New base 763 special 06 january 2016

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NewBase 06 January 2016 - Issue No. 763 Edited & Produced by: Khaled Al Awadi

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Qatar: Biggest No Longer Means Best in Qatar's Strategy for LNG Wealth Bloomberg - Mohammed Sergie

For Qatar, the world’s largest exporter of liquefied natural gas, preparing for a looming glut of the fuel isn’t about being the biggest seller. It’s about being the most efficient.

Global LNG output is expected to rise by a third to about 330 million metric tons annually by 2018, according to Sanford C. Bernstein & Co. Most of the new fuel will come from the U.S. and Australia, which is poised to topple Qatar as the biggest supplier. Unlike Saudi Arabia, the largest oil shipper, Qatar won’t be fighting for market share at the expense of earnings.

Instead, the sheikdom will continue as one of the most profitable LNG sellers by taking advantage of the industry’s lowest production costs and a control over supply routes that lets it redirect LNG quickly between continents to exploit opportunities, said Ibrahim Ibrahim, vice chairman of Ras Laffan Liquefied Natural Gas Co., known as RasGas.

“A lot of people have gas, but we have an integrated project,” he said in an interview in Doha. “We are not trying to maintain a leadership role.”




The Persian Gulf sheikdom faces a challenge similar to the one Saudi Arabia has grappled with in oil markets, as competitors take market share and drive down prices, according to a Nov. 13 report by the Arab Gulf States Institute in Washington, a research center. Prices for LNG delivered to Asia have plunged more than 60 percent from a record in 2014. Better Terms

Buyers such as Tokyo Electric Power Co., South Korea’s Chubu Electric Power Co. and Petronet LNG Ltd., India’s biggest gas importer, are haggling for better terms.

“Most of the long-term prices will expire around 2020,” Chung Yangho, South Korea’s deputy minister of energy and resources policy, said on Nov. 9 in Doha. “If the oversupply continues, we hope to see there will be less rigid market conditions.”

Qatar shipped 76.4 million tons of the fuel in 2014, or 32 percent of global supply, according to the International Group of Liquefied Natural Gas Importers.

“Spending billions to build new LNG plants doesn’t make sense as new supplies come online,” said Allison Wood of consultants Control Risks Group Ltd. “The fact that Qatar owns the value chain from start to finish allows it to have a level of efficiency that is going to be tough for other producers to match.” U.S. Link

Instead of fighting expanding U.S. producers head-on, Qatar has joined them. It has a 70 percent stake in Golden Pass Products LLC, a venture with Exxon Mobil Corp. that’s seeking U.S. regulatory approval to export from Texas. Qatar is already the biggest provider of LNG on the spot market, a departure from its traditional focus on long-term contracts.




Qatar took 10 years to become the fuel’s largest producer in 2006 and even less time after that to build a $250 billion sovereign wealth fund. With a population of 2.4 million people, it tapped the third-biggest gas reserves to become the wealthiest nation per capita. Qatar’s gross domestic product in 2014 was $134,182 for each resident compared with $49,537 in neighboring Saudi Arabia, with a population 12 times as large, according to the World Bank.

The Jamaica-sized country is currently the lowest-cost and most profitable producer of LNG, according to Neil Beveridge, an analyst at Bernstein. The break-even cost for RasGas to produce 1 million British thermal units of LNG is $1.60 compared with $7.60 in the U.S. and as much as $13.50 for Australian companies, according to reports by Columbia University’s Center on Global Energy Policy and the Oxford Institute for Energy Studies. Joint Ventures

RasGas, along with Qatar Liquefied Gas Co., known as Qatargas, operates 14 liquefaction plants in joint ventures between state-owned Qatar Petroleum and foreign partners including Exxon Mobil and Royal Dutch Shell Plc. RasGas can produce 35 million tons of LNG per year; Qatargas, 42 million. Through them and other investments, Qatar’s government owns LNG tankers, stakes in receiving terminals and shares in international gas producers such as Shell and BG Group Plc.

With its control over production, liquefaction, transportation and import terminals, Qatar was able to move cargoes from Europe to Asia where LNG rates surged in 2011 after Japan switched off its nuclear power stations following the Fukushima disaster.

Amid today’s lower prices, buyers locked into multi-year contracts of the type Qatar prefers are trying to negotiate for cheaper gas. Petronet bargained with RasGas for a discount of almost 50 percent, an achievement other buyers may try to emulate, Credit Suisse Group AG said in a Dec. 9 note.

“We are aware of the market change,” RasGas’s Ibrahim said. “We are in a good position. Nobody can compete with us.”




