UAE Oil Minister Expects Higher Oil Prices From Production Cuts

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NewBase 24 December 2016 - Issue No. 978 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Expects Oil Prices to Rise More on Global Production Cuts
Bloomberg - Mahmoud Habboush
Oil prices may rise even more once investors see that OPEC and other major producers are
fulfilling an agreement to cut production to curb the global glut, United Arab Emirates Oil Minister
Suhail Al Mazrouei said.
OPEC is committed to the decision to reduce output and it’s too early to talk about any additional
steps it may take, Al Mazrouei told reporters in Abu Dhabi. Eleven non-OPEC nations said Dec.
10 they will reduce output by 558,000 barrels a day, adding to a Nov. 30 OPEC pledge to cut 1.2
million starting in January.
“When the market sees the agreement is being implemented, and we hope it will be an effective
agreement that will be implemented, and when they see the reduced supply in the market, I am
sure this will be positive” for prices, Al Mazrouei said.
Oil rose 18 percent since Nov. 29. Output cuts that the Organization of Petroleum Exporting
Countries and other producers agreed to may reduce swollen inventories as early as the first
quarter, bringing down the surplus by about one-third, Ed Morse, head of commodity research at
Citigroup Inc., said last week. OPEC has requested all members except those exempted from cuts
to disclose export
plans to ensure
compliance with the
agreement.
The U.A.E. and other
Gulf Arab nations
have told their
customers about
plans to cut output,
and all other OPEC
producers who were
asked to join the
output deal should do
the same, Al
Mazrouei said.
“We call on all OPEC
members that
promised to cut to
follow the steps of
the Gulf states and the U.A.E. and advise the markets and buyers about the percentage of the
cuts that they will make,” he said.

Saudi energy firm wins deal to build 300MWsolar project in Mexico
Arabian Business
Fotowatio Renewable Ventures (FRV), a developer of large-scale solar power plants and part of
Saudi-based Abdul Latif Jameel Energy, has been awarded a 30-year 300MW solar project in
Mexico.
With this build-operate-own agreement, FRV said it is extending its global footprint into the
Mexican market at a rate of $26.99/MWh for the first 15 years of the project.
The construction of the plant will begin in mid-2018 and will become operational in mid-2019, and
will create approximately 250 local jobs as part of the construction phase and a further 20 jobs
during operations.
The plant will generate enough green electricity to supply approximately 76,100 homes, while
reducing greenhouse gas emissions by approximately 97.7 million tons of CO2, the company said
in a statement.
It added that the the agreement was part of a second electricity market auction conducted by the
National Energy Control Centre (CENACE).
FRV said the help the Federal Commission of Electricity's plans to generate 35 percent of its
electricity from renewable energy sources by 2024.
“Mexico is one of the world’s richest markets in renewable energy sources which presents
numerous opportunities for FRV and
international investors. FRV’s success in
this auction marks a milestone as it further
expands the company’s footprint in Latin
America and supports its global growth
plans,” said Rafael Benjumea, CEO of FRV.
"Our pipeline in the country, in addition to
our expertise and competitiveness, places
us in a good position to continue
participating in future auctions.” FRV was
acquired by Abdul Latif Jameel Energy in April
2015.

QP, Exxon Mobil get US nod for gas export Golden Pass LNG plant
Gulf Times
Qatar Petroleum International Ltd and Exxon Mobil Corp won approval by federal energy
regulators to build a $10bn natural gas export plant in Texas.
The two energy giants were cleared to build and operate the Golden Pass liquefied natural gas
export terminal in Sabine Pass, Texas, according to an order issued on Wednesday by the
Federal Energy Regulatory Commission. The agency also authorised a pipeline project designed
to bring in 2.5bn cubic feet per day of gas to the facility for export.
Clearance of the project marks the end of a nearly three-year application process and comes as
LNG prices have slumped amid waning demand and an influx of supply from new export terminals
across the globe.
A string of US production plants have been suspended or cancelled as foreign markets have
soured. “We will authorise Golden Pass Products’ proposal” to construct and operate the project,
the commission said in its ruling on Wednesday.
The Golden Pass project will consist of three liquefaction trains, or plants, with capacity to produce
15.6mn metric tonnes per year of the super-chilled fuel, the order showed.
The developers are awaiting approval from the Energy Department for a permit to export gas to
nations that lack a free trade agreement with the US, according to the project website.

