New base 724 special 09 november 2015

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NewBase 09 November 2015 - Issue No. 724 Edited & Produced by: Khaled Al Awadi

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UAE: ADIPEC opens with UAE promise to increase crude production By Gulf News - Fareed Rahman, S. Business Reporter

The UAE is going ahead with its projects to increase crude production and is committed to supplying any shortage in the global oil market, the Energy Minister Suhail Al Mazroui said as Abu Dhabi International Petroleum Exhibition and Conference (Adipec) is set to begin on Monday.

“The United Arab Emirates is committed to increase its production capacity of crude oil to ensure the stability of oil markets. It also works to increase the refining capacity of crude oil within its efforts to meet the growing oil products demand,” he said.

The Minister said that the UAE as a member of the Organisation of Petroleum Exporting Countries (Opec) is committed to bridging the shortfall in supplies to the world market in the event of any disruption in the production of any member State.

“The market will determine the price of oil and that supply and demand will impose the correct price for producers,” he said about oil prices expressing his optimism about a gradual correction in oil prices in 2016.

Any predictions of large oil price swings in coming months were unrealistic, he added. Oil prices have dropped by more than 50 per cent since last year from a peak of $115 (Dh422) per barrel to less than $50 per barrel due to a global glut in oil production.

A number of companies were forced to reduce spending to overcome losses. Abu Dhabi National Oil Company (Adnoc) announced last week that they are cutting operating costs by up to 25 per cent because of the low oil prices.

Job cuts

Chevron Corp said it is planning to cut 6,000 to 7,000 jobs amid a gloomy outlook for oil prices. The spending in 2016 will be 25 per cent less than this year, according to the company. Meanwhile, 14 National Oil Companies and 16 International Oil Companies will take part in Adipec this year. The event will be held from November 9 to 12 at Abu Dhabi National Exhibition Centre.

The world’s leading authority on energy and Pulitzer Prize-winning author, Dr Daniel Yergin will deliver the key note address.




The event will see the participation of a number of ministers, industry chiefs and top oil and gas professionals from across the globe.

More than 85,000 people are expected to visit the four-day event.

In an interview with Emirates News Agency, WAM, ahead of Monday’s opening of Adipec, Andrew Vaughan, Vice President of Shell for Abu Dhabi, Kuwait and Syria highlighted the company’s association with Abu Dhabi.

He said that Shell has a strong project and business portfolio in the Middle East and North Africa stretching back over 100 years in some countries, and continues to use its technology leadership to build an even stronger one for the future.

Growth

On the Bab Gas Development, a 30-year joint venture to develop the major Bab sour gas reservoirs in the Emirate of Abu Dhabi in 2013, in which Shell was selected to participate, Vaughan said that as Abu Dhabi’s economy continues to grow at an impressive rate, this growth is accompanied by an increase in energy needs, which means that new energy sources need to be found and developed, especially in the application of technologies to unlock “challenging” gas, including sour gas reserves such as Bab Field.

“A new natural gas development like Bab sour gas will benefit Abu Dhabi in terms of supplying local demand, but will also benefit the entire UAE since the gas network is a single system.”

Christopher Hudson, President — Global Energy, dmg events, organisers of Adipec, underlined the prominent role played by the event in shedding light on Abu Dhabi as a global hub for knowledge exchange.

“Adipec has become a landmark event that attracts major oil and gas companies, offering a distinct platform for the exchange of knowledge and experiences in the energy sector, and presenting endless opportunities for innovation,” he said.

The new features of this year’s event would be a dedicated waterfront location for the display of offshore, subsea, and marine products and services as part of Offshore and Marine Conference.

Energy Ministers from the UAE, Oman, Egypt and Gabon will take part in the ministerial panel on the innovation and sustainability in a new energy world. Drop in oil prices and the impact on companies is set to dominate the discussions during the event.




