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NewBase Energy News 13 November 2018 - Issue No. 1213 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Adnoc inks two major deals with Aramco, Indian firm
Khaleej Times - waheedabbas@khaleejtimes.com
Abu Dhabi National Oil Company (Adnoc) on Monday signed a deal with Aramco to explore
investments improve in gas and LNG to expand its revenues and also inked a deal with an Indian
firm to store oil in the state of Karnataka.
Dr Sultan Ahmed Al Jaber, UAE's Minister of State and Adnoc Group CEO, and Amin Nasser,
President and CEO of Saudi Aramco, signed the agreement on the sidelines of 21st Abu Dhabi
International Petroleum Exhibition and Conference (Adipec) on Monday.
Under the deal, Adnoc and Aramco will jointly conduct techno-economic feasibility studies and
exchange knowledge and experiences in the energy sector.
Al Jaber said increased cooperation between Adnoc and Aramco will ensure greater energy security
and long-term economic prosperity for both nations.
"This agreement will ensure that we are well-positioned to secure greater returns from global LNG
demand growth by combining the technological and operational expertise of two of the world's
leading national oil companies," he said.
Earlier this month, Adnoc had announced that it aims to become self-sufficient as well as net gas
exporter in the coming years. It announced investment of Dh486 billion to ramp up oil production
and investments in gas in the coming years.
Aramco's Nasser said Saudi firm has shared strategic interest to expand its gas businesses, and
this new agreement underlines its confidence in strong global gas demand growth.
Abu Dhabi's Supreme Petroleum Council recently approved Adnoc's new integrated gas strategy in
order to sustain LNG production to 2040 and allow Adnoc to seize incremental LNG and gas-to-
chemicals growth opportunities.
Earlier, Sheikh Hamed bin Zayed Al Nahyan, Chief of the Abu Dhabi Crown Prince's Court,
inaugurated the 4-day event.
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In another development on Monday,
Adnoc signed a memorandum of
understanding (MoU) with the Indian
Strategic Petroleum Reserves Ltd
(ISPRL) to lease half of Padur gas
storage facility in Karnata. The
facility can store 17 million barrels of
oil in its four compartments. Under
the deal, Adnoc could store crude in
2 compartments.
Dr Sultan Ahmed Al Jaber and
India's Oil Minister Dharmendra
Pradhan attended the signing
ceremony at Adipec on Monday.
"India is an important oil market. It is
our firm hope that we will be able to
convert this framework agreement
into a new mutually beneficial
partnership that will create
opportunities for Adnoc to increase
deliveries of high-quality crude oil to India's expanding energy market and help India meet its
growing energy demand and safeguard its energy security," Al Jaber said.
In February 2018, an Indian consortium of three companies, comprising ONGC Videsh, Indian Oil
Company and Bharat PetroResources, was awarded a 10 per cent participating interest in Abu
Dhabi's offshore Lower Zakum concession.
India is over 82 per cent dependent on imports to meet its crude oil needs, around 8 per cent of is
supplied by the UAE.
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Adnoc in deal to explore crude storage in India
India News + NewBase
The Abu Dhabi National Oil Company (Adnoc) has signed an agreement with the Indian Strategic
Petroleum Reserves Ltd (ISPRL) to explore storing Adnoc crude oil at ISPRL’s underground oil
storage facility in the Indian state of Karnataka.
The underground storage facility at Padur in Karnataka has a 2.5 million-ton (~17 million barrels)
capacity. Under the memorandum of understanding (MoU), Adnoc could store crude in two
compartments at Padur.
The MoU with ISPRL, an Indian
government-owned company mandated
to store crude oil for emergency needs,
follows the arrival, on November 4, of
the final shipment of the initial delivery of
Adnoc crude to be stored in another
ISPRL underground facility in
Mangalore, also in Karnataka, which will
store 5.86 million barrels of Adnoc crude
oil.
The MoU was signed by Abdulla Salem
Al Dhaheri, director of Marketing, Sales
and Trading at Adnoc, and HPS Ahuja,
CEO and MD at ISPRL, on the sidelines
of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec).
The signing was witnessed by Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group
CEO, and Dharmendra Pradhan, Minister of Petroleum and Natural Gas and Skill Development and
Entrepreneurship for the Government of India.
D. Al Jaber said: “India is an important oil market, and this agreement underscores the strategic
energy partnership between the UAE and India, which leverages the UAE’s and Adnoc’s expertise
and oil resources. It is our firm hope that we will be able to convert this framework agreement into
a new mutually beneficial partnership that will create opportunities for Adnoc to increase deliveries
of high-quality crude oil to India's expanding energy market and help India meet its growing energy
demand and safeguard its energy security.”
Adnoc is the only foreign oil and gas company, so far, to invest, by way of crude oil, in India’s
strategic petroleum reserves program. It is also a stakeholder, along with Saudi Aramco, and a
consortium of Indian state-run companies, in one of India’s largest refinery and petrochemicals
complexes, to be constructed at Ratnagiri in Maharashtra.
Dharmendra Pradhan said: “This memorandum of understanding will allow ISPRL to explore, with
Adnoc, opportunities related to the possible storage of Adnoc crude at Padur, which would help to
significantly strengthen the country’s strategic petroleum reserves. This agreement reflects the
strong bonds of cooperation between India and the UAE and provides a foundation for strengthening
and expanding our strategic energy relationship.”
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In addition to Adnoc’s stake in the Ratnagiri refinery, the hydrocarbon linkages between the UAE
and India were bolstered in February 2018, when an Indian consortium of three companies,
comprising ONGC Videsh, Indian Oil Company and Bharat Petro Resources Ltd., was awarded a
10 per cent participating interest in Abu Dhabi’s offshore Lower Zakum concession.
