New base 21 november 2017 energy news issue 1103 by khaled al awadi

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NewBase Energy News 21 November 2017 - Issue No. 1103 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: ADNOC Pushes Ahead With IPO with unit offering up
to 20% stake
Bloomberg-The National-NewBase
Abu Dhabi National Oil Co. plans to sell as much as 20 percent of its fuel-distribution unit weeks
after Saudi Arabia’s corruption crackdown deterred investors from the Middle East’s biggest share
sale of the year.
The crude producer will offer 1.25 billion to 2.5 billion shares of Abu Dhabi National Oil Co. for
Distribution PJSC, according to an advertisement on Monday. The pricing range for the book-
build initial public offering will be announced on Nov. 26 and the shares will start trading in Abu
Dhabi on Dec. 13.
The IPO is among several expected in the Middle East, including that of Saudi Aramco, as oil-rich
Gulf governments sell assets to raise cash to diversify after crude prices slumped. The Adnoc sale
is set to come after Emaar Properties PJSC scrambled to complete a $1.3 billion offering last
week as local investors reneged on investment plans following the Saudi crackdown, according to
people familiar with the matter.
“We should see very good demand for this IPO, as the company is closely correlated to the
energy industry and you don’t have the chance of buying such a share in the region that easily,”
said Issam Kassabieh, equities analyst at Menacorp Financial Services in Dubai. "It is a good play

and different than Emaar Development, from the real estate market, that has several names
traded already.’’
Valuation
Adnoc may seek a valuation of $10 billion to $14 billion for the unit, people familiar with the matter
said in July. The unit posted earnings before interest, tax, depreciation and amortization of 2.1
billion dirhams ($573 million) last year.
Adnoc will try to sell stakes in some
units and seek partners for
others, Chief Executive Officer Sultan
Al Jaber said in an interview last
week. The company, which raised $3
billion in bonds last month, is putting
chunks of separate operating units up
for sale instead of selling a piece of
the parent company, as Saud Arabia
is planning with Aramco.
"We are looking for ways to maximize
value to our shareholders while keeping Adnoc wholly-owned by the Abu Dhabi government," Al
Jaber said. Adnoc could seek a cornerstone investor for the IPO, he said.
Adnoc pumps most of the crude in the U.A.E., a member of the Organization of Petroleum
Exporting Countries with about 6 percent of global reserves. The company allows foreign firms to
join in partnerships that give them a stake in the emirate’s oil.
Adnoc Distribution will list 1.25 billion to 2.55 billion shares - representing 10 to 20 per
cent of the company - in an offering of two tranches that will commence on 26
November and end 6 and 7 December respectively. The first tranche of 5 per cent of
the offering is open to local retail investors and the second, accounting for the
remaining 95 per cent, is open to government and international institutions and
investors and high net worth individuals.
The final offer price will be determined by a book-building process but a range will be
announced when the offer opens. The nominal value of the shares will be 8 fils rather
than the typical Dh1. The shares are expected to begin trading on the ADX on
December 13.
The official announcement of the listing comes a few days after Dubai real estate
developer Emaar Properties’s development unit issued an IPO to raise up to $1.3bn
(Dhs4.82bn) on the Dubai Financial Market (DFM) - the largest such offering in three
years.
Adnoc entity’s public listing, the first for the group, comes after another unit, its pipeline
operator, issued a US$3 billion bond and one of the largest non-sovereign offerings in
the region, as it looks to tap equity and bond markets while actively managing its
portfolio of assets. The debt issuance was three times oversubscribed, the company
said earlier this month.

Adnoc has made reservations for institutional investors such as strategic federal
investor, Emirates Investment Authority, which has an overall five per cent allocation,
with another tranche set aside for domestic retail investors.
The IPO offering, meanwhile comes ahead of Saudi Aramco’s planned listing next
year, which may raise as much as $100bn as part of a broader diversification strategy
by the kingdom that seeks to reduce the country's dependence on oil revenues.
The offering - the world’s largest should it go ahead - has whetted appetite among
global fund managers and has brought institutional investor attention to planned IPOs
from national oil companies in the region.
Adnoc Distribution currently operates 360 service stations and 235 Oasis-branded
convenience stores throughout the UAE.
Its business model has been boosted by the reform of fuel subsidies in 2015 that allow
for stable margins. It has a 67 per cent overall market share and a monopoly in Abu
Dhabi and Sharjah. It also has a strong commercial and industrial fuel distribution
business including in aviation, government and other strategic sectors.
"Though the fuel distribution segment is entirely based in the domestic market,
investors would likely be interested in a stable, highly-rated economy but they may
watch out for devaluation [of currency]. But a stable dividend policy with consistent
returns can prove very attractive,” said Tariq Qaqish, managing director at financial
services firm MENACorp .
The company had earnings before interest, tax, depreciation and amortisation of Dh2.1
billion last year with shareholders set to receive at least US$400 million in the 2018
calendar year.
Ahead of the planned listing, Adnoc Distribution beefed up its management, bringing in
BP’s John Carey as deputy chief executive and Petri Pentti from Dubai-based Emirates
National Oil Company - which also operates fuel stations - as chief financial officer.
Rothschild is the financial advisor on the IPO along with Merrill Lynch, Citigroup, First
Abu Dhabi Bank and HSBC as joint global coordinators. EFG Hermes, Goldman Sachs
and Morgan Stanley are joint bookrunners.
Adnoc’s move forms part of its strategic transformation announced in July, which looks
to more actively manage assets under its portfolio and form new partnerships.
ADNOC Financial Performance
Retail
Services
JVs
Aviation

