FROM THE EDITOR’S DESK No 16
May-June, 2011 INTERVIEW
ANALYSIS
COMPANY REPORT
Rrajesh Malaviya CEO, Aptus
Oman's new Oil & Gas Law analysed by Edward Rose
Al Ghalbi International
May-June 2011
BOOSTING PRODUCTION
Increased use of EOR techniques will become a necessity as easy oil wanes
CONCEPT & CONTENT Akshay Bhatnagar Sunil Fernandes
THE PRICE RISE! The last few months have been characterised by unprecedented developments in the oil and gas markets. First, it was the unrest in the Middle East and North Africa Region, followed by the tsunami in Japan. Crude prices have been gaining ground steadily and have risen by as much as 50 per cent since February 2011. Brent Crude has hit a recent high of almost $126, which is a 30-month high. The big worry for emerging economies is that rising crude prices will stoke inflation. Already in countries like India and China, the central banks have intervened by hiking rates to curb inflation. Rising crude prices would continue to impact inflation and hence economic growth. The International Energy Agency has already sounded the alarm bells. The current price of oil is harming global economic growth and is a mounting concern for consuming nations, the Deputy Executive Director of the International Energy Agency said recently. “Oil at $120 or more has an effect on economic activity. We have seen similar levels during times of economic slowdown if not recession,” Richard Jones, Deputy Executive Director of the International Energy Agency said.
DESIGN Senior Art Director Sandesh S. Rangnekar Art Director Minaal G Pednekar Senior Designer Shameer Moideen Senior Photographer Rajesh Burman Photographer Sathya Das Motasim Abdulla Al Balushi 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 Business Support Executive Zuwaina Said Al-Rashdi
While it was expected that there may be some intervention by the Organistion of Petroleum Exporting Countries (OPEC), those hopes have been belied. Crude prices continue to hold firm, positively impacted by economic data from the United States and also the recent figure of lower crude inventory levels in the United States. The Oil & Gas Review (OGR) has done a detailed story on the impact of the geo-political tensions on rising inflation and the economy. Moving on we have also analysed the new oil and gas law in force in the Sultanate. OGR also features many more interesting articles. Do enjoy reading the edition and forward your feedback or comments. Sunil Fernandes sunilf@umsoman.com
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 © 2011 United Press & Publishing LLC Printed by Oriental Printing Press Correspondence should be sent to: Oil & Gas Review United Media Services LLC PO Box 3305, Ruwi 112, Sultanate of Oman Fax: (968)24707939 Email: akshay@umsoman.com
Read the E-Mag: Follow us on www.oeronline.com twitter.com/oilandgasreview An
Presentation
CONTENT Exploiting to the very last
20
Enhanced oil recovery (EOR) will play a dominant role in the coming decades as easy oil wanes and demand for oil continues
32
Making a mark
Inter ie with Interview ith Ali Suleym Al Junaibi, Chairman and President, Al Ghalbi International Engineering and Contracting
34
Virtual visualisation
Pic Courtesy: PDO
Interview with Rrajesh Malaviya, CEO, Aptus Software
NEW OIL AND GAS 12 OMAN’S LAW ANALYSED 4
May-June, 2011
38
A comprehensive range of services
Interview with Alex Clark, General Manager, Operations, STS
CONTENT Oil on a boil
16 44
The Indispensable Industry By John Watson
It’s been a “fast and furious” rise in crude prices, accentuated by a host of political and natural events
(North
4 45 HOKKAIDO Electric Power Co. HOKURIKU Electric Power Co. Electric Power Co. GOKU Power Co.
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NAWA Power Co.
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Tsunami and th the rising demand for gas
The tsunami in Japan has put pressure on LNG supplies globally, as the country tries to meet its power requirements through natural gas
48 Crude oil surges
Crude oil prices surged in February with the OPEC Reference Basket moving above $100/b for the first time since September 2008
66 EVENTS CALENDAR
A calendar of events in the local oil and gas industry
54
Global round-up
A round-up of the latest global news
6
May-June, 2011
NEWS BRIEFS
Wireline Engineering signs agreement in Oman Wireline and well intervention technology specialist Wireline Engineering has concluded an agency agreement with a local company in Oman to further develop its activities in the Omani market. The one-year agreement with Oman Oil Industries Supplies and Services Company (OOISS) has options to extend annually and is showing early signs of success with the first rental equipment mobilised for offshore and onshore wells operated by a number of oil and gas companies. Under the agreement, OOISS will provide local support and promote Wireline Engineering’s full product portfolio to oil and gas firms in the Sultanate of Oman. High customer demand is expected for its world-leading Open and Cased Hole Roller Bogie technology as well as specialised gas lift and oriented perforating tools. Aberdeen-headquartered Wireline Engineering has an aggressive internationalisation plan covering the Americas, Middle East and Far East. It has had a permanent presence in the Middle East since 2005 and has built an impressive track-record in the region with equipment deployed across The United Arab Emirates, Kuwait, Saudi Arabia and Qatar. Bill Petrie, Managing Director of Wireline Engineering, said, “Expansion into Oman is another major step for Wireline Engineering to enhance its presence in the Middle East. There is huge scope for specialist wireline conveyance products in Oman and in particular our Roller Bogie technology, which is widely acknowledged as an effective solution for downhole operations in deviated wells, is already proving popular.”
Oman Oil arm to invest $1b in Block 60 Oman Oil Company’s subsidiary Oman Oil Company Exploration and Production (OOCEP) will explore for natural gas in Block 60 in central Oman. The company is expected to invest $1 billion in the first phase to produce 90 million cubic feet of natural gas per day from this block. According to the plan, the potentially prolific Block 60 will be developed in two different phases — first phase for the southern region or Abu Butabul gas field and the second phase for the northern side of the concession area. Mohammed bin Hamad Al Rumhy, Minister of Oil and Gas, and Salim Al Sibani, CEO of OOCEP recently signed the concession agreement. Britain’s oil giant BG group had last year relinquished the onshore gas block of Abu Butabul. Now OOCEP will explore this block. OOCEP, which was incorporated as a separate legal entity in 2009, has several assets and diversified interests in oil and gas exploration and production both inside and outside Oman.
EOR Round Table Workshop held The 2011 Global EOR Knowledge Expansion Workshop was recently held in Muscat, and brought together leaders from major National Oil Companies, International Oil Companies and technology providers. The workshop was a meeting of Subject Matter Experts working in the field of Enhanced Oil Recovery, from Chemical, Thermal, CO2 and other gas injection techniques, creating a jumping point with brilliant ideas and new questions whilst addressing the most pressing issues faced by the hydrocarbon industry. “The workshop facilitated the coming together of leading EOR experts and researchers to share their ideas, initiatives and findings. The gathering was an ideal knowledge sharing and networking platform for all attendees. Oman is witnessing rapid progress in its EOR projects and this workshop complemented this development phase,” said an official spokesperson of Knowledge Expansion. This year the destination of the workshop was particularly important as it took place in Sultanate of Oman, where major EOR projects are under way. The workshop was chaired by H.E. Khalifa Bin Mubarak Al Hinai - Advisor, Ministry of Oil and Gas Oman & co-chaired by Dr. Zaid Al Siyabi - Directorate General, Ministry of Oil and Gas Oman.There were 25 technical papers including, case studies, R&D and poster presentations from 20 different countries that were presented over four days to challenge the very fabric of the EOR community. Delegates interacted with each other in intense break out discussion format trying to find solutions by tackling key challenges put forth by their companies and teams. 8
May-June, 2011
SQU students win Imperial Barrel Award at Middle East level Five students from the Department of Earth Sciences at Sultan Qaboos University have won first place in the Middle East regional level contest of the American Association of Petroleum Geologists (AAPG) Imperial Barrel Award Programme. Ismail Said Rashid Al Dhahli, Shaikha Hamed Hilal Al Qassabi, Asya Ahmed Hammdan Al Abri, Nasser Sultan Mohammed Al Habsi, and Omar Mohammed Marhoon Al Riyami, all undergraduate students in the Department of Earth Sciences of the College of Science, participated in the regional level contest under the guidance of Khalil Juma Mahmood Al Hooti, who is working as a demonstrator in the department. The project assigned to the SQU team was titled, ‘Evaluation of Hydrocarbon Prospects in Cooper and Eromanga Basins’.
Al Hassan Engineering Co holds annual general meeting The annual general meeting (AGM) of Al Hassan Engineering Co (AHEC), the leading Engineering, Procurement and Construction (EPC) Company in the Sultanate, recently approved a 15 per cent dividend for the financial year ended December 31, 2010. Chairman of AHEC, Hassan Bin Ali Salman,
commenting on the strong 2010 results of the company said, “Al Hassan’s focus on delivering consistent and sustainable growth through its existing operations has resulted in a strong performance for 2010. AHEC increased its revenues by 11 per cent from RO54 million to RO60 million and increased its net profit before
tax by 13 per cent from RO3 million to RO3.4 million.” The AGM was chaired by Hassan Bin Ali Salman and was attended by other Directors and senior management members of the company as well as the statutory auditors and representative of the Capital Market Authority and legal advisors.
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NEWS BRIEFS
Renaissance holds its 15th AGM Renaissance Services shareholders approved
The shareholders also elected the nominated
the company’s financial statements, dividend
members of the Board of Directors for a new
distribution and other agenda matters
term of office and approved the company’s
discussed at the 15th annual general meeting
corporate social responsibility (CSR) fund
(AGM), including the planned listing of the
for the year 2011 among other agenda
company’s Topaz business. The shareholders
matters. The AGM was attended by 79.34
authorised Renaissance’s Board of Directors
per cent of shareholders.
to approve the timing, pricing and number of shares to be offered by the Topaz company
Renaissance’s revenue in 2010 was at
which will be listed on the London Stock
RO253.4 million ($658.3 million), marking
Exchange. An information document
a tenth consecutive year of year-on-year
detailing the proposed IPO was dispatched to
growth, reflecting the company’s long-term
shareholders prior to the AGM in an attachment
strategy in alignment with the oil and
to the agenda and financial statements.
gas industry.
AIWA Awards for Oman’s Best Performing Companies in May Come May end, Oman will witness the most high profile event of its kind targeted primarily at the top echelons of the Arabic speaking business community in the Sultanate. Setting up new benchmarks in the industry, for the first time, corporates in Oman will be felicitated based on a highly qualitative performance survey done in a transparent manner as per the best international standards.
The event will be organized under the patronage of Muscat Securities Market (MSM). Gulf Baader Capital Markets SAOC (GBCM) is the knowledge partner whereas KPMG is the audit partner for the ranking process used for the awards. “Achieving the pinnacle of corporate performance is the dream of every CEO. But very few CEOs manage to convert their dream into a reality. Alam al-Iktisaad Wal A’mal Awards for Oman’s Best Performing Companies endeavours to recognize and celebrate the excellent performance of the listed companies who have made it to the top,” said Sandeep Sehgal, chief executive of UMS.
To recognize the top achievers in Oman’s corporate world, Alam al-Iktisaad Wal A’mal (AIWA) has instituted Awards for Oman’s Best Performing Companies. Alam al-Iktisaad Wal A’mal (AIWA), published by United Media Services, is Oman’s leading Arabic monthly business magazine. In a red carpet awards evening at Al Bustan Palace on 30th May this year, AIWA will felicitate the top performing listed companies in Oman during 2010. HE Sheikh Sa’ad bin Mohammed al Mardhoof al Sa’adi, minister of commerce & industry, will be the Guest of Honour at the event. A networker’s dream, the event will be attended by the who’s who of Muscat corporate high life. The premium event will attract more than 250 top business leaders, CEOs and senior government officials 10
May-June, 2011
from a cross-section of industries, ministries and government bodies. It will witness the congregation of the key decision-makers who are driving the country’s business and economy. A high-voltage entertainment show by renowned international troupes will make the attendees cherish the evening for a long time to come.
Overall 15 Top Ranking Companies will receive the coveted trophy. In addition, AIWA will also felicitate two prominent Omani nationals who have done the nation proud by excelling in the fields of business and economy. The AIWA Awards to the selected personalities will be made in two categories – AIWA Global Omani of the Year Award and AIWA Life Time Achievement Award. For more details on the AIWA Awards, log on to www.alamaliktisaad.com or contact: Laurelle De Sa, on 99860242 and laurelle@umsoman.com.
NEWS BRIEFS
Omanoil achieves record RO216 million revenue in 2010 Oman Oil Marketing Company (omanoil) has recorded its highest total sales in history of RO216.2 million, an increase of 28 per cent compared to RO168.4 million in 2009.
OOCEP awards contract for Musandam Gas Processing plant Oman Oil Company Exploration & Production (OOCEP) has awarded Korea’s Hyundai Engineering Co., a $480 million contract for the Gas Processing Plant in Musandam. The Engineering, Procurement and Construction (EPC) Contract is for gas separation and oil treatment plant. The production will come from the Oman West Bukha field – offshore Musandam Peninsula
After providing for corporate tax, the company’s net profit amounted to RO6.9 million. Earnings per share stood at 106 baisas. At the company annual general meeting to announce the financial performance for 2010, the proposed final cash dividend of 42 baisas per share amounting to RO2.71 million for the financial year ended December 2010 was approved. This represents a 20 per cent increase.
with 36-months project schedule. Salim Al Sibani, CEO of OOCEP, said, “This is a very significant project for Oman and the Musandam province. The Musandam Gas Plant is part of a major integrated development comprising West Bukha Field Development, interlink offshore pipeline, crude storage, export facilities, and a gas fired power plant. The project will act as the foundation for additional oil and gas developments. We look forward to a collaborative effort with Hyundai Engineering to complete the project safely and successfully.” Expressing his satisfaction with the contract award, Dong-Wook Kim, Chief Executive Officer of Hyundai Engineering Co., said, “This is an important deal for Hyundai Engineering Co., as it turns the Musandam province with local supporting services and spreads reputation of HEC’s oil and gas project in Oman.”
ANALYSIS
By Edward Rose, Partner, Trowers & Hamlins, Oman
OMAN’S NEW OIL AND GAS LAW ANALYSED
T
he oil and gas sector in Oman awoke to a different world on February 2, 2011, to find a new oil and gas law in force in the Sultanate. Royal Decree No. 8 of 2011 ushered in the new law and immediately abolished the old petroleum and minerals legislation (Royal Decree 42/74). The new law revises the legal framework which governs the country’s hydrocarbon sector and introduces a number of provisions which will apply to future concession agreements. The law also contains important new rules relating to a range of employment and environmental issues, and reworks the penalty regime for those who breach the new law.
REGULATORY FRAMEWORK The new law applies to all Petroleum Substances found in Oman, up to the extent of the nation’s continental shelf, with the definition of “Petroleum Substances” comprising crude oil and both associated and nonassociated natural gas. The law will govern all concessions granted by the Government after February 2. Each future concession will be for 12
May-June, 2011
a fixed term of years and will become effective only upon being ratified by Royal Decree. This is similar to current practice in Oman. The law expressly forbids anyone from undertaking the exploration, excavation, development or exploitation of Petroleum Substances in the Sultanate except under a Concession Agreement. We anticipate that a “Concession Agreement” will in practice take the form of an Exploration and Production Sharing Agreement (EPSA) with the Ministry of Oil and Gas (MOG). The Law is very clear that all Petroleum Substances in Oman are the property of the Government and that, prior to extraction, no third party can acquire title to them. There are some notable changes occasioned by the new law. Unlike the oil law, the new law does not cover mineral resources and mining operations. The old law also permitted concessions to be granted for the storage and distribution of oil and gas, but the previous reference to “storage or distribution” has been dropped from the new definition of what a Concession Agreement may cover. Instead, the new law prevents anyone from
importing, exporting, storing, distributing, manufacturing, marketing or undertaking any similar activity relating to Petroleum Substances without being granted a licence by the MOG. In our view, this indicates that a separate licensing regime will very probably be created for companies engaged in these lines of business, to be based on terms and fees specified by the MOG. The authorities are clearly keen to award EPSAs only to those companies which are technically capable and sufficiently well-funded to perform the obligations to which they agree to commit, since the new legislation mandates that all future concessionaires will need to be qualified in accordance with MOG technical and financial standards. Further information is awaited about these standards. Another new and significant measure is that Royal Decree 8/11 gives the MOG the right to request a performance guarantee from each prospective concessionaire, to be valid for the entire term of the concession. It is envisaged this guarantee will take the form of a monetary deposit of between 2-5 per cent of the value of the EPSA. Subject to further information
from the MOG, it is possible that this value could be linked to the aggregate amount of the expenditure commitments imposed upon the concessionaire in the EPSA. The law allows the MOG to call in the guarantee in the event of a failure or breach by the concessionaire. The Government is obviously intent on ensuring that those awarded concessions remain committed to Oman, since the new law includes statutory restrictions on the ability of a concessionaire to assign or surrender its EPSA. These steps will only be possible with the MOG’s express approval, and any assignment to a third party will additionally require confirmation by a special Royal Decree.
