New base 551 special 02 march 2015

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NewBase 02 March 2015 - Issue No. 551 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
$48tn needed for power infrastructure next 20 years
The National + NewBase
About US$48 trillion of investments in energy infrastructure will be globally required in the next 20
years and most of that demand will come from emerging markets, according to a new report.
National Bank of Abu Dhabi commissioned the study from the advisory PwC and the University of
Cambridge. The demand will be fuelled by the emergence of mega-cities, rapid industrialization
and an expanding middle class.
“The nature of the energy demand in these countries will be different from the pattern which is
now set in the developed world, requiring much more new-build generation [rather that adaptation
or upgrading of established grids], rapid deployment and innovations which can reach large
populations, often living in off-grid situations,” state the report authors.
Renewable energy forms a big chunk of these needed investments, as most of the rise in energy
demand will be for electricity generation, according to the report. Despite the drop in oil prices,
A model that represents the entire proposed Mohammed bin Rashid Al Maktoum Solar Park

renewable energy remains competitive. “First, the huge rise in energy demand is for the most part
electricity, yet only 5 per cent of global electricity comes from oil so in that regard, oil is not a direct
competitor with renewable electricity sources but rather a complement to it,” the report states.
Globally, more than half of investments in new generation capacity is in renewables, the study
found. Investment in renewables is partly being driven by the falling cost of sectors such as solar
power. The price for solar photovoltaic (PV) modules has fallen by more than 80 per cent since
2008.
In the Arabian Gulf region, investments in renewables is picking up pace, with Abu Dhabi targeting
to derive 7 per cent of its energy from renewables by 2020. Dubai also is aiming to generate 7 per
cent of its energy from renewables in the same time scale.
To achieve its goal, Dubai is building a 1000MW solar park. The second phase of the Dubai solar
park attracted a tender from the Saudi firm Acwa Power for the world’s cheapest utility scale solar
PV price to date of 5.84 US cents per kWh for the 200MW PV plant.
“The speed of this shift towards grid parity with fossil fuels means that, in many instances,
perceptions of the role of renewables in the energy mix have not caught up with reality,” the
report’s authors found. “At the end of 2014, the 200MW Dubai Electricity and Water Authority
[Dewa] bid in Dubai set a new world benchmark for utility scale solar PV costs, showing that
photovoltaic technologies are competitive today with oil at US$10 per barrel and gas at
US$5/MMBtu,” it added referring to the solar PV costs.
For NBAD, the findings of the report present opportunities to offer new products to help finance
the upcoming energy investments which can’t be funded solely by equity and banks. “There is no
way that the banking industry globally can fund the $48tn that is required over the next 20 to 25
years,” said the chief executive Alex Thursby.

“Debt capital markets will be an essential piece. So having that expertise and then being able to
put project finance into the bond market and putting project finance into a sukuk [Islamic bond]
with maybe export agency support etc, are some of the areas that we would need to develop.”

Wartsila and N-KOM sign MoU for marine and energy markets
The Peninsula + NewBase
Wartsila and Nakilat-Keppel Offshore & Marine (N-KOM) have signed a Memorandum of
Understanding (MoU) agreeing to work together to improve business opportunities in repair and
maintenance services, for marine and offshore vessels as well as onshore structures in Qatar.
Wartsila is a major player in complete lifecycle power solutions for the marine and energy
markets, while Nakilat-Keppel Offshore & Marine (N-KOM) is one of Middle East’s leading
shipyards, offering services solutions for the marine and oil and gas industries. The MoU was
signed by Chandru Rajwani, Chief Executive Officer of N-KOM, and Seppo Hautajoki, Managing
Director of Wartsila Doha LLC and Wartsila Gulf FZE (Dubai).
“N-KOM is always on the lookout for long-term strategic alliances to further our business interests.
Having Wartsila operate within our premises, offering in-demand marine services, such as main
engine piston crown reconditioning and chrome plating, allows us to better respond to the needs
of our customers as we strive towards becoming the preferred shipyard delivering solutions,” said
Chandru Rajwani.
“Wartsila and N-KOM share the same mission of providing the best services and support solutions to the marine
industry in Qatar. It is Wartsila long-established strategy to assist its customers whenever, wherever possible. By
signing the MOU, Wartsila will be able to enhance further its cooperation with N-KOM, and it will help us to continue
our leading role in this field”, added Seppo Hautajoki.
Wartsila supports its customers throughout the lifecycle of their installations by optimising efficiency and performance.
Wartsila offers expertise, proximity and responsiveness for all customers regardless of their equipment make in the
most environmentally sound way. The company’s Services & Support solutions range from basic support, installation
and commissioning, performance optimisation, upgrades, conversions and environmental solutions to service projects
and agreements focusing on overall equipment performance and asset management.
Chandru Rajwani (centre right) and Seppo Hautajoki (centre left) at the MoU signing event.

