NewBase 610 special 24 May 2015

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NewBase 24 May 2015 - Issue No. 610 Khaled Al Awadi

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

UAE renewable energy future programmes in good hands The National + NewBase

“Nuclear energy is interesting all over the world, and hearing that my country was adopting safe nuclear energy really made me proud. So I wanted to take part in that initiative,” said the student, who earlier this year started a two-year masters programme in nuclear engineering and power plant management at Kings Kepco International Nuclear Graduate School in Seoul.

“I thought coming to Korea would be much more beneficial for my country because we’re trying to have some kind of mutual understanding and learn from their side, their language, working in their nuclear power plants.”

The 30-year old headed east in February after completing her bachelor’s degree in biomedical engineering at Abu Dhabi Higher Colleges of Technology. She is one of many young Emiratis sponsored by the Emirates Nuclear Energy Corporation (Enec) to study nuclear energy in the South Korean capital.

“Over the coming years our demand for power will increase, so we have to supply that demand,” Ms Al Shehhi said. “Nuclear can meet that calculated percentage of energy required for the whole country and I would like to be involved in the next steps for the UAE’s nuclear programme once I graduate.”




Students take a variety of courses to help them understand the inner workings of nuclear power plants, including physics, chemistry, management and mathematics. To fully experience their host country, they are also taught basic Korean.

Learning about nuclear energy, Ms Al Shehhi said, required dedication. “We’ve had almost 16 subjects in three months,” said the Ras Al Khaimah native who became the university’s first female student council president.

“It was intense but we made it. They will then give us three paths to follow, including pure management, technical or design.” Fellow Emirati Omar Al Hashmi is halfway through his four-year bachelor programme in nuclear engineering at the Korea Advanced Institute of Science and Technology (Kaist).

“Since I was young, I was really interested in science,” said the 20-year-old. “When I graduated, I saw the UAE was trying to adopt renewable energy and the programme was interesting so I really wanted to be one of the first to apply to it.”

Having visited Korea previously, the Dubai native said he was impressed by the country’s universities. “This pushed me to want to learn from them. My father also encouraged me because he knows how advanced it is here.”

His aim is to become a nuclear engineer in the UAE. “I want to make my country proud and try to advance nuclear studies in the UAE. We’re trying to reduce our carbon emissions and this is one of the best ways to do it.”

Saeed Al Mheiri, another Kaist student, hoped to be an intern at the Korea Electric Power Corporation, the company constructing Abu Dhabi’s nuclear plant in Barakah, before joining Enec.

“The country is in great need of nuclear engineers before the construction of the nuclear power plant is complete,” he said. “I understood from Masdar how important and safe nuclear energy was, so I’d like to be one of the first pioneers in this field.”

Hamad AlKaabi, the UAE ambassador to the International Atomic Energy Agency, said cooperation between the two countries was strong.

“Our regulator works closely with Korean entities to support licensing of the plant and conducts regular visits to Korea for this purpose. Similarly, Enec has a strong presence in Korea through their office and permanent staff in Seoul,” he said.

“The objective is to support the smooth implementation of the nuclear project. Emirati staff are being trained in Korean facilities and students learn nuclear engineering at Korean universities, which is all part of ongoing cooperation programmes supporting the development of human resources for the UAE nuclear sector.”




UAE: Adnoc seeks 240,000 tonnes gasoline for delivery in July Reuters + NewBase

Abu Dhabi National Oil Co (Adnoc) is seeking 240,000 tonnes of gasoline for delivery in July, adding to an earlier tender seeking cargoes for June, a tender document showed on Friday. This is expected to further boost Asian gasoline margins, which hit a record high earlier this week on firm Indonesian and Indian spot demand. Adnoc is seeking eight cargoes of 30,000 tonnes each of 95-octane gasoline for delivery into Jebel Ali and Ruwais and loading from within the Gulf.

