Oman awards $7B Duqm Refinery contracts

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NewBase August 07 2017 - Issue No. 1059 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oman:Contracts awarded for $7 bn Duqm Refinery project
Oman Observer
Duqm Refinery, a joint venture of Oman Oil Company (OOC) and Kuwait Petroleum International
(KPI), has notified three international groups of its intent to award a number of packages that
together constitute the estimated $7 billion refinery project and associated infrastructure planned
for implementation at the Special Economic Zone (SEZ) at Duqm.
In all, three large multi-billion dollar packages were up for grabs, each of them for execution on an
Engineering, Procurement and Construction (EPC) basis. The three packages are:-
• The first of these packages, labeled EPC 1, and comprising the main process units of the
refinery, went to the consortium of Tecnicas Reunidas (Spain) and Daewoo Engineering &
Construction (S Korea).
• The second package, dubbed EPC 2 — covering the construction of utilities and offsite
facilities — was awarded to the joint venture of Petrofac (UK) and Samsung Engineering (S
Korea).
• Italian oil and gas contractor Saipem International was named the collective winner of three
other components of the mammoth refinery projects, collectively designated EPC 3. These
entail the construction of a product storage and export terminal at Duqm Port (EPC–A);
eight storage tanks at Ras Markaz (EPC 3–B) where a giant crude oil storage park is
planned; and an 80 km crude oil pipeline from Duqm SEZ to Ras Markaz (EPC 3-C).
International multi-disciplinary consultancy services provider Amec Foster Wheeler was named
the Project Management Consultant for the EPC phase of the refinery project.

The awards, which are subject to the all-important notice-to-proceed expected later this year in
conjunction with financial close, mark an end to a keenly contested tendering phase, which began
in November 2015. Then, Duqm Refinery invited international companies and their local partners
to prequalify for Packages 1 and 2 of the project, which was followed by Package 3 in December
2016.
Pending the award of the EPC contracts, Duqm Refinery gave the green light for the preparation
of a 900 hectare site at the SEZ. An army of around 1,300 workers, backed by 850 piece of
earthmoving equipment, were involved in site preparation works involving around 12 million cubic
metres of earth works and other services.

Once operational in 2021, the refining capacity will reach 230,000 barrels per day and will produce
a number of key refinery products: diesel, jet fuel, naphtha and liquefied petroleum gas.
Meanwhile, Petrofac said the EPC 2 package awarded jointly with Samsung Engineering is worth
approximately $2 billion. Work on the 47-month project will commence shortly, subject to financial
closure and full notice to proceed from Duqm Refinery, it said.
Petrofac’s and Samsung’s scope of work includes engineering, procurement, construction,
commissioning, training and start-up operations for all the utilities and offsites at Duqm.
E Sathyanarayanan, Group Managing Director, Engineering & Construction, commented: “This
significant project represents our twelfth in the country and serves to reinforce Petrofac’s
commitment to one of our core markets; one in which we have been present since 1988.
Furthermore, it provides a valuable opportunity for us to continue to increase in-country value
through engaging with the local supply chain and recruitment of local resources. “We are very
much looking forward to working with Samsung on this project and growing our relationship with
Duqm Refinery.”
Duqm Refinery and Petrochemical Industries Company LLC is a Joint Venture (JV) between
Oman Oil Company (OOC) and Kuwait Petroleum International (KPI). This strategic partnership
between OOC and KPI has been established in the incorporation of Duqm Refinery, based in Al
Duqm.
This gives the project a strategic maritime location and a competitive advantage being in the path
of international shipping lines in the Indian Ocean and the Arabian Sea thus easing the process of
transport in and out of the region.

