Energy

Al Shaheen Energy signs US$350m pact with GE

Two agreements were signed by Deputy Prime Minister and Minister of Energy and Industry, Abdullah bin Hamad al Attiyah and the President and Chief Executive Officer of GE Oil and Gas, Claudi Santiago in mid-May. Under the first agreement, Al Shaheen will become a 50:50 international joint venture partner with GE Oil and Gas, in a new company called PII Pipeline Solutions. It will develop pipeline solutions for Qatar petroleum in the country as well as customers abroad. Under the second joint-venture agreement, Al Shaheen will become a 50 per cent partner in a company to be called Al Shaheen GE Services that will render services to GE Oil and Gas's installed fleet in Qatar and the region. Al Shaheen GE Services will specialize in inspection, repair and maintenance of oil and gas facilities in Qatar, the company said. "The formation of the two joint ventures would help Qatar achieve increased oil and gas capacity by providing the most advanced technologies for the inspection, maintenance and repair needs of the local oil and gas industry. The Qatar services centre will promote Qatar's growth by fostering technology transfer and the development of local talent," Attiyah said in his briefing to the media. He said the urgent need to provide services to the energy sector in Qatar has led to this the joint venture agreements. The JVs will also help develop local talent, create jobs and aid technology transfer and development. The total investment in the two projects would be approximately US$305 million, Attiyah added.

Iraq's West Qurna One to see 8 new wells

The initial development plan agreed by Exxon Mobil and its partners for Iraq's West Qurna Phase One oilfield includes drilling eight new wells and overhauling up to 50 wells this year to boost output, an Iraqi oil official said in May. International oil service companies will be invited to drill four new wells and state-run Iraqi Drilling Company is already working on drilling the remaining four planned for this year to increase production beyond its current output of 225,000 barrels per day (bpd), Bassem Abdul Karim, head of the Operation Department in the South Oil Co., said. "We will issue a tender for the other four wells ... and there will be work-over (tenders) for 45 to 50 wells until the end of the year," he said in his office in the southern oilfield of Zubair.

US$350m Bahrain-Saudi pipeline plan on track

The design and route of a massive new pipeline to bring crude oil from Saudi Arabia to Bahrain will be completed later this year, Oil and Gas Affairs Minister and National Oil and Gas Authority (Noga) chairman, Dr. Abdulhussain Mirza said in late May. The US$350 million project, which is expected to be completed within a year, will ensure that the Bahrain Petroleum Company (Bapco) refinery in Sitra receives around 350,000 barrels of oil a day, said Dr. Mirza. Speaking after opening the Middle East Petrotech 2010 at the Bahrain International Exhibition and Convention Centre (BIEC), he said the project is being undertaken to expand and replace the existing capacity and an old pipeline. "The 114-km pipeline will use a safer route that avoids going through inhabited areas and will also use state-of-the-art technology." Dr. Mirza said Bahrain's focus is also on building a new state-of-the-art plant for the production of high-value lubricants base oil stock in a joint venture with Noga Holding and Neste Oil of Finland. "We are today placed in a very inflationary environment, but we have taken the challenges head on and reacted pro-actively to retain our competitive edge and stay on course for continued growth and earnings in line with market expectations," he said.

Bahrain plans refining push to tap markets

Bahrain is looking at its refining capacity beyond 2012 to help give the country a competitive advantage and make it better positioned to capture future market opportunities, says Oil and Gas Affairs Minister and National Oil and Gas Authority chairman, Dr. Abdulhussain Mirza. "Though we remain optimistic about the future of the oil business, our optimism is moderated with caution," he said after opening an exhibition running parallel to the Middle East Petrotech 2010. "There is some concern amongst industry observers that the rate at which additional refining capacity is coming on-stream worldwide is outpacing the rate at which demand for refined products is expected to grow," he said. "This overcapacity might lead to tighter refinery margins which in turn would dry up investment in modernization and new ventures. Therefore, we are looking at our refining capacity beyond 2012 - to give us a competitive advantage and better position to capture the opportunities that future market environments may offer." Dr. Mirza said Bahrain's Refinery Master Plan Project would also look at optimizing refinery capacities, crude oil import and production as well as future investments, among others. He said the Petrotech 2010 theme Downstream Challenges was appropriate as the industry seeks to come to terms with the enormous challenges it faces. "After the sharp dip of late 2008, crude prices have recovered appreciably, creating a healthy outlook for the upstream side of the business," said Dr. Mirza. "However, in contrast, the gain in refinery margins has been very modest. Margins have in general stayed very depressed and the first quarter of 2010 has averaged just slightly above the extremely weak last quarter of 2009. Therefore the challenge remains with us for the foreseeable future - how to ensure the profitability and sustainability of the downstream business?”

