New base 07 may energy news issue 1026 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 07 May 2017 - Issue No. 1026 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, Enoc fuel retailer is turning to electric car chargers
Fuel retailer Enoc is working with Dubai utility Dewa to install electric car chargers at certain petrol
pumps … Gulf News Ed Clowes, Staff Reporter
Emirates National Oil Company (Enoc) is pushing ahead with its aggressive expansion plans in
the UAE and Saudi Arabia, despite a seven per cent increase in fuel prices since deregulation
occurred in 2015.
Whilst the midstream and downstream energy company sees
positive indicators for its service station business, Zaid Al
Qufaidi, Enoc’s Managing Director for Retail, told Gulf News
in an interview the company is investing heavily in charging
stations for electric cars.
“We have seen fuel consumption increase by nine per cent,
even though there has been an increase in price for the end
user of about seven per cent since deregulation,” Al Qufaidi
said.
In August 2015, the UAE government deregulated, or liberated,
the price of petrol, linking it instead to global prices. The move was intended to strengthen the
economy.
Until then, Enoc had struggled to turn a profit, as heavily subsidised fuel prices had squeezed the
company’s margins. High oil prices were “the main reason for our losses in the past, we were
really hurt badly, and that stopped us from expanding our network, and rehabilitating our network,”
Al Qufaidi said.
“Some of the stations are really old, really outdated, because it was a loss business,” he added.
When the government deregulated the price of fuel in 2015, oil had lost around half its value in the
previous year, and the move eased pressure on Enoc, who were able to raise prices without
impacting customers too heavily. “This liberation in fuel prices signalled a major shift in Enoc’s
strategy. We decided to focus on our core business, which is retail,” he said.
The Dubai-government owned company introduced a five-year plan to build 54 service stations by
2021, and strengthen its downstream business.
Electric chargers
So what about electric cars? If everyone started driving vehicles made by Tesla, then there would
surely be no need for petrol stations?
“We have taken a strategic decision, in coordination with the Dubai Electricity and Water Authority
(Dewa), to install electric chargers in select locations,” Al Qufaidi said.

Enoc has already installed 10 of these chargers at existing service stations, and Al Qufaidi said
that he will increase that number in line with the number of electric car owners in the emirate.
Expansion
In recent years, the emirate has seen a double-digit growth in fuel consumption as Dubai’s
population boomed over two decades from 689,420 in 1995 (as per the UAE Census 1995 data),
to 2.753 million in 2017, according to Dubai Statistics Centre. According to Al Qufaidi, citing Road
Transport Authority (RTA) data, there has also been an eight per cent growth in the number of
vehicles on the roads, helping to grow his business.
“This year, we are supposed to deliver 14 brand new stations. So far, we’ve already opened three,
and we still have 11 to go by the end of 2017,” he said, adding, “they’re at differing stages of
construction.”
“We have an aggressive plan to grow,” he said. In Saudi Arabia, too, Enoc is continuing its
expansion. “We currently have seven service stations in Saudi, and we aim to add another seven
by the end of the year,” Al Qufaidi said. It’s not all rosy, however.
In January 2017, the UAE announced plans to massively decrease its reliance on fossil fuels by
2050. With this drive towards clean fuels and renewable energies, mass transportation and
electric cars will be promoted by the government as more sustainable methods of travel.
Responding to a question about whether he saw this as a threat to his business, Al Qufaidi said
that some of his counterparts definitely do.
“I, however, see it instead as an opportunity. All of our new gas stations will be equipped with
vapour recovery and enough operational solar panels to sustain the station’s capacity,” he said. “I
feel very strongly about these things.”

Kuwait Siemens wins order to expand Az Zour power plant
Company says to deliver an industrial steam turbine package to expand the Az Zour South 3
Arabian Businass
Siemens has received an order to deliver an industrial steam turbine package to expand the Az
Zour South 3 open cycle gas turbine power plant to a combined cycle power plant. The plant is
located in Kuwait and is operated by the Ministry of Electricity & Water (MEW) while Siemens’
customer is the Chinese EPC contractor SEPCOIII.
Siemens said the expansion will increase the total installed capacity of the plant by 263
megawatts (MW) without using any additional gas. The combined cycle power plant is expected to
go into operation in mid-2019.
Az Zour South 3 began operating as an open cycle power plant with two SGT4-5000F gas
turbines in 2015. Siemens is now supplying an SST-800 ste am turbine (high pressure) combined
with an SST-500 steam turbine (low pressure) and an SGen1200A generator for this stage.
The customer SEPCOIII has already used Siemens’ steam turbine technology for three solar
thermal power plants in Morocco. Siemens components are already installed in the first and
second stages of the Az Zour South power plant. The company supplied a total of eight SGT5-
2000E gas turbines and two SST5-4000 steam turbines for this project.
Siemens says to set up global logistics HQ in Dubai
Siemens has announced plans to set up its global logistics headquarters including its portfolio for
airports, cargo infrastructure and ports in Dubai. The company will also target the site of Expo
2020 Dubai as the future location for this business after the exposition ends, it said in a statement.
It added that the move supports the legacy aspirations of Expo 2020 Dubai, as well as the
industrial and logistics developments in the emirate.
Siemens said it sees great growth potential in the Middle East region and in the logistics market
globally. “This strategic decision highlights Dubai’s significance as a major player in global
transport and logistics, with some of the world’s biggest airlines and ports operating in and around
the emirate,” said Siemens’ chief technology officer Roland Busch.

