New base energy news issue 906 dated 14 august 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 14 August 2016 - Issue No. 906 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE:Capacity of Emirates National Oil Company’s Jebel
Ali condensate refinery to be increased
MEED + http://www.hydrocarbons-technology.com
A gas condensate refinery with a planned output of 120,000 barrels per day (bpd) was opened in the
United Arab Emirates in 1999. The refinery in Jebel Ali, Dubai, increased the total capacity of the UAE by
about 60%.
The ENOC Jebel Ali oil refinery is the UAE's fourth and smallest. It was built after Ruwais and Um al-Nar in
the emirate of Abu Dhabi, which have a combined capacity of 505,000bpd.
The emirates of Sharjah and Fujairah also have refineries, each with a potential capacity of 80,000bpd.
The refinery is operated by the Emirates National Oil Co (ENOC), which is owned by the Dubai
Government. Investment in the plant totaled $500m.
Construction and expansion
The Jebel Ali refinery took two and a half years to complete and covers 500,000m2. The works included
pouring 22,600m³ of cement for the foundations, structures and a pre-cast pipe rack.

"The Jebel Ali oil refinery took two and a half years to complete."
Over 15,000t of equipment was installed and 223km of electric cables and 155km of instrument cables
were laid. The construction was completed on time and within budget.
In September 2010, ENOC completed an $850m upgrade at the Jebel Ali refinery. It was aimed at
increasing the operational capacity from 70,000bpd to 120,000bpd. In 2010 the refinery processed
108,000bpd of crude at 90% capacity.
Funding for the ENOC refinery
A consortium of four banks provided a loan of $170m to fund the project. ANZ Grindlays Bank, Barclays
Bank, Emirates Bank International (EBI) and National Bank of Dubai (NBD) each provided $42.5m.
ENOC plant and condensates
The ENOC plant converts condensates from Qatar, Iran and Australia into LPG, naphtha, jet fuel, diesel
and fuel oil. The naphtha, a total of about 66,000bpd, is exported for petrochemical use in South East Asia,
and the rest of the liquids are sold to the domestic market.
Condensate distillation units
The ENOC Jebel Ali plant has a pipeline link to the fuel tank farm at Dubai International Airport to provide a
constant supply service. The plant is centred on two 60,000 barrels per stream day condensate distillation
units and five merox sweetening units.
Its storage capacity is in excess of four million barrels of condensate feedstock and petroleum products.
Feedstock is acquired from a number of different suppliers within the gulf region and comes to the plant by
pipeline or by ships with a capacity of up to 120,000dwt.
Plant control system
A modern digital control system controls the operating plant, with every critical function and variable closely
monitored and adjusted as required. It has its own power source with two efficient 10MW turbo generators.
The process stream is supplied by a heat recovery system.
Sulphur recovery processes
To minimise sulphur emissions, the sulphur recovery unit processes the streams, which are rich in
hydrogen sulphide from amine treating and sour water stripping.

"In 2010 the refinery processed 108,000bpd of crude."
Two sulphur plants, each with 100% of the capacity required, provide total protection, even if one plant is
completely shut down.
A neutralising unit treats the sulphidic caustic waste from the LPG and naptha, kerosene and diesel merox.
This renders the caustics suitable for disposal in the effluent treating plant, which is designed to handle and
treat aqueous effluents before disposal according to local environment regulations.
Contractors for the ENOC Jebel Ali refinery
The ENOC refinery was developed by MW Kellogg under EPCL using front end engineering and design
(FEED). Site development and tank foundation works were handled by Dubai-based Al Futtaim Wimpey.
The lump sum engineering, procurement and construction contract worth $130m for the process and off-
site facilities was carried out by Technip of Italy, which was selected from a number of potential contractors
from Europe, America and Japan.
"The ENOC refinery was developed by MW Kellogg."
Various local contractors, including Chicago Bridge and Iron, Eastern Anstalt and Al Futtaim Tarmac, were
used for engineering, procurement and construction management of the tanks, major buildings and
facilities outside the plant fence. Mott McDonald handled the engineering, procurement and construction
management of all local contract works.
The FEED and engineering, procurement and construction management contract for the refinery upgrade
project was awarded to Foster Wheeler. Al Futtaim Carillion was the contractor for civil works. GE Oil &
Gas supplied a steam turbine power generation unit and eight compressors.

