New base 1011 special 19 march 2017 energy news

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,

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NewBase 19 March 2017 - Issue No. 1011 Senior Editor Eng. Khaled Al Awadi

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

UAE Dewa’s Mohammed bin Rashid Al Maktoum solar park to provide power for Expo 2020 site

The National

The Dubai Electricity and Water Authority (Dewa) will provide power to the Expo 2020 site including 400 megawatts from its Mohammed bin Rashid Al Maktoum solar park. A memorandum of understanding signed by Dewa and expo organisers will ensure electricity and water is delivered for the event from October 2020 to April 2021.

Dewa will invest Dh420 million into the infrastructure needed for the expo including three substations and 45 kilometres of cabling, a statement from the expo organisers said.

About half of the event’s power needs will be met from renewable sources and Dewa is supporting the organisers’ efforts to build capacity on site including at the Sustainability Pavilion.

"This agreement opens up many opportunities as we share knowledge and experience in a joint effort to maximise our reliance on clean energy, such as solar power," said Sheikh Ahmed bin Saeed, the Chairman of Expo 2020 Dubai Higher Committee, according to the statement.

Saeed Al Tayer, Dewa’s managing director and chief executive, said the tie-up with Expo 2020 Dubai supported the UAE’s strategy to increase the use of clean energy.

"Dewa has dedicated a large part of its budget for its clean energy projects to align to the Dubai Clean Energy Strategy 2050 to generate 7 per cent of Dubai’s total power output from clean energy by 2020, 25 per cent by 2030, and 75 per cent by 2050," he said.

Dewa is spending Dh3 billion to help the emirate meet rising demand for electricity.




MENA power and utilities green solutions investment valued at $8.7 billion in 2016 … Saudi gazette

Mergers and acquisitions (M&A) in the renewables sector picked up in 2016 across the Middle East and Africa after a long period of slow activity, EY report ‘Power transactions and trends: 2016 review and 2017 outlook’ revealed.

Greenfield activities continue to dominate power and utility transactions in the region, attracting $8.7 billion of investment last year (based on disclosed values).

Key investment announcements in the last quarter of 2016 included the Kuwait Fund for Arab Economic Development has coordinated a debt financing of $115.5 million to set up a desalination plant in Egypt. Additionally, in the UAE, consortium of lenders including Islamic Development Bank, Natixis, National Bank of Abu Dhabi, and First Gulf Bank investing $924 to build 800 MW Mohammed bin Rashid Al Maktoum Solar PV Phase III. The UAE also saw new projects across coal, nuclear, and solar, funded by both local and Asian investors, to support its raised renewable energy target from 24% to 26% to help fight climate change. Separately, Dubai launched a $US 27 billion green fund to support global sustainability projects.

David Lloyd, Middle East Power and Utilities Transactions Leader, EY, said: “In 2016 we saw the continuing successful deployment of the Independent Power Producer (IPP) model to procure new generating capacity, for both conventional and renewable energy.

DEWA’s achievement towards the end of 2016 in reaching financial close on the clean coal Hassyan IPP and Mohammed bin Rashid Al Maktoum Solar PV Phase III shows the pace and scale by which successful projects are coming to market in the region.

The focus in 2017 will be very much on the KSA renewable energy program, now that this has been launched by the Ministry of Energy, Industry and Mineral Resources, and on potential




investment opportunities from the Saudi Electricity Company’s unbundling into four generation companies.”

Middle East governments carrying out energy reforms

Governments in the Middle East are committed to energy reforms and have implemented energy reducing tactics, such as in Oman, where subsidiaries were removed and cost-reflective tariffs were introduced for customers using more than 150 MWh of electricity per annum. Also planning to increase electricity and water tariffs is Kuwait, who will target consumers of large quantities.

Saudi Arabia plans to cut electricity and water subsidies by $53 billion and by 2020, and have further plans to unbundle the state-controlled Saudi Electricity Company to eventual privatization. Moreover, a tender in 2018 for 300 MW will boost solar capacity in the kingdom, followed by other tenders for 900 MW in 2019 and 750 MW in 2020.

