New base energy news 28 august 2020 - issue no. 1368, senior editor eng. khaled al awadi

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NewBase Energy News 28 August 2020 - Issue No. 1368 Senior Editor Eng. Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
U.A.E: Drones ‘key to safety in nuclear power plant inspections’
TradeArabia News Service + NewBase
Falcon Eye Drones (FEDS), a leading provider of DT^3 (drone, data and digital transformation)
technology, said that radiation-proof drones will increase safety and speed up inspection at the
Barakah Nuclear Energy Plant in Abu Dhabi.
Rabih Bou Rashid, CEO of FEDS ( pictured in frame up), said that drones can help ensure the gold
standards of safety and reliability of the country’s $32 billion power plant, which is expected to offset
approximately 21 million tonnes of greenhouse gas emissions a year, or equivalent to removing 3.2
million cars from the country’s roads annually.
“The Barakah Nuclear Energy Plant is a significant step towards the UAE’s vision to deliver a new
source of clean energy. It is a pioneering project that targets to deliver up to a quarter of the nation’s
electricity needs, becoming a true milestone for this forward-thinking nation,” said Bou Rashid.
www.linkedin.com/in/khaled-al-awadi-38b995b

He noted that as the UAE remains committed to thrust science and technology, it is likely that it will
employ only top-of-the-line technology, such as drones, in protecting and maintaining this Arab
world’s pride.
Providing a clear insight about how drone applications are now being utilised in the nuclear industry
today, the CEO said that drones play a vital role in site condition monitoring on nuclear sites across
the globe because of its wide scope of advantages over these ground-based technologies.
With the drones’ ability to inspect confined spaces and areas beyond the human’s line of sight,
FEDS said these unmanned utility vehicles (UAVs) can perform flawless assessments and capture
crucial data in nuclear power plants without putting the workforce in harm’s way.
Prior to drones, Bou Rashid said surveying nuclear power plants required workers to don heavy
anti-contamination suits. They also need to bring a radiation monitor—which exposes them to 250
millirem of radiation (around 10 per cent of the limit for radiation exposure yearly).
“Since drones are immune to radiation, inspectors can employ them to gather superior data—even
around the most inaccessible spaces—without exposing workers to unnecessary dangers,” said
Bou Rashid.
Recently, Swiss drone manufacturing company Flyability used its collision-resistant drones—Elios
2—in an annual survey of the tank rooms at a nuclear power plant, capturing every edge of the area
without the need for any human intervention.
In Norway, meanwhile, drone pilot Lieutenant Bård Alexander Raunlid said that they have entered
a cooperation with the country’s Radiation and Nuclear Safety Authority in 2019 to utilize drone-
based radiation detectors on Coast Guard vessels.
Bou Rashid said that drones’ capacity to comprehensively post-process data can play a crucial role
in completing the set-up and maintaining the operations of the Barakah Nuclear Energy Plant in the
most cost-efficient way possible.
“UAVs provide a first-hand full perspective of the site that was previously unrealistic to obtain, as
well as help inspectors identify any potential deviations that could, in the future, dent its budget and
even pose dangers to workers,” he said.
The CEO also underscored how drones can record areas using photogrammetry, allowing
inspectors to view the nuclear site from different angles. He added that the information captured by

drones can also be used to build information models and even virtual reality systems to help
inspectors truly immerse in the data.
Bou Rashid also noted that the accurate data-gathering features of drones can cut time wastage by
18.4 per cent.
In the assessment done by Elios 2 at DSRL nucle ar site, the time spent for tank inspection was
drastically downsized from 1.5 hours to 15 minutes, he explained.
Meanwhile, Ontario Power Generation, dubbed as Canada's largest clean energy project, decided
to obtain a fleet of 18 drones in 2018 following their first aerial survey success in 2015. “With that
acquisition, they got 100 per cent photo record of the site through drones, which they have referred
to many times since. This has saved them time from the traditional methods that involved a
construction of a tall crane,” Bou Rashid said.
“As the UAE once again sets the bar high in modern science through Barakah Nuclear Energy Plant,
drones will be vital to the leaders’ objective of providing clean energy and commercially competitive
option which could make a significant contribution to the UAE’s economy and future energy security,
" said the FEDS CEO. –