Libya Issues `Cry for Help' as Terrorist State Attacks Oil Tanks Bloomberg - Hatem Mohareb

Libya’s National Oil Corp. issued a “cry for help” as Terrorist State militants attacked a second oil tank in the region of Es Sider, the country’s biggest oil port which has been closed for more than a year. Two members of the Petroleum Facilities Guard were killed and 16 others wounded in clashes with Terrorist State militants west of Es Sider oil port, guards spokesman Ali al-Hasy said by phone. The militants attacked an oil tank in Es Sider, setting it on fire, according to a statement on the NOC website. Terrorist State had shelled a tank in the nearby Ras Lanuf oil terminal region on Monday during a clash with the guards.

“We are helpless and not being able to do anything against this deliberate destruction to the oil installations” in Es Sider and the nearby Ras Lanuf oil terminals, NOC said. “National Oil Corporation urges all faithful and honorable people of this homeland to hurry to rescue what is left from our resources before it is too late.”

Terrorist State militants previously tried to attack Es Sider in October, killing one guard, but were repelled at the gate of the terminal by the petroleum guards. Es Sider and Ras Lanuf terminals have been closed to oil exports since force majeure was declared in December 2014 when armed groups attacked the ports. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

Libya, with Africa’s largest oil reserves, pumped about 1.6 million barrels a day of crude before the 2011 rebellion that ended Moammar Al Qaddafi’s 42-year rule. It’s now the smallest producer in the Organization of Petroleum Exporting Countries, producing 370,000 barrels a day in December, data compiled by Bloomberg show.




Norway initiates feasibility study on subsea CO2 storage Source: Ministry of Petroleum and Energy

On Monday, Norway's Ministry of Petroleum and Energy signed an agreement with Statoil on a feasibility study regarding CO2 storage on the Norwegian Continental Shelf (NCS). The study will include various development concepts for storing CO2 at three different locations on the NCS. The study is to be completed by 1 June 2016 and is budgeted at about NOK 35 million (USD 4 mill.).

'Carbon capture and storage (CCS) will be an important measure in order to mitigate climate change and meet the emission targets under the Paris Agreement. We are pleased that we have reached an agreement with Statoil on conducting a feasibility study regarding CO2 storage. After nearly 20 years of experience with such storage from the Sleipner field, Statoil is well equipped for conducting these studies,' says Minister of Petroleum and Energy, Tord Lien.

The Norwegian Government's strategy on CCS contains a broad range of activities aimed at developing technologies for capturing, transporting and storing CO2. This feasibility study is an important step in the strategy's actions aimed at developing full-scale CCS.




US: Prices for oil and natural gas commodities fell during ’15 Source: Bloomberg L.P.

The energy component of the widely followed S&P Goldman Sachs Commodity Index (GSCI) fell 41% from the start of 2015, a larger decline than the industrial metals, grains, and precious metals components, which declined 24%, 19%, and 11%, respectively, in 2015. Weakness in global economic growth contributed to the overall decline in commodity markets in 2015, but unique supply-side factors within certain commodity markets also affected prices.

Each of the 16 commodities in the S&P GSCI Energy, Grains, Industrial Metals, and Precious Metals indices declined in 2015, with prices of some of the energy commodities falling more than 30%. Nickel, diesel, and crude oil had the largest price declines among the 16 commodities in the four S&P GSCI indices, while lead, corn, precious metals, and gasoline had relatively smaller price declines. Each commodity in the S&P GSCI is reweighted each year based on the commodity's world production and trading volume to measure its relative importance in the global economy.

Energy. West Texas Intermediate (WTI) and Brent, two of the major crude oil benchmarks, account for about 69% of the weighting in the S&P GSCI Energy index. As a result, the energy index tends to follow major price movements in the crude oil market. With sustained, high crude oil production from countries like Saudi Arabia, Iraq, the United States, and Russia, global liquid fuel inventories rose significantly in 2015, resulting in crude oil prices falling to 11-year lows in December.

Petroleum-based products such as reformulated gasoline blendstock for oxygenate blending (RBOB), ultra-low sulfur diesel (ULSD), and gasoil together comprise 27% of the S&P GSCI Energy index. RBOB not only had the lowest price decline of all energy commodities, but it also declined less than many nonenergy commodities because of increased gasoline consumption in the United States and in other countries. In contrast, gasoil and ULSD had the largest price declines of the energy commodities as a result of rising U.S. and global distillate inventories along with lower economic growth in emerging markets.




