New base 478 special 13 november 2014

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NewBase 13 November 2014 - Issue No. 478 Khaled Al Awadi

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

ADCO, ESNAAD announce cooperation on well stimulation services WAM + NewBase

A Memorandum of Cooperation (MoC) between ADCO and ESNAAD for the provision of new coiled tubing & stimulation package and related services on ADCO's Wells was signed today at ADIPEC.

The agreement was signed today by Abdul Munim Saif Al Kindi, CEO of ADCO and Dagher Darwish Al Marar, CEO of ESNAAD at ADNOC stand at the Abu Dhabi International Exhibition and Conference (ADIPEC 2014), which is taking place at the Abu Dhabi National Exhibitions Centre (ADNEC).

The MoC was signed in the presence of Mohammed Shleiweh Al-Qubaisi, Human Resources Director of ADNOC and Chairman of ESNAAD Board, and Darwish Abdulla Al Qubaisi, Director of Shared and Technical Services Directorate at ADNOC.

The Abu Dhabi Company for Onshore Oil Operations (ADCO) explores, develops and produces hydrocarbons from eleven oil fields, mainly in the Western Region of the Emirate. ADCO undertakes active programs to develop and implement technologies and strategies to maximize recovery, optimize cost and ensure the integrity of the facilities whilst contributing to UAE s sustainable future. ADCO continues to achieve the highest standards of HSE Performance in the industry.

ESNAAD, meaning "support" in Arabic, is a wholly owned subsidiary of ADNOC and shares common values with ADCO in its commitment to HSE, contribution to society and Emiratization. ESNAAD contributes to Abu Dhabi s future growth by ensuring a sustainable support to the Oil & Gas Industry (onshore & offshore) through its Supply Base.

ESNAAD own and operate a Strategic Supply Support Base in Mussafah, with an area of over 1.4 million square meters, providing marine services and port services with a jetty of 840m in length and with 14 berths. Jetty facilities are currently under expansion to support increased demand of ADNOC group operating companies. ESNAAD s Oil Field Services provides well related services, including mud chemicals, brine and specialty production chemicals. ESNAAD was among the few




companies in the GCC to obtain an "ISO-22301:2012" Certification in "Business Continuity" in 2013.

Among other local and international companies, ESNAAD has been providing well stimulation services to ADCO since 2007. Well stimulation is a well intervention performed on an oil or gas well to increase production by improving the flow of hydrocarbons from the reservoir into well bore.

The signing of this MoC paves the way for continued cooperation between ADCO and ESNAAD in Stimulation Services to support ADCO s oilfields expansion.

"The signing of this MoC remarks the ongoing cooperation between ADCO and ESNAAD in providing a 2nd package of "New Coiled Tubing & Stimulation Services" for ADCO's Oil wells," said Dagher Al Marar, CEO of ESNAAD.

ADIPEC 2014 – Emarat stand (L 2 R Mike Salem, Khaled AlAwadi & Mohannad Amin)




Lamprell wins $365m rigs contract from NDC The National + NewBase

Lamprell has won a US$365 million contract to construct and deliver two jack-up rigs. The award from the National Drilling Company follows earlier orders for six identical rigs.

They will be built in the Hamriya facility of the UAE company. The company pledged to complete them on time and on budget.

The latest contract will result in the rigs being delivered around the fourth quarter of 2016 and second quarter of 2017. “With the latest contract win, Lamprell has been awarded a total of six firm jack-up rigs in 2014,” Lamprell’s chief executive James Moffat said.

Lamprell said that NDC also had the right to exercise options for Lamprell to build an additional three jack-up rigs.The number of well completions in the Arabian Gulf is expected to rise to 541 by 2020 from 370 in 2013, according to a report by Douglas-Westwood.

The GCC is becoming an offshore hub, with Dubai controlling 80 per cent of ship repair and 60 per cent of rig repairs. With more offshore drilling in the works, the demand for jack-up rigs in the region is growing.

London-listed Lamprell employs about 10,000 people across multiple facilities, with its primary yards located in Hamriyah, Sharjah and Jebel Ali.




