New base 822 special 04 april 2016

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 04 April 2016 - Issue No. 822 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Adnoc Focuses on O&G while being efficient and
keeps output target , says chief executive
The National - Anthony McAuley + NewBase
Adnoc is sticking with an output capacity target of 3.5 million barrels per day but is taking “into
consideration prevailing market conditions", says Sultan Al Jaber, the chief executive.
The head of Adnoc did not comment on whether it might be affected by any deal at Doha later this
month, when the UAE Energy Minister, Suhail Al Mazroui, would be attending a meeting to
discuss a move by Opec and non-Opec producers to freeze output at current levels to help shore
up sagging oil prices.
“Adnoc has always been an agile company capable of quickly responding to the market and
ensuring that its supply is aligned with projected demand," Mr Al Jaber said.
But, he said, “most importantly, we are focused on maintaining our current level of production as
well as our investment programme … We are also committed to achieving the overall target of 3.5
million bpd, while we take into consideration prevailing market conditions.".
Adnoc had been talking of a target date of reaching that overall level of production capacity by the
end of next year, but that has shifted to 2018, which industry observers say is mainly down to
delays in bringing in additional partners to develop its onshore Adco concessions, which have a
target to raise production to 1.8 million bpd from 1.6 million bpd.
Abu Dhabi’s offshore fields are on course to increase production to 1.7 million bpd from 1.4 million
bpd as part of the Government’s US$25 billion investment to increase the country’s overall
production.
The UAE’s output climbed to 3.1 million bpd in January this year from 2.8 million bpd in 2014,
mainly owing to increased production at offshore fields.

focus on effectiveness and efficiency
Sultan Al Jaber, the chief executive of the Adnoc Group, shares his thoughts with The National on
the future of the company, how it will maintain its competitive edge in the current market
environment and its ongoing role in the UAE economy. He highlights the company’s focus on
operational efficiency, optimising resources, developing growth opportunities and leveraging
Adnoc’s pool of talent.
As the new group chief executive of Adnoc, what is your vision and strategy for the group?
The Adnoc Group is an integral part of our economy and prosperity, and will remain so for many
years to come. Most importantly, it will continue to play a central role in helping achieve the
ambitious socioeconomic development objectives of the UAE.
Adnoc’s vision is therefore no different from what it has been for many years now, which is to be a
responsible and reliable energy provider dedicated to maximising the value of Abu Dhabi’s
hydrocarbon resources – for the benefit of our country and our customers.
Ensuring we continue to achieve this vision requires us to be agile and responsive to short-term
challenges, while staying focused on our longer term strategic growth.
At the moment, everyone in the oil and gas industry is confronted with challenging market
conditions – oil prices have declined significantly since the middle of 2014, and in most markets
natural gas prices are following suit. And like others in our industry, Adnoc is ensuring it retains a
competitive edge in this new environment. This means we are improving operational efficiency,
optimising resources and adapting the mindset of our people to focus on our strategic objectives
and on maintaining our competitive edge.
That being said, large oil price swings
happen periodically – this is not the first
time we are seeing markets going through a
major adjustment. We have been through
similar experiences in the past.
And like before, we will respond accordingly
and emerge stronger. We are being
proactive and looking across the entire
group to find ways to improve and optimise
operational efficiency.
It is important to remember that the oil and
gas industry, by its nature, is a long-term
business. And so, as we respond and adapt
to the current market environment in the
short term, we have set longer-term strategic goals that will enable us to continue to deliver
Adnoc’s vision and objectives.
I would summarise these strategic goals as follows: We need to continuously strive to improve
efficiency; we need to constantly explore ways to improve our commerciality and profitability; and,
to have any success with these goals, we need to continue investing in our people to strengthen
their capabilities. We will do this while remaining committed to the integrity, health and safety of
our operations and the communities in which we work.

