New base energy news 05 june 2020 issue no. 1345 senior editor eng. khaled al awadi

Copyright © 2020 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavors have been used to ensure the accuracy of the information contained in this
publication. However, no warranty is given to the accuracy of its content. Page 1
NewBase Energy News 05 June 2020 - Issue No. 1345 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Mubadala to invest $1.2 billion in Reliance's Jio Platforms
Reuters + NewBase
Indian oil-to-telecoms conglomerate Reliance Industries Ltd (RELI.NS) said on Friday that Abu
Dhabi state fund Mubadala Investment Co will buy a 1.85% stake in its digital unit, Jio Platforms,
for 90.93 billion rupees ($1.21 billion).
Reliance has now sold a combined 19% interest in Jio Platforms, which houses movie, music apps
and telecoms venture Jio Infocomm, in six fundraising deals including a 9.99% stake sale to
Facebook Inc (FB.O) for $5.7 billion.
The interest in Jio Platforms highlights its potential to become the dominant player in India’s digital
economy. The telecoms unit has already decimated several rivals with cut-throat pricing and is
counting on Reliance’s retail network to expand into e-commerce.
The Jio Platforms investment is the largest in an Indian firm by Mubadala, which is the second-
biggest state investor in Abu Dhabi after Abu Dhabi Investment Authority (ADIA), managing about
$240 billion in assets.
www.linkedin.com/in/khaled-al-awadi-38b995b

The other recent investors in Jio Platforms are private-equity firms General Atlantic, Silver Lake,
Vista Equity Partners, and KKR & Co Inc (KKR.N).Morgan Stanley served as a financial adviser to
Reliance Industries, the company said in a statement.
Mubadala's USD 229 billion portfolio spans five continents with interests in multiple sectors including
aerospace, ICT, semiconductors, metals and mining, renewable energy, oil and gas,
petrochemicals, utilities, healthcare, real estate, pharmaceuticals and medical technology among
others.
With this investment, Jio Platforms
has raised Rs 87,655.35 crore from
leading global technology and
growth investors including
Facebook, Silver Lake, Vista
Equity Partners, General Atlantic,
KKR andMubadala in less than six
weeks," the company said in a
statement.
Mukesh Ambani, Chairman and
Managing Director of Reliance
Industries, said that he looked
forward to benefitting from the
group's experience and insights.
"I am delighted that Mubadala, one
of the most astute and
transformational global growth
investors has decided to partner us in our journey to propel India's digital growth towards becoming
a leading digital nation in the world. Through my longstanding ties with Abu Dhabi, I have personally
seen the impact of Mubadala's work in diversifying and globally connecting the UAE's knowledge-
based economy," he said.
Meanwhile, Khaldoon Al Mubarak, Managing Director and Group CEO, Mubadala Investment
Company, said, "We have seen how Jio has already transformed communications and connectivity
in India, and as an investor and partner, we are committed to supporting India's digital growth
journey.
With Jio's network of investors and partners, we believe that the platform company will further the
development of the digital economy."Mubadala is committed to investing in, and actively working
with, high growth companies which are pioneering technologies to address critical challenges and
unlock new opportunities, he added.
Jio Platforms, a wholly-owned subsidiary of Reliance Industries, is a next-generation technology
platform focused on providing high-quality and affordable digital services across India, with millions
of subscribers.
Jio Platforms has made significant investments across its digital ecosystem, powered by leading
technologies spanning broadband connectivity, smart devices, cloud and edge computing, big data
analytics, artificial intelligence, Internet of Things, augmented and mixed reality, and blockchain.
Jio's vision is to enable a Digital India for 1.3 billion people and businesses across the country,
including small merchants, micro-businesses and farmers so that all of them can enjoy the fruits of
inclusive growth. (ANI)

