newbase 617 special 02 june 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,

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NewBase 02 June 2015 - Issue No. 617 Khaled Al Awadi

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

SolarImpulse Safe in NAGOYA - JAPAN

A record-breaking attempt to cross the Pacific Ocean using a solar-powered plane has been aborted. Poor weather conditions are forcing the Solar Impulse craft to head to Japan to land.

The pilot was 36 hours into what was expected to be a six-day journey from China to Hawaii. The team will now wait in Japan for clearer skies before attempting to continue. Swiss pilot Andre Borschberg, who is flying solo, tweeted that he was disappointed but looking forward to the next

attempt.

Project co-founder

Bertrand Piccard, who has

been watching the flight

from mission control, in

Monaco, said: "We are not

daredevils, we are

explorers.

"We have to put safety at the top of all of our priorities.




Oman oil minister says Opec's decision not helping member states Oman Times + NewBase + Bloomberg

Refusal of the Organisation of the Petroleum Exporting Countries (Opec) to cut output has not served the purpose for which it was formed, said Oman's minister of oil and gas, even as Opec ministers convene in Vienna on Friday.

"I think the oil sector has not been served by the decision of Opec," Mohammed bin Hamad Al Rumhy told reporters on the sidelines of a graduation ceremony organised by Petroleum Development Oman (PDO). The minister said that Oman is not an Opec member and he cannot dictate a policy decision of the oil body, but noted that the decision against cutting output to defend market share was not in line with the organisation's stated mission and objectives. "Opec was created to safeguard the exporters and to get values for their

member states. In my opinion… the current policy of Opec is not serving that," Al Rumhy said, ahead of the 167th ordinary meeting of Opec member states. Opec refused to cut output to shore up prices at its last meeting in November, a decision which led to further decline in oil prices. Several delegates have said that Opec is unlikely to change its production ceiling in the upcoming meeting.

Following are the latest comments from Opec members and analysts. The respective shares

of the group’s supply are based on April levels. The estimates for the price per barrel each

member needs to balance its budget are from the International Monetary Fund unless stated

otherwise.

ALGERIA ♦ Price needed: $111 ♦ Share of Opec production: 3.6% ♦ Algeria’s attempt to coordinate a response to falling oil prices after a meeting with Angola and Nigeria in March didn’t result in an agreement. The new energy minister Salah Khebri is “expected to be restrained at his first Opec meeting,” Citigroup said. ANGOLA ♦ Price needed: $98 (ING) ♦ Share of Opec production: 5.3% ♦ Angola is among the biggest losers from lower prices and has little scope to boost




output, said Bloomberg First Word Oil Strategist Julian Lee; its goal of producing 2mn bpd has been delayed to 2017, according to Bloomberg Intelligence. ECUADOR ♦ Price needed: $117 (ING) ♦ Share of Opec production: 1.7% ♦ Ecuador lost $2.2bn in expected revenue from September to March following the oil slump, while prices fell below production costs for “many oil fields” in March, President Rafael Correa said last month. IRAN ♦ Price needed: $93 ♦ Share of Opec production: 8.8%

♦ Iran probably won’t argue for production cuts at the meeting because it hopes to restore exports after the removal of sanctions, Citigroup said; the country would be satisfied with oil prices of $70 to $75, according to Oil Minister Bijan Namdar Zanganeh. IRAQ ♦ Price needed: $71 ♦ Share of Opec production: 12% ♦ Iraq plans to boost crude exports by 26% to a record 3.75mn bpd this month, according to shipping programmes. KUWAIT ♦ Price needed: $47 ♦ Share of Opec production: 9% ♦ Keeping the group’s output ceiling unchanged in November was the “best option”

and Opec is now more unified behind the target, Oil Minister Ali al-Omair said last month; Opec will “stick with” its present strategy, Abdulmajeed al-Shatti, a member of Kuwait’s Supreme Petroleum Council, said on May 12. LIBYA ♦ Price needed: $215 ♦ Share of Opec production: 1.7% ♦ Libya is struggling to return production to levels achieved before the civil war started in 2011, according to Bloomberg Intelligence; monthly output has swung between 850,000 to 250,000 bpd over the past year amid conflict between two rival governments, data compiled by Bloomberg show. Opec probably won’t change its output target at the June 5 meeting, Libya’s deputy vice prime minister for energy said last week. NIGERIA ♦ Price needed: $119 (ING) ♦ Share of Opec production: 6.3% ♦ Nigeria has been unable to increase production sufficiently to offset the fall in oil prices, according to Bloomberg Intelligence; output rose 80,000 bpd to 1.98mn in




