Holland Gulf Chamber of Commerce » oil & gas

Saudi government spends SR220bn on fuel subsidies

jochemgeheniau — Mon, 07 Oct 2013 10:03:12 +0000

The Kingdom spends SR220 billion a year to subsidize gasoline and diesel, a Shoura Council member said here recently.
Fahad bin Juma’, deputy chairman of the committee for energy and economic affairs, said the country uses an estimated 2.8 million barrels of petrol and gas a day during the summer season to desalinate water and to generate electricity. The consumption drops to two million barrels a day at other times during the year.
Bin Juma’ told local media on the sidelines of a solar energy conference in Riyadh that the Kingdom is looking for alternative energy sources, either from clean energy produced from nuclear power, or through wind and solar energy.
He said the Kingdom has started using solar energy on Fursan Island on the Red Sea in the south of the Kingdom.
He said research and money is needed to exploit this energy source and that the private sector needs to invest in the field. Bin Juma’ said investors would face various challenges including dust, wind and the strong sun in the region.
He said the Kingdom was trying to reduce energy consumption by calling on citizens and residents to use electricity sparingly in their homes and workplaces, and to use public transport.
He said another way to cut consumption would be to raise prices. “The price of gasoline and diesel could be increased and while this measure may not reduce energy consumption, it will ease traffic congestion in cities.”
Bin Juma’ said the world would not stop using petrol, no matter how advanced the other alternatives.

Saudi, Kuwait shelve Dorra gas field project

jochemgeheniau — Wed, 04 Sep 2013 09:25:40 +0000

KHOBAR, Saudi Arabia, Aug 29 (Reuters) – Saudi Arabia and Kuwait have shelved their project to develop the Dorra offshore gas field after disagreeing over how to share the gas back on land, a senior Kuwaiti energy source said.

Dorra has long been a bone of contention between Kuwait and Iran, which also lays claim to part of the field.

Kuwait agreed with Riyadh in 2000 to jointly develop the field they desperately need to satisfy their growing gas thirst. Thirteen years on, little progress has been made and it has now been shelved indefinitely.

“The entire project is on hold, the budget is on hold, no new drilling is anticipated for the 2013/2014 budget for Dorra,” said the source.

The plan had been to share Dorra’s gas at an offshore facility and pump it down separate pipelines to the project partners. Early last year, Saudi Arabia began pressing for all the gas to be piped first to Khafji, a town on the Saudi side of the border, before piping Kuwait’s share overland.

A route via Saudi Arabia raises security of supply issues for Kuwait.

But the original plan to pump its share direct to a Kuwaiti beach near a big gas fired power plant is also stuck because of land disputes between Kuwaiti energy companies.

“The issue between Saudi and Kuwait has not yet been sorted out, nor has the landing point issue within Kuwait been resolved,” the senior energy industry source said.

Kuwait Oil Co (KOC) has built a large beach club for employees at the landing site and will not give it up until an alternative location is offered.

“We are now back to square one because there is not enough land for the onshore pipeline that will transport the gas from Saudi Arabia to Kuwait… access to all corridors for the pipelines are blocked.”

Kuwati oil and gas officials were either unable to comment, declined to comment or were unavailable for comment. Saudi Aramco could not immediately comment.

Top oil exporter Saudi Arabia plans to raise its gas production capacity to 16 billion cubic feet per day (bcf/d) by 2020. Kuwait, which relies heavily on imports of liquefied natural gas (LNG) to meet a summer surge in air conditioning demand, hopes to nearly quadruple its gas output to more than 4 bcf/d by 2030, with 0.5 bcf/d expected to come from Dorra.

Both need to boost gas supplies to reduce domestic oil consumption for power generation and boost exports, which Dorra’s estimated trillion cubic feet of gas and 310 million barrels of oil should help achieve.

Failure to develop Dorra will likely force Kuwait to buy more costly LNG on the global market.

Doha takes risk on new method

jochemgeheniau — Fri, 09 Aug 2013 07:53:32 +0000

The Gulf state is no longer looking to ramp up petrochemical production slowly, but rather to add a massive amount of capacity within a short timeframe

Qatar’s petrochemicals industry has earned a reputation for delivering high-quality products to the global market. This has been achieved by slowly ramping up production and ensuring the quality of the intermediate chemicals it supplies to its customers.

Now, with two planned megaprojects, the Gulf state is no longer looking to ramp up production slowly, but rather to add a massive amount of capacity in a short timeframe. This is a risk that Doha feels it is now ready to take, and there is no denying it has enough experience in the petrochemicals sector to achieve this hike in production of almost 5 million tonnes a year.

One scheme is Al-Karaana, Qatar Petroleum’s (QP’s) joint venture with the UK/Dutch Shell, which will be tendered in the first quarter of 2014. Several international engineering, procurement and construction (EPC) contractors look set to team up to tackle the scheme. What is unusual about the project is that despite having a budget of $6.4bn, only two packages will be released to contractors. This means there are very few firms willing to take on the risk of the packages that may be worth in excess of $3bn each. What may also strike many as unusual is how firms who are usually extremely competitive when bidding on projects can team up effortlessly when needed.

International EPC contractors working in the region generally have a solid track record when it comes to forming consortiums and this scheme should be no different. It is more prevalent in the power and water sector than oil and gas and petrochemicals, but on most occasions when it has happened, there have been no major disagreements between group members.

Whether a two-package strategy will be cheaper than releasing four or five packages will be unknown until the bids are in. If it is a success, QP will want to emulate this strategy on its upcoming Al-Sejeel scheme.