The tender closes on May 26 and is valid until May 31. Adnoc earlier this week issued a tender to buy two 30,000-tonne cargoes for June 10-12 and June 22-24 arrival, respectively, at any port in the UAE or Ruwais. It is unclear if that tender has been awarded. Adnoc’s July requirements indicate that its 127,000 barrels-per-day (bpd) residual fluid catalytic cracking (RFCC) unit at its expanded Ruwais refinery might still be shut, a Singapore-based trader said. The refiner lowered its operating rate at the refinery to about 50 per cent after the unit encountered start-up problems. Once gasoline production from the RFCC unit is stable, Adnoc will no longer need to import gasoline and the country might even have small volumes to export, sources have said .




Egypt to Floats $3 bn LNG Purchase Tender in June Reuters + NewBase

Egypt plans to issue tender in June to buy LNG shipments worth $3 billion for supply during 2016 and 2017, reported news agency Reuters Friday. "We aim to issue a tender to issue LNG shipments during the first half of June... The tender aims to provide the needs for the new import terminal," Khalid Abdel-Badee, EGAS chairman, told the news agency. Earlier this month, Cairo floated tender to lease a second LNG import terminal. Recently Hoegh Gallant floating storage and regasification unit (FSRU) from Norway's Hoegh LNG commenced commercial operations. The FSRU arrived in Egypt on the Gulf of Suez in early April. In November last year, Hoegh LNG finalised a five year deal with EGAS to supply FSRU by the end of first quarter of 2015. Egypt has become a net importer of oil and gas on the back of lower production amid higher demand. Abdel-Badee said that the amount of shipments have not yet been decided and no final date for procurement has been set, Through the first LNG tender, Cairo secured LNG supplies from multiple entities. Global LNG suppliers, already stung by weak demand and spot prices at four-year lows, are seizing on any new business opportunities. A sharp year-long decline in spot LNG prices has seen

new buyers launch major procurement tenders, including Jordan which this week came out with a supply tender for as many as 36 cargoes over 2016/2017. The switch marks a reversal from when LNG was seen as near unaffordable for less developed economies. The winners of Egypt’s previous tender were Trafigura, Vitol and Noble Group. EGAS also signed deals to import 35 LNG cargoes from Gazprom Marketing & Trading and 6 from Algeria’s Sonatrach. It was also nearing a deal to import 21 cargoes from BP.




Jordan:Questerre Energy to help Jordan develop oil shale Source: NYC Today

Canada-based energy giant Questerre Energy Corp will help Jordan in developing oil shale as the cabinet of Jordan government has approved the signing of a contract with the Canadian company.

Jordan's cabinet has approved the signing of an agreement with a Canadian energy company to develop oil shale, the state-run Petra news agency reported on Monday. The council of ministers said the Canadian company Questerre Energy Corp expressed willingness to invest around $1.4 billion in the project, the report said.

The approval is part of the government's efforts to rely on local resources and utilize oil shale reserves. As part of the deal, the company will conduct studies in two areas in the south of Jordan to develop oil from oil shale. The firm will start conducting initial technical and geological studies to come up with a feasibility study.

Jordan, which has over 40 billion tons of oil shale in reserves, imports currently about 96 percent of its energy at a cost of $2.8 billion annually, or 21 percent of its gross domestic product. The country is implementing a strategy to increase self-produced energy to meet 60 percent of its consumption by 2020.




Iraq oil revenue deal with Kurdish Regional Government expected soon The National + NewBase

A comprehensive deal over how Iraq’s oil output and revenue is managed – a crucial step to make progress on the political front – should be settled in a matter of weeks, according to Iraq’s deputy prime minister in charge of energy.

“We need a few weeks to work on it in council, then we will send it to the parliament for a vote,” said Baha Al Araji, Iraq’s deputy prime minister, on the sidelines of the World Economic Forum on the Middle East and North Africa gathering in Jordan. “We have three problems to solve, but they are not technical – they’re political with Kurdistan. In a few weeks a draft will be ready.”

