New base energy news issue 883 dated 29 june 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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

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NewBase Energy News 29 June 2016 - Issue No. 883 Edited & Produced by: Khaled Al Awadi

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

UAE motorists face fourth consecutive monthly petrol price rise The National staff

Prices of petrol and diesel have increased for the fourth month in a row, but only marginally this time. The Ministry of Energy announced on its website that all grades of petrol have been increased by 2

fils a litre for July, with diesel getting dearer by 8 fils.

From July, Super 98 will retail at Dh1.88 a litre compared with Dh1.86 in June, an increase of more than 1 per cent. Prices of Special 95 have gone up by 1.14 per cent to Dh1.77 from 1.75 a litre and EPlus 91 will cost motorists Dh1.70 compared with Dh1.68 in June, a rise of 1.19 per cent.

Transport companies will see their fuel bills increase by 4.5 per cent next month as the price of diesel has gone up to Dh1.85 from Dh1.77 a litre. Brent crude futures, the international benchmark, rose to above $50 a barrel this month on the back of a report from the International Energy Agency that demand will increase by 100,000 barrels per day to 1.3 million bpd this year as the supply glut eases.

However, oil prices fell sharply after the British voters opted to leave the European Union, with Brent ending the week at $48.41. Petrol and diesel are by-products of crude oil, which is why the movements (or in this case, stability) in Brent crude affect prices at the pump. However, the UAE has not released which benchmark or method it bases petrol price fluctuations.




Qatar: Petrol prices to go up in July 2016 Gulf Times

Petrol prices in Qatar will go up next month while there will not be any change in the diesel price in July, shows an announcement by the Ministry of Energy & Industry. According to the Ministry of Energy & Industry the 91-octane Premium gasoline will cost QR1.3/litre and Super QR1.4 in July. The price fixed for this month is QR1.2/litre (Premium) and QR1.3/l (Super), which will be in effect until June 30. Diesel, however, will remain unchanged at QR1.4/l in July. Fuel prices in Qatar were allowed to fluctuate in response to changes in the global market from May 1, the Ministry of Energy and Industry said. Every month, a special committee comprising representatives from various government bodies, would review fuel prices (gasoline and diesel) and make recommendations on proposed prices for the local market accordingly.




Qatar: Maersk Oil to leave Qatar in 2017 following Al Shaheen decision Source: Maersk Oil

In July 2015 Qatar Petroleum (QP) invited a number of international oil companies to participate in a competitive tender process regarding the future development of the Al Shaheen oil field in Qatar. Presently Maersk Oil is the operator of the field and the current 25 year production sharing agreement expires in July 2017.

Earlier this year Maersk Oil submitted its bid in the tender. QP on Monday communicated that they have selected another oil company as partner for the future development of the Al Shaheen field.

'Maersk Oil presented a highly competitive technical and commercial proposition based on more than 20 years of technical knowledge and experience working with the Al Shaheen field,' says CEO in Maersk Oil, Jakob Thomasen.

During the past 24 years Maersk Oil and QP have together developed the Al Shaheen Oil field into Qatar’s largest off-shore producing oil field. Under the terms offered by Qatar Petroleum, a minority shareholding for Maersk Oil in the new joint venture would have

created a marginal impact on the Maersk Group earnings in the years ahead.

Maersk Oil will continue to operate Al Shaheen until the end of the current license in July 2017. Leading up to the expiry of the existing production-sharing agreement Maersk Oil will work together with QP to support a safe and efficient transition of the existing operations to the new operatorship.

'Maersk Oil is growing as a result of improved operating performance and with major projects like Culzean in the UK and Johan Sverdrup in Norway, we continue adding new production through to the end of the decade. We will continue to deliver in the years ahead based on a strong operational performance and cost focus and ensure that our major projects are executed on time and on budget,' says Jakob Thomasen.

