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NewBase Energy News 25 May 2016 - Issue No. 858 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: DEWA and KEPCO conduct ground-breaking of Smart
Grid Station
WAM -- Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority,
DEWA, conducted a ground-breaking ceremony for the first phase of the Smart Grid Station, SGS,
at DEWA’s green vehicle workshop in Ruwayyah, in partnership with Korea Electric Power
Company, KEPCO.
This new achievement reflects DEWA’s efforts to achieve the Smart Dubai initiative, launched by
Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin
Rashid Al Maktoum, to make Dubai the smartest and happiest city in the world.
The ceremony was attended by Dr. Aisha Butti Bin Bishr, Director General of the Smart Dubai
Office, and Dr. Hwan-Eik Cho, President and CEO of KEPCO, Woohyun Hwang, Senior Vice
President of the Innovative Energy Business division, and other members of senior management
at KEPCO. Abdullah Obaidullah, Executive Vice President of Water and Civil, Waleed Salman,
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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Executive Vice President of Strategy and Business Development, Rashid Bin Humaidan,
Executive Vice President of Distribution Power, Dr. Yousef Al Akraf, Executive Vice President of
Business Support and Human Resources, and Marwan Bin Haider, Executive Vice President of
Innovation and the Future at DEWA, also attended the ceremony, along with other staff from
DEWA.
Al Tayer noted that the inauguration of the first phase of the Smart Grid Station at DEWA’s Green
Vehicle Workshop in Ruwayyah, is a result of the cooperation between DEWA and KEPCO, to
exchange skills and expertise to adopt the latest international standards for smart cities and smart
grids. The Workshop is the largest environmentally-friendly vehicle workshop in the region and
designed according to the US Green Building Council’s LEED specifications.
Al Tayer invited KEPCO to participate in more projects, including Research and Development
(R&D), The Internet Of Things (IoT), Big data, and drones.
"The Smart Grid Station is a solid stepping stone to build towards the smart future of Dubai, it also
enhances the smart infrastructure and Dubai’s position in energy efficiency and sustainable
resources. This will contribute to achieving the happiness of citizens and residents, as well as
support the sustainability of our resources," said Al Tayer.
"The pilot project brings smart grids and smart buildings together. DEWA is exploring the concept
of Smart Grid Stations, which connect smart buildings to each other to share information, to help
improve energy and water efficiency and make optimal use of renewable energy within a smart
city. Upon completing the project, we will cooperate with KEPCO to construct a group of smart
residential buildings, further transforming Dubai into a smart city," he added.
"This supports the Dubai Plan 2021, to make Dubai the preferred place to live, work, and visit, and
our vision to become a sustainable innovative world-class utility. DEWA works to enhance
strategic partnerships with international organisations, to enhance Dubai and the UAE’s
competitiveness by providing the best government services based on world-class standards to
achieve the highest levels of customer satisfaction and happiness," concluded Al Tayer.
"I’m very pleased to attend this ground-breaking ceremony. This is the result of mutual
cooperation between DEWA and KEPCO. Through this project, both companies will greatly
contribute to the development of new industries in the Middle East and over the world," said Cho.
DEWA’s Smart Grid Station is a micro grid that combines all 3 of these smart initiatives. It also
features several smart elements such as smart homes, photovoltaic panels, wind turbines, an
energy-storage system, a smart water system, a smart-cooling system, energy-demand units,
distribution automation, smart devices, and smart lighting.
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
Iraq Sticks to Oil Output Growth Plan Despite Spending Cuts
Reuters|Alex Lawler and Ahmad Ghaddar
Iraq is sticking to an aspiration to increase its oil output by up to a third by 2020 despite warnings
from some companies working in OPEC's second-largest producer that projects could be delayed
due to spending cuts.
Iraq is pumping about 4.5 million barrels per day (bpd) now and is aiming to boost that to 5.5
million to 6 million bpd by 2020, Falah Alamri, head of Iraq's State Oil Marketing Organisation
(SOMO) said at an Iraq oil conference on Tuesday.
"If there is good investment and the investment is available for the next years, I have no problem
with that," he said in reference to the target. "We will not decrease our production; it will continue
growth but slowly."
A collapse in oil prices, which at $49 a barrel are less than half their level of two years ago, has hit
revenue for Iraq and other producers, and last year prompted Iraq to downgrade a more ambitious
goal to expand supplies.
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The price drop has raised concern that Iraq's oil output growth could slow, or stall. Indeed, oil
companies have warned Iraq that projects will be delayed if the government insists on drastic
spending cuts this year. But Iraq has managed to keep increasing its output so far, despite more
pessimistic predictions.
Last year, the country was
the fastest source of
supply growth in the
Organization of the
Petroleum Exporting
Countries, boosting output
by more than 500,000 bpd,
despite spending cuts and
conflict with Islamic State
militants.
With its finances stretched,
Iraq has asked foreign oil
companies to rein in their
budgets for a second year
in a row. Royal Dutch
Shell, which is in charge of
Iraq's Majnoon field, has
been cutting costs by
reducing foreign staff.
"We are doing our bit," said Marcus Antonini, Shell's country chairman for Iraq, adding that the
company had roughly halved its expatriate workforce in Majnoon and planned further reductions.
"This allows us to make significant savings on operating expenditures," he told the conference,
saying the reduction in foreign workers had not hit output at Majnoon, which was producing
220,000 bpd.
Glut Easing
Alamri, who is also Iraq's OPEC governor, said a glut in the market is easing and Iraq was seeing
a rise in demand for the crude it exports from the south - Basra Light and Basra Heavy. He
dampened expectations that OPEC, which meets to set policy on June 2, will agree any steps to
support prices, having shifted policy in 2014 to focus on maintaining market share.
"There is a lot of demand in summer, more consumption now than the beginning of the year," he
said. "After two years, the market is starting to balance but it nearly destroyed many countries."
Oil companies in Iraq have to clear spending with the government each year and are then repaid
with oil produced from existing fields. With the price collapse, Iraq has been struggling to find
enough oil to repay them.
