New base energy news 10pril 2020 issue no. 1329 by senior editor eng

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NewBase Energy News 10 April 2020 - Issue No. 1329 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 : Renewables account for almost three-quarters of new
capacity in 2019: IRENA
WAM/Esraa Ismail/Hazem Hussein
The renewable energy sector added 176 gigawatts, GW, of generating capacity globally in 2019,
marginally lower than the (revised) 179GW added in 2018, but new renewable power accounted for
72 percent of all power expansion last year, according to new data released by the International
Renewable Energy Agency, IRENA.
IRENA’s annual Renewable Capacity Statistics 2020 show that renewables expanded by 7.6
percent last year, with Asia dominating growth and accounting for 54 percent of total additions.
While the expansion of renewables slowed down last year, total renewable power growth outpaced
fossil fuel growth by a factor of 2.6, continuing the dominance of renewables in power expansion
first established in 2012. Solar and wind contributed 90 percent of total renewable capacity added
in 2019.
"Renewable energy is a cost-effective source of the new power that insulates power markets and
consumers from volatility, supports economic stability and stimulates sustainable growth," said
IRENA Director-General, Francesco La Camera, adding, "With renewable additions providing the
majority of new capacity last year, it is clear that many countries and regions recognise the degree
to which the energy transition can deliver positive outcomes."
www.linkedin.com/in/khaled-al-awadi-38b995b

"While the trajectory is positive, more is required to put global energy on a path with sustainable
development and climate mitigation – both of which offer significant economic benefits," La Camera
added.
Renewables accounted for at least 70 percent of total capacity expansion in almost all regions in
2019, other than Africa and the Middle East, where they represented 52 percent and 26 percent of
net additions, respectively. The additions took the renewable share of all global power capacity to
34.7 percent, up from 33.3 percent at the end of 2018. Non-renewable capacity expansion globally
followed long-term trends in 2019, with net growth in Asia, the Middle East and Africa, and net
decommissioning in Europe and North America.
Solar added 98GW in 2019, 60 percent of which was in Asia. Wind energy expanded by close to
60GW, led by growth in China (26GW) and the United States (9GW). The two technologies now
generate 623GW and 586GW, respectively, close to half of global renewable capacity. Hydropower,
bioenergy, geothermal and marine energy displayed a modest year-on-year expansion of 12GW,
6GW, 700MW and 500MW, respectively.
Asia was responsible for over half of new installations despite expanding at a slightly slower pace
than in 2018. Growth in Europe and North America increased year on year. Africa added 2GW of
renewable capacity in 2019, half of the 4GW it installed in 2018.
Solar and wind dominate
Solar and wind contributed 90 percent of total renewable capacity added in 2019. Solar added 98
GW in 2019, 60 percent of which was in Asia. Wind energy expanded by close to 60 GW led by
growth in China (26 GW) and the United States (9 GW).
The two technologies now generate 623 GW and 586 GW respectively – close to half of global
renewable capacity. Hydropower, bioenergy, geothermal and marine energy displayed modest year
on year expansion of 12 GW, 6 GW, 700 MW, and 500 MW respectively.
Asia was responsible for over half of new installations despite expanding at a slightly slower pace
than in 2018. Growth in Europe and North America increased year on year. Africa added 2 GW of
renewable capacity in 2019, half of the 4 GW it installed in 2018.
Highlights by technology:
 Hydropower: Growth was unusually low in 2019, possibly because some large projects missed their
expected completion dates. China and Brazil accounted for most of the expansion, each adding more
than 4 GW.
 Wind energy: Wind performed particularly well in 2019, expanding by nearly 60 GW. China and the
United States continued to dominate with increases of 26 GW and 9 GW respectively.
 Solar energy: Asia continued to dominate global solar capacity expansion with a 56 GW increase,
but this was lower than in 2018. Other major increases were in the United States, Australia, Spain,
Ukraine, and Germany.
 Bioenergy: Expansion of bioenergy capacity remained modest in 2019. China accounted for half of
all new capacity (+3.3 GW). Germany, Italy, Japan and Turkey also saw expansion.
 Geothermal energy: Geothermal power capacity grew by 682 MW in 2019, slightly more than in 2018.
Again, Turkey led with an expansion of 232 MW, followed by Indonesia (+185 MW) and Kenya (+160
MW).
 Off-grid electricity: Off-grid capacity grew by 160 MW (+2%) to reach 8.6 GW in 2019. In 2019, off-grid solar
PV increased by 112 MW and hydropower grew by 31 MW, compared to growth of only 17 MW for bioenergy.

