New base energy news issue 956 dated 28 november 2016

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NewBase Energy News 28 November 2016 - Issue No. 956 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE installs eight solar energy plants in MauritaniaThe National staff
The UAE has helped double Mauritania’s clean energy capacity by delivering and installing eight
new rural solar energy v plants. The plants, sponsored by Masdar, will supply an additional 16.6
megawatts of electricity, which will power about 39,000 homes and save 27,850 tonnes of carbon
emissions per year.
Mohamed Ould Abdel Aziz, president of Mauritania, inaugurated the projects in the city of Atar,
one of the sites of the eight photovoltaic power plants, at an event coinciding with Mauritania’s
National Day on November 28 and UAE National Day on December 2. Also present was Essa
Abdulla Massoud Al Kalbani, the UAE ambassador to the country, and representatives from
Masdar.
"The eight projects bring economic and social benefits to Mauritania, providing opportunities for
training and knowledge-exchange and creating the foundations for long-term growth and
development to the local community," said Dr Sultan Al Jaber, Minister of State and Chairman of
Masdar.

"These projects contribute to the government’s energy and economic diversification strategy. Our
drive to implement a series of ambitious wind, hydroelectric and solar power projects will
contribute significantly to growing the share of renewables in Mauritania’s future energy mix," said
Dr Mohamed Abdul Fattah, Minister of Petroleum, Energy and Mines of Mauritania.
Masdar was selected as the preferred partner of Société Mauritanienne d’Electricité, Mauritania’s
national energy provider, following the successful delivery of the 15MW Sheikh Zayed Solar
Power Plant in the Mauritanian capital Nouakchott in 2013.
Abu Dhabi’s Masdar has completed its second solar power project in Mauritania, doubling the
amount of power the UAE provides to the African nation, the clean energy company said on
Sunday.
Masdar, working with the national utility provider Societe Mauritanienne d’Electricite (Somelec),
will meet up to 30 per cent of the demand for rural communities with eight individual solar
photovoltaic (PV) plants.
"The eight projects bring economic and social benefits
to Mauritania, providing opportunities for training and
knowledge exchange and creating the foundations for
long-term growth and development to the local
community," said Sultan Al Jaber, the UAE Minister of
State and chairman of Masdar, in a statement.
Diversifying the country’s energy mix is important to
free up its expensive import bill. The Abu Dhabi-based
International Renewable Energy Agency (Irena) said
fossil fuel accounted for 66 per cent of the main energy
consumption, which forced Mauritania to spend nearly US$546 million on petroleum product
imports in 2008. "Our drive to implement a series of ambitious wind, hydroelectric and solar
power projects will contribute significantly to growing the share of renewables in Mauritania’s
future energy mix," said Mohamed Abdul Fattah, Mauritania’s energy minister.
Combined with Masdar’s first 15MW solar PV project, these two projects will provide electricity to
about 39,000 homes.

Saudi Arabia Mining Expands as Kingdom Chases Growth Beyond Oil
Bloomberg - Wael Mahdi
Saudi Arabian Mining Co. plans to double gold production by 2020 and is increasing output of
other commodities from aluminum to ammonia as the world’s biggest crude oil exporter seeks to
diversify its economy.
Gold output will be 500,000 ounces by 2020 from about 200,000 ounces this year, Chief Executive
Officer Khaled Al Mudaifer said Wednesday in an interview in Ras Al-Khair in eastern Saudi
Arabia. Aluminum production through a joint venture with Alcoa Corp. in the U.S. has potential to
increase to 1 million metric tons from 760,000 tons this year, through the use of recycled metal
parts, he said.
Saudi Arabia wants to spur growth in the mining industry as it plans to create more jobs away from
oil and increase revenue under the Saudi Vision 2030 program. The government aims for mining
to contribute 97 billion riyals ($26 billion) to its economy by 2020 and create 90,000 jobs as a
result, according to the Vision 2030 document. Saudi Arabia is rich in aluminum, phosphate, gold,
copper and uranium.
“The government seems to be very keen on developing the sector,” Mohamed Ramady, a
London-based independent analyst and former professor of economics at King Fahad University
for Petroleum and Minerals, said Thursday by phone. “It seems there is a big plan for the
company and the sector. They want to bring more private investors and fresh minds to the sector
to end the state dominance over it."
Ma’aden, as the company is known, has created 10,000 jobs in the past five years and plans to
add another 3,000 for its phosphates complex in Wa’ad Al Shamal in northern Saudi Arabia,
Mudaifer said. The Ras Al Khair aluminum project alone employs 12,000 workers, he said.

