microsoft word new base 656 special 03 august 2015

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NewBase 03 August 2015 - Issue No. 656 Senior Editor Eng. Khaled Al Awadi

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

Saudi Arabia, UAE attract over 75% of MENA investment activity by value

SG — UAE and Saudi Arabia attracted over 75 percent of MENA investment activity by value, reflecting their scale and stability and increased availability of larger target assets, the MENA Private Equity Association, a non-profit organization supporting the development of the private equity and venture capital industry in the Middle East and North Africa, said in its ninth “MENA Private Equity & Venture Capital” Annual Report released over the weekend. The two countries

accounted for a lower proportion of transaction volumes at 31%, the report added. Further, the report said the year 2014 was characterized by some of the largest private equity deals seen in the region. Fund managers had demonstrable success in assembling and working with consortium partners, including international private equity investors, to close major transactions. Overall, there was a sense of returning confidence and increased opportunities as the region continued

to emerge from the impact of the Arab Spring. Total number of known investment volumes increased in 2014 to 72 compared to 66 in 2013. Values of disclosed investments have also seen an increase by 118 percent to $1.5 billion. Notable transactions included Fajr Capital, Mumtalakat and Blackstone joining forces to invest in GEMS Education and a consortium including Fajr Capital investing in National Petroleum Services. Total funds raised in 2014 reached the highest level since 2008 at $1,229 million compared to $744 million in 2013. The average close size also increased to $103 million. There was a marginal increase in the number of closes in the year (three funds closed twice in the year) as fund raising




in the region continues to be challenging for many market participants due to the limited number of GPs and concerns over geopolitical instability.

In 2014, the greatest investment values were in oil and gas and demographic driven sectors such as education, services and food and beverage. Retail, healthcare and consumer goods were also core focus areas for GPs as defensive and consumer driven sectors continue to dominate investment focus. The value of investments in Egypt doubled over those seen in 2013 as a growing middle class and movement towards increased political stability remain key factors in attracting private equity investment. Information technology businesses saw the largest number of transactions as venture capital investors continued to target the sector. The manufacturing sector has become more attractive post the downturn and investments in that sector increased significantly over 2013. Disclosed divestment volumes increased in 2014 to 20 compared to 16 in 2014. The venture capital industry in 2014 remained broadly consistent with 2013. Investment activity in 2014 was led by Lebanon. The country is characterized by small- and medium-size companies. Support from the Lebanese Central Bank has further stimulated interest in investing in start-up companies and SMEs. Jordan, the UAE and Morocco were also notably active in 2014. Imad Ghandour, Managing Director at CedarBridge Partners and a member of the Association’s Steering Committee, said: “Private Equity has permanently established itself over the past decade as a mainstay in the regional financial market as it successfully overcame several economic and political crises. It has now several well-established players focused on funding and nurturing tens of young companies of all sizes and in all sectors. Its impact on the development of the regional private sector is increasingly being felt as such company blossom into strong regional and global operators, each in their respective field. This year report reconfirms again the Association’s strong belief of the increasing role in the regional economies.” The long-term outlook for the region remain strong with the demographic profile, relative economic stability, increasingly developed entrepreneurial outlook and underlying liquidity all supporting the view that the private equity and venture capital industries are poised to continue developing positively across the region. According to Declan Hayes, Managing Director at Deloitte Corporate Finance Limited, “the survey is evidence of a significant development in the industry over the last year with the successful conclusion of a number of large and complex transactions. Our confidence survey demonstrates that while the industry inevitably faces challenges the outlook is certainly positive.”




Enoc Revised offer & wins over key minority Dragon Oil The National - Anthony McAuley

Emirates National Oil Company yesterday increased its offer for Dragon Oil and won crucial support from minority investors who had been holding out for better terms. By winning over two of Dragon Oil’s largest minority shareholders, Enoc has secured enough shareholder votes to

privatise the company.

This brings to a close Enoc’s six-year battle to acquire the 46 per cent of Dragon Oil it did not already own. The deal is also a victory for Baillie

Gifford, the Edinburgh-based fund management firm that led the efforts in 2009 and this year to squeeze a higher offer from Enoc. “As a shareholder in Dragon Oil for a number of years we have seen the company grow significantly,” said Richard Sneller, Baillie Gifford’s head of emerging markets, in a joint statement with Enoc.

