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NewBase 05 October 2015 - Issue No. 700 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: POWER-GEN Middle East expo kicks off in Abu Dhabi
News Agencies + NewBase
The UAE’s Ministry of Energy (MOENR) has officially launched the 8th Exhibition of Electrical
Industries in the Arab World (EEIAW). The event, which is taking place in the UAE for the first
time, is co-located with the 13th annual POWER-GEN Middle East Conference and Exhibition.
Prior to the official ribbon cutting, Suhail Mohamed Al Mazrouei, UAE Minister of Energy; Dr.
Matar Hamed Al Neyadi, Undersecretary of UAE’s Ministry of Energy; Eng. Jamila Youssef
Matar, Director of Energy Management at the League of Arab States Egypt; and Glenn Ensor,
Managing Director of PennWell International Power Group, UK, gave their speeches at the joint
opening ceremony.
Al Mazrouei said: “The Ministry of Energy is currently collaborating with service providers, to
develop an integrated strategy which aims to diversify power sources – through the use of eco-
friendly power sources that do not produce any emissions of carbon dioxide ultimately achieving
sustainability and reducing costs. In addition, we plan to reduce our reliance on natural gas
generate electricity by no more than 70% by 2021.”
“PGME 2015 and EEIWA has set the ideal platform for industry professionals to discuss strategic
issues and find appropriate solutions as well as showcase latest energy solutions and innovations
for the Middle East market,” he added.
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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The 13th Annual POWER-GEN Middle East Conference and Exhibition, which runs on Oct. 4-6 at
Abu Dhabi National Exhibition Centre (ADNEC), is renowned for delivering a world-class quality
program with a focus on practical and technical solutions, presided by over 60 leading industry
experts on POWER-GEN Middle East’s Advisory Board.
Eng. Jamila Youssef Matar, Director of Energy Management at the League of Arab States Egypt
said: “Many Arab countries are currently seeking effective ways to develop electrical industries
and equipment. The Arab Ministerial Council has acknowledged the potential for investment in this
market hence putting it in the lead of its priorities. Hosting such events are crucial to the industry
as they provide opportunities to learn more about the latest industry developments in power
generation and all related sectors.”
Top regional power producing companies Saudi Electricity Company (SEC) and Bahrain
Electricity & Water Authority (BEWA) have confirmed participation as Supporting Utilities. Masdar,
Abu Dhabi’s renewable energy company and leader in developing some of the most sophisticated
renewable energy projects in the world, has announced its participation as the official
“Sustainability Partner”. TRANSCO, a subsidiary of Abu Dhabi Water & Electricity Authority
(ADWEA) responsible for developing, operating and maintaining the high voltage power
transmission and bulk water transmission networks within the Emirate of Abu Dhabi, is a ‘Silver
Sponsor’.
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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M.E: Lower Oil Prices Weigh on Power Sector Projects
Gulf News - Sarah Diaa, ( images by NewBase
)
Abu Dhabi: While the Middle East still has one of the lowest break-even prices for crude oil, falling
oil prices will put pressure on fiscal budgets and could result in a knock-on effect as governments
reduce spending on certain projects.
According to Shaheen Chohan, vice-president of global analytics at Industrial Info Resources, a
US-based provider of market intelligence, oil prices could trade around the $60 (Dh220.38) a
barrel mark over the next 12-18 months.
Such a drop in prices presents challenges for power companies to manage planned projects,
finance growth and bring a new generation of projects in time and on budget. Speaking on
Sunday at the Power-Gen Middle East conference, Chohan said that the Middle East will witness
growing fallout in power projects, estimated to reach $20 billion in 2016.
The figure is an increase from the $11.3 billion fallout seen in 2014, and the $15.6 billion expected
to be seen in 2015. However, Chohan said that the figures were not alarming, as they are
standard fallouts and can be seen in other countries as well.
As for spending in projects in the power sector, the Middle East and North Africa region is
expected to see around $311 billion in capital expenditure in the power sector up to 2020. The
UAE alone will see $14 billion worth of projects kicking off in 2016 and 2017, and a total of $31
billion worth of projects commencing between 2012 and 2022.
The Middle East will also see a change in its energy mix as more projects are launched to boost
renewable energy, with solar energy accounting for 10 per cent of the energy mix — up from the
current two per cent. Meanwhile, natural gas will account for 50 per cent of projects in the region
— down from the current 73 per cent, Chohan said.
The Middle East and North Africa region will continue to see an increase in electricity demand
over the next 10 years, with an average rate of 6-7 per cent as Oman is set to see one of the
highest growth rates (9 per cent) and the UAE set to witness one of the lowest (5 per cent).
Also speaking at the event was Simon Harvey, partner at Pinsent Masons, a UK-based law firm,
who said that while oil prices will mainly affect fiscal budgets, they could have a positive impact as
GCC countries like Qatar and Oman start looking at frameworks around public-private partnership
laws.
Currently in its 13th edition, PowerGen Middle East is currently being held at Abu Dhabi National
Exhibition Centre (Adnec), and will run until October 6, discussing various issues in the power
generation industry.
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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UAE energy minister says urgent need to cut subsidies in
the region as oil prices decline
The National Anthony McAuley
There is an urgent need to cut regional energy subsidies as government budgets are squeezed by
slumping oil prices, the UAE Minister for Energy said yesterday
Opening an annual industry conference at Abu Dhabi National Exhibition Centre, Suhail Al
Mazrouei said the issue of subsidies for electricity has become acute because demand continues
to grow by about 9 per cent a year in the GCC countries, even while governments’ spending is
under severe pressure.
“These subsidies urge most of the people in the region not to rationalise [their energy
consumption] while using energy, and as you may know these figures are a great challenge for
the budgets of the Arab world,” the minister said in his speech.
