New base 561 special 16 march 2015

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NewBase 16 March 2015 - Issue No. 561 Khaled Al Awadi

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

Qatar: Energy exports term sales to help Qatar ‘partially shield’ its budget from price fall, says IIF

Gulf Times + NewBase

Term sales in energy exports will help Qatar “partially shield” its nine-month budget for 2015 from the collapse in prices, Institute of International Finance (IIF) has said in a report. Qatar’s budget year has been changed from April-March to a calendar year, starting from 2016. Nevertheless, the authorities have indicated there will be some fiscal consolidation. In particular, current expenditures are expected to be reviewed, which IIF assumes will grow at about 3%, down from an average of about 18% a year since 2000. The country’s capital expenditures are expected to be maintained at high levels, although some “non-core projects could be deferred”. Revenues will inevitably be impacted by lower oil/gas prices flowing to the budget, with the full impact being felt with a delay of about six months because of term sales.

Moreover, since a portion of other fiscal income is based on receipts from entities with interests in the hydrocarbon sector, ostensibly non-hydrocarbon revenues are expected to be adversely affected as well. Taking the lead in the GCC, Qatar has been successful in raising corporate income tax revenues by widening the tax base from about 9% of revenues in 2011 to about 19% in 2013, IIF said. “However, there is scope for additional fiscal measures,” the Institute of International Finance said. This could help achieve further revenue diversification through, for example, the introduction of

Qatar is the largest exporter of liquefied natural gas (LNG) in the world, and the country's exports of

LNG, crude oil, and petroleum products provide a significant portion of government revenues.




real estate transaction fees, and mitigate the risks of boom/bust episodes. Higher energy and utility prices could be used to control growth in demand.

“It remains to be seen to what extent, if at all, these measures are implemented,” IIF said. Despite Qatar’s large net foreign assets, IIF said the gross public debt including major government-related entities, but excluding banks, has risen in recent years to about 67% of GDP, of which external debt is equivalent to about 25% of GDP. These obligations are partially offset by large public sector deposits with domestic banks equivalent to 18% of GDP. Gross central government debt is low at about 25% of GDP and net central government debt is even lower, estimated at 17% of GDP. Government interest debt service is estimated at about 4% of GDP, of which 67% are interest payments on domestic debt. Gross debt of the country’s champions in aviation, petroleum, telecom, and real estate sectors amounts to about 42% of GDP, of which about 55% is external debt. The debt service is spread over the long term and manageable. Nevertheless, the Ministry of Finance has been overseeing all external and domestic borrowing by state entities other than Qatar Petroleum since 2013 as part of a deleveraging strategy. Gross foreign liabilities of the banking system are at about 30% of GDP, but these are offset by equally large foreign assets, resulting in net foreign liabilities of a mere 4% of GDP in 2014. ‘Inflation expected to remain low’ Inflation in Qatar is expected to remain low due to muted global price pressure and a strong dollar, which maintains fixed exchange parity with the riyal; even as pressures exist in the housing sector, according to Institute of International Finance (IIF). Inflation is expected to decline to an average of 2.4% in 2015 from 3% in 2014 and remains close to the Gulf Cooperation Council (GCC) average, IIF said. The housing category, with still the




largest weight in the consumer price index, is the main source of inflation despite the introduction of new properties, suggesting demand may outstrip supply, it said. While there have also been price pressures in the education and healthcare sectors, these have eased, although price control measures whereby fee increases require authorities’ approval are “keeping a lid” on measured inflation, while efforts are being made to increase the supply of such services. With inflation to remain low, IIF said monetary policy would remain “accommodative” in the context of the peg to the dollar. “The potential increase in interest rates in the US are expected to be matched, albeit with a delay of possibility of several months given some differential in the policy rates, with the central bank deposit rate at 0.75%, while the repo and lending rates at 4.5%,” it said.

