New base 25 october 2017 energy news issue 1090 by khaled al awadi-compressed

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NewBase Energy News 25 October 2017 - Issue No. 1090 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Saudi Arabia Just Announced Plans to Build a Mega City That
Will Cost $500 Billion
Bloomberg
Saudi Crown Prince Mohammed bin Salman announced plans to build a new city on the Red Sea
coast, promising a lifestyle not available in today’s Saudi Arabia as he seeks to remake the
kingdom in a time of dwindling resources.
The prince said the city project, to be called “NEOM,” will operate independently from the “existing
governmental framework” with investors consulted at every step during development. The project
will be backed by more than $500 billion from the Saudi government, its sovereign wealth fund
and local and international investors, according to a statement released on Tuesday at an
international business conference in Riyadh.
The new project will likely surprise investors still trying to take stock of a
series of major announcements made by the prince during his meteoric
rise to power as he seeks to prepare Saudi Arabia for the post-oil era. In less than two years, he’s
revealed plans to sell a stake in oil giant Saudi Aramco and create the world’s largest sovereign
wealth fund, and has ended a long-standing ban on female drivers.
The prince, 32, made a rare public appearance at the conference to promote the project, telling
the bankers and economic policy makers in attendance that the kingdom is moving to a “new
generation of cities.” NEOM will be powered by clean energy, he said, and will have no room “for
anything traditional.”
It will likely be met with the same mixture of optimism and doubt that has greeted his previous
headline-grabbing announcements. His supporters can be expected to cheer what they see as a
bold drive to transform the kingdom, while others will point to past failed attempts to overhaul the
Saudi economy that also included industrial cities in the desert.
International Connections
The ambitious plan includes a bridge spanning the Red Sea, connecting the proposed city to
Egypt and the rest of Africa. Some 10,000 square miles (25,900 square kilometers) have been
allocated for the development of the urban area that will stretch into Jordan and Egypt.

Klaus Kleinfeld, the former chairman and chief executive officer of Siemens AG and Alcoa Inc.,
was appointed to lead the development of NEOM. SoftBank Group Corp.’sVision Fund on
Tuesday signed an initial agreement with the kingdom’s wealth fund to buy a “significant” stake in
state-controlled Saudi Electricity Co., and will provide energy for the new city. Saudi Arabia this
year agreed to become a cornerstone investor in the Vision Fund.
The project “seems to be broadly modeled on the ‘free zone’ concept pioneered in Dubai, where
such zones are not only exempt from tariffs but also have their own regulations and laws, hence
operating separately from the rest of government,” said Steffen Hertog, a professor at the London
School of Economics and longtime Saudi-watcher. “In Dubai, this has worked well, but attempts to
copy it have done less well in the region.”
Conservative Clerics
A promotional video released on Tuesday features a lifestyle so far unavailable in Saudi cities. It
showed women free to jog in leotards in public spaces, working alongside men and playing
instruments in a musical ensemble. The one woman wearing a hijab had her head covered with a
patterned pink scarf.
The kingdom has already announced a plan to transform hundreds of kilometers of Red Sea coast
into a semi-autonomous world-class tourism destination and governed by laws “on par with
international standards.”
The unveiling of the new project comes as Saudi officials, almost two years into the latest reform
drive, are still grappling with how to speed up change without crippling the economy and clashing
with the kingdom’s conservative religious establishment.
The world’s biggest oil exporter wants to overhaul the economy while creating enough wealth to
avoid the risk of social unrest. Similar efforts over the past three decades have floundered, with
plans losing steam as soon as crude prices recovered. Some landmark projects, such as a $10
billion financial district in Riyadh, are struggling to take off.
Details Needed
“Saudi Arabia has announced a number of mega-projects recently, but what investors will
ultimately look for is greater details, progress with plans and initial investment,” said Monica Malik,
chief economist of Abu Dhabi Commercial Bank. And while the planned, more liberal, regulatory

