new base 714 special 26 october 2015

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.

NewBase 26 October 2015 - Issue No. 714 Senior Editor Eng. Khaled Al Awadi

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

UAE, perfect place for professionals: paper

(WAM) -- A UAE paper has said that the country is known to be a global leader in attracting talent. According to the Global Shapers Annual Survey 2015 conducted by World Economic Forum, more than 1,000 young people aged between 20 and 30 from around the globe ranked the UAE as the number one emerging market destination for professional fulfilment.

Interestingly, the respondents chose the UAE as the number one emerging market destination over China, Brazil, South Africa and India, despite the massive scale of the powerhouse BRICS economies.

"A cursory look at the country’s economic achievements will make every citizen and resident proud. Earlier surveys had indicated that the UAE topped globally in quality of the roads

and the absence of organised crime and also ranked first globally for having the lowest rate of inflation," said The Gulf Today in an editorial on Monday.

As Yemi Babington-Ashaye, Head of the Global Shapers Community, explained, "The Global Shapers Annual Survey 2015 provides insights into how millennials see the world. In addition to the diversity that we observe, the survey also reminds us of those things that millennials value everywhere, such as social and economic equality."

By choosing the UAE as the top emerging-market destination, millennials are selecting a country that is very serious about professional advancement.

It may be recalled that just two months ago, LinkedIn professional network, named the UAE as the most attractive destination for professionals for a second consecutive year.

There can be little doubt that innovation and progressive approach are what have elevated the country among the world’s best nations. A stable economy and vibrant opportunities that come along with business-friendly practices also make it a perfect place for professionals.

The Sharjah-based daily concluded by saying, "The credit for the stupendous performance goes to the visionary leadership that has implemented impressive and successful policies. It is also due to the people’s high degree of trust in the government and safety and security in the UAE."




Egyptian LNG Imports Could Continue for Another Fives Year

Egypt will continue to import LNG for another five years, oil minister Tarek El-Molla said Saturday, Amwal Al Ghad newspaper reported. The minister added that the amount of imported shipments will depend on the size of local consumption compared to the production rate.

From being an energy exporter Egypt has turned into an imported due to falling domestic gas output. To fill the demand gas, the government has been inking LNG imports deals in past many months. Earlier this month, Egypt selected seven companies out of 12 for supply of 55 shipments of LNG.

The minister on Saturday stressed that earlier new projects, such as the North Alexandria and other discoveries enter into production phase, the sooner Egypt would stop importing LNG.

On the domestic gas production from, Cairo got a big boost recently when Eni made a “world class supergiant gas discovery” at its Zohr prospect, in the deep waters of Egypt. In August the Italian company said the discovery could hold a potential of 30 trillion cubic feet of lean gas in place.

Egypt Plans to Rent Third FSRU by Early 2017

Egypt is mulling renting a third FSRU by end of next year or early 2017, Reuters reported Egyptian Natural Gas Holding Company (EGAS) head as saying.

Egypt's third FSRU will be used to meet the natural gas needs of industry and boost electricity generation, head of the state-run EGAS gas board, Khaled Abdel Badie, told a news conference.

To facilitate the import of LNG Egypt has taken delivery of two floating LNG terminals. Last month EGAS took delivery of FLNG terminal from BW Group which is expected to start operation later this month. Last year EGAS signed an agreement with Höegh LNG to lease the first terminal, which started operation in May this year.

The North African nation has become an importer of gas due to falling domestic gas production amid rising demand. The imported gas is expected to fill the demand gap in the short term while the government works to boost production of local gas.




Egypt: BP to begin North Alexandria gas output in early 2017 Source: Reuters / energy-pedia

British oil major BP will begin gas production at its North Alexandria concession in early 2017 rather than mid-2017, Egypt's petroleum minister Tarek El Molla said at a news conference on Saturday.

The offshore concession's output will be roughly '450 million cubic feet per day in 2017 and reach 1.2 billion cubic feet per day by the end of 2019,' said El Molla. These volumes will mean a significant boost to gas production in Egypt, a country that has been searching for ways to plug acute energy shortages that have slowed production at many of the country's energy-intensive industries.

BP also said this week it had been awarded three new offshore exploration blocks in Egypt and that it and its partners had committed to investment of $229 million. Egyptian authorities have in recent months worked to improve terms for foreign oil and gas businesses in the hope that more competitive pricing will encourage investment in the energy-hungry country.

Once an energy exporter, falling oil and gas production coupled with rising consumption have forced Egypt to divert supplies to the domestic market and it is now a net energy importer.

