newbase 600 special 10 may 2015

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

publication. However, no warranty is given to the accuracy of its content.

NewBase 10 May 2015 - Issue No. 600 Khaled Al Awadi

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

Dubai Carbon, AFC Energy sign MoU to study deploying

hydrogen fuel cells to generate energy

WAM Dubai Carbon Centre of Excellence (Dubai Carbon), has signed an MoU with Britain's AFC Energy, to assess the potential for using hydrogen fuel cells to generate energy in Dubai. This supports the UAE's efforts to reduce carbon emissions. As per the MoU, Dubai Carbon will work with AFC to reduce carbon dioxide (CO2) emissions by using hydrogen fuel cells in a number of facilities.

The two sides will investigate using AFC's hydrogen fuel cells in certain sites and projects that are under construction or which require temporary connections in Dubai, to generate a total of 300MW by 2020.

"We work to achieve the Green Economy for Sustainable Development initiative, the long-term National initiative launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to build an economy that protects the environment and supports a diversified economy based on knowledge and innovation.

It enhances the competitiveness of the UAE in global markets, especially in renewable energy, and green-economy products and technologies. We also work to achieve the UAE Vision 2021 and Dubai Plan 2021 to make Dubai sustainable with its resources," said Saeed Mohammed Al Tayer, Vice Chairman of the Dubai Supreme Council of Energy, and MD & CEO of Dubai Electricity and Water Authority (DEWA).

"The MoU between Dubai Carbon and AFC Energy supports the Dubai Integrated Energy Strategy 2030 to diversify Dubai's energy mix, promote the sustainable development of Dubai, make the Emirate a role model in energy security and efficiency, and reduce energy demand by 30%.

The MoU also supports Dubai's efforts to increase its use of sources of renewable and clean energy. It underlines Dubai's leading role, and vision to ensure secure, clean, and sustainable energy to achieve the goals of Dubai and the UAE to adopt a green economy and keep a sustainable environment for generations to come," added Al Tayer.

"We are delighted to sign this MoU between Dubai Carbon and AFC Energy to evaluate the use of hydrogen fuel cell technology to generate electricity in Dubai. It is a clean and environmentally-friendly technology. This project supports Dubai's strategy to enhance its energy infrastructure, and build capabilities and innovation in energy management and efficiency," said Waleed Salman, Chairman of the Dubai Carbon Centre of Excellence.

Dubai Carbon and AFC will assess the demand for commercial facilities in Dubai to use this advanced technology




Saudia: Thin-film technology best to secure Saudi solar target Saudi Gazette + NewBase

With a module efficiency of 16%, Manz AG presented an impressive new record efficiency grade for CIGS thin-film solar modules at SNEC in Shanghai, the world's leading trade fair for the photovoltaics (PV) industry.

In doing so, Manz is pushing forward into a new dimension and closing the efficiency gap that has previously existed when compared to multi-crystalline technology that is still prevalent today. Interestingly, as the German firm further translates lab efficiencies to mass production, PV module production costs continue to decline – in its report Renewable Power Generation Costs in 2014, the International Renewable Energy Agency (IRENA) noted a 75% drop since 2009. This, therefore, better positions

expansion plans. As part of its expansive renewable energy targets, Saudi Arabia plans to have 16 GW of PV capacity installed by 2040. In the fall of 2014, the Center for Solar Energy and Hydrogen Research of Baden-Württemberg (ZSW), Manz's exclusive development partner, was able to demonstrate the superiority of CIGS technology in comparison to crystalline solar cells in the laboratory, with a world-record efficiency of 21.7% in cell format. Manz is now transferring this superiority to production. The significance of this new record efficiency is greater since the high-tech equipment manufacturer produced the module on its innovative production line for CIGS technology at its location in Schwäbisch Hall, on equipment for mass production. The marked increase in performance was achieved mainly by the next generation of CIGS semiconductor material which Manz applies to a glass substrate in the co-evaporation process. Additional technological innovation is a new module design for increasing the active module surface. Moreover, Manz engineers were able to sustainably reduce optical losses. Dieter Manz, founder and CEO of Manz AG, is extremely satisfied with the consistent, continued development of CIGS thin-film technology by his engineers: "Our performance parameters are world-class. With significantly lower production costs compared to crystalline solar cells, CIGS technology will play a large role in the coming investment cycle of the photovoltaics industry.” Today, CIGS




