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PDO signs deal for
fourth party logistics services
Petroleum Development Oman (PDO) held a ceremony on Sunday
to mark the signing of a major contract for the provision of
fourth-party logistics services by Exel and BahwanCybertek. The
contract, which was put in place over the past three years, will
let the Exel-BahwanCybertek joint venture manage all cargo
operations, including drilling-rig moves, on behalf of PDO. In
addition, the joint venture will integrate its logistics system
nationally and regionally so that other companies and
governmental agencies can take advantage of it.
The ceremony was attended by PDO Managing Director John Malcolm,
Deputy Managing Director Abdulla al Lamki, and representatives
of the PDO’s Logistics department led by the Logistics Manager
Warith al Kharusi. Representing Exel at the signing ceremony
were its CEO for contract logistics in mainland Europe, Middle
East and Africa, Leigh Pomlett, and its Middle East Regional
Director, Colin Wain. Representing Bahwan Cybertek were Hind
Bahwan, its Chairperson, and S Durgaprasad, its CEO.
The contract’s advent promises to increase the utilisation of
truck capacities by some 10-20 per cent. The subsequent
reduction in kilometres driven will result in savings as well as
reduced exposure to traffic accidents. The application of a new
transport management system with track and trace capabilities
will result in a step-change improvement of the service level
offered to the primary customers, namely PDO’s interior-based
drilling and engineering operations. The contract will unify the
system so that everyone—not just PDO-related companies—can take
advantage of it.
The scope of cargo haulage that will come under the system’s
umbrella will include, amongst other things, loads from ports to
the coast and interior, rig moves, loading and unloading
operations, crude-oil and water haulage, and clearing and
forwarding. Al Kharusi said: “This type of fourth-party
logistics contract is the first in the Middle Eastern
exploration and production industry. It will not only result in
an improved service but will also help local businesses to grow.
The execution of all activities will be subcontracted to
established local trucking companies. Logistics integration on
this scale is a perfect example of sustainable development in
practice: it makes optimum use of resources; it improves the
safety of our operations; and it stimulates the growth of local
businesses.” “What we will end up with is a unified system of
logistics that spans the whole country and that links with other
transport systems, including passenger transport. This is a very
positive development for PDO and the Sultanate of Oman in
general,” Al Kharusi concluded.
Source: Oman Observer, 28 June 2005
Agreement for new
LNG carrier signed
Ahmed bin Abdulnabi Macki, minister of national economy and
deputy chairman of the Financial Affairs and Energy Resources
Council and chairman of the board of directors of Oman Shipping
Company, yesterday here signed a joint venture ownership
agreement for an LNG carrier with Japanese companies Osaka Jaz,
NVK Co. and K Line.
“With this, the number of LNG carriers under the control of Oman
Shipping Company rises to seven,” said Macki after signing the
agreement. He said the new 289-metre long and 49-metre wide LNG
carrier with a capacity of 153,000 cubic metres would be put
into service in 2008.
The new carrier will be utilised for the shipment of liquefied
natural gas as per the long-term agreement signed with Oman LNG
The OSC will have a 40 per cent stake in the new LNG carrier
while Osaka Jaz will have 51 per cent, NVK Co. six per cent and
K Line the rest of three per cent.
“The OSC attaches more significance to the marine transport
sector and the new carrier will not only support the company but
help boost the overall national economy,” Macki said, adding
that OSC has already started providing training to the Omani
cadres in the maritime sector.
The signing ceremony was attended by Mohammed bin Yusuf Al
Zarafi, the Sultanate’s ambassador to Japan, and the Omani
delegation accompanying the minister.
Macki also held talks with senior officials of Japanese shipping
and oil giants including Mitsui. They discussed ways of
promoting cooperation between Omani companies such as Oman
Shipping Company, Oman LNG and PDO with the Japan companies in
the field of oil and gas.
Macki stressed the significance of strengthening cooperation and
establishing more joint ventures in private as well as public
sectors. The meeting was attended by Sultanate’s ambassador
accredited to Japan. — ONA
Source: Times of
Oman, 23 June 2005
PDO notches gains
in dealing with 'produced water'
Petroleum Development Oman (PDO) has reported significant
gains in its ongoing effort to deal with the copious amounts of
water that is produced along with oil from a number of major
fields within its concession.
During 2004, nearly seven barrels of water were produced for
every barrel of crude oil primarily from maturing fields in the
south. But the rate at which the produced-water volume is
growing is now slowing, says PDO, thanks to several
technological and water-management initiatives adopted by the
One notable success, outlined by the company in its recently
issued Annual Report for 2004, involves the use of expandable
zonal inflow profiler (EZIP) technology to reduce ‘produced
The EZIP is a type of well completion that, when placed in
contact with water inside a borehole, swells to provide a strong
seal that prevents the water from entering the well.
A total of 44 wells have been completed with EZIPs and by the
end of 2004 they had contributed an additional 400,000 barrels
of oil. This technology has since been massively deployed, says
PDO. Almost half the amount of produced water is now used for
waterflooding (in which water is injected into a producing
formation in order to support reservoir pressure and displace
oil towards producing wells).
Four major waterflooding projects were progressed during 2004.
The waterflood-based field-development plan covering the Ghariff,
Haima and Al Khalata reservoirs in the Marmul area is well on
track to be completed by the end of 2005. One variant of
waterflooding being seriously investigated for this area
involves thickening the injected water with polymers so that the
sweep efficiency of the flood is markedly improved.
The fourth waterflooding project, involving 23 fields known as
the Rahab-Thuleilat-Qaharir (RTQ) cluster, lags behind the
Marmul project in its scheduling.
But that position will enable what was learned from the Marmul
project to be incorporated in the RTQ field-development plan,
says PDO. In any case, rock samples from the reservoirs in the
cluster are being analysed and an additional appraisal well will
be drilled in 2005 to confirm a significant extension to one of
the cluster’s fields.
