New base energy news issue 846 dated 09 may 2016

Copyright © 2015 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 09 May 2016 - Issue No. 846 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Saudi to maintain stable oil policies says new Minister
AFP + Gulf News + the National
: Reuters
The new energy minister of Saudi Arabia, the world’s biggest oil exporter, on Sunday pledged
continuity in the kingdom’s oil policy, after being named in a major government overhaul. “Saudi
Arabia will maintain its stable petroleum policies,” Khalid Al Falih said in a statement.
“We remain committed to maintaining our role in international energy markets and strengthening
our position as the world’s most reliable supplier of energy,” Falih added.In a cabinet reshuffle on
Saturday, King Salman of Saudi Arabia appointed Khalid Al Falih as the new minister of energy,
industry and mineral resources.
The new changes take place as oil prices plunge and Saudi Arabia’s influence in controlling oil
markets wane due to increased oil production from the US and Russia.
“I don’t expect the kingdom to cut its oil production at some point soon or by the June Opec
meeting. The kingdom will not give up its market share to its rivals either Iran or Russia, or the US
shale oil,” Sara Vakhshouri, President of SVB Energy International based in Washington told Gulf
News by email.

The next Opec meeting will take place on June 2 in Vienna. For the first time in the last twenty Al
Nuaimi will not be representing Saudi Arabia at the meet. The new oil minister Al Falih is expected
to attend the important gathering of oil ministers of thirteen member countries
On the new oil minister, Sara said Saudi Arabia followed its traditional trend of appointing a
technical person as the Minister of Petroleum and head of Saudi Aramco, rather than just
choosing a member of the royal family to pursue this job.
“Khalid Al Falih has a technical petroleum background and education and has more than three
decades of experience working in the energy industry and Saudi Aramco,” she said about the new
oil minister.
Energy and economic policy
Falih is from the Saudi province of Dammam and is a graduate of Texas A&M University. He was
appointed as president and chief executive officer of Saudi Aramco in January 2009.
“The replacement of the Saudi
Oil minister (Al Nuaimi) was
expected and was not shocking
to us especially at the time that
the Deputy Crown Prince is
getting ready to shake up the
Kingdom’s energy and
economic policy,” she said on
the sacking of Al Nuaimi.
Dr Mamdouh G Salameh, an
international oil economist was
critical of Al Naimi and said the
policy of not cutting oil
production was a failure.
“The current Saudi oil strategy
has very adversely harmed the
Saudi economy and the Saudi
currency which is now under
pressure with a real possibility
that it could be devalued or
floated. Saudi Arabia could
prove to be the biggest
casualty of the collapse of the oil price,” he said.
He said the policy he followed by flooding the global oil market with oil had been tried before by
the former Saudi oil minister Shaikh Ahmad Zaki Yamani in the early 1980s and found wanting.
“Why follow such a defunct policy then?,” he asked.
Opec, led by Saudi Arabia, stuck to the position of not slashing output at its meeting in Vienna last
year putting pressure on oil prices, which dropped further. Brent, the international benchmark was
trading at $45.37 per barrel on Sunday.

