New base 988 special 17 january 2017 energy news

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 17 January 2017 - Issue No. 988 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: INPEX and ADNOC agree to extend joint development of Satah and Umm Al Dalkh oil fields .. Source: INPEX

INPEX has agreed in principle with the Abu Dhabi National Oil Company (ADNOC) to extend the duration of the joint development of the Satah and Umm Al Dalkh oil fields offshore Abu Dhabi in the United Arab Emirates. INPEX is engaged in the development and production of crude oil in Abu Dhabi through its wholly-owned subsidiary Japan Oil Development Co (JODCO). Based on the agreement in principle, ADNOC and INPEX will discuss new detailed terms on which the joint development of Satah and Umm Al Dalkh oil fields will be extended until 31 December 2042. In addition, INPEX will be granted an additional 28% participating interest in the Umm Al Dalkh oil field, bringing its total participating interest in the oil field to 40%. The Satah and Umm Al Dalkh oil fields, located offshore Abu Dhabi and operated by Zakum Development Company (ZADCO), are producing approx. 20,000 barrels per day and 15,000 barrels per day, respectively. INPEX holds a 40% participating interest in the Satah oil field and a 12% participating interest in the Umm Al Dalkh oil field. The current joint development agreements for the Satah and Umm Al Dalkh oil fields are scheduled to expire on 8 March 2018. Both oil fields have abundant reserves and have stably produced oil for many years based on a strong partnership between ADNOC and INPEX. This stable production is expected to continue over the long term. Going forward, INPEX will continue to strive to strengthen its oil development activities in Abu Dhabi in which it has engaged for over 40 years, as well as help further deepen the strong relations between Abu Dhabi and Japan.




Saudi Arabia’s ACWA Signs Jordan’s Lowest-Cost Solar Project by Sam Wilkin

Saudi Arabia’s ACWA Power International signed Jordan’s lowest-cost solar energy project as demand for power from the sun grows.

The 61-megawatt solar power plant will provide electricity at 5.88 cents per kilowatt hour, Paddy Padmanathan, chief executive officer of Riyadh-based ACWA Power, said in an interview in Abu Dhabi.

The contract signed Monday is for 20 years, and is the lowest cost for electricity ever in Jordan, he said. ACWA Power will develop, finance, construct, own and operate the project, its second solar photovoltaic plant in Jordan, it said in a statement.

With electricity demand growing 7 percent a year in Jordan, according to ACWA Power, the kingdom is trying to boost power supplies from renewable energy. The kingdom hopes to generate about 20 percent of its electricity from renewables by 2020, Jordan’s Energy Minister Ibrahim Saif said in an interview in Abu Dhabi.

The Risha plant, in eastern Jordan, will be designed to provide power for 12,000 households, and is expected to be completed by the first quarter of 2019, ACWA Power said in the statement.

Four solar projects and two wind plants are planned, each producing 50 megawatts of electricity, Sabra said Monday in an interview in Abu Dhabi. Jordan aims to have 1,600 megawatts of renewables by 2020, split evenly between solar and wind, he said. Companies have until Feb. 15 to register expressions of interest, he said.

“Our target by 2020 is to generate about 20 percent of our electricity from renewables,” Ibrahim Saif, Jordan’s energy minister, said in the interview. Of the 1,600 megawatts planned, 1,300 is already contracted in two stages, Sabra said. The remaining 300 megawatts will be the third round, he said.

“Round one and round two were a learning exercise, round three everything is ready,” Sabra said. “I hope we receive lower prices.”

Saudi Arabia’s ACWA Power International earlier on Monday signed an agreement with Jordan to build a solar plant with electricity at 5.88 cents per kilowatt hour, the lowest bid in Jordan, according to ACWA Power.




Iraq: Oryx Petroleum announces successful completion of Zey Gawra-1ST well .. Source: Oryx Petroleum Oryx Petroleum reports that, in December 2016, the Zey Gawra-1 well was side-tracked ('Zey Gawra-1ST well') and completed in open hole partially penetrating the Cretaceous reservoir in the Zey Gawra field.

