New base energy news issue 871 dated 13 june 2016

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NewBase Energy News 13 June 2016 - Issue No. 871 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE:Adnoc to streamline operations across all activities, CEO
The National - Frank Kane
Sultan Al Jaber, the Minister of State and chief executive of Abu Dhabi National Oil Company, has
revealed further details of his ambitious strategy to make the government-owned company a world
leader in the energy sector.
The plan involves streamlining operations across all of Adnoc’s activities in an effort to drive
efficiency, performance and profitability in the business. It will also involve establishing a new
commercially oriented mindset among Adnoc’s 55,000 employees.
The goal is to ensure Adnoc remains a central contributor to the UAE’s economic diversification
strategy and performs on a par with any multinational company, with focus squarely on
shareholder value, Mr Al Jaber told The National.
A master plan has begun to align upstream and downstream gas operations across 18 businesses
to secure effective implementation, following the decision to rebalance the amount of gas being
re-injected to make more available.
Demand for natural gas in the UAE has been rising rapidly – about 6 per cent a year – and the
country has had to import an increasing amount since 2008. “A focus will be placed on ensuring
we provide a sustainable and economical supply of gas through an integrated gas master plan,"
he said.
Another major focus of the new strategy is the upstream operation, which Mr Al Jaber has
identified as one of the areas in which Adnoc needs to maximise profitability.
“For example, in group procurement we are looking to leverage our purchasing power and
improve the efficiency of our operations by optimising inventory and working capital," he said.

“We will also be more economically minded in the smarter use of crude oil. Murban, our flagship
product, is sold on the market at a premium, so instead of using it in the refining process we are
exploring how to replace this valuable resource with offshore blended crude instead," he said.
The strategy is also aimed at creating value for Adnoc’s downstream business. “We are exploring
how to align and create more synergy among our downstream operations, how best to maximise
the use of our resources and to produce new petrochemical products," Mr Al Jaber said.
The company’s new focus is in part a result of the changed market conditions following the fall in
the price of crude oil from historic highs in the summer of 2014, and reflects Adnoc’s role as a key
wealth generator and a driver of the diversification plan laid out in Economic Vision 2030.
Mr Al Jaber’s plan, which has been delivered to Adnoc executives in the first 100 days since he
was appointed the chief executive in February, will be implemented progressively in the coming
years, in what has been described internally as a “journey to the future" for Adnoc.
Benchmarking practices have been introduced, using best practice industry standards on the key
criterion of operating cost per barrel (opex). The vital opex benchmark has been built into the
performance contracts of Adnoc entities and the senior executives that run them.
The new strategy will also make Adnoc business units more accountable, and help them to
adhere to international best practice. But the company is not believed to be considering an initial
public offering of its holding company or any business units on stock markets, an Adnoc source
said.
The introduction of aligned key performance indicators across the company, as well as
encouraging national talent, is seen as especially significant within Adnoc. These indicators
underpin the whole strategy and ensure that performance and commercial criteria are hardwired
into the company and its employees.

Oman plans to tender five oil blocks for development in October
Source: Times of Oman
The Oman government plans to start tendering of around five oil blocks sometime in October this
year, a senior official at the Ministry of Oil and Gas told Times of Oman. These oil and gas blocks
spread in different parts of the country will be awarded, after a tending process, on a production
sharing basis.
'There are a number of locations.
We are evaluating few of them
and in October we will go to the
market. I would probably say an
average of five, but we (may)
have more or less, depending on
the readiness of data collection
and evaluation,' Eng. Salim bin
Nasser Al Aufi, undersecretary at
the Ministry of Oil and Gas, said,
on the sidelines of a function
organised by BP to honour small
and medium enterprises.
Although these blocks have both
oil and gas deposits, these are
predominantly oil blocks.
Presently, majority state-owned
Petroleum Development Oman
contributes 68 per cent of Oman’s
total crude oil production, while
the remaining 32 per cent are
contributed by national and
multinational oil firms.
The average crude oil production
target this year is estimated at
990,000 barrels per day, slightly
higher than 980,000 barrels per
day in 2015. The country’s
average daily crude oil production in January-February period exceeded this target at one million
barrels per day. However, oil production declined in March due to heavy rains, but it recovered to
994,303 barrels per day the following month.
Oman government directly or indirectly holds stakes in several major oil producing firms, including
Occidental Oman, in the country. As huge investment is required for bringing oil above the ground
in view of the peculiar nature of reservoirs in Oman, the government has been encouraging
multinational firms to undertake exploration on production sharing basis.
Asked about whether the recent slump in oil prices is affecting attractiveness of multinational firms
to invest in Oman, Eng. Al Aufi said; 'We have to be smart in negotiation. We need to recognise
that companies will be using lower oil production forecast when they bid and to be smart enough
to accept it today. Also, we have to introduce mechanisms in such a way that we gain from the
deal when oil prices go up.'

