new base energy news issue 948 dated 14 november 2016

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 Energy News 14 November 2016 - Issue No. 948 Edited & Produced by: Khaled Al Awadi

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UAE: State of the Green Energy Economy Report 2017 launched

WAM) - Saeed Mohammed Al Tayer, Vice Chairman of Dubai Supreme Council of Energy and MD & CEO of Dubai Electricity and Water Authority (DEWA), has launched the State of Green Economy Report 2017, a United Nations Development Program (UNDP) backed publication. The 3rd report was launched at the World Climate Summit organised during the 22nd Session of the Conference of the Parties (COP 22) to the UNFCCC, in Marrakech, Morocco.

The event was attended by Dr. Hakima El Haite, Minister Delegate for the Environment in the Kingdom of Morocco, Ahmed Buti Al Muhairbi, Secretary General of the Dubai Supreme Council of Energy, Adnan Amin, Director General of the International Renewable Energy Agency(IRENA), Miriem Bensalah Chaqroun, President of the General Confederation of Moroccan Companies, Bertrand Piccard, Initiator, Chairman and Pilot of Solar Impulse, Yvo de Boer, Former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), Frode Mauring, the UNDP Resident Representative in the UAE, Qatar and Oman, Jens Nielsen, CEO, World Climate Ltd , Paul Polman , CEO of Unilever and other international personalities.

The State of Green Economy Report 2017 aims to help the UAE sustain its economic growth, while keeping the green economy as the fuel for this growth. The report is created around the theme of Knowledge, and aims to provide the public and private sectors with a clear overview of the government’s plans, as well as offer a benchmark on the country’s current standing in green economy.




"The 4th of November 2016 was a historical date as it marked when the Paris Agreement came into force. It is with great pleasure that we meet here today to reaffirm our commitment to the Agreement. The Paris Agreement charts a new course in our efforts to combat climate change and limit its effects, both as individual countries and as part of something far bigger: a global network that by working together can make a real change. Under the leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, Dubai has adopted green growth and sustainable development," said Al Tayer.

He continued: "Last year, His Highness announced the Dubai Clean Energy Strategy 2050. This strategy has a target to make Dubai a global centre for clean energy and green economy, which will also contribute to making Dubai the city with the lowest carbon footprint in the world by 2050. Based on our leadership’s vision, we have set primary goals to ensure our continued social and economic development by mitigating the corresponding negative impacts on our environment. We will continue our efforts to achieve this vision so

that it remains a beacon that shapes our policies, strategies, and practices for government, which in turn will promote social change.

We recognise that there are different methods of achieving as every nation will follow its own path towards a green economy that is adapted to their own social, economic and environmental conditions. Nonetheless, we also recognise the importance of this being a common goal, along with the lessons learned along the way. Sharing experiences, transferring knowledge, and providing support across borders is the only way we can all prosper into the future,"

"Each year, we organise the World Green Economy Summit, which is an international forum for government representatives, business leaders, decision makers, experts, specialists and other stakeholders to gather and create partnerships between the public and private sectors. It encourages dialogue and knowledge exchange, which are vital elements in pushing us forward in planning and implementing the shift to a global green economy. At this year’s summit, His Highness Sheikh Mohammed bin Rashid Al Maktoum

launched the World Green Economy Organisation (WGEO), which is supported by the Government of Dubai and in partnership with the United Nations Development Programme (UNDP). WGEO will be based in Dubai, pioneering a new approach to promoting the green economy by bringing together governments, the private sector, foundations, UN agencies, financial organisations, and civil society, to work on achieving the green economy goals, and to serve as a mechanism for generating new solutions to climate change, sustainable energy, and other challenges for water and the environment around the world.

This year was a very productive one for the UAE. In addition to these initiatives to encourage international cooperation, we have continued to propel the shift in our own economy, adding




further smart services and focusing on diversifying the energy mix to incorporate renewable energy sources. We have numerous initiatives underway, covering all sectors of industry, the economy, and society, to ensure a prosperous, happy and healthy future, for generations to come.

