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NewBase August 29 - 2017 - Issue No. 1066 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Dubai Enoc awards pipeline deal for refinery expansion
The National + NewBase
Dubai-based Overseas-AST will join the project's main contractor, Technip Italy, as well
as Rotary Engineering Fujairah, to complete the refinery expansion, which will increase
capacity by 50 per cent by end-2019. The value of the three contracts has not been
disclosed.
“The refinery’s expansion is part of the group’s five-year strategic plan to secure
uninterrupted energy supply in the UAE to the highest levels of efficiency and
reliability,” said Saif Al Falasi, the group chief executive of Enoc.
Overseas-AST will construct the various interconnecting pipelines between the
refinery’s processing units, storage tanks and berth facilities within Jebel Ali Free Zone.
Technip is in charge of the main design and construction of the refinery’s ancillary
units, while Rotary Engineering will construct 12 new storage tanks.
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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Mr Al Falasi added: “The final phase of the expansion also brings us a step closer to
meeting the growing demand for clean energy and petroleum products locally as
manufactured products will meet stringent Euro 5 standards.”
A new condensate processing train will be added to help to increase daily capacity to
210,000 barrels from its current 140,000 barrels per day. In addition, processing units
will help increase the products such as petrol, jet fuel and diesel to meet the rise in
local demand as well as for export.
“With primary energy consumption growing by 2.1 per cent in the region and the Middle
East making up 6.7 per cent of the share of global energy consumption in 2016, the
expansion of the Jebel Ali refinery plays a key role in the region’s downstream strategy
for exports and increasing domestic use,“ Mr Al Falasi said, quoting data from BP.
The UAE Government estimates that domestic energy demand is growing 9 per cent
per year, in line with the country's rising population. Mr Al Falasi said in April that
Dubai’s population alone was forecast to increase by nearly 32 per cent by 2021.
Enoc Group, the Dubai-based integrated oil and gas major, has awarded the final contract of three
packages for its $1-billion Jebel Ali refinery expansion programme to Overseas-AST.
The engineering, procurement and construction (EPC) contract includes the construction of
various interconnecting pipelines between the refinery’s processing units, the storage tanks and
the berth facilities within Jebel Ali Free Zone (Jafza), said a Wam news agency report.
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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The pipelines will carry jet fuel, isomerate, and light and heavy naphtha and run in a dedicated
corridor through Jafza. Part of the contract includes a non-destructive road crossing (NDRC),
which will enable non-disruption of road traffic and utilities supply through the free zone.
Saif Humaid Al Falasi, group CEO of
Enoc, said: "With primary energy
consumption growing by 2.1 percent in
the region, and the Middle East making
up 6.7 percent of the share of global
energy consumption in 2016, the
expansion of the Jebel Ali refinery plays a
key role in the region’s downstream
strategy for exports and increasing
domestic use.
"The refinery’s expansion is part of the group’s five-year strategic plan to secure uninterrupted
energy supply in the UAE to the highest levels of efficiency and reliability. The final phase of the
expansion also brings us a step closer to meeting the growing demand for clean energy and
petroleum products locally as manufactured products will meet stringent Euro 5 standards," added
Al Falasi.
Andrew Fanton, chief executive officer, Overseas-AST, said: "Overseas-AST is very pleased to be
chosen by the Enoc Group to be part of this expansion project. Founded in 1898, Overseas-AST
has established a strong track record in the successful delivery of near shore marine and civil
infrastructure and top side mechanical installations in the Oil and Gas, Petrochemical, Power,
Desalination, leisure and residential sectors in the UAE and neighbouring GCC countries. We
strive to provide our clients with innovative and cost-efficient solutions that guarantee certainty of
delivery and reliability. We look forward to working closely with the team at Enoc."
The refinery expansion project was announced in September 2016 with the main EPC contract for
design and construction of the refinery’s new ancillary units awarded to Technip Italy. The second
EPC package was awarded earlier this year to Rotary Engineering Fujairah FZE to construct 12
new storage tanks. The expected date for commercial production is the fourth quarter of 2019.
Once the expansion project is completed, the production capacity of the refinery will go up to
210,000 barrels per day from the current 140,000 bpd, enabling Enoc to meet the needs of the
market and the wider industry.
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,
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
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Oman:Salalah Methanol ( SMC ) secures $728m project finance
by A E JAMES/businesseditor@timesofoman.com
Salalah Methanol Company (SMC), a wholly-owned subsidiary of the Oman Oil Company (OOC),
said it has secured a 12-year $728 million project finance facility for funding an
ammonia project from a mix of 12 international, regional and local banks.
A portion of the facility will be used to refinance SMC’s existing debt, while the
remaining $443 million will be allocated for building an ammonia project,
according to the Oman Oil Company.
Loan facility
The loan facility was oversubscribed by around two-and-a-half times of the required amount. The
proposed ammonia project will have a capacity of 1,000 tonnes per day (tpa) of anhydrous liquid
ammonia. Construction of the proposed ammonia project is scheduled to start during the fourth
quarter of this year and is expected to be ready in 2020.
The ammonia plant will be utilising the methanol plant’s hydrogen rich by-product gas as
feedstock making it capable of producing ammonia with great energy saving.
By utilising purge gas from the methanol plant of SMC, the ammonia plant requires significantly
less capital expenditure spend when compared with a greenfield ammonia plant of similar
capacity, making it a highly competitive producer globally.
Land lease agreement
SMC has also signed sub-usufruct and easement agreements with the Salalah Free Zone,
allocating around 12 hectares for the project within the zone. Also, the right of way and port
facilities agreements were signed with the Port of Salalah, while another off-take agreement was
signed with Oman Trading International (OTI).
“This vital project is in
line with the economic
diversification (strategy)
of the Sultanate and part
of OOC’s growth
strategy, which aims to
contribute value
creation,” said Isam Al
Zadjali, chief executive
officer of Oman Oil
Company, while
addressing an event to
celebrate the completion
of financial closure here
on Monday.
“Setting up the ammonia
plant is an important
milestone for high-value petrochemical industries and key to opening up for new further
downstream industries and the creation of job opportunities,” added Al Zadjali.
