New base energy news 18 december 2018 no-1219 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,
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NewBase Energy News 18 December 2018 - Issue No. 1219 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: Empower to lunch world’s first Unmanned District
cooling station and with (AI) operations
REUTERS/Yves Herman + NewBase
Emirates Central Cooling Systems Corporation (Empower) has unveiled the world’s first unmanned
district cooling plant that uses artificial intelligence (AI) in Jumeirah Village Circle (JVC). With a total
capacity of 50,000 refrigeration tonnes, the plant’s total cost amounted to AED 250 million.
The move comes along with the company’s strategy to increase its cooling plants across the emirate
in a bid to serve the largest number of projects. The plant will use AI to monitor and automatically
adjust inflow and outflow of the chilled water.
It will also use award-winning TSE and Thermal Energy Storage (TES) technologies to serve chilled
water to 90 buildings through ETS Rooms located in each building.The company affirmed that the
plant is designed in accordance with global standards.
By completing this plant, Empower’s total plants will increase to 75% by the end of 2018. The cooling
plant is expected to be completed by the fourth quarter of 2019. Built at a total cost of AED 250
million, the project is part of company's expansion plan of increasing the number of district cooling

plants across Dubai, to serve major projects. This is also part of company's ongoing efforts to spread
district cooling services in Dubai, and utilize Artificial Intelligence, AI, technologies.
The Jumeirah Village Cooling (JVC) plant is the world’s first unmanned and fully automated district
cooling plant. It uses AI to monitor and automatically adjust inflow and outflow of the chilled water,
as well as Advanced SCADA system with the capacity to read 2 million data related to cooling
towers, chillers, transformers, water supply etc.
It also uses award-winning Treated Sewage Effluent, TSE, and Thermal Energy Storage, TES,
technologies to serve chilled water. The plant’s operational efficiency will reach 0.89 KW/t, using 6
water chillers running on 11KV of electricity.
"Empower is increasing its efforts to promote reliable and high-quality district cooling services to
customers across Dubai. We are committed in expanding our projects and operations to meet the
increasing demand for district cooling.
This will improve our infrastructure by targeting new areas and increasing the number of cooling
plants such as construction of the new JVC plant. This will also allow the expansion of our current
network, which is expected to reach 100,000 customers by the end of 2018.
This supports the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice
President, Prime Minister and Ruler of Dubai, to promote Dubai as the world's most sustainable city,
and the city with the lowest carbon footprint in the world by 2050.
It also supports the Dubai Integrated Energy Strategy 2030 to reduce energy and water
consumption to 30 percent by 2030, and the Dubai Plan 2021, to make Dubai a smart and
sustainable city whose environmental elements are clean, healthy and sustainable," said Ahmad
bin Shafar, CEO of Empower.
The company confirms that the new plant is designed according to the highest international
standards, taking into account the standards of sustainable green buildings and the modern urban
developments of Dubai, as well as the overall aesthetic appearance of the area and the architecture
of surrounding buildings.
The new plant in JVC will be added to Empower’s list of district cooling plants, which is expected to
reach 75 plants by the end of 2018. Empower also expects to increase the number of buildings
using district cooling to reach over 1,090 buildings by this year end.