Global Oil Refining Faces Shake-Up from Asian Plastics Boom
As the age of the hydrocarbon enters its final era, the action increasingly moves to Asia and plastics
take center stage.
With demand for transport fuels set to tail off in the years ahead, a new breed of processing plants
is sprouting up across the region. These integrated refineries convert oil into petrochemicals, the
building blocks for everything from food packaging to car interiors, and produce less fuels like
gasoline.
In China, the biggest of these is Rongsheng Petrochemical Co.’s plant on Zhoushan island, near
Ningbo. The 800,000 barrel-a-day operation opened in 2019 and will reach full capacity before year-
end. An Indian Oil Corp.-led group is planning a gigantic 1.2 million barrels a day oil-to-chemicals
complex on the country’s west coast. Saudi Aramco, as part of its strategy to invest downstream in
Asia, has or plans to take a stake in both projects.
All told, more than half of the refining capacity that comes on stream from 2019 to 2027 will be
added in Asia and around 70% to 80% of this will be plastics-focused, according to industry
consultant Wood Mackenzie Ltd. Petrochemicals will account for more than a third of global oil
demand growth to 2030 and nearly half through 2050, the International Energy Agency predicts.
Plastics to Dominate
Petrochemicals to make up a third of oil demand growth through 2030
International Energy Agency
* Total demand growth is sum of contributions from all sectors

The popularity of integrated refineries in Asia is being driven by the region’s relatively fast economic
growth rates and the fact it’s still a net importer of feedstocks like ethylene and propylene. The
massive plants promise to make life tougher for their smaller rivals, who lack their scale, flexibility
to switch between fuels and ability to process dirtier, cheaper crudes.
“It doesn’t make sense now to operate a standalone refinery or a standalone petrochemicals plant
for that matter,” said Sushant Gupta, research director for Asia Pacific refining at WoodMac. Smaller
facilities will find the new environment challenging, while there’s also a risk of over-capacity, he said.
The big new projects combined with low oil prices will potentially lead to refinery closures in
developed markets over 2021 and 2022, Goldman Sachs Group Inc. said in a note last month.
Some 1.2 million barrels a day of Chinese independent refining capacity will shut down over the
next few years, while simpler plants in Japan and Australia will also be stressed, according to Gupta.
Global refining capacity is forecast to grow by 1.7% a year through 2025, while demand growth --
taking into account the impact of Covid-19 -- will only amount to around half of the additions,
BloombergNEF said in a report this month.
The new refineries will lead to a glut of capacity in China, according to Michal Meidan, the director
of the China Energy Programme at the Oxford Institute for Energy Studies. This is partly due to the
coronavirus damping global growth expectations and also as efforts to limit single-use plastics
increase, she said.
Environmental Risk
Consumer and government pressure to reduce the use of plastics that are choking the world’s
oceans is a hard-to-quantify threat to demand for petrochemicals. Asia consumes about half the
world’s plastic packaging, according to BloombergNEF, and imports even more waste for recycling
from the U.S. and Europe.

IEA forecasts for petrochemicals demand are based on strong historical growth where plastics
consumption has outstripped economic expansion, according to Christof H. Ruehl, a senior
research scholar at Columbia University’s Center on Global Energy Policy. But even moderate
assumptions on more recycling and lower consumption of single-use packaging could bring forward
the agency’s peak oil demand forecast by about a decade, he said.
“The demand for plastics and one-way plastic will not continue in the same way that it has been
continuing for years, not even in the emerging economies,” Ruehl said. “And a shrinking oil market
is going to be a much more competitive market.”
Adding another wrinkle to the industry’s transition to petrochemicals is the pandemic, which has left
refiners worldwide struggling with weak margins and could stem the flow of downstream investment
from the Middle East to Asia. Complex refining margins in Singapore are at 52 cents a barrel,
compared with a five-year average of $4.18.
There are still plenty of integrated refineries in the pipeline, however. The Zhoushan plant may be
expanded to 1.2 million barrels a day and there are more facilities planned at Shenghong, Yantai
and Caofeidian. China will add about 1.6 million barrels a day of integrated capacity by 2025,
WoodMac said.
In addition to what Indian Oil is planning, Reliance Industries Ltd. has invested about $20 billion in
recent years to double its petrochemicals production capacity and make refining more efficient.
Chairman Mukesh Ambani told shareholders last month that the company had proprietary
technology to convert gasoline and diesel into the building blocks to produce plastics.
Asia’s massive still-developing economies will also cushion the blow from waning demand for
transport fuels. While the IEA predicts consumption oil demand will peak globally around 2030,
that’s likely to happen around a decade later in Asia, according to WoodMac’s Gupta.
Indian Oil is investing heavily in raising the petrochemicals intensity of its refineries, said Shrikant
Madhav Vaidya, chairman of the state-owned refiner. “We are still way below the global average
and there is a big scope of improvement and further addition of petrochemical capacities.”