The rise in interest rates could work through multiple channels such as a weakening in credit quality, particularly since most lending is based on floating rates and mark-to-market impact on securities, it added. “There could also be a contagion due to global financial volatility during the US monetary policy normalisation process. The expected relative tightening in credit conditions and increase in interest rates from record-low levels could lead to a drag on the economic activity,” IIF said.




UAE :DEWA announces Shams Dubai to regulate generation of solar

energy in buildings and connection to its grid. WAM + NewBase

Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority, DEWA has announced the start of DEWA’s first smart initiative, Shams Dubai, to regulate the generation of solar energy in buildings and their connection to DEWA’s grid.

The move supports the Smart Dubai initiative and the vision of Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, to transform Dubai into the smartest city in the world in three years through 100 initiatives and 1,000 smart services that enhance the quality of life in the emirate and achieve its sustainable development.

The press conference was attended by Ahmed bin Byat, Member of the Higher Committee to Transform Dubai into a Smart City, Chairman of the Executive Committee of the Smart Dubai Initiative, Dr. Aisha bin Bishr, Assistant Director-General of the Executive Office, Member of the Smart Dubai Executive Committee and Team Leader of the Smart City Taskforce, Ahmed Buti Al Muhairbi, Secretary-General of the Dubai Supreme Council of Energy, Abdul Aziz Abdulla Al Midfa, Chairman of the Middle East Solar Industry Association, senior officials from the Dubai Supreme Council of Energy, DEWA’s Executive Vice Presidents, Vice Presidents, corporate representatives and members of the press.

Shams Dubai encourages tenants and building owners to install photovoltaic solar panels to generate electricity. DEWA will connect the system to its network. The electricity will be used onsite and the surplus is exported to DEWA’s grid. This encourages the use of renewable energy, increases its share in electricity production and diversifies the energy mix.

"To support the Smart Dubai initiative, launched by His Highness Sheikh Mohammed bin Rashid, to make Dubai the smartest city on earth, and make life easier through the efficient, integrated, seamless and sustainable use of resources, we today have begun the implementation phase of the first smart initiative, Shams Dubai.

This is one of the three initiatives we launched last year to significantly improve the services provided to partners and customers, and make Dubai the smartest city in the world during the next three years. This will enable the city’s facilities and services to be managed using smart and connected systems that enhance living standards for all of Dubai’s residents and visitors," said Al Tayer.

"Shams Dubai supports the Green Economy for Sustainable Development economic initiative launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, and implements Council




Resolution Number 46 of 2014, issued by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, to enable customers to install photovoltaic panels to generate electricity from solar power in buildings, and connect them to DEWA’s grid.

"This smart initiative also supports Dubai Plan 2021 and the Dubai Integrated Energy Strategy 2030, to develop sustainable energy projects in Dubai by increasing the targets for renewable energy in the emirate’s energy mix to 7 percent by 2020 and 15 percent by 2030.

"DEWA supports the vision of our wise leadership, which outlines the roadmap for our work and initiatives to enhance the competitiveness of the UAE and Dubai. We are fully-prepared to effectively and positively contribute to building Smart Dubai and add to the

happiness of citizens and residents," he added.

"Last week, we announced the first project under the first smart initiative, in collaboration with Dubai Airports, to supply Dubai World Central - Al Maktoum International Airport in Jebel Ali with solar energy. The first step in implementing the initiative was installing photovoltaic panels to produce 30kW of electricity there.




Iraq: Egyptian General Petroleum Corporation Farms Into Block 9

Egypt’s national energy firm Egyptian General Petroleum Corporation (EGPC) has signed an agreement to farm into Block 9 in Iraq.

Kuwait Energy and Egyptian General Petroleum Corporation on Sunday jointly announced signing of an agreement whereby EGPC has farmed in a 10 percent participating interest in Block 9, which is located in the Iraq's Basra region. With this agreement, EGPC has become a partner with Dragon Oil Holdings Limited and Kuwait Energy, in the Block 9 license, where Kuwait Energy is the operator. Tarek El Molla, EGPC CEO stated: “We are pleased to announce EGPC’s first international investment. The merit of this investment is its contribution to building an economic relationship between Iraq and Egypt.”

