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NewBase 22 October 2015 - Issue No. 712 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
OPEC Is About to Crush the U.S. Oil Boom
Bloomberg - Grant Smith
After a year suffering the economic consequences of the oil price slump, OPEC is finally on the
cusp of choking off growth in U.S. crude output.
The nation’s production is almost back down to the level pumped in November, when the
Organization of Petroleum Exporting Countries switched its strategy to focus on battering
competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in
2015, ending two years of retreat, the International Energy Agency estimates.
While cratering prices and historic cutbacks in drilling have taken their toll on the U.S., OPEC
members have also paid a heavy price. A year of plunging government revenues, growing budget
deficits and slumping currencies has left several members grappling with severe economic
problems. The fact that the U.S. oil boom kept going for about six months after the group’s
November decision also means OPEC has so far succeeded only in bringing the market back to
where it started.
“It’s taken a hell of a long time and it will continue to take a long time -- U.S. oil production has
been more resilient than people thought,” said Mike Wittner, head of oil markets research at
Societe Generale SA in London. “The bottom line is the re-balancing has begun.”

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OPEC abandoned its traditional role of paring production to prevent oversupply last November as
a tide of new oil from the U.S. eroded its share of world markets. The group chose instead to keep
pumping, allowing the subsequent price slump to squeeze competitors with higher costs. Its
representatives will meet in Vienna Wednesday with non-member countries including Russia for
technical talks.
Shrinking Shale
The plan appears to be working. Oil remains 33 percent lower than when OPEC revealed its
strategy on Nov. 27, trading for $48.42 a barrel at 8:05 a.m. in London Wednesday. U.S. crude
production has retreated about 500,000 barrels a day from the three-decade peak reached in
June to 9.1 million a day in the week to Oct. 9, according to data from the Energy Information
Administration.
The losses will accelerate next year with a drop of 390,000 barrels a day in annual average
production to 8.86 million barrels a day, according to the EIA. OPEC’s fortunes will improve as the
U.S. declines, with the IEA predicting demand for the group’s crude climbing to 31.1 million barrels
a day next year from 29.3 million in 2014.
“Their strategy is still working for them,” said Miswin Mahesh, an analyst at Barclays Plc in
London. “It means pain now, but in the medium-to-long term they will reap the fruits of a more
balanced market, moderated shale supplies, growing demand for oil and ultimately a higher price.”
Fragile Economies
The pain has been considerable. The average price of a selection of OPEC’s crudes has been
about 46 percent lower this year than in 2014, equivalent to a loss of export earnings of roughly
$370 billion.
Saudi Arabia, the main architect of OPEC’s new strategy, will have a budget deficit of 20 percent
of gross domestic product this year, the International Monetary Fund estimates. While the
kingdom has been able to tap foreign currency reserves and curb spending to cope with the

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slump, financial assets may run out within five years if the government maintains current policies
and prices stay low, the IMF said Wednesday.
Less wealthy OPEC members have even fewer options. The threat of political unrest is mounting
in the “Fragile Five” of Algeria, Iraq, Libya, Nigeria and Venezuela, according to RBC Capital
Markets LLC.
Game Plan
Venezuela, whose currency has lost 87 percent of its value on the black market in the past year, is
urging fellow OPEC members to reverse course and curb production to support prices. Eulogio
Del Pino, the nation’s oil minister, will propose the reintroduction of a targeted price range -- a
policy the group abandoned in 2005 -- at the meeting in Vienna Wednesday.
Iran agrees that OPEC ought to reduce output to engineer a price recovery to $70, but it’s doubtful
the group will enact any measures to do this, the nation’s Oil Minister Bijan Namdar Zanganeh
said Oct. 19. The Persian Gulf nation is planning to boost its own output by 1 million barrels a day
next year if international sanctions are lifted.
Faltering U.S. supplies show the Saudi-led strategy is paying off, said Societe Generale’s Wittner.
“If there are folks in the oil market who expect this is going to end with a new game plan, they’re
going to be very disappointed,” he said.

