UPSTREAM: Global upstream capital expenditure to exceed US$1 trillion for the first time

(EnergyAsia, December 31 2012, Monday) — Global expenditure on oil and gas exploration and production (E&P) is expected to reach a record US$1,039 billion for 2012, said natural resources consultant GlobalData.

In a recent report, the UK-based firm predicts that the sector’s capital expenditure will increase by 13.4% over 2011’s US $916 billion as oil companies intensify their search for reserves and increase production in offshore Brazil, the Gulf of Mexico, Africa and the Arctic Circle.

Investor confidence in new upstream projects is being driven by the increasing number of oil and gas discoveries, combined with consistently high oil prices and the arrival of new technologies that are giving the major firms access to deep offshore reserves that were previously technically and financially unviable.

North America will emerge as the leader, receiving investment worth US$254.3 billion, representing a share of 24.5% of the 2012 global total. Investors will continue to focus on the region’s unconventional oil and gas reserves such as shale oil and gas, and Canada’s oil sands.

GlobalData predicts Asia-Pacific region will be a close second, attracting US$253.1 billion in capital expenditure while the Middle East and Africa are forecast to take in a total of US$229.6 billion.

National oil companies (NOCs) will take the lead, contributing approximately half of the world’s upstream investment. Integrated oil companies and independents will make up the rest.

Another consulting group, GBI Research, said companies will venture further into deeper waters as they deplete reserves in shallow water acreages and are not making many new discoveries.

In a recent report, the New York-based firm named the deepwater areas off Brazil, West Africa, Angola, Australia, the Krishna Godavari basin off eastern India, and the US Gulf of Mexico as the hotbeds of offshore investment.

 

 

US: EIA questions bullish forecasts for America to become world leading oil producer

(EnergyAsia, December 31 2012, Monday) — Having contributed to recent bullish sentiments that the US could soon become the world’s largest oil and gas producer, the Energy Information Administration (EIA) has published a commentary laced with doubts and questions that this scenario is far from certain. “Could the US become the leading global producer of…

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SINGAPORE: ExxonMobil starts up new ethylene cracker, power plant at petrochemicals complex

(EnergyAsia, December 31 2012, Monday) — After more than a year of delay, ExxonMobil said it has started up operations at one of the world’s largest ethylene steam crackers, the centrepiece of the company’s multi-billion dollar expansion project at its Singapore petrochemical complex.

The US major has added a new 220-megawatt cogeneration power plant, and a petrochemicals complex with an annual capacity to produce a total 2.6 million tonnes of ethylene, polyethylene, polypropylene, metallocene elastomers, an oxo-alcohol unit and aromatics. Ethylene production is expected to start in the next few months, well behind the original target of early 2011.

Shaw Group, the US-based contractor for the ethylene cracker, suffered a huge loss from the project as a result of rising sub-contractor cost increases and schedule delays since construction began in November 2007.

ExxonMobil has an existing 140-MW cogeneration facility to supply electricity to its world-scale operations on Jurong Island. Cogeneration allows for the efficient generation of electricity to run pumps, compressors and other equipment, while at the same time producing additional steam for use in the production processes. Cogeneration is significantly more efficient than traditional methods of producing steam and power separately, resulting in lower operating costs and reduced greenhouse gas emissions.

Estimated to cost more than US$5 billion, the expansion project has made the Singapore facility ExxonMobil’s largest refining and petrochemical complex. It also marks the first production by ExxonMobil of its proprietary specialty elastomers and metallocene-based polyethylene in the Asia Pacific region.

Steve Pryor, President of ExxonMobil Chemical Company, said:

“We have doubled the size of our finished product capacity at Singapore, making this the largest chemical expansion project in ExxonMobil history. This is among the most technically advanced and competitive manufacturing sites in the Asia Pacific region.”

The expansion will increase the company’s chemical plant workforce by 50%, bringing total employment at ExxonMobil’s Singapore integrated refining and chemical complex to 1,800. During peak construction, the project employed on site 22,000 workers who achieved more than 80 million work hours with no lost-time injuries in construction activities.