The remainder of the ‘produced water’ is mostly injected into
deep or non-exploitable aquifers, although some of it is
disposed of in shallow aquifers. Most of the company’s shallow
water disposal will be phased out with the completion of deep
water disposal projects in Nimr, Rima and Suwaihat in 2005.
PDO, however, has requested the Ministry of Regional
Municipalities, Environment and Water Resources to permit the
shallow disposal of produced water in Sayyala and Sadad,
since the environmental impact of the continued disposal in
those areas is very small. The request has been backed up by
detailed monitoring and computer modelling of the plume of
disposed water, the company stated in its Annual Report.
PDO is also investigating ways of treating production water from
the Nimr field so it can be used locally for productive
For over three years now, the company has been exploring the
potential use of produced water in the cultivation of beds of
reeds as a means of cleaning the water of its hydrocarbon
The produced water flows in at one end of the bed, and by the
time the water has reached the opposite end of the bed, most oil
has been removed by the biological action of the plants’ roots.
The treated water has then been used to irrigate a plot of
salt-tolerant trees, which could perhaps yield a saleable
product. An independent study of the scaling-up of this reed
bed/forest combination concluded in 2004 that it was
technically, financially and socially feasible.
The potential use of produced water as boiler feedstock for
steam injection projects was also explored by PDO in 2004.
Source: Oman Observer, 25
Major boost to
Mukhaizna oilfield development plants
The Government of Oman yesterday signed a pair of landmark
agreements with a consortium of investors designed to ramp up
production from the potentially prolific Mukhaizna field. The
pacts, involving investments of several billions of dollars over
the operational life of the project, will contribute
significantly to the government’s ongoing efforts towards
reversing the trend in falling oil output. Dr Mohammed bin Hamed
al Rumhy, Minister of Oil and Gas, signed the two deals — a
Production Sharing Agreement and a Joint Operating Agreement —
with the consortium partners at a well-attended ceremony held at
the Grand Hyatt Muscat.
Participating in the venture are local subsidiaries of a number
of oil majors and investment firms, notably Occidental Mukhaizna
LLC, Shell Oman Trading Company Limited, Liwa Energy LLC (a
subsidiary of Mubadala Development Company), Total E&P Oman,
Partex (Oman) Corporation, and the state-owned Oman Oil Company
Signing on behalf of the consortium partners were Dr Eduardo
Grilo of Partex, Jean-Luc Porcheron of Total, Rolf Monjo,
President of Occidental (Middle East), Sultan al Jaber of Liwa
Energy, and Raoul Restucci, Shell’s Executive Vice- President
(Middle East, Russia and Caspian region). Also present at the
ceremony were Nasser bin Khamis al Jashmi, Oil and Gas
Under-Secretary, and several senior ministry officials including
Dr Ali bin Thabit al Battashi, who led negotiations on behalf of
The Government of Oman, as owner of Mukhaizna’s hydrocarbon
resources, will retain 80 per cent of all revenue proceeds from
the field’s output. The remainder 20 per cent will be divided as
follows: Occidental Mukhaizna (9 per cent), Oman Oil Company (4
per cent), Shell Oman Trading (3.4 per cent), Liwa Energy (3 per
cent), Total (0.4 per cent), and Partex (0.2 per cent). As
operator, Occidental Mukhaizna LLC will deploy thermal enhanced
oil recovery (EOR) techniques to develop some 1 billion barrels
of heavy crude from the Mukhaizna field. Production is expected
to peak at around 150,000 barrels per day by 2010.
In remarks to journalists, Dr Al Rumhy hailed the significance
of the agreements. “It marks the first time that we have a
consortium of so many companies coming together on the upstream
side. This is the first
time we’ve managed to bring together Shell, Total,
Occidental and so on, within one project, and we’re looking
forward to working with them to produce
tangible results for the country.”
Development of the field, which holds heavy oil, will be
fast-tracked to significantly boost production from the present
10,000-12,000 bpd, he said. “We hope to peak at 150,000 bpd, but
we will see significant production from this field from next
year onwards. Investment is expected to run into billions of
dollars over the 30-year life of the project, much of which will
be injected in the early years of the venture.”
With the signing of the production sharing and joint operating
agreements, the operation of Mukhaizna, which falls within
Petroleum Development Oman’s (PDO) Block 6 concession, will now
pass into Occidental’s hands. While PDO as a company will not
directly participate in the new venture, its shareholders —
Shell, Total and Partex, besides the Omani government — are
partners in the project.
Dr Al Rumhy said the enhanced oil recovery technique envisioned
for Mukhaizna would involve a new approach. “We have been trying
this method for a number of years, but have never done it on a
large-scale. PDO has another project, quite similar to this one,
at Qarn Alam, a contract for which was awarded recently. We are
now embarking more and more on better recovery methods.”
First discovered in 1975, development of the Mukhaizna field has
so far been limited to cold production due to the heavy nature
of the oil and associated high costs. Occidental plans to
implement a large-scale steam flood scheme to increase
production from the field, whose hydrocarbon potential is
estimated at two billion barrels of STOIP (stock tank oil in
Occidental’s cutting-edge enhanced oil recovery technology,
combined with rapid decision-making processes, will allow for
Mukhaizna’s development to the fast-tracked, say officials.
Occidental of Oman, a subsidiary of the California-based oil
giant, is currently the second largest producer of oil in the
Sultanate, with significant volumes of natural gas also produced
from its Block 9 concession.
A further shot in the arm for the Mukhaizna’s project is the
participation of Liwa Energy, a subsidiary of Abu Dhabi-based
Mubadala Development Company, which is also investing in a huge
methanol scheme planned at the Salalah Free Zone. The methanol
project, also backed by state-owned Oman Oil Company, entails
the development of a 3,000 metric tonne per day state-of-the-art
methanol plant, using natural gas as feedstock. Mubadala is a
development and investment company wholly owned by the
government of Abu Dhabi.
