New base special 15 september 2014

Copyright © 2014 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 15 September 2014 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
New Saudi refining capacity adds to price pressure
Gulf News + NewBase
Saudi Aramco and joint venture partner Sinopec have started test runs at their 400,000 barrel per
day (bpd) Yanbu refinery, located in the oil-rich kingdom.
This puts the new plant on schedule to begin commercial exports in November, possibly even by
the second half of October, according to trade sources. Yanbu will be the second major refinery to
come online in Saudi Arabia in little more than a year, following the September 2013 start-up of
the similar 400,000 bpd Jubail plant, a joint venture between Aramco and France’s Total.
Both these plants are largely aimed at the export
market and can supply to both Europe and Asia
because of their location. However, Yanbu is
coming online at a time when crude demand
growth in Asia is disappointing, the region’s
refiners are struggling to make decent profits,
crude prices have gone into contango and Middle
East producers are cutting official selling prices
(OSPs).
The extra refined products from Yanbu may have
two undesirable impacts, from a Saudi
perspective. The first is that they will lower
demand from the region’s refiners for crude
deliveries as competition in the refined fuels
market gets tougher, prompting some plants to
run at lower utilisation rates.
The second is that the additional products will put
downward pressure on prices, thus reducing Asian margins, prompting refiners to ask for greater
discounts on crude supplies. Saudi Aramco cut its OSP for its flagship Arab Light blend for Asian
refineries for October cargoes to a discount of 5 cents a barrel to regional crude marker
Oman/Dubai.
That was a cut of $1.70 (Dh6.24) a barrel from September cargoes, bigger than the market had
anticipated and the largest reduction since February 2012. It’s also the first time since November
2010 that Arab Light has been at a discount to Oman/Dubai, according to a report from
consultants Energy Aspects.
While the large cut in the OSP is probably in part a response to the sharp fall in the spread
between Brent and Dubai crudes, it may also be a sign of Saudi concern about the state of Asian
demand. The premium of Brent to Dubai dropped from a 2014 peak of $4.96 a barrel on June 13
to just 94 cents on August 28.
This has led Asian refiners to prefer crude priced off Brent rather than Dubai, thereby prompting
Middle East producers to start offering lower OSPs. The switch to contango for Oman futures

traded on the Dubai Mercantile Exchange, whereby prompt prices are weaker than future months,
is also a sign of weak current demand.
This market structure has led to traders buying oil and storing it for later sale, which creates a
further headache for producers, since when the stockpiled oil is eventually released, it will be a
drag on prices.
Asian refinery margins have recovered in recent weeks, with the five-day average for a Singapore
plant using Dubai at $5.63 a barrel, slightly higher than the moving 365-day average of $5.35 but
weaker than levels above $6 that prevailed for most of the January to April period this year.
Asian refiners are still not making as much money as their counterparts on the US Gulf coast or in
north-west Europe, and the addition of new plants in the region, such as Yanbu, will make life
tougher for them.
What the start-up of Yanbu highlights is that Middle East oil producers will probably have to cut
crude prices further in the next few months, or hope for a cold northern winter to spark a surge in
demand.

Global oil inventories rise as prices slump
The National + NewBase
In the murky world oil market, one of the most reliable gauges of supply and demand is what is
happening with oil inventories and arbitrage.
Over the past two months or so, world oil inventoe ries have risen sharply – and counter-
seasonally – as benchmark prices in Europe and the Middle East have slumped by about 17 per
cent from their summer peaks. Oil
prices for near-term delivery have
fallen more sharply than for
delivery further in the future,
leaving the market in so-called
contango – that is, where prices
slope upward over time.
There has been much
speculation recently that the
pattern is repeating, although not
everyone is convinced. The
International Energy Agency in its
monthly oil market report last
week was sceptical, concluding
that “Inventory data for August and tanker tracking data do not support the idea that floating
storage has significantly increased, and anecdotal reports suggest that market participants have
put their extra cargoes into land-based storage.
With the price spread between first‐ and second‐month Brent prices on the ICE futures market
remaining at about $0.80 [per barrel] over July and August, it appears that the economics support
land-based storage but not floating storage, which normally requires a sustained contango of at
least $1 [per barrel] to cover the higher costs involved, such as freight, insurance and bunker fuel.”
The IEA report concluded: “During August, a number of West African, Middle Eastern and North
Sea crude cargoes were bought by traders and initially thought to be destined for floating storage,
although it now appears that these were shipped to the Saldanha Bay terminal near Durban,
South Africa which offers easy export routes into Asian and Atlantic Basin markets.”
One of the clearest trends in the past few years is the sharp decline in oil imports by the United
States, which have fallen from a peak in 2005 around 12 million barrels per day (bpd) to about 7.5
million bpd as demand remained flat amid rising domestic production. US imports from the Middle
East in that period have been relatively steady, but those from West Africa have fallen sharply and
instead have been diverted into an already well-supplied Asian market.
The US government’s energy information agency last week said, “In the United States, Europe,
Japan, and other mature industrialised economies, liquid fuel demand has levelled off and is
projected to slowly decline...The largest potential for growth in demand for liquid fuels lies in the
emerging economies of China, India and countries in the Middle East.”
A mild winter in the northern hemisphere and failure to spur growth in emerging markets will mean
those oil storage tanks will stay brimming

