New base energy news 11 febuary 2019 issue no 1230 by khaled al awadi

Copyright © 2018 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 Energy News 11 February 2019 - Issue No. 1230 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: Enoc, BHGE to co-develop lubricant monitoring system
TradeArabia News Service
Baker Hughes, a GE Company announced today an agreement with Emirates National Oil
Company (Enoc) to co-develop VitalyX, a real-time lubricant monitoring system.
VitalyX can be deployed in multiple industries using large machinery, and the advanced cloud-
based system is designed to detect and measure key lubricant properties in real-time while
simultaneously converting the data into actionable insights.
Enoc, which will not only co-develop but has also signed the first order for VitalyX, announced the
project with BHGE leaders at BHGE’s Annual Meeting in Florence, with more than 1,100 customers
in attendance.

Lubrication oil is the lifeblood of many machines and assets, and it not only protects those assets
but also can be used to determine the overall health of a system. Real-time monitoring of lubricants
also helps safeguard end users’ and operators’ equipment by offering a new level of predictive
maintenance, thus enhancing efficiency, reducing downtime and improving asset’s lifetime. Without
continuous monitoring, catastrophic failures due to fluid issues are a reality; for example, the
cumulative cost of a top drive gearbox failure due to fluid loss can be up to $1 million, a BHGE
statement said.
VitalyX’s advanced cloud-based solution can measure key lubricant chemical and physical
properties in real time across an operator’s fleet while simultaneously converting the data into alerts
and alarms to identify potential issues. The user-friendly dashboard can show fleet-wide data down
to the individual asset level and stored either in a shared cloud or locally.
“Digitization is playing an integral role in driving the transformation of the energy sector, and has
contributed significantly to enhancing operational efficiency,” said Saif Al Falasi, Enoc Group CEO.
“We believe that our agreement with BHGE - will play a key role in revolutionizing lubricant quality
testing and physical asset management. We at ENOC are pleased to have been able to work with
BHGE on the development of this innovation and look forward to developing many other projects in
the near future.”
“We look forward to this partnership with Enoc in the Middle East and beyond,” said Ed J Boufarah,
vice president of BHGE’s measurement and controls business for the Middle East, Africa and
India. “Our co-development of VitalyX with ENOC will pioneer innovative solutions in lubricant
monitoring that delivers productivity gains and cost savings that can be scaled across their fleet
globally.”

Oman: Wind farm to meet 7pc of Dhofar power demand
Oman Observer - Conrad Prabhu
The GCC’s first utility-scale wind power project currently making headway in its construction at
Fitkhit in the Wilayat of Shaleem and Halaniyat Islands, will meet at least 7 per cent of Dhofar
Governorate’s total power demand when it comes into operation in the third quarter of this year.
Four of the 13 wind turbines that together make up the 50 MW capacity wind farm have been
installed, with the balance nine due to be completed by the end of next month. The entire support
infrastructure is already in place, according to project officials.
The update came during a high-level visit to the project site by top officials representing all of the
key players involved in the development, construction and delivery of the landmark project.
Participating in the field tour, which took place late last week, were senior executives representing
Oman Power and Water Procurement Company (OPWP) — part of Nama Group and the main
offtaker of the project’s electricity output; the Oman Rural Areas Electricity Company (Tanweer) —
also a member of Nama Group and the operator of the project upon its completion; the Abu Dhabi
Future Energy Company (Masdar), the developer of the project; GE Renewable Energy, the supplier
of the wind turbines; and contractors Gopa-intec (Project Management Consultant), TSK and
Welayat Shaleem.