You have identified your areas of strategic focus as optimising efficiency, increasing commerciality
and profitability, and investing in people. Can you elaborate on your plans?
The current low price of oil gives us an opportunity we should not shy away from to examine more
closely the efficiency of everything
we do. This process will ensure
our company’s resilience and
make it even stronger. We are
working closely with everyone
across the Adnoc family and with
our strategic partners to identify,
across the whole range of
activities in our group, where we
can do things better, be less cost-
intensive and perform more
intelligently.
In terms of increasing
commerciality and profitability, we are examining the entire length of the value chain to identify
new areas for growth. For example, we are working on strengthening and expanding our
downstream petrochemicals and refining business to ensure we harness maximum value.
We are also focusing on innovation and technology development. Adnoc will look to strengthen its
ability to develop and integrate new technologies. We will leverage internal capabilities and also
look to our partners to continue contributing to our technological progress. This is crucial,
especially as we explore new methods to extend the life and maintain strong production levels of
our fields in the future.
In terms of people, we are developing the rich pool of talent that already exists within the Adnoc
group of companies. Our people are the past, present and future of Adnoc and our most valuable
resource. So we are identifying and bringing along the next generation of the company’s
leadership. We have a responsibility to develop Adnoc’s potential from within and to forge a
forward-looking organisation underpinned by a performance-led culture.
Adnoc has set a crude production target of 3.5 million barrels per day by 2018. Are you on track to
achieve this?
As I’ve mentioned, our mission is to remain a reliable supplier focused on maximising value. Most
importantly, we are focused on maintaining our current level of production as well as our
investment programme. And of course, we are also committed to achieving the overall target of
3.5 million bpd, while we take into consideration prevailing market conditions. Like everyone, we
are closely monitoring price, supply and demand, among other market variables. Adnoc has
always been an agile company capable of quickly responding to the market and ensuring that its
supply is aligned with projected demand.
Will Adnoc continue to work with international oil companies (IOCs) or will you be adjusting the
relationship with them going forward?
We have long-standing relationships with a number of IOCs. These relationships are true
partnerships based on mutual trust that go back to the birth of our company and have been part of
Adnoc’s successful growth. We are keen to work with all those who appreciate the value of long-
term collaboration aimed at delivering benefits for both partners.

As for the Adco [onshore] concession, as you know we currently have participating partners, and
we are pleased with their speed of integration. The door is still open to discuss the participation of
other international players in the remaining 22 per cent share. In the spirit of partnership, we are
enthusiastic to work with the industry and to mutually benefit from what is a very attractive, long-
term and sustainable opportunity in the upstream oil and gas sector.
With Abu Dhabi’s growing demand for gas, how does Adnoc plan to ensure future gas supply for
its own operations and for the emirate?
Without a doubt, meeting Abu Dhabi’s growing demand for gas is a critical objective and rests
high on Adnoc’s list of priorities. We are pursuing a variety of solutions across our portfolio, from
conventional and sour gas all the way to a floating storage and regasification unit (FSRU).
Last year, Al Hosn Gas, the largest sour gas facility of its kind in the region, achieved its full
production target of 1 billion standard cubic feet per day. This year we will be bringing online an
FSRU facility that will add an additional 500 million standard cubic feet per day.
Furthermore, we are continuously evaluating new and undeveloped fields, including
unconventional gas. We are also assessing the use of innovative technologies and alternative
methods, such as carbon capture, usage and storage, that will enable us to improve efficiency,
optimise our own consumption, and liberate some gas.
To what extent will Adnoc remain focused only on hydrocarbons or do you see a role for
renewables?
All sources of energy will be needed to meet the current and future growing global demand for
energy, so I don’t see the world as divided by renewable and traditional forms when meeting that
demand. It is not an either-or proposition. As for Adnoc, our business is the upstream, midstream
and downstream of oil and gas. This focus will remain intact.
And as you know there are already various entities and organisations within the UAE that are
making significant strides both domestically and internationally in advancing the development and
deployment of renewable energy. Of course, Masdar is a good example.
What is your prognosis on the oil price and what does it mean for the industry in the near and
medium term?
Over the past few weeks, we have seen some recovery in prices. While we expect to experience
continued volatility in the short term, we also expect to see a slow but upwards improvement in
prices in the medium term. Overall, we think that 2016 and 2017 will be the years during which
markets will start to rebalance the gap between demand and supply, barring unforeseen events
But while we do not have any degree of control over the future direction of oil prices, at Adnoc we
are totally focused on the aspect of our business that we can control – being a cost-effective and
efficient producer.