Source: Oman Observer, 22
PDO adopts new
method to assess hydrocarbon potential
Petroleum Development Oman (PDO)
has adopted a new approach to assessing the hydrocarbon
potential of a reservoir prior to planning the field for
development. The revamped methodology, termed as ‘hydrocarbon
maturation’, is one of six major business processes that have
been implemented this year in an effort to sustain and build on
the company’s performance over the coming years.
The other five priorities listed by the company as key to
achieving ambitious savings and production targets are: Well &
Reservoir Management; Operational Excellence; Development of
Staff; on-time and on-budget delivery of Drilling & Engineering
Projects; and Contracting & Procurement. ‘Hydrocarbon
maturation’ is a new way of finding hydrocarbon-bearing
reservoirs; appraising their size, structure and properties;
accurately simulating the way in which the hydrocarbons flow
through them into wells; and then planning — in light of all the
data and all the uncertainties — how best to extract the
hydrocarbons from them for delivery via pipeline to the coast
“The hydrocarbon-maturation process, in particular, is paramount
for us. It is through this process that volumes of discovered
oil are progressed from ‘oil originally in place’ through ‘scope
for recovery’ to reserves. And reserves constitute the portfolio
of field-development opportunities that is the very future of
our business,” stated Managing Director John Malcolm in the
company’s 2004 Annual Report, issued here recently.
“For that reason we have redesigned the hydrocarbon maturation
process as well as the other five business processes in 2004, to
streamline and standardise them so that accountabilities are
clear and informed decisions are made at the right time and at
the right leadership level. These revamped processes will be
implemented in 2005 with the support of a new organisational
structure,” he added.
During 2004, PDO’s developed reserves (those volumes of oil that
have been made accessible by existing wells and production
facilities) increased on the basis of the comprehensive studies
underlying the company’s field development plans. In particular,
the field-development plans for Lekhwair and Nimr yielded
increases in reserves that more than offset the decreases in the
reserves of Yibal, Al Noor, Fahud, Marmul, Natih and Saih
The company also found some oil and gas through its exploration
efforts. Exploration wells revealed 48.6 million barrels of “new
oil” at Malaan, Tibr and Ghafeer that have been categorised as
scope for recovery. Exploration wells drilled near existing
fields also revealed an additional 66.4 million barrels of
scope-for-recovery “old oil” at Musallim, Burhaan North West and
Maurid. By having them hooked up quickly to the oil-production
facilities, the company managed to produce an average of 3,300
barrels per day from its successful exploration wells at
Musallim, Malaan and Tibr.
No gas reserves were booked in 2004, although the field
development plans for the company’s major gas fields are
expected to result in bookings, which will be factored into the
company’s reserves at the end of 2005. However, some gas was
discovered in 2004. Exploration wells did discover 0.53 trillion
cubic feet (TCF) of gas that have been categorised as scope for
Several major gasfield projects critical to ensuring an
uninterrupted supply of gas for domestic consumption, were
progressed during 2004. PDO was well on its way to securing
feedstock for the Qalhat LNG plant through the construction of
the Saih Nihayda Gas Plant (SNGP) in central Oman and the laying
of a 48-inch loop pipeline from the SNGP to the vicinity of Al
Source: Oman Observer, 18
Kuwait oil project
seen approved by end-2005
Kuwait’s long-delayed multibillion dollar plan to open up
its northern oil fields to western oil majors is likely to be
approved by the end of the year with contracts to be awarded
within six months, the country’s oil minister said Saturday.
Speaking on the sidelines of the World Economic Forum in Jordan,
Fahad al-Ahmad al-Sabah said the plan was likely to be finalized
at the next meeting of the parliament’s finance committee May
”The final step is one more session in the finance committee and
if it is passed it will go to a special session of the National
Assembly,” he told Dow Jones Newswires adding that session would
be held before mid-July.
If the proposal doesn’t go through on May 24, then it should be
ready for the parliament’s next session in October, he added.
”Either way Project Kuwait will be approved by the end of this
year,” al-Sabah said.
Once approved, the tender would be announced immediately with
contracts likely to be awarded within four to six months, he
said. “It can go directly to tender because everything is
Project Kuwait involves a plan to double crude oil output from
existing fields in northern Kuwait. Investment is estimated at
between $7 billion to $9 billion.
Kuwait hopes to tap western technology and expertise to raise
production at the fields.
Consortia led by BP Plc (BP), Chevron and Exxon Mobil Corp. (XOM)
are among those competing for the project.
”We’ll be bidding on Project Kuwait if the price is right,” said
James LeJeune, Chevron’s President for Middle East and North
Chevron is leading a consortium that includes France’s Total,
Petro-Canada (PCZ), Russia’s Sibneft (R.SBN) and China’s Sinopec.
Project Kuwait has been bogged down for years because of
resistance to allow foreign companies into the Gulf state’s
strategic oil sector. But a decision last year to draw up
technical service contracts to develop the fields swept away
Project Kuwait was originally launched in 1998 and envisaged
doubling output from five northern oil fields near the border
with Iraq - Rawdatain, Sabrya, Ratga, Adali and Bahra - to
around 900,000 barrels a day within five years.
Kuwait, a member of the Organization of Petroleum Exporting
Countries, currently produces around 2.4 million b/d.
Financial News, 23 May 2005
Kuwait, Hyundai in
State-run Kuwait National Petroleum Company (KNPC) on Sunday
signed a deal worth US$400m with South Korean Hyundai
Engineering to upgrade a liquefied natural gas plant in Kuwait.
Work on the project will start in June and will be completed by
the end of 2007, KNPC chairperson Sami al-Rasheed said during
the signing ceremony.
