Oil & Gas Review by oeronline emagazine

FROM THE EDITOR’S DESK

No 07

Nov-Dec, 2009

On a roll I

t’s been a year since we launched Oil & Gas Review, with a clear objective of filling the information void on the oil and gas industry in the Sultanate. Exactly a year later, we are deeply satisfied with the acceptance and the overwhelmingly positive vibes we have received for the Oil & Gas Review. In fact, we are grateful to all our readers and all those who have contributed in enabling the Oil & Gas Review scale new heights.

CONCEPT & CONTENT Akshay Bhatnagar Sunil Fernandes

The present edition is our anniversary edition, and it’s a privilege to have HE Stefan van Wersch, the Ambassador of Netherlands to Oman as our Guest Editor. In the current edition we have featured an exclusive interview with HE, Dr Mohammed bin Hamad Al Rumhy, the Sultanate’s Minister for Oil and Gas, who keeps us abreast on the latest in the oil and gas sector in Oman. According to His Excellency the Minister, Oman would do its utmost in exploring its offshore hydrocarbon resources.

DESIGN Art Director Sandesh S. Rangnekar Senior Designer M. Balagopalan Shameer Moideen Senior Photographer Rajesh Burman Photograp her Sathya Das Production Manager Govindaraj Ramesh MARKETING Business Head - Strategic Media Unit Kush Gupta Marketing Team Sanjeev Rana CORPORATE Chief Executive Sandeep Sehgal Executive Vice President Alpana Roy Vice President Ravi Raman Senior Business Support Executive Radha Kumar Distribution United Media Services LLC Published by United Press & Publishing LLC PO Box 3305, Ruwi, Postal Code - 112 Muscat, Sultanate of Oman Tel: (968) 24700896, Fax: (968) 24707939 Email: publish@umsoman.com All rights reserved. No part of this publication may be reproduced without the written permission of the publisher. The publisher does not accept responsibility for any loss occasioned to any person or organisation acting or refraining as a result of material in this publication. OER accepts no responsibility for advertising content. Copyright © 2009 United Press & Publishing LLC Printed by Oriental Printing Press Correspondence should be sent to: Oil & Gas Review United Media Services PO Box 3305, Ruwi 112, Sultanate of Oman Fax: (968)24707939 Email: akshay@umsoman.com

Presentation

Also featured is an exclusive and comprehensive interview with Peter Voser, the Chief Executive Officer of Royal Dutch Shell Plc. Interestingly, there is a lot of expectations on the shoulders of Voser, who took over as the CEO earlier this year, especially since Royal Dutch Shell Plc has now been ranked the number one company in the Fortune Global 500 list. The edition also features a detailed country report on China, which is investing heavily in the oil and gas sector taking advantage of adverse economic conditions. Moving on, there’s been a rebound in the price of crude oil, riding piggy back on positive economic data. In fact, oil prices recently touched a 2009 high of almost Dollars 82 per barrel. Analysts tracking the Oil and Gas industry believe that the euphoria might be short lived, especially if the US Dollar starts strengthening. Analysts also believe that should the economic recovery turn fragile, we could see prices falling once again. Also, a lot would depend on geopolitical factors which always weigh on prices. Do forward your comments and feedback on the edition. Sunil Fernandes sunilf@umsoman.com

CONTENT Cover Story

Growing Offshore

An exclusive interview with His Excellency Dr Mohammed bin Hamad Al Rumhy, The Sultanate’s Oil & Gas Minister, who says Oman will focus on exploiting its offshore hydrocarbons

New Technology & Free Markets Crucial

Harnessing new technologies will be crucial, says Rex Tillerson, Chairman & CEO of Exxon Mobil

Insets:

INDUSTRY SCAN

A complete news round-up on the latest in Oman’s oil and gas industry

Heralding a New Era

COUNTRY REPORT

INTERVIEW

China is making large investments in the Oil & Gas Industry to ensure its energy security in the future

An interview with Joe Sakr, General Manager of Oryx Metal Industries

Curbing Greenhouse Gas Emissions In the global fight against climate change, the industry and power sectors both play a key role, says Nobuo Tanaka, Executive Director of the International Energy Agency (IEA)

Nov-Dec, 2009

Oman and the Netherlands have a long history of co-operation and friendship, writes HE Stefan van Wersch, the Netherlands Ambassador to Oman

Future of Natural Gas

Natural Gas has reached an indispensable position, says Rune Björnson, Executive Vice President, for Natural Gas at StatOil Hydro

CONTENT TETE-A-TETE

An Outstanding Relationship

An exclusive interview with Peter Voser, Chief Executive Officer, Royal Dutch Shell Plc, who outlines his plans for the company

32 42

Bidding Adieu!

An exclusive interview with Dr Andrew Wood, former Shell Country Chairman, Oman

Insets:

54 OPEC

A report on OPECâ&#x20AC;&#x2122;s new office in Austria

MARKET ROUND-UP

COMPANY REPORT

global ROUND-UP

Nov-Dec, 2009

Crude oil prices recovered to touch a yearly high of $82 per barrel, riding piggy-back on improved economic data

Meeting Complex Challenges

A report on the Society of Petrophysicists and Well Log Analysts (Oman Chapter) recently held event

A report on FASTCO which is making rapid strides in providing transportation solutions

A complete news round-up on the latest from the global oil and gas industry

Striving to Excel

A report on the Al Sulaimi Groupâ&#x20AC;&#x2122;s plan for the future

industry scan

Leaving a lasting impression W

He not only suggested, but took the initiative of completing a comprehensive interview with the Voser, asking tricky questions in the process.

However, HE van Wersch, being an avid reader and a good writer himself, instantly agreed. What transpired in the next one month, were fruitful suggestions, culminating in a superb edition. HE van Wersch recommended an interview with the recently appointed Royal Dutch Shell Plc CEO, Peter Voser.

“Pardon me, but I am now a journalist and not a diplomat,” he said while interviewing HE Dr Mohammed bin Hamed Al Rumhy, the Sultanate’s Minister for oil and gas. HE Van Wersch’s questions to His Excellency the Minister were well researched and thoroughly prepared. He did not even spare the photo opportunity, making use of it to quickly squeeze in a few more questions.

hen we approached the Ambassador of Netherlands to Oman, His Excellency Stefan van Wersch to be the Guest Editor for the Oil and Gas Review, we were a little skeptical of getting a positive response.

Nov-Dec, 2009

HE van Wersch visited our office late in October, to review the entire editorial that was slated for printing. He suggested playing-up certain stories, even while giving ideas on how the design and layout could be improved. He interacted with the editorial team, and spoke on all topics including maritime and infrastructure, and praised the Sohar Port. “I think the country has created a world-class port in Sohar. It’s going to change the way we trade in the future,” he said. From vetting the entire edition, to conducting high profile interviews, His Excellency van Wersch had left an indelible impression.

From vetting the entire edition, to conducting high profile interviews, His Excellency van Wersch left an indelible impression

industry scan

Oman Oil and Reliance Industries sign agreement Oman Oil Company Exploration and Production (OOC EP) and Reliance Exploration and Production DMCC, Dubai (REP DMCC) have signed a Farm Out and Joint Operating Agreement, under which OOC EP will have 30 per cent and 25 per cent in blocks 18 and 41 offshore Oman respectively. Under these agreements, the two companies will commence joint exploration activities in the blocks. The agreements were signed by HE Maqbool Ali Sultan, the Minister of Commerce and Industries and Chairman of Oman Oil Company SAOC on behalf of OOC EP and Atul Chandra, Director of REP DMCC. “I am very excited about the prospects of Oman Oil Company Exploration and Production being involved in such large scale activities in the Gulf of Oman,” commented HE Maqbool Ali Sultan. The Joint Operating Agreement provides a

basis to establish a joint operating company to be managed by the two companies upon a commercial discovery being established in Block 18. Under the terms of the contract, both

Seminar for Flexitallic products held

The Oil and Gas division of Khimji Ramdas recently held a seminar for Flexitallic products. The seminar focused on the new sealing technologies from Flexitallic namely the I-Flex Flange Insulation Set and FRG Flange Rescue Gasket. Speaking on the occasion, V. Srinivasan Divisional Manager of Khimji Ramdas said: “Flexitallic products are renowned for their leadership and superb quality. The introduction of the new range of products is yet another milestone in quality.” Nik Thandi, Territory Sales Manager for Flexitallic said: “We pride ourselves in outstanding engineering sealing solutions and this is how we distinguish ourselves from competition. Today, we supply every form of gasket available on the planet. We provide solutions wherever you have two pipelines connected to each other.” Russ Currie, Applications Engineering Manager at Flexitallic said: “The need for the Flange Rescure Gasket was felt from the need to manage corrosion. Everyone whom this product has been introduced to has been excited about it. It is a low cost solution to the repair and management of corrosion issues,” he said.

Nov-Dec, 2009

companies will develop a program to cover all aspects of Block 18 exploration and development, including sub-surface and surface studies and will closely monitor the work undertaken by partner companies.

Shell Oman begins E-invoicing Shell Oman Marketing Company has begun sending electronic invoices through email for fuel cards to all customers registered for E-usage. “This is an initiative aimed at increasing the convenience while providing high quality service for Shell’s customers, reducing data entry errors when figures are re-keyed as well as the resulting positive impact on the environment through reducing usage of paper where not necessary. This service is in addition to the features like SMS information sent from Shell Oman offices regarding fuel cards and online reports which are already available,” a release from the company has stated. Announcing the service, Ali Al Amri, Shell Cards Operations Manager and Mohammed Al Kindi, Cards Marketing Manager, said that this is yet another service Shell Oman has implemented for the convenience and benefit of customers through information collected from market research.

industry scan

PDO Supports Al-Noor Association for the Blind Petroleum Development Oman (PDO) has announced its continued support for the Al Noor Association for Blind. PDO is to fund the acquisition of a small bus which will be used by the Al Dakhilya Region Branch of the Al Noor Association. The fifteen-seat bus will be used to cover the transportation need of the association. The Company’s commitment was made recently at a special ceremony held at the PDO’s headquarters in Mina al Fahal during which a Memorandum of Understanding was signed by Human Resources Director Mundhir bin Salem al Barwani and Mohammed bin Oudam Al Soubahi, Chairperson of Al Noor Association for the Blind (Al Dakhliya Region Branch). “This grant from PDO’s Social Investment budget is aimed at helping people in our concession area,” Mundhir al Barwani said. “PDO believes that the best way to support communities is to work hand-inhand with local organisations like the Al Noor Association.”

Advanced Oilfield Technology to expand Advanced Oilfield Technology Company, an ISO 9001 certified Muscat based Oil and Gas service company is a part of the renowned Al Sulaimi Group, Oman. Presently with about 10,000 square meter engineering facility in Ghala industrial area, AOTC is mainly focused on engineering activities needing special machining, fabrication of components such as piping, structures, tanks, flare stacks, pig launchers and pig receivers, heat exchangers, condensers, using stainless steel and duplex stainless steel material etc. AOTC also offers specialised coating services using UK based Belzona range of products besides offering various lifting solutions in tie-ups with market leaders in the industry such as Kuli Hebezeuze Gmbh, Germany, Italkrane S.R.L Italy etc. Other services include ESP (Electrical Submersible Pumps) supply, installation, commissioning, repair & maintenance for water supply wells, online leak sealing and rubber lining services through in-house capabilities. AOTC is also one of the very few companies in the region to offer Thermal Spray and HVOF (High Velocity Oxy Fuel) services used extensively by the Oil and Gas industry for various maintenance and repair needs. AOTC has recently been awarded the licenses to use the official API monograms API Spec 6A & API Spec 6D. API Spec 6A covers design, testing, inspection welding, repair and manufacture of wellhead and Christmas tree equipment while API Spec 6D covers design, manufacture, testing and documentation of ball, check & gate valves for application in pipeline systems of petroleum and natural gas industry. Previously, in October 2007, AOTC has been awarded API Spec 5CT certificate for manufacture of casing or tubing pup joints & other accessories. With the upcoming state of the art engineering facility in Rusayl industrial area near Muscat covering 30,000 square meters, AOTC will soon be geared up to undertake various heavy engineering jobs o provide better value-added services to the local & regional energy industry.

Renaissance Services a lead partner in Tahaddi-Outward Bound Oman Renaissance Services has announced its commitment to support the first Outward Bound school founded in the Arab world, known locally as Tahaddi, which translates to Challenge. The internationally recognised not-for-profit educational charity, Outward Bound, uses the outdoors as a challenging classroom environ to teach key life skills and its courses are especially designed to build confidence in young adults aged between 16-18 years. Renaissance is keen to provide such an opportunity in Oman where young adults are guided through their confrontations with the competitive wilderness in a “no phone, no cooks, no doors classroom” as a key to realising their self-potential. Working in groups also builds the appreciation for teamwork and responsible citizenry. The lessons taught on an Outward Bound course through a series of team building, problem solving and physical challenges will translate into strategic life and business skills for the Omani students chosen to attend.

Nov-Dec, 2009

Renaissance Services is the first lead partner to pledge support for six, three-day courses for young people from government schools, and hopes more Omani corporate will follow suit. Each course accommodates groups of 18 people and costs RO4000. Renaissance is a leading services provider to the Omani and international communities. The company commits to a social responsibility

programme that regularly supports providing education and employment opportunities, as well as assisting and aiding the countries it operates in. There are Outward Bound schools in 30 countries worldwide and the physically vigorous programme runs on stringent safety policies. Outward Bound also offers designed courses for businesses and international schools.

industry scan

Petroleum development oman breaks seismic world records Land-based seismic-survey crews working for Petroleum Development Oman (PDO) have set two new world records. They have recorded seismic signals emitted from the largest number of daily locations. And, to do so, they have had to deploy the largest number of receivers per seismic crew. PDO is currently probing the subsurface rock structures in the Khulud region of north Oman and in the Greater Birba region of south Oman with seismic waves – essentially sound waves travelling through the ground. The seismic waves are generated by 60,000-pound trucks that hydraulically vibrate thick metal plates pressed onto the ground at specified locations, known as vibrating points (VPs). After vibrating for about seven seconds, the plate is raised back into the truck, and the truck then moves to its next VP – typically

about 50 metres away. The raw seismic signals reflected by underground rock layers are picked up by an array of receivers called geophones. Recording the signals with as many geophones as possible from as many VPs as possible is key to the success of most modern onshore seismic campaigns. The world record for the largest number of VPs in a single day had been 13,315. But PDO’s seismic operations in Khulud, carried out by seismic contractor BGP, have recently achieved 14,363 VPs in a single 24-hour period. In fact, PDO’s seismic campaign in north Oman is now regularly achieving in excess of 14,000 VPs a day thanks to new technology, new techniques and 24/7 operations. Not so long ago, seismic surveys were averaging only 2,000 VPs a day. “The Khulud and Greater Birba seismic acquisition campaigns have literally been

working day and night to gather the vast quantities of data needed to accurately image the subsurface structures of north and south Oman,” PDO’s head of seismic acquisition Said bin Salim al Mahrooqi said. “Increasing the number of VPs acquired per day supports better data quality while lowering unit cost.” Cost-efficiencies have also been achieved by increasing the number of geophones recording the data. PDO has deployed the largest number of geophones of any single seismic crew in the world – about 300,000. “The figures are truly impressive,” says Bob Sambell, PDO’s chief geophysicist. “At any one time, these geophones will be spread over an area of perhaps 90 square kilometres, with the signals from every VP recorded into 200,000 of these geophones. Massive quantities of data are produced, amounting to perhaps one terabyte a day.”

Sultanate’s 2010 budget estimates set oil price at $50

Seven Seas Petroleum launches Valve Automation Centre

The Financial Affairs and Energy Resources Council held its fourth meeting of the year under the chairmanhip of Ahmed bin Abdulnabi Macki, Minister of National Economy and Deputy Chairman of the Financial Affairs and Energy Resources Council. The Council discussed estimates of the State’s General Budget 2010 which covers the general framework of revenues, expenditure and deficit, besides the assumptions upon which the estimates were established as against the requirements of public expenditure and financial commitments, including development projects and the need to maintain an appropriate ration in economic terms of the deficit. The Council agreed, on the estimates of the 2010 budget, that oil price will be $50 a barrel. The Council also discussed a report prepared by the Ministry of Finance on the state’s financial status, as well as reports related to activities of the State’s General Reserve Fund and their investment earnings.

Seven Seas Petroleum has set-up a “Valve Automation Centre (VAC)” offering single point responsibility for engineered valve solutions. As a part of VAC, SSP can supply an exclusive line of valve automation products including pneumatic, hydraulic and electric actuators and a complete line of valve products. This centrally located facility, spread over 7200 sq.ft, in Ghala, Muscat, is equipped with the State-of-art Ventil Test Bench, and will offer complete valve automation solutions which include valve repair, refurbishment, assembly and testing of all type of valves & actuators. Seven Seas Petroleum LLC, a quality & superior service oriented company was established in 2002. The company was set up to provide Oman oil producers and Ministries with oil field instrumentation and mechanical equipment from some of the world’s top manufacturing companies. Over the past seven years Seven Seas Petroleum has increased its customer base in Oman to include industry segments other than Oil & Gas, such as Petrochemicals, Water & Waste Water, Cement, and several EPC contractors serving these industry segments. The new VAC facility is part of Seven Seas Petroleum’s initiative to enhance the services to the Omani Customers/end-users. With this ISO 9001 – 2008 certified facility Seven Seas is in a position to design, engineer, assemble all automated valve assemblies in-house and carry out the relevant tests as per acceptable local & international standards. With a dedicated team of trained experienced engineers, designers, technicians coupled with stringent Quality control systems, Seven Seas ensures maximum satisfaction to their clients thus providing them with complete automation solutions.

