New base 687 special 15 september 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,
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NewBase 15 September 2015 - Issue No. 687 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Qatari Nebras Power signs deal for 500MW project
in Indonesia
By Gulf Times Peter Alagos
Nebras Power and Indonesia’s electricity corporation, PT PLN (Persero), have signed an
agreement for the construction of a 500 megawatt gas-powered power plant in Northern Sumatra.
Nebras Power chairman Fahad bin Hamad al-Mohannadi did not reveal specific details of the
project but told Gulf Times that the two companies were “still in the finalisation phase of
negotiations on the uptake of the contract and the fuel supply agreement”.
“It is still in the early stages, which is why we cannot quantify the investment. But the project is a
full chain starting with the 500MW power plant, which is around $300mn. In addition, there will be
a distribution system for gas and also a gas receiving terminal,” al-Mohannadi explained.
He added: “At this stage, we do not have the exact figures but this agreement would get the ball
rolling towards developing the strategy of investments in Indonesia.”
Citing Indonesia’s plans to generate 35,000MW over the next five years, al-Mohannadi said
Nebras was open to plans of increasing the power plant’s capacity. “This will all happen in time if
we are successful in developing our project correctly and if we create a good ground for further
relations,” he said.
Asked about the timeframe of the project, al-Mohannadi noted, “There is an indication from them
that they want the power plant to be ready by 2019; that is the target but at this stage there is still
no definite timeframe.”

In a speech, Indonesian President Joko Widodo stressed that Indonesia was focused on
improving its infrastructure. The government, he added, has also increased its education budget
to “refocus” on human capital.
Widodo also encouraged the Qatari government, particularly the business community to take part
in Indonesia’s mega projects that are now in the pipeline. These include some 24 new seaports,
15 new airports, 2,630kms of new roads, 35,000MW power plants, and mass rapid transportation
systems in as many as 23 Indonesian cities.
“These major projects will complement our aim to establish Indonesia as a manufacturing and
production hub. To simplify and ease development, the government has launched a
comprehensive economic package, which will give sound platform for the implementation of the
projects.
“Indonesia has allocated $21bn from its 2016 national budget for infrastructure projects. This
means that we still need investments from private sector hence, I am inviting our brothers and
sisters to make a historic leap in the cultural, economic, social, and political relationship between
our two countries. Today is, by far, the best time to invest in Indonesia,” Widodo stressed.

Saudi Aramco: China’s SEPCO set to win gas booster project
Reuters + NewBase
China’s Shandong Electric Power Construction Corp (SEPCO) will likely win a contract to help
expand the capacity of the main gas pipeline across Saudi Arabia, industry sources said.
Last year, SEPCO won the first phase of the master gas system (MGS) which is due to be
completed by the end of 2016. It will boost the capacity of the MGS to 9.6 billion cubic feet of gas
a day (cfd) from 8.4 billion cfd, state-owned oil company Saudi Aramco has said.
Under the new project called MGS 2, SEPCO will build a gas compressor station, industry sources
said, increasing the capacity of the MGS to 12.5 BCFD ( Standard Cubic Foot per Day ) by 2018.
“Under the Out of Kingdom-In Kingdom basis, officially SEPCO is the lowest bidder,” said an
industry source who declined to be identified.
Out of Kingdom-In Kingdom (OOK/IK) refers to the tendering process where an overseas firm
pitches for the engineering and procurement on a project with the knowledge that construction will
be carried out by the same company whose subsidiary is registered in the kingdom.
The source added that JGC Gulf, a subsidiary of Japan’s JGC Corp, had also submitted an alternative
offer, although on a different basis. In an emailed response to Reuters, Saudi Aramco said it did not
comment on its business plans. SEPCO could not be reached for comment while Japan’s JGC Corp
declined to comment. The MGS was built in the mid-1970s to gather and process associated gas from oil
wells and use it for domestic industries. There was no clear value for the contract but a second industry
source said SEPCO’s price was below $700m while a third said it was little bit less than $800m.

