New base 1017 special 09 april 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 09 April 2017 - Issue No. 1017 Senior Editor Eng. Khaled Al Awadi

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

Oman weighs coal, LNG as alternative fuel resources Oman Observer - Conrad Prabhu in Business

Oman’s authorities appear to be gravitating towards the idea of coal and liquefied natural gas (LNG) imports as possible fuel alternatives to natural gas — currently the mainstay energy resource for electricity generation and industrial fuel, and as feedstock for petrochemicals. Changing market dynamics driven by the global economic downturn, coupled with the emergence and growing popularity of clean coal technologies, have prompted a serious rethink on the use of coal as a potential addition to Oman’s energy resource mix.

At the same time, Oman’s rapidly expanding industrial and petrochemicals base is competing with the power and associated water sector for natural gas, supplies of which are increasingly constrained in the face of escalating domestic demand. This is also evident from last week’s announcement by the Ministry of Oil and Gas that new allocations of natural gas to the power industry would remain “capped for some time” as an incentive for the predominantly gas dependent sector to look at fuel alternatives.




Oil and Gas Ministry Under-Secretary Salim bin Nasser al Aufi voiced hope that the moratorium on new gas allocations to the electricity sector would “drive the discussion on renewables and alternative resources”, as well as promote efficient use of the resource in the Sultanate. The strategic shift in longstanding policy governing gas supplies to the power sector is the latest in a pattern of developments witnessed of late, that espouse the pursuit of alternative fuel resources to help diversify the nation’s energy resource mix.

The National Programme for Enhancing Economic Diversification (Tanfeedh) weighed in on this issue last November when it unveiled a far-reaching Energy Policy proposal which, for the first time in nearly a decade, envisions a possible role for non-renewable alternative resources such as coal and petcoke in the manufacturing industry. A coal-based power plant with a generation capacity of around 500 MW has been mooted at Duqm to cater to the electricity needs of the region’s Special Economic Zone (SEZ).

Taking a long-term view on the likely inclusion of coal in Oman’s energy mix, some stakeholders in the Sultanate are already factoring in this possibility in their development plans. Port of Duqm, for example, is looking at coal berths as part of its master-plan development to support not only imports of this commodity for domestic consumption, but for transshipment as well.

Tanfeedh’s energy proposals also call for investments in renewable energy sources designed to achieve a contribution of at least 10 per cent of the nation’s total electricity demand by the year 2025. It sees the potential for 2,500 MW of solar-based capacity and 500 MW of wind-based capacity to be brought on stream by 2025.

Last week, state-owned national shipping line Oman Shipping Company (OSC) also weighed in on the national debate over alternative fuel resources by outlining the potential for LNG imports to plug any shortfalls in domestic generation capacity or to meet the energy needs of localised entities, such as the Duqm SEZ, for example.

By converting a company-owned vessel into a Floating Storage Regasification Unit (FSRU), LNG can be imported from the international market, regasified on board the vessel, and pumped into the national grid — an option that does away with the need for expensive onshore regasification capacity, says Oman Shipping. The SEZ Authority at Duqm (SEZAD) and Port of Duqm have both revealed that they are looking at the potential for LNG imports based on the FSRU solution to secure the energy needs of investors in Duqm.




Oman Block 44 acquisition by ARA completed Saturday 08th, April 2017 / 17:20 Written by Conrad Prabhu

ARA Petroleum, a new entrant to Oman’s burgeoning upstream Exploration & Production (E&P) industry, has confirmed that its acquisition of the 100 per cent interest of PTTEP Oman Company Limited in Block 44 onshore Oman has been completed.

The Muscat-based upstream energy firm had signed a Sales and Purchase Agreement last August for the acquisition of PTTEP Oman’s interest in the gas and condensate licence located in the northwest of the Sultanate.

The transfer of shares from PTTEP Oman, a wholly owned subsidiary of Thai integrated energy giant PTTEP, was completed on December 28, 2016, ARA Petroleum stated in an overview of the performance of its newly acquired block last year.

