Mark Latham Commodity Equity Intelligence Service

Friday 16th October 2015
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    Oil and Gas


    VW to recall 8.5m vehicles in Europe

    German auto giant Volkswagen says it will recall a total of 8.5 million diesel vehicles Europe-wide that are equipped with sophisticated software enabling their engines to cheat pollution tests.

    Responding to an order from the German KBA federal transport authority earlier to recall 2.4 million vehicles in Germany alone, VW announced in a statement that around 8.5 million vehicles would be recalled in all 28 of the European Union's member states, starting from January 2016.

    For countries outside the EU, it would have to be established in detail exactly which vehicles were affected, the statement added.

    "Volkswagen will be pro-active in approaching and informing customers," the carmaker said.

    Already from the beginning of October, every VW customer had been able to use the company's website to check whether their vehicle was affected, simply by typing in the car's number.

    A similar function was also available on the websites of the company's other brands of Audi, SEAT and Skoda.

    "Rectifications of the vehicles will begin from January 2016 and will be free of charge for our customers," VW said.

    The solutions could involve both software and hardware measures.

    Until the changes could be undertaken, "every vehicle remains technically safe to drive," VW insisted.

    Earlier, the German authorities tightened the screws on the embattled carmaker, saying it would oversee the large-scale recall across the country.

    "We are going to issue the order" to recall 2.4 million vehicles, a spokesman for the KBA or federal transport authority told AFP.

    And to make sure that order is carried out, the KBA would oversee the operation, he added.
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    Empire Fed Misses Again As New Orders Collapse To 5 Year Lows

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    After collapsing in August and unable to get up in September, October's Empire Fed bounced very modestly from -14.67 to -11.36 (but missed expectations for the 7th month of the last 8). This is the first time since 2009 that Empire Fed has printed below -10 3 months in a row putting The US firmly in recession territory, the underlying components were ugly with New orders crashing at the fastest pace since Nov 2010. Employees tumbled (as did inventories, although the plunge slowed) withprices received plumbing new cycle lows. In other words, total disaster... time to hike rates.Image title


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    EL Nino to aid nickel, bauxite, tin supplies; cut copper

    An El Nino weather pattern that is expected to be the strongest in nearly 20 years looks set to hit copper mining over the coming months, but should boost production of bauxite, nickel ore and tin in 2016, industry sources said.

    The weather phenomenon leads to hotter sea temperatures in the west Pacific Ocean, which means more rain falls on South America and less in Australia and South East Asia.

    A shorter monsoon in Indonesia the Philippines and Malaysia can help miners produce more tin, nickel and bauxite - key materials for the construction, transport and electronics industries.

    "Dry weather is a good time to mine, because most of our production is off-shore and also the weather is calmer," Agung Nugroho, corporate secretary at Indonesian tin producer, PT Timah told Reuters.

    Indonesia is the world's biggest exporter of the metal, which is seen in a balanced market this year. Production often dips due to heavy rains in December and January.

    In Malaysia, a shorter rainy season could boost bauxite production by anything between 10-20 percent, a geologist at a miner in Kuantan, in Pahang state, said. Malaysia is the second-biggest supplier to China of the ore used to make aluminium.

    Philippine nickel miners are also betting drier weather will let them mine until year end, while Australia's iron ore and coal exports are less likely to be disrupted by cyclones in the upcoming cyclone season.

    While a strong El Nino helps the minig of some metals, the opposite is true for copper as too little rain in Asia and too much in South America crimps supplies.

    Ok Tedi Mining's copper mine in Papua New Guinea has already been forced to shut after a drought cut off river transit links, while Freeport-McMoRan blamed El Nino as it cut its 2015 forecast for copper concentrate sales from Indonesia as less water impacted its milling operations.

    Meanwhile, mining operations in Chile, the world's top producer, remain vulnerable to disruption after heavy rains this year cut power and flooded mine shafts.

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    BHP debt pricing follows CDS market: Glencore, traders read through is nasty.

    Diversified major BHP Billiton has priced $3.25-billion of hybrid notes in the US dollar market, a further €2-billion of subordinated fixed-rate reset notes in the euro market and £600-million of subordinated fixed-rate reset notes in the sterling market. 

    The US dollar priced notes would be issued in two tranches, with settlement to occur on September 19, subject to the customary closing conditions. The euro notes would also be issued in two tranches, while the sterling notes would be issued separately on October 22. 

    The proceeds from the placements would be used for general corporate purposes, which BHP said could include a repayment of the company’s existing debt.

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    Iran Weapons Probe End Sets Stage for Nuclear Deal to Begin

    United Nations investigators are set on Thursday to end their probe into Iran’s nuclear past, taking the next step toward the lifting of oil and financial sanctions imposed on the Islamic Republic.

    International Atomic Energy Agency monitors have until Oct. 15 to collect information and question Iranian authorities about possible military dimensions of past nuclear activities, according to a July 14 agreement between Iran and the IAEA. Inspectors will then have until Dec. 15 to draft and present a final assessment of their inquiry.

    Iran’s nuclear work has been the focus of IAEA scrutiny since February 2003, when Iranian officials told inspectors visiting Tehran of their plans to begin enriching uranium on an industrial scale. Subsequent discoveries that Iran had secretly procured nuclear materials and technologies led to years of mistrust. In May 2008 and again in November 2011, the IAEA publicly disclosed its suspicions about Iran’s activities.

    Concluding the IAEA investigation will set the stage for the broader deal between Iran and world powers to enter into force on Oct. 18, so-called “Adoption Day,” when both sides begin implementing their commitments. The U.S. and Europe have pledged to draft legislation lifting financial and energy sanctions.

    In Iran, engineers and technicians will have to begin mothballing centrifuges at the Natanz and Fordo enrichment facilities as well as retrofitting a heavy-water reactor in Arak. They’ll also need to reduce their stockpile of enriched uranium -- the core material needed to generate nuclear power and weapons -- by more than 95 percent before sanctions relief takes effect.
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    Japan, Iran agree on investment pact after sanctions end

    Japan and Iran have reached agreement on an investment accord, which may give a boost to Japanese investments into the Islamic Republic once sanctions are lifted as early as next year, the countries' foreign ministers said in a statement.

    Japan is keen to boost ties with Iran and invest in resource projects there, as well as increase crude imports from the Middle Eastern country.

    Japan's crude imports from Iran plunged more than 40 percent from 2011 levels before tough Western sanctions were introduced in 2012 over Tehran's disputed nuclear programme.

    Foreign business delegations from Italy, France and others have flocked to Tehran ahead of the expected opening of markets in the oil-rich nation of 80 million people.

    Japanese foreign minister Fumio Kishida reached an agreement on the investment pact during a meeting with the Iranian counterpart Mohammad Javad Zarif in Tehran on Monday.

    "Both sides affirmed that further efforts will be made for the earliest possible conclusion and entry into force," the statement from the ministers said.

    The Japanese government wants the agreement to come into force around the middle of next year, Japanese media reported.

    Japan's top oil and gas explorer Inpex Corp, which in 2010 was forced to give up a stake in Iran's Azadegan oil field because of the sanctions, was among dozens of companies that visited Iran in August.

    Iran's chief negotiator for new oil contacts said last week the country would introduce more than 50 exploration and production projects to investors in the near future.
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    China's Tianjin to relocate chemicals firms after blasts

    Hazardous chemical companies in the Chinese port city of Tianjin will be moved to an industrial zone far from the site of deadly warehouse explosions in August in the city's development area, state media reported on Wednesday.

    The frequency of industrial accidents, and the explosions that killed more than 160 people in Tianjin's Binhai New Area in August, have raised questions about safety standards following three decades of breakneck economic growth in China.

    Firms handling dangerous chemicals will be relocated to the Nangang Industrial Zone about 30 kilometres (19 miles) from the blast site and at least 10 kilometres from the nearest residential area, the official Xinhua news agency said, citing local officials.

    Nangang aims to become a "world-class port and base for the heavy chemical industry", Xinhua said.

    "A third-party organisation will be authorised to enact and release evaluation reports on the environment, safety and ecology," the news agency said without giving further details.

    Tianjin officials came under criticism in the wake of the blasts, which flattened part of one of the world's busiest ports.

    Hundreds of residents had protested, demanding compensation for apartment buildings that were closer to the warehouse than allowed by Chinese regulations on the storage of dangerous materials.

    China's state prosecutor has said an investigation of the blasts found officials from a range of agencies, including Tianjin's transport, land resources, work safety and customs offices, had been irresponsible, negligent and lax in the supervision.

    Chemical facilities explosions are relatively common in China and blasts have killed people since the Tianjin disaster, which spurred nationwide shutdowns and safety checks.

    A blast occurred at a Tianjin alcohol materials warehouse on Monday, although no casualties were initially reported.

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    China Sept PPI down 5.9pct on year

    China's Producer Price Index (PPI), which measures inflation at wholesale level, dropped 5.9% year on year and down 0.4% month on month in September, the National Bureau of Statistics (NBS) said on October 14.

    It was the 43rd straight year-on-year decline, due to subduing demand from downstream sectors.

    Factory prices of production materials declined 6.8% year on year and down 0.6% from August, the NBS said.

    The price of coal mining and washing industry fell 15.4% on year and down 1 % on month, while the price of oil and natural gas mining industry decreased 40.6% on year and down 7.3% on month, it said.

    Besides, prices of ferrous metal industry dropped 19.9% from the previous year and down 1.1% from August, data showed.

    Over January-September, PPI dropped 5% on average from the previous year, and factory prices of production materials decreased 5.9% on year.

    Of this, the average price of coal mining and washing industry fell 14.1% on year; while the price of oil and natural gas mining industry decreased 37.2% on year; price of ferrous metal industry dropped 21% from the previous year, data showed.

    The data came along with the release of the Consumer Price Index (CPI), which rose 1.6% the year prior and up 0.1% from the month before in September.

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    China Property Market: post golden week sales disappoint.

    September is traditionally regarded as a peak season for real estate sales on the mainland. But Evergrande Real Estate reported a 35.4 per cent month-on-month decline in sales to 1.42 million square metres, down from the 2.2 million square metres it sold in August.

    China Vanke reported that its contracted sales in September amounted to 1.84 million square metres in gross floor area terms, up just 7.3 per cent from August’s 1.72 million square metres.

    “This is because developers reaped strong sales in the second quarter,” Hong said.

    The number of new homes sold in Shenzhen between September 1 and September 29 fell 32 per cent month on month to 3,849, according to official data. In Beijing, home sales in September fell 30 per cent month on month, according to Beijing-based property agent Yahao.

    Carlby Xie, director of research at Colliers China, said that due to limited supply, the outlook for housing markets in first-tier cities remained positive, but he was concerned about the situation in smaller cities which still had high levels of inventory.

    Some analysts expect better in the next two months.

    “We believe satisfactory sales in October and November, on the back of more launches by developers and more favourable policies from the government, will be the next positive catalysts for the China property sector,” Barclays property analyst Alvin Wong said in a report released on Thursday.

    SouFun’s 100-city price index rose 0.28 per cent month on month in September.

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    Iran lawmakers vote to implement nuclear deal

    Iran’s parliament voted Tuesday to support implementing a landmark nuclear deal struck with world powers despite hard-line attempts to derail the bill, suggesting the historic accord will be carried out.

    The bill will be reviewed by Iran’s 12-member Guardian Council, a group of senior clerics who could return it to lawmakers for further discussion. However, Iran’s Supreme Leader Ayatollah Ali Khamenei, who has the final say on key policies, has said it is up to the 290-seat parliament to approve or reject the deal.

    Signaling the nuclear deal’s likely success, a spokesman for moderate President Hassan Rouhani’s administration welcomed the parliament’s vote and called it a “historic decision.”

    “Members of parliament made a well-considered decision today showing they have a good understanding of the country’s situation,” Mohammad Bagher Nobakht said. “We hope to see acceleration in progress and development of the country from now on.”

    The European Union’s foreign policy chief Federica Mogherini, who helped facilitate the nuclear talks, also praised the vote as “good news” in a message on Twitter.

    In the parliamentary session carried live by state radio, 161 lawmakers voted for implementing the nuclear deal, while 59 voted against it and 13 abstained. Another 17 did not vote at all, while 40 lawmakers did not attend the session.

    A preliminary parliamentary vote Sunday saw 139 lawmakers out of the 253 present support the outline of the bill. But despite getting more support Tuesday, hard-liners still tried to disrupt the parliament’s session, shouting that Khamenei himself did not support the bill while trying to raise numerous proposals on its details.

    “This decision has no link to the leader!” shouted Mahdi Kouchakzadeh, a hard-line lawmaker who rushed toward the front of parliament to yell at speaker Ali Larijani. “It is a decision by Larijani and we oppose it!”

    The semi-official Fars news agency reported that Ali Aghar Zarei, another hard-line lawmaker, broke down weeping after the vote. Foreign Minister Mohammad Javad Zarif, who led Iran’s nuclear negotiation team, left the session when it grew tense, the state-run IRNA news agency said.
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    Toyota improves Prius fuel efficiency in bid to boost sales

    Toyota Motor Corp said on Tuesday its new Prius hybrid would be a fifth more fuel efficient than its predecessor, an upgrade the automaker hopes will boost flagging sales of the environmentally friendly model amid a slump in gasoline prices.

    The new Prius, which will be released in Japan in December before being launched overseas, has a listed mileage of roughly 40 km per litre (94 mpg), an improvement from the current version's 32.6 km per litre, the company said.

    The launch, however, comes as petrol prices in the biggest market for the Prius - the United States - are at their lowest in about a decade, pushing consumers to trade in hybrids and electric vehicles in favor of sports utility vehicles.

    "When you look at it globally, they haven't taken off as much, but we are looking to increase their profile as an environmentally sound option," Chief Engineer Koji Toyoshima told reporters, referring to the model.

    According to the latest available figures, August Prius sales in the United States fell 24 percent from the same month a year earlier to 17,757 cars. Last year, U.S. Prius sales totaled 207,372 vehicles.

    The Prius may get a boost from the emissions scandal engulfing competitor Volkswagen's, diesel cars from drivers seeking alternate, fuel-efficient models, analysts say.

    "The timing for Toyota in terms of the VW diesel scandal is probably good at least in terms of consumers who are concerned either from the pollution standpoint, or if the favourable tax treatment in euro for diesel goes away," CLSA senior research analyst Christopher Richter said.

    Toyota dominates the gasoline-hybrid car market, manufacturing 8 million of the more than 9 million gasoline-fuelled vehicles on the road globally. Roughly 4 million of those are Priuses.

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    MH17 shot down by a Russian made missile

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    China Growth in Focus as Exports and Imports Fall

    China’s exports and imports fell in September as global demand remained weak, signaling that the world’s second-largest economy continues to struggle into the end of the year.

    Exports dropped less than some economists had expected. Still, they said the data offered a further indication that China’s third-quarter growth figures set for release next week will likely fall below Beijing’s target of about 7% for the whole year.

    “Exports in September look a little better than expectations,” said HSBC economist Ma Xiaoping, adding that year-end trade figures tend to pick up due to Christmas shipments. “But if you factor in seasonal factors, I don’t see much improvement in global demand,” she added.

    According to the General Administration of Customs, Chinese exports fell 3.7% in September from a year earlier in U.S. dollar terms following a 5.5% drop in August. Imports in September fell 20.4% from a year earlier, compared with a 13.8% decrease in August, the customs agency said Tuesday.

    The country’s trade surplus increased to $60.3 billion in September from $60.2 billion in August, the agency said.

    China’s exports were significantly better than in neighboring Taiwan and South Korea, both of which weathered a sharp export drop in September, signaling that China is holding its own in a weak market, economists said. “This shows the competitiveness of Chinese exports,” said Mizuho economist Shen Jianguang.

    Huang Songping, a spokesman with the General Administration of Customs, said in a briefing that China’s exports are expected to return to growth in the fourth quarter after falling in the second and third quarters. The decline in Chinese imports is likely to narrow in the final quarter, Mr. Huang added, citing a raft of measures rolled out by Beijing in recent weeks, including easier procedures and reduced taxes aimed at improving trade.

    Chinese exports, once a primary growth engine for the economy, have faced more headwinds from higher labor and land costs and the rise of low-end competitors in Southeast Asia.

    Economists said exports last month would probably have been stronger if it weren’t for an explosion at the northern port of Tianjinin August and the temporary closing of factories ahead of a September military parade in Beijing aimed at reducing air pollution.

    China is likely to miss its 2015 foreign trade target of 6% year-over-year growth, down from the 7.5% growth targets it set in 2014 and 8% in 2013, both of which it failed to reach, economists said.

    Tuesday’s export data are the latest in a parade of weak economic numbers out of China in recent weeks. The nation’s official purchasing managers index contracted in September for the second month in a row, foreign-exchange reserves fell by more than $40 billion last month and the real-estate industry continues to struggle.
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    There is a new indicator for economic activity in China - and it doesn't look good

    The traditional drivers of China's economy are slowing, and it is showing up in the country's employment market.

    Quanton Data, a firm which focuses on structuring big data and identifying data sets that could help investors make money, has put together a database of job postings from over a hundred different job boards serving China.

    The data goes back four years.

    According to a September report, manufacturing job postings in the country are crashing.

    "Our Manufacturing Job Posting Index continues its multi-year decline reaching a new low in August, mainly driven by continued strong downward trends in Energy and Materials postings."

    Consumer staples postings have also dropped, falling in September for the seventh straight month.

    The index echoes evidence elsewhere that the traditional drivers of China's economy - manufacturing and property - are slowing fast.

    Alcoa on Thursday downgraded its expectations for all but one of its major segments in the world's second-largest economy.  Caterpillar, a global bellwether for industrial investment and development, announced layoffs and a reduction in its expectations for equipment sales, citing a "a convergence of challenging marketplace conditions."

    UK-based JCB, which competes with Caterpillar, said it would cut jobs after the market in China had dropped by almost half in the first six months of the year.

    Here are the key findings from Quanton Data's September report.

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    Commodity: Inventory puke?

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    What South Africa's Ruling Party Decided at its Policy Forum

    South Africa’s ruling African National Congress agreed on measures to shore up the economy, address power shortages and improve governance at a three-day policy forum that ended Sunday near Johannesburg.

    Here are some of the party’s key decisions:

    *State power utility Eskom Holdings SOC Ltd. should revamp aging power stations in partnership with private industry, while a detailed cost-benefit analysis should be undertaken into the viability of building new nuclear plants.

    *Manufacturing incentives should be reviewed to ensure they support jobs. State backing should be given to the steel and agricultural industries.

    *Laws regulating the oil and gas industry should be finalized to provide certainty to investors.

    * A standoff with the mining industry over black-empowerment requirements must be urgently resolved.

    * Consideration should be given toward implementing a wealth tax.

    * The budget should focus on investment rather than consumption expenditure.

    * A pact should be concluded with the financial services industry to secure funding for infrastructure projects on favorable terms.

    * A minimum wage should be implemented once a study into an appropriate level has been implemented.

    * South Africa should review its membership of the International Criminal Court.

    * The government should press ahead with laws that will ensure all private security companies are locally owned.

    * State workers should be periodically rotated to reduce the possibility of them forming corrupt relationships.

    * Lifestyle audits should be undertaken for state workers.

    * An agency should be established to vet all strategic state workers and officials at state-owned companies.

    * The implementation of a national health insurance plan should be accelerated and the state should ensure the necessary financing is made available.
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    Glencore halts trade ahead of asset sale

    Mining and trading giant Glencore Plc said on Monday it would announce the proposed sale of some assets in Australia and Chile, as it sought a trading halt for its Hong Kong-listed shares, in the latest move to slash its debt pile.

    Asset sales are part of a broad plan Glencore outlined last month to raise money to cut its $30 billion in net debt by about a third as it looks to weather a slump in commodity prices and revive its shares, which have dropped 57 percent this year.

    The company has said it is looking to sell a minority stake in its agricultural business, and last month sold a Brazilian nickel project for $8 million.

    In Chile, the company owns a 44-percent stake in the Collahuasi mine, a two-thirds stake in a hydro-power project called Energia Austral, the Altonorte copper smelter and the Punitaqui copper mine and concentrator.

    In Australia it owns an array of copper, coal, nickel, zinc and port assets as well as farms.

    Glencore's Australian spokesman had no immediate comment on what assets were to be sold.

    To shore up commodity markets, the company has cut production of copper, coal and zinc. Last Friday, zinc on the London Metal Exchange CMZN3 surged 10 percent after Glencore said it would slash its output by a third.
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    Commodity Bear Market: Known

    But this is one of the great bear markets. It may seem less important because few people are directly invested in commodities. But in terms of people's daily lives, commodity prices are very important indeed. The Arab spring started as a response to soaring food prices in North Africa. Rising and falling prices act as a tax rise/cut for western consumers. For commodity producing nations, falling prices mean loss export earnings, lost jobs and currency crises.

