New base energy news issue 880 dated 26 june 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 26 June 2016 - Issue No. 880 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Solar Impulse lands in Spain at Sevilla airport, after a 70-hour
journey from New York powered only by sunlight
Associated Press with CNBC
Swiss officials say an experimental solar-powered airplane has completed a three-day flight
across the Atlantic in the latest leg of its globe-circling voyage. The Aero-Club of Switzerland said
the Solar Impulse 2 landed in Seville in southern Spain at 0540 GMT on Thursday, ending a 70-
hour flight which began from New York City on Monday.
It was the 15th leg of a planned around-the-world flight which began in March 2015 from Abu
Dhabi in the United Arab Emirates.
The Solar Impulse 2's wings, which stretch wider than those of a Boeing 747, are equipped with
17,000 solar cells that power propellers and charge batteries. The plane runs on stored energy at
night.
"The Atlantic has always been this symbol of going from the Old World to the New World, and
everybody has tried to cross the Atlantic with sail boats, steam boats, airships, airplanes, balloons,
even rowing boats," pilot Bertrand Piccard said in a speech after landing in Seville.
"Today, it's a solar-powered airplane for the first time ever, flying electric, with no fuel and no
pollution," Piccard added. While the latest flight represents an historic achievement, the project
has not been without its hurdles. Last summer, the plane suffered "irreversible damage to
overheated batteries" after a flight between Nagoya and Hawaii that lasted more than 117 hours. It
had to be grounded for several months while repairs took place.

UAE:Dubai company leads way in bid to boost African renewables sector
The National + Gavin du Venage
A UAE firm is set to make one of the largest private investments ever in the fast-growing African
energy sectorAccess Power, based in Dubai, has started a US$500 million investment roll-out to
fund, develop and operate renewable energy projects in Africa.
The firm has also just awarded a US$7m prize to three companies that took part in a competition
for proposals for energy provision ideas that drew more than 50 entrants. On Wednesday in
London Access said the Africa-focused start-ups AGES, Mentach and Stucky had won for bids to
provide 100 megawatts to 340 000 homes in Nigeria, Madagascar and Sierra Leone.
All three winners are, as with other projects sponsored by Access, developing renewables. The
UK’s AGES will build a 25MW solar project in Sierra Leone; Nigeria’s Mentach a 50MW wind farm
in Nigeria; and the Swiss firm Stucky a 25MW hybrid (hydro and solar) project in Madagascar
The prize, together with the company’s investment fund, is intended to draw energy entrepreneurs
and provide projects that underpin Access’ long-term goal to become an pan-African power
provider.
"Our aim is to become a private utility with power assets spread all across the African continent,"
the Access Power executive chairman Reda El Chaar tells The National. "We intend to deliver
sustainable and affordable power to a market where this has been lacking."
According to the global consulting firm PwC about two thirds of Africa’s population – about 634
million people – are without electricity.
In recent years electricity-poor sub-Saharan Africa has attracted private equity investors such as
the Wall Street firm Blackstone, which helped to fund the $800m Bujagali dam in Uganda and is
also putting billions more into energy projects.
In May this year the London-based but Africa-focused Standard Chartered bank said it would
partner the US government to invest $60m in the Zambian energy sector. Meanwhile, Nigeria,
with a population of 180 million people but half the electricity supply of Abu Dhabi, sold off its
entire network of power stations and grid in 2013.
Access Power is the latest private independent power producer to take on the African energy
sector. The company was set up in 2012 to focus on emerging economies. "We are considering
places that are not saturated – where there are not a lot of players," Mr El Chaar says.

Already the company is constructing the 10MW solar plant in Soroti, northern Uganda –
approximately enough for 40,000 fully electrified homes – which is the current largest privately
funded independent solar project in east Africa and the largest in sub-Saharan Africa outside
South Africa. Uganda is heavily dependent on hydro dam power and in times of drought suffers
regular electricity shortages.
Adding solar to the local energy mix means less water will be needed during the day, helping to
conserve it for use after sunset. An even larger programme is Access’ funding of a Nigerian solar
project for a $100m scheme to build a 50MW solar power plant in Kaduna state.

