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Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
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NewBase 04 November 2014 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Qatar to renew UAE condensate contracts for 2015: CEO
By Reuters + NewBase
Qatar International Petroleum Marketing Co, or Tasweeq, plans to renew its contract to supply
condensate to the UAE for 2015, the company's chief executive said on Monday.
Under the current 2014
contact, Tasweeq supplies
three cargoes a month to the
UAE, two to Dhabi's Emirates
National Oil Company (Enoc)
and one to Abu Dhabi's
National Oil company
(Adnoc), Saad Al Kuwari told
reporters on the sidelines of
an industry event in Doha.
Each cargo has 500,000
tonnes of condensate, he
said. "The Enoc contract
expires soon and we plan to
renew it. We will supply (Enoc) with same volumes and any extra demand will depend on
availability," said Kuwari. Last year, Enoc said it had started importing condensate from Qatar to
replace sanctioned Iranian oil.
Enoc was the biggest buyer of Iranian condensate in 2012 when its imports rose to an average of
127,000 barrels per day (bpd), up from 106,000 bpd in 2011, despite US pressure to stop the
trade.
Asked if Qatar would discount its condensate to compete with Iran, Kuwari said there were no
plans to do so. "The price is market driven and the outlook for demand is positive for next year.
We have no plans to discount because we have a different quality of products and long-term
contracts," he said.
Qatar expects a drop in its condensate exports to 350,000 tonnes per annum in 2017, compared
with the current half a million tonnes a year, as the phase two of the Ras Laffan refinery will come
online by the end of 2016.
"I don't think this will cause any major disruption in the market because there will be more supply
coming from the US," said Ibrahim Al Sulaiti, marketing director for filed condensates at Tasweeq.
He added that in terms of exports 70-80 per cent of contracts were on a long-term basis and 60
per cent were sold to Korea and Japan.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 2
Oman; UK’s Frontier seeks JV partner for Block 38
Oman Obsorber +(OEPPA Business Development Dept)
UK-based international oil and gas firm Frontier Resources says it is looking to partner with an
investor ahead of the next phase of exploration targeting its onshore Block 38 licence in the
southwest of Oman.
Towards this end, the company has set up a data
room at its Houston, USA office to allow for
interested investors to review data on the
concession. Interest in the proposed farm-out has
been “encouraging”, said Frontier Resources,
adding that more than 15 prospective companies
have so far approached the company for access
to the data.
“Following our successful work programmes to
date, we are now actively looking for suitably qualified co-venturers to join Frontier in the next
phase of exploration on (the Block 38 prospect). The level of interest shown by industry has been
very encouraging and we will update shareholders in due course,” said Frontier Chief Executive
Officer Jack Keyes in a statement.
Frontier has a 100 per cent interest in Block 38, having acquired the 17,425 sq km concession in
November 2012 under an Exploration & Production Sharing Agreement (EPSA) signed with the
Ministry of Oil and Gas. The six-year pact commits Frontier to investing around $20 million in
exploration activities in the first three-year phase.
As part of its commitments, Frontier has already evaluated available geological, geophysical and
potential field data on the block, located in Dhofar Governorate. It has also begun reprocessing of
older seismic data and plans to acquire aero-gravity and magnetic data, which are key to the
design of a 3D seismic survey.
During the first half of this year, Frontier undertook gravity and magnetic modelling, as well as the
reprocessing of an additional 574 km of legacy 2D seismic. These reprocessed data have enabled
the company to identify geologic horizons and potentially attractive exploration targets previously
unseen on the original seismic.
These targets, it further noted, include formations within Precambrian — Cambrian units, many of
which contain hydrocarbons analogous to the Khazzan-Makarem Field currently under
development by BP in Block 61 in central Oman.
“In addition to the above formations there is also the potential presence of an Ara formation intra-
salt play on the Block as seen after recent reprocessing of a test line. Based on this encouraging
information, Frontier has decided to reprocess up to an additional 400 kilometres of legacy 2D
seismic data over the area where this lead was identified,” the company stated.
Significantly, a joint venture deal with a suitable industry partner will help support the funding of
the next stage of exploration comprising 3D seismic and drilling.
Frontier has to fulfil all of its commitments under the first three-year phase of the EPSA before it
can approach the government for the go-ahead to proceed with the second three-year phase. The
EPSA also entitles an Omani government company to acquire a 25 per cent participating interest
in the concession once a declaration of commerciality is announced.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 3
GAIL India, SOCAR to Cooperate in the Field of LNG
Source ; Gail India Limited + NewBase
GAIL India and State Oil Company of Republic of Azerbaijan (SOCAR) have signed Memorandum
of Understanding (MoU) to jointly pursue LNG opportunities, GAIL said Monday. The two
companies intend to cooperate through capacity booking, LNG procurement and promotion of
LNG projects globally.
Both companies shall also
cooperate in optimization of LNG
marketing, sourcing and shipping
requirements, GAIL said. In
addition, GAIL and SOCAR will
pursue business opportunities in
upstream assets across the world
and joint investment in
petrochemical projects.
Speaking on the occasion, B C
Tripathi, Chairman and Managing
Director, GAIL said “We are
happy to enter into this strategic
relationship with SOCAR. Skills
and strengths of both the parties
would be leveraged to explore business opportunities jointly in natural gas and LNG business
including new business developments across the gas value chain.”
In order to meet the growing appetite of Indian market, GAIL has been expanding its global
presence to secure long term gas supplies. GAIL has signed a 20 year Sales and Purchase
Agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, USA for
supply of 3.5 million tonnes per year of LNG.
In addition, the company signed long-term LNG supply contract for 2.5 million tonnes per annum
with Gazprom Marketing and Trading Ltd., Singapore for 20 years.
GAIL also signed a Terminal Service agreement for 2.3 million tonnes per year LNG liquefaction
capacity with Dominion Cove Point LNG, USA. GAIL is also poised to make its foray into LNG
shipping business with long-term charter hiring of multiple LNG vessels, mainly to transport LNG
volumes from GAIL’s US portfolio to India.
B C Tripathi, Chairman and Managing Director, GAIL (left) and
Arzu Azimov, CEO, SOCAR Trading SA (Source: GAIL India)
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
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in this publication. However, no warranty is given to the accuracy of its content . Page 4
S. Africa Begins Processing Falcon's Shale Gas Exploration Application
Source : Falcon + NewBase
Dublin based Falcon Oil & Gas announced Monday that Petroleum Agency of South Africa
(PASA) has commenced processing company’s application for a shale gas exploration licence
in South Africa's Karoo Basin.