    The key question of the moment is whether the fall in commodity prices falls into the good news (tax cut) or bad news (weakening global economy) category. Inevitably, the debate focuses around China, given that it was soaring Chinese demand for raw materials that was perceived to drive the great bull market last decade. We wrote recently about the way that the Chinese market was changing, as the country has less need for more infrastructure, and thus for iron ore, steel, copper etc. The Chinese have also been moving to a model in which they create more manufactured goods from scratch, rather than assemble parts made elsewhere; this may explain why other Asian exports have been so weak.

    One can simply see the commodity price decline as the global economy doing its job, in the form of a super-cycle. Rising prices bring forward new sources of supply as production at marginal sites becomes profitable; they also cause consumers to economise on raw material use. This brings prices down, so production falls sharply, allowing the whole cycle to begin again. Beause it takes a lot of time to build new mines, develop oil fields etc, this whole process takes more than a decade.

    Nevertheless, there seem to be broader signs of concern about the global economy which the commodity price decline seems to reinforce. Composite purchasing managers' indices for the manufacturing sector in the emerging market countries have dipped slightly below 50, indicating a decline in output. Figures show that unemployment in emerging markets has risen from 5.2% to 5.7% since the start of the year. The IMF cut its global growth forecastfor this year to 3.3% from 3.5%, largely on American first half weakness. Hopes that the oil price fall in late 2014 would act as a big surge to western demand have only been partly fulfilled; auto sales may be running at the best rate in a decade but retail sales were up only 1.4% year-on-year in June.

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    Russia running low on funds.


    MOSCOW, Oct. 9 (UPI) -- Stumbling under the strain of low crude oil prices, the Russian economy will run out of reserve funds as early as 2017, the deputy finance minister said.

    Russian Deputy Finance Minister Tatiana Nesterenko said private sector investments are all-but out of the question when access to foreign markets is limited.

    "Reserve funds are depleting. We believe reserve funds may end at such rates of their spending," she said. "We will use up resources received when oil prices were high by 2017-18."

    The Russian military intervention in the Syrian civil war on the side of Syrian President Bashar al-Assad put positive pressure on crude oil prices. White House Press Secretary Josh Earnest said last week Russia was responding from a position of weakness brought on by the dual economic strains of lower crude oil prices and tighter sanctions.

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    Oil and Gas

    Sevan Marine: corporate investigation report handed over to Norwegian authorities

    Sevan Has decided to hand investigation report over to the Norwegian authority for investigation and prosecution of economic and environmental crime

    Based on Brazilian press articles indicating irregularities involving Sevan in the period 2005-2008, board initiated independent corporate investigation by Advokatfirmaet Selmer DA (Selmer)

    Selmer's main conclusion is that it is more likely than not, that illegal conduct in the form of improper payments to obtain business occurred when Petrobras awarded contracts to Sevan in 2005-2008 regarding Sevan Piranema, Sevan Driller and Sevan Brasil

    Board of Directors is assessing further actions and implications of the findings contained in the investigation.
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    Carrizo Oil & Gas Announces Estimated Third Quarter Production and share sale

    Estimated third quarter crude oil production of 23,573 Bbls/d, 4% above the high-end of the guidance range
    Raising 2015 crude oil production growth target to 21%
    Added 8,000 Bbls/d of swaps for 2016 at a weighted average price of approximately $60/Bbl

    Production volumes during the third quarter of 2015 are estimated to be 35,948 Boe/d. This represents an increase of 7% versus the third quarter of 2014 and exceeds the high-end of the Company's guidance range of 33,133-34,300 Boe/d. Oil production during the third quarter of 2015 is estimated to be 23,573 Bbls/d, an increase of 18% versus the third quarter of 2014; natural gas and NGL production are estimated at 51,710 Mcf/d and 3,757 Bbls/d, respectively, for the third quarter of 2015.

    Given the continued strong performance from the Company's primary operating areas, Carrizo is increasing its 2015 oil production guidance to 22,750-22,850 Bbls/d from 22,350-22,500 Bbls/d. Using the midpoint of this range, the Company's 2015 oil production growth guidance increases to 21% from 19% previously. For natural gas and NGLs, the Company is increasing its 2015 guidance to 56-57 MMcf/d and 3,500-3,600 Bbls/d, respectively, from 54-56 MMcf/d and 3,250-3,350 Bbls/d.

    Since June 30, 2015, the Company has added additional crude oil hedges covering calendar 2016 volumes. For 2016, Carrizo now has hedges covering approximately 13,500 Bbls/d of crude oil (comprised of 8,000 Bbls/d of swaps at an average price of $60.03/Bbl and 5,492 Bbls/d of collars with a weighted average floor price of $50.97/Bbl and a weighted average ceiling price of $74.73/Bbl). Additionally, Carrizo will continue to get the benefit from the offsetting hedge transactions it entered into during the first quarter of 2015; these transactions locked in an additional $44.8 million of cash flow that will be realized during 2016.

    Carrizo Oil & Gas, Inc.announced today that it has priced an underwritten public offering of 5,500,000 shares of its common stock, which was upsized from the previously announced offering of 5,300,000 shares. Carrizo has granted the underwriters an option to purchase up to 825,000 additional shares. The total gross proceeds of the offering (before underwriters' discounts and commissions and estimated offering expenses) will be approximately $211.8 million. Carrizo intends to use the net proceeds from this offering, and any proceeds from the exercise of the underwriters' option to purchase additional shares, to repay borrowings under its revolving credit facility, with the remainder for general corporate purposes, including future potential acquisitions with a primary focus in the Permian Basin.
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    Occidental to exit North Dakota's oil fields in sale to private equity fund

    Occidental Petroleum Corp, the fourth-largest U.S. oil producer, has agreed to sell all of its North Dakota shale oil acreage and assets to private equity fund Lime Rock Resources in a deal worth around $500 million, according to sources familiar with the matter.

    The sale, which marks the first exit of this downturn by a major oil company from the Bakken shale formation, encompasses all of Oxy's more than 300,000 acres in the state, including a 21,000 square-foot regional office built just three years ago.

    Lime Rock, which already operates in North Dakota, is buying the assets as the oil industry contends with the worst crude price crash in more than six years, a drop the fund used to its advantage.

    As recently as last fall, Wall Street had expected Oxy's Bakken assets to sell for more than $3 billion. The sharp drop in the deal's value represents the most-significant pullback in valuation yet in the second-largest U.S. oil producing state.

    Lime Rock is requiring all of Oxy's North Dakota employees to re-apply for their jobs, according to one of the sources.

    Lime Rock and Oxy, both of which are based in Houston, declined to comment.
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    Schlumberger: market recovery to take longer, hints at more cost cuts

    Schlumberger Ltd, the world's No.1 oilfield services provider, suggested that it may have to reduce costs further and cut more jobs as it expects any rebound in drilling activity to now take longer than expected.

    Even if crude prices improve next year, weak cash flows would curtail the ability of oil and gas companies to increase spending on exploration and production, Schlumberger Chief Executive Paal Kibsgaard said in a statement.

    "In light of conservative customer budgets for next year, we are therefore entering another period during which we will continually adjust resources in line with activity," Kibsgaard said on Thursday.

    Kibsgaard said the oil market is also weighed down by concerns of slowing Chinese demand and additional supply from Iran.

    Schlumberger said spending cuts by companies have been "dramatic", but it did not say how much it expects oil and gas companies to cut spending in North America and internationally - a forecast it issued in the previous two quarters.

    Its last forecast, issued in July, was for a drop in spending of more than 35 percent in North America and more than 15 percent outside the region.

    "They know that the next two quarters are going to be very choppy and very tough so they want to make sure they are aligned for that," Evercore ISI analyst James West said.

    "When they said they are going to manage their operations, it's a good indication that headcount reductions will continue."

    Schlumberger kicks off the earnings for oilfield services providers and its comments are closely watched for a glimpse into industry trends.

    Schlumberger has already cut 20,000 jobs this year and scaled back spending in response to weak crude prices, moves that helped its third-quarter profit marginally beat analysts' average estimate.

    Net income attributable to Schlumberger nearly halved to $989 million, or 78 cents per share.

    Total revenue fell 33 percent to $8.47 billion, including a 47 percent drop in North America and an about 27 percent decline outside.

    Analysts were expecting a profit of 77 cents per share, according to Thomson Reuters I/B/E/S.

    Schlumberger said in August it would buy equipment maker Cameron International Corp for $14.8 billion to bolster its pricing capability, and on Thursday said it would seek more acquisitions.

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    US Domestic oil production continues falling

                                         Last Week       Week Ago         Last Year

    Domestic Production....... 9,096                9,172               8,951
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    Summary of Weekly Petroleum Data for the Week Ending October 9, 2015

    U.S. crude oil refinery inputs averaged about 15.3 million barrels per day during the week ending October 9, 2015, 292,000 barrels per day less than the previous week’s average. Refineries operated at 86.0% of their operable capacity last week. Gasoline production increased last week, averaging over 9.6 million barrels per day. Distillate fuel production decreased last week, averaging over 4.6 million barrels per day.

    U.S. crude oil imports averaged over 7.3 million barrels per day last week, up by 247,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.3 million barrels per day, 1.7% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 719,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.6 million barrels from the previous week. At 468.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 2.6 million barrels last week, but are above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 1.5 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 3.3 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.5 million barrels per day, up by 1.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.1 million barrels per day, up by 3.4% from the same period last year. Distillate fuel product supplied averaged 4.0 million barrels per day over the last four weeks, up by 5.4% from the same period last year. Jet fuel product supplied is up 5.5% compared to the same four-week period last year.
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    Russia says deliberate oil output cuts will not support prices

    Russian Deputy Energy Minister Anatoly Yanovsky said on Thursday that a deliberate oil production decrease by the country would not support prices, responding to calls to reduce output.

    His comments indicated that Russia was still unwilling to cut oil output as it argued that its oil wells, located mostly in harsh climate of Siberia, will not be easy to restart once they are mothballed.

    Some leading oil producers, notably Venezuela, have called on Moscow to cut oil output in order to support prices, which have more than halved since peaking out in June 2014.

    "I don't think that some artificial production cuts will have a significant impact on (price) change," Yanovsky said.

    Russia is also reluctant to decrease extraction of oil as its rivalry for global market share with the world's other leading producer of crude, Saudi Arabia, has heated up after supplies of Middle Eastern oil have increased in eastern Europe, Moscow's traditional market.

    Yanovsky's comments, made just before next week's meeting of Russia and other non-OPEC envoys with the officials from the Organization of the Petroleum Exporting Countries, have pushed the price of oil down.
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    Canacol Energy announces results of Clarinete 2ST well test

    Canacol Energy Ltd. is pleased to announce that Clarinete 2ST, the first appraisal well drilled in its recently discovered Clarinete gas field on the VIM 5 Exploration and Production Contract, has tested at a final gross rate of 25.6 million standard cubic feet per day (4,491 barrels of oil equivalent) of dry gas with no water from the Cienaga de Oro reservoir, and at a final gross rate of 4.7 mmscfpd (825 boepd) of dry gas with 1 barrel of water from the overlying Tubara sandstone reservoir. Canacol, through its wholly owned subsidiary CNE Oil & Gas S.A.S., holds a 100% operated interest in the VIM 5 E&P contract.

    The Clarinete-2 well was spud on August 2, 2015, and had to be sidetracked on August 31, 2015 after becoming mechanically stuck in the shallow Porquero shales at a depth of approximately 4,300 feet, not having reached the primary Cienaga de Oro reservoir target at 5,967 feet. The Clarinete-2 ST reached total depth of 7,842 feet on September 16, 2015. The well encountered 127 feet of total net gas pay with an average porosity of 23% within the same two main reservoir intervals of the Cienaga de Oro sandstone that tested a combined rate of approximately 44 mmscfpd in the Clarinete-1 discovery well.
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    Gate LNG’s throughput almost doubles in first nine months

    The Gate LNG import terminal in Rotterdam was quite busy in the January-September period with the LNG throughput almost doubling.

    Overall, LNG throughput (incoming and outgoing) at the terminal was 1.75 million metric tons in the mentioned period, a rise of 84 percent compared to 2014, according to data released by the Port of Rotterdam.

    Gate is handling about one liquefied natural gas carrier per week since 38 ships called at the first Dutch LNG terminal during the first nine months of this year.

    Out of that, there were “16 unloads, 11 large reloads and 11 small reloads,” by the end of September, Stefaan Adriaens, Commercial Manager of the Gate terminal told recently to LNG World News

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    U.S., Alaska end quest for damages against Exxon over 1989 spill

    U.S. and Alaskan authorities have ended their efforts to seek additional damages from Exxon Mobil Corp over the 1989 Exxon Valdez oil spill and the subsequent settlement, the Department of Justice said on Thursday.

    The department said in a statement that it is "bringing to a close the federal and state judicial actions" against the company and opting not to recover more damages under the reopener provision of the 1991 settlement following the spill.

    Alaska Attorney General Craig Richards said in the statement that although officials were not pursuing the additional damages, authorities will consider alternatives for dealing with lingering oil sites.
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    First GLNG cargo delivered to South Korea?

    The first cargo of liquefied natural gas from the Santos-operated US$18.5 billion GLNG project in Australia has been delivered to South Korea’s Kogas, according to a report by Reuters.

    The news agency cited Total’s CEO Patrick Pouyanne as saying this on Thursday without revealing any further information.

    However, the MISC-operated 152,300 cbm Seri Bakti which arrived on September 28 at the GLNG plant to pick up the first cargo destined for Kogas is still docked at the terminal’s jetty, shipping data shows.

    Santos did not respond to an email by LNG World News seeking comment regarding the matter by the time this article was published.

    The 7.8 mtpa LNG plant on Curtis Island off Gladstone started producing the chilled gas from Train 1 in September. The second train is expected to be ready for start-up by the end of the year.

    Australia’s Santos has a 30% interest in GLNG. Other co-venturers include Petronas (27.5%), Total (27.5%) and Kogas (15%).

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    Mexico to import 9 Bcf/d of natural gas from US under five-year plan: ministry

    Mexico aims to import 9 Bcf/d of natural gas from the US under a five-year plan to build gas pipelines and infrastructure, Mexico's Energy Ministry said Wednesday.

    Currently, Mexico imports about 1.5 Bcf/d from the US.

    The five-year plan, to run from 2015-2019, includes a new compression station in the northern state of Chihuahua and 13 other projects, many of which are already being tendered or under construction.

    Investment was calculated by Energy Minister Pedro Joaquin Coldwell at $11 billion through 2019.

    So far all the tenders are being organized by the two state companies of the sector, the Federal Electricity Commission and the oil company Pemex. The recently founded Cenagas will organize them beginning from next year. Cenagas is the autonomous state regulator for natural gas, under the terms of last year's energy reform.

    The Ramones pipeline, already under construction by Pemex from the US border to the north Mexican state of Nuevo Leon, is to be extended by 855 km to the southern Gulf state of Veracruz, Joaquin Coldwell said at an event to present the five-year plan.

    By 2018, when the current Mexican administration ends, Mexico will build at least 5,000 km of additional pipeline, an increase of 84% on the present network, representing an investment of $10 billion, Joaquin Coldwell added.

    His deputy, Lourdes Melgar, recalled the crisis years of 2012 and 2013, when demand for natural gas in Mexico exceeded far more than the available supply from the US and the nation's LNG reception terminals.

    Currently, more than 3,000 km of pipeline is under construction to help remedy the shortages, she said, and investment so far amounts to $2 billion.
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    Repsol to sell assets and cuts spending

    Repsol said it had achieved “transformative growth” following its $8.3billion acquisition of North Sea operator Talisman, but would be focusing on efficiency and resilience as it laid out its strategic plan for 2016-2020.

    The group presented its plan today just months after buying Canadian producer Talisman in May, a deal that raised its international profile and boosted output but also drastically increased its debt.

    The Spanish oil major has said its net profit could fall by up to 22% in 2015, hit by low crude prices and a loss of value of some of its North-American assets which will trigger a big impairment charge in the third quarter.

    It aims to sell more than €6bn of assets and reduce capital spending over next five years as part of the new strategy which will seek to protect its investment grade rating and dividend from the slump in prices in the past year

    Repsol said it saw net profit reaching a range of between 1.25 billion and 1.5 billion euros ($1.43-1.72 billion) at the end of 2015, down from the 1.61 billion euros in 2014.

    Its net profit cleaned of inventory effects is seen at between 1.6 billion and 1.8 billion euros, down from 1.7 billion euros in 2014.

    The company said it would book a provision of 450million euros in the third quarter from impairments at its Gas & Power and Mississippian Lime units in the United States.

    The underlying business also showed signs of coming under increased pressure.

    Repsol is still aiming for a full-year increase of earnings before interest, tax, depreciation and amortisation (EBITDA) but it switched on Wednesday to a target cleaned of inventory effects, which is deemed easier to achieve in the current context of lower oil prices.

    The firm previously saw its 2015 EBITDA at between 5 billion and 5.5 billion euros, or an increase of up to 45 percent from 2014. It now sees its CCS EBITDA at between 5.2 billion and 5.45 billion euros, or an increase of up to 15 percent from 2014.

    Its production, while up in the third quarter at 651,000 barrels per day from 526,000 barrels per day in the previous three months, was also below a 680,000 barrels per day target announced at the time of the Talisman purchase.
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    Saudi Arabia targets Russia in battle for European oil market

    From global majors such as Shell and Total to more modest Polish energy firms, oil refiners in Europe are cutting their longstanding use of Russian crude in favour of Saudi grades as the world's top exporters fight for market share.

    Russia has for years been muscling in on Asian markets where Saudi Arabia was once the unchallenged dominant supplier. But now Riyadh is retaliating in Moscow's backyard of Europe with aggressive price discounting.

    This has nothing to do with Western sanctions imposed on Russia over Ukraine, which apply to energy industry equipment but not to oil or gas itself. Instead it is a commercial battle for customers as both exporters ramp up their output despite weak world oil prices.

    This is likely to complicate further a dialogue between Moscow and the OPEC exporters' group on tackling the global oil glut, with joint production cuts already looking elusive.

    Trading sources told Reuters that majors such as Exxon, Shell, Total and Eni have been all buying more Saudi oil for their refineries in Western Europe and the Mediterranean in the past few months at the expense of Russian oil.

    "I'm buying less and less Russian crude for my refineries in Europe simply because Saudi barrels are looking more attractive. It is a no brainer for me as Saudi crude is just cheaper," said a trading source with one major, who asked not to be named because he is not allowed to speak to the media.

    Riyadh traditionally focused on the U.S. and Asian markets, leaving Moscow as a major supplier to Europe, especially the eastern countries that were once part of the Soviet bloc.

    But Russia's most powerful oil executive, Rosneft chief Igor Sechin, said on Tuesday that Saudi Arabia had started supplying ex-communist Poland at "dumping" prices. Then on Wednesday, Russian Energy Minister Alexander Novak described the Saudi entry into eastern European markets was the "toughest competition".

    Trading sources said at least one cargo reached the Polish port of Gdansk in September and two more could come in October, to be processed by refiners PKN Orlen and Lotos.

    Two trading sources said Saudi Arabia was looking at storing crude in Gdansk so that it can supply eastern European customers more quickly, just as it has done for years for western European clients from ports in the Netherlands or Belgium.

    One trader said supplies from Gdansk could be sent to Germany to compete with Russian crude sent down the Soviet-built Druzhba (Friendship) pipeline.

    The Baltic state of Lithuania, once a Soviet republic, is also looking to diversify its energy supplies. Lithuanian energy minister Rokas Masiulis told Reuters on Wednesday that the country is in talks with U.S. liquefied natural gas company Cheniere Energy Inc over possible imports as it tries to cut its dependence on Russian supplier Gazprom.

    The battle may raise suspicions in Moscow that Riyadh is trying to punish the Kremlin for supporting Syrian President Bashar al-Assad, an enemy of Saudi Arabia, most recently with Russian air strikes on rebel groups.

    "The Saudis want to secure the market share before Iran comes back," said a trading source with an oil major.

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    API data shows U.S. stockpile building sharply

    Data from industry group the American Petroleum Institute on Wednesday showed that U.S. crude inventories rose by 9.4 million barrels in the week to Oct. 9 to 465.96 million, compared with analyst expectations for an increase of 2.8 million barrels.

    Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.4 million barrels, API said.

