Easwaran Kanason

Co - founder of NrgEdge
Last Updated: February 23, 2020
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Business Trends
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At the start of February, a major new find was jointly announced by the two largest emirates within the UAE: the oil-rich Abu Dhabi and the ambitious Dubai. Between them, they literally made the world’s largest natural gas discovery since 2005. Located at the border between the two sheikdoms, the Jebel Ali field is estimated to contain some 80 trillion scf of natural gas, the largest global find since the Galkynysh field in Turkmenistan.

Stretching over 5,000 square km, an exploration campaign by Abu Dhabi involving over 10 wells confirmed the enormous discovery in early January 2020. The shallow nature of the onshore reserves should make it easier to extract gas at lower costs, hastening the time-to-market. At current estimated figures, Jebel Ali would be the fourth-largest gas field in the Middle East, behind Qatar’s North Field, Iran’s South Pars and Abu Dhabi’s own Bab field.

The politics of the UAE can be complicated; each emirate is essentially self-governing with federal oversight, which is dominated by Abu Dhabi and Dubai (which always hold the President and Prime Minister roles, according to convention). This essentially means that each emirate has grew quite independently. Fujairah, for example, developed into a bunkering port, while Sharjah went into industry and manufacturing. Dubai is globally famous for its titanic real estate projects, pursued finance, services and media, while Abu Dhabi, the largest and most blessed of all with hydrocarbon resources, turned into an energy powerhouse. Oil & gas wealth in the UAE is mainly in Abu Dhabi; so while the Jebel Ali discovery is a welcome addition for Abu Dhabi, it is a game changer for Dubai, which imports most of its energy needs.

Speculation has raised that possibility that the Jebel Ali field could vault the UAE into gas self-sufficiency, because even Abu Dhabi imports gas. The UAE has a stated goal to be gas independent by 2030. On paper, that’s possible. Abu Dhabi’s ADNOC has agreed to develop the field with Dubai’s gas supplier, the Dubai Supply Authority (DUSUP), with the entire supply will be channel to DUSUP for use in Dubai. Jebel Ali could begin producing gas by 2023, and will likely be distributed domestically through pipeline. The enormous reserves could supply the entire UAE’s gas demand for nearly 30 years, assuming optimal recovery conditions. However, in practice, self-sufficiency might take longer to achieve.

Dubai and indeed, Abu Dhabi are currently reliant on Qatar for their gas supply. An existing sales agreement that expires in 2032 sees Qatar pipe 2 bcf/d of gas to the UAE through Abu Dhabi. The problem is that these neighbours are erstwhile friends. A division in the Middle East between the pro-Saudi Arabia and pro-Iran blocs has caused a rift. Led by Saudi Arabia, several Persian Gulf states  including the UAE implemented a diplomatic and trade blockade on Qatar, isolating it. The blockade, slightly weakened, still continues today. Even now, planes flying into Qatar have to make strange manoeuvres when approaching to avoid encroaching on Saudi and UAE airspace. However, the gas supply arrangement remains in place.

And this is where the Jebel Ali discovery could come in handy. Qatar is already on track to be self-sufficient in gas terms by 2025, but will probably honour the Qatar deal until expiration. Dubai has been increasingly reliant on LNG  through an FSRU for power generation, but has attempted over the years to kick-start a number of coal or solar-power projects. Jebel Ali won’t kick the addiction, but it could definitely reduce Dubai’s reliance on Qatari gas.

Jebel Ali wasn’t the only recent gas discovery made in the UAE. Further north, the Sharjah National Oil Corp and Italy’s Eni announced a new onshore gas and condensate discovery. Though tiny in comparison to Jebel Ali, some 50 mscf/d of lean gas and condensate. The cumulative effects of these discoveries could make gas self-sufficiency a reality sooner. At this point, the UAE consumes some 7.4 bcf gas per day, while marketed production is some 6.2 bcf/d. An ambitious plan to develop Abu Dhabi’s large gas fields was the rationale behind naming the 2030 self-sufficiency deadline. With the discovery of Jebel Ali, that can now be brought forward by a couple of years at least. And there might even be some left over to be exported as LNG