Like Uganda, Nigeria has irregular electricity supply and people are largely dependent on
generators, which can cost hundreds of dollars in fuel per month. That is beyond the reach of
many in a country where, according to SalarySurvey, the average monthly salary is $297.
Solar would not provide "baseload" – ie 24/7 – power but during daylight hours it will greatly
reduce the dependence on diesel as a fuel source.
Funding for such projects is all important. Mr El Chaar says one of the criteria for taking on
projects is that they need to be fully self-sustaining. "The projects must be able to recover costs
and support themselves without subsidies."
Access Power is currently operational in 17 African countries . Offering the $7m prize was not just
a marketing strategy. More than anything it helped to get word out that people with ideas should
get in touch, Mr El Chaar says.
"It’s like crowd sourcing – we invite people to come forward with ideas for projects. These are
often entrepreneurs with good ideas but who lack technical and financial support to complete
them. This prize will help some of those projects become a reality."
It is probably time to acknowledge that for much of Africa a grid-based energy system, such as
that enjoyed in developed markets, is a fading dream. Instead of large-scale power plants the
future is brightest for smaller units that can be scaled up over time. For this, renewables are ideal.
"‘All or nothing’ approaches that focus primarily on the national grid are increasingly out of step
with what is now possible in power technology," says Angeli Hoekstra, a power and utility
specialist for PwC Africa. "Advances in technology are rapidly changing the options available
beyond the grid."
Ms Hoekstra adds that falling solar technology costs and access to mobile technology, which has
made the purchase of pre-paid electricity easier, means small-grid electrification has arrived. This
is one of the factors drawing in private equity investors.
Underpinning the electrification process getting underway is the ability of people to pay. It is not
just that the African middle class is growing, but also the sheer lack of banking infrastructure that
held back commerce is now much less of a factor. In South Africa consumers can order prepaid
electricity via their phones, for instance.
"Together with access to mobile technology and mobile payment systems for micro-loans, a new
era has arrived for beyond the grid electrification," Ms Hoekstra says.

Saudi Vision 2030 unveiled before US business leaders
Saudi Gazette
A number of Saudi ministers unveiled the salient features of the Kingdom’s ambitious Vision 2030
in front of the US business leaders during the meeting of the US-Saudi Arabian Business Council
in New York on Friday. They urged the American businessmen and investors to tap the huge
potential of the Kingdom’s economy as well as the vast opportunities that lay open in front of
investors with 100 percent ownership.
The meeting was held on the sidelines of the high-profile official visit of Deputy Crown Prince
Muhammad Bin Salman, second deputy premier and minister of defense. Earlier, Prince
Muhammad discussed with heads of US financial institutions in New York the Vision 2030 with a
focus to diversify the sources of income.
Minister of Commerce and Investment Majed Al-Qasabi, Minister of Energy, Industry and Mineral
Resources Khaled Al-Falih and Muhammad Al-Jasser, advisor at the Royal Court, addressed the
meeting. They underlined that there are ample opportunities for partnership of the Saudi public
and private sectors with US companies, and the visit of the Deputy Crown Prince has opened up
new fields and phases of bilateral cooperation in diverse sectors. While promising that there would
be more transparency and accountability in economic matters, the ministers also called for
directing investments mainly to the manufacturing and production sectors of the Kingdom’s
diverse economy.
.
From right: Minister of Energy, Industry and Mineral Resources Khaled Al-Falih, Minister of
Commerce and Investment Majed Al-Qasabi and Muhammad Al-Jasser, advisor at the Royal Court,
attend the meeting of the US-Saudi Arabian Business Council in New York on Friday. — SPA photo