Saudi :Defending oil market share still ‘pre-eminent’ IHS says
CNBC - Tom DiChristopher | @tdichristopher
Saudi Arabia is still preoccupied with defending its market share even though its oil minister said
producers may discuss taking action to prop up crude prices next month, analyst Dan Yergin said
Friday. Oil markets rallied Thursday on Energy Minister Khalid al-Falih's comments.
Analysts have said Saudi Arabia could play ball with
other producers despite rejecting an agreement to
freeze output in April after regional rival Iran said it
would keep pumping until it returned to pre-sanctions
production levels.
That is because the Saudis now have a larger stake in
the long-term oil price as Prince Mohammed bin
Salman seeks to diversify the economy by launching
an IPO for a stake in state oil giant Saudi Aramco and
turning the country's Public Investment Fund into a $2 trillion sovereign wealth fund.
Al-Falih confirmed that producers will gather on the sidelines of a meeting in Algeria next month to
discuss the rebalancing of oil markets following a two-year rout that has seen crude prices
plummet from more than $100 a barrel in 2014 to the upper $20s this past winter.
But Yergin said protecting Saudi share of the oil market still trumps propping up prices in the eyes
of the kingdom's policymakers. Indeed, in OPEC's latest monthly report out earlier this week,
Saudi Arabia reported it was pumping crude at record levels.
"I think the pre-eminent thing is about maintaining market share," Yergin told CNBC's "Squawk
Box."
Saudi Arabia's new Energy minister Khalid Al-
Falih., Still, he added, energy-producing nations
may be able to come to an agreement as they
reach the upward limits of their capacity to churn
out crude. Still, while Iran is nearing capacity,
striking a deal will be difficult, said Yergin, IHS
Markit vice chairman.
Oil markets are moving into recovery phase as
U.S. producers have decreased production by
about 1.2 million barrels per day from a modern-day peak in April 2015, Yergin said. The Saudi-
engineered policy of maintaining high production has squeezed American drillers whose costs are
higher due to their reliance on hydraulic fracturing, the process of pummeling shale rock with
water, minerals and chemicals to free oil and natural gas.
While commodity watchers have focused on the response from U.S. shale producers as they
await signs of market balance, Yergin cautioned that the postponement of "big, megaprojects"
around the world that typically take five to seven years to complete is jeopardizing the industry's
ability to meet future demand.
"You see postponements, delays and cancellations, so you're going to see as supply-demand
balance that's going to be different over the next couple of years," he said. "The question now is of
course struggling with price, but in three, four, five years, how are we going to meet 5 or 6 million
barrels a day of new demand growth?"

Yemen resumes oil shipments, the first since start of civil war
Anthony McAuley
Crude oil shipments from Yemen have resumed on a small scale after stalling since early last year
because of the continuing civil war.
"With the resumption of production and exports from Masila oil field, the national economy is back
on its own two feet," Saif Al Sharif, the oil and mining minister, told the state-run news agency
Sabanew on Thursday.
Yemen port authorities said
late last month that they
would reopen the crude
terminal at Ash Shihr, about
800 kilometres east of Aden,
where oil from the fields run
by PetroMasila and most
other Yemen fields is lifted.
PetroMasila has been oper-
ated entirely by indigenous
staff since the end of last
year following the exit of the
Canadian oil company
Nexen, which had been its
operator. Most foreign oil
companies have quit Yemen
because of the war, as well
as declining oil production
from its relatively small fields.
The oil tanker Seaprince lifted a 1 million-barrel cargo of Masila crude oil on August 2 and a 3
million-barrel cargo is due to be lifted by the oil tanker Ataka, according to shipping sources. Both
ships are owned by the tanker division of commodity trader Glencore and are bound for China and
Singapore, respectively.
Abdrabu Mansur Hadi, the
president, has instructed that 1
million barrels of crude be exported
to the refinery at Aden, Sabanew
reported. He said he hopes
production from Marib and Shabwa
will resume soon, as well as oil and
gas exports from Ras Isa and
Balhaf ports, the agency reported.
The situation in Yemen has
improved since spring, when forces
loyal to Mr Hadi, together with
those from the UAE regained
control of the largest oil-exporting
port from Al Qaeda insurgents and
took the town of Al Makulla, which lies 70km to the east of Ash Shihr.