Italy: Eni business structure to be a leader in the energy transition
Source: Eni
The Company is creating two new business groups:
 Natural Resources, to develop the upstream oil & gas portfolio sustainably, promoting energy
efficiency and carbon capture.
 Energy Evolution, dedicated to supporting the evolution of the company’s power generation,
product transformation and marketing from fossil to bio, blue and green.
The two business groups will maintain close links in the hydrocarbon value chain, with the objective
of best managing the different phases of the energy transition and jointly developing
decarbonization processes to supply bio, blue and green products.
The Company’s central corporate functions will be organized to support the Company’s CEO in his
integrated compliance, control and risk management responsibilities, and the business groups in
meeting their objectives.
The new organization is a milestone towards the implementation of Eni’s strategy to 2050, which
combines value creation, portfolio sustainability and financial strength. Eni’s Board of Directors,
chaired by Lucia Calvosa, has approved a new business structure for the company.
The new organisation, presented by Eni’s Chief Executive Officer Claudio Descalzi to the Board of
Directors today, is a milestone in the implementation of the Company’s Strategy unveiled in
February, which sets the evolution of the business over the next 30 years. The key, and as of today
unique, element of this strategy is the combination of growth objectives with financial value creation
as well as environmental sustainability, which will lead to a significant reduction in full life-cycle
carbon emissions.
Chief Executive Officer Claudio Descalzi said:
'This new structure reflects Eni’s pivot to the energy transition. An irreversible path that will make
us leaders in decarbonized energy products. With our new Plan, in February, we have set our path

for the next 30 years, as of today it is unique in our industry. To make the plan come true, and
position us to accelerate its delivery, we are creating two new business groups in our company.
They will have specific objectives, but they will also cooperate to deliver on the transition and to
provide our customers with the widest range of sustainable products.
The reorganization also involves the corporate structures, which will evolve, continuing to be the
central reference point for strategic and control processes, providing an effective support to meet
the business groups’ objectives.
The fight against climate change and promotion of sustainable development are recognised by
governments, civil society, investors and business alike as priorities for global development. Only
those who pursue these in an innovative way will create value in the long term. We want to be main
actors in a Just Energy Transition, in which we believe, and is central to Eni’s transformation.'
The new Eni will have two business groups – Natural Resources and Energy Evolution. Alessandro
Puliti will lead Natural Resources and Massimo Mondazzi will lead Energy Evolution. Both were
proposed to the Board by the CEO, in agreement with the Chairwoman.
Natural Resources will continue to build up the value of Eni’s oil & gas upstream portfolio, with the
objective of reducing its carbon footprint by scaling up energy efficiency and expanding production
in the natural gas business, and its position in the wholesale market.
Furthermore, it will focus its actions on the development of carbon capture and compensation
projects. Continuous technological development, and increased efficiency will allow the
maximization of cash generation, even in challenging scenarios.
The business group will incorporate the Company’s oil & gas exploration, development and
production activities, natural gas wholesale via pipeline and LNG. In addition, it will include forestry
conservation (REDD+) and carbon storage projects, and sustainability which will continue to

integrate across all Eni’s activities. The company Eni Rewind (environmental activities), will also be
consolidated in this business Group.
Energy Evolution will focus on the evolution of the businesses of power generation, transformation
and marketing of products from fossil to bio, blue and green. In particular, it will focus on growing
power generation from renewable energy and biomethane, it will coordinate the bio and circular
evolution of the Company’s refining system and chemical business, and it will further develop Eni’s
retail portfolio, providing increasingly more decarbonized products for mobility, household
consumption and small enterprises.
Thanks to the business group’s coordination, the Company will be able to develop these activities
in an integrated way, both geographically and in terms of business line, maximizing results in terms
of product development, customer service and profitability.
The business group will incorporate the activities of power generation from natural gas and
renewables, the refining and chemicals businesses, Retail Gas&Power and mobility Marketing. The
companies Versalis (chemical products) and Eni gas e luce will also be consolidated in this business
group.
The two new business groups will maintain a strong link in the management of the hydrocarbons
value chain, with the objectives of running in the best possible way the phases of the energy
transition, and jointly developing decarbonization processes to supply green, blue and bio products.
Decarbonized, through carbon capture, gas to power and gas to hydrogen projects will be examples,
allowing to add value to gas resources and provide customers with entirely sustainable energy.
Furthermore, in terms of central structures, a new function – Technology, R&D, and Digital – will be
created. This underlines the strategic relevance that Research & Development and technological
innovation represent for Eni as a key driver to create value and growth, through the development of
new technologies and their fast implementation on an industrial scale.
By leveraging on its know-how and technologies, Eni has traced the evolution of its businesses for
the thirty years to come. Research projects cover the whole value chain, with the objective of
reducing risks, increasing efficiency, reinforcing technological leadership and promoting better
quality, products, plants and processes.
The new group will incorporate the current ICT and Digital activities, which are a key support to the
transformation of the Company’s business model, as well as the management of the technical and
scientific knowledge which the new business groups will implement.
All other central functions will be soon further streamlined and reorganized to offer the best support,
in terms of structures and competences, in delivering on Eni’s new mission and on the objectives of
the two new business groups.
The new organizational structure will be implemented over the coming weeks. Massimo Mondazzi
will keep his role as Eni’s Chief Financial Officer until August 1st, 2020.

