New base 695 special 28 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 28 September 2015 - Issue No. 695 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
ROYAL DUTCH SHELL PLC - Shell Updates on Alaska Exploration
Royal Dutch Shell said it will halt further oil exploration offshore Alaska, after initial drilling failed to find
enough evidence of petroleum to continue the search in its current area.
Shell, which has spent billions in Alaska, called this a "disappointing exploration outcome." The company
will record costs of drilling later, according to a statement ..
Royal Dutch Shell (NYSE:RDS.B) Intraday Stock Chart Today : Monday 28 September 2015
SHELL UPDATES ON ALASKA EXPLORATION
Shell today provides an update on the Burger J exploration well, located in Alaska’s Chukchi Sea.
The Burger J well is approximately 150 miles from Barrow, Alaska, in about 150 feet of water.
Shell safely drilled the well to a total depth of 6800 feet this summer in a basin that demonstrates
many of the key attributes of a major petroleum basin. For an area equivalent to half the size of
the Gulf of Mexico, this basin remains substantially under-explored.
Shell has found indications of oil and gas in the Burger J well, but these are not sufficient to
warrant further exploration in the Burger prospect. The well will be sealed and abandoned in
accordance with U.S. regulations.
"The Shell Alaska team has operated safely and exceptionally well in every aspect of this year's
exploration program," said Marvin Odum, Director, Shell Upstream Americas. "Shell continues to
see important exploration potential in the basin, and the area is likely to ultimately be of strategic
importance to Alaska and the US. However, this is a clearly disappointing exploration outcome for
this part of the basin.”

Shell will now cease further exploration activity in offshore Alaska for the foreseeable future. This
decision reflects both the Burger J well result, the high costs associated with the project, and the
challenging and unpredictable federal regulatory environment in offshore Alaska.
The company expects to take financial charges as a result of this announcement. The balance
sheet carrying value of Shell's Alaska position is approximately $3.0 billion, with approximately a
further $1.1 billion of future contractual commitments. An update will be provided with the third
quarter 2015 results.
Shell holds a 100% working interest in 275 Outer Continental Shelf blocks in the Chukchi Sea.
Operations will continue to safely de-mobilize people and equipment from the Chukchi Sea.
The oil industry, environmentalists and federal regulators are closely watching Shell’s Arctic
program, which represents the first offshore oil exploration in the region in decades. A significant
discovery could spark new industry interest in the area and open up a major new offshore oil field
potentially rivaling the Gulf of Mexico.
Environmentalists argue that offshore oil drilling is inherently risky — especially in the cold and
unforgiving Arctic, which is subject to fierce storms and shrouded in darkness much of the year.
Existing technology for cleaning up oil spills is geared for more temperate waters and would be no
match against crude floating in slushy seas or slipping under ice, critics say.
Exploratory oil drilling in U.S. Arctic waters is confined to about three months a year, when waters
are ice free. Shell ice experts predict the waters around the company’s Burger prospect will open
up around the third week in July. Although that is earlier than recent years, it still would be a week
later than the July 15 start date for drilling under law. The company has a narrow window to
conduct its work. Ice is projected to encroach on the site by Nov. 1, and regulators are insisting
Shell halt drilling about a month earlier — by Sept. 28 — to allow time for boring a relief well in
case of an emergency.

Morocco: Paying less in slump lifts Morocco above oil-pumping neighbours
Bloomberg + NewBase
Tumbling oil prices have helped Morocco shore up public finances and lure investments, in
contrast to countries from Saudi Arabia to Jordan struggling with rising budget deficits and slower
economic growth.
Dismantling a costly energy subsidy programme - politically more difficult when prices were high -
was achieved with little fallout for the government, the only Islamist-led administration to remain in
power in North Africa since the Arab Spring unravelled. The PJD party that heads the government
carried the popular vote in this month’s local elections, viewed as a test for its prospects in next
year’s parliamentary ballot.
That stability relative to other regional net energy importers has been vital in attracting investment
in real estate and tourism, especially from the Gulf Cooperation Council countries.
Though Egypt has also benefited from the lower cost of fuel subsidies, the economy has struggled
since the ouster of Hosni Mubarak in 2011 spurred years of political turmoil and the sharpest
business downturn in decades. The fallout from civil war in Syria has weighed on Lebanon, while
in Morocco’s neighbour Algeria, as in Opec nations in the Gulf, loss of vital oil revenues has hurt
the government budget.
“Morocco has made significant savings on the fiscal side, and this was easier to do because of the
low oil prices, so it was good timing,” said Karim El Aynaoui, a former economist at both the World
Bank and Morocco’s central bank, who now heads the Rabat-based OCP Policy Center think tank.
A smaller bill for energy and state subsidies will help both the current account and budget deficits,
while also helping to rebuild Morocco’s foreign reserves, Fitch Ratings said in its most recent
country report in April.
The savings mean state investment will remain above 5% of gross domestic product, according to
Fitch. That is helping Morocco develop its promising auto sector and other manufacturing.

