Downstream Monitor - MEA Week 17

For analysis and commentary on these and other stories, plus the latest downstream developments, see inside…

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reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of i ts contents

30 April 2014

Week 17

Issue 154

News Analysis

Intelligence

Published by

NewsBase

COMMENTARY 2

Iraqi Kurds put crude up for sale 2

East Africa to be an export hub by 2020 3

POLICY 5

Manama to increase gas supplies 5

Egypt promises to pay energy firms 5

COMPANIES 6

Orca threatens gas shut-off in

Tanzania over unpaid bill 6

UAE power firm expands East African

presence 7

REFINING 7

China Sonangol’s Dubai plans clouded

by more uncertainty 7

Nigeria’s Aiteo announces

refinery plans 8

Mombasa refinery sale terms finalised 8

PIPELINES 9

EPC tendering nears on Bahrain-Saudi

pipeline 9

TERMINALS & SHIPPING 10

Iraqi crude output rises but faces

storage constraints 10

Ghana lines up LNG supplies

via Benin 10

VTT Vassilikos storage hub on

schedule for mid-July 11

NEWS IN BRIEF 11

CONFERENCES 17

SPECIAL REPORT 19

NEWS THIS WEEK…

Kurdish crude for sale!

Turkey and Kurdistan signal that in May they will start sales of crude from the region arriving at Ceyhan by pipeline, with or without Baghdad‘s approval.

Erbil announced that exports would begin on May

2, but whether this is possible or not remains to be

seen. (Page 2)

The timing of the statement is key, being made the

day before Iraqis went to the polls. (Page 2)

Barzani’s government now appears keen to make

its move and negotiate with Baghdad later. (Page 3)

East Africa: hitting targets

Mozambique could win the race to become an export hub by 2020 with a more stable outlook on projects and a set of clients already in tow.

Mozambique is set to become the first gas

exporter in the region. (Page 3)

Tanzania continues to face a string of setbacks to

its gas ambitions. (Page 4)

Kenya’s plans are still at a standstill, but the

country will be essential for development. (Page 4)

NewsBase Downstream Monitor

–– MEA ––

Downstream Monitor MEA 30 April 2014, Week 17 page 2




reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

With Iraq going to the polls on April 30

in a general election in which the issues

of regional sovereignty and the control of

the country‘s sizeable hydrocarbon

reserves are set to play a significant role,

the Kurdistan Regional Government

(KRG) has upped the ante, announcing

that it plans to start sales of crude from

the region on May 2 – before the newly

elected government will have had time to

formally start work.

The announcement by regional Prime

Minister Nechirvan Barzani in an

interview with the Rudaw Kurdish media

network comes a full four months after

oil started flowing from the region

through one half of the Kirkuk-Ceyhan

pipeline and two weeks after Turkish

energy minister Taner Yildiz announced

that storage space at Ceyhan was limited

followed by a comment that Turkey

would soon need to allow some crude to

be sold. However, it is still far from clear

whether sales can actually start on May 2

or whether Barzani‘s announcement is

aimed at influencing the outcome of the

Iraqi elections.

Turkish officials have played down the

chances of sales starting on May 2,

saying that while they are now scheduled

to begin ―sometime in May‖ they are not

yet prepared to confirm an exact date.

They did however confirm that the

flow of crude from the region has been

restarted at 100,000 barrels per day,

having earlier been halted in line with the

start of serious talks between the KRG

and the Baghdad government in March.

Critical mass

With flow from Iraq‘s Kirkuk field

suspended since early March the

Kurdistan crude will now be able to flow

to Ceyhan unhindered, whereas

previously it was restricted to periods

when Iraqi Kirkuk flow was halted to

prevent the two crudes becoming mixed.

And with the Ceyhan tanks empty,

there should be plenty of storage space

free to hold the newly flowing crude.

In theory that should mean that there is

no particular rush to start selling the

crude. However Turkish energy minister

Taner Yildiz confirmed on April 29 that

tank farm operator Botas has allocated

only 2.5 million barrels of storage for the

Kurdish crude and that when that has

been filled, Turkey will be obliged to

allow sales to begin.

With 1.5 million already in storage, at

a build-up rate of 100,000 bpd that would

indicate a maximum of 10 days before a

cargo would have to be lifted and a first

lifting sometime before May 7.

This leaves little time for whatever

administration emerges from the Iraqi

polls to conclude an agreement.

Time to act

However, if the tone set by Barzani in his

recent interview is anything to go by, it

may already be too late for more

negotiations, with the KRG apparently

set to first begin sales and to address any

need to negotiate later.

According to Barzani, while the KRG

and Baghdad have reached agreements

on most things, the talks have reached an

impasse on the issue of which body gets

to sell the crude, with Baghdad insisting

that sales must be made by Iraq‘s State

Oil Marketing Organization (SOMO).

The KRG for its part insists that there

is nothing in the Iraqi constitution which

stipulates that SOMO has to conduct

sales and maintains that the only issue

that needs to be addressed is

transparency. Barzani explained that the

crude flowing to Ceyhan is being

transparently monitored and measured

and that the KRG plans to sell it on the

global market, to keep the 17% of

revenues it is entitled to under the Iraqi

constitution and to remit the rest to

Baghdad. With current production

capacity able to send as much as 200,000

bpd to Ceyhan the potential earnings for

Baghdad are significant.

And with Barzani claiming that as

much as 500,000 bpd could be exported

through Turkey by the end of the year,

rising to 1 million bpd within two years,

those earnings are set to grow, assuming

the necessary pipeline capacity is

available.

Route to market

Currently the KRG is using only the

smaller of the two parallel pipes that

make up the Kirkuk-Ceyhan export line,

the 40-inch (1 metre) diameter pipe

which has a maximum capacity of

500,000 bpd, as the larger 46-inch (1.17

metres) line with a capacity of 1 million

bpd is reserved for crude from the

Baghdad-controlled Kirkuk fields.

COMMENTARY

Iraqi Kurds put crude up for sale

Turkey and Kurdistan signal that in May they will start sales of crude from the region

arriving at Ceyhan by pipeline, with or without Baghdad‘s approval

By David O’Byrne

Erbil announced that exports would begin on May 2, but whether this is possible or not remains to be seen

The timing of the statement is key, being made the day before Iraqis went to the polls

Barzani’s government now appears keen to make its move and negotiate with Baghdad later

With current KRG-

operated production

capacity able to send as

much as 200,000 bpd to

Ceyhan the potential

earnings are significant






This suggests that for the KRG to

realise its production potential, a new

export pipeline will be needed.

Plans for such a line exist with Ikideniz

Petrol, a subsidiary of Calik Holding

having last year applied to Turkey‘s

General Directorate of Petroleum Affairs

(PIGM) for a licence to construct a

pipeline from the Iraq-Turkey border to

Ceyhan. But since then, no further

announcements have been made

concerning the project.

In the shorter term though, the focus is

likely to remain firmly on the ongoing

disagreements between the KRG and

Baghdad. According to Barzani,

Baghdad has failed to pay the KRG its

share of the state budget for March and

only paid a fraction of monies due in

January and February, giving the KRG a

pressing need to sell oil to meet its own

needs, and raising questions over

whether it will repatriate 83% of sales

revenue to Baghdad as claimed.

And with Barzani claiming in the

recent interview that ―Baghdad would cut

our oxygen if they could‖, whatever

administration emerges from this week‘s

election may face an uphill struggle to

cut a deal that will satisfy both sides.

A new report by oil and gas information

provider Evaluate Energy has said that

East Africa could become the world‘s

next oil and gas hub by 2020 if even only

one of the three countries aiming for this

goal – Kenya, Mozambique and

Tanzania – reach their objective.

This could bring a major change to the

global energy map as, with the exception

of Angola, Africa has not seen major

evolution in its oil and gas sector over

the last two decades.

The West African country has gained

prominence in the market since its boom

in 2000 and now rubs shoulders with the

continent‘s four major producers –

Algeria, Nigeria, Libya and Egypt – as

the second-largest oil exporter on the

continent – the country exports 1.7

million oil barrels per day more than it

imports) and with an LNG export

terminal capable of exporting 5.2 million

tonnes per year.

Taking the example of Angola, it is

easy to see just how quickly situations

can turn around in developing countries

with vast natural resources that are

targeted by major investors.

However, while Kenya, Mozambique

and Tanzania try to follow Angola‘s

footsteps, they have encountered some

setbacks that could lead to further

delays.