Egypt, one of the top 40 most attractive destinations for renewable energy, is planning to build solar plants with capacity for an estimated 250 MW. In December, Jordan, another top 40 destination, announced its third renewable energy tender for 200 MW and 100 MW wind energy capacity.

Governments are also showing a growing interest in digital and smart technologies. In November, the Bahrain Electricity and Water Authority agreed to partner with Siemens to modernize its grid infrastructure. The Qatar General Electricity and Water Corporation is partnering with Belgian consultancy Elia Grid to develop smart grid expertise.

“We see a clear intent to move on an accelerated basis to greater private sector participation throughout the power and utility value chain. This will create opportunities for both local and international investors, whether in corporate or project finance form. Our current belief is that the nearer term opportunities lie at the production end of the value chain, in both power and water, although we do see potential opportunities in the medium term in transmission, distribution and even retail,” David noted.




Qatargas agrees to double LNG supplies to Poland By Reuters

State-owned Qatargas has agreed to double volumes of liquefied natural gas (LNG) it supplies to Poland's gas firm PGNiG to 2 million tonnes per year at a price that may have positive impact on PGNiG's bottom line, the companies said.

The agreement comes as Poland is struggling to reduce its reliance on supplies of Russian gas, while a deepening global gas glut offers opportunities to bring in cheap LNG from Qatar and elsewhere.

For Qatar, which faces competition from Australian and U.S. producers, supply deals into Europe offer a valuable option as Asia's gas-consuming economies rein in new deals in light of a growing supply overhang. The deal is a side agreement to a long term-contract PGNiG and Qatargas signed in 2009.

The companies then agreed that Qatargas will deliver to Poland around 1 million tonnes or around 1.5 billion cubic metres (BCM) of gas annually for 20 years starting from 2014. At the time PGNiG estimated the deal's annual average value at around $550 million, based on prevailing oil prices.

The price in the side agreement was not revealed but PGNiG said pricing terms were "satisfactory" and expected

to have a "positive impact" on its financial results. An industry source said Qatargas's expanded deal with Poland likely came with a price discount – which PGNIG had been in talks to secure for several years after paying at the peak of the market last time around.

"We have conducted the talks for a few months. It was the best offer. (...) This is now the biggest Qatargas contract of this type in Europe," PGNiG deputy head Maciej Wozniak told a conference on Tuesday, repeating he could not reveal the price.

The new deal will come into effect at the start of 2018 and run until June 2034. The LNG will be supplied from Qatar Liquefied Gas Co, a joint venture between Qatar Petroleum, ConocoPhillips and Mitsui & Co, and will be delivered by Q-Flex LNG vessels to the LNG terminal in Swinoujscie at the Baltic Sea.

Poland's first LNG terminal on the Baltic Sea coast started commercial operations in summer last year and has been Poland's flagship project to reduce the country's reliance on supplies from Russia's Gazprom.

PGNiG also plans to build a gas link to Norway to receive up to 10 bcm of gas annually from the North Sea after 2022 when its long-term deal on gas supplies with Gazprom expires. Poland, which consumes around 16 bcm of gas annually, also wants to buy more gas on the spot market.




UAE: Plans revealed for first 'green' Masdar City community Arabian business

Plans have been revealed for the first residential community of private “green” villas and townhouses at Masdar City, Abu Dhabi’s flagship sustainable urban development.

LEAD Development and Project Management Consultants (LEAD) and The National Investor (TNI) will build the project, which will also include apartments, and is to be delivered over 250,000

sq m of gross floor area.

The freehold real estate development will accommodate around 5,000 residents when completed in 2022, and will be open to both UAE and foreign national investors, a statement said.

Residential property will make up more than 90 percent of the mixed-use development while about 7,800 sq m has been set aside for community amenities, and there is additional space for commercial units. It is a great opportunity to be working closely with Masdar to deliver this unique sustainable development,” said Abdullah M Mazrui, chairman of TNI.

