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NewBase 22 February 2016 - Issue No. 792 Edited & Produced by: Khaled Al Awadi
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UAE: Enoc plans expansion in UAE and Saudi Arabia The National - Dania Saadi
The fuel retailer Emirates National Oil Company (Enoc) is planning more petrol stations in the UAE and Saudi Arabia to meet rising demand for fuel, the Dubai-based company said on Sunday.
Enoc will raise its capacity by 40 per cent between this year and 2020 in Dubai and the Northern Emirates, the company said in a statement. With 112 stations in the UAE, Enoc will renovate two stations and build 54 more in Dubai as part of the expansion plan.
The company did not say how much the new stations would cost.
“We are looking at an increased growth over the next few years as Enoc expands and aims to be an international integrated oil and gas player,” said Burhan Al Hashemi, the managing director of Enoc Retail.
In Saudi Arabia, the company plans to add 11 stations this year to the current three. The Abu Dhabi-based fuel retailer Adnoc Distribution is also expanding in the UAE. Adnoc will have about 507 stations by next year, including new additions, acquisitions and transfer of ownership of petrol stations, its chief executive, Abdulla Al Dhaheri, said in November.
Adnoc is to add 125 stations to its current 385 and plans to take over 59 petrol stations in Dubai and other assets around the country as part of the second phase of acquisitions from the fuel retailer Emarat.
In the first phase, Adnoc took over 75 petrol stations run by Emarat in Sharjah, Ras Al Khaimah, Ajman, Umm Al Qawain and Fujairah, following an agreement signed with Emarat in September 2013.
Demand for fuel is rising by about 7 per cent per year.
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UAE:Abu Dhabi needs to double investment in desalination by 2030 The National - LeAnne Graves
Abu Dhabi will need to double its current investment in desalination by 2030 to avoid a water deficit, according to a senior official from Environment Agency – Abu Dhabi (EAD). Mohamed Dawoud, the manager of water resources at EAD, said that rising urbanisation will be the main catalyst to increase provision of clean drinking water.
He was speaking at a press conference to announce the Liwa International Water Technology Conference, to be held in the capital in May. The conference will highlight the need to address the region’s critical water supply.
He said desalination investment in the emirate will at least double from the current amount by 2030, without providing a figure. “Abu Dhabi will need to double the production of existing desalination because of the increase in development and population,” he said.
The GCC has committed more than US$300 billion for water and desalination projects between 2012 and 2022. The UAE has the second largest desalination market, only after Saudi Arabia. Nearly half of the emirate’s consumed drinking water comes from desalination, according to a report from the EAD.
Freshwater demand is only expected to grow throughout the country by 30 per cent by 2030 as the population and development increases. And for Abu Dhabi, the removal of salt from seawater is the largest source of potable water.
Desalination plants in the region, including Abu Dhabi’s, are typically built alongside power plants. The steam turbines that produce the power are powered by evaporated seawater, which produces the potable water.
But the energy-intensive process typically requires 10 times more energy than extracting and producing freshwater from the ground. And with more electricity required, this also means more capital expenditure.
Abu Dhabi-based Masdar launched a project in Abu Dhabi’s Ghantoot to produce 1,500 cubic metres a day of potable water using renewable energy sources. The company said that this project could reduce up to 40 per cent of the power required to make seawater drinkable.
Masdar said that the emirate could save about $94 million annually after 2020 if 15 per cent of Abu Dhabi’s new desalination capacity is met by energy-efficient technologies.
“Water is essential, important and critical not only for the UAE, but for the region,” said Mohammed Al Ramahi, the acting chief executive of Masdar. He said that the Abu Dhabi-based company was focused on assessing the different technologies to determine what is best for the emirate.
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Egypt: Eni Completes Authorization Process for Zohr Field Development Eni + News Agencies
Eni on Sunday said it has received formal approval to develop the Zohr gas field offshore Egypt. The Italian firm said Egyptian Ministry of Petroleum and Mineral Resources has approved that the Egyptian Natural Gas Holding Company (EGAS) grants Eni the Zohr Development Lease, which, following the contractual framework definition, allows for the development of the gas field.
The development plan envisages the start of production by the end of 2017, just two years after the discovery, with a progressive ramp up until reaching a volume of about 75 million standard cubic meters of gas per day (equivalent to approximately 500,000 barrels of oil equivalent per day) by 2019.
“The quick realization of such a large project will be possible through cooperation with Petroject, Enppi and Saipem contractors, who have always contributed to the success of Eni’s development activities in Egypt,” Eni said.
