NewBase 643 special 08 july 2015

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

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

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NewBase 08 July 2015 - Issue No. 643 Senior Editor Eng. Khaled Al Awadi

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

Egypt signs energy import deals with Russia's Rosneft Source: Reuters

Egypt and Russia's top oil producer Rosneft have signed two initial deals for the supply of petroleum products and liquefied natural gas to Cairo, the two sides said on Tuesday. The oil ministry said in a statement the deals include the supply of benzine and bitumen, as well as 24 LNG cargoes for state gas company EGAS over two years starting from the fourth quarter of 2015.

The deals 'will allow Rosneft to access the high growth potential Egyptian gas market and deepen broader cooperation between the two companies,' Rosneft said in a statement on its website. 'In addition, the cooperation withEGAS will allow Rosneft to strengthen its position in the global LNG trading market.'

Rosneft does not produce its own LNG yet but plans to launch production jointly with ExxonMobil after 2018. Under the terms of the agreements, Rosneft also plans to supply Egypt, the most populous Arab country, with liquefied petroleum gas (LPG), a step Rosneft said it hoped would lead to more deals to supply LPG to North Africa.




Morocco: Maxim signs extension to its Reconnaissance Concession on

the Hassi Berkane onshore .. Block, Source: Maxim Resources

Maxim Resources has signed a 6 month extension to its Reconnaissance

Concession Authorization in respect of the Hassi Berkane Block in the Kingdom of Morocco with both theNational Office of Hydrocarbons and Mines

('ONHYM') and theMinistry of Energy, Mines, Water and Environment of

Morocco (MEMWE).

The original Reconnaissance Concession was signed on June 12, 2015. This

extension will give Maxim until January 15, 2016 to complete the work program previously agreed to with ONHYM, which work program is currently underway.

The extension was requested by Maxim in order to complete the existing work commitment and to expand the analysis using ARKeX gravity / aero-magnetic

reinterpretation, attribute analysis of existing seismic data and model input to ARKeX WorldView 2 satellite imagery system.

A Reconnaissance Concession Authorization is required in order to conduct

exploration and review work in Morocco. The work contemplated includes geological,

geochemical and geophysical surveys and geotechnical review of already existing data.

This work is expected to be completed within next 6 months at which point Maxim

will assess the results.

Andrew Male, CEO and President of Maxim

stated; 'Maxim is pleased to receive this extension and we look forward to

completing the additional work being able to move forward with Stage 2 of our

reconnaissance works on Hassi Berkane.'




Dragon Oil shareholders reject Enoc takeover offer as below fair value The National

Emirates National Oil Company’s (Enoc) fight to own Dragon Oil outright hit another bump yesterday when the Dublin-listed explorer’s second-largest minority shareholder argued that the offer is too low. Enoc said, however, that it did not expect the efforts of Dragon Oil’s two largest minority shareholders – the investment funds Baillie Gifford of Edinburgh and Setanta Asset Management of Dublin, which collectively own just more than 10 per cent of the company – to be enough to rally support to block its buyout offer.

In two previous notes to investors, Richard Sneller, Baillie Gifford’s head of emerging markets, argued that Enoc’s offer of 750 pence a share for the 46 per cent of Dragon Oil it did not already own was below “fair value”.He said Enoc’s offer did not recognise the potential to double production at Dragon Oil’s main asset – the Cheleken oil and gasfields off the shores of Turkmenistan – over the next 10 years. Richard Doyle, a Setanta fund manager, voiced a similar opinion. Setanta is Dragon Oil’s second-largest minority shareholder, with about 15 million shares, or 3 per cent of Dragon Oil. “We emphasise both the potential for increased recovery of oil and the strong production from recently-drilled wells at the Cheleken field,” said Mr Doyle yesterday. He said Enoc’s offer did not recognise “the value of its substantial natural gas reserves, for which infrastructure is being developed, and Dragon Oil’s overlooked exploration portfolio”. For instance, in Block 9 in Iraq, where Dragon Oil holds a 30 per cent interest from only two wells, “early results have been better than the comparable early flow rates at Cheleken”, he said.




