New base 15 march 2021 energy news issue 1415 by khaled al awadi2-compressed

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NewBase Energy News 15 March 2021 - Issue No. 1415 Senior Editor Eng. Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
U.A.E Masdar commits to support Ethiopia’s solar energy plans
WAM/‫أ‬ /Rasha Abubaker
Masdar and the Government of Ethiopia, are exploring the development of solar power projects with
a total capacity of 500 megawatts (MW), along with the related grid infrastructure across Ethiopia.
Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, and Ahmed Shide, Ethiopia’s
Minister of Finance, signed a Memorandum of Understanding (MoU) at a ceremony yesterday at
the Prime Minister’s office in Addis Ababa, the country’s capital.
The signing was witnessed by HE Abiy Ahmed Ali, Prime Minister of the Federal Democratic
Republic of Ethiopia, who presided over the ceremony, and HE Mohamed Salem Al Rashdi, the
UAE’s Ambassador to Ethiopia.
The agreement covers the development, financing, design, engineering, procurement, construction,
testing, commissioning, insurance, ownership, operation, maintenance and transfer of photovoltaic
(PV) plants, and the infrastructure required to transmit the electricity. Additional plans call for the
signing of power purchase agreements and other agreements later this year, and to begin
commercial operations in 2022.

"This initiative will mark a significant step forward for Ethiopia’s efforts to diversify its energy mix
and to drive economic development," said Al Ramahi. "Masdar has been a catalyst for renewable
energy and clean-tech innovation in more than 30 countries around the world, and we look forward
to working with the Government of Ethiopia to help deliver universal access to electricity for all its
people."
While Ethiopia’s electricity grid is almost 100 percent supplied by clean energy sources, chiefly
hydropower, more than half of its population still lack direct access to electricity. Ethiopia’s National
Electrification Program aims to achieve universal energy access by 2025, and to become a power
hub in Eastern Africa. The government is also focused on diversifying its energy mix with wind,
solar, and geothermal sources to reduce dependence on hydropower, which is vulnerable to
fluctuations in rainfall.
About Ethiopia Energy : ( by NewBase )
The current energy generation is highly reliant on hydropower with 3800 MW equal to 89 percent of
total generation capacity and the electrification rate of 85 percent in urban areas. This is high but it
drops dramatically to 10 percent in rural areas, so only 25 percent of Ethiopian citizens enjoy access
to energy.
The population and GDP growth will result in an increased demand for electricity in the coming
years. the government is turning its attention to other renewable energy sources to diversify the
energy mix.
According to the study, the country should exploit renewable energy sources efficiently to cope up
with the strong demand growth that exceeds 12 percent per year.
A focus on attaining a more balanced energy mix between hydro resources, solar, wind and
geothermal sources, diversifying the mix of energy resources will improve the security of supply and
will help mitigate the effect of climate change, the study states. Bio mass resources from wood
residues and sugar waste can also contribute to energy diversification.
Wind power has a capacity of 324MW equal to 8 percent of total generation capacity while biomass,
geothermal and liquid fossil fuels provide only 2 percent of total generation.
In the future, wind and solar power capacities can be installed in Ethiopia. Up to 2400 MW from
wind and 3500MW solar is expected in 2025 and 3600MW from wind and 5300MW from solar by
the year 2030.

U.A.E: DEWA, WGEO to organise 7th World Green Energy Summit
WAM/ /Tariq alfaham
Under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President
and Prime Minister of the UAE and Ruler of Dubai, Dubai Electricity and Water Authority (DEWA)
and the World Green Economy Organisation (WGEO) will organise the 7th World Green Economy
Summit (WGES) on 6 -7 October 2021 at Expo 2020 Dubai.
Saeed Mohammed Al Tayer, Vice Chairman of the Dubai Supreme Council of Energy, and
Chairman of WGES, made the announcement, noting that WGES will be held in conjunction with
the Water, Energy, Technology, and Environment Exhibition (WETEX) and Dubai Solar Show,
which is organised by DEWA from 5 to 7 October 2021 at Expo 2020 Dubai.
"The World Green Economy Summit’s goals are aligned with the directives of His Highness Sheikh
Mohammed bin Rashid Al Maktoum, to achieve a balance between economic growth and the
sustainability of natural and environmental resources. The Summit also supports the UAE’s efforts
to achieve the UN Sustainable Development Goals 2030, the Emirates Green Agenda 2030, and
the Dubai Energy Strategy 2050,''said Al Tayer.
''In the UAE, several key initiatives have accelerated the pace of a green economy. Transformational
projects such as building solar power plants, encouraging the use of environmentally-friendly
electric vehicles, digitisation, as well as building sustainable, low-carbon urban communities
demonstrate the UAE’s position as a global hub for a green economy," he added.

