New base 1053 special 20 july 2017 energy news ilovepdf-compressed

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase July 20 - 2017 - Issue No. 1053 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Solar Plants Aim to Keep Lights on at Night
Bloomberg - Anna Hirtenstein
Solar plants that supply electricity at competitive prices after the sun goes down are about to
become a reality in the Middle East, according to one of the region’s biggest developers of power
plants.
ACWA Power International Chief Executive Officer Paddy Padmanathan confirmed his company
is the low bidder on a $1 billion project that will feed electricity to the grid for the Dubai Water &
Electricity Authority between 4 p.m. and 10 a.m. More such plants are likely to follow because
Chinese companies will start driving down the cost of equipment, he said.
The 200-megawatt Dubai contract, which runs for 25 years, will harness a two-decade old
technology called concentrated-solar, or solar thermal. Unlike photovoltaics, which generate a

charge directly from the sun’s power, thermal plants use mirrors to concentrate heat on water,
turning it to steam to drive a turbine. The heat can be stored in molten salt to be used later. The
technology to date has slipped behind PV on cost but is quickly becoming more competitive, the
executive said.
“I expect concentrated-solar power, within 18 months, to be head to head with combined-cycle
gas, if not more competitive,” Padmanathan said in an interview in London. “The focus has been
on PV and batteries, but there’s a limit on how long they can hold a charge for. We’re proving that
CSP can work through the night.”
Since it can retain heat, the plant can keep working after dark. The sun’s energy in some cases
can heat molten salt to 490 degrees Celsius (914 degrees Fahrenheit), which allows operators to
predict when electricity will flow.
Uncertain Outlook
While solar thermal plants are becoming cheaper, PV costs are falling too, raising questions
whether the Dubai project really will be as attractive as ACWA expects, said Jenny Chase, head
of solar analysis at Bloomberg New Energy Finance.
“This plant in Dubai is for delivery by 2021,” Chase said. “By then, we’re expecting solar PV and
batteries to be in the same order of magnitude for cost and will be a lot more flexible than a solar
thermal plant. Also, a lot of these projects are operating below what they’re meant to, such as the
entire Spanish fleet and some in India as well.”
There are 319 gigawatts of photovoltaic panels installed worldwide, compared to about 5
gigawatts of solar thermal, according to BNEF data. The mass deployment has driven down costs
of solar panel equipment by about 70 percent since 2010, with the latest record set in Abu
Dhabi at 2.45 cents per kilowatt-hour. In comparison, solar thermal was around 15 to 18 cents per
kilowatt-hour until recently.
China hosts 80 percent of the world’s PV solar manufacturing industry. The nation’s expertise at
mass production is credited with making solar panels more affordable, although companies are
now reviving work on thermal technology.
More Suppliers
“There are currently just two suppliers in solar CSP,” Padmanathan said. “The others have gone
bankrupt. I know of at least five Chinese companies that are starting to enter the market.”
ACWA, which is based in Riyadh, Saudi Arabia, bid 9.45 cents per kilowatt-hour, almost cutting in
half the cost of concentrated-solar power. Each of the bidders were also asked to submit an
alternative tender. The offtaker will choose between the bid and the alternative bid, so the price
may be even lower.
ACWA has also built similar projects in Morocco’s Noor solar complex and South Africa’s desert.
One in each nation are operating, with two more in Morocco and one in South Africa currently
under development. ACWA is also seeking to build two more projects in Morocco in the Midelt
area, which will have a joint capacity of 350 megawatts.
“I’m also hoping to build one in Saudi,” Padmanathan said. “Right now they’re tendering for solar
PV and wind, but I think they’ll want a CSP project as well, especially when they see how cost
competitive it can be.”

