New base energy news issue 855 dated 22 may 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 22 May 2016 - Issue No. 855 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Siemens delivers first power unit for ADMA-OPCO
Al-Razboot offshore oil project
Arabianbusiness - Staff writer
Siemens has announced it has shipped its first gas turbine generator package from its
manufacturing facility in the US to Abu D habi Marine Operating Company's Satah Al-Razboot
offshore oil field project on Zirku Island.
The shipment will be the first of five Industrial Trent 60 power generation packages to be
delivered, installed and commissioned for ADMA-OPCO. "The shipment of this first package is an
important milestone in our contribution to the UAE's energy sector," said Dietmar Siersdorfer,
CEO of Siemens Middle East and UAE.
"The SARB offshore oil field project will be a key component of the UAE's economic strength, and
we are proud that our advanced turbine technology will be responsible for making it a reality."
ADMA-OPCO's SARB offshore oil field project is being built on Zirku Island, which is located
120km northwest of Abu Dhabi. The SARB offshore oil field project will have a daily capacity of
100,000 barrels of oil and 35 million cubic feet of gas, the amount on which about 6,600 gas
buses can run.
The offshore project is being implemented in seven stages and primarily involves the reclamation
and construction of two artificial islands, to facilitate drilling works for the extraction of crude oil
from the field.
The first installation phase is expected to begin in May, with commissioning on Duel Fuel
Operation completed by 2018, and completion of plant commissioning on gas by 2019.

The project :
Adma-Opco – Sarb Offshore Oil Field
Name of client : Adma-Opco – Abu Dhabi Marine Areas Operating Co.
Budget : $1.89 billion
Facility type : Gas Processing
Sector : Oil and Gas
Status : Construction
Location : Abu Dhabi
Feed : Fluor Corporation
PMC : Jacobs Engineering Group Inc.
Main contractor : Hyundai Engineering & Construction
Background
Abu Dhabi Marine Operating Company (Adma-Opco) plans to boost Abu Dhabi offshore production capacity from its
current 1.1 million barrels per day (mbpd) to 1.75 mbpd by 2020. Part of the plan is to develop the previously
untapped offshore Satah Al Razboot (Sarb) oil field in Abu Dhabi. The project involves several packages and this is
the 4th package, which includes main process facilities engineering at Zirku island and artificial island.
Project Status
August 2015: Construction works are ongoing.
Project scope
Package 4 is focused on onshore facilities at Zirku and artificial islands and includes the following:
• Sarb 1 & 2 well gathering facilities and support re quirements
• Crude stabilization and crude storage and export from Zirku, injection of water as well as gas
• Utilities, buildings and infrastructure that will sup port the overall
Facilities will consist of the Zirku island facilities and artificial island facilities:
Scope also involves supply of Trent 60 gas turbine capable of producing up to 66MW of power, which brings the total
number of Trent 60 gas turbines operating in UAE to 14.
Project finance
Abu Dhabi Marine Operating Company (Adma-Opco) is the project client. Adma-Opco shareholders are:
Adnoc, 60 per cent
BP, 15 per cent
Total, 13 per cent
Jodco, 12 per cent
Conclusion
Fluor’s modularization solution, addressed the remote location and limited access, facilitated an execution
strategy with improved schedule predictability, maximized shop fabrication, and assembly for improved
productivity and quality, and minimum site exposure to HSE challenges.
This marquee project in the Middle East is vitally important to the continued economic growth and
development of Abu Dhabi.

