New base 527 special 27 january 2014

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NewBase 27 January 2015 - Issue No. 527 Khaled Al Awadi

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

UAE to stick to economic growth forecast for now The National + NewBase

The UAE Government will maintain its outlook for economic growth this year, at least until the end of March, to give time for the country’s non-oil sector activity to offset the drop in oil prices, Sultan Al Mansouri, the Economy Minister, said yesterday .

Last month, Mr Al Mansouri said that growth for the Emirates was forecast to be 4.5 per cent in 2015. The price of Brent crude has fallen 50 per cent since June to the lowest levels in more than six years on the back of higher production in the US.

The oil and gas sector contributed about 64 per cent of UAE government revenues last year.

“What we will need to do is by the end of March we will need to review that [figure for ` this year] based on the prices of oil,” Mr Al Mansouri said at a conference in Abu Dhabi. “Based on what is happening in the non-oil part of the economy, if we have growth in that … then maybe we can say it will stay be at 4.5 per cent. If not, then we will need to review that.”

Last week, the IMF cut its 2015 UAE growth forecast, citing the impact of lower oil prices on Abu Dhabi’s energy sector. The UAE’s economy, it said, will grow by 3.5 per cent – 1 percentage point below the IMF’s October estimate.

The lender HSBC also revised down its outlook for UAE economic growth this year. The bank now estimates growth of 3.1 per cent, down from 4.9 percent forecast last year. “I don’t have a crystal ball to tell you that by March we will have growth at 4.5 per




cent. We have to wait and see,” said Mr Al Mansouri.

He also struck an optimistic tone, saying that oil prices would eventually recover by the middle of this year. “My expectation is by the middle of this year, we should see some positive turn in the prices of oil due to the unexpected turns in the economies of the major blocks such as the EU, US, and China,” he said.

Yesterday the energy minister Suhail Al Mazrouei said at an industry conference in the capital that the UAE would stick to its plans on infrastructure investment in the sector regardless of market prices for crude. “Our investments are on track to make sure our standing as a major oil producer stays in the future,” he said.

Expo 2020

The UAE minister said Expo 2020 will bring financial returns of about Dh139 billion and attract more than 25 million visitors – 70 per cent of them from abroad – to the emirate. Expo is expected to generate more than about 277,000 jobs between 2013 and 2020 and an investment of $9 billion to build infrastructure and logistics to host the mega exhibition. The number of tourists in 2012 were about 11.2 million with total spending of Dh111 billion. This number is expected to reach 18.8 million tourists in 2022, spending up to Dh113.8 billion by the year 2022, he told the conference in Dubai. The UAE was ranked ninth in tourism investment in World Travel and Tourism Council index where the size of the state's investment in this sector amounted to Dh92.9 billion in 2013 compared with Dh84.3 billion in 2012, growing by around 10 per cent. It is expected that the tourist numbers will rise 7.2 per cent with investments reaching Dh104.4 billion in 2014 and grow to Dh137.9 billion in 2022. He said these investments will be concentrated in the establishment of recreational amenities, hotels and other tourist projects. According to an Unctad report, the cumulative foreign direct investment during the period from 2007 to 2012 in the UAE was estimated at Dh202.1 billion. He said the national agenda is to achieve non-oil sector expansion of 5 per cent per annum, ranking the country first in ease of doing business, raising the proportion of SMEs, achieving advanced positions in entrepreneurship, innovation and knowledge indices.




Qatar may build 2nd LNG terminal in Italy The Peninsula + NewBase Italy and Qatar are working to further deepening the bilateral economic ties. Both the countries are planning to build their second LNG receiving terminal in Italy to enhance capacity, in addition to discussions on many other investment proposals in the pipeline, said Guido De Sanctis, Italian Ambassador to Qatar.