April, the first gain this year, data compiled by Bloomberg show. QATAR ♦ Price needed: $59

♦ Share of Opec production: 2.2% n Qatar is the Opec member least dependent on oil and has the lowest crude-production costs, making it well placed to withstand a period of oversupply and low prices, according to Bloomberg Intelligence. SAUDI ARABIA ♦ Price needed: $103 ♦ Share of Opec production: 33% ♦ The world’s largest oil exporter boosted crude production for a fourth month in

April to the highest level since at least 1970, escalating its quest to preserve market share amid a surge in non-Opec production. UAE ♦ Price needed: $73

♦ Share of Opec production: 9.2% ♦ The UAE sided with Saudi Arabia, Kuwait and Qatar in November, rebuffing pleas from other members to cut output to support prices; the country’s “vast financial wealth” should provide “ample time for adjustment” should oil prices remain below $70 next year, Deutsche Bank said last month. VENEZUELA ♦ Price needed: $121 (ING) ♦ Share of Opec production: 7.9% ♦ Venezuela led a faction of Opec members calling for an output cut in November, but its “poor history” of compliance with Opec quotas undermines the position, Citigroup said. President Nicolas Maduro said last month it was in his country’s and Opec’s best interests for prices to stabilise at $100 in the medium term. Oil Minister Asdrubal Chavez arrived in Vienna on Monday without commenting.




Egypt signs $2bn exploration deal with Italy's Eni Reuters + NewBase

Egypt's oil ministry said it had signed an energy exploration deal with Italy's Eni worth $2 billion following an MOU signed in March during an investment conference.

The deal paves the way for the modification of some previous deals between the ministry and Eni that include gas price adjustments, the ministry said in a statement. Eni will be able to explore in Sinai, the Gulf of Suez, the Mediterranean and areas in the Nile Delta. The Italian company will invest $1.5 billion over four years in exploration, development and operation in Sinai and the Delta. A further $360 million will be invested in digging five new wells in northern Port Said; $80 million on digging a well in Sinai and repairing an existing one; and $40 million in the Gulf of Suez.

The agreement also includes signature bonuses totalling $515 million that would partly repay some of Egypt's debts to Eni.




Morocco: Pura Vida Energy spuds MZ-1 well, offshore Morocco Source: Pura Vida Energy Pura Vida Energy has advised that the Atwood Achiever Drillship has spud the MZ-1 well and commenced drilling operations within the Mazagan permit, offshore Morocco.

Based on the well plan, drilling is expected to continue for approx. 2 to 3 months. MZ-1 will be

drilled by the Atwood Achiever (pictured). The Atwood Achiever is a dynamically positioned

ultradeepwater drillship capable of operating in water depths of 3,658 metres (12,000 ft) and

drilling to depths of 12,200 metres (40,000 ft).

The MZ-1 well is ideally positioned

at a location where a single well can

test multiple stacked targets in each

of the Cretaceous and Jurassic

levels. In the Cretaceous, the well is

expected to intersect large

structural four way dip closure at

two levels (see Figure 3). In the

Jurassic, the well is expected to

intersect large turbidite basin floor

fans which are combined

stratigraphic/structural traps.

The Jurassic fans are interbedded within the expected source rocks of the basin and thus they are




ideally positioned to receive migrating hydrocarbons directly from the source rocks into the fan

systems and carrier beds. In the event that the fan systems are not effective traps, then migrant

hydrocarbons are likely to pass vertically up into the younger Cretaceous structural anticlinal

traps.

MZ-1 will also penetrate the shallower Mid-Miocene turbidite channel fairway providing information

on the Tertiary play that is expected to provide useful data in determining the second well in the

drilling campaign.

A full suite of Logging Whilst Drilling (LWD) and wireline logs are planned to be run over the course of the MZ-1 well in both success and failure case scenarios to maximise the learnings for all future exploration. Planned logs include gamma ray, resistivity, porosity and density sonic measurements which provide the basis for fundamental rock evaluation. Drill cuttings, mud gasses and mud samples are

planned to be recorded and analysed immediately after installation of the blowout preventer and down to the final total depth of the well. A fluid sampling and pressure measurement program are expected to be conducted to determine formation fluids and pressures followed by rotary side wall cores for sampling rocks at specific intervals for both reservoir and non-reservoir properties. Finally, a check-shot survey is planned to more accurately ascertain borehole seismic data and velocity information.