Saudi Arabia’s petchem exports growing at 15pc
Saudi Arabia’s petrochemical exports have been seeing a CAGR of 15 per cent and are estimated
to reach 100 million tonnes in 2016, said the organisers of the upcoming ArabPlast, a major
industrial show in Dubai, UAE.
“Saudi Arabia’s petrochemical sector is largest non-oil sector, with investment estimated at $63.5–
150 billion expected in 2020 alone,” added Satish Khanna, general manager, Al Fajer Information
and Services, co-organisers of ArabPlast, citing the Saudi Arabia industrial overview report
published by Jeddah Chamber.
“With proven track record success, ArabPlast has become a biennial tradition for the plastics and
petrochemical industrials in GCC countries. The 2017 edition is believed to showcase higher
contributions in term of innovation, new products, latest technologies and knowledge exchange.

And I am proud to get one of the leading companies in the kingdom of Saudi Arabia to support this
event and enhance its visibility within the Saudi market,” Khanna explained.
Tasnee, a leading industrial company in Saudi Arabia, is the platinum sponsor of ArabPlast Show
to be held from January 8 to 10 at the Dubai Exhibition and convention Centre
Co-organised by Al Fajer Information and Services and German exhibition organiser Messe
Dusseldorf, ArabPlast is expected to bring together key players in the plastics, petrochemicals and
rubber industry with exhibitors and visitors coming from different countries around the Middle East
region and the world.
Established in 1985, Tasnee operates several companies which core activities are related to
petrochemicals, chemicals, plastics, metals manufacturing, industrial services and environmental
technologies.
These industries play a major role in developing and sustaining the regional economies. Hence
the importance of ArabPlast as an opportunity for international experts and professionals to meet
and share practises, success stories, solutions and even concerns regarding these sectors.
Tasnee was one of the early Saudi companies investing in the petrochemical sector. The
company always aimed at reaching a leading position and we are now one of the largest
producers of petrochemical products in the kingdom.
Attendees to ArabPlast 2017 will get the occasion to discover a wide range of products that
provide functionalities in injection moulding, blow molding, wrapping and packaging or pre and
post plastic processing techniques as well as raw materials, such as masterbatches, additives and
polymers.
Some of the machinery and new
technologies to be displayed include
plastic machinery, plastic/rubber
processing technology, pre and post-
processing systems, plastic packaging
technology, injection moulding, blow
moulding, wrapping technology,
extrusions, chemicals and additives, semi
finished goods, engineering plastics and
plastic products.

Egypt Shell reported to be offering Rosetta concession offshore for sale
Source: Daily News Egypt
Daily News Egypt reports that Shell has offered the Rosetta concession, offshore Egypt, for sale.
Daily News Egypt said a source close to the company told it that Shell decided not to carry out
any development operations in Rosetta. 'Development will be expensive with almost no economic
feasibility, considering the price of gas produced there,' he explained.
He said the Rosetta field currently produces 40 million cubic feet of gas per day and will stop
producing by July as the natural decay of productivity is not offset by development.
He pointed out that BP acquired the Rosetta gas treatment plant in Rashid from Shell for $128m.
BP received the plant in April and began preparations to link it to the Fayoum and Giza fields.
The source said that the maximum capacity of the Rosetta gas treatment plant is 425 million cubic
feet of gas per day, of which 420 million cubic feet will come from the Fayoum and Giza fields by
2019.
He added that Royal Dutch The source explained that Shell has reduced its investments for the
current fiscal year in Borollos and Rashid concession areas to cover only operation and
maintenance costs. He added that in the fiscal year (FY) 2016/2017 Shell plans on investing
$158.9m, down from $222m in FY 2015/2016.
Shell moved the current supply extracted at the Rosetta field to the Borollos gas treatment plant
after selling the Rosetta gas treatment plant to BP.
He said the company allocated about $96.7m to operate the Borollos field and $38m for periodical
maintenance. He added that Shell allocated $22.7m for operational costs of the Rosetta field and
$1.4m for field maintenance without new developments.
He noted that production of Borollos and Rashid fields naturally declines by 10m cubic feet of gas
per day. Daily News Egypt had previously revealed that the Ministry of Petroleum owes Shell
$1.3bn, for their share of the gas produced from the Rashid and Borollos fields.
The government collects roughly $50m a month in dues owed to Shell for the Borollos and Rashid
fields, however; they have been unable to pay the company due to the ongoing foreign currency
shortage.

