New base energy news 26 june 2020 issue no. 1350 by senior editor khaled alawadi

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 26 June 2020 - Issue No. 1346 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
U.A.E: ADNOC's $20bln deal marks UAE as top investment
hub, will trigger more deals
Seban Scaria, ZAWYA
ADNOC has signed a mega deal with a consortium of infrastructure investors and sovereign wealth
and pension funds to invest in select ADNOC gas pipeline assets valued at $20.7 billion. The
transaction will result in upfront proceeds of over $10bln to ADNOC
Besides highlighting the UAE as a top investment destination, the deal will significantly help an oil
industry that is languishing with low oil prices and will pave the way for similar deals in the future,
experts told Zawya.
The $20.7-billion deal is the biggest single infrastructure deal in the world this year. Sultan Al Jaber,
CEO of the ADNOC Group, said that it is the state-owned oil giant's biggest transaction since it
rolled out its value-maximisation strategy three years ago.
The deal stipulates that the consortium - Singapore’s GIC, the Ontario Teachers’ Pension Plan
Board, Italy’s Snam, Global Infrastructure Partners and Brookfield Asset Management and Korea’s
NH Investment & Securities - will collectively acquire a 49 percent stake in newly created ADNOC
Gas Pipeline Assets LLC.
www.linkedin.com/in/khaled-al-awadi-38b995b

The state-owned oil giant will lease its ownership interest in assets to the new company for 20 years
in return for a volume-based tariff subject to a floor and cap. The deal is expected to reinforce
amongst investors the business-friendly nature of the UAE and its reputation as a top destination
for best-in-class capital and enterprises.
Top oil and gas companies worldwide are clamping on capex and reducing workforces since oil
prices have plunged to record levels.
"The deal is such a huge achievement given the current global and regional economic condition as
it shows that oil companies in the region are very attractive for foreign investors. The deal reflects
UAE's rich track record and credibility as a highly trusted investment destination," Al Jaber said.
The UAE is ranked 19th on the 2020 Kearney Foreign Direct Investment (FDI) Confidence Index
thanks to its overall strong business environment and the economic stability in the emirates. It is the
only country from the MENA region to feature in the first 25 ranks.
With significant oil assets present, the opportunities for investors could be tremendous, according
to global data provider Refinitiv.
"The deal would increase the interest amongst investors looking for taking a stake in cash
generating assets. Especially at a time of considerable volatility in equities and most other asset
classes, large pension funds could look at similar assets that could generate a steady dividend
income," Sudarshan Sarathy, Senior Analyst, MENA Oil Research, Refinitiv told Zawya.
According to Al Jaber, the deal would allow ADNOC to reinvest responsibly and finance activities
that produce higher returns. “We will continue to develop and explore additional investment
opportunities across our value chain that provide an attractive risk-return profile to high quality, long-
term investors,” he had told CNBC.
"While investors would hesitate putting money in oil and gas assets in risky areas, the UAE and the
region largely holds majority of the world’s oil and gas reserves and production. The cost to produce
and market the resources are one of the lowest in the world. This makes the national oil companies
(NOCs) in the region one of the most competitive companies in the sector," said Sarathy.