UAE: ADNOC considering financing options to promote smart
growth, sustainable expansion.... source: WAM/Hatem Mohamed
The Abu Dhabi National Oil Company, ADNOC, has announced that it is currently considering a
range of financing options, including bank loans, to promote prospects of smart growth and ensure
sustainable expansion of its business, adding that it is negotiating with a number of banks to
arrange a US$5 billion (AED18.5 billion) loan.
ADNOC recently announced the expansion of its strategic partnership model, as well as the more
active management of its portfolio of assets, including considering a number of financing options
for certain assets at its
services businesses and
infrastructure.
This includes an IPO of
minority stakes of some
of its services
businesses only, which
have attractive
investment and growth
profiles. Such IPOs
would support the growth
and expansion of the
UAE’s private sector and
equity capital markets
and will allow the public,
and other investors, to invest alongside ADNOC and benefit from the future growth of these
assets.
ADNOC will continue to be a committed, long-term majority shareholder in any businesses that
are listed. Importantly, there will be no IPO of ADNOC, the Group holding company. ADNOC will
remain fully owned by the Government of Abu Dhabi.
A spokesman for ADNOC has stated that these studies are still at an early stage and that no final
decisions on figures have been made yet. The company is also mulling over possible options to
implement its new initiatives unveiled on 10th July, to promote value for money, optimise
economic performance, strengthen the culture of sound corporate governance, secure additional
capital, invest in new growth opportunities, provide proactive asset portfolio management and
initiate a capital restructuring.
He also stressed that these efforts aim to secure the highest possible value for each barrel of oil,
in line with the company’s strategic policies.
ADNOC has developed a clear set of criteria by which it will select new partners, including the
ability of partners to secure better access to the world’s fastest growing target markets for
ADNOC’s products, the willingness to contribute technical expertise and co-develop new
technologies alongside ADNOC’s own capabilities, and the potential to co-invest strategically
across different parts of a more integrated ADNOC value chain.
The company has stressed that it will start communicating with potential partners, including
leading investment entities specialising in areas of infrastructure, energy, long-term investments,
petrochemicals and personal property along with international banks and financial institutions.

Saudi Aramco In Talks To Buy $2B Stake In PetroChina Refinery
By Tsvetana Paraskova - Aug 04, 2017, 12:30 PM CDT
Saudi Aramco is negotiating a deal to buy a stake of more than 30 percent in a 260,000-bpd
refinery in China owned by state firm PetroChina, in a transaction valued at up to US$2 billion,
The Wall Street Journal reported on Friday, quoting people familiar with the talks.
According to one of the people, Saudi Arabia could provide some of the crude oil for the refinery in
the Yunnan province, and could also buy some of the retail assets of PetroChina, the WSJ
reports.
Aramco and PetroChina have been discussing for years plans for Saudi Arabia to provide crude to
a PetroChina refinery in exchange for a stake in the plant, but no deal has been sealed yet.
Back in 2011, Saudi Aramco said it had signed a memorandum of understanding to provide up to
200,000 bpd of Arabian crude oil via a long-term contract to the PetroChina refinery in Yunnan,
which was then in the planning stage.
China is a crucial market for Saudi oil, and earlier this year Saudi King Salman visited China in a
move widely seen as an attempt to secure future exports, preferably under long-term contracts,
which is the standard approach of the Kingdom toward crude oil exports.

GCC:Three important oil trade chokepoints are located around
the Arabian Peninsula ,, Source: U.S. EIA, 2017 World Oil Transit Chokepoints
Nearly 59 million barrels per day (b/d) of global petroleum and other liquids production moved on
maritime routes in 2015, or almost 61% of the world total. Many of these products transited the
Suez Canal and SUMED Pipeline, the Bab el-Mandeb Strait, and the Strait of Hormuz chokepoints
around the Arabian Peninsula.
Chokepoints are narrow channels along widely used global sea routes, and they are critical to
global energy security. The inability of oil to transit a major chokepoint, even temporarily, can lead
to substantial supply delays and higher shipping costs, resulting in higher world energy prices.
Although most chokepoints can be circumvented through the use of other routes that add
significantly to transit time, there are no practical alternatives in some cases.
The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million b/d
in 2016. The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian
Sea, and in 2015 its daily flow of oil accounted for 30% of all seaborne-traded crude oil and other
liquids.
More than 30% of global liquefied natural gas trade also transited the Strait of Hormuz in 2016. At
its narrowest point, the Strait of Hormuz is 21 miles wide, but the width of the shipping lane in
either direction is only two miles wide, separated by a two-mile buffer zone.