Background - West Nile Delta Project

West Nile Delta (WND) is BP’s first operated project in Egypt outside of a joint venture. The agreement to develop resources in the area covers five fields in the North Alexandria and West Mediterranean Deep Water concessions.

The complex 21-well development will tie-in to existing, upgraded and new infrastructure and target gas and condensate in the Giza, Fayoum, Raven, Taurus and Libra fields, located between 65 and 85 kms offshore, in waters up to 750 metres deep. All the gas from WND will go into the national gas grid, helping to meet Egypt’s projected growth in demand. This large-scale development is also set to create thousands of jobs during its construction phase. (Source: BP)




EU: Gazprom to see its lowest Europe gas price in 11 years

Bloomberg + Gulf News + NewBase

Gazprom, the world’s biggest natural gas exporter, is planning for the lowest price for its fuel in its main European market for more than a decade. The state-run exporter is drafting its budget for 2016 with preliminary estimates for gas prices outside the former Soviet Union of about $200 per 1,000 cubic metres ($5.45 a million British thermal units), said two people with direct knowledge of the matter who asked not to be identified because the information is private.

That compares with the company’s estimate of an average price for the region, which covers Turkey and Europe outside the Baltic States, in 2015 of about $238 per 1,000 cubic metres and $349 last year.

Gazprom, which supplies about a third of Europe’s gas and relies on exports of the fuel for 40% of its annual revenue of more than $100bn, is facing declining prices abroad as most of its contracts are linked to oil with a time lag of six to nine months. Brent crude has lost 16% this year after a 48% drop in 2014.

The company is also facing increased competition as the US prepares to export its first liquefied natural gas from the Gulf Coast. “Gazprom’s forecasts look reasonable,” Alexei Kokin, an energy analyst at UralSib Financial Corp in Moscow, said by phone Friday. Russia has the capacity to maintain its market share in Europe given lower prices next year even amid the predicted glut in LNG, he said.

The Moscow-based company is set to this year note its lowest revenue outside the former USSR in a decade in dollar terms. Sales in roubles may rise to a record, reflecting a 2.2% weakening of the Russian currency against the dollar this year, following a 46% drop last year.




Exports to the region are expected to stay stable at about 160bn cubic metres (5.6tn cubic feet) in 2016 with revenue in roubles declining but still near the average of the past few years, according to one of the people.

Gazprom has most of its costs in roubles and sees no risks for its investment projects, one of the people said. It also isn’t ready to agree on advance payments from China, in discussion since at least last year, if the Asian nation demands a serious price discount in exchange, the person said.

The company plans to spend more than $50bn on three major export routes during the next four to five years - a new gas link to Germany through the Baltic Sea, a Black Sea pipeline to Turkey and an export route to China, including development of the fields to feed it.




China: BP and China Huadian Corp sign multibillion dollar LNG deal Source: BP

BP and China Huadian Corp last week signed a sale and purchase agreement for BP to sell Huadian up to 1 million tonnes of liquefied natural gas (LNG) per year worth up to $10 billion over the next 20 years. The agreement was one of several signed in London during this week’s State

Visit to the UK by the President of The People’s Republic of China, Mr Xi Jinping and signed in the presence of President Xi and UK Prime Minister David Cameron.

'This marks another long-term LNG supply deal between BP and Chinese buyers and it will play an important role in enhancing China’s energy diversification and supporting its economic growth,' said Bob Dudley, BP Group Chief Executive. 'Not

only does it strengthen China’s connections to BP and the UK as global trading partners, it also supports China’s commitment to improving its air quality and reducing its emissions through the use of lower carbon fuels.'

The agreement with Huadian was one of a number of new agreements with Chinese firms, adding several billion dollars in future trade to the BP’s already significant business with China and underscoring the important and growing trade links between the UK and China.

'BP has been committed to doing business in China for more than 40 years and we’re pleased to enter into an agreement that supports continued diversification and growth of the Chinese economy,' Dudley said. 'This agreement also strengthens the connectivity of global gas markets, which is important for countries seeking more diverse and secure energy supplies.'

Huadian is one of the five largest state-owned power generation companies in China and the country’s largest gas-fired power generator.

'This agreement is not only in line with the common objectives of our companies, but it also matches the energy policies of China and the UK,' said Li Qingkui, Chairman of Huadian. 'Lower carbon power generation is part of Huadian’s mission to bring greater value to the economy and society while growing ‘Green Huadian’ into a world-class energy group. We look forward to further cooperation with BP in the near future and actively contributing to energy security and a cleaner energy future.'