The IPO of Saudi Aramco brought in record interest and showed that businesses in the region that
could offer a steady dividend to the investors with relatively low risk would be in significant demand.
"There have been several MOUs signed and partnerships being explored to increase the
petrochemical presence of the NOCs to create further value by going down the value chain. This
could also be of interest to investors as the low-cost feedstock could help the region become a
global petrochemicals hub," he added.
According to Fitch, the gas pipeline transaction should be viewed in the context of other deals
ADNOC has recently entered into – the company is pursuing a strategy of bringing in minority
partners to its operating companies to attract funding and improve access to overseas markets or
share know-how.
This is illustrated by Eni and OMV together acquiring a 35 percent stake in ADNOC Refining for
$5.7 billion in July 2019 and a merger of ADNOC's fertiliser business with OCI's MENA assets in a
joint venture.
Also, in 2019 ADNOC sold a 49 percent stake in ADNOC Oil Pipelines to BlackRock, KKR, GIC,
and Abu Dhabi Retirement Pensions & Benefits Fund for around $5 billion.
"Attracting funding through equity-like
transaction means the company keeps
debt under control, which is in line with
ADNOC’s conservative funding strategy.
It also means that ADNOC would
potentially have more financial resources
available to invest into growth projects to
enhance its oil production capacity and
increase natural gas production," Dmitry
Marinchenko, senior director at Fitch
Ratings told Zawya.
Paving the way for more deals
This is the second successful deal of this type for ADNOC, which suggests that other companies in
the region could potentially follow the suit. "We do not rule out that such deals could become more
widespread,” Marinchenko said.
According to Refinitiv, the region could see more such deals subject to economic recovery and
prices of oil remaining stable. That would help maintain the conducive environment for capital to
flow and deals to take place.
"The enormous scope of the petroleum and downstream sector in the region is definitely of interest
for global players who have been waiting for long to become shareholders in the growth of the sector
and the region," said Sarathy.
"Also, the diminishing interest in the oil space is more and more pivoted into the natural gas,
renewables and assets that are capable of returning a steady source of revenue. Hence, when it
comes to institutional investors, there is a higher chance of them to focus on asset-oriented
industries with a stable cash flow than being directly invested in the upstream oil space," he added.
Disclaimer: This article is provided for informational purposes only. The content does not provide
tax, legal or investment advice or opinion regarding the suitability, value or profitability of any
particular security, portfolio or investment strategy. Read our full disclaimer policy here.

Oman’s OQ sets up Alternative Energy business stream
Oman Observer - Conrad Prabhu
OQ (formerly Oman Oil and Orpic Group) – the Sultanate’s integrated energy and petrochemicals
powerhouse – has announced the formal establishment of a new business stream focused on
investments in renewable and alternative energy resources.
Dubbed ‘Alternative Energy’, it adds to a substantial portfolio of business lines encompassing,
among others, the Upstream, Downstream, Commercial, Duqm Refinery and Petrochemicals
Cluster, and Projects segments of the integrated group.
“The establishment of the Alternative Energy (AE) function, as one of our business lines, will enable
us to move towards a new future and allow us to become a more diversified company, contributing
to the nation’s development along the way,” said the wholly Omani government-
owned group in a post on Tuesday.
Outlining OQ’s vision for this new business segment, the Group said: “Alternative
Energy has been one of OQ’s strategic priorities and is key to achieving our 2030
aspiration of an ‘integrated energy company delivering sustainability and business
excellence, the Omani way’. We are pleased to announce OQ’s Alternative
Energy (AE) strategy and the establishment of AE as a new business line,
alongside Upstream and Downstream.”
OQ also announced the appointment of Ayad al Balushi (pictured) as head of the new business
line. As Chief Executive for Alternative Energy, “Ayad will be leading this promising and
captivating new energy sector which will make us more diversiﬁed, and resilient during downturns”,
OQ further stated.
Following its rebranding and revamp last December into an integrated energy conglomerate, OQ
had revealed that the Group’s Board had green-lighted a strategy for investments in renewables,
including solar and wind, among other related initiatives.
A fund has been instituted to invest in renewable energy and technology in general, a top official
said, noting that energy efficiency would also be a key area of focus for the Group. With the addition
of renewables and alternative energy resources to its substantial business portfolio, OQ is set to
position itself as an end-to-end, integrated energy giant, encompassing not only hydrocarbon-based
fuels but potentially low-carbon fuels, such as hydrogen.

