new base 535 special 08 february 2015

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

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NewBase 08 February 2015 - Issue No. 535 Khaled Al Awadi

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

Saudi PetroChem,Plastics & printing well for flourishing domestic growth

Saudi Gazette + NewBase

Recent reports on the flourishing market for petrochemicals, plastics, printing and packaging in the Middle East have led the Kingdom of Saudi Arabia (KSA) to launch 26 projects at a total value of SR56.34 billion, with projects worth SR172.76 billion still in the planning stage.

Many Saudi companies such as Saudi Basic Industrial Corporation (SABIC), Saudi Polymers and Petro Rabigh are contributing to the development and growth of the sector. Moreover, regional and international companies from the UAE, Qatar, Bahrain, China and Turkey, Egypt, Lebanon, India and Japan among others, have also played a significant role in the prosperity of the sector.

In light of this growth, many companies are sponsoring specialized exhibitions in these sectors. Riyadh Exhibitions Company (REC), organizer of conferences and exhibitions in the KSA, has

unveiled the list of official sponsors for Saudi Plastic & Petrochem 2015 and Saudi Print & Pack 2015, which will be held concurrently on March 1-3, 2015 at the Jeddah International Center for Conferences and Exhibitions. Various significant companies are participating at the events, such as: Rowad Plastic Group, Sadara Chemical Company, Zamil Plastic Industries Limited, 3P Gulf Group, ASIBEX, DC Print Liquids Technology, Paxxal Inc., Technical Industrial Automation and Techno Converting Services (TCS). The two exhibitions will be held under the patronage of the Ministry of Commerce and Industry. Among the attending companies, SABIC will participate in the two events as a Diamond Sponsor, while Saudi Polymers will be the Platinum Sponsor and Petro Rabigh the Gold Sponsor.




Kamil Al Jawhari, Project Manager of the Saudi Plastic & Petrochem 2015 and Saudi Print & Pack 2015 exhibitions, said: “We thank the sponsors and appreciate their continued efforts to support Saudi Plastic & Petrochem 2015 and Saudi Print & Pack 2015. We promise to strengthen our efforts in the upcoming editions in order to develop and expand them in favor of the Saudi market and its most competent bodies and companies." “The process of developing the plastics, petrochemicals, printing and packaging sectors is very important for all stakeholders in the Saudi market in particular and the regional market in general. One of our key priorities is to promote and expand the two shows and achieve success, the way we have done over the years. We will continue to achieve more in the interest of exhibitors and organizers by continuously adopting transparency and a firm commitment to sustainability and focusing on achieving a positive impact for the sector’s exhibitors and visitors,” Al Jawhari averred.




Revealed: Top Countries With The Cheapest Petrol Rates The average price of petrol around the world ranged around $1.04 per liter, according to

GlobalPetrolPrices.com

Venezuela has the cheapest rate for petrol globally at $0.02 per litre, Such low petrol prices in Venezuela were due to heavy subsidies provided by the government, the website said.

The average price of petrol around the world was found to be $1.04 per liter but various levels of taxation and subsidisation led to different pricing levels. Gulf countries, which are among the world’s top crude exporters, were also featured in the list of countries selling petrol at the cheapest rates.

Saudi Arabia sold petrol at the fourth cheapest rate globally while Kuwait had the sixth cheapest price in the world.

Bahrain and Qatar were also among the top 10 countries offering cheap petrol while Oman and the UAE were placed further down the list.

Petrol is sold at $0.47 per litre in the UAE, the highest rate in the GCC, the website showed.

With international crude prices plummeting over the last few months, the UAE, however, is looking to lower its petrol prices in the future.

Recently, UAE Oil Minister Suhail Mohammed Al Mazrouei said during a session of the Federal National Council that

the government has submitted a proposal to the cabinet that will enable consumers to benefit from lower oil prices.




Algeria's gas output to reach 151 billion m3 in 2019 APS + NewBase

ALGIERS- Algeria's natural gas production is expected to reach 151 billion m3 in in 2019, as several fields will be put into operation, national hydrocarbon group Sonatrach told APS.

"During 2014, we have produced the equivalent of 131 billion m3 of natural gas, including 27 billion m3 exported through gas pipeline and 28 million m3 under the form of LNG rough liquefied gas tankers," the source underlined.

"On the mid-term, we plan to raise our production capacity to reach 151 billion m3 by 2019." The increase of production will come from many gas fields to be progressively operational during the coming five years, according to the statement.