NATURAL GAS Royal Decree 8/11 for the first time contains specific sections relating to natural gas. Reflecting the increased importance of natural gas to Oman, in future all Concession Agreements will contain a positive obligation to preserve reserves of gas and to use such gas in a defined order of priorities. Additionally, incentives will be available in crude oil Concession Agreements to encourage the operating company to exploit any reserves of natural gas which they may discover. Details of these incentives remain to be established by the authorities, but this is expected to be a fertile area for future negotiations between prospective concessionaires and the MOG. Note that the new law goes on to provide that the MOG may, if a concessionaire is not using all volumes of natural gas found in its contract area for purposes of its own operations, require the concessionaire instead to allocate remaining gas for supply to the local market.
OPERATIONS Royal Decree 8/11 sets out a new requirement for a security plan to be developed as soon as a commercial discovery has been declared and prior to oil or gas production commencing. This measure notably applies both to existing concession holders, as well as
future concessionaires. From now on, each upstream operator must draw up a comprehensive security plan in coordination with the Royal Oman Police (ROP), with the aim of ensuring safety and security within the contract area established by the EPSA. This plan will need to be updated every two years. This is a brand new measure, which shows how critically the Government continues to treat oilfield safety and security.
If a concessionaire discovers natural resources not covered by the Concession Agreement or any archaeological items, he must suspend work and inform the MOG, so a decision on progress can be made. The new law also contains provisions governing what happens if a concessionaire discovers that a reservoir in his contract area extends beyond that area or forms part of a reservoir which lies beneath another concessionaire’s block.
EMPLOYMENT The new law contains enhanced document retention and information reporting requirements. All information must be kept within Oman. MOG employees must be permitted to access such information, and companies must allow MOG staff also to take samples of hydrocarbons and to inspect facilities and equipment. The new law no longer requires the MOG to exercise these rights during normal business hours and “within reason”. The law brings in several obligations to take out insurance. These include all-risks insurance over fixed and moveable assets, and insurance against any civil liability arising from personal injury or damage to property or the environment. On some operational matters, concessionaires will in future be restricted from acting without the MOG’s approval. These matters encompass the import of restricted materials and equipment, and the transport, storage, handling or use of hazardous materials. Additionally, and importantly, the subcontracting of any obligations under an EPSA will require MOG consent. Concessionaires are now legally obliged to inform the MOG of all events hindering their work, and of all stoppages of work and the reasons for such interruptions. EPSA holders are also required to report all accidents posing a danger, or threatening the environment or giving rise to a risk of serious injury, both to the MOG and the ROP. These obligations should be carefully noted by operators.
Manpower issues are very topical in Oman at the moment. Royal Decree 8/11 establishes a series of obligations on concessionaires regarding the employment and training of manpower, including Omani staff. Upstream companies will also continue to be bound by Oman’s labour laws and the Government’s “Omanisation” regulations. The new law reinforces existing statutory obligations by requiring concessionaires to employ qualified national manpower. Specifically, in co-ordination with the MOG, concessionaires must prepare an annual training programme for the education of Omanis in professional and technical skills and in executive roles and responsibilities. Concessionaires have a positive obligation to develop this programme with the aim of gradually replacing expatriate manpower. The new law bestows on the MOG and the Ministry of Manpower the power to determine the stages and rules for the employment and training of staff who are employed in the oil and gas sector, and the discharge of the concessionaire’s obligations. These are quite wide-ranging provisions which, taken together, are arguably stronger than current policy and practice in the Sultanate. Elsewhere in the new law concessionaires are obliged to establish procedures for the protection of employees at site. The law requires as well that the rights of employees (both Omani and expatriate) are protected “in all circumstances”, must not be prejudiced on any assignment or surrender of the contract May-June, 2011
13
ANALYSIS
area, and must be dealt with in accordance with the labour law and their respective employment contracts. Concession holders seeking to assign or surrender EPSAs are therefore advised to take legal advice on the applicable parts of Oman’s labour legislation.
ENVIRONMENT Royal Decree 8/11 contains a number of significant provisions relevant to the contract area and the management and protection of the environment. In terms of the contract area, the new law restricts concession operations from taking place within 200 metres of human habitation, archaeological or special sites, water wells or similar (the old law set a limit of 50 metres). The law also forbids operations within 500 metres of any defence establishment. The MOG can extend these limits up to 3 kilometres in the national interest.
need to be examined in detail as part of any environmental impact assessment, as well as during operations. The new law also obliges companies holding EPSAs to ensure that any equipment they use is compatible with international standard specifications, and meets safety and environmental requirements, in line with “best applicable techniques”. On expiry of an EPSA, the law obliges a concessionaire to restore the contract area to its previous condition, at its own cost, and within the time limit set by the MOG. It is assumed that, in practice, remediation and decommissioning will take place according to the then current remediation plan (as required by the EPSA). Any failure to remove property from the contract area, means that the MOG may do so itself and charge the cost of doing so plus 10 per cent to the concessionaire.
PENALTIES As per previous legislation in Oman, all oil and gas pipelines must have a 25 metre buffer zone each side of them, and the MOG has the power to expropriate the land necessary to create these zones. Prior to the grant of a concession, the MOG is obliged to co-ordinate with other relevant authorities if the contract area to be granted is within 3 kilometres of one of Oman’s national boundaries. Generally speaking, the law imposes some wide obligations on upstream entities in addition to those already set out in Oman’s environmental legislation. The new law requires each concessionaire to act with “due care”, and in accordance with the technical standards established by the Concession Agreement and the international standards to which Oman is a party, by taking sufficient measures to protect the environment. Royal Decree 8/11 (at article 39) introduces quite a prescriptive list of the measures which must be taken by upstream companies, including regarding the treatment of waste, the disposal of gases, the handing of hazardous material, the protection of water, the prevention of pollution, and the reduction of greenhouse gas emissions. This list will 14
May-June, 2011
If things go wrong and the new law is breached, then companies will need to be very careful since a series of powerful punishments are now available to the Omani authorities. The new law introduces a series of penalties for breaches of specific legal provisions. Sanctions for individuals who violate the law range from fines of up to RO1 million and/or 3 years in prison any of which can be doubled upon a repeated breach. If any stricter penalties are available under Omani law, these can also be applied. Companies can be fined double the fines for individuals, if it can be proved that a company or its officers are guilty of agreeing to a breach, or of concealing a breach, or of being grossly negligent in respect of a breach. A company’s assets can also be confiscated. Penalties can be reduced somewhat, if the infringer pays half the maximum fine and remedies the breach prior to judgment being issued. Further regulations are expected from the MOG regarding additional penalties for offenders.
CONCLUSION This article has provided a survey of the contents of Oman’s new oil and gas law. Additional decisions, regulations and guidelines
are expected from the MOG in a number of important areas in due course. In time, it is also likely that the MOG will issue a new standard form of EPSA. Technically, companies already holding EPSAs with the Government will be mostly unaffected by the new legislation, since article 2 of the new law states that it will come into force “without prejudice to the provisions of existing Concession Agreements…”. However, the new law gives several clear indications of Government thinking and policy across a number of core areas. Existing concession holders can therefore perhaps expect a certain amount of pressure from the MOG to begin bringing their operations into line with the new law. For the moment, it is clear that the new law has introduced a revised and updated legal framework to Oman and reflects a number of new approaches by the Government towards the Sultanate’s hydrocarbon sector. The law should be reviewed by all those active in the industry in Oman. The oil and gas sector is always full of change, and it will be interesting to see how the new law is brought into practical effect in future years.
AUTHOR / FIRM DESCRIPTION: Edward Rose is a partner with Trowers & Hamlins, based in Muscat, Oman. He advises on oil, gas and infrastructure projects throughout the Middle East. Prior to locating to Oman, Edward worked in London for four years and Abu Dhabi for six years. Contact: Edward Rose, t +968 2468 2940, erose@trowers.com Trowers & Hamlins is one of Oman’s longest-established and best-known law firms. An international law firm based in London, Trowers & Hamlins has operated in Oman for over 30 years and in the wider Middle East for over 50 years. The company provides a full range of services in Oman, offering local and international clients high quality advice on corporate, energy, finance and commercial law.
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SPECIAL REPORT
OIL ON A BOIL
It’s been a “fast and furious” rise in crude prices, accentuated by a host of political and natural events. Sunil Fernandes analyses the “sharp rise” and the “future trend”
crude prices in the range of around $90 to $100.
W
hen the Oil & Gas Review did a cover story on “where oil prices are headed in 2011”, towards the end of last year, analysts we had spoken to did not expect a sharp rally. In fact, none of the analysts that we had spoken to had dared predict Brent Crude prices at $126 per barrel. The consensus prediction was more of 16
May-June, 2011
However, most of the analysts did say that geopolitical tensions could see a sharp spike in oil prices. And that is exactly what has happened, along with the tsunami in Japan, which has put pressure on natural gas prices as well. On February 18th, WTI Crude was trading at $86.7, and has since moved to as much as $107.1 per barrel by April 13, 2011, witnessing a hike of almost 20 per cent in the process. It all began with the crisis in the Middle East and Africa, particularly the fight against the regime
of Maumar Gadaffi in Libya. The country before the violence was producing as much as 1.6 million barrels of oil per day. Except a miniscule amount, most of the production has now come to a standstill. In fact, several international oil and global majors, which have operations in Libya have now called back employees. Italian Oil and Gas major ENI, which was producing as much as 250,000 barrels of oil per day before the crisis began has called back all of its Italian employees. Other oil majors who have their operations effected include Total, Repsol, Wintershall, OMV and Oxy. And of course, we have had smaller issues like a postponement of the Nigerian elections which have also weighed on oil prices. The tsunami in Japan has tempered down the price rise to a certain extent, as it is believed that oil demand may be lower because of the crisis. The International Energy Agency has estimated that the effects of the earthquake would cut second-quarter demand by 270,000 barrels a
day, easing upward pressure on prices. But for the rest of the year, it said, increased Japanese oil use for power generation and reconstruction would make up the difference. The agency, therefore, left intact its 2011 demand forecast at 89.4 million barrels a day, up 1.6 percent from 2010. “Fears that higher energy costs will lead to a generalised rise in prices have not occurred. But economists warn that the world economy, still weighed down by banking sector problems, may be too fragile to maintain its momentum if energy prices continue to climb,” it said.
Libyan Crude Oil Exports and Production Profile Libyan Crude
Location
2010 Exports (K/B per day)*
API Gravity
Es Sider
East
341
37
Amna
East
217
36
Sarir
East
45
37.6
Brega/Sirtica
East
87
39.8/42.2
Zuetina/Bu Attifa
East
147
41.5/43.4
El Shahara
West
206
42.6
Al Jurf
West
30
31.6
Bouri
West
48
26.3
Melltah
West
154
42
The agency observed that a sustained price of more than $100 a barrel could “prove incompatible with the currently expected pace of economic recovery.”
Crude oil prices and inflation High crude prices are here to stay, and if the prices continue to stay at current levels, it may affect the faltering economic growth worldwide. Firstly, higher oil prices means stoking up inflation and the threat of inflation remains dire in countries like China and India. In both these countries inflation has now become a threat and interest rates have been moving up. In fact, the central banks of both these countries have taken monetary action to control inflation, resulting in an upward movement of interest rates. This in turn continues to threaten growth rates for both these economies.
Source:IEA Crude prices (WTI) movement
The Organistion of Petroleum Exporting Countries (OPEC) has projected India to show a decline in growth rates from 8.5 per cent witnessed in 2010 to 8.1 per cent in 2011. The agency also has sees China’s growth rate falling from 10.3 per cent in 2010 to 9 per cent in 2011.
Date
Open
High
Low
Close
15/04/2011
108.7
110.1
107.2
109.7
15/03/2011
101.4
101.4
96.7
97.2
15/02/2011
85.1
86.0
83.8
84.3
14/01/2011
90.9
91.8
90.1
91.5
15/12/2010
88.0
89.1
86.8
88.6
“Empirically, past oil price shocks have shown a discernible effect on GDP. Supply shocks tend to be felt just a few months thereafter, while demand shocks usually have an impact roughly a year later. This suggests that if prices remain at current levels or rise further, by September 2011 – if not before – the global
15/11/2010
85.2
85.8
84.5
84.9
15/10/2010
82.6
83.3
80.8
81.3
15/09/2010
76.4
76.5
74.7
76.0
13/08/2010
76.1
76.7
75.0
75.4
15/07/2010
76.6
77.7
75.3
76.6
May-June, 2011
17
SPECIAL REPORT
economy may feature a marked slowdown – and the more so because it would coincide with expected fiscal tightening (and possibly monetary as well, if inflationary expectations become entrenched) in the world’s largest economies,” the IEA has said in its latest monthly economic report.
global GDP growth of 3.4 per cent, would cut oil demand growth from 1.6 per cent to 1.3 per cent, or 300 kb/d less than presently expected for this year. At the high end, with GDP growth curbed to barely 0.8 per cent, oil demand growth would be nearly wiped out altogether, averaging only +260 kb/d,” the agency states.
“As an example, if current $115/bbl price levels that, as noted, are 50 per cent above the relatively stable range evident for much of 20092010, were to be sustained, global GDP growth in 2011 could come in at anything between 1.03.5 percentage points below the IMF’s assumed +4.3 per cent. A low end of this range, implying
Where are oil prices heading? Between October 2009 to September 2010, oil prices were relatively steady. But the jump from September 2010 to the current levels is almost 50 per cent, which has clearly sent alarm bells ringing. However, if one observes carefully towards the end of last year, the
Fears that higher energy costs will lead to a generalised rise in prices have not occurred. But economists warn that the world economy, still weighed down by banking sector problems, may be too fragile to maintain its momentum if energy prices continue to climb
18
May-June, 2011
rise in oil prices to almost $95 was clearly underpinned by fundamentals, as there was a consistent increase in demand. But the rise to current levels has been more on account of geo-political tensions and could also have a speculative element to it. In the short term however, it looks unlikely that crude oil prices would dip. There seems to be a sustained economic recovery around the globe. A recent government report in the United States showed that gasoline inventories plunged the most in 12 years. The crisis in Libya continues with no end to a solution in sight. Emerging markets like India, China and Brazil continue to grow at robust rates (at least the former two), despite a threat to inflation. All these factors will have a short term effect on crude prices with a more likely scenario being one of stability rather than a further rise. Having said that it is also pertinent to point out that there has been an element of speculation that has led to a sharp rise in prices. With some signs of stability, it is likely that speculative unwinding may see prices retracing from the current levels.
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QATAR AIRWAYS: FLYING HIGH SHIRAZ Qatar Airways will begin services to its third destination in Iran – the ancient city of Shiraz from June 5. Shiraz is home to over 1.5 million people and is one of the largest cities in Iran. As the capital city of the Fars Province, Shiraz is the economic centre of southern Iran. The airline will launch two services a week from its hub in Doha, taking the total frequencies to Iran up to 20 flights weekly. Qatar Airways currently flies to Tehran double daily and Mashad four times weekly.
VENICE Beginning its third route in Italy from June 15, Qatar Airways will launch flights to Venice. Qatar Airways will fly to Italy’s Adriatic coastline city of Venice daily non-stop from Doha. Marco Polo Airport in Venice serves one of the largest and most dynamic regions in Italy, home to many shoe, textile and eyeglass manufacturing companies with high export activity. The region is also well-known for its jewellery, as well as Murano glassworks and ceramics. Leading international fashion brands such as Diesel, Replay, Geox and United Colors of Benetton reside in close proximity, making Venice a vibrant commercial centre with also great potential for Qatar Airways’ cargo business. While Venice has a relatively small population of around 270,000 inhabitants, the nearby cities of Bologna, Verona and Trieste collectively have a catchment area of over six million people, representing over 10 per cent of Italy’s total population.
