The Romanian energy regulator (ANRE), controlled by left-wing ruling party PSD, has proposed to limit the property rights of energy assets owners, aiming to limit the exit from the local market of large foreign investors. Razvan Nicolescu a former Energy minister and current energy consultant at Deloitte gave his comments to Business Review regarding this decision.
A draft order by ANRE requires companies that have licenses in the production, distribution or supply of electricity and gas in Romania distribution to notify the local regulator about any intention to sell their assets or reduce the share capital by at least 5 percent 12 months before these decisions are put into practice.
The measure seems to mirror government’s worries regarding the exit of some big players from the local market, such as Czech group CEZ or Italy’s Enel.
Local experts warn that such a measure could have a severe impact on the energy market.
“The Romanian energy sector is about to follow the Venezuelan model, and this means entering a path of rapid self-destruction,” says Razvan Nicolescu, a former Energy minister and current energy consultant at Deloitte.
According to the expert, the draft bill violates the property right guaranteed by the Romanian Constitution.
“The principles of the right to property and that of the market economy are guaranteed by the Romanian Constitution and the Treaty on the functioning of the European Union. Tomorrow someone can tell me that I cannot sell, donate or inherit my car, land or apartment unless I announce it a few years in advance, limiting my right to dispose of my property,” Nicolescu warned.
The expert finds it “shocking” that a Romanian public institution could propose such a measure in 2019.
In effect, the two major gas producers in Romania – Romgaz and OMV Petrom – are being forced to sell gas at capped prices and pay extra taxes, while there is no regulation governing imported gas – meaning that such a measure hits local producers and favors gas imports from Russia.
Through OUG 114/2018, internal gas producers’ sale price to suppliers and heating plants was capped at RON 68/MWh for three years, while electricity prices were also regulated for household consumers.
And the effect was soon evident: in the first months of this year, Romania increased its reliance on Russian gas, as imports from Gazprom jumped, and at much higher prices, official data show.
The measure is also a consequence of the fact that the Romanian government has never managed to identify the energy-vulnerable consumers in order to subsidize only those who need protection from high prices.
Bulgaria’s Supreme Administrative Court said it has closed a case against a decision by the country’s anti-trust regulator to reinstate Saudi-led consortium Arkad as winner in a tender for construction of a leg of TurkStream gas pipeline – SeeNews reports.
The Supreme Administrative Court has dismissed the case as one of the participants in the consortium which filed the appeal, the Bulgarian branch of Luxembourg-registered Completions Development, has withdrawn its complaint against the regulator’s decision, the court said in a statement on Monday.
In order for the court to carry on with the legal proceedings, all participants in the consortium, which besides Completions Development comprises Italy’s Consorzio Varna 1, should agree on the complaint, the court explained.
The court’s decision can be challenged before a five-member bench of the Supreme Administrative Court within seven days.
Bulgarian gas transmission operator Bulgatransgaz named Arkad group as winner of its tender for construction of a 484 km pipeline for transit of gas from the border with Turkey to the border with Serbia but subsequently dropped its original choice and chose as winner the second-ranked consortium.The contracting authority said it had revised its decision because Arkad had failed to present the required documents and sign the contract.
In July Bulgaria’s competition regulator cancelled Bulgartransgaz’ decision to disqualify the original winner and said that the gas transmission operator had been unlawfully holding parallel talks with the Consorzio Varna 1 – Completions Development consortium after ranking the Arkad group first in the tender. Subsequently, the second-ranked consortium offered a price discount for the construction of the pipeline in violation of legal requirements, the regulator said at the time.
Arkad had proposed to build the pipeline for 1.29 billion euro ($1.42 billion) within 250 days, or for 1.10 billion euro within 615 days. The Consorzio Varna 1 – Completions Development group initially offered to build the pipeline for 2.41 billion euro and 1.60 billion euro, respectively, but subsequently lowered its offer for the 615-day period to 1.10 billion euro.
The court also backed the competition watchdog’s decision regarding the urgency of the tender procedure. Bulgartransgaz claimed that the procedure is of great importance for Bulgaria’s economy and therefore must not be halted but the regulator said those claims were unfounded.
