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NewBase Energy News 13 May 2018 - Issue No. 1170 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
GCC: Countries in and around the Middle East are
adding coal-fired power plants
U.S. EIA, based on trade press and company press releases
Planned coal-fired capacity additions from a number of countries in and around the Middle East will
add 41 gigawatts (GW) of new electric generating capacity over the next decade, based on
announced projects and projects currently in the permitting process.
Another 3 GW of coal-fired capacity is currently under construction in these countries. About 12 GW
of coal-fired generating capacity—or about half of the region’s coal-fired generating fleet—has come
online since 2006.
Coal capacity in the region is typically less than that of other fuels, particularly compared with
liquefied natural gas or petroleum-based fuels, because coal accounts for less than 1% of primary
energy production in the region.
Turkey is the heaviest user of coal-fired power among these countries with a capacity of
approximately 18.5 GW, followed by Israel (4.9 GW) and Pakistan (2.5 GW). Turkey and Pakistan
both plan to add more coal capacity over the next decade.
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Egypt, Oman, Iran, Jordan, and the United Arab Emirates (UAE) have no current coal-fired electricity
generation, but they each plan to build coal capacity in the near future. New coal capacity is currently
under construction in the UAE, Iran, and Jordan. In addition, Egypt and Oman have announced
plans for new coal-fired generators.
In the UAE, new coal-fired capacity will come from Dubai’s Hassyan Project. The project consists
of 3.6 GW of ultra-supercritical generating capacity, 2.4 GW of which is currently under construction
and expected to become operational between 2020 and 2022. Another 1.2 GW was announced for
a total of 6 units (with an average size of 600 megawatts (MW) expected to come online in 2023.
The $3.4 billion project is sponsored by several investors, including Chinese and domestic banks.
According to the UAE’s national energy strategy, generation and emission-reduction targets for
2050 include about 11.5 GW of ultra-supercritical coal plants. These coal plants are required to be
compatible with carbon capture and sequestration technologies and to employ highly efficient
technologies to mitigate emissions. Ultra-supercritical coal plants use boilers that heat coal to higher
temperatures, which increases the pressure of steam to improve efficiency and results in less coal
use and fewer carbon emissions than other boiler technologies.
Iran’s Tabas power station, sponsored in partnership with MAPNA Group and China’s Shanghai
Electric, will provide 650 MW of generation capacity from two units upon completion. The billion-
dollar plant, which began construction in 2012, will be powered from locally mined coal.
Iran’s domestic coal production is expected to increase by more than 2 million tons per year when
improved coal mining and processing facilities begin operation in 2020, according to Imidou mining
representatives. Jordan’s 30 MW plant, created based on an agreement between the Energy
Ministry and the Al Manaseer Group, will provide power for industrial cement production using coal
from the United States, Russia, and Africa. Construction on this plant is expected to begin in July
2018.
Oman has announced plans for a 1,200 MW coal-fired power plant and in April began accepting
proposals for qualification from developers. In 2017, Egypt announced plans for a $1.5 billion, 6,000
MW coal-fired power plant. This coal plant, which will be Egypt’s first, is expected to be completed
by 2024.
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UAE's ADNOC plans further downstream expansion: CEO
Reuters - Rania El Gamal
Abu Dhabi National Oil Co. plans to double its refining capacity and triple petrochemicals output
potential by 2025, as the state energy firm focuses more on downstream expansion to be on par
with Big Oil and capture new growth markets, ADNOC’s chief executive said.
To reach that goal ADNOC will need to create new joint ventures and partnerships and not just rely
on its existing assets, Sultan al-Jaber told Reuters in an interview on Saturday.
The company is also looking at different options for its ADNOC Refining subsidiary, including
bringing on strategic partners but an initial public offering (IPO) for the unit is not on the “radar
screen at this point in time”, al-Jaber said.
“We continue to keep upstream as an integral part of our DNA at ADNOC while complementing that
with a real shift in our drive for more downstream investments,” al-Jaber said.
“ADNOC needs to shift its focus to... downstream in a way to help enhance our commerciality,
increase our profitability and maximize value from every barrel we produce,” he said at ADNOC’s
headquarters in Abu Dhabi.
Al-Jaber was speaking a day before he unveils the company’s downstream strategy at an
investment forum. ADNOC produces about 3 million barrels of oil per day and its current refining
capacity is 922,000 bpd. It wants to triple petrochemicals production to 14.4 million tonnes annually.
“The centerpiece when it comes to our downstream strategy is the Ruwais Industrial Complex... Our
aim here is to make it become the single largest integrated refining and petrochemicals complex in
the world,” al-Jaber said.
In February, ADNOC said it was investing $3.1 billion to upgrade its 842,000 bpd Ruwais oil refinery
to free up more crude for export from its flagship Murban grade.
ADNOC - dubbed “a sleeping energy giant” - has embarked on a major shake-up since al-Jaber’s
appointment as CEO in 2016, as part of an economic reform drive led by Abu Dhabi’s Crown Prince
Sheikh Mohammed bin Zayed Al Nahyan.
A sharp drop in crude prices since mid-2014 has forced the oil industry to cut costs and look for
ways to boost efficiency.
The company plans to spend more than 400 billion dirhams ($109 billion) in the next five years. The
spending will include boosting gas output and investing in international downstream activities,
ADNOC said in November.
ADNOC wants to expand its downstream portfolio particularly in Asian markets where demand for
oil is still growing, securing a new outlet for its crude.
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“Hydrocarbons are and will remain an essential part of the energy mix... We are expecting that
demand will double in the next 20 years especially in the petrochemicals sector,” al-Jaber said.
ADNOC is evaluating some downstream expansion opportunities abroad with its strategic partners,
he said, declining to give more details, but he said that India was a potential market.
Other markets where ADNOC is looking for possible downstream expansion are China, Japan,
South Korea, Vietnam, Indonesia and Pakistan, he said, adding the company was not close to a
decision.
