new base 983 special 05 january 2017 energy news

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NewBase 05 January 2017 - Issue No. 983 Senior Editor Eng. Khaled Al Awadi

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UAE:Distric cooling Empower registered 255,000 client-servicing transactions in 2016

(WAM) -- Emirates Central Cooling Systems Corporation (Empower) has registered 255,000 client-servicing transactions last year ranging from face to face client servicing in the branches, telephone calls and e-mail correspondences.

This is represents a breakthrough in the use of modern methods and techniques in managing day to day queries and transactions at Empower as the company has accommodated the increasing number of customers reflecting the expansion of its district cooling network in Dubai.

"In 2016, our client servicing department has seen significant development of advanced technologies in order to keep abreast of increasing demand. Through these technologies, we were able to cater to the needs of the year, which has seen a significant expansion in the demand of district cooling services across Dubai," said Ahmad Bin Shafar, Chief Executive Officer of Empower.

"We firmly believe that we are making strong strides in responding to customers’ requirements, which has resulted in the recent figures that reflect the success of our team in achieving customers’ satisfaction as we continuously work on improving the services to our customers."

Empower currently operates more than 1,100,000 RT, providing environmentally responsible district cooling services to large-scale real estate developments, such as Jumeirah Group, Business Bay, Jumeirah Beach Residence, Dubai International Financial Centre, Palm Jumeirah, Jumeirah Lake Towers, Ibn Battuta Mall, Discovery Gardens, Dubai Healthcare City, Dubai World Trade Centre Residences and Dubai Design District, among others.




Saudi: McDermott to build four jackets for Saudi Aramco

McDermott has been awarded a contract from Saudi Aramco for the engineering, procurement, construction and installation (EPCI) of four jackets and three gas observation platforms offshore Saudi Arabia.

The American EPCI company said on Wednesday that the total weight of all structures combined is 11,595 tons.

“As the third fast-track jacket contract from Saudi Aramco in the last 18 months, this award is a testament to McDermott’s successful performance on previous fast-track projects for Saudi Aramco,” said Linh Austin, McDermott’s Vice President, Middle East & Caspian.

“McDermott’s fully-integrated EPCI solution provides Saudi Aramco schedule certainty, one of their key drivers, while helping them meet their aggressive schedule.”

In 2015, McDermott was awarded a project by Saudi Aramco for the EPCI of twelve jackets; a project completed in 2016. McDermott is currently executing EPCI work for Saudi Aramco on nine jackets offshore Saudi Arabia, which are expected to be delivered in the third quarter of 2017.

The contract award will be reflected in McDermott’s fourth quarter 2016 backlog. Work on the contract is expected to be executed through the fourth quarter of 2017. McDermott also said it plans to use its Engineering teams in Dubai, Chennai, India and Al Khobar, Saudi Arabia with construction taking place at McDermott’s fabrication facilities in Dubai and Dammam, Saudi Arabia. Vessels from McDermott’s global fleet are scheduled to perform the installation work.

McDermott's facility in Dubai




South Sudan plans to increase oil production as prices go up :

South Sudan is planning to increase its oil production in the coming days as oil prices increase following last month’s Opec agreement to cap output, a top diplomat in South Sudan embassy told Gulf News.

“We are planning to increase oil production as oil prices go up to increase our revenue and expand the ways of oil industry,” said Mayom Alier, Deputy Head of mission in South Sudan embassy in Abu Dhabi.

He did not give a specific figure to what extent output is expected to rise but said they are trying to reach the levels of 500,000 barrels per day which the country was producing when the conflict began in 2013.

The current oil production of South Sudan, which is heavily dependent on oil revenue, is about 130,000 barrels per day. The country’s oil output plummeted due to conflict following the rebellion of former vice president Riek Machar in 2013 and the escalation of fighting in the subsequent months.

According to the diplomat, 98 per cent of the country’s budget is dependent on oil revenue and the drop in oil prices has heavily impacted its economy. “We suffered the most due to low oil prices. Rise in oil prices is a good news for us.”

South Sudan has the third largest oil reserves in sub-Saharan Africa after Nigeria and Angola. The main oil companies operating in the country include China National Petroleum Corporation, India’s Oil and Natural Gas Corporation and Malaysia’s Petronas.

The landlocked country does not have oil infrastructure and uses the pipeline in its northern neighbour Sudan to transport its crude oil to the international market. South Sudan is also trying to strengthen its trade ties with the UAE, but it is yet to sign protection of investment agreement and double taxation avoidance agreement with the emirates.

