Today - OSEA2020 HYBRID EXHIBITION

WEDNESDAY 30 NOVEMBER 2016 upstreamonline.com

OFFICIAL SHOW DAILY PRODUCED BY UPSTREAM

INSIDE

Today

Visitor count Day 1:

3,405 (34.4% overseas)

IN THIS ISSUE• Singapore’s expanding capabilities in the O&G industry p7

• The EIC: 20 years at OSEA p8

• Oil & Gas climate is not all doom and gloom p9

• Raccortubi Singapore to grow market presence in APAC p10

• Future-proof innovation at Bosch Rexrot p10

• Information Quality extends Maersk Global Strategic support p10

Jack-up talksCPTDC eyes Middle East buyer for China rigs. Page 3

Thai stalemateCommittee fails to agree on Petroleum Act. Page 4

O&M still keyMinister stresses importance of sector to Singapore. Page 5

DSF awardsIndia set to announce acrage winners by end of year. Page 6

Thaliand hopesGovernment keen to see exploration fill supply gap. Pages 14&15

Project: Petronas chief executive

Wan Zulkiflee Wan Ariffin Photo: BLOOMBERG

Get up to speed with the latest news from the world of oil and gas. Visit us at Stand 1J6-04 or log on to www.upstreamonline.com

Petronas ready to roll at K5Malaysian national oil

company Petronas is laying

the groundwork for the

construction phase of its

prestigious K5 sour gas project

off Sarawak in Malaysia, which

will be anchored initially by a

large production facility.

Page 2

2 Show Daily Wednesday 30 November 2016

MALAYSIA

MALAYSIAN national oil company Petronas is laying the ground-work for the construction phase of its prestigious K5 sour gas project off Sarawak in Malaysia, which will be anchored initially by a large production facility.

The Malaysian operator has in recent weeks whetted the appe-tites of work-starved contractors with market inquiries about a big mobile offshore production unit that it aims to locate on K5.

The total weight of the MOPU is just over 16,000 tonnes — includ-ing jacket and topside with cryo-genic distillation facility, said sources.

The operator recently received submissions from select Malaysian and foreign offshore contractors regarding the engineering, pro-curement and construction of the MOPU.

Sources emphasised that this was an information and cost-gathering exercise, and that no guidance had been provided as to when, or if, an invitation to tender would be issued.

Some sources expressed caution about whether K5 would proceed anytime soon given the cost and technology challenges.

“I find it hard to see K5 going ahead in the current market,” said one source, adding that Petronas, like other oil companies, is under financial pressure, “and it is hard to see a project that will have expen-sive concept-proving technology getting permission to use dollars”.

Others were more upbeat, and said the market inquiry was a clear sign of Petronas’ intent to develop the field.

The operator’s contracting strategy is not yet known. Even though selected yards in South Korea, Vietnam and possibly Indo-nesia received the questionnaire, there is no guarantee they will actually receive a bid invitation.

Sources said it would be a big surprise if Petronas did not keep all the K5 construction work for local companies.

It is understood Technip is cur-rently performing the K5 front-end engineering and design work.

The previous conceptual studies were done by Technip subsidiary Genesis Oil & Gas.

K5 is a significant shallow- water gas resource discovered in

Project: Petronas chief executive Wan Zulkiflee Wan Ariffin Photo: PETRONAS

Petronas ready to roll on K5 sour gas projectMalaysian state oil company eyes mobile offshore production unit for development off Sarawak

THE oil price collapse in 2014 is still having a lasting effect on the offshore industry as a glut of vessels remain unused in certain yards, but not all seg-ments of the industry are feel-ing the pinch as much as oth-ers, writes Josh Lewis.

Douglas-Westwood associate director Jason Waldie told del-egates at OSEA 2016 in Singa-pore that yards had enjoyed a great 10 years building vessels at premium prices, fuelled by the ability for companies to ob-tain favourable financing when the oil price was high.

However, the boom times stopped when the oil price col-lapsed and there is no longer the same level of demand for the vessels, with more still en-tering the market without owners.

This is particularly true in the jack-up rig market, which Waldie said had been hit by the Chinese government’s demand about five years ago for yards to enter the industry.

He said the yards essentially fulfilled orders without really taking any money as a down payment which had led to com-pleted rigs now sitting in yards without owners.

“The Chinese effectively flooded the market for jack-ups and there’s 120 jack-ups sitting in Chinese yards without own-ers because they just kept building them,” he said.

The increase in the number of vessels in the market, com-bined with a fall in demand has seen utilisation rates and dayrates drop, leaving many drillers in financial difficulty.

Those companies banked on newbuilds they envisioned get-ting much higher rates than what they are seeing today.

One segment which is man-aging to weather the storm slightly better is the subsea ves-sel market, which Waldie said had been aided by a number of companies going bankrupt ear-lier in the bust cycle.

“What’s really happening in the subsea vessel industry these days, it seems like they’re busy because a certain number of the fleet has left the indus-try,” Waldie said.

While admitting the vessels which had been sub-contracted to the now defunct companies could still return to the mar-ket, Waldie said the subsea ves-sel industry seemed to be re-maining busy as demand was currently higher than compet-itive supply.

Surveying effects of oil price

RUSSELL SEARANCKE Wellington

The official OSEA2016 show daily is published by Upstream, an NHST Media Group company, Christian Krohgs gate 16, PO Box 1182, Sentrum, N-0107 Oslo and printed by Markono Print Media Pte Ltd, Singapore. This edition was printed on 29 November 2016. © All articles appearing in the Upstream OSEA2016 show daily are protected by copyright. Any unauthorised reproduction is strictly prohibited.

This newspaper is published by Upstream, which is solely responsible for its editorial content. The editorial content is not necessarily the opinion of the event organisers.

Centre stage: Jason Waldie

Photo:

JOSH

LEWIS

1970 with up to 70% carbon dioxide content.

The field is thought to contain 21 trillion cubic feet of gas of which 4 Tcf is deemed recoverable.

A two-phase development is planned for K5, starting with the MOPU and a small floating storage and offloading vessel.

The next phase will be a sub-stantial full-field development, which will require a large central

processing complex fed by a host of smaller platforms.

Phase one production will be an estimated 250 million cubic feet per day of gas, which will ramp up to 1 Bcfd of gas in the second phase.

Gas produced during phase one will be sent by subsea pipeline to the ninth train at the Petronas liquefied natural gas complex in nearby Bintulu. In late 2014,

Petronas signed an agreement with Technip, Twister, Generon and UOP, a Honeywell company, to collaborate on the technology requirements for K5.

Dutch company Twister con-firmed it had reached an agree-ment to collaborate with Petronas on separating carbon dioxide from a natural gas stream utilising Twister’s proprietary supersonic gas separation technology.

Wednesday 30 November 2016 Show Daily 3

RIG MARKET

PETROLEUM equipment provider China Petroleum Technology & Development Corporation (CPTDC) is in advanced talks with an off-shore operator in the Middle East regarding the sale of some of the four jack-up rigs it has on order at two Chinese yards.

The deal could be finalised within the next couple months, industry officials said, declining to name the potential buyer.

“It is through bilateral negotia-tion,” one source noted, adding that the exact number of the rigs to be sold remains unclear.

The rigs on sale are of DSJ 300 design, built by northern Chinese yards Dalian Shipbuilding Indus-try Offshore (DSIC Offshore) and China Petroleum Liaohe Equip-ment Corporation (CPLEC).

DSIC Offshore is said to have already completed both of the rigs

it was contracted to build, where-as CPLEC has completed one and is still working on the second.

The 300-foot rigs, designed by DSIC Offshore, were ordered by CPTDC in 2012.

The drilling packages were pro-vided by Baoji Oilfield Machinery Company (Bomco).

This was a family affair, as CPTDC, CPLEC and Bomco are all units contained within the Chinese state-controlled oil giant China National Petroleum Corpo-ration (CNPC).

In a similar deal a few years ago, CPTDC ordered two DSJ 300 rigs from DSIC Offshore and eventu-ally sold them to a company in the Middle East.

