newbase 597 special 06 may 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 06 May 2015 - Issue No. 598 Khaled Al Awadi

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

Dubai Green Economy Partnership unveils green strategy

to support Dubai Plan 2021

WAM : The Dubai Green Economy Partnership (Dubai GEP), launched by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, has unveiled a comprehensive strategy to strengthen Dubai’s shift towards a green economy.

The strategy is led by partnerships and innovative clean technologies centred on innovation, development and smart technologies that support the Dubai Plan 2021.

The Dubai Green Economy Partnership stimulates the growth of a green and sustainable economy in the Dubai and strengthens the Emirate’s position as a leader in the transition to a green economy.

The Dubai Green Economy Partnership’s strategy proposes cooperation among its founding members and a sustainable business framework that depends on three key pillars. These are: a green economy innovation centre, a gateway for green investment and trade, and an effective communications strategy.

Dubai GEP highlights Dubai’s vision and achievements in the area of energy and showcase new business opportunities arising from the transition to a green economy in Dubai.




"The Dubai Green Economy Partnership plans to be a strategic partner in research projects such as green jobs, and facilitate the transition of Dubai to a green economy by helping companies to adopt green technologies in its businesses.

The innovation centre has been established to enhance new innovations. The central mission of the Dubai Green Economy Partnership is to promote green trade and investment in regional markets, and finally to accelerate the adaptation of green technologies, products and services worldwide in order to enable Dubai and the UAE economy to grow sustainably," said Saeed Mohammed Al Tayer, Vice Chairman of the Dubai Supreme Council of Energy.

"None of the objectives of the strategy can be achieved without innovation and research. Today we live in a rapidly changing world, with speedy developments, great opportunities, discoveries,

and inventions. That’s why, we must keep up and support the transition to a green economy embracing new technologies, products and services," said Ahmed Buti Al Muhairbi, Secretary General of the Dubai Supreme Council of Energy, and Chairman of Dubai GEP.

"The green economy is the largest sector in the world together with IT sector in advancing innovation. Dubai Green Economy Partnership is pioneering a comprehensive strategy that links green economy and clean technologies while also promoting green trade and investments in Dubai," said Fahad Al Gergawi, CEO of Dubai Investment Development Agency (Dubai FDI), and Secretary General of Dubai GEP.

The strategy was endorsed by Ahmed buti Al Muhairbi, Secretary General of the Dubai Supreme Council of Energy and Chairman of Dubai Green Economy Partnership, and Fahad Al Gergawi, CEO of Dubai Investment Development Agency (Dubai FDI), an agency of the Department of Economic Development (DED), and Secretary General of Dubai GEP.

The strategy involves frontline public and private sector organisations such as the Dubai Supreme Council of Energy, Dubai Department of Economic Development, Dubai Electricity and Water Authority, Roads and Transport Authority, Dubai Municipality, Dubai FDI, EnPark, Pacific Controls, Dubai Carbon Centre of Excellence, Etihad ESCO, Emirates Global Aluminium and Emirates National Oil Company (Enoc) to design and implement initiatives and programmes aligned to its three pillars. The next Green Leadership Series event of the partnership will be held in June 2015 with focus on innovation.

At an international level, Dubai GEP will establish global partnerships and collaboration to bring innovation to a city level. The group has been regularly participating in the Road to Paris events in preparation for the Conference of the Parties (C0P21) to the United Nations Framework Convention on Climate Change (UNFCCC) aimed to achieve a legally binding and universal agreement on climate for all nations in the world.

Dubai GEP is also in permanent contact with the United Nations Environment Programme (UNEP) with regard to the Rio+20 Conference agreement by member States to launch a process to develop a set of Sustainable Development Goals (SDGs), which will build upon the Millennium Development Goals and converge with the post 2015 development agenda




InterContinental to open Dubai’s first fully solar-powered hotel WAM

The world’s biggest hospitality chain plans to open Dubai’s first fully solar-powered hotel. InterContinental Hotels Group aims to open the 170-room Hotel Indigo in the first half of 2017 as the city invests heavily in renewable energy projects.

