newbase energy news 07 april 2020 issue no. 1328 senior editor eng. khaled al awadi

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7NewBase Energy News 07 April 2020 - Issue No. 1328 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: Shams CSP plant contributs to UAE’s clean energy transition
WAM/Esraa Ismail/MOHD AAMIR
Shams, one of the world’s largest concentrated solar power plants, continues to significantly
contribute to the UAE’s clean energy transition, and is helping the country prepare for the next 50
years In the following report, Emirates News Agency, WAM, will present the journey of Shams,
which is celebrating its 7th anniversary.
Operated by Shams Power Company and owned by Masdar, one of the world’s leading clean
energy companies, and Total and Abu Dhabi Pension Fund, the pioneering 100-megawatt plant has
played a key role in shaping the renewable energy sector in the UAE and MENA region.
"Our journey towards excellence and success relies on building bridges of cooperation with unique
entities in all fields," said Khalaf Abdullah Rahma Al Hammadi, Director-General of Abu Dhabi
Pension Fund, adding, "This has been achieved over the past years through our fruitful partnership
www.linkedin.com/in/khaled-al-awadi-38b995b

and successful investment in Shams Power Company, which has seen many achievements
worldwide in the field of clean energy."
Shams has paved the way for other ambitious clean energy projects, as the country prepares for
the next 50 years of its development, including the world’s largest solar plant, Noor Abu Dhabi, and
the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. Shams represented the world’s largest
financing transaction for a solar energy project in 2011, when the company announced the financial
closing of the US$600 million project.
"Looking back over the past seven operating years, and almost 10 years since the commencement
of this project, we are proud and privileged to be a part of this visionary venture," said Majed Al
Awadhi, General Manager, Shams Power Company, adding, "By undertaking this investment, UAE
leaders were among the first in the world and in the MENA region who recognised the importance
of clean energy, sustainability and diversification for growth."
Located 120 kilometres from Abu Dhabi in the Al Dhafra region, Shams powers more than 20,000
homes and displaces 175,000 tonnes of carbon dioxide per year. The plant covers an area of 2.5-
square-kilometres, or the equivalent of 285 football fields, and includes 258,048 parabolic trough
mirrors.
"Today, utility-scale solar plants are increasingly common in the Middle East and, without question,
projects such as Shams helped pave the way," said Yousif Al Ali, Executive Director, Masdar Clean
Energy and Chairman of Shams Power Company.
Currently, UAE citizens hold 75 percent of management positions and 70 percent of the female
employees at Shams Power Company are also UAE citizens.
Abdulaziz Al Mheiri, a Plant Manager at Shams, said, "The renewable energy that we produce here,
while maintaining the highest HSE standards, minimises carbon emissions and pollution, and has
a much lower impact on our environment. Solar plants play a prominent role in the UAE today, and
I am proud that we were the first project to trigger this change."
As part of its commitment to the community, Shams Power Company will soon be launching the Al
Dhafrah Innovation Centre, the region’s first interactive hub for knowledge about renewable energy,
sustainable development, the UAE’s clean energy projects, in general, and Shams Power
Company, in particular.

Oman: Sebacic Oman bio-refinery exports maiden cargo
Oman Observer -Conrad Prabhu
Sebacic Oman celebrated its maiden export of product from its bio-refinery complex at the Special
Economic Zone (SEZ) at Duqm, marking a new milestone in the operational phase of this first-of-
its-kind project in the Middle East.
Over the weekend, Port of Duqm announced that it has handled a containerized shipment of glycerin
produced by Sebacic Oman at the adjoining SEZ. The export consignment – the first ever from
Sebacic Oman – is destined for Port of Nhava Sheva on India’s west coast, the port stated in a
message.
In remarks to the Observer, Shaikh Khalid al Maawali, Director Operations of Sebacic Oman, said
the shipment demonstrated the company’s commitment to meeting its supply commitments to its
overseas customers notwithstanding the challenges posed by the lockdown over the novel
coronavirus pandemic. He thanked in particular the SEZ Authority of Duqm (SEZAD), as well as
the Port of Duqm, for facilitating the timely despatch of the shipment despite the challenging
circumstances.