Kuwait's Ethylene 2 Plant resumes production
KUWAIT, 18th July, 2017 (WAM)
Kuwait's Ethylene 2 Plant Tuesday resumed operation following a brief shutdown for technical
considerations last week, the EQUATE Group announced today.
"Operations at our EU2 have resumed normally in record time following repairs. Both the
Ethylene Glycol and Polyethylene plants in Kuwait have returned to the usual production levels as
they were impacted by the temporary shutdown of EU2," the Kuwait News Agency, KUNA, quoted
EQUATE Group’s President and CEO Mohammad Husain as saying.
The EU2 has a production capacity of 850,000 metric tons annually and is owned by The Kuwait
Olefins Company, TKOC, part of the EQUATE Group.
The dedication and efforts of EQUATE Group’s employees were lauded by Husain as operations
resumed two weeks ahead of the planned schedule in absolute conformity with safety standards.
The EQUATE Group is a global producer of petrochemicals and the world’s second largest
producer of Ethylene Glycol (EG).The Group has industrial complexes in Kuwait, North America
and Europe that annually produce over 5 million tons of Ethylene, EG, Polyethylene (PE) and
Polyethylene Terephthalate (PET).

Saudi Aramco WorleyParsons awarded contract for Marjan field
Source: WorleyParsons
WorleyParsons has been awarded the project management and front end engineering and design
(FEED) services for the offshore oil and gas facilities portion and the onshore upstream and
downstream pipelines portion of Saudi Aramco’s Marjan Oil Field Development Program.
Under the agreement, WorleyParsons will provide project management and FEED services. The
services will be executed from WorleyParsons’ office in Al-Khobar in the Kingdom of Saudi Arabia
with support from other WorleyParsons offices.
WorleyParsons awarded FEED contract for Saudi Aramco's Marjan field
'We are pleased to build on our relationship with Saudi Aramco through this significant contract'
said Andrew Wood, Chief Executive Officer of WorleyParsons.

Saudi Aramco considers Zuluf oilfield expansion
REUTERS/Ali Jarekji
State oil firm Saudi Aramco is considering building new facilities to add production of Arabian
Heavy crude from the Zuluf offshore oilfield, industry sources said.
The central processing plant is expected to have two units, known as trains, with a total capacity
of 600,000 barrels per day (bpd) to process Arabian Heavy crude supplied by electrical
submersible pumps (ESP).
"ESPs are required in this Zuluf
increment because the Arabian Heavy
reserves have a lower reservoir
pressure than the Arabian Medium
reserves," said Sadad al-Husseini, a
former executive vice president at
Saudi Aramco.
He said the artificial lift and pressure
maintenance would achieve optimum
production rates and economics, while
also ensuring effective reservoir
management. Zuluf was one of the
largest offshore oilfields in the world
and held extensive proven Arabian
Medium and Arabian Heavy reserves,
said Husseini, who is now an energy analyst.
The gas and condensate will be sent to the new Tanajib gas plant, which is part of the new Marjan
programme. Saudi Aramco declined to comment on the report.
Saudi Aramco is expected to invite companies to bid for front-end engineering and design later
this month with an award seen in September. Like the Marjan increment, it will take until 2021 for
the project to be completed, one of the sources said.
Industry sources estimate Zuluf's production capacity is between 550,000-600,000 barrels per
day. Aramco has an oil production capacity of 12 million bpd.
Saudi Aramco's CEO Amin Nasser said this month the firm planned to invest more than $300
billion in the coming decade "to reinforce its pre-eminent position in oil, maintain its spare oil
production capacity and pursue a large exploration and production programme centered on
conventional and unconventional gas resources."
Saudi officials have said the firm's investment plans aim to compensate for any declining fields
elsewhere rather than adding to total capacity. Saudi Aramco has recently launched studies to
expand its offshore oilfields Berri and Marjan.
Besides Zuluf, sources expect to increase oil output from other offshore fields, such as Safaniya.
Saudi Aramco has previously estimated that the five offshore oil fields Safaniya, Marjan, Zuluf,
Berri and Abu Safah, a field it shares with Bahrain, accounted for more than 20 percent of the
kingdom's daily production.

