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NewBase 31 March 2016 - Issue No. 820 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Saudi Aramco CEO says no projects cancelled amid oil price slump
By Reuters + Gulf Times + bloomberg
Saudi Aramco was continuing to work on both its upstream and downstream projects without any
cancellations, with its Khurais scheme expected to come online in 2018, the chief executive of the
state-owned oil giant said on Wednesday.
Global oil majors and Saudi Arabia have been paring back investments to cope with the
continuing lower oil price environment. The kingdom is the world's largest exporter of crude oil.
"Until now, our projects are continuing in
downstream, upstream, there are no projects that
have been cancelled from our programmes," Amin
Nasser told reporters on the sidelines of an finance
event.
Asked if there will be any delay in exploration
activities, Nasser said: "Exploration activities are
continuing. We have one rig in the Red Sea in the
shallow water."
He added work on the clean fuels project in Ras
Tanura is ongoing, while the completion of the
Khurais oil field expansion would be in 2018.
Aramco revived bidding for the cleaner fuels project at its biggest oil refinery, sources familiar with
the plan told Reuters last month, following speculation that lower oil prices would force the
project's cancellation.
Amin Nasser, CEO of Saudi Aramco.
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Expanding Oil and Gas Projects
• Khurais oilfield expansion to be complete in 2018: Aramco CEO
• Saudi Arabia to double its natural gas output over 10 years
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Saudi Arabian Oil Co. is pressing ahead with an expansion of the Khurais oil field despite lower
crude prices and plans to double its production of natural gas over the next 10 years, the
company’s chief executive officer said.
The world’s biggest oil exporter, known as Saudi Aramco, won’t cancel any oil, gas or refining
projects, Amin Nasser told reporters during a conference in Al-Ahsa in eastern Saudi Arabia.
Aramco is also studying a possible expansion of the country’s largest oil refinery, Ras Tanura,
which has a capacity of 550,000 barrels a day, he said Wednesday.
“Until now all of our downstream and upstream projects are continuous,” Nasser said. “No project
in our programs got canceled.”
Saudi Arabia led a 2014 decision by the Organization of Petroleum Exporting Countries to
maintain output, not cut it, in order to defend market share and drive out higher-cost producers.
Crude prices have tumbled almost 50 percent since the decision in November that year. Saudi
Arabia plans to join a meeting next month of producers from within and outside OPEC in Doha,
Qatar, adding its weight to a campaign by financially stricken crude exporters to freeze output and
overcome the glut weighing on the market.
Giant Field
Khurais oil field’s expansion is due to be complete in 2018, Nasser said. Aramco was seeking to
add 300,000 barrels a day to the field’s production to reach a capacity of 1.5 million barrels a day,
the company’s former CEO Khalid Al-Falih said in October 2013.
Ghawar oil field, the world’s
biggest, has been producing for
70 years and will keep pumping
oil for “many years to come,”
Nasser said at the conference.
Sixty percent of Saudi Arabia’s
crude oil output comes from
Ghawar, Abdul Latif Al-Othman,
governor of the Saudi Arabian
General Investment Authority,
said at the same event.
Aramco has made a “promising”
shale gas discovery at the
Jafurah field in the Al-Ahsa
region and is assessing and appraising the area for future production, Nasser said. The company
plans to double its gas production to 23 billion cubic feet a day over 10 years, he said. Aramco will
also keep exploring for oil and gas in the Red Sea area, he said.
Proposals to sell a stake in some of Aramco’s assets, announced by Deputy Crown Prince
Mohammed bin Salman in early January, fanned speculation that the slump in oil prices had
intensified Saudi Arabia’s push to diversify its economy away from crude. Saudi Arabia’s
dependence on oil isn’t sustainable, Nasser said.
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Bahrain's Nogaholding Borrows $570M for Oil, LNG Projects
Bloomberg - Anthony Dipaola
Bahrain’s oil investment company Nogaholding is taking a $570 million Islamic loan to pay for
expansion projects, including improvements to the island nation’s only refinery and construction of
a liquefied natural gas import terminal.
The company arranged the Murabaha facility with 10 banks including Bank of Tokyo-Mitsubishi
UFJ, BNP Paribas SA and HSBC Holdings Plc, it said Wednesday in an e-mailed statement. The
investment arm of Bahrain’s National Oil & Gas Authority wants the money to help finance
planned investments of more than $7 billion.
Bahrain, the smallest oil
producer in the Arabian Gulf,
pumps most of its crude from a
field it shares with Saudi Arabia,
the world’s largest exporter. The
country is seeking to expand
output capacity at its wholly
owned Bahrain field, site of the
Gulf’s first oil discovery in 1932,
to 100,000 barrels a day by the
end of the decade. The Bahrain
field produced 44,000 barrels a
day in 2014.
Better Fuels
“This is an investment in the
future and highlights our
continued efforts to grow the Kingdom of Bahrain’s oil and gas assets,” Mohamed bin Khalifa Al
Khalifa, chief executive officer of Nogaholding, said in the statement.
Bahrain exports refined products such as jet fuel and diesel from its 260,000 barrel-a-day refinery.
State-run Bahrain Petroleum Co. plans to boost the plant’s capacity to 360,000 barrels a day and
produce higher-quality fuels, Abdul Hussain Mirza, the nation’s energy minister, said in January
in Abu Dhabi. Lower oil prices were reducing
construction costs, making it a good time to expand the
facility, Mirza said that month, without giving a date for
the project’s completion.
Bahrain also plans to build an import terminal for LNG,
which it needs as fuel for power plants and industries,
and upgrade its capacity to process natural gas,
according to the statement.
Other banks participating in the Murabaha facility include
Arab Banking Corp., Ahli United Bank BSC, Arab
Petroleum Investments Corp., Gulf International Bank
BSC, National Bank of Bahrain BSC, Qatar Islamic Bank
SAQ and Kuwait Finance House.
