New base 748 special 15 december 2015

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NewBase 15 December 2015 - Issue No. 748 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE Mubadala Petroleum, CNPC Sign Cooperation Agreement
News Agencies + NewBase
Mubadala Petroleum and China National Petroleum Corporation (CNPC) have agreed on greater
co-operation between the two companies in the oil and gas exploration and production sector.
The cooperation agreement was signed during a ceremony in Beijing by His Excellency Dr Sultan
Al Jaber, CEO Energy, Mubadala Development Company, on behalf of Mubadala Petroleum, and
CNPC Chairman Wang Yilin.
The agreement identifies potential areas for collaboration in the upstream oil and gas sector
outside of the United Arab Emirates and, more specifically, new and existing projects including
onshore conventional projects, offshore projects and LNG projects, Mubadala Petroleum said
Monday.
Musabbeh Al Kaabi, CEO, Mubadala Petroleum, said, “This Agreement reflects a growing level of
dialogue between ourselves and CNPC, both nationally-owned companies with expanding
international interests. We welcome the continued strengthening of links between countries and
companies across the traditional trading routes of the Middle East and Asia, a region where
Mubadala Petroleum already has well established operations.”
Mubadala Petroleum operates a growing portfolio of producing assets in South East Asia. The
latest of these is Nong Yao, which is located in the Gulf of Thailand and came on stream in June
2015. The company is now the second largest black oil producer in Thailand. It also has several
other projects under appraisal and development in the region.

UAE: Masdar Institute Partners With Globally Top-Ranked Tsinghua University
to Research Next-Generation Sustainability Solutions
(WAM) – The Masdar Institute of Science and Technology, an independent, research-driven
graduate-level university focused on advanced energy and sustainable technologies, and the
world’s top ranked engineering university -- Tsinghua University -- today signed a collaboration
agreement to embark on a faculty and student exchange program intended to support
transformative sustainability research.
The agreement was signed in the presence of the leaders from both countries at the Great Hall of
the People in Beijing. Professor Dr. Chen Xu, Chairperson of the University Council, signed the
agreement on behalf of Tsinghua University, while His Excellency Dr. Sultan Al Jaber, Minister of
State and Chairman of the Executive Committee of the Masdar Institute Board of Trustees.
Dr. Sultan Al Jaber said: "The exchange agreement between Masdar Institute and Tsinghua
University is sure to help bring dynamic advancements in water, energy, microsystems and
advanced materials to the UAE, China, and the world at large. I also believe this partnership
reveals the growing maturity and strength of the UAE’s innovation ecosystem and am confident it
will help the country achieve its National Innovation Strategy goals."
Tsinghua University was recently ranked by the US News and World Report as being the world’s
top ranking engineering university, and is one of the nine members in the elite C9 League of
universities in mainland China.
The two leading universities will embark on a faculty and student exchange program that includes
research in the fields of renewable and clean energy. Areas of renewable and clean energy
exploration include solar energy, biofuel, carbon utilization and sequestration. Additional areas to
be explored are membrane and thermal desalination, water treatment, satellite technology, deep
space exploration, smart cities, intelligent transportation, micro-electromechanical system
(MEMS), 3D chips, nano-technology, 3D printing, and management, as well as health and life
sciences.
The Masdar Institute-Tsinghua University research teams will include students from both
universities. Faculty will guide the teams in accordance with the the visions of Masdar Institute
and the UAE for the future of innovation, as well as those of the Chinese institution.
Other prominent Chinese and UAE government officials and representatives from both institutions
including Dr. Yao Qiang, Dean, and YANG Bin, Vice President and Provost, Tsinghua University
were present.