Nov-Dec, 2009

industry scan

Renaissance subsidiary takes double honours at regional maritime awards

The marine and engineering subsidiary of Renaissance Services, Topaz Energy and Marine, has earned two prestigious Seatrade Middle East and Indian Subcontinent Awards for excellence and innovation in the maritime sector across the region. During the grand award ceremony held in Dubai and in attendance of over 600 maritime executives, Fazel A. Fazelbhoy, CEO of Topaz Energy and Marine was awarded for the ‘Personality of the Year’, while Topaz’s Marine MENA fleet received the ‘Workboats’ award. The ‘Personality of the Year’ award presented to Fazelbhoy was one of three special honours on the night, bestowed upon individuals for their significant and lasting contribution to the shipping and maritime industry throughout the region. The ‘Workboats’ award was secured as a result of Topaz’s young and modern fleet size and diversity of the vessels, while its blue-chip client base and laudable safety track record also helped tip the scales in its favour. The company’s engineering division was also represented by its Topaz Marine Repair unit as a finalist in the ‘Ship Repair/ Shipyard’ category. The Seatrade Awards night was the closing event to the Middle East Workboats Exhibition, which ran from October 5-7 at the Abu Dhabi National Exhibition Centre, and included over 170 exhibitors. The organisers noted a 70 percent increase in the number of exhibitors which was seen as a powerful sign of the continuing growth in the offshore marine support sector in the region. The Renaissance subsidiary, Topaz Energy and Marine, was an exhibitor as well as one of the sponsors for the Middle East Workboats Exhibition. The Topaz display included its newest fleet addition, the light crew boat named Topaz Fujairah, a 30-meter aluminium hull catamaran recently built in the company’s own shipyard. The vessel has very high specifications and advanced safety features. At the trade show, the company formally announced its USD 400,000sponsorship of the Flying Angel as part of the company’s Corporate Social Responsibility programme. The Flying Angel is a floating communications support vessel that allows thousands of mariners each year to step off their vessels for a few hours and contact their loved ones at home. The vessel operates in the offshore anchorage of Fujairah and helps the seafarers of all vessels and nationalities to reconnect with their families.

Nov-Dec, 2009

Al Hassan Engineering Company wins Construction contract for Kauther gas compression project Al Hassan Engineering Company SAOG (AHEC) has been selected by Petrofac, the international oil & gas facilities service provider, to execute the construction contract for Petroleum Development Oman’s (PDO) Kauther gas-field depletion-compression project. In July 2009, PDO awarded a contract with a value in excess of US$350 million to Petrofac for the Kauther gas-field depletion-compression project. Petrofac will undertake the engineering, procurement and construction (EPC) of the gas compression system, and associated facilities at the Kauther gas plant, in addition to undertaking the commissioning and six months of initial operations. In turn, Petrofac has selected AHEC for executing the civil, structural, piping, mechanical, electrical, instrumentation, telecom and HSE works. “We are extremely happy to have successfully secured the construction contract for the Kauther gas depletion compression project,” Peter Hall, CEO of AHEC said. He added, “The Kauther Project builds on our significant reference list in the oil and gas facilities sector. We have been associated with the Shams Gas and Condensate Development Project carried out for PTTEP which was adjudged by Construction Week Dubai as the best “Small Project of the Year” for 2007. In a joint venture with SNC Lavalin, Canada we have built the Saih Nihaya Gas Treatment plant which was adjudged the best project in 2005 by PDO as well as Oman’s Best project by Construction Week”. Commenting on the award, Jasbir Singh, General Manager of AHEC, said, “AHEC has been awarded this job based on the excellent credentials it has in major industrial projects involving civil, mechanical, electrical and instrumentation works”. Over last two decades, AHEC which is an ISO 9001:2008 certified company has established an excellent track record of being a prime EPC contractor and construction partner in executing complex jobs in the oil and gas, petrochemicals, power plants, electricity transmission & distribution, industrial infrastructure projects and operations and maintenance of oil & gas installations, water and wastewater. The AHEC healthy current order book includes a number of major projects under varying stages of construction; Seeb Sewage Treatment Plant for Haya Water/ Hyundai Rotem, Nimr Full Field Water Injection Project for PDO, Burhan West - Harmal Pipeline project for PDO, Salalah Methanol project for GS Engineering & Construction, Amal Power Plant project for PDO and a number of other projects in the power sector in addition to civil works for a sub-station for Siemens in Dubai.

OPINION

New Technology & Free Markets Crucial Meeting the world’s growing energy needs while managing the risks of climate change will require the development of all viable sources of energy and policies that support business investment and technology development, says Rex Tillerson, Chairman and Chief Executive Officer of ExxonMobil Corporation

ur best hope is to harness the power of new technologies and free markets to meet the world’s energy and environmental challenges,” Tellerson said in a speech to the Economic Club of Washington, D.C. “By allowing nations and peoples to work together, we can invest in integrated solutions that expand energy supplies, increase efficiency and reduce emissions. Time and time again, our industry has proven that innovation and cooperation unleash human ingenuity and bring far-reaching technological advances that can transform the economy, protect the environment, and increase energy security.” Tillerson outlined the energy challenge facing America and the world – ensuring the availability of energy supplies required for economic growth while addressing the risks of climate change. He highlighted the advantages of a revenue-neutral carbon tax as an effective policy option, compared to the shortcomings of cap-and-trade systems, which can increase price volatility and cause economic harm while failing to reduce carbon emissions. “For businesses and industry, volatile carbon prices under cap and trade would undermine the ability to invest in the advanced technologies that are our best 16

Nov-Dec, 2009

Rex Tillerson, Chairman and Chief Executive Officer, ExxonMobil Corporation

hope for expanding supplies, increasing efficiency and reducing emissions. Such an approach would also create economic inefficiencies and invite market manipulation,” said Tillerson. “A carbon tax is a more direct, transparent and effective approach and one which would be easier to apply globally while avoiding the establishment of new mechanisms for trading emissions and new regulators to monitor them.

It is the most efficient means of reflecting the cost of carbon in all economic decisions – from investments made by companies, to fuel and product choices made by consumers. If implemented on a revenue-neutral basis, a carbon tax would ensure that government policy is specifically targeted to reduce emissions and not to creating a new revenue stream.” Tillerson said punitive taxes targeting the energy industry are detrimental to economic growth, environmental innovation, and energy security. He said such policies ultimately raise energy costs for consumers and undercut America’s future by hindering the industry’s ability to invest in new supplies which are critical to America’s environmental and energy security. The speech also highlighted the importance to the American economy of the oil and gas industry, which supports more than 9 million jobs and provides hundreds of billions in tax revenues for federal and state governments. “Throughout our nation’s history, the oil and natural gas industry has played an important role in America’s economic growth,” said Tillerson. “It drives the US economy by providing reliable energy, well-paying jobs, tax revenues, technological innovation and a solid investment for millions of Americans.”

view point

Heralding a new era Oman and the Netherlands have had a long history of friendship and cooperaton writes OGR’s Guest Editor His Excellency Stefan-van Wersch, the Netherlands Ambassador to Oman

he Sultanate of Oman and the Netherlands have quite some history together, certainly if one takes the geographical distance between the two countries into account. At the recent Rembrandt Exhibition in Muscat, which, as many Omani’s told me, was an unforgettable event, there was also a small exposition about our bilateral relations. It showed that the co-operation between the two countries was immediately off to a good start when Imam Sultan Bin Saif, the then Ruler of Muscat, in 1665 wrote to the Dutch Director of the East India Company in Bandar Abbas: “Our Port is Your Port”.

His Excellency Stefan-van Wersch, Netherlands Ambassador to Oman 18

Nov-Dec, 2009

Actually, the trade relations continued, with peaks and dips, through the following centuries. In 1877 both countries even signed a free trade agreement. But Holland and Oman do not only have history together; right now we are first and foremost facing a challenging future together. In the current period several themes dominate our economic relations such as: maritime co-operation, energy, and water management.

Maritime co-operation The new chapter in the maritime relations was opened only recently when the Sultanate and the Port of Rotterdam launched a joint venture to develop the industrial Port of Sohar. At the time, there were voices in Holland that expressed doubts as to why Holland should participate in a mega project so far from home. I rather believe that this was an almost visionary decision. Recently I read Robert Kaplan’s article in Foreign Affairs on the significance of the Indian Ocean area in the 21st century. Kaplan believes that the “Greater Indian Ocean” will take center stage in the 21st century, both economically and politically: “It combines the centrality of Islam with global energy politics and the rise of India and China to reveal a multilayered, multipolar world,” he wrote. Kaplan concludes that the Indian Ocean is “the quarter of the earth where today one can best glimpse the future”. In the light of Kaplan’s article it is clear that Rotterdam took the right decision when it agreed in 2007 to an extension of the contract until 2043 and to an additional 4500ha for the development of the Freezone Sohar in the Port’s vicinity. Add to this that Sohar will closely cooperate with ports like Dubai, Mumbai and Lahad Datu (Malaysia), and one can state without problem that Rotterdam is now strategically positioned to face the maritime challenges of the 21st century. It is fully plugged in to a region that really counts. That is why I am not amazed that the Port, which only 6 years

The new chapter in the maritime relations was opened only recently when the Sultanate and the Port of Rotterdam launched a joint venture to develop the industrial Port of Sohar

ago was an empty waste land, is already now doing fine. Only recently, on 28 September 2009, contracts were signed for a new jetty and further deepening of the Port. These projects demand serious investments from both the Omani and Dutch side. The jetty will make it possible to receive large carriers of iron ore, shipped to Oman by the Brazilian mining conglomerate VALE. The company is going to invest 1.4 billion USD in the development of the Port’s steel cluster. I note with pleasure that the Port of Sohar is a front runner with regard to Omanisation, corporate social development and high environmental standards. These are matters that are also important to the Dutch. Meanwhile a new

building for the International Maritime College Oman – the first and only College of this kind in the Gulf region and also a joint venture between Oman and Rotterdam – is under construction in the Port area. As an echo of a distant past, the old adage of “Our Port is Your Port” seems today as applicable as 350 years ago to describe the Dutch-Omani maritime relationship! Energy Energy is for the Netherlands another crucial sector. Royal Dutch/Shell, an Anglo-Dutch company, has been active in Oman for more than 50 years. Large numbers of Dutch have lived and worked in Oman over the last couple of decades and have often developed a deep affection for the country. Lots of Dutch exports, which reached last year its highest level ever at approximately 250 million euro, are geared towards the oil and gas sector. The Netherlands itself is of course a major player in the energy field. It is actually the energy hub for nortwestern Europe. Rotterdam, by far the largest port in Europe, is to a high extent an oil port, with five international oil refineries and more than 40 petrochemical companies. But the Netherlands is also becoming more and more a gas “roundabout”. It is a major exporter and transporter of gas, and LNG is playing an increasing role. Right now one LNG receiving terminal is being built while there are plans on the table for two more terminals. We very much hope to welcome LNG from Oman in the future! The Netherlands also holds an important position in the offshore industry, with companies like

Nov-Dec, 2009

view point

Water By sheer necessity the Dutch became experts on water. Netherlands means “low lands” and a large part of the country effectively lies below sea level. Leave it to the sea, and the country would slowly disappear. A rise of the sea level due to global warming would seriously affect the country. No wonder therefore that the Dutch have unique expertise to offer in this field. Oman has its own problems with water. It is not the excess of water, but the relative shortage of it that describes Oman’s situation best, especially with regard to freshwater. This insight motivated several Dutch companies to create an academic Chair for water management at Roosevelt Academy/University of Utrecht in the Netherlands.

His Excellency Stefan-van Wersch, speaking at the recent Rembrandt exhibition in Oman

Shell, Boskalis, Van Oord, Fugro, and Heerema, which are all active in Oman and/or the Gulf region. The key word is sustainability. By 2050 the Netherlands wants to be a country in which gas will still be important but coal and nuclear energy will be part of the energy mix. The use of petrol and diesel for mobility will have declined drastically. Cars 20

Nov-Dec, 2009

will run on electricity, biofuels and/ or hydrogen. Decentralised energy generation by micro-cogeneration, solar cells, wind turbines and heat pumps will have increased greatly. Holland is actually pioneering in many fields of sustainable energies (solar, wind, biomass, hydrogen etc). Since Oman faces similar challenges and is also looking for alternative energies, I see many opportunities for increased co-operation.

His Majesty Sultan Qaboos has qualified good water management as an indispensible element for Oman’s development. It was a great honour that His Majesty agreed to connect his name to this Chair, now officially known as: “Sultan Qaboos Chair for Quantative Water Management in Semi-Arid Regions”. When the Dutch Prime Minister Jan-Peter Balkenende visited Oman in 2005, he officially offered this Chair to His Majesty. Early this year Dr Ruud Schotting was inaugurated as its first holder. One of Professor Schotting’s initiatives is the proposal he and his team developed for water availability management in the Sohar Wadi. This happened in close co-operation with the Omani water scientists at the Sultan Qaboos University and the Dutch consulting engineer Royal Haskoning, the master planner for many port projects in Oman. I have no doubt that this plan could be the start of a very fruitful Dutch-Omani co-operation in the topical field of water management.

GAS

Setting the scene for the future of natural gas Natural gas has gained an impeccable position in the world energy market, from being merely flared-up in the initial years of oil production. Rune Bjornson Executive Vice President for Natural Gas at StatoilHydro outlines the role of natural gas. OGR reports

Increased reserves A similar growth trend can be observed in reserves. In 1988 proven natural gas reserves stood at a little less than 110 trillion cubic metres (tcm). In 2008 the figure stood at more than 185 tcm – a growth of 75 per cent in twenty years, he observed. Transforming the gas industry Natural gas represents some 22 per cent of the world’s total primary energy consumption. Bjørnson identified three ‘game changers’ shaping the gas 22

Nov-Dec, 2009

conditions – is essential to enable natural gas to fulfil its role as a reliable fuel in the future,” he continued. Natural gas is plentiful Secondly, with unconventional gas (i.e. shale gas and coal bed methane) coming into the supply picture, the reserves situation has completely changed – reserves are more plentiful than ever imagined and will be available for generations to come. “This has the potential to change the supply and demand balance in many regions, as it has already done in the US,” Bjørnson noted. Picture courtesy: Trond Isaksen/Statoilhydro

atural gas has reached a level of importance that makes it critical and indispensable as an energy commodity. In less than 30 years, world gas consumption has doubled and gas is now just as important to energy security as oil and coal. This was one of the main messages Executive Vice President for Natural Gas in StatoilHydro, Rune Bjørnson, spelled out in a speech, at the 24th World Gas Conference (WGC) in Buenos Aires, Argentina. WGC, held every third year, is a key meeting place for players in the industry across the globe. Bjørnson revealed that in the 1980s the world’s total consumption of natural gas amounted to some 1500 billion cubic metres (bcm). In 2000 the level was more than 2500 bcm, and last year world consumption passed 3000 bcm.

Rune Bjørnson, Executive Vice President for Natural Gas at StatoilHydro

industry in the long term. The first is international trading of gas. Liquefied natural gas (LNG) has contributed to turn international gas trading into a blossoming business. “In the future we will need to move even more gas over longer distances and across borders even by way of pipelines,” he said. Removing trade barriers for gas “Free and fair trade in gas – including transparent and reasonable transit

A bridge to lower emissions Third is the issue of climate change. “I see natural gas as an important vehicle into a low-emissions future. Gas contains less carbon than oil and much less than coal,” said Bjørnson. There is also an important link between gas and renewable energy. In the power sector, gas turbines are often needed to provide backup and flexibility for intermittent generation – such as wind power. “So, in order to reduce carbon dioxide emissions and promote more renewable energy, gas is a natural partner,” said Bjørnson. “I am optimistic about the ability of our industry to deliver with a strength that is at least on a par with our achievements in recent decades,” he added.

