New base 1047 special 02 july 2017 energy news

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NewBase July 02 - 2017 - Issue No. 1047 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Empower, partners of UN initiative sign Global Co-operation Agreement
(WAM) -- The Emirates Central Cooling Systems Corporation, Empower, signed a Global Co-
operation Agreement with the partners of the United Nations Environment Programme, District
Energy in Cities, at the 108th Annual Conference & Tradeshow of International District Energy
Association, IDEA, held in Scottsdale, United States, US, from 26th to 29th June.
The Memorandum of Understanding,
MoU, aims to enhance the
conservational impact and development
of district cooling in the UAE.
Earlier this year, Ahmad bin Shafar,
CEO of Empower, was chosen by the
United Nations Environment Programme
to become the special advisor on district
cooling within its "Global District Energy
in Cities" initiative.
The agreement defines common
objectives and a collaborative framework
intended to increase deployment of
district energy in respective countries
around the globe. The goal is to increase energy efficiency, reduce emissions, strengthen local
and regional economies, and deliver the social and environmental benefits of efficient district
energy systems.
"At Empower we’ve always been committed to accelerating the deployment of district energy. The
signing of the Global Co-operation Agreement is a testament to support Dubai’s Integrated Energy
Strategy directed by Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh
Mohammed bin Rashid Al Maktoum, to build a green economy in the UAE and transform Dubai
into a global centre for clean energy and green economy.
"While the agreement will facilitate international collaboration and cross-border exchange, it will
also help us increase energy efficiency, enhance energy security, strengthen the local economy
and reduce harmful emissions. In addition, it will also help educate and inform governments and
citizens on the economic, environmental and energy-efficiency advantages of district energy
systems in order to foster adoption of policies and regulations favourable for expansion and
deployment," Shafar said.
In effect, until 60 months from the date of execution, the Global Co-operation Agreement brings
together countries such as Canada, China, Colombia, Denmark, Germany, Japan, Singapore, the
UAE, the United Kingdom, and the US to jointly share efforts to advance the district energy
industry and promote sustainable and resilient technologies.

Egypt raises fuel prices by up to 50% under IMF deal
Reuters
Egypt on Thursday hiked fuel prices by up to 50 per cent to help meet terms of a $12 billion (Dh44
billion) IMF loan deal, a sharper rise than expected by many struggling with soaring living costs
and a further test of President Abdul Fattah Al Sissi’s popularity.
Fuel price increases had been widely anticipated as part of Egypt’s loan accord with the
International Monetary Fund (IMF) and Thursday’s measures were the second rise since the
government floated the pound currency in November.
Government officials say spending cuts will help revive an economy where subsidies have
accounted for about a quarter of state expenditures. But austerity carries risks for Al Sissi as
inflation and a contested deal to hand two Red Sea islands to Saudi Arabia have eroded his public
standing.
Prime Minister Sherif Esmail told reporters after the announcement that officials would monitor
market prices, adding: “We will not allow any greed and exploitation of our citizens.”
Petroleum Minister Tarek Al Molla told Reuters the price of 92-octane gasoline had been put up by
more than 40 per cent to 5 Egyptian pounds ($0.2767) from 3.5 pounds per litre. Diesel and 80-
octane — the most commonly used fuel categories — rose more than 50 per cent to 3.65 pounds
per litre from 2.35 pounds.
The government also increased the price of cooking gas cylinders — used mostly by poorer
Egyptians — by 100 per cent to 30 pounds from 15 pounds per cylinder.
Molla said the total subsidies for petroleum products in 2017-2018 would fall to 110 billion
Egyptian pounds (Dh22.2 billion) from 145 billion pounds.
Last year, the government embarked on an ambitious reform programme to revive the economy
that includes lifting subsidies, raising taxes and loosening capital controls as part of a three-year
IMF agreement.
Austerity set to aggravate economic pain
Egypt has been struggling since a 2011 uprising drove foreign investors and tourists away, and
many Egyptians have been hit hard by record inflation and a local currency that has lost half its
value since it was floated in November.
“It’s very wrong timing. People can’t take it anymore, all prices will increase,” taxi driver Ehab
Labib said in Cairo. “I will sell this taxi, what else am I going to do?”
Government officials say short-term austerity under the IMF plan will free up more financing for
infrastructure and help draw foreign investment to help create jobs and economic growth.
Egypt is expected to receive the second IMF loan instalment of $1.25 billion within the coming few
weeks.
The central bank floated the pound last November as part of reforms agreed with the IMF. At that
time, the government increased fuel prices by as much as 46 per cent.
“The fuel prices hike was expected in line with the government’s economic programme and the
IMF deal. It will directly affect the middle and low-income classes, we will see a second wave of
inflation,” Reham Al Desouki, economist at Arqaam Capital, told Reuters.

