redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 1
NewBase 18 March 2015 - Issue No. 563 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Saudi Arabia & GCC Needs More Oil to Feed Local Refinery Expansion
Bloomberg + NewBase
Saudi Arabia’s plans to expand local refineries while maintaining its share of the global crude
market point to one thing: higher production.
The world’s largest oil exporter will probably increase output this year to feed new refineries, deepening a global supply glut, according to analysts at Societe Generale SA and DNB ASA. The kingdom may go as high as 10 million barrels a day by April, according to Torbjoern Kjus, an analyst at DNB in Oslo. That would be the most in more than two years, according to data compiled by Bloomberg.
“Saudi Arabia will do the same thing as other OPEC members have always been doing: They’ll produce as much as they can,” Kjus said by phone March 11. Fellow OPEC members, the United Arab Emirates and Kuwait, will probably do the same because “they don’t want to be holding back on any potential exports.”
Crude’s rebound from the lowest in almost six years has faltered amid speculation that a global supply surplus may worsen. U.S. production and stockpiles continue to rise from the highest level in three decades, even after last year’s price slump of almost 50 percent. The Organization of Petroleum Exporting Countries has pumped more than its daily production target of 30 million barrels for nine months.
A February rally in the price of oil has been followed by two weeks of declines. West Texas Intermediate, the U.S. benchmark, traded at $43.68 a barrel in electronic trading on the New York Mercantile Exchange at 12:42 p.m. Singapore time. The contract fell to $42.85 Monday, the lowest since March 2009.
SATORP, in its promising future, is one of the most
complex refineries in the world, with a processing
capacity of 400,000 barrels per day of Arabian Heavy
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 2
New Refineries
Saudi Arabia, Kuwait, the U.A.E., Qatar, Bahrain and Oman will raise their combined refining capacity to 5.4 million barrels a day this year, an increase of 17 percent from 2014, according to Vienna-based JBC Energy GmbH. They will be able to process 6 million a day by 2020, the consultant estimates.
Saudi Arabia plans to start the main unit for making gasoline at the new 400,000 barrel-a day refinery at Yanbu on the Red Sea by the middle of the year. Another plant with the same capacity is scheduled to
begin operation in 2017 at Jazan. The kingdom’s oil-product exports rose 44 percent last year
following the start of the Jubail refinery, according to the Riyadh-based Joint Organisations Data Initiative.
In the U.A.E., the Abu Dhabi National Oil Co. is more than doubling the capacity of the 400,000 barrel-a-day Ruwais refinery. The International Petroleum Investment Company, a fund that focuses on energy, is also considering opening a 200,000 barrel-a-day refinery in the emirate of Fujairah.
Kuwait is planning the 4 billion-dinar ($13 billion) Al-Zour refinery that could open in 2020 with a capacity of 615,000 barrels a day. Oman will award a contract next year to build a 230,000 barrel-a-day plant to start production by the end of 2019.
Increase Exports
“Clearly the game plan is to increase product exports, to try to capture the extra margin,” Mike Wittner, head of oil research at Societe Generale, said of Saudi Arabia’s plans by e-mail March 11. “If they want to increase crude exports, they would need to increase crude production even further. Either way, those would be bearish headlines.”
Since 2010, Saudi Arabia, Kuwait and the U.A.E have increased their combined crude-oil output by about 3 million barrels a day, according to OPEC data. The group estimates that it pumped
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 3
30.022 million barrels a day last month, 1.9 million more than the forecast for global demand for its crude in the second quarter.
The effect on the global crude market of any additional production from these countries would be limited if the oil is processed locally before being exported, according to BNP Paribas SA. It would have a more pronounced impact on the prices of refined fuels and profits of European and Asian refiners, the bank said.
Product Markets
“You’ll have an upward drift in production in countries like Saudi Arabia,” Harry Tchilinguirian, BNP’s head of commodity-markets strategy, said by phone from London March 11. “But it doesn’t necessarily mean more crude will be delivered to the international market.”