ExxonMobil has operated in Singapore for more than 100 years and is one of Singapore’s largest foreign manufacturing investors.

 

 

 

 

MARKETS: OPEC keeps forecasts for world oil demand growth for 2012 and 2013

(EnergyAsia, December 31 2012, Monday) — The Organisation of Petroleum Exporting Countries (OPEC) has kept its forecasts for global oil demand to grow to grow by just under 800,000 b/d for 2012 and 2013. With no major revision to its December oil report outlook, OPEC said it is holding its forecast for world demand to…

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CHINA: Focus on domestic economy will boost shipping demand, predicts industry

(EnergyAsia, December 28 2012, Friday) — Shipping executives predict their industry will benefit from China’s long-term shift to becoming a domestic consumer-driven economy.

As the world’s second largest economy continues to grow at more than seven percent a year, the shipping industry will likely see further growth in new vessel deliveries in 2013, said Xu Lirong, President of China Shipping (Group) Company.

At this rate of growth, about half of China’s 1.4 billion population will join the ranks of the middle class by 2020. China’s annual per capita income is projected to range between US$7,000 and US$23,000, according to the Boston Consulting Group.

The country’s manufacturing sector will continue to perform well, leading to demand for container ships despite an on-going capacity glut.

“Oversupply of capacity is still an obstacle for the shipping industry to overcome, but with the improvement of the world economy, the shipping sector is expected to experience moderate growth,” said Mr Xu.

He will examine this key issue affecting China, and the nation’s pivotal position in the international maritime arena at next April’s Sea Asia, the region’s leading maritime event, in Singapore.

The event’s co-organisers, Seatrade and the Singapore Maritime Foundation (SMF), have also invited Andy Tung, CEO of Hong Kong’s Orient Overseas Container Line, and Chen Bin, deputy general manager (Transport Finance Department) at the China EximBank to discuss the future of China’s maritime sector.

Conference speakers will address topics pertaining to dry and liquid bulk cargoes, ship financing, and the role of Chinese banks and their overall outlook and attitudes to industry lending. The offshore and marine sector will also be examined as China is building up its offshore exploration and production capacity.

 

 

 

MARKETS: EIA predicts OPEC revenue to decline in 2013 after reaching record US$1.052 trillion in 2012

(EnergyAsia, December 28 2012, Friday) — Amid falling oil prices, OPEC’s net oil export revenues will fall by 9.2% next year to US$955 billion after reaching a record US$1.052 trillion in 2012, predicts the US Energy Information Administration’s (EIA).

In 2011, the 12-member Organisation of the Petroleum Exporting Countries earned US$1.27 trillion from oil exports for a 33% rise over the previous year, said the EIA.

Saudi Arabia, the cartel’s biggest producer, earned US$310 billion in 2011, or about 30% of OPEC’s total, said the EIA in its latest short-term energy outlook.

 

SINGAPORE: Keppel’s 2012 rig orders almost equal last year’s record S$10 billion

(EnergyAsia, December 28 2012, Friday) — With three new contracts worth a total S$420 million, Singapore’s Keppel Offshore & Marine Ltd said the combined value of its rig orders for 2012 reached S$9.9 billion, just short of last year’s record S$10 billion. (US$1=S$1.22).

Two of the contracts went to Keppel Singmarine Pte Ltd while the third was secured by Keppel Shipyard Ltd.

Keppel Singmarine will build a high-specification deepwater pipelay (S-Lay) vessel for Hydro Marine Services Inc, a subsidiary of McDermott International Inc, and a catamaran air dive support vessel (DSV) for Australia’s Bhagwan Marine Pty Ltd.

Keppel Shipyard will modify and upgrade an existing floating production storage and offloading (FPSO) facility, Lewek Arunothai, for EMAS Offshore Construction and Production Pte Ltd.

CEO Tong Chong Heong said:

“With the strong confidence and support of new and repeat customers, Keppel O&M continues to be the provider of choice for a broad range of offshore and marine projects.

