New base 581 special 13 april 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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NewBase 13 April 2015 - Issue No. 581 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
How competitive is solar energy versus fossil fuels?
Mohamed Alammawi + NewBase
WE all know solar energy is the cleaner choice, but you can’t blame an investor for wondering if
it’s the more competitive option. It’s a popular question, and while
we’re at it, here are a few more that echo down the industry’s
corridors with some regularity: Can the solar industry sustain itself if
you subtract government subsidies from the equation? And, is
worldwide grid parity a reality, or an elusive, somewhat fanciful
projection?
These questions gain significance in light of Solar Impulse 2, the
world’s first solar-powered aircraft capable of flying during the day
and the night without consuming a single drop of fuel, setting off on it’s historic around-the-world
flight earlier this month from Abu Dhabi. And while solar-powered planes may not be ready for
commercial deployment just yet – Solar Impulse 2 can carry only two people at a time and hit a
top speed of just 43 miles per hour; in contrast, the world’s most widely used commercial jet, a
Boeing 747-400 can carry over 400 people at a time and achieve a top speed of 570 miles per
hour – it’s still an impressive feat,
with many spillover benefits.
More specifically, the Solar
Impulse 2’s engines have had to
be engineered to be extremely
energy-efficient – the four motors
on the plane only lose about 3%
of their energy as waste heat,
whereas conventional motors
lose about 70% – and this new
efficiency grade spurs
advancements in the solar
applications industry.
But back to the competitiveness
of solar energy: through the last
decade, intense, properly funded R&D initiatives, innovations in manufacturing processes, leaner
supply chains, lower interest rates and improved economies of scale, have fuelled an upswing in
the solar industry.
In fact, the International Energy Agency, which has historically taken a conservative approach to
evaluating solar power’s prospects, has projected that by 2050, in a best-case scenario, solar
energy could potentially be the single biggest source of power, generating as much as 27% of the

world’s electricity. Meanwhile, German financial services firm Deutsche Bank recently predicted
grid parity in 80% of the global market by 2017, meaning that soon solar energy costs will be at
the same level as conventionally produced electricity or even below in most parts of the world.
This is because grid-based electricity prices are rising across the world, while solar costs are still
falling.
Competing with fossil fuels
In its landmark report Renewable Power Generation Costs in 2014, the International Renewable
Energy Agency (IRENA), housed in the UAE’s increasingly green energy-conscious capital Abu
Dhabi, revealed solar PV module costs have fallen 75% since the end of 2009, and the cost of
electricity from utility-scale solar PV has fallen 50% since 2010.
Today, unsubsidized rooftop solar electricity costs between $0.08 and $0.13 per kilowatt-hour of
capacity (KWh), or 30% to 40% below the retail price of electricity in many markets globally, as
per IRENA.
As a result of plummeting manufacturing expenses, solar energy is now competitive with the
wholesale price of electricity even in the Middle East, where solar power has to compete with
naturally abundant fossil fuel-fired electricity generation.
To put this into perspective, as per figures published by the Middle East Solar Industry Association
(MESIA), only 70 megawatts (MW) of solar photovoltaic system (PV) projects were awarded
across the region between 2007 and 2013. But in 2014, that figure climbed to 287MW – an
impressive fourfold increase within just a year.
Saudi Arabia, in an effort to counteract the nation’s escalating domestic usage of fossil fuels – the
opportunity cost of which is evident in the mounting deficit in international sale – stands out as the
largest potential market for solar energy in the region. The Saudi Arabian government, therefore,
to reduce its potentially crippling dependency on oil and gas for electricity production, created the
King Abdullah City for Atomic and Renewable Energy (K.A.CARE), an entity now charged with