“South Sudan offers investment opportunities in tourism, oil industry and in agriculture sectors for the UAE government to invest,” said Alier. “We have enormous resources that are yet to be tapped. As the UAE mulls investment in various countries, South Sudan could be a good option in future specially in areas of food security.”

South Sudan, which gained independence from Sudan in 2011, opened its embassy in Abu Dhabi 2014. Opec (Organisation of the Petroleum Exporting Countries) and non-Opec members reached an agreement on November 30 to slash production by about 1.8 million barrels per day starting this week to stabilise oil prices.

International benchmark, Brent surged by more than 20 per cent following the agreement and is currently trading at more than $56 per barrel.




Lebanon Set to Join East Mediterranean Race for Oil and Gas Bloomberg - Dana Khraiche

Lebanon approved two measures allowing it to auction its first offshore oil and natural gas rights, ending three years of delays that kept the tiny country from joining a regional race to tap energy wealth in the eastern Mediterranean.

The newly formed government headed by Prime Minister Saad Hariri passed the two decrees on Wednesday, state-run National News Agency reported, citing Foreign Affairs Minister Gebran Bassil. The decrees demarcate energy blocks, establish

production-sharing contracts and specify tender protocols. They take effect with no need

for additional approval. The cabinet formed ministerial committees to study a petroleum tax draft law and another proposed law governing onshore oil resources, Information Minister Melhem Riachi said in a televised news conference. The cabinet also discussed the establishment of a sovereign wealth fund to manage the oil and gas revenue. Lebanon has lagged behind neighboring Israel, Cyprus and Egypt in developing oil and gas deposits that may lie beneath its share of the Mediterranean Sea. Seismic surveys show the country could hold at least 96 trillion cubic feet of gas and 850 million barrels of oil, Bassil, who was then the country’s energy minister, said in a December 2013 interview. Exxon Mobil Corp. and Eni SpA are among companies qualified to bid to explore off the country’s coast. An auction of energy assets first scheduled for November 2013 was delayed after the government failed to pass the decrees. Political disputes then left the country without a president for more than two years until the Oct. 31 election of Michel Aoun, a Christian close ally of the Iran-backed Hezbollah group. Lebanon, which is struggling with severe power shortages and hosting more than a million Syrian and Palestinian refugees, needs revenue to trim its public debt, the highest as a share of annual economic output among Arab states. ExxonMobil, Eni, Chevron Corp., Petroleo Brasileiro SA and Royal Dutch Shell Plc are among companies qualified to bid as operators. Thirty-four companies qualified as non-operators, including Marathon Oil Corp., OMV AG and Dana Petroleum Plc. Under Lebanese law, the government should start auctioning exploration rights six months after the date of the decrees.




MENA:Projects worth $208bn to be awarded across Mena 2017 Gulf Times

A pipeline of about $208bn of major contracts is scheduled to be awarded across the Middle East and North Africa (Mena) this year, a new report has shown. A majority of these, 61% are in the GCC region, the latest issue of ‘Meed Business Review’ shows.

In terms of mega projects (contracts valued at $1bn or above), there are about $75bn of deals scheduled to be let in the GCC and Egypt this year.

The power, oil and transport sectors will drive mega projects spending this year, accounting for 83% of the total value. Major awarded expected include contracts on the Mohamed bin Rashid al-Maktoum Solar Park in Dubai and upgrades at the Ruwais Refinery in the UAE.

“It is no secret that 2017 will continue to be a tough year for the region, but the gradual rise in the oil price will see the projects’ market begin to regain some vigour. Governments still plan to invest in the much-needed infrastructure and are looking at alternate ways to fund schemes,” ‘Meed Business Review’ said.

Between 2018 and the start of 2020, there is a pipeline of more than $500bn of contracts slated for award in the GCC and Egypt. Not all will be let over the period, but the value of awards is expected to pick up, especially as Dubai and Qatar head towards hosting their respective global events of Expo 2020 and the 2022 FIFA World Cup.

According to Meed Business Review, the GCC has been predominantly driven by major infrastructure projects in the past 15 years. These schemes have created jobs, fuelled immigration, expanded economies and changed the landscape of many cities in the region.

But some mega projects in the past few years have been dogged by delays, cancellations and cost overruns. Postponements of tender deadlines or awards have also become a common problem for major infrastructure upgrades.

Mega projects may drive economies, but they are the result of long-term masterplans drawn up by governments. The most recent to be launched is Riyadh’s vision 2030 and the National Transformation Programme, released in late April 2016 in response to low oil prices and its fiscal deficit. The plan calls for a significant programme of infrastructure upgrades.