Saudi Arabia increased crude production to 9.85 million barrels a day last month, the highest since September 2013, according to data compiled by Bloomberg. The country does not want to cede its share of the market and will continue to supply enough to meet its customers’ demands, Oil Minister Ali al-Naimi said in a speech in Berlin on March 4.
“There’s a genuine possibility of the Saudis keeping production high,” Miswin Mahesh, an analyst at Barclays Plc in London, said by phone March 11. “They will definitely have a rethink in terms of how much they’re keeping below the ground.”
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 4
UAE: Emirates National Oil Company Moves to Acquire Dragon Oil http://www.naturalgasasia.com/emirates-national-oil-company-moves-to-acquire-dragon-oil-15073
Dragon Oil on Tuesday said it has received an approach from Emirates National Oil Company (ENOC) to buy its shares that ENOC did not already own. “Following the recent movement in its share price, Dragon Oil confirms that it has received an approach from Emirates National Oil Company (ENOC) regarding a possible offer for the entire issued and to be issued ordinary share
capital of Dragon Oil that it does not already own. There can be no certainty that any firm offer for the Company will be made nor as to the terms on which any firm
offer might be made,” Dragon Oil said in a statement. ENOC is Dubai based Dragon Oil’s largest shareholder and owns 53.95 percent in the company. Dragon Oil is leading independent international oil and gas company with its principal asset being the Cheleken Contract Area, in the eastern section of the Caspian Sea, offshore Turkmenistan. It also has exploration assets in Tunisia, Iraq, Afghanistan, Egypt, Algeria and the Philippines.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 5
UAE: The future is nuclear, says Hans Blix The national + NewBase
New generations of nuclear power plants will not lead to disastrous accidents like the one in Fukushima, Japan, the chairman of the UAE’s nuclear programme advisory board has said.
Dr Hans Blix, former head of the International Atomic Energy Agency, said on Tuesday that smaller accidents might happen but that faith in the sustainable energy source was slowly being
restored around the world.
“The Fukushima plants were 40 years old,” he said during the lecture organised by the Khalifa University on the importance of nuclear power to states and the world, at the Emirates Centre for Strategic Studies and Research.
“They were not the new generation and there were errors in the past, including a lack of sufficient strength in the attitude of the regulator vis-a-vis the operator, and there were also weaknesses in the technical side in the placement of these generators.”
He said there were still concerns about nuclear power.
“Nuclear can offer huge amounts of power without emitting any carbon dioxide,” he said. “It’s the only fuel that can offer energy in terawatt volumes without emitting [carbon dioxide]. Nuclear power is a sustainable source of energy, it’s not a renewable source of energy, and we need sustainable energy.”
The most common concern revolves around nuclear safety.
“There have been three major accidents in the world and they all involved core melts,” said Dr Blix. “We cannot guarantee there won’t be more. The risk is never zero but it is very low, and I think we can exclude the big accidents, not the smaller ones.”
He said many 40-year-old reactors, in France for instance, would soon be replaced. “In the third generation of nuclear power plants coming on stream, we can be sure that even in serious accidents, there will not be any spills of radiation in the environment,” he said.
“The fourth generation of plants, which is now on the drawing board and in the phase of design, can also [rule out] the risk of any core melts. The most severe modern energy-related accidents were connected with hydro-dams bursting.”
He said that although no generation of energy was without some dangers to the environment and the population, hazardous radioactive contamination had been a particular negative consequence of accidents such as Chernobyl and Fukushima. “And this is bad,” he said. “Yet we should note
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 6
that with the third and fourth generation of nuclear power plants, there should be no risk of contamination from accidents.”
Dr Blix said consensus could not be reached on the use of nuclear power. “And this must not stand in the way of the use of expanded nuclear power in countries where they accept it,” he said. “For those countries, it is crucial to use this energy.”
In the Middle East, the support was strong, he said.
