New base 524 special 22 january 2014

Copyright © 2014 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced,

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NewBase 22 January 2015 - Issue No. 524 Khaled Al Awadi

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

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This forum is open to all members of the public.

Fujairah

Date: Wednesday 28 January 2015

10 am – 12 pm Novotel Hotel Fujairah, Dibba Ballroom

Ras Al Khaimah

Date: Tuesday 27 January 2015 10 am – 12 pm

Hilton Al Hamra Beach & Golf Resort, Convention Center

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Qatar among the best in GCC to weather oil prices plunge: PwC Gulf Times + NewBase

Qatar is one of the “best placed” GCC countries to weather the current fall in oil prices, PwC said and forecast that the country’s real GDP to grow by 6.5% this year, and average around 6.2% a year between 2016 and 2019.

PwC’s forecast has been based on factors such as Qatar’s projected population growth, resilient oil and gas sector, non-energy sector growth and stable inflation. However, to overcome some of its current challenges and create a thriving investment environment, the author of the report, Stephen Anderson, also managing partner of PwC Qatar, has urged Qatar to further strengthen its macro-fiscal capabilities. Qatar’s vast natural gas reserves and emphasis on gas exports, along with the decoupling of gas and oil prices in the aftermath of the Japanese earthquake of 2011, suggest that it is likely to be one of the best placed GCC nations to weather the current fall in oil prices. PwC expects strong growth in Qatar’s working age population with the population projected to grow by an additional 10% per year, reaching 2.5mn in 2018 due to the continuous influx of immigrant workers. Qatar has a resilient oil and gas sector due to the country’s leading position in the LNG market and new gas sector developments. The report says the substantial growth in the non-oil and gas sector should outpace hydrocarbons, driven by government expenditure, which PwC expects to continue growing strongly following an 18% average annual growth rate between 2008 and 2013. The country’s growth forecast has also been based on projected “stable inflation,” which it said should run at around 4% over the next five years, resulting from low oil prices partially balancing upward pressure brought on by the planned investment programme.




However, PwC stressed Qatar was “not immune” to the fall in oil prices and there are challenges that remain for the country. Increased gas supply in the medium term may create downward pressure on global gas prices, it said. The impact of global oil prices has already weighed on major downstream petrochemical projects in Qatar. In addition, while the report forecasts project inflation to stay at manageable levels in the medium term, the threat of inflation volatility (due to the unprecedented investment programme related to the 2022 FIFA World Cup) remains. Finally, diversifying government revenue beyond hydrocarbons continues to prove difficult for Qatar, PwC said. Anderson said, “To meet these challenges and create a thriving investment environment we recommend that the authorities continue to strengthen macro-fiscal capabilities in three areas: first, by accelerating the deepening of Qatar’s capital markets and sources of funding; second, expanding the government’s revenue base; and finally, managing government expenditure efficiently. “These measures will help to achieve the desired AAA credit rating, develop a business environment attractive to private and international investors, diversify the economy, and ensure prudent management of governmental expenditure.” He said, “We see the outlook for the coming years is moving to a more sustainable level of growth, tighter fiscal discipline and continued diversification of the economy.”




Jordan, Shell Sign Gas Deal for LNG imports . Jordan Times + NewBase Royal Dutch Shell has inked a deal to supply LNG to Jordan’s National Electric Power Company, country’s Minister of Energy and Mineral Resources Mohammad Hamed said Wednesday. As per the five year agreement, Shell will supply 150 million cubic feet of LNG per day to a terminal in Aqaba. Jordan will pay $500 million per year for the fuel supply, "This is a very important deal for Jordan and part of our efforts to diversify energy resources," Hamed told Jordan Times. The quantities Shell will supply each day cover some 25 per cent of the power company's daily needs for power generation, the minister said. Hamed also said that the power company will start buying 100 million cubic feet per day from international markets starting July. The minister added that work on the terminal is about 78 per cent complete and that all necessary equipment and measures are already in place to start receiving the LNG, Jordan Times reported.

