New base energy news december 04 2018 no-1216 by khaled al awadi

Copyright © 2018 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 Energy News 04 December 2018 - Issue No. 1216 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Saudi Acwa signs partnership deal for giant renewable energy project
ACWA + Trade Arabia + NewBase
Acwa Power, a leading developer, owner, and operator of power generation and water desalination
plants based in Saudi Arabia, said it has joined hands with three international groups - Spanish
company Abengoa and Chinese firms Industrial and Commercial Bank of China Limited (ICBC),
Shanghai Electric Group Company (SEGC) - to set up the world's largest renewable energy project
in Dubai, UAE.
As per the deal, Acwa Power is lead developer on the project, while ICBC has established its role
as an international lender for Noor Energy 1.
Earlier this year the Saudi-based firm had signed an engineering, procurement and construction
(EPC) agreement with SEGC, while Abengoa was roped in as one of the main technology providers
and key subcontractors for the plant.
The deal for the 950 MW Noor Energy 1 Plant in Dubai was signed by Paddy Padmanathan, the
president and chief executive of ACWA Power; Yi Huiman, the chairman of ICBC; Huang Ou, the
chief executive of SEGC and Gonzalo Urquijo, the executive chairman of Abengoa at the Official
Residence of the President of Government of Spain in the presence of Chinese President Xi Jinping,
during his official visit to Spain, and the Spanish Prime Minister Pedro Sánchez.
On the new partnership, Padmanathan said: "The coming together of the four enterprises who are
leaders in our own respective fields: Acwa Power - a leader in development and operation of power
plants, Abengoa - concentrated solar power technology provider, Shanghai Electric, EPC Contractor
and ICBC Project finance MLA; from three countries, Spain, China and Saudi Arabia to deliver this
iconic energy plant."
"On completion, it will deliver electricity day and night generated entirely by solar energy at a
competitive cost in yet another country such as the UAE is the proof of the immense value that can
be created by collaboration than isolation very much reflecting the spirit of the belt and road strategy
that is being implemented by China under President Xi’s leadership," stated the top official.

Padmanathan said Acwa was proud to be the catalysts for this collaboration on a global scale in
this instance focused at accelerating the decarbonisation of power generation by enabling the
reliable delivery of solar power day and night and looked forward to working with these entities within
the framework of the agreement to identify and execute meaningful market opportunities that would
allow the group to continue to reliably deliver electricity and desalinated water at the lowest cost.
The Dewa IV IPP project, which was awarded to a consortium led by Acwa Power last year, is the
fourth phase of the Mohammed bin Rashid Solar Park, the largest single-site concentrated solar
power plant in the world.
The project, initially expected to deliver 700 MW of energy, will use a state-of-the-art combination
of the world’s tallest 260-m-high solar tower that will generate 100MW, three stations of parabolic
trough concentrated solar power (CSP) each producing 200MW, and 250MW generated from
photovoltaic panels to yield a total capacity output of 950MW.
The project is expected to deliver electricity at a levelised tariff of $7.323 cents per kilowatt-hour 24
hours a day; a cost level that competes with fossil fuel generated electricity without subsidy for
reliable and dispatchable solar energy round-the-clock, said Acwa Power in its statement.
The plant will support the Dubai Clean Energy strategy 2050 to increase the share of clean energy
in Dubai to 25 per cent by 2030 and is expected to provide an annual saving of 2.4 million tonne of
CO2, it added.-

Oman:Eni Deep-water exploration is ‘high risk-high reward’
Oman Observer
Oman’s offshore basin represents a new frontier fraught with significant exploration challenges but
with promising upside potential as well, according to a high-level executive of Italian energy super-
major Eni.
Fabrizio Bolondi (pictured), Vice-President — Middle East Region, voiced optimism about the
hydrocarbon potential of the Sultanate’s deep-water basin, particularly off the
Sultanate’s southern seaboard where Eni is the operator of the sprawling Block
52 offshore concession.
“We believe the Middle East has proven basins; there is good exploration
potential,” said Bolondi. “We believe Oman will be a pillar for the company’s
expansion in the Middle East,” he added in a presentation at the OPAL Oil & Gas
Conference, which began at the Oman Convention and Exhibition Centre on
Sunday.
Eni’s local subsidiary Eni Oman BV is the operator of Block 52 — a massive 90,790 sq kilometre
concession — with a 55 per cent stake. Qatar Petroleum holds a 30 per cent interest, while Oman
Oil Company Exploration & Production (OOCEP) — the upstream investment arm of Oman Oil
Company — owns the balance per cent.