Funded by the Abu Dhabi Fund for Development (ADFD), the project is the first of a slew of
renewable energy based energy schemes planned for implementation over the next several years
designed to secure a minimum 10 per cent share of Oman’s total energy needs from sustainable
energy sources within the next five years.
The wind farm is being implemented by Masdar on behalf of ADFD through an Engineering-
Procurement-Construction (EPC) consortium comprising GE Renewable Energy and Spanish
renewables contractor TSK.
In a statement, Eng Yaqoob al Kiyumi, CEO of OPWP — the offtaker of the project’s energy out,
said the nation’s maiden wind farm will serve to inspire the roll-out of new wind-based energy
schemes in the Sultanate. “Oman is very rich in renewable energy resources and OPWP is
determined to exploit the learnings from this project, and its previous IPP experience, to expedite
energy generation from such resources,” he said.
Eng Saleh al Rumhi, CEO of Tanweer, said the company will own the assets and will also be
responsible for operating the site and dispatching the energy to the Oman grid. Additionally, the
company is making headway in the implementation of other renewable initiatives, including adding
photovoltaic capacity at 11 of the company’s existing power plants, he added.
Mohamed Jameel al Ramahi, CEO of Masdar, lauded the Sultanate’s resolute embrace of
enewables in meeting domestic energy demand growth. “Oman’s bold decision to invest in utility-
scale wind energy will give further encouragement to other countries in the region seeking to expand
the role of renewable energy in diversifying their power mix, and strengthen the reputation of
renewables as a reliable provider of cost-effective clean power.
Furthermore, it will underscore the positive socio-economic impacts that come with clean energy,
including job creation, technology transfer and skills development fostering sustainable growth in
the wider economy.”

Oman:Marubeni to build 105 MW Amin solar power project
Oman Observer -Jomar Mendoza
Marubeni Corporation, which heads a Japanese-Omani consortium selected by Petroleum Development
Oman (PDO) to build a 105 MW solar power project at Amin, has effectively expanded its presence in
the Sultanate.
The project will be the first large scale solar plant in Oman. It also marks Marubeni’s second Independent
Power Project (IPP) in the Sultanate, the first being the Sur Gas Fired Combined Cycle IPP Project
(2,000MW) which has been in operation since 2014.
Recently, the Marubeni-led consortium signed a power purchase agreement (PPA) with PDO for the
output of the 105 MW Amin photovoltaic project in the south of Oman.
The consortium is a partnership created through a
special purpose company between Marubeni, with a
50.1 per cent stake, Oman Oil Facilities Development
Company (30 per cent), Bahwan Renewable Energy
Co (10 per cent) and Modern Channel Services with 9.9
per cent.
The PPA, which will last for 23 years, will task the
consortium to develop, construct operate and maintain
the solar PV plant which has a capacity of 105 MW.
Marubeni said the scheduled commercial operation date is projected for May 2020. Marubeni added
that project financing is also being arranged for this project.
Marubeni maintains 12GW of net IPP generation assets across 22 countries and is proactively
expanding its development of renewable energy IPP projects. Marubeni said it will continue to expand
its business activities in the renewable energy power sector throughout the world, with focus on the
Middle East and North Africa (MENA) region where many large scale projects are in the works.
The company added it is committed to contributing to the supply of stable power in the MENA region.

Egypt Dangles Incentives to Attract More Oil and Gas Investors
Bloomberg - Salma El Wardany + NewBase
Egypt is finalizing details of a new type of oil and gas contract to attract even more foreign
investment than the $10 billion already coming into its energy industry this year.
The contract will provide investors with incentives to explore for fossil fuels in undeveloped areas,
Egypt’s oil minister Tarek El-Molla said in an interview. He didn’t provide details of the changes to
the contract.
“We’re improving the cost-recovery process to be faster, less bureaucratic and more efficient,” El-
Molla said. The government will launch a new bid round in the Red Sea this quarter, he said.
The most populous Arab nation wants to become a gas re-exporting hub on the doorstep of Europe,
and the contract overhaul is part of a broader plan to liberalize its energy industry. Italian firm Eni
SpA’s discovery of the giant offshore Zohr gas field in 2015 reignited waning investor interest in
Egypt’s oil and gas industry, the country’s biggest single magnet for foreign direct investment.
Total SA Chief Executive Officer Patrick Pouyanne and BP Plc’s Bob Dudley will join CEOs of other
oil majors at an energy conference in Cairo on Monday.
Arrears
Officials told Bloomberg in October that the new oil and gas contract would allow investors to control
their share of production rather than sell to the government at preset prices. The officials, who asked
not to be identified because the discussions were private, said terms could be tweaked depending
on the investment.
Egypt’s existing production-sharing agreements give investors about a third of a project’s output to
help cover exploration and production costs. The rest is split with the government, which has the
right to buy the producer’s entire share at the preset price.

