Mar 09, 2016
2 May-Jun, 2012
FROM THE EDITOR’S DESK
Recently, we saw how a young entrepreneur with a simple but very effective idea of social networking touched an enterprise valuation in excess of $100 billion in a span of just 8 years. Compare this to the world’s largest oilfield services company, Schlumberger with a rich
history of over 85 years. Its market cap was around $86 billion at the time of going to the press. Of course, we are not saying that Schlumberger should close down their core business and start a social networking platform to become more valuable! Along with Apple and Google, Facebook has shown to the world the power of entrepreneurship.
The current issue of Oil & Gas Review (OGR) has lined up two companies that are powering the entrepreneurship engine in Oman in their own unique ways. First is Takamul Investment Company. It is quietly developing a sustainable downstream chain to support the burgeoning industrial sector in the country. Takamul’s strategy is to promote and invest in sustainable projects that rely on feedstock from local upstream industries in primarily three areas – metals, petrochemicals and minerals. Recently, it has expanded its scope of portfolio by including service oriented industries also. It is already committed to a total investment of $500-600 million and has set an ambitious target of adding another $1 billion of investments in the current year. It is bringing international and local partners on a common platform to create new business opportunities and jobs for the nationals. The second company is Petroleum Development Oman (PDO). Its Local Community Contractors (LCC) programme has led to the creation of over 700 companies owned by individuals or families in its concession areas. Though only 170 of them are active, they have been awarded contracts with a cumulative value of over $700 million. More than 1,000 jobs have been also created for the locals. From a micro set-up, many of them have now grown to become established competitive companies. Taking the programme forward, Super LCCs with a large shareholders’ base have been formed and after initial handholding for some time, they are expected to become medium-to-large independent competitive entities.
In the next issue, we will showcase some of the success stories from PDO’s LCC programme; and a fast rising Omani oil & gas services company run by two young enterprising Omani professionals who had the guts to quit their cushy jobs and start a company at the height of global recession.
Enjoy reading the issue!Akshay Bhatnagar
Group Managing [email protected]
STARTING THE START-UPS
No 22 May-June 2012
An Presentation
Read the emag: www.ogronline.com
DESIGNSenior Art DirectorSandesh S. RangnekarSenior DesignerM. BalagopalanSenior PhotographerRajesh BurmanPhotographerBasim Al Maharbi
Production ManagerRamesh Govindraj
MARKETINGSenior Advertising ManagerShivkumar GaitondeAsst. Advertising ManagerGirija Shankar Mohanty
CORPORATEChief ExecutiveSandeep SehgalExecutive Vice PresidentAlpana Roy
Senior Business Support ExecutiveRadha Kumar
Distribution
United Media Services LLC
Published byUnited Press & Publishing LLCPO Box 3305, Ruwi, Postal Code - 112Muscat, Sultanate of OmanTel: (968) 24700896, Fax: (968) 24707939Email: [email protected] 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 © 2012 United Press & Publishing LLCPrinted by Oriental Printing PressCorrespondence should be sent to:Oil & Gas ReviewUnited Media Services LLCPO Box 3305, Ruwi 112, Sultanate of OmanFax: (968)24707939Email: [email protected]
ProSh
ots
4 May-Jun, 2012
CONTENTPREFERRED PARTNER
COVER STORY
REGULARS:
8 Oman News
12 In The News
43 Events Calendar
52 Opinion
55 Job Postings
58 Economy
60 Petrochemicals
63 Tender watch
64 Market Report
68 Global Round-Up
71 Regional Round-Up
76 Book Corner
66
38
Takamul Investment Company is
targeting to more than double its
investments this year in its quest to promote the
downstream industries to support
entrepreneurship and generate employment
opportunities
Automotive
Advanced Technology & Local Expertise offering innovative and Cost effective Solutions
Plan Engineer Integrate Deliver Support
Visit us at OGWA - APRIL 16 – 18, 2012 (STALL No. 711)OMAN INTERNATIONAL EXHIBITION CENTER - MUSCAT, SULTANATE OF OMAN
DELIVERING THE DIFFERENCE
SERVICESAutomation Services • Commissioning and Startup • Scheduled Onsite Support • Emergency Onsite Support • Instrument Verification• Metering Validation
Mechanical Services • Retrofitting of Mechanical Seals • Fishing, Milling, Casing patching, Perforation • High Temperature & Pressure Pipeline Repair
Valve Automation • Integration & Testing• Repair & Onsite Service
6 May-Jun, 2012
26 28
48
74
32
INVESTMENT HUMAN TALENT
ENTREPRENEURSHIP
Creating Entrepreneurs to Benefit Local Communities PDO has given contracts of more than $700 million till date to Local Community Contractors (LCCs) and is all set to power Super LCCs
Walking the Talk
CONTENT
The value buy zone for Facebook and Apple, by Matein Khalid
EVENT REPORTS20 OGWA Exhibition & Conference 2012
24 IDOC 2012
54 Oman Green Awards 2012
MARKETING FEATURES:42 Berger Paints
46 Teejan Engineering
51 Haifa Industrial Services
34 RENEWABLE ENERGYThe Change Agents
Fracking causes earthquakes, but it’s worth the risk
FEATUREChanging Patterns
HSE
8 May-Jun, 2012
OMAN NEWS
Topaz Energy and Marine, a subsidiary of Renaissance Services and a regional leader in providing offshore support vessels and engineering services, has added yet another milestone to its 35-year history by building two anchor handling/offshore support/towing vessels.
The two sister vessels – Topaz Dignity and Topaz Triumph – will be operated by Topaz Marine on behalf of BP, the oil and gas major, on a long term contract basis in the Caspian Sea. The ships will be fulfilling BPs’ demands for anchor handling/tug/support and transport of dry and liquid cargo to and from pipe-laying barges, drilling platforms and production platforms for its offshore operations. The state-of-the-art vessels equipped with the latest cutting edge technical prowess are custom-built for Fi-Fi Class I and DP2 operations at a cost of approximately $50 million.
The chairman of Renaissance Services, Samir Fancy, stated: “We believe that the production and delivery of the two vessels to an oil and gas giant such as BP will enhance and establish Topaz’s strengths and credibility as a leader in providing offshore support vessel and engineering solutions.”
Thomas Bower, managing director of Topaz Engineering, added: “The offshore support vessel market is an important and stable market sector that has a positive growth potential over the next few years, due to the aging fleets that presently operate in this segment. The building of the two sister vessels – Topaz Dignity and Topaz Triumph – demonstrates that our shipyard is capable of designing, building, and delivering complex vessels to support this market. This is a step toward achieving the growth strategy for our company over the next few years.”
Topaz Energy and Marine adds 2 more vessels
Depletion Compression Project to prolong Saih Rawl Gas Field Talking at the inauguration of Saih
Rawl Depletion Compression project,
Petroleum Development Oman’s (PDO)
managing director Raoul Restucci
said: “The Sultanate’s largest gas
project has been the creation of a
liquefied natural gas industry which
has produced significant revenues for
the country since the first of two plants
was commissioned in 2000. Today,
gas utilization across the country has
grown significantly and PDO and other
operators are actively exploring for and
developing new gas opportunities.
“The easy gas has already been
found and is being developed, but
we are now pursuing new and more
complex exploration and development
opportunities including tight and
unconventional resources. And PDO
continue to be at the forefront in the
exploration and testing of new deeper,
hotter, tighter and more complex
hydrocarbon accumulations.
“Saih Rawl is the largest gas field in
the country. It was discovered in 1999,
with first production in 1999. As the
field reaches maturity and reservoir
pressure has declined, a process
known as depletion compression
has been introduced as indeed in a
number of other PDO fields. Depletion
compression enables sustained
production and increases ultimate
recovery from the field, by reducing
the back-pressure at the wellhead
and boosting the inlet pressure from 35 bar
to 96 bar for exports. The new plant has
a capacity to handle 48 million standard
cubic metres of gas per day and a new
power station with a total capacity of 120
mega watts has been installed to cater for
increased power demand. After completion
and commissioning, the plant reached full
capacity in 2011. “Gas and condensates
from the Saih Rawl field are collected and
processed at Saih Rawl Central Processing
Plant. The treated gas is then sent to key
customers such as Oman LNG, Qalhat LNG,
power stations and desalination units, Oman
India Fertilizer Company (OMIFCO), Sur Light
Industrial Area and South Oman Gas Line via
9May-Jun, 2012
India accepts hike in gas prices by Oman The Indian government has accepted the proposal seeking hike in prices of gas supplied by Oman to Oman India Fertilizer Company (OMIFCO) to $ 1.5 per mmBtu for this year, a move that will ensure uninterrupted supply of urea to the Indian market, according to a news agency report. The report further said that government’s approval of the hike in gas prices means that it has dropped the earlier proposal of challenging the move by Oman at the International Tribunal in London. “The Cabinet cleared the proposal to accept the hike in gas price supplied by Oman to the OMIFCO plant in Sur to $ 1.5 per mmBtu with an annual increase of $0.5 mmBtu,” sources said.
The Indian Cabinet has accepted Oman government’s condition that it would increase gas prices by $0.5 per mmBtu every year up to $ 3 per mmBtu, sources added. Oman had contracted to sell gas to the plant at $0.77 per million British thermal unit for 15 years beginning 2005 but mid-way decided to hike rates to $3 per mmBtu (million British thermal units) from January 1, 2012 citing firming up of prices in global market.
Oman India Fertiliser Company (OMIFCO), a joint venture firm between Oman’s state-owned Oman Oil Co (OCC) and Indian co-operative firms KRIBHCO and IFFCO, produces about 2 million tonne urea a year at Sur for exports to India. The Indian ministry was in favour of accepting the hike because even at $3 per mmBtu, the gas supplied by Oman is cheaper than alternative fuel sources. Long term gas supplies in the international market are no less than $18 per mmBtu. OMIFCO ships around two million tonne urea, which is its entire production, to India under an agreement the country has with the Oman government.
a pipeline known as the Interconnector. This
project is key enabler for boosting the supply
to the flourishing gas business.”
In another but related statement, TR Oman
said: “With the inauguration of the Saih Rawl
Depletion Compression facilities, Técnicas
Reunidas Oman (TR Oman) as prime
Engineering, Procurement and Construction
(EPC) contractor for the project and their
construction partner BEC, have achieved a
major milestone which demonstrates their
strength in successfully completing large-
scale upstream oil and gas projects and their
commitment to the development of oil and
gas industry in the Sultanate of Oman.”
PDO hosted 33rd GCC Drilling Technical Exchange Meeting
Petroleum Development Oman (PDO) hosted a drilling technical exchange meeting in April attended by representatives of national oil companies in the GCC countries. The gulf national oil and gas companies have joint steering committees that convene twice a year to discuss and exchange information on Production and Maintenance, HSE, Supply Chain Management, Exploration and Development and Drilling. PDO’s delegation was led by engineer Khamis al Saadi, Well Delivery Manager for Exploration & Gas and Well Engineering Deputy Director. “The six-monthly event covers variety of topics in both technical and non-technical arenas as well as topics on the Health, Safety & Environment (HSE),” commented Khamis. “It is very crucial how effectively we utilize these events in creating excellent networking for knowledge sharing and learning exchange. Best practices in well construction and maintenance
are also shared providing an environment with wealthy information,” said Abdulla al Ismaili, Well Engineering team leader. PDO Well Engineering presented three topics: HSE Campaign, HSE Performance by AbdulHameed AL-Jaamei, Senior HSE Advisor in Well Engineering; PDO Casing while Drilling (CwD) Technology by Nasser AL-Kindi; Performance Improvement by Mohammed AL-Aghbari, Senior Activity Planner in Well Engineering. During this event, Abdullah AL-Ismaili was appointed as the GCC Drilling Committee secretary. “I am privileged with the new challenging assignment as not only do I need to keep coordinating between different participating companies but also ensuring benefits are maximized to PDO by conveying learning, latest technologies and best practices,” commented Abdullah. The next GCC Drilling Technical Exchange Meeting will be held in November 2012 in Qatar.
10 May-Jun, 2012
OMAN NEWS
Oman LNG achieves an HSE milestone Oman LNG, the Sultanate’s main liquefied natural gas (LNG) company, achieved five million man-hours without Lost Time Injury (LTI). The remarkable achievement followed staff commitment and dedication towards HSE practices along with the re-focus and re-launch of the 12 Life Saving Rules in 2011— a simple and clear list of “do’s and don’ts” that helps to make sure that the rules are followed and people are protected.
In addition, the increasing engagement and intervention by employees to prevent unsafe working practices, which is reflected, during the year-long of 2011, by a total of 4,862 unsafe act and condition observations and reported safety walks, had a significant impact on achieving this record.
Oman LNG annually holds HSE Week which offers an opportunity for staff, contractors and their families to reflect on good Process and Personal Safety practices at work and home, healthcare enlightenment on health mishaps and provides free screening exercise. All these activities are aimed at building a commitment to compliance with safety rules and promote healthy living among the OLNG family. The HSE Week also sharpens staff and contractors’ scope of understanding of best HSE practices through interactive sessions.
“This achievement follows strict adherence from company’s staff and contractors, and confirms Oman LNG’s substantial efforts at maintaining the superior quality of our operations, our careful and consistent attention to health and safety, and that we undertake our activities with a deliberate concern for the environment,” said Jan Brouwer, company’s Quality, Health, Safety and Environment Manager.
OIL PRODUCTION VOLATILE BUT OVERALL TREND POSITIVE
29,00028,00027,00026,00025,00024,00023,00022,00021,00020,000
140
120
100
80
60
40
20
0
2008 2009
‘00
0 B
BL
Oil Production Average Price (US$/BBL)
2010 2011 2012
The students of the Department of Applied Geosciences, GUTech presented their research findings at the European Geosciences Union EGU 2012 in Vienna. About 11,000 international researchers participated in the conference. Kawthar Al Quraishi, 4th year BSc Applied Geosciences at GUtech, gave a presentation about her research for the bachelor thesis titled: ‘Late Quaternary delta evolution on an uplifted coastal area -- Wadi Haida Sultanate of Oman, Arabian Peninsula’.
“The conference is one of the largest Geo-conferences worldwide. The students were highly motivated to attend this conference, where they were able to discuss the results of their research with an international audience. I think they got a huge motivation out of that,” said Professor Dr. Goesta Hoffmann, Associate Professor at the Department of Applied Geosciences at
GUtech and supervisor of Kawther’s BSc thesis.Kawther’s study is integrated in the research project “Short- and long-term environmental changes along the coastline of Oman (Arabian Peninsula)” which is financially supported by The Research Council (TRC).
Kawther’s research area is located close to Sur and she carried out geological fieldwork, especially mapping of an ancient river-delta on the coast. In the Vienna conference, she discussed the results of her work with international experts in the field of coastal zone geomorphologic interactions. A special focus there was on natural versus human-induced driving factors.
GUTech students present reports in Vienna
Source: Ministry of National Economy Bulletin
12 May-Jun, 2012
IN THE NEWS
In a move that could benefit consumers in Oman and the region, UTICO, a leading private utility developer in the Middle East, unveiled a utility development project that would lead to lower consumer tariffs and zero subsidies at the Oman Water and Power Summit 2012 that recently concluded. UTICO is part of the US$3 billion Ghantoot Group, which in February this year had announced a US$500 million investment in Oman’s hospitality, water and energy sectors. As part of that process, UTICO is in active talks with Omani authorities to implement utility and water desalination projects that could lead to lower water and power bills for Oman’s consumers.
The proposal is being currently reviewed by Oman’s Ministry of Finance, the Public Authority of Electricity and Water and also Oman Oil Company. When implemented, UTICO’s overall projects will also generate more than 2,000 jobs for Omanis, besides translating to significant savings for the government. Addressing the Oman Water and
Power Summit, Richard Menezes, Executive Vice Chairman and Managing Director of UTICO, one of the Middle East’s largest Private Utility and Developer, emphasised the role of the utility developer in creating value for both the government and consumers. “Consumers are not the end but the beginning of an economic regeneration,” Menezes told the gathering. “Therefore, they should decide what they want to pay and how they want to be served. Value creation and excelling in consumer satisfaction along with job creation should be the role of the developer of utilities, not building subsidies.”
He added that Oman gave over RO200 million in subsidies in water and power sector last year alone, which could have been made to zero for water or halved, if not fully removed. It could also have generated net profits for the government. Oman’s budget deficit is projected this year at RO1 billion, which means 20 per cent of this deficit is allotted to the water and power sector.
UTICO has offered a net revenue generating model with zero subsidy model to the Public Authority of Electricity and Water for several projects including Musandam Water and Power Supply. It also requires no off-take guarantee, thus saving hundreds of millions of Rials for the government. UTICO owns more than 32 million gallons of desalination plants and is developing another 15 million gallon desalination facility currently. It also develops and operates them. The total power plant ownership is 120MW. Another 300MW is currently being built. The company has over 300 km of T&D network and over 100,000 consumers.
Focussing on renewable energy as the future, this year, UTICO has also set aside a US$20 million investment fund for viable renewable projects. Earlier this year, the Ghantoot Group announced that it would establish two power plants, three hotels and invest in other facilities in water desalination, transmission and distribution and oil and gas projects aimed to benefit the Sultanate.
Ghantoot Group to invest $500mnGhantoot Group plans to establish two power plants, three hotels and investment in other facilities in water desalination, transmission & distribution and oil & gas projects aimed to benefit the Sultanate
14 May-Jun, 2012
IN THE NEWS
NIMR REED BEDS TO SAVE 12BSCF GAS
Petroleum Development Oman (PDO) recently inaugurated an innovative project at Nimr oilfield. The majority of oil producers all over the world are challenged by the great volumes of water they produce along with the oil – PDO is no exception. “This associated water poses several challenges to all oil producers, and especially when fields reach maturity,” PDO’s managing director Raoul Restucci said.
“The produced water is contaminated with oil and other pollutants and much of it has salinity higher than seawater, making it unusable for domestic or agricultural purposes” he added. At the Nimr oilfield in the southern part of its
concession area, PDO and its partner Bauer and Sarooj implemented an innovative solution to the area’s significant water production. After several years of pilot trials, the large-scale Reed Beds project came on stream at the end of 2010, with a second phase now in final completion.
Reed plants naturally absorb oil and other contaminants and a giant water treatment farm measuring 2.4 million square metres of reed beds was constructed. The farm is capable of treating 45,000 cubic metres per day of produced water and phase two will soon increase this to 95,000 m3/day. “The
treated water provides re-use opportunities and reduces deep water disposal costs and associated gas consumption,” said Restucci and added that the project would produce an average of 9,600 tons a year of dry biomass which could be used for small-scale (bio-fuel) power generation. According to the project’s engineers, the venture provides a much lower cost and sustainable solution to a major produced water challenge, and will save an estimated 12 billion cubic feet of gas over the next decade. Additionally, the project results in increased recovery of oil, skimmed from large separation pools.
“Over the last nine months of operation, the project has collected and returned to the company over $4 million worth of skimmed oil. Previously, produced water, with oil concentrations of up to 150 parts per million, was injected in deep water disposal wells. After the oil is skimmed, the water is routed by simple gravity through some 2.5 million square metres of reed bed plantations which further remove oil and other contaminants, before reaching the final evaporation ponds, where PDO can extract salt for use in our drilling operations,” Restucci said.
