NewBase Special 01 March 2015

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NewBase 01 March 2015 - Issue No. 550 Khaled Al Awadi

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




Oman: BP Oman project to support 32 entrepreneurs BYTIMES of Oman

Khazzan growth finance project will provide 32 entrepreneurs with business mentorship for twomonths at Falaj Daris Hotel in Nizwa, as part of BP Oman's social investment programme. The programme, which officially started this week, aims to empower local entrepreneurs and small

and medium enterprises (SMEs)sector as a part of BP Oman'scommitment to developing Oman's InCountry Value (ICV). The project ismanaged by implementing partnersSharakah. Abdullah Al Jufaili, general manager ofSharakah, said, "The Khazzan growthfinance project is the flagship of the BPOman enterprise developmentprojects. Thirty-two candidates fromthe governorates of Al Dakhiliya and Al

Dhahirah will undergo extensive two- to three-month entrepreneurship training By the end of the programme, each of them will have a complete business plan focused on thefinancial aspects of the business, a brand for the company, social media accounts and emailservices. Further, 22 candidates will be awarded OMR5,000 grant from BP Oman to set up thebusiness. Inspired Solutions, an SME consultancy in Oman and the project's associate implementingpartner, have worked on selecting, training, evaluating and now mentoring a segment ofentrepreneurs in Oman, with a particular emphasis on the Al Dakhiliyah and Al Dhahirah regions. William R. Crew, chief executive officer of Inspired Solutions, said, "Inspired Solutions is excited tobe able to bring world class MBA style entrepreneur training to the small business owners of theAl Dakhiliyah and Al Dhahirah areas. The trainees are from all sectors and all ages. We are veryimpressed to see the level of motivation which we see in these areas." The first phase of the project included the application and community outreach in Nizwa and Ibri,which registered 140 people from across Al Dhakhiliyah and Al Dhahirah. The second phasenarrowed down 45 of the top eligible candidates that were interviewed. Now in their third phase,Inspired Solutions will conduct training workshops for the entrepreneurs The participating entrepreneurs in the project have been in business for approximately 36 monthsand are therefore classified as a start-up. According to Crew, this stage is a very sensitive time inthe life cycle of small businesses as most fail within 60 months. Inspired Solutions will offertraining in all aspects of small business management, including the business plan and associatedfinancial statements for all successful graduates. Inspired Solutions is an expert in the design and management of SME accelerators in Oman. Inaddition to managing SME accelerators since 2012, they have provided management consultancyto the SAS and NBC incubators in KOM. Inspired Solutions is also engaged by banks in Omanand the Middle East to provide consultancy to their SME credit and sales departments




ExxonMobil says Russia sanctions could cost it $1 b AFP + NewBase

ExxonMobil said Thursday that US and European Union sanctions against Russia could cost the US oil giant as much as $1 billion.

Exxon “wound down” last year a number of prohibited joint venture activities with Russian oil major Rosneft in the Black Sea, Arctic regions and onshore western Siberia, the company said in its annual report to regulators.

The “maximum exposure to loss” from these joint ventures was $1 billion at the end of 2014, the report said. US sanctions targeted Rosneft, as well as Rosneft president Igor Sechin, a confidant of Russian President Vladimir Putin. The sanctions included a ban on providing certain oil equipment and services, such as for drilling in offshore projects in deep water, in the Arctic, or in shale well drilling.

The US and EU imposed the sanctions over the conflict in Ukraine, accusing Moscow of backing the separatists fighting Kiev government troops in the country’s industrial east. Exxon was forced to abandon its joint venture with Rosneft for exploration drilling in the Kara Sea, off northern Siberia, an area estimated to hold 87 billion barrels of oil.

Rosneft announced in September it had discovered oil in the Kara project. Elsewhere in the annual report, Exxon characterised the big drop in oil prices in 2014 as typical of the energy market, which has “a history of significant price volatility.”

The company cited projections that global oil demand will rise about 30 per cent between 2010 and 2040. Shares of Dow member Exxon were down 1.0 per cent in midday trade on the New York Stock Exchange.




US:Tells Canada Its Climate Goal May Play Keystone Role Bloomberg + NewBase U.S. climate negotiators have told their Canadian counterparts that Canada’s plan to cut carbon emissions could be one of the factors that President Barack Obama weighs as he considers whether to approve the Keystone XL pipeline, a U.S. official said.

