New base 09 september 2019 energy news issue 1276 by khaled al awadi

Copyright © 2018 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 1
NewBase Energy News 09 September 2019 - Issue No. 1276 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 welcomes energy industry’s thought leaders at world's
most influential energy event … WAM/Tariq alfaham/Hassan Bashir
Global energy thought leaders are expected in the UAE as Abu Dhabi hosts the 24thWorld Energy
Congress on 9-12 September, 2019, under the patronage of His Highness Sheikh Khalifa bin Zayed
Al Nahyan, President of the UAE.
The World Energy Congress is the World Energy Council’s global flagship event offering a unique
platform for global energy leaders to explore new energy futures, critical innovation areas, and new
strategies.
Following a successful international bid that was won by the UAE National Committee, the
Congress, which will be held for the first time in the Middle East, is envisioned to see in Abu Dhabi
its most successful edition since its inception in 1924.
Positioned as the flagship event of the World Energy Council, the triennial Congress is the longest-
running and most influential energy event in the world.
Speaking at the opening press conference held at Abu Dhabi National Exhibition Centre,ADNEC,
Suhail Al Mazrouei, Minister of Energy and Industry, said "The United Arab Emirates is honoured to
be hosting the Congress, which builds on and reflects the ambitious energy transformation that the
www.linkedin.com/in/khaled-al-awadi-38b995b

country is going through at present. We recently announced two of the largest solar generation
projects in the world and have also embarked on a civil nuclear programme.
"The UAE’s 2050 Energy Strategy was started as a result of the country Leadership's vision towards
sustainability and diversity. From that vision, we worked on the first long term energy strategy in the
region aiming for 50 percent contribution from clean energy sources with zero Co2 emissions, and
we are also investing in energy efficiency initiatives.
"The 24th World Energy Congress’s theme of ‘Energy for Prosperity’ represents the ambitious and
dynamic energy transition the UAE is going through at present," added the minister "We are proud
to host this historic 24th World Energy Congress – a truly global event with delegates from the
across the world travelling to Abu Dhabi.
"Despite the different corners of the globe that we occupy, we all face the same challenge to achieve
a collaborative, sustainable and innovative energy future that enables societal, commercial and
community prosperity.
"The 24th World Energy Congress will help to lay the foundations for a more prosperous energy
industry – with innovation helping to drive a low carbon economy and cleaner energy generation
methods."
Joining Al Mazrouei to address the media, delegates and guests at the opening press conference
were Eng. Fatima Alfoora Alshamsi, CEO of the UAE Organising Committee for the 24thWorld
Energy Congress, Younghoon David Kim, Chair of the World Energy Council, Jean-Marie Dauger,
Chair-elect of the World Energy Council and Dr Christoph Frei, Secretary General & CEO of the
World Energy Council.
Younghoon David Kim, Chair of the World Energy Council, said: "The World Energy Council has
been engaging leaders in all sectors from across the world, to meet the challenges of whole energy
system innovation and work together to shape the energy future.
"We are bringing together the world’s energy leaders at the 24thWorld Energy Congress to find
solutions to energy transition challenges that will enable whole societies to benefit as well as
regenerate the earth’s natural life support systems."
The UAE, along with host sponsors Abu Dhabi Department of Energy, Abu Dhabi National Oil
Company,ADNOC, Dubai Electricity and Water Authority,DEWA, Emirates Nuclear Energy
Corporation, ENEC, Emirates Water and Electricity Company,EWEC, and Mubadala, will host the
most diverse gathering of ministers, governments, companies, IGOs, NGOs and academics ever to
attend an event in the capital.
The 24th World Energy Congress aims to bring together international energy stakeholders, including
governments, private and state corporations, academia and media. With over 15,000 participants
expected, the Congress is set to welcome over 250 high-level speakers, 72 ministers, 500 CEOs,
1000 media with an 40,000 square metre exhibition space that will cover the entire energy spectrum.