UAE: Weatherford operations in GCC amid oil slide are steady
Gulf News + NewBase
The drop in oil prices has not impacted the operations of Weatherford oil field Services company
in the region, a top executive said in Abu Dhabi on Monday. Ahmad Abu Mattar, an Operations
Manager of Reservoir Monitoring in Weatherford, said that a lot of projects are still ongoing and
the business remains the same.
“We see the same activity. We do not see
any slowdown in projects. All local
companies in the region are in the same
rhythm of expanding operations to
optimise production,” said Abu Mattar,
speaking to Gulf News on the sidelines of
a key oil and gas conference organised
by the Society of Petroleum Engineers in
Abu Dhabi.
Oil prices have been dropping since June
last year. From $115 per barrel oil prices
dropped to less than $50 per barrel due to
over production and weak demand. The
UAE on previous occasions has said that
it is on course to increasing oil production
to 3.5 million barrels per day by 2017 from
the present production capacity of about
2.8 million barrels per day.
The US investment bank, Goldman Sachs last week predicted that oil prices could fall to $20 per
barrel due to a glut in the market. “Even if the oil prices are low now, we know that in the span of
five years or ten years they will go up again. These are not short term projects. They are five to
ten years ongoing development projects,” Abu Mattar said.
Weatherford headquartered in Houston, Texas, is working on a number of projects with the state
owned companies like Abu Dhabi Marine Company (Adma), Abu Dhabi Company for Onshore Oil
Operations (Adco), Saudi Aramco, Petroleum Development Oman and Qatar Petroleum.
“The declining prices have partly sent shockwaves to the GCC equity markets over the last few
weeks causing volatility. Equally important, most countries will be running budget and current
account deficits,” said Riad Melti, CEO, Arqaam Capital while addressing GCC-Africa Investors
Conference in Abu Dhabi.
“However, we don’t expect that this will immediately precipitate GCC policymakers into changing
course on fiscal policy, emulating other hydrocarbon producers who have resorted to currency
devaluation or significantly cutting spending. Deficits can be comfortably bridged by drawing down
large reserves and sovereign wealth funds’ assets or issuing debt.
“While GCC economies are in a strong position compared to other oil producers, fiscal
consolidation cannot be indefinitely postponed and the UAE’s recent move to lift fuel subsidies
despite its vibrant private sector is a step in the right direction, and we expect that other GCC
countries will follow suit in due course.” he added.

LNG Will Make Up Half of India's Share of Gas Consumption by 2017-18
Natural Gas Asia + NewBase
Low prices will push share of LNG in India’s gas consumption basket to 47 percent in fiscal 2017-
18 (Apr-Mar) from 33 percent in 2013-14, said Raghu Yabaluri, Director Strategy and
Operations, Deloitte Touche Tohmatsu India during the 5th Annual Conference on LNG
Business in India: Amid Low Oil Prices held on 26-27 August in New Delhi.
“LNG imports are critical to bridging gas demand-supply gap in India,” Yabaluri stressed. India's
gas consumption in 2013-14 was 144 mmscmd, while it is estimated to reach 262 mmscmd by
2017-18, according to Deloitte.
Yabaluri added that long term and spot LNG prices are competitive vis-a-vis traditional fuels in
India such as furnace oil, naphtha, liquefied petroleum gas and high speed diesel. Coal is the only
traditional fuel source still cheaper than LNG but, according to Yabaluri, environmental concerns
will gradually restrict its usage.
Domestic sources of gas supplies include ONGC, Oil India Ltd. (OIL) and private operators such
as Reliance Industries and Essar.
Opportunity for Asian buyers
Sharp drop in global oil and gas prices has put lot of LNG project across the globe in jeopardy.
Low oil prices are putting pressure on large projects due to difficulty in entering firm supply
contracts, limited funding and low profitability. However, the current situation offers a great
opportunity for Asian LNG buyers, who will account for 75 percent of global LNG demand by 2035,
to lock in attractive deals, Yabaluri said.
“Now is the time for Asian buyers to enter into long term contracts at attractive prices,” he said.
He further stated that regasification capacity addition in the big Asian LNG consuming nations –
Japan, South Korea, India and China- should progress as planned. India will see the biggest jump
in capacity from 25 Mtpa in 2014 to 53 Mtpa in 2018. China’s regasification capacity will rise from
32 Mtpa to 40 Mtpa during the same period. Japanese regasification capacity in 2018 will be 140

Mtpa versus 134 Mtpa in 2014 while South Korea’s regasification capacity will rise to 100 Mtpa
from 92 Mtpa.
Reduced competitiveness of US LNG
Touching upon the global LNG supply scenario, Yabaluri argued that drop in oil prices has
rendered Henry Hub contracts less competitive versus crude indexed contracts. This, he said, will
lead Asian buyers contracting from Australia and Qatar.
With shrinking Asian premiums not allowing for profitability, US exports will to cater to Atlantic
consumers with lower shipping costs, he said.
Low Henry Hub prices (below $3/mmBtu) is affecting viability of shale gas extraction with only
liquid rich regions being economical. Production decline of 1.3 bcfd is expected in 2016 due to
unviability of production, Yabaluri said.

