- BGP Wraps Up Seismic Acquisition for Saudi Aramco
Friday, July 29, 2011
BGP Inc.
BGP Crew 8652 announced the successful completion of the S53 3D TZ seismic survey for Saudi Aramco with a total workload of 1876 km2 3D, as well as a remarkable achievement of 3.5 million man-hour without LTI.
The project area, located on the east coast of Saudi Arabia, comprises terrains of desert, Gobi, seasonal lakes, and shallow water, along with infrastructures of industrial facilities, airport, oilfields, wharfs, offshore exploration platforms, plus convoluted subsea pipelines throughout the entire area. The complex surface conditions, coupled with a large number of workers and equipments had presented unparalleled challenge to engender a safe operation while meeting the client expectations.
The S53 project team integrated three different types of energy sources being vibroseis, explosives and air guns, to best accommodate different working terrains, and yet it is able to complete the project in 18 months almost five months ahead of schedule.
Without saying, this extraordinary accomplishment is the synergetic effort from all members of Crew 8652, supported by the unwavering commitment from BGP headquarters.
- Commodity Corner: Oil Falls on Saudi Production Report
Friday, June 10, 2011
Rigzone Staff
by Matthew V. Veazey
The prospect of more Saudi crude on the world market and a stronger dollar contributed to a 2.6 percent dip in oil futures Friday.
Crude oil for July delivery settled at $99.29 a barrel after Saudi Arabian newspaper reported that the kingdom plans to boost oil production. The reported unilateral move by the world's largest oil exporter follows OPEC's inability earlier this week to decide on raising member countries' production quotas.
Also applying downward pressure to the oil futures price was a strengthening U.S. dollar. The Dollar Index, which gauges the value of the greenback against other major currencies, gained 0.9 percent Friday. Because oil is priced in dollars, the commodity becomes a less attractive buy for investors holding other currencies when its value increases.
Oil traded within a range from $98.79 to $102.15 Friday. Compared to the June 3 settlement price, oil is down 0.9 percent for the week.
July natural gas gained nine cents Friday to settle at $4.76 per thousand cubic feet. Thanks to weather forecast models predicting another heat wave later this month from the Midwest to the East Coast, demand for natural gas to generate electricity to power air conditioners is expected to soar.
Front-month natural gas fluctuated from $4.66 to $4.77, and the July contract price is up 1.1 percent for the week.
July gasoline lost two cents to end the day at $3.02 a gallon. The gasoline futures price peaked at $3.05 and bottomed out at $2.98 during Friday's trading. For the week, gasoline is up one percent.
- BGP Concludes Challenging Seismic Survey for Saudi Aramco
Friday, June 10, 2011
BGP Inc.
BGP Crew 8615 announced the completion of the S54 2D seismic acquisition contract for Saudi Aramco.
In the 48 months since the commencement of the S54 seismic survey in February 2007, more than fifty thousand kilometers of 2D data were acquired. The work area was located in the desert and far away from the city, which made the logistical support to be extremely difficult. The most challenging issues are the complex terrain and dramatic changes of elevation, which greatly increased operational difficulty.
The effort of all members of Crew 8615, along with the support of BGP headquarters, enabled them to overcome many difficulties during the operation. The crew reached more than six million man-hours without an LTI. Outstanding performance in difficult terrain as well as a commitment to client satisfaction guaranteed BGP's success in this operation.
SEOUL // Saudi Aramco, the world's largest oil exporter, will spend about $125 billion (Dh459bn) on projects over the next five years as it seeks to increase refining capacity by 50 per cent, Chief Executive Officer Khalid al-Falih said.
The company wants to boost oil-processing capacity to 6 million barrels a day from the current 4m barrels, Mr al-Falih said in a speech in Seoul today. Aramco is building two plants in the kingdom and is considering a further four "grassroots" facilities, he said. That includes one refinery at Jaizan in Saudi Arabia and possible joint-venture projects in China, Vietnam and Indonesia, he said.
"Saudi Aramco isn't just about petroleum production," he said. "We are also one of the world's largest producers of natural gas, a major player in refining, and we are ramping up our petrochemical activities."
Aramco's domestic and international spending plans include oil exploration and production as well as natural gas, refining and petrochemical facilities, he said. Saudi Arabia plans capital expenditure of more than $450bn in the same period, according to Mr al-Falih.
All 12 members of the Organisation of Petroleum Exporting Countries including Saudi Arabia will need to provide a daily average of 29.8m barrels a day this year to satisfy global requirements, or about 600,000 a day more than they pumped in March, the International Energy Agency said April 12.