Many of these initiatives are outlined in this year’s edition of the State of Green Economy Report, which is an annual review and critical reflection of the current situation of the green economy landscape. The report traces our successes in green economic development, offering a knowledge base for national and international experts and thought leaders to share research and development, tools, and repeatable initiatives.

This year alone, Dubai has recorded two milestones in renewables. Dubai Electricity and Water Authority received the world’s lowest solar tariff at USD 2.99 cents per kW/h, an improvement on DEWA’s previous record of USD 5.6 cents per kW/h. This resulted in an increase in our commitment to clean energy providing 75% of Dubai’s total power output by 2050 and launching the Dubai Green Fund, a USD 27 billion (AED 100 billion) green investment vehicle to support green investments and green growth," added Al Tayer.

"It is a privilege and honour to be here to present the State of Green Economy Report 2017. In this report, we capture success stories that we wish to share to contribute to global sustainable and green development. The report demonstrates our commitment to develop and implement green programmes and initiatives across all sectors, making a strong case for a green transition to a robust low-carbon economy.

It also provides an overview of initiatives that promote innovation, and policies that help accelerate the transition. The report also underlines the efforts made to encourage and enable different sectors to participate in the transition towards a green economy. It serves as a roadmap to establish new market-driven models to decarbonise the energy sector and encourage the market to adopt energy efficiency.

The report emphasises that knowledge leads to change and helps redesign strategies. It provides cutting-edge information to both policymakers and practitioners. The report is divided into 8 areas of green economy development, connected through one common theme: Knowledge, which is the main driver to sustainable development and a guarantee that it remains on the right path," said Al Tayer.

"Human civilization, throughout history, has stood at the edge of many new frontiers. Strong political leadership, with the help of thought leaders, think-tanks, innovators, academicians, businesses and entrepreneurs, and utilising knowledge as a common link, has ensured our consistent progress and sustained economic growth. The transition to a green economy is not a journey into the unknown. The globally-accepted UN Agenda for Sustainable Development Goals are well-defined. The targets are clear.

A better understanding of climate change helps deliver specific solutions based on technology and innovation. Smart cities are sustainable cities. The sustained green growth will reflect positively not only on the environment and ecosystems but also socially. Each chapter opens with




a thought leader and continues to highlight the remarkable contributions of individuals and organisations in knowledge-sharing and building partnerships," noted Al Tayer.

At the end of his speech, Saeed Mohammed Al Tayer handed Dr. Hakima El Haite and other attending personalities a copy of The State of Green Economy Report 2017.

Produced with the support of organisations that are leading the way in the Emirate and the UAE, including DEWA, Dubai Supreme Council of Energy, Empower, ENOC, RTA, Dubai Sustainable Tourism, UAE Water Aid, Dubal Holding, Dubai Science Park and EGA to name a few, the report is a success story of what can be achieved through knowledge sharing and the building of strong partnerships, while advancing towards new frontiers. The report is divided into eight chapters anchored by an opinion from a thought leader, highlighting the remarkable contribution of individuals, as well as government entities.

"The report confirms the UAE’s dedication to combating climate change while increasing the share of renewable energy. It sheds light on the most important strategies, initiatives, existing projects and success stories across various industries including energy, water, oil and gas, industry, transportation, construction, tourism, wastes, land planning, agriculture and finance, in addition to following up on the progress achieved by the UAE in its transformation into a green economy," said Waleed Salman, Chairman of the Dubai Carbon.




UAE: Region’s first self-cooling eco-home unveiled Gulf News + NewBase

A full-sized home that cools itself in the UAE’s scorching summer heat was unveiled in Dubai on Friday.

At first, the two-storey, four-bedroom house, which stands in the headquarters of the Mohammad Bin Rashed Space Centre, seems like a fairly normal family home. But closer inspection reveals the 6,000 square foot concept’s green credentials, which space centre officials claim make it the region’s first sustainable home.

The house’s outside walls are 61cm thick, and insulated with a combination of polystyrene, gypsum and fibreglass mesh. The house’s in-built software system regulates lighting, power, temperature and humidity. All the lights are motion-activated LEDs, while blinds covering the home’s triple-glazed windows open and close automatically.