Saudi Former oil chief to launch 'Energy Elders' initiative
Former oil minister Ali Al-Naimi is part of forum which aims to outline vision of how to tackle most
pressing energy problems
A forum of "Energy Elders" is to be launched by a former Saudi oil minister to outline a vision to
the world on how to tackle some of the most pressing energy issues.
Ali Al-Naimi, Saudi Arabia’s former Minister of Petroleum and
Mineral Resources, will launch the Al-Attiyah Foundation’s
inaugural Forum of Energy Elders in Doha on May 9.
The forum is an initiative to harvest the collective wisdom of
the now 30 distinguished Alumni of the Abdullah Bin Hamad
Al-Attiyah International Energy Awards, a statement said.
It added that the goal of the Al-Attiyah Foundation is to create
a platform for the Energy Elders to present their vision to the
world on how to tackle some of the most pressing energy
issues facing industry and society over the coming decades.
Al-Naimi said: “According to scientists, planet earth is 4.5 billion years old - all this time, the planet
has run quite effectively - on solar power. It is the only reason we are all here today.
“It is constant, reliable, and free. Our energy quest today is to utilise solar and other renewable
forms of energy. I have no doubt fossil fuels will retain a vital place, but all forms of energy will be
required as we go forward.”
The Al-Attiyah International Energy Awards are given annually to individuals for their lifetime
achievement in the advancement of global energy. Since 2013, the accolade has recognised
many of the world’s most respected energy leaders from Asia, Africa, the Middle East, Europe and
the US, including Al-Naimi.
The Energy Elders will gather on May 9 for the first of many live knowledge-exchange forums,
where they will brainstorm with policy makers, industry executives and academics on how to
resolve some of the most pertinent energy challenges

Oman RHIP venture to add 500m boe to PDO’s reserves
Oman Observer - Conrad Prabhu in Business
A number of big-ticket projects initiated by Petroleum Development Oman (PDO) before the global
oil price downturn are still on track and continue to make headway in their implementation,
according to the majority government-owned oil and gas producer. The biggest of these is the
Rabab Harweel integrated project (RHIP), which has the potential to add more than 500 million
barrels of oil equivalent (boe) to reserves.
“(The RHIP) integrates sour miscible gas injection (MGI) in multiple oil reservoirs with production
and pressure maintenance of a government gas condensate field, which also contributes to
Oman’s overall gas demand,” said PDO in its newly released Sustainability Report for 2016.
The RHIP facility will include sour gas processing facilities and associated gathering and injection
systems and export pipelines. It will handle the production of oil and gas from the Harweel oil
reservoirs via Miscible Gas Injection and the production of gas with condensate from the Rabab
reservoir through partial recycling of sour gas. The facility will deliver peak export of 4.9 MMsm3/d
of sweet gas and 9700 m3/d of condensate in addition to approximately 16 MMsm3/d of high
pressure sour injection.
UK-headquartered international oil and gas engineering services firm Petrofac is the engineering
and procurement contractor for the RHIP development — an estimated $1 billion contract it won
early in 2014. The contract also includes Construction and Commissioning management support
services with Petrofac providing full support to PDO during the construction and start-up phases of
the integrated oil and sour gas facility.
Slated for completion in 2019, construction work on several key components of the project is on
schedule, according to PDO. “Power plant pre-commissioning activities have started and plans
are ready for commissioning in early 2017. The construction of the RHIP plant is taking shape with
the majority of the process equipment, including pre-assembled racks, being delivered and
erected at the site. Moreover, most of the associated buildings within the project scope have been
completed,” it said.
Significantly, a notable chunk of the project capital cost will be spent within Oman in line with
PDO’s strategy to maximise In-Country Value (ICV) from its investments. Local content utilisation,
along with training and development of Omanis, will account for a key part of the estimated $230
million in ICV contribution expected from the project during the construction phase. Around 200
Omani 6G-certified Omani welders have been assigned to various RHIP contractors as well, says
PDO.
Also making headway is the equally prestigious Yibal Khuff project, billed as one of the largest
and technically complex schemes to be undertaken by PDO. The project, which centres on the
simultaneous development of a number of sour oil and gas reservoirs, is currently in the
construction phase.
“The first oil is projected for 2020, with a peak average production target of 20,000 barrels a day
— and a gas plateau of six million cubic metres per day over 18 years,” the company noted in its
Sustainability Report.
Also on track for completion for this year is Miraah solar energy project which PDO is
implementing in partnership with GlassPoint Solar. The signature project will produce steam for
thermal enhanced oil recovery using the sun’s energy to convert water into steam. Steam
production is expected to commence this year.

