New base energy news issue 862 dated 31 may 2016

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NewBase Energy News 31 May 2016 - Issue No. 862 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Bahrain: Mubadala and Occidental to exit Bahrain oil field
Source: Gulf NewsSource: Gulf NewsSource: Gulf NewsSource: Gulf News
Mubadala Petroleum together with partner Occidental have reached an agreement with
the Bahraini authorities to exit Tatweer Petroleum, the joint operating company that has
managed Bahraini field operations since 2009.
Confirming the development, a spokesperson for Mubadala said: 'Significant advances have been
made in production and efficiency of operations at the field under the leadership of the partners,
and the time is now right to transfer full responsibility for the asset into Bahraini hands.
“Arrangements have been made for a smooth transition and we are confident the field will
continue to be developed to the benefit of the people of Bahrain by Tatweer.'
Bahrain which is not a member of Organisation of the Petroleum Exporting Countries (OPEC)
produced about 48,000 barrels per day of oil in 2013, the least amount of any country in the Gulf
region, according to US Energy Information Administration.
Total petroleum production capacity at the Bahrain field is expected to rise to 100,000 barrels per
day by 2018. Bahrain like other oil producing countries is struggling due to low oil prices. It is
undertaking reforms to cut subsidies and raise fuel prices.

Saudi's SABIC agrees petrochemicals project with China's Shenhua
ReutersReutersReutersReuters
Saudi Basic Industries Corp (SABIC), one of the world's largest petrochemicals groups, said on
Monday it had signed an agreement with Shenhua Ningxia Coal Industry Group to build a
petrochemical complex in China.
SABIC said in a statement the joint project would be a "greenfield petrochemical complex" located
in the Ningxia Hui Region of China and would help the Saudi company diversify its feedstock
sources.
"The joint venture would benefit from its location in Ningxia and utilize locally available coal
feedstocks to be supplied by SNCG," SABIC said. The Chinese company is a unit of Shenhua
Group Corporation Limited .
No financial details or time frame for the project were given. SABIC said the companies would
now work on getting approvals from Chinese authorities for the complex. SABIC said the plans
were part of its ongoing strategy to diversify its operations geographically and to seek investments
that would open up the company to new markets.
The China-based complex would also help SABIC get its feedstock from a wider variety of
sources, it said. "This protects SABIC against the fluctuations and cyclical movements in
feedstock price in the international markets, which helps ensure a profitable growth strategy,"
SABIC Chairman and Chief Exeutive Yousef al-Benyan said in the statement.
SABIC Vice Chairman & CEO, Yousef Al-Benyan commented on this agreement saying, “This
project reflects our enthusiasm to diversify our sources of feedstock, paving the way for further
investment opportunities that depend on different and untraditional sources of feedstock. This
protects SABIC against the fluctuations and cyclical movements in feedstock price in the
international markets, which helps ensure a profitable growth strategy.”

Pakistan: US offers to conduct and finance study on shale reserves
Source: The Express TribuneSource: The Express TribuneSource: The Express TribuneSource: The Express Tribune
The United States has offered Pakistan assistance in undertaking and financing another study to
assess the hidden and vast shale oil and gas reserves in the country, officials say.
The first study was conducted by the US Agency for International Development (USAID), but it did
not cover some areas of Balochistan, Sindh and Khyber-Pakhtunkhwa. Pakistan has accepted the
offer for the second study for which the US will bear the entire cost.
Pakistan and the US have held a couple of
meetings on forging cooperation in the
energy sector over the past few years. The
first huddle was held in 2014 which was
followed by another meeting in April 2015.
The third meeting of the series was held in
Washington recently where the US
expressed interest in conducting the second
study to evaluate shale oil and gas deposits
in Pakistan.
In the first assessment, USAID estimates
showed that Pakistan had massive deposits
of 10,159 trillion cubic feet of shale gas and
2.3 trillion barrels of shale oil – figures that
were several times higher than those
released by the US Energy Information
Administration (EIA).
The USAID further revealed that risked
technically recoverable resources were 95
trillion cubic feet of shale gas and 14 billion barrels of shale oil. According to EIA assessment in
April 2011, Pakistan had 206 trillion cubic feet of shale gas in the lower Indus Basin, of which 51
trillion cubic feet were recoverable. However, in June 2013, it revised the estimate upwards to 586
trillion cubic feet, of which 105 trillion cubic feet were technically recoverable.
Apart from gas, the EIA also saw the presence of 9.1 billion barrels of shale oil that were
technically recoverable out of estimated deposits of 227 billion barrels. In the first study, the
USAID collected data of 1,611 wells and undertook shale formation of 1,312 wells through drilling.
It used 70% of data to prepare the study and sent samples to the New Tech Laboratory in
Houston for assessment.
Though the technology is available in advanced countries for tapping the shale reserves,
environmental concerns, requirement of a huge quantity of water and a high cost of drilling are the
real challenges. A well requires 3 to 8 million barrels of water. Pakistan has water supplies, but the
real issue is its disposal.
Estimates suggest shale gas will cost $10 per million British thermal units, which will come down
with the increase in recovery of untapped reserves.
The government will frame a policy for shale deposits after the cost of drilling is determined and
the second study is conducted.

