Microsoft word new base 661 special 10 august 2015

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 10 August 2015 - Issue No. 661 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Kuwait energy project spending to hit $100 billion
News Agencies + NewBase
Kuwait’s total spending on energy projects expected to reach $100 billion over the next five years
with implementation of government’s 2030 strategy, said the organizers of the upcoming Big 5
Kuwait, a major construction event.?
The leading trade event will take place on Sept.14-16 at the Kuwait
International Fair. Delegates attending the three-day exhibition can
participate in more than 20 free continuing professional development
(CPD) accredited workshops. Update and overview of Kuwait’s 2035
renewable energy targets and Kuwait’s green building framework, new
trends and innovations in interior design, BIM modeling and applications
and health and safety in construction masterclass will be among the topic
that will come under the spotlight during the workshops.
“The series of free-to-attend CPD-recognized workshops at The Big 5 Kuwait 2015 will provide all
visitors an ideal venue to better understand the local industry, know its needs and navigate its
many aspects,” said Stewart Cripps, HSE coordinator, SSH and featured at the workshops.
“The latest insights and new strategies to be gained by our attendees will contribute to the growth
of their businesses and, consequently, the entire local sector. Furthermore, the subjects have
been chosen specifically in accordance with the current industry requirements and trends to
ensure that the attendees will obtain new and updated information.”

Morocco's sole refinery to shut due to financial problems
Reuters + NewBase
Morocco's Societe Anonyme Marocaine de l'Industrie du Raffinage (SAMIR) will halt production at
its 200,000 barrel per day (bpd) Mohammedia refinery due to financial difficulties, the company
said in a statement.
The refinery is awaiting delivery of two cargoes of 2 million barrels of crude oil, scheduled to arrive
between Aug. 15 and 18, and will stop production after processing them, the statement said.
It said SAMIR will continue to supply oil products until its stocks run out.
A source at the refinery said the facility had already halted production, but that it has full stocks of
diesel fuel, the company's most important and profitable product, and that clients are being
supplied from storage.
Stocks of other fuels are low and those are being imported for now, the source added.
The source would not comment on the nature of the financial difficulties, but said the plan is to
complete maintenance on crude distillation and vacuum distillation units and a hydrocracker
before a restart, likely in the fall.
As Morocco's only refinery, a permanent closure would make the country entirely reliant on
imports for its fuel needs. At just under 300,000 bpd in petroleum consumption, it is Africa's fifth-
largest oil consumer, according to the data from the U.S. Energy Information Administration.
According to a statement on its website from April, SAMIR had secured financing of close to $600
million earlier this year from international institutions including U.S. private equity giant Carlyle
Group and the International Islamic Trade Finance Corporation.
The refinery added a new crude distillation unit in 2012.
• Hydrocracker Unit
• Hydrogen Unit
• Hydrotreater Unit
• Vacuum Distillation Unit
• Sulphur Recovery Unit
• Sulphur Storage Unit
• Amine Treatment Unit
• Sour Water Stripper Unit
• New Cooling Water
Building
• New Flare system
• Buildings

UK: Europa Oil & Gas announces favourable Planning Inspectorate
decision on its Holmwood Prospect well in PEDL 143 Source: Euopa Oil & Gas
AIM-listed Europa Oil & Gas has announced that the Planning Inspectorate has allowed
Europa’s appeal against Surrey County Council’s decision not to grant permission to drill one
exploratory borehole and undertake a short term test for hydrocarbons at the Holmwood
Prospect in the PEDL143 licence in the Weald Basin, Surrey. Europa holds a 40% interest in
PEDL 143, which contains the conventional Holmwood Prospect, alongside Egdon
Resources (18.4%), Altwood Petroleum (1.6%), Warwick Energy(20%) and UK Oil & Gas
Investments (20% subject to completion of farmin).
The Holmwood
Prospect is to be
drilled as a
deviated
exploration well
and a further
planning
application for the
underground well
path was submitted
to Surrey County
Council on 14 May
2014. It is
understood that
Surrey County
Council will make a
decision on this
application now
that the Planning
Inspectorate has
issued its decision
on the planning
appeal. Europa
and its partners will wait until Surrey County Council makes its decision on the underground well
path before considering next steps on this licence.
An application for planning permission to drill the Holmwood Prospect on PEDL143 was
submitted in 2008 and was dismissed by Surrey County Council in 2011. A planning appeal in
2012 was dismissed by the Planning Inspectorate. Europa successfully challenged this decision
in the High Court in 2013. In 2014 the Court of Appeal upheld the 2013 High Court judgment in
the Company’s favour and a second planning appeal was heard at an eight day public inquiry in
April and June 2015. The Planning Inspectorate issued a decision to allow the appeal on 7
August 2015.
CEO Hugh Mackay said 'We are pleased with the Planning Inspector’s decision. With mean
gross un-risked prospective resources of 5.6 million barrels of oil, as estimated in a CPR
published in June 2012, and a one in three chance of success, we regard Holmwood as one of
the best undrilled conventional prospects in onshore UK and we await Surrey County Council’s
decision on the underground well path with interest.'