Earlier on Saturday, India’s oil minister told Reuters that there was a consensus between Saudi
Aramco, ADNOC and Indian companies to firm a joint venture for India’s Ratnagiri oil refinery.
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Egypt: Eni starts up third production unit at Zohr
Source: Eni
After a record start-up in less than two and a half years from discovery, production is continuing to
ramp up, reaching plateau in 2019
Eni has announced the start-up of the third production unit (T-2) of the Zohr project, increasing the
installed capacity to 1.2 bcfd. Zohr is now producing 1.1 bcfd in ramp-up, equivalent to approx.
200,000 boed, of which 75,000 boed net to Eni at current working interest. This outstanding result
has been achieved only a few months after the field’s start-up in December 2017.
The third unit, following just one week after the second unit’s successful power-up, confirms the
programme pursued by Eni, its co-venturers and Egyptian Natural Gas Holding Company (EGAS)
to pursue a production level of 2 bcfd by end 2018, followed by a plateau of 2.7 bcfd in 2019.
The latest achievement reinforces the exceptional development path of Zohr, one of Eni’s seven
record-breaking projects, which is playing a fundamental role in supporting Egypt’s independence
from LNG imports.
The Zohr field, the largest gas discovery ever made in Egypt and in the Mediterranean Sea with
more than 30 tcf of gas in place, is located within the offshore Shorouk Block(some 190 km north of
Port Said). In the Shorouk Block, Eni holds a 60% stake, Rosneft 30% and BP 10% of the
Contractor’s Share (where Eni, Roseneft and BP are collectivity the Contractor).
The project is executed by Petrobel, the Operating Company jointly held by Eni and the state
corporation Egyptian General Petroleum Corporation (EGPC), on behalf of Petroshorouk, jointly
held by Contractor (Eni and its partners) and the state company Egyptian Natural Gas holding
Company (EGAS).
Eni has been present in Egypt since 1954, where it operates through its subsidiary IEOC. The
company is the country's leading producer with equity of more than 260,000 barrels of oil equivalent
per day.
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Venezuela: PDVSA Loses its oil export terminal in the Carebian
Bloomberg - Lucia Kassai
ConocoPhillip, the Houston-based company on Friday assumed control of Venezuela’s oil assets in
the Caribbean island of Bonaire and filed court orders to do the same in Curacao and Aruba. The
takeover is effectively stifling Petroleos de Venezuela SA’s ability to export oil, the commodity that
bankrolls the regime of President Nicolas Maduro.
The Caribbean terminals are logistically key to Venezuela’s ability to export oil. About 16 percent of
its crude exports are stored in those terminals before sailing to their final destination in the U.S.,
China and India.
Oil at Bay
16% of Venezuelan crude exports are first shipped to PDVSA Caribbean terminals
Source: Shipping reports, vessel-tracking data compiled by Bloomberg
The move by ConocoPhillips is part of an effort to fulfill a $2.04 billion arbitration ruling against
PDVSA. The state-run oil company, for its part, is planning to pay the award but hasn’t reached out
to Conoco to discuss the details yet, according to a person with knowledge of the situation. PDVSA
didn’t immediately return email seeking comment.
‘Total disaster’
“This is a total disaster” for Venezuela, says Francisco Monaldi, a fellow at Rice University’s Baker
Institute. “The Conoco situation, as it is, with PDVSA unable to use storage tanks in the Caribbean,
is worse than the existing U.S. sanctions,” he said in a phone interview from Houston.
Unable to use its network of tank farms, PDVSA is rerouting cargoes back to its ill-equipped ports
in Venezuela, causing a logjam of tankers around the main sea terminals.
The company now has limited ability to load supertankers, the transportation mode of choice for
buyers in China and India, which may force PDVSA to push more oil to U.S. refiners at deeper
discounts, Monaldi said.
Oil collapse
Venezuela, owner of the world’s largest oil reserves, was once Latin America’s largest oil exporter
by a large margin, but now loses the lead at times to Mexico and Brazil. The country shipped 1.26
million barrels of crude daily in April, a 20 percent decline from the previous year, according to data
compiled by Bloomberg.
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The country’s production has been dropping even as oil prices have reached the highest level in
more than three years. Daily output fell to 1.509 million barrels in March, from a peak of 3.708 million
in 1970, according to data compiled by Bloomberg.
PDVSA denounced the actions taken by ConocoPhillips to take assets in the Caribbean, according
to a tweet by the Oil Ministry which was later deleted. The takeover comes after the International
Chamber of Commerce found that the late President Hugo Chavez had illegally seized the
ConocoPhillip’s assets in Venezuela in 2007.
This is not the first time that the company has locked horns with PDVSA in court. In 2015, a U.S.
court confirmed that ConocoPhillips was the sole owner of a coker at the Sweeny refinery in Texas.
The coker, then co-owned by both companies, became sole property of Conoco after
PDVSA failed to meet a supply agreement.
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U.S: EIA raises crude oil, gasoline price forecasts for 2018
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, May 2018
EIA’s May Short-Term Energy Outlook (STEO) forecasts that Brent crude oil prices will average $71
per barrel (b) in 2018, $7/b higher than last month’s STEO. Correspondingly, EIA’s forecast for
regular gasoline retail prices increased to an average of $2.79/gallon (g) in 2018, $0.15/g higher
that in last month’s STEO. Monthly average Brent crude oil spot prices have increased in 9 of the
past 10 months, most recently averaging $72/b in April.
EIA expects West Texas Intermediate (WTI) crude oil prices to average $5/b lower than Brent prices
in 2018. Even though WTI is a domestic crude benchmark and Brent is an international benchmark,
gasoline prices in the United States tend to follow Brent. In late April 2018, daily spot prices for Brent
crude oil reached $76/b, the highest level in nearly four years.