modules from Manz already offer the lowest electricity generation costs in comparison to the still prevailing crystalline silicon technology. “As Saudi Arabia’s solar plans begin to take shape and its government gears to significantly boost the region’s solar power market, we are pleased to bring our increased efficiency grade, coupled with our low production costs, to the table. Following this efficiency upgrade, CIGS thin-film modules, which were already highly suited to the region’s weather conditions, are now in an even stronger position to help achieve Saudi Arabia’s solar objectives,” said Mohamed Alammawi, Manz’s vice president of sales for the MENA region. With Manz CIGSfab, the Reutlingen equipment manufacturer is currently the only supplier of turnkey CIGS production lines in the world, with a scalable production capacity of 50 to 350 MWs per year. With an internal rate of return of more than 15%, an investment in a fully integrated CIGS line from Manz is one of the most profitable in the entire energy sector. Manz's new 16% record efficiency is the impressive result of a long-term development partnership with the Stuttgart Center for Solar Energy and Hydrogen Research of Baden-Württemberg (ZSW). Following the presentation of 21.7% cell efficiency in the laboratory by the globally leading research institute for CIGS thin-film technology in the fall of 2014, Manz was able to transfer the essential insights of the technology that was used to mass production. "Building on the know-how of ZSW and our own experts, it is thus absolutely realistic that we will already be able to present module efficiencies of significantly higher than 17% in the near future,

produced on our innovative production line in Schwäbisch Hall. The goal of our joint efforts is the further reduction of electricity costs – around the world, under all climatic conditions," said Dieter Manz. Manz's new 16% record efficiency was certified last week by the testing organization TÜV Rheinland. Manz AG offers potential investors in CIGS production systems a long-term road map for further efficiency increases, whose milestones have always been achieved ahead of schedule in recent years.




Total’s session focuses on enhanced oil recovery GuflTimes + NewBase

Total recently held a high level training on ‘Gas and carbon dioxide enhanced oil recovery (EOR)’ at the Total Research Centre- Qatar (TRC-Q). The course focused specifically on EOR generalities, gas EOR techniques and CO2 EOR specificities. An EOR is the implementation of various techniques for increasing the amount of crude oil extracted from an oil field.An expert from Total’s technical and scientific centre in Pau (France), Marcel Bourgeois, led the training session aimed at increasing the knowledge of the attendants on the effectiveness of well production.

Advanced simulations topics were also covered, and a three-year field case on carbon dioxide and water injection pilot was presented. “A key strategy for Total is to continously engage our partners in knowledge sharing sessions” said Dr Philippe Julien, director, TRC-Q. “Enchanced Oil Recovery (EOR) is a vital topic as the demand for energy continues to increase over the years, and we need to find innovative ways to meet that demand. As we look into the life of maturing oil fields, it becomes more difficult to extract the leftover oil in the reservoirs. Extracting oil using tertiary techniques will be a step further to meet that demand by increasing production and maximising our resources. Enhanced oil recovery techniques introduce fluids that improve flow. Depending on the reservoirs and on the EOR techniques applied, producers can extract a larger and larger amount of the reservoir’s oil content”. TRC-Q has an extensive training plan, which goes hand in hand with its research. Its interactive training sessions are used not only to explain advanced technologies, but also to discuss practical problems and evaluate new ideas and concepts. Total has had a continuous presence in Qatar for close to 80 years, and is the only international oil company active in all branches of the country’s oil and gas sector. This includes exploration and production, refining and petrochemicals, and the marketing of lubricants.

Participants at the recent high level training on ‘Gas and carbon dioxide enhanced oil

recovery (EOR)’ at the Total Research Centre- Qatar (TRC-Q).