Pakistan: MOL announces another gas discovery in TAL Block,
Source: MOL Group
MOL has announced a new gas discovery in the MOL operated TAL Block, Pakistan. This marks
the company’s 13th discovery in the country and the 9th discovery in the TAL block.
The Tolanj West-1 well is located in the Tolanj field within the TAL Block. The exploratory well
reached a total depth of 4,941 metres, upon testing the well flowed gas at a rate of 2,300 boepd
(13.1 mmscf/d). The current exploration success complements the Tolanj-X-1 gas discovery from
2011 in the same field. The Tolanj-X-1 well had a gas flow rate of 2.900 boepd (16.3 mmscf/d)
when the original discovery was made.
Dr. Berislav Gašo, MOL Group’s E&P COO commented:
'I am delighted that we are announcing our second discovery within a week in our operated TAL
block. This is a complex field and the new discovery will allow to monetise and develop Tolanj in
an even more efficient way.'

India May LNG Imports Jump 44%
Natural gas Asia + NewBase
India imported 2,082 million metric standard cubic metres (mmscm) of LNG in May, up 43.4
percent on year, according to data published by Petroleum Planning and Analysis Cell (PPAC).
The cumulative import of 4,224 mmscm for the Apr-May, 2016 was higher by 44.4 percent as
compared with the corresponding period of the previous year (2,925 mmscm).
This the second month in a row when LNG imports have shown a sharp rise. India’s April LNG
imports jumped almost 45 percent to 2,142 mmscm.
Cost of importing LNG has dropped
sharply this year after New Delhi
signed a revised long term contract
with Doha. Qatar is largest supplier
of LNG to India. Given the
backdrop of low global LNG
prices, Petronet LNG insisted on
renegotiating its long term contract
with RasGas.
In December, the two parties
signed a revised deal. The revised
formula bases the price on a three-
month average figure of Brent
crude oil, replacing a five-year
average of a basket of crude
imported by Japan, with a rider that
Petronet buys an additional 1
million tons of LNG
annually. Qatar also waived off a
$1.5 billion penalty against India for
lifting less gas than agreed.
Cost of LNG that India imports from
Qatar has slipped below $5 per
mmBtu post signing of revised
long-term deal.
Currently, there are four LNG
terminals at Dahej and Hazira in
Gujarat, Dabhol in Maharashtra
and Kochi in the state of Kerala.
Capacity expansion of Dahej LNG
terminal is expected from 10 mtpa
to 15 mtpa by end of 2016. Further,
a firm plan is in place to augment
another 2.5 mtpa capacity at
Dahej.

India moves to end state coal monopoly
The National - Rebecca Bundhun
State governments in India are allotting several new coal mines for commercial mining, which is
seen as the first move towards ending the 40-year monopoly of government-owned Coal India.
The new coal mines will have an annual capacity of 40 million tonnes a year.
“There will be no restriction on pricing from our end," Anil Swarup, India’s coal secretary, told
the Hindu Business Line newspaper. “We hope this will lead to discovery of market determined
pricing of coal for the first time in the country.
Right now Coal India is determining the price. With another entity coming in, some sort of a
market will be created and price discovery will happen." India does eventually intend to auction
coal blocks to private companies for mining and sale of coal, but it has no immediate plans to do
this.
“There will be no value if we do it now," Mr Swarup said, according to Reuters. “There’s no
demand for (private commercial coal mines) as of now."
India has vast natural reserves of coal, although it still imports huge quantities of the fuel. The
government has been pushing for an increase in the output of coal and Coal India has ramped up
its production in the past couple of years, resulting in imports declining in the past financial year.
Millions of tonnes of coal for steelmaking, or coking coal, are imported each year. There is a
shortage of the right quality of coal in India that is required for steelmaking.
But the government has been pushing for steelmakers to start converting the local coal to the
required grade for steelmaking in an effort to reduce the amount of costly raw materials that it
imports.