Cyprus:Eni awarded two out of three exploration blocks offshore Cyprus
Source: Eni
The awarded areas have geological affinities with those successfully explored by Eni in the
neighboring areas in the Egyptian offshore, with the discovery of the Zohr super-giant gas field.
Eni has been awarded two exploration blocks offshore Cyprus, following the competitive
international bid round '3rd Licensing Round'. The announcement was made yesterday by the
Ministry of Energy, Commerce, Industry and Tourism of Cyprus, following the decision of the
Council of Ministers of the Republic of Cyprus.
Eni will be Operator of Block 6 with a 50% stake in partnership with Total (with the remaining 50%)
and will acquire a 100% stake in Block 8.
These areas have geological affinities with those successfully explored by Eni in the neighboring
areas in the Egyptian offshore, with the discovery of the Zohr super-giant gas field. With these
new assignments, Eni strengthens its strategic positioning in an area where, in addition to the
Blocks 9, 3 and 2 assigned following the 2nd international bid round in 2012, the company also
holds three exploration blocks on the Egyptian side: Shorouk (where the Zohr field is located),
Karawan (where Eni has a 50% stake) and North Leil (Eni 100%). The company will leverage
synergies with assets already in its portfolio, facilitating time to market and reducing costs.
These assignments – Eni’s CEO Claudio Descalzi said – confirm the effectiveness of Eni’s
exploration strategy, which keeps acquiring significant shares and uses the knowledge base
resulting from the intense activity related to Zohr field. It is another step towards a possible future
definition of a powerful hub for natural gas in the Eastern Mediterranean, which could play an
important role in the future energy security of the area, as well as potentially in Europe’s energy
security.'Eni has been operating in Cyprus since 2013, where it holds and operates the offshore
exploration Blocks 2, 3 and 9.

MENA: Brighter outlook for power consumption in Mena,says BMI
Gulf Times
A brighter outlook for power consumption will mean the Middle East and North African region
(Mena) region will outperform Sub-Saharan African (SSA) in the form of investment opportunities,
as the latter continues to battle with supply shortages, a new report has shown.
East Africa’s focus on power market integration, and Southern Africa’s focus on boosting coal
power, highlight the resulting concerns over energy security, BMI has said.
In Mena, diversification away from oil-fired power, and a push to boost solar power, highlights a
strategy of power mix diversification. There are significant distinctions that differentiate the
regional markets within BMI’s Mena power sector coverage.
Mena, on the one hand, is a more mature regional power market, where the level of economic
development and the availability of fossil fuel feedstock feed into progress in developing new
power generation capacity.
In comparison, SSA power market is relatively underdeveloped, with governments struggling to
field the investment necessary to boost electricity generation, in part due to the widespread issue
of a failure to implement cost-reflective electricity tariffs.
“This has mostly led governments to focus on boosting cheap hydropower output, which in turn
has rendered numerous countries vulnerable to hydrological fluctuations,” BMI said.
BMI expects power consumption in the Mena region to outpace that of SSA over the next decade
despite the significant differences in population (SSA’s current population stands at 1bn, whereas
the Mena region has 363mn).
SSA power consumption will grow by an annual average of 3.6% between 2017 and 2026,
compared to 4.1% in Mena over the same timeframe, BMI said.
Given that Mena’s growth will be from a higher base, net additions to regional consumption from
end-2016 will be about 483TWh higher than what will be the case in SSA over our 10-year
forecast period. This in turn leads to diverging prospects for investment into power generation
infrastructure to support the power demand in each region.

First new U.S. nuclear reactor in almost two decades set to
begin operating..Source: Republished with permission from the Tennessee Valley Authority
The Tennessee Valley Authority's (TVA) Watts Bar Unit 2 was connected to the power grid on
June 3, becoming the first nuclear power plant to come online since 1996, when Watts Bar Unit 1
started operations.
Watts Bar Unit 2 is undergoing final testing, producing electricity at incremental levels of power, as
TVA prepares to start commercial operation later this summer. The new reactor is designed to add
1,150 megawatts (MW) of electricity generating capacity to southeastern Tennessee.
Watts Bar Unit 2 is the first nuclear plant in the United States to meet new regulations from the
U.S. Nuclear Regulatory Commission (NRC) that were established after the 2011 earthquake and
tsunami that damaged the Fukushima Daiichi Nuclear Plant in Japan.
After the NRC issued an operating license for the unit in October 2015, 193 new fuel assemblies
were loaded into the reactor vessel the following month. TVA announced at the end of May that
the reactor achieved its first sustained nuclear fission reaction.
Construction on Watts Bar Unit 2 originally began in 1973, but construction was halted in 1985
after the NRC identified weaknesses in TVA's nuclear program. In August 2007, the TVA board of
directors authorized the completion of Watts Bar Unit 2, and construction started in October 2007.
At that time, a study found Unit 2 to be effectively 60% complete with $1.7 billion invested. The
study said the plant could be finished in five years at an additional cost of $2.5 billion. However,
both the timeline and cost estimate developed in 2007 proved to be overly optimistic, as
construction was not completed until 2015, and costs ultimately totaled $4.7 billion.