Oman: Hazardous waste treatment project planned in Liwa http://omanobserver.om/major-industrial-hazardous-waste-treatment-project-planned-in-liwa/

Oman’s government has approved the establishment of a national industrial hazardous waste treatment facility at Sohar in North Al Batinah Governorate, according to a top official of Oman Environmental Services Holding Company SAOC (Be’ah), the state-owned utility tasked with restructuring and privatising the solid waste sector.

Mohammed Sulaiman al Harthy, Executive Vice-President — Corporate Strategic Development, said the proposed Integrated Industrial Hazardous Waste Handling and Treatment Plant will deal with the estimated 1.47 million tonnes of potentially harmful waste generated annually by the country’s burgeoning industrial sector. The facility will serve as the cornerstone of hazardous waste management infrastructure being developed for the entire country and will include specialised landfills and transfer stations in Duqm and Dhofar Governorate.

A 240-hectare site has been allocated for the establishment of the Integrated Industrial Hazardous Waste Handling and Treatment Plant at Liwa, not far from Sohar Port, home to the Sultanate’s biggest heavy industrial hub. According to Al Harthy, Sohar accounts for around 90 per cent of the country’s current industrial hazardous waste output, with significant amounts of slag being generated by the metallurgical

industries operating within the industrial port and the nearby industrial part. Excellent road connectivity, as well as rail links in the future, with other industrial hubs in the country are also factors seen as conducive for locating the treatment plant at nearby Liwa. Approval for the siting of the plant at Liwa has also been green-lighted by the Supreme Council for Planning and Sohar Industrial Port, he said. Plans drawn up by Be’ah envisage a sprawling complex that will house an array of facilities designed to handle the

diverse types of waste streams making up Oman’s industrial hazardous waste. It includes storage facilities and pretreatment units. There will also be a dedicated waste solidification facility of a capacity of 100,000 tonnes per annum (tpa), alongside a physical/chemical treatment plant designed to process 1,000 tpa of waste. A thermal treatment plant (incinerator) of around 50,000 tpa capacity is envisioned as well. Additionally, areas have been allocated within the site to accommodate a staggering 28 million cubic metres of industrial slag, which will be used for reclamation. A landfill suitably engineered to hold three million cubic metres of hazardous waste is also earmarked within the complex.




Turkmenistan-China Pipeline Capacity Will Reach 55 Bcm2015 Trend News Agency + NewBase

Capacity of Turkmenistan-China gas pipeline will reach 55 billion cubic meters (bcm) this year, Trend News Agency reported citing country’s Ministry of Petroleum and Mineral Resources. In 2010, capacity of the first two lines hit 30 bcm and in late 2014 a third line with 25 bcm capacity was added. In 2013, the two nations signed an agreement to construct the fourth gas pipeline with a capacity of 25 bcm per year.

The fourth branch will stretch along the Turkmenistan-Uzbekistan-Tajikistan-Kyrgyzstan-China route. The pipeline is planned to be constructed in 2017, Trend News said. Thus, by 2017, the capacity of Turkmenistan’s pipeline system running in the eastward direction will increase up to 80 billion cubic meters. Under the agreement signed between the China National Petroleum Corporation (CNPC) and Turkmenistan’s State Concern Turkmengaz, by late 2021, Turkmenistan will annually supply China with 65 billion cubic meters of gas, Turkmenistan is mostly arid and flat with a majority of its population living next to the bordering countries of Uzbekistan and Iran. Because it is surrounded by more powerful countries, it has been historically closed off from the world. However, Turkmenistan produces 77 billion cubic




meters (BCM) of natural gas (NG) per year. Because the country has a small population and low energy needs, the country can afford to export a majority of its hydrocarbons, around 44 BCM/yr. It is estimated that FDI into improving Turkmenistan’s hydrocarbon infrastructure could increase its exports capacity to 80-84 BCM/yer. At a proven reserve of 17.5 trillion CM, 4th highest in the world, Turkmenistan could capitalize off its hydrocarbon reserve for quite some time.

So, what’s the problem?