Heavy project cargo delivered to Duqm Refinery site
Mammoet, a global leader in engineered heavy lifting recently completed the delivery of two key packages of
heavy project cargo to the site of the multibillion-dollar Duqm Refinery complex at the Special Economic Zone
(SEZ) in Duqm.
The first contract came from a local manufacturer, comprising the inland and sea transport of nine LPG storage
tanks (bullets) for EPC-2 Offsite and Utilities scope of the project. The second contract was awarded by Agility
Global Logistics and involved receiving and transport of various reactors.
Each 780-ton bullet fabricated at a local fabrication facility in Suhar, measured 72m long, 11m high and 8m wide,
was loaded-out by 44 axle lines of self-propelled modular trailers (SPMT) onto a barge provided by Mammoet in
Suhar, bound for the Port of Duqm. Precision positioning of the RoRo ramps, an accurate ballasting plan, expert
mooring and sea fastening ensured successful load-outs.
On arrival at the Port of Duqm, the bullets were safely loaded-in, staged in the port’s laydown area and transported
25km to the project site. Once at the refinery, the bullets were successfully positioned onto their foundations by
1,600-ton and 1,250-ton capacity crawler cranes working in tandem. By managing the complete logistics chain
from the fabrication yard to the Duqm refinery, Mammoet was able to ensure timely and safe delivery of the
bullets.
The Agility contract was an essential component of the Tecnicas Reunidas’ Process Unit scope of the project. This
included handling a 1,130-ton reactor measuring 33m long, 8.7m wide and 7.3m high, which was the heaviest
cargo ever loaded-in at the Port of Duqm. All the reactors Agility handled have been received successfully and
safely delivered to the project site using 54 axle lines of SPMT.
Additionally, as part of the scope of work, ten hydraulic cranes and three crawler cranes have been engaged at
Duqm refinery to support other subcontractors on site.

Libya:Revival of War-Torn Oil Industry to Be Slow and Costly
Bloomberg - Salma El Wardany + NewBase
Libya’s oil industry is crumbling after more than nine years of neglected maintenance amid
a civil war that’s killed thousands and destroyed towns across the country.
The lack of basic, nuts-and-bolts servicing has left pipelines corroding and storage tanks
collapsing. Remedial work at wells alone could cost more than $100 million, the head of the
state-run National Oil Corp. told Bloomberg, and that’s money the government can ill afford.
The damage means that Libya, despite having Africa’s largest crude reserves, will struggle
to ramp up production quickly even if the conflict abates soon. Fighters are poised now for
what could be a decisive battle at Sirte, a city just a two-hour drive from the so-called oil
crescent -- a cluster of export terminals for most of the nation’s crude.
Libya produces about 90,000 barrels a day. That’s a fraction of the 1.6 million that
companies such as Eni SpA and Repsol SA pumped in partnership with the NOC before the
ouster of strongman Moammar Al Qaddafi in 2011 and the catastrophic war that followed.
Until now, the NOC has usually succeeded in restoring operations quickly after regaining
control of oil facilities shut due to fighting. That resilience, however, is fraying.
“The longer we wait, the greater the damage and the higher the cost,” NOC Chairman
Mustafa Sanalla said in a written response to questions. “It is a tragedy for the people of
Libya that political game-playing has been allowed to cause such damage to our country’s
critical national infrastructure.”
Libya’s Oil and Gas Network
OPEC nation has Africa’s biggest crude reserves
Source: U.S. Energy Information Administration