“The UAE, Saudi Arabia and Iran are determined to rely on it to generate much of the electricity they need and perhaps to desalinate water,” he said. “The four nuclear power plants in the UAE add 5.6 gigawatt of electricity to the country’s present fossil fuel base capacity of 19 gigawatt. So far, work has been on schedule and on budget, and it’s an achievement.”
He called the UAE programme a well-prepared and ambitious project.
“It will result in a large energy capacity serving the UAE society and industry,” he said. “Women also form a significant part of the workforce. The project has been set as the gold standard and that has been well earned.”
The UAE aims to have four nuclear plants operational by 2020 to provide energy that is expected to meet up to a quarter of electricity needs and save up to 12 million tonnes of greenhouse gas emissions a year.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 7
Renewable energy globally to account for 8% of total consumption by 2035 Saudi Gaszette + NewBase
Renewable energy will account for 8% of total energy consumption in 2035, compared to just 3% today, said Mark Finley, BP General Manager, Global Energy Markets and US Economics, revealing the importance of the renewable energy-focused research taking place at the Masdar
Institute of Science and Technology. Finley was speaking at the Masdar Institute campus in Abu Dhabi as part of the Distinguished Lecture series hosted by the independent, research-driven graduate-level university focused on advanced energy and sustainable technologies. Finley said " Outlook's projection of rising CO2 emissions will require additional significant steps by policy makers beyond the steps already assumed, and the Outlook provides comparative
information for possible options and their relative impacts on emissions. However, as no one option is likely to be sufficient on its own, multiple options will need to be pursued. This underlines the importance of policymaking taking steps that lead to a meaningful global price for carbon which would provide incentives for everyone to play their role in meeting the world's increasing energy needs in a sustainable manner." The BP Energy Outlook 2035 highlights the relevance and importance of research-based institutions such as Masdar Institute that operate in the sustainability arena. The forecast serves as a strong motivating factor for the students and faculty to consistently pursue with their efforts in bringing sustainable solutions to help tackle energy and climate-related challenges. In his talk the BP official also highlighted the BP 'Energy Outlook 2035' finding that among non-fossil fuels, renewables are expectedly to rapidly gain shares in the coming years, from around 3% today to 8% by 2035, overtaking nuclear in the early 2020s and hydro in the early 2030s. The BP Outlook assesses the implications for global energy demand and supply of expected changes in global economic growth, population growth, technological change, and policy support for renewable energies, energy efficiency, and other sources of energy supply. Finley said that the growth of renewable fuels in areas outside the Organization for Economic Cooperation and Development (non-OECD) region will be roughly the same in volume as in the OECD. But there will also be significant increases in non-OECD nuclear and hydropower. Renewables will eventually account for 16% of the growth in power generation in the non-OECD areas.
He noted that among the exporting regions, the report states that the Middle East will remain the largest net energy exporter, but its share will fall from 46% in 2013 to 36% in 2035. Russia will remain the world's largest energy exporting country, while Asia's import dependency will rise from 23% in 2013 to 27%. Oil will account for 60% of that rise, with imports accounting for over 80% of Asian oil consumption by 2035. Asia's oil imports in 2035 will be almost as large as OPEC's current entire oil production, the report said. Citing the BP Energy Outlook 2035, Finley pointed out that nuclear energy at the rate of 1.8% per annum and hydro-electric power at 1.7% per annum will grow faster than the total energy sector.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 8
However, among fossil fuels, natural gas will grow the fastest at 1.9% per annum with oil at 0.8%, marginally ahead of coal, also 0.8%. According to the report, over 70% of carbon emissions will be produced from non-OECD countries, although per capita emissions in the non-OECD will still be less than half the OECD level. Total carbon emissions however will increase by 25%, the report added. It also predicted that by 2035, all the fossil fuel shares will be clustered around 26-28% with no single dominant fuel - for the first time since the Industrial Revolution. Fossil fuels in aggregate will lose share but will remain the dominant form of energy in 2035 with a share of 81%, down from 86% in 2013. On the emissions front, the report says the profile for emissions will be well above that recommended by the scientific community. Total carbon emissions from energy consumption are expected to increase by 25% between 2013 and 2035 at the rate of 1% per annum, with the rate of growth declining from 2.5% over the past decade to 0.7% in the final decade of the Outlook, says the report. The report also predicted that the US, Russia and Saudi Arabia will supply over a third of global liquids fuel (crude oil) output by the year 2035, while the Organization of the Petroleum Exporting Countries' (OPEC) share of the global liquids market by 2035 will be around 40% - the same as over the past 20 years. The lecture, which was attended by faculty, students, staff and other guests, covered global market share of fuels, outlook for US tight oil and shale gas supply, the significance of US energy renaissance for global markets, the likely changes for China and the implications for CO2 emissions. Earlier, Finley was received by Masdar Institute officials, who took him around the campus on a tour of the research projects and the sustainable architectural elements.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 9
Platts: April spot LNG prices to Asia keep dropping Platts + NewBase
Prices of spot liquefied natural gas for April delivery to northeast Asia continued their downward slide, falling 59.8% year over year to average $7.279 per million British thermal units, according to the latest Platts Japan/Korea Marker data for month-ahead delivery.