The gas fields include those developed through Sonatrach's own efforts and are located in Tinhert (Illizi), Gassi Touil (Ouargla), Ahnet (In Salah), Menzel Ledjmet Est (Illizi) and Bir Berkine (Ouargla).

The gas projects to be developed in partnership, by 2019, are Touat Gaz, in partnership with French group GDF SUEZ, Sud In Salah, with BP and Statoil, and Reggane Nord, with Repsol, RWE DEA and Edisson.

Minister of Energy Youcef Yousfi and Dutch Minister of Foreign Trade and Development Cooperation Lilianne Ploumen expressed, Thursday in Algiers, the willingness to boost their cooperation in the fields of oil, gas and renewable energy industries.

During a meeting held at the Energy Ministry's headquarters, Yousfi and the Dutch minister discussed cooperation between the two countries in the hydrocarbon field, said a Ministry's communiqué.




Egypt working on oil and gas exploration deals worth $9.2 bln Reuters + NewBase

Egypt has three major oil and gas deals worth a total of $9.2 billion underway, after attracting investment of about $2.9 billion for oil and gas exploration in just over a year, a spokesman for the energy ministry told Reuters. Since November 2013, Egypt has concluded 53 new agreements with international companies to explore for oil and gas amounting to investments of about $2.9 billion, the spokesman said, adding: "We have three other agreements underway worth $9.2 billion." He gave no further details. Big energy companies Eni , BP , Shell and Total have all announced new exploration deals in Egypt over the past month. The country has emerged as a major new oil and gas market as the government looks to ease the worst energy crunch in decades. In January alone, Egypt clinched 15 new exploration deals, amended two more, and closed major tenders to import liquefied natural gas (LNG) from Algeria to Russia, opening up to global energy pricing norms as the government seeks to scrap crippling subsidies by 2019.

Egypt inks LNG supply deal with Trafigura

Egyptian Ministry of Petroleum

informed that Egyptian Natural Gas

Holding Company signed an LNG

supply deal with Swiss commodity

trading house Trafigura.

Companies signed a contract for the supply of about 33 shipment of LNG to fulfill the requirements of the Electricity Sector during the period 2015 – 2016, ministry said in a statement.

Khalid Abdel Badea, Egas Chairman, said that the coming period will witness the signing of

the rest of the LNG supply contracts with the awarded companies in the US$2.2 billion tender, which include the supply of 75 shipments, won by 4 international companies.




Ophir Energy shareholders vote for Salamander takeover Ophir Energy + NewBase Oil and gas company Ophir Energy has announced that at the general meeting held today, a majority of shareholders supported the previously announced all-share transaction by which Ophir will take over Salamander Energy.

According to Ophir 78.92% voted in favor of the transaction, while 21.08% voted against.

Ophir has said that despite the falling oil prices the deal still makes “full strategic sense and will create value for shareholders.”

“The company will continue our ongoing consultation with shareholders as we integrate the businesses and start to create value from our African and expanded South East Asian businesses,”Ophir said in a statement.

Salamander Energy, is an Asia-focused independent exploration & production company with a number of licences spread throughout Indonesia and Thailand.




US: total US oil count has fallen by a record 435 rigs in nine weeks NewBase + The Pesesula

America’s legacy Permian Basin, the biggest of all oil fields in the US, was hit hardest by drillers past week retrenching amid the worst price collapse in six years. The Permian, stretching across parts of Texas and New Mexico, lost 37 rigs drilling for oil to 413, Baker Hughes Inc said on its website. The US-wide count slid 83 to 1,140, marking the ninth straight week of declines and bringing the total to the lowest since December 2, 2011.

The unprecedented retreat in US oil rigs over the past four months shows how deeply the biggest collapse in global oil prices since 2008 is wounding the country’s oil industry, erasing more than 30,000 jobs and shrinking estimated exploration and production spending by more than $116bn. “The Permian was expected to be a little more resilient than the rest because companies were just starting to ramp up drilling there again,” RT Dukes, an oil and gas analyst at Wood Mackenzie Ltd, said by

phone from Houston. “What this shows is that, in reality, no oil is immune to $50 prices, not even the Permian, not even the best of the best.” The total US oil count has fallen by a record 435 rigs in nine weeks, Baker Hughes data show. The decline in the Permian was larger than the retreats in any other play. It was also the field’s steepest decline since Baker Hughes began reporting basin-by-basin counts in February 2011. “The drop this week was absolutely substantial,” James Williams, president of energy consulting company WTRG Economics, said by phone from London, Arkansas, on Friday. “I’m actually surprised it’s dropping this fast. A lot of companies are strapped for cash, their balance sheets and income statements do not look good and they’re bailing out of new projects as fast as they can.” Swiss oilfield services company Weatherford International Plc became the latest energy company to announce job cuts, saying on Thursday that it’ll let go of 8,000 workers in the first half of this year as it faces “an unusually severe market contraction and concurrently, a once-in-a-lifetime industry change.” “Weatherford will be efficient, will be lean and organisationally flat,” Bernard Duroc-Danner, the company’s chief executive officer, said in a call with analysts on Thursday. “This is what we need to do, and this is what we will execute.”