India:Idled Trucks Have Fuel Demand Headed for 5-Year Low
Bloomberg - Saket Sundria
India’s oil-product demand is set to slump to a five-year low this financial year, with a bleak outlook
for diesel consumption as the nation’s truck operators idle vehicles and consider cutting the size of
their fleets.
 Consumption seen at 90% of pre-outbreak levels by end of March
 About half of India’s fleet is currently idle: trucking group
About half of India’s trucks are parked up without work and the nation’s biggest operator is shunning
new purchases and may downsize after demand crashed due to the pandemic. The workhorses of
industry that haul goods all over the country are the biggest consumers of diesel, the most used
transport fuel in India and a useful proxy for its economic health.
In Reverse
Indian oil product demand may drop to the lowest in five years
The drag on diesel along with the plunge in jet fuel demand is set to weigh on India’s rebound from
the coronavirus. Overall oil-product consumption including transport fuels in the financial year
through March 2021 will be around 90% of last year, according to oil refinery executives. That would
be the lowest level since 2016.
Demand rebounded to about 70% to 80% of pre-virus levels after an initial nationwide lockdown
was eased in June. It’s expected to climb to around 90% in the three months through March 2021,
according to Hindustan Petroleum Corp. Refineries Director Vinod S. Shenoy.
India’s truckers are facing multiples headwinds that are crimping diesel consumption and overall oil
demand. Localized lockdowns after a flare-up in infections is slowing economic activity, while tax
hikes on the industrial fuel over the past few years have eroded the transport companies’ profits.

Idled Trucks
“High diesel costs and forced lockdowns have indeed devastated the transport sector and the
economy,” said Naveen Kumar Gupta, secretary general of the All India Motors Transport Congress,
which represents almost 10 million truckers. “There is a remote chance of its revival in the current
financial year,” he said, adding that about 50% of the country’s truck fleet is idle.
Gasoline will be the fuel that comes closest to making a complete recovery as people stick to driving
their own cars to avoid crowded buses and trains, according to the refinery executives who asked
not to be named because they’re not authorized to speak to the media.
The slowdown this year has decimated purchases of new trucks and buses, with sales by Tata
Motors Ltd. through April to June at a 10th of what it sold in the same period last year. Sales by
Ashok Leyland Ltd. and Mahindra & Mahindra Ltd. slumped more than 90% in the four months
through July.
VRL Logistics Ltd. won’t be purchasing new vehicles and may scrap about 700 of its fleet of 5,000
trucks to rein in costs, Chief Financial Officer Sunil Nalavadi said earlier this month. The nation’s
biggest trucker is current operating at about 75% capacity. More than a third of its customers are
small- and medium-sized firms, which have been hit hardest by the economic slump.
“We expect that 2020 will be a lost year for earnings growth,” VRL Chairman Vijay Sankeshwar said
in the company’s annual report.

South Korea, one of the world’s largest nuclear power producers
Source: International Atomic Energy Agency, Power Reactor Information System (IAEA-PRIS)
As of August 2020, South Korea operates a fleet of 24 nuclear reactor units, representing 23.2
gigawatts (GW) of capacity, at four nuclear power complexes. In 2019, South Korea’s nuclear fleet
generated 139 terawatthours (TWh) of electricity, making South Korea the fifth-largest nuclear
power producer in the world and accounting for 26% of the country’s total electricity generation.
South Korea, which is about the size of Indiana, is home to nearly 52 million people (for comparison,
Indiana has a population of 6.7 million). With 24 operating nuclear reactor units, South Korea has
the highest density of nuclear reactors (defined as the number of reactors per square mile) in the
world. Most of South Korea’s nuclear reactors are located at two complexes in the densely
populated southeastern part of the country, near the cities of Gyeongju, Ulsan, and Busan, which
are major electricity demand centers and home to many heavy manufacturing plants.

