new base 578 special 08 april 2015

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 08 April 2015 - Issue No. 578 Khaled Al Awadi

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

UAE Dh6.98b annual saving possible by 2030 with renewable energy use

Gulf News + NewBase

UAE releases report on renewable energy prospects that it can achieve energy

system savings of $1.9 billion (Dh6.98 billion) annually by 2030 by producing a 10 per cent share

of renewable energy in its total energy supply and almost 25 per cent in the power sector,

according to a new report.

If the health and environmental benefits of clean energy are also included, they could amount to additional annual net savings of $1-$3.7 billion by 2030. The report titled ‘The Renewable Energy Prospects: UAE’ was released on Tuesday evening by the International Renewable Energy Agency (Irena), Masdar Institute, and the UAE Ministry of Foreign Affairs, marking the country’s first public comparison of different energy technology costs and potentials.

“The UAE’s strategy of innovation and diversification has placed it at the fulcrum of the massive transformation of the global energy landscape that has already begun,” said Adnan Z. Ameen, Irena director-general, at a ceremony to launch the report at the Emirates Centre for Strategic Studies and Research (ECSSR) in the presence of senior UAE officials.

Dr Fred Moavenzadeh, President of Masdar Institute, the graduate-level clean-tech university, said: “This report is an eye-opener.”




Dr Thani Al Zeyoudi, the UAE’s Permanent Representative to Irena and the Director of Energy and Climate Change at the Ministry of Foreign Affairs, said: “As this report shows, there is now a clear financial case for renewables even before we consider benefits like energy security, emissions, and job creation.”

The report cites sharp declines in renewable energy costs in the UAE and rising costs for natural gas — as domestic production declines and the country turns to more expensive imported sources — as the key drivers for renewable energy’s financial attractiveness.

Solar and wind may now be the cheapest sources of new energy supply in the UAE, according to the report.

Local solar PV (Photo voltaic) costs, for instance, have fallen by 80 per cent since 2008. The solar costs are poised to decrease even further. In January, the tender for the second phase of Mohammad Bin Rashid Solar Park in Dubai was awarded to the lowest bidder for under 6 cents per kilowatt hour for a 25-year fixed contract. This is the lowest solar price ever achieved worldwide.

Regarding the rising costs of natural gas, the report said the cost of new gas

supplies in the UAE has grown from under $2.5/MMBtu (Dh9.18/million British thermal units) in 2010 to $6-8/MMBtu for domestic production and $10-18/MMBtu for imports today, even after the recent decline of oil and LNG prices.

The report estimates that solar, wind, and waste-to-energy are preferable for power generation when new gas is above $8/MMBtu — making them immediately competitive in the UAE, where natural gas supplies almost 100 per cent of power.

The report is one of the first three country analyses under Irena’s REmap 2030 project, which evaluates how the world can meet the United Nations’ Sustainable Energy for All goal of doubling the global share of renewable energy by 2030.

The project maps how renewable energy can grow in the power, industry, buildings, and transport sectors.

The report notes that solar and wind are still challenged by intermittency, which will require natural gas to fill gaps in output. However, the savings from generating solar during the daytime, instead of consuming gas, are so great that they could justify 17,500 megawatts of PV in the UAE by 2030, up from around 40MW today.




Saudi Arabia Yasref Refinery In Loads First Petcoke Cargo

The Yasref refinery in Saudi Arabia, a joint venture between Saudi Aramco and China’s Sinopec has exported its first shipment of petroleum coke, the company said on Tuesday. The new 400,000 barrel per day refinery had previously started exports of diesel and gasoline.

Yasref loaded 49,000 tonnes of Petcoke from the port in Yanbu to an unknown destination, Yasref said. An industry source told Reuters the shipment went to India.

Petroleum coke is produced by oil refiners from the heaviest, higher-sulphur crudes. It is a higher-energy, higher- sulphur fuel than most thermal coal. The refinery processes Arabian heavy crude.