Production from the Block, which was owned and operated by PTTEP Oman since 2002, averaged 20 million standard cubic feet per day (mmscfd) in 2016, while liquid hydrocarbon output averaged 960 barrels per day (bpd). Also during the year, PTTEP initiated geological and geophysical studies aimed at identifying additional opportunities and potential prospects within the




licence, with a particular focus on the deep plays of Kharaib, Lekhwair and Habshan. “ARA’s intention is to carry out workover and drilling campaigns during 2017 and 2018. Additional engineering studies will begin imminently and will be carried out with a view to developing an optimal life of field development plan,” the new owner of the Block stated on its website.

“ARA Petroleum will commit to developing young Omani talent under the supervision of internationally trained mentors. ARA Petroleum will collaborate with other Zubair Corporation initiatives to maximise the In-Country-Value of its operations in Oman,” it added.

About ARA Petroleum

ARA Petroleum is a new, dynamic entrant to the E&P industry in Oman. The company seeks to develop oil & gas resources in Oman as well as abroad.

The company is managed by an experienced, professional and committed team with a track record gained from working throughout the world. ARA Petroleum will utilize the latest technologies to ensure the hydrocarbon assets are operated optimally and the recovery of oil & gas maximized.

ARA Petroleum will commit to developing young Omani talent under the supervision of internationally trained mentors. ARA Petroleum will collaborate with other Zubair Corporation initiatives to maximize the In-Country-Value of its operations in Oman.

ARA’s primary strategy is to concentrate on projects where hydrocarbons have already been found but where uncertainty in volumes or production strategy persist. ARA’s in-house expertise aims to deliver results in a financially and socially responsible manner accounting for the various needs of all stakeholders.

In the medium- to long-term, ARA plans to have 50% of its portfolio in Oman and 50% international while maintaining its commitment to being a significant employer of technical experts in Oman, with significant growth in both business segments expected in the near-term.




Iraq: Rosneft Said to Prepay About $1 Billion for Kurdistan Oil Reuters - Stephen Bierman

Rosneft PJSC’s commitment to pay in advance for crude oil from the Kurdish region of Iraq is about $1 billion, according to two people with knowledge of the matter who asked not to named as the supply deal is private.

The Russian state-run producer’s trading arm will buy Kurdish oil from now until 2019, Rosneft said in February, without specifying how much crude it would take. At $1 billion, Rosneft would account for about a third of the prepayment deals the Kurdish Regional Government negotiated with oil traders.

Rosneft’s press service didn’t comment on the payment size when contacted by phone. An adviser to the KRG’s Natural Resources Minister Ashti Hawrami didn’t immediately respond to a call and email seeking comment.

The KRG is selling oil in advance to help finance government spending, including the military campaign against Islamic State, during a period of relatively low oil prices. For Rosneft, the deal brings a guaranteed flow of crude into its expanding trading business and is another example of its expansion into the Middle East following deals in Libyaand Egypt.

Under the deal with the KRG, Rosneft will receive its first 600,000-barrel cargo this week at Trieste, Italy, from where the crude will be transported by pipeline to its minority-owned refineries in Germany for processing, according to an email from Rosneft. Kurdish crude suits the company’s refining needs in both Germany and India, said Rosneft, which could potentially source more oil from the region.

Refinery Stakes

Rosneft owns 24 percent of MiRO and 25 percent of BayernOil following the restructuring of a joint venture with BP Plc. The company is also in the process of acquiring a 49 percent stake in the Vadinar refinery in India from Essar Oil.

Rosneft Chief Executive Officer Igor Sechin said in February that the company will be “developing new markets worldwide for Kurdish crude oil.” Rosneft hasn’t previously worked with the KRG, which in recent years has struggled to maintain payments to international producers shipping oil from the region.

Rosneft, Russia’s biggest oil producer, has long participated in prepayment deals with trading houses for its own output. The company’s 25-year deal to supply oil to China National Petroleum Corp. has also yielded billions of dollars of advance payments.




