New base 535 special 08 february 2015

Copyright © 2014 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 08 February 2015 - Issue No. 535 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Saudi PetroChem,Plastics & printing well for flourishing
domestic growth
Saudi Gazette + NewBase
Recent reports on the flourishing market for petrochemicals, plastics, printing and packaging in
the Middle East have led the Kingdom of Saudi Arabia (KSA) to launch 26 projects at a total value
of SR56.34 billion, with projects worth SR172.76 billion still in the planning stage.
Many Saudi companies such
as Saudi Basic Industrial
Corporation (SABIC), Saudi
Polymers and Petro Rabigh
are contributing to the
development and growth of
the sector.
Moreover, regional and
international companies from
the UAE, Qatar, Bahrain,
China and Turkey, Egypt,
Lebanon, India and Japan
among others, have also
played a significant role in the
prosperity of the sector.
In light of this growth, many companies are sponsoring specialized exhibitions in these sectors.
Riyadh Exhibitions Company (REC), organizer of conferences and exhibitions in the KSA, has
unveiled the list of official sponsors for Saudi Plastic & Petrochem 2015
and Saudi Print & Pack 2015, which will be held concurrently on March
1-3, 2015 at the Jeddah International Center for Conferences and
Exhibitions.
Various significant companies are participating at the events, such as:
Rowad Plastic Group, Sadara Chemical Company, Zamil Plastic
Industries Limited, 3P Gulf Group, ASIBEX, DC Print Liquids
Technology, Paxxal Inc., Technical Industrial Automation and Techno
Converting Services (TCS). The two exhibitions will be held under the
patronage of the Ministry of Commerce and Industry. Among the
attending companies, SABIC will participate in the two events as a
Diamond Sponsor, while Saudi Polymers will be the Platinum Sponsor
and Petro Rabigh the Gold Sponsor.

Kamil Al Jawhari, Project Manager of the Saudi Plastic & Petrochem 2015 and Saudi Print & Pack
2015 exhibitions, said: “We thank the sponsors and appreciate their continued efforts to support
Saudi Plastic & Petrochem 2015 and Saudi Print & Pack 2015. We promise to strengthen our
efforts in the upcoming editions in order to
develop and expand them in favor of the Saudi
market and its most competent bodies and
companies."
“The process of developing the plastics,
petrochemicals, printing and packaging sectors is
very important for all stakeholders in the Saudi
market in particular and the regional market in general. One of our key priorities is to promote and
expand the two shows and achieve success, the way we have done over the years. We will
continue to achieve more in the interest of exhibitors and organizers by continuously adopting
transparency and a firm commitment to sustainability and focusing on achieving a positive impact
for the sector’s exhibitors and visitors,” Al Jawhari averred.

Revealed: Top Countries With The Cheapest Petrol Rates
The average price of petrol around the world ranged around $1.04 per liter, according to
GlobalPetrolPrices.com
Venezuela has the cheapest rate for petrol globally at $0.02 per litre, Such low petrol prices
in Venezuela were due to heavy subsidies provided by the government, the website said.
The average price of petrol around
the world was found to be $1.04 per
liter but various levels of taxation
and subsidisation led to different
pricing levels. Gulf countries, which
are among the world’s top crude
exporters, were also featured in the
list of countries selling petrol at the
cheapest rates.
Saudi Arabia sold petrol at the fourth
cheapest rate globally while Kuwait
had the sixth cheapest price in the
world.
Bahrain and Qatar were also among
the top 10 countries offering cheap
petrol while Oman and the UAE were
placed further down the list.
Petrol is sold at $0.47 per litre in the
UAE, the highest rate in the GCC,
the website showed.
With international crude prices
plummeting over the last few
months, the UAE, however, is
looking to lower its petrol prices
in the future.
Recently, UAE Oil Minister
Suhail Mohammed Al Mazrouei
said during a session of the
Federal National Council that
the government has submitted a proposal to the cabinet that will enable consumers to benefit
from lower oil prices.