Saudi Wealth Fund Builds Stakes in European Energy Giants
Bloomberg Matthew Martin and Dinesh Nair + NewBase
Saudi Arabia’s sovereign wealth fund has built up stakes in four major European energy firms,
including about $200 million in Equinor ASA, as the oil-rich kingdom navigates the coronavirus
pandemic and plummeting crude prices.
The Public Investment Fund amassed shares in Norway’s largest producer mostly through the open
market last week, according to people with knowledge of the matter who asked not to be identified,
adding that it’s unclear exactly when the fund bought the holding or if it’s still buying. It also bought
stakes in Royal Dutch Shell Plc, Total SA and Eni SpA, according to another person with knowledge
of the matter.
Saudi Arabia’s $320 billion sovereign wealth fund, run by Yasir Al-Rumayyan and controlled by
Crown Prince Mohammed bin Salman, is taking
advantage of a slump in stock market valuations
as it steps up deal-making to become the world’s
biggest manager of sovereign capital, the
people said. The fund last month built an 8.2%
stake in cruise operator Carnival Corp. after its
shares slumped due to the fallout of the
coronavirus pandemic.
The PIF is a key part of the crown prince’s efforts to diversify the Saudi economy away from its
dependence on oil and has made a series of high-profile investments in recent years. Its amassed
holdings in Uber Technologies Inc. and Tesla Inc., as well as committing giant sums to Softbank
Group Corp.’s Vision Fund.
Oil Policy
Still, building stakes in some of the largest international oil companies is unusual, especially as Al-
Rumayyan also heads up state-owned crude producer Saudi Aramco. He’s also a close adviser to
the crown prince, who sets the kingdom’s oil production policy and influences prices globally.
Representatives for the PIF and all of the oil companies declined to comment.
On top of the slump of oil prices and a meltdown in global markets, Gulf sovereign wealth funds are
channeling some of their billions back home to counter slowing economic growth triggered by the
coronavirus. The decline in assets from funds in countries such as Qatar, Abu Dhabi and Saudi
Arabia could exceed $300 billion this year, according to the Institute of International Finance, the
industry’s global association.
In contrast to 2015, the last time crude prices collapsed, Saudi Arabia will likely focus on borrowing
rather than drawing down PIF funds, according to the IIF. Last month, Finance Minister Mohammed
Al Jadaan said the kingdom would fund an expected larger deficit through borrowing more rather
than drawing down reserves.
Equinor shares slumped just over 30% this year before rising 18% last week, amid a broad recovery
for European energy majors, giving the company a current market value of about $44 billion.
The Wall Street Journal was first to report that the PIF has acquired stakes in Shell, Total and Eni,
worth about $1 billion along with the Equinor holding, citing people familiar. Norwegian daily
Finansavisen this week reported that JPMorgan Chase & Co.’s unit in Saudi Arabia had bought 14.5
million shares in Equinor on behalf of an unnamed client, followed by another 6.4 million shares.

Egypt: SDX Energy reports commercial discovery at Sobhi well
SDX
AIM-listed SDX Energy, the MENA-focused oil and gas company, is pleased to provide an update
on drilling operations at the SD-12X ('Sobhi'; SDX 100% working interest) well in the South Disouq
Exploration Permit onshore Nile Delta, Egypt (SDX 55% working interest).
The well has been drilled to a measured depth of 7,245 feet, encountering 108 feet net of high-
quality gas-bearing sands, with an average porosity of 20%, near the base of the Kafr El Sheikh
(KES) formation.
The top of the KES sand was encountered at a measured depth of 6,506 feet. Management's best
estimate is that the well has encountered approx. 24 bcfe of recoverable gas and condensate
resources which is significantly in excess of the minimum commercial volume of approximately 8
bcfe.

