New base energy news issue 921 dated 04 september 2016

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NewBase Energy News 04 September 2016 - Issue No. 921 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:Masdar Institute develops novel biodiesel chemical reactor
WAM: A team of researchers from the Masdar Institute of Science and Technology, in
collaboration with Tadweer - Abu Dhabi’s Centre of Waste Management, are testing an integrated
chemical reactor they have designed to produce high-quality biodiesel from fats, including waste
cooking oil.
The product is expected to use less energy and potentially cost lower than traditional biodiesel
reactors, a Wam report said.
Masdar Institute’s Dr Isam Janajreh, associate professor of mechanical and materials engineering,
heads the Tadweer-sponsored project that also includes Mohammed Hussain, a student
completing his MSc in mechanical engineering, and Masdar Institute MSc alumna Tala El Samad.

The biodiesel reactor developed by the Masdar Institute team integrates mixing by sound wave
agitation, flow mixing by a static mixer, and separation, recovery, and purification for efficient
conversion of waste cooking oil into its two main components – biodiesel and glycerol. This
process yields much less of the unwanted glycerol and more biodiesel than the high-power mixing
method employed by previous reactors and conventional industrial methods, the report said.
"The ultrasound method makes biodiesel quickly in a continuous process. Our reactor can
produce just as much biodiesel as the large conventional chemical reactors, but at a much smaller
spatial footprint," Hussain explained.
Hussain and El Samad co-authored two papers on the optimised biodiesel reactor that were
published in the journal of Applied Energy and the International Journal of Thermal &
Environmental Engineering, along with three papers that were presented at international
conferences.
The biodiesel reactor can produce 50 litres of biodiesel per hour continuously, while a typical
industrial-sized reactor may produce 500 litres every 10 hours in a batch process, which is a
slower type of manufacturing process that produces products in groups instead of in a continuous
flow. Although the production quantities possible are similar, the Masdar Institute reactor has a
much smaller physical footprint (occupying 85 percent less area than conventional reactors) and
very importantly can produce a high quality biodiesel.
"We determined the biodiesel’s quality by running it through qualitative tests, then followed with
engine performance testing. We found that the biodiesel produced by our reactor generated less
soot, nitric oxide, carbon dioxide and sulphur dioxide when compared to the biofuel produced by
conventional reactors and petroleum-derived diesel with no compromises in power," Dr Janajreh
said.
Because of the reactor’s small and compact size, the production capacity is suitable for a large
number of organisations that have an interest in sustainable waste transformation. Furthermore,
volume can be easily scaled up by linking several reactors together in series to produce the
desired quantity of biodiesel.

Egypt: Eni successfully drills and tests fifth well on Zohr gas
field, offshore Egypt.. Source: Eni
Eni has successfully drilled Zohr 5x, the fifth well on Zohr structure, which confirmed the potential
of the field at 30 Tcf OGIP. Zohr 5xwas drilled to the final TD of 14,271 ft (4,350 m). The Zohr 5x
well is located in 1,538 m of water depth and 12 km south west from the discovery wellZohr 1x.
The well proved the presence of a carbonatic reservoir and gas accumulation also in the South-
Western part of the Zohr mega-structure e ncountering about 590 ft (180 metres) of continuous
hydrocarbon column in the carbonate sequence with excellent reservoir characteristics. The
results are confirming the potential of the Zohr Field at 30 Tcf OGIP.
The well was also successfully tested opening 90 m of reservoir section to production. The data
collected during the test confirmed the great deliverability of the Zohr reservoir, in line with the
Zohr 2 well test, producing more than 50 mmscfd limited only by the constraints of the drilling ship
production facilities. In the production configuration, the well is estimated to deliver up to 250
mmscf per day.
The drilling campaign on Zohr will continue in 2016 with the drilling of the sixth well that will ensure
the accelerated start up production rate of 1 bcf per day. The steady progress of the project
execution is confirming the schedule expected to reach the first gas by the end of 2017.
Eni, through its subsidiary IEOC Production, holds a 100% stake in the Shorouk Block.
Petrobel is operating the activities on behalf of the Petroshorouk company, an equal joint venture
between IEOC and the state company Egyptian Natural Gas Holding Company (EGAS).
Eni has been present in Egypt since 1954 where it operates through IEOC Production BV. The
equity production in the country was in 2015 about 200 thousand barrels of oil equivalent per day.