Saudi Arabia world's biggest strategic drinking water reservoir
WAM + NewBase
Saudi Arabia has set the global Guinness record for Strategic Water Storage
project in Breiman area in Jeddah, which is being developed by the National
Water Company (NCW), as the world's largest drinking water reservoir.
The Saudi Press Agency quoted the NWC as saying that "this achievement
includes the implementation 11 cylindrical tanks with a capacity of 188,000 cubic
metres for each tank in the first phase.
This will bring the full capacity of the first phase to two million cubic metres at a cost of 740 million
Saudi riyals." Regarding the awarding of second and third phases of the Strategic Water Storage
Project in Jeddah, the company said it has awarded the two phases, adding that the second
phase will be implemented in the Breiman area, and the third phase will be implemented in the
Faisaliah Jeddah area.
It noted that the total future capacity would reach up to two million cubic metres at a cost of 824
million Saudi riyals for the second and third phases.
The strategic water storage projects in Jeddah are the first projects of their kind amid growing
water demand.

Iran:Killer Smog Tests Iran’s Top Woman as Pollution Sparks Action
Bloomberg + NewBase
The snowy peaks of the Alborz Mountains visible through Iranian Vice-President Masoumeh
Ebtekar’s Tehran office window may be evidence that the city is finally serious about tackling its
chronic air pollution.
The capital’s factories and five
million vehicles, prevented
from burning imported cleaner
fuels by global sanctions, turn
the air in colder months into a
suffocating smog that shuts
schools and offices. Officials
blame the toxins for the
premature deaths of 4,000
residents a year. Many more
among Tehran’s 12 million
people choke behind surgical
masks, as roadside pollution
readings ram home the health
threat.
For Ebtekar, who heads the country’s Environment Protection Organization and is the most
influential woman in the administration of President Hassan Rouhani, cleaning up the mess can’t
be put off. As a start, she says, the sale of locally produced low-quality gasoline has been
stopped, while higher standards and stricter inspections have been imposed at car production
plants.
“Air pollution adversely affects 35 million” Iranians or half the country’s inhabitants, she said in an
interview. Even after “tangible results, there’s still a long way to go,” said Ebtekar, who first gained
prominence as a spokeswoman for the students who stormed the U.S. embassy in Tehran in 1979
and held American hostages for more than a year.
Still, “We have fewer days where the pollution levels are high,” she said, as a wind helped reveal
the mountains that surround Tehran but which are often obscured by thick haze.
Looming Crisis
Air quality has improved, says Vahid Hosseini, who heads Tehran’s Air Quality Control Co.,
affiliated to the city’s municipal administration. The number of heavily “polluted days” fell in the 10
months since April compared with the same period in the two previous years, he said Feb. 22 in a
report on the organization’s website.
Tehran’s geography, though, poses an additional challenge to officials fighting pollution. The city
sits in a basin at an altitude above 1,100 meters, trapping the foul air.

