newbase 619 special 04 june 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

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NewBase 04 June 2015 - Issue No. 619 Khaled Al Awadi

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

Dubai among Leading Global Maritime Hubs Dubai trade.ae + NewBAse

Dubai is poised to become one of the top seven leading maritime centers in the world over the next five years, according to a recent international survey conducted by Menon Business Economics Group.

Menon Business Economics Group, a renowned organization for benchmarking leading maritime capitals of the world, polled around 1,600 maritime professionals and experts from 33 countries of all five continents. Industry analysts and authorities agree that Dubai is on track to progress from being the leading maritime city in the Middle East to becoming the seventh leading maritime capital of the world by 2020, ahead of cities such as London (UK), New York (US), Tokyo (Japan), Copenhagen (Denmark), and Rio de Janeiro (Brazil) among others, said the report. Dubai ranked fifth overall under the Ports and Logistics indicator, and was named one of the five largest port operators in the world by headquarters, it said. Industry experts positioned the city 10th in the world in relation to both the size of ship owners’ fleets and size of fleets managed from the city, ahead of cities such as New York (US), Rotterdam (Netherlands) and Oslo (Norway).




Dubai also ranked among the Top 10 global players in terms of leading centers for port and logistics services (sixth); site of world-class specialized logistics services (sixth); and volume of twenty-foot equivalent units (TEU) handled in city ports in 2013 (10th). Abdulla Abdul Rahman Al Shaibani, secretary general of the Executive Council of Dubai, said: “We are pleased with Dubai’s standing in the maritime sector global rankings. Being the number one in the region, and among the top players globally, indicates that we are moving in the right direction.” The world’s leading maritime cities were benchmarked based on the four main maritime indicators based of finance, technology, ports and logistics, as well as shipping, in addition to an overall assessment of the cities’ competitiveness and attractiveness. The survey noted that strong knowledge centers with a solid pool of experts attract more maritime business to a city, and that marine insurance is essential to a functioning shipping market. With these features in mind, Dubai was again placed 10th in the world in terms of both the number of maritime legal experts practicing in the city and insurance premiums collected (in millions of US dollars) in 2013, said the statement. Respondents also ranked Dubai ninth in the world in terms of the number of ships classed by societies headquartered in the city. Sultan Bin Sulayem, chairman of Dubai Ports, Customs and Free Zone Corporation and president of the Dubai Maritime City Authority, said: “As the results show, we are particularly adept at providing world-class port and logistics services, and so we shall further reinforce our capabilities and resources in this area. We will also aim for excellence in other key indicators such as shipping services, maritime legal expertise, maritime insurance, and competitiveness and attractiveness.” “Dubai Maritime City Authority (DMCA) will continue to push for more infrastructure investments, introduce impactful policies and regulations, and hone more local expertise to expedite Dubai’s transformation into one of the world’s leading maritime hubs,” he added.




Qatar: RasGas’ emissions cut steps shared at WGC Gulf Times + NewBase

RasGas’ greenhouse gas emissions reduction initiatives were shared at World Gas Conference, now being held in Paris. A high-level delegation of RasGas is participating in the 26th World Gas Conference (WGC), and is also part of the Qatar Petroleum pavilion in the exhibition, which is being held on the sidelines of the conference.

“As one of the prominent global energy suppliers, RasGas continues to invest in technology solutions to enhance business requirements and to be prepared to meet future challenges in an effective and efficient manner,” said Hamad Mubarak al-Muhannadi, RasGas chief executive officer. Through a presentation, RasGas showcased a series of projects it has launched with an aim to reduce greenhouse gas emissions, underlining its commitment to environmental protection. While presenting the paper on RasGas’ green initiatives, Abdulla M al-Attiyah, acting head (Facilities Assessment - Venture Development Planning) at RasGas, said Qatar was continually striving to be at the forefront of measures to conduct its operational activities with minimum impact to the environment. “RasGas’ projects for reduction of greenhouse gas emissions will capture, treat, inject and /or re-use CO2 rich streams from the existing Sulphur recovery units at its plants in Ras Laffan Industrial City in Qatar,” said al-Attiyah. Al Attiyah continued by noting that the series of projects by RasGas (acid gas diversion, CO2 injection and export tie-ins) is an integrated programme, that when fully implemented, would reduce the atmospheric emissions of CO2 by up to 2.5mn tonnes per year at RasGas or the equivalent CO2 emissions of approximately 500,000 passenger vehicles. It would strive to make maximum use of existing facilities, thereby enabling a potentially cost-effective pursuit of improved environmental performance.

