New base 544 special 19 february 2015

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NewBase 19 February 2015 - Issue No. 544 Khaled Al Awadi

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

UAE ranks number 1 globally in aviation safety standards

Saudi Gazette + NewBase

The UAE accomplished an enormous and unprecedented achievement by ranking highest in the world in compliance with international aviation safety standards after intensive audit trough the International Civil Aviation Organization (ICAO )'s Universal Safety Oversight Audit Program. The

UAE scored a success rate of 98.86%, which is the highest rate in history given by ICAO. Sheikh Ahmed bin Saeed Al Maktoum, President of the Department of Civil Aviation Authority, Chairman and Chief Executive of Emirates Airline and Group, welcomed the significant achievement of the UAE represented by the General Civil Aviation

Authority (GCAA) of being rated as the top country in the world in compliance with international aviation safety standards. He believes that this global recognition comes as a result of persistent efforts for many years in order to reach this high position that the country deserves.

He added that the aviation sector in the UAE, with its superb infrastructure and services, has become hugely attractive and is qualified to play a key role in steering the global aviation industry. He praised the efforts of the staff of GCAA, and relevant authorities within the aviation safety sector, hoping the hard work and achievements will continue. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of GCAA , welcomed the achievement by the UAE, represented by GCAA; and d: "Scoring first place in the world in aviation safety comes as a result of GCAA 's hard work locally,

regionally and internationally. Efforts and initiatives by the GCAA in deploying aviation safety culture have had a fundamental impact in the improvement that we are witnessing in the country. UAE's aviation sector has, in just a few years, become one of the most prominent aviation sectors in the world. Aviation safety has always been our top priority parallel with exceptional service quality and assurance of growth capability." He added: “Our ability to execute our strategies and initiatives, along with implementing innovations have greatly improved the status of the civil aviation sector.”

UAE Safety ICAO Audit




Qatargas, Pakistan Close To 15-Year LNG Supply Deal – Sources Reuters + NewBase

State-run Gulf energy company Qatargas is in the final stages of talks on a deal to supply Pakistan with three million tonnes of liquefied natural gas (LNG) annually for 15 years, industry sources in Doha told Reuters on Wednesday.

The deal would help Pakistan tackle serious energy shortages and power cuts which can last up to 20 hours a day. Nearly half the country’s electricity is generated by gas and its output of 4.1 billion cubic feet per day is well short of demand for as much as 6 billion, depending on the time of year.

One source said the deal would be signed in weeks, while a second said the first shipment would be received by March.

An official at Pakistan’s Ministry of Water and Power confirmed an LNG deal was planned but declined to give details. No-one at Qatargas, the world’s largest LNG producer, was available to comment.

State-owned fuel importer Pakistan State Oil (PSO) said payments to Qatar would be guaranteed by the Pakistani government so any cash flow problems at PSO would not affect the Qatargas deal. “These discussions are still ongoing,” he told Reuters when asked about the deal.

PSO frequently suffers severe cash flow problems due to payment delays from its customers. It was forced to slash petrol imports by half in January and stop fuel oil imports altogether. A spokesman for the company said the situation was now resolved.




Qatar: MoU set to boost $35bn Qatar investments in US Gulf Times

The Memorandum of Understanding (MoU) to be signed by Qatar Chamber (QC) and the American Chamber of Commerce will complement the more than $35bn worth of Qatari investments to be poured in the US, QC director general Remy Rowhani said.

Rowhani said a Qatari delegation from the chamber will accompany HH the Emir Sheikh Tamim bin Hamad al-Thani, who is expected to visit the US in the next two weeks. The signing of the MoU with the American Chamber of Commerce will be part of the Emir’s visit, he added. Speaking to Qatari and US companies attending the “Doing Business in the USA Forum”

organised by the American Chamber of Commerce in Qatar (AmCham) yesterday at the Four Season Hotel, Rowhani reiterated HE the Minister of Finance Ali Sherif al-Emadi’s announcement that Qatar plans to increase investments in the US over the next five years to exceed $35bn.

In a visit to Washington DC last month, the finance minister said the $35bn worth of investments are

aimed at various economic fields such as energy, technology, and real estate. “While the $35bn Qatari investment in the US comes from the government side, the MoU also opens the door for private sector investments, which we hope could go beyond this amount because excellent figures are coming out of the US today,” Rowhani told Gulf Times.

He added, “It (MoU) also gives a better opportunity for Qatari businesses to go there and for US businesses to come here. It is protocol but it is an interesting advancement in the relationship between the two countries.”

