New base 697 special 30 september 2015

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

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NewBase 30 September 2015 - Issue No. 697 Senior Editor Eng. Khaled Al Awadi

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

Lower cost producer Qatar well placed to weather sustained fall in LNG prices, says Samba

Gulf Times + NewBase

Qatar is well placed to “weather a sustained fall in LNG prices” as it is a “much lower cost producer” than Australia and has an industry that can “operate strategically”, a new report has shown.

Although Qatar is “much better insulated” from lower oil prices than some of its neighbours, they will still present “some challenges” for Qatar, especially if prices do not recover in line with expectations, Samba Financial Group has said.

The estimated full-year Qatar export figures for 2014 show that oil revenue accounted for 18% ($19.7bn) of the $118bn in hydrocarbon revenues. The main export revenue earner is of course LNG, which garnered $55.4bn in earnings – the rest was from condensates, propane, butane and refined products.

Although there is no global LNG spot price, it is worth recalling the dynamics at play which will determine the price of Qatar’s main export over the next few years.




According to the report, Qatar exported 77.4mn tonnes of LNG in 2014, compared to Australia’s 20.8mn. By 2020 some analysts believe Australia will have an export capacity of 85mn.

“Geographically, Australia has the upper hand, being ideally placed to tap the lucrative emerging Asian markets; currently Qatar’s top export destinations are Japan, South Korea and India,” Samba said.

The report noted that global oil prices have shifted downwards again as a pickup in the US rig count (a proxy for investment in the shale oil sector) has combined with soaring production growth from Saudi Arabia, Russia, Canada, Brazil and even China. The only serious cutbacks in the pipeline are from international oil companies (IOCs), which have shelved investment plans in the challenging terrain. At the same time, the demand

outlook is mixed, with China’s shift into less commodity-intensive sectors, such as domestic services, a potential drag.

“Given the uncertainty over how US shale oil will react to lower prices, and that Opec has surrendered its role as a swing producer, downside risks to the outlook loom large –indeed the futures market see Brent nudging up to only $65/barrel by 2020.

That said, global oil demand does still appear to be increasing at a healthy rate, and our view is that, allied to projected dips in non-Opec supply, this will support a gradual increase in Brent from an average of $58/b this year, to $62/b in 2016. By 2020 prices should be back above $90/b in nominal terms,” Samba said.




UAE: ADOC awards Técnicas Reunidas a contract for the Haild field Source: Técnicas Reunidas

Abu Dhabi Oil Company (ADOC), a Japanese company responsible for the development of the Haild field in Abu Dhabi, has awarded Técnicas Reunidas a new contract for the Early Production Facilities in the field, which is located on the Mubarraz Island and its surroundings in the vicinity of Abu Dhabi.

The contract has been awarded on a lump sum turnkey basis for an approximate value of 310 million dollars with an execution schedule of 20 months. The project consists of onshore works to be developed in the islands of Mubarraz and Hail, the latter being an artificial island, and offshore works which include the installation of three subsea pipelines along with the installation of a composite cable interconnecting both islands. The project scope includes the engineering, procurement, construction, pre-commissioning

and all required services for a further commissioning and start-up.

The project, that includes separation, pumping and transportation facilities along with its associated utilities and offsites, is located in the protected marine area of Marawah, which is recognized as a biosphere reserve by UNESCO since November 2007. This award demonstrates the capability and experience of Técnicas Reunidas to work in environmentally sensitive locations. For Técnicas Reunidas, this new contract further extends the company’s business activity in the offshore sector and represents its fifth contract in the UAE, eight months after its last award in the country, strengthening its presence in the country and its commitment in maintaining the country’s current oil & gas production levels. ADOC is the company responsible for the development of the oil fields of Mubarraz, Umm Al Anbar, Neewat Al Ghalan and Hail. ADOC started operations in Abu Dhabi in 1968. It is one of the largest and longest running companies producing oil in Abu Dhabi and the UAE. Técnicas Reunidas is one of the leading international engineering and construction companies in oil and gas development, refining, petrochemical and power generation for a broad range of customers throughout the world. Since 1960 TR has designed and built more than 1.000 industrial plants in more than 50 countries.




UAE, Japan discuss trade cooperation…….The Gulf Today

Sultan Bin Saeed Al Mansouri, Minister of Economy and Yoichi Miyazawa, Japanese Minister of Economy, Trade and Industry have discussed joint cooperation between the two countries in the economic and trade fields and opportunities for future investment.

