NewBase 601 special 11 May 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 11 May 2015 - Issue No. 601 Khaled Al Awadi

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

Qatar eyeing 2% of its power output from solar by 2020 Gulf Times + NewBase

Qatar plans to have 2% of its power output or 1.8 giga watts (GW), accounted for by renewable resources by 2020, a new report has shown . “Qatar solar energy has a three-phase plan to

subsequently increase Qatar’s solar energy output to 2.5GW per year,” said Qatar Solar Technologies (QSTec) chairman and CEO Dr Khalid K Al-Hajri in an interview with The Business Year, whose 2015 Qatar Edition was launched in Doha yesterday. He stressed that these plans “have come one step closer to fruition” with the June 2014 unveiling of the state-of-the-art solar panel manufacturing factory in Ras Laffan Industrial City, which produces photovoltaic cells with singularly efficient solar energy needs. “The near future is very exciting. We will start the production of high-quality

polysilicon for solar panels in early 2015. At the same time, we will be conducting a number of activities related to awareness of the solar industry,” al-Hajri said.

Al-Hajri noted that the factory complements Qatar’s first world-class solar test facility at the Qatar Science and Technology Park (QSTP), which was inaugurated in 2012. In collaboration with GreenGulf and Chevron, the QSTP-based facility tests emerging solar technologies from around the world in order to identify those best suited to the climate of the Gulf region. According to Al-Hajri, the solar panel factory aims to reduce Qatar’s dependence on fossil fuels. At present estimates, the facility will produce 8,000 tonnes per annum of high-grade polysilicon for export to the world’s solar energy markets, which have seen exponential growth in the past decade. “This demonstrates Qatar’s commitment both to the alternative energy sector and to being on the cutting edge of renewable energy,” Al-Hajri said . He noted that the cells being produced in the country are setting a new benchmark for the economic sustainability of solar power in Qatar. “The solar panels take about 12 months to produce the same amount of energy required to be manufactured, and can then be expected to continue producing solar energy for another 25 to 30 years,” he said.




He also said the facility will reinforce local photovoltaic systems, citing the recently completed Solar Smart-Grid Project at the Education City. With 1.68MW of photovoltaic systems, it is capable

of powering a range of buildings inside the Qatar Foundation (QF) campus. Al-Hajri said demand for the types of cells being produced at Ras Laffan will increase further in the coming years as Qatar continues its process of powering its desalination plants using solar energy. Also, to guarantee a carbon-neutral World Cup in 2022, al-Hajri said Qatar plans to have the new air-conditioned stadiums draw the

greater portion of their energy load from 100MW grid of photovoltaic and solar thermal panels. “Qatar’s own solar needs promise to make the investment in photovoltaic cell production a profitable one – and even if they didn’t, international solar demand would provide a growing export market,” al-Hajri said. According to studies conducted by the UN Environmental Programme, a single square kilometre of land in Qatar receives as much solar energy in one year as is contained in 1.5mn barrels of oil. “Unlike 1.5mn barrels of oil, solar energy isn’t exhaustible,” al-Hajri stressed.




Dubai is stronger for steering clear of oil-based economy Robin Mills +The National + NewBase

Dubai, with its modest oil resources, long ago realised it had to become a post-oil economy. The sharp drop in oil prices from the middle of last year highlights the wisdom of this decision. But how insulated is the emirate’s economy from oil? And what, if anything, can its Arabian Gulf neighbours learn from it?

Speakers at a Bloomberg

conference, who gathered recently to discuss the impact of falling oil prices on Dubai, were quite sanguine. With falling output since the early 1990s and rapid expansion of other sectors such as tourism, trade, aviation and finance, oil now makes up less than 2 per cent of the emirate’s GDP. Dubai has the busiest international airport, the largest artificial port, and what will probably

soon be the biggest airline in the world.

Oddly enough, Dubai has perhaps not made as much of its energy sector as it might have done. It has, for example, not become a major hub for oil trade and equity listings in the same way as Singapore or London, nor a centre for refining and petrochemicals such as Singapore.