West Texas Intermediate for March delivery rose $1.21 on Friday to settle at $51.69 a barrel on the New York Mercantile Exchange, up 6.9 percent this week and down 47 percent from a year earlier. The CBOE Crude Oil Volatility Index, which measures price fluctuations using US Oil Fund options, ended at 63.14 on Thursday, the highest level since April 2009. The Organisation of Petroleum Exporting Countries, which accounts for about 40 percent of the world’s oil supplies, has

meanwhile resisted calls to cut output after agreeing in November to maintain production targets. On Thursday, Saudi Arabia, the group’s biggest producer, deepened its discount for March oil sales to Asia, a sign that the kingdom is fighting for market share. US oil production has meanwhile remained at the highest seasonal level since at last 1983 and climbed to a record 9.21 million barrels a day in the week ended January 23, US Energy Information Administration data show. Drilling techniques such as horizontal drilling and hydraulic fracturing are increasing the yield from new wells and propping up total output. “You might see growth slow, but annual production will continue to rise,” Dukes said. Rigs targeting natural gas in the US fell by five this week to 314, Baker Hughes said. Inventories of the heating fuel declined 115 billion cubic feet in the week ended January 30 to 2.428 trillion, EIA data show. Supplies were 24 percent above year-earlier inventories and 1.2 percent below the five-year average. Natural gas for March delivery slipped 2.1 cents to $2.579 per million British thermal units on the Nymex.




Norway: DNO reports 2014 results Source: DNO + NewBase

DNO, the Norwegian oil and gas operator, achieved record oil and gas output in 2014, but the

Company's results were impacted by one-off impairment charges in the fourth quarter driven in

part by the drop in global oil prices.

Gross output was up 66 percent last year to 117,482 barrels of oil equivalent per day (boepd) and company working interest production jumped 76 percent to 68,958 boepd. Operating revenue stood at USD 452 million in 2014. Impairments of USD 297 million in Kurdistan, Oman, United Arab Emirates and Yemen led to an operating loss of USD 243 million for the year. Excluding impairments, annual operating profit was USD 53 million.

The Tawke oil field in Kurdistan continued to drive the overall increase in DNO's output. Tawke gross production rose 131 percent to 91,255 barrels of oil per day in 2014 despite ongoing security challenges. The Company remains on track to double field production and processing capacity by early 2015.

Capital expenditures in 2014 reached USD 297 million, up from USD 288 million in 2013, on the back of capacity expansion and development programs in Kurdistan. The Company ended the year with USD 114 million in cash and an additional USD 63 million in marketable securities.

'Our focus in 2015 is to align our spending with our earning,' said Bijan Mossavar-Rahmani, DNO's Executive Chairman. 'We are targeting operating efficiencies, cutting back on discretionary expenditures and high-grading our portfolio - a process we started late last year,' he said. 'We are also looking to generate larger revenues from our Kurdistan operations,' he added.

The Company has restarted sales of oil into the Kurdistan local market and plans to ramp up such deliveries in the first quarter. The Company expects to realize additional payments in respect of past and ongoing exports, the timing and extent of which will drive the 2015 capital program. Mr. Mossavar-Rahmani repeated that DNO continues to have one foot on the accelerator and one on the brake.

DNO ASA presents its full-year financial and operating results in Oslo at 10:00 CET

on 5 February. A live webcast of the presentation as well as the full Fourth Quarter and Full Year 2014 Interim Report will be available on the company website (www.dno.no).




Oil Price Drop Special Coverage

Another wild week in the oil market The National + NewBase

After a week in which benchmark oil prices gained more than they have in any five-day period since 2009, some observers were ready to call a bottom to the market.

But others are not so sure that the rally will last.

North Sea Brent crude futures started the week at about US$50 a barrel and ended the week nearly 16 per cent higher at $57.80.

But it seemed that as many professional market watchers were calling the rally a “dead cat bounce” as were calling it a turning point after the severe drubbing that had pushed prices down by 60 per cent from a high last summer above $115 a barrel to their low of just above $46.50 in the middle of last month.

