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NewBase Energy News 17 August 2019 - Issue No. 1269 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oman; Ghazeer field phase2 set for 90% completion by year-end
Oman Observer + NewBase + BP
Strong momentum: 15 wells drilled so far as part of Phase 2 of the energy giant’s BP Oman’s
mega-investment in Block 61
Energy supermajor BP has so far drilled around 15 wells as part of a 100-well drilling programme
aimed at unlocking the tight gas potential of the Ghazeer reservoir, representing the second phase
of its mega-investment in Block 61 in central Oman.
According to Yousuf al Ojaili, President – BP Oman, the second phase – dubbed ‘The Ghazeer
Development’ – is on track to add 0.5 billion cubic feet (bcf) per day of gas from early 2021, up
from the overall project’s current contribution of 1 bcf/day from Block 61.
“The Ghazeer development is progressing very well, and is, in fact, slightly ahead of schedule,”
said Al Ojaili. “We have most of the major pieces of project equipment either at site or en route. By
the end of this year, all of the major equipment will be installed on their foundations.”
Speaking to the Observer, BP Oman’s President said the Ghazeer development is slated to reach
the 90 per cent completion mark by the end of this year. “Next year, we will commence
commissioning, and hopefully, produce first gas in the first quarter of 2021.”
Further, in support of its drilling programme, BP Oman has deployed three rigs in the Ghazeer
area, said Al Ojaili. “We are planning to drill around 100 wells in the area, and we have drilled
around 15 wells so far.”
Presently mobilised at the project site is a combined workforce of around 6,000 workers
distributed across engineering, drilling, operations and other support functions, he said.
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Phase 1 of BP Oman’s tight gas development in Block 61 – targeting the Khazzan field – came on
stream in September 2017, with production averaging 1 bcf / day of gas along with around 25,000
barrels per day (bpd) of condensate.
As part of its investment in Ghazeer, BP Oman is adding a third gas processing train to the central
processing facilities (CPF) in Block 61, along with a second condensate train, gathering systems,
well hookups, and a new gas export system connecting with Oman Gas Company’s network in
Fahud.
BP Oman is a partnership of energy giant BP (60 per cent), Oman Oil Company E&P (30 per cent)
and Malaysian energy giant Petronas (10 per cent).
Last month, the partnership of BP Exploration (Epsilon) Ltd and Italian energy major Eni signed an
Exploration and Production Sharing Agreement (EPSA) with the Omani government for the
development of Block 77 adjoining Block 61. Eni and BP will each hold a 50 per cent interest in
the EPSA, with Eni serving as operator during the exploration phase.
Experts believe that should the JV uncover prolific gas reserves in Block 77, then it could
potentially pave the way for the implementation of yet another landmark Integrated Gas
Development in the Sultanate, mirroring the nation’s current maiden venture centring on the
Greater Barik discovery in central Oman.
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Saudi Aramco reports first half 2019 net income of $46.9 billion
WAM/Tariq alfaham
Saudi Aramco on Monday announced for the first time its half-year financial
results. The company’s net income was $46.9 billion for the first half 2019,
compared to $53.0 billion for the same period last year.
Earnings before interest and tax was $92.5 billion, compared with $101.3 billion
a year earlier. Free cash flow was $38.0 billion, compared to $35.6 billion for
the same period last year. Capital expenditure was $14.5 billion, compared to $16.5 billion for the
same period in 2018.
Commenting on the results, Saudi Aramco President & CEO Amin H. Nasser, said: "Despite lower
oil prices during the first half of 2019, we continued to deliver solid earnings and strong free cash
flow underpinned by our consistent operational performance, cost management and fiscal
discipline.
Disclosing our financial results for the first time, as part of our $12 billion debut international bond
issuance, marked a significant milestone in Saudi Aramco’s history.
''We demonstrated our reliability with near 100 percent delivery on our customers’ requirements
for oil and refined products, maintaining our total hydrocarbon production of 13.2 million barrels of
oil equivalent per day and an average daily crude production of 10 million barrels per day,'' he
added.
''Leveraging our strength in Upstream, we continued to deliver on our Downstream growth
strategy, including acquisitions in both Saudi Arabia and key international markets.
These acquisitions are expected to enhance dedicated crude placement, increase refining and
chemicals capacity, capture value from integration and diversify our operations.'' ''Looking ahead,
we will maintain a prudent and flexible balance sheet. Our financials are strong and we will
continue to invest for future growth," Nasser concluded.
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Egypt:Zohr’s gas production hits 11.3BCM mark in 1H19
© 2019 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info).
Russian energy giant is in a The consortium of the Egyptian Zohr Project Italy’s Eni, Russian
Rosneft, British Petroleum (BP), and UAE’s Mubadala Petroleum for the implementation of the
Zohr offshore gas project
Natural gas production from Egypt’s mammoth Zohr field amounted to 11.3bn cubic metres (cm)
(398.89bn cubic feet) in the first half (H1) of 2019, about 3.6 folds increase compared to the same
period last year, Russian Rosneft announced on Wednesday.
The Russian energy giant is in a consortium with Italy’s Eni, British Petroleum (BP), and
UAE’s Mubadala Petroleum for the implementation of the Zohr offshore gas project in the
Mediterranean Sea.
According to Rosneft’s press statement, Zohr’s current production level is 68m cm/day (2.4bn
scf/day). At the moment, 11 production wells, three offshore pipelines, an offshore management
platform, and all eight production trains of the gas treatment plant have been commissioned.
By the end of 2019, the gas output is estimated to reach 76m cm/day (2.7bn scf/day).
Zohr is the Mediterranean’s largest gas field, with estimated gas-in-place volumes of 850bn cm.
The field was discovered in 2015. It is being implemented as a concession between Italian Eni
(50%), Rosneft (30%), BP (10%), and Mubadala Petroleum (10%).