Maersk Oil will be redeploying a number of its employees which today are based in Qatar elsewhere in its global organisation. The majority of remaining employees in Qatar are expected to be offered employment by the new operator.

A.P. Møller - Mærsk A/S’ financial outlook for 2016 remains unaffected and no need for write-downs will occur. The Group’s reserves and resources (by end of 2015 2P + 2C of 1,141 million boe) will not be impacted by the expiration of the agreement.




Pakistan: OGDC discovers gas in Sukkur Source: The Express Tribune

Oil and Gas Development Company (OGDC) has discovered gas in its exploratory well Thal West 01, which is 100% owned by the company and is located in Sukkur district of Sindh.

The Thal West 01 was drilled and tested using OGDC’s in-house expertise. The well was drilled down to the depth of 3,983 metres to test the hydrocarbon potential of Basal Sands of Lower Goru formation.

The results showed presence of significant reserves of hydrocarbon in the well. The zone produced 17.2 million standard cubic feet of gas per day (mmscfd) at wellhead flow pressure of 2,820 per square inch (psi). The discovery has opened a new avenue and will add to the gas reserve base of OGDC and the country. OGDC, a leading oil and gas exploration company, posted a decline of 36% in its net profit for nine months ended March 31, 2016.

OGDCL is the national oil & gas company of Pakistan and the flagship of the country’s E&P sector. The Company is the local market leader in terms of reserves, production and acreage, and is listed on all three stock exchanges in Pakistan and also on the London Stock Exchange since December 2006. The Company is all set to ride the wave of E&P activity, equipped with its Vision & Mission, Business and Strategic Plan, a debt-free and robust balance sheet and healthy cash reserves. The Company is ready to take on the challenges of a volatile E&P industry.




Indonesia: Santos JV reports rxcellent flow test results at Northwest Natuna appraisal well…..Source AWE

JV partner AWE Limited has been advised by Santos as Operator that a successful Drill Stem Test (DST) has been conducted on the G Sand reservoir at the AAL-4XST1 appraisal well, offshore Indonesia, achieving an averaged stabilized flow rate of 828 barrels/day (bopd) on a 64/64 inch choke over a 9 hour period. The results exceeded pre-drill expectations and are 58%

higher than the previous G-sand tests at AAL-3X (525 bopd).

The DST was successfully conducted over a 3.5m perforated interval in the sidetrack well bore and was assisted by an electrical submersible pump (ESP) which is standard procedure in heavy oil fields due to the viscosity of the oil.

Bulk oil samples were recovered for further testing but wellsite measurements indicate the G-sand oil to have a specific gravity of 10.7 API at 60° F, consistent with previous samples from AAL-3X. Produced gas and water were at rates too low to measure.

AWE’s preliminary analysis of the wireline log data indicates an 8m oil column in the G-Sand and excellent quality reservoir, the best encountered in the field to date. No oil-water-contact was intersected in the well. Operations

are now underway to commence a second DST test in the main AAL field K-sand reservoir. AWE Managing Director and CEO, David Biggs, said:

'The better than expected flow rates achieved and excellent reservoir quality underline the significant potential of the AAL oil project. The positive results of the G-sand DST, together with a forecast lower cost environment and an improving long-term outlook for the oil price are all encouraging in respect of a decision to develop the AAL field.'

The AAL-4X well has been drilled in water depth of approx. 72m using the Raniworo jack-up drilling rig and is forecast to be completed within the Operator’s budget. The Northwest Natuna PSC is located offshore Indonesia in the Natuna Sea and includes the Ande Ande Lumut (AAL) oil project. The AAL project comprises the K Sand reservoir (101 million barrels gross recoverable oil, net 24.3 million barrels of 2P Reserves and 1.7 million barrels 2C Contingent Resources to AWE) and the underlying G Sand reservoir.