Malaysia: PGS, TGS and Schlumberger WesternGeco to acquire
multiclient seismic program offshore Sabah Source: PGS
As a result of a new initiative by PETRONAS to stimulate offshore E&P investment activity,
PETRONAS through Malaysia Petroleum Management (MPM), has taken the decision to open
an area of Malaysian offshore waters to the multiclient model for the first time.
A consortium comprising of PGS, TGS and Schlumberger WesternGeco, the industry’s three
largest multiclient companies, has successfully won the tender for the rights to undertake a
multiclient seismic program offshore Sabah.
Offshore Sabah sits in an active fold-and-thrust province that hosts a number of proven
hydrocarbon accumulations. An extension of the Brunei Baram Delta play, the primary
exploration target has been Miocene deltaics with some younger Pliocene.
With exploration and drilling progressing into deeper frontier waters, there is potential for new
plays in the carbonate and syn-rift section. This large basin will benefit from modern, high
resolution broadband 3D seismic necessary to understand both the existing play concepts and
new potential plays.
The consortium is planning to apply a combination of the industry’s most advanced technology
solutions including multi-sensor acquisition using PGS GeoStreamer and WesternGeco IsoMetrix
marine isometric seismic technology, PGS Towed Streamer EM technology and advanced
broadband 2D acquisition and processing techniques.

Bangladesh: Petrobangla, Excelerate Sign Agreement to Build
Bangladesh's First FSRU… by Chee Yew Cheang|Rigzone
State-owned Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) and Excelerate Energy
L.P. recently signed an agreement to build a floating storage and regasfication unit (FSRU) in the
South Asian country, local media The Daily Star
reported Friday.
The FSRU, the country's first receiving terminal
for liquefied natural gas (LNG), will be located on
the island of Moheshkhali in the Bay of Bengal
offshore Bangladesh, with the new facility
intended to meet rising domestic energy
consumption, particularly in Chittagong, where
there has been an acute gas shortage for some
time now.
Company Secretary Syed Ashfakuzzaman and
Excelerate Energy's Business Development
Manager for Asia Karlman Tham signed the agreement Thursday at Petrobangla in Dhaka.
Petrobangla revealed during the signing ceremony that it will have to spend $1.6 billion a year to
boost natural gas supply by 500 million cubic feet per day (MMcf/d).
Bangladesh's State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the
agreement for the FSRU is the first step which the government is taking to tackle the gas crisis,
according to The Daily Star.
Under the agreement with Petrobangla, Excelerate Energy would develop the floating facility in 23
months and operate the FSRU, which will have a capacity to handle 500 MMcf/d of imported LNG
from Qatar, for 15 years. A 56 mile (90 kilometer) 30 inch pipeline will carry the gas from the
floating terminal to Anowara to feed into the national grid. Bangladesh plans to commence LNG
imports in early 2017.
The government has plans to add another three more LNG receiving terminals in the country as
part of its efforts since 2010 to turn to LNG imports in dealing with the energy deficit. Currently,
Bangladesh has an average natural gas production of around 2,700 MMcf/d, a supply that is
insufficient to meet its demand of more than 3,200 MMcf/d.
Md Quamruzzaman, a Petrobangla director, said Excelerate Energy, which had carried out a met-
ocean study earlier and found the construction of the terminal viable, will collect $159,000 per day
as rent for the FSRU and $45,000 per day as operational charge. As such, the price of each
thousand cubic feet of natural gas from imported LNG would cost at least $3.2.
Tawfiq-e-Elahi Chowdhury, energy adviser to Bangladesh's Prime Minister, said that the overall
cost for handling and re-gasification of the imported LNG would be $0.59 for each thousand cubic
feet of gas, as reported in The Daily Star.
Chee Yew has covered the upstream and downstream sectors of the oil and gas industry for over
a decade. Email Chee Yew at

UK is now producing a quarter of its electricity from renewables
By | Quartz - Cassie Werber
Renewable energy in the UK had a difficult year in 2015. Government support was slashed for
established technologies such as onshore wind and solar, and became uncertain for newer forms,
like biomass burning in place of coal.
But despite the tricky conditions, production of power from renewables hit a record high, according
to government
statistics (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/511955/En
ergy_Trends_March_2016.pdf)
released this week. In 2015, renewables’ share of electricity generation rose to 24.7%, from
19.1% the previous year. (The remaining 75% is a mixture of fossil fuel and nuclear generation.)
Denmark has managed to produce much higher percentages of its electricity from renewables, but
for a smaller population. Germany, which has invested huge resources into building renewable
generation capacity, has at times produced up to 78% of its electricity from renewables.

It should be noted that the amount of electricity
produced and the average actually consumed
can be very different when it comes to highly
variable renewables. In 2014, Germany’s share
of renewables in gross energy consumption was
28.2%, according to Eurostat. In the UK, 17.3%
of energy consumption was from renewables
that year.
The majority of the UK’s renewable power came
from wind, both onshore and offshore, followed
by bioenergy, solar, and
hydropower.
The hike in renewables has seen a parallel fall in coal use. Coal is now being burned at the lowest
level for 150 years, in a country that has retired many of its old coal plants, and converted
others to burn wood. By the 4th quarter of 2015, coal produced just 19.9% of the UK’s electricity—
behind gas at 29.7%, and behind renewables for the first time.