MONTREAL Qatar Airways will make its debut in Canada starting from June 29. The airline’s Montreal route becomes the airline’s fourth destination in North America, where it already flies daily from Doha to New
York, Washington and Houston. The airline will fly to the Canadian city three times weekly on Wednesdays, Fridays and Sundays. The flight will operate with the carrier’s flagship Boeing 777 aircraft. Qatar Airways is the first Gulf carrier to operate flights to Montreal, a city renowned for its festivals and arts scene, being home to the well established international dance troupe Cirque du Soleil, the IMAX cinemas, aircraft manufacturing company Bombardier and top-ranked universities world-wide, McGill and Concordia.
KOLKATA (FORMERLY KNOWN AS CALCUTTA) Daily flights to the eastern Indian city of Kolkata, formerly known as Calcutta, will be launched on July 27 taking Qatar Airways’ capacity in India to 95 services a week spread across 12 cities. The West Bengal city will be served daily non-stop from Doha.
SOFIA In Europe, where much of Qatar Airways’ recent expansion has been the focus, the airline is to launch four-flights-a-week to the Bulgarian capital Sofia from September 14. In January, the carrier began services to the Romanian capital Bucharest, Hungarian capital Budapest and Belgium’s capital city of Brussels, followed two months later by services to the German automotive centre of Stuttgart.
OSLO Beginning October 5, Qatar Airways builds on its successful operations in Scandinavia launching five-flights-a-week to Norway’s capital city of Oslo. The airline already operates scheduled services to the Swedish capital Stockholm and Denmark’s capital city of Copenhagen. The latest route to Oslo will operate on Tuesdays, Wednesdays, Thursdays, Fridays and Sundays with an Airbus A330, in a twoclass configuration of Business and Economy.
ABOUT QATAR AIRWAYS Qatar Airways the national carrier of the State of Qatar, is one of the fastest growing airlines in the world flying to more than 100 destinations worldwide. From its hub in Doha, the airline serves key business and leisure cities across Europe, Middle East, Africa, Asia Pacific and North and South America. Qatar Airways will operate a fleet of more than 120 aircraft by 2013, by which time its global network will rise to over 120 destinations. Qatar Airways has been voted third best airline in the world following the annual 2010 Skytrax survey of 18 million international passengers. In the survey, the airline was also voted as having the Best Business Class Service and Catering in the World, as well as being honoured as the Best Airline in The Middle East for the fifth consecutive year. Qatar Airways also became the first airline to receive the Staff Service Excellence Award for the Middle East. The new award replaces the Best Cabin Staff in the Middle East category, which Qatar Airways has won for the past seven years. The expanded category now includes airline staff at all passenger touch points, including onboard, reservations, check-in and airport personnel. The Premium Terminal at Doha International Airport is the world’s first dedicated passenger terminal for First and Business Class passengers. Open round-the-clock, 24-hoursa-day, seven days a week and built at a cost of almost US $100 million the terminal features a range of exclusive facilities. A few highlights of the Premium Terminal include dedicated First and Business Class lounges, duty-free shopping, business centre with secretarial services, 24-hour medical centre, conference rooms, spa, jacuzzi and sauna, nursery, play area and fine dining restaurants. For more information contact your nearest Travel Agent or visit www.qatarairways.com May-June, 2011
19
COVER STORY
Injecction Pump
EXPLOITING TO THE VERY LAST Enhanced oil recovery (EOR) will play a dominant role in the coming decades as easy oil wanes and demand for oil continues. Sunil Fernandes reports on why EOR techniques will become a “game changer” in the coming years 20
May-June, 2011
Gas, Steam, or fluid
Prodduction Pump
Oil
T
alk to any industry professional these days, and you could increasingly end-up discussing enhanced oil recovery. In fact, over the last few years, several workshops and seminars have been conducted on the use of EOR and its significance. Even in countries with abundance of easy oil, pilot projects and studies are being conducted on EOR techniques to be used in reservoirs. The sense of urgency seems to stem from two facts: easy conventional oil is fast getting
over and in the next few decades it will be completely exhausted. On the other hand demand for oil continues to rise. Some industry experts believe oil will last for a few more decades, while consumption will continue to increase. “Emerging economies will lead energy growth to 2030 and renewables will out-grow oil,” BP’s latest projection of energy trends, the BP Energy Outlook 2030 reveals. World energy growth over the next twenty years is expected to be dominated by emerging economies such as China, India, Russia and Brazil while improvements in energy efficiency measures are set to accelerate, according to BP Energy Outlook 2030. May-June, 2011
21
COVER STORY
Ali Al Gheithy, Petroleum Engineering Functional Director, Petroleum Development Oman
BP’s ‘base case’ - or most likely projection points to primary energy use growing by nearly 40 per cent over the next twenty years, with 93 per cent of the growth coming from non-OECD (Organisation of Economic Co-operation and Development) countries. Non-OECD countries are seen to rapidly increase their share of overall energy demand from just over half currently to two-thirds. Clearly, energy across the world is being consumed at burgeoning rates. It is projected that the world energy demand is expected to double by 2050 as standards of living improve.
HE Khalifa bin Mubarak Al Hinai, Advisor, MOG, Oman
“There are significant amount of oil volumes which are left behind from producing fields. In most cases over 50 per cent of original oil volumes. If you do IOR you improve that average by 10 per cent and with EOR you could move it further and thus the average is moved from 35 to 55 per cent,” said Ali Al Gheithy, Petroleum Engineering Functional Director at Petroleum Development Oman, while speaking at the recently concluded 2011 global EOR Knowledge Expansion Round Table Workshop held in Muscat, whose Chairman was HE Khalifa bin Mubarak Al Hinai, Advisor, MOG, Oman.
known as EOR introduces fluid that helps to reduce viscosity. This would involve adding gases that are miscible with oil (like carbon dioxide), steam, air, oxygen, polymer solutions, surfactant-polymer solutions. According to Al Gheithy, higher recovery factor can be achieved by:
• •
THE NEXT LEG OF SUPPLY Against this backdrop it’s important to exploit the maximum oil from ageing fields. Getting more from existing fields will play an important part in meeting the world’s growing demand for energy. Applying one or both, improved and enhanced oil recovery techniques to extract the oil that would otherwise be left behind is an important part to meet that need. Enhanced oil recovery is a mechanism whereby you increase the amount of crude oil, particularly from ageing reservoirs by using steam, chemicals, gas etc. 22
May-June, 2011
There are basically three stages of oil field development that include: Primary recovery: In this type of recovery, oil is forced out by pressure generated from gas present in the oil. Secondary recovery: In secondary recovery, the reservoir is subjected to water flooding or gas injection to maintain pressure that ensures oil moves to the surface. Tertiary recovery: Tertiary Recovery, also
•
Competitive cost of intervention drilling People Competing for young talent from other industries Fraction of experimental staff – changing of the old guards Training Deployment of technical work Robust technology – quickly developed and effectively deployed
EOR METHODS There are several EOR techniques presently underway including gas injection, chemical injection and thermal. The study on the most likely method would have to depend on many factors. Dr. S M Mousavi Mirkalaei,
COVER STORY
is injected first (followed by oil production from the same well), continuous steam injection, hot water injection and steam assisted gravity drainage using horizontal wells. In countries like Oman, steam based EOR projects are underway and quite a few projects would use steam injection to increase production. Sanjeev Malik, Advisor, Reservoir Engineering, Occidental said that steam was a costly component of the EOR process.
Dr. S M Mousavi Mirkalaei, Research Officer, EOR Centre, Universiti Teknologi Petronas
Research Officer, EOR Centre, Universiti Teknologi Petronas, while speaking at the 2011 Global EOR Knowledge Expansion said it was important to do an EOR screening, study reservoir conditions, understand the availability of the source (steam, gas, polymer, CO2 etc.) “Apart from this one also needs to study the reservoir condition and oil composition, before deciding on a particular
“Horizontal procedure and vertical injection is a viable development option and provides increased rates with surveillance flexibility. Initial performance is dominated by viscous drive in our case,” he said. While steam injection is a costly process, it also consumes a lot of energy like natural gas, which is used to generate steam. However, companies like Glasspoint have developed solar technology where one could use solar as well, in generating steam.
EOR technique,” he stated.
THERMAL EOR Steam injection has been the most common and widely used form of EOR. Heat from steam or hot water dramatically reduces the viscosity of viscous oils, making it flow more readily. There are many variants for this process including cyclic steam injection, where steam
“Oil and gas companies that use steam injection in their EOR projects can benefit immensely from our technology. Rather than burning natural gas to generate steam, GlassPoint specialises in generating steam through solar. Our solution allows oil companies to replace between 25 and 80 per cent of steam generated by burning natural gas with steam produced from a renewable source. In short, solar-steam for EOR saves natural gas, a valuable resource that is particularly scarce in the Middle East. Furthermore, steam generated through solar is just a fraction of the cost compared to steam generated through burning natural gas. With low-cost steam delivered at a constant price for 30 or more years, operators can increase the amount of steam injected into wells so more oil can be ultimately recovered,” says Rod MacGregor, President and CEO of GlassPoint.
CO2 INJECTION
Solar can also be used to generate steam for thermal EOR
24
May-June, 2011
While steam injection projects are underway in Oman, quite a few countries around the world are using CO2. Countries in North America
Sanjeev Malik, Advisor, Reservoir Engineering, Occidental
particularly are increasingly using CO2 for enhanced oil recovery. One of the first large projects on a commercial CO2 EOR began in early 70s in the United States. Since then, there has been no looking back and by 2008, there were more than 112 such projects. “After North America, Middle East has the most potential for CO2 injection,” says Mirkalaei. While there is a potential for the use of CO2 in many countries, its use has not been without problems. Underground geological storage of CO2 is a promising technology for reducing green-house gas emissions because the technology developed by the oil and gas industry that is associated with natural-gas processing and CO2 EOR can support the sound implementation of CO2. Before the use of CO2 Pauria suggests the following:
• • • • •
EOR screening Availability of CO2 requirements Reservoir conditions Oil composition Recycling of CO2
Giuseppe Petrucci, Area Division Manager, SNF
According to him, the CO2 injection process can be considered with continuous CO2 injection, water alternating CO2 or a hybrid injection mechanism. However, there are some challenges with the use of CO2. These include keeping the miscibility, improving the CO2 flow, ceasing the precipitation of asphaltenes and solid particles, controlling the corrositivity, effects of temperature on the carbon dioxide injection and low injectivity. The precipitation of asphaltenes results in undesirable consequences like reduction of the permeability and the reduction of oil production. This occurrence is associated with temperature, composition of the oil, pressure and the rate of production. On the other hand, possible leakages in the wells is another concern associated with cementation and the material for completion. There is also a section that believes embracing geologic storage of CO2 has to be understood in the context of the potential effect on underwater ground sources of drinking water.
POLYMER FLOODING Polymer flooding can increase oil recovery to
a great extent when you compare it to water flooding. Alkaline/surfactant polymer (ASP) flooding is a popular enhanced-oil-recovery method. Pertinently, foam can also be used as an alternative to polymer for improving displacement efficiency. Foam reduces the relative permeability of the injected chemical slug that forms a microemulsion. In the ASP process, polymer provides mobility control during ASP slug and polymer-drive injection. However, the use of polymer has some disadvantages:
• • •
High-molecular weight polymers can plug rocks with low permeability Many of the commercially available EOR polymers can be unstable at high temperatures Some polymers can degrade mechanically from high shear stress through chokes or perforations at high flow rate
One alternative to polymers is foam, which can provide mobility control in chemical EOR processes. In countries like Oman, polymer flooding projects are already underway. May-June, 2011
25
COVER STORY
Underground geological storage of CO2 is a promising technology for reducing green-house gas emissions because the technology developed by the oil and gas industry that is associated with natural-gas processing and CO2 EOR can support the sound implementation of CO2 Rod MacGregor, President and CEO, GlassPoint
“There is a huge potential for polymer flooding in countries like Yemen and Oman,” said Giuseppe Petrucci, Area Division Manager, SNF, while speaking at the 2011 Global Knowledge EOR Expansion Round Table Workshop.
A GIANT LEAP FOR OMAN Oman is amongst the few countries in the world to use steam injection, polymer flooding and miscible gas. In fact, the country’s leading oil and gas producer, Petroleum Development Oman (PDO) has emerged as a leader in the field of EOR implementation employing different EOR techniques across various fields. Along with PDO, Occidental Oman is also using steam for its project at Mukhaizna. In the case of PDO, the last few years has seen a steady trend in oil and gas production, from a decline witnessed towards the early part of the century. However, the next few years will continue to see the company faces challenges in sustaining production, which is one of the reasons why EOR techniques will assume paramount importance. In fact, Enhanced Oil Recovery projects that are slated to go on stream will add almost a third to production in the coming years, making it the next big leg in the production story. EOR projects at Harweel, Marmul, Qarn Alam and Amal will between them add staggering levels to oil produced, when all of the projects go on stream at full production. One fact that cannot be ignored is the costs involved to draw out oil through EOR methods. “We would be 26
May-June, 2011
satisfied even if oil would be around $30. The EOR projects at Harweel, Marmul, Qarn Alam and Amal, would not have any problems with lower oil prices. Having said that, if we consider today’s oil prices, these projects are extremely attractive,” Raoul Restucci, Managing Director of PDO told OGR at the company’s annual media briefing. Interestingly, PDO would be the first company to simultaneously use all the three EOR techniques of polymer flooding, miscible gas and steam injection, when some of its projects are commissioned. The first of the EOR projects at Marmul has already kicked-off with the plant’s inauguration in October 2010. The lowest in terms of oil production contribution, the Marmul polymer project will add 10,000 barrels a day of incremental production to PDO over the coming years. Marmul is a long-term project in which increased production can take many months to take effect. However, early operations have been promising with increased production. Haweel is yet another complex EOR project, but this time using miscible gas to draw-out oil. Technological challenges have led to some delays, but commissioning activities at this project are now underway, and first oil is expected in the second quarter 2011. Once Harweel reaches full production, it will contribute with an additional 40,000 barrels per day of high quality crude oil to PDO’s expanding portfolio. The Qarn Alam steam-injection project has also experienced some delays, but the project team is working hard to recover lost time. First production
and first steam stages are expected in August and October 2011, respectively, after which it will also contribute another 40,000 barrels per day. PDO’s newest EOR project at Amal is progressing on schedule. This is a twin field development at Amal East and Amal West where steam will be used in different ways to increase production. At Amal East, steam will heat the reservoir (known as steam soak) making the oil less viscous and easier to pump to the surface. At Amal West, a variant known as steam drive will be used where steam sweeps the oil to producing wells. Steam will be provided using waste heat from the new Amal power station via a co-generation unit. Amal is expected to take several years to reach its full effect with peak production at the two Amal fields not expected until 2018 when output is projected to reach 23,000 barrels per day. PDO is making every effort to boost Oman’s production and the technologies being deployed are highly complex. Within the region as well EOR projects are underway and in countries like Saudi Arabia pilots are being conducted not to supplement the country’s oil production, but more as a research programme. Places like Qatar and Abu Dhabi too are having projects related to EOR. Clearly, very serious efforts are being made in research as well as production of oil through EOR techniques and in the next few decades production through EOR methods will make a substantial contribution to overall oil production.