With 73 marketing facilities in 54 countries, CPTDC has provided rigs — mostly land rigs and other oil and gas exploration and devel-

DUTCH marine engineering house GustoMSC unveiled a new, cost-effective drillship design on the opening day of OSEA 2016 in Singapore, targeting the mid to deep-water market with its Scylax concept. “The key is to focus on the essential functionality for deep-water drilling,” GustoMSC said. The compact drillship is designed around the drilling process, GustoMSC said, based on a single derrick or drilling mast set-up with off-line stand building and dual blow-out preventers. Water-depth capacity is listed at 10,000 feet and the unit is claimed to have “ample capacity” mud systems.

Image: GUSTOMSC

CPTDC in talks over Chinese jack-up rigsDeal could be finalised within two months for possible sale of four units to Middle East company

MALAYSIAN offshore drilling contractor UMW Oil & Gas is seeing a slight increase in demand for its drilling rigs, and more of its rigs will be on contract in the fourth quarter this year.

The company said its third-quarter 2016 revenue of 49.7 million ringgit (US$11.1 million, S$15.89 million) was significantly less than the corresponding three months in 2015 of 212.7 million ringgit due to low fleet utilisation.

The pre-tax loss for the period was 133 million ringgit.

“Whilst demand for drilling rigs has improved slightly, the long lead time in translating capital and operating expenditures into drilling contracts has resulted in idling in between contracts in 2016,” said the company.

The prospect of a sustained recovery for the oil and gas industry was “highly dependent on the impending outcome of Opec’s decision to cut oil production to ease the supply glut that has weighed on prices for the last two years”.

Despite the volatility being seen on a global level, there are indications of a “gradual recovery” in Malaysia and the region.

The jack-ups UMW Naga 8 and UMW Naga 2 were recently contracted by Hess and Ophir Production respectively.

The previous long-term contract with Petronas for the UMW Naga 6 “augurs well for our future prospects”.

“The increase in the number of tenders being called by oil and gas companies in the region further illustrates a potential recovery in drilling activities both in Malaysia and Southeast Asia.”

Rise in rig deals for UMW

GustoMSC unveils drillship design

XU YIHESingapore

opment equipment — to 80 coun-tries, with its market heavily focused on Central Asia, Russia, Africa, the Americas and the Mid-dle East.

Chinese yards secured new-build orders from foreign rig man-agers for more than 70 jack-ups over the past several years.

Most of these rigs have been completed but many are lying idle and unemployed along the Chi-nese coast.

Rig managers, while aggres-sively bidding for jobs for these rigs, have typically either sought

to delay delivery of the rigs or moved to cancel the contracts out-right, forfeiting their down pay-ments but leaving the Chinese yards with the huge financial bur-den of servicing the bank loans.

Under a normal financing pack-age, rig managers pay only 10% or less of the rig’s contractual value when the fabrication order is signed, leaving the yards to cover the remainder of the funding re-quirements during construction. The full payment is not scheduled to be made until the rigs are deliv-ered.

Under construction: jack-ups at DSIC Offshore yard in ChinaPhoto: DSIC OFFSHORE

In demand: the jack-up drilling rig UMW Naga 8

Photo: UMW


THAILAND

THAILAND’S Petroleum Review Committee failed at its latest meeting to agree on final details for the revision of the Petroleum Act and Petroleum Income Tax Act, suggesting that the novel bills might now not be passed be-fore the end of the year.

One of the main stumbling blocks is still the issue of whether to establish a national oil compa-ny, a proposed move that has di-vided opinion within government and industry.

This issue and the as-not-yet-finalised restructuring of the tax system mean that the National Legislative Assembly might not now get to pass the novel laws on 21 December as had been hoped.

However, this increasing likely legislative delay is not derailing the kingdom’s plans to expand its gas industry.

Twarath Sutabutr, director gen-eral of the Ministry of Energy’s Energy Policy & Planning Office, said that Thailand plans to in-crease its targeted liquefied natu-ral gas imports to 17.4 million tonnes per annum in 2022 and fur-ther to 34 million tpa in 2036.

“Natural gas supplies in the Gulf

Major asset: the Bongkot field in the Gulf of Thailand Photo: PTT

Committee fails to agree on Thai Petroleum ActIssue of whether to establish national oil company remains stumbling block

THAILAND is drafting new legisla-tion to deal with the future decom-missioning of facilities, particu-larly those on offshore fields in the Gulf of Thailand as they come to the end of their producing lives.

“There is no decommissioning project in Thailand at the moment but the Ministry of Energy is working on drafting the regula-tions and hopefully it will come

into effect soon,” said Asa Chotch-akornpant, trade and investment manager at DIT Thailand.

She added that the 21st petrole-um licensing round will be offi-cially launched next year.

“It has been delayed for quite some time but hopefully next year it will be announced,” she told del-egates at the Subsea Asia confer-ence at OSEA 2016. Thailand is

keen to have an upturn in explora-tion as gas production from both the gulf and neighbouring Myan-mar is set to decline within a few years.

Meanwhile, the governments of Thailand and another neighbour, Cambodia, are continuing to try to resolve the impasse over the Over-lapping Claims Area (OCA).

The 27,000-square-kilometre

OCA is home to estimated reserves of between 8 trillion and 15 trillion cubic feet of gas and between 400 million and 1 billion barrels of liq-uids fuels.

“The Thai government and Cam-bodian government are working together to find the best solution. If this can be unlocked it will offer a lot of opportunities in oil and gas for both [nations],” said Asa.

Hurdle for law in Indonesia

A LOCALLY based consultant does not expect Indonesia to pass the proposed revisions to its existing petroleum legisla-tion in their current form, giv-en the market uncertainty it is already creating for industry.

“A recently issued draft showed Pertamina being given first right of refusal on new acreage,” David Braithwaite, president director of Q Energy South East Asia told delegates at an OSEA market briefing on Indonesia.

“This is not good. If you’re an operator or explorer you will only get access to the more challenging, less prospective, higher cost acreage.”

He added that the revised oil and gas law is “far from being passed, there are a lot of con-troversial ideas in it. I think it is very unlikely to get passed in this form”.

Another challenge facing E&P players in Indonesia is fis-cal uncertainty.

Before 2010, companies awarded production sharing contracts did not have to pay higher taxes and fees, even if such were increased during the duration of their 30-year con-tracts.

However, that ‘assume-and-discharge’ privilege was re-moved six years ago meaning companies today are at the mercy of any tax hikes.

On a brighter note, Braithwaite confirmed to del-egates that the government has said it would introduce “a lot more incentives” to encour-age deep-water development and also for marginal areas.

“The sort of things they’re talking about are longer explo-ration periods, DMO (domestic market obligation) holidays and a more favourable split for production,” he said.

Thailand considers introducing platform removal legislation

AMANDA BATTERSBYSingapore

Expectations: David Braithwaite

Photo: AMANDA BATTERSBY

of Thailand will drop in the future. Thailand needs to accelerate LNG imports,” Twarath said.

He added that the plan to sig-nificantly increase LNG imports, which was instigated because of delays in bringing into operation more coal-fired power plants, is subject to final approval from the national energy policy committee.

Domestic natural gas demand is expected to rise to 5.062 billion cubic feet per day in 2036, up from

the earlier forecast of 4.344 Bcfd, according to the Energy Ministry.

Meanwhile, Energy Minister General Anantaporn Kanjanarat on 28 November said that the planned auction of the expiring concessions for PTTEP’s Bongkot project and the Chevron-operated Erawan gas field would now not be completed until 2018.

“We have to admit that we can’t open bids in March 2017 but we will try to do it next year. The auc-

tion will be completed in 2018,” Anantaporn said.

The government had earlier said that it planned to open bids for the two expiring concessions in March 2017 and that the auction would then be completed within six months.

The Erawan and Bongkot con-cessions, which account for some three quarters of the gas produc-tion in the Gulf of Thailand, ex-pire respectively in 2022 and 2023.


OFFSHORE ENGINEERING

SINGAPOREAN Minister of State Koh Poh Koon said the long-term outlook for the marine and off-shore industry remains positive and energy prices are expected to recover as the market balances itself.

Giving the opening address at OSEA 2016 in Singapore, Minister Koh said the marine and offshore industry remains an important part of Singapore’s economy and companies should maintain their core strengths amid the challeng-ing times.

“It is important that during these times we preserve the in-dustry’s core capabilities that have been developed over the years, as they will be important for companies to seek future growth opportunities when the economy recovers,” Koh claimed.

