new base 1016 special 04 april 2017 energy news

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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.

NewBase 04 April 2017 - Issue No. 1016 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

Qatar to boost output by 10% ( 2BCFD) in the North gas field By AFP

Energy giant Qatar Petroleum is to launch a new project in the world's biggest gas field, boosting its output by up to 10 percent, it said Monday. The state-owned firm's chief Saad Al-Kaabi said it

was ending a 12-year moratorium on new projects in the North Field, off the Gulf state's northern coast.

"Qatar Petroleum's technical studies and assessment of the North Field have confirmed the potential for developing a new gas project," he said.

The project will produce around two billion cubic feet (57 million cubic metres) of gas per day for export, boosting Qatar's output by about 400,000 barrels of oil equivalent per day, he said.

Kaabi told journalists in Doha that the project would strengthen Qatar's position as a major player in the global gas industry.

The moratorium on new projects in the North Field had been in place since 2005 as experts assessed the long-term impacts of developing the field.

Kaabi said Qatar Petroleum had spent hundreds of billions of dollars on developing the field, adding that now was a "good time" to allow for new ventures there. It is likely to be several years before the development, in the southern sector of the North Field, starts producing gas for sale. While Qatar shares the North Field with Iran, Kaabi said the new project would not impact Tehran's production.

"It's the furthest project from the Iranian border, the closest to (Qatar's port) Ras Laffan," he said. LNG is produced through an industrial process whereby natural gas is cooled to -162 degrees Celsius (-260 Fahrenheit) and stored as a liquid, making it easier to transport. Qatar produces up to 77 million tonnes of gas each year and is set to remain a top LNG producer.A recent study by




Royal Dutch Shell said worldwide LNG demand hit 265 million tonnes in 2016, with Qatar responsible for around 30 percent of global production.

Qatar and LNG market

Qatar Petroleum plans to start a new development in the offshore North Field, ending a 12-year ban on new projects that allowed the company to assess how its current rate of extraction affects the giant reservoir it shares with Iran.

The patch, in the southern section of the field, will have a capacity of 2 billion cubic feet per day, or 400,000 barrels of oil equivalent, and should start production in five to seven years, Chief Executive Officer Saad Sherida Al Kaabi told reporters Monday at Qatar Petroleum’s headquarters in Doha.

Boosting natural gas production at home and searching for similar assets abroad signals Qatar Petroleum’s confidence in the longevity of gas demand, and its ability to remain a low-cost supplier in a market that has slumped amid a glut driven by output from U.S. shale and Australia.

"Global demand for gas is expected to rise," Al Kaabi said. "There are no analysts who can say when demand for gas will wane. For oil, there are people who see peak demand in 2030, others in 2042, but for gas, demand is constantly growing."




Qatar Petroleum’s decision is a sign that it wants to increase its LNG market share, Giles Farrer, research director, global LNG, at Wood Mackenzie Ltd., said in an email. It’s "also a threat to other developers of new capacity worldwide, as Qatar can add new capacity at a lower cost than anybody else."

The North Field, and the connected South Pars in Iran, is the world’s biggest reservoir of non-associated gas. Qatar Petroleum was quicker to exploit it, becoming the world’s top exporter of liquefied natural gas and, thanks to a boost in condensate output, the fourth biggest energy company in terms of oil and gas production. Iran is catching up, extracting gas from its portion mainly for domestic consumption and to re-inject into oil fields to boost crude production.

By ending the moratorium and earmarking new volumes for exports, QP is giving itself the fuel necessary to reclaim the top spot among LNG exporters it will relinquish to Australia in 2019, if it wants it. Al Kaabi said the company hasn’t decided if exports will be in the form of LNG, or other products. If it goes for the super-chilled fuel, the new production can be converted to 15.3 million tons of LNG a year. Qatar currently produces about 77 million tons annually.

"We will remain the dominant force for LNG in the world for a very long time, and this basically solidifies that position," Al Kaabi said.




Abu Dhabi and Saudi Arabia to team up on energy technology and renewables

The national -LeAnne Graves

Abu Dhabi and Saudi Arabia will work together to enhance their oil and gas, renewables and carbon management industries after agreeing two partnership deals.

In oil and gas, Abu Dhabi National Oil Company (Adnoc) and Saudi Aramco will focus on the development of new technologies to help them better manage the low oil price environment.

