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New base 770 special 21 january 2016

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Greetings,


Attached FYI ( NewBase Special 21 January 2016 ) , from Hawk Energy Services Dubai . Daily energy news covering the MENA area and related worldwide energy news. In todays’ issue you will find news about:-



• GCC: Countries Savings Put at $87 Billion With Renewable Energy
• UAE: Adma-Opco projects on track despite oil slump
• Gulf stocks hit on oil woes
• Equatorial Guinea:ONGC Videsh, Govt Sign MoU for Oil, Gas Cooperation
• Equatorial Guinea:Heerema installs Marathon’s Alba B3 platform
• Sudan offers three oil and gas blocks to India's ONGC Videsh
• Norway’s Arctic ambitions just got a $7 billion boost from Statoil ASA.
• Oil prices stabilize but market sentiment remains bearish
• Oil Extends Drop From 12-Year Low as U.S Supplies Seen Rising
• Rich Nations Sovereign Wealth Funds latest on oil
• Some Bankrupt Oil and Gas Drillers Can't Give Their Assets Away
• Chevron's Costly LNG Project to Start in Shadow of Oil Crash


we would appreciate your actions to send to all interested parties that you may wish. Also note that if you or your organization wish to include your own article or advert in our circulations, please send it to :-



khdmohd@hotmail.com or khdmohd@hawkenergy.net


Best Regards.



Khaled Al Awadi
Energy Consultant & NewBase Chairman - Senior Chief Editor
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME meme since 1995
Hawk Energy since 201

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New base 770 special 21 january 2016

  1. 1. 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 publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase 21 January 2016 - Issue No. 770 Edited & Produced by: Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE GCC: Countries Savings Put at $87 Billion With Renewable Energy Bloomberg - Claudia Carpenter Gulf countries stand to save as much as $87 billion from lower oil and natural gas consumption if they achieve goals for renewables use by 2030, according to the International Renewable Energy Agency. Meeting Gulf Cooperation Council targets for solar and other renewable energy could also create an average of 140,000 jobs a year, with 207,000 people employed in 2030, the Abu Dhabi-based Irena said in a 96-page report released Wednesday. The goals may already be pushed back, with Saudi Arabia, the largest of the GCC’s six member countries, delaying its target completion date for renewables by eight years to 2040.
  2. 2. 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 publication. However, no warranty is given to the accuracy of its content. Page 2 Oil prices dropped almost 70 percent the past three years, prompting some Gulf countries to plan spending cuts or eliminate fuel subsidies. Renewable energy is taking on focus in the Gulf region as some GCC states can’t meet their own needs from traditional fuels because of growing demand, with the United Arab Emirates turning to natural-gas imports, according to the report. The savings of $55 billion to $87 billion by 2030 is equal to 2.5 billion barrels of oil equivalent, the Irena report showed. Carbon emissions could also be reduced by 1 gigaton by 2030, resulting in an 8 percent cut in the region’s per capita carbon footprint, it said. GCC countries Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates comprise the world’s largest hydrocarbon-producing region, with about 30 percent of its proven crude reserves and 22 percent of gas, according to the report. Solar would account for 85 percent of renewables jobs in 2030, with waste-to-energy at 14 percent, Irena said. Saudi Arabia’s program shows solar contributing 76 percent of its sustainable energy plans by 2040, with wind at 17 percent. Water use could be cut by 16 percent in the power sector in the region, it said. In the U.A.E., fuel consumption in water and power industries could be cut 50 percent if targets are met, according to the report. Fuel use would drop 23 percent in Saudi Arabia and 21 percent in Kuwait, it said. Sales of crude, petroleum products and natural gas generated almost 80 percent of total GCC government revenue in 2013, and regional energy consumption grew an average 5 percent a year since 2000, faster than India, China and Brazil, Irena said. Saudi Arabia is the world’s largest crude exporter and Qatar the biggest shipper of liquefied natural gas.
