New base energy news 24 june 2019 issue no 1254 by khaled al awadi

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NewBase Energy News June 2019 - Issue No. 1254 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: First GCC biogas hub (2.7 MW of energy) launched in Dubai
By Waheed Abbas, Khaleej Times - Copyright by SyndiGate Media Inc. (Syndigate.info).
The region's first biogas project is set to go online in the next years in Dubai at a cost of Dh50
million, producing 1.3MW of electricity and 1.4MW of thermal energy while reducing 80 per cent
odour. This project will also help meet the government's target of generating seven per cent
renewable energy by 2020.
Launched by dairy firm Al Rawabi, this is the first project of its kind in the GCC to be built in
partnership with Germany's ME-LE Biogas. Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of
Climate Change and Environment, said it is a pioneering initiative in the whole region.
"We have been seeing this technology [in other parts of the world] but now the UAE private sector
has brought this here to tackle the issue of climate change. This will cut odour and emission as well
as reduce complaints from the community that is closer to farms," he added.
This project will also help meet the government's target of generating seven per cent renewable
energy by 2020 and 50 per cent by 2050, Dr Al Zeyoudi said, adding that "the engagement and
participation of the private sector is very important to achieve the target".
Al Rawabi also signed an agreement with Emirates Development Bank to finance the whole project.

Dr Ahmed Eltigani, CEO of Al Rawabi Dairy, said the plant will also produce high-quality organic
fertiliser, which has high demand in the UAE, especially in Dubai.
"This is a desert area and people go for landscaping so it requires good-quality fertiliser."
On launching an initial public offering, he said the company had completed due diligence but held it
back due to market conditions.
He said the company will go public once the
market improves.
Dr Eltigani said sales are down a little bit, but
not for all products. "Dairy product sales are
okay but juices are regarded as a luxury so
their sales are slightly down."
Dr Eltigani, who is also chairman of the UAE
Dairy Association, said some dairy companies
have sought to increase milk prices but the
government has turned down their requests.
"Being chairman of the dairy association, I
have been asked by different companies to
talk to the government to increase prices. We
had a couple of discussions but the
government is not in favour of increasing the
price because milk is consumed by the
majority of society.
So increasing the price will put more burden on consumers, that's why we are trying to improve our
efficiency and reduce cost rather than increasing the price," he said. Dr Eltigani said the government
is also not in favour of a no-subsidy scheme for dairy companies.
"Neighbouring countries have reduced subsidies and their companies are panicking as they are not
used to go for production without subsidies. It is a disadvantage; if firms depend on subsidies, then
they panic when the government withdraws subsidies."

UAE nuclear plant operator awards maintenance deals
ZAWYA + Reuters - Michael Fahy; Editing by Mily Chakrabarty) - (michael.fahy@refinitiv.com)
Nawah Energy Company, the company charged with operating the UAE's first nuclear plant, has
announced the signing of a couple of long term maintenance contracts for the facility. KEPCO
subsidiary and Doosan unit chosen to handle maintenance at Barakah nuclear energy plant
The company said that it had signed a long-term maintenance & service agreement with Korea
Hydro & Nuclear Power (KHNP) and Korea Electric Power Corporation's Plant Service &
Engineering Company (KPS) to support maintenance of four APR1400 reactor units at the Barakah
Nuclear Energy Plant.
A separate announcement said that a maintenance service agreement had also been signed with
Doosan Heavy Industries & Construction (DHIC), which covers both maintenance services and
manpower for the plant.
KHNP is a subsidiary of Korea Electric
Power Co (KEPCO), which is a joint
venture partner in Nawah Energy
Company alongside the Emirates Nuclear
Energy Corporation.
A KEPCO-led consortium was first awarded
a $20.4 billion contract to build the UAE's
first nuclear plant back in 2009, with a view
to a total of $40 billion worth of contracts
(including maintenance deals) eventually
being signed with Korean firms. A
groundbreaking ceremony at the plant,
which is in Al Dhafra , took place in 2011
with a view to open in 2017.
Last year, Nawah Energy Company said that after completing a "complete operational readiness
review" it now expected operations for the first of the plant's reactors to begin "between the end of
2019 and early 2020".
Statements issued on Monday regarding the contract win did not update on the plant's launch date,
other than stating that overall completion of the plant's four units currently stands at above 93
percent.
KHNP already handles maintenance for the Shin Kori 3 and 4 nuclear energy plants in South Korea,
which are reference plants for the Barakah facility.

