New base 17 june 2021 energy news issue 1439 by khaled al awad i-compressed (1)

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NewBase Energy News 18 June 2021 - Issue No. 1439 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: ADNOC awards $510 mil contract to Saipem to expand
Shah sour gas plant capacity
https://www.spglobal.com/platts Dania Saadi
Abu Dhabi National Oil Co. has awarded a $510 million contract to Italy's Saipem to expand
the capacity of Shah sour gas plant as the UAE's biggest energy producer seeks gas self-
sufficiency.
ADNOC Sour Gas, a joint venture between the oil company and US energy major Occidental,
awarded the engineering, procurement and construction contract for the expansion of the Shah
gas field, which will be completed in 2023, ADNOC said in a statement June 15.
The contract will increase the capacity of the Shah gas plant by 13% to 1.45 bcf/d, it added. Shah,
which lies 120 km southwest of Abu Dhabi city, became operational in 2015.
HIGHLIGHTS
 Saipem wins contract to expand capacity by 13% to 1.45 bcf/d
 Expansion project expected to be completed by 2023
 ADNOC is working to reach gas self-sufficiency

ADNOC Sour Gas processes more than 1 bcf/d of ultra-sour gas from a single gas plant, which also
produces approximately 5% of the world's granulated sulfur. All products from the Shah plant are
delivered to ADNOC companies for further processing or distribution to domestic consumers, while
granulated sulfur is transported by rail to the industrial hub of Ruwais for export.
The seven-member UAE federation is developing several gas projects in various emirates as part
of its self-sufficiency target.
In energy-rich Abu Dhabi, ADNOC is developing both conventional and unconventional resources
to help meet its gas self-sufficiency goal.
In 2019, Abu Dhabi's former Supreme Petroleum Council announced that the emirate had 273 TCF
of conventional gas and 160 TCF of unconventional gas resources. ADNOC is boosting its gas
output with the help of international oil companies.
In November, ADNOC and Total announced the delivery of first gas from the Ruwais Diyab
Unconventional Gas Concession, a joint venture in which the
French major has a 40% stake and the national oil producer
holds the remaining stake. The concession aims to produce
1 bcf/d of gas before 2030.
Germany's Wintershall and Italy's Eni are working with
ADNOC to develop the Ghasha ultra-sour gas concession
which is expected to produce over 1.5 bcf/d by around 2025.
It also plans to move forward to develop the sour gas fields
at Bab and Bu Hasa.

U.A.E: FUJAIRAH DATA: Oil product stocks hit two week high,
https://www.spglobal.com/platts Dania Saadi
Oil product inventories at Fujairah on the UAE's east coast rose to a two-week high as light distillate
stocks soared to the highest level since March 29, recovering from a near record low reached in the
previous week.
The total inventory was 23.470 million barrels as of June 14, up 5.1% from a week earlier and the
highest since May 31, according to Fujairah Oil Industry Zone data provided exclusively on June 16
to S&P Global Platts.
Stocks of light distillates, including gasoline and naphtha, surged 42.9% to 7.115 million barrels,
reversing the previous week's trend.
In the previous week, light distillates fell to the lowest level since Oct. 26, 2020, when they hit a
record low of 4.198 million barrels. The drop was triggered by growing demand for naphtha in Asia
and refinery issues in Saudi Arabia and the UAE.
Stocks of Middle distillates, including jet fuel and diesel, increased 14.6% to 3.993 million barrels.
FOB Fujairah jet fuel/kerosene was assessed at a premium of 65 cents/b to the Mean of Platts Arab
Gulf jet fuel/kerosene assessment on June 15, taking into consideration prices in the FOB Fujairah
gasoil market as well as differentials for recent cargo trades heard in the Middle East.
Marine fuel
Heavy distillates, including fuel for power generation and bunkers, fell 10.9% to 12.362 million
barrels, the lowest level since May 24.