The drilling rig is now completing the well and preparing for testing in the coming weeks. An
announcement concerning the results of the testing of SD-12X will be made in due course.
Management expect that the Sobhi well will be tied in during 2021 via a 5.8 kilometre tie-in to the
Ibn Yunus-1X location where an existing flow-line connects to the South Disouq Central Processing
Facility. On a gross basis, the tie-in cost is estimated at US$3.5 million.
The discovered 24 bcfe of gross recoverable gas and condensate resources will potentially only
require one further development well to be drilled, albeit this will not be necessary for another 2-3
years. SDX drilled the Sobhi well at a 100% working interest and the total cost of the well, including
the cost to complete, is estimated at US$3.7 million.
Under Clause 8.5 of the Joint Operating Agreement, 'Premium to Participate in Exclusive
Operations', if the Company's partner elects to participate in the well now that a discovery has been
made, it is required to pay its full 45% share of the well cost, plus a premium of a further 300% of
this amount.
Mark Reid, CEO of SDX, commented:
'This is an excellent result for SDX and fully justifies our confidence to drill this well on a sole risk
basis. South Disouq represents our flagship asset and in the current economic climate this fixed
price, low cost gas development is highly cash generative for the Group. T
he Sobhi discovery has the potential to extend the current South Disouq plateau production of 50
MMscfe/d through to 2023/24 with a low-cost tie in, utilising the existing gas processing plant. We
look forwarding to updating the market further following the testing of the well'.

EU: ARA oil storage tanks are fully booked but only half full
Reuters + NewBase
Independently-held storage tanks for oil products in the Amsterdam-Rotterdam-Antwerp hub may
be already fully committed to traders, but utilisation levels are still at around the halfway mark, Dutch
consultants Insights Global said.
With demand for fuels across Europe in free fall from the lockdowns that the new coronavirus
outbreak has caused around the continent, and the subsequent price crash for many fuels, traders
have been on an oil storage binge.
But while they been booking a place in those tanks, the tanks are as of the latest data only at around
50-60% full.
“There is hardly any, or more likely no tank capacity available in ARA for lease right now. Everything
is booked out,” managing director for Insights Global Patrick Kulsen said.
Gasoil and diesel tank utilisation, for example, stood at 48.73% on April 1, compared with nearly
80% at the start of the year.
One explanation for the low utilisation level has been increased demand from inland markets in
Germany and Switzerland for stockpiling, Kulsen said.
GRAPHIC: Rhine barge flows by product - here

GRAPHIC: ARA oil product stocks - here
But as demand for fuels continues to be battered by millions of people staying at home, tanks are
expected to fill to the brim, analysts expect.
Consultants Rystad Energy forecast oil demand in Europe in 2020 falling by 2.3 million barrels per
day to 12.7 million bpd, an 11.2% decline from 2019’s 14.3 million bpd. They expect Europe’s April
road fuel demand to fall by 35% to 4.7 million bpd.

World: EIA forecasts record high global inventory builds
https://www.eia.gov/petroleum/weekly/index.php
The 2019 novel coronavirus disease (COVID-19) pandemic has caused significant changes in
energy fuel supply and demand patterns globally.
Crude oil prices have fallen significantly since the beginning of 2020, largely driven by the economic
contraction caused by COVID-19 and a rapid increase in crude oil supply following the suspension
of previously agreed upon production cuts among the Organization of the Petroleum Exporting
Countries (OPEC) and partner countries.
As a result of low demand caused by COVID-19 and high levels of global crude oil production, the
U.S. Energy Information Administration (EIA), in its April Short-Term Energy Outlook (STEO),
forecasts large inventory builds in 2020 followed by inventory draws in 2021 (Figure 1).
If realized, EIA's forecast global inventory builds of 3.9 million barrels per day (b/d) in 2020 will more
than double the previous record of 1.8 million b/d set in 1998.
It is important to note that the April STEO is subject to heightened levels of uncertainty because the
impacts of COVID-19 on energy markets are still evolving. In order to better understand the
heightened uncertainty surrounding this month's forecast, the April STEO highlights some of the
driving assumptions that affected EIA's forecast.