INTERVIEW

Bidding Adieu! After an illustrious career of 30 years, 12 of them spent in Oman with Shell and PDO, Dr Andrew Wood, Shell’s Country Chairman, is bidding “Au Revoir” to the Sultanate and all his friends here. Dr Wood is ending his Shell career having accomplished so much not only at Shell Oman, but at the numerous organisations of which he is a board member. Dr Wood spends time talking to Sunil Fernandes and Akshay Bhatnagar on his Shell career, the memorable time spent in Oman, future ambitions … and more 24

Nov-Dec, 2009

ew employees can boast of starting a career in a company and then retiring as a Chairman. Dr Wood however, is one of those who can. Starting off in Oman in the 1980s as a Geologist with Petroleum Development Oman, he left Oman after three and half years only to return to Oman once again in the 1990s as Exploration Director. He once again had a stint outside Oman, only to return as the Shell Country Chairman – a posting he’s enjoyed for the last six years. “It’s been a fantastic honour to come back to Oman. I am presently in my third posting, which will end shortly. It was a marvelous opportunity to come back as Shell’s representative here in Oman, a country which I know very well. It’s been a privilege for me to take on responsibility for nurturing the longstanding relationship between the Sultanate and Shell. Now after six years it’s time to move on. On and off I have spent almost13 years here and in all these years Oman has become an important part of our family life and an important element of my career. We are planning to move back to our home country, the United Kingdom, and settle there,” says Dr Wood.

Andy has been in Oman in three different assignments. I had the opportunity to be working with Andy in his last capacity as the Shell Country Chair and as Shell Oman Chairman of the Board. From a professional prospective, I enjoyed the working relationship we had, the respect and the trust between us has helped the business and its decision making process. If we look outside the professional arena, we both love to compete for what the sea has to offer or not offer – his fantastic days as a sailor are my worst, and the opposite. He looks forward to windy days, while I look forward to calmer days, but again this is also common discrepancies between power boat owners and sailboat owners – they do not get along. So whenever I see Andy in the waters, I would always offer him a tow back to the marina – I am sure most sailboat owners need it. Faisal Al Hashar, Managing Director, Shell Oman Marketing Co

A testimony to change Being in Oman for so long, Dr Wood has been a witness to many of the changes that have taken place in the oil and gas industry, which have been challenging as well as exciting. “When I was here in the 1980s, it was buoyant times for exploration in Oman. We were unlocking the potential in the south and oil prices were high in real terms. It was tremendously exciting. I remember thinking how privileged I was to see so many wells being drilled in such a short time. Here in Oman during that period, the whole cycle from shooting seismic to seeing a well drilled would take as little as six months. So, it was

a great experience to see the results of your work, especially as you got such quick feedback. We were coming to grips with the challenging geology and for us as exploration geologists it was great fun, as well as a great success,” recounts Dr Wood. With the passage of time, objectives and priorities change for the better and Dr Wood believes that has happened in Oman. “In the early 1980s a lot of relatively heavy oil was discovered that in the high oil price regime that prevailed at that time was all of a sudden very attractive. By the 1990s it was more about gas. In the 1980s,

if there was a risk prospect of finding gas, there would be no drilling, because there was no need for gas in those days. The picture has changed fundamentally and today gas has become valuable for domestic consumption as well as exports. This change has also led to the very successful LNG project,” adds Dr Wood. As the Shell Country Chairman of Oman, Dr Wood can be credited with forging a strong and formidable alliance between Shell and the Sultanate. One of the important milestones achieved under Dr Wood was the renewal of the PDO concession agreement for a Nov-Dec, 2009

INTERVIEW

further period of forty years. “One of my responsibilities as the Shell Country Chairman was to rebuild the Shell Oman relationship, which had undergone stresses and strains, especially at a time when production was declining at PDO. Over the last few years, I believe that the essential fundamentals of the relationship of trust have been reaffirmed,” says Dr Wood. Fond memories at PDO Careers always brings about challenges, excitement and accomplishments. Dr Wood fondly remembers his time at PDO that had an element of all the three. “I have seen PDO mature into a very different company to the one that I worked with in the 1980s and 1990s. It is and remains a remarkable company - one that is driven by technology, because of the complexity and variety of the geology - the rock types, the hydrocarbon types and the reservoir types. PDO has always relied on the very latest technology in order to enable recovery factors to grow. I always remember the Nimr field in South Oman, which was one of the first exploration campaigns that I was involved in back in the 1980s. When we made the discoveries and booked the first reserves we thought we would be able to recover only 4 per cent of the oil, as it was so viscous and heavy. Today, the most productive parts of the Nimr field have a recovery factor of 20 per cent, and as the field moves to enhanced oil recovery we will be looking to increase that to 30 per cent and maybe 40 per cent,” says Dr Wood. Oil Industry in Oman Much has been written and spoken on the estimate of Oman’s oil reserves. Dr Wood however, would not like to make exact estimates. “It’s a very difficult question to answer. We know there is a significant amount of oil remaining in PDO’s concession areas. Of the oil that has been found - what we call ‘oil in 26

Nov-Dec, 2009

We wish Andy and his wife, Trish, well in their retirement. I suspect many people will be envious since he seems to have his future life well planned out. Recently he bought a cruising boat so he will be spending a lot of time afloat and presumably not missing the office one bit, though I am sure, since he has been here for many years over his working life, that he will miss Oman enormously. Not everyone will be aware that both Andy and his wife have, for many years, lived a double life. In the evenings, when others make plans to go and visit friends, Andy is learning his lines for his second great passion in life, which is acting. Both Trish and Andy are fine (semi) professional actors. They will both be missed, both on and off the stage. Nick Pattison, CEO, OPAL

place’ - only about 16 per cent has been recovered so far. Therefore, we have as much as 84 per cent remaining in the ground. Much of this is lying in large fields which have come to the end of their conventional life but are now being reinvented in the enhanced oil recovery era as opportunities for extracting significant amounts of additional oil. So, to make such estimates would depend on many variable factors like technology, price of oil etc. I believe we have entered an era of higher energy prices that will support the application of innovative new technologies to achieve higher and higher recoveries in the future,” says Dr Wood. Personal life Dr Wood is a water sports enthusiast and has a passion for sailing. “I have had a boat at the marina for the last six years. Sailing is great way of managing stress. I have recently invested in a new boat which I bought in Sweden and is now in

the UK,” says Dr Wood. Besides being an avid sailor, Dr Wood has also been actively involved in amateur theatre. “My wife and I have been longstanding members of the Muscat Amateur Theatre, which has been operating in the country for the last thirty years,” says Dr Wood. On the family front, Dr Wood has two sons – the eldest of whom was born in the PDO clinic in Mina a-Fahal - and both are presently based in the UK. While one has been working there for sometime the other has just completed his MSc and will soon be entering the job market. Having had an extremely busy career and being instrumental in the implementation of so many projects and programmes, it’s almost impossible to imagine Dr Wood simply basking in past glory. “I haven’t made any firm plans as yet. But, I am not going to put on my slippers, pull out my pipe and sit by the fireplace! And of course I look forward to coming back to Oman from time to time,” he says.

COVER STORY

Growing Offshore

Nov-Dec, 2009

The Sultanate’s exploration and production of hydrocarbon resources in the last few years, has been characterised by infusion of some of the best known technologies. Oman is perhaps the only country in the world, simultaneously adopting steam injection, polymer flooding and miscible gas injection to boost production. His Excellency Dr Mohammed bin Hamad Al Rumhy, the Sultanate’s Minister for Oil and Gas talks to OGR’s Guest Editor, His Excellency Stefan van Wersch, the Dutch Ambassador to Oman

What has been the effect of the international financial crisis and consequently energy prices on Oman? The financial crisis that the world witnessed did have an impact in almost all sectors of the economy. Of course oil and gas in particular and the energy sector in general did see a huge swing in prices in both the crude oil and natural gas markets. We in Oman did experience a sharp drop in our oil and gas revenues from the highs of nearly US$140 to the low of US$30s in a span of few months. Therefore, from a revenue point of view, we saw a sharp drop. However, our fiscal policies in the country were sound and the impact was less severe. The crisis was and is still painful, however, there are positives that we can take from the crisis. Prices of goods and services were going out of control and our industry experienced massive inflation. Therefore, on the other hand, we could consider the crisis as a blessing, as it helped in achieving a much needed correction in inflation. Could you elaborate a little on the oil & gas sector in Oman? The oil and gas sector in Oman is having a good performance. While I would rather be judged by others than myself, I am satisfied on what we have managed to achieve in the last five years or so. In exploration we have managed to attract

many international players to the extent that Oman is almost 80 per cent under concession agreements of some form. Our production is now stable and we should start to see a steady rise in the coming years. What steps are being taken towards sector expansion? In the next five years our focus will be on offshore exploration. Steps have already been taken for expansion in the oil and gas sector and our ability to attract investors in exploration and production of both oil and natural gas confirms our success. We are satisfied though we will continue to come up with new ideas. What about the entry of new exploration & production companies in Oman? As I said, we are pleased to see multinational large companies as well as small independent companies showing interest and committing to the oil and gas exploration in Oman. Their presence here is a good indication that our policies of attracting direct investment in Oman have succeded. To what extent will the entry of new players affect the role of Petroleum Development Oman (PDO)? My view is it is making and will continue to make PDO a better company by the presence of these new players. Nov-Dec, 2009

We believe in competition and I am sure PDO welcomes these new players in the country. PDO is here to serve Oman and so are these new players. They have a lot in common.

Picture courtesy: PDO

COVER STORY

Would you like to comment on the new concessions that are up for grabs in the coming year or two? There are always new opportunities in Oman. One of the main responsibilities of the Ministry of Oil and Gas is to create these new opportunities. As mentioned earlier we are working on offshore acreage. As they say, â&#x20AC;&#x153; watch this space!!!!â&#x20AC;?. As regards technological breakthroughs in oil & gas exploration, a lot is happening in the application of improved methods. As the oil and gas reservoirs ages, we need to be creative in getting more from them. I am pleased that Oman has never been shy in using new methods and trying new technologies to improve our overall performance. We are dealing with mature fields here in Oman and various methods of enhanced oil recovery (EOR) are now being used or plan to be used on large scale. While these methods are not new in the industry, they certainly are new in the region and we are all excited here. Oman is looking for gas from Iran, Qatar and Central-Asia. Will there be sufficient gas on attractive terms for industrial purposes, such as the Port of Sohar? One of the jobs of this Ministry is to explore for new hydrocarbons. I am sure there is unconventional gas and offshore gas that could be developed. Matching supply and demand in gas is not an easy task. Our job is to find as much as we can. I hope we can find enough to keep us going for all sectors, including Sohar industrial area. I am optimistic that one day we will find good quantities of gas. And, we are doing our best to find that. 30

Nov-Dec, 2009

What about BP and BG in Oman? Have they been able to find gas?

expensive, but we hope to have plenty of gas in the end.

These companies are not here to find gas. They are here to develop the found gas. The fields that they are working on were discovered, but not developed. We have taken the fields from Petroleum Development Oman and given it to them. There are many challenges and according to the companies, they are confident of overcoming these challenges. In one particular case we are digging very deep and this would be the deepest in the Middle East region. Of course, itâ&#x20AC;&#x2122;s going to take time and its is going to be

What would be the target of production per day by the end of the year? There were reports that it would be 850,000? I think 850,000 would be slightly optimistic. We should be close to a million barrels somewhere by 2013. Could you elaborate a little on the Development of local talent pool and in-house technical expertise that we have here in Oman? Developing people is very important for the country. We, in the oil and

His Excellency Dr Mohammed bin Hamad Al Rumhy, the Sultanate’s Minister for Oil and Gas, in a tete-a-tete with His Excellency Stefan van Wersch, the Dutch Ambassador to Oman (OGR’s Guest Editor) along with Sunil Fernandes, Assistant Editor

gas industry, are lucky to have partners who share our passion in human development. Not only large percentages of the work force are local, we are also focusing on developing talents and producing experts in various parts of our business. Is Oman going ahead with a proposed refinery in Duqm? Refinery and Petrochemical business is very cyclical. In my opinion, timing of starting such a project is very important. We are studying the market very carefully, but I’m confident that the Duqm project will go ahead. Infrastructure projects are well under way in Duqm and when the government feels the timing is right we will launch the project.

price for crude oil? Under the current conditions, I feel the market valuation of crude oil is fair and serves both the consumer and producer. However, conditions change and we need to be careful in stating what a fair price is. On the one hand we need to protect the consumer, while on the other hand, we have costs associated with production, as well as amounts to be invested into Research and Development by the oil and gas industry. I’m not suggesting a higher price but I am sure both sides will agree that we need to be creative in protecting consumers, producers and the need to make sure we do invest in the sector. Investment in oil and gas is the only guarantee we have to ensure that future needs of the consumer is safe guarded.

What in your opinion would be a fair

We are going to see fluctuation in oil

prices and I must mention that this has also to do with US Dollar fluctuations. If you do a study of oil prices in terms of Euro you would see that it is relatively stable. Also, oil prices could have a lot to do with geopolitical tensions, regional or otherwise. You can come-up with various scenarios. I do not get comfort of oil prices rising on account of these geopolitical tensions. I have been a witness to people in some villages in South East Asia seeking my help in reducing LPG prices in their country. Sometimes it can get touchy. On the other hand, if say for example I see countries like India and China are continuing to show healthy growth rates, and prices are backed by economic fundamentals, then I would say that is more comforting. Nov-Dec, 2009

Tete-a-tete

An outstanding relationship Royal Dutch Shell is Fortune’s top ranked company globally, in terms of sales. Peter Voser, Chief Executive Officer of Royal Dutch Shell PLC, succeeded Jeroen van der Veer as Chief Executive, earlier this year. Voser outlines his plans for the company to keep the momentum, in an exclusive interview to OGR’s Guest Editor, Stefan van Wersch, the Netherlands Ambassador to Oman

What are your strengths to be a perfect fit for the top position in Fortune’s top ranking company? I hit the ground running when I started my new job in July because I know this company well: I know what makes up our DNA, where our strengths lie, and what we can achieve. I believe in strong leadership, with leaders who are visible, prepared to listen and humble in their approach. They must have the ability to address day-to-day issues while maintaining their strong vision for the future. In this sense, His Majesty Sultan Qaboos bin Said has set an inspiring example to live up to.

natural gas (LNG), gas to liquids (GTL), oil sands, biofuels, or differentiated transport fuels. The LNG projects in Oman that we are involved in contributed to that. In fact, Oman’s LNG plants have the lowest CO2 emissions of any LNG plant in a hot climate thanks to their efficient process design.

How do you plan to make Shell more competitive? What’s your game plan? What are the obstacles you may face in the process? You can’t change the DNA of a company but you can optimise it. We are strong in technology development, operational performance, and local stakeholder management. My game plan is simply about trying to get the best out of our people. We want to build on our track record as a company of firsts developing market-changing technology. We have played a pioneering role in many areas, be it in deep-water technology, liquefied

We believe you are cutting 15% jobs in the core E&P unit. Is it true? If yes, how is it going to impact Shell’s productivity and profitability? No, this is not true, but let me give you the wider context. We recently announced a reorganisation that is a fundamental change to the way we’re running Shell. Shell needs to become a more efficient company, with faster decision-making, sharper implementation of strategy, and more focus on costs and value. We’re making good progress.

Nov-Dec, 2009

We do face the hurdle of a recession and that puts pressure on the financial side. But Shell is in a very competitive position in the oil and gas industry today. We are focusing on what we do best: on delivery, and we are anchoring ourselves back where we are strong.

We are simplifying the Upstream

business that was managed in three separate organisations – Exploration & Production, Gas & Power, and Oil Sands – into two businesses: Upstream Americas and Upstream International. We have also created a new division focusing on the delivery of major projects and technology. Previously those activities were spread across the company. We are taking out any overlap between the former Exploration and Production business and the former Gas and Power business. This will result in a simpler structure with more accountability for delivering results but it will also result in fewer jobs. Oman and Shell have a very longstanding relationship, going back to 1937. What keeps this relationship going and how do you see the future between Oman and Shell? Shell and Oman have had an outstanding relationship for the last 70 years. Oman is blessed with strong leadership, with a vision. We both see the value of our long-term relationship and have worked together successfully. I believe that is what keeps our relationship going. We are committed to help Oman maximise

Peter Voser, Chief Executive Officer, Royal Dutch Shell PLC

its oil production for many years to come. Oman is a very important and integral part of Shell’s portfolio. Oman’s oil and gas resources lie in reservoirs that are very challenging to unlock. Petroleum Development Oman’s success in overcoming those challenges with the support of Shell is an achievement we can be proud of. To nurture our relationship we have also set up a regional learning and development hub in Oman, which provides Shell technical courses to our joint venture staff in the region. Shell Development Oman LLC represents Shell and carries out a number of social investment programmes in Oman, like Intilaaqah, which trains people to become entrepreneurs.

How are you overcoming the challenge to unlock the oil and gas? Technology and innovation are at the core of our strategy and can help to overcome such challenges. So we make significant investments in research and development. In 2008, research and development expenses were nearly $1.3 billion, more than any other oil major, compared with $1.2 billion a year earlier.

viscosity and improving the flow of oil either by heating with steam, by flooding with miscible gas or by using chemicals. Oman is the only country in world that, to the best of my knowledge, uses three EOR technologies at the same time.

In Oman we use the latest enhanced oil recovery (EOR) technologies. At a time of surging global demand for energy, squeezing extra barrels from ageing oilfields is another crucial way to sustain production and enhance value.

It was a logical step recently to transfer our global EOR research leadership and much of the EOR research to a new centre in Oman, working in an innovative partnership with Sultan Qaboos University and Petroleum Development Oman LLC. An important part of the centre’s work will be to develop methods to reduce the energy intensity of EOR operations.

