Arab Oil & Gas

50 Pages·2012·1.27 MB·English

ARAB OIL & GAS
Bulletin of information and studies published fortnightly by
Stratégies et Politiques Energétiques (SPE)
President : Francis PERRIN
Vol. XLI - N° 983
TOP OF THE NEWS
1 September2012
- Energy and cyber warfare: the truth is nowhere else . . . . . . . . . . . . . . . . . . . . . . . . . 3
- Iraqi Kurdistan: Total does it again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SYRIA SPECIAL REPORT
- Could an Alawite state, the possible refuge of Bachar al-Assad, be viable at an
energy level?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
- Publications : AOGD 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
- To our readers : Contact details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
- Iran : Total has taken a charge of €316 million in anticipation of an agreement with the U.S.
government over its Iranian contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
- Saudi Arabia : Saudi Aramco’s whole computer system is operating normally again. Sabic has
reportedly invited seven companies to bid for the construction of a polyacetal plant
at the Ibn Sina complex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
- Qatar : Qatar Petroleum and ExxonMobil apply for approval to expand the Sabine Pass
terminal to enable it to export LNG. Qatar Solar Technologies and Gasal sign a long-
term agreement for the supply of hydrogen and nitrogen. . . . . . . . . . . . . . . . . . . . . . 24
- Egypt/Algeria : Merger between Petroceltic and Melrose will create a company focused on North
Africa, the Mediterranean and the Black Sea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
- Egypt : EGPC preparing to launch an international exploration bid round for 20 blocks in the
Western and Eastern deserts. Production has begun on the Abu Sennan concession at
a rate of 2,200 boe/d from four wells. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
- Caspian Sea : Dragon Oil’s oil production in Turkmenistan now running at over 70,000 b/d. . . . . 31
- UAE : Emirates Nuclear Energy Corporation awards uranium supply contracts to six
international companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
- Lebanon : Dolphin Geophysical and Spectrum commissioned to carry out 1,500-sq km 3-D
seismic survey of the Lebanese offshore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
- UAE/Egypt/Iraq : Dana Gas’s Egyptian production fell to 60,950 boe/d in the first half of this year. . . 36
- Yemen : Fresh sabotage attack against the pipeline delivering feed gas to Yemen LNG. DNO
International abandons its bid to acquire the Canadian company Calvalley Petroleum.. 38
- Arab Countries : Occidental’s gas production in Arab countries rose by 10% to 464 million cu ft/day in
the first half. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
AFRICAN OIL
- Companies : Africa accounted for 30% of Total’s hydrocarbon production in the first half of 2012.. 41
- Angola : Cooperation between Total and Inpex strengthened by the Japanese company’s entrée
into deepwater Block 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
- Angola/Congo : Chevron launches the development of the Lianzi field. . . . . . . . . . . . . . . . . . . . . . . . . 44
- DOCUMENT : Energy resources over and above conventional oil, by Energy Funds Advisors. . . . 46
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AOG / 3 1 September 2012
TOP OF THE NEWS
Energy and Cyber Warfare:
The Truth Is Nowhere Else
The world’s largest national oil company, Saudi Aramco, was the target
of an invasion by a malicious computer virus in mid‐August (see our report,
page 20). The company announced on 26 August that all its computer systems
were operating normally again and assured that its “principal” oil and gas
exploration, production and distribution activities had not been affected by the
incident. Saudi Aramco did not explain what it meant by “principal” activities,
however, nor which activities did not fall under that heading. Through the voice
of its President and Chief Executive Officer, Mr. Khalid al‐Falih, the Saudi giant
explained that the virus had had a “limited” impact, that the precautionary
procedures and multiple protection systems in place had proved their
effectiveness of this occasion, and that there would not be another attack of this kind. On this last point,
one thinks inevitably of the celebrated remark of Winston Churchill, who said “We will never make the
same mistake again,” and who, with the way with words for which he was famous, added immediately
afterwards: “But we will make others.”
The British statesman made that observation in a time of war, and referring to it in the context of
what happened to Saudi Aramco is thus doubly appropriate. Even though we do not know the identity or
the motives of the computer pirates who attacked the leading name in the world oil industry, no
demands were made on it, so we are clearly in the realm of politics. And as the Prussian officer and
military theorist Carl von Clausewitz observed so rightly as far back as the early part of the 19thcentury,
“war is the conduct of politics by other means.”