It aims at modernising the liquefied natural gas plant at Al-Ahmadi
refinery by enhancing the ethane recovery rate from the current
55 percent to 96 percent, he said.
The ethane will be sold to state-owned Petrochemicals Industries
Co to be used as feedstock for the production of petrochemicals.
Hyundai Engineering is currently building a new oil export
terminal at Al-Ahmadi at a cost of $340m.
Kuwait sits on 10 percent of the world’s proven oil reserves and
it currently produces at full capacity of 2.7 million bpd.
The Opec member plans to invest up to $40bn in the next 15 years
to modernise its oil sector which generates more than 90 percent
of public revenue.
France Presse, 16 May 2005
posts seven-fold rise in profits
Kuwait National Petroleum Co (KNPC) posted an almost seven-fold
rise in net profits for the year to March 31, the company
chairman said Saturday.
Net profits reached a record 628 million dinars (2.15 billion
dollars) from 95 million dinars (322 million dollars) in the
previous year, Sami al-Rasheed said.
”These profits are unprecedented in the company’s history,”
Rasheed told a gathering of oil executives and reporters.
The sharp increase in profits was attributed to a rise in the
prices of oil products and increased operational efficiency, he
KNPC runs the emirate’s three refineries in the oil-rich
southern region at a combined production capacity of around
920,000 barrels per day (bpd). It also controls the domestic
petrol market. The company plans to boost its refining capacity
to 1.2 million bpd by 2011 by modernizing two of the three
refineries and building a new refinery at a cost of over 8
The upgrade project is estimated to cost around 3.4 billion
dollars and will be completed by the end of 2010 or early 2011.
The third refinery at Al-Shuaiba with a capacity of 200,000 bpd
will be closed once the project to build the new refinery is
completed in early 2010, Rasheed said.
The capacity of the new refinery will range from 460,000 bpd if
heavy crude is used to 600,000 bpd if medium crude is used, he
said. Kuwait sits on 10 percent of the world’s proven oil
reserves and it currently produces at full capacity of 2.7
The OPEC member plans to invest up to 40 billion dollars in the
next 15 years to modernize its oil sector which generates more
than 90 percent of public revenue. –– AFP
of Oman, 28 May 2005
Kuwait to upgrade
State-run Kuwait National Petroleum Co. (KNPC) is to begin
shortly modernizing two of its three refineries and building a
new refinery at a cost of over $8 billion, an official said
“We are currently reviewing a report on modernizing the
refineries at Al-Ahmadi and Mina Abdullah,” which together
produce more than 700,000 barrels per day (bpd), KNPC Chairman
Sami Al-Rasheed told a press conference.
The third refinery at Al-Shuaiba with a capacity of 200,000 bpd
will be closed once a project to build a new refinery is
completed in early 2010, Rasheed said.
“According to preliminary estimates, the (upgrade) project will
cost around one billion Kuwaiti dinars ($3.4 billion) and will
be completed by the end of 2010 or early 2011,” he said. The
main purpose of the project is to produce “high quality refined
products that meet stringent international standards”, he said.
Rasheed said that KNPC is currently negotiating with technology
providers for the various units of the new refinery that is
expected to cost up to five billion dollars. “We are currently
examining the front-end engineering phase of the project which
will end in February next year. After that bids will be invited
from several contractors,” he said.
The capacity of the new refinery will range from 460,000 bpd if
heavy crude is used to 600,000 bpd if medium crude is used,
Once the two projects are completed, Kuwait’s refining capacity
will top 1.2 million bpd, he said. The new refinery will
initially produce 225,000 bpd of fuel oil needed for domestic
consumption to operate power plants, and 375,000 bpd of oil
products intended for export. It will however produce only oil
products after Kuwait starts importing natural gas from
neighboring countries to operate its power plants.
The OPEC member sits on 10 percent of the world’s proven oil
reserves and it currently produces at full capacity of 2.7
million bpd. Kuwait plans to invest up to $40 billion in the
next 15 years to modernize its oil sector which generates more
than 90 percent of public revenue.
France Presse, 15 May 2005
Kuwait's daily oil
refining capacity could exceed 1.2 million bpd
A Kuwaiti oil expert predicted that, by 2010, Kuwait’s oil
refining capacity would be 1.2 million barrels per day (bpd).
He said that this capacity, which would require new
installations worth USD 8.5 billion, would include the
construction of a fourth new refinery and the development of two
existing ones in Al-Ahmadi and the Abdullah Port.
The chairman of the board of directors of the Kuwait Petroleum
Corporation, Sami Fahd Al-Rashid, who made the statement during
a ceremony marking the launch of a new company logo, said that,
by next year, the new refinery’s architectural plans would be
He added that, nine months after the completion of the plans,
the refinery’s building would be contracted out. He said that,
“by 2010, the new refinery would be finished.” He said that the
new refinery, which would cost up to USD 5 billion, would
produce between 450 and 600 bpd.
He said that, when the new refinery is ready, the Shuaiba
refinery would be closed. He added that the development of the
two refineries at Al-Ahmadi and Abdullah would follow.
He stressed that the object of the development was not only to
increase the production but also to produce better quality
refined oil on the market.
News Agency, 14 May 2005
Statoil sees Saudi
upping oil output to 9.9m b/d in 3Q 05
Statoil ASA’s (STO) top oil analyst said Monday he expects
Saudi Arabia to increase its output to around 9.9 million
barrels a day in the third quarter to meet rising global demand.
