New base 1019 special 12 april 2017 energy news

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NewBase 12 April 2017 - Issue No. 1019 Senior Editor Eng. Khaled Al Awadi

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

Oil Extends Longest Gain of 2017 as Saudis Seen Extending Curbs Bloomberg + NewBase -Ben Sharples

Oil advanced for a seventh day in New York, the longest gain since December, on confidence Saudi Arabia will support an extension to OPEC-led output cuts just as U.S. stockpiles show signs of shrinking.

Futures in New York were holding gains after rising 6.3 percent in the previous six sessions. Saudi Arabia is likely to back prolonging the curbs into the second half of 2017 in an effort to boost prices, according to a person familiar with the kingdom’s internal discussions. Several other countries, including Kuwait, have also expressed public support for an extension. Industry data was said to show U.S. crude supplies fell last week.

While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. Saudi Arabia, the biggest OPEC producer, reduced supply below 10 million barrels a day in March, more than pledged under the deal,




according to a separate person familiar with the matter. The group is scheduled to gather in Vienna on May 25.

“OPEC just has to have patience because the markets are rebalancing,” Abhishek Deshpande, chief energy analyst at Natixis SA in London, said in a Bloomberg television interview.

West Texas Intermediate for May delivery was at $53.64 a barrel on the New York Mercantile Exchange, up 24 cents, at 9:03 a.m. in London. Total volume traded was about 17 percent below the 100-day average. Front-month prices rose 32 cents to $53.40 on Tuesday, the highest close since March 1.

Saudi Decision

Brent for June settlement was 26 cents higher at $56.49 a barrel on the London-based ICE Futures Europe exchange. Prices increased 25 cents, or 0.5 percent, to $56.23 on Tuesday. The global benchmark crude traded at a premium of $2.48 to June WTI.

Saudi Arabia will decide on an extension depending on the stance of other OPEC nations such as Iraq and Iran, as well as Russia, which isn’t a member of the group but joined the output cuts, the person familiar with the kingdom’s internal discussions said. The world’s biggest crude exporter hasn’t made a final decision yet.

Bottom of Form

U.S. crude supplies fell by 1.3 million barrels last week, the American Petroleum Institute was said to report. Stockpiles probably dropped from a record high by 1.5 million barrels to 534 million barrels in the week ended April 7, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Nationwide inventories have expanded by about 56 million barrels since the start of this year.




New ‘Oman Oil & Gas Regulations’ on cards Fit-for-purpose regulations to cover all aspects of upstream hydrocarbon activities in Oman Oman Observer - Conrad Prabhu –

Oman’s Ministry of Oil & Gas is preparing to roll out high-level regulations governing all governing all facets of upstream hydrocarbon activities in the Sultanate.

The move, according to a top official of the Ministry, will support the development of a well-regulated upstream oil and gas sector in Oman — an outcome that significantly enhance the Sultanate’s investment appeal for international exploration & production (E&P) companies.

The new ‘Oman Oil & Gas Regulations’ represent an across-the-board effort to bring international standards and best practice to our industry,” said Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas.

“It provides greater specificity to the existing Oil & Gas Law and the Exploration & Production Sharing Agreement (EPSA), while eliminating any room for ambiguity that comes in the way of the safe and efficient management of the nation’s hydrocarbon resources.”

Speaking exclusively to OPAL Oil & Gas, a quarterly news magazine published in collaboration with Oman Daily Observer, Al Aufi said the new regulations, currently being fine-tuned ahead of their unveiling later this year, will be a game-changer for the industry.

Besides strengthening the existing regulatory framework for the effective management of hydrocarbon investments in the Sultanate, it will also contribute to the goal of boosting efficiency, safety and operational security in all areas of the industry’s upstream business. Additionally, the new regulations will address long-standing deficiencies in the Oil & Gas Law and EPSA guidelines, he said.

“For example, there are presently no regulations on well data acquisition, on the methodology for abandoning wells and facilities, on flaring of associated gas, and so on. These gaps have been suitably addressed,” Al Aufi said.