Global Renewables Increasingly Beat Even Cheapest Coal Competitors on Cost
IRENA – UAE
Competitive power generation costs make investment in renewables highly attractive as countries
target economic recovery from COVID-19, new IRENA report finds.
Renewable power is increasingly cheaper than any new electricity capacity based on fossil fuels, a
new report by the International Renewable Energy Agency (IRENA) published today finds. Renewable
Power Generation Costs in 2019 shows that more than half of the renewable capacity added in 2019
achieved lower power costs than the cheapest new coal plants.
The report highlights that new renewable power generation projects now increasingly undercut
existing coal-fired plants. On average, new solar photovoltaic (PV) and onshore wind power cost less
than keeping many existing coal plants in operation, and auction results show this trend accelerating
– reinforcing the case to phase-out coal entirely. Next year, up to 1 200 gigawatts (GW) of existing
coal capacity could cost more to operate than the cost of new utility-scale solar PV, the report
shows.
Replacing the costliest 500 GW of coal with solar PV and onshore wind next year would cut power
system costs by up to USD 23 billion every year and reduce annual emissions by around 1.8 gigatons
(Gt) of carbon dioxide (CO2), equivalent to 5% of total global CO2 emissions in 2019. It would also
yield an investment stimulus of USD 940 billion, which is equal to around 1% of global GDP.
“We have reached an important turning point in the energy transition. The case for new and much
of the existing coal power generation, is both environmentally and economically unjustifiable,”
said Francesco La Camera, Director-General of IRENA.
“Renewable energy is increasingly the cheapest source of new electricity, offering tremendous
potential to stimulate the global economy and get people back to work. Renewable investments are
stable, cost-effective and attractive offering consistent and predictable returns while delivering
benefits to the wider economy.
“A global recovery strategy must be a green strategy,” La Camera added. “Renewables offer a way
to align short-term policy action with medium- and long-term energy and climate

goals. Renewables must be the backbone of national efforts to restart economies in the wake of
the COVID-19 outbreak. With the right policies in place, falling renewable power costs, can shift
markets and contribute greatly towards a green recovery.”
Renewable electricity costs have fallen sharply over the past decade, driven by improving
technologies, economies of scale, increasingly competitive supply chains and growing developer
experience. Since 2010, utility-scale solar PV power has shown the sharpest cost decline at 82%,
followed by concentrating solar power (CSP) at 47%, onshore wind at 39% and offshore wind at 29%.
Costs for solar and wind power technologies also continued to fall year-on-year. Electricity costs
from utility-scale solar PV fell 13% in 2019, reaching a global average of 6.8 cents (USD 0.068) per
kilowatt-hour (kWh). Onshore and offshore wind both declined about 9%, reaching USD 0.053/kWh
and USD 0.115/kWh, respectively.
Recent auctions and power purchase agreements (PPAs) show the downward trend continuing for
new projects are commissioned in 2020 and beyond. Solar PV prices based on competitive
procurement could average USD 0.039/kWh for projects commissioned in 2021, down 42%
compared to 2019 and more than one-fifth less than the cheapest fossil-fuel competitor namely
coal-fired plants. Record-low auction prices for solar PV in Abu Dhabi and Dubai (UAE), Chile,
Ethiopia, Mexico, Peru and Saudi Arabia confirm that values as low as USD 0.03/kWh are already
possible.
For the first time, IRENA’s annual report also looks at investment value in relation to falling
generation costs. The same amount of money invested in renewable power today produces more
new capacity than it would have a decade ago. In 2019, twice as much renewable power generation
capacity was commissioned than in 2010 but required only 18% more investment.