COMMENTARY

East Africa to be an export

hub by 2020

Mozambique could win the race to become an export hub by 2020 with a more stable

outlook on projects and a set of clients already in tow

By Nádia Morais

Mozambique is set to become the first gas exporter in the region

Tanzania continues to face a string of setbacks to its gas ambitions

Kenya’s plans are still at a standstill, but the country will be essential for regional development






Kenya lags behind

In Kenya, the US$25.5 billion Lamu

Port, South Sudan, Ethiopia Transport

(LAPSSET) Corridor that is to link Lamu

on Kenya‘s coast to Juba in South Sudan

has seen little progress in efforts to

combine the development of a new port,

an oil pipeline, road and railway links

and an oil refinery.

Although Kenya and Ethiopia have

already formally initiated a Joint

Transport Corridor Commission of

ministers to speed up the project, the

construction of the port, the railway, the

pipeline and the refinery have all been

delayed. The tender for the pipeline is

now expected to be issued by the end of

this year.

Some of the reasons for the delays

include pending decisions by the

government of South Sudan. The

executive commissioned a US$3 million

feasibility study to review a possible

route and although the results have not

been made public, the study found that

both the options of merged pipelines

from the oilfields in Unity State and

Upper Nile State and the option of taking

these to Djibouti or Lamu, were

technically viable. However, no decision

has yet been announced.

The refinery has also been at a

standstill with several options on the

table and without an agreement. Another

issue is funding, with costs budgeted at

up to US$30 billion and expected to rise

further. But this remains a crucial project

for the region, as it is expected to relieve

Mombasa, one of the most congested

ports on the continent, and will also

benefit Uganda, South Sudan and

Ethiopia.

Mozambique

In Mozambique, a string of deepwater

gas discoveries made by international oil

companies (IOCs) has made LNG

exports look like a real possibility. Here,

progress has been a bit more agile, with

Italian major Eni‘s recent announcement

regarding the construction of a floating

LNG plant (FLNG) off the coast of

Mozambique‘s northern Cabo Delgado

province. With this development, Eni is

trying hard to speed up and win the LNG

race towards East Asian markets and to

take advantage of Mozambique‘s

positioning as a potential exporter to

Asia.

But although the FLNG facility can

present a major opportunity, it also

presents major technical hurdles involved

in the construction of large structures,

and political barriers in the country can

also represent a setback.

Still, the amount of gas available in

Mozambique is such that there are

several alternatives in its monetisation.

The main obstacle is competition from

the US and Canada as their LNG export

potential is on the rise and is also likely

to target Asia.

Tanzania

In Tanzania, major gas discoveries have

been found by IOCs with LNG export

ambitions, and there are plans for a

separate Chinese-backed mega-port at

Bagamayo. However, Tanzania‘s dream

to beat Mozambique in the race to

become East Africa‘s first exporter of

LNG faces with several stumbling

blocks.

There is little clarity on the country‘s

new regulations for the natural gas

sector, which means IOCs acting in

Tanzania are likely to delay their final

investment decisions (FIDs) until general

elections are held in 2015.

Clare Allenson, Africa analyst at

Eurasia Group, told Zawya: ―The

constitutional review is forcing interest

groups to take a stand on all the most

divisive political issues at once … In this

climate, introducing new terms to govern

the nascent natural gas sector will be

politically difficult, making passage of a

new bill unlikely this year‖.

According to Allensen, as a result of

the uncertainty caused by the lack of

clear terms, ―first production is unlikely

until 2022 at the earliest – a date at which

the global gas market will probably face

significant supply increases‖.

Consequently, she believes the bid round

scheduled to be concluded this month is

likely to be extended.

Certain success

Although progress is being made in

Mozambique and most of its plans are

likely to materialise, competition from

the US and Canada, technical hurdles and

bureaucratic uncertainties are also likely

to hamper the East African country‘s aim

of leading the region in the race to export

gas to Asia.

As for Kenya and Tanzania, the former

must still overcome a plethora of

regulatory headaches for LAPSSET to

move ahead, although progress appears

to be gathering momentum, while

Tanzania‘s latest regulatory setback and

the magnitude of its plans could mean

that FIDs for its ambitious projects will

be postponed until after the general

elections, which could create an

advantage for other competing countries.

Overall, the Mozambican project is the

most advanced and most likely to reach

its full potential and with Kenya and

Tanzania heavily dependent on long-

awaited decisions, the security and

potential of Mozambique‘s projects give

it another obvious advantage. The

presence of state-backed Asian

companies is also of benefit to

Mozambique, as it is expected to create

synergies, higher profits and lower costs.

Whichever country ‗wins‘ the race,

progress in the region is set to change the

global gas landscape and give the

continent a much stronger position in the

market, reversing many of the existing

dynamics.

COMMENTARY






Bahrain is moving forward with plans to

increase the availability of gas through

both imports and domestic development,

CEO of the government‘s National Oil &

Gas Authority (NOGA), Sheikh

Mohamad bin Khalifa al-Khalifa, told an

energy conference in Manama in mid-

April.

As a result, downstream expansion

projects at Bahrain Natural Gas Co.

(Banagas) and Gulf Petrochemicals

Industry Co. (GPIC) are returning to the

agenda.

In 2012, Manama said it would invest

US$20 billion over 20 years alongside

foreign firms in upstream and

downstream development.

A request for proposals will be issued

imminently for the construction and

operation of a long-awaited LNG

terminal, following the submission of

expressions of interest during the first

quarter.

Such plans have been on the table for

years, with a developer shortlist drawn

up in 2010, but regional and local

political ructions put the scheme on hold.

However, with domestic calm largely

restored by 2012, the search resumed for

an international firm to develop the

facility, to include construction of

floating storage facilities, a regasification

and send-out system, marine works and a

jetty, on a 20-year build-own-operate-

transfer (BOOT) basis, with capacity

starting at around 500 million cubic feet

(14 million cubic metres) per day,

increasable to 800 mmcf (22.7 mcm). A

deal was reported at around the same

time with Russia‘s Gazprom for LNG

supply but Sheikh Mohamad denied the

conclusion of any firm supply

agreements. Commissioning is now due

by the end of 2016.

However, the NOGA chief was clear

that Bahrain could not afford to depend

on LNG imports and that the project

would simply make these possible should

the need arise. ―Prices are not in the

range we are comfortable with at the

moment,‖ he said. ―We just want to build

the infrastructure and have it available.‖

Naturally more desirable would be

success in the ongoing and intensifying

drive to increase domestic gas

production, which currently stands at

around 2.3 billion cubic feet (65 mcm)

per day, chiefly through the Deep Gas

Initiative at the main producing Awali

(Bahrain) field, where the aim is to raise

output to around 2.7 bcf (76 mcm) per

day by 2024. Drilling at the 8,000-

10,000-foot (2,440-3,048-metre) deep

Khuff reservoir is due to be launched by

the end of the second quarter.

―Our geologists are very excited about

the field and, if we can get this gas at an

affordable price, it is something we

would be very interested in pursuing,‖

Sheikh Mohamad confirmed.

Lack of gas has long held back major

industrial diversification, with the

notable exception of the kingdom‘s

flagship Aluminium Bahrain venture.

Gas-based industrial development on the

scale pursued by better-endowed

neighbouring states remains unfeasible,

but on a smaller scale, Sheikh Mohamad

revealed plans for an expansion at

Banagas, which processes Awali gas into

butane, naphtha and propane.

―Tatweer Petroleum [the local/foreign

joint venture operator of the Awali field]

does have some extra gas and Banagas is

carrying out a feasibility study for a third

train,‖ he said, adding that a decision

would be taken in the coming months.

Finally, GPIC was reported to be close

to securing a long-awaited gas allocation

to allow a US$1.7 billion expansion of its

Sitra fertiliser plant to proceed, about

which Sheikh Mohamed noted that all

three partners – including Saudi Basic

Industries Corp. (SABIC) and Kuwait‘s

Petrochemical Industries Co. (KPIC) –

were enthusiastic.

The project would entail adding

production of 2,400 tonnes per day of

ammonia and 3,200 tpd of urea.

Egyptian Minister of Petroleum Sherif

Ismail said last week that over the next

two months Cairo would pay US$1

billion to the foreign companies

operating in Egypt.

Egypt owes the companies around

US$6.3 billion for oil and gas produced

and supplied to the state, which in turn

sells most of this on the domestic market

at highly subsidised prices. Delayed

payments prevent the companies from

making further investment in Egypt‘s

hydrocarbon section.

The government paid US$1.5 billion to

the companies in 2013 and has stated that

it intends to pay off the balance by 2017.

