants. As history far too often has showed, such deteriorating situations often benefit the most violent and extreme force, as it can start to look as a security guarantor to the civil population, particularly where there is a lack of credible protection from the government.

Investment programme The Libyan situation is further complicated by a deteriorating security and governance situation in Tunisia and Egypt, the other two countries seeing systemic political changes during the Arab spring. The potential existence of a militant safe haven between Egypt, Tunisia and Algeria means that oil and gas companies will have to up their security planning and spending between Egypt’s Western Desert play, Tunisia’s onshore acreage and Algeria’s eastern Ghadames and Illizi basins. As for Libya, where the threat levels must be said to have risen markedly across the whole of the country, investment programmes - barely restarted during 2012- are already being reconsidered. Looking further east, the Syrian civil war is in itself creating only a limited impact on oil and gas production, as the country is a relatively small oil and gas producer and only a marginal oil exporter. It is however located in the middle of one of the world’s most sensitive areas, given its ties to the Israel-Palestine conflict (not to mentions Syria’s own conflict with Israel), it remains heavily involved with and tied to several of Lebanon’s political factions, including the Hezbollah movement, as well as the Kurdish regional dilemma and some of Iraq’s Western Sunni tribes. Syrian instability is also permanently threatening to spill over into Jordan and infect its

Iraq however remains the main concern from an oil and gas industry point of view, even though Lebanon might be the country most easily drawn into a civil war-like situation. The Kurdish ties to Syria, means that the hitherto most stable part of Iraq could potentially be either drawn in, or see its relationship with the both Iraq’s Shi’a dominated government, or the Sunni minority being complicated by events outside of Iraq. Despite the autonomous region’s recent success in mending fences with Turkey and raising hopes for bilateral Turkish-Iraqi Kurdistan oil and gas export pipelines, it is clear that Kurdish militancy in Syria and its spill over into Turkey has spooked some parts of the Turkish political establishment, threatening to derail the region’s recent progress. The spill over of militancy is however more visible in the Sunni population in Iraq. New regional flows of weapons have come at a time of boiling political - and largely sectarian- dissatisfaction with the central government and this is visible in recent levels of violence. For oil companies this is a worry and it comes at a time of increasing IOC dissatisfaction with Iraqi investment terms and failures to cut red tape. Working to tight upstream project deadlines, with potentially severe penalties, oil companies are frustrated by the government’s inability to lift hurdles largely caused by its bureaucracy. As many oil companies are approaching the second phases of their investment programmes at the projects awarded in 2009-2010, there is reason to be somewhat pessimistic over their willingness to fulfil contracts without significant Iraqi fiscal concessions, something which looks unlikely given the current political deadlock.

Sanctions Over all this swerves the Iranian problem and its potential to escalate to a regional crisis. While recent months have seen a renewed willingness to negotiate, there is little expectation that any results will be produced until after the presidential elections in June. Iran’s Supreme Leader, Ayatollah Ali Khamenei, will hope to have cleared the playing field of incumbent President Mahmoud Ahmedinejad and his allies, in order to better control the overall message communicated both externally and internally. In the meantime Iran’s economy is sinking deeper and deeper into the malaise caused by sanctions, making both the electorate and the political elite’s actions less predictable, should the desperation start to visibly grow - for good or for bad. The global oil market has a greater redundancy this year than last year, which is of an immediate comfort, but for oil and gas companies - and in the longer run consumers- the underlying challenges and changes in the Middle East and North Africa have not been as hard to predict and as potentially fast-moving for decades, to the likely benefit of unconventional upstream plays and new frontier regions in other parts of the world. n www.oilreview.me

S03 ORME 2 2013 Analysis 02_Layout 1 12/03/2013 10:20 Page 13

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Port of Khor Al Zubair

Analysis

BIOGH's International Oil and Gas Free Zone will be the only oil and gas free zone in Iraq and Oil Review heard from the company looking to set up the new free zone and DLA Piper who advised on the deal.

Iraq’s oil and gas logistics centre

takes off B

ASRA INTERNATIONAL OIL and Gas Hub Limited (BIOGH), which is a private company, has entered into a joint venture with the Iraqi Free Zone Authority, an independent authority that is part of the Ministry of Finance to establish a free zone for oil and gas service companies at the Khor Al Zubair port. BIOGH is located within the major oil and gas production area of Southern Iraq and the four super giant oilfields Rumaila, Zubair, West Qurna, and Majnoon are all close by. Richard Cotton, head of marketing & leasing at Basra Oil & Gas Free Zone stated, “The Basra International Oil and Gas Free Zone is the first oil and gas free zone to be developed in Iraq.” The joint venture is effective for 50 years, but after 25 years the revenue share between BIOGH and the Free Zone Authority changes.

BIOGH aims to be similar to the largest free zone for the hydrocarbon sector, which is the Onne zone in Nigeria Cotton said that BIOGH Ltd has signed a development management agreement with EPGI, a global real estate, construction and infrastructure development specialist, to deliver the project. “EPGI will manage the global systems integration, shared facilities, amenities, and public service components,” he added.

14 Oil Review Middle East Issue Two 2013

Salem Chalabi, the head of the Iraq Practice at DLA Piper, the law firm that advised on the deal, described how the deal came about with the help of a little known Iraqi free zone law, enacted in 1998, that established free zones in a number of places in Iraq, including one in Khor Al Zubair. "We entered into negotiations with the Ministry of Finance and the Free Zone Authority and negotiations took quite a long time as they had never done anything like this. Previously they had dealt with small free zone projects that included no infrastructure and the intention here was to build a big development, almost the size of a town. This is the uniqueness of this project," he noted. BIOGH aims to be similar to the largest free zone for the hydrocarbon sector, which is the Onne zone in Nigeria according to Salem Chalabi. Land for logistical operations in Iraq has been difficult to find and the opportunity offered by BIOGH could have a real importance in the growth of the oil and gas sector in Southern Iraq. "Our clients thought it would be great to do a deal with South Oil Company (SOC) to actually develop the free zone for the purpose of bringing in oil and gas logistic operations and the model of this is a place called Onne in Nigeria," remarked Chalabi. SOC has been one of the main supporters of the zone, which has been crucial in getting the project off the ground, as the state-owned oil company appeared to prefer focusing on its principal upstream activities, according to Chalabi. "They have leased some land in the past but the demand is so high they have been looking at new ways to offer logistic space," he added.

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Analysis

Size and scope The zone will be completed in five phases and will extend over 11 sq-km; the zone will comprise mixed-use industrial, logistics, oil and gas storage, commercial and residential accommodation and customs. Cotton said that it has been estimated that BIOGH will employ approximately 10,000-15,000 Iraqi nationals over an initial period of 12 years. Connecting the many facilities within the project will be an important task and transportation will be provided for the tenants within the Free Zone, which will be supported by a network of service roads. The main access road network from the Basra International Free Zone will provide excellent connections to the adjacent shipping port of Khor Al Zubair, local airports including Basra International Airport, the city of Basra, and other strategic centres in Iraq and surrounding regions. "The critical thing with this free zone is that it will take a significant amount of investment and there has been a lot of interest from the oil companies, because being a free zone they can import their material free from customs and store it there," said Chalabi. Cotton remarked, “There has been serious interest from a mixture of truly global oil and gas tenants, large and small, who are either working in Iraq or who have researched the country and are now wishing to begin operations and recognize the economic and operational advantages of being on a third party managed facility.” The BIOGH Public Private Partnership with the Free Zone Authority will assist in enabling the latter’s ambition to provide the appropriate facilities within a Free Trade Zone for international companies to facilitate and optimise this significant increase in production capability. Iraq has potentially the world’s second largest oil reserves and is currently the world’s third largest oil exporter. Iraq is looking to spend over billions of dollars on oil and gas infrastructure to increase production from the current three million bpd to a desired nine million bpd by 2020. “This translates into significant financial rewards for tenants at the Basra International Oil and Gas Free Zone including no capital gains or corporate taxes, and free repatriation of capital and profit,“ argued Cotton. "Our client has to develop the infrastructure and they will enter into a large number of leases (in the form of sub-development agreements) with oil companies and oil service companies and manufacturing companies all to supply the oil sector," Chalabi stated. Cotton added, “The programme for the Basra International Oil and Gas Free Zone will be tenant driven: land parcels will be leased on a long term basis and tenants will have the opportunity to erect purpose-built structures and facilities to their desired specification and needs.”