Statoil’s Tor Kartevold said the world’s biggest oil producer
will likely up its crude output by 300,000-400,000 b/d from its
current production of around 9.5
Statoil is the third biggest net crude seller in the market,
trading both its own oil production and the Norwegian
government’s share of production on the Norwegian Continental
Kartevold, however, doesn’t expect members of the Organization
of Oil Exporting Countries - meeting in Vienna on Wednesday - to
call for an increase in actual production yet. Furthermore, a
widely-forecast inflation of the official production ceiling - a
paper figure largely ignored by OPEC - by 500,000 b/d will be
viewed by the market as a purely symbolic gesture, he said.
”The industry is at full capacity...and high prices will most
likely remain throughout this year,” Kartevold said, though
large price fluctuations of up to $10 a barrel should also be
expected to continue.
Around 1500 GMT, front-month Brent crude contracts on London’s
International Petroleum Exchange traded up 75 cents to $53.42,
while front-month light, sweet. crude was up 66 cents at $54.20
on the New York Mercantile Exchange.
Last October, Saudi Arabia raised its production to around 9.7
million b/d, but with global demand forecast by Statoil to
increase by around 1.8 million b/d this year, Kartevold says the
kingdom’s production this year should grow to at least 9.7
million b/d. According to Statoil’s data, demand could grow by
as much as 2.9 million b/d in the fourth quarter of this year.
But with limited capacity to refine Saudi’s heavy crude, which
makes up the lion’s share of its spare production capacity,
“There’s not much OPEC can really do,” he said.
With all the other OPEC nations pumping at full capacity, if
Saudi Arabia ups its output, “OPEC’s spare production
capacity...could fall below 500,000 b/d,” the senior analyst
”Thus, the market will be very vulnerable to supply
distortions,” he added.
The outlook for the rest of 2005 and 2006 rests largely on how
much the Chinese and U.S. economies continue to grow, how fast
Russia’s crude production growth cools, and if the hoped-for
600,000 b/d-700,000 b/d of new production comes onstream on
Kartevold said there’s a risk new projects in Angola and Brazil,
such as Albacore Leste and Jubarte fields, could “easily be
Financial News, 13 June 2005
agrees to $2 billion Saudi investment
Oil major BP's Innovene petrochemicals unit has signed a
preliminary deal to build a $2 billion plastics manufacturing
unit in Saudi Arabia, in a further move to orient the firm more
toward fast-growing Asian markets. BP said Innovene had signed a
memorandum of understanding with Saudi-owned Delta International
to build a “cracker” unit, which will convert natural gas into
ethylene, the raw material for plastic wrappings and containers.
The cracker, which is expected to start production in late 2008,
will produce around 1.2 million tonnes of ethylene per annum and
Delta added in a statement that the long-term goal was to build
two crackers at a cost of around $2 billion each.
“The memorandum marks the beginning of detailed negotiations
between Innovene and Delta for the construction of a world-scale
cracker and associated derivative capacity in the (Saudi)
kingdom, with sites being explored in Jubail,” BP said in a
Innovene and Delta will contribute equal amounts to the project
but the partners will also now seek to attract funding from
third parties as well to meet the cost of the project.
www.gulfandgas.com, 08 June 2005
Costs rising for
Saudi oil expansion plans
Tougher-than-expected technical hurdles and an accelerated
schedule are quickly raising costs for Saudi Arabia’s ambitious
plans to increase its oil production capacity, a Saudi analysts
The government is now budgeting $15 billion-$18 billion to ramp
up its capacity to about 12.6 million barrels a day by early
2009, according to Nawaf Obaid, managing director of the Saudi
Strategic National Security Assessment Project.
The earlier estimates had been for a more modest $12 billion-$15
Obaid said getting oil out of the Khoreis and Khursaniyah oil
fields has proven more challenging and required costlier
drilling technology then expected. A speeded up rollout has also
raised costs, he said.
Bigger spending poses a challenge to Saudi Arabia’s regime which
relies on oil for about three quarters of its government
Rising oil prices have funded two years of budget surplus ending
years of deficits, but the government of the world’s biggest and
most important oil producer is spending more on social welfare
programs to fight off mounting unemployment stemming from a
Under pressure from big oil consumers such as the U.S. smarting
under $50 oil, Saudi Arabia has pledged to ramp up its
production to stave off high prices and meet rising demand.
The expansion plans are being funded by the Ministry of Finance,
unlike the rest of the operating costs for state-owned Saudi
Arabian Oil Co. (SOI.YY), which continue to come from the
company’s own budget, he said.
Select, 01 June 2005
Saudi Pumping 9.5
Million Barrels Per Day of Oil in May
Saudi Arabia is pumping 9.5 million barrels a day of crude
oil in May, but future output depends on how much refiners want,
a senior OPEC delegate said Thursday.
Saudi officials said they ramped up production to 9.5 million
b/d starting March in an effort to cool overheating futures
markets and build up global oil inventories to cushion a
forecast winter surge in demand. The Persian Gulf source denied
reports Saudi Arabian output had risen even higher.
Saudi Arabia, the world’s biggest and most important oil
producer, has been under mounting pressure from consumer
countries smarting from $50 oil to raise output.
The Organization of Petroleum Exporting Countries meets June 15
in Vienna. Some members are already calling for production cuts
because they fear oil prices could collapse under the weight of
Earlier this week, Saudi Oil Minister Ali Naimi said the country
was still committed to a stock build.
A surprise draw in U.S. crude inventories Wednesday sent oil
futures in New York back above $50 a barrel, up more than a
dollar, marking a two-week high. The strong reaction to the
downtick in U.S. crude inventories after they hit a six-year
high just last week underscores the market’s sensitivity to
supply shifts and fears surrounding rising oil demand.
Wednesday, reports cited an OPEC delegate saying Saudi output
was 9.65 million b/d in May and could rise further.
Outside estimates put Saudi output slightly lower. Closely
watched tanker-tracker Petrologistics estimates Saudi May output
slightly at 9.4 million b/d.