There are limited options to bypass the Strait of Hormuz. Only Saudi Arabia and the United Arab
Emirates have pipelines that can ship crude oil outside of the Persian Gulf and have additional
pipeline capacity to circumvent the Strait of Hormuz.
At the end of 2016, the total available crude oil pipeline capacity from the two countries combined
was estimated at 6.6 million b/d, while the two countries combined had roughly 3.9 million b/d of
unused bypass capacity.
The Suez Canal and the SUMED Pipeline are strategic routes for Persian Gulf oil and natural gas
shipments to Europe and North America. Located in Egypt, the Suez Canal connects the Red Sea
and the Gulf of Suez with the Mediterranean Sea. In 2016, 3.9 million b/d of crude oil and refined
products transited the Suez Canal in both directions, according to data published by the Suez
Canal Authority.
Northbound flows rose by about 300,000 b/d in 2016, largely because of increased crude oil
exports from Iraq and Saudi Arabia to Europe. Southbound shipments decreased for the first time
since at least 2009, largely because of lower exports of petroleum products from Russiato Asia.
The 200-mile long SUMED Pipeline transports crude oil through Egypt from the Red Sea to the
Mediterranean Sea. Crude oil flows through two parallel 42-inch pipelines that have a total
capacity of 2.34 million b/d. The SUMED Pipeline is the only alternate route to transport crude oil
from the Red Sea to the Mediterranean Sea if ships cannot navigate through the Suez Canal.
Closure of the Suez Canal and the SUMED Pipeline would require oil tankers to divert around the
Cape of Good Hope near the southern tip of Africa, which would add approximately 2,700 miles to
the transit from Saudi Arabia to the United States. In 2016, 1.6 million b/d of crude oil was

transported through the SUMED Pipeline to the Mediterranean Sea and then loaded onto tankers
for seaborne trade.
The Bab el-Mandeb Strait is a chokepoint between the Horn of Africa and the Middle East and is a
strategic link between the Mediterranean Sea and the Indian Ocean. Located between Yemen,
Djibouti, and Eritrea, it connects the Red Sea with the Gulf of Aden and the Arabian Sea. Most
exports from the Persian Gulf that transit the Suez Canal and the SUMED Pipeline also pass
through Bab el-Mandeb.
An estimated 4.8 million b/d of crude oil and refined petroleum products flowed through this
waterway in 2016 toward Europe, the United States, and Asia, an increase from 3.3 million b/d in
2011. The Bab el-Mandeb Strait is 18 miles wide at its narrowest point, limiting tanker traffic to two
2-mile-wide channels for inbound and outbound shipments. Closure of the Bab el-Mandeb could
keep tankers originating in the Persian Gulf from reaching the Suez Canal or the SUMED Pipeline.

India’s HPCL aims to buy US oil in next few months
Gulf New Delhi, Bengaluru
Indian refiner evaluates replacing Nigerian sweet oil with US
India’s ews - industan Petroleum Corp plans to buy low-sulphur oil from the United States in the
next few months for its 166,000 barrel per day (bpd) Vizag refinery in southern India, company
executives said on Friday.
“We are also going to buy in the near future, in some months. There are certain grades which we
found suitable for us,” Chairman M.K. Surana said at a news conference. “We should have a
wider basket and more options. US crude is an additional option for us,” he said.
India is the latest Asian country to buy US crude, following South Korea, Japan, China, Thailand,
Australia and Taiwan, after Opec cuts drove up prices of Middle East heavy-sour crude, or grades
with a high sulphur content.
Indian refiners stepped up purchases of US oil after Indian Prime Minister Narendra Modi’s visit to
the Washington in June when President Donald Trump said the United States looked forward to
exporting more energy products to the world’s third-biggest oil buyer.
Since then, state-run Indian Oil Corp and Bharat
Petroleum Corp have bought US oil, as Indian
refiners seek to diversify their crude import sources
as arbitrage opens due to global oil supply cuts.
HPCL’s finance chief J. Ramaswamy said the
company is evaluating if Nigerian sweet oil can be
replaced with US oil. He said HPCL has the appetite
to import a very large crude carrier containing 2
million barrels of US oil every month.
HPCL reported a 56 per cent drop in net profit for the
fiscal first quarter on Friday, as inventory losses
dragged down its refining margins. Net profit for the
quarter ended June 30 came in at 9.25 billion rupees
($145.26 million), from 20.98 billion rupees a year
earlier.
HPCL suffered an inventory loss of 15.95 billion
rupees in the June quarter compared to a gain of
19.35 billion rupees a year ago, Surana said. Gross
refining margins, or profit earned on each barrel of
crude processed, dropped to $5.86 per barrel,
compared to $6.83 per barrel in the same period last
year.
The Indian government has decided to sell its 51.1
per cent stake in HPCL to state explorer Oil and Natural Gas Corp. Surana said HPCL’s
investment plans will not be hit by its integration with ONGC. HPCL aims to invest 71 billion
rupees in this fiscal year to expand its refining capacity and strengthen its marketing and pipeline
network.
HPCL plans to boost the capacity of its Mumbai refinery to 190,000 bpd by July 2019 from
130,000 bpd while its Vizag refinery will be ramped up to 300,000 bpd by July 2020.