On-line enquiries and interest for BIOGH are currently running at around 2,500 hits per week from all the major oil and gas world centres

16 Oil Review Middle East Issue Two 2013

Salem Chalabi

The service contracts in the South have quite a stringent ramp up process and the new free zone is meant to aid in building up the logistic private sector dimension of the oil and gas sector.

Exposure Cotton explained that BIOGH has worked over the past four years to successfully maximise the financial incentives and competitive advantages it can offer new tenants and residents. “The core offerings to our tenants will be our biggest promotional tool,” noted Cotton. Strategic benefits include the option of 100 per cent ownership in any business venture without the need for local partners within the development, all international imports and exports, including all imported machinery, equipment and raw materials, will be exempted from customs duties, and the project will have its own dedicated customs and administration facilities “BIOGH has built a dedicated and experienced in-house marketing and leasing team based in London, New York, Dubai and Basra, and supported by external agencies to ensure global exposure,” he pointed out. Cotton said on-line enquiries and interest are currently running at around 2,500 hits per week from all the major oil and gas world centres. In conclusion Chalabi, argued that, "Infrastructure for the oil sector is where the next really big focus will be and our client is aggressively making plans for the country's first oil and gas free zone."■

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E&P

In a bold public statement, the chairman of Iraq’s parliamentary oil and energy committee, Adnan Al-Janabi, criticised the central government for its lack of will in pushing ahead a unified oil law fearing that international oil companies are risking "work in a legal vaccum" in Iraq.

Are IOCs taking too many risks

in Iraq? I

T IS TELLING that Iraq’s top parliamentarian in charge of resolving the stalemate surrounding the country’s oil legislation is dispirited by the government’s inaction on the matter. Janabi's warning that international oil companies are operating in a legal vacuum in Iraq will cause further concerns amongst investors regarding their contractual arrangements and raises questions over Iraq’s long-term oil production. At the heart of the dispute is Baghdad’s struggle with the assertive Kurdistan Region in the north; with or without a national oil law, however, both sides are entrenched in their positions, widening the gap between the two administrations with no agreement on a national oil law in sight. Meanwhile, the KRG continues its independent energy policy based on its own oil law enacted in 2007. Yet, while Al-Janabi is right in stating that the lack of a unified oil law may have created legal risks for IOCs operating in federal Iraq, it has not discouraged companies from renewing contractual terms with the central government (i.e. the negotiations over the reduction of production plateau targets agreed between LUKoil, ENI, BP, and Shell and Baghdad are a case in point). Neither has the missing oil law put off companies from investing in the Kurdistan Region thus far.

Consequences However, IOCs will need to question themselves over the possible consequences of dealing with two different contractual and legal models in Iraq, of which the deals in the Kurdistan Region are ultimately not recognised by the central government. Will oil deals in the Kurdistan Region be considered valid in international arbitration tribunals and are there risks to service contracts signed in federal Iraq given that there are not based on a national oil law? Adnan Al-Janabi’s concerns over the lack of a national oil law are valid. The impasse in finding a national law will remain a risk for IOCs operating in Iraq and the Kurdistan Region – particularly if things go wrong.

Will oil deals in the Kurdistan Region be considered valid in international arbitration tribunals? In the case of any expulsion, expropriation or other major disagreement between IOCs and the government in which either side faces a commercial loss of some sorts, taking a case to international arbitration tribunal would be problematic given the lack of reference to a national hydrocarbons law. Yet, aside from legal concerns and risks for IOCs, Al-Janabi’s finger-pointing has to be analysed in the context of a deterioration of relations between the KRG and Baghdad. Despite an ongoing oil-for-money payment dispute, military tensions in disputed areas south of Kirkuk province, and Baghdad’s repeated threats to expel companies from federal Iraq (such as ExxonMobil from West Qurna-1) because of their simultaneous involvement in the Kurdistan Region, the KRG has become more assertive in pushing its own energy-policy agenda.

Essential In the absence of a national oil law, the KRG has managed to push its policy ahead. There are three key driving forces at play: first, the KRG’s insistence on political autonomy as a federal region with the right to explore and export oil independently and a guarantee to share revenues with the federal government as per its own Kurdistan Region oil law enacted in 2007; second,

18 Oil Review Middle East Issue Two 2013

The absence of a national oil law means the KRG has pursued an independent energy policy

the ongoing investments of IOCs seeking to take a share in the Kurdistan region’s geological prospects and who are prepared to build export infrastructure for hydrocarbons; and third, the political support of energy-hungry Turkey, which has increasingly antagonised Baghdad to counter Iran’s influence in Iraq and Syria, in particular. Turkey’s role in getting KRG oil to the markets is essential but it is having an inflammatory effect on existing tensions between Erbil and Baghdad. Recently, the US ambassador to Turkey, Francis Ricciardone, held a two-hour meeting with officials from the Turkish foreign ministry in which he reportedly warned that Turkey's energy policy and support for the KRG might cause the disintegration of Iraq and lead to chaos, according to Turkish media reports.

Secret agreement Nevertheless, he also insisted that Iraq needs to agree on a national oil law: "The Iraqis have been struggling to pass a hydrocarbons law. It is very important that they succeed in that," in quotes carried by Reuters. To make matters worse, Iranian media reports have quoted Aytun Ciray, a Turkish opposition member of parliament from the Republican People’s Party, saying that Ankara and Erbil have signed a secret agreement to export KRG oil to the global market via Turkey without Baghdad’s knowledge. Whether this deal is confirmed or not, the KRG’s oil minister, Ashti Hawrami, has made it clear recently that the KRG will press ahead with building its own oil export pipeline to Turkey despite Baghdad’s (and increasingly US) objections due to the risk of a disintegration of Iraq. Hawrami complained that the KRG is entitled to 17 per cent of Iraq’s refined products, but receives only three per cent – insufficient refining capacity to satisfy domestic demand. ■ www.oilreview.me

S04 ORME 2 2013 E&P_Layout 1 12/03/2013 11:22 Page 19

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S04 ORME 2 2013 E&P_Layout 1 12/03/2013 11:22 Page 20

E&P

WesternZagros spuds Kurdamir-3 well WESTERNZAGROS RESOURCES HAS spudded the latest well of its extensive exploration and appraisal program in the Kurdistan Region of Iraq. Drilling began on the Kurdamir-3 appraisal well on the Kurdamir Block on February 22, 2013. 3D seismic surveys are also underway on both the Kurdamir and Garmian Blocks, and preparations are progressing for the three wells on the Garmian Block planned for this year. Simon Hatfield, CEO of WesternZagros commented, “2013 promises to be an exciting, transformational year for the company. We are actively delineating our two major discoveries at Sarqala and Kurdamir and also pursuing high-impact step-out exploration on our Baram and Hasira prospects.” Drilling operations have begun at the Kurdamir-3 appraisal well on the giant Kurdamir Discovery. The well was spudded on February 22, 2013. The well is expected to take approx. four months to reach the planned total depth of 2,800 metres. The company expects the gross costs of drilling and testing operations to be US$50 mn. The Kurdamir-3 well is being drilled on the southwest flank of the Kurdamir structure approx. three kilometres and five kilometres from the company's Kurdamir-1 and Kurdamir-2 discovery wells respectively. Kurdamir-3 will further appraise the extent of the oil leg in the Oligocene interval previously encountered in the Kurdamir 1 and 2 wells. A 3D survey started in January and is expected to be completed early in the Q3. The survey encompasses 184 sq-km on the Kurdamir Block and also extends into the neighbouring Topkhana Block in order to define more clearly the areal extent of the Oligocene, Eocene and Cretaceous reservoirs. The data from this survey will be used to decide on future appraisal well locations and refine resource assessments of the existing discovery.