Indonesia: Conrad Petroleum's Mako South-1 well, offshore
Indonesia, flows gas… Source: Empyrean Energy
JV partner Empyrean Energy has been advised by the operator of the Duyung PSC in the Natuna
Basin, offshore Indonesia, Conrad Petroleum, that the Mako South-1 well has flowed on Drill Stem
Test ('DST') at a rate of 10.9 Million Cubic Feet of Gas Per Day ('mmcfgpd') on a choke of 128/64.
The well is currently shut in for buildup. Cleanup operations commenced early on 26 June 2017
and by midday on 27 June 2017, the well was flowing at a rate of 10.9 mmcfgpd through 128/64
inch choke with a surface flowing pressure of 225 psi. The gas is pure methane completely devoid
of any traces of H2S (hydrogen sulphide) or CO2 (carbon dioxide).
Tom Kelly, Empyrean CEO, commented:
'Empyrean is absolutely delighted with the rate gas has flowed at Mako South-1 well, our first
major exploration project since our efforts of re-building the portfolio. It is a great credit to the
Conrad team and Empyrean's
participation has been made
possible through the efforts of our
Mr. Frank Brophy.
We have a very aggressive and
potentially transforma6onal
programme over the next 6 months
and our first project achieving this
level of success has exceeded both
ours and Conrad's expectations.
We look forward to exciting months
ahead as we continue to unlock
value for our shareholders'.

Germany: DONG Energy inaugurates two offshore wind farms
with total capacity of 582 megawatts,…. CNBC - Anmar Frangoul + Dong Enenrgy
DONG Energy has announced the inauguration of the Gode Wind 1 and 2 offshore wind farms.
The wind farms are situated 45 kilometers off the coast of Germany, and construction on the
project began in 2015.
The announcement was made earlier this week, with DONG Energy saying that the wind farms –
with 97 turbines and a total capacity of 582 megawatts – are set to produce enough power to
supply around 600,000 German households every year. DONG Energy said that it owns half of
both Gode Wind 1 and 2.
"The wind turbines at Gode Wind 1 and 2 are already generating clean power off the coast of
Norddeich, and our next German offshore wind farm, Borkum Riffgrund 2, is well underway,"
DONG Energy's Samuel Leupold said in a statement.
"These large-scale projects are testament that offshore wind has become a reliable, predictable
and cost effective technology which will contribute significantly to Germany's energy transition."
Europe is something of a world leader when it comes to offshore wind. According to the Global
Wind Energy Council (GWEC), at the end of 2016 almost 88 percent of all offshore wind
installations were in "waters off the coast of ten European countries." The GWEC adds that the
U.K. is home to the world's largest offshore wind market, followed by Germany.
"Through technological progress, system services and efficiency, the offshore wind industry has
become a driver in the energy industry and focuses on strengthening competitiveness in export,
innovation and digitisation," Uwe Beckmeyer, parliamentary state secretary at Germany's Federal
Ministry for Economic Affairs and Energy, said. "A strong home market is a crucial factor in this
regard.