The PASA has requested Falcon to
review and update its already drafted
Environmental Management
Programme where necessary. In
accordance with the South African
Mineral and Petroleum Resources
Development Act 2002, Falcon is
required to notify and consult with
communities and parties in respect of
any such revisions.
The company has been requested to
complete this process by 27 February
2015. “We are encouraged by these
developments and will work to meet all
the requirements set by the PASA. The
7.5 million acres in the Karoo Basin, for
which Falcon is seeking an exploration licence, are geologically prospective with the Whitehill
shale believed to be thick, organically rich and thermally mature. We will update shareholders as
and when appropriate.” Philip O'Quigley, CEO of Falcon commented.
Falcon was granted a Technical Cooperation Permit (TCP) in 2009 covering 7.5 million (30,327
km2) acres in the southern part of the Karoo Basin. The TCP gives Falcon an exclusive right to an
exploration licence to find commercial hydrocarbon deposits over all or part of this area.
In December 2012, the company announced a cooperation agreement with Chevron Business
Development South Africa. The agreement enables Falcon to work exclusively with Chevron for a
period of five years in jointly obtaining exploration licences.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 5
Norway: Spike Exploration announces success of the Garantiana discovery
Source: Spike Exploration + NewBase
The appraisal well 34/6-3S was drilled into the southern part of the Garantiana-
discovery inPL554, where Spike Explorationholds a 30% working interest. The well encountered
a gross oil column of 100 vertical metres in the Cook formation with excellent reservoir quality. A
successful production test was undertaken. A sidetrack into a separate compartment named
the Akkar Updip
prospect encountered a gross oil
column of 44 vertical metres in the
Cook formation with good reservoir
characteristics. A conservative
estimate of the combined discovered
resource range in PL554 is 50 to 105
million barrels of oil.
'Our move to increase the interest in
the Garantiana license has paid off
well. In addition to the two discoveries
the licence holds several attractive
prospects which now have been
derisked. We are looking forward to
co-operate with the partnership to
unlock the significant potential in the
licence and find the optimal
development concept.' comments
Bjørn Inge Tønnessen, CEO of Spike
Exploration.
Well 34/6-3 S is located two kms
southwest of the discovery well
34/6-2S, completed in 2012. The well
was drilled deviated to a total vertical
depth of 3791m below sea level. Garantiana is located about 30 kms northeast of the Visund
field in the northern part of the North Sea. Also Snorre and Knarr are nearby oil fields. The water
depth is 381m.
Extensive data acquisition and sampling were carried out in the Garantiana appraisal well,
including comprehensive formation testing of the Cook formation. The stable production rate
measured approx. 5900 bopd through a 24/64 inch choke size, with a maximum rate of
nearly 7000 bopd through a 28/64 inch nozzle opening. The test showed very good flow
properties including stable flowing pressure and low drawdown, and consistent pressure build-
ups. The well produced oil with a low gas/oil ratio. The deeper Statfjord formation was found to
be water-bearing.
The separate sidetrack exploration well 34/6-3 A into theAkkar Updip prospect was drilled to a
total vertical depth of 3724 m below sea level, and discovered oil in the Cook formation. The well
was terminated in the water-bearing Statfjord formation. Sampling and data acquisition was
carried out.
The PL554/B/C group of partners consist of TOTAL E&P Norge (40%, operator), Spike
Exploration (100%-owner ofBridge Energy Norge – 30%), Svenska Petroleum
Exploration(20%) and Det norske oljeselskap (10%).
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 6
Norway: Statoil provides update on Johan Sverdrup development
Source: Statoil
Statoil reports that the gigantic Johan Sverdrup field, one of the most profitable industrial
projects in Norway over coming decades, will provide enormous value. Construction of the first
phase may lead to 51,000 man-years related to Norwegian deliveries, and the field may produce
revenues amounting to NOK
1350 billion. The project will
provide new knowledge,
new solutions and new
opportunities.
'Johan Sverdrup represents
all we stand for as an
industry and our faith in the
future. This will be a gigantic
project that will secure
energy supply and jobs and
result in substantial spin-offs and value for Norwegian society, the industry and the partnership
behind the development,' says Arne Sigve Nylund, Statoil executive vice president for
Development & Production Norway. 'Johan Sverdrup represents all we stand for as an industry
and our faith in the future. This will be a gigantic project that will secure energy supply and jobs
and result in substantial spin-offs and value for Norwegian society, the industry and the
partnership behind the development,' says Nylund.
Johan Sverdrup is one of the biggest discoveries on the Norwegian continental shelf since the
mid-1980s and ranks among the biggest developments in the years ahead. The consultation
period concerning the environmental impact assessment for the field and the power proposal will
now commence.
Large Norwegian component
It is estimated that the first-phase development of the Johan Sverdrup field will create around
51,000 man-years nationally, of which as many as 22,000 are expected to be performed by
suppliers in Norway and approx. 12,000 by their subcontractors. Calculations show that 2,700
man-years will be created in an average year in the production phase, with 3,400 man-years
expected to be created at peak field development.
Based on estimates from Agenda Kaupang it is possible for the Norwegian supplier industry to
be awarded more than 50% of the assignments in the construction phase and around 90% in the
operating phase. 'It is very important for the Johan Sverdrup development that the Norwegian
supplier industry positions itself well for the opportunities lying ahead,' says Nylund.
A new chapter
According to a provisional estimate, total production revenues over 50 years may amount to as
much as NOK 1350 billion (1). Of this amount, corporation tax alone will give the Norwegian state
NOK 670 billion in direct revenue. Total investments for the first development phase are NOK
100-120 billion (2), while production will be in the range of 315,000-380,000 barrels per day.
Looked at from the perspective of 50 years, Johan Sverdrup will be a long-term project that
several generations will bring to maturity and operate. The 200 sq.km. large field will be
developed in stages.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 7
UK: CNOOC Achieves First Oil from Golden Eagle Area
Press Release + NewBase
CNOOC has announced first oil from the Golden Eagle Area Development (GEAD) in the UK
North Sea. The GEAD includes development of the Golden Eagle, Peregrine and Solitaire fields.
The fields are located in blocks 20/1S, 20/1N and 14/26a of the North Sea, and are located 70km
north-east of Aberdeen, with an average water depth ranging from 89-139 m.
