new base 702 special 07 october 2015

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,

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NewBase 07 October 2015 - Issue No. 702 Senior Editor Eng. Khaled Al Awadi

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

UAE: UAE’s Shah gas project hits full output capacity – official Reuters + NewBase

The Shah gas project which began operations this year in the United Arab Emirates has reached its full production capacity, a top company official said on Tuesday. “We have ramped up to full production, which is one billion cubic feet per day (bcf),” Saif Ahmed al Ghafli, chief e xecutive of Al Hosn Gas, told reporters on the sideline of an conference in Abu Dhabi.

Al Hosn Gas is the Shah gas development joint venture in which Abu Dhabi National Oil Co (Adnoc) holds a 60 per cent share and US-based Occidental Petroleum the other 40 per cent.

The multi-billion dollar project is meant to produce usable gas from Shah’s high-sulphur field.

The project is expected to process sour gas into 0.5 bcf/d of usable gas in the remote desert and is vital for keeping the UAE supplied with fuel and reducing its growing gas imports.

The UAE is investing $35bn to diversify its energy mix and reduce its dependence on natural gas imports for power generation, the country’s energy minister said on Sunday.

Input Product Sour Gas = 1.0 BCFD

Produce ;-

Sales gas (500 million scf/day)

NGL (4,400 TD);

Sulfur (9,200 TD) and




Saudi Aramco in talks to buy CNPC refinery stake Reuters

Saudi Aramco, the world’s biggest oil producer, is in talks to acquire a stake in a China National Petroleum Corp (CNPC) refinery as well as retail assets, people familiar with the matter said - a deal that would help it sell more of its output to China amid growing competition.

The deal is estimated to be worth around $1bn to $1.5bn, although final valuations, assets and stakes are subject to change, they said.

The sale of a stake in an established refinery marks a departure from the past for China as foreign energy firms have generally been restricted to investing in greenfield projects. Beijing has, however, been increasingly keen to restructure the country’s many sprawling state-owned enterprises.

For China, the deal would ensure a steady supply of crude to feed growing demand, while providing CNPC with fresh funds to cut down debt at a time when energy companies’ profits are under pressure from sliding oil prices.

Saudi Aramco is in discussions to buy a minority stake in at least one of CNPC’s new refineries and some 300 retail outlets, one of the people said. CNPC operates 26 refineries and petrochemical businesses.

“Most of the value for Saudi Aramco is in the refinery,” the person said. “This will place the Saudis in a favourable position to sell their crude at time of increased supply from other countries,” the person added.

Saudi Aramco declined to comment and a representative for CNPC was not available for comment. Sources declined to be identified as the negotiations are confidential. It remains unclear when a deal will be finalised, the people said, adding that discussions started about five months ago.

Saudi Aramco is being advised by Deutsche Bank, while CNPC is working with HSBC and Citic Securities, according to the sources. Deutsche Bank and HSBC declined to comment, while Citic Securities was not available for a comment.

CNPC’s planned asset sale comes after China’s state-controlled oil giant Sinopec Corp raised $17.5bn last year by selling a 29.9% stake in its retail business, ahead of a potential IPO in 2016.

Saudi Aramco wants to make inroads into more advanced chemicals to diversify away from its oil and basic petrochemicals businesses. In March, it signed a new $10bn loan deal with 27 financial institutions, partly to finance the acquisition of a stake in German rubber firm Laxness.




Modern technology gives Qatar edge in global LNG markets: Al-Attiyah Reuters

The adoption of modern technology has helped Qatar reduce unit costs to a level unmatched by other liquefied natural gas producers, giving it a competitive edge in global markets, said HE Abdullah bin Hamad al-Attiyah, chairman, Abdullah Bin Hamad Al-Attiyah International Foundation for Energy and Sustainable Development.

“Qatar achieved a fundamental milestone for the LNG industry by scaling up liquefaction trains to a record new level using Air Products’ proprietary APX process technology. Currently, six out of

our 14 LNG trains have the capacity of producing 7.8mn tonnes each per year, making them the world’s largest LNG trains ever to be built,” al-Attiyah said in his address at the closing plenary session of the Science and Technology in Society Forum (STS) in Kyoto, Japan.

The role of technology in the future of sustainable energy is quite significant given that the environmental implications of meeting the world’s energy demands suggest that energy technologies with near-zero emissions will eventually be required to ensure such sustainability.