Oman seeks intl investment to develop ultra-heavy oilfield
Oman Observer - Conrad Prabhu
Oman’s Ministry of Oil & Gas says it will open up its ultra-heavy oilfield at Habhab in south Oman
to investment and development by international players with the technological and financial
wherewithal to unlock the field’s promising, but technically challenging, resources.
Habhab, a large, heavy and very viscous oil
accumulation that currently forms part of the Block
6 concession of Petroleum Development Oman
(PDO), is proposed to be carved out and offered
up to international energy firms with the knowhow
to harness the reservoir’s almost bitumen-like
hydrocarbons.
According to Dr Salman bin Mohammed al Shidi,
Director General of Management of Petroleum
Investments at the Ministry, Habhab will be
“packaged separately” to companies that have the
technical capabilities to handle heavy oil
resources. “We will be open to companies that
have the technical might and the investment, firstly
to study the reservoir and then to put together a
proposal to unlock its heavy oil,” the official said.
Earlier this month, the ministry announced that
Habhab would be marketed in conjunction with the
Oman Licensing Bid Round 2019 due to be
launched in the first quarter of next year. In all, six
oil and gas blocks — newly labelled as Blocks 70, 73, 74, 75, 76 and 58 and distributed across the
Sultanate — will be offered under Exploration & Production Sharing Agreements (EPSA) as part of
the bid round.
In addition, two other blocks are also open for investment based on ‘One-to-One’ negotiations with
qualified international parties with the technological wherewithal and resources required to unlock
the challenging hydrocarbon potential of these concessions.
They include Block 71, containing the Habhab field, home to a multibillion barrel (STOIIP) ultra-
heavy oil reservoir. The other concession is Block 43B, which has remained over from the 2017
Licensing Round.
Significantly, the move to market the Habhab internationally follows on from PDO’s own efforts to secure an
international partner to invest in the development of the ultra-heavy oilfield. Habhab’s hydrocarbon content
is officially categorised at bitumen, which presents formidable technical challenges that test the boundaries
of Enhanced Oil Recovery (EOR) technologies currently deployed in the Sultanate, says PDO.
Originally discovered in 1982, Habhab has an estimated 2.4 billion barrels of ultra-heavy crude. Steam and
chemical injection pilots launched by PDO did yield encouraging results, but evidently not to the point where
it could go it alone in harnessing the field’s potential. According to PDO, the bitumen is accumulated in a
thinly laminated sandstone reservoir with an oil column thickness of approximately 100 metres with the
reservoir depth starting at 1,550 metres.

Oman: Shell to develop fuel bunkering facilities at Duqm port
MUSCAT, 19 hours, 24 minutes ago
Shell Oman Marketing Company, a leading downstream fuel marketing company in the sultanate,
signed an agreement with Port of Duqm Company (PDC) to develop fuel bunkering facilities and
services.
The agreement establishes bunkering
terminal to provide different grades of quality
fuels and lubricants as well as other ancillary
facilities to marine liners calling at Port of
Duqm, said a statement from PDC, a 50:50
joint venture between the Oman and Port of
Antwerp Consortium.
The port has entered an early operations
phase with a fully functional port and
commercial quay capable of handling heavy
lift project cargo, general cargo, dry bulk and
containers.
With its deep draught (18 m), lengthy quay walls and expansive basin, Port of Duqm has the
accoutrements of a world class, multipurpose commercial gateway. It has a current capacity of
100,000 to 200,000 TEUs, 4 million tonnes of dry bulk, and 1 million tonnes of project, break bulk
and heavy lift cargos.
The development of marine business at the Port of Duqm will reinforce the strategic partnership
between Shell Oman Marketing and Port of Duqm Company, remarked Dr Mohammed Mahmood
Al Balushi, CEO of Shell Oman, after signing the bunkering terminal agreement with Reggy
Vermeulen, the chief executive of PDC.
"Due to the strategic and geopolitical location of the port on the international shipping lines, it is
hoisted in the coming years to transform into a regional hub attracting large investments and projects
while driving the diversification of the Sultanate’s economy and enhancing its global
competitiveness," stated Al Balushi.
"We are committed to play a crucial role in the attainment of this vision by delivering global fuel technology
and operational excellence to local and international marine customers in Duqm as part of Shell’s global
network," he added. Vermeulen said this new agreement with Shell Oman underlines the clear ambition of
Port of Duqm to become a future bunker hub serving the entire region.
"With new global bunker regulations coming into effect as from 2020, Port of Duqm plans to take full
advantage of its prime location as well as the availability of the right fuel specs and offer prime bunker
services accordingly," he noted.
Shell has a long-established reputation as a reliable partner of choice in the marine industry. Backed by
decades of experience, dedicated global Shell Marine experts work to offer the highest value for customers.
On a global scale, Shell operates in over 130 ports around the globe providing customers with wide range of
marine products and services. This expertise combined with state-of-the-art global technology and
innovative eco-friendly practices is expected to result in the successful delivery of fuel solutions to local and
international marine liners in Duqm.