The project’s innovative method of preserving the environment was recently recognized when PDO received the Regional Clean Sea Organization’s Environmental Excellence Award. “This was preceded by another global award the project achieved earlier in the year. The US-based Global Water Intelligence’s Award classified the project as the best produced water utilization project in the world for 2010-2011,” said PDO’s External Affairs & Communication Manager, Suleiman bin Mohammed al Mantheri.
16 May-Jun, 2012
Oman Drydock Company marks first anniversary of soft operation
Oman Drydock Company (ODC) has
completed successful one year of the
soft operation of its world-class ship
repair yard in Duqm which heralded a
new era in Oman’s maritime industry.
A gala event was organized to mark
this auspicious occasion and to launch
the new website of ODC, recently at
Ritz-Carlton -- Al Bustan Palace, under
the auspices of His Excellency Yahya
bin Said Al Jabri, Chairman of Special
Economic Zone Authority, Duqm. Titled
‘Vision to Reality, A Year of Success’,
the event was aimed at celebrating
the success of one of Sultanate’s most
prestigious projects, poised to make
Duqm a thriving economic and social
development hub. It was in April, 2011
that, after years of meticulous planning
and construction works, ODC launched
the soft operations of its state-of-the-
art dry dock facility in Duqm, in an
ambitious step towards contributing
Oman’s march towards economic
diversification.
HE Said bin Hamdoon Al Harthy,
Chairman of Oman Drydock Company
and Undersecretary of Ports and
Maritime Affairs in the Ministry
of Transport and Communications,
welcomed the gathering. Commenting
on ODC’s one year of successful soft
operation, Al Harthy said, “Today
marks the celebration of one of the most
successful economic achievements in
the Sultanate.
“Vision to Reality reflects ODC’s march
towards strengthening His Majesty
Sultan Qaboos bin Said’s vision of
diversified development and inclusive
growth. Within a short span of time,
ODC could build its unique brand in
a highly competitive dry dock market
‘VISION TO REALITY, A YEAR OF SUCCESS’
IN THE NEWS
17May-Jun, 2012
by utilizing local and international
marketing and media channels.” He
informed that since it started operation
in April 2011, the company had repaired
more than 80 vessels of various types
and sizes. “And in 2012 we are looking
to receive more than 100 ships and
tankers,” he added.
“For this we are cashing in on our human
expertise and material resources and
the unique operation and management
of Daewoo Shipbuilding & Marine
Engineering Co (DSME). At the time
of this celebration, we are proud that we
could employ more than 1000 Omanis
and prepared a comprehensive plan to
train them in some of the biggest dry
docks in Korea and Romania.”
The event also celebrated ODC’s best-
in-the-class health and safety standards
and quality management system
which enabled the company to obtain
the Occupational Health and Safety
Advisory Services (OHSAS) 18001/2007
certification and the ISO 9001:2008
certifications, by US-based ABS
Quality Evaluations. Joe Brincat, the
ABS Regional VP for Middle East and
Eric Kleess, President & COO of ABS
Pacific presented the certifications to the
company on the occasion.
Elaborating on this, Deputy CEO,
Sheikh Khalil bin Ahmed al Salmi
said, “The ODC has achieved one
million safe man-hours which enabled
it to win the OHSAS certification.
These certifications testify to the fact
that ODC has taken adequate steps to
avoid accident and hazardous situation
using a comprehensive and efficiently
implemented system for the benefit
of its employees, clients and relevant
stakeholders.”
A corporate film showcasing the unique
features of Oman Drydock Company
and its remarkable contribution towards
18 May-Jun, 2012
developing national talent, environment
conservation and better health & safety
standards was shown on the occasion.
On the occasion, Chief Guest His
Excellency Yahya Al Jabri felicitated
the chairman, vice chairman, board
members, secretary to the board and the
CEO of the company. In addition, key
department teams were felicitated with
the ‘Appreciation Award’.
WEBSITE LAUNCH This was followed by the launch
of the new website of the company
ww.omandrydock.com. The new website
with its brand new design reflects ODC’s
unique mission offering a complete
spectrum of information related to key
aspects of the company. Equipped with
a lot of distinctive features including
matchless navigation facilities and
exceptional user-friendly interface, the
website gives a comprehensive picture of
the company’s operation, management,
vision achievements, social initiatives etc.
“The website has a fresh vibrant
contemporary design and has employed
the latest technology to serve our
customers, suppliers, employees and
different stakeholders,” said Al Harthy.
“It will help the various departments
in the company to communicate with
their customers who can download
and attach relevant documents and
details. It is frequently updated with
the latest information and marketing
developments and exclusive video and
audio documents, and is linked to social
media websites such as Facebook,
twitter and YouTube etc. The website
will also enable us to interact with the
international market and promote our
values and strategic objectives among
our customers world over 24 hours.”
Apart from the website, ODC also
publishes a magazine called ‘Abhar’
(Voyage) on the latest developments in
international dry dock industry.
20 May-Jun, 2012
OGWA, has turned
into an event of
global significance,
capitalising on the
ever-growing demand
for oil that has stimulated the need for
large-scale exploration and expansion
projects and investments all over the
Sultanate and in the region. This year’s
edition drew together the largest group
of oil and gas companies from the GCC
region, international oil and gas majors,
technology and service providers, and
other local and international companies
EVENT
The eighth edition of OGWA (Oil & Gas West Asia) Exhibition & Conference 2012, one of the largest energy shows in the Middle East region, was held from April 16 to 18, 2012 at the Oman International Exhibition Centre with a record number of almost 10,000 visitors
A SCINTILLATING SUCCESS
21May-Jun, 2012
that play a major role in the development
of the oil and gas sector.
The inauguration ceremony of OGWA
2012 was graced by His Highness Sayyid
Asaad bin Tariq al Said, representative
of His Majesty Sultan Qaboos. The
ceremony opened with keynote speeches
from Dr Zaid bin Khamis al Siyabi,
Director-General of Oil and Gas,
Exploration and Production, Ministry
of Oil and Gas, Sultanate of Oman
(Executive Committee Chairman); Raoul
Restucci, Managing Director of Petroleum
Development Oman; and Alain Lebastie,
Engineering Advisor, EOR Technologies
and Total (2011 SPE President).
With a record number of almost 10,000
participants and visitors (OGWA 2010
had about 8000 visitors), the event also
introduced the CEO forum – a first in
the region – which saw participation by
key business executives, policy makers,
and technical experts from leading oil
and gas companies who shared their
views in line with the government’s
thrust to tap more renewable energy
sources and develop more economic oil
recovery projects. Visitors saw the latest
products, equipment and technologies in
the market presented by almost 200 local
and international oil and gas companies
from more than 20 countries, including
Bahrain, Belgium, China, France,
Germany, Italy, Saudi Arabia, Singapore,
Russia, Turkey, United Kingdom and
the USA.
Key players in the industry present
at the exhibition included Petroleum
Development Oman (PDO), Qatar
Petroleum, the Bahrain Petroleum
Company (BAPCO), Oman Gas
Company, Oman LNG, Occidental
Petroleum Corporation, MB Holding
Company, Technical Supplies
International, Al Sulaimi Group, Partex
Oil and Gas, Pipeline Supply Company,
Khimji Ramdas, Petrofac Industrial
Limited, Towell Engineering, Vanguard
Engineering and Oilfield Services,
22 May-Jun, 2012
Falcon Oilfield Services, International
Business Development Co, Oman
Oilfield Supplies Company, Gulf Energy,
Baker Hughes, Hamriyah Free Zone
Authority, Mott MacDonald and Al
Hassan Group.
Another hallmark was the Enhanced Oil
Recovery (EOR) Technical Conference,
which was held alongside the exhibition,
in partnership with the Society of
Petroleum Engineers (SPE). The SPE
Conference, held in concurrence with the
exhibition, also received an enthusiastic
response by way of a higher delegate
turnout and better visitor feedback than
the previous OGWA event.
The first Panel Session entitled ‘EOR:
Building Towards Sustainable Growth’
was moderated by Dr Ali Al Gheithy,
Petroleum Engineering Director, PDO.
Invited panellists included Amran
Marhubi, Technical Director, PDO;
Hosnia Hashim, Deputy Managing
Director (North Kuwait), Kuwait Oil
Company; SP Singh, Regional Director
– Subsurface Engineering, Occidental
Oil and Gas International in Abu Dhabi;
and Stuart Clayton, Vice President,
Hydrocarbon Recovery Technologies,
Shell. The discussion tackled the ever
increasing importance of using EOR
technologies to exploit reservoirs to
their full capacities, how to develop
people and skills to manage and operate
EOR developments and effectively the
industry can prepare and build towards
sustainable growth.
There is an acute shortness of EOR
professionals in the Middle East and
the world over and this topic was one of
the areas of focus on the second day of
the conference . Moderated by Andrew
Cockin, Technology Leader for EOR,
BP, ‘Human Capability Requirements
for EOR’ deliberated on what it will
take to expand and reenergise the
human resource available in the sphere
EVENT
23May-Jun, 2012
today. The session included analysis
of the present situation of human
resources for EOR, both global and
local; innovative methods to develop
human resource capability for EOR
projects; role of industry, government,
and academia in nurturing EOR
professionals as well as best practices
and case studies for recruiting and
retaining EOR manpower. Invited
panellists were: John McCreery, Partner,
Bain and Company; Omer Gurpinar,
Technical Director, Schlumberger; and
Dr Zara Khatib, Chief Technical Officer,
Smart Water Engineering.
Other sessions, included paper
presentations of topical subjects like
Polymer Flooding in a Large Field
in South Oman: Initial Results and
Future Plans; Stretching the EOR
Boundaries: Thermal Trial in one of
Petroleum Development Oman’s Deep
Reservoirs Containing Heavy Oil;
Flow Characteristics of Viscoelastic
Polymer Solution in Micro Pores;
Low Salinity EOR in Carbonates; as
well as poster presentations on Novel
Methods for Characterising Single
Phase Polymer Flooding; A Cyclic
Steam Injection in Fuyv Reservoir,
Daqing; Process Design Aspects for
Taking CO2 EOR Offshore; and much
more. A paper was also presented on
Microbial Enhanced Oil Recovery
(MEOR), co-authored by Laura Soares,
from Partex and researchers from the
Portuguese Universities of Minho and
Aveiro, summarizing the results of a
joint R&D project.
Participants at OGWA 2012 agreed that
this year’s exhibition and conference
was not only bigger and better, but also
had a fresher approach to the conference
aspect of the show and provided ample
opportunities for networking. All in all,
the event ended on a high-note with
participants eagerly looking forward to
the next edition.
Pictures’ courtesy: OmanExpo
24 May-Jun, 2012
Nowadays IOCs and NOCs
are employing Digital
Oil Field (DOF) policies
in their green and brown
field business planning. DOF has been
defined as a vision where operators,
partners and service companies seek to
take advantage of improved data and
knowledge management, enhanced
analytical real time systems and more
efficient business models.
DOF exploitation is significantly gaining
interest in the Middle East. Saudi
Aramco has implemented this approach
in integrating real time data in their
upstream business processes. They have
successfully demonstrated the enhanced
value in these experiences from the
methodology of integrating relevant
technologies, people and processes.
Within the UAE, there are significant
ongoing DOF programmes. Plans within
ADCO, ADMA-OPCO are in place to
operate Smart Field technology within a
number of fields over the next three years.
KOC’s plan to identify, select and
implement new technologies thus
creating a total technology integration
cycle with the main focus of this cycle to
develop intelligent oilfields. Intelligent
Reservoir Completion Technology has
recently been successfully employed
in Qatar’s Al Shaheen Oilfield as they
begin to herald in their DOF intentions.
In Oman, PDO has recently made
considerable headway in the ongoing
development of their Smart Field
Programme which is key to the optimal
management of their growing number
of wells and equipment. By 2013, 21 of
PDO’s biggest fields which contribute 80
per cent of their output will operate on
Smart Field Technology principles.
Thus it can be seen that great strides in
DOF usage are taking place in Muscat
and beyond and PDO has very kindly
offered to host IDOC 2012 and the
Advisory Committee are planning a
conference programme that will focus on:
WHY DO DOF - This session requires
an in-depth look at what the end-users
feel the value creation is for DOF.
INSTRUMENTATION & AUTOMATION - Topics within this
session include Unmanned Operations,
Closed Loops and Networks &
Architecture.
DATA MANAGEMENT & WORKFLOW AUTOMATION - The
intent of this session is to explore the
current challenges, and educate and
inform the attendees on solutions to the
problems, both from a technology, and a
human factors / culture perspective.
COMMUNICATIONS & COLLABORATION - This session
addresses the challenges of ensuring
that information is communicated to the
relevant staff so they can work together
to reach the optimal decision.
SMART TECHNOLOGY – This
session will focus on Smart Technologies
that are a key enabler to improve health
and safety of our operations, and help to
minimise the environmental impact of oil
and gas production.
CHANGE MANAGEMENT - Effective
Change Management is at the very core
of any successful implementation of DOF
projects or programmes and presentations
will highlight this.
TO BE IN MUSCATGreat strides in DOF usage are taking place in Muscat and beyond, and PDO would host the IDOC 2012
EVENT
Official Media Partner of the event
25May-Jun, 2012
Oman Green Awards (OGA) has rolled out the ‘green’ carpet for its third annual prestigious awards ceremony to be held on June 5 at Al Bustan Palace Hotel, Muscat
CHAMPIONING A GREEN CA USE
Oman Green Awards
(OGA), Sultanate’s first
environmental award
to honour outstanding
environmental vision, endeavours
and achievements of corporates and
individuals, will hold the third edition of
its prestigious award ceremony on June
5 at Al Bustan Palace, A Ritz-Carlton
Hotel. HE Mohammed Salim Said al
Toobi, Minister of Environment and
Climate Affairs, will preside over the
function as the chief guest and felicitate
winners of the nine different categories
of the awards. Oman Green Awards is
the ultimate recognition for companies,
institutions and individuals in Oman,
who demonstrate a commitment
towards responsible consumption and
sustainable growth. The OGA honours
and celebrates their vision in leading the
way to a cleaner, greener tomorrow; and
offers a unique opportunity to be part of
a national platform for this cause.
The OGA is being held in association
with the Ministry of Environment and
Climate Affairs, Ministry of Health and
Muscat Municipality; and representatives
from these august organisations will
attend the green celebrations, which
coincide with the World Environment
Day. The event has received massive
support from corporate houses and
individuals who have made green
mission a priority. Oman Oil Marketing
Company and OCTAL have joined OGA
as strategic partners and Sadolin as the
support partner to keep the green torch
burning bright in the country. The media
partners include Times of Oman and Al
Shabiba while Infoline is the call centre
of the event.
Conceived from a perceived need
to motivate behavioural change and
increase awareness in relation to the
protection and preservation of our
environment, the OGA has been able
to make the corporates, individuals
and organisations in the country more
serious about building environmental
sustainability into their business
practices. Conceptualised and initiated
by Sultanate’s premier business
magazine Oman Economic Review in
2010, OGA has evolved as an umbrella
organisation bringing together corporate
houses, institutions, individuals and
schools etc. who are involved in
relentless efforts to protect and preserve
the environment; and facilitating better
coordination and exchange of ideas.
Its three-fold objectives focus on
boosting local environmental efforts and
achievements; providing green groups
a platform for concerted action; and
raising awareness and generating greater
action. The last two editions of the OGA
were a resounding success in meeting its
stated objectives.
26 May-Jun, 2012
While online ad sales is a high growth global business, Facebook will never dislodge Google from the gold medal winner’s box, despite Mark Zuckerberg’s hoodie on Wall Street roadshows, writes Matein Khalid
INVESTMENT
Facebook may command a 100 billion dollars plus valuations at its birth as a public company but this will not last. The
Instagram deal is a strategic blunder. Facebook paid $1 billion for a zero revenue business that is not worth more than $300 million, if that. This deal can only have been done with Zuckerberg’s approval and a 27 year old software developer is obviously no strategy genius by right. A $100 billion public company will be run by Zuckerberg as his private fiefdom even after the IPO since he controls the voting rights share. This is a corporate governance nightmare that could have devastating consequences for Facebook shareholders in the years ahead. What if Zuckerberg decides to write a $10 billion cheque to the next Stanford dropout with a hot social media website?
I cannot compare Google with Facebook. Google went public in 2004 at a $23 billion valuation, the reason it was a genuine growth stock with a killer app on the Internet (search). This meant there was ample potential for investors to buy Google in 2004 as a long term growth stock and those who did so saw their shares rise seven fold as Google rose from 85 to $650. The mathematic of the Facebook IPO is entirely different. The big parabolic increase in valuation happened during the eight years it was not a public company. So the Facebook IPO breaks syndicate at almost a $100
billion valuation. This does not mean the shares cannot double in the next five years. Yet as revenue slows, I believe Facebook valuation metrics could get slammed. In any case, Facebook will trade at 100-120 times earnings at a time when Europe face financial and political meltdown. This means the risk of a 30-50% crash in Facebook shares all too possible. Every earnings number will be an appointment with a NASDAQ guillotine scaffold. Apple stunned the world, delivered 50% growth rates yet only commands a 20 times valuation. Facebook is a speculative colossus that could well fall victim to Greece’s exit from the EMU later this summer.
Facebook’s revenue model, while powerful and unique is ultimately global online advertising sales. But Facebook is Pepsi to Google’s Coke, the obvious dominant global champion. While online ad sales is a high growth global business, Facebook will never dislodge Google from the gold medal winner’s box, despite Mark Zuckerberg’s hoodie on Wall Street roadshows. This makes the 2011 revenue growth and EPS miss ominous. Facebook earnings were near $1 billion in 2011, it has built a global brand with 900 million users and can easily deliver 25% EPS secular growth. This means the downside risk in Facebook is $50 billion, not coincidentally the level it raised financing from Goldman Sachs and
THE VALUE BUY ZONEFOR FACEBOOK AND APPLE
Matein Khalid
27May-Jun, 2012
Russian oligarch Yuri Miller. In essence, this suggests a 15-18 range for Facebook makes a great long term buy for value investors. It makes no sense to chase nosebleed valuations after the IPO.
Apple has fallen almost $90 from its $644 all time high. This provides investors with a strategic opportunity to acquire history’s greatest Big Tech ecosystem after Microsoft MS-DOS cash machine. Apple is a growth share that dominates its industry and the market penetration metrics in tablets, Macbooks. China and corporate is low enough that its revenue, EPS and operating margins can continue to grow. This is particularly true since social media goes global and Apple TV is launched. Apple blew away the 1Q revenue and EPS estimates thanks to the explosive launch of the iPhone and iPad in China. Annual EPS growth was a phenomenal 92%. China iPhone sales soared fivefold and Apple is just beginning its footprint in the Middle Kingdom, the world’s leading Internet market. The August 2012 put option on Apple with a strike of 530 can be sold to generate a premium of $30.
This means as investor can create a risk/reward calculus in which the worst case scenario is being forced to take delivery
of Apple at 500 cost. This strategic idea is only possible since Apple shares have corrected from their highs while Chicago Volatility Index (VIX) has spiked higher by 25% since March. This means investors buy Silicon Valley’s iconic tech share at a mere 10 times forward earnings. This makes buying Apple at 480 – 500 for a $650 target a credible value proposition for the next six months.