Launching his presentation with the query, ‘Is There A Future for Deep-water Exploration in Oman?’
Bolondi responded in the affirmative: “The answer is positive, because Eni wouldn’t have come all
the way to Oman to say there are no opportunities there.”
But despite the huge financial and technological challenges in unlocking the hydrocarbon potential
of deep-water opportunities, companies still pursue deep-water exploration, because it pays, he
said.
“Since 2015, around 75 per cent of new discoveries coming from conventional exploration are from
offshore areas, with half of this coming from deep-water basins,” said the executive. “In 2018, more
than 70 per cent of volume discovered in the first half of the year has come from deep-water
exploration.
In comparison, more than 50 per cent of all wells were drilled onshore, but only 17 per cent of the
wells yielded any resources. So the rewards are (comparatively) small onshore.”
At the same time, offshore drilling in deep-water is falling, said Bolondi. When high oil prices
prevailed, the cost of hiring a drilling ship averaged about $500,000 per day (without services).
The average price today is about $200,000 per day, he noted. He said Block 52’s water depths
range from 10 metres near the coast to 3,000 metres at the deep end. The average depth is about
500 metres.
Three wells drilled by previous operators on the shelf have yielded “good results” in terms of
hydrocarbon shows. “We cannot consider this as a commercial discovery, but there is a petroleum
system which is working — an encouraging result even if not proven yet!”
However, little is known in deeper waters of Block 52, however. A solitary well named SQB1 in
deep-water has yielded evidence of a hydrocarbon system. “What we don’t know what is contained
in the deep-water sector, but we believe there is potential.
We are carrying out a full block evaluation with
seismic, which is key to understanding what it
contains,” Bolondi stated, adding that a tertiary
target identified in deep-water is also being
studied by the company.
To uncover the potential of Block 52, Eni is
leveraging its formidable expertise as well as
proprietary drilling and exploration technologies
in unlocking the potential of the concession,
said Bolondi. In this regard, he also welcomed
the “attractive terms” offered by the Omani
government that enabled Eni’s foray into the Sultanate’s offshore sector.
“Exploration in deep-water Oman is a high risk-high reward challenge,” he said, noting that
international oil companies may find it attractive to take up such risky challenges if they are aligned
with the company’s portfolio and strategy.

Oman PDO exploring solar-to-hydrogen opportunities
Oman Observer - Conrad Prabhu
Majority government-owned Petroleum Development Oman (PDO), the largest producer of oil and
gas in the Sultanate, is weighing opportunities in solar-to-hydrogen conversion — part of an array
of options it is keenly exploring in line with its pursuit of renewable energy resources, as well as
carbon mitigation technologies.
Also known as solar-hydrogen, the process involves the use of electricity generated by solar
photovoltaic panels to power an electrolyser, a device that splits water (H2O) into its elemental
components hydrogen (H2) and oxygen (O2).
While the oxygen is released into the air, the hydrogen is pumped into storage tanks or diverted for
use in a wide number of petrochemical, industrial and refining applications. Hydrogen can be used
in fuel cells. According to PDO Managing Director Raoul Restucci (pictured), solar-to-hydrogen
conversion has promising potential both in the upstream and downstream segments of the Oil &
Gas business.
“There are a number of opportunities in the petrochemical space, in the downstream space, in the Enhanced
Oil Recovery (EOR) space that we are looking into — how do we take the opportunity to deliver hydrogen to
electrolysers in solar power at increasingly more efficient cost and for direct usage that we will have in our
industry or in the downstream space.”
“We are putting a lot of emphasis on studying solar-to-hydrogen opportunities in that space based on the
capabilities that we have, and how do we move into the next position to maximise these opportunities,” he
further noted.
The reference to solar-to-hydrogen came in the context of PDO’s ambitions to evolve into a ‘fully-
fledged energy development company’ that goes well beyond its current focus on hydrocarbon
exploration, development and production.

