New base 1003 special 22 february 2017 energy news

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NewBase Energy News 22 February 2017 - Issue No. 1003 Edited & Produced by: Khaled Al Awadi

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UAE: Final Adco stake 4%, awarded to China’s CEFC, MU$ 888 LeAnne Graves

The Abu Dhabi National Oil Company (Adnoc) said on Monday it has awarded a 4 per cent stake in the Adco concession to CEFC China Energy in a US$888 million deal, a day after it also said China’s state-controlled China National Petroleum Corporation (CNPC) would be a partner in the emirate’s prized onshore oilfields.

Together with CNPC’s 8 per cent stake, the award to CEFC means that Chinese interests account for the largest foreign holding in the Adco, paying a combined $2.65bn to enter the concession.

"CEFC will complement the technical strengths of our existing partners and bring a new dynamic with their financial, commercial and investment experience," said the Adnoc chief executive Sultan Al Jaber.

The addition of CEFC, a private conglomerate, closes out the more than three-year hunt for partners for the 40-year renewal of the concession which includes an family of 15 oilfields – responsible for more than half of the emirate’s production of 3.1 million barrels of oil per day.

Adnoc chief executive Sultan Al Jaber and CEFC chairman Ye

Jianming during the signing of the agreement. Courtesy Adnoc




The Abu Dhabi Company for Onshore Petroleum Operations (Adco), in which Adnoc has a 60 per cent stake, is the concession operator and the other foreign partners are Total of France, BP, Inpex of Japan and South Korea’s GS Energy.

CEFC has been working to gain more assets in the Middle East, particularly in Abu Dhabi, for the past couple of years and will look to integrate Adnoc’s onshore oil reserves with its storage facilities in China and Southeast Asia.

"By building an energy corridor, linking China, the Middle East and Europe, we can connect the Chinese market with the upstream resources of Abu Dhabi and the terminals in Europe," said Ye Jianming, CEFC chairman.

The company said that it had focused its investments in this direction to speed up its overseas exploration and leverage the 10 million tonnes of crude oil a year it has been receiving from Abu Dhabi.

"Through a strategic cooperation agreement with Abu Dhabi, the company has secured its long-term and stable oil rights and interests, engaged in the exploration of upstream oil and gas in Abu Dhabi and formed collaboration in energy reserves and open market trading," it said.

CEFC has been increasing its investment portfolio with revenue nearly doubling to RMB263.1bn over the three years to 2015.




Abu Dhabi Oil Deal is Stakes in $22 Billion

Asia will show the fastest growth in energy demand over the next two decades, according to the International Energy Agency. Abu Dhabi is among Persian Gulf oil producers including Saudi Arabia and Iraq that are tapping Asia for energy investments. While European and U.S. companies have pumped oil in the Middle East for more than a century, their Asian counterparts are relative newcomers. Japanese and Korean companies are also investors with Adnoc in the deposits.

Export Pipeline

CNPC and CEFC are joining the Abu Dhabi Co. for Onshore Petroleum Operations, or ADCO. Japan’s Inpex Corp. owns 5 percent of the venture, while GS Energy Corp. of South Korea holds 3 percent. No companies from Asia were involved in the previous concession for the onshore fields. Abu Dhabi plans to retain a 60 percent stake in ADCO.

Japanese companies are partners in at least four other oil-production ventures in Abu Dhabi, the largest sheikhdom in the United Arab Emirates. Korean and Chinese companies are exploring at smaller concessions in the emirate. CNPC’s engineering arm also helped build an export pipeline in Abu Dhabi.

Elsewhere in the region, CNPC is

developing Iraq’s biggest oil field,

together with BP. China Petroleum

and Chemical Corp. is a partner in a refinery in Saudi Arabia, and Chinese firms are developing crude deposits in Iran.

With the two deals announced this week, Chinese buyers secure more supplies of Abu Dhabi’s main Murban crude grade. CNPC agreed in 2011 to increase purchases of

crude from the emirate under long-

term contracts.

Abu Dhabi, with 6 percent of global crude reserves, is seeking to boost production capacity to 3.5 million barrels a day by 2018. ADCO pumps about half of Abu Dhabi’s

roughly 3 million barrels of daily crude output.

The emirate is expanding capacity amid a global oil glut that cut prices to an average of about $50 a barrel over the last two years. The Organization of Petroleum Exporting Countries agreed in November to cut production to trim crude stockpiles and boost prices. Brent crude has gained about 11 percent since the day OPEC announced that agreement and was up 0.8 percent at $56.23 a barrel at 1:22 p.m. in London.