Turkmenistan lacks the geography, infrastructure, and capital to fully exploit their hydrocarbon reserves, and the extent that Turkmenistan can exploit this energy wealth is tied to Russia. As Turkmenistan is a landlocked country, all trade and infrastructure must go through Russia or Russia’s spheres of influence. The country has tried to remain neutral by not joining the Eurasian Union or the CSTO Russian military alliance.

Historically, Russia is Turkmenistan’s primary export costumer because the USSR was the first to build up their hydrocarbon infrastructure with pipelines that go through Russia and then to Europe. Prior to 2009, Turkmenistan exported 70-87% of its NG to Russia before the Russians then re-exported the NG to Europe at a higher price that Russia controls. Turkmenistan tried negotiate a more favorable NG price and failed.

Turkmenistan’s wake up call: The Great Recession

Then the was the Great Recession, European natural gas demand shrank as industrial production fell, and as a result Russia slashed it’s imports of Turkmenistan’s NG. This forced Turkmenistan to reduced it’s NG production.

Pre-crisis: NG exports were 40BCM/yr

Post-crisis (2010-2012): NG exports were 9.6-10 BCM/yr

This was deeply troubling for Turkmenistan, as NG exports made up ~50% of its government budgeted revenue. This combined with their reliance on one primary trading partner, Russian, that made up 70-87% of all NG exports, was disastrous.

China To The Rescue: Central Asia-China Pipeline

Purposed back in 2006 and inaugurated in 2009, the Central Asia-China gas pipeline was projected to carry 40 BMC/yr of NG to Eastern China. The pipeline has helped China meet its energy demand and Chinese prices have helped the balanced the budget of Turkmenistan. China not only wants to meet their own growing energy demand, but also diversify they flow of hydrocarbons.

In 2013, a new China-Turkmenistan trade deal was reached expanding NG exports to 23 BCM/yr. By 2020 there is estimated to be 65BCM/yr going to China via the Central Asia-China Pipeline. The rapid growth in imports from Turkmenistan suggests that China may be planning to do without Russian gas altogether, an idea that is troublesome for Moscow. However, this problem may be mute as there may not be enough NG to meet the demands of both Europe and China.

A portion of the pipeline also goes through Kazakhstan, which is a member of the Russian lead

Eurasian Union, and this may allow Russia to influence the growing China-Turkmenistan energy infrastructure. This is something China would care to do without. Thus, China has proposed




an additional alternative parallel pipeline that would bypass both Russian and all members of the Eurasia Union: a pipeline that goes through Uzbekistan and Tajikistan. In fact, China has given $100 million in military aid to Tajikistan to protect the region.

It is axiomatic that geopolitics resists simplicity, and China is not out of the woods yet. For example there are historically exploitable tensions between Uzbekistan, Tajikistan, and Kyrgyzstan. Issues between the three countries include water rights, energy, and the security of Uzbek minorities that live in Tajikistan and Kyrgyzstan. In fact, between 2008 to 2011, Uzbekistan applied several energy and freight train embargos on Tajikistan.

• Turkmenistan is the sixth largest natural gas reserve holder in the world and was the second largest dry natural gas producer in Eurasia, behind Russia, in 2012. The hydrocarbon-rich country lacks sufficient pipeline infrastructure to export greater volumes of hydrocarbons. However, public investment and the start of production at one of the world’s largest natural gas fields (Galkynysh) boosted its economy in 2013.

• According to BP’s 2013 Statistical Review, total primary energy consumption in Turkmenistan was about 1.05 quadrillion Btu in 2013. Natural gas consumption accounted for approximately 76%, and consumption of petroleum products represented the remaining 24%.

• Turkmenistan had 600 million barrels of proven crude oil reserves as of January 2014, according to Oil and Gas Journal (OGJ). In 2013, total oil production was around 260,000 barrels per day (bbl/d), of which 11% was from national gas plant liquids. Recent production growth has come from Dragon Oil’s offshore Cheleken block and Eni’s onshore Nebit Dag field.