NewBase June 05-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil edges higher as traders eye producer talks on extending supply cuts
Reuters + Bloomberg + NewBase
Oil prices nudged higher on Friday as traders await cues from a meeting that could take place as
soon as this weekend where major oil producers will discuss whether to extend record production
cuts.
Brent crude futures were up 33 cents, or 0.83%, at $40.32 a barrel as of 0719 GMT, while U.S.
West Texas Intermediate (WTI) crude futures were up 23 cents, or 0.61%, to $37.64 a barrel.
Brent has risen about 14% this week, while WTI is up nearly 6%, leaving benchmarks on track for
a sixth week of gains. The surge was triggered by the output cuts amid signs of improving fuel
demand as countries begin to ease lockdowns they had imposed to prevent the spread of the new
coronavirus.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a grouping
known as OPEC+, will meet on Saturday to discuss extending output cuts, Algeria’s Ennahar TV
channel reported on Friday, citing an OPEC source.
Oil price special
coverage

Three OPEC+ sources said earlier a ministerial videoconference could be held this week, should
Iraq and others agree to boost their adherence to existing supply cuts.
Edward Moya, senior market analyst at OANDA, said oil prices are heading for a sixth weekly rise
but gains had softened as traders are taking the prospect of Iraq’s full commitment to supply cuts
“with a grain of salt”.
“There still could be a chance that they manage to stretch the cut deal to three months, but energy
traders would be extremely sceptical that compliance would remain high beyond July,” Moya
added.Saudi Arabia and Russia, two of the world’s biggest oil producers, want to extend output cuts
of 9.7 million barrels per day (bpd) into July.
The OPEC+ meeting had been expected to take place on June 4, but was delayed amid talk about
poor compliance with commitments to cut supply by some producers. “The growing fear is that not
only will a deal to extend the deep cuts not be reached, but (some) producers may even relax their
current over-compliance. This would ultimately see output rise in coming weeks,” ANZ Research
said in a note.
If OPEC+ fails to agree to roll over the current output curbs, that would mean the cut could drop
back to 7.7 million bpd from July through December as previously agreed.
Oil Set for Sixth Weekly Gain as OPEC+ Nears Cut Extension Deal
Oil was headed for a sixth weekly gain after OPEC+ reached a tentative agreement to extend
record production cuts until the end of July.
Futures in New York were steady near $37 a barrel on Friday and are up around 6% this
week. After almost a week of wrangling, Saudi Arabia and Russia clinched a deal with
holdout Iraq and the cartel could meet as soon as this weekend to ratify it, according to a
delegate. The pair were pushing Baghdad to stop shirking its share of cuts and to
compensate for past non-compliance.
In another potentially bullish driver for oil prices, analysts have been poring over U.S.
inventory numbers that don’t add up. While it’s unclear where the discrepancy lies, data
sets including stockpiles, output, imports and exports are signaling that official figures on
at least some supplies are excessive.