US Permian Fields Profitable With Oil Below $30, Pioneer CEO Says
Bloomberg
Oil wells in the biggest U.S. oil field remain profitable even when crude prices drop below $30 a
barrel, said Pioneer Natural Resources Co. Chairman and Chief Executive Officer Scott
Sheffield.
The so-called break-even price for drilling in the Permian Basin in Texas is “sub-$30” a barrel,
Sheffield said during a Bloomberg Television interview on Friday. For shale drillers such as Irving,
Texas-based Pioneer, “break-even” typically means operating costs plus a 10 percent or 15
percent return.
Pioneer closed a $435 million acquisition of drilling rights across 28,000 acres in the Permian
region from Devon Energy Corp. earlier this week. When the transaction was announced in June,
Pioneer said wells drilled in the acquired assets will generate returns of 50 percent or more.
West Texas Intermediate crude rose 1 percent to $43.58 a barrel at 8:10 a.m. on the New York
Mercantile Exchange. The price has climbed 67 percent since touching a 12-year low of $26.05 on
Feb.11

Kazakhstan: Roxi Petroleum announces reserves update for
BNG's South Yelemes fields
Roxi Petroleum, the Central Asian oil and gas company with a focus on Kazakhstan, has provided
an update on the reserves, as at 31 December 2015, of BNG's South Yelemes fields. The
reserves update covers the Company's shallow fields at its BNG asset and does not include its
deeper prospects that are subject to drilling at its wells A5, A6 and 801.
Reserves update
Gaffney, Cline & Associates ('GCA') has conducted an independent audit examination, as of 31
December, 2015, of the crude oil reserves of BNG's South Yelemes fields. On the basis of
technical and other information made available to
GCA concerning this property unit, GCA has
provided the reserves statement in Table 1.
The South Yelemes fields consist of two
independent hydrocarbon accumulations (southeast
and northwest). The fields are currently in a pilot
stage of production (post salt reservoirs only) and
appraisal testing and are currently producing
around 600 - 800 bopd.
Roxi has confirmed to GCA that the current
obligations under the assessment licence have
been fulfilled (due to expire in 2018) and a full 25-
year production licence is expected to be awarded,
running till 2043. The reserve numbers provided
below are predicated on the progression of the
company's infill drilling programme.

Table 1 Notes:
• Gross Field Reserves are 100% of the volumes estimated to be commercially recoverable
from the field.
• Net Entitlement Reserves are the Company's net economic entitlement
• The Operator of the South Yelemes fields is BNG Energy LLP
Hydrocarbon liquid volumes represent crude oil, estimated to
be recovered during field separation and are reported in
millions of barrels in Table 1.
The BNG Licence Area (Block) is located in Western
Kazakhstan 40 kms southeast of Tengiz on the edge of the
Mangistau Oblast.
The Licence Area surrounds two smaller areas that are not
included in the geological allotment as they contain the West
Yelemes, Tolkyn and Saztobe Fields, operated by third
parties. The BNG Licence Area, with these exclusions,
amounts to 1,561 km2 of which 1,376 km2 has 3D seismic
coverage acquired in 2009 and 2010.
GCA performed a detailed audit of the data and assumption
presented by Roxi and considers them reasonable for the
estimation of reserves; this included reservoir depth structure
maps, log data, core analysis, well tests, pilot production data
and cash flow models.
Reserves Assessment
The GCA audit examination was based on reserves estimates
and other information provided by Roxi to GCA, and included
such tests, procedures and adjustments as were considered
necessary. All questions that arose during the audit process