'We expect China’s energy production to rise 47 percent and its consumption to grow 60 percent by 2035, making it the world’s largest energy importer,' said Edward Yang President of BP China. 'This agreement with Huadian further demonstrates BP’s long term commitment to helping China diversify its energy supply and improve air quality. We are pleased to serve as China’s trusted energy partner, now and in the future.'




NewBase 26 October - 2015 Khaled Al Awadi

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

Oil prices remain weak as demand seen sagging towards year-end Reuters + NewBase

Crude oil prices remained weak on Monday as a slowing demand outlook implied oversupply will remain in place for months, prompting speculators to cut their bets on rising prices. Front-month U.S. crude futures were trading at $44.65 per barrel at 0253 GMT, 5 cents above their last close but more than 12 percent lower than their October peak.

International benchmark Brent was 4 cents higher at $48.03 a barrel but more than 11 percent below October's high. ANZ bank said it expected prices to remain low for the remainder of this year and that speculators were cutting their bets on higher prices.

"Net speculative (U.S.) long positions declined by 13,841 contracts for the week ending 20 October," the bank said. "We remain cautious on commodity prices into year-end given weak demand conditions."

On the demand side, research agency Energy Aspects said in its quarterly outlook that it "forecast a sharp slowdown in global oil demand across Q4 15 at 0.8 million barrels per day, which marks the slowest pace of growth in five quarters".

Energy Aspects said the ongoing oversupply in crude oil was starting to spill into the market for refined products, with a product stock-build of 0.6 million barrels per day seen in the third quarter.

Oil price special

coverage




Rising inventories as well as a mild winter expected for Europe and North America as a result of El Nino would likely lead to reduced refinery production and lower use of crude oil by refiners, Energy Aspects said.

Global oil markets were "still some way from rebalancing", the research agency said.

Due to the low oil prices, investment in the sector in 2016 will likely decline further after sliding this year by more than a fifth, Fatih Birol, the executive director of the International Energy Agency (IEA), said on Monday.

"If it comes true, this will be the first time in two decades we will see oil investments declining for two consecutive years and may be an indication for future oil markets," he said at the Singapore International Energy Week.

Swift Worldwide Resources estimates that more than 200,000 jobs in the oil and gas industry have been cut worldwide since prices collapsed last year.

West Texas Intermediate for December delivery was at $44.74 a barrel on the New York Mercantile Exchange, up 14 cents, at 3 p.m. Sydney time. The contract slid 78 cents to $44.60 on Friday, the lowest close since Sept. 28. The volume of all futures traded was about 43 percent below the 100-day average. Prices have decreased 16 percent this year.

Brent for December settlement was 11 cents higher at $48.10 a barrel on the London-based ICE Futures Europe exchange. Prices lost 4.9 percent last week. The European benchmark crude traded at a premium of $3.36 to WTI.

The U.S. rig count fell to 594, the lowest level since July 2010, Baker Hughes, an oilfield-services provider, said on its website Friday. Drillers have cut the number of active machines by more than 60 percent since December.

Oil at $50 a barrel is a “gift to the world” as prices should be low enough to spur economic growth, according to Ali Al Mansoori, the chairman of the Department of Economic Development in Abu Dhabi. Crude may climb to $60 by the end of next year, he said in an interview Sunday in the capital of the United Arab Emirates, the fourth-largest producer in the Organization of Petroleum Exporting Countries.




Cheap oil weans GCC firms off public purse and pushes them to the market Reuters + Gulf Times

The Gulf’s state-linked firms are being forced to wean themselves off direct government funding, and focus more on capital markets and private investment, to push ahead with projects in an era of cheap oil.

In the previous several years of high oil prices, building projects from universities to soccer stadiums were funded entirely by the public purse. That is changing as governments scale back non-essential plans and look to markets to share the financial burden.

“The future, as we see it, are projects that connect to private investment,” Abdullah bin Mohammed al-Nuaimi, the UAE’s Minister of Public Works, told Reuters. This could be a boon for bankers, who have long wanted to play a bigger role in arranging financing packages for Gulf governments.

“Projects that do come to fruition will have the most coherent economic justification and be more likely to require standalone financing. This points to a greater need for project finance,” said Andy Cairns, global head of debt origination and distribution at National Bank of Abu Dhabi.

So far the shift is most evident in the smaller Gulf Arab nations which lack huge cash reserves but have big projects in the pipeline: Oman and Bahrain. Oman Electricity Transmission Co issued a $1bn debut bond in May, while Aluminium Bahrain will use the capital markets to part-fund its $3.5bn smelter expansion.