“We are now pleased to support the revised offer of 800 pence, which we believe represents an attractive exit price.” Baillie Gifford was Dragon Oil’s largest minority shareholder, holding just more than 7 per cent of its equity.

Enoc had offered 750 pence a share for Dragon Oil in mid-June, but Baillie Gifford and some minority shareholders argued that the offer undervalued the prospects of Dragon Oil’s main asset, the Cheleken oil and gasfield in Turkmenistan’s Caspian Sea territorial waters.

Last month, Elliott Advisers joined Baillie Gifford in opposing the offer. Elliott Advisers, a UK unit of the New York-based hedge fund group run by the billionaire Paul Singer, had built up a stake of more than 5 per cent in Dragon Oil.

“We appreciate the open and constructive dialogue that we have had with Enoc. We are pleased that we are able to support the offer and encourage other shareholders to do so,” Enoc’s statement quoted Elliott Advisers as saying.

Enoc extended its deadline for its offer to the end of this month when it failed to secure the required votes for its 750 pence buyout offer by the original deadline last Friday. But its advisers, led by Barclays Bank, continued talks over the weekend with Dragon Oil’s dissenting shareholders who still held a collective equity of just over 29 per cent.

The revised offer is worth an additional £17 million (Dh97.5m) to Baillie Gifford, which owns nearly 35.5 million shares. In all, Baillie Gifford will realise about £284m for its stake, which was valued at £180m in April before Enoc said it was considering making a buyout offer.

Saif Al Falasi, Enoc’s chief executive, said the offer was now unconditional in all aspects.“I would like to thank all shareholders for their ongoing willingness to engage in a dialogue with us, enabling today’s outcome to be achieved,” he said.

“We look forward to taking operational control of Dragon Oil and integrating the company into the Enoc group, moving another step closer towards creating a fully integrated oil and gas company.” Enoc said it would begin the process to delist Dragon Oil and any remaining shareholders can accept the 800 pence offer until August 28.




Qatar: PPI falls 36.2% y-o-y in May on lower crude and gas prices By Santhosh V Perumal Gulf Times

Led by a double-digit decline in the prices for crude and natural gas as well as refined petroleum products, basic metals and basic chemicals, Qatar’s producer price index (PPI) plunged 36.2%

year-on-year (y-o-y) in May 2015, according to official figures.

The PPI for the industrial sector - a measure of the average selling prices received by domestic producers for their output - however rose 3.2% compared to that in April this year on higher prices of crude, basic chemicals, refined petroleum products and man-made fibres. The latest figures were yesterday released by the Ministry of Development Planning and Statistics (MDPS).

The PPI for mining, which carries the maximum weight of 77%, reported a 40.3% plunge y-o-y in

May 2015 due to a 40.3% decline in the prices of crude petroleum and natural gas; while stone, sand and clay prices firmed up 2.2%. The mining sector PPI, however, saw a 3.4% surge in May month-on-month owing to a 3.4% rise in the price of crude petroleum and natural gas; even as stone, sand and clay prices fell 0.7%. The Qatar Economic Outlook (QEO) for 2015-17 had said the slide in global oil prices had led to a fall in the PPI.

The manufacturing sector, which has a weight of 21% in the PPI basket, reported a 25.5% decline y-o-y in May 2015, explained by a 31% plunge in the price of refined petroleum goods, 19.7% in basic chemicals, 14.9% in basic metals and 0.1% in paper and paper products.

But there was a 6.9% increase in the price of dairy products, 5.9% in beverages, 5.3% in cement and other non-metallic products, 3.1% in juices, 1% in other chemical products, man-made fibres, 0.6% in rubber and plastic products and 0.5% in grain mill and other products.

The manufacturing sector PPI witnessed a 2.9% expansion compared with April this year on account of a 5.4% increase in the price of basic chemicals, 2.9% in refined petroleum products, 1.3% in other chemical products, man-made fibres, 0.4% in cement and other non-metallic products and 0.1% in grain mill and other products.

However, there was a 0.4% fall in the price of rubber and plastic products, 0.3% in basic metals, 0.2% in diary products and 0.1% each in juices and beverages. MDPS, in its QEO 2015-17, said manufacturing, which is dominated by petrochemicals and refining industries that rely on oil and gas feedstock, also registered a “sizeable” decrease.