Mr Al Mazrouei reiterated that the government
expects to spend US$35 billion on non-
hydrocarbon electricity generation projects by
2020, most of which – $20bn – is accounted
for by the nuclear building project at Barakah,
where four reactors are expected to provide
24 to 25 per cent of the nation’s electricity
demand, or 5.4 gigawatts, by 2020 if they are
delivered on schedule.
The minister also reiterated the UAE’s target
to reduce reliance on natural gas for power
from current levels above 90 per cent to 70
per cent by 2020.
There are plans to have solar energy provide a significant portion of non-hydrocarbon electricity,
although the minister said that while “we are trying to increase other eco energies [we expect] an
increase in natural gas-fired generation”.
He did not say if there is a roadmap yet to reach a specific goal for solar-powered generation, or
how the $15bn non-nuclear budget is being allocated.
Meanwhile, several of those attending the Abu Dhabi conference said there is a clear sign that
government budget cuts are feeding through to electricity projects in the region.
“The Saudis have recently cut about half of their projects, including two we were involved with,”
said Robert Giglio, a strategy and business development executive for Amec Foster Wheeler’s
global power unit.
Saudi Arabia has been the biggest spender in the Arabian Gulf on power generation projects, but
it has curbed its plans to move from oil-fired power plants to gas-fired and other sources. With oil
much cheaper, it is more economic to burn that for electricity than to sell it on international
markets and invest in gas or other projects.
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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Saudi Arabia and other countries in the region have revived plans to reduce subsidies, following
the UAE lead, where utility bills for expatriates (the majority population) were allowed to rise to
market rates at the beginning of the year, followed by a similar move for transport fuels in the
summer.
But it remains a politically fraught issue. As Waleed Alsuraih, a World Bank energy specialist,
pointed out, some countries in the region had to roll back subsidy cuts “within hours” in the past as
their efforts faced a political backlash.
Osama Khawandanah, Saudi Electricity Company’s head of trading, said his government was
initially tackling the demand side by implementing rules for the efficiency of air-conditioning units.
“You know, 70 per cent of peak electricity demand in the summer in Saudi Arabia is used by air
conditioning,” he said, so a relatively simple move can yield big results.
“Addressing subsidies is becoming more and more important, especially with oil prices down,”
agreed Adnan Fakhro, deputy chief executive of the Bahrain Electricity and Water Authority.
He said three-fifths of Bahrain’s annual electricity consumption is subsidised by the government,
but it has now required Bewa to reduce the proportion sharply over the next few years. This year it
has budgeted 325 million Bahraini dinars (Dh3.16 billion) for electricity and water subsidies, falling
to 31m dinar next year.
Bahrain will also follow Saudi Arabia and introduce air-conditioning efficiency standards next
summer. Mr Fakhro also said that his country is looking at a phased approach to cutting subsidies,
which would result in them being eliminated in four years.
This year was the first time the two big regional electricity conference were merged, reflecting the
pressure on budgets.
PennWell, an American media and event company which runs the PowerGen conference,
approached the League of Arab States, which runs the Exhibition of Electrical Industries in the
Arab World, to combine the conferences, said Sue McDermott, senior international marketing
manager for PennWell.
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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Iraq: Gulf Keystone announces doubling of Shaikan 2P reserves
Source: Gulf Keystone
Significant de-risking: Shaikan 2P Reserves more than double to 639 million barrels
Gulf Keystone has announced the release of an updated independent third-party audit of the
Company's Reserves, Contingent Resources and Prospective Resources for its oil & gas interests
in the Kurdistan Region of Iraq, including the Shaikan and Sheikh Adi fields operated by Gulf
Keystone.
The updated Competent Person's Report ('CPR') was again prepared by ERC Equipoise
(ERCE) and follows the first report published in March 2014. The updated CPR is available on the
Company's website at http://www.gulfkeystone.com/investor-centre/presentations-and-technical-
reports.
The focus on the Shaikan field has evolved from oil-in-place to recoverable reserves and the
updated CPR highlights the enhanced understanding of the field. With over 15 million barrels now
produced from the Jurassic, the substantial production and reservoir data acquired over the last
18 months have given a much improved understanding of the field's recovery mechanism.
The Company now has greater certainty in its ability to develop the increased 2P Reserves - fewer
wells and reduced capex per barrel will feature in the updated Shaikan Field Development Plan (FDP).
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
publication. However, no warranty is given to the accuracy of its content. Page 7
Shaikan oil Field:-
• 1P Reserves have increased by 55% compared to the March 2014 1P estimate from 198 to
306 million barrels gross, which is greater than the original 2P estimate
• 2P Reserves increased by 114% from 299 to 639 million barrels gross, significantly de-
risking the field's commerciality
• The field's recovery mechanism, now recognised as being by solution gas rather than a
water drive, results in greater predictability of field performance, increased reserves per
well and lower capex per barrel
Sheikh Adi Oil Field:-
• Work on an FDP for the appraisal area is underway
• FDP approval is expected to lead to a future re-classification of 2C Resources (currently at
112 million barrels gross) to 2P Reserves
• A new prospect in the north-west of the block identified with 169 million barrels gross of
Prospective Resources
CPR Methodology
ERCE has audited the reserves assessment in compliance with PRMS/SPE reporting guidelines.
The table below represents the updated CPR's conclusions on Shaikan Reserves, Contingent
Resources and Technically Recoverable Volumes in comparison with the March 2014 CPR:
Commenting on the publication of the updated CPR, Jón Ferrier, CEO, said:
'Today's announcement is a further independent endorsement of the calibre of Shaikan as a
world-class field. With cumulative production to date of over 15 million barrels, the Company
benefits from a vastly increased dataset and a far greater understanding of the reservoir. Our
technical confidence has markedly improved. In what was already a low production cost operation
in the Kurdistan Region, the Company is working on an updated FDP to develop the increased 2P
Reserves with fewer wells, lower capex per barrel and greater reserves per well.'