The Exploration, Development & Production Service Contract (EDPSC) pertaining to Block 9 was signed in January 2013 after the award in 2012.




Iraq: Oil majors companies offer to cut 2015 spending

Reuters + NewBase

Oil companies have proposed millions of dollars of cuts in development spending in Iraq, a senior oil ministry official said, after Baghdad told them low oil prices and its fight against Islamic State had made payments difficult. In a series of letters sent to companies such as Royal Dutch Shell, BP and Exxon Mobil since January, seen by Reuters , the oil ministry set out the need for change in response to "the rapid drastic decrease in crude oil prices."

The slump in crude prices to below $60 a barrel from $115 in June has slashed government revenues in Iraq, OPEC's second biggest exporter, just as it faces economic crisis triggered by Islamic State's seizure of north and western provinces and surging expenditure to fund a military counter-offensive. In view of the fact that a significant proportion of development costs are passed on to Iraq, the oil ministry called on firms to revise their oilfield development plans by considering postponing new projects and delaying already committed projects as long as no additional costs were incurred. They should cut development budgets "by a certain percentage" and request subcontractors to reduce costs in order to match "the new oil prices world," the ministry said. Those cuts should be made against a backdrop of maintaining or even increasing current oil production levels, the February letter added, requesting a response by the end of that month. Most companies have replied, a senior oil ministry official said, with the largest offered cut in




spending coming from Shell, which proposed slashing investment spending this year by more than a third to $1.5 billion from $2.4 billion. BP proposed a cut to $3.25 billion from $3.50 billion, Lukoil to $2.1 billion from $2.3 billion, while Exxon Mobil said it planned to maintain development spending at $1.8 billion and Eni had yet to reply, he said. "No direct meetings have been held with any of the foreign companies. We are now only testing waters with them via correspondence," said the official, who declined to be named because of the confidential nature of the correspondence. A BP spokesman said the company held regular, confidential discussions with Baghdad about the development of the Rumaila field, which was operating normally. A spokesman for Lukoil said the firm had received a letter from Iraq asking to postpone all new developments or reduce works in

2015, adding: "We are studying it." The West Qurna project was developing on schedule and unchanged so far. Exxon, the lead contractor to rehabilitate West Qurna, declined to comment. Chief Executive Officer Rex Tillerson said last week it was talking with Baghdad on restructuring oil agreements to help the government meet its near term cash needs. Eni and Shell were not immediately available for comment.

SHARING RISKS International firms operate in Iraq's southern oilfields under service contracts, currently based on a fixed dollar fee for additional volumes produced - a formula which has seen Baghdad's bills ballooning just as its oil revenues collapse. "The oil ministry has irreversibly taken the decision to amend its service contracts with foreign firms, due to the cash crisis brought by oil prices drop," the ministry official said. "We have to acknowledge that current contracts were hastily drafted and short-sighted in failing to take into consideration the impact of a potential oil price crash." A letter sent to oil firms last month asked them to propose amendments to their contracts "based on the linkage between oil prices and cost recovery and due remuneration as a sliding scale," so that both sides "take the risk and enjoy the reward." The proposed amendment did not mean Baghdad was planning a formal move to production sharing contracts, but finding a middle ground between that and the current arrangements. "We should fix these flaws to save our economy from collapsing," the official said. A source at one of the oil majors said such discussions were not unusual: "For the past five years we had cost inflation in the industry as oil prices rose. Now we have cost deflation as prices fall. We renegotiate contracts with service and engineering companies all over the world to achieve lower costs without impacting production."