It will use solar power for all its energy needs and recycle all waste water and waste generated.“We were seduced by their plans of waste and energy management,” said Pascal Gauvin, regional chief operating officer for IHG.

The hotel will be built in Sustainable City which is under development in Dubailand near Arabian Ranches. The project has been designed to generate 10MW of peak solar power and will be home to as many as 2,700 residents. The aim is to connect solar panels across the development to the electricity grid.




Saudi Aramco in negotiation to buy 1.7 MB Diesel for May Reuters + NewBase

Saudi Aramco is in negotiation to buy 1.7 million barrels of Diesel for delivery in May, its largest spot requirement in recent months, to meet a potential rise in domestic demand for the power generation fuel in summer, industry sources said. The spot requirement comes even after the country added 800,000 barrels per day (bpd) of capacity in two new refineries over the last two years. Saudi Arabia was once a top importer of Diesel during summer, but its reduced Diesel imports this year are expected to weigh on Diesel margins, traders said. Saudi Arabia's demand for electricity usually peaks during the summer with increased air conditioning use as temperatures soar to as high as 50 degrees Celsius. Its demand for Diesel for transport also increases during the Muslim fasting month of Ramadan, which is expected to start on June 18 this year.

Saudi Aramco Products Trading Company (ATC), a wholly-owned subsidiary of Saudi Aramco , issued a tender late last week seeking four cargoes of 300,000 barrels of Diesel for delivery into Jizan and another 500,000 barrels of the fuel for delivery into Ras Tanura.

The cargoes are to have a sulphur content of 500 parts per million (ppm) and be delivered between May 10 and 31, the sources said. The spot requirement is likely to fill an anticipated increase in domestic demand despite the new refining capacity, traders said.

"It's not that hot yet with temperatures around low 30 degrees (Celsius), so summer is actually relatively mild for May," an industry source said. The tender closed on April 30 and was valid until May 1, but Aramco is still negotiating with potential sellers on the deal, sources said.

Traders said the promptness of the dates, which could be pushing up premiums, may be delaying the tender award. Saudi Aramco also has yet to renew an annual term deal with India's Reliance Industries to import diesel, a contract that might not be inked due to now adequate domestic supply in Saudi Arabia, traders added.

"They might instead just import 500 ppm sulphur Diesel during summer in the spot market and export the 10 ppm sulphur diesel depending on economics," one of them said.




Oman: Plans to privatise the oil and gas sector Times of Oman + NewBase Oman's government sees privatisation as a way to share the wealth with the public and therefore will move ahead with its plans in due course, said a senior official at the Ministry of Oil and Gas. Salim bin Nasser Al Aufi, undersecretary at the ministry, was speaking at a roundtable meeting held at the Occidental office on Monday to discuss the main challenges facing local service

companies in the oil and gas sector. The event, organised by the ministry, Oman Society for Petroleum Services (Opal) and the Oil & Gas Year, was attended by senior officials from Petroleum Development Oman (PDO), Oxy, BP, Daleel Petroleum, Mitsui, Halliburton as well as renowned local companies. Asked whether Oman plans to focus more on privatisation of state-owned companies in the face of lower oil prices, Al Aufi said that the government looks at it as more of a strategy

to share the generated wealth with as many people as possible and the companies can implement their plans in this regard when they achieve sustained profitability. He referred to the earlier announcement that Oman's government may sell off part of Oman Oil Refineries and Petroleum Industries Company (Orpic) and said that the plan has not been scrapped but will be implemented only after the company becomes profitable. Sustained profitability

"Orpic needs to have a few years of sustained profitability before they start privatising part of it. The plan is still there. We have not moved away from it." The official said, adding further that the same is true for other companies such as Oman Oil Company which may be considering privatising some of its industries. Mohammed bin Hamad Al Rumhy, minister of oil and gas, had announced earlier this year that an initial approval has been obtained from the Ministry of Finance and 15 to 20 per cent of Orpic may be offered to the public. Oman Oil

Rumhy was also quoted as saying that Oman Oil Company might sell shares in Abraj Energy Services, which provides drilling and well operation services. Commenting on whether privatisation plans will help cover the budget deficit, Al Aufi said that Orpic, for example, is financing itself predominantly from the market and not so much from the government. "The Ministry of Finance is not putting so much money on Orpic so that is not really putting a lot of strain on the government," he said. In the 2015 budget announcement, the Ministry of Finance projected a big budget deficit and said that there is a plan to privatise a number of state companies over the coming years to raise money after getting the necessary approvals.




