Abu Dhabi Petrochemicals plans expansion and IPO

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NewBase July 17 - 2017 - Issue No. 1052 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Abu Dhabi Petrochemicals plans to expans include
a public share sale down the road
The National Anthony McAuley
Mark Garrett, chief executive of Borealis. The company, which is majority owned by Abu
Dhabi’s strategic investment fund, Mubadala Investment Company, is
eyeing growth in the UAE. Courtesy of Borealis .
Pore through the world’s Top 50 league table of chemicals producers and
you may be hard-pressed to find a mention of Abu Dhabi. That is set to
change.
“If you look at it, Abu Dhabi Inc is actually No 2 in the world of olefins and
polyolefins, [one of the largest petrochemicals sectors], behind only ExxonMobil,” says Mark
Garrett, the chief executive of Vienna-based Borealis, which is majority owned by Abu Dhabi’s
strategic investment fund, Mubadala Investment Company, and the anchor company of its
petrochemicals portfolio.
By Abu Dhabi Inc, Mr Garrett is referring to the combined operations of Borealis, which last year
had gross sales of €9 billion (Dh37.9bn) plus Calgary-based Nova Chemicals, with as much as
US$4bn in annual sales, the petrochemicals division of Spain-based Cepsa, which sells about
€3bn of product a year, and the growing petrochemicals interests of Abu Dhabi National Oil
Company (Adnoc).
The latter includes Adnoc’s 60/40 joint venture with Borealis, Borouge, which esterday announced
a plan to double capacity at its complex in Ruwais, in Abu Dhabi’s Western Region.
Also in the mix is Austrian integrated oil “mini major” OMV, which owns the 36 per cent of Borealis
not owned by Mubadala, and is in turn 25 per cent owned by Mubadala. OMV’s two big refineries
– at Schwechat, near Vienna, and at Burghausen,
west of Munich – are fully integrated with Borealis
petrochemicals plants.
Add all that up and you have about $20bn in annual
sales, which puts Abu Dhabi Petrochemicals
Inc among the world’s top chemicals players, up
near Germany’s Bayer, which has a market
capitalisation above €90bn.
A combined group would make a tempting initial
public offering prospect down the road. That has not
been lost on Abu Dhabi’s leadership, whose
portfolio strategy is aimed at leveraging the country’s natural oil wealth as it vies to prepare the
country for a post-oil era.

“Ipic – now Mubdadala [since they merged in May] – and OMV have always said that an IPO of
Borealis at some point in time could come on the cards,” says Mr. Garrett. “Now, I’m saying I think
Abu Dhabi will step back and look at all of its petrochemicals assets and say: ‘could we put these
together in another way and maybe look at involving public markets?’”
There are two big strategic rationales for a consolidated organisation: to give it the weight needed
to raise financing, a competitive edge in the market, in addition to mitigating against competitive
risks.
“In our industry, you have to be able to fund these massive projects,” says Mr Garrett. Borealis is
committed to the Borouge expansion, which will cost an estimated $10bn by the time it is
completed around 2023, he adds. The company also recently announced it will partner with sister
company Nova to co-invest with France’s Total on a $3.2bn US petrochemicals joint venture on
the US Gulf of Mexico coast, next to Total’s Texas refinery.
“Small companies can’t do those investments and that’s what also protects us from the
competition,” he says. Mr Garrett, an Australian who joined Borealis about 10 years ago, says he
has watched the Borouge joint venture mature into a world-class player.
“When we did Borouge 1 it was like a little kid learning to walk,” he says. “Borouge 2 and 3, those
were the teenage years, and now we’re entering adulthood.”
The Borouge 4 expansion will put it on a par with Borealis’ Scandinavian plants by giving it the
option to run liquid as well as gas feedstock from Adnoc’s refinery next door, as well as giving it a
wider range of products. As Mr Garrett explains, by being able to run algorithms to take maximum
advantage of the ebb and flow of world feedstock and end-product chemicals prices, Borouge will
be among the most fleet of foot and price-competitive players, especially for markets in China and
other parts of Asia.
Already, Borouge has a facility in Shanghai that is able to take its product and process it further to
make a range of parts that go into China’s rapidly growing automobile markets, as well as for
building and other infrastructure.