building a sustainable future for the country, and in turn the region, through renewable and
alternative energy programs. K.A.CARE recently estimated 23,900MW of renewable energy
installed by 2020, and announced an ambitious target of 54GW of renewable energy by 2032.
The Dubai Integrated Energy Strategy 2030 to diversify energy sources had initially set the
percentage of renewable energy in Dubai's energy mix to be 1% by 2020, and 5% by 2030. But at
the World Future Energy Summit 2015, the Dubai Electricity and Water Authority (DEWA)
announced increased targets of 7% by 2020 and 15% by 2030, with claims that energy generated
by photovoltaics – or solar panels – in 2016 will be enough to power more than 700,000 homes.
Crystalline versus thin-film
Ensuring the cost competitiveness of solar energy entails selecting the right technology, or in this
case, the composition. In contrast to traditional crystalline solar technology, in thin-film solar
technology the semiconductor is deposited on a glass substrate. This technology is named for the
fact that the conductive layer is about 90
times thinner than in crystalline technology.
Simply put, thin-film photovoltaic cells can
convert sunlight into electricity with much less
material than conventional crystalline silicon
solar cells, resulting in a potential for lower
material cost. Additional advantages of thin-
film PV modules include possible
improvements in production yields and field
performance.
Conventionally, the limiting factor for thin-film
solar technology has been efficiency grade when compared to crystalline solar technology, but
advancements in manufacturing processes are now nudging this gap shut.
Specifically, the efficiency of thin-film modules when mass-produced is at a level comparable to
that of multicrystalline solar cells; the Centre for Solar Energy and Hydrogen Research Baden-
Wuerttemberg (ZSW), secured the world record in efficiency grade for thin-film solar technology –
an unprecedented 21.7% – and the goal with thin-film technology is to transfer lab efficiencies to
mass production.
BIPV growth
Building-integrated photovoltaics (BIPV) incorporate photovoltaics as an integral building
component, such as part of the roof or the façade of the building. It does not entail unnecessarily
complex planning and architectural challenges as initially assumed. Today, a BIPV project can be
a synergy of architectural design and functional properties. And although solar modules are
preferably installed on roof surfaces due to good irradiation values, façade surfaces have
enormous potential.
Global BIPV revenue to photovoltaic manufacturers is expected to increase to $1.9 billion by

2019, equaling a compound annual growth rate of 6.4% for the five-year period of 2014 to 2019.
Façades are the most significant market segment in 2014 and will maintain that position through
to 2019.
The big advancements in the BIPV industry have been powered by thinner cells, lighter modules
and the ability to incorporate hard surfaces into standard-sized external building components such
as roof tiles, cladding, curtain walls, windows, skylights, breezeways and so on. Another
contributing factor is the ability to incorporate individual designs into the module by the printing
preferred patterns such as arabesque.
Initially also dubbed an environmental ‘extra’ and a way to upgrade green building ratings, new
research from Abu Dhabi suggests that building integrated photovoltaics are not just a green
luxury item. The recent Middle East-based study found that governments and builders might
consider the expense of BIPV because in hot, sunny regions like the UAE, these solar panels can
slash energy costs by as much as 33%.
In fact, the installation of BIPV in a typical residential home in the Gulf can provide an average
electricity surplus of 25,000kWh a year, after meeting electricity needs, and reduce household
energy bills by at least 25%.
The estimated of $1.17 billion worth of construction projects across the MENA region over the
next decade will create a massive increase in energy demand –already growing at between 7 to
8% a year – and solar is emerging as a key power source to sustainably meet these supply
challenges.
Meanwhile, the development
of technologies to store
electricity – in particular,
batteries – has also furthered
solar power’s development.
Without storage, solar power
can be harnessed only when
the sun is shining; with
storage, it can be used at any
given time. The costs of
battery storage have declined
by about 70% over the last
five years, and are projected
to decline another 70% in the
coming decade.
So there you have it: while
coal, natural gas and nuclear
power, which today supply
approximately two-thirds of
global power, are not about to fade away overnight, technological jumps, widespread adoption
and robust projected growth rates in the solar sector have, in spite of modest rates of market
penetration, brought about a marked shift in the economies of electricity. It would not be surprising
if future housing developments, office buildings and public spaces such as shopping complexes,
especially in the sunshine belt of the Middle East, were built incorporated with solar modules – the
onset of the solar power age is definitely gathering momentum.