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“The ammonia project and all the agreements being commemorated today are the result of a
wider plan to invest in the sustainable growth of the national downstream industries, and the
development of existing local assets. We continuously look for opportunities to expand our
industrial footprint, working with global partners to bring technical expertise and investment to help
diversify Oman’s economy and create meaningful employment,” noted Najla Al Jamali, acting
executive managing director of the Takamul Investment Company.
Financial institutions
The financial institutions that provided a loan to SMC are Export Development Canada, Bank
Muscat, BankDhofar, Standard Chartered Bank, Societe Generale, ING Bank, Ahli Bank Oman,
Europe Arab Bank, Bank Sohar, Qatar National Bank, Apicorp and National Bank of Kuwait.
“(The) Salalah ammonia project has been able to successfully secure limited recourse financing
amid challenging global financial and economic conditions. This reflects the trust that financial
institutions have placed in the project and the financing structure, which is demonstrated by the
fact that the lending group comprises local, regional, as well as international lenders,” said Awadh
Al Shanfari, managing director of SMC.
Pharmaceutical products
In fact, ammonia contributes significantly to the nutritional needs of terrestrial organisms by
serving as a precursor to food and fertilisers. Ammonia is also a building block for the synthesis of
many pharmaceutical products and is used in many commercial cleaning products. The ammonia
output from the company will target Southeast Asian markets, such as India, Vietnam, Thailand,
South Korea and Japan.
The project will also harness in-country value, with a strong focus on the development of local
resources and engage the local supply chain. This project will also pave the way for future
opportunities in Oman for the development of downstream industries, thus maximising their value
addition.
SMC is currently managed by Takamul Investment Company, which is a core vertical of Oman Oil
Company, investing in sustainable growth of the national downstream industries and driving the
management of existing local assets.
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,
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. Page 6
Libya's Oil Disruptions Widen as Two More Fields Halt Output
by Bloomberg|Hatem Mohareb & Salma El Wardany|Monday, August 28, 2017
Two more oil fields in Libya are being closed after an armed group took over pipelines to both
deposits, further disrupting the OPEC nation's plan to boost crude production.
(Bloomberg) -- Two more oil fields in Libya are being closed after an armed group took over
pipelines to both deposits, further disrupting the OPEC nation’s plan to boost crude production.
El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the
Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National
Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation
who asked not to be identified because the information isn’t public.
The Hamada oil field will gradually stop pumping through Monday because of the pipeline closing,
Arabian Gulf Oil Co. spokesman Omran al-Zwai said Sunday. Force majeure was also declared
on Hamada, he said. Force majeure is a legal clause protecting a party from liability if it can’t fulfill
a contract for reasons beyond its control. An armed group closed the pipelines to Hamada and El
Feel, according to a person familiar with the situation.
Libya revived its oil production and exports before the recent disruptions. In July, crude production
was at a four-year high and exports were the most in three years, according to data compiled by
Bloomberg. While the expansion has helped Libya’s oil-dependent economy, the Organization of
Petroleum Exporting Countries is trying to cut global supplies. That effort has been undermined by
recovering output at OPEC members Libya and Nigeria.
Libya’s biggest field, Sharara, has been shut for about a week after an armed group closed the
pipeline that linked the deposit to an export terminal, Al-Messmari said at the time. The field is still
not pumping, a person familiar with the matter said Sunday.
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Libya, which holds Africa’s largest crude reserves, pumped 1.02 million barrels a day in July. It
was producing 1.6 million barrels a day before a 2011 revolt set off years of fighting between rival
governments and militias.
El Feel is operated by a joint venture between Italy’s Eni SpA and Libya’s NOC. It has an output capacity of
90,000 barrels a day. Sharara, which has a production capacity of 330,000 barrels a day, is run by a joint
venture between Libya’s NOC and Repsol SA, Total SA, OMV AG and Statoil ASA.
Zawiya oil refinery operating at half capacity
Libya’s 120,000 barrels per day (bpd) Zawiya oil refinery, the largest operating plant in the
country, was working at only half its capacity due to the shutdown at the Sharara oilfield, a source
at the refinery told Reuters on Monday.
Zawiya, located to the west of the capital Tripoli, is fed crude from Sharara but the oilfield is shut
due to a pipeline blockade.
The refinery underwent a maintenance shutdown on one of its two 60,000 barrels per day crude
distillation towers that lasted from Aug. 10 to Aug. 25, the source said, declining to be named
because he was not authorized to speak to the media.
Sharara, which at 280,000 bpd is the OPEC member’s largest, has been shut down for around a
week due to militia blocking a pipeline linking it to the Zawiya oil terminal. A force majeure is in
place on Sharara crude oil exports from the port.
Libya’s 90,000 bpd El Feel field was also shut down over the weekend due to a pipeline blockade and the
National Oil Corp (NOC) has declared force majeure on Mellitah grade exports from the Mellitah oil
terminal. The shutdown of Sharara has also led NOC subsidiary Agoco to shut down the 10,000 bpd
Hamada oilfield, which shares export infrastructure with Sharara, a Libyan oil source told Reuters.
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,
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. Page 8
China:Sinopec Rides Chemicals to Best Half-Year Profit
Bloomberg - Aibing Guo
China Petroleum & Chemical Corp., the world’s biggest oil refiner, posted 40 percent growth in
first-half profit amid better earnings from its chemicals business as well as a narrower loss from
producing oil and gas and lower financing costs.
Net income rose to 27.9 billion yuan ($4.2 billion) in the six months ended June 30, the Beijing-
based company known as Sinopec said in a statement to the Shanghai stock exchange Sunday.
That compares with an expected 25.5 billion yuan based on the average of
three estimates compiled by Bloomberg and the highest semi-annual profit since the first half of
2014. Revenue climbed 33 percent to 1.17 trillion yuan.
Sinopec, which boosted oil processing in the first half, has benefited since the oil price crash
began in 2014 as cheaper crude improves margins for its refining and chemicals units. While oil
has lost about half its value in the past three years, prices averaged nearly $53 a barrel in the first
six months of 2017, almost 30 percent more than a year ago. That helped the state-backed giant
improve results from its aging, high-cost crude fields even as it increases its focus on natural gas
output to meet growing domestic demand.
“Higher crude prices lifted its production business while they cut into profit in the refining sector by
raising crude purchase cost,” said Tian Miao, a Beijing-based senior analyst at Sun Hung Kai
Financial Ltd. “Higher chemical product prices helped elevate Sinopec first-half performance,
separating the refiner from its state-owned peers.”