Iraq: Shell cutting back manpower at Majnoon oilfield
The National - Anthony McAuley
Royal Dutch Shell is cutting its workforce sharply at the Majnoon oilfield near Basra in southern
Iraq as the government’s financial woes deepen.
Majnoon is one of the five “supergiant" (containing more than 5 billion barrels) oilfields located in
southern Iraq, with estimated recoverable reserves of nearly 13 billion barrels, and it has been a
major provider of additional funds for the Iraqi government since it started exporting two years
ago.
The field employed more than 3,000 at peak construction – three-quarters of whom were Iraqis.
But the expatriate workforce had dwindled to 400 amid cutbacks as the government has struggled
with both the collapse in oil prices over the past 18 months and the costs of the war with militants
in the west of the co untry.
Now the expatriate workforce is being trimmed to 200, according to a Shell executive who helps
manage the project.
A Shell spokesman in Dubai said: “In light of the economic challenges, Shell is supporting the
country by implementing cost efficiencies while reducing our expatriate workforce across our
businesses." But he declined to specify the number of job cuts at Majnoon.
He added that “the Majnoon oilfield continues to reliably and safely produce more than 200,000
barrels per day, which is of significant value to Iraq". He declined to comment on whether the
cutbacks might affect future production. It is the latest blow to the Iraqi prime minister Haider Al
Abadi and his government, which has been warned for months by international oil firms that
investment in maintaining and adding to production could be stalled because of cutbacks.
The country has been one of the world’s largest sources of additional oil over the past year,
despite the oil price collapse. Production in the first quarter averaged about 4.3 million barrels per
day, up nearly 500,000 bpd from a year earlier, according to the consuming countries’ energy

watchdog, the International Energy Agency. Most of the oil is produced in the southern oilfields,
where international oil companies including Shell, BP and Exxon are revamping long-neglected
fields that rank among the largest in the world.
Despite the war, which has caused periodic disruptions to exports from the north of the country,
Iraq’s southern fields have grown consistently. March marked the fifth successive month of
exports above 3.2 million bpd, earning the government an estimated US$2.9 billion that month
alone.
Still, the Iraqi government has struggled to meet its obligations to the oil companies. The IEA
estimates that the government’s arrears to the companies are about $6bn. The oil price slump has
led the government to seek oilfield budget cutbacks, which have fallen to $9bn this year from
$13bn last year.
The Majnoon deal in 2010 was seen as a
forerunner of things to come, with Shell winning a
contract to essentially act as a service contractor
rather than an equity partner, getting a 45 per
cent stake in a deal that netted $1.39 per barrel
for Shell, Malaysia’s Petronas (30 per cent) and
Iraq’s Missan Oil Company (25 per cent). Under
the terms of the deal, Shell and its partners are
compensated in oil they can sell on international
markets, but while the deal worked well for the
Iraqi government when oil prices averaged $100 a
barrel, it must hand over considerably more oil to
compensate the partners while oil prices hover in
the forties.
Besides Majnoon, Shell holds a 20 per cent stake
in the southern oilfield of West Qurna 1, which is
operated by ExxonMobil. It is also in a 25-year
joint venture with Iraq’s state-run South Gas
Company to gather, treat and process associated
gas from West Qurna 1, Zubair and Rumaila in the south, and it has a 44 per cent stake in the
Basrah Gas Company joint venture. The Shell spokesman said: “A lower oil price has resulted in a
challenging business environment impacting our partners in Iraq and the Shell Group. We are
managing a range of issues across our portfolio of projects and implementing measures to ensure
continuous business improvement and cost competitiveness."
Shell said in January that it would be cutting 10,000 jobs worldwide. Industry-wide, hundreds of
thousands of jobs have been cut over the past year from both private and government oil and gas
companies.
Iraq and the IMF last week agreed on $5.4bn in three-year emergency financing. But even with
the IMF loan, Fitch Ratings forecasts that Iraq’s government budget deficit will widen to 15 per
cent of GDP this year, to $22bn, assuming that crude exports remain steady at 3.3 million bpd and
the government makes modest spending cuts.
“Lower oil revenue is also causing a balance-of-payments shock," Fitch said. “The central bank’s stock of
foreign reserves (including gold) has fallen from $78bn at the end of 2013 to about $50bn currently. This is
still a robust level, at about nine months of current external payments, but is set to fall further this year and
next."

