New base 23 january 2018 energy news issue 1131 by khaled al awadi

Copyright © 2018 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content. Page 1

NewBase Energy News 23 January 2018 - Issue No. 1131 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: ALJ Energy plans carbon-neutral desalination plants fueled by renewable energy

The National + NewBase

Saudi developer Abdul Latif Jameel Energy (ALJ Energy) plans to use its renewable energy experience to develop carbon neutral desalination plants, as it pursues contracts in both sectors in markets including Saudi Arabia and the UAE.

“We’re looking at working between [our] water and the power teams to develop a carbon neutral desalination approach, to be able to desalinate with renewable energy,” the company’s chief

executive officer Roberto de Diego in an interview with The National.

The firm is “looking internally” at integrating solar and wind power solutions into desalination plants, which are typically highly energy-intensive. “[It will] depend on the geographic conditions of where the desalination plant will be,” said Mr de Diego Arozamena.

“The solar or wind plant doesn’t necessarily have to be in the same place; [much depends on] the regulations to provide electricity to the desalination project.” he said. ALJ Energy is among a number of local and international utility providers and energy firms hoping to benefit from the increasing privatisation of Saudi Arabia’s water and electricity distribution networks.




The country’s environment minister Abdulrahman Al Fadhli on Sunday announced plans to build nine desalination plants on the country’s Red Sea coast with a total capacity of 240,000 cubic metres of water per day, to be completed within 18 months.

Mr de Diego Arozamena said the firm is targeting both greenfield and brownfield desalination opportunities in the kingdom, including largescale projects in the industrial cities of Jubail, Yanbu and Rabigh.

ALJ Energy has also prequalified to bid for the world’s largest desalination facility in Abu Dhabi, a 200 million Imperial gallon-a-day project announced earlier this month by the Abu Dhabi Water & Electricity Authority (Adwea).

The Dh2 billion Taweela project will be developed as two desalination plants of 100 million gallons each and will be constructed alongside its namesake power station, located north of the city of Abu Dhabi.

ALJ Energy, which only opened its wind division last year, is eyeing opportunities in the Middle East’s nascent wind sector, especially within its home market.

Saudi Arabia last year tendered a 400MW project in Dumat Al Jandal, and recently announced another 800MW project to be offered for bidding later this year, as part of the kingdom’s plans to put 9.5GW of renewable power into its grid by 2023.

“We have about 1GW [of wind projects] in the pipeline,” said Mr de Diego Arozamena.

“We don’t have enough credentials yet to participate on the wind side, but we are willing to start participating in consortiums for our teams to start learning.”

The firm, through its fully-owned Spanish subsidiary Fotowatio Renewable Ventures, was awarded a contract last week for the construction of a 540GWh hybrid solar-wind project in Chile, which will power nearly a quarter of a million homes in the Latin American state.

In addition to new business, ALJ Energy’s future plans include managing and extracting value from plants it has developed worldwide.

“We’re looking at keeping the plants, the plan was to sell the plants once operational and now we’re reevaluating that,” said Mr de Diego Arozamena.

The developer announced last week it had reached financial close on a 342MW solar farm in the Mexican state of San Luis de Potosí.

“It should start construction in the next two-three weeks,” said Mr de Diego Arozamena.




Oman: OPEC / Non-OPEC meeting lauds high compliance levels Oman Observer - Conrad Prabhu

The OPEC / Non-OPEC Joint Ministerial Monitoring Committee (JMMC) wrapped up its 7th meeting in Muscat here yesterday with a commitment to keeping in place an agreement to cut global oil production for the entirety of 2018.

That agreement is enshrined in the ‘Declaration of Cooperation’ at which 24 OPEC and non-OPEC producers, including the Sultanate of Oman, pledged to cut a total of 1.8 million barrels per day (bpd) of crude from their aggregate production — a step that has helped accelerate the stabilisation of the global oil market.

Just over 12 months since the landmark pact went into effect, compliance with the ‘voluntary production adjustments’ agreed by the 24 signatories averaged a remarkable 107 per cent per month in 2017, the JMMC — the high-level monitoring panel — announced here yesterday.