In the first two quarters of 2020, EIA expects large inventory builds as a result of widespread travel
limitations and sharp reductions in economic activity. If realized, the forecast inventory builds of 11.4
million b/d in the second quarter of 2020 would be larger than the previous records of 5.7 million b/d
estimated for the first quarter of 2020 and 3.7 million b/d set in the second quarter of 1998.
EIA expects inventory builds to fall sharply to 0.1 million b/d in the third quarter. Firmer demand
growth as the global economy begins to recover and slower supply growth, particularly from non-
OPEC producers, in response to lower prices will contribute to global oil inventory draws beginning
in the fourth quarter of 2020.
EIA expects global liquid fuels inventories will decline by 1.7 million b/d in 2021, but inventory builds
in the first half of 2020 and the inventory overhang will continue to exert downward pressure on
prices.
To better help customers monitor inventory builds, EIA now provides estimates of U.S. crude oil
storage capacity utilization in the Weekly Petroleum Status Report (WPSR) beginning with the
WPSR release on Wednesday, April 8, 2020, with data for the week ending April 3, 2020.
The WPSR will include this information for an indeterminate period of time to help stakeholders
better assess current market conditions. EIA will report the most recent crude oil storage capacity
utilization estimates for the United States in total and for each of the five Petroleum Administration
for Defense District (PADD) regions separately.
Although real-time data remain limited, EIA estimates global liquid fuels consumption declined by
11.4 million b/d in March from the 2019 annual average, and EIA forecasts that demand will decline
by 17.1 million b/d in April from the 2019 average. For 2020, EIA estimates that global liquid fuels
consumption will average 95.5 million b/d, down 5.2 million b/d (5.2%) from 2019.
If realized, 2020 would see the largest year-over-year percentage decline in global oil consumption
in EIA records starting in 1990. In the United States, EIA forecasts that total oil consumption will
decline 6.5% in 2020 to average 19.1 million b/d, which would be the largest percentage decline in
consumption since 1980 and the second-largest decline since 1949, the earliest EIA data available.
EIA assumes significantly lower levels of U.S. liquid fuels consumption during much of 2020 as a
result of the disruptions to economic and business activity because of COVID-19 and the strict
containment measures that have significantly reduced all forms of travel.
These impacts are expected to be most pronounced during the second quarter of 2020, when most
containment measures and wide-scale reductions in business activity are assumed to be in place.
EIA expects these impacts to persist through most of 2020 but anticipates liquid fuels consumption
in the second half of 2020 will gradually increase as some business activity resumes and stay-at-
home orders gradually ease.
EIA forecasts these travel disruptions will have the largest impacts on gasoline and jet fuel
consumption in 2020. EIA expects distillate fuel oil consumption to be affected less because of
assumed increases in trucking activity both for distribution and expected increases in personal
deliveries of goods and food services.
Aside from these significant changes to oil demand, EIA expects global liquids supply to remain
relatively strong in 2020, and EIA forecasts that total world production will average 99.4 million b/d,
down only 1.2 million b/d (1.2%) from 2019 levels, as seen in Figure 1.
As a result of the expiration of the OPEC agreement to curtail production, EIA forecasts that OPEC
crude oil production will surpass the OPEC production levels seen in the first quarter of this year.

However, EIA forecasts that low oil prices will reduce U.S. Lower 48 states' crude oil production in
the second quarter of 2020 as drilling activity slows significantly. In addition, because OPEC and
partner countries (collectively OPEC+) are no longer restraining production, several OPEC
members have begun increasing crude oil production by bringing previously idle spare production
capacity online and selling additional crude oil from storage.
Despite recent news of OPEC+ emergency meetings to discuss production levels, without an
agreement actually in place, EIA assumes no re-implementation of an OPEC+ agreement during
the forecast period. If OPEC+ ultimately reaches an agreement, the STEO will incorporate that
information in future updates.
EIA forecasts that Brent crude oil will average $23 per barrel (b) in the second quarter of 2020. As
non-OPEC crude oil production begins declining in the fourth quarter of 2020 and global liquid fuels
demand increases, prices will increase gradually. EIA forecasts that Brent crude oil will increase
from the lows of the second quarter of 2020 to average $46/b in 2021 (Figure 2).
In the April STEO, EIA expects low crude oil prices will drive down U.S. crude oil production. As
U.S. production declines, net crude oil imports are expected to increase because fewer barrels will
be available for export.
Net exports of petroleum products will be lowest in the third quarter of 2020, when U.S. refinery runs
are expected to decline significantly because of lower demand for refined products. As a result of
increasing net imports of crude oil and declining net exports of petroleum products, total net imports
are expected to increase. EIA expects U.S. imports and exports will be nearly equal in 2020, but

