New base 987 special 15 january 2017 energy news

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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NewBase 15 January 2017 - Issue No. 987 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Abu Dhabi and Irena add to renewables funding for Africa and
Pacific region and call for more investment
The national - LeAnne Graves
Four countries in Africa and the Pacific will receive millions from Abu Dhabi to kick-start renewable
energy projects, benefiting more than a quarter of a million people.
The Abu Dhabi Fund for Development (ADFD) and the
International Renewable Energy Agency (Irena)
awarded Dh44.5 million to the Marshall Islands, Niger,
Seychelles and the Solomon Islands at the Irena
General Assembly on Saturday in Abu Dhabi.
"Over seven funding cycles, our US$350m partnership,
Irena/ADFD Project Facility, aims to support and
enhance the developing world’s energy needs by
tapping into their abundant renewable energy sources,"
said Mohammed Saif Al Suwaidi, ADFD’s director
general.
The concessional loans, at 1 per cent to 2 per cent interest rates for 20 years, will help projects
employing solar photovoltaic (PV) solutions and solar home kits to hydropower. They will provide
electricity to more than 260,000 people.
So far, the organisations have provided more than $189m for 19 projects.
"The UAE’s commitment to advancing sustainable energy transitions in countries around the world
has been unwavering," said Ali Al Shafar, the UAE’s permanent representative to Irena.
"Our renewable energy development aid has been growing significantly to more than $900m."
An important element is that this offers a sort of guarantee for other investors who may perceive
these projects and countries as high-risk. The concessional loans range from $5m to $15m per
project with a five-year grace period for payment. Other investors have provided $387m in co-
financing.

"This facility is also putting in place an innovative process, which supports transformational and
replicable projects that can potentially bring sustainable energy to millions of people around the
world," said Adnan Amin, Irena’s director general.
Irena calls for more investment
Despite its immense potential, renewable energy will only rise from 18 per cent to 21 per cent of
the total global energy mix by 2030, if current plans are implemented without additional measures,
according to the Rethinking Energy Report released today.
The newly elected Irena president,
the Italian Mario Giro, called for a
far more ambitious commitment
from its 177 member countries,
saying they should
increase renewable energy’s
share to 36 per cent.
"It is our responsibility to deliver
more and to deliver together, to
explore energy in all its
dimensions, for our people and
our climate," he said.
To fully meet the requirements set
out at COP21 in Paris in 2015,
where countries decided to reduce
global warming to less than 2°C
by 2050, Mr Giro said more ambitious pledges were necessary.
Dr Thani Al Zeyoudi, Minister of Energy and Climate Change, said: "To meet our goals, and all the
work we have done, global collaboration is necessary."
"We’re not stopping our work to push towards goals that aim to reduce climate change. We
pushed our target from 24 per cent to 27 per cent renewable energy this year, and now we’ve
pledged to have half our energy come from renewable sources in 2050."
Abu Dhabi recently announced plans to cut carbon dioxide emissions by 70 per cent by 2050.
The report calls for an increase in renewable energy investment and implementation as it would
save US$1.3 trillion by 2030, create millions of jobs and save millions of lives otherwise lost due to
air pollution.
It noted that the opportunity to implement renewable energy plans should be the first choice for
the almost one billion people who still lack access to electricity.
Auctions best fit for renewable energy projects, Irena says
Auctions for renewable energy projects have helped to drive down prices but the process runs the
risk of delays from over-aggressive bidding, according to a report by the Abu Dhabi-based
International Renewable Energy Agency (Irena) released today.
At least 67 countries have opted to tender renewable energy projects under such auction system
at the end of last year from only six in 2005, the report said.

