New base 688 special 16 september 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase 16 September 2015 - Issue No. 688 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Petrofac, Tecnicas chosen for $4.7b Saudi gas projects
Reuters + Saudi Gazette + NewBase
London-listed Petrofac and Spain's Tecnicas Reunidas have reportedly been chosen for contracts
worth as much as $4.7 billion to build the Fadhili gas plant in Saudi Arabia for Saudi Aramco.
Reuters cited an industry source as saying that the companies received a letter of intent last
week.
Sources told Reuters in July that Italy's Saipem and South Korea's Daelim Industrial had
previously been among the bidders. Tecnicas is said to have bid for two of the packages on its
own, and for the third in conjunction with South Korea's GS Engineering and Construction.
Sources told Reuters that Tecnicas Reunidas won the two packages in which it bid solo: for the
gas processing unit for as much as $2 billion and for utilities and offsites, worth as much as $1
billion.
Three sources confirmed that Petrofac won the package for sulphur recovery worth up to $1.7
billion. At 1234 BST, Petrofac shares were up 0.7% at 796.50p while Tecnicas shares were 0.1%
higher at €40.33.
"They received notification last week; a letter of intent," said one of the sources, who declined to
be identified as the information isn't public. Petrofac and Tecnicas declined to comment. Saudi
Aramco said it does not comment on its business plans.
Saudi Aramco plans to build a new gas plant at Al-Fadhili oilfield, which will
have a processing capacity of 1 billion standard cubic feet per day of sour gas

Aramco's decision to move ahead with the project at Fadhili is a sign that Saudi Arabia continues
to make big investments that it views as key to its economic future, despite slowing or shelving
some projects regarded as low priority as oil prices plunge since last year.
The new plant is to have a processing capacity of 2.5 billion standard cubic feet per day (Bscf/d)
of sour gas from the onshore Khursaniyah and offshore Hasbah fields. The project is split into
three construction packages for the gas processing unit, utilities and offsite facilities such as
nitrogen, steam, power and water systems, and sulphur recovery.
Italy's Saipem and South Korea's Daelim Industrial had previously been said to be among the
bidders, sources told Reuters in July. Tecnicas bid for two of the packages on its own, and for the
third in conjunction with South
Korea's GS Engineering and
Construction, according to a
second industry source.
Ultimately, the Spanish firm
won the two packages in which
it bid solo: for the gas
processing unit for as much as
$2 billion and for utilities and
off sites, worth as much as $1
billion, according to the first
industry source and a separate
source.
Three sources confirmed that
Petrofac won the package for
sulphur recovery worth as
much as $1.7 billion. Aramco
said in its 2014 annual review
published in May that the
Fadhili gas plant was on track
to come onstream by 2019.
Fadhili, together with Aramco's
other gas projects in Wasit and
Midyan, are slated to add more
than 5 Bscf/d of non-
associated gas processing
capacity, which will help the
company meet soaring
domestic demand for industrial
use and electricity generation
in the world's largest oil
exporter.
Gas production remains a top
priority for Saudi Arabia as it
wants to limit direct crude oil
burning for electricity, thereby
preserving its ability to increase oil exports.
Hasba

Iraq: Gulf Keystone announces Shaikan field operational update
Source: Gulf Keystone
Gulf Keystone, the operator of the world class Shaikan field in the Kurdistan Region of Iraq, has
announced that total commercial production from the Shaikan field has now surpassed 15
million barrels with the current daily average production in excess of 40,000 barrels of oil gross.
In July 2015, at the request of the Kurdistan Regional Government's ('KRG') Ministry of Natural
Resources ('MNR'), the Company commenced trucking Shaikan crude oil a distance of 120 km to
Fyshkhabour on the Turkish border for injection into the export pipeline to Ceyhan in Turkey. In
anticipation of regular payments for pipeline export sales announced by the KRG earlier this
month and at the request of the MNR, the Company is in the process of transferring all crude oil
deliveries to the export pipeline.
As of today, the Company's cash position is US$73.0 million, including the recent payment of
US$15 million gross (US$12 million net to Gulf Keystone) now received for Shaikan crude oil
exports.
Background
Gulf Keystone Petroleum International (GKPI) holds Production Sharing Contracts for four
exploration blocks in Kurdistan, the Shaikan, Sheikh Adi, Ber Bahr and Akri-Bijeel blocks. GKPI is
the operator of the Shaikan block, which is a major commercial discovery, with a working interest
of 75% and is partnered with MOL Kalegran (a 100% subsidiary of MOL Hungarian Oil and Gas)
and Texas Keystone, which have working interests of 20% and 5% respectively. Following the
establishment of a regular payment cycle for all oil sales and arrears, Gulf Keystone plans to
move into the large-scale phased development of the Shaikan field targeting 100,000 bopd of
production capacity during Phase 1 of the Shaikan Field Development Plan.