Oil Minister Adel Abdel Mehdi said 10 days ago that Iraq was renegotiating the contracts with a view to restoring Iraq's state share to around 20 to 25 percent, after it was reduced in recent amendments to around 5 percent. He said that under current contract terms, Iraq's payments due to international companies in 2015 would reach $18 billion. It has already accumulated debts from last year and 2013. The government says it has started work on issuing a Treasury bond, and may resort to seeking forward payment for exports to address its growing debts to the firms, Finance Minister Hoshiyar Zebari said. For now, sources say, Iraq is not providing the service companies with the repayment volumes they are due and is instead sometimes assigning more cargoes to companies who purchase its crude for cash under term contracts in monthly export schedules.




China’s plan to grow cleaner, but economical difficulties a head The National + NewBase

Even as research done for the Wall Street Journal suggested that air quality in Beijing improved slightly last year, Chinese authorities were so disturbed by a TV documentary on pollution in the country that they removed it from websites.

Nevertheless, carbon dioxide emissions dropped last year, a remarkable feat for this coal-dependent nation. Slowing energy demand is good news for the environment, but not so much for those countries who have founded their economic success on supplying China with raw materials.

The Middle Kingdom’s voracious appetite has upturned global energy markets over the past decade. It accounted for nearly half of oil demand growth from 2000 to 2013. Since the early 1990s, its coal consumption rose by more than threefold, oil consumption quadrupled and gas use grew by more than a factor of 10.

Chinese oil executives turned up first in Khartoum and Astana, then Houston, Calgary and Moscow, to strike deals. Prices for oil, gas, coal and a host of other commodities – copper, aluminium, wheat – reached record highs in 2008.

But now Chinese energy demand faces two headwinds – the economy will grow more slowly, and that growth will be less energy-intensive. Commodity producers need to take warning. The sharp fall in oil prices last summer has introduced a world where resources are more abundant than demand.

If China is to continue its dramatic ascent of the past three decades, it faces some daunting challenges: to transform its political system and sources of popular legitimacy; rebalance its economy from heavy industry towards knowledge and services; meet its still-growing energy needs in a more diverse and secure way; and clean up its clouded skies and waters.

All these endeavours will weigh heavily on energy demand. We might discount the possibility of the fall of the country’s Communist party and a period of political upheaval, raised by the United States academic David Shambaugh in a recent Wall Street Journal article. An economic crisis triggered by a build-up of bad debt and overinvestment has been repeatedly predicted, but so far avoided. The economy, however, has already shifted on to a slower track – after regularly




recording double-digit growth up to the financial crisis, expansion from now on is more likely to be about 7 per cent or less annually.

The president Xi Jinping’s new growth strategy advocates a shift away from infrastructure and heavy industry towards higher value-added manufacturing and services. The government has already acted to reduce overcapacity in steel making, cement and coal mining, with coal consumption planned to be capped by 2020 just 10.5 per cent above today’s level.

Energy efficiency is being stepped up, with car mileage standards more stringent than that of the US, and higher taxes on fuel use. Less coal use means less diesel consumed to haul it around the country. Natural gas, renewables and nuclear power are slowing the growth of coal-fired power.

Might other countries take up the slack? India, now the fastest-growing large economy, is the obvious candidate. But its oil consumption is now only where China’s was in 1996. For a host of reasons – a more open political system, less industrialised economy, and higher population density – it seems unlikely that India will record the relentless economic and energy demand growth that China did.

Africa, which uses about as much oil as India, is even further behind in the phase of resource-intensive industrialisation, and with growth very unevenly distributed. Slower growth in China’s use of resources is bad news for miners of coal and iron in Australia, Indonesia and Brazil, and oil producers in the Middle East, Russia, the Caspian Sea area and Venezuela.

Of course China will continue to be a major – probably the major – influence on world oil demand. But it will no longer be the global energy consumer of last resort. Indeed, there no longer is such a consumer.




Oil Price Drop Special Coverage

Oil prices drop again and countries build up inventories

Oil prices look set to remain under pressure as supply chugs along while inventories in major economies continue their relentless rise.