The refinery has been configured with the following major units and technologies to assure high-quality products:

• 400,000 bpd Crude Distillation Unit (open technology) • 124,000 bpd Chevron Lummis Global Hydrocracker • 177,000 bpd UOP Diesel Hydrotreater • 85,000 bpd UOP Naphtha Hydrotreater • 84,000 bpd UOP Continuous Catalytic Reformer (CCR) • 20,000 bpd UOP Isomerization Unit • 20,000 bpd Benzene Extraction Unit • 117,000 bpd ConocoPhillips Delayed Coker Unit • 262 million cubic feet per day Hydrogen Generation Unit • 3,400 tons per day Sulfur Recovery Units Refinery products will include:

• 263,000 bpd Diesel • 90,000 bpd Gasoline • 6,200 tons per day of Petroleum Coke • 1,200 tons per day of Pelletized Sulfur • 140,000 tons per year of Benzene




Qatar LNG Exports Shrink From Record as Australia, U.S. Expand Bloomberg + NewBase

Qatar, the world’s biggest producer of liquefied natural gas, cut exports of the fuel for the first time since at least 2006 as Australia and the U.S. prepare to erode the Middle Eastern nation’s dominant position.

Qatari volumes dropped 2.1 percent from a year earlier in 2014 after at least eight years of gains, the International Group of Liquefied Natural Gas Importers said in its annual report to be published Wednesday. The nation’s share of global LNG imports shrank to 31.9 percent from a peak of 32.9 percent in 2013, according to the data from the Paris-based lobby group known as GIIGNL.

“The industry is waiting for the wave of new exports from the U.S. and from Australia, who

will likely top the producers’ list by 2020,” Domenico Dispenza, GIIGNL president, said in the report. “The dominant market share and role of Middle East producers will diminish.”

Qatar, whose North Field is part of the world’s biggest gas reservoir, dominates the market with output from its 14 LNG plants, known as trains. The nation has capacity to produce 77 million metric tons a year of the fuel, or 26 percent of the world’s total. That is being challenged by Australia and the U.S., which are building a total of 99 million tons of annual capacity, according to estimates from BG Group Plc, a Reading, England-based LNG producer and trader.

Global Trade

Global LNG trade rose 1 percent to 239.2 million tons in 2014, still less than a record 240.8 million in 2011, according to GIIGNL. Global liquefaction capacity increased 4.2 percent to 298 million tons a year.

“Although one new liquefaction plant came on stream in May in Papua New Guinea and one expansion train started producing in Algeria, disappointments in Angola and Egypt and slowdown in Qatar limited the volume of additional LNG supply,” Dispenza said.

Qatari volumes dropped to 76.4 million tons from 78 million in 2013. While gas production fell to 2.8 million barrels of oil equivalent a day in 2014 from 2.9 million due to maintenance shutdowns, output is expected to increase this year, Qatar National Bank Group said April 5.

Australia, which started expanding its production capacity late last year, boosted its market share to 9.9 percent from 9.5 percent, GIIGNL said. The U.S. is poised to start LNG exports from the Gulf of Mexico at the end of this year.




Three Basins

Yemen and Oman, the Middle East’s other LNG producers, cut exports by 8.1 percent and 7.5 percent, respectively, while Abu Dhabi boosted exports 20 percent. The region accounted for 40 percent of global imports last year, down from 41 percent a year earlier. The Pacific region’s share climbed one percentage point to 38 percent, the data showed.

The Atlantic basin, the third LNG producing region, boosted supply by 3.5 percent, the first rise since 2010, and GIIGNL data showed. Nigeria, Africa’s biggest producer, increased supply by 16 percent because of “much improved feed-gas supply,” GIIGNL said. Algerian shipments rose 18 percent after one new train started, the group said.

Spot and short-term trades under contracts lasting four years or less expanded 7 percent to 69.6 million tons in 2014, GIIGNL said. The flexible volumes, as opposed to those contractually tied to one destination, made up 29 percent of total LNG trade, up from 27 percent a year earlier, according to the lobby group.

Re-exports of previously imported cargoes surged to a record 6.35 million tons, 51 percent more than the previous year, GIIGNL said. Spain led the practice, boosting reloads 80 percent to 3.84 million tons. Belgium, France, the Netherlands and Portugal also re-exported more fuel, the data show.