The nuclear fleet in South Korea mainly consists of pressurized water reactors (PWR) that were
commissioned between 1977 and 2019. The country also operates three pressurized heavy water
reactors (PHWR), Wolsong Units 2, 3, and 4, which were built in the late 1990s.
South Korea has four reactors under construction at two sites, Shin Kori and Shin Hanul, which will
add another 5.3 GW of nuclear generation capacity. South Korea’s first nuclear reactor, Kori 1,
was permanently shut down in 2017. Wolsong’s Unit 1 reactor was taken offline in 2017 and
permanently shut down in 2019, three years before the unit’s operating license would have expired
in 2022.
South Korea’s energy policy is driven by energy security considerations and the desire to minimize
dependence on imported fossil fuels. South Korea started developing its nuclear power program in
the 1970s, aiming to reduce external vulnerability to possible global fossil fuel shortages.
In 2018, 98% of the country's primary fuels consumed for electricity generation came from imports
of coal and liquefied natural gas (LNG). South Korea is not served by any international natural gas
pipelines and relies exclusively on tanker shipments of LNG for natural gas-fired electrical plants.
Source: U.S. Energy Information Administration, Korea Electric Power Corporation (KEPCO)
Note: Fossil fuels include coal, petroleum, and natural gas; renewables include solar, wind,
biomass, tide, wave, and fuel cells.
South Korea has established a target of reducing greenhouse gas emissions by 37% from 850.6
million tons, which is the country’s 2030 emissions projection based on business-as-usual levels.
Because nuclear power plants harness the atomic fission heat process for steam electricity
generation and produce virtually no carbon dioxide (CO2) emissions during operation, nuclear
power plays a significant role in reducing CO2 emissions.
More recently, in response to safety concerns following Japan’s Fukushima Daiichi nuclear
accident, South Korea announced a gradual nuclear phase-out plan, which cuts the number of
operating nuclear reactors to 14 units by 2038. However, some stakeholders in South Korea’s
power industry have expressed concerns about the feasibility of decommissioning 42% of the
commercial nuclear fleet.

NewBase August 28-2020 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil Gives Up Some Hurricane-Related Gains After Refiners Spared
Bloomberg + NewBase
Oil prices inched higher on Friday, clawing back narrow losses earlier in the session as a massive
storm raced inland past the heart of the U.S. oil industry in Louisiana and Texas without causing
any widespread damage to refineries.
Brent crude futures for October, set to expire on Friday, rose 5 cents to $45.14 a barrel as of 0628
GMT, heading for a 1.8% weekly gain. The more active November contract LCOc2 climbed 7 cents
to $45.67. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 1 cent to $43.05 a
barrel. The contract is on track to rise 1.7% rise this week, for a fourth straight week of gains.
Futures in New York traded near $43 a barrel after closing down 0.8% on Thursday. Laura came
ashore as one of the most powerful hurricanes to ever hit Louisiana but has since weakened to a
tropical storm.
Oil price special
coverage

