new base energy news issue 954 dated 23 november 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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NewBase Energy News 23 November 2016 - Issue No. 954 Edited & Produced by: Khaled Al Awadi

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Saudi Arabia’s Sway in OPEC Limited by Resurgent Iraq and Iran Bloomberg - Anthony Dipaola @A_Dipaola17

Saudi Arabia’s dominance of OPEC isn’t what it once was. Iraq and Iran, shaking off shackles of sanctions and war, have raised oil output to record highs and are asserting themselves within the Organization of Petroleum Exporting Countries. Together they produce more than 8 million barrels of oil a day, nearly a quarter of the oil pumped by the group, and both want to boost their output further.

The ambitions of OPEC’s second- and third-largest producers are the main obstacle to the Saudi-backed effort to trim the group’s output and buoy prices. Even if members reach a deal next week and accept production quotas, the reluctance of Iraq and Iran to cut output bodes poorly for their long-term cooperation with the kingdom -- and for stability in global oil markets.

“Iran and Iraq want an equal relationship with Saudi Arabia within OPEC,” Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group, said Monday. The two are “in a coincidental collusion in OPEC because it suits their common interest of getting as high a quota as possible.”

OPEC ministers will meet on Nov. 30 to work out a shared cut in production to between 32.5 million and 33 million barrels a day. Trimming output could help balance an oversupplied market and reverse a price slide that’s rupturing budgets from Venezuela to Saudi Arabia. Benchmark Brent crude has tumbled from more than $115 a barrel in June 2014 to less than $50 this week.

The group’s members granted special consideration to Iran in September, when they reached a framework agreement in Algiers, to help the country recover from international sanctions that were eased in January. With Iran now pumping almost as much as it did before sanctions, OPEC has yet to specify a level at which it will try to limit the nation’s output.




Iraq too is pressing for an exemption from cuts, citing the urgency of its offensive against Islamic State. Oil Minister Jabbar Al-Luaibi said last month that Iraq would not pump any less than its official September output figure of 4.7 million barrels a day. OPEC disputes that figure and puts Iraq’s production for that month at less than 4.5 million barrels daily.

An OPEC committee convened on Monday and Tuesday in Vienna to decide how to share the burden of the Algiers agreement, but decided to defer the issue of Iraq and Iran’s participation to the ministerial meeting on Nov. 30, according to two delegates.

Iran and Iraq have grown in importance within OPEC as their production has increased. Iran has added about 880,000 barrels per day since the loosening of sanctions. Iraq has boosted output by about 50 percent over the past three years, to a record high in October.

Both countries need the higher prices that could result from a deal to attract foreign investment vital to their long-term production plans. They also want to sell as much oil as possible in the short term to bolster their depleted budgets. By securing exemptions to any cuts, Iran and Iraq could duck this dilemma.

That would leave Saudi Arabia to shoulder the biggest burden of a collective decrease, OPEC’s first in eight years, and cost the kingdom market share as its two biggest OPEC competitors keep their output unchanged. The Saudis vetoed an earlier deal in April when Iran, a political as well as an economic rival, refused to join in cutting.

OPEC is working toward a six-month agreement, delegates said this week. Such a short time frame could make it easier for Iraq and Iran to accept limits, if not cuts, in their own production, Manaar’s Altaie said.

Setting output limits now may create benchmarks for more permanent production caps for individual OPEC members, according to Tushar Tarun Bansal, director at Singapore-based consultant Ivy Global Energy.

“Iraq is looking to the future,” Bansal said. “They are trying to agree to a higher level of production for any halt so that they will be in a better position down the road.”




Algeria's Sonatrach and Spain's Cepsa extend oil field contracts Source: Reuters

The Algerian state energy firm Sonatrach and Spain's Cepsa signed an agreement on Tuesday to extend partnership contracts for two oil fields in the North African country, Sonatrach said.