Meanwhile, the minister said that starting July, the power company will start buying 100 million cubic feet per day from international markets as part of efforts to reduce losses and shift to less expensive gas than diesel and heavy fuel for power generation, said the minister.

The minister added that work on the terminal is about 78 per cent complete and that all necessary equipment and measures are already in place to start receiving the LNG.

At the signing event, Thomas Meijssen, general manager and country chair of the Jordan Oil Shale Company, fully owned by Shell, stressed the importance of the agreement in meeting Jordan’s energy needs. Jordan, which annually imports about 96 per cent of its energy needs, seeks to diversify its energy sources following repeated cuts in natural gas supplies from Egypt, which forced the Kingdom to buy heavy fuel and diesel for power generation.




Algeria Drops Plans to Drill for Shale Gas APS + NewBase

Algeria has decided to abandon plans to drill for shale gas in the country, the Prime Minister announced Wednesday. The announcement in a television interview came in the wake of a string of protests in the southern desert cities over environmental concerns near where drilling had already begun, news agency AP reported. "I confirm that the exploitation of shale gas is not the order of the day as for now Algeria has sufficient reserves of conventional energy to meet its needs," Prime Minister Abdelmalek Sellal

Last month Algeria successfully completed its first pilot drilling of shale gas in the Ahnet Basin (In Salah), results of which is ''very promising”. This first pilot well drilled by Sonatrach confirmed the existence of substantial reserves of shale gas in the Ahnet basin, located in In Salah. Earlier this month, Algeria’s Energy Minister Youcef Yousfi said that exploitation of shale gas in In Salah in Tamanrasset province doesn't present any danger. Despite these announcements, Prime Minister in the television interview said that the initial drilling near the town of In Salah had just been "experimental", AP added.

He said the studies would continue for at least four more years to evaluate environmental and

technical considerations. "Between shale gas and water, the Algerian people will choose water and you think the Algerian state would be crazy enough to endanger the lives of its citizens?" he asked the interviewer. "We are a responsible government."

During the National Television’s programme "Hiwar Essaa" (Talk on current issues), Sellal that Algeria learnt from the lessons of 1986 crisis and established its budget and expenses on the basis of $60 per barrel.

In this regard, the premier said that "thanks to the good governance of President Abdelaziz Bouteflika, the foreign exchange reserves will allow Algeria to carry on its socio-economic development for the next three or four years. " He recalled that, after refunding its external debt, Algeria "today positions itself on the world markets."

Sellal affirmed that Algeria will pursue the achievement of the socio-economic development projects, particularly those relating to basic infrastructure (housing, health, education, electricity, water resource, gas ...).

The Prime Minister stressed, moreover, that Algeria will cover the deficit induced by oil price fall by using public investment without drawing on the foreign exchange reserves, focusing on the preservation of sovereignty the country in decision making.




Water surpasses solar as GCC’s fastest growing renewable technology Gulf Times + NewBase

The clean technology industry has seen a sudden growth in confidence for water technologies in 2014, according to EY’s 4th Mena Cleantech Survey Report. The report, which was launched at the World Future Energy Summit in Abu Dhabi, gauges the sentiment of senior industry executives on renewable energy implementation in the region.

“A significant shift in the expectations of industry executives occurred during 2014 with regard to the growth of clean technologies in the Mena region over the next

five years. Innovation in water technologies is helping drive energy efficiency in the region, especially given the mostly hot, arid climate.

“It’s interesting to note that water was mentioned less frequently as a growth area over the last three years, yet it has now become the leader in market potential over the next five years. Prospects for investment in water infrastructure in 2014 have also improved markedly over previous years,” said EY’s Mena Power and Utilities leader Christian von Tschirschky.

Solar was ranked second in terms of market potential over the next five years, although it was ranked first place over the past three years. Confidence in solar had been growing based on the announcements of new projects and policies in the region, owing to its low pricing and interest rates and abundant solar resources.

Following water and solar in the survey results are green buildings and energy efficiency. These technologies may rise in importance over the coming years, given their highest return on investment and fastest payoff as well as the high levels of energy consumption in several Mena countries.