ISPRL has already built 5.33 million tons of underground storage capacity at three locations,
Visakhapatnam (1.33 million tons), Mangalore (1.5 million tons) and Padur (2.5 million tons) that
can meet around 10 days of the country’s oil needs. The government of India, in June 2018,
announced the creation of two new reserves, a 4-million-tons storage facility at Chandikhol, in the
eastern state of Odisha, and an additional 2.5-million-tons facility at Padur.
Combined, the existing and newly announced facilities will provide around 22 days of emergency
coverage for India’s crude oil requirements.
Indian energy demand is forecast, by the International Energy Agency (IEA), to grow by more than
any other country in the period to 2040, propelled by an economy that will grow to more than five-
times its current size and by population growth that will make it the world’s most populous country.
Indian energy consumption is expected to grow more than double by 2040, accounting for 25 per
cent of the rise in global energy demand, and the largest absolute growth in oil consumption.
India is over 82 per cent dependent on imports to meet its crude oil needs, around eight percent of
which is supplied by the UAE. In addition to helping to ensure energy security, participation in the
oil storage facilities, in India, will enable Adnoc to efficiently and competitively meet Indian market
demand
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Egypt: Mubadala Petroleum buys 20% in Egypt concession from Eni
Arabia Trade + NewBase
Mubadala Petroleum has announced that it has agreed with Eni to purchase a 20 percent
participating interest from Eni’s share in the Nour North Sinai Offshore Area (Nour) concession, an
offshore exploration block in Egypt.
Eni is the operator of the concession through its subsidiary, IEOC.
In the concession, which is in participation with Egyptian Natural Gas Holding Company (EGAS),
Eni holds an 85 percent interest in partnership with Tharwa Petroleum Company, which holds a 15
percent interest, said a Wam news agency report.
Musabbeh Al Kaabi, CEO of petroleum and petrochemicals, Mubadala Investment Company and
chairman of the board of Mubadala Petroleum, said: "This investment enables Mubadala Petroleum
to further expand our position in Egypt while deepening our strategic partnership with Eni, the
operator of both the Shorouk and Nour concessions.
"This exploration block complements our existing investment in Zohr, supports our growth strategy
in Egypt and holds the potential to unlock an additional resource base that could add to our business
in the longer term."
The completion of the transaction is subject to the satisfaction of certain customary conditions,
including receiving approvals from the relevant Egyptian government authorities.
This transaction would mark Mubadala Petroleum’s second acquisition in Egypt. The company
entered the country in June 2018 by acquiring from Eni a 10 percent participating interest in the
Shorouk concession, which contains the producing world-class Zohr gas field.
In turn, Claudio Descalzi, CEO of Eni, said: "This transaction strengthens our partnership after the
successful relationship in Zohr and confirms Mubadala Petroleum’s trust in Eni’s robustness as
operator, both in projects development and exploration activities."
The Nour exploration block is located approximately 50 km offshore in the Eastern Mediterranean,
in water depth ranging from 50 to 400 m, and covers a total area of 739 km. Eni and Tharwa
Petroleum Company are currently carrying out drilling of the exploration well as foreseen in the first
exploration period of the Nour concession. - TradeArabia News Service
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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UAE's ADNOC awards 40-yr concession to Eni for gas project
Eni will contribute 25% of the development cost of the multi-billion dollar project
By Rania El Gamal, Reuters News
Abu Dhabi National Oil Company (ADNOC) said on Tuesday it has granted Italian oil major Eni a
40-year concession, awarding it a 25 percent stake in its offshore ultra-sour gas mega project.
Eni will contribute 25 percent of the development cost of the multi-billion dollar project, ADNOC said
in a statement announcing the signing of the pact.
ADNOC added that it is in discussion with other potential partners for the remaining 15 percent
stake in the Ghasha concession.
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or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this
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NewBase 13 October 2018 - 2018 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices fall as Trump counters OPEC plan to cut supply
Reuters+ Bloomberg + NewBase
Oil prices fell by more than 1 percent on Tuesday, with Brent crude sliding below $70 and WTI below
$60 per barrel, after U.S. President Donald Trump put pressure on OPEC not to cut supply to prop
up the market.
U.S. West Texas Intermediate (WTI) crude oil futures were at $59.06 per barrel at 0115 GMT, down
87 cents, or 1.5 percent from their last settlement.
International benchmark Brent crude oil futures LCOc1 were at $69.17 per barrel, down 95 cents,
or 1.4 percent, from their last close.
Both oil price benchmarks have shed more than 20 percent in value since early October.
Oil price special
coverage
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“Sky-high production in the U.S., coupled with incremental barrels coming from Saudi Arabia and
Russia is starting to impact oil market balances. As such, crude oil inventories are starting to
increase once again,” Bank of America Merrill Lynch said in a note.
The bank added that it expected U.S. crude production C-OUT-T-EIA, already at a record 11.6
million barrels per day (bpd), to break through 12 million bpd in 2019, making the United States
“energy independent”.
Top crude exporter Saudi Arabia has watched with alarm how supply is starting to outpace
consumption, fearing a repeat of 2014’s price crash.
Saudi Energy Minister Khalid al-Falih said on Monday the Organization of the Petroleum Exporting
Countries (OPEC) agreed there was a need to cut oil supply next year by around 1 million bpd from
October levels to prevent oversupply.
Dutch bank ING said given the abundance of global supply as well as the threat of an economic
slowdown, “cuts over 2019 are unavoidable ...(as) it is becoming clearer that as we move closer
toward 2019, the market will see a sizeable surplus at least over the first half of 2019.”
Saudi Arabia says need for 1 mln bpd cut in oil
U.S. President Donald Trump, however, did not like the rhetoric coming from his political ally in
Saudi Arabia.
“Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much
lower based on supply!” Trump said in a Twitter post on Monday.
Traders said a strong U.S. dollar, which hit a 16-month high on Tuesday .DXY, also weighed on
crude futures. That strength makes oil purchases in countries using other currencies at home more
expensive.
