New base energy news issue 950 dated 17 november 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 17 November 2016 - Issue No. 950 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Qatar: Astad signs MoU with Korea Energy Agency
Gulf Times
In light of Qatar Green Building Council’s Sustainability Week, Astad recently signed a
Memorandum of Understanding (MoU) with the Korea Energy Agency to further promote Astad’s
commitment to best sustainable practices.
The MOU, which was signed at the Qatar National
Convention Centre (QNCC) on Monday, paves the
way for bilateral cooperation and joint strategic
objectives aimed at “continuous knowledge
sharing and the improvement of energy
management strategies and energy efficiency for
buildings”.
On the occasion, Astad chief executive officer Ali
al-Khalifa said, “This agreement reflects our
continued advocacy for sustainability within the
construction industry. As founding members of the Qatar Green Building Council, this agreement
is an additional step forward in Astad’s journey towards a more sustainable future.”
Astad’s head (sustainability) Sheikh Soud al-Thani said, “We look forward to working together with
the Korea Energy Agency using a comprehensive approach through initiatives that encourage
sustainable practices for green building design and development in Qatar.”
In-Taek Kim, Korea Energy Agency’s executive director, said, “As a global energy organisation,
this MoU falls in line with our efforts to contribute to the transformation of Qatar into a low energy
consumption society with a culture of efficient energy usage and we hope that, with Astad, we can
enhance the energy efficiency of buildings and transportation.”
Since its establishment in 1980, Korea Energy
Agency has been at the forefront of efficient and
rational energy use in Korea, as a silent guardian of
Korea’s sound economic development and better
quality of life.
Astad has managed and delivered some of Qatar’s
most complex building and infrastructure projects in
various sectors of the construction industry. They
have covered Education, Healthcare, Sports,
Commercial, Residential and Transport, bringing
together all the necessary components required to build a booming nation with a bright future to
look forward to. Established in 2008, Astad has grown to become a leading organisation within the
construction industry, delivering some of the most iconic projects in Qatar. Using the shared
experience and expertise of its teams, Astad provides world class services in the areas of
construction, engineering, cost, commercial, design and sustainability.

Egypt to finalise contract with Rosatom to build nuclear plant
Gulf News - Fareed Rahman, Senior Reporter
Abu Dhabi: Egypt’s minister of electricity and renewable energy said the country is focusing on
improving the transmission and distribution network to meet the electricity demand and have
commissioned installing 1500 kilometre of 500 kilovolt transmission network.
“This is a huge undertaking as it represents one third of already existing in the country now. We are
installing about nine substations of extra high voltage which are under construction at present. We are
working hard to close the gap in transmission,” said Mohammad Shaker Al Markabi while speaking to
Gulf News on the sidelines of Arab-Germany energy forum in Abu Dhabi on Wednesday.
The Egyptian government is undertaking reforms in the energy sector to improve government’s
finances. It has recently increased electricity tariffs as part of its five-year campaign to restructure
subsidies and cut down on government expenses.
Al Markabi said the reforms are yielding results with people focusing on conserving energy due to
extra tariffs levied for high consumption. “We were under pressure due to power outages. Now people
are trying to conserve energy due to increase in tariffs. There is no power shortage in the country.”
Speaking on power generation, he said they have plans to introduce nuclear power station in the
network, coal-fired power station and renewable energy, adding that the country is trying to finalise a
contract to build a nuclear power plant by the end of the year with Russian company Rosatom.
It is also planning to build 6,000 megawatts of coal-fired power plant in Hamarawein on the red sea
coast with companies from Japan, Korea and China bidding for the project.
“We have about 750 megawatt of wind energy and we have two other projects which are about to be
signed. We are talking to
companies in Denmark
and GE in the US for
future projects,” Al
Markabi said.
Egypt also signed an 8-
billion euro (Dh31.4
billion) contract with
Siemens to increase
power generation
capacity by 50 per cent
last year.