The development comprises separate production and wellhead platforms and two subsea
production systems. A total of 15 production wells and six water injection wells will eventually be
drilled from these facilities.
Currently there are two wells producing approximately 18,000 bbl/d. The project is expected to
reach its peak production rate of approximately 70,000 bbl/d in 2015.
CNOOC subsidiary Nexen Petroleum UK is the operator. Ownership of GEAD: Nexen (36.54%),
Maersk (31.56%), Suncor Energy (26.69%) and Edinburgh Oil and Gas (5.21%) .
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 8
U.S. gasoline prices move with Brent rather than WTI crude oil
Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update; Bloomberg LP
Recent increases in U.S. crude oil production have sparked discussion on how this increase in
supply will be used by U.S. refiners given current limitations on exporting domestic crude. On
October 30, EIA released a study that explored the relationships between crude oil and gasoline
prices.
Key findings from the analysis include:
• Prices of Brent crude oil, an international benchmark, are more important than the price
of West Texas Intermediate (WTI), a domestic benchmark, for determining gasoline
prices in all four U.S. regions studied, including the Midwest.
• The effect that a relaxation of current limitations on U.S. crude oil exports would have
on U.S. gasoline prices depends on its effect on international crude prices, such as
Brent, rather than its effect on domestic crude prices.
• Gasoline is a globally traded commodity, and prices are highly correlated across global
spot markets.
• Gasoline supply, demand, and trade in various regions are changing; one effect is that
U.S. Gulf Coast and Chicago spot gasoline prices, which are closely linked, are now
often the lowest in the world during fall and winter months.
A change in current limitations on crude oil exports could have implications for both domestic and
international crude oil prices. Such a relaxation could raise the prices of domestically produced oil.
If higher prices for domestic crude were to spur additional U.S. production than might otherwise
occur, the increase to global crude oil supply could reduce the global price of crude.
The extent to which domestic crude prices might rise, and global crude prices might fall, depends
on a host of factors, including the degree to which current export limitations affect prices received
by domestic producers, the sensitivity of future domestic production to prices changes, the ability
of domestic refiners to absorb domestic production, and the reaction of key foreign producers to
changes in the level of U.S. crude production.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 9
Relationships between gasoline and crude oil prices
U.S. retail gasoline prices reflect four key components: the price of crude oil; refining costs and
profit margins; retail and distribution costs and profit margins; and taxes. The first two factors tend
to be more volatile, causing most of the variation in retail gasoline prices, while the latter two
reflect the retail portion and tend to be relatively stable.
A general guideline for how crude oil prices affect gasoline is that a $1-per-barrel change in the
price of crude oil translates into a change of about 2.4 cents per gallon of gasoline. (There are 42
gallons in one barrel, and 2.4 cents is about 1/42 of $1.)
While there are many crude oils traded around the globe, two of the major benchmark light
sweet crudes are West Texas Intermediate (WTI) and North Sea Brent. Before 2010, there
was little reason to specify which crude oil price was more important with respect to effects on
domestic gasoline prices, as the two benchmarks traded at similar prices. In mid-2010, more
Canadian exports to the U.S. Midwest and increased production in the United States led to
transportation constraints, which caused the price of WTI to fall below the Brent price. The surge
of domestic production also reduced U.S. crude imports.
However, the lower WTI prices did not result in lower U.S. gasoline prices because, as EIA's
analysis shows, U.S. gasoline prices are more closely linked to the price of Brent. The analysis
shows this is the case in all parts of the country, including the Midwest, where the trading hub for
WTI is located (Cushing, Oklahoma).
Gasoline itself is also a globally
traded commodity, and the United
States both imports
and exports gasoline and other
finished products. The graph below
shows prices at trading hubs around
the world: New York Harbor, U.S.
Gulf Coast, and Chicago, as well as
Singapore, the Mediterranean, and
Amsterdam-Rotterdam-Antwerp
(ARA). These prices trade within a
relatively narrow band, and the prices
between different points reflect the transportation costs associated with shipping gasoline from
exporting markets to importing markets.
Global gasoline supply and demand patterns have been evolving. Gasoline demand in Asia,
Latin America, and the Middle East has been outpacing gasoline production in those regions. In
the United States, demand is declining but refinery production of gasoline has been rising,
resulting in increasing exports of U.S. gasoline into the global market. Because of these changes
in the market and seasonal fluctuations in U.S. gasoline demand, the gasoline spot prices in the
U.S. Gulf Coast or Chicago are now often the lowest in the world during fall and winter months.
While EIA's new report provides directional insights regarding the implications for U.S. gasoline
prices of a possible relaxation of current limitations on crude oil exports, it does not address the
extent of any actual change in domestic production or the domestic or international price of crude
oil that might follow from a decision to relax or eliminate those limitations. EIA is undertaking
further analyses that will examine those issues and expects to report additional results over the
coming months.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 10
Falling Oil Prices Special Coverage
US: Petrol cheaper than milk a happy sign of the times
AP + NewBase
The sights were so surprising that Americans shared photos of them – filling station signs with
prices of US$2-something a gallon. “It’s stunning,” says Tom Kloza, chief oil analyst at the Oil
Price Information Service. “I’m a little bit shocked.”
The national average price of petrol fell 33 cents to end last month at $3 a gallon and dipped on
Saturday to $2.995, according to the US motorists’ group AAA. That marked the first time in four
years that petrol had been cheaper than $3 a gallon [one gallon is 3.8 litres].
The national average crept above $3 a gallon in December of 2010, as global demand for oil and
petrol was rising as people in developing countries bought cars by the tens of millions and turmoil
was brewing in the Middle East.
Now demand isn’t rising as fast as expected, drillers have learnt to tap vast new sources of oil,
particularly in the US, and crude continues to flow out of the Middle East. Seasonal swings and
other factors are likely to send petrol back over $3 sooner than drivers would like, but the US is on
track for the lowest annual average since 2010.
Trisha Pena of Hermitage, Tennessee, recently paid $2.57 a gallon to fill up her Honda CR-V. Like
many around the US these days, she was delighted by the price she took a photograph and
posted it on social media. “I can’t remember the last time it cost under $30 to put 10 or 11 gallons
in my tank,” she said. “A month ago it was in the $3.50 range, and that’s where it had been for a
very long time.”
