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NewBase Energy News 11 February 2018 - Issue No. 1139 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
India Wins Piece of Abu Dhabi Oil With Stake in $6 Billion Field
Blommberg - Mahmoud Habboush
India secured a share in Abu Dhabi’s oil production for the first time after agreeing to pay $600
million for a tenth of one of the emirate’s biggest offshore deposits.
State-owned Oil and Natural Gas
Corp. and other Indian companies
agreed to a 40-year contract for rights
to pump crude from the Lower Zakum
field in partnership with Abu Dhabi
National Oil Co., according to an Adnoc
statement. Adnoc signed the deal
during a visit of Indian Prime Minister
Narendra Modi to the capital of the
United Arab Emirates on Saturday.
Abu Dhabi, which holds most of the
U.A.E.’s oil reserves, is looking for new
partners at its offshore fields as
the production concession for some
deposits expires next month. Partners in Abu Dhabi’s fields generally receive an amount of crude
oil commensurate with their stakes in return for tax and royalty payments and investment to boost
output.
The Indian companies will pay 2.2. billion dirhams ($600 million) to Abu Dhabi for their stake in the
field, according to the statement, putting the overall value of the deposit at $6 billion. Adnoc, which
retains 60 percent holdings in its fields, aims to award rightsfor another 30 percent of the Lower
Zakum field as well as to two other offshore crude blocks.
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The Indian consortium is made up of ONGC’s wholly owned subsidiary ONGC Videsh, the Indian
Oil Corp., and Bharat PetroResources, which is a 100 percent subsidiary of Bharat Petroleum
Corp. Ltd, according to the Adnoc statement. The concession will be operated by Adnoc Offshore,
a subsidiary of Adnoc, on behalf of all concession partners, it said.
Expanded production from its offshore reservoirs are part of Adnoc’s plans to raise its onshore
and offshore production capacity to 3.5 million barrels a day by the end of 2018, according to the
statement. Adnoc offshore fields currently produce about 1.4 million barrels a day, it said.
The current production of the Lower Zakum field is about 400,000 barrels a day and the plan is to
increase the plateau target to 450,000 barrels a day by 2025, according to a statement from
ONGC Videsh.
The Indian win gives the country, one of the biggest buyers of U.A.E. crude, a direct stake in
Middle East barrels. Adnoc will be able to tap demand in the world’s second-most populous nation
and expands its portfolio of partners. Adnoc has said it received more than 10 bids from
companies seeking to work on the fields.
India is the second-biggest buyer of U.A.E. crude behind Japan, according Bloomberg tanker
tracking. Adnoc is seeking partners for its biggest fields that will help secure market access for its
crude in some of the top energy consumers. Adnoc last year signed deals with Chinese and
Korean companies to partner in its main onshore fields for the first time. The company is also
seeking partnerships in refining and petrochemicals and may seek to buy assets abroad to secure
market share.
Adnoc also signed on Saturday an agreement with the Indian Strategic Petroleum Reserves Ltd
for a strategic crude oil storage facility in the southern Indian city of Mangalore, according to the
Adnoc statement. The agreement covers the storage of 5.86 million barrels of Adnoc crude oil in
underground facilities, at the Karnataka facility.
“The oil storage facility will help ensure India’s energy security, as well as enable Adnoc to
efficiently and competitively meet market demand in India and across the fast developing south
east Asian economies,” it said.
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Saudi SWCC reaches 5 MCM/Day desalination,Guinness record
REUTERS/Fahad Shadeed + Staff Writer, The Saudi Gazette
Saline Water Conversion Corporation is recognised as the biggest seawater desalination facility in
the world with production reaching 5 million cubic meters per day.
It is a very proud moment for the Kingdom. The Guinness Book of Records has acknowledged
the Kingdom’s Saline Water Conversion Corporation (SWCC) as the biggest seawater
desalination facility in the world with production reaching 5 million cubic meters per day.
Minister of Water and Electricity and SWCC Chairman Abdulrahman Al-Fadli received the
Guinness World Records Certificate presented by the Guinness Book of World Records in Al-
Khobar, Saudi Press Agency said on Friday.
This coincided with the 118th meeting of the SWCC board of directors held in Al-Khobar
governorate on Thursday. The meeting was chaired by Al-Fadli. Also present were SWCC
Governor Ali Bin Abdulrahman Al-Hazmi and other board members.
Al-Fadli congratulated SWCC personnel for increasing production of desalinated water to 5 million
cubic meters per day. He said that this supports the Kingdom’s pioneering status throughout the
world in the field of developing the desalination industry.
This also reflects the keenness of the government to provide the means for a comfortable life for
the Kingdom’s population and visitors. He lauded the leading role of SWCC in providing water
security as a basic structure for development, which is one of the goals of Vision 2030.
The meeting discussed a number of subjects including security, safety and environment reports of
last year. It also discussed the most prominent accomplishments of SWCC’s new financial
system. The board reviewed the stages reached in the SWCC initiatives within the National
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Transformation Program, apart from the initiative to enhance performance values and culture in
the corporation.
The meeting discussed efforts exerted by the research institute and its research programs to raise
the efficiency of functioning desalination plants and to create new economic technologies to
support the desalination industry. The board was briefed on the initiatives and works of the
operation and maintenance sector.
Al-Fadli lauded the role of SWCC in serving the Guests of Allah and its contribution to achieving
the record production. The board approved several recommendations including the financial lists
for the 2015-16 workers’ commercial account and the external auditor’s report.
About SWCC
The Saline Water Conversion Corporation (SWCC) is a Saudi Government Corporation
responsible for the desalination of seawater producing electric power and supplying various
regions in the Kingdom with desalinated water. The corporation was established by royal decree
dated 20/08/1394 H, corresponding to 07/09/1974 H, as an independent government corporation.
The Main Objective of the Corporation
The corporation aims at consolidating the natural water resource in various regions and cities of
the Kingdom where there are severe fresh water shortages, through the process of desalination.