He added that even as the off-shore and marine sector contin-ues to “grapple with the current challenges”, it should continue to build capabilities over the long-term.

Koh claimed Singapore has achieved much in the oil and gas industry and is the world leader in conversion work on floating pro-duction, storage and offloading vessels, and is also an elite builder of jack-up rigs.

“These achievements come on the back of a well established ma-rine and offshore engineering eco-system, which includes home grown companies that have be-come global players,” he added.

Koh said the marine and off-shore industry is experiencing a deep and prolonged downturn, and noted that industry’s finan-cial challenges have intensified during recent months.

He added that some industry consolidation is “inevitable” in the current market, as companies restructure and adapt to the chal-lenging environment.

“This is why the Singapore gov-ernment has recently announced targeted measures to facilitate marine and offshore engineering companies,” he added.

The Singapore government an-nounced measures last week worth upwards of S$1 billion to help support the nation’s ravaged offshore and marine industry.

Lindy Wee, chief executive of OSEA’s organiser Singapore Exhi-bition Services, said that “for now, it’s critical that the firms in the oil and gas industry are able to keep costs down, remain buoyant and prepare for the eventual market resurgence”.

O&M is still key for SingaporeMinister of State Koh Poh Koon underscores sector’s importance to country’s economyNISHANT UGAL Singapore

Targets: Minister of State Koh Poh Koon Photo: OSEA

Bars & Billets

Machining

Sheets & Plates

Tubes & Pipes

Open & Closed Die Forgings

Round, Flat and Shaped Wire

Steel Castings

Joint Welding Consumables

Distribution

Maintenance Welding Consumables

Steel Solutions to the Pointfor the Oil & Gas industry

Our strong network of specialized companies offers customized solutions all along

the entire oil and gas value chain. Given the high industry standards of voestalpine,

we provide high quality goods, even in small quantities. Our field of competence

also includes joint developments together with our partners. If you are looking for an

independent, stable and reliable partner, the voestalpine companies welcome you at:

OSEA Singapore, booth 1K5-01 from Nov. 29 – Dec. 2, 2016

www.voestalpine.com/oilandgas


EXPLORATION

THE Indian government is ex-pected to award acreage offered under its discovered oil and gas small fields (DSF) round by the end of December, according to Petrol-eum & Natural Gas Minister Dhar-mendra Pradhan.

Pradhan also described the re-sponse from the DSF round as “en-thusiastic” and claimed it has attracted several new players to India’s oil and gas sector.

A source from India’s Directo-rate General of Hydrocarbons (DGH) confirmed to Upstream that bids for the DSF round are cur-rently under evaluation and acre-age is likely to be awarded in a month’s time.

“The DGH is evaluating the DSF bids and the government is hop-ing to award those oil and gas fields by end of this year, follow-ing a clearance from the Cabinet,” he said.

The Indian government re-ceived a total of 134 bids for acre-age offered in its DSF bid round last week — but only 14 were for offshore acreage and major over-seas players stayed away from the process.

Key domestic private sector players that participated included Vedanta Resources-owned Cairn India, Adani Welspun Exploration, Hindustan Oil Exploration Com-pany, Sun Petrochemicals owned by billionaire Dilip Shanghvi, Meg-ha Engineering, Quippo Oil & Gas and Oilmax Energy.

State-owned players Indian Oil Corporation, Oil India, Gail India and Bharat PetroResources also submitted offers.

International players that sub-mitted bids included the UK’s Hardy Exploration & Production, Essel Group and Worldwide Oil-field Machine from the Middle East, Enquest Drilling and US-based Joshi Technologies.

Out of the 46 contract areas offered, 34 attracted bids, mostly

Awards: India’s Petroleum & Natural Gas Minister Dharmendra Pradhan Photo: KAIA MEANS

India set to award DSF blocks by end of year‘Enthusiastic’ response to discovered small fields exercise attracts new players

SINGAPORE’S Sing Swee Bee (SSB) has entered into a joint venture with Spanish company Gabadi that will see the pair build and market small-scale liquefied natural gas mem-brane vessels and develop local capabilities in LNG membrane repair.

At a signing ceremony held at OSEA 2016 in Singapore, SSB managing director Peh Lam Hoh said the companies would look to market their capabili-ties to existing and potential clients in Southeast Asia, Aus-tralia and New Zealand.

“There has been a surge in enquiries for small scale LNG membrane vessels over the few years, hence the potential to develop small and mid-scale LNG applications and to realise these regional opportunities,” Peh said.

“We are confident the joint venture between Sing Swee Bee Group and Gabadi will be very fruitful and will grow sig-nificantly in the coming years as we expand our footprint in this region.”

The joint venture will be strengthened with the guid-ance of Innovation Enterprise (IE) Singapore, with group di-rector of the government body’s transport and logistics group, Law Chung Ming, say-ing the partnership with Gaba-di would strengthen SSB’s capability in providing small scale LNG supply chain solu-tions to clients in the region.

“IE is very excited by such collaboration to develop small and mid-scale LNG applications and we want to work with more Singapore companies to realise such vision of opportu-nities in LNG together,” Law said.

He also said SSB was the only Singaporean company to be certified by Gaztransport & Technigaz (GTT) to carry out LNG membrane global tests for GTT’s cargo containment sys-tem.

He said this had helped SSB command 44% of the market share of non-destructive tests for LNG membrane vessels.

Meanwhile, Gabadi was the first company in the world to obtain a licence from GTT for outfitting LNG membrane ves-sels, the construction of small-scale LNG membrane vessels, and to develop local capabili-ties in LNG membrane repair.

SSB and Gabadi tie knot

BEIJING Gas Group (BGG), the dom-inant gas distributor in the Chi-nese capital, has received the first cargo of liquefied natural gas deliv-ered to a terminal operated by Petro China in nearby Tangshan.

The cargo of about 66,000 tonnes has been offloaded and the Corcovado LNG vessel was set to leave the terminal early this week.

The gas will be distributed to

users in Beijing and some cities in neighbouring Hebei province via an existing pipeline, where gas demand is picking up with the ar-rival of winter.

It is the first of 10 cargoes, total-ling about 600,000 tonnes, that BGG is contracted to buy from French energy player Engie under an agreement signed in Septem-ber this year.

Delivery of these cargoes has

been set for the four-month period from November to February.

The bulk of the remaining car-goes will arrive in December, according to sources.

The Tangshan LNG facility, in which BGG has a minor stake, be-gan operations in late 2013 and has an import handling capacity of 3.5 million tonnes per annum.

The arrival of this first cargo was well timed, as PetroChina –

Beijing’s largest gas supplier — has warned of a possible gas shortage in the wake of supply disruptions from Uzbekistan.

PetroChina said these disrup-tions related to “weather condi-tions and problems with the local gas processing plants”.

China and Uzbekistan have a term agreement for gas supply via a pipeline linking Kazakh stan and China via Uzbekistan.

Beijing Gas receives first LNG cargo at Tangshan facility

NISHANT UGALSingapore

from domestic players. Inter-national oil and gas majors and Indian state-owned upstream gi-ant Oil & Natural Gas Corporation did not participate, though sev-eral large domestic companies did take part.

All of the 26 onshore contract areas received bids but only eight out of 20 offshore areas had offers, according to an Indian govern-ment statement.

“Out of the total 134 e-bids re-ceived, 120 e-bids were for onshore

areas and 14 e-bids were for off-shore areas,” the government said, adding “42 companies participated in the bidding process either alone or as a member of a consortium”.The government has claimed that “despite the challenges the DSF round attracted the interest of first-time investors in the E&P sector”. Industry experts have de-scribed the response for the on-shore areas offered as a part of the DSF round as “positive”, but added that offshore areas have met with

a “tepid response”. The DSF bid round was launched more than five years after the ninth round of India’s New Exploration & Licensing Policy that took place in 2010.

The blocks were offered earlier this year under a revenue-sharing model with simpler tax rules, promising pricing and marketing freedom to operators, along with permission for 100% foreign direct investment by an international investor.

LIQUEFIED NATURAL GAS

Joint venture to build and market vessels

Search the archive:

Small-scale LNG

Wednesday 30 November 2016osea-asia.com Show Section

Singapore’s Expanding Capabilities in the Oil & Gas Industry

The long-term outlook and importance of Singapore’s marine and offshore engineering (M&OE) sector, Singapore’s growing LNG ecosystem, and initiatives to help support local companies through the downturn

were highlighted by Dr Koh Poh Koon, Minister of State, Ministry of National Development and Ministry of Trade & Industry at the Opening Ceremony of OSEA2016.

