PDO focuses on EOR to boost output

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 13 May 2015 - Issue No. 603 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Japan’s Cosmo Oil, Spanish Firm Cepsa In Talks For
New Abu Dhabi Oilfield Stake
Reuters + NewBase
Cosmo Oil and its Spanish upstream business partner Cepsa are in talks with the Abu Dhabi
National Oil Co (ADNOC), aiming to obtain a new oilfield stake in the Middle Eastern nation,
the Japanese firm’s top executive said on Tuesday.
Cosmo Oil’s President Keizo Morikawa also said that Hail oilfield, in which Cosmo’s joint
venture with Cepsa has a stake, will likely start production from second-half 2016. He did not
say which oilfield stake in the country it was aiming to obtain.
Cosmo Oil and Cepsa have
been working together on
crude and natural gas
development due to their
close relations with Abu
Dhabi. Abu Dhabi’s state-
owned investment vehicle
International Petroleum
Investment Co (IPIC) owns
all of Cepsa and is the
biggest shareholder in
Cosmo, with nearly a 21 per
cent stake. Cosmo in 2011
was granted a 30-year
extension on its stakes in
oilfields in the United Arab
Emirates, as well as a
contract for a new
concession for the Hail
oilfield for the same amount of time.
Cosmo, which on Tuesday named the holding company it will launch in October as Cosmo
Energy Holdings, reported a net loss of 77.7 billion yen ($648 million) in the year ending
March 31, saddled with 116.1 billion yen worth of inventory losses in the wake of the sharp
fall in oil prices.
The company will also consider an alliance with other refiners amid shrinking domestic oil
demand, including the possibility of boosting efficiency of its Yokkaichi and Sakai refineries by
teaming up with rivals’ nearby plants, Morikawa also said at a news conference.

Saudi Aramco Reiterates It Will Spend To Retain Leading Oil Position
Reuters + NewBase
Saudi Aramco will dedicate most of its spending to oil production over the next decade to
maintain its position as the world’s top crude oil exporter, the state-owned energy giant
reiterated in its annual report for 2014.
“The bulk of this spending will be in our upstream activities to ensure we maintain adequate
spare crude oil production capacity to help stabilise the world oil market whenever disruptions
occur,” it said, referring to both exploration and production.
Aramco added that in the shorter term it would also invest in boosting natural gas production
to meet rising domestic demand. It did not give a monetary value for projected spending.
Global oil demand is expected to rise to 111 million barrels per day in 2040 from around 93
million bpd currently, it said.
The oil giant has completed a massive investment programme which took its output capacity
up to 12 million bpd. Aramco said in its latest report that it planned to bring online the
expansion of the Shaybah oilfield to one million bpd in April 2016, earlier than initially thought;
previously, officials had indicated this would happen by end-2016 or early 2017.
But Aramco did not give any updates on the expansion of the Khurais oilfield, another big
project. At the end of 2014, its Manifa oilfield almost hit its full production capacity of 900,000
bpd, it said. The state oil giant pumped on average 9.5 million bpd last year, with over 62
percent of its exports going to Asia.
Crude oil exports were slightly lower last year at 2.544 billion barrels or 6.7 million bpd,
against 2.677 billion barrels or 7.3 million bpd in 2013. However, oil product output and
exports rose as Aramco brought new refineries online.
It said both its oil and gas reserves hit all-time record highs, at 261.1 billion barrels for oil and
294 trillion cubic feet for gas. Aramco also said its Wasit gas plant was expected to go online
this year, while the Fadhili gas plant was due by 2019. Midyan would be fully operational by
the end of 2016.
“Together, our Wasit, Midyan, and Fadhili gas plants will add more than 5 billion scfd
(standard cubic feet per day) of non-associated gas processing capacity…” it said. In 2014,
Aramco processed 11.3 billion scfd of raw gas, an increase of nearly 3 percent from 2013.