Gazprom Neft signs KRI deal RUSSIA'S FIFTH-LARGEST CRUDE producer, Gazprom Neft, has signed a deal to enter an oil project in the Kurdistan Region of Iraq (KRI), a company official said. The contract was signed despite tension between local authorities and central government. International oil firms have hit problems developing fields in the KRI. The central Iraqi government claims authority over oilfields in the country while local authorities have been trying to secure separate deals with oil firms. Gazprom Neft, the oil arm of the world's top gas producer, Gazprom, said it has secured 80 per cent of the Halabja project, the company's third project in the region. “We entered the third project (in the Kurdistan Region of Iraq), the Halabja block. It is close to the blocks www.gazprom-neft.com we already own,” Vadim Yakovlev, Gazprom Neft's first chief executive officer deputy, said in a conference call. He said that the block's reserves are estimated at between 90mn and 100mn tonnes. “Now, we have to prepare and approve the geological research programme,” he added.

KS Energy to supply land rig

ENI - a record year for exploration

SINGAPORE-LISTED KS ENERGY (KSE) disclosed recently that it has signed a contract with Taq Taq Operating Company (TTOPCO) to supply a land rig for its drilling operations in the Kurdistan Region of Iraq. The rig, KS Discoverer 4, is expected to start work in March this year. Under the terms of the agreement, the rig will be contracted for one year or until the www.ksenergy.com.sg completion of one exploration well and two development wells, whichever is later. TTOPCO has the option to extend the contract for a further period of one year. The contract, over the minimum period of one year, is worth US$16.8mn. OCBC Investment Research noted in an analyst note that KSE has proven adept at raising funds from investors and partners such as Itochu, Dutco and Actis. OCBC added that it is expecting news of further tie-ups moving into the rest of this year.

ITALIAN MAJOR ENI reported recently that its average oil and gas output for Q4 of 2012 averaged 1.75mn barrels of oil equivalent (boe) per day, in line with expectations. The figure was a seven per cent improvement over Q4 of 2011 and a 3.6 per cent improvement over the previous quarter. ENI confirmed that it had made a record amount of discovered resources during the year, with 3.64 bn barrels of oil equivalent (Bboe) found. Meanwhile, proved reserves were at an eight-year record by the end of 2012 at 7.7 Bboe. ENI CEO Paolo Scaroni commented in a statement: "2012 was a record year for exploration at Eni with discovered resources about six times yearly production thanks to our outstanding achievements in Mozambique and our other successes in West Africa, in the Barents Sea and in Indonesia. We have also made significant progress in developing projects, further increasing our reserves to best ever levels." In Mozambique, ENI executed an exploration campaign during 2012 in its operated Area 4 offshore in the Rovuma Basin, where it proved the Mamba gas complex to be a world-class discovery. Eni estimates the full mineral potential of Area 4 at 75 trillion cubic feet of gas in place, and the firm plans to drill at least two more wells there to fully establish the upside potential. The firm added that it expects production to grow further this year, the principal drivers of this being the start up of major projects: Kashagan in Kazakhstan, Angola LNG and the firm’s gas assets in Algeria. With a capital budget of some EUR 12.8 bn, (US$16.78 bn) ENI said that during this year it will be focused on the development of reserves in West and North Africa, Norway, Iraq and Venezuela, as well as exploration projects in West Africa, Egypt, the US and emerging areas.

20 Oil Review Middle East Issue Two 2013

www.oilreview.me

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Gas

Oil Review Middle East spoke to Rashid Al-Jarwan, executive director and acting CEO of Dana Gas about the Sharjah-based company’s outlook for the gas market in the region and the latest developments in Egypt and Iraq.

Dana Gas

riding high A

L-JARWAN OPENED BY saying that with global demand for energy in general and natural gas in particular on the rise, the fundamentals of the energy industry remained strong.

Egypt prominence The growing importance of Egypt can be seen in the raft of new gas discoveries announced by Dana Gas all of last year. The firm entered the Egyptian market in 2005 and has invested more than US$650mn in exploration, development, production and infrastructure building, according to Al-Jarwan. For the future, he said, "We have our commitment investments this year which we will use to fund a multi-well drilling programme and ongoing infrastructure requirements." Last year Dana Gas undertook a 7-well drilling programme and made four discoveries. “We anticipate a similar success rate this year," noted Al-Jarwan. The last two discoveries in Egypt, Alyam-1 and Balsam-1, were onshore wells located in the Nile Delta Basin and "were significant discoveries, in terms of reserve numbers but also as confirmation that the Nile Delta is a prolific hydrocarbon-bearing basin," Al-Jarwan said. Appraisal drilling will be conducted on both discoveries and together with the third discovery at West Sama, Dana Gas has filed a declaration of commerciality. Al-Jarwan explained that the firm's development plans for the area include making use of the company’s existing pipeline and processing infrastructure, commercialising these wells quickly and bringing additional cash flow to the company. The new discoveries in Egypt have meant that Dana Gas's commercial reserves have increased, with initial estimates indicating that Alyam-1 and Balsam-1 could increase the company’s commercial reserves between 17 (1P) and 95 (2P) MMBOE. According to Al-Jarwan these estimates have enabled Dana Gas to maintain gross proved reserves (as of 31 December 2012) of 87mn MMBOE. He turned to the reason why overall production dipped slightly in Egypt last year, which was down to the firm's conservative cash policy last year which has meant a reduction in CAPEX investments which resulted in an overall dip in production in Egypt. "For 2013, we have reaffirmed an increase in CAPEX and expect production to pick up as we bring on stream new wells and increase flow-rates at others whilst also investing in the overall infrastructure to sustain the long-term growth of our operations in Egypt," he said.

NGL push The firm is positive about its NGL progressing plant after it began operations in October last year. In its first three months, the EBGDCo NGL extraction plant has processed a combined 12,340 metric tonnes of Propane (10,500) and Butane (1,840). The average gas flow-rate for the quarter was 75mn standard cubic feet per day (mmscfd) with recovery rates of 98.9 per cent and 99.9 per cent respectively. In fact Al-Jarwan said that the feed gas rate is expected to increase gradually once gas is received from gas fields in and around Ras Shukheir area. "We have also completed all outstanding project items related to the plant other than the finalisation of the design and testing programmes on the gas flow-rate which is being conducted by Exterran," he noted. Once testing is complete and the plant is fully operational, Dana Gas

22 Oil Review Middle East Issue Two 2013

Rashid Al-Jarwan

anticipates doubling their gas flow-rate and EGBDCo anticipates extraction of 120,000 tonnes per annum of propane and butane from a gas stream of 150 mmscfd. Al-Jarwan sees a bright future for NGL as "it provides us with additional revenue streams and given the huge demand internally (in Egypt) and internationally, the project provides strong validation of our strategic investment in the gas plants, alongside our partners."

