New base 579 special 09 april 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 09 April 2015 - Issue No. 579 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
GCC mega-projects to reach $1trn by 2030
Saudi Gazette + NewBase
Supporting technology innovation for the Gulf Cooperation Council (GCC)’s more than $1 trillion
worth of construction projects, Tekla on Tuesday launched Tekla Structural Designer software for
the Middle East at The Construction Summit – UAE.
Demonstrating the demand for advanced project modeling software, the GCC’s construction
market will hit a record of $144 billion in 2016, driven by mega-projects for World Expo 2020 in
Dubai, 2022 FIFA World Cup Qatar, Smart Cities, and infrastructure, according to the EC Harris
report “Middle East Major Construction Programmes”. Mega-projects in the GCC will reach $1
trillion by 2030, according to the report.
The UAE has $90 billion in capital development projects, according to EC Harris, while Qatar is
the fastest-growing construction and infrastructure market in the GCC, set to spend $24 billion on
infrastructure in 2015, according to BMI Research.
“The GCC being one of the world’s fastest-growing construction markets demonstrates the
potential for how technology will enable the region’s architects, engineers, and field managers to
drive innovation, collaborate, and meet strict code compliance across the design, build, and
operation of the country’s projects,” said Paul Wallett, Area Business Director, Tekla Middle East.
By fully automating concrete and steel design and analysis with high-quality documentation, Tekla
Structural Designer enables engineers to analyze and design multi-material buildings efficiently and
profitably. With Tekla Structural Designer, engineering businesses can quickly compare alternative design
schemes, manage changes efficiently, and collaborate seamlessly using modeling solutions.

Middle East projects that have used Tekla Building Information Modeling (BIM) technology to
deliver precise and complex planning and fabrication include the Abu Dhabi Airport – Midfield
Terminal Complex, the King Abdullah Financial District and King Abdulaziz Center for World
Culture in the Kingdom of Saudi Arabia, and National Museum of Qatar.
Hundreds of construction experts attended The Construction Summit, held at the Burj Al Arab in
Dubai and Grand Hyatt Doha, continuing the momentum of Tekla recently opening a dedicated
office in Qatar, and its parent company Trimble launching a new GCC office in Dubai.
“The Construction Summit was a strong success, and continues our support for the GCC’s
construction sector. Our Tekla Structural Designer can help the country’s construction-related
professionals enhance planning, costs, and productivity, and meet the needs of a more mobile
workforce,” added Wallett.
Among the industry speakers in the UAE event was Bill Thomson, Project Delivery Director –
Middle East, AECOM, who is supporting the Middle East’s organizations to develop and integrate
technology and systems such as BIM, GIS, augmented reality, data visualization, and major
project collaboration systems.
Anil Kumar Gaddameedi, General Manager, HGG Middle East FZE, spoke on integrating workflow
from design data to fabrication, and Vesa Miettinen, Technical Manager, Peikko, on making
concrete manufacturing faster, easier, more reliable.
Additional speakers included Peter Hedlund, Regional Director – Middle East and India, Trimble;
Thiyagarajan Nagarajan, Account Manager, Tekla Middle East; Elina Punkkinen, Technical
Consultant, Tekla Middle East; Hany Salah, Technical Business Development Manager, Tekla
Middle East; Guarav Shah, Technical Manager, Tekla Middle East; Daniel Smith, EMEA Business
Development Manager, Manhattan Software; Aixa Vazquez, Account Manager, Tekla Middle East;
and Paul Wallett, Area Director, Tekla Middle East.