India: To Sign Port Deal With Iran, Ignoring US Warnings Reuters + NewBase

India will push ahead this week with plans to build a port in southeast Iran, two sources said, with Prime Minister Narendra Modi keen to develop trade ties with Central Asia and prepared to fend off U.S. pressure not to rush into any deals with Iran.

India and Iran agreed in 2003 to develop a port at Chabahar on the Gulf of Oman, near Iran’s border with Pakistan, but the venture has made little progress because of Western sanctions on Iran.

Now, spurred on by Chinese President Xi Jinping’s signing of energy and infrastructure agreements with Pakistan worth $46 billion, Modi wants to swiftly sign trade deals with Iran and other Gulf countries.

“Shipping Minister Nitin Gadkari

will travel on a day-long tour to Iran to sign a memorandum of understanding for development of Chabahar port,” a shipping ministry source with direct knowledge of the matter told

Reuters. The deal will be signed on Wednesday, he said.

Encouraged by the prospect of a deal between world powers and Tehran by June 30 on Iran’s nuclear programme, after which sanctions could be eased, India recently sent a delegation to Iran to scout for trade, energy and infrastructure deals.

The United States cautioned India and others last week against strengthening ties with Iran ahead of a final agreement. But Indian officials said New Delhi could not ignore its national interest and noted a report that a U.S. energy delegation was visiting Iran.

“We don’t want to miss this opportunity and will move as expeditiously as possible,” the shipping ministry source said. India’s cabinet approved the plan to develop Chabahar port last year.

Iran has also proposed a free-trade agreement with India, a trade ministry source said. Rupee-denominated trade with Iran, started in 2012 because of complications arising from sanctions, has almost doubled Indian exports to Tehran in the past two years to $4 billion.

Now Indian exporters want to build on that, using a free-trade zone being developed near Chabahar to export more to the Commonwealth of Independent States, made up of former Soviet Republics, said Mumbai-based Khalid Khan, regional head of the Federation of Indian




Export Organisations.“It will be Modi’s gift to Iran and Indian exporters,” he said of the port project.

BYPASSING PAKISTAN

India wants to build the port as it would cut transport costs and freight time to Central Asia and the Gulf by about a third. The port is also central to India’s efforts to circumvent Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

India has already spent about $100 million to construct a 220-km (140-mile) road in western Afghanistan to link up with Chabahar port. Last week Modi assured Afghan President Ashraf Ghani of India’s commitment to building the port.

Chabahar is just along the coast from Gwadar port in Pakistan that is being developed with China’s help, said Robin Mills, head of consulting at Dubai-based Manaar Energy. “So there is a strategic element for the Indian side”.

Iran could rapidly develop as a destination for global investors if Western sanctions are lifted and Modi wants to fast-track the port project before Tehran has time to rethink. At the weekend, Iranian media reported that Iran had turned down an Indian request seeking multi-billion-dollar development rights for the Farzad B gas field.

“I think India should try to push ahead and take advantage wherever they can before Iran changes its mind,” Mills said.

What does the future hold?

India and Iran have a long and complex geopolitical relationship which is currently better than in

years past and they will probably do their level best to maintain this position for now. My guess is

that India will slowly look for other sources of oil to reduce dependence on Iran.

Saudi Arabia is an obvious source here as India continues to build on its relationships with the Arab states. Iran's nuclear endeavors will continue to push India in this direction. Their current position may be compounded by the recent terrorist attack in New Delhi on a vehicle belonging to the Israeli embassy in February. Israel has blamed Iran for the attack and investigations are underway. If Iranian involvement is identified this could cause a lot of stress on India's current position. ….. We'll just have wait and see how things play out.