The corporation is also habilitated to produce electric power as a by-product depending on
economic and technical needs. This is carried out in accordance with a comprehensive plan
devised by the corporation and approved by the Council of Ministers.
The desalination of water, in addition to the production of electricity, represents the most important
objectives of the development plans envisaged by the corporation. One of the main strategic goals
for the implementation of these plans is to build a number of desalination plants, along with
support facilities in regions suffering from shortages of fresh water supplies, based on the
outcomes of technical feasibility studies.
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Iraq: DNO ramping up Kurdistan investments - reports strong 2017 results
Source: DNO
DNO, the Norwegian oil and gas operator, has announced a 50 percent hike in 2018 spending in
the Kurdistan region of Iraq to USD 250 million net to the Company on the back of higher
revenues and regular export payments. Annual 2017 revenues stood at USD 347 million, up 72
percent from 2016, bolstered by fourth quarter revenues of USD 116 million, the highest quarterly
level in more than three years.
The Company fast tracked the development of the Peshkabir field with two wells currently
producing a total of 16,000 barrels of oil per day (bopd) and commingled for export with another
97,000 bopd from the other DNO-operated field, Tawke, on the same license.
'We made the Peshkabir Cretaceous discovery early in 2017, initiated early production in June,
tripled output by year's end and already have exported two million barrels with an estimated value
of USD 100 million - more than twice the investment to date,' said DNO's Executive Chairman
Bijan Mossavar-Rahmani. 'And we have only started to appraise and develop this field which
continues to surprise to the upside,' he added.
A total of six Peshkabir wells will be drilled this year with field production expected to reach 30,000
bopd by summer and continue to ramp up in the second half of the year.
At the Tawke field, plans are being finalized with partner Genel Energy plc to drill four wells in
2018, in addition to the currently drilling Tawke-48 well slated for completion by end-February.
Elsewhere in Kurdistan, DNO has re-entered and sidetracked the Hawler-1 well to appraise the
Benenan heavy oil field in the Erbil license, achieving a technical milestone with the first ever
multilateral well and the first ever dual completion in Kurdistan. Testing will commence shortly,
and if successful, will be followed by additional wells.
The Company received 12 monthly Kurdistan export payments during 2017 totaling USD 380
million net to DNO. The landmark August 2017 receivables settlement agreement, which
increased DNO's stake in the Tawke and Peshkabir fields from 55 percent to 75 percent plus three
percent of gross license revenues over five years, contributed to higher export payments.
Operational cash flow more than tripled to USD 339 million in 2017 and DNO exited the year with
a net cash position of USD 30 million versus net debt of USD 139 million at end-2016.
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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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Angola & Nigeria : set to open giant oilfields this year
Total + NewBase
Two Opec (Organization of Petroleum Exporting Countries) member countries - Angola and
Nigeria - will bring giant oil fields online this year, testing their commitment to cap output amid a
global push to curb supply, said a report.
Total SA plans to start production at two so-called mega-projects, Kaombo in Angola and Egina in
Nigeria, reported Bloomberg citing the company chief executive Patrick Pouyanne. Once both are
onstream -- Kaombo by mid-year and Egina in the fourth quarter -- they’ll have a combined
capacity of 430,000 barrels a day. That exceeds the total output of Opec members Gabon and
Equatorial Guinea, he added.
The Opec has been curtailing production for more than a year, achieving unprecedented
compliance with caps and driving oil prices up 18 per cent in 2017 as global stockpiles finally
shrank.
Yet the latest supply data from Angola and Nigeria show that the additional barrels planned for
this year would cause both to flout their OPEC commitments should their output remain otherwise
unchanged, stated the report. Total didn’t immediately reply when asked whether it expects to
curb future output should host governments request it.
Angola’s production totaled 1.63 million barrels a day in December, according to Opec, within its
quota of 1.67 million a day. Nigeria, whose 1.8 million-barrel cap has only recently come into
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force, pumped 1.86 million a day in the month. Opec has said it’s committed to keeping limits on
output through 2018, though a ministerial meeting is scheduled for June to discuss policy.
To be sure, neither African country is guaranteed to maintain steady production from existing
deposits. Angolan fields have suffered from natural declines, while Nigeria has been subject to
militant attacks that sent output to a two-decade low in 2016, it added.
Total Exploration & Production in Angola
Total has been present in Angola since 1953. In 2013, Total’s equity production amounted to
186,000 barrels of oil equivalent per day (boe/d). Most of this production comes from blocks 17, 0
and 14. At the end of 2013, Total operated close to 600,000 boe/d, making it the country’s leading
oil operator.
Total’s principal asset in Angola, deep-offshore Block 17 (40%, operator), consists of four major
zones: Girassol, Dalia, Pazflor (which are all in production) and CLOV, which is currently being
developed. The development of CLOV started in 2010 and will result in the installation of a fourth
FPSO with a production capacity of 160,000 boe/d, with a start-up scheduled in mid-2014.
In Angola, Total is fully committed to developing the Angolan oil industry by recruiting and training
a local workforce. Total is strengthening the local economy through its ambitious “Angolanization”
program and technology transfer plan.
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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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Cyprus: Eni announces gas discovery offshore Cyprus
Source: Eni
Eni has made a lean gas discovery in Block 6 Offshore Cyprus with Calypso 1 NFW. The well,
which was drilled in 2,074 meters of water depth reaching a final total depth of 3,827 meters,
encountered an extended gas column in rocks of Miocene and Cretaceous age. The Cretaceous
sequence has excellent reservoir characteristics.
An intensive and detailed data collection (fluids and rock samples) has been executed on the well.
Calypso 1 is a promising gas discovery and confirms the extension of the 'Zohr like' play in the
Cyprus Exclusive Economic Zone (EEZ).
Additional studies will be carried out to assess the range of the gas volumes in place and define
further exploration and appraisal operations.
Eni is the Operator of Block 6 with 50% of participation interest while Total is partner with the
remaining 50%.
