new base 783 special 09 februaury 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

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NewBase 09 February 2016 - Issue No. 783 Edited & Produced by: Khaled Al Awadi

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UAE: Dewa to tender third phase of solar park

Utility CEO says contract for adding 800 MW of capacity will be awarded in June Reuters + Gulf News

The Dubai Electricity and Water Authority will launch a tender to build the third phase of the Shaikh Mohammad Bin Rashid Al Maktoum Solar Park in six weeks, its chief executive said on Monday.

“Within a short period, we will open the tender, within a month and a half,” Saeed Mohammad Al Tayer, Managing Director and Chief Executive Officer of Dubai Electricity and Water Authority, told Reuters on the sidelines of a conference.

“The award of this contract will be this year, according to the programme, in June — 800 megawatts will be awarded.”

Dewa said in September it would start accepting expressions of interest for the plant. Al Tayer did not give a figure for the cost of the project. Dubai doubled the capacity of the second phase of the solar park from 100 MW to 200 MW after receiving the lowest-ever recorded cost for solar power in a tender won by Saudi Arabia’s ACWA Power and Spain’s TSK. The emirate’s strategic plan envisions 7 per cent of power generation from renewables by 2020 and 15 per cent by 2030.




Morocco: Sound Energy announces option to acquire interest in the Meridja permit, onshore Morocco.. Source: Sound Energy

Sound Energy, the Mediterranean and European focused upstream gas company, has signed a binding agreement with Oil & Gas Investment Fund ('OGIF') whereby OGIF has granted Sound Energy an option to acquire a 55% interest in the Meridja permit, onshore Morocco.

Meridja is adjacent to Sound Energy's existing Tendrara licence and is a highly prospective 9,000 Km2 area with the same fundamental geology as Tendrara, where Sound Energy expects to drill its first well shortly. OGIF currently holds a 75% interest in a reconnaissance permit over the Meridja area, with the remaining 25% interest held by Morocco's Office National des Hydrocarbures des Mines ('ONHYM').

OGIF has granted the Option to Sound Energy, under which Sound Energy is able to acquire (subject to regulatory and other approvals) a 55% interest in and operatorship of the Meridja

exploration permits, once awarded.

As consideration for the Option, Sound Energy will

pay OGIF US$100,000 and will conduct and fund early stage commitments under the Reconnaissance Permit up to a maximum of US$200,000. On exercise of the Option Sound Energy would pay OGIF a further US$150,000 and would carry OGIF and ONHYM for costs up to the end of a first Meridja exploration well.

The Reconnaissance Permit, which was recently successfully extended by OGIF, has an expiry date of 1 August 2016.

James Parsons, Sound Energy's Chief Executive Officer commented:

'Following our entry into Morocco last year, we have moved quickly to build our regional position further in a highly prospective area. The Option secures exclusive access to a key permit adjacent to Sound Energy's existing Tendrara licence and will enable us to increase our upside potential significantly should the first well at Tendrara be as successful as we hope. The transaction further demonstrates our strong partnership with OGIF and further consolidates our position as a leading onshore operator in Morocco.'




Morocco: Qatar Petroleum and Chevron announce agreement for exploration of deepwater offshore blocks Source: Qatar Petroleum

Qatar Petroleum has reached an agreement with Chevron Morocco Exploration, a subsidiary ofChevron Corp, to acquire a 30% participating interest from Chevron’s 75% share in three deep-water offshore leases in the Kingdom of Morocco. Under the agreement, which was approved by the Moroccan government, Qatar Petroleum will acquire the 30% interest in the deep-water leases, while Chevron will retain a 45% interest and remains the operator and Morocco's Office National Des Hydrocarbures Et Des Mines will continue to have a 25% interest. The three offshore areas are Cap Rhir Deep, Cap Cantin Deepand Cap Walidia Deep. Saad Sherida Al-Kaabi, President and CEO of Qatar Petroleum, expressed pleasure at the finalization of the agreement, which he described as 'an important step towards building a mutually beneficial relationship with Chevron with particular emphasis on international upstream activities. It is no coincidence that Qatar Petroleum’s international presence is now extended to Morocco, a country which Qatar enjoys speci al relations with,' he added.

Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production said 'The agreement is a milestone in both companies’ efforts to maximize the value of exploration and production assets through long-term relationships. We are pleased to partner with Qatar Petroleum in offshore Morocco and are looking forward to use our joint capabilities in this exciting sub-salt play for the benefit of Morocco'. The three offshore lease areas are located between 100-200 kms west and northwest of the Morocco city of Agadir. They encompass approx. 29,200 sq kms with average water depths ranging from 100 meters to 4,500 meters.