Dr. Chen Xu said "Masdar Institute of Science and Technology is a new yet significant partner to
Tsinghua University. The two institutions have established solid foundation for cooperation
through faculty exchange and scholarly communication. We share a common goal of addressing
the world’s most pressing challenges through innovation and education.
Commercial development, urbanization, and a high standard of living have compounded to create
problems that have not existed on this magnitude before. With the signing of this faculty and
student exchange agreement, we look forward to working with Masdar Institute in a more intensive
manner to resolve these ecological challenges that our world faces today."
Through the agreement, faculty at both institutions will be eligible to participate in the Faculty
Exchange Program and in the Student Exchange Program as co- supervisors. Only full-time
doctoral students with good track record will be eligible for this program.
Co-developed and pre-approved research plans are expected to maximize the benefit for both
institutions. Consequently, students from both universities, along with their own research advisors,
will be performing cutting-edge research that could make an impact not only to both countries but
recognized globally as being at the forefront in their receptive fields.
Dr. Youssef Shatilla, Dean of Academic Programs, Masdar Institute, said, "With this agreement
we have secured a win-win situation where both partners involved in the collaboration will benefit
by advancing their research agendas. Significant benefit will also be shared through the faculty
exchange side of the agreement."
At present, Masdar Institute has collaboration agreement with its founding partner the
Massachusetts Institute of Technology (MIT). Other international collaboration partners include
Tokyo University in Japan, Technical University of Dresden in Germany, the Korea Basic Science
Institute (KBSI) and University of Manchester in the United Kingdom.

Egypt aims to reduce oil & gas products subsidies
Reuters + Newbase
Egypt is relaxing a commitment made by the previous government to abolish subsidies on
gasoline, diesel and natural gas, following a slide in crude prices and the discovery of an offshore
gas field.
The previous government
had committed to getting
rid of the subsidies that
were diminishing the
country's foreign currency
reserves over a five-year
period starting in July
2014. Prime Minister Sherif
Ismail said on Monday that
Egypt now planned to
reduce the subsidies to 30
percent of where they
stood in July 2014, over
the same time period.
"We respect the previous
government's decisions
and are committed to them,
but there are changes we
need to adhere to in the
case of oil product
subsidies, such as global
energy prices and new
discoveries," Ismail told a news conference. He said lower global oil prices and the discovery of a
massive offshore gas field meant Egypt could relax that goal.
The Zohr gas field, discovered by Italy's Eni , is the biggest in the Mediterranean. With an
estimated 30 trillion cubic feet of gas, it is expected to plug Egypt's acute energy shortages and
save it billions of dollars in precious hard currency that would otherwise be spent on imports.
Egypt is suffering from a foreign exchange shortage that has seen goods pile up at ports. About
$6 billion was deposited in Egypt's central bank by Gulf Arab allies earlier this year to help
replenish its dwindling foreign
currency reserves.
Ismail is due to meet Saudi Arabian
Deputy Crown Prince Mohamed
bin Salman on Tuesday, when a
new Saudi deposit will be on the
agenda, he said.
The government is also targeting growth in gross domestic product of close to 6 percent and a
reduction in its budget deficit to 8.5 percent by the end of the 2017-18 financial year, Ismail said.

Gabon: VAALCO Energy announces second successful Dentale
formation well in the North Tchibala field…Source: VAALCO
VAALCO Energy has announced that the North Tchibala 2-H well, the second development well
drilled by VAALCO in the North Tchibala field, was brought online at a stabilized rate of approx.
500 gross barrels of oil per day (BOPD), or 122 BOPD net revenue interest to VAALCO. The well
was drilled to a measured depth of 16,476 feet and encountered good quality sands in the Dentale
D-18/19 reservoir.
The well came on production
flowing naturally with no H2S and
water free. Based on production
tests in nearby exploration wells,
the quality of the reservoir would
indicate the potential for a higher
flow rate than has been achieved
thus far. VAALCO is gathering
diagnostic data to assess the
productive capacity of the North
Tchibala 2-H well and to
determine if there is remedial
work that might increase the flow
rate from the well.
While the Dentale formation is
productive in onshore Gabon
fields, the North Tchibala field
represents the first Dentale
production developed in the
offshore waters of Gabon. The
first North Tchibala producer,
North Tchibala 1-H, targeted the
shallower Dentale D-9 formation
at approx. 11,200 feet measured depth and was placed on production during the third quarter of
2015. The North Tchibala 1-H well initially produced at a sustained rate of 3,000 BOPD flowing
naturally for six weeks with minimal pressure depletion.
In late October, the Company observed a decline in bottomhole pressure accompanied by an
increase in gas production rates. The well was choked back to approx. 1,500 BOPD and
bottomhole pressure has now stabilized. Production continues to remain at that level, which is still
at initial expectations for the well. VAALCO will continue to monitor both Dentale wells and take
appropriate actions to optimize long term production and reservoir performance.
The North Tchibala 2-H is the third successful well drilled and placed on production at VAALCO's
new Southeast Etame/North Tchibala (SEENT) platform located in approx. 260 feet of water
offshore Gabon. VAALCO is the operator of the Etame Marin permit area and owns a 28.1%
working interest and a 24.4% net revenue interest. The Transocean Constellation II jackup rig has
mobilized to the nearby Avouma/South Tchibala platform to conduct workover operations to
replace electrical submersible pumps (ESPs) on three existing production wells, two of which are
off production. Sea conditions have improved allowing the safe movement of the rig.

