new base 710 special 20 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,

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

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NewBase 20 October 2015 - Issue No. 710 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: Adnoc restarts unit, increases run rates at Ruwais refinery

Reuters State-owned Abu Dhabi National Oil Co (Adnoc) has restarted a secondary unit at its newly expanded Ruwais refinery and has increased its operating rates to over 80 percent, industry sources said on Monday.

The newly expanded Ruwais refinery with a total capacity of 922,000 barrels per day (bpd) lowered its run rate to just above 70 percent in August after it unexpectedly shut its residue fluid catalytic cracker (RFCC) - a unit which processes heavy fuel oil into higher valued products such as diesel and gasoline. The RFCC was restarted about three weeks ago and is currently running at near maximum capacity, one of the sources said. The refinery was operating at close to 95 percent in the first two weeks of October, before reducing to between 80 and 85 percent currently, the source added. The reason for the reduction in capacity since early October was not immediately clear, but is normal as crude oil intake fluctuates, the source said. Adnoc resumed jet fuel spot exports in October, after a four-month hiatus. But those are unlikely to increase by much after the restart as the refinery is focusing on its term commitments, the sources said. Adnoc will likely increase its term volumes for its jet fuel and diesel exports for next year, though this will depend on the market outlook, the sources said. The refiner signed term contracts to supply ultra low sulphur diesel for exports for the first time over the July 2015 to June 2016 period and resumed its jet fuel exports for the period after skipping them for July 2014 to June 2015. Adnoc's newly expanded refinery is not yet able to meet the more stringent diesel winter specifications in Europe, though that is the eventual aim. For now, its diesel exports are mainly heading to Africa, with a couple of cargoes shipped to Australia despite higher freight rates for sending cargoes from the Middle East to Australia, one of the sources said.




Oman: Sultanate’s oil production cost flares Oman Observer + NewBase

Oct 19: The Sultanate’s expenditure on oil production registered a massive rise of more than 50 per cent in the first half of the current year.

At the same time, Oman’s crude oil production rose 0.12 per cent to 29.70 million barrels in September 2015 marking an average production of 990,030 barrels per day.

According to data available from National Centre for Statistics and Information, expenditure on oil production till June this year amounted to RO 278.2 million against RO 184.9 million in the corresponding period last year.

Still the net revenue witnessed a record fall of 46.1 per cent to reach RO 2.846 billion in the first half against RO 5.277 billion in the same period in 2014.

A statement from Ministry of Oil and Gas said that the total exports of crude oil in September 2015 amounted to 26.55 million barrels, an average of 885,032 bpd, showing a 0.59 per cent rise in comparison with August.

China continued to top the list of importers of Omani crude as buying rose 13.48 per cent in September over August figures accounting for 94.47 per cent of the total exports. The imports of Oman crude by Japan, Taiwan and Thailand remarkably declined in September.

The trading of Oman Crude Oil Future Contract at Dubai Mercantile Exchange (DME Oman) declined in price in the same month in comparison to other crude oils, as it averaged between $49.89 and $43.71 per barrel.




“The drop in oil revenue is a matter of concern in view of the widening budget deficit in the country”, said analyst at a bank. The deficit in the first six month has surged to RO 1,918.5 million, against a surplus of RO 250 million for the same period in 2014.

“There is an urgent need for some cuts to outlays on subsidies”, he said, stressing the need for avoiding lower priority capital expenditures. As far as government expenditure is concerned, public spending declined by 6.4 per cent to RO 5,798.2 million for the first half of 2015, from RO 6,194.3 million for the same period last year.

Civil Ministries received the maximum outlay of expenditure amounting to RO 2.077 billion against RO 1.969 billion last year. The current expenditure by the Defence and National Security witnessed a fall of 15 per cent to RO 1.485 billion against RO 1.746 billion.

Meanwhile, the International Monetary Fund forecast that Oman’s current account balance might suffer a major slump of two per cent last year to –17 per cent this year and –24 per cent next year.

But the Fund said that Oman’s economy is set to expand by 4.4 per cent by the end of 2015 compared with 2.9 per cent in 2014.

However, the IMF delivered downbeat prognosis of the Gulf country’s growth next year onwards. The fund said it expects Oman’s economy to grow by only 2.8 per cent in 2016, which will come down to one per cent in 2020.

Inflation is projected to grow from 0.4 per cent in 2015 to two per cent next year, according to the fund’s October report.