“The online support given by SEZAD in the form of permits and clearances, despite the lockdown,
is much-appreciated. This support will enable us to execute supply orders we have received from
reputed multinationals, such as Dupont and Old World Industries in the US, even during the ongoing
pandemic related lockdown.”
Set up with an investment of $62 million, Sebacic Oman SAOC was the first heavy industrial project
to be established in the Duqm SEZ – the result of a decision by Shaikh Hilal bin Khalid al Maawali,
the company’s chairman, to support the growth of a non-oil economy in the Sultanate.
Sebacic acid, processed from castor oil, is used in the manufacture of a range of high-value
commodities including Bio-Nylons, Sun Protection Creams, Lubricants, Aerospace Polymers, and
various types of pharmaceuticals.
The global pandemic, according to the Director of Operations, has led to the slowdown in the uptake
of company’s products prompted. “We feel this is just a temporary phase and businesses will be
normal globally within the 2-3 months,” he noted however, adding that operations at the Duqm plant
have been scaled down to a minimum following the implementation of measures to secure the health
and well-being of workers.
Commenting on the significance of the maiden shipment, Port of Duqm added: “As an export
oriented unit (EOU) based within the Special economic zone in Duqm and located less than 20kms
away from the port, it underpins the increasing cost and logistics advantage that Port of Duqm is
offering to its clients. As such, Port of Duqm is expecting container handling at the Port to expand
exponentially from now onwards.”

Saudi Arabia denies claim it walked away from Opec+ alliance
The National + NewBAse
Saudi Arabia dismissed remarks attributed to Russian President Vladimir Putin that the
kingdom was responsible for the collapse of the Opec+ deal, and said the alliance had
tried to agree on further oil production cuts but Moscow refused.
Foreign Minister Prince Faisal bin Farhan Al Saud said the suggestion that the kingdom
had walked away from the three-year pact to shore up prices was "fully devoid of
truth", the official Saudi Press Agency reported on Saturday.
Riyadh said Moscow had refused to deepen cuts by 1.5 million barrels per day in
addition to a pact to draw back 1.7m bpd of inventory during the first quarter.
Prince Faisal said there was consensus on the need for additional restrictions within
the alliance, which was forged in Algiers in 2016 by 23 Opec and non-Opec members.
Saudi Arabia also denied any suggestion that the subsequent fall in oil prices had been
engineered to hurt the United States' shale sector, and said shale "is known as an
important part of energy sources".
US shale producers, who have a relatively higher break-even cost, have suffered as oil
prices are down 70 per cent from their most recent peak in January.
A significant US shale producer, Whiting Petroleum, filed for bankruptcy protection on
Wednesday.
Riyadh's clarification came after US President Donald Trump suggested that Saudi
Arabia, which planned to increase supply after the collapse of the deal, could work with
Russia to cut production again.

Oil surged by about 30 per cent after Mr Trump's comments, reversing weeks of lows,
where Brent and West Texas Intermediate, the crude commodity benchmarks,
languished in the low $20s.
Brent, the most widely used benchmark, jumped almost 14 per cent on Friday to finish
the week at $34.11. WTI, which fell below $20 (Dh73.46) per barrel in late March, also
rallied strongly, closing about 12 per cent higher at $28.34 per barrel.
Mr Trump met oil industry executives on Friday, pledging to "get our energy industry
back". Mr Putin said on Friday that he was ready to co-operate with the US and Saudi
Arabia to bring back stability to markets that have witnessed both a significant supply
increase and a steep decline in demand.
Countries are under lockdown due to the rapid spread of the coronavirus outbreak,
and airline fleets are also grounded. Global oil demand is at its weakest amid a record
surge in supply.
"We are ready for co-operation with the United States of America on this issue," Mr
Putin said. "I believe that it is necessary to combine efforts in order to balance the
market and reduce production," he said.
Reports have suggested the Opec+ alliance is set to convene next week to look at measures to
stabilise global oil markets. Meanwhile, Kuwait, an Opec producer, resumed shipment of crude
from the neutral zone it shares with Saudi Arabia after five years.
Aramco Delays Oil Pricing Amid Saudi-Russia Row on Oil Cuts
Saudi Arabia is delaying the release of its closely-watched monthly oil-pricing list until later this week
as the kingdom spars with Russia over a potential meeting of global producers that would aim to
halt the collapse in crude.
State oil producer Saudi Aramco is now set to announce its official selling prices for May on
Thursday, according to people with knowledge of the situation who asked not to be identified
because the information is private. The OSPs, as the prices are known, were due on Sunday.
Aramco is holding off on the
announcement to await signs
of what may happen when
suppliers meet Thursday to
discuss crude production. The
company’s media office
declined to comment on the
delay.
With the coronavirus
pandemic gagging oil demand,
benchmark Brent crude has
plunged 48% this year. Saudi-
Russian diplomatic barbs,
which are opening a fresh
rift between the world’s two
largest oil exporters,