  3. 3. 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 publication. However, no warranty is given to the accuracy of its content. Page 3 UAE: Adma-Opco projects on track despite oil slump Gulg News - Sarah Diaa Abu Dhabi Marine Operating Company (Adma-Opco) is on-track with its drilling and oil production projects despite the plunge in oil prices, which reached new lows below $28 (Dh103) a barrel on Wednesday. According to Ali Al Jarwan, the company’s chief executive officer, Adma-Opco has not changed or slowed down its plans to develop oilfields as a result of lower oil prices. The company has seen a 16 per cent reduction in costs in 2015, however, and plans to cut costs by a further 15-20 per cent in 2016. “2015 was a good year for Adnoc (Abu Dhabi National Oil Company) generally. Reducing our spending was the focus last year, and we managed to cut our spending by 16 per cent. We’re working on a lot of projects in 2016 and have a large budget, but there’s also an opportunity to cut costs because the market prices are lower,” Al Jarwan said. New fields Adma-Opco is mostly owned by Adnoc, which has a 60 per cent stake in Adma-Opco, with the remaining 40 per cent stake being distributed among BP, Total, and Japan Oil Development Co. This year, the company is working on developing new fields including Satah Al Razboot, which is now 70 per cent complete; Umm Lulu, now 40 per cent complete; and Nasr, currently 30 per cent complete. The three projects will come online in 2017, 2018, and 2019 respectively. Al Jarwan was speaking to reporters on Wednesday on the sidelines of the Abu Dhabi Summit of Global Marine and Maritime Leaders. In November, the CEO said the company would increase its oil production levels to one million barrels per day by 2020, up from the current levels of 650,000 barrels a day. Adma-Opco would add around 20,000 to 50,000 barrels incrementally over the next few years to reach its target.
  4. 4. 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 publication. However, no warranty is given to the accuracy of its content. Page 4 Gulf stocks hit on oil woes AFP + Oman Observer Stock markets in the Gulf states plunged on Wednesday, following the massive rout in global shares as oil resumed its decline. The fresh fall came a day after most Gulf bourses made a strong rebound as oil and world stocks saw important gains. But all seven bourses in Gulf countries, which pump around 18 million barrels of oil a day, dropped on Wednesday, led by Saudi Arabia and Dubai. The Saudi Tadawul All-Shares Index, the largest Arab bourse, dipped more than 4 per cent to fall below the key 5,500-point mark at mid-session. The leading petrochemicals and banking sectors fell 5.6 per cent and 3.7 per cent, respectively. The Dubai Financial Market Index finished the day down 4.6 per cent to drop to 2,638.76 points, its lowest level for 30 months. Leading shares Emaar properties and Arabtec construction plunged 5.2 per cent and 7.7 per cent. The Abu Dhabi Securities Exchange shed 3.1 per cent to drop below the 3,800-point level, pulled down by all sectors, especially the investment and financial services sector which plunged 9.3 per cent. The Qatar Exchange, the second biggest Arab bourse, dropped 3.3 per cent to below 8,700 points and traded around levels seen in early 2013. The Kuwait Stock Exchange Index closed down 1.95 per cent to drop below the key 5,000-point mark, a level last seen more than 12 years ago. The small Muscat Securities Exchange lost 1.83 per cent and the tiny Bahrain bourse dropped 0.6 per cent. All seven Gulf bourses remained well below last year’s close. Oil prices were also trading at more than 12-year lows.