The AAL-4X appraisal well’s primary target is the G Sand reservoir, which is estimated to contain 289 million barrels gross oil in place with 36 million barrels gross recoverable oil (net 8.4 million barrels 2C Contingent Resources to AWE). Appraisal of the G Sand will facilitate the preparation of a Plan of Development for this resource, which could be developed in conjunction with the already approved K Sand development.'




Saudi Aramco, Sabic One Step Closer to Turning Oil Into Chemicals Bloomberg - Wael Mahdi

Saudi Arabian Oil Co. and Saudi Basic Industries Corp. are one step closer to building their first plant to process crude directly into chemicals, cutting out a costly intermediate link in the production of plastics.

Aramco and Sabic, as the state-owned companies are known, signed an agreement Tuesday for a feasibility study to build the project in Saudi Arabia, possibly in a joint venture, they said in a statement. The study is due to be completed by early 2017, they said. Oil companies normally refine crude into transportation fuels including gasoline and diesel and leave byproducts such as naphtha to be processed separately into chemicals.

The companies could “substantially” increase Saudi Arabia’s production of petrochemicals, while enabling them to boost exports and spur industrial diversification, Aramco Chief Executive Officer Amin Nasser, said in the statement. Aramco and Sabic are also studying “possible” joint investment in shale gas, Sabic CEO Yousef Abdullah Al Benyan said at the signing ceremony.

Largest Exporter

Saudi Arabia, the world’s largest oil exporter, is pursuing a plan to modernize its economy by reducing the kingdom’s reliance on crude sales. The plan includes selling shares in Aramco and expanding the manufacturing industry, partly by using oil-based chemicals to produce materials like plastics that can go into consumer products.

Saudi Aramco would be partly listed on the nation’s stock exchange under the plan outlined earlier this year by Deputy Crown Prince Mohammed Bin Salman, the king’s influential son. The prince’s strategy calls for both Aramco and Sabic to be owned by the state’s Public Investment Fund, which currently holds 70 percent of the chemical company’s stock, according to data compiled by Bloomberg. The government owns Saudi Aramco directly.

Saudi Aramco and Sabic, the third-biggest petrochemical maker in the world by sales, want to build the oil-to-chemicals plant in Yanbu on the Red Sea coast, people with knowledge of the plan said in April, asking not to be identified because the project was confidential.

Aramco and Sabic had previously been working separately on projects to produce chemicals from oil, they said. Former Saudi Oil Minister Ali al-Naimi had announced in 2013 that the ministry was working with Sabic for an oil-to-chemical refinery in Yanbu.




US: Newest U.S. refinery sold at a loss, hurt by oil price slump Reuters

A North Dakota refinery that was the first to be built in the United States since the 1970s has been sold at a loss, with profit elusive since it opened last year, as low oil prices took a toll on the region's energy industry, crimping the appetite for diesel.

The sale to Tesoro Corp, which owns the only other refinery in the state, makes it unlikely another refinery will be built in the United States in the near future, despite the glut of cheap crude due to shale oil production.

Beyond North Dakota, the refinery business in the past year has been hammered by growing fuel inventories, turning a typical advantage - cheap oil - on its head.

MDU Resources Group Inc and Calumet Specialty Product Partners LP, which were equal partners, broke ground on the refinery in 2013, with executives eager to supply diesel to the trucks, drilling rigs and other equipment powering an oil boom North Dakota was then experiencing.

The state's governor, two U.S. senators and other dignitaries showed up for the groundbreaking in Dickinson, about two hours

south of the oil capital of Williston. Yet construction delays, weather and other factors pushed the refinery's cost to $430 million, about 40 percent above initial estimates.

The Dickinson refinery was designed to produce only 8,000 barrels of diesel per day, far less than refineries on the U.S. Gulf Coast, and not gasoline or jet fuel.

Despite that small size, it opened later than expected, in May 2015, and started hemorrhaging cash. MDU lost $7.2 million during the first quarter on its investment.