US :oil boom is sputtering back to life one rig at a time BLOOMBERG + NEWBASE

For the first time in five months, a rig in the Williston Basin, where North Dakota’s Bakken shale formation lies, sputtered back to life and started drilling for crude once again. And then one returned to the Permian Basin, the nation’s biggest oil play, field services contractor Baker Hughes Inc. said Friday.

Shale explorers including EOG Resources Inc. and Pioneer Natural Resources Co say they’re preparing to bounce back from the deepest and most prolonged slowdown in US oil drilling on record. The country has lost more than half its rigs since October, casualties of a 49 per cent slide in crude prices during the last half of 2014. Futures rallied above $60 a barrel earlier this week, and a sudden return to oilfields would threaten to end this fragile recovery.

“You’re inviting a lot of pent-up supply to come back into the market — not only do you have people drilling again, but you have this fracklog of over 4,000 uncompleted wells,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by phone. “And then we’re in a situation where the market could easily go back into the mid- $50’s.”

While rigs are returning to some fields, the total US count has continued to decline, falling 11 this week to a four- year low on Friday. The drilling slowdown won’t reach a real bottom for about another month, James Williams, president of energy consultant WTRG Economics, said by phone from London, Arkansas.

Nearing end

“This is an indicator that we’re nearing the end of the bust,” he said. “What we’re going to see now are mixed signals from the different basins as we near the bottom of the cycle.”

Carrizo Oil & Gas Inc, Devon Energy Corp. and Chesapeake Energy Corp. all lifted their full-year production outlooks this week. EOG said on May 5 that it plans to increase drilling as soon as crude stabilises around $65 a barrel, while Pioneer has said it is preparing to deploy more rigs as soon as July.




Morgan Stanley said underlying data show drilling is already picking up in some counties within Texas’s Eagle Ford shale formation and the Permian Basin of Texas and New Mexico.

“Prices are triggering activity that could undermine the US recovery, especially in 2016,” Morgan Stanley analysts including Adam Longson said in an April 27 research note.

The US benchmark West Texas Intermediate oil for June delivery rose 45 cents on Friday to settle at $59.39 a barrel on the New York Mercantile Exchange. Prices advanced 25 per cent in April alone, the biggest monthly gain since May 2009.

Permian basin

The Permian will probably be the first basin to bounce back because it’s home to multiple producing zones stacked on top of each other, allowing drillers to tap oil at different depths with the same well, said David Zusman, managing director at Talara Capital Management, which handles $400 million in energy investments.

“There are multistacked pay zones and sweet spots across the basin that make economic sense,” he said by phone. “There’s more optionality associated with the Permian and more likelihood of completing those wells.”

The US rig count may recover to 1,200 to 1,300 should prices rally past $70 a barrel, Allen Gilmer, chief executive officer of the Austin-based energy data provider Drillinginfo, said by phone on May 1. The total rose for three straight days in late April, he said.

“The service companies have responded very quickly in regards to dropping prices, and it has become very attractive, especially for companies with hedged positions, to come back right now before those hedges fall off,” Gilmer said. “We’re a few weeks from the bottom now. You’ll start seeing it build up.”




Oil Price Drop Special Coverage

Oil drop , but scores new 2015 peaks on tumbling US inventories AFP + NewBase

Oil faced a rollercoaster week, striking five-month peaks on news of an unexpected slump in US crude reserves, before sliding as oversupply worries resurfaced. “After a strong start to the week, with Brent seemingly heading for $70 per barrel, the recovery in oil prices ran out of steam by Friday,” said Capital Economics analyst Julian Jessop.