Iraq: Genel Energy provides update on acquisition of interest
in the Bina Bawi field . Source: Genel Energy
Genel Energy announced that on 14 September 2015 it signed a definitive sale and purchase
agreement with OMV to acquire its 36% operated stake in the Bina Bawi field. Completion of the
acquisition is subject only to government approval, which is expected shortly.
The consideration comprises an upfront payment of $5 million. A contingent payment of $70
million is payable once gas production exceeds agreed threshold volumes from the Miran and
Bina Bawi fields. A further contingent payment of $75 million is payable two years after the date of
the second payment.
In consideration of the Kurdistan Regional Government (‘KRG’) agreeing to the transfer of OMV’s
stake in the Bina Bawi field, on completion of the acquisition Genel will offset US$25 million
against monies owed by the KRG to Genel in respect of past expenses incurred on the Miran field.

Kenyna & Uganda Oi Projects in Doubt as Crude Below $50
Bloomberg - David Malingha Doya
Kenya and Uganda ended months of debate in August to sign an agreement on an oil pipeline
costing almost $4 billion. Finding the money to build it and companies to start pumping crude may
be a harder task.
The 1,500-kilometer (930-mile) pipeline is key for exporting the region’s crude when production
finally begins -- 2018 in Uganda’s case. With oil prices languishing below $50 a barrel, there’s little
incentive for companies such as Tullow Oil Plc, Africa Oil Corp., China’s CNOOC Ltd. and
France’s Total SA to keep investing.
“The lower oil price has created a great deal more of uncertainty around future oil production,
given that additional capital expenditure will be required to make oil production a reality,” Razia
Khan, head of Africa economic research at Standard Chartered Plc in London, said in an e-mailed
response to questions.
Just before prices collapsed, oil held great promise for both nations as a way of transforming their
mainly agrarian economies and reducing poverty. Uganda, Africa’s biggest exporter of coffee
where about 38 percent of the population live on less than $1.25 a day, has proven oil reserves of
2.5 billion barrels, on par with Colombia, according to the U.S. Energy Information Administration.
Kenya is estimated to have 600 million barrels available, but not proven.
‘Not Feasible’
Oil explorers had assumed prices higher than $80 per barrel when modeling projects, according to
a 2015 PricewaterhouseCoopers study on the African oil and gas industry. Brent crude has
plunged 57 percent since the beginning of June last year and traded as low as $45.98 a barrel in
London on Tuesday.

“These big oil-based investments are not feasible,” Aly-Khan Satchu, the chief executive officer of
Rich Management Ltd., an adviser to wealthy individuals and companies, said by e-mail from
Kenya’s capital, Nairobi. “Current price structures preclude these big ticket investments.”
From Ghana to Angola, the end of the oil boom is destabilizing economies in Africa as revenue
slumps and currencies tank. Nigeria, Africa’s biggest oil producer, has imposed foreign-exchange
restrictions to stabilize the naira, Angola has cut its budget by about a quarter and Ghana was
forced to take almost $1 billion in emergency loans from the International Monetary Fund to
bolster reserves.
Tullow, the lead explorer in East Africa, is already cutting costs to make its business competitive
at $50 a barrel. Chief Executive Officer Aidan Heavey said in July the company will make a final
investment decision on some of its discoveries in the region by the end of 2016. George
Cazenove, head of media relations at London-based Tullow, didn’t immediately respond to an e-
mail and voice-mail seeking comment.

The planned crude pipeline in East Africa, which will cost about 400 billion Kenya shillings ($3.8
billion), runs from Uganda’s Lake Albertine basin through Kenya’s remote northern oil fields, to a
yet-to-be-built port in the Kenyan coastal town of Lamu.
Government officials in both countries say their projects are still viable. Kenyan Treasury
Secretary Henry Rotich said in a Sept. 8 interview that he remains optimistic of investment
because “these companies have already invested a lot and need to recoup.”
Funding Pledge
Keith Muhakanizi, permanent secretary at Uganda’s Finance Ministry, said on Sept. 9 the two
governments will begin mobilizing resources for the project soon and he was confident they “shall
raise the funds.”
The World Bank’s International Finance Corp. pledged last year to invest in the pipeline from a
$600 million fund earmarked for regional economic development.
Oil explorers “want to get their investment back,” Armando Morales, the IMF’s representative in
Kenya, said in an
interview in
Nairobi on Sept.
10. “The fact that
investors are still
interested makes
me think that they
are still optimistic,
maybe less than
before, but they
are still optimistic.”
Kenya and
Uganda have
already ramped up
debt on the
expectation of
future oil revenue.
Kenya sold $2.75
billion of
Eurobonds in
2014, while
Uganda planned
an auction of
about $1 billion in
securities this year
until a stronger
dollar scuppered
its plans. The IMF
estimates that government debt in Kenya reached 49 percent of gross domestic product last year,
up from 41 percent in 2009, while Uganda’s ratio surged to 30 percent from 18 percent.
“Low oil prices are a concern for everyone,” Denis Kakembo, a senior tax manager at Deloitte
East Africa, said in a phone interview from the Kenyan capital, Nairobi. “Discovery of crude oil
does not mean anything until you monetize it.”