  5. 5. 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 publication. However, no warranty is given to the accuracy of its content. Page 5 Equatorial Guinea:ONGC Videsh, Govt Sign MoU for Oil, Gas Cooperation by Rigzone + NewBase India's ONGC Videsh Ltd. and Equatorial Guinea signed a memorandum of understanding (MoU) to cooperate in the latter's oil and gas industry, the West African country's Ministry of Mines, Industry and Energy (MMIE) announced in a press release Wednesday. "The MoU provides the basis for a comprehensive cooperation in multiple areas of the energy sector, including offshore oil and gas exploration in Equatorial Guinea plus midstream and downstream projects. The MoU is considered the foundation for future discussions that will take place in the coming weeks between the both parties to reach further agreements," MMIE revealed. The agreement, which "calls for a sweeping cooperation that could encompass several areas of the oil and gas industry", was signed by Gabriel Mbaga Obiang Lima, Equatorial Guinea's Minister of Mines, Industry and Energy, and ONGC Videsh's Managing Director Narendra K. Verma, Managing Director. “We have received a clear mandate from H.E. the President of Equatorial Guinea to execute this cooperation on both the economic and political front. Going forward, we want to share our very ambitious plans with ONGC for developing upstream and downstream sectors. We will be happy to cooperate with ONGC to fulfill all of them,” Gabriel Mbaga Obiang Lima said. ONGC Videsh, the overseas arm of state-owned Oil and Natural Gas Corp. Ltd. (ONGC) focused on the upstream sector, has made investments in Africa a top priority of its 2016 agenda. The Indian company intends to double its spending on Africa to $16 billion over the next few years as it evaluates multiple exploration opportunities. “We look forward to this occasion for boosting our ties, particularly in the hydrocarbons and energy sector ... This will strengthen the relationship between our companies and governments. Our Government and Prime Minister are very keen on this cooperation, following the mandate set forth last October,” Verma said.
  6. 6. 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 publication. However, no warranty is given to the accuracy of its content. Page 6 Equatorial Guinea:Heerema installs Marathon’s Alba B3 platform Offshore Energy Today Heerema Fabrication Group, the Netherlands-based manufacturer of large structures for the oil and gas industry, has informed through social media that the Alba B3 topside and jacket have been installed at the Alba field, offshore Equatorial Guinea. The platform sailed away from the Netherlands towards its offshore location in December 2015. Both the topside and the jacket were constructed by Heerema Fabrication Group at the company’s Poland fabrication facility in Opole under a contract awarded by the Houston-based oil and gas company Marathon Oil in April 2013. The transportation and installation scope of work was conducted by the company’s sister division Heerema Marine Contractors. The company used the Thialf crane vessel for final offshore installation. The platform was originally scheduled to be installed on the field by end-2015 with start-up expected in mid-2016. The 5,800-tonne topside was mated with the 91-meter tall jacket weighing 2.600 tonnes some 32 kilometers offshore Malabo, Equatorial Guinea. The topside is 40 meters long and 40 meters wide with the height reaching 35 meters. The 33-meter-long, 4-legged jacket is 33 meters wide and 81 meters high. The Alba 3 platform will compress gas from the existing Alba B2 platform through a 33-meter-long bridge connection. With this new platform, Marathon is expecting to boost production from the gas and condensate field.
  7. 7. 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 publication. However, no warranty is given to the accuracy of its content. Page 7 Sudan offers three oil and gas blocks to India's ONGC Videsh Source: Reuters Sudan has offered three oil and gas blocks for exploration and development to India's ONGC Videshas part of efforts to increase the country's oil revenue, oil minister Mohamed Zayed Awad said on Wednesday. The African nation lost three quarters of its oil revenue when South Sudan seceded in 2011 and currently produces about 100,000 barrels per day (bpd). Three areas have been offered to the Indian company, comprising Blocks 8, 15 and 24, the last of which is in the development stage, Awad told Reuters after meeting his Indian counterpart Dharmendra Pradhan ahead of a two-day India-Africa Hydrocarbon summit. Awad also asked ONGC to consider buying a stake in Sudan's Block 17, which is producing about 7,000 bpd oil. Block 17 is operated byStar Oil, in which Yemen's Ansan Wikfs owns a 66 percent stake and Sudan's Sudapet holds the remainder. Awad said the Yemen company wants to sell its stake in the venture. ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corp, already has a 25 percent stake in onland Blocks 1, 2, and 4, which together produce about 50,000 bpd.