International oil companies have long complained about the contracts. Egypt struggled before
Zohr’s discovery to attract major new energy investments. Its current investment model drew greater
scrutiny after 2011, when the country began to experience fuel shortages and power blackouts.
The government halted gas exports at the time, diverting the fuel for local use and stopping
payments to investors for their share of output. Arrears to international oil and gas companies
mounted, peaking at $6.2 billion in 2012, and stood at $1.2 billion in July.
LNG Exports
Production from the Zohr field along with BP’s West Nile Delta project reversed the shortage. Output
soared, allowing the government to endliquefied natural gas imports and resume exports. The
country has conducted a test run on its gas pipeline to Jordan, and said it will supply Lebanon via a
link that has been idle for years.
Egypt’s gas riches have transformed the LNG demand outlook in the Middle East. The region was
a bright spot for LNG in 2015, driven by Egyptian imports. Now shipments have plummeted so much
that it could take a decade for demand to recover.
Demand Slump
Three of the top four Mideast LNG buyers reduced imports last year
Source: BloombergNEF, Poten & Partners
Royal Dutch Shell Plc, which operates the country’s Idku LNG plant, can now restart regular output
after being restricted to occasional cargoes over the past few years. The company will export 17
cargoes in 2019, El-Molla said.
While gas exports are rising, Egypt still has to import much of the oil products it needs for heating,
transportation and power generation. The country is investing $9 billion to expand refining capacity
and plans to stop fuel imports in about four year, El-Molla said. The Egyptian Refining
Co.’s new $3.7 billion processing plant is part of that effort, and will begin operations by the middle
of 2019, he said.

S. Sudan to return to pre-war oil production levels by mid-2020:
Reuters + NewBase
South Sudan will return to producing more than 350,000 barrels of crude per day by the middle of
2020, up from current levels of just over 140,000 barrels per day (bpd) currently, the country’s oil
minister said on Sunday.
Production is expected to rise to 270,000 bpd by the end of 2019, Oil Minister Ezekiel Lul Gatkuoth
told Reuters. He was speaking on the sidelines of the Petrotech conference in Greater Noida, a
satellite city of India’s capital New Delhi.
The world’s youngest country, which split from Sudan in 2011, has one of the largest reserves of
crude in sub-Saharan Africa, only a third of which have been explored so far. The country lost many
of its oilfields to a civil war that broke out two years after its independence. A September peace
agreement is largely holding.
“By the end of the year, block 3 and 7 will be hitting 180,000 bpd, blocks 1, 2 and 4 will be producing
70,000 bpd, and block 5A will be producing 20,000 bpd,” Gatkuoth said. “We used to produce
350,000 to 400,000 bpd. We expect to go back to those levels by the middle of next year,” he said.

South Sudan has signed a preliminary agreement with Russia’s Zarubezhneft for exploring some of
the blocks, Gatkuoth said. “They are interested in block B1, B2, E1 and E2. We will be working to
see where they are likely to be interested in the most,” he said.
South Africa, which has committed to investing $1 billion in the country, would collaborate with South
Sudan on the construction of pipelines and a new refinery along the border with Ethiopia, the
minister said.
“We have agreed to build a refinery on the border of Ethiopia, we have already signed an agreement
with Ethiopia to offtake refined products,” Gatkuoth said. Land-locked South Sudan is looking to
boost its export options as it looks beyond its neighbor Sudan, the minister said.
“We have new blocks in the southern part of South Sudan, oil from which will be exported to East
Africa (through the new pipelines),” he said. American oil majors such as Exxon Mobil and Chevron
showed interest in investing in South Sudan, but are currently not interested because of the conflict,
he said. “We have been approaching Exxon officials, and I will be meeting them in Houston next
month,” he said.
About Block 5A
is an oil concession in South Sudan. After oil field development began during the Second Sudanese
Civil War, Block 5A was the scene of extensive fighting as rival militias struggled for
control. Production started in 2006. There is evidence that the environmentally sensitive marshlands
beside the Nile are becoming
polluted.[ European companies have been
accused of complicity in clearance of the
population from the oil field.
he Chevron Corporation prospected for oil in
Block 5A, and in 1982 reportedly found oil about
fours hours walk northwest of Koch. However,
Chevron stopped oil exploration after three of
their expatriate oil workers were killed by rebels
in February 1984.
After the resumption of exploration and
development, on 6 February 1997 the
Sudanese Government granted the block 5A
concession to a consortium of Lundin Oil of
Sweden, OMV of Austria, Petronas of Malaysia
and Sudapet of Sudan.[28] Lundin's 40.375%
stake was held by their Canadian subsidiary
International Petroleum Corporation (IPC).
OMV agreed to purchase their 27.5% interest in
the Block 5A project on 3 June 1997. Petronas
already had a pending assignment of a 30%
interest.
In 2002, Lundin and Talisman Energy swapped
some of their assets, but the Lundin family kept
control of their block 5A assets. Block 5A was
the main asset of Lundin Oil's successor Lundin
Petroleum between 2001 and 2003.