Oman says new refinery capacity in Sohar to cut crude oil exports
By Reuters
Oman's crude oil exports will drop by about 50,000 barrels per day when new refining capacity
comes onstream in the northern city of Sohar by early 2017, Minister of Oil and Gas Mohammad
bin Hamad al-Rumhy has said.
Rumhy said the refinery project had been due to be commissioned by the end of 2016, but there
had been a delay so the commissioning date would be in the first quarter of next year. The project
would increase the Sohar refinery's capacity by between 65 and 70 percent.
"It will take an additional 70 to 90,000 bpd. And with the increase in Oman's average oil production
to exceed a million bpd, we expect the drop in our oil exports to be 50,000 bpd compared to last
year," Rumhy said in an interview.
He added that state-owned Oman Oil
Refineries and Petroleum Industries Co
(ORPIC) would seek to refine different
crude mixes.
"In the future I can see ORPIC go
shopping for crude oil, which is not the
case currently," Rumhy said.
"Refineries tend to do better when they
have the option to refine different mixes
of crude.
"So we will be importing different
crudes to have a better yield, and to
look at the needs of the local market in petroleum products."

Iraq: Production at Atrush oilfield in Kurdish region to be delayed
Anthony McAuley
Production at the Atrush oilfield development in the Kurdish region of Iraq will be delayed, possibly
until next year, according to companies involved in the project, which includes Abu Dhabi’s Taqa,
the field’s operator.
Talks over the financing and
construction of a pipeline
spur that will connect the field
with the Kurdish pipeline
network, to allow crude to be
exported via Turkey’s Ceyhan
port, have delayed production
start-up, which was expected
in the second quarter of this
year.
The Kurdistan Regional
Government (KRG) changed
the proposal for the pipeline
in spring this year and
exercised its option to take up
to 25 per cent ownership of
the project.
The talks with the KRG have
"unfortunately ... proved to be
more complex and have
taken longer than initially
envisaged, but are now close
to being finalised.," said Chris
Bruijnzeels, chief executive of
ShaMaran Petroleum, a Canadian company which owns almost 27 per cent of Atrush. But it has
"resulted in a delay in the start of construction of the feeder pipeline [and] this will most likely result
in first oil to slip into the first quarter of next year", Mr Bruihnzeels said.
Atrush is the only major new project that Taqa is investing in since it began to severely cut back its
capital expenditure two years ago. Taqa had a capital investment target this year of Dh1.8 billion
but its chief financial officer, Grant Gillon, said on Wednesday that it was likely to spend much less
than that.
"We are working very closely with the KRG to ensure that the pipeline is installed and constructed
before the end of the year, early next year at the latest," said Saeed Al Dhaheri, Taqa’s acting
chief operating officer.
The KRG earlier said it would take up its option to increase its ownership share at Atrush. Taqa
currently owns a little more than 53 per cent, ShaMaran almost 27 per cent and Marathon Oil the
remainder. KRG can take up to 25 per cent, reducing Taqa’s stake to just below 40 per cent and
the other partners pro rata. The field is expected to ramp up to peak gross production of 30,000
barrels per day.