Iran to mend fences with China to boost Oil & Gas output
Reuters + NewBase
Iran hopes to resolve differences with Chinese energy companies on oil and gas projects in the
Islamic republic, as Tehran wants to be ready to raise output quickly after a potential lifting of
sanctions this year, Iranian oil officials said yesterday.
The officials are in China this week to discuss Chinese investments in oil and gas developments in
Iran, as well as oil sales, just days after world powers and the Opec member reached a framework
nuclear deal. The talks come ahead of a visit to Beijing by Iranian Oil Minister Bijan Zanganeh, his
first since assuming his post two years ago.
Iran, the world’s fifth-largest oil producer, hopes to nearly double its exports from just over 1mn
barrels per day (bpd) in two months once sanctions are lifted, although analysts say it will take
longer.
Some of the production is expected to come from projects state companies China National
Petroleum Company (CNPC) and Sinopec Group have contracted to develop. But the Chinese
companies have stalled or scaled back on developments in Iran since late 2010 as Western
sanctions tightened.
“The main issue is the money we owe them. They have worked there but the return has not
started yet,” said Amir-Hossein Zamaninia, Iran’s deputy oil minister for commerce and
international affairs.
Iran also wants Chinese companies to use the latest technology and equipment in any resumption
of work to get fields pumping, Zamaninia said. A CNPC spokesman was not available for
comment, and Sinopec did not immediately respond to an e-mail about the talks.
Iran’s oil exports have been cut by more than half to around 1.1mn bpd from a pre-2012 level of

2.5mn bpd, with the loss of oil income making it difficult to invest in new developments and pay for
the equipment and services needed to keep its production operating smoothly.
Among oilfields Chinese companies have worked on, the Yadavaran project has progressed
relatively well, with 95% of the work completed and the field, operated by Sinopec, ready from
about September, Zamaninia said.
He said the field, in the southwestern province of Khuzestan, will have a 75,000 bpd capacity in
phase one. Sinopec agreed in late 2007 to a $2bn deal to develop the field. CNPC, China’s top
energy group and PetroChina’s parent, agreed to take on other projects, including a $2bn contract
to turn North Azadegan into a 120,000 bpd field.
Zamaninia said
Iran would
focus this trip
on resolving
issues with
current
contracts,
adding that the
two sides have
yet to discuss
any new
projects.
Iranian officials
said CNPC,
which pulled
out of Iran’s
giant South
Pars natural
gas field in
2012, this week
expressed
interest in returning to the offshore project. CNPC withdrew from South Pars because of
sanctions as they made it difficult to get the equipment needed from US and European
companies, said Zamaninia.
Mohsen Ghamsari, director of international affairs at the National Iranian Oil Company, said Iran
would seek gas liquefaction technology from European firms, while CNPC’s contribution would
focus on developing and producing gas.
“For LNG we have some contracts with some Europeans that, hopefully after the finalisation of the
(nuclear) negotiations, then we can receive technology from that side,” Ghamsari said. The South
Pars project is part of a huge formation shared with Qatar that makes up the world’s largest pure
natural gas reserve. The Iranian part, divided into 24 phases, could cost more than $40bn to
develop.
Many analysts say developing LNG assets from scratch or early stages, as Iran’s would need to
be, is not commercially viable until Asian spot prices rise substantially, which is not expected in
the next two years.
Iran LNG has not moved an inch , due to sanctions