The discovery of Zohr was announced on 30 August 2015 following the drilling of the Zohr-1 well which occurred within the Shorouk Concession Agreement, in which IEOC is the sole operator. Currently in the drilling phase is Zohr-2, the first appraisal well of Zohr discovery.
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Egyptian Natural Gas Company (EGAS) and Spanish company Tecnicas Reunidas on Thursday signed a MoU pertaining to methane recovery project at the Western Desert Gas Complex (WDGC), Egypt’s Petroleum Ministry said in a statement. The MoU envisages preparation of a technical and economic feasibility study and the provision of finance offers for the second phase of the project.
The project aims to maximize the production of ethane/propane mixture, which forms the basis for the production of ethylene and polyethylene in the petrochemical industry, thus contributing to securing feedstock and raw material for new and existing petrochemical projects, the Ministry said.
The memorandum was signed by Karem Mahmoud, Chairman of EGAS and Ricardo Sanchez Galindo, commercial director of Tecnicas Reunidas.
Mahmoud said the methane recovery project is part of a series of projects currently being implemented at the Western Desert Gas Complex (WDGC) and the LPG recovery plant at El-Amereya. He added that the first phase of the project is currently being implemented with an investment of approximately $17 million and is planned to start operation by next June.
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NewBase 22 February 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices stabilize on lower U.S. rig count, but global glut still weighs
Reuters + NewBase
Oil prices partly recovered on Monday following steep losses in the previous session, supported by a fall in the number of U.S. production rigs in use, but analysts said general oversupply was keeping the market weak.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $29.90 per barrel at 0213 GMT, up 26 cents from their last settlement. International benchmark Brent LCOc1 was up 34 cents at $33.35 per barrel. Both contracts fell almost 4 percent on Friday.
A falling rig count in the United States which is expected to lead to a decline in 2016 production helped support prices, analysts said.
"The U.S. oil rig count continued to decline..., with a total of 26 rigs idled," Goldman Sachs said in a note to clients. "The current rig count implies... annual average U.S. production would decrease by 445,000 barrels per day yoy (year-on-year) on average in 2016," it added.
Despite Monday's gains, analysts said that market conditions remained weak due to an ongoing glut.
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Record U.S. crude stocks of 504.1 million barrels pulled back gains from last week's relief rally on the announcement of a production freeze by Russia and the Organization of the Petroleum Exporting Countries (OPEC).
"Crude stocks in the U.S. are at record highs and production is also at or near records and remains way above daily demand, so freezing production at current levels won't reduce the glut, but will actually add to it further," one oil trader said.
With production outpacing demand by 1 million to 2 million barrels every day, crude prices have fallen around 70 percent since mid-2014. Analysts also said that some producers seemed to show little commitment to a deal reached by Russia and OPEC leader Saudi Arabia, and supported by Qatar and Venezuela, to freeze output at January levels.
"The lack of commitment from some OPEC members on a production freeze remains the key headwind short term," ANZ bank said on Monday. OPEC-member Iran has shown little interest in restraining production as it was only allowed a full return to oil markets in January following years of sanctions.
Reuters market analyst Wang Tao said that U.S. WTI crude prices could fall below $28 per barrel, based on technical chart data.
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MENA oil exporting countries seen to incur ‘twin deficits’ The outlook for the oil exporting nations in the MENA region — Algeria, Bahrain, Iraq, Iran, Kuwait, Libya, Oman, Qatar, Saudi Arabia, and the UAE – is generally and unsurprisingly quite difficult as they adjust to the ‘New Normal’ of oil prices being in a rather lower range, National Bank of Abu Dhabi (NBAD) published its Global Investment Outlook 2016 entitled ‘Investment Strategies in Today’s Volatile Markets’ said.
The report said supply pressures are expected to persist for the time being in the oil market, with extra supply expected to come on from Iran and Iraq. Iran is expected to reach pre-sanction oil production levels by the end of 2016, meaning an additional 500,000-700,000 million barrels.
Saudi Arabia is estimated to have an additional 1.5-2.0 million barrels of capacity available, NBAD report added. With serious pressure on budgets, almost all the exporters will register ‘twin deficits’ (current account and fiscal) for 2015/16. Due to fiscal adjustments, however, the magnitude of these deficits is expected to decline in the current year, it noted.