Morocco: Circle Oil Inks MoU Regarding Gas Supply to SBS Porcher

Circle Oil has announced that it, together with its partner Office National des Hydrocarbures et des Mines (ONHYM), has signed a memorandum of understanding (MOU) with a potential new gas customer in Morocco, SBS Porcher. The memorandum forms the basis for Circle to sell the gas discovered during the successful 2014/15 Sebou drilling campaign and all parties expect to sign binding documentation in the coming months, Circle Oil said in a press note published Monday.

As part of this arrangement, a new pipeline extension would be constructed linking the existing Circle-owned pipeline in the northern Kenitra region to the Porcher factory in the central Kenitra area.

As per the MoU, Porcher would pay for (and own) the required pipeline extension of approx. 15-18 km (estimated cost of $2.5m) to central Kenitra, with construction estimated to start in May 2016 and first gas anticipated to flow during Q4 2016. Estimated gross offtake volume would be 10,000 cubic metres per day (approx. 0.35mmcf/d) with a price of MAD 4.25/cubic metre ($12/mcf). The gas price would be fixed with no linkage to oil prices. The contract duration is 5 years.

This new contract when signed, will result in Circle achieving demonstrably higher gas prices, the company stated, adding that it also enables Circle to access a potential new customer base in central Kenitra.




Senegal: FAR reports increase in contingent resources at the SNE oil field, offshore Senegal ..Source: FAR Ltd

Independent Resources Report completed by RISC for FAR’s SNE oil discovery, offshore

Senegal.

1. SNE oil field contingent resources (100% basis, recoverable) have been upgraded by RISC to 240 million barrels of oil ('mmbbls') 1C, 468 mmbbls 2C, 940 mmbbls 3C.

2. RISC’s SNE oil field contingent resource 2C of 468 mmbbls (70 mmbbls net to FAR) represents a 42% increase to FAR’s previous estimate of 330mmbbls (50 mmbbls net to FAR).

3. The SNE oil field Minimum Economic Field Size (“MEFS”) is estimated by FAR to be approx. 200mmbbls.

4. RISC will update its independent assessment following results from the ongoing SNE three well appraisal progam.

5. SNE-3 appraisal well has been drilled to total depth, coring and wireline logging has now been completed and operations are currently preparing for drill stem testing.

FAR Ltd commissioned RISC to prepare an Independent Resources Report for FAR’s SNE oil field offshore Senegal. The report was prepared as at December 2015 incorporating recent data available from wells SNE-1 and FAN-1 and reprocessed 3D seismic. The SNE contingent resources set out in RISC’s Independent Resource Report represent a material increase to the estimates previously reported by FAR in late 2014 (Refer: FAR ASX announcement 10 November 2014) with the SNE field 2C contingent resource increasing by 42% to 468 mmbbls (100% basis, recoverable). RISC reviewed and modified a probabilistic resource evaluation carried out by FAR in accordance with industry standard SPE-PRMS definitions. Table 1 below sets out the SNE field oil contingent resource estimates included in RISC’s report.

• Gross are 100% of the resources attributable to the licence

• Net attributable are reported on the basis of FAR’s current working interest share of 15%. Petrosen has an option to increase its working interest through the exploitation phase to 13.7%

• The contingent estimates are not adjusted to reflect the Production Sharing Contract entitlement on net economic interest basis

The estimation of Stock Tank Oil Initially in Place used 3D seismic data covering the field and wireline log data from SNE-1. The recovery estimates have been evaluated using analytical




methods. The volumes of individual zones have been aggregated probabilistically taking account of dependency between input property distributions. FAR has requested RISC to update its independent assessment of SNE contingent resources follow ing results from each of the wells in the ongoing three well SNE appraisal progam.

FAR announced the successful results from SNE-2, the first well of this appraisal program well, in early January (Refer: FAR ASX announcement 4 January 2016). The second SNE appraisal well (SNE3) is currently undergoing preparations for a drill stem testing program following the successful drilling, coring and wireline logging of the well. SNE-3 has been drilled approx. 3km south of SNE-1 at a location designed to evaluate the mid reservoir and upper “hetrolithic” reservoir sections. This well will be followed by BEL-1, to be drilled into the Bellatrix Prospect and evauate the Buried Hill exploration play as well as being deepened to appraise the northern part of the SNE oil field. RISC’s Independent Resource Report notes that the SNE field contingent resource estimates presented in its report have not been updated to reflect the results of the SNE-2 appraisal well or any other changes since December 2015, and that new data may materially impact these contingent resource estimates. The SNE discovery is at a very early stage of appraisal and will require significant further drilling, testing and studies before any commercial development scheme could be defined.