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Sinopec shares on Monday fell 1.4 percent to HK$5.78 as of 9:48 a.m. in Hong Kong, compared
with a 0.6 percent gain in the city’s benchmark Hang Seng Index.
Other details from the Shanghai statement Sunday include:
• The company issued an interim dividend of 0.1 yuan per share, compared with a
Bloomberg forecast of 0.11 yuan.
• Capital spending reached almost 16 billion yuan in the first six months. That’s well below
half of the 110.2 billion spending pledged for this year.
• Financing costs shrank almost 70 percent to 1.3 billion yuan.
• Operating profits from refining declined 9.8 percent to 29.4 billion yuan from the same
period a year ago, while chemicals rose about 26 percent to almost 12.2 billion yuan.
• Exploration and production narrowed its operating loss to 18.3 billion yuan, compared to a
21.9 billion yuan loss a year ago.
• E&P unit also took a writedown of nearly 3.5 billion yuan, partly because of high-cost oil
fields
• Operating profit for the marketing and distribution segment rose 5 percent to 16.6 billion as
the unit prepares for a long-awaited public listing that may raise up to $10 billion.
Rival state-owned peer PetroChina Co.’s first-half profit of 12.7 billion yuan exceeded analyst
estimates and the company said Thursday it would pay shareholders the entire sum. While seen
as a one-time payout, and small relative to international majors, the move raised expectations of
more investor rewards this year from China’s state-owned giants.
Chinese oil explorer Cnooc Ltd. said earnings swung to a profit of 16.3 billion yuan in the first half,
beating estimates. The company, a pure gas and crude producer, will pay an interim dividend of
HK$0.20 a share.
Sinopec’s oil and gas output rose to 221.4 million barrels of oil equivalent in the first half, the
company said last month. Natural gas output in that period outpaced the country’s overall 8
percent gain, surging 16.3 percent to 452.1 billion cubic feet. Crude production fell 5.3 percent to
146 million barrels, in line with a 5.1 percent nationwide drop. The company’s targets for the
second half of the year include:
• Crude oil output of 148 million barrels, with 125 million from China and 23 million overseas.
• Natural gas production of 427.5 billion cubic feet of natural gas.
• Refinery throughput of 118 million tons of crude.
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,
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
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US: Crude oil and natural gas production in Texas and
Oklahoma's Anadarko Region is growing …U.S EIA, Drilling Productivity Report
The Anadarko Region, which was recently added to EIA’s Drilling Productivity Report (DPR),
accounted for 437,000 barrels per day (b/d) of oil production and 4.9 billion cubic feet per day
(Bcf/d) of natural gas production in July 2017.
Production in the region has increased in 2017, and the region accounted for 13% of all new wells
drilled in the country in July 2017. With the inclusion of the Anadarko Region, the DPR now covers
about 87% of all active onshore rigs in the United States.
The Anadarko Region covers a large portion of western Oklahoma and the northeast corner of the
Texas panhandle. The region has recently seen an increase in activity, mainly from two areas
commonly known as the STACK (Sooner Trend Anadarko Canadian and Kingfisher) and the
SCOOP (South Central Oklahoma Oil Province) plays.
The new region was defined in the DPR by identifying the most prolific oil-producing counties in
the area. In 2010, the U.S. Geological Survey completed an assessment of the entire Anadarko
Basin and estimated mean technically recoverable undiscovered resources of 495 million barrels
of oil, 27.5 trillion cubic feet of natural gas, and 410 million barrels of natural gas liquids.
The new-well production per rig in the Anadarko Region as reported in the DPR was 372 barrels
per day (b/d) in July 2017, lower than in other oil-producing DPR regions. For example, production
per rig in the Permian and Bakken were 609 b/d and 1,166 b/d, respectively. However, EIA
expects productivity in the Anadarko Region to continue to increase in the near future
as operators complete more wells.
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Drilling activity in the region has been increasing over the past year, as the rig count in the DPR
region has increased from 84 in January to 129 in July. Anadarko's rate of increase is second only
to that in the Permian Region in 2017.
The maturity of the oil industry in the region and its proximity to the trading and distribution hub in
Cushing, Oklahoma, should allow producers to increase output using existing takeaway capacity.
The relatively low transportation costs from the wellhead to Cushing may provide higher profits,
allowing producers to continue operating in a relatively low-price environment. Trade press also
indicates that several planned and recently completed pipelines are expanding transportation
(takeaway) capacity in the region.
Source: U.S. Energy Information Administration, Drilling Productivity Report, and Thomson Reuters
According to EIA’s DPR, oil production increased in the Anadarko Region by 112,000 b/d from
July 2013 to July 2017, hitting a peak of 498,000 b/d in March of 2015. The Anadarko Region is
expected to contribute to U.S. production growth, given anticipated market conditions over the
next 16 months.
EIA forecasts production in the Anadarko Region to grow to 500,000 b/d by the end of 2018. The
West Texas Intermediate crude oil spot price is forecast to increase from $47 per barrel (b) to
$53/b over the same period.
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NewBase August 29 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil Price – U.S. Supply Will Rise 1.4M BPD Until Refinery
Production Resumes
ByJames Hyerczyk
U.S. West Texas Intermediate crude oil futures were hit hard by traders on Monday, falling nearly
3 percent, after Hurricane Harvey caused massive flooding along parts of the Texas Gulf Coast, a
major petroleum refining hub.
October West Texas Intermediate Crude Oil futures settled at $46.57, down $1.30 or -2.72% and
November Brent Crude Oil closed at $51.42, down $0.56 or -1.08%.
Daily October West Texas Intermediate Crude Oil
Oil price special
coverage
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Several refineries have shut down because of the dire conditions, while ports in the area were
closed to all incoming and outgoing traffic. The flooding is so widespread that government and
company oil company officials are saying that workers will not be able to access the facilities for
days. The U.S. Gulf Coast is home to nearly half of U.S. refining capacity.
Nearby gasoline prices spiked higher to their highest level since late July 2015, as the refinery
outages threatened to create a short-term supply shortage. At the same time, crude oil prices
plunged because of lower demand expectations. The storm is expected to continue to be bearish
for crude oil prices because refineries will not be able to operate at the high run rates seen in July
and August, reducing demand for crude.
