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Saudi Arabian Oil & Gas Market Update Oct 2013

Oil and Gas Market Update for covering entire month of September 2013

  • Sabic and Mitsubishi issue tender for $500m petrochemicals plants ‐ Two plants will be built at
    Jubail in the Eastern Province of Saudi Arabia.
  • Saudi Aramco awards Foster Wheeler Fadhili gas plant design ‐ US engineering consultancy to
    carry out front end engineering for plant in Eastern Province.
  • Saudi Railway Company invites companies to prequalify for new projects ‐ Contracts cover civil,
    track, signalling and telecoms works.
  • Farabi expected to make decision on Jizan plant in March 2014 ‐ New petrochemicals plant at
    Jizan could have a value as high as almost $1bn.
  • Jubail‐Dammam railway contract awarded ‐ Jubail‐Dammam railway contract value is $220m.
  • Riyadh plans petrochemicals revolution ‐ Massive refining and chemicals integration plan will
  • help cushion the kingdom against future oil shocks.

• ‘Saudi Arabian Oil Co. may offer the first cargoes of gasoline and diesel next month from a new
joint‐venture refinery, according to two people with knowledge of the situation.

• The state‐owned company known as Saudi Aramco may ship light products from the facility at
the Persian Gulf port of Jubail, said the people, asking not to be identified because the information is not
public. The venture with France’s Total SA (FP), called Saudi Aramco Total Refining and Petrochemical
Co. or Satorp, already plans to offer one or two cargoes of straight‐run fuel oil this month.

• Saudi Aramco Products Trading Co., an Aramco unit, will sell the fuel oil, according to the
people. The shipments will each comprise 80,000 metric tons and the first of them could be available
through direct negotiation, rather than by tender, late in September, one of them said. Satorp may offer
two more fuel oil cargoes next month before a coker unit starts.

• A spokeswoman for Total in Paris didn’t have an immediate comment when contacted by e‐mail
today. Nobody answered calls to Satorp’s media office in Khobar today and yesterday and a Saudi
Aramco spokesman in Dhahran referred inquiries to Satorp.

• Saudi Aramco is the world’s largest crude exporter. Satorp, 62.5 percent owned by Aramco and
the remainder by Total, is processing the Arab Light blend at a 120,000 barrel‐a‐day unit, the second
person said. Another crude unit of the same size will start next month, according to the person. A coking
facility, which will turn fuel oil into diesel and gasoline, is to start in November and will enable the
refinery to process heavier oil grades, the person said.

• Saudi Arabia and the United Arab Emirates, members of the Organization of Petroleum
Exporting Countries, are boosting their domestic refining capacity to produce more fuels such as
gasoline and diesel for local use. Refined products typically also fetch higher prices than crude in
international markets.

UAE Oil & Gas Market Update Oct 2013

Oil and Gas Market Update for covering entire month of September 2013

  • Dubai to build new crude refinery – Dubai signs up with China Sonangol Group to build local refinery.
  • Alstom wins Shuqaiq turbine deal ‐ Turbine equipment will be supplied to South Korea’s Hyundai Heavy
    Industries.
  • Habtoor‐Drake tie‐up wins $109m contract for Dubai project ‐ Habtoor‐Drake tie‐up to perform
    mechanical, electrical, and plumbing for Al‐Habtoor City project.
  • UAE gives $100m for Morocco renewable energy projects ‐ Country has alternative energy
    target of 42 per cent by 2020.
  • Dubai plans refinery with Angolan‐Chinese partners ‐ Memorandum of Understanding signed
    with Hong Kong joint venture of Sonangol.
  • Dubai prepares to tender World Trade Centre re‐development ‐ Project stalled in late 2008.
  • Abu Dhabi set to award major hospital construction contracts ‐ Abu Dhabi set to award major
    hospital construction contracts.
  • Hakkasan to open luxury hotel on Palm Jumeirah ‐ The Palm Jumeirah venture will be
    Hakkasan’s first hotel project.
  • Arabtec and Samsung form joint venture company ‐ Arabtec and Samsung Engineering
    announced plans to form new company in April.
  • Megaprojects struggle to take shape in Ras al‐Khaimah ‐ Real Madrid football‐themed tourism
    scheme latest to face obstacles in the emirate.
  • Depa wins $156m contract in Abu Dhabi ‐ Dubai interior firm to perform fit‐out works for
    government project.
  • Abu Dhabi to invest $54m to expand paper mill ‐ New machinery from Metso to boost capacity
    to 90,000 tonnes a year.
  • Platts Survey announces OPEC pumps 30.28 million barrels of crude oil per day in August.
  • Contractors submit bids for Al‐Ain grand mosque ‐ At least six groups competing for Al‐Ain grand
    mosque construction contract.
  • Emirates Aluminium phase two smelter starts production ‐ Abu Dhabi producer eyes possible
    phase three smelter expansion and downstream production units.
  • Brasil Foods to build $145m processing complex in Abu Dhabi ‐ South American group to process
    meat and bread‐based products at Kizad free zone.
  • Enec receives first shipment of nuclear‐grade steel from Emirates Steel ‐ More than $1bn
    awarded to over 200 local companies on development of Abu Dhabi nuclear plant.
  • Abu Dhabi resurrects Ruwais aromatics complex with key award ‐ US engineering group CH2M
    Hill award engineering and design on Chemaweyaat’s Tacaamol project.
  • Abu Dhabi diversification leaps forward with key chemicals and metal awards ‐ Aromatics
    chemicals complex and alumina refinery signal progress for Abu Dhabi’s industrial megaprojects.
  • Abu Dhabi awards feasibility study contracts on alumina refinery ‐ Bechtel, Petrofac, Hatch,
    Outotec and Rio Tinto Alcan pick up work on proposed minerals plant.
  • Farabi Petrochemicals decides product mix for Jizan plant ‐ Proposed new facility will produce
    similar chemicals to sister plant at Jubail.
  • Middle East Base Oil prices reflect marginal changes.
  • Shale gas, oil reshape world energy landscape ‐ Thanks to the sudden abundance of cheap
    natural gas, American electricity suppliers are shunning domestic coal.
  • Gulf Keystone to ramp up Kurdish oil output.
  • Saudi crude output, exports rise ‐ Exports in the world’s largest exporter of crude rose 2.1 per
    cent during July.