The U.S. hasn’t suggested it might approve the $8 billion proposed project in exchange for climate commitments, the official said. Canada is developing a proposal as part of United Nations-sponsored talks aimed at cutting carbon emissions that governments were encouraged to submit by next month.

The notion that there’s any linkage between Canada’s UN goals and the president’s decision on the pipeline is patently false, said another U.S official familiar with the issue. There is a longstanding process for determining these projects, and the State Department is currently conducting that review, the official added.

Obama has secured climate concessions from China and India as part of those UN talks. A similar deal with Canada could help offset the anticipated environmental damage from the TransCanada Corp. pipeline, responding to project opponents.

White House Press Secretary Josh Earnest said Tuesday that Obama could approve the oil pipeline even though he vetoed a Republican bill that would have circumvented the review process that’s been underway for six years.




Harper Offer

Canadian Prime Minister Stephen Harper offered in 2013 to cut greenhouse-gas emissions to win approval of the Canada-to-U.S. pipeline, according to a person familiar with the matter. In December, Harper said it would be “crazy” for his government to unilaterally introduce rules to cut greenhouse-gas emissions from the oil and gas industry as oil prices fall.

Gary Doer, Canada’s ambassador to the U.S., said Canada is open to a joint deal with the U.S. to reduce carbon dioxide emissions, but he doesn’t know of any suggestion that Keystone approval is conditional on such an agreement.

“We can’t do it as a quid pro quo on Keystone,” Doer said. “We don’t think that Keystone is a climate issue.”

Asked about the discussions with the U.S., Christopher McCluskey, spokesman for Canadian Resource Minister Greg Rickford, said his nation will work with other governments on a “fair, effective” deal covering emissions from all nations, including the U.S.

“This is not a debate between Canada and the U.S.; it’s a debate between the president and the American people, who are supportive of the project,” McCluskey said. “The environmentally responsible choice is for Keystone XL to be approved on its merits.”




Carbon Emissions

American and Canadian environmental and diplomatic officials have long been in discussion over the commitment Canada will make as part of a UN climate accord to be negotiated in Paris this year, said the U.S. official with knowledge of the ongoing talks who requested anonymity to discuss international diplomacy.

The U.S. official said the issue of Canada’s carbon reductions arose but wasn’t the dominant theme of a meeting among Secretary of State John Kerry, Canada’s Minister Foreign Affairs John Baird and Mexican Foreign Secretary Jose Antonio Meade in Boston on Jan. 30.

Aspects of the discussions were described by three U.S. officials. One official said the meetings between the U.S. and Canada have been confined to technical advice similar to what the U.S. is providing other nations.

‘Safely Build’

“Ultimately it is up to elected officials to decide what agreements to negotiate and what policies to adopt,” said TransCanada spokesman Shawn Howard. “Our job is to safely build and operate energy infrastructure and that is what we are focused on.”

Depending on its nature and scope, Canada’s contribution to a global goal could become a factor in Obama’s decision on the Keystone pipeline, the U.S. official said, while stressing that it’s up to the Canadian government, not bilateral negotiations, to decide that.

Obama has said he wouldn’t approve Keystone, which would carry oil sands from Alberta into the U.S., if it would significantly add to the carbon pollution scientists link to global warming.

Raised Goal

Meeting new climate goals would be difficult for Canada, which is already likely to miss a pledge it made along with the U.S. to cut emissions by 17 percent by 2020.

The U.S. has since raised its goal to a 26 percent to 28 percent emissions reduction by 2025 from 2005 levels, in a bilateral deal with China.

A Keystone trade wouldn’t make the task any easier, said Jake Schmidt, director of climate policy at the Natural Resources Defense Council, an advocacy group.

“If Canada was serious about its climate targets it would have to deal with its single biggest source of emissions, tar sands,” Schmidt said in a telephone interview. “It’s sort of ‘fool me once.’ Canada is

not going to meet its current target; why should we expect this administration to meet its next target in exchange for Keystone XL?”




The 20 Fastest-Growing Economies in Year 2015 by Joshua Robinson

Emerging markets in Asia and Africa still reign supreme: They're at the top of global growth projections over the next two years.