Algeria's gas output to reach 151 billion m3 in 2019
APS + NewBase
ALGIERS- Algeria's natural gas production is expected to reach 151 billion m3 in in 2019,
as several fields will be put into operation, national hydrocarbon group Sonatrach told
APS.
"During 2014, we have produced the equivalent of 131 billion m3 of natural gas, including 27
billion m3 exported through gas pipeline and 28 million m3 under the form of LNG rough liquefied
gas tankers," the source underlined.
"On the mid-term, we plan to raise our production capacity to reach 151 billion m3 by 2019." The
increase of production will come from many gas fields to be progressively operational during the
coming five years, according to the statement.
The gas fields include those developed through Sonatrach's own efforts and are located in Tinhert
(Illizi), Gassi Touil (Ouargla), Ahnet (In Salah), Menzel Ledjmet Est (Illizi) and Bir Berkine
(Ouargla).
The gas projects to be developed in partnership, by 2019, are Touat Gaz, in partnership with
French group GDF SUEZ, Sud In Salah, with BP and Statoil, and Reggane Nord, with Repsol,
RWE DEA and Edisson.
Minister of Energy Youcef Yousfi and Dutch Minister of Foreign Trade and Development
Cooperation Lilianne Ploumen expressed, Thursday in Algiers, the willingness to boost their
cooperation in the fields of oil, gas and renewable energy industries.
During a meeting held at the Energy Ministry's headquarters, Yousfi and the Dutch minister
discussed cooperation between the two countries in the hydrocarbon field, said a Ministry's
communiqué.

Egypt working on oil and gas exploration deals worth $9.2 bln
Reuters + NewBase
Egypt has three major oil and gas deals worth a total of $9.2 billion underway, after attracting
investment of about $2.9 billion for oil and gas exploration in just over a year, a spokesman for the
energy ministry told Reuters.
Since November 2013, Egypt has concluded 53 new agreements with international companies to
explore for oil and gas amounting to investments of about $2.9 billion, the spokesman said,
adding: "We have three other agreements underway worth $9.2 billion."
He gave no further details. Big energy companies Eni , BP , Shell and Total have all announced
new exploration deals in Egypt over the past month. The country has emerged as a major new oil
and gas market as the government looks to ease the worst energy crunch in decades.
In January alone, Egypt clinched 15 new exploration deals, amended two more, and closed major
tenders to import liquefied natural gas (LNG) from Algeria to Russia, opening up to global energy
pricing norms as the government seeks to scrap crippling subsidies by 2019.
Egypt inks LNG supply deal with Trafigura
Egyptian Ministry of Petroleum
informed that Egyptian Natural Gas
Holding Company signed an LNG
supply deal with Swiss commodity
trading house Trafigura.
Companies signed a contract for
the supply of about 33 shipment
of LNG to fulfill the requirements
of the Electricity Sector during the
period 2015 – 2016, ministry said
in a statement.
Khalid Abdel Badea, Egas
Chairman, said that the coming
period will witness the signing of
the rest of the LNG supply contracts with the awarded companies in the US$2.2 billion tender,
which include the supply of 75 shipments, won by 4 international companies.

Ophir Energy shareholders vote for Salamander takeover
Ophir Energy + NewBase
Oil and gas company Ophir Energy has announced that at the general meeting held today, a
majority of shareholders supported the previously announced all-share transaction by which Ophir
will take over Salamander Energy.
According to Ophir 78.92% voted in favor of the transaction, while 21.08% voted against.
Ophir has said that despite the falling oil prices the deal still makes “full strategic sense and will
create value for shareholders.”
“The company will continue our ongoing consultation with shareholders as we integrate the
businesses and start to create value from our African and expanded South East Asian
businesses,”Ophir said in a statement.
Salamander Energy, is an Asia-focused independent exploration & production company with a
number of licences spread throughout Indonesia and Thailand.

