ArabianOilandGas.com's top 10 stories of 2009

The year 2009 has been a very interesting one for the oil and gas industry in the Middle East. After the giddy heights of US$147 dollar oil and the subsequent crash that occurred in 2008 this year has been all about consolidating assets and investing in the future for most of the big players in the hydrocarbons sector.

Since we launched ArabianOilandGas.com in February, we have tried to keep you all up to date with the latest news and events and this list contains the stories that proved to be the most popular with readers this year.

Looking at the list it is apparent that you like to be kept informed with the latest contract and tender news and that is certainly something you can expect more of in 2010. Our blog has also proved to be a hit and has hosted some excellent comment and analysis pieces contributed by our readers.

ArabianOilandGas.com would also like to extend a massive thank you to everyone who has supported the site and we would like to wish you all a very happy and prosperous 2010.

Saudi Aramco and Total award contracts on Satorp refinery

The US$10 billion Saudi Aramco Total Refining Co (Satorp) oil refinery at Jubail in the KSA will process Arabian Heavy crude and have a capacity of 400,000 barrels per day. It will also produce 700,000 metric tonnes per annum (mtpa) of paraxylene, 140,000 mtpa of benzene and 200,000 mtpa of polymer-grade propylene.

The project made the news in the summer after the joint venture partners met in Paris to try and trim $2 billion from the construction budget – from $12 billion to $10 billion. They did even better and announced a new budget of $9.6 billion shortly after the meeting.

In June the JV partners behond the project announced contracts worth an estimated $7 billion.

French engineering giant Technip won two packages worth an estimated total of $3 billion. The first, Package 2A, covers the conversion unit and is worth an estimated $1.7 billion, while the second, Package 5A, is worth an estimated $1.3 billion and covers the construction of offsites and utilities. Technip will share the second package with Taiwanese company CTCI.

Spanish contractor Tecnicas Reunidas has been awarded Package 1, which covers the distillation and hydrotreating and is worth an estimated $1.2 billion.

Other contracts awarded include: Daelim Industrial Company (South Korea) – Package 2B: sulphur (estimated $400 million), Samsung Engineering (South Korea) – Pakage 3: aromatics (estimated $650m), Samsung Engineering & Chiyoda Corporation (Japan) – Package 4: coker unit (estimated $850 million), SK Engineering & Construction (South Korea) – Package 5B: plant utilities (estimated $850 million).

GASCO awards $9.2bn contracts for IGD Project

The Integrated Gas Development (IGD) Project is a huge undertaking currently in development in Abu Dhabi. The scope of works is enormous and includes facilities being constructed both on and offshore in the emirate.

The IGD Project will be built at a new location in Habshan titled Habshan 5. The site will house four gas processing trains with a combined processing capacity of 2 billion standard cubic feet per day (scfd) of gas.

Of this, 1 billion scfd of gas will be transferred to the offshore oil field of Umm Shaif via Das Island and pumped into the field to increase production. The rest of the gas will be sold domestically in the UAE.

The IGD Project, will also provide a permanent link between offshore and on shore facilities of ADNOC and will provide operational flexibility for oil and gas production.

In July Abu Dhabi Gas Industries Ltd. (GASCO), awarded contracts worth a total of US$9.2 billion for engineering, procurement, construction and commissioning (EPC) works for the onshore section of the project to be built at Habshan and Ruwais in Abu Dhabi.

GASCO, a subsidiary of state-owned hydrocarbons giant Abu Dhabi National Oil Company (ADNOC) said that the four packages were awarded on a lump sum turn key basis and will cover the construction of a process plant, utilities and offsites, the Ruwais fourth natural gas liquids (NGL) train and Ruwais storage tanks.

A joint venture between the contractors JGC of Japan and Tecnimont of Italy were awarded the process plant contract which is worth a total of $4.7 billion.

The $1.7 billion offsites and utilities contract was awarded to Hyundai Engineering & Construction of South Korea.

Petrofac were awarded the $2.1 billion Ruwais fourth NGL train contract. The UK-based company will carry out the works in a joint venture with South Korean outfit GS Engineering.