India:Kochi SmartCity power plant inaugurated Dubai Holding is an 84% shareholder in the project, the first phase of which will open on February 20 By Gulf News - Chiranjib Sengupta, Hub Editor

The first power plant at Kochi SmartCity with a capacity of 11KV and an investment of Rs90 million (Dh4.86 million) was inaugurated on Sunday in order to provide immediate power supply to the first phase of the ambitious IT project once it begins operations.

The first phase of the SmartCity project in the south Indian state of Kerala, in which Dubai Holding is an 84 per cent shareholder through Tecom Investments, is scheduled for official inauguration on February 20. The other 16 per cent is held by the government of Kerala. The project showcases yet another successful example of close collaboration between UAE and Indian governments and businesses.

“This is an independent set-up and we are also a separate electric licencee. So for all the companies setting up business here, we can provide power connections directly without any delay,” said Dr Baju George, Managing Director of SmartCity Kochi, following the inauguration.

“And we can also purchase power from anywhere in India by paying a network wheeling charges. So companies here do not need to worry about the abundance of electricity, they can function very effectively with our 24x7 power connectivity,” he said.

SmartCity Kochi is an IT Special Economic Zone with an envisioned built-up area of more than 8 million square feet, and is expected to create more than 80,000 direct job opportunities once all the shifts are fully functional.




Third India- Australia Energy Security Dialogue Begins 8th – 11th Feb-16

India and Australia would look to discuss, among other issues, business cooperation in coal bed methane and LNG production and trade, during the 3rd India – Australia Energy Security Dialogue to be held from 8th to 11th February 2016 at Australia. Piyush Goyal, Indian;s Minister of State for Power, Coal and New & Renewable Energy will co-chair the Dialogue. The coal sector of India envisages doubling its production in next five years. In this context, areas such as CBM and coal mine methane development and underground coal gasification (UCG) have been proposed for deliberations, the government said in a statement.

“Government of India has recently put in place a policy for development of underground coal gasification and ministry of coal is likely to come up with some coal blocks for offer for development of the resource. The Australian companies can look forward for participation in this area.

There is ample scope for the Australian mining companies in participating in the tenders for development of different coal blocks offered to various public sector companies in the recent past. Coal India Limited is embarking on development of CBM/CMM from their leasehold areas where Australian companies can look forward for

participation for developing CBM resource,” the government said.During the energy dialogue, India will share its perspective on upcoming opportunities for trade of LNG between India-Australia. Policy collaboration on issues pertaining to LNG trade will also be discussed. A Roundtable discussion on LNG trade, chaired by Goyal, will take place in Brisbane on 8th February. During the Roundtable Indian participants will share their perspective on “growth of natural gas and outlook of energy consumption in India” and the Australian side will share their perspective on “Upstream development initiatives for facilitating business opportunities for LNG production and trade”.

India’s Petronet LNG Ltd. has a 20-year contract with Gorgon gas to source 1.44 MMT of gas annually. This will be supplied to IOCL, BPCL and HPCL for further distribution. The supplies are expected to begin by November this year.

The India – Australia Energy Security Dialogue was established following the visit of then Australian Prime Minister Julia Gillard to India in October, 2012. The Dialogue was institutionalized to discuss areas of mutual interest in energy security and key issues in India and Australia's energy markets, as well as regional and globe trends, and developments in both countries. Two meetings of the Energy Security Dialogue were held in New Delhi and Brisbane in 2013 and 2014 respectively.




NewBase 09 February 2016 Khaled Al Awadi

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

Oil prices jump 2% , shrug off equity slump, glut concerns Reuters + NewBase

Crude oil prices jumped as much as 2 percent on Tuesday, shrugging off big drops in Japan's stock market and eroding some of the previous session's losses that were driven by festering concerns about global oversupply.

U.S. crude was up 49 cents at $30.18 a barrel at 0259 GMT, after rising as far as $30.30. The contract fell about 4 percent on Monday, finishing at $29.69. Global crude benchmark Brent was up 35 cents at $33.23 a barrel. It settled the previous session down $1.18 at $33.88.

Prices on Monday were hit by a drop in U.S. equity markets amid persistent fears about the global economic slowdown. But on Tuesday, oil market traders ignored a 5-percent drop in Japan's Nikkei . Many Asian markets are closed for Lunar New Year holidays.

"Once again we have got a weaker U.S. dollar and I suspect that that's where the bulk of the support is coming from," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

The U.S. dollar fell against the Japanese yen =JPY as sentiment towards most risk assets turned bearish amid concerns about banking stability.