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Historically, a stronger economy in the US, the world’s biggest consumer of oil products, usually
meant rising fuel demand. No longer. Americans are driving more efficient vehicles and their
driving habits are changing. Michael Sivak of the University of Michigan Transportation Research
Institute calculates that the number of miles travelled per household and gallons of fuel consumed
per household peaked in 2004.
And so petrol is cheaper than milk again. In September the national average price of milk was
$3.73 per gallon. The annual average for milk is on track to be more expensive than the annual
average for petrol for the first time since 2011.
The drop from last year’s average of $3.51 per gallon will save the typical US household about
$50 a month. It will save the country’s economy $187 million a day, and also boost the profits of
shippers, airlines, and any firm that sends employees out on sales calls or for deliveries.
Iran faces a budget deficit as oil prices fall
By:
Abu Dhabi: The slide in global oil prices will lead to a budget deficit in Iran, experts say. Brent
crude, a benchmark for oil, has plunged more than 20 per cent since peaking in June at about
$115 a barrel amid oversupply due to US shale production and lack of demand in the market.
Brent inched lower on Monday, dropping further away from $86 a barrel.
Alireza Gharbi, Business Development Manager of the Tehran-based Iran Oil Gas Network, said
the country’s budget for this year is set on the $100 per barrel oil price and this drop will lead to a
budget deficit.
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redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
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“Since the situation and parameters are kind of complicated, there is no specific strategy chosen
by the Iran oil officials yet,” said Gharbi when asked what Iran would do as prices plunge. Iran
holds the world’s fourth-largest proved crude oil reserves and the world’s second-largest natural
gas reserves, according to the US Energy Information Administration.
Despite the country’s abundant reserves, Iran’s oil production has substantially declined over the
past few years, and natural gas production growth has slowed. The international sanctions due to
Iran’s nuclear issue have profoundly affected Iran’s energy sector. Sanctions have prompted a
number of cancellations or delays of upstream projects, resulting in declining oil production
capacity.
Kevan Harris, associate director at Princeton University’s Centre for Iran and Arabian Gulf Studies
in Princeton said the government will have to run a current account deficit and reach into its
development fund to make up the shortfall. “That’s not what they would prefer to do, given the
current sanctions regime. But it is manageable, I think,” he said.
Another expert said that the best
strategy for Iran would be to reach
an agreement with the group of
P5+1 countries (United States,
Russia, China, United Kingdom,
France and Germany) so that
sanctions are eased and the country
would be able to increase its
production and export.
“This could reduce its budgetary gap
and help Iran to regain its pre-
sanctions market share,” said Sara
Vakhshouri, President of US-based
SVB Energy International, a global
strategic energy consulting firm specialised in oil and gas industry. She said that Iran will not push
for production cuts at this month’s Organisation of the Petroleum Exporting Countries (Opec)
meeting in Vienna.
“Therefore it’s not in Iran’s interest to push for Opec production drop, as its export is already at its
minimum range and this country would not want to lose additional market share. Also, if Opec and
Iran reduce their production, there is no guarantee that non-Opec producers would do the same,”
she added.
Iran’s economy minister, Ali Tayyebnia, said on Sunday that if oil prices keep falling, the
government will definitely make plans to head off a budget deficit problem next (calendar) year.
The minister said Iran will dip into the National Development Fund of Iran (NDFI) to make up for
any possible shortfall. He was quoted on Shana, the oil ministry’s website in Iran.
Carole Nakhle, a non-resident scholar at the Beirut-based global think tank, Carnegie Middle East
Centre, said that even if an agreement on Iran’s nuclear programme is reached, it would be
premature to predict that the oil and gas markets will be immediately flooded with new supplies
from that part of the world.
“Many technical and legislative bottlenecks remain. Iran might get some speedy concessions, but
these are unlikely to reverse the oil and gas production and investment realities in the country,
given that oil and gas projects require long-term commitments lasting decades. Furthermore, the
removal of sanctions, especially the US sanctions, is a lengthy and complex process,” she wrote
in an article on the centre’s website.
Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 13
Oman Crude Oil Financial Contract closes at US$83.37 at DME
WAM + NewBase
DUBAI, 3rd November, 2014 (WAM) -- The price of Oman Crude Oil Financial Contract, DME
Oman, went down by US$0.51, closing at US$83.37 a barrel at Dubai Mercantile Exchange at
12:30 p.m., Dubai time, on Monday.
DME Oman crude oil is considered a benchmark for pricing crude oil by the countries that produce
it, and it gives them a differential price that reflects the quality of the product.
The Dubai Mercantile Exchange Limited, DME, is the premier energy-focused commodities
exchange in the East of Suez, and home to the world's third crude benchmark.
DME is a joint venture between Dubai Holding, Oman Investment Fund and CME Group. A
number of global financial institutions and energy trading firms have equity stakes in the DME,
providing the exchange with a resounding vote of confidence by major players in global energy
markets.
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redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 14
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Your partner in Energy Services
Khaled Malallah Al Awadi,
Energy Consultant
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Mobile : +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAEKhaled Al Awadi is a UAEKhaled Al Awadi is a UAEKhaled Al Awadi is a UAE
National with a total of 24 yearsNational with a total of 24 yearsNational with a total of 24 yearsNational with a total of 24 years
of experienof experienof experienof experience in thece in thece in thece in the Oil & Gas sector.Oil & Gas sector.Oil & Gas sector.Oil & Gas sector.
Currently working as Technical AffairsCurrently working as Technical AffairsCurrently working as Technical AffairsCurrently working as Technical Affairs
Specialist for Emirates General PetroleumSpecialist for Emirates General PetroleumSpecialist for Emirates General PetroleumSpecialist for Emirates General Petroleum
Corp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntary
Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the
eeeexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience 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 inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences in
the designing & constructingthe designing & constructingthe designing & constructingthe designing & constructing of gas pipelines, gasof gas pipelines, gasof gas pipelines, gasof gas pipelines, gas metering & regulating stations and in the engineeringmetering & regulating stations and in the engineeringmetering & regulating stations and in the engineeringmetering & regulating stations and in the engineering
of supply routes. Many years were spent drafting, & compiling gas transportation , operation &of supply routes. Many years were spent drafting, & compiling gas transportation , operation &of supply routes. Many years were spent drafting, & compiling gas transportation , operation &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 formaintenance agreements along with many MOUs for the local authorities. He has become a reference formaintenance agreements along with many MOUs for the local authorities. He has become a reference formaintenance agreements along with many MOUs for the local authorities. He has become a reference for
manymanymanymany of the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally ,Energy program broadcasted internationally ,Energy program broadcasted internationally ,Energy program broadcasted internationally ,
via GCC leading satellite Channelsvia GCC leading satellite Channelsvia GCC leading satellite Channelsvia GCC leading satellite Channels ....