RasGas executives among others at the World Gas Conference, now being held in Paris.




RasGas representative in the International Gas Union (IGU) working within the Programme Committee Group D, LNG, Kamran Javed, specialist (Short-term sales - Marketing & Shipping Group) presented the IGU paper titled ‘LNG as fuel’, which was officially released to the public at the WGC. This IGU study explores the evolving role of LNG as a fuel across many industries that consume hydrocarbon energy including transportation on road, rail, marine, aviation, heavy machinery, mining, drilling, agriculture and remote power generation. LNG itself is the physical form, which is regasified for consumption in natural gas engines and dual fuel (natural gas and diesel) engine applications. LNG as a fuel helps the environment when considered in the global climate debate by significantly reducing emissions such as CO2 up to 20% and sulphur dioxide up to 100% when compared against other fuels like marine fuel oil or motor gasoline. The IGU study aims to increase the awareness of LNG as the rapidly evolving fuel alternative, and promote informed discussion on tangible next steps for a safe, economic and reliable use of LNG globally. A success factor in the evolution of LNG as a fuel is the growth and availability of small scale LNG, which is a rapidly developing business across the globe with new regions opening up and new players entering the sector while existing players expand. In addition to the ‘LNG as Fuel’ study, RasGas participated in two additional IGU studies and helped write the World LNG Report – 2015 Edition, which was issued at the WGC. RasGas is an active member of the IGU, which is a leading organisational body for the promotion of natural gas

and LNG use globally.

SO2 emissions RasGas trend 2006-2013




QP, JVs showcase Qatar natural gas feats at WGC Paris Gulf times

Qatar Petroleum (QP), along with a number of its major joint ventures and subsidiaries, is participating in the 26th World Gas Conference (WGC), which is now being held in Paris. With the theme of “Growing Together Towards a Friendly Planet,” the 26th WGC brings together the world’s leading energy players, decision makers and thousands of industry professionals for an in-depth discussion of the current issues and challenges as well as the future prospects of the global gas industry.

The triennial event is presented by the International Gas Union (IGU), a non-profit organisation whose 142 charter and associate members in 91 countries, including Qatar, account for more than 95% of the global gas market. Over 4,000 delegates from more than 100 countries are expected t attend WGC 2015.

Saad Sherida al-Kaabi, QP president & CEO said, “The 26th World Gas Conference is an excellent opportunity for Qatar Petroleum to showcase its globally recognised prominence and achievements in the gas industry, and to highlight the developments in the country’s gas sector. “Under the guidance and leadership of His Highness the Emir Sheikh Tamim bin Hamad al-Thani, we are committed to continuing our role as the most dependable supplier worldwide, supporting the industry’s growth and development, and to promoting innovation as natural gas gains increasing prominence in the global energy mix.”

Qatar’s strong presence at the conference was highlighted by Qatargas’ principle sponsorship of the event. On the opening day of the conference, Qatargas CEO Sheikh Khalid bin Khalifa al-Thani delivered a keynote speech, which focused on the theme “Natural gas – a Core Pillar of a Sustainable Energy Future.” The speech underlined the fact that LNG will play a major role in a sustainable energy future as it represents an attractive alternative to unsustainable, higher priced, higher polluting, and less reliable energy options. QP and its subsidiaries’ prominent participation in the event is in line with Qatar’s renowned position as the world’s leading producer of liquefied natural gas (LNG) with a production capacity of 77mn tonnes per year.

Top executives of QP and its major joint ventures and subsidiaries at the 26th World Gas Conference (WGC),

which is now being held in Paris. Qatar’s strong presence at the conference is highlighted by Qatargas’

principle sponsorship of the event.




Egypt signs €8bn power deal with Siemens Reuters + NewBase + The National

Egypt yesterday signed an €8 billion (Dh33bn) contract with Siemens to increase power generation capacity by 50 per cent, which is expected to provide a boost to the economy. The contract, which was signed in Berlin by the Egyptian president Abdel Fattah El Sisi, will add 16.4 gigawatts of capacity to the country’s grid, or enough electricity to power 16 million homes.

The binding agreement comes after an initial memorandum of understanding was announced in March at the Egypt the Future summit in Sharm El Sheikh.The German group will supply three natural gas-fired combined cycle power plants, each with a capacity of 4.8GW.