A tenfold increase in the city’s population in 75 years, decades of resource mismanagement, and
the technological isolation enforced by sanctions are fueling an environmental crisis in Tehran and
across Iran. While an accord with world powers over the Islamic Republic’s nuclear program may
end its pariah status, repairing the environment will require more accountable politics and the
dismantling of policies that allowed for a surge in the use of fuel and water, analysts say.
Subsidies “have certainly exacerbated problems because you’re essentially stimulating overuse of
resources,” Toby Iles, a senior Middle East analyst at the Economist Intelligence Unit, said in a
phone interview from Singapore. “Iran clearly needs to” change course, he said.
Tightened Sanctions
In the northwest, irrigation projects have depleted groundwater sources, prompting officials to
warn of supply cuts to the largest consumers in Tehran. Some of the country’s largest lakes have
shrunk as dams were built and farmers diverted water for crops. Dust blowing from dessicated
water bodies adds to air pollution.
Iran is located in a “belt of drought and dryness, which has been intensified due to climate
change,” Ebtekar said. The country faces “very difficult environmental circumstances,” she said.
“We’re looking for a revolution” in water consumption patterns, Ebtekar said.
Air pollution worsened in 2010 after the U.S. tightened sanctions imposed on Iran over its nuclear
work.
The restrictions prevented global companies from selling refined oil products to Iran, at the time
reliant on imports for as much as a third of its gasoline consumption. In response, Iran started
producing low-quality fuel at its petrochemical complexes.

Metro Trip
Ahvaz, the capital of Iran’s southwestern oil-producing Khuzestan province, was ranked the most
polluted city in the world based on data for so-called PM10 particulates, released by the World
Health Organization in 2011.
In January, sandstorms exacerbated the problem, canceling flights and forcing people indoors.
Residents began a Twitter campaign with the hashtag #Khuzestancantbreath, posting photos of
the yellow air shrouding the city.
“The ground dried up and the sky became dirty,” one local wrote in a December article in the
Tehran-based weekly Tejarat-e-Farda. Lawmakers representing Khuzestan donned face masks in
a protest inside parliament.
There are signs top officials are aware of the need for action. In January, Rouhani, his foreign
minister Mohammad Javad Zarif and other officials promoted the annual clean air day by traveling
in Tehran’s metro.
Phased Out
By lowering some subsidies, the government has reduced fuel consumption, while Iran may have
been able to source higher-grade gasoline from Asian nations, according to recent reports.
The sale of the heavily polluting cheap gasoline “has been totally phased fazed out, the levels of
benzene and other aromatic compounds in ambient air have decreased,” Ebtekar said in the
interview, speaking in English.
Rouhani’s government has put environmental issues “very high on its agenda” and has achieved
“a lot of momentum,” Ebtekar said. “But the more we move ahead, the more we see how much we
had fallen behind.”

BP ex-chief Browne to run Russian oligarchs' oil venture
Reuters + NewBase
John Browne, the former chief executive of BP, will take charge of a $10 billion oil and gas venture
backed by Russian billionaire Mikhail Fridman to help it expand internationally through
partnerships and acquisitions, the Financial Times
reported.
Browne told the newspaper he will be appointed executive
chairman of L1 Energy on Monday, giving up his jobs at
private equity firm Riverstone and UK gas explorer
Cuadrilla.
The appointment comes as L1 Energy, backed by
investment funds owned by Fridman and his partner
German Khan, prepares to complete as early as next week a 5 billion euro ($5.60 billion) deal to
buy RWE Dea, the oil and gas arm of German utility RWE.
The acquisition is a rare development since Russian firms have struggled to expand abroad over
the past year due to US and European Union sanctions imposed on the country for its actions in
Ukraine.
Fridman and Khan plan to turn L1 Energy into a global oil and gas player, using $14 billion in
proceeds from the 2013 sale of their stake in Russian oil producer TNK-BP to state-owned
Rosneft.
Browne led BP from 1995 to 2007 and was one of the architects of TNK-BP, Russia's third largest
oil producer at the time, in which BP owned 50 percent.
Before agreeing to form TNK-BP, Browne and the oligarchs a endured a rocky relationship for
several years because BP had effectively accused the Russians of stealing its assets.
L1 Energy will be capitalised with $10 billion of equity from LetterOne and also be funded by debt.
The intention, said Browne, was "to build great partnerships" and "create something with lasting
value" using Dea, which owns UK North Sea assets, as a platform.
"The first thing we will do is look in Dea's areas of expertise to see where we can expand in those
areas," Browne told the FT.
"Secondly, we will look at
the whole of North America
to see what can be done
and with whom we can
partner there. Then we will
look around the rest of
world."
The FT did not say how
much Browne would be
paid. His role at L1 could
help overcome certain complications in the UK. L1 has been seeking a letter of comfort from the
government to make sure its newly acquired assets in the North Sea are not seized if additional
sanctions are imposed on Russia.