As is expected of a high-level, fit-for-purpose regulatory framework, the new Oman Oil & Gas regulations will be broad-based in their scope. Coverage will include the following areas: HSSE Management, Well & Drilling Operations Management, Reserves Management, Resource Maturation & Management, Surface Infrastructure Management, Financial Requirements, Contracting & Procurement Requirements, Data Management, Inventory & Asset Disposal Management, Human Resources Management, Management of Corporate Governance & Accountability, and Marketing & Export Requirements.

Importantly, the regulations will serve as a valuable playbook particularly for prospective investors who will now know upfront what is in store for them on the regulatory front when they mull a foray into Oman’s upstream sector.

“By having all of the supplementary provisions in place, oil and gas operators will now have greater clarity on what the Ministry of Oil & Gas expects from them in the safe and efficient pursuit of their hydrocarbon activities in the Sultanate. And what we expect from them is proper compliance with these regulations,” the Under-Secretary explained. Furthermore, the new




guidelines promise to spur the emergence of a self-regulating oil and gas industry in Oman, according to the official.

“The regulations will enable the operators to self-police themselves in terms of compliance, and where there is a failure to comply, we expect the companies to revert to us at the Ministry with details of this breach, along with their plans to mitigate any fallout or consequences.”

Potential benefits accruing to the industry, and the wider national economy, are expected to be concrete and substantial.

In addition to tangible spinoffs, in the form of cost savings and value generation, the regulations will, among other things, enhance operational and environmental safety. It will improve well and asset integrity, maximise oil production, and provide guidance on budget management, cost recovery and contracting and procurement procedures.

According to the Under-Secretary, the actual roll-out of the regulations will be deliberate and phased to allow for a period of gestation, review and fine-tuning before they become official policy.

The timeline drawn up by the Ministry envisages a six-month pilot phase during the first half of 2018 during which the operators are expected to apply the provisions of the regulations, albeit without the threat of penalties for non-compliance. “We would like the operators to start getting a feel of the regulations, especially its compliance features, reporting requirements and audits. Hopefully, by mid-2018, the regulations will come fully into effect,” Al Aufi added.




Niger: Savannah Petroleum provides update on upcoming Niger drilling campaign.. Source: Savannah Petroleum

Savannah Petroleum has provided an update on its upcoming drilling campaign in Niger.

Focus of Initial Campaign on R3

The Company can confirm that the focus of its initial three well drilling campaign is intended to be on the R3 PSC. The R3 PSC Area sits within a proven petroleum 'sweet spot' in the basin, with some of the largest discoveries located in adjacent areas to the north and south, including the currently producing fields.

It is also located in close proximity to existing and planned infrastructure in the basin. Initial indications from the recently completed R3 East seismic survey confirm the existence of multiple fault blocks, which have similar configurations to these fields and discoveries. An R3-focused programme also allows for a more efficient and cost effective drilling campaign, by avoiding lengthier rig moves between blocks.

The focus of Savannah's initial three well drilling campaign will be on the R3 PSC

Further details in relation to the prospectivity of the R3 East seismic survey and the Company's chosen exploration targets will be announced in due course. The preferred initial drilling candidates are expected to offer the opportunity for the Company to evaluate multiple stacked objectives with simple well trajectories that have low operational risk.

Drilling Rig

Further to the previously announced signature of the Letter of Award with Great Wall Drilling Company Niger, Savannah has now been offered the opportunity to use rig GW215 instead of GW89. GW215 is already in Niger and is coming off contract from another operator, where it has been operating effectively with an experienced crew. The Company expects that using a 'warm' rig, as opposed to GW89 which was stacked and subject to an element of recommissioning, will lead to greater operational efficiency during the campaign.

Drilling Operations

Savannah has also announced that construction of a logistics camp and pipe yard to be used throughout its drilling operations has commenced. The Camp is located on Savannah's R3 PSC area, in close vicinity to the Jaouro airstrip.