Source: U.S. Energy Information Administration, based on the International Atomic Energy
Agency's Power Reactor Information System.
Although Watts Bar 2 is the first new U.S. nuclear generator to come online in 20 years, four other
reactors are currently under construction and are expected to join the nuclear fleet within the next
four years. Vogtle Electric Generating Plant Units 3 and 4 in Georgia and Virgil C. Summer
Nuclear Generating Station Units 2 and 3 in South Carolina are scheduled to become operational
in 2019–20, adding 4,540 MW of generation capacity.

US:Fracturing accounts for 50% of current crude oil production
Source: U.S. Energy Information Administration, IHS Global Insight, and DrillingInfo
Even though hydraulic fracturing has been in use for more than six decades, it has only recently
been used to produce a significant portion of crude oil in the United States. This technique, often
used in combination with horizontal drilling, has allowed the United States to increase its oil
production faster than at any time in its history.
Based on the most recent available data from states, EIA estimates that oil production from
hydraulically fractured wells now makes up about half of total U.S. crude oil production.
Hydraulic fracturing involves forcing a liquid (primarily water) under high pressure from a wellbore
against a rock formation until it fractures. The fracture lengthens as the high-pressure liquid in the
wellbore flows into the formation.
This injected liquid contains a proppant, or small, solid particles (usually sand or a manmade
granular solid of similar size) that fills the expanding fracture. When the injection is stopped and
the high pressure is reduced, the formation attempts to settle back into its original configuration,
but the proppant keeps the fracture open.
This allows hydrocarbons such as crude oil and natural gas to flow from the rock formation back to
the wellbore and then to the surface.

Using well completion and production data from DrillingInfo and IHS Global Insight, EIA created a
profile of oil production in the United States. In 2000, approximately 23,000 hydraulically fractured
wells produced 102,000 barrels per day (b/d) of oil in the United States, making up less than 2%
of the national total.
By 2015, the number of hydraulically fractured wells grew to an estimated 300,000, and
production from those wells had grown to more than 4.3 million b/d, making up about 50% of the
total oil output of the United States. These results may vary from other sources because of the
types of wells included in the analysis and update schedules of source databases.
This new oil production has primarily come from shale and other tight rocks in the Eagle Ford
formation and Permian Basin of Texas, and the Bakken and Three Forks formation of Montana
and North Dakota.
Source: U.S. Energy Information Administration, IHS Global Insight, and DrillingInfo
The use of hydraulic fracturing is not limited to certain oil-containing formations such as shales or
source rocks, nor is its use limited to only horizontal wells. Hydraulic fracturing has been
successfully used in directional and vertical wells, both natural gas and oil wells, in tight
formations and reservoirs, and in offshore crude oil production.

NewBase 24 December - 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Prices settles at WTI $53.02 & Brent $55.16 as Libyan
output pressures oil prices
.
Oil were little changed on Friday ahead of the Christmas and New Year holiday week as the
market waited to see how OPEC would manage its planned output cuts with Libya expecting to
boost production.
Crude is still trading around its highest since mid-2015, supported by a deal by the Organization of
the Petroleum Exporting Countries and non-members to lower output by almost 1.8 million barrels
per day from Jan. 1.
Brent crude was up 11 cents at $55.16 a barrel as of 2:10 p.m. ET (1910 GMT), after rising 1.1
percent on Thursday. U.S. crude settled up 7 cents to $53.02.
For the week, the U.S. contract rose for a second week in a row, gaining 2.2 percent during that
time, while Brent looked like it would slip lower for a second week in three.
Futures held their losses after oilfield services firm Baker Hughes reported its weekly count of oil
rigs operating in U.S. fields rose for an eighth straight week. The rig count rose by 13 to 523,
compared to 538 rigs operating at this time last year.
"The complex has begun the pre-holiday trade under moderate downside pressures that are
erasing yesterday's gains," Jim Ritterbusch, president of Chicago-based energy advisory firm
Ritterbusch & Associates, said in a note.
Oil price special
coverage