EY’s Mena Power and Utility director Nimer Abu Ali said, “Cleantech is finding widespread acceptance in the region. Technological breakthroughs in solar, wind, and water are driving the increased importance of cleantech among regional leadership, legislators and government entities.”




He added, “Decreasing cost of solar and wind farms, coupled with the development of rooftop generation technology, are providing more options to countries to lower their dependency on fossil fuels. Future developments will see the region adopt technologies such as electric cars, smart metering, and a host of other clean technologies.”

These rankings were mirrored closely in the GCC. Water technologies, for example, edged-out solar as the fastest-growing cleantech technology. Energy efficiency and green buildings were also ranked third in the GCC.

Due to climatic conditions and high energy usage, energy efficiency and green buildings will continue to remain a top priority for the GCC countries, the report said. Across Mena, the report revealed that insufficient government policy frameworks and regulations continued to be the largest barrier to the development of the cleantech industry in 2014. This barrier has continued to grow in importance over the past few years.

The report also noted that price competitiveness in 2014 remained the second most important barrier in the GCC.




Saudia: Spain’s Abengoa Wins Deal, Solar-Powered Desalination Plant

Abengoa will jointly develop the project with AWT, the commercial arm of King Abdulaziz

City of Science & Technology.

Spain-based sustainability technology company Abengoa has been selected by Advanced Water Technology (AWT) to jointly develop the world’s first solar-powered desalination plant in Saudi Arabia.

AWT, the commercial arm of KACST (King Abdulaziz City of Science & Technology), was recently created to bring affordable and sustainable water solutions to the country. The Al Khafji plant, valued at $130 million, will produce 60,000 cubic metres of water per day to supply Al Khafji City in north-eastern Saudi Arabia, Abengoa said in a statement.

The photovoltaic plant will be capable of supplying the power required by the desalination process, “significantly” reducing operational costs, the company said. Saudi currently uses a significant amount of oil to power its 30-odd desalination plants, estimated at over 1.5 million barrels per day.

The new plant will also have a system to optimise power consumption and a pre-treatment phase to reduce the high level of salinity and the oils and fats that are present in the region’s seawater.

The desalination plant aims to ensure a stable supply of drinking water throughout the year in a sustainable manner, it added. Including this project, Abengoa’s total desalination capacity is nearly 1.5 million cubic metre per day, enough to supply 8.5 million people around the world.

In the Middle East, it is undertaking the Barka desalination plant in Oman, and has also won a contract for the region’s largest solar plant, in Abu Dhabi.




Gazprom stops South Stream to go for Turkey Stream Pipeline News Agencies

The Russian natural gas champion Gazprom intends to substitute the cancelled South Stream project by the newly introduced Turkey Stream Pipeline project to supply the Mediterranean countries. On December 2014, President Poutine decided to stop the far advanced South Stream project pipeline as a result of Ukraine tension between Europe and Russia. Due to cross the Black Sea from Russia to Europe through Bulgaria, the South Stream project was supposed to supply natural gas to the southern countries of Europe without passing by the highly sensitive Ukraine.

In August 2014, Bulgaria decided to stop the work in progress for the construction of the 930 kilometers South Stream pipeline as declared not-conformed to the European Union regulation since Gazprom should be the sole operator and gas supplier of this connection. In addition Bulgaria is already100% dependent on the Russian gas, so this project would have increased its reliance on this country. In parallel, Europe is looking at west where on the other side of the Atlantic, North America is building up pipelines and liquefied natural gas (LNG) terminals infrastructures to export the shale gas in competitive conditions. In response to the European policy, Russia has decided to stop the South Stream project and to explore alternative markets with the Turkey Stream Pipeline project. Since February 2003, Russia supplies gas to Turkey through the Gazprom operated Blue Stream pipeline and Western Pipeline. With a compression station located in Beregovaya on the Russian side of the Black Sea, the Blue Stream pipeline delivers 16 billion cubic meters per year (bcm/y) of natural gas directly to Turkey.