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SPECIAL REPORT
TSUNAMI AND THE RISING DEMAND FOR GAS
The tsunami in Japan has put pressure on LNG supplies globally, as the country tries to meet its power requirements through natural gas. OGR reports
W
hile Japan is still recovering from the tsunami shock, its power infrastructure continues to be bogged down, thanks to a shut-down at some of its nuclear plants. Clearly, the country would now have to look at alternate feedstock for its plants and the most obvious choice is “natural gas”. Already, the country faces a huge power supply gap, as it is believed that over 12 GW of power has been disrupted. Japan has the third largest nuclear power capacity in the world, and the disruption now means that it has to rely on coal, or natural gas. But coal does not seem a proposition at the moment, given the low utilisation rates, making natural gas and hence LNG a viable and the most likely option. A few weeks into the catastrophe and the impact was already felt in the markets around the globe. “The fuel shortfall in Japan is already impacting a number of energy markets around the world. Spot European natural gas prices, led by the UK, surged in the last few days for fear of a drain of LNG supply from the Atlantic to the Pacific Basin,” Bank of America Merrill Lynch said in its Global Energy Weekly issued late last month. 30
May-June, 2011
Global natural gas prices and forwards 18
$/MMBtu
16 14
Forward
12 10 8 6 4 2
Jul-08
Feb-09
UK NBP nat gas
Sep-09
Apr-10
Nov-10
Average Euro contract gas
Jun-11 TTF
Japan LNG
Source: Bloomberg, World Gas Intelligence, BofA Merrill Lynch Global Commodities Research
LNG IMPORTS TO SURGE With nuclear power disrupted, Japan will have to fill the yawning gap through firing its power plants through natural gas. Of course, the potential for LNG imports will remain staggering. “There is a lot of room to increase power output at gas-fired units in Japan this spring and fall. If 70 per cent of the nuclear output loss was made up with LNG, Japan would need additional LNG imports of ~30 mcm/d (1 bcf/d). We see gas imports into Japan average just 20 to 24 mcm/d this year due to physical constraints such as damaged gas and
power infrastructure. Moreover, Japan’s dual frequency power network and the limited interconnectivity on Japan’s electricity grid could limit the total LNG intake. Most excess gas-fired capacity sits in the Western side of the country at a higher frequency, suggesting all this electricity may not reach Tokyo and the Eastern board until more transformers are built,” the Bank of America Merrill Lynch Weekly states. DURING PREVIOUS QUAKES, LNG WAS THE SOLUTION In the past Japan has relied on LNG, whenever an earthquake has occurred.
supply due to this upcoming swap with Japan, as they have secured more than 98 per cent of this year’s estimated LNG demand through short-and long-term contracts and inventories were sufficient.
European natural gas forward curves 12.5
$/MMBtu
12.0 11.5 11.0
Malaysia’s state-owned oil company Petronas has also said it would ship additional supplies of liquefied natural gas to Japan to help meet urgent demands. Help has also been offered from countries like Russia and Qatar as well.
10.5 10.0 Russia to Germany Norway to Germany Netherlands to Germany Algeria LNG to Spain UK NBP TTF
9.5 9.0 8.5 Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
PHYSICAL CONSTRAINTS EXIST The Bank of America Merrill Lynch Weekly has pointed out to physical constraints that might exist in LNG supplies to Japan.
Jun-12
Source: Bloomberg, Heren, BofA Merrill Lynch Global Commodities Research
(North latitude)
45O 4 HOKKAIDO Electric Power Co. HOKURIKU Electric Power Co. CHUBU Electric Power Co. The CHYGOKU Electric Power Co. The OKINAWA Electric Power Co.
130O
4 O 40 TOHOKU Electric Power Co. TOKYO Electric Power Co. 35O 3
The KANSAI Electric Power Co. SHIKOKU Electric Power Co. KYUSHU Electric Power Co. 135O 140O 145O
(East Longitude)
Source: Global Energy Network Institute, BofA Merrill Lynch Global Commodities Research
There seems every reason to believe that the country would continue to do so. “Judging from prior experience, Japan could be tempted to make up most of the losses with LNG. For instance, Tepco closed the 8 GW Kashiwazaki-Kariwa (KK) nuclear power complex in 2007 following a much more minor earthquake and it took almost two years for the first reactor to re-open. To make up for the loss, Japan ramped up LNG imports. During the 12-months following the incident and plant closure, the company bought 6.6 million tonnes of LNG from the Atlantic Basin, up from 1.2 million
tonnes the previous year. As a result of that, Asian LNG prices spiked towards $20/MMBtu through the summer/fall of 2008,” says the report. HELP FROM ALL QUARTERS Japan has already been receiving help from all quarters for LNG imports. South Korea, the world’s second-largest liquefied natural gas (LNG) importer, said it would supply LNG to Japan utilities after the country made a request following the earthquake and tsunami. The Government of Korea had said that they did not foresee any impact on local
“Still, it is important to realise that Japan may not be able to consume as much LNG as its nameplate capacity suggests, as there are important physical constraints. First, there is limited interconnectivity on Japan’s electricity grid. Second, Japan’s power grid runs at different frequencies. The system in the West runs on 60 Hz while the system in the East, comprising the Tokyo/Tohoku/ Hokkaido region, runs on 50 Hz. Thus, ramping up power in the Western part of the grid and sending it where it is needed may not be possible on a large scale. Only 0.9 GW of electricity from the West can be transported to the East as there is currently only one transformer in place between the two systems. Third, it could take up to 12 months, if not longer, to build new transformers. Fourth, damage to LNG pipelines is another unknown which could prevent the liquid gas molecules from travelling to the power station. The fact of the matter is that most excess gas-fired capacity sits in the West and there is little point in ramping up utilisation at those gas-fired plants if natural gas cannot travel to where it is needed,” the reports says. May-June, 2011
31
COMPANY REPORT
MAKING A MARK
Ali Suleym Al Junaibi, Chairman and President of Al Ghalbi International Engineering and Contracting talks to OGR in an exclusive interview
Ali Suleym Al Junaibi, Chairman and President, Al Ghalbi International Engineering and Contracting
A
l Ghalbi International Engineering & Contracting LLC is an engineering, contracting and an ISO 9001-2008 certified and Limited Liability Company, providing services for main clients like Petroleum Development Oman, Occidental Oman, Daleel Petroleum, Oman Refineries Petrochemical Company and other oilfield companies in Oman. The company’s main business activity involves mechanical and civil construction and maintenance services, including construction 32
May-June, 2011
It is pertinent to note when you say pipeline installation and maintenance it is a comprehensive job that requires significant expertise in various areas
of new flow lines, maintenance of pipelines, demolition works, painting of pipelines, replacing redundant pipelines with HDPE lining and civil work. The company has over the years adopted the latest technologies to complete engineering/ technology related jobs, thus ensuring modern technologies are available to the oil and gas industry in Oman. “Pipeline construction and maintenance is an integrated job. It is pertinent to note when you say pipeline installation and maintenance it is
a comprehensive job that requires significant expertise in various areas,” says Ali Suleym Al Junaibi, Chairman and President of the company. Today, Al Ghalbi International has various pipelines related contracts with PDO, Oxy, ORPC, Petrogas, PTTEP Oman, and Daleel Petroleum with a potential for more contracts with many other oilfield companies.
supervisory team and highly skilled employees.
area of core competency, it will also look at opportunities to diversify into other areas.
HIGH ADHERENCE TO HSE Health, Safety and Environment (HSE) assume paramount importance in the oil and gas industry. Al Ghalbi has an excellent track record when it comes to the HSE practices. The company maintains the PDO standards for HSE practices and its record on Lost Time Incidents (LTI) has been excellent and is considered one of the best contractors in terms of HSE.
“We might explore opportunities in areas like Marine, Electrical, Chemical Supply and Tourism. However, I must emphasise that any diversification would be evaluated carefully. We do not want to rush and must do our own research and understand the expertise involved,” says Al Junaibi. The company would look at opportunities in areas like Duqm
REASONS FOR SUCCESS Al Ghalbi has come a long way since inception and is now a multi-faceted company offering a wide range of services to the oil and gas industry. Ask Al Junaibi on the reasons for success and he attributes the same to “strategy”. “If one has the right strategy and vision for the company, one could meet with success. Besides, another reason for success has been our employees, who have been the backbone of the company. I would also say that, we have had a lot of hard-work that has gone into the success of the company. We will continue in the same way,” he says. Over the years, the company has also strived to ensure its track record is exemplary. It has always delivered its projects on time, while adhering to the high levels in quality and the best HSE records. “We have discharged all our jobs in a professional manner and have taken our jobs very seriously. We have well-experienced staff delivering on time with adherence to the highest level in quality,” Al Junaibi says. He attributes the company’s achievements to its staff, which he says are well-qualified and trained. “We take utmost care of our staff. Pertinently, we have no staff related issues and the level of employee satisfaction in the company is very high which is reflected in the low level of staff turnover,” he says. The company has a professional management team, competent engineers, qualified
Al Ghalbi has an excellent track record when it comes to HSE practices. The company maintains PDO standards for HSE practices and its record on Lost Time Incidents (LTI) has been excellent. It is considered one of the best contractors in terms of HSE. The company reviews its HSE policies and appreciates staff efforts with rewards The company always reviews its HSE policies and appreciates staff efforts with rewards. This has worked well with employees who are motivated to the highest level to maintain and enhance HSE practices. The company has already received awards from PDO as well as Oxy for its ability to maintain zero lost time incidents.
OMANISATION Al Ghalbi has always laid an emphasis on Omanisation. The company has an Omanisation level of 45 percent, which is more than the mandatory level. Omanis have been trained and today they are occupying very senior positions within the company. “We are happy with the way we have approached Omanisation. Today, I am proud to say that, Omanis are playing a critical role in the growth of this company,” says Al Junaibi.
FUTURE EXPANSION While the company has been doing well in its
which is witnessing rapid development. “The Government has been laying a tremendous emphasis on the rapid development in Duqm. We would be exploring opportunities in this area,” says Al Junaibi. Corporate citizenship lies at the core of Al Ghalbi’s business strategy and determines the way the company interacts with customers, joint venture partners, sub-contractors and also with the government authorities alike. Conducting business with integrity, transparency and social accountability has always been part of the company’s basic principles and a top priority in shaping the company’s strategic planning. Clearly, with a sound vision, experienced professionals, adherence to quality, timely deliverance and achieving customer satisfaction, Al Ghalbi would continue to provide exemplary service to the oil and gas industry. May-June, 2011
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INTERVIEW
Rrajesh Malaviya, CEO, Aptus Software
VIRTUAL VISUALISATION
“Virtualisation” of a plant design enables cost reduction, ease in construction and reduces time. Rrajesh Malaviya, CEO of Aptus Software talks to OGR on Aptus’ 3D range of plant design software offerings, its novel attributes and the reasons why contractors should embrace this latest 3D plant design software Could you elaborate a little on the 3D plant design software that you have for the various industries, particularly the oil and gas industry? The important aspect of any plant design would have to be virtualisation and 34
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visualisation. Both of these are facilitated when you have a plant design that runs on 3D. Architects and contractors have traditionally worked from 2D plans.
While seemingly precise, 2D plans in fact lend themselves to interpretation – and thus misinterpretation. The human mind thinks in three dimensions, not two. The architecture community communicates in two dimensions only
because there hasn’t been a viable technology for readily communicating in three dimensions until now. Presently, in this area two software are in vogue: PDS and PDMS, both have been popular - but the platform is rather old. Once a consultant validates and verifies drawings, the contractors do the fabrication job. In the case of 2D, people who are on the field have to visualise the 2D drawings, and a lot depends on their expertise and experience. Therefore, a lot of time, efforts, coordination and other dynamics are involved. 3D printing is a breakthrough that I believe will redefine technical communication for the next 200 years. Every design should be represented in 3D, and soon will be. It is my sincere desire that all architects move to 3D soon. 3D plant design software eliminates all of these drawbacks. For example, the e-browser introduced by us facilitates use by consultants, contractors and all those involved at the site. Since 3D is virtual and you can fly across the project, the 3D Plant software can easily locate the position of a pipeline, electrical and other fittings etc. Through our e-browser you can visualise and measure distances, rather than taking the information from 2D paper drawings. Clearly, using 2D drawings is passÊ, more difficult and time consuming. Is this plant design software, a ready to use software? Yes, it is a ready-to-use software, to serve different industry people like owners & investors, plant designer, operations and maintenance personnel, suppliers and constructors. This software is capable of providing accurate information on location as well as specifications of various components like valves, pipes, pumps etc. Pertinently, there are libraries with all intelligent data. We provide the necessary training and Cadmatic Engineers are also
available to facilitate training in the use of the 3D plant design software. So, are there many contractors that use this technology presently in Oman? Unfortunately, there are not many contractors that are using the latest in 3D plant design software. Perhaps, companies like us, must do more to educate people, who we believe are missing-out on a sophisticated technology that saves time and eventually money. Our software has the facility to enable coordination and collaboration over the internet. To cite an example, if we assume different specialists are working on a project from different locations, the job can be well coordinated through our e-bowser. The e-browser enables one to view the virtual plant by accessing the internet browser. Interestingly, files from various other softwares are not enabled through the internet browser because of the large file size. Can the 3D plant design software be used across plants? This software can be used wherever you have valves, pipes and motors. So typically this would mean it can be used in almost all of the plants including oil & gas, power plants and other industries like paper, pharmaceuticals, chemicals, cement etc. The Cadmatic software enables projects size where the cost outlay is in excess of several multi-million Dollars. For example, in large refineries, you have complex data and designs which need a software like Cadmatic. We also represent Bentley in Oman, which is almost a similar software. What kind of support would be needed for familiarising an individual with the software? People should be professional engineers, whether electrical, mechanical or any other. One would also need knowledge to use the software and we can facilitate
the required training. The software is capable of generating a print-out of the prototype under consideration. As a stakeholder of a particular project, one would have visualised the plans of a project. However, as the construction phase begins you would possibly realise that the contours of the design are not up to your design or specifications. When a project is constructed, it would not be possible to implement changes, and you may reach a stage where demolition of the structure becomes imminent to facilitate changes. 3D and hence virtualisation eliminates these things as the print-put of a prototype clearly factors all expectations of the stakeholders. You can walk through the 3D software, which is virtual and also take a print-out. Interestingly, one can add value to know how much material is being consumed and hence factor the indicative cost of the project as well. What is the next level of technology that you are coming-up with? One of our other offerings is the Building Information Modelling (BIM) software. My belief is that henceforth no project will be done without BIM. The current airport project is done on BIM, where the two best technologies from Bentley and Autodesk are being used. We are supporting L&T Oman, Towell, CCC and other companies involved with the construction using BIM. Do you have any solution for creating ready desktop models? Z Corp is a technology that offers an entirely fresh way to compress time to building projects: 3D printing. With 3D printing, one could provide on-demand identical sets of three-dimensional physical models of buildings and communities. The traditional method is to creating an architectural model is handcrafting in cardboard or Styrofoam which needs long lead time and is expensive to produce such a creation. May-June, 2011
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INTERVIEW
ZCorp, however, can “3D print” a typical project in six to 10 days, far less than the months that handcrafting a model requires. The time and cost advantage is even more pronounced when plans change and models need to be modified on the fly. The 3D printer can quickly obtain multiple physical models of a project – one for the architect, the client, the general contractor, the subcontractors and the civil authorities. A 3D printer is more than a prototype, it has become a project management tool. Handcrafted models are approximations of the plan while a 3D printed model essentially is the plan. Civil engineering projects need physical models.
With 3D printing, one could provide on-demand identical sets of three-dimensional physical models of buildings and communities
When officials are planning to build a highway overpass, for example, they must plan temporary traffic flows over the various phases of the job. Having 3D physical models for every stage eliminates confusion and improves construction efficiency. Full-colour, 3D printing simply offers so many advantages. It communicates information directly in the way humans think so they can fully, deeply understand what the project will look like and what the project will be like. How can an architect not take advantage of 3D printing when it will save money and save time? I ask customers to just try it once. When they do that, the benefits are overwhelmingly obvious, I am sure they will call us in from the beginning of the next project – not as a vendor but more as a partner. Like the architect.
Advantages of BIM to Building Contractors include: BIM provides a good estimation during bidding and procurement. BIM improves coordination in construction sequencing. Effective marketing presentation of construction approaches. BIM helps in identifying possible conflicts that may arise during building construction. Biggest advantage of using BIM is lesser amount of errors and hence rectifications – saving costs and resources. BIM allows for more “what if” analysis, such as construction sequencing options, shuffling of human resources, fine-tuning cost factors, etc.
• • • • • •
• BIM helps clients and end-users in •
understanding and visualising the end product. BIM helps owner in taking informed decisions about the proposed project.
Benefits of BIM to the Building Designer: BIM allows designer to use sophisticated web-based tools which connects the project’s program to other BIM tools such as Tekla, Revit, ArchiCAD & Bentley BIM solution. Designer has a scope of incorporating eco-friendly design aspects before the commencement of the project.
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Advantages of BIM to the cost engine BIM model allows for better cost estimation of human resources, raw materials and structural components.