The world is expected to grow 3.2 percent in 2015 and 3.7 percent next year after expanding 3.3 percent in each of the past two years, according to a Bloomberg survey of economists. China, the Philippines, Kenya, India and Indonesia, which together make up about 16 percent of global gross domestic product, are all forecast to grow more than 5 percent in 2015.

By comparison, the U.S. and U.K., which combined account for about a quarter of global growth, are expected to grow 3.1 percent and 2.6 percent this year, respectively. The euro area probably will expand just 1.2 percent as European Central Bank President Mario Draghi deals with a fragile Greece and embarks on a bond-purchase program to stimulate the region's growth.




China still remains the fastest-growing G-20 nation, even though the Asian economy is no longer expanding at the pace it did a few years ago. China's economy grew 7.3 percent in the fourth quarter of 2014 from a year earlier, and is expected to slow to 7 percent in 2015.

To counter that slowdown, People's Bank of China policy makers are boosting monetary stimulus. The central bank cut its benchmark interest rate in November for the first time since 2012. This month officials lowered by 50 basis points the deposit reserve ratio, which is the amount of reserves that banks need to keep on hand.

Nigeria, Africa's largest economy, is projected to expand 4.9 percent this year, according to the Bloomberg survey. Kenya will probably grow 6 percent in 2015, even as unemployment and poverty remain stubbornly high, with over 40 percent of Kenyans living below the poverty line.

U.S. growth forecasts for 2015 are coalescing around 3 percent even as the dollar soars to its highest level in more than a decade. As growth picks up, the Federal Reserve is weighing whether to raise interest rates for the first time since 2006. Their benchmark federal funds rate has remained near zero since December 2008.




Oil Price Drop Special Coverage

Oil up sharply; posts first monthly gain since June Reuters + NewBase Crude oil rose sharply on Friday as Brent and US futures posted their first monthly gains since June, supported by an improving demand outlook and supply outages. On its way to contract expiration, March New York ultra-low sulfur diesel (ULSD) gained more than 7 per cent in volatile trading, and the 36 per cent February increase was the biggest percentage monthly rise in 15 years.

Brent crude rose $2.53 to $62.58 a barrel. February's 18 per cent gain was the biggest monthly percentage rise since May 2009. US crude rose $1.59 to settle at $49.76, managing a 3.1 per cent February gain. Both Brent and US futures briefly pared gains after Baker Hughes Inc data showed its US oil drilling rig count fell only 33 to 986 this week. US crude gains have been curbed by rising crude oil inventories in the United States, up 8.4 million barrels last week, according to government data. Money managers cut their net long US crude futures and options positions in the week to Feb. 24, the US Commodity Futures Trading Commission (CFTC) said Friday. Both contracts have been supported by signs that lower prices are starting to reduce investment in non-OPEC production, even as the US rig count slide slows. Brent's more pronounced February gains have been fueled by disruptions to production and exports from Libya and Iraq. "The main event this week has been the widening of the spread between Brent and WTI (US crude)," said Ole Hansen, senior commodity strategist at Saxo Bank. The spread between Brent




and US crude was as wide as $13 a barrel on Friday, the highest Brent premium since January 2014. Brent has also received support from strong US refined products futures. "Cold weather and refinery problems and tight supplies on the East Coast have helped make the ULSD contract the most sensitive part of the oil sector," said Robert Yawger, director for energy futures at Mizuho Securities USA in New York. March ULSD rose 16.31 cents to settle at $2.2989 a gallon, after reaching $2.3325, a 2015 peak and the highest since November. March's premium to April ULSD swung from 22.35 cents a gallon to 37.69 cents on Friday. March RBOB gasoline rose 6 cents to settle at $1.7676 a gallon, going off the board above RBOB's 100-day moving average of $1.7658. Both products posted the first monthly gains since June.