Tanzania: plan 3B$ plant to double power generation capacity.
Reuters + The National + NewBase
Tanzania has signed a deal with Egypt's El Sewedy Electric and Arab Contractors to build a $3
billion hydroelectric plant on a World Heritage site in the country, that will more than double
Tanzania's power generation capacity.
Energy Minister Medard Kalemani, said in comments broadcast on state television on Wednesday
that the plant would have an installed capacity of 2,115 megawatts, calling it "a very huge dam
project".
Representatives of state-run Tanzania Electric Supply, El Sewedy and Arab Contractors signed the
agreement in the presence of President John Magufuli and Egyptian Prime Minister Mostafa
Madbouly, TV broadcasts showed.
Mr Magufuli said the project will be wholly funded from taxes. Monthly tax revenue collection has
increased from 850 billion shillings (Dh1.36bn) per month before he came to power in late 2015, to
an average of 1.3tn shillings under his administration, he said.
"When we asked for financing for this project, the lenders refused to give us money but thanks to
improved tax collection, we are able to finance this project using our own resources," he said.
Arab Contractors will have a 55 per cent stake in the project and El Sewedy 45 per cent, El Sewedy
said on Tuesday.
El Sewedy said the Egyptian stock market had halted trading of its shares pending details on the
deal it had signed.

Covering 50,000 square km, the Selous Game Reserve is one of the largest protected areas in
Africa, according to Unesco.
The World Wildlife Fund conservation group said in a report in July last year the proposed
hydropower dam "puts protected areas of global importance, as well as the livelihoods of over
200,000 people who depend upon the environment, at risk".
Officials at the WWF Tanzania office were not immediately available to comment on Wednesday's
deal.
Mr Magufuli dispelled the environmental concerns, saying Tanzania had allocated 32.5 per cent of
its total land mass to conservation.
"The dam will become a major source of water and the cheap electricity to be produced from the
dam will reduce the number of people who cut trees for firewood," he said.
Mr Magufuli has in the past pushed for the project to start as quickly as possible to speed up
development.
He has introduced anti-corruption measures and tough economic reforms and pushed for swift
completion of big infrastructure projects including roads, railways and airports.

US becomes a net exporter of crude oil and petroleum products
Source: U.S. Energy Information Administration, Weekly Petroleum Status Report
During the week ending November 30, 2018, the United States exported more crude oil and
petroleum products than it imported for the first time in weekly data going back to 1991. From
November 24–30, the United States exported an estimated record 3.2 million barrels per day (b/d)
of crude oil as well as an estimated 5.8 million b/d of petroleum products such as distillate fuel oil,
motor gasoline, and propane.
This single-week estimate is part of a longer-term trend of declining imports of crude oil and
increasing exports of petroleum products and, more recently, crude oil.
From week to week, estimated net crude oil and petroleum product trade volumes can vary by as
much as two million to three million barrels per day because of how the data are collected and
processed.
In mid-2016, EIA improved its weekly estimates of crude oil and petroleum product exports by
incorporating near real-time data from U.S. Customs and Border Protection, the government agency
responsible for collecting export data for the U.S. Census Bureau.
Monthly export volumes provided by the U.S. Census Bureau and published in EIA’s Petroleum
Supply Monthly are EIA’s definitive data series for petroleum exports and are considered higher
quality than the weekly estimates.
U.S. crude oil production has increased in recent years, recently setting a record of 11.5 million b/d
in September, while U.S. crude oil imports have decreased.

After averaging a record high of 10.1 million b/d in 2005, gross crude oil imports fell to an average
of 7.3 million b/d in 2014. Since then, annual crude oil imports have increased slightly, most recently
averaging 8.0 million b/d in 2017.
At the same time, U.S. refinery runs have been at record-high levels. The increase in refinery output
of petroleum products has outpaced growth in U.S. consumption of petroleum products such as
distillate fuel oil, gasoline, and propane, leading to an increase in petroleum product exports.
As a result, the United States has been in a long-term trend of declining net imports of crude oil and
petroleum products. However, the United States still imports more crude oil than it exports: in
September 2018, the most recent monthly data, the United States imported 7.6 million b/d and
exported 2.1 million b/d.
U.S. exports of petroleum products have continued to increase, and in 2017, the United States was
a net exporter of several petroleum products such as motor gasoline, distillate, hydrocarbon gas
liquids, and jet fuel.
The recent increase in U.S. crude oil exports occurred despite the United States exporting no crude
oil to China in August and September. Before August, China was the second-largest destination for
U.S. crude oil exports, receiving an average of 378,000 b/d in the first seven months of 2018.