In parallel the Western Pipeline provides Turkey with 12.5% of its needs, but through Ukraine. Gazprom to pipe gas in Turkey Stream from Russkaya All together Russia represents more than 50% of Turkey gas supply. In this context, Gazprom creates a new company called Gazprom Russkaya to build and operate a third connection with the Turkey Stream directly crossing the Black Sea. It should start from Russkaya, along the Black Sea in the Krasnodar Territory, where Gazprom is already working on the construction of the compression station that was due for the South Stream project.

The Gazprom Turkey Stream Pipeline project is designed to transport 63 bcm/y of natural gas to Turkey. The Russkaya compression station should have a power capacity the 448MW. From this 63 bcm/y capacity, 14 bcm/y should be consumed in Turkey while the remaining 49 bcm/y will be available to be exported to Europe through Greece or to alternative Mediterranean markets. The connection from the Turkey Stream Pipeline to Europe is still to be defined as it should require a natural gas hub close the Greek – Turkish boarder. Considering the delay accumulated by the South Stream Pipeline project before being cancelled, Gazprom is planning to build the Turkey Stream Pipeline project on fast track so that it could start commercial operations by 2017.




Oil Price Drop Special Coverage

Oman Criticizes OPEC policies on Supplies & Demand

Oman’s oil minister, Mohammad Al Rumhy, showed his frustration with Saudi Arabian-led Opec policy as he railed against the market volatility that has carried benchmark oil prices to six-year lows over the past few months.

“I fail to understand how market share can be more important than revenue,” Mr Al Rumhy said at an energy industry conference in Kuwait, Bloomberg News reported.

Although Oman is not a member of Opec, the minister was expressing the same frustration that some within the producers’ group, including his Iranian and Venezuelan counterparts, have shown with the policy

determined by Saudi Arabia. The kingdom is Opec’s effective leader as the biggest producer and only member with significant spare capacity.

At the end of November, Saudi Arabia forced through a policy to hold Opec production levels steady at about 30 million barrels a day, even though it was clear by then that with softening demand in key markets, including China, and with production from the United States rising towards record levels, the market was being supplied with about 1 million bpd more than it needed.

Last week, the International Energy Agency, the Paris-based think tank for energy consuming countries, said the market oversupply was manifest in sharply rising oil inventories.

“Stocks soared counter-seasonally by 12.5 million barrels in December,” the IEA reported. Also, “interest in floating storage was reignited with reports of trading houses booking up to 30 million barrels of long-term floating storage capacity by mid-January.”

The Saudi strategy is aimed at forcing higher-cost producers, particularly the opportunistic entrepreneurs behind the US production surge, off the market. This would allow the Saudis and fellow Opec members to maintain market share and for demand to recover and push prices back up towards US$100 a barrel.

But Oman’s oil minister reckons the strategy is misguided. He said Opec’s policy would only temporarily force high-cost producers off the market so that the only result would be price volatility.

Despite the criticism, the Saudi approach has its defenders.

“We don’t know how the Saudis came to the conclusion they came to, but they must have had some pretty bright people advising them and decided to abandon the tactics of the previous few




years,” said Ian Bourne, the chief analyst at Argus, an independent oil research company. “But overall its aim is the same: to ensure there is a long-term market for [Saudi] crude.”

The policy has, in fact, begun to bear fruit. The collapse in oil prices has led to a large number of companies announcing cutbacks in investment, including a sharp decline in the number of rigs in use in the United States, mostly by producers of shale oil.

The cutbacks will take time to filter through to supply.

In the US, for example, there are already clear signs of reduced well drilling, but existing production will continue for a time because many producers have locked in prices and can make money even at prices well below the current market.

“Even though US output may continue to increase in the near term, we would expect markets to begin pricing in falls in production a while before they occur,” said Tom Pugh of Capital Economics. “This supports our view that the price of Brent will rebound to $60 per barrel by the end of year.”

Another balancing factor is Chinese demand, which is as tricky to track as world oil supply.

A new analysis by the London-based research consultancy, Energy Aspects, forecasts that Chinese oil demand growth will continue to slow.