Opec oil output jumps to 2017 high as Nigeria, Libya pump more
By Reuters + ( images by NewBase)
London: Opec oil output has risen in June by 280,000 barrels per day (bpd) to a 2017 high, a
Reuters survey found, as a further recovery in supply from the two member countries exempt from
a production-cutting deal offset strong compliance by their peers.
High compliance by Gulf producers Saudi Arabia and Kuwait helped keep Opec's adherence with
its supply curbs at a historically high 92 per cent in June, compared with 95 per cent in May, the
survey found.
But extra oil from Nigeria and Libya, exempted from the cut because conflict curbed their output,
means supply by the 13 Opec members originally part of the deal has risen far above their implied
production target.
The recovery adds to the challenge the Opec-led effort to support the market is facing from a
persistent inventory glut. If the recovery lasts, calls could grow within Opec for the exempt
countries to be brought into the production deal.
"The rise in Opec production will further delay the point at which balance is restored on the oil
market," said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
As part of a deal with Russia and other non-members, the Organisation of the Petroleum
Exporting Countries (Opec) originally pledged to reduce output by about 1.2 million bpd for six
months from Jan. 1.

Oil prices have gained some ground but high stocks and rising US output kept them in check. To
provide additional support for prices, the producers decided in May to prolong the deal until March
2018.
June's biggest rise came from Nigeria, where output extended a recovery after being curtailed by
militant attacks on oil installations. The second-biggest was from Libya. Nigerian output is
expected to rise further in coming weeks. Planned exports in August are scheduled to reach at
least 2 million bpd, a 17-month high.
In Libya, output was on average higher despite fluctuation and has now exceeded 1 million bpd, a
four-year high. Production remains some way short of the 1.6 million bpd Libya pumped before the
2011 civil war.
Saudi Arabia pumped 40,000 bpd more, the survey found, although its compliance remained
above 100 per cent. Even with June's increase, the curb achieved by Opec's top producer is
564,000 bpd, well above the target cut of 486,000 bpd.
Aside from a rise in Angolan exports, no other significant change in output occurred elsewhere in
Opec.
Opec announced a production target of 32.5 million bpd last year, which was based on low figures
for Libya and Nigeria. The target includes Indonesia, which has since left, and does not include
Equatorial Guinea, the latest country to join Opec.
The Libyan and Nigerian increases mean Opec output in June averaged 32.57 million bpd, about
820,000 bpd above its supply target, adjusted to remove Indonesia and not including Equatorial
Guinea.
Equatorial Guinea, which became an Opec member in late May, has now been added to the
Reuters survey. The country's crude production is estimated at 150,000 bpd, which brings total
Opec production in June to 32.72 million bpd.

NewBase 02 July 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Price Analysis for July 3, 2017
FX Financial - ByDavid Becker
Oil prices surged higher on Friday following the Baker Hughes rig count which showed that rigs
dropped for the first time in 24-weeks, as prices near $45 per barrel started to become
unprofitable to some shale producers.
Crude markets have been underpinned by data on Wednesday showing a dip in U.S. production,
which reflects curtailed supply from costly shale mining operations following five weeks of price
declines. A weaker dollar is also helping to buoy prices.
The EUR/USD climbed to a 1-year high on Thursday. Since crude oil is priced in dollars, a
weaker dollar makes crude oil less expensive in other countries. China’s manufacturing PMI
increased more than expected which also helped buoy crude oil prices.
Technicals
Crude oil prices surged 2.5% on Friday, recapturing the 46 handle, following the Baker Hughes rig
count which declined for the first time in 24-weeks. With hedge funds out of their long position in
futures and options, the move back into crude oil long positions helped buoy prices. Resistance is
seen near the 50-day moving average at 47.54. A break of this level would lead to a test of a
downward sloping trend line that comes in near 50. Support is seen near the 10-day moving
average at 43.96.
Momentum on crude oil prices has turned positive as the MACD (moving average convergence
divergence) index generated a crossover buy signal. This occurs as the spread (the 12-day
Oil price special
coverage

exponential moving average minus the 26-day exponential moving average) crosses above the 9-
day exponential moving average of the spread. The index moved from negative to positive
territory confirming the buy signal. The MACD histogram is printing in the black with an upward
sloping trajectory which points to higher crude oil prices.
Rig Counts Finally Dipped
According to Baker Hughes, the oil service giant, the number of active oil and gas rigs in the
United States fell by a single rig this week, and thus concludes the US shale patch’s impressive
run of 23 weeks of steady gains.
The decrease comes as oil prices are on track to record their worst first-half performance since H1
1998. The number of oil rigs in operation decreased by two, while gas rigs increased by one.
Combined, the total oil and gas rig count in the US now stands at 940 rigs, which is 509 rigs over
a year ago today. While the numbers were down for the first week in a long time in the United
States, Canada has seen four weeks of two-digit gains, adding 90 rigs in total in that timeframe,
after this week’s 19-rig gain.