Morocco: SDX Energy updates on the Sebou and Gharb Centre
Source: SDX Energy
SDX Energy, the North Africa focused oil and gas company, has announced an update on
its KSR-14 and KSR-15 development wells on the Sebou permit in Morocco (SDX 75% working
interest). KSR-14 and KSR-15 are the first two wells of a nine well drilling programme on the
Company's Sebou, Gharb Centre and Lalla Mimouna permits in Morocco.
Further to the update on 13 November, the KSR-14 well has now been tested and has recorded
an average flow rate conventional natural gas into the sales line of 6.4MMscfd. The well will
remain on production for an extended period prior to being shut in for a pressure build-up as part
of the year end reserve estimate process.
At the KSR-15 development well the completion equipment has been run and connection to the
nearby infrastructure is now underway. Completion of the well is expected to occur within three
weeks of rig departure with flow testing targeted for early December 2017. The rig move to the
next location, KSR-16, has now commenced.
On the Gharb Centre exploration permit, the seismic tender for 240km2 of new 3D seismic has
been completed and the contract awarded to CGG, a market leading seismic provider. The
seismic acquisition is expected to commence at the end of Q2 2018.
Paul Welch, President and CEO of SDX, commented:
'This is further positive newsflow from our active Moroccan drilling campaign. In particular, the KSR-14 test
results are ahead of our internal expectations, especially in light of the fact that we are only flowing from
the Hoot sand, as opposed to both the Hoot and Guebbas. Despite this, the well still managed to produce
at a rate that would allow it to meet our entire daily sales commitment by itself. This increases our
confidence that we can reliably increase our production rates to meet additional customer demands based
upon the results of the current program as we target an increase in our sales volumes by 50% in 2018.
'Overall, we are moving forward with the campaign apace and are pleased with the progress to date. We
look forward to providing further updates in due course.'

Iraq Is Giving OPEC a Headache, exceeding its output quota
Bloomberg - Anthony Dipaola
OPEC has an Iraq problem: the group’s second-biggest exporter is lurching between quota
busting and production-crimping crisis, clouding the policy-making picture as ministers decide how
long they need to extend output curbs.
After consistently exceeding its output quota all year, Iraqi production plunged in October when
clashes between the federal army and fighters from the semi-autonomous Kurdish region
disrupted fields in the disputed Kirkuk province. While the conflict has calmed, exports from Iraq’s
northern fields remained 40 percent lower in the first half of November than before the fighting,
tanker tracking data show.
The Organization of Petroleum Exporting Countries, due to meet next week in Vienna, is already
grappling with volatile production in Nigeria and Libya, and Iraq adds another layer of
unpredictability. For policy makers, the short-term disruption risks masking a longer-term truth:
Iraq, which only got a production quota last year after decades of exemptions, has never felt
comfortable with constraints and wants to maximize the country’s potential output.
“Production will remain volatile,” said Issam Chalabi, a consultant and former Iraqi oil minister.
While it will be difficult for Iraq to replace barrels lost in the north quickly, Iraq’s “real intention is to
reach the 5 million-barrel mark by year-end. Politics is the name of the game.”
The uncertainty makes it more difficult for OPEC to judge the global balance of supply and
demand next year and make a decision about how long to extend supply curbs.

