New base 755 special 27 december 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,

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NewBase 27 December 2015 - Issue No. 755 Senior Editor Eng. Khaled Al Awadi

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

Oman: Opal boosts efforts to mitigate impact of oil fall on companies Times Of Oman – Elham mohamed

Oman Society for Petroleum Services (Opal) has been stepping up its efforts to help address the challenges facing the oil and gas sector in 2016 in the light of lower oil prices, said a senior official.

One of the issues that Opal has to deal with is the contracts that are highly Omanised, mainly in the field of drilling, which are the first to get affected by the decline in oil prices, said Musallam Al Mandhari, Opal’s chief executive officer. “It is unfortunate the more you are Omanised, the more problem you get when you get a downturn in oil prices,” the official told ‘Times of Oman’ in an exclusive interview. The other issue is obviously the projects, he said, adding, “If projects are stopped,

then that will be an issue. Maintenance also becomes an issue.”

Redeployment

According to Al Mandhari, another challenge would be the redeployment of the Omanis released from the affected companies. The right company has to be identified for them and, perhaps, they have to be retrained, said Opal’s CEO, who believes that the time of crisis is when the society can show its true capabilities.

Opal, the first society in Oman’s petroleum industry to be officially approved and registered in the Sultanate in 2001, will also continue to pursue the objectives it had previously set for itself.




Goals Al Mandhari said that when he took over as CEO in November 2014, he embarked on a mission to bring back the company’s ‘reputation’ and put the society on track. Opal has also been seeking to work on communication, capability development and customer focus through various initiatives, the official explained. As part of its efforts, the society has been building on its portfolio, engaging stakeholders and motivating its own personnel through creating a lively office environment and other measures, Al Mandhari noted. He added that Opal has revamped its website, has started to publish a monthly newsletter and plans to announce the launch of its magazine next year. In addition, the society is engaging actively with customers and is seeking to increase its customer base, he noted. Training Commenting on capability development, Al Mandhari said that Omanisation and developing the local workforce has always been a priority for Opal since its establishment. “We want to train the maximum number of people given the fund we can get,” he said, adding that Opal has two main training programmes, namely Training for Development (TFD) and Training for Employment (TFE). TFD is dedicated to staff and employees while TFE is for Omanis seeking to enhance their capabilities, he explained. Target According to him, around 400 individuals received training in 2015 under both programmes, with 168 Omanis receiving TFE. The society had set a target of 200 for its TFE programme and seeks to achieve it in 2016, Al Mandhari stated. He expressed hope that Opal’s training programmes will get a boost next year through closer cooperation with the Ministry of Manpower. Efficiency Asked about Opal’s role in bringing efficiency and productivity to the oil and gas sector in Oman, the CEO said that the society has been doing it in a number of ways. Opal has over 400 members so the ‘power of numbers’ should help the society create efficiency, he added. The official cited group training and ensuring common standards as some of the ways to enhance efficiency and productivity. Future vision Commenting on Opal’s vision for the future, Al Mandhari said that the society has sat with its members and have decided to be their voice of the industry, continue creating best practices and standards, and enhance human resources development. There will also be a focus on In-Country Value (ICV), the CEO of Opal noted.




Qatar Rail, Qatar Cool in deal to provide district cooling Gulf Times + NewBase

Qatar Rail has signed a contract with Qatar Cool to provide district cooling services at seven of the Doha Metro Red Line stations. A signing ceremony took place at Qatar Rail’s headquarters recently in the presence of Saad Ahmed al-Muhannadi, Qatar Rail CEO and Yasser Salah al-Jaidah, Qatar Cool CEO.

Aiming to support the environment and save electricity and cost, Qatar Rail has chosen to partner with Qatar Cool to provide district cooling at the Pearl and West Bay stations (Legtaifiya, Katara, Al Qassar, Doha Exhibition and Convention Centre, West Bay, Corniche and Al Bidda stations), and proactively contributing to cooling measures during the summer months starting 2019, the projected operation date of the Doha Metro project (Phase 1).

Qatar Rail oversees the construction of Qatar’s integrated railway network.

Through district cooling, chilled water is delivered via underground isolated pipelines to commercial, hotel and residential buildings to cool the buildings water via an Energy Transfer Station (ETS), which is situated in the basement of each building within a district. The ETS in each building then uses the buildings water to lower the temperature of air passing through the building’s air conditioning system, known as Fan Coil Units (FCU) or Air Handling Units (AHU).

Cooling systems will operate throughout the other stations and on the trains themselves to ensure that customers enjoy the height of comfort when using the network.