The companies and the government have so far failed to agree on spending levels. An oil
executive who declined to be named said Iraq's payments to oil companies in 2015 were 30
percent higher than expected and - despite talk about companies exiting Iraq - nothing had
happened for now.
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Indonesia: Pasifik Agra Energi to Build Indonesia's First Cryogenic
Energy-Integrated LNG Terminal ..Natural Gas Asia
Pasifik Agra Energi will spend about $500 million in building Indonesia’s first cryogenic energy-
integrated LNG terminal at an industrial park in Bantaeng regency, South Sulawesi.
The privately owned firm conducted a feasibility study in conjunction with a Japanese energy
company. The study started in February and would be completed in August, Pasifik Agra
president director Westana H. Wiraatmadja said, Jakarta Post reported Monday.
The terminal would cater to gas needs of the industrial park, as well as in eastern and central
parts of Indonesia. The LNG terminal, Wiraatmadja explained, would be the first in Indonesia to
integrate LNG and gas with the utilization of LNG cold energy.
According to Jakarta Post, Bantaeng Regent M. Nurdin Abdullah said Bajiminasa Bantaeng, a firm
owned by the local administration, would be the gas distribution agent to industrial markets and
power plants, while Pasifik Agra would supply the LNG either from local markets or imports.
"The gas terminal can support the development of gas-based power plants. The government can
help prepare the infrastructure to transform Bantaeng into a city-gas based region," he said.
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
France:Strike hits French oil refineries & Fuel pumps dry-out
Reuters + NewBase
French riot police have used water cannon and teargas to break up a strike picket blocking
access to a large oil refinery near Marseille in an attempt by trade unions to paralyse the
country’s fuel supply network in protest at changes to employment laws.
The pre-dawn police raids to force down a picket line at the Exxon Mobil Fos-sur-Mer
refinery marked an escalation in the standoff between the French president,François
Hollande, and protesters led by the CGT union.
The union is seeking to force the government to withdraw its planned changes to the labour
laws with rolling strikes and picket-line blockades at refineries and fuel depots, as well as
open-ended rail strikes.
Six of France’s eight refineries have stopped operating or reduced output due to strikes
and blockades. The CGT said strike action had been voted at all eight of France’s
refineries, and denounced
the police raid on the refinery
near Marseille as an
operation “of unprecedented
violence”.
There were long traffic jams
at fuel pumps
across France as regular
motorists, taxi and delivery
drivers fearing a fuel
shortage tried to stock up on
petrol.
The transport minister, Alain
Vidalies, said one in five of
the country’s 12,500 petrol
stations were either
completely dry or out of one
type of fuel, a week after oil
workers began the strike.
Motorists in the Paris region
resorted to tracking down fuel
tankers and following them to
petrol stations. In the north-
east, motorists were driving over the border to stock up in Belgium.
The government vowed to break the blockades and “liberate” other oil refinery sites. The
prime minister, Manuel Valls, said: “We will continue to clear the sites, the depots, which
are today blocked by this organisation.” Hollande said the strike participants represented a
minority of activists.
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The CGT’s leader, Philippe Martinez, said: “We’ll see this through to the finish, to
withdrawal of the labour law. This is a government which has turned its back on its
promises and we are now seeing the consequences.”
The CGT’s hard line against Hollande’s changes to labour laws comes after three months
of protests that brought hundreds of thousands on to the streets. Earlier this month, the
Socialist government – lacking the parliamentary backing to vote in the changes, which
would make it easier for employers to hire and fire workers – used a decree to force the bill
into law.
After repeated street demonstrations failed to budge the government, the CGT union has
toughened its strategy, organising rolling strikes at oil refineries and some ports. It has also
called on its members to stage weekly strikes on state railways. An open-ended strike by
members of certain unions on the Paris Métro and suburban commuter train network has
been called for 2 June, a week before the Euro 2016 football tournament opens.
The grim mood has been compounded by violence on the margins of demonstrations and
violent skirmishes between protesters and police in recent weeks. Several Socialist party
offices in towns in France have had windows smashed or graffitied. In the early hours of
Monday morning, the Socialist party office in Grenoble was left pockmarked by 12 bullets.
The CGT’s brinkmanship strategy also marks a battle for influence inside an organisation
that was once France’s biggest trade union group but is now facing competition from other
unions. The standoff is intended to send a message about the nature of a trade union’s
role, with the CGT attempting to show itself as the opposition to the government at a time
when Hollande is facing growing dissent from leftwing voters.
Hollande, who hopes to run again for office next year despite being France’s least popular
president on record, had feared “end-of-term” protests echoing that faced by Nicolas
Sarkozy over pension changes in 2010.
Protesters have blocked fuel depots and oil terminals on the English Channel coast in Le
Havre and on the Mediterranean coast in Fos-Lavera, disrupting the distribution of petrol
and other refined products. France has a total refining capacity of nearly 1.5 million barrels
per day of oil, which equates to around 1 percent of total global daily crude demand.
Total, US rival ExxonMobil and PetroIneos, owned by PetroChina, operate the eight
facilities. ExxonMobil said on Tuesday output at its two refineries was at normal levels,
while PetroIneos could not be reached for comment. A prolonged refinery strike in France
in 2010 led to a glut of crude in Europe because it could not be delivered to refineries, and
a spike in the prices of refined products due to low output from refineries.
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Germany’s renewables electricity generation grows in
2015, but coal still dominant..Source: U.S. EIA, based on German Statistical Office
Renewable electricity generation in Germany increased to 194 billion kilowatthours (kWh) in 2015,
representing 31% of the country's gross electricity generation. The renewables electricity growth in
2015 was the largest in both percentage and absolute terms (19% and 32 billion kWh,
respectively) in at least a decade.
Germany's Energiewende, or energy transition policy, focuses on renewable energy and
sustainable development. Energiewende goals include eliminating nonrenewable energy sources
from Germany's energy portfolio, phasing out nuclear power generation, reducing dependence on
energy imports, and lowering carbon emissions.