"This week's trade has offered no significant surprises as price consolidation continues with the
market adopting a wait and see attitude regarding OPEC's execution of planned production
curtailments," Ritterbusch said.
While major OPEC producers including Saudi Arabia and Iraq have told customers that supply will
be cut in line with the OPEC deal, Libya and Nigeria are exempt because conflict has already
curbed their output.
Libya's National Oil Corp hopes to add 270,000 bpd to national production over the next three
months after announcing on Tuesday the reopening of pipelines leading from two major fields,
Sharara and El Feel.
Nonetheless, efforts to restore Libyan output since the North African country's 2011 uprising have
been repeatedly stymied and political splits still present a risk that the plan may not go smoothly.
The dollar index steadied on Friday not far below a 14-year peak of 103.65 reached earlier this
week. A firmer dollar makes dollar-denominated commodities including oil more expensive for
holders of other currencies.
Also weighing on oil was a surprise increase in U.S. crude stocks reported on Wednesday in the
government's weekly supply report — and the prospect of sales beginning in January of crude
from the U.S. Strategic Petroleum Reserve (SPR).
"Crude failed to maintain gains this week following the unexpected build in U.S. crude stockpiles,
which revived the oversupply concerns," said Lukman Otunuga, a research analyst with FXTM.
"With some anxieties still lingering over the compliance side of the unexpected cut agreement, oil
could end up extremely volatile with losses expected if production fails to decline."
The volume of extra oil reaching the market from the SPR could be sizeable. Consultancy Poten &
Partners said on Thursday the reserve could be drawn down by some 190 million barrels between
2017 and 2025 if all planned sales went ahead.

Drillers Extend Revival as Oil Trades Near 17-Month High
Oil explorers added rigs for the eighth straight week, extending a ramp-up of activity in the U.S.
shale patch as prices hover near $53 a barrel.
Rigs targeting crude in the U.S. rose by 13 to 523 this week, Baker Hughes Inc. said Friday.
Drillers have added 207 rigs since the count hit a seven-year low on May 27.
Most of the recovery in drilling has been in the prolific Permian Basin, which has been a hotbed for
acquisitions this year. Rig gains will continue to be primarily in that region until oil prices are
"substantially higher," said Robert Christensen, an analyst at Drexel Hamilton LLC in New York.
But don’t expect a surge.
"It’s the only place you really can make any money," he said. "It’s going to be a very rational
progression."
West Texas Intermediate crude touched $54.51 on Dec. 12 and has hovered near $53 after the
Organization of Petroleum Exporting Countries and other major exporters agreed to cut supplies
to ease a global glut. The deal may make room for more U.S. shale growth, IHS Markit’s Daniel
Yergin said earlier this month.
Drillers added four oil rigs in the Permian, raising the count to 262.
The U.S. could add 300,000 to 500,000 barrels a day by the end of 2017 with oil prices around
$50 to $55, according to Yergin. But mega-projects will be much slower to come back.