Natural gas accounts for the remaining 4% of the S&P GSCI Energy index, and in 2015, natural gas futures prices declined to the lowest level in 16 years in mid-December because of increased production and record-high inventory levels.

Grains. The S&P GSCI Grains index includes wheat, corn, and soybeans, with wheat accounting for close to 40% of the index. In late June through July, prices for all three grains rose significantly as adverse weather conditions affected planting and harvesting of grains in parts of the U.S. Midwest.

In June, the U.S. Department of Agriculture (USDA) released a quarterly report that showed lower-than-expected corn and soybean inventories as of June 1. However, as harvesting began, updated projections by the USDA for production and inventories of grains were higher than expected, pushing down prices in the second half of 2015.

Metals. Copper and aluminum make up more than three-quarters of the S&P GSCI Industrial Metals index, with zinc, nickel, and lead making up the remainder. The prices of industrial metals were affected by declining activity in China's manufacturing sector along with the economic slowdown of many developed and emerging markets. Nickel had the largest price decline of all the major S&P GSCI commodities because of lower-than-expected demand for stainless steel from countries like China.

The S&P GSCI Precious Metals index is composed of gold and silver, with gold accounting for almost 80% of the index. Growth in the U.S. economy, the strengthening of the U.S. dollar, and the expectations of a rise in the U.S. federal funds rate, which the U.S. Federal Reserve officially voted to increase on December 16, likely contributed to lower precious metal prices.




Average US N.Gas spot price in 2015 @ lowest level since 1999 Source: U.S. Energy Information Administration, based on Natural Gas Intelligence Natural gas spot prices in 2015 at the Henry Hub in Louisiana, a national benchmark, averaged $2.61 per million British thermal unit (MMBtu), the lowest annual average level since 1999. Daily prices fell below $2/MMBtu this year for the first time since 2012.

Henry Hub spot prices began the year relatively low and fell throughout 2015, as production and storage inventories hit record levels and fourth-quarter temperatures were much warmer than normal.

Natural gas prices at key regional trading hubs ended the year lower than their starting point. At northeastern locations, where natural gas transmission infrastructure is often constrained, prices spiked in the early months of 2015, which were colder than normal compared to much of the United States.

Prices at the Algonquin Citygate, which serves Boston, and at Transcontinental Pipeline's Zone 6, which serves New York City, began the year much higher than the Henry Hub spot prices in early 2015, but then fell below the national benchmark for much of the rest of the year. The annual average spot price at Henry Hub of $2.61/MMBtu was $1.78/MMBtu, or 41%, lower than the 2014 average.

Despite declining prices, total natural gas production, measured in terms of dry gas volume, averaged an estimated 74.9 billion cubic feet per day (Bcf/d) in 2015, 6.3% greater than in 2014. This increase occurred even as the number of natural gas-directed drilling rigs decreased.

As of December 18, there were 168 natural gas-directed rigs in operation, only about half the number of rigs at the beginning of 2015, according to data from Baker Hughes Inc. However, the remaining rigs are among the most productive, and producers have continued to make gains in drilling efficiency.




Low prices and strong production led to increase use of natural gas for electric power generation, which is projected to be about 26.5 Bcf/d in 2015, exceeding the 24.9 Bcf/d level in 2012. Natural gas surpassed coal as the leading source of electricity generation on a monthly basis for the first time in April, and again in each of the four months from July through October.

In the residential and commercial sectors, which use natural gas primarily for heating, consumption in 2015 declined 6.7% and 4.4%, respectively, from the previous year largely because of warmer weather. Natural gas consumption in the residential and commercial sectors was particularly high in 2014 because of cold temperatures in the first and fourth quarters.




Although 2015 had a cold start, temperatures in the fourth quarter were warmer than normal throughout most of the United States.

Growth in production also allowed for strong builds in working natural gas inventory. Inventories surpassed 4,000 Bcf for the first time, reaching 4,009 Bcf in the week ending November 20.

With much of the growth in natural gas production in the Marcellus and Utica shale regions in the Midwest, several major pipeline projects came online in 2015 to transport natural gas from these plays to consumers. In August 2015, the Rockies Express Pipeline (REX) reversal was completed.

REX, one of the longest natural gas pipelines in the United States, began service in 2009 to bring Rockies gas eastward. As Marcellus production increased, however, demand in the East for natural gas produced in the Rockies declined.

The REX reversal added westbound capacity to enable the transport of natural gas produced in the Marcellus and Utica Shale regions to consuming markets in the Midwest. Several other new pipeline projects began to take natural gas produced in the Marcellus and Utica regions to consumer areas on the East Coast, Midwest, and Gulf Coast area.




