new base 566 special 23 march 2015

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NewBase 23 March 2015 - Issue No. 566 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

News in today’s issue ….

Greetings,

Attached FYI ( NewBase Special 23 March 2015 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In todays’ issue you will find news about:-

• Saudi oil official refutes conspiracy theory

• Qatar can consider establishing gas price benchmark, Expert says

• Pipe dreams? Turkey aims to be gas transit hub

• Angola sees oil output rising 10 pct this year to 1.84 mln bpd

• Oil prices drop after Saudi says won’t cut output alone

• Oil Reverses Last Week’s Gains as Saudi Arabia Pumps Near Record

• Saudi Power 2015 to address country’s growing power demand

As this daily news periodical is free for you, we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :- [email protected] or [email protected]

Best Regards.

Khaled Khaled Khaled Khaled Al AwadiAl AwadiAl AwadiAl Awadi Energy Consultant & NewBase Chairman - Senior Chief Editor MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME meme since 1995 Hawk Energy since 2010




Saudi oil official refutes conspiracy theory The National + NewBase

A leading Saudi Arabian oil official on Sunday refuted any accusations that his country was part of a politically motivated conspiracy to push oil prices lower. “There isn’t any political dimension in

what we do at the oil ministry,” Mohammed Al Madi, the Saudi representative on Opec’s board of governors, was quoted by Reuters as saying in Riyadh. “Our vision is commercial and economic.” Hassan Rouhani, the Iranian president and other senior officials, as well as politicians from other oil-producing countries, including Venezuelan and Russia, have accused Saudi Arabia and its allies in recent months of deliberately engineering last year’s oil price collapse to further political aims.

Iran and Russia are both subject to US-led international sanctions which have hurt their oil and gas sectors – the former for its treaty-breaking nuclear programme and the latter for its annexation of Crimea and military involvement in eastern Ukraine.

Saudi Arabia has maintained that its decision as Opec’s de facto leader to leave oil production unchanged last November, even as oil prices were collapsing, was simply aimed at defending market share against a surge in higher-cost production, particularly from the United States.

“We didn’t mean to hurt anybody,” Mr Al Madi said. “Our vision is simply the following: the producers which have low costs have to have the priority to produce, but those who have high costs have to wait for their turn to produce.”

Although Mr Al Madi denied it, the Saudi policy is widely thought to be aimed mainly at US production, where new technologies have resulted in so-called shale oil production surging by more than 4 million barrels per day since 2009, to levels not reached since the 1970s.

The Saudi policy seems to be slow to take effect. US shale oil, while more expensive to produce initially, is proving resilient to lower oil prices. Production has kept rising this year even though oil rigs in use have declined, as producers focus on getting more output from larger fields.

Last week, the US energy information agency reported that domestic crude oil inventories rose by 9.62 million barrels to a record 458.5 million barrels. As well as domestic production, US imports have been rising.

“As suspected, low [official selling prices] from Middle Eastern producers such as Saudi Arabia are also playing a part in higher imports, with Saudi [crude imports to the US] jumping by nearly 500,000 barrels per day to 1.1 million bpd [in the latest week], the highest in four months,” according to Energy Aspects, an independent energy analysis firm.

Worldwide, oil supply has been outstripping demand by about 1 million bpd for months, leading to higher inventories across the board, and the market is not expected to be back in balance until later in the year.

On Friday, the world benchmark North Sea Brent crude futures finished higher on the week for the first time in five weeks, gaining 65 cents to $55.32 on the week. It is down 52 per cent from last June’s high above $115 per barrel.