Egypt: SDX Energy completes successful SD-1X well onshore
Source: SDX Energy
SDX Energy, the North Africa focused oil and gas company, has announced that drilling on
the SD-1X well at its South Disouq concession in the Nile Delta area of Egypt has now reached its
second target depth.
Following the significant natural gas discovery in the upper Abu-Madi section, where the well
encountered 65 ft. of net pay section with an average porosity of 25%, drilling continued with the
SD-1X well which was subsequently targeting oil from the deeper Cretaceous horizons.
The well has now been drilled to a total depth of 11,068 ft. Hydrocarbons were present in the
deeper intervals, which indicates a working petroleum system within this section. Additionally, the
well confirmed both the presence and quality of the reservoir intervals within this section.
However, there was not a sufficient amount of hydrocarbons present to justify completing this
interval.
The well will now be completed in the Abu-Madi, after which the rig will be released. A detailed
testing program will be undertaken after the rig has been moved off location. The well has
provided important new information about the Cretaceous horizons in this area, which will allow
SDX and its partners to further explore its potential within the large 1,275 km2 South Disouq
concession.
As previously announced, SDX will provide further updates on the Abu-Madi section gas
discovery, and associated recoverable volume estimates, in due course.
Paul Welch, President and
CEO of SDX, commented:
'Whilst it is disappointing
not to have made a
second commercial
discovery in SD-1X's
deeper target, evidence of
a working petroleum
system within this interval
is extremely important to the
prospectivity of the concession.
The Cretaceous units are
laterally extensive within
the block and we have
already identified several
locations where this
potential can be further
tested. Meanwhile, we
have an excellent gas
discovery in our primary target, the Abu-Madi, and view the well results as a very significant
success. Our objectives now are to test this upper interval and then get the field developed and
on production in the shortest possible time frame.
'We are excited about this discovery, which adds a new asset to SDX's growing portfolio. Success here,
combined with the extension of several of our permits in Morocco, where further drilling will take place later
this year, puts us in a strong position to grow our production base in the near term. We remain firmly on
track to deliver additional shareholder value in 2017 and beyond.'

Kurdistan DNO reports first quarter net profit - expands drilling
Source: DNO
DNO, the Norwegian oil and gas operator, has announced expanded investments,
including doubling of planned 2017 wells at the Tawke field in the Kurdistan region of Iraq, on the
back of strong first quarter results. The Company reported quarterly net profit of USD 15 million,
reversing a net loss of USD 31 million in the previous quarter. Revenues were up 83 percent to
USD 77 million on operated production averaging 115,900 barrels of oil equivalent per day.
The expanded 2017 Tawke program includes eight new production wells, of which six are
Cretaceous and two shallow Jeribe wells. A third drilling rig has been mobilized following receipt of
regular payments for oil exports through Turkey. Year to date, the Company has been paid USD
122 million net, including USD 23 million towards DNO's booked receivables for previous
deliveries.
Elsewhere on the Tawke license, the Company produced an average of 3,000 barrels of oil per
day from the Jurassic horizon of the recently drilled Peshkabir-2 well during a two-week test
period in April.
These volumes were trucked to DNO's facilities at Fish Khabur and exported. Extended testing of
the shallower Cretacous discovery in the Peshkabir-2 well has commenced. The Peshkabir-3
appraisal/production well will spud this summer.
The Company is preparing an accelerated development plan utilizing an early production facility to
bring the Peshkabir field onstream by the end of this year.
In a separate release, the Company today announced a fast-track reentry into Norway with the
acquisition of privately-held Origo Exploration Holding.