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CADMATIC PROVIDES THE EDGE The powerful Cadmatic 3D plant design software is the ideal engineering solution for the process industry. The software has been divided into several modules making it easier for customers to customise the software package to suit their individual needs. This also means that the software is suitable for relatively modest projects all the way up to the largest and most complex plants in the world. The focus on the integrated life cycle of plant investments makes Cadmatic the most cost efficient and effective engineering offering on the market. The software is further optimised for smooth global project distribution and concurrent design in secure networked environments. Ease of use and compatibility with other external CAD software as well as improved time management and communication between project partners through eBrowser add further value to these features that have made Cadmatic the natural choice for plant investments. Cadmatic is the world’s leading supplier of plant design software for the pulp and paper industry with a strong presence in the pharmaceutical, food & beverage, mechanical and marine industries.
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COMPANY REPORT
A COMPREHENSIVE RANGE OF SERVICES
Special Technical Services (STS) is a reputed company offering a diverse range of services to the oil and gas sector. Alex Clark, General Manager, Operations spoke to OGR on the company’s past performance and future plans. Here are excerpts
Alex Clark, General Manager, Operations, STS Could you tell us a little about the services that STS Oman offers, particularly to the oil and gas sector? STS offers a diversified range of value-added services to the oil and gas sector focused on three key areas that include: fabrication, manufacture and construction. In the past 30 years our focus has been on the market here in Oman. However, today, we also have operations in the UAE and Bahrain and will soon add Saudi Arabia, which offers 38
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tremendous opportunities in the near term. Your company has been working with other large companies in the sector. Would you like to elaborate? Since STS’s establishment in 1980 much of our core business has been executed for Petroleum Development Oman (PDO). Today, PDO remains a key client for STS and we are currently executing three key long term PDO contracts.
More recently in Oman, we have also worked for a number of other operators including Occidental, Medco, Daleel, Sohar Refinery and BP. It has been a challenge for STS as each client is different in their requirements and the challenge has been in meeting and exceeding the individual client’s requirements and standards. We are also working with ADCO in Abu Dhabi and the recently established Tatweer in Bahrain.
What are the major orders on hand? In Oman our largest order is the EMC contract which is a 7 (+3) service contract covering maintenance and capital works within the Northern Directorate of PDO. This project is to the tune of $1 billion in value and we have formed a joint venture with Tebodin and Partners locally, to execute this contract. Other significant orders in hand are the Amal Steam Onplot Construction contract (PDO), a well hook-up and flowline contract for BP Oman, a general civil services contract for Occidental Mukhaizna and a 3-year multidisciplined oilfield service contract for Tatweer in the Kingdom of Bahrain Could you highlight some of the prestigious projects your company has been involved with? Most recently we completed the PDO Oil North EMC contract which was a 5-year contract. This was the highest value and most complex project executed by STS to date and involved extensive brown and green field work and a total workforce exceeding 4500 personnel. Most notably in this recently completed contract we achieved a 23 million man-hour LTI free record - our most significant safety achievement to date. We also executed the first significant major Sohar Refinery shutdown which required us to mobilise an asset base of specialised equipment and 2200 personnel working round-the-clock
(24-hours) for six-weeks. Both these projects were a major achievement for STS and have significantly developed STS’s capability in upstream and downstream oil and gas projects. Timely execution is a key in your industry. Would you like to highlight the company’s execution capabilities? Indeed, timely execution is a key element of our business in the oil and gas sector, which is not surprising when you consider the financial effects of daily production in the oil and gas market. STS offers a significant fabrication capability with over 140,000m2 of land including 15,000m2 of covered fabrication facilities between Nizwa and Sohar. At our workshop locations we own and operate machine shops capable of a range of works from fabricating orifice plates to a complete pump maintenance capability. We also offer substantial in-house capability in the maintenance and plant turnaround sectors and own/operate various specialist plant maintenance assets such as exchanger bundle pullers and high pressure automatic exchanger cleaners. In the construction areas we have a large in-house multi-disciplined capability supported by a fleet of 1000 plus items of equipment as well as construction camps in virtually all geographical areas of our operations.
STS offers a significant fabrication capability with over 140,000m2 of land including 15,000m2 of covered fabrication facilities between Nizwa and Sohar. At our workshop locations we own and operate machine shops capable of a range of works from fabricating orifice plates to a complete pump maintenance capability
Often success is determined by harnessing strengths. What do you believe are the strengths of STS Oman? I would say STS’ strengths are summarised in the following key points: • Strong focus on quality at all levels of the business • A complete range of services underpinned by sound technical credentials and a business built on technical innovation • A long-term approach to strategic partnering and value-added joint ventures • Ethics and a high standard of professional integrity Does STS Oman plan to further diversify into other activities or would you stick to your area of core competency? Unless a business is very specialised sticking to an area of core competency in our market is difficult to maintain in the long-term as competition is never far away. Our approach has been to diversify both our services and markets in differentiated areas where we can add value and maintain an effective market position. In doing so, we are always open to collaborations and strategic partnerships that will help us achieve this objective. We have been fortunate to work with a number of key strategic partners in recent times and have forged some very successful joint venture relationships with international companies. Where we see long term opportunities the company has been willing to invest financially and this has paid dividends in the long term. What is the long term vision of the company? To become a regional differentiated oil and gas service company underpinned by quality at all levels of our business. To this extent we do not seek to be the ‘biggest’ company in our market but aspire to be the ‘best’. May-June, 2011
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COMPANY REPORT
THE WAVE, MUSCAT: TIMELESS TRADITIONS AND CONTEMPORARY STYLE A
new destination for the upscale traveller and international resident, The Wave, Muscat is Oman’s premier project, offering freehold status to GCC nationals and expatriates alike. It is located on a continuous seafront site in Muscat and is in the heart of the natural growth corridor of the Omani capital. It offers easy and straightforward access to major shopping centres, medical facilities, the international airport and international schools, and is approximately a 20-minute drive from downtown Muscat.
Inspired by the Beauty of Oman The Wave, Muscat combines more than 4000 magnificent properties, a 400-berth Marina, Greg Norman signature golf course, a quartet of leading hotels and new retail, leisure and dining opportunities. It is the first integrated resort and residential development to be undertaken in the greater Muscat region. The project’s captivating architecture and design have already garnered major industry plaudits. The Wave, Muscat has been the recipient of numerous international and national design awards from CNBC & Bloomberg Arabian Properties and Homes Overseas. In addition to the Homes Overseas award for The Best Luxury Development, it was also awarded Best 40
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Development Design, Best Marina Design, Best Apartment Design and Best Golf Course Design.
The reason for The Wave, Muscat’s success is clear for all to see. The world-class architects, Triad Oman Consultants International, Meletitiki (Alexandros N Tombazis) and ER International (Carlo Santini), have successfully translated traditional Omani designs and way of life into a modern, workable and progressive master plan for a new village community. Villas, townhouses and apartments are set in sympathetically
The worldclass architects, Triad Oman Consultants International, Meletitiki (Alexandros N Tombazis) and ER International (Carlo Santini), have successfully translated traditional Omani designs
landscaped grounds featuring broad tree-lined boulevards, green parks and inland pools and waterways filled with gently moving seawater. Planting has been carried out with water conservation in mind. What is more, the new Marina has revitalised the area, attracting motorboats and the type of yachts that, until now, have seldom been seen in Oman, whilst the 18-hole green links-style golf course, designed by Greg Norman, and its golf academy, indoor practice nets, gym, spa, treatment facilities, pool bar and tennis courts are proving a huge attraction for tourists and residents alike. And for those with a little foresight, The Wave, Muscat offers an incomparable opportunity to secure a valuable investment by tapping into the long-term potential of Oman’s premier waterfront destination. The Wave, Muscat is an inspirational, world-class destination now welcoming international property investors across the globe. The Wave, Muscat has also signed MoU’s with a number of leading banks including Bank Muscat, HSBC, Standard Chartered, National Bank of Oman and Oman Arab Bank, thereby offering its customers a range of mortgage solutions.
Designs that dreams are made of Towards the end of 2010 The Wave, Muscat launched an exciting new villa project; a first
of-its-kind design previously not offered that has been developed in response to customer feedback. Already offering a wide range of beachfront villas, villas and townhouses, the emphasis in the new design is efficient living space and added lifestyle community features, such as mature green landscaping and garden walkways that connect residents through spacious parkland areas to the beach and recreational facilities. Over the next twelve months, The Wave, Muscat will hand over a number of its core lifestyle and tourism offerings, including the Sultanate’s first 18-hole PGA standard Greg Norman golf course, 400 berth Marina and phase one of the Retail Village, adding new dimensions to residential living within The Wave, Muscat’s growing and dynamic community. To date over 1000 properties have been sold and more than 600 delivered with more than 300 families already calling The Wave, Muscat home.
A slice of utopia The wide-open spaces and ingeniously designed landscaping give rise to The Wave, Muscat being a breathtaking place to live, creating a way of life that is perfect for community living. In fact, inhabitants actually talk to one another, with more and more people being drawn in to celebrate what has developed into a healthy community-based lifestyle. A lively town centre, a refreshingly pure natural environment and a philosophy designed around a string of neighbourhoods, featuring a variety of villas, townhouses and apartments, each succeeding in nurturing an ambiance that’s unadulterated joy.
The Wave, Muscat will hand over a number of its core lifestyle and tourism offerings, including the Sultanate’s first 18-hole PGA standard Greg Norman golf course, 400 berth Marina and phase one of the Retail Village, adding new dimensions to residential living within The Wave, Muscat’s growing and dynamic community The meticulously planned Marina at The Wave, Muscat offers residents the exhilarating vibrancy of a chic urban lifestyle together with the advantages of living by the marina at the heart of town in Oman’s first master planned community. As the focal point of The Wave, Muscat the 400 berth Marina is surrounded by restaurants, shops and cafés, acting as a magnet for people who want to socialize, celebrate or relax against the backdrop of a stunning panorama.
The great white shark In excess of 900,000m3 of earth has now been moved to commence the creation of Oman’s first PGA Links golf course, designed by the legendary Greg Norman. With the appointment of the internationally renowned Southern Golf Oman LLC as the golf course construction contractor, the 18-hole championship course, inclusive of a dedicated academy, driving range and floodlit par-3 practice facility, is expected to fully open in 2011.
The art of hospitality
The focal point of The Wave, Muscat
The Wave, Muscat features two of the finest names in global hospitality; Fairmont Hotels & Resorts and Kempinski. Fairmont is a leader in the international hospitality industry, with a worldwide reputation for excellence. Its diverse portfolio includes historic icons, stylish resorts and up-to-the-minute city centre properties. From the beaches of Hawaii and Bermuda to the heart of New York City, all of its hotels offer an exceptional guest experience that is uniquely ‘Fairmont’.
Living around a marina area is looked upon as one of the most sought after lifestyle options.
Fairmont offers guests a remarkable and
Residents are no more than a few hundred metres away from the beach or prime waterfront areas, with footpaths providing easy access to carefully landscaped green spaces and waterways flowing serenely through the broad, tree-lined boulevards of the residential areas. You’d be forgiven for thinking you’d stumbled upon a slice of Utopia.
extraordinary place that is created by combining distinctive architecture and structure, expressive decor and artistry, and superb features all in one illustrious setting. Add great service to this and the end result is an amazing experience that makes a stay truly memorable.
A hassle-free tenancy and landlord service The Wave, Muscat, the nation’s landmark freehold development and first Integrated Tourism Complex (ITC), has expanded its property management offering with the formation of a new specialised Lease Department. David Stafford, VP Sales and Marketing of The Wave, Muscat, said the new department was launched in response to increased demand for a hassle-free tenancy and landlord service.“In a market categorised by a shift from speculators to end users as the project matures there has been increased demand for residential leasing over the last two years, and by leasing direct from the developer tenants will be assured of the widest selection of premium properties.” The Wave, Muscat has already delivered in excess of 600 villas, townhouses and apartments and the new Leasing Department is a natural extension of the value added services to help new owners rent their properties and provide an easy and accessible option for those wanting to call The Wave, Muscat home.
To reserve your little slice of earthly paradise, visit www.thewavemuscat.com May-June, 2011
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SPECIAL REPORT
GAINS FROM STANDING TOGETHER! G
Iain Conn, Chief Executive, Refining and Marketing, BP p.l.c., on Europe-Russia energy relations
eography and history ensure that Europe and Russia are bound together in the same political and economic space. We may ask a theoretical question about the need for a Europe/Russia relationship. In reality I believe we have no choice – we are obliged to live and work together and the only choices we have are about how well or otherwise we go about this task.
Of course the long years of the Cold War had the inevitable effect of freezing attitudes and perceptions on both sides of the divide. In some ways, there was a degree of comfort in knowing exactly where everyone stood on this immovable and sometimes hostile stage. However, the end of the Cold War in turn revealed inter-dependency and opened up future opportunity as well as threat. It has inevitably been a bumpy road and it should surprise noone if the path of Europe/Russia relations does not always run smoothly. However, there is also much credit to be taken. The political restructuring of almost an entire continent has been accomplished without descent into general war. Europe and Russia have put in place institutional links that ensure dialogue and provide mechanisms for problem solving. 42
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At the same time, closer business links have done much to underpin the substance of the relationship. My own company can trace its presence in Russia back to 1989, our first major investment to 1997 and the formation of the 50/50 TNK-BP joint venture, one of Russia’s largest oil companies, to 2003. BP is absolutely committed to remain the leading foreign energy partner with, and in, Russia and all of our relationships with the Government and
Rosneft are very important to us. Our announced joint venture with Rosneft for Arctic exploration, and an exchange of company shareholdings, was only our latest step along this important road. You will have seen we have some issues with our TNK partners over this. We are committed to resolving these so that we can deepen our pre-existing partnership with Rosneft.
Again it is not surprising that the process is not easy and reconciling different interests can be testing. However, we remain convinced that there is much to gain on all sides from successful partnership. Resources, technologies, operational know how, financial capability and project management capabilities, can all be successfully combined to produce something that is definitely greater than the sum of the parts. The interdependence between Europe and Russia is not only an idea but a substantial reality – and nowhere more clearly than in energy.
asset. It joins producers and customers and allows both to find competitive advantage in a global market. Importantly for Europe, it also provides a competitive basis for energy to continue to flow west, even as demand continues to grow in the east. It is also reliable. Russia has kept energy supplies flowing to Europe even throughout the Cold War. Of course this infrastructure is not and cannot be exclusive in terms of access within the EU market. Europe will also inevitably encourage other gas infrastructure systems such as the Southern Corridor, North Africa pipelines and LNG re-gasification.
There are many choices but a stable and mutually beneficial relationship with Russia will also strengthen the security of supplies from the Caspian, Central Asia and the Middle East, except in the unlikely circumstance that Europe becomes self-sufficient in gas to live and work together, what choices can Europe make about the relationship? My strong conviction is that we must continue to embrace and engage. We have everything to gain from working together and much to lose from standing apart. We gain energy security, co-investment opportunities, key sources of competitiveness for our economy and stability on a long border in an increasingly uncertain world. It is true that to be effective in this relationship, Europe needs to find a shared vision, meaningful coordination and a consistent approach. It is not at all unreasonable for Russia to ask us for the same thing.
THE PATTERN FOR OIL PIPELINES IS BASICALLY SIMILAR Russia accounts for over 30 per cent of European oil supplies and around 23 per cent of natural gas, and in total supplies about one quarter of European energy requirements. The percentage of imports originating from Russia is even higher. The infrastructure that makes this possible should be seen not as a liability but a valuable
There are many choices but a stable and mutually beneficial relationship with Russia will also strengthen the security of supplies from the Caspian, Central Asia and the Middle East. Except in the unlikely circumstance that Europe becomes self-sufficient in gas due to unconventional gas availability, such as shale gas, Russia will in all circumstances remain an indispensible partner in Europe’s energy mix. So if Europe and Russia have no choice except
But in doing so we should be clear that the objective is not to divide but to ensure a strong platform for engagement in support of our long term common interests. We must learn to trust each other in pursuit of this objective.