Kuwait Is Best Off, Nigeria Worst in Fitch's 2017 Oil Break-Even Bloomberg - Claudia Carpenter

Kuwait’s in the best position of major oil exporting nations in the Middle East, Africa and parts of Europe to have a balanced government budget this year with oil forecast to average $52.50 a barrel, according to Fitch Ratings Ltd.

Nigeria is worst off, needing an oil price of $139 a barrel to balance its budget, Fitch said in a April 5 report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe. Even after cuts in government subsidies and currency devaluations, 11 of them won’t have balanced government budgets this year, including Saudi Arabia, it said.

“Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.

Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year. Kuwait at $45 a barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.

Brent crude, a global benchmark, has averaged about $55 a barrel this year.

The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.

Fitch’s forecast 2017 break-even oil prices, per barrel:

• Nigeria at $139

• Bahrain at $84

• Angola at $82

• Oman at $75

• Saudi Arabia at $74

• Russia at $72

• Kazakhstan at $71

• Gabon at $66

• Azerbaijan at $66

• Iraq at $61

• Abu Dhabi, UAE, at $60

• Republic of Congo at $52

• Qatar at $51

• Kuwait at $45




GCC: bond bonanza in the Gulf meets 24B$ cash need in a lower oil prices era Bloomberg/Dubai

Middle East international bond sales are off to the strongest ever start to a year as borrower demand for funds outstrips the firepower of local banks in an era of depressed oil prices.

Hard-currency bond issuance from the six-nation Gulf Cooperation Council, which accounts for the bulk of the region’s capital markets and includes Saudi Arabia, its largest economy, more than quadrupled in the first quarter from a year earlier, according to Bloomberg data. In contrast, syndicated lending, traditionally the preferred source of capital for GCC borrowers, is having its worst year since 2010, declining 73% in the first three months of the year.

“It is mainly the sovereigns that have issued this year and they are very conscious about not sapping liquidity in the local banking system so that access to credit to the small and medium sized companies is not hindered,” said Anita Yadav, head of credit research at Emirates NBD, Dubai’s biggest bank. “Bonds offer longer tenor, large amounts of funding at reasonable prices and attract international liquidity.”

The switch to bonds shows a decade low in oil prices touched in January 2016 is still reverberating through the Gulf’s financial system after governments drew down bank deposits to prop up spending previously funded with energy export revenues.

In Saudi Arabia, deposits of state entities fell 10.3% in 2016, according to central bank data, while in the UAE, government deposits declined 3.8% in 2015, before recovering 1.9% the following year.

GCC bond sales in the first quarter surged 359% to $24.2bn, helped by an $8bn debut issue from the Kuwait government and a $5bn offering from Oman, according to data compiled by Bloomberg. Bahrain raised $600mn in February, while Saudi Arabia is poised for its first offering of Islamic bonds in the international market. The percentage increase in bond sales this year is inflated by a very poor first quarter in 2016 when the plunge in crude prices to the lowest in 13 years pushed GCC spreads wider and led many issuers to postpone sales. Later in the year, sales recovered to a record $72bn, helped by a $17.5bn debut issue from Saudi Arabia, the biggest ever by an emerging- market nation.




4 Chinese-backed electric-car start-ups planning a run at Tesla By Joe D'Allegro, special to CNBC.com

The electric vehicle market is currently dominated by Tesla Motors, which reached a market cap this week of $48 billion. But as EV sales grow — Tesla pulled in more than $7 billion in revenue last year and just had its best quarter — there are several EV start-ups aiming to catch Elon Musk's EV company, and they share a common source of support: Chinese investors.

Chinese venture capital investors have poured more than $1.4 billion into electric vehicle and battery start-ups in the past three years, according to PitchBook, compared to $2.1 billion in total global venture capital funding for the sector.

"Tesla has a target on its back, not only from traditional automakers but also these start-ups," said Jeff Schuster, senior vice president at LMC Automotive, an automotive production and sales forecasting company. "But it'll be a challenge. Tesla now has critical mass and funding."