It is obviously understandable that Saudi Aramco and Saudi Arabia, which are the principal
guarantors of the stability of the world oil system, sought to reassure oil‐importing countries, the oil
industry and their own citizens on such a matter. Assuming that this attack did not effectively result in
any significant damage to the Saudi national oil company, it has nevertheless created uncertainties for
the future, and not only for Saudi Aramco, which was certainly well prepared for this type of cyber
warfare and which has the resources needed to draw all the lessons of what has just occurred. That said,
by its very nature the threat comes in many forms and can mutate so easily that no company can imagine
that it is able to prepare for any eventuality.
Military men and strategists have been working for years on various cyber warfare scenarios, but
one may wonder whether the energy sector, in both its public and private incarnations, is sufficiently
protected. It is banal to say that this is a strategic sector par excellence and that, for this reason alone, it
is a perfect target for those who might conceive and prepare such attacks, whether they be working for
governments or not. In the case of Saudi Aramco, demands have been posted on the internet, but one
has to remain very cautious when confronted with elements that are not only hard to verify but are also
subject to various potential manipulations and attempts at disinformation. Faced with such questions,
the well‐known adage of the intelligence services leaps quickly to mind: “Those who talk do not know
and those who know do not talk.”
While the energy sector in general is a very tempting target for modern‐day pirates, Middle
Eastern countries, and especially those in the Gulf region, are particularly threatened due to their huge
potential in terms of hydrocarbon reserves and their substantial share of global oil production and
exports. In April a fearsome (computer) worm caused serious damage to the files of the Iranian Oil
Ministryand to the operations of the country’s oil terminals. The attack was described by the specialist
computer security firm Symantecas the most sophisticated threat it had ever seen, which led many
experts to think that it was the work of another government or governments.
1 September 2012 AOG / 4
Iran had earlier been hit by the Stuxnet virus, which severely disrupted the operation of the
centrifuges it uses to enrich uranium. That attack, which was widely attributed to the intelligence
services of either Israel, the United States or another western country, was clearly aimed at slowing the
progress of Iran’s nuclear program, something that is of great concern to a large part of the international
community. This program could trigger a military response on the part of Israeland/or the United States
in particular, and there is a game of shadows being played out around it that is taking several forms,
whether they be virtual (but with very real consequences), material (the delivery of previously damaged
equipment) or human (the assassination of scientists closely involved in the Iranian nuclear program).
Over the past few years the oil industry in particular and the oil services sector in general have
invested heavily in security in a bid to prevent major accidents that could seriously harm their personnel,
their facilities or the environment, such as the massive oil spill in the Gulf of Mexico that followed the
explosion on the Deepwater Horizondrilling platform in the spring of 2010. It certainly is not comparable,
but in the area of computer security the attack against Saudi Aramco could be a salutary warning to the
whole hydrocarbon and energy sector. No significant progress is possible on the security front unless the
industry becomes fully aware of the extent of its vulnerability.
Francis Perrin
AOG / 5 1 September 2012
Iraqi Kurdistan: Total Does it Again
Barely three weeks after announcing on 31 July that it had signed a farm‐in agreement with
Marathon Oil Corporationproviding for it to acquire interests in the Harirand Safenpermits, giving it
interests in Iraqi Kurdistan for the first time (see our analysis in AOG, 1 Aug., 2012), Totalhas done it
again. On 20 August the Canadian company ShaMaran Petroleum Corp.(of Vancouver, British Columbia)
disclosed that it had sold the French oil giant a 20% interest in the Tazaexploration block in the same
part of Iraq. On this acreage, where the Taza‐1exploration well is being drilled at the moment, Total will
be associated with Oil Search Limited, operator with a 60% interest, and the Kurdistan Regional
Government(KRG – 20%).
Total has not mentioned this latest transaction directly, having not issued any press release
concerning the agreement it has concluded with ShaMaran Petroleum. The announcement came from
the Canadian company, which explained that Total would be payingUS$48 millionin cash for its interest
and that it had undertaken to reimburse ShaMaran for the exploration costs it has incurred since 1 April
this year. For the Iraqi Oil Ministryin Baghdad, however, this is yet more bad news in the trial of strength
it has been conducting with the KRG for some years over key aspects of oil policy, including the
conclusion of exploration‐production agreements for blocks in the province of Kurdistan without their
being validated by the federal government.