Heading into the weekend, markets tracked the US interest rate outlook after a bright non-farm payrolls (NFP) report in major commodity consumer the US. Traders warned that the Greek financial crisis had the potential to flare up and boost gold, which is seen as a safe bet in times of economic turmoil. “The only major event scheduled for the coming week is yet another meeting of the Eurogroup of finance ministers to discuss Greece on Monday,” Jessop added. “We remain convinced that the Greek crisis will escalate at some point, boosting gold prices, but the precise timing is as uncertain as ever.” OIL: Prices soared Wednesday on news of a shock tumble in US crude stockpiles, with Brent striking $69.63 and WTI reaching $62.58 per barrel—the highest levels so far this year. The latest




official US stockpiles report showed crude reserves tumbled 3.9mn barrels in the week to May 1, the first decline in 16 weeks. The outcome confounded market expectations for an increase of 1.5mn barrels. Despite the decline, however, at 487.0mn barrels of crude, the stockpiles were at their highest level on record for this time of year. And US crude-oil production slipped only marginally to 9.4mn bpd. “There’s been volatility coming into the crude market in the past few days and concerns about rising crude supply is one of the reasons,” IG analyst Bernard Aw told AFP. “The market has become sensitive to data about supply... On one hand some are seeing supply as slowing, but the numbers are not showing that.” The market also declined Friday on worries over rebounding US shale output. Oil prices have in recent weeks also won support due to ongoing strife in Yemen and Libya. However, prices remain well down after plunging almost 60% between June and the start of 2015 on the back of a global supply glut. The problem was exacerbated when the Opec cartel—which pumps 30% of global crude maintained output levels late last year. By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June dipped to $64.74 a barrel from $66.19 the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for June slid to $58.70 compared with $59.12.




Saudi is splurging in Asia to win loyal oil customers for decades Bloomberg + NewBase Saudi Arabia is spending generously now on Asian refiners to lock in its position as the region’s biggest supplier of oil for decades to come. The Saudi national oil company is part of a group that’s building a processing plant in China and it teamed with Asia’s biggest refiner on another in Fujian province.

Oil Minister Ali al-Naimi travelled to Beijing last month, highlighting the importance of the world’s second-biggest crude consumer to his country’s future. He also visited a South Korean refinery in which his country has a majority interest. Pressure is rising on Saudi Arabia to hold on to market share in Asia as competitors including Iraq, Mexico and Russia make inroads. The kingdom, the world’s largest crude exporter, has cut price differentials on its crude to Asia 10 times in the past 18 months, while rivals followed with their own reductions. “Saudi Arabia has been on the lookout for a lot more joint venture projects,” Suresh Sivanandam, a refining and chemical analyst at Wood Mackenzie Ltd in Singapore, said by phone. “They want to secure demand for their crude and that’s one way of increasing market share.” Daily consumption of 31.2mn barrels in Asia this year will take the region’s demand above that in the Americas at 31.1mn barrels, according to the Paris-based International Energy Agency. Asia will account for two-thirds of the growth in global oil demand in 2015, the IEA says. The flexibility of Saudi Arabian Oil Co, the state company known as Aramco, to raise or cut output on short notice along with stakes in refineries run by its customers gives it an advantage over rivals, according to Julian Lee, an oil strategist with Bloomberg. The company has capacity to produce 12mn bpd. Aramco’s press office declined to comment in an e-mail. Saudi Arabia, pumping near a record rate, already forced a slowdown in US shale production by leading the Organisation of Petroleum Exporting Countries in a policy of maintaining output to hold on to customers rather than cutting production to support prices. Shale oil drillers have reduced their rigs 21 weeks in a row and cut the total by more than half since October. West Texas Intermediate crude, the US benchmark, is down more than 40% from a high in June. A joint venture between PetroChina Co, Aramco and Yunnan Yuntianhua Co is currently building a 260,000 bpd refinery in the southwest of the Asian nation. Aramco already manages a 280,000 bpd refinery and petrochemical complex in China’s Fujian province along with China Petroleum & Chemical Corp, known as Sinopec, and Exxon Mobil Corp.




Aramco is pursuing a “long-term growth strategy” and is seeking to invest more in China to help the Asian nation meet its energy needs, Khalid al-Falih, then the company’s chief executive officer, said in a speech in Beijing in March. The country is the largest oil consumer after the US. Al-Falih has since replaced al-Naimi as chairman of Aramco and the company named Amin Nasser as interim CEO. Al-Naimi led a meeting with Aramco officials and South Korean refinery executives in Seoul last month and visited S-Oil Corp’s Ulsan refinery, in which the Middle East producer holds about 63%. The company also owns about 15% of Japan’s Showa Shell Sekiyu KK.