Official goals call for greenhouse gas reductions to 80% to 95% of 1990 levels by 2050 and a
gradual phase-out of nuclear power by 2022. In 2015, 44% of Germany's electricity production
was generated from coal, 11% from other fossil fuels, and 15% from nuclear energy.
Electricity generated from renewable sources has tripled in Germany over the past 10 years.
Based on Energiewende goals, the share of power generated from renewable sources is set to
increase to 40% to 45% by 2025 and to more than 80% by 2050. Most of Germany's expected
growth in renewable electricity comes from solar photo voltics (PV) and wind, which currently
provide 20% of Germany's total electricity. Hydropower and other renewables such as biomass
and waste provided 11% of Germany's overall electricity supply in 2015, but these shares are not
expected to grow significantly.
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The German government has supported renewable electricity growth by promising a fixed, above-
market price for every kWH of energy generated by solar PV or wind and delivered to the grid, a
policy known as a feed-in tariff. By law, these renewable sources have priority over traditional
generation, meaning that other forms of generation must be curtailed to accommodate fluctuations
in renewable electricity generation.
Over the past five years, these
policies have helped to double the
amount of wind generation.
Wholesale electricity prices in
Germany have been declining, but
residential retail prices have risen
and are expected to continue to
increase because of higher taxes and
fees charged to consumers. For
instance, one surcharge for
renewable electricity increased from
8.8% of the residential electricity
price in 2010 to 17% in 2013. Taxes
and surcharges make up about half
of the average residential electricity
rate, and tariffs account for the
remainder. In 2014, the average
sales-weighted retail price for
residential consumption in Germany
was about 35 cents/kWh, while the
average residential retail price in the United States was about 13 cents/kWh. Along with
Denmark, Germany has among the highest residential electricity prices in Europe.
As a net electricity exporter, Germany's rapid growth in electricity production has created
problems for both Germany and its neighbors. Germany currently lacks the infrastructure to send
surplus electricity from the north to the more populous areas in the south.
A large volume of the surplus power instead flows through transmission grids to Germany's
neighbors, often creating power surges. Poland and the Czech Republic have invested in
technology to avoid blackouts from power surges that originate in Germany on particularly windy
days. Germany has identified the need for more than 3,800 kilometers of new transmission lines
that would run from the north to the south of Germany to meet increasing growth in both electricity
demand and supply, but these infrastructure proposals have been opposed by municipalities and
citizens.
Last year Germany signed several agreements with its neighbors to integrate power markets and
to eliminate overcapacity of the grid. The electricity grid problems in Germany reflect a larger,
continent wide problem that has been elevated to the European Commission in Brussels, where
policy makers advised that an integrated, renewables-focused electricity market should be a
political priority for the European Union.
Germany has made several changes to its energy policies to promote renewable growth while also
controlling costs. In 2014, changes were made to the feed-in tariffs. In the future, instead of fixed tariffs,
electricity producers may have to compete in auctions. If renewable growth targets are exceeded in a given
year, the feed-in tariff incentives for the following year would decrease to balance the growth.
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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NewBase 25 May 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices push closer to $50, U.S. crude hits highest in seven months
Reuters + Newbase
Oil futures pushed closer to $50 a barrel on Wednesday, with U.S. crude hitting its highest in over
seven months after industry data suggested a larger-than-expected drawdown in U.S. crude
inventories last week.
Oil markets were also supported by an overnight surge in U.S. equities and strong U.S. home
sales that could point to the Federal Reserve raising interest rates as early as June.
U.S. crude futures had climbed 62 cents to $49.24 a barrel by 0249 GMT, after ending the
previous session up 54 cents. The benchmark earlier on Wednesday touched its highest since
mid-October at $49.35.
Brent futures rose 55 cents to $49.16 a barrel, having closed up 26 cents to snap a four-day slide.
U.S. crude stocks dropped by 5.1 million barrels to 536.8 million last week, data from industry
group the American Petroleum Institute showed on Tuesday. That was double expectations of
analysts polled by Reuters.
Some of the drawdown was due to falling imports due to wildfires in Canada, which lost about 1.5
million barrels per day in production, said Ben Le Brun, market analyst at Sydney online
brokerage OptionsXpress. Although some crude producers restarted operations on Tuesday in
Canada's energy heartland.
Oil price special
coverage
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The stocks draw also reflected a strengthening U.S. economy. "A strong U.S. economy is good for
oil consumption and demand," Le Brun said.
Gasoline stocks climbed by 3.6 million barrels, while inventories of distillate fuels, includingdiesel
and heating oil, fell by 2.9 million barrels, the API data showed.
Investors are awaiting confirmation of the big draw when the U.S. Energy Information
Administration (EIA) issues official inventory figures on Wednesday.
"Technically the market is gearing up for WTI to go above $50 a barrel and it's intriguing on where
it goes from there," said Le Brun.
"I think the cap is not too far above that level - the world is still awash with oil even if it's off the
peaks."
Oil prices were buoyed by a rise in U.S. stocks, with the Dow Jones industrial average, the S&P
500 and the Nasdaq composite all closing up.
Oil prices shrugged off the impact from a strong U.S. dollar which hovered close to a 10-week
high against the euro in Asian trade on Wednesday.
A strong dollar typically makes greenback-denominated oil more expensive for holders of other
currencies.
Iraq is pumping about 4.5 million bpd now and is aiming to boost that to 5.5 million to 6 million bpd
by 2020, the head of Iraq's State Oil Marketing Organisation (SOMO) said.
U.S. crude stocks dropped by 5.1 million barrels to 536.8 million last week, data from industry
group the American Petroleum Institute showed on Tuesday. That was double expectations of
analysts polled by Reuters.
Gasoline stocks climbed by 3.6 million barrels, while inventories of distillate fuels, including diesel
and heating oil, fell by 2.9 million barrels, the API data showed.
Investors are awaiting confirmation of the big draw when the U.S. Energy Information
Administration (EIA) issues official inventory figures on Wednesday.
"U.S. government data are expected to show that oil inventories have retreated from an eight-
decade high, putting further upward pressure on prices," ANZ said in a note.
