NewBase 604 special 14 May 2015

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NewBase 14 May 2015 - Issue No. 604 Khaled Al Awadi

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

UAE: GS Energy buys 3% stake in ADCO oil concession for $676m Reuters + NewBase

South Korea's GS Energy said it had agreed to buy a stake worth 743 billion Korean won ($676 million) in a new 40-year onshore oil concession in Abu Dhabi, the latest move by import-dependent Asian countries to secure upstream assets.

GS Energy would join Japan's Inpex Corp and France's Total in developing the UAE's (UAE) biggest oilfields after a deal with Western oil majors that dates back to the 1970s expired in January.

The 3 per cent stake in the Abu Dhabi Company for Onshore Oil Operations (Adco) concession would provide South Korea with its biggest oil asset of 800 million barrels, GS Energy said in a statement.

GS Energy, owned by GS Holdings Corp, has a 50 per cent stake in South Korea's second-largest crude oil refiner, GS Caltex Corp, with US oil major Chevron Corp holding the other half. The Adco purchase would "greatly contribute to stable energy supplies" in South Korea, GS Caltex said in a statement.




Abu Dhabi, with 6 percent of global crude reserves, selected GS Energy Corp. of South Korea to join Japan’s Inpex Corp. as the second Asian partner in the Arabian Gulf emirate’s biggest onshore oil concession.

Abu Dhabi is seeking new partners to replace some of the Western companies that pumped oil in the emirate for 75 years until their last production agreement expired in 2014. Adnoc picked Total SA of France for a 10 percent stake in the concession in January. By also selecting Inpex and now GS Energy, Abu Dhabi is for the first time opening its biggest onshore producing fields to investment from companies in Asia, the biggest market for the emirate’s crude.

“Asian oil companies have been trying to increase security of supply by buying into production overseas,” Victor Shum, vice president at IHS Inc.’s Asian energy consulting business, said by phone from Singapore. “Middle East producers want to increase demand security, so this meets the needs of both.”

Historical Partners

Abu Dhabi, the largest emirate in the United Arab Emirates, has pumped crude oil from its onshore fields under agreements with Total, BP Plc, Exxon Mobil Corp., Royal Dutch Shell Plc and Portugal’s Partex Oil & Gas -- or their predecessors -- since January 1939. Adnoc joined the group in the 1970s, forming the partnership that extracted Murban crude, the U.A.E.’s main blend, until the concession agreement expired in January 2014.

Total is so far the only legacy partner to have retained a share in the onshore areas. Exxon Chief Executive Rex Tillerson said in March that his company decided against bidding because the fields are “low margin.” Shell submitted a revised bid for a 10 percent stake, two people with knowledge of the matter said in February. BP has declined to comment on the bidding process.

Some bids from international oil companies didn’t meet Adnoc’s conditions, the state producer said in an April 20 statement citing comments by Director General Abdulla Nasser Al Suwaidi. He didn’t identify any of the companies.

$670 Million

GS Energy agreed to pay Adnoc a signing bonus of $670 million, according to a regulatory filing in Seoul. State-run Korea National Oil has the right to buy as much as 30 percent of GS Energy’s stake over the next five years, Joo Hyoung In, a KNOC spokesman based in Ulsan, South Korea, said Wednesday by phone. The Korean companies will gain access to about 50,000 barrels of crude a day, GS Energy said. Their contract will be dated from January 2014, according to Adnoc.

“Bringing in Asian companies, who often have a somewhat lower cost base, puts pressure on the big Western majors and mid-size firms to provide maximum value and technology at the lowest possible cost,” said Samuel Ciszuk, a supply researcher at the Swedish Energy Agency.