It is also seen as an indicator of heightened economic risk to emerging market economies, which
have been the key drivers to global oil demand growth over the past years.
Saudi Arabia, Iraq Agree on Coordination Ahead of OPEC+ Talks
By Grant Smith
OPEC and its allies gathered for a meeting in Abu Dhabi amid signs that they’ll consider cutting
production next year.
A technical committee representing the coalition projected on Saturday a global oil surplus will
resurface in 2019 if they continue to produce at current rates, according to delegates familiar with
its conclusions.
Nonetheless, Saudi Arabia’s Energy Minister Khalid Al-Falih -- representing OPEC’s biggest
member -- said ahead of Sunday’s meeting between the Organization of Petroleum Exporting
Countries and its allies in Abu Dhabi that it was “too premature” to discuss output cuts.
At least three countries which are members of the Joint Ministerial Monitoring Committee consider
that it’s necessary to discuss the possibility of output cuts in 2019, according to delegates. Russia
isn’t ready to reveal its position on whether the group should reduce output further before the
meeting on Sunday, according to a person familiar with the matter.
Al-Falih agreed earlier in a meeting in Baghdad on joint coordination with Iraq to achieve more
stability in the oil market, Iraqi Oil Ministry spokesman Asim Jihad said by phone. The kingdom’s
energy minister flew into Baghdad for a meeting with Iraqi Prime Minister Adel Abdul Mahdi.
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Al-Falih flew to Abu Dhabi for talks with OPEC and other producers on Sunday. Iraq, the cartel’s
second biggest producer after Saudi Arabia, has largely rebuilt its energy industry after decades of
conflict and sanctions, and has announced ambitious plans to keep expanding its output capacity.
OPEC and its allies meet under mounting pressure to consider renewed production cuts after a
slump in oil prices. Crude on both sides of the Atlantic tumbled Friday as the U.S. reported rising
stocks and Washington granted waivers that lessen the impact of sanctions on Iranian exports.
Brent plunged below $70 a barrel for the first time in six months, shedding 4 percent last week. WTI
futures also tumbled, losing around 5%.
The OPEC+ Joint Technical Committee, which met for talks ahead of Sunday’s meeting, has given
a preliminary 104 percent compliance rate to its cuts deal in October, according to a delegate. The
producers’ group implemented about 111% of its pledged cuts in September and has agreed to
boost supply by restoring 100% compliance.
The International Energy Agency has repeatedly called for OPEC to open the taps to ensure global
demand for crude is met. IEA Executive Director Fatih Birol has spoken of the market entering “a
red zone” if output losses from Venezuela and exports from Iran are not offset.
The producer group and its allies have been rapidly ramping up output since May, responding to
political pressure from U.S. President Donald Trump and offsetting supply losses from Iran and
Venezuela. Now, they’re considering a U-turn.
Sudden Reversal
In the U.S., crude production increased to a record 11.6 million barrels a day last week and
stockpiles rose by 5.8 million barrels, according to the Energy Information Administration. OPEC’s
own output in October reached the highest level since 2016, while Russia last month pumped 11.4
million barrels a day, a post-Soviet record.
On top of the danger of overproduction, there’s also the risk to demand from faltering emerging-
market economies and a trade war between the U.S. and China.
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If the group does ultimately decide fresh cutbacks are necessary, it would mark its second
production U-turn this year. For Saudi Arabia -- the world’s biggest crude exporter -- it would be the
third time in recent years that the kingdom has delivered a supply surge only to quickly reverse it.
First there are a number of challenges to resolve. The Saudis will need to once again secure the
support of rival-turned-partner Russia, which has less need for high oil prices. There’s also the risk
of antagonizing Trump, who has repeatedly accused the group of inflating prices.
Oil Short-Sellers Make a Comeback as OPEC Moves to Center Stage
By Jessica Summers
The oil bears are back, and they’re looking at OPEC before making their next move.
While money managers slashed bets on rising West Texas Intermediate crude prices for a ninth
week in their longest retreat on record, short-selling jumped to the highest in more than a year. The
rapid shift in sentiment sets the stage for an OPEC meeting on Sunday to discuss market conditions.
“It’s been a position where no one obviously wants to be long,” said Brian Kessens, who helps
manage $16 billion in energy assets at Tortoise in Leawood, Kansas. “What OPEC needs to do is
certainly come off the produce-as-much-as-you-can mode. OPEC’s the most important factor in the
near-term.”
Investors will be waiting to see whether OPEC provides any indication that the group will trim
production once again next year as futures plunge. A change in policy would follow President Donald
Trump’s calls on the cartel to lower oil prices and ramp up output to make up for lost crude from Iran
due to U.S.-imposed sanctions.
Among the reasons for the bearishness that has roiled the oil market are OPEC production at the
highest since 2016, record U.S. output and waivers given to a number of importers of Iranian crude,
including China.
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“The supply side didn’t necessarily play out as they had expected, especially given the waivers, and
at the same time, we were building stock and we still are,” said Ryan Fitzmaurice, an energy
strategist at Rabobank. “From the long side, it was a questionable time to go max long.”
Hedge funds’ net-long position -- the difference between bets on higher prices and wagers on a
drop -- in WTI crude slid 18 percent to 160,291 futures and options in the week ended Nov. 6,
according to the U.S. Commodity Futures Trading Commission. That’s the lowest since September
2017. Longs fell 6.6 percent to the lowest since July 2015, while shorts soared 29 percent to the
highest since October 2017.
But the bottom might be near for crude. WTI’s 14-day relative strength index is below 30, a level
marking oversold territory. And there are still bullish factors in the market, such as Iran supplying
less crude, declining production in Venezuela and risks in countries like Libya and Nigeria, according
to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. Plus,
demand should increase as we move into the winter, he said.