The home was built with help from the Passive House Institute in Germany. The Darmstadt-based institute aims to develop the ‘holy grail’ of building science — structures that use very little energy for heating and cooling. While the institute claims to have first built Europe’s first ultra-low energy house as far back as 1990, the Middle East’s red-hot, humid climates create a far different challenge.




From the house’s decorative false ceilings, a faint hum reveals the home’s ventilation system. Instead of power-hungry air conditioning, the house uses a mechanical system that filters out dust and particles and cools through refrigerated water pipes.

“Our main goal and objective when we decided to embark on this project was to create a building that is totally independent of the electricity grid,” said Ali Shaheen, the centre’s sustainable energy programme director. “Now we have a building with zero carbon emissions.”

On the roof, 160 solar panels cover 350 square metres of space — and officials claim there’s plenty of room to add more. During the sunny morning on the day of the house’s launch, the solar panels had generated 21 kilowatts.

Thirst for power

The centre is currently working with Dubai’s electricity and water authority (Dewa) to pump the home’s extra power back into the emirate’s electricity grid.

The indoor temperature hovered at around 22.9 degrees Celsius, according to a digital display, around 11 degrees lower than outside. The mechanical cooling system can also extract around 200 litres of water from the air every day — but the water is not drinkable.

“It’s not fully sustainable from the water point of view, but that was not our objective to achieve with this building. The objective was to be sustainable from an electricity point of view,” said Shaheen.

Officials at the centre hope that the eco-home will help inspire property developers to build green. Yet challenges remain.

The average UAE resident uses 550 litres of water per day — the highest per-person consumption in the world. Electricity use is at similar sky-high levels.

However, Shaheen, the programme’s director, is hopeful that similar homes will be seen popping up around Dubai within five years.

“When there is a will, there’s a way,” he said.

Details of The region’s first sustainable home, in numbers:

• Four - the number of bedrooms

• 6,000 - the home’s size, in square feet

• 75 per cent - How much less energy the home uses compared to a home of a

similar size

• 160 - The number of solar panels on the home’s roof

• 61cm - The thickness of the home’s walls, build to keep the heat out

• 100 - The time taken to build the home, in days. Research and planning took

another year




Saudi Calls for OPEC Output Cuts as Iran Pumps More Oil Bloomberg - Sam Wilkin @MrSamWilkin

Iran boosted oil output at three western fields faster than it expected as rival OPEC producer Saudi Arabia called for a collective output cut later this month to help rebalance the market.

Output at the fields west of the Karoun River, near Iran’s border with Iraq, rose to about 250,000 barrels per day from 65,000 barrels in 2013, the Oil Ministry’s news service Shana reported Sunday, citing President Hassan Rouhani at a ceremony to formally open the project. Iran had expected to reach that output target by the end of the year, Mohsen Ghamsari, director for international affairs at the National Iranian Oil Co., said in September.

Saudi Arabia’s Energy Minister Khalid Al-Falih said OPEC must agree to implement a proposed cut in crude production for OPEC countries, Saudi Press Agency reported Sunday. OPEC members will meet on Nov. 30 to discuss a plan to limit the group’s output to a range of 32.5 million to 33 million barrels a day, compared with 33.64 million in October. That target has become harder to reach as several members boosted output.

OPEC reported last week that Iran raised its monthly output by the most since international sanctions were lifted in January. The Islamic Republic negotiated an exemption from the necessary production cuts at a meeting in Algiers in September, to compensate for the production capacity it lost when international sanctions targeted its oil industry. Iran has almost recovered that capacity, and plans to further increase output with the help of foreign investment.

To read a QuickTake explainer on Iran’s plans to boost oil output, click here.

“Oil production west of Karoun must reach one million barrels per day,” Rouhani said, referring to the North Azadegan, Yadavaran and Yaran fields. “This is a realistic goal, and we need investment and technology.”

Iran has approved a new oil contract model to lure foreign investors, although the details have not been made public. France’s Total SA reached an initial agreement to develop a natural gas field in Iran last week, becoming the first international oil company to sign a deal under the new energy contracts.