The figure reflects the daily JKM assessed between February 16 and March 13 expressed as a monthly average.
The year-over-year drop was largely attributed to weaker-than-expected demand from buyers in northeast Asia, where both electricity generation and utility gas usage are down on fairly mild temperatures over the winter season, and slowing economic growth. The fall followed the record year-over-year plunge of 61.7% seen the previous trading month.
Month over month, the April JKM dipped a more marginal 2.1%, suggesting that the downward spiral in prices was beginning to lose momentum.
The JKM had opened the trading month at $6.725/MMBtu on assessment date February 16 before beginning a steady uptick that saw the marker gain 97.5 cents over the period to close at $7.70/MMBtu on assessment date March 13.
This was the first sustained period of increases for the JKM since the beginning of 2015, although the market remained in backwardation, as demand is expected to slow further with the advent of northern hemisphere spring and warmer temperatures.
The U.K. National Balancing Point onshore gas market was seen to be providing some support to Asian spot prices, as NBP had been trading at a premium to JKM for the first half of the trading month.
“This afforded suppliers and traders the opportunity to deliver Atlantic-loading cargoes into the premium European onshore gas markets, while backfilling requirements in the Asian Pacific basin with cheaper spot cargoes,” said Stephanie Wilson, managing editor of Asia LNG at Platts. “This
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 10
effectively tightened availability of cargoes in the Asian spot market as traders and sellers bought spot cargoes from various liquefaction projects, driving prices higher.”
At the beginning of the trading month, the NBP had been trading 40 cents above the JKM, but the spread narrowed as NBP prices slipped on warmer temperatures, while JKM trended higher as supply in the Asia Pacific basin tightened. The April JKM ended the trading month 80 cents higher than the NBP.
The effects of the higher NBP price were also felt in India, where importers looking to secure deliveries into the west of the country were forced to bid above other Asian buyers in order to attract cargoes from the Atlantic and Middle East.
Meanwhile, the price of possible competing fuel thermal coal decreased 11.5% year over year, while fuel oil was down 42.4% year over year.
Key points • 2015 will see a ramp-up in Australian volumes as the new projects currently under construction start coming
online. In addition we may see the first cargo exported from the US Gulf of Mexico around the end of the year.
• Markets will continue to grow and diversify. We could see up to six new markets emerge in 2015 – while continued growth in Asian imports is expected.
• We expect the LNG market to become more volatile over the next few years as it responds to 'lumpy' supply and market additions and exogenous supply and demand factors.
Overview After four years of supply hiatus the industry has now entered a period of supply growth with the start-up of QCLNG the first project in an Australian 'supply wave'. With 12 trains and 1 FLNG unit, across 7 projects currently under construction in Australia this is expected to add a total of 58 mtpa of supply capacity by 2019. Worldwide, including Australia, 26 trains and 4 FLNG units are currently under significant construction, across 16 projects for a total of 122 mtpa of new supply capacity by 2020.