Oil, crushed in the first half of this year, is about to rebound, analyst says
Oil took a tumble in the first half of 2017, falling 14 percent in an oversupplied market, but one
fund manager believes oil is reaching a turning point.
"The energy sector has been down but it is not out," Rob Thummel, managing director for Tortoise
Capital Advisors, told CNBC's "Power Lunch" on Friday. "The fundamentals are set up for a
second-half comeback."
• Oil fell 14 percent in the first half of 2017.
• Tortoise Capital's Rob Thummel believes the second half of the year will see an increase in
oil prices.
• The U.S. rig count fell for the first time since January, Baker Hughes reported Friday.
Crude prices posted their worst first-half performance since 1998 as OPEC-led production cuts
failed to achieve their goal: to significantly shrink huge oil stockpiles around the world. Thummel
believes that is going to change in the back half of 2017.
"You are going to see crude oil inventories globally and
domestically begin to decline month after month. That will
support crude oil prices, boosting the entire sector," Thummel
said.
Thummel also sees a lack of capital investment in U.S.
production leading to an undersupply of crude oil, resulting in a
rise in crude prices.
Oilfield services firm Baker Hughes reported on Friday that its
weekly count of oil rigs operating in U.S. fields fell by two rigs, the first decline since January. Last
week, U.S. crude output dropped 100,000 barrels per day to 9.3 million bpd, the steepest weekly
fall since July 2016.
While the oil market rebalancing plays out, Thummel — whose firm has $16.3 billion of assets
under management — thinks the midstream energy transportation and storage sector is an
attractive investment.
"Put your money in energy infrastructure, it's a great place to be," Thummel said. "You get paid
while you are waiting for higher oil prices." "If you look at where [energy infrastructure] trades at
historical levels, they look pretty cheap right now," Thummel added.

All eyes on July for U.S. oil demand to drain glut
Reyters - Devika Krishna Kumar | NEW YORK
U.S. oil traders are hoping the sweltering days of July are also hot ones for demand, believing the
new month is the last best opportunity this year to see the overhang of inventories finally subside.
Export opportunities to Asia and big U.S. summer driving demand - expected to hit a record this
weekend - are seen as the primary drivers for a drawdown in stocks that have remained
stubbornly above seasonal averages.
July is usually a big month for drawdowns: Over the last five years, inventories of crude oil have
dropped by an average of 2.9 million barrels per week in July, according to the U.S. Energy
Information Administration.
But analysts warn that if inventories do not draw down in earnest, it may dash the hopes of many
in the industry of seeing higher prices by the end of this year.
"Typically June/July represents the seasonal peak in refinery demand for crude," said David
Thompson, executive vice-president at Powerhouse, an energy-specialized commodities broker in
Washington. "It gets tougher to use up all that crude as refinery utilization starts to ease off as we
move past the peak of summer driving season."
A record number of motorists are expected to hit the road for the Fourth of July holiday. U.S.
gasoline demand was up 0.4 percent in April from the year-ago period, the first year-over-year
increase since December, according to the latest U.S. government data.
In addition, a window has opened for
U.S. crude exports to Asia, after
prices made it uneconomical to send
U.S. supplies offshore in recent
months. Robust appetite from
Japanese and South Korean buyers
could help soak up excess supplies.
Investors came into this year
optimistic, and indeed, U.S. crude
prices CLc1 topped out near $55 a
barrel in February in the wake of the
deal struck by the Organization of the
Petroleum Exporting Countries with
other key producers to reduce supply
by 1.8 million barrels per day (bpd) that began in January. But OECD total oil inventories are still
above 3 billion barrels due to an unexpected recovery in Libyan and Nigerian supplies and a
rebound in U.S. shale production.
Several banks in the last week cut their oil price projections for the rest of the year, with analysts
from Bank of America-Merrill Lynch on Friday saying the "the much trumpeted OPEC output deal
has been a complete flop."
U.S. crude futures have slumped about 15 percent so far this year to about $46 per barrel, and as
of Friday, ended its worst half-year performance in 19 years. "We expect to get real clues in the
next 4-5 weeks about second half 2017 oil market sentiment," Credit Suisse said in a note on
Thursday. "If stocks do not fall much next month, at the very least we would worry that bearish
sentiment again would come to the fore.