“2013 will be a busy year for us as we continue to focus on the quality execution of all our projects – we are committed to ensure that they are delivered safely, promptly and to high customer satisfaction. We will also enhance our capabilities, and so extend our range of value-added services.”

 

AUSTRALIA: IEA wants government to establish emergency oil stockpile

(EnergyAsia, 28 2012, Friday) — The Australian government is mulling over a call the International Energy Agency (IEA) that it should build up a national oil stockpile and reduce reliance on private companies to meet any demand for emergency oil supplies. The Paris-based agency has criticised Canberra for failing to meet the minimum 90-day supply…

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KUWAIT: KNPC awards Foster Wheeler US$500 million contract to manage clean fuels project at two refineries

(EnergyAsia, December 27 2012, Thursday) — Switzerland-based Foster Wheeler AG said its global engineering and construction group has been awarded a US$500 million project management and consultancy (PMC) services contract for a clean fuels project at the Mina Al-Ahmadi and Mina Abdullah refineries in Kuwait.

Kuwait National Petroleum Company (KNPC), which awarded the contract, is implementing a multi-billion upgrade and expansion of the refineries to increase their combined throughput by 264,000 barrels per stream day to 800,000 barrels per stream day. When completed, the plants will increase conversion of fuel oil to higher value products to meet growing demand for low-sulphur transportation fuels.

Foster Wheeler said its scope of work includes the provision of project management services during the tendering phase for the main engineering, procurement and construction (EPC) contracts, and management of the contractors through to completion of performance testing.

Fahed Salem Al Ajmi, KNPC’s chairman and managing director, said the clean fuels project, which is expected to be completed during the second quarter of 2018, will shape the future of Kuwait’s refining capability.

Umberto della Sala, Foster Wheeler’s chief operating officer, said:

“Foster Wheeler’s proven project management capabilities, our experience in executing mega-projects, and the breadth of our refining technical expertise were critical factors in our success in winning this significant award.”

 

CHINA: Oil demand at record high of 10.5 million b/d in November, says Platts

(EnergyAsia, December 27 2012, Thursday) — China’s apparent oil demand surged 9.1% year-on-year in November to a record high to 42.96 million metric tons (mt), or an average 10.5 million b/d, said US energy media Platts. In an analysis of recent Chinese government data, Platts said the November demand surpassed the previous record high of…

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JAPAN: Japex to invest C$1.1 billion to boost Canadian oil output to 30,000 b/d, awaits partner Nexen’s decision

(EnergyAsia, December 27 2012, Thursday) — After decades of relative inaction in Canada’s oil-rich Alberta province, Japan Petroleum Exploration Co (Japex) said it plans to invest C$1.1-billion to boost production at its jointly-owned Hangingstone field from about 6,000 to 7,000 b/d to 30,000 b/d from 2016. (US$1=C$0.99).

Japan’s second largest upstream company said subsidiary Japan Canada Oil Sands Ltd (JACOS), which owns a 75% stake in the project, plans to export the increased production to refineries in the US which have the capability to process the heavy crude created from mixing Alberta’s bitumen with ultra-light crude oil and condensate.

Partner Nexen Inc, which holds the remaining 25%, is due to make a decision on its C$300-million share of the investment by the first quarter of 2013. The Calgary-based firm, which has just been acquired by China’s CNOOC Ltd in a massive C$15 billion deal, is expected to greenlight the project as it has just approved the design and execution plan for Hangingstone’s expansion. It is believed that Japex had previously been unable to implement the project as cash-strapped Nexen did not have the funds to go along with the proposed expansion.

Having completed the front-end engineering design and obtained approval from the Alberta provincial government in November, Japex said the partners have started full-scale development work with the aim of raising production in the first half of 2016.

Due to investment timing and technical risks, Japex said the partners will adopt a staged approach with an initial capacity to produce 20,000 b/d of bitumen that could be scaled up to 30,000 b/d. Based on the proven steam-assisted gravity drainage (SAGD) technology that has been in use at Hangingstone since 1999, the plant is expected to have a production life of around 30 years.

According to Japex, JACOS was established in 1978 as a joint investment between Japan National Oil Corporation (JNOC) and 62 Japanese companies. JACOS, PetroCanada and two other Canadian companies jointly started pilot tests for the commercial production of oilsands as a national project.

