Mark Latham Commodity Equity Intelligence Service

Friday 26th May 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Trading gas with Ethereum

    On May 24, 2017, TMX Group announced the development of a blockchain-based prototype that enables the transfer of natural gas. The project was the result of a partnership between Natural Gas Exchange (NGX), TMX’s wholly-owned subsidiary and a leading North American energy exchange, and Nuco Inc., a digital infrastructure provider.

    Steve Lappin, NGX President and CEO, stated, "This exciting new prototype is designed to more accurately and efficiently track activity and provide clients with valuable analytics on natural gas movements, while preserving the confidentiality and integrity of the data." He further elaborated, "NGX is committed to seeking out new ways to improve the client experience throughout the transaction delivery and settlement process, from production to end user, to drive growth in our business."

    The prototype seeks to improve the tracking of natural gas flow from a variety of delivery locations within the United States. As a result, the NGX natural gas settlement process will be optimized and streamlined as clients will be able to track gas movement across different locations and submit more accurate reports. These features enable the prototype to enhance delivery and payment processing, mitigate risks, and provide secure transaction data.

    Shane Quinn, Senior Manager of Communications and Public Affairs at TMX, told ETHNews that the developers experimented with a number of blockchain protocols for the prototype, but the latest implementation is deployed on the Ethereum blockchain.

    “In our overall innovation strategy, TMX is taking a diversified approach and examining multiple platforms. In the use cases that we have explored to this point, we have used Hyperledger (Liquidity Alliance, Voting proxy prototype) and Ethereum (today's announced energy prototype).”

    Quinn also explained why TMX partnered with the newly formed blockchain startup Nuco:

    “TMX is new to this realm. We chose to work with Nuco because they are a creative, ambitious young company with the necessary agility to quickly develop and deliver effective prototypes.”

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    Bitcoin up 13%.

    In a first, a Japanese airline will accept bitcoin for tickets amid the rising popularity of bitcoin in the region. Announced today, Peach’s decision to accept the world’s most popular cryptocurrency comes following a handful of significant recent legal changes.

    Chief among them is Japan’s classification of bitcoin as a recognized method of legal payment after passing bills to underline digital currencies as thedigital equivalent of paper moneylast year. Come July, Japan will now longer impose the 8% consumption tax rate on bitcoin buying through exchanges. All of which has led to Japan becoming the world’s leading market for bitcoin trading in recent months.

    The airline is aiming to soar on bitcoin’s popularity by collaborating with local governments and companies in Japan to help ‘spread usage’ of bitcoin, the company told reporters in Tokyo on Monday. There’s plenty of momentum for such a cause, with up to 260,000 Japanese retail storefronts set to accept the cryptocurrency this year.

    A month ago to the day, the government of the Japanese city of Hirosaki began accepting bitcoin donations toward the preservation of a historic cherry tree park. ‘At Hirosaki-city, we consider bitcoin donations as a great opportunity to attract tourists from overseas,” stated a city official at the time.

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    Peach chief executive Shinichi Inoue sees similar benefits in adopting the cryptocurrency, particularly to make the airline an appealing choice for wealthy Chinese tourists who represent a population that has adopted digital payments like no other.

    “We want to encourage visitors from overseas and the revitalization of Japan’s regions,” Inoue is quoted as stating by theBloomberg, with the announcement to accept bitcoin.



    While based in Japan, Peach offers low-cost international travel options to a number of regional countries including Korea, Hong Kong, Taiwan, Thailand and China. Notably, Peach has also begunaccepting payments via Alipay, a payments platform used by half a billion users in China, earlier this year.

    As the first Japanese airline to accept bitcoin, Peach joins the likes of Polish airline LOT which began selling flight tickets for the cryptocurrency back in August 2015.

    Elsewhere, CheapAir.com, the first US online travel agency to accept bitcoin, revealed record figures in bitcoin sales leading into the first quarter of 2017. In the six months prior, the booking agency processed $15 million in bitcoin payments, a 74% jump, after it made the decision to accept the cryptocurrency in early 2014.

    Getty Images Co-founder of Union Square Ventures Fred Wilson

    For all the excitement around digital currency technology in New York this week, venture capitalist Fred Wilson said it will probably take much longer for bitcoin to go mainstream.

    "I've been trying to transact with bitcoin and a lot of cryptocurrencies for a long time. It's not that rewarding to do, honestly," Wilson, managing partner at Union Square Ventures, said Thursday at the Token Summit.

    "It will probably be a long time before people understand what a blockchain currency is," he said.

    Hundreds of developers, start-up founders and digital currency investors packed a New York University lecture hall for the all-day conference, which focused on how bitcoin's underlying blockchain technology and digital currencies, or tokens, could change the way business operates.


    I would short bitcoin: O'Leary I would short bitcoin: O'Leary  

    "I do think some digital currency will end up being the reserve currency of the world. I see a path where that's going to happen," Brian Armstrong, CEO of the Coinbase exchange for buying and selling digital currencies, said at the conference.

    Coinbase said Thursday it suffered outages due to "unprecedented traffic and trading," according to Reuters.

    The week was a big one for bitcoin, especially in the financial center of New York. The Token Summit followed a two-and-a-half-day digital currency conference called Consensus, both held in Manhattan.

    Bitcoin prices climbed all week and skyrocketed to all-time highs above $2,700 on Thursday, raising some concerns of euphoria, similar to 1999 prior to the dotcom bubble.

    Wilson compared the state of blockchain innovation to the early- to mid-1990s, when the internet's infrastructure was just being built. He pointed out that the only major consumer internet businesses at the time were Yahoo, eBay and Amazon.

    Google came later, and Facebook, Uber, Airbnb and SoundCloud only emerged in the last 15 years, after the tech bubble's collapse in 2000, Wilson pointed out.

    That doesn't give bitcoin the all clear. Rather, it's more likely that the currency and blockchain are still in an early phase, before overspeculation and before widespread adoption.

    "I think there's a ways more we could go before the whole thing could come undone in a massive way," Wilson said, noting investors also need to be wary of scams, fraudulent use and challenges in technological development.

    That said, the longer-term view is more positive.

    "By the end of this decade," he said, "we should start to see native blockchain applications receiving massive adoption."

    Watch: Bit risks to bitcoin rally



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    GM is accused in lawsuit of cheating on diesel truck emissions


    General Motors Co was accused in a lawsuit on Thursday of rigging hundreds of thousands of diesel trucks with devices similar to those used by Volkswagen AG, to ensure they pass emissions tests.

    The proposed class-action lawsuit covers people who own or lease more than 705,000 Chevrolet Silverado and GMC Sierra pickups fitted with "Duramax" engines from the 2011 to 2016 model years.

    It said GM used at least three "defeat devices" to ensure that the trucks met federal and state emission standards, even if they generated more pollution in real-world driving. The complaint was filed in the federal court in Detroit.

    "These claims are baseless and we will vigorously defend ourselves," GM spokesman Dan Flores said.

    He added that the trucks comply with U.S. Environmental Protection Agency emissions standards and California's own tough emissions standards.

    The lawsuit alleges violations of racketeering and consumer protection laws, and seeks remedies including possible refunds, restitution for lost resale value, and punitive damages.

    It adds to legal problems for Detroit-based GM, which has already paid about $2.5 billion in penalties and settlements over faulty ignition switches linked to 124 deaths.