The political turmoil has left Libya divided between a United Nations-recognized
government in the capital Tripoli, where the NOC has its headquarters, and a competing
administration based in the east. S
ince January, when supporters of the eastern-based commander Khalifa Haftar shut most of
the country’s oil fields and ports, daily output has plunged by more than a million barrels.
The Tripoli government of Fayez al-Sarraj, backed by Turkey, appears to have the upper
hand on the battlefield. Its troops repulsed Haftar’s western offensive and have advanced as
far as Sirte, on the central coast, which the rebels still control.
When Haftar, who has support from Russia and Egypt, called a cease-fire this month, the
government rejected it, saying it would first capture Sirte and an air base called Jufra.
Armed groups forced Libya’s biggest oil field of Sharara to stop production twice this
month, and they also closed the nearby El-Feel deposit. Both the southwestern fields had
only just re-opened after halting in January.
The NOC’s lack of access to Sharara prevented workers from injecting chemicals into a
pipeline to stop corrosion. A 16,000-barrel tank that handles overflows, or surges, collapsed
last month as a result, Sanalla said.
“We are deeply concerned about corrosion in the pipelines,” he said. “Due to the disruption
of exports, crude oil has stayed in the pipelines, which has environmental and other
implications that will not be easy to address.”
Eighty Leaks
Harouge Oil Operations, a joint venture between the NOC and Canada’s Suncor Energy Inc.,
blames corrosion for at least 80 leaks at its facilities from January to May, Sanalla said.
Harouge exports crude from Libya’s third-largest oil port at Ras Lanuf.
“Throughout the last nine years, Libyan production has been able to rebound,” said
Mohammad Darwazah, an analyst at consultant Medley Global Advisors. “But many fields
require urgent maintenance, and damage sustained to storage depots at the eastern
terminals has not been fully repaired, limiting how quickly fields can ramp up.”
Prolonged shutdowns have reduced the pressure that wells need to spout oil. On earlier
occasions when Sharara re-opened, it took just a few days to restore production to around
300,000 barrels a day. This time, the field will need around three months to recover,
according to the NOC.
How to pay for the repairs is an open question; the NOC said Sunday that blockades of fields
and ports by Haftar’s supporters have deprived Libya of $6 billion in potential oil revenue
since January.
“Sustained under-funding of the state operator and multiyear delays to field and asset
maintenance will make the challenge of a resumption greater this time around,” said Bill
Farren-Price, a director at consultant RS Energy Group Canada Inc.

Any increase in Libyan supply could jar efforts by the OPEC+ coalition to limit global
production. The Organization of Petroleum Exporting Countries and allies such as Russia
are seeking to rebalance crude markets and prop up prices after they crashed with the
spread of the coronavirus early in the year. Brent crude has more than doubled since late
April, but at around $40 a barrel it’s still down 38% this year.
Libya, an OPEC member, is exempt from the output cuts because of its strife.
For energy analysts and traders, the rot in Libya’s oil facilities makes it that much tougher
to predict when production will pick up.
“Even if a peace deal is reached, its durability and impact on oil production remain
uncertain,” analysts at Citigroup Inc., including Francesco Martoccia, said in a note this
month. “The NOC is also confronting a steep natural decline rate of roughly 8% per year,
which requires capital expenditures to at least marginally offset it.”

Egypt: United Oil and Gas announces Abu Sennan reserves
upgrade and production update … Source: UnitedOil & Gas
United Oil & Gas has provided an update on the Abu Sennan concession in Egypt in which UOG
holds a 22% working interest.
This includes a production update covering the first half of June and the results of an Independent
Reserves Report which estimates gross 2P reserves at Abu Sennan increased to 13.5 MMboe from
12 MMboe over the course of 2019 following drilling success.
Highlights
 13,900 boepd gross (3,060 boepd net working interest) average production from the Abu
Sennan concession for the first half of June - a 69% increase compared to average April
production (1,810 boepd net)
 Total production during that period has benefited from the ongoing testing of the El
Salmiya-5 Well, with c. 4,000 bopd and in excess of 16 MMscf/d (7,200 boepd)
contribution from the El Salmiya Field
 Independent reserves report by Gaffney Cline & Associates ("Independent Reserves
Report") from the end of 2019 indicates an increase in reserves and contingent resources
at Abu Sennan:

o 12.5% increase in Abu Sennan Gross 2P Reserves to 13.5 MMboe (15% gas)
compared to 12 MMboe at the beginning of 2019, representing a 190% reserves
replacement ratio
o Gross 1P reserves up by 76% to 4.2 MMboe and gross 3P reserves up by 46% to
28.6 MMboe (from 2.4 MMboe and 19.6 MMboe respectively at the beginning of
2019)
o Gross 2C contingent resource add of 0.73 MMboe
o Reserves upgrade does not include the recent drilling success at the El Salmiya-5
Well
 The Company will hold an investor call at 11:00am on Thursday 25 June 2020, the details
of which are provided below
Production
Production from the Abu Sennan concession has continued to outperform the Company's pre-
completion expectations, with production from the first half of June averaging 13,900 boepd gross
(3,060 boepd net). This has been underpinned by strong production from the El Salmiya-5 well-
testing (c. 4,000 bopd and over 16 MMscf/d gross (c. 7,200 boepd) from the El Salmiya Field since
the beginning of June), and continuing consistent production from the ASH-2 well, which was
successfully drilled and brought online in January 2020.
Although it is still early days on the El Salmiya-5 well, and United expect the well to be choked back
in order to optimise ultimate recovery, the results to date have clearly demonstrated the capacity of
the well to deliver high production rates. Production at Abu Sennan continues to benefit from low
operating costs of c. $6.50/bbl.
Reserves
The results of an Independent Reserves Report that was completed on the Abu Sennan concession
at the end of 2019 by Gaffney, Cline & Associates, using PRMS definitions for Reserves and
Resources, has now become available to United. The results are summarised in Table 1, below.
The report indicates that gross 2P reserves have increased to 13.5 MMboe (15% gas) compared to
12 MMboe at the end of 2018.
This is an annual increase of 12.5%, and given that nearly 1.7 MMboe was produced from the Abu
Sennan assets during 2018, indicates a reserves replacement ratio for 2019 of 190%. Gross 1P
and 3P reserves have also increased, with 1P reserves up by 76% to 4.2 MMboe and 3P reserves
up by 46% to 28.6 MMboe (from 2.4 MMboe and 19.6 MMboe respectively at the beginning of
2019).
Applying United's 22% working interest to the gross 2P reserves at the end of 2019 gives 2.97
MMboe, up from 2.64 MMboe at the end of 2018.
It is worth noting that although the Independent Reserves Report included an uplift for the results of
the ASH-2 well and the Al Jahraa gas that was brought onstream in March 2020, it was completed
prior to the results of the El Salmiya-5 well.
Similarly, as the report also predates the approval of the plans to bring the gas from the ASH field
onstream, this gas is only included as contingent resources, with 2C estimates of 0.73 MMboe
gross. These two developments would almost certainly have a further positive uplift on reserves.

Table 1. Reconciliation of Abu Sennan Reserves as at 31st December 2019 with Reserves as at
31st December 2018
Notes:
1. Revisions are due to production performance in 2019, the results of wells drilled in 2019, and
the maturation of the gas development for Al Jahraa; exploration adds include the AS-Z
discovery and the AR-E, AR-G, Upper Bahariya and Lower Bahariya II pools discovered by
Al Jahraa-7
2. 2019 production is estimated based on actual production to end October 2019
3. Totals may not exactly equal the sum of the individual entries due to rounding
4. United holds a 22% net working interest in the Abu Sennan concession
Jonathan Leather, COO, United Oil & Gas:
'It is really pleasing to see the Abu Sennan assets
continuing to perform so strongly and the potential
that we recognised in the assets being realised.
Much as we expect the production at the El
Salmiya-5 well to be choked back from the current
levels, it is fair to say that net production of over
3,000 boepd at this stage has surpassed even our
own high expectations for the Licence.
'We remain highly confident that the Licence has
more to offer. Further development at the ASH
field is expected to deliver additional gas before the end of the year, further enhancing production
and cashflow. We also see substantial exploration opportunity on the licence and are working
towards optimising targets for further exploration drilling in due course.
'This independent review of reserves should send a clear message about the strength of the
Company's Egyptian assets and, together with our booked reserves at the Selva field in Italy, serves
to highlight the considerable asset value behind United - a notable discrepancy when compared to
our current market capitalisation. We look forward to working with our partners to maximise the
value of those reserves for our shareholders.'