East Africa’s LNG — the global race intensifies
John Roper is the head of Middle East, Uniper Global Commodities.
The vast and well-documented gas reserves in East Africa continue to whet the appetite of
investors along the New Silk Road — stretching from Beijing to Lagos — especially as the global
population and subsequent energy demand soars. China, Japan, India and the Middle East are
particularly hungry for liquefied natural gas (LNG) and so the intensifying global competition
amongst LNG exporters means East Africa’s window of opportunity is shrinking, certainly facing
stiff competition.
Tanzania and Mozambique — home to East Africa’s largest natural gas reserves and with a
combined capacity of nearly 250tn cubic feet (tcf), must quicken their pace as the race for supply
contracts accelerates. East Africa benefits from convenient geography, with the coastline acting
as a springboard to market to rising demand in the Middle East, India, China, Southeast Asia and
Northern Europe.
Global LNG production hit 250mn metric tonnes (m/t) last year, rising by 4m m/t on 2014,
according to a Wood Mackenzie report. The consultancy cautions that a further 125m m/t of LNG
under development means that the majority of market growth will come post-2016. East Africa’s
plans to ramp up its LNG exports in the early 2020s will face strong competition from both
emerging and established exporters, with everyone jostling to lock in Asian clients where possible.

Qatar remains the world’s biggest LNG exporter, while Iran, home to the world’s second largest
gas reserves, has started increasing its marketing efforts in Europe, India and Pakistan after the
Western-imposed sanctions were lifted on January 17.
Russia, a long-time and reliable European supplier, is also focusing on Asian clients, whilst
Australia is in the
running to displace
Qatar as the worlds
largest LNG exporter
by 2018. Westwards,
the first LNG exports
from Sabine Pass in
the US, marked a
milestone in February
in the country’s journey
from an energy
importer to an exporter.
In addition, China and
some Middle East
energy producers —
notably Kuwait — are
looking to possibly
develop their shale gas reserves, which, if successful, could narrow the LNG import market over
the medium to long-term.
Amid this abundant supply, natural gas prices are unlikely to recover in 2016, according to 69% of
respondents to a GI Industry Survey in January.
Despite this hefty competition, investors are still eager to develop infrastructure that leverages
East Africa’s coveted gas assets. The Dubai-based Dodsal Group has discovered natural gas
reserves estimated at 2.7 tcf in the Ruvu Basin near Dar es Salaam, that they estimate to be the
country’s largest onshore gas discovery with a value of $8-$11bn (bn). The company has
earmarked $300m to invest in Tanzania over the coming two years.
State-run Tanzania Petroleum Development Corp (TPDC) is working alongside Shell, Statoil,
Exxon Mobil and Ophir Energy after securing a land deal for a LNG plant on Tanzania’s coastline
in January. The plant is well-positioned to utilise the country’s offshore gas reserves when it starts
up in the early 2020s.
The national significance of Tanzania’s LNG export market is vast; the country’s central bank
expects LNG to be the main driver of the country’s transformation into a middle-income nation by
2025. This is a valid target considering that the International Monetary Fund (IMF) expects
Tanzania to continue reporting the 7% growth it achieved in 2015. Tanzania will also partly help fill
the economic vacuum left by the weak economic performances in historical powerhouses Nigeria
and South Africa.
Flows of cross-border trade, investments, human capital and politics are entrenched throughout
Africa’s economies and Tanzania’s bullish streak could act as a support for the continent’s sliding
performance. Low commodity prices mean the IMF has put Africa’s 2016 growth rate at 3%, down
from the initial 4.3% outlined last October.

Meanwhile, the incentive for Mozambique to nurture political stability and lure more investors to
Maputo is clear; the country could earn up to $5.2bn a year by 2026 from LNG exports, creating
over 70,000 jobs in its gas sector.
The country’s national oil company ENH, South Africa’s SacOil Holdings, China Petroleum
Pipeline Bureau and China Petroleum & Technology Development Corp are pushing ahead with a
joint-venture to build a $6bn natural gas pipeline by 2020.
The 2,600km gas pipeline will run from Rovuma Basin in northern Mozambique to South Africa’s
Gauteng province, where there will likely be offtakes for others in the South African Development
Community — Botswana, Namibia, Zimbabwe, Angola and Malawi to name a few. Mozambique
supplies two-thirds of South Africa’s current consumption and is also eyeing supply deals with
India.
The vast potential of East Africa’s LNG reserves faces little debate. But, Tanzania and
Mozambique must quickly court investors to leverage their assets and secure clients in Africa and
along the New Silk Road before other LNG exporters cross the finish line.