    GM joins VW, which has admitted to cheating, and at least four other automakers whose diesel emissions have been scrutinized by regulators or consumers.

    They include Mercedes-Benz parent Daimler AG (DAIGn.DE), Fiat Chrysler Automobiles NV (FCHA.MI), Peugeot SA (PEUP.PA) and Renault SA (RENA.PA)

    GM shares were down 74 cents, or 2.2 percent, at $32.46 in afternoon trading, after earlier falling as much as 3.8 percent.

    RBC Capital Markets analyst Joseph Spak estimated that one-eighth of GM's full-sized pickups have diesel engines, and said "negative publicity" from the lawsuit could steer prospective buyers to Ford Motor Co (F.N) or Fiat Chrysler's Ram division.

    EXCESS POLLUTANTS

    According to the lawsuit, "on-road" emissions testing conducted for the plaintiffs found that Duramax-engined trucks produced nitrogen oxide pollutants two to five times higher than allowed, and "many times" higher than gasoline-engined trucks.

    Modifying the engines to meet emissions standards would reduce performance, horsepower and fuel economy, the 184-page complaint said.

    Germany's Robert Bosch GmbH [ROBG.UL] was also named as a defendant for having allegedly helped develop the defeat devices, in an "unusually close" collaboration with GM.

    Bosch spokeswoman Alissa Cleland said that company will not discuss matters being investigated or litigated.

    The named plaintiffs are Andrei Fenner of Mountain View, California and Joshua Herman of Sulphur, Louisiana.

    They said they would not have bought, or would have paid less for, their respective 2011 Sierra and 2016 Silverado trucks had they known about the alleged rigging.

    Their law firms include Hagens Berman Sobol Shapiro, which helped reach multibillion-dollar settlements for VW owners and dealers and has brought similar claims over GM's diesel-equipped Chevrolet Cruze.

    Hilliard Munoz Gonzales, which handles many GM ignition switch lawsuits, also represents the plaintiffs.

    On Tuesday, the U.S. Department of Justice filed a civil lawsuit accusing Fiat Chrysler of using software on 104,000 diesel vehicles sold since 2014 to evade emission standards.

    Fiat Chrysler has denied wrongdoing. It also faces a separate Justice Department criminal probe on emissions.

    The case is Fenner et al v General Motors LLC et al, U.S. District Court, Eastern District of Michigan, No. 17-11661.

    http://www.reuters.com/article/us-gm-lawsuit-idUSKBN18L25Y
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    Oil and Gas

    OPEC extends oil output cut by nine months to fight glut


    OPEC decided on Thursday to extend cuts in oil output by nine months to March 2018, OPEC delegates said, as the producer group battles a global glut of crude after seeing prices halve and revenues drop sharply in the past three years.

    The cuts are likely to be shared again by a dozen non-members led by top oil producer Russia, which reduced output in tandem with the Organization of the Petroleum Exporting Countries from January.

    OPEC's cuts have helped push oil back above $50 a barrel this year, giving a fiscal boost to producers, many of which rely heavily on energy revenues and have had to burn through foreign-currency reserves to plug holes in their budgets.

    Oil's earlier price decline, which started in 2014, forced Russia and Saudi Arabia to tighten their belts and led to unrest in some producing countries including Venezuela and Nigeria.

    The price rise this year has spurred growth in the U.S. shale industry, which is not participating in the output deal, thus slowing the market's rebalancing with global crude stocks still near record highs.

    By 1050 GMT (6:50 a.m. ET), Brent crude had fallen 1.5 percent to around $53 per barrel as market bulls were disappointed OPEC would not deepen the cuts or extend them by as long as 12 months. [O/R]

    OPEC oil ministers were continuing their discussions in Vienna. Non-OPEC producers were scheduled to meet OPEC later in the day.

    In December, OPEC agreed its first production cuts in a decade and the first joint cuts with non-OPEC, led by Russia, in 15 years. The two sides decided to remove about 1.8 million barrels per day from the market in the first half of 2017, equal to 2 percent of global production.

    Despite the output cut, OPEC kept exports fairly stable in the first half of 2017 as its members sold oil from stocks.

    The move kept global oil stockpiles near record highs, forcing OPEC first to suggest extending cuts by six months, but later proposing to prolong them by nine months and Russia offering an unusually long duration of 12 months.

    "There have been suggestions (of deeper cuts), many member countries have indicated flexibility but ... that won't be necessary," Saudi Energy Minister Khalid al-Falih said before the meeting.

    He added that OPEC members Nigeria and Libya would still be excluded from cuts as their output remained curbed by unrest.

    Falih also said Saudi oil exports were set to decline steeply from June, thus helping to speed up market rebalancing.

    OPEC sources have said the Thursday meeting will highlight a need for long-term cooperation with non-OPEC producers.

    The group could also send a message to the market that it will seek to curtail its oil exports.

    "Russia has an upcoming election and Saudis have the Aramco share listing next year so they will indeed do whatever it takes to support oil prices," said Gary Ross, head of global oil at PIRA Energy, a unit of S&P Global Platts.

    OPEC has a self-imposed goal of bringing stocks down from a record high of 3 billion barrels to their five-year average of 2.7 billion.

    "We have seen a substantial drawdown in inventories that will be accelerated," Falih said. "Then, the fourth quarter will get us to where we want."

    http://www.reuters.com/article/us-opec-oil-idUSKBN18L0S8
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    Downgrading 2018 price forecast for Brent to $45/bbl and WTI to $42/bbl

    JP Morgan.
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    SAUDI ENERGY MINISTER SAYS EXPORTS TO THE U.S. DROPPING MEASURABLY


    SAUDI ENERGY MINISTER SAYS EXPORTS TO THE U.S. DROPPING MEASURABLY

     @EnergyBasis

    NO NEW NON-OPEC COUNTRIES JOINING SUPPLY DEAL: DELEGATE

    C_Barraud
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    Russia's Novak Sees Room to Do More for Oil After OPEC's Flop


    After top oil exporters failed to impress markets with their extended supply cuts, Russia’s Alexander Novak said there’s more they can do.

    Russia and OPEC have tools to further support crude prices if needed, the nation’s energy minister said in an interview as a lackluster outcome from their meeting in Vienna sent futures slumping below $50 a barrel in New York.

    The partners are able to act accordingly “if any actions or adjustments are needed,” Novak told Bloomberg TV on Thursday. “These adjustment actions can both be aimed at increasing the amount of cuts or reducing the amount of cuts -- all would depend on the market situation, what is needed for the market.”

    The comments signal a determination to work with Saudi Arabia and other OPEC allies to support prices for crude, their economic and political lifeblood. Since they joined forces, futures have rebounded from last year’s lows and the exporters have been able to earn more while pumping less.

    "We’ve said we’ll do whatever is necessary,” Saudi Energy Minister Khalid Al-Falih said after the meeting.

    While the exporting nations will prolong the current output targets through March, no new non-OPEC country will be joining the pact, and there was no formal option set out to continue curbs further into 2018. Prices tumbled more than 5 percent to under $49 a barrel in New York.

    “It happens all the time -- these fluctuations,” Novak said about the slump. Extending the agreement was a “very important long-term fundamental decision” which will help in re-balancing the market and bringing the investments back. “We could have seen much worse reaction of the market if no decision to extend the declaration of cooperation was taken.”