Eni has been present in Cyprus since 2013 and detains interests in six licenses located in the EEZ
of Cyprus (in Blocks 2, 3, 6, 8, 9 and 11), five of which are operated.
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U.S Cheniere, signing first-ever US long-term LNG contract
Tom DiChristopher | @tdichristopher
• Cheniere Energy announced it has signed the first-ever long-term deal between an American liquefied
natural gas exporter and a Chinese state-owned energy company.
• China is the fastest growing LNG market in the world, importing 26.1 million tons in 2016.
• Energy giant China National Petroleum Corporation agreed to purchase 1.2 million tons per year from
Cheniere's Sabine Pass export terminal.
Cheniere Energy announced it has signed the first-ever long-term deal between an American
natural gas exporter and a Chinese state-owned energy company, a major step forward for the
U.S. gas industry.
China is the fastest growing market for liquefied natural gas, a super-cooled form of the fuel that
allows it to be shipped overseas in liquid form. Earlier this week, the U.S. Energy Information
projected LNG will soon dominate America's natural gas exports, which have mostly been shipped
by pipe to Canada and Mexico.
China's LNG imports are booming as it aims to reduce its use of coal to generate electricity and
power its massive industrial sector. The nation's reliance on coal-fired generation is a big
contributor to China's notoriously poor air quality.
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Energy giant China National Petroleum Corporation agreed to purchase 1.2 million tons per year
from Cheniere's Sabine Pass export terminal on the Texas-Louisiana border. In 2016, China
imported 26.1 million tons of LNG, up 32.6 percent from the previous year, according to IHS
Fairplay.
That year, Australia supplied about half of those imports, while Persian Gulf monarchy Qatar
accounted for about 20 percent of those supplies. The two countries, the world's top LNG
exporters, benefit from long-term contracts with big buyers in East Asia. Most of the gas shipped
from the upstart American LNG industry has been on the short-term spot market.
"We are pleased to announce these LNG contracts with China National Petroleum Corporation, an
important global energy player in one of the largest and fastest growing LNG markets worldwide,"
Cheniere President and CEO Jack Fusco said in a statement.
Cheniere is currently the only company operating a fully operational LNG export terminal in the
Lower 48 United States. Dominion Energy's Cove Point terminal on the Chesapeake Bay will start
up commercial service next month. The Cameron LNG terminal and Freeport LNG facility are
scheduled to open later this year on the Gulf Coast.
The news is also a boon to the Trump administration. The U.S. Commerce Department reached
an agreement with Chinese authoritiesin May that cleared the way for state-owned companies to
negotiate long-term contracts with U.S. LNG exporters, something Beijing had been hesitant to do.
Some market-watchers doubted the agreement would lead to actual shipments, but Cheniere's
deal with CNPC moves the ball forward. A portion of shipments are scheduled to begin this
year.Louisiana Sen. Bill Cassidy cheered the announcement and its impact on the state economy
on Friday.
"This is great news for working families in Louisiana," Cassidy said in a statement. "From the
wellhead to the liquefaction facility, people in Louisiana will benefit from selling more American-
made energy."
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NewBase February 11 - 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil plunges 3.2%, at $59.20, worst weekly decline in two years
Tom DiChristopher | @tdichristopher + Bloomberg + NewBase
A crushing oil price rout extended into a sixth day, with U.S. crude nearly falling below $58 a
barrel, as rising production, a strong dollar and a broad financial asset sell-off combined to weigh
down the market.
The drubbing started last Friday and gathered steam this week, putting U.S. West Texas
Intermediate crude on pace for its worst weekly performance in two years.
U.S. crude plunged to a seven-week low at $58.07 a barrel, before paring losses to end Friday's
session down $1.95, or 3.2 percent, at $59.20.
Brent crude dropped $1.66, or 2.6 percent, to $63.15, after hitting a nine-week low at $61.77 by
2:28 p.m. ET.
For the week, U.S. crude was down nearly 9.6 percent, while Brent has fallen about 8 percent.
WTI broke below $59 a barrel after Baker Hughes reported the U.S. oil rig count rose by 26 rigs to
791, the highest total since April 2015.
Oil price special
coverage
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The week's losses accelerated on Wednesday after government data showed weekly U.S.
production jumping to a record 10.25 million barrels a day. Meanwhile, the nation's stockpiles of
crude rose for a second straight week.
With American output on the rise, concerns are creeping into the market that OPEC's deal with
Russia and other major producers to limit supply could come under pressure, said John Kilduff,
founding partner at energy hedge fund Again Capital.
The head of Russian energy giant Gazprom Neft on Friday said producers could adjust their
commitments under the deal as soon as next quarter, Reuters reported. Gazprom CEO Alexander
Dyukov said he hoped producers would agree to raise output since the market has balanced after
years of oversupply.
"It goes to the sense that folks are getting antsy about the production scheme holding together,"
he said.
Meanwhile, the dollar index is holding above 90 cents, putting pressure on commodities. A
stronger greenback makes it more expensive for holders of other currencies to buy dollar-
denominated commodities like oil.
The inverse relationship between the assets — in which oil prices fall when the dollar rises and
vice versa — has recently reasserted itself.
But commodities were also getting swept up in a broad market volatility. The Dow Jones industrial
average has twice this week closed down more than 1,000 points and is now trading in negative
territory for the year, along with the S&P 500.
"The correlation with the S&P 500 has picked up, so to the extent it's been going down, we've
been going down too," Kilduff said.
Also looming over market is a record number of net long positions in crude contracts, which
signals that many traders still have a bullish outlook for oil prices.
The number of long positions has marched higher in recent months, while short positions, or
wagers that prices will fall, have cratered over the same period. That positioning creates ample
opportunity for profit-taking, which can spark a selling stampede as traders who borrowed to buy
futures rush to cover those positions.
American crude output is soaring so fast that the U.S. is on the verge of elbowing Saudi Arabia
and Russia aside as the top supplier, gushing more than 10 million barrels a day. Drillers this
week added the most oil rigs since January 2017.