Egypt’s natural gas output is expected to reach 8bn scf/day during the fiscal year 2019/20 after
the completion and operation of the gas field projects nationwide. Egypt aims to become a natural
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gas hub after achieving self-sufficiency with the operation of the Idku liquefaction plants receiving
gas from Cyprus and Israel and the Jordan gas pipeline .
The Egyptian Treasures
Egypt’s gas consumption reached its highest level in fiscal year 2016/17 with 41.5 million tons
equivalent per year. Similarly, officials have revealed that, with a $1.8 billion investment from
British Petroleum (BP), the country’s gas output is expected to reach peak production in 2019.
In a mere few years and with a gas consumption that reached its highest of 41.5 million tons
equivalent per year during fiscal year 2016/2017, according to the Ministry of Planning, Monitoring
and Administrative Reform, Egypt is expected to put an answer to an article penned by Gal Luft
from the Institute for the Analysis of Global Security in 2012, titled, “Energy Self-sufficiency: A
Realistic Goal or a Pipe Dream?” It is a realistic goal; at least, this is the answer to Egypt’s case.
Luft had once proposed that energy self-sufficiency is “neither reliable nor affordable,” however,
Egyptian efforts suggest otherwise.
Gas and oil trajectory
Post-2011, Egypt’s decreasing gas production level led to a gap between supply and demand,
whereby demand was significantly greater than supply. As a result, the Egyptian Natural Gas
Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC) announced a
multi-stage liberalization of the natural gas market through Gas Market Law No. 196 for 2017.
This meant that private companies could now use national gas grids to import, ship, store,
transfer, market and disperse natural gas to Egyptian users, and that the natural gas market
would be completely liberalized by 2022. In exchange for allowing private companies to operate
on state-owned grids, Egypt collected tariffs from companies. Importantly, in February 2018, the
law was followed by the declaration of executive regulations designed to implement it.
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This law, coupled with the six-fold growth of the Leviathan Zohr offshore gas field, and the
cooperation between Egypt and Mediterranean countries and the European Union (EU) also
through joint agreements and memorandums of understanding (MoU), has put Egypt on track to
becoming the gas and oil regional hub, enabling it to become a trading centre point, according to
Ministry of Petroleum and Mineral Resources Tarek El-Molla.
“Egypt is qualified to be a regional hub for energy due to its liquefying plants, pipeline grids,
Warehousing, transportation, trading of petroleum and gas products and ports overlooking the
Mediterranean and the Red Sea and refineries,” stated El-Molla during Al-Ahram’s Energy
conference, explaining that the ministry is working within the bigger 2030 Agenda to ensure
energy security and increasing the sector’s contribution to the gross domestic product (GDP),
modernize and promote sustainable habits for the sector, and reduce the environmental footprint
of the sector, according to Egypt Vision 2030.
This, as Fitch Solutions had predicted at the end of 2017, led to increased production in gas in
2018, leading Egypt to end the importing of liquefied natural gas (LNG) in September, upon
receiving the last shipment, according to the Oxford Business Group.
Despite Fitch Solutions being right about their prediction, they argue, “Whilst LNG cargoes will
decrease over 2018 onwards as domestic gas production ramps up, we note that seasonal
demand dynamics will ensure LNG imports continue at smaller volumes over the next five years.”
However, their argument seems to be flawed, as they have also falsely estimated production
levels for Zohr gas field during 2018, with Zohr gas field produce jumping to two billion standard
cubic feet per day (scfd) in September, from January’s 350 million scfd. It is expected that 2019
will see Zohr produce 3 billion scfd.
However, Zohr is not the only gas field in Egypt; West Nile Delta (WND), Greater Nooros Area,
Atoll Phase 1, and WDDM – Burullus Phase 9B are all important gas fields that add to the national
gas production.
Looking at the country as a whole, Egypt’s total gas production, came to 6.6 billion scfd in
September, compared to 2017’s average of 5.1 billion scfd and 2016’s 4.4 billion scfd, according
to the Petroleum Ministry, meaning that between 2018 and 2017, there was a 29.4% year-on-year
increase.
West Nile Delta (WND) gas field, which yields the second highest amount of natural gas,
according to a June 2018 report by The Oxford Institute for Energy Studies, is expected to
develop to 5 trillion cubic feet with a maximum production level of about 1.5 billion cubic feet per
day, according to British Petroleum (BP).
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Moreover, the Oxford Institute for Energy Studies states, “The Taurus and Libra fields started
producing gas in May 2017 and the Giza, Fayoum and Raven fields are expected to come on-
stream by the end of 2018 or beginning of 2019.” These fields are all part of the West Nile Delta
WND gas field.
Turning to the remaining three gas fields, Greater Nooros Area, Atoll Phase 1 and WDDM –
Burullus Phase 9B, produce one billion, 350 million and 450 million cubic feet per day, according
to BP and a 2018 Interfax report.
2019: A year of prosperity
After significantly increasing the total gas output by 29.4% in 2018, it is expected the by 2020, the
total gas output will jump by 100%, according to the Petroleum Minister; Egypt is also expected to
resume exporting energy by the end of 2019.
In a meeting with Minister of Manpower Mohamed Saafan early December 2018, General
Manager of Eni’s IEOC Fabio Cavanna said, “Egypt will move from the group of countries
importing natural gas to be an exporter by the end of 2019.”
To ensure that Egypt is able to reach its potential and meet local demand and then some,
Cavaana and Saafan are looking to sign a cooperation protocol, in coordination with the
Petroleum Ministry, to offer young professionals a high-tech training opportunity. The training will
also cover safety while on site and will look to produce young professional calibres.
Commenting on the training, Cavanna said, “This training will create young cadres who can take
responsibility at the highest level, as they will be trained in major international companies, such as
Italy’s Eni.” Meanwhile, Saafan explained, “This comes within the framework of the Ministry of
Manpower’s current [efforts] to [hold] training programs involving the latest scientific methods with
major international companies, specifically in the field of petroleum services.”