Under the terms of the agreements, Adnoc and Aramco will collaborate to identify technologies that could improve operational performance and efficiency across the oil and gas value chain, according to a statement. The deal was signed by Sultan Al Jaber, the Adnoc chief executive and Minister of State, and Amin Nasser, the Aramco president and chief executive.

The tie-up will foster a "culture of knowledge sharing" between the companies, Mr Nasser said.

Mr Al Jaber said that the increased cooperation "will further ensure our long-term economic and energy resilience".

"This agreement reinforces our renewed approach to partnerships, which are aimed at leveraging and building on existing industry expertise. Innovation and technology are critical to our growth strategy, and there is a strong focus on integrating new technologies into our upstream and downstream operations, as we work to harness maximum value," he said.

Sultan Al Jaber, the chief executive of Adnoc and UAE Minister of State, third from right, with Amin H Nasser,

president and chief executive of Saudi Aramco, third from left, during the signing ceremonies in Abu Dhabi.

Courtesy APCO Worldwide




Since taking over the helm of Adnoc in February 2016, Mr Al Jaber has moved rapidly to implement a level of change rarely seen at such a large energy company, especially one in the state sector.

The collapse in oil prices from late 2014 hit the worldwide oil industry hard and gave renewed impetus for reform, especially at the Arabian Gulf’s state oil companies.

Mr Al Jaber has previously said that a different approach to partnerships will help Adnoc to meet ambitious targets for its five-year business plan and the broader 2030 goals.

As the energy industry looks to produce fossil fuels at cheaper costs, these companies are also looking to diversify their portfolios for life after oil.

On Sunday, Aramco also agreed to work with Masdar on renewable energy and carbon capture for use in Saudi Arabia, the UAE and the world.

Saudi Arabia has ambitious renewable energy targets under its National Renewable Energy Programme, the official plan for installing 9.5 gigawatts of renewable energy by 2030 with the interim target of 3.45GW by 2020.

"The growth potential for renewables in Saudi Arabia is vast, and through our partnership, we look forward to supporting the delivery of affordable and sustainable energy in the kingdom," said Mohamed Al Ramahi, the chief executive of Masdar.

Ultimately, a successful push into clean energy will better position Aramco for its stock market flotation, planned for 2018, according to Pierre-Louis Brenac, the managing partner and Middle East head of the Paris-based consultancy Sia Partners.

"Saudi Aramco has been pushing strongly for renewables, which is a global trend among oil companies," he said. "They want to rebalance their portfolio. It relates quite well with Aramco’s IPO, diversifying between fossil and renewables for an IPO success."




Malaysia: Petronas LNG Facility Loads First Cargo by Rigzone Staff

Petronas’ first floating liquefied natural gas (LNG) facility, PFLNG SATU, has loaded its first cargo at the Kanowit gas field, offshore Miri, Sarawak. The cargo was fully loaded onto the LNG carrier Seri Camellia, which is expected to set sail for a South Asian market.

“This accomplishment effectively demonstrates Petronas’ proven technology and capability of adapting a conventionally land-based installation to a floating LNG facility, a game-changer in today’s LNG business landscape,” Petronas President and Group Chief Executive Officer, Datuk Wan Zulkiflee Wan Ariffin, said in a company statement. Manned by 145 crew on-board, PFLNG SATU possesses a processing capacity of 1.2 million tons per annum. By loading the milestone cargo, Petronas is set to beat its major rivals, like Shell, in the FLNG race. The world’s largest FLNG unit, Shell’s Prelude is yet to be completed by Samsung Heavy and may start producing LNG by the end of his year. Exmar’s Caribbean FLNG unit, that has already produced the chilled fuel during the performance tests carried out at the Wison’s yard in Nantong, China, is yet to secure employment.




Oman: BP gas can be channelled across Oman, even exported Oman Observer Conrad Prabhu in Business

BP Oman’s sprawling gas processing facilities in central Oman are being integrated with existing gas transportation networks to enable the delivery of natural gas from Block 61 not only to all parts of the Sultanate, but potentially to export markets in the future as well.

First gas from Phase 1 of the company’s project targeting the Khazzan gas field is anticipated to flow before the end of this year at the rate of 0.5 billion cubic feet (bcf) per day. By the first quarter of 2018, production is expected to be ramped up to 1 bcf per day.