US: Four countries added to global shale oil and natural gas
resource assessment ( UAE, Oman, Chad , Kazakh)
Source: U.S. Energy Information Administration, Advanced Resources, Inc.
EIA continues to expand its assessment of technically recoverable shale oil and shale natural gas
resources around the world. The addition of four countries—Chad, Kazakhstan, Oman, and the
United Arab Emirates (UAE)—to a previous assessment covering 42 countries has resulted in a
13% increase in the global assessed total resource estimate for shale oil and a 4% increase for
shale gas.
A total of 26 formations within 11 basins were analyzed in these 4 countries. Although these
formations contain significant volumes of technically recoverable resources, there is currently no
shale exploration underway in any of the four countries, meaning the new assessed resources are
not yet economically recoverable.
The portions of these resources that become economically recoverable in the future will depend
on crude oil and natural gas market prices, as well as the capital and operating costs and
productivity within the countries. Each of the countries has an existing oil and natural gas industry
with infrastructure connecting the basins to global markets. All current production of oil and natural
gas in Chad, Kazakhstan, Oman, and the UAE is from non-continuous resources (from high-
permeability formations).
Chad's oil production was 78,000 barrels per day (b/d) in 2014, down 55% since 2005. Oil
production accounts for a significant portion (27%) of Chad's gross domestic product and provides
the majority (63%) of government revenues.

Kazakhstan's oil production increased by 24% to 1.7 million b/d from 2005 to 2014, while natural
gas production increased 37% to 1.9 billion cubic feet per day (Bcf/d) over the same period.
Kazakhstan is an exporter of light, sweet crude oil.
About 16% of Kazakhstan's crude exports head east via pipeline to China. Kazakhstan's exports
will likely increase in the coming years, as production begins at Kashagan and expands at Tengiz
and Karachaganak. However, the rapid growth of oil production and exports will require an
expansion of export capacity.
Oman increased oil production by 18% to 943,000 b/d and natural gas production by 32% to 2.8
Bcf/d from 2005 to 2014. Oman exports liquefied natural gas (LNG) but imports some volumes of
natural gas by pipeline from Qatar via the UAE. Oman is currently developing tight gas from the
country's Khazzan field, which will partially offset natural gas imports.
The United Arab Emirates increased oil production by 21% to 3.7 million b/d and its natural gas
production by 18% to 5.6 Bcf/d from 2005 to 2014. The UAE is a net exporter of LNG but
increasingly imports natural gas by pipeline from Qatar. The UAE's Shah sour gas project, which
is in the process of reaching its full capacity of 0.5 Bcf/d, could lessen the UAE's import
dependence in the short term, and the country is investing $35 billion to diversify its energy mix
and reduce its dependence on natural gas imports.
The resource estimates of these four countries, in addition to the other countries previously
assessed in the 2013 EIA/ARI report on shale resources around the world, indicate proved and
unproved technically recoverable resources of 419 billion barrels of shale oil resources and 7,576
trillion cubic feet of shale gas resources within 46 countries, including the United States.
However, only four countries (the United States, Canada, China, and Argentina) are currently
producing oil and natural gas from these resources at commercial scale, with the United States
alone providing 4.4 million b/d, or more than 90%, of global tight oil production and 42 Bcf/d, or
more than 89%, of global shale natural gas production.