UK:Turning Plastic to Oil, Sees Money in Saving Oceans
by Anna Hirtenstein
About 90% of plastic is burned or dumped in landfills, oceans
At a garbage dump about 80 miles west of London, Adrian Griffiths is testing an invention he’s
confident will save the world’s oceans from choking in plastic waste. And earn him millions.
His machine, about the size of a tennis court, churns all sorts of petroleum-based products -- cling
wrap, polyester clothing, carpets, electronics -- back into oil. It takes less than a second and the
resulting fuel, called Plaxx, can be used to make plastic again or power ship engines.
Adrian GriffithsSource: Recycling Technologies
“We want to change the history of plastic in the world,” said Griffiths, the chief executive officer of
Recycling Technologies in Swindon, a town in southwest England where 2.4 tons of plastic waste
can get transformed in this way daily as part of a pilot project.
For financial backers including the U.K. government and more
than 100 private investors, the technology could mark a
breakthrough in how plastic is managed globally. The machine
uses a feedstock recycling technique developed at Warwick
University to process plastic waste without the need for sorting, a
major hurdle that has prevented economically viable recycling on
a grand scale.
Griffiths’ project is unique in that it doesn’t target a specific type
of plastic, but rather seeks to find a solution for the so-called
plastic soup inundating the world’s water bodies. By 2050, plastic
will outweigh fish in the oceans, according to a study presented at this year’s World Economic
Forum by the Ellen MacArthur Foundation.
“It could be a real game changer,” said Patricia Vangheluwe, consumer & environmental affairs
director at PlasticsEurope, a trade association representing more than 100 polymer producers,
including BASF SE and Dow Chemical Co. “This is a great way of getting plastics that you would
not be able to recycle with current technology, or do that in an economic way, back into the
circular economy.”
At the moment, only about 10 percent of plastic gets reprocessed because it’s cheaper to pump
new oil for petrochemical feedstock, especially after crude prices collapsed in recent years. The

rest is incinerated, disposed in landfills, or dumped into oceans, releasing toxic chemicals that
harm coral reefs and get swallowed by the marine life humans eat.
Many projects fail because they don’t offer a big enough margin to make them viable, according to
Nick Cliffe, innovation lead in charge of resources efficiency at Innovate U.K., one of two
government agencies that’s provided 2.6 million pounds ($3.4 million) of grants to Recycling
Technologies.
“Recovering raw materials from the waste stream is the future,” said Cliffe, whose team also
finances projects that recover platinum from old electronics and calcium from eggshells.
A former car assembly-line designer, Griffiths wants to mass produce his machine, called RT7000,
and then lease them. It can fit into five shipping containers, a fraction of the size of standard
recycling systems. The idea is for it to be transported to the site of the problem, like a beach in a
developing country where garbage washes up regularly and local recycling is limited.
Plastic Waste
Factoring in a cost of 3 million pounds to install and 500,000 pounds annually to operate,
Recycling Technologies expects revenue of 1.7 million pounds per year per machine, thereby
recovering its initial investment in 2-1/2 years, he says.
“That was always the objective, to
make a machine that could pay for
itself, because then people will make
the investment decisions and it can
scale very quickly,” said Griffiths, 48,
who aims to have 100 RT7000s up
and running by 2025. The county of
Perthshire, Scotland will start using
one in 2018 to turn 7,000 tons of
plastic waste annually into 5,000 tons
of Plaxx.
One recent afternoon at the Swindon
plant, workers heaped plastic onto a
conveyor belt via a tube. The materials
move through a series of units that
separate out stuff like rocks, dirt and
caked-on food. Once that’s done, the plastic enters a furnace-like box and is heated at around 500
degrees Celsius (932 degrees Fahrenheit) using hot sand-like particles that melt it into vapor.
The technique is similar to thermal cracking, whereby crude is transformed into gasoline and jet
fuel, only a different material is used in heating that Recycling Technologies is in the process of
patenting, according to technical director Mike Keast, a former oil refinery designer.
“We have to create new technology so we can both live how we want and not destroy the planet,”
he said, shouting to be heard over the screech of Coke and Sprite cans being pressed into cubes
at an aluminum-can crusher next door.

The vapor is cooled at different temperatures to create one of three materials, each emerging from
separate taps at the bottom of the machine. Out of one, a straw-colored light fuel that can be sold
to petrochemicals companies. A second pumps out a heavier substance reminiscent of candle
wax, similar to what’s burned in ship engines. From the third, a thick brown wax that can be used
to make shoe polish or cosmetics.
Griffiths says he’s in talks with about five petrochemical firms for supply agreements, although he
wouldn’t give details. German chemical maker BASF, for one, expects feedstock recycling
technologies will be “important supplement” to waste-treatment options, according to
spokeswoman Christine Haupt.
While he and his staff of 22 are driven by a desire to protect the oceans, they concede that with
plastic consumption set to double in the next 20 years, recycling must be profitable to make a
difference. Griffiths’ next goal is to build a manufacturing facility.
“I’m not a tree hugger,” he said. “I don’t think that you can change environmental things without it
actually making money.”