Maged Mahmoud, the technical director for the Cairo-based Regional Centre for Renewable
Energy and Energy Efficiency, compared auctions to another system that was widely applied
for renewables previously, known as a feed-in tariff.
This sort of subsidy has a government-set low price to encourage companies to invest.
"Feed-in tariff prices in the region have been done in an encouraging way to investors, but
sometimes at a burden to the government," said Mr Mahmoud.
"The auction system is the best option for the Mena region because it fits the existing legal system
and brings an added value to lower prices."
But the latest project bid trend could face several risks starting with delays or cancellations
"attributed to the potential for over-aggressive bidding", according to Irena.
As a result of this type of process, the UAE has recorded some of the lowest prices for solar
power. For example, in 2015 the lowest price for Dubai’s 200 megawatt second phase of the
Mohammed bin Rashid Al Maktoum solar complex was 5.84 US cents per kilowatt hour. Last year,
bids submitted to Abu Dhabi’s Sweihan project were as low as 2.42 cents per kWh.
For companies to even throw their hat in the ring for an auction-type project, upfront fees spanning
from feasibility studies to bid bonds may block small or new companies from participating, the
report said.
Adnan Amin, Irena’s director general, said that the while sector was predominantly geared
towards large businesses, there were still opportunities for smaller firms. "We’re going to see more
decentralised solutions and policies come on-stream, including solar rooftop and heating, and
we’ll see smaller companies that are able to participate in that," he said.
Despite the risks that come with an auction system, it remains the best option to get a real feel for
the market. Mr Amin said: "It’s a market-orientated device and the auction process has helped
deliver much lower cost of projects for renewables."

Kuwait to sell its stake in Areva to France in bid for nuclear fix
Reuters
France will buy out minority shareholders in Areva and delist the troubled nuclear group, the
government said on Wednesday as talks with potential investors in a new nuclear fuel company
being spun out of Areva neared a conclusion.
The state, which owns 87 percent of Areva, said it would offer 4.5 euros per Areva SA share to
minority investors which include Kuwait's investment fund , French utility EDF and French energy
group Total.
In the Middle East and North Africa (MENA), you might not immediately consider the healthcare
industry – dominated as it is by the government sector – fertile ground for startups.
Areva's shares have fallen by as much as 90 percent from their 2007 highs as the group chalked
up repeated losses. The stock was suspended on Tuesday at 5.2 euros.

European Union antitrust regulators approved the French government's plan to inject 4.5 billion
euros ($4.8 billion) into Areva on Tuesday, saying the rescue would not unduly distort competition.
The ruling will allow Areva, whose capital has been wiped out by years of losses, to restart as a
smaller firm focused on uranium mining and nuclear fuel production and recycling.
Legacy Areva SA - the firm left over after this split and the sale of Areva's reactor unit to state-
controlled EDF - will get a 2 billion euro capital increase and will hold the liabilities related to the
troubled Olkiluoto 3 project in Finland, which has been hit by delays.
Areva said negotiations with unspecified investors in the new company were being finalised. It
said last month that two investors have made a 500 million euro ($526.40 million) offer for a
combined 10 percent stake in the new entity.
A source familiar with the situation said the two investors are Japan's Mitsubishi Heavy Industries
(7011.T) and JNFL. Talks are continuing with China's National Nuclear Corporation about also
taking a minority stake.
"These talks are continuing and focus on governance issues, and on the issue of the balance
between the different third-party investor parties," French Industry Minister Christophe Sirugue
told Reuters in an interview.
Sirugue, who said he had discussed the governance issue with Chinese Vice Premier Ma Kai
during his visit to France in November, added that the make-up of the board of the new company
is another important issue in the talks.