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Qatar: Siemens to supply Turbines to Umm Al Houl Power Plant
Gulf Times + NewBase
The Siemens company logo is seen on a factory building in Berlin. Siemens’ end-customer in
Qatar is Umm Al Houl, a consortium comprising the Qatar Foundation (QF), Qatar Petroleum
(QP), Qatar Water and Electricity Company (QWEC), Mitsubishi Corporation (MC) and Tokyo
Electric Power Company (Tepco).
Siemens has received an order to supply six gas turbines, four steam turbines and 10 generators
for a new combined-cycle power generating facility in Qatar with an integrated seawater
desalination facility.
Siemens’ customer is Samsung C&T, which is building the entire complex together with its
consortium partner Hitachi Zosen. The end-customer is the project company Umm Al Houl, a
consortium comprising the Qatar Foundation (QF), Qatar Petroleum (QP), Qatar Water and
Electricity Company (QWEC), Mitsubishi Corporation (MC) and Tokyo Electric Power Company
(Tepco).
With a total electrical output of 2.5 gigawatts, and up to 136mn imperial gallons (618mn litres) of
drinking water per day, the plant will deliver almost one quarter of the nation’s installed power
generating capacity.

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It will ensure adequate power and water supply to accommodate seasonal fluctuations and major
events. The commissioning of the first phase is scheduled for 2017, with commissioning of the
entire complex scheduled for mid-2018.
The new power plant
is to be located in the
Umm al Houl
Economic Zone in the
south of the country
between Al Wakrah
and the industrial city
of Mesaieed. The
plant will consist of
two power blocks,
each in a 3+2
configuration — each
block to consist of
three gas turbines
which will be used to
generate the steam to
drive two downstream
steam turbines. Siemens’ scope of supply includes six SGT5-4000F gas turbines, four SST5-4000
steam turbines and ten SGen5-1200A-series generators as well as technical support for the
project’s field erection and commissioning phases.
“This order is yet another indicator of the strong confidence that Middle Eastern countries have in
Siemens’ technology,” notes Theo Maas, CEO of the Gas Turbines and Generators Business Unit
of Siemens’ Power and Gas Division.
“Thanks to our close collaboration with Samsung C&T right from the very start, this order also
reinforces our excellent partnership with our partner and the customer.”
Siemens has now received two major orders from Qatar in a short span of time. Besides the major
order for power plant components, Siemens has also signed a long-term service contract with the
gas company Dolphin Energy, head-quartered in Abu Dhabi.
Siemens will provide service and maintenance for nine aero-derivative gas turbines from former
Rolls-Royce Energy and the associated nine Dresser-Rand compressors over the contract period
of eighteen years.
Siemens has been partnering with Qatar to power its ambitious growth aspirations across various
sectors in the past years. Siemens and Doosan Heavy Industries & Construction Company formed
a consortium, which in 2009 completed the combined-cycle power plant unit Ras Laffan B, which
generates close to 1,000 megawatts.
This was followed by an order in 2012 for turnkey supply of a streetcar system as well as
intelligent solutions for power distribution. Siemens then received an order from Qatar in 2013 for
a sewage treatment system.
In August the company was awarded a major order by the state-run Qatar General Water &
Electricity Corporation (Kahramaa) for turnkey supply of some 18 electrical substations.

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UAE: plays critical role in innovating and diversifying energy sources,
(WAM) -- Dr. Sultan bin Ahmed Sultan Al Jaber, Minister of State, has paid tribute to the
UAE's founding father, the late Sheikh Zayed bin Sultan Al Nahyan, saying it was because of his
vision and our leadership’s unwavering commitment that the UAE is
strengthening and expanding its leadership by playing a critical role in
innovating and diversifying its energy sources beyond hydrocarbons to
include renewable and nuclear energy.
In a statement made today to mark the World Energy Day, Al Jaber said,
"Our founding father Sheikh Zayed understood the importance of
diversifying our economy away from hydrocarbons, and developing a
future rooted in sustainability. Because of his vision, and our leadership’s
unwavering commitment, the UAE is strengthening and expanding its
leadership by playing a critical role in innovating and diversifying energy
sources beyond hydrocarbons to include renewable and nuclear energy."
This balanced approach to energy and economic diversification, he went on, helps ensure our
leadership and presence in future energy markets, positions us as a stable and reliable partner,
and enables us to contribute to the region’s long-term development.
"More importantly, it paves the way for continued economic growth and a sustainable, secure
energy future for the UAE," he added.