Saudi Electricity Tender for two solar plants in kingdom’s northern
Saudi Gazette +The National
Saudi Electricity Company has asked for bids for two new solar power plants in the north of the
country, as part of the much scaled-back solar power programme announced recently under its
2020 national economic plan, the state-owned utility said yesterday.
The plants, each with capacity of up to 50 megawatts, will be built
to support larger existing power plants at the sites of Al Jouf and
Rafha, which run on conventional fossil fuels, diesel and natural
gas.
The tenders come after last week’s announcement by Khalid Al
Falih, the minister of energy, industry and mineral resources, that the kingdom would scale back
dramatically its target for solar power because of the collapse in oil and gas prices since the
original targets were set four years ago.
Under the King Abdullah City for Atomic and Renewable Energy (Ka-Care) plan, Saudi Arabia had
set out to build 41 gigawatts of solar generating capacity by 2032, with more than half to be up
and running by 2020.
The Saudi economic road map, Vision 2030, now envisions a -
total of 9.5GW for all renewables by 2023, with solar to provide
3.45GW. Even that lower target is ambitious given that there is
negligible capacity now, requiring more than 860MW each year
of new capacity.
“It is clear that they have got to get away from burning oil for
power and solar with gas is a step in the right direction," said
Steve Griffiths, the vice president of research and a professor at
Masdar Institute in Abu Dhabi, which works with Ka-Care on
developing regional renewables and was part of Saudi’s Abdul
Latif Jameel-led consortium that won last year’s Dubai solar
contract with a record low bid.
Mr Griffiths said: “The precedent here is to not get sucked into policy structures like those in
Europe – [that is, complicated feed-in tariff-style pricing] and the [independent power producer]
model works as a lower-cost option as long as you have a reliable off-taker," as has been the case
in Dubai.
But while the more modest solar plans may be achievable, Saudi’s priorities clearly have shifted
as it moves to rapidly diversify its industry amid lower energy prices.
“Our energy mix has shifted more toward gas, so the need for high targets from renewable
sources isn’t there any more," Mr Al Falih said last week, adding that the aim now was to achieve
about 10 per cent of the country’s power generation from renewable sources over the next decade
or so, versus the 50 per cent originally targeted when oil prices were well above US$100 per
barrel.
The plan also calls for the reduction in electricity and water subsidies by 200 billion Saudi riyals
(Dh195.88bn) by 2020, while also aiming to increase the amount of water and electricity that is
produced under strategic partnerships, by bringing in the private sector, from 27 per cent to 100
per cent.

Pakistan: claims it has secured world’s cheapest LNG imports
Natural Gas Asia
Speaking during an event held in Islamabad, Shahid Khaqan Abbasi said the LNG tolling tariff of
0.66 cent per MMBTU was also the lowest of any floating terminal, which would go down
further, Radio Pakistan reported on Friday.
The minister added that LNG supplies were delivered in the
shortest time of 11 months after five failures to do so over the
past 10 years. Furnace oil-based generation had dropped by 13
percent in April against 10 percent increase in RLNG-based
power production.
Pakistan signed its first long term deal earlier this year with
Qatar. As per the deal signed in February, Qatargas will supply
fuel to Pakistan State Oil (PSO) from 2016-2031. The price for each LNG cargo in a particular
month has been agreed at 13.37 percent of Brent where Brent value is average of the preceding
three months.
Qatargas will supply 3.75 million tons
per annum (MTPA) of LNG to PSO.
The 15-year long term deal is the
largest deal of first quarter 2016,
a report by GlobalData suggests. The
deal has been estimated to be worth
$16 billion.
First LNG shipment under the
Pakistan-Qatar long term deal docked
at the LNG terminal in Karachi in
March. Country's first floating unit is
based at Port Qasim in Karachi.
Pakistan is facing severe shortage of
gas as demand has outstripped supply
in recent years. The country’s total gas production is around 4 billion cubic feet per day (bcfd),
while the demand stands at 6 bcfd.