  8. 8. 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 publication. However, no warranty is given to the accuracy of its content. Page 8 Norway’s Arctic ambitions just got a $7 billion boost from Statoil ASA. Bloomberg Norway’s largest oil company was able to halve its expected development costs to keep alive its delayed Johan Castberg development in the Barents Sea. The decision comes as welcome news for an industry that’s struggling with a deep plunge in oil prices and tens of thousands of job cuts. Statoil’s plans will also benefit other companies that have made discoveries in the Barents Sea, such as Lundin Petroleum AB with its Gohta and Alta finds, said the Swedish explorer’s local manager, Kristin Faeroevik. “It’s fantastic news,” she said Tuesday in an interview at a conference in Sandefjord, Norway. “I have great confidence that our own discoveries will be developed.” Statoil announced that the project will proceed after it managed to lower estimated investments to 50 billion kroner to 60 billion kroner ($7 billion) from an earlier estimate of 100 billion kroner. The owners of the oil deposits, which include state-owned Petoro AS and Eni SpA, agreed on using a floating production, storage and offloading facility, with a final investment decision planned for next year and possible production start in 2022. “This is a project that’s starting to get close to what I would call an attractive project,” Chief Executive Officer Eldar Saetre said at the conference. Statoil will seek to make the project even cheaper, he said. The decision breaks a string of delays for the project that has suffered from high costs, a tax increase and, most of all, a plunge in oil prices. It goes against a trend of cancellations of energy
  9. 9. 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 publication. However, no warranty is given to the accuracy of its content. Page 9 projects worldwide, not least in the high-cost Arctic, where Statoil and others have abandoned exploration plans from Alaska to Greenland. Castberg, which holds as much as 650 million barrels of oil, was considered a breakthrough venture to unlock oil resources in the Arctic after Norway’s crude production has dropped by half since a 2000 peak. It’s also a welcome boost to the country’s supplier industry that’s being squeezed as spending is due to fall for a third year. Paradoxically, the 75 percent slump in crude prices over the past 18 months that was weighing on the project’s profitability has also contributed to lower investments as suppliers are forced to cut their rates. Saetre declined to provide details on Castberg’s profitability threshold. Challenging Time Petoro’s CEO Grethe Moen called the news “positive.” All lasting cost efficiencies will help develop resources in the Barents Sea, a region with little infrastructure, she said. Separately, Eni received approval from Norway’s Petroleum Safety Authority to start production from the FPSO on the delayed Goliat field in the Barents Sea, the government body said in a statement. Goliat will become the first oil field to start producing in Norway’s Barents Sea, where only the Snohvit gas deposit is in operation. Statoil will continue working on plans for a possible onshore oil terminal at Veidnes as a separate project with operators on Castberg, and four other fields in the north, Alta, Gohta, Wisting and Goliat, Saetre said. The terminal was part of an original development solution presented by Statoil in 2013 but later scrapped. Norwegian authorities had signaled a preference for a development of Castberg involving pipelines and a terminal with capacity for future discoveries in the area, which would have strengthened incentives to explore the Barents Sea. “I’m satisfied that companies are working on developing projects in a challenging time,” Petroleum and Energy Minister Tord Lien said to reporters in Sandefjord. Still, “it’s important that we find ways to develop the resources on Norwegian shelf that create the most value in the long-term. That means that we need robust solutions too.”
