Mark Latham Commodity Equity Intelligence Service

Friday 10th June 2016
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    Oil and Gas


    Bucking Big Oil Companies, U.S. House Set to Condemn Carbon Tax

    Congressional Republicans are poised to approve a non-binding resolution to condemn the idea of a carbon tax, putting lawmakers on record opposing an approach to combating climate change favored by Exxon Mobil Corp. and other large oil companies.

    The House strategy, pushed by Majority Whip Steve Scalise, a Louisiana Republican, and backed by Koch Industries Inc., uses the symbolic measure to lock in hundreds of votes against a tax on carbon dioxide emissions blamed for climate change. The tactic is designed to weaken the ability of a future president and Congress to levy one to help pay for a broad overhaul of the U.S. tax code, said Republican strategist Mike McKenna.

    “The more you vote on something, the harder it is to vote the other way," McKenna said.

    The House last touched the issue in 2013, when it voted 237-176 to adopt a Scalise-sponsored amendment requiring the administration to receive approval from Congress before implementing a carbon tax. By contrast, the measure up for a House floor vote Friday is a stand-alone resolution asserting that "a carbon tax would be detrimental to American families and businesses, and is not in the best interest of the United States."

    Regulatory Replacement

    Some big oil companies disagree with the Republican effort. That includes Exxon Mobil, which hasn’t taken a formal position on the Scalise resolution but has lobbied on Capitol Hill for a revenue-neutral carbon tax to take the place of an array of environmental regulations that raise the cost of fossil fuels.

    A revenue-neutral carbon tax would "ensure a uniform and predictable cost of carbon, allow market forces to drive solutions, maximize transparency to stakeholders, reduce administrative complexity, promote global participation and easily adjust to future developments in climate science and policy," said Exxon Mobil spokesman Alan Jeffers. "In order to set a uniform cost of carbon across the economy, a carbon tax has to replace all the other patchwork of regulations that are designed to put a price on carbon.”

    The issue divides the oil industry, with several other large integrated companies also favoring a carbon tax, even though it is being fought by many independent producers that lack pipeline and refining operations.

    BP Plc says a well-constructed carbon tax or cap-and-trade system would encourage energy producers and consumers to reduce emissions. Royal Dutch Shell Plc Chairman Charles Holliday calls a carbon tax the most effective and practical way to reduce greenhouse gas emissions.
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    What We Learned From Four Days of Briefings in Saudi Arabia

    What We Learned From Four Days of Briefings in Saudi Arabia

    Following are the main targets laid out in the plan for the coming five years:


    The kingdom plans to build 1.5 million residential units in seven years, and will do so through partnerships with private sector developers.
    It has allocated 13.5 billion riyals ($3.6 billion) in five years to establish partnerships with the private sector to develop state lands and build large-scale residential projects. Real estate stocks surged after the announcement.
    Reduce the average time required to approve new residential projects to 60 days from 730 days.
    All land holdings to be surveyed, compared with 6 percent currently.

    Public Finances

    Non-oil revenue is seen rising to 530 billion riyals ($141 billion) by 2020 from 163.5 billion riyals.
    The public-sector wage bill would fall to 456 billion riyals from 480 billion, making up 40 percent of total spending instead of 45 percent.
    Public debt will increase to 30 percent of economic output from 7.7 percent, while the kingdom’s credit rating is seen rising two levels to Aa2 from A1.
    Water and electricity subsidies are to be cut by 200 billion riyals; the tariffs charged on water would cover 100 percent of actual costs, compared with 30 percent now.
    A tax would be imposed on "harmful products."
    The private sector would fund about 40 percent of the initiatives included in the plan.

    Investments, Jobs, Privatization & Exports

    450,000 jobs to be created by 2020 under the program.
    Non-oil exports would climb to 330 billion riyals from 185 billion riyals by 2020.
    Foreign direct investment would rise to 70 billion riyals from 30 billion riyals.
    The minister of environment, water and agriculture said the government plans to privatize the Saline Water Conversion Corp.
    Information technology proportion of non-oil GDP to double to 2.24 percent; media industry to contribute 6.64 billion riyals to economic output from 5.2 billion riyals.

    Business Environment, Women

    Plan to improve Saudi Arabia’s global ranking in terms of ease of doing business to no. 20 from no. 82.
    Average resolution time for commercial cases to be reduced to 395 days from 575 days.
    80 percent of Justice Ministry’s services to be delivered electronically.
    Female participation in the workforce to increase to 28 percent from 23 percent; number of women in civil service to rise to 42 percent from 39.8 percent.

    Energy, Mining

    Oil output capacity is expected to stay at 12.5 million barrels per day by 2020, with refining capacity rising to 3.3 million barrels per day from 2.9 million.
    Output capacity of dry gas to reach 17.8 billion cubic feet per day versus 12 billion currently. The country will generate 4 percent of its power from renewable energy by 2020.
    Mining sector’s contribution to economic output to reach 97 billion riyals from 64 billion riyals.

    Health Care

    Plan for reforming and "restructuring of primary health care" estimated to cost 4.7 billion riyals.
    Private sector contribution to health care spending to increase to 35 percent from 25 percent.
    70 percent of Saudi citizens to have a unified digital medical record.

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    Low interest rates and timid governments are trashing economic growth, warns OECD

    Permanently low interest rates are ruining investments and savings, the Organisation for Economic Co-operation and Development (OECD) has warned, undermining long-term economic growth.

    Low rates are designed as an emergency boost to crisis-stricken economies, but are harmful over long periods of time, the study said.

    The only way out is for governments to reform stagnant economies, allowing bad companies to go bust, encouraging banks to write off loans to those failing companies, and encourage innovative firms to grow, it said.

    “Seven years of extremely easy monetary policy has not restored the investment and productivity growth needed to raise income per head, real wages, demand and growth,” said the OECD.

    “This policy was originally designed to stabilise the financial system and support economic recovery, but somehow has slipped intotrying to compensate for the absence of the other policies that are needed.”

    These problems are in part coming to light because of the end of the upswing in commodities markets, as oil prices have dived along with other natural raw materials.

    The OECD notes that investment in commodities and related sectors have driven much of the growth in the global economy, particularly in the emerging markets, in recent years.

    As excess supply led to a decline in prices and brought that investment boom to an end, the economy suddenly looks in worse shape.

    The drop in oil and other commodities prices is crushing one of the main drivers of investment growth in recent years CREDIT: WU HONG/EPA

    Low interest rates will not help those emerging economies, the OECD said, nor the richer economies where lending is constrained by tighter banking rules imposed in the wake of the financial crisis.

    The economists propose gradual moves to raise wages in the emerging markets, though this may depress investment further by pushing resources from firms to individual workers.

    Richer countries need to take weak companies and banks off life support, and recognise that negative rates are harming even the healthy banks, the report said.

    Those negative rates are also harming investors by creating “perverse incentives” and driving irrational behaviour in markets, the OECD warned.

    “Investors have been herded into concentrated trades, many of which are illiquid, and recent volatility reflects periodic attempts to exit them – particularly when there is any hint of a withdrawal of the monetary policy ‘morphine’ to which they have become addicted,” the report said.

    “Financial fragility means that central banks will embark upon the normalisation of interest rates only very slowly and the outlook for the next year or two in financial markets is one of choppiness about [a trend of modest returns], with persistent risks of extreme volatility.”

    Until higher interest rates are imposed, investors will be concentrated in a “barbell” pattern of very low risk and very high risk investments, with little in between to finance the growth of companies that do not fit that pattern.

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    S Korea to shut aging coal-fired power plants, LNG to get a boost: minister

    Stressing the urgent need to cut emissions in the country, South Korea's energy minister Wednesday said the government was set to shut aging coal-fired power plants and vigorously promote cleaner fuels by using gas-fired power plants for electricity generation.

    "The government has decided to close down aged coal-powered power plants accused of air pollution and fine dust emissions," South Korea's Minister of Trade, Industry and Energy Joo Hyung-Hwan said in his keynote speech at the Future Energy Forum in Seoul Wednesday.

    But the plan to phase out aging coal-fired plants is unlikely to affect the country's oil demand, as oil accounts for just 3% of total electricity generation and the cost of power production using oil is higher compared to using LNG.

    About 10 coal-fired power plants -- in operation for about 40 years or more -- will be the first ones to shut down, Joo said at the forum hosted by South Korea's biggest daily Chosun Ilbo.

    "As the shutdown of coal-fired plants can affect the country's power supply, natural gas-fired power plants would produce more electricity to avoid any possible electricity shortages," he said.

    While the government is keen to cut coal use in power generation, industry officials see the potential to curb coal usage for power plants as limited.

    South Korea's coal-fired capacity additions are expected to increase by nearly 44% to 36,193 MW by 2020, from 25,149 MW in 2014, Choi Jae-Young, procurement manager at Korea East-West Power Co. said during his presentation at a coal industry gathering in Bali, Indonesia, earlier this month.

    He said South Korea's coal demand is expected to increase by nearly 40 million mt in the next four or five years. The country's total thermal coal imports in 2015 stood at about 93.7 million mt, up 1% from 2014. South Korea runs 53 coal-fired power plants, supplying about 40% of South Korea's electricity, followed by nuclear at about 30%, LNG 25%, oil 3% and renewable sources, such as hydropower, solar, wind and fuel cells, 2%.

    Operating rates at natural gas-fired power plants have decreased to under 40% since the second half of 2014, from 60% in 2012-2013 because of increased capacity of coal-fired and nuclear power plants and a slowing economy.

    "The country's reliance on LNG in its fuel mix for power generation is expected to rebound on the back of the government's plans to shut down aged coal-powered power plants," Yoon Dong-Jun, CEO of Posco Energy, said on the sidelines of the forum. Posco Energy, a unit of the country's top steelmaker Posco, runs six LNG-fired power plants.
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    Freeport says buyers eager for a stake in its assets

    U.S. miner Freeport-McMoRan Inc (FCX.N) will consider a "broad spectrum" of asset sales and has attracted interest from parties wanting to buy a stake in a grouping of its assets, Chief Financial Officer Kathleen Quirk said on Wednesday.

    "We have not ruled anything out," Quirk said at the Deutsche Industrials and Materials summit.

    "As a result of that we've gotten a lot of interest from various parties ... in all of our assets in some form or fashion," she said.

    She said Freeport, the world's biggest publicly traded copper producer, has also had interest from parties looking at buying an interest in a portfolio of its assets.

    "We will certainly consider that," she said.

    There has been media speculation that Freeport is looking at selling a minority stake in a package of its assets, possibly a grouping of its North and South American copper mines. Quirk declined to comment on the speculation.

    Phoenix, Arizona-based Freeport has been selling off assets to bring down its debt to $10 billion from nearly $20 billion.

    Most recently, it agreed in May to sell its majority stake in the Tenke Fungurume copper project in the Democratic Republic of Congo to China Molybdenum Co Ltd (603993.SS) for $2.65 billion.

    The company has also been preparing itself, by lowering costs and cutting production, for copper prices as low as $1.75 a pound although it does not predict prices will fall that low, Quirk said.

    The price of the metal, currently about $2.06 per pound, needs to get back above $3 for the industry to ramp up investment in new projects, she said.

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    Glencore sells down further agri unit stake for $625 million

    Glencore has agreed to sell a 9.99 percent stake in its agricultural business to British Columbia Investment Management Corp for $624.9 million, as it continues a push to sell up to $5 billion worth of assets this year to help cut debt.

    Glencore Agri would also take on $3.6 billion in debt currently funded by Glencore, the Swiss-based mining and trading firm said, helping to pare debt on Glencore's books. The debt would be financed without recourse to Glencore.

    The deal follows the company's sale of a 40 percent stake in Glencore Agri to Canada Pension Plan Investment Board for $2.5 billion in April, and will leave Glencore with just over a 50 percent stake in the business, with existing management to stay.

    "These transactions highlight the superior value of Glencore Agri, with its advantaged asset footprint and business model, relative to its closest peers," Glencore Chief Executive Ivan Glasenberg said in a statement on Thursday.

    The sale of the agricultural unit stakes plus an agreement to sell a gold deposit in Kazakhstan for $100 million has put Glencore on track to reach its asset sales target as it seeks to cut net debt to between $17 billion and $18 billion this year.
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    Brazil prosecutor seeks arrest of Senate president, ruling party leader: report

    Brazil's chief prosecutor asked the Supreme Court to authorize the arrest of the presidents of the Senate and of the ruling PMDB party for allegedly trying to obstruct police investigations, newspaper O Globo said on Tuesday.

    Supreme Court Justice Teori Zavascki must now decide whether to accept the request, O Globo said.

    Chief prosecutor Rodrigo Janot also requested permission to arrest suspended House speaker Eduardo Cunha and former president José Sarney, who was a senator until 2014, for seeking to block the two-year-old probe into political kickbacks at state oil company Petrobras.

    Senate President Renan Calheiros, PMDB acting president and Senator Romero Jucá, former president Sarney and Cunha are some of Brazil's most powerful political leaders. The four men have denied any attempt to halt the probe.

    Their arrests could weaken the new administration of interim President Michel Temer, as it seeks to build support in the Senate to convict suspended President Dilma Rousseff on charges of breaking budgetary laws.

    The chief prosecutor also requested Calheiros be removed from the Senate presidency, O Globo said. If he is suspended, an ally of Rousseff, Senator Jorge Viana, would become the acting president of the Senate in the middle of her impeachment trial in the upper house.

    The trial is expected to conclude in mid-August as Brazil is hosting the Olympic Games in Rio de Janeiro.

    Under Brazilian law, the Supreme Court must approve any judicial action taken against members of congress. Sarney was included in the request, even though he is no longer a senator, because he is mentioned in the same case as Jucá and Calheiros.

    The chief prosecutor's request to the Supreme Court came following the release of recordings made by Sérgio Machado, a former senator and PMDB ally who struck a plea bargain deal with prosecutors to collaborate in the sweeping corruption probe that has plunged Brazil into political mayhem.

    Machado recorded Calheiros, Juca and Sarney, separately, allegedly discussing strategies to weaken the investigation.

    The recordings were leaked by newspapers in recent weeks and caused Jucá's dismissal as Planning Minister.

    The Supreme Court voted unanimously last month to remove Cunha, a bitter rival of Rousseff's, as speaker of the lower house on charges of obstructing the corruption investigation.

    Media representatives for Calheiros, Jucá, Sarney, Cunha and Janot did not immediately respond to requests for comment on the O Globo report. A Supreme Court spokeswoman declined to comment.
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    U.S. Said to Rebuff EU Bid to Shield Banks From Iran Sanctions

    European Union governments have hit a wall with the U.S. in attempts to shield banks and companies that do business with Iran from the threat of financial sanctions.

    EU finance ministers pressed U.S. officials to provide more explicit guidance on the administration’s sanctions regime during talks in Brussels in late May, without success, two people familiar with the meeting said. Spokeswomen for the U.S. Treasury and the European Commission declined to comment on the talks.

    With an estimated $24 billion in additional EU trade at stake over the next two years, Europe, Russia and the U.S. lifted economic sanctions linked to Iran’s nuclear program in January. Yet restrictions on dollar-denominated trades related to Iran were among the penalties left in place, crimping Europe’s expansion of business ties with the Islamic republic.

    “Banks evidently view the risk of violating U.S. sanctions as too great,” Arnold Wallraff, head of the German government’s Office for Economic Affairs and Export Control, said in an interview. “Additional measures to limit liability would be helpful. Politicians need to address that.”

    With oil and aviation deals usually financed in dollars with large banks sharing the risks, the ban on dollar transactions remains a hurdle for deals such as Iran’s agreement to buy 118 Airbus planes worth $27 billion, announced shortly after sanctions were lifted in January.

    EU finance ministers and officials pressed the U.S. to give assurances to banks about the reach and application of the remaining sanctions, according to the people, who asked not to be identified because the talks were private. In its response, the U.S. declined to go beyond its publicly announced policy, the people said.

    Past Penalties

    The push by EU governments reflects pressure by banks after the nuclear deal with world powers sparked optimism that Iran would rejoin the global financial system. More than half of international companies interested in doing business with Iran are holding back for fear of running afoul of sanctions, according to a report by global law firm Clyde & Co.

    EU-Iran trade is expected to quadruple in the next two years from an annual level of some $8 billion, according to the U.K. Foreign Office. Yet U.S. politics mean the window for expanding trade with Iran may be closing, with Republican presidential frontrunner Donald Trump signaling he’d tear up the Iran accord that he says led to U.S. “humiliation.”

    Nuclear-related sanctions, including a ban on Iran’s use of the SWIFT system for international financial transactions, were lifted in January following the nuclear deal. Other international sanctions related to terrorism and ballistic-missile development remained in place, as does a U.S. ban on American commerce with Iran.

    Past U.S. penalties loom large, including the record $9 billion fine that BNP Paribas SA agreed to pay in 2014 in part for dealings with Iran. France’s Societe Generale SA, Germany’s Deutsche Bank AG, Zurich-based Credit Suisse Group AG, ING Groep NV in the Netherlands and the U.K.’s Standard Chartered Plc are among the big European banks that have said they’re generally not prepared to do business in Iran yet.

    ‘Lack of Clarity’

    France’s government, worried that companies may lose exports, is said to be in talks with the U.S. Treasury’s Office of Foreign Assets Control, or OFAC, to seek a commitment that banks can do business without incurring legal woes.

    The U.S. administration says Treasury and State Department officials have held meetings with companies, government officials and financial institutions in more than a dozen countries to discuss the sanctions relief for Iran. Guidance on OFAC’s website is regularly updated in response to questions about the scope of the sanctions, the Treasury spokeswoman said by e-mail.

    U.S. Secretary of State John Kerry met European bankers including Deutsche Bank AG Co-Chief Executive Officer John Cryan in London in May, telling them “that legitimate business, which is clear under the definition of the agreement, is available to banks.”

    That doesn’t satisfy the Europeans. Several EU companies have asked the European Commission to take their individual cases to the Treasury so they can gain legal clearance or permissions before trading with Iran, Francesco Fini, an official in the office of EU foreign-policy chief Federica Mogherini, told Bloomberg BNA on May 25.

    “Lack of clarity from the U.S. is causing a lack of certainty for companies like Airbus,” Franck Proust, a French member of the European Parliament, said during a committee meeting in May. “There are no banks at this point that will support investments.”

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    China's May forex reserves fall to lowest since Dec 2011

    China's foreign exchange reserves in May fell to $3.19 trillion, their lowest since December 2011, central bank data showed on Tuesday, likely due to the effects of a stronger dollar and sporadic official intervention.

    But analysts said the drop did not necessarily suggest a resurgence of speculative capital outflows.

    The reserves, the world's largest, fell by $27.9 billion in May - the biggest monthly drop since February.

    They rose by $7.1 billion in April and $10.3 billion in March, reflecting easing capital outflows and the dollar's drop against non-dollar currencies such as the euro and yen.

    "It mostly reflects exchange rate fluctuations which we estimate lowered the dollar value of the portion of the reserves held in other currencies by $25 billion," Julian Evans-Pritchard, from Capital Economics, wrote in a note.

    Economists polled by Reuters had predicted foreign exchange reserves would fall to $3.20 trillion at the end of May from $3.22 trillion at the end of April.

    The People's Bank of China has intervened in foreign exchange markets to cushion the yuan against capital outflows as markets brace for a rise in U.S. interest rates this year.

    China said it will give the United States a 250 billion yuan ($38 billion) investment quota for the first time to buy Chinese stocks, bonds and other assets, deepening financial ties and interdependence between the world's two largest economies. The announcement was made at the bilateral Strategic and Economic Dialogue in Beijing on Tuesday.

    U.S. central bank chief Janet Yellen said in late May that the Federal Reserve should raise interest rates "in the coming months" if the U.S. economy picks up as expected and jobs continue to be generated, bolstering the case for a rate increase in June or July.

    Heavy capital outflows seen last year seem to have subsided after the PBOC's heavy intervention to support the yuan in January and February, though the more recent weakening of the yuan to its lowest levels this year has put outflows back on the radar.
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    Effects of China’s supply-side reform take time to be seen

    Even though China has attached great importance to cutting the country's overcapacity, Western countries blame China's overcapacity in the steel industry for slumping steel prices; and seldom do people consider how difficult it is for China to press ahead with supply-side reform at a time when the global economy is recovering slowly.

    But this is unfair. Imbalances, in terms of the value of labor, occur between countries and are particularly apparent when we only focus on a single product category, say, steel products.

    In the past years, China did produce more products than needed in some industries, but that is mainly due to developed countries shifting these industries to developing countries, including China, with the intention of giving up low-end manufacturing and transferring it to less-developed countries.

    At the same time, some developed countries failed to make improvements on the demand side while transferring production to developing countries. For instance, the United States badly needs to upgrade its infrastructure, but any proposal by President Barack Obama about investing in domestic infrastructure projects can hardly gain the approval of Congress. How can the developed countries revive their steel industry if there is little demand for steel?

    What is more, developed countries' demand for steel and other raw materials might increase if the global economy recovers. Any trade protectionism measures would be short-sighted. Supply side reform is not only China's economic restructuring, but also rebalancing its supply to better meet the changing demand in the global market.

    The steel industry, which is not profitable now, flourished because of China's massive infrastructure projects and housing boom in past years. While the Chinese government is determined to push supply-side reform and cut overcapacity, it will take time for the effects to be seen.

    The developed countries should avoid trade protectionism. It doesn't help if they politicize China's steel overcapacity and even deny China's market economy status.
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    Industrial capacity cut relies on market forces, finance minister

    China will continue to cut surplus capacity relying on market forces, not government-set targets, Finance Minister Lou Jiwei said on June 6 at a press briefing, as the eighth China-US Strategic and Economic Dialogue kicked off.

    Lou said China has attached great importance to cutting industrial overcapacity, and that measures have been taken to eliminate 90 million tonnes of steel production capacity. But he ruled out the possibility of working out a quantitative target initiated by the government.

    While stressing market forces, the minister said the government will strengthen supervision on environmental protection and energy saving, and ensure high quality and security, as well as provide fiscal support to aid laid-off workers.

    The high-level dialogue between China and United States comes at a time when excess steel capacity has become an acute global challenge.

    US steel producers are increasingly resorting to trade remedies and tariff protection to ride out a sluggish steel market, a practice strongly opposed by Chinese exporters.

    As the global economy grapples with a weak recovery, macro-policy coordination is high on the dialogue's agenda.

    Although the US economy is seeing stronger recovery momentum, its investment engine remains weak and trade and fiscal deficits are high. Meanwhile, the Chinese economy is operating stably, but its fundamental problems have not been sorted out, Lou said, reaffirming the need for both countries to implement structural reforms.

    He said China is willing to work alongside the international community to strengthen policy coordination and boost growth potential through structural reform and technology innovation.

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    Saudis to Keep Crude Capacity Under Plan to Reduce Oil Reliance

    Saudi Arabia will maintain the same level of crude production capacity until 2020 under a new economic reform plan approved by the government on Monday to reduce the kingdom’s reliance on oil.

    The world’s biggest crude exporter will maintain output capacity at 12.5 million barrels a day in 2020, according to a draft of the National Transformation Program distributed to reporters in Jeddah, Saudi Arabia. The program, which was approved by cabinet on Monday according to state television, stipulates a cut in water and electricity subsidies by 200 billion riyals in 2020.

    The kingdom’s refining capacity will rise to 3.3 million barrels a day in 2020, according to the plan. Refining capacity was at 3.1 million barrels a day at the end of last year, the state producer Saudi Arabian Oil Co. said in its annual review last month. The country will produce 4 percent of power from renewable energy sources in 2020, according to the plan.

    Saudi Deputy Crown Prince Mohammed bin Salman, the king’s influential son, announced earlier this year a plan to overhaul the nation’s economy to make it less dependent on oil revenue amid a plunge in prices due to a global glut. The plan includes selling shares in Saudi Aramco by the end of 2018 in an initial public offering that could value the company at about $2 trillion.

    Prince Mohammed’s approach has been forced, in part, by Saudi Arabia’s struggle to deal with oil prices that, at about $50 a barrel this week, are trading at half the average seen from 2010 through 2014. Cuts in government spending and lower subsidies on items like fuel will help trim Saudi Arabia’s budget deficit to 13.5 percent of gross domestic product this year, compared with 16.3 percent last, the International Monetary Fund said April 25.

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    U.S. presses China to reduce barriers for foreign business

    Senior U.S. officials pressed China again on Tuesday to reduce barriers for foreign businesses, saying concerns have grown due to a more complex regulatory environment.

    Foreign business confidence has been impacted by regulatory and protectionist worries, following a series of government investigations targeting foreign companies and the roll-out of a national security law limiting the use of overseas technology.

    U.S. business groups have also complained about new Chinese regulations they say favour local firms and make it more difficult to operate in China, as well as other laws related to national security.

    "Concerns about the business climate have grown in recent years, with foreign businesses confronting a more complex regulatory environment and questioning whether they are welcome in China," U.S. Treasury Secretary Jack Lew told Chinese and American businesses and officials.

    "Our two governments have a responsibility to foster conditions that facilitate continued and increased investment, trade, and commercial cooperation," Lew said, on the second day of high level talks between the two countries in Beijing.

    "This means enacting policies that encourage healthy competition, ensuring predictability and transparency in the policy-making and regulatory process, protecting intellectual property rights, and removing discriminatory investment barriers. These policies are vital as China seeks to build on its economic progress in recent decades."

    Secretary of State John Kerry, speaking at the same event, said that as the two economies become more intertwined in shared prosperity, they have more "skin in the game" to keep their economic relationship on an even keel.

    "So we have to work on intellectual property. We have to work on transparency and accountability, we have to work on certainty and the rules of the road," Kerry said, adding that certainty was critical for business.

    Kerry expressed concern about China's new law on foreign non-governmental organisations, which he said may have a negative impact on non-profit health care groups that want to do business in China.