Future Challenges
The next generation has to master three key challenges: managing through an age of austerity;
internationalising the national oil companies; and opening up the industry.
Mr Al Naimi’s removal is no surprise, even if accelerated by the
collapse of Opec’s talks in Doha amid changes in the Saudi stance
on oil output. Aged 80, and minister for 21 years, he has long been
known to be ready for retirement. Mr Al Falih, 55, the chairman
and previously chief executive of Saudi Aramco, now heads a
renamed ministry of energy, industry and mineral resources.
Over the past few years, Abdullah Al Attiyah, the architect of
Qatar’s gas industry, stepped down in 2011, Suhail Al Mazrouei
came from Mubadala to be the UAE’s energy minister in March
2013 and Sultan Al Jaber, the chairman of Masdar and chief
executive of energy at Mubadala, was appointed to head Adnoc in February.
Anas Al Saleh, Kuwait’s 43-year-old minister of finance, became acting oil minister in November,
although job security is a little less than for Saudi oil ministers – there have been 10 since 2004.
Their most urgent task is, of course, to cope with an era of low energy prices. National oil
companies are under less immediate pressure than their public counterparts, but they are still
cutting costs, squeezing contractors, laying off staff and cancelling extravagant projects.
At the same time, they need to assure a sufficient future supply of oil, positioning themselves to
benefit from an anticipated rebound in prices. They have to deliver gas to the domestic market
and play their expected role in driving industrialisation via petrochemical and refining ventures. Mr
Al Falih also has the job of overseeing the diversification drive into minerals – gold, alumina and
phosphates.
As in the last slump in the late 1990s, there is a greater need for foreign investment. Then, Iran,
Iraq, Algeria, Saudi Arabia, Kuwait, Qatar and Abu Dhabi all planned to open their oil and gas
sectors. Qatar was highly successful, Abu Dhabi and Iran partially so, with negligible results
elsewhere.
Now, the Saudi National Transformation Plan aims to attract businesses across the board. Iran
similarly, though in a more jumbled fashion, has presented a long list of investment opportunities.
With oil companies and banks alike constrained on the amount of capital they may dedicate to a
single region, financial terms and bureaucracy will have to be welcoming.
The region’s state energy ventures are also increasingly going overseas – particularly into
emerging Asian markets – while widening their focus at home to include unconventional oil and
gas and renewable energy.
The initial public offering of Saudi Aramco’s shares – a seismic event, if it goes ahead – will no
doubt absorb much of Mr Al Falih’s time. Key questions need to be answered: valuation, listing
location, transparency and which units will be included.
Mr Al Falih was a key figure in the negotiations for the Saudi Natural Gas Initiative in the early
2000s, which eventually ended in frustration for the foreign companies. Mr Al Jaber and Mr Al
Mazrouei dealt widely with international joint ventures at Mubadala and Masdar.

UAE: ADNOC showcase their full line of business at OTC 2016
(WAM) - The Abu Dhabi National Oil Company (ADNOC) and Group Companies have showcased
their full line of business and services and explored new partnerships at the Offshore Technology
Conference and Exhibition (OTC 2016), held in Houston, (TEXAS), USA, on 2-5 May 2016.
The Group has participated
for the ninth year in this
premier global event with a
delegation comprising CEOs
and senior executives.
Participating under the theme
"Driving a Sustainable Future
through People & Innovation",
ADNOC & Group Companies
made their presence felt in
the exhibition with a state-of-
the-art stand that was
designed to showcase
ADNOC’s new vision of the
future and depict UAE’s
culture and heritage.
The Group’s environmentally-friendly initiatives as well as their long–term expansion projects were
highlighted during the show through interactive audio-visual displays and technical presentations.
As part of its continued efforts to establish alliances and partnerships, ADNOC hosted on the
second day of the event a dinner reception for senior oil and gas sector executives, government
officials, and diplomats. The reception offered ADNOC delegates with the opportunity to network
with senior US executives and top level executives of leading energy companies.
The delegation took part in the conference and other OTC sideline events. ADNOC delegates
presented technical papers at the OTC conference. A paper, titled: "Major Advancement in
Pipeline Integrity Management through an Integrated Quantitative Risk Assessment Approach
highlighted the various threats of different nature posed to pipelines.
The presentation introduced a standardized approach aiming to overcome challenge of how to
integrate the risks of different threats into an overall risk level for the entire pipeline system.
Another paper highlighted Best Practices for HP/HT Pipelines Lateral Buckling Design in Shallow
Water.
ADNOC Group’s green efforts in such areas as Sustainable Energy Systems, Carbon Capture,
Green Fuels, Carbon Footprint Reduction, Emission and Flaring Reduction were highlighted at the
show.
One of the top initiatives presented to ADNOC stand visitors was the Carbon Capture project
implemented recently in partnership with Masdar. Introduced in a bid to reduce carbon footprint
and enhance oil and gas production, ADNOC’s new initiative sets the pace for other hydrocarbon-
rich nations to adopt similar technologies to reduce their carbon emissions.