Egypt: Siemens installs two 400MW gas turbines at Egypt plant
Siemens has placed two of the four 400 megawatt (MW) H-class gas turbines alongside six 500
kilovolt (kV) generator transformers on their foundations at the Beni Suef power plant in Egypt.
Situated around 110 km south of Cairo, the Beni Suef plant is set to become the world’s biggest
gas-fired combined-cycle power plant complex when completed.
It will start supplying its first electricity to the national energy grid as early as winter 2016/2017. To
achieve that, it will initially be operated in so-called simple cycle mode. By subsequently adding
heat exchangers and steam turbines it will be expanded into combined cycle mode reaching a
total installed capacity of 4.8 gigawatts (GW). This is enough to supply around 15 million
Egyptians with electricity.
A special ceremony was held by Siemens at the 500,000-sq-m Beni Suef site in the presence of
the Egyptian Minister of Electricity and Renewable Energy, Dr Mohamed Shaker.
“Today, we celebrate an important milestone in the modernization of Egypt’s energy infrastructure
and I am sure that many other milestones will follow,” said Dr Shaker. “Egypt is undergoing
economic transformation and as the country embarks on a series of ambitious infrastructure
projects, efficient and reliable electricity will be essential to powering this development. The Beni
Suef plant, alongside Siemens’ other power projects in the country, will definitely make an
important contribution towards sustainable power supply in Egypt.”
With its local partners, Siemens will build a total of three natural gas-fired combined cycle power
plants with a total capacity of 14.4 GW in Egypt. About 4.4 GW of this power will be connected to
the national grid in only 19 months – from signing to service – which is six months faster than the
world benchmark.

“Egypt’s Sustainable Development Strategy outlines the need to provide affordable, reliable and
modern energy services, boost energy efficiency and diversify the country’s energy mix,” said Willi
Meixner, CEO of the Siemens Division Power & Gas.
“We are proud to be part of this vision and to celebrate another step towards its realization today.
Thanks to innovative technology, our energy projects in Egypt are set to transform the power
landscape – boosting power generation by 50 per cent, creating thousands of jobs and resulting in
$1.3 billion in fuel savings annually.”
With the arrival of Egypt’s first H-class gas turbines, Siemens has launched its new branding
campaign in Egypt and the Middle East, titled ’Ingenuity for life’. This new claim represents the
company’s commitment to sustainable development in the region, and illustrates how Siemens
impacts people’s lives on a daily basis, through engineering, technology and smart-thinking,
utilizing these strengths to add real value to society.
“Today’s milestone in Beni Suef is a perfect example of what we call ingenuity for life. With our
engineering expertise, our power of innovation and local partners, we create long-term value and
jobs for the people of Egypt – and beyond,” Dietmar Siersdorfer, CEO of Siemens Middle East,
explained.
One important pillar in this context is to build a pipeline of Egyptian experts for these energy
projects, Siemens started training the first batch of 600 Egyptian engineers and technicians last
month. The move is part of the company’s commitment to building local expertise in Egypt’s
energy industry, in collaboration with the Egyptian Ministry of Electricity and Renewable Energy. –
TradeArabia News Service

Pakistan Petroleum Ltd Makes Tight Gas Discovery in Sindh
http://www.ppl.com.pk/content/kirthar-block-1
Pakistan Petroleum Limited (PPL) has announced a gas discovery over its first exploration well Kotri X-1
located in Pakistan's Sindh province.
Kotri X-1 was spud on February10, 2016 and reached the final depth of 3,892 meters on April 23, 2016.
Based onthe gas shows encountered during drilling and wireline logs evaluation, a cased hole drill stem
test was carried out in Lower Goru Massive Sands, the company said on Friday. The well flowed gas at an
average rate of 3.4 MMscfd.
According to PPL, preliminary analyses of the test data suggests that it may be a tight gas discovery,
however, further evaluation is required to determine the nature and commerciality of the discovery based
on the geological, geophysical and engineering data collected during drilling and testing of the well. PPL is
the operator with 100 percent interest.