Iraq growth Al-Jarwan is fairly positive about the firm's prospects in Iraq and the firm and its joint venture partners celebrated the JV’s fourth year of operations in the Kurdistan Region of Iraq. Production growth continued and the Khor Mor field is now producing approximately 80,000 boepd with further plans to expand daily production in 2013. This positive outlook is related to the optimistic outlook for increased gas production in the Kurdistan Region of Iraq. The Khor Mor field supplies gas to two power stations, providing electricity to more than four million people. Two LPG trains were commissioned and are operational and the average production rate has increased year on year. "Our joint-venture partners have achieved an incredible amount in the four years of operations to date," he pointed out. The longer-term plans are to increase production capacity to meet both the local gas requirements and for export. Al-Jarwan touched on the wrangling between the central government in Baghdad and the Kurdistan Region of Iraq. He remarked, "It is well documented that both sets of authorities are in talks to diffuse the growing tensions

www.oilreview.me

S05 ORME 2 2013 Gas 01_Layout 1 12/03/2013 11:28 Page 23

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S05 ORME 2 2013 Gas 01_Layout 1 12/03/2013 11:28 Page 24

regarding revenue sharing agreements. We understand discussions are on going with regular interaction and we look forward to a peaceful resolution, allowing us and others to get on with exploring and producing oil and gas for both the local population and for exportation internationally."

Sukuk offering Al-Jarwan was clear that the refinancing transaction announced in December 2012 "is the optimum solution for shareholders and for Sukuk holders, and enables the company to focus on growing reserves, steadily building production and ultimately delivering superior returns for shareholders." He added, â&#x20AC;&#x153;The agreement allows a more flexible and sustainable financial structure, enabling the company to move forward in pursuit of its growth strategy." One of the main hurdles the companies faces in both Iraq and Egypt is the outstanding receivables www.danagas.com from both countries amounting to US$550mn. Both governments have been proactive in settling these but over the short term, they continue to affect the company in relation to its investment in exploration, appraisal and development programmes and its ability to repay the sukuk. Al-Jarwan noted, "I cannot predict whether all outstanding receivables will be paid this year. However, I am encouraged by the significant efforts made by both governments to address the backlog of payments due. "

Outlook Dana Gas revealed strong 2012 results and posted a 20 per cent profit growth, strengthened their cash position, grow their operations with production growth in the Kurdistan Region of Iraq and new discoveries in Egypt. "Combined with the proposed sukuk refinancing result, Dana is well positioned to push forward with their growth plans in 2013," argued Al-Jarwan. â&#x2013;

HOT WORK Needs a SafeHouse Habitat

24 Oil Review Middle East Issue Two 2013

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S06 ORME 2 2013 Gas 02_Layout 1 12/03/2013 11:35 Page 25

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Gas

Conversion of FSRU Toscana completed DRYDOCKS WORLD ANNOUNCED that the FSRU Toscana conversion project at the Dubai based shipyard, is going to be finalised. The Floating Storage and Re-gasification Unit is intended for a 20 year design life 12 nautical miles off the shores of north-west Italy, in the waters of the Tyrrhenian Sea close to Livorno. Khamis Juma Buamim, chairman of Drydocks World and Maritime World stated, "We indeed keen to take on increasingly challenging projects for the offshore deep sea exploration and production sector as we have proven time and again that we have the capacity and capability to implement such projects." The Liquefied Natural Gas (LNG) carrier Golar Frost, a 2004 Korean built

The FSRU-Toscana naming ceremony was held in Dubai

vessel with a design draught of 11 meters and lightweight of 34,000 tonnes and storage capacity of 135,000 cu/m of LNG, came to Dubai in June 2009 for conversion for contractor Saipem and client OLT Offshore LNG Toscana SpA.

PDO makes new gas find

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26 Oil Review Middle East Issue Two 2013

PETROLEUM DEVELOPMENT OMAN (PDO) has made a major gas discovery in Mabrouk Deep in the northern part of its concession area. Mabrouk Deep, some 40 km west of Saih Rawl, Oman’s main gas field, has estimated inplace volumes amounting to 2.9 trillion cubic feet (tcf) of gas and 115 mn barrels of condensate. Exploratory drilling took place last year at depths of up to 5,000meters and a large field of some 60 sq km was located. PDO managing director Raoul Restucci said, “The scale of the find at Mabrouk is tremendous news for Oman as it will enable a further significant boost to Raoul economic Restucci growth. “The discovery underlines the truly excellent work that our Exploration Directorate is conducting to identify and appraise new hydrocarbon reservoirs which will sustain the Sultanate for many years to come.” In 2012, PDO made five new oil discoveries, amounting to approximately 300mn barrels of stock tank oil initially in place (STOIIP) from Shuaiba and Gharif reservoirs. Restucci added, “PDO accounts for around 70 per cent of the country’s crude oil production and nearly all of its natural gas supply so there is a huge onus on us to find and develop new fields of a challenging or “unconventional” nature to replace those that are declining. Restucci said 2013 would see an intensification of effort in key areas such as exploration, enhanced oil recovery and business efficiency. He stated that PDO’s Exploration Directorate is planning to drill around 100 wells over the next five years and spend more than $US800mn in its search for new reservoirs. By 2022, Restucci said there would also be 16 significant new projects comprising over US$11bn of investment, with a target of developing more than a billion barrels of oil.

www.oilreview.me

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Flexible in Severe Service Conditions

Dana Gas starts production at Egyptian gas sites SHARJAH-BASED DANA GAS has announced that commercial production at West Sama-1 and Allium-1 fields in Egypt has begun, less than two months after initial well testing was conducted. Gas production at West Sama-1 and Allium-1 has been routed through Dana Gas’ South El Manzala and El Wastani gas plant respectively. Rashid Al-Jarwan, executive director of Dana Gas, said, "The wells will increase our production by 566,337 cu/m day, providing much needed additional production to the Egyptian market and maintaining vital supplies of gas for power generation.” Production from the two wells is expected to add 3,450 bopd to the company’s 2012 Egypt year-end output rate of 32,000 bopd. Dana Gas has planned to bring Balsam-1 into production in second half of 2013. These new fields are among the three discoveries made by Dana Gas in Egypt’s Nile Delta Basin during the company’s 2012 multi-well drilling programme. Patrick Allman-Ward, general manager of Dana Gas Egypt, said, “Dana Gas is well positioned to bring new discoveries on stream due to the onshore location of our assets where tie ins to our existing pipelines and processing infrastructure can be made quickly, relatively inexpensively and ensures a high return on our new gas discoveries.” Dana Gas is currently the sixth largest gas producer in Egypt. Dana Gas Egypt operates in the Nile Delta through the El Wastani Petroleum Company (Wasco), Dana Gas’ joint-venture company with the Egyptian Natural Gas Holding Company (EGAS).