A survey of 32 market prognosticators by Bloomberg News last week found that they were almost evenly split between those who forecast oil prices to rise over the next month and those who expected them to fall.

The chiefs of the world’s biggest oil companies typically steer clear of market forecasting, and BP’s Bob Dudley hedged his bets last week when he was asked for his views, following the company’s fourth-quarter results in which full-year profit fell 10 per cent and this year’s projected capital expenditure was slashed.

But he did paint a fairly gloomy picture. “It feels like 1986 to me, where the price dropped at that time from $40 to $9 a barrel and then stayed down for quite some time,” Mr Dudley said. “I think this is quite serious.”

Some of the bearish signs that Mr Dudley pointed to included the fact that China was growing more slowly than it had been for some time, that oil inventories were filling up around the world




and there is an increasing amount being stored now in giant ships by traders hoping that prices rise later in the year.

“When, traditionally, that happens it can go on for quite a while. So for us the prudent way to manage the company is to plan on one, two, three years and rebase so that we can balance our resources and use of funds at $50” a barrel of oil.

While that is an authoritative voice counselling caution, Mr Dudley repeatedly emphasised that he was not making a prediction. Oil company executives have no better track record at predicting oil prices — at least publicly — than most. That is why they do not like to predict publicly.

Traders, on the other hand, like to voice their predictions often and loudly.

Andrew Hall — the head of one of the world’s oldest commodities trading firms, Phibro, and a $4 billion hedge fund, Astenbeck — has been telling his investors that oil will rebound to between $70 and $80 a barrel “in the long run”, a bullish sentiment he reiterated last week.

“There have been two constants of the oil market,” he wrote. “The first is that demand always grows. The second is that supply from existing resources always falls because of depletion.”

That is certainly true, but timing, as Mr Hall knows, is the key to profits versus losses.

So apart from futures trading, what were the important signs in the market last week?

Saudi Arabia, the world’s largest crude exporter, cut the official selling price for its Arab Light crude for Asian buyers by 90 cents to a discount of $2.30 below the Middle East benchmark, the lowest price in nearly a decade and a half.

Others, including Iraq, Iran, Kuwait and the UAE, will almost certainly follow suit. The price war that gave the oil bear market impetus at the end of last summer is still being waged.

On the other hand, oil rig use in the US declined by another record amount, suggesting that the Saudi Arabian-led strategy of choking off the burgeoning US shale oil supply was working. According to the oil services company Baker Hughes, the US oil rig count fell 83 to 1,140, bringing the cumulative decline to 435 in the past nine weeks.

What to conclude at this point? Tom Pugh of Capital Economics reckons the markets will teeter back and forth just a little bit higher than where they finished the week.

“We estimate that an oil price of about $60 to $70 per barrel is high enough to prevent a collapse in US shale and other oil industries and allow production to increase to match increased demand,” he said at the end of last week. “But it would also be low enough to

prevent a repeat of the massive increases in production we have seen over the last few years.” What seems certain, however, is uncertainty. “Of course, oil prices will be extremely volatile over the next year,” he said.




Oil producers battle for market share remains the order Syed Rashid Husain + NewBase

Reversals and counter reversals, this past week, point to fundamentals, as the key - controlling and directing - the global oil and energy markets. With counter push and pulls, markets continued to see - saw the entire week. Possible growth in the US and global demand besides the uncertainty overlapping Libyan output, were enough to help markets sideline the issue of oil glut for the time being. At the beginning of the just gone by week, for four days until Tuesday, markets were seen rebounding - and rather significantly. There was a 19 percent gain in market prices during these four days, leading some to raise questions whether the markets have bottomed out and that it is now getting out of it - slowly and gradually? This rebound was apparently sparked by data highlighting the dramatic drop in US oil drilling rigs in recent months and a cutback in the exploration budgets of energy firms. Those numbers had suggested to some market players that the crude glut might be overcome more quickly than expected. But then markets almost crashed on Wednesday, with US crude losing 9 percent in one of its biggest daily routs ever, as record high oil inventories in the United States cutting short the four-day rally. This was the reaction of the market to the news that US crude stocks has jumped by 6.3 million barrels to 413.06 million barrels, the highest since EIA began recording stock levels in 1982. The reported build-up was considerably higher than the expectation. However, crude oil traded $2 higher before paring gains on Friday, recording a straight second weekly increase, as chaos in Libya and stronger economic signals from the United States helped futures rebound from near-six-year lows.