In 2016, the value of major contract awards in the kingdom fell by about 52% to $25.1bn, compared with $52.1bn of deals let in 2015. This year, Saudi Arabia is expected to award about $43bn of deals, a 73% uplift on 2016, but still lower than the 2015 figure, ‘Meed Business Review’ said.




Report: Asia becoming largest importer of U.S. LNG Oak Spirit loading at Sabine Pass LNG terminal on December 6 (Image courtesy of Jera)

Cheniere’s Sabine Pass LNG terminal in Louisiana shipped nine liquefied natural gas cargoes to Asian countries during December.

The facility shipped a total of 12 cargoes during the last month of 2016, Bloomberg reports, noting that the rise in number of cargoes sent to Asia is a strong indication that the previous trend of sending cargoes to Latin America is changing.

The demand for US LNG in Asia stems from the cold winter temperatures pushing the demand for heating and power production up. Spot LNG prices have also gone up 79 percent since July, the report shows.

Cheniere started exports from the Sabine Pass liquefaction plant in February last year with the majority of cargoes landing in Latin America.

The U.S. is expected to become the world’s third-largest LNG supplier by 2020 with an export capacity of 60 million mt coming from five export terminals.




NewBase 05 January 2017 Khaled Al Awadi

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

Oil dips on doubts over touted production cuts

Oil prices dipped on Thursday on doubts producers would fully deliver on promises to cut output, although record U.S. automobile sales and falling crude stocks offered markets some support.

Brent crude futures, the international benchmark for oil prices, were trading at $56.28 per barrel at 0150 GMT (8.50 p.m. ET), down 18 cents from their last close.

Traders said the decline came on the back of worries that plans by the Organization of the Petroleum Exporting Countries (OPEC) and other leading producers to cut crude supply would be fully implemented.

"There remains a question mark over whether OPEC, with a long history of non-compliance, will actually follow through (with the cuts). Very few respondents expect full compliance," Singapore Exchange (SGX) said on Thursday, citing results from a survey of its participants.

"Three quarters of those surveyed went for (crude) prices averaging within the current $50-60/barrel range (for 2017)," SGX added.

Reuters commodity analyst Wang Tao said that technical price trend indicators showed Brent may soon test support at $55.43 a barrel, although he added that the longer-term upward trend in crude prices that started in the second half of last year was still in place.

In the United States, crude prices were firmer than on international markets, supported by strong vehicle sales and a report of falling commercial crude stockpiles.

Oil price special

coverage




U.S. West Texas Intermediate (WTI) crude oil futures were trading down 10 cents at $53.16 per barrel.

Firmer prices for WTI than for Brent were supported by an American Petroleum Institute (API) report showing U.S. crude inventories fell 7.4 million barrels in the week ended Dec. 30 to 482.7 million, compared with analyst expectations for a decrease of 2.2 million barrels.

"We expect Asia to trade on the positive-side today, supported by the API number," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore.

WTI was also buoyed by U.S. car and truck sales, which were up 3.1 percent in December from the same month last year, and hit a record 17.55 million overall in 2016.

Shale production is rising even as OPEC and friends cut output

Major oil producers have started cutting output but the rally in crude prices could be capped as U.S. shale companies boost production in the latter half of the year, according to JPMorgan.

"Towards the second half of this year, U.S. shale starts to kick in," said Scott Darling, the investment bank's Asia-Pacific oil and gas research head.

U.S. West Texas Intermediate crude oil futures were moving around $53 a barrel and Brent crude futures at around $56 a barrel on Thursday morning in Asia, up from sub-$50-a-barrel levels before the OPEC production cuts were announced.

Late last year, OPEC and major non-OPEC countries announced join production cuts of around 1.8 million barrels a day starting this year.

Darling said sustained crude prices of $50 a barrel in the second half of 2017 will aid U.S. shale growth of 200,000 barrels a day while the jump will be at 600,000 barrels a day if crude prices move up to $60 a barrel. Any further rise may even see shale production growth breaching 1 million barrels a day, he added.

Rival Goldman Sachs noted Thursday U.S. shale activity has already picked up strongly, with the horizontal oil rig count at a 13-month high, and it expect U.S. shale producers to continue to ramp up activity at current price levels.

JPMorgan's forecast for Brent crude averages $58 a barrel in 2017 with prices sliding to $55 in the fourth quarter as shale production starts to impact the market.