Oil market price stability looming on the horizon Syed Rashid Husain + NewBase

In his ‘first public comments’ since December, Saudi Oil Minister Ali Al-Naimi insisted last Wednesday that the oil market had become “calm”, chiding those who would rock the markets. “Why do you want to rock the markets? The markets are calm… demand is growing,” Naimi told reporters on the sidelines of a conference in Jazan. Many took this as a cue that Riyadh was satisfied with the current state of the oil markets and that Saudi Arabia has won the first round of the ongoing tussle for market share. A day earlier, a senior Gulf OPEC delegate too had conceded that oil prices had started to stabilize around current levels - effectively dropping a price anchor at $60 a barrel. The comments came as Brent markets continued to hover at around $60 a barrel and the demand scenario is beginning to look healthier. Several reports last week underlined growing oil demand, a WSJ report said. Energy Aspects, a research consultancy, estimated that global demand for crude reached a record high of 94 million barrels a day in December. This was growth at its quickest pace in 18 months, representing a year-on-year growth of 2.2 million barrels a day. The report projected the trend to continue throughout the year forecasting 1 million barrels a day growth in 2015. On the retail side, cheaper crude seems to be aiding gasoline demand, said JBC Energy. Gasoline demand in the US alone grew by almost 500,000 barrels a day in January. While this is likely due to drivers reaping the rewards of cheaper pump prices, JBC said the current pricing environment is also beginning to shape longer-term driving habits. According to Autodata, sales of light trucks and SUVs grew by 19.3% over the year in January, representing 54% of the sales mix, while passenger cars grew at a more modest 7.7%. With US drillers idling rigs at a record pace, gutting investment plans and laying off thousands of workers, the rebound is vindicating the Saudi insistence on OPEC not to cut output at its November 27 meeting, many are now asserting. “OPEC giving up on trying to control the price is working,” Francisco Blanch, head of commodities research at Bank of America Corp. in New York told Bloomberg. “It is having the effect that we would expect, which is a decline in investment and ultimately supply, and somewhat higher demand.”




“The Saudis are saying – look, everything is happening the way it needs to happen. Others are cutting capex, production growth is slowing and low prices are stimulating demand,” Yasser Elguindi from Medley Global Advisors told Reuters. The US Energy Information Administration reduced its 2015 US crude production forecast to 9.3 million barrels a day in February from 9.42 million in November. The EIA projects output will fall in the third quarter for the first time in four years. “OPEC’s long-game strategy is on track,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA told Bloomberg. “It’s suffering short-term financial pain for long-term gain.” “After the OPEC (November) meeting... we had the oil ministers of Saudi Arabia, Kuwait and the UAE going to the newswires to talk the market down. They did like to talk oil then and (Naimi’s current remarks) is probably another indication that they have reached their objective,” Olivier Jakob from Petromatrix consultancy was quoted as saying. He, however, added that another big unknown was the ongoing nuclear talks between the West and Iran, which could lead to a softening of sanctions against Tehran and a potential release of as much as 1 million barrels per day of additional oil to the market. “Any nuclear deal will reopen the gates of speculation about the role of OPEC and its place in the current oil market,” Jakob emphasized. Shale oil producers are feeling threatened. They are throttling back so quickly on drilling that US crude output could fall sooner than expected, within months, industry executives are beginning to feel. Industry executives are acknowledging they were taken aback by the scale and speed of the cutbacks, noting how this oil price downturn was different from several previous episodes in their careers. “The thing that has surprised me ... is that companies large and small, financially strong, financially weak have really cut capital spending much quicker than I have seen before,” Bruce Vincent, who retired as CEO of Swift Energy Co this month after 40 years in the industry told Reuters. Just few weeks ago, the prevailing view among industry insiders and analysts was that US oil production would keep rising for several months despite falling rig numbers because of rising productivity of active wells and drilling inertia. In the past, if a producer had a rig contract, they would continue drilling. Now, producers are paying fees to break those contracts, a fact that has hastened the steep drop in the rig count, said Vincent. Already, many companies have announced 25-70 percent reductions in drilling and a total of at least $25 billion in spending cuts. Magnum Hunter Resources Corp has halted all drilling and told services firms it will not resume work unless its costs fall 40 percent, the company’s Chief Executive Gary Evans told a conference in Houston.