Big Oil, Make Way for Big Solar. The Winners and Losers in Paris
Bloomberg - Matthew Campbell
Saving the world isn’t going to be cheap. If you sell oil, coal or old-fashioned cars, that threatens
disaster. For makers of stuff like solar panels, high-tech home insulation, and efficient lighting, it’s
a potential miracle.
That’s the bottom line from this weekend’s climate deal in Paris, which commits 195 countries to
reducing pollution in order to head off dangerous climate change.
Global governments and companies are counting the costs and benefits from the agreement,
which calls for wholesale transformations of energy, transportation, and dozens of other lines of
business. Fossil-fuel producers and countries that depend on them face massive, costly
disruption. Players in up-and-coming industries like renewable power and energy efficiency are
looking at an unprecedented opportunity.
“As a major oil and gas company, we are clearly at stake in these discussions," Patrick Pouyanne,
the chief executive officer of French oil giant Total SA, said in Paris. But "an optimist sees in every
difficulty an opportunity. I’m definitely an optimist; I have to be."
The Paris pact, which also calls for a review of ever-tightening pledges every five years, is the
most significant global climate agreement ever, outstripping the 1997 Kyoto Accord in its scope
and ambition. Along with Barack Obama, Vladimir Putin, Xi Jinping and dozens of other top
political leaders, the summit that produced it attracted hundreds of large companies eager to
influence or understand negotiations that could deeply affect their future business models.
The deal will likely accelerate investments in technologies like renewable energy and electric
vehicles -- especially if more countries join the European Union and parts of North America in
imposing a price or tax on carbon. The United Nations estimates upward of $1 trillion a year in
spending is required to de-carbonize the global economy and prevent temperature rises scientists
say could flood coastal cities, disrupt agriculture, and destroy ecosystems.

That means companies with business models threatened by a low-carbon world need to re-focus,
and fast, said Lyndon Rive, CEO of SolarCity Corp., a U.S. provider of home-solar systems
chaired by billionaire Elon Musk. For people who sell oil, Rive said on the sidelines of the Paris
summit, "you’re going to defend that job because that’s your livelihood. But your livelihood is going
to be destroyed."
Executives from more traditional companies have a similar, if less stark, view. Peter Terium, CEO
of German utility RWE AG, said companies like his would have to learn from the successive
transformations of International Business Machines Corp. to stay relevant in a new energy
system. RWE on Friday approved a plan to split into two companies, one focused on renewables
and grids and the other managing declining conventional assets.
That doesn’t mean Big Oil will be closing up shop anytime soon. According to a relatively
optimistic forecast of emissions cuts by the International Energy Agency, fossil fuels will still
account for about 75 percent of energy demand in 2030, with coal hitting a plateau, oil growing
slightly and natural gas surging.
New installations of clean
energy from 2004-2014.
To stay ahead of climate
policies, energy majors are
placing their heaviest bets
on gas. While solar is
advancing quickly in terms
of cost and efficiency, the
industry hasn’t yet figured
out how to stockpile
sufficient power for times
that the sun isn’t shining.
Until that problem is solved
-- likely with major
improvements in batteries -
- there will be significant
demand for coal, gas, or
nuclear power.
"Gas is one of the most
compelling opportunities in the short to medium term," Helge Lund, the CEO of British gas
producer BG Group Plc, said in Paris. A world totally without fossil fuels is "beyond the meaningful
planning horizon," leaving companies like his plenty of time to keep drilling, he said.
Energy investment, though, will increasingly shift toward green power. Under another IEA
scenario, renewables will attract about 59 percent of capital in the power sector over the next
decade, rising to about two-thirds from 2026 to 2040. France’s Total, for example, is building out
its solar business, shifting investment to gas, and expanding energy-efficiency services to cope.
Feeling Pain
Coal companies will be especially hard-hit. The Stowe Global Coal Index, which tracks the stock
performance of 26 major producers, has lost 59 percent of its value this year. It’s the start of a
shift of "many trillions of dollars toward low-carbon technologies and away from old fossil-fuel
technologies," Mindy Lubber, CEO of Ceres, an organization that works with investors to push
companies for better environmental performance, said in an e-mail.