Libya needs big spend to boost its vital oil revenue
Reuters/
Libya’s plans to increase oil output by five-fold by the end of the year will remain out of reach until
the government allocates funds to repair the damage to oil infrastructure, the National Oil Corp’s
chief told Reuters.
“If we receive around $1bn, we can do a lot,” Mustafa Sanalla said, adding that the corporation
submitted its budget to the Presidential Council, the Opec member’s government, on July 3 and is
still waiting for the funds.
Libya, which holds Africa’s largest oil reserves,
has seen it production hobbled to 207,000 bpd
this week from a peak of 1.6mn bpd before it
descended into civil war.
It relies almost exclusively on oil revenue for its
expenditure and faces a serious cash flow
problem due to the disrupted oil exports, but
Sanalla said money going to NOC would
multiply the country’s revenue by generating
more in oil sales. The NOC, which recently
united rival eastern and western factions, is
aiming to boost oil output to over 900,000 bpd
by the end of the year and to 1.2mn bpd within a year. But the company has bumped up against
both security and cash flow problems.
Sanalla said the storage capacity at ports, a crucial part of exporting oil, had plummeted to
750,000 barrels, from 6mn barrels, due to repeated attacks on export terminals over the course of
the revolution, civil war and attacks from Islamic State.
Sanalla said NOC also owes tens of millions of dollars to international oil service companies, and
warned earlier this week that a looming clash between Petroleum Facilities Guard forces and the
Libyan National Army (LNA), which is loyal to the eastern government, threatened to more oil
infrastructure damage.
He said NOC owes one service company alone $80mn, declining to name it. “They were thinking
of closing shop in the country, but after my meeting with them, they decided to stay. They’ve been
in Libya for 50 years.”
Still, Sanalla said the united NOC was working.
He planned to personally visit the eastern city of Benghazi in two weeks to smooth tensions. He
added that clear support from the international community, with western powers expressing
support for the NOC, would help keep various factions on board.
“They [the international community] recognise NOC as a neutral body that is trying to unite and to
save the country,” he said. Sanalla said it would not be safe to send repair crews to Es Sider and
Ras Lanuf, two major terminals that are set to reopen under a recent deal with guards who had
been blockading them, until force majeure from the two ports is lifted.
But he said that the El Sharara and El Feel fields could add 200,000 bpd to production within
weeks if a deal to reopen them were reached.

Kenya: This country is set to join the oil producers club
CNBC - David Reid | @cnbcdavy
Kenya is set to join the ranks of oil producing nations after the country's government approved
plans to extract up to 4,000 barrels per day from newly discovered reserves.
African oil specialist Tullow Oil discovered crude deposits in the
country's Turkana region in 2012 and is partnering with the
country as it readies for full commercial exploration.
In its half-year results released July, Tullow Oil estimated that a
pilot scheme will allow 2,000 barrels of oil to be produced by the
middle of 2017.
A statement released by the Kenyan government Thursday is more bullish, putting initial
extraction levels somewhere between 2,000 and 4,000 barrels per day.
As part of the plan, the government is promising an upgrade to infrastructure, allowing trains and
trucks to ferry the oil from the country's north west region to the main port in Mombasa.
The cabinet also approved the development of a new Kenya crude pipeline, running from the
exploration fields north to Lamu where Kenya is building a second port.
This new port is described by the government as the main transportation route for crude exports in
the future.
In its results, Tullow Oil stated that along with partners Africa Oil and Maersk Oil, a memorandum
of understanding has been signed with the government of Kenya confirming intent to jointly build
the pipeline.
Tullow described the project as "compelling".
The firm estimated that "life of field development costs", which include operating expenditure,
capital expenditure and potential pipeline tariffs should be in the region of $25 to $30 per barrel.

US: North Dakota oil output seen falling below 1 MBD mark
Reuers = Ernest Scheyder
North Dakota's daily oil production will soon drop below 1 million barrels if it has not already done
so, a level not seen since the summer of 2014, and a recovery would take at least a year, state
regulators said on Friday.
The prediction came as yet another ominous sign for the No. 2 producing state, where Continental
Resources Inc, Whiting Petroleum Corp and others have curtailed output and slashed costs in
response to the slump in oil prices.
"Oil prices really just seem to be stuck in that $40 to $48 per barrel range," Lynn Helms, head of
the state's Department of Mineral Resources, said on a conference call with reporters.
"We're still looking at needing a $50 price point for increased hydraulic fracturing activity in North
Dakota." Daily oil output fell 2 percent in June to 1.03 million barrels of oil per day (bpd), according
to the department, which reports on a two-month lag.
The drop reflects a trend that started in 2014, when output started to track down with oil prices. If
the trend continues, statewide production will fall below 1 million bpd soon, Helms said, noting it
might have already done so this month.
"We're not completing enough wells to maintain production," he said. North Dakota first produced
more than 1 million barrels per day of oil in the summer of 2014, a milestone that was celebrated
statewide.
If output falls below that mark it could take at least a year to recover, Helms said. "It's going to
take a significant amount of time and effort to move it back up again." In a positive sign for the
industry, the break-even price for oil production at existing wells, statewide, has slipped to $26 per
barrel, Helms said.