Daily November Brent Crude
Forecast
Profit-taking and short-covering is helping to drive WTI prices slightly better early Tuesday. There
have been no major changes in the news. Officials are still waiting for the rain to stop and for the
flood waters to recede before they can assess the damage, if any, to the oil refinery infrastructure.
If there is no damage then the refineries can reopen, but workers are going to have to be able to
get there.
According to Reuters, Motiva will decide on Tuesday morning whether to shut the 603,000-barrel-
per-day (bpd) Port Arthur refinery, the nation’s largest because of high water in the plant.
Goldman Sachs said in a note to clients, “Data available so far point to sizably larger refining
production disruptions.”
At this time, the U.S. crude oil supply is expected to increase by about 1.4 million bpd until the
refineries are up and running. Given this information, gains are likely to be limited and losses
could be extended, depending on how long the refineries are shut down.
From a trading standpoint, crude will bounce back as soon as there is news about when refinery
production can resume. Right now, investors have priced in a few days of no refinery activity.
Prices will fall further if it takes weeks rather than days to get up and running.
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Crude Oil Price Forecast August 29, 2017, Technical Analysis
WTI Crude Oil
The WTI Crude Oil market broke down significantly on Monday as demand for crude oil will be
lower from refineries affected by the Harvey storm. Because of this, I think it’s only a matter of
time before sellers get back into the market on rallies, and I’m looking for rally that show signs of
exhaustion that I can sell.
I think that the longer-term outlook for crude oil is negative anyway, so given enough time we
should see this market looking towards the $45 level. Ultimately, I have no interest in buying, and
when we rally I just sit on the sidelines and wait for an opportunity to short yet again. The $50
level above could be targeted eventually, but it’s not until the refineries open that we will see that. I
think at the $50 level it should be an excellent selling opportunity.
Brent
Brent markets fell as well, after initially gapping higher. The $51.50 level has offered a bit of
support, but I think given enough time the sellers will return on signs of exhaustion. The $52.50
level above should be massively resistive, and as a result I think that looking for exhaustion
should be a nice opportunity to get short of this market yet again. If we break down below the
$51.25 level, the market is probably free to go down to the $50 level longer term. I expect
volatility, there will be a lot of headlines coming out of the Gulf of Mexico, but given enough time I
think the longer-term fundamentals will come into play. With this, I remain negative of this market,
but recognize that maybe short-term buying opportunities for those who are quick enough to pay
attention to the charts may present themselves.
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NewBase Special Coverage
News Agencies News Release August 29 – 2017
The New Thing in Chinese Oil? America
By Julian Lee
There's a new kid on the block, muscling in on crude sales to China. America is rapidly carving out
a niche for itself, stepping in to fill the gap left by falling supplies from OPEC countries.
As recently as last year U.S. crude-oil exports to China were puny. On average in 2016,
companies shipped just 10,000 barrels a day to China -- that's less than two supertankers during
the whole year.
The U.S. ranked 32nd in the list of Chinese import sources in 2016, according to data from the
Chinese customs authorities. That's below Mongolia and Sudan, and only just above war-torn
Yemen.
But all that has changed dramatically this year, with U.S. crude exports to China leapfrogging
sales from OPEC countries such as Libya and China's neighbors Vietnam, Kazakhstan and
Australia.
Rising Up the Ranks
Average exports in the last four months have pushed the U.S. up to 11th place among crude
exporters to China
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The upward march extended through the first seven months of 2017. Sales averaged 131,000
barrels a day in the period, but over the last four months the daily average figure exceeded
200,000 barrels. That is enough to move the U.S. up to 11th place in the ranking of crude oil
suppliers to China, putting it just behind OPEC heavy weights Venezuela, Kuwait and the U.A.E.
OPEC's bid to push up prices by restricting output, combined with China's apparently insatiable
thirst for imported oil, have certainly helped open up a market for American suppliers. So too have
low shipping costs and widening discounts for U.S. crude benchmark WTI against both North Sea
Brent, which is used as a pricing reference for West African grades, and the Oman/Dubai
average, used for pricing Middle Eastern exports to Asia.
Deeper Discounts
WTI's have become more attractive relative to other global benchmark crudes this year
Expect the U.S. ranking to gain further ground as producers look for outlets for rising volumes of
production, even while the U.S. itself remains a net importer of crude. That may be sweet music to
the ears of President Donald Trump, with rising oil sales helping to reduce the trade deficit with
China.
But it will not be so comfortable for OPEC countries, who have long seen China and other
emerging Asian countries as their core markets. Nor is it helping to drain global stockpiles. While
the volume in storage in the U.S. is coming down, the volume held in China is still rising.
Commercial stockpiles of crude and refined products in China have risen by 16.5 million barrels,
or 5 percent, since the beginning of the year. Strategic stockpiles, which are not reported, have
also almost certainly increased too. Not exactly the rebalancing OPEC is trying to achieve.
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,
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. Page 17
So Much for Rebalancing
China's commercial stockpiles of crude and products have both risen this year
With oil demand stagnating in the developed world, OPEC producers have turned to Asia, tying up
markets with investments in refining and storage capacity in the region. It is no coincidence that
initial output cuts by Saudi Arabia and other Persian Gulf OPEC countries back in January were
targeted at buyers in Europe and North America, while supplies to Asian customers were largely
unaffected.
Saudi Arabia has already ceded its position as China's biggest oil supplier to Russia, and this year
has also seen fellow OPEC member Angola move into second place.
And it'll be hard to regain that top spot: Russia looks set to consolidate its position as China's
biggest crude supplier once the second string of a pipeline connecting oil fields in East Siberia to
Chinese refineries comes into operation in January. That line will allow Russian producers to ship
another 300,000 barrels a day of Siberian crude directly to China.
U.S. oil flows to China remain vulnerable to any increase in freight costs or a narrowing of the
price differential to other global benchmarks. But while OPEC continues to restrict supply, neither
of those looks like a big risk.
This column does not necessarily reflect the opinion of NewBase and its owners.