The drop in U.S. crude oil exports came after the Chinese government temporarily included U.S.
crude oil on a list of goods subject to increased import tariffs in addition to a narrowing difference
between international crude oil prices and U.S. crude oil prices.
China was the second-largest destination for U.S. crude oil exports in 2017, receiving 221,000 b/d,
or 19%, of total U.S. crude oil exports that year. In February 2017, China received more U.S. crude
oil exports than Canada, marking the first time that a country other than Canada was the top
destination of U.S. crude oil exports on a monthly basis.
China’s imports of U.S. crude oil also surpassed Canada's imports of U.S. crude oil in October 2017
and in three months in 2018. In August and September 2018, exports to other countries in Asia such
as Taiwan, South Korea, and India partially offset the drop in U.S. crude oil exports to China.

Global: changes in marine fuel sulfur limits will affect oil markets
Source: U.S. Energy Information Administration, based on International Maritime Organization (IMO)
International regulations limiting sulfur in fuels for ocean-going vessels, set to take effect in January
2020, have implications for vessel operators, refiners, and global oil markets. Stakeholders will
respond to these regulations in different ways, increasing uncertainty for crude oil and petroleum
product price formation in both the short and long term.
When burned, the sulfur in marine fuel produces sulfur dioxide, a precursor to acid rain. The sulfur
content of transportation fuels has been declining for many years because of increasingly stringent
regulations implemented by individual countries or groups of countries. In the United States, federal
and state regulations limit the amount of sulfur present in motor gasoline, diesel fuel, and heating
oil.
The upcoming 2020 rules apply across multiple countries’ jurisdictions to fuels used in the open
ocean, representing the largest portion of the approximately 3.9 million barrel per day global marine
fuel market, according to the International Energy Agency.
The International Maritime Organization (IMO), the 171-member state United Nations agency that
sets standards for shipping, is set to reduce the maximum amount of sulfur content (by percent
weight) in marine fuels used on the open seas from 3.5% to 0.5% by 2020. These regulations are
intended to reduce sulfur dioxide, nitrogen oxides, and other pollutants from global ship exhaust.
The 2020 reduction in sulfur limits follows a series of similar reductions in marine fuel sulfur limits,
such as those that reduced sulfur content of marine fuels in IMO-designated Emission Control Areas
from 1.0% to 0.1% in 2015. Other areas around ports in Europe and parts of China have adopted
similar sulfur restrictions.

Vessel operators have several choices for compliance with the new IMO sulfur limits. One option is
to switch to a lower-sulfur fuel compliant with the new IMO rules. However, the cost, widespread
availability, and specifications of a new fuel for use in marine engines is still uncertain.
Another option is to use scrubbers to remove pollutants from ships’ exhaust, allowing them to
continue to use higher-sulfur fuels. However, the process of installing scrubbers can be costly and
can increase a ship’s operating costs.
A small portion of existing marine vessels has already installed scrubbers, and that portion is not
expected to increase greatly before 2020 because of time constraints and limited installation
capacity. Even if scrubbers become widely adopted, which would allow the continued use of fuels
with higher-sulfur content, the price and availability of higher-sulfur fuels after 2020 remains
uncertain.
Ships also have the option to switch to nonpetroleum-based fuels. Some newer ships and some
currently being built have dual-fuel engines that would allow them to use nonpetroleum-based fuels
such as liquefied natural gas (LNG) after minimal modifications. However, the infrastructure to
support use of LNG as a shipping fuel is currently limited in both scale and availability.
The upcoming IMO regulations pose a significant challenge for global petroleum refineries: how to
increase the supply of low sulfur products for use in marine applications and minimize the output of
high sulfur oils.
Residual oil—the long-chain hydrocarbons remaining after lighter and shorter hydrocarbons such
as gasoline and diesel have been separated from crude oil—currently makes up the largest
component of marine fuels used by large ocean-going vessels, also known as bunker fuel.
Removing sulfur from residual oils or upgrading them to more valuable lighter products such as
diesel and gasoline can be an expensive and capital-intensive process.
The choice of compliance path for vessels also introduces a risk to refiners: if scrubbers become
widely adopted, higher-sulfur residual oils might still be used, potentially reducing the value of
existing and new refining units capable of upgrading the residual oils.