While supplies from Libya and Nigeria -- which don’t have formal production limits under the
current OPEC deal -- show some signs of stabilizing, Iraq is becoming more erratic. The country’s
output fell last month by 120,000 barrels a day -- the most since January -- as the central
government clashed with the Kurds, according to data compiled by Bloomberg. That meant Iraq
pumped 4.35 million barrels a day in October, below its OPEC target for the first time this year.
Still, international companies producing in Iraq are pursuing plans to raise production capacity, Oil
Minister Jabbar al-Luaibi said in September at a conference in the United Arab Emirates. The
government was curtailing output at fields it operates on its own to meet its OPEC quota, he said.
OPEC’s strategy of cuts is showing signs of success in bolstering prices, with Brent trading above
$60 a barrel this month after dropping to less than $30 a barrel last year. Fighting over Kirkuk and
other regional tensions contributed to the increase in prices, according to Daniel Yergin, vice
chairman of IHS Markit.
“This is the first time that we’ve seen regional geopolitics start to flow back into the price of oil” in
several years, Yergin said in an interview in Abu Dhabi Nov. 14. “It’s something that OPEC will
have to grapple with.”
It’s unclear when flows will resume
from oil fields around the northern
city of Kirkuk, which still require
use of a pipeline held by the Kurds
to reach international markets. The
pipeline exported 320,000 barrels
a day in the first half of November,
compared with 565,000 barrels
daily on average during the first
nine months of the year, according
to Bloomberg data.
“The disruptions involving the
Kurds could last another six
months,” said Jaafar Altaie,
managing director of consultant
Manaar Group, which operates in
Iraq. “Iraq will still be cheating, but
the cheating will be intermittent
and it will be disruptive.”
Nigeria’s production, which tumbled to the lowest in almost three years last August following a
series of militant attacks, has recovered to the point that the country has said it would join the
OPEC accord after six months of stability. That calm may yet unravel after militants in the Niger
River delta ended their cease-fire earlier this month.
Volatility in Iraq’s output is unlikely to match that of Libya’s, where rival armed factions still
compete for control of the country more than six years after the fall of dictator Muammar Al
Qaddafi, according to Standard Chartered Plc.
Nonetheless, Iraq is now among the wild cards OPEC needs to take into account, according to Ed
Morse, head of commodities research at Citigroup Inc. in New York. “Iraq has now joined them as
itinerant, non-dependable supply to the market,” Morse said by phone.

Countries exporting Gas convene as global buyers' market rises
Reuters - Marianna Parraga, Alexandra Alper
Top officials of major gas producing countries gathering this week in Bolivia will face a harsh
reality: expanding supplies of the fuel are giving global buyers greater sway over purchase and
contract terms.
This week’s Gas Exporting Countries Forum (GECF), which aspires to be the OPEC (Organization
of the Petroleum Exporting Countries) for natural gas suppliers, is expected to draw energy
ministers from Qatar, Iran, Russia and Venezuela to Santa Cruz, Bolivia as market oversupply
reduces revenues.
These countries increasingly are competing with exports from and prices set in the United States,
which is on track to become the world’s third largest exporter of liquefied natural gas (LNG) after
Qatar and Australia.
That has “buyers in a better position to make contracts with shorter terms and more customized to
their demand profile, without risking money in high take-or-pay clauses,” said Mauro Chavez, a
senior research analyst at consultants Wood Mackenzie.
At least 25 countries are now capable of receiving LNG supplies and new regasification plants are
expected to start operating in the coming months, giving buyers greater flexibility and increasing
competition for suppliers.
Even though LNG represents only about 10 percent of the world’s gas trade, new suppliers are
willing to offer sweeter terms to customers, roiling traditional markets and turning up the heat on
some producers trying to hold onto more rigid terms.
The United States has been the most aggressive in shaking up the market, through flexible
contract terms.
U.S. suppliers such as Cheniere Energy, the largest country’s LNG exporter, are allowing
customers to resell cargoes, which has created a profitable market for trading houses. A growing
number of spot LNG sales and swaps is also taking place. Cheniere plans to open its fifth
liquefaction plant in the coming months while seeking new buyers.

FROM FIX TO INDEXED
The United States’ rise as a force in global LNG markets and its growing gas sales to Mexico via
pipeline have contributed to greater price certainty, according to analysts. This is reflected in a
long and flat North American dry gas cost curve that should limit abrupt price increases, they
added.
Price indexes are becoming a factor not only in LNG contracts but also in sales via pipeline.
Pricing at the U.S. Henry Hub fell in the last decade from a peak of around $11 per million British
Thermal Units (BTUs) at the end of 2005 to a low of $1.96 in March 2016. Since then, prices have
remained stable around $3 per million BTUs.
Attendees at the gas forum might work on “a methodology for determining gas prices in contracts,”
which would promote more stability, Bolivian Hydrocarbons Minister Luis Sanchez said earlier this
month.
In markets such as the Caribbean, some sellers also are customizing their gas supplies by linking
contracts to fuel oil prices, which is also used for power generation.
“I don’t see a situation where the price of LNG would be very high. The price of LNG will be very
competitive in the mid-term and in the long run,” said Edgar Almeida, professor of the Instituto de
Economia UFRJ in Brazil, flagging other market entrants such as Mozambique.
The gas glut has fueled some mergers among producers, just as the terms of some of the world’s
most important gas trade deals are being renegotiated ahead of their expiration dates, including
some contracts between Qatar and Japan, South Korea and Taiwan.
Other traditional gas suppliers such as Russia, Norway and Algeria seem determined to maintain
market share in key markets such as Europe.
In Latin America and the Caribbean, where U.S. LNG supplies have lowered prices for importers
such as Chile and Argentina, traditional suppliers Trinidad and Bolivia need to attract upstream
investments, cut costs and offer consumers more pricing flexibility to remain competitive.