framework for the city “could be positive for streamlining investment,” it didn’t gain traction with
previous economic cities developed in the kingdom, she said.
Prince Mohammed, who became heir to the throne this summer after his older cousin was
removed from office, has vowed not to repeat past mistakes, insisting that his Vision 2030 will
proceed regardless of oil prices. His
government has cut subsidies,
slashed spending to trim the budget
deficit and it plans to introduce value-
added taxation next year to raise non-
oil revenue.
Hertog said investors will want to see
whether “circumventing some of the
slow mainline bureaucracy and
general social restrictions in Saudi
Arabia in a special zone” can work. “If
this is to be an international hub, it
needs to offer something better than
Dubai, which is a high bar to cross,” he said.
The crown prince indicated he understood the challenge. “Dreaming is easy, achieving it is
difficult,” he said.
Saudi Arabia's NEOM: Oasis or Sand Castle?
The promotional video for NEOM, Saudi Arabia's proposed $500 billion city of the future
announced on Tuesday, errs toward the dreamy and inspirational end of the artistic spectrum. But
I couldn't shake the feeling it might also be perfect as the happy prelude to some dystopian movie
where society drowns in its own hubris.
NEOM debuted at a conference this week in Riyadh, dubbed "Davos in the desert" and effectively
a giant marketing pitch to draw in dollars as part of Saudi Arabia's effort to reform its oil-dependent
economy. It manages to be simultaneously ambitious and derivative -- which underscores a
central challenge facing the country and the global oil market that depends on it.
On the ambitious side of the ledger, offering people "a lifestyle that surpasses that of any other
metropolis" isn't even NEOM's most aggressive claim. It is supposed to cover just over 10,000
square miles of desert in Saudi Arabia's northwestern corner -- big enough to accommodate about
37 Singapores.
What's more, NEOM will also apparently spread into Egypt (via a proposed bridge) and Jordan,
creating a transnational economic zone in the heart of the Middle East.
From this blankest of slates will arise an advanced hub featuring the latest technology in
everything from seawater farming to artificial intelligence to 100 percent renewable energy.
By 2030, its GDP is expected to top $100 billion, equivalent to about a sixth of Saudi Arabia's
current economy and about the same as for that other desert outpost, Las Vegas. Leading the
charge to build this mega-city is none other than Klaus Kleinfeld, the soccer-loving former CEO of
Arconic Inc. who was ousted in April.
Now, look, it's easy to scoff. Remember, though, that NEOM is basically a giant real-estate pitch,
and the hyperbole -- I got my annual allowance of "idyllic" in the five minutes it took me to read the
fact-sheet -- doesn't look so strange. 1

The fact is, Saudi Arabia's plans to remake itself are ambitious in the extreme. At such times, and
with executives controlling trillions of dollars having just flown in, it is natural to dust off the
thesaurus and really let the punters have it.
Just as Elon Musk professes to set unrealistic targets in order to spur suppliers and staff at Tesla
Inc., so Saudi Arabia's Prince Mohammed Bin Salman must set lofty goals to maintain momentum
on reform (I actually see quite a few parallels between Musk and the prince, as I wrote here).
And yet, the overall impression of effectively recreating Dubai on the opposite side of the Arabian
peninsula -- albeit one with lots of robots, supposedly -- seems less futuristic than NEOM's
literature suggests.
As analysts at Capital Economics point out in a report also published on Tuesday, this wouldn't be
the first time Saudi Arabia has touted mega-projects and special economic zones to spur growth
and economic diversification.
The King Abdullah Economic City in Rabigh -- tagline: “The dawn of the world’s next great
economic city” -- targets a population of two million, according to this presentation by the Saudi
Arabian General Investment Authority. Yet, as Capital Economics reports, it has only around
5,000 permanent residents, and its ship traffic is way behind that of Dubai's port of Jebel Ali.
More importantly, the NEOM vision lays bare the tensions within the broader reform project. As
Sarah Ladislaw, a dirctor and senior fellow at the Center For Strategic And International Studies,
put it to me on Tuesday:
[It] Seems like a pattern is emerging: Seek systemic change in the Kingdom’s operations, but also
create completely new alternatives to that way of life that circumvent the system and can be less
encumbered.
As of now, there are few details on exactly how NEOM will fit within Saudi Arabia as a whole.
Even the touted transnational nature of it seems barely sketched out; my understanding is that
there's an agreement in principle with Egypt on sharing some land, but discussions are ongoing
(I've no word on Jordan's position).
If NEOM is to be any sort of hub, let alone the futuristic, cosmopolitan one from the video, then it
will have to offer freedoms in terms of lifestyle, business and getting into and out of the place that
are completely at odds with the rest of Saudi Arabia currently.
Overall, the country ranks 94th out of 190, just above El Salvador, in the World Bank's ranking of
countries by ease of doing business. When it comes to trading across borders, it's at 158th, just
above Myanmar and way behind the United Arab Emirates (at 85th).
Saudi Arabia has made some moves toward shifting societal norms away from ossified traditions,
such as removing the ban on women driving. Even so, the country has also shown signs
of watering down the reform program announced only last year; and the totemic IPO of Saudi
Arabian Oil Co., or Saudi Aramco, has clearly run into some difficulties despite the public
pronouncements that all is well.
The country's biggest challenge remains switching its economic model away from extracting rents
from its oil reserves toward extracting the full potential of a markedly young population in a
restless part of the world:

As of last year, the OECD estimated only 1.2 percent of Saudi Arabia's young people could expect
to earn a master's degree or equivalent in their lifetime, ranking the country 37th out of 38 on that
score. Whatever else NEOM ends up having, it'll need good schools. More importantly, it had best
not prove a distraction from the more prosaic reforms the country urgently requires.

Kuwait's Al Arfaj group plans 600,000bpd oil refinery in India
Zawya + NewBase + Reuters News
Kuwait's Al Arfaj Group plans to build a 600,000 barrels per day oil refinery and a 10 million
tonnes a year liquefied natural gas (LNG) terminal in the Indian coastal state of Andhra Pradesh,
the state's chief minister said on Tuesday.
Al Arfaj Holding Co has signed a memorandum of understanding with Andhra's Economic
Development Board for the project, which also includes a petrochemical complex, N Chandrababu
Naidu said.
India, which imports about 80 percent of its oil needs, aims to raise its refining capacity by 50
percent in the next seven years to about 7 million barrels per day.
Earlier this month Saudi Aramco said it planned a 'mega investment' in refining, petrochemicals
and fuel retailing in India.
About Alarfaj
The Alarfaj flower, so prevalent in Arabian deserts, seeks what it needs to survive and flourish in
an ecosystem that defeats most plant life. With a root system hearty enough to cut through sand
baked solid, the Alarfaj finds the nourishment required to sustain and spread its familiar yellow
and orange flowers across the peninsula.
A solid bush-like plant, the Alarfaj is as revered for its practical purposes as it is for its beauty. For
centuries, desert travelers have made camp adjacent to an Alarfaj patch. The plants are dense
enough to serve as a breakfront and provide protection from the wind and sand.
The Al-Arfaj Group is like that ubiquitous plant. Flourishing in economic systems that defeats
others; using strong roots well planted to find what is required to grow; providing protection in
environments that can be hostile. Just as nomads looked for the Alarfaj plant when setting up
camp in the desert, companies establishing themselves in the region find it beneficial to look to the
Al-Arfaj Group.
Founded in Kuwait thirty years ago as a small trading company, the group has systematically, and logically, expended. With the
launch of the Engineering Development Company (EDC) in 1985 and the International Projects Company (IPC) in 1992, the Al-
Arfaj Group moved onto the international stage and has successfully used its “root system” to sustain and grow both independent
and join venture projects.

UAE and Spain agree on cooperation in trade, investment and innovation
WAM/Esraa Ismail/Chris Moran
(WAM) -- The 4th session of the UAE-Spain Joint Economic Committee was held in Dubai on
Monday, chaired by Sultan bin Saeed Al Mansouri, Minister of Economy, and by Luis de Guindos
Jurado, Spain's Minister of Economy, Industry and Competitiveness.
The meeting touched on important economic and development issues in both countries. The
ministers also reviewed the latest developments and trends in international economics and
exchanged views on the many challenges and changes facing the global economy as well as the
cooperative approaches to confronting them.
The committee focused on enhancing trade in goods and services, encouraging mutual
investments, establishing joint ventures that serve the interests of both sides, deepening
cooperation in innovation, small- and medium-sized enterprises, SMEs, entrepreneurship,
scientific research and development, and participating in investments and business activities
related to the hosting of Expo 2020 Dubai. It also sought to build effective and mutually beneficial
partnerships between the business sectors of the two countries.
Speaking on the occasion, Al Mansoori said, "We are proud to count Spain among one of our
closest political and economic allies. Our non-oil bilateral foreign trade has flourished in recent
years, growing by an impressive 26.3 percent from US$1.9 billion in 2011 to US$2.4 billion in
2016. Spain’s direct investments to the UAE continue to grow, with 45 commercial companies,
112 commercial agencies and 2,456 trademarks from Spain registered locally as of 2015."
"There is still huge room for growth, and given the ongoing major shifts in the global economy, we
would mutually benefit from exploring new avenues of cooperation especially in areas prioritized
by our respective national development agendas. Since its first session in Madrid in 2010, the
UAE-Spain Joint Economic Committee has played a pivotal role in bridging our commercial and
economic gaps. For the 4th round of meetings we will assess the progress of the joint actions we