Saudi Arabia’s Energy Minister, Oil Recovering on OPEC Cuts
Bloomberg - Mahmoud Habboush
Oil prices are set to recover next year as OPEC fulfills its agreement to cut output, halting the
slump that battered the global oil industry, Saudi Arabia’s energy minister said.
The kingdom sees no need for additional production cuts on top of the curbs pledged in recent
weeks by OPEC and 11 other oil-producing countries, Khalid Al-Falih said at a ceremony to
announce the annual budget in Riyadh. The intervention is intended only to “nudge along” the re-
balancing of an oversupplied global oil market, he said in a Bloomberg interview.
“I’m very optimistic that next year will see economic recovery and a recovery of oil markets,” Al-
Falih said. Prices, unsustainable at current levels, will also need to rise to encourage investment
in the new supplies needed in coming years, he said. Crude will balance somewhere between $50
and $100 a barrel, he said.
Investment in the world’s oil industry has fallen for three consecutive years amid a slump in prices,
leading to the lowest level of discoveries in five decades, according to the International Energy
Agency. The Organization of Petroleum Exporting Countries, working in concert with other
producers such as Russia, has resolved to reduce output to clear a persisting oil glut and revive
prices.
“Markets worldwide are leaving a contraction period and a period of low oil prices and reduced
investment in the sector,” Al-Falih said. The minister anticipates that crude prices will increase
“tangibly” in 2017, he said in an interview with Al Arabiya television.
Oil Revenue
The kingdom expects its oil revenue to climb by 46 percent to 480 billion riyals ($128 billion) next
year, the Finance Ministry said in a budget statement. Benchmark Brent crude traded at about $55
a barrel in London on Thursday. Saudi Arabia is assuming that prices stay at $55 next year and
advance to $61 in 2018, according to Al Arabiya.
Al-Falih’s outlook echoed comments made by his counterpart from the United Arab Emirates,
Energy Minister Suhail Al Mazrouei, who also predicted Thursday from Abu Dhabi that OPEC’s
intervention will result in higher prices in 2017.
While U.S. shale output grew excessively when prices exceeded $100 a barrel, burgeoning
demand in coming years means supplies will be needed from a number of sources to keep
markets in balance, Al-Falih said.
Trump Policies

As for the policies of U.S. President-Elect Donald Trump, who selected Exxon Mobil Corp. Chief
Executive Officer Rex Tillerson as his secretary of state, Al-Falih told Bloomberg they are “friendly
to oil.”
OPEC agreed to reduce its supplies by 1.2 million barrels a day, while 11 non-members including
Russia and Kazakhstan pledged to curb output by almost 600,000 a day. Al-Falih expressed
confidence that OPEC members will show a high level of compliance with the group’s announced
production cutbacks.
“All producers were convinced, inside and outside of OPEC, of the importance of accelerating
balance” in the oil market, and “this conviction cements my confidence that all countries will highly
adhere” to their obligations, Al-Falih said on Al Arabiya.
“There is a high degree of transparency now in terms of production levels, export and tankers
movements, there are also many parties that monitor oil,” which will make tracking compliance
easier, he added.
OPEC and its partners have established a monitoring committee to ensure that producers abide
by their pledges. The committee will hold its first meeting in January, at a location yet to be
decided, Kuwaiti Oil Minister Essam Al-Marzouk said Thursday at an industry gathering in Cairo.
Saudi Arabia See Oil Revenue Rising 46% in 2017 as Prices Climb
Saudi Arabia expects oil revenue to jump by 46 percent next year after a deal between the
kingdom and other producers to curb output drove up global prices.
The world’s top oil exporter expects to collect 480 billion riyals ($128 billion) from oil sales in 2017,
compared with 329 billion this year, the Finance Ministry said in a budget statement Thursday.
Non-oil revenue will climb 6.5 percent next year to 212 billion riyals, it said.
Oil prices have rallied since the Organization of Petroleum Exporting Countries, of which Saudi
Arabia is the largest member, reached a deal with other producers to curb output next year. The
budget is based on the assumption that global producers cut output as promised, Saudi Energy
Minister Khalid Al-Falih said. Benchmark Brent crude traded above $55 a barrel on Thursday,
almost double its low in January.
“The oil-revenue increase is in line with the expectations by the authorities that the market is re-
balancing higher, and is clearly a sign that oil prices are expected to average $60 per barrel next
year,” said John Sfakianakis, director of economic research at the Gulf Research Center.
The Saudi government relies heavily on oil sales for revenue, and its finances have taken a blow
since prices started tumbling in 2014. Total projected revenue this year, at 528 billion riyals, is less
than half what it collected in 2013, when oil was trading above $100 and made up 90 percent of
revenue.
The kingdom has implemented austerity measures this year to weather the downturn. In April,
Deputy Crown Prince Mohammed bin Salman rolled out the Saudi Vision 2030, an economic plan
to end the country’s “addiction” to oil. The government intends to spend 42 billion riyals on the
program in 2017, up from 9 billion this year, the Finance Ministry said.

