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AFRICA

● Sub-Saharan exploration potential


● Risk awareness and management strategies

LUBRICANTS/FUEL ADDITIVES
● Market megatrends

S U P P LY C H A I N M A N A G E M E N T
● Best practices and new logistics models

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APRIL 2013 VOLUME 67 NUMBER 795

SINGLE ISSUE £22.00 • SUBSCRIPTIONS (INLAND) £270.00


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PUBLISHER IN THIS ISSUE...

T
his month’s issue takes a closer look at E&P activi-
ties in Africa, and asks whether the exploration
potential of the Sub-Sahara region is still being
61 New Cavendish Street, London W1G 7AR, UK underestimated by some industry observers due to the
current relatively low level of proven reserves and
Chief Executive: Louise Kingham OBE FEI production. Outlining four recently successful play types,
Editor: Kim Jackson MEI we assess where the next E&P successes in the region are
likely to be. The magazine also notes the need for opera-
t: +44 (0)20 7467 7118 tors in Africa, and elsewhere, to have a clear risk awareness and management
e: kjackson@energyinst.org strategy, with the recent attack at the In Aménas gas facility in Algeria
having led to a closer scrutiny of in-country insurance cover in recent months.
Deputy Editor: Louise Hunnybun
In addition, we review how the use of supply chain management best
t: +44 (0)20 7467 7142 practices and third-party and fourth-party logistics (3PL and 4PL) providers
e: lhunnybun@energyinst.org can help operators maximise profit margins.
Looking at the global lubricants sector, we reveal 2012 was a year of
Production Officer: Yvonne Laas change and uncertainty, and outline the key trends driving the sector now
t: +44 (0)20 7467 7117 and going forwards. We also introduce the Energy Institute’s new ‘knowl-
e: ylaas@energyinst.org edge strategy’ and explain how continued professional development can
help you ‘stand out from the crowd’ as you look to develop your career in
Editorial enquiries: General enquiries: the energy sector.
Kim Jackson, Editor
t: +44 (0)20 7467 7118 t: +44 (0)20 7467 7100
e: petrev@energyinst.org e: info@energyinst.org

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2 PERSPECTIVE
For advertising opportunities please contact: 3 UPSTREAM
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MEMBERSHIP 14 AFRICA – SECURITY
Check those insurance policies
For all membership enquiries please contact 16 AFRICA – SUB-SAHARA
e: membership@energyinst.org or visit Exploration potential still underestimated?
www.energyinst.org 18 AFRICA – LEGAL
Libyan oil contracts
ABBREVIATIONS
20 AFRICA – ETHIOPIA
The following are used throughout Petroleum Review: Ethiopian exploration points to significant reserves
mn = million (106) kW = kilowatts (103) 22 A F R I C A – A LT E R N AT I V E F U E L S
bn = billion (109) MW = megawatts (106)
tn = trillion (1012) GW = gigawatts (109) Urban biogas for South Africa
cf = cubic feet kWh = kilowatt hour
cm = cubic metres km = kilometre 24 E N E R G Y I N S T I T U T E – K N O W L E D G E S T R AT E G Y
boe = barrels of oil sq km = square kilometres Adding knowledge services to professionalism and good practice
equivalent
b/d = barrels/day 26 CCS – INTERVIEW
t/y = tonnes/year t/d = tonnes/day
Putting the ‘S’ in CCS
No single letter abbreviations are used. Abbreviations go
together eg. 100mn cf/y = 100 million cubic feet per year. 28 IP WEEK – PROFESSIONAL DEVELOPMENT
Standing out from the crowd
30 OIL AND GAS – EMPLOYMENT
Printed by Geerings Print Ltd
MEMBER OF THE AUDIT BUREAU OF CIRCULATION
North Sea investment to lead to a job boom
32 S U P P LY C H A I N M A N A G E M E N T – B E S T P R A C T I C E
Front cover: Developing the latest lubricants to meet market
demands Lessons learnt
Photo: Image courtesy of Shell International, visit 34 S U P P LY C H A I N M A N A G E M E N T – M R O
www.shell.com/lubricants for more information
Optimising operations
Terms of control: Petroleum Review is circulated free of charge to all paid-up mem- 36 S U P P LY C H A I N M A N A G E M E N T – L O G I S T I C S
bers of the Energy Institute. To libraries, organisations and persons not in
membership, it is available on a single subscription of £270 for 12 issues in the UK and Your flexible friend
£440 for overseas subscribers. Agency Commission –10%. ISSN 0020-3076. Energy 38
Institute Registered Charity No.1097899, 61 New Cavendish Street, London W1G 7AR, LUBRICANTS – TRENDS
UK. Change and uncertainty
© Energy Institute 2013. The Energy Institute as a body is not responsible either for
the statements made or opinions expressed in these pages. Those readers wishing to 41 LUBRICANTS – TRENDS
attend future events advertised are advised to check with the contacts in the organi-
sation listed closer to the date, in case of late changes or cancellations. To view the Megatrends matter
full conditions of this disclaimer, visit http://www.energyinst.org.uk/disclaimer.pdf
PERSPECTIVE
the deep-pocketed oil and gas majors,
Africa’s role in ‘Golden Age of Gas’ their big international E&P counter-
parts, and the well-known African oil
Elias Pungong, African Oil & Gas and gas specialists. Opportunities will
Leader, Ernst & Young extend in most areas to the smaller,
local E&P players as well, most often in
partnerships with the larger, more-

I
n a thought-provoking report
published in June 2011, the experienced players.
International Energy Agency (IEA) The ramp-up in E&P activity of course
asked ‘Are we entering a “Golden Age brings opportunity for the oilfield
of Gas”?’ That report described a new services (OFS) segment; but again, not
positive outlook for the global future necessarily just for the big international
of natural gas. This positive forecast OFS players, but also for local and
was based on four factors – ambitious regional companies that can contribute
assumptions around natural gas use in to the supply chains and to the associ-
China; greater use of natural gas in ated upstream support infrastructure
transportation; slower growth in build-out. The broader infrastructure
global nuclear power; and, most criti- build-out may also include massive
cally, a more optimistic outlook for export facilities, as in the case of LNG,
natural gas supply, chiefly driven by but also smaller projects such as
the increasing availability of uncon- led by Nigeria and Angola. While the pipelines and gas distribution networks
ventional natural gas at competitive West African gas growth will continue to support local/regional domestic
prices, and by the expansion of global as flaring is reduced and local gas infra- gas demand. All of this build-out can
supply capabilities for LNG. In its structure is developed, the big future bring substantial local and regional
report, the IEA predicted a growing for African gas will feature yet another opportunities. Certainly the associated
role for natural gas in the world’s move – this one to the east and centred development or expansion of a domestic
energy mix, with natural gas the only on the most dynamic recent develop- gas demand sector could bring substan-
fossil fuel whose share was growing. ments in the African natural gas sector, tial commercial opportunities in the
Importantly, the development of nat- the massive offshore gas discoveries in power generation, industrial and even
ural resources – oil and natural gas in East Africa, particularly in Mozambique transportation sectors. Indeed, many of
particular – is a ‘foundational’ element and Tanzania. the gas flaring reduction efforts are tied
of economic growth and development. Just 10 years ago, East Africa was a to domestic gas use projects.
In developing countries, it typically ‘non-story’ as far as oil and gas went. African governments and local and
accounts for a significant part of the Today, however, it is now seen as the regional NGOs will, of course, have crit-
state’s revenues and, more importantly, ‘new promised land’ or the ‘next epi- ical roles to play – first and foremost,
it represents a ‘prime mover’ for centre’ for global natural gas, the developing a meaningful and practical
employment, infrastructure develop- newest ‘new frontier’. With the recent master gas development plan, one
ment and the improvement of the massive discoveries, East Africa repre- that addresses the upstream tax and
broader social well-being. sents the growth engine for Africa’s licensing models, as well as the
natural gas sector – maybe not the next necessary infrastructure issues and
Qatar or Australia, but certainly a poten- investments, and local training and job
Bright prospects tial LNG heavyweight on par with creation issues. Collaboration and part-
With its rapidly evolving natural gas Nigeria. East African LNG is expected to nerships with the international oil
sector, Africa is seen as likely to play an be very competitive into Asian gas mar- companies (IOCs), both big and small,
increasingly important role in the kets, and the main questions are will likewise be critical.
coming ‘Golden Age of Gas’. The conti- concerned with the number of LNG pro- Risks throughout much of Africa are
nent is currently a small but growing jects that will go forward, and whether still quite high, but in many of the key
part of the global gas industry, and its or not they will be unitised or combined. countries the ‘risk trend’ is improving.
prospects are even brighter still. Natural gas development holds Most importantly, though, the opportu-
As it has grown, Africa’s gas industry tremendous opportunity for Africa. It nities for Africa presented by the
has also evolved geographically. The can be a primary driver of economic ‘Golden Age of Gas’ are enormous and
continent’s gas industry was historically growth and broader social develop- the challenges and risks can be
dominated by the North African pro- ment, as well as a major spur for local addressed and mitigated, if not fully
ducers – in particular Algeria and Egypt. employment growth and infrastructure overcome. ●
More recently, the sector’s growth has development.
been concentrated in West Africa, with Africa’s ‘Golden Age of Gas’ will be The opinions expressed here are not
the huge associated gas resources that more than just headline opportunities necessarily endorsed by the EI.
accompanied the deepwater oil boom, for the national oil companies (NOCs),

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2 PETROLEUM REVIEW APRIL 2013


IN BRIEF NEWS upstream

UK No quick change in Venezuelan oil


Centrica Energy has brought onstream policy after Chavez death
its 100% owned York field in the North
Companies hoping that Venezuela’s investment climate will change after the death
Sea. The field’s unmanned platform is
of President Hugo Chavez may have a long wait, writes Maria Kielmas. The armed
forecast to produce around 120mn cf/d
forces are setting up for a significant political role, says Teodoro Petkoff, Editor of the
of gas at peak. Gas will be exported via
Opposition daily, Tal Cual. Chavez’s chosen successor, Nicolas Maduro, has already
pipeline to Centrica Storage’s terminal
created a political-military high command, a suggestion from Cuba, to govern the
in Easington, East Yorkshire.
country in case of social unrest. Neither Maduro nor his opponent in coming elec-
tions, Henrique Capriles, has mentioned changes in oil policy. However, Maduro did
EUROPE say that the government may take over Venezuelan oil company Suelopetrol that has
a 40% stake in the 6,000 b/d Cabimas field with state-owned PdVSA.
PdVSA’s oil production has fallen from 3mn b/d in 1998, when Chavez was first
Statoil and its partners have started
elected, to 2.3mn b/d today. The company’s Extraordinary Investment Plan had
production from the Vigdis North-East
scheduled output to rise to 3.5mn b/d by 2012, but failed. Meanwhile, it has
oil field located in the southern North
increased from 55,000 employees in 1998 to 110,000 today, even after 18,000
Sea. The fast-tracked field develop-
experienced professionals were sacked between 2002 and 2006 because of their
ment consists of a subsea installation
real or imagined sympathies to the previous governments.
comprising a template with four wells
PdVSA earned $125bn in 2011 revenues, of which $24bn were paid in taxes and
that are tied back to the existing Vigdis
royalties to the state and $30bn into a special presidential fund. The company’s
facility on Snorre A for processing.
debt has climbed to $40bn. Total government and PdVSA debt was $144.8bn in
Reserves are put in the region of 37mn
2012, according to the Finance Ministry, of which domestic debt is 57%. On top of
boe, with a field life of more than 15
this, Venezuela has a $36bn debt to China that it pays with oil at some 230,000 b/d.
years. Statoil is operator, holding a
Over Chavez’s tenure, the state took control of heavy oil projects operated by
41.5% interest, partnered by Petoro
ConocoPhillips and ExxonMobil, with Exxon receiving $900mn in compensation.
(30%), ExxonMobil (16.1%), Idemitsu
Chevron is staying in the country and reportedly providing $2bn for the
(9.6%) and RWE Dea (2.8%).
Petroboscan heavy oil project in Zulia state.
Statoil and its partners have brought
onstream the Hyme oil field in the
southern part of the Norwegian Sea. OSRL unveils global well capping equipment
Hyme is the second of Statoil’s 12 fast-
track projects. It is tied in to existing Oil Spill Response has unveiled its latest
infrastructure on Njord A, extending well capping equipment that can be
the production life of the Njord field deployed around the world in the event
from 2015 to 2020. Due to the high of a subsea well control incident. It is
reservoir complexity at Hyme, an available to oil and gas companies
unconventional well solution has been across the industry, marking a major
chosen, involving the use of a multi- advancement for international oil spill
lateral well for optimal drainage of the response capability.
reservoir. Hyme is estimated to hold OSRL’s Subsea Well Intervention
some 30mn barrels of recoverable Service (SWIS) provides for swift subsea
reserves. Statoil holds a 35% stake in incident response around the world.
Hyme, partnered by Core Energy The integrated subsea well intervention
(17.5%), VNG (2.5%), Faroe Petroleum system includes four capping stacks to
(7.5%), E.ON E&P (17.5%) and GDF shut-in an uncontrolled subsea well and
Suez (20%). two hardware kits to clear debris and
apply subsea dispersant at a wellhead,
creating safer surface working condi-
tions and enhancing bio-degradation.
The SWIS equipment is suitable for the Project (SWRP), pooling resources to
Complete news update majority of known subsea wells. It can develop equipment that could enhance
be deployed in water depths up to subsea well control capability. OSRL
The ‘In Brief’ news items in Petroleum 3,000 metres and control flow pressures collaborated with them to construct
Review represent just a fraction of up to 15 kpsi. this equipment for the benefit of the
the news we regularly publish on the The equipment will be stored in four wider industry, and companies can now
EI website www.energyinst.org via locations – Norway, Brazil, South Africa subscribe to SWIS to incorporate this
the ‘News in Brief Service’ link on and Singapore – and maintained ready equipment into their own incident
the Petroleum Review home page. for immediate mobilisation and onward response plans.
Covering all sectors of the interna- transportation by sea and/or air in the
tional oil and gas industry, the News event of an incident. The first equip- *SWRP is a non-profit joint initiative
in Brief Service is a fully searchable ment is now available for international between BG Group, BP, Chevron,
news database for EI members. use from OSRL’s Norway base, and a ConocoPhillips, ExxonMobil, Petrobras,
Why not visit the site to find out further three devices will be delivered Shell, Statoil and Total. Its work comple-
more about the latest developments during 2Q2013 and 3Q2013. ments, but is separate from, the work
and trends in your industry? SWIS is the culmination of unprece- undertaken in the US via the Marine
dented industry collaboration. In 2011, Well Containment Company, and in the
www.energyinst.org nine international oil and gas compa- UK via the Oil Spill Prevention and
nies* formed the Subsea Well Response Response Advisory Group.

PETROLEUM REVIEW APRIL 2013 3


IN BRIEF NEWS upstream

NORTH AMERICA Saudi Aramco upstream expansions


Saudi Arabia plans to expand capacity capacity by 2.5mn b/d through the
The Canadian government has made
at two oil fields by a combined 550,000 development of five fields. The other
two moves that could spur renewed
b/d, Saudi Aramco Chief Executive three expansions were 900,000 b/d at
Arctic oil and natural gas exploration,
Khalid al-Falih said on 5 March, reports Zuluf, 700,000 b/d at Safaniyah, and
by transferring control over land
Argus. The company is already devel- 300,000 b/d at Berri (see Table 1). ‘If
and resource development to the
oping the 900,000 b/d Manifa project, there was a genuine need, we would be
Northwest Territories (NWT) as of April
which will come onstream this year and able to do those mega projects in less
2014 and setting the stage for a bid-
hit full output in 2014. Al-Falih says all than three years,’ Naimi said at the
ding round in the region’s most remote
three projects are aimed at offsetting time. However, Naimi and al-Falih subse-
location, reports the Platts news
field declines, and not at boosting quently said Saudi Aramco did not plan
agency. Some of the revenues will also
overall Saudi capacity. to develop the projects because Saudi
go directly to the five NWT aboriginal
Saudi Aramco plans to expand the Arabia did not need the extra capacity.
governments that have signed up to
1.2mn b/d Khurais field by 300,000 b/d to Describing the new upstream devel-
the devolution agreement-in-principle.
1.5mn b/d, and the 750,000 b/d Shaybah opments as maintaining capacity rather
It is also understood that the Canadian
field by 250,000 b/d to 1mn b/d, than boosting it makes them more
government will keep ownership of
according to al-Falih, although he did politically palatable in Saudi Arabia,
offshore resources, notably the
not give a timeline for the two projects. because it already has a large capacity
Beaufort Sea, but will open negotia-
The Khurais and Shaybah projects, cushion. In addition, rising Iraqi
tions on revenue-sharing within 60
like the Manifa development, are not capacity will give that country a larger
days of a final agreement. The deal
intended to boost capacity, al-Falih share of the global market.
coincides with Aboriginal Affairs and
says. ‘All of this will allow us to offset Khurais and Shaybah produce Arab
Northern Development Canada
decline that would take place in the Light and Arab Extra Light, respectively,
(AANDC) inviting companies to nomi-
years and decades to come.’ The com- whereas output from Manifa will be
nate lands in the Arctic archipelago for
pany’s strategy is to bring onstream Arab Heavy. Manifa will supply Saudi
a future lease auction.
new capacity to offset depletion else- Aramco-Total’s 400,000 b/d Satorp
where and drill fewer wells at older refinery at Jubail (due onstream later
Neftegaz America Shelf (Neftegaz), an
fields, such as parts of Ghawar. It wants this year) and the 400,000 b/d Aramco-
indirect independent subsidiary of
to deplete older reservoirs as slowly as Sinopec Yasref refinery at Yanbu (due
Rosneft, has acquired from
possible so that more crude can be pro- onstream in 2014). Saudi Aramco’s
ExxonMobil a 30% interest in 20 deep-
duced from them in the future once 400,000 b/d refinery at Jizan, due
water exploration blocks in the Gulf of
technology boosts recovery rates. onstream in 2016, will process Arab
Mexico. The 20 blocks have a total area
Saudi Oil Minister Ali Naimi first Heavy and Arab Medium. Some, if not
of approximately 450 sq km in water
revealed the Khurais and Shaybah most, of the new refinery output will
depths ranging between 640 and
expansions in 2008, as part of a plan to go to the domestic market to meet
2,070 metres. A total of 17 blocks are
increase Saudi Aramco’s 12mn b/d rapidly rising demand.
located in the Western Gulf of Mexico,
with the remaining three in the central
Gulf of Mexico. ExxonMobil retains a Field Crude stream Capacity* Date
70% stake in the blocks and remains (in b/d)
operator. Analysis of seismic data is
under way. There is currently no pro- Manifa Arab Heavy 900,000 ends 2014
duction on the blocks. Khurais Arab Light 300,000 starts 2013
Shaybah Arab Extra Light 250,000 starts 2013
MIDDLE EAST Zuluf Arab Heavy 900,000 n/a
Safaniyah Arab Heavy 700,000 n/a
Qatar Petroleum and Wintershall have Berri Arab Light 300,000 n/a
discovered gas in block 4 North, off-
shore Qatar. Initial gas in place is put at
some 2.5tn cf. Table 1: Saudi field development *gross capacity addition Source: Argus

RUSSIA & CENTRAL ASIA

Repsol and Alliance Oil have begun


Faroe acquires Norwegian and North Sea assets
commercial gas production from the Faroe Petroleum is to acquire a 25% Petroleum and Energy.
Syskonsyninskoye (SK) field in the interest in the Pil prospect in the Faroe has also entered into an agree-
Khanty-Mansiysk region of Russia. Norwegian Sea and a 50% stake in the ment with Talisman Sinopec to acquire a
Initial production stands at 855,000 Lowlander discovery in the UK central 50% interest in UK licence P.324, block
cm/d, which is being delivered to the North Sea. 14/20c, containing the Lowlander oil
Gazprom transportation network. Five The Pil prospect is located within tie- discovery.
production wells have been drilled to back distance (33 km) to the producing The field has sour characteristics,
date, three of which have been put Njord field in which the company holds similar to those of the Perth field (Faroe
into operation. Further development a 7.5% interest. An exploration well is 34.62%), which is located 16 km from
of the field in the coming year envis- to be drilled in 1H2014. Faroe acquired Lowlander.
ages drilling six more wells from five the Pil interest from the operator VNG The acquisition is subject to approval
locations by early 2014. and the acquisition is subject to by the UK Department of Energy and
approval by the Norwegian Ministry of Climate Change (DECC).

4 PETROLEUM REVIEW APRIL 2013


IN BRIEF NEWS upstream

A S I A - PA C I F I C Salamander agrees asset swap


ExxonMobil has started production Salamander Energy has agreed an asset swap that will see the Group acquire the
from the Telok natural gas field, outstanding 15% interest in the Bangkanai production sharing contract (PSC) in
located offshore Malaysia in the South central Kalimantan, taking its interest in the licence to 100%. The transaction with
China Sea. The Telok A platform is the Medco Energi will see Salamander swap its 21% participating interest in the
first phase of the Telok natural gas pro- Simenggaris PSC and 41.7% participating interest in the Bengara-1 PSC for Medco’s
ject, which when completed will consist 15% participating interest in the Bangkanai PSC. There is no cash consideration.
of two 4-legged unmanned gas satel- The Bangkanai PSC is located onshore in central Kalimantan, Indonesia, and con-
lite platforms. Full wellstream gas will tains the Kerendan gas field which is undergoing development. To date, 122.6bn cf
be produced via a new 16-mile pipeline has been committed for sale under a gas sales agreement with PLN, the Indonesian
to the existing Guntong E platform for state power company. A further 160bn cf of contingent resource is identified in the
processing. Telok is being developed by field, providing potential for commercialisation of additional gas volumes. The field
a 50:50 joint venture comprising is expected onstream in 2014.
ExxonMobil and Petronas Carigali.