Production from the naturally flowing well is currently constrained to approx. 1,500 bbl/d of 35.5 degree API oil with a gas-oil ratio of approx. 3,000 scf/stb and less than 0.5% water, with more than 1,500 psi well head pressure. The Corporation intends to continue the extended production test of the well with the objective of assessing the well’s performance, identifying options for increasing production and obtaining information to refine plans for future development of the Zey Gawra field.

Crude oil produced at the Zey Gawra field is currently hauled by tanker from Zey Gawra to the Hawler tanker terminal where it is offloaded and then pumped to the Demir Dagh storage system where it is blended with Demir Dagh crude oil before being exported through the Kurdistan Export Pipeline.

The drilling of the third well in the appraisal and initial development of the Zey Gawra field targeting the Cretaceous reservoir is planned in the second quarter of 2017.

Gross (100%) production from the Hawler license area averaged 3,100 bbl/d in the fourth quarter of 2016. Production from the Demir Dagh-3 well in the Jurassic reservoir, which was expected to decline in 2017, ceased in late December due to an abrupt increase in the water-oil ratio. The Corporation is reviewing the circumstances of the water breakthrough at the Demir Dagh-3 well to determine what remedial action, if any, may be attempted. The loss of production from the Demir Dagh-3 well has been offset by the addition of production from the Zey Gawra-1ST well. Current gross (100%) production from the Hawler license area is approximately 3,000 bbl/d.

A 3D seismic survey in the AGC Central license area is in progress and is expected to be completed before the end of January. Approx. 2,000 km2 of 3D seismic data will be acquired and the data will be processed and interpreted in the first half of 2017.

Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:

'We are very pleased to announce the successful completion of the Zey Gawra-1ST well. Export of the oil is proceeding smoothly. Preparations are underway to drill the third well in the appraisal and initial development of the Zey Gawra field before the middle of this year. This well will appraise both the Tertiary and Cretaceous reservoirs at Zey Gawra, but we intend to complete the well as a second Cretaceous producer from the Zey Gawra field.'




Norway:Oil’s Painful Cost-Squeeze Generates Output Dividend by Mikael Holter

Cost cuts are painful, but for Norway’s oil industry making every penny count has also yielded a surprising production windfall. Thanks to improvements from cheaper, faster drilling to greater regularity in the operation of production platforms, producers pumped 85,000 barrels a day more crude than expected during the past two years, or 6 percent above forecast, according to industry regulator, the Norwegian Petroleum Directorate. And it gets better: this week the NPD raised its output forecast for the 2017 to 2020 period by 8 percent, an average of 110,000 barrels a day.

That’s the same as 2015 production from the country’s third-biggest field -- the Snorre deposit in the North Sea -- and almost as much as the iconic Ekofisk field, the discovery that kicked off Norway’s oil age. “It’s impressive,” Nordea AB’s Oslo-based oil analyst Thina Saltvedt said in a phone interview Friday. “When the crisis came, Norway was efficient in doing something about it.” As investment in Norway’s oil industry continues to decline over the next two years, lower costs and greater efficiency are providing the silver lining in a downturn that’s been more painful for western Europe’s biggest producer than the financial crisis. While cost estimates for seven large projects have been cut in half over the past two years and it’s been clear that efficiency gains were helping producers beat output forecasts, the NPD’s annual five-year prognosis released on Thursday was the first to show the impact on current and medium-term production.




“We’re starting to have faith that this is possible,” the NPD’s Director General Bente Nyland said in an interview in Stavanger following the presentation of the report. “The drilling campaigns on producing fields show that there’s a great focus among the companies to maintain production, and it’s paying off. It’s all about costs.”