Energy demand, particularly for

natural gas, is growing in Egypt. Gas

shortages and power black outs are

expected during the summer as electricity

consumption increases with the heat.

Egypt is attempting to negotiate the

installation of a floating storage and

regasification unit (FSRU) to facilitate

the import of LNG. It has yet to find a

supplier for the infrastructure, although

talks have been held with Hoegh LNG,

and the gas. Egypt‘s own LNG export

plants at Damietta and Idku are facing

serious lack of gas resources. Damietta

has been forced to stop exports and BG-

operated Idku declared force majeure in

January. According to data recently

released by Egypt‘s Information and

Decision Support Center, natural gas

production was down 10% year-on-year

in January, causing a decline in export

revenues of more than 60%, Ahram

Online reported earlier this month.

POLICY

Manama to increase gas supplies

Egypt promises to pay energy firms






Egypt has been receiving billions of

dollars of financial assistance from Saudi

Arabia, Kuwait and the United Arab

Emirates.

Those governments have supported the

military backed government that replaced

Mohammed Morsi. Morsi, a

representative of Egypt‘s Muslim

Brotherhood, had been backed by Qatar,

which had contributed towards easing

Egypt‘s energy problem by covering

some of the state‘s contracted LNG

exports.

Price pump

Reuters reported last week that a

government decree has been issued that

will raise the price of natural gas for

businesses and homes connected with the

distribution network. It said residential

and commercial users of less than 25

cubic metres per month would pay the

equivalent of US$0.06 per cubic metre as

of May. This is double the current price.

It said the price rise does not apply to the

power generation sector.

Consumption between 25-50 cubic

metres per month will rise to US$0.14

per cubic metre, and consumption above

50 cubic metres per month will rise to

US$0.21 per cubic metre, Ahram

reported.

The price rise is expected to increase

state revenues by as much as US$143

million per year, the Egyptian media

reported. Energy subsidies are expected

to cost the government around US$14

billion during the 2013-14 fiscal year.

Meanwhile, it is estimated that an

investment of US$5 billion is required in

order to fix the country‘s dilapidated

power transmission system.

Orca Exploration has sounded the alarm

over the situation in Tanzania, where it

sells gas for local consumption, warning

that unless the local utility pays its bill,

the company will need to seek extra

funds in the 2014 fiscal year.

The crunch time will come if Tanzania

Electric Supply Company (TANESCO)

cannot pay off the debt it has racked up

to Orca and is unable to pay for further

deliveries, the company said on April 24.

The amount in which TANESCO is in

arrears has increased, from US$51.5

million at the end of 2013, to US$60.2

million now.

The total current debt is US$64.9

million, Orca said.

Orca‘s results suffered in 2013, with

the company posting a post-tax loss of

US$5.9 million. It ended the year with

US$32.6 million in cash, and US$1.7

million of debt, but its accounts included

a note on its status as a going concern.

The company, the largest gas producer

in Tanzania, reclassified US$47 million

of TANESCO debt as a long-term

receivable at the end of last year, cutting

its working capital to US$27.8 million,

down 41%, as a result of the slow rate of

payment. Furthermore, Orca said, neither

the utility nor the Tanzanian government

have a plan to address the arrears or

ongoing payments.

Orca is pursuing legal options against

TANESCO, including the suspension of

gas deliveries.

Putting further pressure on the

company, the Tanzania Revenue

Authority (TRA) issued a number of

assessments and interest penalties against

Orca, for a total of US$18.4 million. The

company believes these to be without

merit and has filed objections.

Orca did see off a challenge over the

use of cost pools at the Songo Songo

production-sharing agreement (PSA)

from the Tanzania Petroleum

Development Corp. (TPDC). Orca has

tried to secure commercial terms for

incremental sales from Songo Songo but

has not reached a deal with TPDC.

Unless progress is made, the company

said, it intends to pursue other markets

for gas from this development.

Tanzania is in the process of building a

pipeline from gas fields in the south to

Dar es Salaam and Orca noted this was

72% complete, with facilities 58%

complete.

It is expected on stream in mid-2015,

the company continued, although in

November 2013, Orca had predicted it

would be ready by January 2015. The

pipe will carry gas from Mnazi Bay and

will tie into a new facility at Songo

Songo.

POLICY

COMPANIES

Orca threatens gas shut-off

in Tanzania over unpaid bill






UAE-based Altaaqa Global CAT Rental

Power has expanded its operations in

East Africa, using Kenya as a conduit.

The company, which provides

temporary power solutions, will now

cater for several countries, including

Tanzania, Rwanda, Burundi, Uganda,

Kenya, Somalia, Ethiopia, Sudan, South

Sudan, Djibouti and Eritrea.

Peter den Boogert, General Manager of

Altaaqa Global, said: ―The business

activities in the East Africa region are

flourishing and the economy has been

thriving throughout recent years,

resulting in an increased demand for

power. We realise that our industry is

driven by emergency needs and hard

deadlines, but uses equipment that

requires substantial lead times to

acquire.‖

Altaaqa Global has around 1,400 MW

of rental power readily available and can

provide a diverse choice for the

petrochemical industry when rental

power solutions are required. ―We

provide temporary power for

manufacturers of olefins, ethylene,

propylene, butadiene, plastic products

and synthetic rubber production. We also

provide rental power stations for

aromatics petrochemical companies and

temporary power for manufacturers of

synthesis gas such as pesticides and

fertilizer companies,‖ said the firm.

It also has the capability to provide

power plants running on various fuel,

such as piped natural gas (PNG), LPG,

compressed natural gas (CNG), LNG,

flare gas, diesel, dual-fuel (70% gas and

30% diesel), and soon, heavy fuel oil

(HFO).

Majid Zahid, the Strategic Accounts

Director of Altaaqa Global said East

Africa had ―a promising economic

outlook within the energy, petrochemical

and engineering sectors.‖ The company

handles large-scale temporary power

projects of almost unlimited size, from

20 MW rental power plants to 250 MW

distributed power generation and more.

As the region‘s economy strengthens a

number of new plans are underway to

boost its refining and petrochemical

capacity.

Kenya plans to almost double the

35,000 barrels per day capacity of its

Mombasa refinery, currently the only

major crude oil refinery in East Africa,

meanwhile Uganda intends to add

another refinery to the region that will

handle 60,000 bpd. The latter is to be

constructed in collaboration with Kenya,

Rwanda and South Sudan.

Almost eight months to the day since the

government of Dubai announced that it

had signed a memorandum of

understanding (MoU) with China

Sonangol International (CSI) regarding

the construction of a refinery in the

emirate, there appears to be little reason

for confidence.

In November 2013, NewsBase blog

Drake published an article questioning

Dubai‘s decision to choose CSI, a firm

with no apparent previous refining

experience, for the project.

Announced on September 26, the MoU

– signed by Sheikh Ahmed bin Saeed al-

Maktoum, chairman of Dubai Supreme

Council of Energy, and China

Sonangol‘s chairman, Sam Pa – outlined

the building of Dubai‘s second refinery.

China Sonangol is backed by Hong

Kong-based New Bright International

Development and Angola‘s state-owned

oil firm Sonangol.

At the time, Drake speculated that the

news was little more than spin, and the

Wall Street Journal quoted a Gulf source

as saying it was part of a ―positive news

drive in the emirate as part of its bid to

host the 2020 World Expo.‖ Indeed,

there has been little since to suggest that

the plans will move forward any time

soon. If anything, the project‘s future has

been further complicated by recent news.

On April 17, the US Treasury‘s Office of

Foreign Assets Control (OFAC) added

Pa and Sino-Zimbabwean firm Sino Zim

Development to its sanctions register,

which lists designated nationals and

blocked persons, ―all of whom US

citizens and business must avoid when

conducting business transactions,‖

according to the organisation.

It cited a 2012 Global Witness report,

which ―encouraged the international

community to investigate Pa and Sino

Zim for undermining Zimbabwe‘s

democracy by subverting civilian control

over key organs of the state.

COMPANIES

UAE power firm expands

East African presence

REFINING

China Sonangol’s Dubai plans

clouded by more uncertainty

http://drake.newsbase.com/2013/11/deal-or-no-deal-for-china-sonangol-in-dubai/






Global Witness also alleged that Pa

provided funding and materials to

Zimbabwe‘s Central Intelligence

Organization (CIO) in return for access

to diamond, cotton and property sectors.‖

Pa is thought to have studied alongside

Angolan President Jose Eduardo dos

Santos in Baku, Azerbaijan during the

Cold War. As noted by Drake, the

UAE‘s need for another refinery at a time

when there are already US$10 billion

worth of major projects in progress

aimed at boosting the country‘s refining

capacity to around 800,000 barrels per

day appears negligible.