Located in Abu Dhabi, the joint venture’s first Carbon Capture, Usage and Storage (CCUS) project
consists of three core components. First, CO2 is captured onsite at Emirates Steel. Second, the
CO2 is compressed and transported along the 50-km pipeline to oil fields operated by ADNOC.
Third, ADNOC injects the CO2 into oil fields to enhance oil recovery, while storing the injected
CO2 underground. The project will sequester up to 800,000 tonnes of CO2 annually. Completion
is set for 2016. This pilot project will create a benchmark for the technical and commercial delivery
of CO2.
The joint venture is the first phase of an industrial-scale CCUS network planned as part of Abu
Dhabi's commitment to decarbonise its economy and create a low-carbon power generation
industry.
As a clean energy advocate, ADNOC is constantly searching for opportunities to reduce the
environmental footprint of its existing and future projects. In 2009, ADNOC became the first
national oil company in the region to pilot CO2 injection in collaboration with Masdar.
Breaking the visitor turnout record, ADNOC stand attracted a large number of visitors during the
four days of the event. The design of the stand, coupled with the hospitality offered turned the
booth into a welcoming place for exhibition visitors who included American, Arab and foreign
delegates, dignitaries, ministers, diplomats and senior executives and industry professionals.
In the closing day of the event, a high-level Egyptian delegation led by Tarek El Molla, Minister of
Petroleum & Mineral Resources visited ADNOC stand.
Leading industry executives who visited ADNOC stand discussed with ADNOC delegates the
current global market situation and the challenges facing the energy industry. They also explored
ideas of creating new business partnerships and ways of boosting collaboration, sharing best
practices and exchanging expertise.
During the show, the ADNOC delegation promoted the UAE and Abu Dhabi as a global hub for
the oil and gas sectors. Some participating companies showed interest in participating in the Abu
Dhabi International Petroleum Exhibition and Conference (ADIPEC 2016), scheduled to be held
on November 7-10.

Pakistan: GasPort Led Consortium to build 2nd LNG Terminal
The ExpressTtribune
A consortium led by Pakistan GasPort Limited has won the tender to build Pakistan’s second LNG
terminal by emerging as the lowest bidder, The Express Tribune reported Sunday. The
information was revealed in a tender evaluation report made public by government-owned
Pakistan LNG Terminals Limited on Friday, the newspaper added.
Pakistan GasPort-led consortium included Fauji Oil Terminal and Distribution Company (Fotco).
According to the evaluation report, the consortium has offered a levelised (service) charge of
$0.4177 per million British thermal units (mmbtu) for handling a capacity of 600 million cubic feet
per day (mmcfd), The Express Tribune reported.
The terminal will come up at Port Qasim which already has the first import terminal. Pakistan’s
only operational LNG terminal at Port Qasim has so far regasified and pumped over 77 billion
cubic feet of gas (bcf) into the national gas distribution network.
The terminal became operational about a year ago. Utilising Excelerate's floating storage and
regasification vessel (FSRU), the Exquisite, the facility has the capacity to deliver up to 690 million
ft3/d of natural gas directly to Sui Southern Gas Company's natural gas pipeline system.
Most of the gas has been supplied to gas-based power plants that were either sitting idle due to
non-availability of gas or burning expensive form of fuel to produce expensive electricity. The
second terminal is expected to be complete in 11 months.