Enhanced oil recovery projects key for PDO’s sustainability plan
Times of Oman + Newbase
Oman: Petroleum Development Oman (PDO), the Sultanate's national oil company, will continue to focus
on enhanced oil recovery projects, which is expected to contribute one-fourth of the company's total crude
oil output by 2019 and one-third by 2025, a top-level official of the company told journalists here on
Tuesday.
PDO managing director Raoul Restucci said that the company's current crude oil output from enhanced oil
recovery project is just 11 per cent. He was talking to the media on the sidelines of an event to mark the
second anniversary of His Majesty Sultan Qaboos bin Said's visit to the company's headquarters in Muscat.
PDO's forecast of crude output is 600,000 barrels per day this year, which is higher than last year. Referring
to major EOR projects, he said the second phase of Marmul Polymer project was commissioned recently
and produces between 60,000 to 70,000 barrels of oil per day.
"We have installed 19 pumps from the first 26 we had in the first phase. (We are) expanding polymer
application across the field," added Restucci. He said in the last two years, the field is producing more than
it has in the previous three decades, thanks to better technology. Polymer and other enhanced oil recovery
techniques are allowing the copany to sustain or maintain production.
"We are testing polymer application in Nimr and looking at optimizing steam injection in Al Amal," he said
adding; "Harweel is going from strength to strength and is nor producing 50,000 barrels a day. It is a great
success."
EOR projects are adding considerable volumes and are not affected by today's low oil prices.

PDO:Celebration & highlights efforts to improve efficiency, cut waste
BYTIMES NEWS SERVICE + NewBase
Some of the leading figures from Oman's political, economic and social world attended PDO Day, an event
marking the second anniversary of His Majesty Sultan Qaboos bin Said's visit to the company's headquarters
in Muscat.
The dignitaries, all former PDO employees, feature in a new alumni book which was launched at the event
titled "The Excellence Academy" and charts their individual career success stories.
Attendees included Dr Mohammed bin Hamed Al Rumhy, Minister of Oil and Gas and chairman of the
PDO Board, who started his career as a PD0 trainee, Mohammed bin Salim Al Tobi, Minister of
Environment and Climate Affairs, who worked in finance, administration and health, safety and
environment at the company and Dr Ali bin Saud Al Bimani, Vice Chancellor of Sultan Qaboos University,
who joined PDO in 1980 as a petroleum engineer.
The overall theme for the day was lean, a continuous business improvement technique implemented by PDO
to improve efficiency, cut waste and create more value for all its stakeholders. The special guests were
given presentations on Lean and shown examples of best practice where PDO has been able to realise
millions of rials in savings and incremental value.
PDO managing director Raoul Restucci paid tribute to the distinguished visitors and said he hoped they
might be able to learn from the company's lean journey and apply similar measures in their own
organisations.
Shining stars of Oman
"We were delighted to welcome back some of the shining stars of Oman, who laid the foundations for their
successful careers at PDO, to celebrate our annual PDO Day in honour of His Majesty Sultan Qaboos bin
Said," he said.

"Over the years, the company has built a reputation as the seedbed for some of the country's brightest and
best, educating, training and developing exceptional individuals who have progressed to become
government ministers, undersecretaries, members of the State Council, company chief executive officers or
heads of non-governmental organisations.
"In turn, these outstanding leaders remain part of PDO's family and help and challenge us to continuously
raise our performance and standards while offering us unswerving support and guidance."
Thousands of PDO staff also
flocked to the event which
featured more than 50 displays
on lean, a business process
improvement technique and set
of tools initially developed by
Toyota to continuously
improve its production system.
PDO is implementing the
concept in six business areas –
or value streams – well
delivery, operate and maintain,
well and reservoir
management, contracting and
procurement, people and
health, safety and environment
(HSE).
This had led to progress in
minimising waste by
optimising, among many other
examples, PDO's surveillance
and forecasting processes,
increasing the effectiveness of
company's maintenance
workshops, improving contract
work processes, reducing recruitment timelines, and cutting the execution time of various drilling activities.
"In a tough economic climate, it is incumbent on all of us to concertedly address more effective ways of
working, and lean is an excellent way of operating more efficiently and creating more value across every
facet in our business. We have now reached a tipping point in PDO where it is transforming the way we do
things by removing bureaucracy and empowering staff to think and work smarter," Restucci said.
"Simply put, it's about 'doing more with less.'"
The company also marked the occasion of PDO Day with the online launch of a goodwill book enabling
thousands of its staff to write messages of support and appreciation to His Majesty, which will be presented
to His Majesty at a later date.
The inaugural PDO Day was held on May 12, 2014, to celebrate the first anniversary of His Majesty's visit
to the headquarters building.