U.S. Pump Prices Slip to Three-Month Low in Lundberg Survey
Bloomberg + Newbase
Retail gasoline prices tumbled to the lowest level in more than three months in the Lundberg
Survey as crude oil dropped for a sixth straight week.
U.S. drivers paid an average $2.7108 a gallon for regular gasoline at pumps across the nation in
the two weeks ended Aug. 7, according to Lundberg Survey Inc.
Prices fell 10.77 cents a gallon in the survey, which is based on information obtained at about
2,500 filling stations by the Camarillo, California-based company. Gasoline cost about 81 cents a
gallon less than a year ago.
Pump prices declined to the lowest level since an April 24 survey due to lower crude oil prices in
combination with high output from refineries, according to Trilby Lundberg, the president of
Lundberg Survey. U.S. refineries ran at 96.1 percent of capacity in the week ended July 31, the
highest rate since August 2005.
In the next survey period, “it’s very likely we will see a decline of similar magnitude,” Lundberg
said Sunday in a telephone interview.
The highest price for gasoline in the lower 48 states among the markets surveyed was in Los
Angeles, at $3.80 a gallon,
Lundberg said. The lowest was
in Charleston, South Carolina,
where customers paid an
average of $2.19 a gallon.
Regular gasoline averaged
$2.78 a gallon on Long Island,
New York.
Oil Drop
West Texas Intermediate crude futures slipped 8.9 percent to $43.87 a barrel in the two weeks to
Aug. 7. Gasoline futures on the Nymex declined 11 percent to $2.623 a gallon in the same two-
week period.
Nationwide stockpiles
of motor fuel rose
811,000 barrels to
216.7 million in the
week ended July 31,
according to
government data.
Gasoline consumption
averaged about 9.5
million barrels a day
over the past four weeks. U.S. refineries burned 17.1 million barrels of oil a day the week of July
31, the most in Energy Information Administration records dating back to 1989.

verage U.S. Gas Prices Falling at the Fastest Rate Since January
• Gas prices are falling at the fastest rate since January due to cheaper crude oil costs and the
resolution of some refinery issues. The national average price of gas has dropped for 16 days
in row for a total of 11 cents per gallon. Today’s national average price of gas is $2.66 per
gallon, which is the lowest average for this time of year since 2009.
• “It feels good to see gas prices drop during the middle of the busy summer driving season,”
said Avery Ash, AAA spokesman. “Millions of people are hitting the roads right now and these
gas savings should make their trips more affordable.”
• Gas prices averaged $2.75 per gallon in July, which was the lowest average for the month
since 2010. Today’s average gas prices are about 85 cents per gallon less than a year ago.
The national average has dropped about 14 cents per gallon since hitting a 2015 high of
$2.80 on June 15.
• Oil prices dropped sharply in July on oversupply concerns for the second year in a row. The
cost of West Texas Intermediate crude oil closed at a high of $61.43 per barrel in late June
and has since dropped below $48 per barrel. Domestic oil supplies are about 25 percent more
abundant than a year ago, while domestic oil production remains about 12 percent higher
than last year, according to the Energy Information Administration (EIA). Oil prices were last
this low in March, when the national average price of gas was about 30 cents per gallon
cheaper than today.
• Strong fuel demand and refinery problems have kept gas prices higher than would otherwise
be expected based on the cost of crude oil. Gasoline demand in July is up about six percent
compared to a year ago, based on the latest four-week averages by the EIA. Strong gasoline
demand can lead to tight supplies, especially if refineries are experiencing problems.
• Lower gas prices and a growing economy have helped motivate people to drive more this
year. Americans drove 275.1 billion miles in May, which was the highest monthly total on
record, according to the most recent report by the Federal Highway Administration. It is likely
that driving has continued to increase this summer as Americans take long road trips.
• This is the second year in a row that gas prices dropped in July. Last year, average prices
dropped 16 cents per gallon during the month before eventually plummeting $1.65 per gallon
though January.
• The average price of diesel is only seven cents per gallon more than gasoline today. The
difference between gasoline and diesel reached its most narrow point since 2009 in July. In
January, the average price of diesel was 90 cents more expensive per gallon than gasoline.
Gasoline and diesel prices are generally closest in the summer, while strong gasoline
demand and
refinery
problems
have kept gas
prices higher
than would
otherwise be
expected
based on
recent crude
oil costs.