Egypt sets sights on doubling natural gas output by 2020
Egypt has been seeking to speed up gas production from recently discovered fields, with an eye
to halting imports by 2019 ….Reuters + ( images by NewBase)
Three recently discovered major gas fields are expected to raise Egypt’s natural gas output by 50 per
cent in 2018 and 100 per cent in 2020, the petroleum ministry said.
The fields of Zohr, North Alexandria and Nooros are among the most important projects that will
increase natural gas production ... and will contribute to (Egypt’s) natural gas self-sufficiency by the
end of 2018,” Petroleum Minister Tarek El Molla said in a statement, which set out the production
forecasts.
Egypt’s natural gas production rose to about 5.1 billion cubic feet per day in 2017 from 4.4 billion cubic
feet in 2016 with the start of production from the first phase of BP’s North Alexandria project.
Egypt has been seeking to speed up gas production from recently discovered fields, with an eye to
halting imports by 2019. Once an energy exporter, it has become an importer after domestic output
failed to keep pace with rising demand.
The three large projects, which include the mammoth Zohr Mediterranean gasfield discovered by
Italy’s Eni last year, are expected to collectively bring 4.6 billion cubic feet of gas per day online by the
start of 2019.
Eni began production at Nooros, its Nile Delta offshore field, in September 2015.
Egypt is in talks with its liquefied natural gas (LNG) suppliers to defer contracted shipments this year
and aims to cut back on purchases in 2018, as surging domestic gas production pushes back demand
for costly imports.

Tanzania: Wentworth Resources update on its Mnazi Bay asset
Source: Wentworth Resources
Wentworth Resources reports that, further to the Operational Update in June 2017 including an
update on the Company's Mnazi Bay asset in Tanzania, it is pleased to report that further
payments have been received from Tanzania Petroleum Development Corporation
('TPDC') and Tanzania Electric
Supply Company Limited ('TANESCO') totalling
$1.2 million net to Wentworth, bringing the total
cash received for invoiced gas sales to $7.9
million in 2017.
Since 31 March 2017, receivables from TPDC
have remained consistent at four months and
receivables from TANESCO have improved from
thirteen months to eight months. The Mnazi Bay
Partners continue to work closely with the
Government of Tanzania to settle the remaining
outstanding invoices.
As expected, daily production volumes during the
rainy months of April and May were impacted by
the use of hydroelectric power. However, since
the end of the rainy season, gas demand has
increased with June volumes averaging 45
MMscf/d bringing the average for Q2 to 31
MMscf/d.
Furthermore, the Company has experienced a
temporary increase in volumes since the start of
Q3 due to maintenance work elsewhere in the pipeline system with July month-to-date averaging
71 MMscf/d. We maintain our guidance for 2017 averaging between 40 - 50 MMscf/d.
In relation to the recent legislative changes in Tanzania and the introduction of three new bills
relating to the mining and oil & gas sectors, the Company has undertaken a review of these new
laws to determine their implications on the Company's Tanzania operations.
Based on our current understanding of this new legislation and given the existing terms and
conditions of our relevant agreements we do not anticipate any material impact on our existing
operations.
The Company will report Q2 results on 10 August 2017 and will be holding a conference call for
analysts and shareholders that day.
Geoff Bury, Managing Director, commented:
'We are pleased to have received further payments from TPDC and TANESCO which
demonstrates their commitment to settle invoices as soon as practicable. The payments received
year to date have enabled the Company to meet its obligations and we continue, along with our
Operator, Maurel et Prom, to work with the Government to resolve the payment delays and clear
all arrears. It is very encouraging to see production volumes increase post the end of the rainy
season and we remain confident in achieving our production guidance for the year.'

