new base energy news issue 925 dated 08 september 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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NewBase Energy News 08 September 2016 - Issue No. 925 Edited & Produced by: Khaled Al Awadi

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

UAE:Mubadala chief signals more oil deals as Ipic merger advances Bloomberg + The national

Mubadala Development Company, the Abu Dhabi sovereign wealth fund merging with International Petroleum Investment Co (Ipic), said potential energy deals are more attractive after the slump in oil prices drove down asset prices.

"For someone who takes a long-term view, it’s an attractive time to invest in the industry," the Mubadala chief executive Khaldoon Mubarak said. "We as Mubadala are players in this industry. We will continue to invest in this industry, particularly in such a time where we find valuations at a low and attractive range."

Abu Dhabi, the holder of about 6 per cent of global oil reserves, is cutting spending, tapping reserves and driving mergers at its state-owned companies as it confronts the halving in oil prices over the past two years. The deal with Ipic is set to create a global energy business that pumps more crude than Libya and would have total assets greater than ConocoPhillips, combining production operations at Mubadala with Ipic’s focus on refining and distribution.

After Saudi Arabia and Russia pledged on Monday to cooperate to stabilise global markets – without announcing any specific measures to bolster prices – Mr Mubarak said he was seeking signs of better supply and demand equilibrium in the global oil industry. A proposal to freeze output was derailed in April over Saudi Arabia’s insistence that Iran participate in any accord.

"I hope the industry continues to correct itself, to get to a balance in which the pricing allows growth in the industry and continues investments," he said. "There’s been a correction and the correction is running through its course. At some point, we will have to start seeing an improvement in the balance between supply and demand."

The global benchmark Brent crude has tumbled more than 55 per cent from a 2014 high of US$115.71 a barrel as Opec has boosted output to a record level to defend its market share against higher-cost suppliers, including US shale drillers. Brent was trading at more than $46 a barrel on Tuesday in London.




Abu Dhabi surprised investors in June when it announced plans to merge Mubadala with Ipic and create a Middle East investing heavyweight with $125 billion of assets, just weeks after announcing that it would combine lenders National Bank of Abu Dhabi PJSC and First Gulf Bank PJSC.

The new fund will continue to invest in core Mubadala areas of energy, metals, technology, real estate, infrastructure, health care and aerospace, while expanding into new ones as part of plans to help diversify Abu Dhabi’s economy, Mr Mubarak said.

"This story is not just about efficiency and diversification," Mr Mubarak, said, referring to the merger. "It’s also about growth, creating an industrial and investment powerhouse that has every intention to keep growing. This will be one of the largest mergers in business, but also with the ability to scale up."

Mubadala and Ipic are working to complete the merger by the fourth quarter of this year or the first quarter of next, he said, declining to name the banks or consultancies working on the transaction. Mr Mubarak – also the chairman of the Abu Dhabi Executive Affairs Authority, which provides strategic policy advice to the emirate – said the fund’s focus before the deal has been to navigate the global economic turbulence caused by China’s slowdown, slumping commodities and the UK’s decision to quit the European Union.

Asset sales will not be affected by the merger and "will happen in the natural course of business," Mr Mubarak said. The fund is selling its stake in SR Technics, a Swiss aircraft-maintenance service provider, to China’s HNA Aviation Group.

While stopping short of predicting further mergers in Abu Dhabi – analysts have suggested a possible combination between Abu Dhabi Commercial Bank and Union National Bank or more deals in the energy industry – Mr Mubarak said the emirate has blazed a trail of consolidation and that more deals could follow.

"The trend is clear," he said. "What I can say is this has happened and it’s been happening over the years and it’s been consistent. The more benefits and successes these mergers show, that encourages other companies and sectors to do the same."




Kuwait KPC to keep Investing in increasing oil productions Oil and Gas News

The company has been seeking to enlist foreign expertise to help it expand and maintain domestic oil production levels, even as it prepares for a longer period of lower oil prices

The Kuwait Petroleum Corporation (KPC) is expected to invest up to $100 billion over the coming five years to achieve the strategic directions of the oil sector until 2030, CEO Nizar Al Adsani says.

'We anticipate an expenditure of $100 billion over the next five years to achieve this target, half of which is already committed to specific identified projects,' Al Adsani says.

KPC has signed a Memorandum of Understanding (MoU) with K-sure and Koexim, the Korean Credit

Agencies, for a total of $ 11 billion to finance the upstream, downstream, petrochemicals and transportation projects of KPC and its subsidiaries, Al Adsani says. 'KPC also is studying other means of financing such as bonds, sukuk, project bonds and this will open up the possibility of KPC being rated by the major international credit agencies,' he adds.

Meanwhile, Al Adsani notes that 'low oil prices have been a prominent feature of the market since the second half of 2014, and could stay lower for longer; posing challenge to our industry, but providing an opportunity to structural reforms, to achieve long-term benefits for countries.'

He points to forecasts that global exploration and production (upstream) spending would fall from about $850 billion in 2014, by more than 20 per cent, in 2015, while the level in 2014 over 2013 had increased by 3 per cent. It will take time, probably two years for these changes to have an effect on future supplies. Global upstream spending is expected to decline by 18 per cent in 2016.

This would be the first time since 1986, that consecutive declines in spending were recorded, he says. It is a common sense that mature producing fields globally have an average decline rate of around 5 per cent, while world oil demand will continue to expand at a range of 1-1.5 million barrels per day (mbpd) annually, which means that the world markets would need some 5-6 million barrels per day of new crude annually, the CEO notes.

This shows the importance of continuity of investments in the upstream globally for the sake of stable markets, and to avoid volatility as well as spikes in oil prices. Producers of crude oil have financial surpluses and tend to redistribute income via investment.

The scale of the global effect is significant, he says. That boost is then amplified if it generates a subsequent lift in confidence, encouraging companies to invest and spend. 'We, at Kuwait Petroleum Corporation recognise that it is also a great risk if we do not make investments,' Al Adsani states.