UK shale gas cash should pay for carbon capture projects - report
Reuters + NewBase
Britain should use revenues from the shale gas industry to help fund the development of projects
that capture carbon dioxide emissions and store them underground, a shale gas industry-funded
task force said on Wednesday.
Britain is estimated to have
substantial amounts of shale gas
trapped in underground rocks and
Prime Minister David Cameron has
promised to go "all out for shale",
hoping it will help reduce
dependence on energy imports and
generate additional tax revenue.
But if Britain forges ahead with
shale development it will need to
develop carbon capture and storage
(CCS) to make sure it can still meet
emission reduction targets, the
report by the Task Force on Shale
Gas said.
"If a shale gas industry begins to develop at scale, CCS (carbon capture and storage) will become
essential, and a CCS industry should be developed and grown concurrently," it said. CCS
technology has so far failed to live up to early hopes of wide adoption to slow climate change.
After many years of research, Saskatchewan Power opened the world's first coal-fired power plant
retrofitted with CCS last year, but European utilities have struggled. Chris Smith, chair of the task
force, said it will take 4-5 years before any shale gas is extracted and that by then CCS
technology should have progressed.
Britain's government has committed one billion pounds for two CCS projects, one on a gas plant
and one on a coal plant. The gas project, being developed by Shell (LSE: RDSB.L - news) and
SSE (Amsterdam: UW8.AS - news) in Peterhead, Scotland, could be up and running by the end of
the decade.
The report also said pilot studies should be set up to get a full picture of how many emissions are
generated during the extraction process. Hydraulic fracturing, known as fracking, which injects
water, sand and chemicals into rocks to release hydrocarbons, is used to release the shale gas
from rock formations.
Studies have shown than methane, which is a powerful greenhouse gas, can leak from fracking
wells. The report said a so called "green completion process" should be mandatory on all fracking
wells to capture the methane.
The task force was set up last year to examine the risks and benefits of shale gas extraction and
says it is independent of its funders -- Cuadrilla, Centrica (LSE: CNA.L - news) , Total (Swiss:
FP.SW - news) , Weir Group, Dow Chemical (Hanover: DCH1.HA - news) and GDF Suez E&P
UK.

U.S. job market and automotive sales trends support
growth in gasoline use
Source: U.S. EIA, Petroleum Supply Monthly
U.S. motor gasoline product supplied, a proxy for gasoline use in the United States, has been
rising after reaching an 11-year low in 2012. Although lower gasoline prices have been an
important factor in the increase in gasoline use so far in 2015, changes in the labor market and in
the vehicle sales mix over the past few years also have contributed to the rise in gasoline use.
Because more than 90% of U.S. motor gasoline is used in light-duty vehicles (LDVs), factors that
affect vehicle miles traveled (VMT) and the average fuel economy of the LDV fleet can also lead
to changes in gasoline consumption. In addition to lower gasoline prices, a stronger U.S. job
market and higher wage growth may have contributed to record-high VMT, and sales trends in the
automotive market indicate that U.S. consumers are purchasing more vehicles that have lower
fuel economy ratings.