“LEAD and TNI will work with the Masdar team to deliver a project in line with Abu Dhabi’s regulations for sustainable, water and energy efficient real estate developments. On behalf of our investors and management team, we would like to thank all those involved in making this vision and opportunity a reality, bringing to life a unique community that will complement the lifestyles of its diverse residents,” he added.

Mohamed Jameel Al Ramahi, CEO of Masdar, said: “Our ongoing successful development of Masdar City is demonstrating how cities can be economically, socially and environmentally sustainable, reducing energy and water demand and the production of waste efficiently and cost effectively, while also building thriving communities.

“The private sector has a vital role to play in promoting the wider adoption of commercially viable solutions to urban sustainability challenges, and in sharing knowledge and experience across the industry. LEAD and TNI share our vision for low-carbon urban development, and we are delighted to be working with them in realising the future expansion of Masdar City.”




Saudi Arabia Says Oil-Supply Cuts May Be Extended If Needed by Kathleen Hays ,

OPEC and its allies may prolong production cuts after they expire in June if the world’s crude inventories remain excessive, Saudi Arabia’s Energy Minister said. The curbs will be sustained if stockpiles are “still above the five-year average, if the markets are still not confident in the outlook, if we don’t see companies and investors feel good about the health of the global oil industry,” Khalid Al-Falih said in a Bloomberg television interview in Washington. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation.” The Organization of Petroleum Exporting Countries will meet on May 25 to decide whether to continue its production cuts, aimed at ending a slump that battered the economies of energy exporters around the world. The strategy is moving global markets in the “right direction” and fundamentals have improved considerably, Al-Falih said.

So far, Saudi Arabia has shouldered the bulk of OPEC cuts, trimming February output to 10.011 million barrels a day, which is below the ceiling imposed by the agreement. OPEC output in February was 1.39 million barrels a day lower than its reference level. Brent crude rose as much as 0.3 percent to $51.87 on Friday and traded at $51.81 as of 12:39 p.m. in Singapore. But among the 11 non-members joining OPEC in the accord, compliance is lagging. Led by Russia, the countries reduced their February output by 240,000 barrels a day from October-November levels, or 43 percent of their promised 558,000-barrel reduction, according to Bloomberg calculations using preliminary data from the agency.




Still, OPEC’s partners are “fully committed” to cutting output, Al-Falih said. He characterized any lags in compliance as par for the course: “Some are trying to iron out the process of controlling production, which they’ve never done before,” he said. “I believe in the sincerity of their effort.” U.S. Prices

In the U.S., higher oil prices triggered by the OPEC agreement have spurred investment in the shale industry, potentially signally another production boom that could undermine OPEC’s goal of rebalancing the market.

“Certainly, I have made clear that the excessive production that I saw coming out of shale three, four years ago cannot be absorbed by the global market,” Al-Falih said. “We will see what levels of production are. We hope they will be manageable.” Another price crash also would bode ill for Saudi Aramco’s highly anticipated IPO, expected in 2018. The kingdom hasn’t decided yet where it will list the world’s biggest company, Al-Falih said. Saudi Arabia has said that the oil giant is worth more than $2 trillion, more than twice what analysts and industry executives say it’s worth. “The markets will ultimately determine the real value of Saudi Aramco,” Al-Falih said. “All I can say is it’s a fantastic company.”




Saudi Arabia and China's agree to more cooperation on oil

Let’s consider recent China's push to turn its sovereign wealth fund and biggest oil producer into cornerstone investors in the initial public offering of Saudi Arabian Oil Co. China Investment Corp. would be the biggest investor in the Saudi Aramco IPO, which could be worth up to $100 billion, people with knowledge of the matter told Bloomberg News. PetroChina Co. parent China National Petroleum Corp. would also take a stake under plans being discussed between the powers, the people said.