Energy demand set to soar in the Middle East by 2030
Gulf News – FaREED Rahman
The region will require additional power capacity of 267GW by 2030, Siemens says in
its outlook
Abu Dhabi: The Middle East will require additional power capacity of 267 gigawatts (GW) by 2030 as
energy demand grows due to increase in population, German company Siemens said on Wednesday
announcing its outlook for the energy landscape in the
Middle East.
The company said the region’s capacity will grow to 509
gigawatts from 307 gigawatts at present resulting an
increase of 66 per cent.
“The Middle East’s growing population increasingly
requires reliable and efficient power supply. While the
share of renewables in the region’s energy mix is set to
increase, we also see natural gas as the main source of
power generation by 2030, with energy efficient
combined cycle powers plants leading in new capacity
additions,” said Dietmar Siersdorfer, CEO of Siemens
Middle East and the UAE, while addressing the media in Abu Dhabi.
Though natural gas is expected to be the main source of power generation, solar energy will also gain
momentum with around 16GW of capacity additions expected by 2030.
In the UAE, the growth in power demand will be among the highest in the region in the region. By
2030, the country’s installed power generation capacity is expected to reach 60GW comprising of
44GW from combined cycle power plants and remaining 20GW from simple cycle power plants,
renewables, nuclear and others.
The UAE is constructing a number of solar plants and four nuclear reactors that will be ready by 2020.
“The UAE has a perfectly
strategy to diversify into
several fuels. They have very
good efficient energy fuel mix
to make the power system
more efficient and more
reliable. But, gas fired power
station is still the most
economical way to generate
power,” he added.
Siemens has power plants in
the UAE, Qatar and a
number of other countries in
the region. In Egypt, the firm
is building a total of three
natural gas fired plants with a
total capacity of 14.4GW.
The power plants will
increase current generation
capacity by up to one third by
2020.

Libya to Nearly Double Oil Output as OPEC’s Task Gets Harder
Blommberg - Salma El Wardany S_Elwardany
OPEC’s Libya plans to almost double crude production next year even as the producer group tries
to implement a deal to trim production and ease a global supply glut.
The country with Africa’s largest crude reserves currently produces 600,000 barrels a day, state-
run National Oil Corp. Chairman Mustafa Sanalla said in a statement posted on the company’s
website. It’s seeking to boost output to 900,000 barrels a day by the end of 2016 and about 1.1
million barrels next year, he said.
Libya, a member of the Organization of Petroleum Exporting Countries, has been working to boost
production and exports since the NOC reached an agreement in September with Khalifa Haftar,
the commander of armed forces controlling important oil ports. As a result of that deal, the country
was able to ship 781,000 barrels from the port of Ras Lanuf on Sept. 21, the first international
cargo from the terminal since force majeure was declared in December 2014. The country’s
largest port, Es Sider, may resume exports within days.
The North African country’s production recovery highlights the efforts OPEC must make to
achieve production cuts needed to rein in the oversupply that has pushed down prices. Brent
crude, which traded at more that $115 a barrel in June 2014, has dropped to about $47.
Libya, along with Nigeria and Iran, has been exempted from the deal OPEC reached in
September in Algiers. The more those countries pump, the greater the pressure on other
members of the group to make even bigger curtailments of their own if production is to be brought
under control. OPEC meets Nov. 30 in Vienna to discuss proposals to limit supply.
‘Economic Revival’
Sanalla said Libya is ”heading toward economic revival” but warned against any military attacks on oil installations
that could disrupt plans to increase output. Libya produced 1.6 million barrels a day before the 2011 uprising that
ousted longtime leader Moammar Al Qaddafi.
Output shrank after international oil companies withdrew amid fighting between rival governments and armed groups
over the nation’s oil fields, ports and pipelines. The conflict also halted exports from the nation’s main oil ports. Es
Sider hasn’t exported crude since force majeure, a legal status protecting a party from liability if it can’t fulfill a contract
for reasons beyond its control, was declared on loadings almost two years ago. The curbs were lifted in September.