Turkish Growth

Turkey led import growth in Europe last year, followed by the U.K. and the Netherlands. Lithuania started imports, while the region’s other nations cut purchases, GIIGNL said. In Asia, Singapore boosted imports 85 percent, followed by India with an 11 percent increase. Brazil’s growth was 29 percent, followed by Mexico with a 16 percent gain, while Argentina cut imports 6.4 percent.

LNG prices tumbled 61 percent from a February 2014 peak through March 30, amid milder weather and additional supply in Asia as well as declining oil prices, according to assessments by World Gas Intelligence of cargoes for delivery to northeast Asia in four to eight weeks.

“During the second half of the year a sharp decrease in crude oil prices combined with a looser supply situation in the Pacific drove down prices in Asia,” Dispenza said. “On the demand side, it has begun to translate into the return of flexible LNG cargoes to Europe, where spot prices have been disconnected from oil prices for some time.”




Malaysia: INPEX and JX Nippon discover oil in deepwater Block R offshore Source: INPEX

INPEX Corp has announced an oil discovery at the Bestari-1 exploration well in Deepwater Block R where preliminary findings point to an approx. 70m column of oil-bearing sands across multiple horizons. The company has a participating interest in the Block through its wholly-owned subsidiary, INPEX Offshore South West Sabah.

The Block, located offshore East Malaysia, covers an area of 672km2 with a water depth ranging from 100m to 1,400m. INPEX currently owns a 27.5% participating interest in the Block, where it conducts exploration activities alongside operator JX Nippon Oil & Gas Exploration (Deepwater Sabah), PETRONAS CARIGALI, a wholly-owned subsidiary of Petronas, and Santos Sabah Block R, which own participating interests of 27.5%, 25% and 20%, respectively. Moving forward, INPEX and its partners will analyse and evaluate the data retrieved from the well, and proceed with plans to drill two exploratory wells to assess the possibility of new oil and natural gas deposits. Japan Oil, Gas and Metals National Corporation (JOGMEC) is to cover up to 50% of exploration expenditures incurred by INPEX Offshore South West Sabah through equity capital.




Thailand: KrisEnergy continues exploration drilling in Thai G6/48 block

Source: KrisEnergy

KrisEnergy has announced that the Key Gibraltar jack-up rig has commenced drilling of the Rossukon-3 exploration well in G6/48 in the Gulf of Thailand. Rossukon-3 is the third exploration well to be drilled in the G6/48 contract area in 2015 following the evaluation of Rossukon-2 and Rossukon-2ST, which were drilled in March.

Rossukon-3 lies 1.9 km west of the Rossukon-2 surface location and 1.8 km northwest of the original Rossukon-1 discovery well, drilled in 2009. The well is planned to reach total depth at 7,468 feet (2,276 metres) measured depth (-6235 feet true vertical depth subsea) and will test Early Miocene fluvial sandstones on a broad structural high. Water depth at the Rossukon-3 well location is 208 feet. G6/48 covers 566 sq. km over the Karawake Basin and lies to the north of the G10/48 licence, where KrisEnergy is developing the Wassana oil field. KrisEnergy took over operatorship of G6/48 in May 2014. The Company holds a 30% working interest in the concession and is partnered by Northern Gulf Petroleum with 40% and Mubadala Petroleum with 30%. The Key Gibraltar jack-up rig is owned by Shelf Drilling (Southeast Asia) Limited. KrisEnergy has contracted the rig for a firm six months for its Thai drilling program, which includes the latest Rossukon series of wells in G6/48 and 15 development wells in the Wassana oil field.




U.S. remained world's largest producer of petroleum and

natural gas hydrocarbons in 2014 Source: U.S. Energy Information Administration

The United States remained the world's top producer of petroleum and natural gas hydrocarbons in 2014, according to U.S. Energy Information Administration estimates. U.S. hydrocarbon production continues to exceed that of both Russia and Saudi Arabia, the second- and third-largest producers, respectively.