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In addition, this year looks to be the year when Egypt looks outwards towards neighbouring
countries that could be energy allies. Egypt’s strategic geographical location makes it an optimum
partner to countries from Italy to Saudi Arabia, to Sudan. During the 2018 Med Dialogues in
Rome, Italy, El-Molla explained that Egypt is looking to approach Italy, or “Europe’s energy
gateway,” as he called it, to increase its work with the EU.
“At the start of this year [2018] we signed a memorandum of understanding on energy with the
European Union that will make Egypt a considerable energy supplier in alternative to existing
suppliers,” stated El-Molla, continuing, “With the untapped potential natural gas we have in the
Mediterranean”, nearby countries “need to use Egyptian infrastructure,” adding that they wish to
cooperate on energy. Egypt is also looking to cooperate more with Saudi Arabia and Sudan.
Furthermore, Egypt is looking to increase its gas exports to Jordon to 100 mcf/d early on in 2019,
according to the Jordanian Minister of Energy Hala Zawati, who said, “Egypt has been exporting
amounts of gas to Jordon since September and it will raise the amount to 100 million cubic feet
per day by January.” Supporting this, El-Molla stated in March 2018 that Egypt will resume
exporting gas to Jordan as of early 2019 after four years.
On the foreign front, Egypt is also looking to attract $10 billion worth of new investments during
the fiscal year 2018-2019, stated the Petroleum Minister in a statement in November 2018, adding
that increasing investments is essential to ensure the continuity of the oil and gas sector’s growth
and development. Investments, according to the minister, will be aimed at increasing production
and exploration efforts. Given the positive investment climate that looms over Egypt, the minister
expects that it is very possible to draw this amount in a short amount of time.
Having once been citizens of an exporter of gas and oil, it came to a blow to Egyptians when their
homeland started importing them; however, the recent surge in production has left many happy
and looking forward towards a brighter future. Overall, it seems like 2019 will be a prosperous
year for the industry.
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U.S. solar module imports partially recover after tariffs were
imposed in early 2018 U.S. EIA, Form EIA-63B, Monthly Solar Photovoltaic Module Shipments Report
The United States imposed tariffs on imported silicon solar cells and modules in January 2018.
Module imports decreased in the months following the tariffs’ announcement and effective date,
according to the U.S. Energy Information Administration’s monthly data of solar photovoltaic (PV)
module shipments.
U.S. solar PV module imports, measured in the modules' capacity in kilowatts, increased in mid-
2017, before the tariffs were announced, and then fell to less than 300,000 kilowatts in the months
following the tariff’s effective date in February 2018.
Monthly U.S. solar PV module imports averaged 644,000 kilowatts in the first four months of 2019,
about 16% more than the average imports in the first four months of 2017, before the
announcement of the trade case that ultimately led to the tariffs.
The U.S. International Trade Commission (USITC) began investigations on solar PV tariffs in May
2017 after two global solar manufacturers headquartered in the United States—Suniva and
SolarWorld—petitioned the USITC for import relief through Section 201 of the Trade Act of 1974.
The resulting safeguard tariffs are set to remain effective for four years, with a 30% duty in place
for the first year.
The tariff rate is scheduled to decrease by five percentage points for each year the tariffs are in
effect. The tariffs affect many types of PV modules, including crystalline silicon (c-Si), thin film,
and concentrator types. The tariffs exempt the first 2.5 gigawatts of imported cells per year, as
well as imports from certain developing nations.
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Source: U.S. Energy Information Administration, based on Bloomberg New Energy Finance, Spot Price Index
Note: The average spot price for PV modules includes all companies participating in the Bloomberg survey
regardless of region or type of participant.
Continued decline in the cost of solar PV modules may have offset some of the effects of the solar
tariffs. The global average spot prices of both monocrystalline and multicrystalline modules, not
including any tariffs, declined 27% and 26%, respectively, from December 2017 to July 2018.
Since mid-2018, PV module prices have been relatively stable, according to data from Bloomberg
New Energy Finance.
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NewBase 17 August 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil rises alongside equities, but downbeat OPEC outlook caps gains
Reuters + NewBase
Oil prices on Friday rebounded from a two-day drop, alongside equities as expectations of further
stimulus by central banks helped to ease recession concerns.
But oil’s gains were capped after the Organization of the Petroleum Exporting Countries trimmed
its global oil demand forecast in a downbeat outlook for the rest of 2019 as economic growth
slows. The cartel also highlighted challenges in 2020 as rivals pump more, building a case to keep
up an OPEC-led pact to restrain supplies.
“OPEC killed the golden goose,” said Bob Yawger, director of futures at Mizuho in New York.
“We’ve had some little rallies back into the green, as market tries to follow equities higher, but the
fundamentals in the report are so bearish that it caps the rallies.”
Brent crude LCOc1 was ended the session up 41 cents, or 0.7%, at $58.64 a barrel, after falling
2.1% on Thursday and 3% the previous day. U.S. crude CLc1 rose 40 cents to settle at $54.87 a
barrel, having dropped 1.4% in the previous session and 3.3% on Wednesday.
Oil price special
coverage
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Before the OPEC monthly report, Brent touched a session high of $59.50 and U.S. crude traded at
$55.67 as investors expect further interest rate cuts from the Federal Reserve and moves by the
European Central Bank next month to fight softening growth.
For the week, both oil benchmarks eked out small gains after two consecutive weeks of losses,
even as Wall Street’s three main indexes were on track to rack up their third weekly loss, as
investors worried about the risk of recession and U.S.-China trade tensions.
BNP Paribas cut its forecast for 2019 for U.S. crude by $8 to $55 per barrel and for Brent by $9 to
$62 per barrel, citing slowing economy amid the trade dispute.
