new base energy news issue 929 dated 21 september 2016

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NewBase Energy News 21 September 2016 - Issue No. 929 Edited & Produced by: Khaled Al Awadi

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Cheap solar power in UAE can squeeze manufacturersUAE:

The National - LeAnne Graves

Cheap solar energy can help to tackle the region’s rising power demand, but difficulties are ahead for incubating a local market as margins thin.

The UAE is redefining the solar industry as the latest project in Abu Dhabi attracted record low bids announced on Monday. For the 350 megawatt solar photovoltaic (PV) project in Sweihan, about 120 kilometres from the capital, the lowest submitted price came in at 2.42 US cents per kilowatt hour (kWh).

This is so low that the solar used to generate 16,000 kWh for an average home in the UAE would cost less than Dh1,500 a year – that is just over Dh100 per month (although actual retail prices depend on many variables).

Many said that this is the beginning of the end, with competition squeezing margins to the point of no return. Developers are sitting pretty, with manufacturers and contractors rushing to battle one another to bring the lowest price and join these major solar projects.

But the loser in all of this will be the manufacturing sector.

The Saudi Arabian developer Abdul Latif Jameel said price pressure could drive consolidation in manufacturing as higher volumes and component efficiency are also supporting lower costs. "We continue to submit proposals for projects worldwide that are very competitive and in each one, we reflect the latest cost calculations and forecasts," said Roberto de Diego Arozamena, the chief executive of Abdul Latif Jameel Energy.

While the region is looking to set the bar on pricing, it is also hoping to become a manufacturing hub for the industry. Saudi Arabia was one of the countries that announced how it wanted to be a




leader in manufacturing after it unveiled plans to add 9.5 gigawatts of renewable energy to its power mix earlier this year.

Not only are these prices tightening margins, but a solar panel supply glut is surfacing that will force regional manufacturing ambitions to be reassessed.

Total module, or solar panel, manufacturing capacity globally is about 160GW a year, according to Bloomberg New Energy Finance (BNEF). However, not all of this is operational and some are only collecting dust in factories just waiting for orders to flow. "We hear of significant inventory build-up which means more lean times for manufacturers," said Jenny Chase, a solar analyst at BNEF.

Developers are unwilling to sign contracts a year in advance as the prices are simply unstable, she said. "BNEF benchmarks module prices early next year at 46 cents per watt, but right now you can buy modules cheaper – especially for inventory from non-bankable suppliers," she added.

Mergers and acquisitions may also be on the cards, and Ms Chase said that the industry is heading for another wave. BNEF counted 237 module makers active this summer and while that number may remain, it is not necessarily indicative of a robust sector. "There are always new entrants as well, so the number of manufacturers will not necessarily go down," she said.

The industry will need to consolidate down to those with the best supply chains, which is likely to include government backing in the form of grants, according to Mohammed Atif, the Middle East and Africa regional manager for DNV GL, a consultancy working on renewable energy tenders in Saudi Arabia.

He believes solar will follow the oil and gas path, evolving into a sector with "supermajors" – as big names in hydrocarbons such as BP are dubbed – and smaller, niche players.

"The big question is whether the meteoric growth in demand worldwide will also have the same impact on price fluctuations as they have had in other commodity markets," he said.

If prices get so low from international manufacturers, companies in the region will need to either compete by dropping costs or rethink strategy. "And this is a concerning prospect for any job development-related ambitions that the Middle East North Africa region may have," he said.

The US developer and manufacturer First Solar said that it was hard to discuss manufacturing in any region at present. "We need another 12-24 months before we get a picture of the supply and demand which gives a new direction," said Ahmed Nada, First Solar’s vice president and regional executive for the Middle East.

Marubeni-Jinko submit world-record low bid for Sweihan solar

An Asian consortium that submitted the lowest bid for the upcoming 350 megawatt solar photovoltaic (PV) project in Abu Dhabi includes Marubeni of Japan and Jinko Solar of China, it has been revealed.

Abu Dhabi Water and Electricity Authority’s procurement arm said it had received six bids, with Marubeni and Jinko Solar bidding 2.42 US cents per kilowatt hour (kWh), followed by Abu Dhabi’s Masdar, EDF and




PAL at 2.54 cents per kWh.