US: A $900 Billion Oil Treasure Lies Beneath West Texas Desert
Joe Carroll jcarrollchgo
In a troubled oil world, the Permian Basin is the gift that keeps on giving.
One portion of the giant field, known as the Wolfcamp formation, was found to hold 20 billion
barrels of oil trapped in four layers of shale beneath the desert in West Texas, the U.S. Geological
Survey said in a report on Tuesday. That’s almost three times larger than North Dakota’s Bakken
play and the single largest U.S. unconventional
crude accumulation ever assessed. At current
prices, that oil is worth almost $900 billion.
The estimate lends credence to Pioneer
Natural Resources Co. Chief Executive Officer
Scott Sheffield’s assertion that the Permian’s
shale endowment could hold as much as 75
billion barrels, making it second only to Saudi
Arabia’s Ghawar field. Pioneer has been
increasing its production targets all year as
drilling in the Wolfcamp produced bigger
gushers than the Irving, Texas-based
company’s engineers and geologists forecast.
“The fact that this is the largest assessment of
continuous oil we have ever done just goes to
show that, even in areas that have produced billions of barrels of oil, there is still the potential to
find billions more,” Walter Guidroz, coordinator for the geological survey’s energy resources
program, said in the statement.
Oil explorers have been flocking to the Permian Basin in West Texas and New Mexico to tap
deposits so rich that they generate profits despite the 2 1/2-year slump in crude prices. A race to
grab land in the Permian has been the main driver of a surge of deals in the energy patch and the
industry’s main source of good news.
Although the Permian has been gushing crude since the 1920s, its multiple layers of oil-soaked
shale remained largely untapped until the last several years, when intensive drilling and fracturing
techniques perfected in other U.S. Shale regions were adopted. The Wolfcamp, which is as much
as a mile (1.6 kilometers) thick in some places, has been one of the primary targets of shale
drillers.
ConocoPhillips, the world’s largest independent oil producer by market value, increased its
estimate for the size of its Wolfcamp holdings on Nov. 10 to 1.8 billion barrels from 1 billion last
year. A day earlier, Concho Resources Inc. CEO Timothy Leach told investors and analysts on a
conference call that two recent wells it drilled in the Wolfcamp were pumping an average of 2,000
barrels a day each.
Diamondback Energy Inc. disclosed last week that it has been drilling 10,000-foot sideways wells
in the Wolfcamp. Production from the wells has been as high as 85 percent crude, according to
the Midland, Texas-based explorer.
For Apache Corp., a slice of the Wolfcamp and another Permian layer known as the Bone Spring
are major components of the 3 billion-barrel Alpine High discovery that the company announced in

September. Chief Executive Officer John Christmann called Alpine High “a world class resource”
during a Sept. 7 presentation at a Barclays Plc conference in New York.
The Wolfcamp shale also holds 16 trillion cubic feet of natural gas and 1.6 billion barrels of gas
liquids, the geological survey said in a statement on Tuesday.
"What sets the Wolfcamp apart from similar plays is its inherent rock properties," Craft said.
Typical total organic carbon (TOC) runs between 2.24-7.24%. "We've looked at core samples from
30-40 miles away, and they all fall within this range." Some fall lower or higher, but a uniform
average in TOC across a wide span provides a solid base from which to work. "With the variety of
shale plays out there, anything between 2-10% is considered excellent," he added.
Thermal maturity also is an important factor. "What's unique about the Wolfcamp is that it's normal
pressured," Craft said. "It's probably one of the few shale plays out there that has normal
pressure." While temperature is not an issue for drilling and completion activities, normal
pressured reservoirs can present their own unique challenges as production begins.
The Wolfcamp shale in West Texas has been known to operators since the onset of Permian
basin development in the 1920s.
The Wolfcamp shale in West Texas has been known to operators since the onset of Permian
basin development in the 1920s. The advent of unconventional technology has focused attention
on this formation, which was once thought to be uneconomic.