Oil Price Drop Special Coverage
Oil sails from Russia to Asia faster on smaller ships
Bloomberg + NewBase
With supertankers booked solid carrying cheap crude, smaller vessels are taking advantage of the
opportunity by hauling record volumes of Russian oil to Asia.
Aframax ships that ply the route between the Russian port of Kozmino and North Asia in three
days, compared with journeys of a month for supertankers from the Middle East, are carrying the
most ever East Siberian Pacific Ocean Pipeline oil to China, South Korea and Japan. The demand
has pushed ESPO’s price to the highest since July versus benchmark Dubai crude, according to
industry consultant KBC Energy Economics.
Oil buyers are hiring 30% more Aframax tankers compared with last year’s average, potentially
benefiting owners including Mitsubishi Corp, Hin Leong Trading and Sinokor Merchant Marine Co.
The glut that drove global prices down by about half lifted demand for stockpiling at sea in the
biggest vessels, pushing their rates in December to the highest for any month since January 2010,
and more than double those for the smaller ships.
“Russia is sending more and more crude to Asia at the expense of Europe, while interest in
offshore storage has returned and freight rates have increased,” Ehsan Ul-Haq, a senior market
consultant at KBC in Walton-on-Thames, England, said by phone.
Stronger demand for Russian crude helped ESPO fetch as much as $3.50 a barrel more than the
benchmark Dubai grade for cargoes loading in March, according to data compiled by Bloomberg,
up from a $2 premium in January.
A total of 26 cargoes of ESPO crude, or a record 615,000 bpd, are scheduled to be shipped in
An oil tanker is docked at a pier at Kozmino port in the Russian Far East. With supertankers
booked solid carrying cheap crude, smaller vessels are taking advantage of the opportunity by
hauling record volumes of Russian oil to Asia.

March, according to a loading schedule obtained by Bloomberg. That’s 30% more than a monthly
average of 20 loadings last year, data show.
An Aframax sailing from Kozmino to Japan’s Chiba port was fixed at a rate of 90 cents a barrel
this month, little changed from what it cost in October, according to Seatown Shipbroking. The
price for hiring a supertanker from the Arabian Gulf to Japan surged to a five-year high of $2.38 a
barrel in December, compared with $1.34 in June, before the collapse in oil prices began, data
compiled by Bloomberg show. The rate has averaged $2.20 this year.
Front-month futures for Brent, the benchmark for more than half the world’s crude, averaged
$5.56 a barrel below six-month contracts during January, compared with a $2.77 premium in
June, data compiled by Bloomberg show. This market structure, known as contango, may make it
worthwhile for traders to store oil and petroleum products to sell later.
Vitol Group, Koch Industries, Royal Dutch Shell and Trafigura Beheer have booked tankers that
could be used to store crude at sea for one-year charters, according to reports from shipbrokers
including Optima.
As many as 35 tankers were booked for time charters with capacity to store as much as 66mn
barrels of oil, according to three shipping reports compiled by Bloomberg. More than half of the
vessels were fully fixed for periods of six months to two years.
Spokesmen at Sinokor Merchant Marine, Hin Leong and Mitsubishi, shipping and trading
companies that operate vessels on the Kozmino-to-Northeast Asia route, declined to comment on
the tanker market.
Russia built the ESPO pipeline, a 3,000-
mile link from the Siberian town of Taishet
to Kozmino on its east coast to supply more
crude to Asia as demand from traditional
markets in Europe slowed. The port loaded
its first cargo in 2009, while the pipe was
completed in 2012.
“Asia is the only market that is witnessing
any increases in oil demand,” said Hong
Sung Ki, a commodities analyst at
Samsung Futures in Seoul. “With Russia
and Opec producers both eyeing the Far
East, the price war has begun for bigger market share and we’re likely to see more and more of
it.”
Russia boosted sales of its crude to China, Japan and South Korea by 25% last year, increasing
its portion of shipments to 8.7% from 7.2% in 2013, according to government data compiled by
Bloomberg.
The proximity of the Kozmino port to Asia presents ESPO with a benefit versus Middle East crude,
which takes about a month to arrive in the Far East. “For the Russian grade, immediate demand
from the regional refiners could be met because of the geographical advantage,” the Korea
Petroleum Association, a Seoul-based group that represents the country’s refiners, said in an e-
mail. “As a result, we’re seeing the crude getting more and more attention.”