Uganda: Tullow, Total’s Uganda Oil Exports Face Delays on Infrastructure Bloomberg - Felix Njini FelixNjini

Output from Ugandan crude deposits being developed by companies including Tullow Oil Plc and Total SA is unlikely to be exported as soon as the nation expects because of the scale of the infrastructure projects required to transport the fuel out of the country.

The government of Uganda, where oil was discovered in 2006, has said it expects to begin shipping crude within five years. To do that, it must overcome challenges facing other countries in the region like Mozambique and Tanzania, where a lack of finance and technical capacity to build multiple, capital-intensive infrastructure projects is delaying the start of natural-gas production.

“Everything being done in Uganda is for the first time ever, everything can be a risk,” said Will Hares, an analyst at Bloomberg Intelligence in London. “Timetables are prone to slipping, especially in frontier regions. All stakeholders would suffer from project delays.”

Landlocked Uganda has an estimated 1.7 billion barrels of recoverable oil at fields in the Lake Albert basin that the government expects Tullow, Total and China’s Cnooc Ltd. to start pumping by 2021. The government has estimated it will receive $43 billion of revenue from the resource over 25 years.

Work Beginning

Developing the fields to commercial production requires about $8 billion, though engineering design work on the project has “yet to start,” said George Cazenove, a spokesman for Tullow. For production to start in 2021, Tullow would have to make a final investment decision on the project by 2018, according to Cazenove. The crude would then need to be ferried along a yet-to-be




constructed 1,400-kilometer (870-mile) pipeline to the Indian Ocean port of Tanga in neighboring Tanzania. The government this week opened a tender for surveys of the route for the conduit.

Uganda expects the pipeline, which is backed by Total, to be completed in three years, according to Robert Kasande, the acting head of the state-run Petroleum Directorate. The government is considering building an airport in the oil region to speed up logistics, he said in an interview Nov. 10.

Total spokeswoman Ahlem Friga-Noy and Cnooc spokeswoman Aminah Bukenya didn’t respond to e-mailed requests for comment.

The development of Uganda’s oil industry has been slow if compared with other sub-Saharan African producers like Ghana, where output started three years after discoveries were made. The Ugandan government took 10 years to issue production licenses to Tullow and Total. In addition, in April it reversed a decision made eight months earlier to route the pipeline via Kenya, deciding to go via Tanzania instead. The challenges of coordinating the cross-border project between Uganda and Tanzania has “substantially raised the probability of a delay,” BMI Research said in e-mailed note.

Refinery Talks

In July, Uganda also halted talks with Rostec State Corp. of Russia to build a $4 billion refinery, postponing the production of refined oil for two years until 2020.

“A multitude of projects that need to be completed significantly increases chances of development bottlenecks,” Jacques Nel, a senior economist at Paarl, South Africa-based NKC African Economics, said in an e-mailed response to questions. “The government has more to lose than oil companies regarding the risk of delayed oil production.”

There is the potential for further “politically driven delays” in Uganda should the government insist that oil production be preceded by the proposed 60,000 barrels-per-day refinery, said Clare Allenson, an Africa analyst at Eurasia Group.

“Market realities will also likely contribute to delays,” with crude prices having dropped 45 percent over the past two years . “Low oil prices will be a drag on project timelines as operators grapple with a difficult financing environment,” Allenson said.




NewBase 14 November 2016 Khaled Al Awadi

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

Oil Prices steady on OPEC output record, U.S. rig count Reitrs + NewBase

Oil prices were little changed on Monday near multi-month lows, dragged down by worries about oversupply as OPEC saw record output last month and as the U.S. rig count rose again.

London Brent crude for January delivery was trading down 3 cents at $44.72 a barrel by 0336 GMT, after settling down $1.09 on Friday. The benchmark on Friday hit its lowest since Aug. 11 at $44.19.

NYMEX crude for December delivery was down 8 cents at $43.33 a barrel. The contract closed down $1.25 on Friday after dropping as low as $43.03, its weakest since Sept. 20.

Oil has been under pressure since before the Organization of the Petroleum Exporting Countries (OPEC) said on Friday that its output rose to a record 33.64 million barrels per day (bpd) in October, up 240,000 bpd from the previous month.