The Company continues to expect drilling operations to commence during the first half of this year and will provide further updates as and when appropriate.




Saudi, oil majors discuss gas investments ahead of IPO Reuters/London/Dubai

Saudi Arabia and international oil companies have discussed gas venture opportunities inside the kingdom and abroad as part of the top crude-exporting country’s drive to diversify investments before the listing of national energy giant Saudi Aramco.

Saudi officials explored investment opportunities with firms including BP and Chevron to help develop its gas reserves, the world’s sixth largest, at a time of booming energy demand at home, four industry sources told Reuters.

Aramco has also looked into investing in gas ventures abroad, including with Italy’s Eni, the sources said.

The development revives memories of talks between Aramco and global majors at the end of the 1990s and early 2000s, known as the Saudi gas initiative. Most of those talks collapsed as the parties disagreed over returns on investment.

This time, Aramco is gearing up for a share listing next year, aiming to get a valuation of up to $2tn in what could be the world’s biggest initial public offering (IPO). Chevron, BP, Aramco and Eni declined to comment on talks.




“We have a long-standing relationship with Saudi Arabia, so it is not uncommon for us to talk to them. We’re always having discussions about business development. I don’t have anything particular to say about Saudi Arabia,” Chevron CEO John Watson told Reuters last week.

BP Chief Executive Bob Dudley, who travelled to Saudi Arabia at the end of last year, said this year he wouldn’t rule out “creative partnerships” with Aramco but that an outright investment by BP in the IPO was unlikely.

The kingdom has a long-term goal of increasing the use of gas for domestic power generation, thus reducing oil burning at home and freeing up more crude for export. This could help increase Aramco’s valuation as it generates more revenue from exports than selling oil at lower domestic prices — Saudi Arabia is the world’s fifth-biggest oil consumer despite being only the 20th-biggest economy.

Saudi Energy Minister Khalid al-Falih, who is also Aramco’s chairman, said last year that Aramco was interested in investing in international upstream ventures, particularly gas, and could invest in importing gas into the kingdom.

Diversifying gas assets abroad would help Aramco achieve a better valuation and is attractive for investors, industry sources said. Riyadh also plans to raise domestic gas prices, a move seen as an incentive for foreign companies.

Aramco is preparing to reveal in the next few months a new gas strategy aimed at developing resources to keep pace with rising domestic demand, sources familiar with the discussions said. It comes as part of the kingdom’s push to diversify its economy away from oil, a strategy known as “Vision 2030”, amid a global drive to phase out the most polluting fossil fuels.

Aramco wants nearly to double gas production to 23bn standard cubic feet a day in the next decade. “IOCs (international oil companies) are waiting for that (strategy) to make their decisions,” one industry source familiar with the matter said.

Another industry source said Energy Minister Falih had said in private meetings with Western oil executives that he wanted Aramco to partner with other companies in upstream projects.

Two Saudi-based industry sources familiar with the discussions said BP’s Dudley had expressed an interest in investing in gas exploration in the Red Sea. However, the two sides have yet to hold any talks on the project.

Aramco controls gas reserves in excess of 8tn cubic metres, according to BP’s annual energy review. The Saudi company has said it wants to explore for gas in the shallow waters of the Red Sea as well as onshore shale gas. Companies including Russia’s Lukoil, Shell and China’s Sinopec formed ventures with Aramco but have failed to find commercially viable deposits.

They also complained about low domestic gas prices and high extraction costs. Russia’s Lukoil was the most recent foreign company to quit Saudi Arabia’s

search for gas. However, Saudi Arabia last month slashed income tax on energy companies operating in the kingdom to make energy investments more attractive.




Italy: Saffron Energy receives final approval for first gas at Bezzecca in northern Italy..Source: Saffron Energy

AIM-listed Saffron Energy, the natural gas producer with interests in northern Italy, has received the final approval from the Italian Ministry of Economic Development (UNMIG) for gas production at the Bezzecca gas field on 11 April 2017. Commissioning and gas production will commence in the coming days.