Japex said oilsands production and trade could become one of its core businesses, with Hangingstone’s success paving the way for its expansion into other leases in the province, leading to oil exports to Asia.

Having approved CNOOC’s unpopular wholesale takeover of Nexen, the Canadian government is looking to Japanese companies, which are not government owned, to provide a counter-balance to China’s growing interest and stake in its massive oil reserves, which according to BP is the world’s fourth largest after Venezuela, Saudi Arabia and Iraq.

In announcing his decision on December 7 to allow CNOOC and Malaysia’s Petronas to take over Canadian oil firms, Prime Minister Stephen Harper said his government would make it difficult for state-owned foreign enterprises to make similar future acquisitions.

 

RUSSIA: Putin opens second pipeline to double ESPO crude export to Asia

(EnergyAsia, December 27 2012, Thursday) — Russia’s Transneft has started up the US$11 billion second branch of the East Siberia Pacific Ocean (ESPO-2) pipeline to double its 15-million tonne/year export of the ESPO blend crude oil to Asia and the US. Completed after six years, the 4,200-km pipeline, which ends at the Far Eastern port…

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RUSSIA: Gazprom continues talks with CNPC to supply natural gas to China

(EnergyAsia, December 26 2012, Wednesday) — Russia’s gas giant Gazprom said it is continuing talks with China National Petroleum Corp (CNPC) to secure a long-term deal to supply natural gas to China. Early this month, Gazprom chairman Alexey Miller met Zhou Jiping, CNPC’s President, at the Russian company’s Moscow headquarters in an attempt to narrow…

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INDIA: IEA says private refineries spearheading oil products export boom, but will soon face MidEast competition

(EnergyAsia, December 26 2012, Wednesday) — Private Indian refineries account for nearly half of this year’s global increase in crude oil processing capacity and are spearheading an oil products export boom, said the International Energy Agency (IEA). Having increased their capacity by nearly 50% over the past five years, Indian refiners are shipping their products…

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CHINA: BP to sell Yacheng gas field to Kuwait’s KUFPEC for US$308 million

(EnergyAsia, December 26 2012, Wednesday) — BP said it has agreed to sell its 34.3% interest in the Yacheng gas field in the South China Sea to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for US$308 million cash.

Expected to close in the second half of 2013 upon clearing regulatory, partner and third party approvals, the proposed sale will take BP’s total divestments announced since 2010 to US$37.8 billion.

Following completion, the Yacheng partnership will consist of CNOOC (51%), and KUFPEC (49%).

BP operated Yacheng, which began producing in 1996, until January 1 2004 when it handed operatorship to its major project partner CNOOC.

The field currently supplies natural gas for power generation to Castle Peak Company Limited in Hong Kong via a 780-kilometre pipeline. Additional natural gas, condensate and LPG are sold to customers on Hainan Island.

Chen Liming, President of BP China, said:

“This sale is part of BP’s ongoing global portfolio optimisation, BP remains committed to working with China to contribute its deep expertise and oil and gas supply options in this important emerging market.

BP was awarded interests in the 42/05 and 43/11 deepwater blocks in the South China Sea in 2010 and 2012. These blocks are currently in the exploration phase.

 

MARKETS: IEA raised world oil demand forecasts on unexpected 4Q surge

(EnergyAsia, December 26 2012, Wednesday) — Following an unexpected surge in fourth-quarter consumption, the International Energy Agency (IEA) has raised its forecasts for world oil demand growth for 2012 and 2013. In its latest December monthly report, the Paris-based agency said world oil demand will grow by 800,000 b/d to 89.7 million b/d for 2012,…

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US: National self-sufficiency for natural gas seen, not crude oil, professionals tell Deloitte

(EnergyAsia, December 24 2012, Monday) — America can bank on plentiful domestic natural gas, but will have to continue relying on foreign oil, according to 250 oil and gas decision-makers who participated in a recent Deloitte survey.

Three-quarters of the respondents think the US is already natural gas self-sufficient, or will be within 10 years.

