New base energy news issue 899 dated 03 august 2016

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NewBase Energy News 03 August 2016 - Issue No. 899 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oman: New Sohar refinery project to commission by year-end
Oman Times
The Sohar Refinery Improvement Project (SRIP), with a capital expenditure of $2.7 billion, is
scheduled for commissioning towards the end of 2016, a top official was quoted as saying by the
Times of Oman.
SRIP will enhance capacity by 70 per cent to meet the growing requirement of petroleum products
in the country as well as supply additional volumes to aromatics and polypropylene plants, said
Musab Al Mahruqi, chief executive officer of state-owned Oman Oil Refineries and Petroleum
Industries Company
(Orpic).
“With SRIP, Sohar
Refinery will add
82,000 barrels per day
(bpd) to its existing
capacity of 116,000
bpd – taking the total
capacity to 198,000
bpd,” he said.
“This indicates a 70
per cent growth in fuel
production – 141 per
cent for diesel, 34 per
cent for gasoline, 98
per cent for
kerosene/jet fuel, 93 per cent for LPG, 159 per cent for naphtha and 56 per cent for propylene,” he
added.
Meanwhile, another major venture - Muscat Sohar Product Pipeline (MSPP) project - will entail a
pipeline connection between Mina Al Fahal Refinery, Sohar Refinery with an intermediate terminal
at Al Jifnain, as well as the pipeline connection from Al Jifnain to the new Muscat International
Airport.
Al Mahruqi said that Liwa Plastic Industries Complex (LPIC) is one of the biggest among the three
major projects being executed by Orpic over the next four years.
LPIC includes a steam cracker and its associated downstream units to utilise the refinery light
ends and the C2+ from Oman’s natural gas in order to produce an additional 1.2 million tonnes of
polymers annually as well as motor gasoline (MTBE), the Times of Oman report said.
The project, which will have a capital expenditure of $6.5 billion, is in the engineering,
procurement and construction (EPC) phase and is scheduled for commissioning in 2020, it added.

OPEC Output Disrupted in July on Nigeria Attacks, Libya Dispute
Bloomberg - Angelina Rascouet
OPEC’s crude oil output was disrupted in July by militant attacks in Nigeria and political disputes
in Libya, according to a Bloomberg News survey.
Output from the 13 established members of the Organization of Petroleum Exporting Countries,
excluding new entrant Gabon, fell by 80,000 barrels a day last month, a Bloomberg survey of
analysts, oil companies and ship-tracking data showed. Nigeria led the decline with a 70,000-
barrel-a-day monthly drop to 1.52 million, while Libya and Saudi Arabia reduced output by 20,000
and 40,000 barrels a day respectively.
Gabon joined OPEC on July 1, becoming the smallest member with average output of 210,000
barrels a day. Because the
group expanded to 14
nations, total production in
July actually increased to
33.24 million barrels a day
from 33.11 million the prior
month. The African nation
initially joined the group in
1975, but ended its
membership 20 years
later.
Nigeria has suffered steep
crude output losses this
year as militant attacks
targeted oil infrastructure.
Production in May fell to
the lowest level in more than 27 years. While output recovered in June, it fell again in July
following the disruption of supplies to the Qua Iboe terminal, which shipped an average of 342,000
barrels a day last year.
Bear Market
Libya’s production fell by 20,000 barrels a day to 300,000 in July. The Arabian Gulf Oil Co. halted
output at the Sarir field last month after a protest by oil-facility guards shut the Eastern port of
Hariga, blocking exports. The Tripoli-based Government of National Accord reached a deal with
guards last week to reopen Es Sider and Ras Lanuf, two of its biggest oil terminals that have been
closed since 2014, although shipments have yet to resume.
Output disruptions helped raise West Texas Intermediate crude as high as $51.67 a barrel on
June 9. The benchmark has since fallen back into a bear market amid signs that the decline in
U.S. output is stabilizing and concerns about the strength of demand.
Iranian production gains continued, rising by 20,000 barrels a day to 3.55 million in July. Sanctions
on the country’s oil industry were lifted in January following an accord on its nuclear program,
driving an almost 25 percent rise in its production.
Bloomberg News has expanded the sources used in its monthly production survey. They now
include oil companies, governments, OPEC, analysts and tanker tracking. Some estimates for
June were revised to reflect additional information.