“With this level of correction and the supportive factors that I am looking at, we could see a
turnaround,” said Tchilinguirian. Still, “if you were to ask traders right now, would you buy into this,
the typical answer you’ll get is, I don’t know if I want to catch a falling knife.”
Oil's Rapid Run of Declines Kicks Up Pressure as OPEC Gathers
By Jessica Summers
It’s all eyes on OPEC as U.S. oil prices fell for 10 consecutive days, wiping out any gains for the
year.
Futures in New York slid 0.8 percent to settle at $60.19 a barrel on Friday, a day after falling into a
bear market on concerns growing supplies will overwhelm the market, as the U.S. offered nations
waivers to continue buying Iranian oil. The plunge will push OPEC and its allies into a corner as
they gather in a highly-anticipated meeting this weekend that could yield a signal on future
production cuts.
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“The Iranian sanctions were supposed to be a game-changer in the market,” said Michael Loewen,
a commodities strategist at Scotiabank in Toronto. Producers have been “attempting to pump as
much oil as possible right now to soften the blow of those Iranian sanctions, yet Trump comes out
and gives waivers.”
Crude’s slump from its early-October peak above $76 a barrel comes as U.S. production is at a
record, OPEC output is at the highest since 2016, more Iranian crude might make it to market then
previously thought and demand growth remains a concern.
Click here for the latest on speculators’ oil positioning
WTI futures fell 4.7 percent this week. Total volume traded was about 44 percent above the 100-
day average on Friday, while a measure of oil market volatility jumped to the highest level since late
2016.
Brent futures for January settlement fell 47 cents to end the session at $70.18 a barrel on the
London-based ICE Futures Europe exchange, the lowest since April 9. The global benchmark crude
traded at a $9.82 premium to January WTI.
A potential agreement by OPEC to return to output cuts would mark the second production U-turn
for the group this year. For Saudi Arabia -- the world’s biggest crude exporter -- it would be the third
time in recent years that the kingdom has delivered a supply surge only to quickly backtrack on it.
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NewBase Special Coverage
News Agencies News Release Nov -2018
If OPEC Thought Its Job Was Done, 2019 Will Be a Nasty Shock
Producers face a supply glut, despite the return of sanctions against Iran. Surging shale means the
group will have to extend output cuts.
By Julian Lee
It was meant to be a short, sharp shock. Instead, OPEC members are facing a long, slow grind with
no end in sight.
The deal reached with several non-OPEC countries in 2016 to cut oil supply and drain excess
inventories was meant to last just six months. But after last week’s ugly slide into a bear market for
prices, the agreement looks likely to drag into a third year as the group faces having to make further
cuts in 2019.
Taking 1.8 million barrels a day of oil off the market from January 2017 was meant to drain excess
inventories by the middle of that year, restore prices to an undefined “acceptable” level and
balance supply and demand. Instead, the glut persisted.
Although better than expected, compliance with the agreement was not complete and it was not
until the deal was extendedand Saudi Arabia started cutting shipments to the U.S. in the middle of
2017 that prices really began to pick up.
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Crude Levers
Brent crude prices began to rise only after Saudi Arabia cut supplies to the U.S.
Source: Bloomberg
A further extension to the deal helped to push prices up to $80 a barrel by mid-2018,
earning tweeted rebukes from President Donald Trump that prompted a relaxation of the cuts and
a surge in supply from those with the capacity to do so — principally Saudi Arabia and Russia. Total
OPEC output is now the highest since before the cuts were introduced, even after allowing for
changes in membership, while Russia’s hit a post-Soviet high of 11.4 million barrels a day last
month.
But the recovery in oil prices has been a double-edged sword for OPEC and friends. Sure, it has
boosted revenues for most — Venezuela and soon Iran being the exceptions — but it has also lit a
fire under U.S. shale oil production.
Boom Time
U.S. crude output has risen faster in the past two years than it did during the first shale boom
Source: Bloomberg, EIA
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The latest weekly and monthly data both show American oil output up by 2 million barrels a day
year on year. That’s equivalent to adding the combined production of OPEC members Nigeria and
Gabon in the space of 12 months.
And it comes at a time when shale growth is being hampered by a lack of pipeline capacity to move
crude from the Permian Basin in Texas to the refining and export facilities on the Gulf of Mexico.
Those bottlenecks should ease next year, allowing supply to rise by another million barrels a day
by the end of 2019, according to the Energy Information Administration. On past performance, that
forecast could increase significantly.
Shale Wave
The U.S. is producing over million barrels a day more than was forecast in January
Source: Bloomberg, EIA
Perversely, renewed U.S. sanctions on Iran, which came into effect on Nov. 5, have added to the
perception of a growing supply glut. The country’s exports have fallen by almost 40 percent since
April, the last month before President Trump announced that he was pulling the U.S. out of the
nuclear deal.
But unexpectedly generous waivers from sanctions, which were extended to several countries that
had already halted purchases, have raised the possibility that Iran’s overseas oil sales could actually
increase in November.
Oil ministers from the OPEC+ group that cut output are meeting today in Abu Dhabi to assess their
ongoing collaboration. The get-together won’t set policy, that will have to wait until the full meetings
in Vienna in early December, but it will set the tone for those gatherings.
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There is already talk between Saudi Arabia and Russia of a need to extend restraint into 2019 and
both may consider reducing their own output back to their individual target levels, having boosted it
in recent months to make up some of the shortfalls from Venezuela and Iran.
Glut Returns
OPEC's oil supply/demand balance shows glut returning after a short-lived draw
Source: Bloomberg, OPEC
Note: forecast assumes constant OPEC supply at 33.3 million barrels a day from 4Q18
OPEC’s own analysis shows the need to prolong, or even deepen, the cuts. If the group doesn’t
alter its current track, global oil stockpiles are set to rise by around 1.8 million barrels a day in the
first quarter of 2019 and to continue building throughout the year.