“We additionally highlight the potential for Dragon to achieve better realisations [prices, that is] on its oil – a much lower discount than that currently achieved through export via Azerbaijan and Russia,” said Mr Doyle. Cheleken reached a production level of about 100,000 barrels of oil equivalent per day last month and Dragon Oil said it was expecting that output level to be maintained this year. Enoc has questioned the analysis of Baillie Gifford and Setanta, saying an independent analysis Dragon Oil commissioned last year found Cheleken had a much more modest production potential. Nevertheless, Baillie Gifford said it wanted Enoc to negotiate a “contingent payment note” that would pay up to an additional £2 per share if Cheleken were to exceed certain production levels in the coming years. But Mr Doyle argued for a simpler solution that pays shareholders extra for cash that Dragon Oil holds currently, as well as the potential production growth. “We believe that the additional value could be more practically shared through simpler means, such as a special dividend, recognising the substantial cash balance of Dragon that belongs to all shareholders,” he said. Investors have until July 30 to accept or reject Enoc’s offer. Neither side could say how Dragon Oil shareholders who have yet to publicly declare their positions might vote. Only GLG Partners, a part of Man Group, and LGM Investments, a unit of Bank of Montreal, have publicly supported the Enoc offer, and they represent less than 2 per cent of shareholders. An Enoc spokesman noted that a large number of recent transactions had been too small to register the owners and speculated that they probably were arbitrageurs looking to turn a quick, small profit between the market price and the offer prices.

“Based on our direct ongoing engagement with Dragon Oil’s shareholders, we are confident that there is significant shareholder support for the full and fair offer of 750 pence to succeed,” said an Enoc spokesman yesterday. Mr Doyle said: “We do not know the outcome of the tender offer. However, it is our understanding that while Enoc

claims to have taken minority shareholders’ views on board, the two largest minority shareholders have publicly questioned the price offered by Enoc to minority shareholders.




Nigeria/Gambia: Erin Energy provides production and operations update for Nigeria and The Gambia . Source: Erin Energy

Erin Energy has provided an update on Oyo field production in Nigeria and an update on its offshore operations in The Gambia. Nigeria Erin Energy’s current average production from the Oyo field is in excess of 14,200 barrels of oil equivalent per day (boe/d) and is 94% oil. The Company is continuing further production optimization efforts on both the Oyo-7 and Oyo-8 wells. The Oyo-7 and Oyo-8 wells are producing into the Floating Production Storage and Offloading vessel ('FPSO'), Armada Perdana, and Erin Energy has scheduled the first lifting from the FPSO for sale of at least 300,000 barrels of crude oil to occur mid-July, with a second lifting scheduled for end-July.

Segun Omidele, Senior Vice President of Exploration and Production commented: 'Since becoming operator in February 2014, we are pleased with the increase in current production from an average of 1,300 boe per day in 2014 to more than 14,000 boe per day today. Drilling these two deepwater wells as 100% owner and operator is a testament of our operational abilities and we are very proud of our team. The cash flow generated by these two wells will contribute to our ongoing exploration and development efforts offshore Nigeria.'

The Gambia The necessary permits for the 3D seismic acquisition have been issued by the government of The Gambia, and the Company expects to commence the acquisition this month. Erin Energy will acquire approx. 1,500 sq kms of 3D data over blocks A2 and A5. Erin Energy’s A2 block is on trend with the recent offshore Senegal oil discoveries, and the Company is in continued discussions with potential farm-in partners on the blocks.




UK: ENERGY SUPPLIERS FACE PRICE CAP AFTER WATCHDOG

FINDS CUSTOMERS OVERCHARGED. REUTERS + GULF NEWS Britain’s largest energy suppliers face a price cap after a competition watchdog found they overcharged households by around £1.2 billion (Dh6.84 billion) each year between 2009 and 2013. Britons have seen energy bills double in the last decade to 1,200 pounds a year, leading to allegations that utilities were cheating them. The utilities have denied this.

Suppliers were acting within the law and not making excessive profits but consumers who failed to switch energy provider were charged too much money, the Competition and Markets Authority (CMA) said on Tuesday in provisional findings from a sector-wide inquiry.

“We are proposing a transitional price cap which would actually protect those who are disengaged and indeed those who are most disadvantaged,” Roger Witcomb, non-executive

director of the CMA, told BBC radio. Britain’s biggest energy supplier, Centrica which owns British Gas, said it had “concerns” about some of the proposals, including the price cap. Its shares traded down 0.9 per cent at 0841 GMT, while rival energy supplier SSE saw its stock fall 1 per cent.

The CMA launched an investigation a year ago into whether Britain’s six largest suppliers, which hold around 90 per cent of the market, were abusing their dominant market position. The companies are SSE, Scottish Power, Centrica, RWE npower, E.ON and EDF Energy. The CMA found these large suppliers’ lowest-priced deals were on average higher than those offered by their smaller competitors. Britain’s independent energy providers include Good Energy, Ovo Energy or Frist Utility.

PRICE CAP Good Energy Chief Executive Juliet Davenport called for more action to encourage consumers to break with suppliers. “What we need now is next steps from the CMA that will enable us to ‘unstick the stickies’, and light touch regulation which helps the consumer,” said Davenport.