There has been much made of the extent to which the oil exporters, especially the GCC members, have foreign assets that can be sold and/or which generate other income, although these assets were being depleted at an alarming rate during 2015, it further said.Especially during the second half of 2015, falling oil exports and declining government revenues were met with reductions in government spending, which is turn led to a further slowdown in economic activity via negative multiplier effects
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This year, further fiscal adjustments will be necessary to avoid further significant asset depletion. The UAE was the first nation in the GCC to respond to the oil price decline. State energy subsidies have been reduced, non-critical projects have been postponed, and alternative methods to fund government spending are being considered, including VAT, income and corporate taxes, privatizations, and bond sales.
The GCC oil exporters’ decisions to focus on fiscal policy strongly suggest that for the time being they will maintain their currency regimes, despite pressures resulting from them, the report further said.
The GCC currency pegs force governments to follow US monetary decisions, irrespective of whether this is appropriate, because the GCC economies are slowing down, they could be facing monetary tightening at the wrong time, it said.
During 2016, the GCC region is expected register an overall fiscal deficit of around 10% of GDP, indicating continued vulnerability unless oil prices rally and/or there are further spending cuts. – Saudi Arabia registered a fiscal deficit of 16% of GDP in 2015 (~ $100 billion), and is expected to register a budget deficit of 13% of GDP in 2016, NBAD report said.
The Saudi riyal is thought to be theoretically overvalued by around 16-17% vs. their main trading partners’ currencies, it added. On a similar basis, the UAE dirham could be overvalued by more than 25%, it noted.
Despite the asset depletion mentioned earlier, the GCC countries as a group have financial buffers in place, together with low sovereign debt, and are therefore better prepared than many other oil-exporting nations for low oil prices.
The report moreover said government spending in the GCC countries, although at reduced levels, will still be at levels considered healthy by many other nations. Claude-Henri Chavanon, NBAD’s Head of Global Asset Management said: “The fall in the oil price has complicated investment decisions around the world, and has been described as the ‘New Normal’.
It is a significant shift in the global investment landscape that investors have to deal with. The risks associated with a strong dollar are amongst those uppermost in our minds, especially insofar as this could exacerbate the reduction in US corporate earnings. However, there are always opportunities arising from a new idea, asset class or company, or due to an existing asset being oversold. Investors will need to exercise patience and then have the courage required to decisively deploy funds when opportunities arise.”
According to the report, oil prices are expected to trade in a range of $25-45 during the remainder of the year. Investors are advised to continue to fully emphasize quality government and other investment grade bonds in their portfolios. Whilst headwinds will persist during 2016, NBAD believes attractive investment opportunities will arise, for instance in selected emerging and frontier markets, and also especially within commodities. While a bear market in US equities is likely to unfold, this should lead to buying opportunities in other markets, some of which are already very depressed. Within MENA, for instance, UAE equities could easily be described as being oversold, and cheap in terms of valuation.
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NewBase Special Coverage
News Agencies News Release 22 February 2016
This is the real wild card for oil prices to stabilize CNBC - Patti Domm + Reuters
When the energy industry gathers in Houston Monday, the big topic will be whether oil prices are actually close to stabilizing after months of painful declines.
The 35th annual IHS CERAWeek conference comes just as the world's largest oil producers — Saudi Arabia and Russia — are talking about ways to support oil prices through a production freeze. While a cap on output will not reduce the world's oil glut, the idea has certainly helped lift crude prices off their lows, but WTI crude was still trading below $30 on Friday afternoon, down near-4 percent.
On Friday, Alexey Texler, Russia's first deputy energy minister, was quoted as saying that the world's excess oil supply could be halved if the freeze takes effect. Qatar and Venezuela joined Saudi Arabia and non-OPEC member Russia in the proposed agreement earlier this week.
The very individuals that could comment on this proposal will be attending the meeting: Saudi Arabian Oil Minister Ali al-Naimi and OPEC Secretary General Abdalla Salem El-Badri. El-Badri speaks Monday afternoon, and Naimi speaks Tuesday morning at 9 a.m. CT.
The idea of a production freeze has many proponents, including Daniel Yergin, vice chairman of IHS. "This is a day of reckoning for oil companies and oil countries, and they need to stabilize the market," Yergin said.
Getting such a deal approved poses challenges since many producers would have to agree to cap production. But there is hope talks could lead to a policy change at the next meeting of the Organization of Petroleum Exporting Countries in June. There has also been speculation members could seek an emergency meeting before then.
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"I think the market is beginning to stabilize and perceptions are changing," Yergin said. He noted that there are less negative prognosticators talking about oil prices sinking to $15 to $20 a barrel.