Mirror Image

China is becoming an exporter of capital just as Saudi Arabia's budget weakens

There's a simple logic to a deal. Right now, what China wants most is to put its money to work on a global scale; Saudi Arabia, on the other hand, needs cash. The two desires are complementary: The Arab country is seeking to plug its fourth consecutive budget deficit, just as its Asian counterpart switches to being a net exporter of capital for the first time in its modern history.

There's another factor. China has become more dependent on foreign crude after domestic production entered a slump last year. That surging demand, and Saudi Arabia's inability to meet it while still providing supplies to other long-term customers, has meant the kingdom losing its status as China's predominant supplier.

Russia provided about 1.5 million metric tons more crude to the country during 2016, and in the month of September -- when junior OPEC members were pumping hard to lift their baseline production targets ahead of the cartel's first output cuts in eight years -- Riyadh was briefly overtaken by both Angola and Iraq.




New Kids on the Block

Saudi Arabia used to dominate China's oil supplies. It's now fighting for its position

That dynamic is the biggest threat to the long-term health of this marriage. Equity stakes, like any other form of wasta or guanxi -- the Arab and Chinese terms for "connections" -- are an attractive way of decorating the Saudi-Chinese relationship, but it's hard economic realities that undergird ties.

If Saudi's King Salman bin Abdulaziz used his current Beijing visit to ask the Chinese to stop buying crude from the Russians, he would quickly find out how much leverage Aramco's mooted marriage to China Inc. would deliver.

For the moment, the world's biggest oil importer and its biggest exporter are natural allies -- but they will always be ruthless when it comes to their national interests.




Uganda: CNOOC exercises its pre-emption rights in respect of Tullow's farm down to Total in Uganda Source: Tullow Oil

On 9 January 2017, Tullow Oil announced that it had agreed to farm-down 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total E&P Uganda for a total consideration of $900 million.

CNOOC exercises its pre-emption rights in respect of Tullow's farm down to Total in Uganda

CNOOC has notified Tullow that it has exercised its pre-emption rights under the joint operating agreements between Tullow, Total and CNOOC to acquire 50% of the interests being transferred to Total on the same terms and conditions that were agreed between Tullow and Total (including as to the amount, structure and timing of the consideration payable to Tullow).

Tullow will now work with Total and CNOOC to conclude definitive sale documentation in relation to the farm-down. Completion of the farm-down is subject to certain conditions, including the approval of the Government of Uganda. Once the farm-down has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.




Azerbaijan:BP sends second Shah Deniz 2 platform jacket offshore Source: BP

The Shah Deniz consortium has announced the sail away of the second jacket for the Shah Deniz Stage 2 platforms. The Quarters and Utilities (QU) platform jacket sailed away to the Shah Deniz contract area in the Caspian Sea from the Heydar Aliyev Baku Deepwater Jackets Factory (BDJF) ahead of schedule on 15 March.

The transportation, launch, positioning, pile installation and final completion activities of the jacket structure are expected to take around 75 days, depending on the prevailing weather conditions.

The construction of the jacket was completed ahead of schedule on 20 February 2017 and was then successfully loaded onto the transportation barge STB-1 at the quayside of BDJF.

The QU platform jacket, built by the BOS Shelf, Star Gulf and Saipem consortium, was fully constructed in country at the BDJF, using local construction infrastructure and facilities. 2000 people including sub-contractors and specialist vendors were involved in the construction works. Some 90% of the construction workforce was Azerbaijani citizens.

Ewan Drummond, Vice-President, Shah Deniz 2 Projects, said:

'The second jacket sail away is the first major milestone planned for this year and we are pleased to have achieved it ahead of schedule. 2017 is an important year for BP and for the Shah Deniz 2 project, which is already around 90% complete. We have planned a series of key completion milestones for this year. We are committed to achieving all of these milestones on schedule to make BP’s 25th anniversary celebrations in Azerbaijan a big success.