Norway: NPD reports April 2016 Norway production figures
Source: NPD
Norway's NPD reports that preliminary production figures for April 2016 show an average daily
production of about 2,029,000 barrels of oil, NGL and condensate. This is 20 000 barrels per day
(about 1 percent) more than March 2016. Total gas sales were about 10.5 billion Sm3, which is
0.7 GSm3 less than previous month.
The average daily liquid production in April was: 1,625,000 barrels of oil, 374,000 barrels of NGL
and 30,000 barrels of condensate. The oil production is about 4 percent above the oil production
in April last year. The oil production is about 3 percent above the NPD’s prognosis for the month.

The total petroleum production for the first four months in 2016 is about 82.5 million Sm3 oil
equivalents (MSm3 o.e.), broken down as follows: about 31.2 MSm3 o.e. of oil, about 7.9 MSm3
o.e. of NGL and condensate and about 43.3 MSm3 o.e. of gas for sale. The total volume is 6.6
MSm3 o.e. higher than in 2015.
Final production figures from March 2016 show an average daily production of about 1.606
million barrels of oil, 0.403 million barrels of NGL and condensate and a total of 11.2 billion Sm3
saleable gas production.

Senegal: Cairn Energy reports successful Senegal appraisal well
result Source: Cairn Energy
Cairn Energy has announced the results of the SNE-4 appraisal well offshore Senegal where
operations have been safely and successfully completed following drilling, coring and logging.
The well is now being plugged and abandoned.
The SNE-4 well was appraising the eastern extent of the SNE field discovered in 2014 and
aiming to confirm the nature of the upper reservoirs in the oil zone.
Cairn’s analysis of the dataset collected is continuing with initial results as follows:
• Confirms the extension of reservoirs in the eastern extent of the SNE field, more than 5
kms to the east and down dip of SNE-3
• Confirms oil bearing Upper Reservoir sands of similar quality to those encountered as gas
bearing elsewhere in the field
• The uppermost gas sands first encountered in SNE-3 and BEL-1 were also present and
gas bearing in SNE-4
• Confirms correlation and presence of the principal reservoir units between each of the
wells across the whole field
• A gross oil column of ~100 metres (m) encountered, similar to SNE-1, SNE-2, SNE-3 and
BEL-1
• 108m of continuous core taken across the oil bearing reservoir interval with 100%
recovery
• Multiple samples of gas, oil and water recovered to surface
• Initial indications confirm similar 32°API oil quality as seen across the field
Cairn Energy Chief Executive Simon Thomson said:
'We have now drilled four successful appraisal wells in Senegal and we are delighted with the
results to date of the multi-well evaluation programme, which has confirmed the scale and
potential of this world class asset.

Operations in Senegal have been safely conducted and are ahead of schedule and substantially
under budget. We have gathered a very large volume of data from operations to date and we
look forward to
progressing our long-term,
multi-field, multi-phase
exploitation plan to
maximise value in
Senegal. We see clear
potential to access
additional cost savings
from the current lower
operating environment in
respect of planned future
activity.'
The SNE-4 well is the Joint
Venture’s (JV) sixth well
offshore Senegal and the
fourth completed this year
as part of a multi-well
evaluation programme to
help delineate the shape of
the structure and establish
deliverability and full
potential of the field. The
Ocean Rig Athena will now
be de-mobilised and the
JV will continue integrating
the significant amount of
data collected from the
four wells, including two
drill stem tests and more
than 600m of core. This
will enable the JV to determine the most effective way to further the appraisal of this significant
oil accumulation and evaluate development options.
The SNE-4 well, located in 942m water depth and approx. 85km offshore in
the Sangomar Offshore block, reached the planned total depth (TD) of 2,944m below sea level
(TVDSS).

