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S03 ORME 6 2016 - Oil, gas News A & News B_Layout 1 19/08/2016 07:58 Page 10

 Oil & Gas News

‘Saudi Arabia’s August oil output may hit a new high, to overtake Russia’ SAUDI ARABIA IS likely to boost its crude oil supplies in August to a new record level, overtaking Russia, the world’s top oil producer, as it gets ready for tough talks next month for a global output freeze pact. In June this year, Saudi Arabia pumped 10.55mn bpd, and lifted production to 10.67mn bpd in July, the highest in its history. Now the sources expect the OPEC heavyweight to raise its crude supplies to another record this month as demand inside and outside the Kingdom look healthy. One source from outside OPEC said that output could rise further to as high as 10.8mn bpd to 10.9mn bpd. Reuters report has stated that industry sources say the Kingdom, already the world’s largest oil exporter, started to raise production from June, after holding it steady for the first half of the year, to meet The Kingdom started to raise production from June, after holding it rising seasonal domestic demand as steady for the first half of the year, to meet rising seasonal well as higher export requirements. domestic demand as well as higher export requirements. (Photo: Higher production could give it Sashkin/Fotolia) more leverage during talks in September when both OPEC and non-OPEC producers are expected to revive a freeze deal to support oil prices, the sources added. Saudi Arabia appears to want higher prices, but agreeing a level to freeze supplies will be the main obstacle to a deal. Some analysts, however, said using hard negotiating tactics could backfire on Riyadh. “It would therefore be a very hard sell for Saudi Arabia to have other countries join a collective action plan, while it is the main source of supply increase ” outside of Iran post sanctions,” according to Olivier Jakob at Petromatrix. Last week, Saudi Arabia energy minister Khalid al-Falih sought to clarify why the Kingdom hiked its production in July in an oversupplied market. In a statement, Falih explained the rise was due to rising seasonal domestic demand and customers asking for more oil worldwide. Oil prices dropped to US$27 per barrel in January from as high as US$115 in mid-2014, hitting the budgets of oil exporters worldwide, including Saudi Arabia, and resulting in a record fiscal deficit for Riyadh. A previous attempt to freeze output at January levels to support prices collapsed last April after Saudi Arabia said it wanted all producers, including Iran, to join the initiative. But since the appointment of Falih in April, Saudi Arabia has taken a softer tone towards Iran at OPEC. OPEC sources say the group will probably revive talks on freezing output when it meets non-OPEC nations next month in Algeria as Riyadh appears to want higher prices.

New natural gas processing plant opens in Iraq IRAQ STARTED OPERATING a new natural gas processing plant for oilfields in its south eastern region to use flared gas for generating electricity, the Oil Ministry said in a statement. The plant located in Misan province, on the border with Iran, will process gas associated with crude pumped at the Fakka and Bazargan fields. All Misan fields, to be brought on stream in the future, will be connected to the plant. OPEC’s second largest oil producer, Iraq flares about 70 per cent of its gas output, according to Basrah Gas Company, which was set up in partnership with Shell and Mitsubishi.

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Basrah Gas Company, this year, also started exporting cargoes of gas condensates and LPG processed from fields in the Basra. According to Bloomberg, Iran will start exporting gas to Iraq in September 2016. Shipments will start at seven million cu/m a day to supply a power plant in Baghdad, Hamid Reza Araghi, director of the National Iranian Gas Company, said. A second route to Basra will be opened in 2017, with shipments eventually reaching 70mn cu/m a day. Iraq currently produces around 880mn cu/m of natural gas per year, according to reports.

Libya begins repair work at largest oil port LIBYA HAS STARTED maintenance work at Es Sider port, nation’s largest oil export terminal, as part of plans to increase output from North Africa’s biggest holder of crude reserves. Exports should resume by September once official orders are received to reopen the port, Galal Mohamed, head of operations at Waha Oil Company, said. Es Sider, operated by Waha Oil Company, has been closed since December 2014 when armed groups attacked the port. The state National Oil Corporation has engineers and other workers at the port to evaluate damages and decide when to resume exports, NOC’s Ibrahim alAwami added. “We haven’t received official orders to reopen the port and resume exports, but there were intensive meetings with National Oil Corporation officals recently,” Mohamed noted. Six of the port’s 19 storage tanks are damaged from fighting over the last two years, he revealed. Libya is seeking to boost crude production after rival leaders agreed in July to unify the state NOC under a single management. The bulk of the country’s oil infrastructure is either damaged or straddles disputed territory as armed factions fought for control of producing fields. The nation pumped 300,000 bpd of oil in July, compared with as much as 1.78mn a day in 2008, three years before a revolt led to the overthrow of the regime of Muammar Gaddafi, according to data compiled by Bloomberg. Waha Oil Company will be able to produce 75,000 bpd in the first six months after resuming operations. Waha fields stopped producing in 2014 after the Es Sider oil port operations were halted. Es Sider has an export capacity of 340,000 bpd. Libya’s unity government announced on 28 July an agreement to pay salaries to Petroleum Facilities Guard members in exchange for reopening the ports of Es Sider, Ras Lanuf and Zueitina. The NOC said that the resumption of exports from the ports and the release of budget money to the company would help boost production by more than 900,000 barrels a day by the end of the year. “NOC is working to overcome difficulties and technical problems in the entire oil fields,” it said in a statement on its website.

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Oil Review Middle East 6 2016  

Oil Review Middle East 6 2016