Crude oil prices have probably been driven higher for three reasons: falling global oil inventories,
heightened market perceptions of geopolitical risks, and strong global economic growth signals.
EIA estimates that global oil inventories fell an average of nearly 0.6 million barrels per day (b/d) in
each of the past five quarters (January 2017 through March 2018).
Oil inventories for countries within the Organization for Economic Cooperation and Development
(OECD) at the end of April were an estimated 3% lower than the previous five-year average (2013–
2017) in terms of days of supply, the largest percentage below the five-year average since March
2014.
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In April, when EIA developed the May STEO, several geopolitical risks presented sources of
uncertainty. These risks, including the re-imposition of oil sanctions against Iran and the upcoming
results of May elections in Venezuela, may materialize into actions that remove oil supplies from
the global market and, in turn, tighten global oil balances.
Since the publication of the May STEO, the United States announced that it would withdraw from
the Joint Comprehensive Plan of Action with Iran. This news and resulting price movements are not
reflected in the May STEO, issued May 8, but EIA will consider these developments when
formulating the June STEO.
At the same time, global liquid fuels consumption is quickly increasing. EIA estimates global oil
consumption-weighted gross domestic product (GDP) growth for 2018 will be at its highest rate
since 2012. Greater GDP growth has the potential to increase oil consumption beyond forecasted
levels, which could put upward pressure on crude oil prices, and simultaneously drive systemic
market movements in equities, bonds, and other commodities, which are often correlated with
movements in crude oil prices.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, May 2018
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NewBase May 13 - 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Crude Oil Takes a Breather After Surging on Iran Sanctions
Bloomberg + Reuters + NewBase
Oil slipped, narrowing a second weekly gain, as traders consider the potential supply impact of
renewed U.S. sanctions on Iran.
Futures in New York dipped back below $71 a barrel Friday, trimming this week’s increase to 1.4
percent. Saudi Arabia is ready to work with other producers to mitigate any impact of a shortage
after U.S. President Donald Trump decided to exit a 2015 nuclear accord and hit OPEC’s third-
largest producer with sanctions intended to curb its exports. U.S. crude production pushed to a fresh
all-time high as explorers put the most drilling rigs to work in 3 1/2 years.
Crude’s recent rally has been driven by a deepening regional conflict in the energy-rich Middle East
and Trump’s hawkish stance on Iran. Goldman Sachs Group Inc. said the sanctions could push
prices above its forecasts and Bank of America Corp. sees a possibility oil could rise to $100 a
barrel next year. Israel said it conducted the biggest raid in at least three decades at Iran’s military
facilities inside Syria.
Oil price special
coverage
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“There is at least a narrative building out there that OPEC is more likely than not going to signal to
the market that it is willing to increase production to compensate for any losses to world supply from
these sanctions,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto.
West Texas Intermediate crude for June delivery fell 66 cents to settle at $70.70 a barrel on the
New York Mercantile Exchange. Total volume traded was about 2.3 percent below the 100-day
average.
Brent for July settlement slipped 35 cents to $77.12 a barrel on the London-based ICE Futures
Europe exchange. Prices gained 3 percent this week. The global benchmark crude traded at a $6.44
premium to July WTI.
U.S. drillers add oil rigs for sixth consecutive week: Baker Hughes
U.S. energy companies added oil rigs for a sixth week in a row as crude prices continue to soar to
multi-year highs after new sanctions on Iran are anticipated to take some supply out of the market,
further supporting U.S. drilling and pushing production to record highs.
Drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest level
since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely
followed report on Friday.
That was the first time energy firms added rigs for six weeks in a row since early March.
More than half the total oil rigs are in Permian basin in west Texas and eastern New Mexico, the
nation’s biggest shale oil field. Active units there increased by five this week to 463, the most since
January 2015.
The U.S. government expects oil output in the Permian to rise to a record high near 3.2 million
barrels per day in May, about 30 percent of total U.S. oil production.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 712 rigs
were active as energy companies have been ramping up production in tandem with OPEC’s efforts
to cut global output in a bid to take advantage of rising prices.
U.S. crude output has surged since 2010, fueled by output from formations in states including Texas,
New Mexico and North Dakota. Amid the recovery in prices and drilling, production this year
surpassed a previous long-standing output record.
The U.S Energy Information Administration on Tuesday projected average annual U.S. oil output
would rise 1.37 million bpd to a record high 10.72 million bpd in 2018 and 11.86 million bpd in 2019.
[EIA/M]
Texas energy regulators said in a report this week the state issued a third more oil and gas drilling
permits in April than a year ago as higher prices continue to spur an increase in activity.
After the United States pulled out of the Iran nuclear deal earlier in this week, U.S. crude futures
were trading around $71 a barrel, their highest since November 2014. That is up sharply from the
$50.85 average hit in 2017 and $43.47 in 2016. [O/R]
Looking ahead, futures were trading around $70 for the balance of 2018 and $65 for calendar 2019.
In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the
exploration and production (E&P) companies they track have provided guidance indicating a 12
percent increase this year in planned capital spending.
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Cowen said those E&Ps expect to spend a total of $81 billion in 2018, up from an estimated $72.4
billion in 2017.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week
forecast average total oil and natural gas rig count would rise to 1,020 in 2018 and 1,135 in 2019,
up from an earlier projection of 1,015 in 2018 and 1,130 in 2019.
So far this year, the total number of oil and gas rigs active in the United States has averaged 983,
up sharply from an average of 876 rigs in 2017 and on track to be the highest since 2014, which
averaged 1,862 rigs. Most rigs produce both oil and gas.
Goldman Sees Oil Exports Giving U.S. Leverage in Iran Sanctions
The U.S. has a new bargaining chip on the table when it comes to Iranian sanctions: Shale.