(The above are excerpts from Iain Conn’s speech in Brussels on European Energy Global Choices and pertain only to Europe/Russia energy choices) May-June, 2011
43
VIEWPOINT
By John Watson
THE INDISPENSABLE INDUSTRY
O
ver several decades, we’ve been warned that the world is on the verge of running out of hydrocarbons. More recent has been the notion that some combination of government subsidies and other mechanisms can shift the market away from fossil fuels altogether. Today, you can still find commentators holding forth on both claims, even though proved oil and gas reserves keep rising and subsidies have yet to bring alternatives to commercial scale – points that I’ll return to in a moment. Hearing such things about the future of energy, it becomes clear after a while that we’re not dealing with rational judgments in all cases, but with articles of faith. You have to know the difference if you’re in the business of actually producing energy. Follow the supply chain of economic growth in any region and, above all, along that arc from India through China to South Korea. Without exception, it will lead you back to the energy sources that we draw from the ground. And that’s the picture in a world of 6 billion people. Consider a world of 9 billion by 2050 – all of them wanting 44
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to live and prosper as we do and no less deserving of that chance. Demand for traditional and new fuels will grow sharply. And serving that demand requires production, development and innovation on a scale equal to the challenge.
The good news is that the resources are there. Far from having reached any peak, the world’s estimated base of recoverable oil, gas and coal is continually rising. In fact, over the past 30 years, while concern about resource scarcity was
gaining some traction, the world’s proved reserves of oil and natural gas increased 130 percent, to 2.5 trillion barrels.
sized enterprises, and develop new technology. The broader value of sustained energy investments cannot be overstated.
The last several years alone have yielded deepwater and shale discoveries that couldn’t have been imagined 10 years ago and, in any case, couldn’t have been extracted. As vast as the world’s energy needs are and will be, it is within our power to meet them. The short of it is this. We are a primary component in the supply chain for global economic expansion.
Yet even annual investment on that order will not be enough in the long run. And so the issue is, what will it take to draw out investment capital on the massive scale that is needed?
As a part of the industry that is providing that energy, you need never doubt that you’re involved in something useful, good and vital. Energy is as fundamental as any enterprise can be. Energy is the indispensable industry – at the center of everything. And that is not boasting. It’s simply recognising the scope and reach of our responsibility. We’re in a business where success and failure have very large consequences. A lot can be lost if we don’t observe the highest of standards and keep our entrepreneurial edge. And the public good is served when we do big things and do them right. With that public good in mind, and with a view to the opportunities we have in this industry, it seems to me that four key strategies will see us through. The first is to rebuild the conditions that maximise investment. Even the best of energy companies can perform only as well as the legal and regulatory environment allows. It’s not a question of readiness. The industry is primed to invest all that is necessary to meet the world’s demand. In 2011 alone, energy companies will make half a trillion dollars in capital expenditures worldwide. That capital will do more than bring energy products to market – as important as that is. It will also create jobs, support small and medium-
The answer is access to resources, rational regulatory and tax regimes, and a stable business climate. When Western economies suffer from the effects of supply shocks, the last people in a position to complain are those who have laboured the most to restrict access, add regulations and lay new taxes on energy producers. You and I work in one of the most heavily regulated industries in the world, and nobody here doubts that many of those regulations serve a useful purpose. But most of us could point to other rules and policies that make no sense at all, especially if the goal is to ensure a stable and affordable supply of energy. Reasonable access, along with rational taxation and rule-making, are essential. So, too, is a predictable business climate founded on the rule of law, contract sanctity, and open and free trade. This has never been more important than now, given the recent instability we have seen this month in key energy producing regions. If we take the long view, global markets are generally moving toward openness. We should do all we can to accelerate that momentum. The second key strategy is to be relentlessly focused on safe and reliable operations. We all know that our corporate responsibilities do not end with meeting market demand. We are expected, and rightly so, to meet the highest standards of safety and environmental protection. No doubt there’s been a good deal of discussion here about all that was learned after last
year’s event in the Gulf of Mexico. The Macondo incident was 10 months ago, and for us the lessons are not forgotten. We always manage toward incident-free operations. In our industry, when it comes to safety, the bottom line is zero. Certainly, going forward we will operate under new and stricter standards – in the Gulf of Mexico and other places. Far from resisting those rules, our industry is helping to strengthen them. This proactive, uncompromising approach to safety is the test we should all apply to any company, starting with our own. In an industry that’s always edging up against the frontiers of geology and engineering, the best practices should be the only practices. Technology is at the heart of the third strategy, which is to enhance ways that we produce energy, use energy, and develop new sources of energy. All of us here are believers in technology because we’ve seen our industry make innovative leaps every year. We know that the smart application of technology can help recover more barrels per reservoir and lower the cost of producing those barrels. Technology also can help us unlock the value in unconventional resources, which is one of the reasons we’re witnessing such interest in shale gas. And technology holds great potential to help us use energy more efficiently – lowering per-capita costs and emissions from energy use. Arguably the biggest challenge for technology is how it can be applied to the economic development of renewables and other alternatives to fossil fuels at industrial scale. Right now, alternatives make up less than 15 per cent of the global energy portfolio. Even under the most promising scenarios, it will take decades for alternatives to reach the affordability, reliability and scale May-June, 2011
45
VIEWPOINT
of fossil fuels. If one had any doubts at all, some European governments have gone ahead and proved it for us, by spending billions of euros in subsidies for renewables that aren’t market-ready. Don’t misunderstand me. In the long-run, renewables are going to play an important role in meeting global demand, and my company will contribute to that. Today, Chevron is the world’s largest producer of geothermal energy. In fact, we produce nearly twice as much power from geothermal in Indonesia and the Philippines than all of the solar electricity generated for sale in the United States. We’re also a significant investor in the development of biofuels, and we’re leading our industry in energy efficiency. So we’re committed to renewables. But I’ve charged my company with developing a renewables business that is profitable and can operate at scale without subsidies. I believe that should be the basis of any sound public policy as well. The right approach to building our energy future is to balance aspiration with reality, investing in solutions that can compete at scale reliably and affordably. We simply can’t build a secure energy future through complex, command-and-control schemes 46
May-June, 2011
that defy basic market principles. We can do it through human creativity, technology and innovation, sound economics, and strong partnerships. That last point – partnerships – is the fourth and final strategy I’d like to address. We need to build new partnerships that match the size of the challenges before us.It is the very nature of our business to involve multiple stakeholders – from national governments, to local communities, to private-sector partners in all our projects. My company, for instance, is heavily engaged in world-scale projects in Kazakhstan, China and Australia, among many other nations. Look at each of these and you’ll find a diverse range of partners, all putting technology, capital resources, management skills and local development goals to a common purpose. For all the complexity of such ventures, the basic motivation behind them is a simple insight: When it comes to reliable energy, economic growth and environmental protection, everyone is a stakeholder and everyone is a beneficiary. And even the biggest companies in an indispensable industry know they’ll do
better work in collaboration. Our success will not be measured by ours alone, but by the progress we share with many others. At the outset I promised brevity, and perhaps a shorter way of saying all of this is that we in the energy industry face a great opportunity and a great responsibility. In America, Britain and all across the world, millions of people are depending on economic growth while many more in other parts of the world wait for opportunities they can only imagine. No business enterprise is better positioned than we are to answer the need – by investing, innovating and elevating our standards. In the financial troubles of the last few years, we haven’t always seen the best of free enterprise at work. Yet only the spirit of enterprise – of hard work, risk and reward, innovation, and partnerships for economic and social progress – can set all of our countries on a better course. Let it be the mission of our great industry to show the way. Let that be the mission of everyone here tonight. (John S. Watson, Chairman and CEO, Chevron Corporation, was speaking at the Energy Institute International Petroleum Week in London)
2011
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R E S P O N S E I N I T I AT I V E B Y
MARKET ROUND-UP
CRUDE OIL SURGES Crude oil prices surged in February with the OPEC Reference Basket moving above $100/b for the first time since September 2008
W
orld economic growth remains robust and continuing improvements have led to improved growth expectations for 2011, which have been adjusted 0.1 per cent higher to 4.0 per cent. The main reason for the upward revision is healthy growth in the developing countries. China’s forecast has been increased from 8.8 per cent to 9.0 per cent and India from 8.0 per cent to 8.1 per cent. The forecast for the OECD remains unchanged at 2.3 per cent, with the US at 2.9 per cent and both the Euro-zone and Japan at 1.5 per cent. Inflation is beginning to pose a challenge for policy makers in both the OECD and the developing countries. In the case of the OECD, this might lead to higher interest rates, which could increase the cost of servicing sovereign debt, while for developing countries the introduction of fiscal and monetary tools targeting overheating could result in a larger-than-expected decline in growth levels. World oil demand growth is estimated at 1.8 mb/d in 2010 and forecast at 1.4 mb/d in 2011, representing only minor upward adjustments from the previous report. Oil demand in the first quarter of this year was boosted by cold winter weather in the Northern Hemisphere. In the non-OECD, second quarter oil demand is expected to maintain its healthy level, achieving similar growth to that of the first quarter. While the colder-than-normal winter has strengthened oil demand, high oil prices could dampen consumption over the coming months if current price levels persist for an extended period. This effect would be felt both in the OECD and non-OECD countries. Non-OPEC oil supply is projected to increase by 0.5 mb/d in 2011, following growth of 1.1 mb/d 48
May-June, 2011
in the previous year. The 2011 figure represents an upward adjustment of 0.1 mb/d from the previous assessment, mainly due to revisions to historical data as well as changes in the supply profile of some countries. OPEC NGLs and nonconventional oils are expected to average 5.3 mb/d in 2011, an increase of 0.5 mb/d over the previous year. In February, total OPEC crude oil production, according to secondary sources, increased by 110 tb/d to average 30.0 mb/d. The sustained momentum in the middle distillates market received further support from the industrial sector, contributing to stronger diesel demand across the globe. This offset the bearish sentiment in the top of the barrel and kept product markets healthy. Strong middle distillate demand, amid reduced refinery runs due to seasonal maintenance, is likely to continue to support refinery margins over the coming months. Tanker market sentiment strengthened, with spot freight rates increasing on most routes. The gains were backed by factors such as holidays in the Far East and weather conditions, and occurred despite higher bunker fuel prices and some refinery maintenance. OPEC fixtures decreased by 960 tb/d to average 11.9 mb/d, which corresponds to almost two thirds of global fixtures. OPEC sailings increased by 208 tb/d to 24.0 mb/d, according to preliminary estimates. US commercial inventories fell by around 23.8 mb in February, reversing the build seen last month. The stock draw was driven by the substantial drop in products, which declined by 27.0 mb, while crude inventories saw a build of 3.2 mb. US commercial oil stocks in February remained above the historical norm at 1051.1 mb. In Japan, the most recent data shows that commercial oil inventories declined by 2.4 mb in January, with crude seeing a draw of 2.6 mb while products experienced a slight build of 0.3 mb. Preliminary indications for February show that Japanese commercial oil stocks fell a further 8.2 mb. The demand for OPEC crude in 2010 is estimated at 29.3 mb/d, unchanged from the
previous report and about 0.3 mb/d higher than the year before. In 2011, the demand for OPEC crude is expected to average 29.8 mb/d, unchanged from the previous assessment and an increase of around 0.5 mb/d over last year.
and in the case of a serious re-emergence of those challenges could again put the Euro under considerable pressure. For the time being, the current level seems to
OPEC REFERENCE BASKET AND SELECTED CRUDES, $/B Jan 11
Feb 11
Change
Year to Date
Feb/Jan
2010
2011
OPEC Reference Basket
92.83
100.29
7.46
74.50
96.47
Arab Light
93.59
101.21
7.62
74.89
97.31
Basrah Light
92.33
99.52
7.19
74.00
95.83
Bonny Light
98.10
105.66
7.56
76.21
101.79
Es Sider
96.10
103.51
7.41
74.86
99.72
Girassol
96.18
104.42
8.24
75.37
100.20
Iran Heavy
92.22
99.29
7.07
74.13
95.67
Kuwait Export
91.45
98.75
7.30
73.98
95.01
Marine
92.69
100.18
7.49
75.49
96.34
Merey
80.09
87.51
7.42
69.87
83.71
Murban
95.04
102.75
7.71
76.70
98.80
Oriente
84.80
90.14
5.34
71.16
87.41
Saharan Blend
97.50
105.01
7.51
75.66
101.17
OIL PRICES, US DOLLAR AND INFLATION The US Dollar continued weakening against all major currencies in February, compared to the levels of January. It fell by 2.2 per cent against the euro and the pound sterling, by 0.1 per cent versus the yen and by 0.5 per cent compared to the Swiss franc. With regard to the euro the trading range of the previous months of $1.30/€ to $1.40/€ was broken at the upper side for one trading day at the beginning of March, when it closed at $1.4028/€, anticipating an interest rate hike in the near future by the ECB. The average level for February was at $1.3647/€ compared to the January level of $1.3357/€. While the euro is currently carried by this expectation of a rise in interest rates, the debt worries about the peripheral countries in the Euro-zone might act as a counterforce soon
be well appreciated at both sides of the Atlantic as it enables the US to enjoy a comparative advantage for its exports, while the ECB is potentially happy about the stronger Euro as a counterbalance to the threat of imported inflation from mainly commodities. So continued support for the current trading band of $1.30/€ to $1.40/€ should be expected. In nominal terms, the OPEC Reference Basket increased by 8.0 per cent or $7.46/b from $92.83/b in January to $100.29/b in February. In real terms, after accounting for inflation and currency fluctuations, the Basket price increased by 6.6 per cent or $3.85/b to $62.05/b from $58.20/b (base June 2001=100). Over the same period, the US dollar fell by 1.3 per cent against the import-weighted modified Geneva I + US dollar basket, while inflation remained almost unchanged. May-June, 2011
49
MARKET ROUND-UP
World oil demand is forecast to grow by 1.8 mb/d in 2010 and 1.4 mb/d in 2011, averaging 87.8 mb/d, broadly in line with the previous report. Manufacturing activities are showing an upward trend indicating more oil consumption in most of the OECD countries and Russia. The upward risk centers around the magnitude of the winter’s effect on oil demand. Early indications are pointing toward higherthan-expected consumption of oil in the Northern Hemisphere. Should these indications be confirmed, oil demand could be revised higher in the coming months. However, the downward risk for the forecast for world oil demand comes from international oil prices. Should strong price levels remain, this would lead to a reduction in the use of transportation fuel, especially in the summer driving season. This effect will spread not only throughout the OECD but also into the non-OECD.
WORLD OIL SUPPLY ESTIMATE FOR 2010 Non-OPEC oil supply is estimated to have averaged 52.26 mb/d in 2010, indicating growth of 1.14 mb/d over the previous year, the highest annual supply increase since 2002. This estimate is broadly unchanged from the previous month in terms of total volume and annual growth. However, there were minor upward and downward revisions to a few countries’ supply estimates in 2010 that offset each other.
WORLD OIL DEMAND With the approach of the low energy consumption season as the winter months fall behind us and the summer heat will not be felt until the third quarter, second quarter oil demand is forecast to ease the pressure on the oil supply/demand balance. First quarter oil demand was supported by the cold winter in the Northern Hemisphere. The effect of strong demand was also felt in February. In contrast, the third quarter is anticipated to see more oil usage as a result of enhanced economic activities, higher temperatures and the start of the agricultural season. Supported by high US 50
May-June, 2011
oil consumption growth, OECD February oil demand surpassed that of the previous month. In the non-OECD countries, oil demand in the second quarter is expected to maintain its robust level, achieving similar growth of that of the first quarter. Another factor that pushed oil demand up is the effect of winter on natural gas prices which reduced the power plants’ usage of natural gas. This was experienced not only in the OECD but in some parts of Asia as well. Given the colder-than-expected weather and the recent upward GDP revision, the first and second quarter’s oil demand was revised marginally higher.
The revisions were introduced mostly to fourth quarter supply, while there were a few historical adjustments that affected all quarters of 2010. During 2010, non-OPEC supply experienced significant annual growth on a quarterly basis, with all quarters encountering supply increases ranging between 0.86 mb/d to 1.30 mb/d. The highest quarterly growth was experienced in the second quarter at 1.30 mb/d compared to the same quarter a year earlier. The revisions were due to updated actual production data for some countries. On a quarterly basis, non-OPEC supply is estimated at 52.14 mb/d, 52.11 mb/d, 51.94 mb/d and 52.86 mb/d respectively.