Rowhani also stressed that the recent visit of HE Sheikh Mohamed bin Hamad bin Khalifa al-Thani to the US “reaffirms the strong ties between the US and Qatar.” He also lauded the $1.5bn City Center DC project in Washington, which he said “represents Qatari Diar’s first significant investment in the US real estate sector.”

Quoting the finance minister’s speech in Washington, Rowhani stressed that “Qatar is keen to establish strong partnerships with US companies to enhance the implementation of a range of development projects in Qatar.”

“As representatives of the US in Qatar, we would also want our Qatari friends to know what markets are strong and the opportunities that are available in the States,” Hager told Gulf Times. He added, “We welcome the $35bn worth of Qatari investments coming from the government sector.

US ambassador Smith with Hager and Rowhani at the ‘Doing

Business in the USA Forum




Omani projects nominated for global awards Oman Observor + NewBase

Two landmark infrastructure projects of the Sultanate have been nominated the coveted 2015 Global Project of the Year Awards due to be held in New York, USA, later this month. The Oman-based SAGE Middle East to India Deep-water Gas Pipeline, as well as the Port of Sohar project, are among 21 iconic developments vying for honours at the 8th Global Infrastructure Leadership Forum set to take place on February 26.

New York’s Governor Andrew Cuomo is scheduled to give the keynote address at the event, which typically attracts movers and shakers from the global infrastructure industry. Significantly, it marks the first that Omani projects have figured on the shortlist of contenders for the prestigious awards, underscoring the Sultanate’s growing appeal

on the world stage as a destination for global-scale infrastructure developments. “The Project of the Year Awards recognise those great projects — the building blocks of global growth and opportunity creation — that are model investments for countries around the globe,” said Norman F Anderson, President and CEO of CG/LA Infrastructure, the organisers of the Global Infrastructure Leadership Forum and its centrepiece Project of the Year awards. Voting for the award winners is open to the public at www.cg-la.com. The awards are given in five categories covering strategy, job creation, environmental impact, finance and engineering. Making the cut in the Strategic Project of the Year and Engineering Project of the Year categories is the India to Oman: SAGE Middle East to India Deep-water Gas Pipeline. Promoted by South Asia Gas Enterprise (SAGE), a global consortium led by India’s Siddho Mal Group, the project aspires to create an ‘energy corridor’ that can transport gas from the Middle East to India, bypassing the land route through Pakistan.

At the heart of the project is a proposed 1,300 km pipeline running along the seabed of the Arabian Sea at depths of up to 3,400 metres. Gas rich producers such as Iran, Qatar and Turkmenistan are seen as potential feedstock suppliers for the project, with Oman figuring prominently on the pipeline route.




Also in competition for the Engineering Project of the Year award is Oman’s industrial and logistics hub at Sohar. The deep-sea port and freezone is managed by Sohar Industrial Port Company (SIPC), a 50:50 joint venture between the Port of Rotterdam and the Sultanate of Oman. Billed as one of the world’s fastest growing port and maritime developments, Sohar has already attracted global investments in excess of $15 billion. Up against the Omani contenders in the Engineering Project of the Year category are Canada’s Site C Clean Energy Project, Saudi Arabia’s Kind Abdulaziz Airport, and the Trans-Anatolian Natural Gas Pipeline between Turkey and Azerbaijan. Also in contention for honours in other categories is an array of equally spectacular ventures, notably the Suez Canal (Egypt), Beni Haroun Dam (Egypt), 4G Program (Colombia), St Lawrence River Bridge (Canada), Indianapolis Justice Complex (USA), Hamad International Airport (Qatar), Corbetti Geothermal (Ethiopia) and Laguna Lakeshore Expressway Dike (The Philippines). More than 500 executives from 40 countries around the world are expected to participate in the Global Forum, with project presentations from 28 different countries. The theme of this year’s event is “Build, Build, Build: Generating Global Growth” and focuses on infrastructure as the catalyst for re-starting key economies around the world.