While oil has recovered rapidly from its plunge below zero in mid-April, the pace of the
rebound has slowed in the past couple of weeks and further gains may be more difficult
without a sustained recovery in demand and more evidence the worst of the virus is over.
A continuation of the rally could also encourage more American shale producers to bring
wells back online and lead to a fraying of the consensus within OPEC+, which might also cap
the advance.
“The world’s oil exporters, including members of the OPEC+ alliance, do not want prices
below $30 a barrel, but there’s no consensus on how much higher prices should be,” said
Victor Shum, vice president of energy consulting at IHS Markit. If Dated Brent prices move
into the $40 to $50 a barrel range there would likely be policy divergence between the
Saudis and Russia, he said.
West Texas Intermediate for July delivery rose 0.1% to $37.46 a barrel on the New York
Mercantile Exchange as of 12:06 p.m. in Singapore after climbing 0.3% on Thursday. It’s up
5.6% since May 29, on track for the longest run of weekly gains since April 2019.
Brent for August settlement added 0.4% to $40.16 a barrel on the ICE Futures Europe
exchange and has risen 6.1% so far this week. Dated Brent, used to price more than two-
thirds of the world’s oil, was at $37.71 on Thursday, according to traders monitoring prices
from S&P Global Platts.
Riyadh and Moscow, who were on opposite sides of a vicious price war until a deal in April,
are now united against countries who have consistently failed to shoulder their share of the
burden. Russia, a habitual laggard, has complied punctiliously with the most recent cuts and
wants to make sure others are too. OPEC+ will meet on June 6, according to a report by
Russia’s Tass news service that cited an unnamed source participating in the negotiations.
Meanwhile, Saudi Aramco has delayed the release of its July crude pricing until Sunday at
the earliest, according to people with knowledge of the situation, as waits for clarity on the
extension of production cuts.
OPEC+ Talks Hit Impasse as Iraq Goes Slow With Output Cuts
Talks to extend OPEC+ production cuts hit an impasse on Thursday after Iraq said it will
only be able to reach its output target at the end of July, defying an ultimatum from Saudi
Arabia and Russia to stop cheating on the deal.
While Moscow and Riyadh have already agreed they should continue record supply cuts for
an extra month -- instead of easing them in July as previously planned -- they will only do so
if all other countries implement their pledged cuts in full.
Nigeria, Angola and Kazakhstan have given sufficient assurances that their compliance will
improve, but Iraq has not, said people familiar with the matter. In a letter to fellow members,
the Oil Ministry in Baghdad asked for more time and consideration of issues, such as Kurdish
autonomy, that make it difficult to cut, the people said.

Laggards
Several of the OPEC+ countries failed to implement in full the output cuts they agreed to make in May
“Saudi Arabia is taking a zero tolerance approach to cheating, but it’s unclear how they can
get Iraq to actually comply with the deal,” said Mohammad Darwazah from consultant
Medley Global Advisors.
Several days of fruitless talks this week, in which old OPEC+ tensions have resurfaced, carry
considerable risk for oil prices. If the cartel can’t agree to modify its current deal, millions
of barrels a day of fresh supply could return next month to a market that is only tentatively
recovering from the coronavirus lockdown.
Brent crude, the international benchmark, fell 0.5% to $39.59 a barrel as of 5:21 p.m. in
London.
Painful Prospect
The 23-nation partnership between the Organization of Petroleum Exporting Countries and
other major producers has helped engineer a doubling in Brent prices since April. But if the
Iraqis don’t shape up then Riyadh and Moscow are warning they will start to phase out the
supply curbs that are putting a floor under the market.
The kingdom and the Kremlin are pushing the stragglers hard -- not just demanding they
implement the cuts already promised, but asking for deeper curbs in the coming months to
compensate for their earlier failings.

Such penance would be difficult for Iraq to accept. It made less than half of its assigned
cutbacks last month, so compensating fully would require it to slash production by a further
24% to about 3.28 million barrels a day, according to Bloomberg calculations.
For a country still rebuilding its economy following decades of war, sanctions and Islamist
insurgency, that’s a tall order. Resisting the temptation of selling crude during the current
market rebound, which has brought prices back to about $40 a barrel, may prove
impossible.
While Iraqi Finance Minister and Acting Oil Minister Ali Allawi did pledge to improve
compliance with pledged cuts in an unusual Twitter post on Tuesday, he didn’t go any
further. The government risks a backlash from parliamentarians and rival political parties
if it accedes to foreign pressure, and foregos oil sales while contending with a federal budget
gap.
The letter from Iraq’s Oil Ministry didn’t address the issue of compensation, the people said.
Phasing Out
The Organization of Petroleum Exporting Countries and its allies pledged in April to slash
oil output by 9.7 million barrels a day, or roughly 10% of global oil supplies, to offset the
unprecedented collapse in demand caused by coronavirus lockdowns.
A few weeks later, Saudi Arabia and its closest allies in the Persian Gulf promised additional
supply restraint of 1.2 million barrels a day in June.
Riyadh and Moscow are aligned on continuing cuts at the current level for an extra month
beyond July 1, according to people familiar with the matter. But if they don’t receive
assurances from Iraq by their next meeting -- currently scheduled for June 9-10 -- the
group’s daily supply curbs will ease to 7.7 million barrels for the rest of the year.
Meetings of the Joint Technical Committee and Joint Ministerial Monitoring Committee,
which oversee the deal, have been scheduled for June 17 and 18, respectively, said delegates.
Prince’s Priority
Enforcing better compliance among OPEC+ nations has been a motif since Saudi Energy
Minister Prince Abdulaziz bin Salman was appointed.