Bezzecca is located east of Milan within the established prolific, gas-producing Po Valley region in northern Italy and operated by Saffron's subsidiary Northsun Italia SPA (NSI). Gas from Bezzecca 1 is processed at the Vitalba processing plant and directly connected by the national grid.

Saffron Energy's Italian concessions - including Bezzecca (Source: Saffron Energy)

Chief Executive Officer of Saffron Energy, Michael Masterman commented:

'We are extremely excited to be announcing first gas at Bezzecca as it represents a significant commercial and financial milestone for Saffron coming within 7 weeks of the successful IPO. It will significantly increase the overall Saffron gas production and strengthen our position and portfolio.'




NewBase 12 April 2017 Khaled Al Awadi

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

Oil prices rise on potential extension of output cuts REUTERS/Lucy Nicholson + NewBase

Oil prices rose on Wednesday, putting crude futures on track for their longest streak of gains since August 2016, as Saudi Arabia was reported to be lobbying OPEC and other producers to extend a production cut beyond the first half of 2017. Brent crude futures were up 20 cents, or 0.36 percent, at their highest since early March at $56.43 per barrel at 0656 GMT (02:56 a.m. EDT).

If Wednesday's rise holds, it would mark the seventh straight daily increase. That would beat a six-day bull-run from August 2016, although the price jump then was 17.5 percent versus a 6-percent rise in the current rally. U.S. West Texas Intermediate (WTI) crude futures were up 18 cents, or 0.34 percent, at $53.58 a barrel, also their highest since early March. Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), has told other producers that it wants to extend a coordinated production cut beyond the first half of the year, the Wall Street Journal reported. OPEC and other producers, including Russia, have pledged to cut output by around 1.8 million barrels per day (bpd) during the first half of 2017 in an effort to rein in oversupply and prop up prices.

Oil price special

coverage




While compliance from some participants has been patchy, Saudi Arabia has made significant cuts, with production down 4.5 percent since late 2016, despite a slight increase in March to 9.98 million bpd. "(The) Saudi Arabian production reduction appears to be ahead of forecast and gave oil a boost," said Jeffrey Halley of futures brokerage OANDA in Singapore. Despite this, there are still concerns that oil markets remain bloated and oversupplied. Fearing a loss of market share, Saudi Arabia is shielding its most important customers in Asia from the cuts, continuing to supply them with all contractual volumes. And in the United States, both production and inventories are surging. The Energy Information Administration (EIA) said on Wednesday that U.S. 2018 crude oil output would rise to 9.9 million barrels per day in 2018, from 9.22 million bpd this year. With demand expected to rise by 340,000 bpd in 2018, that will leave increasing amounts of U.S. oil for exports or to be put into storage.

U.S. commercial crude inventories hit a record 535.5 million barrels this month, although a report on Tuesday by the American Petroleum Institute suggested a dip. Official U.S. production and inventory data will be published later on Wednesday by the EIA.




Oil Rises as Saudi Arabia Said to Support Extending OPEC Cuts by Mark Shenk

Crude rose after Saudi Arabia was said to likely support prolonging OPEC production curbs into the second half of 2017.

It’s not clear there has been a final decision on an extension, which would also depend on the positions of other OPEC members and Russia, according to a person familiar with the Saudi Arabia’s internal discussions. The kingdom cut output to 9.9 million barrels a day in March, below levels it committed to under the deal, a person with knowledge of the data said. U.S. crude supplies fell last week, according to a Bloomberg survey before government data Wednesday.

Saudi Arabia joins other members of the Organization of Petroleum Exporting Countries that voiced support for an extension. The curbs have stabilized the market, according to Russia, which is among 11 countries outside the group that have joined in the pact aimed at easing a global glut. American crude output will rise to a record next year, the Energy Information Administration said in its monthly Short-Term Energy Outlook released Tuesday.