'On this occasion, I would like to thank SOCAR and our partners for their support and cooperation in moving this giant project forward. My thanks are also to all people representing BP, contractors and subcontractors whose hard work has made it possible to achieve this milestone ahead of schedule. I would like to specifically thank the BOS Shelf, Star Gulf and Saipem consortium for their firm commitment to BP’s safety standards throughout the 22-month construction period of this jacket. This is a great safety achievement and I am confident that the offshore installation will be performed with the same level of commitment to safety and quality'.

The QU platform jacket weighs approx. 12,084 tonnes and stands 105 metres high. It contains 31 J Tubes, 7 utility caissons and 3 J tube caissons. The jacket will be installed in a water depth of 95 metres.




US: Increasing exports contribute to large draw on propane inventories this winter U.S. EIA Weekly Petroleum Supply Report

U.S. propane inventories, which had been above historical norms since mid-2014, declined by 59 million barrels from the beginning of October 2016 through early March 2017, the largest decline on record for this period, despite unseasonably mild temperatures.

Inventories at the beginning of October were nearly 29 million barrels above the previous five-year average, but by March 3, fell to just slightly below the preceding five-year average for the first time since May 2014, based on data from EIA’s Weekly Petroleum Status Report. The strong inventory draws occurred despite weak heating demand this winter and mainly reflect rapid growth in propane exports.

Although propane has uses in the petrochemical and agricultural sectors, its dominant domestic use is as a heating fuel for homes and businesses during the winter. Because of the seasonal pattern in propane consumption, propane inventories typically peak between late September and mid-October and fall to their lowest levels in March.

The inventory draw this winter, as of March 10, was nearly 23 million barrels larger than the draw last winter (2015–16) and 19 million barrels larger than during the winter of 2013–14, which featured several extremely cold weather events.




As domestic propane consumption has remained relatively flat or declined on an annual basis, U.S. exports of propane have continued to increase. Rising production and lower seasonal heating demand over the past two winters, in particular, have meant that more propane has been available for export. U.S. propane is exported to many different countries where it is used as a petrochemical feedstock, for transportation fuel, and for space heating. Similar to the United States, the use of propane as a heating fuel in other countries is seasonal, and the destination mix for U.S. exports of propane can be influenced by patterns of seasonal heating demand in different countries. However, most of the growth in U.S. propane exports serves growing demand from the expanding petrochemical sector in Asia.

Over the past four years, new and expanded export terminals and a growing shipping fleet increased the United States’ capacity to export propane. In November 2016, Phillips 66 opened a new Gulf Coast export terminal capable of sending out 150,000 barrels per day (b/d) of propane or butane. Gross U.S. monthly propane exports were 1.05 million b/d in December 2016, the first month that propane exports exceeded 1 million b/d.




NewBase 19 March 2017 Khaled Al Awadi

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

Oil Prices settle,WTI at $48.78, Brent at $ 52.00 when week end Reuters + Newbase

Oil prices were largely steady on Friday, and looked set to finish the week with modest gains after losing almost 10 percent last week on concerns that an OPEC production cut was failing to reduce a global supply overhang.

Crude traded in a narrow band this week, with Brent and West Texas Intermediate bouncing in a $2.50 range as investors weighed the impact of the first oil cut from the Organization of the Petroleum Exporting Countries in eight years against rising U.S. shale oil output and high inventories.

Brent crude were up 3 cents at $51.77 per barrel, as of 3:34 p.m. ET (1934 GMT). U.S. West Texas Intermediate crude (WTI) settled up 3 cents to $48.78 a barrel, ending the week's trading about 0.6 percent higher.

However, oil has not been able to reclaim the range that prevailed through most of 2017 before last week's rout. Instead of rebounding to $53 a barrel, U.S. crude has remained stuck around $49. Analysts anticipate that regaining the old levels may be difficult without significant drawdown in inventories. "I think that most are just reassessing the current state of direction. Everyone who was bulled up the past few months has turned," said Carl Larry, president of Oil Outlooks and Opinions in Houston.

Oil price special

coverage




The potential for increased U.S. production continues to build, as Baker Hughes weekly rig count data showed an increase of 14 drilling rigs in the United States.