During the meeting, which was held in Tokyo on the sidelines of the visit of the UAE delegation to Japan to review the prospects of bilateral relations between the two friendly countries and ways of enhancing them, the two sides also agreed to sign a Memorandum of Understanding, MoU, in the field of small and medium enterprises, allowing the exchange and transfer of expertise and to take advantage of the distinctive experience of Japan in this regard.

The two ministers gave instructions for the rapid forming of a joint working group of both countries to start the necessary procedures to prepare a Memorandum of Understanding according to a specific timetable.

Al Mansouri said that the UAE and Japan have strong and distinguished relations and the definite desire of both parties in developing and strengthening them. He pointed out that Japan is a strategic trade partner to the UAE as the size of non-oil trade amounted to about $14 billion at the end 2014, noting that the trade exchange numbers can still be improved in light of the possibilities and capabilities of the two countries.

He added that the UAE considers Japan as a distinctive destination for family tourism, pointing out that one of the key challenges facing tourism exchange growth between the two countries is the lack of adequate direct flights between the two countries, which should be improved in the future by increasing the number of direct flights between the two countries.

Al Mansouri extended an invitation to Japanese businessmen and investors to visit the UAE and explore the horizons of cooperation and the promising investment opportunities in various sectors economic and trade fields.

For his part, the Japanese Minister said that the UAE is the second largest supplier of oil to Japan and is among the top strategic partners, praising the strong relations between his country and the UAE in various sectors, especially the economic sector.




Norway: Final pipe for Polarled Pipeline laid in place Statoil

On Monday, September 28, 2015, the final pipe in the 482.4 kilometre long Polarled Pipeline was laid at the Aasta Hansteen field at a depth of 1,260 metres in the Norwegian Sea. According to Statoil, operator of the Polarled project development, Polarled is the first pipeline on the Norwegian continental shelf that crosses the Arctic Circle and opens up a brand new highway for gas from the Norwegian Sea to Europe.

The pipeline, which has a diameter of 36 inches, extends from Nyhamna in Møre og Romsdal to the Aasta Hansteen field in the Norwegian Sea and was laid by Allseas’ pipelaying vessel, the Solitaire.

The pipelaying work started in March this year and the pipeline consists of more than 40,000 pipes, each of which is 12 metres in length. Statoil says that Polarled is the deepest pipeline on the Norwegian continental shelf. At the Aasta Hansteen field, the pipeline reaches a depth of 1,260 metres.

Statoil emphasizes that it is the first time ever that a pipe that is 36 inches in diameter has been laid at such a depth. The pipeline’s capacity will be up to 70 million standard cubic metres of gas per day.

Polarled under budget

“We are delivering Polarled under budget. The original investment budget for the pipeline project was NOK 11.1 billion. We now expect an investment level of around NOK 7.5 billion. This is due to good planning, good market knowledge and good execution – and the fact that we could combine several large projects when we went to the market and negotiated for pipes and vessels. Based on this, we were able to achieve favourable conditions in the market with regard to capacity and price,” says Torger Rød, head of projects in Statoil.

Link for further gas export

In the initial stage, only the gas from Aasta Hansteen will be transported through Polarled, however the 36-inch diameter pipe has space for more. “We have therefore installed six connection points. Call them future slip roads to the new gas highway,” says Håkon Ivarjord, project director for the Polarled development project.

“With this pipeline, we open up for the export of gas to Europe from a completely new area, and with the infrastructure in place it will also be more attractive to explore the area,” he concludes.

“Energy supply security is essential to the EU and the individual European countries. Tying in a new Norwegian Sea area to the gas transportation network Polarled will be an important link for further gas export, thus strengthening Norway’s position as a reliable supplier to the European gas market,” says Grete B Haaland, head of asset management in Statoil’s Marketing, Midstream and Processing business area.




Germany: First Utility launches in Germany - branded as Shell By Emily Gosden

Energy supplier will sell gas and electricity in Germany using global oil giant's branding under new joint venture . First Utility and Royal Dutch Shell are to launch a new venture in Germany selling households gas and electricity under Shell’s branding.

The deal marks First Utility’s first foray abroad after establishing itself as Britain’s biggest ‘challenger’ supplier to the Big Six . It is also thought to be the first time Shell , the global oil and gas giant, has struck a major household energy supplier partnership to sell electricity and gas in its name in Europe.

The deal builds on an existing arrangement in the UK in which Shell trades the gas and electricity that First

Utility manages marketing and sells to its customers.

However in Germany, while the same division of labour will apply, “all product and service offerings will be Shell branded” leading to an unusual arrangement in which First Utility will be responsible for the oil giant’s reputation and marketing.