Earlier this week, data releases included a surprise drop in industrial output growth in China to a
more than 17-year low, and a fall in exports that sent Germany’s economy into reverse in the
second quarter.
The price of Brent is still up nearly 10% this year helped by supply cuts led by OPEC and its allies
such as Russia, a group known as OPEC+.
In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices.
“At what point will further output cuts be needed at the back end of this year from OPEC and
Russia to keep things going the way they are?” said Phin Ziebell, senior economist at National
Australia Bank.
A Saudi official indicated this month that more steps may be coming, saying Saudi Arabia was
committed to do “whatever it takes” to keep the market balanced next year.
OPEC’s efforts have been undermined by worries about the economy , as well as rising U.S.
stockpiles of crude and higher output of U.S. shale oil.
Also capping oil’s gains on Friday, U.S. energy firms this week increased the number of oil rigs
operating for the first time in seven weeks, General Electric Co’s (GE.N) Baker Hughes energy
services firm said.
The oil rig count, an early indicator of future output, has declined over the past eight months as
independent exploration and production companies cut spending on new drilling as they focus
more on earnings growth instead of increased output.
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NewBase Special Coverage
News Agencies News Release 03 August 2019
OPEC sees bearish oil outlook for rest of 2019, points to 2020 surplus
Reuters + Newbase
OPEC delivered a downbeat oil market outlook for the rest of 2019 on Friday as economic growth
slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an
OPEC-led pact to curb supply.
In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for
global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and
indicated the market will be in slight surplus in 2020.
The bearish outlook due to slowing economies amid the U.S.-China trade dispute and Brexit could
press the case for OPEC and allies including Russia to maintain a policy of cutting output to
support prices. Already, a Saudi official has hinted at further steps to support the market.
“While the outlook for market fundamentals seems somewhat bearish for the rest of the year,
given softening economic growth, ongoing global trade issues and slowing oil demand growth, it
remains critical to closely monitor the supply/demand balance and assist market stability in the
months ahead,” OPEC said in the report.
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Oil LCOc1 briefly pared an earlier gain after the report was released and was trading below $59 a
barrel. Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above $75 pressured
by trade concerns and an economic slowdown.
OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2
million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a
build-up of inventories that could hit prices.
OPEC left its forecast for 2020 oil demand growth at 1.14 million bpd, up slightly from this year.
But OPEC added that its forecast for 2020 economic growth faced downside risk.
“The risk to global economic growth remains skewed to the downside,” the report said. “Especially
trade-related developments will need to be thoroughly reviewed in the coming weeks with some
likelihood of a further downward revision in September.”
OPEC trimmed its global economic growth forecast to 3.1% from 3.2% and, for now, kept its 2020
forecast at 3.2%.
RISING INVENTORIES
The report also said oil inventories in developed economies rose in June, suggesting a trend that
could raise OPEC concern over a possible oil glut. Stocks in June exceeded the five-year
average - a yardstick OPEC watches closely - by 67 million barrels.
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This is despite the supply cuts of OPEC+ and additional involuntary losses in Iran and Venezuela,
two OPEC members which are under U.S. sanctions.
OPEC deepened its cuts in July, the report showed. According to figures OPEC collects from
secondary sources, output from all 14 members fell by 246,000 bpd from June to 29.61 million
bpd as Saudi Arabia cut supply further.
OPEC and its partners have been limiting supply since 2017, helping to clear a supply glut that
built up in 2014-2016 when producers pumped at will, and revive prices.
The policy has been giving a sustained boost to U.S. shale and other rival supply, and the report
suggests the world will need significantly less OPEC crude next year.
The demand for OPEC crude will average 29.41 million bpd next year, OPEC said, down 1.3
million bpd from this year. Still, the 2020 forecast was raised 140,000 bpd from last month’s
forecast.
The report suggests there will be a 2020 supply surplus of 200,000 bpd if OPEC keeps pumping
at July’s rate and other things remain equal. Last month’s report had implied a larger surplus of
over 500,000 bpd.
Balance of Supply and Demand
Demand for OPEC crude in 2019 was revised up by 0.1 mb/d from the previous report to stand at
30.7 mb/d, which is 0.9 mb/d lower than the 2018 level.
In 1Q19, OPEC crude production averaged 30.5 mb/d, about 0.3 mb/d higher than the demand for
OPEC crude in that quarter, while in 2Q19, OPEC crude production averaged 29.9 mb/d, around
0.8 mb/d lower than the demand for OPEC crude.
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Demand for OPEC crude in 2020 was revised up by 0.1 mb/d from the previous report to stand at
29.4 mb/d, which is 1.3 mb/d lower than the 2019 level.
Balance of supply and demand in 2019
Demand for OPEC crude in 2019 was
revised up by 0.1 mb/d from the previous
report to stand at 30.7 mb/d, which is 0.9
mb/d lower than the 2018 level.
Compared with the last monthly report,
1Q19 was revised up by 0.1 mb/d, while
both 3Q19 and 4Q19 were revised up by
0.2 mb/d each.
In contrast, 2Q19 was revised down by
0.1 mb/d. When compared to the same
quarter in 2018, demand for OPEC crude
in 1Q19 was 1.8 mb/d lower, while 2Q19
and 3Q19 are expected to show declines
of 1.1 mb/d and 0.2 mb/d, respectively.
4Q19 is forecast to fall by 0.7 mb/d.
According to secondary sources, OPEC crude production averaged 30.5 mb/d in 1Q19, about 0.3
mb/d higher than the demand for OPEC crude in the same period, while in 2Q19, OPEC crude
production averaged 29.9 mb/d, around 0.8 mb/d lower than the demand for OPEC crude .
Balance of supply and demand in 2020
Demand for OPEC crude in 2020 was revised up by 0.1 mb/d from the previous report to stand at
29.4 mb/d, which is 1.3 mb/d lower than the 2019 level.