The main dispute centres around the details of how the Kurdish Regional Government handles its exports and how

the central government in Baghdad distributes money back to the KRG. There was a deal in place in December, in which the KRG committed to handing over 550,000 barrels of oil per day from areas under its control to Iraq’s state oil marketing organisation.

In return, the federal government in Baghdad agreed to allocate 17 per cent of Iraq’s national budget to the Kurdish region, which translated into about US$1 billion per month. But the deal broke down as the parties accused each other of violating the terms of the agreement.

The argument has been both arcane and unnecessary, said Rowsch Nuri Shaways, a Kurd and the deputy prime minister of Iraq, who was also attending the WEF meeting.

“The constitution had become mere ink on paper because we failed to enforce many of its provisions. Had it been implemented the way it should be we would have been able to do away with one key problem” standing in the way of making progress on both the political and security front, Mr Shaways said.

The dispute that arose in the early part of the year seems to have been about the timing of payments as the KRG funded an upgrade of a pipeline that would handle both 250,000 bpd of crude oil from its region and an additional 300,000 bpd from the Kirkuk field, control over which is disputed between the KRG and central government.

Mr Shaways said the KRG was withholding oil promised to the central government because it had not received payments for building the pipeline, while the central government had paid only around a third of the share of federal money it promised to the KRG saying it had not received the promised oil.

“This has taken us steps backward and created new tensions that were pointless,” Mr Shaways said. UAE companies operating in Iraq were hopeful that the impasse could be broken but also remained sceptical.

“I hope they can reach a deal, but the two sides have seemed to be very far apart on the main issue of dispute,” said Patrick Allman-Ward, the chief executive of Dana Gas, which runs one of the main gas projects in the Kurdish region of Iraq.

Dana Gas has been in its own dispute with the KRG over the terms of its contract.




“The main challenge in Iraq now is a financial one,” said Majid Jafar, the chief executive of Crescent Petroleum, the Sharjah-based company that has a share in Dana Gas’s project, plus a power station project in the south of Iraq. “They have a huge draw on the government budget because of the war with [ISIL] combined with the economic challenges.”

Iraq and Syria dominated the WEF meeting at the Dead Sea because of the security threat to the region from the extremists running rampant across large swathes of the countries. The militants have directly threatened Iraq’s oil infrastructure on the eastern borders of the Kurdish region, disrupting the country’s main oil refinery at Baiji as well as the Kirkuk field.

But while the security issue dominates headlines, senior Iraqi and international figures at the WEF agreed that economic issues were more pressing.

“One of the main obstacles to progress is the absence of facilitating regulation to attract investment,” said Ryan Crocker, the former US ambassador to Iraq. “What investors would like to see is an overhaul of the Iraqi financial system to bring it into the 21st century. It’s something all sects and ethnicities should be able to agree on, and you would see a great deal of private capital come into the country – even with the security situation the way it is now.”




Iran likely to abolish fuel subsidies - government adviser Reuters + NewBase

May 23 Iran is likely to abolish subsidised fuel allowances for motorists, an Oil Ministry adviser said on Saturday, in a move that will cut state spending but could also drive inflation and cause

protests.

The government is trying to curb subsidies that have led to profligate energy consumption and put a strain on public finances, already squeezed by international sanctions and last year's drop in oil prices.

"The issue of fuel rations has not yet been decided, but it is very likely that no ration will be set and private cars from now on will get fuel at market rates," Akbar Naematollahi was quoted as saying by the Tasnim news agency.

Eligible drivers currently receive 60 litres of petrol a month at a heavy discount to market prices. The introduction of the allowance in 2007 led to rioting among motorists who could previously buy unlimited quantities of cheap fuel.

President Hassan Rouhani, elected in 2013 on a platform of better economic management, has championed efforts to rationalise prices and pushed through a modest increase in fuel prices last year.