Turkmenistan discovers potentially large gas field near Caspian
Reuters
Turkmenistan has discovered a potentially large natural gas field close to its Caspian coast, the
Central Asian nation's state news agency reported on Saturday.
Gas exports are the main source of hard currency for the former Soviet republic which is in talks
with the European Union about building a pipeline across the Caspian to link its fields to European
markets.
The new discovery was made onshore in the Uzunada area, at the depth of about 7 kilometers,
state news agency TDH said. The test well produced 500,000 cubic meters of gas and 150 tonnes
of condensate per day, it said.
Turkmenistan, whose reserves include the world's second-largest gas field, Galkynysh, has faced
foreign currency shortages after Russia, one of the biggest customers, stopped buying Turkmen
gas last year, leaving China as the main buyer.
The Ashgabat government is trying to diversify exports by discussing the Trans-Caspian link to
Europe as well as investing in a pipeline through Afghanistan to Pakistan and India.

Suddenly, Oil Below $40 a Barrel Doesn’t Seem So Far-Fetched
by Alex Nussbaum
It’s come to this for the beleaguered oil market: a big bet that prices are about to sink to their
lowest level in more than a year.
About $7 million worth of options changed hands Friday that will pay off if West Texas
Intermediate crude falls beneath $39 a barrel by mid-July, according to data compiled by
Bloomberg. WTI, which hovered around $46 Friday, hasn’t traded below $39 since April 2016,
though it’s been dropping like a stone in recent weeks.
More than 14,000 August $39 puts changed hands, almost 20 times the number of contracts
previously outstanding for the bearish option.
The trade was a sign of the “crescendo of negativity" that’s washing over the oil market, said
James Cordier, founder of investment firm Optionsellers.com in Tampa, Florida.
Prices have plunged about 13 percent in the last three weeks, amid fears that OPEC-led
production cuts aren’t doing enough to stem a global supply glut. For Friday’s bet to work, prices
would have to match that drop in the next few weeks, during a time when summer driving typically
pushes demand higher, Cordier said by telephone.
“That’s just a huge speculative bet that tells me that the fear is at its heights and we’ll probably
see oil recover," he said. “It’s a hell of a lottery ticket that the market’s going to keep falling."

NewBase 07 May 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices settles at Brent $ 49.44, WTI at $46.22, ending 6.0 % lower
Reuters + NewBase
Oil prices rebounded from five-month lows on Friday following assurances by Saudi Arabia that
Russia is ready to join OPEC in extending supply cuts. Despite the gains, both benchmarks fell
for a third week in a row, their longest losing streak since November.
U.S. West Texas Intermediate (WTI) crude oil futures settled 70 cents, or 1.5 percent, higher at
$46.22. For the week, they were down 6.3 percent. They fell more than 3 percent in early trading
to below $44 per barrel, the lowest since Nov. 15, after dropping 4 percent on Thursday.
Brent was up 76 cents, or 1.6 percent, to $49.14 by 2:36 p.m. ET (1836 GMT) , after falling 3
percent overnight to below $47 per barrel, its lowest since Nov. 30.
That was the date the Organization of the Petroleum Exporting Countries (OPEC) triggered a rally
when it said it would cut production in the first half of 2017. Oil prices earlier trimmed deep losses
after Saudi Arabia's OPEC Governor Adeeb Al-Aama told Reuters OPEC and non-OPEC nations
were close to agreeing a deal on supply cuts.
"Based on today's data, there's a growing conviction that a six-month extension may be needed to
rebalance the market, but the length of the extension is not firm yet," the Saudi official said.
Oil price special
coverage

OPEC sources said on Thursday OPEC was likely to extend cuts when it meets on May 25 but
said a deeper cut was unlikely. OPEC and non-OPEC states initially agreed to cut 1.8 million
barrels per day (bpd) in the first six months of 2017.
Brent and WTI futures are down nearly 14 percent so far this year despite OPEC efforts to support
prices. The benchmarks are trading around levels last seen before the joint deal to cut output was
first announced.
"The energy complex is slowly succumbing to an opinion that this year's OPEC production cuts
have been ineffective," Jim Ritterbusch, president of Chicago-based energy advisory firm
Ritterbusch & Associates, said in a note.
"We feel that the (OPEC) cartel has come to a fork in the road in which the current agreement will
be abandoned or steps will need to be taken to double down on current efforts by increasing
production curtailments," Ritterbusch said.
Brent traded volumes on Thursday reached a record high of nearly 542,000 contracts, suggesting
that hedge funds had accelerated reductions to their long positions.
Pierre Andurand, who runs one of the biggest hedge funds specializing in oil, liquidated his fund's
last long positions in oil last week and is running a very reduced risk at the moment, a market
source familiar with the development said.
"It is now-or-never for oil bulls," said U.S. commodity analysis firm The Schork Report. "They
either put up a defense here or risk further emboldening the bears for a run at the $40 threshold
(for WTI)."
Adding to concerns about bulging inventories, traders pointed to soaring U.S. oil output, which is
up more than 10 percent since mid-2016 to 9.3 million bpd, almost matching output of top
producers Russia and Saudi Arabia.
The U.S. oil drilling rig count rose by 6 rigs to a total of 703 operating in American fields, marking
the 16th straight week of increases.