India:Trailing Oil Demand Shows Economy Not Fully Recovered
Bloomberg - Debjit Chakraborty
The world’s biggest lockdown may have eased in India, but the country’s oil refineries are finding it
tough going to pull off a complete recovery as fuel demand remains below pre-virus levels and
stockpiles swell.
Operations across 23 refineries nationwide were at 77% of capacity in May, according to oil ministry
data. While that was an improvement from a low of 72% in April, when stay-at-home
orders decimated fuel demand and filled storage tanks to the brim, it was still well down on the 102%
recorded a year earlier. The amount of crude processed, also known as refinery throughput, was
almost 25% lower year-on-year last month.
Catching Up
India's refineries are processing more but still way below year ago levels
Source: India's oil ministry
Across India, restrictions on everything from the movement of people to business operations put in
place on March 25 pummeled demand for transportation and industrial fuels, placing Asia’s third-
largest economy on course for its first annual contraction in more than four decades this year.
Now, despite the reopening of factories and the resumption of domestic flights, fuel inventories built
up during the more than 10-week lockdown remain stubbornly high.
“We still have that 90% to 95% storage capacity occupied and we have to tone that down slowly,”
said R. Ramachandran, director of refineries at Bharat Petroleum Corp. “We will be calibrating our
refinery runs to be consistent with the demand and try to deplete the products in tanks to avoid
unnecessary inventory carrying cost.”

Since India started reopening, demand has improved dramatically as cars and trucks took to the
roads and people returned to their offices. Still, a complete recovery could still be months away as
Covid-19 infections continue to rise in the world’s second-most populous country. Lasting changes
due to the virus -- such as a drop in international travel -- will make it tough to quickly get all the way
back to pre-virus levels of fuel consumption.
Globally, oil consumption across leading economies has struggled to fully rebound or expand from
year-ago levels due to more permanent lifestyle changes as a result of Covid-19.
India’s gasoline consumption is now almost 86% and diesel about 90% of June 2019 level. said
Sanjiv Singh, chairman of state-owned Indian Oil Corp. The country’s oil demand isn’t expected to
get close to a full recovery until the end of 2020, and it will take two years to return to a normal
growth trajectory.
While the rebound in fuel demand has been notable, going “beyond 90% recovery may take longer
than what we have taken so far,” said Singh.
IOC, the country’s biggest refiner, boosted run rates to almost 73% in May from about 53% in April.
Its refineries may need another month before reaching a close to 100% utilization rate, by end of
July, said S.M. Vaidya, director of refineries.
Meanwhile, run rates at Reliance Industries Ltd. in May were at its lowest level since July 2019
when the private refiner shut some units for maintenance. Operations at state-owned Bharat
Petroleum also declined last month.
In the first two weeks of June, overall Indian demand for fuels, including jet fuel, hovered at 80%-
85% of year-ago levels.
“Despite the easing of restrictions, India’s total oil products demand may be lower by an average of
500,000 barrels a day in June-July versus a year ago,” said Senthil Kumaran, oil markets consultant
at Facts Global Energy. State-owned refiners have been closely referencing the domestic fuel
demand situation when making decisions on run rates, while private processors grapple with lower
consumption both locally and abroad, he added.

NewBase June 26-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Prices Advance on Growing Fuel Demand, Even as U.S.
Coronavirus Cases Jump …. By Reuters + NewBase
Oil prices rose on Friday, extending gains on optimism about a recovery in fuel demand worldwide,
despite a surge in coronavirus infections in some U.S. states and signs of a revival in U.S. crude
production.
Brent crude <LCOc1> futures rose 32 cents, or 0.8%, to $41.37 and were also heading for a small
decline for the week. U.S. West Texas Intermediate (WTI) crude <CLc1> futures gained 25 cents,
or 0.7%, to $38.97 at 0643 GMT but were on track for a slight drop for the week.
Overall, commodities markets were taking a positive view on the global recovery on Friday despite
worries about coronavirus flare-ups, said Avtar Sandu, senior manager commodities at Phillip
Futures in Singapore.
Oil price special
coverage