Canada Site C Green Project Trans-Anatolian Natural Gas Pipeline

between Turkey and Azerbaijan




India coal output closer to ending years of disappointment By Clyde Russell + NewBase

One of the most common assumptions among coal watchers is that India’s rising demand will translate into increasing imports, thus providing one of the few bright spots for a beleaguered industry. While there is little doubt about the bullish demand outlook for India, the belief that imports will have to rise is predicated on the view that domestic coal output will continue to disappoint. If history is a guide, then this is a safe bet, with state-controlled behemoth Coal India consistently failing to meet output targets and battling to supply enough fuel for the South Asian nation’s electricity generators. India’s coal imports have steadily risen and gained 19% last year to 210.6mn tonnes, making the country the world’s second-biggest importer after China and ahead of Japan. But it may pay to heed a warning that accompanies financial products that past performance isn’t necessarily a guide to future outcomes. There are signs that India is taking the right steps to boost its domestic coal industry, and while these won’t necessarily bear immediate fruit, it’s always worth watching the trend.

Once trends start, it becomes difficult to stop them. Just ask any coal miner who exports to China, which has gone from being the industry’s greatest hope for long-term growth to the bleak prospect of a declining market. The new government of Prime Minister Narendra Modi has shown some determination to reform India’s vast coal sector,

starting with making Coal India more efficient. The government raised about $3.6bn by selling a 10% stake in Coal India last month, part of its plan to raise $10bn by selling assets. But more important, from a coal market perspective, than the cash raised was the level of interest shown by investors, with the share offer oversubscribed. This is not only a vote of confidence that the government is prepared to tackle the bureaucratic issues holding Coal India back, but also will act to improve the company’s rather dismal operational record. Having more private investors on board will help drive change within Coal India, given fund managers are likely to push for improved returns and ask uncomfortable questions of management should they fail to deliver. India is also pushing ahead with plans to open up the coal mining sector to private and international investors, Piyush Goyal, the coal and power minister, said on January 8. This comes despite union opposition to the move, however a planned five-day strike in January was called off




after two days when the government assured a committee would be formed to address worker concerns over the process. So far global miners have been cool on the prospect of investing in India, most likely because of complex bureaucratic procedures and a playing field titled in favour of Coal India. The coal divisions of the large miners are also hamstrung by the current low price environment, meaning limited cash available for new investments and management focus on trying to run existing operations as efficiently as possible.

It’s more likely that private Indian companies will seek to get into domestic coal mining, with several expected to bid for blocks. These private companies, which could include GVK and Adani Group have experience in mining, as well access to newer technologies and expertise. If they do enter the market, they will no doubt be more efficient that Coal India, once again putting pressure on the state giant to lift its game. India aims to double annual coal output to 1.5bn tonnes by 2020, an ambitious target that if achieved would probably eliminate much of the need for imported fuel, especially thermal coal for power generation. It’s still very early days in getting anywhere close to that target, and it will be worth watching to see if Coal India does make efficiency and output gains, if the government can manage to cut red and green tape and how much private companies are willing to invest to get a foothold in the industry. The main point is that the risks to India’s domestic coal output are no longer to the downside. If anything, the risk is now that production will surprise on the upside, maybe not immediately but certainly over the next few years. This represents a further blow to export-orientated coal miners in Australia, Indonesia and South Africa, as the last thing they want to see is an early peak in Indian imports.




Oil Price Drop Special Coverage

OPEC daily basket price for Tuesday 17th February

VIENNA, 18th February, 2015 (WAM) -- The price of OPEC's basket of twelve crudes stood at US$56.69 a barrel on Tuesday, compared with $56.43 the previous day, according to OPEC Secretariat calculations.

OPEC Reference Basket of Crudes (ORB) is made up of the following: Murban (UAE), Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar),

Arab Light (Saudi Arabia) and Merey (Venezuela)

Saudi Crude Oil Exports Drop To 6.934 MBPD In December Reuters + NewBase

OPEC heavyweight Saudi Arabia’s crude oil exports dropped in December by 362,000 barrels per day to 6.934 million bpd from 7.296 million bpd in the previous month, official data showed on Wednesday. In December, the Kingdom maintained crude oil production little changed at 9.630 million bpd from 9.610 million bpd in November, data published by the Joint Organisations Data Initiative showed. However, refiners processed 2.217 million bpd in December, up from 1.809 million bpd in November, the data showed. Exports of oil products rose to 1.050 million bpd in December from 878,000 bpd in November. State oil giant Saudi Aramco started in January exporting oil products from its newly launched Yasref refinery, which it shares with China’s Sinopec. Oil prices remain highly volatile but have risen more than 35 percent since hitting an almost six-year low of $45.19 in January, in an ascent fuelled by industry spending cutbacks and falling U.S. rig counts. Saudi Arabian Oil Minister Ali al-Naimi discussed last week “the relative improvement in the market in terms of an increase in demand and the stability of prices in the current period”, state news agency SPA reported. In its last report, OPEC sharply raised a forecast of demand for its own oil in 2015, saying the halving in prices since June would slow production in the United States and other countries faster than previously thought.