That came as some crude producers restarted operations on Tuesday in Canada's energy
heartland, where wildfires have knocked out up to around 1.5 million barrels per day (bpd) of shale
production.
Almost all of the oil from the tar sands production is shipped to the United States, said New York-
based energy consultant Poten.
Oil prices were buoyed by a rise in U.S. stocks, with the Dow Jones industrial average, the S&P
500 and the Nasdaq composite all closing up.
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HE al-Sada says crude is 'not at a fair price', $65 oil price 'vital' for
investment.. Gulf Times
Oil markets are “rebalancing” but crude is “not at a fair price” yet, HE the Minister of Energy
Dr Mohamed bin Saleh al-Sada has said and noted a minimum price of $65 a barrel is
"badly needed at the moment".
"The oil market is recovering slowly
but steadily. Luckily, the
fundamentals show it is heading in
the right direction," al-Sada, also the
current Opec president told the
Associated Press."I don't think we
are yet at a fair price.
We need to have a fairer price so
that we can have the ability to invest
more in order to secure the energy
supply to the world and avoid any price shock," he said.Benchmark Brent futures were
trading at around $48 a barrel on Tuesday.The oil market has moved into a production
deficit earlier than expected following supply disruptions and an increase in demand,
Bloomberg said quoting Goldman Sachs Group. Other banks such as Morgan Stanley,
Barclays and Bank of America Corporation have also noted that supply losses are leading
markets to rebalance.
"The disruptions are getting people thinking that supply may soon trail demand," Again
Capital’s Kilduff said. "This is especially true given the thesis that the market was going to
come into balance later this year anyway." According to Bloomberg, investors have “some
sad reasons to be optimistic” about oil prices.
Outbreaks of violence in Nigeria, export troubles in a divided Libya and wildfires ripping
across the Canadian oil sands are reviving wagers that crude markets will tighten.
Speculators’ net-long position in benchmark US crude, a measure of how bets on a price
increase outnumber bearish ones, climbed by the most contracts since March, according to
data from the Commodity Futures Trading Commission.
"The main bullish factor has been the outages," said Michael Wittner, the New York-based
head of oil-market research at Societe Generale SA. "There are many outages, led by
Nigeria and Canada. We are missing a lot of crude."
West Texas Intermediate futures are heading for a fourth-straight monthly gain, which
would be the longest rally in five years, as evidence mounts that demand may soon
outpace supplies. Investors’ net-long position in WTI futures climbed 14% in the week
ended May 17, according to the CFTC. Short positions, or bets crude prices will drop,
shrank while longs advanced.
WTI futures surged 8.2% on the New York Mercantile Exchange during the CFTC report
week, while the June contract on Friday dropped 0.9% to close and expire at $47.75 a
barrel.
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NewBase Special Coverage
News Agencies News Release 25 May 2016
For Oil's Future, See Schlumberger
Bloomberg- Liam Denning
When you're the hired help, you tend to bear the brunt of your employer's misfortunes. And yet
Schlumberger, the biggest of Big Oil's service providers, seems in one way to be doing better than
its clients:
p of covering its dividend, Schlumberger had enough cash flow over the past four quarters to
cover most of the cost of buying back $1.9 billion of its own stock -- more than even Exxon
Mobil did during the same stretch.
Of course, indulging in schadenfreude over the misfortune of some of your biggest customers isn't
a wise strategy. Those negative bars in the chart above are ultimately bad news for oilfield
services companies -- because the way oil majors try to fix them isn't, funnily enough, cutting
dividends to shareholders:
The majors have been simultaneously putting off some projects and demanding discounts on
others, dealing oilfield services revenues a double blow. Signs are mounting that the industry is
really struggling. For example, Baker Hughes, despite having just gotten a $3.5 billion break-up
fee from Halliburton after their failed merger, is pulling back in certain countries to stretch
resources more efficiently. And only last week, FMC Technologies and Technip announced
a cross-border, nil-premium, all-stock merger -- not the sort of deal bankers pitch in good times.
But Schlumberger is making the best of a bad situation. For one thing, its margins have held up
well despite a real drag from its North American business:
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There's more to this than cost-cutting, though. What really marks Schlumberger out is that it isn't
treating this downturn in the energy market like business-as-usual. Instead, as its CEO Paal
Kibsgaard has been laying out in various presentations, Schlumberger doesn't think triple-digit oil
prices are coming back anytime soon. That means the "hold your breath and hope for better times
soon" playbook isn't going to work.
What's more, the oil majors' business model wasn't performing terribly well even when oil prices
were bobbing around the $100 mark.
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The oil industry's problem is that its costs tend to follow prices, rather than the other way around.
So while the supercycle produced fantastic returns on capital until the financial crisis, it also
provoked a spending boom and rampant cost inflation -- $100 oil makes almost any project look
like a good bet.
What the majors need to do is take a leaf from their smaller brethren in the independent
exploration and production sector. They've been busy boosting productivity in the shale fields,
leading to structurally lower costs through speeding up drilling times and experimenting with
different methods of fracturing rock, rather than simply squeezing their contractors.
We Shale Overcome
Shale producers have made dramatic and sustained productivity gains to reduce their breakeven
prices.
If oil majors are to achieve the same type of productivity gains, they will need to change the way
they work. Schlumberger proposes that the old model, of having multiple contractors tender bids
to build this or that bit of equipment or run this or that process, won't do the job. While it might
have yielded competitive bids for discrete elements of a project, the drawback was a lack of
incentive for service companies to really innovate and a disjointed approach from having so many
cooks rubbing elbows in the kitchen.
Instead, an integrated approach, whereby a contractor can offer a suite of technology and
services covering the entire project, may ultimately prove more efficient if it boosts the overall
amount of oil and gas recovered from a field or, crucially, compresses the timescale from
discovery to production. That is what lies behind Schlumberger's $15 billion acquisition of
Cameron International last year and initiatives such as its integrated hydraulic fracturing system --
a plug-and-play shale-development platform -- due to launch next year. The Technip-FMC deal
follows a similar logic to offer efficiencies via integration rather than fragmented bidding.
