new base 509 special 31 december 2014

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NewBase 31 December 2014 - Issue No. 509 Khaled Al Awadi

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

APICORP: Investments in Arab energy to total $685 billion over next five years WAM+NewBase

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Energy capital investments in the Arab world will total $685 billion over the next five years, according to a new report by the Arab Petroleum Investments Corporation (APICORP), which was presented to officials and delegates at the 10th Arab Energy Conference in Abu Dhabi last week.

Set against the backdrop of continuing regional turmoil, uncertainty in many global and regional economies, and a declining oil price, APICORP’s latest Arab Energy Investment Outlook predicted lower investment levels compared to the previous year’s report.

It stated that energy sector investments would have dipped even further had it not been for an apparent catch-up effect, particularly evident in the power sector, as well as ever-increasing project costs.

The report highlighted the growing divide between the GCC and rest of the Arab region in terms of their credit ratings, and it pinpointed three primary constraints on energy investments. These were the unrelenting cost of project inflation, the paradoxical scarcity of fuel and feedstock such as natural gas and ethane and the accessibility of funding, which will be exacerbated if oil prices remain low and below national break-even levels over the long term.

Commenting, Ali Aissaoui, Senior Consultant at APICORP and author of the Outlook, said, "The energy scene is changing rapidly but we expect oil prices to remain depressed for some time. The general macro-economic and energy investment climate is already impacting on many Arab countries’ ability to access the necessary funding for investment in energy related projects, but the lower price of oil will likely be an additional constraint on access to finance.

"While we are not a policy making organisation, given the investment outlook and current constraints, we would propose steps are taken by the relevant authorities to improve the overarching investment climate.

They should consider methods to reduce the cost of projects and the impact of inflation, address the feedstock scarcity paradox, and promote the full sweep of equity and debt financing options available to the sector." APICORP, an investment company established by the ten member states of the Organisation of Arab Petroleum Exporting Countries in 1975, and a sponsor of the 10th




Arab Energy Conference, participated in sessions with other industry leaders to discuss energy sector developments under the central theme of ‘Energy and Arab Cooperation’.

Ahmad Bin Hamad Al Nuaimi, APICORP’s Chief Executive Officer and General Manager, added, "Next year will see APICORP celebrate its 40th anniversary. Over the past four decades, our efficient and effective equity investments and loans have helped to develop the energy industry in the Middle East and North Africa, enabling this vital sector to make a significant contribution to economic growth and prosperity for the Arab people.




UAE Masdar fund & builds four new solar projects in Pacific islands Masdar + NewBase The construction of four new solar-power projects in the Pacific island countries of Kiribati, Fiji, Tuvalu and Vanuatu has started, Abu Dhabi’s renewable energy company Masdar announced on Thursday.

Financed under the Abu Dhabi Fund for Development’s $50 million UAE-Pacific Partnership Fund, the solar projects seek to deliver 1.8 megawatts of clean energy and contribute to fuel savings worth US$2 million per year. Completion of the projects is expected by the second half of 2015. The projects highlight Masdar’s role in the region, where the Abu Dhabi renewable energy company has already delivered the La'a Lahi 'Big Sun' solar plant in Tonga, commissioned in November 2013, and Samoa’s first wind farm, commissioned in August 2014. Both projects were also financed through the