    Barriers to investment in China should removed as quickly as possible, he added.

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    Groups urge U.S. Congress to reject TPP over environmental concerns

    More than 450 groups on Monday called on Congress to reject the Trans-Pacific Partnership (TPP) if it comes up for a vote this fall, saying the trade deal would allow fossil fuel companies to contest U.S. environmental rules in extrajudicial tribunals.

    The groups, most of them environmental organizations, warned that companies could challenge U.S. environmental standards in tribunals outside the domestic legal system under provisions of the 12-nation TPP and the proposed Transatlantic Trade and Investment Partnership (TTIP) with Europe.

    Congress is expected to vote on the TPP after the Nov. 8 election during a lame-duck session. President Barack Obama wants the agreement ratified before he leaves office on Jan. 20, but opposition to the deal has grown during this year's presidential campaign.

    "We strongly urge you to eliminate this threat to U.S. climate progress by committing to vote no on the TPP and asking the U.S. Trade Representative to remove from TTIP any provision that empowers corporations to challenge government policies in extrajudicial tribunals," the groups wrote in the letter to every member of Congress.

    Obama's political ally and Democratic presidential candidate Hillary Clinton has said she wants to renegotiate the TPP to include stronger rules on currency manipulation.

    Voter anxiety over the impact of trade deals on jobs and the environment has helped power the campaigns of Donald Trump, the likely Republican nominee, and U.S. Senator Bernie Sanders, who is running against Clinton for the Democratic nomination.

    The letter says approving the deals would enable fossil fuel companies to use "investor-state dispute settlements" to demand compensation for environmental rules through cases decided by lawyers outside the U.S. judicial system.

    The groups noted that in January, Canadian energy company TransCanada asked for a private tribunal through the North American Free Trade Agreement to seek compensation exceeding $15 billion, after Obama last year rejected a permit for its Keystone pipeline, citing global warming concerns.

    "The TPP and TTIP would more than double the number of fossil fuel corporations that could follow TransCanada’s example and challenge U.S. policies in private tribunals," the letter said.

    Ilana Solomon, director of the Sierra Club's trade program, said skepticism around trade deals in the U.S. elections creates an opportunity for Congress to reject the TPP.

    "There is so much momentum now to end the TPP and other trade agreements," she told Reuters. "This is an area where there is bipartisan agreement... that these deals harm workers, communities and our environment."
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    Mexico ruling party routed in regional vote on graft, gang violence

    Mexico's ruling party lost several bastions in Sunday's regional elections, dealing a heavy blow to President Enrique Pena Nieto for failing to crack down on corruption and gang violence.

    The rout will help set the tone for the next presidential election in 2018, underscoring deep discontent over graft scandals and a sluggish economy, and throwing the contest open to contenders from both the left and right.

    Early results from gubernatorial races in 12 of Mexico's 31 states on Monday showed Pena Nieto's ruling Institutional Revolutionary Party, or PRI, heading for defeat in seven of them, a result far worse than most polls had forecast.

    Projected losses included two oil-rich strongholds in the Gulf of Mexico, Veracruz and neighboring Tamaulipas, both of which have been plagued by gang violence for years, as well as Quintana Roo, home to Mexico's top tourist destination Cancun. All three have been run by the PRI for over eight decades.

    The opposition center-right National Action Party (PAN) was poised to be the main beneficiary, taking the lead in seven states, three of them in alliance with the center-left Party of the Democratic Revolution (PRD).

    "We've broken the authoritarian monopoly the PRI has held for more than 86 years," a buoyant PAN leader Ricardo Anaya told cheering supporters after polls closed on Sunday.

    In a televised debate, Anaya then chastised the PRI for a surge in kidnappings in Tamaulipas and noted that two of the party's former state governors are wanted by U.S. prosecutors for alleged ties to drug gangs. One of the men, Eugenio Hernandez, was pictured freely casting his vote on Sunday.

    The PRI held nine of the 12 states going into the vote, of which the most populous is Veracruz, a region dominated by just a few families since the PRI took control in the decades after Mexico's 1910 revolution.

    With half the vote counted, the PRI was well behind in Veracruz, with the PAN-PRD contender leading the field ahead of the candidate of the party of two-time presidential runner-up Andres Manuel Lopez Obrador.

    Investors have been wary of a win in Veracruz by Lopez Obrador's new leftist National Regeneration Movement, or Morena, because he has vowed to undo Pena Nieto's historic opening of the oil industry to private investors if he wins the presidency in 2018.

    Veracruz became a liability for Pena Nieto after years of gang warfare, mounting debts and allegations of corruption.

    There were reports of violence and fraud in the state on Sunday, and both opposition campaigns said the PRI had tried to intimidate their supporters and rig the vote.

    Accused by critics of misusing public funds and failing to tackle rampant impunity, outgoing Veracruz Governor Javier Duarte was such a lightning rod for public anger that PRI candidate Hector Yunes was "embarrassed" to be in the same party.

    Duarte, who could not seek re-election, has denied wrongdoing. But his six-year term became notorious for the killings of journalists and violent crime.

    Few voters in Veracruz state capital Xalapa sought to defend him.

    "There's no money, there's no jobs, there's no security for our children," said local teacher Ruth Morales, 52. "This government has only benefited a handful of people."

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    *BREAKING* China stimulus chapter 2.

    <We will provide sources when we see some official confirmation>
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    China State Grid ready for tech exports, official

    China's top electricity supplier, State Grid Corp, is set to export its ultra-high-voltage (UHV) technology to India soon, as it pushes to expand its large-scale network both at home and abroad, China Daily reported, citing a senior official at the utility company as saying.

    Ultra-high-voltage technology, or UHV technology, provides large-scale power delivery over long distances and can reduce energy loss during transmission.

    "We have been having talks in India about testing some ultra-high-voltage projects. Concerning UHV technology, those talks are at an early stage, but there is a great chance that some Chinese technology will be used," said Li Peng, head of the high-voltage division at China Electric Power Research Institute, a unit of the State-owned utility company.

    "China is a country with rich experience in building large-scale power transmission infrastructure, so it has become the first choice for other countries in need," he said.

    Li made his remarks at a forum in Tianjin, where a 1,000-kilovolt transmission project is expected to be completed by October, marking the latest effort by State Grid to ease power shortages in the Beijing-Tianjin-Hebei region.

    After its completion, Tianjin will be able to receive as much as 50 billion KWh of renewable energy, including solar and wind power, from Inner Mongolia autonomous region, said Wang Bin, manager of the Tianjin transmission project. He said that would slash coal consumption by 9 million metric tons.

    Beijing-based State Grid is building a UHV cross-country transmission network in the world's biggest energy-consuming market, which will link major hydropower plants and coal-fired plants in the far southwest and northwest with big energy-consuming regions in the east.

    The company plans to use its domestic experience to win more exports of its technology and equipment. Last year it inked framework deals with Russia and Kazakhstan for cross-country electricity transmission lines.

    State Grid also scored with its bid to build and operate two transmission lines connecting the Belo Monte Amazon dam in northern Brazil to the southeast of the country, the first UHV transmission project it won overseas.

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    Lew says excess capacity 'corrosive' for China growth

    China's excess industrial capacity will have a "corrosive" impact on its future growth and efficiency unless it is reduced, U.S. Treasury Secretary Jack Lew said on Sunday, adding that it was also causing distortions in global markets.

    Lew, speaking to students in Beijing, said he hoped to make progress on the excess capacity issue in bilateral meetings with senior Chinese officials starting on Monday in Beijing. He noted that past discussions had eased currency tensions between the world's two largest economies.

    "Excess capacity is not just a domestic issue in China," Lew said at Tsinghua University. "The question of excess capacity is one that literally has an enormous effect on global markets for things like steel and aluminum, and we're seeing distortions in global markets because of excess capacity."

    A flood of Chinese steel into the United States has prompted the U.S. Commerce Department to impose anti-dumping and anti-subsidy duties on a wide-range of Chinese steel products, while U.S. business groups have complained about new Chinese regulations they say favor local firms.

    China, which now produces more than half of the world's steel, has criticized U.S. anti-dumping duties targeting Chinese steelmakers as irrational and harmful to diplomatic ties. Beijing has said it needs time to address its excess capacity problem.

    Lew said excess Chinese steel capacity was causing problems for steel-producing economies worldwide, and government subsidies were at the root of the problem by encouraging overbuilding.

    "Excess capacity ultimately is corrosive of an economy's efficiency," Lew said. "It means you have misallocation of resources, it means that ultimately, the only way to clear the market is to sell things at a price that is below what the world market price would otherwise be."

    Lew credited past sessions of the annual U.S.-China Strategic and Economic Dialogue talks with helping to reach understandings that have made currency less of an irritant for the two countries. The Treasury did not designate China as a currency manipulator in its recent currency report because it found that China's recent interventions were not problematic, he said.

    China's latest interventions have been aimed at supporting the yuan's value, not pushing it down.

    "It's fundamentally in China's interest not to have an undervalued exchange rate," Lew said, adding that a market-driven yuan would benefit Chinese consumers' purchasingpower.

    "Having a strong consumer in China is central to the future of China's growth," Lew added.

    Lew also said he hoped to make progress on market access, including efforts to open China's financial services and health care markets.

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    Australian storm disrupts everything from internet to shipping

    A weekend of wild weather in Australia disrupted everything from the internet to shipping and banking, while pummeling coastal towns and exposing insurance companies to hefty payouts.

    Stocks in Australia biggest insurers, including QBE Insurance, Insurance Australia Group and Suncorp, were lower on the Australian Securities Exchange, with the wider market trading in positive territory.

    A clean-up was underway on Monday after a low pressure system that brought flooding and strong winds combined with high tidal surges along much of the Australian east coast started to ease.

    Australian websites including Channel Nine, Foxtel Play and Domino's Pizza went down on Sunday when Amazon Web Service's Sydney zone experienced a two-hour poweroutage, according to Australian website ITnews.

    Amazon first warned of the outage affecting Elastic Compute via its status page on Sunday afternoon and an hour later confirmed the issue was related to a power problem, the website said.

    An Amazon spokesman declined to comment on the matter but Amazon Web Services’ status page on Monday showed several connectivity issues in Sydney had been resolved.

    The New South Wales state emergency services said it had received more than 9,250 calls and had conducted 280 flood rescues.

    A spokeswoman for the Port Authority of New South Wales state said the Newcastle port, the world's largest exit point for seaborne thermal coal and used by global miners Glencore, Rio Tinto and Anglo American, was placed on restricted ship movements over the weekend but did not sustain any damage.

    Port Kembla, the largest vehicle import hub in Australia remained closed, as the storm moved south, according to the spokeswoman.

    Big waves were expected to pound the coast on Monday, with the Bureau of Meteorology predicting another day of dangerous conditions, chiefly south of Sydney.

    Banks also needed to restore services to automated teller machines that went down.

    Mobile, ATM and point-of-sale banking services had been restored after an outage late on Sunday, Westpac said.

    “While we aim to ensure continuity of our systems, the severe storm system created disruptions across our network which impacted our services," it said.

    Commonwealth Bank said some of its customers were affected by intermittent problems with another ATM provider.

    Jan Van Der Schalk, a CLSA analyst said IAG and Suncorp faced few catastrophes in fiscal 2016, ending on June 30.

    "Hence, there should be no earnings impact because of this event," Van Der Shalk said.

    Insurers said it was too early to tell what the impact might be.
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    Oil and Gas

    Shell makes $4bn North Sea investment pledge

    Royal Dutch Shell said its spending plans will include a cash injection of around $4billion for the North Sea.

    The investment drive will be rolled out between this year and 2018 and is understood to be line with its previous expenditure in the region.

    The energy giant announced on Tuesday that it would scale down global investment and pinpoint further savings as it grapples with lower oil prices.

    Paul Goodfellow, Shell’s vice president for Upstream in UK & Ireland, told the Press Association that it will “include significant investments with our partners West of Shetland in the Clair
    and Schiehallion projects in which Shell has a 28% and 55% share respectively.”

    He added: “Shell continues to have a substantial business in the North Sea with 65 interests in North Sea Fields, 33 North Sea platforms and two Floating Production Storage Offloading (FPSO)
    vessels – one operated and one operated on our behalf.”

    The investment pledge comes after fresh data showed jobs supported by the UK oil and gas sector set to fall by more than 120,000 in two years by the end of 2016, according to industry body Oil and Gas UK.

    Shell, which sealed a £35 billion takeover of BG Group in February, said earlier this week that spending will be slashed by 35% to between 25 billion and 30 billion US dollars (£17.3 billion and £20.8 billion) over the next four years.

    It also said last month that it would axe a further 2,200 jobs from its global workforce, meaning 12,500 staff and contractor roles would be lost between the start of 2015 and the end of this year, up from its previous target of 10,300. This will include 475 jobs at its UK and Ireland upstream business.

    Mr Goodfellow added: “Shell’s integration with BG provides an opportunity to accelerate our performance in this ’lower for longer’ environment. We need to reduce our cost base, improve production efficiency and have an organisation that best fits our combined portfolio and business plans

    “That is why we recently announced that Shell will reduce the size of the organisation supporting our UK and Ireland Upstream business by around 475 people. Following these changes, Shell will remain a key employer in the north-east of Scotland with around 1,700 employees.”

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    Latest from Niger Delta Avengers


    49 minutes ago

    3:am of Friday @NDAvengers blow up the Obi Obi Brass Trunk line belonging to Agip ENI. It is Agip's Major Crude oil Line in Bayelsa State.


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    European gasoline cracks slip below diesel on oversupply

    European gasoline cracks have dropped below their diesel equivalents for the first time since mid-March this week, as rising stocks put pressure on gasoline values while European diesel is finding support from tightening supply.

    The European gasoline physical crack to Dated Brent was down 36 cents to $10.63/barrel Wednesday, while the crack for physical FOB ARA diesel barges versus Dated Brent gained 11 cents/b to $11.43/b.

    Wednesday saw Northwest European gasoline cracks decline for the fourth consecutive session on the back of a persisting oversupply in the global gasoline complex, tepid demand and lack of workable arbitrage outlets from the net-long European market.

    The front-month Eurobob gasoline crack swap fell to a three-month low of $9.65/barrel on Wednesday, from $10.20/b the previous day. They were last lower on February 29.

    The supply overhang, together with news of a US gasoline stocks build, weighed on market sentiment. The US Energy Information Administration reported a 1 million barrel increase in countrywide gasoline stocks for the week ended June 3.

    With persistent weakness in Asia and modest demand from the Middle East and North Africa, the US Atlantic Coast is the sole outlet for Europe's excess barrels, meaning European prices have been tracking price trends in the US, where increased imports and moderate demand have contributed to the downwards pressure on prices.

    "Europe is pricing [cargoes] to keep the arbitrage [to the USAC] open," one source said.

    Continued underperformance of gasoline relative to other refined products might convince producers to reduce output, according to a refiner source.

    "If this continues then we will maximize diesel, which is a stronger market, over gasoline."

    Another source said that refineries were "running to make diesel and for that they are producing too much gasoline with no arbitrages. Gasoline prices will have to drop quite a lot."

    The European diesel market has found support in reduced resupply recently, as arbitrage flows into the region were capped by unworkable economics while the French refining sector was hit by industrial action resulting in reduced output.

    Assessed at $11.43/b Wednesday, the FOB ARA diesel barge crack is well above its year-to-date average of $8.51/b.

    "It's because of the strikes in France and refineries being down [both because of the French industrial action and the refinery maintenance season]," a diesel trader said, adding that the impact appeared to hit the diesel market harder than gasoline.

    "Also, there is less diesel coming from the US and the East," the trader added.
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    LNGreen concept moves to next phase

    Classification society DNV GL said it has with partners initiated a follow-up of the LNGreen project, a new carrier design concept.

    The joint development project will build on the learnings from the first project to further “increase the efficiency and cost effectiveness of the concept,” DNV GL said on Thursday.

    “By continuing to investigate new technologies and improve the integrated systems and machinery configurations and the containment system, the project seeks to bring a ready-to-build concept to the market realizing the potential savings in actual operation,” the statement said.

    The original partners consisting of GTT, GasLog, Hyundai Heavy Industries (HHI) and DNV GL will all continue their engagement in the new project.

    The project is due for completion by the end of this year.

    New LPG carrier

    In a separate statement, DNV GL said it has launched a joint industry project for the design of a “next generation” LPG carrier.

    “LPGreen aims is to develop a more energy efficient, environmentally friendly, and safer vessel for the transportation of LPG products, taking into account existing and future trading patterns and ensuring the overall competitiveness of the concept,” DNV GL said.

    The project will incorporate the “latest advances” in hull form optimisation, cargo handling systems, engine technology and fuelling options. The resulting concept design will be compliant with the new IGC Code, according to DNV GL.

    DNV GL said it has brought together experts from across the industry for this project, including Hyundai Heavy Industries (HHI), Wärtsilä, MAN Diesel & Turbo and Consolidated Marine Management (CMM).

    The project partners will investigate the potential for hull form optimization, improved cargo handling and management systems as well as machinery systems integration using the DNV GL COSSMOS tool, the classification society said.
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    Det norske merges with BP Norge to create new E&P company

    Det norske oljeselskap has agreed to merge with BP Norge (BP Norway) through a share purchase transaction to create the independent E&P company on the Norwegian Continental Shelf (NCS).

    The company will be renamed Aker BP with Aker and BP as main industrial shareholders. The new E&P company will be independently operated and listed on the Oslo Stock Exchange.

    Aker is the main shareholder in Det norske with a 49.99 per cent ownership, held through its wholly-owned subsidiary Aker Capital. Aker BP will be jointly owned by Aker (40 per cent), BP (30 per cent) and other Det norske shareholders (30 per cent).

    As part of the transaction, Det norske will issue 135.1 million shares based on NOK 80 per share to BP as compensation for all shares in BP Norge, including assets, a tax loss carry forward of $267 million (nominal after-tax value) and a net cash position of $178 million.

    In parallel, Aker will acquire 33.8 million of these shares from BP at the same share price to achieve the agreed-upon ownership structure.

    The completion of the transaction, which is expected by the end of 2016, is subject to customary closing conditions, regulatory review and approval by Det norske shareholders.

    According to BP, all of BP Norge’s roughly 850 employees will transfer to the combined organization upon completion of the deal.

    “We take great pride in the fact that BP has chosen to partner with Aker in transforming Det norske into a leading independent offshore E&P company,” said Aker’s Chairman Kjell Inge Røkke.

    “With this transaction, we provide Det norske with operational strength, a robust capital structure and two solid industrial owners, thereby creating a platform for further growth on the NCS and near-term capacity to pay out quarterly dividend.”

    Aker said that the transaction will strengthen Det norske’s balance sheet and is credit accretive through a 35 per cent reduction in net interest-bearing debt per barrel of oil equivalent of reserves. Aker BP aims to introduce a quarterly dividend policy. The first dividend payment is planned for the fourth quarter of 2016, conditional upon the approval of creditors.

    “We have been in close dialogue with Folketrygdfondet, Det norske’s second-largest shareholder, which supports the transactions,” said Aker’s President and Chief Executive Officer, and Det norske’s Chairman, Øyvind Eriksen.

    The effective date of the transaction is January 1, 2016 and expected closing is in the third quarter 2016, subject to approval by the relevant authorities. The collaboration between BP and Aker spans several decades, and the two companies have previously explored the opportunity to create a large independent E&P company. Aker established Aker Exploration in 2006, which has grown through subsequent mergers and acquisitions, including Det norske and Marathon Oil Norway.

    “Years of close collaboration between BP and Aker have now resulted in a new milestone for Det norske,” said Eriksen.

    “In combining Det norske and BP Norway we will accelerate our strategy for Det norske to become a champion on the NCS in terms of lowest cost of production and highest profitability per barrel. We believe the transaction will yield significant value for both Det norske, BP and Aker’s shareholders.”

    Aker BP will hold a portfolio of 97 licenses on the Norwegian Continental Shelf, of which 46 are operated. The combined company will hold an estimated 723 million barrels of oil equivalent P50 reserves, with a 2015 joint production of approximately 122,000 barrels of oil equivalent per day. Det norske had a net average production of 60,000 barrels of oil equivalent per day in 2015.

    “BP and Aker have matured a close collaboration through decades, and we are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company. The Norwegian Continental Shelf represents a significant opportunity going forward and we are looking forward to working together with Aker to unlock the long-term value of the company through growth and efficient operations.

    “This innovative deal demonstrates how we can adapt our business model with strong and talented partners to remain competitive and grow where we see long- term benefit for our shareholders,” saysBob Dudley, Group Chief Executive of BP.
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    Shale King Hamm Fracking Unfinished Oil Wells After Rally to $50

    Continental Resources Inc. is fracking again.

    Crude almost doubled in the past four months to more than $50 a barrel, enough for Continental to dispatch fracking crews to unfinished wells in the Bakken shale region, where the Oklahoma City-based driller is the largest operator, Chairman and Chief Executive Officer Harold Hamm said in interviews with Bloomberg News and Bloomberg TV in New York on Thursday. Those wells had been left uncompleted as swooning crude prices last year forced explorers to halt projects to conserve shrinking cash flows.

    Hamm, who has taken a high-profile -- though informal -- role advising Republican presidential candidate Donald Trump on energy policy, said the oversupply of crude that crushed oil prices and pushed dozens of U.S. explorers into insolvency has disappeared. Supplies will fall short of demand by as much as 2 million barrels a day next year, adding impetus to the ongoing crude rally, he said. By the end of 2016, WTI could hit $70, he said.

    Oil Fracklogs

    Oil needs to exceed $60 before the company Hamm founded and controls as majority stakeholder would deploy rigs to drill fresh wells, the billionaire wildcatter said. Fracturing oil-soaked rocks with high-pressure jets of water and sand -- or fracking -- is typically the final and most expensive step involved in completing a shale well.

    “That has started,” Hamm said, referring to the fracking of unfinished wells. “We’d need to see WTI north of $60 before we ever thought about adding drilling rigs.”

    Most Bakken shale drillers will start completing their backlogs of unfinished wells when crude reaches the $55 to $60 range, Peter Pulikkan, a Bloomberg Intelligence analyst, said in a note on Thursday, citing a presentation last month by Lynn Helms, North Dakota’s top oil regulator.

    At the end of 2015, there were 4,290 uncompleted wells in the U.S., and almost 30 percent of them were confined to two shale regions: the Bakken in and around North Dakota and the Permian in West Texas and New Mexico, according to data compiled by Bloomberg Intelligence.

    The rebound in oil prices and tightening supply-and-demand balance probably means the wave of bankruptcies among U.S. shale producers is ending, Hamm said. He sees the global oversupply turning into a deficit, which “is going to add a lot of upward pressure quickly,” he said.

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    Energy World’s Newest Supership Misses the Boat on LNG Pricing

    It’s longer than three soccer fields, heavier than two aircraft carriers and powerful enough to chill gas into liquid colder than the surface of Jupiter.

    And its maiden voyage couldn’t have come at a worse time.

    The world’s first modern vessel for producing liquefied natural gas was ordered by Petroliam Nasional Bhd in 2012 when LNG traded for more than $15 per million British thermal units. It was launched last month, with prices down by about two-thirds. Royal Dutch Shell Plc faces a similar problem with its version of a floating LNG plant, which will be larger than any ship ever built.

    “At $15 and above you can do anything, so everyone went and did everything,” said Trevor Sikorski, a natural gas analyst for Energy Aspects Ltd. in London. “Now all these projects start to come online at the same time, and all of a sudden you have all this supply and now your margins are next to nothing.”

    The plight of the PFLNG Satu, as the first vessel is known, reflects the larger struggle facing all producers. Projects approved years ago when energy prices were high are coming online now, adding to a global supply glut that has pushed spot LNG down to $4.62 per million Btu this week.

    Annual LNG demand is forecast to increase by 140 billion cubic meters (5 trillion cubic feet) from 2015 through 2021, which isn’t enough to absorb almost 190 billion cubic meters of new capacity slated to become operational, the International Energy Agency said in its Medium-Term Gas Market Report 2016 published Wednesday.

    “LNG projects take four to five years to get delivered,” said Prasanth Kakaraparth, Wood Mackenzie Ltd.’s LNG supply analyst for Southeast Asia. “By the very nature of these long delivery periods, they get hit quite a bit by these commodity cycles.”

    Petronas, Malaysia’s state-owned energy company, is betting the cycles will even out over the long run. PFLNG Satu will produce about 1.2 million tonnes of LNG annually for the next 20 years from the Kanowit gas field, which is located about 180 kilometers (112 miles) north of the coast of Borneo.

    “We are taking a long-term view for this project,” Petronas said in a written statement. “In terms of profitability, the project is still viable as an additional supply point within our larger portfolio of LNG assets.”

    Floating LNG has some advantages over land-based liquefaction, Rafael McDonald, the Cambridge, Massachusetts-based global director of gas and LNG for IHS Inc. It eliminates the need for pipelines to connect far-flung fields to shore. Companies also hope that they can better control costs in a shipyard than on a distant construction site, he said.

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    Pemex to seek oil firm tie-up in Trion field: sources

    Mexican state oil firm Pemex will present to its board this week its first possible deep-water tie-up with oil firms in the Trion field, according to people familiar with the matter, another major step in the opening up of its oil and gas industry.

    After its state monopoly was ended in late 2013, Pemex [PEMX.UL] was awarded certain blocks in an oil tender known as "Round Zero" and it is looking for partners to help it develop the so-called "farm outs," which have been plagued by delays.

    The first proposed "farm out" will be focused on the Trion field, located in the Perdido area near the U.S. border, three people familiar with the matter told Reuters.

    The field has proven, probable and possible (3P) reserves of 305 million barrels of oil equivalent (boe).