While it knocked out power to hundreds of thousands of people and impacted plants that produce
chemicals and liquefied natural gas, southeast Texas ports and crude facilities -- including the
largest U.S. refinery -- likely avoided the worst of it.
More than 80% of oil output in the U.S. Gulf of Mexico and almost 3 million barrels a day of refining
capacity had been shut ahead of the storm, causing a spike in gasoline and oil prices earlier in the
week. Crude was also buoyed by data showing a fifth straight weekly decline in American stockpiles.
“With little oil infrastructure damage reported so far, and with shut-in production likely to return in
the coming days, it looks as though oil will remain trading in this fairly narrow range that we’ve
become accustomed to,” said Warren Patterson, head of commodities strategy at ING Bank NV.
“Demand from refiners should recover fairly quickly.”
With the passing of Laura, investor attention now turns back to the coronavirus and the pace of
global energy demand recovery. About half of India’s trucking fleet is still idled, leading to a bleak
outlook for diesel consumption there, while gasoline and diesel sales in the U.K. are still about 11%
below pre-lockdown levels. In China, there’s only expected to be a small boost in energy demand
from infrastructure projects and post-flood recovery efforts.
PRICES
West Texas Intermediate for October delivery was unchanged at $43.04 a barrel on the New York
Mercantile Exchange at 7:27 a.m. in London
The contract has risen 1.7% so far this week . Brent for the same month added 0.1% to $45.14 a
barrel on the ICE Futures Europe exchange after falling 1.2% on Thursday
The more active November contract climbed 0.1% to $45.66

Crude futures on the Shanghai International Energy Exchange fell 0.4% to 293.6 yuan a barrel,
paring its advance this week to 2.6%
Brent’s three-month timespread was $1.28 a barrel in contango -- where prompt contracts are
cheaper than later-dated ones -- from $1.41 in contango at the end of last week. The change in the
market structure of the global crude benchmark suggests concerns about over-supply have eased
slightly.
Exxon Mobil Corp.’s Beaumont refinery in Texas will begin restarting after Laura on Friday if an
assessment shows no damage, while its Baytown refinery on the Houston Ship Channel has begun
the restart process. Magellan Midstream Partners LP’s East Houston terminal restored full
operations at its refined products truck loading rack and the U.S. Coast Guard reopened the Port of
Houston on Thursday.
The concern over Laura has now shifted from production to demand destruction, with flooding likely
to disrupt normal consumption patterns, Helima Croft, global head of commodity strategy at RBC
Capital Markets, said in a note. The fortification of offshore drilling platforms and the shale boom
means hurricanes don’t have as much impact on oil prices as they used to, she said.

NewBase Special Coverage
The Energy world - Special 11- August -2020
MARKETS
Exxon Kicked out from Dow Industrials in Major Embrace of Tech
Bloomberg - Sarah Ponczek and Katherine Greifeld
The dominance of technology companies has eclipsed every other story in 2020’s pandemic-
upended stock market. Now it’s helping speed changes to the world’s most famous equity
benchmark.
In the biggest reshuffling in seven years, Exxon Mobil Corp, Pfizer Inc. and Raytheon Technologies
Corp. were kicked out of the Dow Jones Industrial Average, making way for Salesforce.com,
Amgen Inc. and Honeywell International to enter the 124-year old equity gauge a week from today.
The actions were prompted when Apple Inc. -- currently 12% of the 30-stock index -- announced a
stock split that reduced the sway of computer and software companies in the price-weighted
average.
The changes mark a stunning fall from grace for Exxon, the world’s biggest company as recently as
2011, whose ejection reflects the steady decline of commodity companies in the American
economy. They represent an equally significant embrace of technology firms, whose giant rallies
have have caused the Dow to trail other indexes this year.
“Those changes are a sign of the times - out with energy and in with cloud,” said Chris Zaccarelli,
chief investment officer for Independent Advisor Alliance.
The latest reshuffling comes as technology companies have surged past every other industry in a
trend amplified by this year’s Covid 19 lockdowns. While the Dow average is still 4.2% off its
February record, the tech-heavy Nasdaq 100 is almost 20% above the pre-pandemic all-time high.