In his first public outing after becoming energy minister, in Abu Dhabi last September, the
prince was literally applauded for securing loud pledges of atonement from Iraq and
Nigeria.
But his tenure has also been stormy, and the latest move has high stakes. In March, the
prince’s attempt to force Russia to make deeper output reductions backfired spectacularly,
splintering the entire alliance and igniting a destructive price war.
Two months ago, Prince Abdulaziz achievement in successfully restoring the OPEC+
coalition and forging an agreement for historic production cuts was delayed and ultimately
overshadowed by a spat over Mexico’s contribution to the deal.
If OPEC+ can resolves the issues with Iraq, the impact on the oil market could be dramatic.
After the massive oversupply earlier this year, Russian Energy Minister Alexander Novak
predicts there could be a supply deficit of 3 million to 5 million barrels a day next month,
Interfax reported. That’s roughly in line with projections from an OPEC committee that met
on Wednesday, a delegate said.
That would provide a stronger foundation for the crude price recovery, and also allow the
cartel to start chipping away at the billion-barrel stockpile surplus that’s built up during the
coronavirus crisis.

NewBase Special Coverage
The Energy world - Special 01- June -2020
Natural Gas May Be the Next Commodity to Trade Below Zero
Bloomberg - Stephen Stapczynski
The specter of negative prices is hanging over energy markets more than a month after oil’s
unforgettable crash below zero.
While crude has staged a rapid recovery after a deal by the biggest producers to curb a
surplus, the $600 billion global gas market remains extraordinarily oversupplied. Traders
and analysts say the worst may be yet to come as demand falls and storage nears capacity,
creating the ideal conditions for negative prices in some parts of the world.
It shows just how far the global energy industry is from recovering from a pandemic-fueled
slide in demand and signals more pain for producers from the shale fields of Texas to
Australia’s Curtis Island. Unlike the oil market, there’s been no sign of a coordinated
response to address the glut, meaning the fallout could be deeper and longer.
“We are in uncharted territory with low demand levels and high storage stocks,” said Guy
Smith, head of gas trading at Swedish utility Vattenfall AB. “In the shorter term there is real
risk that conditions may be set to allow negative prices in Europe, but only in the very short
term.”
The fuel, used to generate power and heat and as a feedstock for chemicals and fertilizers,
was already slated to have a terrible year after a mild winter exacerbated a glut. But things
turned from bad to worse as the pandemic hammered demand, forcing major buyers to

reject deliveries. Meanwhile, top sellers haven’t yet throttled back enough output as
stockpiles near capacity.
Like oil’s brief plunge in April below minus-$40 a barrel, the key factor is the lack of storage
to absorb excess supply. Traders and analysts point to Europe as the first market likely to
hit that crisis point, which could have ripple effects for buyers and sellers from the U.S. to
Asia.
While the oil market has a broad, if fragile, alliance of producers to manage production and
rescue prices, led by Saudi Arabia and Russia, the gas market lacks a coordinated approach,
allowing the current oversupply to drift unchecked.
With a deep bench of buyers across utilities and trading houses and flexible infrastructure
that can both import and export cargoes, Europe has in recent years become known as the
“sink” for global gas -- balancing booming output from the U.S. with the increasingly energy-
hungry economies of Asia, led by China.
That roll may soon be challenged as inventories across Europe are at a seasonal record of
73% capacity, compared with the 5-year average of 45%, according to data compiled by Gas
Infrastructure Europe.
“European gas storage inventory is the biggest risk for global gas markets,” said Edmund
Siau, a Singapore-based analyst at energy consultant FGE, who expects the region’s storage
to hit capacity in August. “Gas prices will see increasing downward pressure and volatility
as the market gradually loses one of the tools to balance itself.”