At the end of January, Bulgartransgaz successfully completed the binding Phase 3 of the economic test for the pipeline project – part of a larger project of Russia’s Gazprom to build a string of its TurkStream pipeline for transit of gas to Europe from Turkey via Bulgaria, Serbia and Hungary.
The offshore section of the TurkStream pipeline stretching 930 km across the Black Sea from Russia to Turkey consists of two parallel strings with annual throughput capacity of 15.75 billion cubic metres of gas each. One string is intended for consumers in Turkey, while the second will carry gas to customers in Europe through Bulgaria.
On Sept. 11, Ukraine’s new energy minister Oleksiy Orzhel reversed the decision on tender for explore, extract and produce natural gas from part of Ukraine’s offshore shelf close to Romania. Tender winner Trident Acqusition willa ppeal to the court, both Ukrainian and international – Kyiv Post reports.
Western hedge-fund investors, mostly American, were ready to pump at least $200 million into the country’s substantial reserves of untapped gas under the Black Sea. A further $800 million could be raised if discoveries warranted it. On July 26, publicly-traded U.S. company Trident emerged the winner in a contentious tender to explore, extract and produce natural gas from part of Ukraine’s offshore shelf close to Romania.
But it was a short-lived victory. On Sept. 11, Ukraine’s new energy minister Oleksiy Orzhel reversed the decision, stating that the Production Sharing Agreements (PSA) for the gas rich offshore concession block were unfulfilled and that a new tender would take place.
“We cancelled the decision,” the minister said of the tender result, which has been criticized by some for having been carried out too quickly and not having been competitive enough.
Trident is located in New York, incorporated in the U.S. state of Delaware and has a subsidiary in Ukraine. The company is led by former Russian lawmaker, now a Ukrainian businessman, Ilya Ponomarev. He moved to Kyiv in 2014 after becoming the only Russian politician to publicly oppose the annexation of Crimea and was granted Ukrainian citizenship in May 2019.
“It is a pity that the new young reformers started their work with such a sad mistake,” Ponomarev said in a Sept. 15 statement. “It would be the largest American investment in Ukraine. We have worked for a long time to raise these funds, and this government decision means serious potential and real losses for us.”
Trdient Acqusition was ready to invest $200 million immediately and that major energy companies from Romania — GSP Offshore — and Ireland — San Leon Energy — were partnered, contracted and ready to start work. Trident could ultimately invest as much as $1 billion into natural gas extraction and production at the site known as Dolphin, raised from shareholders and investors if their discoveries warranted it, Ponomarev also said, warning that a cancellation of the tender decision could put all that at risk.
The tender initially awarded Trident 50-year rights to explore and extract from a 9,800 square kilometer gas rich offshore zone near the Romanian coastline.
Trident beat three other companies to secure the rights: Texas-registered Frontera Resources, the Caspian Drilling Company (CDC) from Azerbaijan, and Ukrnaftoburinnya, a large Ukrainian gas producer of which the controversial Ukrainian oligarchs Ihor Kolomoisky and Pavel Fuchs are the ultimate beneficiaries.
And Trident’s victory, while supported by many, was quickly opposed from some quarters. It was criticized by then Prime Minister Volodymyr Groysman, as well as the current head of the National Security and Defense Council, Oleksandr Danylyuk.
“The main problem of the competition was the artificially constrained time limits for analyzing the deposits and preparing bids. Serious companies won’t take part in such a competition” – Danylyuk said at the time, complaining that interested companies had only 60 days to submit a proposal.
On Aug. 1, Frontera Resources officially appealed the results of the tender in the Ukrainian courts.
“They are sending a signal to investors that the rules you make can be changed after the fact,” he said in a July interview with the Kyiv Post. “Secondly, they don’t take into consideration that all of our commitments so far have borne expense. Money was invested for a period of time. All of this costs something.” – commented Ilya Ponomarev
“Now our legal team will evaluate the position to appeal to the court, both Ukrainian and international. We definitely can’t just agree with this decision – it will be a violation of the rights of our shareholders,” Ponomarev stated on Sept. 15.