Though far more successful than these start-ups, Tesla does have one thing in common with competitors: the recent investment from China. It received an investment equal to $1.8 billion from Chinese messaging firm Tencent, when it purchased a 5 percent stake in Tesla shares. The investment makes the Chinese giant one of Tesla's largest shareholders, and is part of Tencent's pursuit of self-driving cars and electric vehicles, and it can open doors in China for Tesla.

Its EV rivals also lack one key ingredient: Elon Musk.

Tesla EV rivals worth watching

"While each of those start-ups are run by individuals who don't shy from the spotlight, none of those companies are headed by a successful entrepreneur who is continuously challenging, and changing, the world like Elon Musk," said Michael Harley, executive analyst for the vehicle valuation and research company Kelley Blue Book.

Faraday Future

One well-known EV start-up funded entirely by Chinese investors is Faraday Future. It's backed by Chinese billionaire Jia Yueting, founder of the conglomerate LeEco. Faraday plans to build its first EV, the FF 91, in a factory under construction in Nevada (where Musk is building his battery gigafactory).

"Tesla has a target on its back, not only from traditional automakers but also these start-ups."-Jeff Schuster, senior vice president at LMC Automotive

Faraday hopes to bring the car to market next year, but the company has faced widely reported financial troubles, in line with its parent company's balance-sheet challenges. Yueting took a Jeff Bezos-like approach to expansion, sacrificing profits to move into new areas, including electric cars and entertainment, as well as to make a $2 billion acquisition of TV maker Vizio. Faraday says its plans are proceeding in Nevada, but the state




has shown concern, with its Treasurer telling the Chinese press late last year that Yueting ran out of money.

Attendees look at Faraday Future's FF 91 prototype electric crossover vehicle after it was unveiled at CES 2017 on January 3, 2017, in Las Vegas.

The company recently scrapped plans for a second car facility that was to be built in California, but parent LeEco did raise $2 billion in funding in January. The FF 91 is a large crossover with James Bond-like features, such as facial recognition technology and a retractable LiDAR sensor in the hood to measure distances when it self-parks. The FF 91's battery pack, developed in partnership with LG Chem, is said to allow a range of almost 380 miles — more than most Americans drive in a week and a longer range than any Tesla. Top versions of the FF 91 will have 1050 horsepower and 0 to 60 acceleration in 2.39 seconds, according to the company. If true, that would make it almost as quick as the Tesla Model S, the current record-holder as the quickest four-door production vehicle — it hit 60 in 2.28 seconds earlier this year in testing by Motor Trends.

Lucid Motors

Yueting is also among the Chinese investors in Lucid Motors, an EV start-up founded by a former Tesla executive, which has received more than $130 million in venture funding. Lucid's first vehicle, the Air, is a sedan to be manufactured in Arizona.

It has an enormous interior and two trunks (with total volume similar to a four-person hot tub). The base 400-horsepower model will have a 240-mile range and start at $52,500, after federal incentives.

Upmarket versions will exceed $100,000 and feature larger battery packs, enabling more than a 400-mile range and a 2.5-second run to 60, according to the company. Lucid plans to start

manufacturing in the first half of 2019, and produce 10,000 models its first 12 months of production. The Air seems to be a very close match to the Model S but is likely to undercut it in base pricing. Also, initial reviews note the Lucid's interior is more luxurious than the Tesla, with higher-quality finishes.

Other Chinese investors in Lucid include venture capital firm Tsing Capital and state-owned Beijing Automotive. But it also has Venrock, the venture-capital arm of the Rockefeller family, and Japanese conglomerate Mitsui, among its investors. Due to Yueting's notoriety, the company has stressed that it is an independent U.S.-based company. Chief technology officer Peter Rawlinson, who was previously chief engineer on the Tesla Model S, has also stressed that Yueting is a




minority investor, and the investment LeEco made is already complete. The company has raised $130 million in funding, according to PitchBook.