In addition, tanker rates are still below the peaks reached in
December when the 11-members of the Organization of Petroleum
Exporting Countries sent a surge of crude out to stem rising
prices and strong demand. That suggests OPEC is shipping less
Financial News, 26 May 2005
Saudi Arabia aims
to boost Asian crude sales
Oil giant Saudi Arabia is
aiming to capture higher crude sales and maximise revenue in
Abdulaziz Al Khayyal, senior vice-president of refining and
international marketing at Saudi Aramco, said while all markets
Asia, Europe and North America remain “strategically important”,
Riyadh is sharpening its Asian sales drive.
“Asia has been and will continue to be one of our highest
realisation markets,” he said on the company’s website.
“We want to remain in our three major market enclaves ... but
send a higher percentage of our exports to the Asian markets.”
That is already the case, with Aramco shipping about 60 per cent
of its overseas oil sales, or some 4.5 million barrels per day
(bpd), to Asia. But energy requirements are soaring in the
region that accounted for nearly two-thirds of global demand
growth in 2004.
And Aramco, now producing just over 9.5 million bpd, stands
ready to supply still more oil. “We’re going to work to do our
part to meet this growing demand,” said Khayyal.
“We are always eager to look at opportunities in growth markets
such as China and India.”
To that end, talks are under way with China for a refining and
petrochemical project in China’s Fujian Province with units of
Sinopec and ExxonMobil.
Reuters, 20 May 2005
wins SPM contract from Abu Dhabi Oil Co.
Bluewater Energy Services B.V. has been awarded a contract
by the Abu Dhabi Oil Co. Ltd. Japan (ADOC) for the design and
supply of a complete SPM system for the Mubarraz Oil Field
offshore UAE. The system will be used for the export of crude
oil and condensate.
Bluewater’s scope of supply consists of the design, procurement
and fabrication of a Turret type, catenerary anchor leg mooring
(CALM) buoy including pipeline end manifold (PLEM), telemetry
system, geo-physical/technical survey and a piled mooring
The buoy will be located offshore Abu Dhabi, in a water depth of
approximately 19 meters servicing tankers up to 330,000 dwt.
Delivery of the complete system is expected to take place in
“This contract award by ADOC for a Turret type CALM buoy
represents the third successive contract for Bluewater in the
UAE for this type of buoy. The previous two were for VOPAK for
the Fujairah Terminal and for ADMA-OPCO for the DAS Island
Marine Terminal,” stated Hugo Heerema, President of Bluewater
Energy Services B.V. “Bluewater’s Turret type CALM buoys are
increasingly finding favor with clients worldwide in preference
over the more traditional Turntable buoys due to design
considerations that result in higher uptime, lower maintenance
costs and lower operational costs over the life of the buoy.”
Bluewater Energy Services press release, 28 June 2005
New rig to shore
An Abu Dhabi-based company sees promising prospects for its
pioneering offshore geo-technical drilling rig which was
developed locally in association with a Belgian company.
A senior company official said yesterday the company has secured
its first contract in Saudi Arabia and is likely to win more
contracts in the UAE and the region.
“The new rig pioneered by our company, along with Gems
International NV of Belgium, is designed to conduct offshore
geo-technical investigations of the seabed to depths of 300
metres,” said Maher Muqattash, head of the Architectural and
Civil Department of Control Contracting and Trading Company (CCTC).
“We have won our first contract from Saudi Aramco and the
completed unit set sail on its maiden voyage late last month and
it will be involved in carrying out a geo-technical survey,” he
told Gulf News. The project work will take 45 to 60 days, he
added without stating the contract value.
CCTC, based in Mussafah, Abu Dhabi, plans to build more
geo-technical drilling rigs. “We foresee good demand for such
rigs in the UAE and the region, especially in Iran.
“The drilling equipment enables high quality site investigations
to be undertaken from a variety of vessels and the modular
construction ensures efficient transportation and mobilisation.
“The equipment is equally at home in near-shore environments as
well as deep offshore with a maximum drill depth rating of 300
metres below the sea-bed using standard five-inch API drill
The 30-year-old company has diversified its business activities
over the years from power, water, industrial and commercial
projects to the oil and gas sector as well as the fast-growing
“This project marks a departure for CCTC while for Gems it is
part of their core business.
“Both companies have collaborated on projects in the past, but
this is the first time they have worked on a project of this
nature,” Muqattash said.
Explaining the technical details of the rig, Muqattash said in
survey terms, it provides real-time data acquisition with
graphic display, using both Wilson APB-100 and 150 kn tools.
News, 26 June 2005
company set up in Abu Dhabi
President His Highness Shaikh Khalifa Bin Zayed Al Nahyan
has issued a decree, in his capacity as Abu Dhabi Ruler,
creating Abu Dhabi National Power Company (ADNPC), also called
The decree sets Dh4.1 billion as capital for the newly created
joint stock company, with the nominal value of each share being
The Abu Dhabi Water and Electricity Authority (Adwea) is
assigned by the provisions of the decree to take necessary
procedures to establish the ADNPC in Abu Dhabi, which may have
branches in and outside the UAE.
Adwea is required to meet 90 per cent of the capital of the new
company from its financial resources invested in the Emirates
Power company, Gulf Power Company, Al Shuweihat Power Company,
the Arab United Company for Power and Al Tawila United Company
The remaining part of the capital must be paid in cash. The
value of the company’s shares, upon institution, will be nominal
and wholly owned by the Adwea.
The company will buy and hold shares in existing projects and
companies in energy, electricity, water, gas, oil and mineral
projects. It will also provide financing facilities for such
projects and companies in and outside the UAE.
It will own shares in credit and portfolio companies in and
outside the UAE, and which are involved in the same field as the
It will arrange financing deals with banks and monetary
institutions for the service of its objectives, and offer all
The company will also sign agreements and contracts for setting
up, operating and running of the projects it initiates or takes
The company will be run by a board of directors and a number of
members. The first board will be appointed by a decision by the
Adwea board. The decision will set the board tenure and
remuneration of the members.