Egypt: BP buys 10% interest in Egypt’s super-giant Zohr gas
Source: BP
BP announced Friday it has agreed to buy from Eni a 10% interest in the Shorouk concession
offshore Egypt, which contains the super-giant Zohr gas field, for $375 million.
On closing, BP will also reimburse Eni for BP’s share of past expenditure. As part of the
agreement, BP also has an option before the end of 2017 to buy a further 5% interest in the
concession under the same terms.
Bob Dudley, BP group chief executive, said:
'This interest in a truly world-scale asset will complement our existing Egyptian business. We
already have a strong partnership with Eni in Egypt and look forward to working closely with them
to efficiently bring these important resources to the Egyptian market. BP has now been in Egypt
for over 50 years and we continue to see opportunities to further develop our extensive activities
here. Beyond Zohr, the first phase of our major West Nile Delta project is on schedule to begin
production next year and the fast-tracked development of the Atoll gas field is expected to come
on stream in 2018.'
The Zohr field was discovered by Eni in August 2015; six wells have so far been successfully
drilled on the field. The field is located in the Mediterranean Sea, approx. 190 kms north of Port
Said in waters approx. 1,500m deep. Thought to be the largest gas discovery made in the
Mediterranean, Eni has estimated total gas resources in place in Zohr to be approx. 30 trillion
cubic feet of gas. The first phase of development of Zohr is now being fast-tracked, with first gas
currently expected in late 2017.
Eni is the operator and currently has a 100% interest in the Shorouk concession. The purchase,
which is subject to receiving approvals from the relevant Egyptian Government authorities, is
currently expected to complete in the second quarter of 2017. Click here for Eni
announcement: Eni sells a 10% stake in Shorouk Concession offshore Egypt to BP

Cote d'Ivoire: Total becomes operator of LNG terminal project
in Ivory Coast… source=Total
The CI-GNL (Ivory Coast LNG) consortium led by Total has been awarded the rights to build and
operate a liquefied natural gas (LNG) re-gasification terminal in Ivory Coast with a capacity of 3
million tons per year.
The decision announced by the Government of the Ivory Coast on October 4th was followed by
the signature of the shareholders’ agreement in Abidjan between Total, which will operate the
project with a 34% interest, national companies Petro CI (11%) and CI Energies (5%) as well
as SOCAR (26%), Shell (13%), Golar (6%) and Endeavor Energy (5%).
Total will use the terminal to supply LNG volumes from its global portfolio in proportion to its
participating interest in the project. The re-gasification terminal project is expected to become
operational by mid 2018.
'This project illustrates Total's strategy to develop new gas markets by unlocking access to LNG
for fast-growing economies. Working closely with our partners enabled us to put together an
integrated proposal combining LNG supply and import infrastructure through a floating storage
and re-gasification unit,' said Philippe Sauquet, President Gas, Renewable and Power of Total.
'We are very pleased to have been selected by the Ivorian authorities to manage this project,
which will meet growing domestic and regional needs for gas and power.'
The project involves the construction of a terminal with a floating storage and re-gasification unit
(FSRU) in Vridi, Abidjan area, and a pipeline connecting the FSRU to existing and planned power
plants in Abidjan, as well as to regional markets connected to the Ivorian network. This will enable
Ivory Coast to become the first regional LNG import Hub in West Africa, and to meet both regional
and domestic demand.