The electricity and water group, which has a 2% weight in the PPI basket, saw its index gain 2.3% y-o-y in May with water and electricity tariffs increasing 2.4% each. The index was, however, down 0.7% against the previous month on 1.3% fall in electricity prices; even as water tariffs were up 0.1%.




Egypt expects to import 7.79mn tonnes of LNG this fiscal year Reuters + NewBase

Egypt expects to import 28.6mn tonnes of crude oil, liquefied natural gas (LNG) and other oil products worth a total of almost $16bn in 2015-16, the planning ministry said yesterday.

The government expects to buy 7.79mn tonnes of LNG for $3.55bn and 6.37mn tonnes of crude oil for $3.51bn, the ministry said in a handout given to journalists at a news conference on its economic development plan for the current fiscal year, which started on July 1.

The Arab world’s most populous country, which recently turned from a net energy exporter into an importer, aims to produce about 695,000 bpd of crude oil and condensates in addition to 4.7bn cubic feet of gases sold daily. Government projections put production at 30.5mn tonnes of crude oil this year, bringing the total projected production of oil, condensates and butagas to 35.9mn tonnes. Declining energy production, due to a lack of investment, has turned Egypt from an energy exporter to a net importer over the past few years and contributed to a persistent energy crisis.

Egypt has tried to address energy shortages by signing a raft of LNG import deals this year and giving the private sector a green light to import LNG, a step that could encourage private investment in the energy sector while easing supply shortages. Suez Canal revenue is projected at $5.5bn, compared with $5.4bn the previous year.

Egypt will open its New Suez Canal on August 6, a project President Abdel Fattah al-Sisi sees as a symbol of national pride and a chance to stimulate an economy suffering double-digit unemployment.

The new canal, which will allow two-way traffic of larger ships, is supposed to increase revenues by 2023 to $15bn. The Suez Canal is a vital source of hard currency for Egypt, particularly since the 2011 uprising that scared off tourists and foreign investors. Egypt is targeting $9bn in tourism revenues this year, the planning minister said at the news conference, up from $7.3bn last year.




Algeria boosts oil output by 32,000 bpd with two new fields Source: Reuters + NewBase

OPEC member Algeria has increased crude oil output by 32,000 barrels per day after starting production at two fields, an energy ministry official said on Sunday. Production increased on Saturday when the Bir

Sebaa field started producing 20,000 bpd in addition to 12,000 bpd from the Bir Msana field in Hassi Messaoud area, the official told Reuters.

Algeria produced an average 1.1 million bpd in July, according to a Reuters survey. It has struggled to draw foreign oil investment to increase output that has stagnated over the past years, awarding only 4 out of 31 blocks on offer in a bidding round in September 2014.

State energy firm Sonatrach has said it would stick to a plan to invest $90 billion over the next five years despite a crude oil price slump on global markets.

Algeria relies on energy for 60 percent of its budget, and oil and gas exports account for 95 percent of total sales abroad.

Sonatrach holds 25 percent stake, Thailand's PTTEP 35 percent and Petrovietnam 40 percent in the Bir

Sebaa field, where reserves are estimated at 758 million barrels. Sonatrach owns 25 percent stake, Malaysia's Petronas holds 35 percent and Spain's Cepsa 40 percent in the Bir Msana field, whose reserves are at 144 million barrels.




Mozambique announces closing of 5th Licensing Round bidding Source: INP

At a public meeting at National Petroleum Institute (INP) offices on July 30, INP announced the closure of the Mozambique Fifth Licensing

Round. The meeting was attended by more than 60 people including representatives of the applying companies. The round was launched on the 23rd October 2014 and companies have had nine months to evaluate the available technical data and formulate their applications. A total of fifteen Areas were included in round within the offshore Rovuma, offshore Angoche, offshore Zambezi, onshore Pande-Temane and onshore Palmeira as shown on the attached map. The Areas on offer in the round covered 74,402 sq kms.

INP has received applications from the following Companies:

OPERATOR APPLICATIONS RECEIVED 1. Operator - Shoreline Canoverseas Petroleum Development Ltd. Partner - Bluegreen Investments LLC

Partner - Indico Dourado Lda

2. Operator - Sasol Petroleum Mozambique Exploration Ltd.

3. Operator - eni Mozambico S.p.A Partner - Sasol Petroleum Mozambique Exploration Ltd. Partner - Statoil

Holding Netherlands B.V.