Aramco built the world's largest natural gas network about 30 years ago, and doubled its processing capacity.
The company plans to expand the network to exceed 14bn standard-cubic-feet per day of capacity in the next five years when the network will encompass seven world-scale gas plants.
For the expansion, the company continues to make natural gas discoveries in places including the Gulf, while beginning exploration in areas such as the Red Sea and the north-west region of the kingdom.
These activities are adding to the company's reserves of 275 trillion cubic feet, the world's fifth-largest proven holdings of gas, in addition to the world's biggest reserves of conventional crude oil, he estimated.
The company is also expanding its petrochemical capabilities in the kingdom, through a petrochemical project in Jubail with Dow Chemical and a planned expansion of Rabigh Refining & Petrochemicals, its joint venture with Sumitomo Chemical.
Mr Al-Falih said South Korea is now among Saudi Arabia's four largest trading partners.
The country accounts for about a fifth of Saudi Arabia's total petroleum exports, and Aramco supplies 30 per cent of South Korea's crude imports.
Aramco is holding its board meeting for the first time in South Korea this week, Mr al-Falih said.
"The Far East is the destination for two out of every three barrels of crude oil" that Aramco exports, he said.
Aramco owns 35 per cent of S-Oil, South Korea's third- largest refiner that's expanding its processing capacity in Ulsan to more than 650,000 barrels a day.
Export Import Bank of Korea and Korea Trade Insurance each signed a memorandum of understanding with Aramco on possible future project financing, according to the website of the oil and gas producer.
Crude oil climbed for a second day on the New York Mercantile Exchange on a report out of Saudi Arabia that the holder of the world's largest oil reserves, and the second largest producer of oil, has reduced output this month.
May oil futures were up almost 1% to $108.10 per barrel, after the chief economist at Riyadh-based Banque Saudi Fransi said the Kingdom of Saudi Arabia had cut production by 300,000 barrels per day.
Barclays Plc (NYSE:BCS) said the country might be reducing production of its lighter oil blends introduced in response to the disruption of Libyan output last month.
Prices have gone up 18% this year as unrest has swept across the Middle East. Elections in Nigeria later this month have many fearful of decreased output from that country, Africa's top crude producer.
Stream O&G reported the advancement of its Delvina Block gas exploration program Phase II with the award of the seismic tomography contract. This second phase of the seismic program is target oriented, focused on improving the definition of the three structures in preparation for drilling of the exploration wells. The additional seismic data will be integral to the successful execution of the Company's Plan of Exploration ("PoE") on the Delvina Block, accessing over 600 BCF of gas resources.
The field segment of the program will commence in May 2011, providing monitoring of the north, south and east structures adjacent to the existing producing Delvina field. The resulting information will be utilized to determine the location of the planned exploration well.
"Our exploration program at Delvina is moving forward as planned," said Dr. Sotirios Kapotas, President and CEO. "The Delvina gas field and Block offer significant growth potential for the Company, and is expected to provide new opportunities in a scarce gas environment. The production potential can be utilized in various ways to the benefit of Stream adding shareholder value."
Per the November 30, 2010 independent reserves report, the Delvina gas field and block were evaluated to hold approximately 616 BCF of gas initially-in-place (high estimates; AJM Petroleum Consultants). Future activities at Delvina are expected to result in the conversion of possible reserves into probable reserves, while the drilling of the first horizontal well is expected to convert probable into proved reserves and contingent resources into probable reserves. Drilling exploration wells in the adjacent structures is expected to convert prospective resources.
Stream plans to expand its existing gas market and is finalizing gas utilization plans which will support the Delvina development program timelines. A small power generation plant is expected to be installed in 2011 at the Delvina gas field. Plans are being finalized for a large scale power generation plant in support of the Company's full scale field and block development. These activities are expected to provide production for additional markets for power generation, oilfield enhanced oil recovery utilization and other industrial consumers.
KBR announced that its newly-established Middle East-based Engineering Company has been awarded an engineering and project management services contract by the Saudi Arabian Oil Company (Saudi Aramco) as part of its General Engineering Services Plus (GES+) initiative. The partners in this new Engineering Company, including Abdulhadi and Al-Moaibed Consulting Engineering Co. (AMCDE) and Kellogg, Brown and Root, were selected following a competitive bidding process. The GES+ contract period is for five years with options available for extensions.