NewBase 15 December - 2015 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil extends losing streak as oversupply concerns persist
Reuters + NewBase
Oil prices dipped on Tuesday, set to extend its losing streak to an eighth day, as investors remain
concerned about a global glut and mild winter demand that sent prices close to 11-year lows
during the previous session.
Brent LCOc1, the global benchmark, was at $37.74 at 0440 GMT, down 18 cents from its last
settlement after rising slightly earlier on Tuesday.
The contract on Monday bottomed out at $36.33 a barrel, only a few cents above the $36.20 low
last seen during the 2008 financial crisis. Falling below that level would take Brent to prices not
seen since the middle of 2004. U.S. crude was at $36.23, down 8 cents.
Bearish sentiment remains strong, fuelled by an OPEC decision earlier in December to abandon
setting a production ceiling for the oil cartel and a likely rise in Iranian supplies after sanctions are
lifted.
Oil price special
coverage

With OPEC flooding international markets while U.S. drillers keep producing large amounts of
crude, the Brent/WTI premium has halved over the last week to around $1.50 per barrel. That's
the narrowest spread between the two benchmarks since January.
Traders said that the low prices were a combination of structural oversupply and seasonal price
weakness. "The weather is very mild with reduced demand for heating oil," said Oystein
Berentsen, managing director of crude oil at Strong Petroleum .
Perfect storm for low oil prices-Chris Jarvis
Oil markets usually see strong demand towards year's end as the northern hemisphere enters its
peak winter heating demand season. Yet an unusually mild start to winter, in part due to the El
Nino weather phenomenon, has limited heating demand.
In the next two weeks, Japan, South Korea and Russia will see milder than normal temperatures
while the U.S., Canada and Europe will be "particularly" mild, according to a note from BNP
Paribas. This seasonal weakness is compounding a structural oversupply as 0.5 million to 2
million barrels of crude per day (bpd) is produced in excess of demand.
"Land storage capacity is now limited but OPEC keeps increasing production so the oil price is
relentlessly trending down. Short-term further pressure can be expected. Iran may return to the
market in January which is causing concern of increasing oversupply," said Berentsen.
Also looming large is the likely increase in U.S. interest rates this week. Crude, priced in U.S.
dollars, typically falls as the dollar strengthens since it becomes more expensive for buyers paying
in other currencies.
Yet there are analysts who say that the oversupply may be overrated.
"The oil market remains more tightly balanced than is reflected in today's low prices. The
oversupply is about 1.5 percent of a 95 million bpd market with limited spare capacity in a risky
political setting for weak petro states prone to disruption," Citibank said.

Speculate on oil if you wish, but use the best information available
Dr Aabed al-Saddoun
Pick up a newspaper anywhere in the world today and you are likely to see a prominent story
about low oil prices, the impact this is having on economies, and speculation about where the
price might end up at some arbitrarily chosen point in the future.
Given that major investment and budgeting decisions, both in the
public and private sectors, are reliant on where the price of oil
stands, we should not be surprised that policy makers and
business leaders are eager for that critical piece of insight and
guidance.
For this reason, the recent Apicorp Energy Forum was an
important opportunity. The combination of themes it covered —
policy, outlook and finance — along with the sheer number and
variety of senior energy industry stakeholders it attracted, made it
a multifaceted and unique occasion.
High-profile policy makers and ministers shared a platform with experienced bankers and finance
professionals, respected researchers and analysts, and business leaders from across the private
sector. There have been few, if any, other opportunities since the oil price started tumbling last
year, to tap into such a wealth of knowledge and expertise in one place.
The views expressed during the forum are the ones I would encourage global decision makers
and indeed the media to pay particular attention to. And while no one has a crystal ball when it
comes to predicting oil prices, some people have better information than others.
One of the key takeaways was that most believe the days of $100 oil are over. Some 91% of the
circa of 350 delegates polled during the forum said that the Brent oil price will remain below $70
for the coming 12 months. However, there was a broad alignment of views that it will rise from the
current lows of $40 a barrel. Most see the oil price settling around $65 a barrel in 2016, which
would certainly ease some of the current financial strain some governments are facing.
Another takeaway was that investment in the Arab energy sector will continue, regardless of the
current fiscal pressures. Oil ministers from Saudi Arabia, Bahrain and Egypt all expressed a clear
commitment to ensuring spending on energy-related infrastructure, skills and technology are
maintained. There was also broad acceptance that investment in the Mena energy sector will
need to total $685bn over the next five years; and that cooperation between Arab states will be
critical for these investments to progress.
How oil exporting countries can best deal with lower revenues was also addressed at the forum.
Some 45% of the experts gathered stated that diversification was the best means of dealing with
the issue. This was followed by 34%, who favoured subsidy reform. Only 16% see spending cuts
as the preferred option.
The truth is a combination of all three policy options is most likely needed. However, without
wanting to speculate too much, clearly if this is what the energy industry’s experts are saying, one
should be reasonably safe to assume all of these options are being considered by the relevant
policy makers. This information should be reassuring to the markets. Expert advice and research
is clearly being made available, and indeed has been provided, to those making government
policy.