Saudi Arabia names Prince Abdulaziz as new energy minister
Reuters
Saudi Arabia has named Prince Abdulaziz bin Salman, a son of the king, as energy minister,
replacing Khalid al-Falih, state news agency SPA reported on Sunday, citing a royal decree.
The appointment represents the first time a member
of the ruling Al Saud family has held the energy
minister post in the world’s top oil exporter.
Prince Abdulaziz is a longstanding member of the
No. 1 crude exporter’s delegation to the
Organisation of the Petroleum Exporting Countries
(OPEC) with decades of experience in the oil sector.
As a veteran of OPEC policy-making, Prince
Abdulaziz is not expected to change the kingdom’s
oil policy, since he helped negotiate the current
agreement between OPEC and non-OPEC
countries to cut global crude supply to support prices and balance the market, analysts say. In 2017,
he was named Minister of State for Energy Affairs, and has worked closely with previous oil minister
Ali al-Naimi as his deputy for years.
Some industry insiders say the prince’s lengthy experience has overcome what has always been
seen as the impossibility of appointing a royal to the post of energy minister in Saudi Arabia.
Conventional thinking has been that the ruling Al Saud family has viewed the oil portfolio as so
important that giving it to a prince might upset the dynasty’s delicate balance of power and risk
making oil policy hostage to princely politicking, Saudi sources and diplomats say.
Saudi Arabia has had five oil ministers since 1960, and none of them has been a royal. Last month,
Saudi Arabia created a ministry for industry and mineral resources, separating it from the kingdom’s
colossal energy ministry.
Before the separation decision, Falih had overseen more than half the Saudi economy through the
super-ministry, which was created in 2016 to help streamline new reforms. Last week, Falih was
also removed from his post as chairman of state oil giant Aramco, and Yasser al-Rumayyan, who
heads the sovereign wealth
fund PIF, was named as the
new chairman.
Saudi Arabia has been
pumping less than 10 million
barrels per day for most of
2019, below its OPEC output
target. Falih has helped broker
the deal with non-OPEC
producers led by Russia,
emerging as the main face of
OPEC and the kingdom’s oil
diplomacy over the past three
years.

The current OPEC+ output cuts, of which Al-Falih was a key architect, were meant to last six
months. They have now been extended to run into a fourth year and will almost certainly need to be
be prolonged again, if not deepened. Saudi Arabia is bearing the brunt of those cuts and has said
it will reduce exports even further this month. At the same time, Saudi Crown Prince Mohammed
Bin Salman, the de facto leader of the country, wants to float 5% of state oil company Saudi Aramco,
at a price that would value it at $2 trillion. That might be challenging.
At least Yamani’s successor inherited an oil market that was turning in Saudi Arabia’s favor. Non-
OPEC supply growth - driven then by the North Sea, North America and China - was faltering, while
global oil demand growth was accelerating. Prince Abdulaziz bin Salman, who takes over from Al-
Falih, is not in such an enviable position.
Dwindling Demand Growth
The DOE has cut its forecast of global oil demand growth this year by more than 45% since April 2018
Sources: Bloomberg, U.S. Department of Energy
Oil demand growth is weakening, while U.S. production from the country’s vast shale deposits
shows little sign of running out of steam. U.S. output hit a record 12.5 million barrels a day in weekly
data last month, and new export pipelines and terminals expected in the coming months have the
U.S. Department of Energy forecasting an output level of more than 13.5 million barrels a day by
the end of next year.
That would be bad enough for any incoming Saudi oil minister, but this time it comes with an added
wrinkle. Al-Falih’s successor is the first member of the royal family to be appointed to the job. Until
now, the House of Saud has kept oil policy at arm’s length - at least superficially. Now it is bringing
it in-house.
The previous arrangement allowed the royal family to portray itself as being above the sordid
commerce of oil and to distance itself from responsibility when things weren’t going the kingdom’s
way -- for example, during the final years of Yamani’s tenure. Now, failure to turn around oil prices,
or to secure that $2 trillion valuation for Aramco, risks showing the royals to be just as fallible as any
other Saudi.
Note: Julian Lee is an oil strategist who writes for Bloomberg. He worked for Sheikh Zaki Yamani at
the Centre for Global Energy Studies from 1989 to 2014. The observations he makes are his own
and are not intended as investment advice.