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,
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. Page 18
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
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
khdmohd@hawkenergy.net
khdmohd@hotmail.com
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 August 2017 K. Al Awadi
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,
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. Page 19
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,
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. Page 20

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New base 29 august energy news issue 1066 by khaled al awadi-ilovepdf-compressed

  • 1. 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, 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. Page 1 NewBase August 29 - 2017 - Issue No. 1066 Senior Editor Eng. Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE UAE: Dubai Enoc awards pipeline deal for refinery expansion The National + NewBase Dubai-based Overseas-AST will join the project's main contractor, Technip Italy, as well as Rotary Engineering Fujairah, to complete the refinery expansion, which will increase capacity by 50 per cent by end-2019. The value of the three contracts has not been disclosed. “The refinery’s expansion is part of the group’s five-year strategic plan to secure uninterrupted energy supply in the UAE to the highest levels of efficiency and reliability,” said Saif Al Falasi, the group chief executive of Enoc. Overseas-AST will construct the various interconnecting pipelines between the refinery’s processing units, storage tanks and berth facilities within Jebel Ali Free Zone. Technip is in charge of the main design and construction of the refinery’s ancillary units, while Rotary Engineering will construct 12 new storage tanks.
  • 2. 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, 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. Page 2 Mr Al Falasi added: “The final phase of the expansion also brings us a step closer to meeting the growing demand for clean energy and petroleum products locally as manufactured products will meet stringent Euro 5 standards.” A new condensate processing train will be added to help to increase daily capacity to 210,000 barrels from its current 140,000 barrels per day. In addition, processing units will help increase the products such as petrol, jet fuel and diesel to meet the rise in local demand as well as for export. “With primary energy consumption growing by 2.1 per cent in the region and the Middle East making up 6.7 per cent of the share of global energy consumption in 2016, the expansion of the Jebel Ali refinery plays a key role in the region’s downstream strategy for exports and increasing domestic use,“ Mr Al Falasi said, quoting data from BP. The UAE Government estimates that domestic energy demand is growing 9 per cent per year, in line with the country's rising population. Mr Al Falasi said in April that Dubai’s population alone was forecast to increase by nearly 32 per cent by 2021. Enoc Group, the Dubai-based integrated oil and gas major, has awarded the final contract of three packages for its $1-billion Jebel Ali refinery expansion programme to Overseas-AST. The engineering, procurement and construction (EPC) contract includes the construction of various interconnecting pipelines between the refinery’s processing units, the storage tanks and the berth facilities within Jebel Ali Free Zone (Jafza), said a Wam news agency report.
  • 3. 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, 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. Page 3 The pipelines will carry jet fuel, isomerate, and light and heavy naphtha and run in a dedicated corridor through Jafza. Part of the contract includes a non-destructive road crossing (NDRC), which will enable non-disruption of road traffic and utilities supply through the free zone. Saif Humaid Al Falasi, group CEO of Enoc, said: "With primary energy consumption growing by 2.1 percent in the region, and the Middle East making up 6.7 percent of the share of global energy consumption in 2016, the expansion of the Jebel Ali refinery plays a key role in the region’s downstream strategy for exports and increasing domestic use. "The refinery’s expansion is part of the group’s five-year strategic plan to secure uninterrupted energy supply in the UAE to the highest levels of efficiency and reliability. The final phase of the expansion also brings us a step closer to meeting the growing demand for clean energy and petroleum products locally as manufactured products will meet stringent Euro 5 standards," added Al Falasi. Andrew Fanton, chief executive officer, Overseas-AST, said: "Overseas-AST is very pleased to be chosen by the Enoc Group to be part of this expansion project. Founded in 1898, Overseas-AST has established a strong track record in the successful delivery of near shore marine and civil infrastructure and top side mechanical installations in the Oil and Gas, Petrochemical, Power, Desalination, leisure and residential sectors in the UAE and neighbouring GCC countries. We strive to provide our clients with innovative and cost-efficient solutions that guarantee certainty of delivery and reliability. We look forward to working closely with the team at Enoc." The refinery expansion project was announced in September 2016 with the main EPC contract for design and construction of the refinery’s new ancillary units awarded to Technip Italy. The second EPC package was awarded earlier this year to Rotary Engineering Fujairah FZE to construct 12 new storage tanks. The expected date for commercial production is the fourth quarter of 2019. Once the expansion project is completed, the production capacity of the refinery will go up to 210,000 barrels per day from the current 140,000 bpd, enabling Enoc to meet the needs of the market and the wider industry.
  • 4. 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, 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. Page 4 Oman:Salalah Methanol ( SMC ) secures $728m project finance by A E JAMES/businesseditor@timesofoman.com Salalah Methanol Company (SMC), a wholly-owned subsidiary of the Oman Oil Company (OOC), said it has secured a 12-year $728 million project finance facility for funding an ammonia project from a mix of 12 international, regional and local banks. A portion of the facility will be used to refinance SMC’s existing debt, while the remaining $443 million will be allocated for building an ammonia project, according to the Oman Oil Company. Loan facility The loan facility was oversubscribed by around two-and-a-half times of the required amount. The proposed ammonia project will have a capacity of 1,000 tonnes per day (tpa) of anhydrous liquid ammonia. Construction of the proposed ammonia project is scheduled to start during the fourth quarter of this year and is expected to be ready in 2020. The ammonia plant will be utilising the methanol plant’s hydrogen rich by-product gas as feedstock making it capable of producing ammonia with great energy saving. By utilising purge gas from the methanol plant of SMC, the ammonia plant requires significantly less capital expenditure spend when compared with a greenfield ammonia plant of similar capacity, making it a highly competitive producer globally. Land lease agreement SMC has also signed sub-usufruct and easement agreements with the Salalah Free Zone, allocating around 12 hectares for the project within the zone. Also, the right of way and port facilities agreements were signed with the Port of Salalah, while another off-take agreement was signed with Oman Trading International (OTI). “This vital project is in line with the economic diversification (strategy) of the Sultanate and part of OOC’s growth strategy, which aims to contribute value creation,” said Isam Al Zadjali, chief executive officer of Oman Oil Company, while addressing an event to celebrate the completion of financial closure here on Monday. “Setting up the ammonia plant is an important milestone for high-value petrochemical industries and key to opening up for new further downstream industries and the creation of job opportunities,” added Al Zadjali.