The Company recognises the sensitivity of results of MZ-1 drilling operations. At a minimum, we anticipate reporting preliminary results shortly after the well has been drilled and logged through the major target zones in the Cretaceous and then the Jurassic. We anticipate preliminary analysis of the available well data will be completed within a few days after drilling through and logging each zone, at which time preliminary results for each zone are expected to be released to market. Other announcements may be made in relation to progress of drilling operations as required to comply with disclosure obligations.

Pura Vida’s Managing Director, Damon Neaves, said:

'We are pleased to have commenced drilling operations on the MZ-1 well. This is a high impact event for Pura Vida, with the potential to be transformational in the event of a discovery. This is our first test of the potential of the Mazagan permit and we look forward to reporting the results in the coming months'.




Kazakhstan wants oil majors to develop Caspian Depression Reuters

Kazakhstan plans to form a consortium with global energy companies to explore and develop potentially huge hydrocarbon reserves in the Caspian Depression, Energy Minister Vladimir Shkolnik said.

Central Asia's largest economy and the second-largest post-Soviet oil producer after Russia, Kazakhstan for several years has touted the "Eurasia" project, keen to attract capital and technology to drill super-deep oil wells in its west. "Based on studies by international experts, the Caspian Depression is estimated to hold giant hydrocarbon reserves of some 60 billion tonnes of oil," Shkolnik told parliament. "This is why we are starting to implement the Eurasia project with the use of innovative geological technologies." "Five of the world's

leading oil and gas companies have displayed interest in this project and we are now forming a consortium," Shkolnik said. He gave no details or time frame. Kazakhstan had originally pinned hopes of a sharp rise in its oil output on the Kashagan oilfield in the Caspian Sea, the world's biggest oil discovery in decades. But gas leaks detected at Kashagan halted oil production just a few weeks after its launch in September 2013. Shkolnik reiterated on Monday that output at Kashagan would not restart before the end of 2016. Kazakhstan's oil production will remain stagnant at 80.8 million tonnes this year, he said. Taking into account Kashagan's output and higher output at the Chevron-len Tengizchevroil venture, the country's oil production is forecast to peak at 113 million tonnes in 2031, Shkolnik said




Tanzania: Swala Energy announces farmout of Tanzanian

licences to Tata Petrodyne Source: Swala Energy

Swala Energy has announced that Swala Oil and Gas (Tanzania) has reached agreement with Tata Petrodyne (TPL), a subsidiary of the multinational Tata Sons Limited, under which TPL shall farm into the Pangani and Kilosa-Kilombero licences in Tanzania. Swala owns 58.5% of Swala Tanzania. Tata Sons Limited is the holding company of the Tata Group and holds the bulk of the shareholdings in the companies within the Group. The Tata Group has a market capitalisation of approx. US$110 billion and represents over 8% of the total market capitalisation of the Bombay Stock Exchange. The terms of the agreement with TPL:

• On receipt of governmental approvals for the transfer of interest TPL will pay Swala Tanzania the sum of US$5.7 million for a 25% equity interest in the Kilosa-Kilombero licence and a 25% equity interest in the Pangani licence as consideration towards the past costs incurred on the licences;

• TPL will free carry Swala Tanzania through the costs of the initial well on the Kilosa-Kilombero licence, up to a maximum of US$2.5 million (Swala estimates the gross cost of the well to be US$10.0 million);

• TPL will free carry Swala Tanzania through the costs of the initial well on the Pangani licence, up to a maximum of US$2.125 million (Swala estimates the gross cost of the well to be US$8.5 million); and

• TPL will pay Swala Tanzania up to a further US$1.0 million towards the cost of a second well following a commercial discovery in the initial well on the Kilosa-Kilombero licence. Costs incurred above this sum shall be shared by the partners in proportion to their equity.