The Ruwais storage tanks package was US company CBI and is worth a total of $530 million.

The completion dates for all works is the third quarter of 2013. GASCO said that the projects will create around 30,000 jobs at the peak of construction activities.

GE wins multi-billion Iraq turbine deal

This story proved to be a surprise hit on the website and still has the record for the highest amount of page views in a single day.

In August we reported that the US utilities giant General Electric (GE) won a multi-billion dollar contract to build 56 power generation units.

The Iraqi Minister of Electricity, Kareem Waheed said at the time that the award was made after the ministry abandoned the patching-up methods and embarked on an integrated strategy to overhaul power in Iraq.

Under the agreement, GE Energy is providing heavy-duty frame 9E multi-fuel gas turbines capable of supplying 7,000 megawatts (MW) of electricity.

The Government of Iraq plans to install the units at 10 key sites around the country to provide needed support for the electricity grid.

However there seems to be some discrepancy over the value of the contract. The initial agreement signed in December of last year valued the 56 gas turbine units at US$3 billion while the latest reports from Iraq value them at $7 billion.

ENOC tries (and fails) to buy Dragon Oil

Emirates National Oil Company’s (ENOC) attempted takeover of Dragon Oil ranks as the story that polarised your opinions the most during 2009. In fact no other story even came close to the amount of reader feedback each update received from readers around the world.

In November we reported that ENOC had agreed to fully acquire Dragon Oil in a US$1.15 billion deal. The offer was equivalent to the company paying $7.47 a share for the 48.5% stake in Dragon Oil it previously did not own.

However, the furious shareholder reaction to the deal surprised everyone and immediately put the deal in doubt. In an ArabianOilandGFas.com poll a massive 95% of readers considered ENOC’s bid to be too low.

Subsequently at a meeting in London in December the $7.47 a share offer failed to get approval from the required 75% of shareholder.

Previously the largest of the major shareholders Baillie Gifford, Noster Capital and Carmignc Gestion had announced they would be rejecting the offer. ENOC is now unable to sell its shares in the company until 2011.

The result will come as a blow to ENOC’s ambitions to become an integrated upstream and downstream oil company and means the company will not gain access to Dragon’s $1 billion cash pile

Aramco JV awards KBR contract at $10bn Yanbu

KBR had a good 2009 in Saudi Arabia picking up some major awards from the hydrocarbons giant Saudi Aramco.

In August the company announced that it had been awarded a contract, worth an undisclosed amount, to provide detailed engineering and procurement services for the utilities package and the interconnecting systems and pipe racks for the Saudi Aramco and ConocoPhillips joint venture, the 400,000 barrels per day (bpd) Yanbu Export Refinery Project in the KSA.

The award is an extension of KBR’s current project management contract (PMC) at Yanbu and follows the completion of front-end engineering and design (FEED) services KBR carried out at the project by the US-based oil and gas contractor.

Yanbu was delayed after ballooning costs, but it is believed that, due to the current lower prices for raw materials, the budget should come in at around US$10 billion.

The project is still undergoing the engineering, procurement and construction (EPC) tendering process for the final investment decision by the project sponsors. There are six main packages and a number of smaller packages that will be offered to local contractors.

Iraq Oil Auctions

It’s funny what a difference a few months can make in the oil and gas industry. In early July the first round of auctions for the development contracts of Iraq’s huge oil and gas reserves had just taken place with only one contract being awarded – the supergiant Rumaila field going to a BP-led consortium.

Most of the other supermajors involved in the bidding process has balked at the terms being offered by Iraq’s Oil Minister, Hussain al-Shahristani with some saying the live TV auction was like the “Eurovision Song Contest for oil companies”.

It wasn’t just the IOCs deriding Shahristani either. Calls for his resignation were also coming from within Iraq and he was called into parliament for questioning on several occasions.

In the face of extreme pressure Shahristani stood his ground and insisted that he would rather see the country develop its own oilfields than let any of them be given away on the cheap. His stance was accepted by the Iraq government and he lived to fight another day.