But part of Dubai’s genius has been to attract business and capital from the rest of the region, just as Singapore and Hong Kong previously played the role of windows into China. Visitors from oil-exporting areas such as Saudi Arabia, Abu Dhabi, Iran and, farther afield, Russia and Nigeria, have flocked to the city to do business and spend, enjoy or invest their money.

Apart from Russia, where recession, sanctions and currency collapse had already led to a sharp drop in visitors to Dubai, the oil price fall has not yet sharply curtailed spending in other major trade partners.

But some impact is inevitable. Confidence in the wider Middle East economy has already suffered, probably contributing to Dubai’s property market slowdown. And if oil prices stay low for an extended period, budget cuts in major Gulf neighbours will translate to fewer visitors spending their oil-funded bonuses in The Dubai Mall or Downtown real estate brokerages.




However, this test of lower oil prices may come at a good time for Dubai — when national banks are in better shape, the emirate’s debt restructuring is largely complete, and when regulatory action has already cooled off a nascent real estate boom in 2013.

Dubai’s recent trajectory has aligned perfectly with dominant global trends that will give it a measure of protection against oil prices. World transport and trade benefit from lower fuel bills — bringing down the cost of airline tickets. Major energy-importing trade and tourism partners — China, India, Pakistan, Turkey and Egypt — will benefit from reduced oil costs. And close trade links with Iran should revive if United States-led sanctions on Tehran are lifted.

The city also benefits directly from lower energy bills. It will save about $1.2 billion annually on cheaper liquefied natural gas imports. Government-owned Enoc said it spent $735 million on subsidising petrol sales in 2011, a figure that

should also fall. Dubai has since 2013 moved faster than any of its neighbours to embrace solar power.

In general, the Emirate is one of a few — almost the only — of the Mena constituents to use its favourable geography to ride the wave of globalisation and the rise of Asia. In turn, that lifts the whole UAE and gives the country greater resilience. But the Middle East’s major oil exporters are less favourably placed. They cannot all be finance and tourism hubs. High-tech manufacturing, reduced subsidies and greater regional integration are all parts of the answer.

Ultimately, perhaps the question should not be whether Dubai’s model can cope with lower oil prices. Oil will always be a volatile commodity, and its future is uncertain. Instead, the key task is to make the bold and sometimes difficult choices to ensure continuing success, regardless of the vagaries of energy markets.




Saudi Electricity forges deal to bolster efficiency of power plant Saudi Gazette + NewBase

Saudi Electricity Company (SEC) has named Black & Veatch as Owner’s Engineer for the Qassim II &III Conversion. The project will generate additional power without using significantly more fuel. This comes at a time when Saudi Arabia is seeking to improve its power generation efficiency. Qassim Power Plant serves the people of Buraydah, the capital of Qassim region, in the heart of

the Arabian Peninsula. The power plant is being expanded to meet the increasing demand of power in this region through a conversion from simple cycle operation to combined cycle operation. “We are helping SEC enhance Qassim to meet the local community’s increasing need for power,” said Mazen Alami, Managing Director, Middle East at Black & Veatch. “Black & Veatch is a recognized leader in the best practices and technology shaping power generation. In addition to helping

the utility meet its goal of more efficient power generation infrastructure, our role will help develop local skills through knowledge transfer to SEC’s engineers,” he added. The project will convert 12 oil fired simple cycle combustion turbines to combined cycle operation; this will increase generation capacity by approximately 360 MW. The conversion project was tendered on an engineer, procure, construct (EPC) basis. Black & Veatch’s role is to work closely with SEC to provide engineering, procurement, and construction oversight and supervision and to provide theoretical and practical training for SEC engineers. Black & Veatch has been serving the Middle East since 1920s, undertaking projects that enhance quality of life: power generation to support economic development, and water sanitation to improve health. Black & Veatch’s energy business has been working in Saudi Arabia since the 1970s. Before the signing of the Qassim contract, the company’s most recent work for SEC was Power Plant 3 (PP3) expansion project in Jeddah. Demand for electricity in Saudi Arabia is growing at a significant annual rate of approximately 8%. It is expected that, the demand for 2030 will be about 120 GW. Meeting this demand requires a significant investment in new power plants as well as an upgrade using advanced transmission technologies, the goal of which is to increase transmission capacity. The estimated investment over the next 10 years is expected to be more than SR50 billion. Based on the current electricity generation, which relies solely on oil and natural gas, by year 2030, this amounts to a consumption of approximately 3 million barrels of oil each day. Because oil exports are the country’s primary source of revenue, the increase in oil consumption in order to