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
publication. However, no warranty is given to the accuracy of its content. Page 8
Malaysia: Lundin Petroleum resumes exploration drilling in
Malaysia with the Mengkuang-1 well.. Source: Lundin Petroleum / energy-pedia
Lundin Petroleum has announced that its wholly owned subsidiary Lundin Malaysia has resumed
exploration drilling in Malaysia with the spud of the Mengkuang-1 exploration well in license PM307,
offshore Malaysia. The well will target hydrocarbons in Miocene aged sands 75 km to the northwest of the
Bertam field operated by Lundin Malaysia.
Mengkuang-1 will be drilled with the West Prospero jack-up rig to a total depth of approx. 1,300 metres
below mean sea level. The drilling of the well is expected to take approx. 30 days.
According to information on the Lundin Petroleum web site, the Mengkuang Prospect has
estimated net (75%) unrisked prospective resources of 16 MMboe and an estimated chance of
geological success of 35%.
Lundin Malaysia holds 75 percent working interest in PM307. Partner is PETRONAS Carigali
with 25 percent working interest. Lundin Malaysia operates six blocks in Malaysia, namely PM307,
PM319, PM308A, PM308B, PM328 and SB307/308.
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
publication. However, no warranty is given to the accuracy of its content. Page 9
Indonesia: Cooper Energy completes testing at the Bunian-4
appraisal well in South Sumatra.. Source: Cooper Energy
Cooper Energy reports that testing operations have been completed at the Bunian-4 appraisal /
development well in the KSO Tangai-Sukananti Block, South Sumatra Indonesia.
Testing consisted of swabbing operations which demonstrated that the TRM3 (the field’s main
producing zone) is oil bearing and also recovered oil from the GRM Sandstone, which has not
previously produced oil in the Bunian Field.
The significance of the oil recovery from the GRM will be established by longer term production
performance. Artificial lift will now be installed and the well will be connected for oil production
from the TRM3 and GRM sands. Cooper Energy anticipates that initial production from Bunian-4
will be in the range 100-200 barrels of oil per day.
Cooper Energy Managing Director David Maxwell said 'the test results from Bunian-4 are
consistent with expectations for the TRM3 and demonstrate upside potential with the possibility of
a new oil pool discovery in the GRM Sandstone'.
Joint Venture participants in the KSO Tangai-Sukananti Block are Cooper Energy Sukananti
(Operator 55%) and Mega Adhyaksa Pratama Sukananti (45%).
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 05 October - 2015 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil up as Russia ready to talk with producers, U.S. rig count drops
REUTERS + NEWBASE
Crude oil futures edged up on Monday after Russia said it was ready to meet other producers to
discuss the situation in the global oil market, where prices have more than halved from last year's
highs due to a persistent supply glut.
A report showing a fifth weekly fall in the U.S. oil rig count also underpinned crude prices,
although trading was thin with China away on holiday.
Brent LCOc1 rose 30 cents to $48.43 a barrel by 0420 GMT after it finished up 44 cents on Friday,
while U.S. crude CLc1 rose 32 cents to $45.86 a barrel after settling up 80 cents, buoyed by news
that Russia was ready to meet OPEC, non-OPEC producers for consultations.
Russia, the world's top oil producer, has been unwilling to cut output to support crude prices and
last November it even refused to cooperate with the Organization of the Petroleum Exporting
Countries (OPEC) in order to defend its market share.
Russian oil output reached a new post-Soviet monthly high of 10.74 million barrels per day in
September.
Oil price special
coverage
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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But the country is now prepared to meet with OPEC and non-OPEC oil producers to discuss
global oil markets if such a meeting is called, its energy minister said. He said a separate meeting
between Russian and Saudi officials was being planned for the end of October.
Cash-strapped OPEC member Venezuela has been pushing for an emergency OPEC meeting
with Russia to stem the tumble in oil prices, which hit 6-1/2 year lows in August.
Given weaker prices, global oil investments are on track to drop by 20 percent this year, their
biggest decline in history, said Fatih Birol, head of the International Energy Agency.
Data on Friday showed U.S. energy firms reduced the number of oil rigs by 26 in the latest week,
the biggest cut since April and the fifth straight weekly fall, a sign low prices were pushing drillers
away from the well pad.
Saudi Arabia, however, is continuing with its investments in the oil and gas industry as well as
solar energy despite the current drop in prices, its oil minister said.
On the geopolitical front, tensions have intensified with Russia saying its planes had struck 10
Islamic State targets in Syria.
The oil market is now waiting for an indication on when the U.S. Federal Reserve will hike interest
rates for further trading cues. Asian stocks rose on Monday as the prospect of an imminent hike
by the Fed faded after Friday's weaker-than-expected U.S. employment data .
Rigs targeting oil in the U.S. have fallen for a fifth straight week, and the number of machines is
now more than 60 percent lower than a year ago, according to Baker Hughes. Meanwhile, the
nation’s production declined 40,000 barrels a day to 9.1 million through Sept. 25, dropping for a
seventh time in eight weeks.
Saudi Arabian Oil Co. reduced its November official selling price for Medium grade crude to Asia
to a discount of $3.20 a barrel below the regional benchmark, compared with a $1.30 discount for
October sales, the company said in an e-mailed statement Sunday. The discount for the Medium
grade to Asia, the main market for Saudi crude, widened by the most since the state-owned
company made a $2 a barrel cut in February 2012, according to data compiled by Bloomberg.
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
publication. However, no warranty is given to the accuracy of its content. Page 12
Long-term outlook for oil unclear even with demand
set to rebound
Robin Mills – Manar Energy
“The only two real characters that count are supply and demand,” as the oil historian Daniel
Yergin has said about the market. Since last summer’s slump in oil prices, much has been written
about supply – the Saudis’ apparent attempt to win market share and to drive out competitors.
Less has been said about demand, which has an equally important, if less visible, role in the
drama.
A revival in oil prices will allow shale oil producers to rebound, while more oil is on the way from
Iran next year. For prices to move sustainably higher, demand also has to increase.