Kuwait: KNPC names NBK adviser for $12bn refinery upgrade
Reuters + NewBase
Kuwait National Petroleum Co (KNPC) has chosen National Bank of Kuwait's investment banking arm to
advise it on financing options for its multi-billion-dollar Clean Fuels Project, the bank said on Sunday.
Part of the country's 30 billion
dinar ($104.7 billion) economic
development plan, the Clean
Fuels Project will upgrade and
expand two of the country's
largest existing refineries with a
focus on producing higher-
value products such as diesel
and kerosene for export. NBK
Capital has been chosen to
evaluate funding requirements
and structures for the state-run
refiner and will be in charge of
raising finance on the best
possible terms for KNPC. This
will happen over the next 12
months, the statement added.
Contracts worth around $12
billion were awarded in
February to international
companies including Japan's
JGC Corp, Britain's Petrofac
and US-based Fluor Corp for
construction work on the
project. The Clean Fuels Project
is expected to be completed by
May 2018 and to be fully
operational by the end of 2018,
Mohammed Ghazi Al-Mutairi,
chief executive of KNPC, told
Reuters last week.
Under the project, the capacity of the Mina Al-Ahmadi refinery will drop to 347,000 barrels per day (bpd)
from 466,000, while Mina Abdulla refinery's capacity will rise to 454,000 bpd from 270,000. The reduction
in the capacity of the Ahmadi refinery after shutting one of its crude distillation units will be compensated
for by adding new units to produce higher-value products.

Kingdom’s diversification aims to increase intra-regional trade
http://www.arabnews.com/economy/news/630261
Although Saudi Arabia is the Middle East’s largest goods exporter, accounting for a third of total
goods exported in 2013, only 5.3 percent of these were destined for other nations within the
region, according to a new report by ICAEW.
According to Economic Insight: Middle East Q3, 2014, the GCC nations are leading the region’s
current rail and aviation investment boom as they race to encourage more cross-border trade and
address increasing congestion issues in the face of rampant population growth and rapidly-
developing tourism markets.
Saudi Arabia is leading the charge with investment plans worth $45 billion in a bid to boost freight
and passenger capacity, followed by Qatar and the UAE with investment plans worth $37 billion
and $22 billion respectively.
The planned GCC Railway, a 2,177 km project, which will link the networks of the six GCC
countries, represents the most ambitious aspect of the region’s railway infrastructure plans. With
the Middle East set to become one of the world’s most important aviation centers, expansion of
airports in all the major GCC cities has also become a priority.
Saudi Arabia’s plans include the North South Railway linking the capital with mining centers near
the Jordanian border and ports on the Gulf, and the Landbridge freight link connecting the
Kingdom’s east and west coasts and enabling fast cargo shipments between the Gulf and the Red Sea.
The GCC’s huge infrastructure pipeline is expected to see transport and logistics sectors play an
increasingly important role in the region’s economies. They should start to generate significant
value from these fixed assets in the form of efficient supply chains, delivery of goods and