Given the prodigious size of this output — equating to around 40 per cent of the nation’s current gas production — BP’s Block 61 facilities have been suitably tied into the country’s two main gas grids operated by Petroleum Development Oman (PDO) and Oman Gas Company (OGC) respectively. The measure will enable BP gas to be supplied anywhere around the Sultanate, and potentially beyond as well, according to a top executive of the company.

972084“Theoretically, Khazzan gas can be supplied anywhere around the country,” said Yousuf al Ojaili (pictured), President – BP Oman. “As it will tap into the PDO network and OGC network, the gas can go to the Oman LNG plant and to Duqm when the new pipeline is commissioned. It can also go north via the PDO network, and south via the pipelines of PDO and OGC.”

Additionally, BP gas can also be exported, if authorised and required by the government, via the bidirectional pipeline operated by OGC as part of the Dolphin Network, he remarked. BP Oman’s head made the comments during a presentation on Oman’s gas market at the executive committee meeting of the International Gas Union (IGU), which concluded in Muscat last Thursday.

Earlier, giving an overview of BP’s flagship project in the Sultanate, centring on the development of tight gas reservoirs in Block 61, Al Ojaili said the production of first gas from the concession, anticipated before the end of this year, marked the culmination of a 10-year journey that began in 2007 when BP began to appraise the Khazzan and Makarem fields. Recently, the scope of the concession was expanded to include the Phase 2 Ghazeer development.




“With the extension, the new block is about 4,000 sq km, and we expect to invest $16.5 billion over the lifetime of the project. We will be developing 10.5 tcf (trillion cubic feet) of gas this year over Phase 1 and Phase 2,” said Al Ojaili. “Once Phases 1 and 2 are developed we expect to be pumping around 40 per cent of the current gas volumes into the Oman gas network operated either by PDO or OGC.”

In his address, Al Ojaili described the Phase 1 facilities developed by BP Oman as “massive”. It includes 300 wells targeting the Barik reservoir, more than 400 kilometres of pipelines and gathering systems, plus two processing trains, one of which is currently under pre-commissioning. The second train will be launched either before the end of this year or early in 2018, he said.

Preparations are also under way for the execution of Phase 2 centring on the Ghazeer development, said Al Ojaili. A third train will be added to the complex as part of this phase. “When Phase 2 is completed by 2020, we will be producing 1.5 bcf per day of gas,” he added.

Condensate production, estimated at 25,000 barrels per day during Phase 1, will be significantly ramped up as well.

The second phase of development will access additional resources in the area that have been identified by drilling activity and it is expected to come online in 2020. In combination with the Phase 1 of the block, sanctioned in December 2013 and scheduled to deliver first gas in 2017, it is designated to provide in total 1.5bcf/d of gas, which is equivalent to 40% of Oman’s current overall domestic gas production.

It will involve construction of a three-train central processing facility and drilling around 325 wells over the next 15 years. The two phases are to develop around 17.5tcf of the country’s overall recoverable gas resources.

Production from the Khazzan project will make a significant contribution to ensuring continuing stable and long-term domestic supplies of gas for Oman, the Times of Oman informed. BP Group CEO, Bob Dudley, said that “Khazzan is a major resource

with the potential to produce gas for Oman for decades.

This expansion of its development will build on the success we are already seeing in our work on the first phase.” BP had drilled and completed 27 wells from 2007, when the first agreement was signed, to the end of 2015.

The Khazzan reservoirs in Block 61 represent one of the Middle East’s largest unconventional tight gas accumulations, with the potential to be a major new source of gas supply for Oman. BP is the operator of Block 61 with a 60% interest, leaving Oman Oil with the remaining 40%.




Oman LNG 2016 revenues $B1.925, down from $B2.612, 2015 Oman Observer

Oman LNG, which operates a three-train natural gas liquefaction plant at Qalhat on the Sultanate’s South Al Sharqiya coast, posted revenues of $1.925 billion in 2016, down from $2.612 billion a year earlier, reflecting a protracted global downturn weighing down international gas markets. Net income after tax (NIAT) slumped to $566 million, down from $965 million in 2015, the majority Omani government-owned company said in its 2016 Annual Report.