The steepest decline so far this year was registered in the past week, with world benchmark North Sea Brent crude falling by more than 4 per cent on Friday alone to end at US$54.67 per barrel, reversing some of the gains of nearly 20 per cent made during the recovery in January and February, when Brent pushed above $60.

Yesterday, Ibrahim Al Muhanna, a former spokesman for Ali Al Naimi, Saudi Arabia’s oil minister, and still an adviser to the ministry, offered some soothing words about the outlook for oil prices. Speaking in Doha, Qatar, he said that “demand is and will be stronger” and suggested that “Saudi Arabia has never been in a price war with anyone”.

That is not the perception of the market, however. Just over a week ago, Mohsen Qamsari, the head of international affairs at the National Iranian Oil Company, said that “the Islamic Republic is set to inject more oil into the world market in an attempt to raise market share”, according to Iran’s state Fars News Agency.

Saudi Arabia and Iran – and other suppliers from the Arabian Gulf – have been competing fiercely for market share and lowering their prices for Chinese, Indian and other major customers in Asia, since last summer.

Last month, Irna, another official Iranian news agency, quoted Seyyid Muhsin Kemseri, Iranian National Petrol Company international relations director, as saying of Saudi Arabia’s deep discounting for Asian customers: “There is extremely fierce competition in the market and if we were in Saudi Arabia’s shoes, we would have done the same”.

In its latest monthly market report on Friday, the International Energy Agency (IEA), the rich countries’ main energy think tank, warned: “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly”.




Demand has recovered over the past year but has been outstripped by supply, the IEA reported.

Global supply in February was an estimated 94 million barrels per day, up 1.3 million bpd year on year, with almost all the extra supply coming from North America. Declines in the number of oil rigs operated in the US “have yet to dent North American output growth”, according to the IEA, which added that the sector’s resilience even in the face of lower oil prices meant it would be raising its forecast for North American output for this year.

Higher output from Saudi Arabia, Iran and Angola offset some losses from troubled Libya and Iraq, which meant that overall output from Opec was little changed last month at just more than 30 million bpd.

The IEA said that oil refineries are starting to increase their run rates after a period of maintenance, which should help to slow the rate of inventory building over the next few weeks. But it added that “stocks may soon test storage capacity limits [and] that would inevitably lead to renewed price weakness, which in turn could trigger the supply cuts that have so far remained elusive”.

The think tank does not expect relief any time soon from demand, concluding: “There are still few firm signs at this stage that lower prices are giving the economy a real boost”.

Oil Falls to 6-Year Low as Dollar Holds Gain; China Shares Rally Bloomberg + NewBase

Oil touched its lowest level since 2009 amid increased projections for U.S. production, while the dollar weakened from its strongest level in more than a decade before this week’s Federal Reserve meeting. Chinese shares rose as the government vowed to support economic expansion.

West Texas Intermediate crude dropped 1.1 percent to $44.37 a barrel by 12:43 p.m. in Tokyo, after earlier falling to as low as $43.57. The Bloomberg Dollar Spot Index declined 0.2 percent as the greenback weakened 0.3 percent to $1.0525 per euro. The Shanghai Composite

Index advanced 1.8 percent after China’s Premier Li Keqiang pledged to take action if slowing growth threatens job creation or wages. Standard & Poor’s 500 Index futures were little changed.

U.S. oil dropped 9.6 percent last week and speculators cut bullish wagers to the lowest in more than two years as falling rig counts fail to cool a supply glut. The Fed may remove the word “patient” from its statement this week, giving it more flexibility on the timing of interest-rate increases as U.S. monetary policy diverges from efforts by European and Asia-Pacific policy makers to shore up growth.




“Crude has performed even worse with the strong dollar as it’s been having its own demand and supply issues,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “We are seeing diverging monetary policies between the Federal Reserve and other major central banks, especially the ECB. Investors are curious whether the Fed will raise rates in June.”