Both Ford Motor Co and PSA Peugeot Citroen have announced plans this year to expand their
Moroccan operations, with the former planning to double purchases of domestic auto parts.
Peugeot’s Morocco plant, scheduled to begin production in 2019, will be its first direct investment
in Africa. Renault SA already has plants in Tangier and Casablanca.
Central bank governor Abdellatif Jouahri said in an interview on September 13 that Morocco will
seek International Monetary Fund advice on how to shift to a flexible exchange rate to attract more
investment. The economy is expected to grow by 5% this year, he said. “The challenge is to keep
on reforming to keep up long-term growth, and invest in things like infrastructure that are the basis
of an economy,” El Aynaoui from the OCP Policy Center said.
Morocco does face potential risks, especially from Islamic militancy that may deter tourist travel to
North Africa. Agricultural production remains heavily dependent on rainfall in the absence of
widespread irrigation.
Even so, analysts rank the country above its North Africa peers for its stability and growth
potential. It also stands to gain from the economic recovery in its largest trading partner, Europe.
“Morocco’s economic transformation still appears on track,” said Bloomberg Intelligence analyst
Mark Bohlund. “Continued fiscal consolidation efforts, coupled with an expanding manufacturing
sector, should further boost investor sentiment.”

Russian oil producers head for tax showdown amid output warnings
Bloomberg + NewBase
Russia’s oil industry begins a critical battle over taxes this week. Losing may result in the first
decline in crude production at the world’s largest energy exporter since 2008.
Oil producers are due to meet with Russian Prime Minister Dmitry Medvedev today to present
their joint view on Finance Ministry proposals to increase crude oil extraction taxes, said two
company representatives who asked not to be identified because the meeting isn’t public. The
ministry wants to boost revenue by about 600bn roubles ($9.1bn) in 2016 alone to mitigate the
biggest budget deficit in years.
The price of crude plunged by about 50% over the past year because of a global oversupply.
While Russia’s government finances have deteriorated, its oil companies have proved more
resilient to the slump as some tax rates automatically adjusted lower and a weaker rouble reduced
their costs. The nation’s oil production rose to a post-Soviet record of 10.72mn bpd in June.
“If the Fin Min proposal is approved in the current form, we expect the total production decline to
reach 1.5% to 2% in 2016,” Karen Kostanian, oil and gas analyst at Bank of America Corp, said by
phone. Output will fall because of cuts to capital expenditure estimated at $2bn to $3bn, he said.
Medvedev’s press representative Natalia Timakova declined to comment on his schedule.
Herman Gref, chief executive officer of Sberbank and chairman of the Public Council of the
Energy Ministry, said on September 24 that oil companies would prepare a tax proposal for the
prime minister by today.
Russia’s Energy Ministry estimated last week that oil output would be stable until 2035 at a level
of about 525mn metric tonnes a year, or 10.5mn bpd, as investment in new projects offset
declines at older fields. If the government approves the planned tax hike, investments could slump
by 50% and total oil production drop by 100mn metric tonnes over next three years, Energy
Minister Alexander Novak said in an interview to state TV on Friday.
“In a lower capex environment, the output decline at mature Russian fields may reach some 5%
already next year,” Alexander Nazarov, oil and gas analyst at Gazprombank, said by phone. “New
projects won’t be able to cushion the total decline.”
Oil production dropped 0.9% in 2008 as prices slumped during the global financial crisis,
according to BP data. Russian output has been growing at an average annual rate of 1.4% for the
past six years, the data show.