For a country lacking natural resources, Dr Koh noted that Singapore has achieved much in the oil and gas industry.

For instance, Singapore is the world leader in FPSO conversions, as well as the largest manufacturer of jack-up oil rigs.

These achievements come on the back of a well-established M&OE ecosystem, which includes home-grown companies that have become global players, as well as leading international companies that have made Singapore a base for their regional headquarters and operations.

Dr Koh urged participants even as the industry grapples with the current challenges, it is important to continue to build competencies for the long-term and to preserve the industry’s core capabilities that have been developed over the years as they will be important to seize further opportunities.

Building capabilities to harness growth opportunities in LNGThe projected rise in global demand for liquefied natural gas from 250 million tonnes per annum to 400 million tpa in the next two decades, and Asia Pacific currently accounting for over 70% of global LNG demand sets the stage as Singapore continues to invest heavily in expanding its LNG refining and storage capacity, to establish itself as a major LNG hub in the region.

The country’s fourth LNG storage tank is slated to be completed in 2018, and at 260,000 cubic metres, this new storage tank will be among the largest in the world.

In addition, plans for a second LNG terminal are also underway.

Supporting Singaporeans through economic restructuring and transformationDr Koh also highlighted steps the government is taking to help provide support for local M&OE companies.

These include targeted measures to facilitate access to working capital and financing, the Adapt and Grow initiative to reskill local mid-career workers and help them embark on opportunities both within and across industries, the Career Support Programme (CSP), which encourages employers to hire suitable professionals through the provision of wage support, and expanded P-Max, a programme which helps to place professionals into suitable job roles in SMEs.

Guest of Honour Dr Koh Poh Koon, Minister of State, Ministry of National Development and Ministry of Trade and Industry at the Opening Ceremony of OSEA2016

#OSEA2018

Company BoothValser Engineering & Services Sdn. Bhd BH4-10Shree Digvijay Cement Co Ltd BS3-07Global Offshore & Marine Systems Pte Ltd 1H3-10TrustLube B.V. 1M4-02/3WIND 1M4-02/4Feature-Tec Singapore Pte Ltd BP4-10 Alstern Technologies Singapore Pte Ltd 1P4-06Zhejiang Minghe Steel Pipe Co Ltd 1E5-08 Korea Marine Equipment Association BS3-10

OSEA2016 Exhibitor update

Show Daily, Wednesday 30 November 20168

The EIC, the leading trade association for UK companies that supply goods and services to the energy industries worldwide, is delighted to once again be hosting the UK pavilion at OSEA.

We’ve been ever present at OSEA for over 20 years now: it’s been great to see the event develop over the years to become one of the most important oil and gas conference and exhibitions worldwide.

Southeast Asia is seeing incredible investment in offshore projects and infrastructure. This positive outlook is confirmed by our world-leading project database, EICDataStream, which is currently tracking 198 active and future regional oil and gas projects for 2017 to 2021. OSEA is the ideal occasion for companies wishing to explore these opportunities.

At the EIC we help our members to identify and successfully pursue business opportunities around the world.

Hosting the UK pavilion here and at other key international energy exhibitions is just one of the ways we do this.

We also organise overseas trade delegations, provide global business intelligence and have a network of offices worldwide, all designed to help our members expand into new markets.

OSEA is a great platform for UK oil and gas companies to present their products and services directly to buyers from major regional operators as well as connect with key contacts and meet potential local partners.

All of the UK companies have provided products and services to a number of leading companies in the region.

Those companies looking for innovative products and cutting edge technologies which can help to maximise efficiencies, extend the life of their assets and increase profitability should make the UK pavilion their first stop.

Subsea specialist Osbit comes to OSEA2016 on the back of successfully designing, manufacturing and delivering a bespoke floating launch dock and sea parking garage for Modus’ Seaeye Sabertooth AUV.

The floating launch dock enables Modus to deploy its inspection and maintenance AUV and return it to the deck of the ship, whether the AUV is tethered or untethered.

The dock is submerged in the sea as the AUV leaves.

A unique design feature fills it partially with air to allow safe and easy collection of the AUV from the water’s surface once it has carried out its work.

As well as providing safe and secure storage for the AUV when not in use, the subsea parking garage allows the AUV to be used at different locations without the infrastructure and related costs of having to maintain a permanent presence.• Visit Osbit at Booth 1J4-12

Hydrographic survey and diving equipment specialist Unique Group has added subsea vehicle positioning and navigation technology from Sonardyne International Ltd to its expanding equipment rental pool.

Its newly acquired SPRINT Inertial Navigation System (INS) and Syrinx Doppler Velocity Logs (DVLs) will support survey and construction projects using ROVs and AUVs in water depths up to 4,000 metres.

SPRINT makes use of acoustic aiding from data sources including USBL, LBL, DVL and pressure sensors to improve the accuracy, precision and reliability of subsea vehicle positioning.

Syrinx DVLs can operate at altitudes up to 50% higher than conventional 600 kHz DVLs. They can also provide tight beam-level aiding to SPRINT INS allowing for unprecedented positioning performance.

Individually, SPRINT and Syrinx’s specifications are very impressive but when they are combined they provide outstanding levels of performance in a single offering for underwater surveys and projects.

• Visit Unique Group at Booth 1J4-10

Mr Azman Nasir, Head of Asia Pacific, The EIC

Unique Group — Sonardyne Syrinx

Unique

Osbit - Modus Subsea Garage - Equipment Trial

The EIC: 20 years at OSEA

Osbit delivers cutting edge AUV subsystems

Unique Group offers enhanced ROV and AUV technology

Company Booth

Beka Associates Ltd 1H4-08Caledonian Industries Ltd 1J4-06Clarksons Research 1H4-10Dunlop Oil & Marine Ltd 1H5-01E2s Warning Signals 1H4-07Eaton Hazardous Area Communications 1H5-12Energy Industries Council 1J4-05European Diesel Services Ltd 1H4-12Fluorocarbon 1H4-01Impact Special Metals 1H4-06Leea 1J4-07Lumenox 1H5-10Osbit Ltd 1J4-12Parkburn Precision Handling Systems 1J4-03Sahm Splice 1J4-01Unique Group 1J4-10Vulcanic UK Ltd 1H4-03

Companies in the UK Pavilion

Show Daily, Wednesday 30 November 2016 9

Sing Swee Bee Group (SSB Group) a Non-Destructive Testing (NDT) service provider for liquefied natural gas membrane carriers has partnered Spanish LNG membrane outfitting firm

Gabadi to establish a joint venture for the construction of small-scale LNG membrane vessels, and to develop local capabilities in LNG membrane repair.

The longtime partners made the agreement official at a signing ceremony yesterday at OSEA2016, signed by Peh Lam Hoh, Managing Director of Sing Swee Bee Group and Antonio Jose Llago Hermida, Chief Executive Officer of Gabadi S.L.

The event was graced by Dr Koh Poh Koon, Minister of State, Ministry of Trade and Industry, His Excellency,

Ambassador Miguel Angel Navarro Portera, Ambassador of Spain to Singapore, and about 100 industry guests.

Gabadi S.L. and SSB Group have been collaborating since 2014.

With Gabadi being the first company to obtain TALA licence from Gaztransport & Technigaz (GTT) as an outfitting company for LNG membrane vessels, and SSB Group, the only Singapore company (one of the four companies in the world) certified to render LNG membrane global test for GTT’s cargo containment system, both companies look forward to develop local capability not only in LNG membrane repair and testing, but also in the construction of small-scale LNG membrane vessels.

“There is a growing demand for LNG membrane repair especially in Singapore as the vessels dock at local shipyards. This joint venture will allow SSB Group to bring the engineering technology, expertise and experience in LNG membrane construction to this region, and develop local capabilities in this field. This bodes very well and complements Singapore’s efforts in building a regional LNG hub,” says Peh Lam Hoh, Managing Director of Sing Swee Bee Group.

The joint venture aims to significantly expand both companies’ capabilities in their respective field, as well as providing a complete solution to shipyards, achieving a sustainable competitive advantage among the competitors in the industry.