The UAE Major Gas Projects:

  • Estimated reserves: 273 tcf of conventional gas, 160 tcf of unconventional gas (Abu Dhabi)
  • Ghasha ultra-sour gas field (Abu Dhabi) – 1.5 bcf, by 2025
  • Shah sour gas field (Abu Dhabi) – 1.5 bcf/d

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The Role of Floating Storage During An Oil Price War

In any war, there are winners and losers. Sometimes surprising ones. As the price war between friends-turned-foes Saudi Arabia and Russia rumbles on without any sign of a thaw or a possibility of halting without external intervention, oil producers globally are hurting badly as crude oil prices plunged by nearly 50% over less than a month. This will wreak havoc with the economies and budgets of many countries, particularly at a time when demand is extremely soft given the global Covid-19 pandemic. But in any war, there are opportunities for profit, and that has given a boost to a sector of the industry that had previously been suffering.

With the dramatic drop in prices, and a super-contango structure appearing in the crude oil price future curves, crude cargoes are available on cheap. Part of this buying is coming from entrenched buyers such as India (which took in some cargoes that were turned away by China in the early days of the Covid-19 pandemic). Part of this is coming from government purchases, to fill up strategic petroleum reserves in an effort to support domestic producers (although a US plan to do so was scuppered due to lack of federal funding). But most is this is coming from global oil traders, eager to cash in cheap oil by betting that prices will eventually have to rise somehow. Whether that is in a month, three months or longer, the traders are preparing for this.

The problem is storage. Where does one store millions of barrels of crude? Onshore storage is estimated at a practical upper limit of some 1.2 billion barrels of capacity; much of this is already utilised, with not much room to grow. And what room there is is becoming expensive.

Enter floating storage.

In 2008 during the Great Financial Crisis and again in 2015 when crude prices retreated dramatically, the same scenario presented itself. The solution then, as it is now, was to charter ships to serve as floating storage. Millions upon millions of crude oil barrels sat sloshing in the hulls of VLCC and other crude-carrying ships off the coast of Singapore, Fujairah, the US Gulf and Guangzhou in 2009, waiting for traders to assess an opportune moment to seize a trade.

That is repeating itself now. At the start of March, VLCC charter rates hovered at around US$40,000 per day for delivery from the Middle East to China. As charter rates go, that’s not that bad, and certainly far better than rates of less than US$10,000 day in mid-2019 that caused a world of pain to the oil shipping industry. At the dramatic about-face in Vienna when the OPEC+ alliance splintered, VLCC charter rates jumped up to US$190,000 per day as the price for Brent dropped 30% in a single day. Charter rates continued to spike, up to a peak of US$275,000 per day, as it became very apparent that Saudi Arabia and Russia were engaging in more than just a game of brinkmanship. Prices did calm down, after the initial rush of bookings, but have started to rise again as Brent drifts dangerously close to the US$25/b mark.

Reports suggest that since the price war began, more than three dozen supertanker bookings have been made by the world’s largest oil traders, including Vitol, Shell and Litasco. The largest of them all, Glencore has chartered Europe, one of the world’s two ULCCs (Ultra Large Crude Carriers) that can store 3 million barrels of oil for an indefinite period. The traders are also competing with an unlikely party: Saudi Arabia and its allies that sparked a bidding war for supertankers in a bid to flood the market. That this is happening against a backdrop of weak demand is, frankly, ridiculous. But that is what is happening now, and expect it to go on with Russia entering the fray. While all this drama plays out, the real immediate winners are shipowners. While the traders are betting on the possibility of a profitable trade in the future, shipowners are making profits hand over fist now with the bookings, a great change after terrible 2019 when shipowners were gloomily talking about decommissioning tankers.  

How long will this last? It is anyone’s guess. There are two main variables: the length of the oil price war and the length of the Covid-19 pandemic. The most optimistic scenario points to things returning to relative normality by July 2020; the worst could see the depression continuing into 2021. But, as they say, there is no time like the present. And shipowners are now happy to keep their supertanker bellies full of oil and money in the bank, even if those ship remain anchored and that oil is going nowhere soon.