Technip and FMC to form new $13bn oil services major
Bloomberg
Technip and FMC Technologies agreed to merge in an all-stock deal, creating a US$13 billion
company as the oil-services industry responds to crude’s collapse.
Technip stockholders will get two shares in the new business, TechnipFMC, for every Technip
share held, while FMC investors will get one, the companies said Thursday in a joint statement.
They expect the combination to deliver at least $400
million in annual pretax savings in 2019.
The new oil-services company, based in Paris,
Houston and London, will have an equity value of $13
billion, according to the statement. Technip Chief
Executive Officer Thierry Pilenko will be executive
chairman while Doug Pferdehirt, president and chief
operating officer of FMC, will serve as CEO. Each
company’s shareholders will own close to 50 per cent
of the combined group.
Technip jumped 13 per cent to €52.61 in Paris trading at 9:19am local time. The French company
has lost a quarter of its value over the past year, while FMC has tumbled more than 30 per cent in
New York.
Oil-services companies have seen orders, revenue and earnings come under pressure as the
slump in crude prices prompted energy producers to defer or cancel projects to cut costs.
Halliburton and Baker Hughes, the second and third-largest oil-service providers, tried to merge
before calling off the planned deal this month after meeting stiff
resistance from regulators in the United States and Europe.
“Together, TechnipFMC can add more value across subsea,
surface and onshore/offshore, enabling us to accelerate our
growth," Mr Pilenko said.
Technip and FMC had combined sales of about $20bn last year and earnings before interest,
taxes, depreciation and amoritisation of about $2.4bn, according to the companies. They had a
total order backlog of $20bn at the end of March.
Technip and FMC expect the deal to close in early 2017, subject to shareholder and regulatory
approvals.
FMC, Technip Deal Seen Dodging Scrutiny That Stopped Halliburton
FMC Technologies Inc. and Technip SA appear poised to do what larger oil service and
equipment providers Halliburton Co. and Baker Hughes Inc. couldn’t -- close a merger during the
market downturn.
The $13 billion combination of U.S. subsea-equipment supplier FMC with Paris-based Technip will
deliver at least $400 million in annual pretax savings in 2019, the companies said Thursday. FMC
investors will get one share in the new company for each they own, while Technip stockholders
will get two.

Industry peers Halliburton and Baker Hughes had also tried to join forces to weather the rout,
but called off their planned merger this month amid resistance from regulators in the U.S. and
Europe over concerns about reduced competition. By contrast, Technip’s engineering and
construction for large offshore projects complements FMC’s flow-control subsea equipment, Bill
Herbert, an analyst at Simmons & Co., said Thursday in a phone interview.
"The Halliburton-Baker
transaction was a multifaceted
transaction encompassing classic
consolidation of several
overlapping competitive product
service lines," Herbert said.
"Technip and FTI? They’re
completely different animals.
There is no overlap whatsoever."
Spending Cuts
The companies are combining at
a time when tumbling crude
prices have led customers to
cancel projects and demand
lower fees from suppliers,
sapping earnings for oil-field
drillers, servicers and engineers.
A 55 percent drop in oil since mid-
2014 forced oil explorers to slash over $100 billion in spending last year and has led to more than
350,000 jobs cut globally in the industry.
Technip, Europe’s biggest oil-services company, was valued at $6.19 billion as of Wednesday’s
close, having shrunk by a quarter over the past year. That compares with a $6.49 billion
capitalization for FMC, which declined more than 30 percent in the period. FMC is the world’s
largest provider of subsea equipment to the oil industry.
"I think this deal has a very high likelihood of being approved," said Sean Boland, an antitrust
lawyer at Baker Botts LLP in Washington who represented Halliburton in the Baker Hughes deal.
He did not represent anyone in the FMC-Technip deal.
The new entity, TechnipFMC, will be listed in Paris and New York, according to a joint statement.
Technip Chief Executive Officer Thierry Pilenko will be executive chairman while Doug Pferdehirt,
president and chief operating officer of FMC, will serve as CEO. Each company’s shareholders
will own close to 50 percent of the combined group.
‘Significant’ Synergies
“The synergies targeted are significant -- and above what we expected” given the lack of “overlap”
between the two companies, said James Evans, an analyst at Exane BNP Paribas in London.
Since they don’t compete directly with each other, the deal is more likely to succeed than the
blocked transaction between Halliburton and Baker Hughes, he said in a note. Technip jumped as
much as 14 percent in Paris trading on Thursday, and was up 6.8 percent to 49.51 euros as of
5:14 p.m. local time. FMC fell 2.6 percent to $27.90 in New York.