Morocco: Circle Oil spuds LAM-1 well, onshore Morocco
Source: Circle Oil
AIM-listed Circle Oil, the Middle East and North Africa focused oil and gas
exploration, development and production company, has announced the spudding of
the LAM-1 well on the Lalla Mimouna Permit, onshore Morocco. LAM-1 is the first
well to be drilled by Circle on the Lalla Mimouna permit and is located in the central
part of the permit on the east-west trending Anasba Ridge, within the existing 3D
seismic area.
The well is targeting the Miocene gas-bearing sands, similar to the Sebou discoveries
made previously by Circle in the Sebou Permit to the south of Lalla Mimouna. The
primary target sands are prognosed at a depth of 1,231 metres MD and the TD of
the well at 1,521 metres MD. Depending on progress rates the well is expected to
take between 14 - 20 days to drill.
The Lalla Mimouna permit is a partnership between Circle Oil Maroc (75%)
andONHYM (Office Nationale de Hydrocarbures et des Mines) (25%).

Denmark: Maersk Oil announces hydrocarbon discovery in
Danish North Sea. Source: Maersk Oil
Maersk Oil reports that the exploration well Xana-1X, which was drilled in licence 9/95 in the
northern part of the Danish sector with Maersk Oil as operator, has discovered hydrocarbons.
'The drilling of the High Pressure High Temperature exploration well has been completed. At
present the partners are in the process of assessing the technical and commercial implications of
the discovery and looking at potential follow-up,' said Martin Rune Pedersen, Managing Director
of Maersk Oil’s Danish Business Unit.
The Xana-1X well was drilled on location 56° 14' 36.05" N; 04° 17' 00.58" E, and at a water
depth of 68m and a total drilling depth of 5,071m in the Jurassic formation. The well was
spudded on 8 December 2014 by the jack-
up rig Noble Sam Turner and is currently
being plugged and abandoned.
The partnership in licence 9/95 consists of
the following companies: A.P. Møller –
Mærsk (34%), Dong
E&P (20%), Nordsøfonden (20%), Noreco
Oil Denmark (16%) and Danoil
Exploration (10%).

Indonesian: ExxonMobil ramps up output at new oilfield
Reuters + NewBase
ExxonMobil has begun ramping up production at a new Indonesian oilfield, targeting peak output
later this year of more than 200,000 bpd that will add to an already oversupplied crude market.
Output from the Banyu Urip field, part of ExxonMobil’s Cepu block in East Java, is crucial to
Indonesia’s long-term efforts to meet rising domestic demand as production declines at ageing
fields in the former member
of the Organisation of the
Petroleum Exporting
Countries (Opec).
“We continue to see strong
capacity results on the
Banyu Urip wells and will
continue to ramp up
production until we reach
peak field production of
more than 200,000 bpd,
later in 2015,” Erwin
Maryoto, vice president of
public and government
affairs at ExxonMobil
Indonesia, said in an e-mail
response to questions late on Monday. The oilfield was producing 75,000 bpd at the end of last
month, ExxonMobil said during a conference call on April 30. The Banyu Urip discovery in 2001
was one of the largest in Asia in the last 15 years, but disagreements between the US oil major
and Indonesia’s state oil company Pertamina slowed its development.
The field will help Indonesia meet a target of producing some 830,000 bpd this year, up from
output of just below 800,000 bpd in 2014. These figures are around half the country’s peak
production in the mid-1990s.
Indonesia, an Opec member until 2008, was once self-sufficient in oil and gas but has been
struggling for years to attract investment to halt declining output. The country’s energy minister
said last week he would seek approval for the country to rejoin the oil cartel.
The first shipment of Banyu Urip crude, was lifted from the Gagak Rimang offshore storage
terminal in April jointly by Pertamina, local government interests and the Indonesian government,
Maryoto said.
Traders said they expect first exports from the field in the third quarter. The new production will
add to a global oversupply of crude that triggered a drop in oil prices of more than 60% between
June and January.
Banyu Urip is a light to medium waxy crude with very low sulphur content that will yield good
output of diesel, kerosene and vacuum gas oil, which is used to make gasoline, ExxonMobil said
on its website. Recoverable resources at the field are estimated at more than 450mn barrels. At
full production, Banyu Urip will be Indonesia’s largest oil project, ExxonMobil said.