Big picture, I believe the S&P 500 index can fall to 1280 – 1300 before a sustainable value zone emerges. There is no prospect of a Fed QE on the eve of a Presidential election. A Greek exit from EMU is probable. If the French-German alliance break down now that President Hollande is in the Elysee Palace, a global risk aversion spike is inevitable. This means valuation contraction and earning downgrades will highly likely. Energy could be a value buy when oil supermajor production and reserves on Wall Street are valued at $74 – 80 Brent, at least 12% below current levels. Banks and miners have also lost their momentum. Technology has the growth but it is not immune to risk aversion. Value investors must, above all, be patient.
(The author is a renowned investment banker based in Dubai)
Facebook may
command a 100
billion dollars plus
valuations at its
birth as a public
company but this
will not last
28 May-Jun, 2012
HUMAN TALENT
The domain of Enhanced Oil Recovery (EOR) has seen a decline in the number of specialists who have the knowledge and capability to work on projects. Sushmita Sarkhel reports
WALKING THE TALK
The petroleum industry is currently facing an uncertain future in terms of human resources. According to
Schrader et al. (2007), a large number of experienced professionals will be retiring
in the near and immediate future without qualified workers to replace them and a lack of experienced personnel could cost the industry as much as USD 35 billion per year (Brett 2007). This predicament is further exacerbated for Enhanced Oil
Recovery (EOR) projects which are inherently more complex to conventional recovery methods. Not only are EOR projects manpower-intensive, requiring highly skilled professionals to run them, but many a times the geographical
29May-Jun, 2012
location of the projects and resources pose as deterrents.
There is an acute shortness of EOR professionals in the Middle East as well and this topic was one of the areas of focus at OGWA 2012. Moderated by Andrew Cockin, Technology Leader for EOR, BP, the session deliberated on what it will take to expand and reenergise the human resource available in the sphere today. One of the panellists, John McCreery, a Partner with Bain and Company, believes that one of the mains reasons that the industry is facing a challenge today is because of the short gap solutions that companies employ.
This includes the age-old problem of headcount, particularly when there is a dip in oil prices. “We have heard a lot about the capability issue in oil & gas. How did we get here? Lots of commentators believe that we are at a crisis point within the industry. As much as 25 per cent of the existing workforce will retire in another five to 10 years. On the other hand, activity levels are increasing and more complex projects in EOR are coming up. There is an increasingly high expectation in terms of standards.”
But without the right people there is no use of technology available to us. It is vital to develop a clear outlook for future capability needs. “We need to balance our focus on recruitment, development and retention,” says McCreery. The typical elements of a successful implementation strategy has all the elements of recruitment, development and retention which includes short term manpower development, capability building, long term recruitment solutions as well as capability retention.
The importance of retention was also a key area of focus in a Deloitte report entitled the Talent Edge 2020. It was
reported that four in ten (40 per cent) executives surveyed confirmed that their organization has an updated retention plan in place, and another 36 per cent reported that an updated retention plan is in the works.
However, only 30 per cent of executives surveyed were “very confident” in the overall effectiveness of their company’s retention strategies and programs. It went on to state that ‘different generations have different goals, expectations, and desires—and organizations should tailor and target their talent strategies to satisfy each employee group from Baby Boomers to Gen Xers to Millennials.’
It is imperative now that companies differentiate themselves in the talent marketplace by going beyond financial incentives and creating customised retention strategies that address issues such as career advancement and greater recognition. Looking at advanced training programmes and scholarships to tap into the talent is vital. And having a sound mentoring system in place can also help organisations to a certain extent to meet these requirements.
McCreery also stressed on identifying and implementing new ways of working. “This can mean anything, from new business models and new organisation models to new partnerships
and technologies. There is no magic bullet and a successful strategy requires coordination of the technical functions along with Human Resources. The agenda must be owned by every part of the business.”
Designing effective retention strategies starts with a clear understanding of employee goals and desires. However, there appears to be a disconnect between employers and employees in three areas (Deloitte, Talent Edge 2020):
Intensity Gap: Although employers now recognise that promotion and job advancement is a powerful retention tool, they still have to realise how important it is for the different generation of employees.
Employer-Boomer Mismatch: Employers believe Baby Boomers are interested in additional benefits, additional bonuses, and flexible work arrangements. However, this generation is seeking more than just additional compensation and flexible schedules.
Money Matters: Every generation of employees surveyed ranked additional compensation among the top three incentives for keeping them with their current employers.
Some organisations are already doing a
We have heard a lot about the capability issue in oil & gas. How did we get here?
Lots of commentators believe that we are at a crisis point within the industry. As much as 25 per cent of the existing workforce will retire in another five to 10 years. On the other hand, activity levels are increasing and more complex projects in EOR are coming up
30 May-Jun, 2012
lot in this regard. In the US, Shell has applied Six Sigma techniques, where they can increase efficiency and reduce the cycle times of the processes of standard operations. Some of this has been introduced because of the huge increase in activity in North America which puts pressure on the supply chain. These do not necessarily help throughout the operations but illustrate how learnings from elsewhere can help develop processes and bring in more focus on the tricky subject of ‘standardisation’ within the industry.Ome Gupinar, Technical Director,
Schlumberger, believes that the industry now needs strong single domain experts. And this can be achieved primarily via better EOR education. “EOR is still considered as ‘late-life activity’,” says Gupinar. “Reservoirs are going in to a more challenging state. But the good news is that since the year 2000, academia is getting much better with EOR teaching. So the future generation that will be joining the field, will not only have a better knowledge of EOR processes but also a deeper understanding and the skillsets to handle future EOR needs.”
The importance of better EOR education was also echoed in the presentation by Dr Zara Khatib, Chief Technical Officer, Smart Water Engineering who discussed the role of the Government and academia in developing the talent pool in EOR technologies. Khatib also went on to state that dispersion was knowledge was also vital.
“One can possess all the technical know-how but if there’s no exchange of information and/or expanding this knowledge among those who require it, then it serves no real purpose.” Khatib also stressed on the importance of academia and the industry working together to develop the talent available in handling EOR projects in the future.
However, education is not only limited to the existing programmes available in most universities across the globe today. According to Deloitte, one training tool that is not broadly used by the industry is continuing education in dedicated executive programs for oil and gas professionals. MBA degree programs tailored to oil and gas professionals are offered by only a few schools. Such programs can offer industry the possibility of fast-tracking development of high-potential staff.
It has been established that building world-class talent programmes and retention initiatives require investment. Managers and executives need to start taking responsibility for organisations’ futures and focusing investments and capabilities on their top priorities. There needs to be rebuilding and development of new talent programs for leaders and as well as new recruits. There are no easy answers to building capability. The answer is to improve the younger generation’s professional experience while simultaneously capturing the knowledge base of retiring technical professionals.
Reservoirs are going in to a more challenging state. But the good news
is that since the year 2000, academia is getting much better with EOR teaching. So the future generation that will be joining the field, will not only have a better knowledge of EOR processes but also a deeper understanding and the skillsets to handle future EOR needs
HUMAN TALENT
32 May-Jun, 2012
FEATURE
Ground-breaking research work undertaken by a team of professors and students at GUtech aim to understand the past and future of coastal evolution in Oman. Sushmita Sarkhel reports
CHANGING PATTERNS
The coastline is a changing interface between the land and the sea, influenced by natural and anthropogenic
impacts, such as climate or sea-level change. Oman has a long, diverse coast line extending approximately 2,092 kilometres and has undergone many changes over the last thousands of years.
The German University of Technology in Oman (GUtech) in cooperation with their partner university (University of Stockholm) have been studying the coastal evolution of Oman – a research project which is being funded by the Research Council of Oman. The study primarily aims to understand the natural processes of change which occur or have occurred on the Omani shorelines in the past and the ways it might change in the future. The three year project started off in June 2011 and is currently in the first phase; the final results of which are expected to be out in two years’ time.
Discussing the preliminary results, Professor Dr. Goesta Hoffmann, Associate Professor at the Department of Applied Geosciences at GUtech and the Principal Investigator of the research project says, “The processes which change the coastline may be broadly classified into two different timescales – there are long term changes and short term changes. Long term change relates to global changes in sea levels, a phenomenon linked to global climate change. Short term changes
are more noticeable and direct, like tsunamis. We analyse the coastline to see whether there has been tsunamis in the coastline of Oman and according to the preliminary results, we see that yes, there have been several tsunamis here in the past. The last one was in 1945 but it wasn’t a major one. There have been larger ones before but right
now it is difficult to put a time frame to it. On the other hand there have been changes which are related to weather conditions like tropical cyclones and Oman experienced two, one in 2010 and the other 2007.” Using statistics like these the team tries to predict how many such events have occurred in the past and whether they are increasing or not. The
33May-Jun, 2012
team has also been looking at climate change over the last few thousand years and in doing so discovered that approximately 6000 years ago, there were lakes in the Wahiba Sands. “Wahiba Sands, which we now know to be extremely dry, had perennial fresh water bodies. The reason why we no longer have them is because of a shift in global atmospheric patterns. The climate was different back then and monsoons were prevalent – now only restricted to Salalah and the Dhofar region.”
It is known that the Wahiba Sands started to form already 180000 years ago. “Beside the more arid phases reflected by the sand dunes, there is also increased past humidity in the form of ancient lake deposits in Wahiba Sands. The last of the wet phases dates back about 10000 to 5000 years ago,” says Goesta. The geoscientist and his team discovered that the environmental conditions changed dramatically since then, with mainly dryer conditions as today, but partially also notably wetter periods occurred such as around 6000 years ago, when permanent lakes existed in Wahiba Sands (Sharquiyah Sands). “The main question was what is the general understanding of the origin of the sand deserts and how
did the sand come to the Wahiba sands. We drilled 200 meter deep through the sand dunes and discovered that the origins of Wahiba Sands are related to the past periods of lower sea-levels. The dunes developed in different phases and are connected.”
The obvious question that now arises is, what happens in the future? Will we see further dramatic shifts in climatic patterns? According to Goesta, it isn’t possible to predict the future. “We can perhaps concoct scenarios of future development. They depend on several factors which we cannot inference and which we have no influence on. For example, if the world economy is going to grow in the same pace using the same techniques, then it’ll probably put more CO2 admissions in the atmosphere.
It’ll get warmer and therefore the sea levels will rise more in the future. And I could give you the scenario of how the coastline would look like if the sea level is one metre higher. But if whether or not this will happen I cannot predict.”
One also has to take into consideration not only the global scenario but also what is going on in our immediate
surroundings. Human influence on the coastal area is increasing because most of the population lives in the Al Batinah coastal region and that is going to increase in the future. So there’s human pressure on that natural environment, in terms of utilisation of resources, infrastructure development and the likes. It is hoped that studies like this will assist in raising awareness of key geomorphological issues that are relevant beyond the time horizon of existing plans and the design life of present coastal defence structures. Appreciation of these issues should help avoid tying future generations into inflexible and inappropriate coastal management decisions.
Although the study does not provide a definitive prediction of future coastal evolution, because this is dependent upon a number of factors, not least of which is the implementation and sustainability of existing coastal management policies. It does, however, provide a knowledge base that can be used by all coastal managers to help define sustainable policies therefore enabling strategic coastal management decisions to be made in a longer-term and wider-scale context.
34 May-Jun, 2012
ENTREPRENEURSHIP
‘PDO has given contracts of more than $700 million till date to Local Community Contractors (LCCs) and is all set to power Super LCCs to develop a new set of enterprises in Oman,’ says Khalfan Salim Al Busaidy, LCC manager, Petroleum Development Oman (PDO), in an interview with Akshay Bhatnagar. Excerpts of the conversation:
CREATING ENTREPRENEURS TO BENEFIT LOCAL COMMUNITIES TO START WITH, WHAT IS A LCC?LCC is defined as local community contractors. LCCs are companies owned by the tribal communities or individuals that live in PDO’s concession area. The LCC programme was started in 1998 with the objective of sharing the benefits of PDO operations with the local communities by engaging the community companies in our business activities through contract work.
Currently, we have more than 700 companies owned by individuals or families as the registered LCCs. Not all of them are active though. The active number is around 170. Overall, till date we have given them contracts with a cumulative value of over $700 million. In 2011 alone, we had provided contracts worth $105 million. As a result of our LCC programme, more than 1,000 jobs have been created for the locals.
DID YOU FACE MAJOR CHALLENGES IN THE BEGINNING AS THE PEOPLE IN THE INTERIORS MUST HAVE LACKED THE NECESSARY SKILLS OR EXPERIENCE?It has been a challenging journey all through for us though the nature and degree of challenges have changed over the years. In the initial phase, it was extremely tough. Majority of the people didn’t have business background and we started by teaching them how they could help us in our operations. We provided training to them in doing non-technical work related to logistics, environment or sand mining. The initiative was welcomed by the local communities. It was quite challenging to make them understand the nature of our business, contractual agreement and its terms, expectations from them and how their non/under performance could affect our work. To ensure that our operations
were not affected, we always had a back-up arrangement to maintain the continuity in case of any default from the LCCs.
As we progressed over the years and learnt from each other, we found that some of the LCCs developed a good sense of the business. We provided consultants to them to enable them to learn more about the business management, HSE practices and importance of financial prudence.
In the last 14 years, we have ended up with over 700 LCCs but we don’t have work for all of them. So we are encouraging them to expand their shareholders’ base by merging with other LCCs to form a larger LCC and expand their scope of services or operations. Though there have been some takers for our suggestion but not all of them have welcomed it.
35May-Jun, 2012
HOW DO YOU CLASSIFY THE LCCS?We have encouraged them (LCCs) to join hands with each other to form larger shareholding companies. As on date, 21 LCCs have opened their companies for others to join in as shareholders. We have classified them as ‘Al Ahliya’ or class A LCCs. Each Ahliya LCC must have many shareholders.
On the other hand, majority of the LCCs have opted to refrain from joining any shareholding. They have preferred to retain their own (self or family) ownership. They are known as class B LCCs. We do not allocate work to them. Instead, we provide them with opportunities to inter bid among themselves for a specified scope of work from main contracts as sub-contractors.
WHO COULD FORM A LCC?LCC can be formed by people living in the concession area only. Any resident willing to start or join as a shareholder in a LCC must prove that he/she is a resident of the concession area.
IF YOU LOOK BACK, WHAT HAVE BEEN THE OTHER MAJOR ACHIEVEMENTS OF THE LCCS?Apart from significant value and job creation, many LCCs have graduated to become a confident and respected member of the corporate community. They are now competing with other well-established companies and winning contracts on a merit basis. They have built the confidence to participate in big value contracts. The success of the programme has raised the living standards of the locals in the concession area. The new generation is well-educated and taking up the business in a professional manner.
CAN YOU SHARE SOME OF THE SUCCESS STORIES WITH US?
36 May-Jun, 2012
There are many of them which started as LCCs and are now established competitive companies. For example, Shaleem Petroleum Services is providing well pulling hoist services. They got the contract through an online competitive bidding. HADCO which started as a minor services’ provider is now offering well engineering services.
Al Ghalbi Company is a pipeline integrity services company now. Saih Al Sariya is another good example. The company recently won a multi-million contract in a joint venture with an international firm. Douhat Al Khaleej also started as a LCC and has now established the first gasket manufacturing at Nizwa Industrial Area. Look at Saih Nahaida. It has expanded its business to purified drinking water bottling in Adam. Maqshan, another LCC, is now investing in different areas including desert agriculture. We can add many more names to it. The interesting aspect is that most of them have identified their niche and working in different industry segments to create a distinct business proposition.
MOVING ON, WHAT HAS BEEN PDO’S STRATEGY TO TAKE THE LCC PROGRAMME FORWARD?We have already started the implementation of a new strategy for the LCC programme. To give you
the background of the new strategy, a Ministerial action team was formed in 2006 to look into the scope of the LCC scheme and find ways to improve it for making it more beneficial to the communities in the concession areas. The team comprises four members – three senior officials from the Ministry of Oil & Gas, Ministry of Commerce & Industry and Ministry of Interior along with one person from PDO. I represent PDO in this team. We initiated an extensive study ‘LCC Scheme Improvement’ in 2006. It involved rounds of meetings with members of the communities in the concession areas to understand the demographics of those areas and gauge the needs/strengths of the people.
We went beyond the PDO concession area to do the study. Thereafter we submitted our findings and recommendations to the Government to give shape to the new strategy for improving the LCC programme. As part of the new strategy, it was decided to form five Super LCCs. These includes Al Shawamikh and Al Haditha (both in North concession area), Al Baraka and Al Sahari (both in South concession area) and Al Khazain (Central concession area). The first four SLCCs have already been established and allocated the contracts by PDO and each of them is initially expected to
achieve an annual turnover of $7 to $10 million. The fifth one is expected to be established at a later stage.
WHAT IS THE DIFFERENCE BETWEEN THE THREE TIER STRUCTURE – LCC (CLASS B), AL AHLIYA LCC (CLASS A) AND SLCC?The LCC (class B) is the small company owned by an individual or a family or partnership. Al Ahliya (class A) must have many shareholders. The SLCC, on the other hand, is a different ball game altogether. Each SLCC has a large capital base and is registered as a closed shareholding company on the Muscat Securities Market (MSM). Any interested person from the respective concession area could subscribe to the shares of the SLCC. We have set some restrictions on the ownership say an individual cannot buy more than 2 per cent shares whereas in the case of a family, the limit is extended upto 5 per cent. To promote and protect ownership among the people living near to the area of operation in the concession area, we have allocated 50 per cent shares to those who are living in a radius of 20 kms, 35 per cent shares are for those who live in the next 20 kms radius and similarly another 15 per cent are reserved for those who reside in the subsequent 20 kms radius and cities of Adam and Thumrait. We encourage the
ENTREPRENEURSHIP
37May-Jun, 2012
LCCs (class A & B) to merge with the SLCCs.
WHAT KIND OF SUPPORT WILL BE PROVIDED TO THE SLCCS BY PDO?Unlike LCCs, we are awarding direct contracts to them in core areas such as drilling, mechanical, engineering, electrical, etc. So they don’t need to look for business from day one. They will be paid as per the market norms.
Extensive coaching and training will be done by us. We will extensively train their staff (Omanis living in the concession areas) and thereafter transfer them to the respective SLCCs. We have provided them our senior engineers as technical advisors to guide them in technical aspects. In addition, we have roped in leading international firm Black Gold Consulting to dedicatedly help SLCCs for two years to develop business plans and set-up HSE and management systems as per industry standards. We are also allocating industrial plots and workshops at PDO owned locations for SLCCs.
Our vision is that in two years, these companies must become ISO certified. We are also investing $35 million in buying equipment for SLCCs. The investment will be treated as an interest free loan for 10 years. Each company will be governed by a board with guidance
from us and Black Gold Consultants.
WHAT IS THE VISION FOR SLCCS?Our aim is to ensure that these SLCCs acquire skills in oil & gas fields’ core business and mature into fully competent contractors able to compete in the open market within 10 years. In the first five years, our focus will be on developing these companies by giving them all the support and direct contracts as per the market prices. In the subsequent five years, we expect them to become competitive under our supervision. We will allow them to submit their bids for works that have been previously assigned to them.
If the offer is not found suitable compared to the market prices, then the company will negotiate with them to be in parity with the market trend. They will also be allowed and encouraged to participate in other open competitive tenders like other contractors. After the incubation period of 10 years, they have to be completely independent and stand on their own feet.