NewBase 09 May 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil jumps on Canadian wildfire , markets eye Saudi reshuffle
Reuters + NewBase
A wildfire burns on Highway 63 south of Fort McMurray, Alberta, Canada, on Saturday, May 7,
2016.
Oil prices jumped on Monday as a huge wildfire in Canada's oil sand region knocked out over a
million barrels in daily production capacity, contributing to a significant tightening of markets over
the past weeks.
The lost capacity is equivalent to well over a third of the country's typical daily production. U.S.
crude futures were trading at $45.51 per barrel at 0214 GMT, up 85 cents, or 1.9 percent, from
their last settlement.
Brent crude was up 62 cents, or 1.4 percent, at $45.99 a barrel.
Canadian officials on Sunday showed some optimism about the fire as favorable weather helped
fire fighters, while winds took the flames away from the oil sands boomtown Fort McMurray.
Still, the outages pushed up prices.
"Oil prices held as concerns over the impact of raging fires in Alberta,Canada, on supply from the
oil sands projects lingered," ANZ bank said on Monday.
Oil price special
coverage

Markets were also watching Saudi Arabia, the world's biggest oil exporter, where King Salman on
Saturday announced a government shake-up that included the appointment of Khalid al-Falih as
head of a new super Ministry of Energy, Industry and Mineral Resources.
Oil policy was previously under the Petroleum Ministry led by veteran minister Ali al-Naimi.
"Saudi Arabia will maintain its stable petroleum policies. We remain committed to maintaining our
role in international energy markets and strengthening our position as the world's most reliable
supplier of energy," Khalid al-Falih said on Sunday.
"We are committed to meeting existing and additional hydrocarbons demand from our expanding
global customer base, backed by our current maximum sustainable capacity."
Fort McMurray inferno: Scenes from a Canadian disaster
Since 2014, Saudi Arabia has led the Organization of the Petroleum Exporting Countries
(OPEC) through a strategy aimed at defending market share rather than reducing production to
support oil prices.
Falih's comments were in line with analysts' views that no shift in Saudi oil policy is likely as a
result of his appointment.
Tightening markets support Saudi Arabia's policy of keeping production near record highs in
defense of market share.
Beyond the Canadian fires, U.S. shale oil output is in decline and production is also falling in Latin
America and Asia, eroding a 1-2 million barrels per day supply overhang that pulled down oil
prices by as much as 70 percent between 2014 and early 2016.
While supplies tighten, demand - especially in Asia - is holding firm.
China's monthly imports of crude oil rose 7.6 percent in April from a year ago to 32.58 million
tonnes, customs data showed, lifted by strong demand from domestic private refiners.

NewBase Special Coverage
News Agencies News Release 01 May 2016
Commercial dynamics of renewable energy
SYED MUSTAFA AMJED — Published in Dawn, Business & Finance weekly, May 9th, 2016
OVER the years, renewable energy has gained substantial traction and now contributes more
than 20pc to the electricity generation worldwide.
In 2013, 120GW of renewable electricity generation capacity was added internationally with solar
capacity exceeding wind for the first time.
Major reductions in technological costs, climate change issues, government support and
incentives, oil and gas price volatility and potential for liability for green house gas emissions have
been at the forefront of the move towards renewable energy along with massive public support for
solar, wind and hydro. The movement has even compelled some oil majors such as BP and
Statoil to invest in renewable energy both onshore and offshore, however, not all are convinced of
joining the green energy movement.
This is happening in a market environment where the whole paradigm of ‘ Peak Oil and Gas’, has
been made questionable with the development of unconventional hydrocarbon resources. Smaller
countries such as Iceland and Norway now generate all their electricity through renewable
sources while others including Germany want 80pc green electricity by 2050.
However, whether renewables make economic and technical sense for Pakistan, the world’s 6th
most populous country in the world, is another story and needs serious consideration in view of
our perennial power shortages and transmission losses. At peak summer electricity demand, we
are regularly short of about 5,000 MW generation capacity, which is a substantial amount per se.
Hydro, solar and wind are resources that are in abundant supply in Pakistan and should play a
significant role in the electricity mix, albeit in view of certain very strategic considerations.
The reality is that costs, especially for solar power, have gone down by 50pc over the last
four years and this reduction should be reflected in local allocated tariffs
Renewables, especially solar and wind power, have issues of reliability, intermittent supply
variation, cost and equipment specifications which need to be carefully considered based on
geographical location and environment of the proposed solar and wind farm locations in Pakistan.
Furthermore, the ability of the national grid to adapt to major supply of solar and wind power also
needs to be considered along with the effect of higher solar and wind tariffs on overall electricity
costs to the population.