Namibia: AziNam announces govt approval of operator status
Source: AziNam
AziNam, the offshore Namibia focused exploration company, has received government approval
for it to assume operatorship of Petroleum Exploration Licence (PEL) 34, offshore Namibia,
and has also opened its office in Windhoek, the capital of Namibia.
Government approval of operator status
In recent months AziNam has increased its working interest position in the majority of its offshore
Namibia licences. During the course of 2014 AziNam increased its working interest in PEL
34 from 20% to 40%. The Government of Namibia, along with our partners, have now approved
AziNam to become operator of PEL 34.
The Company’s current working interest positions in PELs 30, 33 and 34, offshore Namibia,
stand as follows:
Opening of new office
In addition, AziNam has opened its new office in the centre of Windhoek’s business district. The
office is already staffed by a team of experienced industry personnel led by Uaapi Utjavari,
formerly Executive E&P Manager at NAMCOR, the Namibian State Oil Company. The Windhoek
based team will be the hub of AziNam’s commercial, technical and operational functions in-
country and will play an integral role in developing the Company’s exploration portfolio in the
wider region.
AziNam Managing Director, David Sturt, commented:
'Becoming an operator offshore Namibia is an important milestone in the development of our
business in the region, reflecting the quality of work already being carried out on our assets and
highlighting AziNam’s financial strength and technical competence.
Receiving approval from the Government of Namibia and the Ministry of Mines and Energy to
assume the operatorship of PEL 34 is another vote of confidence in the Company’s ability.
Across our Namibian portfolio we have carried out aspects of the technical evaluation work and
managed a number of operational projects on behalf of the partnerships. We view our move to
operator status as a natural progression and an endorsement of our technical and operational
capabilities.

The opening of our office in Windhoek and the appointment of Uaapi Utjavari, as Vice President
Exploration of AziNam for Africa, further strengthens our position in Namibia as we continue to
grow within the region.
The Namibian E&P sector is entering a promising period as a number of sizeable Independent
E&P companies have recognised the potential for significant hydrocarbon discoveries offshore
Namibia and are driving forward with exploration campaigns. AziNam has the leading offshore
Namibia G&G database.
Combining the database with a holistic and comprehensive analysis of the potential petroleum
systems offshore Namibia, AziNam has constructed the dominant acreage position in the Walvis
and Luderitz basins and will continue to advance its understanding of the sub-surface. Namibia’s
favourable licence terms and attractive business environment encourage exploration investment
and we would like to thank the Government and people of Namibia for their continued support.'

Oil Price Drop Special Coverage
Oil extends gains as U.S. crude stocks may drop
for second week
Oil extended gains on Wednesday after posting its strongest daily rise in weeks in the previous
session, supported by bets that U.S. crude stockpiles will fall for a second straight week as
production slows.
U.S. crude futures rose more than $1, close to 2015 highs, after industry data showed a larger
than expected drawdown in crude and oil products stockpiles last week. Months of low prices
have spurred U.S. shale production cuts and lifted global oil demand.
"Lower oil prices are already showing signs of demand stimulation, especially in transportation
fuels," Morgan Stanley analysts said in a note.
The Organization of the Petroleum Exporting Countries raised its 2015 global oil demand forecast
to 1.18 million barrels per day, above a previous estimate of 1.17 million, while investors shrugged
off concerns about excess supply.
June Brent crude rose 58 cents to $67.44 a barrel by 0624 GMT. U.S. crude was up 64 cents at
$61.39, after earlier hitting a high of $61.83.

U.S. crude rose 2.5 percent and Brent 3 percent on Tuesday, underpinned by a weaker dollar and
geopolitical tensions in the Middle East.
Saudi-led air strikes in Yemen ahead of a five-day truce to begin later Tuesday raised concerns
over the security of oil supplies in the Middle East.
A modest drop in the U.S. dollar against a basket of major currencies also supported oil prices.
Dollar-denominated commodities become more affordable to holders of other currencies when the
greenback weakens. [FRX/]
In the United States, crude inventories fell by 2 million barrels in the week to May 8 against
analysts' expectations for an increase of 0.386 million barrels, data from the American Petroleum
Institute showed late on Tuesday. [API/S]
Crude stocks at the Cushing, Oklahoma, delivery hub fell by 827,000 barrels, API said.
Stockpiles at Cushing have likely peaked as it receives less crude from Canada and Midland, oil
consultancy PIRA Energy said in a report.
The U.S. government has also cut its 2015 forecast for crude output growth to 530,000 bpd from
550,000, and 2016 growth to 20,000, from 80,000 previously.
But recent price gains could encourage more production.
"Any increases in prices would see an automatic response from the market especially the lower
cost producers such as those in the Permian Basin," Shunling Yap, a senior oil analyst at BMI
Research said.