Russia:ChemChina to take 40 percent stake in Rosneft's
petrochemical project.. Reuters + NewBase
Russia's biggest oil producer Rosneft said on Saturday that China National Chemical Corporation
(ChemChina) would take a 40 percent stake in its planned petrochemical complex VNHK in
Russia's Far East.
"The participation of ChemChina will allow Rosneft to optimize the project financing and jointly
organize sales of the high-margin products of the future complex on the premium markets of the
Asia-Pacific region," Rosneft said in a statement.
Rosneft and ChemChina also signed a new one-year oil supply contract, the Russian company
said, without providing volumes or financial details.
In June 2015, Rosneft signed a one-year contract to supply up to 200,000 tonnes of crude oil to
ChemChina per month.
TASS news agency quoted Igor Sechin,
Rosneft chief executive officer, as saying
the company did not plan to reduce its crude
supplies to China and would defend its
market position amid competition with Saudi
Arabia, Qatar, Iraq, and Iran.
"We will stick to the volumes we have
agreed on. It's around 40 million tonnes (per
year)," Sechin was quoted as saying. Russia
was China's largest crude oil supplier in May
for a third month in a row, having surpassed
imports from Saudi Arabia.

NewBase 26 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 plunge 5% as Britain votes to leave EU
Reuters + NewBase
Oil prices settled 5 percent lower on Friday after Britain's vote to leave the European Union
spurred massive risk aversion and a rally in safe havens like the U.S. dollar that threatened to cut
short a three-month-long recovery in global oil markets.
Financial markets have been worried for months about what a British exit from the European
Union, dubbed widely as 'Brexit,' would mean for Europe's future, but were clearly not fully
factoring in the risk of a 'leave' vote.
The dollar index jumped about 2 percent, its most since 2008, while sterling collapsed to a 31-year
low after British Prime Minister David Cameron, who campaigned to remain in the EU, said he
would stand down by October.
A rallying dollar makes oil and other commodities denominated in the greenback costlier for
holders of the euro and other currencies.
Brent crude settled down 4.9 percent, or $2.50, at $48.41 a barrel. It had fallen 6 percent earlier to
$47.54. U.S. crude fell 5 percent, or $2.47, to settle at $47.64, its largest one-day decline since
February.
Oil price special
coverage

The losses were much smaller on the week, with Brent down 1.5 percent and U.S. crude 0.7
percent.
Analysts in oil markets sought to put the Brexit crisis in perspective even as some $2 trillion was
wiped off equity bourses worldwide, and money poured into safe-haven gold and government
bonds.
"This is an historic event and will not be swept under the rug very quickly," said Dominick
Chirichella, senior partner at the Energy Management Institute in New York.
"That said, markets will not remain in turmoil as they are at the moment for an extended period of
time. There is no indication that the global financial markets are anywhere near a meltdown as we
saw in 2008. The UK will not collapse and the EU will not collapse anytime soon."
Despite the retreat, oil prices held above last week's one-month lows when fears of a British exit
from the EU spiked and Brent hit a trough of $46.94 while U.S. crude tumbled to $45.83.
Some analysts said oil could face further pressure.
"Our view is that we have not yet seen the low oil price of the day with Brent likely to trade down
towards $45 or lower before we have seen the worst of it," said Bjarne Schieldrop, chief
commodity analyst at Nordic bank SEB.
Investors paid little heed to data on Friday showing the U.S. oil rig count fell by seven this week,
the first weekly reduction in four weeks.
"Higher risk aversion is likely to make it hard for prices to regain the $50 per barrel mark in
anything like the near future," said Carsten Fritsch, analyst at Frankfurt's Commerzbank.