On the co-operation deal, al-Muhannadi, said: “Qatar Rail has always sought to work with the best local suppliers and partners on every aspect of each of its projects to achieve the implementation of a sustainable railway network. We have the pleasure to cooperate with Qatar Cool to provide some seven stations on the project with a district cooling system that won’t only withstand the hot weather during summer peak times in Doha, but also contribute to protecting the environment by increasing energy efficiency and reducing environmental emissions, saving electricity, and evidently benefiting from a much more cost-efficient cooling service with an economic interest on the longer term”.

Al-Jaidah said, “We take great pride in being part of Qatar Rail’s story. The benefits that the Qatar Rail system will bring to our country by providing an environmentally friendly, safe, fast and very efficient means of transportation are clear and necessary for our growing population. District cooling’s advantages are increasingly being recognised by governments, developers and end-users alike. It is an honour to say Qatar Cool is playing a fundamental role in Qatar’s sustainable and environmental fortification. We are committed to supporting Qatar and Qatar Rail throughout their journey.”




Turkey: ‘New Turkey story’ needs pipelines and ports Bloomberg + NewBase

Turkey needs to boost infrastructure investment to kick-start a new era of rapid growth in the Middle East’s largest economy, one of President Recep Tayyip Erdogan’s top economic advisers said.

While primary budget surpluses under the ruling AK Party have boosted Turkey’s credit worthiness and reduced the ratio of public debt to gross domestic product by more than half, higher spending on railways, ports and energy pipelines will be necessary to make the economy more competitive and help craft “a new Turkey story” to attract foreign investment, Cemil Ertem said in a December 18 interview in Ankara.

Ertem’s comments point to a potential policy shift by the government, which responded to the global financial crisis and emerging market capital outflows by maintaining fiscal discipline that helped it regain investment grade status in 2013. They also reflect the tale of two halves of AK Party rule - growth since the market turmoil of 2008 has been less than half the average of more than 6% before it, and the lira has slumped more than 20% this year.

It is “flawed” policy to run a public budget with a single aim of having a surplus, and Turkey may need to dip into the red to create “externalities,” Ertem said, referring to conditions in which Turkish industry can flourish.

“You may run some considerable budget gaps, and the fiscal balance may worsen for some time if you undertake these infrastructure projects,” he said. “But in the medium-term, when you create those externalities your industrialists gain global competitiveness, which helps to restore macroeconomic fundamentals and accelerate economic growth.”

Moody’s said uncertainty over the government’s future economic policies was part of the reason for keeping its country outlook at negative at this month’s scheduled review, which held Turkey’s credit rating at the lowest investment grade Baa3 due to its “strong fiscal metrics.”




Turkey has run surpluses, excluding interest payments, since the ruling AK Party came to power in 2002, and the surplus-to-GDP ratio was 2% in the second quarter of this year, according to the Ministry of Finance. The ratio of public debt to GDP fell to 35% last year, from 79% in 2003.

Ertem, who became Erdogan’s chief adviser in January and has a PhD from Istanbul University, said his vision for fast-track growth relies on having complimentary monetary and fiscal policies that support job creation and the government’s broader economic goals.

Some economists have said Turkey can’t return to the same economic model of the high-growth era, which

was fuelled by consumer demand and ample liquidity. It also saw imports outpace exports, contributing to a current-account gap that reached nearly 10% of GDP in 2011. It’s forecast to fall to 5% by the end of this year.

The spike in imports and

subsequent widening in the

current-account deficit was a result of policies that relied on short-term capital to cover the gap and kept interest rates above global norms, Ertem said.

The system is a “trap” for emerging economies, said Ertem, who wrote about Erdogan’s economic policies

and his own proposals for a new growth model in Turkey: A River That Finds Its Course published last year.

While some members of the ruling AK Party have accused the central bank of hindering growth with excessively high interest rates, Ertem said the criticism was “neither useful nor meaningful.”

Policy makers should be able to discuss whether Turkey’s interests are best served by the central bank’s preference for an inflation target rather than a monetary target, including focusing on money supply to spur growth, he said.




India: 2016 to be active for N-power in India Oman Observer + NewBase

The year 2015 could be said as the one of strengthening the foundation for increased foreign participation in the domestic nuclear sector by clearing doubts on nuclear liability, signing a uranium souring agreement, civil nuclear cooperation agreements with a couple of countries.

The year also saw India taking steps to increase the local content in the reactors imported from Russia. During his visit to Russia, Prime Minister Narendra Modi said cooperation between the two countries in the nuclear sector was increasing.

“We are making progress on our plans for 12 Russian nuclear reactors at two sites. The agreement signed on December 24 will increase Indian manufacturing content in these reactors.

It supports my mission of Make in India,” he said. During the year, India finalised an administrative arrangement with the US on monitoring, inspection and other safeguards of nuclear items sourced from that country.

Indian atomic power plant operator Nuclear Power Corporation of India Ltd (NPCIL) and AREVA, France signed a pre-engineering agreement. To meet the concerns of nuclear liability the Indian Insurance Pool with a corpus of Rs 1,500 crore (over $225 million) was set up.




