New base 22 august energy news issue 1064 by khaled al awadi

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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NewBase August 22 - 2017 - Issue No. 1064 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: New contracts awarded for Hail, Ghasha gas project
(WAM) + ( images by NewBase)
Two new contracts have been awarded as part of the Hail & Ghasha sour gas project in Abu
Dhabi, it was announced here by contractors KBR Inc.
KBR Inc. have been awarded a Project Management Services (PMC) contract by OMV Offshore
Abu Dhabi GmbH, on behalf of ADNOC, for management of the Front End Engineering Design
(FEED) phase of the Hail & Ghasha Development project.
The company will also perform PMC services for the Detailed Engineering phase of the project
under a contract awarded by Occidental of Abu Dhabi Ltd. which is jointly managing the project
with OMV Offshore Abu Dhabi GmbH on behalf of ADNOC.
The work is expected to take 24 months.
The project for the development of the Hail & Ghasha Gas Field is in line with ADNOC’s objective
to deliver a more sustainable and economic gas supply by implementing a fully integrated gas
master plan that increases productivity, performance and delivery.

The Hail & Ghasha Project, one of the largest sour gas fields projects being developed by
ADNOC, is forecast, when completed, to produce about 1 billion cubic feet of sour gas per day.
The infrastructure requirements for the Hail & Ghasha Project include a minimum of eleven
offshore artificial islands to be designed and constructed.

Oman Oil subsidiary completes Phase IV of Korean power project
Oman Observer
GS EPS Co Ltd, a joint independent power producer associate of Oman Oil Company, the
Sultanate’s investment arm in the energy and energy related sectors and GS Holdings, has
completed the construction of the ‘environment-friendly’ Phase IV, 900 MW combined cycle power
plant powered by directly imported LNG.
A ceremony to this effect
was held in the presence of
Mohamed al Harthy,
Ambassador of the
Sultanate of Oman to the
Republic of Korea, Isam al
Zadjali, Chief Executive
Officer of Oman Oil
Company, Chang-Soo
Huh, Chairman of GS
Group, Jin-Soo Huh,
Chairman of GS Caltex,
Yong-Soo Huh, Chief
Executive Officer of GS
EPS, and representatives
from both sides.
GS EPS is one of the nation’s major independent power producers. It also operates three other
LNG fired combined-cycle power plants, with a capacity of 1,500MW and a 100MW renewable
energy power plant in Dangjin, South Chungcheong Province.
“It is a great pleasure for us to witness the inauguration of Phase IV power plant with GS Holdings.
This investment is part of the OOC’s integrated strategy to diversify its growing investments
internationally.
OOC plays a vital role to facilitate the transfer of expertise and technology to form a knowledge-
based economy, and aims to build the technological and operational capacities through strategic
partnerships.
“In future similar renewable
energy projects opportunities can be explored in Oman,” said Isam bin Saud al Zadjali, CEO of
Oman Oil Company.
The power efficiency of GS EPS’s newly completed Phase IV is 60 per cent. Its cost
competitiveness comes from directly procuring the fuel needed for power generation instead of
getting the LNG.
It can also generate relatively more power with the same amount of fuel due to its high efficiency.
Moreover, the power generation dispatch system is set to consider both economic factors and
environmental factors such as fine dust.
Oman Oil Company has more than 50 investments, locally and internationally, where about 64 per
cent of its investments are based in Oman. OOC also contributes to the establishment of a
number of industrial zones and large investments within the Sultanate through entering into
strategic partnerships with major companies in the value chain of the energy sector in order to
transfer expertise and technology and build the operational capacity of local projects in the future.

Iraq: Germany's Siemens increases stake in Kurdistan power
The National - LeAnne Graves
Germany's industrial giant Siemens will work with Iraq’s KAR Group to help the Kurdistan region
generate more power after the company reported a downturn in its orders over the three months
ending in June.
The German company said on Monday that it had widened the scope of its existing service
agreement with KAR to provide further operations and maintenance for two newly added
generators at the Khormala power plant in Kurdistan.
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The plant supports "the development goals of the Kurdistan region,” said Gianluigi Di Giovanni,
senior executive vice president of Siemens power Generation Services in the Middle East. “That’s
why we are proud to expand our collaboration with KAR to deliver reliable and stable electricity
supply to people’s homes.”
The gas-fired plant, totaling around 930 megawatts, makes up nearly 30 per cent of the electricity
demand and supplies more than three million people with power. Siemens said that the service
extension will help improve operational flexibility and performance of the gas turbines for the next
15 years.