Saudi management of energy consumption a strategic need
Saudi Gazette + NewBase
Prince Abdulaziz Bin Salman, Deputy Minister of Petroleum and Mineral Resources, Chairman of
the Executive Committee of the Saudi Center for Energy Efficiency, and Honorary President of the
Saudi Economic Association,
emphasized the importance of
managing energy consumption in the
Kingdom to curb the growth of
consumption at the annual meeting
(Economies of Energy) of the Saudi
Economic Association in Riyadh.
Launching the first session of the
eighteenth annual meeting of the
association on Wednesday, he warned
against further energy consumption
growth if the wastage in energy
consumption is not seriously curtailed.
During the panel discussion entitled “Energy Efficiency”, he detailed the Kingdom's energy
consumption growth. Prince Abdulaziz noted that management of energy consumption is a
strategic necessity for the Kingdom.
For this purpose, he highlighted the establishment of the Saudi Center for Energy Efficiency and
its work. He added that he expects savings of 1.5 million barrels of oil equivalent per day by 2030
on the completion of the implementation of all activities of the Saudi program for energy efficiency.
He said the Kingdom’s population has grown and there is economic prosperity and industrial
development. This in turn reflected on the life of the citizens
on the one hand and the industrial and economic
development of the Kingdom on the other. This has
contributed to the growth of energy consumption and
wastage of non-renewable natural resource.
The daily energy consumption in the Kingdom has risen from
less than one million barrels of oil equivalent per day in 1980
to 4.2 million barrels of oil equivalent at present. This
consumption is expected to rise to over 8 million barrels oil
equivalent per day in 2030 if “we do not work seriously to
curtail the big wastage in energy consumption.”
He said the rise in energy consumption in the Kingdom was accompanied by growth in the density
of energy consumption by 50 percent since 1985. The rate of energy consumption in the Kingdom
is higher than the growth rate of the GDP. This is opposite to what is occurring in the advanced
countries. This necessitates for the Kingdom to manage consumption as it is a strategic necessity.
Prince Abdulaziz said energy consumption management in the Kingdom is facing big challenges
in the absence of possibilities for curbing the growing consumption of energy. The most prominent
challenges include the low prices of energy in the Kingdom, lack of awareness of the consumer on
energy efficiency, low standards for energy efficiency or their absence, weakness in compulsory

implementation and weakness of integration between government authorities. Meanwhile, the
advanced countries have available means at their disposal to curb the growing energy
consumption. Most important among these factors is the rise in prices of energy, awareness of the
consumer, the existence of stiff binding penalties for implementation of standards on products and
the existence of one authority concerned with all energy affairs.
He said the Kingdom started work in curbing the big wastage when the council of ministers
decided in 2010 to establish “the Saudi Center for Energy Efficiency”. The aim was to rationalize
and upgrade energy consumption efficiency in the Kingdom and unify the efforts of the authorities
concerned.

Saudis Say Efficiency Drive To Save 20% Of Energy Use
Rules introduced in the last few years require homes and
businesses to install insulation and tighten standards for
air conditioners.
Saudi Arabia expects to save a fifth of its energy use by 2030 through an efficiency drive
designed to prevent domestic consumption from eating up oil for export, the kingdom’s new
deputy oil minister said on Wednesday.
“Energy consumption is 4.2 million
boepd (barrels of oil equivalent per
day) currently and is expected to
rise to more than 8 million boepd by
2030 if we don’t work hard to limit
the big waste,” Prince Abdulaziz bin
Salman told a conference.
The energy efficiency drive will
save about 20 per cent of that
projected consumption, or roughly
1.5 million boepd, said Prince
Abdulaziz, who took the post after
his father became king in January.
The world’s largest oil exporter heavily subsidises domestic fuel and utility costs, which
encourages its growing population to consume more. This could ultimately interfere with oil
supplies available for export.
Cutting subsidies and raising domestic fuel prices could deter excessive consumption, but
Prince Abdulaziz gave no indication that this politically sensitive reform was likely. “The real
challenge is how will we achieve energy efficiency without changing the prices,” Rules
introduced in the last few years require homes and businesses to install insulation and tighten
standards for air conditioners. A fuel efficiency standard for cars will be binding by January 2016.
Standard Chartered wrote in a research note on March 30 that it expected long-term
investment in Saudi Arabia’s power system and alternative sources of energy to reduce the
need for burning crude oil. In the short term, however, there may be little impact, and high
temperatures this summer, which will trigger massive demand for air conditioning, are
expected as usual to boost Saudi Arabia’s domestic oil use.
“In 2015 we expect the seasonal upswing in Saudi Arabia’s direct burn to perform the role of a
market stabiliser, causing Saudi crude oil exports to fall back seasonally from their current
high level,” Standard Chartered wrote.
What works in Saudi Arabia in energy saving and
environmental protection will work in the whole MENA area.