"Selling the refinery reduces our risk by decreasing our exposure to commodity prices," Dave Goodin, MDU's chief executive, said in a statement.

To complete the deal, MDU paid off Calumet's $28.5 million in refinery debt on Monday and absolved Calumet of any environmental obligations, effectively taking full ownership.

MDU then sold the refinery to Tesoro, which owns a refinery near Bismarck, the state capital.

The sale price was not disclosed, but Tesoro assumed the refinery's $66 million in debt and said it would invest $10 million. MDU's board voted to approve the deal on Friday. The company said it expects an impairment charge of at least $150 million.

Wall Street cheered the decision: shares of Calumet rose 5.3 percent to $4.53 while shares of MDU rose 0.5 percent to $23.34. Tesoro owns more than five refineries around the United States.




Extended policies case shows reduced energy use, emissions, more renewables, efficiency… U.S. EIA, Annual Energy Outlook 2016

Tax credits and efficiency standards for appliances and vehicles have been key drivers for increasing renewable energy use and energy efficiency in the United States. Extending these policies and increasing the stringency of the Clean Power Plan beyond 2030 would reduce energy-related carbon dioxide (CO2) emissions by reducing motor fuel use and energy use in buildings by increasing efficiency and by increasing the share of solar and wind in the electricity generation mix.

In EIA's Annual Energy Outlook 2016 (AEO2016) Reference case projection, which generally assumes current laws and policies, electricity generation from solar and wind sources across all sectors increases from 227 billion kilowatthours in 2015 to 950 billion kilowatthours in 2040.

In the Extended Policies case, which perpetuates policies beyond their legislated expiration, solar and wind generation grow to 1,236 billion kilowatthours in 2040, or 30% above the Reference case level.

Production tax credits for renewable energy are legislated to expire or reduce in value in 2017, and investment tax credits for solar energy begin to decline in 2020. In the residential sector, these credits expire completely at the end of 2021.




As these tax credits decline or expire, utilities and distributed generator (e.g., rooftop solar panels) customers accelerate investment and production projects to take advantage of the full value of the credits.

In the Reference case, this acceleration results in a period of fast growth in renewable generation up to those expiration dates. In the Extended Policies case, these credits are extended at their current value through 2040, leading to steadier and ultimately larger growth in renewable energy.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2016

The Extended Policies case also extends federal energy efficiency policies that encourage the adoption of efficient appliances and equipment in the residential, commercial, industrial, and transportation sectors.

Reductions in transportation energy use in the Extended Policies case are driven by extension of fuel economy requirements that further decrease energy consumption in light-duty, medium-duty, and heavy-duty vehicles.

Lower energy use and emissions in the buildings sector in the Extended Policies case result from improved energy efficiency of equipment for heating, cooling, and other uses, as well as increased adoption of more stringent building energy codes. Greater use of distributed generation, such as rooftop solar photovoltaic systems, reduces purchases of electricity




UK” North Sea Oil Industry Faces Years of Brexit-Induced Turmoil Bloomberg - Angelina Rascouet @arascouet

The U.K.’s North Sea oil and gas industry, already reeling from low prices, high costs and collapsing investment, now faces several years of turmoil as the nation’s decision to quit the European Union looks set to trigger a second independence vote in Scotland.

A poll on Scottish independence from the U.K. was defeated in 2014, but after voters there overwhelmingly backed the losing side in the referendum on EU membership a new vote is “very much on the table,” Scotland’s First Minister Nicola Sturgeon said on June 26. This leaves the North Sea oil and gas industry, the bulk of which is in Scottish waters, potentially facing years of uncertainty and political paralysis.

The prospect of another Scottish referendum “is not great for the investment climate,” Alan McCrae, U.K. head of energy tax at PwC, said by phone. “The industry needs both fresh investments and continuation of the existing investments.”

