New base 551 special 02 march 2015

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NewBase 02 March 2015 - Issue No. 551 Khaled Al Awadi

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

$48tn needed for power infrastructure next 20 years The National + NewBase

About US$48 trillion of investments in energy infrastructure will be globally required in the next 20 years and most of that demand will come from emerging markets, according to a new report.

National Bank of Abu Dhabi commissioned the study from the advisory PwC and the University of Cambridge. The demand will be fuelled by the emergence of mega-cities, rapid industrialization and an expanding middle class.

“The nature of the energy demand in these countries will be different from the pattern which is now set in the developed world, requiring much more new-build generation [rather that adaptation or upgrading of established grids], rapid deployment and innovations which can reach large populations, often living in off-grid situations,” state the report authors.

Renewable energy forms a big chunk of these needed investments, as most of the rise in energy demand will be for electricity generation, according to the report. Despite the drop in oil prices,

A model that represents the entire proposed Mohammed bin Rashid Al Maktoum Solar Park




renewable energy remains competitive. “First, the huge rise in energy demand is for the most part electricity, yet only 5 per cent of global electricity comes from oil so in that regard, oil is not a direct competitor with renewable electricity sources but rather a complement to it,” the report states.

Globally, more than half of investments in new generation capacity is in renewables, the study found. Investment in renewables is partly being driven by the falling cost of sectors such as solar power. The price for solar photovoltaic (PV) modules has fallen by more than 80 per cent since 2008.

In the Arabian Gulf region, investments in renewables is picking up pace, with Abu Dhabi targeting to derive 7 per cent of its energy from renewables by 2020. Dubai also is aiming to generate 7 per cent of its energy from renewables in the same time scale.

To achieve its goal, Dubai is building a 1000MW solar park. The second phase of the Dubai solar park attracted a tender from the Saudi firm Acwa Power for the world’s cheapest utility scale solar PV price to date of 5.84 US cents per kWh for the 200MW PV plant.

“The speed of this shift towards grid parity with fossil fuels means that, in many instances, perceptions of the role of renewables in the energy mix have not caught up with reality,” the report’s authors found. “At the end of 2014, the 200MW Dubai Electricity and Water Authority [Dewa] bid in Dubai set a new world benchmark for utility scale solar PV costs, showing that photovoltaic technologies are competitive today with oil at US$10 per barrel and gas at US$5/MMBtu,” it added referring to the solar PV costs.

For NBAD, the findings of the report present opportunities to offer new products to help finance the upcoming energy investments which can’t be funded solely by equity and banks. “There is no way that the banking industry globally can fund the $48tn that is required over the next 20 to 25 years,” said the chief executive Alex Thursby.




“Debt capital markets will be an essential piece. So having that expertise and then being able to put project finance into the bond market and putting project finance into a sukuk [Islamic bond] with maybe export agency support etc, are some of the areas that we would need to develop.”




Wartsila and N-KOM sign MoU for marine and energy markets The Peninsula + NewBase Wartsila and Nakilat-Keppel Offshore & Marine (N-KOM) have signed a Memorandum of Understanding (MoU) agreeing to work together to improve business opportunities in repair and maintenance services, for marine and offshore vessels as well as onshore structures in Qatar.

Wartsila is a major player in complete lifecycle power solutions for the marine and energy markets, while Nakilat-Keppel Offshore & Marine (N-KOM) is one of Middle East’s leading shipyards, offering services solutions for the marine and oil and gas industries. The MoU was signed by Chandru Rajwani, Chief Executive Officer of N-KOM, and Seppo Hautajoki, Managing Director of Wartsila Doha LLC and Wartsila Gulf FZE (Dubai).

“N-KOM is always on the lookout for long-term strategic alliances to further our business interests. Having Wartsila operate within our premises, offering in-demand marine services, such as main engine piston crown reconditioning and chrome plating, allows us to better respond to the needs of our customers as we strive towards becoming the preferred shipyard delivering solutions,” said Chandru Rajwani.

“Wartsila and N-KOM share the same mission of providing the best services and support solutions to the marine industry in Qatar. It is Wartsila long-established strategy to assist its customers whenever, wherever possible. By signing the MOU, Wartsila will be able to enhance further its cooperation with N-KOM, and it will help us to continue our leading role in this field”, added Seppo Hautajoki.