While the number does not take into account the cost of drilling and fracking new wells, it shows
that existing production remains profitable for companies across the state that have aggressively
cut costs to survive.
"You're really starting to see the effect of cost cutting in the industry on break-even prices," Helms
said. Natural gas output rose about 1 percent to 1.66 billion cubic feet per day, as producers
collected more gas for processing. The state's rig count stood at 33 on Friday, up from a recent
low of 27.`

World tight oil production to more than double from 2015 to 2040
Principal contributor: Faouzi Aloulou – US EIA
World tight oil production is expected to more than double between 2015 and 2040, increasing
from 4.98 million barrels per day (b/d) in 2015 to 10.36 million b/d in 2040, according to the U.S.
Energy Information Administration's International Energy Outlook 2016 (IEO2016) and Annual
Energy Outlook 2016 (AEO2016).
Most of the projected increase will come from the United States, with much of the rest coming
from countries such as Russia, Canada, and Argentina that have significant tight oil resources and
existing, developed oil industries.
United States tight oil production, which reached 4.6 million b/d in March 2015 but fell to 4.1
million b/d in June 2016, has proven more resilient to low oil prices than many analysts had
anticipated. U.S. tight oil production is expected to reach 7.1 million b/d in 2040 in the AEO2016
Reference case.
Other AEO2016 side cases that have different assumptions than the Reference case about oil
prices, technological advances, and resource availability have different projected levels of tight oil
production.
Two oil price side cases illustrate the effects of higher or lower global crude oil prices. By 2040,
the global benchmark Brent crude oil spot price averages $73/b in the Low Oil Price case, $136/b
in the Reference case, and $230/b in the High Oil Price case. In the High Oil Price case, drilling
activities increase cumulative production. The opposite is true in the Low Oil Price case, where
production decreases in response to low prices.
In the resource and technology side cases, the estimated ultimate recovery for tight oil wells in the
United States is 50% higher or 50% lower than in the Reference case. Rates of technological
improvement that reduce costs and increase productivity in the United States are also 50% higher

or 50% lower than in the Reference case. By 2040, these cases result in the largest differences
from Reference case production values.
Canada's tight oil production, which reached 0.45 million b/d in December 2014, declined in
January 2016 to 0.36 million b/d, based on the latest available data from the Canada National
Energy Board.
Average year-on-year growth of tight oil production has been declining since 2012, mainly
because of competition with oil sands development for capital. Oil sands development tends to
have larger resource bases than the known shale/tight oil resources.
IEO2016 projects that tight oil production in Canada will continue to decline until 2020, and then
increase over the rest of the projection period, reaching 0.76 million b/d in 2040 in response to
higher crude oil prices and less competition for capital with oil sands development.
Argentina is still in the early stages of commercial tight oil production. The Argentine national oil
company, Yacimientos Petrolíferos Fiscales, reported that shale production reached 0.05 million
barrels of oil equivalent per day (of which 0.03 million b/d was estimated to be tight oil) in the
fourth quarter of 2015 from its joint venture with Chevron in Neuquén Basin, Argentina. IEO2016
projects that production will double from 2015 to 2020 and will reach 0.69 million b/d in 2040.
Russia, Mexico, Colombia, Australia, and other countries that hold large technically recoverable
tight oil resources had not yet reached commercial production of tight oil in 2015. As oil prices
increase after 2020, they are expected to contribute 18% (or the combined equivalent of 1.8
million b/d) of the projected total world tight oil production of 10.36 million b/d by 2040.