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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Morocco: Chariot Oil & Gas announces farmout agreement
with Eni in Rabat Deep … Source: Chariot Oil & Gas
AIM-listedChariot Oil & Gas, the Atlantic margins focused oil and gas exploration company, has
announced that its wholly owned subsidiary, Chariot Oil & Gas Investments (Morocco), has
signed a farm-out agreement with a wholly owned subsidiary of Eni, which will acquire
operatorship and a 40% equity interest in return for a capped carry on drilling the JP-1 Prospect.
Eni will also carry Chariot for other geological and administrative costs relating to work
commitments in the next licence period of Rabat Deep and will pay a contribution which will
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equate to Chariot's investment to date and be used for the continued development of Chariot's
portfolio.
This agreement demonstrates Chariot's ability to deliver on its strategy; seeking third party
investment in order to de-risk and progress its assets towards drilling in order to provide the
opportunity for transformational growth.
Following completion of this agreement the licence ownership will be as follows: Eni (Operator,
40% equity interest), Woodside (25% equity interest), Chariot (10% equity interest) and Office
National des Hydrocarbures et des Mines ('ONHYM') (25% carried interest).
The Rabat Deep Offshore licence area is located approx. 30km offshore in water depths
ranging from 150m to 3,500m. The JP-1 prospect has been described following detailed
processing and interpretation of 3D seismic data as a large, four-way dip closed structure of
approximately 200 sq km areal extent, with Jurassic carbonate primary reservoir objectives.
Based on this data, Netherland Sewell and Associates Inc. conducted an independent
Competent Person's Report and has estimated a gross mean prospective resource of
768mmbbls for JP-1.
The prospect sits adjacent to a source kitchen modelled to be oil generating and third party
drilling offshore Morocco has confirmed that the Jurassic can have excellent reservoirs and the
presence of a light oil charge, hence the focus on this play within Chariot's acreage.
Retaining a 10% equity interest in the drilling of this well has the potential to create
transformational value in the success case due to the large scale of prospective resources,
excellent contract commercial terms and robust economics even in the current lower oil price
environment.
Additional prospects and leads have been identified within the Jurassic fairway and any success
in JP-1 would also materially de-risk these other targets and offer significant follow-on exploration
potential in both Rabat Deep and the neighbouring Mohammedia permit (Chariot, Operator with
75% equity interest).
The completion of this farm-out agreement remains subject to both the approval of the Moroccan
authorities and various conditions precedent, a number of which are outside of Chariot's control.
Larry Bottomley, CEO commented:
'We are very pleased to have signed this farm-out agreement with Eni as the future operator of
our Rabat Deep acreage. We look forward to working with them and our other partners,
Woodside and ONHYM, to progress to drilling the JP-1 prospect which, subject to the relevant
approvals, well planning and securing a drill rig, we anticipate to occur in 2017.
The response we had to the partnering initiative and subsequently securing this deal endorses
our technical view of the asset and is another milestone in delivering on our strategy. Eni is a
world-class explorer and an experienced operator focused on projects with the potential for
material production.
'Despite the challenges posed by current market sentiment, Chariot's high quality assets
continue to attract industry investment. We are excited that we now have an opportunity to see
one of our priority targets through to drilling at near zero cost to the Company, with the agreed
cap above recent drilling cost estimates provided by an independent party.'
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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Pakistan: MOL Group makes third Karak discovery
MOL Group has made its third discovery in the Karak block in Pakistan
Written by OilOnline Press
MOL Group has announced a new hydrocarbon discovery in the Karak Block in Pakistan. The
block is operated by Mari Petroleum Co. Ltd (MPCL) with 60% working interest while MOL
Pakistan Oil & Gas Co. has 40% in the block.
This discovery at the Halini-Deep-1 well constitutes as the third consequent discovery in the block
following two previous successes (Halini-X-1 in 2011 and Kalabagh-1A in 2015).
Halini-Deep-1 was drilled to a
depth of 5900m. The
completion integrity test has
been conducted with flow
rates of 1425 bopd and 1.18
MMscf/d (approximately 200
boe/d). Operator expects first
oil by the end of H1.
“We are very proud of our
11th discovery in Pakistan,”
said Berislav Gašo, MOL
exploration and production
COO. “In the past 17 years,
the exploration teams led by
MOL in Pakistan have
successfully de-risked more
than 400 MMBOE in 2P
reserves. This well, which is
operated by Mari Petroleum,
adds to this success series and will also help to improve the energy security of the country.”
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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Japan: Love of Efficient & Electrical cars in Dawn of Cheaper Gas
Bloomberg - James Mayger ( + NewBase )
Unlike Americans, who are using the windfall of lower gasoline prices to buy bigger cars and drive
more, the Japanese are buying less, even with the price at the pump down by a third from a peak
in 2014.
Households spent an average 13,350 yen ($119) less on gas in 2015 compared to the previous
year, due to lower consumption and falling prices.
The rising number of electric, hydrid and ultra-efficient small cars is playing an important part.
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Japan’s demographics are also having an impact. As the population shrinks and the number of
elderly increase, people are driving less.
Combine all this with Japan’s efficient public transportation system and the result is less driving
and fewer deaths on the road, according to Robert Feldman, chief economist in Tokyo for Morgan
Stanley MUFG Securities Co.
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US: EIA report shows decline in cost of U.S. oil and gas wells
Source: U.S. Energy Information Administration, Trends in U.S. Oil and Natural Gas Upstream Costs
The profitability of oil and natural gas development activity depends on both the prices realized by
producers and the cost and productivity of newly developed wells. Overall trends in well
development costs are generally less transparent than price and productivity trends, which are
readily observable in the markets or through analyses of well productivity trends such as EIA's
monthly Drilling Productivity Report.
In an effort to increase understanding of the costs of upstream drilling and production activity, EIA
commissioned IHS Global Inc. (IHS) to study these costs on a per-well basis in the Eagle Ford,
Bakken, Marcellus, and Permian regions, analyzing the
Permian's Midland and Delaware basins separately.
Upstream costs in 2015 were 25% to 30% below their 2012
levels, when per-well costs were at their highest point over
the past decade. Changes in technology have affected
drilling efficiency and completion, supporting higher
productivity per well and lowering costs, while shifts towards
deeper and longer lateral wells with more complex
completions have tended to increase costs.