Statoil ASA, the state-controlled producer that operates about 70 percent of Norway’s oil and gas output, has reduced the time it spends on one production well by 40 percent, cutting the cost by 30 percent, spokesman Ola Anders Skauby said. Last year, the company drilled 119 wells after planning for 113, and in 2015, 117 wells after planning for 95, he said. “The improvement measures we’ve set in motion have yielded results,” Skauby said in an e-mail. “We’re planning better, working more efficiently and we’ve simplified the well designs.” Huge Waste

Gas production also beat forecasts in 2016 by 10 percent, little changed from the 2015 record of 117 billion cubic meters. The NPD raised its forecast for gas output in the period from 2017 to 2020 by 4 percent. The cost cuts also illuminate past practices, Nordea’s Saltvedt said. If producers can boost production and reverse expected output declines, and make future projects half as expensive as they used to be, what does that say about the way they operated before? “It was a huge waste,” she said. “It must have been, when you look at these numbers.”




Asia-Pacific oil production declining at record levels: Wood Mackenzie CNBC.com staff | @CNBC

Oil production in Asia-Pacific is declining at a rate not seen elsewhere in the world, with around half of losses coming from China alone, Wood Mackenzie has warned.

"We estimate 2016 production of 7.5 million barrels per day will fall by over a million barrels per day by 2020," said Angus Rodger, the energy consultancy's Asia-Pacific upstream research director.

China, Indonesia, Malaysia and Thailand are among the biggest producers in Asia but the near having of crude oil prices since 2014 has hit the industry and resulted in an annual average base decline rate of around 7 percent within existing oil fields, Rodger pointed out.

"Lower oil prices and the severe cuts to upstream capex (capital expenditure) to mature assets has increased decline rates," he explained in a new video published on Wood Mackenzie's site.

Recently, global prices have staged a rebound as the Organization of the Petroleum Exporting Countries (OPEC) and other producers move to implement a supply cut of nearly 1.8 million barrels per day for the first half of 2017.

"Regional oil production will be underpinned by giant fields in Indonesia, Malaysia and China but these fields are super mature and will require expensive techniques, high break-evens and capex cuts," Rodger said.

Moreover, the bulk of exploration in the region is on gas so there are far too few new oil projects to make up for dwindling production, he continued, pointing out there are only a handful of undeveloped fields that can be online by 2020.

"The scarcity of new oil discoveries over the last two decades combined with lower prices and hefty capex cuts, particularly to legacy fields, will see decline rates spiral across the region."




NewBase 17 January 2017 Khaled Al Awadi

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

Oil prices mixed on Saudi commitment to cut output Reuters

Oil markets were mixed on Tuesday, supported by growth in U.S. crude production and Saudi Arabia saying it would strictly adhere to a commitment to cut output, but held back by scepticism in financial markets that oversupply would be curbed.

U.S. West Texas Intermediate (WTI) crude oil futures were trading up 2 cents at $52.39 per barrel at 0540 GMT. Brent crude futures, the international benchmark for oil prices, were down 19 cents at $55.67 a barrel.

"Today the Asian market is focused on the build in U.S. production which is nearly up to 9 million barrels per day (bpd) - up from 8.5 million bpd last June and close to 2014 production levels," said Michael McCarthy, chief market strategist at Sydney's CMC Markets.

"With U.S. crude clearly above $50 a barrel, we are getting a supply-side response which is pushing production higher. Widening spreads between West Texas Intermediate and Brent show we are right about the U.S. price push," he told Reuters.

"But potential oversupply shows this is not the right time to be buying oil."

Traders said markets were receiving some support from top crude exporter Saudi Arabia, which said it would adhere strictly to its commitment to cut output under the global agreement among oil producers including the Organization of the Petroleum Exporting Countries (OPEC) and Russia.