Crude’s Slump Seen Causing Indonesia to Miss Biofuel Target
Bloomberg + NewBase
Indonesia’s goal of boosting use of biodiesel made from palm oil by more than doubling subsidies
is being threatened by the slump in crude prices.
Consumption of
subsidized palm
biodiesel may
miss the 1.7
million kiloliter
target for 2015,
according to
Derom Bangun,
chairman of the
Indonesian Palm
Oil Board. The
biggest producer of palm oil would need 1.5 million metric tons to meet that goal, he said. That
compares with 800,000 tons used last year, PT Mandiri Sekuritas, a broker in Jakarta, estimates.
The collapse of crude oil amid a global surplus has led a decline in fossil-fuel costs that’s cut the
appeal of producing energy from plants. Indonesia’s new government led by Joko Widodo
approved an increase in the biodiesel subsidy last month, spurring analysts including Mandiri to
forecast the change would help to raise domestic palm oil use at a time of expanding output and
weaker demand from buyers such as China.
“It’s a hard time for biodiesel producers,” Bangun said in an interview on Feb. 18 at the Jakarta
headquarters of the group, which represents everyone in the industry from growers to makers of
cooking oil and chemicals. While the increase in the subsidy will add to the appeal of biodiesel,
demand will be sluggish because of pressure from low crude prices, he said.
Palm futures on Bursa Malaysia Derivatives, where the benchmark contract trades, lost 16
percent to 2,352 ringgit ($649) a ton over the past year as Brent crude sank 44 percent to $62.22
a barrel. Palm surged the most in four years on Feb. 5 after the subsidy increase to 4,000 rupiah
(31 U.S. cents) a liter from 1,500 rupiah. Prices rallied on Monday after China interest cut rates
and the ringgit fell.
Rising Supplies
Indonesia has promoted biofuel usage to help absorb rising supplies of the world’s most-traded
edible oil, which is used in foods and cosmetics, and to cut carbon emissions. Biodiesel is blended
with regular diesel, produced from crude oil, for use as a transportation and industrial fuel.
The country in 2013 boosted the mandated amount of blending in diesel to 10 percent from 7.5
percent, and in 2014 ordered power plants to mix 20 percent. The 1.7 million kiloliter target
represents 10 percent of projected consumption of subsidized diesel, according to the energy
ministry.
Total consumption of palm biodiesel may reach 2.2 million kiloliters this year if non-subsidized
usage is included, the Indonesia Biofuel Producers Association estimates.

Biodiesel policies in Indonesia will help determine the direction of palm oil prices, which will climb
if they are implemented in full, Godrej International Ltd. Director Dorab Mistry told a gathering in
November. Mistry is due to speak at a palm and lauric oils conference in Kuala Lumpur on
Wednesday.
Demand Outlook
“Biodiesel is uneconomical at the moment,” said Togar Sitanggang, secretary-general of the
Biofuel Producers Association. Demand for subsidized palm biodiesel may be as low as 1 million
kiloliters this year unless the government comes up with a new formula to set the prices used in
buying tenders by the state oil company, PT Pertamina, he said.
The subsidy increase should make the B10 mandate feasible and boost palm oil demand by
900,000 tons this year, Hariyanto Wijaya, an analyst at Mandiri Sekuritas, a unit of Indonesia’s
biggest bank by assets, said in a report on Feb. 5. Indonesia may produce 31 million tons of palm
oil this year, up from 29.5 million tons in 2014, according to estimates from Bangun.
“We will see just how far the government is committed in enforcing the B10 mandate,” Sitanggang
said in a phone interview on Feb. 24. “Everyone is waiting for the new price index to be
immediately imposed in March.”
The new formula will be based on the price of crude palm oil plus biofuel production costs, Dadan
Kusdiana, bioenergy director at the energy ministry, said Feb. 10. The government previously
used the Mean of Platts Singapore, or MOPS, diesel price, plus 3.48 percent as a reference in
tenders, he said.
“It will be hard to meet the 1.7 million kiloliter target with the low price of crude oil,” Bangun said.
“The government may face problems delivering it.”

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 25 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 02 March 2015 K. Al Awadi

New base 551 special 02 march 2015

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