    Russia maintains its oil-price outlook at $50 to $60 a barrel on average for this year, Novak said.

    The country and its oil-producing companies -- which made the cuts voluntarily -- will fully meet the obligations set in the agreement, Novak said. “We know that it takes a lot of time to build the trust but it can be lost in a day,” he said. “We, in our history, know that very well.”

    Russia, which relies on energy for more than 40 percent of its budget, has sought to boost its revenues in the run-up to next year’s presidential election. The country will go to the polls next March, and incumbent Vladimir Putin is widely expected to seek another term. Novak said at a press conference in Vienna that the election wasn’t a factor in the decision to extend cuts.

    While strengthening of the ruble has reduced the windfall from Russia’s energy exports, which are denominated mainly in dollars, the nation’s overall budget revenue from oil and natural gas taxes recovered to two-year highs in February and March thanks to the pact.

    The country pledged last year to reduce production by 300,000 barrels a day from its post-Soviet record of 11.247 million in October. The extended deal implies the same output caps that were agreed on last year for all non-OPEC states, Novak said.

    https://www.bloomberg.com/news/articles/2017-05-25/russia-s-novak-sees-room-to-do-more-for-oil-after-opec-s-flop
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    Iraq’s Oil Minister: Kurdistan Exports Not Part Of OPEC Cut Extension


    The oil exports of Iraq’s semi-autonomous region of Kurdistan are not subject to the extension of OPEC’s production cuts, Iraq’s Oil Minister Jabbar al-Luaibi told Kurdish media network Rudaw during the OPEC meeting in Vienna on Thursday.

    According to OPEC delegates, the cartel agreed today to extend the current output cuts for nine months until March 2018.

    “The reduction doesn’t include the Kurdistan Region,” Luaibi told Rudaw. “But we will be trying to include the Kurdistan Region in the reduction of its oil. I have plans to visit the Kurdistan Region and discuss this with them after my return to Iraq.”

    The region of Kurdistan in northern Iraq is estimated to have 45 billion barrels of oil reserves. Exports from the fields in northern Iraq held by the Kurdistan Regional Government (KRG) stand at around 600,000 bpd. Most of the exports from landlocked Kurdistan are being carried out via the Kirkuk-Ceyhan pipeline to the Turkish Mediterranean coast.

    Earlier today, Iraq’s Al-Luaibi said that the best option to bring the oil market back to balance was extending the production cuts by nine months.

    OPEC’s no. 2 Iraq was thought to be one of the biggest stumbling blocks to a nine-month output cut extension, but on Monday OPEC’s no.1 Saudi Arabia and Iraq said that they had agreed that the cuts need to be extended by another nine months.

    Iraq was the last holdout to OPEC reaching the initial deal in November, when it first argued for exemption, due to funds need to fight ISIS, then disputing the so-called secondary sources that OPEC uses to calculate the single producers’ output levels and proposed cuts.

    Then, even though it signed up to the initial six-month production cut deal, Iraq has been the biggest overproducer, and has so far failed to cut as pledged every month between January and April, according to OPEC data.

    http://oilprice.com/Latest-Energy-News/World-News/Iraqs-Oil-Minister-Kurdistan-Exports-Not-Part-Of-OPEC-Cut-Extension.html
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    UNECE to help China with CBM control

    UNECE to help China with CBM control

    The United Nations Economic Commission for Europe (UNECE) will build an international coalbed methane (CBM, or coal mine gas) control center in China along with Shanxi Coking Coal Group, according to a memorandum signed in Geneva on May 18.

    The non-profit center, which is scheduled to run until 2018, will be committed to global CBM control, reducing emissions of greenhouse gases and improving the utilization of clean energy.

    "Coal mines will continue to be a part of global energy supply. Reducing the influence of coal mining on the environment and the consequences brought to mining areas is important in the transition to sustainable energy," said Christian Friis Bach, executive secretary of UNECE.

    Shanxi Coking Coal Group will implement the best methods for CBM collection and utilization that experts from UNECE come up with and promote these practices globally.

    As the biggest coking coal manufacturer in China, Shanxi Coking Coal Group produces raw coal of 174 million tonnes per year and has CBM reserves of 197.5 billion cubic meters. In 2016, the company extracted 598 million cubic meters of CBM and established 11 CBM power plants with annual power generating capacity hitting 4.84 GWh.

    The partnership with UNECE will mark a new chapter for the company in the management of natural gas. The group plans to generate electrical power measuring 70 MW through new CBM power stations and increase the proportion of power generated from clean energy over the coming four years, while improving mine safety and cutting down greenhouse gas emission.

    http://www.sxcoal.com/news/4556527/info/en
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    Iran Discovers New Gas Field Next To South Pars


    Iran has discovered a new gas field close to the giant offshore field South Pars in the Persian Gulf, Iranian media reported on Wednesday, quoting an unnamed official with the National Iranian Oil Company (NIOC).

    According to Press-TV the field, called Sepand, has 1.5 trillion cubic feet of sweet gas, of which about 792 billion cubic feet could be recoverable.

    The new field is independent from South Pars, which Iran shares with Qatar, the NIOC official told media. It is not yet clear if the newly discovered gas field is also shared with Qatar, according to the official.

    “One of the most important features of the new field is that it has a wide horizontal natural gas structure,” the official was quoted as saying.

    According to the NIOC representative, Iran would soon begin drilling an exploration well at the new field.

    Just last month, Iran’s President Hassan Rouhani announced the start of phases 17-21 at the South Pars gas field—a development stage worth US$20 billion. Rouhani told media that gas output from the field had reached 570 million cu m and that Iran had plans to overtake Qatar as gas producer.

    Currently, Iran produces 885 million cu m of gas daily—almost the same as Qatar—but most of it is being consumed domestically. Oil fields need gas injections to increase output, so much of what Iran is producing from its gas deposits is being used to stimulate oil production. According to BP data, gas exports have yet to become viable given the current level of domestic natural gas consumption.

    Still, Iran has ambitions to become a major gas exporter, beginning with 50 million cu m daily to neighbor Iraq, as soon as the latter arranges payments for the exports.

    According to the EIA, reserves at the South Pars field account for almost 40 percent of Iran’s total natural gas reserves, and the field is also estimated to hold 17 million barrels of condensate in place.

    http://oilprice.com/Latest-Energy-News/World-News/Iran-Discovers-New-Gas-Field-Next-To-South-Pars.html
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    Wood Group clinches decade-long agreement with Hess


    U.S. oil giant Hess has signed a non-exclusive 10-year global agreement with Wood Group to provide engineering, project management, construction, commissioning, operations & maintenance, integrity management, subsea, and decommissioning services.

    The two companies have worked together for more than 25 years on a wide range of projects worldwide, Wood Group said on Thursday.

    According to the oilfield services company, the two teams aim to remove waste and improve performance leading to safe and reliable operations using proven methodologies.

    Robin Watson, Wood Group chief executive, said, “This agreement further solidifies the strong relationship we have with Hess. The ability to consolidate the full breadth of our services under one agreement offers an exceptional level of continuity to Hess and all our clients.