The conformity level for December 2017 was a record-breaking 129 per cent — the highest since the Joint Ministerial Monitoring Committee was set up a year ago. Addressing international and local journalists at the conclusion of the daylong JMMC meeting, Saudi Energy Minister Khalid al Falih, who is Co-Chair of the Committee, said the high compliance levels boded well for efforts to drain the huge global inventories of crude built up in previous years — stockpiles that have held back a strong rally in international oil prices.

“Throughout 2017, we have seen an improvement in conformity levels every month, and there is no reason not to expect the trend to continue in 2018,” said Al Falih. “The improvement is a result of two things: Overperforming countries continuing to do better, and underperforming countries, especially Iraq, making significant improvements.”

Conference calls made during the JMMC meeting with the energy ministers of both Iraq and Kazakhstan elicited “reassuring responses” about their respective commitments to adhering to their ‘production adjustments’ in 2018, the Saudi minister said. “So I’m reasonably assured, with




solidarity from the 24 participating countries, that 2018 will be even better than the 107 monthly per cent average we saw in 2017,” he stated.

In a statement issued after the conclusion of its meeting in Muscat, the JMMC said: “Conformity levels have increased on a monthly basis from 87 per cent in January to the outstanding current level. Once more, the unwavering resolve of participating countries to rebalance the market has been amply demonstrated.” While welcoming the overall results of the past year, the Committee however urged the participating countries to intensify efforts to achieve stability in the global oil market.

“The JMMC will strive to maintain or exceed full conformity by all participating countries throughout 2018,” the statement said.

The Committee heard that around two-thirds of the overhang in global crude stockpiles have been depleted as a result of the production cuts. The remainder one-third volume is expected to be eliminated before the eliminated by the end of this year, thereby helping achieve a rebalanced oil market, the panel noted.

Importantly, JMMC Co-Chair Khalid Al Falih also urged OPEC and non-OPEC producers to be prepared to “stay the course” beyond 2018 should projections by the International Energy Agency (IEA) of a new stock build materialising next year.

“Despite high levels of conformity and despite commitments to maintain what we have done in 2017 through 2018, (the IEA is) predicting a stock build. If that materialises, we have to not only stay the course for 2018, but we have to consider rolling it into 2019.

If the picture changes, we will adjust course. As I have always said, let’s hope for the best, but let’s also be prepared to deal with an adverse slow rebalancing. Personally, I think, we will achieve a rebalancing by the end of 2018.” He also alluded to the possible “permanency” of the existing partnership between OPEC and non-OPEC members that would help respond to future challenges.

The JMMC also noted that the market had responded positively to the concerted efforts of participating nations to the “benefit of producers, consumers and the global economy alike”. Recent data, it said, confirmed that global oil demand growth will continue on a positive trajectory in 2018, buoyed by the strong performance of the global economy, it added. Represented at the JMMC meeting yesterday were officials from Saudi Arabia, Russia, Kuwait, Libya, Algeria, United Arab Emirates and Venezuela, besides the Sultanate of Oman. OPEC’s Secretary General Mohammed Barkindo was present as well.




Oman-based E&P firm inks pact with Sarawak’s Petros Oman Observer - Conrad Prabhu

PetroTel Energy Oman LLC (PTO), a subsidiary of US based PetroTel Energy — a privately held exploration and production (E&P) company — has inked a deal with Petroleum Sarawak Berhad (Petros), the oil and gas company wholly owned by the Malaysian state of Sarawak.

The Memorandum of Understanding (MoU), signed in Muscat late last week, underscores the growing international appeal of Oman-based E&P players, given their formidable technical skills garnered in harnessing the hydrocarbon potential of some of the most technologically challenging reservoirs in the world.

Parent company PetroTel Energy, which is headquartered in Texas-USA, is one of the largest players in Oman’s upstream sector with as many as four oil and gas blocks in its portfolio. In addition to its assets in the Musandam peninsula (onshore Block 17 and offshore Block 40), the company also operates a pair of concessions in Dhofar Governorate (onshore Block 67 and offshore Block 39).