“We are complementary companies,” Pilenko said at a press briefing in the French capital. “If you
stay narrow, sooner or later you’re going to be commoditized.”
Forsys Venture
Bloomberg reported last year that Technip and Houston-based FMC were in negotiations. The
companies had already announced a joint venture for offshore fields, called Forsys Subsea, in
March 2015 as they sought to cut costs to ride out the market downturn.
"The fact they already have this joint venture, they’re going to be able to
point to that and say, ‘We’ve been doing this already. We’re not really head-to-head competitors.
We’re complementary companies,’" Boland, of Baker Botts, said.
The new entity will be based in Paris, Houston and London. Technip and FMC had combined
sales of about $20 billion last year and earnings before interest, taxes, depreciation and
amortization of about $2.4 billion, according to the statement.
Change Needed
“When oil prices and operator cash flows improve, offshore production won’t be fully developed
unless the industry improves project economics,” John Gremp, chairman and CEO of FMC, said
on a conference call. “To do this requires significant and sustainable cost reduction, and to
achieve this requires change.”
Technip and FMC expect the deal to close in early 2017, subject to shareholder and regulatory
approvals. The merger will have an “implementation cost” of about $250 million, according to
Pilenko.
“The potential transaction may spark further consolidation within the subsea industry,” Goldman
Sachs Group Inc. said in a note. The bank is advising Technip on the deal along with Rothschild &
Co. Evercore Partners Inc. and Societe Generale SA are working with FMC.

US;Many natural gas-fired power plants under construction
are near major shale plays. U.S. EIA, Electric Power Monthly as of February 2016
Natural gas-fired power generation increased 19% in 2015, because of low natural gas
prices, increased gas-fired generation capacity, and coal power plant retirements. EIA's May
2016 Short-Term Energy Outlook forecasts that this year, natural gas-fired generation will exceed
coal generation in the United States on an annual basis.
Growth in natural gas-fired generation capacity is expected to continue over the next several
years, as 18.7 gigawatts (GW) of new capacity comes online between 2016 and 2018. Many of
the new natural gas-fired capacity additions in development are near major shale gas plays. The
Mid-Atlantic states and Texas have the most natural gas-fired capacity additions under
construction with planned online dates within the next three years (2016–18).
Mid-Atlantic states. Many of the natural gas capacity additions are concentrated around
the Marcellus and Utica shale regions, largely located in Pennsylvania, West Virginia, and Ohio.
These states have been leading the growth in U.S. natural gas production over the past several
years, driven by increasing production in the Marcellus and Utica shales.
Natural gas infrastructure has been added in these regions to transport natural gas to population
centers along the Atlantic Coast. Among the states near the Marcellus and Utica shales, Virginia
accounts for the largest cumulative additions of gas-fired capacity over the 2016–18 period, with
2.3 GW of gas-fired capacity under construction, followed by Ohio with 1.9 GW, Pennsylvania with
1.8 GW, and Massachusetts with 0.7 GW, according to EIA's Electric Power Monthly.