Unplanned global oil supply disruptions reach highest level
since at least 2011..Source: U.S. Energy Information Administration, Short-Term Energy Outlook, June 2016
Unplanned global oil supply disruptions averaged more than 3.6 million barrels per day (b/d) in
May 2016, the highest monthly level recorded since EIA started tracking global disruptions in
January 2011.
From April to May, disruptions grew by 0.8 million b/d as increased outages, largely in Canada,
Nigeria, Iraq, and Libya, more than offset reduced outages in Kuwait, Brazil, and Ghana. Along
with other factors such as rising oil demand and falling U.S. crude oil production, the rise in
disruptions contributed to a month-over-month $5 per barrel increase in Brent crude oil spot prices
in May.
In Canada, the evacuation of oil workers because of wildfires in Fort McMurray, Alberta, reduced
Canada's oil sands production and led to an average 0.8 million b/d supply disruption in May, with
a daily disruption peak of more than 1.1 million b/d. In late May, workers began returning to the
area, and production is gradually restarting at a number of projects.
In Nigeria, an escalation in militant attacks on oil and natural gas infrastructure led to a substantial
increase in supply disruptions in May, which averaged 0.8 million b/d, almost 0.3 million b/d higher
than in April.
Nigeria's crude oil production fell to an average of 1.4 million b/d in May, its lowest monthly level
since the late 1980s. The infrastructure attacks are occurring in response to President Buhari's
restructuring and planned phase-out of the amnesty program, discontinued pipeline protection
contracts to former militants, and the increased military presence in the Niger Delta.
For the first five months of 2016, Nigeria's supply disruptions averaged 0.5 million b/d, 0.2 million
b/d more than in 2015. EIA expects Nigeria's disruptions to remain relatively high through 2017.

In southern Iraq, power outages and inclement weather in the Basra Gulf contributed to a 50,000
b/d increase to Iraq's supply disruption.
In Libya, exports from Marsa al-Hariga, currently Libya's largest operating oil terminal, were
temporarily halted from late-April to mid-May, increasing Libya's disruption by an average of
50,000 b/d in May. Exports from the terminal resumed after the rival state oil companies signed a
deal to restart exports.
In EIA's latest Short-Term Energy Outlook, global supply outages are expected to decrease in
June because most of the recent outages, particularly in Canada, have already started to subside.
The duration of an outage mainly depends on the root cause of the disruption. When an outage is
related to weather, natural disaster, labor strikes, or technical failure/accident, the disruption
usually ends within weeks or a few months, such as the recent outages caused by the wildfires in
Canada and the poor weather in the Basra Gulf in Iraq.
Disruptions tied to political disputes or conflicts often last for years, such as in Libya, Nigeria,
northern Iraq, South Sudan, and Yemen, among others, which accounted for nearly 90% of
unplanned disruptions for the first five months in 2016.

NewBase 13 June 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices fall back below $50 as economic concerns rise
Reuters + Newbase
Oil prices fell in early trading on Monday, pulled down by rising economic concerns in Asia and a
related strengthening in the U.S. dollar, which makes fuel imports for countries using other
currencies more expensive.
International Brent crude oil futures fell back below $50 per barrel, trading at $49.89 at 0127 GMT,
down 65 cents, or 1.29 percent, from their last settlement.
U.S. West Texas Intermediate (WTI) crude was down 78 cents, or over 1.5 percent, at $48.29 a
barrel. ANZ bank said that oil was being pulled down by a sharp reduction in risk appetite and a
"U.S.-dollar and treasuries rally".
The dollar has recovered some 1.3 percent from June lows against a basket of other leading
currencies, pushed by the prospect of a potential hike in U.S. interest rates and by concerns over
Asia's economy, which is dragging currencies there.
A stronger greenback makes dollar-traded oil imports more expensive for countries using other
currencies, potentially hitting demand and weighing on prices. But the main concerns in oil
markets was Asia's darkening economic outlook.
Japan's business survey index (BSI) of sentiment at large manufacturers stood at minus 11.1 in
April-June, compared with minus 7.9 in January-March, according to a joint survey by the Ministry
of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office.
There are also worries about growth in China, largely due to industrial overcapacity and spiraling
debt.
Oil price special
coverage

Coming wave of gas ( LNG ) puts focus on finding new shores
Reuters + NewBase
Energy giants such as Royal Dutch Shell and Total are looking to build terminals and power plants
in new markets to soak up the industry's rapidly burgeoning supply.
Companies have invested billions in plants to produce liquefied natural gas (LNG) in places such
as Australia and the United States.
But gas demand growth is slowing, prices are down and the LNG volumes companies are set to
produce will exceed those even major buyers such as China and Japan can absorb.
That has turned attention to the downstream market and opportunities to create new markets from
Ivory Coast to remote Indonesian islands by building gas-fired power plants, pipelines,
regasification and storage terminals.
"We are ready to go downstream as much as it takes to unlock gas demand," said Laurent Vivier,
president for the gas division at Total.
"We need to be present in downstream ourselves, to create demand and unlock bottlenecks along
the chain including regasification, pipelines and power plants."
Total aims to triple the number of its gas and power markets and raise its annual LNG output to 20
million tonnes and its trading to 15 million tonnes by 2020.