Meanwhile, Kuwait has selected the winners of three major upstream deals that are crucial to the Opec member’s long-standing ambition to raise oil production capacity to 4 mbpd by 2020, from about 3.2 mbpd at present.




A senior Kuwaiti industry source says that a 'decision was made' on the award of all three enhanced technical services agreements (ETSAs), for which international oil companies (IOCs) BP, Royal Dutch Shell and Total had submitted their final bids in February.

The official declines to identify the winners; IOCs were given the option to bid for one or more of the contracts.

The five-year service agreements, extendable by one year, cover work at the Greater Burgan onshore oil field, a water management program at several onshore fields, and the Lower Fars heavy oil development at the Ratqa field in northern Kuwait.

KPC has been seeking to enlist foreign expertise to help it expand and maintain domestic oil production levels, even as it prepares for a longer period of lower oil prices. While the exact value of the deals isn’t clear at this point, it is expected to run in the 'hundreds of millions of dollars,' a Kuwaiti official says.

IOCs are also set to help KPC lower operating costs under the ETSAs, which offer them a rare opportunity to become involved in the Gulf Arab state’s upstream sector. The awards also come at a time when IOCs are making their own cost cuts, shedding thousands of jobs and canceling or delaying investment decisions on capital-intensive projects.

The ETSAs will have a similar structure to a deal signed between KPC upstream subsidiary Kuwait Oil Co (KOC) and Shell in 2010, which involved payment of a variable fee for work carried out at the Jurassic deep gas reserves scheme, which will also produce significant volumes of liquids. Under the five-year contract, Shell was to be paid about $800 million but Kuwaiti officials estimated the company would only get around $450 million based on actual work completed.

Shell’s Jurassic ETSA was earlier this year extended for the second time by 12 months until March 31, 2017. The deal was originally due to be extended by another five years upon expiry but got caught up in a drawn-out parliamentary investigation and was subsequently extended by only one year. The contract is set to be re-tendered once it expires.

Kuwait has been in talks to sign ETSAs -- improved versions of the original technical service agreements on offer -- to get more IOCs involved in its upstream since 2009, but apart from the Shell deal, no others had been concluded. Attempts failed in part because Kuwait’s parliament has been critical of foreign investment in its oil industry.

While the ETSAs are pivotal to Kuwait reaching its 4 mbpd target, the country will also need to see production from the Neutral Zone shared with neighbor Saudi Arabia come back on line to hit that level. Neutral Zone output has been affected by a political dispute between the two countries over the 400,000 bpd producing fields in the area.

KPC’s crude oil production hits nearly 3 mbpd while exports are at 2.1 mbpd, KPC’s managing director for International Marketing Nabil Bouresli says.

Bouresli says 80 per cent of Kuwaiti crude and oil products were sold to the eastern hemisphere, 15 per cent to the western hemisphere and 5 per cent to Africa. Bouresli says that Kuwait planned




to increase its crude oil production by 150,000 bpd in the third quarter of 2016, taking total output to 3.15 mbpd. Kuwait plans to increase its crude oil production capacity to 4 mbpd by 2020.

Kuwait has also inked a $2.93 billion contract with three South Korean firms for the construction of the largest Liquefied Natural Gas (LNG) import facility in the country. The project, to be built at the Al-Zour refinery near the border with Saudi Arabia, was awarded to Hyundai Engineering Co, Hyundai Engineering & Construction Co and Korea Gas Corporation.

CEO of national refiner Kuwait National Petroleum Co Mohammad Al-Mutairi, who signed the contract, says the project is slated to be completed in the first quarter of 2021. Opec member Kuwait is rich with crude oil but its natural gas production is too small to meet its needs. Every year it imports large LNG quantities to supply power plants, especially during the summer, and for use in the petrochemicals industry.

The facility will be part of a huge complex being built in Al-Zour, south of Kuwait City, which will also house a state-of-the-art 615,000 barrel-per-day refinery and a petrochemicals plant. Mutairi says the cost of the complex is expected to reach $30 billion.

In October, Kuwait awarded contracts worth $13.2 billion to 10 international firms to build the refinery, which is set to come on stream in late 2019. In 2014, the emirate gave out contracts for a $12 billion project to upgrade two of its three existing refineries. Kuwait sits on 101.5 billion barrels of crude reserves-equivalent to around 7.0 per cent of the world’s proven reserves,

according to the latest Opec figures-and pumps around 3.0 million barrels per day.

In another development, BP and Kuwait Petroleum Corporation (KPC) have signed a framework agreement to explore possible joint opportunities for investment and cooperation in future oil, gas, trading and petrochemicals ventures. Al Adsani signed the agreement with BP CEO Bob Dudley. The framework paves the way for both companies to jointly invest and cooperate in oil and gas projects in Kuwait and globally.

BPs commitment to Kuwait dates back to our participation in the discovery of the giant Burgan oil field in the 1930s and we are there today extending the life of the field, Dudley says. 'We look forward to working with KPC to help the people of Kuwait realize the full potential of their nation’s oil and gas resources and exploring new opportunities globally,' he says.




In addition to enhancing oil and gas recovery from Kuwait’s existing resource base, the agreement also includes the intention to study opportunities for joint investment in future oil and gas exploration both inside Kuwait and globally.

Other elements of the agreement cover possible future oil and gas trading deals including LNG trading and related ventures. Opportunities for cooperation and investment in midstream and petrochemical projects globally will also be considered under the agreement, including potentially deploying BPs proprietary paraxylene technology as part of KPCs petrochemicals projects.

Meanwhile, KPC has met with several of its subsidiary firms to discuss plans to pare back salaries and cut expenses as the state oil company grapples with the low price of crude.

Among the measures being considered are lay-offs and the suspension of bonuses, as well as a move to hire expats on a contractual basis in order to reduce the cost of their salaries and associated costs, such as medical, travel and housing expenses.