In the seven years of rising oil prices from 2001 to the global financial crisis in 2008, global oil
demand, driven by China, rose each year on average by 1.2 million barrels per day. Since 2009,
demand growth has actually been faster, partly fuelled by China’s post-crisis stimulus programme.
But developed-country demand has been contracting sharply, losing 200,000 bpd each year since
the crisis.
Consumers have been driving less and buying smaller and more efficient vehicles, airlines have
sought to save fuel everywhere from newer planes to eliminating in-flight magazines, and cargo
ships have sailed more slowly to reduce drag.
Theoretically, lower oil prices should encourage consumption – and signs of this are now showing
up in the data, with the International Energy Agency expecting a 1.7 million bpd increase in global
demand this year, slowing to a 1.4 million bpd gain next year.
Chinese, US and Indian growth have all been strong so far this year. The Chinese official figures,
showing increased consumption of 1.3 million bpd, are somewhat suspect, as a large part may
represent oil going into strategic storage. It is hard to reconcile such rapid demand growth with
signs of a slowdown in the Middle Kingdom’s economy.
But the US gain of 470,000 bpd and the Indian increase of 205,000 bpd appear real enough.
American petrol use is up 4 per cent this year, and drivers’ mileage has risen sharply since the
start of last year, passing its pre-recession record. Also significant is that European demand,
which has declined every year since its 2005 peak, is showing signs of eking out an increase.
During the period of high prices, there were many theories that OECD oil consumption had
passed its peak – because of tightening vehicle mileage standards, sluggish economies and
ageing populations. Those theories may still be valid, but at least in the short term, demand
seems set for a rebound. A resurgence of consumption would greatly ease the task of the Saudis
and their Opec colleagues in restoring oil prices, even if swollen inventories are only likely to be
drawn down from the second half of next year.
The longer-term picture is cloudier. The average Chinese person uses only three barrels of oil
annually, the average Indian just 1.1 barrels, against the American who burns through almost 22
barrels. Although China has shifted on to a path of slower and less resource-intensive growth,
there is clearly huge scope for more private transport, while India is currently the fastest-growing
large economy.
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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However, alternative-fuel vehicles – natural gas, hybrids and electric cars – are becoming more
practical, and increasingly favoured by governments. The current rebound in US petrol use will be
slowed or stopped by the planned tightening of car mileage standards. Meanwhile, countries such
as Morocco, the UAE, Iran and India are eliminating fuel subsidies, and others will surely follow.
Lower oil prices are helping to bring the character of demand back to the stage. But prices cannot
rise too far, or they would choke off this temporary resurgence. Major oil producers can applaud
some rebound in the market for their product, as long as they plan for the day when the curtain
falls on growing oil use.
Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis.
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NewBase Special Coverage
News Agencies News Release 05 Oct.. 2015
Gas Bears Bathing in Shale Glut Raise Net Short Bets to Record
Bloomberg - Naureen Malik
Hedge funds raised bearish bets on U.S. natural gas to a record as warm weather threatened to
crimp demand for the heating fuel this winter.
Money managers boosted net-short positions in four U.S. gas contracts by 26 percent in the week
ended Sept. 29, the most in U.S. Commodity Futures Trading Commission data going back to
2010. Bullish speculators cut their long-only holdings to a record low.
Gas futures hit a three-year low this month after higher-than-average temperatures shrank
demand for the power-plant fuel to the least since May. The slide in consumption is exacerbating
a supply glut that’s expanding for the 10th straight year as production from shale formations such
as the Marcellus and Utica floods the market, Energy Information Administration data show.
“The market doesn’t like to sell off before the winter, but we are headed toward record inventory
levels, supply has not slowed down and there is consensus for a warm winter,” Kyle Cooper,
director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said
by phone Friday. “Compounding that is the EIA report showing July production hit a record level.”
Speculators boosted short positions while bullish bets fell to a record low
Gas futures climbed 0.4 percent to $2.586 per million British thermal units on the New York
Mercantile Exchange in the period covered by the CFTC report. They added 0.6 percent to $2.465
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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at 12:27 p.m. Singapore time. The fuel for delivery in November, the first of the five-month heating
season, is trading at its lowest seasonal level since 2001.
El Nino
Speculators boosted short-only wagers, bets that prices will drop, by 2.9 percent during the report
period to 422,075 contracts, a 16-week high, while long positions fell 5.9 percent to an all-time low
of 280,523, CFTC data show.
A weather phenomenon known as El Nino threatens to deliver an unusually mild winter, subduing
gas demand. “With a strong El Nino in play, we may be heading for a warmer than normal winter
which would also certainly be bearish for nat gas going forward,” Dominick Chirichella, senior
partner at the Energy Management Institute in New York, said in a note to clients Friday.
Temperatures in Chicago are forecast to reach 68 degrees Fahrenheit (20 Celsius) on Oct. 12, 4
degrees above normal, AccuWeather Inc. said. Two days later, Manhattan temperatures are
projected to climb to 4 degrees above the usual 71.
Natural-gas production is outpacing demand
U.S. gas inventories are already 4.5 percent above the five-year average and may top a 2012
record to reach 4 trillion cubic feet, banks including Societe Generale SA and BNP Paribas SA
said.
Gas deliveries to electricity generators, which account for about a third of demand for the fuel,
meanwhile slumped to the least since May 31, according to LCI Energy Insight, an analysis and
consulting company in El Paso, Texas. Production marketed in the lower 48 U.S. states rose in
July to an all-time high in EIA monthly data, further depressing the price of the fuel, Cooper said.
“Those aren’t bullish factors,” Cooper said. “If anything, I’m surprised it’s not even lower.”
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Khaled Malallah Al Awadi,
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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 05 Octopber 2015 K. Al Awadi
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
publication. However, no warranty is given to the accuracy of its content. Page 17
6th
– 8th
Oct.