L AT I N A M E R I C A OECD predicts Brent prices of $190/b by 2020


Following the news that the OECD pre- 2020.’
Eni reports that the PetroJunín joint dicts Brent prices of $190/b by 2020, ‘The need for conservation and effi-
venture has started production from Caroline Bain, Commodities Analyst at cient usage are also recognised in
the Junín-5 heavy oil field in The Economist Intelligence Unit, says: China, in particular, but increasingly
Venezeula. The Junín-5 block is esti- ‘It is hard not to dismiss the latest across the developing world. The
mated to hold 35bn boe and is jointly analysis by the OECD which suggests Economist Intelligence Unit believes
operated by two joint ventures that oil prices will be averaging $190/b, that all the growth in oil consumption
(Empresa Mixta) formed by PdVSA at least – the OECD thinks there is a in 2013–2020 will be in non-OECD
(60%) and Eni (40%) – PetroJunín for risk they could be significantly higher – countries, driven by higher levels of car
the development and production by 2020. It appears like the sort of ownership in particular. However, lim-
phase, and PetroBicentenario for the forecast that was commonplace in the iting the absolute growth in volume of
construction and operation of a mid-2000s as commodity and energy oil consumed will be the fact that
350,000 b/d refinery in the Jose indus- demand boomed. Since then we have these new cars will be significantly
trial complex. It is planned to increase seen a dramatic – and we believe struc- more fuel efficient than much of the
production to approximately 15,000 b/d tural – change in oil consumption existing vehicle stock in the US, for
by the end of the year, and subse- trends. Oil consumption has been con- example.’
quently to 75,000 b/d by early 2015 tracting in Europe and the US in the ‘The rapid growth in renewable
through the drilling of approximately last two years; these two regions still energy sources and in the consumption
180 wells. Full field development (phase account for nearly 40% of global con- of – much cheaper – gas will be addi-
2 of the project) will bring production sumption. Obviously some of the fall in tional constraints on the ability of oil
to 240,000 b/d by the end of 2018. demand has been the result of strait- consumption to grow more strongly
ened economic times, but this is to than oil supply; the factor that would
WORLD underestimate efforts at increased push prices significantly higher. This is
energy efficiency and conservation. not to say that oil prices might not reach
The scope for the world’s largest oil $190/b over the next seven years – most
OPEC has cut the estimate of demand consumer, the US, to improve the effi- likely caused by a severe disruption to
for its crude in 2013 to 29.71mn b/d, ciency of its oil usage remains supply – but it is not a backdrop that
down some 70,000 b/d from its pre- significant and this will be a key factor would support average prices as high as
vious forecast. In its latest (March) limiting consumption in the years to nearly $200/b in just seven years.’
monthly oil market report, OPEC also
said it estimated the call on OPEC
crude in the first quarter of this year at
29.25mn b/d, down from a previous Carried interest deal for Heidelberg
estimate of 29.39mn b/d. This
compares with the group’s actual pro- Anadarko Petroleum has signed a definitive agreement with an undisclosed party
duction in February of 30.311mn b/d. to enter into a carried-interest arrangement for a portion of Anadarko’s ownership
OPEC’s estimate of non-OPEC oil in the Heidelberg development in the deepwater Gulf of Mexico. Under the terms
supply in 2013 was also revised, to of the agreement, Anadarko will be carried for $860mn, which represents nearly all
53.98mn b/d, up 60,000 b/d from the its expected capital requirements through the anticipated date of first oil at
previous estimate. This revised figure Heidelberg in mid-2016. In exchange, Anadarko will convey a 12.75% working
leaves year-on-year growth in non- interest in the Heidelberg project. Anadarko will continue as operator, holding a
OPEC supply at 960,000 b/d. The 31.5% working interest.
biggest increase in 2013 is expected to The Heidelberg development is located in 5,300 feet of water in Green Canyon
come from North America, with fur- blocks 859, 860, 903, 904 and 948. The project is being developed via a truss spar,
ther growth from Latin America and which is currently under construction, with a design capacity similar to the Lucius
the former Soviet Union. US oil supply spar at 80,000 b/d of oil. The field is estimated to hold up to 400mn barrels of recov-
is forecast to rise by 580,000 b/d, to erable resources.
reach 10.59mn b/d in 2013, the highest According to Anadarko President and CEO Al Walker, the project’s ‘design one,
since 1985. World oil demand growth build two' approach with the ongoing construction of the Lucius spar will lead to
in 2013 remains unchanged, at ‘significant cost savings’ and enable the company ‘to shorten the expected
840,000 b/d. development cycle for a project of this scale by up to 18 months’.

PETROLEUM REVIEW APRIL 2013 5


IN BRIEF NEWS downstream

UK Shell licences gasification technology


Shell Global Solutions has licensed its within the Kingdom.
Developers of renewable electricity gasification technology to Saudi It is the first time that gasification
projects in the UK will be able to apply Aramco’s Jazan power project in Saudi technology will have been deployed in
for support to enable them to commis- Arabia, reportedly the largest residue Saudi Arabia, according to Fahad Al-
sion and build projects more quickly. gasification unit to ever be built. The Helal, Executive Director Project
The UK government’s Final Investment Jazan integrated gasification combined Management, Saudi Aramco.
Decision Enabling Programme is cycle project (IGCC) agreement includes The 2,400-MW high-efficiency com-
designed to help developers of low the licensing of Shell gasification and bined cycle power plant will form the
carbon electricity projects make final acid gas removal technologies and the energy backbone of the Jazan
investment decisions ahead of changes provision of engineering services. Economic City. When it starts oper-
to the electricity market in the second Shell’s CRI/Criterion catalysts and a ating, Saudi Aramco’s Jazan refinery
half of 2014. The government aims to sulphur recovery unit (SRU) will also will process 400,000 b/d of Arabian
offer investment contracts to suc- treat the off gases from the acid gas Heavy and Arabian Medium crude oil
cessful applicants in the autumn, removal unit. to produce gasoline, ultra-low sulphur
based on the draft strike prices and Jazan is to be developed as a new diesel, benzene and paraxylene. A
contract terms that will be published economic city in Saudi Arabia. As part marine terminal on the Red Sea coast
in the summer. By helping developers of the development, a new refinery will accommodate very large crude
make final investment decisions this and IGCC plant are to be built 70 km carriers (VLCCs) for the supply of crude
year, this process should allow north of the city of Jazan. The IGCC oil to the new refinery. Only three
construction to start on a number of unit enables the gasification of low- other refinery projects on the same
projects sooner than otherwise would value residue feedstocks to produce scale as the Jazan refinery have been
have been the case. syngas for power generation. The gen- commissioned worldwide in the past
erated power will provide electricity 20 years, report Shell and Saudi
ScottishPower’s Cockenzie power sta- for the Jazan refinery and supply Aramco.
tion in East Lothian, Scotland, shut
down its four turbines for the very last
time on 15 March, as the 45-year-old
coal-fired power station generated its EU fuel quality directive could impact
final contribution of electricity for the
UK’s national grid. The closure is part region’s refining sector
of a pre-agreed decommissioning pro-
gramme, with several other core UK A methodology for calculating the greenhouse gas (GHG) intensity of fuels
power stations set to close in 2013 written into the proposed European Union (EU) fuel quality directive could restrict
having opted out of the EU’s large access to crude oil for the European refining industry, Baudouin Kelecom,
combustion plant directive (LCPD). The Chairman of the Automotive Fuels Action Group of EU petroleum association
Cockenzie site already has a planning Europia has warned. He was addressing a hearing on the issue held at the
consent for a new 1,000-MW com- European Parliament, in Brussels, on 5 March, writes Carmen Paun, in Brussels.
bined cycle gas turbine (CCGT) power The legislation would tell member states to reduce the carbon intensity of fuels
station and ScottishPower recently used or processed on their territories and the methodology says this needs to
called for clarity on a capacity mecha- take account of production processes. This, said Kelecom, could make it difficult
nism for thermal generation as part of for refiners to buy crude from sources such as Canada, whose oil comes from
the Energy Bill. energy intensive oil sands processing.
‘The fuel quality directive [methodology] as it was proposed by the Commission
Simon Storage’s Immingham West last year is basically restricting crude access to refining and it has an unintended
terminal in north-east England took consequence,’ he argued. Europia proposed in January that every fossil fuel sold
first deliveries of diesel and gas oil for at an EU pump be measured through a fixed default value calculated as an EU
Prax Petroleum in September 2012. average. But EU climate action Commissioner Connie Hedegaard was also present
Since then, product throughput has at the event, and rejected this proposal. ‘We cannot simply pretend that all fossil
risen and in February 2013 the contract fuels have the same climate impact,’ she stated.
with Prax was extended to include
storage of biodiesel (B100) for in-tank
blending to comply with the govern-
ment’s Renewable Transport Fuel Toledo refinery reformer commissioned
Obligation (RTFO). Simon is providing
Prax Petroleum with more than 18,000 BP-Husky Refining marked the successful teria air emissions at the plant by 45%
cm of storage capacity, together with commissioning of a state-of-the-art since 2000.’
road loading facilities for onward naphtha reformer at the joint venture’s The project cost some $400mn and
delivery to customers. Toledo refinery with a ribbon cutting involved replacing two older catalytic
ceremony at the 160,000 b/d plant reformers and a hydrogen plant at the
located in Oregon, Ohio, on 11 March. refinery with a single 42,000 b/d
EUROPE ‘The Reformer 3 unit will significantly reformer. Catalytic reforming is an
improve the plant’s efficiency and com- essential part of the oil refining
DONG Energy and AffaldVarme petitiveness,’ said Mark Dangler, process. Reformers use special reactors
Aarhus (AVA) have agreed on a new President and Refinery Manager of BP- and catalyst to transform naphtha into
biomass-based heat agreement for the Husky Refining. ‘The increased energy high octane gasoline blend stocks. The
period until 2030. It will mean that efficiency of this unit will also reduce latest technology for both reforming
refinery air emissions by 5%, building and catalyst regeneration was used for
on our track record of driving down cri- the project.

6 PETROLEUM REVIEW APRIL 2013


IN BRIEF NEWS downstream

Unit 3 of the Studstrup power station


in Aarhus will have to be converted for UK carbon tax set to double in third year
firing with wood pellets. The conver-
sion underpins Aarhus’ aim to become The UK’s carbon tax is set to almost double again in its third year of implementa-
carbon-neutral by 2030, as the conver- tion after prices within the European Union Emissions Trading Scheme (EU ETS)
sion from coal to wood pellets at plummeted to an all-time low, comment IHS Senior Researcher Alun Davies and
Studstrup will mean a marked reduc- Analyst Catherine Airlie. The tax, known as a carbon price support (CPS), may be
tion in carbon dioxide (CO2) emissions set at £18.29/t for the financial year 2015–2016, according to an estimate by IHS
in the area. The Studstrup power CERA on the basis of the UK Treasury’s methodology and their December inflation
station is expected to be ready to rate assumptions. The CPS was first announced in the 2011 UK Budget and will
supply biomass-based heat to Aarhus come into force at £4.94/t in April. It is calculated annually for the financial year
and the surrounding municipalities two years’ ahead and has been set at £9.55/t for next year. The government has
from 1 October 2015. said it calculates the tax using the average price of EU allowance futures in the
12 months through to the end of February. UK emitters must pay the levy on top
UK utility SSE has announced that it of any EU allowances they have to buy in order to comply with the EU ETS.
will no longer have a financial involve- ‘This carbon tax was intended to provide long-term certainty to investors in low
ment in the NorthConnect project, the carbon power generation in the UK, but the spiralling cost may prove difficult to
interconnector development company maintain amid low EU ETS prices,’ note Davies and Airlie. ‘The tax is worked out as
seeking to build a subsea electricity a differential from EU permit prices, so given current depressed prices, UK polluters
cable between the UK and Norway. will have to pay a much higher cost in order to meet the government’s pledged
NorthConnect partners (Vattenfall UK, minimum carbon price. The policy, which was created at a time of higher EU
E-CO Energi, Agder Energi and Lyse) permit prices, may do little more than raise bills and boost profits at current
report that they remain fully nuclear power sites and wind farms. Once its effects are felt there may be a public
committed to developing the intercon- backlash and the government may have little choice than to make drastic changes.
nector and the decision by SSE does The CPS is an escalator tax that rises each year to track a so-called “carbon floor”
not affect the deliverability of the pro- set by the government and is based on EU ETS prices.’
ject. SSE’s decision is in line with plans ‘UK power producers may be exposed to much higher carbon costs should the
to focus on its core markets of Great European Commission be successful in its plan to increase permit prices. In essence,
Britain and Ireland. It has already the tax raises the cost of fossil-fuelled power production across the country, ahead
announced the disposal of its interests of costs in neighbouring countries. While the government has promised to alle-
in Scandinavia, including a generation viate higher costs faced by heavy industry, no steps have been made to reduce the
pipeline of almost 900 MW. An burden on domestic consumers. In its third year, the tax may account for about
announcement on the sale of the 10% to 15% of the wholesale cost of electricity, which makes up about half of the
Swedish portfolio will be made soon. average electricity bill. The actual proportion will depend on the efficiencies of
power generation and electricity prices at the time. Utilities say their profit margin
for supplying electricity to homes comes in at less than 5%. While the UK claims to
NORTH AMERICA be doing everything it can to attract low carbon energy production, the spiralling
cost of this tax may prompt a call to ditch it or change it.’
Lower-than-expected natural gas Details of the tax level for 2015 were to be announced in the UK Budget in
prices have led the Alberta govern- March, as Petroleum Review went to press.
ment to cancel an agreement with
Calgary-based Swan Hills Synfuels to
provide C$285mn ($285.6mn) in
funding for a carbon capture and
Gasunie unveils new exchange
storage (CCS) facility to be built 192 Gasunie announced the launch of a new derivatives and spot gas exchange –
miles north-west of the provincial cap- ENDEX – at the start of March. The launch of ENDEX follows the decision by APX-
ital, Edmonton, reports the Platts news ENDEX to demerge into a power spot and clearing entity and a derivatives and spot
agency. The CCS project was to turn gas entity, as initially announced in September 2012. Gasunie is now the sole share-
unmineable coal at depths of some holder in ENDEX, owning 100% of shares. However, the company is currently
1,400 metres in the Swans Hill area looking to obtain the necessary regulatory approvals that will clear the way for
into clean synthetic gas (syngas) from IntercontinentalExchange (ICE) to take a 79.12% majority stake in the exchange.

JANUARY 2013

FEBRUARY 2013
Energy World, the monthly sister publication to
Petroleum Review, covers the whole energy scene, from
MARCH 2013

nuclear to renewables. It provides technology, business As an EI member, you can subscribe to


and people news as well as recruitment opportunities. Energy World for just £45 – saving up to £140
In this month’s Energy World: on the UK non-member annual subscription.

Strengthening electricity supplies in East London


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• Putting the 'S' in CCS sample copy of Energy World, contact
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PETROLEUM REVIEW APRIL 2013 7


IN BRIEF NEWS downstream

which carbon dioxide (CO2) would be


captured for enhanced oil recovery
UK at forefront of EU nuclear expansion
(EOR) in maturing conventional oil
The UK positioned itself firmly at the mixes, and to press ahead with their
fields in Alberta, while the rest of the
forefront of Europe’s nuclear expansion decarbonisation objectives through the
syngas would be used for power gen-
in March as it hosted the signing of deployment of the fullest possible range
eration. It was planned to capture
a joint communiqué between 12 of low carbon technologies. This could
13mn tonnes of CO2 over a 10-year
European Union (EU) member states include renewables, carbon capture and
operational period, commencing
with an interest in nuclear energy. The storage (CCS), and nuclear power.
2017. It is understood that a ‘sus-
12 states set out their belief that nuclear A pledge by the UK and France to
tained’ gas price of $5/mn Btu will be
energy can play a part in the EU’s future work closely on research and develop-
required before the project may once
low carbon energy mix and committed ment was underlined by a £12.5mn
again become economically viable.
to collaboration on safety and creating funding commitment to the Jules
greater certainty for investors in low Horowitz research reactor. This will
RUSSIA & CENTRAL ASIA carbon infrastructure projects. allow UK-based academics and the
The signatories also agreed that nuclear industry guaranteed access to
member states should continue to be the reactor, and enable collaboration on
Russian Prime Minister Dmitry
free to determine their own energy safety and innovation.
Medvedev has signed a government
resolution formally recognising global
energy and commodity price reporting
agency Argus as the sole source of price UK produces position paper on ILUC
information for setting monthly export
duties for Russian crude oil, petroleum Speaking to the European Energy Council in Brussels in early March, UK Energy
products and LPG. The Russian Secretary Ed Davey stated that a ‘one size fits all’ approach to the issue of indirect
government will use Argus Urals price land use change (ILUC) for biofuels is ‘not helpful’. The proposals – which can be
assessments for calculating duties for viewed at http://www.r-e-a.net/resources/pdf/104/FINALREANFUSCOPAAICIndustry_
crude and products, and Argus daf positionILUC18Feb13.pdf – include an overall cap on the use of crop-based biofuels
Brest price assessments for LPG. The at 5% of transport, which would make the binding EU-wide 10% renewable trans-
government resolution follows a shift port target virtually impossible to achieve, according to the Renewable Energy
to 100% Argus pricing from May 2012. Association (REA). The Association estimates that the proposals could cost the UK
Russia previously used other price over £1bn of investments and up to 3,500 jobs.
assessment providers in addition to The UK is the first member state to produce a unified industry position paper in
Argus. Industry requests led the Russian response to the proposals. Together, the REA, AIC (Agricultural Industries
government to switch to Argus on an Confederation), NFU (National Farmers Union) and SCOPA (Seed Crushers and Oil
exclusive basis 10 months ago, and Processors Association) represent the entire UK biofuels supply chain. The paper
Medvedev’s decision represents the explains that the assumptions behind the ILUC proposals are based on a purely
official recognition of this practice. theoretical approach which does not account for the realities of biofuels develop-
ment. It also urges the European Commission to propose a dedicated target for
Lukoil has sold its Odessa refinery to 2% of transport to come from advanced biofuels by 2020, while allowing electric
Ukrainian gas trader VETEK Group for vehicles and conventional biofuels to make up the rest of the target.
an undisclosed sum. The 3.9mn t/y
refinery has been mothballed since
the end of 2010. Libya has potential to produce more energy
Invensys Operations Management
has completed the first phase of a
from solar power than from oil
main automation contractor (MAC) Libya could generate some five times it could produce the equivalent of
project at the new Yaysky oil refinery the amount of energy from solar power almost 7mn b/d of crude oil, the study
in Kemerovo, a city in Russia’s Kuzpass than it currently produces from crude found. Currently, Libya produces about
region. The company has supplied oil, according to new research by 1.41mn b/d of oil.
complete control and safety solutions, Nottingham Trent University. The study Researcher Dr Amin Al-Habaibeh,
including field instrumentation, found that the oil-rich nation could who is leading the Innovative and
process analytics and valves. It will generate enough renewable power to Sustainable Built Environment
also provide comprehensive installa- meet its own demand and a ‘significant Technologies research group at the uni-
tion, engineering, development, part of the world energy demand by versity, said: ‘Although Libya is rich in
support and on-site training services. exporting electricity’. renewable energy resources, it is in
The Yaysky facility is designed to Libya is located on the cancer orbit urgent need of a more comprehensive
process 3mn t/y of crude oil. After line and is exposed to the sun’s rays energy strategy. It is difficult to break
start up, it will produce more than throughout the year with long hours the dependency on oil and natural gas,
400,000 t/y of gasoline and 1.5mn t/y during the day. It has an average daily not just in terms of the country’s
of diesel fuel, satisfying more than solar radiation rate of about 7.1 kWh/sq demand for it, but also in terms of the
60% of the fuel consumption needs of metre/d on a flat plane on the coast and revenues that it generates. Renewable
Russia’s Kuzpass region, located in 8.1 kWh/sq metre/d in the south region. energy technology is still in its early
south-western Siberia. The successful By comparison, the UK’s average solar days in Libya and a clear strategy and
first phase sets up the refinery for the radiation rate is less than half that timetable is needed to take it forward.
next two phases of implementation, amount, at about 2.95 kWh/sq metre/d. In particular, work needs to be done to
which will expand production to 6mn If the North African country – which is develop the skills and knowledge
t/y of crude oil and increase oil con- estimated to be 88% desert – used 0.1% needed to install and maintain renew-
version to 93%. of its landmass to harness solar power, able energy systems.’