"Accelerating the shift towards a green economy requires concerted efforts. WGES is a major
platform that supports international cooperation in addressing global challenges and promoting
sustainable development.
The establishment of the Regional Cooperation Centre (RCC) for the Middle East and North Africa,
as well as the hosting of Regional Ministerial Conferences by WGEO on a green economy to
enhance cooperation between the countries of the world, are testament of successful global efforts
towards a sustainable future," he said.
The 6th WGES in 2019 attracted several local and global high-profile participation, including heads
of states and governments, as well as many international prominent speakers, in addition to official
dignitaries and representatives from government organisations, academia, experts and the media.
ABOUT WORLD GREEN ECONOMY ORGANIZATION
The World Green Economy Organization (WGEO) is a comprehensive response to calls by the
international community for a holistic approach to spur progress on how and why a green economy
is the world’s best route towards a safe and prosperous future.
The path from the Rio+20 United Nations Conference on Sustainable Development in 2012 to the
passage of the new 2030 Agenda for Sustainable Development and the Paris Agreement, has seen
strong levels of commitment by world leaders to shift to a green economy.
WGEO seeks to promote the widespread acceptance and increased importance of green economy
in the context of Sustainable Development and poverty eradication.
WGEO intends to support emerging global actions towards the green, low-carbon, climate resilient
development model. The organization is framed to operationalize green economy concepts on the
ground through results and impact-oriented action. The World Green Economy Organization
(WGEO) is head quartered in Dubai, United Arab Emirates.

China Sinopec accelerates hydrogen energy development
Sinopec.com + NewBase
China Petroleum & Chemical Corporation (Sinopec) has proposed to accelerate hydrogen energy
industry development, while seeking to devote more efforts in top-level design, core technology
R&D, standard system formulation and industrial policy support.
Ma Yongsheng, President of Sinopec, leading pressed the company's vision for hydrogen.
As a secondary source of energy, hydrogen is playing an increasingly
important role on the world energy stage. At present, China has achieved
significant progress in hydrogen energy-related technologies, but the
hydrogen energy industry remains in the pilot demonstration and market
promotion stage.
Ma noted the many advantages of hydrogen energy, such as its varied
sources, zero terminal discharge and wide range of applications.
According to the international Hydrogen Council, hydrogen energy will
reduce carbon dioxide emissions by six billion tons by 2050. Meanwhile,
the China Hydrogen Energy Alliance predicts that by 2050, China's
annual hydrogen demand will be close to 60 million tons, which would
help the country to cut 700 million tons from its carbon dioxide emissions.
Since 2020, China has successively issued the "Notice of Launching Demonstration Applications of
Fuel Cell Vehicles" and the "New Energy Vehicle Industry Development Plan (2021-2035)", and
supporting plans and policies to promote hydrogen energy R&D, production, storage and
transportation and application have been introduced by local authorities across China. As of the end
of 2020, China has an inventory of 7,352 fuel cell vehicles, 128 hydrogen refueling stations have
been built with 101 already put into operation, ranking second worldwide only to Japan.
Sinopec currently produces 3.5 million tons of hydrogen per year. In 2020, Sinopec started to
advance and accelerate the construction of an integrated hydrogen energy industry chain across
various fields – capital operation, technology R&D, production storage and transportation, network
distribution and social cooperation.
Sinopec has built hydrogen refueling stations in Guangdong, Shanghai, Zhejiang, Guangxi and
more, and 10 oil-hydrogen mixing stations are now in operation.
As part of China's 14th Five-Year Plan, Sinopec has included "clean" in the company vision for the
first time. Carrying the goal of building China's largest hydrogen energy company, Sinopec will also
be promoting clean energy construction through accelerating the transformation of hydrogen
sources from grey hydrogen to blue and green hydrogen.

