New base 21 september 2019 energy news issue 1279 by khaled al awadi

Copyright © 2018NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 15 September 2019 - Issue No. 1278 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, partners to build resilient green power system for
hurricane-ravaged Barbuda
© Copyright Emirates News Agency (WAM) 2019.
The UAE-Caribbean Renewable Energy Fund, UAE-CREF, has announced a partnership to
restore power to Barbuda following the near-total destruction of the island after Hurricane Irma
struck in September 2017.
Other partners include government of Antigua
and Barbuda’s Ministry of Public Utilities, Civil
Aviation, Transport and Energy, the CARICOM
Development Fund (CDF) and the New Zealand
Ministry of Foreign Affairs and Trade, NZMFAT.
The agreement will see the disbursement of
US$5.7 million from the UAE to support Antigua
and Barbuda through the largest renewable
energy initiative of its kind in the Caribbean
region. However, the UAE-CREF put forth $3.5
million during the first round of funding in 2017,
in addition to $700,000 of humanitarian funding the UAE provided to Antigua and Barbuda after
Hurricane Irma in 2017.
The Government of Antigua and Barbuda also put forth $1 million through the CDF, and the
Government of New Zealand donated $500,000 to aid in funding the project and building a hybrid
solar-diesel power station equipped with hurricane-resilient battery storage.
www.linkedin.com/in/khaled-al-awadi-38b995b

The project aims to build a modern, climate-resilient, safe, reliable and sustainable supply of
electrical power for Barbuda in the wake of Hurricane Irma, which destroyed 95 percent of the
island on 6th September, 2017, and forced all 1,800 residents to be evacuated to Antigua.
The project will be executed by the UAE-CREF in partnership with the UAE Ministry of Foreign
Affairs and International Cooperation, Abu Dhabi Fund for Development, ADFD, and Abu Dhabi
Future Energy Company (Masdar), responsible for project design and implementation.
Commenting on the partnership, Sultan Al Shamsi, Assistant Minister of Foreign Affairs and
International Cooperation for International Development Affairs, expressed his contentment with
this project, which will contribute to the prosperity of the people of Barbuda. Furthermore, he
stressed that this project comes within the framework of the UAE’s efforts to implement projects
that serve communities by offering sustainable solutions and supporting the achievement of
Sustainable Development Goals.
"After the devastation caused by Hurricane Irma in Barbuda, we are not only trying to restore
electricity to the island we will work to rebuild it even better. Providing the island with a solar
power plant will solve its energy crisis, provide clean, environmentally friendly energy, and
improve the living conditions of islanders who will operate and maintain the new solar power plant
to help reduce the impact of climate change," Al Shamsi stated. For his part, Sir Robin Yearwood,
Minister of Public Utilities, Civil Aviation, Transport and Energy of Antigua and Barbuda, thanked
all the partners for their contribution to the transformative energy project.
He added, "This project will be a core component of the efforts by our government to transform
Barbuda into possibly the first truly climate-resilient community in our region and doing this within
a sustainable energy framework. This will also serve as a model for other Caribbean Small Island
Developing States."
In turn, Mohammed Saif Al Suwaidi, Director-General of ADFD, noted, "As part of the second
funding cycle of the UAE-CREF, this energy-efficient and multi-faceted project on the island of
Barbuda exemplifies the level of collaboration needed to ensure that renewable energy
alternatives are spread far and wide to areas or states that can gain maximum benefit. Caribbean
island nations are rich in sustainable resources that are used to produce energy.
ADFD is delighted to work alongside its distinguished partners to bring clean energy alternatives
to the area and support the Government of Antigua and Barbuda in translating its national
priorities into tangible realities."
Mohamed Jameel Al Ramahi, CEO of Masdar, said that in light of the recent catastrophic damage
caused by Hurricane Dorian to the northern Bahamas, the hurricane-resistant solar projects that
are being developed by UAE-CREF are vital to the Caribbean region. "It is a privilege to support

our partners on this extremely important project that will rebuild Barbuda’s electricity system to
give the island’s inhabitants access to a reliable and sustainable supply of electrical power."
The plant will displace an estimated 260,000 litres of diesel fuel per year, saving the Government
of Antigua and Barbuda $320,000 and offsetting 690 tonnes of carbon dioxide annually. The
project notably supports Barbuda’s green tourism industry.
Rodinald Soomer, CEO of the CDF, said that CDF’s $1 million contributions to this novel power
project will be applied towards the solar energy component, in keeping with its 2015-2020
Strategic Plan, which allocates concessional financing towards energy efficiency and renewable
energy investments to CARICOM member countries.
"This project is also consistent with the CARICOM Energy Policy, which aims to accelerate the
deployment of renewable and clean energy sources to increase diversification and affordability.
The CDF’s support for this project also allows it to achieve one of its fundamental aims, as stated
in the Revised Treaty of Chaguaramas, which is to address the structural diversification and
infrastructural development needs of member states.
This includes investing in climate-resilient infrastructure," he stated. "The New Zealand Ministry of
Foreign Affairs and Trade is pleased to support this initiative in Antigua and Barbuda. Supporting
energy security and climate resilient infrastructure is key to sustainability for small island states in
the Caribbean and Pacific.
This initiative continues our partnership with the UAE Government in delivering renewable energy
projects for small island states and the most vulnerable communities in the Caribbean and
Pacific," concluded New Zealand’s Ambassador to the UAE, Matthew Hawkins.