Producers may get a short respite from falling prices in the next few weeks. Demand from U.S.
refineries could rise by as much as 1.5 million barrels a day by the end of the year, as plants return
from their normal fall maintenance. But that boost will be short-lived. 2019 is looking like another
difficult year for OPEC and friends.
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,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 17
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 October 2018 K. 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,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 18
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,
or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 19
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New base energy news november 13 2018 no-1213 by khaled al awadi

  • 1. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 13 November 2018 - Issue No. 1213 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE UAE: Adnoc inks two major deals with Aramco, Indian firm Khaleej Times - waheedabbas@khaleejtimes.com Abu Dhabi National Oil Company (Adnoc) on Monday signed a deal with Aramco to explore investments improve in gas and LNG to expand its revenues and also inked a deal with an Indian firm to store oil in the state of Karnataka. Dr Sultan Ahmed Al Jaber, UAE's Minister of State and Adnoc Group CEO, and Amin Nasser, President and CEO of Saudi Aramco, signed the agreement on the sidelines of 21st Abu Dhabi International Petroleum Exhibition and Conference (Adipec) on Monday. Under the deal, Adnoc and Aramco will jointly conduct techno-economic feasibility studies and exchange knowledge and experiences in the energy sector. Al Jaber said increased cooperation between Adnoc and Aramco will ensure greater energy security and long-term economic prosperity for both nations. "This agreement will ensure that we are well-positioned to secure greater returns from global LNG demand growth by combining the technological and operational expertise of two of the world's leading national oil companies," he said. Earlier this month, Adnoc had announced that it aims to become self-sufficient as well as net gas exporter in the coming years. It announced investment of Dh486 billion to ramp up oil production and investments in gas in the coming years. Aramco's Nasser said Saudi firm has shared strategic interest to expand its gas businesses, and this new agreement underlines its confidence in strong global gas demand growth. Abu Dhabi's Supreme Petroleum Council recently approved Adnoc's new integrated gas strategy in order to sustain LNG production to 2040 and allow Adnoc to seize incremental LNG and gas-to- chemicals growth opportunities. Earlier, Sheikh Hamed bin Zayed Al Nahyan, Chief of the Abu Dhabi Crown Prince's Court, inaugurated the 4-day event.
  • 2. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 2 In another development on Monday, Adnoc signed a memorandum of understanding (MoU) with the Indian Strategic Petroleum Reserves Ltd (ISPRL) to lease half of Padur gas storage facility in Karnata. The facility can store 17 million barrels of oil in its four compartments. Under the deal, Adnoc could store crude in 2 compartments. Dr Sultan Ahmed Al Jaber and India's Oil Minister Dharmendra Pradhan attended the signing ceremony at Adipec on Monday. "India is an important oil market. It is our firm hope that we will be able to convert this framework agreement into a new mutually beneficial partnership that will create opportunities for Adnoc to increase deliveries of high-quality crude oil to India's expanding energy market and help India meet its growing energy demand and safeguard its energy security," Al Jaber said. In February 2018, an Indian consortium of three companies, comprising ONGC Videsh, Indian Oil Company and Bharat PetroResources, was awarded a 10 per cent participating interest in Abu Dhabi's offshore Lower Zakum concession. India is over 82 per cent dependent on imports to meet its crude oil needs, around 8 per cent of is supplied by the UAE.
  • 3. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 3 Adnoc in deal to explore crude storage in India India News + NewBase The Abu Dhabi National Oil Company (Adnoc) has signed an agreement with the Indian Strategic Petroleum Reserves Ltd (ISPRL) to explore storing Adnoc crude oil at ISPRL’s underground oil storage facility in the Indian state of Karnataka. The underground storage facility at Padur in Karnataka has a 2.5 million-ton (~17 million barrels) capacity. Under the memorandum of understanding (MoU), Adnoc could store crude in two compartments at Padur. The MoU with ISPRL, an Indian government-owned company mandated to store crude oil for emergency needs, follows the arrival, on November 4, of the final shipment of the initial delivery of Adnoc crude to be stored in another ISPRL underground facility in Mangalore, also in Karnataka, which will store 5.86 million barrels of Adnoc crude oil. The MoU was signed by Abdulla Salem Al Dhaheri, director of Marketing, Sales and Trading at Adnoc, and HPS Ahuja, CEO and MD at ISPRL, on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec). The signing was witnessed by Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, and Dharmendra Pradhan, Minister of Petroleum and Natural Gas and Skill Development and Entrepreneurship for the Government of India. D. Al Jaber said: “India is an important oil market, and this agreement underscores the strategic energy partnership between the UAE and India, which leverages the UAE’s and Adnoc’s expertise and oil resources. It is our firm hope that we will be able to convert this framework agreement into a new mutually beneficial partnership that will create opportunities for Adnoc to increase deliveries of high-quality crude oil to India's expanding energy market and help India meet its growing energy demand and safeguard its energy security.” Adnoc is the only foreign oil and gas company, so far, to invest, by way of crude oil, in India’s strategic petroleum reserves program. It is also a stakeholder, along with Saudi Aramco, and a consortium of Indian state-run companies, in one of India’s largest refinery and petrochemicals complexes, to be constructed at Ratnagiri in Maharashtra. Dharmendra Pradhan said: “This memorandum of understanding will allow ISPRL to explore, with Adnoc, opportunities related to the possible storage of Adnoc crude at Padur, which would help to significantly strengthen the country’s strategic petroleum reserves. This agreement reflects the strong bonds of cooperation between India and the UAE and provides a foundation for strengthening and expanding our strategic energy relationship.”