Indonesia: Cooper Energy to case Bunian-3 development well in
the Sukananti KSO, South Sumatra, for future production
Source: Cooper Energy
Cooper Energy has advised that the second sidetrack of theBunian-3 development well has
reached a total depth of 1,598 metres and preparations to run production casing are underway.
Wellbore conditions have precluded running open whole wire line logs and the well will be
evaluated through casing.
As reported in the
previous Update
Announcement of 24 March,
potential hydrocarbon bearing
zones were identified in
the Bunian-3 side-track 1 well.
In that near vertical borehole, the
primary target TRM-3 sand was
intersected approx. 16 metres
higher than in the
adjacent Bunian-1 oil
producing well. The deeper
secondary target in the K1 sand
was intersected approx. 11
metres higher than in Bunian-
1. Side-track 2 was deviated
away from the vertical wellbore
and confirmed the presence of
the target reservoirs up dip of
side-track 1. This outcome may
yield additional production and
reserves increments. There is
also potential pay in the TRM-1/2
sands.
Bunian-1 was drilled in 1998
and initially tested at 1,585
barrels of oil per day. Bunian-1
has produced 993,000 barrels of
oil and is currently producing at
191 barrels of oil per day. It is
intended that Bunian-3 will be
completed after casing and
logging and that production
testing will be conducted once
the drilling rig has been
released. The production
performance of the additional
sands will be evaluated as part
of the testing programme.
On completion of Bunian-3, the rig will
move to drill the Tangai-5
development well.

Kenya: Pancontinental withdraws from Block L10B
Source: Pancontinental
Pancontinental has advised that it has served a notice of withdrawal on BG Kenya L10B
Limited, the only remaining participant and operator of Kenya Licence L10B, from the Joint
Operating Agreement with BG and from the PSC governing L10B.
Pancontinental holds a 25% interest in L10B, while BG holds 75%. Licence area L10B lies
immediately to the south of area L10A, in which a joint venture also operated by BG
Group (50%) drilled the Sunbird-1 oil discovery well in 2014. Pancontinental holds 18.75% in
this licence and PTTEP of Thailand holds 31.25%.
Pancontinental believes that it has sufficient exposure to the prospectively of the area through its
18.75% interest in the adjoining Block L10A. The Blocks have similar geological features that in
some cases straddle the permit boundary, while exploration in L10A is more advanced. The
Company considers that the withdrawal is in the interest of prudent financial management, whilst
maintaining a manageable and prospective exploration portfolio.

Thailand: Mubadala completes production drilling at Manora field
Source: Tap Oil
JV partner Tap Oil has provided an update on Manora production and development drilling at
the Mubadala-operated Manora Oil Development in the Northern Gulf of Thailand (TAP 30%
interest).
All eleven Manora development wells have been successfully completed and the drilling rig has
now moved off location. Manora is now producing from six wells: MNA-01, MNA-02, MNA-03,
MNA-05, MNA-07 and MNA-08 with MNA-11 expected to commence production this week.
Manora has been producing above 15,000 bopd (gross), and on occasion above 16,000 bopd
(gross) since the six wells have been in production.
MNA-01 and MNA-02 started
production on 11 November
2014, with MNA-03 following a
day later. MNA-05 started
production on 23 November
2014. All of these wells have
been completed with ESP
pumps, exhibited high
productivity as expected, and
are producing free of water and
sand. Production from the
above wells occurs in the
Central Fault Block 600 sand
reservoirs.
MNA-04, MNA-09ST1 and
MNA-10 are currently injecting
water to support production from 600 reservoir sands in the Central Fault Block. Pressure
response due to water injection has already been observed in the Central Fault Block. MNA-07,
the first producer well from the East Fault Block, was put on production in early January with a
tested rate of 1,332 barrels oil per day (gross) with 40% watercut which has increased to 64%
watercut at present. MNA-08 producer well from the East Fault Block started production on 21
February 2015. MNA-08 is currently producing oil at the rate of 2,377 barrels oil per day (gross)
with 14% watercut.
The last two wells, MNA-11 producer from the Central Fault Block and MNA-13 water injector in
the East Fault Block have been successfully drilled to final Total Depth. MNA-11 intersected
highest net oil pay count (98m) in 600 reservoir sands of any of the wells. This confirms the
Operator’s geological model of thicker sands in the centre of the Central Fault Block. MNA-11 is
expected to commence production this week and MNA-13 has been completed and is currently
injecting water to support production from the East Fault Block.
Following a review of the results from the development drilling programme, the Manora joint
venture agreed that two wells (one producer and one injector) are no longer required and also to
defer two producer wells. The development plan had previously forecast up to 15 development
wells (10 producers and 5 injectors). The Operator (Mubadala Petroleum) has confirmed that
peak production of 15,000 barrels per day (gross) has now been achieved and can be
maintained with only 7 producer wells (instead of the original 10 producer wells).

