Mark Latham Commodity Equity Intelligence Service

Friday 4th November 2016
Background Stories on www.commodityintelligence.com

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    Macro

    Egypt devalues currency, raises interest rates

    Egypt devalues currency, raises interest rates

    The Egyptian central bank on Thursday devalued the country's currency by 48 percent against the U.S. dollar and raised interest rates by 3 percent.

    The official exchange rate of the Egyptian pound will be 13 to the U.S. dollar, down from 8.8 to the greenback.

    The currency will be allowed to fluctuate in value by 10 percent for a short period before it is set, the central bank said in a statement.

    The bank had also raised deposit and lending interest rates by 3 percent.

    The official exchange rate for the Egyptian pound has been steady at 8.8 to the U.S. dollar since March, but the currency kept tumbling on the black market, to as low as 18 against the dollar.

    http://news.xinhuanet.com/english/2016-11/03/c_135803339.htm
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    China seeks to improve energy structure to cut carbon emissions

     
    China plans to upgrade its energy structure to cut carbon emissions and reduce costs in transmission of power, Shanghai Daily learned yesterday at the green technology seminar of the China International Industry Fair.

    China National Offshore Oil Corp is developing a rig that is able to work in over 3,000-meter-deep water as deep-sea oil is expected to account for 60 percent of energies China will get from the ocean crude in the coming five years, said Zeng Hengyi, vice chief engineer of the company.

    Being able to do so would slash China's energy costs by lessening the nation's reliance on import of crude, which in September grew 18 percent year on year, making China the largest crude importer globally.

    CNOOC is also trying to use nuclear power to exploit oil sources, which would lower carbon emissions in the procedure, Zeng said.

    China also plans to develop a more scattered power station layout, which officials call a "distributed generation system," to enhance power transmission efficiency while helping more areas get access to electricity, said Yu Yixin, an academician at the Chinese Academy of Engineering.

    China has long suffered energy waste as it transmits electricity from the west, which has abundant coal, to the eastern parts of the country.

    "Although east China lacks coal, it has more wind and sunshine," Yu said. "It enables the nation to build power stations using diversified resources in more areas."

    Without the energy waste in the long-distance transmission, the "electricity utilization rate would be tripled from the conventional way," Yu said. "More areas can use the power generated locally and enjoy cheaper costs and cleaner energy."

    By 2020, it is envisaged that Chinese would pay 0.80 yuan (12 U.S. cents) for per kilowatt-hour electricity, below the 1 yuan per kWh on average presently. By 2030, the price would be below 0.60 yuan per kWh.

    http://www.chinamining.org/News/2016-11-03/1478155323d77851.html

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    Emotional Molefe weighs judicial review and future after damning Public Protector report


    Eskom CEO Brian Molefe has indicated that he is weighing his future options as head of the State-owned electricity producer following the release of a Public Protector report, which raises serious questions about his role in facilitating a coal deal involving Tegeta, a mining company linked to the Gupta family. He also indicated that he was likely to take the report on judicial review, arguing that he had never been given a chance to present his version of events.

    The report by former Public Protector advocate Thuli Madonsela highlights a seemingly close relationship between Molefe and the Gupta family, with cellphone records showing that, between the period August 2, 2015, and March 22, 2016, he called Ajay Gupta 44 times and Gupta called Molefe 14 times. It also observes that the sole purpose of awarding contracts to Tegeta to supply Arnot power stationwas to fund Tegeta and enable it to purchase all shares in Optimum Coal Holdings, a company previously owned by mining giant Glencore.

    The report, titled the ‘State of Capture’, recommends that President Jacob Zuma convene a commission of inquiry within 30 days, which should be led by a judge selected by Chief Justice Mogoeng Mogoeng. The commission should complete its task and present the report with findings and recommendations to the President within 180 days.

    In an emotional statement made during the group’s interim results presentation on Thursday, Molefe said he took full responsibility for a decision to reject Glencore’s 2015 approach for a renegotiation of a R150/t coal supply agreement from the Optimum mine to Eskom’s Hendrina power station.

    In a high-profile battle, Eskom spurned Glencore’s argument that the contract was onerous and that the price should, thus, be increased to R530/t ahead of the expiry of the contract in 2018. The utility argued that it did not have the financialwherewithal at the time to entertain the increase. Glencoresubsequently placed the mine into business rescue and the asset was later controversially purchased by Tegeta, after receiving prepayment from Eskom – funding that the Public Protector report suggests was deployed to facilitate the acquisition.

    Molefe dismissed suggestions that the board should resign over the matter. “I will take responsibility as the CEO. I will go to the commission of inquiry and we will even ask for judicial review of the Public Protector report,” he said.

    He also rejected calls for Zuma and Public EnterprisesMinister Lynne Brown to resign over the report. “I also don’t think that the President should resign because we decided not to give Glencore R530/t, when we had a contract for R150/t. The President did not even know anything about it as far as I’m concerned and calls for his resignation I think are out of line – I will resign before he does.”

    Regarding his own position at Eskom, Molefe said: “I will weigh my options”. However, he added that, after agonising all Wednesday night over the report, he could not see what he would have done differently.

    ‘DEADLY BLOW’
    A clearly angry Eskom chairperson, Dr Ben Ngubane, jumped to Molefe’s defence saying that, should Molefe resign then “Thuli Madonsela has stuck a deadly blow against Eskom and the people of South Africa. If we lose Brian she should take the blame”.

    Ngubane also described as “crazy” calls for the board to be dissolved based on the “speculation” in the Public Protector’s report.

    Molefe expressed strong displeasure with the way Madonsela had handled the investigation, arguing that he was never given an opportunity to provide Eskom’s side of the story.

    “My gripe with the whole situation is that the Public Protector never called me, or Mr Anoj Singh [Eskom CFO] to come and give our version of events. She asked for files, we gave her 120 files in 13 boxes  . . . She subpoenaed us and we had a date with her to come and explain what was happening . . . she cancelled the meeting. We never appeared in front of the Public Protector.”

    Instead, questions were sent to which Eskom responded in writing. In addition, “substantive” information on a controversial prepayment arrangement for Tegeta coal had been provided the day before Madonsela finalised the report.

    “The Public Protector has painted me with a corrupt brush. There will be a commission of inquiry established six months from now [and] we will get results maybe 18- or 24-months from now. During that period, my children will be taunted at school – your father’s corrupt, your father’s corrupt.”

    “But what pains me the most is that I never had the opportunity to explain what I am saying now to Advocate Madonsela.”

    http://www.miningweekly.com/article/emotional-molefe-weighs-judicial-review-and-future-after-damning-public-protector-report-2016-11-03
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    Annual profit drops 7 pct at Australia's Orica, dividend disappoints


    Orica Ltd, the world's top supplier of commercial explosives, reported a 7 percent drop in annual underlying profit on Friday, in line with analysts' forecasts, but paid a weaker dividend than expected.

    The company said conditions remained volatile in the second half of the year, despite sharp improvements in commodity prices helping its customers.

    "While there has been some external optimism on market conditions, we remain conservative and will continue to focus on business improvement initiatives that improve profitability and shareholder value," Orica said.

    Net profit before one-offs fell to A$389 million ($299 million) for the year to September from A$417 million a year ago. Analysts had expected a net profit of A$385 million, according to Thomson Reuters I/B/E/S.