The transition, first unveiled about a year ago, envisions PDO’s diversification into, among other
areas, solar based renewable energy development, energy management, Oil & Gas consultancy
services, and water management.
In comments to the Observer, Restucci said the strategy has since delivered a string of successes
— some small-scale, other large-scale — as the company seeks to ensure the sustainability of its
business over the long-term.
Successful initiatives include efforts to make PDO’s Bait Al Fahal head office in Muscat self-
sufficient in its power needs via the installation of solar PV panels atop car parks. Solar lighting and
water heating is also a feature at its Ras Al Hamra residential development in the city.
Ten-kilowatt power systems installed at new villas in the complex now almost fully meet the
electricity needs of households during peak hours, he said.
PDO’s signature renewables-based venture — the 1 gigawatt Miraah project under development at
its Amal oilfield — is also progressing well, said Restucci. “We will have 300 megawatts installed by
early next year, and commissioned as well,” he said.
Also noteworthy in this regard is the company’s recent award of a contract for the construction of a
100MW solar PV Independent Power Project (IPP) at the Amin field.
The company is also weighing an expanding portfolio of opportunities in its drive towards energy
efficiency and sustainability, the Managing Director said. “At the moment, we are working to identify
what we can do in terms of monetising some of the gas flaring. We are turning some gas flaring into
power in terms of greenhouse gas management. We are also progressing with the next renewable
opportunities.”
Restucci also welcomed the recent announcement by GlassPoint Solar — the technology provider
behind the landmark Miraah project — for the establishment of a similar scheme for Oxy Oman’s
Mukhaizna heavy oilfield. Sized at a mammoth 2 gigawatts, the Mukhaizna venture will be around
twice the capacity of the Miraah project.
“We are really excited about this announcement,” said Restucci. “Proving the economics of this
technology, the sustainability and reliability aspects as well, in a desert environment of a Miraah-
type solution have been enabler for the projects and for Oman to build that competitive advantage
to the next level.” PDO, he said, would support the new venture by sharing its learnings and best
practices with Oxy in the development of its solar farm.
“The new project will make the focus on the next phase of technology even better, will make the critical mass
get larger, it will help us build the In-Country Value (ICV) proposition to expand the supply chain, to create
more jobs associated with that — which is an area we focus a lot on.
So it’s a win-win for all parties.” “Even if we don’t have share in that project, it will help us in new technology
development; it will help us in work we are doing with GlassPoint on storage — a huge resource that is
available during the day, but not at night. Can we turn the operation during the day into a 24×7 operation,
and obviously storage will have a huge impact in enabling a more sustainable lower cost and more efficient
way of distributing that,” he added.

Saudi Aramco select Sapura Energy its LTA programme
Sapura Energy marked a significant milestone in its growth strategy when its wholly-owned
subsidiaries, Sapura Fabrication and Sapura Saudi Arabia, were selected to join Saudi Aramco’s
Long-Term Agreement (LTA) programme.
The LTA programme covers engineering, procurement, fabrication, transportation and installation
(EPCI) contracts to support Saudi Aramco’s offshore projects.
Joining the major league of international service providers as an LTA contractor, Sapura Energy will
participate in bids for EPCI opportunities by Saudi Aramco. The LTA programme will be for a period
of six years with options for extension.
'We are honoured to be selected by Saudi Aramco for its LTA programme. This win is a major
milestone for Sapura Energy in line with our strategy to grow the business and deepen our presence
in the Middle East,' said Tan Sri Shahril Shamsuddin, President and Group Chief Executive Officer,
Sapura Energy, who was the signatory for the company at the signing event held in Dammam, Saudi
Arabia on Monday, 26th November 2018.
Sapura Energy qualified as an LTA contactor after successfully undergoing an extensive
assessment and meeting rigorous operational and safety requirements. A key component of the
LTA is Saudi Aramco’s In-Kingdom Total Value Add (IKTVA) programme which aims to drive local
value creation with the LTA contractors.
Sapura Energy is taking proactive steps to fulfil its IKTVA commitments by partnering local
businesses and developing local capabilities by leveraging on its in-house technical and project
management expertise as well as its world-class fleet of offshore construction assets.
Source: Sapura Energy