jeopardize a deal to cut output and keep crude from tumbling further.
The coalition known as OPEC+ had curbed production since 2017, but limits on its members’ output
expired at the end of March after Saudi Arabia failed to persuade Russia to accept deeper cuts.
While the Saudis have changed course and are now ramping up production to record levels, U.S.
President Donald Trump said suppliers are open to pumping less to take 10 million to 15 million
barrels of unwanted crude off the market.
The debate over new production cuts poses a challenge for the world’s most valuable listed
company as it tries to decide how to price its crude. By delaying its announcement, Aramco can
better gauge the amount of oil it may have available to sell next month. The postponement would
also give it time to deepen its price discounts should an OPEC+ deal fall apart, as Aramco is
competing for sales in a glutted market.
The kingdom’s energy ministry dictates Saudi oil output, so any decision by the Organization of
Petroleum Exporting Countries, Russia and other producers would determine the amount of crude
that Aramco can offer customers.
Refiners and traders expect Aramco to cut pricing for May due to the collapse in demand. The delay
could be interpreted as an effort to put the global price war on hold and give countries more room
to negotiate reductions in output.
This is the second consecutive time that Aramco has delayed its key pricing announcement beyond
its traditional deadline of releasing the numbers by the 5th day of each month. When it comes, the
decision may affect about 14 million barrels a day of exports from the Persian Gulf because other
producers in the region often follow Aramco’s lead in setting prices for their own shipments.

NewBase April 07 -2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil rises 3% on hopes for output cut as coronavirus ravages demand
Reuters + Bloomberg + NewBase
Oil prices gained on Tuesday as hopes rose that the world’s biggest producers of crude will agree
to cut output as the coronavirus pandemic crushes demand, even as analysts warn a global
recession may be deeper than expected.
Brent crude was up by 93 cents, or 2.8%, at $33.98 a barrel by 0431 GMT after falling more than
3% on Monday. U.S. crude was up by 79 cents, or 3.03%, at $26.87 a barrel, having dropped nearly
8% in the previous session.
The world’s main oil producers including Saudi Arabia and Russia are likely to agree to cut output
at a meeting on Thursday, although that would depend on the United States doing its share, sources
told Reuters.
Oil price special
coverage

But the threat of a major recession hangs over the market due to the halt of much economic activity
as a result of the coronavirus pandemic, with half the global population under some form of lockdown
or social distancing measures.
“Oil producers have to cut deeply and quickly if they want to avert total saturation of oil markets,”
Eurasia Group said.
Worldwide oil demand has dropped by as much as 30%, or about 30 million barrels per day,
coinciding with moves by Saudi Arabia and Russia to flood markets with extra supply after an
agreement on withholding output fell apart.
Oil prices slumped on Monday after Saudi Arabia and Russia delayed a meeting to agree on output
cuts till Thursday.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including
Russia, a grouping known as OPEC+, had been curtailing production in recent years amid a rapid
expansion of U.S. output that made the country the world’s biggest crude producer.
There are also questions over whether the U.S. would join any coordinated action.
U.S. President Donald Trump said on Monday that OPEC had not asked him to push domestic oil
producers to cut their production to buttress prices. He also said that U.S. output was declining in
response to falling prices.
“I think it’s happening automatically but nobody’s asked me that question yet so we’ll see what
happens,” the president told a press briefing on Monday afternoon. Coordinated action by U.S. oil
producers to reduce output would typically be a violation of antitrust laws.
A global recession that economists in a Reuters poll say is under way will likely be more serious
than expected a few weeks ago due to the viral outbreak, the latest survey showed. “We expect
energy prices to hover around current levels until economic activity recovers,” Capital Economics
said in a note.

Russia confirms its participation in OPEC+ meeting on April 9
Russia on Tuesday confirmed its participation in the OPEC+ meeting of leading oil producers set
for April 9, a spokeswoman for energy ministry told Reuters.
The conference, due to be held via a video link as a precautionary measure against the coronavirus,
had been initially scheduled for April 6 but was delayed “to allow more time for negotiations”,
according to the OPEC sources.