were resolved to GCA's satisfaction.
The economic tests for the reserves volumes were based on the following assumptions:
Export Oil Price: based on the Brent crude oil price forecast shown in the table below and further
applying a discount of 10% for the differential in quality. In addition to the transportation costs
(assumed as a part of operating costs), an additional tariff of US$5/Tonne (US$0.67/barrel) is
applied to the export oil price.
Domestic Oil Price: assumed to be US$48.7/Tonne (US$6.5/barrel) for the year 2016 and
thereafter is calculated by dividing the export price by a factor of 6.6.
Future capital costs were derived from development plans prepared by Roxi for the field. Recent
historical operating expense data were used as the basis for operating cost projections. No impact
of inflation has been assumed on the future costs. GCA has found that Roxi has projected
sufficient capital investments and operating expenses to economically produce the projected
volumes.
It is GCA's opinion that the estimates of reserves at 31st December, 2015 are, in the aggregate,
reasonable and the reserves categorization is appropriate and consistent with the definitions for
reserves in the Petroleum Resources Management System (PRMS), which was approved by the
Society of Petroleum Engineers, the World Petroleum Council, the American Association of
Petroleum Geologists and the Society of Petroleum Evaluation Engineers in March 2007.
GCA concludes that the methodologies employed by Roxi in the derivation of the reserves
estimates are appropriate, and that the quality of the data relied upon and the depth and
thoroughness of the reserves estimation process is adequate.

Azerbaijan: First Shah Deniz 2 platform jacket sent offshore
BP
BP reports that the Shah Deniz consortium has announced that the jacket for one of the Shah
Deniz Stage 2 platforms sailed away from the Heydar Aliyev Baku Deepwater Jackets Factory
(BDJF) for offshore installation. The official sail away ceremony, which was held at BDJF on
Thursday, was attended by H.E. President Ilham Aliyev of the Republic of Azerbaijan.
The transportation, launch, positioning and pile installation activities of the Production and Risers
(PR) platform jacket structure have been carefully planned and are expected to take around 40
days to complete.
The construction of the jacket was completed on schedule and on 29 July 2016 it was successfully
loaded out onto the transportation barge STB-1 at the quayside of BDJF in preparation for the sail
away to the Shah Deniz contract area in the Caspian Sea.
The PR platform jacket, built by the BOS Shelf, Star Gulf and Saipem consortium, was fully
constructed in country at the BDJF, using local construction infrastructure and facilities. Over 4700
people including sub-contractors and specialist vendors were involved in the construction works.
Some 90% of the construction workforce was Azerbaijan citizens.
Ewan Drummond, vice-president, Shah Deniz 2 projects, says:
'The first jacket sail away is an important milestone and we are pleased to have achieved this as
we move towards completion of other areas of the project. I would like to thank the government of
Azerbaijan and SOCAR for their support and cooperation in moving this giant project forward. My
thanks are also to all people representing BP, contractors and subcontractors whose hard work

US: Gasoline prices prior to Labor Day lowest in 12 years
Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update
The U.S. average retail price for regular gasoline was $2.24/gallon (gal) on August 29, the lowest
price on the Monday before Labor Day since 2004, and 27¢/gal lower than the same time last
year. Lower crude oil prices are the main factor behind falling U.S. gasoline prices. Lower crude
oil prices reflect continued high global crude oil and petroleum product inventories and increased
drilling activity in the United States.
The U.S. average retail gasoline price increased 51¢/gal since the recent low point in mid-
February, when gasoline prices averaged $1.72/gal. The rise in gasoline prices was the result of
higher crude oil prices and strong demand during the summer driving season.
On a regional basis, average gasoline prices range from $2.59/gal in the West Coast region to
$2.01/gal in the Gulf Coast region. The West Coast, particularly California, has the highest
gasoline prices among states surveyed in EIA's weekly Gasoline and Diesel Fuel Update, which is
the result of a tightly balanced gasoline market, tighter environmental specifications, and higher
taxes in West Coast states. As of Monday, August 26, gasoline prices averaged $2.71/gal in
California and $2.74/gal and $2.75/gal in Los Angeles and San Francisco, respectively.
The Gulf Coast region, where much of the nation's petroleum refinery capacity is located,
continues to have some of the lowest-priced gasoline in the nation, averaging $2.01/gal for the
region and $1.97/gal in Houston.
As fall approaches and U.S. driving decreases, lower gasoline demand, shifts to less costly winter
fuel specifications, and reduced crude oil purchases by refineries undergoing seasonal
maintenance have the potential to put downward pressure on crude oil and gasoline prices. In the
August Short-Term Energy Outlook, EIA forecasts U.S. regular gasoline prices will decline to an
average of $1.95/gal during the fourth quarter of 2016 and will average $2.06/gal for 2016.