Lucid Air

Lucid has experienced management upheaval. It's been without a CEO since founder, Bernard Tse, a former vice president at Tesla, left in late 2015 after friction with Beijing Automotive, according to some reports. But it has avoided the funding issues Faraday is facing. David Salguero, Lucid's marketing manager, said the company is currently raising Series D funding, and the effort is going well. "We are on track to begin manufacturing the Lucid Air in Casa Grande, Arizona, in the first half of 2019," he said.

Fisker Automotive

Another Tesla challenger became notorious for being among the failures funded by a U.S. government loan-guarantee program. The renewable energy loan program managed by the Department of Energy became a lightning rod of criticism during the Obama presidency when some of its big bets went belly-up, including those to solar-panel maker Solyndra and carmaker Fisker Automotive. Fisker filed for bankruptcy in 2013, but now it's backed with Chinese money. The company's assets were purchased by Chinese auto parts company Wanxiang Group and renamed Karma Automotive.

The original Fisker Karma — a hybrid plug-in luxury sports sedan that also has roof-top solar panels — was sold in the United States between 2011 and 2012. It won praise for its gorgeous low-slung styling, but it had a cramped interior and was plagued by quality-control issues, including a recall over concerns its batteries would catch fire. An updated version of the original sedan is being relaunched as the Karma Revero and is expected to be priced at $130,000. Jim Taylor, the chief revenue officer for Karma Automotive, said the company is doing final quality testing and has not shipped any cars to dealers yet, though orders are confirmed. The company plans to sell a few hundred cars a year, starting within three months.

The Karma Revero

As a hybrid, not a fully electric vehicle, the Revero can refuel at any gas station. So while it lacks some of Tesla's high-tech features, it avoids "range anxiety" — the concern you might run out of juice far from a charging station.

Nio All Teslas have been fast — from the small Roadster, which could accelerate 60 miles per hour in only 3.7 seconds to the massive Model X, which can do the deed in as little as 2.9 seconds. Musk's company even has what it is calling a "ludicrous mode" feature. But Tesla doesn't have a monopoly on speed. Chinese-funded start-up Nio (formerly NextEV), which has offices across the




world, including California, Germany and China, generated buzz late last year when its limited-production EP9 sports car lapped Germany's famed Nürburgring race track faster than any other electric vehicle. The EP9 made more news this February when it set an autonomous driving record by circling a test track in Texas at 160 miles per hour without input from a human driver. Nio is also developing a family-size vehicle, called EVE, designed to make commuting better. Padmasree Warrior, CEO of Nio's U.S. operations — who is also a board member at Microsoft and former CTO of Cisco Systems — has said that EVE is slated for production in 2020 and will feature artificial intelligence to enable autonomous driving. Warrior is also chief development officer for the global parent company. She noted that the concept vehicle is designed as "living space" that moves — allowing passengers to work or even sleep while the car guides itself to their destination. This interior flexibility — complete with folding tables and reconfigurable seating — separates it from current Tesla offerings.

Chinese internet provider Baidu recently made a reportedly $600 million investment in Nio's parent company. The company has raised $1.1 billion in two rounds of funding, according to an estimate from PitchBook, making it the most-funded EV effort backed by Chinese investors: The two deals are the largest given to any company in the EV sector.

Nio 2: A close-up of

the Nio EP9, the fastest self-driving car, at the SXSW Festival in Austin, Texas, on March 11, 2016.

Tesla has successfully launched a high-end sports car, a luxury family sedan, and a large crossover and is set to begin selling its first mainstream offering — a smaller family car, starting at

$35,000 — later this year. But it faced near-bankruptcy in its early days, and in 2008 Musk said it "narrowly survived."