Oil price special

coverage




"Many countries are actually going the extra mile and cutting beyond what they've committed ... I am confident about the impact ... and I am very encouraged about those first two weeks," Saudi Energy Minister Khalid al-Falih said late on Monday at an industry event in Abu Dhabi. Under the agreement, OPEC, Russia, and other non-OPEC producers have pledged to cut oil output by nearly 1.8 million barrels per day (bpd), initially for six months, to bring supplies back in line with consumption. Despite this, crude prices have fallen almost 5 percent since their early January peaks, as financial oil traders remain sceptical about OPEC's and Russia's willingness to fully comply with the cuts. Recent fires which have caused unplanned closures at refineries in the Middle East and Asia have also hit short-term demand for crude in the region, traders said. Analysts also said that steps to prop up oil prices through a cut in supplies could be self-defeating. AB Bernstein said on Tuesday that the production cuts, and resulting higher prices, would likely hit oil demand. "For each $10 per barrel increase in oil prices, oil demand will decline by 10 basis points. While consensus expects demand-growth of 1.3 million bpd in 2017 (vs 1.4 million bpd in 2016), we see risks to the downside as demand growth in China and India starts to moderate," Bernstein said. Avoiding Shortage

OPEC’s decision on Nov. 30 to cut output reversed a two-year policy that let members pump all they wanted to try to maximize sales -- a strategy that had contributed to a worldwide glut. The producer group, together with 11 other countries including Russia, is seeking to reduce supply by about 1.8 million barrels a day. The cuts took effect on Jan. 1 and are to last through June. “All players have indicated their willingness to extend, if necessary,” Al-Falih said. “Based on my judgement today, I think it’s unlikely that we will need to continue. Demand is going to pick up in the summer, and we want to make sure the markets continue to be supplied well. We don’t want to create a shortage or a squeeze, so the extension will only happen if there’s a need, and if there’s a a need, we will do it. ” Two years of “market chaos” led to the agreement, with decreases in investment and profits underscoring the need for joint action by producers inside and outside of OPEC, he said. ‘Extra Mile’

Al-Falih said he was confident of the deal’s success. Many countries are “going the extra mile” in making deeper production cuts than they pledged, and OPEC will stop intervening in the market once global crude inventories return to their five-year average, he said. Saudi Arabia has cut production to less than 10 million barrels a day, below its targeted level, and is currently producing at a 22-month low, Al-Falih said Jan. 12 in Abu Dhabi. The world’s biggest oil exporter had agreed to trim output by 486,000 barrels a day to 10.058 million as part of the global accord on supply. “We will strictly adhere to our commitment and be at our cap, or as is the case now, slightly below it,” Al-Falih said Monday.




Saudi Arabia pledges adherence to oil cut, confident others will Saudi Arabia will adhere strictly to its commitment to cut output under the global agreement among oil producers, its energy minister said on Monday, expressing confidence that OPEC's plan to prop up prices would work.

Saudi Energy Minister Khalid al-Falih, speaking at an industry event in Abu Dhabi, also said he was encouraged by signs of commitments by other participants in the deal since it took effect on Jan. 1.

"Many countries are actually going the extra mile and cutting beyond what they've committed... I am confident about the impact... and I am very encouraged about those first two weeks," Falih said.

The comments are the latest in a series of assurances from officials that participants will follow through on the agreement intended to help get rid of a glut. Compliance with the deal will be a key influence in early 2017 on oil prices, which at $56 a barrel are about half their level of mid-2014.

Under the accord, the Organization of the Petroleum Exporting Countries and Russia and other non-members will curtail oil output by nearly 1.8 million bpd, initially for six months.

Last week, Falih said Saudi output had fallen below 10 million bpd, meaning Saudi Arabia had cut production by more than the 486,000 bpd which it agreed to late last year under the producers' agreement.

On Monday, he said: "We will strictly adhere to our commitment," adding that during the six-month agreement, Saudi output would either be at the kingdom's target under the deal or "as is the case now, slightly below".

Producers were unlikely to extend the deal beyond six months and would allow market forces to prevail once the supply glut is eradicated.

"My expectations (are)...that the rebalancing that started slowly in 2016 will have its full impact by the first half," he said.