Turkey:Siemens Gamesa wins Turkey’s first wind power
Bloomberg/Ankara
A consortium led by Siemens Gamesa Renewable Energy won the right to build 1 gigawatt of
wind power in Turkey, outbidding competitors from China to the US in the country’s first wind
power auction.
The group won with a low bid of 3.48 US cents a kilowatt-hour to sell electricity to Turkey’s
government, according results distributed on Thursday at the auction in Ankara. Siemens Gamesa
partnered with Turkey’s Turkerler and Kalyon at the auction, which needed 29 rounds to find a
price.
“The aggressive bidding at 50% below the ceiling price shows that Siemens Gamesa really
wanted to get into this market,” said Keegan Kruger, wind analyst at Bloomberg New Energy
Finance. “This tender also shows there’s a shift in mentality among the turbine makers away from
just being suppliers.”
Eight groups participated in the auction, which set out rules requiring the winning bidder to build a
turbine factory in Turkey and agree to employ a mostly local workforce. Energy Minister Berat
Albayrak estimated that development costs for the wind projects will be more than $1bn.
Capacity will be spread throughout Turkey. Before the auction, the government had selected
seven regions for developers to choose from, including Eastern Thrace near Bulgaria, an area
close to Ankara and the city of Sivas in central Turkey.
The participation of Siemens Gamesa, a Vizcya, Spain-based company majority owned by
Germany’s Siemens, should improve ties with Berlin’s government, Energy Minister Berat
Albayrak said after the tender, an apparent reference to months of diplomatic discord between
Turkey and Europe’s biggest economy.
The win by a German firm is “really important in showing bilateral problems between the Turkish
and German governments is not getting in the way of German business interests in Turkey,” Tim
Ash, an emerging-market strategist at BlueBay Asset Management in London, said in an e-mailed
note. “The Turkish government has been really keen to demonstrate this and re-assure German
business.”

Burkina Faso: Building Africa’s Largest Thermal-Solar PV
Hybrid Power Plant 00 By William Steel
Finnish technology group Wärtsilä is set to deliver a 15-MW solar PV plant in Burkina Faso —
creating Africa’s largest thermal-solar PV hybrid power plant.
The solar PV development will be integrated with an existing 55-MW Wärtsilä thermal plant
(running on heavy fuel oil), to power IAMGOLD’s Essakane Mine, 330km northeast of the Burkina
Faso’s capital, Ouagadougou. The plant is scheduled to be operational early next year.
Renewable Energy World spoke with business development manager, Jerome Jouaville, of
Wärtsilä Energy Solutions, about the project and prospects for hybrid power plants.
“The project has been motivated by an appetite to lower operating costs via reducing fuel usage,
but also by a desire to reduce CO2 emissions.”
Wärtsilä estimates that the solar PV addition will enable a reduction in fuel consumption of
approximately six million litres per year, and reduction in annual CO2 emissions of 18,500 tons.
Jouaville continued: “It’s not an uncommon situation. In fact, we see many potential customers
interested in this kind of hybrid solution, particularly over the African continent.”
Energy solutions provider Aggreko is also optimistic over hybrid generation — a solution it
provides via turnkey solar-diesel packages.