Marine crude oil transport – global voyage losses

The Energy Institute (EI) HMC4A Marine Oil Transportation Database Committee has been collecting and
analysing worldwide oil shipping data for over 20 years and meets twice a year. The 2012 autumn
meeting was held in Houston in Committee members submit their voyage measurement data annually.
They receive a global analysis and confidential individual company reports.
The following member companies submitted data for 2012 – BP Oil International, CEPSA, Chevron,
Chinese Petroleum Corporation, ConocoPhillips, Eni, ExxonMobil, Marathon Petroleum, Petrobras,
Petrogal (GALP Energia), Phillips 66, PMI Pemex, Repsol, Saras, Shell, Statoil and Total. The main findings
from the global analysis are presented below.

Database development
The total number of voyages reported for 2012 increased slightly to just over 9,600. However, the
number of voyages reported with both bill of lading (BOL) and outturn data fell, with a number of
members undergoing systems changes.
The reported BOL volume totalled 5.52bn barrels, a fall of around 4% compared with 2011. The volume
of crude with complete data fell to 3.9bn barrels, as shown in Figure 1. The BP Statistical Review of
World Energy gives global crude seaborne trade for 2012 as 14.1bn barrels, up about 1.3% compared
with 2011. The database therefore includes almost 40% of the global volume at BOL and contains
complete load and discharge data for just under 30% of global volume.
Global losses
Losses have been falling consistently since 2001 and fell to a record low net standard volume (NSV) loss
of –0.161% in 2010 (by convention losses are given as negative). However, the 2011 figures show an
increased loss of –0.172% and this figure was repeated in 2012. It must be noted that losses include
apparent as well as physical losses. Apparent losses result from the combination of fixed and random
errors in the measurement systems used at load and discharge.
The mean NSV loss from the database from 1993 to 2012 is plotted in Figure 1. Global loss showed no
major change between 1995 and 2000. A significant increase in mean NSV loss to –0.21% occurred
between 2000 and 2001, but this has been more than reversed over recent years with the increase
noted in 2011 being the first significant increase since 2000/2001.
Gross or total calculated volume (TCV) loss fell between 1990 and 1994 but rose again to around –0.15%
in 2000, staying fairly constant up to 2007, while water losses continued to fall. Changes in TCV loss have
driven NSV losses since 2006 and it was a rise from –0.134% in 2010 to –0.149% in 2011 which led to the
increased NSV loss in 2011, repeated in 2012. Water loss fell slightly between 2010 and 2011 to partly
compensate.
TCV loss comprises any real losses due to evaporation plus any apparent losses due to systematic
measurement differences. Water loss represents any additional water reported at discharge compared
with that reported at load; ie an accounting loss in terms of oil quantity but not a real loss of either oil or
water.

New figures undermine OFT findings Sept 2013

New data from the UK government confirms that supermarkets (Tesco, Asda, Sainsbury’s and
Morrisons) now have a much higher share of the UK market for retail transport fuels than previously
admitted. The latest combined total for petrol and diesel sees an increase to 46.5% in 2012. This
compares with the official total of just 39% for 2011 quoted in a recent Deloitte study on the sector and
also 39% for 2012 stated in the Office of Fair Trading (OFT) report into UK fuel prices (see Petroleum
Review’s Retail Marketing Supplement in April).

The statistical data on retail fuel volumes since 2008 has recently been revised on the
Department of Energy and Climate Change (DECC) website, after gross reporting errors were uncovered
by officials, reports the Petrol Retailers Association (PRA). 5,000 forecourts have closed since 2000,
another 175 closed last year and the independent retailers are continuing to get massacred by the
aggressive discounting and below cost sales tactics by supermarkets. There was considerable
complacency evident in the Deloitte and OFT reports which assumed that supermarket’s volumes were
levelling off and so the market was steady. However, we warned government that the 2012 Christie
study* indicated that supermarkets are trying to open up to 50 new forecourts for each of the next four
years.’

The data revision indicates that the average supermarket forecourt sells 12mn l/y and
independents 2mn l/y. Thus, every newtoindustry opening by a supermarket could suck up the entire
fuel volume of six independent retailers in the local area and jeopardise the business of at least 10
existing forecourts every year if such expansion proceeded, notes the PRA. ‘This will be bad for
competition, bad for consumer choice, bad for jobs at local family firms and bad for rural communities.’

This rejigging of key market information underpins our members’ real concern that the UK’s
energy resilience for retail fuels is at stake. If this situation is allowed to continue, there will be an
inevitable acceleration in the number of site closures to more than 300 per year. Thus there will be a
severe worsening of supply resilience from fewer sites with low stockholdings.