personnel across borders and supporting the activities of the travel and tourism industries. Kuwait,
Saudi Arabia, the UAE and Oman will likely net the biggest windfalls, with logistics forecast to
contribute 13.6 percent, 12.1 percent, 11.7 percent and 11.7 percent to their respective
economies by 2018.
“While Saudi Arabia
currently has some of the
lowest levels of intra-
regional trade of all the
GCC nations, exporting
marginally more than
Kuwait and Qatar, this
situation is expected to
change significantly when
the Kingdom’s rail and
airport projects come
online. This diversification
will provide a necessary
boost to the Kingdom’s
nonoil sectors and reduce
its dependency on
hydrocarbons,” said
Michael Armstrong FCA,
ICAEW regional director for
the Middle East, Africa and
South Asia (MEASA).
While the GCC’s goods
trade integration lags
behind other regions in the
world, free trade policies, continued minimization of tariff and non-tariff barriers to trade and
transport infrastructure will help foster deeper intra-regional trade links. Currently, Saudi Arabia is
the least open trade market in the GCC, scoring 74 percent on the Heritage Foundation’s Trade
Freedom Index.
“With global oil prices forecast to fall over the medium-term as global supply increases, the need
for economic diversification is becoming more pressing for the GCC countries. Saudi’s huge
investment in regional transport and logistics networks should pay off and contribute to stronger
growth. However, attention is also needed on trade reforms that will enable greater integration
with regional and international markets,” said Charles Davis, director, Centre for Economics and
Business Research.
With extensive infrastructure investment and fiscal expansion set to continue in Saudi Arabia, the
Kingdom’s GDP is expected to grow 4.3 percent in 2014 and rising to 4.4 percent next year,
according to the report.
Real GDP in the UAE is expected to increase by 4.7 percent, with the pace of growth set to
decelerate marginally in 2015-2016. This is due to nonoil activities driving job creation and growth.
Growth of real GDP per capita across the Middle East

Mitsubishi acquires stake in Anadarko exploration block off Ivory Coast
Press Release, September 12, 2014; Image: Mitsubishi Corporation
Mitsubishi Corporation (MC) has agreed to acquire a 20% ownership interest in Block CI-
103 Hydrocarbon Production Sharing Contract from US-based Anadarko Petroleum
Corporation.

Block CI-103, which is located off the coast of Côte d’Ivoire, is currently in appraisal. The transfer
of the interests will be finalized once the government of Côte d’Ivoire issues the required
approvals.
Block CI-103 is located about 50 kilometers off the coast of Côte d’Ivoire, at a water depth of
2,000 meters. Anadarko, Tullow Oil Plc. and PETROCI (Côte d’Ivoire’s national oil company), who
are the interest holders in the block, have received approval to proceed with appraisal operations,
having confirmed oil and gas deposits at an exploratory well they drilled in 2012. Further
evaluation works for deposits, including conducting shallow hazard surveys and drilling additional
appraisal wells, will proceed with MC as a new entrant under the ownership structure outlined
below, while the parties work towards reaching a final investment decision.
Ever since the discovery of oil and gas deposits off the coast of neighboring Ghana several years
ago, Côte d’Ivoire and the Western Coast of Africa, have also been attracting much international
attention as an area for oil and gas wealth. MC enters the scene in partnership with Anadarko, a
global leader in deep-water exploration and development, and will draw on MC’s expertise which
has been accumulated through the projects in Western Coast of Africa, Gabon and Angola, over
many years. This is the first time that a Japanese company is undertaking an oil and gas project in
Côte d’Ivoire.