  • 4. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 4 In addition to Adnoc’s stake in the Ratnagiri refinery, the hydrocarbon linkages between the UAE and India were bolstered in February 2018, when an Indian consortium of three companies, comprising ONGC Videsh, Indian Oil Company and Bharat Petro Resources Ltd., was awarded a 10 per cent participating interest in Abu Dhabi’s offshore Lower Zakum concession. ISPRL has already built 5.33 million tons of underground storage capacity at three locations, Visakhapatnam (1.33 million tons), Mangalore (1.5 million tons) and Padur (2.5 million tons) that can meet around 10 days of the country’s oil needs. The government of India, in June 2018, announced the creation of two new reserves, a 4-million-tons storage facility at Chandikhol, in the eastern state of Odisha, and an additional 2.5-million-tons facility at Padur. Combined, the existing and newly announced facilities will provide around 22 days of emergency coverage for India’s crude oil requirements. Indian energy demand is forecast, by the International Energy Agency (IEA), to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five- times its current size and by population growth that will make it the world’s most populous country. Indian energy consumption is expected to grow more than double by 2040, accounting for 25 per cent of the rise in global energy demand, and the largest absolute growth in oil consumption. India is over 82 per cent dependent on imports to meet its crude oil needs, around eight percent of which is supplied by the UAE. In addition to helping to ensure energy security, participation in the oil storage facilities, in India, will enable Adnoc to efficiently and competitively meet Indian market demand
  • 5. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 5 Egypt: Mubadala Petroleum buys 20% in Egypt concession from Eni Arabia Trade + NewBase Mubadala Petroleum has announced that it has agreed with Eni to purchase a 20 percent participating interest from Eni’s share in the Nour North Sinai Offshore Area (Nour) concession, an offshore exploration block in Egypt. Eni is the operator of the concession through its subsidiary, IEOC. In the concession, which is in participation with Egyptian Natural Gas Holding Company (EGAS), Eni holds an 85 percent interest in partnership with Tharwa Petroleum Company, which holds a 15 percent interest, said a Wam news agency report. Musabbeh Al Kaabi, CEO of petroleum and petrochemicals, Mubadala Investment Company and chairman of the board of Mubadala Petroleum, said: "This investment enables Mubadala Petroleum to further expand our position in Egypt while deepening our strategic partnership with Eni, the operator of both the Shorouk and Nour concessions. "This exploration block complements our existing investment in Zohr, supports our growth strategy in Egypt and holds the potential to unlock an additional resource base that could add to our business in the longer term." The completion of the transaction is subject to the satisfaction of certain customary conditions, including receiving approvals from the relevant Egyptian government authorities. This transaction would mark Mubadala Petroleum’s second acquisition in Egypt. The company entered the country in June 2018 by acquiring from Eni a 10 percent participating interest in the Shorouk concession, which contains the producing world-class Zohr gas field. In turn, Claudio Descalzi, CEO of Eni, said: "This transaction strengthens our partnership after the successful relationship in Zohr and confirms Mubadala Petroleum’s trust in Eni’s robustness as operator, both in projects development and exploration activities." The Nour exploration block is located approximately 50 km offshore in the Eastern Mediterranean, in water depth ranging from 50 to 400 m, and covers a total area of 739 km. Eni and Tharwa Petroleum Company are currently carrying out drilling of the exploration well as foreseen in the first exploration period of the Nour concession. - TradeArabia News Service
  • 6. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 6 UAE's ADNOC awards 40-yr concession to Eni for gas project Eni will contribute 25% of the development cost of the multi-billion dollar project By Rania El Gamal, Reuters News Abu Dhabi National Oil Company (ADNOC) said on Tuesday it has granted Italian oil major Eni a 40-year concession, awarding it a 25 percent stake in its offshore ultra-sour gas mega project. Eni will contribute 25 percent of the development cost of the multi-billion dollar project, ADNOC said in a statement announcing the signing of the pact. ADNOC added that it is in discussion with other potential partners for the remaining 15 percent stake in the Ghasha concession.
  • 7. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 7 NewBase 13 October 2018 - 2018 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil prices fall as Trump counters OPEC plan to cut supply Reuters+ Bloomberg + NewBase Oil prices fell by more than 1 percent on Tuesday, with Brent crude sliding below $70 and WTI below $60 per barrel, after U.S. President Donald Trump put pressure on OPEC not to cut supply to prop up the market. U.S. West Texas Intermediate (WTI) crude oil futures were at $59.06 per barrel at 0115 GMT, down 87 cents, or 1.5 percent from their last settlement. International benchmark Brent crude oil futures LCOc1 were at $69.17 per barrel, down 95 cents, or 1.4 percent, from their last close. Both oil price benchmarks have shed more than 20 percent in value since early October. Oil price special coverage
  • 8. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 8 “Sky-high production in the U.S., coupled with incremental barrels coming from Saudi Arabia and Russia is starting to impact oil market balances. As such, crude oil inventories are starting to increase once again,” Bank of America Merrill Lynch said in a note. The bank added that it expected U.S. crude production C-OUT-T-EIA, already at a record 11.6 million barrels per day (bpd), to break through 12 million bpd in 2019, making the United States “energy independent”. Top crude exporter Saudi Arabia has watched with alarm how supply is starting to outpace consumption, fearing a repeat of 2014’s price crash. Saudi Energy Minister Khalid al-Falih said on Monday the Organization of the Petroleum Exporting Countries (OPEC) agreed there was a need to cut oil supply next year by around 1 million bpd from October levels to prevent oversupply. Dutch bank ING said given the abundance of global supply as well as the threat of an economic slowdown, “cuts over 2019 are unavoidable ...(as) it is becoming clearer that as we move closer toward 2019, the market will see a sizeable surplus at least over the first half of 2019.” Saudi Arabia says need for 1 mln bpd cut in oil U.S. President Donald Trump, however, did not like the rhetoric coming from his political ally in Saudi Arabia. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” Trump said in a Twitter post on Monday. Traders said a strong U.S. dollar, which hit a 16-month high on Tuesday .DXY, also weighed on crude futures. That strength makes oil purchases in countries using other currencies at home more expensive. It is also seen as an indicator of heightened economic risk to emerging market economies, which have been the key drivers to global oil demand growth over the past years. Saudi Arabia, Iraq Agree on Coordination Ahead of OPEC+ Talks By Grant Smith OPEC and its allies gathered for a meeting in Abu Dhabi amid signs that they’ll consider cutting production next year. A technical committee representing the coalition projected on Saturday a global oil surplus will resurface in 2019 if they continue to produce at current rates, according to delegates familiar with its conclusions. Nonetheless, Saudi Arabia’s Energy Minister Khalid Al-Falih -- representing OPEC’s biggest member -- said ahead of Sunday’s meeting between the Organization of Petroleum Exporting Countries and its allies in Abu Dhabi that it was “too premature” to discuss output cuts. At least three countries which are members of the Joint Ministerial Monitoring Committee consider that it’s necessary to discuss the possibility of output cuts in 2019, according to delegates. Russia isn’t ready to reveal its position on whether the group should reduce output further before the meeting on Sunday, according to a person familiar with the matter. Al-Falih agreed earlier in a meeting in Baghdad on joint coordination with Iraq to achieve more stability in the oil market, Iraqi Oil Ministry spokesman Asim Jihad said by phone. The kingdom’s energy minister flew into Baghdad for a meeting with Iraqi Prime Minister Adel Abdul Mahdi.