NewBase 06 January 2016 Khaled Al Awadi

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

Oil prices edge higher after dropping to near 11-year lows Reuter + NewBase

Oil prices edged higher on Wednesday, rebounding from near 11-year lows in the previous session as concerns over growing supply and rising stock levels outweighed tensions between key Middle East producers.

A rift between Saudi Arabia and Iran over the Saudi execution of a Shi'ite cleric failed to boost prices this week, as it appeared to put an end to speculation that OPEC members could agree production cuts to lift prices.

U.S. crude for February delivery was 19 cents higher at $36.16 a barrel at 0124 GMT, after slipping 79 cents in the previous session. Brent crude prices were up 18 cents at $36.60 a barrel, after closing down 80 cents.

"Geopolitical tension presents the greatest upside risk to the crude market, at least through the first half of the year," said Matt Smith, an analyst for energy database Clipper Data. Still, a senior Iranian oil official said the country could moderate oil output and exports once Western sanctions are lifted to avoid putting prices under further pressure.

"We don't want to start a sort of a price war," Mohsen Qamsari, director general for international affairs of the National Iranian Oil Company (NIOC), told Reuters in an interview. "We will be more subtle in our approach and may gradually increase output," Qamsari said.

"I have to say that there is no room to push prices down any further, given the level where they are." Saudi Arabia-Iran tensions won't hit oil exports:Analyst

Oil price special

coverage




Gartman’s contrarian crude call CNBC - Leanne Miller

Saudi Arabia's decision to cut diplomatic ties with Iran sent oil on a wild ride to start the week.

Crude closed in the red Monday after surging 3 percent at one point — but one widely followed commodities watcher says despite the big moves, oil is likely to trade in a very tight trading range for the rest of 2016.

"I think we're going to be $4 on either side of $37 for spot WTI," Dennis Gartman told the CNBC "Fast Money" traders on Monday. "$33 is the low. $41 is the high. I think WTI will be happy to spend the next year or so at and around $37 per barrel. This is where we are today."

West Texas Intermediate crude was down 1.4 percent at $36.24 late morning Tuesday. Oil's volatility Monday offered a stark reminder that record-high supply and

continued aggressive production should keep crude prices low — at least in the near term.

"There's still a great deal of oil that's available to us at almost any instant," Gartman said. "There are a lot of wells that have been drilled here in the United States that have been capped that can be brought on stream very, very quickly.

The Strategic Petroleum Reserve is available, the Chinese have an SPR that's getting larger by the day. The tanks in the United States are very filled up. Simply put, there's a lot of crude oil that can come to the market in a moment's notice."

He points to the Permian Basin in Texas, the Bakken in North Dakota and the Marcellus Formation as hot spots for the surplus of oil wells available in the U.S. "The minute oil rallies higher than $40, the hundreds of wells we have ready in the U.S. will open up and the price will come falling back down," Gartman told "Fast Money" producers.

Despite Monday's volatility, he still believes the time to be short of crude has passed but the time to bet bullish is at least one, two or three years ahead of us.

"Boring is good for the economy. Boring is good for the consumer," Gartman said. "And prices a little higher would be beneficial to [oil] producers so I think 'boring' is the watchword for a long period of time."




This Time Mideast Tensions Are Bad News for Oil Bloomberg - Angelina Rascouet

At almost any other time, an escalating diplomatic conflict between OPEC members Iran and Saudi Arabia would mean a spike in oil prices.

That the rally this time couldn’t be sustained shows just how abnormal things are in the oil market. Brent crude is little changed this week as a global supply glut and the slowest Chinese growth in a generation trumped mounting strife between the nations on either side of the world’s busiest waterway for oil tankers.

“When oil supplies were tight, we’ve seen bigger reactions to geopolitical tensions,” Tushar Tarun Bansal, a senior oil analyst in Singapore at industry consultant FGE, said by phone Monday. “Now the price rise has actually been quite muted because the world is in a surplus situation.” There was little more than a blip in crude futures when Saudi Arabia severed diplomatic ties with Iran, as investors focused instead on record stockpiles and rising supply. As Kuwait and the United Arab Emirates lined up to support Riyadh, the internal divisions that prevented the Organization of Petroleum Exporting Countries from making production cuts even as prices plunged to an 11-year low appeared more entrenched than ever. Awash in Oil

Saudi Arabia gave Iran’s ambassador 48 hours to leave after protesters set its embassy in Tehran on fire following the execution of Saudi cleric Nimr al-Nimr, a critic of the kingdom’s treatment of its Shiite minority. It was the worst clash between the nations since the 1980s, adding to proxy wars they were already fighting from Syria to Yemen in a quest to gain influence in the Middle East.