It is possible that we will also see the first cargoes exported from the US Gulf of Mexico around the end of the year, marking the start of the next supply wave after Australia. With two projects making Final Investment Decisions (FIDs) in 2014, a total of 41 mt are now under significant construction in the US, with Cove Point undertaking initial construction works despite not having formally announced FID. We are expecting five new trains and one FLNG with a total capacity of 21 mtpa to start-up in 2015, mostly in the second half of the year. As a result, we are expecting trade3 to grow 3% to 250 mtpa in 2015 with an incremental 7 mtpa delivered. On the demand side we are expecting 12 new regasification terminals and one expansion to start-up, including six new markets; Egypt, Jordan, Pakistan, Philippines, Poland, Uruguay.
Uncertainties on the demand side include the rate of return of Japanese nuclear power-plants, some of which are expected back on-line in 2015, plus the health of the Chinese economy and how this plays through to energy demand. How the LNG market responds to the growing volumes will be a key factor to watch in late-2015 and in 2016. We expect the LNG market to become more volatile over the next few years as it responds to 'lumpy' supply and market-side additions plus exogenous supply and demand factors. There may be periods in the next couple of years where the balance of supply and demand results in some cargoes flowing 'back' into European markets – but it seems unlikely Europe will see the annual levels of LNG imports it saw at its peak in 2011 until much later in the decade – assuming Asia continues to grow as expected. At current oil price levels the range between crude oil prices and the European market price, between which LNG in Asia has historically priced, will be much narrower in 2015 than in recent years. In each of the past four years over 20 million tonnes of supply capacity has been sanctioned. The extent to which the industry sustains the current supply growth momentum will depend upon how it responds to the current reduction in commodity prices. A key indicator to watch will be the number of FIDs taken in 2015.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 11
Saudi Arabia Wooing Fired U.S. Shale Workers to ‘Join Our Team’ Bloomberg + NewBase
Workers fired from U.S. shale fields after the collapse in oil prices could soon have a new boss: the nation some blame for driving that decline.
The state-owned Saudi Arabian Oil Co., also known as Saudi Aramco, is posting new job ads online aiming to snap up experts in extracting oil from shale as the country seeks to become a leader in that rapidly expanding effort. Tens of thousands of U.S. workers have been fired since November as oil prices plunged because of oversupplies, driven in part by an OPEC decision supported by Saudi Arabia.
That’s now giving Saudi Aramco a better chance to lure experienced workers to its own shale formations. Difficult living conditions had previously made the country a hard sell, said Tobias Read, chief executive officer of Swift Worldwide Resources, a recruiting firm.
“We’ve seen people who have historically been reticent to look at Saudi Arabia who are now more accepting of a job there,” Read said in an interview. For decades, the Saudis have recruited workers from the U.S. for its conventional drilling programs, offering hefty salaries and benefits as lures. Even so, “it’s been hard for us to put people there,” Read said. “The conditions are just quite difficult.”
Previously, Saudi Aramco didn’t need expertise in shale oil and natural gas exploration because it has large conventional oil reserves that don’t require expensive extra steps to develop, such as the hydraulic fracturing or horizontal drilling used in shale rock.
‘Unconventional’ Oil
As those highly productive fields age, however, development of shale resources, along with other hard-to-reach oil categorized as “unconventional,” may help Saudi Aramco maintain its dominance in the oil market, according to John Kingston, president of the McGraw Hill Financial Institute.
“With the layoffs, it’s a great time to do it,” he said about the recruitment effort.
Nigel O’Connor, a spokesman for Saudi Aramco didn’t answer questions on the specifics of the company’s campaign, or its timing. “To support the implementation of our strategy and continued growth, Saudi Aramco continues to hire expertise in a number of technical areas across the unconventional gas resource value-chain,” he said by e-mail.
In November, the Saudis led a decision by the Organization of Petroleum Exporting Countries to maintain production levels of its 12 member countries despite falling prices. The hiring campaign
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 12
comes after some U.S. oil chiefs, including Continental Resources Inc. CEO Harold Hamm, blamed the Saudis for causing the North American cutbacks.