Siemens will work with the Egyptian companies El Sewedy Electric and Orascom Construction on the three power plants located in Beni Suef, Burullus and New Capital.

The plants will add power to the grid in stages, with the first 4.4GW coming online by themiddle of 2017. The company said the entire project will take 38 months to complete once its finances have been ironed out. Siemens is looking to tap international and regional banks for funding.

Siemens began negotiating this deal at the beginning of March, and said financing was not a concern at this stage. “We have started working on operations and will work diligently to reach financial close,” said Joe Kaeser, the president and chief executive of Siemens.

In addition to the gas-fired plants, the German company will also build up to 12 wind farms in the Gulf of Suez and West Nile regions. About 600 turbines will be erected, with an installed capacity of 2GW.

Siemens will also construct a wind turbine blade manufacturing plant in Ain Sukhna, about 120 kilometres east of Cairo. It is expected to employ 1,000 people. Egypt wants to double its power generation capacity by 2020 and has signed non-binding memorandums of understanding worth more than US$20bn.




Oman’s OPWP targets 5pc cut in power sector gas consumption in 2015 Oman Obverse

Oman Power and Water Procurement Company SAOC (OPWP), the sole procurer of all new electricity generation and water desalination capacity in the Sultanate, is targeting a 5 per cent reduction in the consumption of natural gas by the nation’s power sector for the current year.

The wholly government-owned utility announced the initiative in its 2014 Annual Report, which was issued here yesterday. The move is part of a slate of “strategic initiatives”, which include plans for a number of major power and water schemes, outlined for tendering and implementation during the course of 2015.

“Considering national priorities to manage the use of natural gas resources and the growing cost of energy subsidies, OPWP has launched a joint initiative with Oman Electricity Transmission Company (OETC) to make further improvements in gas utilisation by the power and water plants. In 2015, OPWP aims to achieve a 5 per cent reduction in the average amount of gas required for each unit of electricity generated,” the procurer stated.

Natural gas is the principal energy resource that fuels power and water plants across the Main Interconnected System (MIS), covering much of the northern half of Oman. Total gas consumption in the MIS was about 7.1 billion cubic metres in 2014, up 6 per cent from a year earlier, although electricity consumption grew by 11 per cent during the same period.

However, improvements in fuel efficiency over the past six years, notably through the construction of energy efficient power plants, have limited the growth in gas consumption to an average of 4.8 per cent annually, despite an average 10 per cent rise in annual energy demand during the same period, according to the procurer.

In other strategic initiatives lined up for implementation during 2015, OPWP aims to firm up plans to participate in pilot electricity trading activities with a member state of the GCC Interconnection Authority (GCCIA).

The pilot will help the Sultanate test and establish the necessary arrangements for firm capacity transactions, the utility said. “This would create an alternative option for short-term contingent capacity, for which OPWP has previously procured rental diesel generation when required,” it stated.

Membership of the GCCIA, which was formalised in December 2014, provides a number of significant benefits, including improved power system reliability, access to the planning and operating reserves of the interconnected system (comprising six GCC states), and opportunities to import or export electricity. Another key priority for OPWP is the formulation of detailed market rules governing the development of a wholesale electricity spot market in the Sultanate to be brought into operation by 2018.




Oil Addiction Will Put India Into Top 3 Global Guzzlers Bloomberg + NewBase

India’s growing middle class will soon make it the third-biggest oil consumer, reshaping the global energy map as China uses less and the U.S. produces more.

India will overtake Japan this quarter, International Energy Agency estimates show. The country’s galloping demand growth may eventually surpass China’s, a shift that was unforeseen just a few years ago.

As living standards improve, the number of Indians buying cars and trucks has risen, boosting gasoline use by 19 percent in April alone from a year earlier. The International Monetary Fund predicts the economy will swell by 7.5 percent this year as Prime Minister Narendra Modi makes business reforms, beating Chinese growth for the first time in a quarter-century.

India “reminds me of China a decade ago,” said Amrita Sen, chief oil analyst at London-based consultants Energy Aspects. “The demand growth is unbelievable.”

The country’s unbridled thirst for oil has helped bolster crude prices as they start to recover from a six-year low. It’s a further jolt to the energy market after the U.S. shale revolution pushed Russia out of the top spot for natural gas production and paved the way for the first American exports.