Indonesia has significant potential to increase geothermal electricity Source: U.S. Energy Information Administration

Indonesia ranked third in the world in both geothermal electricity production and geothermal generating capacity in 2014, behind only the United States and the Philippines. The country is located at the convergence of several tectonic plates in Southeast Asia, giving it significant geothermal potential, although most of its potential reserves remain unexplored.

Indonesia's Ministry of Energy and Mineral Resources estimates that the country holds a potential 29 gigawatts (GW) of geothermal capacity reserves, only 5% of which is currently being used. Indonesia's current geothermal capacity of 1.3 GW consists of plants clustered around Java, Bali, North Sumatra, and North Sulawesi. Geothermal currently makes up less than 3% of Indonesia's total electricity generation capacity, but Indonesia plans to increase geothermal capacity by 2025 as part of a plan to increase electrification in the country.

Despite a doubling of its total electricity generating capacity in the past decade, Indonesia still has a low electrification rate compared to countries with similar income levels. In 2014, about 84% of Indonesia's population had access to electricity compared to less than 68% in 2010, according to state electric utility Perusahaan Listrik Negara.

Indonesia's latest energy policy aims to achieve nearly complete electrification of the country by 2020. In recent years, electricity capacity additions have not kept pace with electricity demand growth, leading to power shortages in grid-connected areas. Inadequate infrastructure as a result of insufficient investment and regulatory hurdles contributes to lower electrification rates, primarily in eastern Indonesia.

Fossil fuels power most of the electricity generation in Indonesia (88%), while renewables, primarily in the form of hydropower and geothermal resources, account for the remainder. Indonesia intends to use domestic fuel sources and diversify its fuel portfolio to include more renewable power. Plans to increase renewable energy use to at least 23% of the energy portfolio by 2025 depend heavily on further developing the country's geothermal and hydropower resources.




Indonesia has included several geothermal power plants in its fast-track program, which is meant to accelerate the development of more than 27 GW of total power capacity in the next several years. Indonesia has focused on geothermal in particular, signing an agreement with New Zealand in 2012 for joint development of geothermal energy projects.

About 5 GW of new geothermal capacity is slated to come online in Indonesia by 2022, including the 330-megawatt Sarulla power plant, potentially the world's largest geothermal power plant. Successful completion of these geothermal projects could result in Indonesia becoming the world leader in both geothermal electric capacity and generation.

One impediment to unlocking the country's vast geothermal resources has been the definition of geothermal development as a mining activity, which restricted new projects in conservation areas. Indonesia passed a law in 2014 that eliminated this limitation on geothermal development while streamlining the permitting process and alleviating land acquisition issues. The law also attempted to raise private sector investment in geothermal projects by making the price more closely match development costs.




NewBase 20 October - 2015 Khaled Al Awadi

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

Oil prices nudge up on short-covering; glut, economy concerns persist Reuters + NewBase

Oil prices rebounded in Asian trade on Tuesday as traders covered short positions after prices fell at least 3 percent in the previous session, but gains were capped by worries about oversupply and the health of the global economy.

Brent crude for December delivery LCOc1 had climbed 11 cents to $48.72 a barrel by 0329 GMT after settling down $1.85, or 3.7 percent, in the previous session. U.S. crude for November delivery CLc1 rose 13 cents to $46.02 after closing down $1.37, or 3 percent. The November contract expires on Tuesday.

"Short-covering has led to a little bit of a rally," said Ben Le Brun, market analyst at Sydney's OptionsXpress.

But worries over Iran boosting crude production when international sanctions are lifted and weaker economic growth in China, the world's second-largest economy, weighed on markets, Le Brun said.

"The fundamentals remain a little bit stressed," he added.

Iran plans to increase crude production by 500,000 barrels per day within a week of the lifting of sanctions, a senior Iranian oil official was quoted as saying on Monday, selling the oil to traditional customers in Asia and Europe.

Oil price special

coverage




China's GDP growth slowed to 6.9 percent in the third quarter, down on a 7-percent rise in the prior quarter, while implied oil demand was also lower, official figures and Reuters data on Monday showed.

That came as U.S. crude stocks likely rose for a fourth straight week, climbing last week by 3.7 million barrels to 472.3 million barrels, a preliminary Reuters survey taken ahead of weekly industry and official data showed on Monday.

Investors had already priced in the likely rise in oil inventories last week, said Vyanne Lai, an analyst at National Australia Bank in Melbourne.

"The market consensus is a 3.5-million barrel increase which is hardly surprising given seasonal production," she said.

Industry group, the American Petroleum Institute (API) will report its stocks data later on Tuesday, while the U.S. Department of Energy's Energy Information Administration (EIA) will release oil inventory data on Wednesday.

