New base 03 august 2019 energy news issue 1265 by khaled al awadi

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 03 August 2019 - Issue No. 1265 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Adnoc closes refining deal with Eni and OMV and establishes
trading joint venture
The National - Jennifer Gnana
Abu Dhabi National Oil Company (Adnoc) has completed partnership agreements with Eni and
OMV which will see them take stakes of 20 and 15 per cent, respectively, in its refining unit. It has
also established a trading joint venture with the two energy companies.
Adnoc did not disclose the value of the transaction, though an earlier estimate had placed it at
$5.8 billion (Dh21.3bn).
The partners' new trading venture, Adnoc Global Trading, will focus on the direct sale of products
from the state-oil company's refinery at Ruwais to customers in Asia. It will be based at the Abu
Dhabi Global Market.
Physical and derivative trading is expected to begin in 2020, following completion of all necessary
processes, Adnoc said. The Italian and Austrian energy companies have the same shareholdings
in the trading venture as in Adnoc Refining.
The UAE, which accounts for 4 per cent of global crude production, much of it from fields owned
and operated by Adnoc, wants to double refining and triple chemical capacity by 2025. The Abu
Dhabi major unveiled plans to invest Dh165bn with partners across the downstream value chain,

amid ambitions to build the world’s largest integrated refining and chemicals complex in the
emirate’s western region of Ruwais by 2025.
Adnoc Refining has a total capacity of 922,000 barrels per day (bpd) and is the world’s fourth-
biggest single-site refinery. After the development of a new 600,000 bpd refinery, the unit’s
capacity is expected to increase to process crude and condensate amounting to 1.5 million bpd,
rivaling India’s 1.24 million bpd at the Jamnagar refinery, which is currently the world’s biggest.
The Abu Dhabi company will retain a 65 per cent stake in Adnoc Refining, which has an enterprise
valuation of $19.3 billion (Dh71bn).
In April last year, Adnoc announced its intention to set up a non-speculative trading unit as the
company looks to expand revenue streams and derive greater value from the sale of crude and
products. Other state-owned firms in the region have adopted a similar strategy.
Saudi Aramco set up a unit to trade in refined, liquid chemical and polymer products in 2012.
Iraq’s State Marketing of Oil has a Dubai-based joint venture with Russia’s Lukoil to sell its oil.
Oman Oil Company also has its own unit, Oman Trading International, which trades in crude
products and liquefied natural gas.
Adnoc Refining, which has a product range that includes liquefied petroleum gas, naphtha,
gasoline, jet fuel, gas oil, base oils, fuel oil and petrochemical feedstock such as propylene,
expects to achieve better optimisation of systems and better management of international product
flows following the establishment of the trading unit.
The transaction is the second for Eni this year with the Abu Dhabi major following the award of
two offshore exploration blocks in Adnoc’s first ever competitive bid round. The Italian major, in
consortium with Thailand’s PTT Exploration and Production Public Company, paid Dh844 million
for exploration and appraisal of the concessions.

OMAN Signs exploration deal with BP & Eni FOR BLOCK 77
Muscat Daily staff writer
Global energy giants BP and Eni on Wednesday signed an exploration and production sharing
agreement for Block 77 in central Oman with the Ministry of Oil and Gas.
Block 77 covers a total area of
over 2,700sq km. BP and Eni will
each hold a 50 per cent interest in
the exploration and production
sharing agreement, with Eni acting
as operator during the exploration
phase, according to a press
statement issued by BP.
The agreement was signed by H E
Salim bin Nassier al Aufi,
Undersecretary of the Ministry of
Oil and Gas, Salvatore Giammetti
from Eni and Yousef al Ojaili,
president of BP Oman.
The agreement for this significant new exploration opportunity follows from the heads of
agreement for the block that was signed in January 2019.
Block 77 is located 30km east of the BP-operated Block 61, which contains the already-producing
Khazzan gas project as well as the Ghazeer
project, currently under development.
Bob Dudley, BP’s group chief executive officer,
said, “Today’s announcement reflects the
continued exploration potential we see in
Oman and reinforces BP’s commitment to the
sultanate. We look forward to working with the
government and Eni to continue to explore and
develop the country’s resources and secure its
long-term gas production.”
BP successfully brought the major Khazzan
project into production in 2017. Ghazeer, the
second phase of development on Block 61, is
currently under construction and is scheduled
to come on stream in 2021. Khazzan currently
produces around 1bn cubic feet of gas per day
and Ghazeer is expected to add a further 0.5bn
cubic feet per day production.
BP is the operator of Block 61 and holds a 60
per cent interest. Oman Oil Company
Exploration & Production holds a 30 per cent
interest and PC Oman, a wholly owned
subsidiary of Petronas, holds remaining 10 per
cent interest.