Sing Swee Bee Group and Gabadi Joint Venture Signing Ceremony

Sing Swee Bee Group partners Gabadi for LNG joint venture

Conference Highlights: Wednesday 30 NovemberCOMBINED MORNING PLENARY

*Keynote Presentation *Country Focus Sessions Marina Bay Sands, Level 3, Begonia 3103/4

8.50am to 10.30am

1.00pm to 2.00pm

10.30m to 10.50am

NETWORKING LUNCH BREAK AND EXHIBITION VIEWING

NETWORKING COFFEE BREAK

10.50am to 1.00pm

2.00pm to 5.00pm

ASSET OPTIMISATIONMarina Bay Sands,

Level 3, Begonia 3002

Optimal Produced Water and Water

Injection Technologies for Enhanced

Oil Recovery

Managing Static and Pipeline

Integrity Under Challenging

Operating Conditions

Production & Recovery Management

Advanced Integrity Management New O & G Markets andCAPEX Management

OPERATIONAL EXCELLENCEMarina Bay Sands,


Asset Integrity Management: From

Compliance to Higher OE Realisation

SUSTAINABLE GROWTHMarina Bay Sands,


CAPEX Optimisation in New O & G

Projects

Evaluating E&P Assets With Lower

Break Even Points

Show Daily, Wednesday 30 November 201610

Changing market environments ask for continuous development of products and technologies.

Bosch Rexroth, a leading specialist in drive and control technologies, closely examines these changing demands and continuously invests in research and development in different segments of the marine and offshore markets.

Developments have been made in the area of heave and motion compensation systems, electrification and subsea equipment.

“Based on the gained know-how of marine and offshore markets over the past decades, we are now preparing ourselves for the autonomous operations of the future.” said Ad de Brouwer, Director of Sales Marine and Offshore.

De Brouwer continued: “Technological developments for such operations include required features like connectivity, condition based maintenance and machine safety. In order to meet the highest quality and safety standards in the marine and offshore markets, various research and developments projects have been conducted together with our partners at the Bosch Corporate Research Division.”

Bosch Rexroth will be showcasing a number of its recent developments at OSEA2016.• Visit Bosch Rexroth at Booth 1M5-01

When Raccortubi Singapore planted roots in Southeast Asia in 2013, they participated in the 2014 edition of OSEA for the first time as they saw the event as a good platform to build brand awareness and promote their products to potential buyers.

Established by Raccortubi Group as a hub in Singapore and the surrounding region for the supply of pipes, fittings and flanges in stainless steel, duplex, superduplex, superaustenitics and nickel alloys, Raccortubi Singapore sees the region as a hotbed for upstream interest, despite recent slides in exploration activity against the backdrop of the prevailing depressed oil price.

With liquefied natural gas becoming more important in the region, many oil companies are looking to invest heavily in this field in order to meet the growing gas demand.

Through participating in OSEA2016, Raccortubi Singapore hopes to ramp up its market presence, and pledge to customers an assurance of their business stability, especially during this current declining state of the oil & gas industry.

In addition to the company’s recent investments to expand their capacity, visitors to the Raccortubi Singapore’s booth can also learn more on the company’s ongoing activities and developments in the pipeline.• Visit Raccortubi Singapore at Booth BL3-06

As world leaders in strategic development and implementation of Engineering and Maintenance Management, Information Quality provides superior strategies and exceptional value globally.

The company had recently completed their second global strategy scope for Maersk Oil & Gas, Copenhagen, following the successful development of a global Operations Readiness framework and toolbox with a holistic strategy for maturation of Engineering Information Management across the organisation.

Information Quality’s relevant experts and industry professionals reviewed all aspects of Maersk’s operations and management strategies, identifying a number of short term high value solutions which are providing the foundation for a longer term overall

paradigm shift from document and deliverable management to data management.

With pragmatic data management levels and improved governance and assurance models, Maersk received guidance to best practice engineering information management in order to provide simple and intuitive access to all information without undue expenses for the collection and maintenance of extraneous Information.

• Information Quality (Booth BQ3-10) is delivering a presentation on ‘Leveraging Design Information to Achieve Operational Excellence’ today at the OSEA2016 Tech Garage, Basement 2, 1.20pm to 1.40pm.

Bosch Rexroth conducting R&D for autonomous operations in the marine and offshore markets

Maersk Oil

Corporate

Operations

Readiness

Framework

Future-proof innovation at Bosch Rexroth

Raccortubi Singapore to grow market presence in APAC

Information Quality extends Maersk Global Strategic support

From the floor... Tech Garage at OSEA2016


SAFETY

NONE of the major incidents and accidents — many fatal and all costly — that continue to shake the oil and gas industry need have happened, according to Dhirendra Mishra, general manager of pro-duction at Shell Hazira.

“All these incidents could have been avoided if we applied our-selves to how the risks could be managed,” he told the ‘Managing HSSE Performance — Incident Free Operation’ masterclass at OSEA 2016.

Accidents and incidents have long-term ramifications for opera-tors.

Insurance premiums will soar, then regulators put in place more restrictive rules and legislation, which in turn adds to players’ operating costs.

Other issues that companies will have to contend with after a major HSSE breach is the potential loss of trust from joint venture partners and suppliers, Mishra said.

Most important to ensuring safety is that operators must be empowered to shut down plants and not feel pressured into main-taining production or operational up-time purely due to the finan-cial implications.

Many a decision is solely a com-mercial call, with the head of the organisation focused just on prof-it, he lamented.

One key element in the drive to enhance safe operations relates to how handovers between shift leaders are managed.

“There should be a structured process for handovers... a check-list,” whereas it usually takes only five minutes, Mishra said.

Of particular relevance should be the explaining of any unusual situations, such as if a valve is temporarily opened or a system has been bypassed.

“If this information is not cas-caded to the next shift, the next shift person is bound to make mistakes,” Mishra remarked.

Plants are designed to operate safely. Therefore any change or bypass of equipment or even small change is interfering with the de-sign, and this brings inherent risk as a matter of course.

“We have to be very careful if we are not operating within the design... and the existing system for protection is not going to save

Safety: None of the accidents and incidents that have shaken the industry — including the Deepwater Horizon catastrophe in 2010 — need have happened, said Shell Hazira production general manager Dhirendra Mishra at OSEA 2016 Photo: AMANDA BATTERSBY

Managing safety risk under the spotlightDelegates told of importance in enhancing safety of operations in industry

MEXICO’S oil regulators have made public the list of individ-ual companies and consortia set to participate in the coun-try’s inaugural deep- water bid event next week.

The list includes the bidding partnerships for two events running concurrently, the first being the public bid round for 10 open deep-water blocks in the Perdido foldbelt and Salina basin.

The second is a parallel con-test for a 60% stake in appraisal activities for Pemex’s Trion dis-covery.

The list may appear scram-bled as it is not yet known which consortia will be con-tending for what — which of the open blocks, or part of the farm-out of the Pemex find.

Howver, no company may participate in more than one offer on a given block — if they do, both offers will be disquali-fied, officials said.

Companies certified to bid as individuals by Mexico’s National Hydrocarbons Com-mission (CNH) are Australia’s BHP Billiton, UK supermajor BP, China National Offshore Oil Corporation, US supermajor ExxonMobil, Malaysia’s Petro-nas, Mexico’s Pemex, Norway’s Statoil and France’s Total.

The CNH also certified seven consortia, including: Chevron alongside Pemex and Japan’s Inpex, US independent Anad-arko with Shell, and Italy’s Eni with Russia’s Lukoil.

Total was registered in two consortia, one alongside BP and Statoil and one with Exxon Mobil.

Also qualified was a four-way tie-up between US independent Murphy, London-listed Ophir, Petronas and Mexican private-equity backed entity Sierra Oil & Gas.

Petronas is also registered as a joint bidder with Sierra.

In the end, 10 of the 26 com-panies that initially pre-quali-fied for the round elected not to take the process further.

Those were US independents Hess and Noble, Spanish player Repsol, Portugal’s Galp, India’s ONGC Videsh and Brazil’s Petrobras.

Also stepping back were Japan’s Mitsubishi and Mitsui, as well as Petro-Canada Inter-national Holdings.