The 40-year ADCO concession replaces an earlier agreement. Exxon Mobil Corp. and Royal

Dutch Shell Plc took part in the previous venture, also called ADCO, along with BP, Total and Portugal’s Partex Oil & Gas Group.




Egypt: TransGlobe Energy Red Bed discoveries now on production Source: TransGlobe Energy

TransGlobe Energy has announced that North West Gharib, Arab Republic of Egypt (100% working interest, operated)

NWG 38 - Red Bed Discovery now on production

NWG 38 was completed and placed on production in mid-January at an initial pumping rate of ~750 Bopd. NWG 38 is located on a separate Red Bed structure approx. 1.4 kms east of NWG 3 which was placed on production in late December at a flowing rate of ~1,000 Bopd from the Red Bed formation.

NWG 38 is pipeline connected to the NWG 3 early production facility ('EPF') where the oil is gathered and subsequently trucked to the Company's West Bakr oil terminal at K station. The Company's entitlement oil from NWG is lifted and sold with the Company's West Gharib and West Bakr entitlement oil as part of the Ras Gharib blend.

The NWG 38 discovery well was drilled in August of 2016 and encountered a thick (98 foot) Red Bed section with approx. 40 net feet of oil pay in a sandy/conglomerate sequence. The NWG 38 discovery was included in the initial NWG development lease ('NWG DL #1') application which included the NWG 3 and NWG 16 discoveries. The NWG DL #1 was approved in December of 2016 and covers approx. 18 sq kms.

The NWG 3 well was placed on production in late December 2016 at a flowing rate of ~1,000 Bopd from an estimated 42 feet of net Red Bed oil pay with approx. 25 feet of high quality sandstone. Based on internal estimates of subsequent flow and down hole build-up data (which measured a stabilized drawdown of 5.5% at the perforations while flowing 1,000 Bopd), it is expected that NWG 3 will be produced in the 1,500 to 2,000 Bopd range when equipped with a down hole pump later this year.




The Company has analyzed the NWG 3 and NWG 38 discoveries along with the analogous Red Bed production from the Company's East Arta and Arta fields located 3 and 13 kilometers to the south, respectively, to estimate potential development well performance.

For planning purposes, the Company has modeled a typical Red Bed oil development well at a cost of $700k per well with an IP30 of 800 Bopd and an EUR of 800 Mbbls/well for the northern NWG area, which is similar to the NWG 38 well. The economics of a Red Bed development well are very positive with a finding and development ('F&D') cost of less than $1.00/Bbl.

TransGlobe Energy's Egyptian concessions - including North West Gharib

Future NWG Exploration & Development Plans

Currently the Company has two drilling rigs active on NWG.

The first rig is drilling NWG 27 1A which is an appraisal well to the NWG 27 discovery well which encountered a thick (215 feet) Red Bed section with approx. 55 feet of net oil pay above the oil water contact in a 90 foot conglomerate sequence which overlays a 125 foot high

quality sandstone. NWG 27 1A is targeting the Red Bed in a structurally higher position above the oil water contact in NWG 27. The NWG 27 discovery is approx. 2.7 kms north of NWG 3.

The Company has received access approvals for an additional 28 well locations in the northern NWG area which could be drilled during 2017/18 depending on additional exploration/appraisal results. NWG 27-1A is the first of eight budgeted (2017 firm and contingent) Red Bed appraisal/development wells planned for the area in 2017. Following the NWG 27 1A well the rig is scheduled to return to

exploration drilling, with three additional Red Bed exploration wells planned in the area to the east of NWG 27.

The second drilling rig is currently drilling the NWG 28 exploration well targeting a Rudeis/Asl prospect in the southern portion of the NWG concession, approx. 4.3 kms south east of the West Bakr K field.

South West Gharib, Arab Republic of Egypt (100% working interest, operated)

Subsequent to the January 30, 2017 update, the Company drilled SWG 4 which was plugged and abandoned. SWG 4 was drilled to a total depth of 7,145 feet targeting Pre-rift Matulla/Raha/Nubia clastic structures which were wet. The Company has met its phase 1 exploration commitments for the concession and will relinquish the concession at the end of phase 1 (May 7, 2017).




Libya: Rosneft inks Libya oil deal as more firms return Bloomberg/Cairo

Rosneft signed investment and crude-purchasing agreements with Libya’s National Oil Corp as more international companies return to the North African country to gain access to Africa’s largest reserves.