Abu Dhabi is raising production capacity amid a crude glut that contributed to a price collapse of almost 50 percent last year. The Organization of Petroleum Exporting Countries, of which the U.A.E. is the third-largest producer, plans to meet June 5 to assess the market after leaving its output ceiling unchanged in November. Adnoc is spending about $22 billion to increase capacity for onshore oil and gas production and exports, Omar Suwaina Al Suwaidi, the company’s deputy director for strategy, said Nov. 11. Onshore crude-production capacity will reach 1.8 million barrels a day in 2017 compared with 1.6 million currently, Adnoc has said previously. Abu Dhabi plans to boost its total production capacity, onshore and offshore, to 3.5 million barrels a day in 2017 from about 3 million now.




Universal LNG, Sembcorp partner up to turn associated gas into LNG

Universal LNG Holdings Inc. and Sembcorp Marine’s Jurong Shipyard have entered into a partnership to establish West Africa LNG Development. According to a statement by Universal LNG Holdings, the partnership will set a new, greener standard for global oil production and supply Africa with needed energy resources.

By addressing the offshore associated gas needs of the African continent, West Africa LNG Development will reduce pollution globally and improve lives regionally, the company said in a statement.

“By aligning ourselves with Sembcorp Marine’s global leading GraviFloat technology platform, we will make a difference globally and improve the quality of life for underserved people of the African continent,” said Jeffrey Liu, CEO/Chairman of Universal LNG Holdings, Inc. “We are very proud of our affiliation with Sembcorp Marine and feel they are the right kind of technology partner to make this dream a reality.”

“Africa is thirsty for energy, and the GraviFloat offshore solution brings modularity, scalability and a much more affordable solution for the region,” said William Gu, General Manager of Sembcorp Marine, a an offshore and marine industry specialist from Singapore. “This partnership represents a significant new opportunity for the continent, as Africa will receive the resources it needs to supply electricity and running water to underdeveloped regions.”

Only 30% of Sub-Saharan Africans have access to electricity, and planned and unplanned blackouts are a daily occurrence in West Africa, despite modest electricity usage among its 300 million inhabitants.

The partnership says that its mission is to help supply energy to these millions of people, through deployment of new technology to capture and recycle associated gas, the natural gas




byproduct of oil drilling that is typically burned or “flared” at thousands of oil fields around the world.

Every year, around 140 billion cubic meters of associated gas is wastefully flared, resulting in more than 300 million tons of CO2 being emitted to the atmosphere — equivalent to emissions from approximately 77 million cars.

According to the global estimates, if this amount of associated gas were used for power generation, it could provide more electricity (750bn kWh) than is being consumed today on the entire African continent.

World leaders have declared associated gas a vexing environmental and economic problem. In April, the United Nations launched the “Zero Routine Flaring by 2030″ initiative. Endorsed by nine countries,10 oil companies and six development institutions, the initiative commits the oil companies to end the practice of routine gas flaring at oil production sites by 2030.

Those that signed the initiative, collectively, represent more than 40 percent of the entities that flare gas globally.

“While the entire world seems to agree that the practice of flaring must stop, a cost-effective, workable solution has not yet been brought to the global stage,” Liu said. “That’s where West Africa LNG Development comes in.”

Instead of flaring, the partnership’s technology will capture the gas and convert it to clean LNG, which will then supply African nations with much-needed energy resources.

“We can take this harmful byproduct and turn it into good use,” Liu said. “We’re basically the recycler, but instead of creating new plastic or paper goods, we’re improving African lives.”




PetroVietnam to gear up in offshore Vietnam Block-B gas project

The Vietnam national oil company (NOC) PetroVietnam Exploration Production Corporation (PetroVietnam) has taken over the working interests owned by theCalifornia-based international oil company (IOC) Chevron in the Block-B and the Block 48/95 gas field offshore Vietnam.