    “We look forward to many more years of working together with Hess as we unlock our combined potential to create more efficiencies through innovation. We share the same operational excellence mindset and fully expect to achieve meaningful progress in safety, performance and cost savings.”

    http://www.offshoreenergytoday.com/wood-group-clinches-decade-long-agreement-with-hess/?utm_content=buffer0acda&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Nigeria's senate passes oil governance bill - Senate


    Nigeria's Senate passed an oil governance bill following its third and final reading, it said on its official Twitter feed on Thursday.

    The Petroleum Industry Governance Bill is part of proposed reforms that make up the sprawling Petroleum Industry Bill (PIB), aimed at overhauling the OPEC member's energy industry. It has been discussed for over a decade and redrafted many times.

    http://www.reuters.com/article/nigeria-oil-idUSL8N1IR405
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    Petrofac suspends executive amid fraud office investigation


    Oilfield services provider Petrofac has suspended its chief operating officer in response to the UK Serious Fraud Office's investigation into Monaco-based Unaoil, another setback for the company that has been hit by the oil market downturn.

    Petrofac's shares slumped as much as 29 percent, wiping more than half a billion pounds off its market capitalisation, after the company said in a statement on Thursday that COO Marwan Chedid had been suspended and had resigned from the board.

    Investors feared the SFO investigation and Chedid's suspension could hurt the company's ability to win work.

    Petrofac said on May 12 that CEO Ayman Asfari and COO Chedid had been questioned under caution by the SFO in connection with a global investigation into oil and gas services firm Unaoil.

    Asfari will continue as chief executive officer, but will not be involved in any matters connected to the investigation, Petrofac said in its statement.

    "The board is today announcing a number of decisions to ensure Petrofac can retain its focus on its operations and clients, whilst also ensuring the company is able to continue to engage with the SFO's investigation," Petrofac said.

    The SFO launched a criminal investigation last July into Unaoil, its officers, employees and agents in connection with suspected bribery, corruption and money laundering.

    The investigation is now threatening to embroil other British oil services companies after another British oil services company, Wood Group, said this week it was carrying out its own investigation into dealings with Unaoil.

    Last month, Wood Group acquisition target Amec Foster Wheeler was also required by the SFO to disclose information on its relationship with Unaoil and Amec said it expects this "may well" develop into an investigation.

    Petrofac has said it engaged Unaoil primarily in Kazakhstan to provide local consultancy services between 2002 and 2009.

    Last year, the company commissioned law firm Freshfields Bruckhaus Deringer and accountants KPMG to carry out an investigation into its dealings with Unaoil in Kazakhstan after media allegations of misconduct, but said the investigation found no evidence to support the allegations.

    On Thursday, Petrofac said it had set up a committee responsible for responding to the investigation, comprising its chairman, chief financial officer and independent non-executive directors, and would also hire an senior external specialist to review its compliance processes, given the scale of the investigation.

    "We are concerned that (Chedid's) departure may have a knock-on effect on Petrofac's operational oversight and ability to secure new work," Morgan Stanley analyst Robert Pulleyn said.

    The company had $617 million in debt at the end of last year, according to its financial results published in February.

    Analysts at Bernstein estimated that, if found guilty, the company could face a potential SFO fine of $150 million-200 million.

    It based its estimate on its assessment of Petrofac's profits in Kazakhstan and on previous fines the SFO has handed out to companies in similar cases.

    A spokesman for Petrofac declined to comment.

    http://www.reuters.com/article/petrofac-probe-idUSL8N1IR0YH
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    Brazil's Petrobras cuts gasoline price by 5.4 pct


    Brazil's state-run oil company Petroleo Brasileiro SA said on Thursday it decided to reduce the average price of gasoline at its refineries by 5.4 percent and diesel prices by 3.5 percent.

    http://www.reuters.com/article/petrobras-gasoline-price-idUSE4N1F702O
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    India's Reliance gets approval to build LNG-based power plant in Bangladesh

    India's Reliance gets approval to build LNG-based power plant in Bangladesh

    Bangladesh has approved Indian Reliance Power Ltd.'s plan to build a 718-MW power plant that will run on 110,000 Mcf/d of regasified imported LNG, state-run Petrobangla director for operation and mines Jameel A Aleem told S&P Global Platts Thursday.

    Reliance Power is also engaged in a final round of negotiations on whether it will build a new floating, storage and regasification unit for LNG imports near Moheshkhali Island, or whether Petrobangla will supply regasified imported LNG via pipeline to the proposed power plant at Meghnaghat in Narayanganj, some 24 km south from the capital Dhaka, said Aleem.

    The Indian company will also sign a power purchase agreement and an implementation agreement with state-run Bangladesh Power Development Board, to sell electricity to be generated from the power plant.

    The commissioning date of the plant would be stated in the PPA and IA.

    BPDB will purchase electricity from the Reliance Power's power plant for 22 years at a levelized tariff rate of 7.31 cents/kWh, equivalent to Taka 5.85/kWh, Additional Secretary of Cabinet Division Muksodur Rahman Patwary said after a Cabinet Committee on Public Purchase meeting Wednesday during which approval to the plant was granted.

    State-run Gas Transmission Company Ltd., or GTCL, will undertake construction of a gas pipeline from Moheshkhali Island to Bakhrabad.

    It will build another gas pipeline from Kutumbupur to Meghnaghat with its own funding to supply gas to the power plant. Reliance Power will pay a wheeling charge to GTCL for using the pipeline.

    Bangladesh plans to build the country's first power plant that will run on regasified imported LNG by mid-June 2019, S&P Global Platts reported previously.

    State-owned North West Power Generation Company Ltd., or NWPGCL, has issued an invitation of pre-qualification for engineering, procurement, construction and commissioning of a 800-MW combined cycle power plant at Rupsha in the country's southern Khulna region.

    The power plant, with two 400-MW units, is expected to come online by June 2019.

    Some 125,000 Mcf/d of regasified LNG would be required to generate electricity from the proposed power plant, to be supplied by Petrobangla.

    Bangladesh expects to start LNG imports from early 2018 through the country's first FSRU, which is developed by US-based Excelerate near Moheshkhali Island in the Bay of Bengal.

    The FSRU -- the first of several LNG import facilities planned -- would have regasification capacity of 500,000 Mcf/d and 138,000 cu m of LNG storage capacity.

    https://www.platts.com/latest-news/natural-gas/dhaka/indias-reliance-gets-approval-to-build-lng-based-27836218
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    Big drop in U.S. oil stocks finally on the way, traders say


    Oil traders and analysts are expecting large volumes of crude to draw from storage tanks across the United States in coming weeks, in what would be the most tangible sign of an inventory overhang reduction that has punished prices over the last two years.

    A reduction would show the market is finally reversing course after years of stock builds that left a worldwide overhang of half a billion barrels of crude oil and refined products.

    Supplies have remained stubbornly high for months, disappointing traders who were expecting OPEC cuts to help rebalance the market. But traders interviewed said seasonally unusual spring drawdowns in the United States, record refining runs, and big exports to Asia and Latin America as signals that sharp declines in crude stocks could be coming.

    Some traders said that they expect as much as 10 million barrel per week in draws soon, although others forecasted three to four million barrels a week. U.S. crude stocks peaked at 533 million barrels in March, and were at 516 million as of last week, according to the U.S. Energy Information Administration.

    Forecasts can vary depending on unexpected events like unplanned refinery or pipeline outages, but traders agreed the draws would be substantial.