According to Malaysian media reports, the MoU was signed against the backdrop of the visit of Datuk Patinggi Abang Johari Tun Openg, Chief Minister of Sarawak, to the Sultanate. It marked the maiden agreement of Petros, a newly formed state-owned oil and gas company that was set up in August last year with a mandate to work with Malaysian national oil company Petronas.

Separately, PetroTel signed an agreement with South Sea Energy (SSE), a Sarawak affiliated independent oil and gas exploration and production company with assets in the Middle East and South East Asia. SSE is a partner with PetroTel Energy in development of Block 17 onshore Oman’s Musandam peninsula.

The pacts were hailed as auguring well for increased collaboration between energy firms in the Sultanate and Sarawak. Aside from opportunities for cooperation in the upstream energy sector, the delegation from Sarawak also held out the potential for collaboration in the development of downstream oil and gas industries in the Malaysian state.

“Oman and Sarawak have some similarities demographically and as oil producing states that would augur well for enhancing bilateral ties between the two economies,” Chief Minister Abang Johari was quoted as stating. Representing PetroTel Energy Oman at the MoU signing were Dr Anil Chopra, Chairman and Chief Executive, and Mike Lucich, Chief Operating Officer.




Indonesia to auction 43 oil and gas blocks by March Source: The Jakarta Post

The Energy and Mineral Resources Ministry plans to offer 40 conventional and three unconventional oil and gas blocks through a tender in early March, including 32 blocks that failed to attract investors in 2015-2017 auctions.

The winners of the upcoming tender will operate all of those blocks using the new gross-split mechanism, which requires investors to pay exploration and production costs instead of relying on the government’s reimbursement as seen under the former cost-recovery scheme.

'We will offer all of those blocks in early March,' the ministry’s secretary-general Ego Syahrial told reporters on Thursday. In December 2017, the ministry announced it had found bidders for five of 15 oil and gas blocks offered through that year’s auction.

Among the bidders are the United Arab Emirates-based Mubadala Petroleum, Spain’s Repsol Exploración and a consortium consisting of the United Kingdom-based Premier Oil Far East, Mubadala Petroleum and Singapore’s Kris Energy.

The ministry is optimistic that it will also find many bidders for blocks offered through the upcoming auction, especially considering the increasing crude prices.




Iraq: Orion to process gas from Iraq's Nahr Bin Omar oil field Source: Reuters

Iraq has agreed a deal with U.S. energy company Orion Gas Processors to process natural gas extracted at its giant Nahr Bin Omar oil field. The memorandum of understanding, signed in Baghdad by representatives of the oil ministry and the U.S. company, will allow Orion Gas Processors to build facilities to capture the gas from the field located in southern Iraq and to transform it into usable fuels.

Nahr Bin Omar, operated by state-run Basra Oil Co., is producing more than 40,000 barrels per day of oil (bpd) and 25 million cubic feet a day of natural gas. Iraq continues to flare some of the gas extracted alongside crude oil at its fields because it lacks the facilities to process it into fuel for local consumption or exports.

Orion will capture and process 100 million to 150 million cubic feet/day (mcf) of gas, Oil Minister Jabar al-Luaibi said at the ceremony. The gas captured will be used to feed power stations and to produce up to 10 million liters of gasoline, equivalent to 32 percent of Iraq’s total imports of the fuel, he said. Gas flaring across Iraq should end by 2021, he added.

The minister said he plans to visit Kuwait in February to finalize a deal on exporting Iraqi gas, adding that the selling price of the fuel is yet to be agreed by the two countries. The two countries are discussing a pipeline project to bring 50 mcf of Iraqi gas per day to Kuwait for ten years, increasing to 200 mcf per day over the period.

The exports, to come from the Rumaila field, would be used as feedstock for a petrochemical plant and pay off Baghdad’s final $4.6 billion in war reparations owed for its 1990 invasion of Kuwait.

Iraq hired Japan’s Toyo Engineering to help build the project.




India’s ONGC to Raise B.$5.48 to Buy Hindustan Petroleum (HPCL) Bloomberg - Debjit Chakraborty

India’s biggest oil and gas explorer has widened its first debt-raising plan to as much as $5.48 billion to buy state-run refiner Hindustan Petroleum Corp.