The supplier said it had opted to use Shell’s branding in Germany because Shell was “already a well-known and established brand with an extensive nationwide presence in Germany”, with over 2,000 petrol stations and 7 million loyalty card customers.

The German energy market is dominated by four utility giants - E.On, RWE , EnBW and Vattenfall but challenger brands hold a significant share of the market and number into their hundreds, unlike in the UK where there are about a dozen main challengers.

Ian McCaig, chief executive of First Utility, said it believed that “greater engagement and transparency from an energy supplier” would appeal in Germany. “First Utility has helped to change the face of the energy industry in the UK and our first move overseas is another exciting opportunity for us,” he said.

• German energy sector is a disaster - EDF

Jonathan McCloy, general manager North West Europe for Shell Energy Europe, said: "Shell Energy Europe has an established and strong presence in the German market offering advanced energy solutions to wholesalers and large industries.

"This agreement allows us to access the household market in Germany through a trusted relationship with First Utility."

NewBase




30 September - 2015 Khaled Al Awadi

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

Oil falls after US inventories show buildup

Crude oil futures fell in early Asian trade on Wednesday after U.S. inventories showed a weekly buildup that far exceeded analyst expectations. The American Petroleum Institute said late on Tuesday that U.S. crude oil stockpiles rose by 4.6 million barrels to 457.8 million barrels in the week to Sept. 25. Analysts polled by Reuters had expected an increase of only 102,000 barrels.

Front-month U.S. crude had dropped 47 cents, or more than 1 percent, to $44.76 a barrel by 0142 GMT. The contract settled Tuesday's trade at $45.23 a barrel, up 80 cents, or 1.8 percent, on the day.

Brent crude, the global oil benchmark, fell 35 cents to $47.88 a barrel. On Tuesday, the contract rose 89 cents, or 1.9 percent, to $48.23. The U.S. government's Energy Information Administration (EIA) will issue official weekly inventory data on Wednesday.

Wednesday's session may have added volatility due to the close of September and third-quarter trading, according to some analysts. U.S. crude is heading for a 9-percent decline this month as the slump in commodities continues amid deepening concerns over China's slowing economic growth. Brent crude is on track to round out September with a near 12-percent drop. Prices are unlikely to move substantially higher in the near term because demand growth is easing and likely to continue slowing into 2016, Rhidoy Rashid, oil analyst at consultancy Energy Aspects, told Reuters Global Oil Forum.

"We see demand growth easing from 1.5 million bpd (barrels per day) to 1 million bpd next year," Rashid said. He expects supplies to swing into a year-on-year decline, but prices "need to be low for at least the next six months - so in the $45-$55 range - to ensure a proper rebalancing."

Oil price special

coverage




Natural gas prices in Asia mainly linked to crude oil, but use of

spot indexes increases Source: U.S. Energy Information Administration,

Unlike the natural gas market in the United States, natural gas prices in Asian markets typically reflect contracts that are indexed to crude oil or petroleum product prices. The declines in crude oil prices between August 2014 and January 2015 had a significant effect on Asian natural gas prices and markets.

However, Asian countries are developing regional trading hubs so that natural gas prices better reflect natural gas market dynamics. In 2014, almost 30% of global liquefied natural gas (LNG) was traded on a spot and short-term basis, of which Asia Pacific trade accounted for three-quarters of the total.

In Asia most natural gas is imported as LNG, and the price is indexed to crude oil on a long-term, contractual basis. The Asia Pacific market accounts for three-quarters of global LNG trade and one-third of global natural gas trade. Over the past several years, high crude oil prices resulted in increases in LNG import prices.

There is currently no globally integrated market for natural gas, so pricing mechanisms vary by regional market. Internationally traded natural gas has been largely indexed to crude oil prices such as North Sea Brent or Japan customs-cleared crude (JCC) because of the liquidity and transparency of crude oil prices and the substitutability of natural gas and petroleum products in certain markets. For example, some Asian countries have the option to burn either natural gas or petroleum for electricity generation.

Although long-term crude oil-indexed contracts remain Asia's dominant pricing mechanism, natural gas is beginning to be traded on the spot market as one-time transactions, or under short-term contracts, which more closely reflect international natural gas supply and demand balances.




Asia Pacific spot LNG trade almost tripled between 2010-14 and represented 21% of all global LNG trade and 7% of total global natural gas trade in 2014.

Several Asian countries—including Japan, China, and Singapore—are developing regional trading hubs with the goal of increasing price formation transparency:

• In September 2014, Japan launched an LNG futures contract on the Japan over-the-counter exchange (JOE), settled against Rim Intelligence Co.'s Daily Pricing Index. However, only one trade has been made on JOE since its inception. The country's lack of pipeline connectivity with other markets, low volumes of flexible LNG, and lack of LNG price transparency and liquidity have contributed to limited spot LNG trading activity on JOE.

