New base 07 february 2020 energy news issue 1316 by khaled al awadi

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NewBase Energy News 07 February 2020 - Issue No. 1316 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502,Dubai, UAE
UAE: Fuel oil jump leads Fujairah refined product stocks
WAM/Esraa Ismail/Rasha Abubaker + NewBase
Refined oil product stockpiles at Fujairah advanced to an 11-week high over the past week, with
gains in all categories amid a bearish near-term outlook for bunker fuel oils and the coronavirus
outbreak hampering trading.
Total stocks climbed 12 per cent over the week to 24.252 million barrels as of 3rd February, the
most since 18th November last year, data released Wednesday by the Fujairah Oil Industry Zone,
FOIZ, showed. Heavy distillates and residues, including fuel oils used for marine fuel and power
generation, jumped 23 per cent to 12.862 million barrels, a 10-week high.
"February is always a weak month for sales every year and this year, it's going to be worse," a
Singapore-based bunker trader told S&P Global Platts. "You have the coronavirus, weak global
economy and political uncertainty in some parts [of the world]."
Fujairah is not the only port showing gains in supplies of heavy residues. In Singapore,
commercial onshore residue stocks climbed to a seven-month high as of 29th January, according
to Enterprise Singapore data. In Fujairah, the bulk of bunker suppliers are able to offer deliveries
within the next day compared with three to five days out in January, Platts reported previously.
"February is traditionally a slow month for [marine fuel demand]," a UAE-based bunker trader said.
"This is due to stockpiling ahead of the Christmas holidays so shippers have enough inventory."
www.linkedin.com/in/khaled-al-awadi-38b995b

Inventories of gasoline and other light distillates rose 3 per cent to 7.332 million barrels, the most
since 19th August, 2019, according to the FOIZ data, compiled by Platts.
Middle distillates inventories rose 1 per cent to 4.058 million barrels, a three-week high and the
second consecutive weekly gain. The category includes jet fuel, marine bunker gasoil, kerosene
and diesel.
Platts holds exclusive rights to publish Fujairah oil inventory data, and has deployed a blockchain
network for its collation.
FOIZ was established to develop the petroleum strategy for investment in the region. According to
FOIZ, 11 terminals are participating in the weekly stock reporting, including storage volume
involved in activities such as blending and refining.
Brooge unit inks new Fujairah land lease agreement
Brooge Holdings said its wholly-owned energy investment company, Brooge Petroleum and Gas
Investment Company (BPGIC) has signed a land lease agreement with Fujairah Oil Industrial
Zone (FOIZ) for a strategic plot of land spread over 450,000 sq m area.
The area will be utilised by BPGIC to build its Phase III facility, said a statement from Brooge
Holdings.
BPGIC said it expects that Phase III alone could add storage and services capacity of up to three
and half (3.5) times the size of its projected operations post-Phase II, which will be 1 million cu m.
The energy investment company said it intends to use the land to further increase its capacity for
storage and refinery services by developing additional storage and refining capacity using the
same award-winning technology, technical features and tank diversification as used in Phase I
and II.
initial studies indicate that the
land could house up to
approximately 3.5 million cu m of
storage tanks and, potentially, a
refinery with a capacity of up to
180,000 bbl per day.
The company is currently in
discussions with potential
collaborators for Phase III
including several top global oil
majors who expressed interest in
partnership for the Phase III
facility.
CEO Nicolaas Paardenkooper said: We are thrilled to announce that we have secured a lease for
this strategic and sizeable plot of land in Fujairah Oil Industry Zone, which can accommodate
additional capacity of over 3.5 times our facilities currently operating and under construction."
"When the Phase III expansion is completed, we expect to become the largest oil storage and
service provider in the increasingly important FOIZ & Port of Fujairah," he added

Oman; BP Oman’s Ghazeer gas project in ‘final stages’
Oman Observer - Conrad Prabhu
The second phase of BP Oman’s multibillion-dollar tight gas development in Block 61 in central
Oman is in the “final stages”, according to a top official representing the energy supermajor in the
Sultanate.
Yousuf al Ojaili, President, made the announcement in a tweet welcoming on Tuesday the visit of
Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas, to the construction site
where new gas processing facilities are nearing completion in Block 61.
“After production from Khazzan started in September 2017, the second phase of Block 61 gas
development (Ghazeer field) is at final stages. Salim al Aufi, Under-Secretary of Oil & Gas visited
the project site today,” said Al Ojaili in the tweet.
Khazzan, representing the first phase of BP Oman’s mega investment in unlocking the tight gas
resources of Block 61, is currently producing around one billion cubic feet per day (bcf/d).
This will be boosted to 1.5 bcf/day when the Ghazeer development, representing Phase 2 of BP
Oman’s multi-year development, comes on stream early in 2021.
In addition to the drilling of around 100 wells as part of Phase 2, BP Oman is adding a third gas
processing train to the central processing facilities (CPF) in Block 61, along with a second
condensate train, gathering systems, well hookups, and a new gas export system connecting with
Oman Gas Company’s network in Fahud.
BP Oman is a partnership of energy giant BP (60 per cent), Oman Oil Company E&P (30 per cent)
and Malaysian energy giant Petronas (10 per cent).

