new base 501 special 21 december 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained

in this publication. However, no warranty is given to the accuracy of its content .

NewBase 21 December 2014 - Issue No. 501 Khaled Al Awadi

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

UAE: Lamprell delivers the 11th jackup rig to NDC Press Release - Lamprell

The Group delivers its 11th Super 116E jackup drilling unit . Lamprell , a leading provider of fabrication, engineering and contracting services to the onshore and offshore energy industry, announces the completion of construction on a further jackup drilling rig, the “Shuwehat”, and its delivery to Abu Dhabi’s National Drilling Company (“NDC”), safely, within budget and as scheduled.

This follows the recent announcement on 12 November when the Group received a new contract award from NDC for the construction of two further jackup drilling rigs of a similar design and high specification, which is valued at approximately US$ 365 million.

The contract for the “Shuwehat” rig was signed in April 2012 and this is the fifth in a series of eight rigs with the LeTourneau Super 116E (Enhanced) Class design which are being built and delivered by Lamprell to NDC. This latest rig has been delivered to the client following the completion of the third and fourth rigs, the “Qarnin” and the “Marawwah” respectively, earlier

this year. Lamprell has achieved another Company record with the delivery of three drilling units to one client in a single year.

The “Shuwehat” rig is the 11th Super 116E jackup drilling unit that the Group has delivered to various clients during the last six years. The jackup rig was officially named, and completion marked, at a ceremony held at Lamprell’s Hamriyah facility in the United Arab Emirates earlier today, prior to departure for operations at its drilling location in Abu Dhabi.

NDC Chief Executive Officer Mr. Abdalla Saeed Al Suwaidi commented:

“Today, we proudly witness the completion of rig Shuwehat, a true technological marvel. This rig represents a great addition to the NDC fleet of modern rigs, and it will help the company maintain the highest levels of reliability and efficiency. A few years back, we partnered with Lamprell to start building offshore jack up rigs in the UAE. We are proud that we made such a strategic decision, and the four previous rigs, namely Makasib, Muhaiyimat, Qarnin, and Marawwah are working safely and drilling for ADMA-OPCO.




While we aspire to achieve our future objectives, and as we celebrate our current achievements, I’d like to extend sincere appreciation to ADNOC higher management and the NDC board of directors for their guidance and continuous support.”

Commenting on the delivery, Jim Moffat, Chief Executive Officer, Lamprell, said:

“Lamprell’s project execution this year continues to be of the highest standards and I am pleased to announce the delivery of this fifth jackup rig to NDC, our long-standing client. We have been able to prove once again our ability to complete a major project to world-class standards of safety and quality, and we are proud to construct this latest project in the UAE, for use in the UAE, where we have such strong ties.

The “Shuwehat” rig is the third rig handed over to NDC in 2014 and we are scheduled to deliver the next NDC rig to the client within a matter of months. We believe that the recent contract award of two rigs with three options by NDC demonstrates our client’s continuing confidence in our ability to maintain our strong project execution track record on a consistent basis and we look forward to working closely with NDC in the coming years.”

Caption: HE Sheikh Saud Bin Khalid Al Qasimi (centre) cuts the ribbon for the NDC Shuwehat rig alongside Lamprell CEO Jim Moffat (right) and NDC Chief Executive Officer Mr. Abdalla Saeed Al Suwaidi (left)

Lamprell, based in the United Arab Emirates (UAE) and with operations throughout the region, has played a prominent role in the development of the energy industry in the Middle East for over 35 years and is the regional market leader in the rig construction business. It employs approximately 10,000 people across multiple facilities, with its primary facilities located in Hamriyah, Sharjah and Jebel Ali, all of which are in the UAE. In addition, the Group has facilities in Saudi Arabia (through a joint venture agreement) and Kuwait. Combined, the Group’s facilities cover approximately 910,000 m2 with 2.2 km of quayside.