8 PETROLEUM REVIEW APRIL 2013


IN BRIEF NEWS industry

NORTH AMERICA Shell to develop two additional natural gas


Repsol is to sell to Shell a number of its transport corridors in North America
LNG interests under a $6.7bn deal. The
Shell and its affiliates plan to bring LNG fuel to marine vessels that operate in the
arrangement includes the sale of its
fuel one step closer for its marine and Gulf of Mexico and to provide what is
20% interest in the four-train, 15mn t/y
heavy-duty on-road customers in North anticipated to be the first LNG barging
Atlantic LNG liquefaction plant in
America by taking a final investment and bunkering operation in North
Trinidad and Tobago; a 20% stake in
decision (FID) on two small-scale lique- America at Port Fourchon, Louisiana. The
the 4.4mn t/y Peru LNG plant (which
faction units. These two units will form LNG transport barges will move the fuel
came onstream in mid-2010 and is sup-
the basis of two new LNG transport from the Geismar production site to Port
plied by the Camisea gas field); and a
corridors in the Great Lakes and Gulf Fourchon where it will be bunkered into
25% interest in Spain’s Bahia de Bizkaia
Coast regions. This decision follows an customer vessels.
LNG import terminal at Bilbao. The deal
investment decision in 2011 on a similar In the Great Lakes Corridor, Shell
also includes a number of Repsol’s LNG
corridor in Alberta, Canada. Shell is also plans to install a small-scale liquefaction
and vessel contracts. In addition, Repsol
working to use natural gas as a fuel in unit (0.25mn t/y) at its manufacturing
and Shell have signed an agreement to
its own operations. centre in Sarnia, Ontario, Canada. Once
supply 1mn tonnes of LNG to the
In the Gulf Coast Corridor, Shell plans operational, this project will supply LNG
Canaport regasification terminal over a
to install a small-scale liquefaction unit fuel to all five Great Lakes, their bor-
10-year period. The North American
(0.25mn t/y) at its Geismar chemicals dering US states and Canadian
facility is not included in the sale as the
facility in Louisiana, US. Once opera- provinces, and the St Lawrence Seaway.
low gas prices currently seen in the US
tional, this unit will supply LNG along The Interlake Steamship Company is
market do not allow the asset’s
the Mississippi River, the Intra-Coastal expected to be the first marine cus-
medium- and long-term potential to be
Waterway and to the offshore Gulf of tomer in this region, as it begins the
adequately valued, states Repsol.
Mexico, as well as the onshore oil and conversion of its vessels.
gas exploration areas of Texas and Pending final regulatory permitting,
RUSSIA & CENTRAL ASIA Louisiana. To service oil and gas and these two new liquefaction units are
other industrial customers in Texas and expected to begin operations and pro-
Louisiana, Shell is expanding its existing duction in about three years.
Rosneft has signed long-term crude relationship with fuels and lubricants Shell is also working to use LNG as a
supply contracts with trading companies re-seller Martin Energy Services, a fuel in its own operations or to support
Glencore and Vitol. The deal with wholly-owned subsidiary of Martin its operations. It has chartered three
Glencore envisages supply volumes of Resource Management Corporation dual-fuel offshore support vessels from
up to 46.9mn tonnes of crude, while the (MRMC). MRMC and its publicly traded Harvey Gulf International Marine util-
contract with Vitol covers volumes of up affiliate, Martin Midstream Partners, ising Wärtsilä engine and LNG system
to 20.1mn tonnes. Rosneft is to receive a will provide terminalling, storage, trans- technology. Onshore, the company has
prepayment of up to $10bn. Igor Sechin, portation and distribution of LNG. begun to transition many of its onshore
Rosneft President and Chairman of the Shell also has a memorandum of drilling rigs and hydraulic fracturing
Management Board said: ‘We are happy understanding with Edison Chouest spreads to LNG, reducing fuel costs and
to start the implementation of the long- Offshore companies (ECO) to supply LNG local emissions.
term contracts after having agreed
heads of terms late last year. A number
of aspects constitute a landmark
approach – on the one hand, we guar- LPG orderbook doubles in two years
antee predictable supply volumes to our
customers based on tender pricing; on Rising demand has prompted owners to order more and larger LPG vessels,
the other, we receive prepayment that according to the latest LPG Forecaster, published quarterly, from Drewry Maritime
can be used for our strategic goals. The Research. The increased demand has been further improved by a growing con-
contracts are beneficial for all parties – sumption base in emerging economies, with supply bolstered by an expected
they support further development of emergence of new export sources, notably the US and Russia. LPG demand in the
Rosneft’s resource base, guarantee so-called saturated markets, such as Japan and South Korea, is also expected to
stable supplies to Glencore and Vitol, remain robust on the back of government support and increasing consumption in
ensure energy security for end con- sectors other than the residential sector.
sumers and in the long term will allow China has also been investing in PDH units, which could help imports to recover
the optimisation of transportation and in the medium and long term. These developments, or expected developments,
logistics chains of crude and petroleum from both the supply as well as the demand side, have led owners to believe that
products sales.’ tonne-mile demand could rise in the medium and long term. In response, new-
building activity has gained momentum.
Gazprom Marketing & Trading has Only five VLGCs (very large gas carriers) were ordered during 2010 and four in
agreed a 20-year deal with Levant LNG 2011, but there were 11 orders for VLGCs aggregating more than 0.9mn cm during
Marketing to take output from the 2012. The average size has grown too, rising from 15,179 cm in 2010 to 32,125 cm
planned Tamar floating LNG project last year, on the back of the 11 VLGC orders.
off Israel, reports Hazardous Cargo Shantanu Bhusan, Editor of the LPG Forecaster says: ‘Clearly, owners have shown
Bulletin. Tamar is due to be commis- a growing preference for larger vessels in the past few years so as to reap
sioned in 2017, with a production economies of scale, and as infrastructural facilities at ports have been improving.’
capacity of 3mn t/y. As part of the deal In October, Frontline confirmed options for two more VLGCs of 84,000 cm each at
Gazprom will arrange financing for Jiangnan Changxing, for delivery in the fourth quarter of next year. Frontline had
the FLNG part of the project. Output earlier announced that it would order up to six VLGCs, of which four orders have
from the Tamar gas field will be used been confirmed so far. Tomza Group has also entered the VLGC market by placing
an order for a VLGC at Hyundai HI for $73.5mn, to be delivered in April 2014.

PETROLEUM REVIEW APRIL 2013 9


IN BRIEF NEWS industry

to supply the domestic market in Israel


as well as the FLNG project. In addi- Robust outlook for global gas demand
tion, Gazprom has also approved
investment in the Vladivostock LNG While gas demand in Europe will of significant change: ‘In contrast to
export project in the Russian Far East. struggle to recover to pre-financial the historic role of the Middle East as
Plans envisage three 5mn t/y liquefac- crisis levels until the latter half of this purely an export play, we expect gas
tion trains, the first of which will come decade, overall global gas demand exports to remain flat at around
onstream in 2018. Target markets are continues to grow strongly, Ben Hollins, 100bn cm/y, whereas demand will
in the Asia-Pacific region. Head of Gas & Power Research for increase by over 150bn cm by 2020,’
Wood Mackenzie, told delegates in a Hollins continued.
presentation at FLAME 2013 in Wood Mackenzie’s presentation
AFRICA Amsterdam in March. painted a far less positive outlook for
In fact, Wood Mackenzie forecasts Europe: ‘Energy intensive industry is
Gasol, the West African energy devel- that global gas demand growth will be being squeezed by a lack of competi-
opment company, reports that affiliate stronger this decade than last, with tiveness. Coupled with that, we’ve
African Power Generation has signed growth of 33% (between 2010 and already seen evidence that energy effi-
a memorandum of understanding 2020), leading to total global gas ciency measures in the retail sector are
(MoU) with Ghana National Gas demand exceeding 4,000bn cm by taking hold in North West Europe. For
Company in relation to the develop- 2020. However, the growth in gas now, the only upside is in Turkey and
ment of a number of specific projects demand this decade will be driven by parts of Central and Eastern Europe,
aimed at providing additional gas to different markets: ‘When you look at driven by relatively strong economic
Ghana, as well as supporting the the previous decade, demand growth growth. Gas simply cannot compete
longer term security of gas supply was actually strongest in the Middle with coal in the power generation
needed to address the nation’s power East, China, Russia and Europe. By con- sector at current fuel (and carbon)
generation deficit. Under the MoU, trast the US market was virtually flat. prices. While coal-fired power genera-
AfGen and Ghana Gas propose to But looking at the next decade to 2020, tion retirals mandated under the large
explore the establishment of various we forecast sustained significant combustion plant directive (LCPD) and
joint venture arrangements for the growth in China (nearly 300bn cm the industrial emissions directive later
supply of imported natural gas into alone), the Middle East, and also the on should provide some headroom for
Ghana as well as the downstream sale US,’ Hollins remarked. gas from 2015 onwards, the outlook
and marketing of gas to power gener- Focusing on the US, Hollins for gas into power generation remains
ators and industrial/mineral processing explained: ‘Sustained low natural gas largely dependent on the balance that
enterprises in the country. Gasol has prices below $5/mn Btu are encour- European Union policy makers strike in
already previously entered into similar aging significant new gas demand in terms of the development of the EU
arrangements for the marketing of North America. Indeed, methanol, Emissions Trading Scheme and the
natural gas in other West African ammonia, urea, steel, iron, ethylene renewable agenda,’ Hollins said.
countries, including Benin and Togo. and gas-to-liquids projects are all being He also highlighted an additional
proposed to take advantage of low source of demand in parting:
North American gas prices. In addition ‘Penetration of gas into the transport
WORLD to the industrial sector, other sectors sector is gathering momentum around
are contributing to higher, permanent the world, supported by attractive eco-
Shell’s ‘New Lens Scenarios’ unveiled at gas demand, including heating oil dis- nomics in North America and China,
the close of February explore two pos- placement in residential/commercial favourable taxation in Europe and
sible ways the 21st century could sectors, and coal-fired power genera- stricter environmental legislation for
unfold, with dramatically different tion retirals. In aggregate, we forecast LNG as marine bunker fuel. However,
implications for society and the North American gas demand growth much of the upside for gas demand
world's energy system. One scenario between 2015 and 2020 to be more will depend upon infrastructure devel-
(called ‘Mountains’) sees cleaner- than 150bn cm.’ opment, inevitably implying significant
burning natural gas becoming the The Middle East is also in the midst lead time.’
most important energy source globally
by the 2030s and early action to limit
carbon dioxide (CO2) emissions. The
other (‘Oceans’) sees solar becoming
EU to help Ukraine diversify gas supplies
the top source by about 2070, but with
Speaking at the recent 16th EU-Ukraine Summit in Brussels, Ukraine's Minister of
slower action to address the threat of
Energy and Coal Eduard Stavytskyi stated that the European Union will assist
climate change. The scenarios, which
Ukraine in diversifying natural gas supplies, which should influence the current
look at trends in the economy, politics
price Ukraine is paying for Russian gas.
and energy as far ahead as 2100,
He stated that in the near future, Ukraine could secure some 30bn cm/y of gas
underscore the critical role that gov-
from the west – through Poland and Slovakia – enough to meet the country’s
ernment policies could play in shaping
annual domestic demand for gas. The existing technical conditions in Europe are
the future. With the world’s popula-
sufficient for servicing the shipments, he said, and, notably, the gas would be sup-
tion headed toward 9.5bn by 2060 and
plied at the wholesale market price. Currently, Ukraine is purchasing most of its
the rapid growth of emerging
imported gas from Russia – 26bn cm in 2012, projected to rise to 20bn cm in 2013.
economies lifting millions of people
Ukraine also began importing gas from Germany in November 2012.
out of poverty for the first time, the
At the Summit, Stavytskyi and the European Commissioner for Energy Gunther
scenarios project that world energy
Oettinger signed a protocol on the modernisation of the Ukrainian gas trans-
demand could double over the next 50
porting system (GTS). The European Commissioner also suggested considering the
years. For more information, visit
possibility of creating a trilateral consortium (comprising European, Caspian and US
http://www.shell.com/scenarios
partners) for managing the Ukrainian GTS.

10 PETROLEUM REVIEW APRIL 2013


IN BRIEF NEWS government

NORTH AMERICA Latest developments from the EU


US President Barack Obama last A deal has been struck on the shape of a European Union (EU) directive aimed at
month issued a challenge to Congress preventing major oil and gas offshore drilling accidents happening in EU waters,
to create a $2bn clean energy research writes Keith Nuthall. Under the text agreed by European Parliament and EU
fund to help lower US dependence on Council of Ministers representatives, oil and gas firms seeking a drilling licence
oil. According to the White House, the must submit major hazard reports and emergency response plans proving they can
so-called Energy Security Trust would deal with potential accidents. They would also have to demonstrate sufficient
be funded over 10 years from royalties financial muscle to pay for ‘liability for potential economic damage where such lia-
the government recieves from off- bility is provided for by national law’, said the agreed text.
shore oil and gas drilling. The funding Drilling companies will have to submit special reports to national authorities
will be used for research aimed at new describing drilling installations, potential major hazards and special arrange-
ways to lower the cost of vehicles that ments to protect workers, before starting operations. Member states would
run on electricity, biofuels, natural gas also have to require operators to draft a ‘corporate major accident prevention
and other non-fuel sources. Revenue policy’ encouraging incident reporting, consultation with elected safety repre-
for the trust would come from accel- sentatives and whistleblower protection. Companies would have to produce an
erating permit approvals for oil and internal emergency plan, describing equipment, personnel and resources avail-
gas producers, which would increase able to deal with accidents and on how to inform public authorities promptly. EU
production and boost receipts from ministers have backed the deal; formal approval from the European Parliament is
royalties, lease sales and bonus bids. awaited.
In other oil and gas industry news:
● The European Commission (EC) has released guidance on how national govern-
A S I A - PA C I F I C ments in the EU should subsidise vehicle manufacturers making low carbon dioxide
(CO2) cars, vans, buses and trucks and also subsidise their purchase by consumers.
Indonesia’s oil and gas contractors have Incentives of any kind, be it straight grants, loans, tax deductions and other types
should not favour a type of technology over another, should be proportional to
all agreed to comply with a contraversial
performance improvement and should not exceed the additional costs of tech-
rule that will force them to put their
nology, said the state aid guidelines.
export proceeds through a local bank
● Meanwhile, the EC has cleared the proposed acquisition of sole control of
rather than directly offshore, it has
BP’s Russian joint-venture TNK-BP by Russia’s Rosneft. Brussels assessed whether
been reported. The agreement follows
Rosneft operated independently of the Russian government, but decided it
protests by at least two energy
did not matter because the proposed acquisition did not spark competition
contractors and a warning from the
concerns.
government that their shipments could ● The EC has also approved the acquisition of the Netherlands-based petrol and
be blocked if they refuse to abide by the biodiesel storage company Dutch Vesta Terminal by Cypriot energy trader
rule being implemented this year. Mercuria Energy Group and the state-owned China Petrochemical Corporation
(Sinopec). Vesta operates storage facilities at Antwerp in Belgium, Flushing in the
Sri Lanka is to offer a second batch of Netherlands and Muuga in Estonia.
licences to explore for oil and gas, the ● Energy companies are among those being asked by the European Chemicals
government has said. Companies will Agency (ECHA) to lead assessments of chemicals under EU chemical control system
be invited to bid for licences on some REACH. ECHA fears without such leadership, a number of chemicals – many used
of the 13 blocks in the Cauvery and by the energy sector – might not be registered, and be banned from EU manufac-
Mannar Basins off the country’s north- turing or imports. Chemicals manufactured or imported at or above 100 t/y must
west coast. be registered by 31 May. See http://echa.europa.eu/documents/10162/13632/
intentions_2013_no_lr_en.pdf
● Following a review of REACH, ECHA has concluded the quality of registration
AFRICA dossiers ‘needs to improve’. It also admitted to bureaucratic delays in listing
substances of very high concern (SVHCs), for which special usage controls apply.
South Sudan’s government has report- ● The European Parliament Environment Committee has backed proposals to with-
edly signed an accord with Ethiopia hold 900mn allowances from being auctioned through the EU Emissions Trading
and Djibouti that may enable the Scheme. This should help to promote market scarcity, raising the price of these per-
country to export oil by truck from mits to promote emissions reduction investments.
July, while a study on a pipeline linking ● A first EU Council of Ministers debate on proposed targets for alternative fuel and
the three countries is completed. The recharging services has heard from governments voicing ‘concerns about the
accord envisages crude being exported proposed target numbers of recharging or refuelling points, the financing of the
via Djibouti’s Red Sea port of proposed measures and the deadlines for implementation’. Ministers said member
Douraleh. South Sudan is considering states needed flexibility over methods to hit these targets, according to council
building two pipelines, one via minutes.

€70mn to help it upgrade and expand its gas distribution networks in the Veneto
Ethiopia and another across Kenya to ● The European Investment Bank (EIB) is planning to lend Italy’s Ascopiave Spa

the port of Lamu, as an alternative to


the conduit that runs through neigh- and Lombardy regions.
bouring Sudan. ● Ukraine has promised to adopt the EU’s Euro IV standard for fuel quality by the

end of this year, according to an EU report on EU-Ukraine energy cooperation –


Seychelles is to revamp its model see http://ec.europa.eu/energy/international/bilateral_cooperation/doc/ukraine/
petroleum production sharing agree- 20130225_mou_progress_report7_en.pdf for more information.
ments before inviting oil and gas ● EU Energy Commissioner Gunther Oettinger has told Ukraine newspaper

companies to bid for exploration Kommersant-Ukraine that he would welcome the creation of an international con-
licences from May 2013, an energy sortium running Ukraine gas pipelines involving EU partners, Gazprom and
official is reported to have said. Ukraine’s distributor Naftogaz.

PETROLEUM REVIEW APRIL 2013 11


EI NEWS

IN YOUR AREA

EI Humber branch presents Student


of the Year award
The EI Humber branch proudly
presented the award for Student of
the Year at the 2012 awards evening
for apprentices, held last November
by the Humber Engineering Training
Association (HETA). Branch com-
mittee member Paul Walker (pictured
right) had the privilege of presenting
Call for entries to this year’s
the trophy, along with a cheque and
certificate to Shane Adamson
EI Awards is now open
(pictured left). Shane was recognised
for his project work on the Building The Energy Institute (EI)’s annual awards competition celebrates the
Management System at Hull Royal
best in innovation, technology and excellence across the depth and
Infirmary. The EI Humber branch
offers its congratulations on this pres- breadth of the global energy sector. The call for entries is now open
tigious achievement. and individuals and companies are invited to submit their
nominations before the deadline of 28 June 2013.
The EI Awards recognise the dedication with colleagues from their own PR,
and commitment of those working in marketing and communications team to
the energy sector, and feature eight cat- ensure all of the relevant details are
egories – Communication; Community included. One of the most important ele-
Initiative (sponsored by Nexen); Energy ments of each submission is to include
Excellence (sponsored by Ninox); the outcomes of the project, particularly
Environment; Innovation; Outstanding those with measurable results.
Individual Achievement (sponsored by We look forward to receiving your
Mott MacDonald); Safety; and submission and wish all entrants the very
Technology (sponsored by Costain). best of luck.
Energy performance contracts Award submissions consist of a 1,000 For further information on making
At the EI West Midlands and Mid word (max) summary with background a nomination or sponsorship of
Wales branch meeting in December, information covering the development an award, please contact Vickie
members and guests heard Martin of the project, and its aims, impact and Naidu on t: +44 (0)20 7467 7179,
Kenzie from Honeywell Building benefits. To make the most of your entry, e: vnaidu@energyinst.org or visit
it is recommended that nominees speak www.energyinst.org/ei-awards
Solutions describe the company's
approach to the funding of asset
upgrades and other measures
designed to reduce energy consump- Delivering bespoke training in your workplace
tion and carbon emissions. Martin
If you are looking to train a group of staff, perhaps on your own premises, then you
described a low carbon road map
may want to consider having a course tailored to your specific requirements. The EI
comprising a three-stage approach provides bespoke training solutions, which are available to organisations world-
towards carbon reduction. This ini- wide. The EI can create tailored programmes from a combination of existing course
tially focuses on reducing demand content or develop a unique programme using its specialised qualified trainers.
through asset upgrades, followed by One of the EI’s most recent clients was the Co-Operative Group who required the
carbon reduction through local gen- Level Three – Advanced Energy Manager programme. Guy Lee-Potter, Group Estates
eration, and thirdly through 'active Energy Manager at the Co-operative Group, said: ‘The EI is recognised as the premier
demand management'. The full industry body for professionals working within the energy sector. Being a member
speaker presentation is available allows you to stay abreast of all relevant political, environmental and engineering
online to EI members. developments. They also champion personal development and professional accredi-
tation. This makes them the ideal partners when it comes to designing and delivering
Detailed reports and speaker a bespoke training programme to meet the demanding needs of the
presentations from these and Co-operative Group’s team of Energy Managers, who are all currently studying hard
other branch events, along in order to qualify as Advanced Energy Managers and to be awarded the much cov-
with further information on forth- eted status of Chartered Energy Manager.’
coming activities, can be found at EI members benefit from discounted rates on its training programmes. For more
www.energyinst.org/branches information, please contact Will Sadler, Training Manager, t: +44 (0)20 7467 7135,
e: wsadler@energyinst.org or visit www.energyinst.org/training

Follow the EI on:


If you would like to include a news item on these pages, please contact Katie Crabb, Communications Manager,
t: +44 (0)20 7467 7173, e: kcrabb@energyinst.org

12 PETROLEUM REVIEW APRIL 2013


Latest from the Library IN BRIEF
The following items have been added to Knovel – the electronic e-books
service that allows EI members to view the full text online. Each book can be CO2 storage – putting the ‘S’ in CCS
searched using keywords and is available at www.energyinst.org/elibrary The EI is hosting another carbon
● Chemical and process plant commissioning handbook: A practical guide to capture and storage (CCS) focused
plant system and equipment installation and commissioning. Killcross, Martin. conference on 18 April in London.
Elsevier, 2012. ISBN 9780080971759. This time the event will discuss the
importance of storage as a critical
● Fundamentals of materials for energy and environmental sustainability.
step in establishing the commerciali-
Ginley, David S, ed; Cahen, David, ed. Cambridge University Press, 2012.
sation of CCS in the UK. Focusing on
ISBN 9781139182133.
themes that are emerging from the
● Gas turbine engineering handbook. Boyce, Meherwan P. 4th ed. Elsevier, CCS Cost Reduction Taskforce,
2012. ISBN 9780123838438. speakers will examine the conditions
● Geothermal power plants: Principles, applications, case studies and environ- needed for the storage of CO2
mental impact. DiPippo, R. 2nd ed. Elsevier, 2008. ISBN 9780080554761. that will be vital for the
● Global oil and gas industry: Management, strategy and finance. Inkpen, A; future deployment of CCS projects.
Moffett, M. PennWell, 2011. ISBN 9781621980957. Further details can be found at
www.energyinst.org/ccs-conference
● Guide to energy management. Capehart, B L et al. 7th ed. Fairmont Press,
2012.
EI to collaborate with G9 on offshore
● Handbook of industrial hydrocarbon processes. Speight, J. Elsevier, 2011. wind health and safety programme
ISBN 9780080942711. The EI and the G9 Offshore Wind
● Hydrogen and fuel cells – Advances in transportation and power. Hordeski, Health and Safety Association have
Michael Frank. Fairmont Press, Inc, 2009. 291pp. ISBN 9780881735611. announced their plans to collaborate
● Practical handbook of photovoltaics: Fundamentals and applications. on developing a programme of good
McEvoy, A. et al. 2nd ed. Elsevier, 2012. ISBN 9780123859358. practice and guidance on health and
safety issues in the offshore wind
● Renewable energy – Physics, engineering, environmental impacts,
industry. The initial focus of activity
economics and planning. Sørensen, B. 4th ed. Elsevier, 2011. ISBN
will be on four themes – marine oper-
9780080890661.
ations, lifting operations, competency
● Stand-alone and hybrid wind energy systems: Technology, energy storage and training, and work at height. The
and applications. Kaldellis, J. K., ed. G9 Steering Group was formed in
EI individual members have access to the full text of reference books and jour- 2012 to provide leadership on health
nals relating to all aspects of the energy sector, 24-hours a day, seven days a and safety issues in the offshore wind
week, via www.energyinst.org/elibrary These resources are easy to use, but if industry. The G9 founding members
you would like some one-to-one support from the EI Knowledge Service, you are Centrica, DONG Energy, E.ON,
can visit the library in person or contact the team on t: +44 (0)20 7467 7100, RWE Innogy, Scottish Power
e: info@energyinst.org Renewables, SSE, Statkraft, Statoil
and Vattenfall.