S.Africa: Total makes a discovery and opens a new petroleum province
Source: Total / energy-pedia
Total has made a significant gas condensate discovery on the Brulpadda prospects, located
on Block 11B/12B in the Outeniqua Basin, 175 kms off the southern coast of South Africa.
The Brulpadda well encountered 57 meters of net gas condensate pay in Lower Cretaceous
reservoirs. Following the success of the main objective, the well was deepened to a final depth of
3,633 meters and has also been successful in the Brulpadda-deep prospect.
'We are very pleased to announce the Brulpadda discovery which was drilled in a challenging
Deepwater environment', said Kevin McLachlan, Senior Vice President Exploration at Total. 'With
this discovery, Total has opened a new world-class gas and oil play and is well positioned to test
several follow-on prospects on the same block.'
Total drilled this exploration well with the latest generation drilling ship and was able to leverage its
experience in similar environments, such as the West of Shetland, UK.
Following the success of Brulpadda and confirmation of the play potential, Total and its partners
plan to acquire 3D seismic this year, followed by up to four exploration wells on this license.
The Block 11B/12B covers an area of 19,000 sq kms, with water depths ranging from 200 to 1,800
meters, and is operated by Total with a 45% working interest, alongside Qatar
Petroleum (25%), CNR international (20%) and Main Street, a South African consortium (10%).
Note: Total acquired its interest in lock 11B/12B in September 2013 from CNR International (South
Africa) a wholly owned subsidiary of Canadian Natural Resources.

UK: Cuadrilla reports shale gas initial flow test results from its
Preston New Road site in Lancashire …. Source: Cuadrilla
Cuadrilla has announced results from its flow-testing of the UK’s first ever horizontal shale gas
exploration well, drilled through the shale rock more than 7,500 feet beneath the Preston New Road
exploration site in Lancashire.
The company, based in nearby Bamber Bridge, said that the drilling, hydraulic fracturing and flow
testing of the first horizontal well confirms that there is a rich reservoir of recoverable high quality
natural gas present.
Chief Executive Officer Francis Egan said:
'We have also confirmed that the Bowland shale formation fractures in a way that, from US
experience, is typical of an excellent shale gas reservoir. A complex fracture network was generated
in the shale and sand injected into the fractures has stayed in place during flow back. Also the
natural gas flowing to surface from the shale has a very high methane content, which means it could
be delivered into the local gas grid for the benefit of local consumers with minimal processing
required.'
An intentionally conservative micro-seismic operating limit during hydraulic fracturing, set at just 0.5
on the Richter Scale, had however severely constrained the volume of sand that could be injected
into the shale rock. Mr Egan added: 'We have only partially tested this well, with just two out of the
forty one stages installed along the horizontal section fractured fully as designed, and less than 14
per cent of the sand we had planned to inject into the shale rock put in place. Nonetheless the