NewBase Special Coverage
The Energy world - Special 07- April-2020
The global oil industry is experiencing a shock like no
other in its history
The oil world has seen many shocks over the years, but none has hit the industry with quite
the ferocity we are witnessing today. As markets, companies and entire economies reel from the
effects of the global crisis caused by the coronavirus (COVID-19) pandemic, oil prices have
crumbled. The impacts will be felt throughout oil’s global supply chains and ripple into other parts of
the energy sector.
Pressure is coming from all sides: a precipitous decline in global oil demand as the pandemic has
slashed fuel consumption, especially in the transport sector, aggravated by a supply shock due to
the end of restraints on production from OPEC producers and Russia (OPEC+). The scale of the
collapse in oil demand, in particular, is well in excess of the oil industry’s capacity to adjust.
With 3 billion people around the world under some form of lockdown because of the coronavirus,
one of the traditional stabilisers for the oil market is missing. Low prices usually stimulate a reaction
from consumers, but such a boost to demand is highly unlikely this time around, at least for the
duration of the global health emergency. Instead, a rapid build-up of oil stocks is starting to saturate
available storage capacity, pushing down prices further.

This is an unprecedented moment for those engaged in the business of supplying oil and those who
rely on the associated revenue. In this article, we highlight five key dimensions of this crisis – themes
that the IEA is tracking in detail in our Oil Market Report (whose next edition is on 15 April),
the Global Energy and CO2 Status Report (later in April), the World Energy Investment report (late
May), and many other publications.
Some existing production will grind to a halt
At the moment, about 5 million barrels of oil produced worldwide each day is not fetching high
enough prices to cover the costs of getting it out of the ground (based on Brent crude at USD 25 a
barrel, with variations to reflect the prices typically available to producers around the world). These
operations are now losing money on every barrel they produce.
The economics of getting oil out of the ground are not necessarily a good guide to which operations
will actually halt production. Depending on how long they think the crisis will last, some of the more
robust producers may continue pumping oil even if they are losing money. This could happen if the
costs of shutting down production (and eventually starting it up again, if that proves possible) are
higher than the operating losses from keeping the oil flowing. Moreover, some producers may opt
to wait and see if weaker rivals go out of business, which would improve the environment for those
who stay in the game.
However, there is now an additional, even more pervasive threat facing many producers,
irrespective of their operating costs or strategies. As demand plummets, the entire supply chain of
oil refining, freight, and storage is starting to seize up, making it increasingly difficult to push new
supply into the system. Prices available to producers have fallen to single digits in Western Canada
and there have even been incidences of negative pricing for some grades in parts of North America.
For some producers, there could soon be no place for their oil to go.
Sharp cuts in new investments will ricochet all along the supply chain
Oil companies have responded to the price collapse by announcing large cuts to their
spending on new production. The initial reductions are in the 20%-to-35% range compared
with investments they had previously outlined for 2020.

In the new environment, projects considered low cost yesterday (i.e. those that are viable at
around USD 35 to USD 45 a barrel) already look high cost today, and only the most resilient
investments have a chance of going ahead. Companies are pushing back other plans and
redesigning them where possible in order to seek ways of driving costs even lower.
Otherwise, they are shelving these projects entirely.
The scope for further cost reductions is much more limited today than it was after the last
major drop in oil prices, in 2014-15, because much of the efficiency gains have already been
harvested. As a result, the current declines in investment are translating more directly into
cutting back activity.
These cutbacks are especially stark among some independent US companies and shale
producers, many of which were already facing strong demands from investors to shore up
business models and improve cash flow before the recent price crash.
Some producers have a modicum of protection because they hedged 2020 output at higher
prices, but this respite rarely extends far into the future, and the design of some existing
hedges are not providing much of a shield in these extreme market conditions.
All of this brings renewed hardship to companies that provide services and supplies to the
oil industry: there have already been multiple announcements of layoffs.
Refiners are coming under huge pressure as well
The last few years have seen a major ramp-up in investment in the refining sector and more than
2 million barrels a day of new refining capacity came on line in 2019 alone. Now, demand for oil
products has collapsed, and the bottom has dropped out of the market.