Microsoft launched two new cloud regions in the United Arab Emirates. It will accelerate digital transformation to help enable job creation, entrepreneurship, and economic growth across the Middle East, the company’s press office said.
New regions are Microsoft’s first in the Middle East. The new cloud regions in Abu Dhabi and Dubai join Microsoft’s global cloud infrastructure to provide organizations, enterprises, and developers in the UAE with access to cloud services while maintaining data residency, security and compliance needs. The new UAE locations will also deliver increased performance for Microsoft Cloud services to Middle East customers and partners.
“These new cloud regions in the UAE are the dawn of a new era, driving digital transformation, economic growth, and job creation. We are committed to empowering every person and every organization on the planet to achieve more. Now, more customers in the Middle East can move with confidence to the trusted and intelligent Microsoft Cloud. They will be more competitive as they start their digital transformation journeys – engaging customers, empowering employees, optimizing operations, and reinventing products and services,” said Sayed Hashish, Regional General Manager, Microsoft Gulf.
Microsoft Azure offers computing, networking, databases, analytics, artificial intelligence and Internet of Things (IoT) services. Office 365 offers cloud-based productivity solutions providing email, collaboration, conferencing, enterprise social networking and business intelligence. Dynamics 365 and Power Platform, offering the next generation of intelligent business applications and tools, are anticipated to be available from the cloud regions in the UAE by the end of 2019.
“To help meet the compliance needs of our customers, we have engaged very closely with the local authorities to ensure that our cloud services are compliant with relevant local standards and certifications, as well as the global and industry standards with which our services already comply. Microsoft would like to recognize the efforts made by the TRA, DESC, and ADDA to ensure an enabling environment for data centers and cloud services in the country,” said Hashish.
The International Data Corporation (IDC) predicts that cloud computing and the Microsoft ecosystem is set to bring more than half a million jobs to the Middle East, including Egypt, Saudi Arabia and the UAE between 2017 and 2022. The World Bank has reported that for every job created in technology, more than four jobs are created across all occupation and income groups.
A report by Honeywell indicates that 66% of CEOs in Saudi Arabia find Industrial Internet of Things (IIoT) technologies critical to business development.
The IIoT – UAE and Saudi Arabia Market Outlook study involved 250 senior executives from two countries.
51% of respondents in Saudi Arabia identified increasing the performance of operations a primary benefit of IIoT. Fifty percent of survey respondents identified time savings as the main advantage, and 38% of CEOs said that IIoT contributes to revenue growth.
“Our survey reflects a strong and growing, appetite to embrace digitalization across Saudi Arabia. Our customers are generating more data from increasingly connected operations, and are asking for technologies to aggregate this data and convert it into insights that drive profitability. Through the right combination of hardware, software, analytics, and cybersecurity, these companies are poised to realize the gains Industry 4.0 has to offer,” said president for Honeywell, High Growth Regions, Middle East, Russia, and Customs Union, Norm Gillsdorf.
Almost half of the Saudi companies are already to invest in IIoT: 40% of respondents say their companies are already investing either moderately or heavily in IIoT. 64% of executives said their companies would increase investments in IIoT.
A Honeywell report noted that respondents in Saudi Arabia identified the lack of digital culture and a shortage of qualified personnel as the main obstacles to implementing IIoT.
Honeywell added that the company would open a training and knowledge-sharing center for IIoT technologies in Riyadh. Last year, Honeywell launched two innovation and knowledge sharing centers in the UAE.
Digital transformation is no longer simply a future option for oil and gas companies. It is an urgent necessity, says Rob Howard, vice president, MENA, Aspen Technology in an interview for the Refining and Petrochemicals.
What are some of the key trends in asset optimisation that you think the industry should be paying more attention to? And why?
Improving asset reliability through predictive and prescriptive maintenance techniques is one of the key trends. These technologies have huge potential across the sector, offering a better alternative to the traditional calendar-based approach to asset maintenance.
With a predictive maintenance approach, the focus is on analysing issues known to cause a problem such as vibration in a pump, or compressor. Sonic monitors can be added to the device and when vibration exceeds a certain level, alerts can be sent to advise operators that remedial action is needed.