There are several proven EOR techniques: all aimed at reducing

If our industry as a whole could increase what we expect to recover Nov-Dec, 2009

Picture courtesy: Shell

Tete-a-tete

Athabasca oil sands project

from reservoirs globally by just 1%, it would yield some 20-30 billion barrels of additional oil, as much as the USA’s proven oil reserves.

What are the likely scenarios you foresee in the coming year or two on the global oil & gas market front? I believe that we’re at the beginning of a fundamental shift in our energy system, one that calls for a fundamental shift in our collective mindset. Our scenario experts believe that renewable resources, if pushed very hard, could provide around one-third of the world’s energy by the middle of this century. That’s impressive and we are working on that basis. But it will take 40 years to get there, and fossil fuels and nuclear energy will supply the remaining 70% even then. So all energy resources are required and need to be developed. To take a very concrete example, over

Nov-Dec, 2009

a billion new vehicles will enter the world’s roads in the first half of this century – that’s more than double the number today. They will be powered by all kinds of energy: petrol, diesel, electricity, biofuels, natural gas, and hydrogen. In order to meet this fundamental shift in our energy system, we need to diversify the global energy mix, without dismissing any energy option out of hand. I feel that we at Shell, and our partners, are well positioned for the transition and will help drive it. Do you think we are headed for another price shock? What makes you think so? For the short term, it’s clear the market is worried about over-supply. Whether or not OPEC production cuts can make prices rise in the current environment remains to be seen. The market is well supplied today, but there is some evidence that the

supply-demand balance is tightening in the future. This uncertainty about future supply-demand is contributing to higher prices on the futures markets. What is going to be your investment strategy? Fossil fuels and nuclear power will still supply at least 70% of the world’s energy in 2050. For Shell and the energy industry, that means maintaining investment in the face of strong volatility. We invest more in new energy projects than any other private company. For this year alone, we estimate net capital spending of $31-32 billion. We are in the midst of the biggest construction phase in our history. We have oil and gas fields with some 1 million barrels of oil equivalent per day of capacity under construction today. We are set to deliver 2-3% annual production growth between now and 2012. For example, the first LNG cargo left from the Sakhalin II

project in Russia’s Far East to Japan in March, and construction of the Perdido project is set to be complete around the end of 2009. We also have development options within our existing resource base that can deliver growth to 2020. We are investing about $3 billion dollars this year in exploration and appraisal, a slight increase from 2008. What is your take on the company’s asset sales strategy in the recent year or so? Do you plan to be more aggressive on this front? In recent years, we’ve sold assets that we found less attractive both in the Upstream and Downstream businesses. We review our portfolio on a global basis and select those assets that fit best and give the best returns to shareholders. We have announced that a few Downstream assets are under review. But we do not comment on future disposals plans.

How do you look at the unconventional sources of oil and gas? Supplies of easily accessible conventional oil and gas cannot keep up with the growth in energy demand. As a result, society has no choice but to add other sources of energy — including alternatives like solar, wind, and biofuels and “unconventional” fossil fuels like oil sands, oil shale and contaminated gas. Even with huge improvements in energy efficiency and substantial growth in renewables, fossil fuels will still be the major part of the energy mix by middle of this century. Zeroing in on oil sands as an example, Canada’s oil sands reserves of up to 175 billion barrels are a welcome addition to North America’s energy supply. Today, oil sands bitumen production stands at 1.3 million barrels a day. The US Energy Information Agency believes that, by 2030, oil sands could account for around 6% of global non-OPEC oil supply.

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Tete-a-tete

As we all know, bitumen production from oil sands poses environmental and social challenges. Let me assure you that at Shell we work hard to reduce those impacts. But oil sands are not off the scale environmentally. Recent independent studies show that — after many technology innovations and operational improvements — petrol from oil sands today only produces 5% to 15% more CO2 than conventional petrol when measured from “well-to-wheel.”

What is the importance of the Middle East region for Shell? What are your expectations from the region in the coming years? Shell has been active in some markets in the Middle East for over 100 years. We discharged our first bulk cargo of kerosene in Egypt in 1899 and have been operating there since 1911. We have been involved in the Emirate of Abu Dhabi since 1939. Currently we are significantly growing our upstream presence in the Middle East. We are participating in the development of a number of key projects in the region: Harweel and Qarn Alam in Oman and projects in Qatar. Oman has also proven itself to be a leader in LNG. The LNG operations in Oman are among the most reliable, safe and efficient in the world. The construction of the LNG plant in Qalhat near Sur was completed ahead of schedule and under budget. The overall 36

Nov-Dec, 2009

Picture courtesy: Shell

CO2 Capture and Storage could further reduce emissions. Our Scotford Quest project would capture up to 1.1 million tonnes of CO2 each year. That’s like taking 175,000 North American vehicles off the road. We’re not saying that the environmental challenges around oil sands, and other unconventional sources of oil and gas, are too small to worry about. But they should be seen in the right context.

Enhanced oil recovery-harweel project

view in the market is that global demand for LNG is expected to remain generally strong in the mid to long-term. We are present in other countries such as Saudi Arabia where we are a partner in the Rub Al-Khali Company Ltd joint venture and operate in Syria through the Al Furat Petroleum Company. In Iraq, we are in discussions with the government to create a joint venture with Iraq’s South Gas Company to collect and process the currently flared associated gas for domestic use. We will make use of the experience in gas gathering and processing gained in Abu Dhabi over the past 30 years, through our excellent cooperation with Abu Dhabi Gas Industries Ltd (GASCO). We have a significant presence in the downstream

sector as well. I am thinking of our 50% stake in the Al Jubail refinery joint venture in Saudi Arabia. Oman and the Emirates are also key countries for our Downstream business. We have 136 service stations and the only lubricant plant in Oman. We are committed to stay for the long term. We expect to continue to work closely with governments and local authorities in the Middle East. Meeting the world’s energy challenges will also depend on harnessing all the capabilities we have available: breakthrough technologies, skilled people and capable organisations and financial resources. But, above all, the world will need leadership. And I am sure that the Middle East can and will play a very strong role in helping to meet the world’s growing need for oil and gas.

TECHNOLOGY

Sultan Al-Mahrooqi, President of the SPWLA-Oman along with other members Salim Al Hashmi, Salim Al Salmi, Zeid Al Kathiry, Nabil Al Balushi and Mohammed Al Sawai

Meeting complex challenges Omanâ&#x20AC;&#x2122;s geology can sometimes pose challenges in unlocking its huge hydrocarbon potential. The local petrophysics community met recently to discuss the petrophysical challenges posed by a complex geology at a recent conference organised by the Society of Petrophysicists and Well Log Analysts (SPWLA) Oman Chapter. Sunil Fernandes reports 38

Nov-Dec, 2009

here’s no greater excitement then meeting challenges head-on. This seemed to be the objective of the SPWLA-Oman first chapter conference where industry experts provided insight and experiences in harnessing the potential of Oman’s hydrocarbon resources. Abla Al-Riyami, Gas Director, PDO said that there was a need to integrate and talk to each other more than ever before. She recalled how Petrophysics had progressed from paper based interpretation when she first joined PDO to the current sophisticated methods. “Continuing progress and change has now become a necessity since much of the “easy” oil has been produced, leaving the much more challenging “hard” hydrocarbon for future developments. These hard hydrocarbons could be gas in deep, hot, poor permeability rocks. They could be oil in geologically complex formations with limited reservoir connectivity or they could be viscous oil which can only flow into the wellbore with great difficulty,” she observed. Heavy oil has always been extremely challenging in terms of sampling. John Zaggas of Schlumberger spoke on “Heavy oil sampling in unconsolidated formations”. According to him The challenges included extreme difficulty in mobilising fluid and severe plugging as soon as fluid enters the tool. “The tool has to be able to sustain failure and extreme high difficulties can be experienced,” he stated. The contribution of dielectric measurement has been known but unfulfilled for 50 years. Jonathan Mude from Petroleum Development Oman spoke on the Applications in Oman of a New Generation Dielectric Log measurement. “Three jobs have been run in Oman in three different environments with three different objectives. One of

Abla Al-Riyami

The BHI data can be used to improve the identification of reservoir properties which allows for better lithology prediction, as results will enhance the sand quality characterisation in tight gas reservoir

our conclusions is that dielectric physical properties are related to important physical parameters,” he said. Mustafa, head of SCAL at Weatherford stated that tight sand gas offered tremendous reserves and at the same time challenges. Labib Mohsin of BG spoke on the “Applications of the flow zone index for reservoir characterization in low permeability sandstone”. “It is critical to understand the field permeability in order to build the static reservoir model and calculate the saturation height,” he stated. Nov-Dec, 2009

TECHNOLOGY

sharing insights

Sultan Al-Mahrooqi, President, SPWLA-OMAN

he SPWLA-Oman local chapter was established in September 2007. The chapter mission is fostering interest in Petrophysics and Formation Evaluation matters and to encourage the exchange of experiences within the local Petrophysics community. The recent conference held by the SPWLA-Oman received a good response and the community shared good insights on Data Acquisition and Evaluation Challenges in Complex Environments. “The future of the oil and gas industry in Oman and the region involves many petrophysical challenges in unlocking hydrocarbons in complex environments. To overcome these challenges, there should be an agreement between the business requirements of the operating companies and the sophisticated technologies from the service companies. Our recent conference was a step in that direction,” said Sultan AlMahrooqi, President of the SPWLAOman, local chapter.

His talk concluded with the integrated heteregeonity characterisation: Image log contain abundant textural information and leads to more accurate and detailed reservoir description and more efficient reservoir characterisation. Methodology can be implemented in all borehole image type measurement The BHI data can be used to improve the identification of reservoir properties which allows for better lithology prediction, as results will enhance the sand quality characterisation in tight gas reservoir. The method is an attempt to better utilise borehole image as input to define perforation. Sathya Perumaila from GMI spoke on the feasibility of Under Balance Drilling (UBD) in tight gas reservoirs (a new approach). He said that the present challenges included the difficulty to prove the presence of the mobility of gas and high drilling costs. He pointed out that the benefits of Underbalanced Drilling included minimising formation 40

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change, maximising the rate of penetration, while pointing out that not all reservoirs were suitable for UBD. He concluded that the UBD provides an alternative drilling technology to proof the presence of mobility in tight gas reservoirs. “Most of the times UBD provides an opportunity for direct data acquisition. Strategic data acquisition programme is beneficial to make the Geomechanical results more accurate,” he stated. Danny Broughton from Falcon Oilfield Services highlighted the practical difficulties of acquiring log data in deep hot wells and the challenges this imposed on the electronic design of logging tools. He added that steam based EOR is due to grow rapidly over the next few years and monitoring performance in the steam injectors and surveillance wells will present a considerable challenge to the service companies running the jobs as well as the operators planning operations.

John Zaggas, Schlumberger

COUNTRY REPORT

Dragonâ&#x20AC;&#x2122;s Thirst for Oil China is capitalising on turbulent economic times to increase its energy security, says Saji P. Moolan from Toronto

urn your disadvantages into advantages; may be none understands this oriental philosophy in its entirety as the Chinese do. As the world is creaking and screeching under the burden of economic slow down, China is running like a well-oiled machine. The country is showing its economic prowess by finding opportunities in unlikely places. It negotiates and strikes deals while others struggle to prop up their economic framework. China would go for anything that can feed its economy. But, there is something the dragon has unquenchable thirst for â&#x20AC;&#x201C; oil. As far as oil is concerned, the year 2009 has so far been a Chinese year. Over the past ten months, Chinese NOCs (National Oil Companies) have expanded their hunt for oil into Asia, Africa and Latin America. Led by state-owned giants like Sinopec, China National Petroleum Corp. (CNPC), and China National Offshore Oil Corporation (CNOOC), China has clinched deals even in the Middle East, a monopoly of the West for decades, and has ventured into some African regions the West has shied away from. Some deals have been costly in terms of risks involved, but experts view them as smart and futuristic. In June this year, Sinopec made a $7.22 billion takeover bid for

Nov-Dec, 2009

the Geneva-based Addax Petroleum Corp. through its wholly-owned Sinopec International Petroleum Exploration and Production Corporation (SIPC). Two months later, they inked the deal, which was by value China’s biggest-ever foreign oil acquisition. Addax has 25 high-potential oil and gas blocks located in Nigeria, Gabon, Iraq and Iraqi Kurdistan. Its average crude oil output is 143,000 barrels per day and has 537 million barrels recoverable reserves. But, not enough to quench the dragon’s thirst. So in September, PetroChina, the listed arm of CNPC, reached a $1.7 billion deal with Canada’s Athabasca Oil Sands Corp to acquire its majority stake. The deal was PetroChina’s biggest investment in Canada, which has the world’s secondlargest oil reserves. The sands that the Chinese oil giant plans to exploit are estimated to contain five billion barrels of oil. But, that couldn’t stop the dragon. It continued its oil hunt. According to a report published by Ghana News Agency in September, China would co-operate with Ghana’s oil exploration program. The report said the state-owned CNOOC would initially provide financial and technical support to Ghana National Petroleum Corp. (GNPC). On September 29, The Financial Times reported that the CNOOC was seeking large stakes in Nigeria by buying six billion barrels of oil. The move would put CNOOC in stiff competition with conglomerates like Exxon Mobil Corporation or Royal Dutch Shell. But, David Hughes, former geologist with Natural Resources Canada and an advisory board member of Association for the study of Peak Oil & Gas (ASPO), sounded more confident than the Chinese: “They (Chinese NOCs) have lots of resources, including the ability to do deals with nationalized petroleum

Led by stateowned giants like Sinopec, China National Petroleum Corp. (CNPC), and China National Offshore Oil Corporation (CNOOC), China has clinched deals even in the Middle East, a monopoly of the West for decades

commitments for $50 billion loan from key oil producing nations like Russia, Venezuela, Brazil and Kazakhstan. In February, 2009, China struck a landmark deal with Brazil’s state-owned oil company, Petrobras. Under the terms of the deal, Petrobras would get financial assistance worth $10 billion to develop hydrocarbon finds in their home turf. In exchange, the South American company would supply 100,000-160,000 barrels of oil a day to Unipec Asia, a subsidiary of Sinopec. In the same month, China Development Bank signed deals with the cash-strapped Russian oil company Rosneft and pipeline monopoly Transneft to provide $25 billion in financing in exchange for oil shipments from East Siberia oil fields.

companies off limits to multi-nationals.” However, it is not China’s joint ventures or acquisitions in hard times that the oil experts find unusual. It is the new strategy China has adopted to lock up future oil supplies that concerns many. Industry sources term the strategy loansfor-oil. By the new model, China would provide financial assistance to needy governments to help them develop oil finds or to augment their infrastructure in exchange for future oil supplies. The strategy, a great success so far, has complemented its aggressive direct investments overseas. China knows that capitalising on the turbulent economic times will help the country increase its energy security. It can also leverage Chinese financial institutions and provide opportunities to its service industry. Nevertheless, loansfor-oil is a strategic model that allows Chinese NOCs a back-door entry into regions otherwise difficult to penetrate. Through this new age barter system, China has already secured export

In a similar fashion, China has also signed bilateral agreements with Venezuela and Kazakhstan. China believes these indirect investments are innovative and farsighted as they solve problems of both the parties involved in one go. “On the supply side, the basic policy of the country is to make full use of the internal and international markets, and enhance cooperation with other countries and regions to reach a win-win situation,” says Lei Zhigang, Commercial Consul, Consulate General of People’s Republic of China in Toronto. But, how do these NOCS manage to clinch these prodigious deals? Primarily, China has immense reserves worth trillions of dollars that can fund virtually any project of the country’s interest. Secondly, Chinese NOCs receive strong diplomatic and financial backing by the government. Finally, they have access to low-cost loans from state-owned banks. No oil company in the world enjoys all these privileges. Now, the question is why China wants Nov-Dec, 2009

COUNTRY REPORT

so much oil? For China, all these deals, direct and indirect, are multi-pronged strategies to leverage the country’s fastgrowing economy and to meet its evergrowing needs. China is world’s most populous country with 1.3 billion people who are transforming from agrarian to urban at an unusual pace. Their preferences are also changing. A growing number of people now prefer private cars to bicycles and mass transportation. As a result, by the year 2010 China is expected to have 90 times more cars than in 1990. With automobile numbers growing at 19 per cent a year, projections show that China could surpass the US automobile population by 2030. “China does have a large and growing appetite for energy of all kinds to feed its population growth and the desire of the Chinese people to increase their standard of living in line with that which we enjoy,” observes Travis Davies, Public Affairs Advisor, Canadian Association of Petroleum Producers (CAPP). Another important catalyst for these voluminous oil investments is China’s fast growth. With a gross domestic product (GDP) growth rate of 8-10 per cent yearly, the country’s energy needs are expected to increase by 150 per cent by 2020. China is now the second largest oil consumer after the US with an oil consumption growth rate of 7.5 per cent, which is seven times faster than the US. It is not that China suddenly developed an appetite for oil and went on a takeover spree. According to Eurasia Group, a political risk advisory group, China started its overseas investments in 1993 when the country first became an oil importer. It 44

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has, then, realised the grave problem of losing dollar reserves on imported oil. Surprisingly, in the 70s and 80s China was an oil exporter, and was once East Asia’s largest oil exporter. That scenario no longer exists. China has now become the world’s second-largest oil importer after the United States, accounting for 31 per cent of the global growth in oil demand. Currently, China imports about half of the eight million barrels of oil it consumes a day. From a country of a few foreign oil fields in the 90s, China has now grown to a huge oil conglomerate operating in over two dozen countries, the largest operation being China National Petroleum Corporation’s (CNPC) 40 per cent ownership in the Greater Nile Petroleum Operating Company (GNPOC). Founded in 1997, the GNPOC produces 300,000 barrels of oil per day. China started investing in oil partly to save its foreign exchange reserve.

