New base 26 december 2019 energy news issue 1305 by khaled al awadi -comprssed

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NewBase Energy News 26 December 2019 - Issue No. 1305 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 and Kuwait Settle Dispute Over Oil Fields
By Stanley Reed + NewBase
Saudi Arabia and Kuwait said Tuesday that they were ending a long-running dispute over an oil-rich
strip of land shared by the two countries, a move that will allow as much as 500,000 barrels of crude
per day to return to the world market.
The news was welcomed by Chevron, the big American producer that has an agreement to pump
oil from some of those fields. The agreement over a shared region could bring more oil to the global
market and benefit Chevron.
The deal, marked with a signing ceremony in Kuwait with officials from both countries, gives Saudi
Arabia access to a kind of heavy crude that is in short supply in world markets. And it is a likely to
be seen as the latest in a series of wins for the Saudi energy minister, Prince Abdulaziz bin Salman,
who was named to the job in September and recently presided over the initial public offering of
Saudi Aramco, the national company and the world’s largest oil producer.
But the opening of additional spigots of oil may be a mixed blessing because the Organization of
the Petroleum Exporting Countries and Russia agreed this month to reduce output to prop up prices.
The Saudis and Kuwaitis now have a tricky task in convincing the markets that they are not going
to unleash a flood of new crude that would weigh on prices.
www.linkedin.com/in/khaled-al-awadi-38b995b

Prince Abdulaziz said the oil from the shared fields “will not affect the level of the kingdom’s supplies
to global markets,” according to the official Saudi Press Agency.
The agency did not say how the Saudis would maintain their recently agreed-upon quota of about
9.7 million barrels a day. Analysts said the Saudis and the Kuwaitis might compensate for any
increases by dialing back output at other fields.
So far, the markets have shrugged the deal off. On Tuesday, oil prices were up about 0.6 percent
to nearly $70 a barrel for Brent crude, the main international benchmark.
The shared fields, in the 2,200-square-mile area known as the neutral zone, were shut down in 2015
after Saudi Arabia and Kuwait feuded over land use and environmental issues.
Some analysts said the deal reflected efforts by Crown Prince Mohammed bin Salman, Saudi
Arabia’s chief policymaker, to ease tensions with countries in the region, perhaps to nurture an
improved environment for economic growth.
“The real import is that this is part of the big Saudi outreach to its neighbors,” said Bhushan Bahree,
an OPEC analyst at IHS Markit, a research firm.
A big beneficiary is expected to be Chevron. Although Saudi Aramco holds a near monopoly on
production in the kingdom, Chevron operates a large field called Wafra in the shared zone on behalf
of the Saudis.
The Saudi-Kuwaiti feud has cost Chevron about 100,000 barrels a day in lost production.
In a statement on Tuesday, Chevron said it expected to restore full output “within 12 months.”
Despite frustrations caused by the shutdown, Chevron executives said the shared fields could be a
major source of growth.
For instance, Chevron wants to increase the use of steam to loosen up the deposits of molasses-
like oil beneath the sands. “We remain committed to playing a role in further unlocking” these
resources, the company said.
The kind of heavy crude found in the area may be one reason that the Saudis and the Kuwaitis were
able to reach a deal at what seems like an awkward time. Analysts say the market is low on this oil
because of the sharply reduced output of Venezuela and Iran.
“The world really needs that kind of crude after we have lost Venezuelan barrels and Iranian barrels,”
said Amrita Sen, chief oil analyst at Energy Aspects, a market research firm.
Ms. Sen also said output from the neutral zone would give the Saudis the option of shutting down
parts of the key Abqaiq processing facility for more extensive repairs after it was damaged by an
aerial attack in September and then quickly patched up.
Prince Abdulaziz, who is an older half brother of Prince Mohammed, helped push for the Saudi
Aramco’s I.P.O., which raised more than $25 billion for the kingdom. He is also credited with
overseeing the rapid restoration of production at Aramco after aerial attacks blamed on Iran
temporarily slashed output by more than 50 percent.
This month, the prince persuaded fellow OPEC members and Russia at a meeting in Vienna to
agree to new output cuts aimed at bolstering flagging oil prices. That agreement has given oil prices
a modest lift.
But with crude production from the United States, Norway, Brazil and other countries expected to
increase, analysts say he may have more to do to win over skeptical markets.