Shell Buy BG Group for $70 Billion in Cash and Shares
Bloomberg + NewBase
Royal Dutch Shell Plc agreed to buy BG Group Plc for about 47 billion pounds ($70 billion) in cash
and shares, the oil and gas industry’s biggest deal in at least a decade. The acquisition is the
most significant response yet to the slump in oil prices and could set in motion a series of mergers
as the largest energy companies’ look to cut costs and restore profits.
Shell will pay 383 pence in cash and 0.4454 of Shell’s B shares for each BG share, BG said in a
statement today. That’s equal to about 1,367 pence a share and gives BG a market value of about
47 billion pounds. It’s a premium of about 50 percent on BG’s closing share price yesterday.
The merged company, led by Shell Chief Executive Officer Ben van Beurden, will boast a market
value twice the size of BP Plc and surpass Chevron Corp. Shell, struggling to rebound from its
worst production performance in 17 years, will swell its oil and natural gas reserves by 28 percent
with the combination and inherit a management team that carved out a unique niche in liquefied
natural gas, or LNG.
Shell, which helped pioneer the process of liquefying gas for shipment aboard tankers decades
ago, and rivals such as Chevron are betting LNG will play an increasing role in emerging
economies seeking alternatives to dirtier energy sources such as coal.
The new company will be the largest producer of LNG among international oil companies and gas
is a “very important” component of the deal, Van Beurden said on a conference call.
Merger Activity
Shell’s pursuit of BG disrupts the prevailing view among analysts and bankers who expected
merger activity in the industry to remain quiescent until later this year or even 2016. The talks
could presage a repetition of the wave of deals a decade-and-a-half ago that rocked the oil patch
and created today’s so-called super majors.
BP kicked things off in 1998 when it announced plans to take over Amoco at a time when crude
hovered below $12 a barrel. Exxon followed suit with the mega-buyout of Mobil Corp. the following
year; other combinations of the era included Chevron’s merger with Texaco Inc. and Total SA’s
purchases of PetroFina and Elf Aquitaine.
“Any and all combinations are now on the table and this will absolutely be a trigger event, both for
strategic companies and private equity,” Dennis Cassidy, co-leader of the oil and natural gas
practice for consulting firm AlixPartners, said in an interview before the deal was announced.