Yewande Abiose
Obituary – Lionel Downer joins EI Nigeria
In February, Yewande
It is with great sadness that we report the loss of Lionel Downer Abiose was appointed
who passed away in February after a short illness. He was a key as Business Develop-
figure in petroleum measurement and made significant contri- ment Manager for EI
butions to the EI’s technical work in this field.
Nigeria. Yewande was
Lionel had a long and distinguished career with BP and his
educated at the
most far-reaching contribution to oil measurement stemmed
University of Surrey where she gained
from a paper published jointly with Fred Inkley in 1972. This demonstrated that the
measurement tables which had been used since the 1940s for correcting crude oil a BSc in Economics in 2004, followed
and petroleum product volumes to standard conditions for trading purposes were by an MSc in Energy Economics and
not a good representation of the crudes and products actually being traded. This Policy in 2005. During her career,
work led to a joint initiative by the then Institute of Petroleum (now the EI), API Yewande has been employed by
and ASTM, and subsequent liaison with ISO, with Lionel leading the EI effort and Deloitte West Africa, and Total
providing significant input. New tables were published in 1980 and, with very Nigeria. As a graduate member of the
minor amendments, are still in use worldwide today. EI, she has volunteered on the
He was an original member of the EI’s Oil Industry Liaison Committee which committee of the EI’s Nigeria branch
evolved from the joint work on measurement tables and drew in international since January 2008. She will be
experts to meet under the EI umbrella to discuss measurement issues. The committee working closely with the branch
developed into the current HMC-4 Oil Transportation Measurement Committee, one committee in Nigeria in order to
of the largest and most international of the EI’s technical committees. support the activities of their mem-
Lionel was always willing to share his experience, and good humour was bers and volunteers, and further
always a key ingredient to any exchange. Some 200 people attended Lionel’s develop the EI’s presence in the
thanksgiving service in Stroud last month, an indication of the impression he made country.
and the fondness with which he is regarded. Our thoughts are with Lionel’s wife
and family.

PETROLEUM REVIEW APRIL 2013 13


AFRICA Security

Check those
secreted into the south to bring out staff
and provide charter aircraft to small air-
fields on the coast after the Algerian
government closed down all airspace
into the main airports. The In Aménas
attack has significantly ratcheted up the

insurance policies threat to the industry, with multi-


national hostages taken and the
terrorists resorting to killing. Hampered
by the almost total lack of communica-
tion from the Algerian authorities, BP
and Statoil coped as best they could. A
family centre was established by Statoil
at Stavanger for returning staff and at
BP, senior executives were in constant
touch with families.

Risk awareness
The industry must not rely on govern-
ment to provide both intelligence and
strategic assistance when the need
arises. Compass Risk Management,
which deploys consultants with long-
standing experience of hostage
negotiation both on land and offshore,
has prepared a summary briefing into
the In Aménas terrorist operation, com-
menting on the UK government
response. On the positive side, the
Foreign and Commonwealth Office was
quick in sending consular teams to sup-
port repatriation, it reported, but the
government had only limited experience
in the region, unlike France and Spain.
The savagery of the recent attack at the In Aménas gas ‘This lack of experience was reflected in
some of the statements from the gov-
facility in Algeria has led to a closer scrutiny of in-country ernment,’ the company concluded.
Critically at risk is the downstream
insurance cover, reports Nigel Bance. sector, where ‘often, there is a complete
lack of awareness of the risks’, as noted
by the underwriter when commenting

‘I
am constantly surprised that some rent for the well-armed Jihadists, who on how the industry should react to the
companies don’t have specific also looted Libya’s arsenals during the carnage in the desert. Premiums for all
kidnap and ransom cover,’ states an uprising. Insider knowledge was a major sectors across the region into Mali and
insurance underwriter in London that contributor in the assault, which began surrounding areas are high, and cover
specialises in high-risk oil and gas with attackers in Sonatrach-liveried SUVs comes with conditions. Aggregate com-
provinces. His company has seen a surge moving against two buses carrying pany limits on ransom payouts is a
of enquiries since the attack on Algeria’s workers to the facility’s airport and then feature for most policies, with $1mn to
In Aménas gas facility in January, which on to the living and recreational area in $5mn the norm. No member of staff
resulted in the deaths of hostages from the compound where most of the should ever carry on their person any
Algeria, Colombia, France, Japan, hostages were taken. ‘No amount of due certification of insurance where kidnap
Philippines, Romania, Norway and the UK diligence on staff can ever provide perfect is mentioned as, if they did, any such
and US. The plant managed by BP, Statoil security,’ confirmed the underwriter. cover in a hostage negotiation would be
and Sonatrach, which covers 10 sq km, In-country cover is available in the immediately invalidated. Companies are
was a high profile target as it accounts for underwriting market – but it comes at a also instructed by underwriters to keep
a tenth of Algeria’s gas exports. price. The Libyan uprising in 2011 had knowledge of such company cover to a
The complexity of the attack by Al- been a wake-up call to the industry to select few. All staff need key numbers to
Mulathameen, a splinter faction of reappraise security arrangements, after call in the event of crisis.
Al-Qaeda in the Islamic Maghreb (AQIM), many employees had been forced to use A recent addition to kidnap for
has given risk underwriters a major their own initiative in order to evacuate ransom policies is cover for hostage
headache in writing new business in to the coast for rescue or to the borders. extension, quickly gaining currency in
North Africa and the Maghreb region. Those companies with evacuation cover certain oil and gas provinces. Local man-
Some 1,140 km south-east of Algiers, and as part of their policies fared better. agers or foreign expatriates can find
30 km from the Libyan border, the Armed protection from the mainly themselves taken hostage by disgruntled
facility’s very remoteness proved no deter- British and US security companies were staff that have grievances over working
conditions or lack of promotion. There
have been incidences where expatriates
Iraq-style armed security has become the norm in much of North Africa and the have been held in their hotel rooms and
Maghreb forced to contact their head offices to

14 PETROLEUM REVIEW APRIL 2013


secure release by a ransom payment. AQIM had turned northern Mali into a Lawlessness and violence is also rife
Deaths, thankfully, are very rare. hostage holding centre to house victims offshore Nigeria and in the Gulf of
taken across North Africa. Beaten out of Guinea, exacerbated in Nigeria by the
Political vacuum Mali by the French, the problem appears redeployment of some Joint Task Force
The Arab Spring left a political vacuum to be moving to the remote areas of units to trouble spots in the north. There
that has been occupied by the Al- northern Nigeria, leaving the adminis- has been a spate of attacks this year, and
Qaeda-related groups and led to a tration of Goodluck Jonathan in a now the level of violence exacted on crews
game-change in kidnap and ransom countrywide grip of terror. has risen. Vessels are ransacked and ligh-
negotiation. Piracy negotiation in recent In recent weeks Nigeria has intro- tering is commonplace. In one incident
years can be relatively straightforward duced a mandatory death sentence for in January, the Nigerian oil tanker MT
by comparison, even if discussion does kidnapping, but that has not assuaged Itri was hijacked off the port of Abidjan,
take an average of three to six months, the hostage taking. With the north and in the Ivory Coast, while waiting to
sometimes over a year, but usually the central areas in the grip of the Islamist berth. The attackers sailed it away from
end result is the safe release of both groups, the situation in the Niger Delta Ivorian territorial waters and the vessel
crew and vessel. Crisis-response teams has worsened, despite the Movement was last detected off Ghana.
have access to databases of known for the Emancipation of the Niger Delta Well-armed hired security onboard
Somali pirate negotiators and conduits (MEND) still observing the general vessels in the Red Sea, Gulf of Aden and
and can beat down initial ransom amnesty on kidnapping. Followers of Somalia areas has led to a rapid decline
demands. However, AQIM, Boko Haram, ‘Comrade Azizi’ Henry Okah, often in attacks in 2012, falling to an aggre-
Ansar Dine and other Islamist groups described as the leader and founder of gate 75 from 236 in the previous year.
that operate across great swathes of ter- MEND, have threatened the oil industry There is a reverse trend offshore Nigeria
ritory and cross-border, pose a far with attacks following his conviction in and the Gulf of Guinea – during 10 days
deadlier challenge, with execution of South Africa for masterminding the in February this year, there were three
hostages a continual threat. Independence Day bombing in Abuja in hijackings in the Gulf of Guinea alone,
Armed intervention is often the only October 2010. There are fears that with foreign crews ransomed. ●
rescue option and the most difficult Okah’s splinter group could gather
decision for any government to take momentum if it links up with the former Note: The summary brief by Compass
given the potential loss of life. In March leader of the mostly inactive Niger Delta Risk Management on the In Aménas
2012, an Italian and a Briton died in a People’s Volunteer Force (NDPVF), Asari attack is available to download from
failed release in Sokoto, northern Dokubo, who is angry that a $9mn secu- www.compass-rm.com For analysis on
Nigeria, when British Special Forces rity contract awarded to him to provide the terrorist groups targeting the oil
accompanied by Nigerian military took guards for an NNPC pipeline was can- and gas sector, Exclusive Analysis
on AQIM. The Ansar Dine, with its celled by the Nigerian President in provides comprehensive coverage at
former stronghold in Timbuktu, and January this year. www.exclusive-analysis.com

Energy Institute
Process safety survey (EIPSS)

Benchmark your company’s process safety performance

The EIPSS enables your organisation to:


s understand its vulnerability to having a major incident;
s identify gaps in its process safety management system;
s demonstrate compliance to stakeholders, and
s benchmark results both within the company and against industry averages.

The EIPSS web-based benchmarking service will


assist managers in high hazard industries to
understand how well risks are being identified and
managed, which otherwise could threaten people,
environment, reputations, financial performance and
the future of your organisation.

For further information visit


www.energyinst.org/eipss or contact:
Stuart King, t: +44 (0)20 7467 7163
e: sking@energyinst.org

www.energyinst.org /eipss
AFRICA Sub-Sahara

Exploration potential
still underestimated?
The opportunity to add reserves through Sub-Saharan nies to better view sub-salt strata since
the mid-2000s. In 2006, BG discovered
Africa oil and gas exploration is both very large and the giant pre-salt Tupi oil field in deep-
water, offshore Brazil, which Petrobras
underestimated, writes Dr Stuart Amor, Head of Oil & Gas estimates has recoverable reserves of
between 5bn and 8bn barrels. Following
Research, RFC Ambrian. this and other giant pre-salt petroleum
discoveries in Brazil, interest in African
west coast central pre-salt potential has

S
ub-Saharan Africa political risk, reg- becoming much more positive. The April increased dramatically (the Brazilian and
ulatory risk, graft and security issues 2012 USGS World Petroleum Assessment African tectonic plates were joined as
have caused the region to be less estimate of Sub-Saharan Africa mean part of Gondwana before moving apart
explored than its geologic potential undiscovered conventional petroleum in the early Cretaceous period and thus
warrants. Furthermore, new technology resources was 2.2 times larger (or 146bn they share a similar geologic history).
has made possible exploration of plays boe) than its 2000 assessment. This was Cobalt is believed to have been the
that were previously difficult to access. by far the largest increase of its eight first company to have found a giant pre-
As more world-class discoveries are main assessment regions, in both salt reservoir in Africa, with its Cameia-1
made, interest in the region will only absolute and percentage terms. The well (in block 21, offshore Angola). The
increase. Below are outlined four change in sentiment towards Sub- Cameia-2 appraisal well confirmed a
recently successful play types, and where Saharan Africa’s frontier exploration lower oil water contact and confirmed
RFC Ambrian believes the next successes regions (as opposed to Nigeria and the aerial extent of the field; a drill stem
are likely to be. In terms of the size of Angola, which have to date attracted test is planned for 1Q2013. The opening
resources likely to be discovered, the the vast majority of industry exploration, up of deepwater pre-salt plays in Brazil
West African coast pre-salt play is likely appraisal and development spending) has transformed the Brazilian oil
to yield the most positive results over has been driven by large, new discoveries industry. Both the scale of individual
the next few years. in previously underexplored territory. petroleum discoveries and the economic
Many observers continue to underesti- rent available from their development
mate the scope for new oil and gas West African coast pre-salt are enormous. Brazilian proven oil
discoveries in Sub-Saharan Africa as the Following improvements in seismic tech- reserves increased from 8.5bn barrels in
region’s (current) relatively low level of nology it has become possible to view 2001 to 15.1bn barrels at the end of
proven reserves and production unduly the strata below salt layers. Salt attenu- 2011. We believe a similar transforma-
influences them. Only Nigeria and ates seismic waves and its structure tion is possible offshore Angola, Gabon,
Angola saw oil production of more than often contains overhangs that are diffi- Congo (Brazzaville) and DRC. Indeed,
0.5mn b/d in 2011. However, the scope cult to image. Improved computing Cobalt alone plans some four to six fur-
for new discoveries depends not on cur- power and the wide-azimuth towed ther exploration wells and three more
rent reserves and/or production, but on streamer survey have allowed compa- appraisal wells over the next two years.
the geological propensity of a region to
produce oil and gas fields and the
amount of historic exploration con-
ducted in the region. The US Geological
Survey (USGS) has looked at the latter
factors and has produced two World
Petroleum Assessments – one in 2000
and the other in 2012. If you are a Sub-
Saharan African oil and gas explorer, the
results of the most recent assessment
were highly encouraging, with over 15%
of the world’s undiscovered petroleum
resources estimated to be in the region.
Sub-Saharan African total mean undis-
covered petroleum resources are 267bn
boe according to USGS’s 2012 report.
This means that the opportunity is com-
parable in size to that of the Middle East
and North Africa (299bn boe), North
America (296bn boe) and South America
and the Caribbean (260bn boe).
The consensus view of the petroleum Figure 1: World mean undiscovered prospective oil and gas resources
Source: USGS, RFC Ambrian estimates
potential of Sub-Saharan Africa is

16 PETROLEUM REVIEW APRIL 2013


West Africa’s Atlantic and in 2004, Tullow has drilled 50 wells with not started to drill its two blocks (Areas
Transform Margins only three dry holes. 2 and 5) in Mozambique, but has some
The main impetus behind the re- Tullow may have started to replicate 9tn cf of gas-in-place at its Zafarani and
evaluation of petroleum resources along its Ugandan success onshore in Kenya. In Lavani discoveries in block 2, Tanzania.
West Africa’s Atlantic and Transform January 2012 it drilled the Ngamia-1 well Ophir/BG’s discoveries have been from
Margins came from the giant Jubilee oil in the Lokichar Basin, which made a sig- aerially restricted tertiary intra-slope
field discovery by Kosmos Energy off- nificant oil discovery with 100 metres of channel systems rather than the aerially
shore Ghana in 2007. Tullow (the net oil pay across multiple zones within a extensive tertiary amalgamated channel
operator) has already brought onstream 1,100-metre gross oil-bearing interval. complexes/basin floor fan systems in
Phase 1 and expects 2013 production of This followed a 100,000 sq km FTG which Anadarko’s and Eni’s Mozam-
around 120mn b/d. We believe that the gravity survey across Tullow’s Kenyan bique discoveries have been made. It is
reason the Jubilee field was earlier over- and Ethiopian permits. Tullow/AOC have quite possible that a similar play to that
looked is that oil companies along the identified over 100 leads in the seven found in Mozambique is waiting to be
West African Transform Margin had pre- related basins. On 14 January 2013 discovered in Tanzania. In 2Q2012,
viously mainly drilled tertiary structural Tullow spudded the Sabisa-1 well near BG/Ophir conducted a 3D seismic survey
traps as they were easier to identify on the northern shores of Lake Turkana in of the amalgamated channel com-
the then available 2D seismic lines than the South Omo licence, Ethiopia. Should plexes/basin floor fan systems in block 1
deeper Cretaceous stratigraphic traps. this well prove successful, it should sig- and identified a prospect with 22tn cf of
nificantly de-risk around 900mn barrels gas-in-place on the fast-tracked prelimi-
The improved image quality from newer
of risked prospective oil resources nary data. Once they have finished
3D seismic also now allows a better
around and under Lake Turkana. processing and interpreting the data they
understanding of the trap risk associated
hope to drill this prospect later this year.
with stratigraphic traps. The Jubilee field
Offshore East Africa Further north, offshore Kenya is also
is a structural-stratigraphic trap (a large
Offshore East Africa has become a world- ‘hot’, although there has only been one
turbidite fan system in upper Cretaceous
class gas province in the last couple of recent well drilled. Similar play types are
reservoir rocks).
years. That there was gas offshore East possible, and notwithstanding Apache’s
Anadarko learnt from Jubilee’s success
Africa has been known since western oil recent Mbawa ‘non-commercial’ gas dis-
and, in 2009, made the Venus discovery
majors performed some limited explo- covery, we believe this region is likely to
offshore Sierra Leone, some 1,100 km
ration in the 1960s. However, the scale of be more oil prone than further south.
away. Today, Kosmos is pursuing the
the resource was not appreciated, and Anadarko is currently drilling two deep-
same geologic theme as far north as
with a limited local market for any gas water wells (on the Kiboko prospect in
Mauritania and Morocco, where it is
discovered the majors moved on to what block L11B and the Kubwa prospect in
planning to drill wells later this year. The they perceived were more promising block L7).
next main test of this type of play will prospects. It was Anadarko that
come from Africa Petroleum’s Bee opened up the Rovuma Basin, offshore Looking ahead
Eater-1 well offshore Liberia, which Mozambique, with its Windjammer dis- Outlined above are the main Sub-
spudded in early January. This well will covery in February 2010. Pre-drill, it Saharan plays that have worked over
test the aerial extent of the Narina-1 oil estimated gas resources, if found, might the last few years. Other plays that have
discovery made by Africa Petroleum in be between 0.1tn and 3.8tn cf in an not yet had success will also be tested in
February last year. Oligocene toe thrust stratigraphic trap. the next two years. These include off-
Today, several discovery wells later, shore Namibia, where HRT plans to drill
East Africa’s Rift Basins Anadarko has found two huge gas com- two wells in 1Q2013, and Morocco,
Over the last few years there have been plexes with layered resources in where several operators are looking at
significant oil discoveries onshore in East Oligocene, Eocene and Palaeocene basin other plays in addition to Cretaceous
Africa’s Rift Basins. In particular, from fan systems/amalgamated channel com- turbidite fan systems.
2007 to 2010 Tullow and Heritage made plexes – the Propseridade complex has RFC Ambrian believes that not only
several discoveries in Uganda around estimated recoverable resources of some has the geologic merit of exploring in
Lake Albert. Through organic growth 17tn to 30tn cf of gas, while the Sub-Saharan Africa rarely been higher,
and acquisition, Tullow built a Ugandan Golfinho/Atum complex has estimated but with a few notable exceptions polit-
position with base case contingent and recoverable resources of between 10tn ical and regulatory stability is generally
prospective resources of 1.8bn barrels of and 30tn cf of gas. improving. We consider that Sub-
oil by the end of 2011. In February 2012, Anadarko’s gas discoveries in Saharan African country stability is
two-thirds of this position was farmed Mozambique’s Offshore Area 1 are not loosely tied to economic growth, which
out to CNOOC and Total for $2.9bn. the only recent gas discoveries off the has been relatively strong in the last few
Within the East African Rift Basins, the East Coast of Africa. Eni now estimates years, although presidential/parliamen-
contrast between the density of the that Mozambique’s Offshore Area 4 tary polls and leadership successions can
basement and the sediment cover is (adjacent to Area 1) has 70tn cf of gas in still trigger crises.
large. This means that an airborne full- place. We estimate that between 60tn Improvements in the investment envi-
tensor gradiometry (FTG) gravity survey and 100tn cf of recoverable gas ronment are starting to be understood
is particularly suitable for economically resources have been discovered to date by companies; 60% of international
imaging the geology of a large area in Areas 1 and 4, offshore Mozambique. decision makers surveyed in Ernst and
quickly. In 2009, Tullow commissioned a Meanwhile, Ophir/BG have made a Young’s 2012 Africa Attractiveness
2,700 sq km FTG gravity survey in string of ‘small’ Tanzanian discoveries Survey reported that over the last three
Uganda, which allowed it to target its over the last two years. Ophir manage- years their perception of Africa’s attrac-
seismic surveys better. The integration of ment estimates that total discovered tiveness as a place to do business had
FTG gravity and seismic data signifi- gas-in-place resources to date are some improved (only 11% reported that it
cantly improved the definition of 13.5tn to 21tn cf of gas. We estimate this had deteriorated). Thus, we look for-
prospects, allowing a better exploration equates to between 10tn and 15tn cf of ward to a fruitful few years for the
well success rate. Since entering Uganda recoverable gas resources. Statoil has Sub-Saharan oil and gas industry. ●

PETROLEUM REVIEW APRIL 2013 17


AFRICA Legal

Libyan oil contracts


collected to ensure that the best record
of the contract terms is available. The
contract should then be ‘stress tested’ to
identify possible areas of weakness
which a party might exploit so as to
anticipate these arguments and prepare
Damian Honey, Partner, and Alexander Young, Associate, to meet them. The next step is to ensure
strict compliance with the terms of the
at law firm Holman Fenwick Willan, discuss the contractual contract. A potentially defaulting party
should be given no excuse, no matter
how apparently insignificant, to termi-
complexities when conducting business in Libya. nate. Small things can matter –
nominations should be made on time;
shipment periods should not be missed;