NewBase Special Coverage
News Agencies News Release 26 June 2016C O N T R I B U T O R
Oil Explorers Embrace the Sharing Economy to Drill Cheaper Wells
by Bloomberg|Rakteem Katakey|Wednesday,
The biggest oil-industry downturn in a generation has companies collaborating in ways they never
thought possible.
In this global effort, one of the world’s most expensive oil regions intends to lead the way. Last
month companies operating in the North Sea started pooling spare parts and tools, and they are
even sharing plans on how to drill wells so they can work faster and cheaper, said Paul
Goodfellow, Royal Dutch Shell Plc’s vice president for the U.K. and Ireland.
This is a big change from oil’s
boom, when costs weren’t such
an issue as long as $100-a-barrel
crude kept flowing. As companies
focus on adapting to prices closer
to $50 by making their spending
less wasteful, they also aim to
boost profitability for years to
come by keeping costs low as
markets recover.
“We didn’t particularly focus with
the same urgency on costs when
oil and gas prices were high,”
said Colette Cohen, senior vice
president of U.K. and the
Netherlands for Centrica Plc, a
natural gas supplier. “Now it’s
about coming in every day and
thinking how can I do that better,
or how can I reduce costs,” but it’s “very difficult” to keep this going when prices recover, she said.
Companies responded to the price slump by reducing spending, potentially cutting as much as $1
trillion by 2020. The industry has reduced costs by 10 percent to 15 percent overall, but in the U.K.
about three-quarters of these savings are linked to things like rig-rental rates, which typically go
back up when oil prices rise, said Malcolm Dickson, principal analyst at consulting firm Wood
Mackenzie Ltd.
The initiative in the North Sea aims to avoid that.
“You can sit there in a world of $100 and think all is good and not maybe realize how fragile the
system is,” Goodfellow said in an interview in Aberdeen, Scotland, the center of the U.K. oil
industry. “You’ve had the shock and that’s illuminated the problem.”

Shell and partners including EnQuest Plc, Marathon Oil Corp., Apache Corp., Centrica and Repsol
SA’s Talisman started talking last year about setting up a pool of spare parts, ranging from nuts
and screws to valves and compressors, Goodfellow said. They contributed their excess
equipment, cataloged it and stored the more than 200,000 parts in warehouses in Aberdeen.
Sharing Economy
The system, which is managed by a company called Ampelius Trading, came online a few weeks
ago. So now, for example, if Shell needs a valve for a North Sea facility, it can log on to the
system, go through the catalog, place an order and have the part delivered the next day instead of
waiting “six weeks, six months,” Goodfellow said.
Shell is also leading a group called the Wells Forum, which asked members to share their drilling
plans so others could give their opinion and experience on how to reduce costs, Goodfellow said.
Shell, BP Plc and France’s Engie SA were the first to put up their well plans and seven others
followed, helping cut costs by at least 10 percent, he said.
Overall, operating costs in the area have fallen as much as 40 percent in the past two years,
Goodfellow said.
Brent crude prices are half of what they were two years ago. They have increased more than 80
percent from a 12-year low in January. The August contract fell 0.4 percent to $50.40 a barrel on
the London-based ICE Futures Europe exchange as of 3:46 p.m. local time.
While this cooperation is “very desirable,” it’s not enough to fully compensate for current low oil
prices, said Nick Butler, visiting professor at the Policy Institute at Kings College in London and
former vice president of strategy at BP. Investment cuts in the area will start to affect production
from 2018, he said.
Adding Up
Still, lots of incremental savings can add up to significant cost reductions for individual projects.
Statoil ASA and its partners have cut the estimate for capital spending on the giant Johan
Sverdrup field in the Norwegian North Sea to 160 billion kroner to 190 billion kroner ($19.3 billion
to $22.9 billion) from 170 billion kroner to 220 billion kroner previously.
Fewer wells are being drilled, production vessels are being changed and the standardization of
equipment like underwater valves makes cost reductions more sustainable, said Wood
Mackenzie’s Dickson.
BP CEO Bob Dudley says the industry can do a better-than-expected job of keeping costs low.
The company’s Mad Dog Phase 2 project in the U.S. Gulf of Mexico is now expected to costs less
than $9 billion compared with an estimate of $10 billion last year and $20 billion four years ago,
Dudley said. Rig-rental rates are likely to stay down because of an oversupply, while low steel
prices are reducing the cost of other equipment, he said.
“That’s too pessimistic” to say that most savings will be lost when the industry rebounds from the
downturn, he said in an interview in St. Petersburg, Russia, on June 17. “For our organization, we
believe we can capture 75 percent of the cost reduction and keep them there.”