    Orica's final dividend of 29 cents was 4.5 cents below analysts' forecasts.

    The company in May ditched its policy of never cutting dividends and switched to a payout ratio of 40 to 70 percent of underlying earnings to shore up its balance sheet and stave off a credit downgrade.

    http://www.reuters.com/article/orica-results-idUSL4N1D424Z
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    History rhymes...again!

    The number of early voters this year has already surpassed the total number of early votes in the 2012 election, according to data compiled by the United States Elections Project.


    At least 34 million people have already cast a ballot so far in this election cycle, the project found. In 2012, about 32.3 million votes were cast ahead of Election Day.
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    Oil and Gas

    Saudi crude in the med: ARAMCO reverses course?

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    Saudi Aramco Increases Oil Pricing to Asia on Rise in Demand

    Saudi Aramco Increases Oil Pricing to Asia on Rise in Demand

    Saudi Arabia, the world’s largest crude exporter, raised pricing for December sales of all oil grades to Asia as it tries to take advantage of a brief increase in demand for Middle Eastern crude.

    State-owned Saudi Arabian Oil Co., known as Saudi Aramco, increased its pricing for Arab Light crude to Asia by 90 cents a barrel, to a premium of 45 cents over the regional benchmark. The company had been expected to raise pricing for shipments of Arab Light by 85 cents a barrel, according to the median estimate of six refiners and traders in the region polled by Bloomberg.

    Saudi Aramco also raised the pricing of all grades to northwest Europe, and all grades to the Mediterranean except Arab Heavy, which it left unchanged. It cut pricing of the Arab Heavy grade to the U.S. by 40 cents, and left the other grades unchanged.

    The increase in Asian pricing was probably intended to take advantage of a backwardation in the Oman/Dubai benchmark price, where near-term prices are higher than longer-term futures prices, Edward Bell, a commodities analyst at Emirates NBD PJSC, said by phone from Dubai. “Generally that’s a reflection of a tighter market now than is expected two or three months down the line,” he said.

    Record Output

    Oil has gained about a quarter this year amid efforts by OPEC to limit production to reduce a global supply glut, which contributed to a drop in crude prices to about half their 2014 levels. Saudi Arabia boosted output to a record in July. Two months later, the Organization of Petroleum Exporting Countries ended a two-year, Saudi-led policy of letting members pump as much as possible to push higher-cost producers out of the market. OPEC aims at a Nov. 30 meeting in Vienna to allocate production quotas to its individual members.

    Supply and demand will be in balance by the end of this year, helping to push prices higher in the first half of 2017, Amin Nasser, Aramco’s chief executive officer, said on Nov. 1 at a conference in Riyadh. Demand is set to grow on average by about 1.2 million barrels a day this year and next, Nasser said.

    Middle Eastern producers are competing with cargoes from Latin America, North Africa and Russia for buyers in Asia, their largest market. Producers in the 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.

    http://www.bloomberg.com/news/articles/2016-11-03/saudi-aramco-said-to-raise-oil-pricing-to-asia-for-december-sale
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    Nigeria makes progress on long-delayed plan to share oil wealth


    Nigeria's Senate has moved forward a first piece of much-delayed legislation to tackle long-standing problems in managing the nation's oil wealth, aiming to agree details for full consideration in just four weeks, lawmakers said.

    The Petroleum Industry Bill (PIB), stuck in parliament for a decade, aims to tackle everything from an overhaul of state oil company NNPC to taxes on upstream projects in a sector riddled with corruption.

    The Senate, parliament's upper house, gave initial approval in the second reading late on Wednesday to the draft plan to overhaul the state oil industry, a procedural move that allows the bill to move forward, MPs said.

    In a draft seen by Reuters in April, Nigeria planned to split state oil company NNPC into two to help ease a planned stake sale in the coming years.

    "The poor performance of the NNPC is a major concern. The commercialisation of the corporation and its splitting into two entities is for more efficiency and to enhance performance," said Senator Tayo Alasoadura, who sponsored the bill.

    "It (the bill) also provides for the establishment of a single petroleum regulatory commission which will focus mainly on regulating the industry," he said.

    The draft does not include the future fiscal regime and taxation for oil firms and the role of host communities -- one of the most contentious aspects as militants and villages in the impoverished Niger Delta demand a greater share of the oil revenues it generates and more benefits from oil majors.

    The next step is for parliamentary committees to provide a report within four weeks after which the Senate will go clause by clause through the final version, lawmakers said.

    No more details were immediately available.

    Senate leader Bukola Saraki and Oil Minister Emmanuel Ibe Kachikwu have repeatedly said the bill would be split to speed up approval but not given details yet of the bill, central to President Muhammadu Buhari's reform of the sector.

    The inability to pass the bill and uncertainty around taxation and government funds during a slump in oil revenue has stunted investment, particularly in deep-water oil and gas fields.

    Nigeria's oil output has risen to 2.1 million barrels a day, Kachikwu said on Tuesday, after plunging due to militant attacks to 1.37 million barrels per day in May, the lowest level since July 1988, according to the International Energy Agency.

    Seeking to pacify the region, on Tuesday Buhari met Niger Delta leaders who presented a list of 16 demands, such as making oil firms move their country headquarters to the southern region and a army withdrawal from the area.

    http://www.reuters.com/article/nigeria-oil-idUSL8N1D435O

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    Repsol raises cost-savings target, shrinks debt


    Repsol on Thursday reported a higher-than-expected third-quarter profit and raised its 2016 cost-savings target by 300 million euros to 1.4 billion euros ($1.56 billion).

    Europe's fifth biggest oil company, like many of its rivals, has had to cut spending to adapt to the slump in oil prices, which are down by half since June 2014. Royal Dutch Shell and BP, for example, had to rely on cost cuts to beat earnings expectations this week.

    The Spanish company said lower spending on exploration helped to cushion a fall in production revenues. It reported a 28 million euro loss in its upstream operations versus a 395 million euro loss a year earlier.

    Repsol said it had almost reached its previous costs savings target of 1.1 billion for 2016 by the third quarter.

    The group said it had ramped up production at its Latin American fields Cardin IV in Venezuela and Sapinhoa in Brazil, offsetting maintenance stoppages at sites in Trinidad and Tobago, Vietnam and Malaysia.

    In its downstream operations, which includes refining, earnings fell 42 percent in the July to September period from a year earlier.

    Repsol's net current-cost-of-supplies profit - which oil and gas companies use to adjust for fluctuations in expenses - was 307 million euros in the period, up 93 percent from a year earlier and above the 296 million euros expected by analysts in a Reuters poll.

    The company had reported its first annual loss for 2015 and cut its dividend, partly to protect its credit rating. It has also been shedding assets as well as cutting costs to help to shrink its large debt pile, which has been under scrutiny from credit ratings agencies.

    Net debt fell to just under 10 billion euros at the end of September from 11.7 billion euros three months earlier after it sold a 10 percent stake in Gas Natural.

    http://www.reuters.com/article/repsol-results-idUSL8N1D41SH
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    War of words over whether LNG as a ship fuel is greener than low-sulphur oil


    Liquefied natural gas (LNG) as a fuel-type presents a false dawn in shipping’s attempt to reduce its greenhouse gas emissions, according to Ian Adams, chief executive of the Association of Bulk Terminal Operators.