Costs per well generally increased from 2006 to 2012,
demonstrating the effect of rapid growth in drilling activity.
Since 2012, costs per well have decreased because of
reduced overall drilling activity and improved drilling efficiency and tools.
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Changes in costs and well parameters, such as the need to drill deeper or longer lateral wells,
have affected the onshore oil plays differently in 2015, with recent per-well costs ranging from 7%
to 22% below 2014 levels.
Differences in geology, well depth, and water disposal options can affect costs for each onshore
oil play area. The adoption of best practices and the improvement of well designs have reduced
drilling and completion times, decrease total well costs, and increase well performance.
Greater standardization of these drilling and completion practices and designs across the industry
should continue to lower costs.
The drilling cost per foot, based on total depth, and the completion cost per foot, based on lateral
length, are both projected to maintain these lower cost trends through 2018. Sustained lower
upstream costs may affect near-term oil and natural gas markets, and ultimately, the prices of
these fuels.
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NewBase 31 March 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices slieghtly falls & rises 7th week in a row
Reuters + NewBase.
Oil futures fell in Asian trade on Thursday, with U.S. crude hitting the lowest level in more than two
weeks, amid renewed worries of global oversupply after U.S. crude inventories rose to a record
high.
That increase came despite seasonal refinery utilization hitting an 11-year high, while a rise in the
dollar index put further pressure on oil prices.
Brent crude futures fell 36 cents to $38.90 a barrel as of 0331 GMT.
It ended up 12 cents in the previous session after touching a session peak of $40.61.
The front-month contract for U.S. crude futures dropped 46 cents to $37.86 a barrel, after
dropping to $37.74 earlier, the lowest since March 16. It settle up 4 cents in the previous session
following a gain of 3 percent earlier in the session.
Prices will "zig-zag" for the rest of the year, said Tony Nunan, oil risk manager at Japan's
Mitsubishi Corp.
U.S. crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25,
the seventh week at record high levels, data from the U.S. Energy Information Administration
shows.
Oil price special
coverage
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But the increase was less than analysts' expectations of a 3.3 million barrel build after crude
imports fell 636,000 barrels per day to 7.4 million bpd.
Refinery crude runs rose by 414,000 barrels per day (bpd) and refinery utilization rates rose 2
percentage points to 90.4 percent of total capacity, the highest seasonal rate since 2005.
Crude prices, which have risen about 50 percent since mid-February, have started to track lower
in the past week.
"Oil prices will trend down again ... $35 a barrel will be the support level. Low prices are not
sustainable in the long-run," Nunan said.
But with OPEC flagging a price of $50 a barrel and oil producers scheduled to meet in Doha on
April 17 to discuss a possible output freeze, prices are likely to remain range-bound.
"Anytime prices get close to $45-$50 a barrel, funds that have taken long positions are likely to
take profits. Unless things really ignite the global economy, then people will sell-off at that level,"
Nunan said.
In Asia, sustained weakness in oil prices is continuing to supress upstream oil and gas production
activity, consultancy BMI Research said in a report on Thursday.
Weaker oil prices are "limiting opportunities to stem natural declines in ageing assets and bringing
new production sources online," the report added.
Concerns over global oversupply were further fueled after crude output from the Organization of
the Petroleum Exporting Countries (OPEC) rose in March to 32.47 million bpd from 32.37 million
bpd in February, according to a Reuters survey based on shipping and other data.
Iran is expected to add half a million barrels of oil supply a day within a year from existing oilfields
after sanctions were lifted in January, Fatih Birol, the head of the International Energy Agency told
Reuters on Wednesday.
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Opec output rises in March as Iran, Iraq growth offsets outages
Opec supply has risen in March to 32.47mn bpd from 32.37mn bpd in FebruaryReuters
Opec oil output is rising in March, a Reuters survey found, as higher supply from Iran after the
lifting of sanctions and near-record exports from southern Iraq offset maintenance and outages in
smaller producers.
The survey also found no major change in production in top exporter Saudi Arabia - another sign
that Riyadh is serious about freezing output to support prices, which hit a 12-year low near $27 a
barrel in January but have since recovered to $40. Producers are meeting on April 17 in Qatar to
discuss the plan.
"The production freeze has put a floor under the price," said Carsten Fritsch, analyst at
Commerzbank. "We see a risk of a short-term setback if the meeting produces a disappointment."
Supply from the Organisation of the Petroleum Exporting Countries has risen in March to 32.47mn
bpd from 32.37mn bpd in February, according to the survey, based on shipping data and
information from sources at oil companies, Opec and consultants.
The biggest rise came from Iran following the lifting of Western sanctions in January. Tehran,
which wants to recover market share it lost under sanctions, has said it will not take part in the
production freeze.
Iran has increased output by 230,000 bpd since December, according to Reuters surveys. Iranian
officials say the increase in supplies is much larger.
Iraq, Opec's largest source of supply growth in 2015, managed to raise output. An increase in
southern exports to what may be a new record in March offset disruption to flows along a pipeline
carrying oil from the Kurdish region.
Angolan exports rose. In countries where output has fallen, the drop was the result of outages and
maintenance rather than voluntary restraint.
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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Output declined in the United Arab Emirates, where work on oilfields that produce Murban crude is
curbing production. The maintenance will not be completed until April.
There was a further decline in Nigeria due to a whole month of disruption to the Forcados crude
stream operated by Royal Dutch Shell's local venture, but this was partially offset by higher supply
of other grades.
Libyan output, already at a fraction of rates seen before the country's civil war, fell due to a power
outage. Supply in Venezuela edged lower.
Saudi Arabia kept output steady compared with February, sources in the survey said, citing stable
to slightly lower exports in March. Saudi production was assessed at 10.18mn bpd versus
10.20mn in February.
Opec production has surged since the group in November 2014 abandoned its historic role of
cutting supply alone to prop up prices, in the hope that lower prices would curb the growth of more
costly-to-develop competing supply sources.
The extra Opec crude added to a global glut, and this year's output freeze agreement represents
the first cooperation on supply policy between Opec and non-Opec since 2001.