Saudi Arabia: Subsea 7 awarded contracts offshore Saudi
Source: Subsea 7
Subsea 7 has announced the award of three contracts, together representing a sizeable(1) award
for Subsea 7, by Saudi Aramco under the Long Term Agreement between the parties for execution
offshore Saudi Arabia.
The engineering, procurement, construction and installation (EPCI) contracts are awarded for
execution in consortium with L&T Hydrocarbon Engineering (LTHE), a subsidiary of Larsen &
Toubro.
The consortium’s workscope consists of EPCI for a total of 28 Jackets comprised of eight new
jackets to be installed in the Marjan and Zuluf fields, ten Jackets in the Safaniya and Zuluf
fields (including a pipeline decommissioning scope) and a further ten Jackets in the Zuluf and
Ribyan fields. Work shall commence immediately and offshore execution is due to take place in
2020.
Adzariat Monergi, Subsea 7’s Vice President Middle East said:
'These three new awards reflect the good execution and reliable performance that Subsea 7 and
LTHE bring to the offshore sector in the Kingdom of Saudi Arabia. We look forward to continuing
our long-term relationship with Saudi Aramco, delivering these projects safely and efficiently.'
(1) Subsea 7 defines a sizeable contract as being between USD 50 million and USD 150 million.
This value range refers to Subsea 7’s share of the consortium contract.

Oman LNG debottlenecking to add 1m tpa to plant capacity
Oman Observer - Conrad Prabhu + NewBase
A landmark debottlenecking exercise designed to ramp up the liquefaction capacity of Oman LNG’s
three-train complex at Qalhat has commenced. The multi-year exercise, which kicked off last week,
will boost the plant’s current nameplate LNG capacity of 10.4 million tonnes per annum (mtpa) to
11.4 mtpa, a high-level executive said.
Mahmoud al Balushi, Chief Commercial Officer, said the debottlenecking project is being
undertaken in stages starting with the shutdown of one of the three trains to allow for the company’s
engineers to carry out equipment upgrades and technical tweaks that would contribute to the
capacity increase.
The process is expected to be completed by the end of 2021 when the full benefits of the
debottlenecking initiative will be realised, Al Balushi told journalists on the sidelines of a press
briefing held on Thursday to announce Oman’s hosting of the prestigious International Gas
Research Conference next February. Majority government-owned Oman LNG is a key sponsor of
the event.
Debottlenecking is defined as the process of pinpointing specific areas in plant equipment or the
workflow configuration that limits the flow of product in any refining or petrochemical plant. By
optimising plant operations, overall capacity can be ramped up, experts say.
The plant will continue to produce LNG during the staggered shutdown and debottlenecking
exercise as two of the three trains will remain in operation throughout this programme, said the
Chief Commercial Officer.
Last year, US-based technology and professional services giant KBR Inc announced that it had
secured a contract to support the debottlenecking of Oman LNG’s gas liquefaction complex.

The contract, it said, entails the provision of Front-End Engineering Design (FEED) services,
alongside licensor and vendor management services associated with the debottlenecking of the
LNG plant.
Significantly, the debottlenecking initiative is a latest of a series of developments designed to
reinforce Oman LNG’s preeminent role as the nation’s sole gas liquefaction project, as well as
sustain its ability to support economic development and GDP growth over the long-term.
Last September, LNG production from the Sur complex soared, for the first time in the project’s
nearly 20-year operational history, to 10.4 million tonne in 2018, corresponding to its nameplate
capacity. This stemmed from the supply of additional natural gas from BP Oman’s Khazzan field in
Block 61 enabling the operation of the three-train plant to full capacity for the first time.
The additional supplies of gas
also made possible the signing of
a landmark Sales and Purchase
Agreement (SPA) between Oman
LNG and BP Singapore Pte Ltd.
Under the SPA, which covers a
seven-year period beginning in
January 2018, Oman LNG is
providing 1.1 million tonnes per
annum of LNG to BP Singapore —
which is equivalent to
approximately 18 LNG cargoes
annually.

