New base 28 may energy news issue 1035 by khaled al awadi

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NewBase 28 May 2017 - Issue No. 1035 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:World’s most energy efficient light bulb goes on sale in UAE
ArabianBusiness
Dutch-based Philips Lighting has announced that Dubai Lamp, the world’s most energy efficient
light bulb, will be widely available across the UAE from Saturday.
The result of a research partnership between Philips Lighting and Dubai Municipality, the Dubai
Lamp, which was unveiled last October as part of Dubai’s sustainability agenda, aims to reduce
energy levels for lighting by as much as 90 percent.
By replacing conventional
lamps at home with the Dubai
Lamp, consumers could save
up to AED2000 yearly on
their DEWA bill, a statement
said.
“Due to growing populations
and urbanisation globally,
energy consumption at
current levels is simply
unsustainable and the
pressure on our planet
continues to mount... Dubai
Lamp alone offers
unprecedented energy
savings and the reduction of
carbon emissions,” said Olav
Scholte, marketing manager end-user projects at Philips Lighting Middle East. Maitha Khalifa
Mohd Almazroei, head of sustainability research & studies section at the Applied Sustainability &
Renewable Energy Department, Dubai Municipality, added: “In our bid to become the world’s most
sustainable city, we are striving to reach a 30 percent reduction in energy consumption by 2030
and a 16 percent reduction in carbon emissions by 2021.
"We have worked closely with Philips Lighting on this innovation as part of our efforts to build a
greener economy and a sustainable future for our children. We urge UAE residents to actively
engage in the Dubai Lamp Initiative and to think and act green in every aspect of their lives to help
realise these goals."
He said that in addition to raising light and energy efficiency to new levels, Dubai Lamp is
extremely durable with an average lifespan of up to 25 times longer than conventional lamps. The
product range will cost from AED18 and will be available across selected leading supermarkets.

UAE: Enoc to expand with exploration and production unit
The National - Anthony McAuley
Emirates National Oil Company (Enoc) said yesterday it has created a dedicated exploration and
production (E&P) unit as part of its previously stated aim to look for opportunities to expand its
overseas upstream assets portfolio.
The Dubai-based national energy company has been developing a strategy to become a more
expansionary integrated oil and gas company since the liberalisation of fuel pricing in the UAE and
its full acquisition of Dragon Oil, its main oil-producing asset, two years ago.
This year, Enoc hired Ali Rashid Al Jarwan, who had been chief executive of Adma-Opco, one of
Abu Dhabi National Oil Company’s main offshore operating companies, to head its Dragon Oil
unit.
"By acquiring Dragon Oil, and its subsequent integration, Enoc has provided an upstream asset
for the emirate of Dubai, underlining our commitment in strengthening the nation’s energy
security," said Saeed Al Tayer, Enoc’s vice-chairman, in a statement announcing the new unit.
"Our long-term goal is to grow our international operations to expand our reach and upstream
expertise."
Enoc, which is owned by the Dubai Government and whose chairman is Sheikh Hamdan bin
Rashid, Deputy Ruler of Dubai and Minister of Finance, bought out minority shareholders in
Dragon Oil at the end of 2015. Its main asset is the offshore Cheleken field in Turkmenistan that
produces about 100,000 barrels of oil per day (bpd).
Mr Al Tayer said he and the Enoc board recently met the chairman of Turkmenistan’s national oil
company, Turkmennebit, and senior Turkmenistan government officials to discuss opportunities to
expand collaboration.
Enoc officials say the company is in the exploratory phase and not near any financing decision but
that its mergers and acquisition team is looking initially in areas where the company already has
interests, which as well as Turkmenistan includes North Africa – Egypt, Tunisia and Algeria – Iraq
and Afghanistan.
Mr Al Tayer said that while the long-term aim is upstream expansion, the company’s main short-
term focus remains on domestic growth. This includes a US$1 billion project to increase capacity
at its Jebel Ali refinery by 50 per cent, with a new condensate processing train raising daily crude
oil processing capacity to 210,000 bpd from a current 140,000 bpd, plus other new units.
It also includes a 50 per cent expansion of its retail chain to nearly 170 petrol outlets and a move
into Saudi Arabia.

Oman: Eni signs MoU with Oman Oil Company to explore oil
and gas opportunities in Oman…..Source: Eni
Oman Oil Company (OOC), the Sultanate’s investment arm in the energy related sectors, and the
leading Italian integrated energy company Eni have finalized a Memorandum of Understanding
(MoU) to explore cooperation opportunities in the oil and gas sector.
The agreement has been reached in Milan by Eng. Isam bin Saud Al Zadjali, CEO of OOC, and
Claudio Descalzi, CEO of Eni.
The ceremony was attended by
H.E. Dr. Mohammed Al Rumhi,
Oil and Gas Minister of the
Sultanate of Oman – The
Chairman of OOC, by Dr. Ahmed
Salim Baomar, Ambassador of
the Sultanate of Oman to Italy,
and by a number of executives
and senior officials from both
companies.
Commenting on this occasion,
Eng. Isam Al Zadjali, CEO of
OOC said: 'This MoU with Eni is
another step taken by OOC to
join hands with a strategic
international partner seeking development areas in Oil and Gas sector. The strategic position of
OOC as Oman’s national oil company attracts major international oil companies’ investments in
the Sultanate.'
The Ministry of Oil & Gas of the
Sultanate of Oman has also granted
Eni and OOCEP exploration rights
in Block 52, an area of 90,000 Km2
with a water depth ranging from 10
to 2,000 metres with liquid
hydrocarbon potential, located
offshore Oman. The area is largely
unexplored with the potential of
hydrocarbons findings. The area
has been awarded following an
international bid round process
launched in October 2016.
'We are very happy with this
agreement and the award of Block
52', said Eni’s CEO Claudio
Descalzi. 'This MoU and exploration
in Block 52 will allow Eni to start
cooperating and investing in such an important East Country and will enable our company to
expand its presence in a key region of the Middle East, in line with our strategy aimed at
diversifying our exploration portfolio across basins with liquid hydrocarbon potential while keeping
high quality stakes throughout the exploration phase.'

Saudi Aramco to spend $18 bln on growth in the Americas -Motiva
Reuters + NewBase
Saudi Aramco plans to spend $18 billion (Dh66 billion) in the next five years to expand its
operations in the Americas, focusing on its US oil refining subsidiary Motiva Enterprises, Motiva
said on Thursday.
Motiva called the $18 billion estimate “a general framework of opportunities” to increase refining
capacity, branch into chemicals, and expand its commercial operations, marketing and branded
presence in the next five years.
The company also said the expansion may not be solely focused on its current operations but may
involve new sites. It declined to discuss possible expansion locations. Motiva became a wholly
owned subsidiary of Saudi Aramco on May 1 with the split of a 19-year partnership between
Aramco and Royal Dutch Shell Plc.
Aramco-owned Motiva emerged from the break-up with full ownership of a Port Arthur, Texas,
refinery, which is the nation’s largest. It also retained the Motiva name, distribution operations
across seven US states and rights to use the Shell and 76 brand names on products.
“Motiva has made significant strides over the last three years to reposition our business through
focused improvement efforts and organic growth opportunities,” said Motiva Chief Executive Dan
Romasko.
Initial investment
Thursday’s announcement did not say if it was intended to supersede Saturday’s similar
announcement of investments that were part of the Saudi-US CEO Forum. At that time, the Saudi
state-oil giant said it planned an initial investment of $12 billion in Motiva with a likely $18 billion to
follow by 2023.
That forum coincided with a summit between US. President Donald Trump and Saudi King
Salman in Riyadh, Saudi Arabia. The press release remained on the summit’s website as of
Thursday.
On Thursday, Motiva said “it has embarked on a growth journey to become the safest and most
profitable downstream business in the US.” Since the completion of the expansion of the Port
Arthur refinery in 2012, which more than doubled its capacity to refine 603,000 barrels of crude oil
per day, Motiva has weighed plans for further expansion of the plant.
Saudi Aramco also has looked at acquiring at least one additional Gulf Coast refinery and visited
chemical plants up for sale to expand Motiva’s portfolio. US refiners preparing for domestic
gasoline demand to peak within 20 to 30 years are looking at increasing exports of diesel and jet
fuel and expanding petrochemical production.

UK: Alpha Petroleum and GE Oil & Gas to partner on North
Sea’s Cheviot oil field …..Source: Alpha Petroleum
Alpha Petroleum, which is backed by upstream oil and gas investment firm Petroleum Equity, has
announced an agreement with GE Oil & Gas to partner on the advancement of the subsea
infrastructure for the Cheviot oil field, one of the largest undeveloped fields in the UK North Sea
with 55 mmbbls of oil and 20 mmboe of future gas production. Alpha Petroleum has named GE Oil
& Gas as the exclusive supplier of early engineering, project management, and procurement
activities for the project.
Today’s announcement, which follows an innovative and collaborative commercial approach
between Alpha Petroleum and GE, will lead to the supply by GE Oil & Gas of subsea trees, a full
control system, three manifolds, flexible jumpers, flowlines, risers and umbilicals. GE Oil & Gas
will also provide subsea construction and installation services, and support commissioning.
In addition to the provision of services and technologies, GE Energy Financial Services is helping
to raise the needed debt financing for the project and is in discussion with Alpha Petroleum with
the intention, subject to due diligence, of making a significant capital investment at the time of final

investment decision (FID), which is expected in the fourth quarter of 2017. FID is the point at
which the project is awarded UK Government approval, allowing agreed construction contracts to
be executed.
GE Energy Financial Services is GE’s energy
investing business with deep domain experience in
oil and gas infrastructure investing.
For more than 12 months, Alpha Petroleum,
Petroleum Equity and GE have collaborated
closely, co-creating from project inception the
scope of delivery and equipment specifications
required to meet Alpha Petroleum’s performance
objectives.
Andy Crouch, Alpha Petroleum’s Chief Executive
said:
'By taking this unconventional, collaborative
approach, we have been able to really draw on
GE’s expertise, enabling us to minimise costs and
timescales. This partnership marks another key
milestone in Cheviot’s development and we are
excited to see the project move forward to the next
stage.'
'Through this full life-of-field partnership, Alpha Petroleum is defining the performance
characteristics they require and empowering GE Oil & Gas to design the necessary solutions.
While the benefits are clear, this represents another very positive example of how the traditional,
transactional relationship between industry players is evolving into a partnership approach,' said
GE Oil & Gas Europe CEO, Michele Stangarone.
The Cheviot field is 100 per cent owned by Alpha Petroleum and its core development will consist
of 18 firm and 5 contingent wells. Alpha Petroleum recently announced an exclusivity agreement
with Teekay Offshore Partners on the project for use of its Varg Floating Production Storage
Offloading unit as well as FEED capabilities to the project. First oil is expected in 2019 at an
expected rate of at least 30,000 barrels per day.
Arun Subbiah, founding partner at Petroleum Equity, commented:
'It is extremely satisfying to see Alpha Petroleum making such great strides towards realising the
potential of the Cheviot field. We have been working hand-in-hand with Alpha on the project since
we first invested back in 2014 and are all delighted to have attracted a partner of GE’s calibre. We
see this partnership as a significant endorsement of our investment thesis and look forward to
working together to bring the development to fruition.'
• As sole subsea partner, GE Oil & Gas will provide the full Subsea and SURF scope for the
subsea development of the field
• GE Energy Financial Services in discussions to make a capital investment towards the
project, subject to due diligence
• The agreement represents an innovative and collaborative approach between Alpha
Petroleum and GE

Senegal: Cairn Energy spuds FAN South-1 well offshore
Source: FAR
JV partner FAR Limited reports that the Cairn Energy-operated Senegal Joint Venture has
commenced drilling the FAN South-1 exploration well to test the South Fan Prospect. The well is
the first pure exploration well to be drilled offshore Senegal since the discovery wells of FAN-
1 and SNE-1 in 2014.
FAN South-1 is the first well drilled into the deepwater basin offshore Senegal since the initial
FAN-1 discovery well in 2014. The well is being drilled into the South Fan Prospect that FAR
assesses to contain 134 mmbbls of recoverable oil on a best estimate basis, with an 18% chance
of success (refer ASX release 7 February 2017).
The well will also assess the potential for improved reservoir presence and quality in the basin that
will aid in the evaluation of the FAN-1 well results. The map below hows the location of the FAN
South-1 well.
The South Fan Prospect consists of several stacked reservoir targets. The well will be drilled to an
estimated Total Depth (“TD”) of 5,317 metres in a water depth of 2,139 metres. The firm well plan
for FAN South-1 includes a wireline logging program prior to the well being plugged and
abandoned.
FAR Managing Director, Cath Norman said:
'The Fan South-1 target represents an opportunity for FAR to add to the growing inventory of oil
discoveries offshore Senegal and the wider Mauritania, Senegal, Guinea Bissau Basin, clearly
one of the world’s exploration hot spots. Fan South-1 gives us the opportunity to gain valuable
information on reservoir presence and quality and to better understand the substantial potential of
the large, deep-water basin area. After successfully completing the appraisal of the SNE Field, it is
exciting for the JV to be back drilling a pure exploration target.'
Geological setting of the Basin Fan play containing the North Fan (drilled with the FAN-1 discovery well) in
addition to the Central Fan and South Fan prospects.

Malaysia: Octanex to drill Ophir field development wells
Source: Octanex
Octanex has advised that the NAGA 2 self-elevating mobile offshore drilling unit will shortly
commence mobilisation to the Ophir oil field. The rig has commenced demobilising from its
previous drilling location and will shortly commence its tow to the Ophir field where it is expected
to arrive on 27 May 2017 for a three-well drilling campaign.
The three planned horizontal production wells target stacked oil reservoirs in a four-way dip closed
structure previously discovered and tested by the discovery well, Ophir-1 and four additional
appraisal wells, defined with 3D seismic data acquired in 2011, and supported by productive wells
located in adjacent fields.
Located offshore Peninsular Malaysia, with a water depth of approx. 70m, the Ophir oil field is
being developed under a Risk Service Contract (RSC) granted in 2014 to OPSB, a joint venture
company in which Octanex has a 50% interest. The Ophir Oil Field is being developed via three
production wells, a well head platform (WHP) and Floating Production Storage and Offload
(FPSO) vessel.

Energy storage and renewables beyond wind, hydro, solar
make up 4% of U.S. power capacity
U.S. EIA, Preliminary Monthly Electric Generator Inventory
Beyond the main sources of electricity generation capacity in the United States that have recently
been discussed in a series of Today in Energy articles, additional amounts of utility-scale capacity
are provided by technologies such as hydroelectric pumped storage, batteries, flywheels, and
renewable fuels other than hydro, wind, and solar. These sources collectively accounted for 4% of
the electricity generating capacity in the United States in 2016.
Among capacity within this group, hydroelectric pumped storage plants tend to be the oldest
plants. Of the 23 gigawatts (GW) of installed pumped storage capacity in operation at the end of
2016, 88% was in operation before 1990. Hydroelectric pumped storage units produce electricity
from water previously pumped to an upper reservoir. Pumped storage allows system operators to
time-shift power generation during periods of low demand to periods of high demand, when the
value of generating electricity is greater.
At the end of 2016, 195 utility-scale geothermal generating units totaling 3.7 GW were in
operation. The largest group of geothermal generating units, a complex located in Northern
California called the Geysers, has 943 megawatts (MW) of generating capacity, more than a
quarter of the national total.

Wood/wood waste biomass makes up the largest share of biomass technologies, with 10.2 GW of
capacity in 2016. Municipal solid waste, landfill gas, and other waste biomass have total
capacities of 2.2 GW, 2.1 GW, and 0.8 GW, respectively.
California leads the United States in capacity of several categories: hydroelectric pumped storage,
geothermal, landfill gas, and batteries. Florida leads the country in capacity of municipal solid
waste and other waste biomass generators.
Virginia’s Bath County is the site of the largest hydroelectric pumped storage plant in the United
States, at slightly more than 3 gigawatts. All geothermal capacity is located in seven states in the
western United States. By comparison, landfill gas and wood/wood waste generators are more
common, with generators in 44 states and 32 states, respectively.
Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory

Batteries and flywheels, which provide electricity storage, are among the newest operating units,
as almost all of these generators have been added since 2010. Half of the United States’ 540 MW
of batteries are in California, Illinois, and West Virginia. Flywheels provide electricity
storage through rotational kinetic energy, and almost all of the nation’s 44 MW of utility-scale
flywheels are located in New York and Pennsylvania.
Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory
Note: Click to enlarge.
More detailed information about the United States fleet of electricity generators is available
through EIA’s annual survey of electric generators. EIA also maintains a preliminary monthly
update of operating and planned generators.
This article is part of a series of Today in Energy articles examining the fleet of utility-scale power
plants in the United States. Other articles have examined hydroelectric, coal, natural
gas, nuclear, wind, solar, and petroleum generators.

NewBase 28 May 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Nears $50 as Investors Temper Disappoint Over OPEC Deal
Bloomberg + reuters + newbase
Oil recovered some of its mojo, nearing $50 a barrel again, as investors tempered their
disappointment over OPEC’s output agreement.
Futures rose in New York after slumping on Thursday. While many were frustrated by the accord
to prolong current output levels through March, without deeper cuts or an exit plan, Saudi Arabia’s
Energy Minister Khalid Al-Falih said the strategy is working and stockpiles will drop faster in the
third quarter. Producers have more tools to support prices if needed, Russia’s Energy Minister
Alexander Novak said in a Bloomberg television interview.
"The market overreacted," said Gene McGillian, manager of market research for Tradition Energy
in Stamford, Connecticut. Investors will go back to monitoring inventory levels, and "going forward,
the pendulum of the market is going to swing on the impact of the cuts on the massive
inventories."
A price rebound got some traction in the past few weeks as Saudi Arabia and Russia rallied
support for a deal ahead of their meeting in Vienna on Thursday. At the same time, stubbornly
high U.S. inventories dropped seven weeks in a row. But they remain above the five-year average
that OPEC has failed to break and production from shale plays keeps rising, limiting optimism that
a supply glut will ease.
"I don’t think anybody really thought you were going to get bigger cuts, realistically," said Bill
O’Grady, chief market strategist at Confluence Investment Management in St. Louis. With the
extension OPEC and its allies proposed already priced in, the inventory contraction is one of the
main bullish factors, he said.
Oil price special
coverage

West Texas Intermediate for July delivery settled 1.8 percent higher at $49.80 a barrel at 1:30
p.m. on the New York Mercantile Exchange. Prices slumped 4.8 percent on Thursday.
Brent for July settlement closed at $52.15
a barrel on the London-based ICE Futures
Europe exchange. The contract lost 4.6
percent on Thursday. The global
benchmark crude traded at a premium of
$2.35 to WTI.
The sharp sell-off on Thursday was a
"knee-jerk" reaction as the market
continues to digest the OPEC
announcement, said Michael Tran, a
commodities strategist at RBC Capital
Markets in New York. The news "lacked
the fireworks the market was initially
hoping for," and investors will be hesitant until they see the cuts are working, he said.
Rising U.S. shale output won’t derail OPEC’s goals and a nine-month extension will “do the trick,”
Al-Falih said Thursday after the meeting in Vienna. Nigeria and Libya will remain exempt from
making cuts and Iran, which was allowed to increase production under the original accord, retains
the same output target, said Kuwait’s Oil Minister Issam Almarzooq.
OPEC will face the test of defending market share and generating revenue growth as it transitions
from the curbs, Goldman Sachs Group Inc. analysts including Damien Courvalin said in a May 25
report. Backwardation -- when near-term crude prices are higher than those for later months -- will
be needed for the cuts to shrink the glut and prevent an increase in U.S. shale production, the
bank said.
Oil Price Slump May Yet Prove to Be ‘Knee Jerk’
Saudi Arabia’s Energy Minister Khalid Al-Falih said he had no interest in the “knee jerk” reactions
of the oil market when crude prices collapsed on Thursday as he sought to explain OPEC’s deal
to prolong supply curbs. Here’s some evidence that he could be right in believing the slump won’t
last.
1. Speculators Caught Short?
As recently as February, hedge funds and financial investors placed huge bets that prices would
rise. Some analysts speculated -- accurately, it transpired -- that downward pressure on prices
would mount as those big wagers unwound. Now the opposite is the case. “We saw the long
squeeze in the past few months but after yesterday’s move there’s room for a short squeeze,” said
ABN Amro senior energy economist Hans Van Cleef. “I think that will almost certainly be the
case.”

2. Curve Still Bullish.
The market was pricing in an improving supply situation before Al-Falih spoke. Nothing changed
on Thursday. Brent for December is still about 35 cents a barrel more expensive than a year later,
far more than during a similar wobble earlier this month. The pricing relationship -- called
backwardation and in place most of this year -- is normally viewed as bullish. “The fundamentals
haven’t changed and therefore the December spreads are still in backwardation,” said Jan
Edelmann, commodity analyst at HSH Nordbank. “We’ve seen how fast the market moved, a
similar path to higher prices is not unlikely.”

3. Don’t Forget Demand.
With all the talk about supply, it could be the other half of the equation that proves Al-Falih right:
demand. The oil market is moving into a quarter where global consumption has increased for each
of the last eight years.
If demand can catch up with supply, that could be enough to lure back the bulls whose faith wasn’t
enough to push prices higher in the first half of the year. “With producer de-stocking behind us and
floating storage down, the extension of supply cuts and a seasonal swing in demand should set in
motion the necessary inventory draw-downs to re-kindle bullish interest in oil,” said Harry
Tchilinguirian, head of commodity markets strategy at BNP Paribas.
4. Shrinking Exports, Narrowing Spread.
If demand does surge, comments from Al-Falih on Thursday that got lost in the noise will become
even more important. First, he said Saudi Arabia would cut exports in the next few months.
Second, he said flows to the U.S. will drop markedly.
If Saudi Arabia delivers on that pledge, what are the contracts to watch? The spreads between
heavy Dubai crude and lighter grades will be the key barometers, according to UBS analyst
Giovanni Staunovo. U.S. crude has long been cheaper than the international Brent benchmark,
but that discount could narrow, he said.

5. Lingering Doubts.
Still, the oil market continues to be glutted. Petromatrix GmbH analyst Olivier Jakob argues OPEC
is hoping that inventories will fall, rather than expecting such an outcome and doesn’t have a plan
to create a backwardated structure. Couple that with ongoing concerns about whether producing
nations will manage to comply with output cuts into the second half of the year, alongside booming
U.S. production growth, and some say OPEC still has a major supply problem. The surge from
shale has also made Morgan Stanley and Goldman Sachs more bearish about prices in 2018.

Saudis Take Aim at Swollen U.S. Oil Stockpiles in Strategy Shift
by Javier Blas and Wael Mahdi
After sparing its prized U.S. market from oil-output cuts, Saudi Arabia plans to "markedly" reduce
exports to its political ally in the coming weeks in an effort to reduce swollen and highly visible
crude inventories in the world’s biggest consumer.
"Exports to the U.S. will drop measurably," Energy and Industry Minister Khalid Al-Falih told
reporters after chairing a meeting between OPEC and other major producers in Vienna on
Thursday. Saudi crude shipments to the U.S. will fall below 1 million barrels a day next month,
said two people briefed on the kingdom’s oil policy, a reduction of more than 15 percent from the
average so far this year.
Al-Falih spoke after the group of 24 nations agreed to extend their production curbs for another
nine months until the end of March 2018, a decision that in itself was a tacit admission that their
first five months of cuts had failed to make a significant dent in oil stockpiles in developed
economies.
By shifting the focus of Saudi export reductions toward the U.S. -- where customs data allow near
real-time monitoring of shipments -- and away from less transparent markets in Asia and Europe,
Al-Falih was putting his personal credibility on the line. It may be a necessary move, as the slump
in oil prices after Thursday’s agreement showed growing skepticism about the effectiveness of the
cuts.

"The market has been given clear independent and verifiable metric of how Saudi cuts -- and
hopefully broader OPEC -- are working out over the summer,” Amrita Sen, chief oil analyst at
Energy Aspects Ltd., said in an interview in Vienna.
Saudi Arabia has shipped 1.21
million barrels a day of crude to the
U.S. on average so far this year,
according to Bloomberg calculations
based on official customs data.
That’s the highest for that period
since 2014, despite the kingdom
going beyond its commitment to
curb output by 486,000 barrels a
day to 10.06 million.
Export plans for June will reduce
shipments to the U.S. below 1
million barrels a day, said two
people briefed on the matter, who
asked not to be identified because
the plans aren’t public. That
wouldn’t affect the American market
until mid-July, because it takes
between 35 and 55 days for a tanker to sail there from the Middle East.
Seasonal Shifts
To be sure, Saudi exports to the U.S. often drop this time of year because the kingdom has less
crude to sell due to higher domestic demand. Oil consumption in the Middle Eastern country
surges during the hot summer months as crude is burned to generate electricity to meet the spike
in air conditioning needs.
The average reduction in U.S. imports from Saudi Arabia between May and July was 5 percent
over the past five years, EIA data show, smaller than the cut implied by the Saudi plans.
The export curbs, if implemented, would affect big U.S. refiners such as Valero Energy Corp. and
Exxon Mobil Corp., forcing them to buy similar crude elsewhere, such as Mexico, Canada or
Venezuela. It could also narrow the price differential in the Americas between heavy crude with
high sulfur content and higher-quality light grades.
U.S. refiners will raise their light-crude intake if these cuts proceed, said Andy Lipow, a Houston-
based independent oil consultant.
Fluctuations in U.S. crude imports and stockpiles have an outsize impact on the market because
data are available on a weekly basis. In other regions oil traders only get official figures on a
monthly basis, or not at all in the case of stockpiles in big consumers such as China and India.
The credibility of this shift in Saudi strategy will be “easily monitored," said Roger Diwan, the oil
analyst at consultant IHS Markit Ltd., who attended the OPEC meeting in Vienna.

NewBase Special Coverage
News Agencies News Release 28 May 2017
OPEC's Missed Opportunity
By Julian Lee
OPEC ministers failed in their attempt to convince the market that they have a plan when
they agreed to extend output cuts for another nine months. The extension wasn't a problem -- it
was the lack of a sense of what comes next.
By the time officials had retreated to their Vienna hotels on Thursday, or fled to the airport, the
price of crude had fallen by 4 percent.
The extension was supposed to show an unprecedented degree of cooperation between the
Organization of Petroleum Exporting Countries and a group of non-member producers. It was
meant to demonstrate a commitment to do whatever is necessary to bring inventories down to
their five-year average level. But as I noted last week, it's a pale imitation of previous
interventions.
What the deal lacked, rather than what it contained, proved its weakness.
There was no clarity on how the process of rebalancing the market might end. What happens
when inventories are back where OPEC wants them? According to Saudi Energy Minister Khalid

Al-Falih, that will be by the end of the year. But he clearly wasn't using OPEC's own market
analysis to make that prediction, because the group is much less optimistic than the International
Energy Agency about the drawdown of stockpiles in the second half, based on current production
levels.
Who's Right?
OPEC must hope the IEA's aggressive forecast of stock draws is more accurate than its own
The fear is that the group will return to the production free-for-all that we saw between November
2014 and the start of this year, triggering another round of excessive stockpiling and another price
collapse.
OPEC failed to address those concerns with any conviction. That's a pity, because it could so
easily have done so. As long as the group's own members are prepared to ease their output cuts
gradually, there should be little difficulty in unwinding the reductions made by others.
Around one-third of the cuts offered by non-OPEC producers came from natural declines that can't
be reversed. Mexico and Azerbaijan both fall into that category. For the others, particularly Russia,
there would be no incentive to flood the market with unwanted crude -- in all probability those
producers also would be willing to raise output at a gentle pace.
Involuntary Cuts
Around one-third of the non-OPEC cuts come from natural decline and can't be reversed

So why don’t people who trade oil believe them? The experience of unfettered OPEC production
in 2015 and 2016 has left them scarred. The slump in prices from above $110 per barrel to less
than $30 in the space of 19 months wiped billions of dollars off the value of funds that invested in
oil and of the companies that produce it.
Fear of a repetition, just as the industry is finding its feet again, looms large.
Al-Falih said after the meeting that he was not concerned by day-to-day fluctuations in the oil price
-- which is just as well. He insisted that the strategy is the right one. Producers can't control the
price, he said, they can only control supply and, through that, inventories and that's what they
would focus on.
The market begged to differ. OPEC squandered an opportunity to give clear direction on its
longer-term strategy, leaving oil traders with the impression that the group doesn't have one. That
failure will be costly, at least in the short term.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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

New base 28 may energy news issue 1035 by khaled al awadi

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