This year, Aggreko signed a 10-year contract to deliver a solar-diesel hybrid to power mining
operations for Nevsun in Eritrea. The hybrid will feature 22 MW of diesel and 7.5 MW of solar-
generated power.
A rendering of planned solar PV field at Wärtsilä’s existing 55-MW thermal plant. Credit: Wärtsilä
Karim Wazni, Aggreko’s director of business development, renewables, told Renewable Energy
World: “Hybrid generation is about achieving the best of both worlds.”
“Combining thermal power plants with solar or wind power, helps us bring the reliability, availability
and flexibility of thermal power plants together with the low cost of electricity derived from
renewable energy sources,” Wazni said.
He added that an additional benefit is reducing customers’ exposure to fluctuating commodity
prices [of fuels].
Key to a hybrid project is success at the point of interface between the thermal and solar PV
plants — something achieved through control systems, according to Jouaville.
“In order to successfully introduce solar PV, and offset some thermal generation capacity, we
need to design and ensure that any time we push solar PV, we still have enough spinning reserve
in the system to meet [the mine’s] base demand (of roughly 40 MW) even in the event of cloud-
cover, or engine shutdown,” Jouaville said.
To this end, Wärtsilä is adapting its diesel engine operating system to accommodate solar PV
generation.
“The system will manage loads and outputs, and control engines according to solar PV output to
ensure we meet demand whilst keeping enough spinning reserve in the system,” Jouaville said.

Noting that the mine is not grid-connected, Jouaville added: “the priority for us is to deliver
something that avoids jeopardising mining operations.”
Indeed, a perennial concern for energy intensive industries — and cause for reluctance to switch
to renewables, in spite of potential economic gains — is sustained, reliable power supply. It’s a
need that jars with intermittency of renewable power generation.
Nevertheless, Wärtsilä is confident.
“Hopefully, we will demonstrate the success of the hybrid technology with this project,” Jouaville
said.
A stepping-stone to renewable powering industry to be sure, but with the timeline for taking all
conventional thermal plants offline stretching out over decades to come, hybridization represents
a promising interim solution.
“I believe we can replicate this kind of solution over many more situations where we have a
combination off grid customers, long life of project, availability of land, and relatively high price on
fuel – factors on which the economics of the business case relies,” Jouaville said. “In this case,
the PPA is for 15 years.”
Considering the circumstances, the notion of adding battery storage, to enhance plant resilience
and further lessen reliance on engines, is logical.
Jouaville agreed, saying: “Battery storage is something we’re considering for the next step [at
Essakane]. There’s no technical problem, but we need to understand the battery performance
requirements carefully.”
Aggreko has a similar outlook.
“Energy storage is a major player in the thermal-renewable combination,” Wazni said. “Adding
energy storage to our hybrid power plants allows us to further increase the amount of solar power
that can be integrated, while preserving the power quality and reliability, thus displacing more fuel
consumed and reducing the costs for our customers. Energy storage also benefits the operation of
the thermal plants by allowing them to run more efficiently.”
He added that overall, “we strongly believe that energy storage is an asset that can unlock
tremendous value in many power projects.”
The hybrid-plus-batteries ambitions are reflected in strategic moves taken on behalf of each
company. Wärtsilä recently acquired Greensmith Energy, a U.S.-based provider of grid-scale
energy storage software and integrated solutions; while Aggreko acquired Younicos, a provider of
integrated battery storage systems.
Jouaville observed: “Now Greensmith Energy are part of our family, I expect we’ll see more efforts
to deliver battery projects. Hybrid thermal-solar PV is a great combination, but adding batteries is
an even more exciting prospect.”