Why the oil price slump hasn't kickstarted the global economy
Kenneth Rogoff is a professor of economics and public policy at Harvard University
© Project Syndicate, 2015
One of the biggest economic surprises of 2015 is that the stunning drop in global oil prices did not
deliver a bigger boost to global growth. Despite the collapse in prices, from over $115 a barrel in
June 2014 to $45 at the end of November 2015, most macroeconomic models suggest that the
impact on global growth has been less than expected – perhaps 0.5% of global GDP.
The good news is that this welcome but modest effect on growth probably will not die out in 2016.
The bad news is that low prices will place even greater strains on the main oil-exporting countries.
As the price of crude plummets to its lowest level in nearly a decade, analysts point to Opec’s
recent ‘disarray’ and a warming weather pattern as the main culprits – and think we have yet to
see the bottom
The recent decline in oil prices is on par with the supply-driven drop in 1985-1986, when Opec
members (read: Saudi Arabia) decided to reverse supply cuts to regain market share. It is also
comparable to the demand-driven collapse in 2008-2009, following the global financial crisis. To
the extent that demand factors drive an oil-price drop, one would not expect a major positive
impact; the oil price is more of an automatic stabilizer than an exogenous force driving the global
economy. Supply shocks, on the other hand, ought to have a significant positive impact.
Although parsing the 2014-2015 oil-price shock is not as straightforward as in the two previous
episodes, the driving forces seem to be roughly evenly split between demand and supply factors.
Certainly, a slowing China that is rebalancing toward domestic consumption has put a damper on
all global commodity prices, with metal indices also falling sharply in 2015. (Gold prices, for
example, at $1,050 per ounce at the end of November, are far off their peak of nearly $1,890 in
September 2011, and copper prices have fallen almost as much since 2011.)
New sources of oil supply, however, have been at least as important. Thanks to the shale-energy
revolution, American oil production has risen from 5m barrels per day in 2008 to 9.3m barrels in
2015, a supply boom that has so far persisted, despite the price collapse. Anticipation of post-
sanctions Iranian oil production has also affected markets.
A decline in oil prices is to some extent a zero-sum game, with producers losing and consumers
gaining. The usual thinking is that lower prices stimulate global demand, because consumers are
likely to spend most of the windfall, whereas producers typically adjust by cutting back savings.
In 2015, though, this behavioural difference has been less pronounced than usual. One reason is
that emerging market energy importers have a much larger global economic footprint than they did
in the 1980s, and their approach to oil markets is much more interventionist than in the advanced
countries.
Countries such as India and China stabilise retail energy markets through government-financed
subsidies to keep price down for consumers. The costs of these subsidies had become quite
massive as oil prices peaked, and many countries were already looking hard for ways to cut back.
Thus, as oil prices have fallen, emerging market governments have taken advantage of the
opportunity to reduce the fiscal subsidies.