UAE-Pacific Partnership Fund. “Access to clean energy is a pathway toward economic and social development,” said Dr. Ahmad Belhoul, CEO of Masdar. “For Pacific islands, which rely on imported fuel for electricity generation, renewable energy provides a viable alternative. In fact, wind and solar power projects deliver immediate savings, while underpinning long-term energy security.” The $50 million UAE-Pacific Partnership Fund was launched in March 2013 by Sheikh Abdullah Bin Zayed Al Nayhan, United Arab Emirates' minister of foreign affairs, and administered by the ministry’s Directorate of Energy and Climate Change. The fund covers the full project development spectrum, from feasibility studies through to operation and maintenance training. Grants are untied, enabling local companies to participate. To date, the fund has supported the delivery of 2.8 megawatts of renewable energy capacity across six countries in the region. The benefits in being able to generate reliable and cost-competitive clean energy are significant for a region otherwise dependent on expensive imported diesel. The six projects collectively replace 1.5 million liters of imported diesel fuel and avoid 4,450 tons of CO2 each year. The Pacific projects further expand the UAE's efforts to deploy renewable energy as a form of development assistance, which include: • A $350 million fund committed by Abu Dhabi Fund for Development in collaboration with the International Renewable Energy Agency (IRENA) that has sponsored projects from Ecuador to Sierra Leone; • A15-megawatt solar photovoltaic power plant in the Islamic Republic of Mauritania, which accounts for 10 percent of the country’s energy capacity; • A six-megawatt wind farm in the Republic of Seychelles that powers more than 2,100 homes (funded by ADFD); and

• A project in Afghanistan that supplies 600 residences with off-grid solar photovoltaic systems.




Oman: OGC plans pipeline to Crude Oil Storage Park (OEPPA Business Development Dept) + NewBase

Oman Gas Company, the Sultanate’s gas transportation flagship, has kicked off plans for the construction of a major oil pipeline that will link the nation’s crude oil network with a mammoth

crude storage terminal envisaged at Ras Markaz on the country’s southeastern coast

Yesterday, the wholly-owned government gas transportation utility floated a tender inviting qualified companies to bid for its contract to survey the route of the pipeline project. The 42-inch pipeline is proposed to run from Nahada in central Oman to the Ras Markaz Crude Oil Park near Duqm in Wusta Governorate. Bids are due in by January 20, 2015. The strategically significant crude storage terminal is being developed by The Oman Tank Terminal Company LLC (OTTCO), a joint venture between the

wholly-owned government energy investment vehicle Oman Oil Company (90 per cent) and its downstream investment subsidiary Takamul Investment Company SAOC (10 per cent).

At full capacity, the terminal will hold around 200 million barrels of crude, effectively making it one of the largest oil storage hubs in the world. Additionally, the facility will serve as an alternative to the Sultanate’s only crude export terminal at Mina al Fahal in Muscat. Last year, OGC — which operates and manages the nation’s roughly 2,500 km gas pipeline

Duqm

Ras Margaz




network — said it had completed a ‘concept study’ of the Nahada — Ras Markaz oil pipeline project. Provisional plans drawn up by authorities envisage a 130 km pipeline that connects the Main Oil Line at Nahada with Saih Nihayda. Another 230 km pipeline then channels the crude from Saih Nihayda to Ras Markaz. Further linkages between the Ras Markaz terminal and a refinery under development at Duqm Special Economic Zone, some 70 km south of Ras Markaz, are also envisaged.

The Ministry of Oil and Gas is an important stakeholder in the Ras Markaz Crude Oil Park, as well as in the associated pipeline infrastructure and export terminal. In recent comments to the Observer, Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas, said the project’s overall implementation is closely tied to the development of the Duqm SEZ. “It’s work in progress! The development of Ras Markaz and the Duqm hub essentially go hand in hand. When Duqm kicks off, it will accelerate the development of Ras Markaz. I also understand that interest from the market is encouraging. As exporters, we have interest in Ras Markaz and would like to use the facilities when built, as do many others.”

According to Isam bin Saud al Zadjali, CEO — Oman Oil Company, development of the crude oil storage park is being carefully progressed in sync with other strategic initiatives envisioned at the Duqm SEZ “Ras Markaz is part of a portfolio of 3-4 projects (being handled by Oman Oil Company at Duqm). Fundamental to these projects is Duqm Refinery. What we’re doing as a company right now is to look at the schedule of these projects to make sure the timing of completion is ideal.” Elaborating on the Ras Markaz venture, Al Zadjali stated: “Right now we’re moving ahead. We’re beyond the study phase, and will be going to go into the FEED, engineering design, and so on. These would however require some time. For us at Oman Oil Company, the goal is to make sure that all of these projects are delivered at a time that the government deems appropriate.”