Bunker fuel demand was muted in Fujairah on June 15, market sources told Platts.
Market sources said that buyers of 0.5%S marine fuel are treading cautiously around fixing term
contract above their base requirements, due to a volatile ICE Brent.
"The wariness among buyers has weakened valuations of both spot and term contracts,
undermining margins on Fujairah -delivered premiums, as suppliers engage in a price competition,"
a Fujairah-based bunker supplier said.
Fujairah-delivered 0.5%S marine fuel was heard offered at $524-$527/mt, with offers deliverable at
the prompt from June 20. The grade was assessed at $524/mt on June 15, unchanged from the
previous day, Platts data showed.
The premium for Fujairah-delivered Marine Fuel 0.5 %S bunker over FOB Singapore Marine Fuel
0.5 %S cargo ticked $1.12/mt lower from June 14 to $2.29/mt on June 15.
HIGHLIGHTS
Light distillate stocks soar 43% to highest since March 29
Middle distillates up 14.6% from previous week
Heavy distillates down 11% to lowest level since May 24

U.S. shale oil output to climb by 38,000 bpd in July -EIA
Reuters + eia
U.S. oil output from seven major shale formations is expected to rise by about 38,000 barrels per
day (bpd) in July to about 7.8 million bpd, the highest since November, the U.S. Energy Information
Administration said in a monthly forecast on Monday.
The biggest increase is set to come from the Permian, the top-producing basin in the country, where
output is expected to rise by 56,000 bpd to about 4.66 million bpd, the highest since March 2020.
A drilling rig operates in the Permian Basin oil and natural gas production area in Lea County, New Mexico, U.S., February 10, 2019.
The forecast increase in total output was attributable to the Permian and Appalachia basins, with
the other five basins expected to decline, or remain flat, the data showed. The Eagle Ford basin in
South Texas and the Bakken basin in North Dakota and Montana are each expected to register
declines of 4,000 bpd.
Output in the Bakken is expected to slide to about 1.1 million bpd, the lowest since July 2020. U.S.
producers have increased drilling activity as oil prices have rebounded to about $70 a barrel. Natural
gas production from the major shale basins was expected to increase for the first time in four
months, according to EIA's drilling productivity report going back to 2007.
Total gas output will increase less than 0.1 billion cubic feet per day (bcfd) to 84.3 bcfd in July. That
compares with a monthly record high of 86.6 bcfd in December 2019. Gas output in Appalachia, the
biggest shale gas basin, was expected to increase less than 0.1 bcfd to 34.6 bcfd in July, its highest
since May. That compares with a monthly record of 35.7 bcfd in December 2020.
EIA said producers drilled 532 wells and completed 779 in the biggest shale basins in May. That
left total drilled but uncompleted (DUC) wells down 247 to 6,521, their lowest since September 2018.

Malasia:Palm Oil Output at Risk as Virus Lockdown Worsens Labor Shortage
Bloomberg - Anuradha Raghu + NewBase
A resurgence of Covid-19 infections in No. 2 palm oil grower Malaysia is set to exacerbate a labor
shortage and curb production of the world’s most-consumed cooking oil.
The Southeast Asian country, which announced it will extend the first phase of its national
lockdown to the end of June, has shuttered non-essential industries and is expected to prolong a
freeze on the recruitment of foreign workers as it battles with a third wave of the pandemic.
“The crux of the issue is the labor shortage. We have lost of about 20% to 30% of our potential
production because of this,” according to Nageeb Wahab, chief executive at the Malaysian Palm Oil
Association, a growers’ group that represents 40% of palm plantations by area. “That would have
gone up more this year especially among smallholders,” he said in an interview.
That means Malaysian palm oil planters may now miss estimates for yields to rebound in the second
half, which were made due to the annual seasonal high cycle that typically begins in July, and the
initial assumption that restrictions on workers’ intake would have been eased. The Malaysian Palm
Oil Board last week reported January-May production is about 6% smaller than a year ago.