LNG market to remain oversupplied until 2020: QNB
Gulf Times BUSINESS Eco./Bus. News
The global liquefied natural gas market will remain oversupplied for the next four years, but will be
under-supplied beyond 2020 in view of the expected rise in demand, QNB has said in a report.
LNG is playing an increasingly important role in the global energy market. It is cheap – particularly
for power generation – abundant and relatively clean environmentally. But, like other commodities,
it is subject to cyclical forces.
High oil prices in the past, to which LNG contracts are linked, have encouraged the startup of
various projects around the world. Supply from these projects is expected to come into the market
over the next few years. As a result, the market is expected to be over-supplied up to 2020.
“Beyond that, the market is likely to be under-supplied as the current low oil price environment
makes starting new projects unviable meaning that demand will eventually catch up,” QNB said.
The global market for LNG has experienced strong growth. Since 1990, demand for LNG has
grown at the rate of 6.2% a year, more than four times as fast as demand for oil. Most LNG is sold
under long-term contracts which are linked to oil prices, but it is also increasingly sold on spot
markets.
The share of LNG sold on the spot or under short-term contracts (less than four years) rose from
25% in 2012 to 29% in 2014.
Within the LNG market, Qatar is a dominant player. It is the largest exporter of LNG in the world,
accounting for 31.4% of total exports in 2015.

The LNG supply capacity is expected to grow strongly by around 8% a year through 2020. The
environment of high demand growth and high oil prices prior to 2014 led to a large number of LNG
projects being considered globally in a number of countries.
But the sharp reversal in oil prices since mid-2014 led to a re-evaluation of these projects. Only a
fraction of the considered projects is now expected to come on stream. In particular, those
projects already under construction will probably be completed, QNB said.
But those in the earlier design or engineering stage could very well be scrapped. Still, as a result
of the projects already under construction, a large amount of LNG supply is expected to hit the
market, especially from Australia, the US and Russia.
While the supply outlook is largely pre-determined by the progress on existing projects and is
relatively insensitive to price movements, the picture for demand is less certain.
But even under the bullish scenario of demand growth of 6% a year through 2020, it will still fall
short of supply capacity. Such strong demand growth could materialise under two conditions, QNB
said.
First, natural gas replacing coal as feedstock for power generation in order to meet global
environmental targets. This effect is expected to be particularly visible in China and Europe.
Second, higher incomes, particularly in fast-growing emerging markets such as India, leading to
increased demand for power and, consequently, for LNG.
Putting together the demand and supply outlooks yields three implications. One, because demand
growth is expected to fall short of supply, the LNG market is expected to be over-supplied in the
next five years.
Two, the over-supplied market is likely to exert downward pressure on spot prices. This could
provide incentives for LNG buyers to purchase on the spot market rather than through long-term
contracts. This in turn could lead to renegotiations of long-term contracts, which would impact
suppliers, especially the new comers.
Three, the drying up of the project pipeline (no new plants approved so far in 2016), the long lead
time of LNG projects (five years or more) and the strong expected growth in demand as more
environmental-friendly measures are implemented should lead to supply shortages beyond 2020.
In other words, QNB said the strong cyclicality in the LNG market should continue over the next
decade.

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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 26 June 2016 K. Al Awadi

New base energy news issue 880 dated 26 june 2016

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New base energy news issue 880 dated 26 june 2016