India: World’s worst air spurs $25bn utility clean-up Bloomberg/NewBase

Barely 16 miles from central Delhi, a 40- year-old coal-fired power plant run by NTPC stands testament to the bargain struck by India’s capital city: The world’s dirtiest air for electricity. The state-owned utility is now seeking to cut emissions across its facilities in India, starting with its oldest – the one in Delhi. NTPC plans to spend Rs12bn ($189mn) annually on technology upgrades, a company official said, asking not to identified as the person isn’t authorised to speak

on the subject. “Their Badarpur plant is running way beyond its life,” said Chandra Bhushan, deputy director general at Centre for Science and Environment, a lobby group based in the city. “The result is its coal consumption is very high and so are the emissions.” NTPC’s clean-up attempt is part of Prime Minister Narendra Modi’s $25bn spending proposal to revamp ageing utilities as he seeks to accelerate economic growth without further damaging the environment. Providing urgency to Modi’s plan is a World Health Organisation report that shows India is home to 11 of the top 20 cities on the planet with the worst air quality. New Delhi has the world’s highest levels of PM2.5 – tiny, toxic particles that lead to respiratory diseases, lung cancer and heart attacks. The city averaged 153 micrograms per cubic metre in 2013, WHO said in May 2014, citing government data. That’s 15 times more than the average

annual exposure recommended by WHO. Far outlasting its life by a good 15 years, the smokestacks of NTPC’s Badarpur plant spew a blackish-brown exhaust as residents in the neighbourhood go about their business using handkerchiefs as masks to avoid Soot and fly ash. “My eyes burn at times and I get headaches because of the coal dust,” said Sarla Devi, 34, a shopper at a market in front of the plant’s main gate, where a rusty truck waits to ferry fly ash to a disposal site. “I’ve become so used to this that it’s stopped bothering me, which isn’t good really.” NTPC said in an e-mail response that the Badarpur plant meets emission norms of the Delhi Pollution Control Committee.




The company rejected a request for a plant visit. In the densely populated neighbourhood, busy markets and petty shops flank narrow alleys that are strewn with fly ash dropping off tractors carrying the waste to the ash pond about three miles away from the 705-megawatt plant. Badarpur is located off National Highway 2 that connects Delhi with Agra, the site of the Taj Mahal.

Power minister Piyush Goyal wants to change all this and make the surroundings fit enough to be picnic spots for families. His goal is to replace such plants with bigger, more modern ones, an exercise that will cost $25bn, he told lawmakers in March. “Retiring the old plants is a very small part of the solution,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India in Mumbai. “The clean-up would require improving efficiency of not just power plants, but also coal mines and coal transportation. India has to adopt clean coal technologies and allow only large, utility scale power plants, which make optimum use of the fuel.” Coal-fired plants aren’t the only cause of pollution in India. Old diesel vehicles that can pump out exhaust gases with 10 times the carcinogenic particles found in gasoline exhausts are also among the major causes.

NTPC’s focus is on environment, safety and technical upgrades, and the company is also exploring setting up new plants with “ultra-super critical” technology at some locations, the official familiar with the matter said. The company has invited bids for modernisation of two 210 megawatt units at Badarpur, while leaving the older three units of 95 megawatts each, the company said separately in an e-mail. It had invited bids for executing the upgrade by April 22, according to the e-mail. The smaller units are about 40 years old, while the two larger ones are about 36 years old.

The Central Electricity Authority, a unit of the power ministry which monitors operation and execution of power projects, prescribes the normal life a plant should be 25 years. The Centre for Science and Environment released a report in February, rating power plants on parameters such as energy efficiency, greenhouse gas emissions, water use and ash handling. The report, a general indictment on India’s utilities, found six of NTPC’s facilities, including Badarpur, scoring among the lowest. The CSE, which said NTPC plants were “found to be heavily polluting and facing numerous complaints,” said its findings were based on data gathered from regulatory bodies, local communities and the media, as the company refused to answer its queries.