A price cap is intended to address these issues and to prevent customers who don’t switch supplier regularly from being automatically moved on to higher-priced tariffs. The CMA said it was now seeking views on the level and duration of the price cap.

Consumer groups said the findings showed the energy market was failing consumers and that more needed to be done to protect them. “We won’t hesitate to take further action where the market is not delivering a fair deal for consumers,” said Britain’s Energy Secretary Amber Rudd.

Prime Minister David Cameron has said he would implement changes to the energy market in line with the findings of the CMA investigation. The utilities escaped the worst-case outcome of the competition probe that could have led to their break-up, a scenario that has weighed on their share price since the start of the investigation, analysts said.

“The CMA’s findings will provide positive clarification that will be helpful to the companies,” said Whitman Howard utilities analyst Angelos Anastasiou. The CMA is obliged to publish its final findings by December 25.




Sub-Sahara Africa booms in oil exploration, natural gas finds Robin DupreSr. Technology Editor ( Offshore )

Sub-Sahara Africa is expected to outpace Russia as a global gas supplier by 2040, encouraging European Union efforts to wean itself off its Russia gas reliance by investing in the region's development.

Driven principally by Mozambique, Nigeria, Angola, and Tanzania, Sub-Saharan Africa will produce about 175 bcm/yr of natural gas by 2040. Sub-Saharan gas production increased from just 7 bcm in 1990 to 58 bcm in 2012, according to the International Energy Agency's Africa Energy Outlook. International Energy Agency Chief Economist Dr. Fatih Birol said there would be a "substantial" amount of new liquefied natural gas (LNG) potential in Sub-Saharan Africa.

"Investment in liquefied natural gas projects could significantly enhance the diversification of gas imports to Europe," he said. "Sub-Saharan Africa will remain a cornerstone of global oil markets while emerging as a major new player in the natural gas markets."

Furthermore, Africa is expected to hold a 15% share of offshore capex over 2015, up 10%, led by developments offshore Angola, according to Catarina Podevyn, content analyst at Infield Systems Ltd. In West Africa, offshore Ghana and Congo will also see increasing expenditure, she added.

"Total's giant, the Egina development offshore Nigeria, is anticipated to be the single most capital intensive project offshore West Africa over 2015, acting to drive down Angola's leading, albeit still dominant, share in the region," Podevyn said.




Tanzania

Statoil hit a string of successes offshore Tanzania with the new gas discovery, bringing the total of in-place volumes up to about 22 tcf in block 2. The Mdalasini-1 exploration well discovered an additional 1.0-1.8 tcf of natural gas in place. Located at a 2,296-m (7,534-ft) water depth at the southernmost edge of the block, it was made in Tertiary and Cretaceous sandstones.

Statoil drilled the Mdalasini-1 well with a 100% working interest. Previously, Statoil and co-venturer ExxonMobil have made seven discoveries in block 2, including the five high-impact gas discoveries Zafarani-1, Lavani-1, Tangawizi-1, Mronge-1 and Piri-1, as well as the discoveries in Lavani-2 and Gilligiliani-1.

Statoil operates the license on block 2 on behalf of Tanzania Petroleum Development Corp. and has a 65% working interest. ExxonMobil Exploration and Production Tanzania Ltd. holds the remaining 35%.

Block 2, offshore Tanzania (Photo courtesy Statoil)

Madagascar Sterling Energy and its partner Pura Vida Mauritius expect to complete the acquisition of a 3D seismic survey offshore Madagascar during 2Q. CGG will acquire 1,250 sq km (482 sq mi) of 3D data over an area of the Ambilobe block deemed prospective at Cretaceous and Tertiary levels following a review of vintage 2D data. Sterling is a partner to ExxonMobil in the Ampasindava block in the Majunga basin offshore Madagascar, where the production-sharing contract is in the third phase of the exploration period. The remaining minimum work commitment is for one exploration well. However, the partnership has decided that a well on the Sifaka prospect at this stage carries too high a technical and commercial risk, with a strong chance of poor reservoir quality and an increased phase risk of gas over oil.




Oil Price Drop Special Coverage

Oil prices fall as China share crisis worsens, outweighs expected U.S. stock draw Reuters + NewBase

Oil futures fell again on Wednesday as worries over the Greek debt crisis and China's stock market turmoil outweighed an expected U.S. inventory drop. China's stocks tanked further on Wednesday in a deepening crisis in which China's Securities Finance Corp said it would provide liquidity to ease "panic", and as over 500 Chinese-listed firms suspended trading.