    As part of the "farm out" process, Pemex cannot choose which company would help it develop each project, but can suggest specific partners with which to work. The ultimate decision lies with oil regulator, the National Hydrocarbons Commission.

    Earlier on Thursday, Marco Cota, director of exploration and extraction of hydrocarbons in the energy ministry, announced that Pemex would present its first tie-up proposal this week, without mentioning which field it would target.

    "It'll be taken to the board, and one of the themes will be the migration of one allocation ... a deep-water allocation," he said.

    Since 2014, Pemex has said it is looking for tie-ups in the Trion and Exploratus fields, which are both in the Perdido area.

    Cota said that the aim was for this Perdido "farm out" to take place at the same time as a major deep-water tender later this year.

    Mexico's oil regulator has scheduled its first-ever deep water auction in early December for 10 blocks in the Gulf of Mexico, after constitutional amendments in 2013 ended a nearly eight-decade monopoly by Pemex.

    The government hopes the oil sector opening will revive oil output in Mexico, which has been falling since 2004.
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    Oil Reserve to Production Ratios according to BP.

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    EIA Says NatGas Production Nearly Doubles Next 25 Yrs from Shale

    Over the past five years, the amount of natural gas production has blossomed–because of shale and fracking.

    But according to the U.S. Energy Information Administration (EIA), you ain’t seen nothin’ yet!

    The EIA predicts natgas production will nearly double over the next 25 years–and almost all of the growth will come from shale.
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    Marathon Petroleum, U.S. reach agreement on refinery pollution

    A subsidiary of Marathon Petroleum Corp will spend about $334.6 million on pollution abatement at refineries in five states and pay a $326,500 civil penalty, the Justice Department and Environmental Protection Agency said on Thursday.

    The agencies said Ohio-based subsidiary Marathon Petroleum Co will spend $319 million to install state-of-the-art Flare Gas Recovery Systems and $15.55 million on projects to reduce air pollution at three facilities.

    They said the settlement was filed Thursday in U.S. District Court in Detroit and amends a 2012 consent decree involving the company's flares.
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    Brazil bars Skanska unit from public tenders in Petrobras probe

    Brazil has banned the local unit of Swedish construction company Skanska AB from doing government work for at least two years, having accused it of involvement in a bribery and kickback scandal, the Ministry of Transparency said on Thursday.

    The ministry said Skanska Brasil Ltda belonged to a cartel that fixed prices on contracts with Petroleo Brasileiro SA . It also said the company paid 3 million reais ($890,000) in bribes to obtain a 1.3-billion-real ($386 million) contract for the expansion of an oil terminal for the state-run company.

    Skanska Brasil has denied being part of the cartel of 20 engineering and construction companies under investigation in the massive corruption scheme that has landed executives in jail and put dozens of politicians under investigation for allegedly receiving bribes and kickbacks.

    Skanska said it had pulled out of Brazil, indicating the ban will not impact its business.

    "Skanska AB made a decision to leave Latin America in 2014 and has since completed its remaining projects and sold all related operations in Brazil," spokesman Edvard Lind said in Stockholm.

    He said Skanska left Latin America because the business there was not profitable and "there is a lack of transparency in the region."

    Skanska is the second engineering and construction company to be penalized as a result of the corruption probe at Petrobras, as the state-controlled oil company is commonly known. Brazilian builder Mendes Junior Engenharia was barred from bidding for government contracts in April.

    Skanska Brasil can lift the ban on public tenders by returning money lost to the state, the ministry said in a statement.

    It said Skanska Brasil had paid bribes through false receipts issued by a front company called Energex, which had no registered employees and operated from a house in the interior of Sao Paulo state where 14 other companies were based.

    The ministry, Brazil's main anti-corruption body, had been called the Comptroller General's office but was renamed by Brazil's new government when interim President Michel Temer took office one month ago.

    Temer's promise to crack down on corruption in Brazil has been clouded by allegations that senior members of his ruling PMDB party have sought to obstruct the sprawling Petrobras investigation called "Operation Car Wash."

    Two ministers quit in Temer's first weeks in office, including his first pick for minister of transparency.

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    Oil and China: ‘Teapots’ Mean Real Demand Not So Stout

    China’s rising crude oil imports may be nothing more than a tempest in a teapot.

    Image title

    China’s so-called teapot refineries—smaller, private outfits that operate outside the state-owned petroleum industrial complex—have taken center stage of late. Their emergence has made it even trickier to peer through China’s already muddy oil-demand picture.

    On the surface, it seems Chinese demand should take some credit for driving global crude prices higher. Trade data this week showed that in May, the world’s No. 2 economy imported 39% more crude by volume than a year before. Part of this is because May last year was a weak month.

    A bigger factor were the teapot refineries, who are in possession of new government quotas to import crude. Between January and April, teapots accounted for 15% of China’s crude import volume, Citigroup says.

    Many teapot units went offline in May, but because these refineries typically run at 50% utilization—compared with 70% to 80% for established refiners—a teapot company could shut down one unit and ramp up utilization at second to compensate, according to Energy Aspects, a London-based consultancy. This suggests that China’s appetite for importing crude will stay strong regardless of refinery maintenance schedules. That should please crude sellers.

    The bigger question is what China does with all this crude once it is refined. Analysts can impute China’s final oil demand by adding together refinery output, net trade in products and changes in inventories.

    This has always been an imprecise exercise, thanks to the country’s opaque inventory figures. Some analysts now reckon the official data don’t capture new teapot activity. That means refinery runs, and hence underlying demand, could be higher than thought.

    Yet that doesn’t mean oil bulls can rejoice. Even if demand is today higher than previously assumed, there is a strong indication that supply of refined products is even higher and isn’t fully getting absorbed at home. As evidence, China has exported more products than it imported every single month, not the case this time last year. In May, net exports were almost seven times what they were a year ago.

    China’s state refineries started this trend two years ago of guzzling crude, and re-exporting refined products, chiefly diesel. Thanks to the teapots’ increased capacity, China has also begun exporting more gasoline. In the first four months of the year, China’s average daily gasoline exports were a third higher than in all of 2015, according to Energy Aspects. That will pressure gasoline prices across Asia.

    Just because the teapots are active, doesn’t mean that China is the factor that will keep oil prices aloft.

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    World’s Top Energy Exporter Isn’t Counting on Oil Rally to Hold

    Supply disruptions including Canadian wildfires and militant attacks in OPEC member Nigeria have driven prices higher, with the improving outlook for crude not grounded in fundamentals, Finance Minister Anton Siluanov said at a government meeting in Moscow on Thursday. Prime Minister Dmitry Medvedev said at the same event that the situation was reminiscent of a rebound in the second quarter of last year, which was followed by a “rather serious” decline in prices.

    “There are still no fundamental factors for growth in oil prices,” Siluanov said. “We should plan our financial resources on that basis.”

    The assessment is at odds with views expressed last week at a gathering of the Organization of Petroleum Exporting Countries in Vienna, where the group’s members said the oil market was moving in the right direction. The renewed optimism came after prices rose more than 85 percent in New York since touching a 12-year low in February. Forecasters including the International Energy Agency and Goldman Sachs Group Inc. say the crude glut that caused prices to collapse in 2014 is finally dissipating.

    Russia, the world’s biggest energy exporter and second to Saudi Arabia in crude shipments, has delayed amending this year’s budget, still based on an average oil price of $50 a barrel, as the market has stabilized. The economy is into its second year of recession, with the Finance Ministry struggling to keep the budget deficit within 3 percent of gross domestic product after it reached the widest in five years in 2015.

    Authorities are seeking fiscal savings of one percentage point of GDP each year to balance the budget by 2019. The Russian Economy Ministry projects that oil will average $40 a barrel through 2019. The nation’s main export blend Urals averaged$33.93 in the first four months of the year.

    “There are certain similarities to last year’s situation,” Medvedev said. “So we need to be careful with our spending commitments. In that sense, the Finance Ministry’s approach clearly deserves support.”
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    BP, Eni hit more gas in Egypt

    Oil major BP said it has made another gas discovery in Egypt’s East Mediterranean.

    The company said the Baltim SW-1 exploration well hit 62 metres of gas pay in high quality Messinian sandstones.

    The discovery is 12kilomteres from the shoreline and is an accumulation along the same trend of the Nooros field discovered in July last year.

    Hesham Mekawi, regional president of BP North Africa, said: “We are pleased with the results of the Baltim SW-1 well as it is the third discovery along the Nooros trend and confirms the great
    potential of the Messinian play and its significant upside in the area.

    “Our plan is to utilise existing infrastructure which will accelerate the development of the discovery, and expedite early production start-up. This announcement is another example of BP’s
    commitment to unlock resources in order to bring critical gas production to Egypt.”

    BP holds a 50% stake in the Baltim South Development, while Eni holds the other 50%.

    The well was drilled by Petrobel.
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    More Than Five LNG Tankers a Week to Traverse Wider Panama Canal

    Panama said it expects 20 million tons of liquefied natural gas to pass through its canal annually once the newly widened waterway is opened this month. That’s almost a tanker of gas a day traveling through, based on Bloomberg calculations.

    “The canal opens the possibility for that gas to reach Asian markets in a more competitive way because the Panama Canal route is the shortest,” said Manuel Benitez, deputy administrator of canal authority, in an interview in Panama City on Wednesday. “We’ve already seen that many very large gas carriers have already made reservations.”

    The $5.3 billion expansion to the canal is set to be inaugurated June 26, allowing it to handle the kind of massive tankers that transport liquefied natural gas. Its debut is fortuitous for U.S. gas producers as the shale boom has sent domestic supplies surging and drillers are looking to get their fuel to markets abroad.

    The expanded canal will help U.S. gas producers by cutting the shipping time to markets in Asia, according to Skip Aylesworth, who manages $1.5 billion in holdings at Hennessy Funds in Boston, and who holds shares in LNG producer Cheniere Energy.

    “It helps the shipping company if you can cut ten days rather than going around South America,” Aylesworth said Wednesday in a phone interview. “It is more profitable for the shipper and that’s good for Cheniere.”

    The volume projected by the Panama Canal Authority represents about 8 percent of global LNG trade and is equivalent to nearly 300 ships a year, said Bloomberg New Energy Finance analyst Anastacia Dialynas. Next year the U.S. will export about 8 million tons, she said.
    Prices in the Pacific aren’t currently high enough to create a large arbitrage opportunity to send gas from the U.S. Gulf Coast to Asian markets, according to Madeline Jowdy, director of global gas and LNG at PIRA Energy Group in New York. LNG prices in Asia and Europe have plunged in line with oil prices, the surge of new gas export capacity and weakening demand from China and other Asian markets.
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    Leak halts major fuel pipeline into Germany

    A major pipeline feeding oil products from the Amsterdam-Rotterdam-Antwerp refinery hub into Germany was shut this week after a leak was reported in the Netherlands, the operating company said in a statement on Thursday.

    The Dutch-German Rotterdam-Rijn Pijpleiding (RRP) distillates pipeline, partly owned by Royal Dutch Shell and BP, will be closed for at least a day as the company investigates the leak and makes any necessary repairs.

    The 24-inch pipeline has a capacity of 2,000 cubic metres per hour, according to the RRP website. Oil traders say that when it is running it always operates at full capacity to meet demand for bringing fuel into Germany, Europe's top consumer of distillates such as diesel and heating oil.

    Oil market sources said deliveries had already been affected to storage sites in Germany that are served by the pipeline, and sources in the ARA region said Shell had stopped offering diesel into the pipeline from its 400,000 barrel per day Pernis refinery, the largest in Europe.

    Still, the soft summer demand season for distillates had tempered the impact of the closure on local German markets, and sources said oil products could also be delivered via barges when the pipeline is not fully operational.
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    'Intense' competition expected in European gas market: IEA's Birol

    Weak demand growth, low coal prices and an inability to absorb the global glut of LNG will see the European gas market become a battleground for gas suppliers looking to retain -- or gain -- market share, the head of the International Energy Agency said Wednesday.

    In the IEA's latest Medium-Term Gas Market Report, executive director Fatih Birol said the context for global gas markets was changing rapidly, and that as a result "intense" competition was expected in Europe.

    "Demand and supply developments are pointing to a period of oversupply in the market and indeed the next five years will witness a reshaping of global gas trade," Birol said.

    LNG production in the US and Australia is increasing "robustly", he said, underpinned by a massive expansion in export capacity in both countries at a time when global gas demand growth slows.

    Weakening gas demand in Japan and South Korea will result in major shifts in global gas trade patterns -- ample LNG supplies will look for a home elsewhere, Birol said.

    "While Europe has traditionally been the outlet of last resort for unwanted LNG supplies, this time around, weak demand growth and very low coal prices will limit how much gas the region can absorb. As a result, intense competition will develop among producers to retain or gain access to European customers," he said.

    In Europe, the changing market points to a "stark change" in the operating environment for key supplier Gazprom, Birol said.

    "The past 12 months have brought signs that Gazprom might be opting for a more flexible marketing approach," he said.

    "For the company to achieve its stated strategy of maintaining market share in Europe, it will need to adopt a more competitive pricing mechanism than in the past."

    The IEA said that LNG had up to now not been a real threat to Gazprom's position in the European market -- in fact Gazprom's market share has risen given weak European production and losses of North African volumes in recent years.

    "Oversupply in global markets will lead to fierce competition in Europe, with flexible US and Qatari volumes fighting hard to gain access to European customers," it said.

    The IEA said that Gazprom had the advantage of having large volumes of European demand locked in via minimum take-or-pay levels in long-term contracts.

    But, for volumes above this threshold, it needs to compete, it said. "Gazprom needs to win an additional 15-20 Bcm of demand above minimum take-or-pay obligations to maintain exports at the 2015 level," the IEA estimated.

    It added that the period 2016-18 will be very different for Gazprom in light of weak demand in Europe, greater regional interconnection and large volumes of cheap LNG flooding the market.

    "Additional supplies to Europe can conceivably displace Russian gas, but if there is a change in Gazprom's pricing policy aiming at defending market share, prices could be bid down to levels that trigger either coal-to-gas switching in the power sector or a significant supply-side response," it said.
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    Mancos Shale Now Estimated to Hold 66 Tcf -- Substantially Above 2003 Assessment

    The Mancos Shale in Colorado contains an estimated 66 Tcf of natural gas, sharply higher than a 2003 estimate of 1.6 Tcf, becoming the second-largest assessment of potential continuous gas resources ever conducted by the U.S. Geological Survey (USGS), officials said Wednesday.

    The shale play also contains an estimated 74 million bbl of oil and 45 million bbl of liquids, USGS officials said in the updated analysis of undiscovered, technically recoverable resources. USGS provides publicly available estimates of undiscovered technically recoverable oil and gas resources of onshore lands and offshore state waters. The Mancos assessment was undertaken as part of a nationwide project using standardized methodology and protocol.

    "We reassessed the Mancos Shale in the Piceance Basin as part of a broader effort to reassess priority onshore U.S. continuous oil and gas accumulations," said USGS scientist Sarah Hawkins, lead author. "In the last decade, new drilling in the Mancos Shale provided additional geologic data and required a revision of our previous assessment of technically recoverable, undiscovered oil and gas."

    Since the previous USGS assessment 13 years ago, more than 2,000 wells have been drilled and completed in one or more intervals within the Mancos. In addition, the USGS Energy Resources Program drilled a research well in the southern Piceance Basin that provided "significant new geologic and geochemical data" that had been used to refine the 2003 assessment.

    The Mancos is more than 4,000-feet thick in the Piceance and contains intervals that act as the source rock for shale gas and oil, which means that the petroleum was generated in the formation. Some of the oil and gas migrated out of the source rock and into tight reservoirs within the Mancos and into conventional reservoirs above and below the formation. Oil and gas also remained in continuous shale gas and shale oil reservoirs within the Mancos.

    "Tight gas in the younger, shallower parts of the Mancos Shale is produced primarily from vertical and directional wells in which the reservoirs have been hydraulically fractured," USGS noted. Shale oil and gas in the older and deeper intervals of the Mancos are produced mostly from horizontal wells that are fractured.
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    Petrobras puts two LNG terminals on sale

    Petrobras of Brazil on Tuesday said it began a bidding process to sell its liquefied natural gas terminals in Rio de Janeiro and Ceará, along with the thermoelectric power plants associated with these terminals.

    The company noted in its statement that no deals have been signed securing the conclusion of the transaction, and no deliberation by the executive board or the board of directors of Petrobras took place to date.

    The Pecém LNG import terminal has a daily sendout capacity of up to 7 million cubic meters of natural gas to the Guamaré-Pecém gas pipeline that mainly supplies the Ceará and Fortaleza thermal power plants.

    The second facility, the Guanabara Bay LNG import terminal in the state of Rio de Janeiro, has a sendout capability of 22.5 million cubic meters per day.

    In 2014, Excelerate Energy provided an FSRU, the 173,400 cubic meters Experience, upgrading the facility’s capacity. It provides natural gas to the Southeast gas pipeline network and primarily serves the thermal power plants in the region.
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    Wildfire prompts more Canada oil sands production cuts

    Oil sands producers Canadian Natural Resources Limited and Cenovus Energy shut projects and evacuated workers at Pelican Lake facilities in northern Alberta as wildfires threatened western Canadian output for the second time in a five weeks.

    Cenovus shut operations and evacuated all 118 workers from its 23,000-barrel-per-day Pelican Lake project on Tuesday but said on Wednesday afternoon the fire had weakened and was not an imminent threat to facilities.

    The company said 44 essential staff would be back on site during the evening and that it eyed a potential production restart for Thursday if conditions remained safe.

    Canadian Natural said on Wednesday it shut in 800 barrels per day.

    "The wildfire is a safe distance from our major facilities at Pelican Lake," Canadian Natural spokeswoman Julie Woo said on Wednesday. "Canadian Natural has moved non-essential personnel from our northern camp to other camps within our Pelican Lake operations."

    Average production at Pelican Lake was 47,600 bpd, Woo said, citing first-quarter filings. Woo did not have an update late on Wednesday afternoon.

    The fire, roughly 75 hectares (185 acres) in size, and blowing away from the facility, is some 30 km (19 miles) from the community of Wabasca, fire official Travis Fairweather said.

    More than 30 personnel were fighting the blaze, backed by bulldozers and helicopters dropping flame retardant, Fairweather said. Forecasts called for a chance of rain for Wednesday, a provincial website said.

    "The fire is no longer considered out of control, and it probably won't grow anymore," Fairweather said on Wednesday afternoon.

    The Pelican Lake fire is about 160 km (100 miles) southwest of the massive wildfire still burning east of Fort McMurray, Alberta. Last month, that blaze forced 90,000 residents to flee the city and shut down more than 1 million barrels per day of oil sands output.

    Cenovus said there had been no damage reported to facilities or infrastructure. It said air quality was at acceptable levels.

    All Cenovus staffers were evacuated on Tuesday evening to a temporary center in Wabasca, while non-essential workers were sent home.

    Cenovus said essential workers remained on standby at Wabasca, and six workers returned on Wednesday morning to inspect the facilities from a safe location.

    Husky Energy said its operations in the area were unaffected.
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    Cheap Canadian gas imports may prolong U.S. energy industry's rout

    U.S. utilities and merchants are embarking on their biggest buying spree for Canadian natural gas since the start of the U.S. shale boom, taking advantage of record low prices and raising concerns about the U.S. industry's deepening crisis.

    Traders have been scooping up more gas from Canada, the world's fifth largest producer, in recent months after prices at the AECO hub in Alberta sank to a big discount to the U.S. benchmark.

    With some analysts expecting the arbitrage to remain in place through the summer and traders having booked long-term pipeline deals, the shipments could last longer than previously expected, experts warn.

    The deals will feed growing consumption from power generators after a record number of coal plants retired last year. In addition, gas demand is rising as the United States exports more gas to Mexico via pipeline and ramps up exports of liquefied natural gas to the world, traders said.

    The scramble has also offered loss-making Canadian drillers a chance to continue pumping out product as domestic tanks continue to fill up and prices languish near record lows.

    But market experts worry the surprisingly strong imports could prolong the U.S. market's biggest rout in a generation, adding to the ballooning glut after a warm winter left Canadian and U.S. storage facilities at record highs.

    "We're still pulling too much supply out of the field," said Martin King, an analyst at Alberta energy advisory FirstEnergy Capital.

    Now analysts expect Canadian imports to the United States to rise this year for the first time since 2007 when growing output from U.S. shale fields like the Marcellus in Pennsylvania started to displace Canadian fuel.

    Some traders and producers have booked deals for as long as one year to ship product to the U.S. Midwest on TransCanada Corp's Mainline pipeline, said Keith Barnett, head of fundamental analysis at ARM Energy in Houston, a big U.S. gas marketer.

    The Mainline runs from Alberta to Quebec and connects with several pipelines capable of moving Canadian gas to the U.S. Midwest.

    The need to find homes for surplus Canadian gas became more urgent last month after wildfires knocked out half of the nation's oil sands production capacity, curbing demand for the fuel. Oil sands producers use large amounts of gas to produce power and steam to cook the oil sands to produce crude.

    Prices in Alberta, where two-thirds of Canada's gas is produced, fell to around 50 Canadian cents per thousand cubic feet, the lowest on record, in mid May.
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    LNG Ltd soars on takeover rumour

    Aspiring US gas exporter Liquefied Natural Gas Ltd has profited from another buoyant trading session with its shares now up 66 per cent this week with speculation of a possible takeover tilt rumoured in the market.

    The former market darling has suffered a disastrous 12 months with its market capitalisation slashed from nearly $2 billion a year ago to less than $300 million last week.

    The share price fall was attributed to the worsening global energy price outlook and delays in signing up customers for its $US2.2 billion ($3 billion) Magnolia LNG project in Louisiana.

    However, the combination of an 80 per cent surge in the price of oil in the last few months, better confidence around offtake agreements and increasing speculation it may be a takeover target has boosted sentiment.

    LNG Ltd shares rose by up to 45 per cent in intraday trade on Wednesday, its biggest gain in nearly three years, before retreating to close up 25 per cent to $1.02, handing the company a market value of $516 million.

    That followed a 13 per cent share price jump on Tuesday and 16 per cent bounce on Monday as investors surged back into the stock.

    "I think it's a clear takeover target on the basis it is construction ready and proven to have the lowest capital cost for development of a greenfield LNG site," said Martin Corolan, an executive director with Foster Stockbroking which acted as a lead manager in a $174 million equity raising for LNG Ltd last year.

    "The stock was heavily sold off on energy sentiment and our view is the risk/reward begins to look appealing again as it moves towards signing its final long-term supply contracts and achieving a final investment decision which we think could occur this calendar year."

    The company on Tuesday said it was unaware why its shares had run up sharply since last week.

    One source close to LNG Ltd said Woodside's call to put a cap on any future deals at about $US1 billion meant it could be an obvious suitor for the junior LNG hopeful as it gets close to securing supply deals and making a final investment decision on Magnolia.

    LNG Ltd is thought to be making good progress in its pitch to sign up customers and has opened talks with buyers in Asia, Latin America and Europe, according to the source.

    Read more:
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    Suncor Energy Slides After Announcing $2 Billion Equity Raise

     Suncor Energy Inc. slid the most in a week a day after the oil-sands producer announced it would sell about C$2.5 billion ($2 billion) in additional equity.

    Suncor said that it would sell 71.5 million shares at a price of C$35 apiece. The money will lower debt and help pay for the C$937 million acquisition it announced in April to increase its stake in the Syncrude oil-sands joint venture. The proceeds may also fund “opportunistic growth transactions," the company said in a statement.

    Given that Suncor is still planning to sell assets, the timing of the share sale may strike investors as “a bit odd," Tyler Reardon, an analyst at Peters & Co. in Calgary, wrote in a research note Wednesday. “The fact that the company is raising equity is not totally unexpected, but the timing and its commentary on the use of proceeds does come as a surprise."

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    Summary of Weekly Petroleum Data for the Week Ending June 3, 2016

    U.S. crude oil refinery inputs averaged over 16.4 million barrels per day during the week ending June 3, 2016, 211,000 barrels per day more than the previous week’s average. Refineries operated at 90.9% of their operable capacity last week. Gasoline production increased last week, averaging over 10.1 million barrels per day. Distillate fuel production increased last week, averaging over 4.8 million barrels per day.

    U.S. crude oil imports averaged 7.7 million barrels per day last week, down by 134,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 9.5% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 815,000 barrels per day. Distillate fuel imports averaged 167,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.2 million barrels from the previous week. At 532.5 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories increased by 1.0 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 1.8 million barrels last week and are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.9 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories increased by 3.2 million barrels last week.

    Total products supplied over the last four-week period averaged over 20.3 million barrels per day, up by 3.1% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.6 million barrels per day, up by 2.6% from the same period last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, up by 0.4% from the same period last year. Jet fuel product supplied is up 0.3% compared to the same four-week period last year.

    Cushing down 1.3 mln bbls

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    US oil production in small rise on Alaska

                                                  Last Week   Week Before   Last Year

    Domestic Production '000........ 8,745             8,735             9,610

    Alaska up 18,000

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    Shell resumes Iranian oil purchases

    Royal Dutch Shell has resumed purchases of Iranian crude, becoming the second major oil firm after Total to restart trade with Tehran after the lifting of sanctions, trading sources said and ship tracking data showed.

    Iran has been trying to claw back its market share since international sanctions were lifted in January and regaining a major buyer such as Shell will further aid its cause.

    Shell declined to comment.

    According to shipping data, Shell fixed Suezmax tanker Delta Hellas to bring 130,000 tonnes of Iranian crude from Kharg Island on July 8 to continental Europe.

    Trading sources said the cargo would unload in Rotterdam.

    Shell repaid its outstanding debt to Iran from pre-sanction times earlier this year.

    Besides Total, European purchases of Iranian crude have gone to refineries in Spain, Greece and Italy since the sanctions were lifted in January this year.