Adnoc and a number of its peers, including Saudi Aramco, have prioritised petrochemicals
because it helps them hedge against a world of chronically low oil prices and because it makes
basic economic sense: petrochemicals markets are growing at about 1 per cent above the rest of
the economy in most major markets.
The region’s petrochemicals capacity has experienced double-digit annual growth for nearly two
decades, but there is now a sense of urgency to reach scale – there is already large-scale
consolidation within the industry, such Dow Chemical’s $145bn merger with DuPont.
“Sultan Al Jaber has taken a very dynamic approach since he took over” as chief executive at
Adnoc at the beginning of last year, says Mr Garrett, noting that approval of Borouge 4 and the
smaller PP5 expansions were much speedier than previous projects.
“Our partnership with Adnoc is being used as sort of a model for the things they are doing,” says
Mr Garrett, referring to the new openness Adnoc has shown to new types of partnerships and
financing.
The Borouge 4 expansion may not be funded just by the partners, as previous expansions were,
but may bring in more innovative project
financing. It may also bring in partners down
the road who can add further value to its
expanded slate of products, perhaps from
within Abu Dhabi Petrochemicals Inc.
Most importantly for Abu Dhabi are the
opportunities for technology transfer,
cultivating talent and diversifying the
economy. The building phase of the previous
Borouge project – the $4bn Borouge 3 –
employed about 28,000 during the building
phase and Mr Garrett says the new phase
would be about the same. It is expected to
add up to 700 permanent jobs to the current
Borouge workforce of about 3,000.

Saudi Aramco’s energy industrial city Phase 1 by in 2021
Last week, Saudi government said it approved Aramco’s plans to set up two new companies that
will develop and operate new Energy Industrial City ..Reuters + ( images by NewBase )
State oil firm Saudi Aramco said the first phase of a new Energy Industrial City in Saudi Arabia will be
completed in 2021.
Last week, the Saudi government said it approved Saudi Aramco’s plans to set up two new companies
that will develop and operate the new Energy Industrial City as the kingdom seeks to expand its
industrial base.
The city, which will be developed over 50-square km of land allocated for energy-related industries,
will complete its first phase that covers almost 12-square km by that date, Aramco said in a statement
late on Saturday.
The city will be located between Dammam and Ahsa, at the heart of energy operations, the statement
said. An earlier report said the city will be close to Abqaiq, which is in the middle of Dammam and
Ahsa….Ghawar, the world’s largest onshore oilfield is near al-Ahsa.
The Saudi Industrial Property Authority (Modon) which develops industrial cities in Saudi Arabia has
started to lay out plans and programmes with Saudi Aramco to develop and operate the city, the
statement added.
The top oil exporter is trying to lower dependence on oil and build up new industries to speed up job
creation for a rapidly rising young population. It plans to list in stock markets up to 5 per cent of its
shares in Aramco, which will help it invest in other sectors to generate more revenue streams.
The city is expected to add 22.5 billion riyals ($6 billion) to gross domestic product (GDP) each year
and create thousands of jobs, Khalid Al Falih, the Saudi minister of energy and chairman of Saudi
Aramco was quoted as saying.
Falih did not give a date for when the project will contribute to GDP. It will support Aramco’s
operations, will cut costs of products and services, and meet the needs of Saudi Aramco’s operations,
the statement said. It will also provide drilling, exploration and production services and pipe
manufacturing.