    "I think we'll easily get below 500 million barrels over the next six to eight weeks, or eight to 10 to be conservative," said Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut.

    On Thursday, the Organization of the Petroleum Exporting Countries, along with non-members, decided to extend cuts of around 1.8 million barrels per day for nine months to curb output. Prices fell sharply, on worries that it would not do enough to reduce supplies.

    So far in 2017, inventories have remained stubbornly high. Heavy growth in U.S. shale production, along with imports, kept U.S. inventories at levels above last year, even though more opaque storage spots were starting to draw.

    That may have already started to accelerate. Between April and May, U.S. crude draws averaged 3.4 million barrels every week, on track for the first decline for that period since 2008.

    U.S. refiners are churning crude at near-record levels. Refinery utilization was at the highest level seasonally in two years last week even ahead of the U.S. Memorial Day holiday, the de facto start of peak gasoline demand.

    Saudi Arabia's oil minister said on Thursday that the seven weeks of U.S. stock draws, along with a drop in floating storage, is "excellent news," adding that exports to the United States were dropping measurably.

    The primary offsetting factor is U.S. production, which sits now at 9.3 million barrels a day, 550,000 barrels higher than a year ago, according to EIA data. [EIA/S]

    "I expect any curtailment of OPEC exports will be matched by further increases in U.S. shale production, as evidenced by current data on the continued increase of drilling rigs and permits," said Josh Sherman, a partner at consulting firm Opportune LLP in Houston.

    However, U.S. exports of crude and products remain strong, with some 10 million barrels of U.S. crude en route to Asia, according to shipping data and trade sources.

    One crude analyst at a trading house said that he expects draws to be close to 20 million barrels a month from the Gulf Coast through the summer on "massive" levels of exports.

    That could also drain inventories at the U.S. storage hub of Cushing, Oklahoma, where stocks sit at 65.6 million barrels; Standard Chartered expects that figure to fall to below 60 million by the end of the summer.

    "At the pace sustained since the start of March, the crude surplus would be totally gone by end-December," Standard Chartered analysts said in a note this week.

    http://www.reuters.com/article/us-opec-oil-inventories-idUSKBN18L2Q1
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    Permian drilling productivity will see first-ever decline in June, EIA says

    Permian drilling productivity will see first-ever decline in June, EIA says

    Oil fields in West Texas are teeming with drilling rigs after crude prices shot up to $50 a barrel this year.

    But the Energy Department believes a key metric of drilling productivity is about to turn south in the Permian Basin for the first time since its analysts began tracking it in late 2013.

    Next month, the daily oil production of a new Permian well drilled by an average rig will decline by 10 barrels to 630 barrels, the Energy Information Administration said in a recent report.

    Of course, that doesn’t even amount to a dent in the stunning productivity gains that oil companies have made in the Permian Basin over the past few years, but it’s an ominous milestone for companies that have touted increasingly efficient and productive drilling as a way to offset the financial pain of low oil prices.

    It also coincides with another trend: In recent months, oil companies have drilled a lot more wells than they’ve brought into production. The number of so-called drilled-but-uncompleted wells in the Permian Basin is expected to rise to 1,995 in June, up from  1,348 last August, when the EIA first began tracking these unstimulated wells.

    Both of these recent developments, analysts said, are signs that drilling rigs are coming back to the Permian Basin so fast that they’re far outpacing the speed at which contractors can ready fleets of hydraulic fracturing equipment needed to blast open dense rock formations and bring the wells into production.

    A big problem is that pressure pumping companies are spending between $5 million to $10 million rebuilding equipment they cannibalized for spare parts during the downturn in oil prices. Another challenge: getting people to come back to the oil patch after severe job cuts to staff up fracking fleets that require around 100 workers. Smaller, local West Texas oil companies have found it especially difficult to find enough skilled labor, analysts said.

    “A lot of the older class of the generation is like, ‘you know what, I’ve been through the boom and bust cycle, I’m either retiring or I’m going to move on to something safer,’”said Taylor Cavey, an energy analyst at S&P Global Platts in Denver.

    Still, overall production in the Permian isn’t expected to decline anytime soon, even with prices for oil field services set to increase some 15 percent over the next year. In the lucrative Delaware Basin in West Texas, service prices could double and operators could still break even on drilling new wells there, Cavey said.

    The EIA said it expects daily oil production in the Permian Basin to rise by 71,000 barrels next month to 2.5 million. That’s up from 2 million barrels last June.

    http://fuelfix.com/blog/2017/05/25/permian-drilling-productivity-will-see-first-ever-decline-in-june-eia-says/
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    New methane rules aim to cut emissions from Canada’s oil and gas sector


    New rules to reduce methane emissions and air pollution from Canada’s oil and natural gas industry are coming down the pipe.

    Federal Environment and Climate Change Minister Catherine McKenna announced new regulations in Calgary Thursday morning. Ottawa’s pan-Canadian climate change plan includes a goal of reducing methane emissions by 40 per cent to 45 per cent by 2025.

    Government officials say that as a result of these rule changes, the value of conserved gas from 2018 to 2035 could hit $1.6-billion – alongside billions in avoided climate change damage costs. The costs to the oil and gas industry over the same time frame are pegged at $3.3-billion.

    Methane is the primary component of natural gas, used to heat homes and run industrial factories, and is released into the air through natural-gas processing, transmission and oil production. The new regulations will cover more than 95 per cent of industry methane emission sources, according to government officials. Methane emission limits are being proposed in areas including equipment leaks, venting, pneumatic devices, compressors and well completions.

    The government is also proposing new regulations to curb the release of volatile organic compounds from oil and gas sites, including petrochemical facilities, refineries and oil sands upgraders.

    The regulations are expected to come into force between 2020 and 2023. But the government said it will continue to consult with provinces, territories, industry, environmental groups and indigenous groups on the proposed changes in the months ahead, before the new regulations come into force.

    https://world.einnews.com/article/383152332/uQ4vxrhqa1Tg8Tnm?lcf=kVPIQSUt85POzQV_asgUA_flAe9WkKo4o7hyqCViM9Q%3D
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    Land sales surge in Alberta as producers rush into new shale pocket


    Alberta oil and gas land sales have reached levels not seen since 2014 thanks to a rush to buy land in an oil-rich pocket of the Duvernay shale play that was until recently written off as being uneconomic.

    Resurgent land prices are a rare bright spot for Canada's energy industry, dominated by northern Alberta's oil sands projects, a sector that global companies have withdrawn from this year because of high costs and slow returns on capital.

    The Duvernay East Shale Basin is more similar to shale plays in the United States, where hydraulic fracking can unlock oil trapped between rocks in a matter of months.

    The Duvernay Formation itself is a 130,000 square kilometre play, a fifth of the size of the province of Alberta, that holds proved reserves of 354 million barrels of oil equivalent, making it one of Canada's largest shale plays.

    "People are really getting interested in the area because it has more light oil," said Per Pedersen, a University of Calgary geoscience professor. "It could be significant in volume because it's a pretty big play."

    To be sure, exploration in the East Shale Basin is in its infancy, spurred on by improving fracking technology, and geologists are still trying to gauge how much light crude the zone near Red Deer, central Alberta, may hold.