“Italy is one of the largest trading partners of Qatar in Europe. Our exports to Qatar for the first 10 months of 2014 stood at $900m (about QR3.7bn) while Qatar’s exports to Italy was about $1.4bn (QR5.75bn). The trade balance was in favour of Qatar essentially due to exports of liquefied natural gas (LNG),” said De Sanctis. De Sanctis said: “We have been trying to diversify our sources of energy since the 1950s. This is why in 2010 we started importing LNG from Qatar. The existing terminal in Italy, which has been built with financial support from Qatar, is almost running at full capacity. So we are looking forward to build another terminal to receive more LNG from Qatar.” He added: “We also need to keep in mind that a new LNG terminal will not only be useful for Italy but will also help Qatar in catering to the whole of Europe.” However, he said the proposed project has to go through many processes and challenges, including political, environmental and issues related to employment. The existing “Adriatic LNG Terminal” in Italy, located offshore of Porto Levante, in the Northern Adriatic Sea, is the first offshore Gravity Based Structure in the world for unloading, storage and regasification of LNG.

Mohammed bin Ahmed bin Tawar Al Kuwari, (fifth right) Vice-Chairman of the Qatar Chamber, Guido De Sanctis, Italian Ambassador, (third left) Andrea Ferrari, (second left) Director Italian Trade Commission, with other Chamber officials and delegates during a meeting between Italian trade delegation and Qatar Chamber yesterday.




The terminal has been designed, built and operated by Terminale GNL Adriatico (Adriatic LNG), the joint venture between Qatar Terminal Limited (45 percent), ExxonMobil Italiana Gas (45 percent) and Edison (10 percent). Qatar Terminal Limited is a 100 percent owned subsidiary of Qatar Petroleum. According to the Italian envoy, the Qatar-Italy bilateral trade volume in 2015 is expected to surge as many Italian companies are here to explore the Qatari market. De Sanctis was speaking to The Peninsula on the sidelines of a B2B networking event organised by Qatar Chamber (QC) and Italian Trade Agency for the visiting Italian trade mission representing seven leading electrical and electronic companies. Present at event were Mohammed bin Ahmed bin Tawar Al Kuwari, Vice-Chairman, QC, and scores of businessmen. “Our presence in Qatar is growing. There are more than 40 Italian companies and over 1,000 Italian professionals who are working in different sectors of the Qatari economy. We were awarded recently a contract for the construction of Doha Metro (Red Line North), and the companies involved in the project will bring more people,” said De Sanctis. On Qatar’s investments in Italy, he said: “Qatar has made significant investments in Italy, and there are many new plans in the pipeline. Our visiting minister of economic development will be meeting tomorrow (today) with Qatar Investment Authority (QIA) officials. We hope to discuss some concrete projects.” Asked to provide some numbers on Qatari investments in Italy, he said: “I am not ready to quote any number because there are different types of investments, which is difficult to measure since there are investments for project development and other. However, he added that some of Qatar’s important investments in Italy include the buying of Costa Smeralda, a tourist destination, by Qatar Holding, and a hospital located in the same area. “In addition to these two, there are investments in Porta Nuova, the main business district of Milan and many other investments in the hospitality sector in many historical cities.”




EU supports LNG bunkering project at Port of Hirtshals INEA + NewBase

The EU’s TEN-T Programme will co-finance with over €1 million a pilot construction of the

first liquefied natural gas tank and bunker at the Port of Hirtshals in Denmark.

If the pilot is successful, a larger LNG bunker will be developed to supply both marine and road transport with cleaner and cheaper fuel, the European Commission’s Innovation and Networks Executive Agency (INEA) said in a statement on Monday.

European Regulations require the shipping sector to reduce marine sulphur emissions in the North Sea to 0.1% as of January 2015. One of the ways for the sector to reach this goal is to use cleaner fuels, such as LNG. The TEN-T programme puts forward the obligation to provide publicly accessible LNG refuelling facilities in all core European ports by 2030, according to INEA.

As the first such initiative in Denmark and one of the first in Europe, this project will develop a 200 tonne/500 m3 pilot LNG storage tank and bunkering facility, with the perspective to develop it into a larger one of 3000-5000 m3. The new facilities will provide LNG for ships both within and outside the EU, as well as regional consumers including road transport.