    Following media reports claiming LNG has the potential to reduce industry CO2 emissions by 75%, Mr Adams said that, while this may be true, it should not be promoted as “the solution” to reducing levels of greenhouse gasses (GHGs) in shipping.

    “It is well documented that LNG is an excellent solution for reducing sulphur and nitrogen oxides. However, I am dismayed to see it promoted as a solution for reducing GHGs,” he said.

    Citing the fifth assessment report of the UN’s intergovernmental panel on climate change, Mr Adams said that in its unburned state, LNG is predominately methane, which itself is widely recognised as a GHG, with a global warming potential of 28 over 100 years compared with CO2’s base-reading of one.

    That figure vastly increases over a shorter period – the European Commission’s Science for Environment Policy claims that methane becomes 84 times more harmful than CO2 over an 80-year period.

    The danger from LNG, Mr Adams said, came not when the fuel was burned – creating a natural gas with a reduced CO2 level – but through leaks prior to burning. When these occur, the fuel does not remain in a liquid state but rather dissipates into the atmosphere as methane gas.

    Mr Adams told The Loadstar that a 4% leak – or “slip” as he termed it – of something 25 times more harmful was equivalent to the environmental impact of all the CO2 produced when burning fuel oil.

    “If we, rather generously, accept that burning LNG will reduce CO2 emissions by 20% over the current level, it would require less than 1% slippage for there to be no gain from a GHG perspective,” he explained.

    “Taken over the entire supply chain, 1% is not an unrealistic slip. Unfortunately, the LNG myth has progressed unchecked, with very few challenging those lobbying for a wider take-up of LNG.”

    However, Simon Bennett, director policy and external relations at the International Chamber of Shipping, argued that more modern engine types meant this had become less of an issue than previously.

    “While concern about slippage is a valid issue; there is consensus at IMO [International Maritime Organization] and among engine manufacturers that developments in modern engine technology specifically designed to burn LNG mean it’s no longer the great concern it was 10 or 15 years ago. Any slippage with the latest engines would be very small and far out weighed by the environmental benefits,” he said.

    Some proponents of the fuel have even cited the way it dissipates as an additional benefit, compared to the oil spills that come with heavy fuel leaks.

    However, Mr Adams told The Loadstar that when released, LNG doesn’t have the potential for visible harm that fuel oil does, in terms of the swathes of sticky sludge harming birds and marine creatures.

    “But it does release GHGs into the atmosphere. It therefore depends on your definition of cleaner energy,” he said.

    Mr Bennett added that it was also important to consider its benefits in terms of other emission types.

    “While LNG is no panacea, the low-sulphur health benefits are significant, and we certainly view LNG as part of the interim solution for reducing CO2 – until some new technology or fuel comes along, hopefully in the second half of the century.”

    https://theloadstar.co.uk/war-words-whether-lng-ship-fuel-greener-low-sulphur-oil/
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    Cimarrex reports Ethane rejection: GREAT for Lyondell/Westlake.

    Lower-than-expected third quarter production was caused by several factors including higher than anticipated ethane rejection, which accounted for seven MMcfe per day, and the timing of new well completions and subsequent production as well as production shut in during completion operations (13 MMcfe per day).  
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    Kurds Reveal Oil Data as Iraq Output Row Threatens OPEC Deal


    Iraq’s Kurds say their oil production in September was 290,000 barrels a day lower than the federal government’s figures for the semi-autonomous region, as OPEC’s second-biggest member tries to resolve accounting differences with the producer group over its output.

    Iraq’s central government says its crude oil output is several hundred thousand barrels a day higher than market analysts and the Organization of Petroleum Exporting Countries acknowledge. It published a rare breakdown of its September production data this week to support its figures. The disagreement over the figures, which would determine the size of any cuts by OPEC members, threatens to derail talks to limit the group’s output.

    Fields operated by the Kurdistan Regional Government produced an average of 531,000 barrels a day in September, Michael Howard, an adviser to the Kurdish minister of natural resources, said in an e-mail on Thursday. That number includes production from the Kurdish-controlled Bai Hassan and Avana fields in Kirkuk province, he said.

    Iraq’s state-run Oil Marketing Co., known as SOMO, put Kurdish production in September at 546,000 barrels a day. It counted Bai Hassan and Avana separately, adding a further 275,000 barrels a day to the total and creating a 290,000 barrel discrepancy with the KRG’s numbers.

    Double Counting

    “SOMO has been double counting those key fields,” Richard Mallinson, a London-based analyst at Energy Aspects Ltd., said by phone. “It will be quite difficult for them to continue to stand by the total figures they’ve been giving.”

    Consultants Petro-Logistics and FGE also said this week that the federal Oil Ministry was “double-counting” some fields in the region.

    Iraqi Oil Ministry and SOMO officials weren’t immediately available to comment. Deputy Oil Minister Fayyad Al-Nima said on Oct. 23 that the Kurdish authorities were producing more than they acknowledged, when asked at a briefing in Baghdad about the possibility of double counting.

    Kurdish armed forces took control of Bai Hassan and Avana in July 2014, as Islamic State militants seized large swathes of territory in northern Iraq. The federal government doesn’t recognize Kurdish control of the fields, and says they belong to the North Oil Co., a unit of the Oil Ministry.

    SOMO data show Iraq’s total production averaged 4.774 million barrels a day in September. Oil companies, analysts and ship-tracking data surveyed by Bloomberg gave an average estimate of 4.54 million barrels a day for the same month. OPEC put Iraq’s September production at 4.455 million barrels a day.

    Iraqi Oil Minister Jabbar al-Luaibi complained about OPEC data at a meeting in September in Algiers. OPEC assesses output for its 14 members based on data from oil-industry watchers. Iraq wants the group to accept the ministry’s figures before a Nov. 30 meeting at which OPEC could finalize details of the Algiers accord to limit its production.

    http://www.bloomberg.com/news/articles/2016-11-03/kurds-reveal-oil-data-as-iraq-output-dispute-threatens-opec-deal
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    The record build that never was


    Yesterday’s weekly EIA inventory report showed a 14.4 million-barrel build to oil inventories, the largest since weekly records began in 1982.

    Here at ClipperData, we use U.S. Customs bills to report oil imports in a timely fashion. Imports play a key role in the weekly inventory data, making a major contribution to supply, and unsurprisingly, have a big influence on inventory numbers.

    Comparing our numbers to those reported by the EIA shows their import data lagging behind the totals reported for the weeks ending October 14 and October 21, and then playing catch-up in the last week, the one ending October 28.

    In the two weeks prior, the EIA reported import numbers into the U.S. Gulf coast that were significantly below the Customs totals. For the week ending October 14, EIA imports into PADD 3 were 550,000 barrels per day below the Customs number, and 116,000 bpd below for the week ending October 21.

    For the week ending October 28, there was a massive correction in the data, and the EIA reported imports that were 522,000 bpd higher than Customs data.

    Not only do we believe that the EIA missed import volume in the weeks ending October 14 and October 21, but the massive stock build in the week ending October 28 suggests that there was some pent-up stock building that was not reported for at least one week if not two, and that led to the high October 28 number.

    Taking a look at the stock change over a three-week period yields a similar result to that of EIA’s PADD3 imports: they are in line with our numbers. The EIA's total stock change over the last three weeks is an 8.6mn bbl build, in line with our projection of 8.5mn bbls.