UAE Murban Oil Differentials Dip At Year-End on Cusp of IMO 2020
Spot price differentials for Abu Dhabi’s Murban crude are dipping toward the end of the year as the
world’s top refiners seek out other types of crude ahead of a historic ship-fuel overhaul.
Murban is prized for its light- and middle-distillate yield, but the grade’s spot premium has dropped
relative to its official selling price in recent days as Asian refiners focus on purchasing oil that
produces more low-sulfur, high-viscosity marine fuels due to the impending IMO 2020 rule change.
As well, rising supertanker rates are making supplies from closer by in Russia’s Far East and the
Asia-Pacific more attractive than crude from further away.
Ships are mandated to use fuels with 0.5% sulfur or less from Jan. 1 and rising demand for IMO-
compliant products such as very-low sulfur fuel oil are prompting refiners to bid up crude that can
yield more of such output.
Grades such as Russia’s ESPO have become more favored as a result this month, according to
four traders and refiners. The increase in demand for blending into low-sulfur fuel oil is also pushing
up prices for Australian heavy grades Van Gogh and Pyrenees.
Murban for February traded at a discount of 15 cents against its official price on Thursday, dropping
from a 25-cent premium just days before.
The decline has coincided with an increase in the rates for very-large crude carriers shipping oil
from the Middle East to China, which have risen to a two-month high. That’s giving additional
impetus to demand for nearby crudes such as ESPO, which is trading at a premium of $8 to $8.40
a barrel over benchmark Dubai crude, the highest in about two months.
“The short term volatility we are seeing at the moment is ‘business as usual’ for a spot market
product,” Abu Dhabi National Oil Co., the main producer of Murban, said in an email. “In the long
term, we see a solid and growing demand for Murban. As a light crude with sulfur content of less

than 1%, it is a highly attractive grade based on IMO regulations. In fact, the Murban trading
differential is up significantly as a result of IMO regulations, which is a reflection of growing demand.”
Distillates Disappoint
This month, the popularity of Murban and other similar crude has been eroded as processing profits
from gasoil were at an average of $15 a barrel so far in December, about 10% lower than the
average for the second half of the year. While Murban at a discount isn’t good news for term lifters,
buying interest could reemerge should spot differentials fall further or official prices decline.
Marine gasoil was previously seen as the biggest beneficiary from the industry’s scramble for IMO-
compliant fuels, though shippers have so far gravitated to VLSFO due to its high viscosity that aids
engine performance. Vessels that ply long-haul routes -- from Europe or America to Asia -- are
particularly in favor of this option, according to Abhishek Nambiar, an oil market analyst at FGE.
Low-sulfur diesel as shipping
fuel is “losing its status as an
IMO golden child,” wrote
Bank of America Merrill
Lynch analysts in a Dec. 13
note. Gasoil crack spreads
have averaged $16.70 a
barrel so far in the second
half of 2019, versus an
estimate by Goldman Sachs
Group Inc. in August set at
$17.60 for the six-month
period.

Saudi Al Rushaid to set up renewable energy JV in Saudi Arabia
Trade Arabia Bews + NewBase
In a major boost to Saudi Arabia’s emerging renewable energy sector, General Investment Authority
(Sagia) has signed new joint venture agreements with Al Rushaid Group and the French-based
Optimum Tracker.
The duo, Al Rushaid Group and the French-based Optimum Tracker, solidified their new partnership
at a signing ceremony witnessed by Sagia Governor Ibrahim Al Omar at Invest Saudi. According to
Invest Saudi’s Fall 2019 Investment Highlights report, over 250 overseas businesses were granted
investor licenses in Q3 2019, marking a 30 per cent increase compared to the same period last
year.
The new legal entity created by the two companies will combine their expertise into a Saudi-
registered company providing design and engineering services in the field of solar energy, with a
focus on the manufacturing of mounting system structures for solar PV panels, said a statement
from Sagia.
Beginning the joint venture with an initial investment of SR200 million ($53.2 million), Al Rushaid
and Optimum Tracker, will base their main operations in the kingdom’s Eastern Province and target
a gradual capacity to no less than 150 megawatts (MW).
The plant constructed under the deal plans to export at least 30% of its products to countries across
the region and create 1,000 direct jobs, said Al Omar.
"Our country is undergoing a significant economic transformation and energy demand at home and
abroad is growing rapidly, leading to the emergence of renewable energy as one of the most
important strategic sectors in line with Saudi Vision 2030," he added.