The market even failed to rebound after Saudi Arabia Minister Khalid al-Falih said on Thursday the cuts by the OPEC and non-OPEC producers could be extended beyond June if oil stockpiles stayed above long-term averages. "Neither a weaker dollar nor Saudi talk of doing 'whatever it takes' to bring inventories down to healthier levels is inspiring much buying," said Timothy Evans, analyst at Citi Futures in New York, in a note Friday. Evans noted that market sentiment may further weaken in the absence of a strong rebound to the previous range. Volume was low on Friday, with fewer than 125,000 futures contracts on CME changing hands by 1:15 p.m. EDT (1815 GMT), after the market's busiest stretch of the year last week. Six of 10 analysts polled by Reuters said they believed OPEC would prolong its output reductions past the deal's six-month duration. Saudi Arabia has cut output by more than its share under the November 2016 deal. Some ask whether Riyadh has the appetite to continue while several OPEC and non-OPEC states fail to comply and as shale production is expected to rise. The 11 non-OPEC oil producers delivered 64 percent of promised cuts in February, compared with 106 percent compliance from OPEC, an industry source said on Friday. On Thursday, Falih told CNBC there is a learning curve to cutting production, and Riyadh wants exporters to accelerate their learning and "get on board fully." OPEC and non-OPEC members agreed last year to cut output by a combined 1.8 million barrels per day (bpd) in the first half of 2017. But OPEC's monthly report showed global oil stocks rose in January to 278 million barrels above the five-year average. Later Friday, the U.S. Commodity Futures Trading Commission releases calculations of net long and short positions in the crude futures market.




Oil Little Changed as Saudi, Russia Send Mixed Signals on Cuts by Jessica Summers

Oil ended Friday little changed as Russia’s energy minister said it’s too early to discuss extending an output-reduction deal, reducing optimism a day after Saudi Arabia indicated that a rollover to the second half of the year is a near certainty. Saudi Arabia is ready to extend the cuts if supplies stay above the five-year average, Energy Minister Khalid Al-Falih said Thursday on Bloomberg Television. Russian Energy Minister Alexander Novak said that OPEC and its partners should decide in late April or mid-May whether to continue curbs. OPEC members exceeded their pledged cuts in February, two delegates said. Crude posted the first weekly gain since February.

Oil traded below $50 a barrel all week, near the lowest levels since November, as near-record U.S. crude stockpiles and increasing production weighed on the output reductions by the Organization of Petroleum Exporting Countries and non-OPEC nations. The groups had a combined compliance rate of 94 percent in February, compared with 86 percent in January, delegates said. “There’s a bit more producer commitment, with the idea of more producers being amicable to the fact that they may need to extend this period of output restraint beyond the initially agreed six-month period,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. “But today, we have a little bit of cold water being poured on this constructive sentiment by Russia.” West Texas Intermediate for April delivery rose 3 cents to settle at $48.78 a barrel on the New York Mercantile Exchange, up 29 cents for the week. Total volume traded was about 33 percent below the 100-day average. Brent for May settlement advanced by 2 cents to end the session at $51.76 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.45 to May WTI.




Saudi ‘Mission Impossible’ Makes Longer OPEC Oil Cuts Inevitable Saudi Arabia has set a near-impossible target to end the current round of OPEC oil-production cuts, indicating that a policy rollover into the second half of the year is a near certainty. OPEC, which pumps about 40 percent of the world’s oil, and several non-OPEC countries including Russia agreed in December to reduce production for six months in an effort to bring supply and demand into balance. At the time, the producers said they could extend the deal for an extra six months. In an interview with Bloomberg Television on Thursday, Saudi Energy Minister Khalid Al-Falih said that OPEC would extend the cuts after they expire in June if oil stockpiles were “still above the five-year average.” Because oil stocks are so far above that level, the target will probably still be out of reach when the Organization of Petroleum Exporting Countries gathers in Vienna on May 25. “It looks impossible for total OECD company stocks on land to fall back by mid-year to the five-year average, which OPEC has set as a key benchmark as to whether it should extend its deal,” oil consultants FGE told clients in a note.