UAE:Abu Dhabi’s electricity tariffs need to rise for solar power to be viable
The National - LeAnne Graves
Electricity tariffs in Abu Dhabi need to rise by more than two-thirds before investment in solar
power becomes economically viable for businesses and homeowners as an alternative source of
power to help reduce their bills.
This month, the Abu Dhabi Distribution Company announced new power and water tariffs for the
emirate, with bills set to rise at the start of next year by more than 30 per cent for some users. To
cut the cost of electricity, other sources of power could be considered.
The UAE has large solar parks in operation or under construction, but smaller installations are still
not yet feasible to help reduce the rising cost of electricity in Abu Dhabi. "The [electricity] tariff for
commercial and industrial customers, in spite of its recent change, doesn’t allow yet for such a
commercial activity to develop," said Laurent Longuet, the director of Siraj Power in Dubai.
Meanwhile, Abu Dhabi’s Regulation and Supervision Bureau (RSB) is working on regulations for
small-scale solar, adding the energy source to residential and commercial buildings. The authority
said last week it was looking for feedback from parties involved in design, installation,
maintenance and operation. "We encourage any interested parties … to communicate their
views," the RSB said.
The sun is helping to power more than 200 commercial and industrial buildings in Dubai, which
has much higher power prices than Abu Dhabi.
The lowest-usage band of commercial users pay 44 fils per kilowatt hour (kWh) in Dubai, a 62 per
cent premium to that of Abu Dhabi’s lowest usage band commercial rate of 27 fils. At the higher
summer usage rates in Dubai’s tariffs for the commercial sector are at a 46 per cent premium over
Abu Dhabi’s.
Jeremy Crane, the head of Dubai’s Yellow Door Energy, a solar financier and installer, said a
return on investment was even further off for homeowners. "Still, in Dubai [with higher prices], very
few residential customers are choosing solar for economic reasons," he said.
To break this down, assume that a villa installs 20 solar panels on its roof – with total capacity of 5
kilowatt peak power – with the amount of electricity consumed running at 65,000 kWh per year.
In Dubai, the return on the solar system investment would be eight to nine years. Yet in Abu
Dhabi, that payback is 10 to 11 years, which is only one year shorter than with the emirate’s
previous tariffs.

"Even though Abu Dhabi’s ‘lower price tier’ increased by about 27 per cent, the ‘high price tier’
decreased by around 4.2 per cent – and this is why the effect isn’t that significant," said Hennie
Schoeman, the project manager for Dubai’s Oryx Solar.
"The higher the tariffs go, the better returns will be made on solar systems. A good payback period
for residential systems would be around seven years, [for] industrial systems around four or five
years."
The light industrial sector could more readily find an economic benefit from an investment in solar.
Next year’s electricity rate for industrial consumers up to 1 megawatt is 28.6 fils per kWh – nearly
79 per cent higher than the previous tariff.
This has shortened the return on investment to five to six years, compared to a decade.
Incentives such as feed-in tariffs or even favourable financing from local banks could also cut the
return on an investment timeline. Other issues remain for the viability of these smaller systems.
"One of the main problems contractors face in the UAE is the time it takes to connect these
systems to the grid.
If regulations ease up and the connection process is better defined, contractors will be able to
offer residential clients much lower rates," Mr Schoeman said.
Many communities in the UAE restrict solar systems to installations that are not visible, meaning
sloped roofs are prohibited. "This means that loads of villas aren’t suitable for solar or that panels
need to be installed at less-than-optimal angles to remain hidden from view," he said.