But the drive to lift subsidies threatens to undo efforts to curb inflation, which the government has brought down to about 15 percent from highs of 35 percent under Rouhani's predecessor Mahmoud Ahmadinejad. Naematollahi said the move was intended to stop illegal fuel trading and smuggling, adding a final decision would likely be taken in the coming days.




Oil Price Drop Special Coverage

Brent crude oil holding , $66 before long US weekend

Oil prices fell on Friday as worries over the impact of war in the Middle East on crude supplies were outweighed by reports of profit-taking ahead of a long weekend. Monday, May 25 is Memorial Day in the United States and a public holiday in much of Europe, leaving many markets closed.

"No one wants to hold open positions ahead of a long weekend so books are being squared, bringing some consolidation," said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt. July Brent crude was down 80 cents at $65.74 a barrel by 1240 GMT after closing up 2.3 per cent on Thursday. US crude futures are experiencing their longest winning streak since records began in 1983, helped by a drop in US crude and product stockpiles last week, reflecting better demand in the world's largest oil consumer. US crude for July was down 60 cents at $60.12 a barrel, but poised to post gains for the 10th week in a row. Data from the US Energy Information Administration this week showed a big decline in US oil product stockpiles, suggesting end-user demand has been strong. "With US travel expected to reach a 10-year high over Memorial Day, according to AAA (American Automobile Association), product inventory is expected to decline even further over coming weeks," ANZ analysts said in a report. Violence in the Middle East has increased worries over the security of oil supply from the region. A suicide bomber blew himself up at a Shi'ite mosque in eastern Saudi Arabia during Friday prayers, residents said, and up to 30 people were reported to have been killed or wounded.




Traders watch the falling price of oil storage: Kemp Reuters + NewBase

Futures prices indicate the physical market is easily absorbing the large volume of crude being supplied and global rebalancing is well underway. The price for storing a barrel of Brent for six months has fallen from more than $1.23 per month at the start of 2015 to just 37 cents per month on May 21.

U.S. crude inventories are still more than 95 million barrels above the level at the end of 2014 and 115 million barrels higher than normal at this time of year. There are also reports of a build up in stocks in China, either crude oil or refined products, some of which may have been put into long-term strategic storage.

According to most estimates, the global market has been oversupplied by between 1.5 million and 2.5 million barrels per day since the start of the year.

Yet the price for storing crude has fallen by two-thirds in the space of just four months, which indicates there is no shortage of space in tank farms and the supply-demand surplus may be being overestimated.

Strong growth in demand is helping the market absorb record crude supplies from Saudi Arabia and the U.S. shale fields.

“Markets around the world have surprised on the upside. Demand has definitely surprised on the upside in refined products,” an executive for Vitol, the world’s largest oil trader, told a conference (“Oil market buoyed by product demand” May 20).

SPREAD WATCHING

Casual observers focus on spot prices but physical traders are more likely to concentrate on differences between futures prices in adjacent months as an indicator of tightness or slack in the market.

Differences between the first-to-deliver futures contract and the sixth provide a good indication of expected demand for storage and by extension the direction of inventories in the short term. The price gap hit as much as $7.40 contango in early January as traders anticipated the enormous build up in reported crude stocks during the first four months of the year.

But this week it has narrowed to $2.20 contango or less, suggesting traders expect far less demand for storage than previously. There are a number of reasons to think the spread between nearby futures contracts is a fair indicator of near term trends in the oil market.

The first-to-sixth month spread has been closely correlated with shifts in the balance between supply and demand. It tracked the build up and drawdown of inventories during the “missing barrels” episode in the late 1990s following the Asian financial crisis.




It also tracked the tightening of the physical oil market in the run up to prices spiking in mid-2008 as well as the subsequent surplus and return to balance during the recession of 2008-2010. And it tracked the oversupply and enormous stock build between the middle of 2014 and early 2015.

The first-to-sixth month spread is closely correlated with the rise and fall in spot prices and there is some evidence that movements in the spread anticipate movements in the spot prices by some weeks or months (link.reuters.com/tuw74w).