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“The supply backlash that we have been expecting in the U.S. because of higher prices became
very real in the market psyche,” Harry Tchilinguirian, head of commodity markets strategy at BNP
Paribas SA in London, said by telephone.
Crude had been on a steady rally since June as the Organization of Petroleum Exporting
Countries and Russia curtailed output to prop up prices, while American stockpiles shrank. But
with some prime shale areas delivering profits with oil at $50 or even less, the U.S. is producing
the most crude since the 1970s.
Traders who try to divine market momentum from technical signals were closely watching New
York crude’s 50-day moving average during the session, with West Texas Intermediate closing
below the key level. A settlement below that mark for several days in a row would be regarded as
a bearish indicator.
WTI for March delivery slid $1.95 to settle at $59.20 a barrel on the New York Mercantile
Exchange, the lowest since Dec. 22. For the week, futures declined 9.6 percent, the most since
January 2016.
U.S. oil explorers increased the number of drilling rigs this week by the most in a year as domestic
crude production roared toward unprecedented highs.
Working rigs drilling for American crude rose by 26, bringing the total to 791, the biggest one-week
increase since Jan. 20, 2017, according to Baker Hughes data released Friday. Despite the worst
weekly drop in crude prices in almost a year, prices remained close to $60 a barrel, high enough
to entice drillers to boost production and use financial instruments to lock infuture profits.
Worldwide oil demand is “rock solid,” Jeffrey Currie, global head of commodities research at
Goldman Sachs Group Inc., said in a Bloomberg TV interview on Friday.
U.S. oil output topped 10 million barrels a day last week for the first time in decades, challenging
Saudi Arabia and Russia for dominance in the world crude market. American explorers are
expected to break through the 11 million-barrel mark later this year.
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NewBase Special Coverage
News Agencies News Release February 06-2018
How China Is About to Shake Up the Oil Futures Market
By Sungwoo Park
China, the world’s biggest oil buyer, is opening a domestic market to trade futures contracts. It’s
been planning one for years, only to encounter delays. The Shanghai International Energy
Exchange, a unit of Shanghai Futures Exchange, will be known by the acronym INE and will allow
Chinese buyers to lock in oil prices and pay in local currency. Also, foreign traders will be allowed
to invest -- a first for China’s commodities markets -- because the exchange is registered in
Shanghai’s free trade zone. There are implications for the U.S. dollar’s well-established role as the
global currency of the oil market.
1. When will trading begin?
From March 26. Multiple rounds of testing have been carried out and all listing requirements met.
The push for oil futures gained impetus in 2017 when China surpassed the U.S. as the world’s
biggest crude importer. The Asian nation’s purchases reached a record high last month.
Top Oil Buyer
China surpasses U.S. as world's biggest crude importer
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Sources: China's General Administration of Customs, U.S. EIA
2. Why is this important for China?
Futures trading would wrest some control over pricing from the main international benchmarks,
which are based on dollars. Denominating oil contracts in yuan would promote the use of China’s
currency in global trade, one of the country’s key long-term goals. And China would benefit from
having a benchmark that reflects the grades of oil that are mostly consumed by local refineries
and differ from those underpinning Western contracts.
3. How do oil futures work?
Futures contracts fix prices today for delivery at a later date. Consumers use them to protect
against higher prices down the line; speculators use them to bet on where prices are headed. In
2017, oil futures contracts in New York and London outstripped physical trading by a factor of 23.
Crude oil is among the most actively traded commodities, with two key benchmarks: West Texas
Intermediate, or WTI, which trades on the New York Mercantile Exchange, and Brent crude, which
trades on ICE Futures Europe in London.
4. Why didn’t China begin trading futures until now?
Lower crude prices have played a part. Chinese oil futures were proposed in 2012 following
spikes above $100 a barrel, but prices in 2017 have averaged little more than $50. There’s also
concern over volatility. China introduced domestic crude futures in 1993, only to stop a year later
because of volatility. In recent years, it repeatedly delayed its new contract amid turmoil in equities
and financial markets. Such destabilizing moves have often prompted China’ government to
intervene in markets in one way or another.
5. What’s China’s track record in commodities?
Nickel was the last major commodity to be listed there in 2015; within six weeks, trading in
Shanghai surpassed benchmark futures on the London Metal Exchange, or LME. In China,
speculators play a far greater role, boosting trading volumes but making markets susceptible to
volatility. In early 2016, the then-head of the LME said it was possible some Chinese traders did
not even know what they were trading as investors piled into everything from steel reinforcement
bars to iron ore. Steep price rises relented when China intervened with tighter trading rules, higher
fees and shorter trading hours.
6. Will foreigners buy Chinese oil futures?
That remains to be seen. Overseas oil producers and traders would need to swallow not just
China’s penchant for occasional market interventions but also its capital controls. Restrictions on
moving money in and out of the country have been tightened in the past two years after a shock
devaluation of the yuan in 2015 prompted a surge in money leaving the mainland. Similar hurdles
have kept foreign investors as bit players in China’s giant stock and bond markets. In another shift
in for commodities markets, China recently approved a plan to allow overseas investors to trade
directly in mainland iron ore contracts.
7. Could the yuan challenge the dollar’s dominance in oil?
Not any time soon, since paying for oil in dollars is an entrenched practice, according to some
analysts. Shady Shaher, head of macro strategy at Dubai-based lender Emirates NBD PJSC,
says it makes sense in the long run to look at transactions in yuan because China is a key market,
but it will take years. Bloomberg Gadfly columnist David Fickling argues that China doesn’t have
“nearly the influence in the oil market needed to carry out such a coup.” On the other hand, paying
in yuan for oil could become part of President Xi Jinping’s "One Belt, One Road" initiative to
develop ties across Eurasia, including the Middle East. Chinese participation in Saudi
Aramco’s planned initial public offering could help sway Saudi opinion toward accepting yuan,
which is used in only about 2 percent of global payments.