  10. 10. 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 publication. However, no warranty is given to the accuracy of its content. Page 10 NewBase 21 January 2016 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil prices stabilize but market sentiment remains bearish REUTERS + NEWBASE Oil prices stabilized in early trading on Thursday after hitting fresh 2003 lows the session before, but analysts said a persistent global glut would keep pressuring markets. U.S. oil futures crashed below $27 dollars a barrel on Wednesday for the first time since 2003, caught in a broad slump across world financial markets as traders worried that a huge oversupply in crude was coinciding with an economic slowdown, especially in China. On Thursday, oil prices stabilized, with front-month West Texas Intermediate (WTI) crude futures CLc1 trading at $28.66 per barrel at 0155 GMT, up 31 cents from its previous close. International benchmark Brent was up 37 cents at $28.25. Yet broader market sentiment remained bearish as producers around the world pump 1-2 million barrels of crude every day in excess of demand, creating a huge storage overhang. At the same time, concerns are growing that China's economy could slow further, hitting demand. "Lower commodity and oil prices reflect weakening demand," HSBC said on Thursday. ANZ bank said prices were likely to come under more pressure after the release later in the day of the U.S. Energy Information Administration's official storage data. Oil price special coverage
  11. 11. 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 publication. However, no warranty is given to the accuracy of its content. Page 11 Oil Extends Drop From 12-Year Low as U.S Supplies Seen Rising Bloomberg - Ben Sharples Oil extended its decline from the lowest close in more than 12 years before weekly U.S. government data forecast to show crude stockpiles expanded, exacerbating a global glut. Futures lost as much as 3.4 percent in New York after falling 3.3 percent Tuesday to the lowest since September 2003. Inventories probably increased by 2.75 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration Thursday. Markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran boosts exports, according to the International Energy Agency. “The outlook for the oil market is pretty negative at the moment,” Angus Nicholson, an analyst at IG Ltd. in Melbourne, said by phone. “Iran is adding to the concerns. Once the market does get a gauge on Iran’s potential, there will probably be less uncertainty affecting the market.” Crude is down 26 percent this year amid volatility in Chinese markets and speculation the removal of restrictions that capped Iran’s oil sales will help to prolong a worldwide oversupply. Energy producers led declines in Asia as the MSCI Asia Pacific Index lost 2.7 percent in Hong Kong, heading for the lowest close since September 2012. West Texas Intermediate for February delivery, which expires Wednesday, fell as much as 97 cents to $27.49 a barrel on the New York Mercantile Exchange and was at $27.55 at 2:29 p.m. Hong Kong time. Monday’s transactions were booked with Tuesday’s because of the Martin Luther King Jr. holiday. The more-active March future slid 77 cents to $28.80.
  12. 12. 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 publication. However, no warranty is given to the accuracy of its content. Page 12 Oil Supplies Brent for March settlement lost as much as 72 cents, or 2.5 percent, to $28.04 a barrel on the London-based ICE Futures Europe exchange. The contract rose 21 cents to $28.76 Tuesday. The European benchmark crude traded at a discount of 58 cents to WTI for March. U.S. crude stockpiles were about 100 million barrels above the five-year seasonal average at the end of 2015, according to EIA data. Supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest U.S. oil-storage hub, increased for a 10th week through Jan. 8 to a record 64 million barrels. The IEA trimmed 2016 estimates for global oil demand as China’s economic expansion weakens and raised forecasts for supplies outside of the Organization of Petroleum Exporting Countries. While non-OPEC supply is set to drop 600,000 barrels a day in 2016, Iran’s comeback could fill that gap by the middle of the year. As a result, world markets may be left with a surplus of 1.5 million barrels a day in the first half. Output Trimmed Cnooc Ltd., China’s largest offshore oil company, will trim outputfor the first time in more than a decade, prompting speculation the nation’s producers are succumbing to the global price war. Shares dropped as much as 6.6 percent to HK$6.55. PetroChina Co. and China Petroleum & Chemical Corp. both fell more than 7 percent. Oil prices are likely to stay at current levels of about $30 a barrel for some time as the energy market weathers a “supply shock,” Glencore Plc Chairman Tony Hayward said in an interview at the World Economic Forum in Davos, Switzerland.
  13. 13. 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 publication. However, no warranty is given to the accuracy of its content. Page 13 NewBase Special Coverage News Agencies News Release 21 January 2016 Rich Nations Sovereign Wealth Funds latest on oil Bloomberg - Javier Blas In the days of the commodity boom a few years ago, oil-rich nations and their petrodollar wealth were the darlings of the World Economic Forum.A panel that included Kuwaiti, Saudi and Russian sovereign-wealth fund officials was one the hottest tickets at Davos in January 2008, just before oil prices surged to $150 a barrel. It was a time when crude producers were accumulating billions of dollars in debt and equities, plus real estate, sports teams and other trophy assets. So influential were the fund managers that a group of bank chiefs told them behind closed doors at the Swiss resort to become more transparent, or risk antagonizing American legislators.