GCC: IMF sees $275bn GCC export revenue shortfall Due to Oil Prices fall Gulf Times

The Gulf Cooperation Council (GCC) is expected to see a shortfall of $275bn in export earnings this year on lower oil prices, substantially deteriorating fiscal and current account balances.

Overall growth in the region is expected to slow down to 3.2% this year and further to 2.7% in 2016, according to the International Monetary Fund (IMF). Although the GCC countries’ financial buffers avoid them taking “sudden or disruptive” fiscal policy changes, IMF managing director Christine Lagarde said with the oil prices expected to remain low in the foreseeable future, the Gulf countries need to strengthen fiscal policy through higher non-oil tax and energy prices as well as control over public sector wages.

“With oil prices having declined sharply since mid-2014, export revenues are expected to be nearly $275bn lower in 2015 than in 2014,” Lagarde told the media after meeting GCC finance ministers and central bank governors in Doha.

She said the fiscal and current account balances in the region are “deteriorating sharply” with them expected to show a fiscal deficit of 12.7% of GDP (gross domestic product) in 2015. “Growth is also expected to slow with the IMF projection suggesting 3.2% in 2015 and 2.7% in 2016 compared to 3.4% in 2014,” she said in the presence of Finance Minister HE Ali Sherif al-Emadi. Highlighting that the GCC countries face the challenge of lower oil prices from a position of strength, Lagarde said prudent policies over the past decade have enabled them to build up financial buffers, which avoid the need for a “sudden or disruptive” adjustment in fiscal policy.




“Nevertheless, with low oil prices expected to persist for a number of years, all GCC countries need to undertake some degree of fiscal adjustments, although the size and urgency of this adjustment varies across countries,” Lagarde said. Although fiscal adjustment will depend on each country’s specific situation, she said the main elements are common across the economies such as expansion of non-oil tax revenues, raising energy prices, which are still below the international norms; firm control over current spending, particularly on public sector wages; and a review of capital expenditure.

“Reforms to strengthen the fiscal frameworks would support these consolidation efforts,” she said. On public sector wages, she said there was no additional room for any increases, given the fiscal constraints. On the GCC banking sector, Lagarde was of the view that it generally appeared well-placed to weather the impact of lower oil prices, weaker growth and higher US interest rates. “Nevertheless, as oil revenues decrease, external financing conditions tighten and government debt issuance increases, central banks will need to remain vigilant for stresses in the system and provide liquidity to the financial sector if

needed,” she said. Macro-prudential policy can also help manage any systemic stresses in the financial system if they were to emerge, Lagarde added. (The GCC) governments should continue to take steps to switch the focus of growth away from the public sector and towards the private sector, she suggested. With some 2mn people likely to enter the labour force in the GCC by 2020 and given the fiscal constraints on further increasing government employment, private sector job creation needs to be stepped up, she said. Observing that the governments are already implementing many policies in this direction and important progress being made, Lagarde said “nevertheless, continued efforts are needed to encourage nationals to seek employment in the private sector and for firms to hire them.” Highlighting that the IMF would continue to deepen its relationship with the GCC through regular country visits, technical assistance and training, Lagarde said “we stand ready to support the GCC countries in any way they see appropriate as they address the challenges of lower oil prices.”




Nigeria's NNPC says on verge of oil find in Lake Chad area Source: Reuters + NewBase

Nigeria, Africa's biggest crude oil producer, may be 'on the verge of a significant oil find' in the Lake Chad area of the northeast, NNPC managing director Ibe Kachikwu was quoted as saying in a statement issued by the state oil company on Sunday.

Kachikwu, who is to be sworn in to President Muhammadu Buhari's cabinet on Wednesday and is widely expected to become junior oil minister, also said the Nigerian National Petroleum Corporation (NNPC) is projecting revenues of $20 billion in 2016.

Africa's biggest economy has been hammered by the sharp drop in global oil prices, because it relies on crude exports for around 70 percent of government revenues.