USA: Natural gas storage deficit to five-year average continues to narrow
Source: U.S. Energy Information Administration, Weekly Natural Gas Storage Report (WNGSR)
Storage injections have continued to outpace the five-year (2009-13) average this summer, with inventories
as of September 5 at 2,801 billion cubic feet (Bcf), according to data from the Weekly Natural Gas Storage
Report (WNGSR). The winter of 2013-14 led to a large drawdown in inventories, with stocks ending March
2014 almost 1 trillion cubic feet (Tcf) lower than the five-year average and at their lowest end-March level
since 2003. Relatively higher weekly net injections into storage reduced that deficit to 463 Bcf as of
September 5.
EIA's latest Short-Term Energy Outlook (STEO) expects that this trend will continue, with forecast
inventories of 3,477 Bcf by the end of October, 355 Bcf below the five-year average and the lowest end-
October level since 2008. However, the effect of these lower inventories on winter natural gas markets is
expected to be mitigated by increasing new production, as evidenced by decreasing seasonality in natural
gas futures contracts.
Although the injection season began slowly, injections have exceeded their average comparable-week levels
in each week since April 18. Strong domestic production growth and mild demand have supported strong
injections through the summer. Dry
natural gas production grew to 70.2
billion cubic feet per day (bcf/d) in
June, up nearly 6% from 66.4 bcf/d
in June 2013, while mild weather
reduced natural gas use for electric
generation. Natural gas prices have
also fallen during the injection
season. Working natural gas
injections since April 1 are above
the five-year average in every
region: 24% higher in the East,
53% higher in the West, and 69%
higher in the Producing region. STEO projects that East region inventories will have gone from 58% below
the five-year average at the end of March, to 9% below the five-year average at the end of October. West
region inventories will have gone from 45% below the five-year average to 2% below the five-year average,
and Producing region inventories will have gone from 53% below the five-year average to 15% below the
five-year average in that time.

NewBase Special Coverage Report
Azonto Petroleum announces half yearly results - updates West Africa
operations Source: Azonto Petroleum
Azonto Petroleum, the West African focussed exploration and production company, has
announced its audited results for the six months to 30 June 2014.
Financial Overview (all amounts in A$ unless otherwise specified):
• Net loss after tax of $3.8 million
• Administrative expenses of $5.2 million on gross basis but only $3.4 million on a net basis
(excluding share-based payments and depreciation) after income from services provided to
Vioco
• Cash at period-end of $8.4 million
Corporate Highlights
• Successfully progressed the development plans for the Gazelle gas field, working towards
project sanction currently targeted for end 2014
• Updated Resources Report for the Gazelle Field completed by RPS Energy, confirming
Azonto's internal estimates of the field's contingent resources
• Six month extension to the current exploration period granted for the Accra block in
Ghana, enabling farm-out process to commence in June 2014
• Significant cost savings achieved through office relocations in London and Perth
• Management strengthened through appointment of Technical Director
Post-period Highlights
• Revised draft of Gazelle Field Development Plan submitted in July based on supply of gas
directly to a new power plant to be constructed by state electricity company
• Discussions commenced with Ghananian authorities over possible further extension of
Accra exploration period to allow chance to complete the farm-out process
• Approval received from the Australian Government for the surrender of the licence for the
WA-399-P exploration block with effect from 7 July, 2014.
Commenting on today's announcement, Azonto's Managing Director, Mr. Rob Shepherd
said:
'The last six months has seen encouraging progress across the Company's assets. Most
importantly, we have submitted the revised draft of the Field Development Plan for Gazelle and
are targeting project sanction by the end of 2014, subject to the associated power project being
on a similar schedule. The Accra Block dataroom has seen considerable interest and we are
hopeful that we can extend the exploration period again to allow us the possibility of successfully
completing the farm-out process. We have also been actively reviewing a number of new
business opportunities and are making good progress in that regard. In summary, the period has
seen a significant ramp up in activity and this is a trend expected to continue as we approach
some key junctures in the coming months.'

Côte d’Ivoire–CI 202 ( Ivory Coast )
Azonto holds a 35% interest in Vioco, the operator of the CI-202 block offshore Côte
d’Ivoire, with an 87% participating interest. The other 65% of Vioco is held by Vitol.
Côte d’Ivoire Block CI-202
Effecting Participating Interest 30.5% (35% x 87%)
Contingent Resource (P mean) 40 MMBBLS & 270 BCF* (Vioco gross)
Prospective Resource (P mean) 898 MMBBLS & 2,936 BCF* (Vioco gross)
Operator Vioco Petroleum Ltd
Work Program Development of Gazelle gas field (85BCF & 2MMBBLS, P50)
* Competent Person Report dated May 2014
BLOCK CI-202
Block CI-202 is located offshore Côte d’lvoire in West Africa and is operated by Vioco Petroleum
Limited ("Vioco"), with an 87% participating interest. Petroci holds the remaining 13% which is fully
carried by Vioco. The block is located 30km southeast of the commercial capital of Abidjan, is
707km2
in area and forms part of the Ivorian Basin which extends westwards into Liberia and
eastwards into Ghana. Water depths range from 20m to 1000m.
The Block is a highly prospective exploration licence with 5 oil and gas discoveries. It has a
significant database of block-wide high quality 3D seismic, 15 wells and over 20 production tests,
some of which have produced gas at up to 37 mmscfd and oil at over 2,000 bopd. These
discovery and appraisal wells are located in shallow water depths of between 40 and 85m.