Oil & Natural Gas Corp.’s board has approved raising as much as 350 billion rupees in loans to buy the government’s 51.1 percent stake in HPCL, Chairman Shashi Shanker said in New Delhi on Sunday. That would be a 40 percent increase from its plan last year to raise 250 billion rupees. The state-run explorer said Saturday it will pay 369 billion rupees in cash for the stake.

The acquisition is part of a plan to create an oil major that was first outlined by Finance Minister Arun Jaitley while presenting the federal budget in February last year. The stake sale will help the government meet more than of half of its asset-disposal plan for the year to March 2018 and is crucial for narrowing its budget gap.

“We will use our cash first and then the liquid assets and debt will be last,” Shanker told reporters. "This order can change, because we won’t sell the liquid assets in distress. Also, we have offers for over 500 billion rupees debt at very competitive rates, both foreign currency and local."

The company currently has about 130 billion rupees in cash reserve, Shanker said, adding that the company could also sell the shares it holds in India’s biggest refiner Indian Oil Corp. and state-run gas utility GAIL India Ltd. ONGC holds a 13.8 percent stake in Indian Oil and a 4.8 percent stake in GAIL, data compiled by Bloomberg showed.

Bringing HPCL into its fold will make ONGC the nation’s third biggest refiner after Indian Oil Corp. and Reliance Industries Ltd. ONGC said it will pay 473.97 rupees a share for the purchase. The shares will be transferred directly to ONGC without being routed through the stock market, Shanker said.

“Overall we see the transaction valuation as fair, but don’t see major direct synergies," Credit Suisse analyst Badrinath Srinivasan wrote in a report Monday, adding that the acquisition will make ONGC’s earnings more stable.

ONGC shares on Monday rose as much as 6.4 percent to 206 rupees, the biggest intraday gain since August 2015. It pared gains to trade at 204.80 rupees as of 9:53 a.m. in Mumbai, while HPCL fell 2.5 percent to 405.80 rupees. The benchmark S&P BSE Sensex was 0.4 percent higher.

The company, which expects to close the deal by the end of January, may later consider merging its oil refining subsidiary Mangalore Refinery and Petrochemicals Ltd. with HPCL, Shanker said.

Merging MRPL will be positive for HPCL as it would help in combined crude sourcing and reduce logistics costs, Srinivasan of Credit Suisse said. The transaction is exempt from the requirement to make an open offer and all regulatory approvals have been secured for the deal, ONGC said.




Turkey: Gazprom to construct second string of TurkStream PL Source: Gazprom

Gazprom has received a construction permit from the authorities of the Turkish Republic for the second string of the TurkStream gas pipeline’s offshore section stretching to the Turkish coast.

'The TurkStream project is well underway. In accordance with the plan, it is carried out simultaneously at three sections: onshore in Russia and Turkey and offshore in the Black Sea. Over 760 kilometers of the two strings are already built at the offshore section. Construction of the landfall in Russia is nearly completed.

In Turkey, work started at the construction site of the receiving terminal. Today, we received a permit to lay the second string in the exclusive economic zone and territorial waters of Turkey. We now have all of the required permits from the Turkish Government to lay the TurkStream gas pipeline in the offshore area. It is therefore a certainty that both strings of the gas pipeline will be put into operation right on time, before the end of 2019,' said Alexey Miller, Chairman of the Gazprom Management Committee.

Background

TurkStream is the project for a gas pipeline stretching across the Black Sea from Russia to Turkey and further to Turkey's border with neighboring countries. The first string of the gas pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe. Each string will have the throughput capacity of 15.75 billion cubic meters of gas per year. Construction of TurkStream’s offshore section commenced on May 7, 2017.




U.S: Natural gas main energy source for electricity generation Source: U.S. Energy Information Administration, Short-Term Energy Outlook

EIA’s January 2018 Short-Term Energy Outlook (STEO) forecasts that natural gas will remain the primary source of U.S. electricity generation for at least the next two years. The share of total electricity supplied by natural gas-fired power plants is expected to average 33% in 2018 and 34% in 2019, up from 32% in 2017.