Mexico eyes deep bidders

AMANDA BATTERSBY Singapore

MEXICAN EXPLORATION

Regulator reveals hopeful companies

us if there is an oversight.” Com-panies also need to make their chief executives aware of the safe-ty issues surrounding their opera-tions.

“We need to make our chief ex-ecutives realise the consequences (of safety lapses)... it’s much more critical than anything else in the organisation,” he said.

Operators and contractors need to learn not from their own inci-dents but from the experience of others, Mishra added.

“We’ve been having major inci-dents in the industry year after year. Things are improving… but there is something missing some-where, we’re not learning. Even if you [only] apply what free know-ledge is available on the net, that can bring in a step change to the operating facility.” Mishra has

spent more than half of his 27-year career working on liquefied natu-ral gas facilities.

He was chief of operations at Petronet LNG, which developed Dahej — India’s first LNG import terminal — and for the last dec-ade he has been head of opera-tions at Shell’s Hazira receiving and regasification project, also in India.

www.jdngroup.com

VISIT US ATBOOTH 1R3-01


AUSTRALIA

AUSTRALIA’S national auditor claims the system in place for the collection of royalties from the North West Shelf (NWS) joint ven-ture is insufficient.

The Australian National Audit Office (ANAO) tabled a report in parliament on Monday regarding the Department of Industry, Innovation & Science’s (DIIS) administration of the NWS project royalty system.

The report found the NWS ven-ture had reduced its royalty pay-ments by claiming more than A$5 billion (S$5.33 billion) in deduc-tions between July 2014 and De-cember 2015.

According to the ANAO’s report, there had been “limited scrutiny” of the claimed deductions by the NWS venture and that some errors had been identified, while adding available evidence indicated that the problems were greater than had been calculated.

The deductions were claimed under the categories of operating costs, depreciation, cost of capital, depreciated asset disposal, crude excise, condensate excise, process-ing tariffs and joint venture par-ticipant costs.

The ANAO found in its report that the current royalty schedule did not permit all of the deduc-tions being claimed, adding it had doubts over the eligibility of de-ductions claimed for the cost of debt and equity funded capital, excise paid on crude and excise paid on condensate.

The West Australian govern-ment recently commissioned con-sultants to carry out some data analysis on capital and operating expenditure items claimed by NWS producers. According to the

In the spotlight: the North West Shelf Photo: WOODSIDE

Questions raised over NWS venture royaltiesANAO criticises collection system as operator defends compliance procedure

TWO former directors of Oil Ba-sins could launch a legal claim against the Australia-listed com-pany that is now in the process of preparing its own counterclaim, writes Josh Lewis.

Oil Basins revealed early this week it had received notice of a possible legal claim by former chairman Kim McGrath and ex-chief executive Neil Doyle for amounts outstanding under their former positions with the com-pany.

Oil Basins plans to defend any such action and is carrying out its own investigation into the merits of the claim and also the conduct

of the two men during their time with the company. It is also seek-ing legal advice to establish its own counterclaim against the two former executives if the legal pro-ceedings go ahead.

“At this point both Mr McGrath and Mr Doyle are refusing to re-turn company property, informa-tion and records, which will form part of the counterclaim for dam-ages against them,” Oil Basins said in Monday’s announcement.

McGrath and Doyle lost their seats on the board in September following a general meeting, with the company also revealing at the time it had received a letter from

the Australian Securities & In-vestment Commission (ASIC) in relation to McGrath’s conduct.

ASIC claimed in its letter that the company co-founder had acted improperly during the annual general meeting in November 2015 to avoid the company taking a first strike on its 2015 remunera-tion report.

The corporate watchdog said it had been made aware 43.2% of the proxy votes received before the meeting were against the resolu-tion to adopt the remuneration report, yet it was still passed by a show of hands at the meeting.

Companies are required to

record a strike if over 25% of share-holders vote against the adoption of the remuneration report.

If two strikes are recorded at consecutive annual general meet-ings, all board members must be removed from their positions and stand for re-election if they want to continue as directors.

Three of the company’s four board members at the time of the 2015 annual general meeting are no longer with Oil Basins and the new board is currently carrying out a review of the voting and the actions of McGrath at the meeting and will report its findings to ASIC.

Kattupalli upgrade for L&T

INDIAN engineering giant Larsen & Toubro (L&T) has unveiled high-tech spoolbase facilities at its Kattupalli yard on the east coast required for execution of the Vashishta and S1 subsea installation project, awarded by state giant OIl & Natural gas Corporation (ONGC) last year, writes Nishant Ugal.

“These facilities are being employed to execute a prestig-ious lump-sum turnkey con-tract from ONGC for a subsea installation by a consortium of McDermott & L&T Hydrocar-bon Engineering in interna-tional competitive bidding,” L&T said.

L&T won the US$350 million-plus (S$500 million) subsea project in a consortium with US giant McDermott last year.

L&T Hydrocarbon Engineer-ing chief executive Subrama-nian Sarma said that “such high-end technology required for deep-water operations is being transferred and embed-ded in India for the first time” under the partnership with McDermott.

ONGC offshore director TK Sengupta claimed the facilities being installed at Kattupalli are crucial for the company’s deep-water plans.

“For our deep-water cam-paign, this is a very significant step because we are going to-wards a gas-based economy for which it was very important to prepare ourselves for the fu-ture,” he said.

L&T and McDermott are also bidding together for various contracts related to ONGC’s KG-DWN-98/2 development and the Reliance Industries-operated R-series and satellite field project.

L&T also earlier this year signed a memorandum of under-standing with GE Oil & Gas, under which the duo will jointly manufacture subsea manifolds for deep-water projects in the Krishna-Godavari basin.

L&T’s 600,000-square metre modular fabrication facility at Kattupalli will be used as the production site, sources said.

The plant is equipped with advanced welding and fabrica-tion capabilities and a 150- metre jetty, which GE reckons makes it “an ideal location to manufacture advanced hard-ware for the seabed”.

Industry experts believe that, with its three large-scale modular fabrication yards, L&T stands to gain from various projects being floated for the east and west coasts of India.

Former Oil Basins executives preparing legal action

JOSH LEWIS Perth

ANAO, that work provided valua-ble insights and, to date, it had been agreed a net amount of A$8.6 million in royalties had been underpaid and requiring adjust-ments.

However, it added many of the matters identified by the consult-ants commissioned had not been addressed.

It said significant effort was re-quired to resolve the status of an-other A$218.4 million in operating expenditure deductions and $21.1 million in capital expenditure de-ductions.

However, a spokesperson for the NWS venture highlighted the re-port suggested the maximum po-

tential underpayment of royalties would be A$11.6 million if all such deductions were found to be non-compliant.

“Woodside as operator of the NWS project has robust compli-ance processes with regard to roy-alty obligations,” the spokesperson told Upstream. “We have support-ed both the DIIS in the assurance review carried out by the ANAO and the 2014 NWS project royalty audit by the Department of Mines & Petroleum in an open, transpar-ent and co-operative manner.”

The NWS venture paid A$1.9 bil-lion in royalties between July 2014 and December 2015, which was roughly 10% of the A$19.7 billion

in petroleum sales over the same period, compared to the maxi-mum royalty rate of 12.5%.

The ANAO said there were “sig-nificant shortcomings” in the framework for calculating royal-ties from the NWS venture, while also revealing it had been 17 years since there had been an audit of the NWS operator’s control proce-dures for royalty calculations.

It also noted the consolidated royalty schedule governing the calculations had not been updated in the past 10 years.

The NWS joint venture consists of operator Woodside Petroleum, BHP Billiton, BP, Chevron, Mitsubi-shi, Mitsui and Shell.

OFFSHORE ENGINEERING

Indian contrator unveils new spoolbase

Search the archive:

L&T


FLOATING PRODUCTION MARKET

BW OFFSHORE has confirmed that it intends to submit bids to Petrobras for a pair of floating pro-duction projects off Brazil within the next two months as it report-ed a third-quarter loss amid con-tracting challenges.

The Oslo-listed floater contrac-tor will deliver its commercial proposal for a floating production, storage and offloading vessel for the Libra 1 pilot project in Decem-ber, while its bid for an FPSO on the Sepia scheme will be submit-ted in January, chief executive Carl Arnet told a results presenta-tion in Oslo on Monday.