US: total US oil count has fallen by a record 435 rigs in nine weeks
NewBase + The Pesesula
America’s legacy Permian Basin, the biggest of all oil fields in the US, was hit hardest by drillers
past week retrenching amid the worst price collapse in six years. The Permian, stretching across
parts of Texas and New Mexico, lost 37 rigs drilling for oil to 413, Baker Hughes Inc said on its
website. The US-wide count slid 83 to 1,140, marking the ninth straight week of declines and
bringing the total to the lowest since December 2, 2011.
The unprecedented retreat
in US oil rigs over the past
four months shows how
deeply the biggest collapse
in global oil prices since
2008 is wounding the
country’s oil industry,
erasing more than 30,000
jobs and shrinking
estimated exploration and
production spending by
more than $116bn.
“The Permian was expected
to be a little more resilient
than the rest because
companies were just
starting to ramp up drilling
there again,” RT Dukes, an
oil and gas analyst at Wood
Mackenzie Ltd, said by
phone from Houston. “What this shows is that, in reality, no oil is immune to $50 prices, not even
the Permian, not even the best of the best.”
The total US oil count has fallen by a record 435 rigs in nine weeks, Baker Hughes data show.
The decline in the Permian was larger than the retreats in any other play. It was also the field’s
steepest decline since Baker Hughes began reporting basin-by-basin counts in February 2011.
“The drop this week was absolutely substantial,” James Williams, president of energy consulting
company WTRG Economics, said by phone from London, Arkansas, on Friday. “I’m actually
surprised it’s dropping this fast. A lot of companies are strapped for cash, their balance sheets and
income statements do not look good and they’re bailing out of new projects as fast as they can.”
Swiss oilfield services company Weatherford International Plc became the latest energy company
to announce job cuts, saying on Thursday that it’ll let go of 8,000 workers in the first half of this
year as it faces “an unusually severe market contraction and concurrently, a once-in-a-lifetime
industry change.”
“Weatherford will be efficient, will be lean and organisationally flat,” Bernard Duroc-Danner, the
company’s chief executive officer, said in a call with analysts on Thursday. “This is what we need
to do, and this is what we will execute.”

West Texas Intermediate for March delivery rose $1.21 on Friday to settle at $51.69 a barrel on
the New York Mercantile
Exchange, up 6.9 percent this
week and down 47 percent from
a year earlier.
The CBOE Crude Oil Volatility
Index, which measures price
fluctuations using US Oil Fund
options, ended at 63.14 on
Thursday, the highest level
since April 2009. The
Organisation of Petroleum
Exporting Countries, which
accounts for about 40 percent of
the world’s oil supplies, has
meanwhile resisted calls to cut output after agreeing in November to maintain production targets.
On Thursday, Saudi Arabia, the group’s biggest producer, deepened its discount for March oil
sales to Asia, a sign that the kingdom is fighting for market share. US oil production has
meanwhile remained at the highest seasonal level since at last 1983 and climbed to a record 9.21
million barrels a day in the week ended January 23, US Energy Information Administration data
show. Drilling techniques such as horizontal drilling and hydraulic fracturing are increasing the
yield from new wells and propping up total output.
“You might see growth slow, but annual production will continue to rise,” Dukes said. Rigs
targeting natural gas in the US fell by five this week to 314, Baker Hughes said.
Inventories of the heating fuel declined 115 billion cubic feet in the week ended January 30 to
2.428 trillion, EIA data show. Supplies were 24 percent above year-earlier inventories and 1.2
percent below the five-year average.
Natural gas for March delivery slipped 2.1 cents to $2.579 per million British thermal units on the
Nymex.