    Tehran's re-entry to the oil market has heightened tensions with arch-rival Saudi Arabia and attempts by OPEC to concoct a strategy to boost oil prices have been scuppered as a result.

    Iran has resisted Saudi Arabia's calls for output caps as Riyadh is itself aggressively expanding its buyer list ahead of an IPO for its state firm.

    A production freeze deal collapsed in April when Tehran skipped a key meeting in Qatar that included non-OPEC members. OPEC delegates also failed to agree on a plan during their June meeting.

    Major oil producers including Venezuela and Nigeria have been hit hard by a steep fall and protracted weakness in global oil prices.

    Iran's crude exports are now close to pre-sanctions levels of around 2.5 million barrels per day.
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    EU antitrust regulators carry out raids on trio of oil companies

    EU antitrust regulators have raided the offices of a number of oil companies over suspected blocking of gas exports to other EU countries.

    The move was made by the European Commission who said the raids took place on Monday but did not name the companies.

    It’s understood the companies included Romgaz, Transgaz and OMV Petrom.

    Last year, the EU competition enforcer charged Gazprom with a similar offence, a case which the Russian gas company is trying to settle with concessions to avoid a possible billion-euro fine.

    In a statement, an EU executive said: “The Commission is investigating potential anticompetitive practices in the transmission and supply of natural gas in Romania, in particular relating to suspected anticompetitive behaviour aimed at hindering natural gas exports from Romania to other member states.”

    Romania is one of the EU’s least energy-dependent states.

    It produces the bulk of its gas locally and imports up to 8% of its needs from Russia.
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    Norway Strike Threat Increases as Parties Fail to Find Agreement

    The threat of strike action among 6,000 oil service worker employees in Norway increases as unions and energy company representatives fail to settle wage disputes.

    The threat of strike action among 6,000 oil service worker employees in Norway increased Wednesday, as unions and energy company representatives failed to settle wage disputes, multiple sources say.

    After two days of negotiations, the Norwegian Union of Energy Workers (Safe) opted to break off talks with the Norwegian Oil and Gas Association, while the Norwegian Union of Industry and Energy Workers (Industry Energy) postponed its discussions.

    “The distance between the parties was too great where Safe was concerned,” said Jan Hodneland, lead negotiator for the Norwegian Oil and Gas Association, in an official statement.

    “The economics of the settlement were crucial to the failure to find solutions…Safe’s overall demands demonstrate that it does not share our perception of reality with regard to the demanding position in which the oil and gas industry finds itself,” he added.

    “Where Industry Energy is concerned, the negotiations have been demanding but we have agree to suspend the talks for now and resume at a later date,” Hodneland concluded.

    The latest figures from the Central Bureau of Statistics show that investment on the Norwegian Continental Shelf is falling and will continue to decline due to low oil prices, high costs and the need for cost reductions. From a peak of NOK 214 billion ($26.4 billion) in 2014, capital spending in the Norwegian petroleum industry is expected to fall by almost 30 per cent to NOK 153 billion ($18.8 billion) in 2017.

    “In these circumstances, employers and employees have a shared responsibility to safeguard jobs and valuable expertise in an industry which Norway will need for a long time to come,” said Hodneland in an Oil and Gas Association statement June 6.

    Talks between the Norwegian Oil and Gas Association and Industry Energy are expected to re-commence June 30. The deadline for reaching a compromise is July 1, Reuters quoted Industri Energy leader Leif Sande as saying. If no deal is struck, shutdowns could begin as early as July 2.
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    Nigerian chaos leaves refiners cold and oil unsold amid outages

    Refineries from India to the United States are backing away from buying Nigerian oil amid heightened uncertainty about deliveries as the country squares up to militants in the restive Delta region.

    Their reluctance to buy is limiting the prices Nigeria can get for its oil even as there is less of it - another hit to the finances of a country battling its worst economic crisis in decades.

    A group calling itself the Niger Delta Avengers has staged a number of attacks on oil installations belonging to Shell , ENI and Chevron, pushing output in what is usually Africa's largest crude exporter down past 20-year lows last month.

    Some oil facilities have clawed back output, but the Avenger attacks have continued and the group has vowed to bring Nigerian production to "zero".

    "Not everybody wants to be caught up in that, so they will avoid it," said Olivier Jakob, managing director of PetroMatrix in Switzerland. "The refineries will walk away from it."

    India's HPCL was forced last month to cancel a vessel it chartered to carry 2 million barrels of West African crude due to the Qua Iboe force majeure.

    India's state-run Indian Oil Corp. Ltd - a major buyer of Nigerian grades over the past year - has stated in its recent tenders that it would not take grades under force majeure. Qua Iboe remained off the list in its latest tender, according to a document seen by Reuters, an extremely unusual development in its requests for sweet crude.

    Indonesia's Pertamina, another frequent buyer, also chose not to buy Nigerian grades in its recent tenders, favouring Congolese Coco, Angolan Girassol and Saharan Blend from Algeria instead.

    Traders said Pertamina had shifted its preferences since the violence and uncertainty escalated, although Daniel Purba, senior vice president of ISC Pertamina, told Reuters by text message that Pertamina is "monitoring" Nigeria, but "currently it's still not affecting crude purchasing."

    Four of Nigeria's oil grades - including the largest stream, Qua Iboe - have been under force majeure in the past month - a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.

    ExxonMobil, which declared force majeure on Qua Iboe in May due to an accident, lifted the declaration last week, but the unpredictability is too much for some buyers.

    The reduced demand means Nigeria is not benefiting as much as others from a rebound in Brent crude prices, which is partly driven by its own oil outages.

    Even refineries on the U.S. East Coast, which have been on a buying spree for Nigerian crude in recent months that averaged 240,000 barrels per day (bpd) in April and May, according to Reuters shipping data, are starting to turn away.

    "When you plan your crude run months in advance and commit buying cargo, you need to be comfortable that the cargo will be there when you go to lift," one U.S. east coast oil trader said.

    As a result, differentials to dated Brent for Qua Iboe, Bonny Light and other grades are under downward pressure. There are several unsold cargoes for June loading, even with more than half a million barrels of production missing.

    The Nigerian government set up a team this week to launch dialogue with the Avengers, but the group, via their Twitter feed, rejected the offer to talk and blew up another Chevron well.

    "The nature of the recently re-emerged militancy in the Niger Delta suggests it is here to stay for the foreseeable future," said Elizabeth Donnelley, assistant head of the Africa programme at Chatham House, a London-based think tank.
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    IEA Cuts Gas Demand Outlook Again as Glut Seen to End of Decade

    While oil markets will start re-balancing after a slump next year, an oversupply in natural gas won’t disappear until the end of the decade, the International Energy Agency said, slashing its gas demand outlook for a fourth straight year.

    Global consumption will expand by 1.5 percent annually from 2015 through 2021, down from last year’s forecast of 2 percent growth from 2014 through 2020 and a 2.5 gain over the prior six years, the Paris-based agency said Wednesday in its Medium-Term Gas Market Report. The slowdown will be driven by weaker use in the U.S. and Japan as the fuel struggles to compete against booming renewables and “very cheap” coal in power generation.

    “Slower generation growth, rock-bottom coal prices and robust deployment of renewables constrain gas’s ability to grow faster in today’s low-price environment,” the IEA said.

    Global gas markets will remain oversupplied until 2018 and demand and supply won’t align until 2021 as liquefied natural gas capacity jumps 45 percent through 2021, 90 percent of which in the U.S. and Australia. Markets will struggle to absorb the increase amid the return of Japanese reactors, cheap coal and competitive Russian pipeline fuel in Europe. The IEA in Februarysaid an oil glut that damped prices will end in 2017.

    U.S. gas fell 71 percent from a peak in 2008 to average $2.61 a million British thermal units on the Henry Hub in 2015, while U.K. prices on the National Balancing Point dropped 39 percent in the period to $6.53 a million Btu, according to the IEA. Meanwhile, benchmark coal in the U.S. fell 54 percent to $1.97 a million Btu and 62 percent to $2.34 in northwest Europe.

    World gas demand will be 3.9 trillion cubic meters (140 trillion cubic feet) in 2021, compared with 3.6 trillion cubic meters in 2015, the IEA said. Global supply will also rise 1.5 percent annually, slowing from the prior period as low prices and demand deter investments.

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    Latest from Niger Delta Avengers

    Niger Delta Avengers ‏@NDAvengers  2h2 hours ago

    This is to the Gen. public we're not negotiating with any Committee. if Fed Govt is discussing wth any group they're doing that on their own

    Niger Delta Avengers ‏@NDAvengers  2h2 hours ago

    At 1:00am today, the @NDAvengers blow up Well RMP 20 belonging to Chevron located 20 meters away from Dibi flow Stattion in Warri North LGA.

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    Rosneft First-Quarter Profit Falls 75% as Crude Oil Falls to Low

    Rosneft OJSC, Russia’s largest oil producer, said profit slumped 75 percent in the first quarter as crude prices hit their lowest point in over a decade.

    Net income dropped to 14 billion rubles in the first three months of the year compared to 56 billion rubles in the same period a year earlier, according to a statement on the Moscow-based company’s website. That missed the 28 billion-ruble estimate of nine analysts, surveyed by Bloomberg News. Revenue fell 21 percent to 1.05 trillion rubles.

    Earnings before interest, taxes, depreciation and amortization declined to 273 billion rubles from 319 billion rubles in the first quarter of last year, according to the statement.
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    China Oil Imports Fall as Congestion Curbs Refiner Crude Access

    Oil imports by China, the world’s biggest consumer after the U.S., fell to a four-month low as congestion at one of its biggest ports curbed purchases from independent refiners.

    Inbound shipments in May totaled 32.24 million metric tons, data from the Beijing-based General Administration of Customs showed on Wednesday. That’s equivalent to 7.62 million barrels a day, down 4.3 percent from the previous month. Net oil-product exports fell by almost one-third from April to 810,000 tons.

    China has been a bright spot for the global crude market as smaller refiners known as teapots increase purchases after authorities loosened restrictions for them to import oil. Qingdao port in Shandong province, where most teapots are based, has been congested this year from "unprecedented" tanker traffic, according to Liu Jin, general manager of Qingdao Shihua Crude Oil Terminal Co., which operates oil berths at the port.

    "The congestion at the Qingdao port is highlighting the need to slow the pace of buying," Michal Meidan, an Asia energy analyst at Energy Aspects Ltd., said before the data was released. "Prices have gone up so teapots will use this to take stock of their buying patterns thus far."

    While imports slipped on a monthly basis, inbound shipments in the first five months of the year have surged 16.5 percent over the same period in 2015, according to customs data. The nation’s crude imports may ease over the May-June period as lack of storage and logistical bottlenecks limit purchases, BMI Research said in a report last month.

    China’s refineries processed a record 44.75 million tons crude in April, while output from its domestic fields slumped to the lowest in 14 months, data from the National Bureau of Statistics showed last month.
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    Nigeria to scale down army campaign in Delta, talk to Avengers: officials

    Nigeria will scale down a military campaign in the oil-producing Niger Delta and talk to the Niger Delta Avengers militant group which has claimed a string of attacks there that sharply cut crude output, officials said.

    But the militant group said in a statement, without mentioning the government initiative, its mandate was "to liberate the Niger Delta people."

    The government has also decided that the military presence in the region, which had been increased in the last few weeks, should be scaled down, a statement issued by the vice president's office said on Tuesday.

    The southern Delta swamps, where many complain of poverty and oil spills, have been hit by militant attacks on oil and gas pipelines which have brought Nigeria's oil output to a 20-year low, and helped push oil prices to 2016 highs on Tuesday. [O/R]

    President Muhammadu Buhari had appointed a team led by the national security adviser "to begin the process of a very intensive dialogue with those caught in the middle of this," Oil Minister Emmanuel Ibe Kachikwu said late on Monday.

    "I want to call on the militants to sheath their weapons and embrace dialogue with government," he said. "We are making contacts with everybody who is involved, the ones that we can identify, through them, the ones that we can't identify so that there is a lot more inclusiveness in this dialogue."

    "Probably we will suspend the operations of the military in the region for a week or two for individuals in the creeks to converge for the dialogue," he said.

    Vice President Yemi Osinbajo, who had been expected to travel to London to meet investors on Tuesday, instead met Niger Delta state governors and military chiefs to discuss ways to end the militancy.

    A statement from Osinbajo's office said it had been decided at the meeting that the military presence in the region should be "de-escalated," although forces would be kept to provide security for the talks.

    Adding to the problems of authorities trying to stem the violence, a group in the southeast calling for secession declared support for the Avengers.

    "We support the Niger Delta Avengers," said Uche Madu, a spokesman for the Movement for the Actualization of the Sovereign State of Biafra (Massob) which wants secession for the region which fought a civil war from 1967-70.

    A former militant group, the Movement for the Emancipation of the Niger Delta, which laid down arms in 2009 under a government amnesty, accused the army of a "disproportionate use of force."

    MEND, which was one of the largest militant groups, also said the Delta Avengers had attracted some of its former fighters. So far it has been unclear who is behind the Avengers.

    There was no immediate direct response from the Avengers on the dialogue initiative. On its Twitter account it only issued a statement framing MEND leaders as criminals.

    "Our struggle is focused on the liberation of the People of Niger Delta from decades of divisive rule and exclusion," it said.

    Kachikwu also said Nigeria's oil output was between 1.5 million and 1.6 million barrels a day, down from 2.2 million barrels at the start of the year.

    "Over the last two months, we have probably lost about 600,000 barrels from various attacks of militants in the area," he said.
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    Qatar to slash condensate exports by October 2016 -official

    Qatar will double its capacity for processing condensate by almost 150,000 barrels a day (bpd) in August when trials begin on a new splitter at the Ras Laffan refinery with commercial production starting by October, a Qatar Petroleum official said.

    Condensate exports from Qatar will drop from the current 500,000 bpd to about 350,000 bpd when the 146,000-bpd splitter starts operating, said the official, who declined to be named as he was not authorised to speak publicly.

    Qatari condensate exports have already been facing competition from U.S. and Iranian light oil shipments but the splitter should help the Gulf state soak up some of its condensate at home.

    "Overall, there should be less condensate supply in August, but it would still be enough for everyone considering how long the market was in July," a Singapore-based trader said.

    Output of full-range naphtha will double with the start of the new condensate splitter, Ibrahim Al Sulaiti, marketing director of condensate at Tasweeq said in 2014. Part of this would then be used as feedstock for new gasoline and aromatics units that are set to come online in late 2017.

    The Qatari unit's start-up will increase Middle East naphtha exports to Asia, which is already struggling with a stubborn supply glut and tepid demand from gasoline producers.

    "(Qatar is) ambitious in their plan to ramp up production but it would be foolhardy to push a new plant so quickly," the trader said, pointing to the naphtha glut.
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    Shell Says Impossible to Repair Stricken Nigerian Oil Facility

    Royal Dutch Shell Plc said it won’t attempt to repair a key pipeline in Nigeria for now after militants attacked it a second time last week, the latest sign of alarm among foreign oil companies in the African nation.

    Chief Financial Officer Simon Henry said the company had to withdraw repair crews last week after a second attack against the 48-inch Forcados export pipeline that links onshore storage tanks with an offshore port.

    “We cannot operate or repair if our people are threatened,” Henry said in an interview at Shell’s annual capital markets day. While the company previously said it planned to repair the facility, first attacked in February, this month, the CFO said that it was “not possible” at this time.

    Shell’s resignation over the disabled pipeline suggests a new level of insecurity as a wave of violence hits the oil-rich Niger Delta, leaving production at its lowest level in nearly three decades. In the past, energy companies were able to repair pipelines after attacks, barring a few exceptions deep into the region’s swamps and creeks. The attacks are more destructive than in the past, Henry said.

    “There is clearly better organization and targeting," according to the CFO.
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    IHS Report: Shale & Fracking Delivered U.S. Energy Independence

    A new report just issued by Global consulting and research firm IHS, says that Canadian oil sands and U.S. “tight oil” (i.e. shale oil) production have “become the twin pillars of North American energy security.”

    Canada’s oil sands the shale in U.S. represent 95% of the growth in North American oil production from 2009-2015. Over the same time we reduced our dependence on offshore oil imports by 40%.

    Folks, this is HUGE. Fracking of shale is nothing short of a miracle in our country. For Crazy Bernie Sanders to shout, as he did at a rally in California last week, that “We are going to ban fracking all across this country” is insanity itself.

    Can you imagine if that fossil actually became President and signed an Executive Order banning all fracking? Hillary Clinton’s position is essentially the same as Crazy Bernie’s. Loony tunes.

    For the first time since the oil shocks of the 1970s when OPEC began to royally screw us over, we now can tell OPEC where to go pump their oil. You can see why Obama’s decision to deny the Keystone XL Pipeline from Canada is so stupid and damaging to our energy security…
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    Shell makes final investment decision on Pennsylvania petrochemicals complex

    Shell said it has made a Final Investment Decision (FID) to build a major petrochemicals complex in Pennsylvania.

    The construction is expected to take up to 18 months with commercial production expected to begin early in the next decade.

    The oil major said the project will bring new growth and jobs to the region, with up to 6,000 construction workers involved in building the new facility and 600 permanent employees at the site when it is completed.

    The move comes on the same day Shell held its Capital Markets Day and revealed it would be divesting out of up to 10 countries in its global portfolio.

    The complex is expected to use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce 1.6million tonnes of polyethylene per year.

    Graham van’t Hoff, executive vice president for Royal Dutch Shell plc’s global Chemicals business, said: “Shell Chemicals has recently announced final investment decisions to expand alpha olefins production at our Geismar site in Louisiana and, with our partner CNOOC in China, to add a world-scale ethylene cracker with derivative units to our existing complex there.”
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    SCT&E LNG firms up 20-year supply deal

    SCT&E LNG on Tuesday informed it has signed a binding 20-year fixed price natural gas supply agreement to support its future LNG facility to be constructed on Monkey Island in Cameron Parish, Louisiana.

    In May 2015, the company signed the non-binding MOU with a natural gas supplier for a 20-year fixed price on natural gas from the commencement of operations of the SCT&E LNG facility.

    Chairman and CEO, Greg Michaels, said, “We have successfully completed the negotiations and now have a contractual method to offer this unique natural gas supply structure to our LNG offtakers. Together with our upstream supplier, we have essentially created a 25-year hedge on natural gas for our customers.”

    SCT&E LNG said the deal is” first of its kind” among U.S. LNG export projects.

    The company is looking to export liquefied natural gas via take-or-pay tolling agreements.

    So far, SCT&E LNG has signed four offtake MOU’s totalling 4.7 mtpa of LNG, over a third of the proposed facility’s total capacity.

    Currently, the facility is scheduled to produce 12 mtpa of LNG with shipments starting in 2022.
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    Toho Gas inks deal to buy U.S. LNG

    Japan’s Toho Gas said it has entered into a sale and purchase deal with Diamond Gas, a Mitsubishi Corporation unit, to buy liquefied natural gas from Cameron LNG export project in the U.S.

    This deal follows the heads of agreement the two companies signed in April last year.

    Under the agreement, Toho Gas will buy 200,000 metric tons, or three cargoes of LNG per year for a period of 20 years from the liquefaction facility starting in 2019.

    LNG will be delivered on an ex-ship basis with the price of the chilled fuel linked to the US natural gas Henry Hub index.

    Cameron LNG has obtained approval from the U.S. DOE to export up to 14.95 Mtpa, or approximately 2.1 Bcf per day, of domestically produced LNG.

    Construction on the project began in October 2014, with commercial operations expected to begin in 2018.

    Cameron LNG is a joint venture owned by affiliates of Sempra Energy, Engie, Mitsui & Co. and Japan LNG Investment, a joint venture formed by affiliates of Mitsubishi Corporation and Nippon Yusen Kabushiki Kaisha

    Attached Files
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    Mozambique’s Rovuma gas field faces investment drought

    Mozambique’s Rovuma Area 1 gas project, in which India government-owned oil and gas companies hold a 30% stake, has been hit by an investment drought. The start of production from the fields too has become uncertain with no binding agreement from prospective liquefied natural gas (LNG) buyers as few were willing to enter into long-term contracts in the falling oil and gas pricing environment. 

    Two India government officials have pointed out that about $6-billion had already been invested in the Rovuma Area 1 gas assets and that a further $25-billion would be required to bring the asset into production. However, considering that gas purchase agreements have not been signed, major stakeholders were unwilling to make a final investment decision as the project’s projected cash flow could not be determined, the officials added. 

    While neither official was willing to risk a guess on when commercial production from Rovuma would start, both agreed that it would not be before 2021/22 and that too was subject to the revival of oil and gas prices and finding buyers for LNG from the project. 

    When the Indian oil and gas companies first started investing in Rovuma, they had forecast that production would start in 2018.  However, the Indian officials said that, even if one offtake contract was clinched by end of the current financial year, production would not be possible before 2021/22. It was pointed out that Rovuma was just one of the several stalled LNG projects across the world, falling victim to the downturn in oil and gas prices. 

    Delayed development at Rovuma was negative for bilateral relations between Mozambique and India. It was also considered a setback for the Asian country’s attempt to secure a bigger footprint in African hydrocarbon sector. ONGC Videsh, the overseas arm of national exploration and production major ONGC Limited, Oil India Limited and oil refiner-marketer Bharat Petroleum Corporation Limited together hold a 30% stake in Rovuma Area 1. 

    The companies acquired the stake from Indian firm Videocon and Anadarko Petroleum Corporation, when Anadarko partially divested a 10% stake. Anadarko continued to be lead operator of the block, which was believed to have reserves ranging between 35-trillion and 65-trillion cubic feet of gas. 

    One Indian official said that assured offtake from Rovuma by Indian gas importers was one of the options to monetise development of the gas field, but acknowledged that “reconciling sovereign interests” of exporting and importing nations would be a challenge in depressed oil and gas price regimes.

    Attached Files
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    Trafigura First-Half Profit Falls 10% as Oil-Trading Boom Fades

    Trafigura Group Pte said fiscal first-half profit dropped 10 percent as an oil-trading boom fades, even as volumes increased to a record 4 million barrels per day.

    Net income fell to $602 million in the six months to March 31, from $672 million a year earlier, Trafigura, based in Singapore and with major trading operations in Geneva, said Tuesday in a statement.

    The results were “satisfactory” even if the company “did not match the numbers achieved in the exceptional trading conditions in the first half of 2015,” Chief Executive Officer Jeremy Weir said in the statement.

    Trafigura reported record profit from oil and petroleum-product trading in the last fiscal year as the company’s traders took advantage of arbitrage opportunities created by price swings, while locking in returns by storing cheap crude for delivery at higher prices in the future. That contango market structure and continued price volatility meant the first half of the year remained a “favorable” environment for oil trading, Weir said.

    “With U.S. production falling sharply and demand continuing to grow strongly, for example for gasoline in the U.S. and China, the much-anticipated rebalancing of supply and demand now seems within reach,” the CEO said.

    Oil Share

    Gross profit from the oil and petroleum products division fell 22 percent to $787 million in the first half, even as volumes climbed 46 percent. Oil still accounted for 62 percent of Trafigura’s total revenue, which declined 8.5 percent to $44 billion amid lower commodity prices.

    The company has benefited from increased oil flows from Russian state producer Rosneft OJSC. It struck long-term arrangements to handle oil from the Moscow-based company -- sanctioned by the U.S. over Russia’s role in the Ukraine conflict -- by ensuring payments are no longer than the 30 days permitted under sanctions.

    Gross profit from metals and minerals trading dropped 24 percent to $386 million on revenue of $16.7 billion. Volumes were steady and Weir said the market was improving.

    “There were more positive signs in some segments during the first half,” said Weir. “In zinc concentrates, a long-anticipated supply deficit has arrived, while aluminum stocks are drawing down as capacity shutdowns take hold, and even in nickel, previously among the hardest hit metals, a deficit has emerged on rising demand and falling supply.”

    Offtake Deals

    Trafigura added supply and offtake agreements during the period with Nyrstar NV, a zinc smelting company in which it’s the largest shareholder. It further expanded its involvement with the Belgium-based metals producer by taking over a marketing agreement that was previously handled by Noble Group Ltd.

    The gross trading margin for both metals and oil shrank to 2.7 percent from 3.1 percent a year earlier. Gross profit fell 23 percent to $1.2 billion from $1.5 billion. Earnings before interest, taxes, depreciation and amortization was $821 million, down 27 percent from the year before.

    The closely held trading house is owned by a group of 600 employees. Its largest shareholder, co-founder and former CEO and Chairman Claude Dauphin died from cancer in September. The company has said it plans to buy out his stake of less than 20 percent.

    Trafigura said it has created two new management committees, one to oversee the trading business and another to oversee investments.
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    HP says "phones start ringing"

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    Saudi Arabia Scales Back Renewable Energy Target to Favor Gas

    Saudi Arabia is scaling back renewable power targets as the world’s biggest oil exporter plans to use more natural gas, backing away from goals set when crude prices were triple their current level, according to Energy Minister Khalid Al-Falih.

    The kingdom aims to have power generation from renewable resources like the sun make up 10 percent of the energy mix, a reduction from an earlier target of 50 percent, Al-Falih said in Jeddah, Saudi Arabia. Al-Falih provided new details of the country’s revived solar power program as he joined other ministers to announce parts of a plan adopted by the cabinet on Monday to overhaul the country’s economy.

    “Our energy mix has shifted more toward gas, so the need for high targets from renewable sources isn’t there any more,” Al-Falih said. “The previous target of 50 percent from renewable sources was an initial target and it was built on high oil prices” near $150 a barrel, he said.

    Saudi Arabia, which holds the world’s second-largest crude reserves, will double natural gas production under the plan, and the government will expand the gas distribution network to the western part of the nation. Generating more power from gas and renewables should make available for export more crude, which would otherwise be burned for electricity for domestic use.