Norway: DNO reports record revenues and production
Source: DNO
DNO, ( a U.A.E linked oil company ) the Norwegian oil and gas operator, has reported interim
2019 revenues of USD 971 million, the highest in the Company's 48-year history, on the back of
acquisitions and a record drilling campaign driving a 28 percent year-on-year increase in
Company Working Interest (CWI) production to 104,800 barrels of oil equivalent per day (boepd).
Net profit last year stood at USD 74 million.
The Company exited 2019 with a cash balance of USD 486 million and USD 145 million in
marketable securities. The cash balance excludes two delayed export payments totaling USD
107 million net to DNO received from the Kurdistan Regional Government in 2020.
In January 2020, DNO completed a buyback program of up to 10 percent of own shares, having
acquired 108,381,415 shares at a weighted average price of NOK 10.61 per share (for a total cost
of USD 129 million). The Board of Directors has called for an Extraordinary General Meeting later
this month to seek shareholder approval to cancel the treasury shares.
The Board of Directors also plans to approve distribution of the next semi-annual dividend of NOK
0.20 per share in March 2020, following which DNO will have returned USD 200 million to
shareholders since August 2018.
Last year, the Company delivered its largest ever annual drilling program with 36 wells drilled or
spudded across its portfolio, of which 24 were development/infill and 12 exploration/appraisal
wells. Planned operational spend (capital and exploration expenditures plus lifting costs) will
remain high in 2020 at USD 650 million.
In Kurdistan, gross production from the two fields in the DNO-operated Tawke license climbed to
124,000 barrels of oil per day (bopd) in 2019 (87,400 bopd CWI), up from 113,100 bopd in 2018
(79,700 bopd CWI). Average production of 122,800 bopd in the fourth quarter of 2019 was up

3,000 bopd from the previous quarter. In November 2019, the Company reported a discovery in its
operated Baeshiqa license, with the well now undergoing a workover prior to resumption of acid
stimulation and testing of remaining reservoirs to assess commerciality.
Through acquisition of Faroe Petroleum, the Company added North Sea production of 17,400
boepd in 2019. Average production of 19,000 boepd in the fourth quarter of 2019 was up 4,100
boepd from the previous quarter. The Company was awarded 10 licenses in Norway’s Awards in
Predefined Areas (APA) 2019 licensing round adding to the 87 licenses already held in Norway
and 15 across the United Kingdom, the Netherlands and Ireland. Of these licenses, 28 are on
production (13 fields) and the balance in various stages of evaluation, exploration and
development.
The Peshkabir-to-Tawke gas gathering and reinjection project designed to increase oil recovery
rates at Tawke while eliminating flaring at Peshkabir will be completed in spring 2020. Once
completed, CO2 emissions from DNO’s operated Kurdistan fields are expected to drop to around
7 kilograms per barrel, compared to an industry average of about 9 kilograms per barrel in Norway
and about 18 kilograms per barrel globally.

Middle East’s $2 Trillion Wealth Could Be Gone by 2034, IMF
Bloomberg - Anthony Dipaola
The Arab monarchies of the Persian Gulf face a budget reckoning and risk squandering their $2
trillion in financial wealth within 15 years as oil demand nears peak levels, according to the
International Monetary Fund.
Global oil demand may start falling sooner than expected, putting a strain on the finances of the
six-member Gulf Cooperation Council, which accounts for a fifth of the world’s crude production,
the IMF said in a report Thursday.
Without decisive economic reforms, the richest Middle Eastern states could exhaust their net
financial wealth by 2034 as the region becomes a net debtor, the fund projects. Within another
decade, their total non-oil wealth would also be exhausted, the IMF said in the report prepared by
a team of its Middle East and Central Asia specialists as well as the research department.
“Countries in the region need to think long-term and strategically because the oil market is
changing structurally both from the demand and the supply side,” Jihad Azour, director of the
IMF’s Middle East and Central Asia
Department, said in an interview.
Economic reforms already underway
in some countries need to accelerate,
he said. Development plans need to
shift spending and job creation from
governments to the private
businesses and develop more non-oil
sources of income more quickly, he
added.
GCC countries would have to be more
aggressive in their pursuit of an
economic transformation to preserve
their current wealth. “If we stop here,
it’s not enough,” Azour said.
International oil companies and
producing states have come to
recognize that alternative energy
sources, alongside greater efficiency,
are already eroding demand. While
Gulf producers like Saudi Arabia and
the United Arab Emirates are
developing new industries in
preparation for a post-oil era, they’re not moving quickly enough to avoid running out of cash, the
IMF said.
Gulf oil producers sharply increased budget spending from 2007 and until 2014, when crude
plunged. Despite patchy reforms, they haven’t fully offset the drop in oil revenue with spending
cuts, leading to deficits that have eroded wealth, according to the report.
Regional governments will likely need to cut spending further, save more and introduce broad-
based taxation to make ends meet, the IMF said.