In Vietnam, a 400,000 bpd plant will be jointly constructed by Aramco and PTT Pcl in Binh Dinh province, according to the Thai company’s 2014 annual report and the Dau Tu newspaper, which cited a project investment plan submitted to Vietnam’s industrial ministry in September. Aramco’s refining strategy isn’t limited to Asia. The company owns half of Motiva Enterprises, which operates three plants in Texas and Louisiana with total refining capacity of about 1.1mn barrels a day. “By investing in refining, they hope to find guaranteed output for their crude,” said Victor Shum, a Singapore-based vice president at IHS Inc, an industry consultant. “It has been part of their long-term strategy.” Potential investments also include Indonesia. Pertamina Persero PT will join Aramco for a study to upgrade the Cilacap refinery this year, Wianda Pusponegoro, a spokeswoman at the state-owned Indonesian company, said last month. “They definitely have deep pockets but they have to be selective about where to invest,” Wood Mackenzie’s Sivanandam said. “They are looking at the right markets like Vietnam and Indonesia.” Saudi Arabia also has used its pricing strategy to fend off rivals in Asia. Differential cuts set its Arab Light oil at a record discount of $2.30 a barrel for March supplies as it sought to defend market share. Competitors followed. Petroleos Mexicanos, the national oil producer known as Pemex, sold its Isthmus light crude in February to Asian buyers at the biggest discount to the average of the benchmark Oman and Dubai grades since at least 1995. The gap between Iraq’s Basrah Light and Kuwait’s Export grades to Saudi Arabia’s Arab Medium has widened since March, data compiled by Bloomberg show. “Iraq is increasing its production and exports and Russia is also trying to capture part of the market share,” Ehsan Ul-Haq, a senior analyst at KBC Energy Economics in London, said by phone. The Saudi investment strategy is “not only to defend their market share but also to expand their market share,” he said.




Markets to rule oil prices in the coming years Syde Hussain + Saudi Gazette

DESPITE the recent blip - oversupply continues to weigh on crude markets. In recent weeks, oil prices went up by around 50 percent - from January’s six-year low - posting their largest monthly gain in almost six years in April. Over the past one month, markets soared $15 a barrel - interestingly during a season when historically prices tend to be weak. Yet the buzz is a growing - this rally is unsustainable. A consensus seems emerging. The upswing indicates a deep disconnect with the physical markets - Reuters quoted traders as saying - as tens of millions of West African, Azeri and North Sea barrels appeared struggling to find buyers. On the other hand production refuses to go down - significantly - and- any time soon. Aided by record or near-record supplies from Iraq and Saudi Arabia, the April OPEC oil supply jumped to its highest in more than two years. Russian oil and gas condensate production is also at a post-Soviet record level of 10.71 million barrels per day (bpd) in April. And the return of Iranian crude, enough to dampen the market spirits further, could also be just round the corner. Iran is determined to regain its share of the crude oil export market when sanctions imposed over its nuclear program are lifted, Iranian Oil Minister Bijan Zanganeh said last week. Sanctions have cut Iran’s oil exports by more than half to about 1.1 million bpd from a pre-2012 level of 2.5 million bpd. And though the US rig count continues to fall, week after week, for the last 21 weeks in a row now, touching the 905 mark on April 24 - from 1,854 during the same period last year - the US output doesn’t seem going down - in the near future. There are indications that with the rise in prices, the demand boost from cheap oil would dissipate too, while the US shale industry will regain its momentum. According to David Hufton at London brokerage PVM, while some deep sea and Arctic oil exploration isn’t feasible at the current prices, the shale oil industry can continue to grow at $60 a barrel as operation costs plummet. Shale industry thus remains optimistic! In its first-quarter results, oil company Devon Energy

boosted its expected production increase to 25-35 percent – up from the previous quarter’s forecast of a hike of 20-25 percent only. Noble Energy too made similar moves, and now expects to sell 300,000-315,000 barrels of oil equivalent per day, up from February’s forecasts of 295,000-315,000 for 2015. “There’s 5,000 wells in the

US that have been drilled but uncompleted,” Matt Smith, global energy commodity analyst at Schneider Electric told CNBC’s Squawk Box.