Russia relies on oil and gas for about half of its budget earnings, with taxes on the extraction and
export of crude accounting for about 32% of revenue. The nation’s budget deficit was 994bn
roubles through August this year, or 2.1% of gross domestic product, according to the Finance
Ministry. It forecasts a 2016
deficit of under 3% of GDP if
oil averages $50 a barrel.
Brent crude, the international
benchmark, traded at about
$48 in London on Friday.
Last week, President
Vladimir Putin asked the
government “to work on
channelling to the budget
additional revenues of export
companies, which they
received thanks to the rouble
devaluation.” Russia needs
to consider cutting “inefficient
budget spending” rather than
putting additional pressure on oil producers, Novak said.
The oil industry may agree to a less damaging tax scenario, such as a freeze in the oil-export duty
at the current level, TASS news agency reported on September 25 citing unidentified sources.
Freezing it would add 50bn to 100bn roubles to the tax burden, not enough to affect production,
Bank of America’s Kostanian said.
“It is likely that the oil sector will avoid the worst-case outcome,” Sberbank CIB analysts Alex Fak
and Valery Nesterov said on September 25 in a report. Still, the precedent set by a tax increase
would “make it harder to sell the Russian energy investment case.”

NewBase 28 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 fall on slowing global economic growth outlook
Reuters + NewBase
Oil prices dropped in Asian trading hours on Monday despite a fall in U.S. drilling activity for the
fourth straight week, with analysts pointing to a poor economic growth outlook as the main reason
for low crude prices.
China's August industrial profits dropped 8.8 percent from the same month last year, and January
to August industry profits were down 1.9 percent. "The growth problem endures. Asia isn't about
to bounce," said Frederic Neumann, co-head of Asia Economics Research at HSBC in Hong Kong
on Monday in a note to clients.
The International Monetary Fund (IMF) is likely to revise downwards its estimates for global
economic growth due to slower growth in emerging economies, IMF head Christine Lagarde said
in a newspaper interview.
Brent crude futures LCOc1 were at $48.18 per barrel at 2323 EDT, down 42 cents. U.S. West
Texas Intermediate (WTI) futures CLc1 were 39 cents lower at $45.31 a barrel. Crude futures are
now down more than 10 percent since the end of August.
Oil price special
coverage

Monday's price falls came despite an ongoing reduction in U.S. drilling activity. U.S. energy
companies cut oil rigs for a fourth week in a row last week, a sign continued weak prices were
causing oil and gas producers to reduce drilling plans.
Yet analysts said U.S. oil output was holding up despite the lower drilling. "A rapid draw-down of
the observed backlog of uncompleted wells could lead to higher production later this year and in
2016," Goldman Sachs said.
Analysts said U.S. output data would likely be the main driver this week for oil prices, especially as
Chinese trading slows ahead of its seven-day National Day holiday that starts on Oct. 1. The U.S.
Energy Information Administration is due to release its monthly petroleum supply report on
Wednesday. [EIA/S]
"We expect there to be laser-focus on U.S. production figures ... Signs that U.S. production rolled
(fell) could provide a boost to both WTI and Brent flat prices," Morgan Stanley said. Jefferies bank
said that oversupply in oil markets had halved since the second quarter to around 1 million barrels
per day, and that the falling prices since June 2014 were impacting production.
"The price signal is working. U.S. production is past its inflection and declines are accelerating ...
(and) non-OPEC supply outside the U.S. is also beginning to show the effects of lower investment
that arises from lower oil prices," Jefferies said.

Oil Traders May Look to the Sea for Profit Amid Price Collapse
Bloomberg - Ben Sharples Naomi Christie
While traders are already cashing in on the surplus by housing oil in onshore tanks across the
globe -- including on the tiny Caribbean island of St. Lucia-- expanding the storage to tankers at
sea may near a point where it becomes profitable, according to Citigroup Inc., Goldman Sachs
Group Inc. and IHS Maritime & Trade. A structure called contango, when the price of a commodity
to be delivered in the future is higher than if it was sold today, has been moving in the right
direction.
Vessels laden with oil, parked offshore from Singapore to the Gulf of Mexico, became a feature
after the global financial crisis as the widening contango allowed traders with access to storage to
lock in a profit. As the spread expanded again amid a global supply glut, tanker owner Frontline
Ltd. fielded inquiries last month about options to house crude at sea.
“Even though the contango is not wide enough yet, it could become so if OPEC continues to
overproduce relative to demand,” Frode Moerkedal, an analyst at Clarksons Platou Securities,
said by e-mail.
With the Organization of Petroleum Exporting Countries already pumping above its 30-million-
barrel-a-day quota for more than a year, Iran’s plans to boost output after sanctions are lifted
threaten to worsen the oversupply -- a market condition that typically deepens a contango. That
could see more oil stored at sea during the fourth quarter, according to Andrew Scorer, an analyst
at IHS Maritime & Trade.
The profit opportunity requires a little further steepening of the Brent forward curve at current
freight rates, Goldman said in a Sept. 11 report. The widening spread is bringing the potential of
floating storage “back into play,” Citigroup said this month.