In 2013, Siemens installed four gas turbines and four generators valued at €100 million. However,
in the firm’s last quarterly earnings for the three months ending in June, Siemens said orders
dropped 6 per cent “due to sharply lower volume from large orders” in its power and gas segment.
Siemens said that global energy trends continued to reduce overall demand in markets for the
division’s offerings. Orders for the power and gas division dropped by 41 per cent to 2,674, which
resulted in profits and revenues declining 23 per cent and 12 per cent respectively.
Kurdistan’s electricity generation capacity has increased five-fold to nearly 3 gigawatts, up from
482MW a decade earlier. The regional government said that another 3GW could be added to the
power grid “in the near future”.
About US$1.5 billion has been invested in the regional government's power sector, using dual-fuel
gas turbines that can run on either gas or diesel, according to official data.
There is however a bigger emphasis on gas, given the proximity and ease of extraction from Khor
Mor, Khurmala and other fields. That “has resulted in a reliable, scalable and fast-track power
generation programme," the government said in a statement on its website. "With the planned
expansion in gas production, other new power stations will be supplied with gas through the
growing regional gas grid.”

India: Rosneft & Trafigura Buy Essar Oil for $12.9 Billion
Bloomberg - Saket Sundria
Rosneft PJSC and partners including Trafigura Group finalized their $12.9 billion purchase of
India’s Essar Oil Ltd.
It took more than 10 months to complete the deal after it was announcedlast October and more
than two years after Rosneft first confirmed it was in talks to buy India’s second-largest private oil
refiner. The purchase gives Russia’s biggest oil producer and one of the world’s largest
commodity traders access to a global demand center in Asia, while helping Essar Group reduce
its debt by about $11 billion and shift focus to its strugglingsteel business.
Essar Group sold 49 percent of Essar Oil each to Rosneft and a consortium of Trafigura and
United Capital Partners, the Indian conglomerate said in a statement. The closing of the
acquisition enables Rosneft to enter one of the world’s fastest growing markets, the Russian
company said in a separate statement.
Essar will sell its refinery at Vadinar on India’s west coast and its fuel-retailing business along with
a port terminal and power plant that helps feed the refinery. The deal for the 400,000-barrel-a-day
refinery will give Russia’s biggest oil producer an outlet in South Asia for its production as oil-rich
countries vie for market share.
New Management
Essar Oil on Monday announced a new 12-member board and appointed Tony Fountain as its
chairman. It named B. Anand as the new chief executive officer, replacing Lalit Kumar Gupta, who
will stay on as an adviser to the management board.

“One of the great attractions for buying
this is recognition that many
opportunities exist,” Fountain told
reporters. “We have asked the
management team to bring to board an
asset-development plan that we can
review.”
The company will expand its fuel
stations to 6,000 outlets from 3,500
now while the new management has
yet to decide on a refinery-expansion
plan, Fountain said, adding that the
new owners will take over about $5
billion of Essar Oil’s existing debt.
Under the deal, Essar Oil has a non-
compete agreement with Essar Group, which cannot venture into oil refining and fuel retailing,
Essar Oil Director Kris Zielicki said.
Rosneft first confirmed it was buying a stake in the Essar refinery in July 2015. More suitors later
entered the fray as Essar was said to be in talks withthe national oil companies of Saudi Arabia
and Iran to sell a stake in its refinery business. It took several months to secure approvals for the
deal as it faced resistance from lenders.
Essar Oil owes Iran about 2 billion euros for crude oil purchases, which will be paid by the
company under its new owners, the Indian group said at a separate press conference.
Breakdown of Essar Group’s reduction of debt:
• To repay $5 billion to Essar Energy to clear loans
• New owners to take over Essar Oil’s $5.4 billion debt
• Essar to repay about $600 million to some Indian lenders