NewBase 18 December 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices fall for third straight session amid supply glut worries
Reuters + Bloomberg + NewBase
Brent crude prices dropped more than $1 on Tuesday, falling for a third straight session, as reports
of inventory builds and forecasts of record shale output in the United States, now the world’s biggest
producer, stoked worries about oversupply.
Concerns over future oil demand amid weakening global economic growth and doubts over the
effectiveness of planned production cuts led by the Organization of the Petroleum Exporting
Countries (OPEC) also pressured prices, traders said.
International benchmark Brent crude oil futures were at $58.62 per barrel at 0615 GMT, down 99
cents, or 1.66 percent, from their last close.
Brent, which has slipped more than 4 percent in the past three sessions, fell to as low as $58.10 a
barrel on Tuesday, down more than $1.50 from the previous day’s close.
Oil price special
coverage

U.S. West Texas Intermediate (WTI) crude futures were down 91 cents or 1.82 percent at $48.97
per barrel. Both U.S. crude and Brent have shed more than 30 percent since early October due to
swelling global inventories, with WTI now trading at levels not seen since October 2017.
“Rising U.S. shale production levels along with a deceleration in global economic growth has
threatened to offset OPEC+ efforts as markets weigh the potential of looser fundamentals,” said
Benjamin Lu Jiaxuan, an analyst at Singapore-based brokerage firm Phillip Futures.
“Market confidence remains extremely delicate amidst looming economic uncertainties as investors
contemplate on weaker fuel demand beyond 2018,” he said.
Oil production from seven major U.S. shale basins is expected to climb to more than 8 million barrels
per day (bpd) by the end of the year for the first time, the U.S. Energy Information Administration
said on Monday.
Meanwhile, inventories at the U.S. storage hub of Cushing, Oklahoma, delivery point for the WTI
futures contract, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data
from market intelligence firm Genscape on Monday.
With oil prices falling, unprofitable shale producers will eventually stop operating and cut supply,
although that will take some time, analysts said. The United States has surpassed Russia and Saudi
Arabia as the world’s biggest oil producer, with overall crude production climbing to a record of 11.7
million bpd.
Some have also expressed doubts over Russia’s commitment to the cuts agreed with OPEC. Oil
output from Russia has been at a record high of 11.42 million bpd so far in December. “If Russia
can be a bystander, it benefits them greatly,” said Hue Frame, portfolio manager at Frame Funds in
Sydney.
WTI Crude settled below $50 a barrel in New York on Monday for the first time in more than a year
and continued falling in after-hours trading. The slide began after data provider Genscape Inc. was
said to report growing inventories at the biggest American storage hub and intensified as the U.S.
Energy Department forecast higher output in the country’s shale plays.

Oil prices are on track for a third straight monthly decline despite efforts by OPEC, Russia and other
major exporters to halt the slide. Crude had slunk near $50 in recent weeks but always rebounded.
Crossing the threshold was “significant," said Michael Loewen, a commodities strategist at
Scotiabank in Toronto.
A dive for U.S. equities added to the pressure on Monday. The S&P 500 hit a 14-month low as
investors anticipated a Federal Reserve interest-rate hike that could slow the economy.
West Texas Intermediate for January delivery fell $1.32 to settle at $49.88 a barrel on the New York
Mercantile Exchange. Bears gained steam after the official close, with oil falling to $49.01, the lowest
level since September 2017. The WTI February contract fell to $49.47.
Brent for February settlement closed down 67 cents to $59.61 on London’s ICE Futures Europe
exchange. The global benchmark traded at a premium of $9.41 a barrel to same-month WTI.
“There’s always a question mark over to what extent the OPEC countries and Russia will or will not
fulfill their promises,” said Pavel Molchanov, a Raymond James & Associates Inc. analyst. “There
is naturally some skepticism.”
It typically takes about six weeks for OPEC nations to implement supply changes, and Saudi Arabia,
the group’s biggest producer, faces added political pressure from U.S. President Donald Trump to
keep the taps open, Molchanov said.
Saudi Arabia clearly knows that. The oil-rich kingdom has plans to slash exports to the U.S. in
coming weeks in an effort to dampen visible build-ups in crude supplies, telling local refiners to
expect much lower shipments in January, according to people briefed on the plans. That could
bolster confidence among traders that OPEC’s de facto leader is serious about rebalancing supply
and demand.
“We should be at just about the end of the cycle where longs have gotten wiped out,” said John
Kilduff, a partner at New York-hedge fund Again Capital LLC “In the medium term, the Saudis
exporting less to the U.S. should help us head higher.”