UAE: Adnoc awards Wintershall 10% stake in Ghasha concession
Gulf News - Fareed Rahman, Senior Reporter
Abu Dhabi National Oil Company (Adnoc) on Monday awarded German oil and gas firm Wintershall
Holding a 10 per cent stake in the Ghasha ultra sour gas project, which is estimated to hold multiple
trillions of standard cubic feet of recoverable gas.
Wintershall is Germany’s biggest oil and gas producer and joins Italy’s Eni as partners with Adnoc
in the multi-billion dirham project.
The company will contribute 10 percent of the project capital and operational development
expenses, according to a statement by Adnoc.
The agreement marks the first time a German oil and gas company has been awarded a stake in
an Abu Dhabi concession area consisting Hail, Ghasha, Dalma and other offshore sour gas fields,
including Nasr, SARB and Mubarraz. Eni was awarded a 25 percent stake in the Ghasha concession
earlier this month.
“Development of the Ghasha concession area is a strategic priority for Adnoc. The gas, extracted
from the concession area, at commercial rates, will make a significant contribution to fulfilling our
commitment to ensuring a sustainable and economic gas supply and achieving our objective of gas
self-sufficiency for the UAE,” said Dr Sultan Ahmad Al Jaber, UAE Minister of State and Adnoc
Group CEO in a statement on Monday.
The Ghasha ultra-sour concession will tap into the Arab basin, which is estimated to hold multiple
trillions of standard cubic feet of recoverable gas, according to Adnoc.
The project is expected to produce over 1.5 billion cubic feet of gas per day when it comes on
stream, around the middle of the next decade, enough to provide electricity to more than two million
homes. Once complete, the project will also produce more than 120,000 barrels of oil and high value
condensates per day.
“Natural gas production in Abu Dhabi complements our existing portfolio in an ideal way. We have
decades of experience to offer in safely developing sour gas fields. We will contribute our technical
know-how, strength in implementing projects and cost-effectiveness, in Abu Dhabi, in the coming
decades,” said Mario Mehren, CEO of Wintershall.
In addition to developing the Ghasha concession area, Adnoc plans to increase production from its
Shah field to 1.5 billion cubic feet per day and move forward to develop the sour gas fields at Bab
and Bu Hasa.

Adnoc is also looking to unlock other sources of gas which include Abu Dhabi’s giant Umm Shaif
gas cap and the emirate’s unconventional gas reserves, as well as new natural gas accumulations.
Supreme Petroleum Council recently approved Adnoc’s new integrated gas strategy to unlock and
maximise value from Abu Dhabi’s substantial, available gas reserves, as the UAE moves towards
gas self-sufficiency and aims to transition from a net importer of gas to a net gas exporter.
Eni granded 25% Ghasha comcision offshore Abu Dhabi
ADNOC and Abu Dhabi’s government have signed the first of a series of planned concession
agreements with Eni, awarding the company a 25% interest in an offshore ultra-sour gas
development project. The Ghasha concession, which runs for 40 years, takes in the Hail, Ghasha,
Dalma and other offshore fields. Eni will contribute 25% of the multi-billion-dollar development cost.
The announcement follows
the Supreme Petroleum
Council’s approval of ADNOC’s
new gas strategy, aimed at
maximizing value from Abu
Dhabi’s large gas reserves as
the UAE moves toward gas self-
sufficiency, transitioning from a
net importer of gas to a net gas
exporter.
ADNOC remains in talks with
further potential partners for the
remaining 15% available in
Ghasha.
The project will develop the
Arab basin, estimated to hold
multiple tcf of recoverable gas.
ADNOC aims to produce more
than 1.5 bcf/d at start-up in the
mid-2020s.
The concession should produce gas to satisfy more than 20% of the UAE’s gas demand, according
to Eni, and will also produce more than 120,000 b/d of oil and condensate.
ADNOC plans to apply state-of-the-art smart technologies for the development, using the latest
digital innovations to ensure remote access to all key activities across the project’s natural and
artificial islands, platforms, and wellhead towers.
All the remote facilities will be operated from a single control center in Al Manayif that will be able
to respond immediately where changes or interventions are needed.
Use of smart technologies should also allow ADNOC to deliver more value from the gas reserves
and reduce human exposure to the operations, as well as helping to safeguard the local
environment. The company also aims to transfer experience from ultra-sour gas development of the
Shah Arab reservoir.
In March, Eni was awarded a 10% stake in ADNOC’s Umm Shaif and Nasr offshore concession and
5% of the Lower Zakum offshore concession, marking its entry to field development in Abu Dhabi’s
oil and gas market.