U.S. oil drilling increasingly focused in Permian Basin
Source: U.S. Energy Information Administration, based on Baker Hughes
U.S. drilling activity is increasingly concentrated in the Permian Basin, which spans parts of
western Texas and southeastern New Mexico. The Permian now holds nearly as many active oil
rigs as the rest of the United States combined, including both onshore and offshore rigs, and it is
the only region in EIA’s Drilling Productivity Report where crude oil production is expected to
increase for the third consecutive month.
Exploration and production companies are increasing merger and acquisition (M&A) spending in
the United States, recovering from a low period of M&A spending in 2015 and the first quarter of
2016. This change is attributed to two key factors. First, weekly average West Texas Intermediate
crude oil spot prices averaged between $40 per barrel (b) and $50/b since mid-April, an increase
from prices averaging near $30/b in the first quarter of 2016.

Second, improved credit conditions, as reflected in lower spreads in the yields between energy
bonds and U.S. Treasury bonds, suggest improved investor sentiment in the U.S. upstream oil
sector. Several of the larger M&A deals involved Permian Basin assets, where drilling and
production is beginning to increase.
Based on data through November 10, the second half of 2016 already has more M&A spending
than the first half of 2016, but on fewer deals. The 93 M&A announcements in the third quarter of
2016 totaled $16.6 billion, for an average of $179 million per deal, the largest per deal average
since the third quarter of 2014. Although only 11 of the 49 deals so far in the fourth quarter of
2016 are in the Permian Basin, they accounted for more than half of total deal value.
Merger and acquisition activity includes the sale of assets from one entity to another, which does
not necessarily lead to an increase in exploration investment or production. A company may
engage in M&A to diversify its portfolio or to position itself for future opportunities.
Another company may sell property to increase liquid assets on its balance sheet.
Continued increases in the U.S. rig count, however, suggest companies are beginning to invest
capital in development projects.
Continued investment could lead to an increase in crude oil production in the Lower 48 states,
which has been declining since April 2015. EIA’s most recent Short-Term Energy Outlook (STEO)
forecasts that production will increase in the second quarter of 2017.
However, this production forecast is predicated on the expected price of West Texas Intermediate
crude oil, which is highly uncertain. Significant divergence of actual prices from the projected path
could change the pace of drilling new wells, which would, in turn, affect the production forecast.

NewBase 17 November 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices fall on US crude stock build, OPEC remains in focus
Reuters + NewBase
Crude oil futures dropped on Thursday after official inventory reports indicated a larger-than-
expected build in U.S. oil stocks. Crude inventories in the United States rose by 5.3 million barrels
in the week to Nov. 11, compared with expectations for an increase of 1.5 million barrels.
The climb in inventories was mainly due to higher imports that averaged 910,000 barrels per day
(bpd), according to data released by the U.S. Energy Information Administration on Wednesday.
U.S. benchmark WTI crude was down 11 cents, or 0.24 percent, at $45.46 a barrel at 0040 GMT.
European ICE Brent crude futures fell 16 cents, or 0.34 percent, to $46.47 per barrel.
"Crude oil struggled to keep its head above water after the weekly EIA showed another large rise
in inventories ... Stocks of crude oil jumped 5.27 million barrels, much more than expected,"
Australian bank ANZ said in a note.
Refining margins in all five U.S. regional petroleum districts fell in the week ended Nov. 11, Credit
Suisse said in a weekly report on Wednesday. "The U.S. EIA produced a higher than expected
crude inventory figure, but this was subsumed into OPEC gossip," said OANDA senior market
analyst Jeffrey Halley. "We are well into headline trading season as Nov. 30 approaches."
OPEC countries are ready to reach a "forceful" agreement on cutting oil output, Venezuelan
President Nicolas Maduro said on Wednesday, following a meeting with OPEC Secretary-General
Mohammed Barkindo in Caracas. OPEC members are due to meet on Nov. 30.
Russia has also expressed willingness to support an OPEC decision to freeze oil output, Russian
Energy Minister Alexander Novak said on Wednesday, adding that he may meet Saudi Arabia's
Energy Minister Khalid al-Falih at a gas conference in Doha this week.
Oil price special
coverage