US: Shale gas hits railroads and diesel demand
Reuters - By John Kemp
Cheap natural gas has slashed coal traffic across the U.S. rail network and in turn hit demand for
diesel, demonstrating the interlocking relationship between the country's energy and transport
systems.
U.S. rail freight declined more than 6 percent in the first 12 weeks of 2016 compared with a year
earlier, according to the Association of American Railroads (AAR). Most categories of bulk freight
were down compared with 2015 but by far the larges drop occurred in coal, the single-largest
commodity hauled on the network.
The number of railcars loaded with coal in the first 12 weeks was down by 32 percent compared
with 2015 ("AAR reports weekly rail traffic for the week ending March 26"). Coal loadings are
down because power plants have switched to burning inexpensive natural gas, which has left
them with record stockpiles of unburned coal and cutting deliveries.
That in turn is reducing the number of railcars moving across the tracks and the railroad
companies' purchases of diesel, leaving diesel stocks at a seasonal record.
So in a roundabout way, the shale (gas) revolution has battered the U.S. coal industry and in turn
hurt the railroads, and in the process is worsening the imbalances in the diesel market.
GAS DISPLACES COAL
U.S. power plants burned 740 million short tons of coal in 2015, down 13 percent from 2014, and
the smallest quantity since 1987, according to the Energy Information Administration ().

Coal stocks at power plants surged to 197 million tons at the end of 2015, up 30 percent from the
end of 2014 ("Electric power monthly", EIA, March 2016).
Some analysts attribute the slump in coal-fired power generation to clean energy policies or a mild
winter caused by the El Nino weather phenomenon, but the main reason is fierce competition from
cheap gas.
Total generation at utility-scale facilities was unchanged last year from 2014, according to the EIA,
which suggests weather-related demand was not the main cause of the coal slump.
Coal-fired generation fell by 226 terawatt-hours (TWh) in 2015. Renewable generation rose by 11
TWh. But gas-fired generation increased by around 208 TWh ().
The volume of natural gas burned in U.S. power plants surged by almost 18 percent to a record
10 trillion cubic feet.
The average cost of natural gas delivered to electricity generators declined by 40 percent over
2015 compared with a 14 percent fall in the cost of coal.
Coal remained cheaper as a fuel than gas but the change in relative prices encouraged a shift in
the generation mix towards gas. In the short term, abundant gas thanks to the shale revolution,
rather than climate policies, has reduced coal combustion and curbed carbon emissions.
COAL HITS RAILROADS
Coal is the single largest commodity moved by transportation networks in the United States, with
the possible exception of crude petroleum, for which measurement problems prevent an accurate
comparison.

By weight and distance, coal accounted for 22 percent of all freight moved in the United States in
2012 ("Commodity flow survey", Bureau of Transportation Statistics, 2015).
Roughly two-thirds of the coal moves
from mine to power plant in whole or
part by rail ("Railroad deliveries
continue to provide the majority of coal
shipments to the power sector", EIA,
June 2014).
In turn, coal is the biggest commodity
hauled across the railroad network and
vital to the commercial success of the
railroad companies ("Railroads and
coal", AAR, July 2015).
Coal accounted for 38 percent of all
tonnage carried on the rails and 19
percent of all railroad revenues in 2014
("Annual and quarterly commodity survey", Surface Transportation Board, 2015). So the slump in
coal combustion has had an immediate and significant impact on volumes across the rail network
and the revenues of the major railroads.
Burlington Northern Santa Fe railroad, the largest coal carrier, has furloughed about 10 percent of
its workforce owing to lower demand for coal and oil shipments ("BNSF furloughs have hit 4,600
employees nationwide", Star-Telegram, March 31).
RAIL SLUMP HITS DIESEL
The railroads are in turn one of the biggest consumers of diesel fuel in the United States, so the
rail slump has contributed to the drop in distillate demand. Railroads accounted for 6 percent of all
diesel sold in the United States in 2014 ("Sales of distillate fuel oil by end use", EIA, 2015).
The Burlington Northern-Santa Fe railroad, now owned by Warren Buffett's Berkshire Hathaway,
is the second-largest buyer of diesel in the United States after the U.S. Navy.
Once the other major railroads are included, the rail sector is the largest consumer of diesel fuel
after road transport (63 percent) and home heating (6 percent). Railroads consume around
240,000 barrels per day of distillate fuel, which is not large enough to have a major impact on
diesel demand on its own but in combination with other factors has had a material effect.
The slump in oil drilling coupled with efforts by manufacturers, distributors and retailers to combat
overstocking has led to a broad-based drop in freight movements including on the roads. Oil
drillers were also major consumers of diesel fuel to run their diesel-electric motors for drilling and
ancillary oilfield power.
U.S. distillate consumption dropped by 60,000 barrels per day in 2015 (1.5 percent) after rising by
more than 200,000 bpd (5.5 percent) in 2014 and 85,000 bpd in 2013 (2.3 percent). Distillate
consumption declined last year even as the economy grew and gasoline use increased by
240,000 bpd (2.7 percent), according to the EIA ("U.S. refiners press on despite unbalanced fuel
demand", Reuters, March 31).