Morocco: Predator Oil & Gas awarded licence for four permits
Predator Oil & Gas has announced that an application for an exclusive licence for hydrocarbon
exploration and appraisal onshore northern Morocco has been accepted by the Office National des
Hydrocarbures et des Mines ('ONHYM') acting on behalf of the State.
The formal award of the exclusive licence is subject to
the provision by Predator of a Bank Guarantee prior to
a formal Signing Ceremony.
The licence will be for 8 years, split into 3 phases with
an Initial Period of 30 months followed by First and
Second Extension Periods of 36 and 30 months'
duration respectively.
HIGHLIGHTS
 Exclusive licence for exploration covering an area of 7,269km² and comprising the Guercif
Permits I, II, III and IV, lying east of the producing gas fields of the Gharb Basin and northwest
of the Tendrara gas project.
 Predator will be operator through its wholly-owned subsidiary Predator Gas Ventures with
75% equity interest and ONHYM 25%. ONHYM has the right to "back-in" for up to and
including 25% equity in the event of a hydrocarbon development by paying its share of
forward costs
 The work programme for the Initial Period will include 250 kms of reprocessing of existing
seismic data and the drilling of one well to a minimum depth of 2,000 meters to test a large
seismic anomaly interpreted as being indicative of the presence of shallow Tertiary gas,
similar to the producing Gharb Basin.
 The Guercif Licence is also prospective for deeper Triassic gas and Jurassic oil and gas
which can be evaluated in the First and Second Extensions
 The initial target for gas lies just 9 kms north of the Maghreb - Europe gas pipeline, which
has spare capacity in the event of a major gas discovery, which is the desired objective of
Predator's exploration planning
 Government taxes are confined principally to a 5% royalty for gas and 30% Corporation Tax
but with a total exemption for the first 10 years of production
The Company will provide further updates on progress in Morocco as activities ramp up.
Paul Griffiths, CEO of Predator Oil & Gas Holdings Plc said:
'Predator management selected Guercif based on its 12 years' experience of exploring and
financing Moroccan opportunities. It represents an asset that will fit very well with the Company's
strategy of developing gas opportunities adjacent to infrastructure, where the geological and
commercial risks can be shown to be low.
Guercif represents a high impact, low cost, near-term drilling opportunity in a sophisticated and
stable business and operating environment that is well understood by management. We are excited
by this opportunity and by the potential for cash flow from Trinidad C02 EOR operations through
2019, which can underpin our plans to become a significant gas player connected to the European
gas market.'
Source: Predator Oil & Gas

Japan has restarted five nuclear power reactors in 2018
Source: U.S. Energy Information Administration, from the Nuclear Regulation Authority
Shikoku Electric Power Co. restarted the 890 megawatt (MW) Ikata-3 reactor in Japan’s Ehime
Prefecture at the end of October, the fifth nuclear reactor in Japan to be restarted in 2018. Japan
had suspended its nuclear fleet in 2013 for mandatory safety checks and upgrades following
the 2011 Fukushima accident, and before 2018 only four reactors had been restarted.
Following the Fukushima accident, as each Japanese nuclear reactor entered its scheduled
maintenance and refueling outage, it was not returned to operation. Between September 2013 and
August 2015, Japan's entire reactor fleet was suspended from operation, leaving the country with
no nuclear generation. Sendai Units 1 and 2, in Japan’s Kagoshima Prefecture, were the first
reactors to be restarted in August and October 2015, respectively.
The restart of Japan's nuclear power plants requires the approval of both Japan's Nuclear
Regulation Authority(NRA) and the central government, as well as consent from the governments
of local prefectures. In July 2013, the NRA issued more stringent safety regulations to address
issues dealing with tsunamis and seismic
events, complete loss of station power, and
emergency preparedness.
Before a nuclear operator can resume electricity
generation, it must apply for permission to restart
the reactor. The NRA reviews the restart
application and inspects the reactor, potentially
requiring the operator to make safety upgrades
and complete another inspection.

Source: U.S. Energy Information Administration, Nuclear Regulation Authority Japan
The suspension of Japan's nuclear fleet resulted in significantly greater dependence on liquefied
natural gas (LNG), oil, and coal imports to make up for lost domestic nuclear generation. Japan has
limited domestic energy resourcesand imports virtually all of the fossil fuels it uses. Therefore,
Japan is the world's largest importer of LNG and the third-largest importer of coal,
behind India and China.
In 2017, natural gas accounted for nearly 37% of Japan’s electricity generation, followed by coal at
33%. LNG and coal imports rose last year as court injunctions delayed the planned restart of some
nuclear reactors. Japan’s utilities spent approximately $30 billion each year for additional fossil fuel
imports in the three years following the Fukushima accident.