Strait of Hormuz: the world's most important oil transit chokepoint
Source: U.S. Energy Information Administration and ClipperData, Inc.
The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of
Oman and the Arabian Sea.
The Strait of Hormuz is the world's most important oil chokepoint because of the large volumes of
oil that flow through the strait. In 2018, its daily oil flow averaged 21 million barrels per day (b/d), or
the equivalent of about 21% of global petroleum liquids consumption.
Chokepoints are narrow channels along widely used global sea routes that are critical to global
energy security.
The inability of oil to transit a major chokepoint, even temporarily, can lead to substantial supply
delays and higher shipping costs, resulting in higher world energy prices. Although most
chokepoints can be circumvented by using other routes that add significantly to transit time, some
chokepoints have no practical alternatives.
Volumes of crude oil, condensate, and petroleum products transiting the Strait of Hormuz have been
fairly stable since 2016, when international sanctions on Iran were lifted and Iran’s oil production
and exports returned to pre-sanctions levels.
Flows through the Strait of Hormuz in 2018 made up about one-third of total global seaborne traded
oil. More than one-quarter of global liquefied natural gas trade also transited the Strait of Hormuz in
2018.

Source: U.S. Energy Information Administration, based on Short-Term Energy Outlook (June 2019), ClipperData, Saudi Aramco
bond prospectus, Saudi Aramco annual reports, Saudi Ports Authority, International Group of Liquefied Natural Gas Importers, and
U.N. Conference on Trade and Development
Note: LNG is liquefied natural gas; Tcf is trillion cubic feet
There are limited options to bypass the Strait of Hormuz. Only Saudi Arabia and the United Arab
Emirates have pipelines that can ship crude oil outside the Persian Gulf and have the additional
pipeline capacity to circumvent the Strait of Hormuz. At the end of 2018, the total available crude oil
pipeline capacity from the two countries combined was estimated at 6.5 million b/d. In that year, 2.7
million b/d of crude oil moved through the pipelines, leaving about 3.8 million b/d of unused capacity
that could have bypassed the strait.
Source: U.S. Energy Information Administration, based on ClipperData, Saudi Aramco bond prospectus (April 2019)
Note: Unused capacity is defined as pipeline capacity that is not currently used but can be readily available.
Based on tanker tracking data published by ClipperData, Saudi Arabia moves the most crude oil
and condensate through the Strait of Hormuz, most of which is exported to other countries (less
than 0.5 million b/d transited the strait in 2018 from Saudi ports in the Persian Gulf to Saudi ports in
the Red Sea).
EIA estimates that 76% of the crude oil and condensate that moved through the Strait of Hormuz
went to Asian markets in 2018. China, India, Japan, South Korea, and Singapore were the largest

destinations for crude oil moving through the Strait of Hormuz to Asia, accounting for 65% of all
Hormuz crude oil and condensate flows in 2018.
Source: U.S. Energy Information Administration, based on tanker tracking data published by ClipperData, Inc.
In 2018, the United States imported about 1.4 million b/d of crude oil and condensate from Persian
Gulf countries through the Strait of Hormuz, accounting for about 18% of total U.S. crude oil and
condensate imports and 7% of total U.S. petroleum liquids consumption.

Exxon’s $53bn Iraq deal hit by contract snags, tensions
Reuters + NewBAse
Just weeks ago, US energy giant ExxonMobil looked poised to move ahead with a $53 billion project
to boost Iraq’s oil output at its southern fields, a milestone in the company’s ambitions to expand in
the country.
But now a combination of
contractual wrangling and security
concerns, heightened by escalating
tensions between Iraq’s bigger
neighbour Iran and the United
States, has conspired to hold back
a deal, according to Iraqi
government officials.
The negotiations have been
stymied by terms of the contract that
Baghdad objects to, said four Iraqi
officials involved in the discussions
who spoke on condition of
anonymity due to the sensitivity of
the matter.
The main sticking point, they said, was the means by which Exxon proposed to recoup its
development costs, with the company aiming to share the oil produced by two fields — something
Iraq opposes, saying it encroaches on state ownership of production.
One of the Iraqi negotiators said Baghdad would not sign anything with the current terms proposed
by Exxon.
ExxonMobil declined to comment on the terms of the contract or the negotiations, with a
spokeswoman in Texas saying: “As a matter of practice, we don’t comment on commercial
discussions.” The deputy oil minister for upstream affairs, Fayadh Nema, said on Wednesday that
talks were ongoing and he expected a deal soon.
The negotiations have also been held up by two separate evacuations of Exxon staff from Iraq, a
result of escalating regional tension between the United States and Iran. Iraq one of the only nations
in the world to have friendly relations with both Washington and Tehran; the arch-enemies are its
two biggest allies and Baghdad is caught in the middle as they vie for influence in the country.
“Exxon pulled its staff from Iraq in response to regional unrest. The question is how they will run a
$53 billion project with constant regional instability,” said an Iraqi oil official who oversees foreign
companies’ operations in the south. “They might abandon work again and that will hurt our energy
sector.” Iraq is the second-largest oil exporter in OPEC and has long-term aims to boost output
curtailed by decades of war and sanctions. Such projects are among the most valuable prizes in the
world for international oil companies.
An initial agreement would be a boost for Exxon’s plans to expand in Iraq. Under the deal, it would
build a water treatment facility and pipelines needed to boost oil output capacity. It would also get
the rights to develop at least two southern oilfields – Nahr Bin Umar and Artawi. —