    This is an unusual time shift in the EIA data. Usually the agency is much more in line with the numbers reported by Customs, and this looks like a one-off occurrence.

    http://blog.clipperdata.com/the-record-build-that-never-was
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    EOG Resources posts smaller quarterly loss


    As have many oil companies, EOG Resources dramatically cut losses in the third quarter. The Houston-based oil exploration firm also said on Thursday that it was doubling the amount of oil and gas it thought it could recover from West Texas’s prolific Permian Basin.

    EOG reported a third quarter net loss of $190 million, or 35 cents per share, $3.9 billion better than its performance over the same period last year. In the third quarter of 2015, EOG posted a net loss of $4.1 billion, or $7.47 per share.

    Revenues dipped by 2 percent or $50 million to $2.2 billion over the third quarter last year. Expenses fell by more than $6 billion, to $2.3 billion. Last year, EOG wrote down more than $6 billion in oil inventory losses after the crude price crash.

    The dip in income last quarter came from the continuing fall in crude oil and natural gas prices, EOG reported, despite “significant well productivity improvements and lease and well cost reductions.”

    The company pumped 275,700 barrels of oil per day in the quarter, at the upper end of its expectations. Lease and well expenses, meanwhile, decreased 18 percent over the same period last year.

    Chairman and Chief Executive Bill Thomas lauded the company’s $2.34 billion purchase of Yates Petroleum in the quarter and called 2016 a “breakout year” for EOG, despite the oil price crash.

    With the addition of Yates acreage, EOG more than doubled its total oil and gas recovery estimates in the Permian’s Delaware Basin from 2.35 billion barrels of oil and gas to 6 billion.

    Long term, the company expects growth from its wells in south Texas’s Eagle Ford, west Texas’s Delaware Basin, the Colorado Rockies and North Dakot’s Bakken.

    Assuming $50 oil, EOG said it expects 15 percent annual oil production growth through 2020.

    “EOG’s future has never been brighter,” Thomas said in a statement.

    http://fuelfix.com/blog/2016/11/03/eog-cuts-losses-to-190-million-doubles-permian-oil-estimates/
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    Apache Corp. cuts expenses, narrows losses to $607 million


    A drilling rig sits north of the Davis Mountains Friday, Sept. 16, 2016 in Balmorhea. Houston-based Apache Corporation recently announced the discovery of an estimated 15 billion barrels of oil and gas in the area and plans to drill and use hydraulic fracturing on the 350,000 acres surrounding the town. ( Michael Ciaglo / Houston Chronicle )

    Houston’s Apache Corp., one of the largest oil and gas companies in the U.S., narrowed losses in the third quarter thanks largely to the increase in oil prices.

    Apache reported on Thursday losses of $607 million, 85 percent or $3.5 billion better than losses in the third quarter last year. The company posted $1.60 in losses per share, in comparison to $10.95 in losses per share over the same period last year.

    Revenues dipped 6 percent or $88 million to $1.4 billion. Expenses fell dramatically: Apache cut 60 percent or $3.6 billion to end the quarter spending $2.3 billion, largely because it did not have to write down oil reserves.

    Oil production fell 7 percent or 20,000 barrels per day to 271,000 barrels per day. Gas production fell 8 percent or 90 million cubic feet per day to 1.1 trillion cubic feet per day. Total production, including natural gas liquids, fell 6 percent or 30,000 barrels of oil equivalent per day to 520,000 barrels of oil equivalent per day.

    Apache was upbeat on its future.

    The company highlighted its discovery of Alpine High, a new oilfield in the Delaware Basin, the western section of West Texas’s Permian Basin. It said it planned to add three rigs this quarter in the Midland Basin, the Permian’s eastern lobe. And it anticipated 2016 oil and gas production would meet or crest expectations.

    Apache chief executive John Christmann said a “transformation” is taking place at the company, with a “strategic focus on organic growth and strong technical capabilities.”

    Christmann said Apache would develop Alpine High “in a methodical, efficient and environmentally responsible way.”

    “Our economic drilling inventory in the Permian Basin is more extensive today than at any time in the company’s history, and we expect it will continue to grow as we further delineate our vast acreage position in the basin,” Christmann said.

    http://fuelfix.com/blog/2016/11/03/apache-corp-cuts-expenses-narrows-losses-to-607-million/
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    Chesapeake Energy posts surprise profit as costs slump


    U.S. natural gas producer Chesapeake Energy Corp (CHK.N) reported a surprise adjusted profit, helped by lower expenses, and said its production would fall at a slower-than-expected rate next year.

    Shares of Chesapeake, which also kept its capital budget nearly unchanged, were up 6.6 percent at $5.66 before the bell.

    Decreased costs for oilfield services and more efficient drilling processes are helping oil producers extract more barrels of oil out of the ground, without having to spend more.

    Oil producers remain tight fisted to cope with a near 60 percent fall in oil prices since mid-2014 that has depleted cash balances and forced asset sales.

    Chesapeake, which has been trying to reduce its crippling debt load, said it planned to sell more assets this year, including some of its Haynesville Shale acreage in Louisiana.

    The company had nearly $9 billion of debt outstanding as of Sept. 30.

    Excluding output from the assets the company is divesting, Chesapeake expects production to fall 5-0 percent next year, better than its previous estimate of a 7-2 percent decline.

    The company added $2 million to its 2017 budget and now expects to spend $1.82 billion-$2.62 billion.

    Chesapeake also said it expects to exit the next two years with significantly higher production.

    The company said it would exit the fourth quarter of 2017 with a 7 percent rise in total production than at the end of the current quarter. Chesapeake said oil production would grow by about 10 percent over the same period.

    Between the end of 2017 and 2018, the company expects output to climb 15 percent, with a 20 percent jump in oil production.

    Tudor Pickering Holt & Co said the company's oil production forecast was above the investment bank's estimates for both 2017 and 2018.

    The company's fourth-quarter oil output estimate of 90,000-95,000 barrels per day (bpd) also beat Wall Street expectations of 88,0000 bpd.

    Chesapeake's oil and gas production fell 3.3 percent to 59 million barrels of oil equivalent in the third quarter, largely due to asset sales.

    Net loss attributable to Chesapeake's shareholders fell nearly 75 percent to $1.20 billion from a year ago, when the company wrote down the value of some oil and gas assets by $5.42 billion.

    Adjusted profit was 9 cents per share. Analysts on average had expected a loss of 3 cents, according to Thomson Reuters I/B/E/S.