The Marubeni-Jinko Solar bid of 2.41 cents per kWh is now the world’s lowest, beating the previous low of 2.91 cents for a solar plant in Chile last month.

The other bids were 2.59 cents per kWh from Tenaga and Phelan Energy; RWE/Belectric at 2.91 cents; JGC, First Solar and Sojitz at 3.08 cents and Kepco, Q Cells and GSE at 3.63 cents.

As an alternative bid, Marubeni and Jinko submitted an offer to expand the plant to 1,170MW at an offer of 2.30 cents, according to sources who did not want to be named.

However, it is important to note that these submissions do not mean that the project has been awarded as authorities will now evaluate the proposals to ensure thoroughness and economic viability.




Libya Crude Output Rises as Oil Fields Restart, Ports Reopen Saleh Sarrar Hatem Mohareb

Libya boosted crude production by more than 70 percent since August as some oil fields resumed output and export terminals in the OPEC country reopened for their first overseas loadings in two years.

The North African nation’s crude output rose to 450,000 barrels a day after work resumed at some oil fields, Ibrahim Al-Awami, head of oil measurement department at state-run National Oil Corp., said by phone on Tuesday. Armed conflicts and political disputes have hobbled the country’s production, which slid to 260,000 barrels a day last month, data compiled by Bloomberg show.

The tanker Seadelta returned to take on crude at the port of Ras Lanuf after interrupting loading and sailing away due to fighting at the facility earlier this week, Nasser Delaab, petroleum operations inspector at Harouge Oil Operations, said by phone. The shipment would be the first from Ras Lanuf since 2014. Harouge started to pump oil at the eastern Amal field at a rate of 3,500 barrels a day, and the crude will be shipped to the port of Zueitina, he said.

Libya is seeking to ramp up crude exports after fighting among rival militias crushed oil production following the 2011 ouster of former dictator Moammar Al Qaddafi. Earlier this month, the NOC ended measures that had curbed exports from the nation’s main oil ports of Es Sider, Zueitina and Ras Lanuf amid the country’s struggle to form a unified national government.




Oil Reserves

Libya, if it succeeds in shipping the Seadelta cargo, will be selling into an oversupplied market in which crude is trading at about half its 2014 levels. Benchmark Brent crude was down 1.6 percent at $45.24 a barrel on Tuesday at 5:45 p.m. in Dubai. The country holds Africa’s largest oil reserves and pumped 1.6 million barrels of crude a day before Qaddafi’s ouster.

Another tanker, the Syra, will arrive in Ras Lanuf to ship 600,000 barrels of crude to Italy, Delaab said. The Syra was at sea near the port on Tuesday, according to tanker tracking data available on Bloomberg.

Libya’s Arabian Gulf Oil Co. boosted output to 215,000 barrels a day from 145,000 barrels a day after the removal of force majeure on exports from Zueitina, Agoco spokesman Omran al-Zwai said by phone. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

Harouge pumped about 100,000 barrels a day through the end of 2014 but halted operations due to fighting in the country, Delaab said. The company has production rights to at least five oil fields around Ras Lanuf, according to its website.

Libya’s Arabian Gulf Oil boosted output to 215,000 barrels a day from 145,000 barrels a day after the removal of force majeure on exports from Zueitina, said the Agoco spokesman Omran Al Zwai. Force majeure is a legal status protecting a party from liability if it cannot fulfill a contract for reasons beyond its control.

Harouge Oil pumped about 100,000 barrels a day through the end of 2014 but halted operations due to fighting in the country, Mr Delaab said. The company has production rights to at least five oil fields around Ras Lanuf, according to its website.




Mozambique: Spectrum wins 2D offshore Mozambique seismic award

Spectrum has recently been awarded Tender Area 2 covering the southern Rovuma and north-eastern Zambezi Basins, offshore Mozambique, proposing to undertake a comprehensive long-offset Broadband 2D multi-client seismic survey. The survey will be a variable grid with lines spaced from 10 km to 20 km, totalling in excess of 16,000 km.

The new seismic data will image the subsurface potential in open areas of the southern Rovuma Basin and the western flanks of the Kerimbas Graben, west of the Davie Fracture Zone, revealing the prospectivity in this region for the first time.