NewBase June – 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices climb as Middle East tensions simmer
Reuters + Bloomberg + NewBase
Oil prices climbed on Monday as tensions remain high between Iran and the United States, with
U.S. Secretary of State Mike Pompeo saying “significant” sanctions on Tehran would be
announced.
Brent futures were up 25 cents, or 0.4%, at $65.45 a barrel by 0325 GMT. West Texas Intermediate
crude was up 37 cents, or 0.6%, at $57.80 a barrel.
U.S. President Donald Trump said last week that he called off a military strike to retaliate for Iran’s
downing of an unmanned U.S. drone, and he said on Sunday that he was not seeking war with Iran.
But Pompeo also said “significant” sanctions on Iran would be announced on Monday aimed at
further choking off resources that Tehran uses to fund its activities in the region.
Oil price special
coverage

“The Middle East clashes should support oil prices at the start of the week as crude markets will
wait to see Iran’s response to the threat of additional sanctions, ” said Edward Moya, senior market
analyst at OANDA in New York.
Oil prices surged last week after Iran shot down a drone that the United States claimed was in
international airspace and Tehran said was over its territory. Amid the escalating tensions, Brent
racked up a gain of about 5% last week, its first weekly gain in five weeks, and WTI jumped about
10%, its biggest weekly percentage gain since December 2016.
Trump said he had aborted a military strike on Iran because such a response to Tehran’s downing
of the unmanned U.S. surveillance drone would have caused a disproportionate loss of life. Iranian
officials told Reuters that Tehran had received a message from Trump through Oman overnight
warning that a U.S. attack on Iran was imminent.
“We’re prepared to negotiate with no preconditions,” Pompeo told reporters on Sunday. “They know
precisely how to find us. I am confident that at the very moment they’re ready to truly engage with
us we’ll be able to begin these conversations. I’m looking forward to that day.”
Meanwhile, U.S. energy companies last week increased the number of oil rigs operating for the first
time in three weeks. Companies added one oil rig in the week to June 21, bringing the total count
to 789, Baker Hughes said in a closely followed report on Friday.
Oil Keeps Rising as More U.S. Sanctions Worsen Tension in Gulf
Crude kept rising following its biggest weekly gain since late 2016 after President Donald
Trump said he would impose “major additional sanctions” on Iran, exacerbating tensions in the oil-
rich Middle East.
Futures in New York advanced as much as 1.4% after surging 9.4% last week. Trump tweeted about
the sanctions, days after he abruptly called off a plan for air strikes against the Islamic Republic in
retaliation for the shooting down of a U.S. Navy drone. Iran said the downing of an unmanned
aircraft could be repeated if the intrusions into Iranian airspace continue, state-run Tasnim news
agency reported, citing the nation’s navy chief.