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Nigeria to Split Long-Delayed Petroleum Bill to Speed Passage
Bloomberg - Chris Kay christopherkay
Nigeria’s government plans to split an oil-industry bill stuck in parliament for seven years and
resubmit it to lawmakers after it held up reforms and deterred investment in Africa’s largest crude
producer, Vice President Yemi Osinbajo said.
Breaking up the Petroleum Industry Bill, or PIB, into smaller laws focused on fiscal and regulatory
measures in Nigeria’s energy industry would make it easier to pass through parliament, he said.
The bill, first presented to parliament in 2008, will be resent to lawmakers in the first quarter of
2016.
“Separating the PIB, breaking it up, obviously is the way I would think that we’ll proceed,”
Osinbajo, 58, said in an interview on Tuesday in the Aso Rock Villa presidential residence in the
capital, Abuja. “That’s really what the market has been waiting for.”
The proposed law has been held up largely by political wrangling and objections by international
oil companies, which say the government is demanding too big an increase in its share of
revenue. The delays have caused uncertainty and is costing $15 billion a year in lost investments,
Emmanuel Kachikwu, head of the state-owned Nigerian National Petroleum Corp., told the
nation’s senate last week.
Nigeria depends on crude exports for about two-thirds of state revenue and more than 90 percent
of export earnings. A drop in crude prices in the past year has put pressure on public finances,
while the naira has declined 7.9 percent against the dollar this year.
Private Refineries
While the government isn’t planning to sell its four refineries, which are running at a fraction of
their capacity because of poor maintenance and aging equipment, Osinbajo said his
administration wants to encourage private plants to cut Nigeria’s dependence on imports.
More than 30 licenses for refineries have been granted and private refineries will be allowed to
build near the state-run units so they can “benefit from the available infrastructure,” he said.

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The country of about 180 million people subsidizes fuel and relies on imports for more than 70
percent of its supply. Of the four state-owned oil refineries, two units in the southern oil hub of Port
Harcourt with a combined capacity of 210,000 barrels a day are currently producing at 67 percent
of capacity, while others in Warri and Kaduna have been shut, Kachikwu said.
“In the medium term we will be able to get cheaper pump-price oil because we will be importing far
less refined petroleum,” Osinbajo said.
Osinbajo was a lawyer in the commercial capital, Lagos, until his inclusion as the running mate of
former military ruler Muhammadu Buhari of the All Progressives Congress party.
After taking office in May by defeating former incumbent Goodluck Jonathan and his Peoples
Democratic Party in Nigeria’s first electoral transfer of power from one party to another, Buhari
fired the board and management of the NNPC, which has been dogged by allegations of losing
billions of dollars of revenue since the 1970s.
More Efficient
The NNPC has started publishing monthly accounts and is reviewing contracts with joint venture
partners to improve transparency at the national oil company, which had the worst disclosure
record of 44 energy companies analyzed in a 2011 report by anti-corruption nonprofit
organizations Transparency International and the Revenue Watch Institute.
The NNPC’s divisions will be “unbundled” to make them more efficient and the corporation will
become a more regulatory body “as the private sector takes most of the downstream,” Osinbajo
said. However, the government isn’t considering selling its stakes in ventures with oil companies.
Set up to look after Nigeria’s interests with foreign oil companies, the NNPC controls an aggregate
55 percent share in joint ventures with companies including Royal Dutch Shell Plc, Exxon Mobil
Corp. and Chevron Corp.
“We think that we are able to resolve some of the cash-call difficulties that we have experienced,”
Osinbajo said. The partners may be allowed to “borrow even on behalf of the federal government
and will be able to introduce their own capital.”]