Interestingly, it is now planning to reverse its old strategy. In July, quoting an unnamed Chinese government advisor, The New York Times reported that China has $2 trillion in foreign exchange reserves, mostly invested in dollar-denominated bonds. It is now seriously considering ways to diversify from USD into hard assets, especially oil. Incidentally, China’s central bank, People’s Bank of China, recently called for the development of an international currency other than the dollar as a safe repository value. If that call is heard, and things are worked out, it will change beyond recognition the face and arithmetic of international oil business. China’s search for an international currency alternative may not work, at least in the near future. Sooner or later, the country may start doing oil business in currencies other than USD. But, one thing is certain; China is going to call the shots in global oil business. That day is not far away.

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ENVIRONMENT

Curbing greenhouse gas emissions In the global fight against climate change, the industry and power sectors both play a key role, says Nobuo Tanaka, Executive Director of the International Energy Agency (IEA)

“I

ndustry is one of the largest users of electricity, and together, both sectors account for almost two-thirds of global energyrelated CO2 emissions,” Tanaka stressed at the launch of two new IEA publications: Energy technology transitions for industry – Strategies for the next industrial revolution and Sectoral approaches in electricity – Building bridges to a safe climate.

“Decarbonising the power sector and reducing the CO2 intensity of key sectors such as iron and steel, cement, paper, chemicals and petrochemicals, as well as aluminium will be critical to achieve the ambitious targets for halving global CO2 emissions by 2050,” he added. “The task is huge and requires nothing short of a low-carbon industrial revolution. Solutions exist but cannot be achieved overnight. Urgent action is needed, and our two new publications plot the course.” 46

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Industry: applying existing and new technologies worldwide is key In the industry sector alone, implementing today’s best available technology worldwide, would already reduce energy use by 20-30 per cent. However, this measure alone will not be sufficient to curb emissions, as global energy demand is expected to more than double by 2050. To realise significant emissions reductions in the long term, a wide range of new technologies, including carbon capture and storage (CCS) in industry, will need to be developed and widely deployed. Engaging developing countries and their industries in this transition will be a top priority as most future growth in CO2 emissions will be in these countries. “I welcome the fact that a number of regional and international industrial associations have started to examine options available to them to reduce their CO2 intensity,” Tanaka said.

“Nevertheless, additional international co-operative efforts involving both governments and industry are needed. We reaffirm our commitment to work closer with key stakeholders to identify a more sustainable path forward.” The IEA will soon release a technology roadmap for the cement sector which was developed in collaboration with the World Business Council for Sustainable Development. Electricity must be decarbonised, especially outside OECD to avoid “lock-in” To realise the necessary CO2 reductions in industry, decarbonising the power sector is critical. Since it is still mostly generated from fossil fuels, electricity is at the core of the world wide climate challenge, causing 41 per cent of global energy-related CO2 emissions. Growth in power demand is particularly high in the developing world, and this increases the

risk of practically irreversible investment in CO2-intensive electricity generation capacity (the so-called ‘carbon lock-in’). If the power sector in the developing world grows without any regard for climate change, it could alone threaten the world’s capacity to stabilise climate. “Power generation CO2 emissions outside OECD have grown by 90 per cent since 1990, and are on a path to double from today’s level by 2030; this is highly unsustainable from a climate perspective and collective action is needed now,” Tanaka declared. Sectoral approaches in electricity Building bridges to a safe climate connects this threat with decisions that international climate negotiations will need to make at the UN climate change conference in Copenhagen in December 2009. “We need a two-tiered sectoral approach to this problem in the medium term: a strong signal to investors in power generation to promote less carbon-

intensive technology, and ambitious new policies to push for a more efficient use of electricity,” Tanaka said. The Kyoto Protocol has fostered some cleaner investments in developing countries’ electricity sector but this is far from enough, and a vast potential for costeffective energy efficiency improvements remains untapped on the demand side. “The climate negotiators must therefore see the electricity sector as a priority, and set up mechanisms to support effective efforts in developing countries. These mechanisms could rely on a broader access to the “carbon market”, to introduce a price on CO2 emissions and create incentives for most efficient and low-CO2 generation technologies. This includes carbon capture and storage or nuclear. These technologies are currently not allowed to contribute to carbon market projects in developing countries,” said Tanaka. The IEA provides practical recommendations on

this front. Further, much effort is needed internationally to share and transfer best policy practice. China, India, Mexico and South Africa have adopted policies or launched processes that go in the right direction – from an expansion of renewables and nuclear, to more ambitious energy efficiency policies and even plans for domestic emissions trading systems. This book deals with the critical question: how to encourage countries to go farther and faster towards curbing demand growth and decarbonising power generation, when they have abundant fossil fuel resources at their disposal. “An agreement in Copenhagen could include elements to facilitate this evolution, with new market instruments and support to energy efficiency policy.” Powered by

Nov-Dec, 2009

COMPANY REPORT

Striving to excel The Al Sulaimi Group has strived to deliver the best to the oil and gas industry in Oman, by delivering products and services that are unique and sophisticated. Today, the Al Sulaimi Group has a strong presence in several of the domains that it operates. Listed below are a few companies of the group.

Advanced Oilfield Technology Advanced Oilfield Technology Co. (AOTC), is an ISO 9001: 2000 certified company, that caters to the Oil & Gas, Power Generation, LNG, Water Supply, Marine Defense and Construction industries. “We have strived to offer the best under AOTC. We have introduced cost effective industrial pumps for oilfield services. In fact, we have introduced hi-tech water well pumps, which has been accepted by some big oil majors in the country,” says Abdullah Al Habsi, Product Development Director at the Al Sulaimi Group. With the upcoming state-of-the-art engineering facility at Rusayl Industrial area near Muscat covering 30,000 square meters, AOTC will soon be geared up to undertake various heavy engineering jobs to provide better value-added services to the local and regional energy industry.

Some of the services offered by AOTC include: Fabrication Services AOTC does fabrication of structures, piping, pipe supports, tanks etc. The company also undertakes on site services like installation commissioning, 48

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erection and refurbishment of mechanical equipment. Engineering Services AOTC has a full-fledged facility with, machine shop services, mechanical repair services, onsite services and thermal metal spray services. “We have the capability to remanufacture critical parts, as opposed to companies waiting for the job to be done by the original equipment manufacturer or

simply discarding machinery and equipment. We check drawings, designs and then work on the same. We have the capability to deliver within 48-hours. In thermal metal spray quoting, we are the first in Oman,” says Al Habsi.

Polymeric coatings AOTC provides protective coating, repair and maintenance composites and performance enhancement solutions for all industrial/marine

requirements. The company is the sole authorised representative for Belzona Polymerics, UK. Lifting and Handling Solutions AOTC has exclusive agency agreements and tie ups with lifting and handling equipment manufacturers like Italkrane s.r.l, KULI Hebezeuge, Keppel, Harisson Fabrication and Vetter Fordertechnik. This arrangement enables the company to provide standard and explosion proof cranes, hoist, rail mounted gantries, rubber tyred gantries, JIB cranes and tailor made applications for all lifting and handling needs. Casing and Tubing A complete range of API casing and tubing for oil and gas industry through representation of TMK group, Russia, is made available. Well Services AOTC provides well testing services, artificial lifts, oil and gas production facilities, well complexion systems through a partnership with Safwan Petroleum, Kuwait. Integrated Power Distribution System AOTC provides Integrated power distribution system including switchboards, LV and MV packaged substations, MV & LV switchboards and integrated protection and control systems through SKEMA, Italy. Besides the above, AOTC also supplies pumps, explosion-proof electrical equipment and nitrogen generators.

Hi-Tech Inspection Services Hi-Tech Inspection Services (HITIS) offers a complete range of Non Destructive Testing Services (NDT), Post Weld Heat Treatment Services (PWHT) and specialised inspection services to clients in the Oil and Gas, Refineries,

Hamed Bin Mansoor Bin Ali Al Sulaimi, Chairman, Al Sulaimi Group

Petrochemical Energy, Power Plants, Mechanical Fabricators & Construction industries in the Sultanate. “We are the first 100 per cent Omani company to be engaged in Non Destructive Testing. We have made huge investments and have done jobs for major projects in the country. We have a very large number of qualified inspectors and our facilities are amongst the best,” says Al Habsi. The company has vast experience in the industrial inspection business and has a proven track record of successfully and professionally executing large contracts of Non Destructive Testing (NDT), PWHT and specialised inspection services, to the complete satisfaction of clients.

The company’s technical department has good experience in NDT and specialised NDT and PWHT work with a qualification of ASNT NDT Level III in several methods and is responsible for all technical issues, training and certification of NDT personnel to level I and II. HITIS is an ISO 9001: 2000 and OHSAS 18001:1999 certified company. HITIS’s other activities include supply of QA/QC personnel, NDT consultancy for coded vessel, radiation safety consultancy, radiation background monitoring, consultancy for in house NDT systems and developing internal crawler systems for their own use. The company has a full-fledged branch in Sohar, which has already executed projects Nov-Dec, 2009

COMPANY REPORT

for clients there. HITIS employs over 250 experienced multidiscipline inspection personnel, whose professional approach and quick execution have enabled the company to garner large projects.

International Drilling Technology

worldwide experience and almost 120 years of tradition. IDTEC has acquired land and would be expanding its Nizwa facility to add 100,000 meter square. IDTEC’s fully equipped workshop facility and nearby additional structural yard can cater to all oilfield repair needs. IDTEC carries out professional and safe installation, maintenance and repair of all kind of drilling equipment as per customer requirements. The repair and maintenance could involve mast and structures, draw works, mud pumps, rotary tables, elmagco and parmac brakes, top drives, swivels, hoisting and travelling equipment etc.

International Drilling Technology (IDTEC) is a joint venture with Bentec Gmbh of Germany and provides maintenance of drilling/work over rigs and oilfield equipment. IDTEC has been growing steadily in Oman, benefitting from Bentec’s international reputation,

“Bentec is one of the most reputed company’s in the field. We are proud to be associated and bring that level of expertise and experience to the Sultanate. Those who have experienced the IDTEC equipment and service will realise the difference,” says Al Habsi.

Plans are underway to set-up a destructive testing service facilities including chemical analysis of material bend test, tensile test, micro test etc., with a view to provide a one stop solutions to valuable clients.

Nov-Dec, 2009

The company constantly reviews its quality assurance and quality control systems, while enhancing the same with contributions from corporate continuous improvement program. A group of experienced managers, engineers, technicians and commercial support staff, provide the necessary support while drilling. Services are provided in a competent, cost effective and timesaving manner.

Wild Cat & Al Sulaimi Energy Services The Al Sulaimi Group has entered into a joint venture with Wild Cat to provide optmised drilling solutions. The joint venture is under the company name Wild Cat & Al Sulaimi Energy Services. Wild Cat is an oilfield services provider with a significant presence in the Middle East region.

“We focus on providing automated drilling services to several companies, including major national oil companies. We provide service, spare parts availability etc,” says Dean Muriby, General Manager of Wild Cat and Al Sulaimi Group. Wild Cat has head offices in Abu Dhabi and Egypt. “While the Al Sulaimi Group can leverage on the Wild Cat experience in drilling services, we on the other hand can leverage the decades of experience of the Al Sulaimi Group in the local oil and gas industry,” says Muriby. Wild Cat presently has patented technology from National Oilwell Varco (NOV). National Oilwell Varco is a worldwide leader in providing major mechanical components for land and offshore drilling rigs, complete land drilling and well servicing rigs, tubular inspection and internal tubular coatings, drill string equipment, extensive lifting and handling equipment, and a broad offering of downhole drilling motors, bits and tools. The automated drilling services provided by Wildcat & Al Sulaimi Energy Services provides several advantages. Some of these include: n Freeing up the drillers hands for other tasks n Optmising and hence increasing the bit life n Because of optimised drilling delivery of weight the well bore is in good shape. n It enhances the well bore trajectory n Wild Cat technology enables drilling in differential pressure and an ability to react to downhole conditions for directional drilling. n Directional drilling is enhanced dramatically, since one is able to drill on pump pressure and not hook holes. “Apart from the benefits and superior patented technology that we have,

we provide superior service. We back world-class products with world-class service,” says Muriby. Clearly, Wild Cat Energy Services is providing a superior automated drilling services and little wonder then it has orders from the top-notch companies in the private and government sector.

“We have recently won a multimillion dollar contract from Petroleum Development Oman for the construction of a multi unit permanent accommodation for contractors and provision of catering, laundry, jainitorial and general facility management services in Marmul and Lekhwair,” says Al Habsi.

SJ Abed & Al Sulaimi Catering group

The company’s clients, irrespective of location are guaranteed very high quality standards in provision of services.

SJ Abed & Al Sulaimi catering group (SJA), is a joint venture between Africa’s premier industrial catering company – S J Abed General Enterprise and the Al Sulaimi Group. SJA is recognised as a leading industrial catering company providing exceptional quality service to clients.

“For us at the Al Sulaimi Group, the focus has always been on providing the best possible products and services. We are fully dedicated to professional ethics and never deviate from our service standards,” says Al Habsi. Nov-Dec, 2009

INTERVIEW

Excellence in Engineering Oryx Metal Industries LLC (OMI), despite being in the market for a year, has managed to scale incredible heights in terms of high quality products and also services offered. Joe Sakr, General Manager, speaks to OGR about OMI added values and their visions for the future

When was OMI established and what was the motive behind this venture? OMI was established in 2008 to provide the Sultanate with a reliable source for trailers and transport related industry, to avoid local fund leaks outside the country and to contribute in the continuous development of Oman initiated and inspired by His Majesty Sultan Qaboos bin Said. The Sultanate of Oman has embarked on a diversification drive to develop nonoil based industries in the country and integrate its economy with the global market-place. I think the establishment of OMI serves the twin purpose. This was our main objective. With the start of our operations, Oman is no longer relying on imports alone for the commercial vehiclesâ&#x20AC;&#x2122; body building. We are making Oman self-reliant in this segment. This will give a fillip to Omanâ&#x20AC;&#x2122;s economy and contribute in achieving its diversification objective. In addition, our company has generated new employment and human resource development opportunities for Omani nationals. It will help Oman in further developing its technical prowess. 52

Nov-Dec, 2009

Kindly describe your current business operations. We specialise in the design, development, manufacturing and assembly of rigid bodies and semi trailers to major private and public firms not only in the Sultanate but abroad as well. We are the only trailer factory in the region using 3D designs. Our product range includes tippers, water/ fuel/ bitumen/ sewage tankers, flatbeds, sided general cargo trailers, garbage compactors, car carriers, low loaders, and bulk cement silos among others. And our clientele comprises of truck dealers, bulk and liquid transporters, contractors, petroleum companies, cement transporters, municipalities and the army. What sets OMI apart from rest of the manufacturing businesses in the region? OMI possesses state of the art metal technology – from improved 3D designs, latest CNC machinery, to semi robotized welding techniques. The 3D design that we use is an engineering appliance that not only creates a competitive advantage but it also ensures that the design is infallible and free from unnoticed weaknesses. We also use CNC machineries to ensure that human error is minimised and that continuous workflow is established. These computerised CNC machineries also maintain higher output without compromising on the quality of the products. Our experienced Quality Assurance/ Quality Control Engineers make sure that the ISO 9001:2008 standards and requirements are implemented throughout all the production cycle. The result: high-end products and technologies that are user friendly and completely defect free. We have established international ties for technical partnerships and only purchase premium raw materials and accessories from our exclusive partners. And we don’t believe in just selling our products in the market. We take great

pride in being a solution provider to our customers and provide “off business” activities such as consultancy services and experience sharing for our clients. We try to understand the requirements of our clients by listening to them and inquiring about their concerns to enable us offer the most adequate solution to

We want to play a role in building Oman’s repute of manufacturing world class products and place the Sultanate’s manufacturing and production sector on the map. We want to prove that Omani products are, in fact, quality driven not price driven. As a testament of our quality and expertise, many European

satisfy their transportation challenges. Thus we provide all-encompassing business solutions to all our clients.

companies are sub-contracting with us and I believe that if we are able to meet their stringent standards, we will have acceptability in any market across the globe. Today we have a strong presence across Europe, Middle East and Africa. However, we’d also like to place Omani products in various unexplored markets such as West Africa and in fact, we have started delivering fuel tankers to Shell Petroleum in Senegal and Mali and Bitumen tankers to Shell Petroleum in Guinea. From a base in Oman, we are also going to penetrate nearby markets such as Iraq, Qatar and Yemen apart from rest of the GCC region. We are targeting half of our sales through exports and quite confident of achieving it.