'There are signs from the latest 3D seismic studies that oil may be very close to being found now in Lake Chad,' Kachikwu was quoted as saying in a statement issued by NNPC spokesman Ohi Alegbe. 'I am optimistic that by the end of the year we should be able to announce something major on this,' he said in a presentation in Lagos, according to the statement.

Kachikwu was quoted as saying it would be important to pass the long-delayed Petroleum Industry Bill aimed at overhauling the oil sector, and to encourage investment in the country's oil and gas industry.

'Kachikwu stated that the NNPC is projecting the inflow of $20bn in 2016 to enable the corporation to fund major projects,' said NNPC spokesman Alegbe. Portfolios have yet to be assigned to the 36 cabinet members chosen by Buhari, but analysts expect Kachikwu to report to the president, who will personally oversee the petroleum portfolio.

Lake Chad as photographed from orbit




NewBase 09 November - 2015 Khaled Al Awadi

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

US crude steadies after 2 pct slide on dollar strength Reuters + NewBase

U.S. crude futures ticked higher on Monday after tumbling 2 percent in the previous session as the dollar climbed on robust U.S. employment data which raised bets for an interest rate hike this year.

U.S. crude for December delivery was up 14 cents at $44.43 a barrel by 0038 GMT after touching a 1-1/2-week low of $43.83. Brent crude gained 10 cents to $47.52 per barrel after a three-day slide.

U.S. nonfarm payrolls rose 271,000 last month, far exceeding the 180,000 increase that economists polled by Reuters had predicted. It was the biggest monthly increase since December 2014, with the unemployment rate now at its lowest level since April 2008 and is in a range many Fed officials see as consistent with full employment.

Interest rates futures were pricing in a 70 percent probability that the U.S. central bank will raise borrowing costs next month, according to the CME Group's FedWatch. China's trade figures disappointed analysts expectations by a wide margin in October, reinforcing views that the world's second-largest economy will have to do more to stimulate domestic demand given softness in overseas markets.

Hedge funds raised their bullish wagers on U.S. crude this week by the most in six months as speculators bought into oil contracts in forward months on the bet market fundamentals will take time to improve.

The discount for prompt U.S. crude futures fell to its deepest level in six months on Friday, as traders sold off December positions amid bearish indications in physical crude markets.

The dollar remained aloft in Asian trade, after soaring to nearly seven-month highs against a basket of currencies as strong U.S. jobs data prompted more investors to expect an interest rate increase this year. Asian stocks slipped.

Oil price special

coverage




Current oil prices to soon spur demand growth: Saudi minister Bloomberg+ NewBase

Oil demand will soon reflect the “attractiveness” of the current level of crude prices, and Asia will be a vital engine of economic expansion for decades, Saudi Oil Minister Ali al-Naimi said. Opec’s chief joined him in seeing Asia as the main hub for growth.

Oil demand in Asia will rise by about 16mn bpd to almost 46mn by 2040, Abdalla Salem El-Badri, secretary-general of the Organisation of Petroleum Exporting Countries, said in an article posted on the International Energy Forum’s website. The region will need to import 40mn bpd of crude oil and refined products by then, he said.

Many Asian countries welcome the recent decline in oil, and demand “will soon

reflect the attractiveness of the current prices,” al-Naimi said in a separate article posted on the IEF’s website. “That said, it is not high prices or low prices that we want - and by ‘we’ I mean producers and consumers — it’s stability of prices,” al-Naimi said. The Riyadh-based IEF’s members, including the US and China, account for more than 90% of global supply and consumption of oil and gas.

Saudi Arabia and other members of Opec face greater competition for crude sales in Asia as Russia and producers in Latin America and Africa send more cargoes to the region. Crude has slumped more than 40% in the past year amid speculation that oversupply will persist as Opec continues to pump above its collective target in an effort to force high-cost producers, including some US shale companies, to curb output. Opec supplies about 40% of the world’s oil, and Saudi Arabia is its biggest producer.