Turkey: Condor's Poyraz West 2 appraisal well discovers a new
Pre-Sogucak reservoir… Source: Condor Petroleum
Condor Petroleum has announced drilling results of the Poyraz West 2 appraisal well in Turkey.
Poyraz West 2 is a step-out appraisal well testing the southwest extension of the field. Based on
wireline logs, the well encountered 142 meters of net pay which includes 60 meters of a newly
discovered Pre-Sogucak reservoir. The new reservoir is stratigraphically older and deeper than
the previously evaluated Gazhanedere and Sogucak intervals and consists of interbedded
conglomerates and sandstones. Production casing has been set and the well will be completed
and tested prior to Poyraz Ridge first gas, which is on schedule to commence in mid-2017.
Don Streu, Condor’s President and CEO noted:
'We are extremely pleased that all four wells from this recent drilling campaign have encountered
significant gas columns. The wells have expanded the gas charged reservoirs in the Poyraz Ridge
structure by identifying new and deeper
pay zones which should positively
impact reserves. The existing 3D
seismic indicates that the pre-Sogucak
reservoir is extending to the northwest,
suggesting it is a new geologic play
with lateral extent'.
The Poyraz West 2 discovery also
serves to enhance the prospectivity of
similar looking structures located within
the license area. Planning is underway
to drill the Yakamoz 1 exploration
prospect this year, which is only 2 km
north of Poyraz Ridge and shares
many of the same attributes. Additional
3D seismic may also be acquired in the
near term. The Company recently
established a US$10 million credit
facility which should provide sufficient
funding to execute these programs and
achieve Poyraz Ridge first gas. The
receipt of the loan proceeds from the
credit facility is subject to certain
customary conditions precedent
including, but not limited to, the
execution of various security documents. The loan proceeds are expected to be received in
January 2017.
Operations have shifted to completion and testing activities for the recently drilled wells and
testing of Poyraz 3 has commenced. Prior to ‘cleaning up’ and establishing stabilized flow rates,
completion fluid and paraffin (wax) were observed in the surface testing equipment, hindering the
ability to accurately test the well. Additional equipment is being installed before continuing to flow
Poyraz 3. In the meantime, the completion rig has mobilized to Poyraz 5 and has started
completion and testing activities on that well.

US Wholesale power prices in 2016 fell,Due to lower gas prices
Source: U.S. Energy Information Administration, based on SNL Energy
Average wholesale electricity prices at major trading hubs across the United States during the first
quarter of 2016 were significantly lower than during the same period in 2015, ranging from 24%
lower in California to 64% lower in New England. Monthly wholesale prices for the rest of 2016
were slightly below 2015 prices and generally averaged between $20 and $45 per megawatthour
(MWh).
The primary driver of the low wholesale electricity prices was the sustained low cost of natural
gas, which is the fuel that often determines the marginal generation cost in most power markets.
The low cost of natural gas also encouraged increased use of the fuel for U.S. power generation
in 2016.
The cost of natural gas delivered to power generators averaged $2.78 per million British thermal
unit (Btu) during the first 10 months of 2016 (the latest data available), which was 17% lower than
the average price during the same period in 2015.
Milder winter weather in early 2016 also helped keep power prices lower than during the winter of
2014–15 when wholesale prices in the Northeast peaked in response to cold temperatures and
constraints on getting fuel into the region.
The average wholesale electricity price in ISO New England in February 2016 averaged
$34/MWh, significantly lower than the $138/MWh average during February 2015. Wholesale
power prices began slowly increasing in December as colder winter weather set in, which led to
increasing natural gas prices.

In addition to keeping wholesale power prices relatively stable in 2016, the low cost of natural gas
contributed to a shift towards increased natural gas-fired electricity generation, largely at the
expense of coal-fired generation.
The amount of electricity generation fueled by natural gas between January and October 2016
was 6% higher than generation during the same period in 2015. In contrast, coal-fired electricity
generation during the first 10 months of 2016 was down 12% compared with the same period in
2015.
Natural gas was the primary source of U.S. electricity generation (when measured on an annual
basis) in 2016 for the first time. Monthly natural gas-fired electricity generation first exceeded coal-
fired generation as the primary source of electricity in April 2015.
Natural gas was the leading source of electricity for nearly every month of 2016, accounting for an
estimated 34% of total annual
utility-scale power generation,
compared with a 30% share for
coal-fired generation.
Electricity generating facilities
were scheduled to add about 24
gigawatts (GW) of utility-scale
capacity in 2016, more than 90%
of which were natural gas, solar,
and wind additions.
Coal units accounted for most
retirements during 2016, with
more than 7 GW of coal-fired
capacity retired during the year,
equivalent to 2.5% of existing
coal capacity in place at the end
of 2015.

US:Natural gas prices in 2016 were the lowest in nearly 20 years
Source: U.S. Energy Information Administration, based on Natural Gas Intelligence
Natural gas spot prices in 2016 averaged $2.49 per million British thermal units (MMBtu) at the
national benchmark Henry Hub, the lowest annual average price since 1999. The monthly
average price fell below $2.00/MMBtu from February through May, but later increased, ending the
year at an average of $3.58/MMBtu in December.
Warmer-than-normal temperatures for most of the year and changing natural gas demand were
the main drivers of natural gas prices in 2016.