WHAT ARE THE KEY CHALLENGES DO YOU FORESEE IN THE ROAD MAP AHEAD FOR THE LCCS?It is definitely not an easy task. It is difficult to manage, develop and allocate work to many LCCs. We
have tried to address this issue by encouraging them to become Al Ahliya LCC or even merge with SLCC. Another problem is that the expectations of the LCCs and SLCCs are on the higher side. They also need to appreciate and understand the significant efforts made in mobilizing, training the SLCCs’ workforce and developing the required competencies & HSE management system to be able to deliver as per PDO’s core activities and standards.
We have to create opportunities for the SLCCs from the very beginning to focus their efforts towards developing their business in core activities. We need to ensure that there is enough scope for core and support work for the newly formed SLCCs and Al Ahliya LCCs. Another challenge is to ensure that they meet the expected Omanisation targets. In the case of SLCCs, we are looking at them to achieve atleast 50 per cent Omanisation in the beginning and gradually increase it to 90 per cent by the time they enter their sixth year of operations. Despite encouragement from the Ministry of Oil & Gas and PDO, the LCCs are reluctant to merge with SLCCs. However, we are confident that in the coming years, we are going to see a new bunch of aggressive enterprises with strong business acumen as a result of the efforts made by us in this direction.
38 May-Jun, 2012
COVER STORY
PREFERRED
Nabil A. Al-GhassaniChief Executive Officer
Takamul Investment Company
39May-Jun, 2012
Takamul Investment Company is targeting to more than double its investments this year in its quest to promote the downstream industries to support entrepreneurship and generate employment opportunities, Akshay Bhatnagar reports
In order to diversify its oil-based economy, Oman has set-up a number of large industries such as Sohar Aluminium, Oman Oil Refineries and Petroleum Industries Company (ORPIC), Vale Oman and Jindal-Shadeed Iron & Steel, etc. Has it been the right strategy for Oman? Or the Sultanate should have opted for a more inclusive growth by creating a larger pool of small-to-medium industries instead of setting up such industrial behemoths? If we review the developments in the last couple of years, we will find that these industrial giants have been the fulcrum around which number of new business and employment opportunities are emerging in the form of downstream projects of small to medium scale. Most of these new enterprises are engineered by Takamul Investment Company. The Oman Oil Company’s subsidiary initiated operations in 2008 with the mandate to develop a sustainable downstream chain to support the burgeoning industrial sector in the country. It will be wrong to call the company just a downstream investment arm of Oman Oil Company. Takamul is more than an investment firm. Its role is manifold. It scouts for new business opportunities, invites local enterprises to suggest business ideas and encourages international firms to enter Oman. It brings the local enterprises and
specialized international firms together and provides the solid support for the development of projects.
Takamul leads market feasibility and technical studies to ensure a long-term viability of proposed projects. Takamul then invests in the ventures where it will hold a long-term position; provides assistance, best management practices and HR training to create sustainable and competitive business entities that thrive on the opportunities offered by the country’s heavy industries. Its initial focus was on creating downstream industries for Sohar Aluminium. “We are currently utilizing 100 per cent of the project’s aluminium allocation for Oman. That was our initial target. Now, we are looking at enhancing the allocation for Oman as we are considering more downstream industries in the near future,” stated Nabil A. Al-Ghassani, Chief Executive
Officer, Takamul Investment Company.On the overall investment front, he said, “Our current investment approvals are in the range of $500-600 million. We haven’t released part of our committed investments as some of the projects are in different stages of development. This year we are expected to commit another $1 billion worth of investments. We are in an advanced stage to approve an investment of $700-800 million in a single project. This will be our highest investment in a single project. Our highest investment till date has been $400 million in Oman Aluminium Rolling Company in Sohar. The project is currently under development. In addition, we have created a number of new companies with investments ranging between $5-50 million in different types of projects.”
Takamul’s strategy is to promote and invest in sustainable projects that rely
PARTNER
Takamul leads market feasibility and technical studies to ensure a long-term
viability of proposed projects. Takamul then invests in the ventures where it will hold a long-term position; provides assistance, best management practices and HR training
40 May-Jun, 2012
on feedstock from local upstream industries in primarily three areas – metals, petrochemicals and minerals. Recently, it has expanded its scope of portfolio by including service oriented industries also. For example, it has recently formed a company that will provide facility management services such as catering, maintenance, cleaning and other support services. This blends seamlessly in Takamul’s focus on creating and supporting the local enterprises and creating sustainable job opportunities for Omanis.
The company recently signed an agreement with the Special Economic Zone At Duqm (SEZAD) for the construction, management and operation of centralized services to meet the industrial needs related to the supply of
utilities including indusial gases, water, steam, central cooling and management of industrial liquid wastes.
Takamul will prepare the technical and financial studies for the construction and operation of the related assets on a commercial and sustainable basis that will enhance the industrial investment value provided by SEZAD in Duqm. Based on current studies, Takamul is expected to develop the utility projects and operate the services to host the planned industrial projects in SEZAD.
As mentioned earlier, metals have been one of the interest areas for Takamul. Oman Aluminium Rolling Company has been its flagship project in this sector till date. The production capacity of the Aluminium Rolling
COVER STORY
Takamul is
working towards
the developing an
integrated plan to
recruit and develop
Omani nationals
for the current and
future manpower
requirements
41May-Jun, 2012
Mill will be 140,000 tons of multi-purpose rolled aluminium sheets. “We are looking at setting-up number of tertiary downstream projects for Oman Aluminium Rolling Company,” the CEO informed. The tertiary investments could be made by small and medium enterprises (SMEs) focusing on manufacturing products such as office curtains and utensils, etc.
In a separate project, Takamul has established a joint venture ‘Oman Aluminium Processing Industries Ltd.’ with Oman Cables Industry in Sohar. It commenced production in 2010. Equipped with state-of-the-art equipment and technology from the US firm, Southwire Company, the plant is capable of manufacturing EC rods, overhead line conductors, EC and aluminium alloy wires and strand.
In addition, the company is currently building a galvanized steel wire plant ‘Gulf Specialty Steel Industries LLC (GSSI)’ in partnership with Global Steel Industries Pte Ltd, a wholly owned subsidiary of the Singapore-based BH Global Marine Limited, a leading supplier of marine and off-shore electrical products. The high-tech plant at Sohar Industrial Estate has an outlay of $30 million investment. The facility is expected to produce around 60,000 tonnes per annum of galvanized steel wire products for use in armoring of electrical cables.
Moving on to other segments, Takamul has a majority stake in Sohar Sulphur Fertilizers LLC. The company’s sulphur bentonite fertilizer plant at Sohar Industrial Estate recently started production. The 30,000 tonnes per annum facility processes sulphur, a byproduct of the crude refining process, into sulphur bentonite fertilizer, a micronutrient used extensively around the world to help fortify sulphur-
deficient soils. Apart from Takamul, Awtad Projects and Development (Al Nahdha Group) and the US firm CoreSulphur, the world’s leading provider of sulphur bentonite fertilizer technology, are the founding partners of the project. ORPIC will provide 30,000 tonnes per annum of sulphur as feedstock.
Al-Ghassani added, “We are also looking at the downstream for aromatics. We are eying at a PET oriented project as well. Sohar, Duqm and Salalah are the key areas which are on our radar. These are just some of the many projects that are under active consideration by Takamul. We don’t think local. We have to think global. We are not competing in Oman, we are competing in the global market and we have to ensure that we identify relevant business opportunities that are in sync with the raw material available in Oman and the feedstock that could be generated by our major industries.”
On being asked about the corporate social responsibility (CSR) activities of the Takamul, he responded: “We are the CSR of Oman Oil Company. That’s how we look at it. We are developing small to medium sized projects that are sustainable in long term; we are creating new industries and associated new job opportunities. We are focusing quite heavily on the employment of Omanis in the projects and ensuring they are
provided adequate growth-oriented training. We are also targeting creation of new entrepreneurs, allowing young talent to fulfill their desire to contribute to the success of the Omani economy; to develop their entrepreneurial spirit and to promote their career opportunities. Takamul focuses on developing Omani nationals to lead and operate through development of sustainable recruitment and training plan involving expatriates and Omani nationals.
“We may need to keep in mind that Takamul is a start-up investment company in green-field projects; profitability is a key factor that needs to be considered when developing funds to support CSR. Supporting the local industries through integration and establishing raw material through import replacement is a key CSR issue Takamul has adopted.”
He added, “It is worth mentioning that human capital development has been the most challenging aspect. Under the umbrella of Oman Oil Company, Takamul is working towards the developing an integrated plan to recruit and develop Omani nationals for the current and future manpower requirements. Oman Oil Co. has created a specialized unit ‘Takatuf’, staffed with dedicated, experienced and committed team responsible for developing the human capital required for the Group.”
We are also targeting creation of new entrepreneurs, allowing young
talent to fulfill their desire to contribute to the success of the Omani economy; to develop their entrepreneurial spirit and to promote their career opportunities
42 May-Jun, 2012
INDUSTRIAL PAINTS
Berger Paints has a long standing reputation for providing the finest quality coatings; Together with their exceptional technical prowess and service programmes, over a course of 253 years, the company has managed to build a name that’s respected across industries
THE LEADING EDGE
Berger Paints offers clients in the Oil & Gas sector, technologically driven products – be it for use at drilling rigs
at exploration, oil production platforms, or pipelines for upstream/downstream processing. Internationally, the company has a strong presence in key markets like Singapore, where they are approved suppliers to Shell Brunei, Exxonmobil Singapore, Brunei LNG and Petronas Oil & Gas. According to Rajarshi Banerjee, Senior Manager – Marketing, “We have launched many new, customised products for our clients in Asia. A prime example would be a coating especially developed for off shore platforms. The paint is applied on oil rigs and pipelines underwater in an environment classified as C5-M – the toughest and most extreme environmental classification.”(C5-M falls under the ‘very high’ corrosivity category, based on standard ISO 9223:1992 Corrosion of metals and alloys -- Corrosivity of atmospheres - Classification. It categorises environments on the basis of wet time, as well as sulphur dioxide and chloride contents.) For Shell Brunei, Berger Paints has successfully repainted over 250 off-shore platforms.
“The Oil &Gas industry has some of the most extreme exposure conditions and asset protection is a critical issue for our customers. Making the right choices can often impact long-term returns and Berger Paints stays true to this dictum. All our coatings maybe used across the oil and gas, refining and chemical processing industries and have been specially devised to reduce
the risk of damage and/or corrosion under these extreme conditions.”
“In the Middle East,” says Banerjee, “our focus on oil & gas has been primarily in the UAE and Bahrain.” Although, the company does have a substantial presence in Egypt, Qatar, Saudi Arabia and Oman. Berger Paints are approved suppliers for Saudi Arabian Oil Company (ARAMCO) and Bahrain Petroleum Company (BAPCO). “In Bahrain, we are the second largest providers for protective coatings for oil tanks and associated facilities.” In the United Arab Emirates, the company has been working closely with Abu Dhabi National Oil Company (ADNOC) and has recently completed big jobs in the Inter Refinery Pipeline Project (IRPP), Ruwais Sulphur Recovery and several gas tanking facilities for them. Berger Paints has closely works with ADNOC’s subsidiaries- Takreer, ADGAS, ADMA-OPCO, GASCO, National Drilling Company.“We are now increasingly focusing on expanding our client base in Qatar and Oman,” affirms Banerjee. “In Qatar, we have just finished the process of
enlistment with RasGas, QatarGas & Qatar Petroleum. In Oman, we’re an approved supplier for PDO and cover the entire range of PDO products.”
Technological expertise is at the heart of their business and their setup in Oman comprises a full-fledged manufacturing facility and laboratories run by well-qualified, NACE-certified technicians.Extensive testing is carried out byExova and Charter – both, trusted names in laboratory inspection and testing.Their products range from epoxies to polyurethane paintsthat prevent corrosion as well aszinc-rich paints that can withstand temperatures up to 600 degrees C. To meet the highly specific needs of the Oil & Gas industry, Berger Paints will also be introducing a special fire-proof paint which has the ability to resist the extreme high temperatures of hydrocarbon fires.Staying true to their on-going commitment to understanding the needs of customers, and in turn, providing quality products and solutions that consistently perform,Berger Paints have become the first choice for the industry’s most discerningbusinesses.
43May-Jun, 2012 443433344443343434MayMayMMMMMMMMMayMaaMayMMMMMMMaMayyMaayMMMMMMayMMMM yMMMM yMaMMMMMMM -Ju-JJuuJuuuJuuJuuJJuuuJuuJuuuuJuuunn, n, 200000100101201010011001110001110001001100110 222222222222
EVENTS CALENDAR
EVENTS CALENDAR
TITLE DATES LOCATION
74th EAGE Conference & Exhibition incorporating SPE EUROPEC 2012
4-7 June 2012 Copenhagen, Denmark
The 25th World Gas Conference 4-8 June 2012 Kuala Lumpur, Malaysia
SPE Americas Unconventional Resources Conference 5-7 June 2012 Pittsburgh, Pennsylvania, USA
2012 Energy Conference Developing Resources for Sustainability 11-13 June 2012 Port of Spain, Trinidad and Tobago
The Challenges of Sub-Salt Exploration and Development in Deep Sea Middle East and North Africa
11-13 June 2012 Beirut, Lebanon
SPE Heavy Oil Conference -- Canada 12-14 June 2012 Calgary, Alberta, Canada
SPE International Oilfield Nanotechnology Conference 12-14 June 2012 Noordwijk, The Netherlands
World National Oil Companies Congress 18-22 June 2012 London , UK
Intelligent Fields: Making Them Happen 19 - 22 Jun 2012 Bengaluru , India
SPE Deepwater Drilling & Completions Conference 20 - 21 Jun 2012 Galveston, Texas, USA
Inventing the Future of Mature Fields 23 - 25 Jun 2012 Tunis, Tunisia
Horizontal and Complex Wells: Reach Further, Recover More 25 - 27 Jun 2012 Istanbul, Turkey
IADC/SPE Asia Pacific Drilling Technology Conference 9 - 11 Jul 2012 Tianjin, China
Water Flooding 11 - 12 Jul 2012 Luanda, Angola
SPE Summit: The Human Factor, Process Safety and Culture 18 - 19 Jul 2012 Houston, Texas, USA
Distributed Fiber-Optic Monitoring for Well, Reservoir and Field Management
1 - 3 Aug 2012 Palos Verdes, California, USA
Nigeria Annual International Conference and Exhibition 6 - 8 Aug 2012 Lagos, Nigeria
Improving the Healthcare of Oil and Gas Fields -- Sense, Compute, and Act
2 - 6 Sep 2012 Dubai, UAE
Mathematical Methods in Fluid Dynamics and Simulation of Giant Oil and Gas Reservoirs
3 - 5 Sep 2012 Istanbul, Turkey
SPE/SEG Joint Applied Technology Workshop: Giant Fields Monitoring–Are We Doing It Right?
4 - 5 Sep 2012 Dubai , UAE
Well and Reservoir Management: Oil and Gas Field Monitoring 10 - 12 Sep 2012 Doha, Qatar
SPE/SEG Injection Induced Seismicity 12 - 14 Sep 2012 Broomfield, Colorado, USA
The Implications of a $200/bbl World 23 - 28 Sep 2012 Algarve, PortugalSource: Industry websites
In association with
Ministry of Environmentand Climate Affairs
Ministry of Health
Call CentreMedia PartnersSupport Partner Printing Partner
Let’s change the worldone green idea at a time.Get ready for Oman Green Awards on June 5.
5 June2012
An Initiative
Under the auspices ofH E Mohammed Al ToobiMinister of Environment and Climate Affairs
The Green Innovation AwardGreen Campaign of the YearThe Green Habitat AwardThe Green Research AwardGreen Landscape AwardGreen Footprint AwardGreen Guardian AwardGreen Champion AwardGreen Education Award
CATEGORIESOman Green Awards 2012 - Oman’s much awaited awards forum is back, bringing with it this year’s campaigns and initiatives that have increased awareness and motivated behavioural change for the protection and preservation of our environment. This is Oman’s biggest platform that will recognise and reward outstanding environmental vision and achievements by corporates, NGOs and individuals active in promoting and implementing ideas in the Sultanate.
Get ready to get involved…
For partnership enquiries please call Ahmed 99356490
46 May-Jun, 2012
Teejan Engineering, part of Teejan Trading & Contracting brings their extensive project knowledge and industry experience to the Oil & Gas industry
ON THE LAUNCHING PAD
Teejan Trading & Contracting
Company has had an
illustrious history, spanning
well over three decades.
Today, the company has evolved
to become one of Oman’s most
respected organisations with expertise
in civil infrastructure, fire engineering,
electromechanical, laboratory engineering,
environmental engineering and waste
water engineering sectors.
Teejan has been involved in major
infrastructure and industrial construction
projects throughout the country and over
CORPORATE PROFILE
47May-Jun, 2012
the years, has expanded and diversified
into different strategic divisions each
specialising in their field of expertise.
Civil, electromechanical and fire
engineering projects for the Oil & Gas
sector has always formed an integral part
of their projects.
According to Wafa Al Harrassy of Teejan,
“As subcontractors, Teejan has always
undertaken projects for the Oil & Gas
sector. For example, we’ve done the civil
bases for Oman Refinery in conjunction
with the contractor who was awarded
the project.” The company also executed
fire safety engineering projects for oil
tanking at Port Sohar as well as handled
civil works for the Independent Water and
Power Plant (IWPP) in Salalah. Currently,
Teejan is working on another EPC project
in conjunction with FATA (part of the
Italian conglomerate Finmeccanica) for
the construction of an aluminium rolling
mill in Sohar. The client is Aluminium
Rolling Mill Co (ARMCO), a subsidiary
of Takamul.
“In this way,” explains Al Harrassy, “we’ve
been closely involved in working with and
solving complex engineering challenges
and delivering successful EPC, projects
for many of Oman’s oil and gas majors,
independents and industry contractors. As
a direct result, today, we have established
a well-experienced, multidiscipline team
of project specialists, delivering tailored
expertise covering the full scope of the
project life cycle.”
Last year, the company established a
subsidiary – Teejan Engineering – to
exclusively handle EPC projects (in
its entirety) for the oil & gas sector in
Oman backed by a team with multiple
experiences in the field. Furthermore, the
company is also looking at establishing
Joint Ventures with multinationals to
bring in the best expertise to clients in
Oman. Keeping in this vein, Teejan also
participated in OGWA 2012 Exhibition
and Conference for the very first time. “We
found it (OGWA) an incredible platform to
network and establish contacts within the
industry. A lot of participation happened
from outside the Sultanate. We are very
positive about our interactions and have
established some promising leads.”
Despite having considerable experience
in the sector, it raises the question why
Teejan is only now entering the sector.
Al Harrassy explains, “We did not want
to immediately get into handling EPC
contracts because we wanted to enter the
industry with a sound track record and the
right experience. Over the years, we have
established a good working relationship
with some of the best organisations in the
business. This is one of our strong suits
and we certainly foresee it playing a role
in bagging some major contracts. The
competition in the market is quite healthy.
And we believe that as long as you know
what you want to do and know what
your plans are, you can move in the right
direction irrespective. We find ourselves
very competent in what we’re doing and
that keeps us motivated and geared for any
challenge in the future.”