Lower-than-expected supplies in Malaysia are preventing a deeper drop in benchmark palm futures,
which tumbled about 8% on Monday to close at the weakest in over four months. More than 70% of
the plantation workforce are migrant workers and the country produces about 26% of the world’s
palm oil.
“There is good chance that production disappoints as the government is not allowing foreign workers
to come in,” and is unlikely to do so when Covid cases are high, according to Ivy Ng, head of
research at CGS-CIMB. “It should be supportive to prices if supplies are not as strong as projected.”
Crop Losses
Despite nearing the peak cropping months, labor constraints will prevent a big jump in yields and
keep Malaysian production below 19 million tons this year, Nageeb said, lower than the 19.14 million
tons in 2020. The shortage of oil palm harvesters, which was around 40,000 before the pandemic
hit, has probably doubled by now, he said.
“Everybody is short of workers today,” Nageeb said. “We’re seeing numbers from companies, the
shortage keeps on increasing month by month.” While the government initially approved the sector
to bring in 32,000 workers, “that has taken a backseat in view of the recent spike” in cases, he said.
Losses in revenue will also be “much, much higher”. Planters, who were already losing about 1
billion ringgit ($243 million) a month last year because of the shortage, may now be missing out on
at least 1.2-1.5 billion ringgit per month as palm oil prices are higher on year and labor is even
tighter.
In contrast, top grower Indonesia is set to churn out a record crop this year as favorable rains boost
yields, according to PT Astra Agro Lestari, the country’s biggest-listed planter. Production may climb
by 2 million tons to reach 53.6 million tons in 2021, with output of fresh fruit bunches rising gradually
to a peak in the months of September through November.

EU ends target for food-based biofuels and phases out palm oil in cars only in 2030
European countries will no longer be forced to subsidise food-based biofuels to meet the EU’s future
green energy targets, under an agreement reached early this morning by EU governments, the
European Parliament and the Commission. For those EU countries that decide to mandate food-
based biofuels after 2020, the deal limits their contribution to the levels achieved nationally in 2020.
Palm and soybean oil biofuels cannot grow above each country’s 2019 consumption levels and
should gradually decline from 2023 onwards until reaching 0% in 2030.
Yet despite citizens’ appeals, French farmers’ protests and Parliament’s previous decision to stop
support for palm oil biodiesel by 2021, the deal allows for the highest-emitting biofuel to still count
towards the EU’s green energy targets until 2030.
Whilst the principle of phasing out high-emitting biofuels such as palm and soy is enshrined in the
new law, the Commission still needs to come up with a methodology by 2019 to make the phase
out operational.
Laura Buffet, clean fuels manager at Transport & Environment (T&E), said: “The EU has removed
the single biggest driver for food based biofuel expansion in Europe: the infamous transport target.
Governments now have no more excuse to force drivers to burn food or palm oil in their tanks after
2020 and should design policies that promote the use of renewable electricity or biofuels based on
wastes and residues.”
For advanced fuels the new law sets a de facto target of 7%. Half of that will need to come from
advanced biofuels from waste and residues whilst the rest is expected to come from renewable
electricity and other fuels. In reality the shares of advanced biofuels and renewable electricity will
be lower because of multipliers of 2 and 4 respectively.
Laura Buffet concluded: “Europeans don’t want to be forced to burn palm oil or food in their cars.
It’s a disaster for the climate and biodiversity. It’s a disgrace that Europeans could be burning palm
oil for another 12 years and very sad to see the European Commission play such an obstructive
role in the final negotiations.

But the battle is not over: each European government can in 2021 decide to ditch palm oil and other
food-based biofuels.”
The EU’s Renewable Energy Directive was introduced to accelerate the uptake of renewables such
as solar and wind but its transport chapter has promoted the use of food crops like palm oil,
rapeseed oil and soy oil to make biofuels.
Biodiesel made from virgin vegetable oil is the most popular and cheapest biofuel in the European
market with a market share of three-quarters in 2017. Of all biodiesel, palm oil has the highest
greenhouse gas emissions – three times the emissions of fossil diesel, because palm expansion
drives deforestation and peatland drainage in Southeast Asia, Latin America and Africa. Last
year, 51% of the palm oil used in Europe ended up in the tanks of cars and trucks. This makes
drivers the top (albeit unaware) consumers of palm oil in Europe.
Biofuels can be counted as zero emissions energy for climate accounting purposes. If we would
properly account for biofuels’ overall emissions, road transport emissions would be 10% higher.
Topic s:

NewBase June 17-2021 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil Near $72 as Investors Size Up Fed’s Shift, Lower Stockpiles
Bloomberg + NewBase
Oil traded near $72 a barrel as investors weighed signs of a tightening global crude market against
the Federal Reserve’s decision to start moving toward an end of its ultra-easy monetary policy.
WTI for July delivery was 0.5% lower at $71.79 a barrel on the New York Mercantile Exchange at
7:20 a.m. in Singapore. Brent for August settlement fell 0.4% to $74.06 a barrel on the ICE Futures
Europe exchange.
West Texas Intermediate was 0.5% lower, and Brent also fell. On Wednesday, Fed Chairman
Jerome Powell said officials would begin talks on tapering massive asset purchases, while penciling
in two rate hikes by the end of 2023. That aided the dollar, hurting the appeal of commodities priced
in the currency.
Still, the oil market continues to display signs of strength as the pandemic ebbs. A U.S. government
report showed domestic crude supplies sank last week as mobility picked up. Saudi Energy Minister
Prince Abdulaziz bin Salman told a conference that the cautious approach taken by OPEC+ to
reviving supply was paying off, indicating that he’s sticking to that position.
Oil price special
coverage

Oil has rallied this year, with WTI hitting the highest level since 2018 earlier this week, as the roll-
out of Covid-19 vaccines paved the way for anti-virus curbs to be lifted. Even with consumption
picking up and stockpiles drawing, the Organization of Petroleum Exporting Countries and its allies
have returned only a small portion of supply that was taken off the market last year to rescue prices.
The alliance next gathers on July 1 to set strategy.
“We initially thought oil would hit $70 a barrel, but now it looks like $80 a barrel within the third
quarter is possible,” said Suvro Sarkar, an energy analyst at DBS Bank Ltd., citing strong demand
as economies open up. “The move from the Fed is likely to impact other commodities more than
oil.”
The outlook remains constructive, according to Citigroup Inc., which said Brent could soon top $80 a
barrel. Pent-up leisure demand, enabled by vaccine roll-outs, would underpin global consumption
this summer, the bank said in a note.
In the U.S., domestic crude stockpiles fell for a fourth week, with states including California easing
restrictions as virus cases fall. At the biggest supply hub in Cushing, Oklahoma, inventories sank to
the lowest since March 2020.
The market’s pricing patterns remain firm, with near-dated contracts above those further out. Brent’s
prompt timespread was 80 cents a barrel in backwardation, almost double the 42 cents seen two
weeks ago.
There have been bullish signs from Asia’s leading economies. In India, which has suffered from a
brutal wave of coronavirus infections, road fuel sales rebounded in the first half of June. Meanwhile
in China, which has largely contained the outbreak, daily refining rates hit a record last month.

Growing global production limits crude oil price increases
Source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)
In the June Short-Term Energy Outlook (STEO), we forecast that rising global production of
petroleum and other liquid fuels (driven by OPEC, Russia, and the United States) will limit price
increases for global crude oil benchmarks Brent and West Texas Intermediate (WTI).
We forecast production will increase more rapidly than consumption, ending the large global stock
draws seen in the first two quarters of 2021 and limiting upward crude oil price movement.
At its June 1 meeting, OPEC+ (which includes OPEC members and several non-member countries)
reaffirmed its commitment to continued production increases in the coming months. We forecast
OPEC’s annual production to average 26.9 million barrels per day (b/d) in 2021 and 28.7 million b/d
in 2022.
We also forecast that production of petroleum and other liquids in Russia, an OPEC+ participant,
will increase and that annual production will average 10.7 million b/d in 2021 and 11.5 million b/d in
2022.
The price of WTI crude oil increased from $52 per barrel (b) in January 2021 to $65/b in May, driving
increases in the U.S. crude oil rig count—an indicator of active U.S. crude oil production capacity
that is compiled by Baker Hughes. We expect the U.S. crude oil-directed rig count will likely continue
rising in response to the rising WTI crude oil price.
We expect crude oil production in the United States will increase each quarter through the forecast
period, averaging 11.4 million b/d in the fourth quarter of 2021 (4Q21), the highest level since 1Q20,
and 11.1 million b/d for all of 2021. We expect U.S. crude oil production will average 11.8 million
b/d in 2022.

Source: Graph created by the U.S. Energy Information Administration, Short-Term Energy
Outlook (STEO) and data from Baker Hughes Company, as accessed through Bloomberg
Higher crude oil prices and planned OPEC+ production increases contribute to our forecast that
global petroleum supply will increase over the next several months, resulting in an essentially
balanced market in the second half of 2021. We then expect petroleum inventories to build in 2022
as production outpaces consumption.
Based on this global supply and demand forecast, we expect the Brent crude oil price will average
$68/b in 3Q21. We expect the price to fall to $64/b in 4Q21 and decline further to average $60/b in
2022.
The extent to which countries adhere to the current OPEC+ production agreement and the volume
of crude oil entering the market from Iran could push prices higher or lower. Similarly, if U.S.
operators add fewer drilling rigs than expected, the result would be lower U.S. crude oil production
in 2022, which would also affect prices.