NewBase 20 November 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Price fill to Near $46 WTI & Brent $47.24 Amid Skepticism
Reuters + Bloomberg + NewBase
Oil halted declines near $46 amid skepticism over OPEC’s ability to reach an agreement to cut
output and as representatives prepare to meet Monday amid last-minute negotiations over the
deal the group aims to formalize Wednesday.
Oil prices fell over 1 percent on Monday, extending declines from last Friday as doubts re-
emerged over the ability of major producers to cut output at a planned meeting on Wednesday
aimed at reining in global oversupply.
Brent crude futures were trading at $46.40 per barrel at 0035 GMT, down 84 cents, or 1.8 percent,
from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 74 cents, or 1.6
percent, at $45.32 a barrel.
The falls came after prices declined more than 3 percent on Friday over disagreement between
members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC exporters
like Russia over which states should cut production by how much in order to curb a global
production overhang that has more than halved prices since 2014.
"Further doubts about OPEC's production cut agreement saw crude oil prices tumble," ANZ bank
said on Monday. OPEC will meet in Vienna on Wednesday to decide on the details of a cut,
potentially including non-OPEC members like Russia or Azerbaijan.
A meeting between OPEC and non-OPEC producers that was to be held on Monday was called
off after Saudi Arabia declined to attend. Saudi Arabia's energy minister Khalid al-Falih said on
Sunday this was because no agreement within OPEC had been reached so far.
Falih said that the oil market would balance itself in 2017 even if producers did not intervene, and
that keeping output at current levels could therefore be justified.
Oil price special
coverage

Futures were little changed in New York after earlier falling as much as 2 percent and dropping 4
percent on Friday. Saudi Arabia for the first time on Sunday suggested OPEC doesn’t necessarily
need to curb output and pulled out of a scheduled meeting with non-member producers, including
Russia. OPEC will hold an internal meeting in Vienna Monday to resolve its differences, and as
part of the final push to reach an agreement, oil ministers from Algeria and Venezuela are heading
to Moscow to get the group’s biggest rival on board.
The Organization of Petroleum Exporting Countries is heading into the final stretch before its
November 30 meeting to adopt a deal first floated in September to collectively reduce output.
Saudi Arabia, the group’s de facto leader, is seeking to reverse the pump-at-will policy it
supported in 2014 and is now pushing members to agree how they will individually shoulder the
first production cuts in eight years. Saudi oil minister Khalid Al-Falih said the oil market will
recover in 2017 even without cuts.
“The market is currently quite pressured by the uncertainties raised from various reports, including
Saudi Arabia pulling out of Monday’s talks with non-OPEC nations,” Seo Sang-young, a Seoul-
based market strategist at Kiwoom Securities Co., said by phone. “It’s also highly suspicious
whether OPEC will keep its promises even if it achieves an accord because the members are
constantly raising production.”
West Texas Intermediate for January delivery was at $46.08 a barrel on the New York Mercantile
Exchange, up 2 cents at 12:33 p.m. in Seoul. Prices lost $1.90 to $46.06 a barrel on Friday. Total
volume traded was more than double the 100-day average.
Output Accord
Brent for January settlement was at $47.25 a barrel on the London-based ICE Futures Europe
exchange, up 1 cent. The contract dropped $1.76, or 3.6 percent, to $47.24 a barrel on Friday.
The global benchmark traded at a $1.16 premium to WTI.
Global crude demand will recover next year and then prices will stabilize, even without production
cuts from OPEC, Al-Falih said in Dhahran, eastern Saudi Arabia, on Sunday, according to the

