News, data and analysis for the ’s energy professionals November 2012 • Vol. 8 Issue 11

UAE energy profile The upcoming mega-projects in ’s exciting pipeline

drilling tech report Drilling spend trends to be shaped by unconventional gas revolution

first movers Dana Gas and Crescent Petroleum on transforming Iraq ahead of the pack opening

upHE Mohammed Obin Hamadman Al Rumhy, Minister of Oil and Gas of the Sultanate of Oman, reveals what’s driving business in the region’s most exciting exploration and production environment interviews: Halliburton, Total, sh worleyparsons,ell, oil plus, S

nakilat, iemens, and N-KOM

Gulf O&G jobs outlook | pipelayer tech focus | plant safety & security special | libyan legal snapshot UAE Country Profile ADCOP Triumph The – pipeline was commissioned earlier this year. At full capacity the cross-country pipeline will be able to handle 67% of Abu Dhabi’s oil production. Arsalan Iqbal of Contax Partners examines what this crucial bit of infrastructure does for the UAE, and its implications for relations with Iran

46 Oil&Gas Middle East November 2012 www.arabianoilandgas.com UAE Cocountry Profilprofile

OPEC COUNTRY PROFILES

he future of GCC econo- scape has been, and shall con- tion and lack of any routing block the , mies depends heavily tinue to be, influenced by devel- alternatives. Only a width of 3 countries that supply as much on the output capacity opments in the oilfield. kilometers in each direction is as 85% of their oil to South of major oil producing Oneenezuela such is noteworthythe larg- accessible for deep-water ves- East Asia and the subcontinent Tcountries, however, the transit developmentest oil exporterhas been in thethe sels and for regional economies wouldAPPOINTED: be impaired in meeting Rafael D Ramírez VENEZUELAof petroleum products from inaugurationWestern of Hemisphere.the Habshan- Ministerthese channels of Popular Poweralarmingly of fall theirJuly obligations. 2002 JOINED:this region remains of equal VFujairahOil pipelineprovides in the94% UAE,of Petroleumwithin Iranian and Mining territorial waters. CAREERAbu Dhabi, HIGHLIGHTS: holding approxi- importance as nearly 17 million exports,which promises half of tobudget change rev- the Following intense global pres- matelyTechnical 90% Manager,of the UAE’s 97 bil- 1960barrels of oil are shipped daily enues,way oil and is 30% transported of GDP. from sure and sanctions on Iran, the lionINELECTRA, barrels of 1996oil reserves, would through a single source: the theThe Middle country East has and tilted reflects its use of the Strait as a bargaining alsoPresident, be jeopardized national asgas a entity,supplier Reserves:Strait of Hormuz. Contax Part- exportspositively from on the the US stability to China. of tool has become a harsh reality in globalEnagas, petroleum 2000–02 markets. 296.5ners believes billion that bbls the changing Ramirezoil and gas wants supply. to see Chinese and fears exist that this could ExternalIn a recent Director, and PDVSA, very favora- Source:political BP ASRand 2012economic land- exports of 400,000 bpd double. become a vital chokepoint affect- bleFebruary outcome, 2002 however, the com- ThLateste Str aOPECit of figures Hormu sug-z ing oil trade. missioningMinister of of Energy the Habshan-Fujai and Mines, - Production capacity: gestThe VenezuelaStrait of Hormuz is overestimat- is a 21- Hypothetically, if Iran did rahJuly oil 2002–January pipeline (also 2005 referred 2.72 million bpd ingnautical production, mile wide declared passage at 2.8and President, PDVSA, November Source: BP ASR 2012 millionaccounts bpd for inapproximately May but reck- 20% 2004 to date oned by OPEC’s analysts to be Minister of Energy and Latest exports: of the entire world’s oil flows “The Habshan-Fujairah 2.3sourced million from bpd. the Middle East Petroleum, January 2005 to 1.7590% million bpd The country’s reserves out- December 2011 Abu Dhabi holds approximately region and 35% of all petroleum pipeline has given great Source: EIA size Saudi Arabia’s, but con- Minister of Popular Power 90% of the UAE’s 97 billion traded via sea. verting its extra-heavy Orinoco leverage to the UAEof Petroleum in and Mining, barrels of crude reserves. The criticality of this passage can- National oil company: oil to commercial syncrude is December 2011 to date PDVSA not be easily dismissed because securing the future of its uneconomical. Getty Images of its strategic geographic loca- supply routes” Getty Images

www.arabianoilandgas.com November 2012 Oil&Gas Middle East 47 www.arabianoilandgas.com July 2012 Oil&Gas Middle East 43 UAE Country Profile