Norway: DNO reports 2014 results
Source: DNO + NewBase
DNO, the Norwegian oil and gas operator, achieved record oil and gas output in 2014, but the
Company's results were impacted by one-off impairment charges in the fourth quarter driven in
part by the drop in global oil prices.
Gross output was up 66 percent last year to 117,482 barrels of oil equivalent per day (boepd)
and company working interest production jumped 76 percent to 68,958 boepd. Operating
revenue stood at USD 452 million in 2014. Impairments of USD 297 million in Kurdistan, Oman,
United Arab Emirates and Yemen led to an operating loss of USD 243 million for the year.
Excluding impairments, annual operating profit was USD 53 million.
The Tawke oil field in Kurdistan continued to drive the overall increase in DNO's output. Tawke
gross production rose 131 percent to 91,255 barrels of oil per day in 2014 despite ongoing
security challenges. The Company remains on track to double field production and processing
capacity by early 2015.
Capital expenditures in 2014 reached USD 297 million, up from USD 288 million in 2013, on the
back of capacity expansion and development programs in Kurdistan. The Company ended the
year with USD 114 million in cash and an additional USD 63 million in marketable securities.
'Our focus in 2015 is to align our spending with our earning,' said Bijan Mossavar-Rahmani,
DNO's Executive Chairman. 'We are targeting operating efficiencies, cutting back on
discretionary expenditures and high-grading our portfolio - a process we started late last year,' he
said. 'We are also looking to generate larger revenues from our Kurdistan operations,' he added.
The Company has restarted sales of oil into
the Kurdistan local market and plans to
ramp up such deliveries in the first quarter.
The Company expects to realize additional
payments in respect of past and ongoing
exports, the timing and extent of which will
drive the 2015 capital program. Mr.
Mossavar-Rahmani repeated that DNO
continues to have one foot on the
accelerator and one on the brake.
DNO ASA presents its full-year financial
and operating results in Oslo at 10:00 CET
on 5 February. A live
webcast of the
presentation as well as
the full Fourth Quarter and
Full Year 2014 Interim
Report will be available on
the company website
(www.dno.no).

Oil Price Drop Special Coverage
Another wild week in the oil market
The National + NewBase
After a week in which benchmark oil prices gained more than they have in any five-day period
since 2009, some observers were ready to call a bottom to the market.
But others are not so sure that the rally will last.
North Sea Brent crude futures started the week at about US$50 a barrel and ended the week
nearly 16 per cent higher at $57.80.
But it seemed that as many professional market watchers were calling the rally a “dead cat
bounce” as were calling it a turning point after the severe drubbing that had pushed prices down
by 60 per cent from a high last summer above $115 a barrel to their low of just above $46.50 in
the middle of last month.
A survey of 32 market prognosticators by Bloomberg News last week found that they were almost
evenly split between those who forecast oil prices to rise over the next month and those who
expected them to fall.
The chiefs of the world’s biggest oil companies typically steer clear of market forecasting, and
BP’s Bob Dudley hedged his bets last week when he was asked for his views, following the
company’s fourth-quarter results in which full-year profit fell 10 per cent and this year’s projected
capital expenditure was slashed.
But he did paint a fairly gloomy picture. “It feels like 1986 to me, where the price dropped at that
time from $40 to $9 a barrel and then stayed down for quite some time,” Mr Dudley said. “I think
this is quite serious.”
Some of the bearish signs that Mr Dudley pointed to included the fact that China was growing
more slowly than it had been for some time, that oil inventories were filling up around the world