“As the government moves to rebalance the economy and implements an aggressive environmental agenda, oil consumption in China will become more efficient, leading to slower demand growth of around 200,000 to 300,000 bpd,” its report said. That compared with previous estimates exceeding 500,000 bpd.

This is tempered by a huge addition of crude oil storage capacity this year, which Argus puts at more than 100 million barrels.

The bottom line, as Ian Bourne said, is that “it looks like the pain for oil producers will probably last for at least the first half of the year”.

Oil prices have reached ‘bottom’ but to remain below $100 for next years

Oil prices are unlikely to fall further after a plunge of nearly 60 percent since June, Iraqi Oil Minister Adel Abdul Mahdi said on Wednesday. “Our estimate is that the prices have reached the bottom. It is very difficult to drop lower than this,” Abdul Mahdi told a conference in Kuwait. “We do not find any real justification for the big and persistent drop in oil prices,” the Iraqi minister said. “A number of factors will work to correct oil prices upward.” However, the chief executive of state oil company Kuwait Petroleum Corp, Nizar Al-Adsani, said at an energy industry conference on Wednesday that he believed oil prices would remain below $100 a barrel for the next few years. The country's oil minister, Ali Al-Omair, told the same conference that Kuwait would nevertheless continue developing its production and refining capacity. “Despite the atmosphere of falling oil prices, we in Kuwait are determined to expedite finalizing the big oil projects...” Omair said, adding that the country planned to spend $100 billion in the next five years on such projects.




Kuwait has a long-term plan to boost its crude oil production capacity to 4 million barrels per day by 2020 from around 3.15 million bpd now. Adsani said the country had the ability to reach 3.5 million bpd of capacity by the end of 2015. Brent crude oil edged above $48 a barrel on Wednesday, consolidating after a drop in the previous session, although oversupply and the

prospect of inventory rises make further weakness likely. Prices fell on Tuesday after the International Monetary Fund cut its 2015 global economic forecast and OPEC member Iran hinted at further price weakness. Brent rose 47 cents to $48.46 a barrel by 1200 GMT. US benchmark West Texas Intermediate for March delivery was up 44 cents at $46.91 in

afternoon trade. The February contract expired on Tuesday at $46.39, down $2.30 from the day before and not far from its lowest level since March 2009. Prices are consolidating before Thursday's expected launch of a bond buying stimulus program by the European Central Bank, said Kash Kamal, an analyst at Sucden Financial. "If you look at the $60 per barrel mark or $70 or $80, we stop at these psychological levels, consolidate for a while, wait for the next big macro data point to come out and then decide from there," said Kamal. "I do believe it still has some way to go on the downside." In a strategy shift, the Organization of the Petroleum Exporting Countries decided last year against cutting its supply and is betting the drop in prices will curb the growth of more costly-to-produce competing sources, such as US shale oil.

The price collapse is starting to slow growth in US output, according to OPEC, and

prompting investment cuts. The head of France's Total said he had ordered the company to limit US shale spending.

Still, OPEC's own forecasts point to a surplus in 2015, leaving an excess for inventories to absorb. "We see little scope for avoiding a large stock build in the first half of 2015 and therefore anticipate weak prices," analysts at BNP Paribas said in a report. The latest weekly snapshot of supplies in the United States is due on Wednesday. Crude stocks are expected to rise by 2.6 million barrels. Brent fell almost 50 percent in 2014 in its biggest annual drop since 2008, pressured by weakening demand and a supply glut.




Kuwait Oil Minister: Better Economic Growth Needed To Absorb Oversupply Reuters + NewBase

Ali al-Omair also said the Kuwait's budget for the next fiscal year was

expected to be based on an average oil price of $40 to $45.

The fall of oil prices can’t be controlled until oversupply is absorbed by better economic growth, Kuwait’s oil minister Ali al-Omair told reporters on Wednesday. Omair, speaking on the sidelines of an energy industry conference, did not say when that happen. Asked whether oil prices had reached bottom, he said he could not answer. He also said the country’s state budget for the next fiscal year starting on April 1 was expected to be based on an

average oil price assumption of $40 to 45. Iraq’s oil minister Adel Abdel Mehdi, also attending the conference, told reporters that such a steep fall of oil prices after last November’s OPEC meeting wasn’t expected.