Saudi Oil : Where Are We a Week On and What Happens Next?
Bloomberg - Julian Lee
On Sept. 14, Saudi Arabia suffered the single-biggest blow to its oil infrastructure in the country’s
history when critical processing facilities were attacked. After a roller coaster week for the global
oil market, what follows takes stock of everything that happened, where we are now, and what to
watch in the weeks ahead.
At about 4 a.m. local time, oil processing facilities at Abqaiq and Khurais in Saudi Arabia were
attacked by what was initially reported as a swarm of armed drones. The resulting fires were
extinguished within hours, but the drama had only just begun.
Workers repair a damaged tank at Saudi Aramco's Abqaiq crude oil processing plant on Sept. 20. , byr: Faisal Al Nasser/Bloomberg
There were at least 17 points of impact at Abqaiq, the world’s largest oil-processing facility, and
more at Khurais. Damage to the two sites reduced Saudi Arabia’s oil production by 5.7 million
barrels a day, from about 9.8 million. As a single-impact event, it was probably the largest
disruption to the oil market ever.
Abqaiq is the world’s largest oil-processing facility and handled about half Saudi Aramco’s
production last year. It treats the crude from some of Saudi Arabia’s giant onshore fields,
removing sulfur and volatile hydrocarbons that vaporize at atmospheric pressure to stabilize the
crude before it’s pumped to refineries or export terminals. It was operating at a rate of about 4.5
million barrels a day before the attack.
Khurais is Saudi Arabia’s second largest oil field, with the capacity to pump about 1.45 million
barrels a day of Arabian Light crude. It was running at a rate of 1.2 million barrels a day before the

attack. Workers assess the damaged crude oil processing unit at Saudi Aramco’s Khurais oil
field plant, Sept. 20.
Most of Saudi Arabia’s lighter crude streams are produced at its onshore fields. Other deposits
such as Manifa and Safaniyah, which don’t depend on Abqaiq for processing, produce the heavier
grades.
Photos of the aftermath of the attacks at Abqaiq, released by the U.S., show puncture marks on
tanks that form part of the process to remove gas before the crude can pass to the stabilization
towers.
Apportioning Blame
Within hours, Houthi rebels in Yemen claimed responsibility, as they did for strikes against Saudi
Arabia’s East-West pipeline in May, and the Shaybah oil field in August. Saudi Arabia started a
devastating bombing campaign in Yemen in 2015 — with some U.S. backing and weaponry —
after the Houthis took control of the capital and other parts of the country.
Despite thousands of civilian deaths, terrible human rights abuses on both sides, and a
humanitarian catastrophe, the war has settled into an ugly stalemate. Yemen’s Houthi rebels have
stepped up retaliatory attacks against Saudi Arabia and say they will target all countries involved
in the conflict.

U.S. Secretary of State Mike Pompeo dismissed the Houthis’ claim, pinning the blame on Iran.
“There is no evidence the attacks came from Yemen,” he tweeted. French Foreign Minister Jean-
Yves Le Drian also dismissed the Houthi claims.
Iran has denied responsibility.
Twenty-five pilotless aircraft and cruise missiles of Iranian origin were used to attack the two sites,
the Saudi Defense Ministry said at a press briefing four days after the incidents, where it displayed
the remains of some of them. The range and accuracy of the weapons were beyond the
capabilities of the Houthis, spokesman Turki al-Maliki said. The kingdom was still working “to
determine the exact position of the launch point,” he added.
Repairs and Restoration
Saudi Arabia initially expected to re-start most lost oil output within days of the attack, but that
early optimism was tempered after evaluation of the damage. Energy Minister Prince Abdulaziz
bin Salman and Saudi Aramco CEO Amin Nasser still painted a positive picture of the kingdom’s
ability to restore oil production and exports after the attack at a briefing on September 17. Here’s a
summary of the key takeaways from the briefing:
 Production from the Khurais field restarted 24 hours after the attack, with output running at
about 360,000 barrels a day.
 Abqaiq was processing 2 million barrels a day - 41% of its pre-attack throughput - and “its
entire output is expected to be restored to prior rates by the end of September.”
 Saudi Arabia’s oil production capacity will be restored to 11 million barrels a day by the end
of September and to 12 million by the end of November.
 Oil production will reach 9.8 million barrels a day in October, in line with the volume the
country has been pumping in recent months.
 There will be zero reduction in flows of crude to customers.
Oil analysts have been less optimistic. Repair of the Abqaiq facility is unlikely to be completed by
end-September as planned and will instead take months, consultant FGE said in a report
September 18, with production likely to average 8 million barrels a day this month. Full restoration
of pre-attack capacity at Abqaiq will only be completed “as we approach the end of the year,”
according to Rystad Energy.
Exports Continue, Saudi Arabia Seeks Fuel
The attack could affect flows of both crude oil and refined products, as Saudi Arabia cuts
deliveries to its own processing plants in order to maintain exports. It will also shift the balance of
Saudi crude supply toward its heavier grades from offshore fields at the expense of the lighter
supplies mostly produced onshore and processed at Abqaiq.
Saudi Aramco “will be able to meet all its commitments to customers this month by drawing on its
crude oil reserves,” the energy minister said during his briefing. Those stood at 180 million barrels
at the end of July, according to the Joint Organisations Data Initiative. It’s unclear how much of
this will be available for sale and how much is needed as a minimum operating level.
Dwindling Stockpile
Saudi Arabia's crude stockpile is just 40 million barrels above its lowest level in records that began
in 2002

Sources: Bloomberg, Joint Organisations Data Initiative
But some customers have already been informed of delays to some cargoes scheduled to load in
early October, while others have been asked to accept heavier crude grades than those originally
specified.
Aramco’s head of Japan has assured Japanese refiners that the company will meet its contractual
obligations. Aramco has accepted all crude nominations from Japanese refiners for loading in
October, but some cargoes for Idemitsu Kosan have been delayed by several days.
In order to maintain crude exports, Saudi Arabia’s refineries are expected to run at lower rates as
the country scours global fuel markets for refined products. Aramco Trading Co., which buys and
sells fuels on behalf of the state oil company, purchased diesel cargoes and also sought one-off
supplies of aviation fuel in the days after the attack, according to people involved in those
markets. Fuel oil, which can be used instead of crude for power generation, has also been bought,
while exports of naphtha -- a building-block product for making gasoline and plastics -- have been
disrupted.
Few other suppliers have the ability to boost crude production to offset such losses from Saudi
Arabia, which was the holder of most of the world’s spare oil production capacity. Two nearby
countries that can raise output are the United Arab Emirates and Kuwait. Both have offered to
supply more crude to Asian refiners. Saudi Arabia’s cut in supplies of lighter crude grades may
favor sales of U.S. barrels as refiners seek comparable replacements.
U.S. President Donald Trump authorized the release of crude from the Strategic Petroleum
Reserve after the attack. The International Energy Agency Executive Director Fatih Birol said
Wednesday that the oil market remains well supplied but that his agency remains vigilant about
risk of disruptions and stands ready to act.
Oil Market
The attack created turmoil on oil trading desks from Tokyo to Houston. “Sunday and Monday were
probably the most intense day and a half in the oil market I have had since 2008,” said Doug King,