T
here are times when contracts, par- majeure clause – for example on timing the product being sold should comply
ticularly long-term contracts, lose or notice – have been complied with with contractual specifications. An early
their appeal. This may be because exactly. Several oil majors operating in problem in one of these areas could
of a specific change of circumstances – Libya are known to have declared force leave the door open for another party
for example, oil companies withdrawing majeure on contracts as a result of the legitimately to terminate the contract
from operations in Libya following the uprisings in 2011. later on. The same applies in relation to
overthrow of the Gaddafi regime and A force majeure clause often contains notice provisions. If a notice of termina-
subsequent uprising in 2011. Or it may examples of events that fall within its tion or force majeure is not sent in the
be because of a downturn in the local, scope, together with a catch-all provi- correct form to the correct address, for
or global, economy, of the sort we are sion such as ‘any event beyond the example, this could make it invalid. If a
currently experiencing. control of the parties’. Examples of force contracting party does appear to be
This article briefly considers whether, majeure events can include war, civil walking away from its obligations, it is
and how, a party may withdraw from its commotion, terrorism or changes in leg- important to respond cautiously.
contractual obligations in circumstances islation. Given the current unstable Reacting too soon could result in a
where performance of the contract is no situation in a number of areas of the breach by the innocent party due to pre-
longer attractive – and what can be world, often areas where oil and gas mature termination. A party hoping to
done to prevent parties on the other exploration is occurring or is targetted, avoid its obligations will be quick to
side from doing the same. parties operating in those regions who seize on this as an easy escape from the
The general position under English are keen to ensure that a contractual contract.
law is that parties are not allowed to exit route is available if necessary should Next, it is important that any conces-
withdraw from a contract because it consider including appropriate force sion made, such as an extension of time
now seems a ‘bad bargain’. One possi- majeure provisions in their contracts. for performance, is granted under a
bility, however, may be that the parties Parties trying to avoid their contrac- reservation of rights.
will be able to declare their contract tual obligations typically rely on one or The natural temptation when a
‘frustrated’. This will relieve them of all more of a number of arguments to default occurs is often to seek a com-
their contractual obligations. Frustration effect their escape. They may try to mercial resolution. Any commercial
occurs when an event happens after the claim that the individual who signed the settlement discussions should be under-
contract has been agreed which changes contract was not authorised to do so; taken on a without prejudice basis. This
the nature (not simply the cost) of per- that the party who entered into the con- enables the defaulting party to be held
formance so fundamentally that it tract did so as agent and not as in breach of contract whilst settlement
would be unjust to require continued principal; that there has been a breach discussions continue so that if they fail,
performance. Given the dramatic conse- of the contract which allows it to be ter- the innocent party is still in a position to
quences for the contract, it is rarely minated; or that they are unable to rely on its contractual rights.
possible to show that frustration has perform due to changed economic cir- There are circumstances in which it is
occurred. It is usually only found where cumstances (sometimes described as possible to walk away from a contract. It
performance has become impossible. ‘price majeure’). There are a number of is also possible to minimise the risk of a
A second option for exiting contrac- ways to minimise the risk of these argu- contractual counterparty doing so
tual obligations is force majeure. This ments being successful. simply because the contract no longer
will only be available if the contract con- appeals to them. The decision to take
tains force majeure provisions and, even Step by step steps to avoid contractual obligations is
then, a party seeking to rely on them The first step is to ensure that the con- not one that should be made lightly –
will have to show that the force majeure tract terms are evidenced in writing. If the consequences of getting it wrong
event falls within the scope of the provi- they are not, all correspondence with can damage both a company’s finances
sions and that all aspects of the force the other contracting party should be and its reputation. ●

Energy Institute Nigeria –


the EI’s presence in Africa
w w w. e n e r g y i n s t . o r g / n i g e r i a
Or contact Yewande Abiose, e:yabiose@energyinst.org

18 PETROLEUM REVIEW APRIL 2013


AFRICA Ethiopia

Ethiopian exploration
points to significant reserves
block drilling programme in the Ogaden
Basin. Tewodros Ashenafi, the com-
pany’s Chief Executive Officer, told
Petroleum Review that the company
plans to drill its first well at the end of
2013, and a further two wells in 2014
and 2015. It is estimated that the three
blocks could contain a total of between
1.5bn and 3bn barrels – although,
according to Ashenafi, this is a ‘conserv-
ative estimate’.
The company also has the rights for a
block in the Gambela Basin, adjacent to
the South Sudan border. It estimates
that the block has reserves of between
600mn and 1bn barrels. South Sudan has
proven reserves of 900mn barrels in an
area that lies just 100 km from SWE’s
Gambela block, Ashenafi noted. He
explained that SWE is adopting a par-
allel strategy for the financing of the
projects. The company is in the process
of raising private equity of $100mn and
is in discussions, reportedly going well,
A growing number of oil and gas exploration projects are with potential partners. Other smaller
oil exploration projects in Ethiopia are
underway in Africa’s second most populous country, currently being undertaken by
Ethiopia, as interest in its hydrocarbon reserves increases Netherlands-registered Pexco Explora-
tion and US-based Afar Exploration.
from both overseas and domestic companies, writes In addition to its growing oil discov-
eries, Ethiopia already has significant
Jonathan Dyson, in Addis Ababa. natural gas discoveries in the Ogaden
Basin, with the initial gas-in-place
reserves estimated to be 4.7tn cf,

A
ccording to the country’s Ministry Canada-based Africa Oil in 2010. A according to Dr Ketsela Tadesse, Head of
of Mines, there are five distinct Tullow spokesperson told Petroleum the Petroleum Development Enterprise,
sedimentary basins in Ethiopia – Review that 1,002 km of seismic lines a body within the Ministry of Mines set
the Ogaden Basin, covering 350,000 sq have been recorded in the basin and the up to develop oil and gas resources in
km in the south-east of the country; resulting data could indicate significant partnership with private companies. The
Abay (Blue Nile), a 63,000-sq km area in hydrocarbon deposits. The company will government is expected to unveil plans
the central north-western plateau; announce the results of the geological for the development of its gas fields in
Mek’ele, which covers 8,000 sq km in the drill tests in South Omo when the well is the coming months.
north of the country; Gambela, a complete and the data has been inter-
17,500-sq km area within the Central preted, likely to be in 2Q2013. ‘We are Investment opportunities
African Rift System; and the Southern planning two more wells in Ethiopia this As Ethiopia’s sedimentary basins are
Rift Basins, covering 70,000 sq km within year, but that could increase or decrease explored, the oil and gas industry is
the Rift Valley. depending on results,’ the spokesperson bullish about the potential extent of the
Tullow Oil, based in the UK, began said. He added that while it is too early country’s reserves, despite some sugges-
drilling work on its concession in the to give an indication of the potential tions that they will be disappointingly
South Omo Basin, within the Southern reserves, the gross pre-drill estimate for small and that Ethiopia’s geology does
Rift Basins, in early January. The com- the first well, Sabisa-1, is 70mn boe. not lend itself to the large-scale oil and
pany purchased a 50% operating Meanwhile, Ethiopian company South gas production seen in West Africa or the
interest in the South Omo Basin from West Energy (SWE) is planning a three- Middle East. Dr Tadesse said: ‘The
existing gas discoveries are the largest in
the East African region for more than 30
Traffic in Addis Ababa – 72,000 km of new roads are to be constructed in Ethiopia by years. While there have been large
2015, which will improve access to the country’s oil and gas exploration areas recent oil and gas discoveries in other
Source: Jonathan Dyson East African countries, the main reason

20 PETROLEUM REVIEW APRIL 2013


this didn’t include Ethiopia was that we to attract more investors to the country’s roads are to be constructed by the end
hadn’t been carrying out as many drilling oil and gas sector, noting that as well as of 2015, while the power availability is
activities as other countries. If we con- having an increasingly open economy, targeted to increase to 8,000 MW by
tinue with more drilling programmes foreign investors have been attracted by 2015. A growing number of paved and
there will be a substantial increase in oil the 84mn population country’s relative functional roads are providing access in
and gas discoveries in Ethiopia.’ political stability and competitive invest- exploration areas – for example, the
Tolesa Shagi, the State Minister of ment and taxation codes. Dr Tadesse Jijiga to Gode road in the Ogaden Basin
Mines, added: ‘We believe the geolog- said: ‘In the petroleum sector, compa- is currently under construction – and
ical association in Ethiopia is similar to nies have advantages such as tax-free several railway projects that will allow
Yemen and Egypt. It is very convenient import and export for equipment and more access to the areas containing oil
for oil and gas – it just needs systematic machinery for use in oil and gas E&P. and gas reserves are underway. A
and standard exploitation.’ Ashenafi Most fiscal terms are negotiable, except number of new airports are also
also pointed to Ethiopia’s move into income tax which is fixed.’ planned, including Jijiga, in the Ogaden
hydroelectricity, as it begins to exploit its All the companies involved in the Basin, which opened a new airport in
vast hydropower resources with a country’s oil and gas exploration have November 2012.
rapidly growing number of dam- signed production sharing agreements There are also signs that Ethiopia’s
building projects currently taking place. with the Ethiopian government. ‘The security concerns are easing. These have
This has demonstrated what Ethiopia rights and obligations of both parties are been a nagging worry – in an attack on
can do, when it was thought impos- clearly set in the agreements,’ according an oil field in the Ogaden Basin close to
sible,’ he said. ‘Ethiopia will be carrying to Dr Tadesse. ‘Regulatory activities are the border with Somalia in 2007, 65
out its oil and gas operations in an monitored according to the agree- Ethiopian and nine Chinese oil workers
optimal and efficient way.’ ments,’ he said. He also argued that the were killed. Doubts about security in the
The country will continue to develop country’s existing regulatory system is area have remained since the attack.
its renewable energies sector, Shagi said, effective: ‘The Ethiopian oil and gas However, Ashenafi said that SWE has not
including wind as well as hydropower, as sector has petroleum laws that are con- experienced any security difficulties so
it looks to produce oil and gas. ‘As a ducive [to development] and there is no far. ‘We’ve completed one million man
poor country developing rapidly, we need to make changes at the moment.’ hours of seismic testing without one lost
badly need our resources. We need to hour because of security – that’s a very
exploit them and develop infrastructure Infrastructure and security good number,’ he said. ‘We’re working
as quickly as possible. Developing Shagi also pointed to rapid develop- with the community and spending a sig-
renewable energies is not contradictory ment in infrastructure as a major benefit nificant amount on community relations,
to our oil and gas projects – we want to for oil and gas investors. As part of the such as building two $100,000 schools.
W
work very intensively on their potential.’ country’s Growth and Transformation We’re a part of the solution to their chal-
He added that his government is keen Plan for 2011–2015, 72,000 km of new lenges,’ he concluded. ●

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PETROLEUM REVIEW APRIL 2013 21


AFRICA Alternative fuels

Urban biogas for


are giving about 20 families the biogas
for free. The digester is fed with agricul-
tural waste and the biogas is
transported from the digester via a
biobag (portable balloon) to their

South Africa informal homes. This portable concept


has provided the people with light,
cooking gas and a heater since these
appliances connect to the biobag. One
of our new developments will be to set
Urban waste management problems and the rising cost of up a cluster-based system that feeds off
a 100-cm digester made from concrete,
energy have kick-started development in South Africa’s whereby the biogas can be piped into
people’s homes,’ he said.
fledgling biogas sector, prompting a new crop of local Last year, Parks’ company also part-
nered with University of Cape Town (UCT)
‘green’ entrepreneurs to develop a cleaner, cheaper fuel based NGO, Engineers Without Borders,
to install a rubber-bladder biodigester
source, writes Bill Corcoran, in Cape Town. at the Abalimi Bezkhaya Community
Garden in Khayelitsha, an informal settle-

A
lthough biogas is a popular form ment outside Cape Town. Cynthia Nkqayi,
of fuel in African countries such as a group leader at the garden, believes the
Ethiopia because of its long-term biodigester is a great addition to its oper-
affordability and relatively low set-up ation because they use gas for cooking
costs, the South African government has every day. ‘We used to buy about R300
focused on developing other forms of [$33.67] worth of gas every two months
renewable power until recently. Now for cooking, so it is a big saving for us to
though, Africa’s largest economy is inves- have the biogas here, as it is free,’ said
tigating whether it should supply biogas Nkqayi. The raw materials and labour cost
as a cheap fuel to the growing number around R10,680.
of poor people migrating from rural to
urban areas, especially the informal set- Other projects
tlements that spring up around South There are similar projects underway
Africa’s cities and towns. across the country. A Johannesburg-
According to the latest census results based company Bio2Watt, for instance,
released last November, Gauteng aims to build and operate large
province, South Africa’s industrial heart- Engineers Without Borders volunteer commercially-viable biogas plants
land including Johannesburg, saw its Francois Petousis and Siyazama throughout South Africa that use waste
population grow from 9.4mn to 12.8mn Community Garden leader Cynthia streams to produce green electricity. The
people in the decade to 2011, an Nkqayi in front of the biodigester company’s clients are typically waste
increase of 31%. In addition, energy compartment fed with garden waste management companies interested in an
costs across the country have increased Source: Bill Corcoran alternative to landfills as a way to dispose
by 50% since 2008. of waste, but they also include local munic-
The process of turning waste into still embryonic, private sector companies ipalities and large-scale dairy farmers.
biogas involves the breakdown of and universities have forged ahead to According to the company website, its
organic matter in an oxygen-free envi- investigate how to convert organic second commercial biogas project is situ-
ronment called a biodigester, which is material into biogas on a more practical ated on a dairy farm in the Western
usually a large rubber-bladder or a con- level. Pavel Parks, a co-founder of Cape province and it intends using the
crete structure, depending on the scale African Green Energy (AGE), a new waste produced by the farm’s 7,000
of the project. Operating like a human renewable energy company, says they cows to fuel a biogas plant that gener-
stomach, the biodigester produces have combined designs from biogas ates electricity. ‘Targeted electricity
methane gas that is siphoned off and plants from around the world in a bid to generation capacity of the proposed
used for cooking and to replace get the right type of digester for South biogas plant is 3 MW, expected to come
paraffin, an increasingly expensive fuel African conditions. onstream by 2014,’ said a company note.
commonly used in informal settlements Although commercialising the In June 2012, a grant of about R2.7mn
as a light source, even though it causes product is the company’s ultimate goal, was provided by South Africa’s National
countless shack fires each year. in the last few years AGE has primarily Research Foundation to UCT to conduct
David Mahuma of the South African focused on biogas pilot projects in dif- small biogas demonstration projects to
National Energy Development Institute ferent poor communities to iron out see if they can alleviate waste disposal
has been tasked by the government to problems caused by fossil fuel depen- problems in informal settlements, as
examine whether it is feasible to add dency. To date, the company has set up well as saving on energy costs. UCT pro-
biogas to the other renewable energy biogas plants in a rural village called ject researcher Rethabile Melamu said
sources that the country is trying to Melani in the Eastern Cape, near Fort its studies show that up to 70% of
develop. He said while his team is in the Hare University. This is used by villagers organic municipal waste could be used
early stages of assessing its viability at a as a power source and the university stu- to create biogas. ‘We are going to set up
national level, ‘biogas becomes a good dents as a training facility. Meanwhile, a biogas project near an abattoir and
energy provider if you have the biomass in Philippi, at an informal settlement use the leftover blood and animal waste
resources to create it’. near Cape Town, two concrete digesters to create fuel that can be used for
While the government’s research is have been constructed. ‘In Philippi we cooking and heating water,’ she said. ●

22 PETROLEUM REVIEW APRIL 2013


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Energy Institute – skills, knowledge and good practice www.energyinst.org


E NERGY INSTITUTE Knowledge strategy

Adding knowledge services to


professionalism and good practice
energy knowledge, providing an evi-
dence base to help ensure that decisions
taken on energy matters are informed
and underpinned by sound science. Key
to this is an identified need to draw
more on the EI’s greatest resource – its
15,000 individual members, its 250 com-
pany members and technical partners,
and its excellent network across a wide
range of energy-related organisations,
all living and breathing in the energy
sector and often at the cutting edge of
developments.
The EI has always provided wider
knowledge through its various activities,
but especially through its Library and
Information Service. This has to a large
The Energy Institute (EI) is to launch in the summer its new extent grown organically, in a passive
way, over a number of years and has
Energy Matrix website portal as part of a larger expansion of resulted in a wealth of information
being held within the EI. The decision by
its core themes – to become a specialist knowledge services the EI Council was to review this infor-
mation, improve its organisation and
provider in addition to its more traditional professionalism access, link it more to the wide member-
ship of the EI and, importantly, manage it
and good practice functions. Here, Martin Maeso, through the provision of analysis and
enquiry that will help improve its value
EI Knowledge Director, describes the project to link the and relevance across the energy sector. In
doing so, the intent is to support the
expertise of its members to the delivery of an expanded, wider EI objective of providing an inde-
pendent evidence base on which to base
evidence-based and comprehensive information service. policy development.
The core values of the EI therefore
expand to become provision of

G
ood practice and professional over 9bn by 2050, according to the
development have always been United Nations (UN). Some 20% of the knowledge, professionalism and good
the cornerstones of the Energy world’s population do not currently practice.
Institute (EI). Providing the ability for have access to electricity.
individuals to develop their skills, The investment needed and planned Understanding our members
careers and their value to industry, in the energy sector is in the trillions of The first task in improving the EI’s ability
through membership of a professional pounds. Local, regional and global deci- to deliver and develop energy knowl-
body that is relevant to their daily sions are being made on energy policy edge is to gain a better understanding
activities, enabling engineers, scien- that will have a profound impact on of our members and their activities and
tists, environmentalists and energy availability of energy, its affordability, skills. This is important on two fronts.
managers to become chartered, is fun- the mixture of sources, technologies, First, to help the EI get more from the
damental to the purpose of the EI. Also the environmental cost, and the skills membership resource that lies at its
fundamental is providing industry with challenge. Decisions are being made heart, to draw on the inherent experi-
guidance and good practice, across a and policies developed that will have a ence and expertise, to link members to
range of health, safety and environ- huge effect on how we all live our lives key initiatives and to provide a conduit
ment (HSE) and fuels and distribution over the coming decades at a local to enable that expertise to engage with
issues, and acting as a broker between level, and also will have consequences the wider debate. Second, to enable the
industry partners and regulators, sup- on geopolitics and international rela- EI to better target its own resources and
porting self-regulation across industry. tionships for years to come. offerings back to relevant sections of its
How society secures and uses energy, This is the context within which the EI membership – thus improving the value
what it costs to both consumers and the is operating, and it is within this of membership and ensuring EI deliver-
environment, and how we meet a context that the EI Council took the ables are used and relevant.
growing demand have never been decision that, as well as providing excel- An improved understanding of our
more pertinent and relevant than they lent opportunities to develop good members comes from a more refined
are now. The global population is set to practice and routes for personal profes- energy classification system. Work has
increase by a further billion people to sional development, the EI should also been undertaken to better organise
over 8bn in the next 25 years, and to seek to improve its provision of wider and link our assets, both members and

24 PETROLEUM REVIEW APRIL 2013


products. This has been done in a way University, who also sits on Council. The the UK perspective with that from
that takes account of energy products, EAP is made up from senior EI Fellows Europe and beyond.
energy processes within the value chain and other experts in their field, and
and energy disciplines such as finance, exists to identify where the EI should Energy matrix
health and safety, environmental pro- focus efforts to support the energy In order to improve access to knowl-
tection, engineering, science and debate, through provision of a sound edge for members and wider society,
energy management. evidence base. the EI has been building an ’Energy
By reviewing the taxonomy of the EI’s The EAP will operate on the model of Matrix‘, a website access portal. This will
assets, it is possible to categorise both the successful and well established be hosted on the EI website domain at
people and products using one data- Scientific and Technical Advisory www.energyknowledge.org – which is
base system, which then enables us to Committee (STAC), which oversees the currently under construction. In
undertake much more intelligent and technical and good practice develop- essence, this Energy Matrix will host and
targeted analysis. Central to this is a ment activities of the EI. In a similar link to the EI’s knowledge material from
need for members to better inform the way, the EAP will seek to identify spe- across the organisation’s areas of
EI of their skills and experiences, and, cific projects that will steer the EI to activity. It will enable users to quickly
with that in mind, readers are enhance its knowledge base, and will pinpoint specific articles, guidance,
requested to log in to the website and seek support from ‘knowledge part- datasets training materials, publications
update their profile accordingly at ners’ in delivering these projects. and events from across the EI, and will
www.energyinst.org The EAP will also oversee the delivery also provide suggested materials based
against these projects, working with the on search criteria.
EI Knowledge Manager and utilising In addition, it will link to the sites of
EI knowledge services high calibre interns sourced through the EI partner companies where additional
Laying the foundation for improved EI’s network of academic affiliates. It is or more detailed information may be
engagement with members is one task intended that the projects are con- sourced. A number of organisations
essential to knowledge development. A ducted under the steerage of a key EAP have already offered access to their
second major activity has been to merge member, overseeing the activity of an sites and are keen to develop links to
the EI Library and Information Service intern. The intent is that each year the EI Energy Matrix.
with our knowledge management capa- potential projects are offered to acad- The Energy Matrix will organise items
bility. This has resulted in the Energy emic institutions which will compete for across five key themes identified by the
Institute Knowledge Service (EIKS), which the opportunity to provide the resource EAP:
is the vehicle for the EI to curate, create to undertake the work – potentially as ● skills and careers;
and disseminate energy knowledge. part of their existing course or work ● regulation, public confidence and
Improved organisation is vital to better experience. industry accountability;
curation of the wealth of knowledge A number of areas have already been ● energy policy and economics;
already held by the EI. As well as identified for further work and devel- ● energy sources and technologies; and
enabling linkage of information to mem- opment. These include guidance on ● energy efficiency.
bers and vice versa, it also enables energy management, work on heat and These are areas that have been iden-
linkage across the various streams and comfort, and also guidance on uncon- tified by EI Council and the EAP as
activities of the EI. The emphasis has ventional gas. Plans also exist to being where the EI is deemed to be best
been to look to provide information elec- develop knowledge projects on marine placed to add value. Each theme will be
tronically as well as physically. This and tidal power, to look in more detail mapped against the energy value
provides much greater access to the at issues around energy storage, and to chain, building on definitions from the
knowledge held by the EI, but also develop knowledge tools around UN, from production, to transforma-
enables us to ensure that those searching bioenergy. tion, to transportation, use and
for information can be linked to relevant This work will be directed at building recycling of energy. The Energy Matrix
resources across the EI value chain. the EI’s knowledge base and materials, is due for launch at the EI AGM in June.
The EI has invested in its background and looking to identify where work is With the launch of a framework for
databases and online search facilities to being undertaken elsewhere, where the EI’s knowledge, the EI will place itself
underpin this. Some of these electronic there are gaps in knowledge and where firmly at the centre of the energy infor-
resources can be viewed at: there might be opportunities for the EI mation world, building on its already
● eLibrary – www.energyinst.org/elibrary; to add to the evidence base. well-established networks such as STAC,
and Another key area of focus has been the Information for Energy Group (IFEG)
● data services information – www.ener- on energy systems. What constitutes a and the UK World Energy Council
gyinst.org/data-service With additional system? How do components interact? (UKWEC). It will draw on the wealth of
functionality on the way – watch this What are the barriers to a truly holistic existing information and data, and pro-
space! approach and how can these be over- viding value-adding evidence to help
come? The EAP has already organised a inform debate, thus fulfilling the aims to
series of breakfast briefing sessions support knowledge, good practice and
Energy advisory panel with key Fellows and eminent guests professionalism. ●
Hosting knowledge in a way that pro- from relevant organisations, and will be
vides intelligent interrogation and access publishing the output from these dis- If you would like to learn more
is one half of the knowledge manage- cussions later in the year. about any of the developments
ment process. The other is having the There are also plans to work in part- taking place within the EI
ability to analyse that knowledge, iden- nership with Elsevier Publishing in Knowledge Service, or feel you can
tify where there are gaps and put in hosting a wider conference, linking contribute to the areas of addition
place a process to address those gaps. To academia, government and industry to focus described, please contact
oversee this process the EI Council cre- identify and articulate the latest Martin Maeso, Knowledge Director,
ated the Energy Advisory Panel (EAP), thinking around energy systems. This is at e: mmaeso@energyinst.org
which is chaired by Matt Leach of Surrey due to be held in early 2014 and will link