agreed on during the last session in Granada and explore prime investment and partnership
opportunities in sectors of common interest moving forward," he added.
He further noted that the UAE looks forward to exchanging experiences and knowledge and
activating cooperation with Spain in several areas of common interest, particularly those that are
in line with UAE Vision 2021 and those that reflect Spain’s leading developmental experiences,
especially in the fields of innovation, SMEs, entrepreneurship, and scientific research.
He also expressed optimism in intensifying trade and enhancing mutual investment as well as
strengthening cooperation in the industrial and tourism sectors which are policy priorities in the
two countries. He emphasised the importance of deepening collaboration in the fields of
agriculture, food security and Halal products, health, education, transport, infrastructure, the
Islamic economy, specifications and metrology as well.
De Guindos Jurado said, "We have strong bilateral relations with the UAE, mainly in terms of
economic and trade cooperation which continues to grow. The UAE is among our country’s most
important partners in the Middle East and we consider it an important economic destination for the
Spanish Government and our private sector."
He added that both sides have undertaken sound mutual investments towards sectors of added
value. He emphasised his country's keenness to raise the level of trade exchange, and enhance
the opportunities for Spanish companies to thrive within the UAE’s active investment environment
while attracting UAE companies to the promising opportunities offered by the Spanish markets.
This, he said, will further reinforce economic relations between the two countries and open wider
horizons that serve their interests and meet their development aspirations.
During the meeting, the Spanish side expressed their interest in promoting joint work between the
public and private sectors in these fields, as well as their desire to participate alongside the UAE
and international companies in construction works and other preparations for Expo 2020 Dubai.
The two sides further highlighted the importance of cooperation in the adoption of the Halal food
industry and following up the positive results of the MoU signed last year between the Emirates
Authority for Standardisation and Metrology and the National Agency for Quality Assessment and
Accreditation of Spain. They also discussed coordination on Halal standards in the country to
ensure that Halal certifications issued in Spain comply with relevant UAE regulations.
The group emphasised the vital role of the SME sector in driving economic development. The
Spanish praised the UAE's leading efforts to expand the presence of SMEs in Expo 2020 Dubai.
They emphasised the importance of exchanging experiences and sharing knowledge and best
practices in these sectors.

Oman: New O&Gregulations to be unveiled at OPAL conference
Oman Observer - Conrad Prabhu
High-level regulations for Oman’s Oil and Gas industry, billed as a potential game-changer for the
nation’s hugely importantly upstream sector, will be formally unveiled at the OPAL Oil and Gas
Conference due to be held during October 30-31, 2017 at the Grand Millennium Hotel, Muscat.
An entire session of the two-day-long forum is being devoted to presentations and deliberations
on the keenly anticipated regulations, formulated by the Ministry of Oil and Gas to support the
development of a well-regulated upstream oil and gas sector in the Sultanate.
Besides strengthening the existing regulatory framework for the effective management of
hydrocarbon investments in the Sultanate, the new regulations will also contribute to the goal of
boosting efficiency, safety and operational security in all areas of the industry’s upstream
business.
The keynote address on the important initiative will be presented by Dr Anwar al Kharusi, Special
Adviser to the Minister of Oil and Gas (and presently on secondment to Oman Oil Company).
Dr Al Kharusi, who headed a high-level team tasked with formulating the regulations, will speak on
the theme, ‘Developing a well-regulated upstream oil and gas sector in Oman — Analysing the
high-level regulations governing all facets of the upstream hydrocarbon activities’.
Highlighting the importance of the regulations, Salim bin Nasser al Aufi, Under-Secretary of the
Ministry of Oil and Gas, commented: The new ‘Oman Oil and Gas Regulations’ represent an
across-the-board effort to bring international standards and best practice to our industry.
They provide, among other things, greater specificity to the existing Oil and Gas Law and the
Exploration and Production Sharing Agreement (EPSA), while eliminating any room for ambiguity
that comes in the way of the safe and efficient management of the nation’s hydrocarbon
resources.”
The session on Oil and Gas Regulations also features a presentation by Hamood al Sawafi,
Drilling Engineer at the Ministry of Oil and Gas, who will speak on the implications of the new
framework for boosting safety, efficiency and the optimization of the nation’s hydrocarbon
resources.
Additionally, a key representative of the International Centre of Regulatory Excellence (ICORE), set up by
the Alberta Energy Regulator (AER) in Canada, will speak on the importance of hydrocarbon regulation
excellence. AER is one of the world’s best known energy regulatory bodies, overseeing Oil and Gas
regulation in the oil sands-rich Canadian province of Alberta. The regulator is offering its highly acclaimed
expertise in Oil and Gas regulation to the global hydrocarbon industry, through ICORE, a platform that
seeks to share best practice energy regulation among national and international regulators.