Oil price special

coverage




A declining dollar makes oil prices cheaper because most trade is denominated in the greenback, potentially spurring demand. Still, the glut in world oil markets is unlikely to abate soon, with a Reuters survey showing U.S. crude stocks likely rose by 3.9 million barrels in the week ended Feb. 5.

Industry group American Petroleum Institute on Tuesday releases its weekly inventory reports

"The fundamentals haven't shifted. The market remains in surplus and while that's the case, it is very difficult for prices to sustain any gains," McCarthy said. There is also little sign of any coordination among big producers outside the United States after weekend talks between OPEC members Saudi Arabia and Venezuela on possible coordination yielded little.

That dims prospects of any initiative on curbing supply to boost prices including producers like Russia, analysts say. "Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade," ANZ said in a research note on Tuesday.

World's Largest Energy Trader Sees a Decade of Low Oil Prices Bloomberg - Javier Blas javierblas2

Oil prices will stay low for as long as 10 years as Chinese economic growth slows and the U.S. shale industry acts as a cap on any rally, according to the world’s largest independent oil-trading house.

"It’s hard to see a dramatic price increase," Vitol Group BV Chief Executive Officer Ian Taylor told Bloomberg in an interview, saying prices were likely to bounce around a band with a mid-point of $50 a barrel for the next decade.

"We really do imagine a band, and that band would probably naturally see a $40 to $60 type of band," he said. "I can see that band lasting for five to ten years. I think it’s fundamentally different."

The lower boundary would imply little price recovery from where Brent crude, the global price benchmark, trades at about $35 a barrel. The upper limit would put prices back to the level of July 2015, when the oil industry was already taking measures to weather the crisis.

The forecast, made as the oil trading community’s annual IP Week gathering starts in London on Monday, would mean oil-rich countries and the energy industry would face the longest

stretch of low prices since the the 1986-1999 period, when crude mostly traded between $10 and $20 a barrel.




Vitol trades more than five million barrels a day of crude and refined products -- enough to cover the needs of Germany, France and Spain together -- and its views are closely followed in the oil industry.

Taylor, a 59-year-old trader-cum-executive who started his career at Royal Dutch Shell Plc in the late 1970s, said he was unsure whether prices have already bottomed out, as supply continued to out-pace demand, leading to ever higher global stockpiles. However, he said that prices were likely to recover somewhat in the second half of the year, toward $45 to $50 a barrel.

For the foreseeable future, Taylor doubts the oil market would ever see the triple-digit prices that fattened the sovereign wealth funds of Middle East countries and propelled the valuations of companies such as Exxon Mobil Corp. and BP Plc.

"You have to believe that there is a possibility that you will not necessarily go back above $100, you know, ever," he said.

The problem is that "there is so much more supply" while the global economy is more efficient in consuming crude. On top of that, Iran is returning to the market and growth in emerging markets, the biggest engine of oil demand, is slowing.

"China has changed," he said.

Oil prices plunged after the Organization of Petroleum Exporting Countries in November 2014 diverged from its traditional policy of adjusting supply to manage prices, announcing it would maintain output to defend its position in the market. The group formally dropped any production




limits in December, boosting output and intensifying a price war against higher-cost producers including U.S. shale operations, the North Sea, Canada’s tar sands and deep-water discoveries in Brazil and Angola.

Taylor said there could be an agreement between OPEC and non-OPEC countries like Russia to cut production. "It’s probably slightly against, 60-40 against, but it’s a real possibility," he said,

While the price slump has hurt oil producers, independent traders such as Vitol and its competitors Trafigura Group Pte, Glencore Plc, Gunvor Group Ltd, Castleton Commodities International LLC and Mercuria Energy Group Ltd. are profiting from the increase in volatility.

These companies also benefit from a market structure called contango -- where forward prices are higher than current costs. This allows traders to buy oil, store it in tanks and use derivatives to lock in a higher selling price for a later date.

Taylor said that Vitol, which celebrates its 50th anniversary this year and its owned by its employees, would report net income in 2015 above the $1.35 billion it earned in 2014. However, he said the company wouldn’t match the record of nearly $2.3 billion of 2009. Taylor said that the company, which doesn’t publicly release its profit, planned to take write-downs in its exploration and production business and make provisions against customers defaulting on contracts. The company, formally based in Rotterdam, has its major trading floors in London, Geneva, Singapore and Houston.




NewBase Special Coverage

News Agencies News Release 09 February 2016

Oil Drillers Exposed in Three-Way Hedges as Crude Dips Below $30 Bloomberg - Asjylyn Loder

Oil at $30 a barrel is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash.