India depends on coal to meet 60% of its electricity needs, while the nuclear option is stuck in a debate over safety. Other fuels such as gas remain expensive. Modi plans renewable energy additions that will cost about $200bn. Wind, solar and small hydro power plants will contribute to about 15% of India’s needs, twice the current amount, Goyal said in November. NTPC’s Badarpur plant spent Rs4.83 (7.6 cents) on coal to produce one kilowatt hour of power in the year ended March 31, the highest fuel cost among the 11 stations that supply electricity to India’s capital city, according to data available on the website of Tata Power Delhi Distribution, one of the electricity retailers in the city.

The cost at the plant rose 70% over the past three years, the data show, an indication coal consumption is rising as efficiency declines with age. NTPC shares declined 1.2% to Rs150.50 at the close in Mumbai yesterday. The stock has gained 32% in the past year, compared with a 22% increase in the benchmark S&P BSE Sensex.

“The way forward for NTPC is to plan bigger capacities, which will be more efficient in terms of fuel as well as cleaner,” Deven Choksey, managing director at Mumbai-based brokerage KR Choksey Shares & Securities, said by phone on Monday. “There’s good reason to do this and I don’t see funds coming in the way. The company can manage debt at reasonable cost and also has the option to raise equity from the market.”




Angola:Chevron Angola LNG export plant to restart operations by the end of this year. Chevron + NewBase

The US$10 billion LNG plant, which shipped its first cargo in June of 2013, was shut down in April last year after a major rupture on a flare line.

“Work is still underway. The overall plan is to have Angola LNG restart with LNG to the tank in the fourth quarter of this year, probably late in the fourth quarter this year,” Patricia Yarrington, VP and CFO of Chevron told the company’s first quarter earnings conference call on Friday.

According to Yarrington, Chevron expects Angola LNG to be operating at 75% of capacity by the first quarter of 2016.

“The plant will run for a period of time and then ALNG will make a decision as to whether or not they need to take the plant down to perform any sort of shutdown, strainer removal, that kind of cleanup activity,” she said.

“In any case, we would expect ALNG to reach maximum capacity in the second quarter of 2016, if they decide to do those strainer removals,” Yarrington added. Angola LNG is a joint venture between Sonangol (22.8%), Chevron (36.4%), BP (13.6%), Eni (13.6%), and Total (13.6%).

The LNG plant, located in Soyo, is a single-train facility able to produce 5.2 million tonnes per year. Angola LNG also has a dedicated fleet of seven

vessels that carry the chilled gas.

Single-train facility able to produce 5.2 million tonnes per year




Angola: Eni starts production at Kizomba project in Block 15 Source: Eni + NewBase

Eni has started production of the Kizomba Satellites Phase 2 project in Block 15, offshore Angola, ahead of schedule. The project Kizomba Satellite Block 15 is a subsea development of the Kakocha, Bavuca and Mondo South fields.

Mondo South is the first field to begin production, and the other two satellite fields are expected to start it up in the coming months. The project develops approx. 190 million barrels of oil with peak production currently estimated at 70,000 barrels of oil per day. The project is expected to increase Block 15’s total daily production to 350,000 barrels.

The project benefits from the existing capacity of Block 15’s facilities, increasing current production levels without requiring additional floating production, storage and offloading vessels (FPSOs). The Mondo South field is being developed with tiebacks to the Mondo FPSO, while the Kakocha and Bavuca fields are being developed with tiebacks to the Kizomba BFPSO.

Block 15, which has so far produced over 1.8 billion boe, in which Eni participates with a 20% interest, Exxon Mobil (operator) with a 40% stake, BP with a 26.67% stake, and Statoil with a 13.33% stake.