PETROLEUM REVIEW APRIL 2013 25


CCS Interview

Putting the ‘S’ in CCS


Petroleum Review recently asked Michelle Bentham
(right), from the British Geological Society, about the
prospects for the long-term storage of carbon in the
UK, ie post-capture. These issues will be addressed in
more detail during a one-day conference on the
subject in London later this month (see p27). ready at the right time.
EOR may act as a bridge between
hydrocarbon production and CO2

Q
. What are the main opportuni- order for storage activity to develop?
storage; this relies on the tax regime
ties for the development of A. Reducing geological uncertainty
and the need to reduce risks are essen- and business case being favourable.
large-scale carbon dioxide (CO2)
tial, as is improving understanding and The economics of EOR are the subject
storage in the UK?
communication of geological uncer- of much debate.
A. Initially, the selected DECC
tainty. For example, a large amount of The re-use of oil and gas infrastruc-
[Department of Energy and Climate
the UK storage potential is located in ture such as wells and pipelines might
Change] demonstration storage sites
saline aquifers – these have the advan- be possible in some cases and could pro-
might act as seeds or catalysts for projects
tage of offering the large storage vide some cost savings. Timing is critical
offshore the UK. Hubs may develop in
capacities required to achieve significant for this to occur. It will require planning
these regions from specific points on the
CO2 reduction. For widespread utilisa- and might include changing ‘close of
UK coastline. Development of offshore
tion of saline aquifer sites, confidence in production dates’ for oil and gas fields.
infrastructure might provide opportuni-
storage security needs to be established. It might be the case that CCS projects
ties for delivery of CO2 for enhanced oil
Until geological or perceived geological could share or defer the decommission
recovery (EOR). However, coordination of
uncertainty can be reduced, financing of costs for oil and gas operations.
CCS schemes would mostly likely require
some ‘top down’ planning. storage in such scenarios may be more
challenging. Reduction of geological Q. What health, safety and environ-
Opportunities for early storage sites
uncertainty could be achieved by mean- mental concerns need to be addressed?
may be in the larger depleted gas fields
ingful demonstrations in saline aquifers A. Favourable public opinion of CCS is
of the Rotliegend Formation in the
or by more rigorous assessment of the essential. Projects in Germany and the
Southern North Sea. The fields are well
most favourable saline aquifer sites to Netherlands have failed due to deter-
understood due to the history of gas
‘prove’ them up. mined and organised groupings of the
extraction, improving confidence in their
Clear business models need to be public who are against CCS. The pro-
ability to retain CO2. The fields were
developed, allowing clarity and support posed storage sites opposed by the
commonly produced under depletion
on issues such as funding during both public were onshore, whereas in the UK
drive, so the final reservoir pressures are
operational, closure and post-closure planned storage sites are all offshore,
lower than the initial pressure. They are
phases and long-term liabilities. It will which may be less of a challenge. In the
securely sealed by the Zechstein Salt and
be necessary to get agreement on UK public awareness of CCS remains low,
so pose a low leakage risk. In addition,
permit performance conditions that however. If we really believe CCS is one
water depths are shallower than the
enable operators and regulators to of the only ways we can meet CO2 reduc-
northern North Sea, potentially reducing
agree on evidence for appropriate site tion targets then more effort is needed
the cost of infrastructure
performance, which will improve confi- to address the lack of public awareness
development. The Bunter Sandstone
dence in liability transfer at closure. and support for this technology.
Formation in the southern North Sea
In a scenario of large-scale deployment The potential of CO2 leakage and its
offers an opportunity for saline aquifer
of CCS, the management of potential impacts has received significant research
storage in the same region, diversifying
conflicts and protection of future attention, but gaps remain due to com-
the storage portfolio.
resources both at the surface and in the plex interactions between the physical,
In the northern and central North Sea a
subsurface also need to be considered. chemical and biological systems, from the
large amount of potentially high quality
deep subsurface to the seawater column.
storage capacity is available in
Q. What are the main synergies with Research is required regarding the poten-
Palaeogene fan sandstones. This may
current North Sea oil and gas E&P tial for induced seismicity (earth tremors)
offer the volumes of CO2 storage capacity
operations? caused by fault movement due to
required for long-term deployment of
A. The UK has a long history of oil increased reservoir pressure; geomech-
CCS. Less is known about the connectivity
and gas E&P and as a result we have anically induced leakage pathways
and structure of these formations, and
world-leading expertise and experience including scale and frequency; and
large storage sites may present challenges
in this field. Many elements of CO2 impacts of leakage on marine ecosystems.
for licensing, but their size makes them a
storage and CCS more generally require Quantitative emissions measurement
potentially valuable storage asset.
the same. If CO2 storage is deployed on would be required for qualification in the
a large scale, there may be competition EU Emissions Trading Scheme, but mea-
Q. Apart from the capture of CO2, which for skilled people, so it will be essential surement of leakage and emissions at the
hurdles will need to be overcome in to have people with the right training seabed remains a technical challenge. ●

26 PETROLEUM REVIEW APRIL 2013


CO2 storage: putting the S in CCS
18 April 2013
Energy Institute, London
This one-day conference will discuss the importance of storage as a critical step in establishing the commercialisation of CCS in
the UK. Focussing on themes that are emerging from the CCS Cost Reduction Taskforce, speakers will examine the conditions
needed for the storage of CO2 that will be vital for the future deployment of CCS projects.
Topics:
CO2 storage strategy; Appraisal and certification: the path to certification; Understanding long term behaviour: building confidence;
Multi-site planning: interaction and basin management; Operational assurance and site management: a case study;
From single site to cluster: a phased approach; The framework for storage: free market or planned economy?
Risk and liability – who pays?; Financing storage: think beyond the banks; The way ahead
Confirmed speakers: Supported by:
• Ashley Ibbett, CEO, Office for Carbon Capture and Storage
• Professor Stuart Haszeldine, Edinburgh University
• Ian Phillips, Director – CO2 Infrastructure, CO2DeepStore
• Michelle Bentham, Senior Geologist, British Geological Survey
• Dr Owain Tucker, , Global Deployment Lead CCS & Contaminated Gas, Shell International Petroleum Company
• Jason Golder, Senior Development Manager, The Crown Estate
• George Day, Strategy Manager for Economics, The Energy Technologies Institute
• Dr John Scott, Chief Risk Officer, Zurich Global Corporate, Zurich Financial Services
• Allan Baker, MD – Global Head of Power, Société Générale
• Dr Ward Goldthorpe, The Crown Estate
For further information contact Vickie Naidu, e: vnaidu@energyinst.org;
t: + 44 (0)20 7467 7179 www.energyinst.org/events

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I P WEEK Professional development

Standing out from the crowd


delegates as many were from the
Energy Economics course at the
University of Surrey. Rühl explained that
one of the key skills he needs is to be
able to talk to technical staff like engi-
neers and be able to persuade them
Photo: Here and Now Photography for the Energy Institute

that prices matter. His advice for gradu-


ates was: ‘It’s always a good idea to
have common sense. People say is it
talent or hard work that makes you a
success. It’s always both.’ He also advised
participants to choose a career path
they enjoyed: ‘If you don’t like what you
do you will be in the office nine-to-five
and waste a third of your life.’
A question was raised in Rühl’s career
session about how graduates can
get started in the sector when it is
difficult to get a job without work
experience. Rühl suggested taking an
internship to get on the ladder: ‘If you
think your CV has nothing to offer,
go and get a better CV.’ Sara Turnbull,
The Professional Development (PD) programme participants the EI Council’s Young Member
Representative, also covered this point
at IP Week had a busy few days during the 2013 during the skills session in the main IP
conference – not only were they able to attend the regular Week programme, suggesting new
career starters get involved in profes-
conference programme, they also met for specific career sional activities: ‘There are no shortage
of events or mentoring opportunities
and development sessions with speakers and received to get you to the next level.’

guidance from recruiters and Energy Institute (EI) staff. One


The bigger picture
of the key themes running through the development Elizabeth (Betsy) Spomer, Senior Vice
sessions was the competitive nature of getting a job in this President, Global Business Development,
BG Group, explained that she’d had a
industry in the current climate and how participants will surprising career path for the energy
sector, starting in economics and then
need to stand out from the crowd in order to do so, doing an MBA. She said that it was her
interest in the far reaching outlook of
explains Kate Dinwiddy, Professional Development Team the oil and gas sector that had kept her
interest: ‘Once you’ve worked in energy
Manager, EI. and made big changes, how can you
want to go and manufacture iPhones?’
added: ‘The PD programme gave me

T
he Professional Development Her advice for graduates was: ‘Don’t
(PD) programme was open to an insight into career paths available become too focused on status. Maintain
graduate members of the Energy within the energy industry. The talks your level of interest and challenge and
Institute (EI) and many of the partici- from current industry workers were the rest will take care of itself.’
pants were post-graduate students particularly useful for us as they One question from graduates to the
looking for tips on how to enter the explained the different routes to get- speakers was how they kept up their
sector. It was a very useful experience, ting into the energy industry. IP Week motivation when they were doing
as Okuntimo Ayomipo, a graduate of as a whole showed how important and things they didn’t want to do. Spomer
Coventry University, described: ‘I learnt useful being a member of the EI is to told participants that there were always
a lot – I gained knowledge about the my future in the industry.’ things you won’t enjoy doing but to
current trends in the energy industry During the programme, speakers remember the big picture. ‘The pay-off
and the future of oil and gas, I had the from the IP Week conferences joined is good when those big things deliver.’
opportunity to ask questions about graduates to talk about their own Giles Farrer, Senior Analyst – LNG and
the industry and my career, and I had career paths. Christof Rühl, Group Chief Global Gas Research, Wood Mackenzie
the privilege to meet leading energy Economist and Vice President, BP, spoke advised: ‘Make sure whatever you
industry figures. I also corrected wrong at the first career session outlining his deliver is to the best of your ability.’
notions I had earlier about networking career path, from his start as an econo- Spomer and Farrer also advocated
and job applications.’ Rachel Soyoye, mist to his current role in BP. This was networking as a good way to get ahead
an MSc student at Surrey University, particularly useful to PD programme in the industry. Spomer advised gradu-

28 PETROLEUM REVIEW APRIL 2013


ates to keep in contact with their peers Kick-starting your career results, he said. ‘At this stage recruiters
as they would be their support network James Kenyon from Hays Oil and Gas won’t make money out of you, they are
in years to come. Farrer also told of how recruitment and Andy Lewis, investing in you for the future so you
he had recruited a colleague to his com- have to show you are worth investing
Membership Development Manager at
pany after telling him about a job while in. Think how can I make your company
the EI, gave graduates advice on how
playing football. better?’
to enhance a CV and get it noticed by
Graduates were advised specifically Andy Lewis told graduates how
recruiters. Kenyon reported that the
on conference networking tips from membership of a professional body
average global oil and gas salary rose
Hugh Ebbutt, Senior Consultant, CRA, a like the EI can help to enhance a CV
by 8.5% in the last year. In the UK for
regular attender of IP Week and sea- because it would show they are
every one person leaving the sector
soned networker. Hugh told delegates serious about engaging with the pro-
that everyone should have a there were 0.8 people joining – so
fession. When getting started in the
networking style whether they were despite there being a gap, he noted
sector it is important to start building
introverted or extroverted, and they that this was not significant in the UK. your network and this can be done by
should develop techniques that they Although the skills shortage was often attending local branch events.
were comfortable with. Delegates were discussed in the sector, the main skills Professional bodies can also be an
advised that networking was best when shortage was for jobs requiring 10–15 important source of information, the
planned and to look at delegate or years’ experience, so this issue was not EI Knowledge Service can help with
speaker lists to decide in advance who particularly relevant to recent gradu- research and answer questions and
they wanted to talk to. They should ates, he explained. has extensive physical and online
seek to find things in common and tell Kenyon advised graduates to read resources. The EI magazines also keep
people what they have to offer of the industry news so they have some- readers up-to-date with the latest
interest so they are remembered. thing to say in interviews: ‘It’s better to industry news and comment.
During the session delegates prac- talk about relevant news than your In summary, Kenyon advised gradu-
ticed their elevator pitches, trying to place on the university hockey team.’ ates to ‘remain positive, have a plan, set
demonstrate a ‘hook’ about themselves He told graduates: ‘You have 20 sec- targets, gain experience where you can
so others would remember them in the onds to impress with your CV before a and do not give up.’ He also suggested
future. Ebbutt’s final tips were to avoid recruiter moves on.’ CVs could often be not taking a first job purely based on
selling anything at all costs and advised ‘woolly’ when graduates are trying to salary but to look at what role will be
graduates to raise their profile where secure their first job in the sector so better for you in the long-term: ‘If you
they could by writing articles or they should focus on showcasing any are good at what you do then money
speaking at events. achievements that have quantifiable always comes.’ ●

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PETROLEUM REVIEW APRIL 2013 29


OIL AND GAS Employment

North Sea investment


to lead to a job boom
Kevin Forbes, CEO of Oilandgaspeople.com reports that 2013 has the potential to see an
employment boom as the North Sea oil and gas sector experiences continued
investment and growth. However, an ongoing skills shortage needs to be addressed in
order to take advantage of new opportunities.

B
ased on our recent analysis of the announcements are expected in 2013.
current state of the oil and gas The evidence is piling up that we are in
sector in the UK, between 40,000 the middle of a surge in interest in
to 50,000 new jobs are expected to be North Sea oil and gas.
created in 2013 as a result of increased
oil and gas investment. Rising job demand
More than 40bn barrels of oil have Record investment and new oil finds will
been produced from the UK continental lead to an increase in demand for engi-
shelf (UKCS) to date, with potentially neers and drill crew, as well as those
another 20bn still remaining to be who work in the service sector that sup-
exploited. New technology is making ports the oil and gas industry. Likewise,
this oil more accessible than ever before. it is expected that there will be a rise in
A total of 167 new licences covering 330 the need for qualified and experienced
North Sea blocks were offered by the UK geoscientists and exploration engineers.
Department of Energy and Climate While this is good news, this has a
Change (DECC) in the 27th licensing direct impact on the jobs market. With a
round in 2012, while a further 61 blocks current skill shortage being reported
are under environmental assessment. across the sector, the available candidate
The government also announced a pool to meet this forecast employment
number of improvements to the UK tax boom is depleting.
regime last year. Coupled with relatively Oilandgaspeople.com’s study found
stable oil prices, this has led to billions of that the recruitment crisis in the industry seems likely that the current boom in
pounds of planned investment in North will intensify over 2013, pushing up North Sea investment could be short
Sea oil and gas developments. average wages, which, at £64,000, are lived unless the government and the oil
Investment is at record-breaking levels, already twice the national average. One industry proactively tackle the wors-
with more than £40bn, at least, key reason is that it isn’t just the North ening skills shortage in the UK. Without
expected to be invested in the sector Sea alone that is seeing renewed invest- immediate action there is a real risk that
over the next three years. ment. Other areas of the world are also there will be too few qualified staff to
As examples, a new oil field – Darwin increasing investment in hydrocarbons fill the posts.
– was recently discovered in the exploration – finance is picking up in the The UK government also needs to
northern North Sea by the Abu Dhabi US following the lifting of moratoriums realise that, without the workforce,
National Energy Company, while GDF put into force after the Macondo oil large projects will not be able to go
Suez, Dana Petroleum and Talisman spill, with Brazil, Australia, Canada and ahead and the economy as a whole will
have secured the formal go-ahead from Iraq all seeing record levels of invest- be affected. Government needs to step
DECC for projects valued at some £1bn. ment and demand for qualified staff. in and incentivise companies to invest
Late last year, Statoil UK announced This huge global demand for qualified more in people. Both it and industry
£4.3bn investment in the North Sea, cre- staff is leading to many UK candidates need to invest for the future, actively
ating over 700 jobs, including the £1bn heading abroad, lured by high wages, encouraging graduates to train in the
development of the Harris and Barra oil exacerbating an already serious skills energy sector. There has been a lot of
fields. Meanwhile, the Canadian-based shortage in the UK. media coverage suggesting the North
Talisman Energy and Chinese Company The oil and gas industry has always Sea is in decline, but the truth is that
Sinopec joint venture unveiled a billion been reactive and, with so many vari- there are still 30 to 40 years of resources
pound investment plan. Large projects ables, it is hard for companies to left to exploit and that estimate
West of Shetland, backed by BP, are forecast, with any reasonable certainty, increases all the time as new fields are
already underway, while Total’s new ter- future workforce demands. Oil prices, discovered and come onstream. As a
minal project in Shetland is in full swing. global demand, tax changes, conflicts result, anyone looking to get into the oil
Indeed, there are too many new pro- and disasters are all business risks that and gas industry now will enjoy a career
jects to mention and more big are hard to predict. Having said that, it that will last their lifetime. ●

30 PETROLEUM REVIEW APRIL 2013


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, 3&"4 1%" #2)) ,2/0" -/,$/**" ,/ 1, ,,( -)"0" 3&0&1
t: + 44 (0) 20 7467 7174; e: gwilkinson@energyinst.org
444"+$&+""/&+$)""!0 2(0%,/1 ,2/0"0
,/ ,+1 1 1%"  ,+#"/"+ " +! 3"+10 1"* ,+
www.energyinst.org/events  


 
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PETROLEUM REVIEW APRIL 2013 31


S U P P LY C H A I N M A N A G E M E N T Best practice

Lessons learnt
create it on demand at the last minute),
align with suppliers to maintain mate-
rials flow and to centralise distribution
by providing a ‘just-in-time’ service. It is
what the big brands (such as P&G, 3M,
Dell and GSK) do in order to reduce cost,
Professor Alan Braithwaite, LCP Consulting and Cranfield increase demand responsiveness and
reduce stock risk.
School of Management, looks at how the oil and gas
Planning and control
sector could apply supply chain management (SCM) best The second methodology is planning
and control, which, of course, is helped
practice that has been adopted in other industry sectors in by complexity reduction and centralisa-
tion. This is about moving from a
order to maximise profit margins. ‘just-in-case’ mentality to an integrated
plan that positions and moves materials
against activity plans and resources