Oman: Singapore-led consortium awarded $250m water project Times of Oman + NewBase

A consortium comprising Singapore's Hyflux Ltd and National Power and Water Co has beenawarded a major contract to develop a $250 million seawater desalination project in Qurayyat(south of Muscat). The project has been awarded by state-owned Oman Power and WaterProcurement Company (OPWP).

The proposed Qurayyat independent water project is going to be a seawater reverse osmosisdesalination plant with a designed capacity of 200,000 cubic metres per day (44 MIGD) of potablewater. This is going to be the third independent water project in Oman, after Sur and Ghubra IWPs. OPWP has undertaken the development of this vital project to enhance availability of water in theMuscat Governorate. The project is one of a series of water desalination projects planned by thestate-owned company to increase the overall capacity of desalinated water in Oman undercontract to OPWP from the current 670,000 square metre per day to 1,300,000 square metre perday by year 2020

The project is the first IWP tendered following the amendment to the Sector Law, which allowsindependent water projects. Under the letter of award, the consortium will need to further finalisedetails of the project with OPWP, and the award is contingent upon satisfying certain conditionsprecedent. The project is scheduled to commence commercial operation by May, 2017 under a 20-year waterpurchase agreement with OPWP. The project will be structured as an independent water project(IWP) with OPWP purchasing the potable water produced by the project under a water purchaseagreement with a term of 20 years

Hyflux's role includes turnkey engineering, procurement and construction (EPC) – a contractvalued at $210 million – as well as operations and maintenance of the plant. Hyflux said theproject is not expected to have a material financial impact on the company for the financial yearending December 31, 2014 .




Dubai Dubai's DEWA raises annual budget to $6.2bn in 2015 Business Arabia + NEwBase

Dubai Electricity & Water Authority (DEWA) has approved a total budget of AED22.873 billion ($6.2 billion) for 2015, up from AED20.560 billion in 2014. The new budget will ensure a reliable supply of electricity and water to meet Dubai's development plans in all its operations, the state

utility said in a statement. The budget will also enable DEWA to adopt the "best and latest technologies across all its operations", it added. Saeed Mohammed Al Tayer, managing director and CEO of DEWA, said around AED8.28 billion has been assigned for capital purchases and projects, compared with AED7.057 billion in 2014. The 2015 budget includes a number of key projects, the most prominent of which is increasing production capacity of the electricity generation and water

desalination plant at K-Station in Jebel Ali by adding two gas turbines to generate 500MW. The production capacity of the electricity and water generation plant at M-Station in Jebel Ali will also be increased by 700 MW. Other projects include building 12 new 132kV substations, extending 272km of 132kV cables, other power transmission and distribution projects, and smart communication networks. Al Tayer added that AED590 million has been allocated to water network projects including water reservoirs and transmission networks. This includes extending new networks and introducing a district metre system to monitor leakage and reduce water losses. Dewa’s operational budget for 2015 is AED13.465 billion, compared to AED13.151 billion in 2014 while the administrative capital budget has also been increased to AED1.380 billion in 2015 from AED352 million in 2014. DEWA's current installed capacity is 9,656MW of electricity and 470 MIGD of desalinated water. Peak demand for electricity reached 7233MW in 2014, which means there is a reserve margin of approximately 2423MW. Water peak demand in 2014 reached 316 MIGD, with a reserve margin of 154 MIGD, DEWA added.




Morocco: Mazagan JV approves deep well targeting multiple stacked plays Source: Pura Vida

Highlights

• Extensive review of prospects across the entire Mazagan permit has led the Joint Venture to reprioritise the first well location to drill a series of stacked targets collectively called ‘the Ouanoukrim prospect’ (pronounced WON-OO-KRIM). The well has been named MZ-1.