NewBase 04 September 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil up 3 percent as U.S. jobs data hits dollar; tumbles on week
Reuters + NewBase
Oil settled up nearly 3 percent on Friday after a weak U.S. jobs report hurt the dollar and boosted
commodities, but crude prices still ended the week sharply lower on concerns about oversupply.
U.S. employment growth eased more than expected in August after two straight months of robust
gains, the report showed.
That initially led to doubts that the Federal Reserve would hike interest rates at its Sept. 20-21
meeting. The dollar, however, rose later in the day on bets that a September rate hike remained
on the cards. Crude prices were also supported by a steadying U.S. oil rig count.
After being unchanged last week, the oil rig count provided by industry firm Baker Hughes rose by
just one this week as crude prices held below the key $50-a-barrel mark that analysts and drillers
said made drilling more viable.
"Notwithstanding today's dollar-driven rally, September is usually a weak time for oil with demand
coming off the peak summer period. So if the rig count stays steady, we could finish the year at
about $50," said Jay Hatfield of New York-based InfraCap MLP EFT, which invests in U.S. energy
projects.
Brent crude futures LCOc1 settled up $1.38, or 3 percent, at $46.83 a barrel. For the week, Brent
was down 6 percent, its biggest drop in five weeks. U.S. West Texas Intermediate futures CLc1
rose $1.28, also 3 percent, to settle at $44.44. WTI fell nearly 7 percent on the week, its largest
decline in eight weeks.
Oil price special
coverage

"It's quite likely oil will hold at mid-$40 levels," said Carl Larry Director, director of business
development for oil & gas at Frost & Sullivan. "More telling of how oil performs will be the rig count
in coming weeks and OPEC gestures to support prices."
In early trading on Friday, oil rose after Russian President Vladimir Putin said in a Bloomberg
interview that he supported attempts by the Organization of the Petroleum Exporting Countries to
implement an output freeze with other oil producers.
OPEC, led by Saudi Arabia and other big Middle East crude exporters, will meet non-member
producers led by Russia at informal talks in Algeria from Sept. 26 to 28 to discuss an output
freeze.
If OPEC fails to strike a deal in Algeria, the cartel is expected to try other measures to support oil
prices during its policy meeting in Vienna on Nov. 30.
Many analysts remain skeptical that it would be successful.
"The oil price will remain volatile over the coming weeks," said Hans van Cleef, senior oil
economist at ABN Amro.
OPEC Output Rises to Record Before Talks With Russia on Freeze
Bloomberg - Grant Smith Julian Lee
OPEC’s crude production climbed to a record last month as increased output from Gulf members
made up for persisting losses in Nigeria and Libya, according to a Bloomberg survey.
Supplies from the Organization of Petroleum Exporting Countries rose by 120,000 barrels a day to
average 33.69 million a day in August
amid increases by Iran, Iraq and Kuwait,
the survey of analysts, oil companies
and ship-tracking data showed. The
group is due to hold informal talks in
three weeks in Algiers, where Russian
President Vladimir Putin says an
agreement can be reached to limit
output.
Iraq led the increases, boosting supplies
by 70,000 barrels a day to 4.48 million a
day, after the government resumed
flows from Kirkuk through a northern
export pipeline controlled by the nation’s
Kurds, signaling progress in a long-
standing dispute over payments. Iran
raised production by 60,000 barrels a
day to 3.62 million as it continues its
return to global markets after the end of
international sanctions in January.
Saudi Arabia, the group’s biggest and
most powerful member, raised output by 30,000 barrels a day to an all-time high of 10.69 million a
day. The kingdom increased production to meet both domestic consumption -- which peaks in the
summer with surging air conditioning use -- and demand from customers overseas, Energy
Minister Khalid Al-Falih said in an interview with the Saudi Press Agency last month.