Irrespective of whether or not CSI plan

comes to fruition, Dubai won in its bid to

host World Expo 2020, and is predicted

to spend around US$18 billion on

hosting the event.

China Sonangol, with its experience in

construction, may be better placed to

carry out work for the event than the

downstream sector.

Nigerian firm Aiteo has announced plans

to diversify into the downstream sector

with the planned development of a

100,000 barrel per day greenfield

refinery in Warri, Delta State.

According to oil industry sources cited

by Nigerian daily Vanguard, the

company‘s refinery project is at the

conceptualisation stage, and is expected

to come on stream by 2017.

According to Aiteo, the refinery has

become crucial as 70% of Nigeria‘s

refined oil has to be imported despite the

West African country being a major oil

producer.

The company reported: ―Given the

long-term unsustainability of securing all

our petroleum products from imports, we

have set out on our most ambitious

project yet, which is the development of

a 100,000 bpd greenfield refinery.‖

It added: ―Our aspiration is to fast-

track the development and construction

of the refinery and that actual production

from the refinery will come on stream by

2017.‖

The company also acts in bulk

petroleum products‘ storage, marketing,

supply and trading; retail service station

networks; exploration and production;

oilfield services; power generation and

electricity distribution and gas

operations. Aiteo owns bulk petroleum

storage facilities in Port Harcourt and

Apapa, with a capacity of 110 million

litres and 210 million litres of petroleum

products respectively.

The indigenous company was part of a

list disclosed by Reuters, which showed

that Nigeria has awarded most of its

long-term oil contracts to local firms.

Global traders wanting to succeed in the

country, Reuters said, will thus need to

partner with these local companies to

access Nigerian crude.

Nigeria‘s policy is aimed at increasing

the role played by local firms, with the

official intention being to end decades of

control over the sector by foreign majors.

However, several industry sources said

the allocations favoured powerful

businessmen close to President Goodluck

Jonathan ahead of the elections in

February 2015.

The Kenyan government has sent to the

Attorney General‘s office for approval an

outline of the terms and conditions for

the exit of Essar Energy Overseas Ltd

from its 50% shareholding alongside the

state in Kenya Petroleum Refineries Ltd

(KPRL), owner of the country‘s – and

East Africa‘s – only refinery, at

Mombasa.

Approval of the deal, reported to entail

payment of US$3.3 million by Nairobi to

acquire the stake, would bring to a close

a long and acrimonious saga, centred

around Essar‘s failure to undertake the

expansion and upgrade envisaged when a

new strategic investor was brought on

board in 2007 and including allegations

of corruption by the previous government

in negotiating the deal.

Essar Energy overseas is a Mauritian-

registered subsidiary of India‘s Essar

Group Under. Nairobi will pay US$3.3

million for Essar‘s stake – deducting

roughly US$2 million for breach of

contract through cancellation of the

planned upgrade. The overarching

project would have entailed investment

of some US$1.2 billion to raise output

from 80,000 barrels per day to 200,000

bpd while improving the quality of the

refined fuel, most importantly lowering

the sulphur content. In October 2013,

Essar formally announced the decision to

cancel the plans, citing studies from

international consultants which found

that the project would not be

economically viable, while the following

month KPRL initiated a ―critical review

of the project‘s economics‖.

REFINING

Nigeria’s Aiteo announces

refinery plans

Mombasa refinery sale

terms finalised






The refinery has been closed since

September when the government ceased

procuring crude, as the two parties failed

to convert an initial ―support agreement‖

to protect the prices received by KPRL

until the upgrade‘s implementation, into

a long-term offtake agreement.

Aside from the major upgrade project,

Essar is also accused of failing to install

modernised technology to enable the

production of cleaner fuels in the near

term – with the result that output was in

breach of harmonised standards agreed in

June by the East African Community‘s

Council of Ministers. Both developments

have forced marketers to depend on

costly imports, while the Mombasa

facility has been used merely for storage

– and the government has suggested this

may be its long-term destiny, either for

domestic production when it comes on

stream or for strategic stocks. A major

new refinery supplanting the aged and

dilapidated Mombasa plant is a key

component of the multi-billion-dollar

Lamu Port Southern Sudan-Ethiopia

Transport (LAPSSET) Corridor, which

would see the coastal site become a

hydrocarbons processing and export hub

for the whole region. Nairobi also

confirmed in February plans to acquire a

small stake in Uganda‘s planned

greenfield refinery at Hoima, close to the

Lake Albert area where most of the

country‘s oil lies. Essar entered an

agreement to acquire the 50% share in

KPRL from the UK‘s BP, the US‘

Chevron and the Anglo-Dutch Shell

Group in 2007, but the deal for the firm

to pay US$5 million plus a US$2 million

consideration for Nairobi‘s waiver of

pre-emptive rights was not finalised until

2009 and the first payment was only

disbursed in 2011. Questions have

subsequently been raised over why the

size of the deal – first mooted at being

worth around US$11 million – decreased

so sharply during discussions and,

relatedly, over the involvement of senior

figures in the government of former

president Mwai Kibaki as shareholders in

Essar Energy Overseas, which was

incorporated in Mauritius at around the

time of the asset‘s sale.

An engineering, procurement and

construction (EPC) tender is expected by

the end of the year for the planned new

oil pipeline from Saudi Arabia to

Bahrain, CEO of Bahrain‘s National Oil

& Gas Authority (NOGA), Sheikh

Mohamad bin Khalifa al-Khalifa, told a

conference in Manama in mid-April.

The scheme to replace the existing

pipeline, which runs close to residential

areas and is thus unsuitable for

expansion, has been on the table for

many years, held up by debates over

routes and pricing, but appeared to gain a

new lease of life in September when

Riyadh and Manama announced

conclusion of an agreement to go ahead

with a new 115-km link with capacity to

carry 350,000 barrels per day of crude

from Saudi Aramco‘s plant at Abqaiq in

the Eastern Province to Sitra, home to the

270,000 bpd refinery owned by NOGA

subsidiary Bahrain Petroleum Co.

(BAPCO). The existing pipeline‘s

capacity is 230,000 bpd.

Australia‘s Worley Parsons has

completed the front-end engineering and

design (FEED) contract on the estimated

US$350 million pipeline, which will run

overland for 74 km of the overall route.

Progress is essential to BAPCO‘s plans

for an upgrade and expansion of the

refinery at a cost of up to US$9 billion,

the most important element of which is a

new residue conversion unit to process

heavier crude types into lighter-grade

products.

Projections for the scale of the

expansion range from a minimum of

100,000 bpd to 400,000 bpd, with the

other proposed elements being a new

crude unit and associated facilities and a

hydrocracker and associated units, and

the main factor in question besides

feedstock being cost.

BNP Paribas and HSBC have been

appointed financial advisers while bids

for the project management consultancy

and FEED contracts are under

evaluation, Engineers India and the US‘

Bechtel being the respective low bidders

for the two deals.

A tender for technology provision is

expected in July.

While the kingdom will remain heavily

oil-dependent on Riyadh, determined

efforts are being made to raise domestic

production, which recovered to around

50,000 bpd in 2013 and which the

government aims to double by the end of

the decade.

Enhanced oil recovery (EOR) projects

are under way at the main Awali

(Bahrain) field, which covers roughly

80% of onshore territory, while offshore

blocks have been licensed to

international oil companies (IOCs) – the

US‘ Occidental Petroleum (Oxy) holding

the Block 1, 3 and 4 concessions and

Thailand‘s PTTEP responsible for Block

2. Oxy is also a shareholder alongside

NOGA and Abu Dhabi government-

owned Mubadala Development in

Tatweer Petroleum, which operates the

Awali field.

REFINING

PIPELINES

EPC tendering nears on

Bahrain-Saudi pipeline






Crude oil production in Iraq hit a record

high of 3.6 million barrels per day in

February but declined to 3.26 million bpd

in March owing to export problems.

Despite the growing head of steam

behind Iraqi oil output, the country is

hamstrung by a lack of export

infrastructure, particularly storage. Any

complication that prevents loading – such

as bad weather –frequently backs up,

forcing operators to curtail production at

the field.

Iraq exported 2.8 million bpd in

February, but this declined to 2.39

million in March, following an attack on

the northern export pipeline between

Kirkuk and Turkey‘s Mediterranean port

of Ceyhan.

Shipments through the pipeline had

been averaging around 290,000 bpd in

February, but it has yet to be repaired.