The IEA estimates India will consume about 4.1 million barrels of oil a day this quarter, compared with Japanese demand of 3.8 million barrels a day. The U.S. and China are the world’s top oil users.

Price Recovery

Oil has rebounded to about $60 a barrel from $45 a barrel in January. A price of $65 would be “equitable,” Indian Oil Minister Dharmendra Pradhan said Wednesday in Vienna, where the




Organization of Petroleum Exporting Countries is meeting to discuss production limits. India imports about 85 percent of its oil, with the majority coming from OPEC countries.

In April, the country’s oil use rose by about 300,000 barrels a day, similar to the growth rate seen in January and February. If that pace is maintained for the rest of the year, India may overtake China, whose annual growth is estimated at 295,000 barrels a day by the IEA.

“India is growing: We have a new government, a new confidence in the economy, people are driving more,” said Lalit

Kumar Gupta, chief executive officer of Mumbai-based refiner Essar Oil Ltd. “Even with oil prices rising, demand is continuing to increase here and will keep growing.”

Car Sales

Passenger-vehicle sales rose about 16 percent in April, according to the Society of Indian Automobile Manufacturers. It expects vehicle sales to grow as much as 8 percent this financial year.

“Cars are cheap and finance is available,” said Anand Dorairajan, a 32-year-old human-resources executive at a shipping firm in Mumbai. He bought a Hyundai car eight months ago to add to the Suzuki his family already owned, paying about $11,300. “When young people start working, they want to buy a vehicle with their first salaries. That’s what I did.”

As part of his ambitions for economic growth, Prime Minister Modi has proposed an end to government controls on fuel pricing, putting more money in the hands of state-run refiners. He has called on them to expand to meet demand as he works to shift the economy more toward manufacturing from services.

Indian Oil Corp. started a 300,000-barrel-a-day refinery on India’s east coast in April and plans to add capacity at a plant in Gujarat in western India. Bharat Petroleum Corp. intends to expand its refinery in central India and Chennai Petroleum Corp. will boost capacity in the south.

In all, processing capacity will rise more than 30 percent to about 6.2 million barrels a day by the end of the decade, according to Oil Ministry targets.

The jump in energy consumption is reminiscent of the early days of China’s demand boom. That country’s growth in gross domestic product soared toward 10 percent in the first half of the 2000s, pushing oil use beyond Japanese demand in 2003. China’s economy will grow by an estimated 6.8 percent this year, according to the IMF.




India refiners in talks with Iraqi oil firm on strategic reserves-sources Reuters + NewBase

State refiners Indian Oil Corp and Hindustan Petroleum Corp are holding talks with Iraq's national oil company to buy 4 million barrels of Basra light crude oil for India's strategic petroleum reserves (SPRs), three sources said.

India in March asked the state refiners to each seek two very large crude carriers (VLCCs) of Iraq's Basra crude oil for arrival in May-June totaling 8 million barrels for the reserves in the coastal city of Vizag in southern Andhra Pradesh state. But after being faced with having to pay a premium for spot oil purchases the refiners had decided to directly negotiate with Iraq's State Oil Marketing Organisation (SOMO), said the sources with knowledge of the talks.

So far the indications were that SOMO would supply the refiners with Basra Light crude at the official selling price, said one of the sources, who declined to be identified due to the sensitivity of the issue.

The sources said the refiners were looking for the oil supplies to arrive in the next two to three months. Hindustan Petroleum Corp (HPCL) declined to comment. Indian Oil Corp (IOC) and SOMO did not immediately respond to emails seeking comment.

HPCL last month awarded a tender for June loading to European trader BP at $1.40 a barrel above the official selling price (OSP). IOC, the country's biggest refiner, agreed to pay a premium of 50-60 cents a barrel to Chinese trader Unipec for a VLCC arriving in mid-June.

"The spot market is getting pricey now," said an Asian oil trader, highlighting recent spikes in Basra light premiums. "I think SOMO's ambition to push the OSP for Basra Light higher is achievable now." Spot premiums for Basra light crude hit a multi-year high after Iraq cut supply of the grade to export more of its new heavy grade in June.

In May, Iraq set the price for Basra Light cargoes loading this month at minus $2.55 a barrel against the average of Oman/Dubai quotes, up 25 cents from the previous month. SOMO is expected to raise the price for July-loading cargoes next week.