Copyright © 2018 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
The Editor :”Khaled Al Awadi” 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
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Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 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 February 2018 K. Al Awadi
Copyright © 2018 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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Copyright © 2018 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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Ne base 11 feruary 2018 energy news issue 1139 by khaled al awadi

  • 1. Copyright © 2018 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 Energy News 11 February 2018 - Issue No. 1139 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE India Wins Piece of Abu Dhabi Oil With Stake in $6 Billion Field Blommberg - Mahmoud Habboush India secured a share in Abu Dhabi’s oil production for the first time after agreeing to pay $600 million for a tenth of one of the emirate’s biggest offshore deposits. State-owned Oil and Natural Gas Corp. and other Indian companies agreed to a 40-year contract for rights to pump crude from the Lower Zakum field in partnership with Abu Dhabi National Oil Co., according to an Adnoc statement. Adnoc signed the deal during a visit of Indian Prime Minister Narendra Modi to the capital of the United Arab Emirates on Saturday. Abu Dhabi, which holds most of the U.A.E.’s oil reserves, is looking for new partners at its offshore fields as the production concession for some deposits expires next month. Partners in Abu Dhabi’s fields generally receive an amount of crude oil commensurate with their stakes in return for tax and royalty payments and investment to boost output. The Indian companies will pay 2.2. billion dirhams ($600 million) to Abu Dhabi for their stake in the field, according to the statement, putting the overall value of the deposit at $6 billion. Adnoc, which retains 60 percent holdings in its fields, aims to award rightsfor another 30 percent of the Lower Zakum field as well as to two other offshore crude blocks.
  • 2. Copyright © 2018 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 Indian consortium is made up of ONGC’s wholly owned subsidiary ONGC Videsh, the Indian Oil Corp., and Bharat PetroResources, which is a 100 percent subsidiary of Bharat Petroleum Corp. Ltd, according to the Adnoc statement. The concession will be operated by Adnoc Offshore, a subsidiary of Adnoc, on behalf of all concession partners, it said. Expanded production from its offshore reservoirs are part of Adnoc’s plans to raise its onshore and offshore production capacity to 3.5 million barrels a day by the end of 2018, according to the statement. Adnoc offshore fields currently produce about 1.4 million barrels a day, it said. The current production of the Lower Zakum field is about 400,000 barrels a day and the plan is to increase the plateau target to 450,000 barrels a day by 2025, according to a statement from ONGC Videsh. The Indian win gives the country, one of the biggest buyers of U.A.E. crude, a direct stake in Middle East barrels. Adnoc will be able to tap demand in the world’s second-most populous nation and expands its portfolio of partners. Adnoc has said it received more than 10 bids from companies seeking to work on the fields. India is the second-biggest buyer of U.A.E. crude behind Japan, according Bloomberg tanker tracking. Adnoc is seeking partners for its biggest fields that will help secure market access for its crude in some of the top energy consumers. Adnoc last year signed deals with Chinese and Korean companies to partner in its main onshore fields for the first time. The company is also seeking partnerships in refining and petrochemicals and may seek to buy assets abroad to secure market share. Adnoc also signed on Saturday an agreement with the Indian Strategic Petroleum Reserves Ltd for a strategic crude oil storage facility in the southern Indian city of Mangalore, according to the Adnoc statement. The agreement covers the storage of 5.86 million barrels of Adnoc crude oil in underground facilities, at the Karnataka facility. “The oil storage facility will help ensure India’s energy security, as well as enable Adnoc to efficiently and competitively meet market demand in India and across the fast developing south east Asian economies,” it said.
  • 3. Copyright © 2018 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 Saudi SWCC reaches 5 MCM/Day desalination,Guinness record REUTERS/Fahad Shadeed + Staff Writer, The Saudi Gazette Saline Water Conversion Corporation is recognised as the biggest seawater desalination facility in the world with production reaching 5 million cubic meters per day. It is a very proud moment for the Kingdom. The Guinness Book of Records has acknowledged the Kingdom’s Saline Water Conversion Corporation (SWCC) as the biggest seawater desalination facility in the world with production reaching 5 million cubic meters per day. Minister of Water and Electricity and SWCC Chairman Abdulrahman Al-Fadli received the Guinness World Records Certificate presented by the Guinness Book of World Records in Al- Khobar, Saudi Press Agency said on Friday. This coincided with the 118th meeting of the SWCC board of directors held in Al-Khobar governorate on Thursday. The meeting was chaired by Al-Fadli. Also present were SWCC Governor Ali Bin Abdulrahman Al-Hazmi and other board members. Al-Fadli congratulated SWCC personnel for increasing production of desalinated water to 5 million cubic meters per day. He said that this supports the Kingdom’s pioneering status throughout the world in the field of developing the desalination industry. This also reflects the keenness of the government to provide the means for a comfortable life for the Kingdom’s population and visitors. He lauded the leading role of SWCC in providing water security as a basic structure for development, which is one of the goals of Vision 2030. The meeting discussed a number of subjects including security, safety and environment reports of last year. It also discussed the most prominent accomplishments of SWCC’s new financial system. The board reviewed the stages reached in the SWCC initiatives within the National
  • 4. Copyright © 2018 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 Transformation Program, apart from the initiative to enhance performance values and culture in the corporation. The meeting discussed efforts exerted by the research institute and its research programs to raise the efficiency of functioning desalination plants and to create new economic technologies to support the desalination industry. The board was briefed on the initiatives and works of the operation and maintenance sector. Al-Fadli lauded the role of SWCC in serving the Guests of Allah and its contribution to achieving the record production. The board approved several recommendations including the financial lists for the 2015-16 workers’ commercial account and the external auditor’s report. About SWCC The Saline Water Conversion Corporation (SWCC) is a Saudi Government Corporation responsible for the desalination of seawater producing electric power and supplying various regions in the Kingdom with desalinated water. The corporation was established by royal decree dated 20/08/1394 H, corresponding to 07/09/1974 H, as an independent government corporation. The Main Objective of the Corporation The corporation aims at consolidating the natural water resource in various regions and cities of the Kingdom where there are severe fresh water shortages, through the process of desalination. The corporation is also habilitated to produce electric power as a by-product depending on economic and technical needs. This is carried out in accordance with a comprehensive plan devised by the corporation and approved by the Council of Ministers. The desalination of water, in addition to the production of electricity, represents the most important objectives of the development plans envisaged by the corporation. One of the main strategic goals for the implementation of these plans is to build a number of desalination plants, along with support facilities in regions suffering from shortages of fresh water supplies, based on the outcomes of technical feasibility studies.