Other changes include cutting back on flight costs and travel allowances for senior officials. Sources told local media that the plans could save up to $630 million a year. KPC had met with officials from Kuwait National Petroleum Company (KNPC), Kuwait Oil Company (KOC) and Petrochemical Industry Company (PIC) to discuss the changes.

However, sources also say that oil sector employees have refused the measures, saying they had been guaranteed the privileges by law and the treaties stipulated in KPC’s subsidiary companies’ charts.

Al Adsani says the financial reforms will allow the private sector and Kuwaiti citizens to play larger roles in bidding for and co-owning oil service activities. He says a dedicated plan was being prepared to launch and privatise 42 petrol stations, despite the rationalisation initiatives covering both citizens and expat employees.

KPC is a state-owned integrated energy company, that has operations throughout oil and gas value chain including, exploration, production, development, refining and marketing, and transportation business activities related to petroleum products. Its significant focus on research and technology has enhanced its business operations.

Moreover, its supply agreements with Ethiopian Petroleum Enterprise (EPE) and Pakistan State Oil Company (PSO) coupled with prospects in northsea would enhance its operations further. However, volatility in oil and gas prices, rising capital cost and exploration and development risks would affect its operations.

The company has a significant focus on research and technology. KPC’s research and development centres include GC-01 Kuwait Integrated Digital Field (KwIDF) project in South and East Kuwait; Burgan Collaboration Centre; and Q8 Research & Technology Centre located in the Netherlands.

The company takes up various research and development projects, including a project in cooperation with the Kuwait Institute for Scientific Research (KISR), for service on the evaluation and combating the growth of microbes at fuel storage warehouses in Ahmadi and Shuaiba refineries; and a project regarding an environment-friendly catalysts used for industrial gas flaring about Kuwait University.

The company has a research and technology roadmap for 2030 being implemented. They completed a study to meet the requirements of the Kuwaiti oil sector on developing solar energy




technology. The company’s significant focus on research and technology has enhanced its position in the competitive market.

The company’s presence in various countries where there is a demand for its products helps it expand its business further and increase its revenues. The company operates in various locations including, Kuwait, Pakistan, India, the US, China, Japan, Singapore and the UK.

The operations of the company are strategically located either near the raw material or an important market for the product. The company operates in the US through its office in Houston, Texas, which is known as oil capital of the world, and in emerging economies like India and China, where the demand for oil is more. The global presence of the company gives it a strategic advantage over its competitors.

KPC is one of the world’s largest integrated oil companies. The company operates through its subsidiaries in all aspects of the hydrocarbon industry, such as, onshore and offshore upstream exploration, production and refining, marketing, retailing, petrochemicals, and marine transportation.

KPC’s domestic upstream operations are carried out by its subsidiaries Kuwait Oil Company (KOC) and Kuwait Gulf Oil Company. Its subsidiary Kuwait Foreign Petroleum Exploration Company (Kufpec) carries out upstream exploration and production activities in regions outside Kuwait.

The company’s domestic downstream operations includes, refining, gas liquefaction, chemicals and fertilisers, petrochemicals, marine transport and aviation fueling. Its domestic refinery operation is carried out by Kuwait National Petroleum Company (KNPC), which has three integrated refineries. Petrochemical Industry Company, a subsidiary of KPC, operates the domestic petrochemical complex.

Kuwait Oil Tanker Company operates KPC’s marine transport segment and Kuwait Aviation Fuelling Company operates its aviation fueling segment. Its international downstream operations include, crude oil refining, petrochemicals and international marketing. Kuwait Petroleum International, its international subsidiary operates the international refinery business.

Oil Services Company, provides support services to its operations such as fire, security and consultancy. Oil Development Company oversees and regulates the development of the northern oilfields, known as Project Kuwait. The company’s integrated business operations have enabled the company to optimize its operations.

KPC’s operations could get affected with the leakage at its subsidiaries’ operational sites. In March 2015, the company‘s subsidiary reported leak in a water treatment unit tank at its Mina Abdullah refinery. The company initiates anti-leak plan immediately after discovering the leakage. KOC’s operating equipment were used for containing the leaks. Such leaks and operational issues could affect the company’s operations.

KPC could further strengthen its operations with the new growth initiatives by its subsidiaries. In October 2014, Kufpec signed a Memorandum of Understanding (MoU) with PMI Comercio International (PMI), one of the international group of companies of Petrleos Mexicanos (Pemex).

The agreement includes cooperation between the two companies in the evaluation and pursuit of mutual business opportunities in the field of new investments for the exploration and production of oil and gas in Mexico and worldwide.

In August 2014, the company signed a $2 billion crude oil supply contract with Petron Singapore Trading Limited, a subsidiary of Petron.




Egypt: Kuwait Energy commences production from Al-Jahraa SE-1X well in Egypt ..Source: Kuwait Energy

Kuwait Energy has announced the commencement of production from the Al-Jahraa SE-1X exploration well in the Abu Sennan concession located in the Western Desert, Egypt.

Discovered on 27 July 2016, Kuwait Energy obtained the development lease from the Egyptian Petroleum Corporation (EGPC) for Al-Jahraa SE-1X on 24 August 2016 and commenced production on 25 August 2016 at an initial rate of 460barrels of oil per day (bopd) from the Abu Roash E (AR-E) formation.

The well is producing at a 2” inch choke size and production has stabilized to a daily average rate of 410 bopd.

Sara Akbar, CEO of Kuwait Energy, said:

'I am delighted to announce we have begun production from the Al-Jahraa SE-1X well after making the discovery earlier this year. This is another milestone highlighting Kuwait Energy’s exploration, development and execution capabilities adding value to the asset. We could not have achieved this without the unparalleled support of the EGPC and our partners.'

Kuwait Energy holds a 50% revenue interest and is the operator of the Abu Sennan concession development lease, whileDover Investments holds 28% and Rockhopper Explorationholds 22%.