It is understood that BW will be up against familiar rivals Modec International, SBM Offshore, Blue-water, Bumi Armada, Teekay Off-shore and Yinson for the coveted contracts amid a work drought in the FPSO market as oil companies have put field developments on hold amid low oil prices. Arnet

indicated BW’s Belokamenka floating storage and offloading vessel, which has previously been used by Rosneft off Russia but is now unemployed, could be a suit-able candidate for either project, presumably as a converted unit.

He said the vessel has already been accepted by the Petrobras-led consortium on Libra and “we believe this unit should be suita-ble to complete these projects within the time schedule set by the client”.

The FSO is among three idle units for which BW is presently seeking work as the company has recently also suffered contracting blows on other vessels.

Its Berge Helene FPSO is set to become unemployed next year after Malaysian client Petronas Carigali decided not to extend the contract for the vessel beyond May 2017 due to the shutdown of the Chinguetti field off Maurita-

nia in the wake of low oil prices.BW will also lose out on an opera-tions contract with Statoil for the Peregrino FPSO off Brazil from June 2017 after the Norwegian operator decided not to renew the five-year deal and will instead in-source operational services, resulting in an annual revenue loss of around US$50 milllion (S$71.4 million) for the contractor.

Furthermore, the company has launched a US$52.6 million arbi-tration claim against Addax Petro-leum over a payments shortfall for the Sendje Berge FPSO being used by the Sinopec-owned client off Nigeria, stating it considers “the arguments for not paying the full rate unjustified”.

Arnet said the client is pres-ently only paying about one-third of the agreed dayrate for the float-er.

Addax is now in the market for a replacement unit and Arnet said

in response to an analyst’s ques-tion that this was apparently an attempt to put pressure on BW to reduce the dayrate for the existing FPSO.

However, he said “we don’t see a lot of pressure from that as it is a very expensive exercise to replace the FPSO and is not very viable at current production rates”, adding “the defence being put forward by Addax is very weak”.

He warned though there was a counterparty risk on the Sendje Berge contract that could result in a revaluation of the asset.

BW reported a wider quarterly net loss of US$11.2 million, com-pared with a year-earlier loss of US$7.3 million, as operating reve-nue was slashed nearly 50% over the year to US$159.6 million from US$308.7 million in the same pe-riod of 2015, with operating profit sinking to US$19.2 million from US$34.2 million a year ago.

Proposals: BW Offshore chief executive Carl Arnet Photo: ALEKSANDER NORDAHL

BW Offshore confirms bids for Brazil FPSOsFloater contractor to submit offers for units destined for Petrobras’ Libra 1 and Sepia projects

UK PLAYER Hurricane Energy has secured a floating produc-tion, storage and offloading ves-sel for its Lancaster develop-ment in the UK West of Shetland area, writes Anamaria Deduleasa.

The London-listed company said on Monday that it signed a deal with Bluewater Energy Services for the use of the Aoka Mizu FPSO for the early pro-duction system phase of the development.

Hurricane will have the right to extend the contract for up to 10 years, it said.

Under the agreement, signed on board the Aoka Mizu at the Remontowa yard in Gdansk, Poland, Bluewater granted Hurricane an exclusive right to enter into fully-termed agree-ments until November 2017.

“It is the parties’ intention to enter into fully-termed agree-ments prior to Hurricane’s expected sanction date in mid-2017,” Hurricane said.

Hurricane holds a 100% in-terest in Lancaster.

Following the deal, Hurri-cane and Bluewater have start-ed a second phase front-end engineering and design study that is expected to be complet-ed in early the second quarter of next year.

“This will allow us to main-tain our desired first oil date of first half of 2019 and further demonstrate the potential of fractured basement reservoirs in the UK,” Hurricane chief ex-ecutive Robert Trice said.

Bluewater chief executive Hugo Heerema added: “This very serious UK development shows the guts and insight a smaller oil company can as-sume, and therefore I am proud that Bluewater can be part of it through the deployment of its Aoka Mizu, a young and fit North Sea FPSO with an excel-lent track record.

“The dedication and will of both companies to work with each other has led to a realistic contract with understanding of each other’s needs and con-straints, and that caters for low and high oil price scenarios.

“Equally important, this shows that even in a low but im-proving oil price environment developments can be made eco-nomical,” Heerema said.

Bluewater also said it has won orders for five single point mooring systems, but declined to offer further details.

The Aoka Mizu FPSO left Nexen’s Ettrick field off the UK in August after completing its contract there.

Lancaster FPSO deal secured

STEVE MARSHALL Oslo

UK WEST OF SHETLAND

Operator Hurricane signs up Aoko Mizu

Search the archive:

Lancaster


FEATURE

THAILAND has a mature explora-tion and production industry and yet still manages to attract new investments, although the gov-ernment would like to see a ramp up in exploration that, it hopes, will help arrest the increasing gas supply shortfall.

Thailand’s proven reserves at the end of 2015 were 218.79 million barrels of oil, 177.57 million barrels of condensate, and just 7.3 trillion cubic feet of gas — the nation last year produced more than 1 Tcf of gas.

Liquefied natural gas is already being imported, albeit currently at rates below initial predictions, and new facilities are planned in tandem with the expansion of national upstream company PTTEP’s existing Map Ta Phut terminal.

In the first eight months of 2016, Thailand energy demand stood at 2.11 million barrels of oil equivalent per day — up 1.1% from the same period of the previous year — mainly due to rising petro-leum consumption, according to the Ministry of Energy.

PTTEP explains that the in-crease in energy consumption is a reflection of lower crude prices and the recovering Thai economy, which is expanding faster than previously expected.

“The expansion was stimulated by strong public sector invest-ments, higher private consump-tion from the economic stimulus and growing tourism,” says PTTEP.

The Bank of Thailand has raised the nation’s 2016 economic growth forecast to 3.2% from 3.1%, while the increase in private consump-tion compensated for a fall in exports as a result of the UK vote to leave the European Union.

Renewed exploration will be key for Thailand to meet its bur-geoning oil and gas demand, and the government is hoping this will come about following the 21st licensing round that could yet be held before the end of next year.

The Department of Mineral Fuels (DMF), part of the Ministry of Energy, is the sole governmen-

Contribution: state-run oil company PTTEP has 16 projects in Thailand,

including the onshore Sirikit oilfield Photo: BLOOMBERG

Thailand hopes new finds Government keen to see exploration fill the gap as supply shortfall grows

AMANDA BATTERSBYSingapore

tal agency overseeing the upstream petroleum industries of Thailand.

Its main responsibilities in-clude the promotion of petroleum exploration and exploitation, enhancement of domestic petro-leum supply, and acceleration of petroleum development in over-lapping claimed areas.

To successfully achieve the goals, its policy is concentrated on national energy management to increase the competitiveness of the production sectors and create energy price stability.

The DMF is keen to promote the use of natural gas in Thailand in-stead of flaring or venting.

Among its initiatives are projects such as exploiting gas from PTTEP’s Pratu Tao oilfield to generate three megawatts of elec-tricity, using gas from the same operator’s Nong Tum oilfield — both on the onshore S1 concession

THAILAND’S National Legislative Assembly (NLA) passed the amended drafts of two petroleum bills in June by an overwhelming majority, writes Amanda Battersby.

A 21-member ad hoc committee was nominated to carry out a detailed evaluation of the legislation for further deliberation by the assembly.

However, sources say that some NLA members voiced objections to the drafts, claiming they left out some important

elements suggested by an energy panel, particularly in relation to the setting up of a national oil company.

Energy Minister Anantaporn Kanjanarat earlier said that the government was considering appointing the Finance Ministry or an educational institute to evaluate the merits of a possible national oil company.

He added that the petroleum laws could be amended again in future, if

required to accommodate such an entity.The aim of the national oil company would be to initially acquire stakes in the Bongkot and Erawan gas fields so that production continuity could be maintained if there were to be a change of operator.

However, some industry pundits have expressed concern that if such an entity were to be created, it would also have a regulatory role, as has been proposed to the NLA by Thai Energy Reform Watch.

PTT chairman Piyasvasti Amranand has said the most practical way to handle the issue would be for the government to negotiate for the state to have some stake in the Bongkot and Erawan fields before their concessions expire.

However, Piyasvasti told local media he was not in favour of setting up a new national oil company that is wholly owned by the state, since it could be prone to corruption and abuse by politicians.