"During the '14th Five-Year Plan' period, Sinopec will layout 1,000 hydrogen refueling stations and
step up to become a service provider of 'oil, gas, hydrogen, electricity and non-oil business' through
transformation," said Ma. "In the future, people will not only pump gasoline and diesel in Sinopec's
gas stations, but also hydrogen refueling and electricity among other businesses."
To better promote the market application of the hydrogen energy industry, Sinopec as an official
partner of the 2022 Winter Olympics will guarantee supply of clean energy for the Game's
infrastructure construction and operations to empower a "Green Winter Olympics."
Therefore, Sinopec's Beijing Yanshan Petrochemical Company has built a hydrogen purification unit
which successfully produced hydrogen with purity of over 99.9 percent in March, 2020, achieving a
daily production capacity of 500 kg of battery hydrogen products to meet the market's demand.
About Sinopec
Sinopec Corp. is one of the largest integrated energy and chemical companies in China. Its principal
operations include the exploration and production, pipeline transportation and sale of petroleum and
natural gas; the sale, storage and transportation of petroleum products, petrochemical products,
coal chemical products, synthetic fiber, fertilizer and other chemical products; the import and export,
including an import and export agency business, of petroleum, natural gas, petroleum products,
petrochemical and chemical products, and other commodities and technologies; and research,
development and application of technologies and information.
Sinopec sets 'fueling beautiful life' as its corporate mission, puts 'people, responsibility, integrity,
precision, innovation and win-win' as its corporate core values, pursues strategies of value-
orientation, innovation-driven development, integrated resource allocation, open cooperation, and
green and low-carbon growth, and strives to achieve its corporate vision of building a world leading
energy and chemical company.

Italy: Eni and CDP have set up GreenIT for renewable energy
Source: Eni
Eni and CDP Equity have set up GreenIT, a new joint venture for the development, construction
and management of plants for the production of electrical power from renewable sources in Italy,
Eni and CDP Equity have set up GreenIT, a new joint venture for the development, construction and
management of plants for the production of electrical power from renewable sources in Italy.
GreenIT, 51% owned by Eni and 49% by CDP Equity, will produce energy mainly from photovoltaic
and wind power plants with the aim of reaching an installed capacity of approximately 1,000 MW by
2025, with cumulative investments amounting to over 800 million euro in the five-year period.
The resources will be used across various areas of intervention which include the development and
construction of greenfield plants, including through the enhancement of the real estate assets of the
CDP Group and the Public Administration, the repowering of plants at the end of their useful life and
the construction of authorised projects.
The establishment of GreenIT is part of the strategy aimed at supporting the country's energy
transition, increasing the generation of renewable energy, in line with the objectives set by the 2030
Integrated National Energy and Climate Plan.
The CEO of CDP Equity and Chief Investment Officer of CDP, Pierpaolo Di Stefano,
commented: 'The birth of GreenIT is the realisation of a further project envisaged by the Business
Plan of Cassa Depositi e Prestiti to aid the energy transition and contrast climate change,
contributing to the achievement of the sustainable development goals of the United Nations 2030
Agenda.
The collaboration with Eni will make it possible to work - from a system perspective - on the
development of projects with positive impacts on the territories for the production of energy
from renewable sources, in order to build a model increasingly geared towards sustainability and
support the country in achieving the targets defined by the Integrated National Energy and Climate
Plan.'
Giuseppe Ricci, General Manager of Eni’s Energy Evolution, said: 'This new joint venture is part of
Eni's strategy for the energy transition and contributes to the acceleration of our transformation
process towards green energy and renewable sources.
With this in mind, thanks to the partnership with Cassa Depositi e Prestiti, our commitment to
decarbonisation becomes increasingly concrete: to achieve the objectives of the United Nations
2030 Agenda, it is essential to create a system at country level and to pool together investment and
know-how opportunities'. Eni and CDP Equity SpA are related parties. Both Companies applied its
own internal Procedure.
CDP Equity is a holding company of Cassa depositi e
prestiti Group, with the objective of investing in Italian
companies of significant national interest with
economic, financial and asset balance, having suitable
perspectives in terms of profitability and development,
capable to create value for the investors.
CDP Equity also owns majority and minority interests
in asset management companies, focusing on different
business areas: CDP Venture Capital, FII for private
equity and private debt, FSI for private equity, F2i for
infrastructure investments, 4R for corporate
restructuring.