At the same time, many oil exporters are being forced to scale back expenditure plans in the face
of sharply falling revenues. Even Saudi Arabia, despite its vast oil and financial reserves, has
come under strain, owing to a rapidly rising population and higher military spending associated
with conflicts in the Middle East.
The muted effect of oil prices on global growth should not have come as a complete surprise.
Academic research has been pointing in this direction for a long time. Oil is now thought to be less
of an independent driver of business cycles than was previously believed. Also restraining growth
is a sharp decline in energy-related investment. After years of rapid growth, global investment in
oil production and exploration has fallen by $150bn in 2015. Eventually, this will feed back into
prices, but only slowly and gradually: futures markets have oil prices rising to $60 a barrel only by
2020.
The good news for 2016 is that most macroeconomic models suggest that the impact of lower oil
prices on growth tends to stretch out for a couple years. Thus, low prices should continue to
support growth, even if emerging market importers continue to use the savings to cut subsidies.
For oil producers, though, the risks are rising. Only a couple – notably governance-challenged
Venezuela – are in outright collapse; but many are teetering on the brink of recession. Countries
with floating exchange rates, including Colombia, Mexico, and Russia, have managed to adjust so
far, despite facing significantly tighter fiscal constraints (although Russia’s situation remains
especially vulnerable if low oil prices endure).
By contrast, countries with rigid exchange-rate regimes are being tested more severely. Saudi
Arabia’s long-standing peg to the dollar, once apparently invulnerable, has come under enormous
pressure in recent weeks.
In short, oil prices were not quite as consequential for global growth in 2015 as seemed likely at
the beginning of the year. And strong reserve positions and relatively conservative
macroeconomic policies have enabled most major produce rs to weather enormous fiscal stress
so far, without falling into crisis. But next year could be different, and not in a good way –
especially for producers.

Never Mind $35, The World's Cheapest Oil Is Already Close to $20
Bloomberg - Angelina Rascouet
As oil crashed through $35 a barrel in New York, some producers were already living with the
reality of much lower prices.
A mix of Mexican crudes is already valued at less than $28, an 11-year low, according to data
compiled by Bloomberg. Iraq is offering its heaviest variety of oil to buyers in Asia for about $25. In
western Canada, some producers are selling
for less than $22 a barrel.
“More than one-third of the global oil
production is not economical at these prices,”
Ehsan Ul-Haq, senior consultant at KBC
Advanced Technologies Plc, said by e-mail.
“Canadian oil producers could have difficulty
in covering their operational costs.”
Oil has slumped to levels last seen in the
global financial crisis in 2009 amid a global
supply glut. While the prices of benchmarks
West Texas Intermediate and Brent hover in the $30s, they represent a category of crude -- light
and low in sulfur -- that is more highly valued because it’s easier to refine. Some producers of
thicker, blacker and more sulfurous varieties have suffered heavier losses and are already living in
the $20s.
A blend of Mexican crude has plunged 73 percent in 18 months to $27.74 on Dec. 11, its lowest
level since 2004, according to data compiled by Bloomberg. Venezuela is experiencing similar
lows. Western Canada Select, which is heavy and sulfurous, has slumped 75 percent to $21.37,
the least in almost eight years. Other varieties including Ecuador’s Oriente, Saudi Arabia’s Arab
Heavy and Iraq’s Basrah Heavy were selling below $30, the data show.

Bitumen -- which technically isn’t crude but a heavy black viscous oil that constitutes the so-called
tar sands along with clay, sand and water -- is trading at around $13 a barrel, suffering a drop of
more than 80 percent since June 2014.
Crudes of this type trade at a discount to lighter varieties because to process them “refiners have
to invest in upgrading facilities such as coking plants, which are very expensive,” KBC’s Ul-Haq
said.
“Most places in the world, a lot of the producers they don’t really get the Brent price, and they
don’t get the WTI price,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “It’s really
a dramatic situation that really cannot continue for a very long time for many producers.”
Global benchmark Brent slid 5 cents to $37.87 a barrel on the London-based ICE Futures Europe
exchange at 11:38 a.m. Singapore time. WTI was unchanged at $36.31. Mexico’s government
insulated itself from the oil slump after it managed to hedge 212 million barrels of planned exports
for 2016, using options contracts to secure an average price of $49 a barrel. The nation’s 2015 oil
hedge provided it with a bonus of $6.3 billion.
Not all oil producing nations are as well protected. OPEC member Venezuela’s national budget for
next year assumes a price of $40 when its own crude is trading at just above $30. The nation’s
dollar reserves have fallen by 32 percent this year to $14.6 billion.
Further Declines
Even oil prices from OPEC, which supplies about 40 percent of the world’s crude, are trading
below the main two benchmarks. The daily price of 12 crudes produced by the Organization of
Petroleum Exporting Countries stood at $33.76 a barrel on Monday, the lowest in seven years.
Ironically, those selling at the lowest prices have even more incentive to pump, potentially
deepening the glut that’s weighing on prices. “A lot of the producers might want to sell as much at
current prices,” rather than a level that could be even lower in coming weeks, Abhishek
Deshpande, an analyst at Natixis SA, said by e-mail.
That’s a distinct possibility, according to Trafigura Pte Ltd., the world’s third-biggest independent
oil trader. “I don’t think we have reached the bottom of the cycle yet," Christophe Salmon, chief
financial officer at Trafigura, said in an interview on Monday.