OPEC plans to cut or freeze output, but investors are skeptical such a deal will be reached during the cartel's Nov. 30 meeting and are concerned that whatever agreement reached would not be effective.

BMI Research said in a note that the most likely scenario at the OPEC meeting will be no deal, as the election victory of Republican President-elect Donald Trump - a strong advocate of U.S. energy independence - has altered its expectations.

Oil price special

coverage




Any agreement to cut output and support prices would now be seen by some OPEC members as a victory for U.S. shale producers, BMI said.

Still, Saudi Energy Minister Khalid al-Falih has said it was imperative for OPEC members to reach a consensus on activating a deal made in September in Algiers to cut oil production, according to Algeria's state news agency on Sunday.

Iran opened three oilfields with a total production of more than 220,000 bpd on Sunday, as the country continues to ramp up its production after the lifting of sanctions.

Adding to bearish sentiment was Baker Hughes data showing active U.S. drilling rigs rose by two to 452 in the week to Nov. 11, an increase in 21 out of the last 24 weeks.

Bolstering the market against further decline, China's October's crude oil output fell 11.3 percent from a year ago to 3.78 million bpd, while October crude oil runs rose 5.5 percent on year to 11.08 million bpd, highest since at least 2011, data from the statistics bureau showed.

Also, state-run oil company Petrobras' production of oil and natural gas in Brazil fell 2.5 percent from a record high in September to 2.68 million barrels of oil equivalent per day in October due to maintenance stoppages, it said.




Oil Analyst Who Foresaw Crash Sees OPEC Uniting in Self-Interest Bloomberg - Sharon Cho iamsharoncho

OPEC members need to stop bickering over output curbs or risk the group becoming irrelevant to global oil markets, according to an analyst who predicted the biggest price crash in a generation.

It’s in the interest of all producers to reach a deal that’s aimed at stabilizing prices, which are 61 percent lower than their 2014-highs, said Gary Ross, executive chairman at PIRA Energy Group. A failure to implement an agreement could drag down crude to as low as $35 a barrel, while success at the group’s meeting later this month may push oil to $60, more than 30 percent higher than current levels, he said.

Crude slumped below $45 a barrel earlier this month amid concern over the ability of the Organization of Petroleum Exporting Countries to implement a deal to cut production for the first time in eight years. Key members Iran and Iraq argue that they should be exempt from output restraints while non-OPEC nation Russia has said it would be willing to freeze supply if the group can agree on reductions. Ministers will meet in Vienna on Nov. 30 to decide how they will share the burden.

“OPEC has to reach a deal to become relevant again,” Ross said. “Our view is that they will cut and I think when push comes to shove, they will collectively agree on November 30.”

Prices may retreat amid “relentless global supply growth” unless OPEC enacts significant production cuts, the International Energy Agency said Thursday. While the election of Donald Trump as the next U.S. president isn’t a key driver for the group, it could put pressure on its members to reach a deal, according to Ross.

The producer group will probably be able to get members to agree because they all need higher oil prices, he said. As oil prices plunged from more than $100 a barrel to a 12-year low of less than $30 a barrel in January, No. 1 OPEC producer Saudi Arabia has drawn on its currency




reserves to cushion the impact. It spent $115 billion last year and is also planning to sell a stake in its state-owned oil company.

Saudi Arabia’s credit default swaps -- contracts to insure its debt against default for five years -- have more than doubled to about 1.47 percentage points from 0.63 point two years ago. The cost of insuring fellow OPEC member Nigeria’s debt for five years has jumped to 5.33 percentage points from 2.79 points two years ago.

Venezuela, meanwhile, is swapping debt to reduce its near-term payments. Food and energy shortages have spurred calls for a vote to recall President Nicolas Maduro, and traders are pricing in a 91 percent probability the cash-strapped Latin American country misses payments in five years.

“They’re all trying to do what’s in their self-interest, which is trying to cooperate to go ahead and see that OPEC is successful,” Ross said.

OPEC held technical talks at its Vienna headquarters on Oct. 28 aimed at finalizing the details of a September agreement in Algiers to curb output to a range between 32.5 million and 33 million barrels a day. The meeting ended without reaching a deal on quotas for individual members. That prevented an accord with non-OPEC nations the following day.