U.S. advances oil reserve revamp plan, potential crude sale Reuters

The Obama administration has sent Congress a plan to modernize the country's emergency oil reserve, a step that could set in motion a sale of about 8 million barrels from the stash later this year to help pay for the revamp, the Energy Department said on Wednesday.

Under the $1.5-$2 billion revamp plan, three dedicated marine terminals would be added to the Strategic Petroleum (SPR), a string of 60 heavily-guarded underground caverns on the Texas and Louisiana coasts.

Also, aging equipment for oil processing, firefighting and security would be fixed or replaced at the SPR, which was last updated in the late 1990s. "This equipment today is near, at, or beyond the end of its design life," the plan said.

Congress created the SPR in 1975, after the Arab oil embargo spiked oil prices and spurred shortage panics. It now holds 695 million barrels of crude, the amount the country burns in about five weeks. It is the world's largest government-owned emergency oil reserve.

Besides equipment corrosion from salt air breezes and heavy downpours, this decade's U.S. oil boom has also been hard on the ability of the reserve to speed oil to markets in the event of a disruption. Production hikes in Texas and the central United States have congested pipeline systems, making it difficult for the SPR to release crude without shutting in domestic output.

If left unaddressed, the problems could hurt the country's ability to quickly meet international obligations to ship oil in the event of a major global supply crisis, according to the Energy Department review.

Congress would need to approve a series of oil sales worth $2 billion from fiscal 2017 to 2020 to pay for the modernization. Those would be in addition to the 124 million barrels in SPR sales from 2018 to 2025 Congress recently authorized to pay for highway projects and balance the budget.

The Obama administration is eager to start fixing the reserve after a roof collapsed at a tank in 2015 and a water pipe burst this year. In

April, President Barack Obama requested from Congress $375 million in sales, more than 8 million barrels at current prices, in fiscal 2017 to pay for the modernization.

Congress could approve that initial sale in a spending or energy bill later this year. Senator Lisa Murkowski, a Republican and the head of the energy committee, has said she wants to see the plan before supporting any sales.




US: Vehicle efficiency spurs premium gasoline sales Gulf Times + NewBase

Pressure to improve vehicle fuel efficiency is driving an increase in the sales of premium gasoline and boosting demand for high-octane blending components in the United States. Premium grade accounted for more than 1mn barrels per day, around 11.7%, of all gasoline sold in the United States in June, according to the US Energy Information Administration.

Premium sales have risen steadily from a low of just 680,000 bpd, a share of just 7.6%, when gasoline prices were peaking in June 2008. In the 1980s and 1990s, the ratio of premium to

regular grade sales was correlated with the rise and fall in oil and gasoline prices.

Consumers tended to fill their tanks with premium gasoline when oil prices were low in the hope of achieving an improvement in engine performance but switch to cheaper regular grade when oil prices rose. The pattern continued despite repeated warnings from the federal government that using premium grade would not improve the performance of engines designed to run on regular grade.

The quadrupling of retail gasoline prices between 1999 and 2008 largely killed consumer interest in

premium gasoline. Premium grade’s share of all gasoline sales fell from 20% to less than 8%. Since 2008, there has been a gradual increase in premium grade sales again, this time driven by increasing sales of more fuel-efficient vehicles designed to operate with premium fuels.

One of the most popular ways for car manufacturers to meet demands from consumers and regulators for improvements in fuel economy has been to introduce smaller engines with turbochargers.

Downsized turbocharged engines achieve greater efficiency by operating at greater cylinder pressures (and new generations of engines will likely operate at even higher compression ratios). The percentage of new light-duty gasoline vehicles sold with turbocharged engines has climbed from just 3.3% in the 2009 model year to 17.6% in the 2014 model year.

In 2015, the National Research Council found turbocharged engines had been installed in nearly half of all Ford’s popular F-150 light trucks. Ford replaced larger V8 engines with smaller but equally powerful and more fuel-efficient turbocharged 3.5 litre V6 engines (“Cost, effectiveness and deployment of fuel economy technologies”, NRC, 2015).

By 2025, more than 80% of all new gasoline vehicles sold in the United States will include turbocharged engines, according to the Energy Information Administration.

But to prevent fuel detonation (“knocking”) engines with higher compression ratios need to run on fuels with a higher octane rating. Premium grade gasoline has a posted octane rating or anti-knock index of 91 while the index for regular grade is just 87.




NewBase 08 September 2016 Khaled Al Awadi

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

Oil extends gains after data shows huge stock draw Reuters + NewBase

Oil prices extended gains by more than 1.5 percent on Thursday after industry data showed what might be the largest weekly crude stock draw in over three decades.

U.S. crude stocks surprisingly plunged 12.1 million barrels last week, data from the American Petroleum Institute showed after the market settlement on Wednesday, compared with expectations for an increase of around 200,000 barrels.

If official data released from the U.S. government later on Thursday confirms the draw, it would be the largest one-week decline since April 1985. The U.S. Energy Information Administration is set to release its inventory report at 11 a.m. EDT (1500 GMT).

London Brent crude for November delivery was up 74 cents at $48.72 a barrel by 0022 GMT, after settling up 72 cents on Wednesday. NYMEX crude for October delivery was up 84 cents at $46.34, after settling up 67 cents on Wednesday.

Japan's economy grew at a 0.7 percent annualized rate in the April-June quarter, revised up from a preliminary reading of a 0.2 percent expansion, Cabinet Office data showed on Thursday.

Oil hit a one-week high on Monday after Russia and Saudi Arabia agreed to cooperate on stabilizing the oil market. Prices have since fallen due to uncertainty over a possible deal by producer nations to freeze output, particularly after a meeting in Doha in April ended without such an agreement.

The Organization of the Petroleum Exporting Countries and non-OPEC producers such as Russia are expected to discuss the issue at informal talks in Algeria on Sept. 26-28.