Venezuela pumps below OPEC target,oil rivals begin filling gap
Reuters Marianna Parraga, Rania El Gamal
As Venezuela’s dilapidated energy sector struggles to pump enough crude oil to meet the
country’s OPEC output target, rival producers have started to plug the gap, according to OPEC
and industry sources and U.S. government data.
The South American country’s oil output hit a 28-year low in October as state-owned oil giant
PDVSA [PDVSA.UL] struggled to find the funds to drill wells, maintain oilfields and keep pipelines
and ports working.
Venezuela's oil production, which has been falling by about 20,000 barrels per day (bpd) per
month since last year, is on track to fall by at least 250,000 bpd in 2017, according to numbers
reported to the Organization of the Petroleum Exporting Countries (OPEC), as U.S. sanctions and
a lack of capital hobble operations.
Some OPEC members expect the fall to accelerate in 2018, reaching at least 300,000 bpd, OPEC
sources said. At a recent internal OPEC meeting, Venezuelan officials were asked to give a
clearer picture of the country’s declining output.
“A lot of questions have been raised by Saudis and others to the Venezuelans to present a real
picture on the production status and decline,” one of the sources said.
The topic could come up later this month at the group’s next meeting.
Saudi Arabia will not raise its output to compensate for this decline as OPEC’s defector leader is
focused on reducing global oil stocks, one OPEC source familiar with Saudi oil policy told Reuters
this month.
But heavy oil from OPEC member Iraq and non-OPEC producers Canada and Brazil are already
replacing Venezuelan barrels to key customers the United States and India, according to the
sources and Thomson Reuters data. The Iraq shipments remain within OPEC targets.
Iraq has increased shipments of crude and condensate to India by 80,000 bpd this year as
Venezuelan deliveries fell by 84,000 bpd. The second largest OPEC producer also has exported

201,000 bpd more oil to the United States this year through October as Venezuelan shipments
dropped about 90,000 bpd, according to the Reuters data.
Venezuela’s weaker output “could be good for market rebalance and we could see price stay at
$60 for a slightly longer time,” one OPEC source said. “That doesn’t mean there will be no free
riders,” the source added.
PLUGGING THE GAP
Venezuela pumped 1.863 million bpd in October, undershooting its OPEC target by 109,000 bpd,
according to an assessment that OPEC uses to monitor members’ output. Venezuela said it had
pumped 1.955 million bpd, still below its output target of 1.972 million bpd.
There often are discrepancies
between the assessment and
official figures reported by the
OPEC members.
When member countries have
suffered supply disruptions in the
past, other OPEC members
have covered the gap, often
without changing official
production quotas.
Saudi Arabia boosted its output
in 2003 to offset Iraq’s falling
exports after the U.S. invasion,
but the agreement was never
formally disclosed.
OPEC discussions of Venezuela’s quota is not new. Proposals to change the country’s quota
have been raised and batted down several times in OPEC meetings since the South American
country’s production started declining in 2012, a Venezuelan government source said.
Venezuela has argued in the past, when faced with questions about falling output, that it was
working to reverse declines from its sizeable proven oil reserves.
But it could be difficult for Venezuelan officials to convince OPEC that an upturn is likely in the
near future as the country seeks to restructure $60 billion in debt. Dependent on oil revenues,
Venezuela has seen its economy contract sharply in the three years since crude prices collapsed
from over $100 a barrel.
Reviews of quotas and reallocation of market share can be contentious, and the group may prefer
to allow market forces to fill the supply gap left by Venezuela’s decline rather than make an official
share revision and reallocation to other members, one senior OPEC source said. A formal change
would be opening a “can of worms” that OPEC would not want to do, the source added.
OPEC’s oil ministers will meet in Vienna later this month to discuss supply policy. The group is
expected to extend beyond March an agreement under which its members and rival producers,
including Russia, have reduced joint output by about 1.8 million bpd.
“We want a successful meeting on Nov. 30, re-discussing quotas will not be accepted by
Venezuela and talking about it at the meeting will just open the door for others to do the same,”
the senior OPEC source said.