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History points to a good month ahead for oil
Oil is enjoying an incredible March, which could suggest that a good April is ahead. Crude oil is
rising powerfully on Wednesday morning. And even through Tuesday's settlement, oil is up more
than 13 percent over the current month.
That sets March up to be one of the best-ever months for oil. Over the past two decades, crude
has only risen 13 percent or more in 15 distinct months.
The good news for oil bulls? The month following a substantial gain has tended to be a positive
one for the commodity. When oil has risen 13 percent in a given month, it tends to rise another 1.5
percent in the month that follows — with the median move in the following month being a 3.7
percent rise.
For the sake of comparison, the average one-month move for WTI over the past 20 years has
been a 0.7 percent gain. (All of this is according to data sliced and diced from FactSet.)
The move in oil is a "short-covering rally," and "when you have these type of short-covering rallies,
they can oftentimes extend more than you would anticipate, as more traders get panicked about
their short trades," Kathy Lien of BK Asset Management commented in a Monday "Trading
Nation" segment.
Interestingly, oil also
appears to
frequently build up
momentum to the
downside. After a
down-13 percent
month, crude has
fallen an average of
3.2 percent in the
month that has
followed.
Of course, it is no
secret that
commodity markets
experience powerful
trends. The best-known big-money commodity trading strategy is hopping aboard moves higher or
lower, and profiting off of the expected momentum.
Evidence suggests that as oil has bounced back, many of these trend-following hedge funds
(known as commodity trading advisors) have been forced to cover their short positions and
perhaps even get long crude.
In fact, Reuters reported Tuesday that hedge funds have speedily increased their bullish bets on
crude oil over the past three months, all the way up to a near-record net long position of 579
million barrels. As more and more funds potentially pile in as the second quarter begins, oil's
gains may be set to continue.
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NewBase Special Coverage
News Agencies News Release 31 March 2016
Asia Can't Seem to Escape Its Addiction to Middle East Oil
Bloomberg - Debjit Chakraborty
Even in a world awash with crude, buyers in the world’s biggest oil market can’t seem to escape
their addiction to Middle East supplies.
South Korea’s imports from the Middle East climbed last year to the highest level since at least
1980, while refiners in India say they are shunning shipments from distant ports and taking more
cargoes from the Persian Gulf. Saudi Arabia and Oman have boosted supplies to China this year
as volumes from Venezuela and Colombia to Asia’s biggest crude consumer have shrunk.
While the Middle East provides more than 50 percent of Asia’s requirements because of its
proximity, buyers in the world’s biggest oil-consuming region are seeking to end that dependence
and guard against geopolitical risks. Still, even though the global glut has attracted cargoes from
Mexico to the North Sea and Alaska, processors say cargoes from the Persian Gulf are irresistible
because of shorter shipping times, attractive prices and the promise of crude whose quality
refineries are used to.
“If you’re getting something nearby and cheap, why would you go shopping far?” said B.K.
Namdeo, director refineries at India’s state-run Hindustan Petroleum Corp. “The Middle East is the
nearest source for the crude we need and the prices are good.”
More Crude
Middle East nations including Saudi Arabia, the world’s biggest oil exporter, have responded to a
price collapse triggered by the U.S. shale boom by opening their taps and pressing higher-cost
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producers to address a global glut. They’ve also cut official selling prices to defend market share
against other suppliers seeking sales in the Asia-Pacific region, which the International Energy
Agency predicts will account for more than a third of global oil consumption this year.
Saudi Arabia is selling supplies of its Arab Light grade for April in Asia at 75 cents below
benchmark Middle East prices, compared with a premium of $3.75 in early 2014. Iran, now free of
international sanctions that had curbed its exports, offered its heavy crude grade for March to
buyers in Asia at a deeper discount than Saudi Arabia’s for the first time in a decade.
“It’s quite natural that we need to source from the Middle East, from both logistics and economics
perspectives,” said B. Ashok, the chairman of Indian Oil Corp., the nation’s biggest refiner. “If you
are looking for high-sulfur crude, there again it’s the Middle East. The African countries are
offering sweet crudes, which are more expensive. Latin American crudes are heavy and cheaper,
but there is a tremendous impact on the logistics.”
Supply Risks
India is open to buying crude from the world’s newest exporters including the U.S. as it attempts to
diversify supply sources, Oil Minister Dharmendra Pradhan said March 28. That echoes
comments from 2014 when he said the country plans to diversify purchases to guard against
geopolitical risks tied to some of the world’s biggest suppliers.
It’s necessary for South Korea to diversify crude supplies because its significant dependence on
the Middle East means there’s a risk supplies may be disrupted if geopolitical tensions rise in the
region, a government official in the nation’s Ministry of Trade, Industry and Energy said on March
30, asking not to be identified because of internal policy.
Still, those plans face a hurdle that’s built into the countries’ refineries.
“Most Asian plants were designed primarily to process Middle East crude,” said H. Kumar,
managing director of Mangalore Refinery and Petrochemicals Ltd. “Now there are multiple
sources like Latin American heavy grades and companies are adding units with the aim to
diversify, but a challenge for that is the configuration of these plants.”
Spending Cuts
What’s more, the strategy by the Organization of Petroleum Exporting Countries to squeeze other
producers is showing signs of working, limiting some of the choices available to Asia. The IEA
has even warned that investment cuts by producers have increased the possibility of oil-security
surprises in the “not-too-distant” future.
South Korea imported 844.6 million barrels from the Middle East in 2015, the highest since 1980
when state-run Korea National Oil Corp. started to compile the data. In China, the world’s second-
biggest oil consumer, more than half of the top 10 suppliers last year were from the Middle East,
customs data compiled by Bloomberg show.
India’s Reliance Industries Ltd., owner of the world’s biggest refining complex, is shifting away
from crude that’s priced off Brent, a benchmark used oil from Europe to Latin America, and turning
to grades priced against Dubai, the Middle East marker, according to the company.