MENA:Public-private participation for Mena infrastructure projects
The NationalThe NationalThe NationalThe National ---- LeAnne Graves
The participation of private-sector investors in state-backed infrastructure projects is being
reimagined in the Middle East and North Africa amid a US$270 billion gap in spending.
Lower revenue because of the lower oil price has pushed regional governments to increase
private sector involvement, such as promoting the public-private partnership (PPP) model in areas
that have historically been funded exclusively by state money.
Mouayed Makhlouf, the director for the World Bank’s International Finance Corporation’s (IFC)
Mena region, said on Sunday in Dubai that the largest growth sector for private participation was
the power industry.
“There’s a power gap of 20 per cent and the region needs [investment of] over $100bn annually
for the next few years," he said. “There’s a lot of pressure for governments to find solutions to
challenges that they’re facing."
One example comes from Dubai as the emirate’s power utility, the Dubai Electricity and Water
Authority, announced at the beginning of the year that it would tender renewable energy projects
totaling more than Dh27bn with private companies picking up a large chunk of the cost through
PPPs.

Tightening liquidity coupled with increasing country risks have limited the appetite of banks to lend
for projects on a long-term basis, such as in the power sector. And regionally there is a lack of
refinancing mechanisms in place that makes PPPs more difficult to structure.
Villiers Terblanche, the managing partner at Latham & Watkins law firm, pointed to a scale-back in
the number of private-sector banks lending since 2010. “Fewer lenders are available and good
projects are competing for limited resources," he said, adding that there was not a refinancing
culture in the Middle East to overcome this.
“In the West, contracts aren’t as long because of the refinancing option." He said that in places
such as the United States and Europe, local lenders offer refinancing structures that have pushed
down the duration of PPP contracts from more than 20 years, as seen in the Middle East, to about
six years.
While oil prices and technology have always affected the region, Mr Terblanche said that changes
coming about were unique, pointing to a need for an evolution to reach other soft markets such as
education and even digital payments. This could be a remittance platform funded by a private
company that created a substitute for debit cards.
“It’s different this time because demographic fundamentals have shifted past the point of no
return," he said. Project bonds could be another option to bridge the funding gap for infrastructure
deals, according to the IFC.
“Financing is tight now and the region needs to think about building capital markets, which are
shallow at this time," said Muneer Ferozie, the IFC’s regional manager for PPPs. “I think that’s
where the markets are going to get another pool of liquidity."

Norway: Battered by Crude Collapse, Faces Risk of Oil Strikes
BloombergBloombergBloombergBloomberg ---- Mikael HolterMikael HolterMikael HolterMikael Holter
Norway’s oil companies and the industry’s biggest union had set aside two days to negotiate over
wages for offshore workers. Instead, the talks broke down after less than a minute.
The failure shows the width of the gap that will need to be bridged in state-backed mediation if
Norway, western Europe’s biggest producer of oil and gas, is to avoid strikes that would deepen
the crisis provoked by the collapse of crude prices since 2014.
The breakdown of wage talks for offshore workers on production platforms, where a strike would
have immediate consequences on output, comes after negotiations stranded earlier this month for
workers on oil-rigs and onshore supply bases. The risk of several strikes comes as Norway’s
economy is already suffering more than during the financial crisis, with offshore investments set to
drop for a third consecutive year in 2017 and about 40,000 jobs lost in the oil industry.
“The situation is the most deadlocked in a long time,” Leif Sande, leader of the Industry Energy
union, said about the talks that broke down on Monday. “The differences were so obvious so early
on that it was just as well to make an appointment with the National Mediator right away rather
than sit here for two days.”
Oil producers, represented by the Norwegian Oil and Gas Association, are seizing on the difficult
market situation to break down a model of stable wage increases separated from economic
fluctuations, Sande said. Neither oil companies or rig owners offered a wage increase, while the
unions want to negotiate based on a benchmark accord between employers and workers in
export-exposed industries reached earlier this year, he said.
Industry Energy, which covers more than half of Norway’s 7,500 union-affiliated offshore-platform
workers, was followed Monday in breaking off talks by two smaller unions, SAFE and the
Norwegian Organisation of Managers and Executives.