Low inventories and supply developments are affecting Asian
residual fuel oil prices…… Source: U.S. Energy Information Administration, based on Bloomberg
The difference between high-sulfur residual fuel oil prices in Singapore and crude oil prices in
Dubai/Oman has been narrowing since the spring. Low inventories of residual fuel oil in Singapore
and lower residual fuel oil production from Russia are likely contributing to the narrowing price
spread.
Residual fuel oil, the petroleum product remaining after higher-value liquids such as gasoline
feedstocks and distillate are distilled from crude oil, typically sells at a lower price than crude oil.
Residual fuel oil is used in many sectors, including marine transportation, power generation,
commercial furnaces and boilers, and various industrial processes.
For many Asian countries, petroleum product prices tend to follow Dubai/Oman crude oil, which is
the benchmarkMiddle Eastern crude oil exported to Asia.
Moreover, because Singapore is the largest global hub for marine ships to refuel, the residual fuel
oil spot price at Singapore is considered representative of the region.
Dubai/Oman crude oil is classified as a medium and sour crude oil because of its relatively
low API gravity (density) and high sulfur content compared with light, sweet crude oils such as
Brent.
Relatively high demand and relatively low inventories are both contributing to the increase in the
price of Singapore residual fuel oil relative to the price of Dubai/Oman crude oil.
In Singapore, residual fuel oil inventories were 22.2 million barrels for the week ending June 28,
slightly below the five-year average for this time of year but recovering from when they were more

than 6 million barrels below the five-year average at the beginning of June. Residual fuel oil sales
were up 4% year-to-date through May, according to the Maritime and Port Authority of Singapore.
The recent diplomatic dispute between Qatar and Saudi Arabia, Bahrain, Egypt, and the United
Arab Emirates, which included a ban of Qatari-flagged vessels entering the United Arab Emirates
port of Fujairah, may have led some vessels to refuel in Singapore instead.
Source: U.S. Energy Information Administration, based on Bloomberg, International Enterprise
Regional crude oil production decisions are also affecting relative prices. The voluntary crude
oil production reductions from several countries within and outside the Organization of the
Petroleum Exporting Countries (OPEC), who tend to produce medium- and sour-grade crude oils,
reduce the availability of these grades to refiners.
Because of their relatively low API gravity (density), medium and sour crude oils yield more
residual fuel oil from distillation than light, sweet crude oils. As regional refineries run more light,
sweet crude oil, less residual fuel oil is being produced.
Russia, traditionally a large producer and exporter of residual fuel oil, has also reduced its
production and exports over the past year.
Several major Russian refiners completed investments in secondary refinery units, allowing them
to further process residual fuel oil into higher-value liquid fuels. Furthermore, changes in Russia’s
export taxes have affected their trade. Before 2017, Russian exports of residual fuel oil were taxed

at a lower rate than Russian exports of crude oil. In January, however, the tax rate for residual fuel
oil was raised to equal that for crude oil.
Source: U.S. Energy Information Administration, based on Joint Organizations Data Initiative