US: Keystone is needed Thanks to Venezuelan, Mexican Woes
By Alex Nussbaum
After clearing a major regulatory hurdle in Nebraska, the case for building the Keystone XL
pipeline can count on troubles many miles south as one of its strongest arguments.
Withering supplies of heavy crude from Venezuela and
Mexico are making U.S. Gulf Coast refineries more
dependent on the thick, sticky bitumen that Keystone XL
would carry from the Canadian oil sands. That’s the kind
of oil those refineries were built to process, and adapting
them to the light grades that are pumped from American
shale fields requires costly revamping work.
Since the start of the decade, U.S. imports of heavy crude
have fallen by more than a third from Venezuela, and by
almost half out of Mexico, according to data compiled by
Bloomberg. Years of underinvestment, mismanagement
or simply declines in petroleum reserves have taken their toll in both countries. Meanwhile,
Mexico’s drive to lure oil majors to develop its deep-water reserves may take years to translate
into more production.
Canada’s gone in the other direction, as companies have poured billions of dollars into new
projects in the oil sands region where Keystone originates. U.S. imports from its northern neighbor
have almost doubled since 2010, with more expected to flow if the pipeline is ever completed.
The XL pipeline would be an expansion of TransCanada Corp.’s existing Keystone system.

Keystone XL Approval May Open Door for Foes to Fight Route
Nebraska’s approval of an alternative route could throw more uncertainty into the mix
for the long-delayed Keystone XL oil pipeline.
The Public Service Commission approved TransCanada Corp.’s project on a three-to-two
vote, removing one of the last hurdles to the Calgary-based company’s construction of
the $8 billion, 1,179-mile (1,897-kilometer) conduit, which has been on its drawing
boards since 2008. The decision, though, wasn’t wrinkle-free: The panel mandated an
alternative route that was immediately targeted by the project’s opponents as lacking
adequate vetting.
TransCanada is now "assessing how the decision would impact the cost and schedule
of the project,” Russ Girling, TransCanada’s chief executive officer, said in a statement.
The company’s shares rose 1.3 percent to C$63.35 at 12:24 p.m. in New York trading.
The uncertainty expressed by Girling was quickly reflected in analyst notes.
"While today’s Keystone XL pipeline approval is an important milestone, it does not
provide certainty that the project will ultimately be built and begin operating," said Gavin
MacFarlane, a vice president at Moody’s Investors Service. “Pipeline construction
would negatively affect TransCanada’s business risk profile through increased project
execution risk, and would likely put pressure on financial metrics."
Jane Kleeb, president of the environmental advocacy group Bold Alliance, said green-
lighting the alternative may have helped the commission reach a "middle ground
solution.” But it opens new questions that she said her group would likely explore in
federal court.
That view mirrored a dissenting opinion from Commissioner Crystal Rhoades. The
alternative route needed more study on both the state and federal level, she
said before the final vote, and it failed to give landowners along that different path the
ability to address the commission.

The commissioners who supported the route change said it would impact fewer
threatened and endangered species, fewer wells, less irrigated cropland, and that it
included one less river crossing.
Additionally, they wrote, “it is in the public interest for the pipelines to be in closer
proximity to each other, so as to maximize monitoring resources and increase the
efficiency of response times” with “issues that may arise with either pipeline.”
South Dakota Spill
The decision came just days after a spill on TransCanada’s existing Keystone line in
South Dakota on Thursday sparked new attacks by environmentalists who pointed to
the event as something the state could expect if the project is approved.
In its post-hearing brief, TransCanada told the panel its "preferred route was the
product of literally years of study, analysis and refinement by Keystone, federal
agencies and Nebraska agencies," and that no alternate route, even one paralleling the
Keystone mainline as the approved path does, was truly comparable.
Producers in the Alberta oil sands region
and elsewhere in Western Canada are
facing pipeline bottlenecks, forcing
increased volumes onto rail cars. Since
rail is a more expensive form of transport,
heavy Canadian crude prices will need to
trade at a bigger discount to West Texas
Intermediate futures.
That discount widened to more than $15 a
barrel Monday from less than $10 in
August. Keystone XL construction, along
with Kinder Morgan Inc.’s Trans Mountain expansion and Enbridge Inc.’s Line 3
expansion, could narrow the gap to less than $10 by early next decade, Tim Pickering,
chief investment officer at Auspice Capital Advisors Ltd., said in a telephone interview.
Mexico, Venezuela
The pipeline may also be more commercially viable given declining heavy oil
production in Mexico and ongoing instability in Venezuela, said Zachary Rogers, a
refining and oil markets research analyst at Wood Mackenzie, said in a statement.
Canadian producers are an alternate source of heavy crude for U.S. Gulf Coast
refiners.
Brett Harris, a spokesman for Calgary-based Cenovus Energy Inc., a committed oil-
sands shipper on the proposed pipeline, said the approval “is in the best interest of the
industry, best interest of Canada and the best interest of the U.S. as well. We are
pleased to see that decision.”
Dennis McConaghy, former executive vice president of corporate development at
TransCanada, said he would expect senior management to announce they will go