Brent crude, a global pricing benchmark, fell 1.2% on Friday to $47.42 a barrel on the London-based ICE Futures Europe exchange. Prices slid 3.4% last week.

“The global economy has been buffeted over the past few years and major adjustments are taking place,” said al-Naimi, who sees further growth ahead. “Urbanisation continues, populations are expanding, prosperity is increasing, as is social mobility,” he said. “All of this requires energy to power it and, in my view, this equates to oil demand growth. Key to this is the role of Asia.”

The region is “a vital engine of growth for the world economy and I have no doubt it will continue in this role throughout this century,” al-Naimi said. “Asia will -– and should -– assume a greater influence in global energy affairs.”

El-Badri, the Opec chief, said Asian oil use has increased by more than 40% to 30mn bpd since 2000, while consumption in Europe and the Americas fell over the same period. “Asia will remain the main hub for oil demand growth,” he said. “Putting this into some perspective, the demand




increase in Asia by 2040 is projected to be more than double the increase in all other growing regions combined.”

Russia sees the Asia-Pacific region driving energy consumption in the “medium term,” even with China’s economy growing more slowly, Russian Energy Minister Alexander Novak said in an article on the IEF’s website. His country plans to more than double oil exports to Asia-Pacific buyers by 2035, Novak said, without specifying volumes.

Russia is also seeking to boost natural gas exports to Asia, targeting shipments of 128bn cubic meters by 2035 from 14bn cubic meters in 2014, he said. Russia’s Eastern Gas Programme calls for four large gas production centres and construction of pipelines toward China, according to Novak.




NewBase Special Coverage

News Agencies News Release 09 Nov.. 2015

Musk: Millions of Teslas, 500-mile range coming CNBC - Jacob Pramuk

The most successful electric-car company in the world surprised investors in its earnings earlier this week with its plans to sell as many as 52,000 cars this year. But Tesla dealer lots are going to be commanding a lot more square footage based on comments given by Elon Musk on Friday at the Baron Investment Conference.

Musk, chairman and CEO, sees Tesla Motors eventually churning out "several million" electric cars per year, a far cry from the roughly 50,000–52,000 it expects to deliver this year, and notable given Musk's view that in its early days, he believed Tesla "would almost certainly fail."

Money-losing Tesla now boasts a market value of roughly $30 billion, but that hasn't stopped many investors from driving up the stock's value, including long-term buy-and-hold investors like Ron Baron, the billionaire with whom Musk spoke on Friday in New York City.




Musk believes improvements in battery life and affordability can carry Tesla to these lofty production goals. "We're making quite substantial improvements," Musk told Baron, whose funds hold sizable positions in Tesla shares. "Most important, really, is the cost," Musk said.

In response to a question from Baron that to meet production goals, Tesla would need to add a lot more manufacturing, Musk said, "I think over time if we continue to, if we build great products and we keep our cost structure competitive, [Tesla will have] many plants — in fact, many auto plants and many gigafactories, I think, are needed."

Musk highlighted the importance of increasing battery efficiency and, in turn, reducing the cost of electric cars and other energy sources. He would eventually like to see a car with a 500-mile range, which could be feasible in a decade or more, he said. In fact, he said it could be done now; it just wouldn't be worth the compromises.

"For us to do, say, a 500-mile-range car, we could absolutely do that right now with current batteries, but the cost would be too high and the use for load impact on the vehicle would be too high. So you would have to fill the front truck and rear trunk with batteries, [and] we would have to infringe a little bit on passenger room," Musk said.

Musk, whose high ambitions range from eliminating the need for fossil fuels to colonizing Mars, often personally overshadows his ventures, which include SpaceX and SolarCity. Some shareholders, including Baron, bet as much on Musk as his companies.




"We're investing in you," the Baron Funds CEO told Musk on Friday. Question everything, trust Musk .In his third-quarter letter to shareholders, Baron weighed in on the Volkswagen diesel deception and specifically used VW's transgressions as a means to further back Musk and Tesla.