The spread would need to widen to $4 a barrel during a three-month period for storage to be
viable, according to estimates by E.A. Gibson Shipbrokers Ltd. on Sept. 23. Brent crude for
November settlement was at a $2.08 discount to the February contract on the London-based ICE
Futures Europe exchange at 11:52 a.m. in Hong Kong.
“Once Iranian crude is out in the market, then it might start affecting spot prices for crude oil,
which could eventually open up the contango again,” Nikhil Jain, an analyst at Drewry Shipping in
New Delhi, said by phone. The spread during a three-month period needs to reach about $3.30 a
barrel before floating storage would work, he said.
As Frontline takes calls on storage options, Paddy Rodgers, the CEO of Euronav, one of the
world’s largest owners of oil supertankers, sees crude being housed at sea over the next four to
five months. The increase in floating storage may also tighten the shipping market and boost
freight rates, according to Scorer from IHS.
Junk Ship
Daily rates to hire very large crude carriers on the benchmark Middle East to East Asia route rose
0.3 percent to $70,098 a day on Sept. 25, according to Baltic Exchange data. That’s down 26
percent from the peak in July this year. Rates will average $54,112 in 2015, according to a
Bloomberg survey of shipping analysts.
While forecasters see favorable conditions for the offshore contango trade nearing, floating
storage bookings are returning to the oil market, according to Clarksons. The demand will also
provide a boost to the world’s biggest tanking companies including Vopak NV and Kinder Morgan
Inc.
GMS Inc., better known as a recycler of ships, chartered its first oil tanker that was used for
floating storage within the last 12 months, according to Chief Executive Officer Anil Sharma.
Purchased in 2014, the vessel was leased to a customer that used the ship house crude in the
Middle East. The cargo has since been discharged in the Far East.
“It’s more of a black swan event,” said Sharma, who founded the company in 1992. “It’s not
something that’s easy to replicate. You have to be lucky, you have to be in the right place at the
right time.”

NewBase Special Coverage
News Agencies News Release 28 Sep. 2015
Iran Seeks $150 Billion to Target 8 Percent Annual Growth
Bloomberg - Kambiz Foroohar
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Iran needs $150 billion of investment to reach 8 percent growth a year and lower youth
unemployment, President Hassan Rouhani said in an address to Iranian-Americans in New York
on Saturday.
Last year, Iran created 700,000 new jobs, short of the 800,000 needed for new entrants to the job
market, said Rouhani, who is in New York to address the United Nations General Assembly. He
was appealing to the Iranian diaspora for greater involvement in the country.
Iran and six world powers reached an historic agreement on July 14 in Vienna to curb Iranian
nuclear ambitions in exchange for the easing of international sanctions. The accord survived a 60-
day review by the U.S. Congress and is now being examined by
the Iranian parliament.
In another part of his speech, Rouhani said Iran offered stability
in a region that had witnessed wars, revolutions and natural
disaster.
“In the past we used to export oil; now we export security,”
Rouhani said. “Many countries in the region look to Iran’s help
to defeat terrorists.”
Separately, the Iranian president told NPR News that Iran is
willing to talk to the U.S. about a strategy to resolve the Syrian
civil war and defeat militants operating in that country.
“Any solution that can lead to peace, stability and security -- we
will pursue that solution,” Rouhani said in an interview
broadcast on Sunday.
Iran’s economy is recovering from tough economic sanctions
imposed by the U.S., the European Union and the UN over
concerns that the Islamic Republic was pursuing nuclear
weapons.
The economy grew 3 percent in 2014 after two years of
contraction, while the currency has stabilized and inflation slowed to about 15 percent from 40
percent. However, youth unemployment still hovers around 24 percent, and the World Bank says
Iran needs to create 8.5 million new jobs over the next two years.
Iran expects about $29 billion of funds to be unfrozen and repatriated to its central bank by
January 2016 at the latest as economic sanctions are eased after July’s nuclear deal, according to
Gholamali Kamyab, vice governor for foreign exchange affairs at the bank.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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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 28 September 2015 K. Al Awadi

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Oct.

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