The biggest challenge for the Saudis is the concern that growth in prolific U.S. fields could surpass
supply curbs by OPEC and its allies. North Dakota’s Bakken shale play produced a record 1.4 million
barrels a day in October, while the Permian Basin of West Texas and New Mexico is forecast to
surpass 4 million next month.
On Friday, traders continued to sell off oil, as Brent futures for February delivery fell 1.9 percent to
settle at $60.28 a barrel in London, putting it down 2.3 percent on the week. WTI for January closed
down 2.6 percent on the day, closing out the week down 2.7 percent.
Hedge funds’ net-long position on WTI -- the difference between bets on higher prices and wagers
on a drop -- slid 6.7 percent to 119,675 in the week ended Dec 11, the U.S. Commodity Futures
Trading Commission said Friday. That was the least bullish since August 2016. Longs-only fell 0.8
percent to the lowest since March 2013, while shorts rose 7.8 percent.
Brent net-longs edged up from a three-year low over the same period, rising by 2.3 percent to
139,597 contracts, ICE Futures Europe data showed. Longs rose 3.1 percent, while shorts rose 3.9
percent to the highest since July 2017.
“Market observers may need to wait for the cuts to percolate to inventory data,” Barclays analysts
including Michael Cohen said in a note, adding that Brent and WTI prices are poised to rebound in
the first half of next year.
Saudi Russian cooperation on oil production cuts
If anyone doubted that OPEC is now little more than a zombie organization, the last 10 days have
proved it.

The group has shown itself incapable of making it own decisions. Its smaller members have borne
the brunt of an agreement to cut output that was only achieved after Russia took control of
discussions from the heart of OPEC’s
head office. Then, even after Saudi
Arabia announced it would reduce supply
by nearly a million barrels a day by
January, oil traders merely shrugged.
It is a sad result for an organization that
once made governments tremble. Here’s
how it unfolded.
OPEC oil ministers gathered in the
group’s secretariat building on a wintry
Thursday in Vienna. Weakening demand
growth and soaring U.S. production
prompted agreement that they needed to
reduce production in order to balance the market in 2019. What they didn’t see eye to eye on was
how to share that burden.
Saudi Oil Soars
A surge in Saudi oil supply since May has contributed to the glut and to tensions within OPEC
Source: OPEC secondary sources
Note: Future output cut reflects the Saudi oil minister's statement after the OPEC meeting
Saudi Arabia insisted that all members should play an equal part, cutting by the same percentage
from a new baseline set at October’s production level. Naysayers argued that, given how the group’s
biggest producer had boosted its own output by more than a million barrels a day since May, it
should therefore bear the brunt of the cuts needed to get the market back into balance.
Furthermore, Iran led a contingent of countries claiming their special circumstances warranted
exemptions.
The stand-off looked very similar to the one that had scuppered a deal in Doha in April 2016
– something that nobody wanted to repeat. But by the end of that Thursday, Dec. 6, officials had
failed to reach an agreement and Saudi oil minister Khalid Al-Falih said he was “not confident” one

was possible. The gala dinner at the Liechtenstein Palace was sparsely attended, with both the
Saudi and Iranian delegations, among others, skipping the event.
Friday, the day originally scheduled for the group to meet with its partners, began little better. OPEC
ministers were once again locked away in discussions. The talks went nowhere, and the
OPEC+ meeting got pushed back to the afternoon.
Then the Russians arrived.
Bilateral discussions to hammer out negotiating positions are a regular feature of the days and hours
before the main OPEC gatherings. They take place in the suites of Vienna’s grandest hotels, where
the various delegations are holed up. In recent years, the Russians have been part of this scene.
But when Russian Energy Minister Alexander Novak arrived Friday morning, he moved in to the
office of OPEC’s Secretary General. If ever there was a symbol of OPEC’s demise, it was this. He
then summoned first Iran’s oil minister, then Saudi Arabia’s, for about 45 minutes each. Two hours
later, the group reached a deal. And Iran, Libya and Venezuela got their exemptions, even if they
didn’t appear in the final communiqué.
The agreement that emerged is, on paper, fair and reasonable. OPEC will cut production by 800,000
barrels a day from a new baseline of October 2018 production, with participating members cutting
by 3 percent. The group’s partners will reduce their supply by 2 percent, contributing a further
400,000 barrels a day. That combined reduction is just about enough to balance supply and
demand in the first half of next year.
Unfair Shares
OPEC's smaller members are bearing a disproportionate share of the burden of cuts measured
against the original 2016 baselines. Some of its friends are doing very well out of the new deal.
Source: Bloomberg
Saudi Arabia went even further. Al-Falih said the kingdom’s production would fall to 10.2 million
barrels a day in January, down from 11.1 million last month. That looks like a huge cut, but it is still
150,000 barrels a day above its target under the original deal.