The decline, both in gross revenue and NIAT, follows a pattern that began in 2014 when international oil prices began a steep downward spiral. From a high of $4.491 billion achieved in 2013 just before the crisis erupted, revenues ticked down to $4.075 billion a year later, slumping to $2.612 billion in 2015 before ending at $1.925 billion last year. Net income after tax (NIAT) also dropped year on year from a peak of $2.018 billion in 2013 to $1.768 billion a year later, tumbling to $965 million in 2015 before declining to $566 million last year.

Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas who is also Chairman of the Board of Directors of Oman LNG, commented: “Oman LNG ended 2016 at an intersection of national and international occurrences that impact diverse aspects of our operation. In the circumstances, the export revenue loss was somewhat offset by price stabilization across global markets in the latter half of 2016 following the harsh downturn of the previous two years.”

“An additional contribution to the company’s balance sheet,” he further stated in the Chairman’s Message, came from efficiencies obtained across the board by a marriage of intelligent management and productivity-enhancing new technologies.”

Oman LNG Chief Executive Officer Harib al Kitani noted that the global LNG market is expected to remain constrained for some time. “Although gas prices will not see the highs of 2014 for a long time to come, it is possible, to go by a consensus of leading forecasts, that we may have entered a steady, if modest, rising price trajectory into the next decade. Against this backdrop, revenues for 2016, though unspectacular, need not impede our long-term aspirations at Oman LNG,” he noted.

LNG production totaled around 8.5 million tons per annum (mtpa) last year, versus an installed capacity of 10.4 mtpa across all three trains.

A total of 133 cargoes (91 from Oman LNG and 42 from Qalhat LNG) were despatched from Qalhat during the year. They included two spot cargoes to regional destinations Kuwait and Jordan for the first time. Production of natural gas liquids (NGLs), a byproduct of LNG production, totaled 254,029 tonnes last year. This output was exported in a total of 39 cargoes.

LNG production totaled around 8.5 Mton last

year, versus an installed capacity of 10.4 Mton .




Morocco breaks ground on $220m Noor Ouarzazate IV solar plant The National - LeAnne Graves

Morocco broke ground on its US$220 million solar photovoltaic (PV) plant on Sunday, inching closer to realising its 50 per cent renewables target by 2030.

The 72-megawatt Noor Ouarzazate IV plant, developed by Saudi Arabia’s Acwa Power, will generate electricity for 4.79 US cents per kilowatt hour (kWh). Engineering, procurement and construction will be delivered by a consortium of Sterling Wilson, Shapoorji Pallonji and Chint -Solar, while Morocco’s renewable energy agency, Masen, will be the sole lender.

"This programme will not only focus on the delivery of green electricity at a low cost, but it will also deliver on the strategy of employment creation and economic development from renewable energy capacity deployment," said Mohammed Abunayyan, the chairman of Acwa.

The latest plant is part of the Noor Solar Plan, which will develop a combined solar capacity of about 2,000MW in three years. Acwa Power is also the developer of the first three Noor plants, all using concentrated solar power technology, totaling 510MW, costing $2.84 billion.

Acwa’s chief executive, Paddy Padmanathan, said that renewable energy capacity would be delivered at "pace-setting tariff levels support of the country’s unwavering commitment to decarbonise electricity generation without compromising the social and economic development of the kingdom".




Nigeria:Eland Oil-planning development of Gbetiokun field in OML 40 Source: Eland Oil & Gas

AIM-listed Eland Oil & Gas, an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, has announced a quarterly update of its operations.

Following recommencement of production in January, OML 40 has now produced over 330,000 barrels of oil, from the Opuama-3 well only. Following choking back of Opuama-3 for testing and reservoir optimisation average production for full producing days since recommencement of production has been approx. 8,000 bopd.

To this date over 160,000 barrels of oil have been delivered to the export terminal with approx. a further 160,000 barrels ready for imminent injection. The Company has monetised 154,173 barrels of crude at an average price of $52.14 per barrel, with cash receipts of over $8 million. The Company expects to monetise the next 160,000 barrels in the coming weeks.

Production was temporarily halted to allow maintenance on the FPSO. The Company, having already produced 330,000 barrels, has used this opportunity to review the performance of the shipping operation.

Modifications of the mooring system have since been implemented to cater for the tides and increased volumes being delivered to the storage tanker. The Company expects to resume production by the end of next week.