48 May-Jun, 2012
Steven Chu - The China LinkCo-winner of the Nobel Prize for Physics in 1997, US Secretary of Energy Steven Chu is one of the most distinguished faces of renewable energy in the world, tasked with helping the Obama Administration invest in clean energy, reduce dependence on foreign oil, address climate change concerns and create millions of jobs while doing it. Chu has devoted a large part of his scientific career to alternative energy solutions and climate change research, in part as former director of the DoE’s Lawrence Berkeley National Lab. While the last century saw him win
the Nobel Prize, this century earned him R&D Magazine’s Scientist of the Year award for 2011. In announcing his appointment as Secretary of Energy, President Obama said that the “future of our economy and national security is inextricably linked to one challenge: energy (and) Steven has blazed new trails ...”. Chu’s most tangible successes have been the government’s investment in geothermal and offshore wind projects.
Indeed, Chu is one of the world’s leading authorities on renewable energy; and on a geopolitical level, his influence reaches
to China. Chu is a foreign member of the Chinese Academy of Sciences, has trained prominent scientists in China and helped to establish the Bio-X Center at Jiaotong University in Shanghai - all of this gives him valuable access to Chinese politicians.
Dan Reicher - Energy GuruUntil November 2011, Dan Reicher served as Google’s director of climate change and green energy initiatives, during which time he convinced the company to invest in a number of energy projects, some of them rather eccentric and risky, others more pragmatic. He was also behind Google’s policy proposals for Washington. Prior to 2007, Reicher served in the Clinton Administration as the assistant secretary of energy for energy efficiency and renewable energy. He was also considered for the post of energy secretary in the Obama Administration, but lost out to our first pick, Steven Chu.
Today, he’s practicing his innovation at Stanford University, which chose him to lead its new $7 million center to study and advance the development and deployment of clean energy technologies through innovative policy and finance. Stanford alumni Thomas Steyer and Kat Thomas donated the
THE CHANGE AGENTSJen Alic of Oilprice.com looks at the key figures shaping and influencing US renewable energy efforts. In considering from the numerous choices for these top five slots, we take into account a number of variables, including investment in renewable energy, the ability to influence policy and shape public opinion, and advocacy efforts. This goes well beyond simply counting coin - it is about innovation, imagination, vision, risk and patience. Arguably, these people will play an important role in your life and leisure, for better or worse. These are our picks:
RENEWABLE ENERGY
Steven Chu
49May-Jun, 2012
$7 million and trust in Reicher to lead the university’s efforts, which they said “is uniquely positioned to change our nation’s attitudes and capabilities regarding how we make and use energy. What our university did for the information revolution, it must now do for the energy revolution.” Broadly, the Stanford center will conduct research on energy policy and finance, with a particular focus on legislative, regulatory and business tools - all intended to boost public support for funding clean energy technologies.
It also hopes to produce world-class research for policymakers, the business community, and technology leaders. Reicher is influential in the renewable energy world on a number of levels, from finance to policy to advocacy. Not only does he have the ear of the government on policy, he also has the $7 million Stanford research effort at his disposal.
Elon Musk - Iron ManElon Musk is probably the most colourful of the figures on our Top 5 list. He has Hollywood’s eyes and ears, as well, which only adds to his public influence. Musk is the co-founder of and head of product design at Tesla Motors, the producer of electric cars, which is almost a singular focus of Musk’s current green energy efforts. Musk entrepreneurial innovation had already been demonstrated pre-Tesla, when he co-founded PayPal and SpaceX. He also chairs the board of SolarCity, a start-up focused on photovoltaics products and services aimed at climate change solutions. Most recently, Musk created the first viable electric car of the modern era, the high-end Tesla Roadster sports.
The Tesla Roadster will be followed by the four-door Model S sedan, scheduled to release in July, and the ModelX (a sort of SUV/minivan hybrid), slated for production in 2013. Musk’s vision:
making electric cars affordable to mass-market consumers thereby making a huge footprint in American and global energy efficiency and security. The Roadster is a high-end vehicle that will only attract the wealthy, but that is the point: Roadster revenues can fund research and development for lower-priced electric cars.
Countless awards and honours have come Musk’s way, from the Heinlein Price for Advances in Space Commercialization in 2011 to inclusion on Forbes’ list of “America’s 20 Most Powerful CEOs 40 and Under” that same year. Incidentally, Mush designed
the first privately developed rocket to reach orbit and served as the inspiration for the genius billionaire Tony Stark in the Iron Man movie series. He also made it onto TIME Magazine’s list of 100 most influential people in 2010.
Eddie O’Connor - Supergrid Superhero Eddie O’Connor, the CEO and co-founder of Mainstream Renewable Energy and the original founder of Airtrcity, is one of the world’s most interesting, energetic and innovative clean energy figures. O’Connor sold Airtricity to E.on and Scottish and Southern Energy for €2.2 billion in 2008,
Dan Reicher
Elon Musk
50 May-Jun, 2012
when he launched Mainstream along with Airtricity’s former finance chief, Fintan Whelan, investing €32 million in the start-up. O’Conner, who got his start in Ireland’s electricity company, has earned energy leadership awards across Europe, and in 2003 was named World Energy Policy Leader by Scientific American Magazine. O’Connor is behind the creation of some amazing onshore and offshore wind farm projects in Europe, North America, South America and South Africa, and is perhaps best known for his promotion of the European Offshore Supergrid, which envisions electricity interconnectivity on a scale that would entirely transform the European energy scene. O’Connor’s work has been extremely influential on global policy and he has certainly earned his place among the world’s most innovative public figures. He combines ideas with advocacy and action.
Paul Woods - The Algae KingPaul Woods would like no less than to revolutionize the energy sector, and his charisma is hard to match. Woods is the co-founder and chief executive officer of Algenol, the Bonita Springs-based alternative energy company, and his trademark is turning algae into ethanol (with the help of salt, carbon dioxide and sunlight). Algenol has not yet made its definitive mark on the energy industry, but Woods is certain it will. It has not been easy but Woods has proven a very patient warrior. There have been stops and starts. Most recently Algenol was forced to shelve expansion plans after concerns were raised about potential environmental consequences, but in April expansion plans were back on track and in full force. We like Woods because he’s a risk-taker and not one who will give up easily. We’re hedging our bets that algae will play a major role in America’s future energy security.
Source: oilprice.com
Eddie O’Connor
Paul Woods
RENEWABLE ENERGY
51May-Jun, 2012
INDUSTRIAL SCAN
Haifa Industrial Services Co LLC, a member of the Al Hosni Group International, recently relocated to a new plant with increased production services at the Rusayl Industrial Estate
NEW DIRECTIONS
Haifa Industrial Services Co LLC is a manufacturer of all types of LPG Steel Cylinders as per Omani
and GCC Standards and has supplied to all LPG Filling Plants in Oman and other export markets. The company is ISO Certified and follows assured Quality Management Systems for Production and Testing.
Haifa, located in Rusayl Industrial Estate, has a built up area of approximately 8,000 sq mt. The present capacity of the plant is 250,000 cylinders per annum and the company is gearing up to further increase the capacity by introducing one more shift if the demand for the products increases. At the moment the company is meeting local market’s demands and assigning more attention to develop export markets like UAE, Bahrain, Middle East and Africa.
In the year 2009, the company was awarded a tender issued by the Sharjah Government for the supply of LPG Cylinders to replace old, expired cylinders which was executed successfully and Haifa is now registered with them as an approved supplier for any future requirement. Recently Haifa Industrial Services were allotted land in Sumail Industrial Estate by PEIE and the Ministry of Commerce and Industry. The new plot is approximately 40,000 sq mt and will play an instrumental role in meeting the growing demands of high volume customers in the regional markets like UAE and Kuwait which will enable the
company to compete with international companies and quote for their tenders.
As per the Directives of the Government, the company has given due importance on the implementation of Omanization policies thereby recruiting skilled and unskilled Omanis and training them on various critical skills required in the process of LPG cylinders manufacturing.
The company specially extends their thanks to all the bottling plants in Oman for their continued support over the years in purchasing their LPG Cylinders requirement from Haifa Industrial Services company as well as PEIE – Rusayl Industrial Estate for all the support they receive from time to time in the development of the factory infrastructure.
52 May-Jun, 2012
OPINION
Speaking at the International Oil Summit in Paris, Mark Williams, Downstream Director, Royal Dutch Shell plc outlined how the industry can address the challenges of shortages of refining and distribution capacity by increasing and diversifying energy supplies and by building a more flexible and efficient downstream sector. In his own words:
SEISMIC SHIFT
Since last year’s summit, it’s
been another turbulent 12
months for the industry, with
ongoing tensions in the Middle
East and economic uncertainty. However,
there are tentative signs that the outlook
may be improving. Although there
are still some serious risks, especially
in Europe, it seems global economic
activity rebounded somewhat in the first
quarter of 2012.
And over the longer term, energy
demand is resuming its strong upward
trajectory. Worldwide energy demand
could double in the first half of this
century, driven by a rising population
and economic growth. With millions
of drivers taking to the road, demand
for liquid transport fuels will grow
particularly strongly, even as vehicle
efficiency improves. According to the
IEA, global liquid fuels demand could
rise by 26 per cent in the next 25 years,
to over 110 million barrels a day.
Growth will be particularly strong in
Asia’s emerging economies. In China,
for example, the vehicle fleet could
more than triple in the next 20 years to
around 600 million vehicles. As a result,
China´s oil demand could more than
double by 2030, reaching nearly 1.5
times the current US level. Globally, oil
supply will struggle to keep pace with
demand. This is partly due to declining
output from mature fields - perhaps by
80 per cent by 2035. Just to replace
this lost output, the world needs new
production capacity equivalent to one
Saudi Arabia every three years. In many
regions, much of the easily accessible oil
has been tapped, and supply increasingly
comes from challenging and remote
locations with high oil prices necessary
to incentivise the required investments.
According to the International Energy
Agency (IEA), output from resources
like oil sands and other heavy oils has
increased tenfold since 1980, and is
set to quadruple again by 2035. The
rapid development of liquid-rich shales
– using the same hydraulic fracturing
technologies as shale gas – holds
significant promise, if it can be extended
globally.
53May-Jun, 2012
From an upstream perspective, these
trends are a testament to rapid innovation
unlocking new resources. But in the
downstream, shifting demand and
increasing reliance on complex oils
create challenges around refining and
distribution. China, for example, has
roughly half the refining capacity of the
United States, but its oil demand will
exceed that of the US by 2035.
To adapt to these changes, the IEA
estimates the world needs $10 trillion of
new oil infrastructure by 2035, as part
of $38 trillion in energy infrastructure
worldwide. Across the world’s energy
system, that’s around $3 million of
investment every single minute for
almost 25 years. And for the industry,
that adds up to a major challenge. I
believe the industry needs to do several
things: increase liquid fuel supplies,
diversify the transport fuel mix,
and build greater flexibility into the
downstream infrastructure.
First, increasing production of liquid
fuels. Thanks to rapid innovation,
potentially huge new energy
resources are coming online. But the
industry needs to continue finding
more resources: and developing the
infrastructure to process and distribute
them will be an enormous challenge.
Output from Canada’s oil sands, for
example, could triple by 2035, to 4.5
million barrels per day. Making that
happen requires not only the capacity to
extract oil, but also to bring it to market.
According to the American Petroleum
Institute, oil sands output could be
constrained by 2014, due to limited
pipeline capacity to US refineries and
markets.
To unlock the true potential of Canada’s
oil sands, the industry and governments
must ensure the right pipelines,
upgraders and refineries are in place.
At Shell, we’ve increased capacity at
our Athabasca Oil Sands Project in
Alberta by 100,000 barrels per day,
opening a second mine and expanding
the upgrader converting bitumen into
crude. But industry wide, oil sands
output risks outgrowing capacity to
process and export it. Similarly, the rapid
rise of onshore oil production in the US
– typified by the Bakken development –
are testing the limits of the infrastructure
and refining system.
Another way to meet rising demand is
by diversifying the transport fuel mix.
This includes increasing the contribution
of biofuels. A key benefit of biofuels
like sugar-cane ethanol is that they are
compatible with existing infrastructure,
and can be distributed at ordinary filling
stations. The IEA says global demand for
biofuels could triple by 2035 as public
acceptance grows.
At Shell, we recently launched the
Raízen joint venture with Cosan in
Brazil, which will produce and distribute
over 2 billion litres of sugar-cane ethanol
each year. Because sugar-cane ethanol
emits up to 70 per cent less CO2 than
standard petrol over the lifecycle,
it can help make liquid fuels more
environmentally acceptable in an era of
tighter regulation.
Another promising area is natural gas.
The development of potentially huge
new resources like shale gas continues to
revolutionise the supply outlook in many
regions. North America, for example,
now has a century of gas supplies at
current consumption rates, just a few
years after it was feared production
decline had set in.
Many other regions offer similar
prospects. So natural gas as a transport
fuel will also grow, both through
conversion to liquid fuel and directly
into transportation. Last year’s opening
of Pearl GTL, the huge gas-to-liquids
plant developed by Shell and Qatar
Petroleum, was a significant landmark
for the industry. With a total investment
of some $18-$19 billion, it illustrates
the scale of infrastructure needed to
meet rising demand. Pearl will produce
enough GTL gasoil to fill the equivalent
of over 160,000 cars a day, as well as
products like chemical feedstocks and
lubricants, helping generate new revenue
from Qatar’s abundant gas resources.
LNG also holds great potential as a
transport fuel, thanks partly to its ability
to reduce CO2 emissions and local air
pollution. In Canada, Shell is building
LNG refuelling stations along the
Alberta to Vancouver trucking route,
enabling truck fleets to run on natural
gas instead of diesel. As technology
improves, LNG could play a growing
role in the transport fuel mix.
So gas is likely to gain market share
in transportation fuel, but refiners and
marketers may gain as well: historically
low prices for natural gas offer
manufacturers a powerful competitive
advantage, potentially stimulating
economic growth and ensuring more
robust oil demand in the future.
The third way to meet rising fuel demand
is by developing a more flexible and
efficient downstream sector. Of course,
the downstream has not had an easy few
years. The economic downturn, higher oil
prices, and improving vehicle efficiency
have dampened demand in mature
markets. As margins have tightened,
the industry has seen a spate of refinery
closures. In the UK, for example, the
number of refineries has fallen from 18 in
the late 1970s to 8 today.
Part of the problem is that some existing
refineries are unsuitable for processing
more difficult crudes on which supply
increasingly depends. They are in the
54 May-Jun, 2012
wrong places. And they make the wrong
products. In China, increasing imports of
higher-sulphur crudes from the Middle
East put pressure on refineries designed
to process sweeter domestic crudes. And
the big petrol machines in the Atlantic
Basin increasingly find demand for
petrol stagnant or declining, in the face
of petrol capacity increases in the Middle
East and Asia.
To address these challenges, the industry
needs more efficient, flexible, integrated
refineries. That’s a big ask, given today’s
tough investment climate. But one
example of what we could see more of
is Shell and Saudi Aramco’s Motiva
joint venture expanding the Port Arthur
Refinery on the Gulf of Mexico, from
275,000 to 600,000 barrels per day.
The expansion will enable us to process
heavy, sour, acid crudes from wherever
they become available – initially Saudi
Arabia, but also other areas. It will be able
to shift easily between producing petrol
and diesel as demand changes. And it will
have a large diesel export capacity to help
meet robust global demand, while also
supplying US markets with an efficient
inland distribution system. This kind of
flexible, integrated infrastructure is
central to Shell’s plans for selective
downstream expansion.
Finding new resources, extracting them
from challenging locations, processing
and distributing them represents a truly
global challenge, spanning the entire
value chain. In this context, I believe
integrated IOCs have a critical role to
play. By combining our upstream and
downstream capabilities, integrated
companies can drive innovation and
match resources with demand on a global
basis. We will increasingly do this in
close collaboration with our
NOC partners.
This includes building triangular
relationships between IOCs like Shell,
major resource holders, and major
demand holders. Shell’s partnership
with CNPC is a great example.
Within China, we’re working with
CNPC’s listed arm, Petrochina, to
develop tight gas resources to help
meet growing domestic demand. But
we’re also looking beyond China’s
borders, even joining together to
buy a company in a third country:
Arrow Energy, in Australia. In a great
example of tripartite co-operation,
Shell and Petrochina have also joined
with Qatar Petroleum to explore for
natural gas onshore and offshore Qatar.
And drawing on Shell’s downstream
expertise, Petrochina, QP and Shell are
now developing plans for an integrated
refinery and petrochemical complex in
the eastern Chinese city of Taizhou. By
linking diverse partners, we can match
new resources with new demand.
Linking upstream and downstream
activities also means integrated
companies can create commercial
opportunities right along the value
chain. Our Pearl GTL project with Qatar
Petroleum is again a good example.
Shell has been perfecting the technology
behind Pearl for more than 30 years.
We hold about 3,500 patents in the GTL
process. To deliver Pearl, we drew on
advanced technical skills from right
across the company.
Our upstream business helps produce
1.6 billion cubic feet of natural gas a
day from Qatar’s North Field. And our
downstream draws on over 30 years of
research and development to convert
that gas into products like GTL gasoil,
kerosene and base oils. The downstream
also helps market and distribute these
products around the world. By fusing
upstream and downstream operations, we
can link resource holders with demand
holders, and help NOCs realise their
global ambitions.
In conclusion, recent years have seen
seismic changes on both the demand
and supply side of the energy industry.
A combination of rising demand, a
shifting global energy footprint and an
increasing reliance on complex resources
is creating significant challenges for
the industry. But with the right projects
and partnerships, IOCs and NOCs can
leverage each other’s strengths to bring
customers and resources together.
OPINION
55May-Jun, 2012
JOB POSTINGS
JOB POSTINGS
POSITION COMPANY LOCATION DETAILS
Cwi Supervisor PDO Oman www.pdo.co.om
Drilling Supervisor PDO Oman www.pdo.co.om
Senior Pipeline Engineer Consolidated Contractors International Company
Oman www.ccc.gr
Engineering Manager Worleyparsons Oman www.worleyparsons.com
General Manager - Exploration & Business Development Mawarid Mining Oman www.mawaridmining.com
Engineering Manager(Pmc) Worleyparsons Abu Dhabi (UAE) www.worleyparsons.com
General Manager Hewlett Civil Engineering Ltd Oman www.hewlett.co.uk
Senior Development Engineer Worleyparsons Abu Dhabi (UAE) www.worleyparsons.com
Senior Project Control Engineer(Pmc) Worleyparsons Abu Dhabi (UAE) www.worleyparsons.com
Project Engineering Manager - Offshore Petrofac International Limited United Arab Emirates (UAE) www.petrofac.com
Project Director (Onshore / Offshore) Petrofac International Limited Sharjah (UAE) www.petrofac.com
Environmental Consultant SGS Oman www.sgs.com
Field Specialist- Artificial Lift Systems Baker Hughes Pescara, It-Pe (Italy) www.bakerhughes.com
Senior Drilling Engineer Baker Hughes Aberdeen, United Kingdom www.bakerhughes.com
Field Specialist- Process And Pipeline Services Baker Hughes Aberdeen, United Kingdom www.bakerhughes.com
Wireline Field Engineer/ Specialist Baker Hughes Norway www.bakerhughes.com
Design Engineer Chevron Belle Chasse, La www.chevron.com
Application Manager, Oil & Gas Drilling Fluids Evonik Degussa Corporation Houston, Texas Area www.corporate.evonik.com
Senior Drilling Engineer Saudi Aramco Saudi Arabia www.saudiaramco.com
Reservoir Engineer, Chief Oxy Bakersfield, California www.oxy.com
Petroleum Engineer Saudi Aramco Saudi Arabia www.saudiaramco.com
Mechanical Engineer Saudi Aramco Saudi Arabia www.saudiaramco.com
Reservoir Engineer - Advisor Oxy Greater Los Angeles Area www.oxy.com
Well Intervention Engineer - North America Gas BP International Houston, Texas Area www.bp.com
Drilling Engineer – North America Gas BP International Houston, Texas Area www.bp.com
Chemical Engineer - Oil Processing Saudi Aramco Saudi Arabia www.saudiaramco.comSource: From different corporate, recruitment and social networking websites
Strategic Partners
10 JUNE 2012 I Shangri-La's Barr Al Jissah Resort & Spa
Who will shine brightest at AIWA Awards 2012 on 10 June?Soon, AIWA Awards will celebrate the Omani enterprises and corporate captains who blaze a trail for the next generation of home-grown entrepreneurs and professionals.