Investors are also keeping an eye on the outcome of a technical meeting of oil experts from the Organization of Petroleum Exporting Countries and non-OPEC countries on Wednesday, as well as a European Central Bank meeting and manufacturing data from China later this week.

Discussions at the oil experts meeting is likely to focus on possible financial aid for OPEC members hit by falling oil prices rather than production cuts, Lai said.

Thursday's ECB meeting, set against a background of lower consumer spending, could result in a further round of stimulus and asset purchases.




Opec, non-Opec experts to talk, but unlikely to cooperate on output cuts Reuters

A meeting of Opec and non-Opec oil market experts this week is unlikely to increase the prospect of joint co-operation on supply curbs or show much support for Venezuela’s proposed price band, Opec delegates and analysts said.

The Organisation of the Petroleum Exporting Countries has invited eight non-member countries including Russia for talks on the market at its Vienna headquarters tomorrow. Opec’s own meeting to set policy is not until December 4.

Non-Opec producers have refused to work with Opec in cutting supply to reduce a surplus that has prompted prices to sink to below $50 a barrel from $115 in June 2014. In turn, Opec has refused to limit supply alone and many members have raised output.

Cash-strapped member Venezuela is nonetheless pushing for Opec and non-Opec cuts and has proposed reviving Opec’s price band mechanism, attempting to set a $70 price floor. But two Opec delegates said the prospect of joint output cuts was low and the price band was unlikely to find much support.

“I really don’t believe that Venezuela will succeed in its attempts,” said one of the delegates. “Opec countries are now over-producing so the cutback should start from within before trying with non-Opec producers.”

According to Opec’s own figures, Opec is pumping 31.57mn barrels per day (bpd), much more than its official 30mn bpd target and the lion’s share of an excess supply of almost 2mn bpd.

Most Opec countries are sending their national representatives — oil experts who rank below ministers — to the event, although Venezuelan Oil Minister Eulogio del Pino and possibly his Ecuadorean counterpart Pedro Merizalde-Pavón are expected to attend.




“It won’t be better than the one before,” said another Opec delegate, referring to a technical Opec and non-Opec meeting in May which failed to achieve co-operation between the two sides. Expectations among some Opec watchers are also low, given that Saudi Arabia has shown no interest in returning to a strategy of supporting prices.

“Only the market can decide on prices, no-one else,” Saudi Oil Minister Ali al-Naimi said yesterday. “The meeting has a good chance of resulting in an agreement to share information and/or plans to continue to assess the market,” said Jamie Webster, analyst at IHS and an Opec expert.

“But in terms of what the market is looking for — a clear unequivocal plan to cut — it is very unlikely to deliver.”




OPEC Brings Oil Price War Home in Pursuit of Asia's Cash Bloomberg - Serene Cheong

When it comes to deciding how much to charge Asian oil buyers, OPEC members are showing little regard for tradition.

Suppliers from the Organization of Petroleum Exporting Countries have long moved in lockstep, raising or lowering prices in tandem. Now, Kuwait is undercutting Saudi Arabia by the most on record and Iraq is also selling its oil more cheaply than the group’s biggest member. Qatar is pricing cargoes at the biggest discount in 27 months to competing crude from the U.A.E.’s Abu Dhabi.

While the group that accounts for about 40 percent of global oil supplies maintains a collective strategy of flooding the market with crude, the semblance of unity has vanished when setting monthly selling prices. With Asia forecast to account for most of the growth in global oil demand this year, competition for the region’s buyers is trumping historical allegiances.

“It’s a full-on fight for market share within OPEC,” said Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd. “That’s even as the group tries to fend off a rise in non-OPEC production from countries such as Russia, Brazil and the U.S.”

The battleground is the Asia-Pacific region, which will account for about 34 percent of global oil demand in 2015, according to the latest monthly report by the International Energy Agency. China alone will be responsible for more than a quarter of consumption growth next year, the Paris-based group forecasts. The nation is importing near record amounts as it takes advantage of low prices to fill its stockpiles.

Kuwait’s official price for its Export Blend crude to Asia was a record 65 cents cheaper than Saudi Arabia’s similar-quality Arab Medium crude in October and 60 cents for November. The difference has widened from 40 cents at the beginning of 2014.




Iraq’s selling its Basrah Heavy grade $3.70 a barrel below Saudi Arabia’s Arab Heavy variety, the biggest discount since April when Iraq started marketing the oil. Qatar Land crude is $1.20 a barrel cheaper than Abu Dhabi’s Murban, the most since official selling prices were set for June 2013, according to data compiled by Bloomberg. The spread was as narrow as 40 cents in May.