Nigeria's 650,000 Bpd Dangote Refinery Onstream By 12-2019
by Reuters + NewBase
A refinery with capacity to process 650,000 barrels per day (bpd) of oil being built in Nigeria is due to come
onstream by the end of 2019, the oil minister said on Tuesday. "That should be enough to meet local
needs," Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu told an oil and conference in
Cape Town, referring to the Dangote refinery.
State oil firm NNPC last year launched bidding to find partners to overhaul its ailing refineries, which hardly
produce any petrol due to decades of mismanagement and widespread graft, leaving OPEC member
Nigeria reliant on imported oil products. Kachikwu said Nigeria was close to finalising the process for
private partners to revamp three existing refineries, adding a total of 450,000 bpd, part of the effort by
Africa's biggest economy to reduce its reliance on imports.
Kachikwu said 26 firms had indicated their interest in the revamp projects that will require investment of $2
billion. "We are almost at a threshold of finalising the process of selection," he said, adding that it could
announce its selection by January or February.The government has previously said it was in talks with
Chevron, Total and ENI.
Kachikwu told reporters that Nigeria aimed to lift oil output in January to 1.8 million bpd from about 1.6 million to 1.7
million bpd now, but would not breach a ceiling agreed with the Organization of the Petroleum Exporting Countries. "If
we get to 1.8 (million), then we need to say 'hey, close off the taps, because we need to comply," he said.
He also said oil prices were now encouraging but OPEC had not ruled out further cuts to shore up the market. "The
market is balancing fast .... But do we need to see more cuts? We'll see," he said. OPEC, Russia and other producers
cut oil output by about 1.8 million bpd since January. The pact runs to March 2018, but they are considering extending
it.

September unplanned global oil supply disruptions fall to
lowest level since January 2012..U.S. EIA, Short-Term Energy Outlook, October 2017
Unplanned global supply disruptions fell to 1.6 million barrels per day (b/d) in September, the
lowest level since January 2012. Over the past six months, unplanned oil supply disruptions have
fallen by more than 1.0 million b/d, as outages in Libya, Nigeria, and Iraq abated. In addition,
Canada’s disrupted supplies, which reached their peak in April 2017 at 425,000 b/d, returned to
production in August 2017.
Note: OPEC disruptions include crude oil only; non-OPEC disruptions include crude oil and other liquid fuels.
The duration of any supply outage mainly depends on the cause of the disruption. When an
outage, or shut-in, is related to weather, natural disaster, labor strikes, technical failures, or
accidents, the shut-ins generally end within weeks, such as the recent outages in Canada caused
by wildfires and those in the United States caused by hurricanes in the Gulf of Mexico. Disruptions
tied to political disputes or conflicts—such as in Libya and Nigeria—often last for years.
EIA’s Short-Term Energy Outlook (STEO) provides an accounting of these production outages
each month, but unlike other STEO series, it does not project them forward.
In Libya, rival armed factions have blockaded pipelines and export terminals intermittently since
the fall of the Gadhafi regime in 2011. More recently, Libya has had some success in reducing
unplanned outages, particularly since the beginning of this year. Crude oil production restarted at
a number of oil fields in the country, including the country’s largest, the 270,000 b/d Sharara field,
with production rising to more than 1.0 million b/d in July and unplanned outages averaging
295,000 b/d, the lowest since May 2013. Despite the overall success in lowering unplanned shut-
ins, Libya’s outages have fluctuated since the summer as a result of repeated flare-ups of
disputes between rival groups, pipeline blockades, power failures, and other technical issues.
In Nigeria, disruptions fell from an average of 370,000 b/d in April to 200,000 b/d in September, in
part as a result of the Trans Forcados crude oil export pipeline—one of Nigeria’s main crude oil