The U.S. Department of Labor's Bureau of Labor Statistics publishes the Job Openings and Labor
Turnover Survey, which provides data on labor availability, such as the number of people hired
and the number of jobs left unfilled (job openings) each month.
The spread between the number of hires and the number of job openings is one way to measure
the strength of the job market. Since the start of 2014, the gap between the number of hires and
the number of job openings has declined. Starting in February 2015, the number of job openings
has consistently exceeded the number of hires, reaching nearly 800,000 in July, signaling a tighter
labor market where competition has increased to find qualified candidates.
Wages appear to be rising in response to the tighter labor market. Data from the Federal Reserve
Bank of Atlanta for year-over-year median wage growth show that, in the fall of 2014, median
wages began to grow at a faster rate than they had been in the four years since the end of the
recession.
In April and May 2015, median wages grew 3.3%, the highest rate since May 2009, before ticking
down to 3.2% in June and July 2015. Some of the increase in gasoline consumption may reflect
more driving by U.S. consumers as employment levels and purchasing power improve.
In addition to rising VMT in response to both employment growth and lower prices, changes in the
fuel economy of the U.S. LDV fleet can also affect gasoline consumption, particularly over a
longer horizon. Vehicle sales data from the U.S. Department of Commerce's Bureau of Economic
Analysis show that from January through August of 2015, sales of light-duty trucks—pickup trucks,
sport utility vehicles, and vans—outpaced those of passenger cars by a seasonally adjusted 28%,
the highest difference on record. Light-duty truck sales, on an absolute basis, have been
increasing steadily since 2009 and, from January to August 2015, averaged a record 9.57 million
at a seasonally adjusted annual rate.
Even though fuel efficiency for light-duty trucks and passenger cars has increased because of fuel
economy regulations, light-duty trucks have lower fuel efficiency on average than passenger cars.
Over a longer period, the differences in fuel economy can increase gasoline consumption as rucks
make up a higher percentage of the nation's LDV fleet.

NewBase 16 September - 2015 Khaled Al Awadi
U.S. oil extends gains on stock-draw, Brent lags with
Asian economies. REUTERS + NEWBASE
U.S. oil prices extended gains in Asia on Wednesday on an unexpected stockpile draw and higher
gasoline prices, while international crude markets were weaker on the back of low Asian economic
growth expectations.
Front-month U.S. West Texas Intermediate (WTI) crude futures were trading at $44.91 per barrel
at 0453 GMT on Wednesday, up 32 cents from their last settlement. nternationally traded Brent
futures were a bit weaker in comparison, gaining only 9 cents to $47.84 a barrel.
The recent divergence in American and
international markets has cut the discount
of the U.S. oil to the Brent global
benchmark by nearly two-thirds during the
past month to around $2.50 per barrel.
"We believe that this could be the
market's reaction to the decline in U.S.
crude production (drilling) ... further
exacerbated as Iranian crude could be
entering the market in Nov' 15, which puts
heavy pressure on the global benchmark," Singapore-based Phillip Futures said.
Iranian crude oil that has been stored in tankers could be released quickly to world markets
whenever Western sanctions against Tehran are lifted.
U.S. crude futures rose after industry group the American Petroleum Institute (API) reported a 3.1
million-barrel crude drawdown last week, versus analyst expectations for a build. A surge in U.S.
gasoline prices was also supportive.
Official U.S. crude inventory data is scheduled to be released later on Wednesday.
Yet outside the United States, international crude markets remained weak largely because of high
supplies from the Organization of the Petroleum Exporting Countries (OPEC) clashing with Asia's
slowing demand.
Australian bank Macquarie said China's economic outlook for the fourth quarter of the year was
not convincing.
Oil price special
coverage

Oil Traders Hire Tanks on Tiny Island to Profit From Global Glut
Bloomberg E-mail
To see how oil traders are profiting from the longest-lasting glut in three decades, look at the tiny
Caribbean island of St. Lucia.
Glencore Plc hired tanks at the island’s only oil terminal to stow crude, joining Vitol Group, people
familiar with the matter said last week. They’re responding to the market’s deepening contango, a
situation where prices today are lower than those in future months, allowing traders with access to
storage to lock in a profit. From St. Lucia to South Africa to Rotterdam, they’re seizing the
opportunity.
“Contango opportunities are emerging,” Ian Taylor, chief executive officer of Vitol, the world’s
largest independent oil trader, said in an interview earlier this month.
While the oil market has been in contango since August 2014, in the last month prices have
moved in a direction that makes the trade more profitable. The price difference between a Brent
oil contract for immediate delivery, the global benchmark, and one-year forward stood at minus
$7.82 a barrel on Tuesday, more than double its level in mid-July.
The difference between Brent crude for immediate delivery and the price a year in the future has
more more than doubled since July
The spread has widened as refiners enter into their maintenance season before the northern
hemisphere’s winter, reducing crude oil intake. At the same time, supplies in the Atlantic basin
from producers in the North Sea and West Africa have risen to the highest in three years, forcing
traders to find a home for millions of barrels.
Globally, Goldman Sachs Group Inc. estimates crude oil supply is outstripping demand by more
almost 2 million barrels a day, putting increasing pressure on the world’s storage capacity.
Tanker Tracking