Source: U.S. Energy Information Administration, International Energy Agency
As part of Japan's long-term energy policy, issued in April 2014, the central government called for
the nuclear share of total electricity generation to reach 20%–22% by 2030, which would require 25
to 30 reactors to be in operation by then. In 2017, four operating nuclear reactors provided 3% of
Japan’s total electricity generation.
Twenty nuclear reactors in Japan have permanently retired in the wake of the Fukushima accident.
Out of the remaining fleet of 34 operable reactors, 9 are currently operating. Six others have
received initial approval from the NRA, and another 12 units are under review. Nine reactors have
yet to file a restart application.

NewBase 04 December - 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices climb after big falls on expected OPEC-led production cuts
Reuters + Bloomberg + NewBase
Oil prices rose on Tuesday, extending bigger gains from the previous day amid expected OPEC-
led supply cuts and a mandated reduction in Canadian output.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $53.33 per barrel at 0604 GMT,
up 48 cents, or 0.7 percent, from their last close. International Brent crude oil futures LCOc1 were
up 51 cents, or 0.8 percent, at $62.20 per barrel.
Both crude benchmarks climbed by around 4 percent the previous session after Washington and
Beijing agreed a truce in their trade disputes and said they would negotiate for 90 days before taking
any further action.
“Oil prices look likely to move up gradually...this week as investors anticipate supply cuts by
OPEC+,” said Benjamin Lu of Singapore-based brokerage Phillip Futures, referring to the producer
group and Russia.
Oil price special
coverage

The Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) will on Dec.
6 meet at its headquarters in Vienna, Austria, to agree a joint output policy. OPEC will also discuss
policy with non-OPEC production giant Russia.
“We expect OPEC to follow suit and agree to a production cut in Vienna this coming Thursday,”
U.S. bank Goldman Sachs said in a note to clients. “A cut in OPEC and Russia production of 1.3
million barrels per day (bpd) will be required to reverse the ongoing counter-seasonally large
increase in inventories,” the bank said.
It added that it expected a joint effort by OPEC and Russia to withhold supply to push Brent oil
prices “above the mid-$60 per barrel level”. Helping OPEC in its efforts to rein in emerging
oversupply was an order on Sunday by the Canadian province of Alberta for producers to scale
back output by 325,000 bpd until excess crude in storage is reduced.
OPEC’s biggest problem is surging production in the United States, where output has grown by
around 2 million bpd in a year to more than 11.5 million bpd C-OUT-T-EIA. China in November
resumed imports of U.S. crude oil, taking in one tanker at the end of last month, according to ship-
tracking data, with another on order for delivery in January.
Britain’s Barclays bank pointed out that production in the state of Texas alone “reached 4.69 million
bpd in September, compared with Iraqi output of 4.66 million by our estimates”. Iraq is OPEC’s
second-biggest oil producer, behind only Saudi Arabia.