    But some analysts were optimistic on the long-term outlook for oil markets.

    "(Our) base case price scenario results in Brent prices reaching $85 per barrel by 2020, around $20 higher than the current 2020 futures strip of about $65 per barrel," Barclays said in a report.

    "What happens to oil market balances after 2016 depends critically on three main wildcards: a slowing China's impact on oil demand, the return of Iranian oil and the rate of mature field decline.".

    BMI Research, part of the Fitch ratings agency, said in a note that China's crude oil imports would continue to grow over the next five years at an average annual rate of 3.2 percent.

    "This will be a result of higher refinery run rates to produce gasoline and continued strategic stockpiling activity up to 2020, which will help to override macroeconomic headwinds to domestic crude demand," it said.

    Asian shares rose on Thursday and the dollar struggled near multi-week lows after weak U.S. economic data added to expectations that the Federal Reserve will delay hiking interest rates.

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    Wall Street Setting Aside More Cash to Cover Weakening Oil Loans

    Wall Street lenders that bankrolled the debt-fueled U.S. oil boom are setting aside more cash to cover potential energy losses as "lower for longer" takes its toll.

    Oil prices have declined 43 percent in the past year to $46.29 a barrel. JPMorgan Chase & Co. said Tuesday that it increased its loan loss reserves for oil and gas by $160 million in the third quarter. Bank of America Corp.’s at-risk loans increased 15 percent from a year ago due to the deteriorating finances of some of its oil and gas borrowers. And Wells Fargo & Co. reported that it reserved additional cash to cover potential losses in the energy sector.

    “That’s what we’re here for is to lend to clients, particularly in tough times,” JPMorgan Chief Executive Officer Jamie Dimon said during a conference call Tuesday discussing third-quarter financial results. “You can’t be a bank that every time something goes wrong you run away from your client.”

    After rebounding to $61 a barrel in June, crude prices tumbled 24 percent in the third quarter. Shale drillers have slashed spending, laid off thousands of workers and seen their credit ratingsdowngraded. Banks are in the middle of the second round of twice-yearly reassessments of oil and gas credit lines, and borrowing limits have been cut for companies including SM Energy Co., Oasis Petroleum Inc. and Emerald Oil Inc.

    Dimon said the bank stress-tested its loan portfolio to see what would happen if oil prices fell to $30 a barrel.

    “We think we’d have to put up another $500 million or $750 million in reserves, which is just not something we worry a lot about,” Dimon said.
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    October Bakken Rig Count

    According to the Department of Mineral Resources, there are now 67 active rigs in western North Dakota, down four from last month and seven from August.

    The all-time high was 218 rigs drilling in May of 2013.

    The price of sweet crude has recovered slightly and is at $35 per barrel Tuesday.

    That's up from $31.17 in September.

    In August, there were 13,016 active drilling wells, up from 12,965 in July.
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    Yale Study Concludes Fracking DOES NOT Contaminate Drinking Water

    The Sierra Club should start printing retractions (something they’ve been getting a lot of practice doing), because researchers from Yale University have concluded that hydraulic fracturing, or fracking, doesn’t contaminate drinking water!

    “There is no evidence of association with deeper brines or long-range migration of these compounds to the shallow aquifers” concludes the new study, which was published in the highly prestigious Proceedings of the National Academy of Science. The study, the largest of its kind, sampled 64 private water wells near fracking sites to determine if they could be contaminated by fracking fluids.

    “[The chemicals] are likely not a threat to human health,” said Brian Drollette, the study’s first author who is a chemical and environmental engineering graduate student.

    The Yale researchers found essentially no contamination in well water, and the amounts they did detect were hundreds or thousands of times smaller than can be detected by commercial labs.

    The Yale study also bolsters findings made by the Environmental Protection Agency earlier this year that “did not find that [fracking techniques] have led to widespread, systemic impacts on drinking water resources in the United States” from fracking.

    Read more:
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    TAG Oil reports reduction in forward guidance and reduced capital spending

    TAG Oil Ltd, is cutting its forward guidance and planned capital expenditures for the remainder of fiscal 2016 in response to the low commodity price environment, and due to a slower than expected ramp up of our workover program in the Taranaki Basin of New Zealand. TAG will focus on preserving capital, continuing with a reduced workover program and reducing costs.


    TAG is reducing its 2016 average production guidance down from 1,900 BOE/d to 1,400 BOE/d and expects to exit its fiscal 2016 year-end at approximately 1,400 BOE/d.
    TAG is reducing its 2016 forecast capital expenditures down from $23 million to approximately $13 million with $6 million already spent.
    Full year 2016 operating cash flow is expected to be approximately $13 million versus the $22 million forecast at the beginning of the year.
    TAG is now budgeting and running all of its economics based off of a US$45 per barrel Brent oil price for the remainder of the fiscal year.
    TAG will continue to focus on lower cost workovers, artificial lift optimization and re-perforations of certain intervals. To preserve capital, these programs have been prioritized over drilling new wells. Additional programs will include a water-flood pilot study.
    TAG expects to end fiscal 2016 with at least $15 million in cash and cash equivalents assuming US$45 per barrel Brent oil price for the remaining six months of operations.

    'We continue to maintain cash flow positive operations despite historically low oil prices. Driven by our operational expertise and strategic focus on cost containment and value creation, our current breakeven price for oil production remains at approximately US$38/BOE - well below the current industry average for similar conventional production.'
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    U.S. shale oil output to fall by most on record in November: EIA

    U.S. shale production is expected to fall the most on record in November, extending a nationwide output decline into its seventh consecutive month, according to a forecast from the U.S. Energy Information Administration.

    Total output is set to fall by more than 93,000 barrels per day (bpd) to 5.12 million bpd, according to the EIA's monthly drilling productivity report. That's the largest monthly cut forecast since data was available in 2007.

    Oil production from the Eagle Ford play in South Texas was expected to fall 71,000 bpd to 1.37 million bpd. Bakken oil output in North Dakota was expected to slide 23,000 bpd to 1.16 million bpd.

    Oil production from the Permian Basin of West Texas, which continues to buck the trend, was projected to rise 21,000 bpd to 2.03 million bpd.

    New well oil production per rig remained unchanged for the Bakken and Eagle Ford. It rose 2 bpd in the Permian, data show.

    Natural gas production in the major shale plays was expected to fall 294 million cubic feet per day (mmcfd) to 44.9 billion cubic feet per day (bcfd) in November from October.

    That would be the fifth expected monthly decline in a row for gas production from shale fields and would be the biggest decline since March 2014, according to EIA data. Despite the expected decline in November, overall production would still be up from the 42.8 bcfd shale output in November 2014.

    EIA forecast the biggest production declines would be in the Marcellus in Pennsylvania and West Virginia, down 215 mmcfd, and the Eagle Ford in South Texas, down 135 mmcfd.

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    Sinopec Gets Approval for $20 Billion West-East Gas Pipeline

    China Petrochemical Corp., Asia’s biggest refiner, received government approval to build a 8,400-kilometer (5,221-mile) pipeline network to connect gas fields in northwest China to southern and eastern provinces.

    The project from Xinjiang to Guangdong will have an artery and six regional links, the company, known as Sinopec Group, said in an e-mailed statement Wednesday. Investment in the pipeline will be about 130 billion yuan ($20 billion). The statement didn’t mention a construction timeframe.

    The network is designed to send gas produced from Sinopec Group’s Zhundong coal-to-gas project in Xinjiang to end users in populous eastern and southern provinces. It will also carry unconventional gas from coal-bed methane and shale gas projects in northwest China.

    “China’s National Development and Reform Commission has officially approved our project, ” Sinopec Group said in the statement. “The new pipeline will increase China’s natural gas supply and help meet central and eastern China’s increasing gas demands.” The NDRC is China’s top planning agency.

    Sinopec Group’s coal-to-gas project in Xinjiang can produce 8 billion cubic meters of gas a year, it said.
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    E.ON sells Norway oil and gas assets to Russian billionaire

    E.ON is selling its Norwegian oil and gas assets to Russian billionaire Mikhail Fridman in a deal worth $1.6 billion as Germany's biggest utility continues to shed assets under a restructuring plan.

    As part of its major overhaul, E.ON put its North Sea oil and gas exploration and production activities (E&P) under review, hoping to rake in proceeds from a business where it lacks the critical mass to compete with large oil companies.

    "The successful sale of our E&P business in Norway is a landmark transaction in the sector," Michael Sen, E.ON's Chief Financial Officer, said in a statement.

    Under its restructuring plan, E.ON will spin off its energy trading, oil and gas activities and most of its power generation next year into a new company called Uniper.

    Fridman's LetterOne fund emerged as the frontrunner to buy E.ON's Norwegian North Sea assets after the Russian was forced to sell his British North Sea assets as a result of Western sanctions over the Ukraine crisis.

    E.ON E&P Norge has stakes in 43 licences but most are exploration assets, only a handful are in production and none is operated by E.ON. Its main production fields include Njord, operated by Statoil and Skarv, operated by BP.

    Shares in E.ON turned positive after the sale news and were up 2.6 percent at 1111 GMT, leading the German blue-chip index higher.

    The purchase by LetterOne, whose energy fund is headed by former BP boss John Browne, signals a push by the Russian oligarch to expand his fund's oil and gas portfolio.

    "This acquisition in Norway is a perfect fit to our renewed business strategy," said Thomas Rappuhn, CEO of DEA Deutsche Erdoel AG, which LetterOne bought from E.ON's German peer RWE earlier this year.

    Rappuhn said the company would look for further acquisitions in Europe and North Africa.
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    Oil Slide Means `Almost Everything' for Sale as Deals Accelerate

    More than $200 billion worth of oil and natural gas assets are for sale globally as companies come under renewed financial pressure from the prolonged commodity price rout, according to IHS Inc.

    There are about 400 buying opportunities as of September, IHS Chief Upstream Strategist Bob Fryklund said in an interview. Deals will accelerate later this year and into 2016 as companies sell assets to meet debt requirements, he said. West Texas Intermediate crude has averaged about $51 a barrel this year, more than 40 percent below the five-year mean.

    Low prices have slashed profits and as of the second quarter aboutone-sixth of North American major independent crude and gas producers faced debt payments that are more than 20 percent of their revenue. Companies have announced $181.1 billion of oil and gas acquisitions this year, the most in more than a decade, compared with $167.1 billion the same period in 2014, data compiled by Bloomberg show.

    “Basically almost everything is for sale,” Fryklund said Oct. 8 in Tokyo. “Low cycles are when a lot of these companies can rebalance their portfolios. In theory, this is when you upgrade your existing portfolio.”

    Companies with strong balance sheets are seeking buying opportunities, said Fryklund, citing Perth, Australia-based Woodside Petroleum Ltd.’s $8 billion offer for explorer Oil Search Ltd. and Suncor Energy Ltd.’s $3.3 billion bid for Canadian Oil Sands Ltd. Both targets rejected initial offers.

    As of August, one out of every eight junk-rated oil companies was in danger of defaulting, according to Moody’s Corp. WTI plunged below $40 a barrel in August, to the lowest price in six years. The grade added 0.3 percent to $46.81 a barrel on the New York Mercantile Exchange at 11:36 a.m. in Tokyo.

    Next year the U.S. benchmark may trade around $55, said Fryklund. It will take several years for supply and demand to rebalance and prices may rise to about $70 a barrel by 2018, he said.

    “These down cycles are really great for defining the winners for the next cycles,” said Fryklund. “The ones that have cash right now, the ones that have good financials are seeing lots of opportunities.”

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    North Dakota oil well backlog nears 1,000 amid price slide

    The number of North Dakota oil wells that have been drilled but not fracked rose to an all-time high in August of almost 1,000, as producers delayed bringing them online as long as possible in hopes that crude prices would rebound.

    It was the latest sign yet that the state's oil industry, the second-largest in the United States, has sharply curtailed spending amid the more than 50 percent drop in oil prices since 2014.

    North Dakota now has 993 drilled-but-uncompleted wells, or DUCs, according to data released on Tuesday by the state's Department of Mineral Resources, which reports with a two-month lag.

    "That reflects an attitude of leaving the oil in the ground and voluntarily reducing production," Lynn Helms, the DMR's director, said on a conference call with reporters.

    Helms said he expects the number to eclipse 1,000 before the end of the year. The increase in DUCs is in part why output in the state is edging down as production from existing wells naturally declines. Only 51 new wells entered service in August, lifting the total well count to 13,016.

    Producers have one year to drill, frack and start producing oil from a well. If that window passes, the DMR warns producers they have six months to plug the well or start producing oil. It then moves to confiscate the well if nothing has been done by the end of that six-month window.

    Most of the delayed wells have one-year windows that expire in December, Helms said.

    Helms said last month that he was open to granting extensions on the one-year timeline, though he would need approval from the North Dakota Industrial Commission to do so.

    The commission, which comprises the state's governor, attorney general and agriculture commissioner, will next meet on Oct. 22, at which time Helms said he will ask permission for a blanket policy allowing for extensions.

    Extensions for each of the 993 wells must be applied for and reviewed individually, and mineral and land owners have the right to object to any extensions. EOG Resources Inc and Exxon Mobil's have the largest number of DUCs, according to state data.

    The state's oil production fell slightly in August for the second month in a row, largely because of low crude prices .

    North Dakota produced 1,186,444 barrels of oil per day (bpd) in the month, compared with 1,206,996 bpd in July, according to the DMR.

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    Venezuela says eight non-OPEC nations invited to Vienna meeting

    Venezuelan Oil Minister Eulogio del Pino said on Tuesday that eight non-OPEC countries have been invited to an Oct. 21 oil meeting: Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia.

    The technical meeting of oil experts from the Organization of Petroleum Exporting Countries and non-OPEC countries will be held in Vienna, he told Reuters.

    "The confirmations are coming in gradually and I'm personally calling ministers to ensure that the delegation is of the adequate level of authority," del Pino said.

    Venezuela will unveil a bold new oil strategy this month. The OPEC country's long-time oil minister and current United Nations ambassador, Rafael Ramirez, told Reuters in an interview the proposal would reapply the old mechanism of progressive production cuts to control prices, with a "first floor" of $70 per barrel and a later target of $100 per barrel.

    Price hawk Venezuela has been pushing to stem a tumble in oil prices, but faces an uphill battle to convince its richer Gulf counterparts and non-OPEC nations. The meeting's date was already known but the location and full list of invitees was not revealed until Tuesday.

    President Nicolas Maduro said on Tuesday night the most important part of Venezuela's proposal was a suggested meeting of OPEC heads of state and non-OPEC producers.

    "I think we're going to achieve it," he said in an hours-long televised broadcast. "Sometimes processes are slow, but we've already achieved the Oct. 21 experts' meeting."

    Venezuela's proposal will be discussed at the meeting this month, Kuwait's oil minister said on Tuesday.

    "There is no decision. It will be discussed, and (based on) the outcome, we will decide whether to agree or disagree," Ali al-Omair told reporters.

    Russia, the world's top oil producer, has refused to cooperate with OPEC, in which Saudi Arabia is the leading producer.

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    Latest: US shale firms see smaller-than-expected cuts to credit lines

     U.S. shale oil and gas producers have seen smaller-than-expected cuts to their credit lines, a sign that banks could be relaxing their lending standards to help companies avoid technical defaults.

    Companies that hold nearly a third of the energy industry's $100 billion or so in reserve-based loans - borrowed against their oil and gas reserves - have reported a 1.4 percent net drop in credit lines.

    Of the 31 companies that have disclosed information on loan resets so far, banks have cut credit lines of 10 firms by just over $1.15 billion and raised them for six companies by about $725 million.

    Shale companies are also pushing lenders to package credit lines in their favor.

    For example, while lenders last week cut Oasis Petroleum's credit line, the company is seeking relief by inserting a provision that will allow it to borrow as much as possible under the current facility.

    "It's a good example of how bonds and some covenant packages have progressively grown looser over the years," said Anthony Canale, who heads high-yield research at Covenant Review, a research firm focused on debt covenants.

    Meanwhile, companies such as Halcon Resources Corp and Midstates Petroleum Co are trying to swap their unsecured debt for new secured loans.

    "We are seeing more exotic financing transactions ... notably the swapping of unsecured notes for second-lien and third-lien secured indebtedness," said Jimmy Vallee, a partner at law firm Paul Hastings LLP.

    The relatively few lending cuts also underscore the steps taken by energy companies to keep their credit lines secure.

    The decision by many of these firms to snap up hedges in June during a brief price rally has made lending to them far less risky, while a sale of non-core assets and deep cuts to costs have reassured lenders.

    Also, after nearly a decade of uninterrupted growth, the energy sector may be short of workout bankers - who deal with troubled loans and negotiate with borrowers - helping energy companies hold on to their loans longer, said Robert Gray, a partner at law firm Mayer Brown LLP.

    "They all left, so it's partially a management issue."

    Several companies have been able to hold their oil and gas reserves steady because they are mostly completing existing wells rather than drilling new ones.
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    Antero 3Q15 Operational Update: Production Up 33%, Gets $3.99/Mcf

    Today Antero Resources became the first major Marcellus/Utica driller to issue their third quarter 2015 update. The company reports a 39% increase in production over the same quarter last year, and a 1% increase from 2Q15.

    They must have some sharp financial types at Antero because the average price they received for their natural gas was $3.99 per thousand cubic feet (Mcf) in 3Q15, which is $1.22 higher than gas sold for in the NYMEX futures market. What that means is that they’re really good at hedging and using complicated financial instruments called derivatives in order to get a higher price for their gas than many others get. Good for them!

    However, not part of the update released today are Antero’s income statement and balance sheet–which will show the true financial condition of the company. They’re holding that back until the quarterly analyst phone call on Oct. 28.

    We also spotted a new 10-year agreement for LNG to Chubu Electric via the Freeport (TX) LNG terminal…

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    Russia's Putin says does not want energy sector investments to stop

    Russia will not pressurise the energy sector, which is currently working effectively, President Vladimir Putin told an investment conference on Tuesday.

    Recent changes in taxes levied on the energy sector, approved for the next year, do not mean that Russia wants to investments to stop, Putin added.
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    Moroccan shale giving up gas

     Irish energy company Circle Oil, which focuses on North African basins, said it had remarkable success with the early results from shale basins in Morocco.

    Circle Oil said preliminary drilling results from its Sebou concessions in Morocco yielded about 8 million cubic feet of natural gas per day. Chief Executive Mitch Flegg said in a statement the results came in better than expected.

    "The flow rates achieved during the well test are at the upper end of our range of expectations and the well will now be tied in to our existing infrastructure and put into production as soon as possible," he said. "This gas will be sold at fixed rates which are not subject to oil price fluctuations."

    Morocco is one of the West African countries that have drawn interest from international energy companies eager to tap into unexploited reserves. Onshore, the country holds an estimated 20 trillion cubic feet of recoverable shale oil and natural gas reserves.

    Rival company Gulfsands Petroleum in early 2015 said natural gas was flowing at a rate of 10 million cubic feet per day at a test well in northern Morocco.

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    Polish energy company PKN expands via north American deals

    Poland's top refiner, the state-controlled PKN Orlen, said on Tuesday it has launched takeover bids for Canada's Kicking Horse Energy and Nasdaq-listed FX Energy, worth a total of over $300 million.

    PKN currently buys most of its oil from neighbouring Russia and these deals would expand its own exploration and production activities.

    It already runs one such upstream business in Canada after it bought TriOil Resources in 2013 and has said it wants to seize potential takeovers opportunities as low oil prices force rivals to sell assets.

    According to PKN, valued at 27.7 billion zlotys ($7.5 billion) on the Warsaw bourse, the takeovers will raise its deposit base by 38 million barrels of oil equivalent (boe), or 76 percent, to 88 million boe.

    "In line with our strategy in the upstream segment we're aiming at achieving a production potential of 6 million boe a year in 2017," PKN Chief executive Jacek Krawiec said in a statement.

    PKN has offered Kicking Horse's shareholders 4.75 Canadian dollars for each share in an all-cash deal, valuing the firm's equity at 293 million Canadian dollars ($225 million), and putting the enterprise value at C$ 356 million.

    It also offered FX Energy shareholders $1.15 in cash for each common share and $25 for each preffered share, valuing the firm's equity at $83 million. PKN said it it will annouce a tender offer for FX Energy by Oct. 23.

    Kicking Horse, an oil and gas explorer, produces around 4,000 boe a day from its Alberta-based unit. Its market value on Canada's TSX Venture Exchange stands at C$199 million.

    Besides U.S. producing assets in Montana and Nevada, FX Energy has concessions around Poland, partly co-owned with Poland's state-controlled gas group PGNiG. Its curret market value equals $59 million.