Front-month U.S. crude futures were down 15 cents at $52.18 per barrel by 0227 GMT. That followed an 8-percent fall between Monday and Tuesday which pulled the contract to levels last seen in April. Brent crude was 13 cents lower at $56.72 a barrel, following an almost 6-percent drop between Monday and Tuesday.

"Volatility in crude oil prices has increased dramatically in July, up by 40 percent in the last six trading days. Funds are contributing to the sell-off, with (U.S.) speculators reducing net-long position in WTI oil by 8 percent in the latest week," ANZ said. Consumer demand in China could stall if the stock market crisis continues, hitting commodity consumption. "The stock market crash doesn't bode well for the (Chinese) economy. If your stock market account is shredded, you won't buy your white goods," said Ed Meir at INTL FCStone. HSBC on Wednesday cut its 2015 growth outlook for Asia excluding Japan to 6.3 percent from 6.5 percent.

"Things aren't exactly going according to plan. The sharp drop in crude prices, policy easing and stabilizing demand ... were supposed to give Asia a little breather over the last couple of quarters. Instead, local demand - whether construction in China, auto sales in Indonesia or real estate transactions in Taiwan - continues to slow," it said.

"Asia's export malaise is not just a temporary blip, but reflects longer-lasting structural factors, with a trade rebound unlikely." Greece's debt crisis has also dragged on commodities. Creditors have given Athens until the end of the week to come up with reform proposals in return for loans that will keep the country from crashing out of the euro. The oil price falls came despite an expected draw in U.S. inventories. A Reuters poll flagged a 700,000-barrel decline in stocks, while the American Petroleum Institute (API) estimated an almost 960,000-barrel drop. Government data will be published on Wednesday.




Despite recent oil rout, don't expect cuts: Analyst Michelle Fox | @MFoxCNBC

Despite the recent rout in oil, don't expect U.S. shale companies to start cutting capital spending or jobs, analyst Mike Kelly said Tuesday. For one, the budgets were set at the end of last year

when oil was around $50 a barrel, he noted.

Plus, the oil exploration and production companies are doing better than expected this year. "They're drilling bigger wells; they're drilling them faster and actually a lot

cheaper than expected, too," the managing director and senior analyst at Global Hunter Securities said in an interview with CNBC's "Power Lunch." In fact, a survey Global Hunter Securities conducted after first-quarter earnings shows that about 50 percent of the 70 companies the firm follows are potentially set to increase their budgets. That was done at a time when

oil was between $55 and $60 a barrel.

"We don't expect major cuts here in most programs going forward. Actually we can expect in second-quarter earnings maybe even hear some guys increasing the budgets," said Kelly. On Tuesday, U.S. crude closed down 20 cents, at $52.33 a barrel, after falling almost $2 at the session low. Brent crude, on the other hand, rose 43 cents to $57 a barrel.

U.S. crude has lost almost 10 percent since Thursday's close for the sharpest two-day fall since 2011. It is teetering toward a bear market technically, having lost almost 20 percent from a high above $62 just a month ago.

When it comes to investing, Kelly pointed out that not all oil plays are created equal. "You are going to see the guys with really high-quality acreage positions, those that are in the core of the Eagle Ford, or the Permian or even the core of the Bakken be able to really press on here."

One name he likes is Gulfport Energy, which is down about 13 percent in the past month. He called its downturn a "pretty big opportunity," noting it is "one of the best drill stories out there." The name is commonly mistaken for a play on oil but it is really a gas-weighted name in the best gas basin in the country, he said.

Supply-demand balance issue

Meanwhile, a nuclear deal with Iran may also weigh on the oil market, said Ed Morse, head of commodities research for Citigroup. A deal would bring more of the country's crude into an already oversupplied market. However, Morse said the impact really depends on how much oil Iran releases and how quickly.

"The question is will the Iranians surprise the market by agreeing to and implementing the sanctions relief that they need to do and instead of there being a six-month wait between an agreement and more oil, it's shorted to maybe even two months," Morse told "Power Lunch."

However, he believes Iran's claim of being able to add 1 million barrels a day into the market is overstated. He thinks it is probably more in the range of 300,000 to 500,000 barrels a day in incremental crude that could be added to the market.

"Whether that is really bearish or just another input in the database is really a function of where other producers are going," said Morse, noting that both Saudi Arabia and Iraq have indicated they are going to increase production. "It's a supply-demand balance issue. A million would really dump the market, 200,000 to 300,000 barrels a day, we don't really know."




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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 08 July 2015 K. Al Awadi

NewBase 643 special 08 july 2015

Business

Transcript of NewBase 643 special 08 july 2015