Saudi Arabia Is Steering More Oil to China, Draining the U.S.
Bloomberg - Brian Wingfield
Signals from oil tankers last month suggest that Saudi Arabia is sending an ever-larger portion of
its crude to China -- with the U.S. losing out.
Saudi Arabia’s observed exports to China soared to 1.74 million barrels a day in July, the highest
since Bloomberg began tracking the tanker shipments in January 2017. At the same time, the
kingdom’s shipments to the U.S. appear to have tumbled to 161,000 barrels a day, the lowest
during that same period.
The divergence illustrates the current state of energy geopolitics. The Organization of Petroleum
Exporting Countries -- of which Saudi Arabia is the largest producer -- and a group of allies last
month agreed to extend production cuts. A big reason behind the curbs is soaring U.S. output,
which is near record levels in weekly data. U.S. inventories have dropped in recent months as
Saudi shipments to the country have declined.
At the same time, Saudi Arabia has grabbed a greater slice of China’s market as U.S. sanctions
cripple exports from Iran, the kingdom’s regional rival. Saudi crude flows to markets east of the
Suez Canal were about 5.1 million barrels a day last month, tracking data show, and the number
is likely to rise as some ships indicate their final destinations. Saudi flows west of Suez appear to
have dropped to about 1.1 million barrels a day in July.
“East is where their focus is,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London,
noting that China has refineries with about 800,000 barrels of daily capacity starting up. “The West
has been cut quite significantly.”
Overall, Saudi shipments haven’t changed dramatically in recent months -- the 6.7 million barrels
a day in observed cargoes the kingdom exported in July is only about 200,000 daily barrels less
than in June.

China’s Appetite
China imported a record amount of crude from Saudi Arabia in June, according to data from its
General Administration of Customs. The country has a growing appetite for the feedstock, with the
Hengli Petrochemical and Zhejiang Petrochemical megaprojects scheduled for this year.
The Hengli plant in Dalian reached full capacity in May.
With China grabbing more Saudi crude, flows to India, Japan and South Korea also appear to
have declined last month. Just three crude-laden ships sailed from Saudi Arabia for the U.S. in
July -- one each for the East, West and Gulf Coasts -- though more could emerge in the coming
days as tankers indicate their final destinations. U.S.-bound flows are down from 1.03 million
barrels daily in July 2018.
Of the vessels that loaded crude in Saudi Arabia in July, ships holding some 13 million barrels
haven’t yet revealed where they’re headed. Almost half of that amount is likely sailing east,
tracking signals show.

NewBase 03 August 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil gains about 3%; records loss for week after Trump tariff threat
Reuters + Bloomberg + NewBase
Oil prices gained about 3% on Friday a day after recording their biggest daily drop in several years
on U.S. President Donald Trump’s vow to impose more tariffs on Chinese imports. For the week,
crude oil benchmarks recorded a loss.
Washington’s new tariffs on China, due to take effect on Sept. 1, intensify the trade war between
the world’s top two economies. Any resulting economic slowdown could hurt crude demand.
Brent crude futures for October delivery settled at $61.89 a barrel, up $1.39, or 2.30%. The
global benchmark slid more than 7% on Thursday, the steepest daily drop in more than three
years.
WTI crude CLc1 futures for September delivery settled at $55.66 a barrel, rising $1.71, or 3.17%,
after Thursday’s nearly 8% plunge, the biggest loss in more than four years. For the week, Brent
lost about 2.7%, while WTI shed about 1.2%.
Oil price special
coverage