Low oil prices also open up the opportunity for Schlumberger to keep nibbling at the oil majors'
lunch. Its in-house Schlumberger Production Management business effectively replicates the
exploration and production business that is the oil majors' bread and butter, putting the company's
own capital to work and taking over direct management of an oil or gas field.
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
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 25 May 2016 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 17

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New base energy news issue 858 dated 25 may 2016

  • 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 Energy News 25 May 2016 - Issue No. 858 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: DEWA and KEPCO conduct ground-breaking of Smart Grid Station WAM -- Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority, DEWA, conducted a ground-breaking ceremony for the first phase of the Smart Grid Station, SGS, at DEWA’s green vehicle workshop in Ruwayyah, in partnership with Korea Electric Power Company, KEPCO. This new achievement reflects DEWA’s efforts to achieve the Smart Dubai initiative, launched by Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum, to make Dubai the smartest and happiest city in the world. The ceremony was attended by Dr. Aisha Butti Bin Bishr, Director General of the Smart Dubai Office, and Dr. Hwan-Eik Cho, President and CEO of KEPCO, Woohyun Hwang, Senior Vice President of the Innovative Energy Business division, and other members of senior management at KEPCO. Abdullah Obaidullah, Executive Vice President of Water and Civil, Waleed Salman,
  • 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 Executive Vice President of Strategy and Business Development, Rashid Bin Humaidan, Executive Vice President of Distribution Power, Dr. Yousef Al Akraf, Executive Vice President of Business Support and Human Resources, and Marwan Bin Haider, Executive Vice President of Innovation and the Future at DEWA, also attended the ceremony, along with other staff from DEWA. Al Tayer noted that the inauguration of the first phase of the Smart Grid Station at DEWA’s Green Vehicle Workshop in Ruwayyah, is a result of the cooperation between DEWA and KEPCO, to exchange skills and expertise to adopt the latest international standards for smart cities and smart grids. The Workshop is the largest environmentally-friendly vehicle workshop in the region and designed according to the US Green Building Council’s LEED specifications. Al Tayer invited KEPCO to participate in more projects, including Research and Development (R&D), The Internet Of Things (IoT), Big data, and drones. "The Smart Grid Station is a solid stepping stone to build towards the smart future of Dubai, it also enhances the smart infrastructure and Dubai’s position in energy efficiency and sustainable resources. This will contribute to achieving the happiness of citizens and residents, as well as support the sustainability of our resources," said Al Tayer. "The pilot project brings smart grids and smart buildings together. DEWA is exploring the concept of Smart Grid Stations, which connect smart buildings to each other to share information, to help improve energy and water efficiency and make optimal use of renewable energy within a smart city. Upon completing the project, we will cooperate with KEPCO to construct a group of smart residential buildings, further transforming Dubai into a smart city," he added. "This supports the Dubai Plan 2021, to make Dubai the preferred place to live, work, and visit, and our vision to become a sustainable innovative world-class utility. DEWA works to enhance strategic partnerships with international organisations, to enhance Dubai and the UAE’s competitiveness by providing the best government services based on world-class standards to achieve the highest levels of customer satisfaction and happiness," concluded Al Tayer. "I’m very pleased to attend this ground-breaking ceremony. This is the result of mutual cooperation between DEWA and KEPCO. Through this project, both companies will greatly contribute to the development of new industries in the Middle East and over the world," said Cho. DEWA’s Smart Grid Station is a micro grid that combines all 3 of these smart initiatives. It also features several smart elements such as smart homes, photovoltaic panels, wind turbines, an energy-storage system, a smart water system, a smart-cooling system, energy-demand units, distribution automation, smart devices, and smart lighting.
  • 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 Iraq Sticks to Oil Output Growth Plan Despite Spending Cuts Reuters|Alex Lawler and Ahmad Ghaddar Iraq is sticking to an aspiration to increase its oil output by up to a third by 2020 despite warnings from some companies working in OPEC's second-largest producer that projects could be delayed due to spending cuts. Iraq is pumping about 4.5 million barrels per day (bpd) now and is aiming to boost that to 5.5 million to 6 million bpd by 2020, Falah Alamri, head of Iraq's State Oil Marketing Organisation (SOMO) said at an Iraq oil conference on Tuesday. "If there is good investment and the investment is available for the next years, I have no problem with that," he said in reference to the target. "We will not decrease our production; it will continue growth but slowly." A collapse in oil prices, which at $49 a barrel are less than half their level of two years ago, has hit revenue for Iraq and other producers, and last year prompted Iraq to downgrade a more ambitious goal to expand supplies.
  • 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 The price drop has raised concern that Iraq's oil output growth could slow, or stall. Indeed, oil companies have warned Iraq that projects will be delayed if the government insists on drastic spending cuts this year. But Iraq has managed to keep increasing its output so far, despite more pessimistic predictions. Last year, the country was the fastest source of supply growth in the Organization of the Petroleum Exporting Countries, boosting output by more than 500,000 bpd, despite spending cuts and conflict with Islamic State militants. With its finances stretched, Iraq has asked foreign oil companies to rein in their budgets for a second year in a row. Royal Dutch Shell, which is in charge of Iraq's Majnoon field, has been cutting costs by reducing foreign staff. "We are doing our bit," said Marcus Antonini, Shell's country chairman for Iraq, adding that the company had roughly halved its expatriate workforce in Majnoon and planned further reductions. "This allows us to make significant savings on operating expenditures," he told the conference, saying the reduction in foreign workers had not hit output at Majnoon, which was producing 220,000 bpd. Glut Easing Alamri, who is also Iraq's OPEC governor, said a glut in the market is easing and Iraq was seeing a rise in demand for the crude it exports from the south - Basra Light and Basra Heavy. He dampened expectations that OPEC, which meets to set policy on June 2, will agree any steps to support prices, having shifted policy in 2014 to focus on maintaining market share. "There is a lot of demand in summer, more consumption now than the beginning of the year," he said. "After two years, the market is starting to balance but it nearly destroyed many countries." Oil companies in Iraq have to clear spending with the government each year and are then repaid with oil produced from existing fields. With the price collapse, Iraq has been struggling to find enough oil to repay them. The companies and the government have so far failed to agree on spending levels. An oil executive who declined to be named said Iraq's payments to oil companies in 2015 were 30 percent higher than expected and - despite talk about companies exiting Iraq - nothing had happened for now.