"Once we get close to the 5-year average of global stocks and inventories we will basically let our foot off the brakes and let the market do its thing."

OPEC complied with up to 80 percent of its last output cut in 2009, according to International Energy Agency data. A committee of OPEC and non-OPEC ministers to monitor the issue is meeting on Sunday.

Kuwait also said last week it had cut production by more than it committed to and OPEC's secretary general told Reuters he was confident of the level of commitment and enthusiasm among producers who agreed to the deal.




China's Oil Collapse Is Unintentionally Helping OPEC Bloomberg News

China’s production is forecast to fall by as much as 7 percent this year, extending a record decline in 2016, according to analysts at CLSA Ltd., Sanford C. Bernstein & Co. and Nomura Holdings Inc. That’s about the same size as the output cut agreed by Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, which late last year reached a deal to trim supply to support prices.

“China’s domestic crude output decline will certainly help OPEC’s plan to reduce global supply,” said Nelson Wang, a Hong Kong-based oil and gas analyst at CLSA, who sees a 7 percent slide this year. ”Even if that isn’t China’s intention, it’s just the reality that China can’t produce more under the current circumstances.” While China consumes more oil than almost any other country, it’s also one of the world’s biggest producers, with fields stretching from offshore its southern coast to the far north east. The collapse in prices that began in 2014 is taking its toll, and the nation’s output suffered a record decline last year. That plays into the hands of OPEC as it seeks to prop up the global oil market, forcing China to depend more heavily on imports. Brent crude, benchmark for half of the world’s oil, averaged about $45 a barrel last year, more than 50 percent below levels in 2014, the year OPEC decided to tackle a global glut by keeping the taps open. The crash in prices triggered a rethink by the group, which banded together with 11 non-member countries late last year and agreed to a collective cut of almost 1.8 million barrels a day.




The deal triggered a rally, which was unable to hold above $58 a barrel amid concern higher prices would spur higher output elsewhere, particularly from U.S. producers. Brent was trading down 0.6 percent at $55.53 a barrel as of 2:29 p.m. in Singapore on Tuesday.

China’s output slumped in 2016 as state-owned firms shut wells at mature fields that had become too costly to operate after the crash. Crude production fell 6.9 percent in the first 11 months of 2016 to about 4 million barrels a day, the first decline since 2009 and the biggest in data going back to 1990. The International Energy Agency estimates output fell 335,000 barrels a day last year as the country’s biggest producers cut spending, and will slide a further 240,000 barrels a day this year. Production shrank to a seven-year low in October “with no uptick in activity expected from the major companies,” the Paris-based group said last month. Daqing, Shengli

Supply from the Daqing field, one of China’s biggest and oldest, slipped about 3 percent last year to 732,200 barrels a day, according to data from China National Petroleum Corp. While the nation’s biggest explorer plans to maintain output at the field, it aims to cut spending on exploration and engineering there by 20 percent this year, it said in December. Output at China Petroleum & Chemical Corp.’s Shengli field, which contributed 65 percent of the company’s domestic crude production last year, will shrink almost 2 percent, the subsidiary that operates it said this month. There’s “little hope” the country’s aging oilfields can reverse the declines even as prices rebound, while new discoveries may not raise output as much as expected because of high production costs, said Bernstein’s Neil Beveridge, who forecasts the country will pump 4 percent less this




year. Even after explorers improved efficiency over the past two years, the break-even point for new onshore oilfields is still about $50 a barrel, he said. Supporting Imports

CNPC and China Petroleum & Chemical Corp., known as Sinopec, declined to comment. Nobody answered calls to China National Offshore Oil Corp.’s press office in Beijing.

National Energy Administration, the country’s energy regulator, forecasts that output this year will remain stable at about 4 million barrels a day, NEA director Nur Bekri said at the agency’s annual meeting in December, according to a 21st Century Business Herald report. The NEA didn’t respond to a faxed request for comment.