Compared with the last monthly report, both 1Q20 and 2Q20 were revised up by 0.1 mb/d each,
while both 3Q20 and 4Q20 were revised up by 0.2 mb/d.
When compared to the same quarter in 2019, demand for OPEC crude in 1Q20 was 1.4 mb/d
lower, while 2Q20 and 3Q20 are expected to show declines of 1.3 mb/d and 1.4 mb/d,
respectively. 4Q20 is forecast to fall by 1.1 mb/d.
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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
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
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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

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New base 17 august 2019 energy news issue 1269 by khaled al awadi

  • 1. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 17 August 2019 - Issue No. 1269 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Oman; Ghazeer field phase2 set for 90% completion by year-end Oman Observer + NewBase + BP Strong momentum: 15 wells drilled so far as part of Phase 2 of the energy giant’s BP Oman’s mega-investment in Block 61 Energy supermajor BP has so far drilled around 15 wells as part of a 100-well drilling programme aimed at unlocking the tight gas potential of the Ghazeer reservoir, representing the second phase of its mega-investment in Block 61 in central Oman. According to Yousuf al Ojaili, President – BP Oman, the second phase – dubbed ‘The Ghazeer Development’ – is on track to add 0.5 billion cubic feet (bcf) per day of gas from early 2021, up from the overall project’s current contribution of 1 bcf/day from Block 61. “The Ghazeer development is progressing very well, and is, in fact, slightly ahead of schedule,” said Al Ojaili. “We have most of the major pieces of project equipment either at site or en route. By the end of this year, all of the major equipment will be installed on their foundations.” Speaking to the Observer, BP Oman’s President said the Ghazeer development is slated to reach the 90 per cent completion mark by the end of this year. “Next year, we will commence commissioning, and hopefully, produce first gas in the first quarter of 2021.” Further, in support of its drilling programme, BP Oman has deployed three rigs in the Ghazeer area, said Al Ojaili. “We are planning to drill around 100 wells in the area, and we have drilled around 15 wells so far.” Presently mobilised at the project site is a combined workforce of around 6,000 workers distributed across engineering, drilling, operations and other support functions, he said.
  • 2. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Phase 1 of BP Oman’s tight gas development in Block 61 – targeting the Khazzan field – came on stream in September 2017, with production averaging 1 bcf / day of gas along with around 25,000 barrels per day (bpd) of condensate. As part of its investment in Ghazeer, BP Oman is adding a third gas processing train to the central processing facilities (CPF) in Block 61, along with a second condensate train, gathering systems, well hookups, and a new gas export system connecting with Oman Gas Company’s network in Fahud. BP Oman is a partnership of energy giant BP (60 per cent), Oman Oil Company E&P (30 per cent) and Malaysian energy giant Petronas (10 per cent). Last month, the partnership of BP Exploration (Epsilon) Ltd and Italian energy major Eni signed an Exploration and Production Sharing Agreement (EPSA) with the Omani government for the development of Block 77 adjoining Block 61. Eni and BP will each hold a 50 per cent interest in the EPSA, with Eni serving as operator during the exploration phase. Experts believe that should the JV uncover prolific gas reserves in Block 77, then it could potentially pave the way for the implementation of yet another landmark Integrated Gas Development in the Sultanate, mirroring the nation’s current maiden venture centring on the Greater Barik discovery in central Oman.
  • 3. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Saudi Aramco reports first half 2019 net income of $46.9 billion WAM/Tariq alfaham Saudi Aramco on Monday announced for the first time its half-year financial results. The company’s net income was $46.9 billion for the first half 2019, compared to $53.0 billion for the same period last year. Earnings before interest and tax was $92.5 billion, compared with $101.3 billion a year earlier. Free cash flow was $38.0 billion, compared to $35.6 billion for the same period last year. Capital expenditure was $14.5 billion, compared to $16.5 billion for the same period in 2018. Commenting on the results, Saudi Aramco President & CEO Amin H. Nasser, said: "Despite lower oil prices during the first half of 2019, we continued to deliver solid earnings and strong free cash flow underpinned by our consistent operational performance, cost management and fiscal discipline. Disclosing our financial results for the first time, as part of our $12 billion debut international bond issuance, marked a significant milestone in Saudi Aramco’s history. ''We demonstrated our reliability with near 100 percent delivery on our customers’ requirements for oil and refined products, maintaining our total hydrocarbon production of 13.2 million barrels of oil equivalent per day and an average daily crude production of 10 million barrels per day,'' he added. ''Leveraging our strength in Upstream, we continued to deliver on our Downstream growth strategy, including acquisitions in both Saudi Arabia and key international markets. These acquisitions are expected to enhance dedicated crude placement, increase refining and chemicals capacity, capture value from integration and diversify our operations.'' ''Looking ahead, we will maintain a prudent and flexible balance sheet. Our financials are strong and we will continue to invest for future growth," Nasser concluded.