Natural gas prices in U.S. regional markets were volatile in 2016. In the first quarter of the year,
much warmer-than-normal winter temperatures and large amounts of natural gas in storage
caused prices to decrease. Prices began to gradually increase in late spring, with increased
natural gas demand from multiple sectors and decreasing natural gas production, before sharply
increasing at the end of the year with the onset of cold temperatures in mid-December.
In the Northeast, where natural gas pipeline capacity is often constrained, cold weather can cause
monthly average prices at hubs such as Algonquin Citygate (near Boston) and Transco Zone 6
NY (New York) to spike. Although this happened in 2016, new pipeline capacity and increased
natural gas production in the Appalachian Basin, along with warmer-than-usual winter weather,
contributed to price spikes that were considerably lower than in previous years.
Because of warm weather, natural gas consumption in the residential and commercial sectors in
2016 declined 7% and 4%, respectively, from the previous year. Warmer winter temperatures also
limited natural gas storage withdrawals. As a result, natural gas storage inventories were at or
near record levels throughout most of the year and reached a record 4,047 billion cubic feet (Bcf)
for the week ending November 11.
Despite the overall decrease in residential and commercial demand in 2016, late-year increases in
these sectors and increased demand from other sources contributed to increasing natural gas
prices later in the year. In 2016, natural gas surpassed coal as the primary fuel used for power
generation in the United States, supplying an estimated 34% of the nation’s electricity, compared
with 30% for coal. Electric power generation in 2016 used an average of 27.6 billion cubic feet per
day (Bcf/d), exceeding the previous high of 26.3 Bcf/d in 2015.
In November 2016, the United States became a net exporter of natural gas on a monthly basis for
the first time since 1957, based on data from PointLogic. This was supported by infrastructure
improvements—including natural gas pipelines and facilities for liquefying natural gas for export—
that enabled suppliers to meet increasing demand from foreign markets.
U.S. pipeline exports to Mexico continued to grow throughout 2016, making up 87% of all U.S.
natural gas exports. In May 2016, the Sabine Pass liquefaction terminal began commercial
operations in the Gulf Coast to export liquefied natural gas (LNG). The expansion of the Panama

Canal in July 2016 further aided export ability by reducing time and transportation costs to key
markets in Asia and the west coast of South America.
Despite growing demand in the electric power sector and export markets, low demand for space
heating and low prices resulted in lower natural gas production in 2016. Based on preliminary
data, EIA estimates natural gas marketed production to average 77.5 Bcf/d in 2016, 1.3 Bcf/d less
than in 2015 and the first annual decline since 2005.
The number of active natural gas drill rigs continued a multi-year decline, reaching 132 by the end
of 2016, down 19% from the year-ago count. However, production has not fallen as sharply as the
number of active rigs, as producers have continued to make gains in drilling efficiency.

NewBase 15 January 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil falls on China concerns, down 3 percent for the week on OPEC doubts
Oil prices fell on Friday and ended the week 3 percent lower on lingering doubts over the extent of
OPEC cuts, with sentiment worsened by concerns over the economic health of the world's
second-largest oil consumer, China, after it reported the steepest falls in overall exports since
2009.
Record Chinese crude imports of 8.6 million barrels per day (bpd) in December helped to buoy
prices somewhat, traders said, but they could not hide underlying fears over the overall health of
the world's second-biggest economy.
Brent crude futures LCOc1 settled 56 cents lower at $55.45 a barrel, ending the week with a loss
of about 3 percent. U.S. West Texas Intermediate CLc1 crude futures fell by 64 cents to close at
$52.37 also notching a weekly drop of nearly 3 percent.
"China right now seems more interested in keeping capital in the country than focusing on growth
overall," Phil Flynn, analyst at Price Futures Group in Chicago said.
"We have to watch this situation develop because this is one threat to what is an otherwise wildly
bullish scenario for oil in the coming year."
On the supply side, there was some market support from top crude exporter Saudi Arabia, which
said that its output had fallen below 10 million bpd to levels last seen in February 2015 and that it
expects to make even deeper cuts next month.
Oil price special
coverage