    PKN, which runs a refining and gas-station business in Poland, Lithuania, the Czech Republic and Germany, has not yet produced oil at home. It has been trying to build a foothold in shale gas but its efforts have so far come to naught.

    The group plans to delist both takeover targets and finalise the deals in the first quarter of 2016. According to PKN, they do not alter its dividend policy.
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    Saudi offers of extra oil in Asia fail to lure interest in cutthroat market

    Saudi Arabia failed to attract offers for additional oil cargoes for loading in October, industry sources said, in a sign that the market remains over supplied despite recent production cuts.

    The offers were made to some customers in Asia ahead of maintenance at a major Saudi refinery, two sources close to the matter said, as the world's biggest crude exporter seeks to maintain its market share in Asia.

    Yet in a sign of the ongoing price war between producers and the surplus supplies, potential buyers who received the offers said they were too prompt in delivery, adding that cheaper alternatives such as Iraq's Basra crude were also available.

    "Even if the November OSPs (Official Selling Prices) are attractive, we do not have room to take more," one of the potential buyers said, declining to be named due to company policy.

    Refinery maintenance across Asia in the third quarter has also curbed the appetite for more crude in the region.

    Saudi crude production in the first nine months of 2015 hit 10.21 million bpd, up from 9.69 million bpd in 2014, Reuters data showed.

    "Saudi Arabia's strategy of targeting market share amongst key Asian consumers remains at play," said Virendra Chauhan, an analyst at consultancy Energy Aspects.

    "It's a buyers' market at the moment so Saudi will be looking to place its barrels aggressively or risk losing out," he added.

    Despite this strategy, Saudi may trim output further in October as domestic demand drops following the peak consumption summer months and because of maintenance at PetroRabigh's 400,000 bpd refinery. The Yasref refinery has also cut operating rates to 75 percent, down from full capacity in July.

    "We see 10-10.1 million bpd as the new norm for Saudi production given that more crude will be consumed domestically with the two new refineries ramping up to capacity," Chauhan said.

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    Iran boosts oil trade via UAE ahead of sanctions relief

    Iran has boosted exports of fuel oil through U.S.-ally the United Arab Emirates and also almost doubled its imports of gasoline, despite Western sanctions, trading sources said.

    The U.S. State Department recently cabled a message to embassies around the world to reiterate that sanctions on Iran are still in place, diplomatic and government sources told Reuters on Friday.

    Yet behind the scenes Iran and its eager potential trading partners are quietly getting ready for life after sanctions, following the landmark July agreement with the West over Tehran's nuclear policy.

    The resumption of some direct shipments of refined oil products from Iran's Bandar Mahshahr to the UAE's Fujairah port contrasts with the more intricate and furtive means Tehran had employed using ship-to-ship transfers and trading firms in the UAE acting as middlemen for buyers to sidestep sanctions.

    The trading sources said Iranian fuel oil shipments are still being presented with documents declaring it of Iraqi origin at the ship refuelling hub of Fujairah. Fuel oil is used to power ships and also for electricity generation.

    State-owned National Iranian Oil Co.(NIOC) has now started to offer much more fuel and at much more attractive discounts, the trading sources said.

    It is also using its own ships to sail directly to Fujairah, saving buyers costly freight charges, as it becomes more proactive in anticipation of lifting sanctions next year, the sources said.

    "Now because they think the sanctions are over, they are shipping more, I have seen around 6 to 7 shipments (of fuel oil) coming through Fujairah with fake documents, the volumes are bigger now," said one source.

    "Sometimes they use their own ships. They need to put these cargoes out even before sanctions are lifted. People are ready to buy it if they can offer $2-3 discounts on the price."

    The trading sources estimated Iranian fuel oil exports at around 350,000-500,000 tonnes per month in September and October.

    "Internally they use more natural gas for power utilities, therefore export of fuel oil is at that high level," said another trading source.

    A third trading source said the fuel oil shipments from Iran are being pumped into Fujairah Oil Tanker Terminal 2 but since they are then shipped from there to Asia, port regulations are less strict than if the cargoes were to remain in the UAE.

    Traders have also started to ship more gasoline to Iran with volumes at around 10-12 cargoes a month, or 300,000 to 360,000 tonnes, in September and October, up from 6-8 cargoes before, the first source said.

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    The EU Diesel problem

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    Is it really too much to ask that we live in a continent where it is safe to breathe?

    Currently, because testing procedures specified under EU rules are harmfully inadequate, nine out of ten diesel vehicles exceed the permitted pollution levels. The fight is now underway at EU level to ensure that pollutants emitted in the lab under new test procedures accurately reflect emissions from the car in real driving conditions. 

    The cost of air pollution is immense in human terms: we're talking about 400,000 premature deaths in Europe every year. It is also a huge financial drain, since air pollution in the European Union costs around 766 billion euros every year.

    Forty million EU citizens are also exposed to levels of a certain size of particulate matter, 'PM10', which are above the legal European limits. PM10 is a deadly form of air pollution which diesel cars emit.

    But, to add insult to injury, clean air for everyone will be even harder to achieve given recent revelations that the German car manufacturer Volkswagen has cheated on the pollution tests for 11 million of its diesel vehicles. This constitutes an unprecedented health scandal.

    The "dieselgate" scandal shows unequivocally that EU emission limits to curb polluting emissions from vehicles are not just not being respected, but that manufacturers are committing fraud, with criminal intent, through the use of so-called 'defeat devices' which trick the test procedure into thinking that the car has much lower emissions of nitrogen oxides than it will have on the road. Nitrogen oxides react in the atmosphere to form nitrogen dioxide, which is toxic to human health. Beyond the case of Volkswagen, the scandal is also likely to concern other manufacturers.

    Having maintained the myth of "clean diesel", car-makers are now trying to avoid a Europe-wide inquiry. As Green MEPs for the South West and South East of England, and London, we call on the EU institutions not give into industry lobbying, the result of which would be the protection of private interests at the expense of citizens' health.

    We refuse to accept that the people we represent continue to be poisoned in order to swell the profits of car manufacturers. We therefore call for full transparency and for the law to be upheld.

    We believe that the European Commission must immediately launch an inquiry into all vehicles, both petrol and diesel, on the European market to discover the extent to which defeat devices are being used to cheat emission tests for NOx but also for other pollutants, including CO2.

    ~Petition in 4 languages now filed on EU website. 134000 signatures so far in 6 days. 


    This varies from case to case:

    • If the petition concerns a specific case requiring individual attention, the Commission may contact the appropriate authorities or intervene through the permanent representation of the Member State concerned, as this course of action is likely to settle the matter. In certain cases, the Committee on Petitions asks the President of the European Parliament to contact the national authorities in question.
    • If the petition relates to a matter of general interest, for example if the Commission finds that EU law has been breached, it can open infringement proceedings. This may result in a Court of Justice ruling to which the petitioner can then refer.
    • The petition may result in political action being taken by Parliament or the Commission.

    In all cases, the petitioner will receive a response detailing the results of the action taken.

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    IEA flags oil market oversupply through 2016, less optimistic than OPEC

    A top energy watchdog on Tuesday warned that oil markets would likely remain oversupplied next year, as oil demand growth slows down amid an expected return of Iranian oil.

    The assessment by the International Energy Agency -- which represents some of the world's largest oil consumers -- is somewhat less upbeat than the Organisation of the Petroleum Exporting Countries which Monday said oil markets would start to rebalance themselves next year amid declining US production.

    In its closely-watched monthly oil market report, the IEA cut its forecast for oil demand growth for next year by about 200,000 barrels a day compared to its previous assessment in September. It now sees world oil consumption rising by 1.2 million barrels a day in 2016, compared to a five-year-high growth of 1.8 million barrels a day in 2015.

    "A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels -- should international sanctions be eased -- are likely to keep the market oversupplied through 2016," the agency said.

    The IEA said Iran's production could ramp up towards 3.6 million barrels a day from 2.9 million barrels a day currently once international sanctions are terminated early next year.

    But the Iranian increase would come as demand for OPEC's overall production would be lower than expected. The IEA said demand for the group's crude -- which make up over a third of global oil consumption -- would grow by 200,000 barrels a day less next year than it forecast in the September report. The October report forecast is for 31.1 million barrels a day.
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    China plans up to 30 pct cut in natural gas prices -Securities Times

    China plans to cut city-gate non-residential natural gas prices by up to 30 per cent in some provinces at the end of October, the Securities Times reported on Tuesday, citing sources.

    Flagging growth in natural gas demand has hurt Beijing's efforts to replace coal, a major source of smog and greenhouse gas emissions. Demand has risen just 3 percent this year versus double-digit increases between 2000-2013, with experts blaming Beijing's inflexible pricing policy.

    The cuts in the non-residential city-gate rate for each province would differ, said the sources, adding that the price setting method will also be reformed in order to become more market-orientated.

    "For provinces which currently have a low city-gate rate the price could fall by 0.4 to 0.5 yuan per cubic metre, for provinces with a higher city-gate rate it could fall by 0.7 to 0.8 yuan per cubic metre," the newspaper quoted the source as saying, meaning cuts of between 20 to 30 percent.

    On April 1, city-gate prices for new non-residential users were cut by 0.440 yuan ($0.0695) per cubic metre. ($1 = 6.3283 Chinese yuan renminbi)
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    WAF-Far East VLCC freight rates rise to fresh 5.5-year high on tight tonnage

    WAF-Far East VLCC freight rates rise to fresh 5.5-year high on tight tonnage

    The cost of sending 260,000 mt crude oil cargoes from West Africa to the Far East has risen to the highest level in over five-and-a-half years due to a shortage of available vessels in the region.

    Market participants have said further rate increases could be on the cards this week due to the large number of cargoes outstanding.

    The West Africa-Far East VLCC route was assessed Worldscale 2.5 higher at w85 Friday. This equates to $33.64/mt, the highest since a $36.48/mt market on January 21, 2010.

    VLCC tonnage lists throughout the world have been squeezed in recent weeks due to ullage problems at a variety of Eastern ports, and the supply of ships has been further reduced by a large number of cargoes to be covered in the Persian Gulf, West Africa, the UK Continent and the Caribbean.

    Most of the Persian Gulf's October cargoes have now been covered, with market participants waiting to see what the release of the November stem lists in that region will bring.

    "It wasn't as busy as previous weeks in the Persian Gulf but a more active WAF market has kept owner sentiment at a high level," a shipowner said. "The charterers will need at least one week of inactivity to take control of the rates. There will be a big volume of cargoes to come though, November is usually the busiest month of the year for VLCCs."

    Sources said there were still three or four October cargoes left to be covered in the Persian Gulf for October, along with six West Africa cargoes to come for the first half of November.
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    China Crude Imports Rebound as Refiners Seek Oil Bargains

    China’s crude imports rose in September from a three-month low as the world’s second-largest consumer sought bargain barrels for its reserves and refiners boosted processing.

    Overseas purchases rose to 27.95 million metric tons last month from 26.59 million in August, according to preliminary data released by the Beijing-based General Administration of Customs on Tuesday. That’s equivalent to 6.83 million barrels a day, up 8.6 percent from the previous month, Bloomberg calculations show.

    China, which was the world’s top oil buyer in June and April this year, has accumulated about 200 million barrels of crude in its reserve so far and plans to have 500 million by the end of the decade, according to the International Energy Agency. Total imports by the Asian country extended the longest losing streak in six years, underscoring the headwinds to global growth from a re-balancing amid falling commodity prices.

    “China may have taken advantage of the decline in crude oil prices” to boost September imports, Jean Zou, an analyst at ICIS China, a Shanghai-based commodity researcher, said by phone from Guangzhou. “The nation’s largest refiner, Sinopec, boosted oil processing by 2.5 percent last month from August.”

    Chinese refiners in September raised processing rates to the highest level in three months, according to Amy Sun, another analyst at ICIS China. Commercial crude inventories dropped at the end of August, creating more space for stockpiling.

    Oil imports from January through September gained 8.8 percent to 249 million tons, compared with the same period a year earlier, the customs data showed. That’s the fastest pace since 2010.

    The government reported 2.7 million tons of oil-product imports and 3.55 million of exports. September coal imports were 17.77 million tons, compared with exports of 730,000 tons. Final trade figures will be released next week.
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    EOG Resources Inc. Has Done an Amazing Job of Finding Oil in Its Own Backyard

    Through a combination of downspacing, exploring new zones and improved technology EOG Resources Inc. is discovering more oil on its current average position.

    Earlier this year, EOG Resources Inc. (NYSE:EOG) announced that it had increased its Bakken and Three Forks reserve potential by 600 million barrels of oil equivalent, or BOE. That's not a trivial amount of oil and gas by any means as it's equivalent to about 8.6% of America's annual oil consumption. Furthermore, it's far from the first time the company has increased its reserve estimates as it continues to find more oil under its feet as these discoveries are being made within the company's current acreage positions.

    Exploring in its own backyard
    As the slide below shows, EOG Resources has increased its estimate for oil and gas reserve potential from its acreage in the Bakken-Three Forks play from 400 million BOE to 1 billion BOE over the past five years.

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    The company has largely done so without acquiring a lot of additional acreage, but instead by exploring the acreage potion it already had. That meant testing the limits of how closely wells could be drilled together -- testing additional zones, such as the Three Forks formation, while also improving upon its well and completion design so that it could get more oil out of those tight rocks.

    This focus on organically exploring within its current acreage position has paid off in other plays as well. As this next slide shows, the company has increased its reserve potential in the Eagle Ford by 250% since 2010.
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    Meanwhile, the company has uncovered over a billion barrels of oil equivalent reserve potential in the Delaware Basin of West Texas as it explored its acreage in that region over the past few years. There's the potential for a lot more oil in that play, too, as EOG Resources explores additional zones, including tests in the Second Bone Spring Sandstone that have already yielded positive results. It's still evaluating its potential in that one play, but given its acreage position, it could be sitting on substantially more recoverable oil than first thought.

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    Ukraine has been granted loans totalling $520 million to buy gas for the winter.

    The European Investment Bank (EIB) and the World Bank signed an agreement under EU guarantee to help the nation’s gas firm Naftogaz.

    It is part of the support by the European Union and international financial institutions, under which the EIB guarantees World Bank investment development projects in Ukraine.

    The news comes after Russia agreed to resume gas suppliesto Ukraine this winter under a deal set with the European Commission.

    EIB President Werner Hoyer said: “European and global institutions are committed to helping Ukraine avert a potentially severe energy crisis as winter approaches. The guarantee agreement we signed today will facilitate Ukraine’s purchase of gas at a critical time.

    “The deal reflects the EIB’s enduring support for Ukraine as part of EU cooperation with the country and the Union’s Eastern Neighbourhood region.”

    The European Bank for Reconstruction and Development (EBRD) is also lending $300 million (£198m).

    Ukrainian state energy firm Naftogaz and Russia's Gazprom have signed a deal on Russian gas supplies to Ukraine for the winter period and Kiev has already started gas imports, Ukraine's energy minister said in Monday.

    Volodymyr Demchyshyn said Ukraine planned to increase gas in underground storage to up to 18 billion cubic metres (bcm) in the coming weeks from the current level of 15.8 bcm.

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    Magnum Hunter: Preparing to Sell, or Filing for Bankruptcy?

    Sure looks to us like time has finally run out for Marcellus/Utica driller Magnum Hunter Resources (MHR). The company is now either shopping itself looking for a buyer, or preparing to file for bankruptcy.

    Our evidence? On Friday, MHR suspended monthly dividend payments on their stock and hired financial advisory firm PJT Partners and law firm Kirkland & Ellis to advise MHR’s board of directors “regarding potential strategic alternatives to enhance liquidity and address the Company’s current capital structure.”

    According to one analyst we’ve read, addressing a company’s capital structure is coded language for “we’re about to file for bankruptcy protection.”
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    EGAS awards tender for 55 cargoes of LNG

    According to Reuters, seven companies reportedly met with Egyptian Natural Gas Holding Co. (EGAS) to discuss an LNG tender, including: Vitol, Noble Group, Trafigura, EDF Trading, PetroChina, Shell and Gas Natural.

    Reuters now reports that EGAS will buy 55 LNG cargoes through a tender it has agreed to with those seven different companies. Originally, only 45 LNG cargoes were to be delivered.

    EGAS reportedly said in a statement: “Head of EGAS, Khaled Abdel Badie, said that bids from seven companies had been accepted out of a total of 12 for the shipping of 55 cargoes starting this November and through December 2016.”

    The LNG cargoes will be delivered to Egypt’s floating import terminal – the BW Singapore, which has a capacity of 600 – 700 m3/d. The deliveries will begin as of the start of November 2015, and will help solve Egypt’s increasing energy shortage.
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    Oil Traders Targeting Iran for $1 Billion in 2016 Gasoline Sales

    Iran will need to import about 20 percent more gasoline to meet pent-up demand in the first year after economic sanctions are lifted, creating a market for some $1 billion in fuel sales from abroad, according to traders and analysts.

    The nation with the world’s fifth-largest crude reserves may need to buy about 50,000 barrels a day of gasoline if sanctions are removed in early 2016 as expected, say analysts at consultants Facts Global Energy, IHS Inc. and Energy Aspects Ltd. With its refineries running at full capacity and unable to raise output for at least another year, Iran now imports 41,000 barrels a day, or about 9 percent of the gasoline it uses.

    Iran was the Persian Gulf region’s biggest gasoline buyer before world powers imposed sanctions over its nuclear program, and it may need to import even more -- as much as 70,000 barrels a day, according to two traders in the Middle Eastern market who asked not to be identified because they’re not authorized to speak to the media. The traders expressed doubts that Iran would open planned new refineries on schedule and said it will depend on imports for at least two to three more years.

    “Once sanctions are lifted and the domestic economy in Iran improves, demand will likely rise and that’s going to raise imports,” Victor Shum of IHS said by phone from Singapore. “It will be good for existing, export-oriented refineries to see the Iranian market opening up.”
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    Saudi state claws back unspent money as finances tighten

    Saudi Arabia's finance ministry, seeking to cut waste as state revenues shrink because of low oil prices, is telling government bodies to return unspent money which they were allocated in this year's budget, sources familiar with the policy told Reuters.

    Over the past several years of sky-high oil, government bodies in the world's top oil exporting nation were given considerable freedom to transfer money from one project to another as they wished. That led to a bonanza of ad-hoc spending on bonuses, travel allowances and the like.

    Now, ministries are being told that if money is not fully spent on the projects for which it was originally allocated, the remainder must be sent back to the Treasury, the sources said. The ministry did not respond to a request for comment.

    The tighter policy underlines a sober mood taking hold in Riyadh because of the halving of oil prices since mid-2014. The International Monetary Fund and private analysts calculate Saudi Arabia may run a record budget deficit of $120 billion or more this year; to pay its bills, the government has sold over $80 billion of foreign assets since August last year.

    Around the kingdom, bureaucrats, businessmen and ordinary Saudis are preparing for a period of relative austerity as the finance ministry asserts more control over the purse strings.

    "Saudi Arabia has started to focus on efficient spending, which means tighter financial supervision," said prominent local economist Fadl al-Buainain.

    "Suspending the transfer of financial items...means that if they are not invested in the project for which they were allocated, the surplus can be invested in another, more important project as needed."

    Finance Minister Ibrahim Alassaf said last month that his ministry was "working on cutting unnecessary expenses". He did not elaborate, but his comments were widely seen as pointing to significant spending cuts in some areas of next year's budget.
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    Phillips 66 Announces 2016 Capital Budget and Increases Share Repurchase Program

    Phillips 66 announces its 2016 capital budget of $3.6 billion, compared with $4.6 billion in 2015 excluding Phillips 66 Partners’ capital program. The board of directors of Phillips 66 also approved a $2.0 billion increase to the company’s share repurchase program.

    “Cash from operating activities, our MLP and a strong balance sheet allow us to fund business growth while returning capital to shareholders.”

    “The 2016 capital budget will fund Midstream growth and enhance returns in Refining,” said chairman and CEO Greg Garland. “Cash from operating activities, our MLP and a strong balance sheet allow us to fund business growth while returning capital to shareholders.”

    Excluding Phillips 66 Partners’ capital spending, Phillips 66 plans to invest $2.0 billion in its Midstream business lines. In Natural Gas Liquids (NGL), the company continues construction of the 4.4 million-barrel-per-month Freeport LPG Export Terminal on the U.S. Gulf Coast, with completion expected in the second half of 2016. In addition, the budget includes spending associated with expansion of the Sweeny NGL midstream hub.