4. Operator - Troisade Energia Mozambique S.A.

5. Operator - ExxonMobil Exploration & Production Mozambique Offshore Ltd. Partner - RN-Exploration LLC

(Rosneft)

6. Operator - Total E&P Mozambique B.V. Partner - Sonangol Hidrocarbonetos Internacional Ltd

7. Operator - Delonex Energy Ltd. Partner - Indian Oil Corporation Ltd.

Note: Empresa Nacional de Hidrocarbonetos de Mocambique (ENH) will have a minimum 10% interest in all fifth round licenses. NON - OPERATOR APPLICATIONS RECEIVED

• Namoza Natural Resources Lda

• Petroinveste Mozambique S.A.

APPLICATIONS RECEIVED FOR OTHER AREAS (not included in the Fifth Round) • eni Mozambico S.p.A

• Delonex Energy Ltd.

The round is a competitive process and INP will now evaluate the submitted applications on defined criteria which include the Health Safety and Environmental (HSE), the financial strength, technical competence and capability and Economic terms offered to the Mozambican State. INP anticipates that it will announce the results within the next 3 months. More information about the license round is available on www.inp-mz.com and www.inp.gov.mz




Oil Price Drop Special Coverage

Oil hits multi-month lows on record Opec output Reuters + NewBase

Oil extended losses on Monday on worries of oversupply as the Organization of the Petroleum Exporting Countries (Opec) pumped at record levels in July, while weak China data stoked concerns about slower growth at the world's second largest oil consumer.

Saudi Arabia and other key members of Opec show no sign of wavering in their focus on defending market share instead of prices, as the group's oil output hit the highest monthly level in recent history in July, a Reuters survey showed. The lack of a plan by Opec to make room for the return of more Iranian oil fuelled supply worries. Iran expects to raise output by 500,000 barrels per day (bpd) as soon as sanctions are lifted and by a million bpd within months, Oil Minister Bijan Zanganeh said in remarks broadcast on Sunday. "The market seems to again focus on the supply situation ... one of the difficulties is that Iran may be coming back and there is no obvious sign that Opec will make room for them," Ric Spooner, chief market analyst at CMC Markets in Sydney said. Brent fell 44 cents to $51.77 a barrel by 0213 GMT after touching an intraday low of $51.50, the lowest since Feb. 2. It is on its longest weekly losing streak since late 2014. US crude fell 36 cents to $46.76 a barrel after hitting the lowest in four months at $46.35. Front-month prices lost 20.8 percent in July, the biggest monthly drop since October 2008. Hedge funds and other speculators have slashed their bullish exposure to U.S. crude to the lowest in nearly five years, trade data showed on Friday, as local drillers continue to add rigs and pump at full throttle despite a global oil glut.




Asian crude buyers size up Iran barrels Bloomberg+ NewBase

Asian oil buyers, already sucking in barrels from as far away as Alaska and Mexico, are anticipating more bargains when Iran finally returns to world markets.

In a region that’ll account for more than half the growth in global oil demand this year, refiners are poised to be the winners as Iran raises overseas sales when Western sanctions are lifted. Iran’s oil minister has said he will woo Asian customers and seize market share.

Processors including Hindustan Petroleum Corp in India and Taiwan’s Formosa Petrochemical Corp have signaled they may buy more from Iran. Cheap oil has been a boon for many Asian nations, helping to cut budget deficits by reducing fuel subsidies and boosting emergency crude stockpiles.

Iran’s deal “could trigger another price war with Saudi Arabia, Iraq and the UAE,” said Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings. “This is positive for Asian buyers like China, now blessed with more pricing negotiation leverage.”

Brent crude has fallen more than 50% since June 2014 as a global glut of oil triggered international competition, led by Opec’s increase in production to the highest level in almost three years.

Six world powers and Iran reached an agreement in July that’ll be implemented if Tehran meets obligations to curb its nuclear programme. Once inspectors verify compliance, it will be allowed to ramp up energy exports with the gradual lifting of sanctions.

Formosa Petrochemical wants to restore supply from Iran to the full volume under its contract and will hold talks “soon” with the Gulf country, spokesman Lin Keh-Yen said from Taipei on July 15, without giving details. JX Nippon Oil & Energy Corp, Japan’s biggest refiner, sees the lifting of sanctions leading to stable supply and a wider choice of crude, the company said in a statement.