Wartsila supports its customers throughout the lifecycle of their installations by optimising efficiency and performance. Wartsila offers expertise, proximity and responsiveness for all customers regardless of their equipment make in the most environmentally sound way. The company’s Services & Support solutions range from basic support, installation and commissioning, performance optimisation, upgrades, conversions and environmental solutions to service projects and agreements focusing on overall equipment performance and asset management.

Chandru Rajwani (centre right) and Seppo Hautajoki (centre left) at the MoU signing event.




Saudi Arabia world's biggest strategic drinking water reservoir WAM + NewBase

Saudi Arabia has set the global Guinness record for Strategic Water Storage project in Breiman area in Jeddah, which is being developed by the National Water Company (NCW), as the world's largest drinking water reservoir.

The Saudi Press Agency quoted the NWC as saying that "this achievement includes the implementation 11 cylindrical tanks with a capacity of 188,000 cubic metres for each tank in the first phase.

This will bring the full capacity of the first phase to two million cubic metres at a cost of 740 million Saudi riyals." Regarding the awarding of second and third phases of the Strategic Water Storage Project in Jeddah, the company said it has awarded the two phases, adding that the second phase will be implemented in the Breiman area, and the third phase will be implemented in the Faisaliah Jeddah area.

It noted that the total future capacity would reach up to two million cubic metres at a cost of 824 million Saudi riyals for the second and third phases.

The strategic water storage projects in Jeddah are the first projects of their kind amid growing water demand.




Iran:Killer Smog Tests Iran’s Top Woman as Pollution Sparks Action Bloomberg + NewBase

The snowy peaks of the Alborz Mountains visible through Iranian Vice-President Masoumeh

Ebtekar’s Tehran office window may be evidence that the city is finally serious about tackling its

chronic air pollution.

The capital’s factories and five

million vehicles, prevented

from burning imported cleaner

fuels by global sanctions, turn

the air in colder months into a

suffocating smog that shuts

schools and offices. Officials

blame the toxins for the

premature deaths of 4,000

residents a year. Many more

among Tehran’s 12 million

people choke behind surgical

masks, as roadside pollution

readings ram home the health

threat.

For Ebtekar, who heads the country’s Environment Protection Organization and is the most influential woman in the administration of President Hassan Rouhani, cleaning up the mess can’t be put off. As a start, she says, the sale of locally produced low-quality gasoline has been stopped, while higher standards and stricter inspections have been imposed at car production plants.

“Air pollution adversely affects 35 million” Iranians or half the country’s inhabitants, she said in an interview. Even after “tangible results, there’s still a long way to go,” said Ebtekar, who first gained prominence as a spokeswoman for the students who stormed the U.S. embassy in Tehran in 1979 and held American hostages for more than a year.

Still, “We have fewer days where the pollution levels are high,” she said, as a wind helped reveal the mountains that surround Tehran but which are often obscured by thick haze.

Looming Crisis

Air quality has improved, says Vahid Hosseini, who heads Tehran’s Air Quality Control Co., affiliated to the city’s municipal administration. The number of heavily “polluted days” fell in the 10 months since April compared with the same period in the two previous years, he said Feb. 22 in a report on the organization’s website.

Tehran’s geography, though, poses an additional challenge to officials fighting pollution. The city sits in a basin at an altitude above 1,100 meters, trapping the foul air.




A tenfold increase in the city’s population in 75 years, decades of resource mismanagement, and the technological isolation enforced by sanctions are fueling an environmental crisis in Tehran and across Iran. While an accord with world powers over the Islamic Republic’s nuclear program may end its pariah status, repairing the environment will require more accountable politics and the dismantling of policies that allowed for a surge in the use of fuel and water, analysts say.

Subsidies “have certainly exacerbated problems because you’re essentially stimulating overuse of resources,” Toby Iles, a senior Middle East analyst at the Economist Intelligence Unit, said in a phone interview from Singapore. “Iran clearly needs to” change course, he said.