Qatar can consider establishing gas price benchmark, Expert says Gulf Times + NewBase

Qatar can consider establishing a benchmark for gas as “it is the leading producer and supplier with a history of steady supply” to established customers under long-term contracts, says George T Abed, senior counsellor and director (Africa & the Middle East) at the Institute of International

Finance. “I think there is some merit in Qatar considering a benchmark for its own gas. Then others (producers) will have to price their gas relative to that,” Abed said in an interview with Gulf Times here. While it is “possible to have benchmarks” for gas, Abed emphasised that “it won’t be easy, universal, or perhaps even useful” as in the case of benchmarks for oil markets. He said benchmarking gas would have been “simple”, if there were only two or three

sources supplying all the gas in the world. “The cost structure of the gas that goes into the final price is so different that it is very difficult to establish a clear benchmark in order for others to price gas around it. “Heavy investment is required to extract gas and deliver it. Basically, the gas market is made up of an oligopoly of suppliers, whereas oil is being extracted from a number of sources. And in market-based economies such as Canada, the US and other places, we have thousands of operators who can either undersell competitors or can deliver products at different prices… so it is a different market,” the Washington, DC-based Abed points out. Asked whether there was a glut in the gas market, Abed said, “Countries such as the US and Australia are developing their capabilities. Australia has already invested in LNG facilities…and at some point; US will become a major player in the liquefied natural gas market.” On whether the market will shift from term contracts to spot basis, Abed said, “It is difficult to say. Gas is not the same as that of oil. Oil is very transportable… liquid that can be loaded onto ships and taken anywhere. You can buy oil anywhere, in any port in the world…pretty much at the same price across the world. This is because the cost of transportation is minimal relative to the sale

price.” In the case of gas, Abed said, “The delivery system one has to build – whether it is LNG plants and ships, pipelines or liquefaction facilities… is enormous. And therefore, the ultimate price depends on how much you invest in the infrastructure to deliver gas. The ultimate price of the gas depends on all of that investment.” Qatar, Abed asserted, has already the “first mover” advantage in the global gas market. “Qatar has enormous reserves. Its cost structure is somewhat lower. It has established relationships in the market. And I think Qatar will remain a leading supplier of gas for quite some time,” said Abed, a former chairman of the Palestine Monetary

Authority and special adviser to the IMF managing director.




Pipe dreams? Turkey aims to be gas transit hub AFP + NewBase

Turkey has staked a claim to become a major transit hub with two new pipelines to pump gas from Azerbaijan and Russia to Europe, but boasting may prove easier than fulfilling the ambitious projects. Turkey and Azerbaijan last week started work on the new 1,850 kilometre (1,150 mile) overland Trans-Anatolian Natural Gas Pipeline (TANAP) which by 2018 aims to provide 10 billion cubic

metres of gas per year (bcma) to European consumers and 6 bcma to Turkish customers. At the same time Turkish and Russian officials are in intense negotiations to agree terms for a brand new Turkish Stream pipeline under the Black Sea. With the EU backing TANAP and Russia behind Turkish Stream, Turkey is now placed in a hugely strategic position in the intensifying rivalry between Brussels and Moscow over gas supply. Turkey's dream is to turn the region on the western side of the country bordering Greece and Bulgaria into a gas hub, where multiple pipelines will meet to pump gas to EU consumers. The EU-backed TANAP appears sure to be built, as finding returns on the $40-$45 billion investment in Azerbaijan's Shah Deniz 2 gas field depends on the pipeline. Turkish Stream however is a far less stable proposition. - 'Takes time' – Questions remain over whether Turkey has sufficient capacity to become a genuine gas hub, which requires far more than the building of pipeline infrastructure. "To be an energy hub there are a number of ingredients that are necessary, none of which exist as yet in Turkey," said Edward Chow, senior fellow at the Centre for Strategic and International Studies (CSIS). He pointed to the lack of a strong international banking system, a solid legal system to resolve