When it comes to oil, however, survey respondents are far less optimistic about the nation’s ability to meet American demand with domestic supplies: 54% say the US will never be completely oil self-sufficient – and only 26% say oil self-sufficiency is achievable in the next 10 years.

Deloitte believes that the answers would have been different if the question of oil self-sufficiency had been expanded to include all of North America.

“Given North America’s remarkable success with unconventional oil – both tight oil in places like North Dakota and oil sands in Canada – something closely resembling self-sufficiency is arguably within reach,” said Peter Robertson, a senior advisor to Deloitte and former vice chairman of Chevron Corporation.

“When you combine unconventional oil supplies with the recently established increase in shale gas reserves, you could have the makings of a true energy renaissance.”

Deloitte conducted the survey in late October and canvassed 250 oil and gas professionals from a decision-making demographic: Respondents were 48 years old on average and had an average of 20 years’ experience in the industry. All had college or graduate degrees and earned over US$100,000 per year.

“It’s not surprising that oil and gas decision-makers are enthusiastic about the role of natural gas in our national energy future, given burgeoning supplies, America’s comparatively low cost of extraction, and its relative cleanliness,” said John England, Deloitte LLP’s vice chairman, and leader of the company’s oil and gas practice.

“What is surprising is that natural gas is a fuel source that we were aggressively preparing to import at high world prices just a few years ago.”

Looking at 2013, the respondents see natural gas prices remaining quite low – with 40% predicting prices less than US$3 per MMBtu, and a large majority (86%) predicting Henry Hub prices under $4 per MMBtu.

Crude oil prices, on the other hand, are expected to remain relatively strong next year. About 57% of respondents expect think the average cost West Texas Intermediate crude oil to range between US$80 and US$99 a barrel.

Regarding natural gas regulations, 49% think regulations related to hydraulic fracturing are “just right” or “evolving, but on the right track” – but a minority (39%) still believe there is “too much regulation.” Just 5% say there is “too little regulation” and 7% say they are “unsure.”

A clear majority of 63% of the respondents supports regulations requiring producers to disclose the contents of their hydraulic fracturing fluids, with only 24% in opposition and 13% “unsure”.

Looking at the issue of shale gas resource estimates,

A majority (51%) believes that current industry estimates of recoverable shale gas reserves are on target, with 23% saying they are “somewhat overestimated” and the exact same amount saying they are “somewhat underestimated.”

Only a few think shale resources are “very overestimated” or “very underestimated” – 1% and 2% respectively.

“It seems clear that oil and gas professionals believe America has a veritable bounty of shale gas resources,” said Roger Ihne, principal, Deloitte Consulting LLP, serving the oil and gas sector.

“In simple terms, over 95% think the current industry estimates are accurate or not far off.”

With the large gas resource base, industry professionals foresee continued low prices and new market opportunities abroad.

Most survey respondents think that the abundance of shale gas will lead to liquefied natural gas (LNG) exports.

A large majority (72%) expect that LNG export terminals will eventually receive government approval – with 36% believing this approval will occur before 2014 and the exact same percent expecting approval after 2014.

Similarly, the survey found that even with exports of LNG, most oil and gas decision-makers don’t see a meaningful increase in domestic natural gas prices. A strong majority (93%) sees either no price increase or a slight change in price. In contrast, only 7% expect a significant price increase.

“Given the reserve estimates and current supplies, it only makes sense that natural gas producers are keen to develop new uses for their gas. One possible option that stood out among survey respondents was use as a transportation fuel,” said Mr Ihne.

When asked to identify the best alternative transportation fuels to gasoline and diesel, survey respondents clearly preferred natural gas – with 67% seeing products like compressed natural gas (CNG) as the most promising option to refined oil products, far ahead of other top choices like electricity (11%) and biofuels (8%).

The survey also looked at a host of other pressing issues facing oil and gas companies today.

A large majority (78%) of respondents expect that the Keystone XL pipeline will eventually receive government approval – with 42% expecting approval in 2013 and 36% expecting approval in 2014 or later.