One European market in particular has come in focus as the most likely to go negative. While
the world’s four major indexes have converged near historic lows, the U.K.’s National
Balancing Point is the weakest, with the next-day contract recently dropping to the
equivalent of about $0.99 per million British thermal units.
“If we see below-zero gas prices in Europe, we will see it in the U.K.,” said Hadrien Collineau,
senior gas analyst at Wood Mackenzie Ltd. “The market is constrained by its physical
capacity, and once storage sites are filled, prices can go below zero. The U.K. doesn’t have
much place for more gas, while we still have space in continental Europe.”
The U.K.’s storage capacity declined drastically after Centrica Plc’s Rough facility closed in
2017.
European prices would be more likely to flip negative in the prompt contracts -- such as
within-day or day-ahead rather than contracts further out -- when storage injection rates
are low and demand is weak due to mild, windy weather, according to Nick Boyes, an LNG
and gas analyst at Swiss utility and trader Axpo Group.
“I think the highest possibility of this happening is in August or early September when we
have a greatest coincidence of both lowest demand and highest storage inventories,” he said.
Natural gas is no stranger to negative prices. The U.K.’s NBP plunged below zero in 2006
after a pipeline opened for commercial imports from Norway.
That plunge was more of an operational issue from the pipeline than a market trend, and it
wasn’t in the middle of a bearish market, such as the one today, according to James
Huckstepp, manager of EMEA gas analytics at S&P Global Platts.
In the U.S., associated gas, a byproduct of shale drilling, has periodically gone negative due
mainly to increased production coming up against limited transport capacity at places such
as the Waha Hub in West Texas.

While some estimates have Europe’s storage facilities hitting capacity as soon as next
month, analysts at Morgan Stanley and Platts see it getting close but just missing it. Still,
sub-zero prices are a possibility even if hitting “tank tops” is avoided.
“It may require a short period of negative prices to make suppliers understand the gravity
of this situation -- and this is before storages are completely full,” said Jonathan Stern, senior
research fellow at the Oxford Institute of Energy Studies.
While traders and analysts surveyed by Bloomberg last month noted that there’s a
possibility sub-zero gas could emerge in Europe, most said the chances are slim as suppliers
would likely quickly respond before it gets to that point.
Indeed, there are some signs that supply is easing.
Buyers of U.S. liquefied natural gas have canceled dozens of cargoes scheduled for the
summer. Meanwhile, shipments from nations including Malaysia, Brunei and Norway
dropped last month, when global LNG export growth halted years of expansion.
But overall, according to FGE’s Siau, there hasn’t been a large enough output curb to balance
the market and stop a further price slide. Flows from top exporter Russia through its Yamal-
Europe pipeline, for instance, fluctuated at the end of May but have increased again this
month.
Qatar’s energy minister said last month that there would be something “drastically wrong”
with the market if the country stopped selling LNG because of low prices. Meanwhile, LNG
consumption this summer is forecast to drop 2.7%, the first seasonal demand contraction
since 2012, Robert Sims, a research director at Woodmac, said in a note.

“I expect lower for longer -- but we might get stuck into this bad equilibrium, too low to
make real money as a supplier but not low enough to unlock a huge tranche of demand,”
Nikos Tsafos, senior fellow at the Center for Strategic and International Studies, said by
email. “What’s the floor? Frankly we have no idea. We haven’t seen prices like these ever
before.”

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” 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
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 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 2020 K. Al Awadi

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

New base energy news 05 june 2020 issue no. 1345 senior editor eng. khaled al awadi

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base energy news 05 june 2020 issue no. 1345 senior editor eng. khaled al awadi

Similar to New base energy news 05 june 2020 issue no. 1345 senior editor eng. khaled al awadi (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base energy news 05 june 2020 issue no. 1345 senior editor eng. khaled al awadi