ahead with the project by year’s end with construction by the later half of 2019.
Completion of the line would come a couple years later.
“The project could have been very seriously set back if they hadn’t got this approval
today,” he said.
Volume Needed
McConaghy said he believes the company has secured the volume needed to make
the project economically viable. But he added that “there is no question there is going
to be all kinds of legal obstruction that will be resorted to by opponents.”
Nebraska’s decision overrode the objections of environmental groups, Native American
tribes and landowners along the pipeline’s prospective route. The project had the
support of the state’s governor, Republican Pete Ricketts, its chamber of
commerce, trade unions and the petroleum industry.
With Nebraska’s go-ahead in hand, TransCanada still must formally decide whether to
proceed with construction on the line, which would send crude from Hardisty, Alberta,
through Montana and South Dakota to Nebraska, where it will connect to pipelines
leading to U.S. Gulf Coast refineries. The XL pipeline would add the ability to move
830,000 barrels a day, more than doubling the existing line’s capacity.
Shipping Commitments
The company’s open season for gauging producers’ interest closed late last month,
and TransCanada executives have indicated that they’ve secured enough shipping
commitments to make the project commercially worthwhile.
President Barack Obama’s administration rejected the pipeline in 2015.
President Donald Trump vowed to reverse that determination and, in January, invited
the company to reapply. Approval was quickly granted. He also championed
completion of the Energy Transfer Partners LP-led Dakota Access Pipeline, which runs
from northwestern North Dakota to Illinois via South Dakota and Iowa.
The panel heard testimony and took in evidence during a four-day August hearing. Its
power over the project is drawn from the state’s constitution.
The case is In the Matter of the Application of TransCanada Keystone Pipeline LP for
Route Approval of the Keystone XL Pipeline Project, 0p-0003, Nebraska Public Service
Commission (Lincoln)

World: Link between growth in economic activity and electricity
use is changing around the world
Source: U.S. Energy Information Administration, World Bank
Growth in economic activity (measured as gross domestic product) has tended historically to be
coupled with increases in electricity use as populations grow and generate more goods and
services. However, more recently this relationship has been decoupling in many countries.
The amount of decoupling in various countries is caused by many factors—including the countries’
relative level of development, electrification, economic makeup, and income levels.
Most member countries of the more developed Organization for Economic Cooperation and
Development (OECD), such as the United States, United Kingdom, and Japan, have been shifting
from manufacturing economies toward service economies.
Service-based economies tend to use less electricity than economies with high levels of industrial
activity, as commercial services are generally less energy-intensive compared with manufacturing.
OECD member countries still have sizable manufacturing sectors, but they are shifting toward
advanced manufacturing, which uses technologies that tend to be less energy-intensive. As more
economic activity shifts from lower-skilled manufacturing to services and higher-skilled advanced
manufacturing, additional economic activity can be generated without requiring as much electricity
use.

Some non-OECD member countries, such as China, India, Brazil, and Egypt, have rapidly
growing economies, often generated by a large or growing manufacturing sector. However, these
economies use technologies that are less efficient and have lower-skilled labor relative to OECD
countries, which requires more energy and more electricity usage to generate goods and services.
National electricity use among OECD member countries has generally remained flat in recent
years, and in EIA’s International Energy Outlook 2017 (IEO2017), electricity use from these
countries is projected to grow modestly. Total electricity use by non-OECD member countries,
however, surpassed electricity use by OECD members in 2011, and IEO2017 projects it to
continue growing. The amount of electricity needed in the future will largely depend on how fast
non-OECD economies grow and what type of activities make up that economic growth.
For both groups, IEO2017 projects electricity growth to remain lower than the rate of economic
growth. In the IEO2017 Reference case, among OECD member countries, gross domestic
product (GDP) increases by 1.7% per year, and electricity use increases by 0.9% per year
between 2015 and 2040. In non-OECD countries, GDP increases by 3.8% per year, and electricity
use increases by 2.0% per year over the same period.