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 04 November 2014 K. Al Awadi

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New base special 04 november 2014

  • 1. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 1 NewBase 04 November 2014 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Qatar to renew UAE condensate contracts for 2015: CEO By Reuters + NewBase Qatar International Petroleum Marketing Co, or Tasweeq, plans to renew its contract to supply condensate to the UAE for 2015, the company's chief executive said on Monday. Under the current 2014 contact, Tasweeq supplies three cargoes a month to the UAE, two to Dhabi's Emirates National Oil Company (Enoc) and one to Abu Dhabi's National Oil company (Adnoc), Saad Al Kuwari told reporters on the sidelines of an industry event in Doha. Each cargo has 500,000 tonnes of condensate, he said. "The Enoc contract expires soon and we plan to renew it. We will supply (Enoc) with same volumes and any extra demand will depend on availability," said Kuwari. Last year, Enoc said it had started importing condensate from Qatar to replace sanctioned Iranian oil. Enoc was the biggest buyer of Iranian condensate in 2012 when its imports rose to an average of 127,000 barrels per day (bpd), up from 106,000 bpd in 2011, despite US pressure to stop the trade. Asked if Qatar would discount its condensate to compete with Iran, Kuwari said there were no plans to do so. "The price is market driven and the outlook for demand is positive for next year. We have no plans to discount because we have a different quality of products and long-term contracts," he said. Qatar expects a drop in its condensate exports to 350,000 tonnes per annum in 2017, compared with the current half a million tonnes a year, as the phase two of the Ras Laffan refinery will come online by the end of 2016. "I don't think this will cause any major disruption in the market because there will be more supply coming from the US," said Ibrahim Al Sulaiti, marketing director for filed condensates at Tasweeq. He added that in terms of exports 70-80 per cent of contracts were on a long-term basis and 60 per cent were sold to Korea and Japan.
  • 2. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 2 Oman; UK’s Frontier seeks JV partner for Block 38 Oman Obsorber +(OEPPA Business Development Dept) UK-based international oil and gas firm Frontier Resources says it is looking to partner with an investor ahead of the next phase of exploration targeting its onshore Block 38 licence in the southwest of Oman. Towards this end, the company has set up a data room at its Houston, USA office to allow for interested investors to review data on the concession. Interest in the proposed farm-out has been “encouraging”, said Frontier Resources, adding that more than 15 prospective companies have so far approached the company for access to the data. “Following our successful work programmes to date, we are now actively looking for suitably qualified co-venturers to join Frontier in the next phase of exploration on (the Block 38 prospect). The level of interest shown by industry has been very encouraging and we will update shareholders in due course,” said Frontier Chief Executive Officer Jack Keyes in a statement. Frontier has a 100 per cent interest in Block 38, having acquired the 17,425 sq km concession in November 2012 under an Exploration & Production Sharing Agreement (EPSA) signed with the Ministry of Oil and Gas. The six-year pact commits Frontier to investing around $20 million in exploration activities in the first three-year phase. As part of its commitments, Frontier has already evaluated available geological, geophysical and potential field data on the block, located in Dhofar Governorate. It has also begun reprocessing of older seismic data and plans to acquire aero-gravity and magnetic data, which are key to the design of a 3D seismic survey. During the first half of this year, Frontier undertook gravity and magnetic modelling, as well as the reprocessing of an additional 574 km of legacy 2D seismic. These reprocessed data have enabled the company to identify geologic horizons and potentially attractive exploration targets previously unseen on the original seismic. These targets, it further noted, include formations within Precambrian — Cambrian units, many of which contain hydrocarbons analogous to the Khazzan-Makarem Field currently under development by BP in Block 61 in central Oman. “In addition to the above formations there is also the potential presence of an Ara formation intra- salt play on the Block as seen after recent reprocessing of a test line. Based on this encouraging information, Frontier has decided to reprocess up to an additional 400 kilometres of legacy 2D seismic data over the area where this lead was identified,” the company stated. Significantly, a joint venture deal with a suitable industry partner will help support the funding of the next stage of exploration comprising 3D seismic and drilling. Frontier has to fulfil all of its commitments under the first three-year phase of the EPSA before it can approach the government for the go-ahead to proceed with the second three-year phase. The EPSA also entitles an Omani government company to acquire a 25 per cent participating interest in the concession once a declaration of commerciality is announced.
  • 3. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 3 GAIL India, SOCAR to Cooperate in the Field of LNG Source ; Gail India Limited + NewBase GAIL India and State Oil Company of Republic of Azerbaijan (SOCAR) have signed Memorandum of Understanding (MoU) to jointly pursue LNG opportunities, GAIL said Monday. The two companies intend to cooperate through capacity booking, LNG procurement and promotion of LNG projects globally. Both companies shall also cooperate in optimization of LNG marketing, sourcing and shipping requirements, GAIL said. In addition, GAIL and SOCAR will pursue business opportunities in upstream assets across the world and joint investment in petrochemical projects. Speaking on the occasion, B C Tripathi, Chairman and Managing Director, GAIL said “We are happy to enter into this strategic relationship with SOCAR. Skills and strengths of both the parties would be leveraged to explore business opportunities jointly in natural gas and LNG business including new business developments across the gas value chain.” In order to meet the growing appetite of Indian market, GAIL has been expanding its global presence to secure long term gas supplies. GAIL has signed a 20 year Sales and Purchase Agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, USA for supply of 3.5 million tonnes per year of LNG. In addition, the company signed long-term LNG supply contract for 2.5 million tonnes per annum with Gazprom Marketing and Trading Ltd., Singapore for 20 years. GAIL also signed a Terminal Service agreement for 2.3 million tonnes per year LNG liquefaction capacity with Dominion Cove Point LNG, USA. GAIL is also poised to make its foray into LNG shipping business with long-term charter hiring of multiple LNG vessels, mainly to transport LNG volumes from GAIL’s US portfolio to India. B C Tripathi, Chairman and Managing Director, GAIL (left) and Arzu Azimov, CEO, SOCAR Trading SA (Source: GAIL India)
  • 4. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 4 S. Africa Begins Processing Falcon's Shale Gas Exploration Application Source : Falcon + NewBase Dublin based Falcon Oil & Gas announced Monday that Petroleum Agency of South Africa (PASA) has commenced processing company’s application for a shale gas exploration licence in South Africa's Karoo Basin. The PASA has requested Falcon to review and update its already drafted Environmental Management Programme where necessary. In accordance with the South African Mineral and Petroleum Resources Development Act 2002, Falcon is required to notify and consult with communities and parties in respect of any such revisions. The company has been requested to complete this process by 27 February 2015. “We are encouraged by these developments and will work to meet all the requirements set by the PASA. The 7.5 million acres in the Karoo Basin, for which Falcon is seeking an exploration licence, are geologically prospective with the Whitehill shale believed to be thick, organically rich and thermally mature. We will update shareholders as and when appropriate.” Philip O'Quigley, CEO of Falcon commented. Falcon was granted a Technical Cooperation Permit (TCP) in 2009 covering 7.5 million (30,327 km2) acres in the southern part of the Karoo Basin. The TCP gives Falcon an exclusive right to an exploration licence to find commercial hydrocarbon deposits over all or part of this area. In December 2012, the company announced a cooperation agreement with Chevron Business Development South Africa. The agreement enables Falcon to work exclusively with Chevron for a period of five years in jointly obtaining exploration licences.