Saudi Arabia to double natural gas production Reuters + NewBasw Saudi Arabia, the world's top oil exporter, will double its natural gas output by 2030 but plans to keep all of it at home to fuel domestic growth, the country's oil minister said on Wednesday. "Within the next decade, Saudi Arabia will more than double its gas production," the country's oil minister Ali Al-Naimi told a gathering of energy ministers and company executives at a natural gas conference in the Pacific resort city of Acapulco.

Naimi said the kingdom will put the bonanza to use to meet its own rising energy demands, including both power generation and water desalination, as well as developing its growing mineral industry. "Saudi Arabia currently has no plans to export its gas or get into the (liquefied natural gas) business," he said. In his first public remarks since global crude oil prices dived to four-year lows near $80 a barrel, Al-Naimi reaffirmed the kingdom's longstanding policy of seeking stable global markets, dismissing talk of a "price war" but offering no insight on his response to tumbling crude prices. Saudi Arabia has the world's fifth-largest natural gas reserves at 291 trillion cu ft (tcf), according to the US Energy Information Administration. Al-Naimi said a "conservative" estimate of the kingdom's gas reserves is 300 tcf. While he said crude oil will power the global economy for "many decades to come," he said the rising importance of natural gas is a welcome development. "There was a time when the night skies of the eastern province of Saudi Arabia were lit up by the flaring of this gas," he said. "No more."




US:LNG exports will be met by increased gas production,says EIA

Increased natural gas production is projected to satisfy 60% to 80% of a potential increase in demand for added LNG exports from the Lower 48 states, according to an EIA analysis.

The report, Effect of Increased Levels of

Liquefied Natural Gas Exports on U.S.

Energy Market, considered the long-term

effects of several LNG export scenarios

specified by the Department of Energy’s

Office of Fossil Energy (FE). The study

also considered implications for natural

gas prices, consumption, primary energy

use, and energy-related emissions.

Effects on overall economic growth were

positive but modest.

In the export scenarios that EIA was asked to analyze, LNG exports from the Lower 48 states start in 2015 and increase at a rate of 2 billion cubic feet per day per year, ultimately reaching 12, 16 or 20 Bcf/d. EIA also included a 20-Bcf/d export scenario (Alt 20-Bcf/d) with a delayed ramp-up to identify the effect of higher LNG exports implemented at a more credible pace.

EIA looked at these scenarios in the context of five cases from its Annual Energy Outlook 2014 that reflect different supply and demand assumptions. The cases used in the study were: EIA’s Reference, Low Oil and Gas Resource (LOGR), High Oil and Gas Resources (HOGR), High Economic Growth (HEG), and Accelerated Coal and Nuclear Retirements (ACNR).

The five AEO2014 cases used as baselines in the study already include some amount of LNG exports from the Lower 48 states. The LNG exports in the AEO2014 baseline cases, rather than the scenarios specified for this study, reflect

EIA’s own views on future LNG exports.

LNG exports from the Lower 48 states in the baselines have projected 2040 levels ranging from 3.3 Bcf/d (LOGR case) to 14.0 Bcf/d (HOGR case). Estimated price and market responses to each pairing of a specified export scenario and a baseline will reflect the additional amount of LNG exports needed to reach the targeted export level starting from that baseline.




Malaysia: ConocoPhillips announces production start at the Kebabangan gas development offshore . Source: ConocoPhillips

ConocoPhillips has announced the start of gas production from theKebabangan (KBB) gas field, located approx. 60 miles offshore Malaysia. Production will ramp-up as pipeline capacity becomes available.

'This is the third major project start-up planned in Malaysia this year, with Siakap North-Petai brought on stream in the first quarter and the Gumusut-Kakap floating production facility

starting up in October,' said Matt Fox, executive vice president, Exploration and Production. 'These projects will contribute to the company's organic growth over the coming years.'

Project startups in Malaysia are expected to add approx. 60,000 barrels of oil equivalent per day (BOED) to the company's production volumes by 2017. The addition of these high-margin barrels are an important part of the company's overall plan to deliver annual 3 to 5 percent production and margin growth.

The Kebabangan integrated drilling and production platform is located in a water depth of approx. 450 feet. Production from the field will initially utilize six wells with gas exported via pipeline to the Sabah Oil and Gas Terminal in Kimanis.