NewBase November 21 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Prices steady as rising US output undermines OPEC cuts
Reuters + NewBase
• Oil prices were little changed Tuesday as the impact from expectations of an extended
OPEC-led production cut was cancelled out by rising U.S. output
• Brent crude futures were at $62.20 per barrel, 8 cents above their last close
• U.S. West Texas Intermediate crude futures were at $56.50 a barrel, also up 8 cents from
their last settlement
Oil prices were little changed on Tuesday as the impact from expectations of an extended OPEC-
led production cut was cancelled out by rising output in the United States. Brent crude futures, the
international benchmark for oil prices, were at $62.20 per barrel at 0301 GMT, 8 cents above their
last close.
U.S. West Texas Intermediate (WTI) crude futures were at $56.50 a barrel, also up 8 cent from
their last settlement.
Oil price special
coverage

The Organization of the Petroleum Exporting Countries (OPEC), together with a group of non-
OPEC producers led by Russia, has been restraining output since the start of this year in a bid to
end a global supply overhang and buoy prices.
The deal to curb output is due to expire in March 2018, but OPEC will meet on Nov. 30 to discuss
the outlook for the policy.
OPEC is expected to agree to extend cuts as storage levels remain high despite recent
drawdowns, although there are doubts about the willingness of some participants to continue to
restrict their production.
"If the OPEC/non-OPEC cuts continue, the stocks surplus will reduce to just some 50 million
barrels above the 5-year average in 3Q 2018 (down from 140 million barrels above that average
now) and prices will hit $65-70 per barrel," energy consultancy FGE said on Tuesday.
Outside the group of producers voluntarily withholding output, the biggest headaches for OPEC
has been rising U.S. drilling activity, led by shale oil producers.
Energy consultancy Westwood Global Energy Group said U.S. output would climb even faster
than implied by the rising rig count, which has jumped from 316 rigs in mid-2016 to 738 last week,
as producers get more productive per well.
"Westwood Global Energy forecasts an 18 percent increase in active rigs in 2018, but more rapid
demand growth in certain service areas as operators focus on efficiency and delivering more for
less," the consultancy said.
For 2018, FGE warned potential supply disruptions during an already tighter market could trigger
oil price spikes, but it added that the market could slump again towards 2019 as U.S. output
continues to soar and OPEC and its allies at some point will stop withholding output.
"We see another big rush with (U.S.) production growth of some 1-1.5 million bpd in 2018 and
2019," FGE said. It added that OPEC also "has some 1.5 million bpd of spare capacity (while)
Russia and Kazakhstan could also add another 500,000 bpd."
U.A.E. Sees `Logic' for OPEC to Extend Oil-Output Cuts Accord
Suhail Mohammed Faraj Faris Al Mazrouei, United Arab Emirates' energy minister, speaks during
the 2017 CERAWeek by IHS Markit conference in Houston, Texas, U.S., on Tuesday, March 7,
2017. CERAWeek gathers energy industry leaders, experts, government officials and
policymakers, leaders from the technology,
financial, and industrial communities to
provide new insights and critically-important
dialogue on energy markets. Photographer:
Aaron M. Sprecher/Bloomberg
OPEC needs to extend limits on oil output to
help rein in the remaining excess in global
supply, but isn’t considering making deeper
cuts, the United Arab Emirates energy
minister said.
The group is talking about prolonging
production curbs when its members meet at
the end of the month and won’t discuss any increase in the size of the cuts, Energy Minister

Suhail Al Mazrouei said Monday in Abu Dhabi. About 158 million barrels in surplus oil inventories
still need to be cleared, he told reporters.
“The agreement aims at clearing this glut and bringing market back to balance,” Mazrouei said.
“Judging from the current situation, I see a need for extending the agreement,” he said,
without suggesting a length for an extension.
Mazrouei’s comment echoes a view that other important members of the Organization of
Petroleum Exporting Countries have expressed in recent days about the curbs, which took effect
in January and will expire in March. Saudi Arabia’s Energy Minister Khalid Al-Falih said Friday that
OPEC and allied producers including Russia should announce an extension of their output limits
when they gather on Nov. 30 in Vienna.
Iran’s Oil Minister Bijan Namdar Zanganeh said most members of OPEC favor an extension, the
state-run Islamic Republic News Agency reported Monday. Zanganeh didn’t specify which
members support prolonging the curbs.
Russia Undecided
OPEC has yet to persuade Russia, the world’s biggest energy exporter, that it’s necessary to
agree this month to extend the limits. Officials and oil executives in Moscow still haven’t decided
how long the production deal should last, and Russia thinks it’s too early to announce anything
this month, according to two people with knowledge of the matter.
Oman, a member of the producer committee monitoring the cuts, wants to prolong them beyond
March and sees suppliers keeping them until the end of 2018, Oil Minister Mohammed Al Rumhy
told reporters on Nov. 13.
The U.A.E.’s Mazrouei said he’s optimistic about an agreement to extend the cuts and that he
doesn’t think it will be hard to reach a deal. “It’s logical to extend -- everyone is gaining,” he said.
Benchmark Brent crude has risen 10 percent this year and was trading 24 cents lower at $62.48 a
barrel in London at 9:36 a.m. local time.
“Current oil prices are logical, given the state of supply and demand at the moment,” Mazrouei
said. “Global demand this year is healthy and exceeded expectations, and we expect it to continue
to grow next year.”
Oil markets tepid ahead of November 30 Opec meeting
Oil markets were tepid on Monday as traders were reluctant to take on big new positions ahead
of an Opec meeting at the end of the month, when the producer club is expected to decide
whether to continue output cuts aimed at propping up prices.
Brent crude futures, the international benchmark for oil prices, were at $62.47 per barrel at 0752
GMT, down 25 cents, or 0.4 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $56.57 a barrel, up just 2 cents from
their last settlement.Traders said they were avoiding taking on large new positions due to
uncertainty in markets.
The deal to curb output is due to expire in March 2018, but Opec will meet on November 30 to
discuss the outlook for the policy. Opec is expected to agree an extension of the cut as storage
levels remain high despite recent drawdowns, although there are doubts about the willingness of
some participants to continue to restrain output