    But average year-to-date land sale prices across Alberta are nearly three times higher than the same period in 2016 and more than double 2015 levels, led by buying in the East Shale Basin, according to provincial government data.

    At Wednesday's fortnightly auction the lease on a parcel of land in the Duvernay East Shale Basin sold for C$4,300 a hectare, 12 times the average year-to-date price at the sale of C$360 a hectare. The average year-to-date price in May 2014 was C$451 a hectare.

    The spike in land prices is set to benefit companies such as PrairieSky Royalty that own significant titles in the area.

    Firms have spent around C$70 million ($52 million) snapping up East Shale Basin land so far in 2017, accounting for more than 50 percent of total Alberta crown land sales this year, according to a TD Securities note to clients.

    Vesta Energy, one of two private companies leading the land purchases, last week secured C$305 million ($226 million) in financing led by private equity firms Riverstone Holdings and JOG Capital.

    By applying lessons from U.S. shale plays, the East Shale Basin is developing into one of the most economic plays in North America, Riverstone managing director Olivia Wassenaar said in a statement.

    Initial results from operators show it is shallower and cheaper to drill than the Kaybob Duvernay oil play to the northeast, where Encana Corp and Chevron Corp produce liquids-rich natural gas.

    While results prove the play is economic at $50 per barrel crude, some companies are getting wary of the prices even as they move from the gassy western side of Duvernay to the oilier east.

    "It's still a high risk strategy but things are gaining momentum very quickly. (Prices) are getting pretty frothy," Darryl Metcalfe, CEO of Artis Exploration said, which like Vesta has been one of the first companies to buy up land.

    http://www.reuters.com/article/us-canada-alberta-duvernay-idUSKBN18L2V3
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    Canada's Trans Mountain crude pipeline oversubscribed by 23% in June


    Kinder Morgan Canada will limit crude nominations on its Trans Mountain pipeline system by 23% in June, meaning the line will carry 77% of nominated volumes, the company said Wednesday.

    June volumes on the Trans Mountain mainline system are expected to average 275,736 b/d, down from 324,374 b/d in May, Kinder Morgan said in an email.

    Exports from the Westridge Dock near Vancouver are expected to average 77,729 b/d, compared with 80,651 b/d in May.

    Throughput on the Puget Sound pipeline is expected to average 125,099 b/d, compared with 155,222 b/d in May.

    The Trans Mountain pipeline ships Canadian crude from Edmonton, Alberta, to the Westridge export terminal in Burnaby, British Columbia, and on to the connected 180,000 b/d Puget Sound pipeline to Seattle-area refineries.

    https://www.platts.com/latest-news/oil/houston/canadas-trans-mountain-crude-pipeline-oversubscribed-21831911
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    Alternative Energy

    China wind power maintenance industry embraces chances


    With the rapid rise of China's wind power generation, wind power maintenance industry is about to drive into the fast lane.

    It is estimated the wind power installed capacity will total 150 GW by 2020, meaning 100,000 wind turbines need maintenance service, which is a huge market demand for the sector.

    As of end-2016, China wind power installed capacity topped the world at 149 GW. However, large amounts of wind electricity failed to be connected with the grid, which is a huge waste but surprisingly offers a great chance for the sector.

    The maintenance of wind turbines relied on the manufacturers' after-sales services in the early years. In fact, the services make no helps on wind farm's economic benefits due to high service expenses and slow response.

    Professional wind maintenance service got popular and replaced the manufacturers' after-sales services as soon as it came into the market.

    Statistics show the current annual output value of the sector rose to 14.78 billion yuan ($2.15 billion) in 2015 from 8.87 billion yuan in 2013, indicating a bright future for this setor.

    http://www.sxcoal.com/news/4556536/info/en
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    Uranium

    China Fuqing nuclear unit 5 to get its dome


    Construction of the world's first Hualong One nuclear reactor unit at Fuqing in China's southeastern Fujian province will reach a milestone with the installation of the dome on the containment vessel due to take place on May 25 or 26.

    The installation marks the completion of its civil construction work and the start of equipment installation, said Yu Peigen, deputy general manager of China National Nuclear Corp (CNNC), one of the country's largest nuclear companies.

    The fifth and sixth units at Fuqing use the domestically developed Hualong One pressurized water reactor design, a homegrown third-generation reactor, which Yu said is ready to be constructed on a mass scale.

    "After some 30 years of learning and innovation, China has mastered the independent design and manufacturing of third-generation nuclear power facilities, and has shifted from being a novice to a pioneer in the nuclear sector worldwide," Yu said at a news conference in Beijing on May 24.

    The Hualong One demonstration project is making smooth progress, and there is still a lot of room for China's nuclear capacity to grow, he added.

    Xing Ji, chief designer of Hualong One at CNNC, said the pilot project will help pave the way for China's nuclear power equipment industry to go global.

    With Chinese nuclear technologies gaining a presence worldwide in nations including the United Kingdom, Romania and Pakistan, CNNC has successfully exported six nuclear power units and eight reactors to at least seven countries, and has established links with more than 40 countries for further deals spanning the full nuclear industrial chain, he said.

    According to a recent deal signed during the Belt and Road Forum, China will supply Argentina with two nuclear power reactors, including one Hualong One pressurized water reactor. The deal with Argentina to build a reactor in the South American nation starting in 2020 is the second one after CNNC's construction of a Hualong One reactor in Pakistan.

    http://www.sxcoal.com/news/4556522/info/en
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    CGN denies regrouping rumours: relevant orders not yet received



    China General Nuclear Power Group (CGN) has not yet received any regrouping orders from the relevant authorities, and a statement will be released if it does in the future, said Huang Xiaofei, spokesman of the company, at a shareholder meeting.

    It mainly responds to market talks over China's plan of regrouping major thermal and nuclear power producers into three enterprises.

    It was heard that Chinese relevant authorities may restructure China Shenhua Group, CGN and China Datang Group into one company, China Huadian Group, China Guodian Group and China National Nuclear Power Co., Ltd into one, and China Huaneng Group and China Power Investment Group into one firm.

    Xiao Yaqing, director of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), once pledged in March to vigorously pep up regroupings of central government owned enterprises in 2017, as it becomes a practical necessity to restructure steel, coal, thermal power and heavy equipment sectors.

    Rumors have been spreading in the market all along, yet further confirmation remains absent.

    http://www.sxcoal.com/news/4556537/info/en
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    Precious Metals

    London Bullion Market Association launches code of conduct for precious metals markets



    The London Bullion Market Association (LBMA) is launching a code of conduct aimed at boosting confidence in the $5 trillion a year London gold market, it said on Thursday, following years of heightened regulatory scrutiny of the city's financial sector.

    The guidelines set out best practice in ethics, governance, compliance and risk management, information sharing and business conduct, the bullion market's trade association said in a statement.

    "The code is an important step forward to build greater trust, consistency and transparency throughout the market," LBMA chairman Paul Fisher said in the release.

    The LBMA said its more than 140 members - which include banks, refiners, traders, and fabricators - will be required to sign a statement of commitment to the code, which will be mandatory from June 2018.

    "Members will have a 12-month period to demonstrate compliance with the code.  Failure to do so could potentially result in their membership either being suspended or withdrawn," a spokesman for the LBMA said.