Saudi newspaper Asharq al-Awsat. The oil-producer group doesn’t have a single path to cut
output and it can also depend on recovery in consumption, especially from the U.S., the oil
minister said, according to the newspaper.
OPEC needs to reach an internal consensus on output curbs before Russia can join a pact, the
country’s energy ministry said in a statement, citing Minister Alexander Novak. The country has so
far resisted OPEC’s request that it joins the cut, offering instead to freeze production at its current
level.
Algeria’s Energy Minister Noureddine Boutarfa, architect of the group’s preliminary agreement
reached in Algiers, will travel Monday to Moscow with his Venezuelan counterpart before meeting
Iraq’s oil minister Tuesday in Vienna, according to two OPEC delegates with knowledge of the
plan. He presented a proposal Saturday to Iranian Oil Minister Bijan Namdar Zanganeh for an
output cut of 1.1 million barrels a day for OPEC and 600,000 barrels a day for non-member
countries.
For OPEC’s Rivals, Success Lies in Oil Market Far, Far Away
Bloomberg - Serene Cheong
Rivals of OPEC seeking to reach its most-prized oil customers are finding that the long way
around is better than any shortcut to success.
As the group seeks to implement a deal to limit output, the glut that was exacerbated by its prior
strategy of keeping taps open has spawned a market structure that’s benefiting competitors in
sales to Asia. Cargoes from Europe’s North Sea will reach South Korea in coming months, while
U.S. Eagle Ford shale crude as well as Mexican oil arrived at Yeosu port in November. Japanese
and Thai refiners have bought West Texas Intermediate from BP Plc.
Shipments to Asia from locations farther than the Middle East are turning more attractive because
of a deepening market structure known as contango, where near-term supplies are cheaper than
those for future months. Sellers benefit from this because the value of a cargo rises as it makes
the longer journey to its destination. For buyers, abundant output across the Atlantic Basin has
made North American and European oil cheaper relative to crude from OPEC nations such as the
U.A.E and Qatar.

“The wider contango has given OPEC’s rivals a shot at loading up a vessel and sending oil from
all corners of the globe to Asia, even if it sails for up to two months,” said Nevyn Nah, a
Singapore-based analyst at industry consultant Energy Aspects Ltd. “OPEC’s fight for market
share amid rebounding output from members such as Nigeria and Libya, as well as increased
production from places like Russia and former Soviet Union regions, has exacerbated the market
oversupply.”
The premium of later supplies of Brent, the benchmark for more than half the world’s oil, over
near-term cargoes is currently at about $5 a barrel versus a contango of $2 at the end of April.
That’s in contrast to more than two years earlier, when later shipments were at a discount, or
backwardation, of more than $7. Crude was then trading at more than $100 a barrel before a
global glut dragged down prices by more than 50 percent.
Long-Haul Voyages
Two million barrels of oil on a Very Large Crude Carrier will take about 55 days to traverse the
15,000 nautical miles from the U.S. Gulf Coast across the Atlantic to South Korea, a month more
than supplies from the Middle East. The value of crude can rise by as much as a dollar per barrel
during the time difference because of the contango, data compiled by Bloomberg show. That
would also help compensate for higher shipping costs from the longer voyage.
The value of Brent crude loading in three months is about $1 per barrel higher versus cargoes for
two months ahead. The expense to time-charter a vessel for 30 days is lower at 80 to 85 cents per
barrel, according to Bloomberg calculations based on data from ship broker Howe Robinson
Partners.
Oil is trading more than 50 percent below its 2014 highs, amid speculation over whether the
Organization of Petroleum Exporting Countries will be able to implement a plan to cut output and
stabilize markets reeling from a glut. A decision is expected next week after a Vienna meeting
between ministers from group nations including biggest member Saudi Arabia as well as non-
OPEC producers such as Russia.
Crude Varieties
“OPEC’s potential production cut could tighten the market in Asia. And, if you can’t get enough
medium and heavy sour crude, then the best would be to look for alternatives in the Atlantic
Basin,” said Ehsan Ul-Haq, an analyst at industry consultant KBC Energy Economics. If the Saudi-
led plan to curb supplies goes through, the Middle Eastern Dubai oil benchmark could turn costlier
relative to Brent, which “in turn facilitates the flow of Atlantic Basin crude to Asia,” he said.
Brent futures for January settlement traded at $48.90 a barrel on the London-based ICE Futures
Europe exchange by 11:40 a.m. Singapore time.
Vessels that bring oil to the U.S. Gulf Coast from the Middle East can in turn be used to haul back
North American and Latin American crude, or a combination of both, to Asia. The supertanker Izki
arrived at South Korea’s Yeosu port earlier this month with U.S. Eagle Ford crude co-loaded with
Mexico’s Maya and Isthmus oil grades. The cargo was for refiner GS Caltex Corp., which has
joined other Asian processors in buying supply from the U.S. mainland after a 40-year ban on
American oil exports was overturned.
Buyers in Asia-Pacific also benefit from this strategy because they can receive a blend of heavy
crudes from Latin America and lighter varieties from the U.S. in a single shipment. The region will
use 32.88 million barrels a day of oil this year, accounting for more than a third of global