However, the policy covering the public liability risks is yet to be issued as NPCIL wants some changes in its conditions.

The year also saw the shutting down of the first 1,000 MW unit of NPCIL at Kudankulam in Tirunelvelli district for refuelling and maintenance; and the start of sodium loading in the upcoming 500 MW prototype fast breeder reactor (PFBR) at Kalpakkam, around 70 km from here. “Next

year will see lot of action.

In January, the first unit at Kudankulam will restart generation.

The second 1,000 MW unit at Kudankulam and the PFBR are expected to go critical — beginning of the fission process — for the first time,” Atomic Energy Commission chairman Sekhar Basu said.

He said India will be signing the remaining agreements with Russia for the third and fourth units at Kudankulam, estimated to cost around Rs 40,000 crore. “Sometime mid next year the site work would begin for the next two units. The project construction period will be seven years starting next year,” Basu said.

In a statement issued after his talks with Modi, Russian President Vladimir Putin said: “We have agreed on India’s assigning another plot for the construction of Russian power units, where we intend to use the latest… reactors built with the application of the latest and safest technologies.”

“We intend to begin the construction of the third and fourth units (at Kudankulam) in the near future. Negotiations are under way on units five and six,” he said. According to Putin, these are all practical steps for implementing the Strategic Vision of Russian-Indian Cooperation in Peaceful Nuclear Power Use signed a year ago.

“It contains plans to jointly build in India at least six more power units over a period of 20 years,” Putin said. On the purchase of reactors from other suppliers like AREVA or from the US, Basu said talks are on but the price of their equipment is one issue.




He said the suppliers have to reduce their prices and Areva has to complete its restructuring process. Basu said India is open for turnkey projects. Foreign suppliers seem to be interested in the Russian model — providing finance and equipment — adopted for the Kudankulam project.

As for the other major on-going projects, Basu said steps are on to provide increased funding for the Rs 9,600 crore fast reactor fuel recycling facility (FRFCF) coming up at Kalpakkam. “The project is expected to go on stream in 2018.

However it is linked to the operation of the PFBR,” Basu said.

Construction of four India-designed 700 MW pressurised heavy water reactors (PHWR) at Kakrapar Atomic Power Station (KAPS) in Gujarat and the Rajasthan Atomic Power Station (RAPS) are progressing at a quick pace and the first one is expected to go on stream by end 2016 or early 2017, NPCIL officials said.

On uranium mining, Basu said no new facility was opened in 2015 while improved productivity is expected at Tummalapalle mine in Andhra Pradesh with alkali leaching technology. A large underground mine and process plant at Tummalapalle in Andhra Pradesh has been constructed.

In addition, a new underground mine and plant at Gogi in Karnataka, an open pit mine at Kylleng

Pyndensohiong Mawathabah(KPM) in Meghalaya, one open pit and three underground mines at Lambapur in Andhra Pradesh, and one uranium mining project in Sikar district of Rajasthan are in different stages of implementation, the government said in response to a question in the Lok Sabha. During the year, an agreement was signed with CAMECO of Canada for 3,000 tonnes of uranium ore concerntrate (UOC) during 2015-20.

A contract was also signed with Kazatomprom of Kazakhstan for 5,000 tonnes of UOC. Basu said the amendment to the Atomic Energy Act will enable more players — mainly joint ventures between NPCIL and public sector units — to come into the field.




Canada:The Oil Price Crash Is Taking a Heavy Toll On Canada. And the Worst Is Yet to Come

Bloomberg - Rebecca Penty

Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. And the worst isn’t yet over in the heart of Canada’s oil patch.

Some of the city’s largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago.

“We all know someone who has lost a job,” Naheed Nenshi, the city’s mayor, said in a speech this month, lamenting the “funeral"-like atmosphere in the business community.

Calgary, which boasted one of the lowest jobless rates in the nation as crude prices rose over $100 a barrel, is reeling after a global glut pushed prices down by two-thirds. Shares of energy producers have slumped along with oil. While Alberta’s biggest city is benefiting from gains in tourism and transportation, its economy is still 30 percent dependent on oil and gas, according to the mayor.

Oil rose to a one-week high after a report showed U.S. crude inventories declined, climbing 3.8 percent to $37.51 a barrel at 11:46 a.m. in New York.




The largest 23 Canadian producers are set to spend 11 percent less in 2016, a cut of about C$3.61 billion ($2.59 billion). That includes reductions by Canadian Natural Resources Ltd., Imperial Oil Ltd. and Cenovus Energy Inc., according to company forecasts and analyst estimates compiled by Bloomberg. It follows a 32 percent cut in 2015.