While any change to the Dow is notable, the ejection of Exxon Mobil, the longest-serving member,
marks a particularly rapid shift in fortunes. Worth $525 billion in 2007 and more than $450 billion as
recently 2014, the stock had fallen in four of six years before 2020 and is down another 40% since
January. It’s now worth about $180 billion.
Founded in 1999, Salesforce was one of the best-performing stocks of the bull market following the
global financial crisis, rising 27-fold since March 2009. Amgen is among the world’s biggest
biotechnology companies with a market value of about $137 billion, though it’s replacing a company
-- Pfizer Inc. -- that is about $90 billion larger.
Stocks of the affected companies were quick to price in the shake-up. Shares of Exxon dropped 2%
as of 6:10 p.m. in New York, in after-hours trading, while Raytheon fell 3%. Honeywell climbed 3.5%
and Salesforce.com rose 4%. Pfizer dropped 1.9% and Amgen rose 4%.
“This action does not affect our business nor the long-term fundamentals that support our strategy,”
Exxon said in an email. “Our portfolio is the strongest it has been in more than two decades, and
our focus remains on creating shareholder value by responsibly meeting the world’s energy needs.”
This is the second time a stock split by Apple has had big consequences for the Dow. The first was
in 2014, when its 7-for-1 split lowered the price of its shares enough to make inclusion feasible.
Apple’s decision to do it again this year effectively lowered its sway on the price-weighted average,
making the influence of technology companies too small in the eyes of the Dow’s handlers.
Under-representation in technology has penalized the Dow in 2020, when it has frequently trailed
the market-cap weighted S&P 500, whose concentration on megacap companies like Amazon.com
and Alphabet has juiced its returns. Neither of those companies are effectively eligible for the Dow
given their $1,000-plus share prices.
The blue-chip index weights its constituents by price rather than market value, making it different
from the broader S&P 500. A committee chooses members in an effort to maintain “adequate” sector
representation and favors a company that “has an excellent reputation, demonstrates sustained
growth and is of interest to a large number of investors,” according to its website. Other major
indexes add and subtract members on a rules-based process.
Honeywell, meanwhile, is returning to the average after being kicked out 12 years ago to make way
for a financial services company, Bank of America, and an energy producer, Chevron. Its shares
are down about 9% in 2020 but before that had risen in 10 of 11 years, pushing its market value
above $100 billion.

The New Dow Jones Industrial Average
Ranking of new member companies by share price

While the Dow’s influence has faded over the years as passive managers linked to benchmarks
based on market value, the index remains an exclusive club and still serves as one of the highest
profile showcase of American industrial heft. Roughly $31.5 billion of assets are benchmarked to
the Dow, with $28.2 billion of passively managed funds linked. (The figures are $11.2 trillion and
$4.6 trillion for the S&P 500.)
Exxon Mobil replaced by a software stock after 92 years in the Dow
KEY POINTS
 Exxon Mobil’s been in the Dow in some form since 1928, but its tenure as the longest-serving
component is coming to an end.
 On Monday, S&P Dow Jones Indices announced the largest changes to the 30-stock benchmark in
seven years
 Exxon will be replaced by Salesforce. Amgen and Honeywell International are replacing Pfizer and
Raytheon Technologies.
WATCH NOW
V I D E O 0 3 : 5 6
Saleforce, Amgen and Honeywell will replace
Exxon, Pfizer and Raytheon in biggest Dow
shakeup in years
Exxon Mobil’s been in the Dow in some form since 1928, but its tenure as the longest-serving
component is coming to an end.
On Monday, S&P Dow Jones Indices announced the largest changes to the 30-stock
benchmark in seven years. Along with Exxon, which is being replaced
by Salesforce, Pfizer and Raytheon Technologies are being removed in favor
of Amgen and Honeywell International. The changes take effect Aug. 31.
Exxon’s removal is a “sign of the times,” Raymond James said, as the company — and energy
sector broadly — falters, a weakness made all the more apparent by strength in technology names.
Energy now makes up just 2.5% of the S&P 500, compared with 6.84% five years ago, and 10.89%
10 years ago. Technology has jumped from 18.48% of the index in 2010 to 28.17% today.
Edward Jones’ Jennifer Rowland noted that five tech stocks — Apple, Microsoft, Amazon, Alphabet
and Facebook — are individually larger than the entire U.S. energy sector, which she called “pretty
sobering” and “symbolic of just how far the energy sector has fallen over the past few years.”
Chevron is also in the Dow, meaning the energy sector was overrepresented in the benchmark to
begin with. And with Apple’s coming 4-for-1 stock split, the Dow’s exposure to tech was set to
decrease.
“In removing Exxon from the DJIA, the index provider is clearly being reactive, and indeed
accentuating the extremely negative investor sentiment on just about anything tied to oil and gas,”
Raymond James’ Pavel Molchanov wrote in a note to clients.