However, hard evidence of export reductions has yet to emerge, two weeks into the month in
which the cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other
producers, such as Russia, were supposed to start.
"Compliance won't be 100 percent; it never is," an OPEC source told Reuters, adding that an
overall rate of 50 percent to 60 percent would be good enough, based on past compliance levels.
Although, OPEC Secretary-General Mohammed Barkindo told Reuters he was sure countries
would follow through on the deal.
Libya's oil production increased to 750,000 barrels per day (bpd), the deputy leader of the U.N.-
backed government said, a rise of about 50,000 bpd from last week.
"I think the bigger issues for oil are less about demand right now and a lot more about the supply
condition," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in
Seattle.
Oil held gains after advancing the most in almost six weeks as U.S. refiners processed a record
amount of crude, while OPEC and other producing nations trim output to stabilize the market.
Futures were little changed in New York after climbing 2.8 percent on Wednesday following an
Energy Information Administration report that U.S. refineries used 17.1 million barrels a day of
crude last week, the most in weekly data compiled since 1989. The United Arab Emirates and
other Gulf producers have complied with cuts agreed under the OPEC output deal, U.A.E. Energy
Minister Suhail Al Mazrouei said.
Oil has been unable to sustain its rally above $55, driven by the deal between the Organization of
Petroleum Exporting Countries and 11 other nations to pump less crude, amid concern that rising
prices will spur more supply. While Middle East producers including Saudi Arabia have signaled

they’re sticking to the pledged reductions, the U.S. recently raised this year’s output forecast and
explorers have added drilling rigs for 10 straight weeks.
“Saudi Arabia and other core members of the Organization of Petroleum Exporting Countries
remain most committed to the cut in supplies,” said Carsten Menke, commodities analyst at Julius
Baer Group Ltd. in Zurich.
West Texas Intermediate for February delivery was at $52.32 a barrel on the New York Mercantile
Exchange, up 7 cents, at 9:32 a.m. in London. Total volume traded was about 15 percent below
the 100-day average. The contract gained $1.43 to $52.25 on Wednesday, rising the most since
Dec. 1.
U.A.E. Says $50 Oil ‘Isn’t Going to Cut It’ for Producers
Mahmoud Habboush
Crude oil at $50 a barrel is too low for most producing countries, according to United Arab
Emirates Energy Minister Suhail Al Mazrouei.
Prices have climbed almost 20 percent to above
$50 a barrel since the Nov. 30 agreement by the
Organization of Petroleum Exporting Countries to
cut production for the first time in eight years to
curb a global glut. OPEC is reducing output along
with 11 other producing nations including Russia
after a slump in oil prices the past two years
eroded revenue.
Crude at $50 a barrel “isn’t going to cut it” for most
producers, Mazrouei told an Abu Dhabi energy
conference Wednesday. When asked if that level
should be a floor, he said: “I will never quote a
price because I truly believe we should not target a price.”

Brent crude fell 4 cents to $55.06 a barrel at 8:54 a.m. in Dubai, compared with $46.38 a barrel at
the close on Nov. 29 before the OPEC agreement. Prices have still dropped by about half since
2014 because of a glut created by OPEC and producers outside the group.
Demand Growth
During those years of oversupply and low prices, global oil demand has grown faster than
expected, Mazrouei said, forecasting that expansion should continue. While complying with output
cuts, the U.A.E. will also work to boost its production capacity to 3.5 million barrels a day, he said.
Its current capacity is 3.15 million barrels a day, according to data compiled by Bloomberg.
Oil producers probably don’t want prices to go much above $50 a barrel because that would
encourage new production, Neil Atkinson, head of the oil industry and markets division of the
International Energy Agency, said in a speech at the same conference. By limiting the output cuts
to six months, OPEC is sending a signal that it doesn’t want those cuts to stay indefinitely, he
said.
Most members of the Gulf Cooperation Council, an alliance of Gulf Arab countries, will need oil
prices higher than $50 to balance their budgets in 2017, according to International Monetary
Fund data released in October.
The U.A.E. will need a price of $60 a barrel, the IMF said. Saudi Arabia and other GCC countries
are taking steps to make their economies less dependent on crude oil sales. The only OPEC
member in the Middle East and North Africa able to balance its budget with oil below $50 is
Kuwait, it said.
The U.A.E. and other GCC members have carried out the output cuts they agreed to, Mazrouei
said. Bahrain and Oman are among the non-OPEC countries joining the cuts, and the other four
GCC countries are OPEC members.
Opec members cutting oil production, who are they
Iraq has cut oil production by 170,000 barrels per day and is expected to cut it further in the
coming days in line with the agreement reached between Opec and non-Opec members in Vienna
last month.
“We already cut by 170,000 barrels per day and we are going to knock down another 40,000
barrels per day by the end of the month to take the total reduction by 210,000 barrels per day,”
said Iraq oil minister Jabbar Al Luaibi, speaking to reporters at the inaugural Atlantic Council
Global Energy Forum in Abu Dhabi on Thursday.
He said they are satisfied with the current oil price but would like to see oil price go up to $65 per
barrel.
The Organisation of Petroleum Exporting Countries and 11 other producers including Russia
agreed on December 10 to jointly cut output by about 1.8 million barrels a day in an effort to end a
three-year oil surplus, which sent prices spiraling and battered the economies of producing
nations around the world.
Energy ministers from Saudi Arabia, UAE, Qatar, Iraq and Kuwait are participating in the two day
global energy forum which began on Thursday.
KPC said in a statement it had notified its clients of the production cuts from the start of January,
saying they will be in effect for the whole of the first quarter of 2017.