Oman: Port of
Salalah evolving
into a
multipurpose hub
Oman Observer - Conrad Prabhu (
images by NewBase )
The planned addition of a
dedicated jetty for LPG
exports is the latest in a
success of infrastructure
enhancements at the Port of
Salalah that are driving its
transformation into a
multipurpose hub, according to a top official of the port.
Ahmed Akaak, Deputy CEO, said the new jetty — designed to support the export of Liquefied
Petroleum Gas (LPG) from a new LPG Extraction Plant under development at the adjoining
Salalah Free Zone — will underpin the port’s evolution into a global hub that will serve a diverse
variety of product and cargo streams.
“This jetty will definitely add value to Salalah as it becomes a multipurpose port,” said Ahmed
Akaak. “We are setting up another component to our liquid facilities that will provide significant
returns, not only to the port, but to the country as well,” he added.
The official made the comments at last week’s sign-off ceremony at which agreements were
signed with various stakeholders for the implementation of the Sultanate’s first LPG extraction
plant at Salalah Free Zone, with related storage and export facilities to be built at the nearby Port
of Salalah. The $826 million LPG extraction plant and support infrastructure is being implemented
by Salalah LPG SFZCO, wholly owned by Oman Gas Company — part of Oman Oil Group.
The LPG export jetty will be an integral part of a Liquid Hub currently under development as part
of the new General Cargo Terminal project being implemented at the port. Methanol produced by
Salalah Methanol Company at the adjoining free zone is presently the main liquid bulk commodity
exported out of Salalah Port. Bulk liquid volumes, estimated at 510,000 metric tonnes in Q1 2017,
are projected to grow once the LPG plant is operational in 2020. Output from the latter facility is
projected at 300,000 tonnes per annum, although around 10 per cent of this volume is earmarked
for distribution within Dhofar Governorate.
Another likely bulk liquid commodity being lined up for export via Salalah Port is ammonia to be
produced by a new $750 million plant planned downstream of the methanol scheme. Promoted by
Oman Oil Company, the new ammonia facility will feature a capacity of around 1,000 metric
tonnes per day.
In remarks to the Observer, Ahmed Akaak also underlined efforts by the port to develop localized
cargo volumes. “We are also looking to grow our import and export volumes by looking at the
potential to supply our hinterland, notably Yemen, and also by focusing on East Africa and rest of
Subcontinent. Oman is definitely preparing to become a main hub for cargo shipping,” he said.
Port of Salalah handled around 722,000 TEUs of containers during the first quarter of this year,
down eight per cent from the corresponding figure for Q1 2016. General cargo throughput dipped
3 per cent to 3.361 million tonnes in Q1 2017. Major commodities handled are namely limestone,
gypsum, methanol and cement.

Musandam’s gas-fired power plant goes operational
Oman Observer
Musandam Power Company SAOC (MPC), an affiliated company of Oman Gas Company SAOC
(OGC), has successfully commenced commercial operation of its 120MW dual-fuel power plant
located in the Wilayat of Bukha, Musandam Governorate.
The dual-fuel plant will use natural gas as its primary fuel, with light fuel oil as a back-up to ensure
uninterrupted power production. Electricity output will be sent to the existing medium voltage grid
through a new 132KV transmission line being built by the Rural Areas Electricity Company SAOC.
The project’s 120MW net output capacity will support demand growth in Musandam Governorate.
MPC’s power plant has completed the necessary tests and is now ready to serve Musandam with
clean power for the life time of the plant, having first exported power into the grid in April of this
year.
Sultan bin Hamad al Burtmani, Acting Executive Managing Director of OGC said: “We are very
pleased to have reached this important milestone. MPC is the first Omani power project
developed by an Omani developer and in doing so represents an important step for OGC’s power
strategy. OGC’s long-term goal is to establish the first internationally recognised Omani
independent developer of different energy sources.”
Under a Power Purchase Agreement (PPA) signed by MPC with Oman Power and Water
Procurement Company (OPWP), the electrical output will be sold to OPWP for a period of 15
years.
Yaqoob bin Saif al Kiyumi, Chief Executive Officer of OPWP, commented: “This new electrical
capacity from this plant will contribute to the growing power demand to meet the needs of urban,
industrial and tourism development in the Governorate of Musandam. Additionally, the operation