    Solar-power should be the main renewable energy option for the nation, Ibrahim Babelli, the country’s deputy minister for economy and planning, said in Dubai last month. Babelli directed strategy at the government agency previously responsible for renewable energy policy. The cost of building solar power plants is declining globally as Chinese panel makers boost manufacturing capacity and slash costs.

    Attached Files
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    Shell Deepens Spending Cuts, Promises More Savings From BG

    Royal Dutch Shell Plc cut spending plans further and promised increased savings following its record purchase of BG Group Plc, as Europe’s largest oil company continues to adjust to the slump in energy prices.

    Shell will spend $29 billion this year, it said Tuesday. That compares with a May forecast for capital expenditure “trending toward” $30 billion, which was itself down from an earlier projection of $33 billion. Synergies from the BG acquisition will provide $4.5 billion in savings in 2018, up from an earlier estimate of $3.5 billion.

    “If we see oil price levels at a level where we have to go further, we will go further,” Van Beurden said in an interview with Bloomberg TV. “We still have more in our tank in terms of taking cost out. We have more in our tank in terms of deferring or canceling investment programs.”

    Shell’s capital investment will be in the range of $25 billion to $30 billion a year to 2020. The company can reduce that further if required by low oil prices, even though it needs to spend about $25 billion a year to ensure future growth, Van Beurden said.

    While Shell is banking on BG’s assets to boost production and cash flow, the acquisition of BG is driving up Shell’s debt gearing, which has risen above 26 percent from 14 percent at the end of last year. Debt concerns resulted in a credit-rating cut by Fitch Ratings in February.

    Reducing debt is Shell’s “first priority” for cash, Van Beurden said in the interview.

    Shell pledged to raise free cash flow to $20 billion to $25 billion and boost the return on capital employed to 10 percent by 2020 at an oil price of $60 a barrel. That compares with an average $12 billion free cash flow and 8 percent return on capital at $90 oil from 2013 to 2015.

    Low oil prices make it more difficult for Shell to sell its assets. The company expects to “make significant progress” on as much as $8 billion of its sale program this year. It has earmarked up to 10 percent of production for divestment, including exiting five to 10 countries.

    Shell has deepened job cuts this year as it continues to adjust to the slump in oil prices. It announced last month 2,200 more jobs will be eliminated, taking the tally of losses to 12,500 from 2015 to 2016.
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    Iran's Zanganeh says OPEC 'friends' dumping crude oil

    Iranian oil minister Bijan Zanganeh accused its regional neighbors of trying to take away its customers by offering cheaper oil, but said despite not offering much of a price discount itself, Iran had managed to retake 1 million b/d.

    Iran's crude is similar to Iraq and Saudi Arabia's and these producers fight for a share of the same market -- being competitive has proved a huge marketing challenge.

    Zanganeh's remarks come in an interview with S&P Global Platts in Vienna Friday, the day after OPEC's meeting in the Austrian capital. It follows Saudi Arabia's new oil minister Khalid al-Falih's comment Thursday that there is "no reason to expect that Saudi Arabia is going to go on a flooding campaign," suggesting gentle moves in crude supply so as not to shock the market. OPEC's largest producer has kept output fairly steady since January at above 10 million b/d and OPEC made no change in output policy.

    Iran has looked to reclaim market share since nuclear sanctions were lifted in mid-January, with Zanganeh stating that output is currently 3.82 million b/d. He predicts Iran will have around 5-6% spare production capacity after reaching 4 million b/d by the end of the year.

    Zanganeh said India, China, South Korea, Europe (including Turkey) and South Africa were primary markets but that Iran "should look more in Europe and Africa."

    This is especially the case for plans to invest in refineries in other countries, with 1.3-1.4 million b/d to be exported as feedstock to overseas refineries, but cautioned that finance could be an issue.

    "We have this proposal but the National Iranian Oil Company doesn't have the money to do it. So we proposed that the National Development Fund comes and does the investment, either directly itself or giving loans to non-state sectors and buys [shares] in those refineries in the chosen destinations, under the condition that they take all their feedstock from Iran, or a main part of the feedstock," Zanganeh said.


    Iran's oil minister wants to see a return to individual country quotas at OPEC, which were abandoned in 2011 for a notional overall ceiling which was also abandoned in December 2015.

    "I am not against the ceiling but what's the point of a ceiling without a country quota. OPEC says it will produce 30 million b/d. How much for each country? When we set the 30 million b/d ceiling, and somebody produced more, you should be able to hold them responsible. You should be able to control and monitor and question them why they exceeded the production. And everybody should comply with it," Zanganeh said.

    He called the removal of quotas OPEC's biggest historic mistake and said that it was just a matter of time before a consensus is reached in reactivating them. "It is inevitable, but I don't know when."

    Zanganeh said attempts to freeze production at the meeting between OPEC and other producers in Doha in mid-April didn't make sense for Iran.

    "If others wanted to freeze or make any other move for the market, we expressed support for it and we will still support any move. But we said that the primary thing for Iran that everyone agrees with it too regaining its historic share," Zanganeh said.


    Iran echoed the sentiment that the outcome in Vienna was the best possible result. The cartel on Thursday kept its output policy unchanged, declining to set a production ceiling or target at its ministerial meeting and confirming a course set by core members who have refused to intervene to prop up prices.

    Zanganeh hoped the trend of higher prices seen since crude hit a low of under $30/b in late January continues, especially "as the gap between supply and demand is shrinking." He also said it was a particularly good meeting for Iran. "I think all [OPEC members] accepted [that] they cannot put pressure on others to change their ideas. And they accepted this reality in the market and accepted the return of Iran to the market."

    Zanganeh said that OPEC members should be more conservative about the level of production as so not to destabilize the market. "I believe all member countries are going to be more realistic," he added. "It means everything to all producers to stabilize the situation."


    Zanganeh stressed it was very lucrative for international energy companies such as Total, Lukoil and Eni to invest in Iran. "Oil [production] in our region is very low. In Iran, it costs a maximum of $10/b."

    He said that there are contractual risks, but that was unlikely to act as a deterrent, without elaborating.

    He did think that US companies were afraid but hoped that this will change. "The way is open for them on our side."

    Zanganeh said the whole investment plan will require a total of $70 billion in the coming years and that Iran's Petroleum Contract will be part of that.

    Iran plans fewer than 20 projects as part of the first tenders for the IPC. It has said that it will have its IPC ready and approved in June to soon put out the tenders.

    "First we announce the fields and ask companies to come forward and [declare] their interests in any of those fields. We evaluate the companies regarding their technological and financial capabilities and then we put the tender documents at their disposal," he added.
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    Suncor Lowers Annual Production Guidance 6.2 Percent on Wildfire

    Suncor Energy Inc., Canada’s largest energy company, lowered its crude output forecast for the year by about 6.2 percent because of facility outages caused by wildfires raging across northern Alberta.

    Suncor, the producer most affected by the fires, reduced its production target to between 585,000 and 620,000 barrels a day in a statement on Monday. That compares with a forecast released in April of between 620,000 and 665,000 barrels a day.

    Suncor is ramping up its facilities shut down by the fire and expects they will be producing at normal rates by the end of June, the company said in the statement. The company’s base plant mine is expected to return to pre-fire production rates within a week, while the drilling operations are expected to return to normal levels in the third week of June, the same time planned maintenance of the U2 upgrader is scheduled to be complete.

    “As a result of working with government and the region, we safely returned thousands of people and restarted our operations in a safe manner,” Steve Williams, chief executive officer of the Calgary-based company, said in the statement.

    Suncor was the producer with most production affected during the fire. As a result, its cash flow for 2016 is expected to fall by 20 percent or C$928 million ($724 million), Greg Pardy, an analyst at RBC Dominion Securities in Toronto, said in a May 26 research note.

    Syncrude Canada Ltd., the oil-sands mining joint venture controlled by Suncor, expects to return to production in late June and will ramp up to full output after the completion of a scheduled turnaround by mid-July, Suncor said on Monday. Suncor’s Petro-Canada retail stations have faced shortages of gasoline and diesel due to outages and unplanned downtime at a unit of the company’s Edmonton refinery. That unit is expected to be back in service by the end of the week and Suncor continues to try to minimize supply disruptions, the company said.

    Cash operating costs for Suncor are expected to stay within its guidance of C$27 to C$30 a barrel for the year, the company said, while Syncrude’s cash operating costs are expected to rise to between C$41 and C$44 a barrel due to the timing of restart and production ramp-up. The Syncrude cost estimate compares with an April outlook of C$35 to C$38 a barrel.
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    Argentina's YPF names ex-Total executive as new CEO

    Argentina's state oil company YPF said on Monday it has named Ricardo Darre chief executive officer, as the company makes leadership changes under the new pro-business government.

    Darre, an engineer, previously worked for French oil company Total in the United States. He will take up his post on July 1.

    "With the hiring of Ricardo Darre we reaffirm our commitment to the absolutely professional management of YPF that will strengthen the development of our production and our strategic positioning in the market," the country's largest company said in a statement.

    YPF controls the Vaca Muerta formation, which may contain the world's largest shale reserves.

    "The company has good geological areas and a solid industrial base that is highly competitive in all production stages, from the well to our clients," Darre said in the statement. "This is essential to maximize our investment and the key role the company plays in the search to self-supply the country's energy."

    Businessman Miguel Gutierrez was named as president of YPF in April, during the most recent shareholder assembly.
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    Genscape sees Cushing inventory draw of more than 1 mln bbl to June 3 - Traders

    Genscape sees Cushing inventory draw of more than 1 mln bbl to June 3 - Traders
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    Angola LNG returns to global market with first post-shutdown cargo

    Angola's recently refurbished liquefied natural gas (LNG) export plant has launched a tender to sell its first cargo since it was unexpectedly shut down in April 2014.

    According to tender document details relayed by traders, the cargo was loaded between June 3 and 5 on board the Sonangol Sambizanga tanker and bid submissions are due on the morning of June 13, trade sources said.

    Angola LNG confirmed the first cargo since the shutdown had been loaded and was being sold via an international tender but did not give further details of the process.

    The tender is valid until June 15, one source said, while a second trader said that up to six more cargoes could be loaded before the facility goes offline for a final phase of testing.

    In the current tender, the delivery date of the first cargo varies according to the location of terminals dotted around the world.

    For example, the Chevron-led project lists a six-week delivery window for Argentina's Bahia Blanca terminal - between June 28 and August 14, one trader said.

    The cargo may be priced based on levels at Britain's gas trading hub, the National Balancing Point, or as a percentage of Brent crude oil, he said.
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    Eni Said to Lose Another 65,000 Bpd in Latest Niger Delta Attack

    Attacks late last week in the Niger Delta have put an additional 65,000 barrels per day of oil offline from Italian Eni’s Agip Oil company, according to Nigerian media reports.

    Last week’s militant attacks were the third targeting Agip since 18 May, and the 15th targeting oil installations in the Niger Delta since early February.

    Eni lost 5,200 barrels per day of its share in Agip oil output in May.

    Aiteo Oil, which operates the Nembe Creek trunkline feeding crude oil to the Shell-owed Bonny export terminal has also been shut down since a 28 May attack, with the company telling Nigerian media that it has lost 75,000 barrels per day of production. Shell has claimed force majeure on the Bonny terminal.

    Shell has also confirmed the reported attack late last week on its Forcados export pipeline, saying it had been forced to shut down crude exports here indefinitely, according to Nigeria’s Premium Times.

    “The Shell Petroleum Development Company of Nigeria Limited, operator of the SPDC JV, has confirmed signs of a leak on the 48 inch Forcados export pipeline at a location between shoreline and the Forcados terminal in the western Niger Delta”, media quoted a Nigerian Shell spokesman as saying

    “We are currently focused on securing the pipeline to protect the environment. Given this latest incident and the wider security situation in the Niger Delta, we are unable to determine probable timing of resumption of exports from the Forcados terminal,” the spokesman said.
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    Imperial Oil returns to normal operations at Kearl

    Imperial today announced the safe return to normal operations at the Kearl oil sands site. The company will continue to closely monitor developments with the fires in the Regional Municipality of Wood Buffalo. The safety of our employees remains our top priority.

    Kearl's physical plant was not damaged by the fires, and air quality monitoring remains in place.
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    Australia to start importing LNG?

    New South Wales and Victoria may have to consider importing liquefied natural gas due to the looming gas shortage in the two states, according to Andrew Smith, Chairman of Shell Australia.

    Speaking at the APPEA conference in Brisbane on Monday, Smith said the time has come to think “creatively about how we best serve our domestic customers, and ensure we have adequate and reliable gas supply“.

    According to Smith, importing LNG to Sydney could be an option if governments in Victoria and New South Wales persist with “moratoriums that stifle the development of additional reserves“.

    “I for one have mused about importing LNG to our nation’s largest city. If we choose not to act on declining gas fields, the idea of constructing a re-gas terminal in Port Botany may fast become a viable alternative for the industry,” he said.

    Smith said that, in the short term, imports of the chilled fuel would introduce new supply and competition into the New South Wales gas market.

    “In the current climate, I could see the rationale for such a suggestion – as LNG prices are historically low and pricing structures for pipeline capacity limit gas flow. However, the overall benefits are unlikely to outweigh the costs and there are impacts for the effective operation of the east coast gas market.”

    “Of course importing gas from Curtis Island or PNG LNG would come at a cost to customers – particularly if LNG prices recovered to anywhere near 2013 levels,” Smtih said.
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    Devon to Sell Oil and Gas Assets for Almost $1 Billion

    Devon Energy Corp., the energy producer that’s targeted $3 billion of asset sales to fund drilling and lower debt, agreed to sell fields in Texas and Oklahoma and a royalty interest in the northern Midland Basin for almost $1 billion to undisclosed buyers.

    The largest transaction was for reserves in East Texas for $525 million, the Oklahoma City-based oil and natural gas producer said in a statement Monday. The company also agreed to sell its position in the Anadarko Basin’s Granite Wash area for $310 million. The transactions are expected to close in the third quarter.

    A global oil-price crash has forced Devon and the rest of the industry to slash costs, lay off thousands of workers and cut dividends and exploration budgets. While prices have rebounded somewhat in 2016, Chief Executive Officer Dave Hager said last month it’s still not enough for Devon to grow production again.

    “With oil prices having moved in our favor throughout the sales process, we are encouraged by the interest and progress in marketing our remaining non-core oil assets in the Midland Basin and Access Pipeline in Canada,” Hager said in the statement. “Proceeds for the entire divestiture program are well on their way to achieving our previously announced range of $2 billion to $3 billion in 2016.”

    The East Texas properties produced the equivalent of 22,000 barrels of oil a day in the first quarter, 5 percent of which was crude. Proved reserves are about 87 million barrel equivalents. The Granite Wash assets produced the equivalent of 14,000 barrel of oil a day, 13 percent of it oil, and generated $6 million in cash during the quarter. Proved reserves are estimated at 31 million barrel-equivalents.

    Devon is in “advanced negotiations” to sell its half stake in the Access Pipeline, according to the statement. The line transports Canadian heavy oil and Devon is seeking a 25-year transportation agreement in that deal, Hager said at a May 18 investor conference.

    Devon intends to use a third of sale proceeds to bolster this year’s capital spending and pay down debt with the rest, Hager said last month.

    Devon to Sell Oil and Gas Assets for Almost $1 Billion
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    Russian oil firm Russneft plans Moscow share sale

    Russian mid-sized oil producer Russneft, majority owned by businessman Mikhail Gutseriyev, plans to sell new shares on the Moscow stock exchange in the fourth quarter, a company spokesman said on Monday.

    Russneft, which produced 7.4 million tonnes (150,000 barrels per day) of oil last year, plans to sell a stake of 25 to 49 percent, comprising new shares, in an initial public offering (IPO), depending on demand, the spokesman said.

    RBC newspaper on Monday quoted Russneft co-owner Mikhail Shishkhanov as saying Gutseriyev's family and trader Glencore will remain its major shareholders after the IPO.

    It also quoted a banking source as saying the company wanted to raise $2 billion through the share sale.

    Russneft, in which Gutseriyev's family currently controls 54 percent of shares and Glencore owns 46 percent, declined to comment on the valuation.

    According to Moody's Investors Service, Russneft's total debt stood at around $2.5 billion as of 31 December 2015, including a $2 billion loan from VTB.
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    Report suggests Shell may be about to reveal more cost-cutting

    Oil giant Shell may be about to announce further cost cutting and a possible delay to its plans to offload assets, a report said yesterday.

    Chief executive Ben van Beurden is under “increasing pressure” to justify the firm’s £35billion takeover of BG Group in the middle of a severe oil and gas industry slump, it added.

    Shell is holding a capital markets day for investors tomorrow and it is thought it may update on its sale plans and fresh cost-cutting then.

    Last month, Shell chief financial officer Simon Henry said cost levels in the North Sea needed to come down “substantially”.

    Action already taken to integrate BG within Shell’s operations, including job cuts, were “probably about it for now” but he did not rule out further headcount reductions.

    The Anglo-Dutch company has been under pressure from shareholders to cut costs and safeguard its dividend.

    Shell has already scrapped multi-billion-pound projects during the past year, including controversial exploration in the Alaskan Arctic.
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    Lukoil First-Quarter Profit Drops 59% After Crude Prices Slump

    Lukoil PJSC, Russia’s second-largest oil producer, said profit dropped 59 percent in the first quarter as oil prices declined to a 12-year low.

    Net income fell to 42.8 billion rubles ($651 million) from 104 billion rubles a year earlier, the Moscow-based company said in a statement on its website. That beat the 41.3 billion-ruble estimate of six analysts surveyed by Bloomberg.

    Russian producers have been partially buffered against the rout in crude by a weaker ruble, which has reduced costs, and taxes that decline with lower prices. While higher output helped smaller rivals Bashneft PJSC and Gazprom Neft PJSC boost profit in the first quarter, Lukoil’s production in Russia has dropped.

    Oil and gas output fell to 2.35 million barrels of oil and gas a day, according to the statement. Revenue fell to 1.18 trillion rubles. Free cash flow was 36 billion rubles compared with 63 billion a year earlier, the company said in the statement.

    Earnings before interest, taxes, depreciation and amortization fell to 145 billion rubles, missing the 158 billion-ruble estimate of seven analysts.
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    Chile starts up second stage of gas exports to Argentina

    Chile has begun exporting natural gas to Argentina along a second pipeline over the Andes Mountains, state energy company Enap said Friday, tripling the flow of gas to its neighbor after the initial start of exports via a separate pipeline last month.

    The 450 kilometer-long GasAndes pipeline will export 3 million cubic meters/day of gas from central Chile to western Argentina, using gas supplied by Enap, power company Endesa Chile and gas distributor Metrogas.

    The three companies receive the fuel under long-term contract with BG Group via the Quintero LNG import terminal.

    The exports to Argentina will continue throughout the southern hemisphere winter, June to September.

    Last month, France's Engie began exports of 1.5 million cu m/d of gas from its Mejillones LNG import terminal in northern Chile to northwest Argentina via its NorAndino pipeline. These exports are also expected to continue through the winter. Engie owns 63% of the terminal, with Chile's state copper company Codelco holding the balance. Enap said that the latest exports from central Chile could be increased by 1 million cu m/d at Argentina's request if gas were available, which would boost overall exports to 5.5 million cu m/d.

    The two countries are linked by seven pipelines built in the 1990s to transport gas from Argentina to Chile.

    At that time, Chile hoped cheap and plentiful Argentinean gas, up to 22 million cu m/d, would wean it off drought-prone hydroelectric dams. However, from 2004, Argentina began limiting supplies to a trickle to cover its own domestic shortages.
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    Canada's NEB revises, lowers production estimates due to wildfires

    Canada's upgraded bitumen output for May is expected to be more than halved, with yearly output dropping below the 1 million b/d mark, according to the National Energy Board's revised production estimates released Friday.

    The NEB now estimates May upgraded bitumen at 492,550 b/d, down from 1,019,472 b/d in its last update in January. June production was revised to 651,358 b/d, down from 1,019,940 b/d over the same period. The agency expects 987,195 b/d in upgraded bitumen for 2016, down from an earlier estimate of 1,047,698 b/d.

    Non-upgraded bitumen estimates for May similarly fell to 1,056,551 b/d in the latest update, compared with a projection of 1,464,640 b/d pre-fire. June production was revised to 1,409,473 b/d from 1,476,504 b/d over the same period. That drives down the NEB's 2016 estimate of 2016 non-upgraded production to 1,454,366 b/d from 1,481,888 b/d.

    Still, the latest production estimate revision only changes western Canada's 2016 output to 3,698,693 b/d from 3,707,860 b/d.

    NEB Supply Analyst Peter Budgell said the bulk of the revisions were due to the wildfires, including reports of June Syncrude delivery cuts and the typical one- to three-week restart time of steam assisted gravity drainage oil sands facilities also factored. He said it's unlikely producers could recoup the majority of lost production in later months, but that it was too early to revise those estimates.

    The wildfires, which began May 1, knocked as much as 1.27 million b/d of production offline, according to a Platts analysis. Companies began announcing restarts last week as the fires moved east, away from production sites.

    Attached Files
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    U.S. Shale Drillers Restart Oil Rigs as Market Improves

    Oil explorers put drilling rigs back to work in U.S. fields for only the second time this year as supply and demand come closer into balance.

    Rigs targeting crude in the U.S. rose by 9 to 325 this week, Baker Hughes Inc. said Friday. Explorers have idled more than 1,000 oil rigs since the start of last year. Natural gas rigs were trimmed by 5 to 82 this week, bringing the total for oil and gas up by 4 to 408.

    Oil prices extended declines immediately after the release of the Baker Hughes report. Futures in New York have climbed about 85 percent from the lowest level since 2003 earlier this year on signs the global glut is easing.

    "The uptick for rigs might have prompted some people to think that there’s a supply side reaction to $50 oil," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "This is just one week’s data. This doesn’t change the fact that the rig count is down a great deal or represent the beginning of a recovery."

    West Texas Intermediate oil for July delivery fell 55 cents to settle at $48.62 a barrel on the New York Mercantile Exchange. Prices climbed as much as 24 cents, or 0.5 percent, earlier in the session.

    The worst downturn in decades led oil producers to scrap projects and cut spending on drilling, signaling that supply and demand are getting close to being in balance. Disruptions in Canada and Nigeria took 50 million barrels out of the market last month, Geneva-based trading house Mercuria Energy Group Ltd. estimated.

    “The rebalancing is happening a bit faster than anticipated because of the disruptions,” Mercuria Chief Executive Officer Marco Dunand said in an interview. “Demand is also stronger than expected” in countries from India to the U.S., he said.

    The International Energy Agency forecasts oil demand will increase this year by 1.2 million barrels a day, while Dunand said growth is likely to top 1.5 million, perhaps rising as high as 1.8 million.

    America’s oil drillers have been idling rigs since October 2014 as the world’s largest crude suppliers battle for market share. Despite the cutbacks, U.S. production has only recently begun to falter as new techniques that increase efficiency keep the oil flowing.

    U.S. output declined for a 12th week and crude stockpiles dropped in the week ended May 27, according to a report from the Energy Information Administration.
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    Saudi Aramco Raises Asia Oil Pricing

    Saudi Arabia, the world’s largest crude exporter, raised pricing on most oil grades for sale to Asia and the U.S. in July after the nation’s energy minister said demand was robust.

    State-owned Saudi Arabian Oil Co. increased its official selling price for Arab Light crude by 35 cents a barrel to 60 cents more than the regional benchmark for sales to Asia, it said in an e-mailed statement. The company, known as Saudi Aramco, was expected to raise the premium for shipments of Arab Light crude by 40 cents a barrel to 65 cents a barrel more than the benchmark for buyers in Asia, according to the median estimate in a Bloomberg survey of five refiners and traders in the region last week.

    Oil has rallied about 80 percent since January, making ministers of the Organization of Petroleum Exporting Countries confident that their two-year strategy of trying to win market share is working. OPEC agreed on Thursday to stick to its policy of unfettered production with ministers united in their optimism that oil markets are improving. The July pricing sets Aramco’s light crude grades at the highest levels for Asia since at least September 2014, before OPEC adopted its market share strategy.

    “This shows that they’re getting more bullish on demand,” Robin Mills, chief executive officer at consultant Qamar Energy in Dubai and a non-resident fellow at the Brookings Institution in Doha, said Sunday by phone. “India is showing a lot of strength and we’re still seeing very robust demand from China.”

    Aramco raised pricing on most grades for sale to Asia, leaving only the Extra Light blend unchanged, according to the statement. It raised the premium for Super Light crude by 10 cents, to $4.05 a barrel more than the benchmark. Medium crude will sell at a $1 a barrel discount in July, 30 cents higher than in June, according to the statement.

    The company also increased pricing for U.S. buyers on all grades except Extra Light. Arab Light crude for U.S. buyers increased by 20 cents a barrel, to 55 cents more than the regional benchmark, according to the statement. Aramco deepened discounts for all grades to buyers in Europe, it said in the statement.

    Saudi Arabia pumped 10.27 million barrels a day in April, according to data compiled by Bloomberg. It produced a record average of 10.2 million barrels daily last year, it said in its annual review last month.

    Saudi Arabia’s Energy Minister Khalid Al-Falih, who is also chairman of Saudi Aramco, told reporters in Vienna on Thursday that demand is robust and that non-OPEC supply is declining. Global demand is expected to expand by 1.2 million barrels a day this year after growing 1.5 million barrels a day last year, according to OPEC’s final press statement on Thursday.

    Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia, its largest market. Producers in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades and for North America the marker is the Argus Sour Crude Index.
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    Oregon derailment likely to reignite oil-by-rail safety concerns

    A Union Pacific train carrying crude oil derailed and burst into flames along Oregon's scenic Columbia River gorge on Friday in the first major rail accident involving crude in a year.