OPEC And Russia Expand Diplomatic Push to Secure Oil-Cuts Deal
Bloomberg - Javier Blas JavierBlas2
OPEC embarked on a final diplomatic effort to secure an oil-cuts deal, with its top official heading
on a tour of member states as Russia scheduled informal talks in Doha this week with nations
including Saudi Arabia.
The behind-the-scenes diplomacy follows an unannounced meeting in London between OPEC
Secretary-General Mohammed Barkindo and Saudi Minister of Energy and Industry Khalid Al-
Falih, said one OPEC delegate. Just two weeks before the group’s Nov. 30 ministerial meeting in
Vienna, Saudi Arabia, Iraq and Iran are still at odds over how to share output cuts, said another
delegate.
The Organization of Petroleum Exporting Countries has yet to find a path to finalize the
preliminary cuts deal reached in Algiers on Sept. 28, which ended a two-year policy of pumping
without limits. Oil prices rallied to nearly $54 a barrel in October after the outline of the deal was
announced, but as of last week had lost all their gains as doubts over the deal grew again. Prices
recovered more than 5 percent Tuesday to near $47 after Bloomberg reportedthe renewed
diplomatic push.
OPEC countries are “all hands on deck to meet this target date of Nov. 30th and to implement in
full the agreement,” Barkindo said Tuesday in an interview at a climate conference in Morocco.
Barkindo will travel to Caracas, Quito and Tehran for talks in the coming days, said two people
familiar with the matter, who asked not to be identified because the information isn’t public.
Venezuela President Nicolas Maduro said Tuesday he will meet with Barkindo in Caracas on
Wednesday.
Russia will hold informal consultations with representatives of some OPEC countries at the Gas
Exporting Countries Forum in Doha on Nov. 17-18, the Energy Ministry in Moscow said in a

statement Tuesday. The energy minister of Saudi Arabia, which is not a member of the group, will
join the talks, said an OPEC delegate.
Four Pillars
Saudi Arabia, the group’s de-facto leader, is ready to cut production, but only if the effort is built
around four pillars, said the delegate. All members must agree to collective action, pledge to share
the burden of cuts equitably, and do so in a way that is transparent and has credibility with the
market. The latter can be achieved by using OPEC estimates of how much each member pumps,
rather than relying on the countries’ own estimates, the delegate said.
In practice, that means Saudi Arabia still thinks Iraq needs to cut output and Iran has to freeze
production around current levels, the person said. Neither country has so far agreed to do that. As
initially outlined in Algiers, Libya and Nigeria would be exempt from supply curbs.
Barkindo reiterated that there are three countries -- Libya, Nigeria and Iran -- that have been
granted “special considerations” to implement the accord. Iraq isn’t one of them, he said.
Secondary sources are the basis for the Algiers deal, he said.
Iran is considering a proposal to freeze its oil production near the level the country says it pumps -
- nearly 4 million barrels a day -- rather than OPEC’s estimate of about 3.7 million, the delegate
said. Iraq is mulling a cut, but only from the Oil Ministry’s own level of about 4.8 million barrels a
day, not the 4.6 million barrels a day OPEC says it pumps, the person said.
Pessimistic Market
Iraq has sought an exemption from joining any production cuts, arguing that its fight against
Islamic State justifies special treatment. Iran has insisted it won’t accept any limits on its
production until it has returned to the pre-sanctions level of about 4 million barrels a day.
“People are pretty pessimistic right now about a potential agreement,” BP Plc Chief Executive
Officer Bob Dudley said in a Bloomberg Television interview from Riyadh. “You see that in the
price,” he said. If the talks fail, prices “will stay around the level we’re at.”