of this plant will contribute significantly to the reduction of the electricity generation cost in the
region as the plant will be operated by using natural gas for the first time in the governorate.”
Salim bin Marhoon al Hashmi, MPC Director, added: “The plant comprises 15 Wartsila dual-fuel
34DF engines allowing for ultra-flexible operations, such as responding to load variations between
10MW and 120MW.
The plant will run in island mode on the isolated Musandam grid, making reliability a key feature.
It can operate in extreme conditions including high humidity and temperatures of up to 50 degrees
Celsius. It will play an essential role in delivering flexible and sustainable energy to the
governorate.”
As Oman’s first independent power project in the Musandam Governorate, MPC will use natural
gas processed by OOC’s wholly owned subsidiary, Oman Oil Company Exploration and
Production from the adjacent Musandam Gas Processing Plant to integrate the value chain and
maximise value from Oman’s resources.
The new plant was constructed and will be operated by the technology provider Wartsila Muscat
LLC, a global leader in advanced technologies and complete lifecycle solutions for marine and
energy markets.

India BPCL makes its first U.S. oil purchase, buys Mars, Poseidon
Reuters - Nidhi Verma
India's Bharat Petroleum Corp has made its first purchase of U.S. oil, buying high sulfur crudes
Mars and Poseidon in a tender, its head of refineries R. Ramachandran said.
BPCL is the second Indian refiner to buy U.S. Gulf crude after Prime Minister Narendra Modi's
visit to Washington last month when President Donald Trump said the United States looked
forward to exporting more energy products to the world's third-biggest oil buyer.
BPCL has bought a cargo containing 500,000 barrels each of Mars and Poseidon for delivery
from Sept. 26 to Oct. 10.
Ramachandran said the landed price
of the American oil cargo would be
reasonably competitive to the
delivered price of the high sulfur oil
from the Middle East.
Earlier this month Indian Oil Corp, the
nation's top refiner, bought 1.6 million
barrels of Mars.
A trade source said BPCL has bought
the cargo from Shell.
Refiners in India, the world's third
biggest oil consumer, are diversifying
crude imports as cheaper alternatives
have emerged due to a global supply
glut despite OPEC and some non-OPEC producers cutting output to jack up prices.
Share of Middle Eastern crude in India's imports shrank in June to the smallest since October
2015, while that from south America, Africa and Central Asia including Russia rose.
Current market dynamics are also helping India's plan to deepen energy ties with the United
States.
West Texas Intermediate oil prices are depressed relative to Middle East benchmark Dubai
because of rising U.S. shale oil production and as the OPEC cuts have reduced the amount of
Middle East medium, sour crude.
Global oil output in June is 1.2 million barrels per day above a year ago, the International Energy
Agency said on Thursday in its latest monthly report.
We are also looking at buying low sulfur oil from America if priced competitively. Our refineries
need both low sulfur and high sulfur oil, he said, adding the latest purchase was a trial cargo.
BPCL aims to operate its Kochi refinery in Southern India at expanded capacity of 310,000 barrels
per day (bpd) from September, he added.
India is the latest Asian country to buy U.S. crude after South Korea, Japan, China, Thailand,
Australia and Taiwan after the OPEC cuts drove up prices of Middle East heavy-sour crude, or
grades with a high sulfur content.

U.S. petroleum refinery capacity continues to increase
Source: U.S. Energy Information Administration, Refinery Capacity Report
As of January 1, 2017, U.S. operable atmospheric crude distillation capacity reached 18.6 million
barrels per calendar day (b/cd), 1.6% higher than at the beginning of 2016, according to EIA's
annual Refinery Capacity Report. This increase in operable capacity was slightly lower than last
year’s increase of 2.0%.
The capacities of secondary units that support heavy crude oil processing and production of ultra-
low sulfur diesel and gasoline, including thermal cracking (coking), catalytic hydrocracking, and
hydrotreating/desulfurization, also increased. Catalytic hydrocracking and deasphalting units
experienced the largest capacity increases over the past year, rising by 4.5% and 6.1%,
respectively.
EIA's Refinery Capacity Report measures refinery capacity in b/cd and barrels per stream day
(b/sd). Calendar-day capacity is a measure of the amount of input that a distillation unit can
process in a 24-hour period under usual operating conditions, taking into account both planned
and unplanned maintenance.
Stream-day capacity is the maximum number of barrels of input that a distillation facility can
process within a 24-hour period when running at full capacity under optimal conditions with no
allowance for downtime. Stream-day capacity has historically been 6% higher than calendar-day
capacity.