Lower domestic production will help support the nation’s imports, especially in the first half of the year, according to Virendra Chauhan, an analyst at London-based Energy Aspects Ltd. That will increase the country’s reliance on overseas supply, which is forecast to rise above 65 percent of its total crude use this year, according to CNPC’s research arm.

China’s oil imports in 2016 grew at the fastest pace in six years and the nation was the world’s biggest buyer in December. Inbound shipments climbed 13.6 percent last year, while imports in December rose to record 8.6 million barrels a day. This year, though, the Asian nation will boost its purchases by 4.8 percent, according to the median estimate of eight analysts in a Bloomberg survey last month.

Rapidly Aging

China is seen leading a trend across the region. Asia-Pacific’s crude output will drop by about 1 million barrels a day to 6.5 million by 2020, according to Wood Mackenzie Ltd., as exploration since 1990 has yielded mostly natural gas and capital spending was cut because of the slump in oil prices. China will account for 47 percent that decline, according to the consultant.

“China’s largest oil fields are aging rapidly,” said Gordon Kwan, Nomura’s Hong Kong-based head of Asia-Pacific oil and gas research, who sees the country’s output falling 5 percent even as prices rise. “Advanced technology can only mitigate the decline rate, but can’t reverse the structural trend.”




NewBase Special Coverage

News Agencies News Release 17 Jan. 2017

What's Next for Mexico's Energy Sector? by Karen Boman|Rigzone Staff

Mexico’s recent deepwater bidding round marked a major milestone for the country in its transformation of its energy sector. However, more work is needed to prepare Mexico and its state energy firm, Petroleos Mexicanos (PEMEX), for competition in the global oil market. The success of Mexico’s Round 1.4 deepwater bidding compared with other Round 1 bids shows that major international oil companies were waiting for the right properties and fields to be bid out,

Juan Francisco Torres Landa R., partner with the Mexico City office of law firm Hogan Lovells, told Rigzone. The award of fields to key global industry players in the deepwater round, and PEMEX’s farm-out agreement with BHP Billiton, would not have been possible a few years ago. Both PEMEX and Mexican government officials deemed the deepwater auction process and results as a major success. However, government officials from 2013 to 2015 expressed a “naïve optimism” regarding the production and reserve replacement and short and mid-term impact of upstream reform. It wasn’t until last year that officials realized that the upstream auctions will have little effect on production and fiscal revenues during this decade, Adrian Lajous, a fellow with Columbia University’s SIPA Center on Global Energy Policy, stated in a

Jan. 9 research paper on Mexico’s deepwater auctions. “The compounding impact of low oil prices and falling oil production on public finance and particularly on the financial position of PEMEX has forced the oil industry to limit debt and drastically cut expenditures,” Lajous said. “The mid-term consequences of these constraints should not be underestimated.”




Despite president-elect Donald Trump’s controversial comments on building a wall along the U.S.-Mexico border and tough talk on immigration, Mexico still wants the United States investing in its energy sector, Antonio Garza, U.S. ambassador to Mexico during the George W. Bush Administration and now Counsel in the Mexico City office of the White & Case LLP, told Rigzone. “The U.S. energy sector is too dynamic,” Garza said. “There is far too much strategic expertise and know-how not to want them involved. I think the response of Mexican leadership, the Mexican private sector and the Mexican people would [be that] the U.S. energy sector is best-in-class – of course, they’re welcome. Of course, we want them to participate.”

However, companies looking to invest in Mexico face some tough economic headwinds. Companies buying long are still preserving cash, Garza explained. From the standpoint of energy, it’s just going to take time to see where the energy sector and economy is over the year and early 2018.

“They’re still very cautious about major capital expenditures and to the extent that they’re going to be doing much with their capital expenditures, I think it’s going to be in domestic plays or plays where they’re already somewhat vested or have been active before.” Still, U.S. energy companies are the best positioned proximate to this market.