The company is taking part in LNG infrastructure tenders, including several gas-fired power
plants, in countries including Indonesia, Chile, Ivory Coast, Ghana and Morocco, Vivier said. Shell
believes the number of markets buying LNG could double, according to its chief financial officer,
Simon Henry.
"From around 20 to 30 ...we can see potential for around 50 different markets if you look out to
2030," Henry said. "Our aim is to capture the best share of those who are looking now to start or
grow." The focus on downstream mimics a model that companies such as Shell, Total, Exxon
Mobil and Chevron have used for decades in the oil sector where their operations span oil wells,
refineries and service stations.
But some analysts question how easily that model can be reproduced.
"Whether they succeed in this is another story, whether they have the mindset for this type of work
is also another story," said Thierry Bros, senior gas analyst at French bank Societe Generale.
"It will be a painful test for these companies who are not that experienced in building small
downstream demand," he said.
TECHNOLOGY
New technologies are helping speed development, with floating terminals, for example, offering a
cheaper alternative to onshore units that cost more than $1 billion.
"We are looking at multiple markets around the world in terms of potential to regas," said Shell's
Henry. "Quite a lot of it is floating regasification because it is quick and you can develop (a market)
in stages."
Shell, the world's top LNG trader after buying BG Group, expects to produce around 30 million
tonnes of LNG this year and trade nearly 50 million tonnes, accounting for about a sixth of global
trading volume.
Global output capacity is expected to rise by half by 2020, potentially adding some 150 million
tonnes of LNG to the market. However, overall gas demand growth is expected to slow to 1.5
percent a year to 2021 from the 2.5 percent rate seen recently, the International Energy Agency
has forecast.
In step with oil and gas, LNG prices have also struggled in the last two years. That has prompted
traders to offer more single cargoes for immediate delivery on the spot market, making it easier for
smaller buyers to find supply.

NewBase Special Coverage
News Agencies News Release 13 June 2016
Rising Oil Prices Encourage Shale Producers, Dissuade Investors
Bloomberg - Mark Shenk ShenkMark
Crude’s more than 90 percent from a 12-year low earlier this year has U.S. shale producers
starting to return to their drilling rigs, threatening to slow further gains.
"The $50-to-$60 a barrel area is the sweet spot," said Mark Watkins, the Park City, Utah-based
regional investment manager for The Private Client Group of U.S. Bank, which oversees $128
billion of assets. "You start to have producers come back at $50, but a lot of them come in at $60."
Money managers were cautious in the week ended June 7, betting more heavily on a price drop
than on further gains, according to data from the Commodity Futures Trading Commission. WTI
rose 2.6 percent to $50.36 a barrel on the New York Mercantile Exchange during the report week
before closing at $49.07 a barrel June 10.
Prices have climbed enough for Continental Resources Inc. to dispatch fracking crews to
unfinished wells in the Bakken shale region, Chief Executive Officer Harold Hamm said June 9.
Those wells were left uncompleted as tumbling prices forced explorers to halt projects to conserve
shrinking cash flows. Helmerich & Payne Inc., the biggest drilling-rig contractor in the U.S., and
Independence Contract Drilling Inc. said last week they were receiving more queries from oil
explorers.
"Everyone is questioning the price when U.S. rigs come back," Paul Sankey, an energy analyst at
Wolfe Research LLC, said June 10 on Bloomberg Radio. "At $55-to-$60 we would return to
growth in the U.S."

The number of active oil rigs in the U.S. increased by three last week after jumping by nine in the
prior seven days, the first back-to-back gain since August, Baker Hughes Inc. data show. U.S.
crude production is still well below last year’s peak, and explorers have idled more than 1,000 oil
rigs since the start of last year.
Forecasters including the International Energy Agency and Goldman Sachs agree that the crude
glut is starting to dwindle as the Organization of Petroleum Exporting Countries’ policy of
maintaining output squeezes out higher-cost rivals.
Global disruptions reached an average 3.6 million barrels a day last month, the most since the EIA
began tracking outages in 2011. Fires that began early May in Alberta took out an average
800,000 barrels of Canadian supply last month, while Nigerian crude output dropped to the lowest
in 27 years as militants increased attacks on pipelines in the Niger River delta.
"In April and May, before the worst of the disruptions, there was already a consensus that the
market would be in balance the second half of the year," said Michael Wittner, the New York-
based head of oil-market research at Societe Generale SA. "Nigeria and Canada just accelerated
the rebalancing."
Hedge funds’ short position in WTI rose by 24,324 futures and options combined to 77,701, the
biggest percentage gain in 11 months, CFTC data show. Longs, or bets on rising prices,
increased by 17,065, reducing the net-long position by 3 percent.
Other Markets
In other markets, net bullish wagers on U.S. ultra low sulfur diesel dropped 8.8 percent to 14,115
contracts as futures climbed 2.9 percent. Net bullish bets on Nymex gasoline slipped 22 percent to
12,552 contracts, the lowest since November. Gasoline futures decreased 1.7 percent in the
period.
The rally is setting up the conditions of its own demise, according to Watkins and Sankey. When
the rigs return to the shale patch, prices will move lower. "This is the most hated bull market in
history," Sankey said. "Everyone thinks it will end."