The vast majority of Iraqi exports are

made through its southern Gulf port of

Basra, where shipments averaged 2.5

million bpd in February and 2.37 million

bpd in March.

Pipeline and storage infrastructure in

Iraq‘s south is inadequate to meet the

demands of the new production that is

coming on stream there, mainly from the

Majnoon, Gharraf and West Qurna-2

fields.

―The long-awaited full start-up of dual

SPMs is behind the higher exports but

work on storage tanks, pumping stations

and infrastructure is still needed to

ensure the crude‘s quality,‖ the

International Energy Agency (IEA) said

in its April Oil Market Report,

commenting on complaints of high water

content in Iraqi crude.

―The next phase of upgrading work at

the terminals is not expected to be

completed before year-end, which could

constrain growth,‖ the agency added.

The halt of shipments through the

ageing Kirkuk-Ceyhan pipeline – which

has suffered numerous acts of sabotage

over the last 20 years and is in serious

need of refurbishment – has forced a

reduction in crude production in northern

Iraq, where crude storage facilities are

now reported to be full.

During a recent press conference, Iraqi

Deputy Prime Minister Hussain al-

Shahristani said exports could have

reached 3.2 million bpd, had the northern

pipeline been open.

Iraq is looking to export an average of

3.4 million bpd during 2014, including

400,000 bpd from the Kurdistan

Regional Government (KRG) controlled

area. Meanwhile, Iraq‘s oil sector

continues to struggle with widespread

insurgency and political unrest, attacks

from Islamist groups caught up in Syria‘s

civil war, as well as the typical problems

of bureaucracy and corruption.

The parliamentary election scheduled

to take place on April 30 is expected to

be indecisive and it may take weeks for a

new government to be formed. Such

complications could create even further

obstructions to the sorely-needed

expansion of Iraq‘s export capacity.

Africa Power Generation (Afgen) has

finalised a joint venture agreement with

government-owned Ghana Gas for the

import of LNG, initially in regasified

form from Benin, via the West Africa

Gas Pipeline (WAGP), with a view to

accelerating an independent LNG import

project.

Afgen, a subsidiary of South Africa-

based Africa Gas Development Corp.

(Afgas), is in the process of being

acquired by Gasol, a London-listed firm

focused on supplying gas in West Africa

and in which Afgas is the largest

shareholder. Both companies are chaired

by Nigeria‘s former OPEC secretary

general, Rilwanu Lukman.

Gasol announced the Ghana deal on

April 22. The company said gas volumes

sold into Ghana, via the WAGP, would

begin at 2.83 million cubic metres per

day for five years, with gas sourced from

Benin‘s LNG import project. In 2012,

Gasol signed a joint venture, called

Cogaz, with Benin‘s state-owned Societe

Bengaz for the distribution and sales of

natural gas in the country, and elsewhere

in West Africa. This was followed by a

memorandum of understanding (MoU) to

supply gas to Communaute Electrique du

Benin, the power authority for both

Benin and Togo.

Gasol is working on a gas import

project, based on a floating storage and

regasification unit (FSRU), which would

be situated at Benin‘s Cotonou port. This

would be supplied with LNG under an

alliance agreement signed the same year

with the State Oil Company of the

Azerbaijan Republic (SOCAR).

Gasol‘s wider focus is offshore

Nigeria, where it has a co-operation

agreement with London-listed Afren for

first priority in gas supply from the

company‘s fields there. The 678-km

WAGP runs from Nigeria to Takoradi, in

Ghana, with landing points at Cotonou,

Lome and Tema.

TERMINALS & SHIPPING

Iraqi crude output rises but

faces storage constraints

Ghana lines up LNG

supplies via Benin






The Afgen venture envisages an

independent LNG import project for

Ghana, which suffers from a severe local

gas deficit. ―The arrangements signal

progress on two fronts, both in delivering

a dedicated solution for Ghana and prior

to the implementation of that solution,

the sale and marketing of regasified LNG

in Ghana from our planned Benin LNG

Import project,‖ said Gasol‘s chief

operating officer, Alan Buxton.

The company added that the fast-

tracking of the independent option would

both diversify supply risk – inherent in a

regional scheme such as the WAGP and

already proven through a shut-down in

August 2012, as well as by volumes

consistently running well below capacity

– and complement Ghana‘s own gas

reserves. There is a much-delayed project

under way for associated gas from the

Jubilee field to be piped to a gas

processing plant at Atuabo, in Ghana‘s

west, and then onwards to fuel the 550-

MW Takoradi power plant.

Commissioning of the Atuabo project is

due in the third quarter.

VTTI‘s new 300 million euro (US$416

million) storage hub at Vassilikos in

Cyprus remains on schedule, with the

firm targeting a start-up date in mid-July

2014, George Papanastasiou, General

Manager at VTT Vassilikos (VTTV) told

NewsBase last week.

―We are in the pre-commissioning and

commission stage,‖ Papanastasiou said,

adding that the project is on track. ―We

had a slight delay with the jetty, but that

problem has been overcome. At least

450,000 cubic metres of storage will be

available in mid-July and the remaining

‗cubes‘ will be ready in September,‖ he

said.

The first phase of the project will

locate 28 tanks with a capacity of

543,000 cubic metres at the island‘s

Vassilikos Energy Center. Phase 2 is in

the planning stage and would add an

additional 13 tanks with capacity of

305,000 cubic metres.

Phase 1 will handle white products,

while Phase 2 will store and tranship fuel

oil. Work on the storage facility is being

carried out by Cypriot construction firm

Joannou and Paraskevaides (J&P).

―We have received approval for the

environmental impact assessment for

Phase 2, but internally we are making a

further evaluation because this involves

land reclamation,‖ Papanastasiou said.

―This is an expensive process and we

need to compare it with unit costs.‖

VTTI, a joint venture between Vitol

Holding and Malaysian shipping

company MISC Berhad, announced in

2010 that it would build a strategic oil

product storage and transhipment centre

in the Eastern Mediterranean. The VTTV

facility in Cyprus is the first of its kind in

the region.

Work on a 1,200-metre marine jetty

comprising four berths began last year

and is nearing completion.

Vassilikos is the site of the island‘s

main power generation facility as well as

the proposed location for a LNG export

facility that the Cyprus government

hopes to build for the purpose of

exporting the island‘s natural gas

resources.

The following news items are sourced

from local and international news

sources. NewsBase is not responsible for

the contents of the stories and gives no

warranty for their factual accuracy.

REFINING

Dangote’s refinery

raises LFTZ land

The prices of land in Ibeju-Lekki area of

Lagos State have risen considerably since

the Dangote Group indicated interest in

building a refinery in the area.

Although preliminary work, including

clearing of the site, has barely begun, the

prices of land in the areas surrounding

the Lekki Free Trade Zone have gone up

by over 900 per cent. The Chairman,

Dangote Group, Alhaji Aliko Dangote,

had in 2013 disclosed plans to build a

400,000-barrel-per-day crude oil

refinery, and subsequently awarded the

contract to an Indian company, Engineers

India Limited. Notwithstanding the

presence of other companies in the area,

such as Raffle Oil LFTZ, Obat Oil,

Progress Marine Limited, a shipping

company that has also bought hundreds

of hectares of land in the area for its tank

farm development, Eko Resort and a few

others, the proposed refinery is expected

to signal the commencement of the

multi-billion naira investment in the

zone. At the groundbreaking of the

refinery, Governor Babatunde Fashola

had said the LFTZ was beginning to take

shape with the coming of investors.

TERMINALS & SHIPPING

VTT Vassilikos storage hub on

schedule for mid-July

NEWS IN BRIEF






―Tank farms and major refineries are

springing up to service the demands of

the country and make room for export.

The refineries create a major selling

point and release of the opportunities that

lie ahead in this zone, create

opportunities for the local people and the

potential for Lagos and the Nigerian

economy,‖ the governor had said.

According to findings by our

correspondent, the current opportunity

for the local people is coming in the form

of the soaring land prices.

Some of the residents said over 3,000

plots of land, stretching from the access

road towards the lagoon, were acquired

for the Dangote refinery.

An indigene of the area and a resident of

Okuraye, Mr. Daniel Adeyanju, who

spoke with our correspondent on the

development, said some plots of land that

were selling between N200,000 and

N300,000 before the advent of the

refinery, were now going for as much as

N3m. He said, ―Before the plan to build

the refinery, only a few people were

coming here to buy land; it was mostly

investors who wanted to build estates.

Then, a plot of land was sold between

N200,000 and N300,000; there was even

a time people sold land for between

N100,000 and N150,000 in this area.