  14. 14. 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 publication. However, no warranty is given to the accuracy of its content. Page 14 Now, with oil below $30 a barrel, the situation has reversed. Instead of buying U.S. Treasuries, British department stores and French soccer teams, producing countries are selling, helping depress already-spooked markets. Only a handful of wealth-fund heads are scheduled to appear at the 2016 annual forum of the rich and powerful. And not one panel is devoted to the topic. "They are selling, they are selling a lot," said Paolo Scaroni, deputy chairman at Rothschild & Sons and a former head of Italy’s largest oil company, ENI SpA. "The selloff will continue in 2016 because oil-rich countries need to finance" their spending. Across the Middle East, central Asia, Africa and Latin America, governments are tapping the reserves accumulated during the good times. Petrodollars are pouring out of a myriad of vehicles: sovereign wealth funds, stabilization funds, development funds and the foreign-exchange reserves sitting in central banks. To be sure, petrodollar-stocked government funds are still a influential force in global finance, accounting for about 5 percent to 10 percent of global assets. Nor is the selling unexpected: Stabilization funds, for instance, are designed to grow during the boom years and help governments keep up spending during the lean times. Yet the magnitude of the declines has surprised many who help commodity countries manage their wealth. Saudi Arabia, Qatar and Kuwait "are all withdrawing money," said Alberto Gallo, head of macro credit research at Royal Bank of Scotland Plc. "Petrodollars are becoming petropennies." Gallo has a point: the gross flow of petrodollars into the global economy last year fell to as little as $200 billion, down from nearly $800 billion in 2012, according to the bank. Market Sentiment While wealth fund assets aren’t big enough to move markets alone, they can have an impact on market sentiment. Royal Bank of Scotland said in a note to clients this month that the selloff is potentially reducing "the demand for fixed-income assets, which was a significant portion of major oil exporting sovereign wealth funds’ growing investments over the past decade." Producers are exacerbating the global market rout, according to David Zervos, chief market strategist at New York-based Jefferies LLC. At the current crude price, commodities countries have "entered the phase where the excess savings glut is being replaced with an excess selling glut," he said in a note to clients this week. In Chile, the state-owned stabilization fund has seen its assets fall to $14 billion at the end of last year, from a peak of $15.5 billion in 2014. The foreign-exchange reserves of Azerbaijan have fallen to $7.3 billion, less than half the $16.5 billion of mid-2014. Nigeria hasn’t tapped its small sovereign wealth fund -- but the country has burned through the reserves controlled by the central bank. They’ve fallen to $28.7 billion, down from a peak of $48 billion in mid-2013. Losing Money The funds’ chiefs are under pressure. The head of the sovereign wealth fund of Kazakhstan was fired earlier this month after he told The Wall Street Journal the vehicle will run out of money in seven years as oil prices cut its revenue. Algeria, one of the world’s top natural-gas exporters, has over the last year burned through the reserves it took nearly four years to accumulate, according to data compiled by Bloomberg.
  15. 15. 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 publication. However, no warranty is given to the accuracy of its content. Page 15 Saudi Arabia, the world’s largest oil producer, is a prime example of the swiftness and magnitude of the reversal: its foreign-exchange reserves have fallen more than $100 billion since mid-2015, to $635 billion, according to data from the Saudi Arabian Monetary Agency. The drop is larger than in 2008-2009, during the global financial crisis. Riyadh managed most of these petrodollars as foreign exchange reserves under the control of the central bank. The kingdom has in the past suggested it may create a sovereign wealth fund similar to those in neighboring Kuwait and Qatar to manage a portion of the money. Reuters reported last week that the nation is seeking proposals from investment banks and consultants. Saudi reserves and oil prices follow the same path The retrenchment is uneven. The wealth funds of other oil countries such as Kuwait, United Arab Emirates and Qatar show little sign of shrinking, with their funds still buying assets. The sovereign wealth fund of Norway has stopped growing, but hasn’t seen a drop in assets. The fund, the world’s largest, had about 7.02 trillion kroner ($800 billion) at the end of September 2015, little changed from the beginning of the year. Governments and managers of eight commodities-rich countries and their funds either declined to comment or didn’t reply to questions. Few industries are more affected than asset management, whose bosses are heavily represented at Davos. A turnaround isn’t in view any time soon, said Martin Gilbert, chief executive of Aberdeen Asset Management Plc. "What we do know though is, if the oil price remains low, we’re going to see more redemptions, I would say, from government institutions," Gilbert told investors in November. That month, Aberdeen reported $19.1 billion in net outflows in its fiscal fourth quarter as crude-exporting countries, among other investors,pulled out.