OPEC Chief Says Oil Will Rebound, Defends Decision Not To Cut

Badri said, if OPEC had reduced its supply, non-member countries would have increased

production, forcing OPEC to implement further cuts.

By Reuters

OPEC Secretary-General Abdullah al-Badri expressed confidence on Wednesday that oil prices, currently near their lowest since 2009, will rebound, and defended the producer group’s decision not to cut output in November.

Oil prices have fallen almost 60 per cent since June, reaching a 2009 low close to $45 a barrel earlier this month, partly because of OPEC’s November decision not to cut output.

Badri said, if OPEC had reduced its supply, non-member countries would have increased production, forcing OPEC to implement further cuts and lose more market share to rival producers.

“Everyone tells us to cut. But I want to ask you, do we produce at higher cost or lower costs? Let’s produce the lower cost oil first and then produce the higher cost,” Badri said, addressing the World Economic Forum in Davos, Switzerland.

“Prices will rebound. I saw this 3-4 times in my life.” “We will go back to normal very soon,” he said.

He said OPEC’s policy was not directed at Russia, Iran or the United States.




Oil Export Losses To Reach $300bn In Middle East

Losses from lower oil exports should sap up to $300 billion from economies in the Middle East and Central Asia this year, as countries in the region adjust to falling crude prices, the International Monetary Fund said on Wednesday.

Economies that are particularly dependent on oil exports, including Qatar, Iraq, Libya and Saudi Arabia, will be hit hardest by the more than 50 per cent decline in petroleum prices, the IMF said in an update to its outlook for the Middle East and Central Asia.

Oil prices are now hovering near six-year lows amid expectations of an abundance of supply tied to unexpectedly high production of U.S. shale crude.

The IMF said, however, that falling crude prices will not translate immediately into major gains for oil importers in the Middle East and Central Asia, which have been hurt by the slowing growth prospects of key trading partners in the euro zone and Russia.

The IMF this week cut its forecasts for global economic growth to 3.5 per cent for 2015 compared with an October outlook of 3.8 per cent, and significantly lowered projections for oil exporters Russia, Nigeria and Saudi Arabia.




The IMF said nearly every exporting country in the Middle East and Central Asia is expected to run a fiscal deficit this year because of the oil price shock, which prompted the IMF to downgrade the region’s growth prospects by as much as one percentage point compared with its October forecasts, to 3.4 per cent for 2015.

The losses are likely to reach 21 percentage points of gross domestic product in the countries of the Gulf Cooperation Council, or about $300 billion. In non-GCC countries and in Central Asia, the expected losses are $90 billion and $35 billion this year, the IMF said.

Oil importers will see smaller gains, compared to exporters’ losses, as their economies are less dependent on the price of petroleum, the IMF said. Morocco, Lebanon and Mauritania are expected to gain most from falling crude prices, while Lebanon and Egypt are likely to see improved fiscal balances, the IMF said.

The IMF expects oil-importing countries in the Middle East to save most of the windfall, boosting their current account positions by 1 percentage point of GDP, compared with what the IMF forecast in October.

Central Asian importers should see worse external positions this year, compared with the October forecasts, because of lower demand from Russia and China, the Fund said.

Eni CEO urges OPEC to act now, warns of oil spike to $200/bbl

The head of Italian energy company Eni Spa urged OPEC on Wednesday to act to restore stability in oil prices, which he warned could overshoot to $200 per barrel several years down the road because of low investment now.

Claudio Descalzi told Reuters Television he expected prices to stay low for 12-18 months but then start a gradual recovery as U.S. shale oil production began falling. Oil prices have sunk by almost 60 percent since June to below $50 a barrel due to a large supply glut. The price slide accelerated after the Organization for Petroleum Exporting Countries (OPEC) decided in November not to cut production. Speaking on the sidelines of the World Economic Forum in Davos, Switzerland, Descalzi said the oil industry will cut capital spending by 10-13 percent this year as a result of the oil price collapse. However, he said the world should avoid a further massive drop in investment in oil exploration and production as it would create oil shortages in the future, leading to price spikes.