The Adwea board will set up the ordinary and extraordinary
general assembly, and lay down the company statute.
Part of the Adwea shares in the company may be waived or sold by
the consent of the majority of the Adwea board members. The
selling may be made in public or private offerings, and the
Adwea will set selling prices and determine possible buyers.
The duration of the company is set at 100 years renewable for
similar periods unless a decision by the general assembly orders
closure of the company.
News, 22 June 2005
Development & Shell to form strategic alliance
HH General Sheikh Mohammed bin Zayed Al Nahyan attended a
ceremony held at his palace to sign a Memorandum of
Understanding (MOU) between Mubadala Development Company, a
wholly-owned investment and development vehicle of the
Government of the Emirate of Abu Dhabi, and Shell EP
International Ltd, which is intended to lead to the formation of
a strategic alliance.
The MOU provides the general framework upon which Mubadala
Development and Shell will form the alliance, which is expected
initially to focus on the Middle East and North Africa, outside
Abu Dhabi. Areas of cooperation are likely to include the
economic development of new and existing hydrocarbon resources,
and the research and development of economically viable and
environmentally acceptable energy solutions.
The agreement was signed by His Excellency Khaldoon Khalifa Al
Mubarak, Chief Executive Officer, Mubadala Development, and
Malcolm Brinded, Executive Director of Shell Exploration &
Production. HE Khaldoon Khalifa Al Mubarak said today: “The
signing of the Memorandum of Understanding with Shell is in line
with our objective to partner with the best in the business and
build a substantial oil and gas portfolio in the region and
internationally. Mubadala looks forward to developing many
exciting business opportunities with Shell in the Middle East
and North Africa, and elsewhere.”
Mr. Brinded said: “We look forward to working closely with
Mubadala. The Middle East and North Africa are important regions
for Shell and they are regions in which we are expanding. With
Mubadala’s strong regional relationships and our technical and
operational expertise, we will now have even more to offer
press release, 13 June 2005
International: Going deep with new technology
Nabors Drilling International has announced the construction of
Rig 54 and Rig 200, the most technologically advanced deep
drilling rigs, designed to meet the deep gas exploration and
development needs in the Middle East in an official celebration
of the completion of rig 54 at the Lamprell in Jafza (Jebel Ali
Free Zone) facility.
The function was attended Sultan Ahmed bin Sulayem, Executive
Chairman of Ports, Customs and Free Zone Corporation and number
of senior officials in Jafza and companies.
Rig 54 and Rig 200 will utilize Nabors proprietary PACE
(Programmable A/C Electric) drilling technology to create a new
generation of deep drilling rigs. The 3000 horsepower A/C
drawworks, three 1600 horsepower pumps, and the 7500 pounds per
square inch mud circulation system enable the rigs drill deep,
high pressure wells safely and efficiently. All rig operating
and safety systems are designed to be controlled from an air
conditioned Drillers Control Center using just a joystick and
The rigs will have the option to add a rig skidding system to
quickly move the rig from well to well in pad drilling
applications. Pad drilling which is becoming an alternative for
many Middle East operations
is when multiple wells are drilled from a central location.
Siggi Meissner, president of Nabors Drilling International
commented “In Speaking to our customers, we determined there was
a need for a new advanced drilling system to handle the deeper
gas wells our customers want to drill. Rig 54 and Rig 200 will
add value to the deep drilling programs of our customers, here
in the Middle East, for years and years to come.
“The advances in technology, captured in these revolutionary new
rigs, will allow our customers to drill safely deeper, and
faster than ever before,” he added.
Following the rigs completion, they will each begin 6-month
contracts and Nabors expects to secure multi-year contracts
before the construction process is completed.
Info, 01 June 2005
Dolphin Project to
handle 3.2bcf/d gas in initial phase
The initial phase of the Dolphin Gas Project, a strategic
energy initiative designed to supply large quantities of natural
gas from offshore Qatar to the UAE for 25 years starting in
2006, involves processing and transportation by pipeline of up
to 3.2 billion cubic feet per day (bcf/d) of processed ‘sweet’
gas from Qatar’s North Field, to customers in the UAE.
The project is the first venture of Dolphin Energy Limited, a
development company established in Abu Dhabi to implement the
Dolphin Gas Project, and to undertake other important
energy-related developments such as the Al Ain-Fujairah Gas
The mandate of Dolphin Energy is to produce, supply and
transport natural gas from a dedicated section of Qatar’s North
Field to customers in the UAE.
The linking pipeline will be over 370kms in length, and 48
inches in diameter. The costs of the complex upstream gas
gathering and processing plant in Qatar’s Ras Laffan and the
overall investment in the Dolphin Gas Project makes it one of
the largest energy-related ventures ever undertaken in the
The shareholders of Dolphin Energy Limited, include Mudabala
Development Company, fully owned by the Government of Abu Dhabi
with 51 per cent stake, Total of France with 24.5 per cent and
Occidental Petroleum of the USA with 24.5 per cent.
Although Abu Dhabi possesses the fourth-largest gas reserves in
the world, a major portion of these reserves has already been
allocated to essential projects. These include future supply of
gas to power and water plants-as well as gas re-injection
programs for the oilfields, to maintain reservoir pressure for
Hence Abu Dhabi’s - and potentially Oman’s - requirement for a
reliable, long-term source of imported natural gas.
Dolphin Energy entered the business of gas supply in January
2004, with the commissioning of its natural gas pipeline that
connects Al Ain with the UAE East Coast Emirate of Fujairah.
This 24-inch, 182-km pipeline supplies gas to the power and
desalination plants in Fujairah of the Union Water and
Electricity Company (UWEC).