NewBase 04 April 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices fall on dimming prospect of output restraint
Reuters + NewBase
A pump jack operates at a well site leased by Devon Energy Production Co. near Guthrie,
Oklahoma. Oil prices fell in early trading on Monday as the chances of Middle East producers
agreeing to curb overproduction appeared to fade, while U.S. output remains stubbornly high.
Front month U.S. West Texas Intermediate (WTI) crude futures were trading at $36.25 per barrel
at 0143 GMT, down 1.5 percent or 54 cents from their last settlement.
International Brent futures were down 1 percent or 40 cents at $38.27 a barrel.
The falls extended a 4 percent tumble on Friday when Saudi Arabia said it would only participate
in a global freeze of its output if its rival Iran also took part, something Tehran has so far
dismissed.
Adding to concerns of a global glut which has pulled down prices by as much as 70 percent since
2014, U.S. production has remained high despite steep cuts in drilling for new reserves as well as
a jump in bankruptcies.
"In the U.S., rigs targeting oil production declined by 10 to stand at 362 active rigs (last week),"
ANZ bank said.
Oil price special
coverage

Yet despite the ongoing decline in the rig count, U.S. production remains high, at over 9 million
barrels per day, as bankruptcies are so far having little effect on overall output while operators
keep their oil wells gushing in a struggle to service debt and stay alive.
Reflecting a spreading belief that crude prices might not recover by much any time soon, hedge
funds have cut their net long postitions which would benefit from further price rises in WTI futures
for the first time in six weeks.
Despite a pick-up in recent economic data, analysts also poured cold water on recent hopes that
Asia's economic prospects were improving, which could support oil demand and prices.
"Some data has started to perk up, notably China's manufacturing PMIs for March. Across Asia,
exports, production and even consumer spending should also show a bit more swing in the
coming months," said HSBC's Frederic Neumann on Monday.
"Still, fundamentally, have things really improved? No. It's mostly that a more dovish Fed and a
weaker dollar have put a temporary gloss on things. Asia continues to face a structural growth
problem - one that will not be cured in the space of a few, short months," he added.
Oil falls
Oil extended declines after Saudi Arabia’s deputy crown prince said the kingdom will freeze output
only if Iran follows suit, putting in doubt the success of a proposed deal between major producers.
Futures declined as much as 1.7 percent in New York after a 4 percent drop on Friday. Saudi
Arabia’s Mohammed bin Salman signaled in a interview with Bloomberg that if any country raises
output, his nation will also boost sales. With producers scheduled to meet this month to discuss a
pact on capping supplies, Iran’s oil minister said he’ll attend the gathering if he finds the time.
Russian oil production set a post-Soviet high in March.
Oil climbed 14 percent in March after rebounding from a 12-year low this year amid speculation a
global glut will ease as U.S. output falls. While Saudi Arabia, Russia, Venezuela and Qatar in
February first proposed an accord to cap production to reduce the worldwide surplus and boost
prices, Iran has said it plans to increase sales after international sanctions were removed following
a deal to curb the Persian Gulf state’s nuclear program.
“Salman’s comment seems to be a warning to anyone looking to take advantage of an output
freeze without having to cut production,” Hong Sung Ki, a commodities analyst at Samsung
Futures Inc., said by phone from Seoul. “Russia’s output boost can be seen as a strategic move
as it tries to increase production as much as it can before any potential output freeze kicks in.”
Russian Output
West Texas Intermediate for May delivery dropped as much as 61 cents to $36.18 a barrel on the
New York Mercantile Exchange, and traded at $36.40 at 12:32 p.m. Seoul time. The contract fell
$1.55 to $36.79 on Friday. Total volume traded was about 29 percent above the 100-day average.
Brent for June settlement lost as much as 1.2 percent to $38.19 a barrel on the London-based ICE
Futures Europe exchange. The contract fell $1.66, or 4.1 percent, to $38.67 on Friday. The global
benchmark crude traded at a 58 cent premium to WTI for June delivery.