consumption, according to data from the International Energy Agency. Daily demand is forecast to
expand to 33.7 million barrels in 2017.
“There has traditionally been a regular flow of vessels moving oil from the Arabian Gulf to the
U.S., as producers such as Saudi Arabia and Kuwait have term contracts to supply refineries
along the U.S. Gulf coast,” said Den Syahril, a Singapore-based analyst at industry consultant
FGE. “This makes a ready pool of vessels available when exporting U.S crude either on its own or
along with Latin American grades to Asia, while serving as a viable back-haul option for ship-
owners.”
Three days from a crucial meeting, OPEC’s deal to curb oil production and end years of global
oversupply hangs in the balance. But even if ministers hash out a meaningful accord on
Wednesday, there are dangers for the oil-exporter club.
For two years, OPEC tried to bury a growing army of upstart producers by flooding the markets
with crude. Reversing course might hand a lifeline to the battered survivors like Premier Oil Plc
who are rushing to reap the rewards.
The London-listed company, whose 60,000 barrels a day of output amounts to a rounding error for
OPEC, expects to use hedges to lock in 2017 prices of at least $50 a barrel, a level Brent has only
touched briefly this year. That means Premier Oil has adapted well enough to the assault to at
least break even at half the price it received on the futures market in 2015.
Across the industry, from rural America to the Siberian tundra, producers are hoping the
Organization of Petroleum Exporting Countries will trigger a rally that would allow them to secure
funds to boost drilling. Without a deal, prices, now at $47, could test the $30 level breached in
January, as OPEC and non-member Russia ramped up output to defend market share, analysts
say.

The oil club wants to create a “Goldilocks” zone of between $50 and $60, “high enough to
increase revenue for beleaguered oil producers but not too high to trigger a wave of new output
from the U.S. shale patch,” said Walid Khadduri, an OPEC watcher at the Arab Gulf States
Institute in Washington.
It’s a delicate balancing act.
In November 2014, the Organization for Petroleum Exporting Countries adopted a pump-at-will
policy that triggered a price collapse. The group, which supplies roughly 40 percent of the world’s
crude, decided to fight for market share through ultra-low prices, targeting rivals such as U.S.
shale producers.
Oil tumbled from $110 to a 10-year low of less than $30 this year, forcing producers the world over
to slash costs and shelve projects. OPEC, many of whose 14 members are struggling to meet
spending commitments, has been debating how to implement a plan announced in September to
lift prices by dialing back supply.
The International Energy Agency, formed after the Arab oil embargo in the 1970s, expects global
output to surge if crude exceeds OPEC’s price corridor.
"If oil prices rise above $60 a barrel we will see significant production coming," IEA Executive
Director Fatih Birol said in an interview this month.
If so, that would be tantamount to OPEC throwing a lifeline to U.S. shale firms and the other
independent producers it tried to bankrupt with low prices.
Saudi Arabia’s new oil chief, Khalid Al-Falih, is trying to walk the fine line of cutting supply just
enough to raise prices without triggering a major production push by competitors.
For a Gadfly column on prospects for next week’s meeting, click here.
But even at the lower end of the price range, $50 a barrel, cash-battered companies like London-
listed Premier have shown they can survive.
Cost reductions and advances in technology have cut the average price a U.S. oil company needs
to break even by a third since 2014, to $53 a barrel, Esther George, the president of the U.S.
Federal Reserve Bank of Kansas City, said at an energy conference in Houston last week.
U.S. shale drillers have already benefited from OPEC efforts to lift prices. After the group outlined
its plan to cut output in Algiers in late September, crude rallied to a one-year high of almost $55 a
barrel, triggering a wave of hedging.
That short-lived spike allowed companies including Pioneer Natural Resources Co., Oasis
Petroleum Inc. and Whiting Petroleum Corp. to lock in enough 2017 revenue to expand drilling.
Some hedge funds are betting that U.S. shale output will return to month-on-month growth as
early as April.
And then there’s Big Oil.
For the past two years, Exxon Mobil Corp., Royal Dutch Shell Plc and most other global giants
have been busy cutting costs and scaling back long-term projects. But if prices rise enough,
multibillion-dollar, long-life developments may finally get green-lit, said Martijn Rats, an analyst at
Morgan Stanley in London.
“There’s a big inventory of delayed projects,” Rats said. “Break-evens have fallen significantly and
nobody wants to miss the opportunity.”