Algeria, Egypt Sign 850,000 cubic meter LNG Deal News Agencies + NewBase

Algeria and Egypt on Monday signed a previously announced natural gas deal. According to Egypt's Minister of Petroleum, as per the deal Algeria will supply 850,000 cubic meters of LNG in six shipments to Egypt during 2015.

The deal was signed in the presence of Sherif Ismail, Egypt's Minister of Petroleum and Mineral Resources, and Youcef Yousfi, Algerian Minister of Energy and Mines.

Earlier this month, Egypt’s oil ministry announced Cairo will import six cargoes of LNG from Algeria between April and September next year.

The two countries will begin fresh talks next month regarding supply of Algerian gas during 2016-2020, the ministry said adding that negotiations will start in Cairo and will be completed by February in Algiers.

The negotiations scheduled for next month is part of the call for tenders launched by the Egyptian government for the supply with gas between 2016 and 2020.

For his part, Yousfi said that Algeria's shipments are "low compared to the capacity of Sonatrach," adding that the upcoming negotiations will allow the Algerian group to raise its supplies to Egypt.

About AlGeria Liquefied natural gas (LNG) plants

Algeria became the world's first LNG producer in 1964 when the Arzew LNG facility came online. In 2013, Algeria was the world's seventh-largest exporter of LNG, exporting about 5% of the world's total exports.

Algeria has liquefaction units located along the Mediterranean Sea at Arzew and Skikda, with a total design capacity to process almost 3.2 Bcf per day of natural gas, according to PFC Energy.

Sonatrach has commissioned another LNG train at Arzew, with a planned capacity of 0.6 Bcf per day, to process natural gas output from the Gassi Touil project.




US agency gives ‘quiet nod’ to light oil exports Reuters + NewBase

The main US export authority is telling some oil companies that they should consider exporting a lightly processed form of crude oil called condensate without formal permission, according to people familiar with the discussions.

In conversations that may help clear the way for more overseas sales of US shale oil, the Commerce Department’s Bureau of Industry and Security (BIS) has told companies seeking clarification on the legal status of so-called “processed condensate” that self-classification — whereby companies export their product without any formal authorisation — could be a way forward, the people told Reuters.

An official familiar with the law said the agency’s discussions did not represent a change in policy since self-classification is allowed under US export controls and is a routine, common practice for the majority of exports.

Yet the message, though carefully couched as an informal suggestion, marks the first sign that the administration is becoming comfortable about allowing companies to work around the nation’s four-decades-old ban on exporting untreated crude oil.

Last month, BHP Billiton became the first company to announce it would export lightly processed ultra-light US oil without explicit permission from the government. It said it was on firm legal footing because its product was similar to what the agency had already blessed for other companies in a landmark ruling earlier this year.

But until recently, the government’s attitude toward the self-classification for crude has been unclear. Officials have repeatedly declined to comment on what has become one of the year’s most contentious and controversial energy policy topics, beyond saying that it is under review due to the surprising surge in US oil production.

“I would not characterise BIS’s position necessarily as one of encouragement, but BIS has made clear that companies should not overlook the option of self-classification,” said Theodore Kassinger, a partner at law firm O’Melveny & Myers, who had represented oil producer Pioneer Natural Resources in its dealings with the agency.

The tanker Atlantic Queen is docked at an oil dock in the Port of Corpus Christi, Texas. The US Commerce Department’s Bureau of Industry and Security is telling some oil companies that they should consider

exporting condensate without formal permission, sources say.




Two other sources told Reuters that the agency has said self-classification may be an expedient option for companies confident their condensate has been adequately processed.

In March, the agency told mid-stream firm Enterprise Product Partners and Pioneer that condensate stabilised and processed through a distillation tower met the legal criteria for exports. Refined fuels and processed oil is not subject to the ban. Because the earlier rulings were private, and the regulations themselves are unclear on how much “processing” is required, other firms have been hesitant to follow suit. Several dozen energy companies have applied for similar export rulings, but the administration had put their clarification requests on indefinite hold.

Over the summer, those companies were asked to fill out a one-page, nine-question survey about their plans to export oil, including basic questions about the type of oil used for feedstock, the distillation process used and the characteristics of the output after processing.