Until now, Chevron was the main owner and operator of the Block-B and Block 48/95 gas projects offshore Vietnam whereas:

- Chevron 42.38% is the operator

- Mitsui Oil Exploration Corporation Ltd (MOECO) 25.62%

- PetroVietnam 23.5%

- PTTEP 8.5%

Located in the Malay-Tho Chu Basin by 80 meters water depth approximately 300 kilometers from shore at the utmost southeastern Vietnam, the Block-B and Block 48/95 were recognized as one of the most importantgas fields in Vietnam with in-place reserves estimated to at least 5 trillion cubic feet (tcf) of gas andcondensate.

In July 2009, Chevron and its partners started to work on the front end engineering and design (FEED) of the project.

Since then the Block-B and Blcok 48/95 gas fields projects was slowly moving until it got totally stocked because of the disagreement on the gas price between the partners and PetroVietnam, the national company to purchase the gas.

While Vietnam has limited developed resources, it desperately needs natural gas to supply the multiple power plants in projects around to country to support its economical growth.




As these electrical power needs constantly increase since 2009, Chevron and its partners could reasonably expect the Vietnam Government to show some flexibility in the gas prices negotiations.

PetroVietnam to run Block-B gas project on fast-track

On one side Chevron was targeting a price between $7 and $10 per million British thermal unit (mbtu) to develop the Block-B and Block 48/95 in commercially viable conditions.

On the other side PetroVietnam payed barely its gas more than $4 per mbtu from its own resources and therefore had little motivation to exceed $6 per mbtu.

In addition these discussions about the gas prices took place in a period where the gas prices went under pressures all over the world because of the shale gas development inNorth America.

In this context, PetroVietnam was unlikely to show flexibility and in 2013 Chevron decided to post for sales its stakes in the Block-B and Block 48/95 projects.

Since then the India state-owned company Oil and Natural Gas Corporation (ONGC) and the Russian Rosneft took their chance to buy Chevron stakes in the Block-B and Block 48/95 but finally PetroVietnam itself decided to apply its preemption right as being already member of the joint venture.

Estimated to require $4.2 billion capital expenditure the PetroVietnam Block-B project should include:

- Series of Wellhead platforms

- Central Processing Platform (CPP) with 640 million cubic feet (cf/d) of gas and 21,000 barrels per day (b/d) of condensate

- Floating Storage and Offloading (FSO) vessel

- Bridge-connected living quarter platform for 200 man

- 400 kilometers export pipeline to shore

After signing this agreement with Chevron, the Vietnam national company, PetroVietnam and its partnersMitsui and PTTEP are planning to move on fast track with this Block-B and Block 48/95 project in order to resume all the gas-fired power projects left on hold in the meantime and start first production by 2020.




Japan's April LNG spot price falls to 2-month low Reuters + NewBase

May 14 Average liquefied natural gas (LNG) spot prices for buyers in Japan fell to a two-month low inApril, trade ministry data showed on Thursday, in another sign of slack global demand.

Spot LNG contracted in April for delivery to Japan averaged $7.60 per million British thermal units (mmBtu), down from $8 a month earlier, less than half the level a year ago, the Ministry of Economy, Trade and Industry (METI) said.

Spot cargoes booked earlier and arriving in April averaged $7.90 per mmBtu, up from $7.60 in March. Asian benchmark spot LNG LNG-AS stood at $7.40 per mmbtu last week, little changed from a month ago, as demand from end users remained subdued.

Tokyo started surveying spot LNG prices in March 2014 to add transparency to the market amid concerns about rising fuel costs in the wake of the shutdown of nuclear plants after the Fukushima crisis. The average spot price is based on around 10 percent of the nation's purchases of the super-chilled fuel.

The trade ministry survey looks at samples of fixed prices for LNG sold to power companies and utilities among others, and excludes spot deals linked to benchmark prices such as the U.S. natural gas Henry Hub index.

For the monthly price report from METI, click (here). The following table lists monthly prices for LNG per million British thermal units for spot cargoes contracted during the month and those that arrived during the month.