In 2012, American oil stayed at home, giving the U.S. less leverage to compel powerhouse oil-
consuming countries like India and China to sanction Iran. That was then, this is now. The crude
export ban has been lifted, and “the U.S. is as large of an exporter as Iran -- 2.5 million barrels a
day,” Jeff Currie, Goldman Sachs Group Inc’s global head of commodities, said Thursday in
an interview with Bloomberg TV.
“That now gives them a bargaining chip -- saying -- ‘Hey, if you don’t comply, we can take away
those barrels,’” he said. “It is a way to enforce compliance on refiners around the world.”
Sanctions on Iran will reduce the Islamic Republic’s ability to produce and export, but the lost oil
supply will be supplanted by allies of the U.S., like Saudi Arabia, Currie said. While there is “a lot of
geopolitical stuff going on,” the current oil rally is underpinned by real demand, not the headlines,
he said.
As Iran’s Oil Minister Bijan Namdar Zanganeh sees his global market shrinking before his eyes,
he said on state TV today that U.S. President Donald Trump’s motives are just “shenanigans” to
raise prices for the shale producers.
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Oil at $100 Is a Possibility Next Year, Bank of America Says
Oil prices could rally to $100 a barrel next year, a level not seen since 2014, as supply risks in
Venezuela and Iran strain global markets, according to Bank of America Corp.
Brent futures, trading near $77 on Thursday, are set to reach $90 in the second quarter of 2019 as
world inventories shrink, the bank said. As that view hinges on OPEC reviving output and a limited
impact on Iran from U.S. sanctions, prices could go even higher, it said, becoming the first Wall
Street bank to suggest a return to $100.
Crude has climbed to a three-year high as President Donald Trump’s decision to re-impose
sanctions on Iran threatens to tighten a market already depleted by strong demand, OPEC
production cuts and unplanned supply losses in troubled producer Venezuela.
“Looking into the next 18 months, we expect global oil supply and demand balances to tighten,”
Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York,
said in a report.
While other Wall Street banks have bullish outlooks on crude, theirs aren’t quite as strong as that
of Bank of America.
Goldman Sachs Group Inc. predicts that Brent will rise to $82.50 a barrel in the coming months, and
says there’s a chance prices could surpass that level, but sees oil subsiding again in 2019.
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NewBase Special Coverage
News Agencies News Release May 13-2018
Shale's Big Boost Comes With Newfound Thrift as Oil Hits $70
By Kevin Crowley and David Wethe
The shale boom’s back in full swing, with fracking crews the busiest since 2014. The novelty this
time around: Oil executives stressing their prudence, along with their production.
The combination of surging output, oil prices at three-year highs and spending under control means
that the shale patch -- which has notoriously burnt more cash than it makes as investors bankroll
their expansion -- got closer to a milestone in the first-quarter: Positive free cash flow. As oil rises
above $70 a barrel, the outlook for the coming quarters looks even brighter.
It’s a shift that came with the help of new high-tech well systems, and at the insistence of investors
pushing payback over growth. Here are five key takeaways from the first quarter to track moving
forward:
Production is thriving
EOG Resources Inc. and Pioneer Natural Resources Co. are among producers that posted record
output, while keeping capital expenditures in check.
Surging Shale
U.S. shale producers mostly posted large production gains in first-quarter
Source: Bloomberg data from company filings
NOTE: Devon and Anadarko made asset sales in the period
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But how can they keep growing without overspending?
Producers have sought to cut costs since prices crashed more than three years ago, but those
efforts can only go so far. It’s mainly better technology that’s allowing them to get more from each
well without blowing their budgets.
Pioneer, in a recent presentation, offered insight into how its high-tech wells are delivering at a faster
rate, a theme repeated over and over again in earnings calls. Devon Energy Corp. said it completed
the two highest-rate wells in the Delaware section of the Permian in its 100-year history, helping it
to a 20 percent production boost.
Gushing Gains
Pioneer's new wells in parts of the Permian are producing a lot more oil
Source: Pioneer Natural Resources
Almost living within their means
Buybacks, dividend increases and a cap on capital expenditures. Oil executives couldn’t keep from
crowing about their thriftiness while producing record amounts of product, and how their efforts can
be a benefit to both their shareholders, and to continued growth.
The numbers back them up, showing a pretty good rise in free cash flow, starting from the end of
2016.
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Financial Freedom
North American independent oil producers are close to breaking even
Source: Bloomberg Intelligence North America Indepedent E&Ps Valuation Peers
The oil rally’s flip side: Hedging
A big risk facing some producers now is the amount of wrong-way bets on oil prices that they hold.
When crude markets slumped, explorers used hedging contracts to lock in payments for future
barrels that could now turn sour as futures trade above $70 a barrel.
Wood Mackenzie Ltd.’s Andrew McConn estimates top producers will lose $7 billion on their
hedging contracts in 2018.
Changing Fortunes
Once financial lifelines, hedging contracts may now lose money for some producers
Source: Wood Mackenzie
Note: Assumes average WTI price of $68/barrel
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The reality on the ground
To make record production a reality, oil-service providers are sending a growing number of fracking
crews to shale fields to blast the oil-rich layers of rock with water, sand and chemicals.
But for the service providers, that hasn’t translated into better profits yet.
The rush to respond to heightened demand has inflated costs for materials like sand and has
triggered transportation bottlenecks and labor shortages. All that has weighed down on their first-
quarter results. Schlumberger Ltd., the world’s biggest oilfield service provider, and Halliburton Ltd.,
the top fracker, have both promised investors things will improve. If that means increasing prices
for their services, costs will rise for producers.
Waiting for More
Oilfield servicers promised investors better results after tough start to 2018
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 18
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 19
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
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Mobile: +97150-4822502
khdmohd@hawkenergy.net
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
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,
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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.