About 59% predict increased capital spending in 2013 with 35% expecting it to remain the same, and only 6% think it will decrease.

 

 

RUSSIA: Gazprom completes world’s first LNG shipment through Arctic northern sea route

(EnergyAsia, December 24 2012, Monday) — Russian gas giant Gazprom said it has executed the first successful shipment of a liquefied natural gas (LNG) cargo through the Arctic northern sea route.

This route cuts the maritime distance from Northern Europe to Northeast Asia by up to 40% compared to southern sea routes via the Suez or Panama canals, said Gazprom.

The carrier ‘Ob River’, chartered by wholly-owned subsidiary Gazprom Marketing & Trading (GM&T) group and operated by Dynagas (Greece), delivered the cargo from the Snohvit terminal in Hammerfest, Norway to the Tobata terminal in Japan.

Throughout its voyage from November 9 to 18, the vessel was escorted by Russian nuclear icebreakers operated by Rosatomflot and assisted by ice-pilots provided by the Northern Sea Route Administration. The waters of the Barents and Kara Sea were mostly ice-free with young ice of up to 30 cm encountered between Vilkitskogo and Bering Strait.

Gazprom said the voyage was completed safely and on schedule with excellent support from the ice pilots, masters and crews of the ice breakers and the personnel of Rosatomflot and the Northern Sea Route Administration of the Ministry of Transport of Russian Federation.

The northern sea route (NSR), or north-east passage, is a shipping lane linking the Atlantic Ocean to the Pacific Ocean along the North coast of Siberia, most of the route being in Arctic waters.

The combination of shorter cargo delivery times, fuel economy, the ability to meet tighter schedules on cross-basin trades, reduction in boil-off with more cargo delivered, lower greenhouse gas generation and reduced piracy risks presents a very attractive and sustainable solution for the cross-basin LNG trade.

Having made a ballasting voyage from Asia to Europe in October, the Ob River’s round trip confirms the technical and commercial viability of the NSR in serving the global LNG trade.

Frédéric Barnaud, executive director at Gazprom Marketing & Trading, said:

“Never before has LNG been transported via this route. This huge achievement is the result of the LNG and Shipping & Logistics teams at GM&T working together with our partners to make this happen. The importance of opening up the NSR as a viable alternative to our customers fully complements our commitment to the fast growing Asian LNG market which is a key area of growth for the Gazprom group.”

The ’Ob River’ was built in 2007 with 1A ice class notation (Lloyd’s Register) and extensive winterisation equipment. The vessel and its crew successfully performed in ice conditions in 2009-2011 when chartered by the GM&T group for winter operations to export LNG from “Sakhalin-2”, the first Russian LNG project where OAO Gazprom is the majority shareholder.

The vessel has an international crew on board, including Russian officers – the graduates of the Admiral Makarov State Maritime Academy in St. Petersburg, Russia’s leading maritime education and training centre.

 

AUSTRALIA: Record petroleum production achieved in latest September quarter, says EnergyQuest

(EnergyAsia, December 24 2012, Monday) — Boosted by its surging natural gas output, Australia produced a record 143.2 million barrels of oil equivalent (mmboe) in the latest September quarter, according to Adelaide-based EnergyQuest.

Australia’s natural gas production reached a record 611 petajoules (PJ) in the July-September period, surpassing the previous high of 547 PJ in the third quarter of 2010.

Thanks to the start-up of Woodside’s Pluto project and increased supply from the North West Shelf and Darwin, the country’s liquefied natural gas (LNG) production was up 33% from the 2011 September quarter, with all projects operating at close to capacity.

There was also strong growth in domestic gas production, reflecting a 24% increase in production by the ExxonMobil/BHP Billiton joint venture from Longford in Victoria, said Energy Quest.

“The carbon tax was one of the key drivers of higher domestic gas production on the back of a 12% surge in east coast gas-fired power generation,” said EnergyQuest chief executive, Graeme Bethune.

“The increase in gas production was despite a 3.3 per cent drop in demand for electricity on Australia’s east coast,” he said.