“With non-OPEC supplies falling, there is no alternative for Asian refiners but to buy Middle
Eastern oil, which is not only cheaper but also available in large volumes,” said Ehsan Ul-Haq, a
senior consultant at KBC Advanced Technologies in London. “The Middle Eastern oil is tailored to
their requirements.”
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 18
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 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 31 March 2016 K. Al Awadi
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 19
Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 20

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New base 820 special 31 march 2016

  • 1. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 1 NewBase 31 March 2016 - Issue No. 820 Edited & Produced by: Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Saudi Aramco CEO says no projects cancelled amid oil price slump By Reuters + Gulf Times + bloomberg Saudi Aramco was continuing to work on both its upstream and downstream projects without any cancellations, with its Khurais scheme expected to come online in 2018, the chief executive of the state-owned oil giant said on Wednesday. Global oil majors and Saudi Arabia have been paring back investments to cope with the continuing lower oil price environment. The kingdom is the world's largest exporter of crude oil. "Until now, our projects are continuing in downstream, upstream, there are no projects that have been cancelled from our programmes," Amin Nasser told reporters on the sidelines of an finance event. Asked if there will be any delay in exploration activities, Nasser said: "Exploration activities are continuing. We have one rig in the Red Sea in the shallow water." He added work on the clean fuels project in Ras Tanura is ongoing, while the completion of the Khurais oil field expansion would be in 2018. Aramco revived bidding for the cleaner fuels project at its biggest oil refinery, sources familiar with the plan told Reuters last month, following speculation that lower oil prices would force the project's cancellation. Amin Nasser, CEO of Saudi Aramco.
  • 2. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 2 Expanding Oil and Gas Projects • Khurais oilfield expansion to be complete in 2018: Aramco CEO • Saudi Arabia to double its natural gas output over 10 years Share on FacebookShare on Twitter Saudi Arabian Oil Co. is pressing ahead with an expansion of the Khurais oil field despite lower crude prices and plans to double its production of natural gas over the next 10 years, the company’s chief executive officer said. The world’s biggest oil exporter, known as Saudi Aramco, won’t cancel any oil, gas or refining projects, Amin Nasser told reporters during a conference in Al-Ahsa in eastern Saudi Arabia. Aramco is also studying a possible expansion of the country’s largest oil refinery, Ras Tanura, which has a capacity of 550,000 barrels a day, he said Wednesday. “Until now all of our downstream and upstream projects are continuous,” Nasser said. “No project in our programs got canceled.” Saudi Arabia led a 2014 decision by the Organization of Petroleum Exporting Countries to maintain output, not cut it, in order to defend market share and drive out higher-cost producers. Crude prices have tumbled almost 50 percent since the decision in November that year. Saudi Arabia plans to join a meeting next month of producers from within and outside OPEC in Doha, Qatar, adding its weight to a campaign by financially stricken crude exporters to freeze output and overcome the glut weighing on the market. Giant Field Khurais oil field’s expansion is due to be complete in 2018, Nasser said. Aramco was seeking to add 300,000 barrels a day to the field’s production to reach a capacity of 1.5 million barrels a day, the company’s former CEO Khalid Al-Falih said in October 2013. Ghawar oil field, the world’s biggest, has been producing for 70 years and will keep pumping oil for “many years to come,” Nasser said at the conference. Sixty percent of Saudi Arabia’s crude oil output comes from Ghawar, Abdul Latif Al-Othman, governor of the Saudi Arabian General Investment Authority, said at the same event. Aramco has made a “promising” shale gas discovery at the Jafurah field in the Al-Ahsa region and is assessing and appraising the area for future production, Nasser said. The company plans to double its gas production to 23 billion cubic feet a day over 10 years, he said. Aramco will also keep exploring for oil and gas in the Red Sea area, he said. Proposals to sell a stake in some of Aramco’s assets, announced by Deputy Crown Prince Mohammed bin Salman in early January, fanned speculation that the slump in oil prices had intensified Saudi Arabia’s push to diversify its economy away from crude. Saudi Arabia’s dependence on oil isn’t sustainable, Nasser said.
  • 3. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 3 Bahrain's Nogaholding Borrows $570M for Oil, LNG Projects Bloomberg - Anthony Dipaola Bahrain’s oil investment company Nogaholding is taking a $570 million Islamic loan to pay for expansion projects, including improvements to the island nation’s only refinery and construction of a liquefied natural gas import terminal. The company arranged the Murabaha facility with 10 banks including Bank of Tokyo-Mitsubishi UFJ, BNP Paribas SA and HSBC Holdings Plc, it said Wednesday in an e-mailed statement. The investment arm of Bahrain’s National Oil & Gas Authority wants the money to help finance planned investments of more than $7 billion. Bahrain, the smallest oil producer in the Arabian Gulf, pumps most of its crude from a field it shares with Saudi Arabia, the world’s largest exporter. The country is seeking to expand output capacity at its wholly owned Bahrain field, site of the Gulf’s first oil discovery in 1932, to 100,000 barrels a day by the end of the decade. The Bahrain field produced 44,000 barrels a day in 2014. Better Fuels “This is an investment in the future and highlights our continued efforts to grow the Kingdom of Bahrain’s oil and gas assets,” Mohamed bin Khalifa Al Khalifa, chief executive officer of Nogaholding, said in the statement. Bahrain exports refined products such as jet fuel and diesel from its 260,000 barrel-a-day refinery. State-run Bahrain Petroleum Co. plans to boost the plant’s capacity to 360,000 barrels a day and produce higher-quality fuels, Abdul Hussain Mirza, the nation’s energy minister, said in January in Abu Dhabi. Lower oil prices were reducing construction costs, making it a good time to expand the facility, Mirza said that month, without giving a date for the project’s completion. Bahrain also plans to build an import terminal for LNG, which it needs as fuel for power plants and industries, and upgrade its capacity to process natural gas, according to the statement. Other banks participating in the Murabaha facility include Arab Banking Corp., Ahli United Bank BSC, Arab Petroleum Investments Corp., Gulf International Bank BSC, National Bank of Bahrain BSC, Qatar Islamic Bank SAQ and Kuwait Finance House.