Water handling at Opuama field will commence in April through the installation of a three-phase separator, allowing the commencement of production from well Opuama-1. Production is expected to be about 11,500 bopd from Opuama-1 and Opuama-3 following the resumption of production and optimising.

The Company maintains a healthy cash balance at $9MM currently and is in the process of finalizing its semi-annual Borrowing Base review, targeting no change to borrowing levels and debt availability.

The Company is planning to commence the workover and side-track of Opuama-7 by the end of H1 2017, which we anticipate will initially add an additional 6,000 bopd to OML 40 production. We also expect to commence the workover of Gbetiokun-1 in H2 2017, which we expect will deliver at least a further 7,800 bopd to production. Furthermore, the Company expects to begin




development of the Ubima early production system at the end of the Nigerian wet season in September and upon completion of road and wellsite preparation.

Following on from its assessment of the production potential of Gbetiokun-1 and the associated CPR by NSAI, effective 30 March 2016, Eland has carried out an integrated technical evaluation of a full development of the Gbetiokun field.

An initial development comprising six new production wells targeting the deeper reservoirs, together with Gbetiokun-1, is forecast to produce more than 50 MMB.

A second phase of development, comprising six further production wells targeting the shallower reservoirs, has the potential to produce a further 15 MMB. Eland's reservoir models indicate that these wells could deliver a peak production rate of over 50,000 bopd.




NewBase 04 April 2017 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil prices edge lower as rebound in Libyan production weighs Reuters + NewBase

Oil prices edged lower in early Asian trading on Tuesday as a rebound in Libyan production put pressure on the market, along with a rise in U.S. drilling rig capacity that signals potential for increased supply. International Brent crude futures were trading down 3 cents at $53.09 a barrel at 0141 GMT from the previous session. U.S. benchmark West Texas Intermediate crude oil prices was down 1 cents to $50.23 a barrel.

"Crude oil prices fell as increased drilling in the United States and a rebound in Libyan output weighed on investor sentiment," said ANZ bank in a note. Libya's crude output increased on Monday after state-owned National Oil Corp (NOC) lifted force majeure on loadings of Sharara crude oil from the Zawiya terminal in the west of the country, sources familiar with the matter told Reuters. Meanwhile U.S. drillers added the most rigs in a quarter since the second quarter of 2011, data from energy services company Baker Hughes showed on Friday, extending a 10-month drilling recovery. Adding to Libya's oil production recovery, Iran's exports of crude oil and gas condensate hit a record 3.05 million barrels per day (bpd) by March 20, the end of the Iranian month of Esfand, according to a report by the Islamic Republic News Agency (IRNA). The oil market continues to await signs of a tightening market as concerns over OPEC production cut compliance, designed to erode a global crude oil glut, and high U.S. oil output linger.

Oil price special

coverage




The Organization of the Petroleum Exporting Countries (OPEC), and non-OPECmembers including Russia, agreed late last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017. The market's focus has now shifted whether the major oil producers will extend the cuts.

Crude dropped as the reopening of Libya’s biggest oil field countered OPEC’s optimism about production cuts.

Futures slipped as much as 0.9 percent in New York after rising 5.5 percent last week. Libya’s output rose to about 660,000 barrels a day, a person familiar with the matter who asked not to be identified said. OPEC Secretary-General Mohammad Barkindo said Sunday that he is “cautiously optimistic that the market is already rebalancing,” while data on Friday showed the number of active oil rigs in the U.S. rose to the highest since September 2015. Prices also fell as equities retreated and the dollar climbed.

Barkindo’s comments support the Organization of Petroleum Exporting Countries’ commitment to drain swollen inventories before the group meets May 25 in Vienna. Kuwait and other producers from the group joined with non-member Oman to voice support for an extension of the six-month deal to cut output that began in January. The effects of the curbs have been mitigated by a surge in U.S. supply and production.

"The rebound of Libyan production stalled the rally," Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut, said by telephone. "We were rallying on the signs that the OPEC production agreement will be extended."

West Texas Intermediate for May delivery slipped 37 cents, or 0.7 percent, to $50.23 a barrel at 11:12 a.m. on the New York Mercantile Exchange. Prices gained $2.63 last week to settle at $50.60. Total volume traded was about 41 percent below the 100-day average.

Brent for June settlement dropped 39 cent to $53.14 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $2.41 premium to June WTI.