Expanding pipeline networks in the Northeast are increasing takeaway capacity from the
Marcellus and Utica shales, which will support the growth in natural gas-fired generating capacity.
In 2015, 6.0 billion cubic feet per day (Bcf/d) of new pipeline takeaway capacity in the Northeast
was commissioned to transport natural gas to the east, south, and west of the Marcellus and Utica
shales. In 2016, 2.2 Bcf/d of new pipeline capacity currently under construction is scheduled to
come online in the Northeast, according to EIA data on natural gas pipeline infrastructure.
Texas. Significant levels of natural gas-fired capacity are under construction in Texas, with 3.2
GW expected to become operational over 2016–18. Texas produces more natural gas than any
other state and is home to several major shale plays, including the Eagle Ford and Barnett shales.
Florida has the largest cumulative additions of gas-fired capacity currently under construction, with
three plants that have a combined capacity of 3.8 GW expected to come online in 2016–18.
Although the state has no shale gas production, the retirement of older, less-efficient coal units
and the replacement of some oil-fired capacity have led to the expansion of regional pipeline
networks to bring more shale gas to serve gas-fired generation.
The cumulative capacity additions cited above include plants that are under construction. The Mid-
Atlantic states and Texas also have the most regulatory permit filings for new gas-fired capacity
additions. Their combined received and pending permits amount to a cumulative 12.1 GW over
the 2016–18 period. Texas leads the United States in permit filings, with received and pending
permits to construct a cumulative 6.6 GW over the 2016–18 period.

NewBase 22 May 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil price end week at $47.75, and Brent at $48.72
Reuters + NewBase
Oil prices were steady to
softer on Friday as a
stronger dollar spurred
investors to cash in on a
second week of gains,
with the focus remaining
on the rebalancing of the
market as the global glut
faced unplanned supply
outages.
The dollar was on course
for a third straight weekly
gain on Friday on hints
the United States is getting closer to raising interest rates. A stronger dollar makes it more
expensive for investors to hold greenback-denominated commodities like oil futures.
Global benchmark Brent crude prices traded 11 cents lower at $48.70 a barrel, off a six-month high of
$49.85 reached two days ago.
U.S. West Texas Intermediate crude futures settled at $47.75 a barrel, down 41 cents, also falling
from a seven-month high of $48.09. That said, it gained about 4 percent for the week. Also on
Friday, oilfield services firm Baker Hughes reported the number of oil rigs drilling in U.S. fields
remained unchanged from the previous week at a total of 318.
Oil was still headed for their second straight week of gains, boosted by growing supply disruptions
in oil producing countries like Nigeria, Canada and Libya.
"The overall market sentiment remains biased to the upside as a growing contingency of market
participants are of the view that the market is already in a rebalancing pattern and the current
round of unscheduled production cuts are starting to accelerate the process," said Dominick
Chirichella, senior partner at the Energy Management Institute.
In Nigeria, militant activity has cut oil exports to a more than 22-year low of under 1.4 million bpd.
In Canada, production has also been cut as wildfires forced closures of around 1 million bpd,
although output is gradually returning.
Libyan output has also been hit by internal conflict. By some estimates, these outages should
undoubtedly lead to a swifter market rebalancing, but ones like in Nigeria are just the start.
"The risks are mounting and Venezuela could be the next shoe to drop," said Michael Tran,
director of energy strategy at RBC Capital Markets in New York.
Oil price special
coverage

Other analysts, however, expect oil prices to come further off recent highs, correcting their recent
upwards trend. Prices have risen for six out the last seven weeks, buoyed by the supply
disruptions.
"We feel that markets have moved too high, too far, too soon," Harry Tchilinguirian, lead oil and
commodities strategist at French bank BNP Paribas in London, told Reuters' Global Oil Forum.
"The combination of a stronger dollar, still excess supply over demand and ongoing overhang of
inventories can be expected to put strong downward pressure on prices."
He said oil prices could fall to the mid to high $30 range.
Still, the chances of joint action among OPEC and non-OPEC producers to balance an
oversupplied market remained slim. Russian Energy Minister Alexander Novak said he saw
supply in excess of demand of around 1.5 million bpd.
He poured cold water on expectations of the outcome of the next meeting of OPEC members on
June 2.