Initially all the gas being supplied to UWEC comes from Oman and
is delivered via a tie-in on the UAE-Oman border near Al Ain.
An average of 135 million cubic feet of gas per day is currently
being supplied to Dolphin from Oman Oil Company, for between
three and a half and five years. After 2006, when Dolphin’s new
export pipeline from Qatar is operating, Qatar natural gas will
reach Fujeirah through existing land lines to Al Ain-and
thereafter via the new Dolphin link.
Source: The Peninsula, 30 May 2005
Qatar to tender
oil block in mid-July
Qatar is to commence the tender of a rare oil block in
mid-July, a Qatar Petroleum executive said Wednesday.
Speaking at a Qatar investment conference in London, Nasser al-Jaidah,
director of oil and gas ventures for the state-owned energy
company, said Block 14 would then be awarded in December at the
Al-Jaidah said reserves in the field are “significant.”
Unlike other countries in the Gulf, Qatar’s strength doesn’t lie
in oil but in natural gas - it is the world’s third-largest
Al-Jaidah also said that Qatar hopes to raise its oil production
to 900,000 barrels a day from 750,000-800,000 b/d currently.
Current capacity stands at 840,000 b/d, he said.
The executive also said that block 5, operated by Danish company
Maersk Oil via its local subsidiary, produces 200,000 barrels a
day, but is expected to raise output to 400,000 b/d in the
Source: FWN Financial News, 25 May 2005
Qatar to produce
24b SCF of gas a day starting 2010
Qatar has brought forward by 10 years its plan to produce 24
billion standard cubic feet of gas Qatar has brought forward by
10 years its plan to produce 24 billion standard cubic feet of
gas a daystarting in 2010, a downstream executive for the
country’s state-owned oil company said Wednesday.
Speaking at an industry conference here, Ali Hassan Al-Sidiky,
director of downstream ventures for Qatar Petroleum, said the
country currently produces 10-11 billion SCF feet a day.
The tiny, gas-rich Middle-East country had originally targeted
output of 24 billion SCF a day, starting in 2020.
Qatar is stepping up its production of gas because of increasing
local consumption, a rise in exports to neighboring United Arab
Emirates and an increase in liquefied natural gas, or LNG,
Al-Sidiky also said that Qatar’s recent decision to delay some
gas-to-liquids, or GTL, projects is attributable to the need to
manage increased production of gas. But, Al-Sidiky clarified
that the LNG plants and GTL projects that are closest to
completion wouldn’t be postponed. He said the Oryx 1 project,
operated by Sasol Ltd. (SSL), will start up early next year as
The Pearl project, led by Royal Dutch/Shell Group (RD, SC), will
enter production as planned in the second quarter of 2009.
Regarding the projects that Qatar has already said it would
delay for three years, Al-Sidiky said: “We are not stopping
them, just slowing down development.”
The projects postponed include one operated by Marathon Oil Co.
(MRL) and ConocoPhillips (COP) and another from SasolChevron, a
joint-venture between Sasol and Chevron Texaco (CVX).
Al-Sidiky said the decision to postpone the projects was due to
a 40%-50% rise in prices charged by services companies for
Qatar’s numerous gas projects.
GTL consists of the conversion of natural gas to liquid
petroleum after being formed into a mixture of carbon monoxyde
Source: FWN Financial News, 18 May 2005
Kuwait plan petrochem ventures
Qatar and Kuwait plan to set up joint petrochemical projects
worth around $2 billion in Qatar, the states’ oil ministers said
“They said their countries intend to set up joint petrochemical
projects in Qatar,” state news agency QNA quoted the ministers
of the two Opec producers as saying.
“Although it is too early [to discuss] the costs of these
projects, I expect them to be around $2 billion,” Kuwait’s oil
minister, Shaikh Ahmad Al Fahd Al Sabah, was quoted as saying.
Doha, which has the world’s third largest natural gas reserves,
is trying to become a top producer of petrochemical products.
Earlier this month, it signed an initial deal with ExxonMobil to
build a $2 billion petrochemical plant in Qatar.
Shaikh Ahmad and his Qatari counterpart, Abdullah Bin Hamad Al
Attiyah, were speaking ahead of a meeting in Doha in which they
are also expected to discuss a $2 billion pipeline project to
export Qatari gas to Kuwait.
Reuters, 20 May 2005
Qatar to build
world's largest petrochemical plant
Qatar Petroleum (QP) and the US Exxon-Mobil announced on
Monday May 16, 2005 they have signed principles of agreement to
set up the world’s largest petrochemicals plant.
The contract was co-signed by Qatar’s Second deputy Premier,
Minister of Energy & Industry H.E Abdullah bin Hamad Al-attiyah,
who is also QP board chairman, and Exxon-Mobil’s chief executive
officer for petrochemicals Michael Dolan.
After singing the contract, that the US $ 2 billion project is
planned to produce some 1.6 million tonnes of ethylene per
annum. This quantity of ethylene would be processed to obtain
some 420,000 tonnes of linear low-density polyethylene, 420,000
tonnes of low-density polyethylene and 420,000 tonnes of
high-density polyethylene per annum, he explained.
These basic principles of agreement are being signed just one
year after a memorandum of understanding was signed and upon the
completion of the economic feasibility study for this gigantic
project, H.E Abdullah bin Hamad Al-attiyah said.
A letter of intent (LOI) for the project would be signed next
July and the ultimate signing of the final agreement would take
place next year, while construction works, he added, are
expected to be completed in 2010.
Earlier last month in Paris, a number of agreements were signed
between Qatar Petroleum and several French companies to set up
plants to produce ethylene and other petrochemical products.
The plant is expected to go on stream in early 2010, he noted,
and production activities are to begin in the next year in the
Industrial city of Ras Lafaan as agreed with the US company.
Information Agency of the State of Qatar, 17 May 2005