meet the ever-growing demand for electricity will have significant negative ramifications for the Saudi Arabian economy for generations to come. There is a real and urgent need for strategic and

comprehensive planning to adopt alternative sources of energy. The Arab Petroleum Investment Corporation estimates that Gulf states will require as much as $316 billion by 2020 to meet its growing power needs. To date, the Gulf’s power sector has leveraged its strength as a fossil fuel producer to source cheap and plentiful power for the domestic economy. But that is an expensive and increasingly unsustainable strategy. Crude oil is seen as an inefficient energy source for power generation and most economies have moved away from oil and

focused on natural gas, hydro, nuclear or renewables to generate electricity. But countries like Saudi Arabia still depend on crude oil for power – and that’s a trend that’s likely to continue in the absence of alternatives. Oil-fired generation is forecast to gain 27 percent over 2013-19 on the back of insufficiently growing gas production and the very low efficiency of Saudi power plants, according to the International Energy Agency. Saudi Arabia is the world’s 12th largest consumer of energy, accounting for 9 quadrillion British thermal units – of which 60 percent was sourced from petroleum and the rest from natural gas. The country now consumes three million barrels per day of crude oil domestically – roughly a third of its production. If the country can switch to renewable or natural gas, those three million bpd can generate as much as $180 million per day at today’s spot Brent prices.




Oman’s crude oil production falls 1.7% to 29MB in April”15 BYTIMES NEWS SERVICE + NewBase

Oman's production of crude oil and condensate stood at 28.81 million barrels in April this year, a 1.67 per cent fall in production compared to the previous month.

Average daily crude oil production stood at 960,300 barrels in April, according to a monthly report released by the Ministry of Oil and Gas here on Sunday.

Similarly, total crude oil exports were 23.7 million barrels, which was equivalent to 790,132 barrels per day, a decrease of 9.31 per cent, compared to March 2015.

Asian markets imported the major share of the Sultanate's crude oil. China continued to maintain its lead among top importers of Omani crude oil in April 2015. However, imports declined by 5 per cent in April, compared to March, to settle at a level of 82.94 per cent.

Meanwhile, imports of Omani crude by both Japan and Thailand increased by 3 per cent and 1 per cent, respectively.

Taiwan was responsible for the largest rise in April, as purchases of imported crude oil rose by 11 per cent, compared to the previous month, to settle the total exports of Omani crude oil at 12.4 per cent.

With regard to the movement of the price of oil in April 2015, the average oil price of West Texas American on the New York Mercantile Exchange stood at $55.65 per barrel, an increase of $6.56 a barrel.

Average Brent crude Also, the average Brent crude at the London market was $61.77, up $4.59 per barrel, compared to the previous month. It is worth noting that the volatility experienced by the world oil markets, which continued through this month, may be overshadowed by the character of the marked rise in prices, as well as several other factors, such as the important signs of a slight decline in US oil production, and the declining value of the US dollar and continuing tensions in the Middle East, particularly in Yemen.

Rises in prices was also attributable to the continued decline witnessed in crude oil platforms in the United States, a reference to the affected mass production processes that are unprecedented

in North America, thus it is anticipated that there will be a return of some balance between a global supply and demand for crude oil.

The average price of Omani crude for June delivery stood at $58.68 per barrel, up $3.59 a barrel. Also, the Oman Oil Futures Contract on the Dubai Mercantile Exchange rose along with other brands throughout the world.