UAE: Dewa to invest Dh30b to increase solar park capacity
Gulf News + NewBase
Dubai Electricity and Water Authority (Dewa) will invest Dh30 billion to increase the capacity of
Shaikh Mohammad Bin Rashid Al Maktoum Solar Park, Saeed Al Tayer, managing director and
CEO of Dewa said on Sunday.
Currently the park is generating a 13 mega watts (MW) of
electricity. “The Solar Park is one of the largest renewable
energy projects in the region with a planned capacity of
1,000MW by 2019, at a cost of Dh12 billion and by the
completion phase in 2030 its capacity will be increased up to
3,000MW at a cost of Dh30 billion,” Al Tayer said. According
to Dubai Integrated Energy Strategy 2030, solar energy will
account for seven per cent of Dubai’s total energy production
by 2020 and 15 per cent by 2030.
Al Tayer was speaking at a press conference to announce the upcoming opening of the Water,
Energy, Technology and Environment Exhibition (Wetex 2015), which will be held from April 21-23
at the Dubai International Convention and Exhibition Centre.
Further investment
In line with Dubai Integrated Energy Strategy 2030, which encourages research and innovation,
Dewa also announced opening of the Research and Development Centre, which will focus on
innovative projects, and which has a budget of Dh150 million, according to Al Tayer.
This centre will focus on projects related to solar energy, renewable energy, energy efficiency,
desalinating water via solar energy and smart grid, Al Tayer said. An experimental section is also
running side by side with the centre and includes input from the world’s top 20 companies in the
field of energy, he said.
Currently Dewa has a joint venture with RWE Technology Gmbh, a German company specialising
in building power plants and consulting on utility projects worldwide. “This partnership aims to
develop the leading service company for energy consulting in the region,” he said.
Dewa has already won contracts in Saudi Arabia and Turkey and is exploring the Egyptian market
for any possible investment opportunity, Al Tayer said.

Smart initiative
Dewa has also allocated Dh7 billion for implementing a smart grid in the aim to raise the level of
energy efficiency across the emirate, Walid Salman, the executive vice president of strategy and
business development at Dewa, said.
The smart grid is an electrical grid that uses communications technology to gathers information,
such as data about the behaviour of suppliers and consumers, in an automated fashion to improve
the efficiency, reliability, economics, and sustainability of the production and distribution of
electricity.
“Through this initiative, Dewa will roll-out a smart grid technology to upgrade around 100,000 old
buildings in Dubai to enhance energy efficiency, save power and protect the environment,”
Salman said.
“This will imply a fundamental re-engineering of the electricity services industry, although typical
usage of the term is focused on the technical infrastructure,” he said.

Iran-Oman gas project reportedly hits a snag
TIMES of Oman NEWS + NewBase
A project to build a 260-km below-sea pipeline to carry Iranian gas to Oman has reportedly hit a snag,
despite earlier signs that the project was moving ahead. Hamid-Reza Araqi, managing director of the
National Iranian Gas Company, was quoted on
Saturday as saying that construction has not
yet begun.
"There has been no progress in the
negotiations, as yet," said Araqi, whose
company is in charge of Iran's gas export
projects, Iran's Press TV reported.
Negotiations under way
Negotiations over the export of gas to Oman
are still under way at the Ministry of
Petroleum, and once the talks are finalised, the
Oman pipeline contractor will begin work,
Araqi said.
Iran's Afkar News has reported that a key
point of dispute between Iran and Oman is the
pricing formula, while Omani officials have
cited international sanctions on Iran as the
reason for the delay in beginning construction
of the pipeline. The agreement was signed
during the visit of Iranian President Hassan Rouhani to Muscat in March 2014. The proposed pipeline
would connect the Iranian province of Hormuzgan to Sohar in Oman.
The agreement was signed following the signing of a Memorandum of Understanding (MoU) during His
Majesty Sultan Qaboos bin Said's visit to Tehran in August 2013. At the time, Iranian Oil Minister Bijan
Namdar Zanganeh said that Iran would begin pumping natural gas to Oman by 2015.
In a recent interview with Reuters, Yousuf bin Alawi bin Abdullah, Oman's Minister Responsible for
Foreign Affairs, said that more talks are needed if progress is to be made on the agreement. Oman has been
pressured in the past by the United States to purchase fuel from alternative suppliers, such as Qatar,
according to US embassy cables released by Wikileaks.
"Of course, discussions are taking place, in light of our need for more gas for our own industry and power
generation. But, also, we are aware of the sanctions placed on the Iranians," Alawi said, referring to
international curbs on trade with Iran over its nuclear programme.
"It will take time, but definitely if the whole thing is smooth we would require (investment) in that," he
added. Earlier, Salim Nasser Said Al Aufi, undersecretary of the Ministry of Oil and Gas, also indicated
that the project was facing challenges due to international sanctions on Iran.
"We need to agree exactly in which direction the pipeline is going. We need to finalise the feasibility study.
We need to make sure that whoever is doing the study is not impacted by the sanctions on Iran, and so on.
So, it is not an easy project," he told Times of Oman in August last year.