Moscow-based Rosneft agreed to invest in exploration and production in Libya, the state-run NOC said yesterday in a statement on its website, without specifying the amount or timing of the investment. The companies signed a separate accord for Rosneft to buy Libyan crude.

The deals are part of a bigger push by the NOC to encourage additional investments by foreign oil companies to help Libya increase its production to 2.1mn barrels a day by 2020, according to the statement. Rosneft’s press service declined to comment when contacted by phone.

Libya, one of Opec’s smallest producers, is trying to revive

output and sales of oil in spite of continuing political uncertainty and conflict between rival administrations and armed groups. Any increase in production may complicate efforts by the Organisation of Petroleum Exporting Countries to end a global crude glut. Libya pumped 1.6mn barrels a day before a 2011 revolt set off years of fighting that prompted foreign investors to withdraw.

Opec agreed with other oil producers including Russia to reduce their collective output by 1.8mn barrels a day, starting January 1. Libya was exempted from the cuts as its works to restore its oil industry.

“We need the assistance and investment of major international oil companies to reach our production goals and stabilise our economy,” NOC chairman Mustafa Sanalla said in the statement.

Jadadalla Alaokali, an NOC board member, said last week that Libya’s crude production exceeded 700,000 barrels a day and is due to reach 1.2mn barrels a day by August and 1.7mn by March 2018, when the nation’s ports and export terminals will be operating at full capacity. Eni SpA and Total SA are currently working in Libya “without difficulty,” and Schlumberger Ltd resumed operations in the country about three months ago, Alaokali said in an interview in Cairo.

NOC and BP Plc officials discussed cooperation in oil exploration and production on January 25 in London. The Libyans also met with Germany’s Wintershall on February 8.

Libya’s biggest oil field, Sharara, operated by Repsol, re-opened in December. The Eni-run El-Feel deposit is due to re-open within a month and produce an initial 75,000 barrels a day, Alaokali said last week. The two fields in western Libya have a combined capacity of 450,000 barrels a day.




Russia overtakes Saudi Arabia as world’s largest crude producer Bloomberg

Moscow: Russia overtook Saudi Arabia as the world’s largest crude producer in December, when both countries started restricting supplies ahead of agreed cuts with other global producers to curb the worst glut in decades.

Russia pumped 10.49 million barrels a day in December, down 29,000 barrels a day from November, while Saudi Arabia’s output declined to 10.46 million barrels a day from 10.72 million barrels a day in November, according to data published Monday on the website of the Joint Organisations Data Initiative in Riyadh. That was the first time Russia beat Saudi Arabia since March.

Saudi Arabia and fellow producers from the Organisation of Petroleum Exporting Countries decided at the end of November to restrict supplies by 1.2 million barrels a day for six months starting Jan. 1, with Saudi Arabia instrumental in the plan. Non-member producers, including Russia, pledged additional curbs. Brent crude prices have climbed about 20 per cent since the end of November.

The US was the third-largest producer, at 8.8 million barrels a day in December compared with 8.9 million barrels a day in November, according to JODI.

Saudi Arabia’s crude exports declined to 8 million barrels a day in December, from 8.26 million barrels a day, the biggest outflow for any month since May 2003, according to JODI data.




U.S. crude oil production increases following higher drilling activity Source: U.S. Energy Information Administration, Short-Term Energy Outlook

U.S. crude oil production increased for the second consecutive month in November 2016, the first time this has occurred since early 2015. Increased drilling activity in the Permian region, which spans Texas and New Mexico, as well as the start of a number of new projects in the Federal Offshore Gulf of Mexico (GOM), more than offset declining production from other regions in October and November 2016.

Increased drilling in the Permian region responded relatively quickly to a rise in the West Texas Intermediate (WTI) crude oil price, which increased from an average of near $30 per barrel (b) in the first quarter of 2016 to $45/b or higher beginning in the second quarter of 2016. In the GOM, the new projects that came online in the last quarter of 2016 were planned and approved during the 2012–14 period.

U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016, and monthly U.S. crude oil production increased by 232,000 b/d in October and by 105,000 b/d in November. Production in the Lower 48 states increased by 104,000 b/d in October and decreased by 2,000 b/d to average 6.7 million b/d in November, while GOM production increased by 85,000 b/d in October and by 89,000 b/d in November. Changes in Alaskan oil production make up the remaining differences.