BP Plc has already said the final sign-off for Mad Dog 2, a project in the Gulf of Mexico with a
budget of about $10 billion, is imminent.
Even so, OPEC can still claim some successes in its campaign to hamstringing rivals big and
small. The price collapse derailed the U.S. shale boom, at least temporarily, and forced
companies to postpone about $1 trillion of new projects around the world, creating a possible
supply hole in the next decade.
But OPEC’s policies now are misguided, according to Ali Al-Naimi, the former Saudi oil minister
who masterminded the pump-at-will policy the group adopted two years ago. Trying to drive prices
up will only lead to loss of market share, so OPEC should just get out of the way and let capitalism
run its course, Al-Naimi said in “Out of the Desert,” his new memoir.
OPEC's Oil Deal Is No Sure Thing
By Julian Lee
OPEC oil ministers will meet on Nov 30 to agree their first output cut since the 2008 financial
crisis. The deal will be "a total success," according to Venezuela's president. His oil minister had
already called it "a historic agreement, one that's never been seen before."
Stirring stuff to be sure, but can they deliver? The balance of expectations favors an agreement.
OPEC has invested too much credibility to fail. That may be so, but a similar investment didn't
save the deal to freeze output that collapsed at the last minute earlier this year.
More Than You Say
Most members say OPEC's secondary source estimates of their production are too low

NOTE: Official production figures minus secondary source estimates published by OPEC NOTE:
OPEC did not report official production numbers for Gabon, Indonesia or Libya for October
The positions of Iran and Iraq will probably be critical. Iraq's prime minister has said the country
will cut output, but the argument over what level of production it would accept as a starting point
for any reduction seems to rumble on.
Iran is said to have been offered the option of freezing output at the current official output level of
3.92 million barrels a day. But, as I pointed out last week, that would force it to tacitly endorse the
2 million barrel a day increase in Saudi output since 2011, something it could find extremely
difficult. OPEC officials meeting in Vienna last week failed to resolve either issue, deciding to
leave them for ministers to wrestle with on the 30th.
Different Fortunes
Saudi Arabia's oil output has risen by 2 million barrels a day since January 2011, Iran's is
unchanged
NOTE: Difference in production versus January 2011, as assessed by OPEC secondary sources
Then there's the question of support from non-OPEC producers.
OPEC does have history of coordinating cuts with non-member countries. In November 2001 the
group agreed to reduce supply by 1.5 million barrels a day, but only if non-OPEC producers
contributed another 500,000 barrels of cuts. They got enough commitments to go ahead, although

there was much discussion afterwards about how much of the promised reduction actually
happened.
This time around there's also ample evidence that OPEC is looking for external support, although
this has yet to go as far as specifically linking OPEC cuts to non-OPEC action. Russia's energy
minister says OPEC has asked for 500,00 barrels a day of non-OPEC cuts, his Azerbaijani
counterpart put the figure at 880,000 barrels. If Saudi Arabia is really determined not to resume its
role as the world's swing producer -- and there's nothing to suggest otherwise -- this may be an
attractive mechanism to share the burden. But it carries risks.
Russia has said it will only consider its own contribution after OPEC has presented it with an
internal agreement to cut supply. Moscow prefers freezing output at its current post-Soviet record
level of about 11.2 million barrels a day, claiming this represents a cut of 200,000 to 300,000
barrels a day from planned output in 2017.
RUSSIAN RECORD
In the end, it'll come down to one question: how much does Saudi Arabia want, or need, a deal? If
it's willing to abandon the policy to protect its market share that it set in motion two years ago, a
deal can be done with relative ease. If not, the situation is far less certain.