A glittering occasion and networking opportunity like no other, with highly distinguished guests, AIWA Awards will recognise Oman’s Top 5 Small, Mid and Large Cap companies for their outstanding achievements, and honour three special awardees for their contributions.
Knowledge PartnerSupport Partners
CapitalMarketAuthority
IN ASSOCIATION WITH
Media PartnersValidation Partner Call CentrePrint Partner
For enquiries, please contact Ahmed at 99356490 or [email protected]
Please reserve your seat at AIWA Awards 2012.Contact Rekha at 99269147 or [email protected], today.
HURRY! LIMITED SEATS ONLY.
MARKET CAP:OVER RIAL 75 MILLION
MARKET CAP:RIAL 25 - 75 MILLION
MARKET CAP:RIAL 10 - 25 MILLION
5 winners will be chosen from each of the 3 categories - Small Cap, Mid Cap, Large Cap.
167 COMPETITORS.45 FINAL CONTENDERS.ONE MOMENT OF GLORY.LARGE CAPAhliBankAl Maha PetroleumBank DhofarBankMuscatBank SoharNational Bank of OmanOman CementOman Flour MillsOman International BankOman Oil Marketing Co.Omani Qatari Telecom Co. - NawrasOman Telecommunications - OmantelRaysut CementShell Oman MarketingSalalah Port Services
MID CAPAl Anwar Ceramic TilesACWA Power BarkaAl Jazeera Steel ProductsAl Omaniya Financial ServicesA’Saffa FoodsGulf Hotels (Oman)Muscat FinanceOman ChlorineOman National Engg.Oman RefreshmentPort Services Corp.Salalah Flour MillsSMN PowerTaageer FinanceUnited Finance
SMALL CAPAl Jazeira ServicesAl Kamil PowerAreej Vegetable OilsMuscat Gases Co.Muscat National Holding Co.National Aluminium ProductsNational FinanceNational GasOman ChromiteOman Fiber OpticsOman Hotels & TourismOman Investment & FinanceOman Orix LeasingSahara HospitalityUnited Power
58 May-Jun, 2012
ECONOMY
The oil & Gas companies are going to benefit from higher oil prices resulting from sanctions on Iran but global corporate sectors would suffer, says Moody’s reports
‘CORPORATE SECTORS WOULD SUFFER’: MOODY’S
The higher oil prices that could potentially result from new US and European Union (EU) economic sanctions
against Iranian oil exports would be credit-positive for international oil companies (IOCs) overall, but negative for corporate sectors such as airlines, oil
refining, European autos and retail, says Moody’s Investors Service in two new reports published recently.
However, Moody’s points out that the risk of a $150 bbl oil price resulting from Iran blocking the Strait of Hormuz, a key export route for oil
& gas producers, is low because the blockade would be short-lived.
The two new Moody’s reports are titled -- “ Global Non-Financial Corporates: Airlines, Oil Refining, European Autos and Retail at Risk in $150bbl Oil Price Scenario” and “Global Oil &
59May-Jun, 2012
Gas companies: Sanctions Against Iran Would Benefit Upstream Oil Ops And Hurt Downstream”.
“As most IOCs have no or very limited exposure to Iran in terms of their overall production, higher prices triggered by a supply squeeze from the sanctions on Iran would benefit their oil exploration and production (upstream) operations considerably,” says Olivier Beroud, Moody’s London-based Managing Director for EMEA Corporates.
According to Moody’s, these gains would more than offset any adverse effects on IOCs’ refining (downstream) businesses, which typically account for a much smaller portion of their total operating profits and cash flows.
“However, an oil shock resulting from a US/EU economic confrontation with Iran would ripple throughout other industries around the world – and could also derail the global recovery,” cautions Steven Wood, Moody’s NY-based Managing Director for US corporates.
Moody’s defines an “oil shock” as a period lasting at least several months during which oil prices rise to a sustainable $150 per barrel (bbl). The rating agency has identified the following sectors as potentially being hardest-hit in such a scenario:
• European automakers would face a greater risk from an oil shock than their US or Asian counterparts, although profits and cash generation for US automakers would also come under great pressure.
• Airlines would suffer operating losses from sustained higher costs for jet fuel, and the fare increases that result would hurt passenger demand worldwide. European airlines face more exposure to any political
instability in the Middle East than their US or Asian counterparts.
• Retailers, restaurants and other industries that depend on discretionary spending would suffer if fuel prices surged for consumers. Rising transportation and distribution costs would weaken revenues for European retailers. Makers of consumer durables would also see pressure from reduced consumer demand and higher raw-material prices. However in the US, big-box discount retailers and warehouse clubs including Wal-Mart, Target, Costco and BJ’s Wholesale could benefit as consumers economize.
“The magnitude of oil price increases linked to the EU and US sanctions, which take effect from June, will depend in part on how strictly they are adhered to,” says David Staples, Managing Director for GCC corporates based at Moody’s Dubai office. At this stage, it is unclear to what degree Iran’s top customers will reduce their imports in order to avoid the sanctions. (The US sanctions stipulate that countries only have to cut their purchases “substantially” to be exempt.)
Other major oil-producing countries have capacity to cover the loss of
supply from Iran, although it will take time for this to become operational. Separately, ongoing tensions across Middle East and North Africa (MENA) continue to create uncertainty for IOCs:
• In Syria, rated IOCs have already ceased production in accordance with EU sanctions. However, this is unlikely to have a significant bearing on IOCs’ output as they have very limited exposure to the country.
• In Yemen, the operating environment is likely to remain uncertain in the face of ongoing security threats from militant groups.
• Although Egypt’s political situation remains unsettled, for now rated IOCs are not experiencing any disruption to their output.
• However, Libyan oil production is coming back on stream faster than expected. Eni S.p.A. (A2/ negative), which has the largest exposure to Libya among IOCs rated by Moody’s, expects its production to return to pre-civil war levels by around the middle of this year, while OMV AG (A3/stable) and Repsol YPF S.A. (Baa2/review for downgrade) are rapidly ramping up their production in Libya.
The magnitude of oil price increases linked to the EU and US sanctions,
which take effect from June, will depend in part on how strictly they are adhered to,” says David Staples, Managing Director for GCC corporates based at Moody’s Dubai office. At this stage, it is unclear to what degree Iran’s top customers will reduce their imports in order to avoid the sanctions
60 May-Jun, 2012
PETROCHEMICALS
Iraq would embark on a strong growth path that would result in a drop in oil price which will benefit the petrochemical companies which extract NAPTHA from oil to use as their feedstock, says Global Investment House’s report ‘GCC Petrochemical Sector Q1 2012’. Report excerpts:
BETTING ON IRAQ
The GCC petrochemical companies first quarter (Q1) earnings in 2012 declined by 10.2 per cent on year-on-year
( YoY) basis to $3.1bn as compared to $3.5bn in the same period last year. While on a quarter-to-quarter (QoQ) basis, the earning improved by 23.9 per cent added majorly by SABIC profit growth of 39 per cent QoQ (contributing 61.5 per cent in Q1 2012 compared to 58.4 per cent in Q1 2011 and 54.9 per cent in Q4 2011. First quarter performances of various petrochemical companies witnessed improvement on a QoQ basis mainly due to advancement in the product prices and higher volumetric sales.
Iraq’s oil production has surpassed three million bpd as the country prepares to overtake Iranian production by the end of the year. The country’s crude production rose by 195,000 barrels per day in April to touch 3.03mn for the first time since 1979, while oil exports rose to 2.51mn bpd, according to the International
Energy Agency (IEA). According to the IEA, Iran’s sales have dropped by 400,000 bpd to 2.1mn during the first quarter of the year while Iraq shipped a daily average of 2.14mn bpd during the same period. With the fourth round of oil auction due at the end of May, there has been a lot of expectation that Iraq would embark on a strong growth path that would benefit global supplies and would result in a drop in oil price which will benefit the petrochemical companies which extract NAPTHA from oil to use as their feedstock. According to a study released by AlixPartners - the petrochemical companies in the Middle East have benefited significantly from the availability of, and proximity to, oil and natural gas feedstock, production of many petrochemical products in the region will exceed demand significantly over the next few years, leading to low utilization rates and poor margins for less-competitive companies. Major driver for this threat is the huge expansion of chemical production
capacity in the GCC coming on stream in the next three to five years.
Overall, the performance of regional petrochemical companies was mixed on a QoQ basis with SABIC (Saudi Basic Industries Corp.), IQ (Industries Qatar), YANSAB (Yanbu National Petrochemical Company), Sahara Petrochemical, Shell Oman, Petro Rabigh and Dana Gas reporting better than expected earnings while other stocks such as Saudi Kayan Petrochemical Co., SAFCO (Saudi Arabia Fertilizers Co.), TASNEE (National Industrialization Co.), Sipchem (Saudi International Petrochemical Co.) and Nama Chemicals Co. reported drop in earnings or extended their losses. Within the GCC petrochemical companies, Global Research Petrochemical Universe witnessed a decline in profitability during Q1 2012 on a YoY basis. Drop in profitability was majorly due to increase in cost of sales which dropped the gross margins of the
Global Research Petrochemical Coverage
Ticker Mkt Cap Price* P/E P/BV ROE(USDmn) In (LC) 1m 3m 12m 2012e 2012e 2012e 9.395,67ASK ,CIBAS 95.75 -6.4% 1.3% -9.9% 9.2 1.7 20.6%
SIPCHEM, KSA 1,970.1 20.15 -8.4% -4.5% -3.6% 11.0 1.3 12.0% 0.998,11ASK ,OCFAS 178.50 -2.2% 1.4% -0.1% 10.1 5.0 51.6%
YANSAB, KSA 7,244.4 48.30 -6.7% 3.9% 1.3% 7.8 2.0 29.0%DANA, UAE 700.8 0.39 -17.0% -11.4% -40.9% 4.7 0.3 6.0%IQ, KSA 0.418,02 137.80 -1.4% 4.7% -5.5% 7.9 2.5 33.9%
Stock Performance
Source: Bloomberg & Global Research* Market prices as of 16 May 2012
61May-Jun, 2012
GCC Petrochemical Sector Companies Pr tability(USD mn) 1Q11 4Q11 1Q12 YoY Chg (%) QoQ Chg (%)SABIC 2,050.5 1,396.6 1,938.9 -5.4% 38.8%IQ 575.5 463.2 524.0 -8.9% 13.1%SAFCO 222.0 340.4 209.8 -5.5% -38.4%KAYAN (2.2) (50.9) (19.0) n/m n/mYANSAB 191.4 177.3 192.1 0.3% 8.3%TASNEE 154.7 144.6 139.8 -9.6% -3.3%RABIGH 186.3 13.4 30.9 -83.4% 130.2%PETROCHEM (2.8) (7.6) (5.8) n/m n/mSIPCHEM 32.2 56.3 40.4 25.4% -28.2%SAHARA 26.7 1.3 11.2 -58.1% 737.5%APC 35.0 24.2 15.2 -56.5% -37.0%CHEMANOL 2.6 6.2 6.7 161.6% 8.3%ALUJAIN 3.0 (6.6) 2.6 -15.8% -138.7%NAMA (1.2) (61.3) (1.2) n/m n/mDANA 25.1 40.1 56.1 123.9% 40.1%SHELL OMAN 10.4 5.3 8.8 -16.2% 65.9%GCC 3,509.2 2,542.5 3,150.7 -10.2% 23.9%
ability 1Q11 4Q11 1Q12 YoY Chg (%) QoQ Chg (%)Saudi Arabia 2,898.2 2,034.0 2,561.8 -11.6% 25.9%Qatar 575.5 463.2 524.0 -8.9% 13.1%Oman 10.4 5.3 8.8 -16.2% 65.9%UAE 25.1 40.1 56.1 123.9% 40.1%Sector 3,509.2 2,542.5 3,150.7 -10.2% 23.9%
Composition 1Q11 4Q11 1Q12 YoY Chg (%) QoQ Chg (%)Saudi Arabia 82.6% 80.0% 81.3% - -Qatar 16.4% 18.2% 16.6% - -Oman 0.3% 0.2% 0.3% - -UAE 0.7% 1.6% 1.8% - -Sector 100.0% 100.0% 100.0% - -Source: Company Reports & Zawya
sector. Cost of sales rose during the period by more than 16 per cent which dropped the gross margins of the sector to an average of 33.1 per cent in Q1 2012 compared to 37.4 per cent in the same period last year. SIPCHEM margins dropped the most by 6.9pps followed by 5.7pps drop reported by Industries Qatar. Only company registering growth in gross margins was Dana gas by 9.7pps.
Internationally, gas prices continued to drop. Price of natural gas feedstock used in the petrochemical industry, fell by 26.2 per cent QoQ and down 41.3 per cent YoY. Drop in average prices of benchmark was mainly because of discovery of considerable amount of natural gas reserves in western countries coupled with high storage levels and
fragile demand. On an average, price of petrochemical products rose by 2.2 per cent QoQ during Q1 2012. Price of Ethylene witnessed an increase of 17.8 per cent QoQ during Q1 2012. While price of LDPE and LLDPE dropped on a QoQ basis by 6.9 per cent and 0.1 per cent respectively. The sector top-line witnessed a YoY increase of 8.8 per cent in Q1 2012, which was due to the combined effect of increase in price of petrochemical products along with commencement of commercial production from the newly expanded facilities. Most topline growth was registered by SIPCHEM at 52.7 per cent followed by 17.7 per cent increase in the topline of YANSAB. Lowest growth was registered by SAFCO on the backdrop of fall in the prices of Ammonia and Urea by 32.3 per cent and 11.4 per
cent QoQ during Q1 2012. Overall net income registered by the companies under the coverage was $2.96bn in Q1 2012 as compared to $3.09bn in the comparable period last year. SABIC continued to remain the lead contributor to the sector profitability at 65.5 per cent followed by Industries Qatar and SAFCO at 17.7 per cent and 7.1 per cent respectively.
During Q1 2012, the companies were able to reduce the cost of funding which dropped the interest expense by 13.5 per cent YoY. Overall interest expense during Q1 2012 dropped to $249mn as compared to $288mn in Q1 2011. Drop in the interest expense was on the back of cheaper refinancing rates available worldwide and easier fund raising for
62 May-Jun, 2012
these companies because of backing of their oil rich governments. Cash and bank balances of the sector continued to rise, reaching $19.6bn in Q1 2012 compared to $14.6bn in Q1 2011, growth of 34.7 per cent.
NEW DEVELOPMENTSSinopec SABIC Tianjin Petrochemical Company (SSTPC) laid the foundation for a polycarbonate production complex with 260,000tpa. With a total investment of RMB11bn ($ 1.7bn) and covering a ground area of 67 hectares, this polycarbonate production complex is the Phase Two project and was approved by China’s National Development and Reform Commission in January 2012. With two sets of phosgene free production systems, with an annual capacity of 130 kilo tons each, to be built, the new polycarbonate production complex will start construction in Q2 2012 and is expected to be operational in 2015.
Saudi’s Advanced Petrochemical Company and Turkish petrochemical trading firm Bayegan Group have agreed to jointly invest in building a Propane Dehydrogenation (PDH) and Polypropylene (PP) plant in southern Turkey. The firm would establish the plant jointly with Advanced Petrochemical with a $1bn investment. The project will not only include the construction of a state-of-the-art PDH-PP plant, but
will also include the building of port facilities. Construction is expected to start in the second quarter of 2013 and is scheduled to be completed by the fourth quarter of 2015. The plant will have an annual capacity of 500,000 tons and will supply up to one third of the annual polypropylene needs of Turkey. The plant will produce polypropylene from propane gas, which will be bought from producers in the Middle East and transported to Turkey by tanker. Advanced Petrochemical will hold 70 per cent of the equity in the new venture with Bayegan holding the remaining 30 per cent.
Saudi Arabia’s Sipchem Chemical Co, a fully-owned unit of Saudi International Petrochemical Co, has signed a $43.9mn loan facility agreement with the Saudi Industrial Development Fund (SIDF) to help finance the construction of an ethyl acetate and butyl plant in Jubail. The plant will have a production capacity of 100,000 tons per year. The total cost of the project is around $93.3mn, and is expected to start during the second quarter of 2013. It will supply both the local and international markets with ethyl acetate and butyl acetate. The feedstock for the production of ethyl acetate is acetic acid, which will be obtained from the International Acetyl Company, an affiliate of Sipchem, and ethanol will be imported from aboard. The National Industrialization Co. (Tasnee)
and Sahara Petrochemical Co. agreed a $1.4bn financing deal with Saudi banks to support three joint ventures: Saudi Acrylic Acid Co., Saudi Acrylic Monomers Co. and Saudi Polyolefins Co. The agreement is signed for 16 years as the two will pay back the amount in half-yearly installments for providing finance required for their acrylic acid project in the petrochemical complex of the Jubail Industrial City. Tasnee and Sahara have already signed agreements to start engineering, procurement, and early construction works at their $1.07bn acrylic acid project. The project has a designed annual capacity of 145,000 tons of crude acrylic acid, 145,000 tons of butyl acrylate, and 85,000 tons of pure acrylic acid. Tasnee has a 52.3 per cent stake in Saudi Acrylic Acid Co. while Sahara holds 43.16 per cent.
$1bn sukuk, secured against certain Egyptian assets as well as SajGas and UGTC, are due to mature on 31 October, 2012. Although the economic realities outlined above affected Dana’s ability to raise new funding, the company is committed to finding a consensual solution that is equitable to all stakeholders. For these purposes, the company has appointed Deutsche Bank, Blackstone Group and Latham & Watkins as its financial and legal advisors to advise on various options for discussions with the sukukholders and their advisors.