NewBase 14 August 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Heads to Weekly Gain as Saudis Reiterate Wish for Stability
Mark Shenk
Oil is heading for the biggest weekly advance since April as Saudi Arabia signaled it’s prepared to
discuss stabilizing markets at informal OPEC discussions next month after prices tumbled into a
bear market.
Futures rose as much as 2.5 percent in New York after surging 4.3 percent on Thursday. Talks
with OPEC members and other producers may result in action to stabilize the market, Saudi
Arabia’s Energy Minister Khalid Al-Falih said in a statement, according to media reports including
Reuters.
Global markets will continue to rebalance this year, the International Energy Agency said
Thursday. Crude pared gains after a report showing U.S. drillers added rigs for a seventh week.
Oil has fluctuated after falling more than 20 percent into a bear market and closing below $40 a
barrel last week. Money managers increased wagers to a record on declining West Texas
Intermediate crude prices during the week ended Aug. 2, government data show.
World refiners will process record volumes of crude this quarter, shrinking stockpiles, the IEA said
in its monthly report. Nigeria’s oil minister said the country’s output is "dismal" this year after
sustained attacks by militants have damaged infrastructure including its biggest export terminal.
Oil price special
coverage

"The reverse correlation with the dollar is at work today," said Bob Yawger, director of the futures
division of Mizuho Securities USA Inc. in New York. "We rose almost 5 percent yesterday on the
IEA report and Saudi statement. The only reason we moved so much on these dubious headlines
was that there are so many shorts in the market."
WTI for September delivery rose 49 cents, or 1.1 percent, to $43.98 at 1:07 p.m. on the New York
Mercantile Exchange. Futures touched $44.57, the highest intraday level since July 22. Prices are
up 5.2 percent this week.
Brent for October settlement increased 38 cents, or 0.8 percent, to $46.42 a barrel on the London-
based ICE Futures Europe exchange. The North Sea crude touched $46.99, the highest since
July 21. The global benchmark crude traded at a $1.72 premium to WTI for October delivery.
U.S. drillers added 15 rigs during the week ended Aug. 12, Baker Hughes Inc. said Friday. The
count is the highest since February and has climbed for seven weeks, the longest stretch in more
than two years.
While the market is on the path to rebalancing, reducing the inventory overhang of crude and
products will take time, Al-Falih said in the
statement. Saudi Arabia raised production to a
record last month, according to data the country
submitted to the Organization of Petroleum
Exporting Countries. OPEC will hold informal talks
at the International Energy Forum in Algiers,
Mohammed Al Sada, Qatar’s energy minister and
holder of OPEC’s rotating presidency, said in a
statement on Monday.
"I think rebalancing is going on, and it took a while
for U.S. production to go down, but it is down
now," Daniel Yergin, vice chairman of consulting firm IHS Markit, said in a Bloomberg TV
interview. "$50 is probably the stabilization price. You see some companies saying that in this
range they can actually make money."

Oil Drillers Bring Back Rigs in Longest Streak Since 2014
Rachel Adams-Heard racheladhe
U.S. oil producers added rigs for the seventh week in a row, the longest period of expansion since
the final days of the drilling boom in early 2014.
Rigs targeting crude in the U.S. rose by 15 to 396, after seven were added last week, Baker
Hughes Inc. said on its website Friday. Explorers have now added 66 rigs since June 24, led by
rising activity in the Permian Basin in West Texas.
This week’s additions mark the longest period of oilfield expansion since April 2014, when drillers
added oil rigs nine weeks in a row. In the Permian, the country’s largest shale play, the count
increased by 12 to 189 this week. A total of 56 oil rigs have been brought back to work in the area
since mid-May.
"This is all about the Permian Basin," said James Williams, president of WTRG Economics in
London, Arkansas. "All the evidence is that the economics are best for producing oil in the
Permian Basin, but a 12 rig jump in one area is still a surprise."
Oil is heading for its biggest weekly gain since April after Saudi Arabia signaled it’s prepared to
discuss actions to stabilize markets at OPEC talks next month in Algiers. West Texas Intermediate
crude for September delivery was up 84 cents, or 1.9 percent, at 1:34 p.m. on the New York
Mercantile Exchange.
"If this meeting in Algeria wasn’t in the wind, this would have knocked prices off by probably about
a buck," said Williams.
Price Recovery
Prompted by an oil price recovery from a 12-year low in February, producers have begun
returning parked rigs to service after idling more than 1,000 rigs since the start of last year. Prices

peaked above $51 a barrel on June 8, and have declined about 13 percent since then to trade
around $44.
The long term decline in drilling expansion has led to a slowdown in production. Crude output fell
by 15,000 barrels a day to 8.45 million during the week ended Aug. 5, the Energy Information
Administration reported Wednesday.
"I think it’s just a matter of time before we come into balance," Paul Crovo, a Philadelphia-based
oil and equity analyst at PNC Capital Advisors, said on Thursday. "We think the fundamentals will
take care of themselves as we come into the third quarter and later into the fourth quarter and
early 2017."
Natural gas rigs rose by 2 to 283 this week, bringing the total for oil and gas up by 17 to 481,
Baker Hughes said.