UK: Independent Oil and Gas submits Field Development Plan for the
Blythe and Elgood fields in the Southern North Sea.. Source: Independent Oil and Gas
Independent Oil and Gas has announced that it has submitted the Field Development Plan
('FDP') to the UK Oil and Gas Authority ('OGA') for the Blythe Hub, which comprises the Blythe
and Elgood fields. This follows on from IOG's submission of a draft FDP for only the Blythe field in
December 2016.
The Blythe and Elgood gas fields
are 100% owned and operated by
IOG and located in the UK
Southern North Sea close to
existing infrastructure and other
IOG-owned licences. Blythe
contains independently verified 2P
reserves of 34.3 billion cubic feet
('BCF') (6.1 million barrels of oil
equivalent, ('MMBoe') and Elgood
22 BCF of 2C resources (4.3
MMBoe).
A new Competent Persons Report
('CPR') currently being completed
for the Blythe Hub will soon
provide up-to-date independently
verified estimates of the reserves
and resources. Neither Blythe nor
Elgood requires further appraisal
and on FDP approval the Elgood
resources would be upgraded to
2P.
The Blythe Hub is expected to provide the first gas for IOG via the recommissioned Thames
Pipeline and therefore the first revenues to the Company from its current portfolio of assets. IOG
is in the process of completing the 100% acquisition of the pipeline which is intended to be tested
and recommissioned.
There are significant synergies with the 100%-owned Vulcan Satellites Hub, containing
independently verified 2C resources of 321 BCF (55.45 MMBoe), which is also intended to be
exported via the Thames Pipeline. IOG is also 100% owner of the Harvey discovery, which lies
between the Blythe and Vulcan Satellites Hubs. Harvey needs further appraisal and is currently
estimated to have P50 recoverable resources of 113 BCF (19.5 MMBoe).
Mark Routh, CEO and Interim Chairman of IOG commented:
'We are very pleased to have delivered the Blythe Hub FDP for approval to the OGA, thanks to the
team's extensive development work. This is a major step forward from the single-field draft
submission in December 2016. The Blythe Hub is of great strategic value to IOG alongside the
larger Vulcan Satellites Hub. Commercial negotiations continue to be progressed upon the basis
of deferrals of a substantial proportion of contractor costs as well as prepayments from potential
gas offtakers to help meet the funding requirements. This aligns all our partners to ensure an
efficient project and help create value for all stakeholders. We look forward to providing further
updates in due course.'

India Approves Creation of State Oil Giant in $4.6 Billion Deal
By Debjit Chakraborty
India approved the sale of a $4.6 billion stake in state-run refiner Hindustan Petroleum Corp. to
the country’s biggest oil and gas explorer, according to a person with knowledge of the decision.
The move fulfills a plan, first outlined in February, to create an Indian oil giant through
consolidation and mergers, forming a company comparable with international rivals that could
weather crude-price volatility. Bringing HPCL into its fold will make Oil & Natural Gas Corp. the
nation’s No. 3 refiner after Indian Oil Corp. and Reliance Industries Ltd.
"This deal will make both ONGC and HPCL
stronger as the benefits of synergy are huge,"
ONGC Chairman Dinesh Kumar Sarraf said
in a phone interview on Wednesday. "It will
add value to shareholders of both
companies."
The cabinet backed the plan to sell the
government’s 51.1 percent holding in HPCL
to ONGC, the person told reporters, asking
not to be identified because the information
isn’t public. The stake is valued at about 299
billion rupees ($4.6 billion), based on
Wednesday’s closing stock price.
That’s more than 40 percent of the 725
billion-rupee target in India’s asset disposal
plan for the fiscal year to March 2018. Prime
Minister Narendra Modi’s administration
received 462.47 billion rupees
from divestmentslast fiscal year, exceeding its goal.
The HPCL stake sale is unlikely to trigger an open-offer rule as the government’s holding is being
transferred to another state-run firm. Under India’s takeover code, if a company acquires more
than 25 percent of another listed entity, it has to make an open offer to buy at least 26 percent
more.
Spending Plans
ONGC is running low on funds as it has raised spending amid a decline in costs for exploration
services and equipment. The acquisition may threatensome of its near-term investments including
a plan to revive a long-delayed project aimed at cutting the nation’s energy imports.
Why India is creating an oil and gas giant - a QuickTake explainer
Apart from a proposed $4.5 billion investment in its oil and gas blocks this financial year, ONGC
plans to spend a further $1.2 billion to acquireGujarat State Petroleum Corp.’s stake in a block off
India’s east coast.
The company had surplus cash of 130.14 billion rupees as of March 31, down from 246.9 billion
rupees a year earlier, according to an exchange filing. "We have chalked out a funding plan and
that would include a portion of debt as well," Sarraf said, without giving details. He also said that
the deal won’t affect any other ONGC investments.