As OPEC nations worked to secure a deal, Algerian Prime Minister Abdelmalek Sellal led a
delegation which includes the Energy Minister Noureddine Boutarfa for a two-day visit to Saudi
Arabia starting Monday, state-run Algerian Press Service reported. Boutarfa plans to travel from
there to Doha.
Qatar and Algeria were the architects of previous attempts this year to reach an OPEC deal to
limit supply, while Venezuela’s energy minister played go-between for Iran and other members of
the group. Saudi Arabia, Iraq and Iran are the largest producers within OPEC, accounting for
about 55 percent of the group’s output, according to data compiled by Bloomberg.
OPEC pledged in Algiers to bring its production down to a range of 32.5 million to 33 million
barrels a day, which compares with output of 33.6 million last month. The group is also seeking
cooperation from Russia and other producers outside the group, although so far none have
committed to curbing output. Without a deal, the International Energy Agency predicted that 2017
will be the fourth consecutive year in which supply runs ahead of demand.
"If the supply surplus persists in 2017 there must be some risk of prices falling back," the IEA said
in its closely watched monthly report Nov. 10.
OPEC will complete an accord to cut production this month, while stopping short of setting the
individual country limits needed to make the deal work, according to a Bloomberg survey.
The Organization of Petroleum Exporting Countries will finalize a pledge to reduce total output --
its first cut in eight years -- when the group meets on Nov. 30, according to 14 of 20 analysts
polled this week. Yet only seven of the 20 said the group will specify how much each member
should cut, an essential part of OPEC’s actions in the past.
As a two-year slump in oil prices batters the finances of OPEC nations, observers from Bank of
America Merrill Lynch to hedge fund trader Pierre Andurand are confident the group will act. Yet
the oil market remains “pessimistic,” according to BP Plc, as key producers Iran and Iraq seek to
revive output lost to years of conflict and sanctions, complicating OPEC’s efforts to allocate
targets to its members.
“It looks like there will be a deal, but not the deal that’s really needed,” said Eugen Weinberg,
head of commodities research at Commerzbank AG in Frankfurt.
OPEC members will try to resolve the differences at impromptu talks in Doha this week, and will
hold discussions there with Russia, the biggest exporter outside the group, which has signaled it’s
prepared to at least freeze production.
New Direction
Indeed, there are powerful incentives for ministers to agree their individual share of the collective
range adopted in Algiers on Sept. 28, at 32.5 million to 33 million barrels a day. The range implies
they’ll need to distribute cuts of between 600,000 and 1.1 million barrels a day, the group’s data
show.
As the global oil surplus enters a fourth year, it’s time for OPEC to concede that its attempt to
clear the glut by pressing rivals with low prices has been a “failed experiment” and try something
different, according to Michael Tran, an analyst at RBC Capital Markets LLC.
Prices are languishing below $50 a barrel, less than most producers need to cover their domestic
spending, which leaves even richer nations like Saudi Arabia in a “tight spot,” Francisco Blanch,
head of commodity markets research at Bank of America, said in a Bloomberg television
interview.