The underlying message is apparent. There is no shortcut to market redemption. Markets need to balance the demand and supply - before any real, sustainable reversal in market fortunes could be registered. And correcting the fundamentals would need some more time.




Analysts say that even if the number of oil rigs operating in the US, currently at a three-year low, continues to decline, it will take time for this to affect production volumes. Markets are likely to remain oversupplied, at least, through the first half of 2015. “In our experience, oil markets rarely exhibit V-shaped recoveries and we would be surprised if an oversupply situation as severe as the current one was resolved this soon,” Macquarie Research said in a report. “The foundation for a steady price recovery in the second half of the year has been laid by the expected decrease of US oil production. In the short term, however, the price increase is exaggerated in our view, as there is still a considerable oversupply,” analysts at Commerzbank said in a note. Citigroup is now warning that crude oil may need to tumble to $30 because the world still has too much oil on hand. “For the market to truly balance, US oil rig counts would have to fall significantly further and the bottom of the price trading range for 2015 is likely to be a good deal lower,” Citi analyst Seth Kleinman wrote in a research report last week. Citi estimates supply continues to outpace demand by about 1 million to 1.5 million bpd. That’s not exactly a recipe for higher prices, especially since OPEC appears unwilling to step in to balance the market like it usually does. Citi also notes that rig counts have only declined by 9% from their peak at the Big 3 shale oil plays: the Bakken, Eagle Ford and Permian. That’s a big deal because these regions are pumping tons of oil. Without sizeable rig count declines at the Big 3, US oil production could still rise by about 1 million barrels per day in 2015. US production actually increased to a record of 9.3 million barrels per day during the week of January 23, according to Yardeni Research. “Energy production isn’t like flipping a light switch. Supply response happens in months, not days,” said Art Hogan, chief market strategist at Wunderlich Securities. Barclays has in fact slashed its forecast average price of Brent crude for this year to $44 a barrel, down nearly $30 from its early-December forecast of $72 a barrel, before recovering to $60 in 2016. “We expect to see further downside to prices in the next few months, with both WTI and Brent likely to trade into the high $30s before the oil price decline is arrested,” Barclays’ head of energy commodities Michael Cohen was quoted as saying. Goldman Sachs too is forecasting WTI oil to trade about $44 a barrel for the first three-quarters of this year, lifting to $65 a barrel by the end of the year as sharp cuts in capital spending and rising demand weigh on supply. Analysts at Morgan Stanley are also saying that US production needs to slow sharply to balance the market, which requires low prices. “If the rally goes well beyond this band, we see risk of counterproductive behavior that would push off recovery and make us more bearish in the second half of the year and in 2016,” Morgan Stanley said. And in the wake of a bearish short-term market scenario, the battle for market share is still on, with major crude producers’ battling to hold on to their market share.




China, the World’s largest crude importer and second-biggest crude consumer after the US in 2014, remains the focus of attention. In recent months, Middle Eastern producers were increasingly facing competition with cargoes from Latin America, Africa and Russia for buyers in Asia. Saudi Arabia’s share among the top three suppliers to China fell to 37 percent in December, from 44 percent in October, as it lost ground to Angola and Russia, Julian Lee, oil strategist for Bloomberg First Word was quoted as saying. Dhahran could not have remained oblivious to all this. Saudi Aramco thus announced last Thursday cutting March prices for oil sales to Asia. It lowered its official selling price for Arab Light crude by 90 cents to $2.30 a barrel less than Middle East benchmarks, it announced in an e-mailed statement last Thursday. That’s the lowest in at least the 14 years since Bloomberg began gathering data. Abu Dhabi has also cut export prices for its crude for the seventh consecutive month and to the lowest since 2009. Murban crude, its main grade, sold in January for $46.40 a barrel, or 23 percent below December’s level, according to an e-mailed statement from Abu Dhabi National Oil Co. Murban hasn’t sold for less since February 2009, data compiled by Bloomberg show. Doha too had reportedly cut its January price for Marine crude by 26 percent from December to $43.25 a barrel and reduced Land crude 24 percent to $45.95 a barrel. While some redemption in crude market fortunes seem in the pipeline, yet it is still some way off. And until then, battle for market share remains very much the order of the day, one cannot refrain underlining.




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile : +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels.

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

NewBase 01 February 2015 K. Al Awadi

new base 535 special 08 february 2015

Economy & Finance

saudi companies

saudi market

saudi polymers

saudi plastic petrochem

saudi print pack

uae saudi petrochem

kingdom of saudi arabia

international companies