• The decision to change the first well location from Toubkal to Ouanoukrim is based on the results of technical work (including 3D reprocessing) undertaken since the block was acquired and is driven by the following:

o MZ-1 will be testing 4, and potentially 5, independently risked stacked prospects at an optimal location close to the source rocks increasing the overall chance of success;

o MZ-1 will test total gross mean prospective resources of over 1.4 billion barrels, with a high case of over 3.0 billion barrels; and

o MZ-1 provides the opportunity to test the full prospective stratigraphic section of the basin, drilling through a Mid-Miocene turbidite channel (same age as Toubkal) and testing large traps in the Cretaceous and Jurassic thereby providing a greater understanding of the geology and plays ahead of the selection of the second well.

• The change in well location will have no impact on the scheduled spud of the first well (currently estimated to be in Q1 2015).

• Pura Vida has secured additional financial protection in the event that drilling costs exceed the US$215 million cap under the original farmin terms.

Pura Vida Energy has advised that the Joint Venture has resolved to change the location of the first well in its 2015 drilling campaign. The decision follows a detailed review of the prospectivity of the Mazagan permit, and careful consideration of the benefits offered through investing more capital to drill deeper and test multiple prospects in the first well in the two well program.




The well has been named Mazagan-1 ('MZ-1')and will target the Ouanoukrim prospect in the northern part of the block (see map). The Ouanoukrim prospect comprises a series of independently risked stacked targets that are defined on 3D seismic (see seismic). MZ-1 will be drilled to 5,600 metres with potential to deepen to 6,150 metres Total Vertical Depth Subsea ('TVDSS'). The total gross mean resource potential targeted by the MZ-1 well is over 1.4 billion barrels, with a high case of over 3.0 billion barrels.

MZ-1 will test four separate

objectives and a fifth objective

if the well is deepened. MZ-1

provides the opportunity to

test the full stratigraphy in the

basin including large traps in

the Cretaceous and Jurassic,

as well as providing data on

the potential of the Mid-

Miocene. In drilling through

the Jurassic targets the well

will also sample the source

rocks as they are interbedded

with the Jurassic fans.

Another significant benefit of

this prospect will be the

opportunity to drill through the shallower Tertiary, including the Mid-Miocene, where deep water

turbidite channels are evident on seismic that are identical in age to those at Toubkal.

This well not only provides a greater chance of finding oil but will greatly enhance the Joint Venture’s understanding of the potential of the Mazagan permit at an early stage. The MZ-1 well has an estimated cost of US$136.6 million (including contingencies other than deepening). Pura Vida is carried by its Joint Venture partner, a subsidiary of Freeport-McMoRan Oil & Gas, for the cost of both this well and the second well in the program up to a maximum of US$215 million. Pura Vida has also secured an option to continue to be carried beyond the cap of US$215 million under the farmin agreement (refer to announcement of 3 January 2013 for a summary of the original farmin terms). If the option is exercised then Pura Vida will dilute its interest in the permit on the basis of one percentage point per US$4.5 million of gross expenditure in excess of the US$215 million cap in the manner described in section 3 below. Pura Vida’s Managing Director Damon Neaves said: 'MZ-1 is a high impact well providing the benefit of targeting multiple independently risked structures and a variety of different play types and will enhance the Joint Venture’s understanding of the potential of the Mazagan permit. The Company is pleased that the Joint Venture has supported an investment decision to drill a deeper well to test a range of plays in order to maximise our chance of success. This decision also ensures that the Joint Venture gains information relating to each of the reservoir formations in the basin which will provide far greater information to evaluate prospects ahead of drilling our second well. In short, this approach maximises our chances of making a commercial oil discovery in the permit. The agreement with Freeport in respect of any overruns to the US$215 million carry maintains Pura Vida’s strong financial position during the drilling campaign.'




Apache, Shell Sign Fracking Deal With Egypt Source : Natural GasAsia + NewBase

Egypt has signed a deal with Apache Corporation and Shell Egypt to extract unconventional hydrocarbons by fracking in the Western region , oil ministry announced Wednesday. Tariq Al Mulla, Chief Executive of EGPC and Tom Maher, President of the US based Apache Corporation and Aiden Murphy, Chairman of Shell Egypt, signed the contract.