  • 5. 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, 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. Page 5 “The ammonia project and all the agreements being commemorated today are the result of a wider plan to invest in the sustainable growth of the national downstream industries, and the development of existing local assets. We continuously look for opportunities to expand our industrial footprint, working with global partners to bring technical expertise and investment to help diversify Oman’s economy and create meaningful employment,” noted Najla Al Jamali, acting executive managing director of the Takamul Investment Company. Financial institutions The financial institutions that provided a loan to SMC are Export Development Canada, Bank Muscat, BankDhofar, Standard Chartered Bank, Societe Generale, ING Bank, Ahli Bank Oman, Europe Arab Bank, Bank Sohar, Qatar National Bank, Apicorp and National Bank of Kuwait. “(The) Salalah ammonia project has been able to successfully secure limited recourse financing amid challenging global financial and economic conditions. This reflects the trust that financial institutions have placed in the project and the financing structure, which is demonstrated by the fact that the lending group comprises local, regional, as well as international lenders,” said Awadh Al Shanfari, managing director of SMC. Pharmaceutical products In fact, ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to food and fertilisers. Ammonia is also a building block for the synthesis of many pharmaceutical products and is used in many commercial cleaning products. The ammonia output from the company will target Southeast Asian markets, such as India, Vietnam, Thailand, South Korea and Japan. The project will also harness in-country value, with a strong focus on the development of local resources and engage the local supply chain. This project will also pave the way for future opportunities in Oman for the development of downstream industries, thus maximising their value addition. SMC is currently managed by Takamul Investment Company, which is a core vertical of Oman Oil Company, investing in sustainable growth of the national downstream industries and driving the management of existing local assets.
  • 6. 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, 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. Page 6 Libya's Oil Disruptions Widen as Two More Fields Halt Output by Bloomberg|Hatem Mohareb & Salma El Wardany|Monday, August 28, 2017 Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation's plan to boost crude production. (Bloomberg) -- Two more oil fields in Libya are being closed after an armed group took over pipelines to both deposits, further disrupting the OPEC nation’s plan to boost crude production. El Feel, or Elephant, stopped production, Wessam Al-Messmari, an office manager for the Petroleum Facilities Guard that is protecting the field, said Sunday by phone. State-run National Oil Corp. declared force majeure at the deposit, according to a person familiar with the situation who asked not to be identified because the information isn’t public. The Hamada oil field will gradually stop pumping through Monday because of the pipeline closing, Arabian Gulf Oil Co. spokesman Omran al-Zwai said Sunday. Force majeure was also declared on Hamada, he said. Force majeure is a legal clause protecting a party from liability if it can’t fulfill a contract for reasons beyond its control. An armed group closed the pipelines to Hamada and El Feel, according to a person familiar with the situation. Libya revived its oil production and exports before the recent disruptions. In July, crude production was at a four-year high and exports were the most in three years, according to data compiled by Bloomberg. While the expansion has helped Libya’s oil-dependent economy, the Organization of Petroleum Exporting Countries is trying to cut global supplies. That effort has been undermined by recovering output at OPEC members Libya and Nigeria. Libya’s biggest field, Sharara, has been shut for about a week after an armed group closed the pipeline that linked the deposit to an export terminal, Al-Messmari said at the time. The field is still not pumping, a person familiar with the matter said Sunday.
  • 7. 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, 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. Page 7 Libya, which holds Africa’s largest crude reserves, pumped 1.02 million barrels a day in July. It was producing 1.6 million barrels a day before a 2011 revolt set off years of fighting between rival governments and militias. El Feel is operated by a joint venture between Italy’s Eni SpA and Libya’s NOC. It has an output capacity of 90,000 barrels a day. Sharara, which has a production capacity of 330,000 barrels a day, is run by a joint venture between Libya’s NOC and Repsol SA, Total SA, OMV AG and Statoil ASA. Zawiya oil refinery operating at half capacity Libya’s 120,000 barrels per day (bpd) Zawiya oil refinery, the largest operating plant in the country, was working at only half its capacity due to the shutdown at the Sharara oilfield, a source at the refinery told Reuters on Monday. Zawiya, located to the west of the capital Tripoli, is fed crude from Sharara but the oilfield is shut due to a pipeline blockade. The refinery underwent a maintenance shutdown on one of its two 60,000 barrels per day crude distillation towers that lasted from Aug. 10 to Aug. 25, the source said, declining to be named because he was not authorized to speak to the media. Sharara, which at 280,000 bpd is the OPEC member’s largest, has been shut down for around a week due to militia blocking a pipeline linking it to the Zawiya oil terminal. A force majeure is in place on Sharara crude oil exports from the port. Libya’s 90,000 bpd El Feel field was also shut down over the weekend due to a pipeline blockade and the National Oil Corp (NOC) has declared force majeure on Mellitah grade exports from the Mellitah oil terminal. The shutdown of Sharara has also led NOC subsidiary Agoco to shut down the 10,000 bpd Hamada oilfield, which shares export infrastructure with Sharara, a Libyan oil source told Reuters.
  • 8. 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, 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. Page 8 China:Sinopec Rides Chemicals to Best Half-Year Profit Bloomberg - Aibing Guo China Petroleum & Chemical Corp., the world’s biggest oil refiner, posted 40 percent growth in first-half profit amid better earnings from its chemicals business as well as a narrower loss from producing oil and gas and lower financing costs. Net income rose to 27.9 billion yuan ($4.2 billion) in the six months ended June 30, the Beijing- based company known as Sinopec said in a statement to the Shanghai stock exchange Sunday. That compares with an expected 25.5 billion yuan based on the average of three estimates compiled by Bloomberg and the highest semi-annual profit since the first half of 2014. Revenue climbed 33 percent to 1.17 trillion yuan. Sinopec, which boosted oil processing in the first half, has benefited since the oil price crash began in 2014 as cheaper crude improves margins for its refining and chemicals units. While oil has lost about half its value in the past three years, prices averaged nearly $53 a barrel in the first six months of 2017, almost 30 percent more than a year ago. That helped the state-backed giant improve results from its aging, high-cost crude fields even as it increases its focus on natural gas output to meet growing domestic demand. “Higher crude prices lifted its production business while they cut into profit in the refining sector by raising crude purchase cost,” said Tian Miao, a Beijing-based senior analyst at Sun Hung Kai Financial Ltd. “Higher chemical product prices helped elevate Sinopec first-half performance, separating the refiner from its state-owned peers.”