to as the Abu Dhabi Crude Oil Greater Role of Pipeline or ADCOP) has eased Fujairah fears of a supply impasse, and The development of the Hab- has greatly reduced the signifi- shan-Fujairah pipeline was origi- cance of Iran’s potential threat. nally intended as an internal stra- Abu Dhabi may now transport tegic move to aid in the develop- up to 56% of the UAE’s total daily ment and economic integration output of 2.7 m bpd through the of the Fujairah emirate within Eastern port of Fujairah and cir- the UAE. As a weak economy, cumvent any threat of a supply Fujairah was reliant on the fed- blockade. eral government for develop- Once the pipeline is upgraded ment through subsidies and to its total intended capacity grants. In a far-sighted move by of 1.8 m bpd, it will account for the UAE to capitalise on favora- transport of approximately 67% ble geography and consolidate of the country’s oil capacity. Fujairah’s position as a leading oil bunkering port, the new pipe- Habshan-Fujairah line will help the UAE diversify pipeline its supply routes. The Strait of Spanning 362 kilometers and Hormuz chokepoint can now be capable of carrying 1.5bpd of circumvented altogether and, at crude oil from the Habshan col- the same time, economic sustain- lection point in Abu Dhabi to the ability may be pursued in Fujai- port of Fujairah, the Habshan- rah. Fujairah pipeline has given great Domestically, while this emirate leverage to the UAE in securing does not produce any oil or gas of the future of its supply routes. its own, it handles approximately Built by the China Petroleum 1 million tonnes per month of Once upgraded, the pipeline will transport 67% of the country’s oil capacity. Engineering & Construction marine transportation including Corporation at a cost of $3.3 bil- fuel and related products. lion, the pipeline includes a 14 Furthermore, the Abu Dhabi kilometer offshore section, oil government has also commis- storage tanks, terminals and off- sioned a refinery in Fujairah to shore mooring devices. process 200,000 bpd at a total 362 kilometres The pipeline will help offset cost of US$3 bn. In turn, this The Habshan-Fujairah pipeline spans the UAE’s desert and mountainous reliance on regional oil terminals promises to be the catalyst to regions for a whopping 362 kilometres. and enable the UAE government generate new activity, employ- to avoid shipping congestion ment and opportunities for through the Strait of Hormuz. future expansion in the region. Subsequently, by catering to The clustering effect is already deep water vessels in the open somewhat visible, with the con- sea, it would make cargo opera- struction of a new $817 million “Some analysts estimate that tions more efficient and less risk- hotel and resort project under- transport costs may fall by prone; vessels would therefore way to boost tourism. be subject to reduced insurance Soon after the commission- approximately 25% when the and freight costs. ing of the Habshan-Fujairah Habshan-Fujairah pipeline Some analysts estimate Pipeline on 21st June 2012, that transport costs may fall the European Union imposed becomes fully operational by approximately 25% when an oil embargo on Iran on 1st due to lower maritime the Habshan-Fujairah pipeline July 2012, which resulted in an terrorism risks and wartime becomes fully operational due immediate ban on oil imports to lower maritime terrorism into 27 European countries premiums” risks and wartime premiums. from Iran. This included end-

48 Oil&Gas Middle East November 2012 www.arabianoilandgas.com UAE Country Profile

The pipeline will help the UAE transport its oil should the Straits be comprimised.. The Habshan-Fujairah pipeline delivers crude oil to the Fujairah port. ing all exemptions for con- for rice, medicine, engineering reliance on nuclear power and tracts that were signed before supplies and steel to be made thus have a renewed appetite for Companies involved 2012, barred international in the Indian rupee. A few Ira- petroleum products – the Japa- Financing and ownership – IPIC insurance for Iranian oil ship- nian financial institutions have nese government has granted FEED - WorleyParsons ments and heavily restricted subsequently been allowed to maritime sovereign insurance (assisted by Intecsea) the country’s ability to do busi- open accounts in the local rupee worth US$7.6 bn to continue Technical assurance, risk, asset ness with the rest of the world. denomination delivery of Iranian crude oil management and inspection - In response, it is reported that • China: Iran has been rely- Despite securing some of its Germanischer Lloyd the Iranian government has ing on state-backed insurance biggest customers, Iran has suf- Main EPC – China Petroleum resorted to continuing sale for its own tankers to supply to fered nearly US$133 mn a day Engineering and of petroleum to its preferred China, which is its number one in lost sales whereas daily ship- Construction Corporation partners and accepting pay- customer. This mechanism, ments have plunged by 1.2 mil- (CNPC) ments through the following while costly and time-consum- lion barrels a day. Sub-EPC - Techno alternate mechanisms: ing, also adds an element of After losing its status as the Engineering Services • India: After initially banning increased risk by placing faith world’s second largest producer Main EPC subcontractor - Iranian tankers in its waters to in the Iranian government for in the world, the Persian state is Penspen International comply with international sanc- insurance payouts continually struggling to keep its Pipeline subcontractor - SPCC tions on Iran, it is reported • Japan: Due to the fallout from economy afloat. It is feared that Pipeline Construction that India has agreed to trade the Fukushima nuclear reactor, existing or increased pressure Company (CNPC) for Iranian oil with payments the Japanese have reduced their might force a retaliatory meas- Construction management – ure, such as closure of the Strait ILF Consulting Engineers of Hormuz. Electrics – ABB With the Habshan-Fujairah Electrical testing - Aggreko pipeline coming online however, Cables – Ducab, R&M the UAE government’s initia- Wholesale Electric $4.2 Billion tive will help reinvigorate confi- Landscaping – Menard The pipeline project cost rose by almost a billion dollars from an initial dence in the future of the UAE’s Oil tanks, Fujairah - Belleli estimate of $3.3 billion oil supply and reinforce its long- Energy term objectives to protect and Pipes - Sumitomo, develop its domestic oil and gas Salzgitter, Jindal Saw assets.

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