Getting companies to self-classify is likely preferable for the agency than responding case-by-case to pending requests, Jacob Dweck, a partner at the Sutherland law firm who has worked on behalf of Enterprise and other firms, told Reuters.

“The BIS obviously is aware that self-classified exports of processed condensate are and will be taking place. They have no problem with such exports,” said Dweck, who has become one of the most outspoken experts on the once-obscure energy laws that ban crude exports.

It remains to be seen how many companies are now prepared to take the leap and begin exporting processed condensate. With global oil prices having halved since June, pushing US crude down to nearly $50 a barrel, exports are less alluring today than they were only a few months ago.

Even so, political pressure to share the US shale boom with the rest of the world had been building domestically and from foreign trade partners, such as South Korea, and is expected to become a major energy issue in the new year. Texas Congressman Joe Barton earlier this month proposed a bill that would overturn the four-decade old ban and said he would continue to press the issue in the new Republican-led Congress in 2015.




Oil Price Drop Special Coverage

Sub-$55 Oil Has U.S. Drillers Idling Most Rigs in 2 Years Bloomberg + NewBAse

U.S. oil drillers idled the most rigs since 2012 as prices slide below $55 a barrel to the lowest level in five years and a fight for market share with OPEC intensifies.

Rigs targeting oil declined by 37 to 1,499 in the week ended Dec. 26, the lowest since April, Baker Hughes Inc. (BHI) said on its website yesterday, extending the three-week decline to 76. Those drilling for natural gas increased by two to 340, the Houston-based field services company said.

U.S. oil output has surged to the highest in three decades even as the Organization of Petroleum Exporting Countries resists cutting production to defend market share, exacerbating an oversupply that Qatar estimates at 2 million barrels a day. Crude has slumped by almost 50 percent this year prompting U.S. producers including Continental Resources Inc. and ConocoPhillips to plan spending cuts.

“We should see the rig count going down at least through the end of the first quarter as a reaction to the low oil prices,” said James Williams, an economist at WTRG Economics, an energy-research firm inLondon, Arkansas, before the report. “By midyear, we should see measurable impacts on production.”

The total rig count, which includes one miscellaneous rig, dropped 35 to 1,840, an eight-month low.

The international benchmark Brent and the U.S. counterpart West Texas Intermediate crude are both trading near their lowest levels since 2009. WTI futures fell 79 cents to $52.82 a barrel in electronic trading on theNew York Mercantile Exchange at 4:22 p.m. Singapore time. Brent dropped $1.02 to $56.86.

Falling Margins

“The rig count is falling because oil prices are falling,” Carl Larry, a Houston-based director of oil and gas atFrost & Sullivan, said by phone. “The margins just aren’t there.”

While the U.S. rig count has dropped, domestic production continues to surge, with the yield from new wells in shale formations including North Dakota’s Bakken and Texas’s Eagle Ford projected to reach records next month, Energy Information Administration data show.

U.S. producers battling OPEC for market share may increase output further from the highest rate in more than three decades as costs decline almost as fast as oil prices, Goldman Sachs Group Inc. said in a Dec. 15 e-mailed report. The oil price slump is driving producers to move drill rigs to lower-cost fields, according to the report.




Domestic oil output climbed to 9.14 million barrels a day in the week ended Dec. 12, the highest in weekly EIA data going back to 1983, according to government estimates. Production was 9.13 million in the seven days ended Dec. 19.

Oil rigs dropped by five to 527 in the Permian Basin in Texas and New Mexico, by three to 188 in the Eagle Ford of Texas and by two to 178 in the Williston of North Dakota, Baker Hughes said. In basins outside the 14 majors listed by Baker Hughes, oil rigs fell by 27 to 375.

Natural gas futures lost 1.7 percent to $3.135 per million British thermal units on the Nymex, down 26 percent this year.





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Khaled Malallah Al Awadi, Energy Consultant MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

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 31 December 2014 K. Al Awadi

new base 509 special 31 december 2014

Economy & Finance

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arab energy conference

energy scene

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