Rise in US shale production prompts fall in oil markets The National + NewBase

A survey by the oil data firm Platts, showing that shale oil production rose again in the US last month, contributed to a souring mood in the oil markets yesterday after three weeks of gains that helped to recover some ground lost in recent months.

The survey, released on Tuesday in Houston by Platts’ forecasting unit, Bentek Energy, showed that production from key shale oil producing areas in Texas and North Dakota increased in January by a total of 28,000 barrels per day, or 1 per cent, above the previous month’s levels.

Production in the Eagle Ford area in south Texas was put at 1.6 million bpd last month, up 37 per cent from the same month a year earlier, Bentek figures showed. That was despite a sharp drop recently in the number of rigs used in the area.

Benchmark North Sea Brent crude oil futures retreated yesterday and were down 93 cents at US$61.60 a barrel in early afternoon trading in London.

The rise in Brent futures since January’s low point of $46.59 has not been matched by futures in the US, where the gap over the past month has widened from less than $1 to nearly $10 as the market there remained saturated with supply.

West Texas Intermediate crude futures were down $0.53 in early New York trading yesterday at $53.08.

US shale producers appear to have been able to continue producing at higher rates even as oil prices slumped in recent months because they had sold some of their oil ahead of time, using hedging strategies, and by getting more output from their cheaper operations, said Bentek’s head of energy analysis, Catherine Bernardo.




“Many producers have the cushion of hedging programmes in place, which is helping them minimise the impact of the current oil price environment and continue production,” she said. “Other producers are likely focusing their efforts on their more prolific, higher production rate acreage.”

Crude oil production in North Dakota’s Bakken shale formation averaged 1.2 million bpd last month, up 28 per cent on the year earlier, according to Bentek.

That put combined output from Bakken and Eagle Ford up 33 per cent on the year, with overall US crude oil production 1.5 million bpd higher.

US oil production has become the key barometer for the oil market since Saudi Arabia-led Opec decided at the end of November to keep pumping oil at an average above 30 million bpd, even though the rise in US output has left the global market chronically oversupplied.

Although there have been many signs in recent weeks that lower oil prices, which peaked last summer above $115 per barrel, are hitting investment in future oil projects, the resilience and adaptability of the US shale sector has meant output there has kept rising.

In their quarterly outlook, analysts at Energy Aspects called the focus on the falling number of oil rigs in use in the US a “red herring”, as it will take time for lower spending to translate to lower production. They do, however, expect production growth to be much lower this year – 300,000 bpd lower than previously forecast, at 500,000 bpd – as the estimated 30 per cent drop in capital spending bites.

“Production will respond, but with a delay,” Energy Aspects’ quarterly outlook predicts. As well as shale oil production, the other key short-term indicator to watch in the US is commercial crude oil inventories, which stood at nearly 16 per cent above last year’s levels when the US government’s energy information agency reported last week. The next report is due today.




BP’s Latest Battle: Keeping Control of Prize Caspian Oil Field Bloomberg + NewBase

BP Plc has no shortage of challenges: adapting to lower oil prices, dealing with the legal fallout from 2010’s Gulf of Mexico spill and managing the largest foreign investment in Russia.

Chief Executive Officer Bob Dudley can add another to the list: extending an agreement with Azerbaijan to manage the country’s largest oil project, fields accounting for about 4 percent of the London-based company’s global production.

Dubbed the “contract of the century,” BP signed a deal to develop the fields in 1994 as an independent Azerbaijan emerged for the chaotic collapse of the Soviet Union. Then-President Heydar Aliyev saw western investment as a way of securing the viability of his fledgling state. BP led a group that invested billions in the Azeri-Chirag-Guneshli, or ACG, fields under the Caspian Sea.

Two decades later, Aliyev’s son Ilham leads a more confident nation, where the economy is underpinned by oil and natural gas revenue. With the concession to operate ACG ending in 2024, Azerbaijan is considering all options including allowing the State Oil Co. of Azerbaijan, or Socar, to take over operating the field, according to a person familiar with the matter, who asked not to be named due to confidentiality.

Putting forward the idea is a natural opening position for negotiation, said Edward Chow, senior fellow at the Center for Strategic and International Studies. The Azeri company has experience with the fields and time to improve capabilities should that decision be made, he said.