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28 Oil Review Middle East Issue Two 2013

NORWAY'S GOLAR LNG has been selected by the Jordanian Energy Ministry as the preferred bidder to supply a 3.5 mtpa Floating Storage and Regasification Unit (FSRU), according to a top official. "We will enter negotiations with the first-ranking bidder to conclude the lease agreement. The contract may be signed by the end of March," Marwan Bakain, director of the natural gas department was reported by Interfax as saying. Golar LNG, the carrier fleet owner and floating storage and regasification unit provider, said it was encouraged by the Jordanian Ministry of Energy and Mineral Resources' decision to select Golar as preferred bidder for their FSRU requirement for which negotiations on a firm contract should begin shortly. The terminal will have an initial base-case send-out capacity of 4.2mn cubic metres per day (MMcm/d), with the possibility of increasing send-out to 14.2 MMcm/d. The Energy Ministry intends to launch the tender for LNG supply to the facility within the next two months and aims to start imports in the second half of 2014.

www.oilreview.me

S07 ORME 2 2013 Petrochemicals_Layout 1 12/03/2013 11:41 Page 29

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Petrochemicals

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Honeywell awarded Four contracts by Borouge HONEYWELL HAS BEEN awarded four major contracts worth a combined US$40mn over an 18-month duration for the Borouge petrochemicals complex in Ruwais, Abu Dhabi. Honeywell will be the main automation contractor (MAC) for this project, providing Linde and other engineering, procurement and construction (EPCs) contractors involved in the project with integrated control and safety systems. The installation of Honeywell Process Solutions’(HPS) control and safety systems, Experion® Process Knowledge System C300, Safety Manager, and Advanced Process Control will allow for operational integration, improved production, increased safety and reliability, and maximum operability and profitability. The Real Time Information Management System will provide Borouge 3 with business solutions that streamline, centralise and optimise operations, allowing for further profitability and productivity. “We continue to see countries in the Middle East, such as the UAE, invest in growing their petrochemical capacity, as part of economic diversification strategies,” said Mansour Belhadj, sales director of Honeywell Process Solutions Middle East. Borouge 3 is the latest expansion of Borouge’s polyolefins plant in Abu Dhabi and will manufacture ethylene, polyethylene, polypropylene, and low-density polyethylene (LDPE), alongside associated butane, utilities Honeywell's Experion Process Knowledge System C300 and offsite facilities.

Dow Chemical awarded bigger payout from Kuwait

Andrew Liveris

DOW CHEMICAL CO. (Dow) has been awarded an additional US$318mn in an arbitration case with Petrochemical Industries Company of Kuwait (PIC) related to the K-Dow transaction. The award, from the International Court of Arbitration of the International Chamber of Commerce, brings the total amount Dow Chemical has been awarded to US$2.48 bn and is the last step in the disciplined arbitration process, bringing the process to an end. The partial award of US$2.16bn was announced last May. The extra award is linked to a dispute over a scrapped multibilliondollar joint venture, know as K-Dow Petrochemicals, in 2008. "Payment of these damages of nearly US$2.5bn will allow Dow to accelerate its priority uses for cash by further strengthening our balance sheet," Dow chief executive Andrew Liveris said. "Dow and Kuwait share a long history and strong partnership, and this award ruling brings suitable closure to the arbitration process."

30 Oil Review Middle East Issue Two 2013

Orpic to connect refineries between Sohar and Muscat THE STATE-OWNED OMAN Oil Refineries and Petroleum Industries Company (Orpic) said it is planning a new 280 km pipeline connecting refineries between Sohar and Muscat. The project will increase the Mina Al Fahal Refinery storage capacity for diesel, petrol and connect the current storage facilities in Sohar and Mina Al Fahal refineries. Musab Al-Mahruqi, CEO of Orpic commented, "The new storage and loading station will reduce the load on the current Mina Al Fahal station which considered as the main station for loading and distributing fuel in Oman. As much as 70 per cent of Oman fuel is being distributed from Mina Al Fahal and the rest from Sohar Refineries and Raysut Port." "With this significant investment, we will remove the need to ship refined products from Sohar to Muscat and then truck them through the city, as we do today. This will bring a new level of efficiency," he added. The implementation of the Muscat-Sohar Pipeline Project will be carried out in three phases. Under the first Phase, a pipeline will connect the Muscat International Airport and the Mina Al Fahal Refinery by a main storage facility, while in Phase 2 a pipeline will be built to connect the Mina Al Fahal Refinery and the Sohar Refinery as well as the construction of an intermediate storage facility in Muscat. In the final Phase, an additional strategic storage facility will be built, which will provide strategic reserves for Oman, allowing fuel stocking for 30 days.

Jacobs awarded Luberef Yanbu expansion deal JACOBS ENGINEERING GROUP was awarded a contract from Saudi Aramco Lubricating Oil Refining Co. (Luberef) to provide project management consulting (PMC) services for an expansion project at its lube oil refinery in Yanbu, Saudi Arabia. Under the terms of the agreement, Jacobs will provide PMC services for both inside battery limits (ISBL) and outside battery limits (OSBL). The ISBL services include a new lube oil unit, a new sulfur complex, a new hydrogen manufacturing unit, and an expansion of the propane de-asphalting unit. The OSBL services involve all utilities, tanks and infrastructure. Luberef's President and CEO Hasan Jamaan Alzahrani stated, "This expansion project will add value to the Kingdom's economy including employment, and provide high quality lubricants to the markets we serve." Jacobs' Leiden, Netherlands office is managing the overall project in collaboration with Jacobs' offices in Al-Khobar, Saudi Arabia and other locations. The Yanbu Refinery expansion is expected to increase base oil production to meet future demands for high quality GR-II and GR-III base oils; increase the GR-I Bright stock to almost double current production; produce higher-value byproducts (naphtha, diesel, and kerosene). "In addition, it is part of Luberef's overall strategy to provide high quality base oil with different product slates of GR-I, GR-II, and GR-III to strengthen Luberef's position as a leading supplier. Luberef is looking forward to working with Jacobs to execute this major milestone of the expansion project," added Alzahrani. Jacobs Group vice president Bassim Shebaro noted, "After our successful FEED efforts, we welcome the opportunity to continue to support Luberef's production of higher-grade clean fuels." Luberef, a joint venture between Saudi Aramco and Jadwa Industrial Investment.

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005

Petrochemicals

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Iran to create petrochemical hub IRAN HAS ANNOUNCED plans to establish three energy hubs on the Gulf islands of Lavan, Qeshm and Siri. According to Mahmoud Zirakchianzadeh, managing director of the National Iranian Offshore Oil Company (NIOOC), about US$70bn will be invested in the country's upstream sector of the oil industry, with the NIOOC planning to turn Lavan Island into a petrochemical hub. Zirakchianzadeh said some 8.5mn cubic metres of natural gas will be fed into the Lavan Island for it to produce and directly export petrochemical products. He added that some US$12bn and US$16bn in investment were respectively needed for the development of Lavan’s upstream industry and petrochemical sector. "Siri Island will become Iran’s gas export hub. Around US$14bn of investment is needed for the development of the three gas fields of Foruz-A and -B and Binaloud in the island," the NIOOC official added. Iran is looking to invest in Lavan Island

32 Oil Review Middle East Issue Two 2013

QP awards Al-Karaana FEED contract to Fluor QATAR PETROLEUM (QP) and Shell have awarded the Front-End Engineering and Design (FEED) contract to Fluor for the joint AlKaraana Petrochemicals Complex in Ras Laffan Industrial City. The award is an important milestone for the project as it completes the full scope and definition for the development of the project. The chairman of the project’s Executive Committee, Mohammed Nasser AlHajri noted, “The focus of the project team is on the delivery of a quality FEED that will be a major step towards successfully delivering this project.” Mohammed bin Saleh Al-Sada, Qatar’s Minister of Energy and chairman & managing director of QP, said, “The Al-Karaana Petrochemicals Complex project has been envisioned to further boost Qatar’s rapidly growing stature in the global petrochemicals industry. I am very pleased to see the project taking a significant step forward.” The scope under consideration for the Al-Karaana Petrochemical Complex project includes the following: a world-scale steam cracker, with feedstock coming from natural gas projects in Qatar; a 1.5mn tonnes per annum (tpa) mono-ethylene glycol plant using Shell’s proprietary OMEGA (Only MEG Advantaged) technology; a 300,000 tpa linear alpha olefin unit using the proprietary Shell Higher Olefins Process; and a 250,000 tpa OXO products. Graham van’t Hoff, executive vice president for Shell Chemicals remarked, “The proposed Al-Karaana Petrochemicals Complex project underlines Shell’s growth aspirations in the Middle East.”