The project’s outcomes are expected to serve as best practice to other ports in northern Europe and encourage consumers switch to alternative fuel with reduced environmental impact. It will also be the first step towards creating a robust LNG supply infrastructure in the region, the statement said.

The project was selected for EU funding with the assistance of external experts under the TEN-T Annual Call 2013, priority ‘Decarbonisation / Oil substitution or environmental cost reduction’. Its implementation will be monitored by INEA.

The project is to be completed by 30 June 2015.




Oil Price Drop Special Coverage

OPEC chief: Oil at $200 possible with lack of investment Agencies + NewBase

OPEC’s secretary-general said oil prices as high as $200 a barrel is possible if there’s a lack of investment in new supply. “If you don’t invest in oil and gas, you will see more than $200,” Abdullah Al-Badri said in an interview in London Monday. Brent, the global benchmark, erased an earlier 2.5 percent decline, trading as high as $48.94 in London.

Crude oil prices collapsed almost 50 percent last year as Saudi Arabia and other members of the Organization of Petroleum Exporting Countries said they won’t curb output in response to a surplus. That excess is 1.5 million barrels a day, Al-Badri said. Oil prices turned positive on Monday, erasing early losses after the Secretary-General of the OPEC producer group said he expected the market to bottom out around current levels. March Brent crude LCOc1 was trading at $49.13 per barrel by 1317 GMT, up 34 cents, bouncing from an early low of $47.57. "Now the prices are around $45-$55 and I think maybe they reached the bottom and will see some rebound very soon," Al-Badri said. West Texas Intermediate (WTI) crude for March delivery CLc1 was at $45.94 a barrel, up 35 cents. Front-month WTI had touched an intraday low of $44.35, just above the $44.20 hit on Jan. 13, which was its lowest level since April 2009.

After a smooth transition in Saudi Arabia following the death early on Friday of King Abdullah, both Brent and UScrude price fell early on Monday. The new ruler, Custodian of the two Holy Mosques King Salman, was quick to retain veteran Saudi oil minister Ali Al-Naimi on Friday, in a message aimed at calming a jittery market. Money managers cut their net long US crude

futures and options positions in the week to Jan. 20, the US Commodity Futures Trading Commission said on Friday. Oil services firm Baker Hughes (BHI.N) published data on Friday that showed the number of US oil rigs fell for a seventh straight week to 1,317, the fewest since January 2013. Germany-based Commerzbank said that output would remain high in the short term but production from US oil rigs would continue to dwindle in the coming weeks, eventually supporting prices. "It is only a question of time before this is reflected in decreased oil production," Commerzbank analysts said in a note to clients on Monday. "In our opinion, this indicates that prices will recover in the second half of the year."




Oil major BP freezes pay in 2015 to cut costs Source: Reuters via Yahoo! Finance

BP is freezing base pay across the group this year, the latest in a series of steps by oil majors to cut costs in response to sinking oil prices.

Over the past year, oil majors have been selling assets to protect cash flows and shareholder dividends. Many have accelerated cuts in capital and operating expenditures, including freezing some projects, as crude prices more than halved since June to below $50 per barrel. Salaries in the oil sector are a major part of operating expenses. BP employed 83,900 employees in 2013 and paid them around $13.6 billion in benefits, including wages and pensions, according to the company's website.

'The tougher external environment in 2015 means that our businesses and functions need to work... to take a number of measures in response to the harsh trading environment,' Chief Executive Bob Dudley said in a message to staff on Monday. 'One of the measures we are taking across the group is a general freeze to base pay for 2015, with only a few exceptions for specific circumstances around the world,' Dudley added.

A BP spokesman would not comment directly on the internal message but confirmed the step, saying: 'We have told staff across BP that we intend to freeze base pay worldwide for 2015. Together with our work to simplify and increase efficiency across BP, we see this as a prudent measure in response to the current challenging market environment in which BP is operating.'

In December, BP announced a $1 billion program to cut thousands of jobs globally, including its UK North Sea operations.