“Asia continues to be the brightest spot in global gas demand, with consumption continuing to grow strongly.

“Demand is growing moderately in the US, but is still falling in Europe.

`“European demand is now at 2003 levels and the International Energy Agency believes it might take until 2020 for European gas demand to return to 2010 levels.”

LNG imports by the UK were down 44% in the nine months to September 2012, compared with the same period last year.

Dr Bethune said weak economies, renewables and cheap coal imported from the US were marginalising gas in Europe.

Australian production of oil and natural gas liquids (condensate and LPG) was essentially flat – quarter-on-quarter – at 41.1 mmboe.

 

 

SRI LANKA: Government to buy back China Bay oil tank farm from Indian Oil Corp

(EnergyAsia, December 24 2012, Monday) — The Sri Lankan government is set to buy back the Trincomalee oil storage tank farm in northeastern China Bay now being leased to the Indian Oil Corporation (IOC). The leases was signed in 2002 by the United National Party (UNP) government when Colombo was fighting a civil war against…

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MOZAMBIQUE: Wartsila secured 138-million-euro contract to supply country’s largest gas-fired power plant

(EnergyAsia, December 21 2012, Friday) — Wartsila, a Finnish supplier of flexible and efficient power plant solutions, said it has signed a contract to supply and install the largest gas-fired power plant in Mozambique worth 138 million euro. (US$1=0.75 euro).

The company said it will also construct a sub-station and a gas pipeline as part of the contract signed with Central Termica de Ressano Garcia, a company jointly owned by Mozambique state utility Electricidade de Moçambique (EDM) and South Africa’s Sasol New Energy.

The plant will be powered by 18 of Wartsila’s 34SG engines with natural gas supplied from the Pande and Temane gas fields when it starts up by May 2014. Its electricity output will be sold to EDM.

Wartsila said it supplied gas engine technology best suited for Mozambique which has considerable gas reserves but faces water scarcity. The Finnish company said its gas engine technology features closed-circuit cooling that requires minimal water use.

“There is rapidly growing demand in Mozambique for electricity, and Wartsila has demonstrated its capability to provide competitive and comprehensive turnkey power plants with outstanding operational efficiency and minimum environmental impact,” said Vesa Riihimäki, President of company’s power plants unit.

To date, Wartsila said it has delivered 470 power plants to Africa with a total output of 5,000 MW.

 

PEOPLE: BG names Chris Finlayson to succeed Frank Chapman as CEO

(EnergyAsia, December 21 2012, Friday) — UK gas major BG has named Chris Finlayson to succeed the retiring Frank Chapman as chief executive from January 1.

Mr Finlayson, 56, who joined BG from Royal Dutch Shell in 2010, overcame close competition from chief financial officer Fabio Barbosa and chief operating officer Martin Houston to take on the company’s next phase of large projects in Australia and Brazil.

Mr Chris Finlayson, who was named to the BG board last year, is currently its executive director and managing director. In his more than 35 years experience in the oil and gas industry, he held senior executive positions overseeing upstream projects in Nigeria, Russia, the UK and Brunei.

“He has an outstanding track record of delivering large scale projects, optimisation of production and operational performance, and has worked successfully with joint venture partners, national oil companies, and governments at the highest levels,” said BG.

As managing director of Shell Petroleum Development Company of Nigeria, Mr Finlayson led Nigeria’s largest and most complex oil and gas joint venture, managing production of some one million barrels of oil equivalent per day. He was also Shell’s director of Nigeria LNG Ltd, the second largest LNG plant in the world at the time.

As Shell’s executive vice president for exploration and production in Russia, he took charge of cost and schedule issues at Sakhalin 2 as well as smoothened relations with the Russian government and Gazprom.

Alongside responsibility for delivering the project, he helped manage Gazprom’s entry into the project as a joint venture partner. He was asked to remain chairman of Sakhalin Energy Investment Company, when Gazprom became the majority shareholder.

BG said Mr Chapman will retire in June after 12 years as chief executive during which he oversaw its transformation and growth from a North Sea producer to a global gas company. In June this year, he began a course of medication for very early stage myeloma.