A further decline in oil prices this year, in the face of geopolitical tensions and threats the
coronavirus poses to growth, is making that task even harder. Should global oil demand trend
downward before those plans take root, the countries would have to cope with their longer-term
economic problems even sooner, according to the fund.
“The world’s demand for oil is expected to grow more slowly and eventually begin to decline in the
next two decades,” the IMF said.
Global oil demand is likely to peak around 2041 at about 115 million barrels a day and gradually
decline from there, according to the report. While that forecast is firmly in line with most industry
estimates, some, including the IMF, see potential for oil use to permanently decline even earlier.
Saudi Aramco, citing forecasts from oil industry consultant IHS Markit Ltd., said in its initial public
offering prospectus last year that oil demand could peak around 2035. Improved energy efficiency
or the imposition of a carbon tax by governments worldwide could bring oil’s demand peak forward
to as soon as 2030, the IMF said.
Saudi Arabia, the U.A.E. and Kuwait are the biggest producers in the GCC and are all OPEC
members. Risks differ for the GCC states, which also include Qatar, Oman and Bahrain. The
IMF’s outlook offers a broad timeframe in which global oil demand might crest. Revenue may not
peak until the middle of the century and Gulf producers could see demand for their oil sustained
from other quarters.
Increased use of oil for petrochemicals might help mitigate the slowdown in demand, the IMF said.
Even as oil demand peaks, the lower costs of production will allow Gulf states to gain market
share over rivals elsewhere.
Even then, under the IMF’s scenario, Saudi Arabia, the U.A.E. and their neighbors face a future of
slumping income and reliance on debt to support spending. “Faster progress with economic
diversification and private sector development will be critical to ensure sustainable growth,” the
IMF said.

U.S. Despite becoming a net petroleum exporter, most U.S.
regions are still net importers
Source: U.S. Energy Information Administration, Petroleum Supply Monthly
In November 2019, the United States exported 772,000 barrels per day (b/d) more petroleum
(crude oil and petroleum products) than it imported, marking the third consecutive month in which
the United States was a net petroleum exporter. Although the United States is a net petroleum
exporter as a whole, most regions other than the U.S. Gulf Coast region remain net petroleum
importers.
Net petroleum trade is calculated as the total imports of crude oil and petroleum products minus
the total exports of crude oil and petroleum products. In September 2019, the United States
became a net petroleum exporter for the first time since monthly records began in 1973.
The United States is a net importer of crude oil. In November 2019, the latest monthly data, it
imported 5.8 million b/d of crude oil and exported 3.0 million b/d of crude oil.
The United States is a net exporter of petroleum products (such as distillate fuel, motor gasoline,
and jet fuel). In November 2019, the United States exported 5.8 million b/d of petroleum products
and imported 2.2 million b/d of petroleum products.

Regional petroleum trade patterns are still determined by geographical factors, existing
infrastructure, regional balances of supply and demand, and other constraints—factors that often
change slowly. In recent years, significant growth in crude oil output and infrastructure changes to
refineries, pipelines, and terminals in the U.S. Gulf Coast region have led to most of the changes
in U.S. petroleum trade patterns.