  • 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 Indonesia: Pasifik Agra Energi to Build Indonesia's First Cryogenic Energy-Integrated LNG Terminal ..Natural Gas Asia Pasifik Agra Energi will spend about $500 million in building Indonesia’s first cryogenic energy- integrated LNG terminal at an industrial park in Bantaeng regency, South Sulawesi. The privately owned firm conducted a feasibility study in conjunction with a Japanese energy company. The study started in February and would be completed in August, Pasifik Agra president director Westana H. Wiraatmadja said, Jakarta Post reported Monday. The terminal would cater to gas needs of the industrial park, as well as in eastern and central parts of Indonesia. The LNG terminal, Wiraatmadja explained, would be the first in Indonesia to integrate LNG and gas with the utilization of LNG cold energy. According to Jakarta Post, Bantaeng Regent M. Nurdin Abdullah said Bajiminasa Bantaeng, a firm owned by the local administration, would be the gas distribution agent to industrial markets and power plants, while Pasifik Agra would supply the LNG either from local markets or imports. "The gas terminal can support the development of gas-based power plants. The government can help prepare the infrastructure to transform Bantaeng into a city-gas based region," he said.
  • 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 France:Strike hits French oil refineries & Fuel pumps dry-out Reuters + NewBase French riot police have used water cannon and teargas to break up a strike picket blocking access to a large oil refinery near Marseille in an attempt by trade unions to paralyse the country’s fuel supply network in protest at changes to employment laws. The pre-dawn police raids to force down a picket line at the Exxon Mobil Fos-sur-Mer refinery marked an escalation in the standoff between the French president,François Hollande, and protesters led by the CGT union. The union is seeking to force the government to withdraw its planned changes to the labour laws with rolling strikes and picket-line blockades at refineries and fuel depots, as well as open-ended rail strikes. Six of France’s eight refineries have stopped operating or reduced output due to strikes and blockades. The CGT said strike action had been voted at all eight of France’s refineries, and denounced the police raid on the refinery near Marseille as an operation “of unprecedented violence”. There were long traffic jams at fuel pumps across France as regular motorists, taxi and delivery drivers fearing a fuel shortage tried to stock up on petrol. The transport minister, Alain Vidalies, said one in five of the country’s 12,500 petrol stations were either completely dry or out of one type of fuel, a week after oil workers began the strike. Motorists in the Paris region resorted to tracking down fuel tankers and following them to petrol stations. In the north- east, motorists were driving over the border to stock up in Belgium. The government vowed to break the blockades and “liberate” other oil refinery sites. The prime minister, Manuel Valls, said: “We will continue to clear the sites, the depots, which are today blocked by this organisation.” Hollande said the strike participants represented a minority of activists.
  • 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 The CGT’s leader, Philippe Martinez, said: “We’ll see this through to the finish, to withdrawal of the labour law. This is a government which has turned its back on its promises and we are now seeing the consequences.” The CGT’s hard line against Hollande’s changes to labour laws comes after three months of protests that brought hundreds of thousands on to the streets. Earlier this month, the Socialist government – lacking the parliamentary backing to vote in the changes, which would make it easier for employers to hire and fire workers – used a decree to force the bill into law. After repeated street demonstrations failed to budge the government, the CGT union has toughened its strategy, organising rolling strikes at oil refineries and some ports. It has also called on its members to stage weekly strikes on state railways. An open-ended strike by members of certain unions on the Paris Métro and suburban commuter train network has been called for 2 June, a week before the Euro 2016 football tournament opens. The grim mood has been compounded by violence on the margins of demonstrations and violent skirmishes between protesters and police in recent weeks. Several Socialist party offices in towns in France have had windows smashed or graffitied. In the early hours of Monday morning, the Socialist party office in Grenoble was left pockmarked by 12 bullets. The CGT’s brinkmanship strategy also marks a battle for influence inside an organisation that was once France’s biggest trade union group but is now facing competition from other unions. The standoff is intended to send a message about the nature of a trade union’s role, with the CGT attempting to show itself as the opposition to the government at a time when Hollande is facing growing dissent from leftwing voters. Hollande, who hopes to run again for office next year despite being France’s least popular president on record, had feared “end-of-term” protests echoing that faced by Nicolas Sarkozy over pension changes in 2010. Protesters have blocked fuel depots and oil terminals on the English Channel coast in Le Havre and on the Mediterranean coast in Fos-Lavera, disrupting the distribution of petrol and other refined products. France has a total refining capacity of nearly 1.5 million barrels per day of oil, which equates to around 1 percent of total global daily crude demand. Total, US rival ExxonMobil and PetroIneos, owned by PetroChina, operate the eight facilities. ExxonMobil said on Tuesday output at its two refineries was at normal levels, while PetroIneos could not be reached for comment. A prolonged refinery strike in France in 2010 led to a glut of crude in Europe because it could not be delivered to refineries, and a spike in the prices of refined products due to low output from refineries.
  • 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 Germany’s renewables electricity generation grows in 2015, but coal still dominant..Source: U.S. EIA, based on German Statistical Office Renewable electricity generation in Germany increased to 194 billion kilowatthours (kWh) in 2015, representing 31% of the country's gross electricity generation. The renewables electricity growth in 2015 was the largest in both percentage and absolute terms (19% and 32 billion kWh, respectively) in at least a decade. Germany's Energiewende, or energy transition policy, focuses on renewable energy and sustainable development. Energiewende goals include eliminating nonrenewable energy sources from Germany's energy portfolio, phasing out nuclear power generation, reducing dependence on energy imports, and lowering carbon emissions. Official goals call for greenhouse gas reductions to 80% to 95% of 1990 levels by 2050 and a gradual phase-out of nuclear power by 2022. In 2015, 44% of Germany's electricity production was generated from coal, 11% from other fossil fuels, and 15% from nuclear energy. Electricity generated from renewable sources has tripled in Germany over the past 10 years. Based on Energiewende goals, the share of power generated from renewable sources is set to increase to 40% to 45% by 2025 and to more than 80% by 2050. Most of Germany's expected growth in renewable electricity comes from solar photo voltics (PV) and wind, which currently provide 20% of Germany's total electricity. Hydropower and other renewables such as biomass and waste provided 11% of Germany's overall electricity supply in 2015, but these shares are not expected to grow significantly.