The field is operated by Kebabangan Production Oil Company, a joint operated company with ConocoPhillips Sabah and Shell Energy Asia each holding a 30 percent interest and PETRONAS Carigali holding a 40 percent interest.




US: Increased natural gas production would meet most demand from added LNG exports. Source: U.S. Energy Information Administration, .

Increased natural gas production is projected to satisfy 60% to 80% of a potential increase in demand for added liquefied natural gas (LNG) exports from the Lower 48 states, according to recently released EIA analysis. The report, Effect of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy Market, considered the long-term effects of several LNG export scenarios specified by the Department of Energy's Office of Fossil Energy (FE). The study also considered implications for natural gas prices, consumption, primary energy use, and energy-related emissions. Effects on overall economic growth were positive but modest. A discussion of caveats and limitations of the analysis is also included.

In the export scenarios that EIA was asked to analyze, LNG exports from the Lower 48 states start in 2015 and increase at a rate of 2 billion cubic feet (Bcf) per day per year, ultimately reaching 12, 16 or 20 Bcf/d. EIA also included a 20-Bcf/d export scenario (Alt 20-Bcf/d) with a delayed ramp-up to identify the effect of higher LNG exports implemented at a more credible pace.

EIA looked at these scenarios in the context of five cases from its Annual Energy Outlook 2014 (AEO2014) that reflect different supply and demand assumptions. The cases used in the study were: EIA's Reference, Low Oil and Gas Resource (LOGR), High Oil and Gas Resources (HOGR), High Economic Growth (HEG), and Accelerated Coal and Nuclear Retirements (ACNR). The five AEO2014 cases used as baselines in the study already include some amount of LNG exports from the Lower 48 states. The LNG exports in the AEO2014 baseline cases, rather than the scenarios specified for this study, reflect EIA's own views on future LNG exports.

LNG exports from the Lower 48 states in the baselines have projected 2040 levels ranging from 3.3 Bcf/d (LOGR case) to 14.0 Bcf/d (HOGR case). Estimated price and market responses to each pairing of a specified export scenario and a baseline will reflect the additional amount of LNG exports needed to reach the targeted export level starting from that baseline.




With the exception of one baseline/scenario pairing, higher natural gas production satisfies 60% to 80% of the increase in natural gas demand from LNG exports during 2015-40. With the exception of the HOGR case, more than 70% of the increased production comes from shale resources.

Natural gas used in the electric power sector accounts for 52% to 69% of the decline in consumption that occurs when implementing the export scenarios, contributing 9% to 17% to volumes needed to support increased LNG export demand (excluding the HOGR 12-Bcf/day scenario). The electric generation mix shifts towards other generation sources, including coal and renewables, with some decrease in total generation as electricity prices rise.




Oil Price Drop Special Coverage

IEA outlines challenges ahead for world oil Anthony McAuley

The shale US oil boom should not distract attention from future supply threats including Middle East political turmoil, the International Energy Agency has warned. The oil price slide may be the short-term worry dominating discussions in producing countries, but the rich countries’ energy watchdog is more concerned about the long-term effect that might have on investment.

“A well-supplied oil market in the short term should not disguise the challenges that lie ahead,” Fatih Birol, chief economist of the Paris-based IEA, said on Wednesday. Introducing the IEA’s annual World Energy Outlook forecasts, he said: “The world is set to rely more heavily on a relatively small number of producing countries, [so] the apparent breathing space provided by rising output in the Americas over the next decade provides little reassurance, given the long lead times of new upstream projects.”

The IEA’s latest forecast is for world oil supply to rise to 104 million barrels per day in 2040 from last year’s average of 90 million bpd, but achieving that level “hinges critically on investments in the Middle East”, the IEA report said.

The shale oil boom in the US has risen sharply and is forecast to continue rising for a decade, which is the main contributing supply side factor to the recent sell-off in oil prices. But the IEA report expects this scenario to change. “As tight oil output in the United States levels off, and non-Opec supply falls back in the 2020s, the Middle East becomes the major source of supply growth,” the report forecasts.

Demand patterns change dramatically, too, over this time period, with China overtaking the US to become the largest oil consumer by about 2030. But then as its demand growth slows, India, sub-




Saharan Africa, the Middle East and South East Asia take over as the main drivers of oil demand growth.