The refinery capacity reported for the start of 2017 includes one new unit, the 42,500 b/cd
Magellan Midstream Partners LP condensate splitter in Corpus Christi, Texas. Condensate
splitters are distillation units that process condensate, which is lighter than crude oil.
Splitter capacity is categorized as atmospheric distillation units in EIA data. The Magellan
Midstream Partners LP unit, which began operating in 2017, was operable but not running at the
start of the year, so its capacity was listed as idle in the Refinery Capacity Report. Overall, the
percent of idle distillation capacity as of January 1 was 1.6%, a slight increase from last year’s
relatively low 0.8%.
Gross inputs to refineries, also referred to as refinery runs, averaged a record-high 16.5 million
barrels per day (b/d) in 2016. U.S. crude oil production was 0.5 million b/d lower in 2016 than in
2015, the first annual decline since 2008.
To offset the decline in production, net imports of crude oil increased by a similar amount. Despite
the increase in refinery runs, atmospheric crude distillation capacity increased even more,
lowering refinery utilization in 2016 compared with 2015.
Source: U.S. Energy Information Administration, Refinery Capacity Report
Good to read
http://www.iea.org/Textbase/npsum/gas2017MRSsum.pdf

NewBase 17 July 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices firm on strong China demand, signs of U.S. output slowdown
Reuters + NewBase
Oil prices strengthened on Monday, supported by a slowdown in the growth of rigs looking for
crude in the United States and because of strong refinery demand from China.
Brent crude futures, the international benchmark for oil prices, were at $49.04 per barrel at 0353
GMT, up 13 cents, or 0.3 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $46.64 per barrel, up 10 cents, or 0.2
percent. Both crudes extended gains from strong performances last week.
Traders and analysts said the rising prices were a result of strong demand as well as signs that a
relentless climb in U.S. oil production was slowing down.
The slowing pace of increases combined with massive drawdowns last week on both official
crude inventory numbers from the U.S. probably explains the positive sentiment in general at the
moment, said Jeffrey Halley, senior market analyst at futures brokerage OANDA in Singapore.
Oil price special
coverage

Last week's strong draw on U.S. oil inventories was supported by comments from the IEA that
demand is growing stronger than they had initially estimated, ANZ bank said on Monday. The
relentless climb in drill rigs operating in the U.S. also subsided, it said.
U.S. drillers added two oil rigs in the week to July 14, bringing the total count up to 765, energy
services firm Baker Hughes said on Friday.
While that is the highest level since April 2015, the rate of those additions has slowed. Rig
additions over the past four weeks averaged five, the lowest since November 2016.
Given the usual time lag between price signal and drilling decision, the coming month, which also
features the EP (exploration and production) earning season, will be key, said U.S. bank
Goldman Sachs.
In Asia, China's refinery activity continues to indicate strong fuel demand.
Chinese oil refineries increased throughput in June to the second highest on record, with some
independent plants raising output even as state oil majors prepare to take drastic steps to cut
production during the peak summer season.
Throughput last month hit 46.08 million tonnes, or 11.21 million barrels per day (bpd), a 2.3-
percent rise from a year ago and up from May's 10.98 million bpd, data from the National Bureau
of Statistics (NBS) showed on Monday.
The number was just short of December's record high of 11.26 million bpd.
Oil Price Forecast: ( ByChristopher Lewis)
WTI Crude Oil
The WTI Crude Oil market rallied a bit during the week, reaching towards the $47 level. There are
a lot of noises going around the market right now, such as Saudi Arabia cutting back shipments of
crude oil to the United States.
Ultimately though, we still have an oversupply of oil, and quite frankly I believe that OPEC has lost
control of the market. I think it’s only a matter of time before we see in exhaustive candle, and with
that I think it’s time to start selling.
I have no interest in buying crude oil, I believe that the $50 level above is going to be massive
resistance even if we do breakout, so being patient and waiting for signs of weakness is how I
plan to trade this market going forward.
Brent
Brent markets initially tried to fawn then rallied significantly, but the $49 level continues to offer
quite a bit of resistance that it extends to the $50 level. I believe that the real fight in this market is
at the $50 level, so and exhaustive candle in that area is a nice selling opportunity as far as I can
see.
The $45 level underneath will be a target, and that’s exactly what I am looking to reach towards. If
we break above $50, then I think we can go to the $55 level above, but as you can see the moving
average is starting to roll over, and it appears that the market is getting a bit heavy.
Oversupply continues to be a massive issue in the gold markets, so having said that I think it’s
going to be difficult for rallies the last for any real length of time.