  • 4. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Egypt:Zohr’s gas production hits 11.3BCM mark in 1H19 © 2019 Daily News Egypt. Provided by SyndiGate Media Inc. (Syndigate.info). Russian energy giant is in a The consortium of the Egyptian Zohr Project Italy’s Eni, Russian Rosneft, British Petroleum (BP), and UAE’s Mubadala Petroleum for the implementation of the Zohr offshore gas project Natural gas production from Egypt’s mammoth Zohr field amounted to 11.3bn cubic metres (cm) (398.89bn cubic feet) in the first half (H1) of 2019, about 3.6 folds increase compared to the same period last year, Russian Rosneft announced on Wednesday. The Russian energy giant is in a consortium with Italy’s Eni, British Petroleum (BP), and UAE’s Mubadala Petroleum for the implementation of the Zohr offshore gas project in the Mediterranean Sea. According to Rosneft’s press statement, Zohr’s current production level is 68m cm/day (2.4bn scf/day). At the moment, 11 production wells, three offshore pipelines, an offshore management platform, and all eight production trains of the gas treatment plant have been commissioned. By the end of 2019, the gas output is estimated to reach 76m cm/day (2.7bn scf/day). Zohr is the Mediterranean’s largest gas field, with estimated gas-in-place volumes of 850bn cm. The field was discovered in 2015. It is being implemented as a concession between Italian Eni (50%), Rosneft (30%), BP (10%), and Mubadala Petroleum (10%). Egypt’s natural gas output is expected to reach 8bn scf/day during the fiscal year 2019/20 after the completion and operation of the gas field projects nationwide. Egypt aims to become a natural
  • 5. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 gas hub after achieving self-sufficiency with the operation of the Idku liquefaction plants receiving gas from Cyprus and Israel and the Jordan gas pipeline . The Egyptian Treasures Egypt’s gas consumption reached its highest level in fiscal year 2016/17 with 41.5 million tons equivalent per year. Similarly, officials have revealed that, with a $1.8 billion investment from British Petroleum (BP), the country’s gas output is expected to reach peak production in 2019. In a mere few years and with a gas consumption that reached its highest of 41.5 million tons equivalent per year during fiscal year 2016/2017, according to the Ministry of Planning, Monitoring and Administrative Reform, Egypt is expected to put an answer to an article penned by Gal Luft from the Institute for the Analysis of Global Security in 2012, titled, “Energy Self-sufficiency: A Realistic Goal or a Pipe Dream?” It is a realistic goal; at least, this is the answer to Egypt’s case. Luft had once proposed that energy self-sufficiency is “neither reliable nor affordable,” however, Egyptian efforts suggest otherwise. Gas and oil trajectory Post-2011, Egypt’s decreasing gas production level led to a gap between supply and demand, whereby demand was significantly greater than supply. As a result, the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC) announced a multi-stage liberalization of the natural gas market through Gas Market Law No. 196 for 2017. This meant that private companies could now use national gas grids to import, ship, store, transfer, market and disperse natural gas to Egyptian users, and that the natural gas market would be completely liberalized by 2022. In exchange for allowing private companies to operate on state-owned grids, Egypt collected tariffs from companies. Importantly, in February 2018, the law was followed by the declaration of executive regulations designed to implement it.
  • 6. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 This law, coupled with the six-fold growth of the Leviathan Zohr offshore gas field, and the cooperation between Egypt and Mediterranean countries and the European Union (EU) also through joint agreements and memorandums of understanding (MoU), has put Egypt on track to becoming the gas and oil regional hub, enabling it to become a trading centre point, according to Ministry of Petroleum and Mineral Resources Tarek El-Molla. “Egypt is qualified to be a regional hub for energy due to its liquefying plants, pipeline grids, Warehousing, transportation, trading of petroleum and gas products and ports overlooking the Mediterranean and the Red Sea and refineries,” stated El-Molla during Al-Ahram’s Energy conference, explaining that the ministry is working within the bigger 2030 Agenda to ensure energy security and increasing the sector’s contribution to the gross domestic product (GDP), modernize and promote sustainable habits for the sector, and reduce the environmental footprint of the sector, according to Egypt Vision 2030. This, as Fitch Solutions had predicted at the end of 2017, led to increased production in gas in 2018, leading Egypt to end the importing of liquefied natural gas (LNG) in September, upon receiving the last shipment, according to the Oxford Business Group. Despite Fitch Solutions being right about their prediction, they argue, “Whilst LNG cargoes will decrease over 2018 onwards as domestic gas production ramps up, we note that seasonal demand dynamics will ensure LNG imports continue at smaller volumes over the next five years.” However, their argument seems to be flawed, as they have also falsely estimated production levels for Zohr gas field during 2018, with Zohr gas field produce jumping to two billion standard cubic feet per day (scfd) in September, from January’s 350 million scfd. It is expected that 2019 will see Zohr produce 3 billion scfd. However, Zohr is not the only gas field in Egypt; West Nile Delta (WND), Greater Nooros Area, Atoll Phase 1, and WDDM – Burullus Phase 9B are all important gas fields that add to the national gas production. Looking at the country as a whole, Egypt’s total gas production, came to 6.6 billion scfd in September, compared to 2017’s average of 5.1 billion scfd and 2016’s 4.4 billion scfd, according to the Petroleum Ministry, meaning that between 2018 and 2017, there was a 29.4% year-on-year increase. West Nile Delta (WND) gas field, which yields the second highest amount of natural gas, according to a June 2018 report by The Oxford Institute for Energy Studies, is expected to develop to 5 trillion cubic feet with a maximum production level of about 1.5 billion cubic feet per day, according to British Petroleum (BP).
  • 7. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Moreover, the Oxford Institute for Energy Studies states, “The Taurus and Libra fields started producing gas in May 2017 and the Giza, Fayoum and Raven fields are expected to come on- stream by the end of 2018 or beginning of 2019.” These fields are all part of the West Nile Delta WND gas field. Turning to the remaining three gas fields, Greater Nooros Area, Atoll Phase 1 and WDDM – Burullus Phase 9B, produce one billion, 350 million and 450 million cubic feet per day, according to BP and a 2018 Interfax report. 2019: A year of prosperity After significantly increasing the total gas output by 29.4% in 2018, it is expected the by 2020, the total gas output will jump by 100%, according to the Petroleum Minister; Egypt is also expected to resume exporting energy by the end of 2019. In a meeting with Minister of Manpower Mohamed Saafan early December 2018, General Manager of Eni’s IEOC Fabio Cavanna said, “Egypt will move from the group of countries importing natural gas to be an exporter by the end of 2019.” To ensure that Egypt is able to reach its potential and meet local demand and then some, Cavaana and Saafan are looking to sign a cooperation protocol, in coordination with the Petroleum Ministry, to offer young professionals a high-tech training opportunity. The training will also cover safety while on site and will look to produce young professional calibres. Commenting on the training, Cavanna said, “This training will create young cadres who can take responsibility at the highest level, as they will be trained in major international companies, such as Italy’s Eni.” Meanwhile, Saafan explained, “This comes within the framework of the Ministry of Manpower’s current [efforts] to [hold] training programs involving the latest scientific methods with major international companies, specifically in the field of petroleum services.”