In January 2013, RPS completed a Competent Person Report (CPR) over the CI-202 concession
the results of which are summarised below:
Gazelle Area
• The Gazelle field contains contingent resources of 85 BCF& 2MMBLS.
• Eight wells drilled to date of which six tested oil or gas.
• On 7 November 2013 Vioco signed a new Production Sharing Contract (PSC) for block CI-
202, which restored the original area of the block and granted three consecutive exploration
periods over a total of 7 years.
• A Field Development Plan has been submitted which will lead to the grant of an Exclusive
Exploitation Area in respect of the Gazelle Field allowing for 25 years of exploitation
Hippo Area
• Contains the Bubale oil discovery and a gas and condensate (Hippo) discovery
• Significant un-appraised resource potential
Impala Area
• One oil and two gas discoveries
Addax Area
• One oil discovery (Addax) with a successful appraisal well

Exploration
In 2012 Azonto acquired the first block-wide 3D seismic survey, covering areas previously not
imaged by 3D seismic. This survey, which is of a high quality, has been processed and
interpreted. The survey revealed stratigraphic traps, similar to the discoveries in the nearby
Ghanaian acreage. Five prospects, with Mean Prospective Resources of 538MMbbls and
1,896Bcf have been high-graded for further study.

Operations
During 2012 Azonto drilled three appraisal/development wells on the Gazelle Field. Since then activity has
been confined to planning the field's development.
Your partner in Energy Services

Your partner in Energy Services

Khaled Malallah Al Awadi,
Energy Consultant
MSc. & BSc. Mechanical Engineering (HON), USA
ASME member since 1995
Emarat member since 1990
Mobile : +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 yearsKhaled Al Awadi is a UAE National with a total of 24 years of experience in theof experience in theof experience in theof experience in the Oil & GasOil & GasOil & GasOil & Gas
sector. Currently working as Technical Affairs Specialist for Emirates Gsector. Currently working as Technical Affairs Specialist for Emirates Gsector. Currently working as Technical Affairs Specialist for Emirates Gsector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp.eneral Petroleum Corp.eneral Petroleum Corp.eneral Petroleum Corp.
“Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a“Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a“Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a“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 ,UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat ,UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat ,UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat ,
responsible for Emarat Gas Piresponsible for Emarat Gas Piresponsible for Emarat Gas Piresponsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , hepeline Network Facility & gas compressor stations . Through the years , hepeline Network Facility & gas compressor stations . Through the years , hepeline Network Facility & gas compressor stations . Through the years , he
has developed great experiences in the designing & constructinghas developed great experiences in the designing & constructinghas developed great experiences in the designing & constructinghas developed great experiences in the designing & constructing of gas pipelines, gas metering &of gas pipelines, gas metering &of gas pipelines, gas metering &of gas pipelines, gas metering &
regulating stations and in the engineering of supply routes. Many years were spentregulating stations and in the engineering of supply routes. Many years were spentregulating stations and in the engineering of supply routes. Many years were spentregulating stations and in the engineering of supply routes. Many years were spent drafting, & compilingdrafting, & compilingdrafting, & compilingdrafting, & compiling
gas transportation , operation & maintenance agreements along with many MOUs for the localgas transportation , operation & maintenance agreements along with many MOUs for the localgas transportation , operation & maintenance agreements along with many MOUs for the localgas 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 andauthorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andauthorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE andauthorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and
Energy program broadcasted internationallEnergy program broadcasted internationallEnergy program broadcasted internationallEnergy program broadcasted internationally , via GCC leading satellite Channels .y , via GCC leading satellite Channels .y , via GCC leading satellite Channels .y , via GCC leading satellite Channels .
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 15 September 2014 K. Al Awadi

New base special 15 september 2014

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à New base special 15 september 2014

Similaire à New base special 15 september 2014 (20)

Plus de Khaled Al Awadi

Plus de Khaled Al Awadi (20)

Dernier

Dernier (20)

New base special 15 september 2014