―But now, you can‘t get a plot of land for

less than N1.5m in the remote areas, and

between N2.5m and N3m in areas facing

the Free Trade Zone. Imobido, for

instance, is more expensive and a plot

there sells for N3m and above, but some

areas around Eko Resort still sell for

N1.5m.‖ The residents said the

developments in the LFTZ had created a

boom in the property market for the

communities, including Akodo, Magbon

Alade, Orimedun, Orofun, Tiye,

Imobido, Elege, Idaso, Magbon Asegun,

Itoki, Idotun and Okuraye; Okuraye is

the host community of the Dangote

Refinery and Petrochemical Company.

―We are happy about the development

and excited that things are turning out

this way; Ibeju-Lekki is turning out to be

a global market,‖ an indigene of

Okuraye, Mr. Segun Adebayo, said.

He added that the area, which used to be

a coastal settlement on the outskirts of

the state, was gradually transforming into

a sprawling and modern settlement, one

of the fastest growing areas in the state.

Another indigene, Mr. Kehinde

Oyebanjo, said most of the indigenes that

left the area for ‗greener pastures‘ in

other parts of the state were now

returning home.

―All the indigenes that left here about 30

years ago because there was no

development in the area are now coming

back because they have heard of the new

developments,‖ he said.

According to findings, apart from the

rising prices of plots of land, the value of

residential buildings in more developed

parts of Ibeju-Lekki has also gone up.

The rental value of a three-bedroom flat

in the area, for instance, has increased

from N1.5m to N3m per annum, while a

duplex has risen from N15m to between

N30m and N45m per annum.

A block of flats is said to be selling for

between N40m and N65m, while rent on

a flat in the block is between N2.5m and

N3.5m per annum.

Real estate experts say the LFTZ has the

potential to be one of Africa‘s largest

commercial cities in the future.

According to an estate surveyor and

valuer and Principal Partner, Kola

Akomolede and Co, Chief Kola

Akomolede, the rise in property value in

the area is expected.

―In an area where an airport, a major

seaport and other developments are

expected, we expect that the land value

will rise and speculators will rush into

the area to buy land that they will later

sell for bigger profits,‖ he said.

The valuer noted that the development

would have a positive effect on the area

as indigenes would be expected to make

more money from the sale of their land.

Akomolede, however, warned that the

development could also pose danger to

the indigenes. He said, ―The danger is

that they may run out of land because it

is a coastal area. And in the future,

should the value of land grow to N20m

and above, they will have nothing to sell.

―Development is good for everyone, but

they should tread softly and reserve some

land for the future when the value will be

higher than what it is now.‖

For buyers, caution is the word, because

most of the LFTZ area has been acquired

by state government and compensation

paid to the original owners. In order not

to stifle the development of the

communities, the government has

excised some portions to the indigenes.

Therefore, buyers must exercise caution

and ensure that thorough searches are

conducted so as to ensure that

speculators do not sell acquired plots of

land to them, as doing so may result in

the loss of their money, experts warn.

PUNCH, April 28, 2014

Kuwait launches

plans to develop oil

refineries

The project is of a strategic and

developmental nature that stimulates the

economic wheel in Kuwait and is

expected to create numerous job

opportunities, especially for the local

workforce, as it will employ more than

35,000 people in the sectors of refinery

construction and development.

This project will give the oil sector the

opportunity to work with foreign

companies and experts from many

countries, specializing in almost all areas

related to the method of development of

major projects and the improvement and

development of performance and

production. Moreover, it will introduce

this sector into the various global

markets. This project is costing about 3.4

billion Kuwaiti dinars ($10 billion) and is

expected to be completed in 2018. The

upgrading of the refineries will increase

the benefits of Kuwaiti medium crude oil

so that it can compete with light crude oil

such as Brent, by producing oil

derivatives that have the light oil

characteristics.

The two Kuwaiti refineries will become

similar to the US refineries relying on oil

from Saudi Arabia, Kuwait, Iraq, Iran

and Venezuela, which is a medium to

heavy oil, but less expensive than light

oil. The total refining capacity of Mina

Abdulla and Mina Al Ahmadi refineries

will go up to 800,000 barrels per day

(bpd) with an increase of approximately

60,000 barrels per day.

NEWS IN BRIEF






Kuwait‘s total refinery capacity will

increase to 1.4 million barrels per day

after the closure of the Shuaiba refinery

and the completion of the construction of

the fourth refinery, known as al-Zour.

On the other hand, Kuwait must keep

investing in the refining sector on the

local or international market since it can

compete with the largest producers of

crude oil in the Gulf region, such as

Saudi Arabia, Iraq and Iran, in terms of

the production rate relative to population

density. However, Kuwait cannot barter,

i.e., exchange oil in return for other

goods such as foodstuffs, construction

materials or equipment and vehicles, for

example. Therefore, the Kuwaiti oil

sector must follow the general inclination

mainly based on building refineries

abroad, such as the Vietnam refinery

which is under construction, especially in

major consuming countries such as

Indonesia, India and Pakistan.

Moreover, KNPC is expected to

announce the qualification of

international companies to build the al-

Zour refinery, which is the fourth

refinery of an estimated capacity of

600,000 barrels per day. This would

complete the [project of] construction of

refineries in Kuwait to meet local

requirements and increase the production

of electricity and water, instead of

importing natural gas during the summer

period that extends from April to

October.

The relevant cost [of the project] would

be about 4 billion Kuwaiti dinars ($14.2

billion), which means that Kuwait would

be simultaneously developing two mega

projects, which strongly stimulate the

economy and commercial sectors.

On a related note, workers, whose

number exceeds 75,000, are working in

the same area, which will be witness to

numerous activities carried out at the

same time.

Are the winds of economic activity

blowing again after a recession that

lasted for more than 20 years? Is this the

beginning of future projects that would

stimulate the static commercial activity?

It surely seems so.

AL-MONITOR, April 29, 2014

Abu Dhabi plant to

receive ‘smart’

valves for new coker

The valves will be installed in a carbon

black and delayed coker plant now under

construction. Once completed in

December 2015, the plant will process

30,000 bpd of crude oil and have an

annual production capacity of 40,000

tons of carbon black. The refining

complex is located in Ruwais, 240 km

west of Abu Dhabi City in the United

Arab Emirates.

The order includes hundreds of Metso‘s

Neles Globe control and on-off valves.

Most of the control valves will be

equipped with Neles ND9000 intelligent

valve controllers (FOUNDATION

Fieldbus) for performance follow up and

predictive maintenance, resulting

improved process efficiency and uptime.

South Korean Samsung Engineering,

which is providing project management

services and commissioning processes on

a turnkey basis, selected Metso‘s valve

technology for the demanding project.

―It is the largest project ever executed by

our company, and the total valve

quantities are huge,‖ says Mr. YunKi

Sung, Vice President, Procurement

Dept., Samsung Engineering. ―We chose

Metso as our valve partner because we

can rely on fast expediting; their valve

factory is conveniently located close us

to us in South Korea.‖

―Also, we have had good support from

Metso in our past projects. To ensure

smooth startups, Metso offers its wide

product knowledge and application

expertise, global manufacturing facilities

and sourcing, full expediting and

inspection support, a global service

network and comprehensive startup

support.‖

Metso has valve technology centers and

production facilities in Finland, the

United States, Germany, China, South

Korea, India and Brazil. Metso‘s

deliveries will take place in August 2014.

HYDROCARBON PROCESSING,

April 28, 2014

FUELS

Nigeria orders 1.85m

tonnes of gasoline

imports

Nigeria has granted licences to 40

companies to import around 1.85 million

tonnes of gasoline by the end of June,

Nigerian National Petroleum Corporation

(NNPC) and oil industry sources said, as

the country takes measures to avoid fuel

shortages.

Nigeria is Africa‘s top oil producer but

relies on fuel imports because its

refineries work at a fraction of their

capacity due to poor maintenance and old

age.

Africa‘s most populous nation suffered

fuel queues in February and March,

prompting state oil firm NNPC to release

stocks.

―The (oil) Minister has approved the

allocation of a total volume of 1,854,314

metric tonnes of premium motor spirit

known as petrol as supplementary

volumes for first quarters 2014 and

second quarter 2014 June only delivery,‖

NNPC said in a statement issued last

week and confirmed by importers.

Import allocations, typically done on a

quarterly basis, have been delayed due to

disputes between the government and

traders over a backlog of subsidy

payments.

Nigeria belatedly issued its first quarter

gasoline allocation at the end of

February. In an attempt to get the

calendar back on track, it has issued its

second quarter allocation in two parts.