Accordingly, there is a pressing need for substantial research, development, and initiation of programmes aimed at launching advanced energy technologies.

“Some of these technologies are readily available, including the technological revolution in power generation where natural-gas-fired combined cycles is offering low costs, high efficiency and low environmental impact. Modern gas-fired power plants emit 50% less carbon dioxide than coal plants and they are 40% more energy efficient” said al-Attiyah, the former Deputy Premier and Minister of Energy and Industry.

Emerging innovations offer the potential to use conventional sources of energy, mainly fossil fuels, in ways that are cleaner, more efficient, safer, flexible, and affordable, he said. “In Qatar, we understand that economic development must be based on the implementation of new technology which often involves challenges; however, meeting these challenges has become necessary in order to thrive in an increasingly competitive market,” al-Attiyah said.

Entrepreneurs and small companies have the potential to provide innovative solutions. They are the key to unlocking the potential of an even more technology driven energy era. In this regard, the Qatar Science and Technology Park offers a unique business environment for start-up enterprises in the areas of energy, environment, health sciences and ICT.

Also, large “research cooperation programmes” have been launched with international corporations and Qatar welcomes new opportunities to take advantage of human ingenuity in the fields of energy and environment. It is becoming increasingly important to develop technologies that enable us to achieve sustainable economic development in a safe and environmentally responsible manner, al-Attiyah said.

HE al-Attiyah addresses the closing session of the Science and

Technology in Society Forum (STS) in Kyoto, Japan.




Egypt Awards Four Offshore Oil & Gas exploration Licences Reuters + Gulf News

Egypt has awarded four new licences to explore for oil and gas off its Mediterranean coast, weeks after Eni’s giant Zohr gas find piqued fresh international interest in the area.

Egypt’s state gas company EGAS said in a statement it had awarded one licence to Britain’s BP and one to Italy’s Edison. A consortium involving BP and Eni’s Egyptian subsidiary had also picked up a bloc as had another consortium involving Eni, BP and France’s Total.

Eni announced in late August it had discovered the largest known gas field in the Mediterranean off the Egyptian coast.

The Italian major predicts the Zohr field could hold 30 trillion cubic feet of gas, covering an area of about 100 square kilometres (39 square miles). It could be a game-changer for Egypt, whose $3.5 billion (Dh12.9 billion) debts to foreign energy companies had made it increasingly difficult to attract major investments.

Egypt, which once exported gas, has become a net energy importer over the last few years as production has failed to keep up with domestic demand. Not only has Egypt diverted to the domestic market gas originally earmarked for export, but it has failed to keep up payments to the foreign energy companies producing it.

The crisis had discouraged international energy companies from making major investments in Egypt’s oil and gas sector at a time when it needed to make new discoveries and boost output.

The Zohr find, however, is likely to encourage oil majors to look more carefully at the eastern Mediterranean region, which has yielded some significant discoveries in recent years. The EGAS statement said the new concessions would see the companies making total investments of at least $306 million, conducting seismic studies and sinking eight discovery wells.




Iran's October oil exports head towards seven-month low REUTERS + NEWBASE

Iran's crude sales are on track to hit the lowest in seven months in October, according to a source with knowledge of its preliminary shipping plans, showing how Tehran is struggling to boost oil exports even after reaching a landmark nuclear deal.

The weaker sales come despite offers of price discounts to stimulate purchases by Asian buyers as Iran tries to regain market share lost to rivals such as Saudi Arabia over the last 3-1/2 years of Western sanctions.

September and October loadings - for arrivals mostly in October and November - indicate purchases by Iran's main buyers in Asia are set to fall a third consecutive month, hit by refinery turnarounds and projections for mild winter weather. China, the biggest buyer of Iranian oil, is taking the lowest volumes in about a year.

The drop counters expectations that Iran's exports would rise after Tehran and six world powers reached a nuclear agreement on July 14, although the sanctions are unlikely to be officially relaxed until next year. The sanctions - aimed at persuading Iran to discuss curbs to its nuclear program - cut Tehran's exports by more than half and cost it billions of dollars a month in lost sales.

Iran's crude exports, excluding condensate, are set to fall to around 830,000 barrels per day (bpd) this month, down 14 percent from revised figures for September and the lowest since March, according to the source. India and Japan did not load any Iranian oil in March to hold shipments within sanction limits.