Oil stocks in the world’s richest countries stood at 3,025 million barrels in February, or about 297 million barrels above the five-year average, according to Bloomberg calculations based on International Energy Agency data. To reduce the overhang to within the five-year average on time for OPEC’s next meeting, inventories would need to drop at an unusually high rate -- of more than 3 million barrels a day.




With current supply and demand trends, OPEC can hope for, at best, a reduction of about 500,000 barrels a day. WTI Slides

West Texas Intermediate, the U.S. crude benchmark, last week fell below $50 a barrel for the first time this year amid worries about the pace of the stockpile reduction. Brent crude is trading at about $52 a barrel.

“We expect Saudis to defend prices over market share through 2017 and the output deal to be extended at OPEC’s next meeting on May 25th, continuing to tighten the market,” Ed Morse, head of commodities research at Citigroup Inc. in New York, said in a note to clients. OPEC and its allies agreed in December to reduce output by nearly 1.8 million barrels a day in the first half of the year to

rebalance the market. So far, OPEC has delivered nearly all the cutbacks it promised, mostly because Saudi Arabia has cut deeper than agreed. Non-OPEC nations have been slower, however, so far delivering about a third of their agreed reductions. Russia has trimmed about half what it promised while Kazakhstan has actually boosted production. Still, OPEC and its partners are “fully committed” to curbing supply, Al-Falih said. He characterized any lags in compliance as par for the course: “Some are trying to iron out the process of controlling production, which they’ve never done before,” he said. “I believe in the sincerity of their effort.” On top of a reduction in stockpiles, Al-Falih is looking for signs that the market is confident about the future before deciding whether to extend the supply deal. “We want to signal to them that we’re going to do what it takes to bring the industry back to a healthy situation,” he said. Russia trimmed its oil production by 160,000 barrels a day through mid-March, Novak told reporters in Moscow. The cuts will reach the planned level of 300,000 barrels a day in April and will remain there through the end of June. The U.S. oil rig count rose by 14 to 631 rigs, the highest level since September 2015, according to data published Friday by Baker Hughes Inc. Nationwide crude inventories slid by 237,000 barrels last week to 528.2 million, according to the Energy Information Administration. Yet stockpiles remain near the highest level in more than three decades. The previous record of 528.4 million was set the prior week. It’s likely U.S. crude inventories will increase during the rest of seasonal refinery maintenance season, Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone.




US Shale Gas Selling at Record Prices to Overseas Buyers by

Jonathan Crawford

A year after Cheniere Energy Inc.’s Louisiana terminal shipped the first exports of U.S. natural gas from shale, cargoes from the facility are fetching higher prices than ever.

The export price of liquefied gas from Sabine Pass rose as high as $7.52 per million British thermal units in January, topping last year’s high of $6.21, according to an Energy Department report Friday. Fifteen tankers sailed from the terminal that month and in February, the most since commissioning began at the facility last year.

Abundant gas supplies from America’s shale basins have sailed from Sabine Pass to more than a dozen countries from Mexico to China, putting the U.S. on the path to becoming a net exporter of the fuel next year. Houston-based Cheniere swung to a profit for the first time since 2010 in the fourth quarter.

Sabine Pass has “ramped up faster than expected, so it seems like a pretty successful launch into commercial operation” that’s being reflected in the export volumes, Jason Feer, head of business intelligence at ship broker Poten & Partners in Houston, said by phone Friday. “The prices have been fairly strong. For Cheniere Marketing that’s been good to see.”

Cheniere is in the process of starting up the third liquefaction plant at Sabine Pass, which chills gas so it can be transported by ship, and is expected to bring online a fourth one there later this year. Royal Dutch Shell Plc has contracted most of the capacity for the first plant at Sabine Pass and Cheniere’s marketing arm has the ability to trade any spare volume.