Market outlook

LMC Automotive's Schuster said the long-term prospects for Tesla (which began turning a profit only last year) are still debatable, as large mainstream manufacturers like GM and BMW make inroads into the EV space. Schuster noted that mainstream manufacturers have an appetite for strategic acquisition. Absorbing or partnering with start-ups such as these could provide useful technology as well as an image-boosting shot of Silicon Valley cachet. Ford recently invested $1 billion in robotics company Argo to spur autonomous car efforts. Early self-driving car efforts from the traditional automakers have scored higher in independent studies than those from Tesla, Uber and Alphabet's Waymo.

"One could argue that Lucid, Faraday Future, Karma, Nio and all of the countless others aren't in this to turn profits," Kelley Blue Book's Harley said. "Most are simply trying to demonstrate viable




electric vehicle technology that puts them in a position to be purchased by an automaker that needs to meet ZEV (Zero Emission Vehicle) regulations."

The Trump administration is relaxing mileage standards set under President Obama at a time when trucks, SUVs and crossovers are already dominating sales of passenger cars in the United States. But the California Air Resources Board recently voted to keep the ZEV regulations it and 12 other states adhere to. Even if Trump reverses federal emissions policy, ZEV standards will still guide a third of the U.S. marketplace — too big a slice for automakers to ignore. Tesla might face less potential for takeover than newer start-ups due to its size. It just had its best quarter ever for new car deliveries, and it recently achieved a $48 billion market cap — that's now higher even than Ford, a company 100 years older.




NewBase 09 April 2017 Khaled Al Awadi

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

Oil rises after U.S. missile strike in Syria, weekly gain 3 percent Reuters + NewBase

Oil prices rose on Friday, trading near a one-month high and closing the week up 3 percent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region. Larry noted that many in the market also believe Venezuela could be producing below reported levels."Venezuela could turn out to be another Iraq where they say they've been pumping 1.5 million bpd and it turns out to be nothing. It could get ugly, and markets could jump quickly." The market shrugged off a report showing U.S. drillers added oil rigs for a 12th straight week to cash in on a recovery in crude prices. Oil drillers increased the number of active oil rigs by 10, according to Baker Hughes. Although Syria is not a major oil producer, any escalation of the conflict feeds fears about oil supplies due to the country's location and alliances with big oil producers in the region.Oil, gold, foreign exchange and bond markets reacted strongly to the attack but moderated some of their sharp moves after monthly U.S. employment figures came in weaker than expected. Brent crude futures settled up 35 cents at $55.24. Brent reached a session high of $56.08, the highest since March 7, shortly after the U.S. missile strike was announced. For the week, Brent was up 4.4 percent. U.S. West Texas Intermediate (WTI) crude futures were up 54 cents at $52.24 a barrel, off the session high of $52.94.

"Oil markets are back in bullish mode after the setback of the previous weeks. This news flow seems to bring geopolitical risks back on the radar," said Frank Klumpp, oil analyst at Landesbank Baden-Wuerttemberg, based in Stuttgart, Germany.

Oil price special

coverage




U.S. economic data pressured prices, and some analysts said the conflict in Syria had no bearing on oil market fundamentals. In Summary:

Oil prices shot up after the U.S. launched a cruise missile attack against Syria. West Texas Intermediate climbed as much as 2.4 percent to a one-month high of $52.94 a barrel in New York, with Brent crude up 2.2 percent in London. The price spike from potential short-squeezes due to

geopolitical risks may prove temporary as long as the military action is well-contained, as Syria is no longer a significant oil producer, according to Nomura Holdings Inc.




Get ready for pumped up prices! Stephanie Landsman | @stephlandsman

Get ready to open up your wallet a lot wider at the gas pump. A major Wall Street bank is reiterating its bullish call on crude oil, as the fossil fuel sits at four week highs following this week's U.S. missile attack on Syria.

RBC Capital Markets Head of Commodity Strategy and CNBC Contributor Helima Croft predicts prices will climb to the low $60s within months — a nearly 20 percent move from current levels. That would translate to roughly a $1.80 gasoline spot price.