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Saudis to invest heavily in India SAUDI ARABIA'S STATE-OWNED fund and private companies plan to invest heavily in a host of vital economic sectors in India, said Saudi Ambassador to New Delhi Saud Al-Sati.

www.sabic.com

"Saudi Basic Industries Corp (SABIC) is the largest public sector firm. It is looking for joint ventures to expand operations globally. In India it is in the process of investing around $ 100 million," IANS quoted Al-Sati as saying. He added: "Several other Saudi firms are exploring similar opportunities. They are finding India attractive."

Will Iran overtake Saudi production? IRAN HAS EARNED nearly US$3 billion in exports of petrochemical products during the first 336 days of the Iranian calendar year that began on March 21, 2012. The exports of paraxylene, benzene and other petrochemical products from the Assaluyeh port, located in the southern part of the country, fetched US$ 2.856 billion for Iran, Mehr News Agency reported. According to the www.nipc.net report, Iran’s petrochemical products were mainly exported to China, India, Japan, Indonesia, Thailand, Afghanistan, United Arab Emirates, Spain, Taiwan, Malaysia, Turkey, Vietnam and the Netherlands during the period. In the last calendar year, Iran exported a total of 18.2 million tons of petrochemicals and polymers worth around US$14.2 billion to over 60 countries. Iran’s National Petrochemical Company (NPC) is currently the secondbiggest manufacturer and exporter of petrochemicals in the Middle East, next only to Saudi Arabia. The petrochemical production capacity of Iran is likely to reach 100 million tons by 2015, Mr. Abdolhossein Bayat, an Iranian Deputy Oil Minister, has said. Bayat, who is also the managing director of National Petrochemical Company (NPC), said Iran’s petrochemical production capacity would increase to 60 million tons by August this year, as several new petrochemical projects are likely to come onstream by then. New petrochemical hubs are being set up in Lavan Island in the Persian Gulf, in the southeastern port city of Chabahar, and in Sarakhsh in northeastern Iran, which are together expected to make Iran the largest petrochemical producer in the Middle East. www.oilreview.me

Oil Review Middle East Issue Two 2013 33

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SOGAT 2013 Open for business

New sour gas field exploitation is focused on but not limited to the Middle East given the many interesting activities taking place in North and South America, Russia, Central Asia and the Far East. HUS WITH SO many international sour hydrocarbon projects there is a real need for operators to work closely with partners and service companies to ensure that project management, risks and costs are properly controlled for successful field development given the range of contaminants that need removing in order to sweeten the gas for industrial use. The increasing domestic demand for gas at a rate of 15 per cent per annum within the Middle East has meant expanding sour E&P developments as one of the major priorities for the region’s governments. Current developments in Saudi Arabia include the offshore Karan field where the gas processing operations from this field have commenced at the Khursaniyah Gas Plant. PDO are continuing their efforts on the Harwell project as well as its interests in sour gas reinjection, and have significant future development plans in Southern Oman together with a new challenging brown field mega sour gas project located below currently producing sweet reservoirs. In Kuwait, Shell is also assisting KOC with their HPHT Jurassic sour gas fields. These deep exploration wells present some of the most challenging drilling conditions currently known. Of the 24 phases of South Pars in Iran only 10 are operational and doubts exist over the 12th phase expected to be operational and producing 84 mcm of sour gas per day. In Qatar, with its world dominance in LNG, they have recently started up another two of the largest LNG trains each having a capacity of 7.8 MTPA and are still producing around two million t/a of sulphur from natural gas processing at the Common Sulphur Facility at Ras Laffan. When the Shah Field in the UAE is operational it expects to increase gas capacity by 10.34 bcm/y and all aspects of this project will serve as an international benchmark in future sour gas development. UAE sour gas interests are not limited to Shah as technical assessments have commenced for the Bab Field prior to tendering in 2015 which after expansion

should increase production to 36.6 mcm per day. ADNOC have also invited Wintershall and OMV to investigate the potential of the Sour Shuwaihat Field. Similarly the offshore Hail Field is under technical review given its potential of producing 14.2 mcm per day of sour gas. This increase in sour gas output will be addressed by the Asab Gas Processing Facility and a further fifth plant at Habsham allowing 198.2 mcm per day to be processed. Certain fields under development contain significant amounts of CO2. The interest in CO2 – EOR in the region as a whole continues and within Abu Dhabi, ADMAOPCO is conducting a feasibility study for the Thanama Reservoir and ADCO’s plans with the Rumaitha Field are ongoing. Throughout the region there will also be a need for more plant to manage the increase in liquid sulphur by-products. So the SOGAT 2013 Conference will see several examples of the latest acid/sour gas removal techniques being presented. Also featured will be the impending environmental needs to improve SRU efficiency, how to overcome the detrimental effects of various

contaminations in sour gas processing, managing polluting emission risks, the proper management of engineering material selection to combat various corrosion scenarios and to avoid costly repair or redesign aspects, CO2 issues with respect to amine treatment and EOR usage and the all important HSE challenges with sour gases in protecting employees as well as the proper handling of liquid and solid sulphur to mitigate serious subsequent issues for the supply and distribution chain. Thus together with the pre-conference range of detailed workshop topics and the increased number of exhibitors participating together with specific software demos from one exhibitor, SOGAT 2013 will provide a unique and one stop opportunity to benefit all from the latest developments in international sour hydrocarbon technology management and will continue to serve as the premier international meeting place for the sour gas community.

Visitors to the Exhibition are welcome and can attend for free but need to register at www.sogat.org.

S08 ORME 2 2013 OMC_Layout 1 12/03/2013 11:47 Page 35

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'Charting a course' is the appropriately nautical theme for this year’s Offshore Mediterranean Conference (OMC). With Libya back fully on stream the sea unites a wide region with huge potential.

It’s time to make your mark

in the Med T

HE 11TH OFFSHORE Mediterranean Conference & Exhibition will be open in the Italian oil port-and-processing city of Ravenna from 20-23 March. Back in 2011 – a momentous year for the regional industry as a result of events in Libya – more than 1,200 delegates attended the many technical sessions, and more than 10,000 visited the focused trade exhibition alongside. Says this year’s chairman Innocenzo Titone: “OMC 2013 will continue to provide a unique venue for discussing the latest developments in oil and gas technology and their applications, across the entire E&P chain, providing a platform for technical knowledge exchange and networking opportunities.” And he comments in his welcome message (issued along with all relevant details including the full conference programme at www.omc.it/2013) on the momentous challenges and changes facing the industry in general and this enormous region in particular. These include: the unstable financial context generally; continuing political unrest in energyproducing countries; the development of unconventional resources, now including crude itself in North America; retraining of skilled workers; and the opportunities offered by new giant fields – to name but a few. He places special emphasis on the growing social responsibilities that the industry now faces, the subject of a special session on the morning of 22 March.