But the change is also occurring at some of the region’s largest enterprises. In the past, utility Saudi Electricity Co used the market to fund power plant construction but also received regular contributions from the government in the form of interest-free loans. In June 2011, it said a royal decree had awarded it around 50bn riyals in this manner, and it received a similar injection in March 2014.

Now it is seeking more finance via the market. It announced plans for a $1.5bn sukuk programme in August as well as for a corporate loan worth around $2.3bn; bankers said it was the first time that SEC had sought the kind of back-up revolving facility which many big firms have.




Bankers are also encouraged by new laws in Dubai and Kuwait this year facilitating public-private partnerships (PPPs), which grant ownership stakes in and revenues from assets to investors in exchange for helping pay the original costs.

In Kuwait, clauses covering land ownership in previous legislation prevented Islamic banks and investors from participating in projects. The new law resolves that issue and should encourage greater backing for PPPs in the country, said Alex Saleh, partner at law firm Al Tamimi and Co.

The difficulty for state firms, though, is that they are approaching these alternative funding solutions at a time when the market is changing. As governments’ oil income shrinks, local banks are receiving fewer new deposits, reducing the cash available for projects. Money markets reflect this as rates rise.

Meanwhile, new Basel III global banking standards make less feasible the loans of 20-plus years that Gulf state firms have often sought.

“During that 20-year term, the margin is fixed but rules come in and change the capital requirements for banks, so what was profitable on day one is no longer the case,” said Mario Salameh, HSBC’s head of project finance for the Middle East and North Africa.

This may drive borrowers towards bonds rather than loans, bringing the Middle East into line with other areas of the world such as Australia and the US, where infrastructure is either originally funded by project bonds or shorter-term loans are refinanced with bonds soon after the project is operational.

Project bonds have long been talked about in the Gulf as the future of fund-raising, but so far only a handful have come to market. PPPs have also struggled outside the utilities sector because Gulf states have been reluctant to cede control of assets. For example, Saudi Arabia’s Medina airport expansion in 2012 was conceived as a PPP project but the ultimate structure was different, awarding the private sector concession rights rather than full ownership of a stake.

“Ultimately, what the market really lacks is a big transport PPP which has come to the capital market and that can be used as a template,” said Karim Nassif, credit analyst at Standard & Poor’s. “I think the potential is there but the jury is out on what will be the next deal outside of power and water.”




NewBase Special Coverage

News Agencies News Release 26 Oct.. 2015

Oil at $50 Is ‘Gift to World’ as Abu Dhabi Sees Higher Prices Bloomberg - Mahmoud Habboush

Oil at $50 a barrel is a “gift to the world” as prices should be low enough to spur economic growth, according to the head of Abu Dhabi’s Department of Economic Development.

Prices will probably be at $60 next year, after hitting bottom at $45, Ali Al Mansoori, the department’s chairman, said in an interview Sunday in the capital of the United Arab Emirates, the fourth-largest oil producer in the Organization of Petroleum Exporting Countries. Brent crude has dropped 16 percent this year amid a global oversupply and was trading at $48.02 a barrel at 10:16 a.m. Hong Kong time.

“It is a gift to the world that oil has dropped to $50,” Al Mansoori said. “Would we like for oil to stay at $50? Absolutely not. We would like oil to go to $70, $80, but beyond that I think it would hurt the economic growth.”

Oil demand growth will climb to a five-year high of 1.8 million barrels a day this year before slowing next year amid a weaker outlook for the world economy, the International Energy Agency forecast in its October market report. The market will probably remain oversupplied through 2016 as Iran exports more crude, should international sanctions be eased, it said.




‘Win-win’

Oil at $50 to $60 a barrel is a “win-win situation” because it benefits consumers and producers alike, Al Mansoori said. For buyers, “it’s an opportunity for them now to use it as much as possible to set up their policies for economic growth in the next five years because ultimately the commodity is scarce.”

Declining oil prices will mean Abu Dhabi’s gross domestic product growth will be little changed next year, Al Mansoori said. The emirate is doing what it can to expand the economy, but "if we don’t, we take next year as a challenge and turn this challenge into opportunity and turn 2017 with strong growth," he said.

Major projects in Abu Dhabi will continue, however. The Midfield Terminal Building at the Abu Dhabi International Airport is still slated to open in 2017, while a branch of the Louvre museum will open next year, Al Mansoori said. In addition, Al Mansoori said he’s meeting with architect Frank Gehry next month in Los Angeles to review the final design for the Guggenheim museum being built in Abu Dhabi, and move ahead with signing the museum’s contract.




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 [email protected] [email protected]

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 26 Octopber 2015 K. Al Awadi

new base 714 special 26 october 2015

Economy & Finance