The project will entail investments of around $30-40 million along with drilling three horizontal wells, the ministry said adding that this project will open up new horizons for the Western Desert region for the production of unconventional gas.

Egypt has been facing shortage of natural gas due to rising domestic demand amid declining output. Cairo is looking to fill the demand gap by sourcing LNG from suppliers such as Algeria.

Earlier this month, Egypt agreed to import six cargoes of LNG from Algeria between April and September next year. The agreement regarding this would be signed by the end of this month in Algeria, Egypt’s oil ministry said. To allow for smooth import of the fuel, last month, Egyptian Natural Gas Holding Company (EGAS) finalised a five year deal with Norway’s Hoegh LNG for supply of FSRU by the end of first quarter of 2015. In May this year, Höegh LNG signed a Letter of Intent (LOI) with EGAS for the use of one of its FSRU as an LNG import terminal in the port of Ain Sokhna, located on the Red Sea's Gulf of Suez. The FSRU was scheduled to start operations in the third quarter of 2014 but was delayed.




African Petroleum renews Senegal licence Source APC + NewBase

African Petroleum Corporation’s subsidiary African Petroleum Senegal Limited has received confirmation from the President in the form of a Presidential decree of entry into the First Renewal Period on licence Senegal Offshore Sud Profond (SOSP).

According to African Petroleum, prior to entering into the First Renewal Period, Petrosen (the National Oil Company of Senegal) agreed to defer the existing well commitment of the First Renewal Period of SOSP by 18 months to allow for further technical work by the company prior to drilling.

The initial exploration period on SOSP expired on November 2, 2014, with African Petroleum Senegal Limited exceeding all obligations, having acquired 3,600km2 of 3D seismic data, purchasing 2,000km2 of 2D

seismic data, processing and interpreting both datasets and investing more than $21 million in the licence.

First Renewal Period The company has now entered the First Renewal Period, with effect from the date of the Presidential decree namely December 15, 2014, for a three-year period that has been split into two 18-month sub-periods. The company says that the first sub-period requires it to carry out further technical work over SOSP and the second sub-period, should the company elect to enter into, requires the drilling of an exploration well. In accordance with the terms of the licence, the company says it has relinquished 30% of SOSP upon entering the First Renewal Period.

“The entering of the next phase on licence SOSP demonstrates our commitment to our operations in Senegal.”

According to the press release, SOSP has significant potential for both deep-water submarine fans and shelf edge platform plays, both of which have recently been proven in nearby acreage by the Cairn Energy operated wells FAN-1 and SNE-1. The company says it has proposed Pre-Stack Depth Migration (PSDM) over the licence area to improve definition of the material prospects identified through technical work to date. The forward programme, agreed with Petrosen, provides an opportunity to analyse the data fully prior to making a commitment to drill the exploration well in the second sub-period of the First Renewal Period.

Chief Executive Officer, Dr Stuart Lake, comments: “The entering of the next phase on licence SOSP demonstrates our commitment to our operations in Senegal. In addition, the deferral of the well obligation in SOSP until after June 2016 allows the Company time to leverage learnings from the two recent significant oil discoveries by Cairn Energy in nearby acreage, and complete seismic reprocessing and interpretation over the licence area prior to drilling our first exploration well.”




Tanzania: Solo Oil provides update on Ruvuma PSC, Source: Solo Oil

Solo Oilhas been advised by Aminex that they have updated their internal resource estimates in the southern part of theRuvuma Petroleum Sharing Contract ('PSC') area, in which Solo holds

a 25% interest, from mean initially in place gas of 2.3 trillion standard cubic feet ('tcf') to 3.2 tcf. Neil Ritson, Solo Executive Director, commented:

'Ongoing work by the operator continues to reveal significant additional upside in the Ruvuma PSC using the 2014 seismic data. We remain excited about the potential developments in this area in the next few years where access to the 36-inch pipeline to the gas market in Dar es Salaam is nearly complete.'