GCC on track to add 1.5 mbpd refining capacity by 2021
Apicorp Energy Research ( images by NewBase)
GCC is leading the greenfield projects and refinery expansion drive in the Middle East with 1.5
million barrels per day (mbpd) of new refining capacity expected online by 2021, a report said.
The new capacity will be dominated by the two major additions in Saudi Arabia and Kuwait, as
well as clean fuel projects in the region, added the July edition of Apicorp Energy Research.
They will adhere to stringent European requirements for cleaner fuels, and will thus provide GCC
refineries with a competitive edge in a tough market.
At the same time, these refinery additions are changing global trade flows, with the region
exporting more refined products, particularly to Europe. As global capacity rises and fuel
standards improve, competition will become more intense meaning a more uncertain outlook
awaits the region’s refineries.
The GCC refining sector has seen tremendous growth over the past few years, mainly driven by
significant government investments during a period of high oil prices. Governments have
prioritised the expansion of the downstream sector for several reasons.
First, the region has witnessed rapidly rising demand for gasoline and diesel in the transportation
sector, as well as diesel and fuel oil in the power sectors of Saudi Arabia and Kuwait. Second,
governments are seeking to diversify away from crude exports towards more specialised refined
products.
Third, they are also committing to create more value in their economies by integrating the crude,
refining and petrochemical industries.

Refinery additions have shifted trade flows
Of the recent 1.2 mbpd of additional capacity, diesel represents over half, while gasoline and jet
fuel output stood at around 350,000 bpd and 140,000 bpd. These additions have had a
measurable impact on trade flows, particularly in the diesel market. Prior to the recent ramp ups,
Kuwait and Bahrain had been the only two net diesel exporters in the region. As for gasoline,
refineries in GCC countries were built to meet domestic demand.
As a result, Saudi Arabia has become a net exporter of diesel, with cargos competing in the
European market. Thanks to the GCC region's geographical position between Europe and Asia,
its refineries have turned into competitors to their Asian counterparts, especially in the
overcrowded diesel segment. For example, Saudi Arabia had historically been a net importer until
2014; however, by 2016, the country had evolved into a net exporter of over 300,000 bpd.
This surge in diesel exports is attributed to the mainly diesel-
oriented refineries that were recently built and geared
towards increasing production in anticipation of rising
demand in Asia, particularly China.
As for gasoline, Saudi Arabia became a marginal net
exporter of gasoline in 2016 after historically having been a
net importer. In 2016, the kingdom exported 5,000 b/d,
coming from an average net import level of 55,000 bpd and
60,000 bpd in 2015 and 2014.
Second wave of expansion in the GCC region
Despite the oil price collapse since mid-2014, the region is
still seeing significant investments in its refining sector. The

main additions that came online in the past 12 months were condensate splitters in Qatar and
Iran, which are geared towards producing gasoline and naphtha. In 2016, the Ras Laffan 2
condensate splitter added approximately 150,000 b/d of capacity.
This will reduce the country’s condensate exports from 500,000 bpd to 350,000 bpd, allowing the
country to refine domestically before exporting. The splitter will mainly produce naphtha (60,000
bpd) and jet fuel (53,000 bpd), with the remaining being small amounts of gasoline and LPG.
In the period 2017-21, the region will continue its expansion plans with the 600,000 bpd Al Zour
refinery in Kuwait and the 400,000 bpd Jazan
project in Saudi Arabia being the major additions.
The Jazan refinery is expected to commence
operation in 2018-19 while the Al Zour refinery is
expected towards the end of the decade. The rest
of the additions will come from the Duqm refinery
and the Sohar expansion in Oman.
The 230,000 bpd Duqm refinery -a joint venture
between Oman Oil Company and Abu Dhabi's
International Petroleum Investment Company (now
merged with Mubadala) -is likely to come online in
2020.
In addition, Bahrain's plans to expand the Sitra Refinery, which aim to add 100,000 bpd to the
existing 260,000 bpd, are ongoing. In total, the GCC countries are expected add 1.5 mbpd of
refining capacity between 2017-21, although the recent shutdown of the 200,000 bpd Shuaiba
refinery in Kuwait means that net additions in the medium term will be 1.3 mbpd.
Uncertain longer-term outlook
The surge in refining capacity in the past decade was mainly a response to rising domestic
demand but also an effort to diversify away from crude exports and integrate the crude, refining,
and petrochemical industries. It is also having an impact on trade flows.
The year 2016 marked a milestone for the GCC region as it became a net exporter of all refined products,
although a marginal exporter of gasoline. On the other hand, diesel exports are expected to lead the way,
having reached over 500,000 bpd in 2016, up from 310,000 bpd in 2015.