Oil Skeptics Let a Little Sunshine In
Bloomberg - Jessica Summers
After the worst June for oil in six years, hedge fund bets on declining West Texas Intermediate
retreated. That made room for futures to rebound more than 5 percent last week on optimism that
the summer will finally boost demand for crude and gasoline.
“The market is starting to recognize that demand is a little better than what has been the
consensus view so far this year,” Matt Sallee, who helps manage $16 billion in oil-related assets
at Tortoise Capital Advisors in Leawood, Kansas, said by telephone.
While doubts persist that the Organization of Petroleum Exporting Countries and its allies will
manage to bring the oil market back to balance anytime soon, the mood improved as the
International Energy Agency said world demand is climbing faster than initially estimated.
Meanwhile, Libya and Nigeria may be asked to join the other members of OPEC in capping
output, according to Kuwait’s oil minister.
In the U.S., data from the Energy Information Administration showed crude and gasoline
stockpiles shrinking.
Hedge funds increased their WTI net-long position, or the difference between bets on a price
increase and wagers on a drop, by 19 percent to 178,654 futures and options over the week
ended July 11, the sharpest increase in seven weeks, according to data from the U.S. Commodity
Futures Trading Commission. The improvement was entirely due to a 21 percent retreat in shorts,
more than offsetting a 2.1 percent decline in longs.

The mood has been largely set by big swings in bearish wagers over the past months, with bullish
bets not increasing more than 5 percent in any week since January.
Bets on the benchmark U.S. gasoline contract flipped to a net-bullish position for the first time
since early June. The net-position on diesel was the least bearish in five weeks.
Investors are “starting to see, not necessarily full conviction, but a little bit more optimism about
some of the developments in the market, even though the overall tone is clearly still bearish. It’s
kind of going from bad to a little less bad,” Tamar Essner, an energy analyst at Nasdaq Inc. in
New York, said by telephone. “The shorts were at very high levels. We knew that that wasn’t going
to be sustainable.”
WTI closed at $46.54 a barrel on Friday after edging higher each day of last week. Stuck below
$50 since May, the U.S. crude benchmark is still down 13 percent for the year and worth less than
half its price three years ago.
“For the near-term, oil is in a $40-$50 a barrel range. As you get toward the low end of that range,
you see shorts close out,” Sallee said. “Your risk-return is kind of skewed against you if you are on
the short side and on the lower end of that range.”
Last week, EIA data showed U.S. crude stockpiles slid by 7.56 million barrels, the biggest decline
since September, in the week ended July 7. Gasoline supplies fell for a fourth straight week,
tumbling to the lowest level since December, and demand increased by 81,000 barrels a day.
“Perhaps, the worst is behind us,” Stewart Glickman, an energy equity analyst at CFRA Research
in New York, said by telephone. It doesn’t mean necessarily that we are on the verge of a V-
shaped recovery. You can bounce along the bottom for quite a while.”