  • 8. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 In addition, this year looks to be the year when Egypt looks outwards towards neighbouring countries that could be energy allies. Egypt’s strategic geographical location makes it an optimum partner to countries from Italy to Saudi Arabia, to Sudan. During the 2018 Med Dialogues in Rome, Italy, El-Molla explained that Egypt is looking to approach Italy, or “Europe’s energy gateway,” as he called it, to increase its work with the EU. “At the start of this year [2018] we signed a memorandum of understanding on energy with the European Union that will make Egypt a considerable energy supplier in alternative to existing suppliers,” stated El-Molla, continuing, “With the untapped potential natural gas we have in the Mediterranean”, nearby countries “need to use Egyptian infrastructure,” adding that they wish to cooperate on energy. Egypt is also looking to cooperate more with Saudi Arabia and Sudan. Furthermore, Egypt is looking to increase its gas exports to Jordon to 100 mcf/d early on in 2019, according to the Jordanian Minister of Energy Hala Zawati, who said, “Egypt has been exporting amounts of gas to Jordon since September and it will raise the amount to 100 million cubic feet per day by January.” Supporting this, El-Molla stated in March 2018 that Egypt will resume exporting gas to Jordan as of early 2019 after four years. On the foreign front, Egypt is also looking to attract $10 billion worth of new investments during the fiscal year 2018-2019, stated the Petroleum Minister in a statement in November 2018, adding that increasing investments is essential to ensure the continuity of the oil and gas sector’s growth and development. Investments, according to the minister, will be aimed at increasing production and exploration efforts. Given the positive investment climate that looms over Egypt, the minister expects that it is very possible to draw this amount in a short amount of time. Having once been citizens of an exporter of gas and oil, it came to a blow to Egyptians when their homeland started importing them; however, the recent surge in production has left many happy and looking forward towards a brighter future. Overall, it seems like 2019 will be a prosperous year for the industry.
  • 9. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 U.S. solar module imports partially recover after tariffs were imposed in early 2018 U.S. EIA, Form EIA-63B, Monthly Solar Photovoltaic Module Shipments Report The United States imposed tariffs on imported silicon solar cells and modules in January 2018. Module imports decreased in the months following the tariffs’ announcement and effective date, according to the U.S. Energy Information Administration’s monthly data of solar photovoltaic (PV) module shipments. U.S. solar PV module imports, measured in the modules' capacity in kilowatts, increased in mid- 2017, before the tariffs were announced, and then fell to less than 300,000 kilowatts in the months following the tariff’s effective date in February 2018. Monthly U.S. solar PV module imports averaged 644,000 kilowatts in the first four months of 2019, about 16% more than the average imports in the first four months of 2017, before the announcement of the trade case that ultimately led to the tariffs. The U.S. International Trade Commission (USITC) began investigations on solar PV tariffs in May 2017 after two global solar manufacturers headquartered in the United States—Suniva and SolarWorld—petitioned the USITC for import relief through Section 201 of the Trade Act of 1974. The resulting safeguard tariffs are set to remain effective for four years, with a 30% duty in place for the first year. The tariff rate is scheduled to decrease by five percentage points for each year the tariffs are in effect. The tariffs affect many types of PV modules, including crystalline silicon (c-Si), thin film, and concentrator types. The tariffs exempt the first 2.5 gigawatts of imported cells per year, as well as imports from certain developing nations.
  • 10. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Source: U.S. Energy Information Administration, based on Bloomberg New Energy Finance, Spot Price Index Note: The average spot price for PV modules includes all companies participating in the Bloomberg survey regardless of region or type of participant. Continued decline in the cost of solar PV modules may have offset some of the effects of the solar tariffs. The global average spot prices of both monocrystalline and multicrystalline modules, not including any tariffs, declined 27% and 26%, respectively, from December 2017 to July 2018. Since mid-2018, PV module prices have been relatively stable, according to data from Bloomberg New Energy Finance.
  • 11. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 NewBase 17 August 2019 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil rises alongside equities, but downbeat OPEC outlook caps gains Reuters + NewBase Oil prices on Friday rebounded from a two-day drop, alongside equities as expectations of further stimulus by central banks helped to ease recession concerns. But oil’s gains were capped after the Organization of the Petroleum Exporting Countries trimmed its global oil demand forecast in a downbeat outlook for the rest of 2019 as economic growth slows. The cartel also highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to restrain supplies. “OPEC killed the golden goose,” said Bob Yawger, director of futures at Mizuho in New York. “We’ve had some little rallies back into the green, as market tries to follow equities higher, but the fundamentals in the report are so bearish that it caps the rallies.” Brent crude LCOc1 was ended the session up 41 cents, or 0.7%, at $58.64 a barrel, after falling 2.1% on Thursday and 3% the previous day. U.S. crude CLc1 rose 40 cents to settle at $54.87 a barrel, having dropped 1.4% in the previous session and 3.3% on Wednesday. Oil price special coverage
  • 12. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Before the OPEC monthly report, Brent touched a session high of $59.50 and U.S. crude traded at $55.67 as investors expect further interest rate cuts from the Federal Reserve and moves by the European Central Bank next month to fight softening growth. For the week, both oil benchmarks eked out small gains after two consecutive weeks of losses, even as Wall Street’s three main indexes were on track to rack up their third weekly loss, as investors worried about the risk of recession and U.S.-China trade tensions. BNP Paribas cut its forecast for 2019 for U.S. crude by $8 to $55 per barrel and for Brent by $9 to $62 per barrel, citing slowing economy amid the trade dispute. Earlier this week, data releases included a surprise drop in industrial output growth in China to a more than 17-year low, and a fall in exports that sent Germany’s economy into reverse in the second quarter. The price of Brent is still up nearly 10% this year helped by supply cuts led by OPEC and its allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices. “At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?” said Phin Ziebell, senior economist at National Australia Bank. A Saudi official indicated this month that more steps may be coming, saying Saudi Arabia was committed to do “whatever it takes” to keep the market balanced next year. OPEC’s efforts have been undermined by worries about the economy , as well as rising U.S. stockpiles of crude and higher output of U.S. shale oil. Also capping oil’s gains on Friday, U.S. energy firms this week increased the number of oil rigs operating for the first time in seven weeks, General Electric Co’s (GE.N) Baker Hughes energy services firm said. The oil rig count, an early indicator of future output, has declined over the past eight months as independent exploration and production companies cut spending on new drilling as they focus more on earnings growth instead of increased output.