Libyan Supply

Libya’s output had dropped to about 500,000 barrels a day last week when production was halted at the Sharara field. Libya has sought to boost crude exports after fighting among rival militias hobbled oil production following the overthrow in 2011 of Moammar Al Qaddafi.

Rigs targeting crude in the U.S. increased for an 11th week to 662, the longest run of gains since 2011, according to data from Baker Hughes. American oil production expanded for a sixth week to 9.15 million barrels a day in the week ended on March 24, the highest level since February 2016, according to Energy Information Administration data.

Libya’s crude production rebounded to about 660,000 barrels a day as the OPEC nation’s biggest oil field resumed output after about a week of disruption.

Force majeure on the Zawiya export terminal was lifted after pumping resumed Sunday at Sharara, the nation’s biggest oil field, Mustafa Sanalla, chairman of Libya’s state-run National Oil Corp., said Monday by phone. Libya’s overall production is 660,000 barrels a day, according to a person familiar with the matter who isn’t authorized to speak to the media and asked not to be identified. Libya’s output had dropped to about 500,000 barrels a day last week when production was halted at Sharara, according to the same person.

Libya, with Africa’s largest oil reserves, is struggling to recover from years of conflict between rival governments and militias. Its production was exempted from the Organization of Petroleum Exporting Countries’ production cuts, because of its internal strife. Some OPEC members and non-members are calling for the production cuts to be extended beyond June.

"With the lifting, it’s positive for oil exports out of Libya,” Michael Poulsen, oil risk manager at A/S Global Risk Management Ltd. in Middelfart, Denmark, said by phone. "The assumption is that it will continue into the foreseeable future,” he said, cautioning that “the security situation is not 100 percent resolved."

Market Focus

Libya’s increased oil output “would have a bearish effect, but right now the market is more focused on potential extended cuts” by OPEC, he said.

Libya’s NOC had declared force majeure on Sharara crude last Tuesday, a clause which relieves it from delivery obligations due to circumstances outside its control. The same restrictions are in still place for loadings from the Wafa oil field and the Mellitah export terminal, Sanalla said. Sharara’s production resumed Sunday, with output at 160,000 barrels a day, according to the person familiar.

Libya has sought to boost crude exports after fighting among rival militias hobbled oil production following the overthrow in 2011 of Moammar Al Qaddafi. The conflict showed signs of calming in recent months, with oil output rising from as little as 260,000 barrels a day in August, according to data compiled by Bloomberg. Libya pumped 1.6 million barrels daily before Qaddafi’s ouster.

The vessel Minerva Kythnos, currently north of Malta, will arrive at 11 p.m. Tuesday to load 700,000 barrels of Sharara crude at Zawiya, according to three people familiar with shipments from the port.

Sharara, which was producing 221,000 barrels a day before the halt, is operated by a joint venture between NOC and Repsol SA, Total SA, OMV AG and Statoil ASA. The field’s total capacity is 330,000 barrels a day. The Eni SpA-developed Wafa oil field, further to the west near the Algerian border, has capacity to produce about 35,000 barrels a day.




US Drillers Add Most Oil Rigs in a Quarter Since 2Q 2011

U.S. drillers added oil rigs for an 11th week in a row in the best quarter for boosting the rig count since the second quarter of 2011, as a ten-month recovery gathers pace with energy companies boosting spending on new production.

Drillers added 10 oil rigs in the week to March 31, bringing the total count up to 662, the most since September 2015, energy services firm Baker Hughes Inc said on Friday.

During the same week a year ago, there were 362 active oil rigs.

The 137 rigs added in the first quarter is the biggest boost in a quarter since the drillers activated a record 152 rigs in the second quarter in 2011, according to Baker Hughes data going back to 1987.

This recent rig count increases have come despite a collapse in U.S. crude futures this month to levels seen when the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production on Nov. 30.

U.S. crude futures eased to around $50 a barrel on Friday, putting the contract on track for its worst quarter since 2015, as investors fret that growing U.S. supplies are undermining the OPEC-led cuts.

Since crude prices first topped $50 a barrel in May after recovering from 13-year lows in February 2016, drillers have added a total of 346 oil rigs in 40 of the past 44 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.

Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May 2016 as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.