NewBase Special Coverage
News Agencies News Release 02 July 2017
Big Energy Just LOVES the Little Guy
By Liam Denning
H E R : C H R I S T O P H E R F U R L O N G / G E T T Y I M A G E S
Andrew Vesey, CEO of Australian utility AGL Resources Ltd., made an interesting comment at a
recent Bloomberg New Energy Finance summit in New York:
There are signs of this cropping up all over. Royal Dutch Shell Plc has just launched a
service, TapUp, that lets you order a refill for your car at home rather than drive to a gas station.
Rival BP Plc earlier this month hosted an investor day dedicated entirely to the downstream part
of its business -- that is, things like chemicals and retail that are closer to the customer -- for the
first time in six years.
Meanwhile, Enel SpA, the Italian utility, just announced a $282 million deal to buy EnerNOC Inc.,
a Boston-based company that helps large energy users manage their demand. This
follows similar acquisitions by other utilities such as Southern Co. and Edison International in
the past couple of years and the launch of non-energy related customer-service businesses such
as Centrica Plc's "Local Heroes" handyman platform.
The most interesting aspect of Vesey's comment, though, is that customers might only just be
finding their place in the modern world's indispensable industry now, in 2017. Imagine the same
being said for the technology or health-care sectors.
But energy is different. Or, rather, it was.
Oil majors and utilities have long been obsessed with supply. Customers, after all, are slaves to
the gas pump and the light switch. This isn't to say they were ignored altogether. But one look at
the financials of, say, one big integrated oil company quickly identifies the center of gravity in the
business:
Upper Level
The upstream business of finding and producing oil and gas dominates Exxon Mobil's financials,
as it tends to do at integrated oil majors

Oil majors spent much of the past couple of decades selling refineries and retail sites (helping to
strengthen the independent refining and marketing industry in the process) and redeployed the
funds into upstream resources, no matter how exotic (read: high-cost.)
On the power side, while utilities clearly have a direct, hardwired link to the customer, frequently
it isn't your standard relationship. In the U.S., regulated monopolies limit customer choice except
in certain states (such as Texas); the key thing is avoiding blackouts and price spikes rather than
winning hearts and minds. In a survey conducted in 2014 by the SmartGrid Consumer Collective
-- an industry and consumer association -- while four out of five respondents said they were
satisfied with their utility, only 58 percent said they believed their utility acted in consumers' best
interest.
As far back as 1960, Theodore Levitt's seminal paper Marketing Myopia took aim at the oil
industry's complacency:
Not since John D. Rockefeller sent free kerosene lamps to China has the oil industry done
anything really outstanding to create a demand for its product.
He was similarly scathing of electric utilities "enthroned on a pedestal of invincible growth".
Even without such baggage, it is hard to turn a commodity like energy into a consumer product at
the best of times. And yet Big Energy must try, because that old assumption of ever-increasing
demand and lack of competition that Levitt warned against is being called into question.
U.S. oil and electricity demand has clearly flattened over the past decade (although gas has
made big strides, largely at coal's expense):
The Plateau
Gas has taken market share from coal but U.S. electricity and oil demand has been flat for about a
decade

As consultant Harry Benham discusses in this recent blog post, though, growth in primary energy
consumption for the world as a whole has slowed, even amid relatively low prices and reasonable
economic growth:
Slow Burn
Primary energy demand is growing at low levels historically associated with price spikes or
recessions. Neither is the case today
This trend toward lower growth has a profound effect on the economics of Big Energy because,
whether an oil major or a utility, they are making investment decisions on projects with lifespans
typically measured in decades, and which must support rising dividend payments.
Investing in raw production capacity in the traditional form of giant oil fields or power plants makes
less sense in this environment. Hence, for example, the exit from oil sands by several of the
international majors and, at least in developed markets, the paucity of new coal-fired and nuclear
power plants (unless there's some sort of government backing).
Exacerbating this is the breakdown of the traditional walls between different energy markets.
The clearest example is road transportation, which currently accounts for about half of global oil
demand and, in BP's latest long-term projection, almost half of demand growth out to 2035.
Besides the impact of more fuel-efficient regular vehicles, there is the growing threat from
electric and hybrid vehicles, which have the potential to break oil's grip on its top market
along the lines of what Levitt predicted 57 years ago (he might have been amused to think oil
companies might actually end up competing with utilities to power cars). While we may yet see
further cyclical upswings in oil prices, this is a structural challenge that will only grow over time.
No wonder Shell is offering to run the fuel over to you. But no wonder all the oil majors are
emphasizing adding value to their barrels at points closer to the customer, given there's less
margin at the wellhead.