Algeria: Neptune Energy announces first gas export at Touat
Source: Neptune Energy
Neptune Energy and Sonatrach have announced first gas export production from the Touat gas
development in Algeria. Touat will deliver around 75,000 barrels of oil equivalent per day at plateau
(around 450 million standard cubic feet of gas).
The development, located around 1,400 kms southwest of Algiers and close to Adrar, comprises 19
development wells, a gas treatment plant for gas and stabilized condensate with a gathering network
and export pipelines.
Production from Touat will represent around six per cent of Algeria’s total gas exports and will be in
production for more than 20 years. The project has involved the installation of a connection to the
main GR5 pipeline, built by Sonatrach, to collect the gas from South West Algeria and bring it to
Hassi R’Mel, located around 800 kilometres to the North.
The Touat Project is led by Groupement Touat Gaz (GTG Partners), consisting of Neptune Energy
Touat[1] (65%) and Sonatrach (35%). It is Neptune’s first co-operated project in North Africa.
Jim House, Neptune CEO, said:
'We have made significant investment in the Touat project and this milestone represents a series of
firsts for our business; the first North Africa project we have seen over the line and the first we have
taken forward as an operator in the country, alongside our partner Sonatrach. Algeria is of great
strategic importance for our global gas production portfolio and this development underlines the
substantial commitments we have made to both enhancing our footprint in the country and to
building on our strong, long-term relationship with our partners.'
Philip Lafeber, Neptune VP for North Africa & Asia Pacific, said:
'With Phase I complete, we now look forward to implementing Phase II, which covers the remaining
eight fields which will help to maintain the plateau of 450 mmscfpd for many years to come.'
Within Neptune Energy Touat, ENGIE holds 46% and Neptune 54%.

Italy's Snam seeks U.S. footprint with bid for Midwest gas pipeline
Reuters - Stephen Jewkes, Pamela Barbaglia, David French
Italy’s Snam is working on a bid for a stake in a $6 billion natural gas pipeline in the United States
in what would be the gas group’s first foray outside Europe, four sources told Reuters. The Milan-
based company, controlled by state lender Cassa Depositi e Prestiti, is carrying out due diligence
to buy a 33% stake sold by Energy Transfer LP in its Rover pipeline, one of the sources said.
The 713-mile Rover pipeline can carry 3.25 billion cubic feet of gas daily from the Marcellus and
Utica shale plays in Appalachia. It is backed by Energy Transfer with a 33% stake and two private
equity firms - Energy & Minerals Group (EMG) and Blackstone Group - who have the remaining
67%.
Snam, Europe’s biggest gas pipeline operator which makes most of its money from gas transmission
in Italy, is working with JPMorgan on the deal, the sources said. Snam and JPMorgan declined to
comment while Energy Transfer was not immediately available for comment.
Snam wants to build an international presence and sees potential to grow in the United States which
has seen a boom in natural gas production as part of the shale revolution.
Pipelines and other midstream infrastructure in the U.S. have consistently drawn interest from
private equity firms as well as infrastructure and pension funds as they produce stable returns.

Additionally, returns on pipeline investments in the United States are generally higher than in Europe
where many grids are run with regulated tariffs.
The Rover pipeline moves the natural gas from Ohio, West Virginia and Pennsylvania to other parts
of the U.S. Midwest and up into Michigan where it can also be piped into Canada.
The auction process for Energy Transfer’s stake in Rover is at an advanced stage, according to
three sources, and other bidders have also shown interest in the asset. Snam, led by Chief
Executive Marco Alverà, may submit a joint bid with some financial investors to boost its firepower,
one of the sources said.
It previously teamed up with Abu Dhabi state investor Mubadala and EIG Global Energy Partners
to bid for Petrobas’ TAG gas pipeline in October but lost out to a consortium led by France’s Engie.
The Italian company is also sounding out whether EMG and Blackstone would be willing to sell their
shares in the Rover pipeline and cash out with Energy Transfer.
Blackstone declined to comment while EMG was not immediately available for comment. Snam,
which also operates gas storage and liquefied natural gas (LNG) assets, has previously said it is
ready to monitor opportunities in Italy and abroad that fit its investment criteria.
The company is playing a leading role in integrating Europe’s grids and is investing in the Trans
Adriatic Pipeline which will bring Azeri gas into Italy in 2020.
Last year it led a consortium that bought a majority stake in Greek gas grid operator DESFA. Snam
generated revenues of 2.58 billion euros in 2018 and had 1.4 billion euros of operating profits.