US:Natural gas, renewables projected to provide larger shares

of electricity generation EIA's Annual Energy Outlook 2015 (AEO2015) Reference case projects that electricity consumption will increase at an average annual rate of 0.8% from 2013 to 2040, nearly in line with expected population growth. Continuing a recent trend toward lower levels of carbon-intensive generation, natural gas and renewable generation meet almost all of the increase. Electricity generation from renewable sources provided 13% of U.S. electricity in 2013. In the AEO2015 Reference case, which reflects current laws and regulations—but not pending rules, such as the Environmental Protection Agency's Clean Power Plan—this percentage is projected to increase to 18% by 2040.

Wind and solar generation account for nearly two-thirds of the growth in renewable generation. Solar is the fastest-growing renewable generation source, but wind accounts for the largest absolute increase in generation. Wind becomes the single largest source of renewable generation by 2040, supplanting hydropower as the largest renewable generation source. New solar photovoltaic capacity drives nearly all of the growth in solar generation, with increases coming from both the electric power sector and end-use sectors such as distributed or customer-sited generation (i.e., rooftop installations). The natural gas share of total generation also grows, from 27% in 2013 to 31% in 2040 in the Reference case, while the coal share declines from 39% in 2013 to 34% in 2040, and the nuclear share drops from 19% to 16% over the projection period. Natural gas-fired generation is highly dependent on natural gas prices as a result of competition with existing coal plants and renewables. The AEO2015 includes several cases with varying fuel prices and economic growth assumptions.




In the High Oil and Gas Resource case—where greater oil and natural gas resources lead to delivered natural gas prices to the electric power sector being 44% below the Reference case in 2040—natural gas becomes the leading source of generation by 2020 and accounts for 42% of total generation by 2040.

Growth in new renewable generation is also sensitive to natural gas prices. Lower natural gas prices in the High Oil and Gas Resource case result in fewer renewable capacity additions toward the end of the projection period and lower generation compared with the Reference case. Higher macroeconomic growth results in an increase in both natural gas and renewables generation, as higher electricity demand requires more generation from marginal sources, while lower macroeconomic growth has the opposite effect.




Oil Price Drop Special Coverage

Oil prices rose today to hold near 2015 highs

Oil Prices continuing a month-long rally that was supported by a weaker dollar and a disruption to crude exports in Libya. Oil bulls have pushed prices higher this week, after a rally of between 25 percent and 30 percent in April, despite a continued build in US crude stockpiles and indications that the Opec cartel will keep production at current high levels at a meeting next month.

Brent crude for June delivery was 32 cents higher at $67.87 a barrel by 0141 GMT, below its 2015 peak of $68.40 reached on Tuesday, when the contract ended up $1.07. US crude for June delivery traded 50 cents higher at $60.90 a barrel. The contract closed up $1.47 on Tuesday, after hitting a 2015 high of $61.10. "Stronger European demand now appears to have been the key catalyst that allowed refineries to lift utilization (in 1Q) and absorb surplus crude while maintaining strong refining margins," analysts at JP Morgan said in a note. The bank raised its average 2015 Brent forecast by $3 to $62 a barrel and its average 2016 forecast by $10 to $72 a barrel, "as tighter balances are expected to reduce Opec spare capacity through 2016." The recent price rally has muted calls from Opec members to cut supply, with the cartel set to maintain production levels at a June 5 meeting, three delegates said. In a sign that Middle East producers continue their fight for market share in Asia, top exporter Saudi Arabia said on Tuesday it would keep prices for its flagship crude unchanged at a discounted level for Asian buyers in June.

US crude inventories likely continued to rise last week for the 17th consecutive week, according to a Reuters poll showing a build of 1.5 million barrels. But a report from industry group American Petroleum Institute suggested that US crude inventories fell by 1.5 million barrels last week, for the first time this year.




Oil Analysts Practice Cautious Capitulation as Crude Surprises Bloomberg + NewBase

As oil prices climbed above $68 Tuesday for the first time since December, analysts at some of the world’s biggest banks were holding onto views that this would be a bad year for crude -- just not as terrible as they originally predicted.

Rather then extending last year’s losses, Brent, the global benchmark, has rallied 49 percent from a six-year low in January as demand accelerated and the rapid growth in supplies started to slow.