But there is a wild card for the market, and for any producers' deal: Iran. While Iran has said it supports a freeze, there's been no indication it is willing to impose one on its own production. It's in the process of ramping up production with sanctions against its nuclear program being lifted.
The idea of more Iranian crude has weighed on the market as traders attempt to gauge just how much oil Iran can actually export. Iran also faces elections at the end of the month, and some analysts say it's unlikely it would agree to hold back on oil sales ahead of that.
At the same time, other forces are at work that will affect the future of the energy industry. "The market is trying to determine whether this is a new era of cooperation between Russia and OPEC," said John Kilduff, partner with Again Capital.
For that reason, industry experts are anxious to hear from the Saudi oil minister Naimi at the event since Saudi Arabia is the driver of OPEC's market-based pricing policy. In an effort to secure its global market share, Saudi Arabia was willing to accept much lower prices.
"Hopefully he'll give us some clarity on what the Saudis' commitment is — freezing production or doing more to stabilize the market," Kilduff said, noting that market watchers wonder if this is just lip service or a game they are trying to play against Iran.
The question of price stability will be an important topic for the global energy industry officials, regulators and political leaders expected to attend IHS CERAWeek.
Mexican President Enrique Peña Nieto speaks Monday, as does Mexican Finance Minister Luis Videgaray Caso. Royal Dutch Shell CEO Ben van Beurden is speaking Tuesday, as does Yilin Wang, chairman of China National Petroleum Corp.
At this time last year, Mexico was playing up plans to bring in outside investment for its natural resource industry.
"The challenge for Mexico is they launched this reform when the mentality was $100 a barrel, and that's not the reality so they've had to have a lot of adjustments. One of the big benefits they're getting is cheap gas from the United States which is helping them bring down electricity costs," Yergin said.
Jose Antonio González Anaya, the new CEO of Pemex, the Mexican energy company, will also attend IHS CERAWeek. Petroleos Mexicanos, or Pemex, has been hit hard by a new round of spending reductions announced this week.
Pemex had a roughly $10 billion third quarter loss, and it has been cutting costs and workers. González Anaya was named CEO earlier this month to turn around the struggling company. He was a former deputy finance minister, and last serviced as director of the Mexican Social Security Institute.
According to Eurasia Group analysts, about $5.4 billion will be cut from Pemex which "will keep Pemex's finances strained and affect Pemex's ability to maintain investment plans." The analysts said Pemex will soon announce its new business plan, and it will try to prioritize the most productive projects and attract investment while cutting costs.
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The analysts, in an note, said the Mexican government would also be ready to inject capital into Pemex.
Industry cutbacks
Another big topic at the conference will be how the industry is scaling back, and the tactics it is using to get by on oil prices that have fallen further than most predicted. Last year, the industry was just coming to grips with the idea of lower prices for longer, and now it's been living it.
Yergin said absent a deal among producers to curb production, the industry should have a very difficult first half, but a better second half.
"This year is going to be very rough on the industry, very turbulent. We think that the decline in U.S. production is going to get more serious – another 600,000 to 800,000 barrels a day in this kind of price environment. The U.S. would decline that much by summer, and that starts to set the basis for a greater stabilization," Yergin said.
The U.S. is the world's third-largest oil producer and its rapid arrival on the world scene over the past five years contributed to the roughly 1.5 million to 2 million barrels a day in global oversupply.
Globally, the industry has trimmed upstream oil and gas capital spending in 2015 by nearly 30 percent from the 2014 level, according to IHS CERA data. But North America saw an even steeper cut back, with spending falling 41 percent in 2015.
For 2016, IHS CERA stated that several large North American upstream companies are cutting spending by 50 percent or more compared to 2015 levels.
Companies are also moving beyond capital spending cuts. Ryan Lance, CEO of ConocoPhillips will also participate in the IHS CERAWeek conference and his company, earlier this month, became the first large oil company to cut its dividend.
Wall Street analysts expect other companies to follow with dividend cuts of their own.
"I think we'll hear a lot of debate about how much capacity in the industry will be lost. Can you bring it back when you need it? There is a short-term question of protecting your balance sheet and being in survival mode. There is a question longer term about the resilience of the individual companies and the resilience of the industry. That's going to be on the minds of a lot of people," Yergin said.
Boosting efficiencies
Another "day of reckoning" for the U.S. industry is near as bank reviews of existing debt agreements arrive this spring, and some lenders will surely cut back unless there's a significant turnaround in prices.