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
publication. However, no warranty is given to the accuracy of its content. Page 18

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New base 700 special 05 october 2015

  • 1. 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 publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase 05 October 2015 - Issue No. 700 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE UAE: POWER-GEN Middle East expo kicks off in Abu Dhabi News Agencies + NewBase The UAE’s Ministry of Energy (MOENR) has officially launched the 8th Exhibition of Electrical Industries in the Arab World (EEIAW). The event, which is taking place in the UAE for the first time, is co-located with the 13th annual POWER-GEN Middle East Conference and Exhibition. Prior to the official ribbon cutting, Suhail Mohamed Al Mazrouei, UAE Minister of Energy; Dr. Matar Hamed Al Neyadi, Undersecretary of UAE’s Ministry of Energy; Eng. Jamila Youssef Matar, Director of Energy Management at the League of Arab States Egypt; and Glenn Ensor, Managing Director of PennWell International Power Group, UK, gave their speeches at the joint opening ceremony. Al Mazrouei said: “The Ministry of Energy is currently collaborating with service providers, to develop an integrated strategy which aims to diversify power sources – through the use of eco- friendly power sources that do not produce any emissions of carbon dioxide ultimately achieving sustainability and reducing costs. In addition, we plan to reduce our reliance on natural gas generate electricity by no more than 70% by 2021.” “PGME 2015 and EEIWA has set the ideal platform for industry professionals to discuss strategic issues and find appropriate solutions as well as showcase latest energy solutions and innovations for the Middle East market,” he added.
  • 2. 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 publication. However, no warranty is given to the accuracy of its content. Page 2 The 13th Annual POWER-GEN Middle East Conference and Exhibition, which runs on Oct. 4-6 at Abu Dhabi National Exhibition Centre (ADNEC), is renowned for delivering a world-class quality program with a focus on practical and technical solutions, presided by over 60 leading industry experts on POWER-GEN Middle East’s Advisory Board. Eng. Jamila Youssef Matar, Director of Energy Management at the League of Arab States Egypt said: “Many Arab countries are currently seeking effective ways to develop electrical industries and equipment. The Arab Ministerial Council has acknowledged the potential for investment in this market hence putting it in the lead of its priorities. Hosting such events are crucial to the industry as they provide opportunities to learn more about the latest industry developments in power generation and all related sectors.” Top regional power producing companies Saudi Electricity Company (SEC) and Bahrain Electricity & Water Authority (BEWA) have confirmed participation as Supporting Utilities. Masdar, Abu Dhabi’s renewable energy company and leader in developing some of the most sophisticated renewable energy projects in the world, has announced its participation as the official “Sustainability Partner”. TRANSCO, a subsidiary of Abu Dhabi Water & Electricity Authority (ADWEA) responsible for developing, operating and maintaining the high voltage power transmission and bulk water transmission networks within the Emirate of Abu Dhabi, is a ‘Silver Sponsor’.
  • 3. 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 publication. However, no warranty is given to the accuracy of its content. Page 3 M.E: Lower Oil Prices Weigh on Power Sector Projects Gulf News - Sarah Diaa, ( images by NewBase ) Abu Dhabi: While the Middle East still has one of the lowest break-even prices for crude oil, falling oil prices will put pressure on fiscal budgets and could result in a knock-on effect as governments reduce spending on certain projects. According to Shaheen Chohan, vice-president of global analytics at Industrial Info Resources, a US-based provider of market intelligence, oil prices could trade around the $60 (Dh220.38) a barrel mark over the next 12-18 months. Such a drop in prices presents challenges for power companies to manage planned projects, finance growth and bring a new generation of projects in time and on budget. Speaking on Sunday at the Power-Gen Middle East conference, Chohan said that the Middle East will witness growing fallout in power projects, estimated to reach $20 billion in 2016. The figure is an increase from the $11.3 billion fallout seen in 2014, and the $15.6 billion expected to be seen in 2015. However, Chohan said that the figures were not alarming, as they are standard fallouts and can be seen in other countries as well. As for spending in projects in the power sector, the Middle East and North Africa region is expected to see around $311 billion in capital expenditure in the power sector up to 2020. The UAE alone will see $14 billion worth of projects kicking off in 2016 and 2017, and a total of $31 billion worth of projects commencing between 2012 and 2022. The Middle East will also see a change in its energy mix as more projects are launched to boost renewable energy, with solar energy accounting for 10 per cent of the energy mix — up from the current two per cent. Meanwhile, natural gas will account for 50 per cent of projects in the region — down from the current 73 per cent, Chohan said. The Middle East and North Africa region will continue to see an increase in electricity demand over the next 10 years, with an average rate of 6-7 per cent as Oman is set to see one of the highest growth rates (9 per cent) and the UAE set to witness one of the lowest (5 per cent). Also speaking at the event was Simon Harvey, partner at Pinsent Masons, a UK-based law firm, who said that while oil prices will mainly affect fiscal budgets, they could have a positive impact as GCC countries like Qatar and Oman start looking at frameworks around public-private partnership laws. Currently in its 13th edition, PowerGen Middle East is currently being held at Abu Dhabi National Exhibition Centre (Adnec), and will run until October 6, discussing various issues in the power generation industry.