Oil price special

coverage




U.S. Oil Output Drop Gets a Bit Less Drastic as Rigs Return Bloomberg - Mark Shenk

The Energy Information Administration boosted its domestic output forecast for this year to 8.77 million barrels a day, up half a percentage point from its estimate last month, as some drilling rigs return to work and productivity from existing wells increases. It also raised its estimate for 2017 to 8.51 million, up 200,000 barrels a day from last month’s Short-Term Energy Outlook.

The slower pace of oil declines, from the 44-year high of 9.42 million barrels a day last year, comes after West Texas Intermediate crude climbed more than 50 percent from a 12-year low in February. Producers boosted the number of rigs seeking oil in 12 of the past 14 weeks, according to Baker Hughes Inc. data.

“Since June the rig count has been coming back,” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “Forecasts are being adjusted to take that into account.”

World demand will average 97.78 million barrels a day in 2017, a 20,000 barrel reduction from last month. World production will average 96.79 million barrels a day in 2017, which is up 200,000 barrels from the August projection.

WTI crude will average $41.92 a barrel in 2016 versus the August projection of $41.16, according to the report. Prices will average $50.58 in 2017.

Trending Higher

Brent crude, the benchmark for more than half the world’s oil, is projected to average $42.54 this year, a gain from the prior estimate of $41.60. Prices will average $51.58 in 2017, unchanged from the August report.




“Drawdowns in global oil inventories are expected to start in mid-2017, which will contribute to higher oil prices in the second quarter of next year,” EIA Administrator Adam Sieminski said in an e-mailed statement.

The average retail price for regular-grade gasoline this summer is forecast at $2.22 per gallon, up 3 cents from August’s estimate. Prices averaged $2.63 during the 2015 summer driving season.

“Gasoline retail prices are down this year because of a combination of modest crude oil prices and abundant supplies of gasoline from high levels of refinery production,” Sieminski said. “U.S. retail gasoline prices are expected to continue falling through the end of 2016, even though gasoline demand this year is expected to be the highest ever.”

It’s How Saudis Cope With Oil Below $50 That Spurs Stocks: Chart

Stock investors are more interested in how the world’s biggest crude exporter is handling its finances with oil below $50 a barrel than the daily rise and fall of the commodity’s price, Shiv Prakash, a senior research analyst at NBAD Securities LLC, said in an e-mailed note this week.

The Tadawul All Share Index has declined about 10 percent this year as the kingdom, which may cancel more than $20 billion of projects, seeks to boost non-oil revenue and cut spending, while oil prices jumped almost 30 percent. The nation has the biggest budget deficit among the world’s biggest 20 economies.




NewBase Special Coverage

News Agencies News Release 04 September 2016

Can ExxonMobil Be Found Liable for Misleading the Public on Climate Change? .. Bloomberg - Paul Barrett Matthew Philips Scientists at the biggest U.S. oil company understood as early as anyone that fossil fuel emissions were heating up the earth’s atmosphere.

Last fall, ExxonMobil executives hurried along the hushed, art-filled halls of the company’s Irving, Texas, headquarters, a 178-acre suburban complex some employees facetiously call “the Death Star,” to a series of emergency strategy meetings. The world’s largest oil explorer by market value had been hit by a pair of multipart investigations by InsideClimate News and the Los Angeles Times. Both reported that as early as the 1970s, the company understood more about climate change than it had let on and had deliberately misled the public about it. One of Exxon’s senior scientists noted in 1977—11 years before a NASA scientist sounded the alarm about global warming during congressional testimony—that “the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.”

The two exposés predictably sparked waves of internet outrage, some mainstream media moralizing, and the Twitter hashtag #ExxonKnew. The Washington Post editorial page, for one, chided Exxon for “a discouraging example of corporate irresponsibility.” Bill McKibben, the founder of the environmental group 350.org, which spearheaded protests against the Keystone XL pipeline, wrote an impassioned article in the Guardian accusing Exxon of having “helped organize the most consequential lie in human history.”

Kenneth Cohen, then the company’s vice president for public and government affairs, convened near-daily meetings to form a response. “We all sat around the table and said, ‘This feels very orchestrated,’ ” says Suzanne McCarron, who succeeded Cohen when he retired at the end of last year. McCarron still seems shocked that her company could come under sustained attack. “We wanted to know who’s behind this thing,” she says. While Exxon tried to identify its new nemesis—made difficult, perhaps, by the release of the two reports being coincidental—the executives also decided to nitpick the journalism and sent lobbyists to Capitol Hill to argue their side. That didn’t go so well. “I couldn’t get any journalist to actually evaluate the coverage,” Exxon spokesman Alan Jeffers says, with evident frustration.

The crisis might have died down, a week or two of bad PR and nothing more, but several politicians saw an opening. On Oct. 14, four weeks after the first InsideClimate report, Democratic




Representatives Ted Lieu and Mark DeSaulnier, both from California, asked U.S. Attorney General Loretta Lynch to launch a federal racketeering investigation of Exxon. “It occurred to me that this looks like what happened with the tobacco companies a decade ago,” Lieu says. Democratic presidential candidate Hillary Clinton added her support for a Department of Justice inquiry. “There’s a lot of evidence that they [Exxon] misled people,” she said two weeks later.

Stoked by 40 of the nation’s best-known environmental and liberal social-justice groups—including the Environmental Defense Fund, Sierra Club, and Natural Resources Defense Council—the anti-Exxon animus only intensified. And if there wasn’t a coordinated campaign before, now there was: The groups all signed an Oct. 30 letter to Lynch also demanding a racketeering probe. (Lynch has since asked the FBI to examine whether the federal government should undertake such an investigation.) The same day, Lieu and DeSaulnier tried to interest the Securities and Exchange Commission in a fraud probe against Exxon, a request that’s pending. Five days later, on Nov. 4, New York Attorney General Eric Schneiderman opened a formal investigation into whether Exxon had misled investors and regulators about climate change.