    In Transportation, the company is investing in the new DAPL and ETCOP pipeline projects to move crude oil from the Bakken production area of North Dakota to market centers throughout the United States. Storage capacity is being added at the Beaumont Terminal in Nederland, Texas, and the company is investing in the Bayou Bridge pipeline project to move crude oil from Texas to Louisiana markets.

    Phillips 66 plans $1.2 billion of capital expenditures in Refining, with approximately 70 percent to be invested in reliability, safety and environmental projects, including compliance with the new Tier 3 gasoline specifications. Discretionary Refining capital of about $400 million will improve product yields and lower feedstock costs. These investments include a modernization of the FCC at Bayway, and an upgrade of the vacuum tower at Billings.

    In Marketing and Specialties, the company plans to invest about $135 million of growth and sustaining capital. This furthers Phillips 66’s plans to expand and enhance its fuel marketing business, including new retail sites in Europe.

    Capital spending plans for 2016 for Phillips 66 Partners and for self-funded joint ventures DCP Midstream, Chevron Phillips Chemical Company, and WRB Refining will be announced later this year.

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    Argentina's YPF targets unconventional gas, petrochemicals for growth

    Argentina's state-run energy company YPF plans to ramp up unconventional natural gas production to help close the nation's supply deficit and expand petrochemical output.

    "Fifteen percent of our gas production comes from tight and shale," CEO Miguel Galuccio said late Thursday at the Argentina Oil & Gas Expo in Buenos Aires. "We have a goal of getting 50% of our gas production from these formations by 2020."

    YPF is producing gas from tight plays like Lajas and Mulichinco, as well as from Vaca Muerta, one of the world's most promising shale plays that has attracted the attention of majors like Chevron, ExxonMobil and Shell.

    At El Orejano, a block it is developing in partnership with Dow Chemical, horizontal wells are "showing better-than-expected results," Galuccio said.

    There is room to meet domestic demand, given that the country is running a deficit in gas, which meets 50% of national energy demand.

    Gas production has dropped by about 20% to 118 million cu m/d over the past decade, led by maturing output from conventional reserves.

    This has left slack capacity on pipelines that can be filled without much infrastructure investment.

    Galuccio said another incentive is that the government is subsidizing gas prices from new developments to encourage exploration and production. Producers get $7.50/MMBtu at the wellhead for such new output, more than a $4/MMBtu average for conventional production.

    As the country pays about $7.50/MMBtu or more for imported gas in its liquefied form, there is an incentive to close the deficit with local production, he said, more so if global gas prices rise in the future.

    With more gas supplies, YPF wants to expand its petrochemical production.

    "There is an important opportunity to create a regional hub for petrochemical production in Argentina," led by polyethylene, polypropylene and other polyolefins and derivatives, Galuccio said.

    "This will make it possible to replace imports and become a net exporter of petrochemicals," he said.

    In August, YPF announced plans to buy stakes in two polymer producers in Argentina for $122 million by the end of 2015. The assets include an 180,000 mt/year polypropylene plant and another with 130,000 mt/year of capacity.

    Galuccio said the petrochemical output will add between $1/MMBtu and $2/MMBtu to the revenue the company makes on its gas production.

    With this additional revenue, YPF could widen its exploration and production to riskier locations that it can't develop now because gas prices are not high enough, he said.

    YPF produces 45 million cu m/d of gas, more than a third of national output.

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    Nigeria State Oil Company Reports Loss in Transparency Report

    Nigeria’s state oil company recorded a loss of 378 billion naira ($1.9 billion) in the first eight months of this year mainly because of fuel subsidy spending, it said in a publication that seeks to bring transparency to the organization.

    At least 73 percent of the loss was due to deficit spending by its Pipelines and Products Marketing Co. unit comprising “claimable subsidy” payments, repairs, as well as product losses from ruptured and sabotaged pipelines, the Nigerian National Petroleum Corp. said in a monthly report for August on its website.

    The publication of the report is one of the initiatives of Group Managing Director Emmanuel Kachikwu to ensure accountable conduct of its business. Kachikwu was appointed in August by President Muhammadu Buhari, who won elections in March after campaigning on a pledge to end corruption in the management of the country’s oil accounts.

    The NNPC has been dogged by allegations of losing billions of dollars of revenue since the 1970s and had the worst disclosure record of 44 energy companies analyzed in a 2011 report by anti-corruption nonprofit organizations Transparency International and the Revenue Watch Institute.

    Nigeria, Africa’s biggest oil producer, pumped 445 million barrels of crude and condensate from January to July, an average of 2.009 million barrels daily, according to the report.

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    OPEC sees more demand for its crude in 2016 as cheap oil hits rivals

    OPEC forecast on Monday that demand for its oil in 2016 would be much higher than previously thought as its strategy of letting prices fall hits U.S. shale oil and other rival supplies, reducing a global surplus.

    In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) forecast the world would need 30.82 million barrels per day (bpd) from the group next year, up 510,000 bpd from the previous prediction.

    OPEC's forecast, if realised, would be a further indication its strategy is working. The group last year refused to prop up prices and instead raised output, seeking to recover market share taken by higher-cost rival production. Oil is trading just below $53, half its price of June 2014.

    Supply outside OPEC is expected to decline by 130,000 bpd in 2016, the report said, as output falls in the United States, the former Soviet Union, Africa, the Middle East and much of Europe. Last month, OPEC predicted growth of 160,000 bpd.

    "This should reduce the excess supply in the market and lead to higher demand for OPEC crude," OPEC said in the report, "resulting in more balanced oil market fundamentals".

    The higher call on OPEC comes despite weaker global demand growth overall. OPEC trimmed its estimate of 2016 world oil demand growth by 40,000 bpd to 1.25 million bpd, citing slower growth in China.

    Other forecasters also expect less oil from non-OPEC. The International Energy Agency, which advises industrialised countries, sees an even bigger drop in their supply in 2016. The next IEA report is due out on Tuesday.

    Output in the United States - the biggest source of non-OPEC supply growth in recent years - is being hit by reduced drilling activity and tighter credit conditions have reduced companies' access to funds, OPEC said.

    The report said OPEC members continue to boost supplies. According to secondary sources cited by the report, OPEC pumped 31.57 million bpd in September - up 110,000 bpd from August and almost 2 million bpd more than its prediction of the demand for its crude this year.

    With the higher demand it expects for OPEC crude in 2016, the report points to a 750,000 bpd supply surplus in the market next year if the group kept pumping at September's rate, down from 1.23 million bpd indicated in last month's report.

    In the third quarter of 2016, demand for OPEC crude will rise to an average of 31.50 million bpd, OPEC predicted - similar to current output and leaving almost no surplus.

    Saudi Arabia, the driving force behind's OPEC's refusal to cut output, told OPEC it trimmed production to 10.23 million bpd in September, a further decline from June's record rate.

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    China oil demand grows 10 per cent year over year

    China's apparent oil demand rose 10.2% in August from a year earlier to 11.19 million barrels per day (b/d), according to a just-released Platts analysis of Chinese government data.

    Barring gasoil and naphtha, China's apparent demand for all other key products¡ªgasoline, liquefied petroleum gas (LPG), jet/kerosene, and fuel oil¡ªsaw double digit year-on-year growth in August.
    China's refinery throughput in August averaged 10.49 million b/d, up 6.5% from a year earlier, data from the country's National Bureau of Statistics (NBS) on September 12 showed.
    Meanwhile, China's net imports of oil products surged 131% year on year to 700,000 b/d in August, driven by strong inflows of LPG, fuel oil and naphtha, according to data released September 21 by the General Administration of Customs.
    During the first eight months of this year, China's total apparent oil demand averaged 11.14 million b/d, an increase of 8.2% from the same period of 2014.
    China's actual oil demand growth could be higher since stocks of key products have fallen, Platts estimates show. "Inventories of gasoil, gasoline and jet/kerosene fell by between 2.5% and 9.7% at the end of August, from end July," said Platts Associate Editorial Director for Asia Oil News Mriganka Jaipuriyar.
    China's apparent oil demand is expected to remain steady at 11.1 million b/d for the rest of the year, according to data from Platts China Oil Analytics, an on-line platform for supply/demand, refining margins, volume forecasts, trade flows and the like. However, it indicates that overall growth for 2015 could moderate to just over 5%, given the high base in the fourth quarter of last year.
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    Russia to raise mineral extraction tax rate on Gazprom by 36.7 pct in 2016

    Russia plans to increase the mineral extraction tax (MET) rate that is applied to gas company Gazprom by 36.7 percent in 2016, according to amendments to the Tax Code published on the government's website on Saturday.

    On Thursday the government approved the tax increase on Gazprom, but did not give the new rate that would apply. The government calculates that the increase will raise an additional 100 billion roubles ($1.62 billion) for next year's budget.

    Russia is looking for ways to raise revenue to fill a hole in the federal budget caused by the slump in global oil prices.

    The government said the higher tax rate would be achieved by adjusting the conditional fuel unit used in the formula for calculating MET on natural gas fuel and gas condensate, and would apply only to companies with the right to export natural gas in a gaseous state - a reference to Gazprom.

    Gazprom is paying an average rate of 788 roubles ($12.75) per thousand cubic metres of gas in 2015.

    The government had also been discussing an increase in the MET on oil companies, but this was rejected.
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    U.S. shale firms snap up $50 oil hedges, risking rally reversal

    This past week, as oil prices barreled over 9 percent higher to break out of a weeks-long trading range, U.S. shale producers jumped at the chance to lock in $50-plus crude for the first time in months, making up for lost time after holding off hedging during the market's late-summer slump.

    U.S. crude oil futures for December 2016 delivery, a favored contract for hedgers, saw trading volume spike to a weekly record high of nearly 190 million barrels, twice as much as the average for the previous four weeks, in what market sources and industry executives said was the biggest wave of hedging since a fleeting rush in late August.

    The price premium for the Dec 2016 contract against the same month in 2015 has shrunk to just $4 a barrel, down from more than $7 a barrel two months ago, due partly to forward selling.

    Oil producers' rapid response to the latest move upward comes in contrast to the second quarter, when a moderate price recovery was met with only modest hedging interest as many executives bet - wrongly - that the worst was already behind them.

    It also highlights the far more precarious financial position for many shale firms facing rapidly tightening credit conditions, expiring legacy hedges and a deepening fear that prices may stay much lower for much longer than they thought.

    For some, hedging is now less an insurance policy than a lifeline as those who have scrimped on protection watched with despair oil prices shuffling between $43 and $48 for six weeks.

    Yet their activity also threatens to undermine one of the fundamental reasons for oil's gains: falling U.S. output.

    In addition to creating immediate headwinds by selling into the rally, drillers whose future profits are insured with new hedges will be better able to keep on pumping oil, adding to a global oversupply, the thinking goes.

    "Any little rally ends up getting suffocated by the new production it unleashes," said Vikas Dwivedi, Houston-based global oil and gas strategist at Macquarie Group.

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    Traders eye floating diesel storage in Atlantic

    Oil traders are preparing to store diesel in giant tankers off the coasts of northern Europe and New York as land storage tanks are nearly full, traders said on Friday.

    Tank capacity levels are above 70 percent in some cases, levels considered near maximum, according to traders.

    While the recent glut in global crude oil supplies appears to ease, boosting oil prices, diesel supplies around the world are set to rise sharply in the coming months, according to analysts.

    Benchmark diesel barge values in northwest Europe ULSD10-BD-ARA dropped over the past week as huge volumes of the driving fuel reach the region from around the world.

    Gasoil stocks, which include diesel, in the Antwerp-Rotterdam-Amsterdam (ARA) hub rose in the week to Thursday to a fresh record high of 3.754 million tonnes, data from Dutch consultancy PJK International showed.

    The spread between the prompt Low Sulphur Gasoil futures and the November contract, in what as known as contango, has widened in recent days to around $5 a tonne, supporting the case for storage, traders said.

    Traders said that Vitol, the world's top oil trader, has booked two 90,000 tonne tankers off the coast of Britain to store diesel volumes for an extended period of time.

    Royal Dutch Shell has also booked a 90,000 tonne tanker to store product outside the New York Harbour, according to traders and shipping brokers.

    Though floating storage economics based on the contango and freight rates are currently unworkable for most traders, Vitol and Shell may have decided to book the vessels ahead of an anticipated worsening of the market.

    "It is getting really ugly," a diesel trader said.

    Traders have already opted to store jet fuel in tankers in recent weeks.

    Weeks of extremely low water levels along the Rhine river WL-KAUB, a key artery for delivering products to inland markets in Germany, France and Switerzerland, have significantly limited barge traffic, creating a large backlog in the ARA hub and adding further pressure, traders said.

    Global diesel supplies are expected to sharply grow in the fourth quarter of 2015, rising by around 500,000 barrels per day (bpd) from a year earlier, according to Vienna-based consultancy JBC Energy.

    "European margins are likely to bear the brunt of this," JBC said in a note.

    Huge refineries in the U.S. Gulf Coast, Russia, Asia and the Middle East have been shipping in recent months, increasing volumes of diesel to Europe, whose domestic production does not meet demand.

    In September, more than 5 million tonnes of diesel were imported into Europe, creating an oversupply of more than 500,000 tonnes, traders said.

    Europe, including Turkey, consumes roughly around 16.5 million tonnes of diesel per month.

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    Oil market needs an anchor, Saudi adviser says

    The lack of a clear leader or "anchor" in the global oil market is fueling uncertainty and leading to sharp swings in crude prices, but this uncertainty is unlikely to continue for long, a senior Saudi oil adviser said.

    The comments by Ibrahim al-Muhanna suggest that Saudi Arabia and the rest of OPEC understand that they are unable to manage the oil market alone for the time being, and would like to see some kind of collective mechanism to reduce the current instability in the market.

    "In the current circumstances, the international oil market could continue in an unstable situation, where there is a lot of uncertainty with the lack of a market anchor," Muhanna, an adviser to the Saudi oil minister, told a closed-door energy event in Kuwait on Wednesday. His comments were released publicly on Friday.

    "In the end, this means the inability of investors to find a suitable price in the market currently and in future," he said in the speech. "This is an unnatural situation and it is difficult to see it continuing."

    Top oil exporter and OPEC heavyweight Saudi Arabia was the driving force behind OPEC's landmark decision, at its meeting in November 2014, not to cut oil output to support prices, and instead seek to defend market share.

    The decision, which is a shift from OPEC's traditional role of reducing production to prop up prices, has along with a supply glut helped trigger a sharp drop in crude prices in the last year.

    The message from Riyadh has been clear: the kingdom is no longer willing to shoulder the burden of reducing production alone and if others want better prices, they should take on their share of output cuts.

    Gulf oil sources see no sign of Saudi Arabia wavering in its long-term strategy, particularly when other OPEC members such as Iraq are raising production and Iran is gearing up to boost exports by next year. Non-OPEC producers including Russia have refused to cooperate with OPEC in cutting output.

    Muhanna referred in his speech to the need for greater international cooperation to reduce speculation and support a healthy oil market, which "should not only be limited to OPEC and other producing countries but also include the other main energy consumers," he said.

    Muhanna did not describe in detail how such a structure would work or say how likely it was to be established.

    He gave examples of organisations such as the International Energy Agency and the International Energy Forum as attempts to bring more transparency to the oil market but said more needs to be done.

    Muhanna said global demand for oil was expected to rise by at least 1 million barrels per day every year,  driven mainly by economic growth in Asia, Africa and Latin America, and the world's oil consumption would reach about 105 million bpd by 2025.

    He also said the current persistent oil supply glut and instability of prices "is a temporary situation that will not last for long".

    A U.S. Energy Information Administration report on Tuesday predicted global oil demand for 2016 would rise by the fastest rate in six years, suggesting the crude surplus that has pushed prices down about 50 percent since June last year is easing faster than expected.

    OPEC's Secretary-General Abdullah al-Badri said on Tuesday that the oil exporter group should work together with producers outside OPEC to tackle the oil surplus in the global market.
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    Japan's Kansai seeks more flexible LNG contracts amid demand uncertainty

    Japan's Kansai Electric is looking to add more flexible contracts that will enable the utility to respond swiftly to changes in demand and adjust its portfolio by buying or selling volumes, a company executive said in an interview with Platts this week.

    Kansai Electric, whose LNG procurement hit a record 9.44 million mt in fiscal year 2014-15 (April-March), faces growing demand uncertainty as the domestic retail market is set to fully open to newcomers in April next year, a measure which could dent or boost its electricity sales.

    Timing of the restart of Kansai Electric's two Takahama 870-MW nuclear units also remains murky, and Japan's slow economic growth is adding another variable to the equation.

    Against such backdrop, the Osaka-based power utility struck a deal with BP, under which BP would supply Kansai Electric with up to a total of 13 million mt of LNG over 23 years.

    The agreement also allows Kansai Electric to resell the volumes to third parties or ask BP to find alternative buyers by mutual consent, the first of its kind in Japan.

    The utility also inked a contract with France's Engie under which Kansai Electric would sell 400,000 mt/year of LNG from its US LNG and buy an equivalent amount of LNG from Engie's portfolio, with the aim to cut shipping costs.

    "If we have a existing contract which is about to mature and have to look for alternatives, we would like to consider these kinds of contracts," Tatsushi Fujiwara, general manager for Kansai Electric's office of fossil fuel said.

    "It's our basic thinking that we want to cooperate with various sellers, traders and buyers to enhance our flexibility," he added.

    The most ideal allocation would be for long-term contracts to represent 70% of Kansai Electric's LNG portfolio with mid- and short-term contracts, including spot contracts, accounting for 30%, Fujiwara said.

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    Cairn India Said to Target 18% Rajasthan Oil Output Boost

    Cairn India Ltd., the nation’s biggest onshore oil driller, is targeting an 18 percent increase in output from its wells in the northern state of Rajasthan in January as it revives older fields in its largest producing block, according to company and government officials.

    The company’s crude equivalent output from the region may climb to an average 200,000 barrels a day by January from about 170,000 barrels a day now as the enhanced recovery project yields results, said the people, who asked not to be identified because the information is confidential. State-owned Oil and Natural Gas Corp. is a 30 percent partner at the site.

    Cairn India spokesman Sourav Das declined to comment ahead of an earnings announcement on Oct. 21.

    Cairn India Chief Executive Officer Mayank Ashar in April said the company had allocated 45 percent of its $500 million planned capital spending for the year to March 31 to its core fields, including the largest, Mangala, in Rajasthan. The company expects to ramp up output from the field as early as December, he said in July.

    Brent oil, the global benchmark, which has fallen about 40 percent from a year ago, traded at $53.72 a barrel at 8:20 a.m. London time. The grade has increased 12 percent this week, the most since March 2009. Crude prices may remain low in the near term but will be substantially higher in a year’s time, Ashar said in August.
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    NOVATEK reports preliminary operating data for the third quarter and nine months 2015

    OAO NOVATEK reported today preliminary operating data for the third quarter and nine months 2015.

    In the third quarter 2015, NOVATEK's marketable production totaled 17.06 billion cubic meters of natural gas and 2,346 thousand tons of liquids, resulting in an increase in natural gas production by 1.86 bcm, or by 12.2%, and an increase in combined liquids production by 813 thousand tons, or by 53.0% as compared with the third quarter 2014.

    In the nine months period ended 30 September 2015, marketable production totaled 50.10 bcm of natural gas and 6,535 thousand tons of liquids, resulting in an increase in natural gas production by 4.24 bcm, or by 9.2%, and an increase in liquids production by 2,260 thousand tons, or by 52.9% as compared with the corresponding marketable production in the nine months 2014.

    In the third quarter and nine months 2015, NOVATEK processed 3,275 and 8,698 thousand tons, respectively, of unstable gas condensate at the Purovsky Processing Plant, representing an increase in processed volumes by 92.4% and 92.5%, as compared with the respective periods in 2014.

    In the third quarter and nine months 2015, NOVATEK processed 1,606 and 5,046 thousand tons, respectively, of stable gas condensate at the Ust-Luga Fractionation and Transshipment Complex, which was 35.5% and 56.4% higher as compared with the respective periods in 2014. Scheduled maintenance works at the first train of the Ust-Luga Complex were conducted in September resulting in lower throughput volumes as compared with the second quarter 2015. Maintenance works at the second train of the Complex are scheduled for October.
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    Alternative Energy

    Galaxy Resources Ltd. says prices for lithium carbonate in China have risen

    Lithium producer Galaxy Resources Ltd said prices for both technical and battery grade lithium carbonate in China have risen significantly on the back of tight demand and supply fundamentals, with current prices up almost 17% on the same time last year.