  • 4. 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 publication. However, no warranty is given to the accuracy of its content. Page 4 UAE energy minister says urgent need to cut subsidies in the region as oil prices decline The National Anthony McAuley There is an urgent need to cut regional energy subsidies as government budgets are squeezed by slumping oil prices, the UAE Minister for Energy said yesterday Opening an annual industry conference at Abu Dhabi National Exhibition Centre, Suhail Al Mazrouei said the issue of subsidies for electricity has become acute because demand continues to grow by about 9 per cent a year in the GCC countries, even while governments’ spending is under severe pressure. “These subsidies urge most of the people in the region not to rationalise [their energy consumption] while using energy, and as you may know these figures are a great challenge for the budgets of the Arab world,” the minister said in his speech. Mr Al Mazrouei reiterated that the government expects to spend US$35 billion on non- hydrocarbon electricity generation projects by 2020, most of which – $20bn – is accounted for by the nuclear building project at Barakah, where four reactors are expected to provide 24 to 25 per cent of the nation’s electricity demand, or 5.4 gigawatts, by 2020 if they are delivered on schedule. The minister also reiterated the UAE’s target to reduce reliance on natural gas for power from current levels above 90 per cent to 70 per cent by 2020. There are plans to have solar energy provide a significant portion of non-hydrocarbon electricity, although the minister said that while “we are trying to increase other eco energies [we expect] an increase in natural gas-fired generation”. He did not say if there is a roadmap yet to reach a specific goal for solar-powered generation, or how the $15bn non-nuclear budget is being allocated. Meanwhile, several of those attending the Abu Dhabi conference said there is a clear sign that government budget cuts are feeding through to electricity projects in the region. “The Saudis have recently cut about half of their projects, including two we were involved with,” said Robert Giglio, a strategy and business development executive for Amec Foster Wheeler’s global power unit. Saudi Arabia has been the biggest spender in the Arabian Gulf on power generation projects, but it has curbed its plans to move from oil-fired power plants to gas-fired and other sources. With oil much cheaper, it is more economic to burn that for electricity than to sell it on international markets and invest in gas or other projects.
  • 5. 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 publication. However, no warranty is given to the accuracy of its content. Page 5 Saudi Arabia and other countries in the region have revived plans to reduce subsidies, following the UAE lead, where utility bills for expatriates (the majority population) were allowed to rise to market rates at the beginning of the year, followed by a similar move for transport fuels in the summer. But it remains a politically fraught issue. As Waleed Alsuraih, a World Bank energy specialist, pointed out, some countries in the region had to roll back subsidy cuts “within hours” in the past as their efforts faced a political backlash. Osama Khawandanah, Saudi Electricity Company’s head of trading, said his government was initially tackling the demand side by implementing rules for the efficiency of air-conditioning units. “You know, 70 per cent of peak electricity demand in the summer in Saudi Arabia is used by air conditioning,” he said, so a relatively simple move can yield big results. “Addressing subsidies is becoming more and more important, especially with oil prices down,” agreed Adnan Fakhro, deputy chief executive of the Bahrain Electricity and Water Authority. He said three-fifths of Bahrain’s annual electricity consumption is subsidised by the government, but it has now required Bewa to reduce the proportion sharply over the next few years. This year it has budgeted 325 million Bahraini dinars (Dh3.16 billion) for electricity and water subsidies, falling to 31m dinar next year. Bahrain will also follow Saudi Arabia and introduce air-conditioning efficiency standards next summer. Mr Fakhro also said that his country is looking at a phased approach to cutting subsidies, which would result in them being eliminated in four years. This year was the first time the two big regional electricity conference were merged, reflecting the pressure on budgets. PennWell, an American media and event company which runs the PowerGen conference, approached the League of Arab States, which runs the Exhibition of Electrical Industries in the Arab World, to combine the conferences, said Sue McDermott, senior international marketing manager for PennWell.
  • 6. 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 publication. However, no warranty is given to the accuracy of its content. Page 6 Iraq: Gulf Keystone announces doubling of Shaikan 2P reserves Source: Gulf Keystone Significant de-risking: Shaikan 2P Reserves more than double to 639 million barrels Gulf Keystone has announced the release of an updated independent third-party audit of the Company's Reserves, Contingent Resources and Prospective Resources for its oil & gas interests in the Kurdistan Region of Iraq, including the Shaikan and Sheikh Adi fields operated by Gulf Keystone. The updated Competent Person's Report ('CPR') was again prepared by ERC Equipoise (ERCE) and follows the first report published in March 2014. The updated CPR is available on the Company's website at http://www.gulfkeystone.com/investor-centre/presentations-and-technical- reports. The focus on the Shaikan field has evolved from oil-in-place to recoverable reserves and the updated CPR highlights the enhanced understanding of the field. With over 15 million barrels now produced from the Jurassic, the substantial production and reservoir data acquired over the last 18 months have given a much improved understanding of the field's recovery mechanism. The Company now has greater certainty in its ability to develop the increased 2P Reserves - fewer wells and reduced capex per barrel will feature in the updated Shaikan Field Development Plan (FDP).
  • 7. 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 publication. However, no warranty is given to the accuracy of its content. Page 7 Shaikan oil Field:- • 1P Reserves have increased by 55% compared to the March 2014 1P estimate from 198 to 306 million barrels gross, which is greater than the original 2P estimate • 2P Reserves increased by 114% from 299 to 639 million barrels gross, significantly de- risking the field's commerciality • The field's recovery mechanism, now recognised as being by solution gas rather than a water drive, results in greater predictability of field performance, increased reserves per well and lower capex per barrel Sheikh Adi Oil Field:- • Work on an FDP for the appraisal area is underway • FDP approval is expected to lead to a future re-classification of 2C Resources (currently at 112 million barrels gross) to 2P Reserves • A new prospect in the north-west of the block identified with 169 million barrels gross of Prospective Resources CPR Methodology ERCE has audited the reserves assessment in compliance with PRMS/SPE reporting guidelines. The table below represents the updated CPR's conclusions on Shaikan Reserves, Contingent Resources and Technically Recoverable Volumes in comparison with the March 2014 CPR: Commenting on the publication of the updated CPR, Jón Ferrier, CEO, said: 'Today's announcement is a further independent endorsement of the calibre of Shaikan as a world-class field. With cumulative production to date of over 15 million barrels, the Company benefits from a vastly increased dataset and a far greater understanding of the reservoir. Our technical confidence has markedly improved. In what was already a low production cost operation in the Kurdistan Region, the Company is working on an updated FDP to develop the increased 2P Reserves with fewer wells, lower capex per barrel and greater reserves per well.'