N
o one now expects the oil price to The challenge for oil and gas is that deployed – ie increasingly ‘just-in-time’.
fall back below $100/b, which volume growth is being eroded by cus- Again, the precedents for such processes
brings a whole range of new and tomers (both business and consumer) and their effectiveness are legion, with
more difficult to access resources into adopting energy efficiency programmes the automotive sector as the standard-
play that have much higher production in the face of the doubling of oil prices bearer. Scheduled and sequenced
costs than the Saudi baseline of $5 to over the years. If it was not for China’s inbound materials against a build plan
$10. The good news is that ‘peak oil’ insatiable appetite for energy, the world have reduced plant stocks to less than
may be postponed by a combination of price would have collapsed. These con- half a day and helped to reduce the
new fields and economic disruption ditions accentuate the pressure to end-to-end construction time for a car
while low carbon technologies kick in. secure improved operating efficiency in to as little as six hours whilst cutting
However, the bad news is that margins all upstream areas of the sector. waste by 80%.
will decline and the industry will enter a Historically, most supply chains in the I can almost hear oil industry execu-
phase of ex-growth unless costs are rad- upstream sector have been based on tives shouting ‘We are not like the car
ically contained. ‘threat’ rather than ‘trust’, with the industry!’, which misses the point that
Oil and gas are commodity markets focus placed on the ‘three Cs’ of forcing getting half the way towards such
where the final price has no bearing on Competition, Coercion and Conflict. methods would still be transforma-
the cost of production, which means However, a shift is beginning to occur, tional. Techniques and processes such as
that supply chain efficiency is set to with supply chain operations adopting sales and operations planning (S&OP)
become an imperative in a sector that a more positive, pro-active stance help to organise the flows and manage
has been revenue rather than margin focused on Anticipation, Advice and the stocks; this, in turn, reduces emer-
driven in the past. Assistance. gencies and improves availability and
This is a paradigm shift which has up-time while using less stock. It is tech-
been experienced in other sectors and it Methods employed niques like these that are causing the
may be time for the oil and gas industry Learning from other sectors suggests pharmaceutical sector to question why it
to learn from some of those experiences. that the methodologies adopted can be runs with an average of more than
The pharmaceutical sector has seen 80% applied to an industry that has tradi- 200 days stock while consumer goods
gross margins decline to 30% on some tionally thought of itself as a ‘project firms (arch exponents of the method)
lines in the face of the growth of business’ with engineers dominating the are on 70 days overall. In the earlier oil
generics; the food sector has seen mar- specification. and gas case, S&OP would have more
gins decline by 20 percentage points in than halved the upstream stocks of
the face of own label products; retailing Standardisation and centralisation pipes, which then would have been
in the Wal-Mart way plans for average The first of these methodologies is stan- halved again by complexity reduction
gross margins of 22% against the sector dardisation and centralisation. The bill programmes.
at more than 35%. The electronics sector of materials for upstream oil and gas is
now runs on gross margins in the 20% profoundly complex; much of that com- Supplier collaboration
zone against more than 60% some 30 plexity is unnecessary and the ‘cost of The third methodology that is com-
years ago (Apple excluded), while the car complexity’ is simply not understood. monly applied is supplier collaboration
industry measures profits in US dollars Some work by LCP on engineering sup- to smooth schedules and take cost and
per unit and looks to other revenue plies to the North Sea found many risk out of the whole chain. At present,
streams to enhance operating profit. grades of well piping with different the oil and gas sector is characterised by
So, what has driven these changes and pressure specifications. The materials tightly protected commercial silos that
how have industry leaders coped with were on long lead times from specialist leave waste in terms of time and cost at
them? The first answer is that most sec- steel works, where the cost of each spec- every interface. The idea that suppliers
tors have sought to exploit the potential ification was correspondingly inflated. can co-create value with their customers
for growth, allowing them to reduce Worse still, because of the long lead through product specification and
sales prices and commute margins for times for the range of specifications, design as well as the mode of delivery is
increased volume, so enabling con- pipe stocks were up to one year, distrib- not new. A great example is CEMEX,
tinued profit growth. The second is that uted over many locations with little which has an operating model enabling
they have looked for transformative visibility and significant redundancy, it to deliver concrete to construction
supply chain business models and oper- repositioning and write-offs. sites in a 15-minute window on a short
ating methods. Combined, these factors The standard suite of measures in lead time; this maximises labour utilisa-
have driven economic success. other sectors is to reduce variety (or tion and reduces concrete waste. It

32 PETROLEUM REVIEW APRIL 2013


Figure 1: Supply chain ‘seismology’ Source: LCP Consulting

lowers the total cost of doing business there was the potential to threaten identify where the true potential is (see
while giving suppliers the profit incen- safety and there were bankruptcies as Figure 1).
tive to innovate rather than hide from a result. When you describe it like The challenge will be to establish the
or obstruct overt power. that, it sounds stupid; but such situa- right culture so that the heavily
An example from the oil and gas tions are a constant feature of supply defended silos are bridged and objec-
sector related to the deployment of heli- chain operations. tivity is attained. The Deepwater
copters to rigs exposed the lack of a Horizon reports showed how conflicted
collaborative mindset. The operator Unlocking value potential relationships can be deeply embedded,
could see clearly the potential to reduce So, how can companies in the oil and resulting in catastrophic losses. We are
costs by working to adjusted schedules gas supply chain identify and unlock this talking here about the potential for
and providing shared-use services value potential? At LCP, we would argue spectacular gains. In the end, margin is
between the different rig operators. for an objective end-to-end opportunity everything and oil and gas majors will
Instead,
E it was forced to spend time identification process that balances costs have to take a more industrial and
defending prices through a hard pro- and performance along the chain. This is supply chain view of their operations in
curement process. Prices fell so low that a kind of operational ‘seismology’ to order to maximise profit. ●

Stichting Tripod Foundation


Sponsored by:

Evening Lectures Call for abstracts


Bi-annual human factors conference
Is biomass the answer to 2020? Human factors application in major hazard industries
with learning from incidents and Tripod exploration sessions
(supported by the Stichting Tripod Foundation)
Wednesday 24 April 2013
Tuesday 26 and Wednesday 27 November 2013, Leeds, UK
Dean Cook, UK Sector Leader – Renewable Energy,
Deloitte
Deadline for abstract submission: Monday 3 June 2013
and
Neil Cornelius, Director – Economic Consulting, Abstract topics:
• Learning from incidents: tripod and other methodology
Deloitte developments; generating quality remedial actions;
Venue: Energy Institute, 61 New Cavendish Street, London W1G 7AR, UK normalisation of risk; quality incident analysis; case studies
Format: Each meeting will last for approximately 11⁄2 hours. Registration • Non-technical skills and crew resource management (CRM)
and refreshments are from 16.30 and the lecture will commence at • Competence assurance
17.00. Doors close at 17.30. Following the lecture, there will be an
• Leadership
opportunity for participants to ask questions and express opinions
in an open discussion. We aim to conclude at 18.00. • Case studies on human factors integration into major projects
If you are not able to attend this lecture, you may participate online. • Risk analysis
Contact: For further information please visit our website: • Other practical applications of human factors in industry
www.energyinst.org/evening-lectures
or contact Gemma Wilkinson, e: gwilkinson@energyinst.org 300–500 word abstracts (in MS Word format) should be submitted to
Join the EI: www.energyinst.org/membership Stuart King, e: sking@energyinst.org; t: + 44 (0) 20 7467 7163

Conference sponsored by
Book online at:

www.energyinst.org/events www.energyinst.org

PETROLEUM REVIEW APRIL 2013 33


S U P P LY C H A I N M A N A G E M E N T MRO

Optimising operations
The indirect material maintenance, repair and operations • Inflexibility in serving smaller or more
remote production sites, because the
(MRO) supply chain is an important part of a producer’s distributor supply model is generally
only cost-effective for very high-
operations. If it does not perform well or is inefficient, a density markets.
producer risks, among other things, overspending on indirect In short, the traditional model leaves
significant opportunity to control costs
materials and experiencing unproductive downtime. Ed Smith, on the table.
Vice President, Business Development, Exel/DHL Supply Chain 3PL distribution model
Americas, explains. As more companies look to save costs
and improve MRO performance, they
realise the distributor supply chain

H
istorically, the maintenance, • Multiple suppliers entering the manu-
repair and operations (MRO) facturing site create safety and security model may not meet their needs or their
supply chain has been an after- issues – Allowing multiple suppliers to best interests. As a result, a growing
thought. Purchasers usually focus on make on-site deliveries creates risks number of companies are exploring the
obtaining high-value, mission-critical and drives inefficiency. Risks include option to outsource their indirect mate-
engineered equipment and compo- accidents, plant congestion and poten- rials supply chain to third-party logistics
nents, and not necessarily on other tial security threats. Many, smaller providers (3PLs).
indirect materials or the cost to get shipments drive escorting, unloading A 3PL with expertise in MRO supply
them to their final destination when dock and asset inefficiencies. chains will offer:
they are needed. However, market com- • A comprehensive approach to supply
petition and opportunity, as well as MRO outsource models chain assessment, supported with
increasing operating costs, are driving Fortunately, companies have recognised analysis tools to uncover hidden costs
the need for innovation and better that the strategies that helped them and ensure accurate evaluation of
management of the MRO and mainte- drive waste and inefficiency out of their potential cost improvement.
nance supply chain. High capital operations can be applied to MRO • Lean expertise to re-engineer the
investment, shorter maintenance and supply. While some tackle MRO chal- supply chain, evaluate capabilities and
development timeframes, and the cost lenges with internal resources, many technologies of the future supply
of operating in more dispersed and Fortune 500 companies have gone out- chain, and assemble a new supply
remote environments are mandating side their organisations to seize the chain team.
increased maintenance productivity and opportunity more quickly by leveraging • Cost transparency and sourcing neu-
better transportation and materials existing expertise and solutions. trality.
management for upstream, midstream There are two primary outsourcing • Key performance indicators that
and downstream companies. models currently used in the industry. proactively measure and monitor
Today, companies are facing many compliance and success.
MRO supply chain inefficiencies, Traditional distribution model • A proven track record in project
including: This is the most common model today. implementation for new process, IT
• End users lack comprehensive under- The MRO supply chain is outsourced to a systems and physical infrastructure,
standing of MRO costs – MRO supplies single or a few external providers as a providing adequate levels of staffing
represent almost two-thirds of com- service bundle (procurement, logistics, at all times.
panies’ purchasing transactions, yet inventory control and on-site manage- • Existing infrastructure and tools that
companies lack comprehensive ment). The traditional model offers fast can be leveraged to reduce or elimi-
tracking systems that provide visibility implementation of turnkey IT solutions, nate up-front costs.
into the total costs of fulfillment a single point of contact for the end • Relationships with relevant specialists
(including ordering, warehousing, customer and better management that will be needed in the assessment
transporting, receiving, payment and resources for high-volume sites. On the and implementation of a higher-
other supply chain costs). These downside, supply chain management efficiency MRO supply chain.
expenses typically represent about (SCM) issues and waste may include:
50% of the total cost of MRO supplies. • Lack of cost and data transparency, Specific opportunities
• Expensed materials are critical, but not making it difficult to identify inefficien- Fluctuating energy demand and price
easily tracked and visible – Energy cies and reduce total delivered cost. volatility have forced producers to slash
producer ERP (enterprise resource • Mismatched incentives between dis- operating costs and non-core activities.
planning) systems often do not track tributors and producers to reduce At the same time, the days of producing
expensed materials after they are stocking levels and overall costs. ‘easy’ oil are ending. Now companies
received. Producers may over order • Overstocking, obsolescence and stock- must consider extraction of oil from
materials because they lack visibility to outs resulting from MRO items being unconventional sources such as from the
expensed material receipts or avail- replenished based on historic demand Canadian tar sands, North American
ability. This lack of visibility and control and new product promotions. The hydraulic fracturing, or natural gas sites
can also lead to materials becoming resulting push-based supply chain in politically challenging environments
lost or stolen and contribute to ineffi- responds slower to changes in end- like Israel and Mozambique.
cient operations, lost productivity user demand or changing This evolution of production is driving
and/or redundant purchasing. specifications. three major trends:

34 PETROLEUM REVIEW APRIL 2013


• Expanding production into emerging chain or site assessment will identify returns or reuse. A partner with
markets and countries. inefficiencies and opportunities in the processes and systems to manage
• Developing more remote extraction indirect supply chain. expense material location, paperwork
sites, onshore and offshore. • Implementing strategic inventory tracking and material helps producers
• Focusing on cost reduction, including management – The indirect supply avoid losing materials and keeps pro-
material sourcing from low-cost loca- chain is often overlooked when devel- jects on track. Producers should define
tions. oping a new operating region or the systems, processes and responsibil-
These changes have increased the supporting an existing site. Building a ities for material control well in
complexity, length, number of stake- warehouse infrastructure for MRO in advance of commencing a new project
holders and uncertainty of the indirect new geographies is far too often and or turnaround.
materials supply chain, while continuing incorrectly the first step. The correct
to limit SCM resources. stocking and replenishment strategies Critical to operations
Third-party logistics providers can should be considered first. A 3PL can The MRO supply chain is a critical part of
help energy companies address the chal- focus on the supply chain savings a producer’s operations and many are
lenges created by these market realities associated with optimising facilities, beginning to recognise that the inte-
if the provider is experienced in imple- labour, transportation and inventory. grated supply chain model offers more
menting solutions for managing This can be done in early-phase advantages than managing the supply
cross-border activity, servicing remote network design for new geographies/ chain on their own or outsourcing it to a
locations and identifying cost improve- sites, or by converting an existing large product supplier.
ment opportunities. network to an integrated supply An integrated supply chain managed
Global 3PLs experienced in serving the chain model capable of supporting by a 3PL experienced in the energy
energy industry can provide solutions critical MRO and maintenance industry will offer infrastructure support
that improve the visibility of indirect functions. in remote locations, local knowledge in
materials and increase operations and • Improve systems for managing capital emerging markets and a rigorous focus
maintenance productivity. Enhanced vis- projects/turnarounds – Because capital on compliance. In addition, a 3PL can
ibility can help identify cost savings that project materials are often expensed provide visibility of parts and materials
could range between 10% and 20%. (as discussed earlier), it may be difficult through best-in-class systems and
Additional opportunities to capture to keep track of material and relevant processes, and the oversight to manage
savings by working with an experienced paperwork, especially when setting up cross-border supply chains. Such a
global 3PL include: a new location. Likewise, projects tend provider can give producers the full con-
• Conducting an MRO assessment – To to over-order ‘just-in-case’ materials, fidence that they will receive the
wring out inefficiencies, companies and sound material preservation is a support and expertise required to
need a big-picture view of their key determinant in extracting post- manage the indirect material supply
processes and costs. An MRO supply project value either through material chain now and in the future. ●

Corrosion management essentials


2-day technical training course: 14–15 May 2013, Aberdeen
This workshop will describe the model process of corrosion management for the
upstream oil and gas industry and is based on the Energy Institute publication
Guidance for corrosion management in oil and gas production and processing. It will
provide practical advice for successful implementation of a corrosion management
policy, using practical examples of corrosion threats and mitigation methods.
Why attend?
• Gain an understanding of the benefits of corrosion management in relation to safety and asset preservation.
• Understand how corrosion management fits into the wider safety framework and helps to comply with safety legislation.
• Understand the model process of corrosion management and the key features that need to be addressed.
• Obtain practical knowledge of methods of implementation and system maintenance.
• Compare current practices with the model process and plan improvements, in a guided exercise.

Prices: EI Member: £845.00 (+ VAT); Non-Member: £945.00 (+ VAT)


Visit the Energy Institute's website for more information regarding technical training or contact the training team at:
e: wsadler@energyinst.org or t: +44 (0)20 7467 7135

www.energyinst.org/technical-training

PETROLEUM REVIEW APRIL 2013 35


S U P P LY C H A I N M A N A G E M E N T Logistics

Your flexible friend


The logistics landscape has changed, with many oil majors
exiting direct downstream operations and the concept of
fourth-party logistics (4PL) – already embraced by the
upstream sector – being increasingly adopted. Chris
Dalton, Managing Director, Lateu Logistics (right),
reports.

C
ontract management and the wholesalers that franchise their brands. maximising logistics or sharing logistics
selection of logistics contractors is This has led to a number of large inde- has now become a problem to be man-
an increasingly diverse and skilled pendent fuel wholesalers entering the aged.
task that demands greater consistency market, initially in the industrial/ With this changing modus operandi,
and efficiency in its management, and distribution sector, targeting the contracted fleet operators are strug-
requires a positive attitude to risk and retailers and competing hard with the gling to offer the flexibility the market
opportunity. The operational manage- majors. A few have even dared to step now demands as equipment and drivers
ment of logistics contractors has become openly into the public’s eye by fran- may be wrongly located to meet the
a critical discipline that is moving away chising their own brands. price points of the suppliers. Volumes
from what was purely an administration These changes in the market are are moving between locations quicker
role, to become a commercially driven causing logistics contractors to start and the consistency of operation
frontline operation. This will require looking around, wondering who will be changes daily. Even the larger supermar-
contract managers of the future to be their customer of the future and asking kets and major oil companies are
broader in their skill base in order to where will contractual security come seeking to find flexibility in their opera-
meet the operational demands placed from? tions, looking to reduce their
upon them to extract the flexibility and contractual liabilities with the fleet
reduced risk (financially) that has not An exact science operators. Furthermore, the discount
been demanded in long-term contract Fuel sourcing for the retailers and indus- promotions on fuel by supermarkets
arrangements in the past. trial customer has become an exact mean volume demands peak and
Time has proven that term contracts science as spot prices change regionally trough, increasing and decreasing logis-
operate successfully while the market and between suppliers in the same area. tics demand over time.
remains stable, as per the forecasted vol- This has led some companies to consider
umes. However, in times of austerity and sourcing products from further afield as Re-thinking logistics
changing markets, the contracts become it can be cheaper to operate the road This growing complexity in logistics
outdated and the relationships between fuel tankers over greater distances and demand is placing pressure on all parties
parties can become adversarial, leading still gain financial benefits on the fuel and there is a need to re-think the logis-
to a negative business impact on both price into tank. tics models of the future.
parties. There was a time when the major oil The US market has already started to
The landscape of downstream fuel companies owned the fuel, held in address these issues with what is termed
deliveries – both retail and industrial – is bulk/terminal storage or at a retail 4PL (fourth-party logistics), which drives
changing, with the retail fuels market outlet. Now, it is more common for the flexibility that the retailers and
evolving towards greater numbers of retailers and industrial customers to industrial users are demanding. It
independent retailers. The supermarket own the product, paying for it and the reduces risk and cost, both from an
chains are placing pressure on retail associated duty within days. As a result, internal dimension and from contractual
market volumes through discounting they are constantly rolling the dice on arrangements, in most cases removing
fuel against in-store purchases, while cash flow and credit terms between sup- the need to tender as the business
major oil companies are withdrawing pliers; stock management and credit model is live and consistently reviews
from retail and are becoming fuel terms dominate the business, while price and performance with shorter
break clauses, whilst maintaining the
requirements of the industry in opera-
EI Oil and gas training tional efficiency and safety.
The model is simply based upon using
Supply and distribution: Organisation, operations a fourth party as the management of
and economics 10–13 September 2013, London, UK the logistics chain, which is impartial
Now includes a visit to Royal Dutch Vopak’s London facility and does not directly operate any equip-
This 4-day course will examine the impact on supply and distribution of: refineries’ output and fuels’ specifications; ment itself. Therefore, it is not seen in
product sourcing – parent company refinery, open-market, ex-rack, exchanges; primary-supply mechanisms used;
terminal design and location… and much more. the market as a competitive haulier, but
EI Member £3,000.00 (£3,600.00 inc VAT); non-member £3,200.00 (£3,840.00 inc VAT) as a ‘funnel’ that issues the collections
For more information, contact Nick Wilkinson at: and deliveries across several approved
e: nwilkinson@energyinst.org www.energyinst.org/training subcontractors, holding responsibility

36 PETROLEUM REVIEW APRIL 2013


for the overall logistical operations. can offer services is built against many benefits to them as well. They are
The model is often confused as a agreed criteria, and each is vetted no longer under the harsh penal terms
‘freight forwarder’, but there are subtle by the 4PL for compliance. of contract and, when it goes wrong,
differences. The 4PL basically acts as a • Lane or cluster prices are obtained the 4PL is there with a handful of
client’s outsourced logistics team that and compared. options to sort problems out. Fleet size
has responsibility for the selection, • Pricing (which is without margin) is can also be optimised and the con-
auditing and compliance (HSSE) of the then presented, clearly highlighting tractor can be selective about what
logistics contractors. the strengths, weaknesses and com- work to take on, making for better busi-
The advantages of this model are bi- pliance of each contractor. ness practice and returns.
directional – the contractor gains from • The contractors are listed in order For fuel wholesalers and retailers, the
being approved by the 4PL and there- of preference and agreed, against management of logistics is a non-core
fore is offered a variety of work across the criteria. activity. This means recruiting in the
several contracts, while the 4PL also • Orders are passed to the contractor skills and managing the complexity
looks to fill shifts and operate vehicles by the 4PL in order of preference, of potentially several logistic sub-
more efficiently so that all parties can typically there is 98% take-up by contractors, expatiating non-productive
gain financially. Of course, the window the preferred contractor. If not, activity within their business. However,
of security is not open for long and the orders are passed down the prefer- by optimising 4PL, overheads can be
contractor must prove that it can meet ence tree. lowered and senior management kept
the demands of flexing and ensure cor- • The monitoring and return of POD focused on core activities.
rect training of its people. However, the (proof of delivery) is controlled by The contractual arrangement with the
4PL is there to help and the supplier has the 4PL. 4PL can be negotiated in several dimen-
a vested interest to make the logistics Flexibility is key, driving the growth in sions, bearing in mind that reducing cost
work for all. popularity of 4PL in the US. It means the exposure and risk is the ‘driver’ for util-
But does this mean losing control of swings up and down in fuel demand and ising a 4PL model. Normally a retainer
the logistics completely? The answer to price can be quickly adjusted for by non- fee and a transactional charge are
this is ‘definitely not’. The 4PL model is a committal arrangements. This reduces agreed.
very transparent way of operating and is risk on long-term contractual agree- The 4PL concept goes across the board
seen as an out-sourced logistics depart- ments and keeps relationships at a – it’s not just about logistics, it covers
ment. For example: cordial level, while also delivering multi- planning, customer services, stock man-
• The 4PL company is appointed to layer options to meet customer agement etc, extracting effective results
manage the logistics based upon demands. from internal and global supply chain
industry knowledge and ability. Contractors are obviously suspicious providers that best match a customer’s
• The portfolio of contractors who of the model, but soon realise there are requirements. ●

SAFE:
Safety appraisals for everyone
Do you see yourself as others see you?

Improving safety leadership


Safety leadership is one of the foundations of improving safety culture.
When it comes to safety, leaders who walk the talk support the
workforce to do the right thing.

Understand your safety leadership performance


SAFE is an established, tried and tested 360-degree appraisal tool
developed from behavioural psychology research, and utilises a
simple technique for comparing how you see yourself against others’
perceptions. It focuses on how you communicate your commitment to
HSE practices and how committed you really are.
s Feedback is provided confidentially.
s Users can develop an effective action plan for improvement.
s Safety leadership performance can be assessed on a group and/or
company wide level.
To learn more about SAFE, visit www.safeappraisal.org, or contact
safe@energyinst.org to discover more about this tool and how it can be
implemented within your organisation.

www.safeappraisal.org
L UBRICANTS Tr e n d s

Change and uncertainty


In the global lubricants industry, 2012 can be defined as a ambitions – in our industry and the
automotive industry. Mergers and acqui-
year of change as well as a year of continued uncertainty, sitions (M&A) seems to be the vehicle of
choice – eg Gulf Oil purchasing
Houghton International and Petromin
writes Geeta Agashe, Senior Vice President – Petroleum (this is a joint venture purchase along
with the Dabbagh Group), Brazil’s Cosan
and Energy, Kline Management Consulting. acquiring the UK’s Comma Oil and
Chemicals, and Tidewater India
acquiring Castrol’s Veedol brand.