    Chinese lithium carbonate producers have lifted domestic lithium carbonate prices, and the uncontracted spot price for battery grade lithium carbonate in China has hit levels of up to RMB 45,000/tonne, or approximately US$7,000/tonne, in recent months.

    The Company also reports that technical grade lithium carbonate prices have followed the same trend with uncontracted spot prices up to RMB 40,000/tonne or approximately US$6,250/tonne.

    The price increases in China follow the increases in global lithium product prices, including lithium carbonate, announced by major producers Rockwood Lithium and FMC Lithium this year.
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    Breakthrough could lead to cheaper, cleaner solar cells - Report

    Solar Daily reported that the researchers have worked on developing iron-based solar cell dyes for three years and are surprised by how quickly they found a dye that can capture sunlight as efficiently as this.

    The hope is to develop efficient and environmentally friendly solar energy applications. Solar energy is an inexhaustible resource that we currently only utilise to a very limited extent. Researchers around the world are therefore trying to find new and more efficient ways to use the energy in sunlight.

    The technique the researchers in Lund are working on is solar cells consisting of a thin film of nanostructured titanium dioxide and a dye that captures solar energy.

    Today, the best solar cells of this type use dyes containing ruthenium metal - a very rare and expensive element.

    Mr Villy Sundstrom, Professor of Chemical Physics at Lund University, said that "Many researchers have tried to replace ruthenium with iron, but without success. All previous attempts have resulted in molecules that convert light energy into heat instead of electrons, which is required for solar cells to generate electricity."

    Researchers at the Chemistry Department in Lund, in collaboration with Uppsala University, have now successfully produced an iron-based dye that is capable of converting light into electrons with nearly 100 per cent efficiency.

    Mr Kenneth Warnmark, Professor of Organic Chemistry at Lund University, said that "The advantage of using iron is that it is a common element in nature. It can provide inexpensive and environmentally friendly applications of solar energy in the future."

    By combining the experiments with advanced computer simulations, the researchers are able to understand in detail required design concepts for the iron molecules to work. This knowledge is now being used for further developing the iron-based dyes. More research is needed before the new solar cell dye can be used in practice, but there are high hopes.

    Mr Villy Sundstrom said that "The results of the study suggest that solar cells based on these materials can be at least as effective as those of today that are based on ruthenium or other rare metals."

    The discovery could also advance research on solar fuels in which, like in photosynthesis of plants, water and carbon dioxide are turned into energy-rich molecules - solar fuel - with the help of sunlight.

    Mr Kenneth Warnmark said htat "We envision that the new iron-based molecules could also drive the chemical reactions that create solar fuel."

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    Biomethane plant in the UK inaugurated

    Sun Wind energy reported that the German company Agraferm Technologies AG (link is external) starts building its tenth biomethane plant in the United Kingdom. Overall, Agraferm has received three contracts for new biogas plants.

    While the project in Metheringham will produce biomethane, two other projects in Methwold and Crowland will produce biogas from a flexible substrate mix.

    Additionally, those two plants will use a cogeneration unit to produce electricity.

    The biomethane plant in Metheringham will consist of one digestor and post digestor, yield 400 m³ per hour and will have an electric capacity of 500 kW. As Heinrich Schulze Herking, Chief Technology Officer at Agraferm explains, plants in this performance class usually require three to four tanks but thanks to high-load fermentation, the new plant will require substantially less tank volume.

    The second project is situated in Crowland on Decoy Farm, right next to a compost facility run by Material Change Ltd., who manages construction and operation of the Crowland plant. The CHP plant being constructed there will use a mix of energy crops and waste material and will have a capacity of 2.8 MWel.

    The third order comes from Future Biogas Ltd. for a plant in Methwold, which will also use an individual concept with a flexible substrate mix.

    Yearly, about 50,000 tons of substrate will be fermented in the plant. Due to upstream milling, two digestors and one post digestor, more than half of the raw material for the plant will come from pig dung. Like Metheringham, the output of the plant will be around 400 m³/hour and it will supply a 500 kW CHP plant.

    Meanwhile, all three plants are scheduled for completion in 2015. Including them, Agraferm will have 20 biogas plants in the UK providing a raw biogas volume of approximately 200 million m³ per year.

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    German 2016 green power surcharge at 6.354 cents/kWh -grid firms

    A surcharge levied on German consumers to support renewable power will rise 3 percent next year, despite government efforts to scale back support for green power, a statement from the country's network operators (TSOs) showed on Thursday.

    The surcharge under the renewable energy act (EEG) will be 6.354 euro cents per kilowatt hour (kWh), up from 6.170 cents this year, it said.

    Sources told Reuters last week that the fee, which is added to consumers' bills, would rise by this amount and a leading green energy group had also anticipated higher costs.

    It had fallen this year for the first time since it was introduced in 2000.

    The fee represents the biggest single item to finance Germany's "Energiewende" policy, amounting to a total 22.3 billion euros ($25.49 billion) in 2014, according to the TSOs.

    Its growing size has created concern, leading to reforms to the system of rewarding green energy with above-market payments last year. These curbed incentives and set caps on green energy expansion, also mandating that it must be better integrated into the wholesale electricity market.

    The TSOs, which are supervised by the energy regulator, the Bundesnetzagentur, cited the following factors:

    Germany is adding more wind power capacity both offshore and onshore as well as biomass, which means more money is paid out under the EEG act..

    Also, the gap between guaranteed EEG prices and wholesale market prices obtained by mainly thermal power plants on energy bourse EEX has risen because prices have fallen sharply amid a fuels markets slump. They are currently at 12-year lows.

    The EEG provides for the difference between EEG support and market prices to help young technologies such as wind turbines and solar panels compete with conventional energy.

    The real eventual cost of the surcharge depends on weather patterns -- which rule how much renewable energy is produced and entitled to support from the EEG account only once it is fed into the grid.

    A household using 3,500 kWh per year would have to pay 222.39 euros towards the EEG alone in 2016, 3 percent more than this year, retail portal Toptarif said.

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    Lynas reports solid first quarter

    Despite low commodity prices, rare earths miner Lynas has achieved a strong first financial quarter. The ASX-listed company reported on Wednesday that stable production output, consistently high-quality end-product and efficient cost and cash management had been key contributors to the company generating A$1.3-million in free cash flow for the three months to September 30, despite rare earth prices dropping to historic lows.

    Lynas produced 3 171 t of ready-for-sale rare earths during the quarter, which was in line with guidance, and included 968 t of neodymium praseodymium. With production now stable, Lynas has focused on the quality of its cerium and lanthanum products and has made strides in improving quality output. This, the company said, would allow Lynas to serve new customers with higher-quality specifications. 

    The company sold 2 691 t of rare earth oxides in the three months under revieew, compared with the 2 353 t sold in the previous quarter. Sales revenue for the quarter reached A$46.2-million, down from the A$51.9-million achieved in the previous quarter. 

    Meanwhile, recovery rates improved at both the Mt Weld and Lynas Advanced Materials Plant, in Malaysia, and, along with the increased throughput, led to a reduced unit cost of production. Lynas said that continuing to reduce the cost of production was essential to mitigating the effects of the current low market prices.
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    Rare earth major cuts production

    China Northern Rare Earth (Group) High-tech Co Ltd said on Tuesday that it was effecting a 10percent reduction in its rare earth output target, as prices have fallen sharply due to oversupplyand illegal mining.

    The company, China's largest rare earth miner, said its reduced rare earth output for this yearwould be 2,596 metric tons. The move, the company said, will "help stabilize the market and propup prices of rare earth products".

    An informed source told China Daily that the company was asked by the government to cut itsoutput target in September, after prices fell more than expected, and many rare earth mining firmsslipped into the red.

    "The other five major rare earth miners will also roll out measures to cut their output targets forthis year," the source said. "We hope this will bring normalcy to the industry and relieve thepressures caused by a glut in the market."

    Operating revenue of the company rose 35 percent to 3.2 billion yuan ($502 million) for the firsthalf of this year, but its profit was only 260 million yuan, up a mere 2 percent for the same period.

    The average prices of neodymium iron boron permanent magnets made out of rare earths andused in strategic industries such as smartphones, military and airplane equipment, haveplummeted since 2011.

    Prices fell to their lowest this year, as China decided to drop export quotas in January, andannounced cancellation of rare earth export tariffs in April, in a bid to curtail smuggling.

    Meanwhile, the sharp drop in prices has boosted overseas sales of rare earths, as foreign buyersare going on a shopping spree, taking advantage of low prices.

    China, the world's largest rare earth supplier, exported 3,658 tons of rare earths in July, thehighest level in four years, double the amount from a year earlier. However, the average priceshave witnessed a drop of about 30 percent.

    During the first three quarters of this year, about 23,400 tons of rare earths were exported tocountries like the United States and Japan, data from the General Administration of Customsshowed.

    Chen Zhanheng, deputy secretary-general of the Association of China Rare Earth Industry, saidthat the curbs on production are expected to push up prices in the short term. However,technology will be the key to solving the problems faced by the rare earth industry in the longterm.

    "Companies will have to shift to downstream business to absorb the excess production," Chensaid.

    The Ministry of Industry and Information Technology announced the first batch of rare earth production quotas in 2015. This includes a quotas of 52,500 tons for rare earth mining and another 50,050 tons of rare earths smelting and separating production quotas.
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    PTC India sign MoU with Solar Energy Corpn

    Business Line reported that PTC India Ltd has signed a MoU with Solar Energy Corporation of India for the sale and purchase of power generated from 3,000 MW of solar projects.

    The power from these projects will be sold onward on a long term basis for 25 years from the commercial operation date of each project to the state electricity distribution utilities.

    PTC India Ltd statement said that "Under the said arrangement, SECI will facilitate development of 3,000 MW of solar projects at various locations on behalf of central public sector units or any other government/private agency. PTC will purchase solar power offered by SECI/project developers for onward sale to state utilities at tariffs to be determined by SECI through reverse auction process or any other competitive route."
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    CEFC’s Yates says solar-to-hydrogen fuel cheaper than petrol in regions

    Clean Energy Finance Corporation chief executive Oliver Yates says he is a big fan of hydrogen energy, and believes that right now solar-to-hydrogen fuels in regional Australia would be cheaper at the pump than petrol. All that is missing are the hydrogen fuel cell cars and a refuelling network.

    But Yates would like to fix that. “I’m a self-proclaimed hydrogen junkie,” he quipped in a speech to 6th World Hydrogen Technologies Conference in Sydney this week. That was opposed to the overall Australian economy, which he said was a “carbon junkie” and needed to drop its habit of heavy emissions.

    Yates has a vision of having hydrogen fuels follow the NBN network around Australia. This, he says, would provide power for the telecoms towers, and also provide a network of fuelling stations that could be used by commercial and heavy vehicles – utes, trucks, buses and even tractors – and at the distances required in regional Australia.

    “There is an ability for hydrogen to be a piggy back technology – with one investment, Australia can solve two problems. Can we think that far ahead?”

    Yates said that an array of solar panels, with an electrolysed to transform the electricity into hydrogen (just add water and bottle the left over pure oxygen) might be able to deliver fuel at around $1.25 a litre. In areas such as Mt Isa, where fuel had to be trucked vast distances, petrol prices were above $1.40. In other areas, even more.

    Yates said that potentially in some remote areas, it would be possible to cut out the costly transportation of fuels. “We have got significant solar resources, and significant wind resources,” Yates said.

    “We like the hydrogen space; it is versatile, transportable and flexible and economic in regional Australia right now. It is a very exiting market.”

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    Statoil Readies Investment in Scottish Floating Wind Farm

    Statoil ASA, Norway’s biggest oil company, is looking to make an investment decision to go ahead with its Hywind floating windpower farm offshore Scotland within the six next weeks, the first such commitment since creating a separate renewable-energy unit.

    “Offshore wind has a strong potential” along the coast of the U.K., Stephen Bull, senior vice president for wind power projects, said in an interview Tuesday at Statoil’s office outside of Oslo. “It’s a natural place to try and develop and build our business.”

    The Hywind park, which will consist of five 6 megawatt floating turbines, is a pilot project designed to demonstrate the technology on a commercial scale, according to Statoil. Bull declined to provide a spending estimate. Construction is planned to start as early as next year with final commissioning in 2017, according the company.

    Statoil is committing to the project after Chief Executive OfficerEldar Saetre, who succeeded Helge Lund at the top of the Norwegian state-controlled company a year ago, named Irene Rummelhoff to head its newly created New Energy Solutions unit.

    While the company aims to take advantage of its offshore expertise in expanding into offshore-wind and other renewable-energy projects, they will need to compete with oil and gas ventures to demonstrate profitability, Bull said.

    “To kick off and develop a renewables business, you can’t do this on the hope that we will make money one day,” he said. “We need to have positive rates of return. We need to show that this can be profitable.”

    Statoil’s only commercial wind project in production is the Sheringham Shoal farm offshore eastern England. It also made an investment decision on the nearby Dudgeon project last year and is a partner on two Dogger Bank projects, which were approved by the U.K. earlier this year.
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    Westport & Gazprom Sign Agreement for Manufacturing in Russia

    Westport Innovations Inc., developer of advanced engines and vehicles for the global natural gas for transportation market, has signed a market agreement with Gazprom of Russia’s subsidiary Gazprom Gazomotornoye Toplivo (Gazprom) which focuses on expanding the use of natural gas vehicles in Russia and the localization of manufacturing of Westport’s Emer brand natural gas products. The agreement was signed at the St. Petersburg International Gas Forum, where the two parties signed a roadmap outlining their planned market development activities.

    Gazprom has 200 existing compressed natural gas (CNG) stations, with plans to invest in existing station upgrades and new station construction to meet a target of about 500 fuelling stations by 2020. According to Gazprom, CNG consumption is projected to grow from 0.4 billion cubic meters in 2013 to 10.4 billion cubic meters by 2020, and LNG consumption to grow from zero to 3.8 million tons per year. Thirty-one regions in Russia have been selected for investment projects promoting the use of natural gas as a vehicle fuel.

    “Gazprom is investing in initiatives to accelerate growth of the natural gas vehicle market in Russia due to strong demand for emissions compliance,” says Mikhail Likhachev, Director General of Gazprom Gazomotornoye Toplivo. “We are working with Emer, a Westport company, for its expertise in natural gas vehicle components and market development.”

    “In addition to assessing localized manufacturing and building relationships with Russian OEMs for vehicle development opportunities, Westport will advise on regulatory requirements to enable effective use of natural gas in transportation,” added Maurizio Grando, Executive Vice President, Applied Technologies Group at Westport.

    According to Power Systems Research, there were a total of 2.2 million units sold in the light-duty market (cars, light-duty trucks and vans) in Russia in 2013. In the medium- and heavy-duty bus and truck market, there were 119,881 units sold in the same timeframe.
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    Cheap natural gas from U.S. shale claimed another victim this week.

    Entergy, a large integrated utility specializing in nuclear power, announced that it will be shutting down its Pilgrim Nuclear Power Station in 2019, citing “poor market conditions, reduced revenues and increased operational costs.”

    The Pilgrim plant, located in Plymouth, Massachusetts, has a capacity of 680 megawatts, enough power to supply 600,000 homes in New England with electricity. However, the power plant has been undercut by cheap natural gas, as New England increasingly ties into shale gas from the Marcellus Basin in Pennsylvania.

    Cheap gas is putting downward pressure on wholesale power prices, pushing them down to $10 per megawatt hour, levels that are unprofitable for the Pilgrim plant. Entergy blamed flaws in electricity markets, which policymakers have failed to address. For example, nuclear power provides baseload power, 24 hours per day, and is low-carbon. That should theoretically make the plant a key part of the region’s climate change strategy. But since there is no price on carbon, the Entergy plant is not compensated for providing clean energy.

    And with an eye on cheap natural gas, the region is supporting the expansion of natural gas pipelines to increase access to the fuel, with the intention of sourcing a larger share of the region’s electricity supply from natural gas.
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    Denison, Fission cancel merger as investor support falls short

    Canadian uranium companies Denison Mines Corp and Fission Uranium Corp said on Tuesday they have terminated their C$483 million ($371.71 million) merger agreement due to opposition from Fission's shareholders.

    While a majority of the Fission shares voted were in favor of the purchase by Denison, the required two-thirds approval was not obtained, the companies said in a statement.

    "A lot of people who own our stock tend to be the type who want a home run, not a single," Fission Chief Executive Dev Randhawa said in an interview. "They feel combining it with another company dilutes the story."

    Cantor Fitzgerald analyst Rob Chang said some Fission shareholders did not support the combination because it lacked operational synergies. They viewed Denison's assets as lower quality than Fission's Patterson Lake South project in northern Saskatchewan, he added.

    Randhawa said he does not expect a revised offer from Denison.

    Fission's shares jumped 5.8 percent, or 4 Canadian cents, to 73 cents in Toronto, while Denison's stock gained 1.5 percent, or 1 Canadian cent, to 68 cents.

    Fission will continue drilling at Patterson Lake, viewed by some as the best undeveloped uranium deposit in the world, and resume its search for a strategic investor, Randhawa said.

    At the deadline for submission of proxies on Friday, Denison's shareholders strongly supported the arrangement.

    Both companies have canceled the shareholders' meetings scheduled for Wednesday.

    Up to Friday's close, Denison Mines' shares had declined 9.4 percent since the announcement of the deal, while Fission Uranium's stock had lost nearly a third of its value.

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    China aims to become world's top nuclear power producer by 2030

    The Chinese government aimed to make China the world's top generator in terms of both capacity and number of reactors by 2030, state reported on October 12.

    China is poised to greatly expand the country's nuclear power generation, with plans to build six to eight new reactors a year over the next five years.

    Under its 13th Five-Year Plan, which starts in 2016, China's nuclear power capacity is to triple by 2020, compared with the end of 2014, reaching 58 GW. By 2030, China is expected to have more than 110 nuclear reactors in operation, exceeding the number in the U.S.

    According to the European Nuclear Society, China is now the world's fifth-largest nuclear power producer in terms of capacity, after the U.S., France, Japan and Russia.

    China will invest 500 billion yuan ($78.7 billion) to introduce domestically developed reactors in the next five years. The government plans to make nuclear power a pillar of its economic policy and increase support for related government organizations and industries.

    According to the China Nuclear Energy Association, there are 25 nuclear reactors operating in the country and a further 26 under construction. Under previous five-year plans, Chinese authorities approved construction of three to five reactors a year.

    In addition to unfreezing new projects, China will lift a ban on nuclear projects in inland areas and promote the introduction of domestically developed reactors under its next five-year plan. China hopes to make nuclear reactors a major infrastructure export in the future, along with high-speed trains.

    The new Five-Year Plan is to be formally adopted at next spring's annual session of the National People's Congress, China's parliament.
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    U.S. lawsuits build against Monsanto over alleged Roundup cancer link

    Personal injury law firms around the United States are lining up plaintiffs for what they say could be "mass tort" actions against agrichemical giant Monsanto Co that claim the company's Roundup herbicide has caused cancer in farm workers and others exposed to the chemical.

    The latest lawsuit was filed Wednesday in Delaware Superior Court by three law firms representing three plaintiffs.

    The lawsuit is similar to others filed last month in New York and California accusing Monsanto of long knowing that the main ingredient in Roundup, glyphosate, was hazardous to human health. Monsanto "led a prolonged campaign of misinformation to convince government agencies, farmers and the general population that Roundup was safe," the lawsuit states.

    The litigation follows the World Health Organization's declaration in March that there was sufficient evidence to classify glyphosate as "probably carcinogenic to humans."

    "We can prove that Monsanto knew about the dangers of glyphosate," said Michael McDivitt, whose Colorado-based law firm is putting together cases for 50 individuals. "There are a lot of studies showing glyphosate causes these cancers."

    "Glyphosate is not a carcinogen," company spokeswoman Charla Lord said in an emailed statement. "The most extensive worldwide human health databases ever compiled on an agricultural product contradict the claims in the suits."

    Roundup is used by farmers, homeowners and others around the globe and brought Monsanto $4.8 billion in revenue in its fiscal 2015. But questions about Roundup's safety have dogged the company for years.

    Attorneys who have filed or are eying litigation cited strong evidence that links glyphosate to non-Hodgkin lymphoma (NHL). They said claims will likely be pursued collaboratively as mass tort actions.

    At least 700 lawsuits against Monsanto or Monsanto-related entities are pending, brought by law firms on behalf of people who claim their non-Hodgkin lymphoma was caused by exposure to PCBs that the company had manufactured until the late 1970s.
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    Syngenta sales fall 12 pct on Brazil weakness

    Third-quarter sales at Swiss agricultural chemicals group Syngenta AG fell by more than expected as the weak currency in Brazil, its second-largest market, eroded the value of overseas business.