  • 5. Copyright © 2018 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 Iraq: DNO ramping up Kurdistan investments - reports strong 2017 results Source: DNO DNO, the Norwegian oil and gas operator, has announced a 50 percent hike in 2018 spending in the Kurdistan region of Iraq to USD 250 million net to the Company on the back of higher revenues and regular export payments. Annual 2017 revenues stood at USD 347 million, up 72 percent from 2016, bolstered by fourth quarter revenues of USD 116 million, the highest quarterly level in more than three years. The Company fast tracked the development of the Peshkabir field with two wells currently producing a total of 16,000 barrels of oil per day (bopd) and commingled for export with another 97,000 bopd from the other DNO-operated field, Tawke, on the same license. 'We made the Peshkabir Cretaceous discovery early in 2017, initiated early production in June, tripled output by year's end and already have exported two million barrels with an estimated value of USD 100 million - more than twice the investment to date,' said DNO's Executive Chairman Bijan Mossavar-Rahmani. 'And we have only started to appraise and develop this field which continues to surprise to the upside,' he added. A total of six Peshkabir wells will be drilled this year with field production expected to reach 30,000 bopd by summer and continue to ramp up in the second half of the year. At the Tawke field, plans are being finalized with partner Genel Energy plc to drill four wells in 2018, in addition to the currently drilling Tawke-48 well slated for completion by end-February. Elsewhere in Kurdistan, DNO has re-entered and sidetracked the Hawler-1 well to appraise the Benenan heavy oil field in the Erbil license, achieving a technical milestone with the first ever multilateral well and the first ever dual completion in Kurdistan. Testing will commence shortly, and if successful, will be followed by additional wells. The Company received 12 monthly Kurdistan export payments during 2017 totaling USD 380 million net to DNO. The landmark August 2017 receivables settlement agreement, which increased DNO's stake in the Tawke and Peshkabir fields from 55 percent to 75 percent plus three percent of gross license revenues over five years, contributed to higher export payments. Operational cash flow more than tripled to USD 339 million in 2017 and DNO exited the year with a net cash position of USD 30 million versus net debt of USD 139 million at end-2016.
  • 6. Copyright © 2018 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 Angola & Nigeria : set to open giant oilfields this year Total + NewBase Two Opec (Organization of Petroleum Exporting Countries) member countries - Angola and Nigeria - will bring giant oil fields online this year, testing their commitment to cap output amid a global push to curb supply, said a report. Total SA plans to start production at two so-called mega-projects, Kaombo in Angola and Egina in Nigeria, reported Bloomberg citing the company chief executive Patrick Pouyanne. Once both are onstream -- Kaombo by mid-year and Egina in the fourth quarter -- they’ll have a combined capacity of 430,000 barrels a day. That exceeds the total output of Opec members Gabon and Equatorial Guinea, he added. The Opec has been curtailing production for more than a year, achieving unprecedented compliance with caps and driving oil prices up 18 per cent in 2017 as global stockpiles finally shrank. Yet the latest supply data from Angola and Nigeria show that the additional barrels planned for this year would cause both to flout their OPEC commitments should their output remain otherwise unchanged, stated the report. Total didn’t immediately reply when asked whether it expects to curb future output should host governments request it. Angola’s production totaled 1.63 million barrels a day in December, according to Opec, within its quota of 1.67 million a day. Nigeria, whose 1.8 million-barrel cap has only recently come into
  • 7. Copyright © 2018 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 force, pumped 1.86 million a day in the month. Opec has said it’s committed to keeping limits on output through 2018, though a ministerial meeting is scheduled for June to discuss policy. To be sure, neither African country is guaranteed to maintain steady production from existing deposits. Angolan fields have suffered from natural declines, while Nigeria has been subject to militant attacks that sent output to a two-decade low in 2016, it added. Total Exploration & Production in Angola Total has been present in Angola since 1953. In 2013, Total’s equity production amounted to 186,000 barrels of oil equivalent per day (boe/d). Most of this production comes from blocks 17, 0 and 14. At the end of 2013, Total operated close to 600,000 boe/d, making it the country’s leading oil operator. Total’s principal asset in Angola, deep-offshore Block 17 (40%, operator), consists of four major zones: Girassol, Dalia, Pazflor (which are all in production) and CLOV, which is currently being developed. The development of CLOV started in 2010 and will result in the installation of a fourth FPSO with a production capacity of 160,000 boe/d, with a start-up scheduled in mid-2014. In Angola, Total is fully committed to developing the Angolan oil industry by recruiting and training a local workforce. Total is strengthening the local economy through its ambitious “Angolanization” program and technology transfer plan.
  • 8. Copyright © 2018 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 Cyprus: Eni announces gas discovery offshore Cyprus Source: Eni Eni has made a lean gas discovery in Block 6 Offshore Cyprus with Calypso 1 NFW. The well, which was drilled in 2,074 meters of water depth reaching a final total depth of 3,827 meters, encountered an extended gas column in rocks of Miocene and Cretaceous age. The Cretaceous sequence has excellent reservoir characteristics. An intensive and detailed data collection (fluids and rock samples) has been executed on the well. Calypso 1 is a promising gas discovery and confirms the extension of the 'Zohr like' play in the Cyprus Exclusive Economic Zone (EEZ). Additional studies will be carried out to assess the range of the gas volumes in place and define further exploration and appraisal operations. Eni is the Operator of Block 6 with 50% of participation interest while Total is partner with the remaining 50%. Eni has been present in Cyprus since 2013 and detains interests in six licenses located in the EEZ of Cyprus (in Blocks 2, 3, 6, 8, 9 and 11), five of which are operated.