and there is an increasing amount being stored now in giant ships by traders hoping that prices
rise later in the year.
“When, traditionally, that happens it can go on for quite a while. So for us the prudent way to
manage the company is to plan on one, two, three years and rebase so that we can balance our
resources and use of funds at $50” a barrel of oil.
While that is an authoritative voice counselling caution, Mr Dudley repeatedly emphasised that he
was not making a prediction. Oil company executives have no better track record at predicting oil
prices — at least publicly — than most. That is why they do not like to predict publicly.
Traders, on the other hand, like to voice their predictions often and loudly.
Andrew Hall — the head of one of the world’s oldest commodities trading firms, Phibro, and a $4
billion hedge fund, Astenbeck — has been telling his investors that oil will rebound to between $70
and $80 a barrel “in the long run”, a bullish sentiment he reiterated last week.
“There have been two constants of the oil market,” he wrote. “The first is that demand always
grows. The second is that supply from existing resources always falls because of depletion.”
That is certainly true, but timing, as Mr Hall knows, is the key to profits versus losses.
So apart from futures trading, what were the important signs in the market last week?
Saudi Arabia, the world’s largest crude exporter, cut the official selling price for its Arab Light
crude for Asian buyers by 90 cents to a discount of $2.30 below the Middle East benchmark, the
lowest price in nearly a decade and a half.
Others, including Iraq, Iran, Kuwait and the UAE, will almost certainly follow suit. The price war
that gave the oil bear market impetus at the end of last summer is still being waged.
On the other hand, oil rig use in the US declined by another record amount, suggesting that the
Saudi Arabian-led strategy of choking off the burgeoning US shale oil supply was working.
According to the oil services company Baker Hughes, the US oil rig count fell 83 to 1,140, bringing
the cumulative decline to 435 in the past nine weeks.
What to conclude at this point? Tom Pugh of Capital Economics reckons the markets will teeter
back and forth just a little bit
higher than where they finished
the week.
“We estimate that an oil price of
about $60 to $70 per barrel is
high enough to prevent a
collapse in US shale and other
oil industries and allow
production to increase to match
increased demand,” he said at
the end of last week. “But it
would also be low enough to
prevent a repeat of the massive increases in production we have seen over the last few years.”
What seems certain, however, is uncertainty. “Of course, oil prices will be extremely volatile over
the next year,” he said.

Oil producers battle for market share remains the order
Syed Rashid Husain + NewBase
Reversals and counter reversals, this past week, point to fundamentals, as the key - controlling
and directing - the global oil and energy markets. With counter push and pulls, markets continued
to see - saw the entire week. Possible growth in the US and global demand besides the
uncertainty overlapping Libyan output, were enough to help markets sideline the issue of oil glut
for the time being.
At the beginning of the just gone by week, for four days until Tuesday, markets were seen
rebounding - and rather significantly. There was a 19 percent gain in market prices during these
four days, leading some to raise questions whether the markets have bottomed out and that it is
now getting out of it - slowly and gradually?
This rebound was apparently sparked by data highlighting the dramatic drop in US oil drilling rigs
in recent months and a cutback in the exploration budgets of energy firms. Those numbers had
suggested to some market players that the crude glut might be overcome more quickly than
expected.
But then markets almost crashed on Wednesday, with US crude losing 9 percent in one of its
biggest daily routs ever, as record high oil inventories in the United States cutting short the four-
day rally. This was the reaction of the market to the news that US crude stocks has jumped by 6.3
million barrels to 413.06 million barrels, the highest since EIA began recording stock levels in
1982. The reported build-up was considerably higher than the expectation.
However, crude oil traded $2 higher before paring gains on Friday, recording a straight second
weekly increase, as chaos in Libya and stronger economic signals from the United States helped
futures rebound from near-six-year lows.
The underlying message is apparent. There is no shortcut to market redemption. Markets need to
balance the demand and supply - before any real, sustainable reversal in market fortunes could
be registered. And correcting the fundamentals would need some more time.