"A lot of our projects are long term to have production in five or six years. And that is a problem. If you are cutting capex (capital expenditure) drastically now - we can have a lack of production in four or five years creating a new increased oil price at $200 maybe," Descalzi said. "What we need is stability... OPEC is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way."




Oil Drops as U.S. Crude Stockpiles Seen Exacerbating Global Glut BoolmBerg + NewBase

Oil fell amid forecasts for U.S. crude inventories to expand for a second week, bolstering speculation that the global supply glut that spurred the market’s collapse may persist.

Futures dropped as much as 1.2 percent in New York. Stockpiles in the U.S., the world’s biggest oil consumer, probably gained by 2.7 million barrels last week, according to a Bloomberg News survey before government data on Thursday. Iraq, OPEC’s second-largest producer, said it needs to boost output and exports to compensate for lower prices.

Oil slumped almost 50 percent last year as the U.S. pumped crude at the fastest rate in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to reduce production. Prices will rebound rather than extend declines to as low as $20 a barrel, the group’s Secretary-General Abdalla El-Badri said in Davos, Switzerland.

“The consensus view is that there’s about a 2 million barrel-a-day supply overhang at the moment,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “When we start seeing cuts, we’ll see an immediate response to forward prices, assuming it’s a significant reduction.”

West Texas Intermediate for March delivery decreased as much as 55 cents to $47.23 a barrel in electronic trading on the New York Mercantile Exchange and was at $47.67 at 2:12 p.m. Singapore time. The contract rose $1.31 to $47.78 on Wednesday. The volume of all futures traded was about 37 percent below the 100-day average.

U.S. Supplies

Brent for March settlement was up 7 cents, or 0.2 percent, to $49.10 a barrel on the London-based ICE Futures Europe exchange. It climbed $1.04 to $49.03 on Wednesday. The European benchmark crude traded at a premium of $1.46 to WTI.

U.S. crude stockpiles probably increased to 390.5 million barrels in the week ended Jan. 16, according to the median estimate in the Bloomberg survey of 10 analysts before the Energy Information Administration’s report. Supplies in the prior period were more than 9 percent above the five-year average for this time of year.




The nation produced 9.19 million barrels a day through Jan. 9, the most in weekly records dating back to January 1983, said the EIA, the Energy Department’s statistical arm. The U.S. oil boom has been driven by a combination of horizontal drilling and hydraulic fracturing, or fracking, which has unlocked shale formations from Texas to North Dakota.

Venezuela, Iraq

Fracking is “destructive” and the U.S. is flooding the market, according to Venezuela’s PresidentNicolas Maduro. The OPEC member’s oil price reached $38 a barrel, he said during a national address broadcast on radio and television.

Iraq has lost about 50 percent of its revenue because of the price slide, Deputy Prime Minister Rowsch Nuri Shaways said in Davos on Wednesday. The country is pumping at 4 million barrels a day, Oil Minister Adel Abdul Mahdi said on Jan. 19.

Producers outside OPEC should be the first to reduce their output amid a surplus that’s pushed crude below $50 a barrel, El-Badri said in an interview with Bloomberg Television at the World Economic Forum.

“The price will not go to $20 or $25, I think the price will stay at where we are now,” he said. “We have seen this before -- prices coming down very fast and go up very slow. But prices will rebound.”

OPEC’s 12 members, which supply about 40 percent of the world’s oil, maintained their collective quota at 30 million barrels a day at a Nov. 27 meeting in Vienna. Output averaged 30.2 million in December, data compiled by Bloomberg show.

Crude’s rapid drop and volatility in the market may deter investment in all types of energy needed to meet future demand, Maria Van Der Hoeven, the executive director of the International Energy Agency, said in an interview in Abu Dhabi.





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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 22 January 2015 K. Al Awadi




Economy & Finance

New base 524 special 22 january 2014