“OPEC wants a $50-$60 price and they want to basically accelerate the re-balancing by cutting
production modestly,” said Gary Ross, executive chairman at PIRA Energy Group, which is now a
part of S&P Global Platts. “They’re all trying to do what’s in their self-interest, which is trying to
cooperate to go ahead and see that OPEC is successful.”
Repairing Rifts
Still, there are plenty of barriers. Bilateral meetings over the weekend failed to resolve the rifts,
according to a delegate familiar with the discussions who asked not to be identified.
Saudi Arabia, the group’s biggest and most powerful member, is seeking full cooperation from
both its OPEC counterparts and major producers outside the group, Energy Minister Khalid Al-
Falih said in London on Oct. 19.
Yet from the outset of the deal, Iraq -- still recovering from decades of war and sanctions and now
battling an Islamist insurgency -- refused to lower output and rejected OPEC’s estimates of its
production as too low.
Iran, which is also restoring exports after three years of nuclear-related sanctions ended in
January, aims to raise production to more than 4 million barrels a day from about 3.9 million,
officials from the Oil Ministry and state-run oil company signaled last month.
Main Obstacle
Besides disputes over how to share the burden, the main obstacle to an OPEC cut may be the
same one that originally drove its policy in 2014 to keep pumping: that boosting prices and ceding
market share would only stimulate supplies from competitors, such as U.S. shale drillers, to fill the
gap.
Shale oil, which can respond more quickly to prices than traditional crude projects, would “pour”
into the market if the organization manages to lift prices, Fatih Birol, executive director of the
International Energy Agency, said on Nov. 16.
The consequences of failing to reach a deal could mean another price slump toward $40 a barrel,
Goldman Sachs Group Inc. and Societe Generale SA predict.
With no accord to hold them back, OPEC members may revert to the competition and price-
cutting that sent prices spiraling two years ago, according to Daniel Yergin, vice-chairman of
consultants IHS Inc. and author of Pulitzer Price-winning history of the oil industry, “The Prize.”

NewBase Special Coverage
News Agencies News Release 17 November 2016
Race for innovation defines new chapter in LNG market
Gulf Times - By John Roper
Carving out innovative roadmaps to navigate intensifying global competition has climbed to the top of
liquefied natural gas (LNG) producers’ playbooks. Stakeholders are jostling to thrive and not just
survive for three primary reasons – oil-indexed LNG prices have shadowed plummeting oil prices
since mid-2014, the current glut of supply calls for increasingly competitive strategies and there is an
ever-growing environmental checklist.
Global LNG demand is weakening; the International Energy Agency (IEA) expects natural gas demand
to grow at 1.5% annually through to 2021 compared to the robust 2.2% annual growth seen over the
last five years. Yet, global LNG production volumes climbed by 2% on 2014 to 250mn tonnes in 2015,
with an additional 125mn tonnes of LNG under development likely to come to market next year,
according to consultants Wood Mackenzie.
The disparity between supply and demand makes for dynamic market conditions and innovation is the
ultimate tool to safeguard stakeholders’ profit margins until the outlook stabilises, which may not start
till at least 2020.
Innovative strategies include ships being turned into floating storage regasification units (FSRU),
which has piqued the intrigue of investors seeking business opportunities. The capital expenditure for
FSRUs, floating LNG (FLNG) production units and floating import units (FSUs) is expected to reach
$41.6bn between 2016 and 2022, compared to $11.4bn during 2011-2015, according to Douglas
Westwood’s World FLNG Market Forecast. FSRUs, for example, significantly reduce associated risk