Saudi ‘ready to meet rising oil demand from China’
Saudi Arabia's Energy Minister Khalid Al-Falih said the kingdom was ready to meet rising energy
demand from China, state news agency SPA reported on Friday. "The Kingdom is ready to fulfill
the rising energy demand in China in the coming decades," the SPA quoted Al-Falih as stating.
Al-Falih made his comments during meetings with leading Chinese energy industry officials,
the SPA said. The minister was on an official visit to China earlier this week when several energy
agreements were signed.
Saudi Aramco also signed a strategic partnership agreement with China's CNPC during the visit
with a view to cooperating on investments in refining, marketing and project developments,
the SPA said. The agreement would include Aramco's ownership of shares in the refining
business and retail sales of CNPC, it said.
OPEC nations will meet Russian Energy Minister Alexander Novak for informal talks on the
sidelines of an industry conference in Algiers scheduled for Sept. 26 to Sept. 28. Putin would like
Russia and OPEC to reach a deal on freezing supply, he said in an interview on Thursday. Any
dispute over Iran’s participation which thwarted a previous effort can be resolved, he said.
Still, with OPEC members already producing at, or close to, their maximum capacity, any accord
they reach on a freeze will have little relevance for actual supplies, according to Mike Coleman,
founder of Singapore-based hedge fund,
RCMA Asset Management Pte Ltd.
“It’s more symbolic,” Coleman said. “The
production freeze doesn’t do anything. To
have a meaningful impact on prices, you
need a production cut.”
Nigeria suffered the biggest production
decline among OPEC’s 14 members last
month, sliding by 130,000 barrels a day to
1.44 million a day. Companies are
struggling to repair pipelines in the oil-rich
Niger Delta following attacks claimed by
militant groups.
Libya experienced the next-biggest losses,
sliding 40,000 barrels a day to 260,000 a
day as the country’s political factions
continued to feud over the control of oil
export terminals. Output restarted at the
Sarir oil field, Arabian Gulf Oil Co. said
Thursday, following the receipt of payment
from the state-run oil company.
Last month’s production figure exceeds last year’s level even when adjusted to exclude Gabon
and Indonesia, which joined the group this year. Estimates for most members’ production in July
were revised from the previous survey.

NewBase Special Coverage
News Agencies News Release 04 September 2016
Exxon Ignores Near-Term Glut to Play LNG Long Game
Bloomberg -Joe Carroll
When it comes to natural gas, Exxon Mobil Corp. believes in playing the long game.
As competitors continue to flood the world market with a liquefied form of the fuel, depressing
prices, Exxon is heeding the advice of forecasters scanning a quarter-century beyond the current
glut. Their view: LNG demand will rise 1.6 percent a year through 2040, more than double the rate
for crude oil.
With much of that growth set to come from the Asia-Pacific region, the world’s biggest energy
producer is working to bookend the area with resources, pursuing promising but as-yet untapped
natural gas fields in Papua New Guinea and Mozambique that won’t produce for years. It’s a
strategy that stands in stark contrast to Royal Dutch Shell Plc’s takeover of BG Group Ltd., an
established producer that promises to quickly swell Shell’s LNG exports, even as prices remain
low.
“Exxon has a different strategy in that it’s not looking to grow its gas business right now but is
looking at what will happen in LNG 10 or 15 years from now,” said Brian Hennessey, who
manages $1.3 billion at Alpine Woods Capital Investors LLC. “The market’s going to get tight
starting in 2020.”
The influx of LNG from gigantic projects first conceived a decade ago has swamped markets with
excess supply, dropping the average worldwide price by 37 percent last year to $9.77 per million