The employers’ group, which represents companies like Statoil ASA, BP Plc and ConocoPhillips,
said there was no room for increases in a situation where producers were trying to reduce costs
even before prices started falling.
“We’re in a very challenging situation,” Kolbjoern Andreassen, a spokesman, said in phone
interview. “It will get worse before it gets better.”
No date has been set for the state-backed mediation, a last-ditch effort led by the National
Mediator to reach an agreement and avoid a strike. The mediation in the rig-worker negotiations
will take place June 20 and 21. Energy Industry has said 190 of its workers would strike if a deal
isn’t reached, while the SAFE union has said as many as 2,456 members could walk out. It wasn’t
immediately clear which drilling rigs or production ships would be affected.
A rig strike would deepen the worst market downturn in a generation in offshore drilling, Jakob
Korsgaard, the lead negotiator for the Norwegian Shipowners’ Association said in an interview last
week. It could also “over time” have consequences for production, he said.
The last strike to affect output in Norway was a 16-day stoppage by oil-company workers in 2012.
Actions that would have affected production have been avoided on several occasions through
mediation in recent years.
While Korsgaard was “worried” rig owners and unions would still fail to see eye to eye during the
mediation, the Norwegian Oil and Gas Association’s Andreassen said there was “always room to
find solutions.”
“It will surely be a very challenging mediation,” he said. But “it’s usually easier to split money than
to split principles.”

TANZANIAN GAS MARKET POST-2018 UNCHARTED
Tanzania's government earlier this May said that it intends to build a pipeline that will flow gas
from Tanzania to Uganda but declined to elaborate on when the planned pipe would be built and
how large it would be. Its statement of intent followed a definitive decision by the Ugandan
government to build a pipeline that will flow oil in the opposite direction: from Uganda to the
northern Tanzanian coast.
NGA asked Wentworth Resources' managing director Geoff Bury, during the company's 1Q 2016
analysts call on May 12, if he had insights into the planned Tanzania-to-Uganda gas pipeline and
how he sees the landscape for independent gas producers in Tanzania after 2018.
"We have no more clarity on the Uganda gas pipeline than you do, than what has been disclosed
into the market," he replied: "It’s our understanding that it is only at the planning stage. So we
don’t know when a final investment decision [FID] will be achieved on that."
Tanzania has three main onshore producers – Canada's Orca Exploration; Maurel & Prom with
Wentworth Resources; and Aminex – while Dubai-based Dodsal has announced a large gas find.
But their reserves are dwarfed by the roughly 39 trillion ft3 (1.1 trn m3) offshore gas resources
held by Shell/Ophir and Statoil/Exxon, representing over two-thirds of the US Energy
Administration's gross gas estimate for Tanzania of over 57 trillion ft3.
So NGA sought Bury's on-the-ground viewpoint of whether gas developments in Tanzania
would be phased, according to demand from existing and prospective power plants in Tanzania
and Uganda – and if smaller onshore producers risked getting swamped in volume and price
terms by a potential overspill into the domestic market of gas from the Shell and Statoil LNG
projects. If they take FID, production may start in the first half of the 2020s.
"With respect to the offshore gas that you alluded to, the LNG projects – to the best of our
knowledge – have not reached FID yet," replied Bury: "So it’s a number of years out before we
would anticipate seeing any of that gas coming into the domestic market."
Unclear, but upbeat about future demand
"As far as demand goes, beyond 2018 there are plans in place to continue to expand the power
generation and distribution system in Tanzania. Only a small portion of the population currently