    The company is under pressure to boost shareholder returns after fending off a $47 billion takeover approach from U.S. seeds rival Monsanto in August.

    Sales fell 12 percent to $2.62 billion, whereas analysts polled by Reuters had on average expected only a 5 percent decline to $2.82 billion.

    "Sharp depreciation of the (Brazilian) real in the quarter created major market disruptions. Because of its suddenness we were not immediately able to increase prices to compensate," finance chief John Ramsay told analysts in a conference call.

    The company planned to push up prices in Latin America, he added.

    Syngenta said its earnings before interest, tax, depreciation and amortisation (EBITDA) would fall by a figure of around 5 percent this year because of currency effects.

    Brazil's real hit an all-time low in September amid a political crisis coupled with an economy in recession, which has also proved a headache for rivals.

    The shares dropped 2.7 percent to a more than nine-month low, amid rising scepticism about the group's medium-term profitability and sales targets.

    "The expected growth from 2016 is fraught with uncertainty because of potentially longer-lasting market weakness," Zuercher Kantonalbank analysts said.

    Rival DuPont this month cut its full-year operating profit forecast by 11 percent, citing weak pesticides and seeds demand in Brazil.

    Also this month, Monsanto said it expected low prices for agricultural produce to squeeze results well into 2016 and unveiled plans to cut 2,600 jobs.

    Latin America typically accounts for about 45 percent of Syngenta's total sales in the second half.

    Brazil, which is a big producer of soybeans, sugarcane and maize, was Syngenta's second-most important market in 2014, generating 19 percent of sales.

    In Brazil, low commodity prices weighed on pesticides and seeds markets, as did the sharp currency depreciation and tight credit conditions for farmers, the Swiss company said.

    The company maintained its 2015 target of an improvement in its EBITDA margin from 19.3 percent last year, helped by cost cutting efforts.

    It will also get a boost from a $200 million upfront payment from selling some rights to genetically modified corn traits to Germany's KWS and France's Limagrain.

    As part of an expansion of its licensing collaboration with the two companies and their joint ventures AgReliant and Genective, Syngenta also stands to receive future royalty and milestone payments over 20 years.

    Syngenta last month unveiled plans to buy back more than $2 billion of stock to boost shareholder returns after rejecting Monsanto's takeover approach, and is putting its vegetable seeds business on the block to fund the measure.
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    Precious Metals

    Gold breaks out

    Gold breaks out

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    Mitsui to shut precious metals business in London, New York-sources

    Mitsui will close its precious metals businesses in London and New York at the end of this year, two sources familiar with the situation said, due to sliding commodity prices and more stringent regulation.

    "Mitsui is shutting down precious in London and New York in December," one source said.

    Mitsui, which started trading precious metals in 1970, is the latest to join a retreat by banks and brokers from some commodity markets as profits and prices tumble on concern about slowing Chinese economic growth.

    Mitsui & Co. Precious Metals Inc, a wholly-owned subsidiary of Mitsui & Co incorporated in the United States, has a team of approximately 50 trading gold, silver, platinum, palladium, rhodium, ruthenium and iridium from offices in Hong Kong, London and New York.

    The sources did not know how many jobs would be affected across trading, sales and research.

    Mitsui trades precious metals on the Tokyo Commodity Exchange (TOCOM) in Japan and also has offices in Hong Kong.

    "The decision will affect global operations, as it will reduce volumes," the second source said.

    The trading house also participates in the twice-daily auction setting the London silver benchmark run by the Chicago Mercantile Exchange and Thomson Reuters. Its withdrawal would leave five banks to set the price.

    Last month, Mitsui was included by Switzerland's competition authority WEKO on a list of banks being investigated for possible collusion over the pricing of precious metals.
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    South Africa’s AMCU union votes to strike in gold sector

    South Africa’s Association of Mineworkers and Construction Union (AMCU) voted on Sunday to strike at the operations of AngloGold Ashanti, Harmony Gold and Sibanye Gold.

    “The whole gold sector has voted for a strike,” AMCU President Joseph Mathunjwa said after a crowd of about 5,000 miners voted by a show of hands.

    AMCU, which lead a bruising five-month strike last year in the platinum sector, is known for its uncompromising stance, and has not backed down from its original demand for a more than doubling of basic wages to R12,500 a month.

    South Africa’s gold producers, who are grappling with depressed prices and soaring costs, say they can ill afford such demands – even Sibanye, which is the most profitable gold bullion producer in the country.

    The vote will not lead to an immediate stoppage.

    “If you look at the platinum strike we didn’t go on strike when we got the strike certificate. We have to use our heads, and not our stomachs,” Mathunjwa said. “That has to be taken to structures of AMCU.”

    Only at Sibanye does the AMCU have a clear path to a strike that would not be deemed wildcat.

    The Chamber of Mines has said Harmony and AngloGold will go to court to prevent AMCU from striking because they have signed wage deals with three other unions representing most of their workers.

    The industry says this means they can apply the same agreement to the rest of their workforce. This happened two years ago in the gold sector, when AMCU was forced to accept agreements signed by other unions.

    Sibanye’s situation is different: it will only sign an agreement if all four of the unions represented at its operations accept it.

    Even if Sibanye wanted to, it could not impose an agreement on AMCU because the other three unions combined do not represent a majority of its workers.

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    Base Metals

    Anglo-Glencore Collahuasi copper mine postpones expansion plan

    Chile's second-biggest copper mine Collahuasi, owned by Anglo American and Glencore has postponed expansion plans, on top of its previously announced cuts, as it faces a six-year low in the price of the base metal. 

    On September 29, Collahuasi had said it was planning to cut output by 30 000 t, alongside dozens of jobs, because of difficult market conditions. But a letter addressed to workers that same day, seen by Reuters on Wednesday, added that its growth project would also be delayed. "The growth project has been postponed and operations at our company will be reduced," the letter said. 

    Collahuasi has been mulling expansion plans to double the mine's annual production to around one-million tonnes for some time, a plan originally slated to cost some $6.5-billion. 

    Metals companies globally have been cutting back on production and freezing expansion plans as a cooling Chinese economy has darkened the outlook for a quick recovery in the copper price. Collahuasi could not immediately be reached for comment on Wednesday.
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    Indian copper firms sends SOS to government on cheap imports

    ET reported that India's three copper majors Hindalco Industries, Vedanta Ltd and Hindustan Copper Ltd have warned the government that the sector is facing an imminent shutdown in the face of a surge in cheaper imports from Japan and Asian countries

    Operating at 75% of capacity, the industry has cautioned about further cuts in production that could impact 10,000 jobs, blaming free trade agreements or FTAs, which would allow an influx of duty-free copper by 2021, for making the entire sector unviable.

    An industry executive said “Both primary copper producers and downstream industries, including over 800 small and medium enterprises, are suffering, and production may have to be cut further soon. The issues have been raised with officials in the mines ministry and would also be taken up with the ministries of finance and commerce. 'The domestic industry looks forward to government's support to maintain its viability and improve its competitiveness and will contribute significantly to the PM's vision of Make in India.”

    The development assumes significance amid a tepid global commodity market that is seeing demand shrink as China's hunger for resources is slowing down in tandem with its growth. The copper industry's SOS call comes within a month of the Modi government decision to impose a 20% safeguard duty on import of some steel products for 200 days, after a similar clarion call from local steelmakers.

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    Vedanta raises prospect of more copper cuts

    Vedanta Resources raised the prospect of further cuts in copper production from its Zambia-based Konkola Copper Mines (KCM).

    "If copper prices remain low and we see further constraints on power availability that will put some copper production at risk," said Tom Albanese, CEO of Vedanta. He was commenting on the sidelines of the Joburg Indaba mining conference.

    On October 2, KCM said it would send an additional 148 workers on forced leave, owing to weak copper prices and power shortages. This follows some 133 employees who were asked to stay away from work while KCM reviewed operations.

    "We have reduced our own consumption by 20% in the past few months, but it is not enough to overcome the power deficit, so we have reduced refining capacity and that led us to reduce mining operations," said Albanese.

    In September Glencore's Mopani Mines said that it planned to cut 4,300 workers at its Mopani operations for the similar reasons as those of Vedanta.

    Zambia has installed capacity of 2,300MW but a drought which has restricted the productive capacity from hydroelectric sources has resulted in a deficit of some 985MW in September versus the maximum recorded demand of about 1,960MW.

    Zambia's finance minister, Alexander Chikwanda, estimated recently that the country would produce 25% less copper this year, partly owing to lower power availability. "By the end of the year, I don’t think we’ll go far beyond, very much beyond 600,000 tonnes," said Chikwanda.
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    LME Week delegates mildly optimistic

    LME Week delegates mildly optimistic 

    The mood at the metals world's number one annual gathering – LME Week – appears to be one of cautious optimism.

    A survey of 400 metals and mining investors polled by Macquarie at the London summit returned a moderately bullish view of the next 12 months for base metals.

    Platts quotes Macquarie's head of commodity research Colin Hamilton as saying "despite the ongoing and conspicuous issues for fundamentals across base metals markets, the overall mood was not as bearish as we might have expected":

    "While concern over Chinese economic growth and metals demand was clear, the consensus for growth, albeit slower, persisted," he added.

    Zinc was the top pick among the delegates with the consensus view that the metal would be trading at $2,000 a tonne in a year's time, up by double digits from today's ruling price.

    Glencore may also ride to the rescue of nickel with speculation rife that the Swiss mining and trading giant is on the brink of announcing supply cuts

    Glencore said last week it would slash its zinc output by over a third or 500,000 tonnes, most of it in Australia, after the price of the industrial metal fell to a five-year low leading to a 10% jump in the price on Friday.

    Copper was also expected to strengthen adding $500 to todays's price around $5,300 over the next year, while tin should continue its good run holding onto its gains around $15,000 a tonne.

    Aluminum was considered the worst bet with predictions of a fall to $1,450 a tonne by this time next year.

    Last year's favourite, nickel also found no love with forecasts of further losses to $9,650 a tonne compared to today's LME ask of $10,460 a tonne.

    But here Glencore may also ride to the rescue with speculation rife that the Swiss mining and trading giant is on the brink of announcing cuts at its operations in Canada, Australia, New Caledonia and elsewhere. Glencore is the world's fifth largest producers of the steelmaking raw material.

    During the boom years copper was the top pick among summit attendees for five years in a row before switching to lead and tin in 2013.

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    Nickel pig iron producer in Indonesia to triple capacity by May

     A unit of China steel producer Tsingshan Group is set to triple its capacity to produce nickel pig iron in Indonesia as soon as May, an executive said, as the Southeast Asian nation pushes to win more profit from its mineral wealth.

    Chinese stainless steel mills often feed nickel pig iron into furnaces to strengthen their product as a cheaper alternative to refined nickel.

    That means increased Indonesian nickel pig iron output could help pour cold water on remaining hopes for international nickel prices to climb off six-year lows.

    "By May next year, we'll have an installed capacity of 900,000 tonnes of nickel pig iron," Tsingshan Bintangdelapan Group CEO Alexander Barus said in an interview late last week.

    The expansion of its facility on the island of Sulawesi will make the company the country's top producer of the nickel iron feed. The plant has been operating at 60-70 percent of its current capacity of 300,000 tonnes, said Barus.

    The firm is developing three smelters at the site, which once completed will have a combined annual output capacity of 1.2 million tonnes of nickel pig iron, containing 120,000 tonnes of nickel. The group expects all three smelters to be completed by June 2017. Other stakeholders include Hanwa Co Ltd of Japan.

    Output from the plant has already driven the Southeast Asian nation to become the top supplier of the feed to China's vast stainless steel sector in the wake of a ban on exporting mineral ores that kicked in at the start of last year.

    Growing smelting capacity is a rare piece of good news for President Joko Widodo who has been struggling with faltering economic growth and political infighting since taking power last year, as his government has prioritised a drive to win bigger returns from Indonesia's mineral resources.

    While the ban was intended to boost Indonesia's profits from its mineral wealth, miners and analysts had doubted the viability of developing downstream mineral processing facilities.

    Barus said the timetable for expanding the project had not been changed due to the low nickel prices, which this week stood around $10,400 per tonne. He expects price to recover to $12,000-13,000 in the next six months as the global economy revives.

    "We are producing at a loss now, but this is the way you arrive at an area where in the future you are going to be competitive," he said.

    "For the time being we are sticking to our schedule."

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    Indonesia wants more royalties from Freeport for longer contract

    Freeport-McMoRan Inc should significantly increase the amount it pays in royalty payments to the Indonesian government if it wants to extend a contract to operate one of the world's biggest copper mines, a cabinet minister said on Tuesday.

    The U.S. firm last week said it received assurances from Indonesian mining minister Sudirman Said that Freeport's contract for its giant Grasberg copper and gold mine would be extended beyond 2021.

    But comments this week from Said's boss, chief natural resources minister Rizal Ramli, have raised questions as to whether contract renegotiations between Freeport and the Indonesian government will be that straightrandiforward.

    Ramli, who oversees mining and energy, sharply criticized Freeport's history in Indonesia, telling parliament that the government had not shared enough in the company's profits over the past few decades.

    "It is time to rewrite our history," Ramli said. "(Freeport) has to pay 6-7 percent royalty."

    "If Indonesia's government shows its persistence and it won't easily be lobbied by Freeport, I think that Freeport will give up in the negotiation process and follow what we want."

    Freeport agreed in July 2014 to start paying 4 percent in royalties on copper sales, up from 1.5-3.5 percent previously.

    Freeport spokesman Riza Pratama said a royalty payment increase was one of the issues being discussed with the government.

    "(The mines ministry) and Freeport are working hard to finalize the contract extension," Pratama said.

    Freeport, the biggest listed U.S. copper producer and one of Indonesia's largest taxpayers, has been trying for years to obtain a contract extension but the government says legally it cannot start talks until 2019.

    An Indonesian government official said on Friday it planned to amend rules on mining contracts by the end of this year, allowing Freeport to apply for an extension immediately.

    Freeport plans to invest $18 billion to transition the Grasberg complex from an open pit to underground mining in late 2017. The company currently produces about 220,000 tonnes of copper ore per day, which is then converted to copper concentrate.

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    In metals shake-up, Noble has been selling aluminium stockpiles – sources

    In metals shake-up, Noble has been selling aluminium stockpiles – sources 

    Noble Group Ltd's efforts to free up capital by reducing stockpiles of base metals include selling off some of its large holdings of aluminium, historically one of its biggest businesses, sources said. 

    As part of a strategy to shrink its metals franchise, the second-biggest division by revenue after energy, Noble has been quietly selling copper, zinc and lead since July, two sources familiar with the matter said. 

    The company has not publicly commented on the changes or on a series of high-profile departures from the metals group. Still, company officials have privately portrayed them as a shift away from noncore, capital-intensive areas as the company focuses on its legacy strengths, which include alumina and aluminium trading. Yet the inventory reduction has also occurred in aluminium, the sources said, suggesting that the metals division shake-up may be deeper than widely known. 

    "Inventories across all commodities have been ordered down to free up cash since Q2," said a source familiar with the matter. He said sales of copper, lead and zinc will likely continue as the company cuts its exposure to capital-intensive markets like copper and following the departure of the traders. But the aluminium business has been hit by the "meltdown" earlier this year in premiums, which are surcharges paid on top of the benchmark London Metal Exchange for physical delivery of metal, he said.

    In August, Noble blamed the second-quarter loss at its metal and mining division, the first in at least five years, on the unprecedented plunge in premiums. The metals and mining business accounted for about 20% of group's $18-billion quarterly revenue. 

    Noble's rival Glencore is also offloading excess stock to help pay off debt. Glencore has said it would cut its "readily marketable inventories" by $1.5-billion and would reduce working capital by an additional $1.5-billion, partly from liquidating more inventories. 

    It was not clear how much metal Noble has sold, but one of the sources said it has sold less than Glencore has. Noble's aluminium book is considered one of the largest in the industry, competing with Glencore and Trafigura. Traders said they have not seen much evidence of Noble's sales in the market. 

    Still, the release of unwanted stock on the market already awash with metal has likely kept premiums under pressure. US surcharges have steadied near two-year lows of 8.50c/lb in recent months after plunging by more than 60% since March amid concerns about waning demand from China, the world's top consumer.
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    Hedge funds playing dangerous game with copper - Rio Tinto

    Image Source: Business WireAccording to the head of copper at Rio Tinto Group, hedge funds betting that copper will drop further are playing a dangerous game with prices.

    Rio Copper & Coal Chief Executive Officer Mr Jean-Sébastien Jacques said in an interview in London The metal is not trading on fundamentals. There is lots of short-selling in copper and we've seen the pick up in terms of short-selling in copper on the back of what happened in China a few months ago."

    He said “A glut of copper has exacerbated short-selling by hedge funds and China's move in August to restrict such sales in equities has prompted funds to redirect bearish bets on the nation's economy to copper.”

    His view echoes Glencore Plc CEO Ivan Glasenberg's comments last week that the market was being distorted but that supply and demand would eventually prevail. The metal has slumped about 16 percent this year amid a slowdown in China, the biggest user.

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    China copper imports surge a third in September

    China's monthly copper imports surged a third in September, hitting a 20-month high after staying flat in the previous three months, as price differentials favoured spot purchases and some shipments arrived ahead of the week-long Oct. 1 holiday.

    Imports of anode, refined copper, copper alloys and semi-finished copper products stood at 460,000 tonnes in September, the highest since January 2014 and compared to 350,000 tonnes in August, July and June 2015, data from the General Administration of Customs showed on Tuesday.

    Arrivals increased 17.9 percent from a year ago. In the first three quarters, imports dropped 5.5 percent from a year ago to 3.39 million tonnes.

    "High arrivals in September were linked to good arbitrage ratios. Some shipments also arrived earlier ahead of the week-long Oct. 1 holiday," said Yao Yao, analyst at Maike Futures Brokerage.

    But Yao said the growing imports did not reflect a strong boost in domestic consumption. She expected monthly imports in the fourth quarter to be slow due to the weaker economic growth.

    Spot copper prices in China CU-1-CCNMM reached a 2-month high of about 41,200 yuan in September, supported by some production cuts by smelters and expectations that a weaker yuan would increase import costs.

    Stronger demand for spot refined copper imports had pushed up premiums for bonded stocks to a one-year high of about $130 a tonne, traders said. Some importers had also bought spot shipments from Asia and Chile.

    Bonded stocks in Shanghai, imported metal that has not been assessed for China's 17-percent value-added tax, were estimated by traders at about 400,000 tonnes currently, compared to about 570,000 tonnes in early August.

    Imports of raw material copper concentrate rose 5.2 percent to 1.21 million tonnes in September, compared to 1.15 million tonnes in the previous month, the data showed.

    Concentrate imports in September was down 6.2 percent from a year ago. In the first three quarters, imports rose 9.3 percent on-year to 9.33 million tonnes.

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    No more funds for Chile copper producer Codelco for now - minister

    Chile's government is not planning for now to give more funds to state-run copper producer Codelco, the world's No.1 supplier of the metal, having already pledged $4 billion until 2020, its mining minister told Reuters on Monday.

    Codelco, though, has said it needs to invest $25 billion over five years to dig deeper at new and existing sites and keep production flowing.

    "At the moment what is important is that Codelco is sufficiently capitalised from year to year," Mining Minister Aurora Williams said on the sidelines of LME Week in London.

    "Over the five years the amount cannot exceed $4 billion, since this is what is established in a law passed by the Chilean congress."

    Codelco hands it profits to the state, and is funded in part by the return of some profit and in part by issuing debt. But with copper prices at a six-year-low, the cash-strapped government has so far promised just $4 billion in returned profits between 2015 and 2020.

    The government has pledged billions of dollars for an overhaul of the education system and other social initiatives and is reluctant to promise more funds to Codelco at a time when the economy is struggling.

    Williams said the only condition for Codelco to receive the funds from the government was that its mining projects "keep advancing". She added it was too early to say how the government plans to help Codelco beyond the five-year period.

    Mining firms globally have been hit hard by a slump in metal prices, mostly due to an economic slowdown in China, which accounts for half of the world's copper demand.

    Copper makes up over half of Chile's exports, leaving it more exposed than other Latin American economies to China.

    Williams said she expected some producers to exit the market, which would help lift prices that have roughly halved from a 2011 high.

    "We are not going to return to prices seen during the super cycle, the recovery will be slow," she said. "We hope that by the first quarter of 2017 the copper price will rebound to an average of $2.5 (a pound)."

    Benchmark copper on the London Metal Exchange was up a percent at $5,323 per tonne at 1230 GMT on Monday. It hit a record high above $10,000 per tonne in 2011.