    Total operating expenses slumped nearly 63 percent, making up for a 32.6 percent fall in revenue.

    http://www.reuters.com/article/us-chesapeake-enrgy-results-idUSKBN12Y1AH
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    Carrizo Oil & Gas announces third quarter 2016 results


    Carrizo Oil & Gas, Inc. today announced the Company's financial results for the third quarter of 2016 and provided an operational update, which includes the following highlights:

    Oil Production of 24,488 Bbls/d, 4% above the third quarter of 2015, as previously reported
    Total Production of 40,762 Boe/d, 13% above the third quarter of 2015, as previously reported
    Loss From Continuing Operations of $101.2 million, or $1.72 per diluted share, and Adjusted Net Income of $13.6 million, or $0.23 per diluted share
    Adjusted EBITDA of $91.2 million
    Moving stagger-stack to development mode at Brown Trust lease
    Strong results from two additional Delaware Basin wells, the Corsair State 3H and Fortress State 1H, which achieved peak 24-hour rates of approximately 1,430 Boe/d and 1,791 Boe/d, respectively
    Increasing 2016 crude oil production guidance to 25,350-25,500 Bbls/d primarily to account for the recently-announced agreement to acquire Eagle Ford Shale properties from an affiliate of Sanchez Energy Corporation

    Carrizo reported a third quarter of 2016 loss from continuing operations of $101.2 million, or $1.72 per basic and diluted share compared to a loss from continuing operations of $708.8 million, or $13.75 per basic and diluted share in the third quarter of 2015. The loss from continuing operations for the third quarter of 2016 includes certain items typically excluded from published estimates by the investment community, including the impairment of proved oil and gas properties recognized this quarter. Adjusted net income for the third quarter of 2016 was $13.6 million, or $0.23 per basic and diluted share compared to $10.4 million, or $0.20 per basic and diluted share in the third quarter of 2015.

    For the third quarter of 2016, Adjusted EBITDA was $91.2 million, a decrease of 20% from the prior year quarter as the impact of lower commodity prices more than offset the impact of higher production volumes.Production volumes during the third quarter of 2016 were 3,750 MBoe, or 40,762 Boe/d, an increase of 13% versus the third quarter of 2015. The year-over-year production growth was driven by strong results from the Company's Eagle Ford Shale and Delaware Basin assets, as well as a lower level of voluntary curtailments in its Marcellus Shale assets. Oil production during the third quarter of 2016 averaged 24,488 Bbls/d, an increase of 4% versus the third quarter of 2015; natural gas and NGL production averaged 69,262 Mcf/d and 4,730 Bbls/d, respectively, during the third quarter of 2016. Third quarter of 2016 production exceeded the high end of Company guidance due primarily to stronger-than-expected performance from the Company's Eagle Ford Shale and Delaware Basin assets as well as lower-than-planned levels of voluntary curtailments from its Marcellus Shale assets.

    Drilling and completion capital expenditures for the third quarter of 2016 were $125.8 million. Approximately 80% of the third quarter drilling and completion spending was in the Eagle Ford Shale, with the balance weighted towards the Delaware Basin and Niobrara Formation. Land and seismic expenditures during the quarter were $6.2 million. Carrizo is increasing its 2016 drilling and completion capital expenditure guidance to $400-$410 million from $370-$380 million. Approximately one third of the increase results from additional infrastructure spending associated with incremental Delaware Basin activity as well as bringing forward infrastructure spending previously planned for 2017 in order to capitalize on the current depressed service cost environment. The balance of the increased spending results from additional drilling and completion activity in the Eagle Ford Shale and Delaware Basin. In the Eagle Ford, the Company now expects to drill an additional four wells due to continued operational efficiencies, and in the Delaware Basin, the Company has elected to drill and complete one additional well due to the strong results from its recent completions. The Company is increasing its land and seismic capital expenditure guidance to $25 million for the year from $20 million.

    Last month, Carrizo agreed to acquire approximately 15,000 net acres located primarily in the volatile oil window of the Eagle Ford Shale for $181 million, subject to customary closing adjustments. Following the closing of the transaction, Carrizo will hold approximately 101,000 net acres in the Eagle Ford Shale, concentrated in LaSalle, McMullen, and Atascosa counties. The acquired properties had estimated net production during September of approximately 3,100 Boe/d (61% oil) from 93 net producing wells, and Carrizo has identified approximately 80 net de-risked drilling locations in the Lower Eagle Ford Shale, with material upside potential beyond this. The transaction has an effective date of June 1, 2016, and is currently expected to close by mid-December, 2016. A map of the acreage to be acquired and how it fits in with the Company's existing position can be found on the Carrizo website.

    Carrizo is increasing its 2016 oil production guidance to 25,350-25,500 Bbls/d from 25,150-25,400 Bbls/d previously. The majority of the increase results from production associated with the proposed Eagle Ford Shale acquisition. Using the midpoint of this range, the Company's 2016 oil production growth guidance is 10%. For natural gas and NGLs, Carrizo is increasing its 2016 guidance to 68-69 MMcf/d and 4,800-4,900 Bbls/d, respectively, from 64-66 MMcf/d and 4,600-4,700 Bbls/d. For the fourth quarter of 2016, Carrizo expects oil production to be 27,300-27,700 Bbls/d, and natural gas and NGL production to be 60-64 MMcf/d and 4,800-5,000 Bbls/d, respectively. A full summary of Carrizo's guidance is provided in the attached tables.

    http://www.oilvoice.com/n/Carrizo-Oil-Gas-announces-third-quarter-2016-results/ff867d31d29a.aspx
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    After curtailing production, Continental to complete 29 Bakken wells


    Continental Resources' Bakken production averaged nearly 108,000 b/d of oil equivalent in the third quarter of 2016, down 14% or more than 17,000 boe/d from the previous quarter, but the Oklahoma City-based producer plans to boost production in its North Dakota and Montana plays before the end of the year.

    "We've begun harvesting our valuable Bakken inventories," Harold Hamm, Continental's chairman and CEO, said during an earnings call Thursday.

    Continental plans to complete 29 gross operated wells in the Bakken, nine more than it planned at the end of Q2, and will double its stimulation crews in the play to four by the end of the year, the company said Thursday.

    Continental plans to stimulate another 15 Bakken wells this year, but first sales are not expected until 2017. It expects to end the year with about 175 gross operated uncompleted wells in the Bakken.

    Hamm said the focus was entirely on completing wells in that inventory and said his company would not be adding any new rigs. Continental currently operates four rigs in the Bakken.

    Continental expects Bakken production to average over 124,100 boe/d this year, down from nearly 137,400 boe/d in 2015.

    Continental's announced plans for the Bakken come as North Dakota has seen its oil production dip below 1 million b/d for the first time since March 2014. The drop in supply came as producers like Continental restricted production amid persistently low crude oil prices.

    North Dakota's Department of Mineral Resources reported last month that statewide oil production averaged 981,039 b/d in August, down 49,000 from July. The state agency plans to announce September production statistics next week.

    In its Q3 results, Continental said it had curtailed Bakken production by about 12,000 net boe/d during August and September "due to lower commodity prices," but said production was brought back online by the end of the quarter.

    Continental's total production averaged nearly 208,000 boe/d, down from about 219,000 boe/d in Q2 and 228,000 boe/d in Q3 2015. Continental expects production will average 215,000-220,000 boe/d this year, up 5,000 boe/d from last quarter's low-end guidance and up 15,000-20,000 boe/d from guidance at the beginning of the year.

    Production guidance has increased as the company said production expenses had dropped 25 cents to $3.50-$4/boe and the company raised anticipated capital expenditures for 2016 from $920 million, which it said in August it expected to spend this year, to $1.1 billion.

    Continental said production in its SCOOP play averaged over 67,400 boe/d in Q3, up from nearly 64,700 boe/d in Q2 and down from more than 69,100 boe/d in Q3 2015.