Group Vice Chairman and President Sheikh Rasheed A. Al Rushaid said: "We’re proud and
extremely excited to be working side by side with a successful, rapidly growing company like
Optimum Tracker, as we work towards localizing an important component of solar plants in Saudi
Arabia in line with the Kingdom Vision 2030."
"We are confident that our experience and expertise in the industrial field will assure a quick and
seamless start of manufacturing and commercialization of solar trackers, in order for these
innovative products to be installed across in Kingdom and exported worldwide.
We are blessed to find in Sagia a true partner in success - their unconditional support has been
instrumental to facilitating this exciting new partnership," he stated. Al Rushaid pointed out that
the agreement builds on the positive momentum that Saudi Arabia had seen this year in terms of
inward investment.

Norway: Western Europe’s largest oilfield ramps up production
— defying calls to stop altogether … CNBC - Sam Meredith@SMEREDITH19
A newly-discovered oilfield in the Norwegian part of the North Sea is on track to produce almost
0.5% of global oil supplies next year, despite calls for it to immediately stop producing crude
altogether.
Based approximately 87 miles off the West coast of Norway, the Johan Sverdrup oilfield represents
the largest North Sea discovery in more than three decades.
It only came on stream in early October, but it is already considered Western Europe’s biggest oil
producer, supplying more than 300,000 barrels per day (b/d).
Equinor, Norway’s state-controlled oil company and Sverdrup’s operator, has said it expects crude
production from this field to increase to 440,000 b/d in the summer of next year — before eventually
climbing up to 660,000 b/d after 2022.
 Based approximately 87 miles off the West coast of Norway, the Johan Sverdrup oilfield
represents the largest North Sea discovery in more than three decades.
 Some environmental groups have called on major energy firms to immediately stop
producing oil altogether.
 However, Equinor has said it believes “Johan Sverdrup is a prime example of exactly why
we shouldn’t do that.”
To put those figures into context, the International Energy Agency (IEA) reported earlier this month
that global oil supplies stood at 101 million b/d in November. So, assuming total oil output worldwide
is little changed over the coming months, the Sverdrup oilfield will soon account for 0.4% of global
production.

“It is quite significant,” Tamas Varga, senior analyst at PVM Oil Associates, told CNBC via
telephone.
The speed of its development has been “absolutely amazing,” he added, especially when you
consider “the general perception was that the North Sea was declining as far as output is
concerned.”
Climate crisis
The discovery of the Sverdrup field, and its rapidly rising oil output, comes as global leaders debate
the best approach to combat an intensifying climate crisis.
Equinor CEO: Earnings were impacted by oil prices
The United Nations (UN) has recognized the
phenomenon as the “defining issue of our time,”
with a recent report calling it “the greatest
challenge to sustainable development.”
Some environmental groups have called on major
energy firms to immediately stop producing oil altogether, with Greenpeace arguing such action is
necessary given that crude is one of the biggest contributors to climate change.
This is a complete greenwash — both of Equinor and the Norwegian government.
Frode Pleym “ HEAD OF GREENPEACE NORWAY “
However, Equinor has said it believes “Johan Sverdrup is a prime example of exactly why we
shouldn’t do that.”

The Stavanger-based energy firm has described its record-breaking oilfield as a “technological
triumph” and “a milestone for the Norwegian oil industry, supplying the world with energy and
creating value for society.”
It argues “world energy demand continues to rise and we will still have a significant need for oil and
gas in the foreseeable future. But not all barrels are created equal.”
‘We need to stop looking for new oil and gas’
Equinor says this is because it extracts oil more cleanly when compared to other energy firms,
thanks largely to hydroelectric power from the shore.
“This is a complete greenwash — both of Equinor and the Norwegian government,” Frode Pleym,
the head of Greenpeace Norway, told CNBC via telephone.
“It is typical” of Norwegian oil and gas companies to claim it uses cleaner energy than other
countries, he added.
School students protest outside of Parliament on September 20, 2019 in London, England. Millions
of people are taking to the streets around the world to take part in protests inspired by the teenage
Swedish activist Greta Thunberg.
Guy Smallman | Getty Images
Pleym said that, while the process of Equinor’s oil extraction may be slightly cleaner than rival
energy firms, when crude is burned, “it doesn’t matter to the climate crisis whether the oil came from
Saudi Arabia, the U.S., or Norway.”
“We need to stop looking for new oil and gas. We have already found more oil and gas than the
world can afford to use.”
Equinor and Norway’s ministry of petroleum and energy did not respond to a request for comment
when contacted by CNBC.