Of the five regions (also referred to as Petroleum Administration for Defense Districts), only the
U.S. Gulf Coast currently exports more crude oil than it imports: 2.9 million b/d of exports
compared with 1.2 million b/d of imports in November. The Gulf Coast continues to import
primarily heavy, high-sulfur crude oil, which most Gulf Coast refineries are configured to process.
Imports from Mexico and Canada are nearly tied as the largest sources of Gulf Coast crude oil
imports.
Canada is also the largest source of crude oil imports for the Midwest, which is now the largest
crude oil importing region; crude oil net imports totaled 2.5 million b/d in November. In other
regions, crude oil trade patterns are relatively unchanged.
Similar regional differences exist for petroleum products as well. The United States has been a net
exporter of motor gasoline on an annual basis since 2016; motor gasoline exports—mostly from
the U.S. Gulf Coast—have more than offset motor gasoline imports, especially to the U.S. East
Coast.
The U.S. Energy Information Administration’s (EIA) January 2020 Short-Term Energy
Outlook forecasts that U.S. petroleum net exports will average 0.8 million b/d in 2020 and 1.4
million b/d in 2021.
If these forecasts are realized, the United States would be a net petroleum exporter for the first
time on an annual basis in EIA's data series that dates back to 1949. EIA forecasts that the United
States will remain a net importer of crude oil in both years, importing a net 3.9 million b/d of crude
oil in 2020 and 2.9 million b/d in 2021.

NewBase February 07-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil stables on likely OPEC+ output cuts amid coronavirus outbreak
Reuters + Newbase
Oil prices edged higher on Friday after Russia said it would support a recommendation for OPEC
and other producers to cut their output further amid falling demand for crude as China battles the
coronavirus epidemic.
Brent crude LCOc1 futures slide 7 cents, or 0.13%, to $54.86 a barrel by 09.32 GMT, but were
heading for a fifth weekly loss amid lingering fears over the impact of the virus.
U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 2 cents, or 0.04%, at $50.93
a barrel, also heading for a fifth consecutive week of losses.
Prices came off earlier highs in the session after China’s central bank governor said the world’s
second-biggest economy may experience disruptions in the first quarter, while Japan announced
Oil price special
coverage

a big jump in confirmed coronavirus cases among thousands of passengers confined to a cruise
liner off its coast.
A panel advising the Organization of Petroleum Exporting Countries (OPEC) and allies led by
Russia, known as the OPEC+ group, suggested provisionally cutting output by 600,000 barrels
per day (bpd), three sources told Reuters on Thursday.
(GRAPHIC: Change in Brent crude oil prices since Jan. 20 - here)
“We support this idea,” said Sergei Lavrov, Russia’s Foreign Minister, when asked about the
proposal at a news conference in Mexico City later in the day.

The OPEC+ group, which pumps more than 40% of the world’s oil, has been withholding supply
and agreed to deepen the cuts by 500,000 bpd from the start of this year, to 1.7 million bpd, nearly
2% of global demand.
“The OPEC+ cuts are supportive of prices near term, but we are still facing uncertainty about the
timing and speed of Chinese activity restarting post Chinese New Year,” said Lachlan Shaw, head
of commodities research at National Australia Bank in Melbourne.
Stimulus measures by the People’s Bank of China (PBOC) are also supporting prices, Shaw said.
The PBOC has pumped hundreds of billions of dollars into the financial sector this week to help
steady markets and boost the economy, along with other measures.
Eurasia group said it estimates a contraction in oil demand in China, the world’s biggest importer
of crude, of as much 3 million bpd in the first quarter from 2019 levels.
Meanwhile, JPMorgan cut its estimate for Brent to average $60.40 a barrel in 2020, down $4.1
compared with its earlier forecast.
Oil prices have fallen by more than a fifth since the outbreak of the virus in the city of Wuhan in
China.
“There is still plenty of uncertainty around the global balance, with it unknown how demand will
evolve in coming months as a result of the coronavirus,” ING Economics said in a note.

NewBase Special Coverage
The Energy world – Special Feb- 07-2020
Unwanted Gas / LNG sweeps over global gas market
Oil Price.com + NewBase
China’s state-owned gas importers are considering declaring force majeure on LNG imports,
which would amplify the turmoil in global gas markets.
Shipments of oil and gas are backing up at Chinese ports, which is creating ripple effects across
the world. Now, Chinese state-owned CNOOC is considering declaring force majeure on its LNG
import commitments, according to the FT. Sinopec and CNPC are also apparently considering the
move.
Prices were already in the dumps. JKM prices recently fell to 10-year lows. But they have
continued to decline, approaching $3/MMBtu for the first time in history. Just a few weeks ago,
JKM prices were trading at around $5/MMBtu, itself an incredibly low price for this time of year.
LNG exports from the US are uneconomical at these price levels. Many exporters have contracts
at fixed, higher prices. But shipments can be cancelled for a fee. And any spot trade would be hit
hard. The question now is whether shipments will come to halt.
“Forward prices for summer are now at levels where US LNG shut-ins begin to seem
viable,” Edmund Siau, a Singapore-based analyst with energy consultant FGE, told
Bloomberg. “There is usually a lead time before a cargo can be canceled, and we expect actual
supply curtailments to start happening in summer.”
But if buyers start cancelling their purchases, LNG exporters have to ramp down production. That
could then ripple back to the shale gas fields in the US, where prices are already below $2/MMBtu