UK:Centrica increases gas supply volumes with Statoil and Gazprom

Statoil has made an agreement with Centrica Energy to increase the volume of gas it supplies to Centrica under an existing supply agreement. In 2011, Statoil signed a 10-year agreement with Centrica for the supply of 5 billion cubic metres (bcm) of gas per annum to be delivered to the UK from October 2015.

The new agreement will increase the volume of gas by a further 2.3 bcm per annum, taking the total volume to be delivered over the 10 years period to 73 bcm. According to Statoil, the agreement has been made at market terms and conditions.

“We are very happy to have made this agreement with Centrica. The agreement confirms Statoil’s position as a reliable and competitive supplier of gas to the UK, which is a very important market to Statoil,” says Ann-Elisabeth Serck-Hanssen, acting Senior vice president Marketing and trading in Statoil.

In a separate agreement, Centrica has also extended its gas supply contract with Gazprom Marketing & Trading Limited (GM&T), a UK-registered subsidiary of OAO Gazprom, to increase the volume of gas it is buying under the agreement it signed with GM&T in 2012.

The new agreement, combined with the volumes agreed in 2012, takes the average volume of gas to 4.16 bcm per annum, taking the total volume to be delivered to the UK under the agreement to 29.1 bcm.

According to Centrica, Britain needs around 70 bcm of natural gas each year to heat homes and businesses and to generate electricity and the UK now needs to import more than half of this. The company explained that the long-term supply agreements with Statoil and GM&T will meet the gas needs of 9 million British homes every year and take the total amount that Centrica has committed in securing gas and electricity, through a range of suppliers, to over £50 billion ($78.3 billion).




US: Corn Ethanol yields continue to improve ( 1 MBD ) Source: U.S. Energy Information Administration, Monthly Energy Review

In 2014, U.S. fuel ethanol production reached 14.3 billion gallons ( 1.0 Million Barrel / Day ) of ethanol fuel, the highest level ever. The growth in U.S. fuel ethanol production has outpaced growth in corn consumed as feedstock—as the industry has grown, it has become more efficient, using fewer bushels of corn to produce a gallon of ethanol.

If ethanol plant yields per bushel of corn in 2014 had remained at 1997 levels (when ethanol made up just 1% of the total U.S. motor gasoline supply), the ethanol industry would have needed to grind an additional 343 million bushels, or 7% more corn, to produce the same volume of fuel. To supply this incremental quantity of corn without withdrawing bushels from other uses would have required 2.2 million additional acres of corn to be cultivated, an area roughly equivalent to half the land area of New Jersey.

Several factors contributed to the yield increases from a bushel of corn. Increased scale has allowed producers to incorporate better process technology, such as finer grinding of corn to increase starch conversion and improved temperature control of fermentation to optimize yeast productivity. The growth of the corn ethanol industry also enabled the development of better enzymes and yeast strains for improved output per bushel of corn.

This growth in ethanol production has been made possible by a rise in demand for ethanol to increase octane levels as MTBE

(methyl tert-butyl ether, a gasoline additive) has been phased out of gasoline, and to meet Renewable Fuel Standard (RFS) targets enacted in 2005 and expanded by subsequent legislation in 2007. RFS requirements effectively placed a floor under ethanol demand. Recently, ethanol's volumetric share of total U.S. motor gasoline supply has been just below 10%, reaching 9.8% in 2014.




Oil Price Drop Special Coverage

Oil Prices Continue its Ups and Downs




IEA Says OPEC’s Battle for Oil Market Share Only Just Started Bloomberg + NewBase

OPEC’s strategy of defending its share of the global oil market has just begun and the group may increase production, the International Energy Agency said.

Gulf-based members of the Organization of Petroleum Exporting Countries are boosting supplies as they escalate a strategy to preserve sales volumes, the IEA said in its monthly market report. The 12-nation group agreed in November to maintain its production ceiling, insisting non-member suppliers help tackle a global glut that they caused.