normal commercial disputes and sufficient storage facilities. "Turkey has the advantage of location, it's near a lot of oil and gas producing countries. Being a hub takes time," he said. The $10 billion TANAP project -- whose construction was launched by President Recep Tayyip Erdogan and his Azerbaijani counterpart Ilham Aliyev -- is firmly backed by the European Union which hopes it will help Europe reduce its dependence on Russian gas. But analysts say Turkey will need to ramp up its total capacity from the initial plan of 16 bcma for it to make any major impact on the EU's goal of diversifying supplies away from the Russia of President Vladimir Putin. "In the longer term if TANAP carries much more that will start to give it greater significance. That is something that will probably happen but will not be imminent," said Laurent Ruseckas, senior advisor in global gas at IHS Energy. - 'Hard to fathom' – The plan to build Turkish Stream was dramatically announced by Putin in December in Ankara, as a replacement for the South Stream pipeline and to bypass Ukraine. Putin blamed the EU for the collapse of the South Stream project, which was to have come ashore in Bulgaria. But Russia and Turkey, who already operate the undersea Blue Stream pipeline, have yet to agree a final accord on Turkish Stream. In exchange for agreeing to host the pipeline, Turkey secured from Russia a reduction on its own gas imports of 10.25 percent, a welcome concession for a country with slowing growth and pressured currency.




Angola sees oil output rising 10 pct this year to 1.84 mln bpd Reuters + NewBase

Angola expects oil output to average 1.84 million barrels per day (bpd) this year, up

10 percent from 1.67 million bpd in 2014, according a revised 2015 budget passed by parliament on Thursday, the state news agency said.

Angola's parliament voted heavily in favour of passing a revised 5.4 trillion kwanza ($51 billion) 2015 budget, cutting spending by 1.8 trillion kwanza from its original

plans due to a halving of oil prices since June last year. The revised budget figures are based on an oil price of $40 per barrel rather than the $81 previously forecast

and predicts a budget deficit of 7 percent of GDP.

Oil accounts for around half of Angola's GDP, 80 percent of tax revenues and 90 percent of export earnings.

Angola's state-oil company Sonangol laid out ambitious plans to increase oil production last month after what it called a 'very difficult' 2014 as cost cuts soared,

prices slumped and technical problems hit output. The OPEC-member has missed its oil production target of 2 million bpd for several years due to project delays and disappointing levels of investment as oil majors scaled back exploration projects due to the global economic downturn.

Chevron, Exxon Mobil, Total, BP and China's Sinopec are all major producers in Africa's second largest oil exporter.




Oil Price Drop Special Coverage

Oil prices drop after Saudi says won’t cut output alone Oil prices dropped around a percentage point in early Asian trade on Monday after Saudi Arabia

said over the weekend that it would not unilaterally cut its output to defend prices.

Since oil prices started to fall in June 2014, many analysts have expected Saudi Arabia, Opec's biggest producer, to curb its output. Yet Riyadh has so far opted to keep output stable in a move to defend market share against non-Opec producers like Russia and the United States, where production has soared as a result of the shale exploration boom. "We tried, we held meetings and we did not succeed because countries (outside Opec) were insisting that Opec carry the burden and we refuse that Opec bears the responsibility," Naimi said. "The production of Opec is 30 per cent of the market, 70 per cent from non-Opec ... everybody is supposed to participate if we want to improve prices," Saudi oil minister Ali al-Naimi said on Sunday. Benchmark Brent crude oil futures was trading at $54.79 a barrel at 0123 GMT, down 53 cents from their last settlement. US WTI crude was down 58 cents at $45.99 a barrel.




Oil Reverses Last Week’s Gains as Saudi Arabia Pumps Near Record Bloomberg + NewBase Oil fell in London, erasing most of last week’s gains as Saudi Arabia said it’s pumping crude near a record pace, bolstering speculation that a global glut will persist.

Futures dropped as much as 1.3 percent. Saudi Arabia is producing almost 10 million barrels a day, Oil Minister Ali al-Naimi said on Sunday, adding he was optimistic about the market. U.S. companies are preparing to boost drilling activity later this year and building a “war chest” of uncompleted wells, according to Goldman Sachs Group Inc.

Oil has lost 12 percent from this year’s peak in February as U.S. crude output and inventories rose to the highest levels in more than three decades. Prices are unlikely to return to $100 a barrel because a surge would draw higher-cost producers into the market, said Mohammed Al-Madi, Saudi Arabia’s governor to the Organization of Petroleum Exporting Countries.

“The supply story is still there,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone.