OMC 2013 will continue to provide a unique venue for discussing the latest developments in oil and gas technology and their applications, across the entire E&P chain “Integrating social responsibility activities into project planning and execution ... assures companies of having a licence to operate” he says, referring to operations in frontier and mature areas – with social responsibility being the “fourth element” of HSE. Introduced by eni’s CEO Paolo Scaroni leading officials from Algeria, Egypt and Libya will participate in the opening non-technical session, concentrating on the general issues raised by Eng Titone above. All will remember very clearly how it was during the previous OMC that the Libyan crisis with its momentous consequences - for the whole region and the whole wider world - was brewing up fast. The plenary will concentrate on the new strategies needed to cope with just some of the ongoing regional results. Detailed technical sessions follow as listed here: 20 March, pm 6 Exploration prospects 6 Flow assurance 6 Advances in drilling technology 6 Seismic interpretation, satellite field exploration 6 Gas valorisation 6 Drilling optimisation 21 March, am

6 Drilling fluids 6 Hydrocarbon prospectivity of different basins I, II www.oilreview.me

www.omc.it

6 6 6 6

Protecting the community and the environment Deepwater technologies Completion Offshore technology

21 March, pm Risk evaluation, training Increasing reserves Unconventional resources I, II Monitoring, inspection and operations Advanced methodologies for complex reservoirs Technologies for the future I

6 6 6 6 6 6

22 March, am HP-HT and E&P challenges Field and production optimisation Technologies for the future II New logging techniques Offshore pipeline integrity Safety enhancement for facilities and materials A lot of detail about the technical workshops also on offer is provided on the website, participation being negotiable on an individual-registration basis. These cover such topics as Aspects of automation (in association with the well known Italian ANIMP association, 21 March, am), Offshore service vessels (21 March, pm), as well as Developing offshore wind resources on the 22nd. Oil Review Middle East along with its Oil Review Africa equivalent are proud to have been appointed Official Regional Magazines for this highly regarded two-yearly technical conference which focuses on a vital but generally under-exposed region. All delegates will receive a full set of conference proceedings, and additional copies can be obtained at cost from new associated publishers OnePetro at http://shop.omc ■

6 6 6 6 6 6

Oil Review Middle East Issue Two 2013 37

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What the industry says

Seminar series confirmed

“…a unique opportunity to interact with industry partners and discuss the changes that are occurring in the upstream sector, the ever so important environmental aspects of our operations, technological innovation and the development of international infrastructures.” [Nicola Monti, Edison Spa]

PRECISION POLYMER ENGINEERING (PPE), a leading manufacturer of high performance moulded elastomer seals will be delivering a series of seminars at the OMC (Offshore Mediterranean Conference) in Ravenna, Italy, between 20th and 22nd March alongside key Italian specialist sealing distributor Fridle Sistemi di Tenuta. PPE and Fridle are also jointly exhibiting at the show, showcasing their range of specialist O-Rings and sealing solutions for the offshore oil and gas Industry, focussing on key PPE brands Perlast and Endura. The three seminar sessions will take place on Wednesday 20th March between 10am and 1pm in room “Sala Verde” (1st floor Hall 6) and will cover topics including; 6 Elastomer seals in high concentration sour gas (H2S) – what you should know, 6 Rapid Gas Decompression (RGD) tests for offshore sealing: the good, the bad and the just plain inappropriate, 6 Low temperature elastomers for the oil and gas industry – how low can you go? These seminars will aim to address the key sealing issues affecting the oil and gas industry in an ever more demanding marketplace. Places at the seminars are free to attend but are limited to only 40 delegates and both PPE and Fridle are anticipating strong demand for the tickets. PPE has experienced significant growth in recent years providing specialist seals for the oil and gas industry and attendance at OMC is viewed as an excellent opportunity to meet new and existing customers to enable them to discuss technical issues surrounding effective sealing technologies. PPE are especially interested in talking to valve manufactures and manufacturers of other specialist flow control equipment that supply the oil and gas industry. Italy is a hotbed of specialist valve manufactures and PPE has identified this as a significant opportunity to penetrate the European manufacturing market further. Paul Gillyon, managing director, PPE said “we have a number of excellent partner distributors around the world who do a superb job of communicating our value proposition and in a market as important to us as Italy, we are delighted to work together with Fridle on joint promotional projects. We expect demand for the seminars to be very strong, in 2011 there was standing room only so we are advising that people pre-register for these sessions to avoid disappointment.”

“There is a focus, unique within the industry, on the issues and opportunities which are important to those of us who are exploring for and developing the resources in this area.” [Giuseppe Tannoia, eni e&p] “…a unique networking opportunity for upstream companies … With the world’s energy systems facing profound changes it provides an excellent insight into innovations in the technologies on which our business relies and a chance not to be missed to discuss them and share knowledge …” [Marco Brun, Shell Italia E&P] “OMC is a key opportunity for us to communicate who we are, what we do and what are our strengths and values.” [Thierry Normand, Total E&P Italia] Other major companies including Baker Hughes, Halliburton, Schlumberger and Saipem (eni Group) are again proud to be associated with this major regional event. Address e-mailed queries to conference@omc.it and/or exhibition@omc.it (tel +39 0544 219418 and +39 0630 883030 respectively)

Accurate analysis of fluid types BAKER HUGHES ANNOUNCED the availability of its SOr™ (saturation oil remaining) sponge liner coring system, which provides an accurate analysis and measurement of fluid types and oil saturation levels in cores. This information helps operators optimise their asset life cycle and determine if formations have sufficient reserves in place to continue field development and production. Conventional sponge coring methods do not always accurately determine fluid types or quantify residual oil volumes because the sponge can be easily damaged, allowing oil seepage during core extraction. The SOr system, which includes a 3½-in. ID sponge liner, modified pilot shoe, proprietary pressure-compensating piston design, LaserCut™ aluminum inner-barrel liner system, and custom-designed coring bit, reduces the risk of drilling fluid invasion and captures all of the expelled oil as the core is brought to the surface. The system’s application-specific bit minimizes eccentricity and helps ensure that a precisely sized core is cut for entry into the sponge liner. The molded, oil-absorptive sponge liner with protective mesh ensures a close fit between the core and the sponge so that expelled oil is absorbed rather than lost in the formation or wellbore. This tight fit also provides additional core integrity and protects it during acquisition, recovery, surface handling, and transportation to the laboratory for analysis and short-term storage.

38 Oil Review Middle East Issue Two 2013

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S09 ORME 2 2013 Innovations C & D_Layout 1 12/03/2013 11:54 Page 39

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Tratos has been producing cables for use in the oil and gas industry for over 40 years. We provide cables and services for a large variety of onshore and offshore operations, including umbilical cables.

Jasmine (UK) ÂŁ5 million supplied to ConocoPhillips for specialist fire resistant cables for Phase 1 of the Jasmine development in the Central North Sea

Alba Marina (Italy) 1830 meters of Tratos Submarine medium voltage cable to energy company Edison for use in its Alba Marina floating storage

Sannazzaro Refinery (Italy) â&#x201A;Ź15 million contract for oil and gas cables to the Sannazzaro Refinery, owned by energy company ENI, in the Po Valley

Visit us at: OMC 2013 Offshore Mediterranean Conference Stand 6 A2 20/22 March 2013 Ravenna - Italy

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S09 ORME 2 2013 Innovations C & D_Layout 1 12/03/2013 11:54 Page 40

Innovations

Schlumberger releases new slimhole RSS SCHLUMBERGER HAS LAUNCHED the slimhole PowerDrive Archer high build rate rotary steerable system (RSS). The new RSS delivers build rates of up to 18°/100 feet (ft), with full directional control and dogleg assurance for complex 3D well profiles and multilateral well designs. “The slimhole PowerDrive Archer RSS can drill well profiles previously only possible with motors, in one run, with the ROP and wellbore quality of a fully rotating RSS,” said Steve Kaufmann, president of Drilling & Measurements at Schlumberger. “Expanding the capabilities of our high build rate RSS services, this slimhole edition has drilled 130,000 ft in carbonate, sand and unconventional reservoirs as part of our integrated drilling systems offering, including advanced Smith PDC drillbit technology,” he added. Schlumberger said in a statment that the slimhole PowerDrive Archer RSS uses a combination of push-and point-the-bit technologies, and introduces a step change in drilling performance in geosteering and openhole sidetrack applications. The new product has been built on the reliability of the PowerDrive X6 system. It has proven itself in more than 130 field test runs in North America, the Middle East, West Africa, Europe and Asia.