The newest interpretation using the 2D seismic data acquired earlier in 2014 has shown that in addition to the previously announced target for an appraisal well in the Ntorya-Likonde appraisal area where 2.3 trillion cubic feet (tcf) mean gas initially in place (GIIP) was estimated, there is a further 900

billion cubic feet (bcf) of gas in theNamisange prospect to the west. In November 2013, independent consultants, calculated that the Ruvuma PSC contained unrisked prospective resources of over 5 tcf (mean GIIP) in known prospects and leads. This includes further leads and prospects; includingSudi and Kiswa that are still under evaluation. The Ruvuma PSC predominantly covers the onshore extension of the highly prolific basin in which multiple giant gas fields have been discovered offshore in both Tanzania and Mozambique during recent years. The presence of condensate in Ntorya-1 well and oil shows seen in Likonde-1 well represent a further positive aspect of the onshore play, since liquid hydrocarbons add considerable further commercial value to the discovered gas and suggest the presence of a potential oil play.

The Chinese built gas pipeline from Mtwara to Dar es Salaam is currently being finalized with over 500 kms of the 506 km pipeline now trenched, installed and backfilled with gas. Pressure testing of the line is over 85% complete and the overall pipeline is reported to be 97% complete. The civil works associated with the gas processing facilities are 87% completed at end November 2014. Due to its close proximity of the pipeline to the Ntorya/Likonde area this provides an early route to commercialize gas discovered in the Ruvuma PSC.

Aminex and Solo are partners in the Ruvuma Production Sharing Contract, with respectively 75% and 25% interests. Aminex subsidiary Ndovu Resources is the operator of the Ruvuma Production Sharing Agreement.




US seeks up to $16b-$18b in water-pollution fine from BP BYBLOOMBERG NEWS + NEWBASE

The government wants BP to pay $16 billion to $18 billion in water-pollution fines for the worstoffshore oil spill in US history while seeking more than $1 billion from the co-owner of the blown-out well that caused the 2010 Gulf of Mexico disaster.

The federal government said BP deserves the maximum fine, which BP said would be the biggestClean Water Act penalty ever and called it a "gross outlier" compared to other cases. US District Judge Carl Barbier in New Orleans ruled in September that London-based BP actedwith gross negligence in drilling the well, a finding that quadruples the per-barrel penalty. As ofOctober 28, the company had set aside $3.51 billion for the penalties, saying that's a reliableestimate of its liability if it wins an appeal of the judge's ruling

Substantial fine

While Anadarko doesn't deserve the maximum fine, the government said, a substantial penalty iswarranted because it provided virtually no assistance after the spill and a small fine wouldn't besufficient punishment for a multibillion-dollar oil company, the government said in the filing. BP said it deserved a fine "at the lower end of the statutory range" because it already has incurred$42 billion in liabilities from the spill, including more than $14 billion spent to stop and clean up thedamage. The company said a smaller fine is also appropriate because the spill caused less environmentaland economic harm than had been expected. Ed Hirs, a professor of economics at the Universityof Houston, said the government's proposed fine "is a penalty for bad behaviour." 'Doesn't cripple

"It hurts and it certainly is not immaterial but it doesn't cripple the company," said Hirs, who is alsomanaging director of Hillhouse Resources, a Houston-based oil and gas company."The company goes forward," he added further




The maximum $18billion fine is lessthan the $23.5 billionin net income thatBP booked last year,Hirs said. As forAnadarko, they are"guilty byassociation," hesaid. "They didn'thave a say how thewell was drilled.