South Africa has much to gain from the pivot to hydrogen use
The National + NewBase
The country, which produces around 80% of the world's platinum, is well placed to further develop
and use hydrogen as an energy source.
By year’s end, the world's largest hydrogen powered land vehicle will be crawling along the dusty
plains of South Africa’s Bushveld region.
Japanese firm Komatsu, which specialises in heavy industrial machines, will dispatch a hauling lorry
that weighs almost 300-tonnes to a platinum mine belonging to Anglo American Platinum. These
vehicles are common on mining sites, where their vast payload capacity is used to carry ore for
processing.
These beasts of machines traditionally use diesel to fire their engines, but this one will be different.
It will be powered by hydrogen, through a clean-burning fuel cell. Eventually, Anglo’s entire fleet of
mine vehicles will run on emissions-free technology, chief executive Mark Cutifani says.
The Northam Platinum Booysendal platinum mine in South Africa. The country is well positioned to
tap into hydrogen boom as it produces most of the world's platinum. Bloomberg
“We will use wind power or solar to create hydrogen, and then replace the diesel in a truck, we’ll
have a carbonless energy footprint.”
Hydrogen is increasingly seen as a clean alternative to fossil fuels. It has no harmful emissions, with
its only by-product being water. There are $95 billion worth of hydrogen projects underway across
the world, according to PwC.
Countries ranging from the UAE to the US are developing technologies to tap into the most abundant
element in the universe as an energy source. Few countries though have as much to gain from
hydrogen as South Africa, which produces around 80 per cent of the world's platinum. The metal
provides the catalyst that helps convert hydrogen to electricity through fuel cells.

South Africa’s president Cyril Ramaphosa said the country is developing a 'Platinum Valley', which
will foster technologies such as electricity generators and vehicles. Tax incentives will be introduced
to encourage local and foreign investment into the sector.
“It presents what I see as a great opportunity to build a local skills base and lead the country into a
new era of energy generation and demand for its platinum group metals," Mr Ramaphosa told the
parliament.
Hydrogen generators have already been deployed to provide emergency electricity to field hospitals
set up to manage a surge in Covid-19 infections, he said.
"Through this Hydrogen South Africa strategy, government and its partners have successfully
deployed hydrogen fuel cells to provide electricity in some of our schools, and to build hospitals
established as part of the country's Covid-19 response."
The government is under intense pressure to increase energy provision, with business and industry
regularly being disrupted by power cuts. The coal dependent grid is straining with age, while
providing more than 90 per cent of the national electricity capacity.
The country is in the process of procuring additional renewable capacity, but fuel cells are also likely
to be part of the solution, says Zanele Mbatha, chief executive of Bambili Energy, a company which
provides emergency generators to field hospitals.
“Fuel cells are highly reliable sources of energy,” she says. “We are so confident in our systems
that they can provide the primary power for field hospitals – hospitals that have high care, and
intensive care units.”
South Africa is also exploring other hydrogen-related technologies. The national postal service is
trialling hydrogen powered motorcycles while the Council for Scientific and Industrial Research, a

state body, is building a prototype drone it says is capable of staying aloft for up to eight hours,
using an electric motor and fuel cell.
Such drones will be useful where cheap aerial surveys are required, such as infrastructure
monitoring, geological surveys and even agriculture, says Erik Wegman, a senior CSIR engineer
heading the project.
“One can imagine a drone is used to look at a farmer’s crop, to determine which areas need
fertilising, which do not – bringing with it a cost saving.”
By using hydrogen, South Africa could even reverse the spending on imported fuel and become a
net exporter instead. The country is an ideal environment for wind and solar energy production,
which could be used to power the electrolysis plants that produce hydrogen from water.
We can capitalise on this and move ourselves from being an energy importer, to being an energy
exporter,Currently, South Africa burns 12 billion litres of diesel a year and 10 billion litres of petrol,
most of which is imported.
“We can capitalise on this and move ourselves from being an energy importer, to being an energy
exporter,” says Jonathan Metcalfe, head of hydrogen strategy for consultancy firm PwC South
Africa.
Adopting a hydrogen strategy could completely revolutionise the South African economy, which is
now struggling with record unemployment of 43 per cent, Mr Metcalfe notes. The country already
has the infrastructure such as ports and roads needed to bolster exports.
South Africa even has an automotive sector that could potentially manufacture hydrogen-based
vehicles for export.
The industrialised world is moving towards hydrogen and South Africa should take advantage of
this through the manufacture and exporting of the fuel, Mr Metcalfe adds.
“In order to stimulate the economy, we need additional sources of export revenue. Playing to our
strengths in South Africa, hydrogen offers a compelling argument, to generate all-important foreign
currency.”