New Ads
In February, Saudi Aramco posted several new ads on websites including Rigzone and LinkedIn that focused on shale expertise. One recent LinkedIn listing for a petroleum engineer with shale experience drew 160 applicants in a month, according to data from the professional networking website.
“Consider the opportunity to join our team and help shape the future of key global unconventional resource development,” the ads say, referring to shale-rock exploration that’s led to a renaissance in U.S. oil and natural gas production.
Additionally, since the start of the year, Saudi Aramco has added an “unconventionals” category to its recruiting website, where 35 job listings require specific experience in shale. A recruiting company, Whitney Human Resources, has also written directly to prospective employees on Saudi Aramco’s behalf. A February letter from Whitney obtained by Bloomberg News said there are three areas of the country where Saudi Aramco has an “active exploration program” for unconventional gas resources.
‘Exciting Development’ “Senior managers from the company will be in North America in the forthcoming months to meet professionals with your background who are interested in joining this exciting development,” the letter said. A recruiting professional at Whitney declined to answer questions about its work with Saudi Aramco.
The nation is interested in developing natural gas in its shale formations to help replace the equivalent of 900,000 barrels a day of domestic crude and fuel oil used to generate local electricity supplies, according to a March 10 research note by a team of Barclays Plc analysts including David Anderson in New York.
On a recent trip to the region, the analysts learned that Saudi Arabia fears damaging its oil- and-gas-rich formations with shale drilling, which could hurt future production, Barclays said in the note. To date, only eight shale gas wells have been drilled in the country with plans to drill 135 wells over the next 3 years.
Recruiting Efforts
“Soon, Saudi Aramco will be known not just for conventional oil and gas production, but as a leader in full life-cycle unconventional gas development,” the company said in a recent ad. Saudi Aramco’s shale recruiting efforts are akin to a Chinese factory running a U.S. factory out of business, then trying to hire the unemployed workers to improve operations in China, said Michael Webber, an associate professor at the University of Texas and deputy director of the Energy Institute.
After watching the U.S. shale revolution collapse on low prices, Saudi Aramco is seizing the opportunity to bolster its own expertise in shale. “They don’t want to start from scratch,” Webber said. “They have no experience with shale and they have to hire outside workers. It’s a way to leapfrog.”
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 13
US: Removing US oil export ban would create jobs beyond drilling Source: Reuters via Yahoo! Finance
Lifting a 40-year-old U.S. ban on crude exports would create a wide range of jobs in the oil drilling supply chain and broader economy even in states that produce little or no oil, according to a report released on Tuesday. Some 394,000 to 859,000 U.S. jobs could be created annually from 2016 to 2030 by lifting the ban, according to the IHS report, titled: 'Unleashing the Supply Chain: Assessing the Economic Impact of a U.S. crude oil free trade policy.'
Only 10 percent of the jobs would be created in actual oil production, while 30 percent would come from the supply chain, and 60 percent would come from the broader economy, the report said. The supply chain jobs would be created in industries that support drilling, such as oil field trucks, construction, information technology and rail. Many of the jobs would be created in Florida, Washington, New York, Massachusetts, and other states that are not known as oil producers.
'The jobs story extends across the supply chain, right across the United States,' said Daniel Yergin, a vice chairman at IHS and an oil historian. 'It's not just an oil patch story, it's a U.S. story.'
Record spare U.S. crude oil supplies caused by the drilling boom of the last five years have put pressure on the Obama administration and Congress to lift the country's ban on oil exports. Congress put the ban in place after the 1970s Arab oil embargo led to fears of energy shortages, and only a few lawmakers including Republicans Senator Lisa Murkowski and U.S. Representative Joe Barton support lifting the restriction. Many other lawmakers have been hesitant to support relaxing the ban, fearing they could be blamed for any unrelated rise in gas prices.