China plans to lift about 370,000 bpd this month, down nearly 10,000 bpd from updated September loadings. China will also lift around 33,000 bpd of condensate - an ultra light crude that Iran produces from its gas fields - between September through to next March, another industry source has said.

That would put China's total crude and condensate purchases this month at around 400,000 bpd, the lowest since the 340,000 bpd that arrived from Iran in October 2014. India, Iran's second-biggest buyer, is set to cut its October loadings by 20 percent to around 170,000 bpd from the previous month.

In contrast, Japan and South Korea are lifting around 100,000 bpd and 80,000 bpd, an increase of 10 percent and 20 percent, respectively, from September. Iran's four Asian buyers are set to load about 720,000 barrels in October, down 12 percent from September. Turkey is also lifting around 110,000 bpd, the source said, with about 100,000 bpd going into offshore storage over September and October.




NewBase 07 October - 2015 Khaled Al Awadi

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

Crude oil futures push higher after range breakout Reuters + NewBase

Crude oil futures rose further in thin Asian trade on Wednesday after breaking out of a month-long trading range on a forecast suggesting a global glut in supply may be easing. Oil prices jumped more than $2 a barrel in the previous session with the global benchmark, Brent crude, closing above $50 a barrel for the first time in a month.

The contract had risen 41 cents to $52.33 a barrel by 0348 GMT, after settling up $2.67, or 5.4 percent on Tuesday. But the volume was low with Chinese traders away for National Day holidays that last through Wednesday.

The West Texas Intermediate (WTI) benchmark for U.S. crude gained 67 cents to $49.20 a barrel. The contract climbed $2.27, or 4.9 percent, on Tuesday.

Oil prices are also being given a continued boost from the U.S. jobless numbers on Friday that pushed back expectations for a rate rise by the Federal Reserve to next year, amid a dearth of data early this week, said Avtar Sandu, senior commodities manager at Phillip Futures in Singapore.

Oil price special

coverage




"We expect slightly lower numbers and that will add another boost to the market," Sandu said.

Global oil demand is expected to increase by the most in six years as supply from non-OPEC countries stalls, the EIA said in its Short Term Energy Outlook on Tuesday. U.S. production, which has surged in recent years and caused a roughly 50-percent decline in prices since June last year, is also starting to decline.

The slowdown in U.S. output is giving heart to members of the Organization of Petroleum Exporting Countries (OPEC), which has held production steady to force out more expensive producers, despite the pain to the finances of its members.

OPEC Secretary General Abdullah al-Badri told an industry conference in London on Tuesday that the market is improving, suggesting the grouping is unlikely to change its strategy of defending market share.




Opec sees oil market improving; lower price will not persist Reuters

Opec sees the oil market improving because of higher demand for the group’s crude and a drop in supply growth from non-members, its secretary-general said, the latest sign that Opec believes its strategy of defending market share is working.

Oil prices have almost halved in the last year on oversupply in a drop that deepened after the Organisation of the Petroleum Exporting Countries in 2014 changed strategy to protect market share against higher-cost producers, rather than cut output to prop up prices as it had done in the past.

“There is an improvement in the market,” Abdullah al-Badri told reporters on the sidelines of an industry conference in London yesterday. “This situation may not stay long, more than two years,” he said in response to a question on how long the market would take to rebalance.

Opec meets to review its output policy on December 4 and Badri’s comments add to signs that the group is unlikely to be diverted from its current strategy. Badri himself declined to be drawn on what Opec oil ministers would decide. Addressing the Oil and Money conference in London, an annual gathering of senior industry executives, Badri urged producers outside Opec to help tackle a global surplus of crude, which he put at 200mn barrels.

“All of us should work together, Opec and non-Opec, work together to get rid of this overhang,” Badri said. “There is one problem we are facing: the overhang of 200mn barrels.”

Opec has invited non-Opec countries to attend a technical meeting on October 21 at its Vienna headquarters, to discuss the market, Badri told reporters, following on from a similar meeting held in May. Non-Opec producers including Russia have refused to cooperate with Opec in cutting output, although forecasters have reduced estimates for supply growth outside Opec because of the price slump.