co-founder of the commodity hedge fund Merchant Capital. Order volumes were sky high and
hedge funds, refiners and oil trading houses had their top traders staffing operations, according to
interviews with multiple market participants. Brokers put special teams in place to beef up skeleton
weekend crews.
Brent crude jumped the most on record in dollar terms when oil markets opened after the attacks,
adding as much as $11.73 a barrel to reach an intraday high of $71.95. But that only took it back
to a price level last seen in May in a market that remains concerned by the prospect of weakening
oil demand growth amid ongoing U.S. trade wars and slowing global economic growth.
Asian countries, the biggest buyers of Saudi crude, will be hardest hit by any disruption, with India
the most exposed as its own crude stockpiles are the smallest among those of the kingdom’s main
customers, according to Wood Mackenzie research director Vima Jayabalan.
Impact on Saudi
The attacks had “zero” impact on Saudi Arabia’s revenue and won’t affect its economy, according
to Finance Minister Mohammed Al-Jadaan. Growth in the kingdom, where the oil and gas sector
accounts for about 50% of gross domestic product, was on track to slow to 1.9% this year even as
the non-oil economy showed signs of revival, according to the International Monetary Fund.
The fallout could still test Saudi Arabia’s economic defenses. But low public debt and net foreign
assets in excess of $500 billion offer significant ammunition. The stockpile of reserves “gives the
monetary authority the ability to intervene in the markets at any time,” the central bank’s governor,
Ahmed Abdulkarim Alkholifey, said on Tuesday. Saudi Arabia’s central bank said it’s prepared
to inject liquidity in the financial system if needed to help the economy cope with the aftermath of
this week’s major attacks on Aramco’s oil facilities.
The attack could have consequences for a planned Saudi Aramco IPO. A prospectus published in
May ahead of the company’s first international bond sale identified the importance of Abqaiq,
noting that “the Company also depends on critical assets to process its crude oil, such as the
Abqaiq facility which is the Company’s largest oil processing facility and processed approximately
50% of the Company’s crude oil production for the year ended 31 December 2018.”
But a successful, deliberate attack was not listed under the operational risks and hazards that
could have a significant impact on operations. The vulnerability of the kingdom’s most important
oil asset will now be a focal point for investors.
Global Impact
The reverberations of the attack on the heart of Saudi Arabia’s oil industry have potential to drain
the remaining risk appetite from global markets.
Higher oil prices will inevitably feed through into the prices consumers pay at the pump for
gasoline and diesel, and to the cost of home heating oil and feedstocks for making plastics and
the other products that depend on oil-based chemicals. But the oil shock alone won’t lead to a
global recession, according to RBC Capital Markets’ Global Macro Strategist Peter Schaffrik.
Response Scenarios
Saudi Arabia’s Crown Prince Mohammed bin Salman and U.S. Secretary of State Mike Pompeo
have agreed that Iran must be held accountable for the attack. Possible responses range from
doing nothing to open military conflict.
The tougher the response, the more oil is likely to move higher. At the same time, a non-response
could embolden whoever was responsible for the attacks.

President Trump has announced new sanctions on Iran’s “national bank,” but declined to say
Friday whether he is planning for military action. Pompeo visited Saudi Arabia and United Arab
Emirates to “build out a coalition to develop a plan to deter” Iran.
Saudi Arabia could accept the Houthi claims that it launched the attack and step up its military
action in Yemen, specifically targeting
Houthi drone and missile capabilities,
but that “might require a larger military
commitment from Saudi Arabia at a time
when it wants the opposite,” according
to Emily Hawthorne, Middle East and
North Africa analyst at Texas-based
advisory firm Stratfor Enterprises.
Or it might continue to pin the blame on
Iran and seek talks with the Houthis to
bring the Yemen conflict to an end and
deprive Iran of a proxy on its southern
border.

Saudi Arabia Partially Restores Output at Damaged Oil Plant
Bloomberg - Anthony Dipaola
Saudi Arabia attempted to move beyond the worst oil disruption in its history, assuring the world
that crude exports won’t suffer, its damaged facility has partially restarted and that production
capacity will be back to normal within months.
The long-awaited update on Tuesday from the kingdom -- which before the strike pumped almost
10% of the world’s oil -- gives the market much-needed clarity after days of speculation over how
severe the damage was at Saudi Aramco’s Abqaiq plant.
However, progress has
been slower than was
initially expected and
crude prices remain
elevated as traders
factor in higher risks for
Saudi supply. Prince
Abdulaziz bin Salman
gives a press
conference in Jeddah
on Sept. 17.
“During the two past
days, we managed to
contain the damage by
recovering more than
half of the production
that we had lost during
that terrorist attack,”
Energy Minister Prince Abdulaziz bin Salman said at a briefing in Jeddah. “The company will be
able to meet all its commitments to customers this month by drawing on its crude oil reserves.”
Abqaiq is now processing about 2 million barrels a day, Aramco Chief Executive Officer Amin
Nasser said. The facility should return to pre-attack levels of about 4.9 million barrels by the end of
September, he said.
Soon after the weekend attack, officials indicated that the majority of output would be restored
within days, with weeks required to get back to full capacity. The outlook became more pessimistic
in subsequent days as photos were released showing the scale of the damage at the crucial
facility.
The minister and CEO assured customers Aramco’s crude exports won’t be reduced this month
because it will draw down strategic reserves. The kingdom also temporarily reduced the rate at
which domestic refineries process oil by about 1 million barrels a day, making more crude
available for shipment overseas.
Still, figures provided by the energy minister suggested the kingdom will take months to fully
recover from the incident. Full output capacity of 12 million barrels a day will only be available at
the end of November, with about 11 million restored by the end of this month, said Prince
Abdulaziz. Saudi Arabia aims to pump 9.8 million barrels a day in October, he said, in line with
recent months.