Shell and BG both have assets in Egypt where they, in common with other international
companies operating in the country, have had major difficulties during the political turmoil of the
past few years, with hundreds of millions of dollars of overdue payments still owed by the
government. Shell operates a number of concessions, including the Assil and Karam fields in the
Alam El Shawish West concession in the Western Desert, which began producing last November.
BG has holdings of 35.5 per cent and 38 per cent, respectively, in LNG plants at El Beheira
Natural Gas Liquefaction Company and Idku Natural Gas Liquefaction Company. The company
declared force majeure on the LNG business last year after the government forced diversion of
gas to the domestic market rather than for export.
Asked about the future of the combined group in Egypt, Mr. van Beurden said: “In valuation of
things we haven’t given it a lot of value in our assessment of the combined company going
forward.”
He also said he did not expect Iran to open up to investment any time soon, despite the
framework deal reached last week that might lead to easing sanctions, assuming a final deal on
Iran’s nuclear programme can be reached this summer.
Shell’s takeover deal was engineered by Mr. van Beurden and the BG chairman Andrew Gould
during discussions started on March 15, only three weeks after BG’s chief executive, the former
Statoil chief Helge Lund, joined the company.
Balance Sheet
The Shell-BG merger, which envisions combining Europe’s largest oil explorer by market value
with the No. 3 U.K.-based energy producer, will be the industry’s biggest in at least a decade,
according to data compiled by Bloomberg.
BG, for its part, has been a victim of both its own success and $50-a-barrel oil. The Reading,
England-based company’s balance sheet has been stretched as the relatively cheap task of
finding new fields evolved into the costly business of developing those fields into active sources of
crude and gas.
Shell, which invented the oil tanker in the 1890s to haul Caspian Sea crude to European markets,
saw its worldwide production drop to the equivalent of 3.08 million barrels a day in 2014, the
lowest in at least 17 years. Reserves, a metric that investors watch to assess future growth
prospects, have declined in two of the past three years.

In contrast, BG boosted reserves in six of the past seven years. Its reserves were 78 percent gas
as of Dec. 31, compared with 47 percent for Shell.
Former Monopoly
BG was forged from the exploration arm of the U.K.’s former state-owned gas monopoly, British
Gas that was privatized by Margaret Thatcher in the 1980s.
The company was led for more than a decade by Frank Chapman, who built a global LNG
business and drilled wells from Kazakhstan to Brazil. The company’s market value rose more than
fivefold during his tenure, outperforming larger rivals including Shell and BP.
Chapman retired at the end of 2012 and his successor Chris Finlayson lasted little more than a
year, resigning in early 2014 after profit warnings and disagreements with the board over strategy.
He was replaced by Helge Lund, poached from Norway’s state oil producer Statoil ASA, who BG
made the most highly paid oil executive in Europe to win his services. He now seems set to
negotiate the sale just two months after taking the helm.

Oil Price Drop Special Coverage
Oil prices edge back from 6 pct fall, but outlook weak
Reuters + NewBase
Oil prices rose in early trading on Thursday, clawing back a part of the 6 percent slump in the
previous session after a shock jump in U.S. crude inventories and record Saudi output, although
analysts said sentiment remained bearish.
A 10.95 million barrel surge in U.S. crude stockpiles to 482.4 million, the biggest gain in 14 years,
and Saudi oil production of 10.3 million barrels a day in March had battered crude futures on
Wednesday.
The falls were pared on Thursday in an extension of the recent high market volatility that has seen
frequent price reversals. Brent May crude was up 61 cents from its last settlement, trading at
$56.16 a barrel by 0035 GMT, while U.S. May crude rose 59 cents to $51.01 a barrel.
Close-to-close price volatility for Brent prices is at levels last seen during the height of the global
financial crisis of 2008/2009, Reuters data shows. Overall sentiment remains bearish due to high
production and modest demand.
"We are seeing little sign of economic acceleration... and anticipate a meaningful decline in oil
production is still a couple of months away," U.S. Bank Wealth Management said in a research
note. Because of slowing demand growth and soaring production, oil prices have dropped around
50 percent since June last year, when prices began to fall.