NewBase August 07 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil holds near 9-week highs on jobs data, fall in U.S. drill rigs
Reuters + NewBase + Bloomberg
Oil prices edged lower today Monday but still held near nine-week highs, supported by
robust U.S. jobs data last week and a slight fall in the U.S. drill rig count, even as rising output
from OPEC capped crude markets.
Global benchmark Brent crude futures were down 6 cents, or 0.11 percent, at $52.36 a barrel at
0309 GMT. U.S. crude futures were down 7 cents, or 0.14 percent at $49.51 per barrel.
Prices for both benchmarks have been on the rise, holding near their highest since late May, when
oil producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended a
deal to reduce output by 1.8 million barrels per day (bpd) until the end of next March.
"Crude oil prices rose strongly as investors viewed (U.S. jobs) data as a positive sign for oil
demand in the United States ... A small fall in the number of drill rigs operating in the U.S. also
supported prices," ANZ bank said in a note.
U.S. employers added an above-forecast 209,000 workers in July and raised wages, the U.S.
Labor Department said on Friday in its monthly jobs report.
U.S. drillers cut one oil rig in the week to August 4, bringing the total count down to 765, energy
services firm Baker Hughes also said on Friday.
Still, the U.S. rig count has been trending upwards since mid-May, and oil production in the United
States hit 9.43 million bpd in the week to July 28, the highest level since August 2015.
Michael McCarthy, chief market strategist at CMC Markets, said, supportive news such as big
drawdown in U.S. supplies would be needed to push U.S. WTI prices above $50 a barrel.
Oil price special
coverage

"This week, weekly data out of the U.S. should be really influential .... if (U.S. daily production)
makes further gains given the high prices, I think that would be a catalyst for downside news,"
McCarthy said.
Meanwhile, OPEC's crude oil exports in July rose to a record high of 26.11 million bpd, most of
which came from Nigeria, according to a report by Thomson Reuters Oil Research last week.
Libya, though, one of the OPEC members who has been exempt from the OPEC-led production
cuts, was facing a gradual shutdown of its 270,000-bpd Sharara oil field after the closure of a
control room.
Officials from a joint OPEC and non-OPEC technical committee are set to meet in Abu Dhabi on
Monday and on Tuesday to discuss ways to boost compliance with their supply reduction
agreement.
WTI Trades Near $49 as Prices Still Capped by Sufficient Supply
Oil traded near $49 a barrel in New York amid speculation that plentiful supplies will continue to
thwart any further rallies.
Futures fell 1.3 percent. While growth in U.S. drilling has stalled and Libya’s production revival
was dealt a setback by protests, rebounding output is still capping prices, according to Saxo Bank
A/S. A committee co-chaired by Kuwait and Russia will examine why some participants in the deal
between OPEC and other producers to reduce global supply aren’t fully implementing their cuts.
Oil in New York was unable to hold its advance above $50 a barrel last week as signs of rising
global supply eroded optimism that output curbs by the Organization of Petroleum Exporting

Countries and its partners are rebalancing the market. Compliance with cuts was 86 percent in
July, according to a Bloomberg survey.
“The market has recovered strongly from its lows on signs that the market is normalizing, but
further upside at this stage seems unlikely,” said Ole Sloth Hansen, head of commodity strategy at
Saxo in Copenhagen.
West Texas Intermediate for September delivery was at $48.95 a barrel on the New York
Mercantile Exchange, down 63 cents, at 9:52 a.m. London time. Total volume traded was about
12 percent above the 100-day average. Prices climbed 55 cents to $49.58 on Friday, trimming the
weekly loss to 0.3 percent.
Brent for October settlement dropped 70 cents to $51.72 a barrel on the London-based ICE
Futures Europe exchange. Prices rose 41 cents to $52.42 on Friday, reducing the weekly decline
to 0.2 percent. The global benchmark crude traded at a premium of $2.62 to October WTI.
Saudi Arabia said last month that it planned to increase pressure on nations that didn’t comply
with their pledged cuts. Compliance by members of OPEC was at 78 percent in June, compared
with 82 percent from its 10 non-OPEC partners, according to the International Energy Agency.
Representatives from both sides meet Monday and Tuesday in Abu Dhabi.
“I expected compliance in this deal to weaken as time went on,” Robin Mills, head of Dubai-based
consultant Qamar Energy, said in a Bloomberg Television interview. “The ultimate enforcement
mechanism is that Saudi Arabia walks away from any deal, and production goes up and prices
collapse and members get hurt. We’re not anywhere close to that now.”

