New base 829 special 13 april 2016

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NewBase 13 April 2016 - Issue No. 829 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: ADDED chairman: Oversupply of oil to end soon
Gulf News - Sarah Diaa
The oversupply of oil is unlikely to continue for long especially as plenty of shale producers in the
US exit the market and Opec (Organisation of Petroleum Exporting Countries) freezes production,
according to the head of the Abu Dhabi Department of Economic (ADDED).
Ali Majid Al Mansouri, chairman of the Abu Dhabi ADDED, who is also the chairman of the
Tourism Development and Investment Company (TDIC), said he expected to see relative stability
in the oil market even if demand does not pick up as supply drops.
“The [oversupply] will ultimately wash out. The other side of this equation is demand. If you look at
China, seven per cent [growth rate] is still not bad. Once we have the marginal producers in the
US of shale oil coming out of the production, supply will start to decline. Even if demand stays as
is, I think prices should cycle up. I’m in the school of seeing higher prices than $43 this year and
beyond this year in 2017,” he said.
Oil prices on Tuesday rose above $43 a barrel — their highest level in 2016 — as investors remained
optimistic about the possibility of a production freeze at the upcoming meeting in Doha. Al Mansouri said
he expected producers to agree on freezing supply. As for US shale, he pointed out that producers have a
production cost of around $45-$50, which means financing is challenging and the high cost presents
risks.“Today, most facilities that produced shale when prices were at $80-$90 will not go back [to
production] if oil stays at $50, $60, $70 because it’s a higher risk. If you look at Baker Hughes’s rig count
two years ago, it was 1,700 or 1,800 rigs operating in the US. Today, there are around 500 [rigs], so there’s
a big decline, and this will end up [affecting] the supply in the oil market,” he said.

Oman: Cost Reflective Tariffs for large power consumers
Oman Observer - Conrad Prabhu –
Rising costs: Industrial, commercial and government customers to pay more for electricity
Oman’s government has given its nod for the implementation of Cost Reflective Tariffs for large
electricity consumers — primarily industrial, commercial and government customers — in the
Sultanate, according to a senior official of the Authority for Electricity Regulation Oman (AER) Eng
Hilal al Ghaithy, Deputy Director for Consumer Affairs, said .
The move, which had been
held in abeyance by the
government more than five
years since it was first
proposed by the Authority,
is likely going ahead now
because of the current
financial downturn triggered
by the collapse in oil prices.
Cost Reflective Tariffs
reflect the true cost of supplying electricity to customers. The proposed tariff scheme effectively
eliminates the reliance on government subsidies to cover the variance between the permitted tariff
and the true cost of supply of electricity.
Speaking at the ‘Energy Solutions — Made in Germany’ symposium held at the Grand Hyatt
Muscat yesterday, Eng Al Ghaithy said: “The government recently took a decision to move
forward with Cost Reflective Tariffs for industrial, commercial and government consumers.
Basically, this tariff will reflect the actual cost of cost of producing and supply electricity.”

Electricity charges paid by customers — whether residential, industrial, commercial, government,
agricultural, tourist etc — are currently governed by a system of ‘Permitted Tariffs’ approved by
the Council of Ministers.
These Permitted Tariffs have remained essentially unchanged since 1986, according to the
Deputy Director.
The planned switch to Cost Reflective Tariffs, he said, is expected to incentivise investment in
rooftop solar capacity by industrial and commercial customers. Studies have shown that at rooftop
solar generation compares favourably with Cost Reflective Tariffs especially during peak demand,
he added.
According to the Authority for Electricity Regulation, the rate of growth in electricity supply to
industrial and commercial customers continues to exceed that to other customer categories.
Industrial and commercial customers accounted for 36 per cent of total supply in 2014, up from 23
per cent in 2005.
“The 186 per cent increase in industrial customer intensity (from 2005 to 2014) reflects increased
supply to a relatively small number of new Industrial customers who are large consumers of
electricity,” the regulator stated in its 2014 Annual Report.
“Industrial customers actually account for a smaller proportion of the overall increase in intensity
than residential and commercial customers, whose intensity in 2014 was 34 per cent and 58 per
cent higher, respectively, than in 2005 and who accounted for 67.4 per cent of total 2014 supply,
compared to the 21.1 per cent share of industrial customers.”
“The Authority does not consider intensity increases of this magnitude to be sustainable and
continues to believe that the introduction of Cost-Reflective Tariffs (for large Industrial,
Commercial and Government customers) coupled with the implementation of measures to
improve energy efficiency will help to reduce the electricity intensity of all customers,” it stressed.