• China launched the Shanghai Oil and Gas Exchange on July 1, 2015, which will trade both pipeline gas and LNG. China's diversified natural gas market, with expanding pipeline infrastructure and gas-on-gas competition, may offer a more liquid Asian natural gas price index, but high levels of government regulation make it less attractive as a regional benchmark.

• In June 2015, Singapore's Stock Exchange launched the Singapore SGX LNG Index Group (SLInG). The index will provide a price for LNG cargoes from Singapore to different destinations reflecting regional spot prices, but trading volumes to date have been very low.

Prices at Henry Hub, the U.S. natural gas benchmark, can also affect global pricing through LNG trade. By 2020, when all current U.S. liquefaction projects are expected to be completed, the United States will account for almost one-fifth of global liquefaction capacity and will become the third-largest LNG export capacity holder in the world, after Qatar and Australia.

Almost 80% of U.S. LNG export volumes for projects currently under construction have been contracted on pricing terms directly linked to the Henry Hub price, or under a hybrid pricing mechanism with links to Henry Hub.

The flexibility in destination clauses in U.S. LNG export contracts and the introduction of hub indexes are expected to promote greater liquidity in global LNG trading and shift pricing away from oil-based indexes, contributing to the development of the Asian regional trading hubs and pricing indexes.




NewBase Special Coverage

News Agencies News Release 30 Sep. 2015

U.S. nuclear outages were less than 3% of capacity this summer Source: U.S. Energy Information Administration, Status of U.S. Nuclear Outages

Outages at U.S. nuclear power plants were extremely low this summer (June through August), averaging 2.9 gigawatts (GW), or less than 3% of total U.S. nuclear capacity. During four days in August, outages dropped to just 0.1 GW out of a total U.S. nuclear capacity of 98.7 GW, the lowest value recorded since the U.S. Nuclear Regulatory Commission (NRC) began collecting data in 2007.

Nuclear power plants provide baseload electricity generation and do not change output in response to daily or hourly fluctuations in electricity demand, as do power plants running on other fuels, such as natural gas. In June, nuclear power accounted for nearly 20% of total U.S. electricity generation. Although nuclear plant outages are typically low during the summer and winter months, when electricity demand is relatively high, outages this year have been much lower than normal. The decrease in nuclear power plant outages, both planned and unplanned, may be attributable to several factors.

Shorter refueling-related outages. Nuclear reactors typically refuel every 18 to 24 months. Although a reactor can be fueled in as little as 10 days, refueling-related outages often last longer, as operators schedule other noncritical maintenance work at the same time to minimize downtime.

The average duration of nuclear power plant refueling outages has been steadily declining. In the early 1990s, refueling-related outages lasted about three months. More recently, these outages lasted six weeks.




Fewer uprates. Uprates to nuclear reactors, in which a power plant increases its maximum generating capacity, generally involve physically modifying the power plant and require the plant to be offline. Large or extended uprates may even be implemented over the course of two refueling outages.

In early 2013, five reactors completed extended power uprates totaling more than 600 megawatts (MW), which required lengthy outages. In contrast, uprates currently under review and pending approval by the NRC total just 61 MW, and the NRC expects to receive additional requests for a total of only 580 MW between 2015 and 2019, out of a total capacity of 98.7 GW.

Improved operating performance. U.S. nuclear power plant performance and reliability have consistently improved over the past 10 years. In 2014, the nuclear fleet operated at an average




annual capacity factor—the measure of the capability of a power plant to remain online and generate electricity—of 91.7%.

The nuclear fleet's average estimated monthly capacity factor for August 2015 was 98.4%, compared with 96.4% for August 2014. According to the Nuclear Energy Institute, 95 of 99 operating reactors achieved a capacity factor of 90% or higher during August, and 48 of the nation's 99 operating nuclear reactors achieved a capacity factor of 100% or above—reported capacity factors slightly above 100% are possible because they are based on net summer capacity, which can be lower than actual maximum generation capacity. Unplanned automatic or manual reactor shutdowns also reached a record low of 59 shutdowns in 2014.

Continued efficiency improvements will shorten outages of nuclear power plants. However, as summer transitions to fall, outages are expected to increase from their historic lows as nuclear plants enter the fall refueling and maintenance season. Outages can be tracked on EIA's Status of U.S. Nuclear Outages website.




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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 30 September 2015 K. Al Awadi




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