    While no injuries were reported, the train remained engulfed in flames six hours after the derailment, officials said. The accident has already renewed calls for stronger regulation to guard communities against crude-by-rail accidents.

    Union Pacific Corp, owner of the line, said 11 rail cars from a 96-car train carrying crude oil derailed about 70 miles (110 km) east of Portland, near the tiny town of Mosier.

    Oil spilled from one car, but multiple cars of Bakken crude caught fire, said Oregon Department of Transportation spokesman Tom Fuller. Firefighters were still fighting the flames several hours later.

    The crude was bought by TrailStone Inc's U.S. Oil & Refining Co and bound for its refinery in Tacoma, Washington, some 200 miles (322 km) northwest of the derailment, the company said.

    Television footage showed smoke and flames along with overturned black tanker cars snaking across the tracks, which weave through the Columbia River Gorge National Scenic Area.

    "I looked outside and there was black and white smoke blowing across the sky, and I could hear the flames," said Mosier resident Dan Hoffman, 32, whose house is about 100 meters (328 ft) from the derailment. "A sheriff's official in an SUV told me to get the hell out."

    While rail shipments have dipped from more than 1 million barrels per day in 2014 as a result of the lengthy slump in oil prices, the first such crash in a year will likely reignite the debate over safety concerns surrounding transporting crude by rail.

    "Seeing our beautiful Columbia River Gorge on fire today should be a wake-up call for federal and state agencies – underscoring the need to complete comprehensive environmental reviews of oil-by-rail in the Pacific Northwest," said U.S. Representative Earl Blumenauer of Oregon.

    Ecology officials from Washington state said there was no sign of oil in the Columbia River or Rock Creek.

    Since 2008, there have been at least 10 major oil-train derailments across the United States and Canada, including a disaster that killed 47 people in a Quebec town in July 2013.

    The incident comes eight months after lawmakers extended a deadline until the end of 2018 for rail operators to implement advanced safety technology, known as positive train control, or PTC, which safety experts say can avoid derailments and other major accidents.
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    Australia's UGL faces more provisions on work for Ichthys LNG

    Australian contractor UGL Ltd warned on Monday it may have to book a provision of up to A$200 million ($146 million) for losses on its work for the Ichthys liquefied natural gas (LNG) project, knocking its shares down 35 percent.

    Ichthys, off northwestern Australia, is running at least six months behind its original schedule due and is now not expected to start producing until September 2017 due to changes in the scope of the project, mainly owned by Japan's Inpex Corp and France's Total SA.

    That has led to cost blowouts for the UGL-Kentz joint venture handling construction of onshore facilities and claims against the project's main contractor, the JKC joint venture formed by JGC Corp, KBR and Chiyoda Corp .

    UGL said on Monday it had not yet settled those claims, even though it said UGL and its partner Kentz had accommodated their client's delays to the project. UGL threatened to pursue a formal dispute process if necessary.

    "This is very disappointing given the co-operation of the JV to ensure client delays to the project were, and continue to be, accommodated," UGL Chief Executive Ross Taylor said in a statement.

    The company said if talks failed and it did have to resort to a formal dispute process, it may have to book contract loss provisions of up to A$200 million, all or part of which may be recoverable from JKC.

    That would be on top of a A$175 million provision it has already booked for delays on apower plant for the project.

    UGL's shares sank as much as 35 percent to A$2.24, their lowest since February and on track for their biggest one day loss ever.
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    Brazil Said to Delay Petrobras, Other Asset Sales Until 2017

    Brazil’s Acting President Michel Temer will prioritize infrastructure concessions this year as a way to showcase an improving political environment and rule of law, before offering stakes in state companies in 2017.

    Several highways and airports are almost ready to be put up for tender. Such deals are less controversial than those involving strategic assets, like units of oil company Petroleo Brasileiro SA, according to a Temer aide who participates in key policy discussions. Temer’s team is also identifying regulatory improvements needed to pave the way for asset sales, said the aide, who asked not to be named because the information isn’t public.

    Amid the impeachment trial of President Dilma Rousseff and the worst economic recession in over a century, the Temer administration will need more time to structure asset sales and reassure investors wary of years of market volatility and a heavy government hand in the economy, the aide said.

    Among the assets that may head for the auction block are Petrobras’s oil and gas unit Transpetro, as well as state airport operator Empresa Brasileira de Infra-Estrutura Aeroportuaria, or Infraero. The company’s stake in recently auctioned airports, including Sao Paulo’s Guarulhos, could be spun off separately, according to the government aide.

    The main goal of the privatizations is to shrink a growing public debt and downsize government to make room for private sector participation. Finance Minister Henrique Meirelles has said that slowing public debt growth is one of the administration’s main priorities.

    Privatization is still considered a political taboo by many legislators in a country that has been ruled by the leftist Worker’s Party for more than 13 years. Given that Temer still relies on senators to confirm him in office by impeaching Rousseff, his administration must tread lightly in pushing unpopular measures in Congress, another senior government official said.

    The government is still analyzing whether it will sell just a minority stake or a controlling share of power utility Furnas Centrais Eletricas SA and BR Distribuidora, a unit of Petrobras, the official said.

    Eletrobras subsidiaries Eletrosul Centrais Eletricas SA, known as Eletrosul, and Cia Hidro Eletrica do Sao Francisco, known as Chesf, are also candidates for divestment.

    Some members of Temer’s administration also support the idea of selling the government participation in Itaipu Binacional, a hydroelectric owned by Brazil and Paraguay, although the proposal is in the very initial stages, the official said.
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    Chile environmental watchdog investigates GeoPark for illegal fracking

    Chile's SMA environmental regulator said on Friday it was investigating Latin America-focused oil and gas explorer GeoPark Ltd for alleged violations, including fracking activities without having the necessary permits.

    Inspections in 2014 and 2015 of GeoPark's hydrocarbon project in the Fell block, located in the southern Magallanes region, detected "hydraulic fracturing activities in different wells, without the environmental permits required by law for this type of activity," the regulator said.

    GeoPark is also accused of having faulty systems in place for avoiding soil erosion and managing spills of hazardous materials, and of damaging archaeological findings.

    GeoPark has 10 days to present a compliance plan to the SMA or 15 days to present a legal defense.
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    French strikes offer Atlantic refiners lifeline

    Refiners' profits in Europe and the United States are getting yet another lifeline from protracted strikes in France that have cut into the world's excess of diesel, jet fuel and gasoline.

    A strike in France entering its third week shut four of Total's five refineries, knocking out most of the country's fuels production and forcing distributors to truck in fuel from neighbouring countries and tap stored volumes.

    The disruption has roiled global markets, pushed prices for diesel and gasoline higher and boosted rivals' refining margins just as they had come under huge pressure from a daunting supply overhang.

    French fuels production is down by more than half, with diesel output down by around 320,000 barrels per day (bpd) and gasoline by some 170,000 bpd due to the industrial action, according to consultancy Energy Aspects.

    "This volume is enough to materially affect balances," said Robert Campbell, refined products analyst at consultancy Energy Aspects.

    "France is running through a lot of inventory and though there is plenty of stock at hand, this is changing the picture and is fundamentally bullish."

    The government also released at least 1.5 million barrels of products from its strategic storage, traders said.

    The outages have had a more significant impact on gasoline prices, particularly in the U.S. East Coast, which absorbs most of France's excess production.

    Gasoline appears on the front foot once again as U.S. gasoline demand over the past four weeks rose by 4 percent from a year ago to 9.66 million barrels per day.

    The strikes, the worst since 2010, are set to lead to material losses for Total. But for other refiners in the region and overseas, the timing was perfect.

    Oliver Jakob, managing director of Swiss-based consultancy PetroMatrix, estimates the French outages will support the Atlantic basin refining market over the next two months.

    "It makes a better margin for refineries - and a more stable margin ... France will have to import at a high level for the next two months."

    Global inventories of diesel and gasoline have risen to multi-year highs in recent months as refiners around the world pumped at full throttle ahead of the peak summer demand season. The large product builds, particularly for diesel, put refining profits under heavy pressure.

    Global gasoline stocks declined last week by 1.3 percent to 273 million barrels, BNP Paribas data shows. At this level the stocks are nevertheless still up 11.4 percent from last year.

    Diesel inventories registered a smaller 0.3 percent last week, holding 12.9 percent above last year's levels at 200 million barrels, according to the Paris-based bank.

    Total said on Thursday it plans to restart its 220,000 bpd Donges refinery after workers there voted to end the strike, and said 62 percent of workers at the 101,000 bpd Granpuits refinery also voted to end strike action. Restarts could ease the crunch, but not erase it.

    "France will have to rebuild its stocks," Jakob said.

    Attached Files
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    Russia Almost Doubles Gas Exports to the U.K.

    Russian media reports say the county’s gas giant Gazprom has dramatically increased its exports to the United Kingdom during the first five months of 2015, nearly doubling shipments.

    The 91.5-percent increase in natural gas exports to the UK--which equates to 3.85 billion cubic meters--was reported by the company’s CEO Alexei Miller on Wednesday.

    Other countries in the European Union—desperate to reduce dependence on Russian gas--have also begun importing more energy supplies from Russia.

    Gazprom’s business with Poland jumped by 35.6 percent from January to May 2016, while Germany (10.4 percent), France (35 percent), Austria (21.3 percent), Greece (85.8 percent), the Netherlands (103.8 percent) and Denmark (139.3 percent) also upped their orders by significant amounts.

    The European Council on Foreign Relations published a report calling Russia an “unreliable partner” and outlined possible alternatives to Russian energy resources.

    It suggested increasing natural gas imports from the Middle East and North Africa region, “intensifying collaboration” with Azerbaijan, Kazakhstan and Turkmenistan all of which host the Southern Gas Corridor, and getting a hold of liquefied natural gas from the United States, Australia and East Africa.

    In order to implement the three-pronged strategy, the report suggested appointing a Special Envoy on International Energy Affairs to begin discussing energy trade deals.

    “Although diversifying away from Russian gas is not unrealistic in the medium term, several technical and political obstacles must be overcome,” the authors said, pointing out that “most” of the European Union’s energy contracts with Russia will expire by the year 2025.

    The analysis leaned towards offering energy contracts to Iran, had its oil industry not been bombarded by international sanctions at the time. The nuclear deal’s success could mean the recovering country could receive new European contracts.

    The document also suggested increasing its energy imports from Algeria – the North African country that already the continent’s second-largest non-EU gas supplier behind Russia.

    Other OPEC members from Latin America and the Middle East were also listed as new potential energy partners.
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    Nigerian militants warn of 'zero' oil output in new attacks

    The Niger Delta Avengers militant group claimed three new attacks on the country's battered oil infrastructure overnight, promising to bring Nigeria's oil production to "zero."

    Early on Friday, the group said via its Twitter account that it had blown up a pipeline in Nigeria's Bayelsa state owned by Italy's ENI, hours after attacks on another ENI pipeline as well as one belonging to Shell Petroleum Development Company of Nigeria Ltd (SPDC).

    "At about 3:30am our (@NDAvengers) strike team blew up the Brass to Tebidaba Crude oil line in Bayelsa," the group said on a Twitter feed it uses to claim attacks.

    The pipeline is used to transport Brass River crude, which was placed under force majeure after an attack last month, to an export terminal.

    Hours earlier, the group said it blew up the Ogboinbiri-Tebidaba and Clough Creek-Tebidaba pipelines in Bayelsa and a Shell Forcados export pipeline. That grade has been under force majeure since an attack on a sub-sea pipeline in February.

    Because the attacks were on infrastructure for oil streams already under force majeure, the immediate impact on Nigeria's exports was limited. The country's oil minister said on Thursday its production was close to 1.6 million barrels per day (bpd).

    ENI did not immediately respond to a request for comment. A spokesman for the SPDC, which operates the Forcados line, said the company was "investigating reports of an attack on its pipeline in the Western Niger Delta."
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    SeaEnergy placed in administration

    Aberdeenshire-based SeaEnergy has been placed in administration as marine engineering services specialist James Fisher & Sons acquired the firm’s Return to Scene (R2S) business.

    Trading in the shares of SeaEnergy have been suspended since April, pending clarification of its financial position. Blair Nimmo, Geoff Jacobs and Tony Friar of KPMG have been appointed administrators.

    Prior to the administrators’ appointment its SE Innovation Limited (SEIL) business, assets and 10 employees (including the Return to Scene forensic, and Max & Co businesses) were sold to R2S by the Sea Energy directors, and seven employees of SeaEnergy were transferred to R2S.

    In March, SeaEnergy, which has its headquarters at Westhill, said it had entered into discussions with a number of parties for acquisition of its R2S Visual Asset Management business as well as other group assets.

    It said was facing significant cash flow difficulties and would need to consider a sale of its main assets, or the group businesses would be unable to continue trading beyond May 2016.

    SeaEnergy began to experience cash flow challenges in late 2015, due to the ongoing oil price decline adversely impacting R2S activity levels. Client orders were cancelled or postponed, and the number of new business enquiries reduced significantly.

    James Fisher has struck a £1.9 million deal to acquire the Return to Scene business. Return to Scene provides visual asset-management photographic capture services, digital media services and forensic services to the oil & gas and security sectors.

    In response to these challenges, the SeaEnergy directors secured additional funding in November 2015 via a £1 million working capital loan. In early 2016, trading conditions began to deteriorate even further.

    James Fisher will pay £1.9 million upfront for the business and another £100,000 if R2S wins certain contracts before the end of 2016.

    All 33 R2S employees have been transferred under the James Fisher deal.

    Bob Donnelly of Return to Scene, added: “We are delighted to be part of the James Fisher family. This is an exciting time for our team. The uninterrupted provision of services to our clients is of key importance and as part of James Fisher, we’ll continue to innovate and deliver efficiencies for our clients.”

    Of the remaining seven employees of SeaEnergy, three have been made redundant following the appointment of KPMG as administrator and four have been retained to assist the administration process.

    Nimmo said: “We are pleased to have concluded the sale of R2S to James Fisher, which will safeguard the majority of jobs within the group, maintain customer service, and provide the best outcome for SeaEnergy’s creditors.

    “Based on the information available at present, it is unlikely there will be any recovery for the shareholders,” said Blair Nimmo, joint administrator for SeaEnergy and UK head of restructuring at KPMG.
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    JX Nippon buys stake in ninth Bintulu LNG train from Petronas

    Malaysia’s’ Petronas said Friday that Japan’s JX Nippon Oil & Energy will buy a 10 percent stake in its unit that owns a liquefaction train within the Bintulu LNG complex in Sarawak.

    Petronas LNG 9 Sdn Bhd (PL9SB) owns the ninth liquefaction train, with a production capacity of 3.6 million tonnes per annum, within the Petronas LNG complex in Bintulu, Malaysia.

    The train is expected to commence commercial operations in the first quarter of 2017, according to a joint statement by the two companies.

    JX NOE’s entry into PL9SB marks its second participation in Petronas’ LNG projects, in addition to its existing 10 percent equity interest in MLNG Tiga.

    With the addition of the liquefaction plant owned by PL9SB, the Petronas LNG complex in Bintulu will now have the capacity to produce approximately 30 million tonnes per annum, the statement said.
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    Total readies sale of German chemicals maker Atotech: sources

    French oil and gas producer Total has begun preparations for the sale of its specialty chemicals and equipment division Atotech, which may be valued at about 3 billion euros ($3.4 billion), sources said.

    Total said in February it was planning sales of mostly non-core assets worth about $4 billion this year and Chief Executive Patrick Pouyanne said last month that Atotech no longer fell within the company's strategic vision.

    The chemicals sector has seen a surge of mergers and acquisitions in the last year, with a tie-up between U.S. peers Dow and DuPont and ChemChina buying Swiss pesticides group Syngenta.

    The deal bonanza is driven by large corporates striving to bulk up in higher-margin specialty chemicals and rely less on commodity chemicals. At the same time, they are trying to focus on key areas and divest sub-scale activities, while the cheap funding has facilitated deal-making.

    Total is expected to ask Barclays to lead the divestment, the sources said, adding that a final mandate has not yet been assigned but was imminent.

    An auction of Berlin-based Atotech, which generates annual sales of about $1 billion from the manufacture of specialty chemicals and equipment for printed circuit boards and semiconductors, would likely to kick off after the summer, the sources said, after sales documentshad been prepared.

    About a dozen private equity groups are looking at the Atotech, which is expected to be sold to a buyout group as there are no obvious strategic buyers, the sources said.

    People familiar with the company said they expect Atotech to generate earnings before interest, taxes, depreciation and amortization (EBITDA) of 250 million euros this year and that the company may be valued at 12-13 times that in a sale.

    That would be a slight discount to the multiple of 13.9 times core earnings that U.S. peer Platform paid for its acquisition of Alent last year.

    Companies buying a direct peer are usually able to reap synergies from an acquisition, allowing them to pay more than buyout groups which do not have such cost savings potential.

    Atotech is Total's sole remaining specialty chemicals unit after the sale of Bostik in 2014.
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    Alternative Energy

    Dong Energy market cap at $15B. Set for Copenhagen debut

    Danish energy company Dong Energy has completed its Initial Public Offering.

    Admission to trading in and official listing on Nasdaq Copenhagen of the shares of DONG Energy is expected to take place on June 9 2016.

    The company said that the final offer price was DKK 235 per offer share, valuing the company at DKK 98.2 billion. Converted to U.S. dollars, the final offer price was $36.01, and the market capitalization is $15.05 billion.

    Claus Hjort Frederiksen, Danish Minister of Finance, said that as a representative of the majority shareholder he was pleased to see that there has been a lot of interest in becoming part of the ownership of DONG Energy – both among retail and professional investors.

    He said: “It gives DONG Energy a solid foundation to retain and develop its position as one of the leading green energy companies in the world. Recognition goes to the management and employees, for all of their hard work in connection with the IPO.”

    Worth noting, while DONG Energy is looking to turn its business mostly towards renewables, the company also has producing oil and assets in Denmark, Norway and the UK. The oil and gas business is being managed for cash, which will be reinvested in renewable energy
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    Solar Is the Fastest-Growing Energy, Says BP

    The world’s growing fleet of solar panels generated a third more electricity in 2015 than a year earlier, making power captured from the sun the world’s fastest growing source of energy, according to BP Plc.

    Solar generation grew 33 percent, with China overtaking the U.S. and Germany as world leader in 2015, BP said in its 65th annual statistical review into world energy published on Wednesday. The London-based oil company exited from solar in 2011 after 40 yearsin the business.

    “Sharp cost reductions have gone hand-in-hand with rapid growth in renewable energy. Solar power production has increased more than 60-fold in 10 years, doubling capacity every 20 months,” said Spencer Dale, BP chief economist, in a speech that also predicted continued falls in the costs of solar.

    The growth in renewables means the industry now accounts for 2.8 percent of global energy use, up from 0.8 percent a decade ago, said BP. In total, renewables added 213 terawatt-hours of wind, solar and biofuel capacity last year, which was about the same as the total increase in global power generation, said BP.

    Wind still remains the largest source of renewable power generation and grew by 17 percent in 2015, according to BP. Biofuel production grew 0.9 percent, below the 14 percent 10-year average, the oil major said. Coal saw its biggest drop in demand on record in 2015.

    Coupled with sluggish global demand for power, the growth rate of renewable power meant carbon emissions from the energy sector stalled last year, increasing just 0.1 percent.
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    England ‘not windy enough to justify more onshore wind’

    England is not windy enough to justify more onshore wind developments.

    That’s according to Hugh McNeal, CEO at RenewableUK, who added wind speeds in the region are not high enough to make projects economically viable without subsidies.

    Speaking to the Telegraph, Mr McNeal said despite the government cuts to subsidy, the industry could still build onshore wind farms but only in some parts of the UK.

    However, new wind farms in England are “very unlikely”, he added.

    Mr McNeal claims the onshore wind industry is “now the cheapest form of new generation” in the country.

    He believes that instead of asking the government for support for onshore wind, the industry must take a step back and win a wider argument with the public.

    He added: “There are plants we can build – I prefer the word onshore wind plants to farms – which are cheaper than new gas.

    “I think that’s a fundamental turning point and we are going to have to persuade people that is true. If plants can be built in places where people don’t object to them and if, as a result of that, over their whole lifetime the net impact on consumers against the alternatives is beneficial, I need to persuade people we should be doing that.”
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    German battery maker sonnen GmbH wins backing from GE

    German battery maker sonnen GmbH on Monday said it has secured financial backing from GE Ventures, General Electric's venture capital subsidiary, to develop its brand of residential power storage systems.

    Sonnen, formerly called Sonnenbatterie, is a start-up which besides producing storage batteries has also launched a scheme to connect households with solar panels and other consumers in Europe's first online energy sharing platform.

    GE and existing investors in sonnen had together put up a double-digit million-euro sum in growth capital for sonnen, it said in a statement.

    "Sonnen is helping to reshape the energy industry," said Jonathan Pulitzer, managing director at GE Ventures. "We believe in sonnen's vision and that is why we are excited to partner to provide clean and affordable energy for all."

    Sonnen, whose backers also include German E-Capital and Czech firm Inven Capital, has to date sold 11,000 lithium battery units, making it the European market leader in that segment, said Philipp Schroeder, one of sonnen's managing directors.

    He said since the sharing platform, called "sonnenCommunity" was introduced last November in Germany and Austria, some 1,500 households had signed up for the scheme, which is aimed at making users independent of conventional suppliers.

    He also said that sonnen was growing in the United States and Italy, where the community scheme would be launched by the end of 2016.

    Battery technology allows usage of clean energy even when weather conditions are not favourable.

    Long seen as expensive, it is moving into a price range which makes it increasingly affordable to ordinary householders.

    Incentives for German solar power producers to feed surplus supplies into the national grid are set to end in 2021, providing a reason for them to store more power themselves.

    Apart from energy, California-based GE Ventures also invests in healthcare, software, aviation, transport and appliances.
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    US to lease land for offshore wind

    As part of President Obama’s climate plans, huge swathes of water off New York state are to be used to build offshore windfarms.

    The Department of Interior aims to offer more than 81,000 acres, an area equivalent to the size of  Milton Keynes, located around 11 miles south of Long Island.

    The Proposed Sale Notice, which will present details on the area, proposed lease conditions and the auction, will be published next week. It will also include a 60-day public comment period.

    Secretary of the Interior Sally Jewel said: “This is another major step in broadening our nation’s energy portfolio, harnessing power near population centres on the East Coast. Offshore wind power marks a new frontier in renewable energy development, creating the path for sustainable electricity generation, job creation and strengthening our nation’s economic competitiveness.”
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    U.S. weather forecaster sees high chance of La Nina developing

    A U.S. government weather forecaster on Thursday maintained its projections for the La Nina weather phenomenon to take place in the Northern Hemisphere later this year, as El Nino conditions dissipated.

    The Climate Prediction Center (CPC), an agency of the National Weather Service, in its monthly forecast said La Nina is favored to develop during the summer and pegged the chance of La Nina developing in the fall and winter 2016-17 at 75 percent.
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    Monsanto develops plan for GMO U.S. soy lacking EU import approval

    Monsanto Co is developing plans to prevent a new variety of biotech U.S. soybeans from entering European markets where they are not approved, leaders of two agricultural trade groups said, in a sign of the growing impact of regulatory delays on the world's largest seed maker.

    The company is working with representatives of the U.S. farm sector on a strategy to keep Xtend soybeans separate from varieties approved in all major export markets, said Jim Sutter, chief executive officer for the U.S. Soybean Export Council. The plan could be used if Europe does not clear imports before harvesting starts in August.

    Monsanto had no immediate comment on Tuesday.

    The company launched Xtend soybean seeds, engineered to resist the herbicides glyphosate and dicamba, before obtaining clearance for crop shipments to Europe because executives were expecting approval early this year.

    The product is designed to replace hugely popular Roundup Ready soybeans planted nationwide and its release could represent Monsanto's biggest technology launch ever, according to the company.

    But European import approval still has not come, prompting the world's top grain handlers to declare they will reject Xtend soybean deliveries to avoid trade disruptions.

    "They'll obviously have to channel it so it doesn't go to the European market," Sutter said of Monsanto. He declined to offer more details.

    Richard Wilkins, president of the American Soybean Association, also said Monsanto was working on a plan for Xtend soybeans if Europe's approval comes too late. The association, which represents farmers, has asked Monsanto to present the plan next month, he said.

    "We are particularly interested in preventing anything from disrupting international trade," Wilkins said.

    Last month, Monsanto told agricultural organizations in a letter that it hoped for European approval before summer and was not "yet in a place where harvest contingency plans are needed."

    Rivals, including Syngenta AG and Dow AgroSciences , in recent years have launched programs that specify where farmers must deliver biotech crops lacking approval in key markets or how they can use the harvests domestically.

    The United States is the biggest producer of GMO crops and has long been at the forefront of technology aiming to protect crops against insects or allow them to resist herbicides.

    That innovation is now seen as a risk to trade because it is hard to segregate crops containing traits lacking import approvals from the billions of identical-looking bushels exported every year.

    China roiled global grain trading two years ago after it rejected boatloads of U.S. corn containing a biotech Syngenta trait that had not been approved for import.

    Since then, the Swiss-based seed company has partnered with grain handler Gavilon, owned by Marubeni Corp, to oversee U.S. harvests of Duracade corn, another biotech variety that lacks China's approval.

    Associations representing grain handlers and processors, in a letter to Monsanto on May 7, asked the company's plans for Xtend soybeans if Europe does not approve imports before harvests.

    Delays in the review come as soybean and soymeal prices have surged amid crop woes in Argentina, which are expected to increase demand for U.S. soy shipped to Europe.

    One grain group, the National Grain and Feed Association, has told members of reports linking the timing of Europe's decision on Xtend soybean imports to the relicensing of glyphosate, sold by Monsanto and other companies.