Prescriptive analytics adds a new layer of sophistication to the methodology, moving it from a product-based to a broader process-based approach. Critically too, the approach also tells operators the root cause of the problem. It can inform them not only that the compressor is going to fail but also that its impending failure is directly linked to the leakage of liquid into the gas lines at a certain concentration, or even just a slow change in the pressure recorded, for example.
Over the course of 2019, we expect interest and excitement around this approach to continue gathering pace. We also anticipate significant demand for these kinds of predictive and prescriptive analytics tools across our core markets during 2019.
Do you have any predictions for the refining and petrochemical sectors in the Middle East in 2019-2020?
The last two years have seen massive advancement in the desire and demand for true innovation and transformation in the region, adoption of emerging technologies is starting to happen at pace, and we are pleased to see the region advancing in this way. Supported and driven by government initiatives, we see growing demand for tools that drive asset performance management and that will be a key focus area for us during 2019/2020.
Across the oil and gas sector, the volume of connected data available to operators will continue to grow quickly. Much of this is being driven by the ongoing expansion of the Industrial Internet of Things (IIOT) market, which according to research firm, Markets and Markets, is expected to grow from $64bn in 2018 to $91.4bn by 2023, at a CAGR of 7.39% during that forecast period.
Coupled with this, we are seeing rapid growth in machine learning, making insights about plant and equipment available faster to senior decision-makers; and in mobility, visualisation and analytics, providing simple interfaces and insight to data and models.
What are some challenges facing the industry at the moment?
Digital transformation is no longer simply a future option for oil and gas companies. It is an urgent necessity. With competition fierce, capital more scrutinised, prices volatile and trade wars taking place, operators cannot afford to be ‘leaving money on the table’, or throwing it away by encountering delays in bringing assets online, or seeing unplanned downtime of all assets dig into profits.
Today, data is inexpensive to collect, richer in context, and, in fact, exploding in quantity. But executives often have access to less than 10% of this data as it is often too complicated to support agile decision-making. In parallel, teams are often telling the executive team they need to recruit scarce data-scientists to make sense of it all.
What impact do you see machine learning having on the industry?
By use of artificial intelligence, machine learning and multivariate analytics, further enabled by advances in computing speed and mobility, process companies can begin to address previously unsolvable issues, without turning themselves into technology experts.
They can start to generate deeper insights from data to drive digital transformation projects, to extend asset life; maximise return on capital employed and drive additional profit. The ability to detect patterns and opportunities across a business can save vast sums and create competitive advantage. Avoiding a compressor failure at a well site, gas pipeline, or oil refinery, through early detection and diagnosis, for example, can avoid downtime losses running into millions of dollars.
Oil and gas companies are increasingly looking to embrace digitalisation. But, in doing so, they face a problem. How do they prioritise the multitude of available/possible digital initiatives without reducing the chance of success? How do they distinguish between science projects and compelling initiatives? How do they take the best advantage of their current staff? In short, where do they begin?
While they should never try to do everything at once, that does not have to mean going after small problems, or profit opportunities. In implementing new digital technologies, businesses can be pragmatic around a significant problem that represents major value.
Borealis has begun construction of a propane dehydrogenation plant with a capacity of 750 thousand tons per year in the Belgian city of Callo, the company’s press service said.
The new enterprise will become one of the largest and most productive plants of its kind in the world. Investments in the project will amount to about 1 billion euros.
“Borealis’s investment in the new Kallo plant is not only the largest investment of the company in Europe, it is also the most significant investment in European petrochemicals over the past twenty years,” said Alfred Stern, CEO of the company.
Borealis plans to launch the plant in mid-2022. The company will supply propylene to the European market, where demand for olefins is growing, but its production is decreasing.
The plant will operate using Honeywell UOP’s Oleflex technology. The new production will create about hundreds of jobs.
Borealis is a leading global manufacturer of polyolefins, base chemicals and fertilizers. The company’s revenue in 2018 amounted to 8.3 billion euros, net profit – 906 million euros. UAE Investment Fund Mubadala Investment Company owns 64% of Borealis, 36% owned by Austrian OMV.