PETROCHEMICALS
63May-Jun, 2012
TENDERS
Tender WatchWORK COMPANY DETAILS
FEED for replacement of NFIS I/A package at Dukhan Qatar Petroleum www.qp.com.qa
FEED for new gas Kod at HP/LP outlet & FNGLC spillback line Qatar Petroleum www.qp.com.qa
Provision of heavy lifting services at MM and BH fields during
shutdown
Qatar Petroleum www.qp.com.qa
Prov. of accommodation barge to support PS2/3 shutdown in
QP’s offshore fields
Qatar Petroleum www.qp.com.qa
FEED - Centralised wastewater and sewage treatment plant Qatar Petroleum www.qp.com.qa
Pipeline maintenance contract (North) Petroleum Development Oman www.pdo.co.om
Pipeline maintenance contract (South) Petroleum Development Oman www.pdo.co.om
Pipeline maintenance contract (Central Oman) Petroleum Development Oman www.pdo.co.om
Topographical survey and mapping services Petroleum Development Oman www.pdo.co.om
Yibal rejuvenation project Petroleum Development Oman www.pdo.co.om
Provision of digital rock analysis services Kuwait Oil Company www.kockw.com
Consultancy services to debottleneck GC-17 at West Kuwait Kuwait Oil Company www.kockw.com
Provision of gas lift services Kuwait Oil Company www.kockw.com
Inspection of mobile equipment & plant Kuwait Oil Company www.kockw.com
Supply, installation, commissioning, training and preventive
maintenance of intensive care ventilators for adult, pediatric
and neonatal patients complete with all standard accessories &
consumables at Ahmadi Hospital
Kuwait Oil Company www.kockw.com
64 May-Jun, 2012
Rising global supply has contributed to an increase in inventories, preventing prices from moving higher
DECLINING MODE
After three consecutive
monthly gains, the
OPEC Reference Basket
declined in April to settle
at $118.18/b, representing a drop of
$4.79 or 3.9 per cent. Prices remain
elevated by the risk premium associated
with ongoing geopolitical factors. The
decline in the value of the Basket came
with the start of the first month of the
typically low demand season in the
second quarter. Crude prices shifted
into contango for the first time in over
a year amid higher supplies and weak
consumption. The decline in crude oil
prices occurred as refined product prices
came down from the peak levels seen
in previous months. Moreover, rising
global supply contributed to an increase
in inventories, preventing prices from
moving higher. On 9 May, the OPEC
Reference Basket stood at $109.85/b.
World economic growth expectations
for 2012 remain unchanged at 3.3 per
cent. The US continues to enjoy solid
momentum, with the growth forecast
revised up by 0.1 pp to 2.3 per cent. In
contrast, the Eurozone continues to weaken
and is now expected to contract by 0.4 per
cent, compared to the minus 0.3 per cent
forecast in the previous month. The growth
forecast for Japan remains unchanged at
1.8 per cent. With these offsetting revisions
in the OECD, growth in the export-led
emerging economies is also unchanged.
India is expected to expand by 6.9 per cent
in 2012, while China is projected to grow
at a solid 8.2 per cent. Overall, the global
economic outlook remains fragile, with
heightened uncertainties in the Euro-zone
and potential spill-over effects in the
emerging markets.
World oil demand growth in 2012 now
stands at 0.9 mb/d, broadly unchanged
from the previous report. Given the
stabilization of the US economy and the
shutdown of Japanese nuclear power
plants, world oil demand growth has
– at least for the short-term – stopped
its declining trend and is showing
some growth. Oil demand in non-
OECD countries is also indicating a
slight improvement. The upcoming
driving season in the US might be
affected by higher retail gasoline prices
and uncertainty regarding economic
developments. Japan’s oil usage also
could slow if the country were to restart its
nuclear plants.
Non-OPEC supply is forecast to grow by
0.6 mb/d in 2012, following an increase
of 0.1 mb/d in 2011. This represents
an upward revision of 50 tb/d over the
previous report. The adjustment to this
year’s growth was mainly due to the
release of preliminary 1Q12 data for
actual production, particularly for the US.
OPEC NGLs and non-conventional oils
in 2012 are expected to increase by 0.4
mb/d over the previous year. In April, total
OPEC crude oil production, according
to secondary sources, was estimated to
average 31.62 mb/d, an increase of 0.32
mb/d over the previous month.
Product markets showed an uptick in April
with gasoline taking advantage of the
improved product sentiment in the Atlantic
Basin, ahead of the driving season. This,
along with the additional support from
tight product supplies in the Asian region
amid heavy refinery maintenance allowed
refinery margins to increase across the
globe. The decline in crude oil prices also
supported product markets.
The tanker market saw mixed movement
in April, with VLCC spot freight rates
increasing and Suezmax and Aframax
spot rates encountering declines. Lower
MARKET REPORT
65May-Jun, 2012
tonnage demand and refinery maintenance
drove the decline in Suezmax and Aframax
rates. The rise in VLCC spot freight rates
was supported by higher demand and
floating storage requirements. In April,
OPEC spot fixtures decreased by 20 per
cent. Sailings from OPEC were higher and
arrivals in North America increased.
US commercial oil stocks in April
reversed the build of the previous month,
declining by 4.3 mb. US stocks remain
20.1 mb above the year-ago level and 30.8
mb over the five-year average. Products,
which fell by 17.5 mb, were responsible
for the decline, as crude stocks rose
by 13.5 mb. In Japan, the most recent
monthly data shows that commercial oil
stocks increased by 6.6 mb in March to
stand 1.4 mb above a year ago, which was
still 5.2 mb below the five-year average.
The total stock-build was concentrated
in crude, which rose by 8.5 mb, while
product inventories fell 1.9 mb.
Demand for OPEC crude for 2011
remained unchanged from the previous
assessment to stand at 30.1 mb/d,
indicating growth of 0.4 mb/d compared
to the previous year. Demand for OPEC
crude for 2012 is projected to average 30.0
mb/d, the same level as in the previous
report and representing a decline of 0.1
mb/d from last year.
CASPIAN OUTLOOKOil production from Kazakhstan is
forecast to average 1.62 mb/d in 2012, an
increase of 20 tb/d over the previous year
and showing a minor downward revision
of 10 tb/d from the previous report. This
revision has come across the entire year,
as updated production data in the first
quarter led to the undertaken adjustment,
which has been partly carried over to the
rest of the year. Updated data for the first
quarter indicated slightly lower output
than had been expected. Output was shut
down at different fields, due to severe
weather conditions. A state producer
warned of output targets not being met in
2012, citing bad weather conditions that
reduced production. On a quarterly basis,
Kazakhstan’s supply is expected to stand
at 1.62 mb/d, 1.60 mb/d, 1.61 mb/d and
1.65 mb/d respectively. According to the
preliminary data, during the first quarter
of 2012, Kazakh oil production decreased
by 40 tb/d, compared with the same
period in 2011.
Azerbaijan’s oil supply is forecast to
average 0.97 mb/d in 2012, a minor
increase of 10 tb/d over 2011 and
unchanged from the previous month.
According to preliminary data, Azeri
oil supply declined by 50 tb/d in the
first quarter, compared with the same
period a year ago. This decline has been
driven by technical issues that had an
impact on the Azeri-Chirag-Guneshli
(ACG) field’s output, which had affected
production in previous years. Limited
new developments have also influenced
the forecast for 2012. On a quarterly
basis, Azerbaijan’s output is estimated to
average 0.97 mb/d, 0.95 mb/d, 0.96 mb/d
and 0.98 mb/d respectively.
Turkmenistan’s oil supply is expected
to increase in 2012 and help offset
the decline from mature production in
the Other FSU (not including Russia,
Azerbaijan and Kazakhstan). Growth is
supported by increased output from the
Dzheitune field. Other FSU production is
expected to average 0.45 mb/d in 2012, an
increase of 10 tb/d from the previous year.
(Excerpts from the OPEC Market Report
May 2012)
Non-OPEC supply growth by regions, mb/d
RussiaFSU - ex Russia
Total DCsOECD N. AmericaOECD W. Europe
OECD PacificChina
Total Non-OPEC
-0.40 -0.20 -0.00 -0.20 -0.40 -0.60 -0.80
2011/102012/11
OPEC crude oil production, mb/d32.031.531.030.530.029.529.028.528.027.527.0
3.0
2.5
2.0
1.5
1.0
0.5
0
OPEC crude production (LHS)
2010
2011
Jan
11Fe
b11
Mar
11A
pr11
May
11Ju
n 11
Jul 1
1Au
g11
Sep1
1O
ct11
Nov
11D
ec11
Jan
12Fe
b12
Mar
12A
pr12
Cumulative change (RHS)
66 May-Jun, 2012
AUTOMOTIVE
NEW RENAULT DUSTER COMES TO OMAN
The New Renault Duster, a strong and
reliable SUV with genuine off-road
ability, was launched recently by Suhail
Bahwan Auto Group. The new Renault
Duster promises to be a versatile 4x2 and
4x4 vehicle, which combines a spacious
interior with saloon-car comfort, while
its compact footprint and high ground
clearance ensure that it is at home in
and about town as it is on country roads
or off the beaten track. The vehicle is
available in 4x2 4-speed AT and 4x4
6-speed MT versions powered by a 2.0
16V (135 hp) engine, especially tested in
the GCC.
To confirm the New Renault Duster’s
strength and reliability, the new vehicle
covered the equivalent of four million
kilometers in a wide range of climates
and in particularly punishing conditions.
One month of rigorous testing in GCC
conditions prior to launch was carried
out few months ago to make sure all
standards of Renault quality will be
met and the vehicle conforms to GCC
specifications and requirements.
Today’s all-terrain vehicles are often
synonymous with bulk, but the new
Renault Duster is an antidote to that idea.
With a length of 4.31 metres and a width
of 1.82 metres, the Renault Duster is
very compact but roomy.
The New Renault Duster offers an
unmistakably 4x4 plus a 4x2 version.
From the front, it exudes an impression
of toughness: the wide wheel-arches,
the imposing lines of the chrome grille
and the sump guard clearly emphasize
the 4x4 DNA of the new Renault Duster.
Seen from the side, the high ground
clearance, clearly defined wheel-arches
and protective mouldings encourage the
driver to tackle even the toughest roads
and tracks.
67May-Jun, 2012
RELIABLE MAN
MAN offers a comprehensive portfolio
of products from 7.49 to 41 tonnes gross
vehicle weight and thus a guarantee to
municipality and entrepreneur alike that
their tasks will be performed reliably and
economically. The MAN series - TGL,
TGM and TGS - offer a wide range of
vehicles suited to the most varied of
tasks. Then there is also the TGS WW
series, which is orientated particularly
towards the operational conditions of
global markets like the Middle East. The
MAN CLA, which is produced in India,
is sold on the Middle Eastern, African
and Asian markets.
An interesting concept designed to
bring transport efficiency to waste
disposal is the basis of the four-axle
MAN TGS 35.360 8x2-6 BL on show.
The waste container is bigger than that
of a conventional three-axle truck - 30
instead of 25 cubic metre - enabling
more work to be done in the collection
area before this truck has to be driven
to the waste disposal site. This enables
the working day to be optimally utilised
according to the relative lengths of
the routes in the district for which the
disposal service is responsible.
The rise of the megacities with their
heavy traffic and diversely allocated
traffic spaces explains the demand for
compact, manoeuvrable refuse-collection
vehicles. MAN has just the right vehicles
in its light- and medium-duty TGL and
TGM series. With its manoeuvrability
and a body of up to nine cubic metres,
the MAN TGL was built for narrow
streets and old cities. The MAN TGM
series has a selection of two- and
three-axle vehicles capable of taking
containers up to 22 cubic metres in size.
The TGM 26-tonner can be configured
with steered, liftable leading and
trailing axles.
68 May-Jun, 2012
“In terms of prices, this year we have generally seen moving in an upwards direction. However, current prices are not due to market fundamentals. Speculation is pushing prices higher. Trading is being made on the perception of a supply shortage, rather than evidence of any actual or impending shortfall. It is related to geopolitics. In many respects it can be described as a fear factor,” stated OPEC Secretary General, HE Abdalla S. El-Badri, at the 13th International Oil Summit, Paris, France.
He added, “Oil is increasingly being treated as an individual asset class by financial investors. Since 2005, the total open interest of the NYMEX and ICE Brent crude oil futures and options has increased sharply. Today, the level of open interest on the NYMEX is close to 3 million contracts. And combined with Brent it is 3.85 million. It means that the level of open interest on these two exchanges is equivalent to more than 44 times the size of physical demand.”
Speculation is pushing prices higher
GLOBAL ROUND-UP
The Shah Deniz consortium has approved the decision to commence Front End Engineering and Design (FEED) on the estimated $25 billion Shah Deniz Stage 2 project. This was officially announced in Baku during the meeting between the President of the Republic of Azerbaijan Ilham Aliyev and Bob Dudley, Group Chief Executive of BP, the Operator of Shah Deniz.
The Shah Deniz Stage 2 project will bring gas from the Caspian Sea to markets in Turkey and Europe, opening up the ‘Southern Gas Corridor’. Achieving this important milestone allows the consortium to maintain its target for first gas exports around the end of 2017.
The Shah Deniz 2 project is set to produce 16 billion cubic metres of gas per year. The entry into FEED represents the start of a key phase in the project during which engineering studies will be refined, further wells will be drilled, commercial agreements will be finalised and key construction contracts will commence. During the FEED phase of the
project, the Shah Deniz consortium will finalise its selection of export routes across Turkey and into Europe. Rashid Javanshir, President of the Azerbaijan, Georgia and Turkey Region of BP, said: “We are pleased
to announce this major step forward. Over the past two years we have made substantial progress on all the individual components of this mega-project. Engineering studies, commercial agreements and the support of the State of Azerbaijan and other governments give the Shah Deniz consortium the confidence to embark upon this FEED phase.”
“With over 30 trillion cubic feet of gas resources, Shah Deniz is truly a giant field. And with more than 26 wells, two new platforms, a terminal expansion and up to 4000km of new pipelines to Europe, this chain of major projects represent one of the largest oil and gas developments in the world,’ he added. Shah Deniz Stage 2 is expected to add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma from Shah Deniz Stage 1.
$25bn Shah Deniz Stage 2 to commence FEED work
Shell, Chevron join hands in UkraineRoyal Dutch Shell plc and Chevron Corporation have bagged the exploration rights for two shale gas fields – Yuzivske and Oleske – in Ukraine. The total investment for the project is expected to be around $170 million for the Oleske field and $200 million for Yuzivske, totaling $370 million.
According to Ukrainian state geological service, the Oleske field that covers over 2,316.6 square miles is estimated to hold about 3 trillion cubic meters of conventional and unconventional, as well as
condensed gas deposits. The other field Yuzivske is likely to have a reserve of 4 trillion cubic meters of gas. Together the fields, where industrial extraction of gas is expected to begin in 2018-2019, will contribute up to Ukraine’s 10 per cent domestically consumed natural gas by 2020. This move highlights Ukraine’s attempt to capitalize on the booming shale gas scenario and develop its large untapped resource of shale gas. The establishment of a strong domestic gas industry will also minimize the country’s dependence on Russia.
69May-Jun, 2012
Halliburton and Gazprom International makes a fresh pact Halliburton has signed a strategic cooperation agreement with Gazprom International for the development and implementation of new oil and gas technologies in global exploration and production projects. The agreement sets the framework for the ongoing exchange of information related to oil and gas technologies, for technical training to be provided to Gazprom International by Halliburton, and for the deployment of Halliburton technology on Gazprom International projects. The technologies will address areas including tight gas, deepwater, advanced software applications and integrated workflows.
“Halliburton has invested considerable resources in research and development for new technologies, which support our customers’ activities,” said Brady Murphy, Halliburton’s senior vice president of Business Development for the Eastern Hemisphere. “This agreement
provides an opportunity for Gazprom International and Halliburton to mutually benefit from the implementation of these technologies and to build a closer strategic working relationship.”
Valeriy Gulev, Gazprom International’s managing director, said, “We expect that cooperation with Halliburton will extend our engineering capability, improve Gazprom International’s competitive performance, and broaden the range of our possibilities in the areas of exploration and development of hydrocarbons.”
BG to sell Comgás stake for $1.8bnBG Group has signed a memorandum of understanding (MoU) with Cosan S.A. Indústria e Comércio (Cosan) for the sale of its 60.1 per cent holding in Comgás, Brazil’s largest gas distribution company, for approximately $1.8 billion (R$3.4 billion). Subject to partner consent, BG Group and Cosan expect to execute a definitive sale agreement in the near term. The transaction, which will be subject to regulatory approval, is likely to complete by the end of 2012.
BG Group Chief Executive Sir Frank Chapman said: “This memorandum of understanding is another important step in our ongoing portfolio rationalisation and funding diversification programmes, underpinning delivery of the wealth of opportunities we have across our global portfolio.
We look forward to concluding this deal as part of our plans to release some $5 billion of capital in the next two years through strategic divestments. Shareholders in Comgás are BG Group (60.1 per cent) and Shell (18.1 per cent) with the remainder held via the public through a listing on the São Paulo stock exchange.
Schlumberger to acquire Tesco’s CASING DRILLING DivisionTesco Corporation and Schlumberger have signed a definitive agreement for Schlumberger to acquire Tesco’s CASING DRILLING division for $45 million in cash. “Our CASING DRILLING division comprises some of our leading technologies, which Tesco has incubated for several years,” said Julio M. Quintana, chief executive officer and president of Tesco Corporation. “The time is right to expand the market for this technology through this sale to Schlumberger. Tesco has been an innovator throughout its history and we look forward to introducing further new technologies to the industry.”Jean-Francois Poupeau, president, Schlumberger Drilling Group, added, “CASING DRILLING technology enables construction of wells where the use of conventional technology has proven difficult. The addition of these technologies to our drilling portfolio will help our customers reduce finding and development costs through drilling efficiency gains and wellbore integrity improvements.”
In addition to this definitive agreement, Schlumberger and Tesco have entered a long-term supplier agreement in which Tesco will sell and lease its Casing Drive System equipment to Schlumberger to support CASING DRILLING projects.
70 May-Jun, 2012
The Australian Government has opened up 27 new offshore petroleum exploration areas in 9 basins for bidding on the back of strong demand for new acreage. Minister for Resources and Energy Martin Ferguson told the APPEA 2012 Conference in Adelaide that industry nominations underpinned all but one of areas.
“The 2012 Acreage Release encompasses large frontier basins suited to exploration programs with numerous targets as well as smaller blocks of relinquished and highly prospective acreage in more mature areas,” he said. “The high level of early stakeholder participation led to multiple nominations for many of these areas, which are located in a range of water depths and vary in size and exploration history.” The release of the new blocks is a clear sign that the oil and gas industry is still hungry for new exploration acreage in which to seek out discoveries “Today’s acreage release will allow offshore petroleum explorers to seek a larger role in an energy revolution, with a high probability of ongoing major petroleum discoveries in Australia, and more than 40 sedimentary basins yet to be fully explored.” Ferguson noted that Australia had undergone an unprecedented expansion in the
discovery and development of national energy resources in recent years, with natural gas leading the way. It was also home to 70 per cent of global liquefied natural gas capacity under construction and is currently the world’s fourth largest LNG exporter with output of 20 million tonnes of LNG per annum in 2010-11. This is expected to grow by 19 per cent in 2012-13 as production from Woodside Petroleum’s Pluto LNG facility in Karratha, Western Australia, ramps up.
GLOBAL ROUND-UP
Australia offers 27 new areas for exploration
New class of MaxForce FRAC ChargesHalliburton has developed a new class of perforating shaped charges designed for perforating oil and gas wells prior to hydraulic fracturing. The MaxForce-FRAC charge is designed to optimize fracturing efficiency and placement by providing consistency of the perforation entry hole in the casing, regardless of the gun’s azimuthal orientation and clearance, which can vary greatly in horizontal wells. Consistent hole size is an important parameter to ensure that each perforation tunnel contributes equally during the fracture treatment. Injection rates during any stimulation are directly proportional to the perforation hole size; therefore, gun systems with irregular casing hole diameters result in higher-than-necessary injection pressures, and potentially early screen-outs.
Large variation in perforation entrance hole diameters can increase the effects of near-wellbore tortuosity and can leave many of the perforation holes not contributing to the stimulation, causing sub-optimal fluid distribution and higher injection pressures. The MaxForce-FRAC charge provides the tightest variance of the entrance hole diameters currently available, thus improving pressure distribution and stimulation efficiency. Currently undergoing field trials in the Permian Basin, MaxForce-FRAC charges have demonstrated up to 20 percent improvement in flow efficiencies, which can reduce the cost and improve the overall success of the fracturing treatment. The MaxForce-FRAC charge is currently available for 3-1/8-in. and 3-3/8-in. gun assemblies commonly used in 4-1/2-in. and 5-1/2-in. casing.
Fracing causing stir in USA top White House adviser has said the Obama administration made a concerted effort to reach out to the oil and gas industry while crafting regulations governing natural gas drilling but insists the effort isn’t an election-year ploy, reported timesunion.com. After all, said White House energy and climate change adviser Heather Zichal, there still are tensions. “The notion that we’ve rolled out the welcome mat and have this hunky dory relationship and we’re all holding hands and signing kumbaya is not exactly where we are today,” Zichal said after a presentation to an American Petroleum Institute forum. Zichal’s comments come a month after President Barack Obama established an interagency task force to streamline the work of more than a dozen federal agencies that are studying or regulating the hydraulic fracturing technique used to harvest natural gas from dense rock nationwide. Administration officials characterized the move as part of a plan to foster domestic natural gas development with environmental safeguards. Some industry leaders — who generally prefer states regulate fracturing instead of the federal government — applauded the new task force as a step in the right direction. Industry representatives also cheered the Interior Department’s decision to soften a disclosure requirement in a proposed rule governing fracking on federal lands, so that companies could tell regulators about chemicals after they are used at wells, not beforehand. “This isn’t about election-year politics,” she said. “This is truly about the administration working on a number of regulations that directly impact the oil and gas industry.”
71May-Jun, 2012
Deloitte: Shortage of critical talent in the Middle EastIn a Deloitte report entitled ‘The Talent Edge 2020: Redrafting Talent Strategies for the Uneven Recovery’, experts focused on the oil and gas sector, to gauge the talent trends in the growing industry. Of the key findings, the majority of the surveyed oil and gas executives anticipate a looming talent shortage in all skill categories, the most pressing of which is in operations (81 per cent).
The Deloitte report is based on the responses of 376 executives, 34 per cent of which from Europe, Middle East and Africa, outlining key talent-related challenges across industries. Findings indicate that critical talent shortages, retention programs, and the growing reliance on discovering global talent are top concerns for oil and gas executives. “We are witnessing a growing trend of oil and gas companies expanding into global and new markets as a top strategic priority. Moreover, talent management is no longer confined to the company’s country of operation; rather the search has gone global, to find skilled and critical talent,” commented Ghassan Turqieh, Human Capital consulting partner at Deloitte in the Middle East.
The report came up with number of other significant findings. Surveyed oil and gas executives ranked finding the right people globally as their top talent priority, citing managing human capital (38 per cent) and expanding into global and new markets (38 per cent) as their companies’ most important strategic concerns. Executives find that a looming talent shortage in all skill categories exists in many fields, which include operations (81 per cent), information technology (61 per cent), risk and regulatory (62 per cent), and research and development (60 per cent).
REGIONAL ROUND-UP
Highlighting a need for change in the way the Kingdom of Saudi Arabia approaches education, Khalid A. Al-Falih, president and CEO of Saudi Aramco, has announced the company’s launch of a youth enrichment programme that will see 2 million young Saudis receive critical training by 2020 and encouraged young people to create a bright future.
The CEO noted past and current achievements regarding education in the Kingdom, including a significant improvement in literacy over the past four decades and the investment of billions of riyals in scholarships and infrastructure.
That, however, is not enough to secure success in the future. With more than 35 percent of the Kingdom’s population 15 years and younger, the challenge today is greater than it has ever been, and the need for a different kind of education is just as great. “In recent decades, the world has undergone structural changes that in the past took centuries to achieve,” Al-Falih said.
“The currency of this new realm is knowledge. He added that the dynamics of this changing world will “require us to radically rethink what we know about education, how we manage it and with whom we partner.” Al-Falih said the company is launching Ithra Youth, a new programme targeting Saudi youths throughout the Kingdom. The company sponsored national initiative will help teach young people the principles of science, math, engineering and technology skills, as well as special skills to build personal, lifelong learning skills. Beginning in June, the programme will provide 500,000 hours of training in 2012 alone.
“And that’s just the beginning,” he said. The programme will see 2 million Saudis trained by 2020.
The company will also be helping teachers transition from “teaching to the test” to a more holistic approach, using summer workshops to give teachers an opportunity to explore new ways to connect science and math to real life.
Programme to train 2mn young Saudis
72 May-Jun, 2012
NPCC eying $7bn oil projectsNational Petroleum Construction Co., an Abu Dhabi government-controlled oil-services company, is looking at bidding for the $7 billion in energy projects being tendered in the emirate this year, according to the company’s chief executive officer. “We are looking at Abu Dhabi for sure,” Chief Executive Officer Aqeel Madhi said. “It’s our biggest market.”
The company is bidding for two of the construction packages being tendered by Zakum Development Co., which plans to raise output from Upper Zakum, the world’s fourth-largest oil field, Madhi said. It’s also bidding for projects offered by Abu Dhabi Marine Operating Co., which plans to develop the offshore Umm Lulu and Nasr fields. The company is targeting revenue of 5 billion dirhams ($1.36 billion) this year, compared with 4.2 billion dirhams in 2011, Madhi said. It is also looking for opportunities in Iraq, Oman and South East Asia, he said. The company is spending more than $500 million to upgrade its offshore marine fleet, increase the capacity of its yards and improve equipment, Madhi added.
REGIONAL ROUND-UP
The 7th Middle East Energy Security Forum (MEESEC 2012) to be held on 28-30 May in Abu Dhabi, UAE aims to evaluate new security technologies, discuss strategies, solutions, products and services that could help safeguard energy infrastructure. The forum will provide a platform for global security professionals in energy sector, highlighting latest strategies and technologies which can be implemented to effectively mitigate security threats.
MEESEC 2012 will convene leading key speakers from renowned organizations including World Institute for Nuclear Energy (WINS), NATO, AngloGold Ashanti, PetroPars, Department of Energy, GAIL and American University of Sharjah to name a few.
The event will see all security leaders in the oil & gas, petrochemicals, power & water, nuclear and mining industry come together on a unique platform to strategically overcome
the challenges posed by economic disruption, political crisis and terrorist threats. The forum is a platform of knowledge on technological requirements and deployment where attendees will get an insight on international best practices to protect assets.
The two day annual conference and workshop program promises to be bigger this year from previous years with finely crafted sessions in support of distinguished panel of advisors who are expert leaders in regional and international security sector. The delegates can look forward to interactive panel discussions, insightful case studies, pre-conference workshops together focusing on critical security issues like: effective security operations through integrated business processes, examine emerging industry standards and best practices to maximise the performance of your security programme, security threats to critical energy infrastructure and mitigations and many more.
Middle East Energy Security Forum in Abu Dhabi
Inatech appoints Jean-Hervé Jenn as CEO
Inatech, the global software and IT services company, has appointed Jean-Hervé Jenn as CEO. Based at the company’s UK headquarters, Jenn will be responsible for global operations in the UK and Europe, the USA, the Middle East and India.
Inatech is controlled by Chemoil, the world’s leading supplier of marine fuel, and a subsidiary of Glencore, a global producer and marketer of commodities. Inatech focuses on the implementation of Oracle and Microsoft solutions and bespoke software development. Leveraging the expertise of its parent companies, Inatech has also developed a suite of software programmes for the shipping industry, including bunkering operations management and fuel procurement management platforms. Jenn’s focus will be on driving the global growth of Inatech by enhancing existing client relationships and improving the overall product and services portfolio.
73May-Jun, 2012
Saudi Aramco had launched its Accelerated Transformation Program or ATP some time back. In less than a decade, The company is hoping to transform from an oil and gas company to a fully integrated global energy and chemicals enterprise. The aim is to transform from a consumer of the best technology into an innovator and a provider of leading technologies. A key component of delivering the ATP is its upstream R&D arm – EXPEC ARC – which is actively pursuing the transformation vision through its R&D roadmaps in several areas. With expansion plans overseas to establish the Saudi Aramco upstream Satellite Research Centers, it will be closer to its vision of becoming a global technology provider.
The satellite centers will complement the ongoing R&D activities in Dhahran in various key areas such as: nanotechnologies for reservoir sensing and illumination; electromagnetic and gravity tools for reservoir monitoring; smart-water flood research for improved recovery; intelligent chemicals for our drilling and production operations; and parallel computation and massive visualization for on-the-fly reservoir modeling and simulation. The company is targeting at least five locations around the world: from North America to Europe to China. These centers will enable Saudi Aramco to strengthen existing partnerships with academia and industry. They will also build new partnerships and tap into talent and other resources available in those regions.
Saudi Aramco to open new satellite R&D centers
Qatar buying stakes in Shell and ENI?Qatar is purchasing significant stakes in Royal Dutch Shell and Italian oil major ENI, according to reports published in the international media. A news agency has reported that a Shell spokeswoman has confirmed the purchase while declining to detail its size. According to the Middle East Economic Survey (MEES), Qatar’s sovereign wealth fund (QIA) was looking at a 3-5 percent stake. If Qatar did buy 5 percent, it would be just ahead of Blackrock, which is currently Shell’s biggest investor with 4.97 percent, according to reports. But British stock market rules require any party to disclose a holding of over 3 percent in a listed company so the absence of a statement from Qatar suggests its interest is below this level. Shell operates multi-billion dollar natural gas projects in Qatar.
Siemens to supply pump sets to Iraq’s strategic oil infrastructureThe oil & gas division of Siemens won a multi-million Euro contract for the supply of fuel efficient turbo pump equipment to be installed at a crude oil pumping station in Iraq. The contract, which is due to be completed in June 2013, was signed between Siemens and engineering, procurement and construction (EPC) contractor Progetti Europa & Global SpA (PEG), and is for the supply and installation of two fuel-efficient turbo pump trains driven by Siemens SGT-400 Gas Turbines. The trains will be installed at the new Habaneya PS4 crude oil pumping station located along the north-south Iraq Strategic Pipeline, enhancing the transfer of crude to a major depot, while reducing the station’s fuel consumption. Ali Vezvaei, Siemens Executive Vice President for Oil & Gas operations in Middle East and North Africa said: “Habaneya is the second pumping station in Iraq that uses Siemens equipment; we are proud to be a technology partner of choice for Iraq’s oil and gas industry and will continue to support the rebuild of Iraq with our broad range of products and solutions.”
74 May-Jun, 2012
The process of hydraulic fracturing is a mining technique which uses injected fluid to propagate fractures
in a rock layer to release hydrocarbon deposits that would otherwise be uncommercial. Developed in the US and first used in 1947 for stimulating of oil and natural gas wells, the use of “fracking” soared in the past decade as thousands of wells have been drilled into the Marcellus Formation, also referred to as the Marcellus Shale, a deposit of marine sedimentary rock found in eastern North America.
While initial environmental protests of the technique centered around its possibility of polluting underground water aquifers as a number of known carcinogenic substances are used in the procedure, more recently research has focused on an even more ominous byproduct of the technique - the increased possibility of earthquakes. While in the US, the US Geological Survey and the state governments are investigating the link, in Britain the Department of Energy and Climate Change on 17 April published an independent expert report recommending measures to mitigate the risks of seismic tremors from hydraulic fracturing and invited public comment on its recommendations. The report reviewed
UK GOVERNMENT: FRACKING CAUSES EARTHQUAKES, BUT IT’S WORTH THE RISKJohn C.K. Daly takes a look at the latest report on Fracking which offers proof it does cause earthquakes - but that there is no threat to people or property
HSE
75May-Jun, 2012
a series of studies commissioned by Cuadrilla, whose fracking operations in Lancashire aroused public debate, and the document “confirms that minor earthquakes detected in the area of the company’s Preese Hall operations near Blackpool in April and May last year were caused by fracking.”
DECC’s Chief Scientific Advisor David MacKay remarked, “If shale gas is to be part of the UK’s energy mix, we need to have a good understanding of its potential environmental impacts and what can be done to mitigate those impacts. This comprehensive independent review of Cuadrilla’s evidence suggests a set of robust measures to make sure future seismic risks are minimized - not just at this location but at any other potential sites across the UK.”
The report is certain to reopen debate about the Lancashire tremors, which on 1 April and 27 May 2011 shook the Blackpool area, registering 2.3 and 1.5 on the Richter Scale. On 2 November, a report commissioned by Cuadrilla Resources, “The Geo-mechanical Study of Bowland Shale Seismicity,” acknowledged that hydraulic fracturing was responsible for the two tremors and possibly as many as 50 separate earth tremors overall, noting that it was “highly probable” that the hydraulic fracturing of its Preese Hall-1 well did trigger a number of “minor” seismic events.
At the time of the report’s release, Cuadrilla Resources CEO Mark Miller said, “We unequivocally accept the findings of this independent report and are pleased that the report concludes that there is no threat to people or property in the local area from our operations. We are ready to put in place the early detection system that has been proposed in the report so that we can provide
additional confidence and security to the local community. Cuadrilla Resources is working with the relevant local and national authorities to implement the report’s recommendations so we may safely resume our operations.”
The British Geological Survey also linked smaller quakes in the Blackpool area to fracking. BGS Dr. Brian Baptie said, “It seems quite likely that they are related,” noting, “We had a couple of instruments close to the site and they show that both events occurred near the site and at a shallow depth.”
While the DECC report confirms that Cuadrilla Resources ‘s test-fracking likely caused the 2011 two small tremors last year, it also said that Cuadrilla Resources could proceed with exploring the area if it follows a new set of expensive safety measures. Cuadrilla Resources clearly sees the report as vindication, with Miller proclaiming, “We are pleased that the experts have come to a clear conclusion that it is safe to allow us to resume hydraulic fracturing, following the procedures outlined in the review. Many of today’s recommendations were contained in the original expert studies we published in November last year, and our supplementary information sent to DECC in January.
We have already started to implement a number of the experts’ recommendations in the pursuit of best practice and look
forward to the final decision by DECC ministers concerning the resumption of hydraulic fracturing following the six week period for public comment commencing on 17 April.”
And insurers in the City of London clearly believe that the DECC report validates fracking. City insurance brokerage Willis chief operating officer of global energy Neil Smith said, “Shale gas is here to stay... The issues are of a political nature and a lot are born out of ignorance of what the operations are.” Dominick Hoare of Watkins Syndicate at the Lloyd’s of London insurance market was equally bullish, saying, “With a proper assessment it’s a good risk to assume,” as was Matt Yeldham, the head of casualty at Aegis’ marine and offshore liability division, who commented, “Provided fracking is conducted in an appropriate fashion, it would appear on the whole to present a reasonable risk profile” before adding, “Underwriters are not there to cover long-term health hazard and other latent issues.”
It is precisely those “long-term health hazard and other latent issues” that should be at the top of the British government’s concerns, but Westminster has repeatedly proven that its interests more closely align with those investment bankers in the City of London than those forced to live with the consequences if the environmental nay-sayers ultimately prove correct about water pollution and “seismic events.”
Source: www.oilprice.com
DECC’s Chief Scientific Advisor David MacKay remarked, “If shale gas is to
be part of the UK’s energy mix, we need to have a good understanding of its potential environmental impacts and what can be done to mitigate those impacts
76 May-Jun, 2012
OIL – A NOVELPlunge into the heart of the oil conflicts that pit nation against nation in the Middle East -- and threaten to topple a fragile world economy. That’s the core theme of the novel by Jeff Nesbit who has been a national journalist, the director of public affairs at several major federal agencies in Washington, D.C., and the communications director to a former vice president at the White House. He’s written 18 successful thrillers and novels in the past. Read the excerpt from the novel – ‘With the discovery of a secret oil pipeline -- once funded by Iran to connect the Mediterranean to the Red Sea through the heart of Israel -- comes Israel’s shocking emergence as the world’s newest oil and gas superpower. Meanwhile, ancient fights that have split Islam for hundreds of years threaten to shatter an uneasy peace forged between Israel, Iran, and the United States -- until news of the emergence of the Mahdi threatens to change the balance of power forever in the Middle East.’ It is certainly is a spine-chiller!
BOOK CORNER
PEEKING AT PEAK OILThe term “Peak Oil” was born in January 2001 when Colin Campbell formed the Association for the Study of Peak Oil & Gas (ASPO). Now, Peak Oil is used thousands of times a day by journalists, politicians, industry leaders, economists, scientists and countless others around the globe. Peak Oil is not the end of oil but it tells us the end is in sight. Anyone interested in food production, economic growth, climate change or global security needs to understand this new reality. In Peeking at Peak Oil Professor Kjell Aleklett, President of ASPO International and head of the world’s leading research group on Peak Oil, describes the decade-long journey of Peak Oil from extremist fringe theory to today’s accepted fact: Global oil production is entering terminal decline. He explains everything you need to know about Peak Oil and its world-changing consequences from an insider’s perspective. In simple steps, Kjell tells us how oil is formed, discovered and produced. He uses science to reveal the errors and deceit of national and international oil authorities, companies and governments too terrified to admit the truth. He describes his personal involvement in the intrigues of the past decade. What happens when a handful of giant oil fields containing two thirds of our planet’s oil become depleted? Will major oil consumers such as the EU and US face rationing within a decade? Will oil producing nations conserve their own oil when they realize that no one can export oil to them in the future? Does Peak Oil mean Peak Economic Growth? If you want to know the real story about energy today and what the future has in store, then you need to be “Peeking at Peak Oil”.
RECOMMENDED PRACTICE FOR CORROSION MANAGEMENT OF PIPELINES IN OIL & GAS PRODUCTION AND TRANSPORTATION Pipeline integrity is key to maintaining operational success, safety and security and minimising harm to the environment. Corrosion is a dominant contributory factor to failures, leaks and integrity threat in pipelines. Therefore, its optimum control within an integrity management framework is paramount for the cost effective design of facilities and ensuring continued, uninterrupted and safe operations within the expected design life. This recommended practice (RP) is a compendium of current best practices and state of the art knowledge by major operators, engineering contractors and service companies involved in hydrocarbon production and transportation. The RP incorporates some minimum operational requirements and practices to ensure that when managing corrosion in pipelines, fundamental principles are followed. It covers management of corrosion for pipelines carrying hydrocarbons, injection water and/or produced water from design to decommissioning. It is structured to follow the logical steps of a basic corrosion management process and makes references to relevant and available International standards and/or recommended practices. It is intended for use by personnel from the petroleum industry having knowledge of corrosion and materials. It is expected to be a key reference document for engineers, suppliers and contractors working in the oil and gas industry, paving the way for corrosion free operation of pipelines with the ultimate goal of improving safety, security and minimising the impact on the environment.
TOeiuheeIaHoUcs