UAE Investors Interested in TAPI Pipeline Project
Natural Gas Asia + ( images by NewBase )
Multi-billion dollar Turkmenistan, Afghanistan, Pakistan and India (TAPI) pipeline project is
attracting interest of number of investors from the United Arab Emirates (UAE) . Afghanistan's
ambassador to the UAE, Abdul Farid Zikria, told Khaleej Times, investment from state owned
entities and some of the private investors would be into the entire project.
He said TAPI pipeline is a major infrastructure project in the energy-hungry region in that part of
Asia that would change the development scene in times to come. "Afghanistan will be offering
vitally-important transit facilities before the pipeline will go into Pakistan and Afghanistan - the two
main consumers of natural gas," he said.
Last week, the four TAPI nations agreed to invest $200 million in the next stage of the project. The
agreement was signed during 24th meeting of the steering committee of the TAPI pipeline
project which was held in Ashgabat on Thursday.
The much delayed transnational pipeline was formally inaugurated on December 13. TurkmenGaz is the
leader of the consortium and has 85 percent equity. Along with GAIL India, ISGS of Pakistan and Afghan
Gas Enterprise (AGE) have 5 percent stake each. The TAPI pipeline will have a capacity to carry 90 million
standard cubic metres a day (mmscmd) gas for 30 years and is planned to become operational in 2018.

Indonesia Pertamina to import LNG via Woodside Energy Agreement
Woodside Energy Trading
Woodside Energy Trading Singapore Pte Ltd has signed a preliminary agreement with Indonesia’s
Pertamina (Persero) for the supply of approximately 0.5 to 1.0 million tons of LNG per annum. The
fuel will be supplied from Woodside’s LNG portfolio for a period of 15 to 20 years with deliveries
commencing in 2019.
This agreement remains conditional upon the negotiation and execution of a fully termed LNG
sales and purchase agreement and obtaining all necessary approvals, including the relevant
Woodside and Pertamina board approvals, Woodside said in a statement published Wednesday.
Indonesia’s demand for gas has been increasing in recent years amid declining domestic output.
Experts believe the Southeast Asian nation will become net importer of LNG as early as the end of
this decade.
Last month, Badak LNG said it expects continuous decline in output for next few years due to
insufficient supply from depleting gas fields. Badak LNG is one of country’s biggest LNG plants.
Output is expected to be 152 LNG cargoes this year, down from 182 cargoes last year.
The projected decline in domestic output has compelled Pertamina to ink various LNG deals in
recent months. In March, the Indonesian state owned firm signed a long term 15 year deal with
France’s Total.

China’s electric-car maker BYD seeks to replicate Tesla
Bloomberg news
BYD Co. showed off its latest compact SUV model in a lights-and-dance show in Beijing on
Monday, as China’s largest electric-car maker seeks to replicate Tesla Motors Inc.-like buzz to
compete in a crowded market.
The Yuan, named after the 13th-century Chinese dynasty established by the conquering Mongols,
starts from 59,900 yuan ($9,265) for the gasoline-engine version. Its arrival -- timed ahead of the
Beijing motor show later this month -- marks BYD’s entrance into the entry-level sport utility
vehicle segment popular with young urban families and single professionals.
The automaker perhaps best known globally for winning an investment by Warren Buffett’s
Berkshire Hathaway Inc. has made branding its top priority for the next two to three years, BYD’s
senior vice president Stella Li said in an interview. While likening BYD Chairman Wang Chuanfu
to a marathon runner and Tesla Chief Executive Officer Elon Musk to a sprinter, she
acknowledged BYD’s inability to draw lines of consumers out the doors of retail outlets clamoring
for its cars.
“We don’t have the ability now to sell tens of thousands of cars before producing a single one,” Li
said, referring to the reservations consumers have placed for Tesla’s Model 3 this month. “The
day we can do that will be the day our brand is established.”
By naming its models after different Chinese reigns as part of a Dynasties line, BYD is setting
itself apart from other automakers that use letters and numbers to denote their lineup -- think
An event to introduce the Yuan, the latest Plug-in Hybrid SUV from BYD