U.S:Permian Basin gas prices up with pipeline nears completion
Source: U.S. Energy Information Administration, based on Natural Gas Intelligence
Natural gas spot prices at the Waha hub in western Texas, located near Permian Basin production,
settled at $1.55/million British thermal units (MMBtu) on August 15, the highest price since March
2019. This price increase coincides with the 2 billion cubic feet per day (Bcf/d) Gulf Coast Express
Pipeline (GCX) preparing to enter service.
GCX will provide much-needed additional natural gas takeaway pipeline capacity from the Permian
region of western Texas and southeastern New Mexico.
Limited natural gas pipeline takeaway capacity from the region has kept prices very low, or even
negative, in recent months. During the first eight months of 2019 (through August 19), the Waha
spot price averaged just 65¢/MMBtu. The Waha spot price has been consistently lower than
the Henry Hub spot price—the national benchmark price for natural gas.
However, in recent days, that differential has significantly decreased, and Waha spot prices posted
59¢/MMBtu lower than the Henry Hub spot price last Thursday, which was the lowest daily
differential since January. In comparison, this differential averaged between $2/MMBtu and
$3/MMBtu between March and June of this year.
This recent uptick in the Waha natural gas price coincides with flows on the GCX. Deliveries into
the pipeline began on August 8. S&P Global Platts reported that deliveries at El Paso Natural Gas
Pipeline’s interconnection with GCX reached nearly 0.26 Bcf/d on August 14.
Industry reports suggest that this level means that GCX is packing its lines in anticipation of entering
service late next month, ahead of its announced in-service date of October 1. Once fully operational,
the pipeline will be capable of sending about 2.0 Bcf/d of natural gas eastward to the Agua Dulce
receipt point near the Texas Gulf Coast.

The Permian Basin in western Texas and southeastern New Mexico has seen large increases in
natural gas production in recent years. Natural gas produced in the Permian Basin is
largely associated natural gas, which is produced as a byproduct of crude oil production.
Crude oil takeaway capacity in the region expanded in early 2019; however, GCX is the first addition
to takeaway capacity for natural gas since this date. Producers in the region may vent or flare limited
volumes of natural gas, and the Texas Railroad Commission regulates these activities.
After GCX enters service, several additional new natural gas pipelines are currently planned from
the Permian to the Gulf Coast, which may further reduce the Waha-Henry Hub price differential.
These projects include
 The Permian Highway Pipeline (2.1 Bcf/d)
 The Whistler Pipeline (2.0 Bcf/d)
 The Permian 2 Katy Pipeline (1.7 Bcf/d to 2.3 Bcf/d)
 The Pecos Trail Pipeline (1.9 Bcf/d)
 The Permian Global Access Pipeline (2.0 Bcf/d)
 The Bluebonnet Market Express Pipeline (2.0 Bcf/d)
 The Permian Pass Pipeline (2.0 Bcf/d)
Of these additional projects, currently only the Permian Highway Pipeline and the Whistler Pipeline
have reached a final investment decision (FID) and are currently scheduled to enter service in 2020
and 2021, respectively. These projects plan to serve growing natural gas demand along the Gulf
Coast, in particular at liquefied natural gas export facilities.