Jillian Berling-MacKenzie, 25, was one of the lucky few of her graduating geology class to secure full-time work this year, at oil company ConocoPhillips. She bought a house with her boyfriend, also a newly graduated geologist with a job, before they both became victims of the cuts. A friend’s company has provided some contract work paying slightly more than employment insurance as Berling-MacKenzie tries to land positions just about anywhere, seeing no postings she qualifies for in her field.

Career Change

The dearth of opportunities has Keely Eng, 27, seeking a career change. Eng was let go from an engineering position in March at Nexen, the Cnooc Ltd. subsidiary. Dreading an extended job hunt, Eng took medical school exams and has applied to several programs.

“The industry isn’t doing well and I’m not super-established, so it isn’t too late to switch,” Eng said.

Career transition firm Gilker McRae Ltd. is already hearing from companies planning next year’s cuts. The firm helped with more than 20 downsizings in 2015, mostly in Calgary, said Ross Gilker, owner and president. A typical year would include one to three.

Stampede Cuts

The impact of the energy downturn is easy to see downtown in the easing traffic, emptier office buildings and closed restaurants. The Calgary Stampede, which runs an annual rodeo and events throughout the year, suffered its own round of cuts last month after losing funding and site bookings.

Kevin Mulligan, 61, was among Stampede workers who “got the Tuesday boot,” he said. The former park maintenance manager, six years from retirement, is helping his wife with a Christmas wreath-making side business to supplement severance payments while job-hunting.

“My new job is finding a job,” Mulligan said.

Calgary’s unemployment rate rose to 6.9 percent in November from 4.6 percent a year earlier, Statistics Canada data show, as 21,100 more were put out of work. Home sales have fallen 21 percent this year as the average price skidded 2.6 percent, according to the Calgary Real Estate Board.

Brown Bagging for Calgary’s Kids is providing 16 percent more school lunches than in September -- about 2,900 across 187 schools. The rise is unprecedented, said Tanya Koshowski, the group’s executive director. Food bank use jumped 23 percent in Alberta in the year ended March 2015, the country’s biggest increase, according to Food Banks Canada. Crime Surge




Police are pointing to economic decline and rising drug use to explain Calgary’s crime surge. In the first 10 months of 2015, commercial break-ins almost doubled from a year earlier, bank robberies were up 65 percent and home invasions increased 52 percent, Calgary Police Service data show.

There is a silver lining. Thanks in part to Canada’s weaker currency, some sectors have been doing well, such as transportation, agriculture and tourism, and have been a source of employment for people previously working in energy, said Todd Hirsch, chief economist at ATB Financial. He predicted the oil industry will start recovering in the second half of 2016 as companies stop cutting jobs.

“We’ve got a bit more tough sledding before it starts to turn around,” Hirsch said.

Greg Cosma is being patient about a rebound, using his woodworking skills and time to volunteer building houses with Habitat For Humanity. The 58-year-old engineer was let go from Cenovus in October, the second industrywide cut he’s endured in the past decade.

“If you’re good at something, you have a future,” Cosma said, offering advice to the new grads entering Calgary’s energy work force: “Don’t sweat it.”




Russia: End to U.S. oil export ban should not affect Russian market Reuters + NewBase

Russia, the world's top oil producer, believes the U.S. decision to lift a 40-year ban on exporting crude oil will not affect the global oil market, Russian Energy Minister Alexander Novak said.

Global oil prices are down to under $40 per barrel, trading close to an 11-year low, pressured by oversupply amid resistance by the leading producers, including Russia, to cut output.

Last Friday, Congress voted to repeal the 40-year-old ban on exporting U.S. crude oil, imposed after the Arab oil embargo of the early 1970s that sent gasoline prices soaring and contributed to runaway inflation.

"This should not affect the market, this country (the United States) is an importer, it needs to buy oil on the market itself," Novak told reporters. U.S. energy group Enterprise and oil trader Vitol became the first firms eager to "stress test" the lifting of the export ban.

The United States consumed around 19 million barrels per day (bpd) of oil products in 2014, a fifth of the world's total, with net imports of oil and oil products accounting for just over a quarter of total U.S. consumption, according to the U.S. Energy Information Administration.

Novak also said that Russian oil companies were examining stress scenarios for an oil price of $30-$35 a barrel and that Russian preliminary oil output in 2015 was around 533 million tonnes, or 10.70 million bpd.

Low oil prices along with Western sanctions on Russia have put pressure on the rouble since last year, making the Russian oil industry one of the lowest cost and helping to increase investments.

Novak said that investments in Russian oil production were around 1.1 trillion rubles ($15.7 billion) this year, up from some 980 billion rubles in 2014.

Oil output in Russia is expected to rise to a new post-Soviet average high in 2016, 10.78 million bpd, as new fields come online and producers enjoy lower costs, a Reuters poll showed this week.




US firm inks first crude export deal in four decades

American oil company Enterprise Products Partners has announced the first US crude oil export shipment after the country lifted its 40-year ban.