Under the agreement reached in Vienna on Nov. 30 to cut output by 1.2 million barrels per day,
Kuwait would cut its production by more than 131,000 bpd.
Libyan oil production, which has been steadily rising in the last two months, could pose a risk to
the production cut deal reached between Opec and non-Opec member countries least year,
analysts said.
From 300,000 barrels a day in August, Libya’s oil put has gone up to about 700,000 barrels a day
currently..

Crude oil prices expected to increase slightly through 2017 and 2018
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2017
The U.S. Energy Information Administration’s January Short-Term Energy Outlook (STEO)
forecasts benchmark North Sea Brent and West Texas Intermediate (WTI) crude oil prices to
average $53 per barrel (b) and $52/b, respectively, in 2017, close to their levels during the last
three weeks of 2016. These prices are expected to rise to $56/b and $55/b, respectively, in 2018.
EIA’s price forecasts have wide uncertainty bands that are consistent with contract values for
future delivery. For example, contracts traded during the five-day period ending January 5 suggest
that the market expects WTI prices could range from $35/b to $93/b (at the 95% confidence
interval) in December 2017.
Strong demand and the recent agreement among members of the Organization of the Petroleum
Exporting Countries (OPEC)—along with some key non-OPEC oil producers—are putting upward
pressure on crude oil prices. However, forecast increases in global production should provide
downward pressure on prices and mitigate the potential for significant crude oil price increases
through 2018. Despite the recent OPEC agreement, EIA expects global petroleum and other liquid
inventory builds to continue, but at a slowing rate, in 2017 and 2018.
Despite increases in global oil inventories and U.S. oil rig productivity, market reactions to the
November OPEC agreement to cut production by 1.2 million barrels per day (b/d) starting in
January 2017 contributed to rising oil prices in December, when average Brent prices were $9/b

above their November levels. In response to the price movement, in the January STEO, EIA
increased its crude oil price forecast for both Brent and WTI by $2/b from the December STEO
forecast for 2017. The slight price discount of WTI to Brent in the forecast is based on the
assumption of competition between the two crude oils in the U.S. Gulf Coast refinery market.
Brent crude oil spot prices are expected to remain fairly flat over 2017 in part as a result of the
responsiveness of U.S. tight oil production to rising oil prices in late 2016. EIA forecasts Brent
prices will slowly increase in 2018, beginning the year at $54/b in January and ending the year at
$59/b in December. During this time, inventory builds will slow, putting modest upward pressure
on prices. This rise in oil prices encourages production increases, particularly in the Lower 48
onshore. However, any production increases realized while the global markets are building
inventories will moderate price increases, which will in turn limit additional production increases.
Total U.S. crude oil production is estimated to have averaged 8.9 million b/d in 2016, down 0.5
million b/d from 2015, with all of the production decline in the Lower 48 onshore. EIA forecasts
U.S. crude oil production will increase to an average of 9.0 million b/d in 2017 and 9.3 million b/d
in 2018. Forecast production in 2017 is 0.2 million b/d higher than in the previous forecasts,
reflecting higher drilling activity, drilling efficiency, and well-level productivity than in previously
assumed.
In the previous forecast, EIA generally expected Lower 48 onshore production to decline through
the end of 2017. However, the new forecast reflects crude oil prices near or above $50/b, which
have led to increased investment by some U.S. production companies, particularly in the Permian
Basin. EIA expects that declines in Lower 48 production have largely ended and forecasts
relatively flat production in the first quarter of 2017 at 6.7 million b/d, which will then increase to an
annual average of 7.0 million b/d in 2018. Even modest increases in crude oil prices could
contribute to supply growth in other U.S. tight oil regions.
EIA estimates global petroleum and other liquids production will increase through the forecast.
Annual estimated and forecast production levels for 2016, 2017, and 2018 were revised up to 96.4
million b/d, 97.5 million b/d, and 98.9 million b/d, respectively. More information about crude oil
prices and production is available in EIA’s latest This Week in Petroleum.