  • 8. 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 publication. However, no warranty is given to the accuracy of its content. Page 8 Malaysia: Lundin Petroleum resumes exploration drilling in Malaysia with the Mengkuang-1 well.. Source: Lundin Petroleum / energy-pedia Lundin Petroleum has announced that its wholly owned subsidiary Lundin Malaysia has resumed exploration drilling in Malaysia with the spud of the Mengkuang-1 exploration well in license PM307, offshore Malaysia. The well will target hydrocarbons in Miocene aged sands 75 km to the northwest of the Bertam field operated by Lundin Malaysia. Mengkuang-1 will be drilled with the West Prospero jack-up rig to a total depth of approx. 1,300 metres below mean sea level. The drilling of the well is expected to take approx. 30 days. According to information on the Lundin Petroleum web site, the Mengkuang Prospect has estimated net (75%) unrisked prospective resources of 16 MMboe and an estimated chance of geological success of 35%. Lundin Malaysia holds 75 percent working interest in PM307. Partner is PETRONAS Carigali with 25 percent working interest. Lundin Malaysia operates six blocks in Malaysia, namely PM307, PM319, PM308A, PM308B, PM328 and SB307/308.
  • 9. 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 publication. However, no warranty is given to the accuracy of its content. Page 9 Indonesia: Cooper Energy completes testing at the Bunian-4 appraisal well in South Sumatra.. Source: Cooper Energy Cooper Energy reports that testing operations have been completed at the Bunian-4 appraisal / development well in the KSO Tangai-Sukananti Block, South Sumatra Indonesia. Testing consisted of swabbing operations which demonstrated that the TRM3 (the field’s main producing zone) is oil bearing and also recovered oil from the GRM Sandstone, which has not previously produced oil in the Bunian Field. The significance of the oil recovery from the GRM will be established by longer term production performance. Artificial lift will now be installed and the well will be connected for oil production from the TRM3 and GRM sands. Cooper Energy anticipates that initial production from Bunian-4 will be in the range 100-200 barrels of oil per day. Cooper Energy Managing Director David Maxwell said 'the test results from Bunian-4 are consistent with expectations for the TRM3 and demonstrate upside potential with the possibility of a new oil pool discovery in the GRM Sandstone'. Joint Venture participants in the KSO Tangai-Sukananti Block are Cooper Energy Sukananti (Operator 55%) and Mega Adhyaksa Pratama Sukananti (45%).
  • 10. 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 publication. However, no warranty is given to the accuracy of its content. Page 10 NewBase 05 October - 2015 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil up as Russia ready to talk with producers, U.S. rig count drops REUTERS + NEWBASE Crude oil futures edged up on Monday after Russia said it was ready to meet other producers to discuss the situation in the global oil market, where prices have more than halved from last year's highs due to a persistent supply glut. A report showing a fifth weekly fall in the U.S. oil rig count also underpinned crude prices, although trading was thin with China away on holiday. Brent LCOc1 rose 30 cents to $48.43 a barrel by 0420 GMT after it finished up 44 cents on Friday, while U.S. crude CLc1 rose 32 cents to $45.86 a barrel after settling up 80 cents, buoyed by news that Russia was ready to meet OPEC, non-OPEC producers for consultations. Russia, the world's top oil producer, has been unwilling to cut output to support crude prices and last November it even refused to cooperate with the Organization of the Petroleum Exporting Countries (OPEC) in order to defend its market share. Russian oil output reached a new post-Soviet monthly high of 10.74 million barrels per day in September. Oil price special coverage
  • 11. 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 publication. However, no warranty is given to the accuracy of its content. Page 11 But the country is now prepared to meet with OPEC and non-OPEC oil producers to discuss global oil markets if such a meeting is called, its energy minister said. He said a separate meeting between Russian and Saudi officials was being planned for the end of October. Cash-strapped OPEC member Venezuela has been pushing for an emergency OPEC meeting with Russia to stem the tumble in oil prices, which hit 6-1/2 year lows in August. Given weaker prices, global oil investments are on track to drop by 20 percent this year, their biggest decline in history, said Fatih Birol, head of the International Energy Agency. Data on Friday showed U.S. energy firms reduced the number of oil rigs by 26 in the latest week, the biggest cut since April and the fifth straight weekly fall, a sign low prices were pushing drillers away from the well pad. Saudi Arabia, however, is continuing with its investments in the oil and gas industry as well as solar energy despite the current drop in prices, its oil minister said. On the geopolitical front, tensions have intensified with Russia saying its planes had struck 10 Islamic State targets in Syria. The oil market is now waiting for an indication on when the U.S. Federal Reserve will hike interest rates for further trading cues. Asian stocks rose on Monday as the prospect of an imminent hike by the Fed faded after Friday's weaker-than-expected U.S. employment data . Rigs targeting oil in the U.S. have fallen for a fifth straight week, and the number of machines is now more than 60 percent lower than a year ago, according to Baker Hughes. Meanwhile, the nation’s production declined 40,000 barrels a day to 9.1 million through Sept. 25, dropping for a seventh time in eight weeks. Saudi Arabian Oil Co. reduced its November official selling price for Medium grade crude to Asia to a discount of $3.20 a barrel below the regional benchmark, compared with a $1.30 discount for October sales, the company said in an e-mailed statement Sunday. The discount for the Medium grade to Asia, the main market for Saudi crude, widened by the most since the state-owned company made a $2 a barrel cut in February 2012, according to data compiled by Bloomberg.