Asia Thirst for Natural Gas Is Disrupting Europe’s Market
Bloomberg - Anna Shiryaevskaya
Asia’s emergence as global natural gas trading superpower will increasingly dictate market rates in
Europe for a once-localized commodity that was simply linked to the price of oil.
The change was highlighted this winter, when freezing temperatures in the northern hemisphere
meant liquefied natural gas tankers went to Asia, the biggest consumer of the fuel and where sellers
could get record-high rates. That pushed up market levels in Europe and, conversely, is now acting
as a price brake as winter ends and LNG supplies return to the region.
“Over the next couple of years European gas prices will become less and less Europe-centric, and
more and more globally influenced,” said Andy Sommer, team leader for fundamental analysis and
modeling at Swiss trader Axpo Solutions AG.
Even with its numerous pipeline-supply options, Europe’s import dependency is rising amid falling
domestic production due to aging fields in the North Sea. At the same time, trade in LNG
transportable across oceans is expanding faster, driven mainly by demand in Asia.
In coming years, Europe will have to compete for LNG with consumers in China, India, Pakistan
and Bangladesh. In addition, new markets are yet to open as some Asian nations are just starting
to use gas in power generation instead of more polluting coal and fuel oil. By contrast, Europe’s
tightening climate targets will lead to more renewables squeezing out gas.

“You can compare it to the coal market,” Sommer said. “Asia was always an anchor for European
coal prices. The situation is moving into the very same phenomenon in the gas market as well.”
LNG production is rising primarily in nations relatively close to Europe, such as the U.S. and Russia.
But the addition of new plants in regions closer to Asian buyers has now slowed, a factor seen
boosting the interconnectedness of gas markets worldwide.
“The susceptibility of U.K. and European
gas markets to global LNG prices may be
set to increase,” according to energy
consultant Cornwall Insight. “With no
concrete plans for new long-term storage
facilities in the U.K. and declining U.K.
Continental Shelf, it could point to a
greater LNG dependency in the coming
years.”
This past winter’s LNG price volatility
may be a taste of things to come. The
super-chilled fuel is becoming such a
global commodity as trade mechanisms
evolve, that it’s now dictating natural gas
prices, according to Christoph Merkel,
managing director of the Merkel Energy
consultancy in Germany.
Burgeoning LNG supply from U.S. and
Russia helping drive natgas prices
Source: Shell LNG Outlook 2021
“LNG prices have become the gas
market prices,” he said. “There are still
some hub prices, but LNG is now the
market’s driver.”

NewBase March 15-2021 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil gaining momentum to rise With China’s Powerful Recovery
NewBase + Bloomberg
Oil opened the week in robust form after a raft of economic data from China added to signs of
recovery from the coronavirus pandemic just as the OPEC+ alliance presses on with output curbs
to drain global inventories.
Brent for May settlement climbed 1% to $69.93 a barrel on the ICE Futures Europe exchange. Later
at 69.73 5.45 BST . West Texas Intermediate for April delivery rose 1% to $66.24 a barrel on the
New York Mercantile Exchange at 10:30 a.m. in Singapore. Prices fell 0.7% last week.
West Texas Intermediate in New York gained 1%, while Brent also climbed. Figures from China for
the first two months of the year showed a surge in industrial output and retail sales, underscoring
the strength of its V-shaped recovery and reinforcing expectations for increased energy demand.
Crude has rallied strongly in the opening months of 2021, supported by the vaccine-aided recovery
from the pandemic and the decision by the Organization of Petroleum Exporting Countries and its
allies to keep a tight rein on supplies.
That combination -- plus an uptick in attacks on Saudi oil infrastructure by Houthi rebels -- helped
London’s Brent crude to top $71 a barrel last week.
Oil price special
coverage

“Once again, a much-improved demand picture along with supply cuts, particularly from OPEC+,
have us drifting higher,” said Michael McCarthy, chief markets strategist at CMC Markets Asia
Pacific. Lots of data this week, including China’s, may yield primary evidence of the recovery,
according to McCarthy. “I expect, if anything, we are going to see higher levels.”
Among the welter of figures, China’s apparent oil demand rose almost 17% in January-February
from a year earlier, to 13.326 million barrels a day, according to data compiled by Bloomberg. That
snapshot takes into account domestic oil processing volume, and the net import of refined
petroleum.
China is the only major economy to power out of the pandemic after an early control over the virus.
Its economy grew 2.3% in 2020, and it is forecast by economists to expand 8.4% this year. The
government has targeted a more modest expansion of “above 6%” for 2021.
There have also been positive signs from the U.S., with the weekly Covid-19 death toll declining to
a four-month low and new infections dropping. That’s boosting the outlook for oil consumption in the
world’s largest economy.
The OPEC+ alliance is wagering its tighter-for-longer policy on supply curbs will buttress higher
prices without provoking a resurgence in U.S. shale output. On Friday, Baker Hughes Co. data
showed the U.S. rig count little changed.
Baker Hughes Rig Count Shows USA Dip
The combined rig count for the USA and Canada declined by 26 this week. The U.S. rotary rig count
declined by one to 402 drilling units this week, Baker Hughes Co.reported Friday.
In its weekly count of operating rigs Baker Hughes noted the U.S. oil rig count fell by one and now
totals 309. The U.S. gas and miscellaneous rig tallies remained flat at 92 and one, respectively, the
service company added.