NewBase Special Coverage
News Agencies News Release 15 Jan. 2017
Will Putin and Trump Bond Over Oil?
by Matthew Philips
In the early 2000s, the Russian and U.S. presidents, Vladimir Putin and George W. Bush, decided
it was time their two countries had a closer relationship. The obvious place to start was the oil
industry. The U.S. was importing almost twice as much crude as it produced and wanted to
diversify away from Middle Eastern suppliers. Russia’s vast, untapped reserves of oil needed two
things U.S. companies had plenty of: money and technology.
In October 2002 the inaugural U.S.-Russia Commercial Energy Summit convened in Houston.
Over two days, members of both governments and executives from 70 oil and gas companies
mingled and talked business. Eleven months later, a second summit was held in St. Petersburg,
where the focus was on improving the climate for energy investment in Russia. A closer
relationship seemed to be developing, but there would be no third summit.
By 2004 the Kremlin had begun nationalizing portions of Russia’s private energy sector, most
notably seizing the assets of Yukos, the largest oil company. At home, U.S. drilling companies
were developing fracking technology to unlock oil and gas from shale formations, and they were
reluctant to share their knowledge with the Russians. “The U.S. became quite cautious, and so the
basis for establishing this harmonized relationship was destabilized,” says Igor Yusufov, Russia’s
energy minister from 2001 to 2004 and a key participant in the energy summits.

Yusufov, who now runs an energy investment fund, is hoping that incoming U.S. President Donald
Trump will restart the high-level meetings. Trump has vowed to improve relations with Russia and
has tapped former ExxonMobil Chief Executive Officer Rex Tillerson to serve as secretary of
state. Tillerson arguably has more Russia experience than any other U.S. executive, having
negotiated a $500 billion joint venture with Kremlin-controlled Rosneft in 2011.
The potential for a new era of constructive relations between the U.S. and Russia will likely be a
topic of discussion in the hallways of Davos, where the attendee list reads like a who’s who of the
oil industry. A lot has changed since Yusufov was clinking glasses with then-Energy Secretary
Spencer Abraham. The U.S. is poised to become a net energy exporter in the next decade,
according to the U.S. Energy Information Administration. In time, American oil and gas could
compete with Russian supplies, exerting pressure on global prices. Cheap energy isn’t exactly
good for the Kremlin, which has been starved of revenue since the crash in oil prices.
A first step in any rapprochement would be to lift the sanctions that the Obama administration put
in place in retaliation for Russia’s incursions into Crimea and Ukraine. “If he wants a better
relationship with Russia, Trump can start by dropping the sanctions,” says Steven Pifer, who
served as deputy assistant secretary of state in the Bureau of European and Eurasian Affairs with
responsibilities for Russia and Ukraine from 2001 to 2004.
The question is what does the U.S. get in return. “If you take the sanctions off, you have no
leverage,” Pifer says. Speaking at his Jan. 11 confirmation hearing, Tillerson called sanctions a
“powerful tool” but said that poorly designed sanctions can be worse than having none at all.
Carlos Pascual, who led the Department of State’s Bureau of Energy Resources from 2011 to
2014, says any reevaluation of the relationship with Russia will have to include the issue of cyber
attacks, the situation in Syria, and Russia’s role in the Mideast.
There’s also the question of whether a Tillerson-led State Department would work in concert with
U.S. companies trying to exploit opportunities in Russia. Richard Morningstar says that when he
was U.S. ambassador to the Republic of Azerbaijan from 2012 to 2014, “the State Department
people and the Exxon people were like two ships passing in the night,” even though both camps
were deepening their engagement on energy issues in Russia and the surrounding area.
Morningstar, who now runs the Global Energy Center at the Atlantic Council in Washington,
wonders if a Trump administration will prioritize closer ties with Russia over geopolitical issues.
“Will he care what role Russia plays as a primary supplier of gas to Europe?” he asks. “There is
also the question of how a potential reset with Russia flies in the face of a desire in the U.S. to sell
more to Europe.”
Yusufov brushes aside talk of competition and instead emphasizes how the two countries could
cooperate to stabilize a volatile oil market. “We could combine our efforts to establish prices that
would be of benefit to both countries,” he says. A range of $60 to $80 a barrel would be high
enough for the Kremlin to plug its budget hole and for U.S. frackers to start investing in new
projects—though not so high that drivers in the U.S. would feel too much pain. “This could be the
essence of the discussion of a Russian-American energy summit as it was 15 years ago,” Yusufov
says.
The bottom line: U.S. and Russia may struggle to carve out room for energy cooperation now that
America is also a big oil and gas producer