  • 9. 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, 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. Page 9 Sinopec shares on Monday fell 1.4 percent to HK$5.78 as of 9:48 a.m. in Hong Kong, compared with a 0.6 percent gain in the city’s benchmark Hang Seng Index. Other details from the Shanghai statement Sunday include: • The company issued an interim dividend of 0.1 yuan per share, compared with a Bloomberg forecast of 0.11 yuan. • Capital spending reached almost 16 billion yuan in the first six months. That’s well below half of the 110.2 billion spending pledged for this year. • Financing costs shrank almost 70 percent to 1.3 billion yuan. • Operating profits from refining declined 9.8 percent to 29.4 billion yuan from the same period a year ago, while chemicals rose about 26 percent to almost 12.2 billion yuan. • Exploration and production narrowed its operating loss to 18.3 billion yuan, compared to a 21.9 billion yuan loss a year ago. • E&P unit also took a writedown of nearly 3.5 billion yuan, partly because of high-cost oil fields • Operating profit for the marketing and distribution segment rose 5 percent to 16.6 billion as the unit prepares for a long-awaited public listing that may raise up to $10 billion. Rival state-owned peer PetroChina Co.’s first-half profit of 12.7 billion yuan exceeded analyst estimates and the company said Thursday it would pay shareholders the entire sum. While seen as a one-time payout, and small relative to international majors, the move raised expectations of more investor rewards this year from China’s state-owned giants. Chinese oil explorer Cnooc Ltd. said earnings swung to a profit of 16.3 billion yuan in the first half, beating estimates. The company, a pure gas and crude producer, will pay an interim dividend of HK$0.20 a share. Sinopec’s oil and gas output rose to 221.4 million barrels of oil equivalent in the first half, the company said last month. Natural gas output in that period outpaced the country’s overall 8 percent gain, surging 16.3 percent to 452.1 billion cubic feet. Crude production fell 5.3 percent to 146 million barrels, in line with a 5.1 percent nationwide drop. The company’s targets for the second half of the year include: • Crude oil output of 148 million barrels, with 125 million from China and 23 million overseas. • Natural gas production of 427.5 billion cubic feet of natural gas. • Refinery throughput of 118 million tons of crude.
  • 10. 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, 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. Page 10 US: Crude oil and natural gas production in Texas and Oklahoma's Anadarko Region is growing …U.S EIA, Drilling Productivity Report The Anadarko Region, which was recently added to EIA’s Drilling Productivity Report (DPR), accounted for 437,000 barrels per day (b/d) of oil production and 4.9 billion cubic feet per day (Bcf/d) of natural gas production in July 2017. Production in the region has increased in 2017, and the region accounted for 13% of all new wells drilled in the country in July 2017. With the inclusion of the Anadarko Region, the DPR now covers about 87% of all active onshore rigs in the United States. The Anadarko Region covers a large portion of western Oklahoma and the northeast corner of the Texas panhandle. The region has recently seen an increase in activity, mainly from two areas commonly known as the STACK (Sooner Trend Anadarko Canadian and Kingfisher) and the SCOOP (South Central Oklahoma Oil Province) plays. The new region was defined in the DPR by identifying the most prolific oil-producing counties in the area. In 2010, the U.S. Geological Survey completed an assessment of the entire Anadarko Basin and estimated mean technically recoverable undiscovered resources of 495 million barrels of oil, 27.5 trillion cubic feet of natural gas, and 410 million barrels of natural gas liquids. The new-well production per rig in the Anadarko Region as reported in the DPR was 372 barrels per day (b/d) in July 2017, lower than in other oil-producing DPR regions. For example, production per rig in the Permian and Bakken were 609 b/d and 1,166 b/d, respectively. However, EIA expects productivity in the Anadarko Region to continue to increase in the near future as operators complete more wells.
  • 11. 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, 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. Page 11 Drilling activity in the region has been increasing over the past year, as the rig count in the DPR region has increased from 84 in January to 129 in July. Anadarko's rate of increase is second only to that in the Permian Region in 2017. The maturity of the oil industry in the region and its proximity to the trading and distribution hub in Cushing, Oklahoma, should allow producers to increase output using existing takeaway capacity. The relatively low transportation costs from the wellhead to Cushing may provide higher profits, allowing producers to continue operating in a relatively low-price environment. Trade press also indicates that several planned and recently completed pipelines are expanding transportation (takeaway) capacity in the region. Source: U.S. Energy Information Administration, Drilling Productivity Report, and Thomson Reuters According to EIA’s DPR, oil production increased in the Anadarko Region by 112,000 b/d from July 2013 to July 2017, hitting a peak of 498,000 b/d in March of 2015. The Anadarko Region is expected to contribute to U.S. production growth, given anticipated market conditions over the next 16 months. EIA forecasts production in the Anadarko Region to grow to 500,000 b/d by the end of 2018. The West Texas Intermediate crude oil spot price is forecast to increase from $47 per barrel (b) to $53/b over the same period.
  • 12. 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, 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. Page 12 NewBase August 29 - 2017 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil Price – U.S. Supply Will Rise 1.4M BPD Until Refinery Production Resumes ByJames Hyerczyk U.S. West Texas Intermediate crude oil futures were hit hard by traders on Monday, falling nearly 3 percent, after Hurricane Harvey caused massive flooding along parts of the Texas Gulf Coast, a major petroleum refining hub. October West Texas Intermediate Crude Oil futures settled at $46.57, down $1.30 or -2.72% and November Brent Crude Oil closed at $51.42, down $0.56 or -1.08%. Daily October West Texas Intermediate Crude Oil Oil price special coverage
  • 13. 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, 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. Page 13 Several refineries have shut down because of the dire conditions, while ports in the area were closed to all incoming and outgoing traffic. The flooding is so widespread that government and company oil company officials are saying that workers will not be able to access the facilities for days. The U.S. Gulf Coast is home to nearly half of U.S. refining capacity. Nearby gasoline prices spiked higher to their highest level since late July 2015, as the refinery outages threatened to create a short-term supply shortage. At the same time, crude oil prices plunged because of lower demand expectations. The storm is expected to continue to be bearish for crude oil prices because refineries will not be able to operate at the high run rates seen in July and August, reducing demand for crude. Daily November Brent Crude Forecast Profit-taking and short-covering is helping to drive WTI prices slightly better early Tuesday. There have been no major changes in the news. Officials are still waiting for the rain to stop and for the flood waters to recede before they can assess the damage, if any, to the oil refinery infrastructure. If there is no damage then the refineries can reopen, but workers are going to have to be able to get there. According to Reuters, Motiva will decide on Tuesday morning whether to shut the 603,000-barrel- per-day (bpd) Port Arthur refinery, the nation’s largest because of high water in the plant. Goldman Sachs said in a note to clients, “Data available so far point to sizably larger refining production disruptions.” At this time, the U.S. crude oil supply is expected to increase by about 1.4 million bpd until the refineries are up and running. Given this information, gains are likely to be limited and losses could be extended, depending on how long the refineries are shut down. From a trading standpoint, crude will bounce back as soon as there is news about when refinery production can resume. Right now, investors have priced in a few days of no refinery activity. Prices will fall further if it takes weeks rather than days to get up and running.