"Optimism about recovering fuel demand worldwide has been supportive of prices despite an
increase in total coronavirus infections worldwide and amid signs that U.S. crude production from
shale would grow," he said.
Analysts said satellite data showing a strong pick-up in traffic in China, Europe and across the
United States pointed to an improvement in fuel demand.
Congestion in Shanghai in the past few weeks was higher than in the same period last year, while
in Moscow traffic was back to last year's levels, data provided to Reuters by location technology
company TomTom showed.
However, there are fears a spike in COVID-19 infections in southern U.S. states could stall the
demand recovery, especially as some of those states, such as Florida and Texas, are among the
biggest gasoline consumers.
The global economic outlook has also worsened or at best stayed about the same in the past month,
a majority of economists polled by Reuters said, and the recession underway is expected to be
deeper than earlier predicted.
"It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,"
said Michael McCarthy, chief market strategist at CMC Markets.
The prospect of increased U.S. crude production also kept a lid on gains on Friday.
A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve
Bank found more than half of executives who cut production expect to resume some output by the
end of July.
WTI would have to be between $36 and $41 a barrel for a majority of producers to restore output,
nearly a third said in the survey. Another 27% said prices would have to range between $41 and
$45 per barrel.

NewBase Special Coverage
The Energy world - Special 01- June -2020
Demand for battery raw materials to increase amid shift to
electric vehicles
Wood MackenzieContributor + The National - Jennifer Gnana + NewBase + Bloomberg
Global demand for raw materials used in electric car batteries is poised to increase as electric
vehicle use is set to surge, according to the United Nations. Global electric vehicles could account
for 7% of all passenger car sales by 2025, according to UNCTAD
Electric vehicle production is expected to reach 23 million units by 2030, up from 5.1 million in 2018,
fuelling demand for battery production. Growing concerns over climate change and increasing
efforts to lower greenhouse gas emissions have also contributed to an uptick in demand for electric
batteries.
“Alternative sources of energy such as electric batteries will become even more important as
investors grow more wary of the future of the oil industry,” said Pamela Coke-Hamilton, director of
international trade at the United Nations Conference on Trade and Development.
The demand for cobalt, lithium and nickel –key metals used to produce electric batteries – has been
growing at a rapid pace, prompting concerns of a supply crunch by the mid-2020s, according to
consultancy Wood Mackenzie.
Meanwhile, electric vehicle sales, including hybrids, rose 24 per cent in 2019, the consultancy said.
It forecast that global electric vehicles could account for 7 per cent of all passenger car sales by
2025, reaching 14 per cent in 2030 and taking a 38 per cent share in 2040.

The market for lithium – the most commonly-used material in rechargeable car batteries – was
estimated at $7 billion (Dh25.7bn) in 2018 and is expected to reach $58.8bn in 2024, UNCTAD said
in its latest report.
The UN agency also warned of possible supply disruptions to car batteries supply as resources are
concentrated in a few countries that are particularly susceptible to political instability.
Nearly 50 per cent of the world’s cobalt reserves are located in the Democratic Republic of Congo,
while 58 per cent of lithium reserves are in Chile. Around 80 per cent of natural graphite reserves
are in China, Brazil and Turkey, while manganese ores are concentrated in Australia, Brazil, South
Africa and Ukraine.
"The highly concentrated production, susceptible to disruption by political instability and adverse
environmental impacts, raises concerns about the security of the supply of the raw materials to
battery manufacturers,” UNCTAD said.
The UN agency called for more investment in green technologies that are less reliant on critical raw
materials, that could help reduce consumers' exposure to supply shortfalls.
“Tighter markets, higher prices and increased costs of car batteries” could affect the global transition
to low-carbon electric mobility, the agency said.
Can Metals Supply Keep Up With Electric Vehicle Demand?
Battery raw materials could face a supply crunch by the mid-2020s. In every electric vehicle
(EV) battery, there’s a complex chemistry of metals – cobalt, lithium, nickel and more.
The electrification of transport is transforming the demand and supply of those battery raw
materials. In fact, we expect to see double-digit growth for battery raw materials over the next
decade. And our latest research suggests they could face a supply crunch by the mid-2020s,
increasing the pressure on the raw material supply chain.