Unlike the spot market for “flat prices” which attracts a large share of financial investors and may be subject to a lot of noise, the market for “spreads” is dominated by relatively well informed insiders from oil companies, trading houses and the largest hedge funds, so it may provide a better signal about market conditions.

In the 1998 and 1999, the shift from contango to backwardation coincided with the return of the “missing barrels” to the market as the supply-demand balance tightened. At the current contango of just 40 cents per month there are no strong incentives to store excess oil and any hidden inventories are likely to return to the market.

Most oil analysts are still bearish about the outlook for oil prices over the remainder of 2015 and into the early part of 2016.

Major bears like Goldman Sachs are concerned that the market is still heavily oversupplied and carrying an abnormally high level of inventories while the resurgence in prices will slow down the needed adjustment.

But the spreads tell a different story, and given their track record, it is not one which should be dismissed too quickly. The market could be wrong and the recent tightening of the spreads could prove to be a false rally that gives way to renewed weakness later in the year.

The spreads are, however, consistent with reports from market participants, including Vitol and Saudi Aramco, as well as the U.S. Energy Information Administration, all of which have pointed to the strength of fuel demand.




‘Preserving oil market share top priority for Gulf’: Pundits AFP + SG + NewBase

Gulf oil producers will resist attempts to cut output at an OPEC meeting next month as preserving market share remains their top priority, industry analysts said.A decision by the 12-member Organization of Petroleum Exporting Countries not to cut production in November sent prices crashing 60 percent before a partial recovery in recent weeks.

Gulf and other OPEC members said they wanted to safeguard their share of a market that has faced a supply glut as a result of sharp increases in the production of shale and sand crudes. "Preserving market share still remains a top priority for Gulf states," Saudi economist Abdulwahab Abu-Dahesh said. "This time they are even encouraged by signs their November strategy is working after a drop in US shale oil production and in the number of rigs," Abu-Dahesh told AFP. In the face of the sharp drop in their earnings, some OPEC members, led by Iran and Venezuela, have publicly called for the cartel to cut production to support prices. "I don't thing that any change will happen at OPEC's meeting," a former member of Kuwait's Supreme Petroleum Council, Musa Maarafi, said. "Gulf states will continue to defend their market share and it is their right to do so," Maarafi told AFP. "They will not accept to cut output at their own expense unless an agreement is reached with non-OPEC producers." The burden of any cut in OPEC output would likely fall on the Gulf members whose production has risen by around 3.5 million barrels per day since 2011. Currently, they pump 16.8 million bpd,




or 55 percent of OPEC's total, with Saudi Arabia accounting for 10.3 million bpd. They export around 12.5 million, almost two-thirds of the cartel's total. Head of marketing at national oil conglomerate Kuwait Petroleum Corp. (KPC) Jamal Al-Loughani told a symposium last week that a change in the global energy map has made market share a highly sensitive issue. He said the sharp rise in US production to 9.4 million bpd had allowed Washington to stop light crude imports from Africa. It also cut imports of heavy oil from Latin America, substituting it with Canadian sand oil. "That led African and Latin American exporters to seek new markets in the east," said Loughani, adding that more than 3.0 million bpd of additional high good quality crudes are being pumped into these markets in competition with Gulf exports. "That places additional pressure on OPEC members, especially Gulf exporters, to cooperate to maintain market share and even ensure new takers for additional quantities in the future," he said. A relative rebound in prices and a drop in US shale oil output is likely to convince OPEC to continue with its strategy. Data from the US Department of Energy showed US crude production dropping 112,000 bpd to 9.26 million bpd in early May. "Prices are improving, growth in supplies from outside OPEC – especially shale oil – is lower than before and demand is recovering," Kuwait's governor at OPEC Nawal Al-Fuzai told reporters last week.




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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

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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 03 May 2015 K. Al Awadi

NewBase 610 special 24 May 2015

Economy & Finance

Transcript of NewBase 610 special 24 May 2015