More Difficult

Azerbaijan’s relationship with BP has become more difficult in recent years as the fields produced less than expected, an issue which Baku may use to pressure the U.K. producer in talks on the renewal of the ACG operating agreement.




Nizamaddin Quliyev, head of Socar’s press service, declined to comment as did Tamam Bayatly, a BP spokeswoman in Baku.

The idea of Azerbaijan dropping BP also shows the increasing assertiveness of national oil companies, who seek less reliance on the technical and financial help of the largest U.S. and western oil producers.

Abu Dhabi, which holds most of the oil reserves in the United Arab Emirates, is seeking payment of about $7 billion from international companies bidding for stakes in onshore oil fields after a 75-year concession expired.

Iraq, meanwhile, has awarded service contracts for its largest fields that pay international oil companies a set rate per barrel of production, rather than a share of output. That’s a model Azerbaijan is moving to for some projects.

Boom Town

Azerbaijan’s capital, Baku, was one of the world’s first oil boom towns. Nearby wells supplied as much as 50 percent of the world’s oil at the start of the 20th century. Baku’s city hall, modeled on Paris’s Hotel de Ville, and its lavish opera house are both products of that era.

Wedged between Russia and Iran, Azerbaijan saw its significance fade during the Soviet era as onshore deposits declined. It wasn’t until the collapse of the Soviet Union that international majors with more advanced offshore technologies

gained a shot at the Caspian’s larger prizes.

The BP-led ACG deposits provided 76 percent of Azeri output in 2013. Others in the development group include Chevron Corp., Exxon Mobil Corp., Statoil ASA, Turkiye Petrolleri AO, Itochu Corp., ONGC Videsh Ltd. and Socar.BP, the biggest shareholder, gets about 4 percent of its oil output and 2.8 percent of its gas output from the country, according to a 2013 annual report.

Flame Towers

The field has transformed Azerbaijan’s economy and Baku is again an oil boom town, where the skyline is dominated by three office blocks known as “Flame Towers” and Zaha Hadid’s Heydar Aliyev Cultural Center won 2014 Design of the Year from the London Design Museum.

The nation’s gross domestic product has grown more than seven-fold since 1990 to $73.56 billion in 2013, according to the World Bank. The country has built a $37 billion reserve fund, providing a cushion even after the recent plunge in oil pries. All this means a much stronger bargaining position. Handing the deposit to Socar could give Azerbaijan’s state oil company a big share of the field’s revenue. The risk is that in the interim, the BP-led group will curb investment in preparation




for their exit and that could lead to a deeper drop in output, according to the person familiar with the matter. BP Azerbaijan President Gordon Birrell said a year ago the contract, which ends in 2024, needs to be extended to allow for more investment in the field to keep output stable.

Unexpected Decline

In any case, earlier than expected output declines from the fields will complicate the task for BP, according to Julian Lee, a Bloomberg First Word oil strategist. ACG output declined to 32.5 million tons in 2013 from 32.9 in 2012.

Azeri President Ilham Aliyev blamed the “unexpected decline” in oil output on “grave mistakes” by BP in an October 2012 broadcast on Azeri state television. BP and Baku appear to have made peace since then, Lee said. The sides have a long working partnership and a December announcement of plans for joint exploration in shallow waters can be taken as an indication that relations are reasonably good, he said.

BP will probably stress continuity in investments in talks, CSIS’s Chow said. The company and some partners may also be able to use their position leading the development of a Caspian natural gas field as leverage in talks, he said. “Some of its key members would naturally mention their other commitments in the country, such as BP in the Shah Deniz gas/condensate field,” he said.

Shah Deniz

BP is leading a group developing the second phase of Shah Deniz, a $28 billion investment intended to bring 16 billion cubic meters of gas a year to Turkey and Europe. Baku may demand more favorable terms on extending ACG, perhaps changing the production sharing agreement to a service contract, Lee said.

Socar President Rovnag Abdullayev told reporters last year that production sharing agreements would only be signed for “high risk” structures while lower risk developments would be targeted for service agreements.

The future of “ACG will be decline management, or later life, oil field management and Socar may well feel that’s something they can do well on their own,” Lee said. “I’m not sure BP is strong enough position to demand a renewal on their terms.”




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Khaled Malallah Al Awadi, Energy Consultant MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

Mobile : +97150-4822502 [email protected] [email protected]

Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years , he has developed great

experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation , operation & maintenance agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally , via GCC leading satellite Channels.

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

NewBase 19 February 2015 K. Al Awadi







Economy & Finance

New base 544 special 19 february 2015