On completion of the farm-out, the equity interest in the two licences will be:

Swala Energy estimates that it will be fully carried for the costs of the remainder of its commitment obligations on both licences. The Company is therefore well positioned to move quickly towards the drilling campaign(s) in what it believes is a highly prospective region, as highlighted by the successful seismic campaigns previously reported. Swala was advised by FirstEnergy Capital and TPL was advised by Rand Merchant Bank. Interim funding from Hayaat International Swala is also pleased to announce that Hayaat International, a cornerstone investor which holds an equity interest of 9.2% of the Company, has provided an Interim Loan Facility to Swala




for an amount of US$1.0 million. The loan is to be made available in two equal tranches and is repayable from the proceeds of the farm-outs with TPL. Other key terms for the Loan include:

• the Loan Facility being available to be drawn down in US$500,000 tranches;

• no interest being payable on the Facility;

• a fee of US$25,000 per US$500,000 tranche is payable; and

• the Loan Facility is secured on the Company’s assets.

The Loan Facility will be used for working capital and the ongoing development of the Company’s licences in Tanzania, Kenya and Zambia. Swala and Hayaat have agreed the Loan Facility in order to advance the development of the Company’s assets pending the approval of the farm-

outs by the relevant governmental authorities and as part of the financial planning for the farm-out undertaken during the past months. Hayaat International is a private investment company headquartered in Abu Dhabi that has been a strong supporter of Swala since its initial AU$3.3 million investment in the Company in November 2013. Dr. David Mestres Ridge, CEO of Swala said:

'We are grateful to Hayaat International for their ongoing support and recognition of the efforts being undertaken by the Company’s personnel as we organise the government´s approval of our farm-outs. This interim loan facility allows the Company to fund its near-term operations without the need to raise equity from our shareholder base at a time of significant activity.'




Uganda announces London roadshow for First Licensing Round Source: Directorate of Petroleum - Ministry of Energy and Mineral Development The Government of Uganda through the Ministry of Energy and Mineral Development has opened up six blocks in the Albertine Graben for licensing in the first competitive bidding round. Following the issuance of a Request for Qualification (RFQ) inviting interested firms and/or consortia to submit Statements of Qualifications, the Ministry continues to encourage more firms to participate in the upcoming licensing round. A licensing round roadshow will be held at the Montcalm Shoreditch London Tech City Hotel on 17th June 2015 starting from 9:00am to 4:00 pm. Eng. Irene Muloni announced Uganda’s first licensing round during February 2015. The six

blocks on offer are; Ngassa (410 Km2) in Hoima District,Taitai & Karuka (565 Km2) in Buliisa District, Ngaji (895 Km2), Rukungiri & Kanungu Districts, Mvule (344 Km2) in Moyo and Yumbe Districts

together with Turaco (425 Km2) and Kanywantaba (344 Km2) in Ntoroko District. These blocks have both seismic and well data which were acquired by oil companies previously licensed in these areas. Stratigraphic Licensing will be applicable to some of these blocks.

Uganda’s first licensing round is guided by the National Oil and Gas Policy for Uganda (2008) and the Petroleum (Exploration, Development and Production) Act 2013.




The U.S. oil fracker's dilemma: crouch or pounce? Reuters + NewBase

U.S. shale oil producers, having weathered the worst price plunge in their industry's brief history, now face a dilemma: whether to stay in a defensive crouch after slashing their rig fleets, or start drilling more wells to capture a partial recovery in prices.

In a way, the conundrum is as old as the first oil well. If producers start pumping more crude, as some executives have said they might do if prices edge a bit higher, they risk contributing to another slump in a fragile global market; if they hold back, they forego regaining revenue lost during a price slide of 60 percent that started in June.

Yet it is also a changed world.

For decades the global industry has been dominated by a handful of mega-majors, which made shifts to the supply and demand balance less rapid and more predictable.

Today, about 100 public firms and many more private ones are shaping the North American shale industry, raising the risk that hundreds of rigs might quickly reenter service, even if individual companies tread lightly.

Many say they are aware of the dilemma. The June 5 meeting of U.S. rivals in the Organization of the Petroleum Exporting Countries adds to the uncertainty.

"We do not want to get in a hurry. We want to stay disciplined," Bill Thomas, Chief Executive of EOG Resources Inc, a top shale oil producer, said in May. "We certainly don't want to jump start completions and (have) the price maybe fall back."

JUST A FEW MORE DOLLARS

CEOs of Whiting Petroleum Corp, Pioneer Natural Resources, Apache Corp, WPX Energy Inc and Anadarko Petroleum Corp have echoed the caution. At the same time, some have toyed with the idea of adding rigs if U.S. crude hovers for a while around $65 or $70 a barrel.