Immediately after the signing of Total’s agreement with Marathon Oil, Iraq’s Deputy Prime
Minister in charge of Energy, Mr. Hussein al‐Shahristani, asserted that the French company had a clear
choice to make: either it intended to continue participating in the development of the Halfayaoil field, in
which case it would have to cancel its farm‐in agreement with Marathon, or it decided to keep its newly‐
acquired interests in Kurdistan and would then be given a certain time to dispose of its equity stake in the
Halfaya development. In view of the sensitivity of the issue and its political implications, Total did not
make any comment on Mr. al‐Shahristani’s remarks, and in the press release it issued on 31 July it went
no further than confirm in the vaguest of terms “its commitment to contribute to the development of the
Iraqi oil sector and invest in new projects.”
Being well aware of the extreme sensitivity of the Iraqi Oil Ministry on this subject, Total could not
but know that its entrée into Kurdistan would provoke a sharp reaction, and its decision is bound to have
been taken at the very highest level within the company. Total has never made any secret of its desire to
operate in Iraq and it is due to become operator for the development of the Safen acreage, so one might
presume that the company will not be prepared to change its mind and pull out of Kurdistan. The
company is probably hoping that a compromise may be possible and that it might be able to retain its
interest in Halfaya at the same time as investing in hydrocarbon exploration in Kurdistan, but this is by no
means certain given what is at stake politically for the Iraqi authorities.
Taking the view that it has not been treated very well in Iraq, although it has not said so in so
many words, and that the project in which it is involved in southern Iraq is not on a par with its rank, its
technical skills, its knowledge of the country and its ambitions, Total has decided that the time has come
to send a strong message to Baghdad. This is a risky strategy, but the company is not the first major to
embark on this delicate path, and it has done so knowing full well the implications of its actions.
Francis Perrin
1 September 2012 AOG / 6
The Arab Oil & Gas Directory 2012
Is Now Available
The 2012 edition of the Arab Oil & Gas Directory (AOGD) is available. This is the 38th edi-
tion of this annual reference book, which is well known in industry circles and has reviewed
all the activities of the oil, gas and petrochemical sectors in the Arab countries of the Middle
East and North Africa, as well as Iran and Sudan, every year since 1973 (see the order form
on the following page).
AOGD 2012, which runs to 670 pages, includes chapters on the following countries and orga-
nizations:
∙ Algeria ∙ Bahrain ∙ Egypt ∙ Iran ∙ Iraq
∙ Jordan ∙ Kuwait ∙ Lebanon ∙ Libya ∙ Mauritania
∙ Morocco ∙ Oman ∙ Qatar ∙ Saudi Arabia ∙ Soudan
∙ South Sudan ∙ Syria ∙ Tunisia ∙ UAE ∙ Yemen
∙ OAPEC ∙ OPEC ∙ Index of oil and oil services companies operating in
the Middle East and North Africa.
In the case of the electronic version, it is possible to order either the whole book or one or more
chapters.
AOGD is one of the publications created by the Arab Petroleum Research Center (APRC),
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1 September 2012 AOG / 10
SYRIA SPECIAL REPORT
Could an Alawite State, the Possible Refuge of
Bachar al-Assad, Be Viable at an Energy Level?
Since January at least, when the former Syrian Vice-President, Mr. Abdel-Halim
Khaddam, told the French newspaper Le Figaro that he knew President Bachar al-Assad was
thinking of establishing “his own republic”, many analysts and political pundits specialized in the
Near East, as well as the media, have pondered this eventuality as a possible refuge for the
Syrian president. “I know that a month ago he confided in one of his Lebanese henchmen and told him
that he intended to create an Alawite state where he could wage a fratricidal and religious war,” said
Mr. Khaddam. “He is now ready to create his personal republic. He is thinking of settling in Lattaquié. I
am sure there are enough underground shelters there to which he and his clan can repair.”
Located in the north-west of the country, the “Alawite” region is a strip of land about 100
kilometers long and 50 kilometers wide that runs along the Mediterranean from the port of
Lattaquié in the north, close to the Turkish border, to Tartus in the south, at the frontier with
Lebanon. To the east, it is protected by the Djebel Ansariehmountain range. An Alawite state
already existed there between 1920 and 1936. It was created in 1920 under the French mandate,
before being attached to Syria in 1936. Syria’s Alawites are estimated to number around
2 million people, representing around 12% of the total Syrian population.
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