has power generation available to them. So we see the market continue to grow substantially
beyond 2018. And we expect to continue to be one of the suppliers of that market," Bury added.
"The final point was, you
referred to the Dodsal
discovery," noted Bury: "We
don’t have any clarity on that,
on the timing of when that may
come into the domestic market.
This is just an evolving
situation. The demand is
growing and the supply, of
course, will also grow over
time."
Bury was also asked by
equity analyst Colin Smith
of UK firm Panmure Gordon
how sure Wentworth could be
of how the Tanzanian
government will allocate the
market through to 2018,
particularly between the Mnazi
Bay field – producing since
August 2015, in which Maurel &
Prom and Wentworth
are partners – and the rival
Aminex-operated Kiliwani
North field that started up
in April 2016.
Bury's reply, detailed in NGA
on May 12, was that Mnazi Bay
contracted volumes are up to
80mn ft3/d at present, stepping
up to 130mn ft3/d over time:
"So we would fully expect that
the first 130mn ft3/d of demand
we will be supplying. We don’t have any visibility on what demand the other potential suppliers in
the country will be supplying. But we do have a contract in place for up to 130mn ft3/d."
Asked again if the government could use its discretion to take from Kiliwani North, rather mainly
from Mnazi Bay, Bury replied: "The take-or-pay provisions become fully in place once COD
[commercial delivery] has occurred, which we will expect that will happen in the coming months.
So it’s immediate from that point in time.
That’s just a legal condition. The practical considerations are that we [Mnazi Bay] are the only one
supplying gas through that [new] pipeline at present, and we have indications from the
government that they will be taking all of our gas up to 130mn ft3/d. We’re not concerned about
this." He also reminded analysts that the Mnazi Bay supply contract and pricing extends out to
October 2031.

NewBase 31 May 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
US oil prices rise on start of summer driving
Reuters + NewBaseReuters + NewBaseReuters + NewBaseReuters + NewBase
U.S. oil prices were lifted early on Tuesday by the start of the peak demand summer driving
season, although international fuel markets were weighed down by rising output in the Middle
East, which mostly serves Asian customers.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $49.50 per barrel at 0042
GMT, up 17 cents from their last settlement.
Demand in North America is set to pick up along with the official start of the U.S. summer driving
season this week, triggering a cut in the amount of open short crude positions that would profit
from falling prices.
"Investor positioning points to further support for commodity prices as bearish bets continue to be
reduced," ANZ bank said on Tuesday. The amount of outstanding managed short crude positions
of U.S. WTI crude futures fell to its lowest level this year last week.
International oil markets, however, were hit by a rise in Middle Eastern crude exports, most of
which go to Asia. Brent crude oil futures were trading at $49.65 a barrel, down 11 cents from their
last close.
Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with
the issue said, joining other Middle East producers by lifting market share ahead of an OPEC
meeting this week.
Oil price special
coverage

Iraq, which is the second-largest producer in the Organization of Petroleum Exporting Countries,
had already been targeting record crude export volumes from southern terminals next month of
3.47 million barrels per day.
Saudi Arabia, the world's top crude exporter, as well as fellow OPEC producers Kuwait, Iran and
the United Arab Emirates, also plan to raise supplies in the third quarter in an ongoing race for
market share in the world's biggest consumer region, Asia.
Nigerian Supplies
Oil is set for the longest run of monthly gains in five years as output disruptions from Nigeria to
Canada reduce supply before OPEC meets Thursday in Vienna to discuss production policy.
Futures were little changed in New York from the Friday close, set for a fourth monthly advance.
Militant attacks have cut Nigerian supply to the lowest level in more than two decades while
Canadian output fell amid wildfires. Producers are starting to resume operations after the blaze
eased. Libya’s Petroleum Facilities Guard captured a town near the Es Sider and Ras Lanuf oil-
loading terminals after fierce clashes with Islamic State militants.
Oil has surged more than 85 percent since slumping to a 12-year low in February on signs the
worldwide surplus is easing amid declining production from the U.S. to Nigeria. The Organization
of Petroleum Exporting Countries is unlikely to reach any agreement to limit output when it meets
June 2 as the group sticks with Saudi Arabia’s strategy of squeezing out rivals, according to
analysts surveyed by Bloomberg.
“It’s difficult to see Saudi giving much in terms of the supply situation and clearly Iran’s not going
to step back,” Robert Rennie, the global head of currency and commodity strategy at Westpac
Banking Corp. in Sydney, said in a Bloomberg Television interview. “Beyond $50, I think crude
starts to struggle. It looks like the Canadian production should start to pick up.”