Opec secretary general Abdullah al-Badri (left), president of Nalcosa, Nordine Ait-Laoussine (right), and

International Energy Agency executive director Fatih Birol (centre) attend the 2015 Oil & Money

conference in central London yesterday. Al-Badri urged producers outside Opec to help tackle a global

surplus of crude.




Badri said oil supply growth from non-Opec producers might be zero or negative in 2016 because of lower upstream investment. Investment has been cut by around $130bn this year from about $650bn in 2014, he said.

The International Energy Agency, which advises industrialised countries on oil policy, sees an even larger impact on non-Opec supply in 2016 from low prices. IEA Executive Director Fatih Birol, also at the conference, said the drop in upstream oil investment in 2015 would be at least 20% versus 2014, the biggest ever fall.

Opec expects global demand for its crude, under pressure in recent years because of rising supplies from outside the group, to rise to 30.3mn barrels per day in 2016, about 1mn bpd more than in 2015.

“We will see the effect of the cut on production,” Badri said. “This will mean less supply in the near future.” “We are seeing now a low price. After a few months, we will not see this. We will see a higher price again.”




Shell CEO sees first signs of oil price recovery REUTERS

Oil markets are beginning to recover but the scale of global oversupply means prices may rise only slowly, the chief executive of Royal Dutch Shell Plc (RDSa.L) said on Tuesday.

"I see the first mixed signs for recovery of oil prices," Ben van Beurden told an oil industry conference in London. "But with U.S. shale oil being more resilient than we originally thought and a lot of oil still in stock, it will take some more time to rebalance demand and supply," he added. Oil prices have collapsed over the last year in the face of heavy oversupply, with benchmark Brent crude LCOc1 falling to below $50 a barrel from a high above $115 in June 2014.

The Organization of the Petroleum Exporting Countries led by Saudi Arabia has increased production in an attempt to build market share, leaving some other producers, including shale companies in North America, operating below break-even costs.

Van Beurden said many U.S. oil producers would struggle to refinance while prices remained so low, leading to lower output in the future: "Producers are now looking for new cash to survive and they will probably struggle to get it."

Longer-term, there was a risk that low levels of global production could bring a spike in oil prices, he said. If prices remained low for a long time and oil production outside OPEC and the United States declined due to cuts to capital expenditure, there was not likely to be any significant spare capacity left in the system, he said. "This could cause prices to spike upwards, starting a new cycle of strong production growth in U.S. shale oil and subsequent volatility," van Beurden said.




NewBase Special Coverage

News Agencies News Release 07 Oct.. 2015

US Oil Production On Brink Of 'Dramatic' Decline, Exec Says by Reuters - Ron Bousso & Dmitry Zhdannikov

Oil executives warned on Tuesday of a "dramatic" decline in U.S. production that could pave the way for a future spike in prices if fuel demand increases.

Delegates at the Oil and Money conference in London, an annual gathering of senior industry officials, said world oil prices were now too low to support U.S. shale oil output, the biggest addition to world production over the last decade.

"We are about to see a pretty dramatic decline in U.S. production growth," the former head of oil firm EOG Resources Mark Papa, told the conference.

Papa, now a partner at U.S. energy investment firm Riverstone Holdings LLC, said U.S. oil production would stall this month and begin to decline from early next year. He said the main reason for the decline would be a lack of bank financing for new shale developments.

Official data show that nationwide U.S. output has already begun to decline after reaching a peak of 9.6 million barrels per day (bpd) in April, although production in some big shale patches, including North Dakota, has held steady thus far. The Energy Information Administration forecast on Tuesday that output would reach a low of around 8.6 million bpd next year.

Until this year, U.S. oil output was growing at the fastest rate on record, adding around 1 million bpd of new supply each year thanks to the introduction of new drilling techniques that have released oil and gas from shale formations.

But oil prices have almost halved in the last year on oversupply in a drop that deepened after the Organization of the Petroleum Exporting Countries in 2014 changed strategy to protect market share against higher-cost producers, rather than cut output to prop up prices as it had done in the past.

Benchmark Brent crude was up 5 percent, or $2.50 a barrel, at $51.75 on Tuesday as investors digested news from the London conference. It peaked in recent years above $115 a barrel in June 2014.

Spike

The chief executive of Royal Dutch Shell Plc agreed, saying U.S. oil producers would struggle to refinance while prices remained so low, leading to lower output in future.

"Producers are now looking for new cash to survive and they will probably struggle to get it," Ben van Beurden said.