NewBase September 09 – 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil rises as Saudi signals OPEC cuts to continue under new minister
Reuters + NewBase
Oil rose on Monday after a Saudi official said there would be no change in Saudi Arabia’s OPEC
policy as Prince Abdulaziz bin Salman was made the new energy minister for the world’s biggest
crude exporter over the weekend.
Prices were heading for a fourth day of gains and were also supported by comments from United
Arab Emirates energy minister saying OPEC and its allies are committed to balancing the crude
market.
Global benchmark Brent was up 60 cents at $62.14 a barrel by 04.57 GMT, while U.S. West Texas
Intermediate was 63 cents, or 0.63%, higher at $57.15 a barrel.
“There is no shift in Saudi oil and OPEC policy. Prince Abdulaziz will work on strengthening
cooperation among OPEC and non-OPEC,” a Saudi official said on Sunday. Saudi Arabia’s king
appointed his son, Prince Abdulaziz bin Salman, as energy minister on Sunday, replacing Khalid al-
Falih and for the first time handing the portfolio to a member of the royal family.
Oil price special
coverage

Prince Abdulaziz has been a longstanding member of the Saudi delegation to the Organization of
the Petroleum Exporting Countries (OPEC).
He helped to negotiate the current agreement between OPEC and non-OPEC countries including
Russia, a group known as OPEC+, to cut global crude supply to support prices and balance the
market.
UAE’s Minister of Energy and Industry Suhail al-Mazrouei said on Sunday that members of
OPEC and non-OPEC producers are
“committed” to achieving oil market
balance.
Asked about possible deeper
production cuts, the minister told a
news conference in Abu Dhabi that
he was not concerned about current
oil prices, rather the level of oil
inventories.
Trade and geopolitical tensions are
affecting the market more than
demand and supply, Mazrouei said,
but he was quick to rule out hasty
steps influenced by the trade war
between the United States and
China.
“The fear of slower (oil) demand is only going to happen if that tension is escalating and I am
personally hopeful that is not the case,” Mazrouei told Reuters later on Sunday.

NewBase Special Coverage
News Agencies News Release Sep. 09-2019
World’s oil glut is much worse than it looks
By Julian Lee
A meeting of ministers from OPEC states and their oil-producing allies will take place in Abu Dhabi
this week. It will probably be a subdued affair. Oil prices remain stubbornly low despite big output
cuts by the so-called OPEC+ group and geopolitical factors such as the U.S. sanctions on Iran.
The meeting of the Joint Ministerial Monitoring Committee, a body set up by OPEC+ to oversee its
production-cutting strategy, won’t reset the group’s approach but it might provide some clearer
guidance on its goals. The ministers insist that they don’t have a target for how far they want the
price of crude to rise, and say instead that their aim is to reduce excess stockpiles.
But for market-watchers it’s tough to even get a sense of how big that stockpile is, and hence when
the output-cutting exercise may be seen to have done its job.
The original target of the output cuts back in November 2016 was to get stockpiles back to their five-
year average level. That was never going to be enough, though. The problem is that this average
has been inflated by the very excess stockpile that OPEC+ is trying to drain (as the chart below
shows).
As such, it’s been relatively easy to cut the inventory to close to this inflated figure but that has still
left a huge amount of unwanted crude sloshing around. Not a very useful outcome when you’re
trying to boost prices.

Khalid Al-Falih, the Saudi oil minister, acknowledges that the group needs a new target. The OPEC+
ministerial group concluded at its last meeting in July that the moving five-year average wasn’t
working and it has been considering using a new benchmark from the more “normal” period (in
global oil inventory terms) of 2010-2014.
That leaves the producers with a lot more excess crude to drain. OPEC assessed that commercial
oil stockpiles in the industrialized countries of the OECD totaled 2.955 billion barrels at the end of
June. That’s 258 million barrels more than the 2010-2014 average for the same month.
Using this figure would certainly be a step in the right direction in terms of truly managing the
market’s excess inventory. Better still would be having a target that takes into account the growth
in oil demand every year, by measuring stockpiles in terms of the number of days’ worth of demand
they represent rather than in simple volumes.
Measuring the number of barrels held in storage is all well and good, but with demand rising year
after year (even if the rate of increase is slowing) the world now needs a bigger stockpile to provide
the same amount of forward cover.