US drilling rigs drop along with investor confidence,The U.S.
Shale Boom Is Slowing Down.... Bloomberg
The US shale boom slowed breaking the 23-week consecutive growth record
Shale producers in the US are scaling back on output expectations for the second half of the year.
Matt Nager / Bloomberg
Oil explorers reduced rigs drilling in US oilfields this week, fuelling optimism that a shale slowdown
and Opec production cuts will be enough to deflate a glut and strengthen crude prices.
Working rigs targeting crude fell by 1, bringing the total to 765, according to Baker Hughes data
reported Friday. Producers ended 23 straight weeks of additions with a pullback at the end of
June, breaking the longest stretch of continuous growth in three decades. Even so, more than
twice as many rigs are drilling for oil now than in May 2016, when the count hit a low point of 316.
"It echoes what we’ve been expecting and what explorers and producers have been saying,"
Andrew Cosgrove, senior analyst for energy and mining equity at Bloomberg Intelligence, said by
telephone. "They’re dialing back some of their expectations for output in the second half of the
year."
The Eagle Ford basin in Texas bucked the trend by adding three rigs for a total of 70 working
there. The Permian basin was unchanged, putting an end to three weeks of expansion.
Shares Stumble
Shares of major shale producers including Pioneer Natural Resources and EOG Resources
tumbled this week as investors began to lose confidence in the prolific Permian basin. As the
productivity of older wells in shale fields is rapidly declining, explorers added rigs at a record pace

this year to keep increasing output. The Permian has seen the steepest declines among the four
largest US shale plays.
West Texas Intermediate, the US benchmark, retreated this week following the strongest rally of
the year that pushed prices briefly to US$50 a barrel. Investors focused on the glut despite a
seasonal increase in American fuel demand, which is due to end in September.
While Opec members including Saudi Arabia and Kuwait have pledged to deepen supply cuts to
shore up oil prices, their efforts are being hampered by a surge in production from fellow oil
exporters Libya and Nigeria. Rising production in Libya helped drive an increase in output from
Opec, which reached the highest level this year.
Steady growth in US output is adding to that pain, with US crude production expanding by 20,000
barrels a day this week according to data from the Energy Information Administration.
"The market still needs about another year and a half for demand to catch up," Mr Cosgrove said.

NewBase Special Coverage
News Agencies News Release August 06 2017
Saudi Arabia Builds Cities in the Sand to Move Beyond Oil
Bloomberg - Sarah Algethami
After relying on oil to fuel its economy for more than half a century, Saudi Arabia is turning to its other abundant
natural resource to take it beyond the oil age -- desert. The kingdom is converting thousands of square kilometers
of sand into new cities as it seeks to diversify away from crude, create jobs and boost investment.
In the past month alone, the world’s biggest oil exporter has announced two major developments -- one covering
an area bigger than Belgium and another almost the size of Moscow. That’s on top of plans to build a series of
so-called economic cities -- special zones in logistics, tourism, industry and finance, an entertainment city and a
$10 billion financial district.
“The overall progress with the economic cities has been very slow, even before the collapse of the oil
price,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank PJSC. “Since then, the pace of
development has moderated even further with a number of projects being placed on hold.”

When “Saudi Vision 2030” was announced last April, the 84-page blueprint said the government would work to
“salvage” and “revamp” economic city projects executed over the past decade that “did not realize their
potential.”
Here’s a look at some of Saudi Arabia’s most ambitious projects:
The Red Sea
The kingdom last week announced plans to turn 50 islands and 34,000 square kilometers (13,127 square miles) --
an area bigger than Belgium -- along its Red Sea coastline into a global tourism destination. Located between the
cities of Umluj and Al Wahj, the project aims to attract luxury travelers from around the world and will be
developed by the Public Investment Fund, the country’s sovereign wealth fund. Construction is expected to start
in 2019 and the first phase completed by 2022. The development cost of the project wasn’t given.
Visitors will have access to the ancient ruins at Mada’in Saleh, a relic of the same ancient civilization that built
the city of Petra in Jordan. A promotional video for the project with dramatic music showcases white sand
beaches and flocks of birds soaring over turquoise waves.
Bringing sun-seekers to Saudi beaches could transform a tourism industry that relies almost solely on Muslim
pilgrims visiting holy shrines in Mecca and Medina. The country’s restrictions on alcohol and dress, however,
could make it a hard sell for foreign tourists. The government will need to “get through the cultural and legal
hurdles,” said Crispin Hawes, London-based managing director at Teneo Intelligence. “If you can’t change
restrictions on alcohol and dress, that market effectively disappears.”
Mada’in Saleh
Photographer: Vivian Nereim/Bloomberg