And this is where the inequality of the new OPEC+ deal becomes apparent. Saudi Arabia, Russia,
the United Arab Emirates and Iraq boosted their combined output by almost 1.6 million barrels a
day between May and October. That not only contributes to the current glut, it also gives them much
higher starting points for the latest cuts than for the previous ones. Other OPEC members all face
lower starting points.
Note: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan,
and Sudan are not OPEC members. The effect has been to shift a disproportionate share of the
burden of OPEC’s supply management since 2016 onto the group’s smaller producers.
Handing control of OPEC decision making to the Kremlin has come at a high cost for the group, and
most particularly for its smaller members. Some of the latter were already feeling marginalized. This
latest deal will do nothing to change their view and the divisions between the organization’s “haves”
and “have nots” will only widen.
Russia has done very well out of this. It agreed to cut output by 230,000 barrels a day from its
October output level of 11.42 million. That would reduce its production to 11.19 million barrels a
day, a figure that is just 15,000 barrels below its original 2016 baseline — a cut of just 0.1 percent.
Contrast that with OPEC member Algeria, which produces around a tenth as much oil as Russia.
Its new target will be 1.023 million barrels a day. That’s a cut of 66,000 barrels a day, or 6.1 percent
below the 2016 baseline.
Oil Traders Shrugged
The OPEC+ deal briefly boosted oil prices, but they quickly dropped back below their level before
the meeting began
Source: Bloomberg
Oil markets have reacted with indifference. After a brief rally when the deal was revealed, Brent
subsequently sank back below the level it was trading at before the meeting began. Perhaps traders
don’t believe the group will be able to implement the arrangement, or are waiting to see evidence
that it’s taken effect.

NewBase Special Coverage
News Agencies News Release 18 December 2018
New oil, gas projects to accelerate next year: report
Reuters -
The number of new oil and gas projects will rise five-fold next year from a 2015 trough but overall
spending is still unlikely to be enough to meet future demand, consultancy Wood Mackenzie said in
a report.
Shaken by a sharp drop in oil prices in recent months, boards are generally expected to stick to
spending discipline imposed following the 2014 price crash.
Global investment in oil and gas production, known as upstream, is expected to reach around $425
billion next year, according to WoodMac analyst Angus Rodger.
That compares with a total spending of $770 billion in 2014, which dropped to $400 billion in 2016
and 2017.
Although spending levels have slightly recovered since then, next year’s capital expenditure will still
fall short of the $600 billion required to meet demand growth and to offset the natural decline of
output from fields, Rodger told Reuters.
A handful of the world’s top oil companies, including U.S. giants Exxon Mobil and Chevron, said
they would boost spending next year as they accelerate developments of highly-productive shale
fields.
Reporting by Ron Bousso; Editing by Adrian Croft

But overall, companies will seek to maintain spending largely flat in order to return cash to investors
after years of pain, Rodger said.
Still, deep cost cuts introduced in recent years and lower rates for drilling rigs and services mean
that companies can do more with their money.
In 2019, the number of large new oil and gas projects is expected to reach up to 50, compared with
40 in 2018, and around 10 in 2015, according to WoodMac’s 2019 outlook. Large projects hold over
50 million barrels of oil or gas equivalent.
Many of the new projects will be around gas, with a record number of liquefied natural gas (LNG)
projects set to get the green light in 2019.
Those include the Arctic LNG-2 in Russia, at least one project in Mozambique and three in the
United States, which would together require $50 billion, according to the report.
“The stars are aligning on LNG sales contracts, corporate appetite, long-term demand and costs.
But these are huge investments, and investor confidence could waver if we see signs of cost
inflation, global recession and falling prices.”
The LNG projects will target 100 trillion cubic feet of gas, up from 80 tcf in 2019 and 32 tcf in 2017.
Spending could see a strong increase in 2020 if oil prices continue rising steadily and as rig costs
are expected to rise, Rodger said.

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
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For additional free subscription emails please contact Hawk
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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 December 2018 K. Al Awadi

New base energy news 18 december 2018 no-1219 by khaled al awadi

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