Tightened Sanctions

In the northwest, irrigation projects have depleted groundwater sources, prompting officials to warn of supply cuts to the largest consumers in Tehran. Some of the country’s largest lakes have shrunk as dams were built and farmers diverted water for crops. Dust blowing from dessicated water bodies adds to air pollution.

Iran is located in a “belt of drought and dryness, which has been intensified due to climate change,” Ebtekar said. The country faces “very difficult environmental circumstances,” she said.

“We’re looking for a revolution” in water consumption patterns, Ebtekar said.

Air pollution worsened in 2010 after the U.S. tightened sanctions imposed on Iran over its nuclear work.

The restrictions prevented global companies from selling refined oil products to Iran, at the time reliant on imports for as much as a third of its gasoline consumption. In response, Iran started producing low-quality fuel at its petrochemical complexes.




Metro Trip

Ahvaz, the capital of Iran’s southwestern oil-producing Khuzestan province, was ranked the most polluted city in the world based on data for so-called PM10 particulates, released by the World Health Organization in 2011.

In January, sandstorms exacerbated the problem, canceling flights and forcing people indoors. Residents began a Twitter campaign with the hashtag #Khuzestancantbreath, posting photos of the yellow air shrouding the city.

“The ground dried up and the sky became dirty,” one local wrote in a December article in the Tehran-based weekly Tejarat-e-Farda. Lawmakers representing Khuzestan donned face masks in a protest inside parliament.

There are signs top officials are aware of the need for action. In January, Rouhani, his foreign minister Mohammad Javad Zarif and other officials promoted the annual clean air day by traveling in Tehran’s metro.

Phased Out

By lowering some subsidies, the government has reduced fuel consumption, while Iran may have been able to source higher-grade gasoline from Asian nations, according to recent reports.

The sale of the heavily polluting cheap gasoline “has been totally phased fazed out, the levels of benzene and other aromatic compounds in ambient air have decreased,” Ebtekar said in the interview, speaking in English.

Rouhani’s government has put environmental issues “very high on its agenda” and has achieved “a lot of momentum,” Ebtekar said. “But the more we move ahead, the more we see how much we had fallen behind.”




BP ex-chief Browne to run Russian oligarchs' oil venture Reuters + NewBase

John Browne, the former chief executive of BP, will take charge of a $10 billion oil and gas venture backed by Russian billionaire Mikhail Fridman to help it expand internationally through

partnerships and acquisitions, the Financial Times reported.

Browne told the newspaper he will be appointed executive chairman of L1 Energy on Monday, giving up his jobs at private equity firm Riverstone and UK gas explorer Cuadrilla.

The appointment comes as L1 Energy, backed by investment funds owned by Fridman and his partner

German Khan, prepares to complete as early as next week a 5 billion euro ($5.60 billion) deal to buy RWE Dea, the oil and gas arm of German utility RWE.

The acquisition is a rare development since Russian firms have struggled to expand abroad over the past year due to US and European Union sanctions imposed on the country for its actions in Ukraine.

Fridman and Khan plan to turn L1 Energy into a global oil and gas player, using $14 billion in proceeds from the 2013 sale of their stake in Russian oil producer TNK-BP to state-owned Rosneft.

Browne led BP from 1995 to 2007 and was one of the architects of TNK-BP, Russia's third largest oil producer at the time, in which BP owned 50 percent.

Before agreeing to form TNK-BP, Browne and the oligarchs a endured a rocky relationship for several years because BP had effectively accused the Russians of stealing its assets.

L1 Energy will be capitalised with $10 billion of equity from LetterOne and also be funded by debt. The intention, said Browne, was "to build great partnerships" and "create something with lasting value" using Dea, which owns UK North Sea assets, as a platform.

"The first thing we will do is look in Dea's areas of expertise to see where we can expand in those areas," Browne told the FT.

"Secondly, we will look at the whole of North America to see what can be done and with whom we can partner there. Then we will look around the rest of world."

The FT did not say how much Browne would be paid. His role at L1 could

help overcome certain complications in the UK. L1 has been seeking a letter of comfort from the government to make sure its newly acquired assets in the North Sea are not seized if additional sanctions are imposed on Russia.