Since 2008, U.S. petroleum production has increased by more than 11 quadrillion British thermal units (Btu), with dramatic growth in Texas and North Dakota. Despite the 50% decline in crude oil prices that occurred in the second half of last year, U.S. petroleum production still increased by 3 quadrillion Btu (1.6 million barrels per day) in 2014. Natural gas production—largely from the eastern United States—increased by 5 quadrillion Btu (13.9 billion cubic feet per day) over the past five years. Combined hydrocarbon output in Russia increased by 3 quadrillion Btu and in Saudi Arabia by 4 quadrillion Btu over the past five years. Although Russian petroleum production continued to increase, natural gas production declined because weak European economic growth and a warm 2013-14 winter reduced demand in Russia's primary market for gas exports. While total petroleum and natural gas hydrocarbon production estimates for the United States and Russia in 2011 were roughly equivalent, by 2014 U.S. production exceeded Russian production by almost 12 quadrillion Btu. In contrast to its past actions to raise or lower oil production levels to balance global oil markets, Saudi Arabia did not cut its production in the fall of 2014 despite falling oil prices and growing global inventories of oil as supply exceeded demand. As a result, Saudi Arabia's total petroleum and natural gas hydrocarbon production was nearly unchanged from 2013. With the increase in U.S. production, the United States produced nearly twice the petroleum and natural gas hydrocarbons as produced by Saudi Arabia in 2014.




Myanmar: Canadian Foresight Group, Partners to Drill Large Gas Field CFG + NewBase

A joint venture of Canadian Foresight Group (CFG), Perth based Transcontinental Resource Group (TRG) and Myanmar’s KMA Group will explore a large gas field in the Andaman Sea. CFG was awarded offshore Block M-15 late last month. Under the terms of joint bid, CFG will undertake a seismic program and drill two wells.

Block M-15 is located in the Andaman Sea, within the Tanintharyi Offshore basin, which is off Myanmar’s southern Tanintharyi coast. The area of Block M-15 covers 13,480 square km with estimated P50 Recoverable 16.1 Tcf.

One of the biggest of fshore gas fields in Myanmar, Yetagun gas field, is located 60 km to the north of M-15. The Yetagun field contains an estimated 4.2 Tcf of recoverable gas. Exploration work is expected to commence in September.




Oil Price Drop Special Coverage

Oil rallies and will keep the lows due to : Reuters +Bloomberg+ NewBase

1- on US jobs data 2- bullish EIA report 3- Iran sacnctions lifting 4- Saudi high level production

Oil futures rallied yesterday, erasing losses on strong jobs data and US government forecasts for lower domestic crude production growth and higher global demand for oil. US job openings surged to a 14-year high in February the Labor Department said in its monthly Job Openings and Labor Turnover Survey (JOLTS), lifting oil prices. “That JOLTS report was certainly quite strong and strong employment equals strong gasoline demand,” said John Kilduff, partner at Again Capital in New York. Oil got more support from news that Minneapolis Fed President Narayana Kocherlakota made a case for waiting until the second half of 2016 to raise interest rates, and to then raise them gradually to just 2% by the end of 2017. Crude futures got additional lift when an Energy Information Administration (EIA) monthly report




raised forecasts for US and global demand growth and lowered forecasts for crude oil production growth in the US. US May crude was up $1.65 at $53.79 a barrel at 12:58 p.m. EDT (1658 GMT), having traded from $51.17 to $53.84. Brent May crude was up $1.10 at $59.22, having swung from $57.02 to $59.27. Also cited as supportive was news that an oil spill into the Mississippi River on Monday forced authorities to close part of the waterway in Louisiana. Eight refineries along the river in the region account for about 12% of US refining capacity, according to the EIA. Crude futures fell earlier on signs of growing oversupply as Iranian officials visited China to seek more oil sales following the framework nuclear deal that could lead to lifting sanctions on Tehran. Prices also were pressured by a Goldman Sachs report saying prices needed to remain low for months to slow US oil output growth. The American Petroleum Institute’s (API) weekly report on US oil inventories is due Tuesday at 4:30 p.m. EDT (2030 GMT), with the EIA’s report following on Wednesday at 10:30 a.m. EDT.

Iran deal may cut EIA oil price forecast by as Much as $15 A final nuclear deal with Iran and the lifting of oil export sanctions from the OPEC member could lead the Energy Information Administration to lower its oil price forecast for next year by as much as $15 a barrel.