But there has been a silver lining for the U.S. industry, which has not seen a dramatic cut back in production yet, and that is higher efficiency. U.S. production peaked at 9.6 million barrels a day, and was reported to be 9.1 million barrels a day last week.
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"Under the duress of price and just the learning curve, people continued to get more efficient and by the end of 2015, a dollar spent was about 60 percent more efficient than it was in 2014," Yergin said.
Honeywell is one company that has been working to help drillers become more efficient.
Bruce Calder, vice president and CTO Honeywell Process Solutions, said Honeywell sees lot of opportunity now as producers attempt to lower costs. Honeywell, for instance, has a remote technology specifically designed for the well head. The unit provides workers with data on what's going on and will alert them to whether something is wrong in the well and across the oil field.
"All of this drives down cost. You're using less people. You're getting more production out," Calder said.
Calder said the cost of staffing and equipment across the industry has become very competitively priced. "Technology is probably the biggest play. If you have the right data, you can make the right decision," he said.
Besides the oil industry, natural gas players will be in attendance at IHS CERAWeek, and this could be a historic week for the U.S. gas industry.The Wall Street Journal reports that Cheniere could be sending off the first shipment of LNG for export sometime this week and the buyer was reported to be Petrobras.
Cheniere's Meg Gentle, president of marketing, will be participating on a panel Wednesday morning.
A PAINFUL TIME
The fact that Opec members are talking to each other offers a ray of hope, according to some industry figures, an indication that the kingdom’s own fiscal pain could prompt it to change tact and lead efforts to reach a deal. On Tuesday, Standard & Poor’s downgraded Saudi Arabia’s credit rating.
“The pain is at a threshold right now. People are now willing to sit down and talk about possible remedies to that pain,” Mills said.
Texas, where oil production has more than doubled over the past five years thanks to the Eagle Ford and Permian Basin fields, is feeling acute pain.
The state lost nearly 60,000 oil and gas jobs between November 2014 and November 2015, according to the Texas Alliance’s most recent data. Only 236 rigs are still actively drilling wells in the state, down from more than 900 in late 2014, Baker Hughes data showed.
Financial distress among US producers has deepened. More than 40 US energy companies have declared bankruptcy since the start of 2015, with more looming as lenders are set to cut the value of companies’ reserves, often used as collateral for credit.
Anadarko Petroleum and rival ConocoPhillips both cut their dividends this month, unusual moves that showed financial stress.
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THE TIGER HAS TEETH
The last time Naimi spoke at CERAWeek, seven years ago, Opec was slashing output to lift prices that sank to $40 a barrel amid the global financial crisis, and he railed against speculators who he blamed for the price plunge.
Few oil executives anticipated Naimi’s willingness to let prices collapse this time around.
Some of them, such as Harold Hamm, the chief executive of Oklahoma-based Continental Resources, even called his bluff.
Shortly before the November 2014 Opec meeting, Hamm cashed in Continental’s hedges, calling Opec a “toothless tiger”.
In an investor call in August, Hamm said he expected Opec to begin cuts in September, adding, “we think that may be the first of many.” Those have yet to come.
A Continental spokeswoman declined to comment on whether Hamm would attend Naimi’s speech.
Continental shares have tumbled more than 60 per cent during the downturn, cutting Hamm’s personal fortune by more than $10 billion since 2014.
While producers may be more cautious now than before, some are still betting that Opec will bail them out.
EOG’s Thomas reckons prices will shoot up as high as $80 a barrel in the second of the year - in part, he says, because Opec will eventually be forced to yield in the face of fiscal strains.
“The whole world is under stress,” he said. “I don’t care who you are. Even the Saudis are under stress.”
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OPEC's Path From Oil Freeze to Output Cuts Is Far From Clear Bloomberg - Grant Smith
Saudi Arabia said its accord with Russia to cap oil production was “the beginning of a process,” but the path from a freeze to the output cuts needed to eliminate a global surplus is far from clear.
When Saudi Oil Minister Ali al-Naimi suggested that the agreement in Doha was a prelude to “other steps,” he fanned hopes that the kingdom’s resistance to production cuts was finally weakening. Oil’s recovery from a 12-year low last month was fueled by speculation that major producers were finally building a coalition that could work to end the glut.
The problem with using a production freeze as the bedrock for deeper cooperation is that none of the parties involved have to make any effort to comply.
“The four producers involved are already producing close to their peak,” said Miswin Mahesh, an analyst at Barclays Plc in London. “The freeze is the oil-market equivalent of calling for a cease-fire when they’re running out of ammo.”