Potential targets along the Mozambique margin have already been identified in both structural and stratigraphic settings, following recent studies in the area. These include Cretaceous and Tertiary turbidites and buried canyon plays.

The survey will also aim to image the syn-rift structures and Late Cretaceous pro-delta stacked turbidite sequences in the northeast Zambezi Depression. The Zambezi Delta exhibits complex structuration following extensive recent compressional tectonics.

Several potential source, reservoir and seal intervals have already been identified in this area. Play types include onlaps and drapes over basement highs, stratigraphic and structural traps of deep water slope channel and basin floor fan complexes, lowstand plays (both wedge and pro-delta fan), syn-rift graben

hanging wall and footwall plays, and strike slip structural plays.

New 2D data will play a key role in refining our understanding of the hydrocarbon potential of the area and accelerate hydrocarbon exploration activity in what is believed to be an oil-dominated region offshore Mozambique.




Wind and solar power enjoy a decade of massive growth: World Energy Council … Anmar Frangoul | Special to CNBC.com

Renewable sources of power including hydroelectric and solar represent around 30 percent of the world's total capacity and 23 percent of total global electricity production, according to a new report from the World Energy Council (WEC).

In a news release, WEC said that in the last 10 years wind and solar power had seen "explosive average annual growth" of 23 percent and 50 percent.

The report also said that $286 billion was invested in 154 gigawatts of "new renewables capacity" in 2015, with China's spending on renewable sources representing 36 percent of global investments.

"The success of both the development of intermittent renewables and their efficient integration in electricity systems fundamentally depends on the right market design and regulatory framework and solid regional planning to avoid bottlenecks," Christoph Frei, secretary general of the WEC, said in a statement.

The report comes in the wake of last year's historic COP21 agreement in Paris. There, global leaders agreed to make sure global warming stayed below 2 degrees Celsius and to also pursue efforts to limit the temperature rise to 1.5 degrees Celsius.

"We are beyond the tipping point of grand energy transition," Frei added. "Implementing technically and economically sound, stable policies supported by clear carbon price signals will enable this transition and take us a step closer to meeting the climate aspirations agreed at COP21."

The report, Variable Renewables Integration in Electricity Systems 2016 – How to get it right, was launched on September 20 and published by the WEC in partnership with CESI S.p.A.

The WEC said that it drew upon 32 country case studies, representing roughly 90 percent of global installed solar and wind capacity.




Middle East ready to become swing producer in refined oil Anthony McAuley

The Middle East is poised to become a "swing" producer for refined oil products as the sector’s importance in world trade grows, according to Standard & Poor’s Platts commodities pricing unit.

Platts, which is one of the most important of the world crude oil and products price-setters, said on Tuesday it would add four new benchmark prices for trading out of the port of Fujairah, in recognition of its growing role in regional trade in petrol, gas oil and other refined product trading. The benchmark prices include assessments for petrol, diesel/gas oil, jet fuel and fuel oil.

Although refining capacity has been growing rapidly in the Middle East, the pricing of refined products is still dominated by those set in Singapore, and most market participants expect that it will take many years for regional pricing to challenge the status quo.

Indeed, a poll of about 130 traders and other market professionals at Platts’ annual Dubai Oil Forum held on Tuesday found that only 13 per cent expected any impact before 2020, and even then about half expect that Singapore will continue to dominate into the foreseeable future.

"This is a marker for the future and about the way we see broader market trends developing … Over the next few years, we hope to see more diversity in those trading, and not just in Fujairah but in other regional markets which currently are dominated by the national oil companies," said Gurdeep Singh, a Platts executive.

Among the trading trends expected to influence the Middle East market is the fact that after a period of resilience, European refining capacity is predicted to stall as its reliance on imported oil products grows.

Similarly, India’s refining capacity had been among the world’s fastest growing, but it now has no new capacity due to be built, even though its demand for petrol and products such as liquefied petroleum gas continues to soar.

Refining capacity project in Middle East




The International Energy Agency says that on current trends the Arabian Gulf refiners will be India’s biggest supplier of imported refined products by 2035-40, taking over from Singapore and other Asian refiners. Growing refining and product-trading ability is a key strategic objective for the region’s major oil exporters, in part to meet growing domestic demand but also with the broader aim of diversification to make them less exposed to crude oil prices.