Some 600,000 barrels of light sweet crude pumped in South Texas will be loaded onto a tanker in the first week of January, according to the company. The tanker belongs to a Dutch oil-trading titan Vitol Group which is buying the crude. It will head to a Vitol subsidiary’s refinery in Switzerland, which supplies diesel and other fuels to Northern Europe, the Wall Street Journal cited a person familiar with the matter.

“We are excited to announce our first contract to export US crude oil, which to our knowledge may be the first export cargo of US crude oil from the Gulf Coast in almost 40 years,” said Jim Teague, chief operating officer of Enterprise’s general partner. While American oil producers are enthusiastic about Washington's decision to lift the oil export ban, they face difficult obstacles. Low oil

prices on the global market will prevent some private producers from selling on their product abroad. It makes more sense for smaller operators to temporarily seal their oil wells instead of selling more crude at a loss.

The other problem is that despite being a major oil producer, the US still heavily relies on crude imports. The US produces 9.4 million barrels per day while consuming nearly 20 million barrels. Therefore the country cannot be a significant crude exporter and will instead export relatively small amounts of light crude.

"It’s universally agreed in the short-term we won’t see a flood of ships leaving for foreign ports because the economics aren’t right," Sandy Fielden, director of energy analytics at RBN Energy was cited as saying by Reuters. Last week, US President Barack Obama signed a bill lifting crude export restrictions which were introduced in 1975 in the middle of the energy crisis. The restrictions followed OPEC’s oil embargo on the US and other countries backing Israel during the Arab–Israeli war of 1973. In the face of embargo-related high oil prices, Washington eased the limits on oil imports and ordered an export ban.




Turkmenistan eyes Western markets with new $2.5b gas link The approximately 800-km long East-West pipeline could connect the isolated state possessing the world’s fourth largest gas reserves

AFP

Turkmenistan hailed on Wednesday the completion of a $2.5 billion (Dh9.2 billion) gas pipeline connecting its abundant eastern gasfields to the Caspian Sea while potentially expanding Europe’s energy security options.

The approximately 800-kilometre long East-West pipeline could connect the isolated state possessing the world’s fourth largest gas reserves with markets in the West via an ambitious link that would traverse the Caspian.

“With the completion of the East-West pipeline, cooperation with our European partners acquires a new quality,” said Turkmenistan’s President Gurbanguly Berdymukhamedov at the opening ceremony at the Belek compressor station, some 500 kilometres northwest of the capital, Ashgabat.

The East-West pipeline may prove an important component of a bigger link planned by the European Union, Azerbaijan, Turkey and Georgia that would funnel natural gas along the floor of the Caspian before connecting with pipelines threading into Europe.

The Trans-Caspian pipeline is expected to cost around $5 billion and could carry as much as 30 billion cubic metres of natural gas annually in the direction of the EU.




The pipeline would provide Europe with an opportunity to lessen its dependence on Russia-sourced gas.

Strength of companies

Berdymukhamedov said the East-West link had been built “by us on our own thanks to the strength of our national companies” despite previous foreign interest in building the vital link.

“This clearly demonstrates our economic and financial potential and the capacity of our country,” Berdymukhamedov said.

Turkmenistan’s lack of infrastructure has left it dependent on pipelines connecting it to Russia and China for the bulk of its exports in the past.

Brussels’ energy chief Maros Sefcovic said during a May visit to Ashgabat that the Trans-Caspian pipeline might come online by the end of 2019, although it is unclear who will build a link that faces opposition from littoral states Russia and Iran.

Other efforts to involve Turkmenistan in the EU’s energy system including via the long-planned Nabucco pipeline have come to nothing in the past.

Turkmenistan, which sends up to 90 per cent of its natural gas east to China, has also begun building a $10 billion T urkmenistan-Afghanistan-Pakistan-India (TAPI) link expected to help ease energy deficits in South Asia.

The country’s once-booming energy relationship with former master Russia has virtually collapsed since energy giant Gazprom confirmed its intention to wind down imports of Central Asian gas, with Turkmenistan blasting the company as an “unreliable partner” earlier this year.

But Igor Sechin, who heads Russia’s top oil company, Rosneft, and is known as a close ally of President Vladimir Putin, attended the opening of the East-West pipeline.




NewBase 27 December - 2015 Khaled Al Awadi

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

Oil above $37 as U.S. supply tightens, still near 11-year low WTI Oil prices edged further above $38 a barrel on Thursday before retreating as it remained within sight of an 11-year low reached this week, as traders put positions in order ahead of an expected week of low liquidity ahead.

U.S. crude has gained support from falling inventories, reduced drilling and the lifting of a ban on most U.S. crude exports, which has pushed U.S. crude to a premium to global benchmark Brent for the first time in about a year.