“We cannot continue to allow the fossil fuel industry to treat our atmosphere like an open sewer or mislead the public about the impact they have on the health of our people and the health of our planet,” former Vice President Al Gore said at a subsequent news conference organized by Schneiderman. Compelled by the New York AG’s subpoena, Exxon has so far turned over some 1 million pages of internal documents.

Hours after Schneiderman issued his subpoena, Exxon Chief Executive Officer Rex Tillerson went on Fox Business Network. “The charges are pretty unfounded, without any substance at all,” he said. “And they’re dealing with a period of time that happened decades ago, so there’s a lot I could say about it. I’m not sure how helpful it would be for me to talk about it.” These remarks themselves weren’t terribly helpful—certainly not to Tillerson’s company.

McCarron and her colleagues can sound a tad overwrought when discussing all this. “The goal of the coordinated campaign is to delegitimize the company by misrepresenting our history of climate research,” she says. “Tackling the risk of climate change is going to take a lot of smart people, and we’ve got some of the best minds in the business working on this challenge.”

A company that has 73,500 employees and reported $269 billion in 2015 revenue would seem not to have much to fear from a bunch of tree-huggers and a grandstanding state AG. And yet the #ExxonKnew backlash comes at a financially perilous time for Big Oil. A glut-driven collapse in crude prices has rocked the entire industry. On July 29, Exxon announced second-quarter profit of $1.7 billion, its worst result in 17 years. That followed a rocky spring when ferocious wildfires reduced production in the oil-sands region of western Canada. (The frequency and intensity of such fires may be related to climate change, Exxon’s Jeffers acknowledges, adding, “But we just don’t know.”)




Most important, though, #ExxonKnew comes as climate change, after being on a legislative back burner, has gotten hot again. Signs of this include President Obama’s rejection last November of the Keystone pipeline from western Canada, the Paris summit in December that produced an international agreement to lower greenhouse gas emissions, and the U.S.-China plan, finalized on Sept. 3, committing the world’s two largest economies to implement the Paris accords. It’s too soon to say how much of a danger Schneiderman’s investigation poses to Exxon or if the corporation will ever be charged billions of dollars for carbon pollution. But it can’t ignore the risk of the sort of litigation storm that engulfed Big Tobacco in the 1990s. ExxonMobil doesn’t want to become the Philip Morris of climate liability.

ExxonKnew has taken shape over the past year, but Peter Frumhoff traces its roots to January 2007. That’s when the Union of Concerned Scientists, a Cambridge, Mass.-based nonprofit, published a 64-page report alleging that Exxon used the cigarette industry’s tactics to “manufacture uncertainty on climate change.” Founded in 1969 by physicists worried about nuclear issues, the UCS has branched out over the years. Frumhoff, a 59-year-old Ph.D. ecologist, serves as its director for science and policy. He dresses in grad-school casual and seems highly amused by Exxon’s notion that he’s a central player in a conspiracy against the company. For starters, Frumhoff is a snap to track down and operates quite openly—violations of the conspirator’s imperative to plot in secret.

The 2007 report, which Frumhoff oversaw, compared Exxon to cigarette manufacturers that only five months earlier had been found liable by a U.S. district judge for violating the federal Racketeer Influenced and Corrupt Organizations Act (RICO). “ExxonMobil has underwritten the most sophisticated and successful disinformation campaign since Big Tobacco misled the public about the incontrovertible scientific evidence linking smoking to lung cancer and heart disease,” the report asserted.

With a relatively modest expenditure of $16 million from 1998 to 2005, Exxon helped fund a network of some 40 advocacy organizations that raised doubts about the growing scientific consensus that global warming is caused by carbon dioxide and other heat-trapping emissions, the UCS found. Exxon, Frumhoff says, is “sort of the poster child for combining a very large contribution to the [climate] problem with an arrogant organizational culture and a significant investment in disinformation to avoid regulation.”

The idea of “making oil the next tobacco” percolated quietly for several years and reemerged in June 2012 in sunny La Jolla, Calif., Frumhoff says. It was there that he co-convened a meeting of scientists and lawyers who discussed not only the parallels between fossil fuels and cigarettes, but also the method used to wound tobacco: the amassing via litigation of internal corporate documents showing that cigarette companies concealed the hazards of smoking. “Similar




documents may well exist in the vaults of the fossil fuel industry and their trade associations and front groups,” an online report summarizing the La Jolla meeting stated. Even “a single sympathetic state attorney general might have substantial success in bringing key internal documents to light.”

Several more years passed before a passel of climate documents surfaced, not courtesy of a prosecutor’s subpoena, but as a result of journalistic digging: those reports in InsideClimate (21,000 words in length) and the Los Angeles Times. The two organizations reported that after accumulating climate knowledge for a decade or so, Exxon changed course beginning in the late 1980s, just as public debate over greenhouse gas emissions heated up.

By the 1990s, top Exxon executives were publicly raising doubts about the sorts of findings the company’s own scientists had made. In October 1997, Lee Raymond, then Exxon’s CEO, said in a speech in Beijing, “Let’s agree there’s a lot we really don’t know about how climate will change in the 21st century and beyond.” Arguing against the 1997 Kyoto Protocol, an early attempt to forge an international agreement on emission reductions, he added, “It is highly unlikely that the temperature in the middle of the next century will be significantly affected whether policies are enacted now or 20 years from now.”

Working separately from InsideClimate, the Los Angeles Times showed how Exxon incorporated climate change projections into its Arctic exploration plans in the 1990s while publicly undermining such projections.

The overlapping investigative journalism efforts appeared as delegations from countries around the world were getting ready for the December climate talks in Paris. On the sidelines of the Paris summit, McKibben, the author-activist, co-hosted a mock trial of Exxon in which he served as a prosecutor. “This is not just some run-of-the-mill, usual corporate malfeasance,” McKibben said at the trial. “It’s hard to imagine a set of corporate practices that could have done more damage.” Exxon, needless to say, was found guilty.