NewBase Special Coverage
News Agencies News Release November 02-2017
Never Bet Against a Saudi Oil Minister
By Julian Lee
Don't be fooled by the apparent dithering of OPEC and friends over whether to extend their output
restraint when they meet at the end of the month. They know full well that failing to send a clear
signal would send oil prices plummeting.
The apparent backsliding from Russia and a small number of OPEC members may be a belated
attempt to create a sense of uncertainty ahead of the gathering. The extension will then have a
much more positive impact than if it merely ratified a long-flagged intention. Just look at what
happened last time they all met, back in May:
Unintended Consequences
Crude prices dropped when OPEC last met and continued falling for almost a month
The decision to extend the cuts to the end of March 2018 was a foregone conclusion. Every
ministerial interview said so. When that decision came, the market duly reacted: Brent fell by
$2.50 a barrel amid disappointment that OPEC and the others hadn't done even more. They don't
want a repeat.

Last month, I warned that the participating countries mustn't dither and kick a decision down the
road. Perhaps the second worst thing would be flagging the decision so clearly that it can only
disappoint. The latest suggestions of dissent may just be an attempt to avoid that.
Perhaps some comments have been interpreted more definitively than speakers intended.
Vladimir Putin's support last month for extending cuts to the end of 2018 was prefaced by a
reminder that November was too soon to decide. But the qualification has been all but lost.
OPEC and friends have lost control of the narrative and attempts to sow uncertainty have come
too late to manage expectations. Speculative long positions in Brent crude are just shy of 600
million barrels, suggesting a nine-month extension has already been fully priced in. If an extension
isn't announced, the impact on prices as these positions are unwound would be ugly from the
producers' perspective.
Hedging Accelerates
The growing net short position of swaps dealers reflects hedging by shale producers
If the Vienna group hopes uncertainty will discourage U.S. shale producers from locking in prices
for next year, they're likely to be disappointed. They've left it too late to influence the Americans'
2018 strategies, which were largely put in place just as crude hit $65 a barrel. The net short
position of swaps dealers on the Nymex crude market -- a proxy for the hedging activity of shale
producers -- has widened to more than 525 million barrels, suggesting that hedging activity has
accelerated in the past couple of weeks.
Is there a real prospect of Russia throwing a spanner into OPEC's works? I don't think so.
Citigroup published a research note on Russian oil last week saying, among other things, that "the
math is indicating Russia should let the OPEC+ agreement expire", with higher production more
than offsetting the lower prices that would result.
RUSSIA'S NEXT OIL BOOM
While Citi makes an economic case, it doesn't address the political implications for President Putin of
leaving his new friends in the lurch. As I argued here, backing away from an extension could endanger the
arms and investment deals signed during the Saudi king’s visit to Moscow and weaken Russia’s
burgeoning influence in the Middle East. That doesn't seem a good trade-off. When push comes to shove,
the world’s biggest energy exporter will back a deal.
Sure, we've been blindsided by OPEC before. But Saudi oil minister Khalid Al-Falih has said he wants a clear
decision on Nov. 30, including "an extension of some sort". He believes Russia will be on board. Opposition
to announcing an extension on that date may show the group's unity is under strain, but it's not a good idea
to bet against a Saudi oil minister when he's that explicit.

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 27 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spent drafting, &
compiling gas transportation, operation & maintenance agreements along with many MOUs for the
local authorities. He has become a reference for many of the Oil & Gas Conferences held in the
UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase November 2017 K. Al Awadi

New base 21 november 2017 energy news issue 1103 by khaled al awadi

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