  • 5. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 5 Norway: Spike Exploration announces success of the Garantiana discovery Source: Spike Exploration + NewBase The appraisal well 34/6-3S was drilled into the southern part of the Garantiana- discovery inPL554, where Spike Explorationholds a 30% working interest. The well encountered a gross oil column of 100 vertical metres in the Cook formation with excellent reservoir quality. A successful production test was undertaken. A sidetrack into a separate compartment named the Akkar Updip prospect encountered a gross oil column of 44 vertical metres in the Cook formation with good reservoir characteristics. A conservative estimate of the combined discovered resource range in PL554 is 50 to 105 million barrels of oil. 'Our move to increase the interest in the Garantiana license has paid off well. In addition to the two discoveries the licence holds several attractive prospects which now have been derisked. We are looking forward to co-operate with the partnership to unlock the significant potential in the licence and find the optimal development concept.' comments Bjørn Inge Tønnessen, CEO of Spike Exploration. Well 34/6-3 S is located two kms southwest of the discovery well 34/6-2S, completed in 2012. The well was drilled deviated to a total vertical depth of 3791m below sea level. Garantiana is located about 30 kms northeast of the Visund field in the northern part of the North Sea. Also Snorre and Knarr are nearby oil fields. The water depth is 381m. Extensive data acquisition and sampling were carried out in the Garantiana appraisal well, including comprehensive formation testing of the Cook formation. The stable production rate measured approx. 5900 bopd through a 24/64 inch choke size, with a maximum rate of nearly 7000 bopd through a 28/64 inch nozzle opening. The test showed very good flow properties including stable flowing pressure and low drawdown, and consistent pressure build- ups. The well produced oil with a low gas/oil ratio. The deeper Statfjord formation was found to be water-bearing. The separate sidetrack exploration well 34/6-3 A into theAkkar Updip prospect was drilled to a total vertical depth of 3724 m below sea level, and discovered oil in the Cook formation. The well was terminated in the water-bearing Statfjord formation. Sampling and data acquisition was carried out. The PL554/B/C group of partners consist of TOTAL E&P Norge (40%, operator), Spike Exploration (100%-owner ofBridge Energy Norge – 30%), Svenska Petroleum Exploration(20%) and Det norske oljeselskap (10%).
  • 6. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 6 Norway: Statoil provides update on Johan Sverdrup development Source: Statoil Statoil reports that the gigantic Johan Sverdrup field, one of the most profitable industrial projects in Norway over coming decades, will provide enormous value. Construction of the first phase may lead to 51,000 man-years related to Norwegian deliveries, and the field may produce revenues amounting to NOK 1350 billion. The project will provide new knowledge, new solutions and new opportunities. 'Johan Sverdrup represents all we stand for as an industry and our faith in the future. This will be a gigantic project that will secure energy supply and jobs and result in substantial spin-offs and value for Norwegian society, the industry and the partnership behind the development,' says Arne Sigve Nylund, Statoil executive vice president for Development & Production Norway. 'Johan Sverdrup represents all we stand for as an industry and our faith in the future. This will be a gigantic project that will secure energy supply and jobs and result in substantial spin-offs and value for Norwegian society, the industry and the partnership behind the development,' says Nylund. Johan Sverdrup is one of the biggest discoveries on the Norwegian continental shelf since the mid-1980s and ranks among the biggest developments in the years ahead. The consultation period concerning the environmental impact assessment for the field and the power proposal will now commence. Large Norwegian component It is estimated that the first-phase development of the Johan Sverdrup field will create around 51,000 man-years nationally, of which as many as 22,000 are expected to be performed by suppliers in Norway and approx. 12,000 by their subcontractors. Calculations show that 2,700 man-years will be created in an average year in the production phase, with 3,400 man-years expected to be created at peak field development. Based on estimates from Agenda Kaupang it is possible for the Norwegian supplier industry to be awarded more than 50% of the assignments in the construction phase and around 90% in the operating phase. 'It is very important for the Johan Sverdrup development that the Norwegian supplier industry positions itself well for the opportunities lying ahead,' says Nylund. A new chapter According to a provisional estimate, total production revenues over 50 years may amount to as much as NOK 1350 billion (1). Of this amount, corporation tax alone will give the Norwegian state NOK 670 billion in direct revenue. Total investments for the first development phase are NOK 100-120 billion (2), while production will be in the range of 315,000-380,000 barrels per day. Looked at from the perspective of 50 years, Johan Sverdrup will be a long-term project that several generations will bring to maturity and operate. The 200 sq.km. large field will be developed in stages.
  • 7. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 7 UK: CNOOC Achieves First Oil from Golden Eagle Area Press Release + NewBase CNOOC has announced first oil from the Golden Eagle Area Development (GEAD) in the UK North Sea. The GEAD includes development of the Golden Eagle, Peregrine and Solitaire fields. The fields are located in blocks 20/1S, 20/1N and 14/26a of the North Sea, and are located 70km north-east of Aberdeen, with an average water depth ranging from 89-139 m. The development comprises separate production and wellhead platforms and two subsea production systems. A total of 15 production wells and six water injection wells will eventually be drilled from these facilities. Currently there are two wells producing approximately 18,000 bbl/d. The project is expected to reach its peak production rate of approximately 70,000 bbl/d in 2015. CNOOC subsidiary Nexen Petroleum UK is the operator. Ownership of GEAD: Nexen (36.54%), Maersk (31.56%), Suncor Energy (26.69%) and Edinburgh Oil and Gas (5.21%) .