EIA expects the share of generation from coal, which had been the predominant electricity generation fuel for decades, to average 30% in 2018 and 28% in 2019, compared with 30% in 2017.

The mix of energy sources used for producing electricity generation continues to shift in response to changes in fuel costs and the development of renewable energy technologies. Since 2015, the cost of natural gas delivered to electric generators has generally averaged $3.50 per million British thermal units (Btu) or less, and it is expected to remain near this level through 2019.

EIA expects the cost of natural gas for electricity generation to remain relatively competitive with coal-fired electricity over the next two years. The average cost of natural gas delivered to generators in 2018 is forecast to fall 2%, while the forecast delivered cost of coal rises 5%.




These relative price changes should increase the share of natural gas generation in 2018. The costs of both natural gas and coal in 2019 are expected to remain relatively unchanged from this year’s forecast prices.

Source: U.S. Energy Information Administration, Short-Term Energy Outlook Note: Costs in dollars per megawatthour are calculated using average coal and natural gas heat rates as reported in Electric Power Annual Table 8.1.

Power plant operators are scheduled to bring 20 gigawatts (GW) of new natural-gas fired generating capacity online in 2018, which, if realized, would be the largest increase in natural gas capacity since 2004.

Almost 6 GW of the capacity additions are being built in Pennsylvania, and more than 2 GW are being built in Texas. In contrast, about 13 GW of coal-fired capacity are scheduled to be retired in 2018. These changes in the generating capacity mix contribute to the continuing switch from coal to natural gas, especially in southern and midwestern states.




Compared with the rest of the country, the use of natural gas for electricity generation is not expected to increase as much in the West, where natural gas largely competes with hydropower.

EIA expects the natural gas generation share in the West region to rise from 27% in 2017 to 29% in 2018, primarily as a result of a decline of the region’s hydropower generation share, which is expected to fall from 26% in 2017 to 23% in 2018. In 2017, hydropower generation in the West benefitted from atypically wet conditions.

Generation from renewable energy sources other than hydropower has grown rapidly in recent years. EIA expects the average annual U.S. share of total utility-scale generation from nonhydro renewables to exceed 10% for the first time in 2019.




NewBase January 23 - 2018 Khaled Al Awadi

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

Oil rises on IMF economic growth outlook, OPEC-Russian supply curbs Reuters + Bloomberg + NewBase

Oil prices rose on Tuesday, lifted by healthy economic growth as well as the ongoing supply restraint by a group of exporters around OPEC and Russia.

FILE PHOTO: The Philadelphia Energy Solutions oil refinery owned by The Carlyle Group is seen at sunset in front of the Philadelphia skyline March 24, 2014. Picture taken March 24, 2014. REUTERS/David M. Parrott/File Photo

Spot Brent crude futures LCOc1 were at $69.41 at 0409 GMT, up 38 cents, or 0.55 percent, from their last close, not far off the Jan. 15 three-year high of $70.37 a barrel.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.99 a barrel, up 42 cents, or 0.7 percent, from their last settlement. WTI hit its highest since December 2014 on Jan. 16 at $64.89 a barrel.

Oil price special

coverage




Traders said oil markets were generally well supported by healthy economic growth.

The International Monetary Fund (IMF) on Monday revised upward its forecast for world economic growth in 2018 and 2019, to 3.9 percent for both 2018 and 2019, a 0.2 percentage point increase from its last update in October.

The “economic outlook and seasonally colder weather has led to firmer oil demand growth, facilitating the continuation of a fall in oil inventories toward OPEC’s recent five-year average target,” BNP Paribas said in a note.

This growth, which is also translating into more oil consumption, comes at a time of supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, which began in January last year and are set to hold throughout 2018.

“The outlook for 2018 is roughly balanced for most of the year, but inventories are set to rise in Q4‘18,” the French bank said, adding that it has hiked its 2018 oil price forecasts by $10 a barrel and expects WTI to average $60 a barrel and Brent $65.