Companies including Marathon Oil Corp., Noble Energy Inc., Callon Petroleum Inc., Pioneer Natural Resources Co., Rex Energy Corp. and Bonanza Creek Energy Inc. used a strategy known as a three-way collar that doesn’t guarantee a minimum price if oil falls below a certain level, company records show. While three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines.

"At the time people hedged, they did it without thinking that oil would go to $28," said Thomas Finlon, director of Energy Analytics Group LLC in Jupiter, Florida. "They didn’t have a realistic view about whether the market would crumble or not."

The three-way hedges risk worsening a cash shortfall for companies trying to survive the worst oil crash in 30 years. The insurance is all the more important after oil plummeted 43 percent in the past year to $26 a barrel in January, exacerbating the pressure on debt-burdened producers.

"In 2015, everyone was given a hall pass and had a little protection from hedges," said Irene Haas, an analyst with Wunderlich Securities. "But as we roll into 2016, the hedges aren’t as attractively priced anymore and the hedges aren’t going to exactly bail you out." Shale Boom

The U.S. shale boom was built on high oil prices and low-cost financing, which enabled drillers to spend more than they earned while making up the difference with debt. With oil at a 12-year-low, financing is much harder to come by. Locking in a minimum price for crude reassures investors and lenders that companies will have the cash to pay their debts.

Joseph Gatto, Jr., Callon’s chief financial officer, told investors at a conference in December that the company had hedged about 4,000 barrels a day in 2016, or 40 percent of its projected output, at a price of $56 a barrel.

About half of those contracts are worth significantly less at $30 a barrel because Callon employed three-ways, Securities & Exchange Commission records show. While the company is guaranteed




$58.23 for 364,000 barrels in the first half of 2016, or about 2,000 barrels a day, the remaining 364,000 has lost value because the strategy sacrifices protection when prices fall below $40. Three Parts

The trade has three parts. First, one option capped the best price Callon could get at $65 a barrel. Selling the right to profit if prices rise offsets the cost of protecting against a decline. The second piece established a floor price of $55, a guaranteed minimum that Callon would get paid even if oil fell below that point. By itself, this kind of trade, called a collar, would’ve ensured that Callon received $25 a barrel protection when oil is trading at $30.

However, Callon added a third element by selling a put option, sometimes called a subfloor, at $40 a barrel. Below that point, Callon essentially forfeits its protection. Instead of pocketing $55, the company is only entitled to the difference between the floor and that subfloor, or $15 a barrel in this case. At $30, Callon will realize $45 a barrel, $10 a barrel less than it would’ve received with a traditional collar.

If prices rebound above the subfloor, any disadvantage to the three-ways disappears. ‘Risk Management’

"Our hedging program is part of our broader risk management efforts, and is designed to provide downside protection in a falling commodity price environment," said Eric Williams, a spokesman for Callon. The price of oil futures through 2016 is at about $35, at which Callon’s three-ways would yield $50 a barrel, he said.

Representatives for Marathon, Noble and Rex Energy did not return phone calls and e-mails seeking comment.

Similarly, Pioneer used three-ways to cover 65,000 barrels a day in the first half of 2016, or about a third of its projected output, company filings show. The strategy capped the upside price at $73 and guaranteed a minimum of $63, which would’ve ensured $33 above a selling price of $30.

However, Pioneer added a subfloor at $43. If oil’s trading at $30 a barrel, Pioneer will get about $50, or the market price plus the $20 difference between the floor and the subfloor. The difference adds up. With oil at $40, Pioneer will realize about $845,000 less every day than it would have using the collar with the $63 floor. Providing Protection

The protection is still significantly better than nothing. Last year, the company’s hedges brought in $875 million and they will pay off again in 2016, said Rich Dealy, Pioneer’s chief financial officer.

"Over the past few commodity price cycles, we have learned the importance of using derivatives to protect margins and cash flow," Dealy said. "We actively manage the types of derivative instruments we use based on our outlook for prices."

Likewise, Bonanza Creek hedged 5,500 barrels a day for 2016, about 33 percent of its production, with three-way collars with a ceiling of $96.83 and a floor of $85. At $40, the trade would be worth about $55 a barrel, or $302,500 a day. However, Bonanza Creek also sold $70 puts, making its position worth just $15 a barrel, or $82,500 a day.

Ryan Zorn, treasurer and senior vice president of finance for Bonanza Creek, declined to comment.




"Nobody expected this kind of downward spike," said Haas, the Wunderlich analyst.




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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 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 09 February 2016 K. Al Awadi

new base 783 special 09 februaury 2016

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