    The code is one of three developed as a result of the Fair and Effective Markets Review (FEMR) of the fixed income, forex and commodities markets which was commissioned by the UK government in three years ago after British banks were fined billions of pounds for trying to rig benchmark interest rate Libor, and manipulate foreign exchange reference rates.

    The FEMR found that informal codes of practice across these markets had often been misunderstood or disregarded, especially in bilateral over-the-counter (OTC) markets like gold. A lack of internal controls and personal accountability had meanwhile contributed to what it called "ethical drift".

    The review recommended that firms working within these markets should take greater collective responsibility for "developing and adhering to clear, widely understood and practical standards of practice".

    In the wake of the Libor scandal, London's precious metals price benchmarks, or fixes, were reconfigured, while the LBMA overhauled its management structure last year and announced moves toward trade reporting.

    Rising concerns over regulation and a resulting push toward greater transparency have fueled speculation that more of London's OTC gold trading could move onto exchanges.

    Intercontinental Exchange (ICE) launched new precious metals contracts earlier this year, and the London Metal Exchange (LME) plans to launch its LMEprecious suite of contracts in July.

    http://www.reuters.com/article/us-gold-lbma-code-idUSKBN18L124
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    Stronger rouble hurts Russian diamond miner Alrosa in first quarter


    Russian diamond miner Alrosa , the world's largest producer of rough diamonds in carat terms, reported a 55 percent drop in first-quarter net profit on Thursday, blaming a stronger rouble.

    State-controlled Alrosa and Anglo American's De Beers unit produce about half of the world's rough diamonds.

    Alrosa announced a first-quarter net profit of 22.7 billion roubles ($404 million) as earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 41 percent from a year earlier to 35.2 billion roubles.

    Revenue declined 17 percent from a year earlier to 84.8 billion roubles.

    "Rouble appreciation against the U.S. dollar, and a change in the product mix resulted in a decrease of gem-quality rough diamond sales year-on-year," Alrosa said in a statement.

    Revenue has begun to improve however, rising 38 percent in January to March from the previous quarter as Indian demand for rough diamonds recovered.

    Alrosa has previously said that it increased diamond production by 9 percent in the first quarter from a year earlier to 8.9 million carats, while diamond sales were well above production and reached 14.1 million carats for the period.

    The high sales mean Alrosa's inventory was reduced by 5.2 million carats to about 13 million carats and is now closer to Alrosa's long-term target of 10 million carats.

    Analysts at VTB Capital said in a note on Thursday that Alrosa's EBITDA missed their expectations due to the accounting treatment of inventories but a free cash flow of 35 billion roubles exceeded their estimates by 17 percent.

    VTB Capital said a current recovery in diamond prices might enable Alrosa to report comparable earnings in the second quarter despite seasonally lower sales volumes and a stronger rouble.

    http://www.reuters.com/article/russia-alrosa-results-idUSL8N1IR51J
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    Base Metals

    Strike impacts Freeport's Grasberg mine, workers 'resigned'


    Freeport McMoRan Inc said on Thursday that mining and milling rates at its Grasberg copper mine in Papua, Indonesia have been affected as some 9,000 workers stage an extended strike, and a "large number" of approximately 4,000 absentee workers were deemed to have resigned.

    Escalating tensions with workers is a further disruption for Freeport, entangled in an ongoing dispute with Indonesia over rights to the giant mine, which has cost both sides hundreds of millions of dollars.

    An estimated 9,000 workers have extended their strike for a second month at Grasberg, the world's second-largest copper mine, in an ongoing dispute over employment terms and layoffs, the union said on May 20.

    Freeport, the world's largest publicly traded copper miner, said that approximately 4,000 workers, including a limited number of contractors, have not reported to work, despite multiple summons to return.

    "As a result, a large number of these workers were deemed to have resigned, consistent with agreed Industrial Relations guidelines and prevailing law," spokesman Eric Kinneberg told Reuters.

    Officials for the union were not immediately available to comment.

    In a May 15 memo obtained by Reuters, Freeport said the strike is illegal and "voluntary resignation is the consequence" for workers who ignored demands to return to work and were absent for five consecutive days.

    Freeport is trying to mitigate the impact on mining and milling rates, which were not quantified, by re-allocating resources, training additional workers and supplementing its mill throughput with available stockpiles, Kinneberg said.

    Freeport resumed copper concentrate export shipments from Grasberg late last month after a 15-week outage related to its dispute with the government and had planned to ramp up production, which was cut by around two-thirds during the outage.

    Freeport had "demobilized" around 10 percent of its Indonesian workforce as of mid-April, among efforts to cut costs resulting from the dispute. The company has repeatedly warned workers that striking will result in disciplinary action.

    The union has demanded an end to Freeport's furlough policy and began a 30-day strike on May 1 in an effort to get workers' jobs back.

    The majority of Freeport's approximate 30,000-member workforce is working "productively and safely and operations continue to improve," Kinneberg added.

    http://www.reuters.com/article/us-freeport-mcmoran-strike-idUSKBN18L27C
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    Chilean copper miner Codelco preparing local bond issue: agency


    Chile's state-run Codelco, one of the world's biggest copper producers, is readying a domestic bond issue that will allow it to refinance its debt and fund investments, a local ratings agency said on Thursday.

    Codelco was in the process of registering a new debt issue worth some $1.6 billion, denominated in Chilean inflation-adjusted currency unit UF, said Feller Rate in a statement, adding that it was rating the bonds 'AAA'.

    The company, which returns its profits to the state and is funded by a mix of government refinancing and debt, needs to invest billions of dollars in an ambitious program to expand its tapped-out mines.

    Codelco confirmed that it was registering the new bonds, but added that an issue was not necessarily imminent.

    http://www.reuters.com/article/us-codelco-debt-idUSKBN18L2TM
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    Steel, Iron Ore and Coal

    Coal India wins tax-cut boost as environmentalists fret


    State-run Coal India Ltd, saddled with millions of tonnes of unsold coal, is expected to be the biggest beneficiary of a controversial government decision to more than halve the local sales tax on the fuel after a jump in local supplies.

    The world's third-largest greenhouse gas emitting country said last Friday it would lower the duty on domestic coal from July 1 and impose a new 18 percent tax on solar cells and modules as part of a broader tax overhaul. 

    The moves are seen as helping boost sales of the fossil fuel mined locally and used mainly in thermal power plants. But imports of high-quality coal which are scarce in India and used in the steel making process by companies such as JSW Steel and Tata Steel will become expensive following changes to the duty structure.

    The duty revamp under the national India's Goods and Services Tax (GST) could also hurt the young and booming solar power industry, which relies heavily on cells and modules imported from China.

    Output by Coal India, the world's largest coal miner that mainly produces low-grade coal for power companies, has expanded rapidly as the government speeds up environmental and other approvals as part of its efforts to provide electricity across the country. However, highly indebted power companies struggled to match the same growth rates.

    The government recently reined in coal output, cutting Coal India's production target by about a tenth to 600 million tonnes for this fiscal year.

    Coal India hopes the lowering of the coal sales tax to 5 percent from around 11 percent currently will help it find buyers for some 57 million tonnes of mined coal it has been struggling to sell, a senior company official told Reuters.

    "As prices go down it should help us sell the stock," the official said, declining to be named.

    The company has also been trying to sell coal to neighboring Bangladesh, but has faced delays due to issues over quality.