Recent VLCC Freight Rates

  • March 1: US$40,000 per day
  • March 6: US$190,000 per day
  • March 12: US$275,000 per day
  • March 20: US$90,000 per day
  • March 27: US$125,000 per day
  • March 30: US$180,000 per day
April, 05 2020
The Oil Price War – What Are The Options for Trump

As Saudi Arabia and Russia dig in their heels and prepare for extended trench warfare over oil prices, the important questions now are: how long will this last, and what (or who) can bring these friends-turned-foes back to the negotiation table? China is the major buyer of crude from both countries, but with little production of its own, should be relishing in lower oil prices, particularly as it plots a potential recovery from the Covid-19 pandemic. That leaves the USA.

To say the US has a vested interest in where oil prices are is an understatement. The country, after all, has a major oil production industry and has recently become the largest producer in the world. Prices at US$50-60/b were perfect. Anything above that risked higher fuel prices causing demand disappearance; anything lower than that risked putting American drillers – particularly in the prolific shale patch – out of business. Which is why President Donald Trump embarked on a campaign of sanction threats and fiery rhetoric when crude rose above US$70/b last year. And also why the US oil industry is urging an intervention as WTI crashes to nearly US$20/b. At risk is not just the health of the US oil industry, but the very life of the shale patch.

There are various options available to Trump when he intervenes. Trump said that he would only get involved in the price war ‘at the appropriate time’, noting that low gasoline prices were good for US consumers. This suggests that he values the positive effects of low oil prices on the wider economy, perhaps noting that the oil industry will still remain a solid electorate base for him in November 2020 come what may. But with no sign that Russia or Saudi Arabia are open to new talks, Trump has to do something at some point.

Some new policies have been put in place. Instead of selling barrels from the US strategic petroleum reserves, adopted when the global supply/demand dynamics were much, much different – the White House now wants to fill those coffers to the brim, buying as much as US$3 billion from US independents to shore up the industry. But that’s only a temporary balm; if the price war rolls on for too long, those US independents will either go out of business or be forced to continue pumping to pay the bills. Either way, this won’t achieve much.

The next weapon is diplomacy. There is already happening, with the US Senate reaching out to the Saudi Ambassador to seek ‘clarity’. Diplomacy is likely to be taken with Saudi Arabia and its Middle Eastern allies, as a more combative approach could jeopardise geopolitical alliances. However, when cajoling, the US will also have to put something on the table. Saudi Arabia’s ultimate goal is to have steady oil prices at a level acceptable to all (or most); since Russia isn’t cooperating but the US may want to, then it must shoulder some burden as well. Imposing a national quota in the US, however, is pure anathema, although the Texas state oil regulator has already suggested introducing production curbs. President Donald Trump said on Thursday, 2nd of April that he expected Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman to announce a deal to cut production by up to 15 million barrels, and that he had spoken to both countries’ leaders.

The much anticipated virtual meeting between OPEC and its allies scheduled for 6th of April  has been postponed, as reported by CNBC, amid mounting tensions between Saudi Arabia and Russia. The meeting will now “likely” be held on Thursday, 9th April, sources said. "The delay is likely to hit oil prices next week following a record-setting comeback week for crude. U.S. oil surged 25% on Thursday for its best day on record, and gained another 12% on Friday. It finished the week with a 32% surge, breaking a 5-week losing streak and posting its best weekly performance ever, back to the contract’s inception in 1983." 

The other more potent weapon is sanctions. This has worked well, at least from the perspective of the policy’s goal, but certainly not in humanitarian terms in Iran and Venezuela, where the exports of these OPEC members have shrunk dramatically. The US has already imposed sanctions on certain parts of the Russian energy machinery, notably to stop the Nordstream-2 LNG pipeline and is now reportedly considering pursuing a dual-pronged strategy of diplomacy with Saudi Arabia and sanctions on Russia. But what could this do? What would this even achieve? Russia hardly sells much oil to the US; its markets are in Europe, India and China. Imposing sanctions, especially at a time of a global crisis, risks it being completely ignored. Worse, this would make Russia even more determined to get back at the US by destroying the shale patch. With its deep pockets, it could very well do so.