Analysts projected U.S. energy firms would boost spending on drilling and pump more oil and natural gas from shale fields in coming years with energy prices expected to climb.




Futures for the balance of 2017 were trading over $51 a barrel, while calendar 2018 was fetching almost $52 a barrel.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 843 in 2017, 968 in 2018 and 1,079 in 2019. Most wells produce both oil and gas.

That compares with an average of 742 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data.

Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 57 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016.

That expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.

Oil back over $50

A barrel of West Texas Intermediate for May delivery was at $50.68 by 5:37 a.m. Eastern Time as optimism over production cuts outweighed rising U.S. supply. OPEC's Secretary-General Mohammad Barkindo said the group's output reduction is helping to bring the market to balance. Tensions in the oil-producing Kirkuk region of Iraq risk curtailing supply from the 1-million barrels a day field.

Markets quiet

Overnight, the MSCI Asia Pacific Index added 0.4 percent, while Japan's Topix index closed 0.3 percent higher as regional PMI data were strong. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:50 a.m., again after positive PMI data. U.S. stock market futures pointed to a small gain at the open.

At melting point

President Donald Trump said the U.S. can tackle the nuclear threat from North Korea on its own, if China doesn't cooperate to put pressure on the nation. The president is due to meet Chinese premier Xi Jinping on Thursday. Coming up in the U.S. today is manufacturing PMI at 9:45 a.m., with manufacturers also scheduled to release vehicle sales data for March throughout the day. That's projected to show sales of 17.3 million in total.




NewBase Special Coverage

News Agencies News Release 04 April 2017

PDO sets new production record of 1.293m boepd Written by Oman Observer in Business, Oman

Petroleum Development Oman (PDO) confirmed yesterday that it set a new combined oil, gas and condensate production record of 1.293 million barrels of oil equivalent per day (boepd) in 2016.

The achievement was secured whilst reducing capital and operating expenditure and thanks to continuous improvement in drilling, well and reservoir management and project delivery.

To boost near-term cashflow and reduce reliance on government funding, PDO cut planned 2017 expenditure by almost $1.5 billion through project optimisation and re-phasing, closer collaboration with contractors and a further comprehensive review and challenge of costs across the organisation.

The company pledged to continue to drive cost reduction opportunities to improve the country’s budgetary position, including through its Lean business efficiency programme, which has to date generated more than $400 million in terms of extra revenue, cost reduction or avoidance.

At the same time, it increased its investment in its In-Country Value (ICV) programme to boost Omani business and generate almost 7,800 employment opportunities for young jobseekers, both in the oil and gas industry and other sectors of the economy, contributing to a total of almost 30,000 since 2011.

The average PDO daily oil production for 2016 was 600,197 bpd, the highest since 2005 and more than 15,000 bpd above the original planned target. Annual condensate production was 81,325 bpd against a yearly target of 76,800 bpd, helped by a strong performance from wells at Kauther, Rabab and Khouloud. Average government gas production during the year was 80.24 million m3/d against 81.07 million m3/d in 2015.

Commenting on the 2016 performance, PDO Managing Director Raoul Restucci (pictured)

said: “I am pleased to announce that in another year dominated by the low global oil price, PDO




exceeded performance expectations, delivering a significant improvement across a broad range of functional and asset targets.

“Our philosophy and strategy have been simple and consistent: working to ‘stay the course’ while addressing value creation, cost control and continuous improvement in every facet of our business. This approach has helped to steer us through the difficulties caused by the low oil price environment and to build solid foundations for the future.

“The recessionary climate has meant established ways of working have required a paradigm shift in mindset to significantly improve capital efficiency and deliver competitive projects. However, the ability of our staff and contractors to adapt and work more collaboratively has enabled us to exceed targets across the board.”

PDO confirmed it was well placed to develop growth plans to further raise our plateau levels and create more value for Oman when the production restrictions are lifted.

“With our partners at Shell, we have identified 46 opportunities for incremental development that could yield in excess of 700 million barrels of recoverable reserves and raise our production plateau.”

In 2016, PDO’s Exploration Directorate sought new sources of low unit technical cost hydrocarbons to create value and meet customer needs. It exceeded its 2016 delivery targets, booking a total of 86.4 million barrels of oil, 0.45 trillion cubic feet (Tcf) of non-associated gas and 24.3 million barrels of condensate as commercial contingent resource (CCR) volumes. Major oil discoveries of the year included the Shammar play opening, which unlocked 40 million barrels of CCR volumes from the shallow, high-permeability reservoir in the Lekhwair field.