Since we are a perennially electricity deficient country needing base loads rather than peaking
loads, we also need to carefully determine the share and timelines of adding renewables to the
national grid with the exception of perhaps utility scale hydro projects.
It is pertinent to mention here that solutions to electricity generation variability and related issues
as mentioned above are being constantly improved, however, their adaptability to Pakistan is
questionable given our infrastructure and demand supply profile.A lot of ground has to be covered
before we are able to develop a diversified matrix of renewable energies with intelligent
technologies and smart grids to manage both base and peak loads.
Hydroelectricity is arguably the cheapest source of electricity worldwide, however, all countries are
not blessed with a river system such as Pakistan’s. In 1985, a not too-distant past, Pakistan
generated almost 67pc of its electricity through hydro and was, by default, a great follower and
proponent of renewable energy. This share has now dropped to 30pc as the country’s focus
moved away from cheap hydro to relatively expensive fossil fuel based electricity generation.
On a positive note, we are now again focusing on hydropower development with a number of
utility scale and smaller projects in the pipeline including Suki Kinari 870MW, Azad Pattan
640MW, Karot 720MW, which is being developed by China Three Gorges International. These
would be very welcome additions to the national grid while providing affordable energy to the
country. The levelised tariff that has been approved for these plants ranges from $0.053 –
$0.088/kwh which is quite reasonable.

This needs to be seen in contrast to the levelised tariff of $0.14-0.15/kwh approved by Nepra for
solar projects, with higher tariffs for the initial 10 years. The difference in tariff, for lack of details,
could primarily be due to higher Pakistan-specific costs.
But international comparison is rather stark with competitive solar power now being generated at
$0.08/kwh without subsidies. The overall 5GW solar project by DEWA Dubai was recently bid at $
0.0585/kwh for second round. However, interestingly the third phase of this project was bid at
$0.0299/kwh. Solar power has had many false dawns and one needs to see this through.
Pakistan has wind potential of 50,000 MW with quite a few sweet spots for wind power. However,
offshore areas present a much higher wind potential as compared to onshore. Wind power is
contributing a miniscule 0.25pcof total electricity generated and the ratio needs to be enhanced
significantly.
Internationally, low cost onshore wind power is now being developed at $0.05/kwh whereas, the
levelised tariff now allowed in Pakistan is $0.13/kwh. As renewable power projects normally have
a range of cost profiles which are dependent on resource quality, equipment cost and
performance, capacity factors, operational and maintenance costs, economic life, regulation,
capital costs and discounting factors, a comparison with international norms would require a
detailed study of project dynamics

Having said this, the reality is that costs, especially for solar power, have gone down by 50pc over
the last four years and this reduction should be reflected in local allocated tariffs.
Given the above scenario, technology cost reductions and economic dynamics, the following
steps should be undertaken to adequately develop the renewable energy sector:
The Renewable Energy Policy 2006 needs to be reviewed in view of changed market dynamics
and costs. The policy provides for zero risk to investor on account of variation in wind speeds and
hydrological flows and a rather generous 17pc return on equity ( ROE) on wind projects. The
investor is compensated for resource quality risk leading to a higher tariff for local consumption.
This needs to be revised in view of international best practices as the industry has graduated from
subsidies and government incentive schemes.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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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 25 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 09 May 2016 K. Al Awadi

New base energy news issue 846 dated 09 may 2016

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New base energy news issue 846 dated 09 may 2016