The North Sea has been battered by the slump in oil prices because of its high costs and dwindling resources. Oil and gas producers in the region will spend 40 percent less this year than in 2014 and by the end of the year an estimated 120,000 jobs will have been lost because of the downturn. The government of Prime Minister David Cameron, who resigned on Friday, supported the industry with tax cuts and the industry’s lobby group said it’s essential that the current political uncertainty be minimized.

Critical Juncture

“The U.K. oil and gas industry is at a critical juncture and we need to ensure the U.K. continental shelf continues to attract investment,” industry group Oil & Gas U.K. said in a statement on June 24. It urged U.K. government to “clearly” outline the process of leaving the EU in order to “make this transition as smooth as possible.”




There are “silver linings” to the political turmoil in the U.K., said PwC’s McCrae. The plunge in the pound to a 31-year low against the dollar will most likely cut costs for oil companies while their sales of crude -- denominated in dollars -- will benefit. Nevertheless, it remains vital that the government and the industry accelerate their collaboration to work through the current uncertainty, PwC said.

Government Support

The U.K. government has sought to mitigate the impact on the oil industry of the drop in crude prices to 12-year lows earlier this year. Chancellor of the Exchequer George Osborne said in March that the Treasury would forgo 1 billion pounds ($1.3 billion) in taxes over the next five years to support the industry. BP Plc received $317.6 million from the U.K. government in tax credits last year, the company said in a June 24 statement.

Whoever becomes the next U.K. prime minister, the process of leaving the EU is set to dominate their government’s agenda for several years. Cameron said June 24 that he won’t trigger the start of the secession process under Article 50 of the EU treaty, leaving that to his successor who will be appointed by September. Once Article 50 is set in motion, the U.K. formally has two years to negotiate its way out of the bloc. Analysts say it’s unlikely that this will be long enough to work out the more complex trading accords.

Referendum map

The industry would face an even longer period of turmoil if the U.K.’s EU exit were followed by a split with Scotland. That would probably mean reserves of oil and gas would be split, possibly along the so-called median line already used to allocate fishing rights. The division would hand the Scots about 96 percent of annual oil production and 47 percent of natural gas, according to estimates for 2012 by the University of Aberdeen’s Alex Kemp and Linda Stephen cited by the Scottish government at the time of the 2014 referendum campaign.

A spokeswoman for BP said the question of the future of Scotland in the U.K. isn’t a question for the company but it will “monitor the situation closely.” Royal Dutch Shell Plc, Europe’s largest energy company, reiterated its position during the 2014 referendum, saying it would prefer to see Scotland remain part of the U.K.

There may be a pause in investment while companies assess uncertainties, including the possibility of another Scottish referendum, said Ian Thom, senior research manager at Edinburgh-based consultant Wood Mackenzie Ltd.

“The main issues remain managing high costs in a low oil price environment and a lack of new investment opportunities,” Thom said.




Venezuela’s Oil Output Decline Accelerates as Drillers Go Unpaid Bloomberg - Angelina Rascouet @arascouet

Venezuela’s oil output, already the lowest since 2009, is set to slide further this year as contractors scale back drilling after the cash-strapped country fell more than $1 billion behind in payments.

The Latin American nation’s oil production, which generates 95 percent of export revenue, will decline by about 11 percent to 2.1 million barrels a day by the end of the year, Barclays Plc estimates. Output is falling largely because oil-services companies aren’t being paid, according to the International Energy Agency.

Venezuela’s economy has been in crisis since crude prices slumped, with sporadic looting as the desperate population fights for food and other essentials. President Nicolas Maduro has pledged to continue payments to bondholders, while the partners of state-run oil company Petroleos de Venezuela SA, known as PDVSA, aren’t paid. Further output decline in the OPEC nation, combined with disruptions in fellow members Nigeria and Libya, could leave the oil market short of supply next year.

“The situation is becoming more and more difficult for oil services in Venezuela,” Baptiste Lebacq, an analyst at Natixis SA in Paris, said by phone. As long as oil prices are at current levels, it’ll be “very difficult” for PDVSA to pay the contractors, he said.