There's an Early Sign OPEC's Push to 'Fast-Forward' the Normalization of the Oil Market May Be Working by Luke Kawa When it comes to OPEC production cuts, "We tend to cheat," said former Saudi Arabia Oil Minister Ali al-Naimi after the group reached an agreement to curb output late last year. But the extent of that cheating won't be too bad this time around, reckons Goldman Sachs Group Inc.'s Damien Courvalin. The analyst sees OPEC and non-OPEC nations enacting a full 84 percent of their agreed-upon cuts, citing the incentive among lower-cost producers to "fast-forward the normalization in inventories." Such a move would effectively alter the shape of the oil futures curve, ensuring that competing shale producers will be less likely to lock in 2018 production as longer-dated contracts cheapen relative to near-dated ones, helping to reduce the global glut in crude. The dramatic change in the shape of the Brent futures curve over the past five weeks may be an early sign that the tactic is poised to bear fruit. While the curve was in a state of contango before the November 2016 agreement — meaning near-dated oil delivery contracts were less pricey than longer-dated contracts — part of the curve has now shifted into the opposing state of backwardation, meaning a contract expiring in December 2018 is now trading at lower price than contracts expiring in September 2017, for instance.

BRENT CURVE OPEC WINNING Source: Bloomberg




This dynamic can make locking in next year's production a less attractive prospect for higher-cost shale drillers, Courvalin explains, and will expedite the market's return to balance and foster a "meaningful" drawdown in previously built-up stockpiles of crude. There are also ancillary benefits to consider for major producers that may be planning on selling a stake in their state-run oil companies, which the analyst alludes to.

The "normalization of inventories is key to low-cost producers," he writes in a Jan. 4 note to clients, as "it generates backwardation, which removes hedging gains from high-cost producers and helps low-cost producers grow market share," he said. It also "reduces oil price volatility, which increases the valuation of the debt and equity they are issuing." Of course, the swiftness of the response of U.S. shale companies, which expanded output in October by the most since April 2014, could throw a wrench in the analyst's estimates. Courvalin forecasts that Brent prices peak at $59 per barrel in 2017 amid these inventory draws, but warns that investment in new projects will pick up steam as crude stabilizes between $55 and $60 per barrel, effectively capping the upside for front-month prices. As such, he expects better returns from futures than the spot price, as the current structure of the curve provides opportunities for positive carry.




Crude oil prices increased in 2016, still below 2015 averages Source: U.S. Energy Information Administration, based on Thompson Reuters

Crude oil prices ended the year above $50 per barrel (b). Although the annual average West Texas Intermediate (WTI) crude oil price in 2016 was $43/b—down $5/b from 2015—the WTI price ended 2016 at $53/b, $16/b higher than at the end of 2015. Similarly, Brent ended the year up $17 from the end of 2015, at $54/b, but the 2016 annual average of $44/b was $8 below the 2015 average.

Despite robust demand for petroleum products, relatively high production and inventory levels provided downward pressure on crude oil prices throughout most of 2016. However, recent agreements to curb production over the next six months within the Organization of the Petroleum Exporting Countries (OPEC) and additional pledges by some key non-OPEC producers put upward pressure on prices at the end of 2016 as markets appear to be anticipating tighter balances than previously forecast.




U.S. highlights for 2016

• U.S. crude oil production was lower in 2016 than in 2015 by more than 500,000 barrels per day (b/d) using estimates from the December Short-Term Energy Outlook (STEO). The decrease was driven by reductions in Lower 48 onshore production, with an estimated decline in production from 2015 to 2016 of nearly 700,000 b/d. Despite the decline, production of crude oil is forecast to average 8.9 million b/d in 2016, the second highest level since 1985.

• The Brent-WTI price spread averaged less than $1/b in 2016, significantly below the 2015 average spread of $3.45/b.

• Based on data through September 2016, average U.S. imports of crude oil increased by more than 500,000 b/d from 2015 to 7.9 million b/d, the highest level since 2012. The United States imported the three largest volumes of crude oil from Canada, Saudi Arabia, and Venezuela.

• The number of countries receiving U.S. crude oil exports has risen since restrictions on exporting U.S. crude oil were lifted in December 2015. Despite declines in domestic production, total crude oil exports for 2016 were up, with estimates through October 2016 totaling more than 500,000 b/d, an increase of more than 30,000 b/d from the same period in 2015.

International highlights for 2016

• EIA estimates that total OPEC crude oil and other liquids production increased 3% to 39.3 million b/d in 2016.

• At the November 30 OPEC meeting, member countries agreed to reduce production by approximately 1.2 million b/d from an October baseline to lower OPEC's production ceiling to 32.5 million b/d beginning January 1, 2017.

• Non-OPEC countries met following OPEC’s agreement and agreed to cut production by 558,000 b/d, with Russia making the largest cuts of approximately 300,000 b/d.