Since this time last year, when 792 rigs were operating, the U.S. has shed 390 rigs, Baker Hughes
noted. The firm stated the year-on-year figures reflect a 374-unit decrease in oil rigs, a 15-unit
decline in gas rigs, and a one-unit drop miscellaneous rigs. It added the U.S. offshore rig count
dropped by one this week to 13 – compared to 19 a year ago.
Canada shed 25 rigs to end the week at 116 units, Baker Hughes continued. The net loss includes
a 22-unit decrease in oil rigs, which now total 58, and a three-unit decrease in gas rigs (also to 58),
the company added.
Year-over-year, Canada’s rig count is down 59 from 175, Baker Hughes stated. The firm pointed
out that Canada has posted decreases of 57 oil and two gas rigs since this time in 2020.
Baker Hughes obtains its working rig location information in part from Enverus, which produces daily
rig counts using GPS tracking units.
Oil’s Dramatic Recovery Comes to Life in Caribbean Storage Tanks
Bloomberg - Lucia Kassai
For evidence that OPEC+’s strategy is working, consider what’s happening within the massive oil
tanks dotting the Caribbean islands.
Since Saudi Arabia stunned the global oil market with a large cut in crude production in January,
traders have been draining crude supplies from St. Lucia and Freeport in the Bahamas to capitalize
on the nearly 35% surge in crude prices. Inventories in the region are now at a 17-month low and
less than half the peak reached in June, according to industry data-analytics firm OilX.
The rapidly depleting inventories in the Caribbean -- which serves a sort of transfer station for the
world’s oil markets -- illustrate how staggering the turnaround in crude prices has been. Nearly a
year ago as demand was plummeting because of the pandemic, Saudi Arabia and Russia kicked
off a petroleum price war that resulted in oil futures falling below zero. The market moved into a

state of contango, when prices in the near term are lower than those out into the future, and traders
frantically searched for tanks to stockpile crude as they waited for a recovery.
Now, oil markets are in deep backwardation because of OPEC+ stunning decision earlier this month
to maintain production cuts. Brent oil for prompt delivery traded at 63 cents a barrel above that for
delivery another month out, more than double what it was at the beginning of February. As a result,
traders in the Americas are removing barrels from storage a month or two earlier than expected,
according to people with knowledge of the situation.
The depletion of inventories extends beyond the Caribbean. In Central America, Panama’s Pacific
terminal of Charco Azul used by Chinese and U.S. West Coast refiners experienced a similar
phenomenon after tankers removed 8 million barrels last month, a 33% increase from January, data
compiled by Bloomberg show.
The outflow is happening so rapidly that it is contributing to a lull in demand for physical crude from
the North Sea and West Africa, the people said. The pace of drawdowns is expected to accelerate
in coming weeks with U.S. Gulf refiners continuing to ramp up operations following the freezing
temperatures that hit Texas in February while Asian refiners are set to emerge from planned
maintenance.
How a Hasty Move to Change the World’s Key Oil Price Unraveled
Bloomberg - Alex Longley
It’s a conundrum that brought uproar in the oil market over the past few weeks after S&P Global
Platts, the company that publishes the world’s key crude price, announced on Feb. 22 that it was
going to radically change the very nature of that benchmark, known as Dated Brent.
Just nine days after announcing its ambitious overhaul, which had been meant to begin in June
2022, Platts was forced to apologize to the market for the suddenness of the move. A week later it
went a step further: the changes would be shelved for an as-yet-undefined period.