“It looks like the Saudis want to extend the cuts, which was in doubt,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by telephone. “It looks like they’ve had a modicum of success reducing global stockpiles and this is supporting prices.”

West Texas Intermediate for May delivery rose 19 cents, or 0.4 percent, to $53.27 a barrel at 12:37 p.m. on the New York Mercantile Exchange. Brent for June settlement increased 9 cents to $56.07 a barrel on the London-based ICE Futures Europe exchange.




NewBase Special Coverage

News Agencies News Release 12 April 2017

OPEC's War On Oil Overhang Starts To Bear Fruit Reuters -Libby George & Ahmad Ghaddar

OPEC appears to be slowly winning the battle against a global overhang of crude and oil products as inventories in onshore and floating storage decline. The price of oil may not reflect this just yet, as Brent crude futures are struggling to recover its losses for the year to date and break above $55 a barrel. But there is no doubt that stocks are falling around the world, from Saldanha Bay in South Africa, to the Caribbean. A persistent glut of Nigerian oil is easing and even Iran has liquidated the amount of crude held in floating storage. The Organization of the Petroleum Exporting Countries explicitly said a joint deal with non-OPEC producers to cut some 1.8 million bpd in the first half of 2017 was aimed at slashing an excess of around 300 million barrels of crude and petroleum products in OECD stocks. "Across the first quarter of the year, crude stocks built by much less than they did in the first quarter of last year even though refinery maintenance globally was much heavier," Energy Aspects analyst Richard Mallinson said. Iran has sold all the oil it had stored for years at sea and Tehran is now struggling to keep exports growing as it grapples with production constraints. Trading giant Vitol has sold millions of barrels of Nigerian crude oil from storage in South Africa's Saldanha Bay, according to oil traders, with cargoes sailing for Taiwan, India, the United States and Europe. France's Total has offered a further 2 million barrels of Nigerian Escravos oil from its own Saldanha Bay storage tanks, while sources said trader Mercuria had also been offering oil from storage. At the same time, Nigeria's new loading programmes are finding buyers at a reasonable pace – in stark contrast to the past two years, when any sales from storage put immense downward pressure on prices for newly loaded cargoes. Nordic bank SEB said global oil inventories in weekly data have dropped by 42 million barrels in the last four weeks. "Rising U.S. crude oil stocks have created some confusion so far this year, but they are a function of reduced U.S. refining activity on the one hand and U.S. crude oil imports on the other," SEB said. Mallinson said OPEC ministers meeting in late May will not have a full picture of world stocks due to a lag in reporting from major agencies including the International Energy Agency.




"It is going to take some time of all of the pieces of that inventory picture to become clearer." Product Draw

Stocks of oil products are also steadily drawing down. According to consultants FGE, total main product stocks levels in the United States, Amsterdam-Rotterdam-Antwerp independent storage and Singapore and Japan have declined by 6.5 million barrels, in the week to March 13 (latest full data available) to 631 million barrels. The weekly data hit an all-time high of just over 679 million barrels in February 2016, FGE said. If the declines continue, FGE said global product stocks could hit the top of the 10-year range, or 611 million barrels, in just three weeks. Still, they cautioned that much of the product strength was seasonal, and related to maintenance shutdowns that also diminished consumption of crude oil. This bullishness towards oil products has seen huge amounts of gasoline leaving Europe, and has hindered diesel shipments into the region, which has boosted margins and encouraged refineries to run as quickly as they can. Still, Hamza Khan, head of commodities strategy with Dutch bank ING, said normal seasonal draws on oil products, at the tail end of refinery maintenance season, could be creating a mirage of a tight market. "Is this due to the reasonable cuts? Or is it due to seasonal draws on crude?" Khan said, adding that with Asian refineries in their month of heavy maintenance, cleared cargoes from storage may not have been processed yet. "The key question is whether it's being consumed or whether it's pushed into somewhere else," he said. In the United States "refineries are already running at 91 percent of capacity, how much more crude can they burn?"

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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

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New base 1019 special 12 april 2017 energy news