PetroChina, Shell and Qatar Petroleum ink gas exploration deal

Chinese oil giant PetroChina has signed a 30-year agreement with Royal Dutch Shell and Qatar Petroleum to search for natural gas in the Gulf state's Block D area, the companies have announced. Under the deal, the partners will jointly search for gas in the block, which covers an onshore and offshore area of 8,089 square km, they said in a joint statement. Shell, as operator, will hold a 75 per cent share in the project while PetroChina will take the remaining 25 per cent, according to the statement. Shell and PetroChina will produce the natural gas under Qatar Petroleum's supervision and the Qatari company will buy any gas produced, it said. PetroChina is the listed arm of China's top oil and gas producer, state-owned China National Petroleum Corp. "China is an important downstream market and PetroChina is keen to build upstream partnerships with major resource holders like Qatar," PetroChina official Zhao Dong, who signed the deal in Doha, said in the statement. No financial details were disclosed. Meanwhile, Qatar is holding talks with Lebanon and Turkey for sales of LNG, Qatar's Energy Minister Abdullah Al-Attiyah said Qatar is building capacity to export 77 million tons per year of LNG, and aims to complete that capacity boost this year. Current capacity is around 61 million tons. Qatar was in talks to supply Lebanon with 3 million tons of LNG, Attiyah told an industry event. He did not specify over what time period.

Kuwait's crude oil exports to China hit record high

Kuwait's crude oil exports to China grew 17.8 per cent in April from a year earlier to a record high of 1.081 million tons, equivalent to around 264,000 barrels per day (bpd), the latest government data showed. Kuwait provided 5.1 per cent of China's total crude oil imports, compared with 5.7 per cent in the same month of last year and 4.5 per cent in March, according to the General Administration of Customs. For the first four months of 2010, Kuwait, OPEC's fourth largest exporter, shipped 3.17 million tons.

Qatar and Russia reducing gas output

Qatar, the world's leading producer of liquefied natural gas (LNG), plans to idle two-thirds of its LNG production capacities. As Bloomberg reports, Gazprom's natural gas production forecasts for 2010 have also been revised downward. Ras Laffan Liquefied Natural Gas Co. (Qatar's second-largest LNG producer) and Qatar Liquefied Gas Co. have reported "unusually complicated" technical maintenance programs at their liquefaction plants over the last two months. For this reason, six out of 12 plants have stood idle for several weeks. Two more plants in Qatar will shut down for maintenance soon. Gazprom's management team has decided to set a 2010 production target of 519.3 billion cubic meters, replacing the previous target of 529 billion cubic meters. According to a Gazprom spokesman, this step has been prompted by falling gas demand worldwide. Global gas consumption dropped by 2.1 per cent in 2009, according to the latest edition of BP's annual Statistical Review of World Energy. Gas prices fell because a number of countries increased exports, and the United States increased domestic shale gas production.