International Energy Agency concerned as oil supplies exceed demand
Anthony McAuley
The International Energy Agency has joined the chorus voicing concern that oil supply is again
running ahead of demand.
The Paris-based think tank on Thursday lowered its forecast for oil demand growth for next year,
saying the rebound in oil prices from their depths at the start of the year had slowed the market’s
momentum.
The IEA also noted that Opec output was steaming ahead, led by record output from Saudi Arabia
in July, as well as gains from other Arabian Gulf producers, including the UAE and Kuwait.
In its monthly oil market report, the IEA said it lowered its forecast for demand growth for next year
by 100,000 barrels per day, to 1.2 million bpd, which would represent a slowdown from this year’s
forecast growth of 1.4 million bpd.
The slowdown is already apparent, with data confirming that demand growth in the first half of the
year slowed from a year-on-year rise of 1.6 million bpd in the first three months to 1.4 million bpd
in the second quarter. The IEA now expects growth to slow further in the third quarter – to 1.2
million bpd.
The US, the world’s biggest market, is the main factor. There was strong growth in demand as
petrol prices plummeted there in line with the oil price slump last year. Refineries’ demand for
crude rose sharply, but that response overshot somewhat and rising inventories – particularly of
diesel and other middle distillates (such as jet fuel) – has led to cutbacks at plants totalling about
10 per cent of capacity.
In other bad news for the world market, the pace of growth in India – which has been a growth
engine for the oil market – has slowed sharply.

"The rapid pace of Indian demand growth has eased dramatically in recent months ... due to
June’s sharp slowdown in gasoline and diesel demand growth as well as stuttering petrochemical
use during May," the IEA reported.
A relatively mild monsoon season and a slowing of growth in the transportation sector mid-year,
as well as a slight downward revision to the IMF’s forecast for India’s economic growth next year,
led the IEA to trim its forecast oil demand growth for the subcontinent this year and next.
The IEA noted that output from outside Opec increased last month, mainly owing to Canadian
output recovering from outages after wildfires ravaged the Fort McMurray oil-producing area in
Alberta.
Output from non-Opec producers is still down 1.1 million bpd year-on-year, outstripping gains in
production by Opec of 870,000 bpd, led by Saudi Arabia’s record output last month of more than
10.6 million bpd.
IEA revised upward expected non-Opec output for next year by 100,000 bpd, to 56.9 million bpd.
The upshot, the IEA concluded: "The massive overhang of stocks is...keeping a lid on prices, with
both newly produced and stored crude competing for market share in an increasingly volatile
refinery margin environment."