By its public-relations staff’s own admission, Exxon spent last fall and winter in a largely reactive mode, scrambling to respond to each new revelation or congressional request for an investigation—and never succeeding in offering an alternative narrative. “It was like playing whack-a-mole,” spokesman Jeffers says.

Seeking to illustrate how InsideClimate “cherry-picked” evidence, the company’s communications team pointed Bloomberg Businessweek to a half-dozen alleged examples. One focused on the site’s account of the late James Black, the Exxon scientist who told management in 1977 of the “general scientific agreement” about man-made global warming. Exxon accused the publication of failing to include qualifications feathered into Black’s work, such as his noting that “a number of assumptions and uncertainties are involved in the predictions of the greenhouse effect.” But




InsideClimate did prominently note that Black’s “presentations reflected uncertainty running through scientific circles about the details of climate change.” Exxon also accused the organization of erroneously asserting that the company had “stopped” doing carbon research in the late 1980s. But InsideClimate had written, correctly, that the company “curtailed” its in-house research program during that period. (“Curtail” doesn’t mean “stop.”)

Exxon has also accused InsideClimate and the Los Angeles Times of having financial conflicts of interest. The Times articles were researched and written in collaboration with an environmental-reporting project at Columbia University’s Graduate School of Journalism, and that program has taken substantial grants from environmentally oriented foundations, such as those funded by the Rockefeller family. Despite the source of their original wealth—in 1870, John D. Rockefeller created Standard Oil, the corporate forerunner of Exxon—the Rockefeller charities in recent years have taken strong stands against the fossil fuel industry. The Rockefeller Family Fund gave Columbia Journalism School $550,000 to help pay for its fossil fuel reporting project but exercised no editorial control, says Lee Wasserman, director of the fund. The Los Angeles Times initially failed to disclose the funding of the Columbia reporting project, though the newspaper eventually linked to the financial details online. Since 2013, the separate Rockefeller Brothers Fund has provided InsideClimate with $200,000 a year; that fund had no say over what the website published, according to David Sassoon, InsideClimate’s founder and publisher.

As its attacks on journalists fizzled, Exxon tried sending lobbyists to dozens of congressional offices to counter #ExxonKnew on Capitol Hill. Lieu, the California Democrat seeking federal investigations, is still shaking his head over a November visit from four Exxon emissaries. The lobbyists handed out a 10-page presentation titled Managing Climate Change Risks, which sought to underscore the company’s carbon-reduction bona fides. “It was a really surreal meeting,” Lieu says. The lobbyists “came in and said, ‘We believe in climate change and that it’s being caused by humans, and we support a carbon tax.’ I thought to myself, Where is this coming from? Is this like some white-hat department that no one else at Exxon knows about?”

Lieu hadn’t been keeping up with the evolution of Exxon’s climate-related positions since Tillerson replaced the hard-nosed Raymond as CEO in 2006. In 2007, Exxon began cutting off funding for some nonprofits that deny widely accepted science on global warming. The company in 2009 for the first time endorsed a tax on carbon emissions, a stance vehemently opposed by Republicans in Congress and therefore dead on arrival on Capitol Hill. At the Exxon annual meeting in Dallas in May, the silver-haired Tillerson went out of his way to tell shareholders that “the risks of climate change are serious and they do warrant thoughtful action.”

Strictly speaking, though, #ExxonKnew isn’t a campaign aimed at what the company is saying or doing today. #ExxonKnew focuses on discrepancies between past actions and past statements. That historical inquiry, Lieu says, deserves the authority and force of a government investigation. Exxon’s lobbyists didn’t change his mind.




Exxon executives say their view of #ExxonKnew as a conspiracy was confirmed by the gathering of 15 state attorneys general and Gore in New York on March 29. Schneiderman, the host, says he organized the event simply to educate fellow state officials about his Exxon investigation. At the news conference, he sounded like he’d already decided to take the company to court: With “morally vacant forces” blocking climate action in Washington, he said, states were obliged to devise “creative ways to enforce laws being flouted by the fossil fuel industry.”

Schneiderman also arranged for private briefings for the visiting AGs. These closed-door sessions featured a talk on climate science by Frumhoff and a legal backgrounder by Matt Pawa, a private plaintiffs’ attorney who in 2013 won a $236 million groundwater-pollution verdict against Exxon. The company’s public-affairs representatives see great significance in Pawa’s also having attended Frumhoff’s 2012 gathering in La Jolla. “You see the same people showing up at planning meetings over the years,” Jeffers says. Schneiderman says he doesn’t know anything about the La Jolla session and that his office routinely consults with outside experts.

A more consequential aspect of the prosecutors’ conclave was the announcement by the attorney general of the U.S. Virgin Islands, Claude Walker, that his tiny Caribbean territory had launched a parallel investigation of Exxon. In theory, the Virgin Islands has ample reason to be anxious about climate change: Warming, rising ocean waters could swamp its homes and resorts in coming decades. But in practice, the territory proved itself inadequate to the task of confronting Exxon.

In March the Virgin Islands issued a sprawling, loosely worded subpoena that demanded the company’s correspondence with scores of conservative and free-market organizations, including FreedomWorks, the Heartland Institute, and the Heritage Foundation. In a separate subpoena, it sought documents directly from the Competitive Enterprise Institute, a right-leaning group that’s cast doubt on mainstream climate science and formerly received financial support from Exxon. This focus on communication opened the door for Exxon’s New York law firm, Paul, Weiss, Rifkind, Wharton & Garrison, to seek to kill the islands’ subpoenas on First Amendment grounds. Paul Weiss filed court papers in Texas on April 13 condemning the Virgin Islands’ attempt “to deter ExxonMobil from participating in ongoing public deliberations about climate change.” (The more precisely tailored New York subpoena didn’t explicitly name nonprofits with which Exxon may have communicated.)