Exxon -- run these days, like Shell, by a man mostly steeped in the downstream business --
emphasized during its investor day in March how it could reap higher returns from low-priced
U.S. oil and gas by feeding it into the company's own refineries and petrochemical plants. And at
BP's recent presentation, it laid out ambitious targets for its downstream business, such as
boosting its pre-tax earnings by $3.4 billion, or almost 60 percent, by 2021. You can see why:
Doubling Down
BP is banking on its downstream business to help claw back some of the profits lost in its
upstream business
Similarly, the business of simply producing and transmitting ever more raw electrons is not as
solid as it once was.
That's one reason why utilities have been shedding their "upstream" unregulated power plants. It
is also why merchant generation companies such as Dynegy Inc. rely more on merger
speculation to keep their stock price reasonably buoyant these days rather than anything more
fundamental. On that point, it is worth noting that the company cited most often as a potential
suitor for Dynegy, Vistra Energy Corp., derives a lot of its competitive strength from a solid retail
electricity business in Texas.

Utilities have in part retreated to the apparent safety of their regulated assets, such as
transmission and distribution networks. And, like the oil majors, some have embraced gas where
they can, paying eye-watering multiples for acquisitions in some cases.
Regulated returns offer some protection, particularly in less competitive markets such as the
southeastern U.S. Again, though, for a business valued on its long-term dividend-paying potential,
the trend is not its friend.
Besides the lack of growth in electricity demand in both the U.S. and the European Union,
customers have a growing set of options beyond their traditional utility supplier. Rooftop panels on
households are one example of this, but the bigger concern is on the commercial and industrial
side -- which, in the U.S., accounts for more than half of electricity suppliers' revenue:
Big Business
Corporations around the world are signing more long-term power purchase agreements that
compete with the traditional utility business model
Corporations are looking beyond their usual suppliers for a variety of reasons. One is to manage
costs. Falling prices for solar and wind energy, as well as the ability to expand these power
sources in a modular way, provide a good hedge against rising utility bills. These also help
companies keen to burnish their green credentials. Most intriguingly, big power users such as
Apple Inc. have registered in some markets such as California as utilities themselves,
so they can sell excess power from the sources they've commissioned.
This expansion, in both consumer preferences and options for their power, as well as the
shrinking growth opportunity, are why utilities are experimenting with different customer offerings
in developed markets. If the old business was to simply build the biggest hosepipe of electrons,
the one taking shape now involves helping customers manage their demand -- see Enel's
EnerNOC deal -- optimize their sources of supply, and, if possible, sell them other services. As
this (very simplified) chart of inputs and outputs to America's electricity system shows, there is
clearly a big opportunity to do things differently if possible:

Deadbolts
Two-thirds of the energy that goes into U.S. electricity generation is wasted
Even in emerging markets, where overall demand will keep growing, considerations around
pollution (including carbon dioxide), capital availability and energy security mean equipment and
services to boost efficiency and manage demand will be valuable alternatives to simply building
more power plants and wires.
Similar to the oil majors, this pivot toward adding more value at the customer end rather than
relying on a tight grip on primary sources of supply, while necessary, isn't going to be easy for
utilities. Even for relative leaders in this, such as Centrica, retailing energy still generates two to
four times as much revenue as services do, according to Bloomberg New Energy Finance.
And, again similar to what the oil business is experiencing in terms of shale supply and
transportation markets, new entrants to the power game offer things like software, sensors,
storage and services where traditional utilities haven't necessarily developed a competitive edge.
That is partly because these things compete with the incumbent business model -- which, for now,
remains highly profitable, blunting the instinct for change.
Like any other consumer industry, though -- cameras, vehicles, telephones,
computers, clothing, books, groceries -- energy's 20th-century model is officially up for
grabs. The industry's embrace of all things downstream is the surest sign of it.
This column does not necessarily reflect the opinion of NewBase and its owners.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase July 2017 K. Al Awadi

Solar power is the key to renewable development in the GCC. Installed solar capacity is expected
to reach 76 GW by 2020, representing massive opportunity for suppliers in the region.
Co-located with The Big 5 Dubai, The Big 5 Solar launches this November 26 - 29th 2017. 20% of The Big 5
visitors in 2016 were looking for solar technologies making The Big 5 Solar an ideal platform to meet
dedicated buyers, get inspired at the Global Solar Leader's Summit and open up to new markets.

New base 1047 special 02 july 2017 energy news

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