Audi’s A6, BMW’s 3 Series and Mercedes-Benz’s S-Class. At the same time, BYD risks creating a
brand identity so tied to Chinese culture that it resonates less in overseas markets.
Mass-market Image
Chinese carmakers, like the Korean and Japanese brands before them, are struggling to upgrade
their image and move beyond reputations for making cheap, utilitarian vehicles sometimes
accused of ripping off more established competitors. For BYD, a mass-market image hampers the
company’s ability to charge a premium and differentiate its brand.
As China’s biggest maker of electric vehicles, BYD is vulnerable to being squeezed out of the top
end of the market by companies such as Tesla, with its cult-like appeal that consumers pay a
premium for. At the low end, dozens of small-time manufacturers are competing on price.
A host of companies, many without auto-making experience, also have staked a claim to creating
connected electric vehicles as the government has encouraged technology companies to help
upgrade the traditional auto industry.
Bigger Pie
“With the increasing size of the new-energy vehicle pie, many players are coming in and the
industry will enter a period of reshuffle,” Chairman Wang said last night. “We are thinking about
what we should do going forward every single day."
Tesla’s popularity and China’s expanding set of electric-car competitors are putting pressure on
BYD, said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg
Intelligence.
“Elon Musk’s recognizable fame and success as an entrepreneur makes him a strong voice for
Tesla,” he said. “BYD will probably need to build a greater awareness to maintain its market
share.”

Tesla’s shares have gained 19 percent in the past year, while BYD has slumped 15 percent in
Hong Kong trading. Gary Tao, Tesla’s Beijing-based spokesman, didn’t comment on Li’s remarks
about Tesla.
“What BYD hopes to achieve through its brand image
is to position us as a company that’s grounded, that
will deliver what we promise and one with a long-term
target,” Li said. “We don’t seek a moment’s glory or
satisfaction, but take a long-term view. BYD hopes to
create a business that’ll be around for a hundred
years.”
While BYD is selecting a consulting firm to advise on
its branding makeover, subtle changes already emerged during the Monday event in Beijing.
Instead of delivering his speech behind a lectern, as he did last year during an inaugural BYD fan
event in Shenzhen, Wang roamed the stage in a Steve Jobs-style presentation.
He laid out the company’s vision and its responsibility to make the air cleaner and roads safer to
the hundreds of gathered fans and media, eschewing use of technical terms to describe the
company’s technology.
“We are lucky to grab the rare opportunity in a hundred years when demand for electric vehicles
picks up,” Wang said, flanked by the company’s cars. “We have to shoulder our responsibilities to
make a change and benefit our children.”

US oil imports 2015 with Canada provides record-high share
Source: U.S. Energy Information Administration, Petroleum Supply Monthly
Although total U.S. crude oil imports in 2015 continued to be lower than levels reached during the
mid-2000s, imports from the United States' top foreign oil supplier—Canada—were the highest on
record, according to annual trade data from EIA's Petroleum Supply Monthly. Canada provided 4
out of every 10 barrels of oil imported into the United States in 2015.
U.S. gross crude oil imports from all sources averaged 7.4 million barrels per day (b/d) in 2015,
down 27% since the 2005 high of 10.1 million b/d. As gross crude oil imports decline, a growing
share of remaining imports are being sourced from four top suppliers: Canada, Saudi Arabia,
Venezuela, and Mexico.
Canada, America's largest crude oil supplier since 2004, sent a record-high 3.2 million b/d of
gross crude oil exports to the United States in 2015, up 10% from the year before, accounting for
a record 43% of total U.S. crude oil imports. Canada also receives nearly all U.S. crude oil
exports, making up 422,000 b/d, or 92%, of the 458,000 b/d of crude oil exported from the United
States in 2015.
Canada generally produces heavy, sour crude oil that is well-matched to processing capacity in
the United States, where many refineries have the equipment needed to process such oil. Canada
has few alternative outlets for the heavy crude produced in Alberta, where most of Canada's
proved oil reserves are located. Canada is expected to continue to provide a large share of U.S.
oil imports for the foreseeable future, especially given the expansion of pipeline and rail shipping
capacities to transport Canadian oil.