But there have also been signs of a possible crude oil downward price correction.

Crumbling refinery profits, first in Asia and now also in Europe and the United States, as a result of rising feedstock prices and plentifully available fuel products, point to lower crude orders going forward.

In the longer term, investors are preparing for large-scale changes in oil demand coming from the rise of electric vehicles.

Bank of America Merrill Lynch said this week in a note to investors that “we see peak oil demand by 2030 on electric vehicles...Electric vehicles will have replaced conventional (vehicles) by 2050.”

The bank also said that “when gasoline demand peaks by 2025 (and total oil by 2030), refinery utilization rates may decline permanently and refining margins suffer heavily.”

Saudi Arabia, the world’s top oil exporter and de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said on Sunday major oil producers were in agreement they should continue cooperating on production after their deal on supply cuts expires this year.

“There is a readiness to continue cooperation beyond 2018...The mechanism hasn’t been determined yet, but there is a consensus to continue,” Saudi Arabia’s Energy Minister Khalid al-Falih said in Oman.

A group of oil producers including OPEC and Russia, the world’s

biggest crude producer, started to withhold production in January last year to prop up prices. The deal is set to expire at the end of 2018.




In the United States, declining drilling activity for new oil production further supported crude. U.S. drillers cut five oil rigs in the week to Jan. 19, bringing the count down to 747, energy services firm Baker Hughes said on Friday.

Despite this, the rig count in 2017 and early this year remains much higher than in 2016, resulting in a 16 percent rise in U.S. production since mid-2016, to 9.75 million barrels per day. Beyond supplies, strong global economic growth was also supporting oil prices.

“During the last four quarters, the underlying global growth dynamic began to shift... Global growth has become synchronized and accelerated above trend,” U.S. bank Morgan Stanley said over the weekend in a note.

In the latest indicator, Japanese manufacturing sentiment in January jumped to an 11-year high, the Reuters Tankan poll showed on Monday, highlighting the optimism driven by nearly two years of economic expansion.

Despite the well supported market, analysts warned oil markets had lost some steam since their peak early last week. Bernstein Energy said on Monday that oil inventories might start rising soon due to a slowdown in demand which typically happens at the end of the northern hemisphere winter.

“We expect... an end to the strong (inventory) draws we have seen... With the strong correlation between inventories and crude prices, this perhaps means we should expect crude prices to moderate in the near term,” Bernstein said.




NewBase Special Coverage

News Agencies News Release January 06-2017

IEA: Oil Market Review, Is seventy Dollar Per barrel plenty?

The price of Brent crude oil closed earlier this week above $70/bbl for the first time since 2 December 2014 (shortly after OPEC’s “market share” ministerial meeting) and money managers have placed record bets on the recent upward momentum continuing.

The factors contributing to this burst of optimism by investors include; the possible unravelling of the Iran nuclear deal and recent demonstrations in the country, disruption to the industry in Libya, and the closure of the Forties pipeline system.

Although these factors might have faded somewhat, there are others at work. The general perception that the market has been tightening is clearly the overriding factor and, within this overall picture, there is mounting concern about Venezuela’s production.

Taking Venezuela first, production has been sliding for a long time – it is now about half the level inherited by President Chavez in 1999 – and in December output was 490 kb/d lower than a year ago, having fallen to 1.61 mb/d. It is reasonable to assume that the decline will continue but we cannot know at what rate. If output and exports sink further other producers with the flexibility to deliver oil similar in quality to Venezuela’s shipments to the US and elsewhere, including China, might decide to step in with more barrels of their own.

The oil market is clearly tightening; in the three consecutive quarters 2Q17-4Q17 OECD crude stocks fell by an average of 630 kb/d; such a threesome has happened rarely in modern history: examples include 1999 (prices doubled), 2009 (prices increased by nearly $20/bbl), and 2013




(prices increased by $6/bbl). Since the nadir for Brent crude in June when the price was $45/bbl, the 2017 OECD crude draws have coincided with a price increase for Brent of nearly $25/bbl.