NewBase Special Coverage

News Agencies News Release 05 Jan. 2017

U.S. refiners face severe labor shortage for deferred maintenance By Jarrett Renshaw

After years of running flat out, U.S. Gulf Coast refiners are lining up repairs to plants in 2017 - but facing a severe labor shortage that could delay work, drive up costs and raise accident risks.

Fuel producers such as Marathon Petroleum Corp (MPC.N) and Valero Energy Corp (VLO.N) have delayed routine work in the past 24 months amid high margins. Those margins collapsed this year in a global fuel supply glut, providing an incentive for refiners to undertake the shutdowns necessary for maintenance.

But refiners are now competing for pipe fitters and ironworkers with a host of billion-dollar energy projects, including Cheniere Energy's liquefied natural gas export terminals and a new petrochemical unit for Dow Chemical.

Without undertaking the work they need, refineries run the risk of more unscheduled outages at plants. Plant shutdowns can disrupt fuel supplies and are closely tracked by oil traders because they directly affect demand for crude and supply of fuel.




"Putting off work definitely affects the safety of the refinery," said Ed Lee, an independent refinery safety consultant who worked at Royal Dutch Shell for three decades.

Refiners can mitigate the risks - but at a cost, by slowing output or avoiding types of crude that are difficult to process, Less said.

In recent months, a spate of unexpected outages have hit refineries nationwide, taking hundreds of thousands of barrels off the market and boosting gasoline prices and margins.

U.S. refiners are expected to spend $1.26 billion on planned maintenance next year, up 38 percent from this year and the highest level since at least 2010, according to Industrial Information Resources (IIR), which tracks labor supply for refiners and other industrial companies.

Many will struggle to execute those plans, said Anthony Salemme, a vice president at IIR.

"Refiners are going to have trouble finding even the lowest skilled workers, such as scaffold builders, and you can't do work at a refinery without a scaffold," Salemme said. "That's going to complicate scheduling and even extend outages."

FEW WORKERS, MANY PROJECTS

IIR estimates that the coastal region from Brownsville, Texas to New Orleans - the largest U.S. refining region - will be short roughly 37,400 craftsman needed to complete all of the planned capital projects in 2017.

"We are definitely feeling the labor shortages in skilled craft labor," said Paul Tooze, construction manager for the oil, gas and chemicals business at Bechtel, one of the world's largest industrial contractors.

Tooze said the company spends a lot of time and money to attract and retain employees, but still has to bring in workers from other regions to complete projects. That typically requires $100-per-day travel allowances that drive up project costs.

Bechtel employs between 40 percent and 70 percent workers requiring daily allowances on their Gulf Coast projects, Tooze said.

The shortage will be most acute in Lake Charles, Louisiana, the home to several refineries and petrochemical plants. There, South African energy firm Sasol (SOLJ.J) is investing billions on a chemical project, and the call on labor for the plant is one of the reasons the area will be short more than 18,000 workers in 2017, according to IIR.

Sasol raised its cost estimate on the project in August by 25 percent to $11 billion, in part due to rising labor costs.

Chevron Phillips – the joint venture between Chevron (CVX.N) and Phillips 66 (PSX.N) – is spending $6 billion on building a petrochemical units in Baytown and Old Ocean in Texas. Labor costs would drive the projects' costs up 10 percent from previous expectations, Phillips 66 President Tim Taylor said in an earnings call earlier this month.

Fluor (FLR.N), one of the world's largest industrial contractors, took a $154 million charge on the plant in November due to cost overruns, including labor.

Earlier this year, Fluor opened a skilled craft training center in the Gulf Coast, stating that while the firm could not train its way out of the shortage, it hope to alleviate the problem.




COMPETITION FROM MANUFACTURERS

Refiners are also competing for workers with a broader range of power companies, pharmaceutical firms and industrial manufacturers nationwide, which are also preparing for a spike in maintenance projects in 2017, according to IIR.

In the southwest region that includes Texas, Louisiana, Oklahoma and Arkansas, IIR counted 952 planned projects among the various groups it tracks, the most since at least 2010 and a 24 percent increase from this year.

A recent survey conducted by the Associated General Contractors of America found that 74 percent of Texas contractors are having trouble filling hourly craft worker positions, and a majority of them believed they would continue to struggle over the next year.

More than 60 percent of the respondents said they bumped up salaries to attract more skilled craft workers.

"These shortages have the potential to undermine broader economic growth by forcing contractors to slow scheduled work or choose not to bid on projects, thereby inflating the cost of construction," said Stephen Sandherr, head of the Associated General Contractors.




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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

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 January 2017 K. Al Awadi