“The move by the group’s core Gulf members last November not to cut production in defense of prices was only the first step in a plan that includes actually ramping up output and aggressively investing in future production capacity –- even as their non-OPEC counterparts keep tightening their belt,” the Paris-based adviser to 29 industrialized nations said. It’s “premature to suggest that OPEC has won the battle for market share. The battle, rather, has just started.”

While slowing growth in U.S. crude inventories signals that the shale industry has “blinked” in the face of OPEC’s move, the agency increased its overall 2015 estimate for non-OPEC supplies and said that short-term market fundamentals remain “relatively loose.”

Oil prices have recovered almost 50 percent in London from a six-year low reached in January, as the surge in U.S. shale supplies that triggered a global glut loses momentum. The price rebound has made OPEC members, due to meet next month, more united in the strategy to maintain rather than cut their production, Kuwaiti Oil Minister Ali Al-Omair said on Tuesday. Brent futures traded near $67 a barrel on Wednesday.




Non-OPEC Resilience

The IEA raised its estimate for non-OPEC supply growth in 2015 by 200,000 barrels a day because of “surprisingly strong” output during the first quarter from Russia, China, Colombia, Vietnam and Malaysia. Non-OPEC producers, which account for about 60 percent of global supplies, will expand output this year by 830,000 a barrels a day to 57.8 million a day.

While U.S. crude inventories have declined as production “buckled,” the accumulation of crude stockpiles is being converted into a build-up in supplies of refined fuels, the IEA said. U.S. product stocks increased in March, a period when they normally decline, the agency said.

Supply from OPEC’s 12 members increased by 160,000 barrels a day in April to 31.21 million a day, the highest since September 2012, because of higher output from Iran and Iraq, according to the report. Supplies from Saudi Arabia, Kuwait and the United Arab Emirates remain near the highest level in three decades. Group output will probably stay close to 31 million barrels a day this month, the IEA projected.

Iraq Progress

Iran raised production by 90,000 barrels a day to 2.88 million in April, the highest since international sanctions on its oil exports took effect in July 2012, according to the agency. Iraq boosted output by 100,000 barrels a day to 3.8 million a day, extending a three-decade high.

Saudi Arabia, the world’s biggest oil exporter and OPEC’s most influential member, trimmed production slightly in April to 10.1 million barrels a day, according to the report. Sustaining output above 10 million barrels a day for a second month demonstrates the kingdom “is intent on maintaining its policy to preserve its market share,” the IEA said.

Total OPEC output is about 1.2 million barrels a day higher than the average of roughly 30 million a day that will be required in the second half, the report indicates. The group will meet to review its production target -- currently at 30 million barrels a day -- on June 5 in Vienna.

The IEA increased its 2015 estimate for global oil demand slightly, by 50,000 barrels a day. World oil consumption will rise by 1.1 million barrels a day this year, or 1.2 percent, to average 93.6 million a day, according to the report.




Russia says current oil price in line with forecast Reuters + NewBase

Russia is consulting with OPEC before a meeting of the oil producers' group in June and the current oil price is within range of Moscow's earlier forecasts, a Russian energy ministry official said on Wednesday.

The statement by Kirill Molodtsov, deputy energy minister, suggests Moscow is less worried about the oil price after it rebounded to over $65 a barrel and may signal that Russia is less willing to cooperate with OPEC on production cuts.

Saudi Arabia and other OPEC members have said they will consider cutting output only if non-OPEC members such as Russia agree.

"The consultations are under way," Molodtsov said when answering a question about planned talks between Russian energy ministry officials and OPEC representatives in Vienna before the June meeting.

"Look at the forecasts we had produced earlier. In that sense, you will understand that we are within the (pricing) corridor that we had forecast," he added. Russian Energy Minister Alexander Novak has said that oil prices could rise to $65-$70 per barrel by the end of the year.

He also has said that the oil price of $60 per barrel was comfortable for Russian producers. On Wednesday, June Brent crude rose $0.66 to $67.52 per barrel. It was still 40 percent below last June's peak of $115 per barrel.