streams—resuming production. Shell Oil Company resumed Forcados production and exports in
June 2017 following a 16-month outage that resulted from an attack by Niger Delta rebels on the
main export pipeline. Other production and export facilities including the Bonny Light and Qua
Iboe streams have also suffered a number of attacks, but negotiations with Niger Delta militants,
as well as reinstatement of some of the amnesty payments, have resulted in fewer attacks and
lower shut-in volumes.
In Iraq, a pipeline explosion in the Kirkuk area and a loss of production at the Rumaila field led to
an increase in disruptions in spring 2017. Since then, disruptions fell to 50,000 b/d in September.
However, the outlook for Iraq’s oil supply from the Kirkuk oil fields remains uncertain following an
offensive by Iraqi security forces that started on October 15 in response to the autonomous
Kurdistan Regional Government’s (KRG) independence referendum held in September.
As of October 17, Iraqi security forces now hold oil assets, including the major oil fields of Bai
Hassan (180,000 b/d), Khurmala Dome (110,000 b/d), Baba Dome (125,000 b/d), and the Avana
Dome (80,000 b/d). However, the KRG remains in control of the pipeline that transports the
Kirkuk-area crude oil to the Turkish port of Ceyhan and on to the global oil market.
Iraq’s Northern Oil Company, which was in charge of the Kirkuk oil fields prior to the KRG
takeover in 2014, also owns a pipeline that was used for exports, but the pipeline has been out of
service since 2014, and portions of it are not yet under federal Iraqi government control. Adding
further uncertainty, and increasing the likelihood that production will be disrupted, are recently
reported attacks by ISIS militants targeting the areas around Bai Hassan field.
By comparison, recent outages in non-OPEC member countries have been attributable to weather
events. In Canada, a fire at Syncrude’s Mildred Lake facility forced a complete shut-in of
production at the site, which, along with the outages at Long Lake and Surmont facilities, resulted
in a 425,000 b/d disruption in April. Since then, disrupted volumes in Canada returned to
production over a five-month period. As of September, there were no unplanned outages in
Canada.
U.S. production also saw shut-ins this summer as a result of Hurricane Harvey, which led to a
186,000 b/d disruption in August. This disruption had lessened to an average of 53,000 b/d in
September. Hurricanes Irma and Maria did not affect U.S. crude oil production.

NewBase October 25 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil hovers near four-week high on Saudi pledge to end glut
Reuters + NewBase + Bloomberg
Oil prices were largely steady in early Asian trade on Wednesday, hovering near a four-week high
hit a day earlier after top exporter Saudi Arabia said it was determined to end a supply glut.
Brent crude, the global benchmark, was up 10 cents at $58.43 a barrel by 0103 GMT, after
settling on Tuesday up 96 cents, or 1.7 percent. U.S. West Texas Intermediate crude was trading
down 4 cents at $52.43 a barrel, having risen 57 cents on Tuesday.
Saudi Arabia’s energy minister said the focus remained on reducing oil stocks in industrialized
countries to their five-year average and raised the prospect of prolonged output restraint once an
OPEC-led supply-cutting pact ends.
Oil price special
coverage

The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers,
have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to
March 2018, but they are considering extending it.
“We are very flexible, we are keeping our options open. We are determined to do whatever it
takes to bring global inventories down to the normal level which we say is the five-year average,”
Falih told Reuters.
U.S. crude stocks fell by 519,000 barrels last week, industry group the American Petroleum
Institute said on Tuesday after settlement. That compared with analysts’ expectations for a decline
of 2.6 million barrels.
Gasoline stocks fell by 5.8 million barrels, compared with analysts’ expectations in a Reuters
poll for a 17,000-barrel decline. Distillate fuels stockpiles, which include diesel and heating oil, fell
by 4.9 million barrels, compared with expectations for a 860,000-barrel drop, the API data
showed. The U.S. government’s Energy Information Administration releases its report later in the
day.
Saudi determination to end oil glut
The world’s top oil exporter Saudi Arabia is determined to reduce inventories further through an
OPEC-led deal to cut crude output and raised the prospect of prolonged restraint once the pact
ends to prevent a build up in excess supplies.
Saudi Energy Minister Khalid al-Falih, speaking during an investment conference in Riyadh, said
on Tuesday the focus remained on reducing the level of oil stocks in OECD industrialized
countries to their five-year average.
The Organization of the Petroleum Exporting Countries, plus Russia and nine other producers,
have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact runs to
March 2018, but they are considering extending it.
“We are very flexible, we are keeping our options open. We are determined to do whatever it
takes to bring global inventories down to the normal level which we say is the five-year average,”
Falih told Reuters.
The market has been concerned that, once the supply cut deal comes to an end, producers will
ramp up supplies again, causing prices to fall. But Falih raised the prospect of continued output
restraint to prevent this.
“When we get closer to that (five-year average) we will decide how we smoothly exit the current
arrangement, maybe go to a different arrangement to keep supply and demand closely balanced
so we don’t have a return to higher inventories.”
The oil price LCOc1 has recovered from below $30 a barrel at the start of 2016 to trade above $57
on Tuesday, and rose after Falih’s comments. Oil remains, however, at half its price in mid-2014.
Reuters reported last week, citing OPEC sources, that producers were leaning towards extending
the deal for nine months, although any decision could be postponed until early next year
depending on the market.