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NewBase May 2018 K. Al Awadi
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Call us for details khdmohd@hawkenergy.net
Your Energy Consultant for the GCC area
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,
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New base 13 may 2018 energy news issue 1170 by khaled al awadi

  • 1. 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 13 May 2018 - Issue No. 1170 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE GCC: Countries in and around the Middle East are adding coal-fired power plants U.S. EIA, based on trade press and company press releases Planned coal-fired capacity additions from a number of countries in and around the Middle East will add 41 gigawatts (GW) of new electric generating capacity over the next decade, based on announced projects and projects currently in the permitting process. Another 3 GW of coal-fired capacity is currently under construction in these countries. About 12 GW of coal-fired generating capacity—or about half of the region’s coal-fired generating fleet—has come online since 2006. Coal capacity in the region is typically less than that of other fuels, particularly compared with liquefied natural gas or petroleum-based fuels, because coal accounts for less than 1% of primary energy production in the region. Turkey is the heaviest user of coal-fired power among these countries with a capacity of approximately 18.5 GW, followed by Israel (4.9 GW) and Pakistan (2.5 GW). Turkey and Pakistan both plan to add more coal capacity over the next decade.
  • 2. 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 2 Egypt, Oman, Iran, Jordan, and the United Arab Emirates (UAE) have no current coal-fired electricity generation, but they each plan to build coal capacity in the near future. New coal capacity is currently under construction in the UAE, Iran, and Jordan. In addition, Egypt and Oman have announced plans for new coal-fired generators. In the UAE, new coal-fired capacity will come from Dubai’s Hassyan Project. The project consists of 3.6 GW of ultra-supercritical generating capacity, 2.4 GW of which is currently under construction and expected to become operational between 2020 and 2022. Another 1.2 GW was announced for a total of 6 units (with an average size of 600 megawatts (MW) expected to come online in 2023. The $3.4 billion project is sponsored by several investors, including Chinese and domestic banks. According to the UAE’s national energy strategy, generation and emission-reduction targets for 2050 include about 11.5 GW of ultra-supercritical coal plants. These coal plants are required to be compatible with carbon capture and sequestration technologies and to employ highly efficient technologies to mitigate emissions. Ultra-supercritical coal plants use boilers that heat coal to higher temperatures, which increases the pressure of steam to improve efficiency and results in less coal use and fewer carbon emissions than other boiler technologies. Iran’s Tabas power station, sponsored in partnership with MAPNA Group and China’s Shanghai Electric, will provide 650 MW of generation capacity from two units upon completion. The billion- dollar plant, which began construction in 2012, will be powered from locally mined coal. Iran’s domestic coal production is expected to increase by more than 2 million tons per year when improved coal mining and processing facilities begin operation in 2020, according to Imidou mining representatives. Jordan’s 30 MW plant, created based on an agreement between the Energy Ministry and the Al Manaseer Group, will provide power for industrial cement production using coal from the United States, Russia, and Africa. Construction on this plant is expected to begin in July 2018. Oman has announced plans for a 1,200 MW coal-fired power plant and in April began accepting proposals for qualification from developers. In 2017, Egypt announced plans for a $1.5 billion, 6,000 MW coal-fired power plant. This coal plant, which will be Egypt’s first, is expected to be completed by 2024.
  • 3. 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 3 UAE's ADNOC plans further downstream expansion: CEO Reuters - Rania El Gamal Abu Dhabi National Oil Co. plans to double its refining capacity and triple petrochemicals output potential by 2025, as the state energy firm focuses more on downstream expansion to be on par with Big Oil and capture new growth markets, ADNOC’s chief executive said. To reach that goal ADNOC will need to create new joint ventures and partnerships and not just rely on its existing assets, Sultan al-Jaber told Reuters in an interview on Saturday. The company is also looking at different options for its ADNOC Refining subsidiary, including bringing on strategic partners but an initial public offering (IPO) for the unit is not on the “radar screen at this point in time”, al-Jaber said. “We continue to keep upstream as an integral part of our DNA at ADNOC while complementing that with a real shift in our drive for more downstream investments,” al-Jaber said. “ADNOC needs to shift its focus to... downstream in a way to help enhance our commerciality, increase our profitability and maximize value from every barrel we produce,” he said at ADNOC’s headquarters in Abu Dhabi. Al-Jaber was speaking a day before he unveils the company’s downstream strategy at an investment forum. ADNOC produces about 3 million barrels of oil per day and its current refining capacity is 922,000 bpd. It wants to triple petrochemicals production to 14.4 million tonnes annually. “The centerpiece when it comes to our downstream strategy is the Ruwais Industrial Complex... Our aim here is to make it become the single largest integrated refining and petrochemicals complex in the world,” al-Jaber said. In February, ADNOC said it was investing $3.1 billion to upgrade its 842,000 bpd Ruwais oil refinery to free up more crude for export from its flagship Murban grade. ADNOC - dubbed “a sleeping energy giant” - has embarked on a major shake-up since al-Jaber’s appointment as CEO in 2016, as part of an economic reform drive led by Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. A sharp drop in crude prices since mid-2014 has forced the oil industry to cut costs and look for ways to boost efficiency. The company plans to spend more than 400 billion dirhams ($109 billion) in the next five years. The spending will include boosting gas output and investing in international downstream activities, ADNOC said in November. ADNOC wants to expand its downstream portfolio particularly in Asian markets where demand for oil is still growing, securing a new outlet for its crude.
  • 4. 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 4 “Hydrocarbons are and will remain an essential part of the energy mix... We are expecting that demand will double in the next 20 years especially in the petrochemicals sector,” al-Jaber said. ADNOC is evaluating some downstream expansion opportunities abroad with its strategic partners, he said, declining to give more details, but he said that India was a potential market. Other markets where ADNOC is looking for possible downstream expansion are China, Japan, South Korea, Vietnam, Indonesia and Pakistan, he said, adding the company was not close to a decision. Earlier on Saturday, India’s oil minister told Reuters that there was a consensus between Saudi Aramco, ADNOC and Indian companies to firm a joint venture for India’s Ratnagiri oil refinery.