Iran and world powers reached a preliminary agreement on April 2 that set the parameters for further negotiations needed to complete a signed, comprehensive agreement by a June 30 deadline. The re-entry of more Iranian barrels could cut the EIA’s price projection by $5 to $15 a barrel, the US Energy Department’s statistical arm said in its monthly Short-Term Energy Outlook report yesterday.

“If a comprehensive agreement that results in the lifting of Iranian oil-related sanctions is reached, then this could significantly change the STEO forecast for oil supply, demand, and prices,” the EIA said in the report. “However, the timing and order that sanctions could be suspended is uncertain.”

Iran’s full return to the oil market risks delaying a recovery in prices, which have slumped 50% since last year following a supply glut. Iran could boost output by at least 700,000 barrels a day by the end of 2016, the EIA said. The nation produced 2.85mn barrels a day in March, according to Bloomberg data.

The EIA said in the report that West Texas Intermediate crude, the US benchmark, will average $70 next year and Brent will be at $75.03. The forecasts don’t take additional Iranian supply into consideration. The additional output from Iran could lead to an annual average growth of about 500,000 barrels a day in global inventories in 2016.

Oil prices fall as Saudi Arabia reports record output Crude prices dropped on Wednesday after Saudi Arabia reported record production of 10.3 million barrels per day in March, a figure the country's oil minister said was unlikely to fall by much.




The decline in prices followed a rally on Tuesday in which U.S. crude approached 2015 highs on strong jobs data, as well as government forecasts for lower U.S. crude production growth and higher global demand for oil.

Saudi oil minister Ali al-Naimi told reporters late on Tuesday that the March figure of 10.3 million barrels per day (bpd) would eclipse its recent peak of 10.2 million bpd in August 2013, according to records going back to the early 1980s. Brent May crude was down 73 cents from its last settlement at $58.37 a barrel by 0100 GMT, while U.S. May crude fell over a dollar to $52.96 a barrel. Both futures have dropped around 50 percent since June last year, when prices began to fall.

Naimi did not say why production had increased last month. He said in the speech in Riyadh that Saudi output would likely remain around 10 million bpd.

Ali al-Naimi also said that the kingdom stood ready to "improve" prices but only if other producers outside the Organization of the Petroleum Exporting Countries (OPEC) joined the effort.

The U.S. dollar index , which measures the greenback against a basket of currencies, rose 1.22 percent on Tuesday, resuming a recent upward trend and weighing on crude prices.

Meanwhile, Royal Dutch Shell is in advanced talks to buy BG Group in the first oil super-merger since the early 2000s to extend its global lead in gas production and close the gap with the world's biggest independent oil major ExxonMobil .




Shell 'in advanced discussions' to buy BG Group

Source: BBC News

Energy giant Royal Dutch Shell is 'in talks' to buy gas utilityBG Group, the Wall Street Journal

has reported, citing 'people familiar with the matter'. The mega-merger could produce a company with a combined market capitalisation of more than £200bn ($296bn; €274bn).

A Shell spokesman told the BBC: 'We're not making any comment.' But BG Group confirmed that it was 'in advanced discussions'" with Shell about a possible takeover. However, it added: 'There can be no certainty that any offer will ultimately be made for BG.' BG said in a statement that Shell had until 5 May to make a firm offer or walk away.

Defensive merger?

If the deal goes ahead, the recent collapse in oil prices will have played a large part in it. BG Group, Britain's third largest energy company, said in February that it would write down the value of its oil and gas assets by nearly £6bn ($9bn) due to the oil price slump. Similarly, Shell announced in January that it would be cutting spending by nearly £10bn over the next three years. Shell's £177bn market capitalisation dwarfs that of BG, which now stands at £29bn after a 20% fall in its share price over the last 52 weeks.

Bumper payout

A deal between the two energy companies could be controversial if it lands new BG Group boss, Helge Lund, with a huge payout. In December, BG's board revised Mr Lund's proposed £12m upfront shares bonus, after shareholders and the Institute of Directors complained. The former Statoil chief executive, who took up his role in March, can still earn nearly £11m in shares over the next five years if certain performance targets are met. This is on top of his base salary of £1.95m.




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 [email protected] [email protected]

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 08 April 2015 K. Al Awadi

new base 578 special 08 april 2015

Economy & Finance