  • 13. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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
  • 14. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 03 August 2019 OPEC sees bearish oil outlook for rest of 2019, points to 2020 surplus Reuters + Newbase OPEC delivered a downbeat oil market outlook for the rest of 2019 on Friday as economic growth slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to curb supply. In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020. The bearish outlook due to slowing economies amid the U.S.-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices. Already, a Saudi official has hinted at further steps to support the market. “While the outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil demand growth, it remains critical to closely monitor the supply/demand balance and assist market stability in the months ahead,” OPEC said in the report.
  • 15. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Oil LCOc1 briefly pared an earlier gain after the report was released and was trading below $59 a barrel. Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above $75 pressured by trade concerns and an economic slowdown. OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices. OPEC left its forecast for 2020 oil demand growth at 1.14 million bpd, up slightly from this year. But OPEC added that its forecast for 2020 economic growth faced downside risk. “The risk to global economic growth remains skewed to the downside,” the report said. “Especially trade-related developments will need to be thoroughly reviewed in the coming weeks with some likelihood of a further downward revision in September.” OPEC trimmed its global economic growth forecast to 3.1% from 3.2% and, for now, kept its 2020 forecast at 3.2%. RISING INVENTORIES The report also said oil inventories in developed economies rose in June, suggesting a trend that could raise OPEC concern over a possible oil glut. Stocks in June exceeded the five-year average - a yardstick OPEC watches closely - by 67 million barrels.
  • 16. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 This is despite the supply cuts of OPEC+ and additional involuntary losses in Iran and Venezuela, two OPEC members which are under U.S. sanctions. OPEC deepened its cuts in July, the report showed. According to figures OPEC collects from secondary sources, output from all 14 members fell by 246,000 bpd from June to 29.61 million bpd as Saudi Arabia cut supply further. OPEC and its partners have been limiting supply since 2017, helping to clear a supply glut that built up in 2014-2016 when producers pumped at will, and revive prices. The policy has been giving a sustained boost to U.S. shale and other rival supply, and the report suggests the world will need significantly less OPEC crude next year. The demand for OPEC crude will average 29.41 million bpd next year, OPEC said, down 1.3 million bpd from this year. Still, the 2020 forecast was raised 140,000 bpd from last month’s forecast. The report suggests there will be a 2020 supply surplus of 200,000 bpd if OPEC keeps pumping at July’s rate and other things remain equal. Last month’s report had implied a larger surplus of over 500,000 bpd. Balance of Supply and Demand Demand for OPEC crude in 2019 was revised up by 0.1 mb/d from the previous report to stand at 30.7 mb/d, which is 0.9 mb/d lower than the 2018 level. In 1Q19, OPEC crude production averaged 30.5 mb/d, about 0.3 mb/d higher than the demand for OPEC crude in that quarter, while in 2Q19, OPEC crude production averaged 29.9 mb/d, around 0.8 mb/d lower than the demand for OPEC crude.
  • 17. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 Demand for OPEC crude in 2020 was revised up by 0.1 mb/d from the previous report to stand at 29.4 mb/d, which is 1.3 mb/d lower than the 2019 level. Balance of supply and demand in 2019 Demand for OPEC crude in 2019 was revised up by 0.1 mb/d from the previous report to stand at 30.7 mb/d, which is 0.9 mb/d lower than the 2018 level. Compared with the last monthly report, 1Q19 was revised up by 0.1 mb/d, while both 3Q19 and 4Q19 were revised up by 0.2 mb/d each. In contrast, 2Q19 was revised down by 0.1 mb/d. When compared to the same quarter in 2018, demand for OPEC crude in 1Q19 was 1.8 mb/d lower, while 2Q19 and 3Q19 are expected to show declines of 1.1 mb/d and 0.2 mb/d, respectively. 4Q19 is forecast to fall by 0.7 mb/d. According to secondary sources, OPEC crude production averaged 30.5 mb/d in 1Q19, about 0.3 mb/d higher than the demand for OPEC crude in the same period, while in 2Q19, OPEC crude production averaged 29.9 mb/d, around 0.8 mb/d lower than the demand for OPEC crude . Balance of supply and demand in 2020 Demand for OPEC crude in 2020 was revised up by 0.1 mb/d from the previous report to stand at 29.4 mb/d, which is 1.3 mb/d lower than the 2019 level. Compared with the last monthly report, both 1Q20 and 2Q20 were revised up by 0.1 mb/d each, while both 3Q20 and 4Q20 were revised up by 0.2 mb/d. When compared to the same quarter in 2019, demand for OPEC crude in 1Q20 was 1.4 mb/d lower, while 2Q20 and 3Q20 are expected to show declines of 1.3 mb/d and 1.4 mb/d, respectively. 4Q20 is forecast to fall by 1.1 mb/d.
  • 18. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE 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 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
  • 19. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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 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
  • 20. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, 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