Unpaid Debts

Schlumberger Ltd., the world’s largest oil-services company by market value, was owed $1.2 billion by PDVSA as of March 31, according to an April 27 filing. Halliburton Co. said last month the amount it was owed rose 7.4 percent in the first quarter to $756 million.

The number of rigs drilling for oil in Venezuela fell by 10 to 59 in May, the lowest level in more than a year, according to Baker Hughes Inc.




Schlumberger has reduced activity in line with the drop in payments, the company’s president, Patrick Schorn, told investors last week at the Wells Fargo West Coast Energy Conference. It still works in the country and could boost operations if “new payments models” are implemented, he said.

Italy’s Saipem SpA declined to comment on its operations in Venezuela. The company referred back to comments from Chief Executive Officer Stefano Cao, who said in April that it had idled all but 3 of 28 rigs in the country.

Halliburton declined to comment.

Minister’s Response

While Oil Minister Eulogio Del Pino declined to say whether PDVSA has delayed payments to contractors, he said the companies would remain in Venezuela.

“They have been operating in the country for more than 100 years,” Del Pino said. “They are not going to leave.”

Venezuela is preparing to take over some of the functions of the oil-services providers with the creation of Camimpeg, a new state enterprise under the control of the military. This is unlikely to solve the problem, according to consulting firms Energy Aspects Ltd. and FGE.

“You’ll get more natural declines at a steeper rate” because these local providers don’t have the experience needed to maintain production levels at the country’s aging wells, said FGE analyst Thomas Olney.

Declining Production

Supply reductions in Venezuela, combined with a political stalemate in Libya and militant attacks on oil infrastructure in Nigeria, helped curb an oversupply in the oil market this year. The surplus could turn into a shortfall in 2017 if the Organization of Petroleum Exporting Countries can’t pump an extra 650,000 barrels a day, according to Bloomberg calculations based on IEA data.

Venezuela faces further hurdles with the finances of its state-run oil company. While PDVSA has continued paying back the debt it owes to bondholders, almost $4 billion is due in the fourth quarter and the company will probably default, Moody’s Investors Service said in a report this month.

An oil price of about $50 a barrel is enough for PDVSA to avoid default, said Del Pino, who is also the state oil company’s president. “We have been paying all of our debts” during “the longest cycle of low prices that we have had,” he said.

West Texas Intermediate crude, the U.S. benchmark, traded at $47.43 a barrel on the New York Mercantile Exchange at 1:04 p.m. Tuesday. The average price of all crudes handled by PDVSA was $40.16 on June 24, according to government data.

In the worst case scenario, the nation’s output could fall as low as 1.7 million barrels a day by year-end, Barclays said. That would be the lowest since a strike halted much of the nation’s oil output in 2003, according to data compiled by Bloomberg.

“Further supply weakness from Venezuela cannot be ruled out,” Barclays said in a note.




NewBase 29 June 2016 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 Norway strike threat; Brexit shock fades Reuters + NewBase

Oil rose early on Wednesday as financial traders poured money back into commodities following the initial shock of Britain's vote to leave the European Union, and as a potential strike in Norway and crisis in Venezuela threatened to cut supply.

International Brent crude futures were trading at $48.76 per barrel at 0019 GMT, up 18 cents from their last settlement. U.S. West Texas Intermediate (WTI) crude was up 30 cents at $48.15 a barrel.

Both crude oil benchmarks had climbed on Tuesday after financial markets shook off some of the shock of last week's referendum in Britain in which most voters elected to exit the EU, triggering turmoil across markets and regions.

"The risk-on tone should see commodities continue to push higher," ANZ Bank said on Wednesday.

"Oil led the (commodities) sector as the shock of the UK voting to leave the EU wore off. Oil gains were solidified by news that the decline in Venezuela's oil output appears to be accelerating, while a strike in Norway also looked like it would impact production," it added.