that the United States will again become a net importer of crude oil and refined petroleum products
in 2021. U.S. net imports will average 1.4 million b/d in 2021.
U.S. average regular gasoline and diesel prices fall
On April 6, the average regular gasoline retail price for the United States fell more than 8 cents from
the previous week to $1.92 per gallon, 82 cents lower than a year ago. The Midwest and Gulf Coast
prices each fell nearly 11 cents to $1.63 per gallon and $1.66 per gallon, respectively, the Rocky
Mountain price fell nearly 10 cents to $2.01 per gallon, the West Coast price fell nearly 8 cents to
$2.68 per gallon, and the East Coast price fell nearly 6 cents to $1.92 per gallon.
The U.S. average diesel fuel price fell nearly 4 cents from the previous week to $2.55 per gallon on
April 6, 55 cents lower than a year ago. The Rocky Mountain price fell more than 5 cents to $2.54
per gallon, and the West Coast, East Coast, Midwest, and Gulf Coast prices each fell by nearly 4
cents to $3.09 per gallon, $2.63 per gallon, $2.39 per gallon, and $2.33 per gallon, respectively.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 0.2 million barrels last week to 64.5 million barrels as
of April 3, 2020, 13.8 million barrels (27.3%) greater than the five-year (2015-19) average inventory
levels for this same time of year. Gulf Coast, Rocky Mountain/West Coast, and Midwest inventories
decreased by 0.6 million barrels, 0.2 million barrels, and 0.1 million barrels respectively. East Coast
inventories increased by 0.7 million barrels. Propylene non-fuel-use inventories represented 8.5%
of total propane/propylene inventories.

NewBase April 10-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
OPEC and allies agree to historic 10 million barrel per day
production cu
Reuters + Bloomberg + NewBAse
A historic production cut agreement between OPEC and its allies, known as OPEC+, hit a roadblock
after Mexico refused to agree to its share of the cuts after a marathon meeting between the oil-
producing nations that lasted more than nine hours.
The other members of OPEC+, led by Saudi Arabia and Russia, earlier in the day agreed to cuts
that would take 10 million barrels per day offline as the coronavirus pandemic saps demand for
crude.
A statement released by OPEC following the meeting outlined details of the cuts but notes the
measures were “agreed by all the OPEC and non-OPEC oil producing countries participating in the
Declaration of Cooperation, with the exception of Mexico, and as a result, the agreement is
conditional on the consent of Mexico.”
The extraordinary meeting kicked off around 10:30 a.m. ET and stretched into the evening.
Following the meeting, Mexico’s Secretary of Energy Rocío Nahle said in a tweet that the country
would be willing to cut production by 100,000 barrels per day for the next two months. OPEC+ had
reportedly asked for a cut of 400,000 barrels per day, according to Reuters.
OPEC said in a statement that the initial 10 million barrels per day cut would last in May and June,
before tapering to 8 million barrels per day for the rest of the year. Beginning in January 2021, the
cuts would decrease to 6 million barrels per day, which would continue through April 2022, according
to the statement.
The agreement was not contingent on nations outside of OPEC+ curbing production, which some
had suggested might be a stipulation for Saudi Arabia and Russia to scale back production. The
group did, however, call on other major producers to cut production in a further bid to prop up prices.
Despite the record size of the potential cut, oil prices moved lower on Thursday as investors feared
it would still not be enough to combat the unprecedented demand loss from the coronavirus.
“Although 10 million bpd will help the market on the short term to not fill up storage, it is a
disappointing development for many, who still realize the size of the oil oversupply,” said Rystad
Energy’s head of oil markets Bjornar Tonhaugen.
U.S. West Texas Intermediate fell 9.29%, or $2.33, to settle at $22.76 per barrel. Earlier in the
session, the contract had been up more than 12% trade at a session high of $28.36. International
benchmark Brent crude slipped 4.14% to settle at $31.48, after earlier hitting a high of $36.40.
Oil price special
coverage

“Covid-19 is an unseen beast that seems to be impacting everything in its path,” OPEC Secretary
General Mohammad Barkindo said at the meeting. “For the oil market, it has completely up-ended
market supply and demand fundamentals since we last met on 6 March,” he added.

Earlier WTI spiked more than 12% on reports that Saudi Arabia and Russia were discussing cuts
that could have taken 20 million barrels per day of global production offline.
“The market has been underwhelmed by the proposed 10m/bd production cut, perhaps because of
early expectations of a massive 20m/bd reduction,” said Helima Croft, RBC’s global head of
commodities research. “However we contend that it is crucial to turn off the tap off the tap in the
midst of colossal demand crash and bring the price war to a swift conclusion,” she added.
Ahead of the meeting, the Street had been watching for cuts in the 10 million to 15 million
barrels per day range after Trump said he had spoken to Russian President Vladimir
Putin and Saudi Crown Prince Mohammed bin Salman and expected them to announce
a deal of that size.
“We’re optimistic that they’ll reach an agreement between the Saudis and Russians in
an effort to stabilize the markets,” U.S. Energy Secretary Dan Brouillette said Thursday
on CNBC’s “Squawk Box” before the OPEC+ meeting kicked off. “I think they can easily
get to 10 million, perhaps even higher, and certainly higher if you include the other
nations who produce oil, nations like Canada and Brazil and others. Easily, easily done,”
he added.
Energy ministers from the Group of 20 major economies will convene for their own
extraordinary meeting on Friday, in which Energy Secretary Dan Brouillette will
participate.
The G-20 presidency said Tuesday that the meeting would be held “to foster global
dialogue and cooperation to ensure stable energy markets and enable a stronger global
economy.”