The Permian region was the only area covered in EIA’s Drilling Productivity Report (DPR) that did not experience a month with a year-over-year production decline throughout 2014–16. This region benefits from a number of highly productive formations located within what is an established oil-producing region that allows producers to continue operations despite low prices. When the WTI




spot price rose to more than $45/b in May 2016, the Permian experienced a rapid growth in drilling rigs, increasing by 85 rigs from May to November 2016, suggesting that some operators can generate positive returns in the region at those prices.

In contrast to the Permian, other onshore regions in the United States experienced year-over-year production declines in November. However, recent drilling activity suggests that production may be increasing in these areas as well.

According to Baker Hughes, the total U.S. oil-directed rig count increased by 123 rigs since November 2016, with 39% of the increase occurring in regions outside of the Permian. Since the end of November, the number of active oil rigs has increased in the Eagle Ford by 23, in the Williston by 3, and in the Cana Woodford by 12.

Production in the GOM is less sensitive to short-term price movements than onshore production in the Lower 48 states because of the time needed to complete large offshore projects. The GOM projects that started producing in the second half of 2016 collectively produced more than 100,000 b/d in November and contributed to overall production increases.

Current crude oil prices above $50/b, combined with increasing drilling rig counts in several onshore basins, suggest U.S. crude oil production will likely continue to increase.

The February Short-Term Energy Outlook (STEO) also forecasts year-over-year GOM production to increase by 30,000 b/d in 2017 and by an additional 140,000 b/d in 2018 to reach a total of 1.8 million b/d. Total U.S. crude oil production from the Lower 48 states, the GOM, and Alaska is expected to average 9.0 million b/d in 2017 and 9.5 million b/d in 2018.




Source: Baker Hughes

EIA’s Drilling Productivity Report uses monthly average rig count data to anticipate production changes in the coming months. Based on these recent increases in drilling, production in the seven regions included in the DPR is expected to increase from 4.8 million b/d in November 2016 to 4.9 million in March 2017.

Source: U.S. Energy Information Administration, Drilling Productivity Report




NewBase 22 February 2017 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil Prices holds near seven-week high; OPEC upbeat on output curbs Reuters + NewBase

Oil prices held near multi-week highs on Wednesday after OPEC signaled optimism over its deal with other producers to curb output to clear a glut that has weighed on markets since 2014.

The U.S. West Texas Intermediate April crude contract, the new front-month future, was up 16 cents, or 0.3 percent, at $54.49 a barrel at 0552 GMT. On Tuesday, the March contract expired up 1.2 percent after reaching its highest since Jan. 3.

Brent crude was up 23 cents, or 0.4 percent, at $56.89, having touched its highest since Feb. 2 at $57.31 in the previous session.

"We are nearing the top of the trading range for West Texas and Brent and so the next couple of sessions will be crucial from a technical point of view, at least in determining which way we break," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"The DoE data tomorrow will be where we get our next impetus," he said, referring to the U.S. Department of Energy's official weekly numbers on crude and petroleum product stockpiles.

The data is set to be released on Thursday, a day later than normal, following a U.S. public holiday on Monday.

Last week's numbers showed U.S. output helped boost crude and gasoline inventories to record highs, amid faltering demand growth for the motor fuel.

Oil price special

coverage




That has kept a lid on prices after they climbed following an agreement by the Organization of the Petroleum Exporting Countries and other producers to cut output by about 1.8 million barrels per day (bpd).

Mohammad Barkindo, OPEC secretary general, told an industry conference in London on Tuesday that January data showed conformity from member countries participating in the output cut had been above 90 percent. Oil inventories would decline further this year, he added.

Goldman Sachs, however, noted that a rebound in U.S. drilling activity had exceeded even its own above-consensus expectations.

"While the reduction in supplies out of core OPEC in the Gulf and Russia has exceeded our and consensus expectations, the market is starting to doubt that this will be sufficient to translate into large oil inventory draws by 2Q17," it said in a research note.

Brent futures prices for the second quarter have risen strongly in recent days suggesting traders expect the oil market to move into deficit earlier or that a squeeze is underway.

Calendar spreads for nearby months have tightened sharply since the middle of February to a level that will make storing oil outside the United States unprofitable from the start of the second quarter onwards.

The calendar spread from April to May has tightened from a contango of 35 cents per barrel on February 15 to just 17 cents on February 20 and is now trading around 12 cents. The spread is now too narrow to cover the cost of financing and storing barrels under any set of realistic assumptions about the cost of borrowing money and leasing tank space.

Spreads are even narrower for later months, with a contango of just 10 cents for May-June and 7 cents for June-July.