Oman: Sebacic acid project to come up in Duqm Times of Oman + NewBase

An usufruct agreement for setting up a sebacic acid project was signed by Yahya bin Said bin Abdullah Al Jabri, chairman of the Special Economic Zone Authority at Duqm (SEZAD), and representatives of the company. Photo: Ismail Al Farsi/Times of Oman A first-of-its kind sebacic acid production plant is planned to be built in the Duqm Special Economic Zone with an investment of $62.7 million, according to the officials involved in the project.

An usufruct agreement for the establishment of the facility was signed on Sunday by Yahya bin Said bin Abdullah Al Jabri, chairman of the Special Economic Zone Authority at Duqm (SEZAD), and representatives of Sebacic Oman Company. The plant will be spread over 400,000 square metres of land. Sebacic acid is extracted from castor oil and is used in a wider range of chemical industries including plastics and pharmaceuticals. The ceremony witnessed the signing of partnership agreement between Sheikh Hilal bin Khalid Al Mawali as local investor and the foreign partner Pradeep Nair as well as the signing of the financing agreement between Sebacic Oman and Meethaq Islamic Banking. Ismail bin Ahmed Al Balushi, deputy chief executive officer of SEZAD, said that partnerships represent another step towards realising the vision of SEZAD to become an important economic engine in meeting the Su ltanate's goals to diversify the sources of national income.




He explained that the plant would be the first of its kind in the Middle East and will create 450 employment opportunities in its first phase. The second phase, which is expected to begin during the next five years, shall witness an investment of around $250 million and will provide 250 jobs, bringing the total of employment opportunities to around 700 jobs. SEZAD officials mentioned during the event that the available investment opportunities in Duqm are numerous and diversified. The last few years have witnessed the signing of many usufruct agreements with local and foreign companies. It was also stated that having foreign investors contributes to the development of local experiences and promotes local capabilities to work in major projects such as the ones that are currently being implemented. Al Mawali, the local partner in Oman Sebacic Company, said that entering into such eco-friendly strategic projects has always been a priority for the company. The project would allow citizens to benefit by planting trees that produce the necessary feedstock in the Sultanate, he said, adding that the tree is known in the Sultanate for thousands of years as the 'castor oil plant' and that its oil has many usages and is easy to plant in different areas. Al Mawali also confirmed the company's commitment to purchasing the farmer's produce, pointing out that the company has begun carrying out a study that aims to encourage local Omani farmers to grow this tree in a scientific way, especially in untapped agricultural areas.




Tanzania to finalise land acquisition for LNG project Reuters + NewBase

Tanzania plans to spend 12 billion shillings ($6 million) in the next fiscal year to buy land for the planned construction of a liquefied natural gas (LNG) terminal, raising hopes it is speeding up progress of the long-delayed project. The two-train onshore LNG export terminal, which the government says could cost up to $30 billion, has run into delays mainly due to complex land acquisition procedures and an uncertain legal and regulatory framework.

Along with neighbouring Mozambique, Tanzania is in a race with Russia, Australia, the United States and Canada to build LNG export plants, aiming to exploit a gap in global supply that is expected to open up by 2020.

'The government has set aside 12 billion shillings in 2015/16 for assessment and compensation of 450 people ... where the (LNG) terminal will be built,' the government's planning commission said in a report seen by Reuters on Saturday. The 2015/2016 fiscal year starts on July 1, 2015.




The terminal would be built in the small southern town of Lindi, located close to an offshore deep-sea region where huge natural gas discoveries have been made.

Tanzania is estimated to have more than 53.2 trillion cubic feet (tcf) of gas reserves off its southern coast, but its energy sector has long been dogged by allegations of graft and other problems.

Tanzania's parliament last year accused senior government officials of fraudulently authorising the transfer of at least $122 million of public funds to a private energy company. Three cabinet officials, including the energy minister, lost their jobs.Analysts said the graft accusations, coupled with delays in passing new gas legislation, are holding back the development of the sector.