Al Faisaliyah
The kingdom announced detailed plans for the Al Faisaliyah project last month. Located to the west of Mecca,
the city will have residential units, entertainment facilities, an airport and sea port. The project will cover 2,450
square kilometers -- almost the size of Moscow -- and is expected to be completed by 2050. The Makkah Region
Development Authority is supervising the project and the PIF is also involved. An investment figure hasn’t been
given.
Entertainment City
Saudi Arabia in April announced plans to develop the kingdom’s largest cultural, sports and entertainment city in
Al Qidiya, southwest of Riyadh. The project will be developed on 334 square kilometers and will include a safari
area and a Six Flags Entertainment Corp. theme park. The country’s sovereign fund is the main investor, along
with local and international investors. Construction is due to start next year and the first phase should be
completed by 2022. An investment figure was not given.
As part of plans to overhaul its economy, the government is relaxing the rules on entertainment in the ultra-
conservative society. Concerts, dance shows and film screenings have drawn thousands of people over the past
year. By 2030, the kingdom aims to double household spending on recreation to 6 percent.
“While the current authorities seem to be committed to open up the country to forms of entertainment previously
banned, a big test will be the reaction of the more conservative parts of the Saudi society which have already
shown great reservations toward the newly founded Entertainment Authority as reflected through social media
widespread criticisms,” said Philippe Dauba-Pantanacce, a London-based senior economist and geopolitical
strategist at Standard Chartered Bank.
King Abdullah Economic City
KAEC, named after the former head of state, is the kingdom’s first freehold city and is being developed by
Emaar Economic City, a company controlled by the Saudi government and Dubai’s biggest property developer
Emaar Properties PJSC. Covering about the same area as Brussels, the project has attracted $7.9 billion of
investment and secured enough cash and credit to fund its planned spending for the next decade, according to
KAEC. The project includes a deep-sea port, a 55 square-kilometer logistics hub, a sports and recreation center
and more than 6,500 residential properties.

King Abdullah Financial District
KAFD, as it’s known, was envisaged as Saudi Arabia’s answer to the Dubai International Financial Centre,
bringing banks, financial-services firms, auditors and lawyers, as well as the kingdom’s stock exchange and
capital-market authority into one area. The project, north of Riyadh, has been slowed by construction delays
since work began in 2006 and is more than 70 percent complete. As of last April, not a single financial
institution had agreed to take space in the 73 buildings the state is constructing, said Waleed Aleisa, chief
executive officer and project manager of the district at developer Al Ra’idah.
The 1.6 square-kilometer district is owned by the Saudi Public Pension Agency and the government is looking at
ways to lure banks with incentives that could include tax breaks lasting a decade or more, as well as separate
regulation that makes it easier to hire and issue work visas, Aleisa said. Five buildings at the district’s core will
be surrounded by dozens of offices, apartments, hotels, conference centers and entertainment venues. On the
ground, walkways below street level branch out to connect buildings and provide space that’s 8 degrees Celsius
cooler than street level.
Knowledge Economic City
Saudi Arabia’s first so-called smart city development, the city in Medina will focus on intellectual property,
knowledge-based industries, medical, hospitality, tourism and multi-media. It will also have serviced apartments,
a hotel and conference facilities, according to the Economic Cities Authority website. Residents of the city,
which will cover 4.8 square kilometers, will have access to Mecca and Jeddah via the Haramain High Speed
Railway. KEC was listed on the Saudi stock exchange in 2010 after raising about $270 million.
Prince Abdulaziz bin Mousaed Economic City
This is a mixed-use development located on 156 square kilometers of land in Hail in the north of the kingdom.
As well as a residential area, the city will also have an international airport, hotels, shopping centers and
entertainment venues.

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 27 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 August 2017 K. Al Awadi

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