After 350,000 Layoffs Oil Companies Now Face Worker Shortages
By Nick Cunningham of Oilprice.com
There could be a growing shortage of skilled workers in the oil industry. That may seem
counterintuitive in an industry that has been rapidly shedding workers, with more than 350,000
people laid off in the oil and gas industry worldwide.
Texas is one place feeling the pain. Around 99,000 direct and indirect jobs in the Lone Star state
have been eliminated since prices collapsed two years ago, or about one third of the entire
industry.
In April alone there were about 6,300 people in oil and gas and supporting services that were
handed pink slips. Employment in Texas’ oil sector is close to levels not seen since the aftermath
of the financial crisis in 2009. "We're still losing big chunks of jobs with each passing month," Karr
Ingham, an Amarillo-based economist, told The Houston Chronicle.
But the damage to the oil industry’s workforce could be exactly why companies could face a skills
shortage in the months and years ahead.
North Dakota had nearly 1,000 drilled but uncompleted wells as of March, and more companies
are showing some signs that they might step up completions now that oil prices are above $50 per
barrel. But they might find it difficult to ramp up the rate of completions if they cannot field enough
workers. There are only about eight fracking crews left in the state, down from 45 two years ago,
according to Reuters. Fracking crews are brought in to frack and complete wells for oil producers.
A recent survey of oil companies in the Bakken revealed concerns from the industry about the
dismantling of fracking crews. “Even if prices went to $100 per barrel of oil, you don’t have any
frack crews available to complete all the wells that need fracking,” one survey
respondent told Hart Energy Market Intelligence.
One oil worker recently interviewed by Reuters illustrates the problem for places like the Bakken.
John Ritchart, a worker that was responsible for heating water for a fracking crew, packed up and
left North Dakota, moving back to Washington State after his pay was cut by 30 percent. “I can
feed two people at home for a month for what it costs me to eat in Williston for a week,” Ritchart
told Reuters.
“I can’t afford to stay here.” The city of Williston, located in the heart of the Bakken, saw its
population shrink by 16 percent since the summer of 2015.
At a recent industry conference in North Dakota, a top executive at Hess Corp. said that
dismantling crews can be counterproductive. “If you just stop your entire operation, you send all
your contractors home, you lose all your completion supervisors and you end up in a situation

where you have to start all over again,” Gerbert Schoonman, Hess vice president in the
Bakken, said at the Williston Basin Petroleum Conference in May.
But the thousands of laid off engineers, technicians, geologists, and rig workers won’t sit around
waiting for oil prices to rebound. Many are moving on to find work in other states and in other
industries.
In Texas, some laid off oil workers are increasingly finding work in the solar industry, which may
not pay as much as working in the oil fields, but does offer more stability. One solar company in
San Antonio told Marketplace that about a quarter of the resumes they receive come from workers
who lost jobs in the oil and gas industry.
The problem for solar companies is finding workers that are truly leaving oil and gas and not just
waiting for a rebound. As thousands of out-of-work oil and gas veterans find other jobs, there
could be a shortage of skilled workers if drilling picks back up.
“There is going to be within the next, I think, six months to a year a real competitive war for the
best and the brightest in this industry,” Les Csorba, a partner at the Houston office of Heidrick &
Struggles, said in an interview with Houston Public Media.
“You are seeing the baby boomer generation retiring, so you have an aging population within the
energy sector…you are seeing an
increased demand for technical
competence and expertise.”
But the damage from two years of
low oil prices is also doing its part.
“Obviously we are going to see a
number of defections from the
energy industry. Young people that
came into the business are now
leaving because they are afraid of
the cyclical nature of the industry,”
Csorba said.T O R

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
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For additional free subscription emails please contact Hawk Energy
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 13 June 2016 K. Al Awadi

New base energy news issue 871 dated 13 june 2016

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New base energy news issue 871 dated 13 june 2016