Russia and Saudi Arabia to Extend OPEC+ Oil Pact
Bloomberg - Ilya Arkhipov
Russia and Saudi Arabia agreed to extend into 2019 Vladimir Putin and Mohammed bin Salman
on Dec. 1
their agreement to manage
the oil market, known as
OPEC+, although Moscow
and Riyadh have yet to agree
on any fresh output cuts.
Russian President Vladimir
Putin announced the
extension after a meeting
Saturday on the sidelines of
the Group of 20 with Saudi
Arabian Crown Prince
Mohammed bin Salman. The
comments open the door for a
deal at the OPEC meeting
next week in Vienna. OPEC
delegates said the leaders
have given their political
blessing for an agreement,
but plenty of work is left, including on the size of any potential output cut.
“There is no final decision on volumes, but together with Saudi Arabia we will do it," Putin told
reporters about extending the agreement in Buenos Aires. “And whatever number there will be
based on this joint decision, we agreed that we will monitor the market situation and react to it
quickly.”
Simultaneously, Saudi Arabia said through its state-owned press agency that Riyadh and Moscow
had held talks in Buenos Aires about "rebalancing" the oil market. While both talked about progress
and extension of the cooperation, neither the Russian nor Saudis made any formal declaration about
output volumes.
“This might be the critical breakthrough for OPEC and non-OPEC to cut,” said Derek Brower, a
director at consultant RS Energy Group. “But the details are now what matter - how much will be
cut, from when, for how long and, crucially, from what baselines."
Earlier this week, an advisory group to OPEC told ministers the market is oversupplied, with a need
to cut about 1.3 million barrels a day from October levels. The advisory group’s proposals aren’t
binding, and OPEC ministers often choose a different path. Yet the view that the oil market is
oversupplied is a signal the cartel is laying the groundwork for action.
OPEC, which pumps four-in-ten barrels produced worldwide, will convene in Vienna on Dec. 6 to
discuss output cuts after oil prices in November suffered the largest monthly drop since the global
financial crisis in 2008.
Brent crude, the global benchmark, is down about a third from an October high due to rising supply
from the U.S. shale regions, Saudi Arabia and Russia, slower demand growth and American waivers
on oil sanctions on Iran. Brent hit a a 4-year high of $86.76 a barrel in early October before slumping

to $58.71 Friday. Oil trading has been volatile over the last week as traders took positions ahead of
the OPEC gathering.
"Markets think there will be some sort of a cut," said Mike Wittner, head of oil market research at
Societe Generale SA. "However, there’s concern that the cuts will not be big enough and also that
the message may be intentionally unclear, in order not to get President Trump upset."
In public and private, Trump has told the Saudis he wants cheaper crude, even disclosing that he
berated the crown prince in an October phone call when international benchmark Brent surged
above $80. Prior to the collapse in oil prices, the kingdom was responsive to Trump’s demands.
Its November production surged to an all-time record above 11 million barrels a day as prices
swooned, prompting a jubilant response on Twitter from the White House.
For bin Salman, the kingdom’s crown prince and day-to-day ruler, the dilemma between keeping
the U.S. president happy and having an oil price that balances the Saudi budget has been
sharpened by the murder of journalist Jamal Khashoggi. Despite pressure from angry senators and
other Washington power players, the Trump administration has maintained its support for the Saudi
leader.
Putin and the prince ended years of animosity between the world’s two largest oil exporters in 2016
and have worked together since then in a deal known as the OPEC+ group, that includes the cartel
plus non-OPEC members such as Russia, Mexico, Azerbaijan and Kazakhstan.

OPEC-Russia Inch Toward Output Cuts, But How Far Will They Go?
OPEC and its allies gather in Vienna this week to discuss production cuts after the biggest monthly
drop in oil prices in a decade.
They have the broad outlines of a deal after Russia and Saudi Arabia agreed over the weekend to
extend their cooperation into 2019, but details are lacking. Whether the group bring about the end
of the oil rout will depend on the size of any cut, how clearly it’s communicated and whether
members follow through on what they’ve promised.
Here are some possible outcomes:
A Big Cut
The Organization of Petroleum Exporting Countries has already told us how much they’d need to
curb production to avoid a glut: 1.3 million barrels a day from October levels. A reduction on that
scale would certainly change the dynamics of the market, eliminating most of the anticipated
inventory buildup next year.
Building Up Trouble
OPEC sees oil inventories building rapidly next year, if output remains at Oct. level.
Source: Bloomberg, OPEC
The group would need to haggle over how that reduction would be shared out, but it would hardly
be an unprecedented step. They agreed a larger production cut in 2016 and removing 1.3 million
barrels a day would take their combined output back to June levels that most members were happy
with before U.S. President Donald Trump started pressuring them to open the taps.
Trump is the biggest risk to this scenario. Mohammed bin Salman, the Saudi crown prince and day-
to-day ruler, can ill afford to openly defy the president’s Twitter-based campaign for lower oil prices.
After international outrage over the murder of Jamal Khashoggi in the Saudi consulate in Istanbul,
the prince needs his ally in the White House to protect him from angry senators and other
Washington power players.