natural gas still flowed back from the shale at a peak rate of over 200,000 standard cubic feet per
day and a stable rate of some 100,000 standard cubic feet per day.'
Cuadrilla estimates that, when compared to a typical North American 2.5km long producing
horizontal shale gas well, with all of its stages fractured as planned, the data indicates a potential
initial flow rate range of between 3million and 8million standard cubic feet per day.
'This is a highly encouraging result and great news for the UK which continues to import gas in ever
increasing quantities by ship and long distance pipeline and has seen record demand for gas during
the recent cold weather. The natural gas beneath Preston New Road could help secure our
domestic gas supply and flow directly into the local grid, reducing CO2 emissions associated with
importing LNG in tankers from around the world, including shale gas from the US, or piping gas to
the UK over thousands of miles.'
Cuadrilla confirmed that it has requested the
Oil and Gas Authority (OGA) to urgently
review the TLS to enable the PNR exploration
wells to be properly tested and produced
effectively, without compromising safety or
environmental protection. Subject to the
outcome of such a review Cuadrilla plans to
complete hydraulic fracturing of the PNR1
well, fracture the PNR2 well and carry out flow
testing of both wells later this year.
The company was the first to work within the
micro-seismic Traffic Light System (TLS),
regulated by the Oil and Gas Authority (OGA),
and now holds a unique and extensive data
set.
Mr Egan said: 'We have acquired almost
40,000 micro-seismic data points during
hydraulic fracturing operations on the PNR1-z
well. We believe this to be the most
comprehensive micro-seismic data set ever collected at a shale gas well anywhere in the world.
The data has been shared with the OGA and the British Geological Survey (BGS) and we believe
that there is more than ample evidence to justify an expert technical review of the TLS and, based
on the outcome of that review, a revision at the PNR site, without compromising on safety.'
In addition to micro-seismic data Cuadrilla recorded ground vibration levels throughout fracturing
operations. The vast majority of those vibrations were less than 0.5 mm/second which the company
has highlighted is up to thirty times lower than limits applied to other UK industrial operations,
including quarrying and construction.
Francis Egan said: 'Cuadrilla and its investors remain committed to this opportunity. The potential
for Lancashire and the UK has again been clearly demonstrated by the fracturing and flow-testing
carried out at Preston New Road. We look forward to completing the job.
'All we ask now is that we are treated fairly, with comparable seismic and ground vibration levels to
similar industries in Lancashire and elsewhere in the UK who are able to work safely but more
effectively with significantly higher thresholds for seismicity and ground vibration.'
Cuadrilla has now shut in the well and will monitor build-up as it continues to assess the results.

U.S.: Most utility-scale solar PV power plants, 5 MW or maller
Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory, November 2018
The United States has more than 2,500 utility-scale solar photovoltaic (PV) electricity generating
facilities. Most of these power plants are relatively small and collectively account for 2.5% of utility-
scale electric generating capacity and 1.7% of annual electricity generation, based on data through
November 2018.
EIA considers utility-scale generating facilities to be those where total generation capacity is one
megawatt (MW) or greater. However, some utility-scale sites use more than one generating
technology. At utility-scale facilities where PV is one of several technologies in use, the PV capacity
itself may be less than one megawatt, but this is relatively rare: based on EIA’s latest data, only 20
sites with a total combined capacity of 10 MW were in this category.
The growth in small utility-scale facilities is driven by several factors, many of which are tied to state-
level policies and practices. For example, North Carolina used the Public Utilities Regulatory
Policies Act of 1978 to allow utilities to set long-term purchase agreements with solar facilities,
enabling solar developers to secure project funding more easily and spurring growth.
Currently, North Carolina has 433 utility-scale PV facilities with capacities no greater than 5 MW,
the most of any state, and accounting for nearly a quarter of all utility-scale PV facilities in the country
between 1 MW and 5 MW. These facilities collectively account for 1,803 MW of capacity, or 35% of
the total U.S. PV capacity located at facilities with 1 MW to 5 MW of installed capacity.
In other states, the growth of small utility-scale PV capacity is encouraged by strategies that include,
for example, community solar facilities. Community solar facilities offer a share of their solar capacity
for sale to off-site customers who may not necessarily have access to solar generation. In these
programs, customers may subscribe to a designated community solar facility and receive monthly

credits on their electric bills for the energy generated by the share of solar capacity they purchase.
The average community solar facility has a capacity of 2.0 MW.
Growth in small utility-scale facilities is expected to continue through 2020. EIA’s Preliminary
Monthly Electric Generator Inventory for October 2018 reports that most of the 216 solar PV facilities
that will come online by the end of 2020 will have capacities of five megawatts or less.
Solar PV facilities with less than one megawatt in capacity are not included in EIA’s surveys of
electricity generators, but their aggregate capacities are included in the EIA’s survey of electric
power sales, revenue, and energy efficiency and are represented in EIA’s Electric Power Monthly.
EIA estimates small-scale solar PV capacity to be about 40% of total solar capacity connected to
the grid as of November 2018.