  • 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 The German government has supported renewable electricity growth by promising a fixed, above- market price for every kWH of energy generated by solar PV or wind and delivered to the grid, a policy known as a feed-in tariff. By law, these renewable sources have priority over traditional generation, meaning that other forms of generation must be curtailed to accommodate fluctuations in renewable electricity generation. Over the past five years, these policies have helped to double the amount of wind generation. Wholesale electricity prices in Germany have been declining, but residential retail prices have risen and are expected to continue to increase because of higher taxes and fees charged to consumers. For instance, one surcharge for renewable electricity increased from 8.8% of the residential electricity price in 2010 to 17% in 2013. Taxes and surcharges make up about half of the average residential electricity rate, and tariffs account for the remainder. In 2014, the average sales-weighted retail price for residential consumption in Germany was about 35 cents/kWh, while the average residential retail price in the United States was about 13 cents/kWh. Along with Denmark, Germany has among the highest residential electricity prices in Europe. As a net electricity exporter, Germany's rapid growth in electricity production has created problems for both Germany and its neighbors. Germany currently lacks the infrastructure to send surplus electricity from the north to the more populous areas in the south. A large volume of the surplus power instead flows through transmission grids to Germany's neighbors, often creating power surges. Poland and the Czech Republic have invested in technology to avoid blackouts from power surges that originate in Germany on particularly windy days. Germany has identified the need for more than 3,800 kilometers of new transmission lines that would run from the north to the south of Germany to meet increasing growth in both electricity demand and supply, but these infrastructure proposals have been opposed by municipalities and citizens. Last year Germany signed several agreements with its neighbors to integrate power markets and to eliminate overcapacity of the grid. The electricity grid problems in Germany reflect a larger, continent wide problem that has been elevated to the European Commission in Brussels, where policy makers advised that an integrated, renewables-focused electricity market should be a political priority for the European Union. Germany has made several changes to its energy policies to promote renewable growth while also controlling costs. In 2014, changes were made to the feed-in tariffs. In the future, instead of fixed tariffs, electricity producers may have to compete in auctions. If renewable growth targets are exceeded in a given year, the feed-in tariff incentives for the following year would decrease to balance the growth.
  • 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 NewBase 25 May 2016 Khaled Al Awadi NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE Oil prices push closer to $50, U.S. crude hits highest in seven months Reuters + Newbase Oil futures pushed closer to $50 a barrel on Wednesday, with U.S. crude hitting its highest in over seven months after industry data suggested a larger-than-expected drawdown in U.S. crude inventories last week. Oil markets were also supported by an overnight surge in U.S. equities and strong U.S. home sales that could point to the Federal Reserve raising interest rates as early as June. U.S. crude futures had climbed 62 cents to $49.24 a barrel by 0249 GMT, after ending the previous session up 54 cents. The benchmark earlier on Wednesday touched its highest since mid-October at $49.35. Brent futures rose 55 cents to $49.16 a barrel, having closed up 26 cents to snap a four-day slide. U.S. crude stocks dropped by 5.1 million barrels to 536.8 million last week, data from industry group the American Petroleum Institute showed on Tuesday. That was double expectations of analysts polled by Reuters. Some of the drawdown was due to falling imports due to wildfires in Canada, which lost about 1.5 million barrels per day in production, said Ben Le Brun, market analyst at Sydney online brokerage OptionsXpress. Although some crude producers restarted operations on Tuesday in Canada's energy heartland. Oil price special coverage
  • 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 The stocks draw also reflected a strengthening U.S. economy. "A strong U.S. economy is good for oil consumption and demand," Le Brun said. Gasoline stocks climbed by 3.6 million barrels, while inventories of distillate fuels, includingdiesel and heating oil, fell by 2.9 million barrels, the API data showed. Investors are awaiting confirmation of the big draw when the U.S. Energy Information Administration (EIA) issues official inventory figures on Wednesday. "Technically the market is gearing up for WTI to go above $50 a barrel and it's intriguing on where it goes from there," said Le Brun. "I think the cap is not too far above that level - the world is still awash with oil even if it's off the peaks." Oil prices were buoyed by a rise in U.S. stocks, with the Dow Jones industrial average, the S&P 500 and the Nasdaq composite all closing up. Oil prices shrugged off the impact from a strong U.S. dollar which hovered close to a 10-week high against the euro in Asian trade on Wednesday. A strong dollar typically makes greenback-denominated oil more expensive for holders of other currencies. Iraq is pumping about 4.5 million bpd now and is aiming to boost that to 5.5 million to 6 million bpd by 2020, the head of Iraq's State Oil Marketing Organisation (SOMO) said. U.S. crude stocks dropped by 5.1 million barrels to 536.8 million last week, data from industry group the American Petroleum Institute showed on Tuesday. That was double expectations of analysts polled by Reuters. Gasoline stocks climbed by 3.6 million barrels, while inventories of distillate fuels, including diesel and heating oil, fell by 2.9 million barrels, the API data showed. Investors are awaiting confirmation of the big draw when the U.S. Energy Information Administration (EIA) issues official inventory figures on Wednesday. "U.S. government data are expected to show that oil inventories have retreated from an eight- decade high, putting further upward pressure on prices," ANZ said in a note. That came as some crude producers restarted operations on Tuesday in Canada's energy heartland, where wildfires have knocked out up to around 1.5 million barrels per day (bpd) of shale production. Almost all of the oil from the tar sands production is shipped to the United States, said New York- based energy consultant Poten. Oil prices were buoyed by a rise in U.S. stocks, with the Dow Jones industrial average, the S&P 500 and the Nasdaq composite all closing up.