Market Mess

The group “messed with the market” during its Algiers meeting in September as the proposed deal to cut output pushed prices higher, only for them to drop again because of the inability of members to resolve their differences, Ross said.

If they succeed at this month’s upcoming meeting, the world may see a supply reduction of 500,000 barrels a day over the first half of 2017, according to Ross. “This would accelerate rebalancing of markets, accelerate the reduction in global surplus stocks and could even eliminate most of the surplus stocks by beginning of the second half of the year,” he said.

Without a decision on output cuts, the market’s rebalancing could be delayed by a year, Ross said. He estimates “very strong” global demand growth at 1.9 million barrels a day this year and 1.6 million barrels a day for 2017, supported by consumption in Asian countries including China and India. “OPEC wants a $50-$60 price, and they want to basically accelerate the rebalancing,” he said.




NewBase Special Coverage

News Agencies News Release 14 November 2016

Arabian Gulf’s fragmented gas market needs a regional hub Robin Mills + NewBase ( for images )

Gas hubs are in fashion. The US and UK have long had them, continental European markets are now increasingly integrated and Turkey, Singapore, China and Japan, in different ways, want to be gas nexuses. But could the Middle East develop a hub of its own and what advantages would it bring? It is strange that the Middle East’s gas markets are so fragmented. The region holds more than 40 per cent of the world’s reserves, 17 per cent of its production and 14 per cent of its consumption.

And from being primarily an exporting region, it is now also a growing importer and consumer.

But there are almost no intra-regional pipelines and for those that exist, most capacity is tied up under long-term contracts at fixed rates. Large gas markets – Saudi Arabia is the world’s sixth biggest – are completely isolated. Only two Gulf countries can import liquefied natural gas (LNG). Countries short of gas, such as Kuwait, Bahrain, the UAE and Oman, lie next to the world’s largest gasfield in Qatar and Iran.




Gas prices are shrouded in fog. State-regulated rates are public in Saudi Arabia, Oman, Bahrain and other regional countries. But these are just an administrative fiction, not "prices" in the normal sense. Since gas is in short supply, it is not possible to turn up at the headquarters of Saudi Aramco or Oman Gas Company and offer to buy at these prices. Instead, gas supplies have to be allocated by bur-eaucrats. A business that fails to obtain a ration of gas cannot go out and buy at world market prices from another supplier.

Compare this situation to North America or north-west Europe. A dense network of pipelines connects producers and importers with consumers and exporters. Gas is freely traded and prices publicly avail-able, by the millisecond, at hubs. These can be physical locations where pipelines intersect, such as the US’s Henry Hub in Louisiana, or they can be virtual, as for the UK’s National Balancing Point. The EU has made a determined effort to create a common market between key hubs in Belgium, the Netherlands, Austria and Italy and to expand it east, by building pipelines and passing the necessary legislation. Connectivity and transparency are a great tool against dominant suppliers, such as Russia’s Gazprom, which seek to squeeze higher prices from isolated or ill-

informed buyers. Asian markets, traditionally isolated and mostly reliant on domestic production or LNG imports, are also developing pricing hubs. Singapore has launched an LNG index, by which traders or consumers could hedge their future purchases. China is becoming increasingly connected by gas pipelines to central Asia and Russia, and LNG terminals to the world market. Powerful forces are against such an endeavour in the Ara-bian Gulf region. Major suppliers do not want to lose their control over price. The GCC and its neighbours lack sufficient pipeline connections, with politics an obstacle.

But in the next few years, the building blocks of an integrated market could be laid. Abu Dhabi has started LNG imports and Sharjah plans to start a terminal by 2018 (Dubai has had one since 2010). Iran is likely to begin exports by pipeline to Iraq soon and, in a few years, to Oman. Oman and Abu Dhabi already export LNG.

Dolphin Energy recently signed new contracts to expand supplies of Qatari gas to Sharjah and Ras Al Khaimah. Prices are undisclosed but are probably comparable to the current cost of LNG.