  • 9. Copyright © 2018 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 U.S Cheniere, signing first-ever US long-term LNG contract Tom DiChristopher | @tdichristopher • Cheniere Energy announced it has signed the first-ever long-term deal between an American liquefied natural gas exporter and a Chinese state-owned energy company. • China is the fastest growing LNG market in the world, importing 26.1 million tons in 2016. • Energy giant China National Petroleum Corporation agreed to purchase 1.2 million tons per year from Cheniere's Sabine Pass export terminal. Cheniere Energy announced it has signed the first-ever long-term deal between an American natural gas exporter and a Chinese state-owned energy company, a major step forward for the U.S. gas industry. China is the fastest growing market for liquefied natural gas, a super-cooled form of the fuel that allows it to be shipped overseas in liquid form. Earlier this week, the U.S. Energy Information projected LNG will soon dominate America's natural gas exports, which have mostly been shipped by pipe to Canada and Mexico. China's LNG imports are booming as it aims to reduce its use of coal to generate electricity and power its massive industrial sector. The nation's reliance on coal-fired generation is a big contributor to China's notoriously poor air quality.
  • 10. Copyright © 2018 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 Energy giant China National Petroleum Corporation agreed to purchase 1.2 million tons per year from Cheniere's Sabine Pass export terminal on the Texas-Louisiana border. In 2016, China imported 26.1 million tons of LNG, up 32.6 percent from the previous year, according to IHS Fairplay. That year, Australia supplied about half of those imports, while Persian Gulf monarchy Qatar accounted for about 20 percent of those supplies. The two countries, the world's top LNG exporters, benefit from long-term contracts with big buyers in East Asia. Most of the gas shipped from the upstart American LNG industry has been on the short-term spot market. "We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest growing LNG markets worldwide," Cheniere President and CEO Jack Fusco said in a statement. Cheniere is currently the only company operating a fully operational LNG export terminal in the Lower 48 United States. Dominion Energy's Cove Point terminal on the Chesapeake Bay will start up commercial service next month. The Cameron LNG terminal and Freeport LNG facility are scheduled to open later this year on the Gulf Coast. The news is also a boon to the Trump administration. The U.S. Commerce Department reached an agreement with Chinese authoritiesin May that cleared the way for state-owned companies to negotiate long-term contracts with U.S. LNG exporters, something Beijing had been hesitant to do. Some market-watchers doubted the agreement would lead to actual shipments, but Cheniere's deal with CNPC moves the ball forward. A portion of shipments are scheduled to begin this year.Louisiana Sen. Bill Cassidy cheered the announcement and its impact on the state economy on Friday. "This is great news for working families in Louisiana," Cassidy said in a statement. "From the wellhead to the liquefaction facility, people in Louisiana will benefit from selling more American- made energy."
  • 11. Copyright © 2018 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 NewBase February 11 - 2018 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil plunges 3.2%, at $59.20, worst weekly decline in two years Tom DiChristopher | @tdichristopher + Bloomberg + NewBase A crushing oil price rout extended into a sixth day, with U.S. crude nearly falling below $58 a barrel, as rising production, a strong dollar and a broad financial asset sell-off combined to weigh down the market. The drubbing started last Friday and gathered steam this week, putting U.S. West Texas Intermediate crude on pace for its worst weekly performance in two years. U.S. crude plunged to a seven-week low at $58.07 a barrel, before paring losses to end Friday's session down $1.95, or 3.2 percent, at $59.20. Brent crude dropped $1.66, or 2.6 percent, to $63.15, after hitting a nine-week low at $61.77 by 2:28 p.m. ET. For the week, U.S. crude was down nearly 9.6 percent, while Brent has fallen about 8 percent. WTI broke below $59 a barrel after Baker Hughes reported the U.S. oil rig count rose by 26 rigs to 791, the highest total since April 2015. Oil price special coverage
  • 12. Copyright © 2018 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 The week's losses accelerated on Wednesday after government data showed weekly U.S. production jumping to a record 10.25 million barrels a day. Meanwhile, the nation's stockpiles of crude rose for a second straight week. With American output on the rise, concerns are creeping into the market that OPEC's deal with Russia and other major producers to limit supply could come under pressure, said John Kilduff, founding partner at energy hedge fund Again Capital. The head of Russian energy giant Gazprom Neft on Friday said producers could adjust their commitments under the deal as soon as next quarter, Reuters reported. Gazprom CEO Alexander Dyukov said he hoped producers would agree to raise output since the market has balanced after years of oversupply. "It goes to the sense that folks are getting antsy about the production scheme holding together," he said. Meanwhile, the dollar index is holding above 90 cents, putting pressure on commodities. A stronger greenback makes it more expensive for holders of other currencies to buy dollar- denominated commodities like oil. The inverse relationship between the assets — in which oil prices fall when the dollar rises and vice versa — has recently reasserted itself. But commodities were also getting swept up in a broad market volatility. The Dow Jones industrial average has twice this week closed down more than 1,000 points and is now trading in negative territory for the year, along with the S&P 500. "The correlation with the S&P 500 has picked up, so to the extent it's been going down, we've been going down too," Kilduff said. Also looming over market is a record number of net long positions in crude contracts, which signals that many traders still have a bullish outlook for oil prices. The number of long positions has marched higher in recent months, while short positions, or wagers that prices will fall, have cratered over the same period. That positioning creates ample opportunity for profit-taking, which can spark a selling stampede as traders who borrowed to buy futures rush to cover those positions. American crude output is soaring so fast that the U.S. is on the verge of elbowing Saudi Arabia and Russia aside as the top supplier, gushing more than 10 million barrels a day. Drillers this week added the most oil rigs since January 2017.