Right now the price is at $60 and, despite a 40 percent rebound since March, still well below last year's levels of $100 a barrel. But helping to underpin the shale firms' measured optimism about adding rigs are costs that have fallen 15-25 percent and continued productivity gains for new wells.

Break-even levels for most shale fields have already inched down since the price crash started. Wood Mackenzie sees them falling on average by $10-15 a barrel through mid-2016, with bigger savings accruing in the most productive spots.

Pioneer has said it is "getting more confident" in its ability to expand its rig fleet starting in July. "Price is only one component," Tim Dove, chief operating officer at Pioneer, said in May. "It's really the margin of the well that matters."




The U.S. oil rig count, after being sliced by more than half since November as producers cut spending, appears to have nearly bottomed out, analysts say. It stood at 646 on Friday after falling 13, Baker Hughes said.

Analysts canvassed by Reuters, along with the driller Nabors Industries Ltd, see the rig count picking up in the third quarter and gaining momentum in the fourth quarter.

DOUBLE-DIGIT GROWTH?

It could take a while for new wells to replace lost output. The U.S. Energy Information Administration sees domestic crude production peaking this year in May at 9.36 million barrels per day. From there, it would ebb by several hundred thousand barrels a day and not fully recover until late 2016.

Right now, the talk about the potential for a significant rebound appears to be just that: talk. "We are not generally in discussions with operators to add rigs at this time," Andy Hendricks, CEO of Patterson-UTI Energy Inc, one of the big U.S. drilling contractors, told Reuters by email.

The price of crude remains a wild card, with Saudi Arabia having abdicated its role as the world's swing supplier.

The Saudis and other members of OPEC, which meets on Friday in Vienna, are widely expected to maintain a policy of keeping production high to retain market share, regardless of price, a stance adopted in November that sent prices reeling.

Current OPEC policy has been seen in the United States as a bid to squeeze out higher cost shale producers. Just how fast the uptick in rigs will be is anybody's guess. Robin Shoemaker of KeyBanc Capital Markets said it would "probably be optimistic" if 100 rigs were added by the end of this year, 12 percent of the current fleet.

The natural gas shale industry saw an almost identical retrenchment in rigs in 2009, but it rebounded by some 50 percent about nine months after hitting bottom. So long as prices hold and global demand strengthens, some shale producers say they could return to swift output growth next year.

"If we add the rigs we're talking about this year, we add a few rigs in 2016, it's not out of the realm of possibility we will be (at) a double-digit growth rate again," Pioneer's Dove told analysts in May.




Oil Price Drop Special Coverage

Oil prices stabilize, firm demand counters oversupply Reuters + NewBase

Crude oil prices stabilized on Tuesday due to firm demand after dipping in early trade on expectations that OPEC would not cut output at its meeting this week.

The Organization of the Petroleum Exporting Countries (OPEC) meets this Friday in Vienna to discuss its production strategy, with U.S. bank Citi saying the group was likely to maintain current production. Prices were supported as Saudi oil minister Ali al-Naimi said overnight that demand would pick up and tighten the market in the second half of the year.

"Comments from Saudi Arabian oil minister Ali al-Naimi were characteristically upbeat, acknowledging a current surplus in the market, but anticipating stronger second half demand and an eventual rebalancing of the market," Citi said in a note responding to his comments.

Front-month Brent crude futures fell to a low of $64.71 per barrel on Tuesday, before edging back to $64.85 by 0345 GMT.

U.S. crude was at $60.23 a barrel, up 3 cents from its last settlement and 14 cents above its session low of $60.09 per barrel.

Analysts said that firm refinery demand was also supporting prices. "Refineries are on the cusp of higher crude runs as we approach 3Q2015. On balance, we think any short-term price weakness will be dissolved by the pickup in end-user demand, higher runs and shrinking U.S. supply growth," JP Morgan said in its latest monthly oil report. Singapore-based Phillip Futures said that prices would likely fall back later this week as an OPEC decision not to cut production would mean there was "only room for a worsening oversupply". High production by OPEC, but also from other regions like U.S. shale producers and Russia, has contributed to oversupply and left tankers filled with millions of barrels of oil without buyers. Saudi Arabia's Naimi was the key architect of OPEC's decision at its last meeting in November 2014 not to cut crude production despite a growing global glut, exacerbated by a boom in U.S. shale oil, triggering sharp oil price falls.




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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 02 June 2015 K. Al Awadi

newbase 617 special 02 june 2015

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