Other major trends forecast by the IEA include demand for natural gas rising by more than 50 per cent in 2040, compared with current levels. But again, investment is uncertain. A key question for gas supply outside North America is “whether it can be made available at prices that are low enough to be attractive for consumers and yet high enough to incentivise large investments in supply”.

Renewable sources of energy also are forecast to continue to grow. “It is incredible that we can now see a point where they become the world’s No 1 source of electricity generation,” said Maria van der Hoeven, executive director of the IEA.

The IEA’s annual world outlook is among the more influential forecasts for the industry, but it is often overtaken by events, as Helle Kristoffersen, head of strategy and business intelligence at the French oil company Total pointed out at the Adipec oil gathering in Abu Dhabi yesterday. She showed a graph of the IEA’s predictions for oil supply and demand over the past decade and how, like other major forecasters, it had been consistently lowered, mainly thanks to much greater gains in efficient use of energy, particularly in the most developed countries.

Indeed, as Yasushi Yoshikai, head of worldwide LNG for Mitsui & Company, pointed out at an Adipec debate about energy security, Japan had reduced its overall energy consumption by 16 per cent following the Fukushima nuclear disaster in 2011.

On oil supply, Ms Kristofferson said: “We can all agree that Opec policy on one hand, and sustainability of US shale oil production on the other, are the two key drivers of supply and energy security. But whatever your view on the US shale revolution, what I always say when questioned about it is that you cannot compare short-term, profit-driven US producers to long-term oriented Opec countries. We believe Opec’s share of the world oil market in 2030 will be at least twice as big as North America’s.”

Meawhile, the big question for Middle East energy consumers, where demand is the highest per capita in the world, will be moves that governments take to curb subsidies and force efficiency. But this is a very problematic policy, despite moves by some governments in the region.

“It’s not easy in this part of the world,” said Musabbeh Al Kaabi, the new chief executive of Mubadala Petroleum. “Many governments are planning for it and communicating to public. But the cross-subsidy from oil to gas is relatively small. One country in the region calculates that at $100 a barrel oil, the subsidy is less than 1 per cent, so there is no strong incentive to remove it.”




OPEC sees lower 2015 demand Agencies + NewBase

Global demand for oil from OPEC next year will be far below its current output level because of the US shale boom, the group said on Wednesday, as its top producer, Saudi Arabia, kept silent on whether it will cut output to remove surplus oil from the market. In a monthly report OPEC forecast that 2015 demand for its oil will drop to 29.20 million barrels per day (bpd) - almost 1 million bpd less than it is currently producing. Saudi Oil Minister Ali Al-Naimi reaffirmed the Kingdom’s policy of seeking stable global markets, but offered no insight on his response to tumbling crude prices. Brent for December settlement declined 52 cents, or 0.6 percent, to $81.15 a barrel at 11:49 a.m. New York time on the London-based ICE Futures Europe exchange. The contract closed at $81.67 Tuesday, the lowest since October 2010. WTI for December delivery dropped 34 cents to $77.60 a barrel on the New York Mercantile Exchange. Volume was 4 percent above the 100-day average. The US benchmark crude was at a $3.57 discount to Brent on the ICE. Global demand for OPEC crude will fall by 245,000 bpd to 29.20 million bpd in 2015, unchanged from last month. That suggests a surplus of close to 1 million bpd in 2015 if OPEC keeps output at October's 30.25 million bpd, as assessed by secondary sources cited by the report. Brent crude for delivery in December lost 20 cents to $81.47 a barrel around midday in London. The contract had on Tuesday hit $80.46 – the lowest level since September 2010. US benchmark West Texas Intermediate for December delivery lost 43 cents to $77.51 a barrel. "Oil prices continue to tumble on concerns over modest demand and no signs of clipping supply at OPEC," said Desmond Chua, market analyst at CMC Markets in Singapore. The report said Saudi Arabia had told OPEC it produced 9.69 million bpd in October, little changed from 9.704 million in September. OPEC also kept its main oil demand and supply forecasts unchanged. The group expects growth in world demand to accelerate to 1.19 million bpd in 2015 from 1.05 million bpd in 2014 and is fairly upbeat about the outlook. "With economic indicators pointing to a continued recovery in the global economy, any additional improvement in the economies of major oil consuming countries should help the demand trend to pick up further," OPEC said. However, despite rising world demand, OPEC expects demand for its oil to fall in 2015 as higher supply outside the group, particularly in the United States due to its shale energy boom, squeezes its market share.