Brent settled up 53 cents at $37.89 a barrel as of 11:48 a.m. EST. It fell to $35.98, an 11-year low, on Tuesday. U.S. crude settled up 60 cents at $38.10 after gaining more than 8 percent this week.

"Some traders playing spot on the downside are getting out and calling it a year," said Tariq Zahir, managing partner at Tyche Capital Advisors.

U.S. crude futures have seen support from fundamentals including the lifting of a four-decade ban on crude exports.

"The lifting of the ban on U.S. exports will provide some underlying support for U.S. crude. Oil demand in 2015 was exceptionally high and at current prices, demand is going to remain strong next year," said Olivier Jakob, analyst at Petromatrix.

Oil price special

coverage




"For now, there is still an ample supply of crude and a huge amount in storage."

Brent traders in London said the market was quiet with many participants away for the Christmas holidays.

Crude gained support from the latest snapshot of U.S. supplies on Wednesday. Crude inventories, which were expected to rise, fell 5.88 million barrels, the Energy Information Administration said.

Baker Hughes reported that U.S. oil drillers cut rigs for a fifth week in the last six, a sign that low prices are curbing activity and could slow output.

Brent has more than halved from more than $100 a barrel 18 months ago, pressured by a supply glut that according to OPEC figures exceeds 2 million barrels per day.

Next year, the glut is expected to be smaller as world demand rises and the price collapse leads to lower output from some countries outside OPEC, but there is no sign yet that OPEC itself is prepared to lower its supply - which is likely to rise when sanctions on Iran are lifted.




NewBase Special Coverage

News Agencies News Release 27 Dec. 2015

‘Oil at $100, it possible If…’: Imagine a world where Black Swans scenario really do come true in 2016

Bloomberg –

On a clear March night in Iraq, the desert plain of the Faw peninsula and a Kurdish village near Syria and Turkey go up in flames. The next morning, Islamic State claims responsibility for the destruction of the country’s major oil pipelines.

The world immediately loses 3.5mn bpd exports. As Iraq struggles with repairs, violence erupts in the oil-rich region of the Niger Delta, Algeria descends into chaos on the death of its president and there’s a coup in Venezuela. Bloated inventories protect the global economy for a while, but the industry is operating with the thinnest capacity cushion in years. Crude eventually tops $100 a barrel. The Federal Reserve reverses its rate-raising policy to avert a global recession.

Impossible or plausible?

Investors can’t ignore this or other so-called Black Swan scenarios following a year that surprised the world with record refugee flows and brutal terror attacks. In 2016, unexpected events will take on heightened importance as the Fed ends an era of ultra-cheap credit. Markets will lose the cushion that’s shielded them from geopolitical shocks such as the Arab uprisings and the annexation of Crimea.

“There is very little ammunition that can be applied to mitigate these kinds of risks,” said Tina Fordham, Citigroup Inc’s chief global political analyst. “Central banks still have the most bullets and we have already crossed the Rubicon into extraordinary measures.”

From a maverick winning the US presidential election to Britons voting to quit the European Union to hackers bringing down Wall Street, Bloomberg discussed a range of high-impact events with dozens of former and current diplomats, economists, investors, geopolitical strategists and security consultants. The scenarios were reviewed and ranked by 119 economists in a survey.

Just over one-quarter of them chose oil rising on Islamic State attacks as the biggest challenge to the global economy. The runners-up were the UK exiting the EU and a cyber attack taking down the financial system. Nightberg, a New York-based independent global macro research firm whose clients include hedge funds, assigned these three events probabilities of 25%, 20% and 10%, respectively.

Some risks are well known.

If the Fed raises rates too fast, capital could flee emerging markets and sovereign defaults may spread. If China’s economy is in worse shape than expected - as the drop in demand for metals and other mined goods suggests - that could prompt civil unrest that chips away at the authority of the ruling Communist Party. Latin America’s decline could continue, with Brazil diving into full-blown depression as it hosts the Olympics and Venezuela morphing into a failed state.




“We’re going through a period of dispiriting global economic growth which highlights the costs and distortions created by years of unorthodox policies in a number of major economies,” said Alberto Ramos, chief Latin American economist at Goldman Sachs Group Inc

Societe Generale, in its yearly chart of Black Swan risks, said a China hard landing - a severe slowdown after a cycle of fast

growth - could tip the global economy into recession. The bank assigned it a 30% probability.

“When China bites off more than it can chew that’s a big bite,” said Paul Brewbaker, former chief economist at the Bank of Hawaii who now runs consulting company TZ Economics.

There’s an element of “Whack-a-Mole” in conjuring Black Swans but when they come true, they are a life-changing “lesson in humility” for policy makers and markets, said Jacob Funk Kirkegaard of the Peterson Institute for International Economics in Washington. He cited the 2008 financial crisis, the Arab Spring and the Fukushima meltdown as unexpected events that were misread at the time.