What does the long-term outlook for battery raw materials mean for electric vehicle penetration,
the metals supply chain and those who invest in it?
What’s driving demand?
 Total passenger electric vehicle (EV) car sales, including hybrid electric vehicles (HEV), were
up by over 24% last year
 Global electric car sales (with a plug) will account for 7% of all passenger car sales by 2025,
14% by 2030 and 38% by 2040
 Battery pack sizes continue to trend larger through the medium term
 NMC 811 cells are being produced on a greater scale resulting in increased nickel demand
at the expense of cobalt and lithium
 Most automotive manufacturers plan to go completely electric by 2050
Retreat in lithium prices underway
Spot prices for lithium carbonate have fallen by just under US$7,000/t since June 2018.
We are seeing the same weakness in the realised prices of the majors and their expectations for
H1 2019. And this is in an environment where the major brine producers in South America have
failed to ramp up capacity. Clearly, the first responders to the lithium boom – Australian hard rock
mines – have the capability to quickly deliver the required tonnages. Meanwhile, the bottleneck in

Chinese conversion capacity that was supporting prices is giving way as China emerges as a net
exporter of lithium chemicals to the region.
It has only taken a few years for the battery sector to become the largest demand driver for lithium.
Lithium’s use in every lithium-ion battery type means it will have double-digit annual growth, making
up over 80% of total lithium demand by 2030.
Cobalt prices have plummeted this year
Like lithium, cobalt prices have softened over H1 2019. The low prices may defer some mine
projects and are likely to see reduced artisanal output from the DRC. However, the industry must
still contend with an oversupply of intermediates until 2024.
And the existence of swing supply in China is likely to keep a lid on any major price upside. Although
cobalt looks challenging in the long-term, the adoption of high-nickel batteries in EVs means the
emerging deficits look more achievable than previously expected.
Indonesia key for nickel
Although the battery sector share of nickel demand is much smaller than other metals, getting the
quantity of nickel that EVs will need by the mid-2020s will be a challenge. A low nickel price has
hindered any project development and with lead times often up to 10 years, investment needs to
happen now.
While high-nickel ternary batteries will mean higher corresponding demand for nickel, like cobalt,
our long-term deficits are becoming more feasible. Much of this is due to growing capacity in
Indonesia, to serve both the stainless steel sector and emerging battery demand.
Business as usual for graphite
For graphite, there is little change in fundamentals. While the scale of demand is huge, we don’t
expect any supply-side challenges in terms of natural graphite flake due to the growing supply out

of East Africa. Synthetic graphite presents more of a challenge, given potential disruption to needle
coke feedstock as a result of the new IMO 2020 regulations and growth in China’s steel sector.
Manganese central to NMC batteries
The manganese industry is overwhelmingly driven by the steel sector, something unlikely to change
no matter how many EVs are on the road. While a steady supply of manganese sulphate will be
crucial for NMC battery producers, we do not foresee any supply-side issues in this space.
What does this mean for investors in battery raw materials?
Despite strong growth in demand on the horizon, there’s not yet much for investors to get excited
about. Meeting demand is not a challenge for key metals at present. In many cases supply is
chasing demand. Increase electric vehicle penetration to 10% and above, and it is a different matter
altogether. Are the current falling prices and weak sentiment setting the world up for a crunch down
the road?
Unless battery technology can be developed, tested, commercialised, manufactured and integrated
into EVs and their supply chains faster than ever before, it will be impossible for many EV targets
and ICE (internal combustion engine) bans to be achieved – posing issues for current EV adoption
rate projections.

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 26 june 2020 issue no. 1350 by senior editor khaled alawadi

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base energy news 26 june 2020 issue no. 1350 by senior editor khaled alawadi

Similar to New base energy news 26 june 2020 issue no. 1350 by senior editor khaled alawadi (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base energy news 26 june 2020 issue no. 1350 by senior editor khaled alawadi