A judgement as to whether the recent price strength is sustainable must take into account the rapid growth in global oil supply seen recently and which will continue through 2018. Short-cycle production from the US is reacting to rising prices and in this Report we have raised our forecast for crude oil growth there in 2018 from 870 kb/d to 1.1 mb/d. It is possible that very soon US crude production could overtake that of Saudi Arabia and also rival Russia’s.

After adding in barrels from Brazil, Canada and other growth countries, and allowing for falls in Mexico, China and elsewhere, total non-OPEC production will increase by 1.7 mb/d. This represents, after the downturn in 2016 and the steady recovery in 2017, a return to the heady days of 2013-2015 when US-led growth averaged 1.9 mb/d.

This projected big increase in non-OPEC production needs to be set against our current forecast for oil demand. For 2018, we see growth of 1.3 mb/d, a conservative number that acknowledges the current perception of healthy global economic activity, but also takes into account the fact that benchmark crude oil prices have increased by 55% since June and this can dampen oil demand growth to some extent.

The uncertainty surrounding Venezuela is such that our regular practice of showing a market scenario chart that assumes steady OPEC production must be treated with caution. If OPEC countries plus their non-OPEC supporters maintain compliance then the market is likely to




balance for the year as a whole with the first half in a modest surplus and the second half in a modest deficit.

This scenario, or something similar to it, presumably lies behind the assumption by forecasters surveyed by Reuters that Brent will trade in a $60-$70/bbl range in 2018. Whether or not the recent price rise has run out of steam and seventy really is plenty remains to be seen. However, such are the geopolitical uncertainties and the ever-dynamic prospects for US shale that we should expect a volatile year.

Highlights • Demand estimates in 2017 and 2018 are roughly unchanged at 97.8 mb/d and 99.1 mb/d

respectively. A 40 kb/d downward revision to 2016 demand, however, pushed up the 2017 growth to 1.6 mb/d, while our growth estimate for 2018 remains unchanged at 1.3 mb/d.

• The slowdown in 2018 demand growth is mainly due to the impact of higher oil prices, changing patterns of oil use in China, recent weakness in OECD demand and the switch to natural gas in several non-OECD countries.

• Global oil supply in December eased by 405 kb/d to 97.7 mb/ddue mostly to lower North Sea and Venezuelan output. Production was steady on a year ago as non-OPEC gains of nearly 1 mb/d offset declines in OPEC.

• A plunge in Venezuelan supply cut OPEC crude output to 32.23 mb/d in December, boosting compliance to 129%. Declines are accelerating in Venezuela, which posted the world's biggest unplanned output fall in 2017.

• Rapid US growth and gains in Canada and Brazil will drive up non-OPEC supply by 1.7 mb/d in 2018, versus last year's 0.7 mb/d increase. US crude supply will push past 10 mb/d, overtaking Saudi Arabia and rivalling Russia.

• OECD commercial stocks declined for the fourth consecutive month in November, by 17.9 mb, with a large fall in middle distillates. Preliminary data for December suggest a further fall of 42.7 mb.

• Global crude oil markets saw an exceptionally tight 4Q17 as the large draw in OECD crude stocks coincided with a decline in Chinese implied crude balances. The combined draw is estimated at 1 mb/d.

• Benchmark crude prices climbed to a three-year high in early January, reflecting falling stocks, supply issues in the North Sea and Libya, and geopolitical tensions. However, physical markets were softer and oil products failed to match the increases.

• Global refining throughput hit a record in 4Q17 at 81.5 mb/d, instead of falling seasonally. The US returned to pre-hurricane highs in December and China's refiners ran at their highest ever quarterly level. Margins suffered further from both product stock builds and the rally in crude oil prices.




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

The Editor :”Khaled Al Awadi” Your partner in Energy Services

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

sponsored by Hawk Energy Service – Dubai, UAE.

For additional free subscription emails please contact Hawk Energy

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

ASME member since 1995 Hawk Energy member 2010

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

Khaled Al Awadi is a UAE National with a total of 28 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 January 2018 K. Al Awadi







For Your Recruitments needs and Top Talents, please seek our approved agents below

Business

New base 23 january 2018 energy news issue 1131 by khaled al awadi