“The intent is to keep our hands on the wheel between now and until we get to a balanced market
and beyond, we are not going to do anything that is going to disrupt the path we are on,” he
added.
Falih said oil investment had returned after the OPEC-led pact began at the start of the year and
helped by a global economic recovery. The minister said there was consensus to continue the
cuts until targets were reached to balance the market but said shocks to the market by reducing
more than needed should be avoided.
On Saudi comments, forecast of U.S. inventory drop
Brent oil rose 1 percent on Tuesday after top exporter Saudi Arabia said it was determined to end
a supply glut, while prices also drew support from forecasts of a further drop in U.S. crude
inventories as well as nervousness over tensions in Iraqi Kurdistan.
In post settlement trade, prices briefly pared gains before steadying, in response to data from
industry group the American Petroleum Institute showing crude inventories built up while gasoline
and diesel drew down.
The Saudi energy minister said the focus remained on reducing oil stocks in industrialized
countries to their five-year average and raised the prospect of prolonged output restraint once an
OPEC-led supply-cutting pact ends.
The oil market has been concerned that, once the supply deal expires, producers will ramp up
shipments again and cause prices to fall.
Minister Khalid al-Falih, told Reuters at an investor conference in Riyadh on Tuesday that global
oil demand is expected to grow by 45 percent by 2050 despite an international push for using
more renewable sources of energy.
“Expectations of increased demand continue to provide support for higher prices,” said Gene
McGillian, manager of market research at Tradition Energy. “There’s nervousness (about
Kurdistan) in the market, but I think that the production cut ... is really driving traders.”
Brent crude, the global benchmark, settled up 96 cents or 1.7 percent to $58.33 a barrel. U.S.
crude settled up 57 cents or 1.1 percent to $52.47.
The Organization of the Petroleum Exporting Countries (OPEC), plus Russia and nine other
producers, have cut oil output by about 1.8 million barrels per day (bpd) since January. The pact
runs to March 2018 and they are considering extending it.
Prices also drew support from expectations U.S. crude inventories will show a drop of 2.5 million
barrels in the latest weekly supply reports, which would be the fifth straight week of declines and a
sign the OPEC-led cut is working.
Preliminary data from the American Petroleum Institute (API), an industry group, said U.S. crude
oil stocks rose 519,000 barrels in the week as refined products drew. U.S. gasoline margins rose
to a one-month high of $18.42 a barrel after the data was released.
Pumping along the pipeline rose to 300,000 bpd on Tuesday, a shipping source said. Output fell
from 600,000 bpd last week when Iraqi forces retook control of oilfields from Kurdish fighters.

The disruption to exports from Iraq, the second-largest producer in OPEC, has supported the
market and should give the group’s already high compliance with the cutback agreement a boost
in October.
Elections for the presidency and parliament of Iraq’s Kurdistan region set for Nov. 1 have been
delayed by eight months, the regional parliament announced Tuesday.
Data Shows Gasoline Stock Drop
Oil held its gains after an industry report was said to show U.S. gasoline and distillate stockpiles
slid as OPEC weighed whether to extend its production caps beyond March.
Futures edged higher from the settlement in after-market trading in New York, prompted by
reports that data from the American Petroleum Institute showed a 5.75 million barrel drop in
gasoline last week and 4.95 million fewer barrels of distillate. Meanwhile, OPEC, set to meet next
month on prolonging the cuts, are said to be planning how to prevent a new price-killing glut once
they end.
The market “looks a lot more bullish than it did three or four months ago,” said James Williams,
president of London, Arkansas-based energy researcher WTRG Economics. The stockpile
declines aren’t surprising since “refinery utilization is coming down this time of year because it’s
turnaround season,” he said. Nonetheless, he predicted prices will rally again Wednesday if the
government confirms the drops.
The Organization of Petroleum Exporting Countries is expected to extend supply cuts beyond their
March expiration date, which has supported oil above the key $50-a-barrel psychological
threshold. In addition, oil demand is proving more resilient than some expected, Saudi Arabia’s
Minister of Energy and Industry Khalid Al-Falih said in Riyadh.