India Prods Top LNG Buyers to Recast Deals Amid Global Glut
Bloomberg - Debjit Chakraborty
India’s liquefied natural gas buyers are being encouraged to renegotiate long-term contracts after
spot prices tumbled amid a global glut.
"We have asked the companies to renegotiate the LNG deals wherever there is a possibility,” Oil
Minister Dharmendra Pradhan said in an interview Monday in New Delhi. “I am hopeful our
companies will successfully steer the negotiations.”
India wants to turn an oversupply of LNG to its favor as it seeks greater use of natural gas in its
energy mix and tries to reduce the dependence on crude oil imports.
India is among the first countries in Asia to renegotiate a long-term deal after the glut pushed
down prices. Petronet LNG Ltd. in December reworked a 25-year contract with Qatar’s RasGas
Co., resulting in prices dropping by almost half.
Elsewhere in the region, Japan is probing resale restrictions in most of its LNG contracts that may
lead to the renegotiation of more than $600 billion worth of deals that run until almost the middle of
the century. The chairman of China National Petroleum Corp., the country’s biggest energy
company, said in March that it’s looking for opportunities to rework the pricing method on its LNG
supply contract with Qatar.
Energy Basket
The price of spot LNG to Asia has fallen by more than 25 percent during the past year. India’s
LNG imports surged 59 percent to 8.13 million metric tons in the first five months of the year, while
domestic output slipped 8 percent, according to data compiled by Bloomberg Intelligence.
Spot LNG in Singapore fell 0.9 percent to $5.639 per million British thermal units on Monday, the
first decline since June 27, according to Singapore Exchange Ltd.

Aligning LNG contracts to current market rates can make natural gas more affordable to Indian
customers as the government plans to increase regasification capacity to 55 million tons within
five years, from about 21 million now, Pradhan said.
“We want to increase the gas component in our energy basket,” Pradhan said. “We are building a
gas grid around the country to increase the use of gas.”
Pradhan on Monday also highlighted the country’s supply deals from Russia, the U.S., Australia
and Canada.
Global Supply
GAIL India Ltd. is seeking to defer a 20-year contract to buy liquefied natural gas from Gazprom
PJSC until the Russian company’s Shtokman project begins production, according to officials at
the South Asian country’s biggest gas transporter, who asked not to be identified citing company
policy.
Petronet signed an agreement with Exxon Mobil Corp. in August 2009 to buy 1.5 million tons
annually for 20 years from Australia’s Gorgon project, with supplies expected to begin by the end
of this year.
GAIL also has an agreement to buy 3.5 million tons a year for two decades from Cheniere Energy
Inc.’s Sabine Pass terminal, with the supplies expected to start in March 2018. It has also booked
2.3 million tons a year from the Cove Point LNG liquefaction terminal in Maryland, which is set to
commence deliveries in December 2017.
Indian Oil Corp. bought a 10 percent stake in Petroliam Nasional Bhd.’s Canadian natural gas
fields and a planned export project, which will give the Indian state oil refiner the right to 1.2 million
tons of LNG per year for two decades.
India is becoming more reliant on imported oil and gas as domestic production lags demand
growth. The country will be about 90 percent reliant on imports by 2040, up from 70 percent in
2014, the International Energy Agency said in its most-recent annual World Energy Outlook. The
cost of those oil and gas shipments will reach nearly $480 billion by 2040, up from $110 billion
today, it said.
Prime Minister Narendra Modi on the other hand has set a target to cut import dependence by 10
percent by 2022 by boosting output from local fields and expanding the market for natural gas and
non-conventional energy sources.
Local Output
India has announced steps to attract investments in the oil and gas industry, prompting explorers
such as Oil and Natural Gas Corp. and Reliance Industries Ltd. to revive billions of dollars of
investment.
BP Plc and its partner Reliance are looking to develop three discoveries and invest “several billion
dollars” to increase by fourfold natural gas production from the deepwater D6 block in the Krishna
Godavari basin by 2022, Sashi Mukundan, head of BP’s India unit, said on Monday.
The companies aim to produce 30 million to 35 million standard cubic meters a day of gas from
the block on India’s east coast after they develop the three new fields, Mukundan said.