  16. 16. 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 publication. However, no warranty is given to the accuracy of its content. Page 16 Some Bankrupt Oil and Gas Drillers Can't Give Their Assets Away Dawn McCarty In mid-2014, when the crude price topped $100 a barrel, Clark made an offer to buy properties from Dune Energy Inc., a small driller with money trouble. Dune turned him down. A year later, as oil plunged to $60 a barrel, Dune filed for bankruptcy and Clark’s White Marlin Oil & Gas Co. picked up the assets at auction at a deep discount. “What we offered versus what we got it for, it’s a great price,” Clark said. “We’re going to continue to play these bankruptcies. We’re participating in two more right now.” Winners and losers are emerging from the energy bust. What’s a meal for Clark is indigestion for banks that financed the boom using oil and gas properties as collateral. The four biggest U.S. banks -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. -- have set aside at least $2.5 billion combined to cover souring energy loans and have said they’ll add to that if prices stay low. There’s plenty to keep Clark bargain-hunting. Last year, 42 U.S. energy companies went bankrupt, owing more than $17 billion, according to a report from law firm Haynes & Boone. Dune went belly up owing $144.2 million. Its assets sold for $20 million. In May, American Eagle Energy Corp. filed for bankruptcy with debts of $215 million. Its properties sold for $45 million in October. BPZ Resources Inc. owed $275.2 million. Its assets fetched about $9 million. Endeavour International Corp. went into bankruptcy owing $1.63 billion. The company sold some assets for $9.65 million and handed over the rest to lenders. ERG Resources LLC opened an auction with a minimum bid of $250 million. Response? No takers. “A lot of people got into this business and didn’t really understand the ups and downs of price cycles,” said Becky Roof, a managing director for turnaround and restructuring with the consulting firm AlixPartners. “They’re getting a very bad dose of reality right now.” Eternal Energy More pain will come, according to Roof’s firm. Crude prices, down more than 70 percent since June 2014 and sinking below $30 a barrel, could head down further, according to an AlixPartners report. With its optimistic ticker AMZG -- earlier incarnations were named Golden Hope Energy and Eternal Energy -- American Eagle is classic shale. The last few years, the company took advantage of low interest rates and high oil prices, outspending its income and relying on debt to keep drilling. Now the company is part of the bust, selling off acreage for less than it owed its bondholders. Bradley Colby, American Eagle’s chief executive officer, didn’t respond to an e-mail seeking comment. Samson Resources Corp. filed for bankruptcy in September, listing $4.2 billion in debt. Its initial plan was to let lenders with claims on its assets take over, but unsecured creditors opposed the idea since, they contend, nothing would be left over for them. The company is still negotiating with its lenders. Brian Maddox, a spokesman for Tulsa, Oklahoma-based Samson, declined to comment. “The reality is setting in as prices remain lower for longer,” said Buddy Clark, a partner with Haynes & Boone in Houston, which represented Dune Energy in bankruptcy.