NewBase 13 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, Brent 44.42 & WTI 41.80 holds on profit-taking& overSup
Oil futures holding in Asian trade on Wednesday as profit-taking and concern over a larger-than-
expected build in U.S. crude stocks outweighed a report that Russia and Saudi Arabia had
reached consensus on an oil output cap.
Brent crude holds at $44.42 a barrel as of 0207 GMT, after hitting a four-month high in the
previous session, when it settled up $1.86, or 4.3 percent. U.S. crude holds at $41.80 a barrel
after settling up $1.81, or 4.48 percent, the day before.
A firmer U.S. dollar, which makes dollar-denominated commodities more expensive for holders of
other currencies, also pressured prices. "There are two things. There has been a fantastic rise in
prices so I think in the Asian time zone there's been a little bit of profit-taking," said Jonathan
Barratt, chief investment officer at Sydney's Ayers Alliance.
"The second thing is that while we're waiting for more official inventory data, investors are
thinking: 'Are prices warranted at these levels?'," he said. Investors are also wary of the outcome
of a producer meeting in Doha on April 17 that may lead to an oil output cap.
Oil price special
coverage

"Investors have been burned before that OPEC (the Organization of the Petroleum Exporting
Countries) will do something - the fundamentals of that thought have shown to be made of sand,"
said Ben Le Brun, market analyst at Sydney's OptionsExpress.
That came as Russia and Saudi Arabia were reported to have reached a consensus on Tuesday
about an oil output freeze, ahead of Sunday's meeting. "There's no reason for a freeze when oil is
at $50 a barrel. If oil prices move back to $35 a barrel there'll be rhetoric and action for an output
cap; at $50 a barrel there'll just be rhetoric," Barratt said.
That came as China's crude imports rose 13.4 percent in the first quarter from a year ago, China
customs data showed. Imports of oil products fell 1.9 percent in the first quarter U.S. crude stocks
rose by a larger than expected 6.2 million barrels to 536.3 million last week, data from industry
group the American Petroleum Institute showed.
That compared with analyst expectations for a 1.9-million barrel increase. Official inventory data is
due later on Wednesday. U.S. crude production is forecast to fall by 560,000 barrels per day to
8.04 million barrels in 2017, while U.S. demand would increase by 190,000 bpd, according to the
EIA's short term energy outlook published on Tuesday.
Global oil demand will grow by 1.16 million barrels per day this year, a 10,000-barrel rise
compared with earlier estimates, the EIA said in its monthly forecast. The agency raised its oil
demand growth estimate for 2017 by 120,000 bpd to 1.33 million bpd.
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World's Top Traders Say the Worst Is Over for Oil
Bloomberg - Andy Hoffman
Top executives at the world’s largest oil-trading houses said the worst of the market’s woes are
probably over, with some predicting prices will climb to $50 a barrel by next year.
“The down market is behind us,” Torbjorn Tornqvist, chief executive officer of Gunvor Group Ltd.,
said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the
end of that for sure.”
Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut
will ease as U.S. output declines. The world’s largest oil traders were meeting in Switzerland as
members of OPEC and other major producers prepare to assemble in Doha on April 17 to discuss
an output freeze. Oil traders benefited from a surge in volatility last year and that should continue,
according to Tornqvist.
“We are going to have lots of volatility going forward,” Tornqvist said. “From here on the trend is
up.”
A “rebalancing” of global crude oil supply and demand could take place by the end of the third
quarter as production cuts by cash-strapped producers start to curb the current glut, according to
Trafigura Group Pte CEO Jeremy Weir.
“I believe we’ve seen the bottom unless there is some sort of catastrophic situation, political or
otherwise,” Weir said.
Price Recovery
When oil prices recently dipped below $28 it was a positive for crude as forward prices fell faster
than current ones, prompting major production projects to be canceled, according to Marco
Dunand, CEO of Mercuria Energy Group Ltd.
“We anticipate the market to start a recovery and we see a $50 price next year,” he said.
The oil market is at the beginning of a multiyear bull run, with prices rising to $60 later this year
and $80 in 2017, said Pierre Andurand, the chief investment officer of London-based hedge fund
Andurand Capital Management LLP.
Brent crude, the international benchmark, climbed 1 percent to $43.27 a barrel, a four-month high,
as of 2:21 p.m. on the London-based ICE Futures Europe exchange.
Large Stockpiles
Alex Beard, head of oil at Glencore Plc, was less bullish about the recovery, noting that the global
market added over 300 million barrels of crude and oil products into storage in the last 18 months.
“We hopefully will move into a rebalancing, but I don’t think it will come particularly quick,” Beard
said. “We still have very large stockpiles to eat through.”
The trading executives were unanimous in predictions that oil production from Iran will be
slower than expected to return to the market after the lifting of sanctions in January.