  • 5. 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 5 Egypt: Eni starts up third production unit at Zohr Source: Eni After a record start-up in less than two and a half years from discovery, production is continuing to ramp up, reaching plateau in 2019 Eni has announced the start-up of the third production unit (T-2) of the Zohr project, increasing the installed capacity to 1.2 bcfd. Zohr is now producing 1.1 bcfd in ramp-up, equivalent to approx. 200,000 boed, of which 75,000 boed net to Eni at current working interest. This outstanding result has been achieved only a few months after the field’s start-up in December 2017. The third unit, following just one week after the second unit’s successful power-up, confirms the programme pursued by Eni, its co-venturers and Egyptian Natural Gas Holding Company (EGAS) to pursue a production level of 2 bcfd by end 2018, followed by a plateau of 2.7 bcfd in 2019. The latest achievement reinforces the exceptional development path of Zohr, one of Eni’s seven record-breaking projects, which is playing a fundamental role in supporting Egypt’s independence from LNG imports. The Zohr field, the largest gas discovery ever made in Egypt and in the Mediterranean Sea with more than 30 tcf of gas in place, is located within the offshore Shorouk Block(some 190 km north of Port Said). In the Shorouk Block, Eni holds a 60% stake, Rosneft 30% and BP 10% of the Contractor’s Share (where Eni, Roseneft and BP are collectivity the Contractor). The project is executed by Petrobel, the Operating Company jointly held by Eni and the state corporation Egyptian General Petroleum Corporation (EGPC), on behalf of Petroshorouk, jointly held by Contractor (Eni and its partners) and the state company Egyptian Natural Gas holding Company (EGAS). Eni has been present in Egypt since 1954, where it operates through its subsidiary IEOC. The company is the country's leading producer with equity of more than 260,000 barrels of oil equivalent per day.
  • 6. 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 6 Venezuela: PDVSA Loses its oil export terminal in the Carebian Bloomberg - Lucia Kassai ConocoPhillip, the Houston-based company on Friday assumed control of Venezuela’s oil assets in the Caribbean island of Bonaire and filed court orders to do the same in Curacao and Aruba. The takeover is effectively stifling Petroleos de Venezuela SA’s ability to export oil, the commodity that bankrolls the regime of President Nicolas Maduro. The Caribbean terminals are logistically key to Venezuela’s ability to export oil. About 16 percent of its crude exports are stored in those terminals before sailing to their final destination in the U.S., China and India. Oil at Bay 16% of Venezuelan crude exports are first shipped to PDVSA Caribbean terminals Source: Shipping reports, vessel-tracking data compiled by Bloomberg The move by ConocoPhillips is part of an effort to fulfill a $2.04 billion arbitration ruling against PDVSA. The state-run oil company, for its part, is planning to pay the award but hasn’t reached out to Conoco to discuss the details yet, according to a person with knowledge of the situation. PDVSA didn’t immediately return email seeking comment. ‘Total disaster’ “This is a total disaster” for Venezuela, says Francisco Monaldi, a fellow at Rice University’s Baker Institute. “The Conoco situation, as it is, with PDVSA unable to use storage tanks in the Caribbean, is worse than the existing U.S. sanctions,” he said in a phone interview from Houston. Unable to use its network of tank farms, PDVSA is rerouting cargoes back to its ill-equipped ports in Venezuela, causing a logjam of tankers around the main sea terminals. The company now has limited ability to load supertankers, the transportation mode of choice for buyers in China and India, which may force PDVSA to push more oil to U.S. refiners at deeper discounts, Monaldi said. Oil collapse Venezuela, owner of the world’s largest oil reserves, was once Latin America’s largest oil exporter by a large margin, but now loses the lead at times to Mexico and Brazil. The country shipped 1.26 million barrels of crude daily in April, a 20 percent decline from the previous year, according to data compiled by Bloomberg.
  • 7. 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 7 The country’s production has been dropping even as oil prices have reached the highest level in more than three years. Daily output fell to 1.509 million barrels in March, from a peak of 3.708 million in 1970, according to data compiled by Bloomberg. PDVSA denounced the actions taken by ConocoPhillips to take assets in the Caribbean, according to a tweet by the Oil Ministry which was later deleted. The takeover comes after the International Chamber of Commerce found that the late President Hugo Chavez had illegally seized the ConocoPhillip’s assets in Venezuela in 2007. This is not the first time that the company has locked horns with PDVSA in court. In 2015, a U.S. court confirmed that ConocoPhillips was the sole owner of a coker at the Sweeny refinery in Texas. The coker, then co-owned by both companies, became sole property of Conoco after PDVSA failed to meet a supply agreement.
  • 8. 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 8 U.S: EIA raises crude oil, gasoline price forecasts for 2018 Source: U.S. Energy Information Administration, Short-Term Energy Outlook, May 2018 EIA’s May Short-Term Energy Outlook (STEO) forecasts that Brent crude oil prices will average $71 per barrel (b) in 2018, $7/b higher than last month’s STEO. Correspondingly, EIA’s forecast for regular gasoline retail prices increased to an average of $2.79/gallon (g) in 2018, $0.15/g higher that in last month’s STEO. Monthly average Brent crude oil spot prices have increased in 9 of the past 10 months, most recently averaging $72/b in April. EIA expects West Texas Intermediate (WTI) crude oil prices to average $5/b lower than Brent prices in 2018. Even though WTI is a domestic crude benchmark and Brent is an international benchmark, gasoline prices in the United States tend to follow Brent. In late April 2018, daily spot prices for Brent crude oil reached $76/b, the highest level in nearly four years. Crude oil prices have probably been driven higher for three reasons: falling global oil inventories, heightened market perceptions of geopolitical risks, and strong global economic growth signals. EIA estimates that global oil inventories fell an average of nearly 0.6 million barrels per day (b/d) in each of the past five quarters (January 2017 through March 2018). Oil inventories for countries within the Organization for Economic Cooperation and Development (OECD) at the end of April were an estimated 3% lower than the previous five-year average (2013– 2017) in terms of days of supply, the largest percentage below the five-year average since March 2014.