OPEC member Algeria has announced plans to boost oil and gas production after stagnation in recent years due to a lack of foreign investment. Under Tuesday's deal, contracts for the Rhourde El Krouf (RKF) and Ourhoud oil fields will be extended by 25 years and 10 years respectively, Sonatrach said in a statement carrie d by the state news agency APS.

The Sonatrach-Cepsa contract for Ourhoud was due to expire in 2019, the statement said. The agreement was signed by Sonatrach chief Amine Mazouzi and Cepsa CEO Pedro Miro Roig.

The two sides also signed a memorandum of understanding 'to explore opportunities in other areas where both companies have common interests in Algeria and internationally', the statement added.

Algeria says it expects gas output to reach 141.3 billion cubic metres (bcm) in 2017, 143.9 bcm in 2018, 150 bcm in 2019 and 165 bcm in 2020. Oil production targets are 75 million tonnes of oil equivalent in 2017 and 2018, 77 million tonnes in 2019 and 82 million tonnes in 2020.

In 2015, gas production stood at 128.3 bcm, while oil output reached 67 million tonnes.




New infrastructure aims to increase takeaway capacity of natural gas from Utica region.. Source: U.S. Energy Information Administration pipeline database

A number of pipeline projects that have been approved, or are in various stages of the approval process, would increase capacity to transport natural gas from the Utica production region in Ohio to natural gas markets. Collectively, these projects could add up to 6.8 billion cubic feet per day (Bcf/d) of takeaway capacity out of the Utica region by the end of 2018.

Over the past several years, natural gas production in the Appalachian basin from the Marcellus and Utica shales has grown significantly.

Because pipeline projects often have longer lead times than production projects, transport infrastructure for accessing natural gas demand centers and export locations in the Appalachian Basin has not kept pace with production capability. This situation has resulted in a lower price for natural gas from the Appalachian region relative to many other natural gas trading hubs in the United States.

Construction of a new interstate natural gas pipeline in the United States requires approval by the Federal Energy Regulatory Commission (FERC), which can be a lengthy process. Construction on a pipeline can begin once a final environmental impact statement is issued, pending that project receiving Clean Water Act, Coastal Zone Management Act, Clean Air Act, and other necessary state permits.

Key projects that are undergoing FERC review and may enter service in the next few years include:

The Rover pipeline, which recently received a final environmental impact statement from FERC, is designed to transport 3.25 Bcf/d of natural gas from the Marcellus and Utica Shale areas to various market hubs.




The Leach Xpress project, which received a draft environmental impact statement (DEIS) from FERC, seeks to add 1.5 Bcf/d of natural gas takeaway capacity along the Columbia Pipeline Group’s network.

The Rayne Xpress project, which received a DEIS, will augment the Leach Xpress project. The Rayne Xpress Project seeks to add 0.6 Bcf/d in takeaway capacity from the Columbia Pipeline system to Gulf Coast markets, which will help facilitate liquefied natural gas exports, among other uses.

The Nexus Gas Transmission project, which received a DEIS from FERC in July 2016, is designed to deliver 1.5 Bcf/d of natural gas supplies from the Utica region to markets in northern Ohio, southeastern

Michigan, the Chicago Hub in Illinois, and the Dawn Hub in Ontario, Canada.




Tesla powers a whole island with solar to show off its energy chops CNBC - James Vincent

Tesla completed its $2.6 billion acquisition of SolarCity this week, and, to celebrate, the company has announced a major solar energy project: wiring up the whole island of Ta'u in American Samoa. Previously, the island ran on diesel generators, but over the past year Tesla has installed a microgrid of solar energy panels and batteries that wil l supply "nearly 100 percent" of power needs for Ta'u's 600 residents.