Damage to Aramco’s facility in Abqaiq, Saudi Arabia…..Source: Planet Labs Inc.
Houthi rebels in Yemen initially claimed responsibility for the attacks, although the U.S. later
blamed Iran. The oil market has been gripped with uncertainty since the plant was hit. The
international benchmark jumped 15%, the most on record, on Monday, before tumbling 6.5% after
Aramco’s update on Tuesday. It was 0.1% lower at $64.50 a barrel in early Asian trading on
Wednesday.
Unprecedented Disruption
That historic price gain underscored the unprecedented nature of the disruption caused by the
attack. For decades, Saudi Arabia has been the oil market’s great stabilizer, maintaining a large
cushion of spare production capacity that can be tapped in emergencies, such as during the 2011
war in Libya.
The suspension of 5.7 million barrels day of Saudi production -- the worst sudden loss in history --
exposed the inadequacy of the rest of the world’s supply buffer. Aramco ramped up offshore
fields to maximum to replace some lost production, Nasser said. Customers were also being
supplied using stockpiles, though some buyers are being asked to accept different grades of
crude, a person familiar with the matter said earlier this week.
Beyond the kingdom, other participants in the OPEC+ cuts, such as Russia, Kazakhstan and the
United Arab Emirates, could restore a few hundred thousand barrels a day of idled production, but
that’s not enough to offset Saudi losses.
Escalation Threat
Even as Aramco fixes the damage at Abqaiq, the possibility of further escalation of conflict in the
Middle East hangs over the market.
Tehran and Riyadh are historic foes backing opposing sides in Yemen’s long-running civil war.
The volatile situation in the region finally boiled over earlier this year as U.S. President Donald

Trump used sanctions to attempt to choke off all of Iran’s oil exports -- the lifeblood of its economy
-- after unilaterally withdrawing from an international nuclear deal.
Since then, the Persian Gulf, source of about a third of the world’s seaborne oil exports, has been
under siege, targeted by air, sea and land. While Trump has shown some reluctance to go to war,
there are also few prospects for easing tensions as Saudi Crown Prince Mohammed bin Salman
decides how to respond to the assault.
Prince Abdulaziz said he wouldn’t comment on whether Iran was responsible for the attack. The
Pentagon is preparing a report on who was to blame and intends to make it public within 48 hours,
a U.S. defense official said Tuesday.
Houthi rebels in Yemen, who are backed by Tehran, said Monday that oil installations in Saudi
Arabia will remain among their targets and their weapons can reach anywhere in the country.
Iran’s supreme leader Ayatollah Ali Khamenei said Tuesday his country won’t negotiate with the
U.S. on any level.
The threat to key Saudi infrastructure has loomed over the planned initial public offering of
Aramco. The state-run company will still be ready for a share sale any time in the next 12 months,
Chairman Yasser Al Rumayyan said at the briefing.
Saudis Face Lengthy Oil Halt With Few Options to Fill Gap
The oil market is facing a prolonged disruption to Saudi Arabia’s oil production with few options for
replacing such huge output losses.
The weekend attacks on the kingdom eliminated about 5% of global oil supply -- and raised the
risk of more conflict in the region -- propelling Brent crude to a record surge on Monday. Officials
at state oil company Saudi Aramco have become less optimistic on the pace of output recovery,
telling a senior foreign diplomat they face a “severe” disruption measured in weeks and
months and informing some customers that October shipments will be delayed.
The historic price gain underscores the unprecedented nature of the disruption caused by the
drone attack on the Abqaiq crude processing plant. For decades, Saudi Arabia has been the oil
market’s great stabilizer, maintaining a large cushion of spare production capacity that can be
tapped in emergencies, such as the 2011 war in Libya. The halt of 5.7 million barrels day of the
kingdom’s production -- the worst sudden supply loss in history -- exposes the inadequacy of the
rest of the world’s supply buffer.
Little to Spare
There's only enough spare capacity
to offset about 70% of lost Saudi
production - and most of that may
not be usable
“The market is in scramble mode to
secure not only supplies of crude,
but also products,” consultant JBC
Energy GmbH said in a note. Prices
are “reflecting a new geopolitical risk
premium, namely that the safety of
oil production in the heart of the
Middle East cannot be guaranteed.”

Tehran and Riyadh are historic foes that have been backing opposite sides in Yemen’s long-
running civil war. The volatile situation in the region finally boiled over earlier this year as U.S.
President Donald Trump used sanctions to attempt to choke off all of Iran’s oil exports -- which are
the lifeblood of its economy -- after he unilaterally withdrew from an international nuclear deal.
Since then the Persian Gulf, source of about a third of the world’s seaborne oil exports, has been
under siege -- targeted by air, sea and land. While Trump has shown some reluctance to go to
war, there are also few prospects for easing tensions as Saudi Crown Prince Mohammed bin
Salman decides how to respond to the assault.
Houthi rebels in Yemen, who are backed by Tehran, said on Monday that oil installations in Saudi
Arabia will remain among their targets and their weapons can reach anywhere in the country.
Iran’s supreme leader Ayatollah Ali Khamenei said on Tuesday that his country won’t
negotiate with the U.S. on any level neither in New York or anywhere else.
Click here to read how the Saudi Central Bank may step in to support liquidity.
Saudi Aramco is firing up idle offshore oil fields to replace some of the lost production, said a
person familiar with the matter. Customers are also being supplied using stockpiles, though some
buyers are being asked to accept different grades of crude. The kingdom has enough domestic
inventories to cover about 26 days of exports, according to consultant Rystad Energy A/S.
Trump also authorized the release of oil from the country’s Strategic Petroleum Reserve, while the
International Energy Agency, which helps coordinate industrialized countries’ emergency fuel
stockpiles, said it was monitoring the situation.
Saudi Stockpiles
Kingdom has about 26 days of crude exports in storage, Rystad says
Source: JODI, Rystad Energy
Note: 26-day figure based on domestically-held stocks, not overseas inventories
According to Bloomberg calculations based on publicly available data, the absolute maximum in
spare capacity that could be brought into production in the coming weeks is about 3.9 million
barrels a day.