Oil Price Drop Special Coverage
Crude prices down on chronic oversupply, poor China data
Reuters + NewBase
Crude oil futures fell on Monday in early Asian trading, touching fresh multi-month lows after
disappointing data from China over the weekend showed exports tumbled in the world's second
largest economy.
Exports fell 8.3 percent in July, the biggest decline in four months, as weaker global demand for
Chinese goods and a strong yuan policy hurt manufacturers. Producer prices in July were at the
lowest point since late 2009, during the aftermath of the global financial crisis, and have been
sliding continuously for more than three years.
China's economy is officially forecast to grow at 7 percent this year, strong by global standards but
some economists believe it is growing at a much slower pace. Brent LCOc1 was down 22 cents at
$48.39 a barrel at 0130 GMT, after touching a more than six-month low of $48.26.
U.S. crude CLc1 fell 18 cents to $43.69 and fell to $43.35 earlier, a nearly five-month low. Both
benchmarks have fallen for six straight weeks, weighed down by chronic oversupply and sagging
demand.
U.S. production rose to near the highest level since the 1970s in the last week, edging up to 9.5
million barrels per day, according to government data.
Oilfield services firm Baker Hughes' said on Friday that the U.S. oil rig count had risen by six,
adding to bearish sentiment for crude as it signaled production could creep up from higher drilling
activity. Drillers have added a total of 32 oil rigs over the past three weeks.

Oil prices to stay lower for longer on supply glut: QNB
Gulf Times
The current glut in world oil markets is likely to persist well into 2016 as oil prices have again
collapsed to sub-$50 per barrel levels, QNB has said in a report.
According to the report, a bear market in Chinese equities has shaken confidence in the global
growth outlook, and oil markets have been surprised by continued increases in global oil output
despite lower oil prices.
From 2017, as producers and consumers adjust to lower prices, oil markets should begin to
tighten, leading to gradually firmer prices. As a result, QNB forecasts oil prices to average around
$55 a barrel in 2015-16 before rising to $60 in 2017.
Oil prices rallied 45.5% during the first half
of the year, mainly driven by improving
expectations for global growth.
Subsequently, prices have lost almost all
the gains, falling back below $50 at the
beginning of August. A mixture of supply
and demand factors was behind the recent
drop, the QNB report said.
The weaker demand picture was mainly
driven by concerns about global growth
emanating from China. The largest drops
in oil prices were at the beginning and end
of July as sharp selloffs in Chinese
equities triggered concerns about
potentially negative knock-on effects on
the real economy. China is highly
important for global oil markets, QNB said.
On August 3, oil prices fell 5.2% after
disappointing manufacturing data was
released in China. Looking at the overall global picture, the International Monetary Fund (IMF)
revised down its 2015 forecast for world GDP growth by 0.2% to 3.3% in July.
On the supply side, the agreement to remove international sanctions on Iran and persistent
increases in global production has further weakened the outlook for prices. An Iranian nuclear
agreement was initially announced in April with the final details made public on July 14. Assuming
international sanctions are lifted in the next few months (ratification by the European Union, the
US, and Iran itself is still required), Iranian production would increase, QNB said.
Elsewhere, supply has increased. Saudi Arabia’s production rose to a record 10.3mn bpd in July,
according to the International Energy Agency (IEA). Production is also rising in other Opec
countries, particularly Iraq (4.1mm bpd in June, up from 3.3mn on average in 2014). Total Opec
production stood at 31.7mn bpd in July, up from 30.3 on average in 2014.
Opec made no changes to its production target in its meeting at the beginning of June, bolstering
the outlook for supply. In the US, where high-cost shale oil producers were expected to be hit
hardest by lower oil prices, production has been resilient, averaging 9.5mn bpd so far in 2015,
compared with 8.7mn in 2014.