Prices were also supported by supply fundamentals, as a looming strike by Norwegian oil and gas field workers threatened to cut output from the biggest North Sea producer.

Oil price special

coverage




Reports that oil producers and refiners in crisis-struck Venezuela were struggling to keep output up due to power outages and equipment shortages also supported prices, traders said.

Additionally, the American Petroleum Institute (API) indicated in a preliminary report on Tuesday that crude inventories could have fallen nearly 4 million barrels for the week to June 24, some two-thirds more than the 2.4 million barrels expected by analysts. The U.S. Energy Information Administration will issue official stockpile data on Wednesday.

OPEC Says Its Oil Revenue Plunges $438 Billion to 10-Year Low Bloomberg

OPEC said its oil revenue plunged by $438 billion to a 10-year low last year, as an increase in export volumes failed to compensate for the collapse in prices.

The Organization of Petroleum Exporting Countries earned $518.2 billion in 2015 from the sale of crude and refined fuels, the lowest figure since 2005, the group’s Vienna-based secretariat said in its Annual Statistical Bulletin. It boosted exports by 1.7 percent to 23.6 million barrels a day, maintaining its share of global markets, as Iraq increased output and Saudi Arabia pressed on with a policy to squeeze rivals.

Oil futures tumbled by 35 percent last year as U.S. crude production held up despite the Saudi-led strategy to pressure OPEC’s competitors with lower prices. Crude has since recovered, rising almost 90 percent in London from the lows reached in January, as U.S. output retreats and disruptions from Canada to Nigeria help whittle away a global surplus.

The organization’s exports increased by an average of 400,000 barrels a day in 2015, raising its share of global production for the first time in four years, by 0.2 percentage points to 43 percent. Still, that wasn’t enough to compensate for the price rout. As a result of the lost revenue, OPEC nations recorded their first current account deficit since 1998, at $99.6 billion, compared with a surplus in 2014 of $238.1 billion, according to the report.

Exports from Saudi Arabia, which has steered the group’s policy often in defiance of poorer members like Venezuela and Algeria, were steady last year at 7.163 million barrels a day. The kingdom’s production rose by 4.9 percent to 10.193 million a day, according to the report. While drilling activity declined in OPEC nations last year, with the number of rigs dropping by 60 to 887, the drop-off in other parts of the world was far more severe, the report showed.




NewBase Special Coverage

News Agencies News Release 291 June 2016

Who Will Now Invest £100 Billion to Keep Britain's Lights On? Bloomberg - Jessica Shankleman

As if managing the Brexit crisis weren’t enough, the U.K. government also needs to find 100 billion pounds ($132 billion) to keep the lights on nationwide after 2020.

With more than a dozen power plants due to close in the next decade, Prime Minister David Cameron’s government has been working to lay out incentives that will draw in money for new electricity infrastructure. Finding that investment will be made more difficult by voters’ decision to leave the European Union, said Fatih Birol, executive director of the International Energy Agency.

“Decision makers don’t like uncertainties, especially in the economic outlook,” Birol said in an interview in London. “The U.K.’s electricity system is one of the oldest in the world. It’s aging very quickly, and we need to bring in new capacity.”

There’s already evidence of investors rethinking British projects. Vattenfall AB, which is planning a 5.5 billion-pound wind farm off England’s east coast, said it’s reassessing the risk of working in the U.K. PensionDanmark A/S, which also is funding energy projects in Britain, has said it would lose interest in new deals if the U.K. voted to leave.




That’s unsettling for the government’s effort to attract the 100 billion pounds it says is needed for energy infrastructure by the end of this decade. Already, the U.K. is facing the risk of price spikes this winter after a number of plants finish their life in service, according to Deutsche Bank AG analyst James Brand. As much as 7 gigawatts of closures were announced for 2016, equivalent to 11 percent of U.K. peak demand.