NewBase Special Coverage
News Agencies News Release 24 Dec. 2016
Imperial Oil, BP in Limbo After Canada Freezes Arctic Drilling
by Josh Wingrove and Robert Tuttle
Energy firms including Imperial Oil Ltd. and BP Plc will get a year of consultations to hash out the
fate of their rights in Canada’s Arctic after Prime Minister Justin Trudeau’s drilling freeze set the
stage for a dispute over license extensions.
The Canadian leader and U.S. President Barack Obama said this week they would designate
most of North American Arctic waters off-limits to new activity, including all future oil and gas
licensing in Canadian waters. Trudeau’s government said existing licenses wouldn’t be affected,
but initially offered scant detail.
Five companies -- Imperial, BP, ConocoPhillips, Chevron Corp. and Franklin Petroleum Canada
Ltd. -- hold active exploration licenses in Canada’s share of the Beaufort Sea, where there
currently isn’t any oil production. Many of those licenses expire within the next five years, when
Trudeau has pledged to review his moratorium.
Companies remain eligible to upgrade their existing licenses, and some may seek extensions,
which will be a central issue in talks between government and the industry over the next year.
“It’s their intention to have discussions with each of the active license holders,” said Paul Barnes,
Atlantic Canada and Arctic manager for the Canadian Association of Petroleum Producers, the
main oil-industry lobby group. “I suspect most companies would still want to maintain an active
license there” or seek an extension “until such time as the government has another review.”
Walking Away
The exploration licenses due to expire over the next five years were issued in 2012 when crude
hovered around $100 a barrel, nearly double its current price. “Companies have been walking
away from their leases in the North American market, or seeking extensions of those leases

because they can’t justify any expenditure on those leases at current pricing,” said Michael Byers,
a University of British Columbia professor who studies Arctic issues.
All five companies have exploration licenses in the Beaufort Sea that expire between 2019 and
2023. Of those, only closely held Franklin has permits that extend past the five-year window.
Barnes said exploration has been quiet of late, with no drilling since 2012.
All but Franklin also hold
additional permits known as
significant discovery
licenses in the Beaufort
issued as far back as the
1980s. Those types of
permits, which don’t expire
and are a precursor to
production licenses, are
also held across northern
Canada by Suncor Energy
Inc., Paramount Resources
Ltd., Devon Energy Corp.,
Nytis Exploration Company
Canada Ltd. and others,
government records show.
There are no current
offshore production licenses
in Canada’s Arctic waters.
In its joint statement this week, Trudeau’s government ruled out “future offshore Arctic oil and gas
licensing” and later said existing permits won’t be affected. It didn’t specify what happens next for
license holders.
Next Steps
“Current licenses are not impacted,” said Sabrina Williams, a spokeswoman for Indigenous and
Northern Affairs Minister Carolyn Bennett, Trudeau’s lead minister for Arctic development.
Williams said the government “will determine next steps after consultation with industry and other
interested stakeholders.”
The consultations will be conducted over one year by Bennett and Natural Resources Minister Jim
Carr. In the meantime, companies with exploration licenses can still “accede to Significant
Discovery within their existing permit timelines,” Williams said, meaning offshore oil development
can still potentially continue in the Arctic after the Trudeau and Obama announcement.
The terms of Obama’s ban, which applies to most of the U.S. share of the Beaufort Sea, is also
unclear as he prepares to leave office. The path for a legal challenge from the incoming
administration of President-elect Donald Trump is murky.
‘Turned Back’
Northwest Territories Premier Bob McLeod has objected to his northern region, the shores of
which are nearest to much of the existing licensed exploration areas, being shut out of talks that

led to the Arctic offshore freeze. He said he expects companies that already hold permits will be
rejected if they apply for extensions.
“I’d be very surprised if they’re not turned back,” McLeod said in an interview Tuesday, shortly
after he spoke with Trudeau about the new measures. “If oil and gas is shut down, then we need
to look at diversifying our economies. And we need to have sustainable development in the
North.”
Imperial has previously called for extending the terms of exploration licenses “to ensure future oil
and gas activities are conducted in an appropriately paced, safe and environmentally responsible
manner,” spokeswoman Killeen Kelly said in a statement this week, acknowledging uncertainty
around the measures so far. “With respect to existing licenses we will work to understand the
implications to our business, if any.”
Chevron referred questions to CAPP, the lobby group. ConocoPhillips declined to comment; BP
and Franklin didn’t immediately respond to queries.
Some existing license holders may seek extensions, Barnes said, but Arctic offshore development
has always been a long-term proposition. “They aren’t short-term. They are potentially medium-
term but likely longer-term,” CAPP President Tim McMillan said. “Each ecosystem is unique and
needs to be looked at specifically.”

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

UAE Oil Minister Expects Higher Oil Prices From Production Cuts

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