Some 750,000 tonnes have been

allocated as ―supplementary volumes‖

for the first quarter, whilst another 1.1

million tonnes have been designated for

June-only delivery, the NNPC statement

said.

―The idea of June only is to revert back

to the normal quarterly sequence, ie July-

September and October-December,‖ said

Ohi Alegbe, a spokesman for the NNPC.

Alegbe said the first quarter supplement

was designed to cover ―any under-

delivery by marketers due to unforeseen

financial challenges‖.

NEWS IN BRIEF






Industry sources said some of the

winners for the second quarter included

MRS Oil Nigeria, Conoil, Total, Oando,

Forte Oil, Mobil Oil, Masters Energy,

Techno Oil, Folawiyo Oil & Gas and

NIPCO.

Oando, Total‘s local unit, and Folawiyo,

in which global commodity house

Glencore is a minority stakeholder, also

won allocations in the first quarter.

The Petroleum Products Pricing

Regulatory Authority (PPPRA),

Nigeria‘s downstream regulator, has

inserted a provision in the allocation

document which allows volumes to be

deducted from a seller‘s subsequent

allocation in the event of any default or

slippage into July.

Traders welcomed the attempt to get the

issuance cycle back on track, but noted

that the total volumes allocated for the

second quarter were significantly down

on the 3.1 million tonnes that were

allocated for the first quarter.

―It‘s good to see us revert back to the old

sequence of April to June, July to

September and October to December and

not the February to May, June to August

we shifted to two to three years ago,‖ one

trader said. ―That helps with simplifying

the planning of imports.‖

He suggested that the lower volumes

could reflect the fact that the NNPC still

has a lot of fuel in storage but supply

chain issues are likely to be restricting

adequate supplies into the market.

―We also note the increase in the number

of importers from 27 in Q1 to 40 in Q2,‖

he added. ―This could again be due to the

view that marketers are likely to have

adequate capacity to deliver smaller

volumes as against sharing large chunks

to a few players.‖

REUTERS, April 28, 2014

Gasol expects Ghana

gas purchase deal

within a month

Energy company Gasol expects to sign a

gas purchase agreement with Ghana

National Gas Co within a month,

bringing Gasol‘s Benin liquefied natural

gas (LNG) project, which will provide

the fuel, a step closer.

―The talks with Ghana Gas are going

well, so we are confident that we will

make an announcement on an agreement

within the next month,‖ Gasol Chief

Operating Officer Alan Buxton told

Reuters.

The company, listed on London‘s

Alternative Investment Market, plans to

build a floating liquefied natural gas

(FLNG) terminal in the Port of Cotonou

in Benin, but the project‘s financing

depends on a gas purchase agreement

with Ghana Gas.

Buxton said agreements with Benin and

Togo to buy 60 million cubic feet of gas

per day (mmcf/d) were already in place.

Gasol also has an option to acquire

African Power Generation (AfGen), a

Ghana Gas joint venture partner for a

project potentially to build an FLNG

terminal in Ghana. AfGen will be

responsible for selling at least 100

mmcf/d of Gasol‘s gas in Ghana for five

years.

Buxton said Gasol‘s option to acquire

AfGen will depend on the agreement

with Ghana Gas and the approval of a

concession in the Port of Benin that will

house its FLNG facilities.

―If we can get the pieces in place then the

board can start to look at the value of

AfGen,‖ Buxton said.

Gasol‘s option expires on Aug. 24.

Ghana is counting on promising oil and

gas discoveries off its coast to help boost

its economy and replace some of its

reliance on expensive liquid fuels for

energy generation.

Its flagship Jubilee field, estimated to

contain 1.4 trillion cubic feet in gas

reserves, is expected to start processing

gas in September following long delays

due to financial and technical issues.


PIPELINES

One dead after blast

on Ghana refinery

pipeline

One person was killed in an explosion on

a pipeline linking Ghana‘s 45,000 barrel-

per-day Tema Oil Refinery in an

industrial hub near the capital Accra to a

nearby port, a spokeswoman for the

refinery said on Tuesday.

The 5 km (3 mile) stretch of pipeline was

transporting naphtha, primarily used as a

feedstock for producing gasoline, when it

began to leak around midday. Passersby

had begun collecting the highly

flammable liquid, when a sudden fire

broke out at 2 pm (1400 GMT),

spokeswoman Aba Lokko told

journalists.

The fire sent a column of dense black

smoke billowing hundreds of metres into

the sky above Tema, around 20 km (12

miles) east of Accra.

Witnesses told Reuters they had seen the

charred body of the victim of the

accident. Lokko said the person was not

an employee of the refinery.

The fire was brought under control in

around three hours and output from the

refinery would not be disrupted.

―Products supplies to the refinery will

not be affected in any way, shape or

form,‖ Lokko said.

The fire also damaged part of Cocoa

Processing Company‘s nearby factory

forcing it to shut down. The facility has

capacity to process 64,500 tonnes of

cocoa beans annually.

―Our engineers are on the ground doing

the initial assessment, but what we can

say immediately is that the fire has

damaged our packaging materials,‖ CPC

spokesman Ekow Rhule, told Reuters.

―The main power cable feeding the

factory is also affected so we are not

running the plant this evening,‖ he

added.

The refinery has been hobbled by

repeated shutdowns over the last few

years, but Ghanaian President John

Mahama said in February that Tema was

close to signing a joint venture

agreement with PetroSaudi International.

The refinery‘s managing director was in

London at the time of the accident as part

of a delegation meeting with PetroSaudi

to conclude the deal, Lokko said.


NEWS IN BRIEF






Plans to diversify

Mideast oil pipeline

map

Jordan used to rely on an Egyptian gas

pipeline for the production of 80% of its

electric power. However, the frequent

interruptions caused by successive

bombings of this pipeline in Egypt, and

the reliance of the state-owned national

electric power company on imported

crude oil, have led to a debt exceeding $7

billion in the last three years, including

the cost of the subsidy policy and the

declining gas quantities coming from

Egypt. Every time the supply is halted as

a result of the frequent interruptions

caused by the bombing, it costs the

Jordanian treasury $1 million per day.

Jordan and Iraq signed an agreement in

April 2013 to build a pipeline to carry 1

million barrels of oil per day from the

Iraqi city of Basra to the Jordanian city

of Aqaba on the Red Sea. The 1,700-

kilometer [1,056-mile], $18-billion

pipeline will be completed in 2017. Iraq

will handle all the costs and the entire

project will be the property of the Iraqi

government. The two sides have held

meetings and both have carried out

discussions with qualified companies.

Jordanian Minister of Energy and

Mineral Resources Mohammad Hamed

expected the tender for the execution of

the project to be launched in the second

quarter of 2014 and prior to this coming

June. It is one of the mega projects that

will promote economic ties between the

two countries. For Iraq, the project will

help increase oil exports and diversify

outlets, with a new terminal on the Red

Sea. This comes as part of Iraq‘s massive

plan to produce 9 million barrels of oil

per day by 2017. For its part, Jordan will

meet its oil needs with an average

150,000 barrels per day. It will also be

able to use the Arab gas pipeline to carry

imported liquefied natural gas (LNG) by

sea, to fully meet its power plants‘ needs.

In addition, a passage tax might generate

an income ranging between $5 million

and $10 million per day. Implementation

stages will provide Jordanians with

nearly 3,000 job opportunities.

Egypt signed two agreements with both

countries on March 6, 2014. The first

stipulates that natural gas is transferred

via the Arab gas pipeline, while the

second is designed to connect the

pipeline to import LNG to the gas

pipeline that is between the Ministries of

Energy and Mineral Resources and the

national electric power company on the

one side, and the Jordanian Fajr

Company on the other.

Thus, the oil pipeline network gradually

finds its place back in the region, and the

importance of the Iraqi pipeline is

highlighted through the development of

strategic ties and the intersection of

common interests among beneficiary

countries.

However, the Israeli role in this field

cannot be ignored, especially in light of

the expected geopolitical developments

and its ambitions to share Arab wealth.

History bears witness to the repeated

attempts to exploit opportunities Israel

considers available, and to the security

developments of repeated wars and

aggressions.

In 1946, Britain built two oil pipelines

from Iraq to the port city of Haifa. The

first starts from Mosul and goes to the

Palestinian port, and the second passes

through Jordan to Palestine. In the same

year, Britain developed a project for an

oil pipeline stretching from Saudi Arabia

to Palestine (the Trans-Arabian Pipeline

or Tapline). The project was not

implemented until 1950, after altering its

path through the Syrian Golan Heights to

the Az-Zahrani terminal in southern

Lebanon, because the State of Israel was

established in 1948. For the same reason,

Arab oil was no longer pumped from Iraq

to the port of Haifa.