Shipments of LNG priced at $7.52 per million were sent to Mexico, Japan and Jordan, the government report showed. A Cheniere spokeswoman said by email Friday that she couldn’t immediately provide comment.




NewBase Special Coverage

News Agencies News Release 19 Mar. 2017

Shale's Mister Fix-It: Saudi Arabia By Liam Denning

Things are looking up in Shalelandia these days. Oil prices, despite the most recent drop, have stayed close to $50 a barrel. Rig-counts and production are rising. Even Saudi Arabia is looking discombobulated.

Lest we forget, though, the chief reason things are looking up is because E&P companies fell way down.

Back in October, Gadfly surveyed the financial performance of 11 of the biggest oil and gas producers focused on North America. Now that they have all filed their 10-Ks for 2016, we can see how they fared in the very depths of the oil crash.

The first thing to note is that the sector's almost clichéd resilience cracked in one respect: Output broke a pattern of double-digit growth and actually declined overall. Only four of the 11 companies managed to raise their production: Concho Resources Inc., EQT Corp., Pioneer Natural Resources Co. and Range Resources Corp.

Time Out

The output of a group of big U.S. E&P companies fell by 1.8 percent in 2016, having grown by 11 percent annually on average in the prior six years

That slight dip in crude oil production hurt the most. The E&P sector has been shifting toward higher-value oil over natural gas, where prices crashed and have stayed low. Crude oil and other liquids are now almost 44 percent of the mix, up from 23 percent in 2009:




Liquidity

E&P companies have chased higher-margin oil production to compensate for the crash in natural gas prices

This shift in the production mix has been crucial to offsetting some of the pressure on realized prices. While Nymex crude oil might be trading at around $50 a barrel, E&P companies selling a mix of products in different regional markets realize very different actual prices per barrel of oil equivalent. Selling more oil helps, but it couldn't fully offset the carnage of the past two years:

Realization Dawns

Average realized prices peaked at about $42.50 before the crash. In 2016, they fell below $20

Oil-weighted companies such as Pioneer enjoyed the relative sanctuary of realized prices in the




upper $20s, while at Southwestern Energy Co., producing 90 percent natural gas, they actually fell below $10 (before hedging effects).

As you might imagine, this didn't do wonders for margins per barrel. The E&P companies report these in different ways. Gadfly calculates an adjusted production cost per barrel of oil equivalent, including not just costs directly involved in producing oil and gas, but also the non-income taxes, general and administrative and interest costs reported in the companies' filings. It's a more conservative measure that recognizes the corporate overhead each barrel must support; after all, you buy shares in a company, not a set of wells.

Chop Chop

Production costs are back down to 2010 levels, but higher leverage has pushed up interest charges

Comparing these to realized prices, margins per barrel plummeted by almost 75 percent between 2014 and 2016:




The Big Squeeze

Despite cost cutting and productivity gains, margins fell below $8 per barrel of oil equivalent in 2016

That the group's output fell by less than 2 percent in 2016 in the face of such a collapse in realized revenue and profits is a testament to its collective -- yes -- resilience.

But the foundation of that resilience has been access to U.S. capital markets. While net debt in absolute terms actually fell between 2014 and 2016, aggregate leverage for the group jumped from 1.3 times trailing Ebitda in 2014 to 10.4 times in 2016, according to figures compiled by Bloomberg. Only the remarkable faith of, in particular, equity markets in a brighter future has prevented even more of a shake-out in the industry.

Indeed, it is this dynamic that has so perturbed Saudi Arabia in the past couple of weeks.

On the one hand, it would like to finish the job of squeezing higher-cost rivals out of the oil market; our analysis shows it was clearly making progress on that front in 2016. On the other, though, an IPO of Saudi Aramco is supposedly not far off. So its owner, the Saudi Arabian government, is now compelled to keep the equity market feeling good about oil's future.

The unwelcome side effect? Suffering rivals in the shale patch can free-ride on such optimism to repair themselves and resume growing.




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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 March 2017 K. Al Awadi

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New base 1011 special 19 march 2017 energy news