A gust of wind energy in Egypt

Wind energy is growing leaps and bounds globally, at a rate of 31.7 per cent since 2001, and wind capacity is doubling every three years. While Africa is having difficulty keeping apace, Egypt seems to be forging full steam ahead. The actual growth rate for the continent hovered around 28 per cent last year, below the 31.6 per cent for the world total, according to 2009 World Wind Energy Report by the World Wind Energy Association. A conference titled “Wind Power Africa 2010” held in South Africa in early May, hosted by the African Wind Energy Association in cooperation with African governments and international organizations, brought together stakeholders to discuss the current state and future projections for the wind energy sector. Eduardo Gonzalez, Spain's representative to the Global Wind Energy Council (GWEC), said that Africa is faring the worst compared to other regions. The current world leaders in total capacity are Europe with 47.9 per cent, North America with 24.2 per cent and Asia with 25.1 per cent. In terms of newly installed wind turbines, Asia is leading the way with 40.4 per cent, the US with 28.4 per cent and Europe trailing in third place at 27.3 per cent. Africa accounts for a mere 0.4 per cent of new wind turbine installations, and just 0.5 per cent of current total capacity, the report indicates. The figures speak for themselves. While the continent as a whole seems to be left in the dust by the US, Asia and Europe, Egypt, on the other hand, has made significant strides. In fact, Egypt is helping lead the continent in wind energy: Combined with Morocco, they represent 169 megawatts out of the 770 for the continent as a whole.

The boom in Qatar

While Abu Dhabi will be the capital of the world's renewable energies, Qatar is becoming the capital of the global gas-to-liquids (GTL) fuels trade and the world's second largest producer of helium. Qatar is already the world's largest exporter of LNG. Qatar's economy in 2009 rose 8.7 per cent, less than expected but still gaining from the gas sector's growth, which helped it ride through the global crisis relatively unscathed. Qatar grew at an average pace of 17.4 per cent per annum over the past five years and it is set to largely outperform fellow GCC oil producers such as Saudi Arabia and the UAE in the coming years. Farah Ahmad Hersi, senior economist at Masraf Al-Rayan in Doha, was quoted by Reuters as noting: "The [Qatari] economy is extremely robust and it will continue to grow at even a higher pace". The 2009 growth figure is below the 11 per cent cited by Qatar's Deputy PM and Energy and Industry Minister Abdullah bin Hamad al-Attiyah in January. Qatar's GDP had risen 25.4 per cent in 2008, much higher than 15.8 per cent reported previously. Qatar has performed better than its GCC peers due to a massive expansion of gas and LNG facilities. Qatar is making growing amounts of helium as a by-product of gas output and aims to become the world's second largest helium producer with a new plant. Helium is used in medical diagnostics such as MRI scanners and has industrial applications for semi-conductor processing, fiber optics and welding. It is the second most abundant element in the universe after hydrogen. Qatar's second helium plant would come on line in 2013 and purify and liquefy helium recovered from the North Field. The volume of sales gas from the Qatar-2 Helium Project would be 1,300 MCF/year. It would make Qatar second only to the US in helium output.

Qatar: Value-added energy

After establishing itself as the world's leading supplier of liquid natural gas (LNG) products, Qatar is now targeting its resources towards its own domestic market. Long focused on exports, and being largely responsible for the upsurge of LNG usage around the world through its promotion of the product, Qatar's output is projected to exceed 77 million tons a year by the end of 2010. While the vast majority of this is intended for the export market, an increasing percentage is being reserved for local industries. On May 10, the Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, inaugurated Al Khaleej Gas 2 (AKG-2), a US$4.7 billion plant to process gas from the Khuff Reservoir, part of the massive North Field. According to Qatar's deputy prime minister and minister of energy and industry, Abdullah bin Hamad Al Attiyah, "this project, developed in cooperation between Qatar Petroleum and ExxonMobil, will be a major supplier of clean energy sources for power plants and various industries, and will contribute to the country's comprehensive development”. Among the industries that will benefit is the Ras Laffan Olefins Company, which will be supplied by gas and ethane and gas-to-liquids producer Oryx GTL. Output from the project will also be used to turn the turbines of the country's two largest electricity producers, the Ras Laffan Power Company and the Qatar Power Company. Not only will this help keep the lights on at home, but the additional gas will also assist the utilities in ensuring they can meet the growing needs of non-hydrocarbon industries. (Source: OBG)