NewBase Special Coverage
News Agencies News Release 22 May 2016
5 reasons why it's been a brutal week for Saudi Arabia
CNBC - Matt Clinch | @mattclinch81
The economic pressure on Saudi Arabia showed little sign of relief this week, despite the country
delivering its bold new vision for the economy in April.
With the world's largest oil exporter heavily reliant on the commodity, it's been plagued by the
plunging prices. And the bad news keeps on coming in spite of the recent uptick in price. CNBC
highlights what's happened in the last seven days.
IMF forecast
The International Monetary Fund (IMF) said Thursday that real gross domestic product
(GDP) growth for the country is projected at 1.2 percent this year, down from 3.5 percent in 2015.
The global organization added that lower oil revenues have resulted
in current account and fiscal deficits which are projected to be around
9 and 14 percent of GDP, respectively, in 2016, according to IMF
staff forecasts.
Bond sale
Also on Thursday, the Financial Times - citing people familiar with the situation - reported that
Saudi Arabia is advancing plans for its first international bond sale. Analysts at BNP Paribas have
linked Saudi Arabia's increased borrowing with the fact that the kingdom's current deficit levels are
unsustainable.
"Public borrowing has begun to play a bigger role in financing the fiscal deficit, which slowed down
the erosion in fiscal reserves. But, as noted above, the lack of transparency in public borrowing
makes it difficult to monitor fiscal developments," the French banks said in a note on Thursday.
Cash buffers
These reserves came to light this week with the U.S Treasury indicating Monday that Saudi
Arabia's central bank held $116.8 billion in U.S. debt at the end of March. Bloomberg added that it
has about $587 billion in total foreign reserves.
BNP Paribas said the "continued rapid decline" in foreign-exchange reserves should be ringing
alarm bells. "The decline in reserves (from 2015) far exceeds the current account deficit, which
implies that, in addition to the terms-of-trade shock, the country is also facing capital outflows," it
added.

IOUs for contractors?
On Wednesday, Bloomberg reported that the country is considering paying its contractors with
IOUs, citing people briefed on the discussions. Saudi Arabia has slowed payments to contractors
and suppliers working on the kingdom's infrastructure projects, according to the news agency,
which may mean that some form of bond-like deals would be more beneficial to the contractors
not being paid at all. Nonetheless, it adds to a growing picture of the dire straits the country now
finds itself in.
"Without meaningful reform, we believe Saudi Arabia faces another protracted cycle of stagnation
and decay as the most recent boom unwinds – a disturbing, and, we believe, highly motivating
prospect given that the Kingdom's population is now twice as large as it was when the last boom
went sour," Simon Williams and Razan Nasser, two economists at HSBC, said in a note on
Tuesday.
Downgraded
On Saturday, ratings agency Moody's downgraded Saudi Arabia's credit rating by one notch,
noting the fall in oil prices. It said the government had
"ambitious and comprehensive" plans to address the
shock by diversifying its economic and fiscal base, but
added that those plans are at an early stage of
development and their impact remained uncertain.
...and now the good news
The kingdom has a plan. In April, the government
unveiled a long-term economic blueprint for life in a
low-oil-price world. Titled "Saudi Vision 2030," the plan includes regulatory, budget and policy
changes that will be implemented over the next 15 years.
Timothy Ash, the head of emerging markets at Standard Bank, believes the vision creates huge
potential for foreign companies to help with the transition.
"I am not worried about their ability to pay ... they have lots of cash, and ability to borrow a lot, plus
lots of assets to sell," he told CNBC via email.
Matt ClinchDeputy Digital News

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Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
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NewBase 22 May 2016 K. Al Awadi

New base energy news issue 855 dated 22 may 2016

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New base energy news issue 855 dated 22 may 2016