NON-OPEC SUPPLY IN 2010, MB/D
CHANGE 2009
1Q2010
2Q2010
3Q2010
4Q2010
2010
10/09
North America
14.36
14.71
14.86
14.92
15.26
14.94
0.57
Western Europe
4.73
4.70
4.40
4.01
4.40
4.38
-0.35
OECD Pacific
0.64
0.61
0.60
0.60
0.57
0.60
-0.04
Total OECD
19.73
20.03
19.86
19.53
20.23
19.91
0.18
Other Asia
3.70
3.68
3.67
3.71
3.72
3.69
-0.01
Latin America
4.41
4.65
4.72
4.72
4.73
4.71
0.30
ME
1.73
1.77
1.77
1.77
1.78
1.77
0.04
Africa
2.61
2.62
2.59
2.61
2.62
2.61
-0.01
Total DCs
12.46
12.72
12.75
12.81
12.84
12.78
0.33
FSU
12.96
13.16
13.20
13.21
13.33
13.22
0.27
Other Europe
0.14
0.14
0.14
0.14
0.13
0.14
0.00
China
3.85
4.03
4.10
4.18
4.25
4.14
0.29
Total “other regions”
16.95
17.32
17.43
17.52
17.71
17.50
0.55
Total non-OPEC production
49.13
50.07
50.04
49.86
50.78
50.19
1.06
2.00
2.08
2.08
2.08
2.08
2.08
0.08
Total non-OPEC supply
51.13
52.14
52.11
51.94
52.86
52.26
1.14
Previous estimate
51.13
52.13
52.12
51.97
52.83
52.26
1.14
0.00
0.01
-0.01
-0.03
0.03
0.00
0.00
Processing gains
Revision
FORECASTED Y-O-Y GROWTH IN 2011 WORLD OIL DEMAND
LPG
12% 21%
Naphtha 12% Gasoline
-6% Jet/Kero 23% 31%
Gas/Diesel oil Residual fuels
7%
Other products
REVISIONS TO THE 2010 ESTIMATE Azerbaijan and Brazil oil supply estimates for 2010 encountered revisions across all quarters. Updated production data for Azerbaijan as well as new biofuel production figures required the revisions. The rest of the revisions for 2010 supply estimates were carried out in the fourth quarter, as more actual production data became available. Fourth quarter oil production estimates were revised for Canada, UK, Brunei, Indonesia, Malaysia, Argentina and Colombia. The largest revision affected Canada oil supply in the fourth quarter by 80 tb/d. This was mainly due to strong production levels in December, which reached a record high, according to preliminary data. The healthy output was mainly driven by the growth of Canada NGLs and non-conventional oil supply. The revisions that affected the supply estimates of other countries were also driven by adjustments to updated production data.
(Courtesy: OPEC Report) May-June, 2011
51
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GLOBAL NEWS
Kearl test module underscores commitment to safety ExxonMobil and Imperial Oil have announced that a test module to demonstrate the safe transportation of oversized shipments with minimal public disruption has begun. The test module is part of a comprehensive transportation plan to move modules for the Kearl project from Idaho to Canada. The modules consist of new structural steel, piping and electrical equipment. Pic courtesy: ExxonMobil
“Safety is our top priority, and this test module, which was developed by some of the leading transportation experts in the world, is part of our commitment to moving these modules safely and in accordance with a comprehensive plan submitted to state transportation officials,” said Chris Allard, Kearl Project Manager.
Arco Aluminum to be sold BP has agreed the sale of its wholly-owned subsidiary, ARCO Aluminum to a special purpose vehicle incorporated by a consortium of Japanese companies. ARCO Aluminum is a supplier of rolled aluminium sheet, used primarily in the production of beverage cans.
Pic courtesy: BP
Under the terms of the agreement the consortium - comprised of Sumitomo Light Metal Industries (40 per cent), Furukawa Sky Aluminum (35 per cent), Sumitomo Corporation (20 per cent), Itochu Corporation (2 per cent), and Itochu Metals Corporation (3 per cent) - will pay BP $680 million in cash, subject to closing adjustments. Subject to obtaining required regulatory approvals, the
parties expect to complete the transaction in the third quarter of 2011. “Although a strong business, ARCO Aluminum is clearly a non-strategic asset for BP. Today’s agreement will deliver an attractive price for the business, unlocking its value for our shareholders,” said Bob Dudley, BP Group Chief Executive. BP remains on track to meet its target of achieving up to $30 billion of divestments by the end of 2011. Including ARCO Aluminum, BP has now entered into agreements for divestments with a total value of over $24 billion.
Repsol agrees the sale of a further 3.83 per cent of YPF Repsol has agreed to sell a 3.83 per cent stake of YPF to Lazard Asset Management and other investment funds for $639 million. Both transactions have been agreed at a price of $42.4 per share. Lazard Asset Management will acquire for $484 million a total of 2.9 per cent of YPF for a number of its clients, while a further 0.93 per cent will be acquired by other investors for a total $155 million. 54
May-June, 2011
At the end of last year, Repsol agreed the sale of 3.3 per cent of YPF for $500 million to funds managed by Eton Park Capital Management, Capital Guardian Trust Company and Capital International. Additionally, shares of YPF totalling 1.06 per cent of the company have been sold on the stock markets in the last few months.
Following the latest transactions, YPF’s shareholding structure is as follows: Repsol Group (75.9 per cent), Petersen Group (15.46 per cent) and 8.64 per cent free float. This deal is part of Repsol’s strategic aim to rebalance its global assets portfolio as laid out in the Horizon 2014 plan, allowing new shareholders into YPF.
Njund and Visund production temporarily suspended
Lukoil increases stake to 60 per cent in joint venture
Pic courtesy: Yvind Hagen - Statoil
Lukoil has increased its stake to 60 per cent in its joint venture to be operated in the ISAB Refining Complex.
Production on the Njord field in the Norwegian Sea has been temporarily suspended as a safety precaution due to internal damage to flexible risers. The damage was detected during a scheduled inspection. Statoil has also found it necessary to conduct special investigations at Visund, and this installation will therefore also be shut down. In the autumn of 2010, faults were discovered on some of the risers on the Njord A platform. An extraordinary inspection programme was therefore initiated. The inspection was performed visually by means of video camera that was sent down the risers. Risers are pipes
that carry oil and gas between the seabed and the installation. They are constructed of multiple layers of plastic and steel. The current challenges are limited to a specific type of riser technology. Internal damage of this type does not threaten the structural integrity of the risers, but over time it will reduce resistance to leakage. The risers are therefore immediately removed from operation when damage is detected. “Damaged risers will be shut down until they have been repaired or replaced. The rest will be shut down until they have been inspected and found satisfactory,” says Jannicke Hilland, Head of Joint Operations.
Third Tanzanian well discovers gas BG Group has announced its third Tanzanian gas discovery with the Chaza-1 well, located in Block 1 approximately 18 kilometres offshore southern Tanzania in a water depth of around 950 metres. The discovery is some 200 kilometres south of BG Group’s Pweza and Chewa discoveries, previously announced. The three successful wells so far drilled by the joint venture of BG Group (60 per cent) and Ophir Energy (40 per cent operator) form part of an initial work programme planned for Blocks 1, 3 and 4 offshore Tanzania. The initial
work programme also includes the acquisition of a minimum of 4000 square kilometres of 3D seismic data. BG Group has the option to assume operatorship of all three blocks upon completion of the initial work programme. To date in 2011, a 3,200 square kilometre 3D seismic survey has been acquired in Blocks 3 and 4, and a second 3D survey of 1,800 square kilometres is nearing completion in Block 1. It is intended that a second drilling campaign will commence in late 2011.
Lukoil has completed the acquisition of 11 per cent in the joint venture to operate the ISAB refining complex located in Priolo (Sicily). Thus, Lukoil’s stake in the joint venture has gone up from 49 per cent to 60 per cent. The transaction amount was EUR 205 million, excluding inventory. In January of 2011 ERG’s Board of Directors resolved to sell an 11 per cent stake in the joint venture to Lukoil. This is a partial exercise of ERG’s option to sell its stake, which accords with the agreement of 2008 to create the joint venture.
Petronas supplies fluid technology Petronas’ partnership with the Mercedes GP Petronas Formula One Team has taken another significant step forward with the Petronas Malaysia Grand Prix supplying its Fluid Technology Solutions package to the race team. Petronas’ Fluid Technology Solutions, which includes fuel, engine oils, hydraulic and gear oils as well as transmission fluids, has been supplied to the team through subsidiary Petronas Lubricants International. Prior to this, Petronas has been supplying lubricants to the race team since the Spanish Grand Prix in May 2010. The new supply arrangement was announced during the visit by the Mercedes GP Petronas Formula One Team – including drivers Michael Schumacher and Nico Rosberg - to the Petronas Melaka Refinery Complex, the core of Petronas’ valueadding downstream activity.
GLOBAL NEWS
Chevron Corporation has named Paul V. Bennett as Vice President and Treasurer, effective May 1, 2011. “Paul is highly qualified to guide our financing strategies, both for our overall corporate capital structure as well as for our significant development projects. He is broadly experienced in treasury and risk management, having served in several senior corporate and operating financial positions, including oversight of Chevron’s credit and receivables operations,” said Patricia E. Yarrington, Chevron’s Chief Financial Officer. “In his current role, Paul was instrumental in helping to streamline our Downstream and Chemicals business and transform it into a more profitable, lower-cost organisation.” Bennett, 57, joined Chevron in 1980 as a Financial Analyst in the Comptroller’s department. Over the course of his career, Bennett assumed finance positions of increasing responsibility, including Manager, Tax Compliance and Audits, Chevron U.S.A. Manager, Logistics and Trading Accounting, Chevron Products Company; Vice President, Finance and Administration, P&M Coal Mining Co.; Assistant Treasurer, Credit and Receivables Management, Chevron Corporation; and General Manager, Finance Shared Services, Chevron Services Company. In 2009, Bennett assumed his current position as Vice President of Finance, Downstream and Chemicals.
Shell agrees sale of Chilean businesses Shell has agreed to sell most of its Downstream business in Chile to Quiñenco for a total consideration of some $614 million. Under a separate agreement, Quiñenco has also been appointed as a Macro Distributor to market, sell and distribute Shell branded lubricants in Chile and will become the delivery service provider for Shell Marine Products’ international customers in the country. The proposed sale, which covers all Shell’s existing Retail, Commercial Fuels, Bitumen and Chemicals businesses, in addition to related supply and distribution infrastructure in Chile, follows a review by Shell of its downstream businesses in the country and is consistent with the company’s strategy to concentrate its global downstream portfolio into fewer and larger markets. The retail network of about 300 sites will continue to be Shell-branded through a trademark license agreement. “This deal is consistent with our strategy to concentrate our Downstream footprint and I strongly believe it is in the best possible interests of staff, Shell shareholders and our customers,” said Mark Williams, Royal Dutch Shell’s Downstream Director. “Quiñenco will continue to provide the high quality Shell products that our Chilean customers have come to trust and rely on over many decades.” Shell and Quiñenco will now concentrate on securing necessary steps for the completion of the proposed deal.
Strategic breakthrough for Total in East Africa Total has announced the acquisition of a one-third interest in Blocks 1, 2 and 3A in Uganda held by a subsidiary of Tullow Oil, for $1,467 million. Located in the Lake Albert region, these three licenses cover a total area of close to 10,000 square kilometres. Exploration and appraisal work has already discovered oil resources of over one billion barrels and Total estimates that the area’s remaining exploration potential is roughly similar. Following this acquisition, Total becomes an equal partner with Tullow and CNOOC in the blocks, each with a one-third interest and each being operator of one of the blocks. Subject to the decision of the Authorities, Total will be the operator of Block 1.
ConocoPhillips continues focus on creating value new
to improve capital efficiency, reduce debt
to improve returns and create value through
information regarding sources of future
and increase shareholder distributions.
disciplined capital spending, non-core asset
reserves and production growth during
Proceeds from the increased asset sales
sales and growing production per share,”
its annual presentation to the financial
are expected to be used primarily to fund the
said Jim Mulva, Chairman and Chief Executive
community. In addition, the company
company’s recently announced $10 billion
Officer. “Our unique approach prioritises
announced plans to sell an additional $5-10
share repurchase programme and for capital
value creation over low margin production
billion of non-core assets over the next two
investment opportunities.
growth and is designed to position the
ConocoPhillips
has
provided
company for higher returns and increased
years. ConocoPhillips initiated its multi-year returns-enhancement plan in 2010, designed
56
May-June, 2011
Pic courtesy: Shell
Paul V Bennett named Chevron Treasurer
“We are executing the plan set out last year
shareholder distributions in the future.”
1
REGIONAL ROUND-UP
In a meeting with the Ruler of Fujairah Emirate Hamad bin Mohammed Al-Sharqi, the Iranian Ambassador to the UAE Mohammad-Reza Fayyaz announced that the Iranian companies have expressed readiness to assist the Arab Emirate with the repair, maintenance, and exploitation of oil pipelines. During the meeting, Fayyaz referred to Iran’s capabilities and experiences in different industrial fields, and underlined readiness of the Iranian companies for implementing economic plans and projects as well as joint ventures in Fujairah. Al-Sharqi, for his part, described the bilateral relations between Iran and the UAE as “satisfactory” and said, “The relations between the two neighbours
Yanbu Refinery shutdown completed Employees at Saudi Aramco’s wholly owned Yanbu Refinery recently completed a wideranging and complex Total Refinery Shutdown (TRS) on schedule and without any safety incidents. The scope of the TRS covered 320 pieces of equipment, 1,000 maintenance work orders and more than 30 projects. The refinery undergoes extensive maintenance every five years to ensure the safety, integrity and reliability of the facility. However, the TRS that ended March 10 was more extensive than previous shutdowns. Despite adverse weather and other issues, the shutdown was completed in the scheduled 38 days, due largely to advanced planning, organisation and solid teamwork. Nearly 3,000 Saudi Aramco employees and contractors worked together to complete the task safely and on time. Safety and environmental issues were seamlessly integrated into the operation’s scope, and the outstanding performance of
Pic courtesy: Saudi Aramco
Iranian companies ready to help UAE with oil pipeline
employees — and contractors — proved to be a testament to the success of this holistic approach, organisers said. Young engineers and technicians were given major responsibilities, joining their mentors in playing a major role, enabling knowledgesharing as an added outcome.
should always be good and any possible point of difference between the two sides should be resolved through bilateral talks.” He also welcomed the envoy’s proposals for the Iranian companies’ cooperation in a number of economic plans in Fujairah. The two sides agreed to study other potential areas for cooperation in the oil, mining, cement-production and other industrial fields in another meeting. Habshan-Fujairah oil pipeline (ADCOP) is an under construction oil pipeline in the United Arab Emirates. It starts from the Habshan onshore field in Abu Dhabi and will run to Fujairah.
58
May-June, 2011
Qatargas achieves 100 per cent capacity Qatargas has achieved a historic milestone - all four of its mega liquefaction Trains are now at 100 per cent production capacity. This means that as the world’s largest Liquefied Natural Gas (LNG) producer, Qatargas is currently running at its full production capacity of 42 million tonnes per annum (MTA) from a total of its seven trains. Commenting on this accomplishment, Khalid bin Khalifa Al Thani, Chief Executive Officer of Qatargas, said, “I’m proud of this landmark
achievement for Qatargas. With this, Qatargas is now fully contributing its significant share to the State of Qatar’s vision of producing 77 MTA. This accomplishment is also supporting the vision of His Highness the Emir, Sheikh Hamad Bin Khalifa Al Thani, that Qatar’s energy resources would fuel the country’s long-term development. We are thankful to His Excellency Dr. Mohammed Saleh Al Sada, Minister of Energy & Industry and Chairman of Board of Directors of Qatargas for his guidance and leadership.”
Pic courtesy: Saudi Aramco
Saudi Arabia comes to Shanghai
of Saudi Aramco and AOC, and strengthen the
“An Evening of Saudi Arabia” was Aramco
AOC Public Relations and the AOC Shanghai
university, Tongji University.
Overseas Co’s (AOC’s) first outreach event
Representative Office recently hosted the
to highlight the company’s corporate social
event to introduce the history and culture of
It was also expected to help build a good
responsibilities (CSR) in the Far East region.
the Kingdom, reinforce the corporate image
foundation for future outreach in China.