  • 14. 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, 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. Page 14 Crude Oil Price Forecast August 29, 2017, Technical Analysis WTI Crude Oil The WTI Crude Oil market broke down significantly on Monday as demand for crude oil will be lower from refineries affected by the Harvey storm. Because of this, I think it’s only a matter of time before sellers get back into the market on rallies, and I’m looking for rally that show signs of exhaustion that I can sell. I think that the longer-term outlook for crude oil is negative anyway, so given enough time we should see this market looking towards the $45 level. Ultimately, I have no interest in buying, and when we rally I just sit on the sidelines and wait for an opportunity to short yet again. The $50 level above could be targeted eventually, but it’s not until the refineries open that we will see that. I think at the $50 level it should be an excellent selling opportunity. Brent Brent markets fell as well, after initially gapping higher. The $51.50 level has offered a bit of support, but I think given enough time the sellers will return on signs of exhaustion. The $52.50 level above should be massively resistive, and as a result I think that looking for exhaustion should be a nice opportunity to get short of this market yet again. If we break down below the $51.25 level, the market is probably free to go down to the $50 level longer term. I expect volatility, there will be a lot of headlines coming out of the Gulf of Mexico, but given enough time I think the longer-term fundamentals will come into play. With this, I remain negative of this market, but recognize that maybe short-term buying opportunities for those who are quick enough to pay attention to the charts may present themselves.
  • 15. 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, 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. Page 15 NewBase Special Coverage News Agencies News Release August 29 – 2017 The New Thing in Chinese Oil? America By Julian Lee There's a new kid on the block, muscling in on crude sales to China. America is rapidly carving out a niche for itself, stepping in to fill the gap left by falling supplies from OPEC countries. As recently as last year U.S. crude-oil exports to China were puny. On average in 2016, companies shipped just 10,000 barrels a day to China -- that's less than two supertankers during the whole year. The U.S. ranked 32nd in the list of Chinese import sources in 2016, according to data from the Chinese customs authorities. That's below Mongolia and Sudan, and only just above war-torn Yemen. But all that has changed dramatically this year, with U.S. crude exports to China leapfrogging sales from OPEC countries such as Libya and China's neighbors Vietnam, Kazakhstan and Australia. Rising Up the Ranks Average exports in the last four months have pushed the U.S. up to 11th place among crude exporters to China
  • 16. 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, 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. Page 16 The upward march extended through the first seven months of 2017. Sales averaged 131,000 barrels a day in the period, but over the last four months the daily average figure exceeded 200,000 barrels. That is enough to move the U.S. up to 11th place in the ranking of crude oil suppliers to China, putting it just behind OPEC heavy weights Venezuela, Kuwait and the U.A.E. OPEC's bid to push up prices by restricting output, combined with China's apparently insatiable thirst for imported oil, have certainly helped open up a market for American suppliers. So too have low shipping costs and widening discounts for U.S. crude benchmark WTI against both North Sea Brent, which is used as a pricing reference for West African grades, and the Oman/Dubai average, used for pricing Middle Eastern exports to Asia. Deeper Discounts WTI's have become more attractive relative to other global benchmark crudes this year Expect the U.S. ranking to gain further ground as producers look for outlets for rising volumes of production, even while the U.S. itself remains a net importer of crude. That may be sweet music to the ears of President Donald Trump, with rising oil sales helping to reduce the trade deficit with China. But it will not be so comfortable for OPEC countries, who have long seen China and other emerging Asian countries as their core markets. Nor is it helping to drain global stockpiles. While the volume in storage in the U.S. is coming down, the volume held in China is still rising. Commercial stockpiles of crude and refined products in China have risen by 16.5 million barrels, or 5 percent, since the beginning of the year. Strategic stockpiles, which are not reported, have also almost certainly increased too. Not exactly the rebalancing OPEC is trying to achieve.
  • 17. 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, 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. Page 17 So Much for Rebalancing China's commercial stockpiles of crude and products have both risen this year With oil demand stagnating in the developed world, OPEC producers have turned to Asia, tying up markets with investments in refining and storage capacity in the region. It is no coincidence that initial output cuts by Saudi Arabia and other Persian Gulf OPEC countries back in January were targeted at buyers in Europe and North America, while supplies to Asian customers were largely unaffected. Saudi Arabia has already ceded its position as China's biggest oil supplier to Russia, and this year has also seen fellow OPEC member Angola move into second place. And it'll be hard to regain that top spot: Russia looks set to consolidate its position as China's biggest crude supplier once the second string of a pipeline connecting oil fields in East Siberia to Chinese refineries comes into operation in January. That line will allow Russian producers to ship another 300,000 barrels a day of Siberian crude directly to China. U.S. oil flows to China remain vulnerable to any increase in freight costs or a narrowing of the price differential to other global benchmarks. But while OPEC continues to restrict supply, neither of those looks like a big risk. This column does not necessarily reflect the opinion of NewBase and its owners.
  • 18. 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, 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. Page 18 NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE Your partner in Energy Services NewBase energy news is produced daily (Sunday to Thursday) and sponsored by Hawk Energy Service – Dubai, UAE. For additional free subscription emails please contact Hawk Energy 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 khdmohd@hawkenergy.net khdmohd@hotmail.com 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 August 2017 K. Al Awadi
  • 19. 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, 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. Page 19
  • 20. 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, 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. Page 20