OPEC's Crisis Of Confidence
By Liam Denning
The big question in the oil market is whether OPEC and chums will extend their supply cuts when
they meet later this month. Except, it's actually a foregone conclusion that they will (see this).
The real question is this: Will they also deepen the cuts?
Brent crude oil dropped below $50 a barrel on Thursday for the first time since late March. If it
closes below that level, it'll be the first time since November 29 -- just before the supply cuts were
announced.
That's freighted with symbolism. But the more telling price move concerns the "strip" -- the
average price for the first 12 months of futures contracts. Here is how that looks for both Brent and
Nymex light, sweet crude:
Remember November?
The Nymex and Brent oil strips have just dropped below their pre-supply cut levels
Note: 12-month futures strips.
U.S. oil production is rising, as a mixture of efficiency gains and open capital markets has
enabled many E&P firms to keep pumping at lower prices. Indeed, energy economist Phil Verleger
points out that open interest in Brent and WTI futures for the next 12 months jumped by the
equivalent of 13 million barrels on Wednesday. He suspects that reflects producers rushing to
hedge future output -- and all that selling weighs on prices.
The initial burst of bullishness fostered by OPEC has, of course, played a big part in the shale
revival. So cutting more of the organization's own output to juice prices would come with the
negative side effect of helping its rivals.
And there's another side effect OPEC should worry about, too.

Because oil isn't the only commodity falling: Copper, iron ore, nickel and steel prices -- along with
the stocks of the metal and mining companies that produce them -- are all slumping on fears
about Chinese demand amid a crackdown on excessive borrowing.
Demand is the bit of the supply-and-demand balance that tends to get forgotten when all the
attention is focused on the utterances of OPEC member ministers. But the market can't ignore
bearish signals forever. Besides the slide in metal markets, a few other recent ones include:
• Gasoline demand in the U.S. has been unexpectedly weak, and inventories, particularly on
the East Coast, are well above average as refiners have taken advantage of low crude oil
prices to boost production;
• New vehicle sales have stalled in the U.S., with implications for jobs, consumer demand
and steel producers, among other things;
• All is not well in the used car market;
• The initial estimate for U.S. GDP growth came in below 1 percent for the first quarter.
A curious thing that has happened over roughly the same time frame as the supply-cut drama is
the rise in market optimism following the U.S. presidential election. The Conference Board
Consumer Confidence index jumped from around 100 in October to 125 in March, its highest
reading since 2000. Stocks and commodities did likewise.
However, in the latest reading, for April, confidence fell. One notable aspect: The index for future
expectations fell more sharply than sentiment about the current situation. As Carl Riccadonna,
Chief U.S. Economist at Bloomberg Intelligence, wrote last week:
The more pronounced weakness for expectations may be a reflection of rising doubts toward the
Trump agenda against the backdrop of relatively solid economic conditions. Forecasters will no
doubt watch to see if ebullience continues to fade in the months ahead, as they attempt to assess
whether the “Trump-bump” to sentiment will have a sustained impact on economic conditions.
What OPEC faces, therefore, is not merely a loss of faith in its ability to rebalance the oil market. It
must also deal with signs of fatigue in sentiment, economic activity and, ultimately, demand.
So at this point, extending the existing supply cuts is merely necessary to prevent an utter rout in
oil prices. OPEC would have to deepen the cuts to really jolt the bulls back to life and scare off the
bears. And yet, doing that would of course also put more rigs back to work in Texas and more
pressure on consumers.
That conundrum won't go away, whatever OPEC & Co. choose to do.
This column does not necessarily reflect the opinion of NewBase or Bloomberg LP and its owners.