NewBase Special Coverage
News Agencies News Release 17 July 2017
Aramco's Odd Response to a Future Oil Shortage
Julian Lee (an oil strategist for Bloomberg . Previously he worked as a senior analyst at the Centre for Global Energy Studies)
Let's say you're the holder of the world's largest reserves of conventional, low-cost crude oil and
you believe the supply outlook is increasingly worrying due to a lack of investment. Enhancing
production capacity so as to cash in when prices soar would seem like a good idea. Apparently
not if you're Saudi Aramco.
Saudi Arabian Oil Co. CEO Amin Nasser spoke at the World Petroleum Congress in Istanbul last
week, describing his company's plans to invest $300 billion over the next decade. But that cash
won't go toward boosting the rate at which Saudi Arabia can get oil out of the ground, even though
as much as 20 million barrels a day of new output could be needed over the next five years to
offset rising demand and the natural decline of fields that are currently in production. Instead, that
money will be used to maintain current capacity, and double gas output.
Am I alone in seeing this as an odd response to the supply crunch Nasser sees looming?
In Reserve
Saudi reserves jumped by 85 billion barrels in 1998, but have changed by less than 1.6 billion
each year since 1990

Saudi Arabia sits atop 266.5 billion barrels of proven oil reserves. That's more than any other
country, if you exclude the extra-heavy crude in Venezuela's Orinoco Belt. At under $9 a barrel,
the cash cost of production is the lowest in the world, according to consultants Rystad Energy. To
me, this screams, drill, baby, drill.
I would go further and argue that Saudi Arabia should be opening its upstream oil sector to foreign
or local private investors -- under carefully controlled conditions, of course. If Mexico can do it
after almost 80 years, then why not Saudi Arabia? Yes, I know there are issues of national pride
and memories of unfavorable concession terms from the 1930s, '40s and '50s, but these are
battles of the past, not of the dynamic, forward-looking nation that Crown Prince Mohammed bin
Salman wants to build.
Foreign Aid
Iraq's foreign investors have helped boost capacity by more than 2 million barrels a day
J
ust look at the impact that foreign investment has had on Iraq, and think what the opportunity to
invest in Saudi Arabia would do to the attractiveness of alternatives in Iran.
Why wouldn't Saudi Arabia position itself to reap the rewards of the industry's failure to invest in
boosting oil production capacity?
There are a number of possibilities.
It can't afford to raise upstream capacity on top of its other plans. This would seem unlikely. While
Saudi Arabia has certainly been hurt by the halving of oil prices since 2014, financial reserves are
still plentiful and it could redirect part of its planned investment budget to developing known oil
reserves.
Reserves aren't as big as reported. This is a long-running claim by those who point to the big
jumps in oil reserves disclosed by OPEC countries in the 1980s when they were a factor used to
determine output quotas.

A former colleague, who previously worked in both OPEC and the Iraqi oil ministry, argues that
the revisions corrected previous under-reporting of discoveries there had been no incentive to
divulge.
Don't expect the Aramco IPO to shed any light on the matter, either. With oil in the ground
remaining the property of the Crown, there won't be anything like a full audit of Saudi oil reserves
in the foreseeable future.
Decline rates at existing fields are so steep that Aramco must run as fast as it can just to stand
still. This was certainly a popular theme a decade or so ago when Matt Simmons published his
book Twilight in the Desert, but one that has found few supporters in recent years.
Maybe Nasser doesn't believe his own story of a future oil shortage and if the need for additional
Saudi capacity doesn't exist, then there's no point investing in it. He wouldn't be alone in that view.
The new normal has emerged, India's Petroleum Minister Dharmendra Pradhan said in an
interview at the same event in Istanbul. This is a reasonable price for everyone.
I have no idea which, if any, of the above is closest to the truth. But I'm sure everybody will have
their own favorite, and probably plenty more besides.
This column does not necessarily reflect the opinion of NewBase and its owners.

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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

Abu Dhabi Petrochemicals plans expansion and IPO

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