and drillers can’t make any money. The CEO of Marcellus shale gas giant EQT said in December
that “a lot of this development doesn’t work as well at $2.50 gas.” Henry Hub prices are now below
$1.85/MMBtu.
There is little relief in sight. “Even with our projected increase in power sector natural gas demand
due to the current low price environment, we estimate natural gas stocks to end this summer with
3.85 tcf in the ground,” Bank of America Merrill Lynch said in a recent note. “Such inventory level
would be more than 100 bcf higher YoY, and does not leave much room for bearish errors from
mild weather, high renewable generation, or reduced LNG exports.”
Europe too is sitting on abnormally high inventories. “LNG exporters desperately need cold
weather in Europe to draw down inventories and provide more breathing room this summer,” Bank
of America warned.
But that is not happening. Europe just saw its warmest January on record, depressing gas
demand. Fossil fuels are driving climate change, so it’s rather ironic that higher temperatures are
now battering gas markets.
It’s all combining to create a “gasmaggedon,” according to Bank of America Merrill Lynch.
“We are now more than halfway through the winter, and thus far Mother Nature has not been kind
to natural gas prices,” analysts at the bank wrote.
The investment bank calls the US Midwest power sector is the “true market of last resort,” which
means that US gas prices have to fall to such low depths that coal-fired power plants are forced
offline in their last redoubt – the Midwest.

“We believe the US cannot sustain reduced LNG exports this summer,” Bank of America
warned. “Therefore, US natural gas prices might have to go low enough to stimulate sufficient
Midwest power sector natural gas demand to balance the entire global gas market.”
China is the world’s second-
largest importer of LNG, and its
spot purchases of the super-
chilled fuel and other energy
products have almost ground to a
halt as the coronavirus spreads
rapidly throughout the country.
LNG traders said they were
scrambling to divert shipments or
find new outlets for cargoes
destined for China, driving spot
prices for LNG in Asia to record
lows.
“China was the place we sent
cargoes to if demand was weak
elsewhere in Asia but now
people are trying to find
alternative locations,” one of the
traders said.
The sources with knowledge of
CNOOC’s move declined to be named due to the sensitivity of the matter.
No further details were immediately available and a CNOOC spokeswoman did not answer calls
from Reuters.
A Chinese international trade promotion agency said last week it would offer force majeure
certificates to companies struggling with the fallout from the epidemic to give to their overseas
partners.
WORKING FLAT OUT
China’s PetroChina and Sinopec also supply CNOOC during the colder months from mid-
November to mid-March under a state-mandated “inter-connected” supply scheme, another
industry official with knowledge of the matter said.
It was not immediately clear which of CNOOC’s LNG suppliers had been issued with a force
majeure notice.
A Woodside representative said the company was closely monitoring the situation. Sinopec and
Shell declined to comment and other suppliers were not immediately available for comment.
It was also not clear which unforeseen event CNOOC had cited when declaring force majeure.
Even before the outbreak of the virus, CNOOC had been offering to resell LNG cargoes because
Chinese buyers have been struggling to shift high levels of stocks amid weak demand due to a
slowing economy and a milder winter.
Baldev Bhinder, managing director of law firm Blackstone & Gold, said Chinese buyers may have
difficulty establishing a link between the virus and their inability to fulfill contracts.

“That is where I see Chinese buyers having difficulty because weak demand and lower prices,
which were already in play independent of the virus, cannot in itself establish force majeure
causation,” said Bhinder.
But if crew members were affected or terminals were closed to contain the spread of the virus,
then there would be a stronger case, he said.
A top executive at an LNG terminal in northern China operated by PetroChina said its 80 staff has
been working flat out on shifts since before the Lunar New Year break.
“With demand plunging, our tanks are topping. And workers are getting exhausted waiting for
colleagues to return from holiday to relieve them,” said the executive.

NewBase For discussion or further details on the news below you may contact us on +971504822502,Dubai, UAE
The Editor :”Khaled Al Awadi” 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
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28
years ofexperience 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 broadcastedinternationally, via GCC leading satellite Channels.
NewBase :For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase Jan 2020 K. Al Awadi

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New base 07 february 2020 energy news issue 1316 by khaled al awadi