These advances make the UAE-Oman area the natural site for a Gulf hub – where gas can be freely traded with transparent prices. Such a hub will not appear from nothing – local gas players and governments can encourage it. By energising industrial investment, this would be the next step in the region’s gas evolution.




Companies drilling black gold go a little green AFP + Oman Observer + NewBase

The companies that drill black gold are going a little bit green: Taking stakes in renewable energies that are growing rapidly, enabling oil firms to diversify revenue and show commitment to fighting climate change.

In the past, such swings have been written off by environmental campaigners as greenwash, and just as likely to be reversed once low oil prices go up again.




But analysts say that, even though only a tiny per cent of oil majors’ investment goes into renewables, the interest this time seems to be sustained, and underpinned by solid profit. “It is not a purely economic trend” driven by low crude prices, said Francis Perrin, President of SPE, which publishes a number of energy-related publications.

“It’s more profound: It’s the adaption of certain oil industry majors to a certain number of energy and economic upheavals.”

Perrin suggested oil companies were more cognisant of the threat posed by climate change and the potential that renewable energy will become big business.

Already present in the manufacturing of solar panels via its unit Sunpower, France’s Total earlier this year invested in a US company that installs mini wind turbines for homes and businesses.

Italy’s ENI plans to invest 1 billion euros ($1.1 billion) over the next three years in solar projects, while Shell, BP and Statoil are concentrating on wind power.

In the US, Chevron is switching its bets from geothermal to biofuels, although ExxonMobil remains lagging in the green energy field.

PROFITABLE=SUSTAINABLE

With the price of crude in the doldrums, “the priority for oil companies is creating value” said Jerome Sabathier, head of the economics department at IFPEN, a French government body that supports research into the renewable energies, the environment and transportation.

Most oil companies are trying to cut costs and reduce their debts, selling off non-strategic assets. Interestingly, though, they have been loath to sell off renewables, which have been a source of growth.

Perrin said the interest isn’t only due to low crude prices, however. “The trend started before oil prices began to tumble in the summer of 2014 and will continue if they rebound,” he said.

While oil companies have been slashing investment as they seek to cut costs, the Chief Executive of Total, Patrick Pouyanne, noted the company has continued to allocated $500 million per year on renewable energies.

And often their efforts are supported by public funds. “There are a certain number of financing mechanisms and subsidies for renewable energy that create a real financial interest for companies,” said IFPEN’s Sabathier.

But Total’s CEO said that the key to sustainability is profit.

“You will not build sustainable business just because its green, you will build it because it will be profitable and because ecology meets economy,” said Pouyanne at a recent conference.

Even if they are not initially profitable, renewable investments also provide an enormous public relations benefit to oil companies.

“It’s the cherry on the cake,” said Perrin.

STILL MARGINAL

Shareholders, including big investment funds, have also been keeping a close eye that oil companies correctly evaluate the financial risks posed by measures that may be adopted by countries as the global community aims to keep global warming limited to 2 degrees Celsius.




The Opec oil cartel, even with limited implementation of climate change mitigation efforts, sees oil demand growing at a much slower rate than natural gas over the next 25 years. But an expected near doubling of passenger cars on the roads as consumers in developing countries purchase vehicles should drive demand for oil higher.

However, if countries fully honour their pledges to cut down on the use of fossil fuels which cause global warming, Opec believes oil demand could begin declining by 2030. In any case, oil companies are not turning their backs on their main business for the moment.

Investments in renewable energies remain marginal — less than 3 per cent of the billions pumped into oil and gas projects every year, according to a recent report by the Sia Partners consulting firm.

The interest by oil firms in natural gas is understandable as it is seen by the International Energy Agency as the only fossil fuel whose share in the energy mix is to increase in the coming decades as electricity producers switch from coal, which causes far more pollution.

Ten oil majors, members of the Oil and Gas Climate Initiative, also want to continue research into the development of carbon capture technologies. “If you advance in that area, you can develop in the long-term fossil fuels without these energy sources contributing to climate change as in the past,” said Perrin




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990

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Khaled Al Awadi is a UAE National with a total of 26 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 November 2016 K. Al Awadi

new base energy news issue 948 dated 14 november 2016

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