In the past couple of years Saudi Arabia added 800,000 barrels per day of capacity to bring its domestic total to 3 million bpd, and under its 2020 Transformation Plan the goal is to balance its worldwide refining capacity with its crude oil output, which recently hit a record 10.67 million bpd.

In the UAE, capacity at the largest refinery in Ruwais, in the Western Region, doubled last year to 900,000 bpd and there are plans to add further capacity to handle a growing stream of crude oil from offshore, as well as to feed the much-expanded Borouge petrochemicals plant next door.

Emirates National Oil Company has also awarded the main contract on a US$1 billion plan to raise capacity at its Jebel Ali refinery in Dubai by 50 per cent, to 210,000 bpd.

Kuwait’s $4bn Al Zour refining project, which was contracted at the end of last year, is expected to nearly double the country’s refining capacity to 1.4 million bpd by 2019.

The next phase of expansion in the UAE, however, is stalled awaiting a decision by Abu Dhabi’s International Petroleum Investment Company (Ipic) about the main contracts for its $3.5bn refinery project in Fujairah, where the winner from an all-South Korean shortlist was expected to be announced in June last year.

The delay is partly because Ipic is in the midst of a merger with Mubadala Development Company as Abu Dhabi Inc rationalises its strategic investment companies. But the opportunity is there for Gulf refiners, especially in India.

"With a population of 1.3 billion and around 250 million households, India is developing at such a rate that, as one Indian refining executive told me recently, demand for some refined products, especially LPG [liquefied petroleum gas], is basically whatever you can supply," said Mr Singh.




NewBase 21 September 2016 Khaled Al Awadi

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

Oil prices rise on reported US crude stock draw, firm Japan imports Reuters + NewBase

Oil prices climbed on Wednesday, supported by a reported draw in U.S. crude inventories and by firm import data from Japan.

U.S. West Texas Intermediate (WTI) crude futures were up 1.8 percent, or 77 cents, at $44.82 a barrel at 0251 GMT. The October contract expired yesterday at $43.44 a barrel and the front-month has now rolled over to November delivery.

Traders said that the main WTI price driver had been American Petroleum Institute data showing a 7.5 million barrel draw to 507.2 million barrels in U.S. crude inventories, the third weekly stock draw.

Market participants had expected an increase of 3.4 million barrels, according to a Reuters poll. International benchmark Brent crude oil futures were trading at $46.45 per barrel, up 57 cents, or 1.2 percent, from their last close.

Traders said that Brent was being supported by firm import data from Japan. Japan's customs-cleared crude oil imports rose 0.5 percent in August from the same month a year earlier, the Ministry of Finance said on Wednesday.

Japan, the world's fourth-biggest crude buyer, imported 3.38 million barrels per day of crude oil last month, the preliminary data showed. Overall, however, oil markets remain oversupplied as exporters around the world pump near record amounts, while demand stutters.

"Fundamentals suggest the oil market is likely to remain in surplus for longer than many expected," Dutch bank ING said, citing lower Chinese oil purchases and uncertainty around the global economy as factors weighing on markets.

Oil price special

coverage




Major oil producers from the Organization of the Petroleum Exporting Countries (OPEC) and also Russia plan to meet in Algeria next week to discuss measures to rein in the oversupply, but analysts said they did not expect significant cuts to production.

"OPEC members will not agree on a production freeze at the end of September at the meeting in Algiers. Political tensions will prevent cohesion, and individual members will continue to protect market share from resilient non-OPEC producers," BMI Research said in a note to clients.

"Even if an agreement to freeze production is reached, this will change very little for the global oil market, given that most OPEC members are already producing close to their peak capacity," it added.

Oil Advances Near $45 as OPEC May Hold Formal Meeting in Algiers Bloomberg - Ben Sharples BenSharps

Oil climbed near $45 a barrel after Algeria said OPEC may turn its informal talks next week into a formal session and as weekly industry data showed U.S. crude inventories declined.