When it comes to U.S. energy companies, Trump has commented that market forces will
prevail, and on Wednesday said that producers have “already cut way back.” Brouillette
echoed this on Thursday, telling CNBC that the “demand downturn has led to production
cuts in the United States of about 2 million barrels per day thought the reminder of 2020.”
Oil prices crater
At OPEC’s last meeting in early March, de facto leader Saudi Arabia proposed cuts of
1.5 million barrels per day to combat falling demand. But OPEC-ally Russia rejected the
proposal, sparking a price war between the two powerhouse producers. Saudi Arabia
slashed its oil prices to gain market share, and also ramped up production to record
levels above 12 million barrels per day.
Since early March, the outlook for oil has changed drastically as the pandemic spread,
with much of the world now staying home. Oil prices sank to their lowest level in nearly
two decades. WTI and Brent both fell more than 50% in March for their worst month on
record. The first quarter was also the worst in history, with WTI shedding 66%, while
Brent fell 65%.
Amid the decline, which has pressured highly-leveraged U.S. oil companies, Trump
sought to broker a deal between Saudi Arabia and Russia. On April 2 Trump told CNBC
that he had spoken to Russian President Vladimir Putin and Saudi Crown Prince
Mohammed bin Salman and that he expected them to announce a record production cut.
American drillers are still pumping near record levels as the world is coming to the edge
of its ability to store oil. The U.S. oil industry is divided on whether it could or should
contribute to production cuts in an effort to stabilize prices.
The American Petroleum Industry opposes cuts, saying such a move would harm the
U.S. industry. In Texas, however, Ryan Sitton, one of the three members of the Texas
Railroad Commission, has said that the state would consider participating in such a deal.
U.S. oil firms likely to 'organically' cut four million barrels per day: regulator
OPEC members and other oil producers need to cut at least 20 million barrels per day of output, a
Texas oil and gas regulator said on Wednesday.
U.S. firms are likely to “organically” cut 4 million barrels of output per day in the next three months,
Ryan Sitton, one of three elected oil and gas regulators in Texas, wrote in a Tweet. Sitton is not
participating in Thursday’s OPEC meeting but plans to attend the group’s June meeting.
Texas regulators next week will consider curtailing the state’s output for the first time in nearly 50
years. Sitton has backed the idea of considering cuts - requested by producers Pioneer Natural
Resources (PXD.N) and Parsley Energy (PE.N) - but the other two commissioners have not said
how they might vote.
If OPEC and other countries do not cut production, oil storage is likely to fill in two months, Sitton
said.

OPEC+ talks face challenges over baseline for cuts and U.S. role
OPEC and its allies are due to hold talks on Thursday to discuss the biggest
coordinated supply production cut in history but they must agree on two major points:
the levels from which any cuts should be made and how the United States will respond.
U.S. President Donald Trump said last week he had brokered a deal between Russia
and Saudi Arabia to cut 10 million to 15 million barrels per day (bpd) of crude, or 10 to 15% of global
oil supplies. The coronavirus crisis has slashed demand by 30%.
ALL ABOUT THE BASELINE
OPEC sources have told Reuters a key element to the discussions is reaching a deal on what levels
of national production to use to calculate any output cuts.
An OPEC source said discussion were around whether to cut from April levels or whether to use a
period before that.
Another source said Riyadh, which hiked output to a record 12.3 million bpd in April from 9.8 million
bpd in March, was insisting on cutting production from April levels.
Russian President Vladimir Putin has said he favoured cuts being made from production levels in
the first quarter.
“Clearly, cuts taking place from the most recent elevated levels would have less impact on absolute
supply,” FGE Energy said.
THE PRODUCTION DATA CHALLENGE
But one of the challenges facing OPEC+ - the informal grouping of the Organization Petroleum
Exporting Countries, Russia and other producers - is getting reliable production figures for
producers.
OPEC’s monthly oil market report on output from its members relies on secondary sources including
price reporting agencies, the International Energy Agency (IEA) and the U.S. Energy Information
Administration (EIA) to assess production.
Secondary source data is sometimes at odds with the direct submissions of individual members,
which has allowed some members like Nigeria and Iraq to justify lagging behind on compliance with
previous cut agreements.
The data usually carries a lag of up to two weeks, so February’s production figures were published
on March 11 and the March figures are expected to come out on April 16.
Another challenge for OPEC+ has been around how some members assess their production. After
much debate, Russia secured agreement among OPEC+ to include oil and condensate - a by
product in crude production - in its total output level.
THE U.S. CONUNDRUM
Russia has insisted that it would only accept cuts to its output if the United States joined in with
reductions. The U.S. Department of Energy said U.S. output was already falling without government
intervention, in line with the position of the White House that it would not intervene.
U.S. Department of Energy projections now show U.S. oil output averaging 11 million bpd in 2021,
which correlates to about a 2 million bpd decline from the late 2019 peak.But Moscow has said
natural production declines were not the same as the voluntary output cuts now being negotiated.