OPEC in driver’s seat as ‘Fast and Furious’ oil stock draw eludes
Heinz-Peter Bader | Reuters
Bloated global crude oil inventories are declining but not as quickly as OPEC expected, adding to
pressure on the producer group to extend supply cuts, according to a CNBC poll of energy
strategists, traders and economists.
Oil markets are questioning whether OPEC's current phase of production cuts totaling 1.2 million
barrels a day–agreed in November, effective
from January and the first since 2008–are
enough to re-balance the market when U.S.
producers are aggressively increasing supply
and U.S. inventories remain stubbornly above
five-year highs.
Producers outside the Organization of
Petroleum Exporting Countries including Russia
pledged to cut around 600,000 barrels a day.
"OPEC producers have under-estimated the
volumes to be taken off the market," said Victor Shum, vice president at IHS Energy.
"The drawdown in the U.S. inventories is not going to be fast and furious. Ultimately, the objective
is to support prices. Gulf producers need money to balance the budget. That's a strong incentive
to cut more than they have."
The findings of CNBC's second-quarter poll reflect continued concern over the supply picture and
OPEC's efforts to re-balance the market. Brent crude will likely average $54.55 a barrel in the April
to June period, little changed from the first-quarter average of $54.57 a barrel.
Price forecasts for the second-quarter ranged from as low as $45 to as high as $63 a barrel. The
most bearish forecasters warned prices may drop to the mid-forties or below if OPEC and its
outside producer allies fail to agree to extend production at May 25 meeting in Vienna.
Though compliance to the latest production deal has been strong, at 90 percent according to a
survey by Reuters this week, with de facto OPEC leader Saudi Arabia doing most of the heavy
lifting, it hasn't been enough to dislodge the global oil glut.
"There is an obvious compelling fundamental reason to extend cuts given the inventory objective–
these are simply not declining fast enough (as acknowledged by Saudi Arabia and other
producers) even if we were to account for seasonal factors that limit crude oil demand like refinery
maintenance," said Harry Tchilinguirian, global head of commodity markets strategy at BNP
Paribas, who expects Brent crude to average $57 a barrel this quarter.
Turning back that tide of supply isn't "realistically feasible" in six months, Tchilinguirian said, citing
year-on-year production growth in U.S. shale oil, an "unrelenting" increase in active oil rigs and
supply growth in Canada and Brazil. "Right now, it is all about supply and not demand."
Even a simple six-month rollover of the first round of OPEC cuts may not be enough to satisfy oil
market bulls.
"Despite a possible extension of the OPEC agreement… prices are likely to continue their slide in
Q2 and I see higher chances of them dropping below $45 than rising above $55," said Eugen
Weinberg, head of commodities research at Commerzbank.

The closely-watched U.S. rig count–which comprises U.S. onshore and U.S. offshore Gulf of
Mexico drilling rigs - hit 971 in April, up 107 percent from last year, according to Platts RigData.
U.S. production is at its highest since August 2015.
"U.S. rig rates have now increased to levels that will allow production growth," said James Davis,
upstream analyst at consultancy FGE.
"We see it inevitable that OPEC will have to extend its cuts a further 6 months if not longer. Latest
stocks data indicates that there is unlikely to be a significant stock draw through the first half of
2017, which is one of the main indicators that OPEC will be looking at when they meet next to
decide what action to take."
Commercial U.S. crude inventories in the week to April 28 fell by 0.9 million barrels, marking the
fourth week of declines. Stockpiles still stand at a near-record 527.8 million barrels and well above
the five-year range.
"It seems the frackers have more influence on pricing at this point than OPEC does," said CNBC
contributor Anthony Grisanti, founder and president of GRZ Energy.
However, Grisanti and survey respondents with a more constructive view on oil suggested U.S.
production may be closing in on a near-term peak.
"While fracking has come back I don't see production from them increasing much more from these
levels–banks won't finance those operations like they used to–and as the price falls some of those
new wells become unprofitable once more."
Grisanti expects oil to average between $50 to $55 this summer. Christopher Haines, head of Oil
& Gas, BMI Research, also predicted U.S. output may start levelling off.
"US production will grow, though likely not as strongly as many people are expecting. While
drilling has been strong, we have yet to see the same level of activity in completing wells, which
will limit the aggressiveness of growth."
Consultancy Energy Aspects–the most bullish forecaster in the CNBC survey–said the markets
were too fixated on U.S. stockpiles and needed to consider inventories on a global basis.
"We expect fundamentals to improve over Q2, but the path to rebalancing may not be fully clear
for the market without some data cleansing," said Miswin Mahesh, chief oil analyst at Energy
Aspects, who expects Brent prices to average $63 this quarter.
"Overall for Q2, our balances show a stock-draw of 1.2 million barrels a day. We expect North
American supplies to grow 600,000 barrels a day year-on-year in Q2, but this is offset by fall in
supplies elsewhere in non-OPEC."
Follow CNBC International on Twitter and Facebook.
Sri JegarajahSenior Correspondent, CNBC

NewBase Special Coverage
News Agencies News Release 07 May 2017
Five Charts That Explain Crude Oil's Sudden Nosedive Toward $45
by Alex Longley
Thursday’s collapse in oil prices brought with it big shifts to many of the indicators that analysts
follow as they try to figure out where the market’s headed next. Here are five charts monitoring
many of those key barometers. In them, a trend emerges: capitulation.
1. Technical Tantrum
It started with a technical break. Then another. Then another. West Texas Intermediate crude
broke through its 200-day moving average last week after a battle had raged between bulls and
bears. Once that gave way, a key Fibonacci retracement and the low of the year were on the
horizon, before paving the way to $45 a barrel. As each one collapsed, a new trap-door opened
lower. “We have well and truly entered the capitulation stage,” said Saxo Bank head of commodity
strategy Ole Hansen.
2. Overnight Panic
In Asian trading hours Friday, where volumes are normally small, a sudden surge came that sent
U.S. crude prices crashing through the $45 a barrel level. “It was an extremely violent day
yesterday and that continued overnight,” said Petromatrix GmbH analyst Olivier Jakob. “There
was not a lot of strong support until $45 and prices just went towards that.” The number of
contracts traded in a minute -- usually in the hundreds early in the trading day -- surged above
7,000 on WTI at 4:28am London time.