The true volume of viable backup supply could be significantly lower, because it includes
restarting production from the Neutral Zone shared by Saudi Arabia and Kuwait, as well as
tapping the kingdom’s own spare capacity, much of which may also have to be processed at the
Abqaiq or Khurais facilities and therefore be unusable.
OPEC Capacity
Other participants in the OPEC+ cuts, such as Russia, Kazakhstan and the United Arab Emirates,
could restore a few hundred-thousand barrels a day of production, not enough to offset the Saudi
losses.
The Organization of Petroleum Exporting Countries is in regular contact with the Saudi authorities,
the group’s Secretary-General Mohammad Barkindo said in a Bloomberg TV interview. It’s
premature to talk about reversing the oil-production cuts implemented by OPEC and its allies, he
said.
U.S. output may be booming, but the country’s many shale drillers hold little to no output in
reserve. Oil production has plateaued at an average level of 12.37 million barrels a day since
recovering from the impact of Hurricane Barry at the end of July.
Output will continue to grow and more than 10 new export terminals have been proposed for U.S.
crude, capable of handling about 8 million barrels a day, but the first of these is unlikely to be
operational before 2022 at the earliest.
Crude prices pared gains on Tuesday, following an extraordinary trading day in which Brent crude
leaped settled a record 15% higher at just above $69. Futures were 1.7% lower at $67.87 a barrel
as of 12:09 p.m. in London as the market waited for any further update from Aramco.
Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled to hold a press briefing on
Tuesday evening in Jeddah.
Images released of the damage to Abqaiq’s stabilization towers, which separate gaseous
compounds from crude oil, suggest lengthy repairs, according to Phillip Cornell, a former senior
corporate planning adviser to Aramco.
“They can take weeks or months to get specialized parts,” he said at an event hosted by the
Atlantic Council in Washington on Monday. Five out of 18 stabilization towers appear to have
been taken out and the pictures that have been released show “very specific, accurate targeting of
those particular infrastructures,” he said.
In addition to the immediate loss of supply, the attack raised the specter of U.S. retaliation against
Iran, which could further inflame oil prices. While Houthi rebels in Yemen claimed responsibility for
the assault, President Trump said it looked like Iran was to blame.
“I don’t want to have war with anybody” but our military is prepared, Trump said at the White
House on Monday.
Aramco Attacks Had ‘Zero’ Impact on Saudi Revenue, Minister Says
Bloomberg - Yousef Gamal El-Din
Attacks that slashed half of Saudi Arabia’s oil output had “zero” impact on the kingdom’s
revenues, Finance Minister Mohammed al-Jadaan said.
Jadaan told Bloomberg TV in Riyadh on Wednesday that there was no impact on the Saudi
economy and the country would continue to spend “as we need” on defense.

India: to build Mega Solar Power Plants
India Mint - Utpal Bhaskar
Clean energy parks of 2,000MW at a cost of around $2 billion each on cards ,Investments in the
country’s renewable energy sector doubled over the last five years to around $20 billion in 2018
New Delhi: In a renewed push to cut India’s dependence on fossil fuels, the central government
wants state-run companies to build massive clean energy parks at a cost of around $2 billion
each, with built-in incentives to ensure states and operators are invested in the success of the
parks.
The proposed ultra mega renewable energy power parks (UMREPP) of 2,000 megawatts (MW)
each will help developers achieve economies of scale and further bring down solar and wind
power tariffs.
Setting up such parks will bolster India’s image as a clean energy champion at a time the world is
grappling with concerns related to climate change. Clean energy projects now account for more
than a fifth of India’s installed power generation capacity.
These green energy parks will be set up under the existing Solar Park scheme, which provides the
building blocks—land and grid connectivity—and will be implemented by a special purpose vehicle
(SPV).
“Various public sector undertakings have been urged to set up ultra mega renewable energy
plants in major states in collaboration with state governments through SPV mechanism for these
parks," said Anand Kumar, secretary in the ministry of new and renewable energy, adding that the
SPVs can either purchase land or take it on lease from state governments or private parties.
To get states on board and facilitate the requisite clearances, state governments will be paid
₹0.02 per unit of electricity generated from the projects over their lifetime.

The power ministry’s ultra-mega power project programme was India’s earlier attempt to create
large power generation capacities at a single location. However, it has had its share of problems,
weighed by environmental concerns and local resistance.“The state governments will facilitate the
SPV to identify and acquire land, and obtain required statutory clearances," a government official
aware of the plans said, requesting anonymity.
The SPVs will also be paid park development and operations and maintenance (O&M) charges by
the developers, and ₹0.02 per unit on the electricity generated over their lifetime. The operators
that will set up renewable energy projects such as wind or solar inside the clean energy park will
be selected through tariff-based competitive bids.India is seeking additional clean energy
investment of around $80 billion till 2022, growing more than threefold to $250 billion during 2023-
30.
According to a government note reviewed by Mint, “the capacity of the UMREPP may be in the
range of 2,000MW. However, the minimum capacity of any UMREPP at a single location may be
600MW where there is need for creation of new transmission system by CTU (central
transmission utility). The UMREPP,
connected to any existing transmission system of CTU/STU (state transmission utility), shall be of
the size of 250MW at a single location. For floating solar PV (photovoltaics) parks, the minimum
size should be 50MW".
These mega solar park plans comes against the backdrop of Tesla, China’s Contemporary
Amperex Technology Co. Ltd (CATL) and BYD Co. Ltd, among others, showing an initial interest
in the Indian government’s plan to build large factories to make lithium-ion batteries at an
investment of about ₹50,000 crore.
Aimed at securing India’s energy needs, the plan to set up these 50 gigawatt hour (GWh) factories
has been cleared by the expenditure finance committee, with the final tender expected to be