NewBase Special Coverage
The Energy world - Special 10- April-2020
Saudi, Russia outline record oil cut under U.S. pressure as
demand crashes Reuters + newBase
OPEC, Russia and other allies outlined plans on Thursday to cut their oil output by more than a fifth
and said they expected the United States and other producers to join in their effort to prop up prices
hammered by the coronavirus crisis.
But the group, known as OPEC+, said a final agreement was dependent on Mexico signing up to
the pact after it balked at the production cuts it was asked to make. Discussions among top global
energy ministers will resume on Friday.
The planned output curbs by OPEC+ amount to 10 million barrels per day (bpd) or 10% of global
supplies, with another 5 million bpd expected to come from other nations to help deal with the
deepest oil crisis in decades.
Global fuel demand has plunged by around 30 million bpd, or 30% of global supplies, as steps to
fight the virus have grounded planes, cut vehicle usage and curbed economic activity.

An unprecedented 15 million bpd cut still won’t remove enough crude to stop the world’s storage
facilities quickly filling up. And far from signalling any readiness to offer support, U.S. President
Donald Trump has threatened Saudi Arabia if it did not fix the oil market’s problem of oversupply.
Trump, who has said U.S. output was already falling due to low prices, warned Riyadh it could face
sanctions and tariffs on its oil if it did not cut enough to help the U.S. oil industry, whose higher costs
have left it struggling with low prices.
A White House aide said Trump held a call with Russian President Vladimir Putin and King Salman
of Saudi Arabia about the talks, after a U.S. official said the OPEC+ move towards cuts sent an
“important signal” to the market.
Officials from the Organization of the Petroleum Exporting Countries and Russia have said the scale
of the crisis required involvement of all producers.
“We are expecting other producers outside the OPEC+ club to join the measures, which might
happen tomorrow during G20,” the head of Russia’s wealth fund and one of Moscow’s top oil
negotiators, Kirill Dmitriev, told Reuters.
Thursday’s OPEC+ talks will be followed by a call on Friday between energy ministers from the
Group of 20 (G20) major economies, hosted by Saudi Arabia.
OPEC and Russian sources said they expected other producers to add 5 million bpd to cuts,
although an OPEC+ statement on Thursday made no mention of any such condition.
Brent oil prices, which hit an 18-year low last month, were trading around $32 a barrel on Thursday,
half their level at the end of 2019.
U.S. DILEMMA

OPEC+ would cut output by 10 million bpd in May to June, OPEC+ documents showed. All members
would reduce output by 23%, with Saudi Arabia and Russia each cutting 2.5 million bpd and Iraq
cutting over 1 million bpd.
Under the plans, OPEC+ would then ease cuts to 8 million bpd from July to December and relax
them further to 6 million bpd from January 2021 to April 2022, the documents showed.
The United States, whose output has surged to surpass Saudi and Russian production, was invited
to Thursday’s OPEC+ talks but it was not clear if it had joined the video conference. Brazil, Norway
and Canada were also invited.
U.S. officials have already said U.S. output would fall naturally over two years but have not
committed to any cuts.
In a sign OPEC+ was struggling to win broader support, Canada’s main oil province of Alberta said
output had already dropped and that it had not been asked by OPEC for more cuts. The province
said it backed a U.S. idea for tariffs on imported crude.
Before the talks, Moscow and Riyadh had been at odds over what level of production to use to
calculate reductions, after Saudi Arabia hiked its supply in April to a record 12.3 million bpd, up from
below 10 million bpd in March. Russian output, meanwhile, has been running about 11.3 million
bpd.
The two nations fell out during an acrimonious meeting in Vienna in March, when a previous
production deal collapsed.
The two sides agreed on Thursday that cuts would be made from an 11 million bpd baseline for
both countries, OPEC+ documents showed.
“We have managed to overcome differences. It will be a very important deal. It will allow the oil
market to start on a path to recovery,” said Dmitriev, who last month was the first official to propose
a deal involving members other than OPEC+.