The slimhole PowerDrive Archer high build rate RSS can drill well profiles previously only possible with motors

In the Permian Basin, Cimarex Energy needed to drill a 6 1/8-in horizontal section within a 7-ft thick true vertical depth zone in the Bone Spring shale formation. The well design included high dogleg severity with a 10°/100-ft curve. The slimhole high build rate RSS was selected to eliminate additional trips downhole, and the challenging curve and lateral were drilled in one run, saving 26 hours of drilling time.

40 Oil Review Middle East Issue Two 2013

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S09 ORME 2 2013 Innovations C & D_Layout 1 12/03/2013 11:54 Page 41

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“Why is Gerard smiling?”

“Because once again he has just successfully demonstrated the Graco XP70”

XP70 beneﬁts: TM

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Register for your demo at XP70.graco.eu.com This picture has been taken after a successful demo at Pugliese Industria Meccanica S.r.l. in Mozzagrogna (Ch) Italy.

S09 ORME 2 2013 Innovations C & D_Layout 1 12/03/2013 11:54 Page 43

HALLIBURTON’S FORAYSM 3D microseismic fracture matching analysis service is now available as a real time application. A component of Halliburton’s Knoesissm service, the Foray service provides a new method of fracture diagnostics that uses microseismic event data as it is generated in real time to develop an image of the fracture network being created in the formation. Halliburton noted that real-time analysis provides the technical team the knowledge it needs to make changes to treatments during the Knoesissm service job. Every fracturing treatment can be tailored for maximum effectiveness. This capability is particularly important for fracturing treatments in shale formations. The Foray service, according to Halliburton, can help to reduce the cost per barrel of oil equivalent and maximise asset value for an operator through improving fracturing treatment design and execution.

www.oilreview.me

Maersk Oil Qatar signs major drilling contract MAERSK OIL QATAR and Gulf Drilling International (GDI) have signed a four year agreement worth US$211mn in which Maersk Oil Qatar will contract the Al Jassra, GDI’s new-build jack-up drilling rig. The contract covers drilling and well work-over activity in the Al Shaheen field, Qatar’s largest offshore oil field. The Al Jassra will be one of the drilling rigs used to deliver Maersk Oil’s current field development plan, FDP 2012, which was agreed in November 2012 and calls for the drilling of 51 new wells in the Al Shaheen oil field. Lewis Affleck, Maersk Oil Qatar’s managing director said, “By working closely with our partner Qatar Petroleum, Maersk Oil has started to unlock the significant potential of the Al Shaheen oil field. We have already drilled in excess of 300 wells, and we expect to drill many more in the years ahead to optimise recovery from this giant offshore oil field.” The state-of-the-art Al Jassra rig is a Pacific Class 400 jack-up drilling rig. The rig will come with a 75’ cantilever outreach and will provide accommodation for 150 persons. It will provide the capacity and ability to drill the extended reach wells that are needed to access the long thin reservoirs of the Al Shaheen field. Ibrahim Al-Othman, GDI’s CEO added," This deal signifies an important milestone for GDI, as we begin to provide an essential role in the future development of Qatar’s largest offshore oil field. Both companies have worked tirelessly to ensure that a credible, economic and sustainable drilling rig solution is delivered.” The Al Jassra rig is currently under construction at PPL shipyard in Singapore. Following commissioning and dry tow, the rig is expected to arrive in Qatar mid-year, 2013.

Oil Review Middle East Issue Two 2013 43

Innovations

Halliburton adds new features to its Foray service

Saudi Aramco and Welltec trial new well tractor system

Foster Wheeler and Shell agree technology Enterprise Framework Agreement FOSTER WHEELER HAS signed a five-year global Enterprise Framework Agreement (EFA) with Shell Global Solutions International (Shell). Under this agreement, Shell may request Foster Wheeler to provide support in the preparation of basic engineering packages for the following Shell technologies: distillation, hydrocracking, hydrotreating, thermal conversion, ethylene oxide, pyrolysis gas, fluid catalytic cracking and CANSOLV sulfur dioxide scrubbing. The agreement is for a five-year period, with an option for Shell and Foster Wheeler to agree to extend the agreement for another five years. Foster Wheeler already has in place a five-year Asian Enterprise Framework Agreement initiated last year with Shell under which Foster Wheeler is providing engineering and project management services for Shell downstream and midstream projects in Asia and elsewhere. “We are already working with Shell on a diverse portfolio of their planned investments under the Asian Enterprise Framework Agreement, both within Asia and elsewhere, and we are very pleased to have signed a second EFA under which we will provide additional global support to Shell, this time in the development of technology packages,” said Umberto della Sala, President and chief operating officer, Foster Wheeler AG. “It is a key strategic objective of Foster Wheeler to develop and extend long-term relationships with our clients to leverage our technical expertise, global reach and local project delivery to support their global investment plans,” he added.

THE EXPEC ADVANCED Research Center (EXPEC ARC) and Welltec have collaboratively developed and successfully field tested the first 2-1/8 inch well tractor that can pull a coiled tubing through to the total depth (TD) of the well to perform stimulation and logging jobs. The tractor is a tandem set-up equipped with dedicated turbines and generators that can provide the necessary power to the tractors to pull the stimulation and other tools down to the TD. “This new development will add significant value in ongoing operations, such as in the Manifa field, where extended reach wells need to be stimulated to meet the expected targets,” said Nabil Al-Habib, chief technologist of EXPEC ARC Production Technology Team (PTT). The Upstream business line has been developing Extreme Reservoir Contact (ERC) wells with advanced completions to complement their Extended Reach Drilling (ERD) in achieving wells that can span kilometers and increase reservoir contact to improve sweep efficiency and ability to recover. To overcome the difficulties of producing hydrocarbons through laterals of such long distances, electrical submersible pumps (ESP) are deployed within the ERC laterals to boost hydrocarbon production over the long well distances. The challenge remains in pulling tools to the TD of the well, especially for a stimulation job that needs to be performed using a coiled tubing (CT). A tool has to be designed small enough to go through small diameter constrictions, yet powerful enough to pull the load needed. EXPEC ARC and Welltec had to overcome this challenge through their development of the first tandem 2-1/8 inch well tractor and have proven its viability in a recent Saudi Arabia field test.

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Web selection - Innovations from www.oilreview.me A selection of recent products and service developments for the oil and gas sector. Full information can be found on www oilreview.me

Sadara opts for Intertec enclosures

Paperless recorders from Yokogawa

INTERTEC HAS WON the contract for the environmental protection cabinets and shelters that will protect the field-based process analyzers at the new Sadara petrochemical complex in the Kingdom of Saudi Arabia.

YOKOGAWA ELECTRIC The GX and GP series CORPORATION announced the release of two new product series, the GX panel-mounted paperless recorders and the GP portable paperless recorders. These are components of SMARTDAC+TM, a newly developed next-generation data acquisition and control system.