NewBase 11 February 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices stable above $62 for Brent even on rising U.S. rig count, Illinois refinery fire
Reuters + Bloomberg + NewBase
Oil prices this morning hoovering around $62 Brent with WTI around $ 52.4 after an early fell by
more than 1 percent on Monday as U.S. drilling activity picked up and as a refinery fire in the U.S.
state of Illinois resulted in the shutdown of a large crude distillation unit.
U.S. West Texas Intermediate (WTI) crude futures were at $52.41 per barrel at 04:44 GMT, down
31 cents, from their last settlement. International Brent crude oil futures were up 2 cents, at $62.12
a barrel.
Oil fell toward the lowest level in almost two weeks as global growth concerns continued to damp
the demand outlook, with investors hoping for positive news from high-level U.S.-China trade talks
this week.
Futures dropped as much as 1.6 percent in New York, following a 4.6 percent decline last week that
was the biggest this year. U.S. Trade Representative Robert Lighthizer and Treasury Secretary
Oil price special
coverage

Steven Mnuchin are heading to Beijing for discussions before a March 1 deadline set by the U.S. to
more than double tariffs on $200 billion of Chinese goods. Hedge funds plowed back into bearish
bets on Brent crude in the week through Feb. 5.
West Texas Intermediate oil has reversed course after the best January on record as a lack of
progress on the trade war and growth warnings from Europe, Asia and elsewhere depressed the
demand outlook. In more bearish news, American drillers added seven working oil rigs last week,
bolstering concern that record U.S. production will undermine efforts by the Organization of
Petroleum Exporting Countries and its allies to curb a global glut.
“We’ll see oil trading in a range between $50 to $55 a barrel in the short term as uncertainties linger
over the U.S.-China trade negotiations, as well as over wider economic growth,” said Vincent
Hwang, a commodities analyst at NH Investment & Securities Co. in Seoul. Crude is likely to recover
to near $60 a barrel in the longer term once the macroeconomic concerns ease, he said.
West Texas Intermediate oil for March delivery dropped 60 cents to $52.12 a barrel on the New
York Mercantile Exchange at 7:53 a.m. in London after falling as much as 82 cents earlier. The
contract closed 8 cents higher at $52.72 on Friday.
Brent for April settlement lost 30 cents to $61.80 a barrel on the London-based ICE Futures Europe
exchange. The contract climbed 47 cents to $62.10 on Friday. The global benchmark crude was at
a $9.29 premium to WTI for the same month, the highest in more than seven weeks.Investors are
hoping that the world’s two biggest economies can get their trade talks back on track
A slew of reports due this week may provide fresh direction for oil markets. The Energy Information
Administration and OPEC will publish data including their market outlooks on Tuesday. The Paris-
based International Energy Agency and BP Plc will also put out reports containing their demand
forecasts on Wednesday and Thursday, respectively.
In the United States, energy firms last week increased the number of oil rigs operating for the second
time in three weeks, a weekly report by Baker Hughes said on Friday. Companies added 7 oil rigs
in the week to Feb. 8, bringing the total count to 854, pointing to a further rise in U.S. crude
production, which already stands at a record 11.9 million bpd.