“It is not surprising that it caused such an uproar in the market,” Adi Imsirovic, senior research fellow
at the Oxford Institute for Energy Studies and an experienced oil trader, said in a paper on the
reform. The proposal was “nothing short of revolutionary.”
While Platts may have hit pause on the plan, what the saga really highlighted was a more
fundamental problem facing the global oil market. Volumes of Brent oil -- which gets its name from
a Scottish oil field whose production peaked in the 1980s -- have slowed to a trickle. Platts widened
what constituted ‘Brent’ to include four other grades -- Forties, Oseberg, Ekofisk and Troll -- but
even those are slowly running out.
With fewer barrels to trade, the decline poses a threat to the reliability and credibility of a measure
that affects everything from crude oil transactions, to long-term refining and drilling contracts. Gas
supply deals and a whole host of derivatives -- even Brent crude futures -- all rely to varying degrees
on that one number, published every day some time after 4:30 p.m. in London.
Platts’s idea was radical: add American crude into the mix and base its flagship oil price assessment
on the trading of delivered cargoes, a move that effectively adds the cost of shipping to the price.
Until now they have been based on the prices of barrels as they are loaded. As soon as the changes
were announced, it became apparent that parts of the market were unprepared. There was a surge
in value and trading of derivatives contracts that reference Dated Brent. Sellers all but disappeared
from the market as uncertainty reigned over how the price would look next year. Both Platts and the
Intercontinental Exchange Inc. subsequently issued clarifications that brought prices back down.
Platts says it has made it clear that it will publish a Dated Brent value at the point of loading beyond
July 2022. ICE declined to comment.

Before the plans were confirmed, ICE sent Platts a letter saying the changes were too quick. The
exchange, responding to Platts’s original proposal in which cargoes would be priced at point of
loading, already had open interest in contracts after the proposed implementation date, so it asked
for a delay to inform the market of the overhaul, which was granted.
“ICE does not have the luxury of time,” the letter said. “The proposal, if adopted, would represent
the most radical change seen in the Brent market thus far.”
Production Problems
While ICE may not have the luxury of time, nor does Platts. The company says loadings of the five
benchmark grades will fall below 600,000 barrels -- or a single cargo -- each day in 2022. They
averaged 868,0000 a day last year, according to loading programs compiled by Bloomberg.
Multiple solutions have been floated over the years, from bringing Russian oil into the mix, to barrels
from West Africa. There’s also a giant new Norwegian oil field called Johan Sverdrup that could
solve the market’s problems at a stroke -- if it wasn’t for the heavier and more sulfurous crude it
pumps.
Among the solutions proposed to implement Platts’s now-shelved approach was one by trading
giant, Trafigura Group to use its Corpus Christi terminal and publish a loading program for U.S.
crude supplies. Other market participants also put forward a wide range of ideas for what Platts
should do.
It was that spectrum of responses that brought about the delay, Platts said. What comes next will
be a series of working groups -- organized by Platts for North Sea oil traders, under the guidance
of legal counsel -- and a push to hammer out an agreement on how North Sea and U.S. oil can
trade together.

“We need to be mindful of providing sufficient timelines to all participants in the market, so that
they’re able to prepare and be ready,” said Jonty Rushforth, a senior director in the price group at
Platts. “But at the same time we’re facing geology, you can’t change the geology.”

NewBase Special Coverage
The Energy world – March 01- -2021
The Giants of U.S. Shale Are Proving OPEC Right With Discipline
Bloomberg - Michael Tobin
Saudi Arabia’s bet that the golden age of U.S. shale is over appears to be a safe one -- for now, at
least.
A round-up of data on shale drillers shows they’re sticking to their pledge to cut costs, return money
to shareholders and reduce debt. If they stay the course, it would validate the OPEC+
alliance’s high-stakes wager that it can curb output and drive crude prices higher without unleashing
an onslaught of supply from U.S. rivals.
That’s still a big “if,” one that’s keeping the oil market on edge as crude’s rally makes it more tempting
for shale producers to go back on their word. But the U.S. shale patch is showing little sign of a true
comeback so far, and even a dramatic boost in activity would leave oil output below pre-pandemic
levels until late next year. Drillers that have shown signs of straying from the script and boosting
production have been punished by investors.
Publicly traded explorers that are remaining disciplined on output are helping to keep crude prices
aloft, said Michael Tran, managing director for global energy strategy research at RBC Capital
Markets. The motives of closely held producers, on the other hand, remain “an open-ended
question,” he said. The number of oil rigs has already jumped 80% after bottoming out in August,
Baker Hughes data show.