N.America: Renewables share of electricity mix expected to rise
Source: U.S. Energy Information Administration, Annual Energy Outlook 2016 Reference case, International Energy Outlook 2016
Based on results from EIA's Annual Energy Outlook 2016 (AEO2016) Reference case
and International Energy Outlook 2016, EIA projects that the North American share of energy
generation from renewable and nuclear energy sources will grow from 38% in 2015 to 45% in
2025.
This projection assumes the Clean Power Plan (CPP) is upheld and takes effect in the United
States. A recent agreement among Canada, Mexico, and the United States established a goal of
50% of electricity generation from clean energy sources by 2025.
The trilateral agreement goal includes nuclear, renewables, and energy efficiency as eligible
sources of clean energy, but it does not specify a baseline for assessing energy efficiency, which
has been improving over time.
The EIA projections discussed here focus solely on electricity generation from nuclear and
renewable sources as a share of total generation. Substantial increases in demand-side energy
efficiency are included in EIA's projection for overall electricity demand, but explicit accounting
of energy efficiency contributions are not projected.
Moreover, these values reflect the Reference case projections; other assumptions for fuel prices,
technology costs, and policies could affect the electricity generation mix.

Electricity generation in the United States currently represents more than 80% of total generation
in North America. EIA's AEO2016 Reference case assumes that implentation of the CPP will
begin in 2022.
The extension of certain tax credits, significant cost reductions, and recognition of future CPP
requirements result in a large increase in renewable generation between 2015 and 2025. U.S.
coal-fired generation is expected to decline by 13% between 2015 and 2025 in the AEO
Reference case, while natural gas-fired generation increases by 4%.
Canada's power generation was already met by 80% clean energy in 2015, mainly because of
Canada's extensive hydroelectric capacity. Canada plans to further increase its hydroelectric
capability by 2025, in addition to increasing wind and solar capacity by 2025.
EIA's International Energy Outlook 2016 (IEO2016) projects reduced coal use in Canada between
2015 and 2025, consistent with Canadian government plans to gradually phase out the use of
existing coal plants.
However, the combined share of renewables and nuclear in Canada's total generation is expected
to fall to 75% by 2025 because of increases in natural gas use and projected retirements of
existing nuclear capacity. Overall, Canada's generation currently represents about 13% of the
North American total generation.
Mexico accounted for about 6% of total North American electricity generation in 2015. The country
has announced national energy goals and is undergoing electricity market reform to help
encourage the development of new, low-carbon capacity expansion.
Mexico is projected to increase generation from hydroelectric, wind, and other renewables and to
reduce generation from fossil fuels. By 2025, Mexico's combined nuclear and renewables share of
total electricity generation is expected to be 29%.

India: BP Aims to Increase Gas From KG-D6 Fourfold by 2022
Saket Sundria Debjit Chakraborty
BP Plc is working with its partner Reliance Industries Ltd. to increase natural gas production from
the deepwater D6 block in the Krishna Godavari basin as much as fourfold by 2022, according to
the chief of the British company’s India unit.
The companies aim to produce 30 million to 35 million metric standard cubic meters a day of gas
from the block on India’s east coast after they develop three new fields, Sashi Mukundan, head of
BP’s India unit, said Monday in New Delhi. Gas production from KG-D6 averaged about 8.7 million
cubic meters a day in the April to June quarter, said in a July 15 presentation.
The companies are preparing to restart work in four offshore oil and gas blocks as they seek to
revive development activity stalled for seven years by disputes with the government. Reliance and
BP intend to withdraw from multiple arbitration proceedings against the government related to KG-
D6 people with knowledge of the plan said in May. Reliance spokesman Tushar Pania declined to
comment Monday on the production target.
The effort to resolve disputes with the government “has created confidence for us to move
forward,” Mukundan said. BP and Reliance are looking to develop three discoveries in three
different fields and invest "several billion dollars,” he said.
Production from the KG-D6 block, discovered in 2002, has tumbled since hitting a peak in 2010 of
around 62 million cubic meters a day. The companies continued with offshore exploration
activities there, while pausing development drilling because of disputes with the government over
gas prices and cost recovery.