    Production in Continental's STACK/Northwest Cana play climbed to nearly 17,700 boe/d in Q3, up from more than 14,600 boe/d in Q2 and more than 6,600 boe/d in Q3 2015.

    http://www.platts.com/latest-news/oil/washington/after-curtailing-production-continental-to-complete-21978896
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    Cheniere narrows losses, plans mid-scale LNG project


    Cheniere Energy posted a third-quarter net loss of US$100.4 million for the three months ended September 30, 2016, compared to a net loss of $297.8 million for the comparable 2015 period.

    The Houston-based company reported third quarter revenue of $465.7 million compared to $66 million in the corresponding period in 2015.

    Speaking of the third quarter, Cheniere’s president and CEO Jack Fusco said the company’s transition to operations continues as Train 2 at Sabine Pass liquefaction project reached substantial completion and the commissioning of Train 3 began.

    The company noted in its report on Thursday that the construction of Sabine Pass trains 3 and 4 is 91.8 percent complete and ahead of contractual schedule, with substantial completion expected in 2017. Train 5 was approximately 42.8 percent complete.

    Cheniere said that the outage to improve the flare systems at Sabine Pass, as well as to perform scheduled maintenance to Train 1 and other facilities, was completed.

    At its Corpus Christi LNG export terminal the construction of Trains 1 and 2 is approximately 43 percent complete with completion expected in 2019, with Train 3 under development and expected to begin construction once more LNG sale and purchase agreements are signed.

    Cheniere eyes mid-scale modular liquefaction project

    The LNG exporter said in its report that it is exploring the development of a mid-scale liquefaction project.

    The project would be developed using electric drive modular trains, with an expected aggregate nominal production capacity of approximately 9.5 mtpa of LNG.

    Cheniere has completed a competitive bidding process and awarded a front-end engineering and design contract to a consortium consisting of KBR, Siemens, and Chart Industries.

    http://www.lngworldnews.com/cheniere-narrows-losses-plans-mid-scale-lng-project/
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    Oil and gas producer Encana posts surprise operating profit


    Canadian oil and natural gas producer Encana Corp posted a quarterly profit, on an operating basis, as a steep fall in costs helped offset the impact of weak commodity prices.

    Encana has responded to the 60 percent drop in crude oil prices since June 2014 by slashing jobs, cutting spending and selling oil and gas assets.

    The efforts seem to be paying off. The company said on Thursday expenses fell to $600 million, from about $3.14 billion a year earlier.

    The company has also downsized operations to focus on four core North American plays: the Montney and Duvernay in Western Canada, and the Eagle Ford and Permian in the United States.

    Encana posted an operating profit of 4 cents per share, compared with the average analyst estimate of a loss of 4 cents, according to Thomson Reuters I/B/E/S.

    Revenue fell 25 percent to $979 million, but beat analysts' expectation of $718.3 million.

    Encana's oil and natural gas liquids production fell nearly 17 percent to average 117,000 barrels per day in the three months ended Sept.30, while natural gas output declined by about 14 percent to 1.33 billion cubic feet per day.

    The company said on Thursday it expected to limit production decline from its core four assets to about four percent in the fourth quarter, citing "continued improvements in capital efficiency and strong operational performance."

    Encana, which has cut over $3.5 billion of debt since 2014-end, said it paid back $2 billion of debt in the third quarter. The company had long-term debt of about $4.2 billion as of Sept.30.

    The company has sold its Gordondale assets in Alberta to Birchcliff Energy Ltd for C$625 million, and its Denver Julesburg basin oil and gas assets in Colorado for $900 million.

    Cash flow fell 32 percent to $252 million, from $371 million.

    Encana posted a net profit of $317 million in the quarter, compared with a loss of $1.24 billion a year earlier.

    The company took an impairment charge of more than $1 billion in the year-ago quarter.

    http://www.reuters.com/article/encana-results-idUSL4N1D42YZ
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    Panda Power Raises $710M to Fund 3rd Marcellus Power Plant


    Last week saw a flurry of activity for the official ribbon-cutting at Panda Power’s very first built-from-scratch Marcellus gas-powered electric plant going online in Bradford County. 

    We were so distracted with that momentous event, we almost missed another important Panda announcement: Panda finished securing $710 million worth of investments to fund its third Marcellus gas-fired plant–a huge plant (bigger than Panda Liberty), located in Snyder County, PA.

    We previously wrote about “Panda Hummel,” a 1,124 megawatt power station that will convert a former coal-fired plant to burn natural gas . Hummel will generate enough electricity to power 1 million homes! You can have all the great plans and ideas in the world, but they don’t get built without money. Panda has now raised the money to build Hummel, by selling debt to do it…

    http://marcellusdrilling.com/2016/11/panda-power-raises-710m-to-fund-3rd-marcellus-power-plant/

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    Rice Energy 3Q16: Everything’s Up (That Should Be)


    Yesterday one of our favorite drillers in both the Utica and Marcellus, Rice Energy, released their third quarter 2016 update.

    It can be summarized in one, short phrase: “Everything that should be up is up.”

    Production is up for the quarter–by a big 23%. Net income is up, by 40%. The company’s line of credit is up to $1 billion (was $875 million).

     In addition, during 3Q16 Rice floated new stock to help them buy Vantage Energy, for a whopping $2.7 billion.

    Also during 3Q16 Rice drilled and completed 10 new Marcellus wells, along with drilling and completing 2 Utica wells. In addition they brought another 11 Utica wells online.

    There’s lots happening at Rice Energy.

    http://marcellusdrilling.com/2016/11/rice-energy-3q16-everythings-up-that-should-be/
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    Alternative Energy

    Chile holds line on lithium exploration limits despite price rise


    Chile is sticking to its policy of limiting the exploitation of its vast lithium reserves, the country's mining minister told Reuters on Wednesday, despite a surge in prices for the battery and electronics ingredient.

    Battery-grade lithium prices tripled to more than $20,000 a tonne in top consumer China over the summer as demand surged, but Chile continues to consider the mineral as "strategic" and limits its production.

    Private investors, desperate to cash in on the demand-fuelled boom for lithium, which is used in electric vehicles, have criticised Chile's policy of limiting production of a mineral that is no longer really used in nuclear applications.

    "What we are saying is lithium is in the hands of the state," Chilean mining minister Aurora Williams told Reuters on the sidelines of the LME Week industry conference in London.

    Chile, which has one of the world's most plentiful supplies of lithium, is pushing ahead with new policies to develop those reserves, with state copper miner Codelco expected to decide on a partner to develop lithium assets in the Maricunga and Pedernales salt flats in the first quarter of 2017.

    The government has also signed a deal to allow U.S. firm Albemarle to increase output.

    However, it said earlier this year that it would not change the way that lithium is administered, leasing out the rights to its exploitation and restricting the amount produced via quotas.

    Williams said Chile had no preference as to what type of company Codelco partners with, nor does it have any front runners to date.

    "We think Codelco, one of the world's largest mining companies, can create the business model to (explore and mine lithium). It's a (business) model that's been tried and tested."

    By 2035, some 140 million lithium-using electric vehicles will be on the road versus just 1 million now, global miner BHP Billiton told investors at an LME Week event.

    http://www.reuters.com/article/lmeweek-chile-lithium-idUSL1N1D31DY
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    Uranium

    China’s nuclear roll-out facing delays


    For China’s nuclear industry, 2016 has been a frustrating year. So far, construction has started on only one new plant, and its target of bringing 58 gigawatts of nuclear capacity in service by 2020 seems impossible to meet.