The US is caught in a dilemma. Participating in a coordinated production alliance is unthinkable existentially, although stranger things have happened which leaves Trump with few weapons to participate in this price war. It could go on the offensive, and risk worsening the situation. It could exert diplomatic pressure, and risk that going nowhere. Or it could do what it has always done: prop up the industry but leave survival to the free-market, with the knowledge that in the cyclical world of oil, this bust will one day become a boom again.

Infographic: Top Three Crude Producers

  • Saudi Arabia: 12 mmb/d, 1 producer (Saudi Aramco)
  • Russia: 12.5 mmb/d, 10+ producers (including Rosneft and Lukoil)
  • USA: 13 mmb/d, 100+ producers
April, 05 2020
Is Document Verification effective in managing identity theft?

Technology has indeed changed the way we think, act and react. Every activity we perform is directly or indirectly linked to technology one way or another. Like everything else, technology also has its pros and cons, depending on the way it is used. Since the advancement in cyberspace, scammers and hackers have started using advanced means to conduct fraud and cause damage to individuals as well as businesses online. 

According to the Federal Trade Commission (FTC), 1.4 million cases of fraud were reported in 2018 and in 25% of the cases, people said they lost money. People reported losing $1.48 billion to fraudulent practices in 2018. This has caused considerable loss to individuals and businesses. Global regulatory authorities have introduced KYC and AML compliances that businesses and individuals are encouraged to follow. However, banks and financial institutions have to follow them under all circumstances.

KYC or Know Your Customer refers to the process where a business attains information about its customers to verify their identities. It is a complex, time-taking process and customers nowadays don’t have the time or resources to deal with the government, consulate, and embassy offices for their KYC procedures. However, due to technological advancement, the identity verification process has been automated through the use of artificial intelligence systems. These systems seamlessly increase the accuracy and effectiveness of the identity verification process while reducing time and human efforts.


The following methods are used to digitally authenticate identities nowadays:

  • Face Verification

The use of artificial intelligence systems to detect facial structure and features for verification purposes.

  • Document Verification

The use of artificial intelligence systems to detect the authenticity of various documents to prevent fraud.

  • Address Verification

The use of artificial intelligence technology to verify addresses from documents to minimize the threat of fraudsters.

  • 2-Factor Authentication

The use of multi-step verification to enhance the protection of your accounts by adding another security layer, usually involving your mobile phone.

  • Consent Verification

The use of pre-set handwritten user consent to onboard only legitimate individuals.


Digital Document Verification

Document verification is an important method to conduct KYC or verify the identity of an individual. The process involves the end-user verifying the authenticity of his/her documents. In banks, financial institutions and other formal set-ups, customers are required to verify their personal details through the display of government-issued documents. The artificial intelligence software checks whether the documents are genuine or have been forged. If the documents are real and authentic, the digital documentation verification is completed and vice versa. 

There are four steps that are mainly involved in the digital document verification process. First, the user displays his/her identity documents in front of the device camera. Then the document is critically analyzed by artificial intelligence software to check its authenticity. Forged or edited documents are rejected by the software. The artificial intelligence system then extracts relevant information from the document using OCR technology. The information is sent to the back-office of the verification provider and analyzed by human representatives to further validate the authenticity. Then the results are sent to the business or individual asking for the verification. The whole process takes less than five minutes.

The document authentication process can detect both major and minor faults in the documents. It can detect errors and faults in forged documents, counterfeed documents, stolen documents, camouflage or hidden documents, replica documents and even compromised documents. The verification process can be done on a personal computer or a mobile device using a camera. Although only government-issued documents are used for the authentication process, the following are accepted by most verification providers:

  • Govt ID Cards

  • Passports

  • Driving Licenses

  • Credit/Debit Cards

Illegal and fraudulent transactions have dangerous consequences for both individuals as well as businesses. Losses due to scams and frauds trickle down at every level and ultimately have negative consequences on the whole system. Therefore it is imperative to conduct proper customer verification and due diligence in order to minimize the risks of fraud. Digital documentation verification plays a key role in the KYC process. 



April, 02 2020