Shale oil profitable at today’s price, top US energy official says
Amos Hochstein
US shale production is expected to go up as oil prices increase due to Opec agreement, a top
energy official from the US Department of State told Gulf News in an exclusive interview.
“As a result of Opec action, prices rose by a few dollars and as a result you’ve seen shale oil
production going up again in the United States. We had hit a low of 8.4 million barrels a day of the
total production, we are now back up to 8.7 million barrels a day,” said Amos Hochstein, special
envoy and coordinator, international energy affairs, US department of state.
He expected US oil production to reach 9.5 million barrels a day next year, similar to production
levels two years ago.
“As long as prices are $50 or above, we will see an increase in production in the United States. In
2014, when oil prices collapsed, shale oil was considered expensive. We are seeing that the cost
of shale oil has reduced very significantly and therefore it is already profitable at today’s prices.”
Oil prices have gone up by more than 20 per cent since the 13 Opec member countries and 11 oil
producers from outside the group reached an agreement to cut production by about 1.8 million
barrels a day last month.
The historic deal, the first in 15 years, came into effect from January 1 with oil producers
promising to slash output to comply with the deal to rebalance oil markets.

Hochstein, who was in Abu Dhabi as part of Atlantic Council Global Energy Forum, also said he
doesn’t expect any changes in the energy policy of the United States under the new administration
of Donald Trump.
“I personally don’t expect that any changes could come or actually have an impact on the energy
markets any time soon. Much of the changes are already in place, the trajectory of the market is
there and I think that’s where we are going.”
When asked whether Trump will encourage shale oil production, he said it will continue to rise or
fall based on global price of oil and has nothing to do with the US government.
“Right now, the US is an important swing producer for global energy market that is entirely in the
control of the market and prices. The US government, Trump administration or others will have
very little impact on it.”
Speaking on the renewable energy sector in the US, he said the sector will continue to increase in
the coming days and over $50 billion worth of investments were made in the renewable energy
industry last year.
“The US last year has put in place a five years of tax credits for renewable energy so we have
another four and half years of extended tax credits which will encourage continued investment.”
Praising the UAE energy plan 2050 announced by the government last week, he said the
leadership by the government is remarkable and is looking into the future of what the energy world
looks like.
“Today the leading country is the UAE. No one is looking into the future as aggressively and as
proactively as the UAE.” The UAE energy plan has a target of 44 per cent clean energy, 38 per
cent gas, 12 per cent clean coal and 6 per cent nuclear by 2050.
The strategy will aim to invest Dh600 billion to meet demands for energy and ensuring the
sustainability of growth in the UAE’s economy, and will also result in savings of Dh700 billion.

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 January 2017 K. Al Awadi

New base 987 special 15 january 2017 energy news

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