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NewBase 22 October - 2015 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices move higher on weaker dollar, above three-week low
Reuters + NewBase
Oil prices edged up in Asian trade on Thursday, gaining support from a weaker dollar to hold
above a three-week low hit in the previous session after a bigger-than-expected build in U.S.
crude stocks added to concerns of a global oil glut.
Brent for December delivery rose 25 cents to $48.10 a barrel by 0434 GMT. The global crude
benchmark finished down 86 cents, or 1.8 percent, on Wednesday, after hitting $47.50, its lowest
since early October.
U.S. crude for December delivery climbed 23 cents to $45.43 a barrel, having settled down $1.09,
or 2.4 percent, in the previous session. It earlier hit a three-week low of $44.86.
The higher values came as the dollar index fell against a basket of six major currencies on
Thursday. A weaker dollar makes dollar-denominated commodities, including oil, cheaper for
buyers using other currencies.
Still, analysts said the support from the dollar was unlikely to signal an end to the downward trend
in oil prices.
"I wouldn't want to conclude there is a real bounce going on," said Ric Spooner, chief market
analyst at Sydney's CMC Markets. "I'd like to see U.S. crude go beyond $46 a barrel to conclude
the downtrend had finished."
Oil price special
coverage

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Oil prices came under renewed pressure from worries about a global glut this week after U.S.
crude inventories rose more than twice what analysts had expected.
U.S. crude stocks surged sharply for a second week, climbing 8 million barrels in the week to Oct.
16, data from the U.S. Department of Energy's Energy Information Administration (EIA) showed
on Wednesday.
That jump followed a rise of more than 7.5 million barrels in the previous week and put U.S. crude
stocks up more than 22 million barrels over the last four weeks.
This will keep oil prices bouncing around support levels of about $48-$56 a barrel for Brent and
$43.50-$50 a barrel for West Texas Intermediate, said Mike McCarthy, chief market strategist at
CMC Markets.
Commodity markets, including oil, have gained some relief from recent China data that indicate
economic problems in the world's second largest economy are not as great as some people
expected, Spooner said.
China's third quarter GDP growth was 6.9 percent, slightly ahead of forecast of 6.8 percent,
according to data this week. Investors are also looking ahead to next week's Federal Reserve
open market meeting on Oct. 27-28 to see if there are any policy changes on the dollar, Spooner
said.
Oil experts from the Organization of the Petroleum Exporting Countries and non-member
countries made no agreement this week to take steps to boost prices, officials said after talks in
Vienna on Wednesday.

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OPEC Hosts Meeting With Oil Officials From Non-Member
States – No cuts
http://www.wsj.com
The Organization of the Petroleum Exporting Countries held an unusual meeting Wednesday with
oil officials from nonmember states like Russia and Mexico, in a bid to forge a common response
to fallen oil prices.
Member country Venezuela proposed that OPEC return to its 1980s policy of trying to fix oil prices, saying
that $88 a barrel was a potential target. The South American nation’s officials proposed another
summit next month, around the group’s regular Dec. 4 gathering, to discuss the idea.
“We are concerned about the depletion of reservoirs and about the decline of production,” said
Venezuela Oil Minister Eulogio del Pino at a news conference in the Austrian capital. “We are
talking here about an equilibrium price to sustain the production.”
But the idea of cutting production to lift prices wasn’t discussed at the meeting of OPEC staff and
technical experts from five non-OPEC producers, officials said, though countries like Venezuela
have called for Russia to slash output. Russia, the world’s largest oil producer, and the Persian
Gulf countries that rule OPEC have said they aren’t interested in cutting output.
“OPEC made it very clear months ago they will not interfere to control prices and it is the market
that should do that,” said one Persian Gulf country OPEC delegate.
The meeting agreed to assess the oil market on a long-term basis and to meet again after OPEC’s
next ministerial gathering on Dec. 4, said Ilya Galkin, a Russian oil official who was in attendance,
lamenting that oil prices aren’t high enough to support investments.
A Persian Gulf OPEC delegate earlier called Venezuela’s price-fixing idea “unrealistic.”
This is the second such meeting between technical experts of OPEC and non-OPEC countries
since the cartel made its historic decision in December to keep pumping at full tilt in the face of an
oil-market crash, abandoning its customary role of pulling back supply to boost prices. Any cut, the
group’s leaders reasoned, would be rendered meaningless by a flood of new oil production from
the U.S.
OPEC’s leader Saudi Arabia and its Gulf allies like Kuwait and the United Arab Emirates decided
it was better to fight it out in the marketplace to maintain their share of oil buyers. Oil has traded
between $40 and $68 ever since, down from highs of $114 last year.