  • 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 HE al-Sada says crude is 'not at a fair price', $65 oil price 'vital' for investment.. Gulf Times Oil markets are “rebalancing” but crude is “not at a fair price” yet, HE the Minister of Energy Dr Mohamed bin Saleh al-Sada has said and noted a minimum price of $65 a barrel is "badly needed at the moment". "The oil market is recovering slowly but steadily. Luckily, the fundamentals show it is heading in the right direction," al-Sada, also the current Opec president told the Associated Press."I don't think we are yet at a fair price. We need to have a fairer price so that we can have the ability to invest more in order to secure the energy supply to the world and avoid any price shock," he said.Benchmark Brent futures were trading at around $48 a barrel on Tuesday.The oil market has moved into a production deficit earlier than expected following supply disruptions and an increase in demand, Bloomberg said quoting Goldman Sachs Group. Other banks such as Morgan Stanley, Barclays and Bank of America Corporation have also noted that supply losses are leading markets to rebalance. "The disruptions are getting people thinking that supply may soon trail demand," Again Capital’s Kilduff said. "This is especially true given the thesis that the market was going to come into balance later this year anyway." According to Bloomberg, investors have “some sad reasons to be optimistic” about oil prices. Outbreaks of violence in Nigeria, export troubles in a divided Libya and wildfires ripping across the Canadian oil sands are reviving wagers that crude markets will tighten. Speculators’ net-long position in benchmark US crude, a measure of how bets on a price increase outnumber bearish ones, climbed by the most contracts since March, according to data from the Commodity Futures Trading Commission. "The main bullish factor has been the outages," said Michael Wittner, the New York-based head of oil-market research at Societe Generale SA. "There are many outages, led by Nigeria and Canada. We are missing a lot of crude." West Texas Intermediate futures are heading for a fourth-straight monthly gain, which would be the longest rally in five years, as evidence mounts that demand may soon outpace supplies. Investors’ net-long position in WTI futures climbed 14% in the week ended May 17, according to the CFTC. Short positions, or bets crude prices will drop, shrank while longs advanced. WTI futures surged 8.2% on the New York Mercantile Exchange during the CFTC report week, while the June contract on Friday dropped 0.9% to close and expire at $47.75 a barrel.
  • 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 NewBase Special Coverage News Agencies News Release 25 May 2016 For Oil's Future, See Schlumberger Bloomberg- Liam Denning When you're the hired help, you tend to bear the brunt of your employer's misfortunes. And yet Schlumberger, the biggest of Big Oil's service providers, seems in one way to be doing better than its clients: p of covering its dividend, Schlumberger had enough cash flow over the past four quarters to cover most of the cost of buying back $1.9 billion of its own stock -- more than even Exxon Mobil did during the same stretch. Of course, indulging in schadenfreude over the misfortune of some of your biggest customers isn't a wise strategy. Those negative bars in the chart above are ultimately bad news for oilfield services companies -- because the way oil majors try to fix them isn't, funnily enough, cutting dividends to shareholders: The majors have been simultaneously putting off some projects and demanding discounts on others, dealing oilfield services revenues a double blow. Signs are mounting that the industry is really struggling. For example, Baker Hughes, despite having just gotten a $3.5 billion break-up fee from Halliburton after their failed merger, is pulling back in certain countries to stretch resources more efficiently. And only last week, FMC Technologies and Technip announced a cross-border, nil-premium, all-stock merger -- not the sort of deal bankers pitch in good times. But Schlumberger is making the best of a bad situation. For one thing, its margins have held up well despite a real drag from its North American business:
  • 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 There's more to this than cost-cutting, though. What really marks Schlumberger out is that it isn't treating this downturn in the energy market like business-as-usual. Instead, as its CEO Paal Kibsgaard has been laying out in various presentations, Schlumberger doesn't think triple-digit oil prices are coming back anytime soon. That means the "hold your breath and hope for better times soon" playbook isn't going to work. What's more, the oil majors' business model wasn't performing terribly well even when oil prices were bobbing around the $100 mark.
  • 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 The oil industry's problem is that its costs tend to follow prices, rather than the other way around. So while the supercycle produced fantastic returns on capital until the financial crisis, it also provoked a spending boom and rampant cost inflation -- $100 oil makes almost any project look like a good bet. What the majors need to do is take a leaf from their smaller brethren in the independent exploration and production sector. They've been busy boosting productivity in the shale fields, leading to structurally lower costs through speeding up drilling times and experimenting with different methods of fracturing rock, rather than simply squeezing their contractors. We Shale Overcome Shale producers have made dramatic and sustained productivity gains to reduce their breakeven prices. If oil majors are to achieve the same type of productivity gains, they will need to change the way they work. Schlumberger proposes that the old model, of having multiple contractors tender bids to build this or that bit of equipment or run this or that process, won't do the job. While it might have yielded competitive bids for discrete elements of a project, the drawback was a lack of incentive for service companies to really innovate and a disjointed approach from having so many cooks rubbing elbows in the kitchen. Instead, an integrated approach, whereby a contractor can offer a suite of technology and services covering the entire project, may ultimately prove more efficient if it boosts the overall amount of oil and gas recovered from a field or, crucially, compresses the timescale from discovery to production. That is what lies behind Schlumberger's $15 billion acquisition of Cameron International last year and initiatives such as its integrated hydraulic fracturing system -- a plug-and-play shale-development platform -- due to launch next year. The Technip-FMC deal follows a similar logic to offer efficiencies via integration rather than fragmented bidding. Low oil prices also open up the opportunity for Schlumberger to keep nibbling at the oil majors' lunch. Its in-house Schlumberger Production Management business effectively replicates the exploration and production business that is the oil majors' bread and butter, putting the company's own capital to work and taking over direct management of an oil or gas field.
  • 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 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 25 May 2016 K. Al Awadi
  • 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