    At present, China has 19.3 gigawatts of nuclear supply under construction and a further 31.4 gigawatts already in service. Given that new plants take five years or more to build, the country faces a shortfall of more than seven gigawatts on its target.

    All the plants started between 2008 and 2010 are online except for six imported reactors. These include four AP1000 reactors designed by Westinghouse, based in the USA but owned by Toshiba of Japan; and two European Pressurised Reactors (EPR), developed by Areva, a French multinational group specialising in nuclear power.

    The plants are not expected to be completed before 2017 and all will be at least three years late, an unprecedented delay in China’s nuclear history. It would be surprising if China was not disillusioned with its suppliers and their technologies.

    Technology problems

    The EPR and AP1000 reactors have been problematic to build. The two EPRs are 3-4 years late although there is little available information detailing why. Meanwhile, EPR plants in Finland and France, which should have been completed in 2009 and 2012, respectively, will not be online before 2018.

    There are no obvious problems that account for the majority of the delays at any of the sites, just a series of quality and planning issues that suggest the complexity of the design makes it difficult to build.

    The four AP1000s are also running 3-4 years late. They are being built by China’s State Nuclear Power Technology Company (SNPTC), which has not built reactors before. There is some publicly available information about the problems suffered in China with the AP1000s, including continual design changes by Westinghouse. The reactor coolant pumps and the squib valves, which are essential to prevent accidents, have been particularly problematic, for example.

    Still, China is expected to be the first country to complete construction of AP1000 and EPR designs, a scenario it did not expect or want. The government is required to develop and demonstrate test procedures for bringing the plants into service, which could take up to a year. These test procedures are developed by vendors and generally standardised although national safety regulators must approve them and can add specific requirements.

    In 2014, a senior official at China’s nuclear safety regulator, the National Nuclear Safety Administration (NNSA) complained that only a small number of test procedures had been developed for the AP1000, and no acceptance criteria had been submitted for review. He said the same issues affect the EPR.

    China will likely be reluctant to commit to further AP1000s (and the CAP1400, a Chinese design modified from the AP1000) until the first of the Westinghouse designs is in service, passes its acceptance tests, and demonstrates safe, reliable operation. There are no plans to build additional EPR reactors.

    In fact, state-owned China General Nuclear (CGN) and China National Nuclear Corporation (CNNC) opted instead to develop medium-sized reactors (1000 megawatts), the ACP1000 and the ACPR1000, respectively, based on Areva’s much older M310 design rather than the EPR.

    Challenging circumstances

    The slowdown in electricity demand growth at home has left China with surplus power-generating capacity. Nuclear is now competing against coal plants supplied with cheap fuel. Furthermore, nuclear has a lower priority for dispatch in winter than combined heat and power plants, which warm homes and factories and typically burn coal and gas.

    In 2015, nuclear power accounted for only 3% of China’s electricity and at any plausible rate of building nuclear plants, it is unlikely that nuclear would achieve more than 10% of China’s electricity supply.

    This year, one reactor (Hongyanhe 3) in Liaoning, operated for only 987 hours in the first quarter of 2016, just 45% of its availability, while reactors in Fujian (Fuqing) and Hainan (Changjiang) were shut down temporarily.

    Another challenge is the strain placed on China’s nuclear regulators in the face of such an ambitious target. The NNSA is under particular pressure to oversee the operation of 36 plants and the construction of 20 plants, as well as being the first regulatory authority to review six new designs. Not even the US Nuclear Regulatory Commission, which monitored standards during the huge build out of the industry in the 1960s and 1970s, has faced such a workload.

    Safety authorities are usually reluctant to appear critical of their international peers but in 2014, a senior French safety regulator described NNSA as “overwhelmed”, and claimed that the storage of components was “not at an adequate level”.  A senior official from SNPTC said in 2015: “Our fatal weakness is our management standards are not high enough.” To build up the capabilities to support such a large construction programme a pause in ordering new plants and equipment may be necessary.

    Uncertain future

    The 58GW target of nuclear capacity in service by 2020 is not achievable and, like nuclear capacity targets in the past in China and elsewhere, it will be quietly revised down. The challenge for the Chinese nuclear industry is to do what no other nuclear industry worldwide has been able to do; to bring the cost of nuclear generation down to levels at which it can compete with other forms of generation, particularly renewables.

    If it is unable to do this, China cannot afford to carry on ordering nuclear plants and nuclear will retain a small proportion of the electricity mix.

    This leaves China’s nuclear export drive in a precarious position. Since 2013, China has turned its attention to nuclear export markets, offering apparently strong advantages over its competitors. The Chinese government can call on all the resources of China to offer a package of equipment, construction expertise, finance and training that none of its rivals, even Russia, can match.

    http://reneweconomy.com.au/chinas-nuclear-roll-facing-delays-15487/

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    Agriculture

    China loosens land transfer rules to spur larger, more efficient farms


    China has relaxed rules to allow farmers to transfer their land rights to help promote more efficient, large-scale farms, amid an exodus of farm workers to the cities.

    The authorities on Sunday recommended separating various rights to rural land, which they say would improve land circulation, increase farmers' incomes, and contribute to the development of modern agriculture.

    China's Agriculture Minister Han Changfu told a news conference on Thursday that the separation of rural land ownership rights, contracted rights and operating rights is a key reform step.

    "This helps guide the orderly transfer of land operating rights and lay a system foundation for appropriate-scale agricultural operations the development and modern agriculture," he said.

    The step will help improve land and labor efficiency in the farm sector, he said, but he added that farmers will not be forced to transfer their land rights.

    Farmland in China is collectively owned and farmers only have the right to contract and use the land. Many rural migrant workers have leased out their land to those who stay in the countryside or commercial entities.

    Over 30 percent of rural land has already been leased to others to operate, said Han.

    Chinese farmers still cannot sell their land rights freely and the lack of clear rights makes many farmers vulnerable to land grabs by local administrations for development. A program to issue certificates confirming rights to land has covered 60 percent of farmland.

    He said the guidelines will also better protect the rights of those that lease and operate the land from farmers, helping to encourage more investment in more efficient and productive agriculture.

    The priority for the world's most populous country is to ensure enough land and rural labor to maintain food security.

    Land reform and household registration are two key issues if China is to succeed in its plan to get 100 million migrants to settle in cities by 2020.

    China's leaders aim for 60 percent of the population of almost 1.4 billion to be living in cities by 2020, turning millions of rural dwellers into consumers who could be a driving force for the world's second-largest economy.

    http://www.reuters.com/article/us-china-economy-landrights-idUSKBN12Y09F

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    Agrium posts surprise loss on low fertilizer prices


    Canadian fertilizer maker Agrium Inc , reported a surprise quarterly loss on Thursday as it grapples with low fertilizer and crop prices, and also cut its full-year profit forecast.

    U.S. farmers are cutting back on spreading fertilizer this autumn in response to a drop in crop prices to multi-year lows and a delayed harvest, dealers say, warning of a pullback that will be felt from grain markets to Canadian potash mines.

    Agrium cut its full-year profit forecast to $4.60 to $5 per share, from the prior range of $5 to $5.30 per share.