Before Thursday’s decline, crude futures had seen a fragile rally supported by steady drawdowns
in U.S. inventories but pressured by a shaky global demand outlook.
“The market is still digesting the impact of the tariffs on oil markets, but given China has been
taking very little U.S. crude year-to-date, we see little scope for the tariffs to directly impact market
fundamentals,” RoboResearch Commodities Strategist Ryan Fitzmaurice said in a note.
Trump said he would impose a 10% tariff on $300 billion of Chinese imports and said he could
raise tariffs further if China’s president, Xi Jinping, failed to move more quickly toward a trade
deal.
The announcement extends U.S. tariffs to nearly all imported Chinese products. China said it
would not accept “intimidation or blackmail” and pledged countermeasures.
China, once the top buyer of U.S. crude, slashed its purchases last year as the trade war dragged
on. The escalating trade war, however, could push the U.S. Federal Reserve toward more
interest rates cuts, which would likely boost oil prices.
“The trade war is going to increase the odds dramatically that the Fed is going to have to cut rates
again, maybe twice this year,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
U.S. crude oil exports surged 260,000 barrels per day (bpd) in June to a monthly record of 3.16
million bpd as South Korea bought record volumes and China resumed purchases, data from the
U.S. Census Bureau showed.
The market also watched the weekly U.S. oil rig count, an indicator of future production, which fell
for a fifth week in a row as most independent producers cut spending even though majors were
still pushing ahead with investments in new drilling.
U.S. oil drillers cut rigs for fifth week in a row: Baker Hughes
U.S. energy firms this week reduced the number of oil rigs operating for a fifth week in a row as
most independent producers cut spending even though majors were still pushing ahead with
investments in new drilling.
Drillers cut six oil rigs in the week to Aug. 2, bringing the total count down to 770, the lowest since
February 2018, General Electric Co’s (GE.N) Baker Hughes energy services firm said in its closely
followed report on Friday. RIG-OL-USA-BHI
That is the most weekly declines in a row since March when drillers cut rigs for six consecutive
weeks.
During the same week a year ago there were 859 active rigs.
The rig count, an early indicator of future output, has declined over the past eight months as
independent exploration and production companies cut spending on new drilling as they focus
more on earnings growth instead of increased output.
Independent producer Hess Corp (HES.N) this week said it cut its full-year spending plans by
$100 million to $2.8 billion, even as a surge in output in its Bakken shale and Gulf of Mexico
assets prompted the company to raise its 2019 production forecast.
ConocoPhillips (COP.N) missed Wall Street estimates for quarterly profit as it spent more than
expected and took a hit from lower crude prices due to fears of a slowing global economy. The
world’s largest independent oil and gas producer also raised its capital spending for 2019 by $200
million to $6.3 billion, citing more drilling in Alaska and the Eagle Ford shale of Texas.

Unlike the independents, oil majors have been increasing their spending to boost production,
especially in the top U.S. shale field, the Permian Basin.
Exxon Mobil Corp (XOM.N), the largest U.S. oil producer, boosted its output in the Permian to
274,000 barrels of oil and gas per day in the second quarter, up 90% from a year ago.
Chevron Corp (CVX.N), the second-largest U.S. oil and natural gas producer, saw its second
quarter profits surge 26%, as its Permian output rose 21.5% over a the same period a year ago.
U.S. crude output slipped to 12.11 million barrels per day in May from a monthly record high of
12.13 million bpd in April, the U.S. Energy Information Administration (EIA) said in a production
report on Wednesday.
For the year, however, total U.S. crude output is expected to rise to a record 12.36 million bpd in
2019, topping the current annual all-time high of 10.96 million bpd in 2018, according to EIA
projections.
U.S. financial services firm Cowen & Co this week said that projections from the exploration and
production (E&P) companies it tracks point to a 5% decline in capital expenditures for drilling and
completions in 2019 versus 2018.
Cowen said independent producers expect to spend about 11% less in 2019, while major oil
companies plan to spend about 16% more.
In total, Cowen said all of the E&P companies it tracks that have reported plan to spend about
$81.1 billion in 2019 versus $85.4 billion in 2018.