Opec oil output boost keeps supply surplus despite higher demand
Reuters + NewBase
Opec said its oil production rose further in April, keeping an excess supply in the market despite
stronger demand and signs the producer group’s strategy of letting prices fall to hurt other
producers is taking effect.
In a monthly report yesterday, Opec said demand for its oil this year would be 50,000 barrels per
day (bpd) higher than previously thought, thanks to a slightly lower supply forecast for countries
outside the group.
Oil prices have almost halved from $115 a barrel in June 2014, in a decline Opec officials have
said is stimulating fuel use. The report made a small upward revision to forecast oil demand
growth in 2015 and was upbeat about the outlook.
“Despite the slow start in some countries, world economic growth could strengthen further as the
year progresses, leading to an improvement in crude oil demand in 2015,” the report said. Last
year, Opec refused to cut its output despite the price collapse, seeking to recover market share by
slowing higher-cost production in the US and elsewhere that had been encouraged by Opec’s
previous policy of keeping prices high at around $100 a barrel.
Instead, key members have raised supply and the report said the Organisation of the Petroleum
Exporting Countries pumped an extra 18,000 bpd in April, due to increases in top exporter Saudi
Arabia, Iraq and Iran.
According to secondary sources cited by the report, Opec produced 30.84mn bpd in April, after
raising supply by a massive 850,000 bpd in March. Saudi Arabia, the driving force behind’s
Opec’s refusal to cut output, told Opec it raised output to 10.308mn bpd in April, the highest rate
on record.

If Opec keeps pumping at April’s rate, the report indicates there will be an excess supply of
1.52mn bpd in 2015, unchanged from the surplus implied last month. In a sign Opec’s strategy to
slow rival supply is working, Opec cut its forecast for the growth in US oil output this year by
40,000 bpd to 700,000 bpd.
It left the estimate for all non-Opec countries’ supply growth unchanged at 680,000 bpd.
“The main factors for the lower growth prediction in 2015 are low oil price expectations, the
declining number of active rigs in North America, the decrease in drilling permits in the US and the
reduction in the 2015 spending plans of international oil companies,” the report said.
Saudi Arabian Oil Co, the world’s largest crude exporter, boosted 2014 production of
hydrocarbons close to an all-time high while adding reserves amid a supply glut that led to a drop
in oil prices by almost half last year.
Aramco ’14 oil, gas output reaches near-record high
Saudi Aramco, as the state-owned company is known, produced 9.5mn bpd of crude last year, up
from 9.4mn bpd in 2013, according to the annual review the company posted on its website on
Monday. Natural gas output rose to 11.3bn standard cubic feet a day from 11bn, it said.
The company discovered five gas fields and three oil deposits in 2014 and “booked reserves that
significantly exceeded production, despite the fact our combined oil and gas production
approached an all-time high,” former chief executive officer Khalid al-Falih said in the review.
Aramco increased oil production amid a global glut that drove benchmark prices down almost 50%
last year. Opec, led by Saudi Arabia, chose in November to keep pumping crude to protect its
share of the market rather than cutting output to boost prices. The 12-nation Organisation of
Petroleum Exporting Countries produced more than 31mn bpd last month, data compiled by
Bloomberg show.
The Saudi company’s oil reserves grew to 261.1bn barrels in 2014 from 260.2 in 2013, while
reserves of gas increased to 294tn standard cubic feet from 288.4tn, the review showed. The
company said it maintains an oil-production capacity of 12mn bpd.
Oil-refining capacity was 3.1mn bpd
at the end of last year, Aramco
said. Its refining venture with China
Petroleum & Chemical Corp in
Fujian, China, raised capacity to
280,000 bpd, while a plant in
Jazan, Saudi Arabia, is set to start
processing in 2017, according to
the review. Aramco is seeking to
upgrade three refineries in
Indonesia, it said.
Aramco is planning to spend between $70bn and $80bn on overseas acquisitions and
investments during the next five years, according to three people with knowledge of the matter,
asking not to be identified as the information is private.

Iraq targets record Basra crude exports in June with new grade
Iraq plans to export a record volume of crude from its southern ports in June, as it splits its
production into two grades for the first time to resolve quality issues, trade sources familiar with
the matter said.
The No 2 Opec producer has allocated 3.1 million barrels per day (mbpd) of Basra crude to
buyers in a preliminary June loading programme, up from the usual monthly total of between 2.6
million and 2.7 mbpd, they said.
This included 1.22 mbpd of new crude Basra Heavy for June, nearly double the expected volume,
they said, while Basra Light crude exports were reduced to 1.93 mbpd.
Iraqi crude exports hit a record 3.08 mbpd in April, including 2.63 mbpd from southern terminals.
The producer hopes to stabilise the quality of Basra Light by separating rising heavy oil production
from the southern export pool.