Analysts say that even if the number of oil rigs operating in the US, currently at a three-year low,
continues to decline, it will take time for this to affect production volumes. Markets are likely to
remain oversupplied, at least, through the first half of 2015.
“In our experience, oil markets rarely exhibit V-shaped recoveries and we would be surprised if an
oversupply situation as severe as the current one was resolved this soon,” Macquarie Research
said in a report.
“The foundation for a steady price recovery in the second half of the year has been laid by the
expected decrease of US oil production. In the short term, however, the price increase is
exaggerated in our view, as there is still a considerable oversupply,” analysts at Commerzbank
said in a note.
Citigroup is now warning that crude oil may need to tumble to $30 because the world still has too
much oil on hand. “For the market to truly balance, US oil rig counts would have to fall significantly
further and the bottom of the price trading range for 2015 is likely to be a good deal lower,” Citi
analyst Seth Kleinman wrote in a research report last week.
Citi estimates supply continues to outpace demand by about 1 million to 1.5 million bpd. That’s not
exactly a recipe for higher prices, especially since OPEC appears unwilling to step in to balance
the market like it usually does.
Citi also notes that rig counts have only declined by 9% from their peak at the Big 3 shale oil
plays: the Bakken, Eagle Ford and Permian. That’s a big deal because these regions are pumping
tons of oil. Without sizeable rig count declines at the Big 3, US oil production could still rise by
about 1 million barrels per day in 2015.
US production actually increased to a record of 9.3 million barrels per day during the week of
January 23, according to Yardeni Research. “Energy production isn’t like flipping a light switch.
Supply response happens in months, not days,” said Art Hogan, chief market strategist at
Wunderlich Securities.
Barclays has in fact slashed its forecast average price of Brent crude for this year to $44 a barrel,
down nearly $30 from its early-December forecast of $72 a barrel, before recovering to $60 in
2016. “We expect to see further downside to prices in the next few months, with both WTI and
Brent likely to trade into the high $30s before the oil price decline is arrested,” Barclays’ head of
energy commodities Michael Cohen was quoted as saying.
Goldman Sachs too is forecasting WTI oil to trade about $44 a barrel for the first three-quarters of
this year, lifting to $65 a barrel by the end of the year as sharp cuts in capital spending and rising
demand weigh on supply.
Analysts at Morgan Stanley are also saying that US production needs to slow sharply to balance
the market, which requires low prices. “If the rally goes well beyond this band, we see risk of
counterproductive behavior that would push off recovery and make us more bearish in the second
half of the year and in 2016,” Morgan Stanley said.
And in the wake of a bearish short-term market scenario, the battle for market share is still on,
with major crude producers’ battling to hold on to their market share.

China, the World’s largest crude importer and second-biggest crude consumer after the US in
2014, remains the focus of attention. In recent months, Middle Eastern producers were
increasingly facing competition with cargoes from Latin America, Africa and Russia for buyers in
Asia. Saudi Arabia’s share among the top three suppliers to China fell to 37 percent in December,
from 44 percent in October, as it lost ground to Angola and Russia, Julian Lee, oil strategist for
Bloomberg First Word was quoted as saying.
Dhahran could not have remained oblivious to all this. Saudi Aramco thus announced last
Thursday cutting March prices for oil sales to Asia. It lowered its official selling price for Arab Light
crude by 90 cents to $2.30 a barrel less than Middle East benchmarks, it announced in an e-
mailed statement last Thursday. That’s the lowest in at least the 14 years since Bloomberg began
gathering data.
Abu Dhabi has also cut export prices for its crude for the seventh consecutive month and to the
lowest since 2009. Murban crude, its main grade, sold in January for $46.40 a barrel, or 23
percent below December’s level, according to an e-mailed statement from Abu Dhabi National Oil
Co. Murban hasn’t sold for less since February 2009, data compiled by Bloomberg show.
Doha too had reportedly cut its January price for Marine crude by 26 percent from December to
$43.25 a barrel and reduced Land crude 24 percent to $45.95 a barrel. While some redemption in
crude market fortunes seem in the pipeline, yet it is still some way off. And until then, battle for
market share remains very much the order of the day, one cannot refrain underlining.

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile : +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 25 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 01 February 2015 K. Al Awadi

New base 535 special 08 february 2015

Recomendados

Recomendados

Más contenido relacionado

Más de Khaled Al Awadi

Más de Khaled Al Awadi (20)

Último

Último (20)

New base 535 special 08 february 2015