"We see it grinding higher over the back half of the year," Croft told "Futures Now," recently. "We're coming out of refinery maintenance season. So, we're going to start to see draws of the U.S. inventory. Those high U.S. inventory numbers have really been depressing prices."

Summer driving season will also give prices a "boost," and demand won't fall anytime soon, according to Croft.

Crude initially jumped two percent in reaction to U.S. airstrikes on Syria before giving back some gains. The commodity settled up one percent on Friday to $52.24 a barrel, its highest settle in a month. However, crude is still down nearly three percent so far this year.

The latest activity overseas isn't moving the needle on Croft's oil forecast... yet.

She said there's no real immediate supply disruption threat, since Syria's six-year-old civil war has moved the majority of local production offline.

However, she pointed out a few wildcards, which include potential new strains between Russia and the Sunni Arab Gulf Cooperation Council (GCC) states, and whether the U.S. strikes could give hardline candidates a lift in Iran's presidential election in May. These situation could also propel prices higher.

In a research note out Friday, Croft wrote, "If these strikes are not followed up by a serious effort to oust the Syrian leader [Bashar Assad], none of these scenarios may materialize and the oil implications will remain negligible. However, given that President Trump had previously signaled deep disdain for humanitarian interventions and Middle Eastern military engagements, we are now in uncharted waters...."

Nearer term, Croft lists OPEC as a key factor in the direction of oil prices. She believes OPEC's next meeting on May 25 could have more immediate impact.

"We see that 1.8 million barrel a day OPEC, Non-OPEC coordinated cut. We see them rolling that over for another six months. That's why we are constructive going into the back half of the year," she said.

"If you are sovereign head of state in one of these oil producing countries, you fear more than anything a price reversal back into the $40s or the $30s."

Stephanie LandsmanProduce




NewBase Special Coverage

News Agencies News Release 09 April 2017

Big utilities back proposed EU deal with Gazprom

Reuters/Brussels

Some big utilities in eastern Europe are backing a proposed EU antitrust settlement with Russian state gas exporter Gazprom, increasing the chances of a deal that is opposed by countries striving to loosen the Kremlin’s grip over their energy sectors.

The provisional agreement, announced last month, would see Gazprom avoid a fine of up to 10% of its global turnover over EU charges it abused its dominant market position and overcharged clients in eight eastern European nations.

In return the Kremlin’s gas giant, which denies the charges, has offered concessions on contract terms and pricing to settle one of the EU’s largest, longest-running antitrust cases.

However, the deal is subject to feedback from EU states and market players in the region and could still be amended or even abandoned.

Many of the countries involved — once in the orbit of Moscow and reliant on Gazprom for the bulk of their gas supplies — are disappointed at the EU’s deal-making.

They believe Russia has been exploiting their dependence in a region where gas prices can make or break governments and want to see Gazprom punished, EU diplomats said.

“Russia uses the full arsenal of tools to deploy influence: military, economic, political and even cultural,” an EU diplomat said. “Is there a country that doesn’t want this case solved? Probably not...but there is a lot of anger.”

EU antitrust authorities say the case is not political and that the market response will take priority.

A settlement would smooth business ties with Russia, which supplies around a third of its gas, despite tensions over Ukraine and Syria.

The agreement has drawn a positive response from some big utilities and network operators which said it would allow them to strike better deals with Gazprom, increasing the likelihood the EU will accept the Russian company’s concessions.




Bowing to EU conditions, Gazprom’s offer would see it do away with contract terms that bar clients from exporting its gas to other countries and tie deals to investments in pipelines.

The company would also link its prices to benchmarks such as European gas market hub prices, rather than oil, and allow clients to renegotiate the prices every two years.

“It (the deal) is a very welcome step if it is made a reality,” the head of Latvia’s public utilities commission, Rolands Irklis, told Reuters. “It would give Latvia a direct access to the European markets even if (it) is not directly connected to the infrastructure,” he said.

Aigars Kalvitis, head of gas utility Latvijas Gaze, which is partly owned by Gazprom, said the settlement could help it negotiate more favourable terms for its long-term Russian gas contracts, which expire in 2030.