Exxon resumes Kuwait heavy oil negotiations

Exxon Mobil has resumed long-stalled negotiations over development of Kuwait's heavy oil fields, a top Kuwaiti official says, spurred by fierce competition from France's Total. Exxon and Total are the only two international oil companies (IOCs) that prequalified for a contract to develop roughly 13 billion barrels of ultra-heavy oil in northern Kuwait. The US supermajor seemed close to winning the deal when it signed a heads of agreement in 2007, but its enthusiasm dimmed and a final contract was never inked. However, talks with Exxon are now back on track, Sami al-Rushaid, Kuwait Oil Co. (KOC) chairman and managing director, said on the sidelines of an energy conference in Qatar. "There are negotiations with Exxon Mobil and there is some progress." Exxon's change of heart follows a high-profile trip to Kuwait in recent months by Total boss Christophe de Margerie, when he sat down with top oil officials and expressed interest in developing the same heavy oil reserves. Al-Rushaid said talks also continue with the French oil giant. The renewed interest in Kuwait's upstream comes on the heels of a landmark gas development agreement signed in February by Royal Dutch Shell. The Anglo-Dutch supermajor became the first IOC to ink an improved version of the technical service agreements (TSAs) that Kuwait used to offer foreign companies. The so-called enhanced TSA (ETSA) allows dozens of IOC staff to be seconded to Kuwaiti oil companies, compared with just a handful under the old arrangement; each secondment earns the IOC a few million dollars annually over a three- to five-year contract period. Total considers the new formula to be commercially viable, hence its interest in the heavy oil development.

US$4 billion revenues from Iraqi oil exports last month

Iraq's revenues from oil exports in April have reached more than US$4 billion after exporting 53 million barrels, according to a spokesman from the oil ministry. "The oil ministry has made US$4.222 billion from exporting 53 barrels last month," Essam Jihad said, noting that the average price per barrel reached US$79.66 from the Basra oil. "The volume of exports from the Basra oil reached 42.700 million barrels, recorded revenues of three billion and 386 million dollars. The exported quantities of crude oil from Kirkuk, amounted to 10 million barrels, and their revenues 836 million dollars." He said that Iraq had achieved US$4.351 billion from exporting 57.1 million barrels last March.

Bahrain expects to award LNG plant contract in 2011

Bahrain is in talks with more than 10 international oil companies to build liquefied natural gas import facilities and plans to award a contract in early 2011, the country's energy minister said. Speaking during an interview in Manama in May, Abdul Hussain Mirza said: "Once we have LNG facilities in place, we can get gas from any country, whereas if you have a pipeline, you can bring it from only one country". He added: "LNG is only a backup strategy, we have already started increasing our own gas production." Bahrain is turning to LNG as talks that started at least three years ago to build a pipeline from Iran, the world's second largest holder of natural gas reserves, are yet to be concluded. Bahrain is in talks with Qatar, the world's largest LNG exporter, to supply the gas by tanker, Qatari Energy Minister Abdullah Bin Hamad al Attiyah said. The plant will take three to four years to build, Mirza said. Occidental Petroleum Corp, Mubadala Development Co and the National Oil & Gas Authority of Bahrain plan to boost gas output capacity at the Bahrain oilfield to about 2.7 billion cubic feet a day in five years from about 1.3 billion now, Mirza said. Oil output will triple in seven years to 100,000 barrels a day, he said. Occidental and Canadian Natural Resources Ltd have bid for contracts to explore for gas in deep marine areas, he said.

Iraq signs deal with CNOOC, TPAO for Maysan oilfields

Iraq's Oil Ministry signed a final deal with China's CNOOC and state-run Turkish Petroleum Corporation (TPAO) to develop the 2.5-billion-barrel Maysan oilfield complex. The deal is the 11th of a series signed since last year with international oil companies to develop the war-damaged country's vast oil reserves, and which have the potential to vault Iraq into second place in the league of oil producing nations.

Qatar in talks with Turkey's Botas to supply LNG

The world's largest exporter of LNG, Qatar is in talks with Turkey's state-run pipeline operator Botas for LNG sales, Qatar's Energy Minister Abdullah al-Attiyah said. Qatargas, one of Qatar's two producers of liquefied natural gas (LNG), was discussing the sales to Botas, Attiyah told reporters on the sidelines of an industry event in Doha. He declined to give further details. LNG production is divided between Qatargas and RasGas, two firms in which state-run Qatar Petroleum owns a majority stake.