In New York, a state that maintains a ban on hydraulic fracturing, or fracking, for natural gas, jobs for the drilling business have been created in big data analytics and database management. The number of those jobs would rise if the ban was lifted, said the report. In Illinois, jobs would be created in durable manufacturing of engines and machine tools and mining for fracking sand.
The report, sponsored by energy companies including ConocoPhillips, Exxon Mobil and Pioneer Natural Resources, assumed there would be no slowdown in drilling due to campaigns by environmental or other groups.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 14
Oil Price Drop Special Coverage
Brent crude oil prices Ups & Downs as supplies increase Brent crude oil prices lost ground on Tuesday, trading at their lowest level since early February, as concerns over a growing supply glut mounted.
Analysts said that rising US crude oil stocks, an increase in Libyan oil production and the chance of an agreement between Iran and the West that could ease sanctions on the oil producer and boost its exports are all pulling prices lower.
“The focus is on the bearish side,” said Bjarne Schieldrop, chief commodities analyst with SEB in Oslow. “When people look at the market now, they are looking at the possibility of an Iran resolution,” Brent, which rose to a
session high of $54.38 (Dh199.73), was trading at $53.11, down 33 cents, by 1016 GMT. The April contract that expired in the previous session closed down $1.23 after hitting $52.50 earlier on Monday, its lowest since February 2.
US crude, or West Texas Intermediate (WTI), was at $43.11 a barrel, down 77 cents and slightly above 6-year lows of $42.85 marked on Monday. Though fighting between rival governments has complicated Libya’s oil production, an industry source said it has now risen to 489,000 barrels per day after the restart of the Al Feel and Wafa oilfields.
Further weekly data on US crude inventories was due later on Tuesday from industry group the American Petroleum Institute (API), and some traders expect the gap between Brent and WTI to widen further.
While the US rig count dropped to 1,125 last week from 1,809 rigs a year ago, past cycles have shown there is “often a lag between when drilling stops and when oil supply stops growing”, Morgan Stanley said in a note. “We expect WTI to remain under pressure as inventories swell further as the seasonal maintenance period begins. We expect this to remain the case in the short term,” ANZ bank said. A Reuters poll showed a likely build in US crude inventories for a tenth week to a new record high. Some see the possibility for markets to stabilise or even rise, with Vitol chief executive Ian Taylor telling a conference on Tuesday that oil markets would “come into balance” by the second half of the year.
However the potential of a nuclear deal that could end sanctions against Iran, allowing Tehran to send more of its oil into the market, also dragged on oil markets.
“If sanctions were to be lifted, up to 1 million barrels per day of additional oil could reach the market from Iran in the second half of the year, making it more difficult for prices to recover,” Commerzbank said in a note on Tuesday.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 15
OPEC Comes Cleaner On How Much Oil Its Members Pump By Reuters + NewBase
OPEC members’ own versions of their oil output were for years greeted with such scepticism that the group resorted to publishing what others thought they were producing. That gave rise to a mini-industry of OPEC watchers, tapping secretive sources to track every barrel. Output was hotly contested when the group squabbled over member quotas, which have since been abandoned.
But on Monday, OPEC issued a set of production figures as reported to its Vienna Secretariat by member-countries, without any countries missing from the total for the first time in months. {OPEC/M]
These also showed the difference between OPEC output based on member-countries’ own submissions, and that provided by OPEC’s list of secondary sources, which include consultants and industry media, to be narrowing.
“I can see some countries trying to address these problems and publish better data,” said an oil market expert working for a European government. “But there are a few countries that I doubt have made much progress.”
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 16
As OPEC accounts for the bulk of the world’s oil exports, its production level is vital information for traders, consumers and governments. The trouble is that finding that number is no easy task due to a dearth of timely official information.
Due to that challenge, the Organization of the Petroleum Exporting Countries since 2012 in its monthly report has published two sets of numbers – one from member-countries themselves, and one from the secondary sources.
The two often show wide differences. But the gap between their OPEC output total has now narrowed to about 230,000 barrels per day (bpd) in the February 2015 estimates published on Monday, from almost 1 million bpd in the first data set given in 2012.