After falling to the lowest level in almost five months in mid-June, oil has rallied as escalating
tensions between Washington and Tehran threaten to disrupt crude flows.
Hopes that China and the U.S. will restart trade negotiations have also aided prices, with Trump set
to meet with Chinese President Xi Jinping at the G-20 summit in Japan this week. There are as yet
no details on the new sanctions on Iran, although the nation has managed to keep exporting some
energy despite a U.S.-imposed ban from early May.
“The arrow is pointing upwards at the moment,” said Michael McCarthy, chief market strategist at
CMC Markets Asia Pacific Pty in Sydney. “Neither side wants a war here but there is national pride
at stake on both sides,” he said, adding that technical indicators were also pointing to further gains.
West Texas Intermediate for August delivery rose 63 cents, or 1.1%, to $58.06 a barrel on the New
York Mercantile Exchange as of 8:26 a.m. in London after climbing as much as 79 cents earlier.
Prices settled 1.4% higher on Friday, capping a weekly rally that was the biggest since Dec. 2, 2016.
Brent for August settlement advanced 40 cents, or 0.6%, to $65.60 a barrel on London’s ICE Futures
Europe Exchange, after closing up 1.2% on Friday. The benchmark crude contract traded at a
premium of $7.53 to WTI.
Trump’s decision to abort the strike on Iran may have prevented a war, for now, but fresh sanctions
will increase economic pressure on the Islamic Republic, possibly leading to more incidents. Trump
said he’s willing to hold talks with Iranian leaders with “no preconditions” to ensure the nation never
acquires a nuclear weapon.
Rear Admiral Hossein Khanzadi, commander of the Iranian navy, told Tasnim news that “this
crushing response can be repeated,” referring to the strike on the U.S. drone. “The enemy is aware
of this.”
While there’s some optimism the meeting this month between Trump and Xi will lead to a restart of
negotiations, the state-run People’s Daily said in an editorial Saturday China had the strength and
patience to withstand the trade war and would fight to the end if the U.S. persists with it.
Meanwhile, the Federal Reserve’s signal that it’s ready to cut interest ratesand European Central
Bank President Mario Draghi nudging toward unleashing more monetary stimulus have been
buoying financial markets and improving the demand outlook for oil.
The market bias is positive because of that, as well as a “general optimism that the talks this week
between Xi and Trump will see a resumption of dialog,” CMC’s McCarthy said.
Shipping Rates for Mideast Oil Are Surging
Oil tanker owners are raising the prices they charge to export Middle East crude as tensions surge
in a region that accounts for about a third of all seaborne petroleum shipments.
Rates for transporting 2 million-barrel cargoes from Saudi Arabia to China jumped to almost $26,000
a day on Thursday, more than double where they were at the start of June, according to Baltic
Exchange in London. Shipbrokers report a surplus of vessels in the Persian Gulf, indicating that
owners are reluctant to accept charters at low rates given the current risks.

“Nothing much has changed in terms of supply and demand since the latest attacks, so it’s pretty
much all a risk premium,” said Halvor Ellefsen, a shipbroker at Fearnleys London.
A survey of shipbrokers involved in the Middle East trade shows they anticipate there being 22%
more ships available for charter in the next four weeks than probable cargoes. That’s a smaller
surplus than last week but still higher than normal for the time of year.
Trading Paused
Despite the glut, vessel owners including Frontline Ltd., one of the world’s biggest operators of
supertankers, briefly paused charters in the immediate aftermath of the latest round of attacks in
the region last week. The U.S. blamed Iran for those incidents, something the Persian Gulf country
denied.
Insurance rates also soared after those incidents, with companies charging at least $180,000 in
premiums to go to the Persian Gulf. They were about $30,000 early this year before tensions began
to escalate.
Since then, frictions have continued to mount. Iran shot down an American drone on Thursday. The
U.S. got to within hours of counter strikes until U.S. President Donald Trump abandoned the plan.
Earlier this week, a rocket landed near an oil field workers’ camp in Iraq.
Tanker rates are still not particularly high by historic standards. The $26,000 a day that owners are
earning from very large crude carriers, or VLCCs, compares with as much as $177,000 in July 2008
around the time that oil prices were surging to a record. Oil companies are paying about $1.31 a
barrel for shipments to Asia, according to data compiled by Bloomberg
“VLCC rates continue to rise out of the Middle East Gulf, where modern ships are receiving a
premium,” said Pareto Securities AS shipping analysts Eirik Haavaldsen and Wilhelm Flinder said
in a note. War premiums are “starting to show for real.”