India, Mozambique to Deepen Energy Cooperation
Asia Gas + NewBase
India and Mozambique have agreed to deepen cooperation in the field of oil and gas.
Indian Petroleum and Natural Gas Minister Dharmendra Pradhan visited Mozambique 9 to 10
April 2015.
The meeting with Mozambique Mineral Resources and Energy
Minister Pedro Couto, Foreign Minister Bloi and Prime Minister
Agostino Rosario and discussed Indian investment in Mozambican
hydrocarbon sector and ways to further enhance energy
cooperation.
Indian state owned energy companies BPCL, OVL and Oil
India already own significant stake in gas field offshore the East
Africa nation. OVL along with Oil India bought 10 per cent stake in
Mozambique gas asset from Videocon Industries for $2.48 billion
in June last year.
OVL acquired another 10 per cent stake in the field from Anadarko
Petroleum Corp for $2.64 billion. BPCL also holds 10 percent
stake in an offshore gas asset. Last November, India and Mozambique signed a memorandum
of understanding (MoU) to enhance bilateral cooperation in the field of natural gas and oil.

Ghana oil refinery now a symbol of economic woes
Reuters + Oman Observer + NewBase
When it opened in 1963, Ghana’s oil refinery symbolised pride and hope for the first African
country to escape colonial rule. Now the plant stands idle in a sign of the economic shadow that
has crept over one of the continent’s brightest stars.
The discovery of oil in Ghana in 2007, added to its gold and cocoa wealth and its other major
asset, stable democracy, gave it a chance to start catching up with oil giant Nigeria and regional
West African economic powerhouse Ivory Coast. The year after oil began flowing in 2010
economic growth spiked
to 14.8 per cent, one of
the highest rates in the
world.
Now, however, the
country faces high levels
of public debt, a currency
that has fallen sharply, a
yawning budget deficit
and inflation that recently
rose as high as 17 per
cent. Chronic power
shortages have led to
lengthy rolling blackouts,
angering voters and
raising business costs.
The growth that propelled
Ghana to official ‘middle
income’ status in 2010 is
forecast at a modest 3.9
per cent this year, lower
than the average for sub-
Saharan Africa.
Economists say Ghana’s prospects are still bright over the medium-term but only if it quickly
restores fiscal stability. The 45,000 barrel-a-day Tema Oil Refinery east of Accra is a case in
point: it played a key role in Ghana’s oil sector for decades, but was subsidised by the
government.
In practice some of those payments were not made, leaving it in debt. A mechanical fault has now
put it out of action for a month. To stabilise the economy, the International Monetary Fund last
week agreed to a $918 million aid programme that also aims to help increase tax collection and
strengthen central bank policy.
The sagging economy presents an opportunity for the opposition New Patriotic Party, whose
leader Nana Akufo-Addo blames the National Democratic Congress government for the problems.
Akofo-Addo lost narrowly to President John Mahama in 2012 and is set to run against him again
next year in what is likely to be a close election between two parties with government experience

and similar ideological stances. “None of these problems really originate with this government.
But each step of the way the government has acted to make things worse rather than better,” said
Joe Jackson, director of business operations at Dalex Finance, a non-bank financial institution
based Accra.
Mahama’s government defends its record and says mid-term prospects are healthy as fresh oil
and gas finds come on stream from two offshore fields in the next few years. It blames the
economic problems on lower global commodity prices and says it has a plan to restore growth and
stability.
“Government will continue to work tirelessly to ensure that these positive prospects as well as our
macroeconomic stability and socio-economic objectives are not derailed,” Finance Minister Seth
Terkper said.
WILL IT BE MISSED?: The IMF deal is key to a plan to secure a bridge financing loan in the first
half of this year followed by a Eurobond. It should also help unlock donor budget support.
But investors and economists say it is not a fail-safe route back to fiscal health.
“It will depend on implementation,” said Moody’s analyst Elisa Parisi-Capone. ‘‘We need to see
how authorities progress in terms of fiscal consolidation.” Ghana has struggled to implement past
IMF programmes, especially in the run up to elections.
Public sector wages ballooned in the 2012 election year, pushing the budget deficit to a huge 12
per cent of GDP. Moody’s downgraded Ghana’s sovereign rating last month in a move that took
into account of the IMF agreement. At the same time, the deal requires civil service reform to
reduce the wage bill — a move that could lead to conflict with powerful unions.
“The speed of cuts in the public sector will likely proceed at a much slower pace than required by
the IMF,” Teneo Intelligence, a business consultancy, said in a research note. With all that, the
irony of the refinery breakdown may be how little it will be missed by an economy that has shifted
radically from state-dominated vision of Kwame Nkrumah, elected Ghana’s first president after
independence from Britain in 1957.
Most of Ghana’s fuel needs these days are imported as finished product, not crude, and the
refinery processes none of the roughly 100,000 barrels per day of oil produced by the Jubilee
offshore field, operated by Britain’s Tullow.
Last year, the refinery processed just 18 per cent of Ghana’s 3.7 million metric tonnes of fuel
imports, according to Ghana Chamber of Bulk Oil Distributors figures. “The Tema close down will
have no bearing on fuel supply because it has not really been an active player in Ghana’s fuel
supply in a long while,” said the head of an oil import firm.
Mahama last year said the government was seeking an external partner for the refinery amid talk
of a deal with Saudi Arabia’s Petro Saudi but no deal has been finalised.