The slowdown in economic activity and the limited price reforms that were introduced in early
2016 have already impacted demand growth in the region, with diesel demand in Saudi Arabia hit
particularly hard. Further price reform will likely have a more significant impact on domestic
demand, possibly freeing up more refined products for exports.
In the medium term, there are plans to further increase refining capacity, but the outlook beyond
2021 is less certain. The Al-Zour project in Kuwait as well as the Sitra expansion programme
faced financing challenges which caused delay for several years, before finally reaching financial
closure. On the other hand, tough competition in the products market and weakening demand is
putting further pressure on the refining industry.
The recently commissioned projects, as well as the ones expected online in the next five years,
are in the process of turning the region into a leading hub for exports of refined products. As
elsewhere, the new refineries in the Middle East have been configured mainly to produce diesel to
cater for the anticipated increase of diesel demand from Asia, particularly from China.
However, China’s economic rebalancing away from manufacturing towards consumer goods and
services has changed demand patterns within the country: diesel demand, related to heavy
industry and transport of goods, is flat-lining, while gasoline demand related to personal
transportation continues to grow.
This has turned China into a net exporter of diesel. With US exports of distillates surging to record
levels, Russia upgrading its refineries to produce more distillates, and Indian refineries ramping up
their production, the competition in the products market, particularly in the diesel segment, has
become more intense.
However, GCC export-oriented refineries might stand to benefit from the recent International
Maritime Organisation rules which would alter demand patterns as fuel oil is replaced by diesel in
2020.

NewBase 20 July 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil steady after drop in US fuel stocks, but markets remain bloated
Reuters + NewBase
Oil prices held steady on Thursday, hanging on to gains made the previous session when falling
U.S. crude stocks lifted the market, as analysts offered mixed supply outlooks for the commodity
ahead of a key OPEC meeting next week.
Crude oil prices are still capped below the key $50-per-barrel mark on concerns about high
supplies from the Organization of the Petroleum Exporting Countries (OPEC) despite its pledge to
cut output along with non-OPEC producers.
Brent crude futures, the international benchmark for oil prices, were at $49.66 per barrel at 0512
GMT, just 2 cents down from their last settlement. U.S. West Texas Intermediate (WTI) crude
futures were at $47.10 per barrel, 2 cents below their last close.
Prices jumped more than 1.5 percent in the previous sessions for both crudes on a report showing
U.S. crude and fuel stocks fell in the United States last week.
U.S. crude inventories fell by 4.7 million barrels in the week to July 14, according to data from the
Energy Information Administration, against analyst expectations for a decrease of 3.2 million
barrels.
Oil price special
coverage