BP, the parent of theexploration unit,

helped fund the cleanup and response effort, although it wasn't legally obligated to pay for them,the company said in a court filing. The parent company shouldn't be expected to voluntarilyshoulder additional billions in penalties, its lawyers said, particularly in light of the 45 per cent fallin crude oil prices since mid-August

'Funding shortfall

BP said a high enough pollution penalty would "exhaust" the exploration unit's "available funds in2015 and result in a funding shortfall," according to company lawyers. They blacked out thespecific level of fine that would trigger that result

"If ever there was a case that merits the statutory maximum, this is it," government lawyers said intheir court filing. BP might deserve some credit for what it's paid so far, they said, but "no amountsmaller than $16 billion suffices for this disastrous violation of law."




Oil Price Drop Special Coverage

Oil impact: Who’s hurt and happy AP + NewBase Oil’s plunge is spreading both pain and gain across the globe. The price of a barrel has fallen by about half since June, punishing the economies of some major exporters. Russia’s currency has nose-dived, for instance, and investors worry Venezuela could default on its debt. For countries that consume a large amount of the world’s oil, it’s a different story. The world’s four biggest economies — US, China, Japan and that of the European Union — all benefit from lower oil prices. “Economically this is a good thing for the US, it’s a good thing for Europe, it’s a good thing for China and it’s a good thing for most consumers,” says Sarah Ladislaw, director of the energy and national security program at the Center for Strategic and International Studies. Whether the price plunge ultimately helps or harms the global economy depends on how low oil prices fall, how long they stay low, and whether they trigger political upheaval that interrupts trade or spooks investors. On Friday the global price of oil traded near $61, down 47 percent from its high for the year of $115. That drop removes nearly $5 billion a day in revenue from the global oil industry — and reduces costs for consumers. The prices of bonds of some state oil companies and developing nations have fallen. And a possible recession in Russia next year could hinder European economies in their recovery. But the US stock market is trading near an all-time high, helped by some of the best employment and wage growth since the Great Recession. Western sanctions against Russia were already pressuring the rouble when oil prices plunged, accelerating the currency’s decline. A move last week to help the state-owned oil company Rosneft meet debt obligations sent the ruble down even further, raising concerns about a run on banks as Russians fled to stores to buy expensive goods before prices rose. Oil and gas sales account for nearly 70 percent of Russia’s export revenue. If oil prices stay near $60, the Central Bank said the Russian economy could contract by nearly 5 percent next year. Even at $80 a barrel, the Russian economy could still shrink by 0.8 percent. Like Russia, Venezuela’s economic problems predate the decline in oil prices. Venezuela is even more dependent on oil revenues, though — they account for 95 percent of the country’s exports. The price of Venezuelan bonds has plummeted in recent days as investors worry about a default, a move that could trigger political upheaval. On Wednesday Nigeria’s finance minister trimmed the country’s 2015 budget by $3 billion, or 12 percent, because of lower oil prices. The world’s biggest economies are also the world’s biggest oil users. Lower prices for gasoline,




diesel and jet fuel helps boost those economies by giving consumers more money to spend and businesses more money to invest. Lower gasoline prices will save the typical US household $550 next year, the Energy Department predicts. Shares of airline companies and shippers like UPS and FedEx have soared in recent months. Federal Reserve Chair Janet Yellen said Wednesday that the decline in energy prices is “likely to be a net positive” for the US even if it decreases domestic drilling activity, because the country remains a net importer of oil. Consumers in China, Japan and Europe spend a lower portion of their income on energy, so a cut in energy prices doesn’t go quite as far, although it still stimulates their economies. There’s a catch for Japan, however. Falling oil prices could hamper efforts to trigger inflation in an effort to overcome economic stagnation.

OPEC net oil export revenues expected to fall in 2014 and 2015 Source: U.S. Energy Information Administration, Short-Term Energy Outlook Based on crude oil market assessments in the Short-Term Energy Outlook, EIA estimates that members of the Organization of the Petroleum Exporting Countries (OPEC), excluding Iran, will earn about $700 billion in revenue from net oil exports in 2014, a 14% decrease from 2013 earnings and the lowest earnings for the group since 2010. OPEC earnings declined in 2014 largely for two reasons: decreases in the amount of OPEC oil exports and lower oil prices, with the 2014 average for Brent crude oil projected to be 8% below the average 2013 price.