What does this mean for oil prices going forward? The latest report from the IEA suggests that
world oil markets will be oversupplied by around 1.9mn bpd in 2015. Based on the IEA
projections, QNB said it expects another supply glut in 2016 of around 1.1mn bpd.
Opec production should remain elevated, according to the report. Iran is expected to add around
0.7mn bpd to global production by the end of 2016 and Saudi Arabia is expected to maintain
current output levels. Meanwhile, non-Opec production shows no signs of slowing down either, the
report added.
The IEA expects US production to rise by 0.3mn bpd in 2016. Rising supply is likely to offset any
pick up in global demand. As a result, QNB said it expects oil prices to remain broadly flat at
around $55.5/b in 2016. The QNB report said: “One caveat to our supply outlook is the risk of
supply disruptions from security or geopolitical factors, which could lead to higher than forecast
prices.”
From 2017, oil markets should begin to tighten, leading to rising oil prices. In terms of supply, non-
Opec producers will eventually be forced to cut back on investment in response to lower oil prices,
leading to slower output growth. Production with higher costs is likely to be the first to be
impacted, including shale oil in the US, oil sands in Canada, and offshore producers in the Gulf of
Mexico and off West Africa.
The report said major oil companies have already reportedly cut back on $200bn of capex on new
projects ($5.6bn in Canada, the worst impacted region), which will lead to lower future production
growth. On the demand side, oil consumption is likely to increase in response to lower prices,
mainly in emerging markets, and as global growth is expected to rise. Therefore, from 2017,
slower supply growth coupled with rising demand should erode excess supply in global oil
markets, leading to a gradual increase in oil prices to around $60, the QNB report said.
Tesla burns cash, loses more than $4,000 on every car sold
Reuters + NewBase
It’s crunch time for Tesla Motors. The Silicon Valley automaker is losing more than $4,000 on
every Model S electric sedan it sells, using its reckoning of operating losses, and it burned
$359mn in cash last quarter in a bull market for luxury vehicles.
The company on Wednesday cut its production targets for this year
and next. Chief executive Elon Musk said he’s considering options to
raise more capital, and didn’t rule out selling more stock.
Musk has taken investors on a thrill ride since taking Tesla public in
2010. Now he’s given himself a deadline, promising that by the first
quarter of 2016 Tesla will be making enough money to fund a jump
from making one expensive, low volume car to mass producing
multiple models, and expanding a venture to manufacture electric
power storage systems.
Tesla’s shares fell almost 9% on Thursday and slipped another 2% on Friday as investors and
analysts weighed the risks of Musk’s ambitious plans for expanding Tesla’s auto and energy
storage businesses. Tesla had just $1.15bn on hand as of June 30, down from $2.67bn a year
earlier.

Automakers consume cash to pay for assembly line equipment, including metal dies and plastic
molds, as well as testing to meet safety and emissions standards. A typical new car can cost $1bn
or more to engineer and bring to market.
Established automakers such as General Motors Co and Ford Motor Co have amassed far larger
cash cushions as they’ve rebuilt balance sheets battered by the 2008-2009 recession. GM,
restructured six years ago in a government funded bankruptcy, has targeted cash reserves of
$20bn and had more than $28bn in cash equivalents as of June 30.
To be sure, GM sells more than 9mn vehicles a year, while Tesla plans to build between 50,000
and 55,000 cars this year. Tesla, most of whose cars are built to order directly, delivered 11,532
cars in the second period and said it had an operating loss of about $47mn, for an operating loss
per car of about $4,000. Tesla’s narrower margin for error is just one more way in which it is
different from its century old rivals.
The company said it plans $1.5bn in capital spending this year, mainly to launch its Model X,
battery powered sport utility vehicle with eye-catching, vertical-opening “falcon wing” doors. Tesla
reported $831mn in capital spending during the first half of the year, indicating it will spend roughly
another $700mn.
During the second quarter, Tesla said operating
costs and research and development spending
rose, while average selling prices for the Model S
lineup, which starts at $70,000 before federal and
state electric vehicle tax breaks, fell 1% as the
mix of sales shifted to less expensive models and
a strong dollar hit revenue generated overseas.
The Model S comes in several different versions,
ranging in price up to $106,000 or more,
depending on options.
Tesla has signaled capital spending will drop next
year because the company won’t be spending on
a major vehicle launch. In 2017, Tesla plans to
launch its Model 3 line, which the company says
will start at about $35,000 and push total sales
toward the goal of 500,000 vehicles a year by 2020.
Barclays analyst Brian Johnson disagreed with the company’s estimates, and said he expects
Tesla’s capital spending will go up in 2016 and 2017 as the company ramps up its battery factory
and Model 3 development. “Their small scale means the cash generation is not as great as they
might have hoped for,” he said.
Musk said this week Tesla expects to have $1bn in cash over the next year, and told analysts
“there may be some value” in raising capital “as a risk reduction measure.”
Tesla’s stock is still about 70% higher than it was two years ago, and 8% ahead of its level on Jan
1. With a market capitalization of $31bn, Tesla is worth more than Fiat Chrysler Automobiles, the
much larger maker of Ram pickups and Jeep Grand Cherokees.
“A capital raise, given the way they’re burning cash today, given the fact that they have future
investment needs, seems very likely at some point,” said UBS Securities analyst Colin Langan,
who has a sell rating on the stock.