Oil Price Drop Special Coverage

Oil sails from Russia to Asia faster on smaller ships Bloomberg + NewBase

With supertankers booked solid carrying cheap crude, smaller vessels are taking advantage of the opportunity by hauling record volumes of Russian oil to Asia. Aframax ships that ply the route between the Russian port of Kozmino and North Asia in three days, compared with journeys of a month for supertankers from the Middle East, are carrying the most ever East Siberian Pacific Ocean Pipeline oil to China, South Korea and Japan. The demand has pushed ESPO’s price to the highest since July versus benchmark Dubai crude, according to industry consultant KBC Energy Economics. Oil buyers are hiring 30% more Aframax tankers compared with last year’s average, potentially benefiting owners including Mitsubishi Corp, Hin Leong Trading and Sinokor Merchant Marine Co. The glut that drove global prices down by about half lifted demand for stockpiling at sea in the biggest vessels, pushing their rates in December to the highest for any month since January 2010, and more than double those for the smaller ships.

“Russia is sending more and more crude to Asia at the expense of Europe, while interest in offshore storage has returned and freight rates have increased,” Ehsan Ul-Haq, a senior market consultant at KBC in Walton-on-Thames, England, said by phone. Stronger demand for Russian crude helped ESPO fetch as much as $3.50 a barrel more than the benchmark Dubai grade for cargoes loading in March, according to data compiled by Bloomberg, up from a $2 premium in January. A total of 26 cargoes of ESPO crude, or a record 615,000 bpd, are scheduled to be shipped in

An oil tanker is docked at a pier at Kozmino port in the Russian Far East. With supertankers

booked solid carrying cheap crude, smaller vessels are taking advantage of the opportunity by

hauling record volumes of Russian oil to Asia.




March, according to a loading schedule obtained by Bloomberg. That’s 30% more than a monthly average of 20 loadings last year, data show. An Aframax sailing from Kozmino to Japan’s Chiba port was fixed at a rate of 90 cents a barrel this month, little changed from what it cost in October, according to Seatown Shipbroking. The price for hiring a supertanker from the Arabian Gulf to Japan surged to a five-year high of $2.38 a barrel in December, compared with $1.34 in June, before the collapse in oil prices began, data compiled by Bloomberg show. The rate has averaged $2.20 this year. Front-month futures for Brent, the benchmark for more than half the world’s crude, averaged $5.56 a barrel below six-month contracts during January, compared with a $2.77 premium in June, data compiled by Bloomberg show. This market structure, known as contango, may make it worthwhile for traders to store oil and petroleum products to sell later. Vitol Group, Koch Industries, Royal Dutch Shell and Trafigura Beheer have booked tankers that could be used to store crude at sea for one-year charters, according to reports from shipbrokers including Optima. As many as 35 tankers were booked for time charters with capacity to store as much as 66mn barrels of oil, according to three shipping reports compiled by Bloomberg. More than half of the vessels were fully fixed for periods of six months to two years. Spokesmen at Sinokor Merchant Marine, Hin Leong and Mitsubishi, shipping and trading companies that operate vessels on the Kozmino-to-Northeast Asia route, declined to comment on the tanker market.

Russia built the ESPO pipeline, a 3,000-mile link from the Siberian town of Taishet to Kozmino on its east coast to supply more crude to Asia as demand from traditional markets in Europe slowed. The port loaded its first cargo in 2009, while the pipe was completed in 2012. “Asia is the only market that is witnessing any increases in oil demand,” said Hong Sung Ki, a commodities analyst at Samsung Futures in Seoul. “With Russia and Opec producers both eyeing the Far

East, the price war has begun for bigger market share and we’re likely to see more and more of it.” Russia boosted sales of its crude to China, Japan and South Korea by 25% last year, increasing its portion of shipments to 8.7% from 7.2% in 2013, according to government data compiled by Bloomberg. The proximity of the Kozmino port to Asia presents ESPO with a benefit versus Middle East crude, which takes about a month to arrive in the Far East. “For the Russian grade, immediate demand from the regional refiners could be met because of the geographical advantage,” the Korea Petroleum Association, a Seoul-based group that represents the country’s refiners, said in an e-mail. “As a result, we’re seeing the crude getting more and more attention.”