UK: Ithaca Energy announces successful flow test on final Stella
field development well. Source: Ithaca Energy
Ithaca Energy has announced the successful completion of flow test operations on the fifth and
final development well on the Stella field, with the well achieving a flow rate of over 8,000
barrels of oil equivalent per day ('boepd').
Well 30/6a-A3Y ('A3') is the
fifth development well drilled
on the Stella field. The well
was drilled to a total
measured depth subsea of
14,267 feet, with a 2,137 foot
gross horizontal reservoir
section completed in the
Ekofisk chalk reservoir, the
secondary reservoir
underlying the primary Stella
Andrew sandstone formation
in which the first four Stella
wells have been drilled. The
Ekofisk well intersected a net
reservoir interval of 2,073
feet, equating to 97% net pay.
A clean-up flow test was performed in order to remove the chemical stimulation fluids injected to
enhance the natural fracture network of the chalk formation and improve the long term production
performance of the well.
Following the initial clean-up period, a series of production flow tests were conducted on the well
over approximately five days in order to obtain additional data and fluid samples to assist with
future reservoir management. The well was flowed at rates up to 7,172 barrels of oil per day
('bopd') on a 48/64 inch choke, with a gas/oil ratio of approx. 1,850 standard cubic feet per barrel
('scf/bbl'). The average flow rate over a 12 hour period was 8,080 boepd, comprising 6,191 bopd
and 11.3 million standard cubic feet per day ('MMscf/d'). Fluid samples show that the oil gravity is
approx. 39°API.
The A3 well is currently in the process of being suspended and operations are scheduled to be
completed in the coming days. As with the previous Stella development wells, the suspension
configuration is such that the well can be brought on to production without the requirement for
any further well intervention activity once the 'FPF-1' floating production facility is on location
and hooked up.
Upon completion of operations on the A3 well the ENSCO 100 drilling rig will be demobilised
from the field, marking the end of the Stella development drilling campaign. The five Stella wells
that have been drilled have achieved a combined maximum clean-up flow test rate in excess of
53,000 boepd (100%). This well capacity significantly de-risks the initial annualised production
forecast for the Greater Stella Area hub of approx. 30,000 boepd (100%), 16,000 boepd net to
Ithaca.

Indonesia: KrisEnergy awards FEED tender for Indonesia gas project
Source: KrisEnergy
KrisEnergy has awarded the front-end engineering and design ('FEED') contract for
the Lengo gas development offshore East Java in Indonesia, and has commenced
geophysical and geotechnical surveys at the platform site as well as along the proposed
platform-to-shore pipeline route and onshore receiving terminal location.
The Lengo gas accumulation is located in the Bulu production sharing contract ('PSC'), which
covers 697 sq. km over the East Java Basin in water depths of 50 to 60 metres. The
development plan was approved by the Indonesian authorities in late 2014 and comprises four
development wells, an unmanned wellhead platform and a 20-inch, 65-km export pipeline to
transport the gas to shore. The Company is in negotiations over gas sales and production is
expected to begin approximately 24 months after the joint-venture partners declare final
investment decision. The field will produce 70 million cubic feet per day at plateau.
Indonesian-based survey contractor, Java Offshore, has commenced the geophysical and
geotechnical surveys and PT. Synergy Engineering was awarded the engineering services
contract for the Lengo FEED.
Chris Gibson-Robinson, Director Exploration & Production commented:
The Lengo gas development marks the first step in the Company’s ambitions to create a gas
aggregation hub offshore East Java, where it is also the operator of the adjacent East Muriah
and Sakti PSCs.KrisEnergy holds a 42.5% operated working interest in the Bulu PSCand is
partnered by AWE Limited with 42.5%, PT Satria Energindowith 10% and PT Satria
Wijayakusuma with 5%.