Indonesia: Citic Resources boosts Seram oil production
Source: Lion Energy
JV partner Lion Energy advises that the Oseil-28 development well has been completed as a producer with
final clean-up rates prior to rig release of approx. 640 bopd on a 20/64” choke. Total field production has
been boosted by 18% to approx. 4000 bopd. The Oseil-22 development well is the next well planned in the
ongoing development drilling program.

NewBase 15 September - 2015 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices mostly steady, but weak Asian economy weighs
REUTERS + NEWBASE
Brent crude oil prices edged down slightly on Tuesday as Asia's economic weakness persisted,
extending losses into a third session, while U.S. futures firmed following a report that indicated a
drawdown in weekly inventory levels.
Market intelligence firm Genscape estimated a 1.8 million-barrel drop last week at the Cushing,
Oklahoma delivery point for U.S. crude. A weekly report from the American Petroleum Institute is
expected on Tuesday while the U.S. Energy Information Administration's report is expected
Wednesday.
Front-month U.S. crude futures CLc1 were trading at $44.15 a barrel at 0647 GMT, up 15 cents
from the previous close. Internationally traded Brent contracts LCOc1, however, were weaker
following more gloomy Asian economic news, down 6 cents at $46.31 a barrel.
"With Asian demand slowing, not just due to the contagion from China's economic malaise, but
also from rising political risks in countries such as China, Malaysia and Thailand, the outlook for oil
market remains hazy," Energy Aspects said.
Japanese manufacturers' confidence slumped the most in a year in September to an eight-month
low and is forecast to worsen further as fears of a China-led global economic slowdown grow, a
Reuters poll showed.
Oil price special
coverage

In China, fiscal spending jumped 25.9 percent in August from a year ago as Beijing tries to re-
energize flagging economic growth, but stock markets were unimpressed, with China's major
indexes down about 4 percent.
"In the first half of 2015, official GDP growth in China came in at 7 percent year-on-year. Official
economic growth is in stark contrast to commodity demand growth which has been low through
2015," consultancy Wood Mackenzie said, adding that its China Activity Index implied economic
growth of 5.3 percent in Q2 and just 4.5 percent in Q3.
On the supply side, Venezuela repeated its call for the Organization of the Petroleum Exporting
Countries (OPEC) to cut output, yet Middle East producers from OPEC - who effectively control
the export club - have so far pledged to keep output high in a bid to defend market share against
rising competition.
Despite the weak immediate outlook, analysts say they are seeing early signs of a rebalancing
market. "The tables are turning – demand (is) slowing but supplies are slowing too," Energy
Aspects said.
"The market remains oversupplied, but the pace of stockbuilds is moderating. And should U.S.
and OPEC supplies continue on current trajectories, November and December will see small
global crude stockdraws," the consultancy added.

GCC’s economic diversification to cushion fall in oil prices
Saudi Gazette + NewBase
Arqaam Capital, the specialist emerging and frontier markets investment bank, inaugurated on
Monday its second GCC-Africa Investors Conference in Abu Dhabi on the back of a global
markets selloff and a slowdown in emerging markets that has sent shockwaves across the Middle
East and Sub-Saharan Africa.
The conference attracted more than 100 global investors and over 70 listed companies from
across the Middle East and Africa. Participating corporates included, among others, the like of
Etisalat, Saudi Telecom, Zain, Ooredoo, Omantel, Turk Telekom, DP World, Emirates REIT,
Damac, Depa, KIPCO, Emirates NBD, NBAD, Kenya Commercial bank and Ecobank.
Addressing the delegates during the opening session of the conference Riad Melti, CEO, Arqaam
Capital, said: “The timing of our conference cannot be more opportune. The global economic
outlook is clouded by uncertainty with China’s slow growth and currency devaluation, the
prospects for interest rate hike by the US Fed, and a downgrade to the euro area’s prospects
paving the way for additional quantitative easing measures.
More significantly, emerging markets are grappling with one of the most enduring challenges in
two decades, albeit to varying degrees, which has recently translated into much market volatility
and significant losses in equities and currencies.”
“Two key drivers underlie the current turmoil in emerging markets. On the one hand, there is an
economic slowdown as a result of reduced Chinese demand for raw materials, which has weighed
heavily on commodity exporters.
On the other hand, the ever-imminent hike of interest rate in the US has accentuated the pressure
on emerging economies and led to significant capital outflows. These outflows have pressured
emerging markets currencies to weaken against the US dollar, restraining import demand and
stifling economic growth,” he added.
Commenting on the GCC economic outlook, Melti said: “The drop in oil prices over the last few
months is surely posing some challenges for the GCC economies. The declining prices have