I
n the past year, continuing financial in what could be called the last frontier
turmoil – notably in the Euro Zone and for the lubricants industry – Africa. National and regional oil companies are
the US, but not just confined to these Volatile oil prices, currency fluctua- expanding, with recent examples
regions – has had a significant impact on tions, product shortages and overages, including Lukoil’s plans to build a lubri-
the performance of several industries changes to oil-derived products and cant plant in Kazakhstan and SK
(including construction, mining, primary petrochemical flows and a continuing exporting its ZIC finished lubricants
and fabricated metals, transportation emphasis on energy efficiency, the envi- brand to many countries outside of its
equipment and general machinery, on- ronment and sustainability are all home market of South Korea. We are
highway and marine transportation). factors that present challenges to the also seeing continuing legislation on
There has also been a significant slowing baseoil and lubricants industry. fuel efficiency driving new lubricant and
down in the star economies as China, However, there are also many opportu- hardware solutions, and the beginning
India, Brazil and Russia all see challenges nities – and we have an industry of an industry that looks beyond petro-
to what is sometimes seen as inexorable infrastructure that is fit to rise to these leum and gas toward fluid products
and guaranteed growth rates. challenges and continue to provide made from renewable and sustainable
In particular, China witnessed a signif- good earnings for stakeholders. raw materials.
icant contraction in demand in 2012, Shell began blending its new gas-to-
including that for finished lubricants, liquids (GTL) basestocks into its line of Key developments
additives and baseoils, as the govern- branded finished lubricants and the syn- Narrowing down to the specifics of our
ment tries to re-align the economy from thetics category as a whole is showing industry, 2012 was certainly not a strong
being export- and investment-driven to significant growth in many parts of the year for finished lubricants demand
an economy focused on domestic con- world given the tightening of original growth as originally expected – given
sumption and services. However, as equipment manufacturer (OEM) specs the ongoing economic conditions in
labour wages grow in the emerging on both the industrial and automotive Europe, lacklustre growth in the US
economies, we are also seeing trends side, as well as significant barrels of API economy, a significant six-month
such as re-shoring – where companies Group III baseoils gushing into the mar- demand contraction in China and a
elect to bring manufacturing closer to ketplace. Refinery and Group I baseoil slowdown in industrial activity in Brazil.
the home markets, with increased plant shut-downs continue in the Despite these issues, the global lubri-
wages in the emerging markets and mature economic areas and investment cants market remained essentially flat in
increased productivity in the developed east of the Suez regions is increasing as 2012, as compared to 2011 from a
markets contributing to this phe- refiners seek to reshape their strategic volume standpoint. However, one
nomena. The Arab world has also footprints for the new world. cannot be complacent given the flat
changed considerably after the advent We are seeing national players in the growth as many opportunities and
of the Arab Spring; and not enough can rising economies flexing their wings and threats are bubbling at the surface.
be said about the growth opportunities demonstrating regional and global These key developments can be

Figure 1: Global lubricant demand by region, 2012 Figure 2: Global lubricant demand by product, 2012
Source: Kline & Co Source: Kline & Co

38 PETROLEUM REVIEW APRIL 2013


grades as older vehicles are scrapped
and new vehicles enter the car parc. We
are seeing a rapid shift from the heavy
multigrades, such as the 20 W and 15 W
grades, to the lighter grades, including
5 W. In fact, we see a leap-frogging of
viscosity grades, which are jumping from
a 20 W grade straight to a 5 W grade
due to tightened OEM requirements.
The point is that the growth market is
expected to continue to be a high
volume market, but slowly and surely a
high quality market as well.
Quality evolution
Passenger car motor oils (PCMO) and
heavy duty motor oils (HDMO), and
industrial lubricants are undergoing re-
formulation and quality upgrades
primarily driven by:
• The need to increase fuel economy.
Figure 3: Global lubricant demand by leading country market, 2011 and 2020 • The need to increase engine oil
Source: Kline & Co durability.
• Compatibility with emission control
devices.
illustrated under the following broad multinational suppliers. The reason is a • Compatibility with biofuels
parameters: certain portion of the market is satisfied (ethanol and biodiesel).
by using baseoils with no additive con- • Industrial equipment shrinking in
Emerging growth patterns
tent that are sold as finished lubricants, size while handling the same or
Clearly, from a volume standpoint, the
while another section of the market increased power – as a result, oils
Asia-Pacific region continues to be the
uses very poor quality products in many are running hotter for a longer
growth engine of the finished lubricants
instances, such as adulterated and amount of time, and the focus is on
industry. Rapid industrialisation, a
counterfeit oils. increasing thermal stability.
growing middle class with increased
Moreover, the risk potential to the All of these drivers are clearly pointing
purchasing power and improved infra-
major branded suppliers of counterfeit to increased consumption of API Group
structure has led to strong growth in
II and III baseoils in automotive applica-
new vehicle production and sales. China, products can be very high, upwards of
tions. Group II baseoils are also finding a
India, Japan, South Korea, Indonesia 25% of sales volumes. Certain industries,
home in industrial applications, such as
and Malaysia are the leading consumers especially government-owned, prefer to
turbine oil. Having said that, Group I
of finished lubricants in the region. steer their business to other state-
baseoils continue to be the workhorse
Similarly, Brazil, Russia and Thailand owned or nationalised oil companies.
of the industry today. We also see
offer significant growth opportunities Having said that, the quality of lubri-
increased opportunities for Group IV
from a decent base. However, one cants consumed in these markets is
(PAO) baseoils as the full synthetics cate-
cannot be fooled by the sheer size of rising rapidly. Monogrades continue to
gory is growing, and select marketers
these markets, and it is very important be phased out of the passenger car
are trying to position and differentiate
to understand addressable demand for engine oil market, replaced by multi-
their products from a performance and
raw material perspective. Biodegradable
grease and vegetable oil-based grease,
including soy-based grease and oleic
vegetable basestock-based grease, are
also enjoying growth, albeit from a
small base.
Changing raw material requirements
As a result of the above mentioned
changes, API Group I baseoils are slowly
but surely exiting from automotive
applications, and the market space for
basestocks is becoming more diffused.
Significant growth in the synthetics
category
Propelled by OEMs with factory fill and
service fill requirements for SAE 0 W and
5 W viscosity grades for mass market
vehicles (eg Toyota and Honda), which in
the past were only recommended by the
luxury auto OEMs, combined with the
greater availability of high performance
Group III baseoils, significant growth has
Figure 4: Performance level evolution of lubricants Source: Kline & Co been seen in the synthetics category.

PETROLEUM REVIEW APRIL 2013 39


L UBRICANTS Tr e n d s

give the additional shelf space? These


questions are not yet answered.
Certainly, synthetics are expected to
grow much more strongly than the
demand for conventional lubricants.
Competition
The top 10 global lubricant marketers
currently account for 50% of the market
place. However, as noted earlier,
national players in the rising economies
are looking to secure larger market
share in the lubricants sector, both
regionally and globally. Meanwhile, on
the automotive side, China, India and
others are beginning to take on the lead
global vehicle manufacturers.

Looking ahead
In conclusion, we as an industry have
Figure 5: Supply (basestocks) and demand (lubricants), 2011 Source: Kline & Co done very well – but how do we push
the envelope and come up with new
ideas? How do we surpass ourselves?
In the past, synthetic products were thetics. This has led to a growing com- Nolan Bushnell, the founder of Atari
primarily offered by the global multi- moditisation in this category and new Games, said: ‘Everyone who’s ever taken
national oil companies who had access competitors entering the space a shower has a brilliant idea. It’s the
to high quality baseoils and the most including retailers, distributors and person who gets out of the shower, dries
advanced additive packages. Today, equipment OEMs offering their own off and does something about it who
with the growing availability of Group branded product lines. To curb this, makes all the difference.’ So, I say,
III baseoils marketed by merchant sup- some marketers have resorted to a ‘Shower often and dry off often.’
pliers who promise availability of tested ‘good’, ‘better’, and ‘best’ strategy in Companies that draw winning strategic
and approved additive packages in their their line of synthetics. Will customers plans and, more importantly, execute
baseoils, many lubricant blenders have be confused? Will the retail stores, mass them to perfection, will be the winners
developed an ability to formulate syn- merchandisers, and do-it-for-me chains in this race. ●
E

www.energyzone.net
19th Reservoir Microbiology Forum 2013
The most comprehensive online guide to energy
education and training from the Energy Institute.
(RMF2013)
About Towards a Advancing your
20–21 November 2013
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L UBRICANTS Tr e n d s

Megatrends matter
Brian Crichton, Global Industry Liaison Manager at additive innovation that enables these
green targets to be met, further pres-
Infineum UK Limited, talks about the five key megatrends surising the profitability of the vehicle
builders.
that will shape automotive fuel and lubricant technologies 3. Legislation
From this social pressure to be cleaner
during the rest of this decade and beyond.* and greener springs government legisla-
tion. However, it is often the case that

O
ur collective industries are being facturing footprint. This allows them to government policy and customer prefer-
impacted upon by a wide array take advantage of lower cost manufac- ence are in conflict and both are
of factors. From tightening emis- turing in emerging markets, gets them explicitly impacted upon by economic
sions legislation and fuel economy closer to the customers and in some realities and shifts. In the past six
standards to the rising importance of cases avoids trade tariffs. However, months, UK Brent crude, the most
emerging markets, all have the poten- today, another new trend is emerging – widely accepted gauge of global oil
tial to create new opportunities and one in which regional Chinese and prices, averaged more than $100/b and
pressures. However, these changes are Indian companies are looking to glob- so far in 2013 the price has been on yet
being accelerated by the impact of the alise their operations and where another upward trajectory. These high
global economic downturn. After a consumer interest in lower cost vehicles crude oil prices have the capability to
period of high growth, the automotive is offering potential for them to gain a quickly change both policy and con-
industry experienced tough times in the place in the more mature markets. sumer drivers.
recession and is now in recovery mode. Legislation concerning CO2 emissions,
Financial distress continues among sup- 2. Climate change debate other tailpipe emissions, safety and end
pliers and many original equipment The global debate on climate change of vehicle life all require investment by
manufacturers (OEMs), leading to con- continues. Greenhouse gas emissions OEMs and add cost to the product on
solidation and budget constraints. legislation and the mandated use of the showroom floor. In the recent past
Traditional tailpipe emissions remain renewable biofuels, coupled with con- industry attention has been centred on
important, but carbon dioxide (CO2) and sumer desires for improved fuel reducing emissions of nitrous oxides
fuel economy standards increasingly economy are driving changes to both (NOx) and particulate matter. This has
take precedence when it comes to allo- passenger car and heavy-duty vehicles. been achieved in the main through
cating the available R&D budgets and At the United Nations climate confer- advanced hardware, which has in part
are the major drivers of powertrain ence, held at the end of 2012 in Qatar, a been facilitated by reducing sulphur in
technology developments. new commitment period under the fuels and cutting sulphated ash, phos-
As the lingering recession saps confi- Kyoto Protocol was successfully phorus and sulphur (SAPS) in lubricants.
dence, oil prices remain high and the launched, a firm timetable to adopt a Now, because atmospheric CO2 is
rising economic powerhouse – China – universal climate agreement by 2015 known to make a significant contribu-
adds further uncertainty, it is essential was agreed and a path to raise necessary tion to the greenhouse effect,
for industry to adapt and innovate. ambition to respond to climate change governments around the world are
However, the impacts of the five key was established. New ways to deliver introducing and tightening legislation
industry megatrends – macro economic scaled-up climate finance and tech- to limit those carbon emissions that can
environment, climate change debate, nology to developing countries was also be controlled. Going forward, industry
legislation, technology challenges and endorsed. Some 37 countries adopted efforts are focusing on innovative and
model mix – must be considered so that legally binding emission reduction tar- cost-efficient ways to meet the very
informed decisions on future lubricant gets, bringing them collectively to a challenging CO2 and fuel economy legis-
and fuel needs can be made. Each is level 18% below their 1990 baselines lation in order to help OEMs avoid the
addressed below. over the next eight years. hefty fines for non-compliance. The
As governments work hard to meet spread of these regulations sets major
1. Macro economic environment their green obligations, CO2 emissions challenges for vehicle builders, lubri-
In the continuing global downturn it is limits and fuel economy targets across cant, fuel and additive suppliers, and are
the established markets of the US, all transport sectors will tighten. This a real threat to the industry’s cash flow.
Europe and Japan that are suffering adds complexity and risk for OEMs
most in terms of new vehicle sales. The because they must invest in new tech- 4. Technology challenges
future does not look promising in these nology to meet the imposed targets and Fuel economy and CO2 emissions legisla-
regions, and we have to look to the mar- avoid fines at a time of high competi- tion will be the main drivers of
kets in China, India, South America, tion and low profitability. Improvements technology change in the next decade.
Africa and the Middle East for a positive to conventional powertrains, drivetrain However, regional politics, legislation
story. The front-runners, in terms of electrification and the increasing use of and vehicle use means a complex set of
market growth, are in Asia, where the sustainable biofuels are sure to con- vehicle and hardware road maps with
market size in China alone is already tinue. However, while consumers may no obvious winning technology
larger than that of North America. look for cleaner and more fuel efficient emerging.
The established international players vehicles they may be unwilling to pay a The European Commission (EC) is
in the automotive industry are premium price for the engine, transmis- tightening legislation to reduce average
responding by globalising their manu- sion, vehicle design, fuel, lubricant and CO2 emissions from transportation. By

PETROLEUM REVIEW APRIL 2013 41


L UBRICANTS Tr e n d s

2015, car manufacturers are obliged to


ensure that their new car fleet does not
emit more than an average of 130 g
CO2/km, with fines for manufacturers

every g/km over the limit will cost €95


whose fleets exceed the limits. By 2019,

per vehicle, which means the fines could


be huge. In the longer term the
European Union (EU) has its sights set on
a target of 95 g/km by 2020, which will
bring significant technology challenges
and changes to the make-up of the
vehicle market.
In the US, car and light truck makers
will have to significantly improve fuel
efficiency to meet stringent new emis-
sions and fuel economy standards. These
apply to model years (MY) 2012–2016,
and require vehicles to meet a corporate
average fuel efficiency (CAFE) of
35.5 mpg by 2016; resulting in an Figure 1: Passenger cars and light commercial vehicles – estimate of split by engine
average tailpipe CO2 level of 250 g/mile technology Source: Ricardo Strategic Consulting/ Infineum Analysis
(155 g/km). MY 2017–2025 proposals
would cut the fleet average CO2 emis-
sions to 160 g/mile (100 g/km) by 2024, emissions from HD vehicles in both that is not reflected right across the
and to meet this target, fuel efficiency freight and passenger transport. These globe. The growing economies of Asia,
would have to improve by more than changes are driving significant tech- Eastern Europe and Latin America have
4% per year from 2017 to 2025. nology change in this sector. While OEMs traditionally been small/medium size
Carbon dioxide and fuel economy leg- are introducing hybrid technology, low cost vehicle markets. But, because
islation is not solely a preserve of the improving aerodynamics, reducing there is a significant part of the popula-
European and American markets; the weight and improving tyre technology tion (in absolute numbers) with high net
rising markets are increasingly playing as first steps, they will always look for worth and large disposable incomes
legislative catch-up. All this will result in the lowest cost and least disruptive route there is disproportionately high growth
increased R&D spending in the automo- to compliance practicable. in the premium/luxury vehicle segment.
tive, lubricant, fuels and additives For both light and HD vehicles, the
industries, despite the lower levels of evolution of internal combustion Challenging times
profitability many are experiencing. engines, advances in transmission tech- In these challenging times, as many
The US Environmental Protection nology and the introduction of electric parts of the world struggle to crack the
Agency (EPA) says electric vehicles will motors in hybrids and electric vehicles code for growth, an understanding of
have ‘game-changing potential’ with will create new requirements for lubri- these five megatrends that are
regard to CAFE standards, but it expects cants and additives. Low viscosity and impacting OEMs, suppliers and con-
most of the fuel efficiency improve- low friction engine and transmission sumers is increasingly essential for
ments and reductions in CO2 emissions fluids that deliver sustained and signifi- survival.
to be achieved through advances in cant fuel economy contributions Over the next decade, success or
conventionally-powered vehicles. without compromising hardware dura- failure will be measured by the ability to
In the short-term we would expect to bility will be essential. adapt to change at all levels in our
see a portfolio of advanced internal organisations. With continuous innova-
combustion engine-based powertrains 5. Model mix tion, companies that survive and thrive
and hybrid vehicles. OEMs will continu- The economic downturn combined with in the future will need to build sustain-
ously evolve their conventional diesel high fuel prices, increased congestion able businesses, collaborate to form
and gasoline technology and we would and green consumerism have encour- optimised supply chains, and effectively
expect a wide variety of technologies aged consumers in mature markets to communicate with their increasingly
including improved injection and downsize to smaller cars and smaller sophisticated consumers.
turbocharging, engine downsizing, engines. The emergence of advanced hard-
advanced transmissions and new mate- Large, premium vehicles are the ware will offer significant opportunities
rials to be adopted to varying degrees. bedrock of the profitability of European to create fluids of very high value to
We are now truly entering the era of and US OEMs. Which means the main fluid developers, marketers and auto-
powertrain electrification, but it will be concern here is that, because very few motive OEMs. It will be important to
a long and evolutionary journey. In our cars that emit less than 130 g CO2/km collaborate early on in the development
view, full electrification will not become make a profit, this trend to smaller vehi- cycle to ensure maximum value genera-
commonplace until at least 2025, and cles will reduce profitability and OEMs’ tion for all industry stakeholders.
even at this point advanced conven- ability to invest. At the same time, the For those who can adapt to our
tional technology will still have a strong push to smaller vehicles has provided an changing world and get the investment,
role to play. opportunity to develop a feature-rich innovation and collaboration right there
Standards to reduce CO2 emissions ‘premium’ small car segment and it has is a bright future ahead. ●
from medium and heavy-duty (HD) vehi- been the manufacturers of these large
cles were introduced in the US in 2011, premium cars that have been at the *A version of this article was first pub-
while in Europe, the EC is working on a forefront of its creation. lished in the December 2012 issue of
comprehensive strategy to reduce CO2 However, once again, this is a trend Insight.

42 PETROLEUM REVIEW APRIL 2013


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Affiliate membership to the
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Unless otherwise specified, Personnel from a range of technical, non-technical and commercial backgrounds, new industry entrants and those
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London at the Energy Institute, overview for those employed by financial, legal, insurance, governmental, service, supply and advisory organisations
61 New Cavendish Street,
that require an informed introduction to the economic and commercial background and general trends within the
London W1G 7AR, UK.
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For more information, please contact Nick Wilkinson


w w w. e n e r g y i n s t . o r g t: +44 (0)20 7467 7100; f: +44 (0)20 7255 1472
e: nwilkinson@energyinst.org
CALENDAR

4 April 2013 16–18 April 2013 24 April 2013


EI membership workshop NEMEX Energy Live Is biomass the answer to 2020?
(London) (Birmingham) (London)
Contact: EI Membership team – Contact: EI Events team –
www.sustainabilitylive.com/einemex
Andy Lewis Gemma Wilkinson
t: +44 (0)20 7467 7162 t: +44 (0)20 7467 7174
e: alewis@energyinst.org 16–18 April 2013
e: gwilkinson@energyinst.org
Energy from Waste Live
9–11 April 2013 (Birmingham) 24–26 April 2013
Exploration and production of www.sustainabilitylive.com/eiefw Oil marketing (Cambridge)
oil and gas: Technical and Contact: EI Training team –
commercial perspectives 18 April 2013 Nick Wilkinson
(London) e: nwilkinson@energyinst.org
CO2 storage – putting the ‘S’
Contact: EI Training team –
in CCS (London)
Nick Wilkinson 24–26 April 2013
Contact: EI Events team –
e: nwilkinson@energyinst.org Practical workshop: Building
Vickie Naidu
t: +44 (0)20 7467 7179 excel models of oil and gas
12 April 2013
e: vnaidu@energyinst.org fiscal terms (London)
Branch annual dinner and dance Contact: EI Training team –
(Orsett) Nick Wilkinson
Contact: EI Essex and East Anglia 22–26 April 2013
e: nwilkinson@energyinst.org
branch – Mark Harrison MEI Certificate in Energy
t: +44 (0)7733 007051 Management Essentials
e: mark.harrison@intertek.com 29–30 April 2013
(London) Advanced petroleum economics
Contact: EI Training team –
15–17 April 2013 with optimisation
Will Sadler
Shale gas and other t: +44 (0)20 7467 7135 (London)
unconventional petroleum e: wsadler@energyinst.org Contact: EI Training team –
resources (London) Nick Wilkinson
Contact: EI Training team – e: nwilkinson@energyinst.org
22–26 April 2013
Nick Wilkinson
e: nwilkinson@energyinst.org Trading oil on
29 April – 1 May 2013
international markets
Advanced Energy Manager
15–19 April 2013 (Cambridge)
Economics and trading of the Contact: EI Training team – qualification (London)
oil supply chain (Cambridge) Contact: EI Training team –
Nick Wilkinson
Contact: EI Training team – Will Sadler
e: nwilkinson@energyinst.org
t: +44 (0)20 7467 7135
Nick Wilkinson
e: nwilkinson@energyinst.org e: wsadler@energyinst.org
23 April 2013
Energy management – 1–3 May 2013
16 April 2013
Energising the workforce Essentials of cash flow
Biomethane: Fuel of the future?
(Colchester) (Cheltenham) management: Managing cash
Contact: EI Essex and East Anglia Contact: EI South Western and South for value (London)
branch – Clive Walter CENv CEng FEI Wales branch – Contact: EI Training team –
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For more information, please go to www.energyinst.org/events

44 PETROLEUM REVIEW APRIL 2013


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