British thermal units, according to the International Gas Union. In Japan, the world’s biggest LNG
market, the price of cargoes from Qatar tumbled 70 percent in two years to $4.93 per million Btu.
Spot LNG in Singapore fell 1.3% on Thursday to $5.187 per million British thermal units, according
to Singapore Exchange Ltd.
But the glut may be short-lived as low prices spur new buyers to enter the market and the advent
of low-cost import facilities enables poorer nations to receive cargoes.
Exxon spokesman Scott Silvestri referred to Vice President Jeff Woodbury’s remarks on long-term
gas demand during a July conference call.
“Like any type of commodity,” Woodbury said, “there are going to be periods of oversupply and
periods of shortness, and we do expect that into the early part of the next decade that there will be
some oversupply. But we keep focused on the long-term value proposition.”
While internal projections used by Exxon to guide their investments show a clear picture of rising
demand, forecasters at the U.S. Energy Information Administration are even more bullish. They
predict demand will rise an average 1.9 percent annually through 2040.
Bidding War
That “tidal wave” of demand will overwhelm available supplies and pit major importing nations in a
bidding war for LNG cargoes as soon as the early 2020s, said Fred Beach, assistant director for
policy studies at the University of Texas Energy Institute, in a telephone interview.
“Consensus is that the LNG market will be over-supplied for the next 5+ years,” wrote Anish
Kapadia, managing director at Tudor Pickering Holt & Co. in London, in a note to clients on
Wednesday. “However, there is the potential for the market to tighten around the end of the
decade as we see downside risks to supply and upside risks to demand.”
In July, Exxon agreed to pay between $2.3 billion and $3.6 billion for InterOil Corp.’s Papua New
Guinea finds, and is in talks to buy stakes in the fields in Mozambique. The final value of the
stock-and-cash agreement with InterOil, expected to close within weeks, depends on how large
the natural gas reserves prove to be.
Nascent Development
More drilling is required to figure that out, as well as the optimal locations for production wells that
can eventually produce natural gas for export. The Mozambique assets are in a similar state of
nascent development.
The InterOil transaction will be Exxon’s biggest acquisition since a 2009-2013 spree in which the
company acquired multiple North American gas drillers, including the $35 billion buyout of XTO
Energy Inc. That foray has yet to pay off.
In the six years since the XTO transaction closed, U.S. gas prices have fallen 40 percent. Within
24 months of the biggest deal of his career, Exxon Chairman and Chief Executive Officer Rex
Tillerson told a Council on Foreign Relations gathering that he and fellow gas producers were “all
losing our shirts.”
Although Tillerson sold the XTO deal as a way to bring shale-drilling expertise into Exxon, the
transaction loaded the company with massive amounts of gas production just when prices were in
retreat. Every year since then, the company has cut U.S. gas production, reducing output by 20
percent in the past half decade.

Slamming the Brakes
Exxon’s long-term approach has also meant slamming the brakes on projects that are moving too
fast.
Last week, the company told Alaska lawmakers it’s quitting an LNG project in that state because
its leaders want Exxon and its partners, BP Plc and ConocoPhillips, to spend money on
engineering and design work even though a fiscal agreement for the development hasn’t been
finalized. Bill McMahon, Exxon’s senior commercial adviser on the project, told an Alaskan
legislative panel on Aug. 25 that the company will hand control of the project to the state by the
end of the year.
Tillerson’s new LNG strategy included a meeting with Mozambique President Filipe Nyusi in the
capital city of Maputo in July to discuss acquiring a stake in Eni SpA’s offshore gas holdings,
according to a person with knowledge of the talks. Exxon is also talking to Anadarko Petroleum
Corp. about buying into a nearby discovery beneath a part of the seafloor known as the Rovuma
Basin.
Exxon’s newest push is definitely “a long gas play,” said Thomas McNulty, an analyst at Navigant
Consulting Inc. in Houston. “Even though demand has weakened in markets like China, Japan
and South Korea in the near term, the long-term view is that demand will recover and be strong in
that part of the world.”