Japan: Nissan starts AED1.1 trillion plant technology rollout
WAM/Nour Salman + NeewBase
Nissan today announced a substantial investment in advanced technologies and equipment for its
factories around the world.
These innovations will help deliver a new generation of electrified and intelligent automobiles that
embody the company’s Nissan Intelligent Mobility vision, while also making production operations
more flexible, efficient and sustainable.
Following an initial investment of about AED1.1 trillion at the company’s Tochigi Plant in Japan, with
work to finish in 2020, the technologies will be rolled out across factories globally.
Since 1933, Nissan has honed its ability to mass-produce vehicles to the highest possible standards.
Over the same period, the company’s takumi master technicians have perfected a range of complex
or delicate processes requiring a high degree of craftsmanship.
This latest investment represents a necessary rethinking of conventional car-making and tackles
the structural and technical challenges of producing vehicles that will lead the industry in a new era
of electrification and intelligence.
"We’re facing an unprecedented evolution in the capabilities of our vehicles," said Hideyuki
Sakamoto, Nissan’s Executive Vice President for Manufacturing and Supply Chain Management.
"Our job is to make this evolution a reality by rethinking how we build cars. This will also mean
shifting the efforts of our expert technicians from techniques they’ve already mastered to new,
unexplored areas."

Russian: A floating nuclear power plant started to produce electricity
CNBC - Anmar Frangoul
A floating nuclear power plant has been connected to the grid and has commenced electricity
production for the first time in a remote region of Russia.
In a statement Thursday, Russia’s state-owned nuclear company Rosatom said the Akademik
Lomonosov had started to produce electricity in the “isolated Chaun-Bilibino network” in the port of
Pevek, Chukotka, which is located in the Far East area of Russia.
The Akademik Lomonosov floating nuclear power unit moored at the port of Pevek in the
Chukotka Autonomous Area, in Russia’s Far East.
Described by Rosatom as the planet’s “only floating power unit,” it’s envisaged that the Akademik
Lomonosov — which set sail from the Russian port of Murmansk in August — will become an
important part of the Chukotka area’s power supply. It has two KLT-40C reactors which have a
capacity of 35 megawatts each.
While Rosatom describes the facility as a “first of a kind”, the history of floating power plants
stretches back decades: the U.S. converted a ship called the STURGIS into a floating nuclear power
plant during the 1960s.
Rosatom says the floating nuclear power plant is suited to remote areas and “island states” which
need stable and in its own words, “green,” sources of energy. Interest in the technology has come
from North Africa, the Middle East and Southeast Asia, it claims.
Rosatom has previously said that it is already working on second-generation floating power units
that will be constructed in a series and available for export.
In a statement issued at the end of August, the director general of Rosatom described the launch
of the floating power plant as a “momentous occasion for our company and for the Chukotka region.”

Alexey Likhachev went on to state that the Akademik Lomonosov would “guarantee clean and
reliable energy supplies to people and businesses across the region.”
While there is excitement in some quarters surrounding the scheme there are concerns surrounding
nuclear power projects.
This is in part due to high profile events such as the Fukushima disaster of 2011, when a powerful
earthquake and tsunami resulted in a meltdown at the Fukushima Daiichi nuclear power plant.

For its part, Rosatom has said that its floating nuclear power plant has been designed with a “great
margin of safety” which exceeds “all possible threats” and makes the nuclear reactors invincible to
tsunamis and “other natural disasters.”
It adds that the nuclear processes at the facility meet requirements from the International Atomic
Agency and don’t pose an environmental threat.
Paul Dorfman, an honorary senior research associate at University College London’s Energy
Institute, told CNBC via email that while the Akademik Lomonosov was not that significant in energy
terms, it was “significant in terms of risk.”
Dorfman went on to explain via email the concerns that, in his view, people should have about the
project. “It would be extremely difficult, perhaps impossible, to abate the radiological consequences
of a nuclear accident in the Arctic,” he said.
All nuclear power plants, Dorfman added, were vulnerable to unforeseen external events through
human or engineering-based fault conditions, which include accidental or deliberate harm.
“Accidents are by nature, accidental, and the cost of ignoring this common-sense axiom has proven
to be catastrophic,” he said.
“Part of the problem is that nuclear facilities are so complicated that, given the unpredictability of
unforeseen natural and other events (including terrorist attacks), it’s actually impossible to defend
this floating nuclear plant with any real confidence.”
Whatever your views on nuclear power, Dorfman said, it was clear that “the possibility of
catastrophic accidents must be factored in — and the risk to people and the environment as a
consequence of a major incident to a floating reactor is very significant indeed.”