"Over the past 15 weeks, U.S. oil inventories have fallen ... 13 times, and in most cases, the falls
were more pronounced than expected," said Fawad Razaqzada, market analyst at futures
brokerage Forex.com.
"Yet, U.S. crude oil inventories still remain near the upper half of the average for this time of the
year," he added. The ongoing high U.S. inventories - crude stocks are now just over 490 million
barrels - as well as high output from OPEC are preventing prices from rising much further, traders
said.
OPEC and non-OPEC producers are due to meet in St. Petersburg, Russia, next Monday to
discuss the current situation in oil markets. OPEC, along with Russia and other non-member
producers, has pledged to cut production by 1.8 million barrels per day (bpd) between January
this year and March 2018.
A lack of compliance by some, though, and exemptions for Nigeria and Libya have undermined
that OPEC-led effort, preventing prices from rising by much. Analysts, however, pointed to rising
political risk factors, including potential U.S. sanctions on Venezuela and tensions in the Middle
East and North Africa, that could impact oil prices.
Crude Oil Price Forecast July 20, 2017, Technical Analysis
WTI Crude Oil
The WTI Crude Oil market initially went sideways during the session on Wednesday, but as the
Crude Oil Inventories number came out, it showed that demand had picked up for crude oil, so
obviously drunk price higher. It looks as if the market is struggling near the $47 level though, so
it’ll be very interesting to see how this turns out. At the first signs of exhaustion, I would be a seller
as we are getting a bit stretch, but if we can break above the $47 level, it’s likely that the market
will go looking for the $48 level. Either way, expect volatility but it looks as if the buyers are
starting to flexor muscles a bit.
Brent
Brent markets of course did the same thing, slicing towards the $49.50 level. I think there is a
massive amount of resistance near the $50 handle, and a break above there would be a major
sign of strength. However, the market should continue to go much higher. I think that the $50 level
is going to be very difficult to overcome, as it is a large, round, psychologically significant number,
and of course previous support and resistance on the longer-term charts.
Alternately, if we break down below the $49 level, the market should continue to go much lower,
perhaps reaching towards the $48 level. I expect a lot of volatility, but it looks as if the markets are
trying to rebalance themselves a bit, and that perhaps supply is starting to dwindle down a bit.
However, longer-term it can only go for so long, as there is a plethora of American wells that are
almost completed. In other words, if oil continues to rise in value, those wells will be utilized.

Three Years Into Cheap Oil, Gulf Is Still Depending on a Rebound
Bloomberg - Ahmed Feteha
Energy-rich Gulf Arab nations have scrambled to adjust to the slump in oil prices since 2014.
Three years on, their economies are mired in weak growth and largely just as dependent on crude
as they ever were.
The six members of the Gulf Cooperation Council have curtailed subsidies and introduced new
taxes to bolster non-oil revenue and reduce ballooning budget deficits. Much of the savings,
however, have been due to spending cuts and the pace of reforms has slowed across the region,
said Monica Malik, chief economist at Abu Dhabi Commercial Bank. Overall progress in economic
diversification has been limited, she said.
Absent a rebound in oil prices, analysts say it’s unlikely that these nations can repair their finances
without deeper spending cuts that could further hurt growth. The standoff between a Saudi-led
bloc and Qatar is also undermining investor confidence at a time when the GCC is seeking foreign
funds.
Five charts illustrate oil’s dominance and the challenges facing the region.
First-quarter budget data from Saudi Arabia and Oman showed an improvement in their budget
deficits alongside higher oil revenue, after the price of Brent crude rose to as high as $57.10 per

barrel in January. It has since retreated under $50, well below what the two nations need to
balance their budgets.
Saudi Arabia, OPEC’s biggest producer, increased non-oil revenue in 2016 and introduced taxes
on tobacco products and soda drinks in June this year. The government, however, reversed a
decision to cut the bonuses and some allowances of state employees. A second round of subsidy
cuts will also likely be delayed to later in 2017 or early next year, according to people with
knowledge of the matter.
Risk Perception
The average cost of protecting government bonds of Saudi Arabia, the U.A.E., Kuwait and Qatar
was at a three-year low about six weeks ago, when the Qatar dispute erupted. It has since jumped
by about 40 percent to 94 basis points, according to data compiled by Bloomberg.
“The Qatar situation has an added an element on the political and economic risk side, so it is not
surprising to see risk perceptions going up,” said David Butter, associate fellow at Chatham House
in London. “Most countries in the GCC are still in relatively solid financial positions,” he said, but
there are “underlying issues” around the long-term sustainability.