The US could deliver one the biggest surprises of the year if Hillary Clinton unexpectedly drops out of the presidential race, clearing the road to the White House for an outsider such as Republican Donald Trump. The billionaire promises to enlarge the military, prohibit Muslims from entering the US and build a wall along the border to keep out Mexican immigrants.

A Republican in power would pour more money into defence, especially with rising security challenges such as Islamic State, the Syrian conflagration and Russian adventurism, according to George Ferguson, senior aerospace analyst at Bloomberg Intelligence. Among the beneficiaries of those policies: Raytheon Co, Lockheed Martin Corp and Boeing Co, he said.

An untested commander-in-chief accusing China of manipulating its currency and Mexicans of stealing jobs raises the spectre of a trade war and may lead to a flight to safe investments like bonds, according to Nightberg.

“It is difficult to envision any type of policy coherency emerging from a Trump administration,” said Tom Fullerton, a professor of economics and finance at the University of Texas at El Paso.

In Europe, investors fear German Chancellor Angela Merkel could be ousted over her emphatic open-door policy as a wave of terror attacks and growing xenophobia ensnares the continent. That increases the chances of a successor with few qualms about abandoning Greece and other peripheral nations to their own currency fates.

“If Merkel were to lose her job, all hell would break loose,” said Nicholas Spiro, managing director at Spiro Sovereign Strategy, a London advisory firm assessing risk in developing economies. A chancellor such as Finance Minister Wolfgang Schaeuble, a fiscal hawk, “would probably be less supportive of full-blown quantitative easing, less supportive of Greece, less supportive of bailouts.”

3.5mn bpd exports




A big EU crisis could lead to a strong selloff in equity markets, a favoured destination for investor capital in the past years, and a considerable weakening of the euro, Nightberg predicts. With capitals on high-security alert, shuttered borders would hit trade and damp already anaemic growth.

UBS Group, in its “Year Ahead” note to clients, flagged the rise of extremist political parties in Europe and Islamic State extending its territorial reach among the potential dramas that would hurt consumer confidence and spending. In France, the rise of Marine Le Pen’s National Front is a barometer of growing anti-immigration sentiment.

“If for some reason Europe is unable to defend itself from terrorism, people would reduce the allocations,” said George Hoguet, a Boston-based global investment strategist at State Street Global Advisors, which has $2.4tn under management.

The malaise could also infect the UK, where polls show euro-scepticism is picking up at a time when Prime Minister David Cameron is trying to negotiate better terms for staying in the 28-member club. A referendum could be held as early as next year; banks from UBS to Morgan Stanley are warning clients to pay attention to the chances of the “Leave” camp winning.

Top bankers have said a vote for EU departure could reduce London’s role as the European centre of finance. Ripple effects could include a renewed push for independence by the Scots and other separatist movements. One scenario transcends borders: A cyber-attack wreaking havoc on a major financial system.

Extremist groups such as Islamic State could team up with Eastern European criminal hackers-for-hire to launch attacks on electronic-settlement or trading platforms. Everything from online bank accounts to computer-controlled electrical plants and power grids is at risk.

High-profile data breaches at JP Morgan Chase & Co and Sony Corp highlight these vulnerabilities. Just last month, the US and the UK carried out a joint drill to test the resilience of the world’s two dominant financial hubs.

“In the past, bank fraud was used to steal money: In 2016, we’ll see these techniques used to finance terror,” said Mark Gazit, chief executive of The taRay, an Israeli startup focused on threats to critical infrastructure. “I do see power outages and an enormous breach of privacy.”

Some Black Swans can have positive overtones. An example: Russian President Vladimir Putin could become a peace broker in war-torn Syria. He stepped in after Islamic State claimed responsibility for the downing of a Russian passenger plane over Egypt and the massacre in Paris, two seminal events that laid the groundwork for closer military collaboration against a common enemy with headquarters in Syria.

If Putin can work with the international community to bring about a political transition in Syria - though it remains to be seen how stubborn differences over the future of President Bashar al-Assad can be settled - chances rise that sanctions can be lifted down the road, easing Russia’s path out of recession.

“Imagine if three months ago it was possible to think that the US and Russia could work” in the same direction, the UN special envoy for Syria, Staffan de Mistura, said this month in Rome. “Maybe there is no light at the end of the tunnel, but now we have a tunnel.”




Gazprom Is Losing Its Market Muscle Bloomberg - Elena Mazneva

Gazprom, the state-controlled, Moscow-based natural gas giant has long played a double role: as an instrument of Kremlin foreign policy; and as a major source of tax revenue for Vladimir Putin’s government.