U.S. crude futures CLc1 traded around $56 per barrel on Friday, putting the contract on track to
fall about 1% for the week on U.S. President Donald Trump’s promise to impose more tariffs on
Chinese imports. [O/R]
Looking ahead, U.S. crude futures were trading around $56 a barrel for the balance of 2019
CLBALst and $54 in calendar 2020 CLYstc1.
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,006.
Most rigs produce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, said it
amended its rig count forecast lower because some public land drillers said they would run fewer
rigs.
Simmons now expects the average combined oil and gas rig count will slide from a four-year high
of 1,032 in 2018 to 970 in 2019 and 955 in 2020 before rising to 997 in 2021.
That compares with Simmons prior forecast of 992 in 2019, 1,011 in 2020 and 1,067 in 2021.

NewBase Special Coverage
News Agencies News Release 03 August 2019
In the U.S.A, most petroleum is consumed in transportation
U.S. EIA, Monthly Energy Review Note: Click for full U.S. petroleum flow 2018 diagram.
Petroleum, which consists of crude oil and refined products such as gasoline, diesel, and propane,
is the largest primary source of energy consumed in the United States, accounting for 36% of total
energy consumption in 2018.
Crude oil is processed at petroleum refineries to make many different products, such as motor
gasoline, distillate fuel oil, hydrocarbon gas liquids, and jet fuel. More than two-thirds of finished
petroleum products consumed in the United States are used in the transportation sector.
The U.S. Energy Information Administration’s (EIA) U.S. petroleum flow diagram helps to visualize
U.S. petroleum supply (production, imports, and withdrawals from storage) and disposition
(consumption, exports, and additions to storage).
The large number of refined products and outlets for sale (e.g., gasoline stations) makes data
difficult to collect and end-use consumption difficult to calculate. EIA uses petroleum product
supplied to estimate petroleum consumption. EIA calculates product supplied by adding field
production, refinery and blender net production, and imports and then subtracting stock change,

refinery and blender net inputs, and exports. Petroleum product supplied increased for the sixth
consecutive year in 2018, totaling about 20 million barrels per day (b/d).
Source: U.S. EIAMonthly Energy Review , Note: Production includes crude oil, lease condensate, and natural gas liquids.
In 2018, U.S. exports of crude oil reached a record high of 2.0 million b/d, an increase of about 0.8
million b/d from 2017. U.S. crude oil exports have increased significantly since the beginning of
2016, after the U.S. Congress lifted restrictions on exporting crude oil. In addition, U.S. exports of
total petroleum products reached a record high of 5.6 million b/d in 2018, an increase of 0.3 million
b/d from the previous year.
The United States imported about 8 million b/d of crude oil in 2018, a 3% decrease from 2017. Net
imports of crude oil and petroleum products were down to about 2 million b/d, the lowest level
since 1967. The United States still imports crude oil because of geographic and quality
considerations.

In 2018, total field production, which includes crude oil, lease condensate, and natural gas liquids,
reached a record high of more than 15 million b/d. U.S. crude oil production reached a record high
of nearly 11 million b/d in 2018, a 17% increase from the record set in 2017. Production of natural
gas liquids reached a record high of more than 4 million b/d, a 15% increase from the record set in
2017. Increased production from tight oil and shale formations drove these record highs.
Source: U.S. Energy Information Administration, Monthly Energy Review
Most crude oil is refined into petroleum products used for transportation, such as motor gasoline,
diesel, and jet fuel. The transportation sector has been the largest consumer of petroleum
products in the United States since at least 1949, the earliest year for which EIA has data.
Transportation accounted for about 14 million b/d of petroleum consumption in 2018. This level
was the second highest since its peak in 2007.
After transportation, the industrial sector accounts for the second-largest share of petroleum
consumption, accounting for about 5 million b/d in 2018. Examples of industrial use of petroleum
products include hydrocarbon gas liquids used as feedstocks for chemicals and plastics, as well
as asphalt and road oil used for construction and road maintenance.
Petroleum data are available in various EIA sources, including
• Weekly, monthly and, annual petroleum reports, which compile information from EIA’s
petroleum industry surveys
• Gasoline and Diesel Fuel Update, for weekly retail fuel prices
• This Week in Petroleum, for weekly petroleum analysis
• Monthly Energy Review, EIA’s comprehensive source for historical energy data

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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

New base 03 august 2019 energy news issue 1265 by khaled al awadi

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