The project seems intended to show off the potential benefits of the SolarCity acquisition, with Ta'u's microgrid comprised of 5,328 solar panels from SolarCity and Tesla, along with 60 Tesla Powerpacks batteries for storage. But buying SolarCity remains a risky move for Tesla, with the purchase including billions of dollars of debt for a company that's far from profitable (SolarCity spends $6 for every $1 it makes in sales). Nevertheless, Tesla CEO Elon Musk describes the acquisition as "blindingly obvious" — a necessary step in his so-called "Master Plan" to integrate clean energy generation and storage.

The project in Ta'u shows the benefit of this. It was funded by American Samoan and US authorities (including the Department of Interior), and Tesla says it will offset the island's use of more than 109,500 gallons of diesel per year, as well as the expense of shipping that fuel in. (Confusingly, the "Factoring in the escalating cost of fuel, along with transporting such mass quantities to the small island, the financial impact is substantial," said Tesla in a blog post.

The microgrid will allow the island to stay fully powered for three days without sunlight, and its capacity will recharge fully in seven hours. Local businesses, along with essential services like the hospital, police, and fire stations, will all use solar power "This project will help lessen the carbon footprint of the world," local resident Keith Ahsoon said in a Tesla blog post. "Living on an island, you experience global warming firsthand. Beach erosions and other noticeable changes are a part of life here. It's a serious problem, and this project will hopefully set a good example for everyone else to follow."




NewBase 23 November 2016 Khaled Al Awadi

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

Oil prices static on uncertainty over OPEC-led production cut Reuters + NewBase

Oil prices moved little early on Wednesday with traders reluctant to dive in as uncertainty loomed over a planned OPEC-led oil production cut, and volumes low ahead of the U.S. Thanksgiving holiday on Thursday.

U.S. West Texas Intermediate (WTI) crude oil futures were trading at $46.09 at 0100 GMT, up 6 cents from their last settlement. International Brent crude oil futures were at $49.22 a barrel, up 10 cents.

"The market seems unwilling to push oil towards $50 a barrel ahead of the Thanksgiving holiday tomorrow," said Jeffrey Halley, senior market analyst at OANDA brokerage in Singapore. "Their reticence is understandable given that longs (long positions) put on above that level have not ended well in recent times."

"Tonight's (U.S.) EIA Crude Inventory numbers should provide a welcome, albeit temporary sideshow to the OPEC main event. Otherwise, we expect Asia to continue the sideways trading ranges," Halley said.

The Energy Information Administration (EIA) is due to publish official U.S. crude oil and refined product inventory data later on Wednesday.Wednesday's lethargy came after oil prices rallied earlier this week.

Traders anticipated the Organization of the Petroleum Exporting Countries (OPEC) would successfully implement a planned, coordinated production cut - to be discussed at a Nov. 30 meeting - in order to prop up prices. However, by late Tuesday analysts had become wary of the prospects for such a deal, as it remained unclear whether major OPEC-producers Iraq and Iran were willing to participate in a meaningful way.

"Cracks in the OPEC production cut agreement could see oil prices weaker in trading today," ANZ bank said in a note on Wednesday.

"A preliminary meeting ahead of next week's OPEC gathering failed to resolve the issues around Iran and Iraq's involvement in the production cut agreement," it said. "Despite this hiccup, we still expect the group to reach an agreement next week."

Oil price special

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NewBase Special Coverage

News Agencies News Release 23 November 2016

OPEC's big three battle for oil market share until the bitter end CNBC - Tom DiChristopher | @tdichristopher

If oil prices are going to rebound, a few countries that have spent two years trying to edge each other out of crude markets will have to learn to cooperate.

Members of the Organization of the Petroleum Exporting Countries have suffered serious economic pain as oil prices have languished over the last two years. But OPEC's largest producers —Saudi Arabia, Iraq and Iran — as well as nonmember Russia — have all pumped their way through the rout, seeking to capture more business to offset the falling value of their lifeblood product.

Their prolific pumping has pushed OPEC's production to all-time highs ahead of a meeting next week, where Saudi Arabia will try to impose output limits on the group's member countries. The




record output has some analysts questioning whether OPEC can cut deeply enough to balance an oversupplied global market — especially given its members' poor history of sticking to quotas.