In normal times, low crude oil prices are not necessarily bad news for refiners. However, the plunge
in demand really squeezes refinery margins and volumes. This has dashed hopes among refiners
of securing near-term benefits from changes in consumption, such as the anticipated boost in diesel
demand arising from the new environmental regulations for the shipping industry from the
International Maritime Organization.
Even before the enormity of today’s crisis had emerged, the IEA’s medium-term oil report, published
in early March, was forecasting that net refining capacity would grow much faster than demand for
refined products over the coming years. With demand now in freefall, the excess capacity now looms
very large over the industry, posing an immediate threat to the outlook for older and more exposed
operations.
Oil majors and independent refiners are already taking a hard look at planned investments and
divestments. Many will re-evaluate their existing portfolios, possibly leading to another wave of
refinery closures. This would accelerate the restructuring of the global refining industry towards
regions benefitting either from cheaper inputs, such as the Middle East, or close to still-growing
demand, such as in developing countries in Asia.
Massive strains on countries that rely heavily on hydrocarbon income
The IEA has already highlighted the risks posed by today’s market conditions for vulnerable
producer economies. Our initial estimates of 50%-85% drops in net income for selected producer
countries in 2020, compared with 2019, were dramatic. But these declines could be even greater
depending on the final extent of the demand drop and the economic slowdown.
This would further undermine the ability of countries like Iraq and Nigeria to continue to pay salaries
and provide essential services to their populations, such as healthcare and education.
Even among the countries of the Gulf Cooperation Council, some of which still have a degree of
financial cushioning against worsening market conditions, fiscal deficits are now projected to reach
10%-12% of GDP this year, implying additional financing needs of around USD 150 billion to USD
170 billion.

The collapse in oil prices will spill over into other parts of the energy sector
Changes in oil markets ripple across all parts of the energy sector, with implications for a range of
different fuels and technologies. A sustained period of low oil prices would affect the prospects for
clean energy transitions, easing some aspects of this transformation – such as the removal of fossil
fuel consumption subsidies – while complicating others.
One of the clearest spillover effects is on natural gas because of the links between oil and gas prices
that remain in many long-term gas supply contracts. This linkage had been offering a measure of
shelter for some suppliers, but it is now set to disappear over the typical 6-9 month period in which
movements in oil prices filter through into natural gas contract prices.
The precise implications will vary from company to company. But oil at USD 25 a barrel would leave
some international gas suppliers struggling to cover their operating costs, and the depressed spot
market for gas would not provide any relief.
Gas demand is less exposed to the immediate effects of the current crisis than oil demand because
of its relatively limited use for transport. But industrial and power demand for gas will still be affected
by the lockdowns and the ensuing economic slowdown. With consumers constrained in their ability
to respond to lower prices, adjustment in the gas market may also need to come in the form of
halting some gas supply. Suppliers with the highest short-term costs of production and those who
rely on spot sales are among the most vulnerable.
The oil industry has never seen anything like 2020.
Today’s crisis comes at a moment when the oil and gas companies were starting to grapple with
the implications of energy transitions for their operations and business models. But some of the
industry’s angst about the future has now been abruptly fast-forwarded to the present.
Although demand for oil will rebound when the crisis eases, the dislocation could accelerate some
structural changes in the way the world consumes oil. And the heavy cuts to investment in

production capacity will definitely affect the medium-term prospects for oil supply. The IEA will
continue to watch developments closely to assess implications for energy security and sustainability
over the short term and the long-term.
The reverberations will extend beyond energy markets. Some oil-importing countries might
experience benefits from low oil prices when their main focus shifts from dealing with their immediate
health crises to the need to repair their economies.
But the shock to some oil-exporting countries is going to be profound, bringing risks to their social
stability and sharply curtailing their ability to buy essential goods and services from the rest of the
world. The threat of bankruptcies in a sector with the size and strategic importance of oil, alongside
the crucial role of oil in global finance and trade, add hazardous elements to a highly unstable global
financial situation.
Comparisons with previous periods of disruption in oil markets are inevitable but misplaced.

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
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Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE operations
base , Most of the experience were spent as the Gas Operations Manager in
Emarat , responsible for Emarat Gas Pipeline Network Facility & gas
compressor stations . Through the years, he has developed great experiences
in the designing & constructing of gas pipelines, gas metering & regulating
stations and in the engineering of supply routes. Many years were spent
drafting, & compiling gas transportation, operation & maintenance agreements along with many
MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences
held in the UAE and Energy program broadcasted internationally, via GCC leading satellite
Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 2020 K. Al Awadi

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