awarded by February. Each gigawatt hour (1,000 megawatt hours) of battery capacity can power
1 million homes for an hour and around 30,000 electric cars.
The government wants to make India a global manufacturing hub for electric vehicles and their
components. This is aimed at arresting the South Asian country’s reputation as the world’s third-
largest crude oil importer, saving on precious foreign exchange and also controlling pollution in its
major cities.
In what is being marked as a turning point for India’s green economy, investments in the country’s
renewable energy sector doubled over the last five years to around $20 billion in 2018, surpassing
the capital expenditure in the thermal power sector, according to a joint study by Paris-based
International Energy Agency and Council on Energy, Environment and Water.
India has been trying to rejig its energy mix in favour of green energy sources. At present, India
has an installed power generation capacity of 357,875MW, of which around 22%, or 80,000MW, is
generated through clean energy projects. India has become one of the top renewable energy
producers globally, with ambitious capacity expansion plans to achieve 175GW by 2022 and
500GW by 2030, as part of its climate commitments.

NewBase September 21– 2019 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil slips on trade fears but soars in week after Saudi attacked
Reuters + NewBase
Oil prices eased on Friday on renewed concern over the U.S.-China trade war, but futures still
posted weekly gains, with Brent marking its biggest weekly increase since January, after an attack
on Saudi Arabia’s energy industry last weekend.
Brent crude LCOc1 futures fell 12 cents to settle at $64.28 a barrel, while U.S. West Texas
Intermediate (WTI) crude CLc1 futures ended 4 cents lower at $58.09 a barrel.
Prices pared gains along with the stock and grains markets after Chinese agriculture officials that
were due to visit U.S. farm states next week canceled their trip to Montana and Nebraska to return
to China sooner than originally scheduled.
The cancellation came as trade talks were held in Washington and U.S. President Donald Trump
said he wanted a complete trade deal with the Asian nation, not just an agreement for China to
buy more U.S. agricultural goods.
Oil price special
coverage

For the week, however, Brent rose 6.7%, its biggest gain since January, while WTI gained 5.9%,
the most since June.
U.S. shale producers pounced on the chance to lock in future revenue for this year and next after
oil prices surged by the most in 30 years early this week following the attack, sources familiar with
the money flows said.
Money managers raised their net long U.S. crude futures and options positions by 11,209
contracts to 220,758 in the week to Sept. 17, the U.S. Commodity Futures Trading Commission
(CFTC) said.
The oil market jumped nearly 20% on Monday in reaction to the Sept. 14 attack, which halved
Saudi production and cut global supplies by about 5%. But prices have since pared most of those
gains on assurances from the kingdom that it would restore lost production by the end of this
month.
Prices, however, have kept a risk premium as geopolitical tensions in the region have escalated
with the United States and Saudi Arabia blaming the attack on Iran. Tehran denies any
involvement.
The attack has intensified a years-long struggle between Saudi Arabia and Iran, who are locked in
a sometimes violent contest for influence in several flashpoints around the Middle East.
A Saudi-led coalition on Friday launched a military operation north of Yemen’s port city of
Hodeidah while the United States worked with Middle East and European nations to build a
coalition to deter Iranian threats.
State-owned Saudi Aramco has switched crude grades and delayed crude and oil product
deliveries to customers by days after the attack severely reduced its light oil production and led to
output cuts at its refineries, market sources said.
Whilst showing reporters the damaged the Khurais field and the Abqaiq oil processing facility,
Aramco said it was shipping equipment from the United States and Europe to rebuild the
damaged facilities. It also said that Abqaiq is expected to have full capacity restored by the end of
the month.
“The question is can they convince the market that they can keep their oil fields safe,” said Phil
Flynn, an analyst at Price Futures Group in Chicago, in a note.
In the United States, meanwhile, flooding from Tropical Storm Imelda forced a major refinery to
cut production, while a key oil pipeline, terminals and a ship channel in Texas were shut,
according to sources familiar with operations.
Exxon Mobil Corp (XOM.N) shut some units at its 369,024 barrel per day (bpd) Beaumont refinery
while Valero Energy Corp (VLO.N) reduced production at its 335,000 bpd Port Arthur refinery.
U.S. energy firms this week reduced the number of oil rigs operating for a fifth week in a row to the
lowest since May 2017. Drillers cut 14 oil rigs in the week to Sept. 20, bringing the total count
down to 719, General Electric Co’s (GE.N) Baker Hughes energy services firm said. RIG-OL-USA-
BHI

NewBase Special Coverage
News Agencies News Release Sep. 19-2019
As IMO 2020 deadline nears, shipping sector makes final push
to adapt …. S&P Global – Platts
Ahead of the S&P Global Platts Asia Pacific Petroleum Conference (APPEC 2019), Insight presents a series of
articles exploring aspects of the global trade in crude oil and refined productsI. Here, Surabhi Sahu focuses on
the shipping sector’s final push to prepare for the International Maritime Organization’s 2020 deadline
imposing lower sulfur limits for fuel.
Benjamin Franklin once said: “You may delay, but time will not.” This is certainly true for the
international shipping industry as it prepares for a plethora of stricter environmental rules that are
set to bring escalating costs and operational challenges.
Among the upcoming rules, the International Maritime Organization’s global sulfur limit for marine
fuels, which will be cut to 0.5% from January 1, 2020, is among the most significant.
While restrictions on sulfur emissions in shipping are not an entirely new concept, as emissions
control areas in certain regions have long existed, the transition to the IMO 2020 rule is daunting.
The majority of bunker demand will have to switch from high-sulfur fuel oil (HSFO) to 0.5% sulfur
almost overnight, calling for extensive planning by shipowners, charterers, ship crew and refiners,
among others.
The operational challenges will be manifold, and the costs astronomical. S&P Global Platts
Analytics estimates the total global impact of this rule on various sectors in the energy space, as
well as other industries, will be in excess of $1 trillion over five years.