Note: OPEC is the Organization of the Petroleum Exporting Countries. Iran is excluded because current sanctions make it difficult to estimate revenues. The 2014 revenue estimates are subject

to revision as historical production and consumption data are updated.




For similar reasons, revenues for OPEC (excluding Iran) in 2015 are expected to fall further, to $446 billion, 46% below the 2013 level. Brent crude oil is projected to average $68 per barrel in 2015, down from $100 per barrel in 2014 and $109 per barrel in 2013.

Iran is excluded in this calculation because current sanctions make it difficult to estimate their crude oil export revenues. Iran may be taking discounts on the crude oil it exports and may not be receiving all the revenue from those sales because of restrictions on accessing international payment systems.

Prolonged periods of lower oil prices have the largest effect on OPEC countries that are more sensitive to losses in revenue, most notably Venezuela, Iraq, and Ecuador. Governments in these countries were already running fiscal deficits in 2013, and their sovereign wealth funds are smaller compared to other OPEC members. This implies that these countries may not be able to fill budget gaps for as long as other OPEC members.

Further revisions to future budget plans may be required in many OPEC member countries, particularly the countries cited above, because of lower oil prices and large uncertainty over future global economic growth and crude oil production levels. Geopolitical risk may also be elevated because of lower government spending.

Iran: Oil plunge, nuke uncertainty weigh on Iran rial

Bloomberg + NewBase

Iran’s rial is weakening after months of stability over declining oil prices and uncertainty whether the country will clinch a nuclear deal lifting international sanctions.

The currency, which had hovered around 32,000 per dollar in unregulated markets since April, has lost 8% since November 24, when world powers and Iran extended nuclear talks by seven months after failing to reach a breakthrough.




The rial depreciated to 35,200 per dollar in unregulated trading on Thursday, compared with 32,560 on November 24, according to rates compiled by Daily Rates For Gold Coins and Foreign Currencies, a Facebook page used by traders and companies in Iran and abroad.

“The two factors seem to be the lack of a comprehensive nuclear agreement, therefore the continuation of the financial and energy sanctions, combined with the rather dramatic slide in the oil price, which is a worrying scenario for Iran,” Toby Iles, a senior Middle East analyst at the Economist Intelligence Unit, said in a phone interview from Singapore on Thursday. “Perception definitely plays into this.”

Crude prices have fallen more than 50% from a June peak amid overproduction and slower demand growth. The plunge comes as international sanctions imposed on Iran over its nuclear programme curtail crude exports, the Arabian Gulf nation’s main income source.

Presenting the nation’s budget for the Iranian year starting March 21 to lawmakers, Iranian President Hassan Rouhani said on December 7 that he expected oil prices at five-year lows would place “short-term pressure” on state revenue. The government, which assumed a price of $100 for a barrel in the fiscal year through March, is basing its 2015 spending plan on an average of $72. Iran will lose about $8bn in oil revenue from June to the end of this Iranian year, the Tasnim news agency reported on December 16.




The government has adjusted the official exchange rate to the dollar in this year’s budget, which “sends a signal to the market,” Kamal Seyed-Ali, a former deputy for foreign exchange affairs at the Central Bank of Iran, said in comments published in the Tehran-based newspaper Shargh. The government can offset some of the lost revenue through that adjustment, he said.

The draft budget being reviewed by parliament is based on an official exchange rate of 28,500 rial to the dollar compared with 26,500 last year, local media including the Iran newspaper have reported.

Oil rebounds from 5-year low as Saudi minister’s comments add volatility Bloomberg + NewBase

Crude prices in London and New York rebounded from the lowest closing levels since May 2009 as comments from Saudi Arabia’s oil minister on Thursday added to the most volatile market in three years.

Saudi Arabia’s oil minister Ali al-Naimi said on Thursday that a slump in prices was temporary.