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OPEC members like Venezuela, Algeria and Ecuador have chafed under the policy and called for
meetings like the one on Wednesday. Officials in those countries, which don’t have huge cash
reserves, want production cuts and higher prices.
Some OPEC members have expressed sympathy for those views. At an oil conference on
Monday in Tehran, Iran’s Oil Minister Bijan Zanganeh said OPEC members wanted oil prices in a
range of $70 to $80 a barrel.
Mr. Zanganeh also called for Russian cuts. “We hope Russia shows interest to cooperate with us
to rebalance the market,” he said in Tehran.
In September, Russian Deputy Prime Minister Arkady Dvorkovich ruled out any cuts, saying that
output may only decline if prices remain low for a sustained period. Mr. Dvorkovich said even
then, production wouldn’t fall by much. ”
Other, more powerful figures in OPEC also have separately suggested that production cuts
involving OPEC members and nonmembers could help prices pick up, including Saudi Arabian Oil
Minister Ali al-Naimi and OPEC Secretary General Abdalla Salem el-Badri, but they have stressed
OPEC can’t do it alone. They haven’t made direct calls on Russia, however.
‘It’s a buyers’ market. Everyone is fighting for market share.’ —Iranian oil official
And some OPEC delegates are skeptical about Russia’s willingness to coordinate on oil
production. They point out that in a similar meeting in May between OPEC and nonmembers, the
two sides failed to even come up with a news release as Russia refused any commitment to
reduce production.
“They are not going to change position now. Russia is the elephant in the room, not the U.S. or
Iran,” one Gulf delegate said. The OPEC talks in Vienna Wednesday come as Russia and Saudi
Arabia are increasingly competing for the same customers, like China and Eastern Europe.
“It’s a buyers’ market. Everyone is fighting for market share,” one Iranian oil official said.
Russia has been getting increasingly competitive against Saudi Arabia in Asia and mainly China,
the kingdom’s largest market, said an official at state-owned Saudi Arabian Oil Co., better known
as Aramco.
In response, Aramco has been offering big discounts in Europe to attract buyers, particularly those
who are actually more accustomed to Russian crude, the official said. The strategy has been
successful so far with big buyers like Royal Dutch Shell RDS.A 0.36 % PLC, Total SA TOT -0.20
% and Eni E -0.37 % SpA, he said.

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NewBase Special Coverage
News Agencies News Release 22 Oct.. 2015
Climate pledges for COP21 slow energy sector emissions
growth dramatically
The International Energy Agency (IEA) released on Wednesday a World Energy Outlook (WEO)
special briefing that outlines the energy sector implications of national climate pledges submitted
for the upcoming climate summit in Paris (COP21). The briefing finds that if all countries meet
goals outlined in their submitted pledges, known as Intended Nationally Determined Contributions
(INDC), growth in energy-related emissions-- which account for two-thirds of total greenhouse gas
emissions --will slow to a relative crawl by 2030.
“The fact that over 150 countries – representing 90% of global economic activity and nearly 90%
of global energy-related greenhouse gas (GHG) emissions – have submitted pledges to reduce
emissions is, in itself, remarkable,” said IEA Executive Director Fatih Birol. “These pledges,