U.S Permian Gas Problem Is Just Getting Worse
Bloomberg - Rachel Adams-Heard
America’s top shale field is becoming increasingly gassy as drilling slows down, undercutting profits
for explorers at a time when investors are demanding better returns.
Natural gas has long been a nuisance in the Permian, where a massive glut weighs on prices, with
crude producers sometimes having to pay to get it hauled away or burn it off in a controversial
practice known as flaring. Now the problem is intensifying as wells age and fewer new wells are
drilled.
Shale wells produce a spew of oil when they’re first fracked, but over time, production falls --
sometimes as much as 70% in the first year -- and gas becomes a bigger part of the mix.
“Activity levels are no longer what they were,” said Artem Abramov, head of shale research at
Rystad Energy. “The oil ratio is no longer sufficient to offset gas in older wells, so we’re seeing some
increase in basin-wide” gas-to-oil ratios.
Getting Gassy
Source: Rystad Energy
In the Midland portion of the Permian, the average well produces about 2,000 cubic feet of gas for
each barrel of oil in its first year, according to Tom Loughrey, a former hedge fund manager who
started shale data company Friezo Loughrey Oil Well Partners LLC, or FLOW. Over the lifetime of
those wells, about 30 years or so, that rises to an average of about 5,000. It can climb as high as
7,000 in the gassier Delaware.
It’s an issue that’s made worse when subsequent wells are drilled too close to the initial one, or
when there’s interference from another producer’s neighboring wells.
Diamondback Energy Inc. emerged in November as a victim of this phenomenon when it reported
third-quarter well results that were disappointingly gassy. The percentage of oil was 65%, the lowest
since at least 2011, which it blamed on a nearby producer who took too long to frack its wells. The

company also revised its expected crude ratio for 2019 to 66%-67% of production versus 68%-70%
previously.
Then there’s the fact that in recent years investments have shifted to the Delaware, where output is
much gassier than in the historic Midland portion of the Permian.
“Almost all, if not all, of the gas supply growth next year is coming from the Delaware Basin, whereas
most other basins are staying flat or even decreasing,” said Ryan Luther, a senior research
associate for RS Energy Group Inc. “It’s something that can be particularly challenging for the
Permian operators because there is that pipeline constraint.”
Delaware Basin's Gas Problem
In the area's Wolfcamp play, increasing gas output could be a headache
Source: IHS Markit
In April, gas traded at the Waha hub in West Texas dropped to minus $4.63 per million British
Thermal units. In other words, producers had to pay to get their gas taken away.
Smaller producers with rising gas ratios have taken the hardest hit as prices tanked. Over the last
year, Approach Resources Inc. has reported oil production that was less than one quarter of its total
output. The company filed for bankruptcy protection in November.
Producers in the Permian are already flaring record levels of natural gas. The Texas Railroad
Commission, which oversees the oil and gas industry in the state, has granted nearly 6,000 permits
allowing explorers to flare or vent natural gas this year. That’s more than 40 times as many permits
granted at the start of the supply boom a decade ago.
While flaring gets rid of the methane, it still releases carbon dioxide and other particulates into the
air. The agency’s tendency to approve all flaring permits is now the subject of a lawsuit brought by
pipeline operator Williams Cos. The company recently lost a case in front of the commission, arguing

that producer Exco Resources Inc. should use Williams’ pipeline system instead of burning off
unwanted gas.
U.S. Energy Secretary Dan Brouillette put the Permian’s gas problem down to infrastructure.
“Even if we could capture the gas, it’s not clear we could get it to the marketplace,” he said in an
interview in Washington last week. “We just need more pipeline capacity.”
There aren’t any major gas pipelines set to come online next year. Kinder Morgan Inc. recently
delayed its Permian Highway gas pipeline to 2021, citing red tape.
But not everyone agrees that the Permian’s flaring problem can be chalked up entirely to a lack of
pipelines.
“Pipeline capacity is going to end up helping, but it’s not going to solve the issue,” said Colin Leyden,
senior manager of regulatory and legislative affairs at the Environmental Defense Fund in Texas.
“There’s no doubt that folks are absolutely fed up with the amount of waste and pollution coming
from the Permian Basin.”