What are your plans for the future? One of our main goals for the future is to allow Oman to be self sufficient in the transport related industry. Previously, customers used to go through a third party to buy their trailers because it was not available in the local market. Now, with our comprehensive factory up and running, clients can order their trailers directly and save the commission they used to pay for the third party, as well as enjoy a 24-month warranty without the need of going abroad.

Nov-Dec, 2009

OPEC

Moving Out! As OPEC’s Ministers left the Organisation’s Secretariat in the early hours of September 10, they knew that this marked the end of an era. It was the last time they would meet at a Conference on the premises that have housed the OPEC’s headquarters since 1977

Nov-Dec, 2009

PEC will have a new home very shortly. This will be about a kilometre from where its Secretariat has been based for the past three decades. It involves a move across Vienna’s Danube Canal to a new, purpose-built, state-of-the-art block of offices in the city centre. In the build-up to this, an important ceremony took place in Austria’s Federal Ministry for European and International Affairs in Vienna on September 20, 2009. This saw Austrian Foreign Minister

Michael Spindelegger and OPEC Secretary General Abdalla Salem El-Badri undertake the signing ceremony of the Protocol to the OPEC Headquarters Agreement between the Republic of Austria and OPEC. This amended the existing Headquarters Agreement between the two parties to facilitate the move. Spindelegger said that a new chapter had been opened between Austria and OPEC: “Ever since OPEC decided in 1965 to choose Austria as its host country, the relations

The move from the existing premises at Obere Donaustrasse 93 in the Second District will take place on November 26–28, with the first regular day of work on November 30

have been sincere and fruitful. We are delighted that we can continue with this longstanding friendship and close partnership in the same spirit. “I would like to express my deep gratitude to the Secretary General of OPEC for his leadership in making this new agreement possible. A new stateof-the-art headquarters will enable the Organization to fulfil its challenging duties even better than in the past,” Spindelegger said. He assured the Secretary General of Austria’s continued support, adding: “Austria is not only your host country, but, at the same time, your partner and friend. May the new OPEC Headquarters also be a symbol of our fruitful partnership.” In his response, El-Badri said: “It is a great pleasure for OPEC and our Member Countries to be here in Vienna.” He added: “We are here because … you invited us way back in 1965.” He also remarked: “I would like to thank the Austrian Government and people for hosting us here in Vienna. Vienna is a beautiful town, as I have told you many times.” He underlined the importance of the imminent move, when he pointed out that the Organization would be celebrating its 50th anniversary next year.

Indeed, OPEC was looking forward to “another 50 years or maybe more” to come, because, with its strong crude oil reserve base, “we can supply the world with enough oil, as much as they want.” Both the Foreign Minister and the Secretary General thanked all the people who had been involved in the project to relocate the Secretariat. Also present at the ceremony was Ambassador Ernst-Peter Brezovszky, Head of the Ministry’s Department for International Conferences and International Organizations, who has led the Austrian side of the venture. The new Secretariat will be on the corner of Wipplingerstrasse and Helferstorferstrasse in Vienna’s First District, close to Schottenring and between the old stock exchange and part of the university. It will have nine floors above ground and a basement, car park and storage facilities below. Its total usable area of about 9,000 square metres will accommodate the Secretariat’s present 138 Staff Members and allow for expansion in the future, as the Organization takes on new assignments to meet upcoming challenges in the international oil market and related areas. It is being built by a consortium on the site of the former Austrian Association of Trade Unions (Österreichischer Gewerkschaftsbund), and the architects are Atelier Hayde Architekten from Vienna’s 15th District. Work began on the project in January 2007 and the handover date is 31 October this year. The move from the existing premises at Obere Donaustrasse 93 in the Second District will take place on 26–28 November, with the first regular day of work on 30 November. OPEC was founded in Baghdad, Iraq, in 1960, and its Secretariat — its headquarters — was moved from its original location in Geneva, Switzerland, to Vienna on

September 1, 1965. In the Austrian capital, it was first housed in two small buildings, before being transferred to Dr Karl Lueger-Ring 10. The move to Obere Donaustrasse took place in March 1977. OPEC, which will celebrate its 50th anniversary in 2010, has always enjoyed excellent relations with the Federal Republic of Austria and the City of Vienna and looks forward to an enhancement of this in the future. Meanwhile, the 154th Meeting of the Conference reviewed the current oil market conditions and future prospects and observed that, whilst there are signs that economic recovery is underway, there remains great concern about the magnitude and pace of this recovery, especially in the major industrialised nations of the OECD. There has been some easing of the overhang in crude oil stocks but market fundamentals remain weak, refinery utilisation rates are low and product inventories have risen considerably. Accordingly, since the market remains over-supplied and given the downside risks associated with the extremely fragile recovery, the Conference once again agreed to leave current production levels unchanged for the time being. In doing so, the Conference reiterated its determination to ensure sound supply fundamentals and an adequate level of spare capacity for the benefit of the world at large. Similarly, the Conference recorded the readiness of Member Countries to rapidly respond to any developments which might jeopardize oil market stability and their interests. Therefore, in addition to continuing to maintain constant watch over supply/ demand fundamentals, the Conference agreed to reassess the market situation at its 155th (Extraordinary) Meeting, to be held in Luanda, Angola, on 22nd December 2009. Nov-Dec, 2009

market round-up

Rising Trend The price of OPEC basket of twelve crudes stood at $73.20 by mid-October, as clear signs of economic recovery boosted prices

he OPEC Reference Basket fell by $4.18 or 5.9 per cent in September to reach $67.17/b. Bearish developments in equity markets in early September exerted downward pressure on crude prices across the world, reinforced by product stock builds. However, US dollar depreciation, increasing equity prices and improving demand projections due to the economic recovery have turned market sentiment and lifted crude prices. These factors continued to strengthen the market into October with the Basket rising to $67.63/b in the week ended October 9 from $65.75/b the week before. Positive reports about US corporate earnings for 3Q09 may provide further support for market sentiment and prices in the weeks ahead. Supported by fiscal and monetary policy, the world economy is showing signs of recovery. However, private spending remains muted, particularly in the advanced countries. The growth forecast for 2010 was increased by 0.2 percentage points to 2.7 per cent, while the 2009 forecast remained at the level of minus 1.2 per cent. The major adjustment was made

Nov-Dec, 2009

the world economy has greatly improved. The second quarter is now seen to mark the bottom of the recession, a view that has been reflected in comments by world leaders and policy-makers at the G-20 summit in Pittsburgh, as well as at the annual meeting of the IMF/World Bank in Istanbul. As a result of the improving economic conditions, forecasts for world GDP have been revised higher. While global GDP is still expected to decline by 1.2% this year, the forecast for 2010 now shows positive growth of 2.7%, up from an initial forecast of 2.3% in July (see Graph 2). Graph 1: WTI crude oil price Sept-Oct 2009 (US$/b)

Graph 2: Revisions to 2010 world economic growth forecast (%) 2.8

75.0

6.0

73.0

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-2.0

2.3

65.0

-4.0

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2.7 2.6 2.5

Mon 5

WTI (LS)

Thu 1

Tue 29

Fri 25

Wed 23

Mon 21

Thu 17

Tue 15

Fri 11

Wed 9

Mon 7

Thu 3

Tue 1

Daily Change (RS)

2.4

2.3

2.1 July

August

September

October

Although there is widespread consensus that there is a turnaround in the global economy, the pace and strength of the recovery is still not clear. This is due to the fact that so far the improvements have been primarily driven byfor government with inventory rebuilding. growth in Brazil, Azerbaijan, CanadaHowever, the current level of fiscal stimulus will in the forecast Chinese GDPstimulus growth along be difficult to sustain as government spending is creating large deficits, Powered particularlyby in the advanced economies. and Kazakhstan. OPEC NGLs and nonwhich is now projected to grow by 8.0 With regard to inventories, the rebuilding has occurred to compensate for the sharp reduction in manufacturing conventional oils are forecast to increase per cent in 2009 and by 8.5 per cent in output that took place earlier in the crisis. As much of this job is done, the impact is expected to diminish.

by 0.5mb/d in 2010 to average 5.3 mb/d. 2010. This underlines the relative high Going forward, strength and sustainability of the recovery In September, total OPEC crude oil will depend on achieving a re-balancing in two dependency of the 2010the forecast on nonareas. The first is a shift from public to private consumption. For that, it is recognized that exit strategies should production averaged 28.9mb/d according OECD countries, which could constitute be carefully planned and coordinated to ensure that they do not to secondary sources, representing take place too early — which would undermine an additional challenge going forward. the economic recovery — or too late which could result in a fiscal crisis as debt to GDP ratios rise dramatically. a slight increase of 43 tb/d over the Non-OECD countries are now expected Moreover, reviving consumer demand poses a big challenge given the high and rising unemployment rates An early cold snap in the Atlantic Basin to make up 2.2 percentage points of which now stand at close to 10%previous in the month. US and Euro-zone. Consumer indebtedness along with tight credit may provide support for Product markets lost further ground in world economic growth in 2010 with conditions will also dampen demand. Thus, growth is not expected to pick up some sufficiently in products the developed and crude prices in the future, but ample September due to a narrowing of the OECD contributing only 0.5 per cent. countries without further stimulus. distillate stocks could cap these positive gasoline crack spread and continuation With the US oil demand bouncing Therefore, global recovery would require a second re-balancing, which would involve a shift in global demand distillate thedomesticdevelopments. backand fromtrade a steeppatterns. historical decline, Specifically, of this wouldstockbuilding be a shiftacross from to external demand in industrialized OPEC spot fixtures in international September rose nature of globe. Despite bullish reports about the forecast for 2009 world oil demand countries, especially the US, and the complementary shift in Asia, particularly China. The by 12 perand centcoordination, compared to theaprevious the economic recoverymultilateral and the positive growth has challenges been revised up by 0.2 mb/d these highlights the need for continued consultations fact that has month. Sailings from OPEC were for demand product to now show a contraction of 1.4 mb/d. been clearly recognised during theimplications recent G-20 meetinggrowth, as well as the annual meeting of the IMF/World Bank in relatively steady. Freight rates in the markets remain weak, forcing refiners to Global oil demand growth in 2010 has Istanbul. oil tanker a trim operation been revisedthe up bycurrent 0.2 mb/deconomic to 0.7 Given environment andlevels. the difficulties ahead, crude the world is market more increased likely tobyexperience margin of 5 per cent in September with mb/d to take into account the gradual slower growth rather than the sharp rebound that has generally characterized previous economic recoveries. the VLCC sector and falling 7 per centofand improvement in the world economy. The recovery in the US willThe certainly play an important role in determining the pace strength the global If USdemand privategrowth and foreign demand do not pickup sufficiently as the fiscalincreasing stimulusbyfades, then this could Suezmax 16 per cent. bulkupturn. of next year’s will growth further challenge recovery. Storing crude oil on tankers declined by takecreate place inathe non-OECD, mainlyfor the worldThe about 10 mb for withoil theand narrowing the China, thethere MiddleisEast, India, and Latin about the forecast forglobal 2010recovery, the Until a clearer picture pace of the outlook otherofcommodities structure in crude oil futures, America. Most of this will dependent be will continue to demand be highly on economic signals. Given weak contango oil market fundamentals as reflected in was increased by inventories continued close monitoring middle distillates increased by about of both as ahigh resultglobal of industrial, transportand and large OPEC spare capacity, there is a needbutfor 0.2 percentage economic conditions and developments in the oil market. 15 mb. Clean spot freight rates increased petrochemical sectors. by 5 per cent on average with a much points to 2.7 per October 2009 3 firmer East of Suez market. Non-OPEC oil supply is forecast to cent, while the increase by 410 tb/d in 2009, following 2009 forecast US commercial oil stocks resumed an upward revision mainly due to their upward trend, increasing 10.4 higher-than-expected supply from the remained at a mb in September to stand at 1,109 mb, US, Russia and Caspian region. In 2010, level of minus implying an overhang of nearly 90 mb. non-OPEC oil supply is expected to 1.2 per cent The build was attributed to products, grow 350 tb/d, supported by anticipated Nov-Dec, 2009

market round-up

particularly distillates, while crude oil stocks dropped for the fifth consecutive month but remained 32 mb above the five-year average. In Europe, total oil stocks dropped nearly 5 mb but remained within the upper half of the five-year range. Japanâ&#x20AC;&#x2122;s commercial oil stocks fell slightly in August but then recovered in September, according to preliminary data. The demand for OPEC crude in 2009 is estimated to average 28.6 mb/d, around 0.1 mb/d higher from the previous report. This still represents a considerable decline of 2.3 mb/d compared to the previous year. In 2010, the demand for OPEC crude is expected to average 28.4 mb/d, an upward revision of 0.3 mb/d from the previous assessment and a decline of 0.2 mb/d from a year earlier. Since the beginning of September, crude 58

Nov-Dec, 2009

price behaviour has alternated between periods of sharp upward movements followed by large corrections. At times, this has led to daily changes of more than $3/b (see Graph 1). This volatility reflects some nervousness as the market is searching for direction. One of the key uncertainties driving this volatility is the outlook for the world economy and the impact this will have on world oil demand. Therefore, to have a better understanding of oil market developments over the coming months, a careful assessment of the outlook for the world economy is essential. The world economy now appears to be entering into a new phase, moving from a period of containing the crisis to one of economic recovery. Over the course of this year, financial markets have stabilised and the outlook for the world economy has greatly improved. The

second quarter is now seen to mark the bottom of the recession, a view that has been reflected in comments by world leaders and policy-makers at the G-20 summit in Pittsburgh, as well as at the annual meeting of the IMF/World Bank in Istanbul. As a result of the improving economic conditions, forecasts for world GDP have been revised higher. While global GDP is still expected to decline by 1.2 per cent this year, the forecast for 2010 now shows positive growth of 2.7 per cent up

from an initial forecast of 2.3 per cent in July (see Graph 2). Although there is widespread consensus that there is a turnaround in the global economy, the pace and strength of the recovery is still not clear. This is due to the fact that so far the improvements have been primarily driven by government stimulus along with inventory rebuilding. However, the current level of fiscal stimulus will be difficult to sustain as government spending is creating large deficits, particularly in the advanced economies. With regard to inventories, the rebuilding has occurred to compensate for the sharp reduction in manufacturing output that took place earlier in the crisis. As much of this job is done, the impact is expected to diminish. Going forward, the strength and sustainability of the recovery will depend on achieving a re-balancing in two areas.

The first is a shift from public to private consumption. For that, it is recognized that exit strategies should be carefully planned and coordinated to ensure that they do not take place too early â&#x20AC;&#x201C; which would undermine the economic recovery â&#x20AC;&#x201C; or too late which could result in a fiscal crisis as debt to GDP ratios rise dramatically. Moreover, reviving consumer demand poses a big challenge given the high and rising unemployment rates which now stand at close to 10 per cent in the US and Euro-zone. Consumer indebtedness along with tight credit conditions will also dampen demand. Thus, growth is not expected to pick up sufficiently in the developed countries without further stimulus. Therefore, global recovery would require a second re-balancing, which would involve a shift in global demand and trade patterns. Specifically, this

would be a shift from domestic to external demand in industrialized countries, especially the US, and the complementary shift in Asia, particularly China. The international nature of these challenges highlights the need for continued multilateral consultations and coordination, a fact that has been clearly recognised during the recent G-20 meeting as well as the annual meeting of the IMF/World Bank in Istanbul.

Given the current economic environment and the difficulties ahead, the world is more likely to experience slower growth rather than the sharp rebound that has generally characterized previous economic recoveries. The recovery in the US will certainly play an important role in determining the pace and strength of the global upturn. If US private and foreign demand do not pickup sufficiently

Until there is a clearer picture about the pace of the global recovery, the outlook for oil and other commodities will continue to be highly dependent on economic signals. Given weak oil market fundamentals as reflected in high global inventories and large OPEC spare capacity, there is a need for continued close monitoring of both economic conditions and developments in the oil.

as the fiscal stimulus fades, then this could create a further challenge for the world recovery.