NewBase 03 August 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
US crude oil remains below $40 as oversupply still weighs
Reuters NewBase
Oil prices edged up early on Wednesday, supported by a weaker dollar, but U.S. crude futures
remained below $40 per barrel and Brent was below $42 as ongoing fuel oversupply and
stuttering economic growth weighed on markets.
U.S. West Texas Intermediate (WTI) crude futures were trading at $39.63 per barrel at 0027 GMT,
up 12 cents from their last settlement but still below the $40 marker it settled below for the first
time since April during the previous session.
International Brent crude futures were trading at $41.85 per barrel, up a mere 5 cents from their
last close, and failing to retake and maintain $42.
Analysts said a weaker U.S. dollar, which has shed 2.5 percent in value
against a basket of other leading currencies since July highs, was lending
oil markets some support by making fuel imports cheaper for countries
using other currencies, potentially stoking demand.
"Risks for oil remain skewed to the downside in 2H16. Supply disruptions
and risk appetite were supportive Apr-Jun, but fundamental headwinds are growing, which
outnumber any recent positives," said Adam Longson of Morgan Stanley in an outlook to clients.
The U.S. bank said the global economic outlook was also weak, potentially hitting fuel demand.
"We expect global growth to move below consensus estimates," Morgan Stanley said.
Oil markets have been dogged by oversupply that started in the crude sector more than two years
ago and which has since spread to refined products, leaving storage tanks filled to the brink, and
unsold fuel stored on ships.
Oil price special
coverage

Crude Oil May Rebound to $57 Next Year, Analysts Say
Alex Longley
Oil closed in a bear market Monday, but don’t abandon hope. Analysts are looking beyond the
current slide to next year for a rebound.
Crude has plunged by more than a fifth in less than two months as refineries created a glut of
gasoline while failing to eliminate excess supply of crude. That wrecked refining margins and hurt
the earnings of Exxon Mobil Corp., BP Plc and Royal Dutch Shell Plc. Yet, global oil prices will
average $57 a barrel in 2017, according to the median of at least 20 analyst estimates compiled
by Bloomberg.
Progress will be slow. The crude glut will take a long time to dissipate, meaning only gradual price
gains, said Michael Hsueh, a strategist at Deutsche Bank AG. West Texas Intermediate, the U.S.
benchmark, will average $49.50 in the fourth quarter before breaking decisively above $50 next
year, the analysts say.
“We’re looking at a market that’s still in a very slow process of rebalancing and we don’t think that
you’ll get a sustainable deficit until the second quarter of 2017,” said Hsueh, who sees oil at $53
next year. “Those deficits are necessary to draw down global inventories, but that will still take
until the end of 2018, it appears.”
WTI fell 22 percent from early June to Monday’s close, taking it past the 20 percent drop that
characterizes a bear market. So ends a recovery that saw prices almost double from a 12-year
low in February. The grade traded at $40.53 at 3:35 p.m. in London, having dipped below $40
earlier in the day. Supply disruptions from Nigeria to Canada that cut into the global surplus have
abated.
While U.S. stockpiles are down from an April peak, they remain far above anything the market has
witnessed at this time of year for at least three decades. Worse, gasoline inventories are at

unprecedented levels, too, crushing processing profits from a fuel that a few months ago was
seen as an industry bright spot.
“The price move down does make sense, given that we still have a huge overhang of oil
inventories,” said Gareth Lewis Davies, an energy strategist at BNP Paribas. “There’s a sense that
looking at the balances going forward, supply and demand are in parity. That means we’re still left
with this overhang.”
‘Time Bomb’
Yet, with oil companies’ capital expenditure reductions set to reach $1 trillion by 2020, Simon
Flowers, the Edinburgh-based chief analyst at Wood Mackenzie Ltd., said there’s a "ticking time
bomb" that will eventually push prices higher. Such reductions may even push demand above
supply as early as the end of this year, said Hans Van Cleef, an ABN Amro energy economist.
The lack of investment “will have a big impact on global supply," said Van Cleef, who forecast
Brent will reach $70 next year. As soon as the market realizes there isn’t an oversupply and that a
shortage is imminent, “that should give a huge boost to oil prices,” he said.
As prices begin to rise, the first producers to benefit will be U.S. shale drillers, Flowers said. He
expects shale output to bottom early next year before returning to the record level set in 2015 of
about 4.5 million barrels a day within two years. Shale production will nearly double to as much as
8.5 million by the middle of the next decade, spurred by cost savings of as much as 40 percent,
according to Flowers.
Already, U.S. oil explorers have boosted the number of active rigs by 58 since the start of June to
374, with 3 added last week, Baker Hughes Inc. said July 29. American producers have expanded
drilling in recent weeks after idling more than 1,000 oil rigs since the start of last year.