    In September, Potash Corp of Saskatchewan Inc and Agrium agreed to join forces in an all-stock deal that will allow Potash shareholders to own 52 percent of the new company, with the rest going to Agrium shareholders.

    Shareholders of both companies are scheduled to wrap up voting later on Thursday, and they are expected to back the merger.

    Agrium reported a net loss from continuing operations of $39 million, or 29 cents per share, in the third quarter ended Sept. 30, compared with a net profit of $99 million, or 72 cents per share, a year earlier.

    On an adjusted basis, Agrium posted a loss of 12 cents per share. Analysts on average had expected earnings of 11 cents per share, according to Thomson Reuters I/B/E/S.

    Total sales fell by about 11 percent to $2.25 billion.

    http://www.reuters.com/article/agrium-results-idUSL4N1D43DI
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    Base Metals

    Copper market seen 'broadly balanced' in 2016, 2017 -IWCC


    Global demand for copper is expected to broadly meet supply in 2016 and 2017, while there is a chance of stronger-than-expected consumption in top user China, an industry body said on Friday.

    The International Wrought Copper Council (IWCC) sees a modest 120,000-tonne deficit this year, narrowing to 60,000 tonnes in 2017.

    "Forecasts therefore suggest that in both 2016 and 2017 the copper market will be broadly balanced," the IWCC said in a statement.

    Refined copper production in 2016 is expected to rise 2 percent from the year before to 22.38 million tonnes, while global demand for refined copper will climb 2.6 percent to 22.26 million tonnes.

    For 2017, the body sees refined copper output at 22.77 million tonnes, growing 1.7 percent compared with 2016, with demand climbing 2 percent to 22.71 million tonnes.

    Demand in top consumer China is set to hit 10.5 million tonnes this year, up 4.1 percent on last year, with 2.4-percent growth next year to 10.75 million tonnes.

    "There is perhaps more upside demand potential in China in 2017 than the figure might suggest," the IWCC said, without giving details.

    Meanwhile, demand for refined copper in the European Union is forecast to increase 0.5 percent to 3.15 million tonnes this year, rising to 3.19 million tonnes in 2017.

    The IWCC sees slightly lower demand from Japan and the United States in 2016, although that will stabilise next year in Japan and recover in the United States to 1.82 million tonnes.

    Global copper mine production this year is expected to grow 1.4 percent to 19.2 million tonnes, rising another 2.1 percent to 19.61 million tonnes in 2017.

    http://www.reuters.com/article/lmeweek-copper-forecasts-idUSL8N1D5021

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    Steel, Iron Ore and Coal

    Hebei to cut 12.40 Mpta of coke capacity in 2016


    North China's Hebei province planned to slash 12.40 million tonnes per annum (Mpta) of coke production capacity during 2016, and another 10.29 Mtpa in 2017, to lower pollutants emission, the provincial Environmental Protection Bureau announced in a statement on prevention of air pollution.

    Hebei aims to trim its coke-making industry, by stopping approval of newly-added coke projects and eliminate outdated capacities. There will be no coking plants operating in Zhangjiakou, Langfang, Baoding and Hengshui.

    The province will also move coke producers off areas surrounding Beijing, ecological protection areas and downtowns, guide those cannot withdraw to transform, merge and reorganize with large enterprises, and arrange qualified coke capacity into circulatory chemical industrial park.

    Meanwhile, Hebei vows to control coke capacity within 100 Mtpa by the end of 2018, and smoke, sulfur dioxide and nitric oxide emissions from the coking industry within 0.1 million tonnes, 0.05 million tonnes and 0.15 million tonnes, separately.

    http://www.sxcoal.com/news/4548825/info/en

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    Industry Minister meets Posco to discuss Whyalla future, possible bid


    South Korean steel major Posco has emerged as a viable buyer for the steelworks division of the now defunct Arrium.

    Federal Industry Minister Greg Hunt on Thursday revealed that Posco had expressed a “strong desire” in buying the Whyalla steelworks, which was placed on administration earlier this year.

    “I met with Posco in South Korea and was joined by South Australian Treasurer Tom Koutsantonis and National Secretary of the Australian Workers Union, Scott McDine.

    “We stood together and made it clear that we are determined to work with any potential buyer for the steelworks to support the workers of Arrium and the Port Pirie community,” Hunt said on Thursday.

    “Posco briefed me on their future vision for Whyalla – where the plant not only continues current operations, but grows significantly. They don’t want Arrium to just be competitive domestically. They want Arrium to be globally competitive.”

    Hunt said Posco’s plans included expanding overall production at Whyalla by 50%, which would significantly boost steel output and would result in the creation of a new 220 MW power plant, which would meet Arrium’s own power requirements and assist in providing electricity supply and security for the state.

    “You couldn’t get a better outcome for South Australia – not just protecting the jobs but investing, expanding production and providing additional baseload grid security,” Hunt said.

    Koutsantonis for his part said that the state government had made clear to Posco that it stood ready to invest some A$50-million into the Whyalla operations, to make them more viable over the long term.

    “While the bid process is still a long way from completion it was clear from the meeting today that Posco has a serious interest in Arrium and the long-term future of the Whyalla operations, the local workforce and the Whyalla community as a whole.

    “Of particular interest is their world-leading manufacturing technology Finex, which produces steel identical in quality to steel from blast furnaces but with fewer input materials and less impact on the environment, and the potential to implement this technology in Whyalla.”

    Koutsantonis noted that the state government was also hoping to meet with other potential buyers over the coming months.

    However, Posco has denied interest in the Arrium assets, saying in a statement to Reuters that it was trying to sell the group the FINEXT technology.

    “Posco is not participating in bidding to buy Arrium. We are interested in selling our FINEXT technology to Arrium,” a spokesperson was quoted as saying.

    Arrium, which appointed the administrator in April, has steel-making capacity of about 2.5-million metric tons a year. Operations include the Whyalla steelworks and port, the OneSteel steel manufacturing, distribution and recycling unit and an iron ore mining division

    Marketing efforts for the Arrium Australia business started in August this year, with administrators favouring offers that will allow for the sale of the business in one line as a going concern, with a view to maximise value to credit holders.

    Shortlisted bidders are expected to submit final binding offers in December.

    http://www.miningweekly.com/article/industry-minister-meets-posco-to-discuss-whyalla-future-possible-bid-2016-11-03
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    China's key steel mills daily output slides 1.3pct in mid-Oct


    Daily crude steel output of China's key steel mills slid 1.31% from ten days ago to 1.72 million tonnes over October 11-20, according to data released by the China Iron and Steel Association (CISA).

    Analysts attributed the drop to sluggish demand from infrastructure construction industry and increased costs of raw material, which resulting in furnaces maintenance.

    The average daily crude steel output across the country was estimated at 2.26 million tonnes during the same period, slipping 1.17% from ten days ago and falling 2.36% from the month-ago level, the CISA said.

    By October 20, stocks of steel products at key steel mills stood at 13.61 million tonnes, dropping 1.89% from ten days ago and down 4.08% from a month ago, the CISA data showed.

    By October 28, total stocks of major steel products in China slid 5.53% on month to 8.94 million tonnes, the third consecutive drop on weekly basis, as operating rate fell back affected by tight supply of coking coal and coke.

    http://www.sxcoal.com/news/4548829/info/en
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