The exploration and production efforts were underpinned by an intensification of well activities, with 644 oil and gas production and exploration wells drilled, 33 above plan and a 12 per cent increase on 2015. There were also 19,600 well interventions, a 49 per cent increase on the 2015 total of 13,190 activities with a similar well entry and work-over fleet.

Despite the heavier workload, the Well Engineering Directorate realised considerable savings in well delivery against the approved budget, through a multitude of Lean business efficiency projects and innovative contracting strategies. The cost per metre drilled fell 8 per cent from 2015, the lowest since 2010, with well delivery 3 per cent under budget despite being 5 per cent ahead of plan. Beyond cost reductions, this effort contributed to also achieving 10 per cent extra oil than planned from new wells.




PDO achieved the majority of its corporate project delivery milestones on or ahead of plan, and all were delivered within the year. Three major projects — Yibal depletion compression phase 3, Mabrouk phase 2, and Ghaba North gas oil gravity drainage were delivered successfully.

The Company disclosed that the Rabab Harweel integrated project — the largest capital project in PDO with a reserve add of more than 500 million boe — is on schedule, while the Yibal Khuff project, which involves the simultaneous development of a number of sour oil and gas reservoirs, is ahead of schedule with construction beginning last year.

OOCEP uncovers 430m boe of new oil and gas discoveries

Oman Oil Company Exploration and Production (OOCEP), the upstream arm of the government-owned energy investment firm Oman Oil Company (OOC), has announced additional potential discoveries totaling in excess of 430 million barrels of oil equivalent (boe) in 2016.

This increase in the reserves potential comes on the back of a string of oil and gas discoveries most notably in its flagship Block 60 concession in the Midwest of the Sultanate. The wholly Omani upstream company has also notched up a number of successes elsewhere across its substantial portfolio of operations in the Sultanate.

OOCEP’s Vice-President (Technical) Eng Saif al Khayari characterised 2016 as a “very successful year” for the company, exemplified by its selection for the title of ‘Fastest Growing Company in the Middle East’ by Wood MacKenzie, a well-known business consultancy firm. The award recognises OOCEP’s strong production performance since 2015, he said.




OOCEP operates a total of five assets in the Sultanate across the hydrocarbon spectrum, and has interests in five non-operated assets, in addition to financial interests in partnership with two major players

in the Sultanate, besides two assets in Kazakhstan as well. Speaking at the Annual Media Briefing 2017 hosted by the Ministry of Oil & Gas yesterday, Eng Al Khayari said total production from the operated and non-operated assets amounted to 83,000 barrels of oil equivalent per day (boepd) in 2016, up from around 33,000 boepd in 2015, entailing a steep 150 per cent increase. Much of this increase came from the recently awarded Block 9 concession, he said.

“We will continue this growth by targeting nearly 100,000 boepd from operated and non-operated assets,” he stated.

A key highlight of the past year’s performance was the discovery of three “significant” oil and gas fields — all uncovered in the company’s Block 60 licence, he said. The first of these finds, named ‘Bisat’, was reported north of the currently producing Abu Butabul (ABB) field. Light oil flowed at the rate of 1,000 barrels per day (bpd) during testing.

Not far from this find came the Abu Butabul North discovery where an exploratory well targeting a deep Haima formation successfully produced gas at the test rate of 25 million standard cubic feet per day (mmscfd), along with some condensate.

“We are currently appraising the ABB North field and laying down a flowline to accelerate production from this discovery. We are also working towards delivering early production from the Block with first gas planned for early next year,” the executive said.

A further significant find, dubbed Abu Butabul South, yielded around 600 bpd of light oil with significant volumes of gas. The discovery requires significant appraisal which will be pursued in the coming years.

Elsewhere around Oman, OOCEP has reported further headway in the development and commercialisation of hydrocarbon resources across its expanding portfolio. In Block 65, acting on behalf of the Ministry of Oil & Gas, the company says it is studying the feasibility of exploiting the Block’s unconventional oil potential, having already successfully drilled a horizontal well. Testing and data analysis is ongoing, he said.




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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

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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 April 2017 K. Al Awadi