NewBase Special Coverage
News Agencies News Release 15 Dec.. 2015
Halliburton bid for Baker Hughes in limbo as US deadline looms
Bloomberg
Halliburton’s takeover bid for Baker Hughes has come down to the wire with the US Justice
Department, which may decide this week whether to approve the deal after months of
negotiations.
Halliburton has presented a package of proposed asset sales to antitrust officials in hopes of
allaying their concerns that the tie-up between the No 2 and No 3 players in the oil- services
industry would be anticompetitive. A recent meeting was held with Bill Baer, the head of the
Justice Department’s antitrust division, who will make the final decision, said a person familiar with
the discussions. The meeting is a sign the review is drawing to a close.
The companies don’t know whether the government will accept their proposals or file a lawsuit to
block the deal, the person said. Both sides could agree to continue discussions beyond today’s
deadline, but hadn’t negotiated an extension as of late last week, the person said.
Representatives for Halliburton and Baker Hughes, as well as Mark Abueg, a Justice Department
spokesman, declined to comment.
Outside the US, Halliburton must contend with antitrust officials at the European Commission, who
are also reviewing the transaction, and in Australia and Brazil, where regulators have expressed
concerns about the deal. Halliburton has fallen 6% this year, while Baker Hughes has dropped
15%. The 15-member Philadelphia Oil Services Index has slipped 24% in the same period.
The combination has been fraught from the beginning. The companies faced early resistance from
US officials, who were concerned the tie-up could hurt competition because it would reduce the
top three players to two, a person familiar with the matter told Bloomberg News in July. The
officials were concerned that the oilfield services industry would become too concentrated and
that proposed asset sales didn’t go far enough, the person said.

In November, the company sought European approval for the takeover a second time, four
months after regulators rejected an earlier filing on the bid. The initial deadline for the new filing
has been set for January 12.
Australia’s competition watchdog has queried the transaction, and delayed its decision until
December 17 after asking for more comments from market participants. Brazil’s antitrust regulator
challenged the transaction December 7, but a final decision may not be made for another 240
days.
Halliburton said the Brazilian challenge was a “normal step” in the regulator’s process and the
transaction has won regulatory approval in Canada, Colombia, Kazakhstan, South Africa and
Turkey.
US antitrust enforcers are responding forcefully to the flurry of mergers in highly concentrated
industries and may be emboldened by some recent victories. Last week the the Federal Trade
Commission surprised some antitrust experts when it moved to block Staples’ merger with Office
Depot after waving through Office Depot’s tie-up with Office Max in 2013.
General Electric Co abandoned plans to sell its appliance business to Electrolux AB earlier this
month in the middle of a Justice Department lawsuit seeking to block the deal. Comcast Corp
dropped its bid to buy Time Warner Cable in April because of firm objections by the Justice
Department and a regulator. Mega deals pending in industries including health insurance, drug
stores, pharmaceuticals and chemicals are also certain to get careful review.
Halliburton announced the takeover in November 2014 to better compete against industry leader
Schlumberger by achieving scale and building a broader technology portfolio in a market where
the ability to innovate is increasingly critical for success. The deal’s value is now about $26bn,
down from $34.6bn at the time of the announcement.
Schlumberger would remain about two-thirds larger than the combined company. To seek
approval, Halliburton and Baker Hughes said they would divest assets that generate as much as
$7.5bn in revenue, including those vital for building new wells and for controlling the flow of oil.
Halliburton has presented a package of proposed asset sales to antitrust officials in hopes of
allaying their concerns that the tie-up between the No 2 and No 3 players in the oil- services
industry would be anticompetitive.

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 15 December 2015 K. Al Awadi

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