Several U.S. states could order private companies to limit production under rarely used powers. The
oil regulator in Texas, the largest producer among U.S. states with output of about 5 million bpd,
meets on April 14 to discuss possible curbs.
These are the three big things to focus on from OPEC and the G-20
meetings over the next 48 hours
KEY POINTS
 These are the three things to focus on from OPEC and the G-20 meetings over the next 48
hours.
 The world is expected to cut an unprecedented 12 million to 15 million barrels of oil per day
from global production.
 One major sticking point of any OPEC+ Russia deal is from what level of production do any
Saudi cuts originate.

Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud and Russian Energy
Minister Alexander Novak at the start of an OPEC and NON-OPEC meeting in Vienna, Austria,
December 6, 2019.
There are three big things to focus on from OPEC and the G-20 meetings over the next 48 hours:
1) total global output cut, 2) benchmark production levels for those cuts, and 3) the length of time of
any formal deal.
The Cut Math
The world is expected to cut an unprecedented 12 million to 15 million barrels of oil per day from
global production. Assuming talks don’t break down, here’s a very simplistic possible breakdown
of how the cuts play out garnered from a variety of research:
 OPEC = 5 million to 6 million barrels per day
 Russia = 1.5 million barrels per day
 US = 1.5 barrels per day, within a few months
 Brazil, Canada, Mexico = 1.2 million to 1.5 million barrels per day
 Norway = 250,000 barrels per day
 Others = 1 million barrels per day
So by late Friday a variety of agreements could be made to remove nearly 12 million barrels of oil
from the daily global market.
But like everything with global energy politics, it’s not that simple.
Benchmarks and quotas
One major sticking point of any OPEC+ Russia deal is from what level of production do any Saudi
cuts originate.
Saudi production has risen over the past two months as the market share and price war kicked off.
The Saudis are willing to cut more than any single producer, but Russia and Iran have made it fairly
clear that whatever cuts come from the Kingdom must come from pre-output surge levels, not
current production. In other words, if the Saudis cut, say, 3 million barrels per day, that should come
off of the 10 million output figure, not the newer 12.5 million level, because then was it really a big
cut at all? This benchmark debate will likely be key inside the virtual room.

On the U.S. side, keep in mind that we have neither a national American producer nor an OPEC,
so there is no way for us to assure OPEC or the G-20 that any cuts can be guaranteed. It’s every
company for itself in the Permian Basin right now.
But there are two big things OPEC leaders will be watching here: first, the level of capital spending
cuts by Exxon, Chevron, Occidental and other major players has been sizeable, so the group knows
U.S. output will fall from natural attrition and lack of new well drilling.
Also, the Texas Railroad Commission, the obscure three-person organization that regulates that
state’s oil production, could vote April 21st to impose production quotas or caps. It’s a hot topic for
another day, but if OPEC believes the commission will vote for quotas, it could take another million
or so barrels from the global market.
For how long
Maybe even more vital than the output cut size are the length of any deals made. The world is
oversupplied by 25 million to 30 million barrels per day of oil. So whatever happens at OPEC and
the G-20 won’t be enough to balance the market. The goal is only to minimize the damage until the
world can get back on its economic feet.
An extra 30 million barrels of oil floating around the world (literally, now, on ships) could grow to 2.7
billion barrels over the next three months. That would completely overwhelm global storage and oil
could quickly slide to single-digit prices.
Taking 15 million barrels per day from that supply cuts 1.35 billion barrels from those totals over the
next 90 days, and makes managing that storage a little easier, with hope that economies
everywhere begin to recover sooner than later and demand picks back up.
Hope may be the key word as these tense negotiations kick off today. The longer a deal, the better,
or markets may simply decide the path of least resistance for prices is down once again.
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” Your partner in Energy Services

NewBase energy news is produced daily (Sunday to Thursday) and sponsored by Hawk Energy Service –
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For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 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 2020 K. Al Awadi

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New base energy news 10pril 2020 issue no. 1329 by senior editor eng