Growth Suffers
Austerity measures and oil-output cuts are weighing on economic growth in the region. The Saudi
economy contracted in the first three months of this year for the first time since 2009. The
International Monetary Fund expects average growth in the GCC to slow to 0.9 percent this year,
compared with 5 percent during the last oil boom between 2000 and 2013.
“We’re going to see poor levels of growth across the GCC on lower oil production, although
they’ve been helped in the first quarter by the relatively higher prices,” Butter said.
Vulnerable Pair
Bahrain and Oman have the lowest credit ratings of the GCC nations, with less oil to sell, thinner
fiscal buffers and in Bahrain’s case, more debt. That picture is unlikely to change unless crude
prices rise dramatically. Bahrain needs $101.1 a barrel for its budget to break even, the highest
among Middle East and North African net oil exporters, according to the IMF.

Oman’s budget deficit soared to about 21 percent of GDP last year, the highest in the GCC.
Official data shows little progress made on fiscal consolidation in the first four months of this year.
Blessing in Disguise?
Yet for Qatar, the world’s biggest exporter of liquefied natural gas, the economy’s reliance on
hydrocarbons is proving to be a blessing in disguise. Revenue from LNG and oil exports has
remained intact through the diplomatic row.
And while Standard Chartered Plc economists expect Qatar’s non-oil economy to slow this year
as a result of the crisis, they still see overall gross domestic product expanding 2.5 percent -- little
changed from 2016.

NewBase Special Coverage
News Agencies News Release 20 July 2017
Saudi Arabia and the oil cuts countries needs or problems
By Liam Denning ( title revised by NewBase )
The felines in this case are the countries making up the Vienna Group, which agreed to cut oil
production to support prices. This strategy hasn't been terribly successful thus far, despite most of
the 24 countries involved delivering on their promises, more or less. Brent crude oil is now roughly
where it was before the agreement was announced in November and 10 percent below where it
was when the cuts were extended in late May.
The pain of those low prices led one of the cats to call it quits on Tuesday. Ecuador, which is
implementing an austerity plan and struggling to clear a $1.1 billion backlog of unpaid pensions,
said it can't continue to forgo the revenue lost from cutting a nominal 26,000 barrels a day as part
of the agreement. At current prices, that's worth about $465 million a year.
Now, as Ecuador's oil minister said when announcing this, “What Ecuador does or doesn’t do has
no major impact on OPEC output.” That is true in strict mathematical terms.
Bit Part
Ecuador accounts for just 1 percent of the Vienna Group's agreed output cuts

Saudi Arabia's own oil minister, Khalid Al-Falih, has been relying more on the power of rhetoric,
with a central banker-like promise to do "whatever it takes" to clear the glut of excess barrels
weighing on prices.
It is telling that, not long after Ecuador announced it was cutting loose, a report surfaced that
Saudi Arabia was considering a unilateral reduction in exports of a further 1 million barrels a day.
This would help offset this year's surge in Nigerian and Libyan production, two sick cats exempted
from the original agreement but now being called upon to do their part, too.
Yet this is exactly the situation Saudi Arabia wanted to avoid.
The whole point of getting other countries to join with OPEC's cuts -- Russia, in particular -- was to
reassert the cartel's powers of persuasion in the futures market and make sure Saudi Arabia didn't
have to act as cutter of last resort (it could, after all, use the money to help ease the pains
of its rather ambitious reform program.)
Besides Libya and Nigeria, Iraq is another concern. Producing 4.4 million barrels a day, the
country's compliance with its agreed cuts has slipped from more than 80 percent in April to less
than 30 percent. Meanwhile, tensions are high within OPEC's core, the Gulf monarchies engaged
in a tense face-off with Qatar.
Ecuador may be a kitten in the grand scheme of things. But its departure, and the (perhaps
coincidental) signal that Saudi Arabia might shoulder even more of the burden encourages moral
hazard in a group that hardly needs encouraging.
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

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

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