Brent Slide

West Texas Intermediate crude lost 4.7 percent on Friday, and capped a fourth straight weekly retreat. Brent, the benchmark contract for more than half of global oil, fell 0.8 percent to $54.26 per barrel following Friday’s 4.2 percent retreat.

The U.S. surplus may soon strain the country’s storage capacity, renewing the slump in oil prices, the International Energy Agency said Friday. U.S. production will expand this year by about 750,000 barrels a day to 12.56 million a day, the IEA said.

Hedge funds and other money managers reduced their net-long position in WTI by 2.5 percent in the seven days ended March 10, U.S. Commodity

Futures Trading Commission data show.

A gauge of energy producers dropped the most among the 10 industries on the MSCI Asia Pacific Index. South Korea’s S-Oil Corp. tumbled 4.1 percent and Japan’s Inpex Corp. retreated 4 percent. Santos Ltd., Australia’s No. 3 producer, fell 2.1 percent while BHP Billiton Ltd., the world’s biggest miner, decreased 1.3 percent for a 10th straight drop, the longest losing streak since 1998.

Dollar, Won

Anger over alleged bribes and kickbacks at Brazil’s state-run oil producer Petroleo Brasileiro SA brought more than 1 million people to the streets Sunday demanding President Dilma Rousseff’s impeachment. The Next Funds Ibovespa Linked Exchange Traded Fund, which tracks Brazilian shares, dropped 1.2 percent in Tokyo.

The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, climbed 0.8 percent on Friday to its highest level in data going back to the end of 2004.

The euro is heading for its biggest ever quarterly loss versus the dollar after the region’s central bank took deposit rates below zero and began buying bonds as tries to stave off deflation. The dollar touched $1.0458 to the euro today, the strongest versus the joint currency since January 2003.

The won slipped a sixth day, losing 0.6 percent to 1,134.96 per dollar and touching its weakest level since July 2013. Korea’s currency retreated 2.7 percent last week, the most since 2011, as the central bank unexpectedly cut interest rates. Malaysia’s ringgit dropped 0.6 percent to 3.7058 a dollar.




Aussie Bears

The Australian dollar added 0.1 percent to 76.43 U.S. cents, after sliding 0.9 percent on Friday. Minutes of the Reserve Bank of Australia’s March 3 meeting, when the key rate was held at 2.25 percent after a cut in February, are due Tuesday.

Investors raised their bearish bets on the Australian dollar to a record as BlackRock Inc., the world’s largest money manager, expects the currency to plunge to levels well below what the RBA prefers. Traders wager there’s a 50 percent change the RBA will reduce borrowing costs again within six months, according to data compiled by Bloomberg from swap contracts.

Policy makers will take action if China’s growth, which the government targeted at about 7 percent this year, drifts toward the lower limit of its range and cuts into employment or wages, Premier Li told reporters. While stripping the government of some of its role in the world’s second-largest economy may face resistance from vested interests, it is crucial, he said.

The Shanghai Composite, the world’s best-performing benchmark stock gauge last year, is up 6 percent this year and is heading for a fourth straight advance. The number of new mainland stock accounts surged in the two weeks through March 6. A gauge of mainland companies listed in Hong Kong advanced 0.6 percent and the Hang Seng Index increased 0.4 percent.

U.S. Seeks More Crude for Strategic Reserve After 2014 Sale Bloomberg + NewBase The U.S. government wants to buy up to 5 million barrels of crude to store in its strategic reserve on the Gulf Coast.

The Energy Department wants the crude delivered to its Bryan Mound storage cavern near Freeport, Texas, in June or July, according to a pre-solicitation notice posted on federal websites today. The purchase follows a 5 million-barrel test sale last spring, when oil prices were nearly double what they are now.

The Strategic Petroleum Reserve purchase comes as booming shale oil production has pushed private oil inventories in the U.S. to 449 million barrels, the most in records dating

back to 1982. The reserve has 691 million barrels and 36 million barrels of empty space.