NewBase December 26 – 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Extends Gains on U.S. Inventory Decline, Trade Deal Optimism
Bloomberg + NewBase
Oil rose a third session as an industry report showed American inventories shrunk and as optimism
over a partial U.S.-China trade deal grew.
Futures rose as much as 0.7% in New York, extending gains as trading resumed after the Christmas
break. Prices are up more than 11% in December, on pace for the largest monthly gain in almost a
year. U.S. stockpiles dropped 7.9 million barrels last week, Reuters reported, citing American
Petroleum Institute data. China data on Wednesday showed imports of U.S. soybeans surged to
the highest in about two years, while President Donald Trump said a trade pact between the two
nations is “done.”
Oil has surged 35% so far this year as the world’s two largest economies made a breakthrough on
an initial trade deal. The Organization of Petroleum Exporting Countries and its allies also extended
their agreement to reduce output, while oil production growth in the U.S. tapered off and stabilized
at a lower level.
“Oil prices continue to show year-end strength supported by a combination of definitive progress on
the U.S.-China trade deal, the OPEC+ output-cut agreement and slowing shale activity,” said
Stephen Innes, chief Asia market strategist at AxiTrader Ltd. “All of these factors are pointing to a
stronger performance for oil in the beginning of next year, more than anyone had thought only a few
months back.”
Oil price special
coverage

West Texas Intermediate for February delivery climbed as much as 43 cents on the New York
Mercantile Exchange, and traded 24 cents higher at $61.35 a barrel as of 11:05 a.m. in Singapore.
Markets were closed on Wednesday for the Christmas holiday.
Brent for February settlement rose 24 cents to $67.44 a barrel. The contract closed 81 cents higher
at $67.20 on Tuesday, increasing about 8% so far this month.
API’s reported draw in American crude stockpiles last week would be the largest since August if
confirmed by government data on Friday. A median forecast of nine analysts in a Bloomberg survey
showed a smaller drop of 1.5 million barrels, while inventories in the oil storage hub of Cushing were
expected to decline for a seventh week.
China’s inbound shipments of
soybeans from the U.S. climbed
to 2.6 million tons last month, the
highest since March 2018.
President Trump said the U.S.
and China are just working on
the translation and paperwork,
and suggested that the two sides
will sign the deal before a
meeting with his Chinese
counterpart Xi Jinping.

Oil Analysts See Few 2020 Fireworks As OPEC+ Cuts Trim Surplus
Oil prices are likely to remain in check during 2020 as OPEC+ production cuts are offset by higher
output from other countries and a mixed outlook for demand, according to analysts.
Analysts see prices climbing higher in the middle of the year as stronger emerging-market demand
and the OPEC+ cuts trim global inventories. Saudi Arabia surprised the market in early December
with a deeper supply cut, which, along with signs of a thaw in the U.S.-China trade conflict that may
boost demand, lead some prominent analysts to revise their forecasts higher.
Goldman Sachs Group Inc. increased its estimate for Brent crude to $63 a barrel from $60,
according to a note from analysts including Damien Courvalin and Jeff Currie. "This points to a
tighter inventory path than we previously expected, especially through first-half of 2020."
West Texas Intermediate will average $58.50 a barrel in 2020, according to the median of analyst
estimates compiled by Bloomberg since the OPEC+ meeting in early December. That compares to
the current level of around $60 and the average so far in 2019 of $56.95. Brent is forecast to average
$64.25 a barrel.
1Q 2020 2Q 2020 3Q 2020 2020 2021
WTI $57.00 $58.00 $58.00 $58.50 $57.50
ICE Brent $62.00 $64.00 $64.00 $64.25 $60.00
The forward curve is in backwardation, with spot prices for WTI about $4 a barrel and Brent about
$5.25 a barrel higher than December 2020 contracts. That premium for near-term delivery comes
as producers sell forward contracts to hedge their output for the next couple of years and as
inventories are seen as likely to decline.
Additional analyst comments:
 JPMorgan Securities LLC analysts including Abhishek Deshpande see Brent averaging $64.50
a barrel. Stronger emerging market growth prompted the bank to tighten its oil balance in
2020 by 300,000 barrels a day compared with a 100,000 barrel-a-day surplus previously,
according to a Dec. 17 note. The bank also cited Petrobras's recent reduction of its production
guidance for next year.
 Michael Tran and Helima Croft at RBC Capital Markets see Brent at $64 a barrel, noting
inventories are tighter than anticipated, signaling that supply from Johan Sverdrup in Norway
and Guyana "are and will be absorbed with relative ease."
 Rystad Energy predicts that North American shale oil supply will continue to grow. "In spite
of the decline in spending and activity levels, the North American shale supply is not
following the downward trend," said Sonia Mlada Passos, an oil analyst at Rystad Energy AS.