Shipowners will have to choose a marine fuel strategically, considering factors such as the age of
their vessels, trading routes and locational availability of the various fuel options. They will also
have to manage the fuels after bunkering, with critical factors being how many receiving tanks the
vessel has and tank segregation requirements.
According to Platts Analytics, the global bunker fuel specification changes in 2020 mean some 3
million b/d of HSFO will have to be replaced. As a result, LSFO, marine gasoil and blended
distillates will all play important roles in the bunker fuel mix in 2020 and onward.
The exact bunker fuel mix that will prevail is still an unknown, as it will depend on availability of the
different fuels as well as their relative pricing. Still, there is growing consensus in the industry now
that very low sulfur fuel oil (VLSFO) will be one of the main marine fuel choices come 2020. In
fact, either through direct use or blending, gasoil will also be in greater demand because of the
sulfur limit change for marine fuels under IMO 2020.
Recent announcements by oil majors such as ExxonMobil, BP, Total, Cepsa, Sinopec on the
supply of 0.5% sulfur bunker fuels to meet rising demand have quelled some concerns in the
industry about their availability.
There is also the option of equipping a vessel with scrubber technology, which removes sulfur
oxides from the exhaust gas of ship engines, meaning HSFO can still be burnt.
Shipowners’ preparations
Most shipowners have already made a conscious choice regarding their bunker fuel choice post-
2020.
This includes many big shipping companies such as AP Moller-Maersk, Hapag-Lloyd, Teekay
Tankers, BW Group, CMA CGM, Pacific International Lines and Mitsui OSK Lines.
Japan’s MOL, for example, will mainly use low-sulfur fuel oil, but also plans to install sulfur oxides
scrubbers on about 50 vessels, mainly VLCC and capesize bulkers, the company said in May.
The company is also advancing plans to use other cleaner fuels – LNG and methanol – for
bunkering.
Some container shipping companies, such as Maersk and Hapag Lloyd, plan to use both 0.5%
sulfur marine fuels and scrubbers with HSFO to comply with the rule.
Go deeper – Into the storm: How will shipping cope with fuel bills from IMO 2020?
But in any case, taking no action is
arguably a decision on the part of a
shipowner, implying that VLSFO or 0.5%
sulfur compliant bunker fuel will likely
become their default marine fuel choice.
An important procedure to carry out before
switching, as emphasized by the
International Bunker Industry Association
last year, is cleaning of fuel oil tanks.
Failure to do so could see a vessel breach
the sulfur limit despite being loaded with
compliant fuel, and also carries operational
risks, according to the IBIA.

Some global shipping companies, such as Thailand’s Precious Shipping and Norway
headquartered HoeghAutoliners, have already said that they are cleaning bunker tanks on their
vessels.
For those who plan to use 0.5% sulfur bunker fuels and haven’t started the clean-out, there should
be an urgency to do so to ensure there is no residual heavy sulfur fuel left in them.
Tank cleaning comes with its challenges. Manual tank cleaning is considered the best method, but
this needs the vessel to be in dry-dock or anchorage. Tank cleaning can be done with additives
but this process requires some cycles.
Another option is to load LSMGO or VLSFO into the tank and flush out the fuel system with the
low sulfur fuel oil. There is still a risk that tanks will not be 100% clean at the end of this process.
One large shipowner told Platts that November 30 could be a potential “sweet spot” date to shift to
compliant fuels as it would give some leeway to finish off the remainder of HSFO in ships’ tanks
and ensure a smooth transition to 0.5% sulfur bunkers.
While tank cleaning is important, tank segregation is also vital. With the multitude of fuels being
launched in time for 2020, there is likely to be a wider range of viscosity, requiring temperature
adjustments. The risk of compatibility issues may be greater. Therefore, the challenge will still be
to keep the fuels segregated to the maximum extent possible.
The scrubbers debate
Alongside fuel switching, exhaust gas cleaning systems – known as scrubbers – will be an
important solution for compliance with IMO 2020, at least initially, and will help alleviate some of
the pressure on 0.5% sulfur bunker fuels.
The Exhaust Gas Cleaning Systems
Association, or EGCSA, reckons that
around 4,000 ships will be fitted with
scrubbers globally by January 1,
2020, though other estimates are
lower. CE Delft, which acts as a
consultant to the IMO, has forecast
some 3,000 ships will be fitted with
the technology by 2020, while Platts
Analytics estimates that around 2200
ships will be ready with scrubbers by
January 1, 2020.
But scrubbers have their own issues.
Some argue that “open-loop”
scrubbers – which discharge
wastewaster – do not address
environmental issues as they simply
take sulfur out of the air and put it into
the ocean. Others argue that this is an oversimplification and ignores the fact that the IMO has set
out guidelines for cleaning systems which include washwater discharge and monitoring criteria to
safeguard against environmental damage.However, a handful of nations and ports have decided
to operate independently of the IMO and have introduced local requirements for the operation of
scrubbers.

In January, the Port of Fujairah – the key bunkering location in the Middle East – issued a notice
banning the use of open-loop scrubbers in its port waters. China has already implemented a ban,
from January 1, in its emission control areas covering inland waters and most of its coastline
including Bohai Bay waters. Singapore is set to implement a ban from January 1, 2020, with ships
that wish to dispose of exhaust gas cleaning residues in Singapore required to engage a licensed
toxic industrial waste collector.
Washwater discharge from open-loop scrubbers has also been banned in many other regions
including Belgium, California and Massachusetts in the US, along Germany’s Rhine River as well
as the Irish Port of Waterford.
Despite some skepticism towards open-loop scrubbers, Japan has decided it will support their use
after a study conducted by its Ministry of Land, Infrastructure, Transport and Tourism concluded
that no short-term or long-term effects on marine organisms were likely to be caused by the use of
this technology.
Meanwhile, the Clean Shipping Alliance 2020 in June said it welcomed the preliminary results of
an independent study presented by CE Delft, which indicated that accumulated concentrations of
exhaust gas cleaning systems wash water components are at very low levels, and well below
applicable regulatory limits.
Another issue cited against scrubbers is their high upfront capital costs. Costs generally range
between $2 million and $10 million per vessel. If a company such as Maersk were to outfit its
roughly 300 vessels with scrubbers at an average cost of $5 million per vessel, this would amount
to $1.5 billion, Moody’s Investors Service said recently in a research report.Maersk has so far
disclosed about $263 million of contractual commitments for scrubber investments.
Sulfur spreads
Still, for some market participants, the investment case for a scrubber remains fairly strong with
widespread expectations that the price of HSFO will decline sharply after 2020, while the price of
LSFO/MGO will remain high, at least in the initial years following 2020. This means that the
payback time for scrubbers could still be relatively short despite their initial costs.