  • 13. Copyright © 2018 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 “The supply backlash that we have been expecting in the U.S. because of higher prices became very real in the market psyche,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said by telephone. Crude had been on a steady rally since June as the Organization of Petroleum Exporting Countries and Russia curtailed output to prop up prices, while American stockpiles shrank. But with some prime shale areas delivering profits with oil at $50 or even less, the U.S. is producing the most crude since the 1970s. Traders who try to divine market momentum from technical signals were closely watching New York crude’s 50-day moving average during the session, with West Texas Intermediate closing below the key level. A settlement below that mark for several days in a row would be regarded as a bearish indicator. WTI for March delivery slid $1.95 to settle at $59.20 a barrel on the New York Mercantile Exchange, the lowest since Dec. 22. For the week, futures declined 9.6 percent, the most since January 2016. U.S. oil explorers increased the number of drilling rigs this week by the most in a year as domestic crude production roared toward unprecedented highs. Working rigs drilling for American crude rose by 26, bringing the total to 791, the biggest one-week increase since Jan. 20, 2017, according to Baker Hughes data released Friday. Despite the worst weekly drop in crude prices in almost a year, prices remained close to $60 a barrel, high enough to entice drillers to boost production and use financial instruments to lock infuture profits. Worldwide oil demand is “rock solid,” Jeffrey Currie, global head of commodities research at Goldman Sachs Group Inc., said in a Bloomberg TV interview on Friday. U.S. oil output topped 10 million barrels a day last week for the first time in decades, challenging Saudi Arabia and Russia for dominance in the world crude market. American explorers are expected to break through the 11 million-barrel mark later this year.
  • 14. Copyright © 2018 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 February 06-2018 How China Is About to Shake Up the Oil Futures Market By Sungwoo Park China, the world’s biggest oil buyer, is opening a domestic market to trade futures contracts. It’s been planning one for years, only to encounter delays. The Shanghai International Energy Exchange, a unit of Shanghai Futures Exchange, will be known by the acronym INE and will allow Chinese buyers to lock in oil prices and pay in local currency. Also, foreign traders will be allowed to invest -- a first for China’s commodities markets -- because the exchange is registered in Shanghai’s free trade zone. There are implications for the U.S. dollar’s well-established role as the global currency of the oil market. 1. When will trading begin? From March 26. Multiple rounds of testing have been carried out and all listing requirements met. The push for oil futures gained impetus in 2017 when China surpassed the U.S. as the world’s biggest crude importer. The Asian nation’s purchases reached a record high last month. Top Oil Buyer China surpasses U.S. as world's biggest crude importer
  • 15. Copyright © 2018 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 Sources: China's General Administration of Customs, U.S. EIA 2. Why is this important for China? Futures trading would wrest some control over pricing from the main international benchmarks, which are based on dollars. Denominating oil contracts in yuan would promote the use of China’s currency in global trade, one of the country’s key long-term goals. And China would benefit from having a benchmark that reflects the grades of oil that are mostly consumed by local refineries and differ from those underpinning Western contracts. 3. How do oil futures work? Futures contracts fix prices today for delivery at a later date. Consumers use them to protect against higher prices down the line; speculators use them to bet on where prices are headed. In 2017, oil futures contracts in New York and London outstripped physical trading by a factor of 23. Crude oil is among the most actively traded commodities, with two key benchmarks: West Texas Intermediate, or WTI, which trades on the New York Mercantile Exchange, and Brent crude, which trades on ICE Futures Europe in London. 4. Why didn’t China begin trading futures until now? Lower crude prices have played a part. Chinese oil futures were proposed in 2012 following spikes above $100 a barrel, but prices in 2017 have averaged little more than $50. There’s also concern over volatility. China introduced domestic crude futures in 1993, only to stop a year later because of volatility. In recent years, it repeatedly delayed its new contract amid turmoil in equities and financial markets. Such destabilizing moves have often prompted China’ government to intervene in markets in one way or another. 5. What’s China’s track record in commodities? Nickel was the last major commodity to be listed there in 2015; within six weeks, trading in Shanghai surpassed benchmark futures on the London Metal Exchange, or LME. In China, speculators play a far greater role, boosting trading volumes but making markets susceptible to volatility. In early 2016, the then-head of the LME said it was possible some Chinese traders did not even know what they were trading as investors piled into everything from steel reinforcement bars to iron ore. Steep price rises relented when China intervened with tighter trading rules, higher fees and shorter trading hours. 6. Will foreigners buy Chinese oil futures? That remains to be seen. Overseas oil producers and traders would need to swallow not just China’s penchant for occasional market interventions but also its capital controls. Restrictions on moving money in and out of the country have been tightened in the past two years after a shock devaluation of the yuan in 2015 prompted a surge in money leaving the mainland. Similar hurdles have kept foreign investors as bit players in China’s giant stock and bond markets. In another shift in for commodities markets, China recently approved a plan to allow overseas investors to trade directly in mainland iron ore contracts. 7. Could the yuan challenge the dollar’s dominance in oil? Not any time soon, since paying for oil in dollars is an entrenched practice, according to some analysts. Shady Shaher, head of macro strategy at Dubai-based lender Emirates NBD PJSC, says it makes sense in the long run to look at transactions in yuan because China is a key market, but it will take years. Bloomberg Gadfly columnist David Fickling argues that China doesn’t have “nearly the influence in the oil market needed to carry out such a coup.” On the other hand, paying in yuan for oil could become part of President Xi Jinping’s "One Belt, One Road" initiative to develop ties across Eurasia, including the Middle East. Chinese participation in Saudi Aramco’s planned initial public offering could help sway Saudi opinion toward accepting yuan, which is used in only about 2 percent of global payments.
  • 16. Copyright © 2018 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 The Editor :”Khaled Al Awadi” 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 28 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 February 2018 K. Al Awadi
  • 17. Copyright © 2018 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 Thank you for sharing with us your comments and thoughts on the above issue, similarly we would like to share with our daily publications on Energy news via own NewBase Energy News - call us for details khdmohd@hawkenergy.net Your Energy Consultant for the GCC area Khaled Al Awadi
  • 18. Copyright © 2018 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 For Your Recruitments needs and Top Talents, please seek our approved agents below