“Commercial storage is filling up,” said David Hackett, president of Stillwater Associates, an energy consulting firm in Irvine, California. “If they buy domestic oil and put it in the SPR, that creates 5 million more barrels of space in commercial storage.”

The law requires the Energy Department to use the funds from last year’s test sale to purchase replacement crude, Robert Dillon, spokesman for Senate Energy and Natural Resources Committee Chairman Lisa Murkowski, R-Alaska, said in an e-mail.




The government plans to officially post its tender offer on its websites about March 23, according to the notice.

Peak Inventory

The purchase will be the first for the reserve since it reached its peak inventory level of about 727 million barrels in December 2009. It released 31 million barrels in 2011 to help offset supply disruptions caused by upheaval in the Middle East and North Africa, and exchanged 1 million with Marathon Petroleum Corp. after Hurricane Isaac blocked tankers from delivering crude to the company’s Garyville refinery in Louisiana.

The SPR, which was created in the 1970s in response to the Arab oil embargo, has four underground storage caverns in Texas and Louisiana. The Bryan Mound site has 241 million barrels in storage now.

When the reserve finished filling in 2009, it held the equivalent of 80 days worth of crude imports to the U.S. Booming domestic oil production from shale wells has cut inbound shipments since then, and the reserve now holds 94 days of imports based on 2014 data.

“This is all happening at the same time that a debate is going on about whether we really need 700 million barrels in the SPR given the increase in production in the U.S., so it is surprising,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.




IEA Sees China, India Filling Strategic Reserves With Cheap Oil Bloomberg + NewBase China and India are set to fill up their strategic petroleum reserves this year, taking advantage of lower oil prices, according to the International Energy Agency.

The two nations are building emergency stockpiles with millions of barrels of crude that mirror the reserves of oil and refined products that the U.S. and its western allies amassed after the first oil crisis of 1973 to 1974. “Cheaper oil facilitates the building of strategic reserves,” the Paris-based IEA said on Friday in its monthly oil market report.

The purchases, if confirmed, will add to global oil consumption growth, the IEA said, offsetting “current weak fundamentals” of supply and demand and potentially boosting prices. Brent crude, a global oil benchmark, has fallen 47 percent over the past year to trade at $57.03 a barrel at 8:53 a.m. in London.

“Since oil prices began their rapid retreat last June, the import bills of oil-importing economies have declined,” the IEA said. “This has assisted governments in many of these countries in either adding to their strategic reserves or putting in place firm budgetary provisions to increase oil holdings.”

The energy watchdog said China was “expected to again stockpile crude in 2015” as it completes new tanking capacity. Beijing in November for the first time revealed details of its oil stockpiling program, saying it held about 91 million barrels in four different locations. The U.S. holds 696 millions barrels of oil in its emergency reserve, the largest in the world.

Indian Storage

India has yet to start storing crude oil, but the IEA said the government has approved a $338 million budget to cover the filling of its first emergency tanks this year. At current prices, that would amount to 6.5 million to 7 million barrels of crude. The Indian Strategic Petroleum Reserves Ltd., the company in charge of the stockpile, has already built a tank farm in eastern India capable of holding 10 million barrels of crude. Another two facilities in western India are expected to be completed by the end of the year, adding a combined 28 million barrels of capacity.

The IEA, adviser to 29 oil-consuming nations, said Vietnam has also used lower oil prices to boost its commercial stockpiles held at refineries. China and India have said in the past they need to build strategic reserves to offset the risk of a disruption in supplies, mostly from the Middle East and North Africa. Western countries have used their strategic reserves only three times over the past 35 years, during the first Gulf War in Iraq in 1991, after hurricane Katrina in 2005 and in 2011, after the start of the war in Libya.




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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 16 March 2015 K. Al Awadi







Economy & Finance

New base 561 special 16 march 2015