The accord reached Tuesday in the Qatari capital marks the first sign of the cooperation
between OPEC and non-members that Saudi Arabia has said is necessary before it agrees to curb production. The failure of previous attempts at coordination, such as when Russia offered to curtail supply in 2008 only to keep pumping, makes analysts doubtful this latest union will go ahead. Divisions over the conflict in Syria -- where Saudi and Russia back opposing sides -- are also an obstacle.
Nigeria, another member of the Organization of Petroleum Exporting Countries, supports an output cap but also backs giving Iran and Iraq room to regain lost market share, the African producer’s Energy Minister Minister of Petroleum Emmanuel Kachikwu told reporters Sunday in Doha. He’s scheduled to meet with al-Naimi on Monday, according to a person familiar with the matter, who asked not to be identified because Kachikwu’s itinerary isn’t public.
“Countries like Iran and Iraq have been out of the market for a while and if they are to come back you shouldn’t freeze them out where they are, you should freeze them at a higher level,” Kachikwu said. “By June we will come very close to tightening the market.”
Russian Potential
As Russian Deputy Prime Minister Arkady Dvorkovich acknowledged on Feb. 16, complying with the output freeze is no great stretch for the world’s second-largest crude producer. Most companies won’t have to take any measures to comply and the nation’s output was already on track to remain stable this year after recent tax increases reduced the potential for growth, he said.
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“Freezing production does not really change our view on Russia supply for this year,” said Jeff Currie, Goldman Sachs Group Inc.’s New York-based head of commodities research. The nation’s output won’t grow any further after it reached 10.84 million barrels a day last month, the bank estimates.
Saudi Arabia already boosted output by about 500,000 barrels a day in the past year to near-record levels of more than 10 million barrels a day. While the Middle Eastern country has at least 1 million barrels a day of spare capacity, it probably doesn’t intend to tap the reserve, which is held back to cover market disruptions, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. Tentative Step
For some observers, the Russia-Saudi detente is the first tentative step toward something bigger -- the revival of OPEC’s appetite for market management.
“OPEC is not dead,” Olivier Jakob, managing director at consultants Petromatrix GmbH, said by e-mail from Zug, Switzerland. “It’s back.”
Jakob described the freeze as an interim measure that will culminate in agreement on new production quotas at the group’s next meeting on June 2. The organization’s last gathering ended with the abandonment of any limits on output as members focused on defending market share against rivals both internal and external.
“This is a real, credible plan to get everyone on board,” said Yasser Elguindi, oil analyst at New York-based consulting firm Medley Global Advisors. “If Iran at some point freezes, then this allows for a potential discussion of cuts if they are needed.”
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Saudi Communications
Iranian Oil Minister Bijan Namdar Zanganeh welcomed the Doha accord without saying if Iran would deviate from plans to ramp up exports by as much as 1 million barrels a day this year after international sanctions were lifted last month.
Even if the Doha pact doesn’t develop into a deal to curb production, it marks a significant shift in Saudi communications strategy, which was hitherto focused on pursuing market share, said Antoine Halff, a senior fellow at the Center on Global Energy Policy at Columbia University in New York.
“It’s a way for Saudi Arabia to keep its options open, to tell the market they’re not wedded to one policy,” Halff said. That in itself could make oil traders think twice before taking new short positions, he said.
The effectiveness of this message faces an imminent test. Even if oil production remains frozen at January levels, there’s no shortage of other factors to put pressure on prices. Seasonal demand typically peaks in February and keeps falling until May. Crude stockpiles in the U.S. are the highest in more than 80 years and still rising, according to Energy Information Administration data. Brent oil, the global benchmark, has fallen about 70 percent since a 2014 peak. Prices were up 28 cents, or 0.9 percent, at $33.29 a barrel on the London-based ICE Futures Europe exchange at 10 a.m. Singapore time on Monday. OPEC Meeting
“With refinery maintenance season looming and stock builds projected for as far as the eye can see, the market will before long test OPEC’s verbal intervention and likely demand real cuts,” said Bob McNally, head of consultants The Rapidan Group in Washington.
The output freeze should continue for at least three months before considering actual reductions in supply, said a person with familiar with the Doha accord, who asked not to be identified because the information is private. That could make OPEC’s June meeting in Vienna the venue for crunch talks on output cuts between Saudi Arabia, Russia and other major producers -- something they tried and failed to achieve in November 2014.
“Oil production cuts would be very difficult,” said Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. in London. “But OPEC has introduced enough uncertainty that speculators need to think twice about their bearish bets.”
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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
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.
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