  17. 17. 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 publication. However, no warranty is given to the accuracy of its content. Page 17 An attorney for BPZ Resources declined to comment. Representatives of Endeavour International didn’t respond to requests for comment. Cat Canyon ERG Resources owns almost 19,000 acres in a century-old field about an hour’s drive northeast of Santa Barbara, California. Called Cat Canyon, it was discovered in 1908 and has produced 300 million barrels of crude since then. ERG planned to squeeze more oil from the aging field. That was before prices declined. ERG declared bankruptcy in April owing about $400 million, most of it to Beal Bank USA, a private lender based in Las Vegas. The company found no qualified buyers willing to pay its minimum bid of $250 million. Any money the business generates will be used to repay Beal before other creditors, said Roof, who was ERG’s chief restructuring officer. Bankruptcies are accelerating. Magnum Hunter Resources Corp., Swift Energy Co. and New Gulf Resources filed in December. With more liquidations hitting the market, bargain hunters may not be willing to pay top dollar when there are so many deals to be found. The next test will be the auction of Quicksilver Resources Inc.’s properties, scheduled for Wednesday. The shale driller declared bankruptcy in March with more than $2 billion in debt. “So much of the frenzy in shale in the past few years was a result of the money pouring out of Wall Street,” said Clark of White Marlin. “It was as much a Wall Street play as it was an oil-and- gas play. It was putting money to work. Companies took on all that risk and now we see the result.”
  18. 18. 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 publication. However, no warranty is given to the accuracy of its content. Page 18 Chevron's Costly LNG Project to Start in Shadow of Oil Crash Bloomberg|James Paton After years of delays, cost overruns and labor unrest, Chevron Corp.’s Gorgon project, one of the world’s most expensive liquefied natural gas ventures, faces another challenge: the weakest energy prices in more than a decade. As Chevron prepares to start exports from the development off northwest Australia, oil prices -- which traditionally determine the value of LNG shipments -- are languishing near 12- year lows. The project will add to a wave of new supply, including the first deliveries from the U.S., amid weakening demand. Gorgon highlights the challenge of investing in major energy projects amid unpredictable and volatile prices. Brent crude has more than halved since Chevron decided to go ahead with the development in 2009, and its cost has ballooned to $54 billion from $37 billion. While the company says it’s focused on returns over four decades, current market conditions will reduce near-term cash flows.
  19. 19. 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 publication. However, no warranty is given to the accuracy of its content. Page 19 “Falling oil and LNG prices will greatly affect the economics of all new projects coming online now,” James Taverner, a Tokyo-based analyst at industry consulting firm IHS Inc., wrote in an e- mail. “Gorgon is one of the most expensive LNG projects in the world. Low LNG prices will hurt its margins.” China Contract Chevron, which signed a preliminary supply agreement earlier this week to sell Gorgon gas to a buyer in China, is concentrating on the long term. The San Ramon, California-based company has agreements in place with buyers covering more than 80 percent of its LNG from the Gorgon and Wheatstone ventures in Australia, it said in an e-mail. “Legacy assets such as Gorgon will drive long-term growth and create significant shareholder value for decades to come,” Chevron said. “Gorgon will generate substantial earnings over its expected economic life of 40+ years.” The Project LNG Sales and Marketing :- The Gorgon Joint Venture Participants have signed a number of sales agreements to market LNG in key customer countries and have adopted a flexible and innovative marketing approach where each participant secures markets for its share of gas. Domestic Gas Sales In November 2011, long term contracts were announced with Western Australia’s largest energy retailer, Synergy and the State’s leading energy generator, Verve Energy for a combined 125 terajoules per day for 20 years commencing in 2015. Local Benefits : The Gorgon Project will be an important pillar of the Australian economy for decades to come. The Project has:- • Spent more than $31 billion on local goods and services. • Generated more than 10,000 jobs in Australia, this includes more than 8,000 people working on and around Barrow Island. The Chevron-operated Gorgon Project is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history. The Project is under construction on Barrow Island, around 60 kilometres off the northwest coast of Western Australia. It includes a three-train, 15.6 million tonnes per annum (MTPA) liquefied natural gas (LNG) facility and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia. The first LNG cargo is expected to be loaded in early 2016. This will be followed by the commencement of domestic gas supply to the maket.
  20. 20. 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 publication. However, no warranty is given to the accuracy of its content. Page 20 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 21 January 2016 K. Al Awadi
  21. 21. 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 publication. However, no warranty is given to the accuracy of its content. Page 21

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