15 Oct Harnessing resources and developing production
A report prepared by the 15-strong Organisation of Petroleum Exporting Countries (OPEC) predicts a slow down for 2019 of 20,000 barrels per day less in the global growth of oil demand. At first glance that would suggest that the oil and gas industry’s traditional heavy reliance on the suppliers and installers of fire resistance and safety equipment to protect its production sites could weaken as well. However, as FME has discovered, a glance across the sea from the Middle East’s traditional oil producing region to East Coast of Africa, captures a very different picture.
New rich oil and gas fields have been discovered and are now being developed in Mozambique and Tanzania with the recent opening of a huge combined gas turbine power plant in Maputo typical of the projects that will demand fire protection systems.
Looking again at the energy industry within the MENA region there has been for some years a slowdown in the need for the fire protection of new oil wells and rigs there is another picture.
Abu Dhabi’s Adnoc has awarded two front end engineering design (FEED) contracts to develop the Hail, Ghasha and Dalma gas fields to companies from the UK and the UAE.
Adnoc is harnessing its gas resources as part of its vision 2030 growth strategy keeping in mind the energy demand in the UAE. “This FEED award provides Adnoc with the potential to unlock additional undeveloped sour gas reserves and will allow us to deliver against our strategic objective to ensure a sustainable and economic supply of gas,” said Dr Sultan Ahmad Al Jaber, UAE Minister of State and Group CEO of Adnoc.
The project taps into Abu Dhabi’s Arab formation, which is estimated to hold multiple trillions of cubic feet of recoverable gas and from which the project is expected to produce more than one billion cubic feet of gas per day enough gas to provide electricity to two million homes.
In Qatar, focused operators on gas projects have allocated over $9.9bn in capital expenditure for the next four years to ensure that country’s production will remain around 18.1 billion cubic feet per day. Conventional gas projects will be the only source of gas production in Qatar between 2018 and 2021.
Qatar Petroleum is expected to have a 62.1% share of all the production in 2021 with Exxon Mobil Corporation and Total SA will also have 23.8% and 3.5% respectively.
Qatar also has two key upcoming gas projects, Barzan and North Field Expansion, of which Barzan will be producing by 2021 and it is planned that Qatar Petroleum will lead in greenfield gas projects, with participation in both the projects.
There is further new development at South Pars, one of the largest gas fields in the world located on the Iranian border with Qatar in the Persian Gulf. Phase 19 of its operation is involving the drilling of 15 wells on three wellhead platforms 150km away from the Persian Gulf coast.
The gas and condensates extracted from them is to be transferred to a series of new onshore facilities in the Tumbak region via 2 submarine gas pipelines around 129km in length. The daily production targets are considerable including 2 billion cubic feet of natural gas, 75 million cubic feet of ethane, 80,000 barrels of natural gas condensate, 3,000 tons of LPG per and 400 tons of sulphur.
Bahrain meanwhile is fully embracing the era of liquid natural gas with the construction of the Middle East’s first LNG receiving and regasification terminal. Construction is expected to be completed in 2019, at which point the facility will have a capacity of over 22 million cubic metres of gas a day. The facility will consist of a floating storage unit (FSU), an offshore LNG-receiving jetty, a regasification platform, subsea gas pipelines, an onshore gas receiving centre, and an onshore nitrogen production facility.
Such is the strategic importance of this facility to the Middle East that it has attracted a wealth of backers including Samsung C&T, Gulf Investment Corporation (GIC), and Teekay LNG Partners.
Downstream from the basic production facilities for oil and gas there are several projects either underway or at an advanced stage on the drawing board for the development of the chemical industry in MENA using the two basic elements.
However, there has been a warning that despite the abundance of those elements the industry needs to be ultra efficient to make its investments pay off against the intense global rivalry that exists with producers in North America, China and India. It was issued by Sanjay Sharma, the vice president of Middle East and India HIS market. He said: “There’s not much domestic demand, growth rate is starting from a very small base and they’re primarily driven by the export market, high capital cost.”
Regional governments such as the UAE have allocated capital for downstream development in the domestic market and abroad, with state energy companies such as Adnoc looking to evolve as an integrated player.
Adnoc has plans to invest up to $45 billion with its partners, in expansion and development of refining and chemicals capacities in its oil hub at Ruwais, which includes a project to develop the world’s largest integrated refinery.
However, analysts say the region must be mindful of competitiveness and work towards removing trade barriers to compete with established players in China and India that are poised to add more capacity to market.
“China is back and they’re announcing projects on the basis of liquid feedstock, so they’re back in the business. North America is adding around 11 million tonnes of capacity. The Middle East is sitting on liquid feedstock, they need to find a competitive model to execute that,” said Mr Sharma. “The product that comes from Singapore to India comes at zero tariffs whereas products from the Middle East go at 6 or 7 per cent tariff. So the governments should look to engage with free trade agreements.”
Arabian Gulf NOCs are currently laying the foundations, building refining and chemical complexes that can process oil to chemicals more seamlessly than before.
Saudi Aramco, the world’s top oil exporter, for instance, is developing a $20bn oil-to-chemicals complex with Sabic, the region’s biggest chemical player on its Red Sea coast. The facility, which will be integrated with the existing refinery at Yanbu, could have as much as 70 per cent conversion rate for chemicals, one of the highest globally.
“You’re talking about massive volumes coming out of just one complex,” said Mr Sharma. But he also added: “Asia Pacific is expected to contribute more than 50 per cent to the demand growth, out of that China’s contribution will likely be 20 per cent, India’s growth rate is quite fast at 9 per cent.
“These will be strategic moves and [the Middle East] will have to be innovative with products. It’s almost as if the oil companies now really have to go out there and sell their products. That’s some shift. It’s new for the industry.
On a smaller scale some new fire prevention and safety contracts are about to enter the market in Ras Al Khaimah as the Emirate goes ahead with its plan to build a number of new large residential estates.
The Federal Electricity and Water Authority (Fewa) has announced that it will build six new power stations at the cost of Dh490 million in the new estates by 2020.
Mohammed Saleh, director-general of Fewa, said: “More power is needed for the new residential areas in the emirate. The same applies to the new and ongoing industrial projects as well as property investment projects at the Al Marjan Island, Al Hamra and RAK marine city”.