In 1967, after Israel occupied the Golan

Heights, the Tapline — which was an

outlet for the export of large quantities of

Saudi oil to global markets — was

closed. It remained closed for a while,

until it was allowed, with US approval, to

pump small amounts to the Lebanese Az-

Zahrani refinery. Israelis bitterly looked

on as this occurred until 1982, when their

forces destroyed the refinery during the

Israeli invasion of Lebanon.

Until the early 1980s, the small oil

pipeline stretching from Kirkuk to Syria

down to the Tripoli refinery in northern

Lebanon had continuously operated,

before halting its activity during the Iraq-

Iran war. It resumed its activity in 2002,

but it reached only to Syria.

Since Iraq was occupied in 2003, Israel‘s

oil dream has grown bigger, including

the revival of the Mosul-Haifa oil

pipeline that was closed in 1948. The

Israeli government has even planned to

control southern Iraq. Under the

agreements that were signed with Egypt,

Israel received quantities of oil and gas.

However, the pipelines were damaged by

the frequent attacks following the

overthrow of President Hosni Mubarak.

Thus, the flow of gas has stopped to

Israel, which is demanding that Egypt

provide compensation.

It should be noted that the gas agreement

signed between US Noble Energy and

Arab Potash Company to supply 2 billion

cubic meters [2.6 billion cubic yards] of

natural gas to Israel for 15 years is the

beginning of new Israeli plans that will

be implemented under the auspices of the

United States as part of the reconciliation

treaty the United States is seeking. The

plans include a comprehensive

geographic and economic review of the

region, including safe corridors and oil

pipelines as privileges of the four

concerned countries and beneficiaries –

namely Israel, Palestine, Egypt and

Jordan.

AL-MONITOR, April 27, 2014

Iran to complete

natural gas pipeline

to Iraq

Iran is on track to complete construction

work on a 100 km pipeline, which will

transport natural gas to Iraq, in the next

four months.

Alireza Gharibi, Managing Director of

Iranian Gas Engineering Development

Company, stated that the pipeline is now

75% complete, with 80 km already built.

Construction work on the Iraqi section

will be carried out on schedule.

NEWS IN BRIEF






The new pipeline begins in Chahar

Meleh village in the Ilam Province,

western Iran, and runs to the city of

Naftshahr, which is located on the Iran-

Iraq border.

Gharibi noted that the pipeline would

carry 5 million m3/d of natural gas in the

first stage and 10 million m3/d in the

second stage.

Iran signed the first agreement with Iraq

for the delivery of natural gas on 21 July

2013 in Baghdad. Rostam Qassemi,

former Iranian Oil Minister, signed the

agreement for the delivery of 25 million

m3/d of gas from Assaluyeh, near the

offshore South Pars oil and gas field in

southern Iran, to power plants in Al-

Baghdad and Al-Mansouriyah. The 270

km pipeline is expected to achieve

revenues of approximately US$ 3.7

billion per year.

ENERGY GLOBAL, April 27, 2014

TERMINALS &

SHIPPING

Eversheds brings

Sierra Leone

development in to

port

Global law firm Eversheds has advised

Petrojetty Company Limited, an affiliate

of Oryx Energies, on a public private

partnership (PPP) concession for the

development and operation of a new

state-of-the-art petroleum jetty at Sierra

Leone‘s key import and export facility,

the Kissy Oil Terminal, Freetown.

The agreement grants Petrojetty the right

to design, construct and operate a jetty

for the import and export of petroleum

products, edible oils and biothanol. The

new jetty, which is expected to be

completed by early 2015, will increase

capacity, comply with international

standards and facilitate access with

international markets efficiently and

economically.

Petrojetty will develop and operate the

jetty for 21 years in a PPP with the

Government of Sierra Leone after which

the facilities will revert to Sierra Leone‘s

Port Authority.

Oryx Energies signed a concession

agreement with Sierra Leone‘s

authorities in October 2013 and the

agreement was ratified by the country‘s

parliament in February 2014.

The Eversheds team, led by Partner

Howard Barrie working principally with

Lucy Chadwick and Lynne Wells, and

local counsel Berthan Macaulay Jnr.

advised Petrojetty Ltd and Oryx

Energies, on all legal aspects of the

concession agreement and its

negotiations with the various government

stakeholders.

Howard Barrie said: ―The new jetty will

increase the amount of hydrocarbon

products that can be imported in a much

safer environmental way. It is

strategically important for the country‘s

growing energy needs. The Government,

through the National Commission for

Privatisation, decided on using a public

private partnership, an innovative

approach for Sierra Leone, with a private

sector entity being responsible for the

new jetty‘s development and operation.

―Africa offers a wealth of opportunities

for new infrastructure projects and we

are pleased to have played our part in

such a vital and novel development for

Sierra Leone.‖

EVERSHEDS, April 30, 2014

Angola LNG rig

salvage work to

finish by March 2015

Salvage work to remove a capsized rig

lying in shallow waters offshore from

Angola‘s new liquefied natural gas

(LNG) export plant should be completed

by March 2015, the company in charge

of the operation said.

The three-legged Perro Negro 6 drilling

rig overturned last summer as it was

being positioned to bore a tunnel for a

gas pipeline key to feeding the $10

billion plant. Italian oil services firm

Saipem chose South African company

Smit Salvage, a unit of Netherlands-

based dredging specialist Boskalis, to

remove its rig.

―Including the preparation phase

(engineering and outfitting), mobilization

and demobilization, the salvage operation

is expected to take around 10 months,‖ a

Boskalis spokesman said. ―The work is

expected to commence in this quarter.‖

The rig capsized as it prepared to bore a

tunnel below an underwater canyon,

killing at least one person and delaying

gas supplies from Chevron-operated

blocks 0 and 14, which were to be linked

to the plant this year via the tunnel.

It will take even longer for a new rig to

come into position and dig out a tunnel

for the pipeline, a source linked to the

liquefaction plant said.

Feedgas from the Chevron blocks is

essential to helping Angola LNG boost

production, which has only managed to

reach 50 percent of capacity despite

starting up nearly a year ago.

Fresh technical setbacks have recently

forced the plant to shutdown as engineers

investigate the cause of malfunctions.

Chevron has a 36.4 percent share in the

plant, while Angolan state oil firm

Sonangol has 22.8 percent. Other

stakeholders include Total, BP and ENI.


Kuwait signs LNG

import deal with

Qatargas

Kuwait has signed a contract to import

liquefied natural gas (LNG) from fellow

Gulf state Qatar to help meet its energy

needs to the end of 2014, state news

agency KUNA reported on Sunday.

The first shipment of LNG will arrive in

Kuwait on Monday under the contract

between Kuwait Petroleum Corporation

(KPC) and state-owned Qatargas, KUNA

said. There were no further details on the

terms of the deal with Qatar, which is the

world‘s largest LNG exporter.

Rising air conditioning demand in the hot

Middle Eastern summer and a lack of

domestic supply means OPEC member

Kuwait needs to import more gas each

year to run its power plants.

The contract paves the way for greater

cooperation between the two companies,

KUNA quoted a KPC official as saying.

It added that major oil producer Kuwait

was still looking at ways to supply its

LNG needs beyond 2019.


NEWS IN BRIEF






CONFERENCES






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Downstream Monitor MEA 30 April 2014, Week 17 Back Page

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HEADLINES FROM A SELECTION OF NEWSBASE MONITORS THIS WEEK

Oil and Gas Sector

AfrOil Tullow has had a second disappointment in Mauritania,

leading it to pause exploration plans.

AsianOil PTTEP has agreed to pay US$1 billion for Hess’ Thai

assets.

ChinaOil PetroChina will spend US$1.2 billion on a 40% stake in

Canada’s Dover oil sands project.

FSU OGM Russia may become Total's largest source of oil and gas

by 2020.

GLNG Japan’s LNG imports rose 1% to a record 87.73 million

tonnes in 2013. The bill soared 18.2% to US$71.51 billion.

LatAmOil Pacific Rubiales’ share price has tumbled owing to

operational issues in Colombia.

MEOG Iraq has approved the award of two drilling contracts at

the three Missan fields, near the Iranian border.

NorthAmOil BP is selling stakes in four fields on Alaska’s North Slope

to Hilcorp for an undisclosed amount.

Unconventional OGM Cumulative production from the Bakken shale reached 1

billion barrels during the first quarter of 2014.

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Downstream Monitor - MEA Week 17