Nov-Dec, 2009

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Nov-Dec, 2009

The Fastco team

Making a mark

FASTCO is the transportation solutions arm of the OHI Group of Companies, which is a leading and well diversified public limited company in Oman

he Courier division of FASTCO has been associated with UPS, a US$49.6 billion and the world’s largest package delivery company and a leading global provider of specialised transportation. FASTCO has been the authorised service partner for UPS in the Sultanate for several years. FASTCO’s logistics division provides an array of services including integrated logistics services to a wide gamut of industries ranging from mining, pharmaceutical, fast moving consumer goods, textiles, automotive, electronics, construction to oil & gas industries. The professionally trained staff can provide best logistics solutions, in the most economical way, irrespective of the place, size of the cargo & mode of transportation. The company’s activities include customs brokerage services,

freight forwarding, land transport, packing and removals, project cargo and warehousing. FASTCO represents the France based Geodis Wilson Group in Oman. The French multinational ranks amongst Europe’s top five transport and logistics companies, with a workforce of more than 6000 people and presence in all continents. FASTCO has recently entered into the 3PL (third party logistics) business. The company’s 3PL facility is strategically located within 20 minutes drive from the Oman International Airport and equidistant to the new Oman International Container Terminal at Barkha. This facility in Mobellah is equipped to handle diverse inbound freight and product configurations and is designed to accommodate various types of cargo. FASTCO

provides a comprehensive range of third-party logistics warehousing and distribution services that can be scaled and customised to clients’ individual requirements and to the service quality they set. The 3PL warehousing and distribution services provide a key differentiation in supply chain business process integration that leverages on collaborative work between buyers and suppliers. The company’s point-of-origin to pointof-consumption program offers an effective means to balance supply with demand, while maintaining seamless and total visibility into all the customers’ inventory. In effect, the end-to-end supply chain execution solutions tie together all key processes in the supply chain to ensure customers receive the goods when they expect them.

global ROUND-UP

Shell Aviation celebrates 100 years of Innovation Shell Aviation has reached a significant milestone in its centenary year. On July 25, 1909 Louis Blériot famously crossed the English Channel from Calais to Dover using Shell fuel. Recently, as part of an historic celebration of Aviation in Dover, the Blériot flight was recreated courtesy of Shell Aviation in the restored but original Blériot plane and was once again fuelled successfully by Shell. Since the original Blériot flight, Shell has been at the forefront of Aviation Technology & Innovation. Highlights over the last 100 years have ranged from providing fuel and lubricants to many of the early pioneers (the Blériot flight being just the start of Shell Aviation’s significant ‘Firsts’), to fuelling the non-stop flight of Boeing 747 from London to Australia in the 1980’s to the development of alternative jet fuels today. Sjoerd Post, VP, Shell Aviation said: “We are as thrilled to have fuelled this recreated flight by Swedish pilot Mikael Carlson as our

predecessors at Shell were 100 years ago to have fuelled Louis Blériot’s flight. It is with immense pride that we in Shell look back at our 100 year association with the Aviation industry and we salute the courage of both men in achieving this remarkable feat.”

Eni enters Ghana through the acquisition of two offshore exploration blocks Eni has entered Ghana through the acquisition of majority stakes in the Offshore Cape Three Points (OCTP) and Offshore Cape Three Points South (OCTPS) exploration licences. Eni’s entry into these licences follows agreement reached with Vitol Upstream Ghana Limited (“VUGL”), part of the Vitol Group, to assign a majority interest in both licenses, as well as both operatorships, to Eni. The new license participating interests, which will be the same for both blocks, will be Eni Ghana Exploration and Production Limited 47.22 per cent (and operator); VUGL 37.78 per cent; and state company Ghana National Petroleum Corporation (GNPC) 15.00 per cent. GNPC will have a back in option for an additional 5 per cent in OCTP and 10 per cent in OCTPS. During June and July 2009 VUGL, in partnership with GNPC and Eni, drilled the Sankofa-1 well in the OCTP block in a water depth of 850 metres. The well encountered high-quality reservoir sands containing 36 metres (net) of oil and gas. Both blocks lie in the prolific Tano/Cape Three Points oil basin, which has recently yielded some of the biggest offshore discoveries yet made in Africa. The Sankofa is a significant hydrocarbon discovery located some 35km east of Jubilee field.

Nov-Dec, 2009

Centenary celebrations also included a marquee at Dover Castle attended by UK B2B colleagues and customers, as well as a flypast of aircraft from all eras over the last century culminating in an impressive display by the Red Arrows.

Occidental Petroleum Announces Acquisition of Phibro Occidental Petroleum Corporation has signed an agreement to purchase Phibro LLC (“Phibro”) from Citigroup Inc., for approximately net asset value. Primarily a trader in oil and gas, Phibro’s assets consist of cash, marketable securities and readily saleable commodity positions. Phibro does not trade in any exotic derivatives or hold any level three type assets. Occidental’s net investment in Phibro is expected to be about $250 million. Phibro’s management team, headed by Andrew Hall, and its employees will remain with the company after closing. The senior management team has agreed to make a significant investment in Phibro and receive returns dependent upon the company’s future performance. Additionally, significant portions of current and future bonuses will be deferred and retained by Phibro and paid out in future years. These future payouts will be adjusted to reflect Phibro’s results during that period. From 1997 until the second quarter of 2009, Phibro averaged approximately $200 million per year in pre-tax earnings, while over the last five years Phibro’s earnings averaged $371 million per year. Phibro has been profitable each fiscal year since 1997, attaining profitability in 80 percent of all quarters. The transaction is expected to close by year end. Upon closing, Occidental will support the credit of Phibro. Phibro will become a part of Occidental’s midstream segment which includes Occidental’s natural gas liquids, power, pipeline and existing trading business.

Shell has announced its plans to develop its Prelude and Concerto gas discoveries, located in the Browse Basin off the northwest coast of Western Australia, using its innovative Floating Liquefied Natural Gas (FLNG) technology. Shell’s FLNG solution is an important development for the LNG industry, with its ability to process gas ‘in situ’ over an offshore gas field, reducing both project costs and the environmental footprint of an LNG development. Shell is the Operator and 100 per cent equity holder of the WA-371-P permit, containing the Prelude and Concerto fields, which would be developed sequentially. While pending a Final Investment Decision, the Prelude FLNG Project is now in the Front End Engineering and Design (FEED) phase of development. FEED for Prelude is being undertaken as part of Shell’s contract with the Technip-Samsung Heavy Industries consortium for the design, construction and installation of multiple FLNG facilities. Malcolm Brinded, Shell’s Executive Director, Upstream International, said: “Shell is excited to be progressing with FLNG technology, which has the potential to unlock some of Australia’s ‘stranded’ gas reserves that have previously been considered uneconomic to develop because of their small size or distance from shore. “LNG technology adds to Shell’s LNG leadership – we are already the largest LNG marketer amongst the international oil companies, and are technical advisor to many of the world’s LNG facilities.”

Picture courtesy: OMV

Prelude LNG development to deploy Shell’s Floating LNG technology

OMV sells a further 30 filling stations OMV has said that it has sold a further 30 stations, with the continued operations of the stations being guaranteed by the acquirers. In 2008 OMV sold 60 OMV and Avanti filling stations throughout Austria. Early in 2009, OMV announced its intention to continue with the optimisation of its filling station network as part of a new network evaluation, and to dispose of an additional 70 OMV and Avanti stations across the country. Against the backdrop of an ever increasing competitive marketplace and shrinking margins, such measures have now become necessary throughout the entire petroleum industry. 30 stations have been sold to new acquirers and operators, with negotiations for the disposal of a further 15 stations currently underway with private interested parties. Suitable investors have not been found for the remaining 25 filling stations due to tighter legal and economic conditions in the filling station market. As a result OMV is evaluating the potential closure of the remaining locations. OMV continues to pursue a growth strategy in the premium segment of the filling station market. The focus is on strengthening and further expanding well located and highly frequented stations. At the beginning of 2009, the company announced the disposal of 70 OMV and Avanti filling stations across the country as part of a new network evaluation aimed at enhancing efficiency and optimising costs.

Sociedade Nacional de Combustíveis de Angola (Sonangol) and BP Exploration (Angola) Limited have announced the ‘Tebe’ oil discovery in ultra-deepwater Block 31, offshore Angola. This is the nineteenth discovery made by BP in Block 31 and is located in the southern portion of Block 31 some 350 kilometres northwest of Luanda and about 12 kilometres to the south east of the Hebe discovery. Tebe was drilled in a water depth of 1752 metres and reached a total depth of 3325 metres below sea level. The well results confirmed the capacity of the reservoir to flow in excess of 5,000 barrels a day under production conditions. Sonangol is the concessionaire of Block 31. BP Exploration (Angola) Limited as operator holds 26.67 per cent. The other interest owners in Block 31 are Esso Exploration and Production Angola (Block 31) Limited (25 per cent), Sonangol P&P (20 per cent), Statoil Angola A.S. (a subsidiary of StatoilHydro ASA)

Picture courtesy: BP

BP makes discovery in Angloa

(13.33 per cent), Marathon International Petroleum Angola Block 31 Limited (10 per cent) and TEPA (BLOCK 31) Limited, (a subsidiary of the Total Group) (5 per cent).

Nov-Dec, 2009

global ROUND-UP

Antonio Brufau opens Canada’s first liquefied natural gas terminal Repsol Chairman Antonio Brufau officially opened the Canaport LNG terminal in Canada, marking the completion of the first of ten key projects outlined in the company’s 2008-2012 Strategic Plan. Brufau was accompanied by Kenneth Irving, Chairman of Irving Oil, and Shawn Graham, Premiere of New Brunswick. The terminal, built in association with Irving Oil, is the first of its kind to be built on the east coast of North America in 30 years and the first ever to be built in Canada. The 1 Bcf per day facility will provide supplies of natural gas to homes, businesses and industry in Canada and the northeast US. Repsol is the managing general partner of Canaport LNG with a 75 per cent stake. Repsol has contracted for 100 per cent of the plant’s capacity. Repsol began selling gas in Northeast of the US in 2008. “The Canaport LNG Terminal commissioning demonstrates

Repsol’s commitment to the LNG business and natural gas as the fuel of choice, for today and for the future,” said Antonio Brufau, Chairman of Repsol. “Canaport LNG demonstrates Repsol’s ability to develop and construct complex energy projects”. Repsol commercial strategy in LNG aims to reinforce its position in the business which is key for the company’s mid and long-term growth. The company’s strategic plan aims to quadruple the volumes of LNG sold by 2012. Repsol is Spain’s largest oil company, and the sixth largest in Europe. Repsol is present in more than 30 countries where it has interests from exploration and production through shipping, refining, LNG, LPG and retail sales. Repsol Energy North America Corporation and Repsol Energy Canada are the entities that will engage in the sale of the regasified LNG in the US and Canada, respectively.

Eni wins exploration block onshore Pakistan

Gazprom delegation takes part in 24th World Gas Conference

Eni has won, in joint venture with Pakistan Petroleum Ltd (PPL) and Royal Dutch Shell, the bid tender for the exploration licence of onshore Sukhpur block, located in the Sindh province north of Karachi. The Sukhpur block lies in the vicinity of the Eni-operated producing areas of Bhit and Badhra and will bring significant operating synergies. During the meeting held in Rome between the President of Pakistan Asif Zardari and Eni CEO Paolo Scaroni, discussions covered this assignment as well as further developments of the Protocol of Cooperation signed last March between Eni and the Government of Pakistan. Eni CEO Paolo Scaroni also expressed Eni’s commitment to continuing as a strategic partner in the development of Pakistan’s oil sector by making the company’s expertise, knowhow and innovative technologies available. Eni has been present in Pakistan since 2000 and is the first international company operating in the country in terms of exploration and production of gas with an equity production of 56,000 boe/d. Eni is also the first player in the offshore exploration of hydrocarbons with cutting-edge technologies.

A Gazprom delegation led by Alexey Miller, chairman of the company’s management committee, participated in the 24th World Gas Conference held in Buenos Aires (Argentina). As part of the Conference, Alexey Miller met with heads of a number of global energy companies, as well as with businessmen and politicians from WGC member countries. In particular, Alexey Miller had a working meeting with Oscar Coca, the Bolivian Energy Minister and Carlos Villegas, President of the Bolivian state-owned Petroliferos Fiscales Bolivianos (YPFB). The parties gave a high appreciation to the progress with the cooperation between Gazprom and Bolivia’s energy companies and confirmed their mutual aspiration to the strategic partnership deepening. It was noted that the General Scheme for the Bolivian gas industry’s development was being worked out by Gazprom VNIIGAZ in line with the schedule. Alexey Miller had a meeting with Gerard Mestrallet, Chairman and Chief Executive Officer of GDF SUEZ and Jean-Francois Cirelli, Vice-Chairman and Chief Operating Officer of GDF SUEZ. The parties paid special attention to the development prospects for the mutually beneficial cooperation, namely, to the expanded interaction in supplies of Russian gas to France as well as to the potential entry of GDF SUEZ into the Nord Stream project as a shareholder. Alexey Miller and Daniel Saba, President of Perupetro discussed the possible ways to execute joint projects in the energy and sci-tech sectors. Alexey Miller and Hassan Marican, President and Chief Executive Officer of Petronas stressed the successful practice of cooperation in swap deals.

Nov-Dec, 2009

Total to Develop the Timimoun Gas Project in Algeria

New discovery: Abare West in the pre-salt, Santos Basin, Brazil

Total (37.75 per cent, Sonatrach (51 per cent) and Cepsa (11.25 per cent) have announced that the Algerian National Oil and Gas Development Agency (ALNAFT) has approved the development plan for the Timimoun natural gas project, located between Timimoun and Adrar in southwestern Algeria. This project milestone is the outcome of an exploration and appraisal program begun in 2003, during which six wells were drilled. Development work should begin in the fourth quarter of the year, with first gas scheduled for 2013. Timimoun is expected to commercially produce around 1.6 billion cubic meters of natural gas per year (160 millions cubic feet per day) at plateau. Total, Sonatrach and Cepsa will jointly operate the Timimoun project. The development plan entails drilling around 40 wells to tap eight structures over an area of 2,500 square kilometres. It also includes the construction of gas gathering and processing facilities, as well as a connection to the pipeline that Sonatrach has been called to develop to carry gas from fields in southwestern Algeria to Hassi R’Mel. Under the marketing agreement, Sonatrach will market all the gas produced. The Timimoun development project consolidates the longstanding cooperation between Total and Sonatrach in the upstream.

BG Group (30 per cent) and partners Petrobras (45 per cent, operator) and Repsol (25 per cent) have announced another new discovery in the Santos Basin pre-salt BM-S-9 concession area, offshore Brazil. The well, 4-SPS-66C (4-BRSA-723C) known as Abare West, proved the presence of an accumulation of oil and natural gas in a separate structure within the 1-SPS-50 evaluation plan area on BM-S-9. The evaluation plan area also encompasses the separate Iguaçu (4-BRSA-709 (4-SPS-60), announced April 2009) and Carioca discoveries (1-BRSA-491SPS (1-SPS-50), announced September 2007). Abare West is approximately 30 kilometres from the Iguaçu discovery and 40 km from the Carioca discovery and 50 km to the west of the Guara discovery (1-BRSA-494-SPS), also in the BM-S-9 concession, announced June 2008. Abare West is in 2163 metres of water, approximately 290 km off the coast of Sao Paulo State and encountered a hydrocarbon column containing oil, gas and carbon dioxide in pre-salt reservoir sections. The well will be fully analysed and the forward plan for this discovery will be incorporated into the evaluation plan for this accumulation approved by ANP. BG Group Chief Executive Frank Chapman said: “Abare West further extends an outstanding sequence for BG Group and partners operating in the Santos Basin, with eight discoveries in three years.”

Total signs Heads of Agreement with KazMunaiGas Total has signed Heads of Agreement (HOA) partnership with KazMunaiGas (KMG) for the development of the Khvalynskoye field, located offshore in the Caspian Sea on the border between Kazakhstan and Russia. The field is a conventional gas condensate field located in water depths of 25 metres which will be developed by Lukoil (50 per cent, operator). The gas produced from this field will be transported to Russia. Under the terms of the HOA, Total and GdFSuez will acquire a participation of 25 per cent (Total 17 per cent, GdF-Suez 8 per cent) from the initial 50 per cent stake held by KMG. “This agreement provides the opportunity for Total to further strengthen its ties with KazMunaiGaz, with whom the Group is already a partner on the Kashagan project in Kazakhstan,” stated Yves-Louis Darricarrère, President Exploration and Production.

ConocoPhillips increases dividend ConocoPhillips has announced an increase in its quarterly dividend along with plans to improve its financial position and increase returns on capital through a combination of enhanced capital discipline and portfolio rationalisation. “These actions are consistent with our objectives of creating shareholder value and improving financial flexibility while pursuing our long-term strategic initiatives,” said Jim Mulva, Chairman and Chief Executive Officer. “This plan capitalises on our large resource base and our strong portfolio of projects, while providing flexibility for potential changes in business conditions. We will replace reserves and grow production from a reduced, but more strategic, asset base.” Capital expenditures in 2010 are expected to be approximately $11 billion, down from $12.5 billion in 2009. At this level of funding, the company will support exploration, production and reserve replacement, while preserving its project portfolio for future development. Further details of the company’s 2010 capital program will be announced near the end of 2009. The company intends to achieve its objective of replacing reserves through organic growth. Upstream production growth will occur from a reduced base, as a result of the asset rationalisations. To improve its financial position and strengthen its balance sheet, ConocoPhillips intends to sell approximately $10 billion of assets over the next two years. The dispositions will occur across the company’s Exploration & Production and Refining & Marketing portfolio. Proceeds from dispositions will be targeted to debt reduction, accelerating the company’s return to its stated target debt-tocapital ratio of 20 percent to 25 percent. These actions will increase the company’s return on capital using normalised commodity price assumptions.