British gas company BG Group, together with partners Statoil, Exxon

Mobil and Ophir Energy, plans to build an LNG export terminal, expected to start operating in the early 2020s, but a final investment decision is only set for 2016. Royal Dutch Shell agreed to buy BG Group last month for $70 billion in the first large oil merger in more than a decade, giving the Anglo-Dutch company access to BG's multi-billion dollar projects in Tanzania.




Oil Price Drop Special Coverage

Oil steady, little help from Chinese interest rate cut Reuters + NewBase

Crude futures were little changed on Monday as moves by China to bolster its flagging economy failed to instil confidence that oil demand in the world's largest energy consumer would improve quickly to absorb a global supply glut and lift prices.

China cut interest rates for the third time in six months on Sunday to stoke its sputtering economy, which is headed for its worst year in a quarter of century. "There's been limited response in the oil markets today," said Ric Spooner, chief analyst at CMC Markets in Sydney.

"The stimulus is probably seen as helping to soften a decline rather than really turn things around." Data on Friday showing record crude imports by China in April did not support oil prices, either. ANZ analysts said the imports in April were "likely in response to opportunistic buying and stockpiling".

June Brent crude edged down 3 cents to $65.36 a barrel by 0351 GMT after dropping 1.6 percent last week. June West Texas Intermediate (WTI) dropped 12 cents to $59.27 a barrel after rising for eight straight weeks, the longest winning stretch since late 2012 to early 2013.

U.S. crude price gains may have encouraged shale producers to resume drilling again as they added rigs to the Permian Basin for the first time this year, oil services company Baker Hughes Inc said on Friday.




Brent's four-week advance to hit 2015 highs halted late last week as excess European and African crude supply dragged prices down, with a rally technically exhausted.In Libya, oil production remained volatile after a protest closed the Nafoura oilfield, cutting output at Libya's Arabian Gulf Oil Co (AGOCO) by some 35,000 barrels per day (bpd).




Steady oil price fall blurs GCC construction outlook Saudi gazette + NewBase

Government spending continues to drive strong project and construction activity across the GCC despite lower oil prices, business intelligence service MEED said. However the outlook is increasingly uncertain as governments review their capital spending plans. The implications of these reviews will be the central theme of discussions at the annual MEED Construction Leadership Summit on May 27.

“The construction market in 2015 is beset with mixed signals,” said MEED News Editor Colin Foreman. “There is a negative backdrop of lower oil prices, a cooling property market and conflict on the GCC’s borders. But, so far there has been no evidence of projects being cancelled, and while some schemes in the planning stages may have slowed, many clients are still pushing ahead and tendering new work. That said, if the macroeconomic backdrop remains a concern for the rest of 2015 and into 2016 then spending will start to be reduced and tendering activity will slow.’’ While governments across the region remain committed to delivering massive investment programs to develop the region’s infrastructure, the change in economic landscape is forcing them to focus on their strategic priorities. And, as a result, creating uncertainty for the construction industry.




The MEED Construction Leadership Summit (MCLS) 2015 will be held at The Address Dubai Marina on May 27 and the outlook for GCC construction will be the main issue under discussion.

MEED’s projects database MEED Projects figures show about $172 billion worth of project contracts are scheduled to be awarded in 2015, the highest ever with the market being driven by government investment in major infrastructure schemes. “Construction work on the region’s largest projects such as Abu Dhabi International airport and the Riyadh and Doha metros is continuing as planned, and for future work new contracts are still being tendered, notably in Dubai,” said Foreman. “Government and government-related clients have a mandate to develop new infrastructure and for the most part have the financial reserves to proceed with their capital spending plans despite the somewhat negative economic backdrop.’’ “As ever, the primary challenge for construction companies in the region is securing work, getting paid and making a healthy margin,” Foreman further said. “For the rest of 2015 securing new work will become an issue if the economic outlook remains subdued. If that trend continues into 2016 then cash flow and payments could start to become an issue.”




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

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

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

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

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

NewBase 11 May 2015 K. Al Awadi

NewBase 601 special 11 May 2015

Economy & Finance

Transcript of NewBase 601 special 11 May 2015