The change could reflect efforts by OPEC and other government agencies to improve the transparency of oil markets through programmes such as the Joint Organisations Data Initiative (JODI), and comes at a time when OPEC is defending market share from rival suppliers. There is little disagreement over the output rate of top producer Saudi Arabia, which told OPEC it pumped 9.64 million bpd in February while the secondary sources estimated 9.68 million bpd.
“We are at a serious moment with OPEC defending market share,” said the oil market expert. “It makes sense to be transparent.” The figures still show some long-standing output claims by OPEC members to be pumping at different levels than estimated by the secondary sources.
For example, Venezuela told OPEC it pumped 2.74 million bpd in February, while the secondary sources estimated production at 2.34 million bpd. And large differences persist. The secondary sources put Iraq’s February production 540,000 bpd higher than Iraq itself.
Lukoil Overseas announces record oil production Gulf News + Newbase
Lukoil Overseas, the Dubai based international upstream division of the Russian Lukoil Group said that none of its projects were affected due to the recent drop in oil prices and has announced a record oil production for the year 2014.
In a statement, the company said its total oil production in 2014 reached 9.6 million tonnes, 2.4 times the level of 2013 due to the start of the West Qurna-2 field in Iraq. The gas production was 6.8 billion cubic meters (bcm).
“This boosted the share of Lukoil Overseas in Lukoil’s total oil production from 4.4 per cent in 2013 to 10 per cent in 2014, and its share in total hydrocarbon production from 9.5 per cent to 13.3 per cent,” the company said.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 17
A spokesperson for the company said that the recent slide in oil prices has not affected their projects. “We didn’t abandon any projects due to fall in oil prices,” said Fedor Klimkin, press and communication officer of Lukoil Overseas speaking to Gulf News.
He however said that they received a letter from Iraqi authorities to find ways to reduce the cost of West Qurna-2 field without influencing the time schedule and implementation of the project.
“The letter is under consideration at the moment and everything is on schedule,” he said. Klimkin said the precarious security situation in Iraq has not impacted their operations as most of their projects are located in the Southern part of Iraq.
West Qurna-2, one of the largest oilfields in the world is located in Southern Iraq, 65 kilometres from the town of Basra. The field has 13 billion barrels of recoverable oil reserves in two main formations — Mishrif and Yamama. The company has invested more than $4 billion (Dh14.7 billion) in the oilfield.
The development and production service contract for the West Qurna-2 field was signed on January 31, 2010. The stakeholders are the South Oil company of the Ministry of Oil of Iraq and consortium of contractors including Lukoil and Iraqi North Oil Company.
Oil prices have been falling due to record US shale production and weak demand. Prices fell about 60 per cent since last June. Organisation of the Petroleum Exporting Countries (Opec) kept the oil production unchanged at a crucial meeting in Vienna last year.
Opec countries led by Saudi Arabia are pressing non-Opec countries mainly Russia to cut production to prop up the prices. Another meeting of Opec is scheduled to be held in June. On the other hand, the implementation of major gas projects in Uzbekistan by Lukoil is on track, the company said.
A booster compressor statıon was started in November at the Khauzak-Shady field, allowing for a 20 per cent increase in production, according to the company. The Early Gas Kandym large capital project entered an active phase; work was underway on design documentation development, equipment fabrication and delivery, as well as early construction under the Gissar Full Development project.
The annual production at the fields in Uzbekistan totalled 4 bcm of gas and over 100,000 tonnes of liquid hydrocarbons. Lukoil Overseas shifted its base to Dubai from Moscow in late 2013 because the city is near to their upstream projects located in the Middle East and Central Asia.
About 800 people work in Dubai office located in Dubai Media city and the company is implementing around 30 upstream projects in more than a dozen countries worldwide. On Tuesday, Lukoil announced it had closed a deal to develop the Etinde offshore block in the Gulf of Guinea off Cameroon.
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 18
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
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
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 19
redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained
in this publication. However, no warranty is given to the accuracy of its content . Page 20