Finally, Exxon had its counterpunch: that hostile outsiders had attacked the company’s free-speech rights. There’s a reason Theodore Wells, the Paul Weiss partner who’s led Exxon’s legal defense (and has represented such clients as Philip Morris), is known as one of the craftiest people in his profession. However unlikely the image of Exxon as victim, that’s how Wells decided to characterize his client—and it worked. On April 22, the Washington Post carried two opinion pieces on the topic: a column by George Will headlined “Scientific Silencers on the Left Are Trying to Shut Down Climate Skepticism” and one by Sam Kazman and Kent Lassman, respectively




general counsel and president of the Competitive Enterprise Institute, condemning “the environmental campaign that punishes free speech.” In the following days, dozens of similar broadsides were issued from the Wall Street Journal editorial page, Fox News, the Heritage Foundation, and many others.

Once again, politicians followed. In mid-May, the House Committee on Science, Space, & Technology began investigating what it called “a coordinated attempt to deprive companies, nonprofit organizations, and scientists of their First Amendment rights.” The only company the panel mentioned by name was Exxon. Committee staff members and Exxon’s McCarron say that despite the company’s widespread lobbying of Congress, it didn’t ask the panel or its chairman, Lamar Smith (R-Texas), to begin the probe. First elected in 1986, Smith has received almost $685,000 in career campaign contributions from the oil and gas industry, according to the Center for Responsive Politics. By early July, the Virgin Islands had turned tail and withdrawn its subpoenas of Exxon and the Competitive Enterprise Institute. Trying to put the best spin on his humiliating retreat, Virgin Islands AG Walker said via e-mail that extricating itself from the subpoena imbroglio will allow his office to “use our limited resources to address the many other issues that face the Virgin Islands and its residents.” Wells didn’t respond to requests for comment.

Schneiderman now finds himself under investigation, too. When the New York AG’s office refused to cooperate with the science committee, Smith issued subpoenas to Schneiderman; Massachusetts Attorney General Maura Healey, who’d launched her own investigation of Exxon; and eight nongovernmental organizations, including the Rockefeller funds, the Union of Concerned Scientists, and 350.org. “Unfortunately, the attorneys general have refused to give the committee the information to which it is entitled,” Smith told reporters on July 13. “What are they hiding and why?”

Not a thing, according to Schneiderman, who says Smith’s inquiries evoke 1950s-era communist hunting by the House Un-American Activities Committee: “They have no evidence of any cabal, no evidence of any misconduct.” As for the science panel’s concern about Exxon’s First Amendment rights, Schneiderman says the federal government’s successful RICO case against the tobacco companies made “very clear that the First Amendment doesn’t give you the right to commit fraud.”

If Schneiderman continues to resist the House committee’s document demands, the confrontation could end up in court—a fight the New York official sounds eager to have. He’d have an excellent chance of winning, too. It’s unusual for a congressional panel to interfere with a pending state investigation, says Senator Sheldon Whitehouse (D-R.I.), a former federal prosecutor who advocates putting Exxon under a microscope. Smith “is trying to subvert the power of state government [and] do something he is not entitled to do under any kind of discovery rules,” Whitehouse says. More succinctly, Peter Shane, a law professor at Ohio State University, says, “Congress has no authority over the conduct of state law enforcement.”




Exxon, for its part, has been cooperating with Schneiderman’s subpoena because the company’s lawyers at Paul Weiss advised their client that it had no choice, according to a person familiar with the situation. Schneiderman is investigating under the broad provisions of a 1921 state law called the Martin Act, arguably the most potent securities-fraud statute in the country. Named for sponsor Louis Martin, an otherwise-forgotten state assemblyman, the law forbids “any fraud, deception, concealment, suppression, [or] false pretense.” Crucially, it doesn’t require

a prosecutor to demonstrate that a defendant consciously intended to defraud investors or regulators. New York’s top court has interpreted it to cover “all deceitful practices contrary to the plain rules of common honesty.”

Schneiderman doesn’t have a slam-dunk case. “The New York attorney general has a plausible theory, but he’ll need more than the results of the journalistic investigations,” says Michael Gerrard, a law professor at Columbia who directs the Sabin Center for Climate Change Law. “It’s not enough to show that Exxon had internal knowledge of climate change when external knowledge was widespread. The government would have to show that there were things that only Exxon knew and that were material to investors and that Exxon kept from investors. Such evidence might be there, but we don’t know yet.”

One potential defense that Exxon is floating: Since the 1970s its scientists have published climate findings in more than 50 peer-reviewed articles. What Exxon knew, the argument would go, the wider scientific world also knew. The company didn’t keep secrets the way the tobacco industry did.

Few complicated securities-fraud cases go to trial; the risk of losing and the costs of extended litigation impel settlement. With those risks in mind, Exxon and New York may eventually look to a separate case resolved by Schneiderman’s office in November. The attorney general found after a two-year investigation that coal producer Peabody Energy provided incomplete information to investors by saying in public reports that it couldn’t “reasonably predict” the risks it faced from climate-related regulations. St. Louis-based Peabody, which in April declared bankruptcy amid a collapsing coal market, neither admitted nor denied wrongdoing and didn’t face pecuniary punishment. The company did agree to provide more forthcoming disclosures to investors.

“It’s really too soon to tell” whether the Peabody settlement provides a model for the Exxon case, Schneiderman says. He expects to amass evidence in the Exxon investigation of “a much more sophisticated ongoing policy of deception” than what his office found inside Peabody—wrongdoing that could warrant seeking substantial money damages. Exxon has kept that alleged policy in place through recent years, Schneiderman says, pointing to a 2014 company report claiming that international efforts to reduce climate change wouldn’t oblige fossil fuel producers to leave enormous amounts of oil in the ground untouched.

Exxon denies any deception took place and isn’t ready to talk settlement, McCarron says. She calls Schneiderman’s comments “an attack on the integrity of the company” and says Exxon “will pursue all available legal options to defend ourselves.”




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Khaled Al Awadi is a UAE National with a total of 26 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

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NewBase 08 September 2016 K. Al Awadi