  • 8. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 8 U.S. gasoline prices move with Brent rather than WTI crude oil Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel Update; Bloomberg LP Recent increases in U.S. crude oil production have sparked discussion on how this increase in supply will be used by U.S. refiners given current limitations on exporting domestic crude. On October 30, EIA released a study that explored the relationships between crude oil and gasoline prices. Key findings from the analysis include: • Prices of Brent crude oil, an international benchmark, are more important than the price of West Texas Intermediate (WTI), a domestic benchmark, for determining gasoline prices in all four U.S. regions studied, including the Midwest. • The effect that a relaxation of current limitations on U.S. crude oil exports would have on U.S. gasoline prices depends on its effect on international crude prices, such as Brent, rather than its effect on domestic crude prices. • Gasoline is a globally traded commodity, and prices are highly correlated across global spot markets. • Gasoline supply, demand, and trade in various regions are changing; one effect is that U.S. Gulf Coast and Chicago spot gasoline prices, which are closely linked, are now often the lowest in the world during fall and winter months. A change in current limitations on crude oil exports could have implications for both domestic and international crude oil prices. Such a relaxation could raise the prices of domestically produced oil. If higher prices for domestic crude were to spur additional U.S. production than might otherwise occur, the increase to global crude oil supply could reduce the global price of crude. The extent to which domestic crude prices might rise, and global crude prices might fall, depends on a host of factors, including the degree to which current export limitations affect prices received by domestic producers, the sensitivity of future domestic production to prices changes, the ability of domestic refiners to absorb domestic production, and the reaction of key foreign producers to changes in the level of U.S. crude production.
  • 9. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 9 Relationships between gasoline and crude oil prices U.S. retail gasoline prices reflect four key components: the price of crude oil; refining costs and profit margins; retail and distribution costs and profit margins; and taxes. The first two factors tend to be more volatile, causing most of the variation in retail gasoline prices, while the latter two reflect the retail portion and tend to be relatively stable. A general guideline for how crude oil prices affect gasoline is that a $1-per-barrel change in the price of crude oil translates into a change of about 2.4 cents per gallon of gasoline. (There are 42 gallons in one barrel, and 2.4 cents is about 1/42 of $1.) While there are many crude oils traded around the globe, two of the major benchmark light sweet crudes are West Texas Intermediate (WTI) and North Sea Brent. Before 2010, there was little reason to specify which crude oil price was more important with respect to effects on domestic gasoline prices, as the two benchmarks traded at similar prices. In mid-2010, more Canadian exports to the U.S. Midwest and increased production in the United States led to transportation constraints, which caused the price of WTI to fall below the Brent price. The surge of domestic production also reduced U.S. crude imports. However, the lower WTI prices did not result in lower U.S. gasoline prices because, as EIA's analysis shows, U.S. gasoline prices are more closely linked to the price of Brent. The analysis shows this is the case in all parts of the country, including the Midwest, where the trading hub for WTI is located (Cushing, Oklahoma). Gasoline itself is also a globally traded commodity, and the United States both imports and exports gasoline and other finished products. The graph below shows prices at trading hubs around the world: New York Harbor, U.S. Gulf Coast, and Chicago, as well as Singapore, the Mediterranean, and Amsterdam-Rotterdam-Antwerp (ARA). These prices trade within a relatively narrow band, and the prices between different points reflect the transportation costs associated with shipping gasoline from exporting markets to importing markets. Global gasoline supply and demand patterns have been evolving. Gasoline demand in Asia, Latin America, and the Middle East has been outpacing gasoline production in those regions. In the United States, demand is declining but refinery production of gasoline has been rising, resulting in increasing exports of U.S. gasoline into the global market. Because of these changes in the market and seasonal fluctuations in U.S. gasoline demand, the gasoline spot prices in the U.S. Gulf Coast or Chicago are now often the lowest in the world during fall and winter months. While EIA's new report provides directional insights regarding the implications for U.S. gasoline prices of a possible relaxation of current limitations on crude oil exports, it does not address the extent of any actual change in domestic production or the domestic or international price of crude oil that might follow from a decision to relax or eliminate those limitations. EIA is undertaking further analyses that will examine those issues and expects to report additional results over the coming months.
  • 10. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 10 Falling Oil Prices Special Coverage US: Petrol cheaper than milk a happy sign of the times AP + NewBase The sights were so surprising that Americans shared photos of them – filling station signs with prices of US$2-something a gallon. “It’s stunning,” says Tom Kloza, chief oil analyst at the Oil Price Information Service. “I’m a little bit shocked.” The national average price of petrol fell 33 cents to end last month at $3 a gallon and dipped on Saturday to $2.995, according to the US motorists’ group AAA. That marked the first time in four years that petrol had been cheaper than $3 a gallon [one gallon is 3.8 litres]. The national average crept above $3 a gallon in December of 2010, as global demand for oil and petrol was rising as people in developing countries bought cars by the tens of millions and turmoil was brewing in the Middle East. Now demand isn’t rising as fast as expected, drillers have learnt to tap vast new sources of oil, particularly in the US, and crude continues to flow out of the Middle East. Seasonal swings and other factors are likely to send petrol back over $3 sooner than drivers would like, but the US is on track for the lowest annual average since 2010. Trisha Pena of Hermitage, Tennessee, recently paid $2.57 a gallon to fill up her Honda CR-V. Like many around the US these days, she was delighted by the price she took a photograph and posted it on social media. “I can’t remember the last time it cost under $30 to put 10 or 11 gallons in my tank,” she said. “A month ago it was in the $3.50 range, and that’s where it had been for a very long time.”
