New base 26 september 2017 energy news issue 1075 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,
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NewBase Energy News 26 September 2017 - Issue No. 1075 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: Announces Free Salik, parking and charging among raft
of incentives for Dubai motorists to go electric
The National - LeAnne Graves
Dubai introduced four incentives to help propel electric cars on the streets of the emirate from free
public charging and parking to toll fee exemptions and discounted vehicle registration. Reem
Mohammed / The National
Dubai will spend millions of dirhams on incentives to have 42,000 electric vehicles (EVs) on the
emirate’s streets by 2030.
Dubai Electricity and Water Authority (Dewa) and the Road Transport Authority (RTA) on Sunday
announced four incentives to help increase the number of plug-in cars, from free public parking
and charging to toll-fee exemption and discounts on the plug-in car’s registration.
Saeed Al Tayer, Dewa’s managing director and chief executive, said that cost of the project is
linked to the rate of utilisation of the incentives. While it was difficult to put an exact figure on how
much the government will spend to provide these offers – the free public electricity alone will be in
the “millions” of dirhams, he said.

The Dubai government had previously set the tariff for charging EVs by the green chargers at 29
fils per kilowatt hour (kWh), but now until the end of 2019, public charging stations will be free.
“This is significant savings compared to fuel-powered cars,” Mr Al Tayer said.
Currently there are more than 100 public charging stations throughout the emirate, doubling next
year to 200. Mr Al Tayer said that EV cars such as the Renault Zoe had cost Dh7 to charge, while
a similar petrol-fuelled car would cost Dh100 to fill its tank.
For Tesla, the price to charge at one of the public stations
was Dh29, more than 80 per cent cheaper than the Dh150
for fuel at a petrol station.
In collaboration with Dewa, the RTA has offered free public
parking at designated areas which include Madinat
Jumeirah, Jumeirah Beach Residence and Dubai
International Airport. Nasser Shehab, chief executive of
strategy and corporate governance at the RTA, said that
there were over 40 parking areas across Dubai designated
for EVs, with more being added.
The incentives offered by the RTA do not have an expiration at present. Any EV owner can apply
for a Salik fee exemption to bypass the Dh4 charge at each of the seven toll gates as well as a 15
per cent discount on all car registration and renewal fees.
With the addition of these incentives, there are still limitations, said Mr Al Tayer. These include
auto finance loans to insurance coverage, but there are also a limited selection of EV cars
available for purchase on the UAE market. Tesla started its operations in Dubai in January,
offering its Model S sedan, Model X SUV and now the cheaper Model M.
At that time the Tesla founder Elon Musk said that he expected to invest tens of millions of dollars
in propelling the UAE’S EV infrastructure. Yet even before Tesla’s emergence, France’s Renault
featured its Zoe in showrooms across the country.
However, there are other types of plug-in cars that may be available in the UAE soon.
BMW makes an all-electric car, known as the i3, yet only its hybrid i8 is in the country.
Discussions are under way to have BMW, Honda, Nissan and Toyota all-electric cars sold in the
country, a source told The National.
Despite hybrids being sold on the market, not all of the dual-powered types will qualify for this
programme as cars must have an electrical plug. For instance, the Toyota Mirai is powered by
hydrogen fuel. It is considered a hybrid car, but does not rely on electricity as a form of its power.
“I think there will be more cars in the future with the adaptation, definitely, but first we have this
initiative and we need market penetration,” said Mr Al Tayer. “Once we have solid infrastructure, I
think this will attract more customers and agents [car makers] will increase.”
The EV market is expected to make up the majority of new car sales worldwide by 2040,
according to Bloomberg New Energy Finance (BNEF). Colin McKerracher, a BNEF transport
analyst, said in June that he saw “momentous inflection point for the global auto industry in the
second half of the 2020s”.
BNEF forecasts EV sales globally will more than triple to 3 million by 2021 from 700,000 last year.

Ivano Iannelli, the Dubai Carbon chief executive, said that the EV model of the future will come
from a Silicon Valley-type company.
“Don’t expect EV manufacturers to be the BMW or Toyota, but your Apple, Google and other
disruptive innovation companies,” he said. “These are the companies that no one has heard of or
feel threatened by currently, but tomorrow, they’ll be the ‘Teslas’ attacking the market.”
Hybrid and electric cars, parked outside Armani Hotel, where Dubai authorities announced
incentives to promote electric vehicles in Dubai. Reem Mohammed / The National. Dubai will
spend millions of dirhams on incentives to have 32,000 electric vehicles (EVs) on the emirate’s
streets by 2020.
Dubai Electricity and Water Authority (Dewa) and the Road Transport Authority (RTA) announced
four incentives to help expand EV motorists on Sunday, from free public parking and charging to
toll fee exemption and discounts on the plug-in car’s registration.
Dewa’s managing director and chief executive, Saeed Al Tayer, said more than 100 charging
stations throughout the emirate will provide free electricity to all EVs until the end of 2019.
Previously, the standard electricity tariff of 29 fils per kilowatt hour (kWh) was applied.
Mr Al Tayer said that EV cars such as the Renault Zoe had cost Dh7 to charge, while a similar
petrol-fuelled car would cost Dh100 to fill its tank. For Tesla, the price to charge at one of the
public stations was Dh29, more than 80 per cent cheaper than the Dh150 for fuel at a petrol
station.
The other incentives offered by the RTA do not have an expiration currently. Any EV owner can
apply for a Salik pass to bypass tolls as well as a special sticker to be placed on the car to allow
free parking in designated areas throughout the emirate. In addition, the RTA is offering a 15 per
cent discount on all registration fees for the green cars.
These incentives will only apply to some hybrid cars as the requirement is to have plug-in
capabilities. Any car without this capability, such as hydrogen fuel Toyota Mirai, will not be eligible.

UAE Dana Gas is a surviver of Debt Drama
By Marcus Ashworth & Marcus Ashworth ( Bloomberg )
Dana Gas PJSC is an independent natural gas supplier from Sharjah, one of the smaller emirates
in the United Arab Emirates. It produces most of its energy from the Kurdish region of Iraq as well
as Egypt. With a market capitalization of about $1.5 billion it may not be a major player, but it has
certainly learnt how to play hardball in legal wranglings over its sukuk securities.
Its dispute with investors including Blackrock Inc. and Goldman Sachs Group Inc. is now making
its way through the English courts -- the latest wrinkle is due on Monday -- and trading suggests
bond holders are banking on common sense prevailing.
Down But Not Out
Investors are pricing the recovery rate close to previously suggested workout plans
There's perhaps some wisdom to this, given the outcome of a previous attempt not to pay a
different type of sukuk: in 2010, Kuwaiti company Investment Dar attempted this, but then rolled
over soon after the English courts got involved. To have this happen once is unfortunate, but this
second occurrence is worrying for investors.
This time around, a broader problem has already taken hold, with one small issuer potentially
ruining the whole market for everyone. Regardless of what happens next, Dana's gone so far
down the road of using religious rulings to avoid its debt repayments the affair could easily scare
international investors away from the sector, possibly for good.
The fallout can be seen in the new issue market. While sovereign sales are carrying on -- Saudi
Arabia and Bahrain issued sukuks this month -- the broader corporate and financials market in the
Middle East has been effectively shuttered awaiting resolution of this dispute.
Sukuk are complex financial structures that require -- ongoing, in Dana's case -- approval from
religious scholars. They don't pay interest, which is banned under Islamic law. They offer
something else instead, such as profit participation payments or rent.
In June Dana obtained a ruling from an Islamic court that two of its outstanding international
Mudarabah Sukuk bonds, with a combined face value of $700 million, were non-compliant with
Shariah law. But here is the rub: if the bond is not compliant now then it was never compliant, and

no profit participation payments should ever have been made. So Dana is now claiming most the
money it paid out to holders of the bonds should be returned. Punchy.
Bondholders objected, but Dana has rejected a common sense solution. A counter-offer from a
group representing 70 percent of holders, including Blackrock and Goldman, suggested an
immediate payment of half of the $700 million face amount outstanding and the due date for the
balance extended for three years.
Instead the investors are finding themselves defending their cause in an English court, with the
added twist that Dana won't be appearing due to restrictions placed on it by a Sharjah court in the
U.A.E. A ruling in London on Friday addressed some conflicts about the company's participation
and the timing, and now the case will proceed on Monday. It is still a far from straightforward
affair. After the trial starts it will be stayed until Oct. 12, to allow court proceedings in Sharjah to
conclude -- these concern the legitimacy of the injunction against Dana, along with questions on
the earlier Shariah-compliance ruling.
The irony in all of this is that that Dana’s stock price has doubled since around the end of May,
because it has successfully pursued the Kurdistan Regional Government over failure to develop
oil and gas assets. The profits could yet start flowing. It has now set its legal sights on Egypt as
well as partners in its equity joint ventures.
Not An Equity Problem
Dana's success in pursuing compensation for their energy rights from Kurdish region of Iraq has
doubled the share price
However, even if the case resolves into an arrangement that roughly satisfies all sides, the
damage has been done to one corner of the $350 billion global sukuk market. Though the
corporate, non-sovereign universe is a small slice of this pie (not least because it mostly concerns
only issuers outside of Malaysia), its the one global players are eyeing for growth. The U.K. is part
of the push: not only has Britain issued a sukuk, it plans to increase the size of the security in
2019. Big beasts such as Blackrock and Goldman are by no means under pressure to suffer the
types of antics Dana is now trying, they can just ignore the whole sector.
The affair highlights the importance of creating a centralized Shariah court for the Gulf
Cooperation Council countries that would have definite and final authority on sukuk structures.
Future investors would rightly demand this level of comfort.
This column does not necessarily reflect the opinion of Bloomberg LP nor NewBase and its owners.

UAE: Statoil Vies for a Stake in Abu Dhabi's Offshore Oil
Bloomberg - Mikael Holter
Statoil ASA is among producers involved in discussions with the Abu Dhabi National Oil Co. about
joining offshore production in the emirate, according to a Norwegian diplomatic dispatch.
“All the major oil companies, including Statoil, are positioning themselves for a cooperation with
Adnoc in the offshore segment,” Norway’s embassy in Abu Dhabi wrote in a message to the
Foreign Ministry in Oslo dated Aug. 17, which was obtained by Bloomberg through a freedom-of-
information request.
The diplomatic wire made direct
reference to an Aug. 7 statement from
Adnoc in which Abu Dhabi’s state oil
company said it was in “advanced
discussions with potential partners” for
an offshore oil concession that expires in
March and will be split into several parts
under new terms.
Adnoc said at the time that more than a
dozen companies were involved in talks,
including existing concessionaires and
new participants, without mentioning
names. Existing international partners
include Exxon Mobil Corp., BP Plc
and Total SA.
Statoil, which has had an office in Abu
Dhabi since 2010 to look for business opportunities in the region, has an “ongoing dialog” with
Adnoc, spokesman Erik Haaland said by phone. He declined to comment on whether Statoil was
involved in discussions over the offshore concessions.
“The Middle-East is a very interesting area for our industry, and one of the most resource-rich
areas in the world,” Haaland said. “We’re looking at a broad range of opportunities.”
BP and Royal Dutch Shell Plc, Europe’s biggest oil company, declined to comment. Total and
Exxon couldn’t immediately comment. Adnoc responded to a request for comment by referring to
its Aug. 7 statement.
Existing Concession
The existing offshore concession is currently operated by the Abu Dhabi Marine Operating Co., or
ADMA-OPCO, which is 60 percent owned by Adnoc. Production capacity is planned to reach
about 1 million barrels of oil a day by 2021, compared with 700,000 barrels currently.
Adnoc plans to merge ADMA-OPCO with the Zakum Development Co., or Zadco, of which it also
owns 60 percent, by the end of the year. International shareholders in ADMA-OPCO are BP with
14.67 percent, Total with 13.33 percent and Japan Oil Development Co. with 12 percent. Exxon
owns 28 percent of Zadco, while Jodco holds 12 percent.
The new concessions will include a mix of the Lower Zakum, Umm Shaif, Nasr, Umm Lulu and
Satah Al Razboot fields, according to Adnoc’s Aug. 7 statement. Adnoc will retain a 60 percent
stake in the new areas.

Oman BP production increasing from giant Khazzan gas field
Times News Service
Natural gas production started from Oman’s tight Khazzan gas field operated by BP in partnership
with Oman Oil Company Exploration and Production.
The first phase of the Khazzan development is made up of 200 wells feeding into a two-train
central processing facility, while the production is expected to plateau at 1 billion cubic feet of gas
per day (bcf/d), said a press release. The project was completed ahead of schedule and below
budget.
Once the second phase of the Khazzan is fully up and running production is expected rise to 1.5
bcf/d. Approximately 300 wells are expected to be drilled over the estimated lifetime of the
Khazzan field. The first two phases together will develop an estimated 10.5 trillion cubic feet of
recoverable gas resources.
“I am delighted to see BP delivering Phase One of the Khazzan Project within time and budget.
This will result in realising more gas reserves and more production of gas that our country needs
to support our energy planning and requirements,” said Dr. Mohammed Al Rumhy, Minister of Oil
and Gas
Largest project
“The start of production from Khazzan, BP’s sixth and largest major project start-up so far this
year, is an important milestone in our strategic partnership with Oman. With further development
already planned, this giant field has the potential to produce gas for Oman for decades to come,”
added Bob Dudley, group chief executive of BP.
BP expects to start-up seven major upstream projects in 2017 -- making it one of the most
important years for commissioning new projects in BP’s history. These seven projects are
expected to make a significant contribution to the 800,000 barrels of oil equivalent per day of
production from new projects that BP expects to add by 2020.
“Khazzan further demonstrates BP’s ability to consistently deliver large, complex projects on
schedule and within budget while applying the industry-leading skills and technology we have

developed globally,” Dudley noted. “In this case, tight gas techniques we perfected in the US have
been brought to Oman and we are very pleased with the results.”
The Khazzan tight gas reserves lie at depths of up to five kilometres in narrow bands of extremely
hard, dense rock. These complex and challenging conditions require specialised drilling
equipment, the precise drilling of both vertical and horizontal wells, and well stimulation to free the
gas.
“While Oman has a vast set of resources and human capabilities, BP brings its technology to help
unlock that potential. This increment of gas supplies will provide feedstock for development of
downstream and petrochemical industries,” said Eng. Isam bin Saud Al Zidjali, CEO of Oman Oil
Company.
Production sharing agreement
The production sharing agreement for Block 61, which contains the Khazzan field, was first signed
in 2007 and was amended in 2013 and extended in 2016. Appraisal over 2007-2013 confirmed
the existence of significant tight gas resources that could be developed through the application of
BP’s extensive unconventional gas experience and technology. The first phase of development of
the field was sanctioned in December, 2013.
Drilling efficiency has increased
significantly during the development of the
project. The average time to drill and
complete a vertical well was reduced by 27
per cent and a record time of 60 days was
achieved for completion of one well.
While BP provided advanced seismic,
hydraulic fracturing and well design
expertise, many local Omani businesses
contributed to the Khazzan Project. In fact,
approximately 38 per cent of the total
contract spend to date has been awarded
to local oil and gas services companies.
BP is the Operator of Block 61 and holds a
60 per cent interest. The Oman Oil Company for Exploration & Production holds a 40 per cent
interest.

Oman announces 2017 licensing round
Source: Oman Ministry of Oil & Gas
The Oman Ministry of Oil & Gas has announced the 2017 licensing round. Registration and
bidding for the four blocks on offer starts on 20 September 2017. There are currently over 10
open blocks that will be tendered over the next few years, providing some excellent exploration
opportunities. In this bid round, 4 blocks will be tendered: Block 43B, Block 47, Block 51 and Block 65.
The Ministry has provided a ‘Living Data Room’ with online tools for browsing and visualizing
available block data with an easy-to-use web interface, offering the ability to access the data from
any location world-wide.
In addition to the high quality raw data, additional 'ready-to-use' interpretation projects are
available to subscribers. These projects will save time and facilitate fast-track evaluations. There
are many advantages for businesses that choose to invest in Oman. The country has a well-
deserved reputation as natural, stabilizing force in the region. Omanis are known for their
graciousness and tolerance.
Other significant advantages include:
• An Omani work force that is educated and mostly bilingual (Arabic and English).
• A high quality of life in a safe and modern country.
• A modern business law framework that respects the free market, property rights and the
importance/inviolability of contracts
• Oman encourages free trade and supports international agreements on intellectual property and
foreign investment.
• Corruption remains very low. Oman ratified joining the United Nations Conventions Against
Corruption in 2013.

Oman: Sohar & Tescorp in Maritime Oil Trade With Port Project
By Anthony Dipaola
Oman, the biggest Arab oil producer outside of OPEC, is turning up the heat in a regional battle
for business from ships in need of fuel with a $600 million deal to build storage tanks at the port of
Sohar.
Sohar Port and Freezone signed a contract with
Singapore-based trader Trescorp Alliance Pte to
build an initial fuel-storage capacity of 600,000
cubic meters (21.2 million cubic feet) that will start
operating by 2020, the Omani company’s chief
executive officer, Mark Geilenkirchen, said in an
interview. Trescorp plans to triple the facility’s
capacity to 1.8 million cubic meters within a year,
he said Monday in Dubai.
The Indian Ocean port of Sohar is taking aim at
some of the business that the oil trading hub of Fujairah, located on the same coastline in the
neighboring United Arab Emirates, has had pretty much to itself. Fujairah is the Middle East’s
biggest hub for ship fueling, or bunkering, and will provide more than four times the oil-storage
capacity that Sohar expects to have by 2020.
Both ports are located outside the Strait of Hormuz, a shipping bottleneck vulnerable to potential
disruptions amid political tensions in the area. About 20 percent the world’s oil supply passes
through the strait, according to the U.S. Energy Information Administration.
‘Huge for Us’
“This is going to be huge for us,” Geilenkirchen said. “What we were seeing was vessels coming
to Sohar and then going to Fujairah for bunkering. We want to stop that.”
The first phase of the project will include tanks
to store and blend crude, jet fuel and diesel,
while the second phase will add blending of
products like gasoline and jet fuel, according to
a statement from Sohar Port and Freezone.
Trescorp expects the growth in regional
demand to be “far greater” than the storage
capacity currently available, the Singapore
trader’s chairman, Hamood Al Hashmi, said in
the statement. The expanded facility will have
six deep-water berths, one of which will be
capable of handling very large crude carriers, or VLCCs.
By 2020, Sohar will have total storage of about 3.2 million cubic meters, including the Trescorp
project. Fajairah aims to expand its oil storage to about 14 million cubic meters by that time.
Ship traffic at Sohar has increased for three consecutive months since June, after starting cargo
services to Qatar because of the political crisis that cut that Gulf nation’s transport links to the
region’s largest port, Jebel Ali in the U.A.E., Geilenkirchen said. Sohar Port expects to serve about
3,000 vessels this year, up from about 2,600 in 2016, and it estimates maritime traffic to grow 30
percent next year as more projects including chemical production start there, he said.

Iraq: Shamaran drilling Atrush development well CK-7
Source: ShaMaran Petroleum
ShaMaran Petroleumannounced last week that drilling operations have commenced on the Chiya
Khere ('CK-7') appraisal and development well in the Atrush Block in the Kurdistan Region of Iraq.
CK-7 is located in the central area of the Atrush Block approx. 3 kms east of the Atrush 2
producing well and 3.5 kms west of the Atrush 3 appraisal well.
The main objectives of the well are to appraise the commercial potential of the Mus formation, to
help reduce the uncertainty in the location of the medium to heavy oil transition zone and to serve
as a further producing well.
The well will be drilled with the Romfor 25 drilling rig and is expected to take approx. 52 days.
Planned total vertical depth for the well is approx. 1,575 metres.

Ghana: Tullow Oil to restart TEN fields development drilling
Source: Tullow Oil
Tullow Oil notes that the Special Chamber of the International Tribunal of the Law of the Sea
(ITLOS) in Hamburg made its decision with regard to the maritime boundary dispute between
Ghana and Côte d’Ivoire. The new maritime boundary as determined by the tribunal does not
affect the TEN fields as per the map below.
Tullow will now work with the
Government of Ghana to put in place
the necessary permits to allow the
restart of development drilling in the
TEN fields. Tullow expects to resume
drilling around the end of the year
which will allow production from the
TEN fields to start to increase towards
the FPSO design capacity of 80,000
bopd.
Paul McDade, CEO, commented:
'Tullow looks forward to continuing to
work constructively with the
Governments of both Ghana and Côte
d’Ivoire following the conclusion of this
process. While the TEN fields have
performed well during the period of the
drilling moratorium, we can now restart
work on the additional drilling planned
as part of the TEN fields’ plan of
development and take the fields
towards their full potential.'
TEN field
Development was approved
by the Government of Ghana
in May 2013.
In March 2009, the Eirik Raude rig
successfully drilled the Tweneboa-1 wildcat well in the Deepwater Tano licence, around 20 km
west of Tullow’s Jubilee field and some 45 km offshore from the Ghana mainland. This initial
discovery was followed up by a series of further successful appraisal and exploration wells which
resulted in the discovery of the Tweneboa-Enyenra-Ntomme (TEN) field.
In May 2013, The Ghana Minister of Energy approved the Plan of Development for the field and
Tullow commenced with its second major operated deep water development project in Ghana.
Similar to Jubilee, the development includes the use of an FPSO which has a facility production
capacity of 80,000 bopd which will be tied in to subsea infrastructure across the field. The vessel
was converted in Singapore and in September 2015, the vessel was officially named ‘FPSO Prof.
John Evans Atta Mills’, after the late Ghanaian president who oversaw First Oil from Ghana’s
Jubilee Field in 2010. The FPSO sailed away from Singapore to Ghana on 23 January 2016.

US Residential electricity prices up 3% in first half of 2017
Source: U.S. Energy Information Administration, Electric Power Monthly
Retail electricity rates paid by U.S. residential customers averaged 12.8 cents per kilowatthour
(kWh) during the first six months of 2017, an increase of about 3% compared to the same period
in 2016. First half of 2017 average electricity prices are higher than last year in most areas of the
country, with only six states experiencing lower prices.
The Pacific noncontiguous states of Alaska and Hawaii have the highest electricity residential
prices in the nation. Hawaii's retail price averaged 23.3 cents/kWh in the first half of 2017, and
Alaska's average price was 18.1 cents/kWh, which were 9% and 5% higher, respectively, than in
the same period in 2016.
As a group, the six states in the New England region have the second-highest residential
electricity prices in the nation, but in the first half of 2017, New England’s average residential
electricity price was only 0.5% higher than during the same period last year. This small increase
follows a 3% decline in average annual New England prices during 2016.
Some of the early 2017 increase in residential electricity prices can be attributed to the rising costs
of fuels used for generating power. For example, the cost of natural gas delivered to U.S. electric
generators during the first half of 2017 averaged $3.53 per million British thermal units.
This cost was 37% higher than in the first half of 2016, and the average delivered cost of coal was
down about 2%. An additional driver for increased electricity prices has been the trend in recent
years for power utilities to increase their expenditures on infrastructure for the transmission and
distribution of electricity.

Residential electricity bills reflect changes not just in prices, but also in electricity usage. In the first
half of 2017, the average residential customer was consuming an estimated 812 kWh per month,
down 2.5% from the first half of 2016. Residential customers were using less electricity earlier this
year primarily because of milder weather than in the first half of 2016.
Milder winter temperatures reduce the need for electric heating, while cooler summer
temperatures in many areas of the country reduce the need for air conditioning. The lower
average usage of electricity offset the increase in retail prices. The average residential electric bill
was about the same amount as last year, averaging $104 per month between January and June
2017.
Source: U.S. Energy Information Administration, Electric Power Monthly
EIA’s latest Short-Term Energy Outlook expects electricity prices will remain higher during the
second half of 2017 than in recent years. In 2017, the annual average U.S. residential price is
forecast to be 3.6% higher than in 2016, averaging 13.0 cents/kWh.
Forecast annual average electricity prices are higher across all regions in 2017, ranging from an
increase of 2.2% in the Mountain states to 6.4% in the East South Central states from 2016 levels.
Mild summer weather continues to keep forecast electricity usage lower during the second half of
2017 compared with 2016. EIA expects the typical U.S. residential customer will spend $1,350 for
electricity in 2017, almost exactly the same as annual average expenditures last year.

NewBase September 26 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil hits highest since July 2015; producers say market rebalancing
Reuters + Bloomberg + NewBase
Oil prices soared more than 3 percent on Monday, with Brent hitting its highest in more than two
years, after major producers said the global market was on its way to rebalancing, while Turkey
threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.
The November Brent crude futures contract settled up $2.16, or 3.8 percent, at $59.02 a
barrel, its highest since July, 2015. U.S. West Texas Intermediate crude for November
delivery rose $1.56, or 3 percent, to settle at $52.22 a barrel, the highest since April.
“It’s all driven by the idea that the production cut is starting to work and the rebalance is
underway,” said Gene McGillian, director of market research at Tradition Energy in New York.
Even as both contracts rallied, concerns about U.S. production growth weighed on WTI, widening
its discount, he said.
Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market,
putting more pressure on the Kurdish autonomous region over its independence referendum. The
Iraqi government does not recognise the referendum and has called on foreign countries to stop
importing Kurdish crude.
“If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would
reach the market,” Commerzbank said in a note. The Organization of the Petroleum Exporting
Countries, Russia and several other producers have cut production by about 1.8 million barrels
per day (bpd) since the start of 2017, helping lift oil prices by about 15 percent in the past three
months.
Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting in Vienna of the Joint
Ministerial Monitoring Committee, said output curbs were helping to cut global crude inventories to
their five-year average, OPEC’s stated target.
Russia’s energy minister said no decision was expected before January on whether to extend
output curbs beyond the end of March. Other ministers suggested such a decision could be taken
before the end of this year.
Iran expects to maintain overall crude and condensate exports at around 2.6 million bpd for the
rest of 2017, a senior official from the country’s state oil company said. The energy minister from
the United Arab Emirates said the country’s compliance with OPEC’s supply cuts was 100
percent.
Oil prices came under pressure from a strong dollar, but kept most of their gains from the previous
session as major producers meeting in Vienna said the market was well on its way towards
rebalancing.
The Organization of the Petroleum Exporting Countries, Russia and several other producers have
cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil
prices by about 15 percent in the past three months.
Oil price special
coverage

Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting of the Joint Ministerial
Monitoring Committee, said output curbs were helping cut global crude inventories to their five-
year average, OPEC’s stated target.
London Brent crude for November delivery was down 8 cents at $56.78 a barrel by 0614 GMT,
near the highest since March. U.S. crude for November delivery was down 15 cents at $50.51, but
not far off recent four-month highs.
The dollar index was up 0.2 percent against a basket of currencies. The euro slipped after
Germany’s election showed surging support for a far-right party that left Chancellor Angela Merkel
scrambling to form a governing coalition.
Russia’s energy minister said no decision on extending output curbs beyond the end of March
was expected before January, although other ministers suggested such a decision could be taken
before the end of this year.
Iran expects to maintain overall crude and condensate exports at around 2.6 million bpd for the
rest of 2017, a senior official in the nation’s state oil company said, while the UAE’s energy
minister said its compliance to supply cuts was 100 percent.

OPEC Loses Its Crown as the world's top oil player
By Julian Lee
It's happy days for OPEC, but once the whoops and hollers die down, the group should take a
long hard look at itself. Because it's lost its crown as the world's top oil player.
Shale billionaire Harold Hamm told Bloomberg TV on Friday that forecasts of U.S. oil production
growth are way too optimistic and are distorting global crude prices. That news was greeted with
big smiles -- if not wild cheering -- by oil ministers meeting in Vienna to discuss the effectiveness
of their output deal. But it is too early for them to start celebrating just yet.
That wasn't the only boost ministers got ahead of their latest gathering. Analysts at Goldman
Sachs Group Inc. said in a Sept. 21 note that the level of Brent backwardation -- the premium for
crude for delivery next month over that for delivery a year in the future -- "is consistent with OECD
inventories in days of demand cover falling to 5 percent above their five-year average level." In
other words, OPEC is very close to reaching its target for stockpiles, at least in the developed
nations.
Flipping Curves
Brent crude for prompt delivery is now more expensive than barrels further in the future
Add to that the latest figures from U.K.-based Oil Movements that show the volume of crude oil in
transit on tankers falling to the lowest in records going back to April 2015, along with the growing
sense that physical crude markets are tightening.
And there you have it. The group's cuts are doing the job intended, shale isn't responding, and
OPEC and friends may finally be reaping the rewards from nine months of impressive compliance
with the output deals they agreed late last year.
How did U.S. government forecasters get it so wrong? They failed to recognize that U.S. shale
producers were finally starting to focus on return on investment, rather than growth at any cost,
Hamm said.
When oil prices fell with the recovery in Nigerian and Libyan production during the second quarter,
shale operators cut capital expenditure and output started to fall.

The result is that, while official Department of Energy forecasts as recently as last month showed
U.S. crude production reaching 9.82 million barrels a day by December 2017, the Domestic
Energy Producers Alliance -- a group representing domestic onshore oil and natural gas
exploration and production, chaired by Hamm -- sees it at 9.35 million.
How Much More?
The EIA is overestimating U.S. oil production growth this year, according to Harold Hamm
Note: All forecasts are for December 2017 versus December 2016
Once the market recognizes the U.S. forecasting error, Hamm said, crude prices could rise to $60
a barrel from around $50 now. Good news for OPEC then. The group is targeting "a figure close to
$60 a barrel," Nigerian Minister of State for Petroleum Emmanuel Ibe Kachikwu told Bloomberg
TV in Vienna on Friday.
But there is a sting in the tail.
Hamm, CEO of Continental Resources, the biggest leaseholder and producer in the Bakken oil
basin, said he didn't believe that now was the right time to start hedging next year's production.
Not everyone agrees. Oil producers have been stepping up hedging activity as 2018 WTI prices
rose above $50 a barrel, according to analysts from Citigroup Inc. and BNP Paribas SA. That
hedging will help lock in revenue and underpin growth in shale production next year, even if oil
prices slip again.
So OPEC still faces the same problem that it has since oil started to weaken in 2014. It appears
that the price level they are seeking to achieve simply stimulates growth in rival supply. Looked at
from another direction, there's a more important question: Has U.S. shale usurped OPEC as the
global swing producer?
But perhaps a study published earlier in the week by analysts at Wood Mackenzie is what OPEC
really wants to hear -- without technological innovation to overcome dwindling reservoir pressure,
production from the Permian Basin could peak as soon as 2021. The shale boom flash in the pan
will flare out and the world will return to "normal," with incremental demand to be met from the
core OPEC countries and Russia once more. If the 158-year history of the oil industry has taught
us anything, though, it is surely that innovation is one thing it is very good at.

NewBase Special Coverage
News Agencies News Release September 26-2017
Commentary: Looking for balance in the oil market
By Kristine Petrosyan
Oil Market Analyst
There is more than one way to look at oil-market balances. The IEA uses a straightforward
approach: supply minus demand, which we report in the monthly Oil Market Report as “Total stock
changes and Miscellaneous.” Part of the calculation can be easily explained by changes in OECD
stocks, floating storage and oil in transit.
The remaining “miscellaneous to balance” is less clear. This element, which implies unreported
non-OECD stock changes, has come under scrutiny recently particularly as Chinese crude-oil
balances have risen to unprecedented levels.
The following commentary expands on the analysis we provided in the September issue of the Oil
Market Report, where we took a close look at our “miscellaneous to balance” and drew a
distinction between crude oil and product balances to have a clearer view of oil market
developments. The world oil market appears to have returned to balance this year, thanks to a
substantial stock draw in the second quarter. As global demand exceeded supply, our balances in

2Q17 implied a 0.9 million barrels a day (mb/d) decline in inventories, the first draw since 4Q13.
Somewhat counter-intuitively, the price of Brent was $4/bbl below the first quarter.
In 2Q17, refined product markets drew nearly 1 mb/d of stocks, as refining activity lagged demand
growth. The OECD refined product stocks drew by 0.3 mb/d, implying a 0.6 mb/d draw from non-
OECD countries. There is no comprehensive non-OECD stocks data to confirm this, however non-
OECD total demand grew by 1.1 mb/d year-on-year in 2Q17 while refining throughput was flat. A
0.6 mb/d draw was close to the 0.5 mb/d implied build in 1Q17, so the stock draw would have
been technically possible.

Forecasts of refinery runs and demand for 3Q17 and 4Q17 imply continued refined product stock
draws. Even in 3Q17, when global headline oil balances show an oversupply of 0.4 mb/d, refined
products are forecast to draw by a counter-seasonal 0.4 mb/d, in part due to the hurricane
outages in the US Gulf Coast. The draw accelerates in 4Q17 and is double the size of our
headline total oil balances.
Refined
product
balance
2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017
Demand* 80.9 81.4 81.3 82.4 82.4 81.9 82.0 83.4 83.1 83.9 83.1
Supply 81.5 82.1 81.0 82.5 82.3 82.0 82.5 82.5 82.7 83.2 82.7
Balance 0.6 0.7 -0.3 0.1 0.0 0.1 0.5 -1.0 -0.4 -0.7 -0.4
Memo
OECD
refined
product
actual
stock
change
0.3 0.4 -0.3 0.0 -0.1 0.0 0.1 -0.3
Non-OECD
refined
product
implied
stock
change
0.3 0.3 0.0 0.1 0.1 0.1 0.5 -0.6
*Excludes non-refined products such as natural gas liquids from fractionation plants, biofuels,
direct use of crude, liquids from coal and gas.
Unlike crude oil stocks, when refined products draw on stocks, crude oil prices may not
necessarily show an immediate reaction. Refined product stocks decrease precisely because
refiners do not purchase and consume enough crude to meet all of the product demand. Thus,
crude oil demand is subdued, and prices need to be supported by supply-side incentives to move
higher.

What about crude oil markets? In analysing the crude-oil balance, it makes sense to look at a
rolling average for two quarters to remove refinery maintenance-related seasonal swings. Crude
oil has been significantly oversupplied in the last three years. Despite supply cuts from OPEC and
some non-OPEC participants, 2017 as a whole still sees an oversupplied market as refining
demand is relatively subdued, assuming OPEC production remains flat from August through end-
year.
Crude oil
balance
2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017
Refining
throughput +
direct use
80.5 80.8 80.1 81.5 81.1 80.9 81.2 81.5 81.7 81.9 81.6
Crude and
condensate
supply
81.6 82.0 80.6 81.4 82.9 81.7 81.5 81.2 82.2 82.6 81.9
Crude oil
balance
1.1 1.2 0.5 -0.1 1.8 0.8 0.3 -0.2 0.5 0.7 0.3
Crude oil
balance ex-
China
implied
balance
0.9 0.6 -0.2 -0.8 1.6 0.2 -0.5 -1.5
Memo
OECD crude
oil stock
change
0.4 0.3 0.1 -0.3 0.0 0.0 0.5 -0.7
Non-OECD
implied crude
oil stock
change
0.7 0.9 0.4 0.2 1.8 0.8 -0.2 0.4
China crude
oil balance
0.3 0.6 0.6 0.7 0.1 0.6 0.8 1.3
Non-OECD 0.4 0.3 -0.3 -0.4 1.6 0.2 -1.0 -0.8

Crude oil
balance
2015 1Q16 2Q16 3Q16 4Q16 2016 1Q17 2Q17 3Q17 4Q17 2017
ex-China*
*Mathematically, this includes also oil in transit and floating storage.
Since 2015, most of the excess crude oil has found a home in China. The Chinese crude-oil
balance shows an oversupply of 0.6 mb/d in 2016 and 1 mb/d in 1H17, slightly higher than the
global crude oil oversupply of the past six quarters. China has accelerated oil infrastructure
construction, so some of this excess has been used to fill pipelines, and as working inventory at
ports and refinery sites. But some of this stock build could be under-reported refinery throughput
or direct use in petrochemical facilities. Neither could be large enough to explain away the
Chinese balances. Most of the additional oil is likely to have built up in Chinese strategic
petroleum reserves or in commercial inventories.
If Chinese implied stockbuilds are excluded from our global balances, the extent of oversupply
goes down in 2015-2016. In 1H17, the crude-oil market is nearly balanced. As OECD crude
stocks at the end of June were unchanged from December, and Chinese balances amounted to
0.9 mb/d, this means that elsewhere in the non-OECD crude inventories must have drawn
0.9 mb/d, or some 160 million barrels.
Based on our analysis of JODI-reported stock data, and the movement in floating storage and oil
in transit, we can identify about 100 million barrels of stock draws in the first half of this year,
equivalent to 0.5 mb/d. However, many crude-producing countries that account for almost half the
world’s crude supply do not report stocks data that would allow us to calculate actual 2017 draws.
The remaining 0.4 mb/d of implied crude stock draw in 1H17 could have come from these

countries, especially since some were involved in output cuts and would have tried to sustain
market share by keeping up exports.
Therefore, China effectively acted as a price setter from 3Q15 to 1Q17, when it stored away much
of the global oil overhang. That may change now that Chinese buying is actually drawing down
stocks elsewhere. Our 2H17 crude oil balance shows a 0.6 mb/d build. If China continues to buy
big volumes, there is still some cushion in the global market. The key question is whether China
will want to purchase even more oil, causing continued stock draws in the OECD and other non-
OECD countries.
In our view, the Chinese crude balance is price dependent. While it obviously contributed to the
market equilibrium, it would be illogical for us to incorporate an assumption of Chinese implied
stock builds in our forward-looking balances.
Analysing today’s oil markets is as fascinating as ever. The growing role of non-OECD countries
highlights yet again the need to have access to more transparent and timely data. The IEA is
leading these efforts by continually working with its partners from emerging countries to improve
energy data and bring greater transparency to all. At the same time, the IEA appreciates there are
different ways to analyse the state of the oil market and healthy debate about these approaches is
very welcome.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 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 September 2017 K. Al Awadi

New base 26 september 2017 energy news issue 1075 by khaled al awadi

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