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together with the increasing engagement of the energy industry, are helping to build the necessary
political momentum around the globe to seal a successful climate agreement in Paris”
The WEO special briefing finds that all of the INDC submissions take into account energy sector
emissions and many include specific targets or actions to address them. If these pledges are met,
then countries currently accounting for more than half of global economic activity will see their
energy-related greenhouse gas emissions either plateau or be in decline by 2030.
Global energy intensity, a measure of energy use per unit of economic output, would improve to
2030 at a rate almost three times faster than the rate seen since 2000. In the power sector, 70%
of additional electricity generation to 2030 would be low-carbon. Significantly, the power sector –
the world’s largest source of energy-related carbon-dioxide (CO2) emissions – sees emissions
plateau at close to today’s levels, effectively breaking the link between rising electricity demand
and rising related CO2 emissions.
The full implementation of these pledges will require the energy sector to invest $13.5 trillion in
energy efficiency and low-carbon technologies from 2015 to 2030, an annual average of $840
billion. However, despite these efforts, the pledges still fall short of the major course correction
necessary to achieve the globally agreed climate goal of limiting average global temperature rise
to 2 degrees Celsius, relative to pre-industrial levels.
“The energy industry needs a strong and clear signal from the Paris climate summit. Failing to
send this signal will push energy investments in the wrong direction, locking-in unsustainable
energy infrastructure for decades,” emphasised Dr Birol.
Achieving the ultimate climate goal will also hinge critically on innovation in the energy sector and
on the deployment of new and emerging energy sector technologies that have the potential to
deliver the transformational change needed to achieve deep levels of decarbonisation in the
decades to come. Download the World Energy Outlook special briefing for COP21.

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Low oil price impact: OFW remittances decline
for first time in over a decade
Gulf Times Correspondent - Arno Maierbrugger
For the first time since 2003, remittances from Overseas Filipino Workers (OFWs), a major
contribution to the country’s economy and an important source of foreign currency, dropped in
absolute value terms. In a surprise announcement last week, the Philippine central bank said that
cash sent back home from OFWs amounted to $2.04bn in August which is 0.6% lower compared
to $2.06bn in the same month of the previous year.
This confirms the bearish pattern already witnessed in July when growth in remittances was just a
mere 0.5%, far from the average growth trend of remittances of around 5% monthly.
While there was still growth over the period from January till August, it showed a notably slower
pace compared to previous years, namely 4.3% versus 5.8% over the same period in 2014.
However, the Philippine government’s target for remittances growth in the full year 2015 remains
at least 5%.
Economists cite a number of reasons for the slump, but one major cause is the low oil price which
affects the income situations of Filipinos working in the Middle East. According to the central bank,
growth in remittances from Filipinos based in the Middle East was just 6.77% to $3.56bn from
January to August compared to $3.36bn in the same period last year, while growth was 22.5%
and 25.4% in the corresponding periods of 2014 and 2013, respectively.
A number of Middle Eastern countries, particularly those in the Gulf Cooperation Council, have
reduced infrastructure spending in the wake of the oil price drop and also slowed down activity in
the petroleum and oil-related service industries that rely to a large extent on Filipino labour.

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“The Middle East has been the main contributor to growth of overseas worker remittances since
2013, helping to offset slowing growth of remittances from the US,” rating agency Fitch said in a
note, adding that “this could, however, change if low oil prices were to persist, slowing
investments and weakening demand for foreign workers.”
But low oil prices are not the only problem. Dropping remittance value also has to do with
excessive currency weaknesses in key non-Middle East countries were many OFWs work, such
as Singapore, Malaysia and Indonesia, and – in turn – the relative strength of the Philippine peso.
The Philippine branch of Barclays bank said in a note that it expects the entire third quarter to
show negative growth in terms of cash remitted, although it stated that the slump was “only likely
to be temporary. With the recent rebound in regional currencies, we expect remittance flows to
improve in the fourth quarter.”
Philippine central bank governor Diwa Guinigundo takes the same line.
“In the last quarter of the year, we expect renewed heavy inflows because of the holidays,”
Guinigundo said, noting that “OFWs are expected to send more money to their families back
home in preparation for the Christmas holidays.”
Remittances of overseas Filipinos made up for a total of around $24.8bn in 2014, the third largest
amount of money sent home by overseas workers globally behind India and China. It is equal to
about 10% of the Philippines’ GDP and helps keeping the current account balance positive
despite the country’s chronic trade deficit. The bulk of cash remittances come from the US, Saudi
Arabia, UAE, Qatar, Kuwait, UK, Singapore, Japan, Hong Kong and Canada.

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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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