NewBase Special Coverage
News Agencies News Release 28 November 2016
Eni presents the 15th edition of the World Oil and Gas Review
Eni presents the 15th edition of the World Oil and Gas Review, the annual statistics report on
world reserves, production and consumption of oil and gas. A special focus is on crude oil quality
and on the refinery sector.
Year 2015 proved a slight increase in oil reserves
against a decline in gas reserves.
Oil production set another yearly record growth (+2.9%)
driven by the Middle East and North America. Among the
top ten producers, Iraq showed the biggest rise and the
USA, the largest producer, kept on growing for the
seventh year in a row. Geopolitics still affect the
production of Libya, Syria and Yemen.
In the crude quality analysis emerged a significant increase of the “heavy sour” category (+12%)
due to the new Iraq stream of Basrah heavy that has been commercialized since June 2015,
together with “ultra light” crudes (+6%), directly related to shale oil condensate production, and
“heavy sweet” crudes (+8%).
World oil demand grew by 1.8 Mb/d
(+2.0%), one of the biggest increases in
the recent years stimulated to a large
extent by the rapid fall in oil prices that
began in the second half of 2014 gaining
momentum in 2015. The OECD countries
have interrupted their structural decline
trend (+0.4 Mb/d; +1.0%) while non-
OECD countries’ growth slowed down
(+1.4 Mb/d; +3.0%) mainly due to the
main oil producing countries
consumption reduction (Latin America
and Russia).
In the last five years world refining
capacity has grown by over 4 Mb/d
where Asia, in particular China, has been
the main contributor followed by North
America and Middle East. The fall in the
domestic demand together with the
increasing foreign competition have
pushed Europe to curb refining capacity.

In 2015, world gas production increased by 1.6%, driven by USA and Iran (+5% each). In Europe,
Norway had a strong production increase (+8%), whereas European Union output continued to
decline (-8.5%). In Russia, which
is the world’s second gas
producer, after the previous
year’s decline, output grew by
1.3%.
Gas demand started to rise again
in 2015 (+1.7% against -0.2% in
2014) with a strong increase in
some emerging markets (MENA
+4.8%) but also in mature areas
like North America (+2.2%) and
Europe (2.2%). Asia stopped its
continuous growth as a
consequence of a slowdown in
China (+3.1% vs +9.4% in 2015)
and a strong decline in Japan
and South Korea (-6.0% and -
8.8% respectively), due to the
restart of nuclear plants and an
increasing role for coal and
renewables in power.
•
•
• In 2015, oil reserves showed an increase while gas reserves recorded a decline.
• Oil production set another yearly record growth driven by the Middle East and North
America.
• The crude quality analysis showed a significant increase of the 'heavy sour' crude category,
after the commercialization of the new Iraqi crude Basrah heavy.
• Oil consumption grew by 2%, one of the biggest increase recorded in recent years.
• In the last five years world refining capacity has grown by more than 4 Mb/d: in this frame
Asia, mainly China, played a key role.
• Gas production, driven by USA and Iran, increased by 1.6%.
• Gas consumption started to grow again (+1.7%) with a strong increase in some emerging
markets but also in mature areas like North America and Europe. Asia stopped its
continuous growth.
The publication is available online at the World Oil and Gas Review website.
https://www.eni.com/docs/en_IT/enicom/company/fuel-cafe/WOGR-2016.pdf

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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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 26 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering & regulating stations
and in the engineering of supply routes. Many years were spent drafting, & compiling gas
transportation, operation & maintenance agreements along with many MOUs for the local
authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE
and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase November 2016 K. Al Awadi

New base energy news issue 956 dated 28 november 2016

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New base energy news issue 956 dated 28 november 2016