“If those come back to market, as there is the financial incentive (currently) to do so, that could bring hundreds of thousands of barrels back to the market when we’re still in a situation of imbalance.” There are plenty of headwinds for oil, a Bank of America Merrill Lynch report said. Refineries are going into maintenance in the fall which will decrease demand for oil. The strengthening US dollar will also pressure dollar-priced commodities like oil which become more expensive for holders of other currencies as the greenback appreciates. Many hence feel, oil markets are not out of woods - yet - despite the surge. “We don’t think we’re out of the woods yet when it comes to oil markets improving,” Barclays oil analyst Miswin Mahesh told Worldwide Exchange. “The rally from this year’s low is impressive, but it contains the seeds of its own destruction in potentially re-stimulating supply and curtailing demand,” Hufton was quoted by WSJ as saying. Markets are simply awash with crude. “We’ll see weakness come back into crude prices as basically we’re still one and a half million barrels oversupplied on a global basis,” Matt Smith emphasized.

“I think the downward pressure is going to build,” analyst John Kilduff told CNBC, underlining that all the elements that brought oil down to the low-$40s remain in place. For example, US production has not gone down “one iota,” he noted. “We’re a million barrels over last year. If we get more Iranian barrels on the market from the easing of the sanctions, the perfect storm




will re-emerge - particularly later in the summer when our refiners go into maintenance to gear up for the winter heating season,” he said. “You could see a real glut develop once again and it will get ugly.” An ANZ report highlights that the latest US data showing a rise in gasoline inventories was also stoking fears of weaker demand going into the northern hemisphere summer. Despite oil prices hitting a 2015 high, global demand remains soft and higher prices are transitory, a Bank of America Merrill Lynch report said. “I think as we move into the September-October contracts, we are going to see some downward pressure again,” said Francisco Blanch, the firm’s head of commodities.

Fundamentals “hardly,” justify a market rally, the Bank of America Merrill Lynch report added. “[The rally] conceals a weak underlying fundamental balance.” The bank sees US crude prices double dipping to $50 a barrel as refinery maintenance kicks in again in September before recovering to $57 a barrel by year-end. Bank of America has also raised its forecast for Brent, the global oil benchmark, to $63 a barrel at the end of the second quarter, but lowered its 3Q estimate to $54 a barrel. The main reason for the recent price rally is the increased demand for gasoline as consumers have taken advantage of low fuel prices. “US motorists have returned to the streets on a large scale, clocking an average 229 billion highway miles in January and February, up 3.9% year-on-year, while rediscovering their love for SUVs,” the report reads. Eugene Graner, of Bismarck-based Heartland Investor Services is quoted as saying that the current run up to $62 a barrel from the $40s was a seasonal rally and won’t spike past $65. He was of the view that the rally may last several months, yet, ultimately the price of oil would sink into the $35 to $40 range in the fall. “A lot of people are looking for $70 a barrel, and they’re not going to get it,” he was emphatic. Markets are not too optimistic. Signals being emitted indicate a bearish market - in the months to come. And it was apparently in this very perspective that Saudi Oil Minister Ali Al-Naimi, while talking to CNBC, underlined that “no one can set the price of oil – it’s up to Allah”. He had a point. Markets are under no one’s control. Those days are gone - and - forever!




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

Your partner in Energy Services

NewBase energy news is produced daily (Sunday to Thursday) and

sponsored by Hawk Energy Service – Dubai, UAE.

For additional free subscription emails please contact Hawk Energy

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 10 May 2015 K. Al Awadi

newbase 600 special 10 may 2015

Economy & Finance

dubai sustainable

uae dubai carbon

sustainable energy

dubai plan

ruler of dubai

goals of dubai

clean energy

renewable energy