Abu Dhabi to continue promoting, developing and deploying renewable energy With the confirmation as the permanent home
come into its official existence as an organisation,
to the International Renewable Energy Agency
endorsing the mandate of the global community for
(IRENA), Abu Dhabi vows to continue its bold
sustainable and clean technology. The UAE and its
initiatives to accelerate the development of
people are proud, and honoured for Abu Dhabi to
renewable energy and further innovations in clean
be the permanent home of IRENA. Guided by our
technologies. Speaking at the Abu Dhabi National
leadership’s vision, the UAE has taken bold steps
Exhibition Centre (ADNEC) after the conclusion
to develop and deploy renewable energy, and we
of the two-day inaugural First General Assembly,
are looking forward to further collaboration with
Dr. Sultan Ahmed Al Jaber, UAE Special Envoy
IRENA nations to accelerate the global adoption.
for Energy and Climate Change and President
We are committed to integrating new sources of
of the first General Assembly of (IRENA), said,
power and commercialising the technologies that
“The International Renewable Energy Agency has
will enable a clean energy future.”
Petrofac inks $200 million Shell, Petronas, Iraq deal UK-based oil and gas services firm, Petrofac has signed a $200 million agreement with Royal Dutch Shell and its partners, Malaysia’s Petronas and the Iraqi government, to boost production from the super-giant Majnoon oil field. Shell is planning to increase output from Majnoon, which has estimated reserves of 12.6 billion
barrels, to 175,000 barrels a day by the end of next year from current 60,000 barrels a day. Under the deal, Petrofac will provide engineering, procurement and construction management services to build a new early-production system comprising two trains each with a total capacity of 50,000 barrels a day of oil.
company’s relationship with its local partner
Technip awarded offshore contract in the United Arab Emirates Technip has been awarded an engineering services contract by ZADCO for the UZ 750 project, one of the major offshore field development projects in the United Arab Emirates. The project aims at increasing by 2015 the oil production of the Upper Zakum field (located in the Gulf, 84 kilometers offshore Abu Dhabi) to 750,000 barrels of oil per day and to sustain this production target for at least 25 years. This contract follows the conceptual engineering, which has been successfully completed by Technip. Front-end engineering design is scheduled to be completed by the second semester of 2011. It will be executed by Technip’s operating center in Abu Dhabi, as a new milestone in its continued support to Middle East clients in the early phases of their developments.
May-June, 2011
59
REGIONAL ROUND-UP
Petrofac Saudi Arabia achieves independent certification to ISO 9001
Petrofac’s Saudi Arabian business, Petrofac Saudi Arabia, has achieved independent certification to international quality standard ISO 9001. The standard is for project management, engineering, design, procurement, construction management, commissioning and training and associated activities for oil & gas production and processing facilities, petrochemical plants, refineries and related utilities. This system is underpinned by a comprehensive set of technical and business documentation, which has been created in line with best practices. Now fully implemented, the team has also demonstrated their approach to maintaining and continually improving the system. Imad Shanan, Senior Vice President and General Manager for the Saudi operations commented, “Of our many achievements to date, I am delighted to announce this milestone which demonstrates our commitment to both quality and integrity and to building an enduring business in the Kingdom. My sincere congratulations go to the team on achieving this goal.”
60
May-June, 2011
Jacobs receives engineering services contract from Saudi Aramco Jacobs Engineering Group has been awarded a major contract by Saudi Aramco for general engineering and project management services (GES+). Officials did not disclose the contract value; however, they noted that the work is expected to be executed by its office in Al Khobar, Saudi Arabia. The duration of the GES+ contract is five years and covers all engineering, procurement and construction management services for Saudi Aramco’s Capital Programme. Saudi Aramco is offering the GES+ contract to only a select number of companies for the execution of its general engineering and project management services needs. Under the contract award,
Jacobs is providing a variety of design and related services, as well as the full range of project management services. In making the announcement, Jacobs Group Vice President Mike Coyle stated, “Jacobs is delighted to have the opportunity to build upon our longstanding relationship with Saudi Aramco as one of its preferred providers on such a significant program. When fully developed, the GES+ programme not only increases our opportunities, but also enhances the stature of Saudi Arabian engineering and construction throughout the world.” Jacobs is one of the world’s largest and most diverse providers of technical, professional, and construction services.
ABB wins $40 million order to power Saudi Arabia’s Najran University ABB, the leading power and automation
products to be supplied include the gas-
technology group, has won a second order
insulated switchgear (GIS), transformers,
from Saudi Arabia’s Najran University,
medium-voltage switchgear and cables.
worth $40 million, to build a substation to ensure reliable power supplies for the
“This substation will provide the power
university’s new complex. The order
required for Najran University’s long-term
was booked in the first quarter. ABB will
development,” said Peter Leupp, Head of
be responsible for the design, supply,
ABB’s Power Systems division. ABB’s
installation and commissioning of a 380 kv
compact substation technology will be
(kilovolt) substation capable of distributing
deployed to ensure that the facility has the
power at 132 kv and 13.8 kv. Key
smallest possible footprint.
Sahara declares the completion of Al Waha plant test Sahara Petrochemicals Company has said that Al Waha Petrochemicals Company, an affiliate of Sahara, has successfully completed its performance test, after the successful completion of the performance test of the PDH unit which is regarded the last unit to undergo this test, and accordingly the commercial operations of Al Waha Petrochemicals Company will be starting on April 1, 2011. Al Waha Petrochemicals Company, a limited liability company, is owned by Sahara Petrochemicals Company which holds 75 per
cent of its share capital whereas LyondelBasell, as an international partner, owns 25 per cent. It was established in Jubail Industrial city to construct and operate a world scale petrochemical complex with a capacity of 467,000 TPA of propylene utilising Oleflex technology and this quantity serves as a feedstock for the Polypropylene Unit whose design capacity reaches 450,000 TPA of polypropylene. It is considered as the largest plant producing high quality polypropylene utilising LBIs technology, sphereizone.
JOB POSTINGS
Positions
Company
Location
Details
Exploration Geologist
Oman Oil Company Exploration and Production
Oman
www.oocep.com
Head of Well Services
Oman Oil Company Exploration and Production
Oman
www.oocep.com
Lead Pipeline Engineer
Oman Oil Company Exploration and Production
Oman
www.oocep.com
Seismic Data Management Analyst
Shell
United States
www.shell.com
Inventory Management Lead
Shell
United States
www.shell.com
Legal Counsel
RasGas
NA
www.rasgas.com
Sub Sea Intervention Engineer
Chevron
Australia
www.chevron.com
Senior Drilling Engineer
Chevron
Australia
www.chevron.com
Senior Cost Estimator
Bahrain Petroleum
Bahrain
www.bapco.com.bh
LAST UPDATED: APRIL 20, 2011
Attract the best talent from around the globe. To advertise in job opportunities call: +968-99253729 May-June, 2011
61
GLOBAL OIL PRODUCTION
Oil: Production* Thousand barrels daily
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
US
7733
7669
7626
7400
7228
6895
6841
6847
6734
7196
Canada
2721
2677
2858
3004
3085
3041
3208
3320
3268
3212
Mexico
3450
3560
3585
3789
3824
3760
3683
3471
3167
2979
13904
13906
14069
14193
14137
13696
13732
13638
13169
13388
819
830
818
806
754
725
716
699
682
676
1268
1337
1499
1555
1542
1716
1809
1833
1899
2029
Colombia
711
627
601
564
551
554
559
561
616
685
Ecuador
409
416
401
427
535
541
545
520
514
495
Total North America Argentina Brazil
Peru
100
98
98
92
94
111
116
114
120
145
Trinidad & Tobago
138
135
155
164
152
171
174
154
149
151
3239
3142
2895
2554
2907
2937
2808
2613
2558
2437
130
137
152
153
144
143
141
143
140
141
6813
6722
6619
6314
6680
6899
6866
6636
6678
6760
Azerbaijan
282
301
311
313
315
452
654
869
915
1033
Denmark
363
348
371
368
390
377
342
311
287
265
Venezuela Other S. & Cent. America Total S. & Cent. America
Italy
95
86
115
116
113
127
120
122
108
95
744
836
1018
1111
1297
1356
1426
1484
1554
1682
Norway
3346
3418
3333
3264
3189
2969
2779
2550
2451
2342
Romania
131
130
127
123
119
114
105
99
98
93
6536
7056
7698
8544
9287
9552
9769
9978
9888
10032
144
162
182
202
193
192
186
198
205
206
2667
2476
2463
2257
2028
1809
1636
1638
1526
1448
177
171
171
166
152
126
125
114
114
107
Kazakhstan
Russian Federation Turkmenistan United Kingdom Uzbekistan Other Europe & Eurasia
465
465
501
509
496
468
455
448
425
400
14950
15450
16289
16973
17579
17541
17595
17810
17572
17702
Iran
3855
3892
3709
4183
4248
4234
4286
4322
4327
4216
Iraq
2614
2523
2116
1344
2030
1833
1999
2143
2423
2482
Kuwait
2206
2148
1995
2329
2475
2618
2690
2636
2782
2481
Oman
959
960
904
824
786
778
742
715
754
810
Qatar
757
754
764
879
992
1028
1110
1197
1378
1345
9491
9209
8928
10164
10638
11114
10853
10449
10846
9713
548
581
548
527
495
450
435
415
398
376
2547
2455
2260
2553
2664
2753
2971
2900
2936
2599
450
455
457
448
420
416
380
345
304
298
48
47
48
48
48
34
32
35
33
37
23475
23025
21729
23299
24797
25258
25497
25156
26182
24357
Algeria
1578
1562
1680
1852
1946
2015
2003
2016
1993
1811
Angola
746
742
905
870
1103
1405
1421
1684
1875
1784
88
81
72
67
89
82
87
82
84
73
Total Europe & Eurasia
Saudi Arabia Syria United Arab Emirates Yemen Other Middle East Total Middle East
Cameroon 64
May-June, 2011
Thousand barrels daily Chad
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
-
-
-
24
168
173
153
144
127
118
Rep. of Congo (Brazzaville)
254
234
231
215
216
246
262
222
249
274
Egypt
781
758
751
749
721
696
697
710
722
742
91
177
200
244
346
376
364
376
350
307
Gabon
327
301
295
240
235
234
235
230
235
229
Libya
1475
1427
1375
1485
1623
1745
1815
1820
1820
1652
Nigeria
2155
2274
2103
2238
2431
2499
2420
2305
2116
2061
Sudan
174
217
241
265
301
305
331
468
480
490
Tunisia
78
71
74
68
71
73
70
97
89
86
Other Africa
56
53
63
71
75
72
66
84
79
79
7804
7897
7990
8386
9324
9921
9925
10238
10219
9705
Australia
809
733
730
624
582
580
554
567
556
559
Brunei
193
203
210
214
210
206
221
194
175
168
China
3252
3306
3346
3401
3481
3627
3684
3743
3901
3790
India
726
727
753
756
773
738
762
769
768
754
Indonesia
1456
1389
1289
1183
1129
1087
1017
969
1031
1021
Malaysia
735
719
757
776
793
759
747
763
768
740
Thailand
176
191
204
236
223
265
286
305
321
330
Vietnam
328
350
354
364
427
398
367
337
317
345
Other Asia Pacific
200
195
193
195
235
286
305
320
340
328
7874
7813
7836
7750
7853
7946
7942
7968
8175
8036
74820
74813
74533
76916
80371
81261
81557
81446
81995
79948
of which: European Union #
3493
3285
3339
3128
2902
2659
2422
2388
2222
2082
OECD
21521
21303
21430
21165
20766
19861
19458
19140
18414
18390
OPEC
31072
30544
29132
30877
33592
34721
34920
34604
35568
33076
Non-OPEC £
35734
35608
35869
35540
35371
34700
34321
34046
33602
33671
8014
8660
9533
10499
11407
11839
12316
12795
12825
13202
Equatorial Guinea
Total Africa
Total Asia Pacific Total World
Former Soviet Union
Courtesy: BP Statistical Review of World Energy 2010
Oil: Production*
* Includes crude oil, shale oil, oil sands and NGLs (the liquid content of natural gas where this is recovered separately). Excludes liquid fuels from other sources such as biomass and coal derivatives. ^ Less than 0.05. Less than 0.05%. # Excludes Estonia, Latvia and Lithuania prior to 1985 and Slovenia prior to 1991. £ Excludes Former Soviet Union. Notes: Annual changes and shares of total are calculated using million tonnes per annum figures. Growth rates are adjusted for leap years.
May-June, 2011
65
EVENTS CALENDAR
REGIONAL
Deepwater Application of Managed
FLNG 2011
Pressure Drilling
June 14-June 16
Ship Tek 2011
May 9-May 13
London
May 8-May 9
Crown Plaza
United Kingdom
Dubai
Houston United States
UBD Operations and Well Control
Deepwater Application of Managed Pressured Drilling
June 20-June 23
Flame 2011
June 20-June 24
Dubai
May 9-May 13
Perth
UAE
Amsterdam
Australia
Netherlands Intelligent Energy International
Upstream and Downstream Oil and Gas
Conference and Exhibition
Heavy Oil Technology
Expo & Conference 2011
Oct 3-Oct 5
May 14
June 21-June 23
Bahrain
Stavanger
Nigeria
Norway Offshore Middle East 2011
8th Annual Bunker & Residual Fuel Oil
Oct 24-Oct 26
Introduction to Well-Control Equipment
June 22-June 23
Dubai
and Subsea Systems
Houston
UAE
May 25-26
United States
Houston, Texas
GLOBAL
United States
Optimising Oil and Gas Statistics June 28-June 30
Small Scale LNG 2011
London,
MPD Well Design & Operations
May 26-May 27
United Kingdom
May 2-May 6
Oslo, Norway
Calgary, Canada
China International LNG Conference Floating Production 2011
June 28-July 1
Sustainable Energy in the Caribbean
May 30-June 1
Beijing
May 3-May 4
Nesbru, Norway
China
Kingston, Jamaica 4th Annual Energy Capital Conference
Enhanced Oil Recovery Conference
FPSO Houston Training Course
June 1-June 2
July 19-July 20
May 4-May 6
Houston, Texas
Kuala Lampur
Houston
United States
Malaysia
United States
6666
May-June, M Ma May aayy-Ju -J ne, e 20111
Managed Pressure Drilling School
Shanghai 6th International Petroleum
LAGCOE
August 8-August 12
Petrochemical Natural Gas Technology
Oct 25-27
Houston, US
Equipment Exhibition
LA, US
Sept 21-Sept 23 Maintenance Planning and Scheduling
Shanghai, China
Africa Petroleum Storage and Transport Oct 12-Oct 13
Training August 8-August 12
Russia & CIS Refining Technology
Charleston, US
Conference and Exhibition
Australian Petroleum Show
Chad
Sept 22-Sept 23
Deep Offshore Technology 2011
Moscow, Russia
Nov 8-Nov 10 Perth , Australia
August 17-August 19 Maintenance Planning and Scheduling
Australia
Training
Underground Gas Storage Course
Asia Pacific Oil & Gas Conference and
Sept 26-Sept 30
Nov 21-Nov 25, Netherlands
Exhibition
Charleston, United States Clean gulf Conference and Exhibition
Sept 20-Sept 22 Jakarta,
Oil Spill India 2011
Nov-Dec 1
Indonesia
Sept 29-Oct 1,Goa, India
San Antonio, US
Attract the best contractors from around the globe. To advertise in tender watch call: +968-99253729
180 mm
May-Ju May -June, ne, 2011 2011 May-June,
85 mm
85 mm
180 mm
67
TENDER WATCH
Tender Watch Work
Company
More Information
Yibal-Fahud-Nihada 132kV OHL
Petroleum Development Oman
www.pdo.co.om
Remote Terminal Units
Petroleum Development Oman
www.pdo.co.om
Drilling Chemicals (Specialty)
Petroleum Development Oman
www.pdo.co.om
Provision of Well Intervention services
Petroleum Development Oman
www.pdo.co.om
Charter of Supplementary Supply Vessel
Qatar Petroleum
www.qp.com.qa
Annual Casing and Tubing requirement
Qatar Petroleum
www.qp.com.qa
UPDATED ON APRIL 20, 2011
www.mbholdingco.com
MB Holding is a multinational company with operations in more than 20 countries across the globe. The group stands as one of the fastest growing and largest services companies in its field within the Middle East. MB Holding LLC reliably meets its commitments and sets benchmarks in the process, with emphasis on maintaining the highest standards of business ethics and integrity.