Hess Corp announces 2015 Projects & budget Source: Hess Corp

Hess has announced a 2015 capital and exploratory budget of $4.7 billion, a 16 percent reduction from its 2014 actual spend of $5.6 billion. Of this, $2.1 billion (45 percent) is budgeted for unconventional shale resources, $1.2 billion (26 percent) for production, $1.0 billion (21 percent) for developments and $0.4 billion (8 percent) for exploration.

CEO John Hess said: 'Our company is well positioned to manage through the current price environment, with a strong balance sheet and resilient portfolio. Our 2015 budget reflects a disciplined approach to maintaining our financial strength and flexibility while preserving our long term growth options.'

Greg Hill, President and COO, stated: 'We are reducing our 2015 spending in the Bakken to $1.8 billion, compared with $2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approx. 210 new operated wells online, compared with 17 rigs and 238 operated wells brought online in 2014.

'Hess has some of the best acreage in the Bakken, and we will continue to drill in the core of the play which offers the most attractive returns. Substantially all our core acreage is held by production, which allows us to defer investment in the short term while maintaining the long term value and optionality of this important asset. As oil prices recover we will increase activity and production accordingly.

'In the Utica, we plan to spend $290 million compared with approximately $500 million last year, as we transition to early development at a measured pace in this price environment and as infrastructure builds out. Over 2015 our joint venture with CONSOL intends to execute a two rig program focused in the core of the wet gas window and bring 25-30 new wells online, compared with four rigs and 39 new wells in 2014.




'Our 2015 budget also includes continued offshore production drilling at the Tubular Bells and Shenzi fields in the deepwater Gulf of Mexico, at the South Arne Field in Denmark, the Valhall Field in Norway, the Okume Complex in Equatorial Guinea, and also in the Joint Development Area of the Gulf of Thailand. Additionally the budget will fund continued full field development of the North Malay Basin project in Malaysia and development of the Stampede Field in the deepwater Gulf of Mexico. Our 2015 exploration drilling program includes wells in the deepwater Gulf of Mexico, offshore Guyana and Kurdistan.'

Unconventionals - $2.1 billion:

• $1.8 billion for the development of the Bakken Shale in North Dakota. Approximately $1.45 billion is dedicated to drilling and completion activities, pad level facilities and low pressure gathering lines; $350 million is planned for major infrastructure projects

• $290 million for drilling 20-25 wells in the core of the wet gas window of the Utica Shale play in Ohio

Production - $1.2 billion:

• $300 million to drill four production wells and begin one water injection well at the South Arne Field (Hess 62 percent and operator) in Denmark, and to bring three production wells online and drill one new well at the Valhall Field in Norway (Hess 64 percent, BP operator)

• $250 million to complete drilling of one production well and one water injection well, and for continued facilities work at the Tubular Bells Field (Hess 57.1 percent and operator) in the deepwater Gulf of Mexico

• $220 million to drill two production wells (Hess 85 percent and operator) in Equatorial Guinea

• $200 million to complete drilling of production, appraisal and water injection wells at the Shenzi Field (Hess 28 percent, BHP operator) and for small-scale well-related activity elsewhere in the deepwater Gulf of Mexico

• $175 million to drill 8-10 wells and progress the ongoing Booster Compression project in the Joint Development Area (Hess 50 percent) in the Gulf of Thailand

Developments - $1.0 billion:

• $600 million to install three wellhead platform jackets, progress fabrication and commence Phase 1 drilling for the North Malay Basin full field development project (Hess 50 percent and operator) in Malaysia

• $300 million to progress hull and topsides fabrication and commence drilling at the Stampede Field (Hess 25 percent and operator) in the deepwater Gulf of Mexico

Exploration - $0.4 billion:

• Drill the Sicily well (Hess 25 percent, Chevron operator) in the deepwater Gulf of Mexico • Drill the Liza well (Hess 30 percent, Esso Exploration and Production Guyana Limited

operator) in offshore Guyana • Complete drilling operations in the Dinarta block (Hess 80 percent and operator) in

Kurdistan





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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 27 January 2015 K. Al Awadi




Economy & Finance

New base 527 special 27 january 2014