Naimi wants stable crude oil markets Reuters

Saudi Arabia Oil Minister Ali al-Naimi broke months of silence to reaffirm the kingdom’s longstanding policy of seeking stable global markets yesterday, dismissing talk of a “price war” but offering no insight on his response to tumbling crude prices.




In his first public comments since global oil prices dived to four-year lows near $80 a barrel, al-Naimi said the world’s biggest producer wanted to work “with other producers to ensure price stability for the interest of producers, consumers and the industry at large”.

“Talk of a price war is a sign of misunderstanding, deliberate or otherwise, and has no basis in reality,” al-Naimi told an event in the Mexican Pacific resort of Acapulco.

He made no mention of position ahead of a pivotal meeting of the Organisation of the Petroleum Exporting Countries (Opec) on

November 27, where producers will consider whether to cut output to shore up prices that have slumped over 30% since June.

Instead, he reiterated several of the kingdom’s familiar talking points: that stable markets are good for producers and consumers; that the market, not Saudi Arabia, ultimately sets prices; and that its monthly export price formula is set according to a range of marketing factors, nothing more.

Oil markets have tumbled on growing speculation that Saudi Arabia is more concerned with maintaining market share than supporting prices, with some traders pointing to reductions in the kingdom’s monthly oil price formula as evidence.

Al-Naimi also dismissed this notion, saying: “Saudi Aramco prices oil according to sound marketing procedures, no more and no less. These take into account a host of scientific and practical factors, including the state of the market.”

Brent plunges to $80 as Saudi stays mum on output cut Reuters + NewBase

Brent crude traded around $80 a barrel on Thursday, near its lowest since 2010, after Opec said demand for its oil would fall next year, while Saudi Arabia remained silent about a possible cut in production. Global demand for oil from Opec will drop to 29.20 million barrels per day (bpd) next year, almost

1 million bpd less than it currently produces, the cartel said in its monthly report. Brent broke below $80 a barrel for the first time since 2010 on Wednesday before settling at $80.38, down $1.29 on the day. Brent crude for December delivery, which expires on Thursday, had shed




another 38 cents to $80.00 a barrel as of 0314 GMT. "There are not many bullish factors to lift the market now," said Avtar Sandu, senior manager for commodities at Phillip Futures in Singapore. "But it's not a one-way street down. Those who have been selling want to take profits around this area," he said. US crude for December delivery was down 16 cents at $77.02 a barrel. The spread between the two benchmarks has narrowed more than $3 in the past week. The recent sharp decline in oil prices may cut investment in US shale oil by 10 percent next year, the International Energy Agency (IEA) said. Brent's premium to US crude narrowed to $2.98 on Thursday from as much as $6.42 last week. ALL EYES ON SAUDI Saudi Arabian Oil Minister Ali al-Naimi broke months of silence on Wednesday to reaffirm the kingdom's long-standing policy of seeking stable global markets, dismissing talk of a price war". However, al-Naimi offered no insight on the kingdom's response to tumbling oil prices, leaving investors guessing about the outcome of Opec's next meeting on Nov. 27. US crude stocks fell by 1.5 million barrels last week to 373 million, compared with analysts' expectations of an increase of 800,000 barrels, data from industry group the American Petroleum Institute showed. The US government's Energy Information Administration will publish its weekly data at 1600 GMT. Libya abandoned an attempt to restart production at the El Sharara oil field on Wednesday after a pipeline blockage, state-run National Oil Corp said.




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

Your partner in Energy Services

Khaled Malallah Al Awadi, Energy Consultant

MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995

Emarat member since 1990

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

Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a Khaled Al Awadi is a UAE National with a

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

NewBase 13 November 2014 K. Al Awadi

New base 478 special 13 november 2014

Economy & Finance

ceo of esnaad

ceo of adco

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