November futures rose by as much as 2.5 percent in New York. OPEC ministers can transform the gathering into an extraordinary meeting since they will all be present, Algerian Energy Minister Noureddine Bouterfa said on public radio. Supply needs to be cut by 1 million barrels a day to rebalance the market and stabilize prices, he said. U.S. crude stockpiles dropped by 7.5 million barrels last week, the American Petroleum Institute was said to report Tuesday.

Oil has fluctuated since August’s rally on speculation the Organization of Petroleum Exporting Countries and Russia will agree on ways to stabilize the market at the meeting. While Venezuelan President Nicolas Maduro said members are close to a deal, all but two of 23 analysts surveyed by Bloomberg predict an agreement to limit production is unlikely. A deal to freeze output was proposed in February but a meeting in April ended with no final accord.




“History suggests that OPEC action is unlikely, but there will be talk and that will move the market,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “The API data gave the market a boost, but prices are coming from a low base. Oil is moderating around the $44 to $45 a barrel level.”

West Texas Intermediate for November delivery rose as much as $1.09 to $45.14 a barrel on the New York Mercantile Exchange and was at $44.82 at 1:11 p.m. in Hong Kong. The October contract expired Tuesday after advancing 14 cents to close at $43.44. Total volume traded was 12 percent above the 100-day average.

Brent for November settlement rose as much as 69 cents, or 1.5 percent, to $46.57 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 7 cents, or 0.2 percent, to $45.88 a barrel on Tuesday. The global benchmark traded at a $1.65 premium to WTI.

Supply Glut

U.S. crude stockpiles probably increased by 3.25 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. Inventories at Cushing, the delivery point for WTI, probably rose by 100,000 barrels.

For a story on the possible outcomes from the OPEC meeting, click here.

OPEC will hold an informal meeting on the afternoon of Sept. 28 after the closing session of the International Energy Forum conference, Bouterfa said. Oil needs another six to nine months to stabilize within a range of $50 to $60 a barrel, he said.




NewBase Special Coverage

News Agencies News Release 21 September 2016

Report: Yamal LNG unaffected by low oil prices LNG World News Staff

Yamal LNG’s output is less sensitive to oil price movements due to the project’s cash cost, according to Novatek’s chief financial officer Mark Gyetvay.

Speaking at an investment summit in Russia, Gyetvay said that Yamal’s estimated cost, the extraction, liquefaction and shipping, comes at about US$3 per mmBtu, with $2.5 set for shipping, Reuters reports.

At current LNG spot prices in Asia of $5.50 per mmBtu, Yamal LNG has an advantage over some of the high-cost producing competitors, Gyetvay said.

Yamal LNG is expected to ship first liquefied natural gas from its first liquefaction train by the end of 2017. The second and third LNG trains are expected to come on stream in the second half of 2018 and the second half of 2019, respectively, reaching the full production capacity of 16.5 mtpa.

The project will use the northern route to ship LNG from Russia to China during the summer. The voyage from the facility to Chinese customers, using the northern route, will take about 18 days, with 32 days needed to transport LNG to Asia via the Mediterranean Sean and Suez canal. Gyetvay additionally

expects the global LNG market to swing into a deficit from 2023 to 2025 as no FID decisions on new projects has been reached over the past two years, and no such decision is expected in the coming year.

With projects’ construction period between five to seven years, with none currently being built, Gyetvay notes it is expected that this will have an effect on the supply to 2025 and beyond.

He also informed that the feasibility work for Novatek’s second project, Arctic LNG-2, is expected to be completed within the next 12 to 18 months. The company could target first LNG from the second project in 2023, when Novatek expects the market would need additional volumes.

Shareholders in the Yamal LNG project are Novatek, as the operator with a 50.1 percent stake, CNPC and Total with 20 percent stake each and China’s Silk Road Fund with a 9.9 percent stake.

Novatek recently signed a memorandum of understanding with Japan Bank for International Cooperation (JBIC) to cooperate on liquefied natural gas projects, including possibly the Arctic LNG-2 project. However, Novatek’s CEO Leonid Mikhelson was reported as saying that the Russian company has still not chosen its partners for the project.




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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 26 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 21 September 2016 K. Al Awadi

new base energy news issue 929 dated 21 september 2016

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