India's finance ministry has set aside 24 billion rupees (about $375 million) from revised budget estimates for the current fiscal year to pay for filling its first SPR allocation. The Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels. The smaller compartment will be used by HPCL for its 166,000 barrel-per-day Vizag refinery.

HPCL is using Nigerian Qua Iboe oil supplied by Unipec for the smaller compartment. A total of three SPRs in the south of India will hold more than 36 million barrels of oil, enough to meet about 13 days demand in India in case of a supply disruption or extreme price volatility. The two other SPRs, at Padur and Mangalore in southern Karnataka state, will have a capacity of 29.3 million barrels and are expected to be ready by Octobe




Oil Price Drop Special Coverage

Oil prices dip as crude glut overshadows strong fuel demand

Oil prices dipped today Thursday 4th June 2015 as a large crude glut and a sliding dollar overshadowed strong global fuel demand. Front-month Brent futures LCOc1 were down 16 cents at $63.64 per barrel by 0300 GMT. U.S. crude futures CLc1 dropped 12 cents to $59.52.

Crude markets remain oversupplied ahead of Friday's meeting of the Organization of the Petroleum Exporting Countries, which is expected to continue to produce about 2 million barrels per day above demand, adding to a glut that has left millions of barrels stored on tankers without a buyer.

Energy advisory Wood Mackenzie said that it was very unlikely that OPEC would agree to cut output at its June 5 meeting and that it expected the group's crude output to remain just above its 30 million bpd production ceiling through 2016.

The company said it forecast Brent to average $60 a barrel in 2015 and $70 in 2016. But strong global fuel demand curbed declines in prices. Goldman Sachs said that Europe's high diesel consumption was a risk to the bank's bearish Brent outlook of $58 per barrel for 2015 and $62 for next year.

European diesel demand grew 7.2 percent, or 420,000 barrels per day (bpd), in the first quarter of this year compared with the same period of 2014, bolstering Brent prices, according to Goldman. "EU diesel strength is a risk to our bearish Brent view," the bank said, adding that diesel accounted for 45 percent of Europe's product output and 43 percent of its demand.

Goldman said that it expected demand to grow by 220,000 bpd, or 3.5 percent, for the rest of 2015. It sees full-year growth among the strongest in 30 years at 270,000 bpd. Asian fuel demand is also strong, driven by China where car sales remain strong at around 2 million a month despite slowing economic growth.




Oil market 'comfortable’ with current unrest risk SG+Agencies+NewBase

Recent unrest in the Middle East and North Africa has little impact on oil prices because the market has become "comfortable" with risk, Saudi Arabia's Oil Minister said Wednesday. Questioned about ongoing violence in Iraq, Libya, Yemen and also Saudi Arabia, Ali Al-Naimi replied that there was "very, very small" risk premium in the current oil price. "This premium is there but fortunately the world is getting very comfortable with the risk," said

Naimi, addressing an OPEC seminar before the organization’s output meeting on Friday. "That is why you see that portion is really very small no matter what is happening ... in the most productive part of the Middle East. "They don't seem to be affecting production, shipping, demand, supply... The risk

premium is there, but it is very, very small because of the variability of supplies." This week's production meeting of the Organization of Petroleum Exporting Countries (OPEC) takes place against a backdrop of sharply lower oil prices that have slashed revenues for the organization’s 12 members. At its last meeting in November, OPEC – which pumps around 30 percent of the world's oil – kept its collective production target of 30 million barrels per day. This was despite a sharp fall in oil prices and was seen as an attempt to maintain OPEC's share of a market flooded by a vast supply glut – caused partly by booming US shale oil. The Saudi-backed strategy appears to have paid off, analysts say, with shale oil producers – which have higher production costs – squeezed and the oil price recovering in recent months. However on Wednesday, world oil prices sank by more than a dollar, as oversupply concerns resurfaced. Market chatter over a possible OPEC output hike also sent the market lower. In London midday deals, Brent North Sea crude for July shed $1.60 to $63.91 per barrel, compared with Tuesday's closing level. US benchmark West Texas Intermediate (WTI) for delivery in July lost $1.38 to $59.88 a barrel. The market has witnessed volatile trade this week. On Tuesday, New York oil prices surged to 2015 highs as the dollar dived on the back of positive eurozone economic data, even as officials at OPEC defended their strategy.