The rebound is a shock. At the start of 2015, Bank of America Corp., Barclays Plc and Goldman Sachs Group Inc. all predicted that oil might collapse to about $30 a barrel. Now, though, they are raising their price estimates while remaining skeptical that crude will gain much above current levels. There are still risks, including U.S. shale oil coming back into the market with the increase in prices, they say.

“We’re past the lows for the oil market,” Sabine Schels, an analyst at Bank of America in London, said by phone. “The balances are tightening. This is most visible in the U.S., where the surplus has eased significantly. Supply is still greater than demand, but less than it used to be.”

Boosting Estimates

Bank of America raised its 2015 Brent crude forecast to $58 in a report on April 24, from $52 previously. The bank said in a report dated Jan. 15 that Brent would “spiral down” to $31, and West Texas Intermediate crude, the U.S marker, to $32, by the end of the first quarter. Brent rose as high as $115.71 last June.

Barclays raised its 2015 forecast for average Brent prices to $60 in a report on April 28, up from $51 in February and $44 in January, citing surprisingly strong Chinese demand growth of 700,000 barrels a day in the first quarter. Concern that the conflict in Yemen will curb Middle East supplies, and output disruptions from Norway to Mexico added to the revision.

“The range seems to have shifted with the price discovery process,” Miswin Mahesh, an analyst at Barclays in London, said by phone. “It seems like a comfortable level now. What’s changed is how quickly demand has adjusted higher. The first-quarter China numbers are a great example.”

U.S. drillers cut the number of oil rigs in operation since the start of the year by 55 percent since the start of the year, according to Houston-based field services company Baker Hughes Inc. Rigs targeting U.S. oil slid by 24 to 679, the lowest level since September 2010, Baker Hughes said on May 1. The nation’s output from tight-rock formations will decline in May, according to the Energy Information Administration.




More Aggressive

“U.S. producers have responded more aggressively than we had expected,” Goldman Sachs analysts including New York-based Damien Courvalin said in an April 6 report. This gives “modest upside” to their three-month price target for WTI of $40, according to the report. The bank wasn’t able to make analysts available to interview for this article.

JPMorgan Chase & Co., which predicted that Brent could fall to $38 in March, raised its forecasts for the year to $62 on April 30.

“It’s a tighter market than we were expecting and I think demand is the culprit,” David Martin, JPMorgan’s London-based head of global oil strategy, said by phone on May 1. “Our view back in January was the build in stocks was really going to weigh on the crude market and depress the front end of the crude curve. We’ve seen upside surprises in demand, which have allowed refiners to run harder and absorb that crude.”

More Demand

Refiners globally processed an extra 1 million barrels a day last quarter compared with a year earlier. The bear market in Brent crude ended without the most pessimistic estimates being realized. Futures have risen from a six-year low of $45.19 on Jan. 13 and were at $68.28 on the London-based ICE Futures Europe exchange at 1:44 p.m. Singapore time.

Citigroup’s Ed Morse predicted in a report dated Feb. 9 that prices would “bottom” by the start of the second quarter, with WTI falling toward $20. Goldman Sachs said in a report dated Jan. 11 that Brent would trade at about $42 in early April. Goldman president Gary Cohn told CNBC on Jan. 26 that prices could fall to $30.

Still, analysts maintain the view prices will struggle to advance significantly in the second half.

U.S. shale supplies will prove more resilient than anticipated, as drilling resumes with rebounding prices, and demand in emerging economies will struggle to climb further as fuel subsidies are removed, Bank of America and Barclays predict. WTI may suffer a “double-dip” to $50 in the third quarter, Bank of America says.

“Growth in emerging markets is still fairly uncertain -- higher oil prices would risk the recovery we’re seeing there,” said Barclays’s Mahesh, who forecasts Brent will average $61 and $66 in the third and fourth quarters respectively. “I wouldn’t say the worst is completely in the rear-view mirror.”




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

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

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

NewBase 06 May 2015 K. Al Awadi

newbase 597 special 06 may 2015

Economy & Finance