Vienna Fudge
To avoid incurring the wrath of Trump, some OPEC delegates are privately discussing the idea of
engineering a production cut without explicitly calling it that. They could perhaps say that output will
fall, but only because customers are asking for fewer barrels.
Saudi Energy Minister Khalid Al-Falih already hinted at such an approach earlier this month, saying
the kingdom’s output should fall in December and again in January as buyers seek lower volumes.
The risks of this approach are twofold. First, oil traders simply might not believe that real production
cuts are coming. Second, nations such as Iraq and Russia, which were already showing signs of
deal-fatigue when their cuts ended in June, may not adhere so faithfully to vaguely worded
commitments.
"Walking out of Vienna next week with no explicit cut, but a jumbled statement referring to some
broad intention to prevent the market from being oversupplied will undoubtedly trigger a further sell-
off," said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London.
Open the Taps
Four years ago, as oil slumped due to surging U.S. shale output, Russia met with ministers in Vienna
to discuss possible cooperation to boost prices. Those talks went nowhere and a few days later the
full OPEC meeting ended without any agreement to cut production.
What followed was a fully fledged price war as Saudi Arabia opened the taps and crashed prices in
an attempt to drive high-cost rivals such as shale producers out of business. Crude fell as low as
$27 in early 2016 before the kingdom gave up on the strategy and started building a new alliance
to cut production.
The deal between Putin and Prince Mohammed in Buenos Aires would appear to preclude such a
scenario this week. While the two leaders didn’t agree any hard numbers, they showed the political
will still exists for joint action to stop the market spinning out of their control.
“While they may disagree on what is the right price to aim for they are all in agreement that they do
not want global oil inventories to rising back up again,” said Bjarne Schieldrop, chief commodities
analyst at SEB AB. Their agreement removes the risk that prices will drop any lower, he said.

NewBase Special Coverage
News Agencies News Release 04 December 2018
As Oil Prices Plunge, China Is Grabbing Every Cargo It Can Get
By Alaric Nightingale and Steve Voss
As oil prices plunge, there are plenty of signs that China is buying the dip -- and in potentially large
volumes -- if shipping and trade data are any guide.
Here’s some evidence to suggest the world’s biggest source of incremental demand growth for oil
has ramped up imports -- and that its buying remains undimmed.
1. Imports Data
The first, and perhaps most authoritative, piece of information comes from the country itself.
Inflows last month were the highest for the time of year in customs data starting in 2004. One
downside to the data is that they’re backward looking. Another is that China’s imports have tended
to trend higher in recent years anyway.
Strengthening Imports
Crude oil flows to the Asian country reach seasonal high
Source: China's General Administration of Customs

2. West African Feast
So backward-looking data from the Chinese government aren’t your thing? No matter. Just look at
the country’s purchases from West Africa. At 1.78 million barrels a day this month, they’re the
highest since at least September 2011, and an astonishing 70 percent above November 2017. It’s
important to note that the country may be replacing inflows from the U.S. against the backdrop of a
trade war.
3. Cargo Counts
Okay, okay, you’re right to still be skeptical. West African flows don’t completely prove heightened
buying either. After all, they’re still a relatively small part of total Chinese buying. Another good place
to look is at cargo counts. Since the start of October, an average of 35 spot shipments from the
Persian Gulf to Asia were arranged each week. The equivalent a year ago was 19.
Shipping Out
Supertanker fixtures for voyages eastwards from the Persian Gulf have soared in 2018

4. China Bound Shipments
What! You still want more? You’re saying, quite rightly, that extra Middle East barrels could be going
some place else in Asia? Here’s a rather more blunt way to look at it: How many of the world’s
supertankers -- that is, very large and ultra large crude carriers -- are pointing to China? As of Nov.
23, there were 101 (or about 202 million barrels’ worth) signaling for ports in the Asian country. A
year earlier, there were 77.
Destination of Choice for Crude Tankers
Number of supertankers destined for China within next 3 months
Source: Bloomberg tanker tracking
Source: Clarkson Research Services
Note: 4-week moving average

5. Knowledge in Prices
Still dubious? Noisy flows data don’t persuade you? Perhaps freight prices will help. As signs of an
emerging glut and worries about demand cause crude futures to collapse, rates to haul the black
stuff are moving in the opposite direction.
Supertankers to deliver Middle East oil to China are earning almost $52,000 a day, close to the
highest since at least February 2017, according to the Baltic Exchange. Somebody, somewhere is
buying more in this price slump.

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
Mobile: +97150-4822502
khdmohd@hawkenergy.net
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 December 2018 K. Al Awadi

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