 

MALAYSIA: Petronas raises Canadian project value to between C$9 and C$11 billion, triples unconventional gas reserves

(EnergyAsia, December 21 2012, Friday) — With the acquisition of Canadian natural company Progress Energy, Malaysia’s state energy firm Petronas has raised the value of its proposed investment in an export-oriented liquefied natural gas (LNG) project which includes a terminal at Prince Rupert Port to between C$9 and C$11 billion as well as nearly tripled…

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CHINA: PetroChina, Encana to form C$2.18 billion JV to develop Canadian gas reserves

(EnergyAsia, December 20 2012, Thursday) — A PetroChina International subsidiary and Canada’s Encana Corp have signed a C$2.18 billion venture to jointly develop the latter’s Duvernay gas reserves in Alberta province. (US$1=C$0.99).

Encana said it did not need to seek the approval of the Canadian government as Phoenix Duvernay Gas would acquire a 49.9% stake of its 180,000-hectare Duvernay assets.

The deal was announced nearly a week after Canada’s Prime Minister Stephen Harper said his government, which had just approved two separate takeovers of Canadian oil and gas companies by China’s CNOOC and Malaysia’s Petronas, would make it almost impossible for foreign state-owned companies to fully acquire Canadian firms.

Ottawa, however, is not opposed to joint ventures, having stated that Canada needs to attract C$630 billion worth of investments to develop its oil and gas reserves.

Encana, which has already received C$1.18 billion in cash from Phoenix, said the joint venture will focus on developing natural gas and related products like butane and ethane. Phoenix will pay the remaining C$1 billion over the next four years by covering Encana’s share of development capital.

The Encana-operated joint venture will invest a total of C$4 billion in new drilling, completion and processing facilities to develop an estimated nine billion barrels of oil equivalent reserves.

Encana said it has drilled nine wells into the Duvernay, has five producing wells and currently has two rigs actively drilling additional wells. Through the joint venture, Encana expects to more than double its planned pace of development from early 2013.

Randy Eresman, Encana President and CEO, said:

“Phoenix’s investment demonstrates the tremendous value that Encana has created in this early life liquids rich play, and enables us to accelerate the pace at which the full production potential of our Duvernay lands can be achieved.

“A transaction of this magnitude keeps us on track to create a more diversified commodity portfolio and maintain our balance sheet strength. It is a strong endorsement of Encana’s position as a reliable long term partner.”

Zhiming Li, Phoenix’s President and CEO, said:

“The Duvernay project will combine Phoenix’s integrated upstream and downstream capabilities and financial resources with Encana’s proven resource play hub expertise. This joint venture will build a foundation for the successful development of the Duvernay play and help to diversify our business portfolio. Encana is our ideal long term partner for the development of our future natural gas business.”

Last year, Encana and PetroChina called off their proposed C$5.5-billion joint venture to develop the Canadian company’s Cutbank Ridge assets.

 

SAUDI ARABIA: Petrofac awarded US$1.4 billion EPC contracts for refinery project

(EnergyAsia, December 20 2012, Thursday) — UK’s Petrofac said it has been awarded two engineering, procurement and construction (EPC) packages worth a total of US$1.4 billion for a US$4 billion oil refinery and storage terminal project in the southwestern Saudi Arabian city of Jazan.

Saudi Aramco, which awarded the contracts, expects to start up the 400,000 b/d refinery and the support terminal on the coast of the Red Sea to process local heavy and medium crude by 2016.

Petrofac said its Saudi Arabia office will lead the project management delivery of the work scope that includes construction of tank farms.

Marwan Chedid, chief executive of the company’s engineering, construction, operations and maintenance division, said:

“We are delighted to have secured these significant packages for Saudi Aramco on their Jazan refinery and terminal project. This will serve to reinforce the relationships and experience we have developed through our recent involvement on the Karan project as well as our ongoing Petro Rabigh projects for Saudi Aramco and Sumitomo Chemical Co Ltd.

“As this project progresses, we look forward to working closely with Saudi Aramco and our contractors to further deepen our engineering and project management capability in the kingdom.”