    On Monday, European nations refused to back a limited extension for the use of glyphosate.

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    U.S. lawmakers probe EPA staff over possible bias in herbicide review

    U.S. lawmakers are investigating whether U.S. Environmental Protection Agency staff influenced the World Health Organization's review of glyphosate and its finding that the herbicide probably causes cancer, according to a letter sent to the agency on Tuesday.

    The letter from the U.S. House of Representatives Committee on Science, Space and Technology is part of an ongoing investigation into the agency after the EPA posted and withdrew an internal report that said glyphosate was not cancer causing.

    One question that lawmakers are trying to answer, according to legislative sources, is whether EPA staff allowed personal bias to color the agency's scientific review of glyphosate, the chemical in Monsanto Co's Roundup herbicide.

    Some EPA staff participated in both the U.S. review and the WHO review. While the committee's line of investigation was not clear, lawmakers cited the contradictory findings of the two reviews.

    Those reviews were by the EPA's cancer assessment review committee or CARC and the WHO's cancer arm, the International Agency for Research on Cancer or IARC.

    “Given the apparent contradictions of the CARC and IARC findings for glyphosate ..., the committee has concerns about the integrity" of the WHO review, the role of EPA officials in that review and their influence on the outcome of the EPA study, the committee's letter to the EPA seen by Reuters said.

    According to the letter, lawmakers want congressional staff to interview four top EPA officials who were involved in one or both reviews of glyphosate.

    An EPA spokeswoman said Tuesday the agency had received the letter, was reviewing it and would respond.

    In an earlier letter EPA sent to the committee, the agency said that publishing the cancer assessment review committee's report was an accident and that the cancer review was still ongoing.

    The EPA said it was "currently reviewing our standard operating procedures for the release of documents to avoid the inadvertent release of pre-decisional information in the future."

    The congressional committee began its investigation into the EPA last month after the report by the EPA's cancer assessment review committee became briefly public.

    The report found that glyphosate was "not likely" to be carcinogenic to humans. It also appeared to dispute the IARC report and questioned its analysis.

    The WHO's IARC last year classified glyphosate as "probably carcinogenic to humans."

    The House's Agriculture Committee previously said it too was examining the agency's review of glyphosate and atrazine, another chemical used in agricultural herbicides.

    The Agriculture Committee also wanted to know what steps still needed to be taken to finalize and issue the glyphosate report, which it had expected in July 2015.

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    K+S says Kassel prosecutors drop pollution case

    German potash and salt miner K+S said on Tuesday that public prosecutors in the city of Kassel, where the company is headquartered, had dropped investigations into suspected water pollution because they had found no evidence of misconduct.

    In a separate case about water pollution which was brought by prosecutors in the town of Meiningen against the company's chief executive and supervisory board chairman among others, a decision on whether to start proceedings remains outstanding.

    The Meiningen court said on Tuesday it would not decide before the end of August whether the case would go to trial.
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    EU nations fail to approve weed-killer glyphosate

    EU nations refused to back a limited extension of the pesticide glyphosate's use on Monday, threatening withdrawal of Monsanto's Roundup and other weed-killers from shelves if no decision is reached by the end of the month.

    Contradictory findings on the carcinogenic risks of the chemical have thrust it into the center of a dispute among EU and U.S. politicians, regulators and researchers.

    The EU executive, after failing to win support in two meetings earlier this year for a proposal to renew the license for glyphosate for up to 15 years, had offered a limited 12 to 18 month extension to allow time for further scientific study.

    It hopes a study by the European Union's Agency for Chemical Products (ECHA) will allay health concerns.

    Despite the compromise, the proposal failed to win the qualified majority needed for adoption, an EU official said.

    Seven member states abstained from Monday's vote, 20 backed the proposal and one voted against, a German environment ministry spokeswoman said.

    European Commissioners will discuss the issue at a meeting on Tuesday, a Commission spokesman said.

    Failing a majority decision, the EU executive may submit its proposal to an appeal committee of political representatives of the 28 member states within one month. If, again, there is no decision, the European Commission may adopt its own proposal.

    The controversy overhangs German chemicals group Bayer's $62 billion offer in May to buy U.S. seeds company Monsanto. Germany was among those which abstained from Monday's vote and has in the past opposed Monsanto's genetically modified seeds.
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    IOI hit by Greenpeace

    Amazing work! We just got off the phone with General Mills, makers of Betty Crocker cake mixes, and they've agreed to stop buying from destructive palm oil giant IOI.

    This is brilliant news - as more customers desert IOI, they'll be forced to take action and protect Indonesia's forests. Have a slice of victory cake to celebrate!

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    Precious Metals

    After five lean years, gold miners gear up for growth

    For the first time in five years, Barrick Gold and other bullion miners are getting ready to expand, breaking from their monologue on cutting costs and debt because of tumbling gold prices.

    Backed by healthier balance sheets, a 17 percent rise in the price of gold since January to $1,244 an ounce and new investors, miners from Canada to Australia and South Africa are studying ways to raise production.

    At the world's biggest gold miner, growth was not a priority in recent years, said Rob Krcmarov, Barrick's vice president of exploration and growth, as the company sold assets to reduce its $14 billion debt by 40 percent.

    "Now some of our investors are starting to ask us: what is next?," Krcmarov said. Barrick created a "growth committee" in March to evaluate in-house projects, exploration opportunities and acquisitions.

    Early signs of activity include Kinross Gold's March decision to expand its Mauritanian gold mine. In May, Goldcorp paid C$520 million ($406.44 million) for a gold project in Canada's Arctic.

    "What the sector will see is smaller, bolt-on type projects, brownfield expansions of existing mines. That's going to account for the bulk of growth in new investment in the space," said BB&T Capital Markets analyst Garrett Nelson.

    Over the past half-decade, many mining companies have pared debt and overhead to build cash flow, that can be used to boost output, along with rising prices.

    Such balance sheet improvements have attracted investors who once again see promise in gold stocks, including billionaire George Soros.

    Shares in gold miners have soared this year with the Philadelphia Gold and Silver Index up 98 percent versus a paltry 3.5 percent increase in the S&P 500 Index.

    Still, with lingering memories of the last bull run's overpriced mine builds and acquisitions that stretched balance sheets, producers are keeping watch on volatile gold prices which peaked at $1,920 an ounce in September 2011.

    "At this stage, it's largely talk and discussion and trying to get people to recognize that they do have these options in the portfolio," said Stephen Land, who manages Franklin Templeton's Franklin Gold and Precious Metals Fund.

    Barrick and others such as Australia's Evolution Mining say growth means more than just adding production - ounces must be profitable at a range of prices.

    "We want to be a company that prospers through the cycle and not just when the gold price is going up," said Evolution Executive Chairman Jake Klein.

    Gold prices began dropping sharply from late 2012 as concerns about global inflation fell, reducing bullion's value as a hedge against rising prices.

    Newcrest has its hands full with expansion plans at existing assets, and while the company is "not blind" to larger scale M&A opportunities, it is "not a major focus" right now, said CEO Sandeep Biswas.

    By focusing on early-stage projects, Canada's Agnico Eagle Mines, which doubled 2015 exploration spending from the previous year, can reap more profit from its investments, CEO Sean Boyd said.

    Still, securing new supplies is critical: after seven years of gains, gold production will fall for the next three years, Thomson Reuters GFMS data shows.

    Some miners will be tempted to make acquisitions.

    Advanced projects and newly-built mines that can supply "instant ounces" are likely to be popular targets, said Cassels Brock & Blackwell mining lawyer Paul Stein.

    Evolution and South Africa's Sibanye Gold have said they might be looking to buy.

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    Lundin to advance Fruta del Norte to development on positive feasibility

    Canadian project developer Lundin Gold, has published the results of a feasibility study on its attractive Fruta del Norte (FDN) gold/silver project, in Ecuador, stating that it would move into the development phase for what is one of the highest grade undeveloped precious metals projects anywhere in the world. 

    With an eye on first production early in 2020, Lundin stated Monday that basic engineering and an early works programme would get underway in the third quarter to provide the infrastructure, services and facilities to support the start of the mine twin decline construction and to advance the project in a fast tracked manner. 

    "The feasibility study provides a solid basis to enable FDN to advance immediately into development, ultimately becoming a landmark, high quality and profitable mining operation, adding great value to the company, its shareholders and the people of Ecuador. 

    FDN has an after-tax netpresent value at a 5% discount rate of $676-million, providing an after-tax rate of return of 15.7%. The study assumed a gold price of $1 250/oz and a silver price of $20/oz. 

    According to Lundin, the initial capital cost was estimated to be $669-million, excluding any expenditures by the company before starting construction on July 1, 2017. The sustaining capital was estimated to be $263-million and closure costs were projected to total $29-million. 

    FDN would produce on average 340 000 oz at an average life-of-mine (LOM) total cash cost of $553/oz and a LOM all-in sustaining cash cost (AISC) of $623/oz, placing FDN in the lowest cash cost quartile globally. 

    Over the project’s initial 13-year mine life, it would produce 4.4-million ounces of gold and 5.2-million ounces of silver, using an average gold recovery of 91.7% and average silver recovery of 81.5%.
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    Bitcoin has been on an explosive rally — and it's back through $500

    The cryptocurrency has been surging in US dollar terms over recent weeks, surging back through the $US500 mark, up around 170% from its lows of January last year. And in the past few weeks it has exploded by $US100 from the price on May 19th.

    A watershed is approaching for the Bitcoin marketplace, when the reward for “mining” a block of Bitcoin using computing power will be halved from the current 25 Bitcoins at some point in the coming weeks. This will reduce the rewards for Bitcoin miners, potentially leading to a fall in supply. The website currently estimates the cutover for the reduced rewards will now be on July 10.

    There has also been talk of increased Chinese demand. As Beijing has been weakening the yuan, canny Chinese have been looking at ways to place their money into offshore assets. The Australian property market has been one suspected beneficiary of this, and what’s happening with Bitcoin may be a bit of the same, as the digital currency can be easily exchanged for US dollars.

    Now to how that all looks:
    Image title

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    Base Metals

    Lundin mulls interest from multiple parties on Tenke copper mine

    Lundin Mining is weighing interest from "multiple parties" for its stake in the Tenke Fungurume copper mine in the Democratic Republic of Congo, CEO Paul Conibear said on Thursday. In June, 

    Tenke mine operator Freeport-McMorRan Inc agreed to sell its majority stake to China Molybdenum for $2.65-billion to help cut its debt.  Lundin has a 24% stake in the mine and the right of first offer on any sale. Last month it hired the Bank of Montreal to help it consider its options. 

    Freeport owns 56% of Tenke, one of the world's largest copper deposits. Congo's state mining firm Gecamines owns a 20% stake. Lundin could do nothing and allow the China Moly deal to proceed, supplant the offer, or sell its stake. "We've been pleased by the response on interest, on a number of these scenarios. There are multiple parties interested," Conibear said in an interview at the company's office. 

    "We've been busy and BMO's been busy, very busy. It's obviously not an easy process, the DRC (Democratic Republic of Congo) is a more challenging environment and Tenke's a really big operation. But we've had very credible interest." Lundin has until August 8 to decide. 

    "It's obviously our highest priority to evaluate these things in a relatively short period of time and make some decisions," Conibear said. Mounting a bid, either independently or as part of a group, is the most complex move, he said. There are variations of each of its three options. He would not comment on which is preferable or whether Lundin's right of first offer can be transferred. 

    Separately, Conibear said Lundin would not get involved in Nevsun Resources' planned takeover of Reservoir Minerals. Reservoir owns a copper/gold project in Serbia under a joint venture with Freeport. Nevsun said in late April that it would buy Reservoir for $365-million, trumping an offer Lundin announced in March to buy part of Freeport's stake for up to $262.5-million.
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    Copper Is Crashing Again...

    Dr.Copper is sick again as the almost unprecedented surge in inventories, that we detailed previously, continues to pressure the economic metal to its lowest levels since January...

    Copper held in Asian warehouses tracked by the London Metal
    Exchange jumped 50 percent in the past two days, the most in seven

     Supplies are moving to Singapore, South Korea and Taiwan from China,
    where stockpiles tracked by the Shanghai Futures Exchange have almost
    halved since mid-March.

    Base metals are still trading at "relatively low levels," Jens
    Naervig Pedersen, a senior analyst at Danske Bank in Copenhagen, said by e-mail. "Uncertainty over the outlook for global manufacturing is outweighing the positive effect of the lower dollar," he said.

    Whether this is more CCFD unwinds or the hangover from the massive
    speculative bubble of the last 3 months is unclear but the inventory
    spike in almost without precedent.
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    Electric vehicles to power cobalt revival

    Cobalt prices may be on the threshold of a major revival due to flourishing demand for the mineral, a key component of lithium-ion batteries used in electric cars.

    Prices for cobalt metal are expected to rise 45 percent to above $16 a lb by 2020 from $11 now as stricter emissions controls boost demand for electric vehicles and push the market into deficit from this year, analysts said.

    Consultants CRU Group say electric car and plug-in hybrid vehicle sales could top 17 million in 2030, assuming an average growth rate of 25 percent a year from 2016 to 2030.

    That compares with sales of 540,000 electric cars last year and 750,000 this year based on year-to-date sales.

    "Demand for cobalt in non-metallurgical (chemical) uses such as in batteries will grow at more than 7.5 percent a year to 2020," said CRU senior consultant Edward Spencer.

    "Chemical demand growth will be buoyed by the electric vehicle sector growing out of its infancy and the lithium-ion sector for other applications also growing robustly."

    Lithium-ion batteries are also used in mobile phones, laptops, digital cameras, cordless drills and hedge trimmers.

    Amounts of cobalt used in these batteries vary, but larger quantities typically mean enhanced performance.

    Lithium nickel manganese cobalt oxide and lithium nickel cobalt aluminum oxide are two compounds used in batteries for electric vehicles.

    China's electric car market is expected to grow at a faster pace than in the rest of the world. It is already the world's largest consumer of cobalt, accounting for nearly 40 percent of global demand estimated at around 90,000 tonnes this year.

    Roughly 60 percent of the world's cobalt comes from the Democratic Republic of Congo (DRC).

    China has few cobalt resources and that is why the State Reserves Bureau (SRB) bought 2,200 tonnes of the metal late last year and is in the process of acquiring another 2,800 tonnes, traders say. The SRB declined to comment.

    China's scramble for cobalt resources over coming years can be seen in a deal announced last month where Freeport-McMoRan Inc agreed to sell its majority stake in a unit controlling the Tenke copper project in the DRC to China Molybdenum for $2.65 billion.

    "Tenke is one of biggest cobalt ore bodies on the planet, we think the real reason behind the purchase was security of supply for China," said Investec analyst Jeremy Wrathall.

    Also highlighting cobalt's potential over coming years is the U.S. Defense Logistics Agency starting to stockpile cobalt compounds, seen as "strategic and critical".

    CRU's Spencer sees global cobalt demand at approximately 120,000 tonnes in 2020, whereas Macquarie analysts see it at 107,000 tonnes. Both, however, forecast similar deficits in excess of 7,000 tonnes at the end of 2020.

    "Cobalt's demand growth profile remains one of the best among industrial metals peers. Its exposure to rechargeable batteries continues to play a crucial role," Macquarie analysts said in a note.

    Rising supplies from ramp ups at mines such as Ambatovy and a return to full production at Katanga are expected to limit the deficit between now and 2020, but much depends on nickel prices.

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    Sandfire’s DeGrussa copper/gold mine now solar powered

    Australia’s largest off-grid solar and battery storage facility has been successfully commissioned and has started providing electricity to the DeGrussa copper and gold mine in Western Australia. 

    The solar plant, which was located immediately adjacent to Sandfire Resources’ DeGrussa underground mine and processing plant, was currently generating 7 MW of electricity, which consortium members said on Tuesday would ramp up to 10 MW in the summer months. 

    Testing confirmed that the plant could perform in accordance with contractual specifications and validated the power purchase agreements covering the facility. Continual testing would be completed in June to ensure it could maintain stable operations at 100% generation capacity. 

    Commissioning of the $40-million project started in March following installation of the last of the 34 080 solar photovoltaic panels. The panels have a single-axis tracking system mounted on 4 700 steel posts, enabling the panels to track the sun during the day. A network of low-voltage, high-voltage and communication cables connected the panels to a 6 MW lithium-ion battery storage facility and the existing 19 MW diesel-fired power station at the mine. 

    The solar facility has been integrated with the diesel-fired power station, which Pacific Energy subsidiary KPS owned, which would continue to provide baseload power to the DeGrussa mine. The solar plant would reduce Sandfire’s diesel consumption by about five-million litres a year and would lower carbon dioxide emissions by about 12 000 t, which MD Karl Simich said was a reduction of over 15% based on the miner’s reported emissions for the 2016 financial year. 

    Simich said the completion and successful commissioning of the DeGrussa solar power project was a significant achievement, providing a strong demonstration of the exciting opportunities emerging within the mining industry for the adoption of renewable energy technologies at remote mine sites. “This project has already attracted a significant amount of interest from within the mining industry in Australia with Sandfire receiving inquiries from several of our peers interested in adopting this technology at their mine sites. 

    I would not be surprised to see more facilities like this built over the next few years, as the benefits and potential of solar power become increasingly recognised across the resource sector,” he said. The DeGrussa Solar Power project is owned by French renewable energy firm Neoen, with juwi Renewable Energy responsible for the project development; engineering, procurement and construction, as well as operations and maintenance. 

    The mine’s production guidance for the 12 months to the end of June 30, was expected to be in the range of 65 000 t to 68 000 t of contained copper metal and 35 000 oz to 40 000 oz of contained gold metal. The C1 cost was expected to be about $0.95/lb to $1.05/lb.
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    Chinese mining giants join forces to create new industry behemoth

    China Minmetals Co, one of the country's largest mining groups by asset value and overseas projects, merged with China Metallurgical Group Co on Thursday, creating a new conglomerate bigger than the asset value of any of the three global giant mining companies-BHP Billiton Ltd, Rio Tinto Group and Vale SA.

    After the merger, China Metallurgical, the largest metallurgical engineering contractor and service provider in the country, will become a wholly owned subsidiary of China Minmetals. The company will no longer be directly administered by the State-owned Assets Supervision and Administration Commission of the State Council.

    Before the merger, China Minmetals had overseas operations in 34 countries and regions.

    The new company will have 240,000 employees, 29 national-level research and development centers and institutes, and different types of mines in Africa, Australia, Latin America and Asia. It will have mining and mine-related construction projects in more than 60 countries and regions.

    He Wenbo, chairman of China Minmetals, said the move would help the new company optimize its business structure and further ensure China's resource security in the current global business and political situation.

    "The new company will deploy more resources and manpower to accelerate the construction pace of developing copper, zinc and nickel mining projects in overseas markets to meet China's demand in these specific mining resources, as well as developing its modern logistics, financial services and equipment manufacturing businesses," He said.

    The combined sales revenue of the two Chinese companies reached 430 billion yuan ($65.36 billion) in 2015.

    The move is part of the ongoing restructuring of State-owned enterprises. The top two high-speed rail makers and two leading shipping companies have already merged since last year.

    Guo Wenqing, former chairman of China Metallurgical and now general manager of China Minmetals, said the merger would help the new company have a more diversified operational model that could take full advantage of the opportunities likely to come from the Belt and Road Initiative, as well as strengthen the company in its competition with established foreign rivals in overseas markets.
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    Chinese copper imports jump by 19.4 pct in May, Aluminium exports rise

    China's copper imports jumped by 19.4 percent from the same month a year ago to 430,000 tonnes in May, customs data showed on Wednesday, as term shipments remained strong despite higher prices in overseas markets.

    Shipments eased from the month before, however, falling by 4.4 percent from April, data from the General Administration of Customs showed. Arrivals of the metal including refined copper, copper alloys and semi-finished copper products have reached 2.31 million tonnes in the first five months of 2016, up 22.1 percent from a year ago.

    Given that the difference between Shanghai and global copper prices has not been attractive for imports into China, Daniel Hynes, an analyst with ANZ in Sydney, said it was a "reasonable result."

    "I would expect imports to ease in June on seasonal factors, and also the arbitrage has turned negative for Chinese traders."

    China's copper demand tends to be strongest in the second quarter, on pent up demand after the Lunar New Year holiday and before the northern hemisphere summer.

    Shipments into China have remained strong this year, as a weaker dollar boosted the purchasing power for China's copper buyers, swelling exchange and bonded inventories. Exchange stockpiles hit record highs in March. At the same time, China's smelters have ramped up output on more new international mine supply.

    The glut has hurt the demand for spot refined copper, already hampered by a slowing economy in the world's top producer of the metal. Premiums for spot copper in Shanghai's bonded zones reached four-year lows of $45 a tonne this week.

    Chinese traders have shifted copper stocks to Asian warehouses registered with the London Metal Exchange as domestic demand wanes and banks unwound financing deals. Traders expected further increases in coming months.

    China's imports hit a record 570,000 tonnes in March as price differentials between domestic and international markets favoured imports in previous months.

    China exported 420,000 tonnes of unwrought aluminium and aluminium products, including primary, alloy and semi-finished aluminium products, in May, up 5 percent from April's 400,000 tonnes, data showed.

    Aluminium exports were 2.4 percent higher than the same month in 2015. Total exports fell 7.9 percent to 1.9 million tonnes for the first five months of this year.
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    Copper Is Crashing After Huge Spike In Inventories

    Copper futures are tumbling by the most in 2 months (testing back towards 4 month lows) after the biggest two-day increase in copper stockpiles monitored by LME since 2004.

    Copper held in Asian warehouses tracked by the London Metal Exchange jumped 50 percent in the past two days, the most in seven years.

    Supplies are moving to Singapore, South Korea and Taiwan from China, where stockpiles tracked by the Shanghai Futures Exchange have almost halved since mid-March.

    Base metals are still trading at "relatively low levels," Jens Naervig Pedersen, a senior analyst at Danske Bank in Copenhagen, said by e-mail. "Uncertainty over the outlook for global manufacturing is outweighing the positive effect of the lower dollar," he said.

    Whether this is more CCFD unwinds or the hangover from the massive speculative bubble of the last 3 months is unclear but the inventory spike in almost without precedent.

    This plunge in copper prices is especially notable as the reflation trade appears to have got hold of China commodities once again with Dalian up over 3% overnight, Rebar up over 2% and Shanghai Iron Ore up almost 3%.
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    Goldcorp and Teck plow ahead with new $3.5bn mine in Chile

    Canadian miners Goldcorp, and Teck Resources are moving ahead with their new $3.5 billion mine in Chile’s Atacama region, with a pre-feasibility study expected to be ready by the second half of 2017.

    The $3.5 billion mine will mean lower costs and improved capital efficiency — before joining El Morro and Relincho, the estimated costs for each project were $3.9 billion and $4.5 billion respectively.

    The 50/50 joint venture, expected to be one of the largest copper-gold-molybdenum mines ever-developed in Latin America, will now be known as NuevaUnion (meaning new union), to symbolize the merger of their two projects in the region, El Morro and Relincho, announced last year.

    The miners are currently working on several scenarios and development plans to complete a pre-feasibility study, they said in an e-mailed statement. They also plan to begin working on the environmental and social aspects of the project in the second half of this year, they noted.

    NuevaUnion is expected to provide Goldcorp and Teck with a number of key benefits, including reduced environmental footprint, an optimized mine plan, enhanced community benefits and greater returns over either standalone project.

    Overall, the mine will mean lower costs and improved capital efficiency. NuevaUnion is expected to be one of the largest copper-gold-molybdenum mines ever-developed in Latin America.

    Based on the results of a Preliminary Economic Assessment (PEA), initial stage development of Project NuevaUnion contemplates a conveyor to transport ore from the El Morro site to a single line mill and concentrator facility at the Relincho site with an initial capacity in the range of 90,000 – 110,000 tonnes per day.

    NuevaUnion will have a 32-year lifespan and produce an average of 190,000 tonnes of copper and 315,000 ounces of gold a year, over the first decade.
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    Glencore must face U.S. lawsuit over zinc prices

    A U.S. judge on Monday said Glencore Plc must face a private antitrust lawsuit accused it of trying to monopolize the market for special high-grade zinc, driving up its price.

    U.S. District Judge Katherine Forrest in Manhattan said the zinc purchasers who brought the lawsuit have alleged "a plausible story of market control" by two Glencore affiliates that violated the Sherman Act, a U.S. antitrust law.

    The judge did not rule on the case's merits.
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    Ex LME CEO to set up new metals trading platform for London

    Former chief executive officer of the London Metal Exchange Martin Abbott is trying to set up an alternative metals-trading platform to existing venues.

    Brokers are said to be unhappy with the exchange's new fees as well as the sense that the LME is moving away from its traditional metals trading roots.

    The move, reports Bloomberg, follows months of talks with brokers and other concerned parties about the need to creating another trading platform, as the LME has become expensive for its current users.

    Last year, the 139-year old exchange hiked trading fees by about 34% and it also added charges for using its data as it faces decreasing volumes and competition from CME Group Inc.

    Abbott, who left the LME in 2013, said a study group is being formed to explore the potential for a new venue, and that anyone interested is welcome to join and fund research looking at various ways of developing such platform.

    Hong Kong Exchanges and Clearing acquired the LME in 2012 for $1.4bn.
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    South32 CEO says Colombia nickel mine needs cash flow plan

    South32  the diversified miner that’s cutting its global workforce on lower commodity prices, says its loss-making and strike-threatened Colombian nickel asset must deliver a plan to return to profits in the coming fiscal year to remain in operation. 

    Cerro Matoso is facing a deadline of July 2017 to demonstrate how it’ll begin to improve cash flow, CEO Graham Kerr said in an interview last week in Melbourne. 