    New Delhi-based Jindal Steel and Power said the lowering of the duty on coal, which accounts for up to 60 percent of costs for power companies, will improve the health of merchant power companies and cut power tariffs for some users.

    "The government is mining so much coal, they would like that be used," Jindal Steel Chief Executive Ravi Uppal told Reuters, adding that it was only fair that thermal power companies were being given some relief when renewable companies were enjoying numerous government incentives.

    The government has facilitated capital subsidies and cheap loans for clean energy to help meet Prime Minister Narendra Modi's goal of raising renewable energy capacity by more than five times in the next five years to fight climate change.

    Piyush Goyal, minister for power, coal and renewable energy, said after the tax announcement the government will stick to its clean energy goals, but environmental groups said India's progress on solar would be jeopardized.

    "The international community will read this as India backtracking on its renewable energy commitments," said Nandikesh Sivalingam, climate and energy campaigner at Greenpeace India.

    http://www.reuters.com/article/india-tax-power-idUSL4N1IR3N3
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    CEO sees little chance of Samarco restart in 2017


    The Samarco iron ore mine in Brazil – a joint venture Vale and BHP Billiton  – is unlikely to resume operations before the end of the year.

    Samarco Mineracao ceased operations in November 2015 following a deadly tailings dam burst. CEO Roberto de Carvalho told Reuters that talks with South American nation's environment authorities to restart operations is ongoing but there's only a "small possibility" of a restart this year:

    "It is getting increasingly tight to resume operations this year," Carvalho said in a telephone interview. "Each day that passes makes it tighter."

    At 30 million tonnes per year before the disaster Samarco's pelletizing operations supplied roughly one-fifth of the seaborne trade in the steelmaking raw material that attracts a premium price over iron ore fines and lump ore. Earlier Samarco said that should the mine reopen output would likely be capped at 19 million tonnes per year.

    The uncertain timing of a new environmental licence to restart operations had forced the company to move to lay off over 1,000 workers last year. Samarco is also in debt restructuring talks with its bankers concerning $3.8 billion in outstanding loans.

    A settlement in a civil lawsuit brought by Brazilian prosecutors for 155 billion reais (nearly $50 billion today) against the two companies and Samarco is being negotiated with a deadline for an agreement set for June 30.

    In March last year Vale and BHP reached a deal with Brazilian authorities and the mine owners agreeing to pay an estimated 24 billion reais or $6.2 billion spread out over several years.

    http://www.mining.com/ceo-sees-little-chance-samarco-restart-2017/
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    China's ICBC signs $4 billion debt swap with Shandong Steel: Xinhua


    The world's largest lender, Industrial and Commercial Bank of China , has signed a 26 billion yuan ($3.79 billion) debt-for-equity swap framework agreement with Shandong Iron & Steel Group, the official Xinhua news agency reported on Thursday.

    China's lenders are signing deals with struggling, debt-laden state firms to lower their leverage and cut financing costs following instructions from Beijing.

    The deal will help state-owned Shandong Iron improve its capital strength and promote diversification in its corporate ownership structure, the agency reported.

    This is the fifth such swap signed in the northern province of Shandong, the agency added.

    In December, ICBC signed three debt-for-equity swaps with Shanxi province's highly indebted state-owned coal and steel firms.

    Heavy industries such as coal and steel have suffered from overcapacity as China relies increasingly on consumption for economic growth.

    The deputy general manager of Shandong Iron was investigated by the ruling Communist Party, according to the party's anti-graft watchdog.

    http://www.reuters.com/article/us-china-icbc-debt-idUSKBN18L147
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    Baosteel to deeply integrate steel businesses in 3yrs


    Baoshan Iron and Steel Co., Ltd (Baosteel), which has been restructured with Wuhan Iron & Steel Group (WISCO) to form China Baowu Steel Group, plans to facilitate deep integration of steel businesses and regional cooperation in Shanghai and Wuhan over 2017-2019, said the company on May 23.

    The integration, including human resources, corporate culture, investment management, auditing and operation improvement, is expected to be completed in the three years, said the company.

    Baosteel aims to realize a synergy of 1 billion yuan ($145.1 million) from steel businesses in Shanghai and Wuhan this year.

    Baosteel, a listed steel maker with the largest steel production in China, lifted 2017 revenue target to 338.5 billion yuan, which would represent a surge of 82.5% from 185.5 billion yuan recorded last year, said the company in 2016 annual report released in April.

    The company plans to produce 45.22 million tonnes of iron and 46.19 million tonnes of steel in 2017, said the report.

    The ambition probably comes as operation results of WISCO will be incorporated into Baosteel after regrouping, and WISCO may contribute one third to Baosteel's total iron, steel output in 2017.  

    http://www.sxcoal.com/news/4556530/info/en
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    Baogang pushes on with steel expansion

    Baogang pushes on with steel expansion

    Steel giant Baogang Group is planning to integrate its overseas operations and expand its market share through the Belt and Road Initiative.

    The State-owned iron and steel company will set up an international division from its Baotou headquarters in the Inner Mongolia autonomous region.

    This is all part of a push by the group to seek overseas financing as it brings together its offices in the United States, Singapore, Japan and Hong Kong.

    "We will not only explore increasing global sales for our steel products, but also try to expand our role as an integrated trade service provider in the steel sector," said Wu Yongbo, deputy director of strategic development at Baogang.

    Since being set up in 1954, the company has become one of the biggest steel conglomerates in Inner Mongolia and has around 50,000 employees.

    In the first quarter, it reported profits of 20 million yuan ($2.9 million), increasing 6.16% on the year.

    Revenue topped 13.76 billion yuan, which was a rise of 98.76%, or 6.84 billion yuan, compared with the same period last year.

    Increasing its global presence will help Baogang boost production as it taps into potential new markets through the Belt and Road Initiative.

    "This will involve procurement and sales in the global market as well as in China," Wu said.

    Other company plans include expanding iron ore operations in the Tumurtei mine in Mongolia as well as the anthracite project in Jargaland and the coking coal operation in Tavantolgoi, Mongolia.

    Another key development will be to build advanced steel making factories overseas although the company has yet to reveal the global locations or time frames for the projects.

    Still, Wu was quick to point out that Baogang is moving in the right direction.

    "Last year, we signed a joint agreement with Salim Group, a multinational corporation in Indonesia, for iron and steel projects with annual production of 2 million tonnes," he said.

    He also revealed that the company hopes to increase its market share by 10% of steel and nonferrous metal products to Southeast Asia, the Middle East and South America without disclosing detailed figures.

    During the first quarter, Baogang exported 536,500 tonnes of steel, up 23.41% year on year.

    Pipeline steel exports also hit 29,000 tonnes in the same three months with 90% exported to countries and regions related to the Belt and Road Initiative, such as in South Asia and the Middle East.

    "With the Belt and Road Initiative, the communication and transportation networks connecting eastern Europe, West Asia and Southeast Asia will be established, benefiting Baogang's economic ties with those countries and regions," Wu said.

    Chen Ruhai, deputy manager of Baogang Group International and Trade Co, pointed out that the conglomerate was heavily involved in key infrastructure projects across the globe.

    These include rail construction in East Africa countries such as Kenya, Uganda, Rwanda and South Sudan.

    http://www.sxcoal.com/news/4556539/info/en
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