The impact of the tensions is limited because the oil market remains oversupplied, Macquarie Group Ltd. analysts including Vikas Dwivedi said in a note. The events “may severely limit the possibility of peace in surrounding countries, but do not directly threaten crude oil production,” the bank said.

The world is awash in oil after OPEC members led by Saudi Arabiacommitted to a strategy of increasing market share by pressuring high-cost producers, rather than cutting output to support prices. This policy has resulted in record oil inventory levels that will probably keep growing for most of the year, the International Energy Agency said last month. This provides a cushion against any unexpected turmoil.

Eastern Province

Brent, the global benchmark, dropped 0.2 percent on Monday, erasing a gain of as much as 4.6 percent. Futures for February settlement fell another 0.2 percent to $37.16 a barrel at 11:47 a.m. on the London-based ICE Futures Europe exchange Tuesday.

Should violence break out in the Eastern province of Saudi Arabia, home to most of its Shiite community and its richest oil fields, the impact on prices could be more significant, according to Alexandre Andlauer, an oil analyst at AlphaValue SAS in Paris.

“The Saudis will move quickly to quash any violence, but the question will be whether they can keep any protests from flaring out of control,” Andlauer said Monday.

OPEC Divide

The dispute entrenches the biggest bearish factor in the oil market in the past year -- OPEC’s decision to keep pumping amid falling prices.

Saudi Arabia and Iran are the largest and fifth-biggest producers in OPEC, respectively. Their worsening relations make it even less likely the group could overcome internal differences and agree to an oil-output cut to boost prices, Macquarie said.

Last month, OPEC effectively abandoned any limits on output and boosted production, according to a Bloomberg survey. The group would need to reach a consensus before making any change of policy that could reduce the glut.

While Iran is set to boost to oil production as sanctions on its nuclear program are lifted this year, it has called on other OPEC members to cut output. This is opposed by Saudi Arabia and its Gulf allies.

The U.A.E. reduced its representation to Iran, while Kuwait said it backed “all measures adopted by Saudi Arabia to maintain its security and stability,” according to an unnamed Foreign Ministry official cited by the KUNA news agency.

“When you see an escalation of this sort -- which is sectarian in nature and involves the broader OPEC group -- it just makes things even more difficult,” Virendra Chauhan, a Singapore-based oil analyst at consultant Energy Aspects Ltd., said by phone. The organization is now “less likely to come to some kind of broader output cut,” he said.




NewBase Special Coverage

News Agencies News Release 06 January 2016

Could this be the year for oil takeovers? Kalyeena Makortoff |

Low oil prices could spur further mergers and acquisitions (M&A) across the oil and gas sector in 2016, analysts told CNBC.

Speaking to CNBC on Tuesday, Karri Vuori, head of M&A at Panmure Gordon said that alongside healthcare and advertising technology, oil and gas is one of the top sectors to watch in terms of M&A deals this year.

"The juniors can't support their asset bases anymore, their balance sheets aren't looking very strong," Vuori said.

It comes as oil prices continue to fall amid a supply glut that has shaken energy firms across the globe. Brent crude prices are down over 33 percent over the past 12 months and were sitting around $37.17 per barrel by mid-day London trade. U.S. benchmark WTI prices are close behind, down

over 30 percent over the past 12 months, near $36.75 per barrel.

Most companies were able to hold out through the price troughs of 2015, Jefferies equity analyst Jason Gammel said, but 2016 could set the backdrop for further acquisitions by year-end. "Smaller companies have been able to maintain balance sheet flexibility, but this could erode," Gammel told CNBC in a phone interview.

But the first three months of the year could be the biggest hurdle for the small companies to clear, Abhishek Deshpande, an oil markets analyst at Natixis, explained. Whereas many companies might have been able to extend their credit lines back in October, the extended oil price rout has added pressure onto firms who were already struggling.

"Particularly with oil prices hitting lows at some point in the first quarter...lots of sub investment-grade firms could be under a lot of stress, and for those with stronger balance sheets, those companies could take this as an opportunity to buy and acquire assets," Deshpande said in a phone interview. Deshpande forecast Brent prices will stay around $39 per barrel in the first quarter, but with prices rising to $56 by the end of the year, to average around $47.80 for 2016.

"You should see a lot of these companies under pressure in 2016," Deshpande said.




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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 06 January 2016 K. Al Awadi




New base 763 special 06 january 2016

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