  • 12. 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 publication. However, no warranty is given to the accuracy of its content. Page 12 Long-term outlook for oil unclear even with demand set to rebound Robin Mills – Manar Energy “The only two real characters that count are supply and demand,” as the oil historian Daniel Yergin has said about the market. Since last summer’s slump in oil prices, much has been written about supply – the Saudis’ apparent attempt to win market share and to drive out competitors. Less has been said about demand, which has an equally important, if less visible, role in the drama. A revival in oil prices will allow shale oil producers to rebound, while more oil is on the way from Iran next year. For prices to move sustainably higher, demand also has to increase. In the seven years of rising oil prices from 2001 to the global financial crisis in 2008, global oil demand, driven by China, rose each year on average by 1.2 million barrels per day. Since 2009, demand growth has actually been faster, partly fuelled by China’s post-crisis stimulus programme. But developed-country demand has been contracting sharply, losing 200,000 bpd each year since the crisis. Consumers have been driving less and buying smaller and more efficient vehicles, airlines have sought to save fuel everywhere from newer planes to eliminating in-flight magazines, and cargo ships have sailed more slowly to reduce drag. Theoretically, lower oil prices should encourage consumption – and signs of this are now showing up in the data, with the International Energy Agency expecting a 1.7 million bpd increase in global demand this year, slowing to a 1.4 million bpd gain next year. Chinese, US and Indian growth have all been strong so far this year. The Chinese official figures, showing increased consumption of 1.3 million bpd, are somewhat suspect, as a large part may represent oil going into strategic storage. It is hard to reconcile such rapid demand growth with signs of a slowdown in the Middle Kingdom’s economy. But the US gain of 470,000 bpd and the Indian increase of 205,000 bpd appear real enough. American petrol use is up 4 per cent this year, and drivers’ mileage has risen sharply since the start of last year, passing its pre-recession record. Also significant is that European demand, which has declined every year since its 2005 peak, is showing signs of eking out an increase. During the period of high prices, there were many theories that OECD oil consumption had passed its peak – because of tightening vehicle mileage standards, sluggish economies and ageing populations. Those theories may still be valid, but at least in the short term, demand seems set for a rebound. A resurgence of consumption would greatly ease the task of the Saudis and their Opec colleagues in restoring oil prices, even if swollen inventories are only likely to be drawn down from the second half of next year. The longer-term picture is cloudier. The average Chinese person uses only three barrels of oil annually, the average Indian just 1.1 barrels, against the American who burns through almost 22 barrels. Although China has shifted on to a path of slower and less resource-intensive growth, there is clearly huge scope for more private transport, while India is currently the fastest-growing large economy.
  • 13. 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 publication. However, no warranty is given to the accuracy of its content. Page 13 However, alternative-fuel vehicles – natural gas, hybrids and electric cars – are becoming more practical, and increasingly favoured by governments. The current rebound in US petrol use will be slowed or stopped by the planned tightening of car mileage standards. Meanwhile, countries such as Morocco, the UAE, Iran and India are eliminating fuel subsidies, and others will surely follow. Lower oil prices are helping to bring the character of demand back to the stage. But prices cannot rise too far, or they would choke off this temporary resurgence. Major oil producers can applaud some rebound in the market for their product, as long as they plan for the day when the curtain falls on growing oil use. Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis.
  • 14. 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 publication. However, no warranty is given to the accuracy of its content. Page 14 NewBase Special Coverage News Agencies News Release 05 Oct.. 2015 Gas Bears Bathing in Shale Glut Raise Net Short Bets to Record Bloomberg - Naureen Malik Hedge funds raised bearish bets on U.S. natural gas to a record as warm weather threatened to crimp demand for the heating fuel this winter. Money managers boosted net-short positions in four U.S. gas contracts by 26 percent in the week ended Sept. 29, the most in U.S. Commodity Futures Trading Commission data going back to 2010. Bullish speculators cut their long-only holdings to a record low. Gas futures hit a three-year low this month after higher-than-average temperatures shrank demand for the power-plant fuel to the least since May. The slide in consumption is exacerbating a supply glut that’s expanding for the 10th straight year as production from shale formations such as the Marcellus and Utica floods the market, Energy Information Administration data show. “The market doesn’t like to sell off before the winter, but we are headed toward record inventory levels, supply has not slowed down and there is consensus for a warm winter,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management in Houston, said by phone Friday. “Compounding that is the EIA report showing July production hit a record level.” Speculators boosted short positions while bullish bets fell to a record low Gas futures climbed 0.4 percent to $2.586 per million British thermal units on the New York Mercantile Exchange in the period covered by the CFTC report. They added 0.6 percent to $2.465
  • 15. 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 publication. However, no warranty is given to the accuracy of its content. Page 15 at 12:27 p.m. Singapore time. The fuel for delivery in November, the first of the five-month heating season, is trading at its lowest seasonal level since 2001. El Nino Speculators boosted short-only wagers, bets that prices will drop, by 2.9 percent during the report period to 422,075 contracts, a 16-week high, while long positions fell 5.9 percent to an all-time low of 280,523, CFTC data show. A weather phenomenon known as El Nino threatens to deliver an unusually mild winter, subduing gas demand. “With a strong El Nino in play, we may be heading for a warmer than normal winter which would also certainly be bearish for nat gas going forward,” Dominick Chirichella, senior partner at the Energy Management Institute in New York, said in a note to clients Friday. Temperatures in Chicago are forecast to reach 68 degrees Fahrenheit (20 Celsius) on Oct. 12, 4 degrees above normal, AccuWeather Inc. said. Two days later, Manhattan temperatures are projected to climb to 4 degrees above the usual 71. Natural-gas production is outpacing demand U.S. gas inventories are already 4.5 percent above the five-year average and may top a 2012 record to reach 4 trillion cubic feet, banks including Societe Generale SA and BNP Paribas SA said. Gas deliveries to electricity generators, which account for about a third of demand for the fuel, meanwhile slumped to the least since May 31, according to LCI Energy Insight, an analysis and consulting company in El Paso, Texas. Production marketed in the lower 48 U.S. states rose in July to an all-time high in EIA monthly data, further depressing the price of the fuel, Cooper said. “Those aren’t bullish factors,” Cooper said. “If anything, I’m surprised it’s not even lower.”
  • 16. 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 publication. However, no warranty is given to the accuracy of its content. Page 16 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 05 Octopber 2015 K. Al Awadi
  • 17. 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 publication. However, no warranty is given to the accuracy of its content. Page 17 6th – 8th Oct.
  • 18. 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 publication. However, no warranty is given to the accuracy of its content. Page 18