    The Perth-based producer is continuing talks with union members at the asset to avert a planned strike this month amid a dispute over a wage offer, he said. “If they are not cash flow positive, if they can’t show me a plan to be cash flow positive, well we shouldn’t be running,” Kerr said. “We can’t cross-subsidise across the group, so if we can’t restructure if a way that makes sense, well then we won’t produce.” 

    Even as nickel prices have rebounded about 10% since touching a 13-year low in February, about 70% of global output is still unprofitable, according to GMK Norilsk Nickel PJSC, one of the world’s largest producers. 

    Cerro Matoso is South32’s remaining asset of concern, as other loss-making units show progress toward a recovery, Kerr said. Operating costs at Cerro Matoso were $4.43/lb in the six months to December 31, compared with a realised sale price of $4.30/lb, South32 filings show. 

    The producer outlined plans earlier this year to cut costs and adjust output across its alumina, metallurgical coal, nickel and manganese units. In addition to previously announced plans to cut its global workforce by about 1 750 jobs, South32 will cut 270 corporate and regional posts in Australia, Singapore and South Africa and won’t fill 144 vacant positions, Kerr told reporters in Melbourne. 

    “The biggest challenge for the industry is still that there’s excess supply,” Kerr said in the interview. “The demand rates out of China aren’t terrible, the issue is more that the industry has built overcapacity, and that needs restructuring to go away.”
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    Congo copper production down 20% in Q1 amid market slump

    Copper production in Democratic Republic of Congo, Africa's top miner of the metal, dropped 20% in the first quarter of 2016, while cobalt and gold output also slumped amid low prices and production cutbacks, the central bank said on Saturday. 

    The declines are hammering Congo's economy, which derives 98% of its export earnings from extractive industries. Last month, the government proposed a 22% cut to the current year's budget due to lower-than-expected revenues from the mining sector and fears of inflation due to exchange rate pressures. 

    Congo mined 219,009 tonnes of copper in the first three months of the year compared with 274,201 tonnes over the same period last year, the central bank said in a monthly bulletin. 

    Meanwhile, output of cobalt, the metal used in lithium-ion batteries and of which Congo is the world's leading producer, fell over 19% to 16,396 tonnes in the first quarter of 2016. 

    Glencore's Katanga unit, one of the country's largest copper and cobalt producers, announced an 18-month suspension of operations last September and other large mines have laid off workers. 

    Quarterly gold production declined to 7 166 kg this year from 7 801 kg last year, an 8% slide. Large new gold mines opened by companies like Randgold Resources, AngloGold Ashanti and Banro Corporation in the last five years boosted Congo's industrial gold output from near zero in 2011 to over 30 tonnes last year. Spot gold prices are up 14% this year but Randgold says it expects production at Kibali, the country's largest gold mine, to fall 5% this year because it is mining lower grade ore.
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    Steel, Iron Ore and Coal

    Brazil police say Samarco ignored risk of dam collapse

    Brazil police say Samarco ignored risk of dam collapse

    Brazil's federal police accused on Thursday mining company Samarco, a joint venture between Vale SA and BHP Billiton, of willful misconduct in relation to a deadly dam burst last November, saying the company had ignored clear signs the dam was at risk of collapsing.

    Police said Samarco had skimmed on safety spending, focusing instead on increasing production despite obvious indications, such as cracks, that the dam was in danger of a breach.

    As well as Samarco, police accused Vale because it deposited its own mining waste in the dam, and VogBR, the service company that checked the safety of the dam. Eight executives were also accused, although their names were not disclosed by the police.

    Samarco said in a statement it rejected any speculation that it was aware of an imminent risk of collapse at the dam, which held waste known as tailings from its iron ore mine.

    "The dam was always declared stable," the company said, adding that increases to the dam's size were done in accordance with the project's design.

    The dam's height was below the size allowed by its licensing when it collapsed, Samarco said.

    All of the accused, excluding one individual, were first informed by the police in January.

    Although the police have not disclosed names, Vale said in a statement it "rejected forcefully the accusations against one employee," saying he was never responsible for the dam's management. VogBR did not immediately respond to requests for comment.

    With the police investigation now complete, the case will be passed to prosecutors to decide whether to press charges.
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    Germany's Gabriel rejects calls to focus on exit from coal

    Germany's economy minister on Thursday rejected calls for Europe's largest economy to focus on ending coal use in the way it plans to quit nuclear energy.

    "I will not call for a commission to deal with a coal exit," Sigmar Gabriel told a conference of some 1,400 delegates mostly representing power utilities.

    "My proposal would be for one to deal with the question how we create a modernisation shift in our macroeconomy out of the need to protect the climate."

    He said such a forum ought to link discussions about economic growth and social issues with the need to further develop Energiewende, Germany's drive towards a decarbonised economy.

    "We cannot reduce all that to the coal question," Gabriel said.

    Following the Fukushima disaster in 2011, Germany shut 40 percent of its nuclear capacity immediately and announced it would exit nuclear completely by 2022, earlier than previously planned.

    Calls have grown for Germany to set out a timetable for a withdrawal from coal in power production as well.

    A draft economy ministry document last month showed plans to end coal-fired power generation, the most carbon-intensive form of energy, "well before 2050".

    Domestic hard coal mining will cease in 2018 and Germany's coal miners and users expect the country's last brown coal mines to close by around 2045.

    Utilities such as E.ON and RWE plan to close several old coal-fired power plants in the coming years and will move 2.7 gigawatts (GW) of brown coal plant capacity into a reserve scheme later this decade.

    They also stress that the simple fact that it is difficult to profit on generating power from coal will speed its demise.

    "Coal is losing in importance, but (that means) we will have to talk about industrial growth and social compensation," Gabriel said.

    Government would need to create alternative business opportunities to safeguard jobs and tax revenue in affected areas, he said.
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    India's steel ministry to seek extension of floor price on imports

    India's steel ministry will seek to extend a floor price on steel imports beyond August, a senior steel ministry source said, as the country looks to keep up its protectionist barriers to stem the tide of cheap foreign products.

    New Delhi imposed the minimum import price (MIP) on 173 steel products in February, helping cut inbound shipments last month to their lowest level in at least 14 months. The MIP expires in August.

    The steel ministry will call for the extension of MIP for as long products are being dumped in India, the official, who declined to be named as he was not authorised to speak to media, told Reuters.

    India is the world's third-largest steel producer with a total installed capacity of 110 million tonnes. But the industry says its margins have been squeezed due to cheap imports from China, as well as Russia, Japan and South Korea.

    To shield domestic mills, India in March extended safeguard import taxes on some steel products until 2018 and has begun probing the possible dumping of cheap steel from China, Japan and South Korea.

    Last month it also imposed a provisional anti-dumping duty on seamless tubes and pipes imported from China.

    Countries including Japan, Taiwan, Canada and Australia have accused India of restrictive trade practices with the country's steel import policies drawing wide criticism at the World Trade Organization (WTO).

    A spokesman for the steel ministry said it was premature to discuss floor prices while the trade ministry, which decides whether MIP remains beyond August, was not immediately available for comment.

    Recommendations that follow detailed investigations are generally accepted by the trade ministry.
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    BHP sets sights on a new iron-mine to replace ageing one

    The new mine will be designed to replace almost a third of BHP's current production from the Yandi mine. 

    BHP Billiton is studying an option to develop a massive new iron-ore deposit in Australia to replace lost tonnes as operations age and reserves decline, according to the company and documents filed with environmental regulators. 

    The deposit is called South Flank and lies 10 km south of BHP's existing Mining Area C operation and would create an expanse 26-km long and 2-km wide. 

    "We are currently studying a number of options to sustain our supply chain capacity for the future, and the South Flank deposit is one option under consideration," a BHP spokeswoman said. She said it was too early to place a cost on any new iron-ore mine, which would be designed to help replace almost a third of BHP's current production, coming from its Yandi mine. 

    "At the current rate of production, the resource supporting Yandi's 80-million-tonnes-a-year operation will need to be sustained from other ore sources at some stage over the next five to ten years," she said. 

    BHP is the second-biggest iron-ore producer in Australia behind Rio Tinto, with each company using its own rail lines and port facilities to ship hundreds of millions of tonnes of ore a year, mostly to China. Rio Tinto is expected to decide this year to whether to develop its own Silvergrass iron-ore deposit in Australia, which analysts estimate could cost $1-billion. 

    Iron-ore was largely absent from a growth strategy outlined by BHP CEO Andrew Mackenzie last month that focused on ways to increase the company's footprint in copper and petroleum, despite iron-ore being its greatest source of revenue. BHP has invested heavily in iron-ore, more than doubling its output since 2010. 

    The company has submitted an environmental document to Western Australia state's Environmental Protection Authority to determine the level of assessment required. The document is designed to help the authority decide on how much scrutiny to apply to the project, with BHP recommending a full public environmental review be conducted. 

    Any plans remained preliminary and don't change BHP's production guidance of 260 million tonnes this year and 290 million tonnes over time, according to the spokeswoman.
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    China on track to import 1 billion tonnes of iron ore this year

    On Wednesday the Northern China benchmark iron ore price held onto recent gains to trade at $52.10 per dry metric tonne according to data supplied by The Steel Index after Chinese imports of the steelmaking raw material continued to gather pace.

    The price of iron ore is down sharply since trading within shouting distance of the $70 mark in mid-April but is back in bull territory for 2016 with a 22% rise since the beginning of the year and a 40% rebound since hitting near-decade lows in December.

    Customs data released today showed China imported 86.75 million tonnes of iron ore in May, the fourth highest monthly figure on record and the biggest volume this year. May cargoes constituted a 22.4% rise from a year earlier.

    Australia and Brazil are predicted to increase their share of the seaborne market to 90% within five years from 77% at the moment

    Shipments climbed 9.1% to 412.15 million tonnes in the first five months of the year and at the current rate could reach the 1 billion tonnes per year mark in 2016 for the first time. Year to date iron ore is averaging $51.60 a tonne.

    The country's iron ore imports has coincided with stockpiling, however. Inventories at the country's ports now stand at just over 100 million tonnes, up from 75 million tonnes during the summer months last year.

    A recent report by Australia's Dept of Industry showed the country and to a lesser degree Brazil, are wiping the floor with producers in other countries. The two nations are predicted to increase their share of the seaborne market to 90% within five years from 77% at the moment. South Africa, Ukraine and Iran make up the top fiver iron ore suppliers to China.

    Australian government analysts estimates global trade in iron ore to inch up by only 4 million tonnes from 2015 levels to reach 1.48 billion tonnes in 2016, the lowest rate of growth in more than a decade. By 2021 world trade in iron ore is forecast to jump to just under 1.6 billion tonnes.

    Iron ore dependence on China won't diminish even as imports begin to fall from record levels next year according to the report. China last year consumed two-thirds of the seaborne iron ore supply with imports reaching a record 968 million tonnes according to dept calculations.
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    China key steel mills profit jumps to 7.2 bln yuan in Aprir, CISA

    China’s 93 large and medium-sized steel firms reached profit of 7.214($1.098) billion yuan in April, thanks to the rapid increase in prices of steel products, said the China Iron and Steel Association (CISA).
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    Hebei large miners adjust up washed coking coal prices

    Large miners in southern and northern Hebei province have recently increased prices of coking coal by 20-50 yuan/t from June 1, which have been accepted by most customers, sources said.

    Kailuan Group adjusted up prices by 20 yuan/t for local end users and 50 yuan/t for key customers, with a discount of 10-20 yuan/t for major customers; Jizhong Energy raised price of primary coal and fat coal by 50 yuan/t, and that of lean coal by 30 yuan/t.

    As of June 7, the ex-washplant price of Tangshan fat coking coal and Handan primary coking coal stood at 720 yuan/t and 690 yuan/t with VAT, respectively, both up 30 yuan/t on week.

    One Tangshan-based steel producer said the price hike of fat coal was notified by Kailuan Group orally so far, adding that current price of this material was 800 yuan/t with VAT, on delivered basis.
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    Japan may seek WTO help to resolve India steel tariff dispute

    Japan said it may ask the World Trade Organization (WTO) to help resolve a dispute related to India's "safeguard" tariffs on the import of hot-rolled steel.

    India has extended its safeguard import taxes on some steel products until March 2018, in a bid to stop cheap overseas purchases from flooding its market and bolster the domestic steel sector.

    Japan will make repeated requests to the Indian competent authority to ensure the consistency of their measures with the WTO agreements, the Japanese Ministry of Economy, Trade and Industry said in a report.
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    Rio Tinto to buy back up to $3bn in debt

    Diversified mining company Rio Tinto is further reducing its debt, announcing this week that it would repurchase up to $3-billion of its US dollar-denominated notes. 

    The company has launched cash tender offers to buy back notes due in 2018, 2020, 2021 and 2022. 

    This is Rio Tinto’s second bond buyback in as many months, with the company in April having bought back $1.5-billion of its 2017 and 2018 notes. 

    Debt reduction is high on the priority list of major diversified miners. Rio Tinto has sold about $4.7-billion in assets since the start of 2013.
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    Iron ore jumps to two-week high

    On Tuesday the Northern China benchmark iron ore price advanced more than 3% to $52.30 per dry metric tonne, a more than two week high according to data supplied by The Steel Index.

    The steelmaking raw material is down sharply since trading within shouting distance of the $70 mark in mid-April but is back in bull territory for 2016 with a 22% rise since the beginning of the year and a 40% rebound since hitting near-decade lows in December.

    The massive cost deflation in the past two years, helped by lower oil prices and freight rates, as well as a depreciation in producers’ currencies, may have come to an end

    Iron ore's fightback comes despite data showing exports from top supplier Australia nearing record levels and higher port stocks in China pointing to weakening fundamentals for the commodity.

    Shipments from Port Hedland in the Pilbara region of West Australia increased 4% from last year and totalled 39.4 million tonnes in May – not far off March's all-time record of 39.5 million. Cargoes from world number three and four iron ore producers BHP Billiton and Fortescue Metals Group use the facility which is responsible for the bulk of the seaborne trade.

    Data released last week showed stockpiles of iron ore at ports in China, responsible for consuming nearly three quarters of seaborne cargoes, climbing back above 100 million tonnes to levels last seen at the end of 2014.

    Analysts at Citigroup upgraded their forecasts for iron saying Chinese demand may "surprise to the upside", but the investment bank still expects a decline to an average of $49 a tonne this year and $42 next year before falling to $38 in 2018. Previously Citigroup predicted a retreat to below $40 as soon as the end of this year.

    The commodity may also find some support from a potential increase in miners’ production costs according to the bank:

    The “massive” cost deflation in the past two years, helped by lower oil prices and freight rates, as well as a depreciation in producers’ currencies, may have come to an end.
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    China May coal imports climb 5.7pct on month

    China May coal imports climb 5.7pct on month

    China imported 19.03 million tonnes of coal, including lignite in May, slumping 33.54% on year but up 5.7% on month, showed data from the General Administration of Customs (GAC) on May 8.

    The monthly increase in coal imports was mainly caused by reduced domestic supply amid miners’ implementation of government-mandated 276-workday regulation.

    Total value of the imports in May stood at $881.9 million, dropping 3.94% year on year and down 4.6% month on month. That translated to an average price of $46.34/t, dropping $13.2/t from the year prior and down $2.66/t on month.

    Over January-May, China imported a total 86.28 million tonnes of coal, up 3.63% on year; total value of the imports stood at $5.33 billion, slumping 22.7% from the year before.
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    Indonesia's June HBA thermal coal price up 1.2pct on month

    Indonesia's June HBA thermal coal price up 1.2pct on month

    Indonesia's Ministry of Energy and Mineral Resources has set its June thermal coal reference price, also known as Harga Batubara Acuan (HBA), at $51.81/t FOB, up 1.2% from May, but down 13.06% compared with the same month last year.

    The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg gross as received assessment; 25% on the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR); 25% on the Newcastle Export Index -- formerly the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy Publishing -- and 25% on the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

    It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.

    The HBA for thermal coal is the basis for determining the prices of 75 Indonesian coal products and for calculating the royalties Indonesian producers have to pay for each metric ton of coal they sell locally or overseas.
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    China steel exports rise in May, Iron ore imports up

    Chinese steel exports rose 3.7 percent to 9.42 million tonnes in May from the previous month, customs data showed on Wednesday, as steel mills continued to ship output abroad in sales that have raised global trade tensions.

    China also boosted its iron ore imports by 3.4 percent in May to 86.75 million tonnes from the previous month, the highest since December. Shipments climbed 9.1 percent to 412.15 million tonnes in the first five months of the year, customs data showed.

    Chinese steel mills accelerated production amid a seasonal pick-up in demand and higher prices, boosting appetite for the steelmaking ingredient, with imports staying above 80 million tonnes a month this year apart from the holiday season of February.

    Total steel exports rose 6.4 percent to 46.28 million tonnes in the first five months of the year, according to data from the General Administration of Customs.

    China's robust exports have come under fire from global rivals, who have accused it of dumping cheap exports after a slowdown in demand at home.

    "The pushback to steel exports has been more from the U.S. and Europe which only represent less than 10 percent of total exports," said Daniel Hynes, commodity strategist at ANZ.

    "We're still seeing strong exports to the rest of Southeast Asia and obviously the Chinese mills have a competitive advantage into this region," said Hynes, who sees China's total shipments again topping 100 million tonnes this year.

    China's steel exports reached a record 112 million tonnes in 2015.

    South Korea is the top market for Chinese steel, with shipments reaching 13.5 million tonnes last year, compared with 2.35 million tonnes to the United States, according to data compiled by MEPS consultancy.

    The trade dispute over steel escalated after the U.S. regulators launched on investigation into complaints by United States Steel Corp that Chinese competitors stole its secrets and fixed prices.

    Steel surged 80 percent in late April from decades-low prices hit in December last year, prompting steel mills to ramp up production and some zombie mills to resume output, complicating government efforts to cut overcapacity.

    China has committed to curbing its steel capacity and winding down weak state enterprises by taking new measures and strengthening global coordination.

    Attached Files
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    Protectionism Goes Nuclear.

    A huge global trade war is on the horizon, regardless of whether Hillary or Trump wins the election.

    The die is cast: US Steel Given Green Light to Seek China Import Ban.

    The US has given the go-ahead for the country’s largest steel producer to seek a ban on imports from Chinese rivals, in the first known case in which trade sanctions could be used in retaliation for alleged China government-backed hacking of commercial secrets.

    In a decision last week the US International Trade Commission gave the go-ahead for the case to proceed, setting the stage for a legal battle that experts say will probably take more than a year for an administrative judge to decide.

    This timeframe could lead to a decision related to arguably the US’s most important commercial relationship early in the next president’s first term. Under the law, US presidents are given 60 days to block ITC decisions on Section 337 cases, although according to the ITC “such disapprovals are rare”.

    “We strongly believe that Chinese steel producers have engaged in illegal unfair methods of competition, which have created a force with which no market economy can compete,” Mario Longhi, the company’s president and CEO, said in a statement welcoming the ITC decision. “We remain confident that the evidence will prove the Chinese steel producers engaged in collusion, theft and fraud and we will aggressively seek to stop those responsible for these illegal trade actions.”

    Trade experts say that the case also represents the potential escalation of what has been a creeping protectionism in recent years with steel a growing target of anti-dumping cases.

    But a wholesale ban on US imports of Chinese steel would be materially different and could set a protectionist tone for the next US presidency, said Simon Evenett, a professor of international trade at the University of St Gallen in Switzerland, who oversees the Global Trade Alert, a monitoring service for protectionist measures.

    “The big thing is really the potential scale of this case versus the pin pricks that we have seen unleashed over the past nine months,” Mr Evenett said.

    “This should be setting off alarm bells,” he said. “It is really a nuclear option.”

    Attached Files
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    BHP Billiton sells Indonesian coal assets to Adaro

    BHP Billiton said on Tuesday it has agreed to sell its coal assets in Indonesia to its partner, Adaro Energy, following a slump in prices for metallurgical coal.

    BHP did not disclose the price for its 75 percent stake in IndoMet Coal, which it first flagged was up for sale in April.

    Adaro, however, Indonesia's second largest thermal coal producer, said in a statement the deal was worth $120 million and would "become effective upon the fulfilment of requirements in the share sale agreement, including necessary approvals from the Government of the Republic of Indonesia."

    The amount is well below the $335 million Adaro paid for a 25 percent stake in IndoMet in 2010. Analyst had said in April that BHP would be lucky to get $200 million for its stake due to regulatory uncertainty in Indonesia and the sharp slump in coal prices.

    "After a detailed review of IndoMet Coal, we concluded that although the project could support a larger scale development, BHP Billiton has a range of other growth options in the portfolio that are more attractive for future investment," IndoMet Coal asset president James Palmer had said in a statement earlier in the day.

    IndoMet holds seven coal contracts of work in Central and Eastern Kalimantan, including the 1 million tonnes a year Haju mine, which started producing last year.

    Haju made up less than 2 percent of BHP's metallurgical coal output in the first nine months of its current fiscal year.
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    Iron ore glut persists with third-largest exports from Hedland

    Iron ore shipments from Australia’s Port Hedland, the world’s largest bulk export-terminal, expanded to the third-highest level on record, signaling that a global surplus is set to persist.

    Exports totaled 39.4 million metric tons last month from 37.7 million tons in April and 38 million tons a year earlier, according to data from the port authority. Shipments were a record 39.5 million tons in March. Cargoes to China were 31.7 million tons in May compared with 32.6 million tons in April and 31.7 million tons in May 2015.

    Goldman Sachs Group said it expects a growing surplus of seaborne supply in coming months to pummel prices, according to a May report. Benchmark prices sank back below $50 last week to the lowest since February on concern that profit margins at China’s steel mills are again tumbling, hurting the outlook for iron ore demand just as miners continue to add supply.

    “Australia’s exports have been steady at high levels and will probably remain so for the rest of 2016 as miners boost output,” Wu Zhili, an analyst from Shenhua Futures Company, said by phone before the data. “This may add to signs of a swelling glut in China, where demand is past the seasonal peak. Exports may continue to push up port inventories in China.”
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    Adani may abandon Australian coal mine project: NGO victory??

    Adani Group may abandon its plans of building the world's largest coal mines in Australia amid a series of legal challenges and protests by environmental groups. The company's proposed rail and mine project in Australia is estimated to be worth $21.5 billion.

    Stating that he was “disappointed”, the company’s founder and chairman Gautam Adani said the project was yet to receive the green light after six years of environmental assessments and court battles.

    "You can’t continue just holding. I have been really disappointed that things have got too delayed,” Mr. Adani said.

    Mr. Adani said he hoped the court challenges to Australia’s largest proposed coal mine would be finalised in early 2017.

    However, with one court case yet to be heard in the Federal Court, and at least two groups threatening High Court action, Mr. Adani warned he could not wait indefinitely.

    Mr. Adani said that he was already scouting alternatives to feed his power stations in India.

    Confirming he had met Australian Prime Minister Malcom Turnbull in December 2015 to seek to deliver greater certainty on such projects, Mr. Adani said, “We were suggesting how to bring in the certainty of the timing.

    "We were asking how we get certainty of the time schedules... that is the most important for us in committing all of our resources.”

    "It’s just covering up the real fact that what is damaging the reef is an increase in the temperature of the seas through climate change,” he said.

    Another new Federal Court challenge to the mining lease for Carmichael, issued by the Palaszczuk Labour government, will be heard this year.

    Mr. Adani said he originally believed the approvals process would take two to three years and that he has already spent $3 billion buying the tenements and the Abbot Point port lease.

    The company is still exploring the financing issue of the project.

    Mr. Adani said if there were no more unexpected delays, he had confidence that the project would get financing and “still be competitive” against other alternative sources of coal in India and Indonesia.

    Adani Australia chief executive Jeyakumar Janakaraj said the co-ordinated campaign by anti-coal activists to block the mine had damaged Australia’s international reputation.

    He said the business community in India had expressed concern about future investment in Australia. “I think it has already turned off a lot of switches. I am not saying it is going to be permanent, but there has been damage.”

    Mr. Turnbull’s office did not comment on June 5 about Mr. Adani’s call for greater certainty to the approvals process. But the government has argued that all commonwealth approvals are in place and there are no remaining federal obstacles to the project proceeding.

    Adani’s coal mines plan in Australia has been hampered time and again. A federal court in August 2015 had revoked the original approval due to environmental concerns.

    In October 2015, the project got a new lease of life after the Australian government gave its re-approval.

    Australia’s Queensland State government in April 2016 gave Adani permission to mine coal reserves estimated at 11 billion tonnes and to build roads, workshops, power lines and pipelines associated with the mine.

    Environmentalists are fighting the approvals, saying the project will jeopardise the State’s future and destroy national treasures like the Great Barrier Reef.

    Attached Files
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    Japan Apr thermal coal imports down 16.29pct on year

    Japan’s thermal coal imports (including bituminous and sub-bituminous coals) stood at 7.56 million tonnes in April, down 16.29% year on year and down 17.82% month on month, the latest customs data showed.

    In April, Japan imported 6.6 million tonnes of bituminous coal, down 18.33% on year and down 20.75% on month.

    Australia was the largest supplier to Japan with 5.52 million tonnes, down 22.73% on year and down 20.02% on month.

    It was followed by Indonesia with 533,575 tonnes, up 24.65% on year and climbing 35.64% on month.

    Imports from Russia stood at 307,030 tonnes, down 38.21% year on year and dropping 63.21% on month.

    Sub-bituminous coal
    Japan imported 967,341 tonnes of sub-bituminous coal in April, edging up 0.94% on year and rising 9.77% on month.

    Indonesia, the top supplier of this material, shipped 594,418 tonnes of sub-bituminous to Japan in April, climbing 8.19% on year but down 22.67% on month.

    The Russia followed with 225,624 tonnes, surging 177.67% on year and almost doubling March’s 112,500 tonnes.
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