  • 9. 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 9 In April, when EIA developed the May STEO, several geopolitical risks presented sources of uncertainty. These risks, including the re-imposition of oil sanctions against Iran and the upcoming results of May elections in Venezuela, may materialize into actions that remove oil supplies from the global market and, in turn, tighten global oil balances. Since the publication of the May STEO, the United States announced that it would withdraw from the Joint Comprehensive Plan of Action with Iran. This news and resulting price movements are not reflected in the May STEO, issued May 8, but EIA will consider these developments when formulating the June STEO. At the same time, global liquid fuels consumption is quickly increasing. EIA estimates global oil consumption-weighted gross domestic product (GDP) growth for 2018 will be at its highest rate since 2012. Greater GDP growth has the potential to increase oil consumption beyond forecasted levels, which could put upward pressure on crude oil prices, and simultaneously drive systemic market movements in equities, bonds, and other commodities, which are often correlated with movements in crude oil prices. Source: U.S. Energy Information Administration, Short-Term Energy Outlook, May 2018
  • 10. 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 10 NewBase May 13 - 2018 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Crude Oil Takes a Breather After Surging on Iran Sanctions Bloomberg + Reuters + NewBase Oil slipped, narrowing a second weekly gain, as traders consider the potential supply impact of renewed U.S. sanctions on Iran. Futures in New York dipped back below $71 a barrel Friday, trimming this week’s increase to 1.4 percent. Saudi Arabia is ready to work with other producers to mitigate any impact of a shortage after U.S. President Donald Trump decided to exit a 2015 nuclear accord and hit OPEC’s third- largest producer with sanctions intended to curb its exports. U.S. crude production pushed to a fresh all-time high as explorers put the most drilling rigs to work in 3 1/2 years. Crude’s recent rally has been driven by a deepening regional conflict in the energy-rich Middle East and Trump’s hawkish stance on Iran. Goldman Sachs Group Inc. said the sanctions could push prices above its forecasts and Bank of America Corp. sees a possibility oil could rise to $100 a barrel next year. Israel said it conducted the biggest raid in at least three decades at Iran’s military facilities inside Syria. Oil price special coverage
  • 11. 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 11 “There is at least a narrative building out there that OPEC is more likely than not going to signal to the market that it is willing to increase production to compensate for any losses to world supply from these sanctions,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. West Texas Intermediate crude for June delivery fell 66 cents to settle at $70.70 a barrel on the New York Mercantile Exchange. Total volume traded was about 2.3 percent below the 100-day average. Brent for July settlement slipped 35 cents to $77.12 a barrel on the London-based ICE Futures Europe exchange. Prices gained 3 percent this week. The global benchmark crude traded at a $6.44 premium to July WTI. U.S. drillers add oil rigs for sixth consecutive week: Baker Hughes U.S. energy companies added oil rigs for a sixth week in a row as crude prices continue to soar to multi-year highs after new sanctions on Iran are anticipated to take some supply out of the market, further supporting U.S. drilling and pushing production to record highs. Drillers added 10 oil rigs in the week to May 11, bringing the total count to 844, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. That was the first time energy firms added rigs for six weeks in a row since early March. More than half the total oil rigs are in Permian basin in west Texas and eastern New Mexico, the nation’s biggest shale oil field. Active units there increased by five this week to 463, the most since January 2015. The U.S. government expects oil output in the Permian to rise to a record high near 3.2 million barrels per day in May, about 30 percent of total U.S. oil production. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 712 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output in a bid to take advantage of rising prices. U.S. crude output has surged since 2010, fueled by output from formations in states including Texas, New Mexico and North Dakota. Amid the recovery in prices and drilling, production this year surpassed a previous long-standing output record. The U.S Energy Information Administration on Tuesday projected average annual U.S. oil output would rise 1.37 million bpd to a record high 10.72 million bpd in 2018 and 11.86 million bpd in 2019. [EIA/M] Texas energy regulators said in a report this week the state issued a third more oil and gas drilling permits in April than a year ago as higher prices continue to spur an increase in activity. After the United States pulled out of the Iran nuclear deal earlier in this week, U.S. crude futures were trading around $71 a barrel, their highest since November 2014. That is up sharply from the $50.85 average hit in 2017 and $43.47 in 2016. [O/R] Looking ahead, futures were trading around $70 for the balance of 2018 and $65 for calendar 2019. In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies they track have provided guidance indicating a 12 percent increase this year in planned capital spending.
  • 12. 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 12 Cowen said those E&Ps expect to spend a total of $81 billion in 2018, up from an estimated $72.4 billion in 2017. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast average total oil and natural gas rig count would rise to 1,020 in 2018 and 1,135 in 2019, up from an earlier projection of 1,015 in 2018 and 1,130 in 2019. So far this year, the total number of oil and gas rigs active in the United States has averaged 983, up sharply from an average of 876 rigs in 2017 and on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas. Goldman Sees Oil Exports Giving U.S. Leverage in Iran Sanctions The U.S. has a new bargaining chip on the table when it comes to Iranian sanctions: Shale. In 2012, American oil stayed at home, giving the U.S. less leverage to compel powerhouse oil- consuming countries like India and China to sanction Iran. That was then, this is now. The crude export ban has been lifted, and “the U.S. is as large of an exporter as Iran -- 2.5 million barrels a day,” Jeff Currie, Goldman Sachs Group Inc’s global head of commodities, said Thursday in an interview with Bloomberg TV. “That now gives them a bargaining chip -- saying -- ‘Hey, if you don’t comply, we can take away those barrels,’” he said. “It is a way to enforce compliance on refiners around the world.” Sanctions on Iran will reduce the Islamic Republic’s ability to produce and export, but the lost oil supply will be supplanted by allies of the U.S., like Saudi Arabia, Currie said. While there is “a lot of geopolitical stuff going on,” the current oil rally is underpinned by real demand, not the headlines, he said. As Iran’s Oil Minister Bijan Namdar Zanganeh sees his global market shrinking before his eyes, he said on state TV today that U.S. President Donald Trump’s motives are just “shenanigans” to raise prices for the shale producers.