The more restrained shale drillers are this year, “the more they can potentially grow production at
higher prices next year and beyond,” Tran said.
As crude prices climb, the odds of
another shale boom rise, JPMorgan
Chase & Co. analysts including
Natasha Kaneva wrote in a March 11
note to clients. Even with flat capital
spending, efforts are under way to
maintain or grow production at low
cost, according to the bank.
“At current prices, most U.S. onshore
operators are economic, leaving a
vast group of operators, from large
public companies to private players,
in good position to ramp up activity” in
the second half of this year and build solid momentum for higher output in 2022, the analysts said.
Bloomberg compiled these charts from Bloomberg Intelligence data of publicly listed companies.
Companies with production outside of the U.S. are excluded.
Modest Output Gains
U.S. shale drillers are estimated to modestly increase production in 2021 compared with last year

Muted Output
Producers are keeping their powder dry and barely
increasing production at a time when oil prices are
recovering to pre-pandemic levels. Companies are
instead focused on reducing debt and paying cash back
to shareholders through dividends. Companies that
recently announced plans to boost output, like Matador
Resources Co. and EOG Resources Inc., saw a drop in
their share prices.
Free Cash Flow Boost
U.S. shale producers are forecasting an increase in free cash flow after the pandemic

Tight Reins
Capital discipline is the name of the game now. Exploration and production companies are focused
on generating free cash flow and strengthening their balance sheets. “What we really need to do is
maintain our scale and generate free cash, excess substantial free cash, and push that into reducing
debt,” Ovintiv Inc. Chief Executive Officer Doug Suttles said in an interview with Bloomberg
Television.
Cutting Capex
Shale producers are reducing capex after the pandemic hurt oil prices and demand in 2020
Efficient Drilling
Even as producers cut capital spending, they can keep output flat or slightly higher compared with
last year. That’s because as oilfield service companies continue to get better at drilling and fracking,
the explorers who hire them are getting more bang for their buck.
For an explorer to turn a profit in the Permian’s Delaware, the lowest-cost U.S. basin, an oil price of
roughly $33 a barrel is required, down from $40 in 2019, according to BloombergNEF. So-called

break-evens refer to the price at which the cost of bringing supplies online is less than or equal to
the expected revenue. West Texas Intermediate crude settled at about $66 a barrel on Thursday.
“Contract renegotiations, ongoing efficiency gains and process improvements have allowed the oil
industry to slash the cost to drill and complete a well,” according to the report.
Uphill Struggle
Shale takes 22 months to regain losses even if rigs more than double
Production Lags
This year’s surge in oil prices should mean the number of rigs will continue to climb from its historic
lows, particularly as closely held operators take advantage of higher revenues.
But even if drilling expands at a much more aggressive pace than companies are promising, it will
be a long time before U.S. shale production reaches its peak again, according to a projection by
ShaleProfile Analytics. If the rig count doubled by the end of the year and then holds flat, it would
take until the end of 2022 before the industry regains the production it lost during the pandemic, the
projection shows.

The model assumes no changes in well productivity or in the number of drilled but uncompleted
wells.
Barrel Blockade
Pioneer and Parsley's combined growth rate will plunge post-deal
Merger Wave
A year of consolidation in the shale industry put a lid on production. Companies including Concho
Resources Inc. and Parsley Energy Inc., which once drilled aggressively, have been acquired by
larger rivals. Producers are turning their attention inward and focusing on returning capital to
shareholders rather than getting more oil out of the ground.

NewBase Energy News 15 March 2021 - Issue No. 1415 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscriptions, please email us.
About: Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas
sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S.
Universities. 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 the UAE operations base. Khaled is the Founder
of NewBase Energy news articles issues, an international consultant, advisor,
ecopreneur and journalist with expertise in Gas & Oil pipeline Networks, waste
management, waste-to-energy, renewable energy, environment protection and
sustainable development. His geographical areas of focus include Middle East,
Africa and Asia. Khaled has successfully accomplished a wide range of projects in
the areas of Gas & Oil with extensive works on Gas Pipeline Network Facilities &
gas compressor stations. Executed projects in the designing & constructing of gas
pipelines, gas metering & regulating stations and in the engineering of gas/oil supply routes. Has drafted &
finalized many contracts/agreements in products sale, transportation, operation & maintenance agreements.
Along with many MOUs & JVs for organizations & governments authorities. Currently dealing for biomass
energy, biogas, waste-to-energy, recycling and waste management. He has participated in numerous
conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is the Editor-
in-Chief of NewBase Energy News and is a professional environmental writer with more than 1400 popular
articles to his credit. He is proactively engaged in creating mass awareness on renewable energy, waste
management and environmental sustainability in different parts of the world. Khaled has become a reference
for many of the Oil & Gas Conferences and for many Energy program broadcasted internationally, via GCC
leading satellite Channels. Khaled can be reached at any time, see contact details above.
NewBase: For discussion or further details on the news above you may contact us on +971504822502, Dubai, UAE
NewBase 2021 K. Al Awadi

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