US shale companies protected by the Oil Industry's $26 Billion Life Raft
Bloomberg + NewBase
For U.S. shale drillers, the crash in oil prices came with a $26 billion safety net. That’s how much
they stand to get paid on insurance they bought to protect themselves against a bear market -- as
long as prices stay low.
The flipside is that those who sold the price hedges now have to make good. At the top of the list
are the same Wall Street banks that financed the biggest energy boom in U.S. history, including
JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co.
While it’s standard practice for them to sell some of that risk to third parties, it’s nearly impossible
to identify who exactly is on the hook because there are no rules requiring disclosure of all
transactions. The buyers come from groups like hedge funds, airlines, refiners and utilities.
“The folks who were willing to sell it were left holding the bag when prices moved,” said John
Kilduff, partner at Again Capital LLC, an energy hedge fund in New York.
The swift decline in U.S. oil prices -- $107.26 on June 20, $46.39 seven months later -- caught
market participants by surprise. Harold Hamm, the billionaire founder of Continental Resources
Inc., cashed out his company’s protection in October, betting on a rebound. Instead, crude kept
falling.
Counterparty Names
Other companies purchased insurance. The fair value of hedges held by 57 U.S. companies in the
Bloomberg Intelligence North America Independent Explorers and Producers index rose to $26
billion as of Dec. 31, a fivefold increase from the end of September, according to data compiled by
Bloomberg.
Though it’s difficult to determine who will ultimately lose money on the trades and how much, a
handful of drillers do reveal the names of their counterparties, offering a glimpse of how the risk of
falling oil prices moved through the financial system. More than a dozen energy companies say
they buy hedges from their lenders, including JPMorgan, Wells Fargo, Citigroup and Bank of
America.
Danielle Romero-Apsilos, a Citigroup spokeswoman, said the bank actively hedges and manages
its risk. Representatives of JPMorgan, Wells Fargo and Bank of America declined to comment.
At the end of 2014, JPMorgan had about $671.5 million worth of derivatives exposure to five
energy companies, including Pioneer Natural Resources Co., Concho Resources Inc., PDC
Energy Inc. and Antero Resources Corp., according to company records. That’s the amount
JPMorgan would have owed if the contracts were settled Dec. 31, not including any offsetting
trades the bank made.
It’s a similar story for Wells Fargo, which was on the hook for $460.9 million worth of oil and
natural gas derivatives for companies including Carrizo Oil & Gas Inc., Pioneer, Antero, Concho
and PDC, according to regulatory filings.

Energy Trading
These aren’t, of course, the kind of figures that would trigger any sort of systemic-risk concerns.
Commodities are generally smaller parts of banks’ businesses compared with lending and
underwriting, and banks hedge their oil-price risk.
New York-based JPMorgan had $2.57 trillion in assets at the end of last year compared with net
liabilities for commodity derivatives of $2.3 billion, not including cash from settled trades and
physical commodity assets, according to regulatory filings. San Francisco-based Wells Fargo had
$1.69 trillion in total assets compared with net commodity liabilities of $241 million.
Still, $26 billion is $26 billion.
U.S. oil companies already netted at least $2.4 billion in the fourth quarter of 2014 on their
hedges, according to data compiled on 57 U.S. companies in the Bloomberg Intelligence index.
Oil companies would rather be losing money on the trades and making money selling crude at
higher prices, Kilduff said.
“It’s like homeowners’ insurance,” he said. “You don’t buy it hoping the house burns down.”
Offset Risk
The $26 billion of protection won’t last forever. Most hedging contracts expire this year, according
to company reports. Buying new insurance today means locking in prices below $60 a barrel. The
alternative is following Hamm’s example and having no cushion if crude keeps falling.
Financial institutions act as a go-between, selling oil derivatives to one company and buying from
another while pocketing fees and profiting on the spread, said Charles Peabody, an analyst at
Portales Partners LLC in New York. The question is whether the banks were able to adequately
offset their risk when the market took a nosedive, he said.
“The banks always tell us that they try to lay off the risk,” Peabody said. “I know from history and
practice that it’s great in concept, but it’s hard to do in reality.”

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
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
khdmohd@hawkenergy.net
khdmohd@hotmail.com
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 09 April 2015 K. Al Awadi

New base 579 special 09 april 2015

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New base 579 special 09 april 2015