Such pullback, combined with shale well decline rates of some 60 percent or more a year, has Evans predicting US production will begin falling “in the next two months.” On its fourth-quarter earnings call, Devon Energy Corp. said it had cut its completion crews working in the Eagle Ford oil basin to four from nine, while Anadarko Petroleum said it reduced its completion crews by a third. After years of breakneck growth, top shale companies Apache Corp and EOG Resources have said their oil and gas output this year will be flat. Large oil firms too have announced cuts in capital spending of over 20% for this year. BP, for example, will spend $20 billion in capital projects in 2015, compared with $23 billion in 2014. Producers who had grown accustomed to oil at $100 a barrel say they aim to cut costs to profitably drill shale wells at $40 a barrel or less. That is well below the $70 now needed to work in some basins and less than current US benchmark crude prices of about $51 a barrel. Assuming that many drilling contracts will be carried out, the US Energy Information Administration (EIA) still sees output climbing early this year to peak at 9.42 million barrels per day in May, with a decline starting in June. After nearly doubling since 2008, US crude production should stabilize, though not necessarily decline, in the second half of this year, analysts at IHS say. New discoveries too are down even more steeply. According to IHS, new finds of oil and gas were the equivalent of 16 billion barrels last year, the lowest for 60 years. Markets are closing on a new demand - supply equilibrium. OPEC can boast of an upper hand in this round, one can’t deny. And although professionally hazardous - yet one could now say with some conviction - crude market prices could well stabilize somewhere around the current level.

Crude prices 'set to rise in second half' Reuters + NewBase

Oil prices have probably touched bottom and should recover in the second half of 2015 as the collapse in the market over the last year begins to curb production, a survey of analysts showed yesterday. Oversupply is likely to keep a lid on oil over the next few months, and prices could retreat a little in the short term, the 34 economists and analysts contributing to this month's Reuters poll said. But the market ought to see sustained rallies later this year, bringing North Sea Brent crude futures to an average of $59 a barrel in 2015 and to $71.80 in 2016. Last month, the oil price poll showed its biggest month-on-month downward revision since the 2008 financial crisis, projecting Brent at $58.30 this year, its fifth successive monthly drop. Brent crashed from a high above $115 a barrel last June to almost $45 last month and has since regained ground to trade at or slightly above $60 this week. Brent has averaged $53.72 so far this year. Sentiment has stabilised over the last month, with evidence week by week that oil exploration and production are responding to the dramatic collapse in prices. Fewer drilling rigs in the US should eventually mean lower output.




"Oil prices have bottomed out and they will stabilise in the next few months before rising in the second half," said Italian bank Intesa Sanpaolo analyst Daniela Corsini. Twenty-three of the 31 analysts who contributed to both the January and February polls retained their forecasts from last month, but eight increased their outlook. Analysts agreed that a slowdown in non-Opec production, led by US shale producers, and unrest in the Middle East and North Africa, particularly Iraq, would support prices this year. But several said a recent rally in prices had been overdone. "The price surge since late January is exaggerated and will be reversed in the upcoming weeks as the oil market remains oversupplied," Commerzbank analyst Carsten Fritsch said. The poll forecasts US light crude, or WTI, will average $54.50 a barrel this year and $66.90 in 2016. WTI has averaged $48.93 a barrel so far in 2015. Brent's premium to US crude, known as the Brent-WTI spread, is expected to average $4.50 a barrel in 2015 from around $4.63 so far this year, the poll showed. The survey shows output from the Organisation of the Petroleum Exporting Countries has fallen by 350,000 barrels per day (bpd) in February, below its target of 30 million bpd. Opec at a meeting on November 27 agreed to retain that target for the first half of 2015 despite oversupply, a change of strategy aimed at defending market share rather than supporting prices.-

U.S. Oil Rigs Get Hammered for the 12th Week U.S. oil rigs declined for the 12th straight week despite still-rising levels of production. Drillers idled 33 oil rigs (excluding gas rigs), dropping the number to 986, Baker Hughes reported on Friday. The rig count is down 39 percent since October, an unprecedented retreat.

The Baker Hughes rig count has been around since 1944, but only since the price crash last year has it has emerged as a widely popular, though controversial, signal for U.S. oil watchers. Rigs

are used to explore for new deposits and to drill new wells. The theory goes that when oil rigs decline, fewer wells are drilled, less new oil is discovered, and oil production slows. That would be good news for investors hoping for a rise in crude prices after the oil crash.

But production isn't slowing yet, and new efficiencies in U.S. drilling and pumping may make raw numbers of

rigs in the field misleading. The U.S. will pump 9.3 million barrels a day this year, the most since 1972, despite the fewest rigs in the field in almost four years, according to the Energy Information Administration.




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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 01 March 2015 K. Al Awadi







NewBase Special 01 March 2015

Economy & Finance