Oil's Not Coming Back. Here's Why
Oil bulls who’ve cheered a rebound of 40 percent from a six-year low should take heed: Unless
demand accelerates, the rally is in danger.
The omens aren’t good. The U.S. government expects global consumption to grow next year at
less than half the rate of 2010, when the world was emerging from a previous recession. The
growth is insufficient to close the gap with rising supply, according to Royal Dutch Shell Plc,
Europe’s biggest energy producer.
The last time oil crashed, during the 2008 financial crisis, China’s appetite for commodities
seemed insatiable, and powered prices higher. This time, Chinese fuel use is growing at half the
rate of the past decade, and sliding U.S. shale output could reverse as prices rise, smothering the
gains.
“The recent rally appears driven by investors looking at catching the bottom of the market and the
expectation that U.S. oil production has reached a turning point,” said Harry Tchilinguirian, BNP
Paribas SA’s London-based head of commodity markets strategy. “But fundamentals, notably in
the U.S., have not changed much.”
West Texas Intermediate crude, the U.S. benchmark, has climbed more than $17 a barrel from a
six-year low of $43.46 on March 17. WTI for June delivery added 65 cents to $61.40 in electronic
trading on the New York Mercantile Exchange at 1:17 p.m. Singapore time.
Slowing Demand
Global oil demand will grow just 1.3 million barrels a day to 94.58 million next year, the Energy
Information Administration said Tuesday. It jumped 2.89 million in 2010 after the previous price
crash.
In the U.S., consumption will increase 0.4 percent next year to 19.44 million barrels a day, leaving
it at a lower level than in 2008.

“There are pockets of strength, but the days where we saw greater than 1.5 percent oil demand
for a year are probably largely behind us,” said Michael D. Cohen, an analyst at Barclays Plc in
New York.
Consumption growth is not enough to bridge the divide with supply, Simon Henry, Shell’s chief
financial officer, said April 30 on a conference call. “The supply overhang is potentially quite a bit
higher for some time to come.”
Chinese Consumption
China’s fuel demand will grow by 3.1 percent next year to 11.34 million barrels a day, according to
the EIA. That compares with an 11 percent jump in 2010 that helped boost crude prices by 15
percent. Annual growth has averaged 5.2 percent in the past 10 years.
China’s economy will expand by 6.8 percent this year, the International Monetary Fund forecast
last month. That would be the slowest pace since 2008.
“The Chinese economy is faltering and the government is scrambling to keep it growing,” John
Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy,
said by phone. “If these interventions don’t work as hoped, the economy will slow further and with
that will be a decline in oil demand.”
Global oil production will rise 1.7 percent to 95.1 million barrels a day this year, while demand will
increase 1.5 percent to 93.9 million, according to Goldman Sachs Group Inc.
Oversupplied Market
“Despite this perception of improving fundamentals, our updated supply and demand balance
points to a still well oversupplied market in 2015,” Goldman analysts including Jeffrey Currie said
in an e-mailed report dated May 11. “While low prices precipitated the market rebalancing, we
view the recent rally as premature.”
The drop in oil prices since last summer is boosting the demand outlook, EIA Administrator Adam
Sieminski said Tuesday. Global production will still be more than consumption in 2015 and 2016,
the EIA said. That will increase inventories by 1.8 million barrels a day in the first half and 900,000
in the second.
U.S. oil production will grow each year through 2020, rising a total of 14 percent from this year,
according to the EIA’s Annual Energy Outlook. Petroleum demand will gain less than 3 percent
during the same period.
The record drop in rigs drilling for oil in the U.S. could bottom out this month, with operators
already reviving operations in parts of Eagle Ford and Permian in Texas, Morgan Stanley said.
The rig count dropped to 668 in the week ended May 8, the lowest since 2010, according to Baker
Hughes Inc.
U.S. monthly production will decline in the third quarter from the second but will increase again in
the last three months of this year, EIA forecasts. “We’ll see some demand recovery because of
lower prices over the long term, but demand is not going to grow as fast as supply,” said Michael
Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

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NewBase 13 May 2015 K. Al Awadi

PDO focuses on EOR to boost output

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