Many observers see OPEC's ability to deliver a serious deal as a referendum on the group's continuing relevance. That test comes at a time of profound change in the Middle East.

In Saudi Arabia, an ambitious young prince is spearheading the kingdom's efforts to diversify its economy by selling off a share of the state oil giant Saudi Aramco in order to create a $2 trillion investment fund. Many OPEC watchers believe that creates an incentive to boost oil prices so that Saudi Aramco's IPO looks more attractive.

Meanwhile, Iran is rebuilding its foreign oil trade after international powers lifted sanctions on Tehran in January, and Iraq is fighting to oust Islamic State militants from their Iraqi stronghold in Mosul. Keeping oil revenue flowing is central to those endeavors.

It's little surprise, then, that all three countries have been grabbing for more foreign business with both hands.




Iraq's October crude oil exports grew 15.1 percent from a year ago, while Saudi Arabia's jumped 6.8 percent. In the same period, tanker loadings from Iran have more than doubled, according to data from tanker-tracking firm ClipperData.

Tehran has made inroads in particular with India, which will be the largest driver of crude oil demand growth in the coming decades, according to the International Energy Agency. In October, Iran overtook Saudi Arabia as India's top supplier of crude oil.

"They're clawing some of that market share from others, but they're also helping to fill that gap of increasing demand," said Matt Smith, director of commodity research at ClipperData.

India purchased much of Iran's crude oil before the international community imposed sanctions on Tehran over its nuclear program. Iran is now winning back that business, in no small part because its crude is well-suited to India's refineries, according to John Kilduff, founding partner at investment management firm Again Capital.




Reading the data out of China is more difficult, because Beijing sources its massive crude imports from a wider array of oil-producing nations. But as erratic as the data are, they tell an important tale about the nature of the global crude markets today.

The first part of that story boils down to China's ability to dictate pricing. A country's crude exports may swing widely from month to month in part because China is able to shop around for the best price. ClipperData's figures for the last two years illustrate this:

Here, the big three OPEC players have to undercut not just one another, but Latin American and West African players, as well. In a price downturn where oil producers are scrambling for business, that works in China's favor.

"You think that prices dictate flows, but when it comes to China, it's such a large part of the market, it's the other way around. Their demand dictates prices," Smith said.

Historically, the Saudis primarily pursued long-term contracts, but they have recently been playing the spot market, selling from month to month to try to capture some of China's short-term demand, Kilduff said.




"They're getting sharper elbows," he said. "This price crash has really changed the landscape in so many ways."

Competition has only heated up since Russia pivoted to China and boosted trade ties with Beijing after the European Union and United States slapped the Kremlin with sanctions over its meddling in Ukraine and annexation of Crimea.

But while it's carving out more share in China, Russia's dominance in the shrinking European Union market for crude oil is being challenged by Iran. Tehran has quickly ramped up its exports to the EU, and Moscow must now also contend with Libyan oil after the war-wracked nation resumed exports from key ports this year.

OPEC's surprise shift to a hands-off approach in November 2014 — it previously cut output to boost prices — worsened the downturn and forced high-cost producers such as U.S. shale drillers to turn off the tap.

But in a sign that the group's strategy is coming full circle, Nigeria has made some room for fellow OPEC producers in Europe by increasing shipments of oil to the United States, where production fell along with oil prices after OPEC refused in 2014 to cut output.

"The lifting of the U.S. export ban meant that WTI [crude oil] came back in line with other global benchmarks. Combine this with falling production from Bakken [shale formation], and it became more economical for U.S. East Coast refiners to import Nigerian crude rather than domestic crude by rail economics," Smith said.

Tom DiChristopherWeb and TV producer




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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 November 2016 K. Al Awadi

new base energy news issue 954 dated 23 november 2016

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