Equatorial Guinea: Ophir reports Fortuna FLNG offtake
warded to Gunvor …. Source: Ophir Energy
The Ministry of Mines and Hydrocarbons ('MMH'), Ophir Equatorial Guinea (Block
R), OneLNG and GEPetrol have nominated Gunvor Group as their preferred LNG Buyer for
offtake from the Fortuna FLNG project.
All parties have agreed the principal commercial terms subject to finalising a Sale and Purchase
Agreement (“SPA”) for the offtake ahead of the Final Investment Decision (“FID”) on the Fortuna
FLNG project.
Gunvor is committed to taking the full contract capacity of the Gandria FLNG vessel of 2.2
MMTPA, which will be purchased on a Brent-linked, Free on Board (“FOB”) basis for a 10 year
term.
The contract structure allows flexibility for up to 1.1 MMTPA of the Fortuna capacity to be
marketed on an alternate basis. Consequently the agreement gives the Fortuna partners,
alongside the State of Equatorial Guinea, the potential to sell volumes to higher priced gas
markets in Africa and beyond, whilst retaining a share in the profits of such sales.
Fortuna is located in Block R, offshore Equatorial Guinea, in the SE part of the Niger Delta
complex With a preferred LNG Buyer now nominated, the last significant milestone remaining prior
to FID for the Fortuna FLNG project is the completion of project funding, with FID remaining on
track for later in 2017.
His Excellency, Gabriel Mbaga Obiang Lima, Minister of Mines and Hydrocarbons for the Republic
of Equatorial Guinea, commented:
'The selection of Gunvor sets a landmark moment in the development of the Fortuna Project. The
partnership with Gunvor also paves the way for the government’s objective to deliver important
projects that monetize our gas, promotes local content and brings world-class petroleum
technology to Equatorial Guinea.
The Fortuna Project will target becoming the first choice supplier of LNG for the LNG to Africa
initiative, furthering Equatorial Guinea’s leadership position in Africa as an LNG exporter.'
London-based Ophir Energy on Thursday said it still expects to make a final investment decision
on its Fortuna FLNG project in Equatorial Guinea in mid-2017.

Ophir and its partner, OneLNG, a joint venture between Golar LNG and Schlumberger,
had “advanced the Fortuna FLNG project towards FID,” Ophir said in its 2016 results report. Ophir
and One LNG signed a deal back in November to form a joint operating company to develop the
Fortuna FLNG project.
“Since announcing the JV in November 2016 we have made good progress against the remaining
milestones. The Umbrella agreement
between the Fortuna JV and the
Government of Equatorial Guinea is
expected to be signed during the first
quarter this year. This defines the
legal and fiscal framework for the
project,” said Nick Cooper, Chief
Executive of Ophir Energy.
“A term sheet has been signed for
the provision of the debt facility with
a consortium of Chinese banks. We
have now moved to the
documentation phase and expect to
close the facility during the second
quarter of2017,” he added. Cooper
said that talks with offtakers “remain
on-going and are expected to be
closed out imminently.”
Initial offtake is expected to be 2.2-2.5 mtpa for a duration of between 15 and 20 years which will
monetise around 2.6 Tcf of the discovered resource offshore Equatorial Guinea, according to an
earlier statement Ophir.
2017 Capex
Ophir revised its capital expenditure for 2017, from $150-200 million previously planned to $125-
175 million. The plans include initial funding of $25 million for the Fortuna JV.
Longer term, Ophir’s future financial commitments beyond 2017 are limited to $33 million against
agreed exploration work programs. The company currently forecasts the net cash position of
$100-$125 million at year end 2017, and a gross cash of $375-425 million.
Nick Cooper, Chief Executive of Ophir, commented:
'We thank those parties that participated in the competitive tender process for the offtake and
welcome Gunvor to the Fortuna FLNG Project. Gunvor’s involvement is a further addition to a
strong partnership along the Fortuna value chain.
Our focus is now on completing the financing package and debt facility. With Golar’s sister vessel,
the Hilli, nearing completion and with Petronas FLNG having recently delivered commercial
cargoes, FLNG is now entering the mainstream.'
Jeff Goodrich, CEO OneLNG SA, commented:
'OneLNG, along with the State of Equatorial Guinea and Ophir, would like to take the opportunity
to welcome Gunvor to the Fortuna family. We look forward to working together to set the new
performance benchmark in FLNG.'

NewBase August 22 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices rise on signs of gradually tightening market
Reuters + NewBase
Oil prices rose on Tuesday, lifted by indications that supply is gradually tightening, especially in
the United States.
Brent crude futures, the international benchmark for oil prices, were at $51.91 per barrel at 0607
GMT, up 25 cents, or 0.5 percent, from their last close. U.S. West Texas Intermediate (WTI) crude
futures CLc1 were at $47.60 a barrel, up 23 cents, or 0.5 percent.
"U.S. crude oil stocks have been falling consistently in recent weeks. If the downtrend in oil
inventories is maintained, then a bullish case can be made for oil, especially given the ongoing
supply restrictions from OPEC and Russia," said Fawad Razaqzada, market analyst at futures
brokerage Forex.com.
U.S. commercial crude inventories have fallen by almost 13 percent from their March peaks, to
466.5 million barrels. And although U.S. crude production has broken through 9.5 million barrels
per day (bpd), its highest since July 2015, analysts said growth may soon slow as U.S. energy
firms are cutting the amount of rigs drilling for new oil.
Erik Norland of CME Group, a major commodity exchange, said "it looks like the growth in U.S.
production is quickly running out of steam and, all else being equal, this should be good news for
OPEC and the price of oil".
The Organization of the Petroleum Exporting Countries (OPEC) together with non-OPEC
producers including Russia has pledged to hold back around 1.8 million bpd of output between
January this year and March 2018 in order to tighten supplies and prop up prices.
The weekly rollout of data on U.S. inventories starts later on Tuesday, giving the market a chance
to see if the recent downward trend will continue.
Oil price special
coverage

Industry group the American Petroleum Institute publishes statistics on crude inventories and
refinery operations for last week. On Wednesday, it will be the turn of the U.S. government's
Energy Information Administration.
U.S. crude inventories are expected to fall for an eighth straight week and drop by 3.4 million
barrels, a preliminary Reuters poll showed on Monday. "Attention now turns to this week's crude
inventory figures tonight and tomorrow," said Jeffrey Halley, senior market analyst at OANDA in
Singapore.
Crude Oil Price Forecast August 22, 2017, Technical Analysis
The WTI Crude Oil market was initially somewhat sideways during the day on Monday but then
turned around to sell off drastically during American trading. We reached towards the $47.50 level,
and therefore an area that should be supportive. If we can break down below that level, the
market is very likely to see quite a bit of support extending down to the $46.50 level. If we can
bounce from here, I think that the
market goes looking towards the
$48.50 level above. The oil
markets continue to be very
volatile, but when you look at the
longer-term charts it seems that
the markets are drifting lower
overall. There is an obvious
concern about oversupply, so
having said that it will more than
likely continue to weigh upon the
value of crude oil in general. Also,
pay attention to the US Dollar
Index, as the value of the
currency also influences price.
Brent
Brent markets initially were sideways during the day on Monday, but the $52.50 support level has
given way, and we have fallen a full dollar since then. Because of this, I think that the markets can
go looking for more serious support at the $51 level, and then possibly even the $50 level. Crude
oil looks horrible as every rally that we get, the sellers come in and smash it right away. If we can
find support, it’s possible that we
go back towards the $52.50
level, but there isn’t much on this
chart that gives me a lot of hope
for any sustained rally. If we
break down below the $50 level,
that would of course be very
bearish, and send this market
towards the $48 level
underneath. I expect that thin
volume during vacation season
will continue to be an issue as
well.

NewBase Special Coverage
News Agencies News Release 22 Aug 2017
The Oil Glut Rewrites History
By Liam Denning
The good news for oil bulls is that U.S. stockpiles of the stuff, while still bloated, are now firmly
back inside the historical range. The bad news is that all that bloating means the average isn't
what it was.
When the Energy Information Administration puts out its weekly summary of oil inventories,
the one-pager usually has some form of wording about how the current level compares with what's
typical for the particular time of year. Here's an example from this week's report, released
Wednesday:
At 466.5 million barrels, U.S. crude oil inventories are in the upper half of the average range for
this time of year.
U.S. inventories being in the upper half of the range means OPEC's efforts to clear the glut still have a
ways to go. On the bright side, stockpiles have now dropped for seven weeks in a row, draining almost 43
million barrels from the tanks -- so things have been heading in the right direction. But even here, OPEC
isn't making as much headway in its journey back to "rebalancing" the market as it may seem.
That's because those historical ranges are five-year averages that roll forward with time. So in the summer
of 2017, there's about two years worth of build-up skewing the range higher. To see what I mean, I
calculated average ranges for the periods 2012 through 2016 and 2010 through 2014, with the second
corresponding to the period before inventories blew out and oil prices crashed. The chart below shows how
weekly commercial crude oil inventory levels in 2017 compare with the recent historical range and the pre-
crash one:

You can see immediately how the sudden build-up of oil in 2015 and 2016 have expanded the
historical range enormously. Notice, too, how the average level for the most recent five-year
period is roughly 20 million to 40 million barrels above the ceiling for the slightly older range.
Inventories would need to drop by another 127 million barrels to be inside that green area.
Here's the same chart for gasoline:
The ranges for gasoline are much tighter, possibly due in part to the fact that, unlike crude oil,
exports of the product have been allowed for many years. Even here, though, while stocks are
now inside the upper part of the five-year range, they're still almost 8 million barrels above the top
end of the older range.
One should also acknowledge, however, that inventories are only one part of the equation. After
all, demand for oil changes over time. So higher (or lower) stockpiles may reflect the need to
cover more or less consumption, not just excesses or deficits.
With that in mind, here's how U.S. crude oil and gasoline inventories compare with trailing
demand:

The Daily Show
Relative to trailing demand, gasoline inventories are already back to where they were before the
crash but crude stocks still have a ways to go
Note: U.S. inventories as a multiple of average daily demand for gasoline and petroleum products,
trailing 12 months. Data for June and July 2017 interpolated from the EIA's weekly estimates.
There's some good news here for the likes of OPEC, with U.S. gasoline inventories getting back to
the sort of demand-adjusted levels that prevailed in that halcyon summer of 2014 (although last
week's increase in inventories, unusual for this time of year, is troubling). Not so the crude glut.
Even after the reductions, it remains high however you cut it.
Inventories may be back inside the range. But the lesson here is to read historical averages as
living, moving things rather than fossilized remains.
--Dave Merrill contribued graphics
This column does not necessarily reflect the opinion of NewBAse and its owners.
7

Natural gas-fired electricity conversion efficiency grows as coal
remains stable
Form EIA-923, Power Plant Operations Report
From 2006 to 2015, annual average heat rates of natural gas-fired electricity generators
decreased 7% as heat rates of coal-fired electricity generators remained stable, increasing only
1%. Heat rates are calculated based on the amount of energy (measured in British thermal units)
reported to EIA that was used to generate a unit of electricity. Lower heat rates indicate more
efficient generation, because less fuel is needed per kilowatthour.
In 2006, the heat rate for all natural gas-fired generation averaged 8,471 British thermal units per
kilowatthour (Btu/kWh), about 18% lower than the average heat rate of 10,351 Btu/kWh for coal-
fired generation.
With stable coal-fired heat rates and declining natural gas-fired heat rates since that time, the
average heat rate for natural gas-fired generation was about 25% lower than the average heat
rate for coal-fired generation in 2015, based on the latest available annual data.
The small rise in the average operating heat rate for coal-fired generation may be attributed to
emissions controls. Emissions-control equipment was installed on almost 205 gigawatts (GW) of
coal capacity from 2006 to 2015, or about 73% of the coal-fired generator fleet that was operating
in 2016. These emissions-control measures often require more on-site usage of electricity, which
involves consuming fuel but not necessarily producing electricity output.

Emissions-control investments were also made at about 37.5 GW of natural gas-fired generators,
or about 9% of the natural gas fleet. However, relative to the effects on coal-fired generation,
these investments have not been a significant influence on average operating efficiency trends for
natural gas-fired generation.
Changes in usage patterns of coal and natural gas plants could affect their heat rates. Plants that
are cycled on and off more frequently—as opposed to being operated more continuously—may
consume more fuel to produce electricity, especially during ramping periods (times of increasing
demand for electricity).
The rise in coal generators’ heat rates—likely attributable to increased on-site electricity use as a
result of operational changes and emissions controls—was partially offset by the net effects of
adding 19.5 GW of more-efficient new coal generating capacity while retiring 43.1 GW of relatively
less-efficient coal capacity.
Coal units installed between 2006 and 2015 had a weighted-average design heat rate of 9,665
Btu/kWh, compared with the coal units that retired over this period, which had a weighted average
design heat rate of 10,343 Btu/kWh.
One main factor in the improvement of the natural gas fleet’s heat rate is changes in the types of
natural gas-fired electricity generators. Unlike coal, natural gas has two distinct types of electricity-
generating technologies: combined cycle and simple cycle.
Combined-cycle systems are significantly more efficient. The capacity of natural gas-fired units
added since 2006 has been, on average, more efficient than the existing fleet, and the natural
gas-fired capacity retired since 2006 has been, on average, less efficient. Almost 58 GW of
combined-cycle capacity, with a weighted-average design heat rate of 7,029 Btu/kWh, was added
between 2006 and 2015. Nearly 34 GW of natural gas capacity, with a weighted average design
heat rate of 11,218 Btu/kWh, retired during that period.
Over time, as more combined-cycle units have been installed, they have made up a larger portion
of the natural gas generator fleet and accounted for a larger share of natural gas-fired generation.
In 2015, natural gas-fired combined-cycle technology operated at an average heat rate of 7,340
Btu/kWh. In contrast, simple-cycle natural gas-fired generators, which encompass several distinct
technology types (gas turbines, internal combustion engines, and steam turbines), operated at a
consumption-weighted average heat rate of 9,788 Btu/kWh.
Combined-cycle systems accounted for 75% of total natural gas-fired generation in 2006. By
2015, this share had increased to 85%. The increased use of the more efficient technology
resulted in a lower overall average operating heat rate for natural gas-fired units.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
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 August 2017 K. Al Awadi

New base 22 august energy news issue 1064 by khaled al awadi

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