West Texas Intermediate for July delivery was at $49.48 a barrel on the New York Mercantile
Exchange, up 15 cents, at 9:10 a.m. Hong Kong time. There was no settlement Monday because
of the U.S. Memorial Day holiday. Trades will be booked Tuesday for settlement purposes. Prices
are up 7.8 percent this month for the longest run of monthly gains since April 2011.
Libyan Battle
Brent for July settlement, which expires Tuesday, lost 11 cents to $49.65 a barrel on the London-
based ICE Futures Europe exchange after rising 0.9 percent Monday. Prices are set for a fourth
monthly increase, also the longest streak since 2011. The more-active August contract slipped 16
cents to $50.20. The global benchmark traded at a premium of 15 cents to WTI for July.
For a column on what to expect from the OPEC meeting, click here.
Libyan forces took control of the town of Bin Jawad after clashes during which five petroleum
guards were killed and 16 others wounded, PFG spokesman Ali al-Hasy said by phone. The
nation is the smallest OPEC producer, pumping about 310,000 barrels a day.

NewBase Special Coverage
News Agencies News Release 31 May 2016
OPEC Meeting Will Provide Heated Debate but No Freeze
Like an ageing incandescent lightbulb, OPEC's meeting on Thursday will produce a lot of heat and
shed little light. At least it won't freeze.
Saudi Arabia will see little reason to change direction from the policy introduced in Nov. 2014. The
kingdom set the group on a path of protecting market share in the face of rapidly rising U.S. shale
oil production by refusing to agree to a lowering of its output target, and now the market is
correcting itself through dwindling non-OPEC supply.
But the squeeze on some producers is starting to strangle -- low oil prices have lasted much
longer than anybody expected and calls from within the group for action to be taken to push them
higher have become louder and the battle-lines are getting deeper.
The divisions within the group seem to be worsening. Prospects of an output freeze that looked to
many like a sure bet just a month ago have evaporated completely as prices have risen and both
Iran and Saudi Arabia have hardened their positions, while there's little chance of the
group reinstating an output target that it abandoned it at its previous meeting.
On one side are the nations of the Arabian Peninsula, with their small populations and low
production costs, on the other are the rest.

Chief among these is Venezuela, which has now burnt through more than a third of its gold
reserves to raise the cash it needs now that oil prices have sunk. Algeria hasn't been able to
revive production and is now running its first current-account deficit in a decade.
Selling the Family Gold
Venezuela has sold more than a third of its gold reserves since the start of 2015
Calls from these quarters for action to boost prices will fall on deaf ears. Saudi Arabia's position on
the best course of action for OPEC has not changed. With oil prices back near $50 a barrel it has
even less reason than at previous meetings to consider changing a policy that seems to be
successfully reigning in higher-cost rivals.

The Saudi view survived a change in oil minister, and the kingdom isn't the only member
presenting a new face at the table. That will feed into the tone of discussions.
Personnel moves at the top of several delegations may mean that ministers will carry less
historical baggage into this meeting, making it easier to bridge the chasm between them.
But what's more likely is that the large number of new oil ministers, with little experience of
working together and few personal bonds, will find it more difficult to reach common ground. There
are now just 4 out of the 13 ministers who were involved in the 2014 discussions that led to the
adoption of the current strategy.
OPEC's decisions are reached by consensus, so it is always easier to keep the current policy than
to change it. Inertia, therefore, is likely to reign this time around at the Vienna meeting.
There's another agenda item, that's already proving to be just as divisive. Members need to select
a new Secretary General to replace Abdallah al-Badri, who is due to step down in July after
several extensions to his term of office. It is a role that requires real diplomatic skill. A good
secretary general can help to facilitate dialogue between the different factions without being seen
to take sides.
Ministers have been unable to agree on a successor -- they apparently debated this issue for
three hours at their last meeting without reaching a consensus.
Support seems to be gathering behind Nigeria's Mohammed Barkindo, who was Acting Secretary
General in 2006 and is backed by both Saudi Arabia and Iran, but it is not yet unanimous.
Indonesia is fielding its own candidate, Mahendra Siregar, while Venezuela is said to have
proposed Ali Rodriguez, who held the post from 2001 to 2002.
We can only hope that the emergence of three new candidates will allow them finally to make a
choice. Just don't expect it to be easy. C R E D I T : R E Z A / C O N T R I B U T O R

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 31 May 2016 K. Al Awadi

New base energy news issue 862 dated 31 may 2016

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New base energy news issue 862 dated 31 may 2016