“The volatility suggests that the market is looking for a near-term low.”

Brent for May settlement slid as much as 70 cents to $54.62 a barrel on the London-based ICE Futures Europe exchange on Monday and was $54.89 at 1:09 p.m. Singapore time. The contract climbed 89 cents to $55.32 on Friday, capping a 1.2 percent gain for the week. The European benchmark crude traded at a premium of $8.88 to West Texas Intermediate, the U.S. marker grade.

Saudi Output

WTI for May delivery decreased as much as 70 cents, or 1.5 percent, to $45.87 a barrel in electronic trading on the New York Mercantile Exchange. The April contract expired on Friday after advancing $1.76 to $45.72. Total volume was about 46 percent below the 100-day average. Front-month prices are down 14 percent this year.

Saudi Arabia, the world’s biggest oil exporter, is able to meet demand from any customer, al-Naimi said at a conference in Riyadh. While global consumption is improving, there isn’t enough need to expand the nation’s production capacity beyond its current level of 12.5 million barrels a day, he said.

The kingdom pumped 9.85 million a day in February, increasing output for a second month, data compiled by Bloomberg showed. It’s the largest producer in OPEC, whose 12 members supply about 40 percent of the world’s crude.




Rig Count

Drillers in the U.S. further reduced the number of active machines seeking oil to the fewest since March 2011. The nation’s rig count shrank for a 15th week to 825, according to data from Baker Hughes Inc.

“The current rig decline can reverse given flexibility in bringing back rigs at a lower cost,” Goldman analysts including Damien Courvalin in New York said in an e-mailed report dated March 20. “The backlog of uncompleted wells is rising.”

U.S. oil production will fall “slightly sequentially” during the second and third quarters, Goldman predicted. Output growth by the fourth quarter may average 160,000 barrels a day, the bank said.

The U.S. pumped 9.42 million a day through March 13, the fastest pace in weekly Energy Information Administration records dating back to January 1983. Stockpiles rose to 458.5 million, the most since at least August 1982, according to the Energy Department’s statistical arm.

Hedge funds were the least bullish on WTI since 2012, cutting net-long positions by 12 percent in the week ended March 17, U.S. Commodity Futures Trading Commission data showed.




Saudi Power 2015 to address country’s growing power demand

The power consumption in the Kingdom of Saudi Arabia (KSA) continues to grow at a steady rate. Over the last decade, it has witnessed an average annual increase in demand for electricity, with a significant rise in the number of subscribers. In order to address the challenges faced by the country’s power industry, Riyadh Exhibitions Company (REC) is looking forward to contribute positively towards the development of this industry.

The Saudi Power is an annual international trade exhibition for electricity, power generation, alternative energy, water technology, and lighting. The current edition of the show will be hosted under the patronage of the Saudi Ministry of Water and Electricity from . For the 18th consecutive year, Saudi Power will help industry players to showcase products, services and technologies to a professional audience from the KSA and the wider Middle East.

Formerly known as Saudi Energy, the Saudi Power 2015 will serve as an ideal platform for leading international companies to network with government officials, buyers and developers; explore partnership opportunities with local companies; strengthen brand presence in the Saudi market; and gain access to the Middle East to identify opportunities for collaboration and promote their latest technological creations and innovations. The show will showcase the latest trends and cutting-edge products, equipment, solutions, and services in the power industry.

The Saudi Aircon exhibition, a dedicated platform for air conditioning, heating, ventilation and refrigeration products and service, will be held consecutively with the Saudi Power.

The Saudi Power attracts hundreds of local and international organizations and more than 3,200 unique visitors worldwide annually, earning it the reputation as the KSA’s leading power event. Representatives from government agencies, power production, construction and development, and other major industrial companies as well as factory operators, service providers, and distributors and retailers participate in the annual show.

May 11 to 13, 2015 , Riyadh , KSA




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile : +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 23 March 2015 K. Al Awadi




11 March 2015 K. Al Awadi

new base 566 special 23 march 2015

Economy & Finance