Glencore sent the medium-size Everglades tanker full of North Sea crude to St Lucia on Sept. 9,
according to ship-tracking data compiled by Bloomberg. Its rival Vitol sent supertanker Front
Ariake, laden with Nigerian crude, to an onshore storage facility in Saldanha Bay in South Africa
on Aug. 25.
At today’s price levels, traders can store crude onshore, at terminals like St. Lucia and Saldanha
Bay and make money. The contango isn’t strong enough yet to allow the use of oil tankers as
floating storage facilities, traders said.
Nonetheless, there are signs that floating storage could become economic. Paddy Rodgers, CEO
of Euronav, one of the world’s largest owners of oil supertankers said that oil is likely to be stored
at sea over the next four to five months.
“If it doesn’t happen this fall, then it’s going to happen next spring unless something gives on
supply-demand,” Seth Kleinman, head of energy strategy at Citigroup Inc. in London, said by
phone.
Oman Crude
E.A. Gibson Shipbrokers Ltd. estimates that contango levels are getting closer to allowing floating
storage for some Middle East oil, such as Oman crude. The 3-month contango on Oman crude
near $3 per barrel is almost enough to cover the $3.10 a barrel it estimates would cost to hire a
tanker for floating storage.
The main obstacle to contango trades is the cost of storage, both onshore and offshore. In 2008
and 2009, the last time the oil market was as oversupplied as today, the storage companies and
shipping firms were slow to increase rates, allowing the traders who used their tanks to take an
unusually large slice of the contango profit. This time, the split between tank owners and traders is
more even.
Even so, the stronger contango signals a boom for oil traders if history is any guide.
Vitol had record income of $2.28 billion in 2009, during the last big contango, up from $1.36 billion
in 2008, according to the company’s accounts. BP Plc, which has a large trading division, said it
made an extra $350 million in oil trading during the first quarter, in part thanks to a strong
contango.

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
NewBase Special Coverage
News Agencies News Release 16 Sep. 2015
DNV GL: Two new JIPs have potential to save over
$10M in costs
It is estimated that the JIPs could deliver a combined saving of £6.75 million ($10.4 million). The
DNV GL Affordable Composites for the oil and gas industry JIP aims to reduce the cost of
qualifying composite components for subsea use by replacing large scale tests with ‘certification
by simulation’.
Statoil, Petrobras, Petronas, Nexans, Airborne and the Norwegian University of Science and
Technology (NTNU) in Trondheim, are participating in the project. The project is partly funded by
the Research Council of Norway.
DNV GL is launching two joint industry projects (JIPs) to investigate affordable composite components
for the subsea sector and qualify technology for more efficient linepipe production processes.
The project, which could potentially deliver a 40 to 50% cost saving for certification and
qualification of subsea composite components, will seek to validate new advanced material
models by experimentation, with the main focus on predicting chemical ageing, DNV GL said in its
press release.

“Composite components require full-scale testing to document long-term properties to achieve
certification,” said Jan Weitzenböck, Principal Engineer, DNV GL – Oil & Gas.
“A typical qualification campaign for a subsea composite component can cost in the region of ten
to 100 million NOK. The results of this JIP could potentially save up to 16 million NOK for re-
certificaiton of existing components.”
DNV GL will also develop processes to accept mathematical material models in the certification
process. This will be documented in a revised edition of the DNV GL offshore standard for
composite components (DNV-OS-C501).
The driver for the New Material Solutions for Flowlines JIP is to explore cost savings by use of
HFW/SAW (high frequency welded/submerged arc welded) pipes. Within the envelope of
production parameters, these may be a very attractive alternative to the traditional seamless
pipes, due to their lower cost and shorter delivery time, said DNV GL.
The JIP has drawn the interest from pipe manufacturers, installation contractors and operators
such as: Corinth PipeWorks, EMAS, JFE-Steel, Sumitomo, Tata steel, Tenaris/Tamsa and
Woodside. The JIP is still open to additional partners.
“Though there is a considerable amount of
research and full-scale reeling trials for the
use of HFW or SAW linepipe, as well as a
good track record in terms of executed
projects, a joint systematic approach to
optimize the design of these linepipe for
reeling is lacking. There is much to be
gained through this project – we estimate
that it could deliver a 20-30% reduction in
pipeline material cost, corresponding to
£4—5.5 million saving potential for a 30
km flowline,” said Leif Collberg, Vice
President – Pipeline Technology, DNV GL – Oil & Gas.
The JIP will be run as a Technology Qualification (TQ) project and is expected to result in a
qualification plan that will require qualification testing by the manufacturers.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 16 September 2015 K. Al Awadi

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