for cross-border transactions as they can circumnavigate political unrest — an offering unmatched by
onshore pipelines.
The players in the LNG market are also evolving as Shell’s $54bn acquisition of BG Group in February
this year — the deal includes some of Australia’s major LNG projects – illustrates major energy
companies’ appetite for widening their LNG portfolios.
At the other end of the scale, the world’s small scale LNG terminals market is expected to more than
double from the 50.47mn tonnes per year in 2015 to 102.44mn tonnes per a year by 2022, according
to Transparency Market Research (TMR).
The growth forecast largely relates to onshore developments, though the offshore profile will gain
traction as energy companies explore more small fields. Investors and speculators’ confidence to
support such projects will correlate to the growth of liquidity in the market, though financial support is
required more immediately for small and medium sized enterprises (SMEs), whose bank balances are
creaking amid low prices.
Thinking outside the box must become a long-term strategy as competition in the LNG market
intensifies. The US’ first LNG export from the country’s Sabine Pass on the Gulf of Mexico in February
this year through the newly-widened Panama Canal signalled a seismic shift in the competitive nature
of global LNG markets. Plus, despite a wave of delays, Australia is still likely to become one of the
world’s biggest LNG exporters in the 2020s, following the country’s $200bn investment into that
industry over the last decade. The combined volume from the US and Australia could account for more
than 90% of new LNG exports by 2020, which could challenge Qatar’s position as the world’s largest
LNG exporter.
Iran, home to the world’s second largest natural gas reserves, is poised to become an LNG supplier
during the next decade following the lifting of the majority of Western-imposed sanctions in January of
this year. It is still not clear how Iran will prioritise its pipeline export ambitions over developing an
international LNG export business.
The glut of supply means up to 50mn tonnes of ‘un-contracted LNG’ — product without a pre-
determined home – is anticipated by 2020 and buyers’ preference for shorter-term contracts is gaining
traction at the negotiating table. This signifies a fundamental shift for a market historically
characterised by agreements that stretch into decades in order to justify LNG producers’ high
infrastructure capital costs.
Political appetite for LNG, which is considered a
stepping stone from a hydrocarbon to low-carbon
world, will help soak up some of the oversupply
over the next decade. Ports in northern Europe,
Asia and the US agreed in October this year to
collectively work on a standardised framework for
LNG bunkering. Antwerp, Rotterdam, Zeebrugge,
Singapore and the Port of Jacksonville are
among those involved in a historical shift from
using fuel oil to LNG as a marine fuel. In addition,
the new Emission Control Areas around port
zones will propagate the use of cleaner fuels, of
which LNG is one.
In the midst of such uncertainty, LNG stakeholders have little choice but to embrace change and use
innovation and entrepreneurship as their allies in the battle for stability. But, a balance must be struck
so that new roadmaps are not characterised by expensive and risky lone-wolf ventures. Knowledge
sharing and collaborations by the greater industry are integral to reducing risks and bills for
governments, companies and investors.

World Energy Outlook 2016 sees broad transformations in the
global energy landscape.. Source: IEA
The International Energy Agency (IEA) reports that, as a result of major transformations in the
global energy system that take place over the next decades, renewables and natural gas are the
big winners in the race to meet energy demand growth until 2040. This is according to the latest
edition of the World Energy Outlook, the International Energy Agency’s flagship publication.
A detailed analysis of the pledges made for the Paris Agreement on climate change finds that the
era of fossil fuels appears far from over and underscores the challenge of reaching more
ambitious climate goals. Still, government policies, as well as cost reductions across the energy
sector, enable a doubling of both renewables – subject of a special focus in this year’s Outlook –
and of improvements in energy efficiency over the next 25 years. Natural gas continues to expand
its role while the shares of coal and oil fall back.

'We see clear winners for the next 25 years – natural gas but especially wind and solar – replacing
the champion of the previous 25 years, coal,' said Dr Fatih Birol, the IEA's executive director. 'But
there is no single story about the future of global energy: in practice, government policies will
determine where we go from here.'
This transformation of the global energy mix described in WEO-2016 means that risks to energy
security also evolve. Traditional concerns related to oil and gas supply remain – and are
reinforced by record falls in investment levels. The report shows that another year of lower
upstream oil investment in 2017 would create a significant risk of a shortfall in new conventional
supply within a few years.
In the longer-term, investment in oil and gas remain essential to meet demand and replace
declining production, but the growth in renewables and energy efficiency lessens the call on oil
and gas imports in many countries. Increased LNG shipments also change how gas security is
perceived. At the same time, the variable nature of renewables in power generation, especially
wind and solar, entails a new focus on electricity security.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 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 November 2016 K. Al Awadi

New base energy news issue 950 dated 17 november 2016

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New base energy news issue 950 dated 17 november 2016