  • 4. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 4 Morocco: Chariot Oil & Gas announces farmout agreement with Eni in Rabat Deep … Source: Chariot Oil & Gas AIM-listedChariot Oil & Gas, the Atlantic margins focused oil and gas exploration company, has announced that its wholly owned subsidiary, Chariot Oil & Gas Investments (Morocco), has signed a farm-out agreement with a wholly owned subsidiary of Eni, which will acquire operatorship and a 40% equity interest in return for a capped carry on drilling the JP-1 Prospect. Eni will also carry Chariot for other geological and administrative costs relating to work commitments in the next licence period of Rabat Deep and will pay a contribution which will
  • 5. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 5 equate to Chariot's investment to date and be used for the continued development of Chariot's portfolio. This agreement demonstrates Chariot's ability to deliver on its strategy; seeking third party investment in order to de-risk and progress its assets towards drilling in order to provide the opportunity for transformational growth. Following completion of this agreement the licence ownership will be as follows: Eni (Operator, 40% equity interest), Woodside (25% equity interest), Chariot (10% equity interest) and Office National des Hydrocarbures et des Mines ('ONHYM') (25% carried interest). The Rabat Deep Offshore licence area is located approx. 30km offshore in water depths ranging from 150m to 3,500m. The JP-1 prospect has been described following detailed processing and interpretation of 3D seismic data as a large, four-way dip closed structure of approximately 200 sq km areal extent, with Jurassic carbonate primary reservoir objectives. Based on this data, Netherland Sewell and Associates Inc. conducted an independent Competent Person's Report and has estimated a gross mean prospective resource of 768mmbbls for JP-1. The prospect sits adjacent to a source kitchen modelled to be oil generating and third party drilling offshore Morocco has confirmed that the Jurassic can have excellent reservoirs and the presence of a light oil charge, hence the focus on this play within Chariot's acreage. Retaining a 10% equity interest in the drilling of this well has the potential to create transformational value in the success case due to the large scale of prospective resources, excellent contract commercial terms and robust economics even in the current lower oil price environment. Additional prospects and leads have been identified within the Jurassic fairway and any success in JP-1 would also materially de-risk these other targets and offer significant follow-on exploration potential in both Rabat Deep and the neighbouring Mohammedia permit (Chariot, Operator with 75% equity interest). The completion of this farm-out agreement remains subject to both the approval of the Moroccan authorities and various conditions precedent, a number of which are outside of Chariot's control. Larry Bottomley, CEO commented: 'We are very pleased to have signed this farm-out agreement with Eni as the future operator of our Rabat Deep acreage. We look forward to working with them and our other partners, Woodside and ONHYM, to progress to drilling the JP-1 prospect which, subject to the relevant approvals, well planning and securing a drill rig, we anticipate to occur in 2017. The response we had to the partnering initiative and subsequently securing this deal endorses our technical view of the asset and is another milestone in delivering on our strategy. Eni is a world-class explorer and an experienced operator focused on projects with the potential for material production. 'Despite the challenges posed by current market sentiment, Chariot's high quality assets continue to attract industry investment. We are excited that we now have an opportunity to see one of our priority targets through to drilling at near zero cost to the Company, with the agreed cap above recent drilling cost estimates provided by an independent party.'
  • 6. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 6 Pakistan: MOL Group makes third Karak discovery MOL Group has made its third discovery in the Karak block in Pakistan Written by OilOnline Press MOL Group has announced a new hydrocarbon discovery in the Karak Block in Pakistan. The block is operated by Mari Petroleum Co. Ltd (MPCL) with 60% working interest while MOL Pakistan Oil & Gas Co. has 40% in the block. This discovery at the Halini-Deep-1 well constitutes as the third consequent discovery in the block following two previous successes (Halini-X-1 in 2011 and Kalabagh-1A in 2015). Halini-Deep-1 was drilled to a depth of 5900m. The completion integrity test has been conducted with flow rates of 1425 bopd and 1.18 MMscf/d (approximately 200 boe/d). Operator expects first oil by the end of H1. “We are very proud of our 11th discovery in Pakistan,” said Berislav Gašo, MOL exploration and production COO. “In the past 17 years, the exploration teams led by MOL in Pakistan have successfully de-risked more than 400 MMBOE in 2P reserves. This well, which is operated by Mari Petroleum, adds to this success series and will also help to improve the energy security of the country.”
  • 7. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 7 Japan: Love of Efficient & Electrical cars in Dawn of Cheaper Gas Bloomberg - James Mayger ( + NewBase ) Unlike Americans, who are using the windfall of lower gasoline prices to buy bigger cars and drive more, the Japanese are buying less, even with the price at the pump down by a third from a peak in 2014. Households spent an average 13,350 yen ($119) less on gas in 2015 compared to the previous year, due to lower consumption and falling prices. The rising number of electric, hydrid and ultra-efficient small cars is playing an important part.
  • 8. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 8 Japan’s demographics are also having an impact. As the population shrinks and the number of elderly increase, people are driving less. Combine all this with Japan’s efficient public transportation system and the result is less driving and fewer deaths on the road, according to Robert Feldman, chief economist in Tokyo for Morgan Stanley MUFG Securities Co.
  • 9. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 9 US: EIA report shows decline in cost of U.S. oil and gas wells Source: U.S. Energy Information Administration, Trends in U.S. Oil and Natural Gas Upstream Costs The profitability of oil and natural gas development activity depends on both the prices realized by producers and the cost and productivity of newly developed wells. Overall trends in well development costs are generally less transparent than price and productivity trends, which are readily observable in the markets or through analyses of well productivity trends such as EIA's monthly Drilling Productivity Report. In an effort to increase understanding of the costs of upstream drilling and production activity, EIA commissioned IHS Global Inc. (IHS) to study these costs on a per-well basis in the Eagle Ford, Bakken, Marcellus, and Permian regions, analyzing the Permian's Midland and Delaware basins separately. Upstream costs in 2015 were 25% to 30% below their 2012 levels, when per-well costs were at their highest point over the past decade. Changes in technology have affected drilling efficiency and completion, supporting higher productivity per well and lowering costs, while shifts towards deeper and longer lateral wells with more complex completions have tended to increase costs. Costs per well generally increased from 2006 to 2012, demonstrating the effect of rapid growth in drilling activity. Since 2012, costs per well have decreased because of reduced overall drilling activity and improved drilling efficiency and tools.