Slovakian gas utility SPP said Gazprom had already scrapped curbs on cross-border trade and shown more flexibility on pricing in recent years.

The pledges could further boost integration on gas markets, a spokesman said, leading to “higher energy security”. The EU member states where Gazprom has allegedly engaged in anti-competitive behaviour are Poland, Estonia, Latvia, Lithuania, Bulgaria, Hungary, Slovakia and the Czech Republic. The eight governments and industry players have until May 4 to lodge objections to the proposal in the final chapter of a case which began with raids on offices in 10 countries in 2011.

A spokeswoman for the European Commission declined to comment ahead of the EU executive’s final assessment, saying there “no formal deadline” for its decision.

Its complex, politically-charged investigation has played out against the backdrop of tense relations since the EU imposed sanctions on Russia over the annexation of Crimea in 2014 and the subsequent conflict in east Ukraine, as well as deep disagreements over the Syrian civil war.

Brussels officials have repeatedly said they want to reduce the EU’s reliance on Russian gas.




Moscow argues the antitrust case is politically motivated — something denied by Brussels.

With a settlement, however, Russia would accept EU authority in applying competition law — something it has long balked at.

If it fails to abide, the EU could still impose fines.

In the five years since the EU began its antitrust probe, Gazprom has shifted its strategy under pressure from increased competition from LNG imports, price arbitration cases brought by Western customers and more liquidity on Europe’s energy markets.

It abandoned some of its most contentious practices and sold stakes in some gas pipelines in response to new EU energy rules.

Gazprom “is offering new trade tools, adapting and perfecting the contract model in accordance with our clients’ needs,” Elena Burmistrova, who heads its export arm, wrote in an industry publication earlier this year.

Some EU diplomats have questioned the Commission’s decision to pursue a case against US tech giant Google that will likely lead to hefty fines while settling with Russia’s gas exporter.

Poland has threatened to take the European Commission to court if it settles on a deal that its state-run energy company PGNiG called “far from enough”. PGNiG estimates it has been losing almost $1bn per year from buying Russian gas at oil-linked prices but reselling it at hub-linked prices.

Others say the settlement is too little, too late — particularly in the Baltic states and Czech Republic, which have taken their own steps to break Gazprom’s supply monopoly.

The Czech Republic, for example, has been buying Norwegian gas for several years.




“We have done the homework,” Czech energy security ambassador Vaclav Bartuska told Reuters.

“You can only force your supplier to behave if he knows you have alternatives...fines and

investigations can alleviate the situation for some time but are not a permanent solution.”

After Lithuania broke Gazprom’s supply monopoly by opening a Liquefied Natural Gas terminal in 2014, it won a 20% discount on Russian gas supplies.

Since 2015, it has been trading gas with Estonia and plans to include Latvia this year.

“Gazprom no longer has meaningful levers for influence in the Baltic states,” the head of its state-owned gas network operator Dalius Misiunas said.

Latvia, meanwhile, regards Gazprom’s settlement pledges as simply agreeing to abide by existing EU energy rules rather than making meaningful concessions, said Olga Bogdanova, head of energy at the economics ministry.

Despite the cautious optimism from bigger market players, traders and smaller clients said Gazprom’s concessions came with too many strings attached, such as restrictions on time, volume, location and fees for gas swapping.

“What kind of commitment is this, if I have to walk through fire to use them?” one executive in the Baltics said. “These commitments do not cost Gazprom anything...Gazprom should be punished.”

For Bulgaria, almost wholly dependent on buying Russian gas under a contract that runs until 2022, the stakes are high and the clock’s ticking.

A speedy deal is the priority for the EU’s poorest nation.

The country’s independent energy regulator said it hoped a settlement would allow to renegotiate contracts pegged to oil prices before next winter.

If not, it said hot water and heating bills would rise by up to 35%, squeezing households and industries.




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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

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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.

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NewBase April 2017 K. Al Awadi