Winter Shortages

“We were already fearing severe problems of grid control in coming winters,” said Paul Younger a professor of engineering at the University of Glasgow. “The challenges just got a whole lot worse.”

To date, the government has focused on stimulating offshore wind and new nuclear power plants as part of a program to boost energy security, cut pollution and keep electricity affordable. The board of Paris-based Electricite de France SA is considering whether to make a final investment decision on new reactors at Hinkley Point in southwest England. Several large offshore wind farms in the North Sea got financing last year.

The Department of Energy & Climate Change hasn’t detailed how the Brexit vote will reshape its policies. Ministers are due to adopt a target this week on slashing carbon emissions by 2030. After the vote, Energy Secretary Amber Rudd said in a posting on Twitter that the government is “still committed to making sure consumers have secure, affordable and clean energy now and in the future.”

Even so, uncertainty created by the Brexit decision may slow investment decisions in the energy industry for two or three years, said Simon Currie, global head of energy at Norton Rose Fulbright LLP.

Unsteady Policy

“It’s not like the U.K. can say, ‘We’re a steady state and we don’t need to build anything, we can just keep going.’” Currie said. “That’s not where we sit. We need more investment. We can’t have the entire industry pause for two years.”

The next government might renege on its deal with EDF over Hinkley because the project will push up electricity bills, said Elchin Mammadov, an industry analyst at Bloomberg Intelligence. The reactors would sell power for double the current market price -- and more than what wind turbines or natural gas-fired plants cost.

Nuclear Question

“Hinkley Point is a big issue,” said Mammadov. “The current government has been pushing to get the deal done. The next government may start asking questions about whether we need it. It’s very expensive, and it’s an EU project.”

EDF Chief Executive Officer Jean-Bernard Levy said on Friday the utility is undeterred by the referendum and is pressing ahead with its consideration.

A Vattenfall spokesman said Britain’s exit from the EU introduces more risk to the industry over a period of time that can’t yet be measured. The company’s proposed offshore wind farm would produce 1.8 gigawatts of electricity.




The aftermath of the vote “brings considerable uncertainty and market turmoil,” said Stephanie Pfeifer, chief executive of the Institutional Investors Group on Climate Change, which represents more than 120 pension, insurance funds and other institutional investors across Europe.

Not everyone is fazed by the vote. Energy UK, a trade association that represents more than 80 generators, said “people need not worry, the lights will stay on and power and gas will continue to flow to homes and businesses.” Dong Energy A/S, the world’s biggest offshore wind developer, also said it’s confident the U.K. will stick with offshore wind, in part because its long coastlines and high-wind speeds are favorable for investment.

“U.K. energy policy is not dependent on EU membership,” Marianne Wiinholt, Dong Energy’s chief financial officer, said by e-mail.

Even so, leaving the EU stands to tear up some of the structures that financed projects. The status of the European Investment Bank, an EU development bank based in Luxembourg, is one of the many details policy makers will have to work out. The institution loaned 42 billion euros ($46 billion) to the U.K. over the past eight years, including 7.7 billion euros in 2015. Almost half went for projects that fight climate change.




“A significant portion of this was for offshore wind such as the Galloper wind farm and transmission links,” EIB spokesman Richard Willis said by phone. “Our engagement in this sector in U.K. waters would be under threat. There’s a significant potential for ramping down.”

Vestas Wind Systems A/S, one of the largest turbine manufacturers, also sees potential uncertainty.

“It will be interesting to see how this develops,” Vestas Chairman Bert Nordberg said by phone. “It could affect the wind industry. One could think that it could be a time for the government to pause and see that it costs too much. On our strategy, it’s too early to say if it will have much of an effect.”

C R E D I T : R E Z A / C O N T R I B U T O R




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

ASME member since 1995 Hawk Energy member 2010

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

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

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels. NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 29 June 2016 K. Al Awadi