Longer term, there was a risk that low levels of global production could bring a spike in oil prices, he said.

If prices remained low for a long time and oil production outside OPEC and the United States declined due to capital expenditure cuts, there was not likely to be any significant spare capacity left in the system, he said.

"This could cause prices to spike upwards, starting a new cycle of strong production growth in U.S. shale oil and subsequent volatility," van Beurden said.

Adam Sieminski, administrator at the U.S. Energy Information Administration, told reporters on the sidelines of the conference the U.S. oil industry had reacted to lower prices by improving its productivity.

But this process could not continue forever.

"Now we are seeing the limits at least in the near term and it is beginning to impact production," Sieminski said. "We see (U.S. oil production declines) continuing into next summer."

The Secretary-General of OPEC, Abdullah al-Badri, said oil supply growth from non-OPEC producers might be zero or negative in 2016 because of lower upstream investment.

But Papa said if U.S. light crude oil prices went back up to $75 a barrel, U.S. oil production would resume growth at around 500,000 bpd - or around half the record growth rates observed in the past few years.

"I see the United States as a long-term growth producer," he said. "If low oil prices prevail - then the correction in oil prices will be much more severe."




Solar and Wind Just Passed Another Big Turning Point Bloomberg + Tom Randall

Wind power is now the cheapest electricity to produce in both Germany and the U.K., even without government subsidies, according to a new analysis by Bloomberg New Energy Finance (BNEF). It's the first time that threshold has been crossed by a G7 economy.1

But that's less interesting than what just happened in the U.S.

To appreciate what's going on there, you need to understand the capacity factor. That's the percentage of a power plant's maximum potential that's actually achieved over time.

Consider a solar project. The sun doesn't shine at night and, even during the day, varies in brightness with the weather and the seasons. So a project that can crank out 100 megawatt hours of electricity during the sunniest part of the day might produce just 20 percent of that when averaged out over a year. That gives it a 20 percent capacity factor.

One of the major strengths of fossil fuel power plants is that they can command very high and predictable capacity factors. The average U.S. natural gas plant, for example, might produce about 70 percent of its potential (falling short of 100 percent because of seasonal demand and maintenance). But that's what's changing, and it's a big deal.

For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That's because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you're a power company with a choice, you choose the free stuff every time.

It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed.

The virtuous cycle has begun.

Wind and solar have long made up a small fraction of U.S. electricity—about 5 percent in 2014. But production has been rising at an exponential rate, and those two energy sources are now big enough to influence when coal and natural gas plants are kept running, according to BNEF.2

There are two reasons this shift in capacity factors is important. First, it's yet another sign of the rising disruptive force of renewable energy in power markets. It's impossible to brush aside renewables in the U.S. in the same way it might have been just a few years ago. "Renewables




are really becoming cost-competitive, and they're competing more directly with fossil fuels," said BNEF analyst Luke Mills. "We're seeing the utilization rate of fossil fuels wear away."

Second, the shift illustrates a serious new risk for power companies planning to invest in coal or natural-gas plants. Historically, a high capacity factor has been a fixed input in the cost calculation. But now anyone contemplating a billion-dollar power plant with an anticipated lifespan of decades must consider the possibility that as time goes on, the plant will be used less than when its doors first open.

Capacity Factors Take a Sharp Turn3

Most of the decline in capacity factors is due to expensive "base-load plants that are being turned on less because of renewables," according to BNEF analyst Jacqueline Lilinshtein. Plants designed to come online only during the highest demand of the year, known as peaker plants, play a smaller role. In either case, the end result is that coal-fired and gas-fired electricity is becoming more expensive and the profits less predictable.

The opposite is true of wind and solar, as well as new battery systems that can be paired with renewables to replace some peaker plants. Wind power, including U.S. subsidies, became the cheapest electricity in the U.S. for the first time last year4, according to BNEF. Solar power is a bit further behind, but the costs are dropping rapidly, especially those associated with financing a new project.

Latest Solar Costs by State

The economic advantages of wind and solar over fossil fuels go beyond price.5 Still, it's remarkable that in every major region of the world, the lifetime cost of new coal and gas projects6 are rising considerably in the second half of 2015, according to BNEF. And in every major region the cost of renewables continues to fall.




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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 07 Octopber 2015 K. Al Awadi




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new base 702 special 07 october 2015

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