  • 11. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 11 Historically, a stronger economy in the US, the world’s biggest consumer of oil products, usually meant rising fuel demand. No longer. Americans are driving more efficient vehicles and their driving habits are changing. Michael Sivak of the University of Michigan Transportation Research Institute calculates that the number of miles travelled per household and gallons of fuel consumed per household peaked in 2004. And so petrol is cheaper than milk again. In September the national average price of milk was $3.73 per gallon. The annual average for milk is on track to be more expensive than the annual average for petrol for the first time since 2011. The drop from last year’s average of $3.51 per gallon will save the typical US household about $50 a month. It will save the country’s economy $187 million a day, and also boost the profits of shippers, airlines, and any firm that sends employees out on sales calls or for deliveries. Iran faces a budget deficit as oil prices fall By: Abu Dhabi: The slide in global oil prices will lead to a budget deficit in Iran, experts say. Brent crude, a benchmark for oil, has plunged more than 20 per cent since peaking in June at about $115 a barrel amid oversupply due to US shale production and lack of demand in the market. Brent inched lower on Monday, dropping further away from $86 a barrel. Alireza Gharbi, Business Development Manager of the Tehran-based Iran Oil Gas Network, said the country’s budget for this year is set on the $100 per barrel oil price and this drop will lead to a budget deficit.
  • 12. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 12 “Since the situation and parameters are kind of complicated, there is no specific strategy chosen by the Iran oil officials yet,” said Gharbi when asked what Iran would do as prices plunge. Iran holds the world’s fourth-largest proved crude oil reserves and the world’s second-largest natural gas reserves, according to the US Energy Information Administration. Despite the country’s abundant reserves, Iran’s oil production has substantially declined over the past few years, and natural gas production growth has slowed. The international sanctions due to Iran’s nuclear issue have profoundly affected Iran’s energy sector. Sanctions have prompted a number of cancellations or delays of upstream projects, resulting in declining oil production capacity. Kevan Harris, associate director at Princeton University’s Centre for Iran and Arabian Gulf Studies in Princeton said the government will have to run a current account deficit and reach into its development fund to make up the shortfall. “That’s not what they would prefer to do, given the current sanctions regime. But it is manageable, I think,” he said. Another expert said that the best strategy for Iran would be to reach an agreement with the group of P5+1 countries (United States, Russia, China, United Kingdom, France and Germany) so that sanctions are eased and the country would be able to increase its production and export. “This could reduce its budgetary gap and help Iran to regain its pre- sanctions market share,” said Sara Vakhshouri, President of US-based SVB Energy International, a global strategic energy consulting firm specialised in oil and gas industry. She said that Iran will not push for production cuts at this month’s Organisation of the Petroleum Exporting Countries (Opec) meeting in Vienna. “Therefore it’s not in Iran’s interest to push for Opec production drop, as its export is already at its minimum range and this country would not want to lose additional market share. Also, if Opec and Iran reduce their production, there is no guarantee that non-Opec producers would do the same,” she added. Iran’s economy minister, Ali Tayyebnia, said on Sunday that if oil prices keep falling, the government will definitely make plans to head off a budget deficit problem next (calendar) year. The minister said Iran will dip into the National Development Fund of Iran (NDFI) to make up for any possible shortfall. He was quoted on Shana, the oil ministry’s website in Iran. Carole Nakhle, a non-resident scholar at the Beirut-based global think tank, Carnegie Middle East Centre, said that even if an agreement on Iran’s nuclear programme is reached, it would be premature to predict that the oil and gas markets will be immediately flooded with new supplies from that part of the world. “Many technical and legislative bottlenecks remain. Iran might get some speedy concessions, but these are unlikely to reverse the oil and gas production and investment realities in the country, given that oil and gas projects require long-term commitments lasting decades. Furthermore, the removal of sanctions, especially the US sanctions, is a lengthy and complex process,” she wrote in an article on the centre’s website.
  • 13. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 13 Oman Crude Oil Financial Contract closes at US$83.37 at DME WAM + NewBase DUBAI, 3rd November, 2014 (WAM) -- The price of Oman Crude Oil Financial Contract, DME Oman, went down by US$0.51, closing at US$83.37 a barrel at Dubai Mercantile Exchange at 12:30 p.m., Dubai time, on Monday. DME Oman crude oil is considered a benchmark for pricing crude oil by the countries that produce it, and it gives them a differential price that reflects the quality of the product. The Dubai Mercantile Exchange Limited, DME, is the premier energy-focused commodities exchange in the East of Suez, and home to the world's third crude benchmark. DME is a joint venture between Dubai Holding, Oman Investment Fund and CME Group. A number of global financial institutions and energy trading firms have equity stakes in the DME, providing the exchange with a resounding vote of confidence by major players in global energy markets.
  • 14. Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content . Page 14 NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Your partner in Energy Services Khaled Malallah Al Awadi, Energy Consultant MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990 Mobile : +97150-4822502 khdmohd@hawkenergy.net khdmohd@hotmail.com Khaled Al Awadi is a UAEKhaled Al Awadi is a UAEKhaled Al Awadi is a UAEKhaled Al Awadi is a UAE National with a total of 24 yearsNational with a total of 24 yearsNational with a total of 24 yearsNational with a total of 24 years of experienof experienof experienof experience in thece in thece in thece in the Oil & Gas sector.Oil & Gas sector.Oil & Gas sector.Oil & Gas sector. Currently working as Technical AffairsCurrently working as Technical AffairsCurrently working as Technical AffairsCurrently working as Technical Affairs Specialist for Emirates General PetroleumSpecialist for Emirates General PetroleumSpecialist for Emirates General PetroleumSpecialist for Emirates General Petroleum Corp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntaryCorp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of theEnergy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the eeeexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipelinexperience 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 inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences inNetwork Facility & gas compressor stations . Through the years , he has developed great experiences in the designing & constructingthe designing & constructingthe designing & constructingthe designing & constructing of gas pipelines, gasof gas pipelines, gasof gas pipelines, gasof gas pipelines, gas metering & regulating stations and in the engineeringmetering & regulating stations and in the engineeringmetering & regulating stations and in the engineeringmetering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation &of supply routes. Many years were spent drafting, & compiling gas transportation , operation &of supply routes. Many years were spent drafting, & compiling gas transportation , operation &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 formaintenance agreements along with many MOUs for the local authorities. He has become a reference formaintenance agreements along with many MOUs for the local authorities. He has become a reference formaintenance agreements along with many MOUs for the local authorities. He has become a reference for manymanymanymany of the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE andof the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally ,Energy program broadcasted internationally ,Energy program broadcasted internationally ,Energy program broadcasted internationally , via GCC leading satellite Channelsvia GCC leading satellite Channelsvia GCC leading satellite Channelsvia GCC leading satellite Channels .... NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE NewBase 04 November 2014 K. Al Awadi