Ian Taylor, CEO of Vitol Group of Cos., the world’s largest independent oil trader, said getting
capital into Iran to fund the restart of production remains difficult. Trafigura’s Weir said banks are
still “wary” of financing deals to trade oil from Iran as U.S. sanctions remain in place for now.
Oil refining, which was a standout business for traders including Vitol and Gunvor in 2015, will
probably earn lower margins in 2015, said Taylor. “It will be tougher this year,” said Gunvor’s
Tornqvist.

NewBase Special Coverage
News Agencies News Release 13 April 2016
LNG makers Awaiting Demand From LNG over supplied
Market in `Pause Mode' … Bloomberg - James Paton
The over-supplied LNG market is in hiatus as energy giants from Chevron Corp. to Royal Dutch
Shell Plc and Woodside Petroleum Corp. await a surge of demand from countries seeking access
to energy.
Liquefied natural gas producers are in “pause mode” as low prices have stalled development of
new projects, Woodside Chief Executive Officer Peter Coleman said today at the LNG18
conference in Perth. That respite means that coming years demand will exceed supply, causing
prices to rise back to higher levels, Shell CEO Ben Van Beurden said.
The price cycle underscores difficulties in timing the construction of multi-billion dollar projects that
take years to come online. Companies have to focus on long-term natural gas demand which is
expected to grow by 35 percent over the next 20 years, Chevron CEO John Watson said.

“There is LNG that’s coming on line and it’s clear that there is some surplus. Customers are doing
what you would expect them to do, they are going to take advantage of that in the short term,”
Watson said. “Once you see that surplus absorbed, you will see that market re-emerge.”
No Pressure
Spot prices for LNG in Singapore fell below $4 per million British thermal units on Monday,
according to Singapore Exchange Ltd. That’s the lowest level since the exchange began tracking
it in September 2014. It’s plunged from $14 in October 2014.
As oil prices slid about 60 percent since mid-2014, more than $400 billion of proposed energy
projects have been delayed until 2017 and beyond, according to consulting firm Wood Mackenzie
Ltd. Woodside and partners Shell and BP Plc in March scrapped plans to develop the $40 billion
Browse liquefied natural gas project in Australia after the plunge in energy prices.
“We are not under the pressure of having to develop at the moment,” Coleman said. “Industry is in
this hiatus, in this pause mode where there is really no market to sell into, so it gives us a chance
to step back and say what is the best way to move.”
Demand Optimism
The market could see a deficit of 75 million metric tons of LNG per year by 2025, which would
require $250 billion in investment through 2020, Sanford C. Bernstein estimated in November. The
market is well-supplied to 2018 and possibly to the end of the decade, it said. Annual demand in
Asia-Pacific may gain 36 percent to 245 million tons by 2025, Western Australia’s Premier Colin
Barnett said today.
“The industry may be cyclical and sometimes volatile, but the long term growth trend is
undeniable,” Barnett said. Woodside may decide to develop Browse within the next three-to-five
years, he said later to reporters. “I am very optimistic about the demand for gas, so I have no
doubt Browse will go ahead.”

Demand is also coming from new markets including Thailand, Pakistan and Poland, Shell said.
Australia may increase LNG sales to Europe as the continent struggles with security of supply via
pipelines, Barnett said.
Oil and LNG prices have historically been linked because traditional long-term contracts priced the
gas in relation to crude. While Brent oil has surged about 50 percent since hitting a 12-year low in
January amid the worst energy crash in a generation, LNG has fallen 28 percent in the same
period. Shell expects most LNG to continue on the long-term model based on a mixture of oil and
natural gas indices. Short-term prices will be volatile, Van Beurden said.
“Shorter term LNG will go through different pricing environments,” he said. “At the moment there is
a bit more depth, a bit more room in the market, so short-term prices are probably a little bit
discounted. When we see that shortness disappear, and the market goes tight again, it will price
above the long-term.”

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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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 13 April 2016 K. Al Awadi

New base 829 special 13 april 2016

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