Russian production of crude and a light oil called condensate climbed 2.1 percent in March from a
year earlier to 10.912 million barrels a day, according to the Energy Ministry’s CDU-TEK unit. That
narrowly beat the previous high of 10.910 million barrels in January. Exports rose 5.1 percent from
a year earlier to 5.59 million barrels a day in March.

NewBase Special Coverage
News Agencies News Release 04 April 2016
Oil, taxes — and big problems for Russia's economy
CNBC + Reuters - Everett Rosenfeld
Things are getting bad in Russia — so bad that the country is weighing sacrificing its future in
order to survive its present.
A conflict is simmering in Russia as the country's Finance Ministry pushes for increased taxation
of the country's oil industry in order to support its budget. A contracting economy and
a persistently low oil price have severely hurt the country's budget, so officials are seeking to draw
more revenue from
domestic energy
companies —
instead of severely
cutting costs, which
Moscow fears could
bring dire political
consequences.
This plan likely
makes short-term
sense to the Kremlin,
but it could cripple
the oil industry —
and by extension
Russia's long-term
growth prospects —
for years to come, experts told CNBC.
"This would have decadeslong effects," Lauren Goodrich, a senior Eurasia analyst at geopolitical
intelligence firm Stratfor, said of a strong tax on the oil industry. If Russia's energy resources don't
see new investments in the next two years, she said, then the country could experience lengthy
declines in oil production — old Soviet-era wells drying up, without new ones coming on.
With sanctions keeping Western energy investments at bay, and with many Chinese investors
likely tapped out, the domestic energy companies are Russia's best hope for maintaining
production levels in the fiercely competitive global market.
"They really have to have investment money coming in, whether it's from foreign firms or Russian
firms," Goodrich said. "The Kremlin is really, really in a tough spot."
Western sanctions, low oil prices, and high military and governmental costs have hurt the
country: State statistics released Friday show that the economy contracted 3.7 percent in 2015
compared with the prior year. Meanwhile, the ruble has depreciated by about 55 percent since
2014.

Despite all that, Russian oil companies have been doing alright.
By virtue of earning profits in dollars and paying domestic costs in rubles, Russia's energy giants
have fared better than many of their international peers. The Russian government, however, has
tied its progressive tax collection to the price of oil, so its receipts are much lower at the current
sub-$40 price than when a barrel exceeded $100.
Oil-related taxes reportedly
totaled nearly 50
percent of Russian tax
revenue in 2014.
The progressive tax has
allowed domestic firms to
maintain a dollar or two of
profit on each barrel of oil,
Russian economic experts
said, but that could
dissipate with any new
reforms.
"At the current oil prices,
with the single-digit
dollars-per-barrel profit, it raises the question of whether you're going to eat your seed corn or not
in terms of growth later," said William Courtney, an adjunct senior fellow at the Rand Corp. and a
former U.S. ambassador to Georgia and Kazakhstan.
But not everyone believes Russian energy tax reform will cripple the country's future prospects.
Ildar Davletshin, a London-based oil and gas analyst at Renaissance Capital, told CNBC he sees
the government seeking to raise those taxes if oil remains below $50 — as many analysts expect
it to. If that happens, the production decline from lost investment will be only a few percentage
points, he said, and that would not have drastic effects on the economy.
In fact, Davletshin said, the slight decrease in production from such a major global supplier could
push prices higher — bringing even more revenue to Moscow. That money could, in turn, be used
to diversify Russia's economy away from oil dependence and into higher-value industries like
technology.
But others said that scenario is only wishful thinking.
"That argument doesn't hold any water for me: Russia is an oil economy and has been even from
the czarist days," Goodrich said.
The politically powerful energy lobby is likely to fight against any and all tax increases in coming
months, although the government may attempt to sweeten the deal by opening up resource
monopolies or picking sides in acquisition competitions.
Either way, the real fireworks are likely to come in the fall, experts said, when negotiations over
the 2017 budget come to a head.

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 04 April 2016 K. Al Awadi

New base 822 special 04 april 2016

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (8)

Similar to New base 822 special 04 april 2016

Similar to New base 822 special 04 april 2016 (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base 822 special 04 april 2016