The spread tightening has been concentrated in the second quarter which implies traders now expect a supply deficit to occur from April rather than June. Calendar spreads have tightened much more in Brent than in WTI — where the spreads remain wide enough to finance crude stockpiles in the United States through until about June. If the tightness in Brent persists, physical traders will have an incentive to unwind cash-and-carry storage trades where they hold a long position in physical oil and a short position in futures.

Physical barrels will be sold from stockpiles to refiners and reported inventories should start to decline rapidly.

Senior Opec officials have repeatedly cited a shift in oil market structure from contango to backwardation as one of their intermediate objectives for oil market rebalancing.

Hedge funds have accumulated a record bullish position in crude futures and options in the expectation that Opec will succeed. Fund managers have also amassed a large bullish position in options on the calendar spreads in a direct bet the market will move from contango towards backwardation. Hedge funds and other money managers have a net long position in WTI calendar spread options (physical and financial) equivalent to 144mn barrels that will make money if the spreads continue to narrow. The tightening spreads imply that traders see a higher probability the market will move into deficit from the start of the second quarter rather than the start of the third.

They could also indicate a lack of traders willing to take a short position in the spreads given the likely market rebalancing. But they would also be consistent with a squeeze, with one or more traders accumulating a large long position in nearby futures and threatening to take them to expiry.

The first rule for executing a successful squeeze is to squeeze with the underlying fundamentals of the market rather than against them. The regular tightness of the Brent market in the second and third quarters makes it vulnerable to squeezes at this time of year if traders accumulate long futures positions (outright or in the spreads) and then buy physical cargoes.

The Brent market is very small with only 40 to 50 cargoes loaded each month, which means the purchase of even a small number can tighten the market considerably. Brent availability is often restricted during the summer when field operators take advantage of better weather to undertake routine maintenance.

And Brent maintenance corresponds with the annual peak in oil demand during the US summer driving season and the summer air conditioning season in Saudi Arabia and Iraq. If Opec is successful in creating a supply deficit and drawing down oil stocks, Brent could become very tight this summer.

A successful squeeze, or even just the possibility of one, would make that tightness even worse. Fundamental tightness and the possibility of a squeeze are complementary rather than exclusive explanations for the tightness of the Brent spreads.

Opec’s expected success in draining inventories, hedge fund bullishness about the shift from contango, and the possibility of a squeeze are combining to push the Brent market towards a backwardation.




NewBase Special Coverage

News Agencies News Release 22 Feb. 2017

Tesla working on new Dubai service centre Gulf News - Derek Baldwin Chief Reporter

If you’re one of the lucky ones to have ordered a Tesla electric car after the company announced it was taking UAE orders starting February 13, you won’t have to worry about shipping it back to the US for servicing.

Construction crews are hard at work creating a new Tesla Motors service centre in Dubai, a first in the Middle East, on the sliproad northwest of Shaikh Zayed Road between Burj Khalifa metro station and Al Mazaya Centre.

When it opens in July, it will make UAE only the 22nd country in the world to have service centres able to service the new electric cars that are taking the world by storm.

Following confirmation by Elon Musk, co-founder and CEO of Tesla, at the World Government Summit last week that Tesla was setting up shop in the UAE, car enthusiasts are welcoming news the first cars will be shipped to Dubai by summer.

For now, the front of the Tesla service centre site is covered, with a large hoarding encouraging the curious to test drive the cars.

During a Dubai press conference, Musk told reporters that in addition to the arrival of new cars and the opening of the new service centre, the firm has already opened two super-charging stations in the UAE at the last Jebel Ali exit on Shaikh Zayed Road en route to Abu Dhabi and in Masdar City in Abu Dhabi.

“By the end of the year, Tesla will open five additional Supercharger locations, enabling long distance travel

across every route into and out of the country. The UAE is already home to a number of Tesla’s Destination chargers, which are available at 26 locations across the UAE, including hotels and shopping malls. Tesla will add more than 50 additional Destination charging locations by the end of the year,” Tesla officials said in a statement.

The company said customers looking to explore the new lines of Model S and Model X can log on to www.tesla.com/en_AE for details.




“Customers in the UAE can now visit the online design studio to customise and order the Tesla vehicle that best suits their lifestyle. First orders of Model S and Model X vehicles are expected to be delivered in Dubai this summer,” the company said.

The launch of the UAE’s dedicated online platform is supported by a pop-up store in The Dubai Mall.




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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 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 26 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 February 2017 K. Al Awadi

New base 1003 special 22 february 2017 energy news

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Transcript of New base 1003 special 22 february 2017 energy news