NewBase Special Coverage
The Energy world - Special Dec. 26-2019
Oil’s 2019 Milestones Tell Decade’s Story of Energy Abundance
-
Global oil markets notched up a number of milestones this year that echoed the story of the past decade:
the world has shifted from an era of supply tightness to plenty.
What distinguished the developments of 2019 was not just how big they were but often how little impact
they had. From the world’s biggest-ever initial public offering to its worst-ever supply disruption, a
barrage of sanctions on exporters to two OPEC interventions, never before had so many momentous
events left investors so unmoved.
At the heart of that indifference was the force that has transformed world energy balances over the past
10 years: the American revolution in shale oil and gas, which is cushioning global markets against
shocks that would once have sent prices rocketing. This too achieved a landmark in 2019, turning the
U.S. into an net exporter of crude and refined oil.
And there was another turning point showing the years ahead may also be marked by supply
abundance. For the first time, the world’s leading energy institution predicted that demand for oil -- once
expected to keep growing almost indefinitely -- will stall at the turn of the next decade.
“This year is probably the first in my recollection where oil prices so extremely decoupled from
geopolitical risk,” said Amy Myers Jaffe, senior energy and environment fellow at the Council on Foreign
Relations in New York. “It was also the year when analysts and car companies started to talk about the
possibility of peak car and peak demand with increasing probability.”

The biggest headlines of 2019 came out of the world’s largest oil exporter, Saudi Arabia. Riyadh finally
floated part of state oil giant Saudi Aramco after a laborious three-year process, securing a valuation of
$2 trillion that made it the world’s biggest company.
Yet the 1.5% stake sold was just a portion of the original plan, and mostly marketed to local buyers
instead of the foreign investors once courted, as fund managers balked at the lofty asking price.
A far more traumatic ordeal rocked Saudi Arabia in September, when a swarm of missiles and armed
drones blasted its Abqaiq processing facility and briefly disabled half the kingdom’s output capacity.
Yemen’s Houthi rebel group claimed responsibility, although the U.S. Secretary of State Michael
Pompeo blamed Iran directly.
The sudden loss of 5.7 million barrels a day was exactly the crisis the industry had feared for decades,
and in previous years might have triggered a prolonged rally. Although prices initially rocketed 19% in
an unprecedented surge, the gains dissipated in two weeks.
Riyadh’s attempts to shore up oil prices also yielded lackluster results. The Saudis led the OPEC cartel
and its partners in not one but two coordinated production cutbacks this year, an unusual level of activity
for the organization, and reduced its own output far more than initially planned.
Their efforts were amplified by extreme levels of political involvement in the oil market, as U.S. sanctions
squeezed exports from OPEC members Iran and Venezuela to the lowest in decades. Yet prices remain
about 12% below this year’s high, trading near $66 a barrel in London.
The main source of the cartel’s struggle remained the U.S. shale-oil industry, which has turned the
country into the world’s biggest oil producer, and propelled nationwide production to a new record of
almost 13 million barrels a day this year.
Even as the shale boom shows some signs of slowing, production from offshore deposits once thought
unviable in an era of low prices -- such as Brazil and Norway -- is springing to life.
“Despite major geopolitical tensions around the world, oil markets have remained surprisingly calm,”
said Fatih Birol, executive director of the International Energy Agency in Paris. “This is mainly due to
significant amounts of oil supply coming into the market from the U.S. as a result of the shale revolution,
and from other non-OPEC producers.”
The transformation though isn’t confined to the supply side of the market.
The IEA, which for years projected that oil demand would increase for the foreseeable future, predicted
last month that consumption will plateau at the turn of the next decade as efforts to avert catastrophic
climate change spur the use of more efficient car engines and electric cars.
Growth in world oil demand will dwindle from about 1 million barrels a day, or 1%, currently to roughly
100,000 a day in the 2030s, the IEA said. Sales of passenger vehicles with internal combustion engines
are probably already in decline, according to Bloomberg New Energy Finance.
The change is increasingly occupying financial investors, who are shifting their portfolios from fossil fuels
to more sustainable energy sources. Reflecting that anxiety, the organizers of the “Oil & Money”
conference, held annually in London for the past four decades, announced a re-branding that will remove
both words from the title.
Perhaps the greatest symbol of changing attitudes has been the rise of 16-year-old Swedish
environmental activist Greta Thunberg. The “strike for climate” she began at school last year became a
global phenomenon, leading her to address the United Nations in New York and earn Time magazine’s
‘Person of the Year’ award -- a level of international popularity the organizers of the Aramco IPO can
only dream of.