From left: British energy giant BP CEO Bob Dudley, Executive

Director of the International Energy Agency, Dutch Maria van der

Hoeven, Saudi Arabia's Oil Minister Ali Al-Naimi, OPEC Secretary-

General Abdalla Salem El-Badri and Exxon Mobil Chairman and

CEO Rex Tillerson attend the Organization of the Petroleum

Exporting Countries's 6th International seminar at Hofburg Place

on Wednesday in Vienna, prior to Friday's OPEC meeting — AFP




With oil prices having stabilized at around $65 a barrel, some $20 above their January lows, there's little appetite within the Organization of the Petroleum Exporting Countries to modify production limits or address Iran's request to give it more room in the market as sanctions ease. "There is consensus among Gulf OPEC countries, and others, to keep the ceiling unchanged," a senior Gulf OPEC delegate told Reuters late on Tuesday after an informal meeting of the four core Gulf Arab OPEC members earlier in the day. Iraqi oil minister Adel Abdel Mahdi said there was "optimism and general acceptance with the current situation". The group meets on Friday following a two-day seminar featuring the chief executives of the world's biggest energy groups, including BP and Exxon, companies whose fortunes have been abruptly altered by OPEC's decision to abandon efforts aimed at sustaining oil prices at more than $100 a barrel in favor of defending market share. "Nobody wants to rock the boat," the Gulf source said. "The meeting is expected to be smooth sailing." OPEC Secretary-General Abdullah Al-Badri said on Wednesday that it would likely be a brief meeting. "Everything is very clear," Badri said. OPEC members are producing more than 1 million barrels per day (bpd) above the group's collective ceiling of 30 million bpd, with Saudi output at its highest in at least three decades, a Reuters survey showed, leaving the group little room to pump more. There may still be some choppy moments. Iran is seeking to clear space for its gradual return to the oil market after years in which Western sanctions halved its oil exports to as little as 1 million bpd. "If OPEC members want to keep prices at the same level, we expect them to make room for Iranian oil," oil minister Bijan Zanganeh was quoted as saying by Shana news agency. But he told an OPEC seminar in Vienna he was confident that other producers would "coordinate and consider" Iran's return, which would "not have a negative impact" on the market. While Zanganeh said Iran would be pumping another 500,000 bpd within a month of lifting sanctions and up to 1 million bpd within six or seven months, most analysts believe it will be months or up to a year for any significant increase to occur. That's even if Iran and world powers meet a June 30 deadline for finalizing a pact on curbing Tehran's nuclear program. "Due to heightened uncertainty with an (Iran nuclear) deal, we think OPEC is likely to take a wait-and-see approach to the prospect of additional oil," analysts at Barclays wrote. Some analysts, including those at Morgan Stanley, have raised the remote possibility that OPEC might surprise the market by increasing the output ceiling. Some of OPEC's 12 members have dismissed that option.




Shell CFO Expects Oil Rebound as Shale Fails to Fill Supply Gap Bloomberg + NewBase

Royal Dutch Shell Plc sees oil prices increasing because supply from shale drilling in the U.S. won’t be enough to meet increasing global demand.

The industry needs to find an additional 4 million barrels to 5 million barrels a day of supply every year to meet rising demand and replace depleted fields, Shell Chief Financial Officer Simon Henry said in an interview on Tuesday.

“Lower oil prices increase demand and reduce investment, and it already has,” Henry said. Global demand of about 93 million barrels a day is increasing by 1 million every year, he said in London.

Oil producers are delaying or canceling projects and cutting costs after crude slumped by about 40 percent

over the past year because the Organization of Petroleum Exporting Countries gave up defending prices in favor of grabbing market share from U.S. shale producers.

“Within three to four years there will be a recovery,” Henry said. “Whether it will take one, two or three years, that’s difficult. It will depend a bit on whether OPEC has cohesion or not and on the reaction in the U.S. on the shale and also other big investments.”

OPEC, which supplies about 40 percent of the world’s oil, probably won’t cut production at a meeting in Vienna this week because the rationale for the current policy remains in place, Henry said.

Shell, which in April agreed to acquire BG Group Plc for $70 billion, is seeking to complete filings for antitrust approval in the main jurisdictions, including Europe, China, Australia and Brazil, by the end of this week, Henry said.

“In every country so far the response has been neutral to good,” Henry said. “So far so good, still early days, and we don’t expect to complete before the early part of next year.”




What's OPEC Going to Do With Iran's Million Barrels a Day? Bloomberg + NewBase

Just when it looked like OPEC was winning the war with U.S. shale-oil drillers, a new front is opening up within its own ranks.