“Iran coming into the market will mean a further slide in oil prices and countries like India will be a major beneficiary,” Indian Oil Minister Dharmendra Pradhan said July 15.

Iran was the second-biggest producer in the Organisation of Petroleum Exporting Countries before its disputed nuclear programme prompted the European Union to ban purchases of its




crude in July 2012. Countries including China, India and Japan had to get a waiver from the US to buy limited amounts of Iranian oil or risk losing access to parts of the global financial system.

Iran is now the fourth-largest Opec member, with output in June averaging 2.85mn bpd, from 3.6mn at the end of 2011.

The measures forced buyers such as South Korea to reduce Iran oil imports from 2011 levels by almost half. To help replace supplies, the North Asian country bought oil from Mexico for the first time in two decades and purchased a cargo of Alaskan crude.

“We will aggressively assess economic aspects to decide how much to import from Iran in the future,” Chang Woo Seock, head of the corporate planning office at SK Energy Co, a unit of SK Innovation Co, South Korea’s biggest refiner, said on July 23.

While Iran has signalled it wants to boost shipments by as much as 500,000 bpd immediately after sanctions are removed, Goldman Sachs Group predicts it will be limited initially to drawing down oil in floating storage. Iran may be holding 53.7mn barrels of oil in ships at sea, according to Windward, a Tel Aviv-based vessel-tracker.

The nation’s main market is Asia, which will be its priority, Iran Oil Minister Bijan Namdar Zanganeh said in May. Oil demand in the region will increase by 770,000 bpd in 2015 from a year earlier, accounting for more than half of the growth in global consumption, according to the Paris-based International Energy Agency.

“The Iran deal is good for the government, refiners and other customers as this will lead to competition among producers,” B Ashok, chairman of Indian Oil Corp, the country’s biggest refiner, said on July 15.

Countries may take advantage of lower prices brought on by an influx of Iranian crude to boost strategic reserves, Victor Shum, vice president at IHS Inc, an Englewood, Colorado-based industry consultant, said by phone from Singapore.

“Big consumers like China and India in particular are likely to benefit,” Shum said. “Competition will intensify.”




Opec production falls’ Bloomberg + NewBase Opec crude output declined last month as Iraqi production slipped from a record in June.

Output by the Organisation of Petroleum Exporting Countries decreased 362,000 barrels to 32.107mn a day last month, according to a Bloomberg survey of oil companies, producers and analysts. June’s total was revised 335,000 barrels higher, to 32.469mn a day, because of changes to the Saudi, Kuwaiti, Angolan and Nigerian estimates.

Brent crude, the benchmark for more than half the world’s oil, relapsed into a bear market last week on speculation that the global supply glut will grow. Opec agreed on June 5 to retain its collective output target of 30mn bpd, a level that it’s exceeded for 14 months, according to data compiled by Bloomberg.

“Prices are going to remain under pressure because output is near record levels in several Opec countries,” John Kilduff, a partner at Again Capital, a New York-based hedge fund that focuses on energy, said by phone.

Iraqi production dropped 194,000 bpd to 4.194mn last month, according to the survey. Iraq, Opec’s second-biggest producer, was responsible for more than half of the total decline last month. Exports from the south of the country through the Arabian Gulf rose to a record while there was a larger dip in shipments from the north through the port of Ceyhan on Turkey’s Mediterranean coast.

Saudi Arabia, Opec’s top producer, increased output by 70,000 bpd to 10.57mn in July, the most in monthly Bloomberg data going back to 1989. Fuel consumption in the Arabian peninsula peaks in the summer months, when high temperatures lead to increased use of air conditioners.

Iranian production was steady at 2.85mn last month. The nation pumped more than 3.1mn bpd from 1991 until July 2012, when additional sanctions were imposed on the Islamic republic to curb its nuclear programme. After its nuclear accord with world powers last month, Iran will focus on regaining market share it lost due to sanctions, regardless of the impact on prices, Oil Minister Bijan Namdar Zanganeh said on July 20 in Tehran. The nation is seeking to produce almost 4mn bpd within seven months of sanctions being removed.




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

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

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

NewBase 03 August 2015 K. Al Awadi

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