We "question everything," Baron wrote shareholders. "Questioning everything is what gives us confidence to 'invest in people,' another tenet of our investment process. For example, we have made a significant effort to understand Tesla's culture by tirelessly questioning its executives. As a result, it is unimaginable to me that if a car part or an assembly process wasn't exactly 'right' and potentially compromised the safety of Tesla passengers, that Elon Musk would lie about it."

After Tesla's quarterly results this week, Musk said plans to start battery-cell production at its Nevada GigaFactory in 2016 are ahead of schedule. He contended the operation should make production more seamless, though company outsiders have gained little access to the facility thus far.

"What we're able to do in this process is massively improve the cost of the cells," Musk told Baron.

"I think over time if we continue to, if we build great products and we keep our cost structure competitive, [Tesla will have] many plants — in fact, many auto plants and many gigafactories, I think, are needed." -Elon Musk, chairman and CEO, Tesla Motors Musk downplayed concerns about the cost of Tesla cars. Starting at a base price of $70,000–$75,000, Tesla's flagship Model S prices out many non-luxury buyers. He said he sees the upcoming Model 3, at a price of about $35,000, as an alternative to the Model S and Model X lines — the Model X is Tesla's new SUV, which is expected to cost as much as the S, if not a little more.

After results this week, Tesla said it was on track to unveil the Model 3 in March.

"The 3 will be a smaller version, 20 percen t smaller, comparable in size to say a BMW 3 series or an Audi A4, but it is going to have a similar feel to the S, it will have great acceleration, good driving feel and great cargo space," Musk said.

Baron has repeatedly touted Tesla and its vehicles. Multiple Baron funds added to their Tesla exposure in the last year, during which Tesla introduced its Model X and released a home and business energy-storage service, which can be linked to solar-power sources.




Apache Said to Get Takeover Approach for $18 Billion Company Bloomberg - Ed Hammond

Apache Corp., the oil and natural gas company worth more than $18 billion, has received an unsolicited takeover approach, according to people familiar with the matter.

The Houston-based company rejected the initial offer and is working with financial adviser Goldman Sachs Group Inc. on defense, said the people, who asked not to be identified because deliberations are private. The potential buyer, who could not immediately be identified, sent a letter to Apache in the past few weeks and it’s unclear whether talks will resume, one of the people said.

A spokesman for Apache couldn’t immediately be reached for comment outside of regular business hours. A representative for Goldman Sachs declined to comment.

Apache on Nov. 5 reported a smaller-than-expected adjusted loss and boosted its 2015 production forecast. It’s one of the biggest leaseholders in the Permian Basin in western Texas, the largest U.S. shale play and the only one where oil output has continued to grow even as drillers slash spending and idle rigs. It also explores in Egypt, the Gulf of Mexico, Canada and the Eagle Ford and Woodford shale basins in the U.S.

A deal for Apache would be the largest for an independent oil and gas producer in the U.S. this year. Noble Energy Inc. bought Texas shale driller Rosetta Resources Inc. for $3.9 billion, including assumed debt, in an all-stock transaction in July.

Apache’s shares have fallen 54 percent from their 2014 peak as crude prices have crashed amid a global supply glut. It’s part of a larger sell-off in exploration and production companies, with an S&P index of 17 drillers down 28 percent in the past year. The shares closed at $47.67 on Friday in New York.




A high-flying producer during the shale boom of the 2000s, it has chronically under-performed in recent years, largely due to bad bets on major projects in Argentina and Australia that didn’t pan out. Apache, which appointed a new chief executive in January, has been selling off lackluster properties in Texas and Australia.

Apache had a net loss of about $5.7 million in the third quarter, compared with a net loss of about $1.3 million a year earlier, according to its latest earnings report. The company has cut it its 2015 capital budget by more than 60 percent from a year earlier, according to an investor presentation in September.




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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

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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 November 2015 K. Al Awadi