The Organization of Petroleum Exporting Countries’ summit on June 5 to determine the group’s output will come three weeks before a deadline for a deal on Iran’s nuclear program. The government in Tehran says it can add almost 1 million barrels to daily production within six months of sanctions being lifted.

That’s a million barrels that OPEC hasn’t had to worry about since it adopted a new strategy in November of favoring market share over propping up prices. The group is already pumping the most oil in more than two years to quash higher-cost producers, and while Iran’s return would add to the pressure on OPEC’s rivals, it will also heighten competition within the group for buyers.

“There’s a lot of jockeying for position going on in OPEC right now,” Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S, said by phone. “The Saudis are increasing production and anyone else in OPEC who can is also doing the same. If OPEC’s not willing to cut output to make room for Iran, they have to look for reductions from producers outside the group.”

OPEC will maintain its output target of 30 million barrels a day when it meets in Vienna, according to all but one of 34 analysts and traders surveyed by Bloomberg last month. In reality, the group has been pumping more than that for a year, a sign of its determination not to cede a single barrel of market share to rival producers.

Restoring Share

Iran, once OPEC’s second-biggest producer and now the fifth-largest, fully intends to “restore its lost share of the oil market,” Oil Minister Bijan Namdar Zanganeh said May 6 in Tehran. OPEC must accommodate his country’s increased output, he said in comments reported by the Shana news agency in April.

OPEC’s strategy is working: The number of active U.S. oil drilling rigs has fallen by a record 60 percent to 646; output from American shale formations fell in May for the first time since February 2011; and producers have cut billions of dollars from their spending plans. In contrast, Saudi Arabia, OPEC’s biggest member and the architect of its strategy, is deploying the most rigs in at least two decades and operating with the lowest spare production capacity in about three years.

Nuclear Talks

Iran and six global powers including the U.S., Russia and China seek to finalize by June 30 the terms and details of a nuclear agreement that would curb Iran’s nuclear program in exchange for an easing of sanctions. Discussions are set to resume in Vienna this week. Both sides have said difficult issues cloud the outlook for success.

Increased production from Iran, and its neighbor Iraq, will heighten competition within OPEC for sales to the fastest-growing markets in Asia and test the group’s unity. It also threatens to kill the 40 percent rally in crude prices from a six-year low in January.




Brent crude, the benchmark for more than half the world’s oil, traded 0.6 percent lower at $65.11 a barrel on the London-based ICE Futures Europe exchange at 1:17 p.m. Singapore time.

Iraq shipping plans signal all-time-high exports this month as the country recovers from decades of war and sanctions. The nation pumped a record 3.87 million barrels a day in May, according to data compiled by Bloomberg.

Iran produced 2.8 million barrels a day of crude last month, compared with as much as 6 million in the 1970s, data compiled by Bloomberg show. A lifting of sanctions that have limited exports would also spur spending on the country’s oil industry, which controls the world’s fourth-largest reserves. Talks with foreign investors have already begun.

Lifting Sanctions

World powers reached an outline accord with Iran in April. If a final agreement is reached, U.S. and European sanctions will probably be phased out rather than lifted at once, meaning additional exports from Iran probably won’t hit markets until next year, according to Societe Generale SA.

The best option for OPEC in the event of Iran’s reinstatement might be to keep pumping and hope the extra supply is absorbed by rising demand, said Mike Wittner, the head of oil market research at Societe Generale in New York.

“If anything, it adds to OPEC’s strategy of let the low-cost producers produce all-out, and let the high-cost producers be the ones to cut spending, drilling and production,” Wittner said by phone May 29.

A slug of Iranian oil could hit the market even before the country raises output. It has about 10 million barrels sitting in storage on ships, Deputy Oil Minister Roknoddin Javadi said in Kuala Lumpur in May.

Yemen Rebels

Saudi Arabia, with a majority Sunni Muslim population, and predominantly Shiite Iran are increasingly at odds in a struggle for regional influence. Iran has stated its support for rebels in Yemen, whom the Saudis oppose, and is backing Iraq’s Shiite-led government.

“The Saudis would probably not make room for them,” Francisco Blanch, Bank of America Corp.’s head of commodities research, said by phone from New York. “There’s not a lot of friendship between those two.”




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

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

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

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

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

NewBase 04 June 2015 K. Al Awadi

newbase 619 special 04 june 2015

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