No go area: Gulf nations are delining to boost oil production because the global financial crisis has led to a slowdown in demand.
No go area: Gulf nations are delining to boost oil production because the global financial crisis has led to a slowdown in demand.

Gulf states throttle back on oil and step on gas



Gulf states are easing back on oil projects but pushing forward on gas as domestic demand upstages crude exports as the focus for energy investment. While oil export projects continue to fall victim to the global economic slowdown and subsequent weakening demand forecasts, the need for natural gas is surging due to rising populations and industrialisation. Already, Saudi Arabia and Kuwait have pushed back plans to boost production capacity from the Khafji oilfield in the Neutral Zone between the two countries. Late last month, the project operator Kuwaiti-Saudi Khafji Joint Operations said work to increase the field's output by 65,000 barrels per day (bpd) to 350,000 bpd would be completed in 2013, five years behind original plans.

Delays are also expected at projects to raise the production capacity of Abu Dhabi's Upper Zakum oilfield and Saudi Arabia's Berri and Qatif fields. Last week, the US oil firm ExxonMobil said in a study that a surge in costs, rig shortages and geological problems were likely to delay completion of the development plan for the Upper Zakum field - one of the world's biggest crude deposits - by about four years to 2015.

Upper Zakum is the only large oil project the UAE has opened up to foreign participation in recent years. In 2006, Abu Dhabi National Oil Company (ADNOC) and ExxonMobil formed a venture to develop the field. The publication of ExxonMobil's official study of Upper Zakum followed statements by the Minister of Energy, Mohammed bin Dha'en al Hamli, suggesting the UAE's long-term plan to boost production capacity by about one third to 3.5 million bpd had been extended to 2018 from the original target of 2011.

Meanwhile, Global Industries, a US oilfield contractor working on the Berri and Qatif fields, said both projects were losing money due to "continued productivity and logistical issues" that threatened their scheduled completion in next year's third quarter. On Saturday, Saudi Aramco, the world's biggest state-owned oil company, said falling crude prices might curtail investment needed to offset production declines from ageing Saudi fields. A senior company official said earlier in the week that Aramco might re-tender a contract to boost production from the Manifa oilfield, to take advantage of falling costs of steel and other building materials.

Any such action would delay the US$15 billion (Dh55bn) Manifa project, which was set to add 900,000 bpd of heavy crude from onshore and offshore Gulf fields from mid-2011. It would also anger contractors, who warned on Sunday that trying to force down contract prices could cause supply bottlenecks and even bankruptcies for some providers. During times of falling oil prices, most input costs for projects follow the drop in crude by several months, partly because orders for raw materials are based on earlier prices. That can leave both oil producers and oilfield services companies financially squeezed.

Crude prices have fallen about 56 per cent from their record peak of $147 a barrel in July. Nonetheless, Aramco still plans to complete several projects that would expand Saudi production capacity to 12.5 million bpd by next year, Khalid al Falih, the chief executive of the company, said on Sunday. On the other hand, Aramco's entire downstream oil development plan is under review. "The market in general is slowing at a fast pace. Therefore all refinery projects will be reviewed by investing companies," Mr Falih said. "It was difficult to get suitable offers for several projects by the end of this year."

Aramco and ConocoPhillips, a US oil company, said last week they would halt the bidding process for a 400,000 bpd export refinery planned for Saudi Arabia's Yanbu Industrial City. The companies said the project would be re-tendered in the second quarter of next year. There have been unconfirmed reports of delays to other refinery projects in Saudi Arabia, Kuwait and the UAE. But most Gulf gas projects seem to be moving ahead as planned, and some new projects have recently been announced.

The exception is Saudi Arabia's $10bn Karan offshore gas project, which Mr Falih said would be reviewed, along with the Manifa oil project. Still, some analysts viewed Mr Falih's appointment last week as Aramco's chief executive as a sign that the Supreme Council of Saudi Arabia planned a long-term strategic emphasis on gas development to help the kingdom resolve its worsening gas crunch. From 2000, Mr Falih served sequentially as the vice chairman of Aramco's gas ventures study team, its vice president of gas ventures development and its senior vice president of gas operations.

During a major oil industry exhibition and conference in Abu Dhabi last week, Adnoc signed a preliminary agreement with the Anglo-Dutch company Royal Dutch Shell to explore for deep gas deposits in the Gulf. At the same event, ConocoPhillips said it was moving ahead with its joint venture with Adnoc to develop Abu Dhabi's big Shah gasfield - a technically challenging project involving the production of deeply buried gas containing a high concentration of toxic hydrogen sulphide - and Shell said it was reviewing opportunities to deploy floating gas liquefaction technology in the UAE, Iraq and Egypt.

Shell recently signed a framework agreement for a project to capture and market about 700,000 cubic feet per day of gas that is now being burned at southern Iraqi oilfields. Like Saudi Arabia and most other Gulf states, the UAE is short of gas for power plants and industrial developments. Iraq, which is struggling to rebuild its ravaged energy infrastructure, has a desperate need for gas for electricity generation and oil refining.

@Email:tcarlisle@thenational.ae

Another way to earn air miles

In addition to the Emirates and Etihad programmes, there is the Air Miles Middle East card, which offers members the ability to choose any airline, has no black-out dates and no restrictions on seat availability. Air Miles is linked up to HSBC credit cards and can also be earned through retail partners such as Spinneys, Sharaf DG and The Toy Store.

An Emirates Dubai-London round-trip ticket costs 180,000 miles on the Air Miles website. But customers earn these ‘miles’ at a much faster rate than airline miles. Adidas offers two air miles per Dh1 spent. Air Miles has partnerships with websites as well, so booking.com and agoda.com offer three miles per Dh1 spent.

“If you use your HSBC credit card when shopping at our partners, you are able to earn Air Miles twice which will mean you can get that flight reward faster and for less spend,” says Paul Lacey, the managing director for Europe, Middle East and India for Aimia, which owns and operates Air Miles Middle East.

Dubai works towards better air quality by 2021

Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.

The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.

These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.

“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.

“We’re in a good position except for the cases that are out of our hands, such as sandstorms.

“Sandstorms are our main concern because the UAE is just a receiver.

“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”

Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.

There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.

“There are 25 stations in total,” Mr Al Daraji said.

“We added new technology and equipment used for the first time for the detection of heavy metals.

“A hundred parameters can be detected but we want to expand it to make sure that the data captured can allow a baseline study in some areas to ensure they are well positioned.”

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
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Price: From Dh1,849

'The Alchemist's Euphoria'

Artist: Kasabian
Label: Columbia
Rating: 3/5

Our legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

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Engine: 1.5-litre turbo

Power: 181hp

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The more serious side of specialty coffee

While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.

The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.

Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”

One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.

Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms. 

Herc's Adventures

Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5

Kill

Director: Nikhil Nagesh Bhat

Starring: Lakshya, Tanya Maniktala, Ashish Vidyarthi, Harsh Chhaya, Raghav Juyal

Rating: 4.5/5

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded