New base 31 december 2020 energy news issue 1396 by khaled al awadi

Copyright © 2020 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 endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 1
NewBase Energy News 31 December 2020 - Issue No. 1396 Senior Editor Eng. Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
“Despite the ups-and-downs, we hope that 2020 has been a successful year for you
and your organization.
Thank you for taking the time to partner with us, we are very thankful. Here’s to a
happy and healthy 2021 for you and yours!” “Here is to a prosperous 2021! We
appreciate the time you have spent working with us!”
www.linkedin.com/in/khaled-al-awadi-38b995b

UAE: Adnoc Distribution for a $10m Saudi fuel distribution assets
The National + NewBase
Adnoc Distribution, the UAE’s largest fuel and convenience retailer, is considering the potential
acquisition of fuel distribution assets worth $10 million in Saudi Arabia, the company said on
Monday. The company opened its first fuel station in the kingdom two years ago.
The company’s board will review the possible deal on Wednesday, it said in a statement to the Abu
Dhabi Securities Exchange, where its shares trade. Adnoc Distribution has held long-standing
ambitions to expand in Saudi Arabia, the Arab world’s largest economy.
“We see the Saudi Arabian fuel market as large and fragmented, with underdeveloped customer
offerings," the company said. "Adnoc Distribution’s experience and strengths can be leveraged to
introduce world-class fuel station and customer service standards in Saudi Arabia to capture
growth.”
The company reported a 22 per cent jump in its third-quarter profit to Dh671m ($183m) as direct
costs fell by 47 per cent to Dh2.3 billion. The company also expressed interest in expanding into
Egypt, the Arab world's most populous nation.
In September, Adnoc successfully completed the placement of 1.25 billion of its shares in Adnoc
Distribution with institutional investors. This represented 10 per cent of Adnoc Distribution’s total
share capital, and increased the company’s free float on the ADX to 20 per cent.
The company is the sole fuel distributor in Abu Dhabi and has a dominant market position in Sharjah,
Ras Al Khaimah, Fujairah, Ajman and Umm Al Quwain.
It is rapidly expanding in Dubai, where it opened its 20th station last month, with between six and
11 more expected by the end of the year.
The expansion has already allowed the company to more than triple its footprint in the emirate, from
just six stations at the start of the year.
The company listed expansion into the kingdom as one of its goals in its prospectus when it listed on the
ADX three years ago and opened its first service station in the kingdom in 2018.
Adnoc Distribution currently operates more than 420 service stations in the UAE, according to its website.
The company said last month that it was in “advanced discussions to finalise land leases with landlords,
as well as to grow our network inorganically" in Saudi Arabia.

Saudi Arabia makes four new oil and gas discoveries
Reuters + NewBase
Saudi Arabia, the world's largest exporter of crude, discovered four new oil and gas fields, the
kingdom's minister of energy Prince Abdulaziz bin Salman bin Abdulaziz said on Sunday.
State oil firm Saudi Aramco discovered 4,452 barrels of unconventional Arab extra light sweet oil
and 3.2 million standard cubic feet of gas at Well No. 2 in Al Reesh oil field, north west of Dhahran,
according to a statement carried by the Saudi Press Agency.
Non-conventional gas has also been discovered at Al Sarrah reservoir at Al Minahhaz well, south-
west of the Ghawar oil field, and at al-Sahbaa well, south of Ghawar. Al Minahhaz well has a
capacity to produce about 18 million standard cubic feet of gas and 98 barrels of condensate per
day, while Al Sahbaa well will produce 32 million standard cubic feet.
On top of these, oil has been discovered at Al Ajramiyah Well No. 1, with a well test showing a daily
production rate of 3,850 barrels per day. The well lies north-west of the city of Rafhaa in the Northern
Borders Province.
The discovery at Al Reesh is considered important "as it shows that it is possible to produce Arab
extra light crude oil at the Tuwaiq mountain formation", the statement said.

Aramco has drilled two more wells at Al Reesh, No. 3 and No. 4, to determine its size. Well No. 3 is
initially producing 2,745 barrels of oil and 3 million cf of gas per day. Well No. 4 is producing 3,654
barrels and 1.6 million cf of natural gas per day.
Saudi Aramco "continues to work on determining the size and volume of discovered fields and
estimating the amount of oil, gas, and condensate in these fields", the minister said in the statement.
The new discoveries "underline the wealth of natural resources the kingdom has at its disposal", he
said.
Saudi Arabia accounts for about 17 per cent of the world's proven petroleum reserves. The oil and
gas sector accounts for about 50 per cent of gross domestic product, and about 70 per cent of
export earnings.
In February, the UAE discovered 80 trillion cubic feet of shallow gas reserves in an area straddling
the emirates of Abu Dhabi and Dubai, the biggest find in 15 years. The Turkmen gasfield – the
world's second-largest – was discovered in 2005 and is estimated to hold about 500 trillion cf of
gas.
"The discovery of more reserves of Saudi extra light crude is especially beneficial for Aramco, as
the grade trades at a premium to the heavier and more sulphurous barrels coming out of the
kingdom," said Vandana Hari, founder and chief executive of Singapore-based Vanda Insights.
"In a year when tens of billions of dollars in upstream investment has been cancelled by companies
across the world and we are likely going to face a drought of sizeable new discoveries for the
foreseeable future, it is reassuring that Saudi Arabia is still adding to oil and gas reserves," she
added.
"We believe the announcement of the discoveries are aimed at highlighting the overall wealth of
natural resources in the kingdom rather than benefitting from it immediately," Junaid Ansari, acting
head of investment strategy and research at Kamco Invest, said.
Like the other members of the Opec+ alliance, Saudi Arabia is currently curtailing production to
ensure a better balance between oil demand and supply. As a result, Mr Ansari said he does not
see the discoveries going "live with production anytime soon".
Saudi Arabia currently has capacity of
about 12.4 million barrels per day, but
is producing an estimated 9.2 million
barrels per day on average, Iman
Nasseri, Middle East managing director
of Facts Global Energy, said.
Although new discoveries are important
in terms of replacing capacity from
maturing fields, given the current
cutbacks the production of
unconventional oil and gas is likely to
remain "marginal and experimental" for
the foreseeable future, he added.
"We expect any unconventional
production coming out of the Middle
East in significant capacity not to
happen in the first half of this decade,"
he said.

Saudi Aramco ties up with SAP for ERP digitalization
TradeArabia News Service
Aramco has announced a strategic alliance with SAP Saudi Arabia to expand the digitalization of
its Enterprise Resource Planning (ERP) systems.
The agreement with SAP is another step in Aramco’s digital transformation journey, paving the way
for further integration of new technologies in a rapidly evolving technological landscape, said a
statement.
The SAP ERP system will deepen the deployment of innovative IR4.0 technologies including cloud-
based services, embedded analytics, mobility, machine learning, artificial intelligence, advanced
analytics and Internet-of-Things solutions.
By extending the strategic alliance with SAP Saudi Arabia, Aramco’s contribution to the in-Kingdom
business ecosystem will be enhanced through job creation, training and by localizing supplier
services and R&D. In addition to enabling greater efficiencies, SAP’s Data Center in Saudi Arabia
will offer new cloud solutions to Aramco and other companies.
Ahmad A Al Sa'adi, Aramco Senior Vice-President of Technical Services, said: “We are committed
to our digital transformation program, which is improving our ability to meet the needs of our
customers around the world and setting a new standard for technology deployment in our industry.
Technologies and solutions within digital transformation initiatives will touch all facets of our
operations. This is just one more example of how we are applying best practice in this space and
embracing 4IR solutions. It is an important milestone on our digital journey and also contributes to
our iktva target.”

Luka Mucic, Member of the Executive Board of SAP SE, Chief Financial Officer, said: “In 23 years
of strong collaboration, Aramco and SAP have become strategic partners. With numerous co-
innovation initiatives, we have jointly introduced oil and gas best practices, enhanced business
operations, and expanded the horizon of opportunities in this industry.
Aramco has taken the next step on their digital transformation journey and towards becoming an
Intelligent Enterprise, implementing S/4 HANA and the Business Technology Platform amongst
others.”
SAP’s new platform will serve the entire Aramco organisation, supporting the company’s digital
transformation program and enabling new processes for a majority of the company’s enterprise
applications and solutions.
The new architecture leverages emerging technologies that will propel Aramco into a new era of
Intelligent Enterprise and benefits include faster processing, intuitive user experience, real-time
reporting, integration with cloud solutions and system consolidation, which reduces total cost of
ownership, the statement said. –

Oman: Port of Duqm set for full-fledged operations in 2021
Oman Observer
NEW PHASE: Starting in 2021, Port of Duqm will ramp up its cargo handling capabilities to cater to
new service sectors, as well as develop its existing portfolio
Port of Duqm Company (PDC) is working in conjunction with the Public Authority for Special
Economic Zones and Free Zones to tender out a new set of construction packages that when
implemented will enable the maritime hub to operate at full capacity.
Starting in 2021, Port of Duqm will ramp up its cargo handling capabilities to cater to new service
sectors, as well as develop its existing portfolio. In addition to full-fledged containerised operations
and fishing vessel handling capabilities, the maritime gateway is also poised to boost mineral
exports, according to a top official of the port.
Reggy Vermeulen, CEO, said the port is set to receive a pair of Ship to Shore (STS) cranes as part
of investments in a modern Container Terminal suitably equipped to handle mega ships.
Subsequently arrivals of new cranes will help boost the port’s handling capability to 35 container
moves per hour, which equates to a capacity of one million containers per annum.
Vermeulen said the port is working closely with the Public Authority for Special Economic Zones
and Free Zones (OPAZ) to offer an integrated package to potential international investors aimed at
positioning Duqm as an industrial and logistics hub — a move that will spark job creation and
economic benefits.
By the end of the third quarter of 2020, Duqm Port had achieved steady growth in cargo throughput,
reaching RO 379 million in value, compared to RO 174 million for the same period in 2019.
As many as 607 ships had called at the port during the first nine months of the year, versus 498
ships in 2019.
Of the commercial berth’s total length of 2,250 metres, around 1,600 metres are earmarked for two
Container Terminals offering a combined capacity of 3.5 million TEUs per annum.

Also planned is a 300-metre-long dry bulk terminal with a capacity of about 5 million metric tonnes
per year, and a 425-metre-long multipurpose terminal for cargoes totalling 800,000 metric tonnes
per year.
Future capacity additions will boost container handling volumes to over 20 million TEUs per year,
he noed.
Also included in the port area is an Oil Terminal which is designed and equipped to provide services
to refining and petrochemical investments at the SEZ. Separately, a 980-metre-long government
berth currently housing offices and buildings serving Royal Oman Yachts, the Sultan’s Special Force
and the Royal Navy of Oman (RNO). The port also offers 2,000 hectares of land for logistics and
industrial related investments.

Russia Pushes on Gas Link to Europe Before U.S. Sanctions
Bloomberg - Vanessa Dezem + NewBase
Russia is stepping up work on the Nord Stream 2 pipeline before the U.S. tightens sanctions against
the controversial project designed to feed more natural gas into Germany.
Construction of the 1,230-kilometer (764-mile) pipeline reached a milestone on Monday with
the completion of pipe-laying in German’s exclusive economic zone, the project operator said.
Among the next steps resuming work in Denmark’s part of the Baltic Sea, where the bulk of the
remaining sections of the 157 kilometer link will be located.
Progress on the link is a victory for Russian President Vladimir Putin and the nation’s gas export
champion, Gazprom PJSC. When complete, the project will allow Russia to expand deliveries of
gas to Europe and circumvent the traditional transport corridor through Ukraine. The U.S. and
Eastern European nations say Nord Stream 2 will make Germany and the European Union too
reliant on Russian gas.
“There are approximately 120 kilometers in Danish waters and approximately 30 kilometers in
German EEZ to be laid,” Nord Stream 2 said in an emailed reply to questions on Tuesday. “We are
not in a position to deliver further construction details. We will inform about further offshore
construction activities in due time.”
The Nord Stream 2 undersea link to Germany.
Work on the 9.5 billion-euro ($11.6 billion) project was stopped a year ago by U.S. sanctions and
resumed only earlier this month when Gazprom found its own ship to lay the pipeline. Nord Stream
2 can use the vessel Fortuna to carry out the work starting Jan. 15, assisted by construction vessels
Murman and Baltiyskiy Issledovatel and other supply ships, the Danish Maritime Authority said last
week.

Based on the Danish permit, the operator must submit an updated schedule to the nation’s Energy
Agency prior to carrying out the works. So far, the regulator hasn’t received the updated plan, the
agency said. The Fortuna vessel can lay as much as 1 kilometer of pipes per day.
At that rate, analysts estimate Nord Stream 2 could start operations as soon as the end of 2021
under an optimistic scenario.
The U.S. meanwhile is maneuvering to tighten sanctions, extending penalties to companies that
provide technical certification and insurance for the work. That legislation was part of a broader
defense bill that passed Congress but was vetoed by President Donald Trump. The House of
Representatives voted to override the veto. If that’s endorsed by the Senate, which is dominated by
Trump’s Republican Party, the new measures could come into force in the next few weeks.
Should the Senate override Trump’s veto on the defense bill, “the new sanctions against Nord
Stream 2 will turn into reality,” said Mateusz Kubiak, a senior analyst at Warsaw-based energy
consultant Esperis. “It might be just another factor that will make it more difficult for the Russians to
effectively and timely restart works” in the Danish waters in January, Kubiak said.

“All of the additional pipe-laying activities will now be sanctioned, including surveying, trenching and
rock placement,” he said.
The U.S. maintains that Nord Stream 2 gives Russia too much leverage over Europe and that
American liquefied natural gas supplies are a better alternative. Nord Stream 2 benefits the
economies of Germany and Europe since the price of Russian pipeline gas is 20% lower than that
of U.S. LNG, according to Putin.
U.S. sanctions can complicate the completion of Nord Stream 2, Kremlin spokesman Dmitry Peskov
told reporters last week. Deputy Prime Minister Alexander Novak told the state TV channel Rossiya
24 on Monday that the pipeline will be completed because good for European business.
“It’s a commercial project, which is, in the first place, in the interests of our foreign partners,” Novak
said.

U.S: Oil Drilling in U.S. Ends Fraught 2020 at Pre-Shale Levels
Bloomberg - David Wethe
The crisis that enveloped the oil industry in 2020 can be measured in various ways, but in the U.S.
there may be no better single gauge than the tally of drilling rigs operating across the world’s largest
producer.
The weekly data shows at a glance the level of confidence from hundreds of companies that sink
shale wells from Texas to North Dakota. As the price of crude plunged amid the pandemic, those
operators slashed spending and cut drilling crews.
The result was a rig count that collapsed to levels not seen since the advent of the shale era 15
years ago, as crude demand and prices plunged. And while the data has rebounded since August,
it still remains far below where it began 2020.
Next year isn’t expected to get much better with U.S. oil prices widely expected to be stranded
between $40 and $50 a barrel, forcing explorers to make hard choices about whether new drilling
is worth it.
The number of rigs drilling for oil in the U.S. closed out 2020 at 267, according to Baker Hughes Co.
data released Wednesday. It’s the lowest end-of-year figure since 2005, when drilling and fracking
breakthroughs perfected in natural gas regions like North Texas’s Barnett Shale were just beginning
to be deployed in crude fields.
The slump reflects a huge readjustment for the U.S. oil industry. Having ridden to a position of global
preeminence on the back of the shale boom, the U.S. reemerged as a major exporter rivaling Saudi
Arabia and Russia, but the pandemic hit hard and forced producers to make painful cost cuts.
Domestic output is ending the year steady but about 16%, or 2.1 million barrels a day, below its pre-
pandemic peak, a level where it’s widely expected to stay absent a dramatic price spike. In the

meantime, OPEC has managed to regain its former position as the dominant player in the global
market.
On the ground in places like West Texas and North Dakota, the plunging rig count signifies a painful
year for the U.S. oil services sector, which does the drilling and fracking. Dozens of companies filed
for bankruptcy in 2020, and tens of thousands of jobs were lost. Industry giant Schlumberger
abandoned frack work entirely in North America, a sign that activity in the U.S. shale patch may
never revisit previous highs.
Shale Patch Shutdown
Drilling activity is slowly recovering, partly because output from shale deposits declines more quickly
than conventional wells. Simply maintaining production levels requires additional fracking. Still, U.S.
oil executives remain wary of plowing significant sums into new exploration because of the supply
glut that began weighing on prices in early 2020 and only worsened as the Covid-19 pandemic
paralyzed economies around the world.
“North American E&Ps are in a battle for investment relevance, not a battle for global market share,”
Matt Gallagher, chief executive officer at Parsley Energy Inc., told analysts during a conference call

in August. “Allocating growth capital into a
global market with artificially constrained
supply is a trap our industry has fallen into
time and time again.”
A week after Gallagher’s remarks, the
nationwide rig tally dipped to a 15-year low of
172, and a short time later he agreed to sell
Parsley to rival Pioneer Natural Resources
Co. for about $5 billion in stock.
Since the August nadir, shale plays in Texas
have shown the biggest rebounds. The
Permian Basin in West Texas and New
Mexico, North America’s most-prolific oil field,
has seen 15 straight weeks of rising or steady drilling activity. The rush has been spurred in part by
drillers’ concerns that President-elect Joe Biden may hinder fracking on federally-owned land in the
New Mexico section of the Permian.
Meanwhile, places like the Bakken in North Dakota and the DJ-Niobrara in Colorado have been
slower to recover because they are more costly -- and thus, less profitable -- to drill.
Spending Slump
After U.S. explorers slashed spending almost in half this year, they’re expected to raise outlays by
a mere 5% in 2021, according to Evercore ISI. In other regions around the world, including Latin
America and Europe, expenditures are forecast to grow more robustly, according to Evercore.
In the U.S., much of that new spending is expected to finance fracking rather than new drilling as
explorers such as Callon Petroleum Co. chew into a large supply of pre-drilled wells that were never
finished because of the price crash.

NewBase December 31-2020 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Vaccines, stimulus set tone for 2021 as year ends on bullish note
Reuters + NewBase
Oil held steady on Thursday 31-12-2020 as a U.S. coronavirus fiscal aid package and a decline
in crude oil inventories supported prices. Brent crude futures dropped 0.19% to settle at $51.53
per barrel, and U.S. West Texas Intermediate (WTI) crude advanced 0.83% to settle at $48.40
per barrel.
Energy
Global oil futures have more than doubled from their decade lows hit in April, closing out a historic
year that marked the first-ever negative prices for WTI.
Overall, spot Asian LNG led the energy complex, gaining more than 140% this year on booming
demand and outages in key suppliers.
Oil price special
coverage

Graphic: Price chart of key global energy markets in 2020
“The recovery from the pandemic will accelerate once a vaccine is widely available, further
supported by ongoing fiscal and monetary stimulus from governments around the world,” ANZ said
in a note. “A strong global growth pulse will likely see the U.S. dollar weaken, which is normally a
prerequisite for a rally in commodity markets.”
Oil prices plunged in March and April when China and other countries went under lockdown to curb
the spread of COVID-19, choking off global fuel demand.
Graphic: 2-year price chart of key global energy markets

Vaccine rollouts have raised hopes for a demand recovery in 2021, brightening the outlook for all
energy products, with Goldman Sachs forecasting Brent to hit $65 a barrel in the next 12 months.
Commodity
Global commodity markets are poised to end 2020 on a strong note, with recovering demand and
widespread stimulus packages buoying prices after a roller coaster ride caused by the global
coronavirus pandemic.
Roll-outs of vaccines to combat the virus and trillions of dollars’ worth of fiscal support are expected
to boost investment and spending in 2021.
“It’s been a tumultuous year for the commodity market, as the oil meltdown in March changed how
we measure and gauge risk in the entire commodity sphere,” Stephen Innes, chief global market
strategist at brokerage Axi, told Reuters.
Graphic: Price chart of key commodities markets in 2020
“But thanks to the Fed’s unwavering support to dig the U.S. and global economy out of a hole,”
commodity markets have flourished, he added.
Dalian iron ore futures and silver are up around 50% in 2020, leading the gains in commodity futures.
METALS
Dalian iron ore and Comex silver were the top performing major metals futures in 2020.

Graphic: Price chart of key global metals markets in 2020
Iron ore was driven by a combination of booming demand in China and a drop in supplies from key
producer Brazil. In precious metals, Comex silver gained 47.9% and Comex gold 25% on the back
of a rush of buying by investors seeking a store of value amid rampant global central bank spending.
In industrial metals, benchmark three-month copper on the London Metal Exchange rose 27% this
year, becoming the sector’s best performer.
Graphic: 2-year price chart of key global metals markets

Oil set for 20% drop in 2020 as lockdowns weigh
Brent and WTI have more than doubled from decade-lows seen in April, putting past a year which
marked the first negative prices for WTI that shocked investors globally.
Oil pumping jacks, also known as “nodding donkeys,” in a Rosneft Oil Co. oilfield near Sokolovka village, in
the Udmurt Republic, Russia, on Friday, Nov. 20, 2020.
Global crude oil markets have lost about a fifth of their value in 2020 as strict coronavirus lockdowns
paralyzed much of the global economy, but prices have rebounded strongly from their lows as
governments rolled out more stimulus.
On Thursday, the last trading day of 2020, Brent was trading down 18 cents, or 0.4%, at $51.45 a
barrel, as of 0136 GMT and U.S. West Texas Intermediate (WTI) lost 0.1%, or 5 cents, to $48.35 a
barrel.
Brent and WTI have more than doubled from decade-lows seen in April, putting past a year which
marked the first negative prices for WTI that shocked investors globally.
Asian shares are set to end a tumultuous 2020 by hovering near record highs on Thursday while
riskier currencies cruised near 2-1/2-year peaks, buoyed by hopes that COVID-19 vaccine rollouts
will help the world beat the pandemic. In the short-term, concerns over coronavirus lockdowns are
likely to cap gains.
A new variant of the virus in the United Kingdom has led to the reimposition of movement
restrictions, hitting near-term demand and weighing on prices, while hospitalizations and infections
have surged in parts of Europe and Africa.
On the supply front, U.S. energy firms this week added 3 oil and natural gas rigs to the best quarter
for boosting the rig count since the second quarter of 2017, according to data from Baker Hughes.
A Jan. 4 meeting of the Organization of the Petroleum Exporting Countries and allies, including
Russia, a group known as OPEC+, is set to boost output by 500,000 barrels per day in January.

A historic oil price collapse, with worries headed into 2021
Even as global prices end the year at about $51 a barrel, near the average for 2015-2017, it masks
a year of volatility. In April, U.S. crude plunged deep into negative territory and Brent dropped below
$20 per barrel, slammed by the COVID-19 pandemic and a price war between oil giants Saudi
Arabia and Russia.
The remainder of 2020 was spent recovering from that drop as the pandemic destroyed fuel demand
around the world. While the short-lived decline of U.S. oil futures below negative-$40 a barrel is not
likely to be repeated in 2021, new lockdowns and a phased rollout of vaccines to treat the virus will
restrain demand next year, and perhaps beyond.
“We really haven’t seen anything like this - not in the financial crisis, not after 9/11,” said Peter
McNally, global sector lead for industrials, materials and energy at research firm Third Bridge. “The
impact on demand was remarkable and swift.”
Fossil-fuel demand in coming years could remain softer even after the pandemic as countries seek
to limit emissions to slow climate change. Major oil companies, such as BP Plc and Total SE,
published forecasts that include scenarios where global oil demand may have peaked in 2019.
World oil and liquid fuels production fell in 2020 to 94.25 million barrels per day (bpd) from 100.61
million bpd in 2019, and output is expected to recover only to 97.42 million bpd next year, the Energy
Information Administration said.
“Every cycle feels like the worst when you’re going through it, but this one has been a doozy,” said
John Roby, chief executive of Dallas, Texas-based oil producer Teal Natural Resources LLC.

DEMAND SLACKENS
As coronavirus cases spread, governments imposed lockdowns, keeping residents indoors and off
the roads. Consumption of world crude and liquid fuels fell to 92.4 million bpd for the year, a 9%
drop from 101.2 million bpd in 2019, EIA said. The changing landscape poses a threat to refiners.
About 1.5 million bpd of processing capacity has been taken off the market, Morgan Stanley said.
Worldwide crude distillation capacity is expected to keep rising, according to GlobalData, but falling
demand and weak margins for gasoline, diesel and other fuels has prompted refineries in Asia and
North America to close or curtail output, including several facilities along the U.S. Gulf Coast.
Shutdowns in more developed economies “increase refineries’ exposure to the highly competitive
product export market,” BP said in its outlook, released in September.

VOLATILITY CLIMBS
The next several months are likely to be volatile as investors weigh tepid demand against another
potential spike in oil supply from producers, including the Organization of the Petroleum Exporting
Countries (OPEC) and allies.
“Markets have been tumultuous and disorderly over the last 12 months with long-lasting
implications, as we begin to form new contours of normality towards a post-virus equilibrium,”
Mitsubishi UFJ Financial Group analysts said.
The Cboe Crude Oil ETF Volatility Index surged to a record 517.19 in April. The index has since
dropped to around 40, but that is still about 60% higher than this time a year ago, Refinitiv Eikon
data shows.
Reporting by Stephanie Kelly and Devika Krishna Kumar in New York; Editing by David Gaffen and
Matthew Lewis

NewBase Special Coverage
The Energy world – Dec. 31 -2020
Tesla’s Dominant Position in China Could Be Threatened Next Year
Bloomberg + NewBas
Tesla Inc. is coming to the end of its first year selling China-made cars with a commanding position
in the world’s biggest electric-vehicle market, but Elon Musk shouldn’t rest on his laurels.
While Tesla regularly topped monthly premium EV sales tallies this year, helped by the sedans
churned out from its multibillion-dollar plant opened to much fanfare in Shanghai last December,
2020 was also marked by rivals catching up. In 2021, the breadth of the competitive attack that
Tesla faces will be greater than ever.
Whether Tesla can defend its lead in China will be key to its wider growth and earnings trajectory.
While still in its infancy, China’s electric-car market dwarfs that of other countries and the
government is intent on further expansion amid commitments to reduce fossil-fuel use. Tesla’s fate
in China will also show whether it can grow into a truly global carmaker, an ambition investors are
banking on after pushing the company’s shares up almost 700% this year.
A trio of local champions Nio Inc., Xpeng Inc. and Li Auto Inc. has emerged as the front line
against the Palo Alto, California-based company. All traded in the U.S., and enjoying backing from
government entities or internet giants, the three startups are quickly winning fans, with sales of their
electric SUVs, sedans and crossovers also rising in 2020 and their shares surging on Tesla’s
coattails.
“Since June, you’ve seen a steady rise in sales by Nio, Xpeng, and Li,” said Bill Russo, founder and
chief executive officer of advisory firm Automobility Ltd. in Shanghai. “Can you stay competitive
with these fast-moving, internet-backed, very deep-pocketed companies?”

China is Tesla’s largest market after the U.S., with sales in Asia’s biggest economy topping 120,000
units this year, according to local registration data. And Tesla keeps ramping up production in
Shanghai, prompting analysts to forecast that China will account for a bigger slice of its sales and
earnings in the years ahead.
The Model 3 sedans Tesla sells in China have higher profit margins than its vehicles in the U.S. and
Europe, and China could make up more than 40% of Tesla’s sales by early 2022, Wedbush
Securities analyst Dan Ives said in a Dec. 21 research note. That compares with about 20% now.
“China could see eye-popping demand into 2021 and 2022 across the board with Tesla’s flagship
giga 3 footprint a major competitive advantage,” he said, referring to the Shanghai plant.
Expansion Push
Waiting in the wings for Tesla is the Model Y, which Musk says has the potential to outsell all other
vehicles it makes. The crossover is already being built in California, and a Shanghai-assembled
version is clearing the final regulatory stages to start selling in China as soon as next year. Earlier
in December, drone footage captured around 40 Model Y vehicles being driven out of the factory
and wrapped in protective covers.
“China will continue to fuel Tesla’s global growth in 2021, more so than ever,” Sharon Li, a JL Warren
analyst, said in a recent note.
The Tesla Gigafactory in Shanghai. Photographer: Qilai Shen/Bloomberg
The carmaker is also expanding its geographic footprint, recently opening multiple Tesla centers in
China’s lower-tier cities including Weifang and Linyi in northeastern Shandong province. Meanwhile,
it’s bolstering its public and government relations teams in smaller hubs including Shijiazhuang
and Haikou, in addition to larger cities.Tesla is starting local production of chargers in Shanghai
too, part of an effort to expand its charging network in more cities. The company recently completed
its 500th super-charging station, marching toward an annual target of 650.

Crowded Field
Trade group China Passenger Car Association predicts that Tesla will sell as many as 280,000
vehicles in the country next year. While that represents impressive growth over 2020, it would still
leave more than 80% of the market up for grabs. PCA predicts total sales of 1.7 million new energy
vehicles for 2021.
Nio SUVs parked at the company’s production facility in Hefei.Photographer: Qilai Shen/Bloomberg
Market Overview
The China Electric Vehicles market is anticipated to register a CAGR of over 25% during the forecast
period (2020 - 2025).
 With the growing environmental concerns, and rise in exhaust emissions, the country has
been focusing on and working toward the development of sustainable transportation. This, in
turn, has resulted in the electrification of its transport sector.
 During the forecast period, the country may also witness growth in the adoption of electric
buses, as more than 30 Chinese cities have made plans to achieve 100% electrified public
transit by 2020, including Guangzhou, Zhuhai, Dongguan, Foshan, and Zhongshan in the
Pearl River Delta, along with Nanjing, Hangzhou, Shaanxi, and Shandong.
 Also, the sales of the cars have been decreased gradually mainly due to the economy
lockdown. This declining trend has further continued during the first quarter of 2020 due to
the outbreak of Corona Virus across the country. The government had announced country
lockdown, due to which production and dealerships facilities were shutdown.

That means local premium brands Nio, Xpeng and Li are increasingly a threat -- combined, the three
companies already approach Tesla’s monthly sales tally. SAIC-GM Wuling Automobile
Co. and BYD Co., which sell less expensive electric cars, are also gaining momentum.
Chinese Challengers
Nio, the biggest of the Chinese trio, has steadily boosted sales of its electric SUVs that it sells at a
price as much as 40% higher than Tesla’s Model 3. The company’s retail strategy
includes clubhouses with showrooms, lounges, work spaces, theaters and even camp activities for
customers’ children. A Tesla price cut earlier in the year added some pressure, but a subsequent
reduction failed to have a similar impact, Nio CEO William Li said on a recent earnings call.
“We didn’t see any specific impact on our order intake,” Li said. “This proves that we have our own
unique advantages.”
Xpeng similarly has seen brisk sales growth, helped by lower prices than Tesla’s. The company,
which touts the smart features of its vehicles, raised $2.2 billion this month selling additional stock,
capitalizing on a recent share-price surge.
“I would call 2020 Year One of an intelligent electric-vehicle market in China,” Xpeng Vice Chairman
Brian Gu said in a phone interview on Nov. 27. “We’re seeing really good sales of many good
products.”
Common Enemy
But Tesla and its Chinese rivals also face a common threat: conventional carmakers swiftly moving
to electrified autos. Volkswagen AG plans to introduce eight ID series electric models in China
by 2023, while Daimler AG, the maker of Mercedes-Benz luxury cars, has launched the EQC
electric SUV and plans to expand its lineup of purely battery-powered vehicles to at least 10 in

coming years. While their EV volumes in China are still small -- they’ve yet to break into the Top 10
-- the traditional giants have the advantage of vast dealership, service and supply-chain networks.
The Volkswagen ID.4 SUV, right, and the Volkswagen ID.3. Photographer: Krisztian Bocsi/Bloomberg
China’s government, meanwhile, is doing its best to lure consumers and old-school automakers
away from gas guzzlers with subsidies and restrictions. The target is to have NEVs account for 20%
of the market by 2025, up from about 5% currently.
Tesla will have its work cut out to ensure it’ll be among the beneficiaries of that push. Lu Bin, a fund
manager at HSBC Bank (China) Co. and an early buyer of a China-built Model 3 sedan, said he
opted for a roomier Li Auto model when he purchased a new EV in November. The range is better,
plus the six-seater is more suitable for families.
“Tesla had the early-mover advantage and has shown the way to consumers,” said Russo. “But
now, there are more options.”

NewBase Energy News 31 December 2020 - Issue No. 1396 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscriptions, please email us.
About: Khaled Malallah Al Awadi, Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 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 the UAE operations base. Khaled is the Founder
of NewBase Energy, and an international consultant, advisor, ecopreneur and
journalist with expertise in Gas & Oil pipeline Networks, waste management, waste-
to-energy, renewable energy, environment protection and sustainable development.
His geographical areas of focus include Middle East, Africa and Asia. Khaled has
successfully accomplished a wide range of projects in the areas of Gas & Oil with
extensive works on Gas Pipeline Network Facilities & gas compressor stations.
Executed projects in the designing & constructing of gas pipelines, gas metering &
regulating stations and in the engineering of gas/oil supply routes. Has drafted &
finalized many contracts/agreements in products sale, transportation, operation & maintenance agreements.
Along with many MOUs & JVs for organizations & governments authorities. Currently dealing for biomass
energy, biogas, waste-to-energy, recycling and waste management. He has participated in numerous
conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is the Editor-
in-Chief of NewBase Energy News and is a professional environmental writer with more than 1400 popular
articles to his credit. He is proactively engaged in creating mass awareness on renewable energy, waste
management and environmental sustainability in different parts of the world. Khaled has become a reference
for many of the Oil & Gas Conferences and for many Energy program broadcasted internationally, via GCC
leading satellite Channels. Khaled can be reached at any time, see contact details above.
NewBase: For discussion or further details on the news above you may contact us on +971504822502, Dubai, UAE
NewBase 2020 K. Al Awadi

For Your Recruitments needs and Top Talents, please seek our approved agents below

New base 31 december 2020 energy news issue 1396 by khaled al awadi

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base 31 december 2020 energy news issue 1396 by khaled al awadi

Similar to New base 31 december 2020 energy news issue 1396 by khaled al awadi (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base 31 december 2020 energy news issue 1396 by khaled al awadi