Worst Case for Climate Change Doesn’t Look Realistic
Noah Smith an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
In recent years, much of the commentary about climate change has gone from sternly serious to
wildly despairing. A new report from the United Nation’s Intergovernmental Panel on Climate
Change warns that the effects of climate change are accelerating and that the world has barely
more than a decade to make deep cuts to greenhouse gas emissions and limit warming to 1.5
degrees Celsius by century’s end.
Such reductions are extremely unlikely, given that global emissions rose this year and last. China,
the world’s biggest emitter by far, is still building coal-fired power plants, while the U.S. under
President Donald Trump has abdicated leadership on the climate issue. Warming of more than 1.5
degrees seems certain at this point and the world will have to deal with the consequences.
But how much, exactly, will Earth warm before the fossil-fuel era runs its course? That’s harder to
forecast because it depends not just on climate science but also on assumptions about emissions.
And that, in turn, depends on technology and economics, both of which are notoriously hard things
to predict.
The IPCC lays out several business-as-usual scenarios for how much greenhouse gas would be
emitted without major policy action, but it doesn’t say which scenario it thinks is more likely. The
direst of these, called RCP8.5, implies that the planet would warm by an average of 5 degrees
Celsius (about 9 degrees Fahrenheit) by 2100 -- an absolutely catastrophic, civilization-ending level
of warming.
It’s typically this doomsday scenario that motivates some observers to despair and others to call for
reckless, flailing policies like the dismantling of capitalism.
But a growing chorus of climate scientists and energy policy analysts has begun to question whether
the dreaded RCP8.5 scenario should be taken seriously. The scenario assumes that after a brief

flirtation with natural gas and renewable energy, the world returns to fueling industrialization
primarily with coal.
But it seems vanishingly unlikely that the global coal industry will increase sevenfold, as RCP8.5
envisions, even if natural gas proves to be a temporary phenomenon.
First of all, there probably just isn’t that much accessible coal in the ground. Second, burning coal
creates air pollution in addition to greenhouse gases, which gives countries an additional incentive
to reduce its use.
Third, the price of renewables has dropped to the point where building new coal plants is simply not
economical in most places. Despite China’s new plants, overall global coal use fell 3% in 2019.
India is turning away from coal, and so is Southeast Asia:
Even Trump, despite his promise to restore the coal industry to its former glory, has managed to do
nothing of the kind:
And as renewables get cheaper, it will become economical to retire existing coal and gas plants.
McKinsey predicts that this will be the case in most of the world by 2030. Banks are already
beginning to pull out of the coal-power industry, not because of environmental pressure (since
they’re still funding coal for other industrial uses), but because they know there’s just no future in
coal plants. Gas won’t be far behind, though a few gas plants will probably remain in service to back
up solar plants when the sun isn’t shining.
So the IPCC’s commonly cited doomsday scenario looks like a rash flight of imagination. A group
of climate scientists recently got together on Twitter and tried to figure out what a more realistic
scenario looked like. They fed energy predictions from the International Energy Agency into climate
models and found out that 3 degrees of warming is a much more likely business-as-usual scenario
than 5 degrees.

But as the climate scientists noted, the IEA has consistently underestimated the growth of solar
power; each year the international agency predicts that growth in solar-power generation will slow,
and each year it grows rapidly. If renewable technologies continue to surprise on the upside,
warming could be limited to 2.5 degrees.
Now for the bad news: 2.5 degrees of warming will still be catastrophic for many people and
countries, and 3 degrees even more so. Heat waves will become unbearable without air
conditioning, even in high latitudes. All coral reefs will probably die. Many major cities will be
drowned. Even just 2 degrees of warming, which will be exceeded in any business-as-usual
scenario, will have very serious global repercussions.
That’s why a business-as-usual scenario is unacceptable. The human race probably isn’t doomed,
but climate change is still an enormous catastrophe in the making. Big policy changes are needed
-- in the U.S., in China and in many other countries.
Instead of embarking on the fool’s errand of trying to dismantle capitalism, governments should
utilize the combined resources of the public and private sectors. They should retire all coal plants
as quickly as possible, steadily reduce natural gas usage and convert to all electric vehicles.
Buildings need to be retrofitted to use electricity instead of gas.
And new technologies for producing low-carbon steel and cement, and for carbon-free aviation,
need to be researched, scaled up and disseminated internationally.
More rational climate scenarios don’t give any excuse for complacency. But they do give human
civilization a fighting chance.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” 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
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 a total of 28 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 2019 K. Al Awadi

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