Still, whether you measure them as simple volumes or in terms of cover for future demand, OECD
stockpiles are rising. Admittedly, much of the recent increase comes from natural gas liquids (light
oils produced in large quantities from U.S. shale) which are used widely as petrochemical
feedstocks. When you strip these out of the numbers, OECD inventories of crude oil plus the major
fuel products – gasoline, middle distillates (diesel, heating oil and jet fuel) and fuel oil – are below
their five-year average level. Yet the stockpiles calculated on this basis are well above their 2010-
2014 average and that’s the real problem for OPEC+ ministers when they meet in Abu Dhabi.
Saudi Arabia can’t rescue oil prices on its own. With demand growth weakening and non-OPEC
supply rising, the producing nations may to have to consider both longer and deeper cuts.

US oil market suffering as the trade war escalates
Oil Price + NewBase
The ongoing trade war with China is impacting many industries. Market volatility is being
exacerbated by President Trump’s pattern of vacillating between threats and cease-fires on the
topic.
At the beginning of August, the markets were sent into a tailspin by President Trump’s threat to
impose tariffs on another $300 billion of Chinese imports. The markets were broadly impacted, but
the energy sector was hit especially hard. Crude oil prices suffered their largest drop in over four
years.
President Trump subsequently backed off, citing concerns about retail spending headed into the
holiday season. As if to further
emphasize the risk, the yield on the 10-
year US Treasury bond recently fell
below the yield on the 2-year US
Treasury. This yield curve inversion
happens when investors are flocking to
safety and it’s historically a strong
recession indicator.
What could possibly cause a recession?
Most economists think the economy is
still pretty healthy, but trade wars cost
consumers money. When consumers
have less money to spend, they buy
fewer goods. The overall economy slows
down. That could push the US and the
entire world for that matter into
recession.
Fears of a slowing economy have an
impact on the oil industry which is why
the oil markets sold off so sharply on
President Trump’s tariff threat. But he
wasn’t finished. In a series of recent
tweets, President Trump said he would
retaliate against China’s response to the
tariffs that we had imposed:
"China should not have put new Tariffs
on 75 BILLION DOLLARS of United
States product (politically motivated!).
Starting on October 1st, the 250 BILLION

DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%.
Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was
being taxed from September 1st at 10%, will now be taxed at 15%.”
This latest Twitter-salvo particularly rattled the markets, with the Dow Jones Industrial Average
closing down over 600 points and oil prices shedding another 2%. Rystad Energy Senior Analyst
Artyom Tchen summarized the potential impact of the trade war on the oil market:
"We believe that the United States-China trade war and resulting weak economic growth sentiment
is among those factors that balance supply risks and cap oil prices. We forecast 2019 demand
growth at 1.2 million barrels per day (bpd), as opposed to a pre-trade-war forecast of 1.4 million
bpd.”
However, in addition to the threat of an economic slowdown, a trade war with China impacts the oil
markets in two other ways. The oil industry is capital intensive, and some of that capital equipment
comes from China. Chinese steel, for example, is considerably cheaper than US steel. If a pipeline
company, for example, is forced to buy more expensive steel, it will impact capital budgets and
result in fewer projects.
But a final, and more direct way the oil industry is impacted is that China was becoming an
increasingly important market for US oil exports. Last summer US exports to China had reached
half a million barrels a day, but because of the trade war China stopped buying US crude. They
turned instead to Iran for their crude oil needs.
Enterprise Products Partners CEO Jim Teague recently noted China’s reluctance to sign any long-
term agreements for US crude oil: “When I was in China, I heard two words at every meeting:
‘Trump’ and ‘tariffs.’”
The bottom line is that this ongoing trade war is inflicting real pain on the US oil industry, and there
is no end in sight. That is going to create headwinds in the oil markets for the foreseeable future.

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 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 2019 K. Al Awadi

For Your Recruitments needs and Top Talents, please seek our approved agents below

New base 09 september 2019 energy news issue 1276 by khaled al awadi

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base 09 september 2019 energy news issue 1276 by khaled al awadi

Similar to New base 09 september 2019 energy news issue 1276 by khaled al awadi (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base 09 september 2019 energy news issue 1276 by khaled al awadi