Fast-forward to December and the round of second oil auctions. The IOCs have had a few months to mull things over and all of a sudden the terms on offer are starting to look a little more attractive. The auction is a success and most of the major oilfields were snapped up companies including Shell,
Gazprom, Total CNPC and Lukoil.

Since the second auction the mood in Baghdad has been bullish to say the least and more than one official has made bold predictions about Iraq overtaking Saudi Arabia as the world’s largest supplier of oil. One step at a time guys.

One anomaly noticed by many was the curious lack of any American oil companies on the winning bidder list. All that blogosphere conspiracy theory talk of the US commandeering the Iraqi oilfields looks a tad daft now.

Petrofac wins US$350m gas contract in Oman

Petrofac has had a pretty incredible 2009 and stories regarding the UK-based oil and gas contractor have been very popular with readers throughout the year.

Petrofac’s popularity will come as no surprise to industry insiders due to it winning around $5 billion of work in the Middle east and North Africa (MENA) region this year.

In July Petrofac announced that it had been awarded a $350 million contract for the Kauther gas-field depletion-compression project in the Sultanate of Oman.

The company will undertake the engineering, procurement and construction (EPC) of the gas compression system, and associated facilities at the Kauther gas plant, in addition to undertaking the commissioning and six months of initial operations.

Samsung wins $1.2bn Algerian refinery contract

The Algerian state-owned energy company Sonatrach has had a busy 2009 and has pumped billions of dollars into its hydrocarbons infrastructure.

In May Sonatrach awarded a $1.28 billion EPC contract for the modernisation of its oil refining facility in Skikda, on the eastern coast of Algeria, to the South Korean firm Samsung Engineering and Construction.

The 36 month lump-sum contract involves the refurbishment of existing units and the installation of several new units including a benzene recovery plant and a paraxylene production facility.

The upgrades are part of Algeria’s plans to almost double national refinery capacity by 2014 where the facility in Skikda is expected to add another 1.6 million tonnes per annum (tpa) to its current output of 15 million tpa.

Other notable contract awards made in 2009 by Sonatrach includes Daewoo winning a contract to upgrade the refinery of Arzew on Algeria’s west coast,

Algeria’s current refining capacity is 21.7 million tpa. The country has also recently awarded a contract to Daewoo to upgrade the refinery of Arzew on Algeria’s west coast, Saipem and Petrojet winning a $1.4 billion contract for a gas pipeline and Petrofac winning a $2.2 billion award to carry out the EPC contract for the El Merk central processing facility (CPF) in the Berkine Basin.

Japanese consortium to develop Nassiriya field

The US$8 billion contract to develop Iraq’s Nassiriya oilfield must rank as the longest running saga of 2009.

In June we reported that a Japanese consortium led by Nippon Oil Corp and including Inpex Corp and JGC Corp had seen off some stiff competition from Italian supermajor Eni to seal the deal with the Iraq Oil Ministry.

The Nassiriya development contract, which was not part of the recent oil auctions in the Gulf state, involves the pushing production up to 150,000 barrels per day (bpd) within two years and subsequently raising that to 600,000 bpd. The contract also includes the construction of both refining and power-generating facilities

However, by November terms of the deal had still not been agreed by the two parties and this month it was reported that concerns over security had put the deal in jeopardy.

So still some work to do before the ink dries on this deal. Don’t bet against it appearing in the 2010 top 10 stories list.

Aramco sued for death of beauty queen camel

The story of a man who breeds camels that take part in beauty pageants sueing Saudi Aramco after one poor creature died must easily rank as the most bonkers story to appear on ArabianOilandGas.com in 2009.

In October we reported that Aramco are being sued for US$267,000 for allegedly causing the death of a female camel that had taken part in a beauty pageant in the KSA.

The attractive three year-old black camel died in tragic circumstances after she fell into a hole in the desert that the Saudi hydrocarbons giant had dug and filled with crude oil.

Her heartbroken owner, Abdullah Al-Saiari, had entered the animal into the Camel Beauty Contest, a hotly contested event that attracts camel breeders from all over the KSA to show off their most eye-catching beasts.

The case is currently being brought before the court in Saudi Arabia, but despite our best efforts, we have yet to find out the outcome of the case.