Crude’s Slump Seen Causing Indonesia to Miss Biofuel Target Bloomberg + NewBase

Indonesia’s goal of boosting use of biodiesel made from palm oil by more than doubling subsidies is being threatened by the slump in crude prices.

Consumption of subsidized palm biodiesel may miss the 1.7 million kiloliter target for 2015, according to Derom Bangun, chairman of the Indonesian Palm Oil Board. The

biggest producer of palm oil would need 1.5 million metric tons to meet that goal, he said. That compares with 800,000 tons used last year, PT Mandiri Sekuritas, a broker in Jakarta, estimates.

The collapse of crude oil amid a global surplus has led a decline in fossil-fuel costs that’s cut the appeal of producing energy from plants. Indonesia’s new government led by Joko Widodo approved an increase in the biodiesel subsidy last month, spurring analysts including Mandiri to forecast the change would help to raise domestic palm oil use at a time of expanding output and weaker demand from buyers such as China.

“It’s a hard time for biodiesel producers,” Bangun said in an interview on Feb. 18 at the Jakarta headquarters of the group, which represents everyone in the industry from growers to makers of cooking oil and chemicals. While the increase in the subsidy will add to the appeal of biodiesel, demand will be sluggish because of pressure from low crude prices, he said.

Palm futures on Bursa Malaysia Derivatives, where the benchmark contract trades, lost 16 percent to 2,352 ringgit ($649) a ton over the past year as Brent crude sank 44 percent to $62.22 a barrel. Palm surged the most in four years on Feb. 5 after the subsidy increase to 4,000 rupiah (31 U.S. cents) a liter from 1,500 rupiah. Prices rallied on Monday after China interest cut rates and the ringgit fell.

Rising Supplies

Indonesia has promoted biofuel usage to help absorb rising supplies of the world’s most-traded edible oil, which is used in foods and cosmetics, and to cut carbon emissions. Biodiesel is blended with regular diesel, produced from crude oil, for use as a transportation and industrial fuel.

The country in 2013 boosted the mandated amount of blending in diesel to 10 percent from 7.5 percent, and in 2014 ordered power plants to mix 20 percent. The 1.7 million kiloliter target represents 10 percent of projected consumption of subsidized diesel, according to the energy ministry.

Total consumption of palm biodiesel may reach 2.2 million kiloliters this year if non-subsidized usage is included, the Indonesia Biofuel Producers Association estimates.




Biodiesel policies in Indonesia will help determine the direction of palm oil prices, which will climb if they are implemented in full, Godrej International Ltd. Director Dorab Mistry told a gathering in November. Mistry is due to speak at a palm and lauric oils conference in Kuala Lumpur on Wednesday.

Demand Outlook

“Biodiesel is uneconomical at the moment,” said Togar Sitanggang, secretary-general of the Biofuel Producers Association. Demand for subsidized palm biodiesel may be as low as 1 million kiloliters this year unless the government comes up with a new formula to set the prices used in buying tenders by the state oil company, PT Pertamina, he said.

The subsidy increase should make the B10 mandate feasible and boost palm oil demand by 900,000 tons this year, Hariyanto Wijaya, an analyst at Mandiri Sekuritas, a unit of Indonesia’s biggest bank by assets, said in a report on Feb. 5. Indonesia may produce 31 million tons of palm oil this year, up from 29.5 million tons in 2014, according to estimates from Bangun.

“We will see just how far the government is committed in enforcing the B10 mandate,” Sitanggang said in a phone interview on Feb. 24. “Everyone is waiting for the new price index to be immediately imposed in March.”

The new formula will be based on the price of crude palm oil plus biofuel production costs, Dadan Kusdiana, bioenergy director at the energy ministry, said Feb. 10. The government previously used the Mean of Platts Singapore, or MOPS, diesel price, plus 3.48 percent as a reference in tenders, he said.

“It will be hard to meet the 1.7 million kiloliter target with the low price of crude oil,” Bangun said. “The government may face problems delivering it.”




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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 02 March 2015 K. Al Awadi

New base 551 special 02 march 2015

Economy & Finance

Transcript of New base 551 special 02 march 2015