3. Like Bears to Honey
Hedge funds dived into long positions like never before earlier this year. They may have
capitulated. Preliminary Nymex data show WTI open interest rose to a record 2.27 million
contracts on Thursday, likely suggesting the addition of new bearish bets given Thursday’s price
moves, according to UBS analyst Giovanni Staunovo. It could also be that some investors held
onto their bullish bets, even as crude fell to its lowest level in five months, he said.

4. Options Frenzy
The equivalent of more than 520 million barrels of crude options changed hands Thursday, the
third most ever. Investors rushed to acquire bearish $45 and $46 bets for June WTI, but the
futures price was also roiled by Mexico’s state oil company -- known as Pemex -- deciding earlier
this month to hedge some of its production in the options market.
That forced some traders to sell futures to balance the risk, or gamma, from options contracts,
forcing prices lower, according to Amrita Sen, chief oil market analyst at Energy Aspects.
"Negative gamma from the large Pemex hedging and shale producer selling coupled with short
positions from momentum traders have created violent moves lower and no one risks catching a
falling knife," she said.
5. Back to Square One?
And all of that has left the market back where it started when OPEC and other nations agreed to
cut production in November -- in a bearish structure. WTI for December 2017 fell to a lower price
than the same contract for a year later Thursday. It was the lowest close for the spread, a key
indicator of market strength, since the last OPEC meeting. “Positives are in short supply for
beleaguered oil bulls,” said PVM Oil Associates analyst Stephen Brennock.

Shale Revival Cancels Out OPEC Efforts
Oil closed near $46 a barrel in New York, back to levels last seen before the OPEC deal, as the
shale revival appears to be making the group’s cuts ineffective.
After dipping below $44 Friday, futures pared this week’s decline to 6.3 percent. But, prices
remain near their lowest since the Organization of Petroleum Exporting Countries signed a six-
month deal to curb production in November. Meanwhile, shale drillers are pressing ahead with
their longest expansion since 2011. Market volatility and trading volumes surged.
“What we’ve seen in terms of the rebound today is really just a bit of a correction following an
oversold market over the past several days,” Michael Tran, a commodities strategist at RBC
Capital Markets in New York, said by telephone.

OPEC’s curbs drove oil above $55 at the start of the year, encouraging U.S. producers to ramp up
drilling. The result has been an 11-week expansion of American production, the longest run of
gains since 2012. Prices are still more than 50 percent below their peak in 2014, when surging
shale output triggered crude’s biggest collapse in a generation and left rival producers such as
Saudi Arabia scrambling to protect market share.
Oil market volatility, as measured by the CBOE/Nymex Oil Volatility Index, jumped to the highest
level since December. The U.S. benchmark’s 14-day relative strength index hovered near
30, signaling the commodity is oversold.
West Texas Intermediate for June delivery rose 70 cents, or 1.5 percent, to settle at $46.22 a
barrel on the New York Mercantile Exchange. Total volume was about 70 percent above the 100-
day average. The contract sank 4.8 percent Thursday.
Brent for July settlement climbed 72 cents to settle at $49.10 a barrel on the London-based ICE
Futures Europe exchange. The global benchmark crude traded at a premium of $2.50 to July WTI.
Oil’s retreat Thursday stoked declines in other commodities from iron ore to industrial metals. The
deterioration in sentiment also carried through to the currency market.
The selloff was also due to “broad macro concerns regarding the Chinese economy. The entire
commodity space was weaker,” Tran said.
While OPEC is likely to prolong curbs for a further six months, American shale supply remains a
concern, according to Nigeria’s oil minister. The U.S. oil rig count has more than doubled from a
year ago to 703 this week, according
to Baker Hughes Inc. data Friday.
Nationwide crude production rose to
9.29 million barrels a day last week,
the highest level since August 2015,
according to the Energy Information
Administration.
Russia’s energy minister said
Thursday that the country thinks it
will be necessary to extend its
agreement with OPEC beyond June.
OPEC will meet May 25 in Vienna to
decide whether to extend the deal.
“Clearly, the faith in the OPEC and
non-OPEC deal has just been
obliterated. There are whispers and
rumors out there that the deal won’t
even get extended,” John Kilduff, a
partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “The proof just
hasn’t been in the pudding in terms of this accord.”

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
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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 May 2017 K. Al Awadi

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