  • 13. 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 13 Oil at $100 Is a Possibility Next Year, Bank of America Says Oil prices could rally to $100 a barrel next year, a level not seen since 2014, as supply risks in Venezuela and Iran strain global markets, according to Bank of America Corp. Brent futures, trading near $77 on Thursday, are set to reach $90 in the second quarter of 2019 as world inventories shrink, the bank said. As that view hinges on OPEC reviving output and a limited impact on Iran from U.S. sanctions, prices could go even higher, it said, becoming the first Wall Street bank to suggest a return to $100. Crude has climbed to a three-year high as President Donald Trump’s decision to re-impose sanctions on Iran threatens to tighten a market already depleted by strong demand, OPEC production cuts and unplanned supply losses in troubled producer Venezuela. “Looking into the next 18 months, we expect global oil supply and demand balances to tighten,” Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York, said in a report. While other Wall Street banks have bullish outlooks on crude, theirs aren’t quite as strong as that of Bank of America. Goldman Sachs Group Inc. predicts that Brent will rise to $82.50 a barrel in the coming months, and says there’s a chance prices could surpass that level, but sees oil subsiding again in 2019.
  • 14. 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 14 NewBase Special Coverage News Agencies News Release May 13-2018 Shale's Big Boost Comes With Newfound Thrift as Oil Hits $70 By Kevin Crowley and David Wethe The shale boom’s back in full swing, with fracking crews the busiest since 2014. The novelty this time around: Oil executives stressing their prudence, along with their production. The combination of surging output, oil prices at three-year highs and spending under control means that the shale patch -- which has notoriously burnt more cash than it makes as investors bankroll their expansion -- got closer to a milestone in the first-quarter: Positive free cash flow. As oil rises above $70 a barrel, the outlook for the coming quarters looks even brighter. It’s a shift that came with the help of new high-tech well systems, and at the insistence of investors pushing payback over growth. Here are five key takeaways from the first quarter to track moving forward: Production is thriving EOG Resources Inc. and Pioneer Natural Resources Co. are among producers that posted record output, while keeping capital expenditures in check. Surging Shale U.S. shale producers mostly posted large production gains in first-quarter Source: Bloomberg data from company filings NOTE: Devon and Anadarko made asset sales in the period
  • 15. 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 15 But how can they keep growing without overspending? Producers have sought to cut costs since prices crashed more than three years ago, but those efforts can only go so far. It’s mainly better technology that’s allowing them to get more from each well without blowing their budgets. Pioneer, in a recent presentation, offered insight into how its high-tech wells are delivering at a faster rate, a theme repeated over and over again in earnings calls. Devon Energy Corp. said it completed the two highest-rate wells in the Delaware section of the Permian in its 100-year history, helping it to a 20 percent production boost. Gushing Gains Pioneer's new wells in parts of the Permian are producing a lot more oil Source: Pioneer Natural Resources Almost living within their means Buybacks, dividend increases and a cap on capital expenditures. Oil executives couldn’t keep from crowing about their thriftiness while producing record amounts of product, and how their efforts can be a benefit to both their shareholders, and to continued growth. The numbers back them up, showing a pretty good rise in free cash flow, starting from the end of 2016.
  • 16. 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 16 Financial Freedom North American independent oil producers are close to breaking even Source: Bloomberg Intelligence North America Indepedent E&Ps Valuation Peers The oil rally’s flip side: Hedging A big risk facing some producers now is the amount of wrong-way bets on oil prices that they hold. When crude markets slumped, explorers used hedging contracts to lock in payments for future barrels that could now turn sour as futures trade above $70 a barrel. Wood Mackenzie Ltd.’s Andrew McConn estimates top producers will lose $7 billion on their hedging contracts in 2018. Changing Fortunes Once financial lifelines, hedging contracts may now lose money for some producers Source: Wood Mackenzie Note: Assumes average WTI price of $68/barrel
  • 17. 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 17 The reality on the ground To make record production a reality, oil-service providers are sending a growing number of fracking crews to shale fields to blast the oil-rich layers of rock with water, sand and chemicals. But for the service providers, that hasn’t translated into better profits yet. The rush to respond to heightened demand has inflated costs for materials like sand and has triggered transportation bottlenecks and labor shortages. All that has weighed down on their first- quarter results. Schlumberger Ltd., the world’s biggest oilfield service provider, and Halliburton Ltd., the top fracker, have both promised investors things will improve. If that means increasing prices for their services, costs will rise for producers. Waiting for More Oilfield servicers promised investors better results after tough start to 2018
  • 18. 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 18
  • 19. 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 19 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 Mobile: +97150-4822502 khdmohd@hawkenergy.net 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
  • 20. 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 20 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 2018 K. Al Awadi Thank you for sharing with us your comments and thoughts on the above issue, similarly we would like to share with our daily publications on Energy news via own NewBase Energy News – https://www.slideshare.net/khdmohd/ne-base-27-april-2018-energy-news-issue-1165-by-khaled-al-awadi Call us for details khdmohd@hawkenergy.net Your Energy Consultant for the GCC area Khaled Al Awadi
  • 21. 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 21 For Your Recruitments needs and Top Talents, please seek our approved agents below