Oil Price Drop Special Coverage
Oil recovery capped as gold strikes back
Saudi Gazette + NewBase
Commodities were lower for the first week in four as losses in the agriculture sector, led by grains,
more than offset gains made in energy. The dollar resumed its ascent rising by more than 3% as
minutes from the latest Federal Open Market Committee meeting (surprisingly enough) left the
door open for a June rate hike. This returned focus to the big central bank divergence currently
being seen across the globe, Head of Commodity Strategy at Saxo Bank Ole Sloth Hansen said in
a weekly report.
While the US is gearing up for a rate hike later in 2015, some 28 other global central banks – not
least the European Central Bank – have all eased monetary conditions so far this year. As a
result, the dollar resumed its ascent following a three-week pause and this helped create some
additional headwind for commodities.
This was particularly obvious in grains, where US farmers already dealing with huge inventories
are finding it increasingly difficult to compete for orders on the global market. Gold was one of the
better performers, not least when measured in euros as it shrugged of the prospect of a potential
earlier-than-expected rise in US interest rates.
Speculative short selling interest in gold futures recently reached a record high and following the
failure to break below $1180/oz some short covering has helped drive the metal back to $1200/oz.
This represents the middle of its current range between $1175/oz and $1225/oz.

Holdings in exchange-traded products backed by physical gold were sharply reduced during
March, but this week saw the largest daily increase in more than six weeks. This could indicate
some renewed interest for bullion exposure following the discovery of support at $1180/oz.
Gold priced in euros rose to its highest level since January as investors continue to look for
alternatives to European assets. The Eurozone, of course, has seen secure government bond
yields trading at negative rates and stocks rally by more than 20% so far this year.
A potential recovery in oil prices remains unsupported by Opec as the total March production –
according to Bloomberg estimates – breached the 31 million barrel mark for the first time since
August 2013.
With Iraq, Iran and Libya all raising production during a month where Saudi Arabia, according to
its own data, produced a record 10.3 million barrels per day, the cartel's stated target of 30 million
barrels has now been breached for the past 10 months in a row.
Doubts about how quickly a deal over Iran's nuclear program can be solved provided some
support to prices after Iranian supreme leader Ayatollah Ali Khamenei demanded that all
sanctions on Iran should be lifted on the same day as any final agreement was reached. The US
opposes this, with its position being that sanctions will only be removed gradually.
Last week, US crude inventories jumped by the largest increment since 2001 as 10.9 million
barrels were added to already ballooning stockpiles across the country. Since January some 100
million barrels have been added to total inventories.
With production once again picking up after a drop the previous week, market participants are still

left guessing about when a 50% reduction in rig count (since last October) will finally begin to have
a negative impact on production.
The EIA and other major forecasters expects this turnaround only to be weeks away now, and
once it kicks off we could see US production begin to slow from the current level of 9.4 million
b/day towards 9 million
by year-end.
WTI crude reached a
one-month high above
$54/b (thereby
completing a 22% rally
since March 18) before
the aforementioned
headwinds triggered
some renewed selling.
For now, this leaves WTI
crude stuck in amajor
trading range either side
of $50/b.
The pressure on spot
crude from oversupply,
especially in WTI crude,
remains elevated with
the prompt spread
between the May future
and the next widening to $1.7/b representing a cost of 3.5% when rolling long positions.
On the basis of US inventories remaining elevated for the foreseeable future, this should apply
renewed downside pressure on WTI crude relative to Brent crude. The spread contracted to a
two-month low at $5/b this week, and from these levels it could easily expand outwards again.
The tender beginning of US LNG exports later this year can not come soon enough for US
producers, who witnessed another horrid week in terms of price performance.
The cost of prompt month natural gas fell to just $2.52/therm, a level that was last seen during the
summer of 2012. Mild weather in the Eastern US led to another week of lower than expected
consumption, which in turn led to a larger than expected jump in weekly inventories.
With producers from the various shale fields – not least Marcellus and Haynesville – continuing to
produce record amounts of gas, the price has now fallen by almost half since last June and it is
forecasted to drop even further over the coming months as the injection season kicks off in
earnest.
The Sabine Pass LNG facility in Louisiana will ramp up production of exportable LNG later this
year and as the chart below from Stratfor shows, several other facilities are currently under
construction and will be ready to begin production starting in 2017.
Exports will, in other words, not help offset the current pace of production anytime soon and that
leaves the price risk skewed to the downside for now.

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 09 April 2015 K. Al Awadi

New base 581 special 13 april 2015

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