Although there is still a lot of uncertainty over how great the premium of LSFO over HSFO will be, the
expected tight supply of compliant fuels suggests that the premium will be strong enough to
recover the cost of scrubbers within the first two years, Drewry Maritime Research said in May.
Drewry expects the average price premium of LSFO over HSFO to be around $240/mt in 2020,
gradually declining to close to $80/mt by 2023 once the LSFO supply improves. Under the Platts
Analytics reference case, gasoil-HSFO spreads are expected to reach the peak of a little over
$350/mt in early the year, but then will ease back.
“We don’t know what the price of compliant fuel is going to be, and the market doesn’t know,”
Hamish Norton, the president of Star Bulk Carriers, said in April. “The only way to hedge is to put
in a scrubber that allows you to use residual fuel oil, which will always exist.”
BIMCO, the world’s largest international shipping association, said last year that there was
anecdotal evidence that there might be a significant premium on long-term charters for oil tankers
with a scrubber installed over similar ships without one.
Some expect the adoption of scrubbers to split the time-charter market into two tiers. Some
charterers are likely to be willing to pay higher prices for scrubber-installed ships because it would
allow them to burn a cheaper fuel, thereby trimming their operational costs. As the deadline on the
new marine fuel norms draws closer, the trend of compliant ships fetching a premium will only
gather steam, according to some analysts.
Green loans are also paving the way for shipowners to install this technology as banks and other
financial institutions lend their support to environmental goals. In October 2018, Star Bulk Carriers

said it had secured a $310 million loan including a $70 million tranche to exclusively finance the
procurement and retrofitting of scrubbers for up to about 50 vessels in its fleet.
Early this year, law firm Watson Farley & Williams said it advised BNP Paribas as coordinating
bank and agent, together with a syndicate of four other banks as lenders, in connection with a
$439 million financing backed by China’s export credit agency Sinosure of 86 scrubbers for the
Mediterranean Shipping Company (MSC), which are to be fitted in China.
Japan’s Nippon Yusen Kabushiki Kaisha, or NYK Line, said in March it had entered into a Yen 9
billion ($81.5 million) syndicated loan agreement to fund installation of scrubber systems on its
vessels. According to the company, that was Japan’s first syndicated loan to be certified by the
Japan Credit Rating Agency with its highest ranking of “Green 1,” demonstrating the loan was
aligned with the core components of the internationally recognized Green Loan Principles.
Ensuring compliance
It is expected there will be a high degree of compliance with the IMO 2020 rule, particularly in the
major ports, as stringent checks will be in place with stiff penalties likely to be enforced.
Shipowners who do not comply run the risk of considerable damage to their reputation among
charterers and customers. A growing number of shipowners and operators are already developing
ship implementation plans, which will mitigate risks and help with compliance.
The largest sources of bunker demand – the biggest container ships, dry bulk carriers – will have
to be compliant, so non-compliance will only ever represent a small fraction of global bunker
demand. One industry consultant told Platts that non-compliance will at most be 10% in the initial
months following 2020.
Meanwhile, port authorities are also stepping up efforts to aid checks. Singapore, the world’s
largest bunkering port, has already unveiled a list of measures to help the industry.
MPA will inspect Singapore-registered ships and foreign-registered ships calling at Singapore in
accordance with the Flag State and Port State Control regimes, respectively.

“Like the violation of other MARPOL Annex VI requirements, the owner and the master of the ship
may be fined up to S$10,000 ($7,392) or imprisoned for a term not exceeding two years, or both,
for non-compliance of these regulations,” an MPA spokeswoman told Platts in April.
Collaborate for success
The automaker Henry Ford once said: “Coming together is a beginning. Keeping together is
progress. Working together is success.” This could not be more apt in the context of the IMO 2020
rule, where so many stakeholders are involved.
The charterer, owner, ship crew and manager, for example, must be involved while planning for
the fuel switchover, to ensure a smooth transition. The ship’s crew will likely have to deal with
more varied fuels. Trialing such fuels ahead of 2020 could help them manage the many
challenges.
Refiners also need to educate their customers about the fuels specifications they intend to supply
and the ports where such fuels will be available. Many of them are already engaging with their
customers.
Meanwhile, bunker traders are providing credit to both buyers and suppliers at a time when
shipping faces headwinds due to this rule and other impending environmental regulations.
Pricing agencies are also playing their part to bring transparency to a market that currently has
limited liquidity, while international shipping industry associations such as BIMCO are already
developing bunker clauses to supplement contracts, to aid preparations for 2020.
Platts, for its part, has been publishing daily price assessments for IMO-compliant Marine Fuel
0.5% bunkers on delivered and ex-wharf bases at key ports globally since July 1, 2019. Platts has
also launched daily cargo and barge assessments for Marine Fuel 0.5% reflecting residual marine
fuels with a maximum sulfur limit of 0.5% at key ports across the globe starting January 2, 2019.
In the end, as IBIA says, “the best course of action is for all parties to try their best to be ready for
2020… Society will judge the entire sector harshly if it fails.”

NewBase For discussion or further details on the news below you may contact us on +971504822502,Dubai, UAE
The Editor :”Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and sponsored by Hawk Energy Service –
Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS &BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 years ofexperience 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 broadcastedinternationally, via GCC leading
satellite Channels.
NewBase :For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 2019 K. Al Awadi

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