  • 9. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 9 Al-Falih flew to Abu Dhabi for talks with OPEC and other producers on Sunday. Iraq, the cartel’s second biggest producer after Saudi Arabia, has largely rebuilt its energy industry after decades of conflict and sanctions, and has announced ambitious plans to keep expanding its output capacity. OPEC and its allies meet under mounting pressure to consider renewed production cuts after a slump in oil prices. Crude on both sides of the Atlantic tumbled Friday as the U.S. reported rising stocks and Washington granted waivers that lessen the impact of sanctions on Iranian exports. Brent plunged below $70 a barrel for the first time in six months, shedding 4 percent last week. WTI futures also tumbled, losing around 5%. The OPEC+ Joint Technical Committee, which met for talks ahead of Sunday’s meeting, has given a preliminary 104 percent compliance rate to its cuts deal in October, according to a delegate. The producers’ group implemented about 111% of its pledged cuts in September and has agreed to boost supply by restoring 100% compliance. The International Energy Agency has repeatedly called for OPEC to open the taps to ensure global demand for crude is met. IEA Executive Director Fatih Birol has spoken of the market entering “a red zone” if output losses from Venezuela and exports from Iran are not offset. The producer group and its allies have been rapidly ramping up output since May, responding to political pressure from U.S. President Donald Trump and offsetting supply losses from Iran and Venezuela. Now, they’re considering a U-turn. Sudden Reversal In the U.S., crude production increased to a record 11.6 million barrels a day last week and stockpiles rose by 5.8 million barrels, according to the Energy Information Administration. OPEC’s own output in October reached the highest level since 2016, while Russia last month pumped 11.4 million barrels a day, a post-Soviet record. On top of the danger of overproduction, there’s also the risk to demand from faltering emerging- market economies and a trade war between the U.S. and China.
  • 10. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 10 If the group does ultimately decide fresh cutbacks are necessary, it would mark its second production U-turn this year. For Saudi Arabia -- the world’s biggest crude exporter -- it would be the third time in recent years that the kingdom has delivered a supply surge only to quickly reverse it. First there are a number of challenges to resolve. The Saudis will need to once again secure the support of rival-turned-partner Russia, which has less need for high oil prices. There’s also the risk of antagonizing Trump, who has repeatedly accused the group of inflating prices. Oil Short-Sellers Make a Comeback as OPEC Moves to Center Stage By Jessica Summers The oil bears are back, and they’re looking at OPEC before making their next move. While money managers slashed bets on rising West Texas Intermediate crude prices for a ninth week in their longest retreat on record, short-selling jumped to the highest in more than a year. The rapid shift in sentiment sets the stage for an OPEC meeting on Sunday to discuss market conditions. “It’s been a position where no one obviously wants to be long,” said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise in Leawood, Kansas. “What OPEC needs to do is certainly come off the produce-as-much-as-you-can mode. OPEC’s the most important factor in the near-term.” Investors will be waiting to see whether OPEC provides any indication that the group will trim production once again next year as futures plunge. A change in policy would follow President Donald Trump’s calls on the cartel to lower oil prices and ramp up output to make up for lost crude from Iran due to U.S.-imposed sanctions. Among the reasons for the bearishness that has roiled the oil market are OPEC production at the highest since 2016, record U.S. output and waivers given to a number of importers of Iranian crude, including China.
  • 11. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 11 “The supply side didn’t necessarily play out as they had expected, especially given the waivers, and at the same time, we were building stock and we still are,” said Ryan Fitzmaurice, an energy strategist at Rabobank. “From the long side, it was a questionable time to go max long.” Hedge funds’ net-long position -- the difference between bets on higher prices and wagers on a drop -- in WTI crude slid 18 percent to 160,291 futures and options in the week ended Nov. 6, according to the U.S. Commodity Futures Trading Commission. That’s the lowest since September 2017. Longs fell 6.6 percent to the lowest since July 2015, while shorts soared 29 percent to the highest since October 2017. But the bottom might be near for crude. WTI’s 14-day relative strength index is below 30, a level marking oversold territory. And there are still bullish factors in the market, such as Iran supplying less crude, declining production in Venezuela and risks in countries like Libya and Nigeria, according to Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas in London. Plus, demand should increase as we move into the winter, he said. “With this level of correction and the supportive factors that I am looking at, we could see a turnaround,” said Tchilinguirian. Still, “if you were to ask traders right now, would you buy into this, the typical answer you’ll get is, I don’t know if I want to catch a falling knife.” Oil's Rapid Run of Declines Kicks Up Pressure as OPEC Gathers By Jessica Summers It’s all eyes on OPEC as U.S. oil prices fell for 10 consecutive days, wiping out any gains for the year. Futures in New York slid 0.8 percent to settle at $60.19 a barrel on Friday, a day after falling into a bear market on concerns growing supplies will overwhelm the market, as the U.S. offered nations waivers to continue buying Iranian oil. The plunge will push OPEC and its allies into a corner as they gather in a highly-anticipated meeting this weekend that could yield a signal on future production cuts.