  • 10. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 10 Changes in costs and well parameters, such as the need to drill deeper or longer lateral wells, have affected the onshore oil plays differently in 2015, with recent per-well costs ranging from 7% to 22% below 2014 levels. Differences in geology, well depth, and water disposal options can affect costs for each onshore oil play area. The adoption of best practices and the improvement of well designs have reduced drilling and completion times, decrease total well costs, and increase well performance. Greater standardization of these drilling and completion practices and designs across the industry should continue to lower costs. The drilling cost per foot, based on total depth, and the completion cost per foot, based on lateral length, are both projected to maintain these lower cost trends through 2018. Sustained lower upstream costs may affect near-term oil and natural gas markets, and ultimately, the prices of these fuels.
  • 11. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 11 NewBase 31 March 2016 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil prices slieghtly falls & rises 7th week in a row Reuters + NewBase. Oil futures fell in Asian trade on Thursday, with U.S. crude hitting the lowest level in more than two weeks, amid renewed worries of global oversupply after U.S. crude inventories rose to a record high. That increase came despite seasonal refinery utilization hitting an 11-year high, while a rise in the dollar index put further pressure on oil prices. Brent crude futures fell 36 cents to $38.90 a barrel as of 0331 GMT. It ended up 12 cents in the previous session after touching a session peak of $40.61. The front-month contract for U.S. crude futures dropped 46 cents to $37.86 a barrel, after dropping to $37.74 earlier, the lowest since March 16. It settle up 4 cents in the previous session following a gain of 3 percent earlier in the session. Prices will "zig-zag" for the rest of the year, said Tony Nunan, oil risk manager at Japan's Mitsubishi Corp. U.S. crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25, the seventh week at record high levels, data from the U.S. Energy Information Administration shows. Oil price special coverage
  • 12. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 12 But the increase was less than analysts' expectations of a 3.3 million barrel build after crude imports fell 636,000 barrels per day to 7.4 million bpd. Refinery crude runs rose by 414,000 barrels per day (bpd) and refinery utilization rates rose 2 percentage points to 90.4 percent of total capacity, the highest seasonal rate since 2005. Crude prices, which have risen about 50 percent since mid-February, have started to track lower in the past week. "Oil prices will trend down again ... $35 a barrel will be the support level. Low prices are not sustainable in the long-run," Nunan said. But with OPEC flagging a price of $50 a barrel and oil producers scheduled to meet in Doha on April 17 to discuss a possible output freeze, prices are likely to remain range-bound. "Anytime prices get close to $45-$50 a barrel, funds that have taken long positions are likely to take profits. Unless things really ignite the global economy, then people will sell-off at that level," Nunan said. In Asia, sustained weakness in oil prices is continuing to supress upstream oil and gas production activity, consultancy BMI Research said in a report on Thursday. Weaker oil prices are "limiting opportunities to stem natural declines in ageing assets and bringing new production sources online," the report added. Concerns over global oversupply were further fueled after crude output from the Organization of the Petroleum Exporting Countries (OPEC) rose in March to 32.47 million bpd from 32.37 million bpd in February, according to a Reuters survey based on shipping and other data. Iran is expected to add half a million barrels of oil supply a day within a year from existing oilfields after sanctions were lifted in January, Fatih Birol, the head of the International Energy Agency told Reuters on Wednesday.
  • 13. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 13 Opec output rises in March as Iran, Iraq growth offsets outages Opec supply has risen in March to 32.47mn bpd from 32.37mn bpd in FebruaryReuters Opec oil output is rising in March, a Reuters survey found, as higher supply from Iran after the lifting of sanctions and near-record exports from southern Iraq offset maintenance and outages in smaller producers. The survey also found no major change in production in top exporter Saudi Arabia - another sign that Riyadh is serious about freezing output to support prices, which hit a 12-year low near $27 a barrel in January but have since recovered to $40. Producers are meeting on April 17 in Qatar to discuss the plan. "The production freeze has put a floor under the price," said Carsten Fritsch, analyst at Commerzbank. "We see a risk of a short-term setback if the meeting produces a disappointment." Supply from the Organisation of the Petroleum Exporting Countries has risen in March to 32.47mn bpd from 32.37mn bpd in February, according to the survey, based on shipping data and information from sources at oil companies, Opec and consultants. The biggest rise came from Iran following the lifting of Western sanctions in January. Tehran, which wants to recover market share it lost under sanctions, has said it will not take part in the production freeze. Iran has increased output by 230,000 bpd since December, according to Reuters surveys. Iranian officials say the increase in supplies is much larger. Iraq, Opec's largest source of supply growth in 2015, managed to raise output. An increase in southern exports to what may be a new record in March offset disruption to flows along a pipeline carrying oil from the Kurdish region. Angolan exports rose. In countries where output has fallen, the drop was the result of outages and maintenance rather than voluntary restraint.
  • 14. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 14 Output declined in the United Arab Emirates, where work on oilfields that produce Murban crude is curbing production. The maintenance will not be completed until April. There was a further decline in Nigeria due to a whole month of disruption to the Forcados crude stream operated by Royal Dutch Shell's local venture, but this was partially offset by higher supply of other grades. Libyan output, already at a fraction of rates seen before the country's civil war, fell due to a power outage. Supply in Venezuela edged lower. Saudi Arabia kept output steady compared with February, sources in the survey said, citing stable to slightly lower exports in March. Saudi production was assessed at 10.18mn bpd versus 10.20mn in February. Opec production has surged since the group in November 2014 abandoned its historic role of cutting supply alone to prop up prices, in the hope that lower prices would curb the growth of more costly-to-develop competing supply sources. The extra Opec crude added to a global glut, and this year's output freeze agreement represents the first cooperation on supply policy between Opec and non-Opec since 2001.