“This represents a combination of the obviously rough COVID-impacted oil price backdrop but also
concerns about the eventual peak in oil demand (which had emerged long before COVID) and ESG-
related objections to fossil fuels generally,” he added. That said, Raymond James is upbeat on the
sector and envisions recovery into 2021.
Over time the S&P 500 has surpassed the Dow in importance given that it better reflects the market
and economy. Not only does it contain hundreds of additional stocks, it’s also market-cap weighted,
which means that larger companies have a greater influence. The Dow, on the other hand, is price
weighted.
Roughly $24 billion in actively managed funds tracks the Dow, dwarfed by the more than $300 billion
following the S&P 500, according to data from Goldman Sachs. The gulf in passively managed
funds tracking each one is even deeper.
Still, Exxon’s removal is significant nonetheless.
As recently as 2013 Exxon ruled the S&P 500 and market generally as the largest publicly traded
U.S. company. In 2007 its market capitalization peaked above $500 billion, but has been slowly
declining since. In the last five years the shares are down nearly 40%, and the company is now
valued at $178.5 billion, according to data from FactSet. Salesforce, on the other hand, has seen
its stock jump nearly 220% in the last five years, and currently has a market capitalization around
$187.5 billion.
“This action does not affect our business nor the long-term fundamentals that support our strategy,”
Exxon said in a statement. “Our portfolio is the strongest it has been in more than two decades, and
our focus remains on creating shareholder value by responsibly meeting the world’s energy needs.”
Why Exxon and not Chevron?

Chevron shares, while also struggling this year, have returned roughly 25% over the last five years.
Its stock price is currently a little more than double Exxon’s. While this is not relevant to investing
generally, it is relevant to the price-weighted Dow. But that’s likely not the only reason Exxon got
the ax instead of Chevron.
Molchanov noted that Chevron is “positioned much more straightforwardly as an oil producer” with
a “high degree of operating leverage to commodity prices.” Exxon’s vertical integration, on the other
hand, means heavy exposure to refining and chemicals.
“The index committee probably wanted to maintain some oil exposure, making Chevron the better
choice to do so, especially given that chemical giant Dow Inc. ... already represents the chemical
industry in the index,” he added.
Goldman’s Neil Mehta added that Chevron is a better fit than Exxon due to three reasons: greater
free cash flow generation, stronger balance sheet, and better operational and earnings execution.
The firm has a buy rating on Chevron and a sell rating on Exxon.

NewBase Energy News 28 August 2020 - Issue No. 1368 call on +971504822502, UAE
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About: Khaled Malallah Al Awadi, Energy Consultant
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Khaled Al Awadi is a UAE National with over 30 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 the UAE operations base. Khaled is the Founder
of NewBase Energy, and an international consultant, advisor, ecopreneur and
journalist with expertise in Gas & Oil pipeline Networks, waste management, waste-
to-energy, renewable energy, environment protection and sustainable development.
His geographical areas of focus include Middle East, Africa and Asia. Khaled has
successfully accomplished a wide range of projects in the areas of Gas & Oil with
extensive works on Gas Pipeline Network Facilities & gas compressor stations.
Executed projects in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of gas/oil supply routes. Has drafted &
finalized many contracts/agreements in products sale, transportation, operation & maintenance agreements.
Along with many MOUs & JVs for organizations & governments authorities. Currently dealing for biomass
energy, biogas, waste-to-energy, recycling and waste management. He has participated in numerous
conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is the Editor-
in-Chief of NewBase Energy News and is a professional environmental writer with more than 1400 popular
articles to his credit. He is proactively engaged in creating mass awareness on renewable energy, waste
management and environmental sustainability in different parts of the world. Khaled has become a reference
for many of the Oil & Gas Conferences and for many Energy program broadcasted internationally, via GCC
leading satellite Channels. Khaled can be reached at any time, see contact details above.
NewBase: For discussion or further details on the news above you may contact us on +971504822502, Dubai, UAE
NewBase 2020 K. Al Awadi

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New base energy news 28 august 2020 - issue no. 1368, senior editor eng. khaled al awadi

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New base energy news 28 august 2020 - issue no. 1368, senior editor eng. khaled al awadi