NewBase Special Coverage
The Energy world – June - 17- -2021
Column: Climbing oil prices signal need for more output: Kemp
Reuters - John Kemp
Oil prices are signalling the need for an urgent increase in production from OPEC+ and U.S. shale
companies as the global economy and oil demand recover more rapidly than expected from the
pandemic.
Futures markets are sending a strong and unambiguous message that petroleum inventories are
already tight and expected to shrink further in the second half of the year and into 2022. OPEC+
countries are still restricting liquids production by more than 3.0 million barrels per day (bpd)
compared with the pre-epidemic levels to cut inventories and raise prices
And U.S. liquids output is also down by more than 1.5 million bpd, according to estimates by the
U.S. Energy Information Administration ("Short-Term Energy Outlook", EIA, June 8). U.S. shale
producers have so far reacted cautiously to the rise in prices, returning earnings to shareholders
and cutting debt rather than increasing drilling and production.
Shale producers are adding extra rigs more slowly than in previous recoveries and the total number
of active rigs (365) is less than half the number (844-869) the last time WTI prices were at similar
levels in 2018.

But the continued rise in prices is signalling the urgent need for more production from one or more
of OPEC+, Iran once U.S. sanctions are lifted, U.S. shale firms and the non-OPEC non-shale
producers.
Uncertainty about the timing and extent of sanctions relief on Iran helps explain why OPEC+ has
taken a cautious approach to lifting production so far despite signs of a much faster recovery in oil
consumption.
Intense pressure on the industry as a result of last year’s pandemic and associated price slump
received widespread sympathy from consumers and an understanding that prices had fallen
unsustainably low and needed to rise.
But prices are now relatively high. If they continue climbing while producers hold down output, the
lack of a production response is likely to draw more critical scrutiny from consumers into the market’s
operation.
With non-energy commodity prices rising at the fastest rate since the 1970s, and central banks
becoming alert to the threat of faster inflation, rising oil prices will soon start to attract more political
attention.
PRICE INDICATORS
Front-month Brent futures prices < have risen more than 10% over the last two months as OPEC+
and U.S. shale firms have continued to restrict output even as the United States and European
economies have re-opened.

As a result, Brent futures prices have climbed to their highest level since 2018, before the
intensifying trade war between the United States and China hit the global economy.
In real terms, the price of the front-month Brent contract has risen to the 67th percentile for all
months since 1990, confirming the industry is now well into the expansion phase of the cycle.
Brent's six-month calendar spread has surged into a backwardation of more than $3.60 per barrel,
the 93rd percentile for all trading days since 1990, underscoring that the market is expected to
become very tight.
Flat prices and spreads are both reacting to the persistent under-production of petroleum over the
last year and decline in inventories of both crude and refined products.
Commercial petroleum stocks in the countries of the Organization for Economic Cooperation and
Development (OECD) have already fallen by 300 million barrels or 10% since June 2020.
OECD inventories are now more than 1% below the pre-epidemic five-year average for 2015-2019
and the deficit is expected to persist throughout the remainder of 2021 and 2022.
Position-building by hedge funds and other portfolio investors has accelerated and magnified the
increase in futures prices, as investors anticipate an increasingly tight market towards the end of
the year.
Physical markets are not yet as tight as their futures counterparts: there are sufficient stocks for
now, but availability is expected to deteriorate later in the year. Dated Brent's five-week spread is
trading in a small backwardation of 35 cents per barrel, which lies in the 65th percentile since 2010.
But the oil market is now well into the upswing phase of the price cycle when more production will
be needed to satisfy rapidly recovering consumption.
The longer OPEC+ and shale producers wait before responding, the greater the likelihood prices
will climb too high, creating conditions for the next downturn, just as delays in responding to price
rises in 2013/14 and 2017/18 created conditions for price slumps in 2014/15 and again in
2019/2020.

Additional Graphical Analysis, By Kemp Energy

NewBase Energy News 18 June 2021 - Issue No. 1439 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.

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