  • 15. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 15 History points to a good month ahead for oil Oil is enjoying an incredible March, which could suggest that a good April is ahead. Crude oil is rising powerfully on Wednesday morning. And even through Tuesday's settlement, oil is up more than 13 percent over the current month. That sets March up to be one of the best-ever months for oil. Over the past two decades, crude has only risen 13 percent or more in 15 distinct months. The good news for oil bulls? The month following a substantial gain has tended to be a positive one for the commodity. When oil has risen 13 percent in a given month, it tends to rise another 1.5 percent in the month that follows — with the median move in the following month being a 3.7 percent rise. For the sake of comparison, the average one-month move for WTI over the past 20 years has been a 0.7 percent gain. (All of this is according to data sliced and diced from FactSet.) The move in oil is a "short-covering rally," and "when you have these type of short-covering rallies, they can oftentimes extend more than you would anticipate, as more traders get panicked about their short trades," Kathy Lien of BK Asset Management commented in a Monday "Trading Nation" segment. Interestingly, oil also appears to frequently build up momentum to the downside. After a down-13 percent month, crude has fallen an average of 3.2 percent in the month that has followed. Of course, it is no secret that commodity markets experience powerful trends. The best-known big-money commodity trading strategy is hopping aboard moves higher or lower, and profiting off of the expected momentum. Evidence suggests that as oil has bounced back, many of these trend-following hedge funds (known as commodity trading advisors) have been forced to cover their short positions and perhaps even get long crude. In fact, Reuters reported Tuesday that hedge funds have speedily increased their bullish bets on crude oil over the past three months, all the way up to a near-record net long position of 579 million barrels. As more and more funds potentially pile in as the second quarter begins, oil's gains may be set to continue.
  • 16. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 16 NewBase Special Coverage News Agencies News Release 31 March 2016 Asia Can't Seem to Escape Its Addiction to Middle East Oil Bloomberg - Debjit Chakraborty Even in a world awash with crude, buyers in the world’s biggest oil market can’t seem to escape their addiction to Middle East supplies. South Korea’s imports from the Middle East climbed last year to the highest level since at least 1980, while refiners in India say they are shunning shipments from distant ports and taking more cargoes from the Persian Gulf. Saudi Arabia and Oman have boosted supplies to China this year as volumes from Venezuela and Colombia to Asia’s biggest crude consumer have shrunk. While the Middle East provides more than 50 percent of Asia’s requirements because of its proximity, buyers in the world’s biggest oil-consuming region are seeking to end that dependence and guard against geopolitical risks. Still, even though the global glut has attracted cargoes from Mexico to the North Sea and Alaska, processors say cargoes from the Persian Gulf are irresistible because of shorter shipping times, attractive prices and the promise of crude whose quality refineries are used to. “If you’re getting something nearby and cheap, why would you go shopping far?” said B.K. Namdeo, director refineries at India’s state-run Hindustan Petroleum Corp. “The Middle East is the nearest source for the crude we need and the prices are good.” More Crude Middle East nations including Saudi Arabia, the world’s biggest oil exporter, have responded to a price collapse triggered by the U.S. shale boom by opening their taps and pressing higher-cost
  • 17. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 17 producers to address a global glut. They’ve also cut official selling prices to defend market share against other suppliers seeking sales in the Asia-Pacific region, which the International Energy Agency predicts will account for more than a third of global oil consumption this year. Saudi Arabia is selling supplies of its Arab Light grade for April in Asia at 75 cents below benchmark Middle East prices, compared with a premium of $3.75 in early 2014. Iran, now free of international sanctions that had curbed its exports, offered its heavy crude grade for March to buyers in Asia at a deeper discount than Saudi Arabia’s for the first time in a decade. “It’s quite natural that we need to source from the Middle East, from both logistics and economics perspectives,” said B. Ashok, the chairman of Indian Oil Corp., the nation’s biggest refiner. “If you are looking for high-sulfur crude, there again it’s the Middle East. The African countries are offering sweet crudes, which are more expensive. Latin American crudes are heavy and cheaper, but there is a tremendous impact on the logistics.” Supply Risks India is open to buying crude from the world’s newest exporters including the U.S. as it attempts to diversify supply sources, Oil Minister Dharmendra Pradhan said March 28. That echoes comments from 2014 when he said the country plans to diversify purchases to guard against geopolitical risks tied to some of the world’s biggest suppliers. It’s necessary for South Korea to diversify crude supplies because its significant dependence on the Middle East means there’s a risk supplies may be disrupted if geopolitical tensions rise in the region, a government official in the nation’s Ministry of Trade, Industry and Energy said on March 30, asking not to be identified because of internal policy. Still, those plans face a hurdle that’s built into the countries’ refineries. “Most Asian plants were designed primarily to process Middle East crude,” said H. Kumar, managing director of Mangalore Refinery and Petrochemicals Ltd. “Now there are multiple sources like Latin American heavy grades and companies are adding units with the aim to diversify, but a challenge for that is the configuration of these plants.” Spending Cuts What’s more, the strategy by the Organization of Petroleum Exporting Countries to squeeze other producers is showing signs of working, limiting some of the choices available to Asia. The IEA has even warned that investment cuts by producers have increased the possibility of oil-security surprises in the “not-too-distant” future. South Korea imported 844.6 million barrels from the Middle East in 2015, the highest since 1980 when state-run Korea National Oil Corp. started to compile the data. In China, the world’s second- biggest oil consumer, more than half of the top 10 suppliers last year were from the Middle East, customs data compiled by Bloomberg show. India’s Reliance Industries Ltd., owner of the world’s biggest refining complex, is shifting away from crude that’s priced off Brent, a benchmark used oil from Europe to Latin America, and turning to grades priced against Dubai, the Middle East marker, according to the company. “With non-OPEC supplies falling, there is no alternative for Asian refiners but to buy Middle Eastern oil, which is not only cheaper but also available in large volumes,” said Ehsan Ul-Haq, a senior consultant at KBC Advanced Technologies in London. “The Middle Eastern oil is tailored to their requirements.”
  • 18. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 18 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 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 31 March 2016 K. Al Awadi
  • 19. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 19
  • 20. Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its content. Page 20