Battered US oil firms scramble to delay looming retirement wave BY EDWARD MCALLISTER + NEWBASE

May 14 After 20 years in the oil business, Craig Reed, 62, is thinking about winding down his career just as a second downturn in six years rocks the industry.

Reed is part of the baby boomer generation that forms the backbone of the U.S. oil workforce and now weighs retirement as energy firms cut spending and shelve projects. That is a worrying prospect for company executives keen to keep their most experienced workers while they ride out the oil market slump.

"Between the politics and uncertainty and cost cutting, a lot of people of my age are saying that it isn't worth it anymore," says Reed who draws up engineering and construction contracts for major energy projects worldwide.

"Many of us could handle the downturn in 2008, but when the volatility comes back so quickly, and in a different form, it is difficult to take." For him, it is maybe two more projects and then retirement beckons, with a holiday home in Maine that needs work.

The oil industry has been aware for years of a looming exodus of oil workers who joined in the 1970s in a so-called Great Crew Change. But a sharp drop in oil prices from June to January that triggered spending cuts and limited opportunities for senior technical staff, threatens to speed up their departures.

That further complicates energy firms' balancing act as they cull thousands of field and office jobs to save cash, but try to retain seasoned scientists and engineers essential for oil exploration when prices rebound and drilling resumes. Industry data show energy firms have cut at least 125,000 jobs worldwide since crude prices headed south from over $100 a barrel in June 2014 to as low as $40 last February.

Yet they try to keep specialist staff such as technicians and oil reservoir engineers who in the past slumps may have been encouraged to retire, according to recruitment agents, oil workers and consultants.

"Those with more experience are being retained," says Regina Mayor, an energy consultant at KPMG in Houston. "They are trying to defer retirements." For example, employers offer some more senior workers more flexible work arrangements to make them stay.




BIG VOID

What makes the task even more pressing is a big generational gap that looms once Reed's cohort retires - a legacy of a decade-long hiring slump after an oil market crash in 1986. Out of 93,000 professional members of the Society of Petroleum Engineers worldwide, over 7,000, or 8 percent, were older than 65, according to its 2014 data. Thirty percent were under 35.

Oil data provider Drillinginfo estimates that half of the oil industry workforce is set to retire in the next five to seven years. Ninety percent of oil and gas executives see talent shortage as an issue, it said.

Moreover, the shale oil technology, which allows drillers to respond to market swings faster than in the past, makes retention of core staff more critical than ever.

Federal data offers no breakdown into specific job types.

But when drillers and service giants such as Baker Hughes , Schlumberger and Halliburton started shedding jobs, field workers were the first to go. Then those in logistics, sales, marketing and human resources followed. Recruiters say those workers account for most of a fivefold increase in the number of job seekers.

To be sure, some engineers and scientists have lost their jobs as new projects become scarce, and some have retired, says Tobias Read, CEO of Swift Worldwide Resources that recruits contract engineers for oil companies. Yet it is a step companies try to avoid whenever they can, says Jeff Bush, president at CSI Recruiting in Fort Worth, Texas.

"Oil and gas firms learned from the past that you do not cut yourself off at the knees when things get bad by getting rid of higher level staff that might be hard to get back when you need them." A recovery in crude prices to around $60 a barrel also strengthens energy firms' resolve to hold on to their key workers.

"Everybody believes that at $70 a barrel companies are going to need 80-90 percent of their technical community to still be intact," said Dennis Cassidy, managing director at consulting firm AlixPartners. "They don't want to do anything to dismantle the system."




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

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

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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

NewBase 03 May 2015 K. Al Awadi




NewBase 604 special 14 May 2015

Economy & Finance

selected gs energy

adco oil concession

asian oil companies

biggest oil asset

year onshore oil concession

gs caltex corp

gs holdings corp

western oil majors