National oil company questions cloud petroleum bills

— to produce LNG and power com-munity enterprises.

The DMF is also looking into adding vapour recovery systems at PTTEP’s Bongkot gas field and the Chevron-operated Benchamas oilfield — both in the Gulf of Thai-land.

PTTEP achieved domestic pro-duction of 239,387 barrels of oil equivalent per day in the third quarter — 77% of the operator’s

global production — while such output for the first nine months of 2016 averaged 241,554 boepd.

PTTEP’s domestic operations posted a net profit of $152 million in the third quarter, making it easily the company’s most lucra-tive asset base.

“The increase was primarily due to an increase in petroleum reserves at the Contract 4 project, which resulted in a fall in depre-

ciation, depletion and amortisa-tion expenses,” says PTTEP. “How-ever, sales revenue decreased primarily from the B8/32 and 9A project as a result of a decrease in the average selling price, even though the average sales volume increased.” Co-venturer Kris-Energy adds of the Chevron-oper-ated asset: “B8/32 & B9A continued to produce at the highest rates in more than three years as a result

THAILAND E&P

2010 2011 2012 2013 2014

2D seismic (line kilometres) 6710 964 862 32 0

3D seismic (square kilometres): 2230 4982 7335 1317 842

Exploration/appraisal wells: 65 44 56 100 44

Development wells: 432 519 578 553 796

Sales volume - gas (billion cubic feet): 939 923 1069 1071 1098

- oil (million barrels): 55.98 49.1 52.3 54.4 49.4

- condensate (million barrels) 29.3 29.3 33.2 33.4 34.2

Source: Department of Mineral Fuels


2017 is shaping up to be a pivotal year in Thailand’s upstream sector, writes Amanda Battersby.

The Department of Mineral Fuels (DMF) is looking to officially launch the 21st licensing round next year. It would be the first such exercise in a decade.

Next year had been expected to see the award of new contracts for the producing giant Bongkot and Erawan gas fields, which collectively account for about three-quarters of the Gulf of Thailand’s output.

The fields have combined production of 2.2 billion cubic feet per day, which meets half of Thailand’s gas demand, but their existing contracts will expire by 2023.

Before last month’s passing of King Bhumibol Adulyadej, the government had hoped to have the terms and details for the planned auction for the new Erawan and Bongkot contracts in place later this year.

The schedule had been to open the auction in March 2017, with bids likely to be submitted in June and then the winners would be announced in September.

However, government officials said the award was not likely until 2018.

While Prime Minister Prayut Chan-o-cha has asked businesses to stay open and continue operations, state enterprises will observe a year

of mourning. Industry sources and consultants privately say that while they expect business will not face major disruptions during the coming year, there could be some slight delays as individuals mourn.

Management of state-owned upstream company PTTEP had said the company would bid to retain Bongkot, while US supermajor Chevron has its eye on securing a new contract for Erawan.

Meanwhile, revised versions of Thailand’s Petroleum Act and Petroleum Income Tax Act are expected to be ratified by the National Legislative Assembly and could yet be implemented before the end of 2016.

Then, late next year, the government intends to finally launch the 21st Round, which has been on hold since 2011.

This bid round, which has already been delayed several times, comprises 29 blocks — 23 onshore in central and northeast provinces and six offshore in the Gulf of Thailand.

Energy Minister Anantaporn Kanjanarat earlier said the revised petroleum laws would give the government the flexibility to choose between concession, production sharing contract or service contract models for the upcoming auction of the Erawan and Bongkot gas fields.

The DMF is said to be open to a non-concession model for 21st Round blocks G3/57, G5/57 and G6/57, which contain, or are near to, producing fields and oil and gas discoveries and infrastructure.

Thailand’s last bid round nine years ago failed to attract the level of interest and participation from industry heavyweights hoped for by the government.

PRODUCING FIELDS IN FRAME

Disruption possible after king’s death

Gearing up for first bid round in a decade

NATURAL gas currently fuels nearly 70% of Thailand’s electricity production, in addition to feeding the petrochemical industry.

Thailand already receives pipeline gas imports from neighbouring Myanmar and imports liquefied natural gas, and such imports are expected to increase.

The Energy Regulatory Commission this year moved to allow other players as well as PTT, the former Petroleum Authority of Thailand, to import LNG and get involved in gas infrastructure in Thailand.

“We want to focus on the LNG business, we want to take the opportunity,” PTTEP chief executive Somporn Vongvuthipornchai earlier told Upstream.

The Electricity Generating Authority of Thailand (Egat) quickly jumped on the bandwagon and recently unveiled plans to import LNG and deploy floating storage and

regasification units.Egat has initial plans to

import some 5 million tonnes per annum of LNG via an FSRU to be deployed in the Gulf of Thailand.

PTT’s existing receiving and regasification project at Map Ta Phut is being expanded from 5 million tpa to 10 million tpa and then further to 11.5 million tpa.

Also the Thai government this year approved PTT’s plan to build a second such LNG import facility with an initial 5 million tpa capacity in Rayong.

Thailand’s 2015-2036 power development plan envisaged imports of about 22 million tpa of LNG in 20 years’ time, up from the current 4 million tpa.

This week the provisional target was increased to 34 million tpa in 2036.

Liquefied natural gas set to take centre stage

FOR someone unused to Thailand and its culture, it might be difficult to fully appreciate just how revered its royal family is and just how loved its recently deceased king was.

King Bhumibol Adulyadej, or King Rama IX, who passed away on 13 October aged 88, was the world’s longest reigning monarch. He had led — and been a unifying force to — the nation for 70 years, so most of the people have only known this one head of state.

So revered was the late king that most homes, offices and schools have pictures of him.

Thailand has entered a year of mourning and

celebratory behaviour is off limits for at least 30 days. The government has asked the population to wear black or white clothing as a mark of respect for the month after the king’s death. Civil servants are re-quired to wear black clothes for a year.

Also many companies have changed the home pages on their websites to black and white as a mark of respect while almost all have a picture of their beloved monarch.

Thailand’s lese majeste law spells out prison terms of up to 15 years for anyone convicted of defaming, insulting or threatening the king, queen, heir appar-ent or regent.

Respect for royalty runs deep

Search the archive:

PTT

2015 THAI OIL & GAS ACTIVITY

Offshore exploration wells: 29, 18 of which were successful

Onshore exploration wells: 20, 10 of which were successful

Development wells: 855

Offshore 3D seismic: 43 square kilometres

Onshore 3D seismic: 432 square kilometres

Source: Department of Mineral Fuels

Looking ahead: PTTEP chief executive Khun Somporn Photo: PTTEP

are in pipeline

of wireline zonal recompletions. Average oil production in the

third quarter was approximately 29,150 bpd and average gross gas production in the quarter was a little over 148 MMcfd.”

PTTEP has 16 projects in Thai-land, most of which are in produc-tion located both in the Gulf of Thailand and onshore.

Its flagship projects include the Bongkot and Arthit developments in the Gulf of Thailand, the onshore S1 acreage and the Chevron-operat-ed Contract 4 project, in which it has the 45% majority equity. The

Contract 4 project comprises the producing B12/27 concession, which is home to the Pailin, Nin, Morakot, Paytai, Ubon and Taptim gas and condensate fields, and the G7/05 exploration block.

PTTEP is actively pursuing a number of cost reduction initia-tives, including the reduction in the number of drilling days, opti-misation of wellhead platform design, contract renegotiations on current and future equipment rental and services.

The operator is also optimising its logistics and reducing the

number of supply boats alongside inventory management.

In the first nine months of 2016, PTTEP has managed to lower its unit cost per barrel of oil equiva-lent to $29.98 — down 23% com-pared to last year.

PTTEP, which is planning to in-crease its investments in Thai-land, says the Thai baht is expect-ed to weaken as the US Federal Open Market Committee is ex-pected to increase interest rates in late 2016.

However, the US president elec-tion will be another factor that will affect the money market.

“The financial performance of PTTEP will be affected in the form of tax expense as a result of the difference between PTTEP’s tax filing currency and functional currency, although the cash flow is not expected to be materially impacted,” says the state-owned company.


Scenes from the show Photos: OSEA

In the picture at OSEA2016...

Documents

Today - OSEA2020 HYBRID EXHIBITION