NewBase Special Coverage
News Agencies News Release 07 August 2016
In Debt and Out of Cash, Oil and Gas M&A Slow to Recover
by Deon Daugherty|Rigzone
Persistently low commodity prices and lack of market confidence is delaying an expected uptick in
oil and gas mergers and acquisitions (M&A) across all sectors, Deloitte LLP reports in a recent
study.
During the first half of 2016, Deloitte found that the number of M&A deals reached its lowest total
in five years. In the first six months of 2012, 385 deals had a value of $127.37 billion. Fast forward
to the same time frame in 2016, and 198 deals totaled $85.66 billion.
The “lower for longer” philosophy of energy investors during the last 18 months has given way to
questions of exactly how much lower and how much longer. Essentially, the second year of the
commodity price downturn has found lenders less willing to fund deals, Deloitte wrote in “Oil &
Gas Mergers and Acquisitions Report – Mid-Year 2016: Looking for a Restart.”
Heading into the second half of the year, more exploration and production (E&P) companies, as
well as their service providers, are expected to file for bankruptcy, Deloitte said. The industry’s
revival will rely on several factors: stable commodity prices, open debt markets and global
economic growth.
“I think the numbers tell a very straightforward story,” said Andrew Slaughter, executive director at
the Deloitte Center for Energy Solutions. “Even if you look across all of the
sectors, there’s still an awful lot of caution and uncertainty around the ‘where,
when, how fast and how far’ the recovery will go. If you compare this downturn
with historical downturns, it’s lasted a lot longer. Nobody really anticipated it
was going to last as long as this.”
Slaughter told Rigzone that boardrooms are in a position that members don’t
see past the next quarter and many have yet to yield an increase in cash flow.
Plus, most companies are still leveraged from the downturn.
“You’ve got buyers not sure how to value assets and how to pick out the best assets. Nobody is
really sure about when to recognize a sustainable recovery. I think there are a lot of impediments
to the uptick in the deal flow that most people anticipated,” he said.
Still, Slaughter said the seeds of recovery do exist with some erosion in the inventories that have
pushed down commodity prices.
“It’s taking quite a while and we’re not going to get a tsunami of consolidation or asset
rationalization in the next several months,” he said. “It’s going to be slow. It’s going to be cautious
and I think there will need to be a lot clearer perception across the market about a higher price
level is here to stay, the supply-demand balance is more in historical territory, and there is room to
drill up more prospects than there is today.”

The key finding of Deloitte’s research is that the industry’s M&A will remain in a holding pattern
until market uncertainty plays out.
“It will take a much stronger set of signals that the recovery is underway and is sustainable. I don’t
think a brief price spike is going to do it. We all want to see a sustainable price recovery, $10, $15
or $20 above where we are today to really kick things off again,” he said.
Dozens of Upstream Bankruptcies
In the upstream sector, there was a slight increase in the number of deals from 2015, but the
value of those deals was less than the previous year’s first half. Of the 81 upstream bankruptcies
since 2014 around the world, 77 have been producers, which may yield more deals through the
rest of the year.
Of the 136 upstream deals covered, 72 of them accounted for 45 percent of the total deal value.
The largest among them were the Suncor Energy purchase of Canadian Oil Sands Ltd. at $4.5
billion and Range Resources Corp.’s buy of Memorial Resource Development for $4.4 billion.
Big Deals in Midstream
The midstream sector has offered some positive news, containing three of the largest deals to
date – each of which included companies based outside of the United States.
The midstream deal between TransCanada and Columbia Pipeline Group was the second largest
of all oil and gas subsectors, accounting for 61 percent of all deal value. In total, less than two
dozen midstream deals generated $20 billion during the first six months of 2016.
Oilfield Services Trouble
Although oilfield services (OFS) lead the lay-offs in energy both in timing and quantity, only four of
the 81 oil and gas bankruptcies in the first half have claimed OFS companies. Deloitte found that

the number was held in check by the fact smaller companies with more localized OFS liquidated
their assets and closed their doors outside of the bankruptcy courts.
As a group, OFS saw 21 deals with a total value of $16.8 billion during the first half of the year.
Downstream’s Fewer Deals, Fewer Dollars
Deloitte found that in the first half of 2016, the downstream sector had less activity than in the two
previous years. In total, there were nine corporate deals worth more than $1.8 billion and 10
assets sales valued at $4.1 billion. More than half – 11 of 20 – of the deals involved companies
outside of the United States and most focused on logistics and distribution instead of refineries,
Deloitte said.
ArcLight Capital Partners was a mover in the downstream space, scooping up TransMontaigne
GP and NGL Energy Partners. In addition, ArcLight has made four other purchases in the last 12
months, which Deloitte said sends a message the company is developing an infrastructure
acquisition and development strategy.
Still, downstream as a sector is strong relative to the others. As Slaughter explained, downstream
has a different business cycle than that of upstream and midstream.
“Downstream margins have been good, and so that is a trigger for deal-making. If you have a
company with a portfolio of downstream assets that they want to high-grade, then a high-margin
environment is probably a good time to do that because it means their maybe second or third-tier
assets are attractive to other buyers and the valuations will still be pretty healthy,” he said.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 26 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 14 August 2016 K. Al Awadi

New base energy news issue 906 dated 14 august 2016

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