NewBase Special Coverage
News Agencies News Release 11 February 2019
Donald Trump's Cheap Oil Dream Can Still Come True
By :Julian Lee
As winter keeps its grip on the northern hemisphere it is the oil bulls, not the bears, who have gone
into hibernation. The price rally that greeted the new year has fizzled out as renewed concerns
about demand growth outweigh the tightening of oil supply through OPEC cuts and U.S. sanctions.
Saudi Arabia had already started to deliver on its promised output reductions in December and went
beyond what was pledged in January. U.S. production growth has stalled — for now — and
President Donald Trump’s sanctions on oil flows from a second OPEC producer (Venezuela joins
Iran on the naughty step) will cut supplies even further.
The flow of OPEC crude to the U.S. fell to the lowest in five years in January, according to data from
the cargo-tracking and intelligence company Kpler. Bloomberg’s own tanker tracking shows the flow
of crude from the Persian Gulf to the U.S. last month was 36 percent lower than in December and
almost 60 percent lower than in August.
Those flows matter, not because the Americans are OPEC’s biggest customer — they aren’t — but
because the U.S. market is still the most transparent. Official weekly data on the country’s oil
production, consumption, refining, stockpiles and trade flows are watched keenly by traders and
policymakers. Those indicators drive sentiment.
How Low Can You Go?
Saudi crude shipments to the U.S. are their lowest in since the OPEC+ supply cuts began in January 2017
Source: Bloomberg

That’s why Saudi Arabia decided to focus its output cuts on the U.S. in the middle of 2017 and has
done so again now. While the kingdom’s crude shipments were cut by 10 percent between
November and January, flows to the U.S. were slashed by 46 percent, taking them to the lowest
level since OPEC and other oil producers began the last round of supply reductions at the start of
2017.
Slowing Shale Growth
U.S. oil production growth is forecast to slow markedly in 201; but beware, last year's outlook missed
the summer surge
Source: Bloomberg, EIA
U.S. production growth is also expected to slow significantly in 2019. Output rose by about 1.8
million barrels a day between December 2017 and December 2018, almost three times the increase
that was expected at the start of last year.
This year, it’s expected to rise by just 520,000 barrels a day. The slowdown in U.S. output growth
might be seen as bullish for crude — so long as you believe the Department of Energy has got its
forecast right this time.
And then there’s Venezuela. Sanctions on its oil exports, and on the sale to the country of the
diluent needed to let its extra-heavy crude flow through pipelines, have had an instant impact. The
country is now divertingsome of its own light crude from export markets to mix it with the extra-
heavy oil in an attempt to keep producing.

What Goes Down May Not Come Up
Sanctions will accelerate the drop in Venezuela's oil production, while recovery will be slower than
optimists hope
Source: Bloomberg
And things are going to get worse for Venezuela’s oil sector. The sanctions will hasten the decline
in output and even if there’s a swift transition of power, which looks unlikely, it will be months before
production is restored. Infrastructure is crumbling, the state oil company has lost much of
its technical staff, and an interim government will struggle to enact promised changes.
The problem for bulls is that while oil supply has clearly tightened, demand is starting to look weaker
again. Hopes of a breakthrough in U.S.-China trade talks were knocked back after Trump said
he wouldn’t meet President Xi Jinping before a March 1 deadline to avert higher tariffs on Chinese
goods.
Meanwhile, the European Commission has slashed growth forecasts for the euro area’s big
economies and warned that Brexit and the slowdown in China threaten to make things even worse.
That might start to weigh on oil demand forecasts, which have remained relatively robust.
Oil Demand Growth Undimmed
Oil demand growth forecasts for 2019
remain robust despite economic
worries
Note: Year-on-year change in global
oil demand: 2019 vs 2018
Last month, the International Energy
Agency cited “average prices being
below year-ago levels” as the main
reason it saw demand growth holding
up. We’ll have to wait for its next
forecast on Wednesday to see
whether it still thinks that’s the case.
Oil prices have been flat for a month, which should be positive for demand, but the weakening
economy is negative. And if the oil bulls do emerge from their January slumber, and start pushing
up prices, they might just choke off that demand.

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 – 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 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 Feb. 2019 K. Al Awadi

New base energy news 11 febuary 2019 issue no 1230 by khaled al awadi

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base energy news 11 febuary 2019 issue no 1230 by khaled al awadi

Similar to New base energy news 11 febuary 2019 issue no 1230 by khaled al awadi (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base energy news 11 febuary 2019 issue no 1230 by khaled al awadi