West Texas Intermediate, the US grade, climbed as much as 2.6% in New York and Brent 2.2% in London. A measure of expected WTI futures movements and a gauge of options value was at the highest level since October 2011, data compiled by Bloomberg show.

While Ali al-Naimi, Saudi Arabia’s oil minister, said on Thursday that a slump in prices was temporary, he also said it would be “difficult, if not impossible” for Opec to curb its oil production amid a glut, Saudi Press Agency reported. Prices rose immediately

after his remarks, before ending the day at the lowest in five years. The nation accounted for about 13% of global oil output last year, BP Plc estimates.

“Many private investors are tempted to buy at these levels,” said Bjarne Schieldrop, chief commodities analyst at SEB in Olso. “However, at the moment Opec is not on the market as a back-stop, leaving the downside fully open.”

Crude has slumped about a quarter since Saudi Arabia led a decision last month by the Organisation of Petroleum Exporting Countries to maintain its collective output target. US oil producers continue to pump at record levels, contributing to a global glut and competing with the 12-member group for market share.

WTI for January delivery rose as much as $1.39 to $55.50 a barrel in electronic trading on the New York Mercantile Exchange and was up 64 cents to $54.75 at 1:31pm London time. The contract, which expired yesterday, fell $2.36 to $54.11 on Thursday. The more active February future gained 71 cents to $55.07. Total volume was about 13% above the 100-day average for the time of day. Prices have decreased 44% this year.

Brent for February settlement was up 1.1% at $59.91 a barrel on the London-based ICE Futures Europe exchange. It slid $1.91 to $59.27 yesterday, also the lowest close since May 2009. The European benchmark crude traded at a premium of $4.79 to WTI for February.




Implied volatility for at-the-money options in the front-month WTI contract increased to more than 51% today, data compiled by Bloomberg show. Brent volatility is also at the highest since 2011.

Oil markets are experiencing “temporary” instability caused mainly by a slowdown in the world economy, al-Naimi said, according to comments published yesterday by the Saudi Press Agency. Steady global economic expansion will resume, spurring demand, according to the minister, leading him to be “optimistic about the future.”

Opec, which supplies about 40% of the world’s oil, pumped 30.56mn barrels a day of crude in November, a Bloomberg survey of companies, producers and analysts shows. That exceeded its collective target of 30mn for a sixth straight month.

“The Saudi comments indicate that until we see signs of supply destruction the potential upside for crude seems limited,” Ole Hansen, head of commodity strategy at Saxo Bank, said by e-mail. “This is the first week in a while where buyers have dipped their toes back in the market.”

In Russia, the world’s largest crude producer, the economy must adapt to the reality of prices that could decline to as low as $40 a barrel, according to President Vladimir Putin. Oil’s collapse may be due to a battle for market share between traditional producers and shale companies, he said at his annual press conference in Moscow yesterday.

The US oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, which has unlocked supplies from shale formations including the Eagle Ford in Texas and the Bakken in North Dakota.

Production from the nation, the world’s biggest oil consumer, expanded to 9.14mn barrels a day through December 12, the Energy Information Administration said. That’s the highest level in weekly data that started in January 1983.

WTI will drop next week, a separate Bloomberg survey shows. Fifteen of 35 analysts and traders, or 43%, forecast futures will fall through December 26, while 11 predict a price advance.

Brent's front-month settled up $2.11, or 3.4 per cent, at $61.38 a barrel, after closing twice this week below the psychologically key level of $60, and continued to rise as high as $62.66 in post-settlement trade.

WTI's front-month crude settled up $2.41 at $56.52 a barrel, ending the day on an unusually strong note at just 39 cents off the intra-day peak. On average this

month, the US crude contract has settled at nearly $1.80 below the day's peak, according to data analyzed by Reuters.





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Khaled Malallah Al Awadi, Energy Consultant MSc. & BSc. Mechanical Engineering (HON), USA ASME member since 1995 Emarat member since 1990

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

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