Nov-Dec, 2009

EVENTS CALENDAR

REGIONAL

Global

Getenergy for the GCC countries

Subsea Production Systems Engineering

November 16-17, 2009

November 10-13, 2009

Bahrain

Marriott Westchase Hotel, US

International Petroleum Technology

AAPG 2009 International Conference

November 25-26, 2009

Conference and Exhibition

and Exhibition

Lake Como, Italy

December 7-9, 2009

November 15-18, 2009

Sheraton Doha Resort and Convention Hotel,

Rio de Janeiro, Brazil

Successful Mega Projects November 18-19, 2009 Perth, Australia European Autumn Gas Conference (EAGC) 2009

Establishing Effective Capital Cost and Schedule

Qatar Subsea Pipeline Engineering Saudi Oil, Gas & Petrochemical

November 16-20, 2009

January 17-20, 2010

InterContinental Hotel, Houston

December 7-8, 2009, Singapore Contracting in the Changing World of Projects

Riyadh Exhibition Centre Deepwater Riser Engineering

December 9-10, 2009, Singapore

Nano Petroleum, Gas and Petrochemical

November 16-20, 2009

Industries Conference - Concepts to

Intercontinental Hotel

Best Practices for Power Projects

Revolutionize the Energy Sector Through

Houston, USA

December 16-17, 2009 Beijing, China

Nanotechnology Nov 18-19

Establishing Effective Capital Cost

Cairo Egypt

and Schedule

Produced Water Management 2010

November 17-18, 2009

January 21-22, 2010, Norway

Saudi Oil, Gas & Petrochemical

Johannesburg, South Africa 2nd Annual Oil & Gas Communications

Jan 17-20 Overview of Subsea Systems

South East Asia Conference

November 17-19, 2009

Nov 17-18

13th Middle East Corrosion Conference

Renaissance

Kuala Lampur, Malaysia

and Exhibition

Kuala Lampur

Feb 14-17

Malaysia

Riyadh, Saudi Arabia

Manama, Bahrain

Coal Mine Methane Nov 23-24 London, United Kingdom

Nov-Dec, 2009

Oil & Gas Agreements Production

9th South East Asia Hydrocarbon Flow

5th China Offshore Summit

Sharing & Unitisation

Measurement Workshop

March 24-26, 2010

Nov 26-27, 2009

March 2-4, 2010

Beijing, China

Utrecht, Netherlands

Kuala Lampur Malaysia

Oil and Gas Technology Forum

Getenergy for Libya

March 25-28, 2010

Dec 1-2, 2009

OCEANTEX- 2010 Offshore Conference

Tripoli, Libya

& Technology Exposition

London

March 3-6, 2010

United Kingdom

PETEX West Texas Natural Gas

Bombay Exhibition Centre

Measurement Fundamentals Course

Mumbai

Dec 16-18, 2009

*Dates may be subject to change, please

USA

Oil Field Chemistry Symposium

confirm with event organiser

March 14-17, 2010 Seabed Mapping and Inspection 2010

Geilo, Norway

Feb 9-11, 2010 Unconventional Gas

Norway

March 15-16, 2010 33rd Annual ASME/ALRDC International

United Kingdom

Gas-Lift Workshop Feb 1-5, 2010

SPE/ICoTA Coiled Tubing

Houston, USA

Well & Intervention Conference & Exhibition

E&P Information and Data Management

March 23-24, 2010

Feb 9-10, 2010

USA CAPE IV, 4th African Petroleum Congress & Exhibition

Feb 24-25, 2010

March 24-27, 2010

• Plant Maintenance in the Middle East 2010 (Jan 10-13, 2010) • Gas Arabia Summit (Jan 31, Feb 3, 2010)

UK Utilising Associated Gas

Oil & Gas Review is the strategic media partner for the following forthcoming events:

• 9th Middle East Geosciences Conference & Exhibition (March 8-10, 2010) • Middle East Petrotech 2010 (May 24-26, 2010)

United Kingdom

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REGIONAL ROUND-UP

Major Upgrade Completed on RT Sea Islands

Taqa signs five-year contract with Wipro The Abu Dhabi National Energy Company (Taqa) has awarded a five-year contract for an unspecified sum to India’s Wipro Limited, a major provider of information technology services, to deliver infrastructure operations and application management services. Under the agreement, Wipro will establish an offshore development centre in the southern Indian city of Chennai, which will be operational later this year, said Wipro Infotech’s Chief Executive Anand Sankaran. The facility will employ a workforce of 200 over the next three to five years. “The reputation of Wipro matches with the global footprint we are building,” Taqa’s Chief Executive Officer Peter Barker-Homek said at the contract signing ceremony. He declined to elaborate on the terms of the contract with Wipro, citing confidentiality. Wipro’s Sankaran said the Middle East market is a major growth driver for Wipro and despite the ongoing global financial crisis, they are expecting a 45 per cent to 50 per cent growth in this market in 2009.

One of Saudi Aramco’s oldest and most essential crude oil loading facilities is enjoying increased reliability and operational enhancements thanks to completion of three major upgrades to Ras Tanura Sea Islands 2, 3 and 4. The company carried out the three projects simultaneously, providing new tower cranes, control systems and firewater protection for the Sea Islands, which have been a reliable gateway for crude oil export for more than 40 years. The Saudi Aramco project team, working in partnership with main contractors Worley Petrocon and Mohammed Al-Mojil Group, achieved project completion without disruption to the crude-loading operation. More than two million work-hours were expended during project construction, with no lost injury time despite many challenges, including daily transporting of the work force by boat, working in congested areas, and the parallel integration of a major Test and Inspection. Hassan J. Al-Zahrani, General Manager of Northern Area Project Management, at a recent recognition ceremony, remarked on the diverse challenges that had been overcome and congratulated the team for their efforts, dedication and alignment in completing the projects.

Laffan Refinery Starts Production Qatargas has started production from the Laffan Refinery, the first condensate refinery in Qatar. The refinery’s production reached commercial quantities and specifications on 23 September for all products. The new refinery has a total processing capacity of 146,000 barrels per stream day (BPSD). It consists of process units including utility systems, distillation units, naphtha and kerosene hydrotreaters, a hydrogen unit and a saturated gas plant producing naphtha, kerojet, gasoil and liquefied petroleum gas (LPG). Faisal M. Al Suwaidi, CEO and Chairman of Board of Directors of Qatargas Operating Company, said: “The Laffan Refinery brings together a number of effective technologies and synergies from multiple ventures. The refinery adds value for end customers as well as the State of Qatar. This start-up represents a historic milestone for Qatar and Qatargas especially as this is the first time some of

Nov-Dec, 2009

these technologies are being used in the country.” “We have also focused on safety at the refinery and implemented critical safety

systems throughout the construction phase. The same Qatargas safety philosophy has also been applied in the commissioning and start-up phases as well. “We are aiming for safe and stable operations,” he observed. The Laffan Refinery is a key part of the strategic vision for Qatar as it will process and add value to the field condensate produced from the Qatargas and RasGas facilities. The condensate will be refined and turned into products such as naphtha, kerojet (otherwise known as jet fuel) and gasoil. The refinery’s production capacity will be 61,000 bpsd of naphtha, 52,000 bpsd of kerojet, 24,000 bpsd of gasoil, and 9,000 bpsd of LPG. From inception, the refinery has been planned as an environmentally friendly facility and it has been built in line with stringent environmental standards to reflect this concept in every detail.

Flare tower milestone for Qatargas project

Ras Gas receives international safety awards

Qatargas has passed a major milestone towards completing a new berth for liquefied natural gas (LNG) tankers at Ras Laffan Port, with the safe installation of 68 metres-tall flare tower. The new terminal, LNG Berth 6, will be capable of loading Qatargas’s latest Q-max tankers, each of which is 345 metres long. The flare is made up of three component sections assembled on location. The flare sits on a sub-structure 15 metres above sea level and the overall lifting weight of the operation was 80 tonnes. Work on the new berth is being carried out by contractors, Fluor, MedGulf and Mammoet, under a Qatargas project management team. Mammoet used Crane model: CC4800-1 with a lifting capacity of 800 tonnes as well as a 240 tonne Super lift. Overall boom length was set at 114 metres. Qatargas Berth 6 Project Manager, Bertrand Boudier said: “This major lift puts us well on the way to completing Berth 6 safely and to meet the business needs. Everyone involved, whether from Qatargas or our contractors, has worked as one team, and can be proud of what we have achieved so far.”

In recognition of its world-class safety, health and environmental performance in 2008, RasGas Company Limited (RasGas) has received two ExxonMobil Development Company (EMDC) President’s Safety Awards. RasGas’ Subsurface Group and the Common Offplot Projects (COP) Team were selected from a number of worldwide finalists, after a comprehensive review of their 2008 performance. EMDC also acknowledged the remarkable safety achievements of the RasGas Venture Expansion Phase 2 (RGX2) Onshore Project Management Team with a Special Recognition award. RasGas’ exemplary performance in project execution during 2008 marks another key milestone in its history. “It gives me great pleasure to note that not one, but three of our development teams have achieved such recognition from ExxonMobil,” said HE Dr I B Ibrahim, RasGas Vice-Chairman.”As you know, RasGas is moving towards completing a multibillion dollar expansion programme. The safety, health and welfare of the people who work on RasGas assets are held as a core value for the entire organisation. The remarkable performance by the Subsurface Group, COP and the RGX2 Onshore teams is a powerful symbol of this core value. “The EMDC President’s Safety, Health and Environment Award recognises industry efforts to reduce risks and prevent incidents through management leadership, employee participation and use of state-of the-art management systems.

Thousands celebrate KAUST inauguration More than 3,000 heads of state, industry leaders and academics joined the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz for the inauguration of his dream of 25 years: the King Abdullah University of Science and Technology (KAUST). The university, he said in his inaugural address, was the realisation of a “persistent desire” of his and part of the legacy of Muslim scholars from centuries past. The ceremony took place on the Kingdom’s 79th National Day and was symbolic of what the occasion meant to the King and the country.

BAPCO to introduce refinery reliability clock To further enhance the reliability culture, Bapco is introducing the Refinery Reliability Clock concept at its refinery. The Refinery Reliability Clock (RRC) will be a new key performance indicator to measure and recognise everyone’s contributions to achieving operational excellence. The ultimate aim is to have no unplanned shutdowns between turnarounds. The RRC will measure the number of days since a major processing unit experienced an unplanned shutdown of 24 hours (oil out to oil in) or longer. Other factors leading to the RRC being reset include: catalyst damage due to human error, and shutdowns in supporting departments such as Oil Storage & Export and Power & Utilities, resulting in a shutdown of core units for more than 24 hours. An initial target of 90 days has been set for Bapco, based on the best ever result achieved by the

Refinery in 2007/8. Subsequent milestones will be in increments of 90 days (i.e. 180, 270, etc.) Bapco’s RRC started to ‘tick’ in mid-June this year. Unfortunately, a power failure on August 4 forced No.1, No.2 and No.3 CDUs, No.1 VDU, and No.1 VBU to shut down. Although the power supply was restored after a short period, it took more than 24 hours before all the units came back into normal production. The RRC, which was reading 52 days at the time, was reset and on August 31 was reading 27 days. The RRC will soon be prominently displayed on Bapco’s portal and on the new electronic board which will be set up next to Engineering building at the Refinery. As with other safety milestones, Bapco will recognise the achievement of RRC milestones through suitable rewards to employees.

Nov-Dec, 2009

REGIONAL ROUND-UP

Dana Gas appoints CFO Dana Gas PJSC, the Middle East’s first and largest private-sector gas company, has announced the appointment of James Dewar as Group Chief Financial Officer (CFO). Dewar brings in over 27 years experience working in global/ regional CFO roles with British Petroleum (BP) Plc in the UK, Dubai, Kuwait, Indonesia, Singapore and the USA. Dewar is a Chartered Accountant and holds a Bachelor of Arts honours degree in Accounting & Marketing from Strathclyde University in Scotland. Ahmed Al Arbeed, Dana Gas Group Chief Executive Officer, said, “I am pleased to announce the appointment of James Dewar as Group CFO, effective October 1, 2009. Dewar joins us at an important time to add executive and financial leadership to support the further growth and development of Dana Gas. We are confident he will add significant value to the company, utilising his extensive global business and finance experience in upstream, downstream, petrochemicals and trading for the benefit of Dana Gas shareholders, business partners and employees.” Speaking of the appointment Dewar said, “I am delighted and honoured to be joining Dana Gas as Group CFO. I have watched the company grow with interest since its inception and seen its phenomenal development over the past few years to become an increasingly successful energy company with interests across the MENASA Region. I look forward to working closely with Ahmed Al-Arbeed, the Board of Directors and the Dana Gas leadership team to contribute to the company’s continued growth and success through long term value delivery to its shareholders.” Dana Gas recently announced its financial results for the second quarter of 2009, posting a net profit of AED 392 million and production figures of 3.19 million barrels of oil equivalent (MMboe) for the quarter.

Consortium acquires Qatar Engineering and Construction Company

A Consortium comprising of institutions from Qatar and Bahrain have announced that they have acquired Qatar Engineering & Construction Company WLL (QCon), one of Qatar’s leading industrial engineering and construction contracting companies specialising in the Oil & Gas, Petrochemical, Power and other industrial infrastructure sectors. The transaction sees Qatar America Asia Consortium (QAAC), Bahrain-based Unicorn Investment Bank (Unicorn), Qatar First Investment Bank (QFIB) and The First Investor (TFI) acquire 100 per cent of QCon from Qatar Shipping. QAAC is the Co-Originator of the transaction, with Unicorn acting as Co-Originator and Arranger. The Consortium formed a close partnership to structure the transaction according to Shari’ah principles. QFIB and TFI are the largest shareholders in the Consortium, having each acquired a 41 per cent stake in QCon.

TAQA Completes Acquisition of DSM Energy The Abu Dhabi National Energy Company’s (TAQA) wholly owned subsidiary, TAQA Energy B.V. (TAQA Energy), has completed its EUR 285 million acquisition of 100 per cent of the share capital of DSM Energie Holding B.V. (DSM Energy) from Netherlands based Life Sciences and Materials Sciences Company Royal DSM N.V. The sale includes non-operated interests in the pipeline company Noordgastransport B.V. (NGT), three other pipelines and 20 producing oil and gas fields in the Dutch North Sea. The assets will strengthen TAQA’s midstream position in Europe and provide additional daily production of approximately 5,000 barrels of oil equivalent (boe) (2008 average) of which 85 per cent is natural gas. The enterprise value of the transaction as of 1 January 2009 is EUR 285 million. Most of the value is assigned to interests in the midstream assets. Commenting on the announcement, Paul van Gelder, TAQA Energy Managing Director, stated: “Increasing our midstream operations, alongside our European footprint, is a key objective for TAQA’s

Nov-Dec, 2009

development into a global energy company. This acquisition meets both of these criteria. Not only does it bring a new family of attractive assets, but it also provides TAQA Energy with excellent commercial opportunities and access to key relationships that will help develop our position as a pan-European midstream player.” The DSM Energy assets have been incorporated into TAQA Energy with immediate effect.

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job postings

Positions Company Locations Details CMMS Specialist BG United Kingdom

www.bg-group.com

Contracts Engineer-upstream projects BG Australia

www.bg-group.com

Exploration and Development Accountant BG Australia

www.bg-group.com

Gasfields Social Performance Manager

www.bg-group.com

Financial Reporting Lead

Shell United States

www.shell.com

Senior Geotechnical and Tailings Engineer

Shell Canada

www.shell.com

Corporate Lawyer

Shell Australia

www.shell.com

Australia

Shutdown Maintenance Engineer BAPCO Bahrain

www.bapco.com.bh

Mechanical Design Engineer BAPCO Bahrain

www.bapco.com.bh

Department Manager

OMV

Romania

www.omv.com

Regulatory Affairs Manager

OMV

Austria

www.omv.com

Environmental Impact Assessment Coordinator Chevron Australia

www.chevron.au

Expressions of Interest â&#x20AC;&#x201C; Drilling

Chevron

www.chevron.au

Sales Engineer

Hutchinson Suzhou China

www.total.com

Procurement and Logistics Supervisor

Total China

www.total.com

Australia

Maintenance and Reliability Engineers BP United States

www.bp.com

Technical delivery Engineer BP United States

www.bp.com

JOB POSTING UPDATED ON october 15, 2009

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TENDER WATCH

Tender Watch Work Company More Information

Qarn Alam Power Station Phase 3

PDO

www.pdotenders.com

Pre-qualification for EMC Contract

PDO

www.pdotenders.com

Operations inspection services

PDO

www.pdotenders.com

Provision of harbour tugs, and pilot boats

Qatar Petroleum

www.qp.com.qa

accessories for Nakelat Shipyard project

Qatar Petroleum

www.qp.com.qa

EPIC of privacy & breakwater wall at DWS facility, Dukhan

Qatar Petroleum

www.qp.com.qa

Tender selling of fuel oil

Jordan Petroleum

www.jopetrol.com

Various welding machines, equipments and

UPDATED ON october 15, 2009

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