What Could Be Next for Mexico’s Energy Sector

The outlook for Mexico’s energy sector could be impacted by the 2018 president elections and its regulatory regime. It’s too early to tell what the outcome of Mexico’s 2018 presidential elections will be. But the mood in Mexico is that a left-wing presidency is more likely than ever, Duncan Wood, director of the Woodrow Wilson International Center for Scholars, told Rigzone. This shift is due to corruption scandals that have tarnished the image of current Mexican President Enrique Pena Nieto. Energy reform has also been unpopular in Mexico. Wood said he expected energy reform to become even more unpopular with the liberalization of gasoline prices in 2017, which would cause gas prices to rise. Leftist candidate Andres Manuel Lopez Obrador has consistently opposed energy reform, Wood stated. Manuel believes in taking a more nationalistic approach to the energy sector. “At the same time, he’s a pragmatist and actually understands the basics of the national economy and the need to attract investment,” Wood added. Whoever succeeds Pena Nieto is also unlikely to have the votes in Congress to repeal the constitutional reform. But the new president could slow energy reform momentum by simply cancelling future bidding rounds, and taking steps to create a business climate less friendly for investment. Cancelling existing contracts would be difficult and costly for the Mexican government, as investors are protected by international and bilateral treaties, Wood said. “It also would destroy confidence among investors,” Wood said. “I don’t see anybody taking that risk.” Currently, the oil and gas industry and the government are both trying to ensure that Round 2 of

bidding for exploration and production opportunities will be a bigger success and move forward in 2017. Given that the timing and sequencing of the Round 1 auctions has been severely affected by global oil industry conditions, Lajous argues that the Mexican government could have had




better results by conducting a more rigorous selection of assets and a slower paced calendar could have offered better results under these circumstances. “The institutional stress under which policy makers operated allowed little time to evaluate and more fully understand the results of each auction and pose alternative contractual options in the following ones,” Lajous stated. “The argument that they had no other options is mistaken.” One issue that Mexico needs to address is its regulatory capacity, Wood said. Wood believes that the Mexican government should focus not only on expanding the workforce of the nation’s energy regulatory agencies, but investing in regulatory processes as well. This investment will ensure that permitting takes less time, shortening the amount of time to first oil. “This is to ensure agility and to make investors happy with the way their contracts are being applied,” Wood said. “If not, they’ll tell those stories to other investors, and other investors won’t come, and Mexico becomes less competitive.” PEMEX Faces Further Challenges in Evolving for Competition

Mexico’s state energy firm PEMEX is on the right track long-term, but will continue to face challenges in 2017. PEMEX’s biggest challenge is its business culture, which still tends to think like a government agency rather than an oil company, Wood explained. “What the government should have done was show that PEMEX is actually healthier and stronger at the beginning of the reform process,” Wood said. “But time has run out for the government to show that.” PEMEX has dealt with international companies before, but it wasn’t really competing with those companies under the previous regulatory environment. Landa believes that PEMEX will need to significantly reduce its workforce if it wants to meet the margins that public companies will impose and new framework for the oil and gas industry. “It’s a good idea to make sure that PEMEX is not a politically-driven company, but one where economic efficiency is a major driving force,” Landa said.`

How long will it take for PEMEX to complete its evolution hinges on a number of factors? The current CEO has made good changes; but the president who will follow Pena Nieto will likely want to bring in a new PEMEX CEO, Wood said. If the current CEO remains, the meaningful changes within PEMEX will continue to impact its bottom line over the next five years. But if somebody comes in with a different plan, that could delay everything. Wood predicts that PEMEX’s production will fall below 2 million barrels per day (MMbpd) over the next 12 to 18 months because of Mexico’s aging oil and gas fields. Optimistically, Mexico’s production will climb above 2 MMbpd in 2020. Wood thinks that production up 2 MMbpd is too ambitious, but between 2.5 MMbpd and 3 MMbpd.




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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.

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