NewBase Special Coverage
News Agencies News Release June 24-2019
Russia-Saudi Oil Team-Up Is Pairing of Convenience, geopolitical goals
By Julian Lee
They got there in the end. After a fraught period when nobody could agree on when to meet, OPEC
and its friends will gather on July 1-2 in Vienna. All 24 oil ministers will have to decide whether to
renew their commitment to output cuts, which have already run five times longer than originally
intended.
OPEC’s three biggest members – Saudi Arabia, Iraq and the
United Arab Emirates – are all willing to continue the policy of
reduced production. But the big question is what Russia will do.
Though it has a lot of reason to back away from the deal, it
will continue to pay lip service to the agreement. President Vladimir
Putin’s wider ambitions to rebuild the country’s geopolitical role in
the Middle East will outweigh objections from the boss of the
country’s biggest oil company and any evidence that the cuts are
undermining economic growth.
For Russia, the participation in OPEC+ output restraint is less about the needs of its oil industry and
more about its President's relationship with his new ally in the region, Saudi Crown Prince
Mohammed bin Salman. Putin has a lot at stake, with wider trade and investment deals still being
negotiated. Continuing to support Saudi efforts to underpin oil prices can only help those
discussions.
It’s not as if Russia has been stretching itself to meet lower production goals. True, its output was
below its target in May. But that was only the first time that has happened since oil producers
established their policy of restraint in 2016. The broader picture is that Russia’s reductions
have been minimal.
Making The Cut
Russia is repeating its slow path to compliance with the output targets it agreed

While Saudi Arabia implemented its agreed production cut immediately and in full in January 2017,
Russia dawdled, blaming cold winter weather that it said prevented it from shutting wells. The same
pattern has emerged after the targets were reset for the latest round of cuts, which came into effect
at the start of 2019.
Russian production tailed off only because of the discovery of contaminated crude in its main export
pipeline to Europe. Now that the tainted oil crisis looks to have passed, output should rise again in
the coming weeks.
If compliance has almost always been minimal at best, why not ditch the policy? The country’s
biggest oil company wouldn’t mind.
Burden Sharing
Among Russia's biggest producers, Lukoil and Surgutneftegas have borne more of the burden than
state-controlled Rosneft.
The loudest critic of Russia’s alignment with OPEC has been Igor Sechin, the boss of state-
controlled oil giant Rosneft PJSC. He warned earlier this month that extending the deal would cause
Russia to cede global market share to the U.S.
His complaints are a bit rich – in percentage terms, Rosneft cut output much less than either of its
nearest rivals, Lukoil PJSC and Surgutneftegas PJSC, during 2017 and 2018, and was quick to
boost it again as oil prices climbed in the second half of last year. Still, he has a point.
While Saudi Arabia and Russia are both producing less oil now than they were when the OPEC+
group was formed in late 2016, U.S. output has soared, rising by more than a third as producers
tapping the country’s vast shale formations have bounced back from the price collapse of 2014-15.

And The Winner Is...
While Saudi Arabia and Russia have cut their oil production, U.S. output has soared
Abandoning the deal would allow Russian output to grow – Rosneft and other companies have a
string of new projects to bring into production. The cost of saying farewell to OPEC+ policy would
inevitably be lower prices for every barrel they pump.
The output cut was one of the factors that undermined Russia’s economic growth in the first quarter,
according to Kirill Tremasov, a former economy ministry official who’s now an analyst at Loko-Invest
in Moscow. That might give Putin pause for thought when it comes to instructing his oil minister for
the Vienna OPEC+ meeting.
But it is unlikely to change his mind. And he has a handy justification for insisting on reduced
production – oil demand growth is starting to look more fragile. Russia can also demand flexibility
to raise production if market conditions allow. That would be noteworthy, given that Saudi Arabia is
producing 620,000 barrels a day less than it is permitted under the deal and might expect first dibs
at any production increase.
The latest forecast from the International Energy Agency shows global oil inventories falling at a
rate of 900,000 barrels a day in the third quarter. This assumes the output restraint is maintained
and that demand growthdoesn’t evaporate, as it did in earlier periods. That may provide some
leeway to allow output to rise, but it won’t last long.

Getting Tighter
At current OPEC production levels, the IEA sees a big stock draw in the third quarter, as long as
demand doesn't collapse
Source: Bloomberg, IEA
By the time the OPEC+ group meets, the G20 summit in Japan will have concluded and some of
the U.S. trade relationships may have become a little clearer. But there will still be plenty of
uncertainties for ministers to grapple with, not least the rising tensions in the Middle East.
So even if ministers can reach a deal for the rest of this year, don’t expect them to even start to
tackle what they might do in 2020. As I have argued, if demand growth turns out to be much weaker
than expected producers will have make even deeper cuts. That may finally prompt Putin to decide
that he’s better off without the goodwill of the Saudi crown prince.

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
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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 June 2019 K. Al Awadi

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