The finalization of this contract qualifies the new Engineering Company to execute front-end engineering design (FEED), detailed design, material procurement, and project management services (PMS) to support Saudi Aramco's capital programs. The Company will be an independent standalone company operating exclusively in the Middle East, and will employ and train Saudi nationals.
"We are proud to sign this contract with Saudi Aramco under its GES+ Initiative and look forward to the successful execution of future projects," said Khaled Abu-Nasrah, President, KBR Middle East. "KBR's work in the Middle East is integral to the company's rich legacy and the award of this contract further solidifies KBR's commitment to the region and to our long-time client, Saudi Aramco."
The King Abdullah Financial District takes shape in the centre of Riyadh. Waseem Obaidi / Bloomberg News
Recent events in the Middle East have caused concern in some quarters about increased risks to Saudi Arabia's economic outlook.
While apprehensions in the region may dampen confidence in the next few months, Credit Suisse forecasts that Saudi Arabia will enjoy robust real GDP growth in the next two years.
Fuelled by surging oil prices, higher crude output and increases in government and consumer spending, Credit Suisse expects Saudi Arabia's real GDP to grow 5.7 per cent this year and 4.9 per cent next year.
After the impact of the Libyan turmoil on oil markets, crude prices surged towards US$120 a barrel, prompting Saudi Arabia to offer reassurances that it would step in to replace the loss of Libyan exports.
The rise in global oil prices and increased crude output will clearly benefit the Saudi economy. We see Saudi oil output posting large gains this year, with production rising 10.4 per cent to 9 million barrels per day (bpd).
Consequently, the oil sector will make a greater contribution to the kingdom's overall economic growth. According to our forecast, Saudi Arabia's oil GDP will grow 7.1 per cent this year and 4.6 per cent next year.
We also expect public sector spending to grow more strongly this year as authorities further boost social payments. The government's $36 billion (Dh132.22bn) social support package, announced in February, includes the first unemployment benefits, as well as investment in housing and extensions of salary increases for public sector workers.
Last month, King Abdullah announced another package of social spending, worth $133.32bn.
These packages complement the kingdom's ninth five-year development plan, a $385bn investment that targets key industrial and infrastructure projects such as the economic and industrial cities.
Moreover, development projects are aimed at drawing in private investment to fuel the expansion of non-crude activities to try to diversify away from oil, while also creating jobs to meet the needs of the kingdom's fast-growing young population.
This huge spending push by the Saudi Arabian government will further bolster activity in the non-oil sector of the economy. In our view, non-crude GDP growth will accelerate to 5.3 per cent this year and hold at nearly 5 per cent next year.
The kingdom's fiscal balance will be given a lift from surging crude prices. Based on an average Brent oil price assumption of $110 a barrel, our baseline forecast, we see government revenues leaping 47.9 per cent this year to 1.15 trillion riyals (Dh1.12tn), 53.2 per cent of GDP.
Based on our projection of an average crude output of 9 million bpd, we expect oil revenues to climb 51.5 per cent this year to 1.05tn riyals. We also expect non-oil revenues to increase by 17.7 per cent, given the pick-up in economic activity in the kingdom.
Robust revenue collections, particularly from oil, will help Saudi Arabia to offset the added burden of increased government spending from the social support packages and the continuation of the kingdom's five-year development plan.
According to our projection, government expenditure will grow 25.2 per cent this year to 811.1bn riyals (37.5 per cent of GDP).
Saudi Arabia is likely to tap its huge foreign-asset holdings to cover part of the near-term spending increases this year. Based on this, we forecast the fiscal surplus to increase to 339bn riyals. If oil prices average a higher $120 a barrel, this will result in a fiscal surplus of 410.8bn riyals.
We see Saudi Arabia's fiscal balance posting another large surplus next year of 276.8bn riyals, provided oil prices remain at $110 a barrel on average.
We see headline inflation edging up to an average annual rate of 6 per cent this year. Although annualised consumer price index inflation edged down for the third straight month in January, to 5.3 per cent, price pressures will continue, fuelled by higher prices for food and housing as well as a pickup in domestic demand.
The government's social support package is likely to add to inflation by bolstering demand. However, Saudi Arabian authorities are likely to implement subsidies and other price control measures if inflation begins to climb significantly higher.
In our view, monetary policy will remain accommodative to help the recovery gain further momentum and boost lending, with the Saudi Arabian Monetary Authority awaiting a cue from the US Federal Reserve before raising rates.
Berna Bayazitoglu is the head of macroeconomic research for emerging markets in eastern Europe, the Middle East and Africa at Credit Suisse, and Sergei Voloboev the director within the bank's emerging market economics research group