Things have changed. Gazprom has long been accustomed to dictating terms because of its size. In the European Union, it supplies about 30 percent of the gas. But with a 70 percent drop in profits, the Russian company finds itself fighting to protect its share of a market it depends on for as much as a third of its revenue of $100 billion. Gazprom is no longer a potent diplomatic tool at a time when customers have many more options.

By 2025, says the International Energy Agency (IEA), gas imports by the EU will account for 77 percent of its consumption, up from 63 percent now. Gazprom will not necessarily be supplying Europe with those extra imports. American companies will be providing liquefied shale gas to European power plants starting next year.

“U.S. shale gas will provide a very important opportunity for European consumers to strengthen their hands,” says Fatih Birol, executive director of the IEA. U.S. exports may make up half of flexible liquid natural gas volumes heading to Europe by 2020, says Philip Olivier, chief executive officer of Engie Global LNG, a shipper of flexible LNG. “Flexible” means the gas can be shipped anywhere.

It’s not just America. “There will be competition between American gas, Russian gas, Algerian gas, Middle Eastern gas,” Total CEO Patrick Pouyanné said in October. In response, Gazprom has dropped the bluster and threats it used with European clients that protested Moscow’s actions in Ukraine last year and whose governments imposed sanctions on Russia.

(The Western sanctions don’t restrict purchases of Russian natural gas.) Instead, the company is paying more attention to customer needs, announcing plans for a pipeline that would transport its gas directly to the EU and pushing to settle an EU antitrust claim that could cost it billions of dollars.

The new approach complements Russia’s attempts to ease tensions with the West over Ukraine and boost cooperation in fighting terrorists in Syria. Those efforts have met with limited success, but Russia is persistent. “The position of Gazprom and the Russian side is becoming flexible in




light of the changing situation, defending our interests but also taking into account the demands of the European side,” says First Deputy Energy Minister Alexey Teksler.

“The position of Gazprom and the Russian side is becoming flexible in light of the changing situation, defending our interests but also taking into account the demands of the European side”

Gazprom is trying both to appease the Europeans and look for new customers. “In the aftermath of the Ukraine crisis, gas diversification became a mantra for both the EU and Russia,” says Simone Tagliapietra, energy fellow at Bruegel, a think tank in Brussels. But “Russia needs the EU gas market as much as—if not more than—the EU market needs Russian gas.”

Gazprom’s room to maneuver is limited. All the gas for Europe is shipped by pipeline, meaning Russia can’t divert it to other markets. Links to China aren’t expected to be built until after 2019. Russia shelved plans to turn Turkey into a conduit to Europe after the Turks downed a Russian warplane near the Syrian border in November.

Gazprom’s “export policy has always been balanced and adaptive,” says spokesman Sergei Kupriyanov. He argues that European customers have become more interested, not less, in Russian gas, given Europe’s own decline in production.

In September 2014, Gazprom started to limit gas deliveries to some EU members, including Poland and Slovakia. They had been supplying gas to Ukraine to replace supplies that Russia had cut off in a pricing dispute with its neighbor. Russia warned that the conflict with Kiev could disrupt supplies to Europe, as had happened in 2006 and 2009. In both those episodes, Gazprom cut off gas to Ukraine. Because Europe got most of its Russian gas via Ukraine, Gazprom’s actions imposed shortages on the EU as well.

In January 2015, Miller told the EU’s new energy chief, Maros Sefcovic, that Gazprom would cut off shipments to Europe via Ukraine after the current pipeline contract ran out in 2019. That would force customers to build new pipelines. “We don’t work like this,” a stunned Sefcovic told reporters in Moscow.

But since the spring, the pressure has been growing on Gazprom. The plunge in gas prices has begun to bite. Gazprom expects revenue in Europe in 2016 to be down 16 percent, the lowest in 11 years. Its giant Siberian fields are operating far below capacity. It says production this year will fall to a record low because of weak demand, primarily from Ukraine, which isn’t buying much.

In April, Brussels unsealed an antitrust complaint alleging Gazprom sold gas to Poland and the Baltic states at prices up to 21 percent higher than the average. If the charges are proven, the gas giant could pay as much as $3.8 billion in fines, VTB Capital in Moscow estimates. Gazprom denies all the charges.

In negotiations to export more gas to China, talks have stalled. After a September visit to China again failed to yield a deal to expand shipments, Gazprom hastily signed a pact with five big EU companies including oil major Shell and utility E.ON to build a pipeline under the Baltic Sea to Germany. Russian officials say they’re ready to offer lower prices to gas customers that help fund construction, as well as concessions to ensure the pact wins EU approval. The company later made a formal offer to settle the EU’s antitrust charges.

Miller has publicly backed off from threats to cease shipments via Ukraine after 2019. Gazprom is also giving in to European clients’ calls for more pricing flexibility. Slowly, Gazprom is learning how to operate like an ordinary company that has to work on its customer relations.




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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 &

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