  • 12. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 12 “The Iranian sanctions were supposed to be a game-changer in the market,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto. Producers have been “attempting to pump as much oil as possible right now to soften the blow of those Iranian sanctions, yet Trump comes out and gives waivers.” Crude’s slump from its early-October peak above $76 a barrel comes as U.S. production is at a record, OPEC output is at the highest since 2016, more Iranian crude might make it to market then previously thought and demand growth remains a concern. Click here for the latest on speculators’ oil positioning WTI futures fell 4.7 percent this week. Total volume traded was about 44 percent above the 100- day average on Friday, while a measure of oil market volatility jumped to the highest level since late 2016. Brent futures for January settlement fell 47 cents to end the session at $70.18 a barrel on the London-based ICE Futures Europe exchange, the lowest since April 9. The global benchmark crude traded at a $9.82 premium to January WTI. A potential agreement by OPEC to return to output cuts would mark the second production U-turn for the group this year. For Saudi Arabia -- the world’s biggest crude exporter -- it would be the third time in recent years that the kingdom has delivered a supply surge only to quickly backtrack on it.
  • 13. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 13 NewBase Special Coverage News Agencies News Release Nov -2018 If OPEC Thought Its Job Was Done, 2019 Will Be a Nasty Shock Producers face a supply glut, despite the return of sanctions against Iran. Surging shale means the group will have to extend output cuts. By Julian Lee It was meant to be a short, sharp shock. Instead, OPEC members are facing a long, slow grind with no end in sight. The deal reached with several non-OPEC countries in 2016 to cut oil supply and drain excess inventories was meant to last just six months. But after last week’s ugly slide into a bear market for prices, the agreement looks likely to drag into a third year as the group faces having to make further cuts in 2019. Taking 1.8 million barrels a day of oil off the market from January 2017 was meant to drain excess inventories by the middle of that year, restore prices to an undefined “acceptable” level and balance supply and demand. Instead, the glut persisted. Although better than expected, compliance with the agreement was not complete and it was not until the deal was extendedand Saudi Arabia started cutting shipments to the U.S. in the middle of 2017 that prices really began to pick up.
  • 14. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 14 Crude Levers Brent crude prices began to rise only after Saudi Arabia cut supplies to the U.S. Source: Bloomberg A further extension to the deal helped to push prices up to $80 a barrel by mid-2018, earning tweeted rebukes from President Donald Trump that prompted a relaxation of the cuts and a surge in supply from those with the capacity to do so — principally Saudi Arabia and Russia. Total OPEC output is now the highest since before the cuts were introduced, even after allowing for changes in membership, while Russia’s hit a post-Soviet high of 11.4 million barrels a day last month. But the recovery in oil prices has been a double-edged sword for OPEC and friends. Sure, it has boosted revenues for most — Venezuela and soon Iran being the exceptions — but it has also lit a fire under U.S. shale oil production. Boom Time U.S. crude output has risen faster in the past two years than it did during the first shale boom Source: Bloomberg, EIA
  • 15. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 15 The latest weekly and monthly data both show American oil output up by 2 million barrels a day year on year. That’s equivalent to adding the combined production of OPEC members Nigeria and Gabon in the space of 12 months. And it comes at a time when shale growth is being hampered by a lack of pipeline capacity to move crude from the Permian Basin in Texas to the refining and export facilities on the Gulf of Mexico. Those bottlenecks should ease next year, allowing supply to rise by another million barrels a day by the end of 2019, according to the Energy Information Administration. On past performance, that forecast could increase significantly. Shale Wave The U.S. is producing over million barrels a day more than was forecast in January Source: Bloomberg, EIA Perversely, renewed U.S. sanctions on Iran, which came into effect on Nov. 5, have added to the perception of a growing supply glut. The country’s exports have fallen by almost 40 percent since April, the last month before President Trump announced that he was pulling the U.S. out of the nuclear deal. But unexpectedly generous waivers from sanctions, which were extended to several countries that had already halted purchases, have raised the possibility that Iran’s overseas oil sales could actually increase in November. Oil ministers from the OPEC+ group that cut output are meeting today in Abu Dhabi to assess their ongoing collaboration. The get-together won’t set policy, that will have to wait until the full meetings in Vienna in early December, but it will set the tone for those gatherings.
  • 16. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 16 There is already talk between Saudi Arabia and Russia of a need to extend restraint into 2019 and both may consider reducing their own output back to their individual target levels, having boosted it in recent months to make up some of the shortfalls from Venezuela and Iran. Glut Returns OPEC's oil supply/demand balance shows glut returning after a short-lived draw Source: Bloomberg, OPEC Note: forecast assumes constant OPEC supply at 33.3 million barrels a day from 4Q18 OPEC’s own analysis shows the need to prolong, or even deepen, the cuts. If the group doesn’t alter its current track, global oil stockpiles are set to rise by around 1.8 million barrels a day in the first quarter of 2019 and to continue building throughout the year. Producers may get a short respite from falling prices in the next few weeks. Demand from U.S. refineries could rise by as much as 1.5 million barrels a day by the end of the year, as plants return from their normal fall maintenance. But that boost will be short-lived. 2019 is looking like another difficult year for OPEC and friends.
  • 17. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 17 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 October 2018 K. Al Awadi
  • 18. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 18
  • 19. 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, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours 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 19 For Your Recruitments needs and Top Talents, please seek our approved agents below