Musk has steered Tesla out of tight corners before. In September 2012, the company faced a
cash crunch, but raised money by selling shares and renegotiating the terms of a federal loan.
The Model S started production in miod-2012.
Tesla has made moves to expand sales volume, and lure people to pay more for its vehicles. In
addition to adding a lower priced version of the Model S, Tesla last month said it would offer
performance upgrades for its Model S 85 and 85D for $5,000 and launched the Model S 90D and
P90D high performance cars at a $10,000 price premium.
Tesla reports its finances in a different way from the Detroit automakers. Using the generally
accepted accounting principles, or GAAP, used by GM or Ford, Tesla’s operating losses per
vehicle have steadily widened to $14,758 from $3,794 in the second quarter of 2014.
But Tesla points out in its statements to investors that its GAAP accounting excludes certain
revenue and profits from Model S sedans that customers lease. In the second quarter, the
deferred gross profits from Model S leases amounted to $61.9mn, Tesla said. Analysts say they
add back the deferred revenue to make Tesla’s figures more comparable to the reporting used by
other automakers.

Oil companies need to resurrect stalled projects
Robin Mills head of consulting at Manaar Energy
Are we in an oil bust worse than the famous crash of 1986? The investment bank Morgan Stanley
thinks so.
Oil companies have scrambled to cut costs and shore up their financial
positions, and the industry has adopted the mantra that prices will be “lower
for longer”. But with no consensus about how much lower for how much
longer, executives have to steer a difficult course between riding out the
storm in the hope of an upturn, and panicked overreaction.
Analysts polled by Reuters suggested Brent crude, now below $50 per
barrel, would average $60.60 per barrel this year and $69 next, while the
International Energy Agency foresees a recovery to $73 by 2020. But after
oil prices had modestly recovered from January’s lows, the renewed plunge
last month burnt several hedge funds.
Bearish factors abound. The continuing growth in Iraqi production, historically high Opec output
led by the Saudis, the prospect of a return of Iranian crude, and future growth in Mexico as its
industry opens up, collide with a tepid Chinese economy and a weak outlook for most
commodities.
But Morgan Stanley’s comparison with 1986, although technically accurate, seems misleading.
Back then, prices had already been dropping for five straight years before they plummeted. Opec
spare capacity was 13 million barrels per day – 15 per cent of global demand – which took a
generation to work off. Surging non-Opec output from the North Sea, Mexico and Alaska met
consumption in steep decline owing to the increased use of other fuels.
Compare the current situation, when Opec spare capacity is only 2 million bpd or so, virtually all in
Saudi Arabia, global demand is anaemic but growing, and non-Opec growth has been led entirely
by North American shale projects, now beginning to show the effect of a year of declines in
drilling. The fall in oil prices has been sharper than 1986 but was not preceded by a steady decline
from a peak. And even at $50 per barrel, oil still seems valuable compared to 1998 when,
adjusted for inflation, it was below $19 per barrel.
Oil companies have already cancelled $180 billion of spending on 46 planned megaprojects,
particularly in high-cost areas in deep water and Canada’s oil sands. The abandonment of ageing
North Sea fields, and the deferral of exploration in new areas will weigh on future production.
New debt and equity financing for US shale companies, abundant earlier this year, now seems to
be drying up. They are considering asset sales, as are some of the super majors, including BP
and Shell. But if everyone is a seller, who will be a buyer?
Even at $50 per barrel, prices are perfectly adequate for many projects to go ahead, if the industry
can get some control over its costs. It has so far been more sensible than in previous busts,
managing to retain skilled technical staff despite layoffs, reducing supply chain expenditure,
improving technology, particularly in shale drilling, and beginning to reshuffle portfolios towards
lower-cost fields, as with Shell’s purchase of BG, and wider industry excitement about Iran.

Governments and labour unions have to play their part. In countries from Canada to Norway to
Australia, taxes, regulations, environmentalist obstructions and pay rates have swollen to absurd
levels. One oil executive quoted by Reuters reportedly maintained his company would never build
anything in Australia again unless labour laws were reformed.
Although prices should increase somewhat from today’s levels, no one – rightly – is betting on a
return to $100 per barrel oil. Severe though this slump is, well-run companies should come
through it stronger. But for the sake of future demand, the industry needs to start thinking how to
resurrect, and finance, some of its $180bn of lost projects.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 10 August 2015 K. Al Awadi

Microsoft word new base 661 special 10 august 2015

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