As they seek to cement relationships with long-term customers, OPEC producers including Saudi Arabia are competing among themselves, as well as with suppliers from outside the group, according to Bob Fryklund, the chief upstream strategist at IHS Inc.

“That’s why you saw some of those discounts, relative to other crudes in the world,” he said in an October 8 interview in Tokyo. “They continue to try to build those relationships.”

Oil prices collapsed to the lowest in six years in August as OPEC responded to a surge in supply from U.S. shale fields by opening its taps in an attempt to price higher-cost producers out of the market. OPEC said it pumped the most crude in three years in September, led by output gains in Iraq.

The strategy has worked to the extent that U.S. production dropped as the falling prices spurred oil drillers to sideline more than half the country’s rigs in the past year. Output is down over 500,000 barrels a day from a more than three-decade high of 9.61 million reached in June, weekly Energy Information Administration data show.

It has been costly for OPEC members that are dependent on oil revenue to balance their books. Saudi Arabia, which relies on oil for most of its revenue, is expected to post a budget deficit of almost 20 percent of gross domestic product this year, according to the International Monetary Fund.




Brent futures have fallen 13 percent on the London-based ICE Futures Europe exchange this year and are trading near $50 a barrel. OPEC’s own basket price, representing the main export crudes of all member countries, is 12 percent lower.

While OPEC predicts improving demand for its oil next year, there may be more supply from one member. Iran, OPEC’s fifth biggest producer, may boost output to 3.6 million barrels a day within six months if international sanctions against the country are eased, the IEA said on Oct. 13.

The nation pumped 2.8 million barrels a day in September, data compiled by Bloomberg show. The additional supply may end up replacing similar grades from Saudi Arabia, Iraq or Russia, the agency said.

“There will likely be much more competition within OPEC when Iranian exports increase,” said Ehsan Ul-Haq, a London-based analyst at industry consultant KBC Advanced Technologies. “If Iran exports continue to go up, it will need to adjust its official selling price to be more attractive as compared with other similar grades.”




NewBase Special Coverage

News Agencies News Release 13 Oct.. 2015

Saudi Arabia, UAE economic activity remains stable: CA Saudi Gazette + NewBase

Saudi Arabia and the UAE continue to witness stable economic activity despite challenging macro environment, the latest Crédit Agricole Private Banking research report “Macro comment – Mena update” showed.

There may be some general negativity around low oil prices and the geopolitical situation, but it is yet to translate into really weaker economic activity in these two countries, it said.

“Despite the pessimism engineered by the continued low level of oil prices and the regional geopolitical situation, the economic engines of leading GCC countries like the UAE and Saudi Arabia continue to move ahead. Oil price related negativity has not actually translated into any meaningful or weaker economic activity in the UAE or Saudi Arabia, as reflected in the September purchasing managers indices (PMIs),” said D. Paul Wetterwald, chief economist at Crédit Agricole Private Banking.

In Saudi Arabia, the non-oil private sector PMI stood at 56.5 in September, which is markedly lower than the August figure of 58.7. However, the third quarter average was almost the same as the second quarter average. Despite the slowdown of the growth rate, Saudi output expanded along with new orders (including foreign ones).

Saudi Arabia also benefitted from the elevated level of the oil price prevailing between 2012 until the 4th quarter of 2014. As a result, its GDP growth outpaced the Jordan one by a full one per




cent per annum between 2012 and the second quarter of 2015. In the UAE, the non-oil private sector PMI did not decline significantly with the September mark set at 56 versus 57.1 in August. It was seen that output and new orders improved, but export orders declined slightly.

On the other hand, input costs rose due to both higher costs in regards to labor and materials. As a result of subdued output price increases, company prices were more likely to decline. At the consumer level, a continuous upward trend was observed in the CPI, which was 4.9 percent higher this September than a year ago.

Meanwhile, purchase prices and staffing costs were reported to be increasing in Saudi Arabia. As a result, companies marginally increased their output prices. However, this should not impact the inflation as measured at the CPI level, which stabilized at +2.1 per cent year-on-year since June.

“Following the tensions which have emerged in the forward rates of the Saudi riyal, the kingdom’s monetary authorities have reaffirmed their determination to keep their currency pegged to the dollar. Therefore, the risk of imported inflation through a weakening of the external value of the Saudi riyal seems ruled out for now,” added Wetterwald.




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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

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new base 710 special 20 october 2015

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