Globally the number of new oil rigs that hit their break even costs at $57 a barrel is "a much more
patchy story,” Flowers said, with regions such as West Africa lagging behind the U.S. in adapting
to a lower price environment.
“The U.S. Energy Department is saying that this productivity gain is continuing,” said Bjarne
Schieldrop chief commodities analyst at SEB AB. Those gains could put the price of oil needed for
U.S. shale production below $40 this time next year, he said.
China Oil Race Heats Up as Russia Weakens Saudi Dominance: Chart
Saudi Arabia, after years of dominating sales to China, is being challenged by Russia for
supplying the world’s biggest energy consuming nation. The Asian country’s monthly imports from
the Middle Eastern kingdom have been exceeded by purchases from its rival oil producer seven
times since May 2015, customs data compiled by Bloomberg show.
The proximity of Kozmino port, from where Russia ships Siberian crude, toQingdao, where
Chinese private refiners known as teapots typically receive their supplies, has helped boost
cargoes after the processors were allowed to use overseas oil last year.

NewBase Special Coverage
News Agencies News Release 03 August 2016
Here's how companies can survive $40 oil
CNBC - Bob Pisani | @BobPisani
Pipes carry recovered bitumen from Devon Energy's Jackfish Projects processing plant, Alberta,
Canada.
The markets started positive, but as oil dropped below $40, the markets again fell apart. Can oil
companies — specifically exploration & production (E&P) companies — survive if oil remains at
$40?
We'll get a better idea in the next couple days. Nearly two dozen E&P companies will be reporting
Wednesday and Thursday, including Devon Energy on Tuesday.
First off, let's give up on trying to figure out where oil is going to be six months from now. No one
can even get it right 30 days from now. There are a small group that have claimed that February
was the bottom in oil, including Halliburton and Schlumberger. Maybe.
Let's assume oil is at $40 in the fourth quarter. Oil companies can avail themselves of four
courses of action:
1- Never-ending cost-cutting. This has become a religion. Take ConocoPhillips, the largest
E&P out there. They just posted a big loss of $985 million because massive cost-cutting
could not overcome the drop in oil prices. What to do? Keep cost-cutting. They again cut
their capital spending guidance to $5.5 billion from $5.7 billion previously.
Mark Hanson, Energy Analyst for Morningstar, told me this morning that cost-cutting has taken
two forms: "permanent" and "cyclical." "Permanent" cuts involve how they drill and frack wells
— this is good news, because the technology has dramatically improved and they can drill
cheaper.
- The "permanent" cuts are going to stick. Hanson believes we are probably in the 7th inning
of "permanent" cost-cutting measures. - "Cyclical" cuts are being driven by capacity for drilling
rigs and fracking crews. These cuts may not stick because once rig activity goes up, services
firms will be able to charger more.
2- Sell assets. Most firms are trying to meet the gap between cash flow and spending by
selling assets. Seventy-five percent of the E&P universe are outspending their cash flow,
relying on selling assets and debt to finance the gaps, Hanson tells me.
- Bottom line: There will be more asset sales to come.
3- Sell more shares. This was a common response with oil plunging below $30 in
February. Marathon Oil, Newfield Exploration, Cabot Oil & Gas and Pioneer Natural
Resources all priced secondaries earlier this year. Devon Energy, for example, priced a 69-
million share secondary at $18.75 in mid-February.

This was a small discount to the prior day's price, and though the deal increased Devon's
float by roughly 15 percent, it was snapped up eagerly by investors (the initial deal size was
55 million and increased to 69 million on strong demand.
- Still, selling shares is a fairly drastic alternative. Most of the larger companies —
Anadarko Petroleum, Devon, Apache — have repaired their balances sheets by cost-
cutting and asset sales and seem to be in pretty good shape.
- And it raises a more delicate question: Would the investor appetite to buy still be there?
4- Mergers. The most drastic step but increasingly likely. While the bigger names like Apache
or EOG or Anadarko may not feel the need to merge, there are dozens of small- and mid-
size companies — Concho Resources, Cimarex Energy, Pioneer Natural Resources,
and Whiting Petroleum among many others — that might.
- And don't think the U.S. government's take-down of the Baker-Hughes-Halliburton merger
kills M&A in this space. In that case, there was a concern that Baker-Hughes-Halliburton
would corner too much of the oil services market. There is no danger of any one company
obtaining a near-monopoly in the E&P space.
Bob PisaniCNBC "On-Air Stocks" Editor

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 26 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 03 August 2016 K. Al Awadi

New base energy news issue 899 dated 03 august 2016

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New base energy news issue 899 dated 03 august 2016