OPEC is implying it’s “likely to accept the current supply discipline for the rest of 2018, and
ultimately the market is looking at that as optimistic,” said Bart Melek, head of global commodity
strategy at TD Securities in Toronto.
At the same time, one major contributor to weak crude prices -- U.S. shale drillers -- appear to be
curtailing some activity. The most recent rig count by Baker Hughes showed the biggest one-week
drop in the Permian Basin fleet in 19 months. Schlumberger Ltd. and Baker Hughes, the two
largest oilfield-service companies, blamed their own lackluster profit reports on the reluctance of
North American explorers to boost spending.
U.S. Inventories
West Texas Intermediate for December delivery traded at $52.54 a barrel at 4:41 p.m. after
settling at $52.47 a barrel on the New York Mercantile Exchange. Total volume traded was about
6 percent below the 100-day average.
Brent for December settlement gained 96 cents to end the session at $58.33 on the London-
based ICE Futures Europe exchange. The global benchmark traded at a premium of $5.86 to
WTI.
Stockpiles at Cushing, Oklahoma, the delivery point for New York-traded futures contracts,
probably declined by 500,000 barrels, according to a separate forecastcompiled by Bloomberg. A
Bloomberg survey estimated that U.S crude stockpiles slid by 3 million barrels last week, while
gasoline stockpiles probably rose by 1.7 million barrels.
The API report also showed crude stockpiles rose by 519,000 barrels, while Cushing supplies fell
by 55,000 barrels last week. A draw at Cushing would be the first since August if the Energy
Information Administration confirms it in its data release on Wednesday.

NewBase Special Coverage
News Agencies News Release October 06-2017
Big Oil Is Investing Billions to Gain a Foothold in Clean Energy
Bloomberg - Anna Hirtenstein
The world’s biggest oil companies are closing more clean energy deals as pressure to diversify
their businesses mounts and growth accelerates among green technologies.
Oil majors more than doubled the number of acquisitions, project investments and venture capital
stakes, to 44 in 2016 from 21 the year before, according to research published Tuesday by
Bloomberg New Energy Finance. In the last 15 years, they’ve completed 428 transactions and
spent $6.2 billion building stakes in clean energy companies.
“This reflects their underpinning strategy to test out new ideas and businesses,” said
Richard Chatterton, one of the London-based analysts that authored the report. “The
international oil companies are identifying opportunities and building expertise, and
when a commercial opportunity becomes clear, they will invest at scale.”
To be sure, the sums expended on clean energy still represent a fraction of the money
invested in crude every year, showing that the oil majors are still very much focused on
their core business. Royal Dutch Shell Plc, for example, budgeted $25 billion this year for
capital expenditures.
Some of the investments by oil majors in projects and startups isn’t disclosed,
according to BNEF, which estimates that the clean energy industry attracted almost
$290 billion in 2016.

Solar energy generated the largest number of projects backed by oil companies. Wind created the
second-highest volume of deals, with offshore wind investments beginning to catch up with
windmills stationed on land. Oil companies have been looking to leverage their know-how in
extracting fossil fuels from seabeds to install turbines in similarly harsh climates.
Wind projects offshore also tend to be some of the largest-scale and riskiest in the renewable
energy industry, leading to higher profitability. Shell has a stake in the Borssele III and IV wind
projects in the Dutch North Sea and Statoil ASA developed the world’s first floating wind farm off
the coast of northern Scotland.
Interest in biofuels is on the decline, the data showed. It peaked when oil prices were high, fueling
motivation to find alternatives. After the oil price crash that began in the middle of 2014,
investment has flowed out of the sector. Deal count was zero in 2017.

Total SA has concluded the highest number of acquisitions and joint ventures with clean energy
companies, buoyed by its purchases of a majority stake in SunPower Corp. in 2011 and battery
maker Saft Groupe SA last year. Europe’s second-largest oil and gas producer is also active in
the venture capital space, with a focus on companies in the U.S.
Oil majors’ venture capital deals have been shifting toward power storage and digital technologies.
Advanced mobility may also be emerging, as companies seek to evolve as more transportation
eschews gas for electricity. Shell recently bought NewMotion, an electric vehicle charging point
network.

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 October 2017 K. Al Awadi

New base 25 october 2017 energy news issue 1090 by khaled al awadi-compressed

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