partly sent shockwaves to the GCC equity markets over the last few weeks causing volatility.
Equally important, most countries will be running budget and current account deficits.”
“However, we don’t expect that this will immediately precipitate GCC policymakers into changing
course on fiscal policy, emulating other hydrocarbon producers who have resorted to currency
devaluation or significantly cutting spending. Deficits can be comfortably bridged by drawing down
large reserves and sovereign wealth funds’ assets or issuing debt.”
“While GCC economies are in a strong position compared to other oil producers, fiscal
consolidation cannot be indefinitely postponed and the UAE’s recent move to lift fuel subsidies
despite its vibrant private sector is a step in the right direction, and we expect that other GCC
countries will follow suit in due course.
Stimulating non-oil growth through more diversification of the economy and a revitalization of the
private sector is a pressing need as these economies try to undermine their vulnerability to the
drop in oil prices,” Melti explained.
With regards to the outlook for Africa, Melti underscored the African continent presented a mixed
outlook, highlighting that while some non-oil economies were faring pretty well, commodities-
driven economies were struggling with sluggish growth and a weakening of currencies.
“Interestingly, Egypt
presently stands out as
the most attractive
investment story in
Africa, with the country
set for a strong
economic recovery
underpinned by bold
fiscal and economic
reforms,” he said.
“Egypt has slashed its
domestic energy
subsidies, improved the
operating conditions for
foreign energy firms
and broadened the tax
base, increasing fiscal
revenues to a level
equal to 2% of GDP.
Equally significant, the
latest discovery of a
huge gas field off the
Egyptian coast is set to
transform the Egyptian
economy, attracting international energy companies and bringing the country back into being a net
gas exporter. Egypt has yet to address the foreign exchange challenge to lure more investors and
alleviate the constraints on the economy. We expect that the lineup of projects announced in
Egypt over the last few months can give a c.6.4% boost to GDP over the next seven years,” he
added .

NewBase Special Coverage
News Agencies News Release 15 Sep. 2015
Opec says world will want more of its oil next year
Reuters + NewBase
Opec yesterday predicted higher demand for its crude oil next year, sticking to its view that a
strategy of letting prices fall will tame the US shale boom and cut a global surplus. The monthly
report from the Organisation of the Petroleum Exporting Countries also said a weaker outlook for
China would contribute to slower global oil demand growth next year.
“US oil production has
shown signs of slowing,”
Opec said in the report.
“This could contribute to a
reduction in the imbalance
of oil market fundamentals,
however, it remains to be
seen to what extent this can be achieved in the months to come.” Opec said it expected demand
for its crude next year to average 30.31mn barrels per day (bpd), up 190,000 bpd from last month,
despite the slower demand growth overall due to a weaker outlook for Latin America and China.
Oil is trading below $50 a barrel, less than half its level of June 2014. But Opec has refused to cut
output, seeking to recover market share by slowing higher-cost production in the US and
elsewhere that had been encouraged by Opec’s former policy of keeping prices near $100.
Opec expects oil supply from non-member countries to increase by 160,000 bpd next year, a
sharp slowdown from growth of 880,000 bpd in 2015. The predictions are, respectively, 110,000
bpd and 70,000 bpd less than forecast last month.
The 2016 forecast for US tight oil production, also known as shale, was reduced by 100,000 bpd.
Opec’s move follows the US government’s downward revision of domestic output announced in
August. But Opec did not go as far as the International Energy Agency, which on Friday said lower
oil prices would force non-Opec to cut output by the steepest rate in more than two decades next
year.
Opec also expects the recent strength in oil demand growth to moderate. It sees world oil demand
growth slowing to 1.29mn bpd in 2016 - down 50,000 bpd from last month, from 1.46mn bpd in
2015. “For 2016, projections for oil demand development in China are slightly lower than
anticipated in last month’s report amid expectations of slower economic activity than previously
assumed,” Opec said.
The report said Opec members continue to boost supplies. According to secondary sources cited
by the report, Opec pumped 31.54mn bpd in August — up 13,000 bpd from July and 2.19mn bpd
more than its prediction of the demand for its crude this year.
Despite the higher demand it expects for Opec crude in 2016, the report points to a 1.23mn bpd
supply surplus in the market next year if the group kept pumping at August’s rate. Saudi Arabia,
the driving force behind’s Opec’s refusal to cut output, told Opec it trimmed production to 10.27mn
bpd in August, a further decline from June’s record rate.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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NewBase energy news is produced daily (Sunday to Thursday) and
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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 15 September 2015 K. Al Awadi

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Oct.

New base 687 special 15 september 2015

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