Payrolls, Putin Have Oil Slouching Towards Algiers
Bloomberg - By Liam Denning
The wistfulness of the Labor Day weekend is especially pronounced in the oil market. The
summer driving season draws to a close and refineries prepare to shut down for routine
maintenance. Little wonder oil prices have fallen in 8 of the past 10 Septembers, something
pointed out in a recent report by Citigroup.
This year, the oil market enters the fall definitely lacking all conviction -- as Friday's payroll
numbers showed.
The mix of gives and takes in the headline numbers -- weakish August gains, better July figures,
sluggish hours and wages -- leaves open the central economic question of when the Fed next
raises rates. Oil prices ticked up a little when the payrolls hit the wires, but that likely reflected a
thin sigh of relief, following the mildly hawkish tone coming out of Jackson Hole last week. Oil has
started to become more negatively correlated with the dollar in recent months, Bloomberg data
show, itself a sign of a lack of real direction. In any case, the relationship remains weak for now.
Seeking Direction
Oil's inverse relationship with the U.S. dollar has come back, sort of
Note: Data show rolling 90-day correlation coefficient for the generic 1st-month Nymex crude oil
futures price and the spot U.S. dollar index.
The glut of crude oil and refined products is what deadens any sign of life in oil prices. A build-up
in U.S. inventories reported earlier this week was reported as surprising relative to expectations,
but it's really stretching the definition of "surprise" to apply it to oil stocks at this point. It's been
apparent for months now that U.S. gasoline demand wasn't the savior it was touted as in the
spring.
So we are back to relying on a deus ex machina to jolt prices above $50 a barrel. In a wide-
ranging interview with Bloomberg published on Friday, Russian president Vladimir Putin revived
the prospect of a supply freeze deal with OPEC, ahead of the oil-exporting group's informal talks
in Algiers later this month.

Putin's willingness to risk even the mildest embarrassment if nothing materializes freeze-wise, as
happened at Doha in April, is worth noting. But with OPEC clocking up record production in
August, according to a Bloomberg survey, it's hard to have much faith in anything real coming out
of the talks. And don't forget, with Saudi Arabia reportedly aiming to sell $10 billion worth of
sovereign bonds and the Kremlin considering selling off a big chunk of Rosneft, two key players
have good reason to gin up sentiment on oil prices in the short term.
What's more, rhetorical support for oil prices comes at a cost to producers like Russia -- it throws
a lifeline to U.S. E&P companies that actually are cutting production in the face of low prices. The
underlying data in Friday's jobs numbers showed the sector is still suffering mightily, but with
tentative signs of job cuts there bottoming out.
The number of workers engaged in oil and gas extraction actually rose in August, and the
numbers for June and July were revised up slightly. Adding in support workers for the sector --
where the data are lagged to July -- shows the pace of job cuts in the oil patch could be turning.
Merely Dreadful
The severe downturn in oil and gas payrolls shows signs of bottoming out
Note: Data show year-over-year change in combined extraction and support payrolls.
The summer rally in oil prices helped alleviate the burden of wages on E&P finances. Using
monthly price and output data, it's possible to construct a crude measure of the industry's
revenue, ignoring regional differentials and royalties. Meanwhile, BLS data on employment, hours
and average wages can be used to estimate a rough overall wage bill for the sector. You can see
the impact of the rally here:
Pay Rolls
The implied wage burden on E&P revenue has dropped sharply since February as oil prices
rallied

Source: Bureau of Labor Statistics, Bloomberg, Energy Information Administration, Bloomberg
Gadfly analysis Note: Assumes U.S. natural gas output was flat in July vs. June.
Notice, though, that the burden ticked up again in July as oil prices started falling. August's price
rally, predicated largely on revived hopes of an OPEC production freeze, likely sent that line back
down (we'll know in a month's time).
The point is that the oil market is rebalancing. While there are pockets of strength in U.S. shale --
notable the Permian basin -- supply there continues to fall. But it is a gradual process. And while
Algiers shimmers on the horizon, any price support coming from the mouths of OPEC officials also
serves to take the pressure off E&P companies. As the rhetoric mounts in the weeks ahead,
beware those full of passionate intensity.

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Khaled Al Awadi is a UAE National with a total of 26 years of experience in
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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 04 September 2016 K. Al Awadi

New base energy news issue 921 dated 04 september 2016

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New base energy news issue 921 dated 04 september 2016