    Williams said Chile's copper output was expected to be steady at 5.8 million tonnes this year, with production seen rising by 3.8 percent in 2016.
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    Scrap Metal prices tell a different story to the LME

    Image title

    Records tumble at the LME but China expansion on hold

    The London Metal Exchange saw record electronic trading volumes after Glencore's decision to cut a third of its annual zinc production on Friday. The exchange is also planning to launch mini-futures contracts in nickel, tin and lead in Hong Kong but has abandoned plans to set up a warehousing network in China for the time being, according to Charles Li, the head of Hong Kong Exchange, the parent company of the LME.

    Everyone is pessimistic on base metals.

    At the LME Seminar in Westminster there was hardly a positive word from its panellists on aluminium, copper, nickel, lead or zinc.

    There would need to be "deep pain" and production cuts in the market outside China before stockpiles of aluminium fall said one consultant, while copper could take another lurch lower because of weak demand in China and emerging markets. As for zinc the positive impact from Glencore's big production cut could be offset by increased Chinese production. Electric vehicles were seen threatening the future of lead while large warehouse stocks will continue to weigh on the price of nickel.

    Who is next (for production cuts)?

    First it was thermal coal, then copper and most recently zinc. Delegates at the LME Seminar said nickel could be the next base metal where the pain of lower prices forces mines to close or be put under care and maintenance. Alternatively, attendees speculated one option might be for Glencore to look to merge its Canadian nickel operations with neighbouring assets controlled by Vale and lower output that way along with significant cost savings.

    Attached Files
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    Norsk Hydro inks deal with Vale to lift MRN ownership to 45%

    Primary aluminium producer Norsk Hydro has settled a deal with Brazilian mining company Vale to possibly buy Vale's 40% interest in Brazilian bauxite producer Mineração Rio do Norte (MRN), which would strengthen Hydro's global position as a long-term player in bauxite and alumina. 

    The Norwegian firm on Friday said an eventual agreement would depend on the parties agreeing terms for Hydro to acquire Vale's 40% interest in MRN, completion of Hydro's due diligence process, approval by the parties' boards and by the relevant competition authorities. 

    The parties would also seek support from the other MRN shareholders for the transaction and would advance under the terms of the existing shareholders' agreement. Vale currently held a 40% stake in MRN, while Alcoa owned 18.2%, South32 held 14.8%, Rio Tinto held 12%, CBA held 10% and Norsk Hydro 5%. 

    MRN was situated in the westernmost part of the state of Para, home to Hydro's other Brazilian operations, and was Brazil's, and one of the world's, largest producers of bauxite, a critical ingredient in the aluminium-making process. In operation since 1979, MRN currently employed around 1 400 employees and a significant number of contractors. 

    Norsk stated that MRN was a well-operated mining operation with a competitive cost position owing to its high-quality bauxite, attractive strip ratio and economy-of-scale benefits through its production of 18-million tonnes a year. In addition to mining licences covering 143 000 ha, operations included mine infrastructure and equipment, the Porto Trombetas township, railway, stockyard, beneficiation plant, tailings disposal system, driers, port and power generation facilities.
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    Vedanta reports record zinc production

    The diversified global mining company announced a second quarter/first half production update. The group pointed to record production for its tier-1 zinc mines and lower costs for its Zambia copper operations. Oil and Gas second quarter production rose by 6% year-over-year.

    In relation to the company's financial position, the second quarter saw several initiatives and programmes to generate cash savings, including a reduction of working capital implemented across its businesses. These initiatives had resulted in an improved cost performance and lower net debt. Net debt at the end of the quarter is expected to be below US $8bn and management is confident of meeting its covenants at Vedanta Resources plc as at 30 September 2015.

    Chief Executive comment:

    Tom Albanese, Chief Executive Officer, Vedanta Resources plc, said: "Our diversified asset portfolio has delivered a strong operating performance during the quarter. We are continuing to drive efficiency improvements and optimise opex and capex across the business. While the near-term market outlook is challenging, we believe we have the right mix of commodities to benefit from future demand in India and globally."
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    Zinc deficit seen at 152,000 T in 2016 -ILZSG

    The global zinc market is forecast to have a surplus of 88,000 tonnes this year, but is expected to see a deficit of 152,000 tonnes next year, the International Lead and Zinc Study Group said on Friday.

    The group also said after its annual meetings that the global lead market is forecast to have a surplus of 97,000 tonnes in 2016, compared to "a close balance" this year.
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    China to keep expanding copper smelting capacity

    China will keep ramping up its copper smelter capacity even though copper prices have slumped to six-year lows as the top metals consumer reduces its reliance on imported refined metal, an industry conference was told Thursday.

    China will also keep up investments in overseas copper mines to secure supplies of concentrate, an intermediate raw material that feeds smelters, analysts said.

    Benchmark copper prices on the London Metal Exchange have slid by nearly a fifth so far this year, mainly on concern about demand in China.

    China, which has tripled smelting capacity since 2007 to 6 million tonnes, is due to commission another 900,000 tonnes of copper smelting capacity before 2017, an Chinese consultancy analyst told the Metal Bulletin Copper Concentrates conference. "China will continue to rely on imported concentrate," said Min Cui, an analyst at the Beijing General Research Institute of Mining and Metallurgy.

    China's imports of copper concentrates climbed 17 per cent in 2014 and are forecast to increase another 7 per cent this year, she added.

    This year will be the first time since 2006 that Chinese imports of copper concentrates exceed those of cathode metal, said Colin Hamilton, head of commodities research at Macquarie in London.

    The trend is due to continue with increasing reliance on South America, he added. "Chinese concentrate imports from Chile and Peru have more than doubled since the end of 2012." China will also have to boost concentrate imports as its domestic mine output is due to keep declining. "Even with mining costs coming down this year, at the sharp end of the spectrum in terms of Chinese mine supply, it's small- scale, quasi-artisinal, and facing a lot of pressure." Globally, copper concentrates will continue to gain market share since production has peaked of copper through solvent extraction and electrowinning (SX/EW), which allows miners to produce cathodes, he added.
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    Steel, Iron Ore and Coal

    Rio Tinto lifts iron ore shipments despite China risks, draws on inventory

    Rio Tinto on Friday posted a 17 percent rise in third-quarter iron ore shipments and said it was on track to meet a full-year target of 340 million tonnes, shrugging off risks from slower economic growth and peaking steel output in China.

    In a sign market conditions may be improving, the miner dipped into its inventories - 4 million tonnes from its Australian operations and 1 million from the Canadian business - after production fell short of shipments.

    Rio Tinto shipped 91.3 million tonnes over the quarter, outstripping production of 86.1 million tonnes, data from the company's quarterly production report showed.

    "Clearly, the iron ore market is reasonably tight," said Shaw Stockbroking mining analyst Peter O'Connor in a note to clients.

    At Rio Tinto's forecast shipping rate, the Anglo-Australian miner would maintain a steady ranking with Vale of Brazil, while ahead of BHP Billiton .

    "Companies such as Rio Tinto are making a lot of money out of iron ore because they can produce so much, so you would expect production to keep going up," MineLife analyst Gavin Wendt said.

    A global glut of ore and falling Chinese steel demand have dragged iron ore prices down sharply from a high of nearly $200 in 2011. The price is forecast to drop to $50 over the next two years, a Reuters poll showed.

    Iron ore miners have been on a drive to lower their iron ore production costs to close to $10-$15 a tonne to keep ahead of the deterioration in pricing.

    Nev Power, chief executive of Australian iron ore miner Fortescue Metals Group on Thursday said the market for the steel-making commodity had returned to relative balance, following the exit of some higher cost producers who found the business unprofitable.

    Rio Tinto iron ore division head Andrew Harding last month forecast some 120 million tonnes of unprofitable iron ore would dry up in 2015 - 45 million in China and the rest mostly from mines in West Africa.

    Iron ore stood at $53.20 per tonne on Friday, just above the $50 average over 2016 and 2017, according to a median forecast of 17 analysts polled by Reuters late last month.

    Rio Tinto's iron ore production had taken a blow in the first half of the year after interruptions due to two cyclones hit near its Australian mines, forcing it to revise earlier guidance down by 10 million tonnes this year.
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    Coal prices keep dropping as Asian demand ebbs

    Image Source: wikimediaReuters reported that coal markets continued to test new lows over the past week, with both physical and futures prices falling further as demand wanes along with Asia's slowing economies.

    China, the world's biggest coal user, producer and importer, bought 17.77 million tonnes of coal overseas in September, down 16 percent from a year ago, with weak demand and a domestic supply glut continuing to weigh on shipments.

    Imports over the first nine months fell 29.8 percent to 156.36 million tonnes, with foreign suppliers struggling to compete in a massively oversupplied market.

    India, another huge coal consumer and importer, has also started to order less shipments as its domestic output has begun improving following years of falling behind target.

    As a result, cargo prices for Australian coal from its Newcastle terminal which largely supply China, and shipments from South Africa's Richards Bay, which ships much of its coal to India, have become around a third cheaper since their 2015 peaks, last settling at USD 53.60 and USD 49.55 a tonne respectively, and both are now below their 2008-2009 global financial crisis lows.

    One coal trader said that "The situation in Asia for coal sellers is pretty bad. It's been bad for a while, but I still can't see any sign of a fundamental improvement until something on the supply side really budges in the form of a major reduction or closure."

    European physical coal cargo prices for delivery into its main terminals at Amsterdam, Rotterdam or Antwerp (ARA) are also down sharply this year, shedding over 20 percent from their 2015 peaks to a last settlement of USD 51.70 a tonne.
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    China coastal coal freight rates further drop

    Freight rates for vessels shipping coal from northern China to the south further dropped in October amid subduing shipment demand from downstream sectors.

    The shipping rate for vessels of 50,000-60,000 DWT from Qinhuangdao to Guangzhou port stood at 18.1 yuan/t on October 15, down 0.1 yuan/t on day and down 0.6 yuan/t from a week ago, according to the data from the Shanghai Shipping Exchange.

    The rate for smaller vessels of 15,000-20,000 DWT from Qinhuangdao to Ningbo port in eastern China's Zhejiang province was 21 yuan/t on the same day, unchanged on day but down 0.6 yuan/t on week.

    The rate for 30,000-40,000 DWT vessels to ship coal from Huanghua to Shanghai port stood at 17.6 yuan/t on the same day, unchanged on day but down 0.4 yuan/t on week.

    The sluggishness in coastal coal shipping market was mainly attributed to the decreasing coal consumption from downstream utilities amid cooler weather, and was also impacted by slack industrial activities during the National Day holidays.

    Daily coal consumption at power plants under the six coastal utilities stood at 0.46 million tonnes on October 15, down 2.3% from a week ago; while their coal stocks totaled 13.37 million tonnes on the same day, which was enough to cover 28.8 days of consumption.

    The volume of coal shipped out of Qinhuangdao port fell 25.76% on week to 0.49 million tonnes on average each day over the week ended October 15.

    Market sources said most ship owners had to resume shipping to pay for bank debt, despite the great losses it cost. The coastal coal shipping market may continue to see a downward trend in the remaining days of October, but the decrease may be slower.

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    Roy Hill iron ore shipment delayed a bit

    Image Source: AfrSydney Morning Herald reported that Ms Gina Rinehart's key lieutenant Mr Tad Watroba has revealed the Roy Hill project has suffered a further delay and its first shipment of iron ore will not leave Port Hedland until at least November. Mr Watroba conceded in a statement on Wednesday the first shipment would now not be until the last two months of this year. Roy Hill said as late as last week the maiden shipment, originally slated for September, was still expected to occur in October.

    Within an hour, Roy Hill clarified the timing of the shipment with a statement from chief executive Mr Barry Fitzgerald who said it was imminent in the coming weeks but later than October 21, which had been reported by some media.

    In a rare public attack, Mr Watroba, executive director of Mrs Rinehart's Hancock Prospecting, lashed out at suggestions that supply from Roy Hill would put pressure on the soft iron ore price, which is hovering around USD 55 a tonne. Mr Watroba said analyst and media speculation on the prominent project's impact on prices was overstated. He said "They ignore that the prices dropped last year, pre-Roy Hill even shipping, and that when Roy Hill commences shipments in the last two months of this year, these initial shipments will only represent a small portion of its capacity of 55 million tonnes a year. Close to 90 per cent of the supply was spoken for under long-term contracts, so very little ore will actually enter the spot iron ore market.”

    It is understood the outburst is in response to media coverage of a research note Citi analysts published on September 28 which referred to the supply from Roy Hill as an impending whale likely to negatively impact pricing.
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    Australia clears way for Adani's $7 bln coal and rail project

    The Australian government on Thursday reissued an environmental permit for construction of one of the world's biggest coal mines to India's Adani Enterprises, after clearing concerns about two rare outback species.

    The decision by Environment Minister Greg Hunt opens the way for Adani to proceed with the A$10 billion ($7 billion) project in the undeveloped Galilee Basin that promises to generate billions of dollars in export revenue for Australia.

    Adani, which wants to ship 40 million tonnes of coal a year in the mine's first phase, has battled opposition from green groups since starting work on the project five years ago.

    A court in August temporarily blocked progress on the mine following a claim Adani failed to take into account the welfare of the yakka skink and ornamental snake.

    "The conditions I have imposed take into account issues raised by the community and ensure that the proponent must meet the highest environmental standards," Hunt said in a statement.

    The conditions include protecting and improving habitat for an endangered finch, protecting groundwater and providing A$1 million in funding for research to improve conservation of threatened species in the Galilee Basin.

    The project's proponents argue it is needed if Indian Prime Minister Narendra Modi is to keep his promise to bring electricity to hundreds of millions of people living off the grid. Critics are concerned greenhouse gases from burning coal will hinder efforts at combating global warming.

    Several French and German banks have said they will not provide financing for coal mining in the Galilee Basin, while Standard Chartered and Commonwealth Bank of Australia pulled out of the project in August.

    "Minister Hunt is sacrificing threatened species such as the Black Throated Finch and precious ground water resources for the sake of a mine that simply does not stack up economically," Ellen Roberts, co-ordinator of the Mackay Conservation Group, said on Thursday.

    Adani, which stills needs state government approvals including a mining lease and permission to dredge for a port, has yet to line up funding.

    "It is certainty over the remaining approvals that is now key to the company progressing its plan to deliver mine, rail and port projects in Queensland that will deliver 10,000 direct and indirect jobs, and A$22 billion in taxes and royalties," Adani Australia said in an emailed statement.

    While a push in India to rely more on solar and wind power and domestic coal has raised questions over the viability of the project, Adani has said the majority of Carmichael production had been pre-sold, guaranteeing revenue.
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    Iron ore miner Fortescue Q1 cost cuts beat target, shares climb

    Australia's Fortescue Metals Group reported on Thursday its quarterly iron ore shipments were virtually flat at 41.9 million tonnes, but the miner said production costs were cut more deeply than its fiscal 2016 target.

    The world's fourth-biggest iron ore exporter, which had been aiming to lower its cash production cost to $18 per wet metric tonne in a weak global market, said costs averaged $16.90 over the quarter.

    "Our team is continuing to deliver sustainable cost reductions through an unwavering focus on optimising every aspect of Fortescue's operations," Chief Executive Nev Power said in a statement. .

    "This has resulted in production costs being driven lower for the seventh consecutive quarter, down by 47 percent compared to the September 2014 quarter,"

    Fortescue has recently traded off seven-year lows, which analysts attributed to a period of stability in the iron ore price at around $55 per tonne.

    The steel-making commodity has now lost almost 3 percent in two days, reversing a four-day winning streak driven by expectations of further Chinese stimulus benefiting steelmakers.

    Also, Fortescue's debt of $6.6 billion remains a concern for investors amid rumours it was close to selling some assets or taking on new equity partners.

    Fortescue said it sold its ore at an average of $50 a tonne over the last quarter, or 91 percent of the 62 percent iron benchmark price, reflecting its lower grade.

    Australia's Fortescue Metals Group said on Thursday seaborne iron ore sales into China were clearly improving, and iron ore prices would increasingly be driven by demand rather than supply.

    "All eyes are on China at the moment to see what the Chinese government will do in terms of economic stimulus. That will determine steel demand and in turn demand for iron ore going forward," Chief Executive Nev Power told a conference call.
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    BHP gloomy on iron ore price, but cautiously optimistic on China

    BHP Billiton, the world's largest miner, was downbeat on Wednesday about iron ore prices as low-cost producers continue to swamp the market and as the intensity of China's demand for the steel making raw material ebbs.

    However, there were some positive signs on the economic outlook for top commodity consumer China, BHP officials told a briefing during the LME Week industry gathering.

    "By the end of this year, there will be additional iron ore coming from Australia, from Brazil," Arnoud Balhuizen, president of the group's marketing unit, told a media briefing.

    "Our expectation is that the iron ore market cost curve will continue to flatten and continue to come under pressure."

    In China, while some state-owned iron ore mines continue to operate even though they are losing money, privately-owned mines have largely been closing down when they go into the red, he added.

    "You'd be surprised how capitalism is making its way into China. If you own a mine in China, it's a universal thing that you don't like to lose money."

    A substantial driver of the decline in commodity prices this year has been the fear of a hard landing in China's economy, but BHP sees glimmers of hope despite weak industrial production data, said Stacie Wu, vice president of market analysis in the marketing unit.

    "In terms of the industrial side, which drives a lot of our commodities in the near term, we look at other measures as well, for example electricity generation, and some of those lead indicators actually tell us there is activity happening," she said.

    "If you look at property sales and property prices, those have been improving as well."

    Balhuizen said there has been no issues with finding buyers recently. In the most recent financial year, BHP's marketing unit handled $45 billion of sales.

    "All our commodities we have continued to see over the last couple of months, commodities going, inventory levels not being built up throughout the supply chain," he said.

    "So while prices are lower, it hasn't stopped business, and in some businesses we have seen increased flows."

    Balhuizen also said he did not share the concerns of some others that a surge of speculative activity was distorting commodity prices.

    In August, the chief executive of hard-hit commodity group Glencore, Ivan Glasenberg, blamed short sellers and hedge funds for a rout in his shares, saying they did not understand his business and were painting "doomsday scenarios" for commodities.

    Speculative activity has been a big factor in financial markets for over 25 years and can cause short-term volatility, but was not a cause for concern, Balhuizen said.

    "Some people who are complaining about it now have probably been big players in it as well. So let's be realistic about it," he said.
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    Poland's Grupa Azoty plans $648 mln coal gasification plant

    Poland's biggest chemical group Grupa Azoty has given initial approval to a 2.4 billion zlotys ($648 million) project to build a coal gasification plant, which would help boost local demand for coal by 1 million tonnes a year, it said on Wednesday.

    The state-run company said it would make the final decision on the investment in the town of Kedzierzyn Kozle in the first quarter of 2016, after it completes a feasibility study and concludes talks with potential partners.

    "The development of alternative coal use technologies confirms that coal is one of the most important natural resources of Poland," treasury minister Andrzej Czerwinski said in a statement.

    Earlier this year, the Polish government approved the plan for Grupa Azoty to develop the coal gasification project valued at between 1.8 billion zlotys to 4.2 billion zlotys, depending on whether it would produce hydrogen or methanol.

    The project was identified as a part of a wider programme designed to boost the country's southern industrial area Silesia, where the bulk of Poland's struggling coal mines are located. Poland is estimated to have an oversupply of coal amounting to around 7 million tonnes a year.
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    Coal strike ends after NUM agrees to wage deal - Union

    The unions said that the coal sector strike has ended after the National Union of Mineworkers (NUM) agreed in principle to a two-year wage deal with producers.

    This brings to an end just over a week of industrial action that 30,000-strong NUM members had embarked on. The end to the strike will also come as welcome relief to Eskom, as most of the power utilities’ stations are fuelled by coal.

    Mr Peter Bailey, NUM chief negotiator in the sector, said that although, no agreement has been signed, management will be talking to employees about a return to work, which is likely to happen on Wednesday morning.

    Mr Bailey said that “The parties have now concluded an agreement after a lengthy and dynamic process. It wasn’t easy. All of us had to steer the ship through the rocky waters. The parties will now bury the hatchet.”

    The deal, which the NUM has in principle agreed to, will see entry-level underground workers (categories 4-8) receive increases of ZAR 750 and ZAR 1,000 a month in the first year. In the second year, workers who fall in this category will get a guaranteed 7.5% pay hike.

    Employees in higher categories will get between 5% and 7.5% wage salary increases.

    He said that coal producers Anglo American Coal, Delmas, Exxaro, Kangra, Koornfontein, Msobo and Glencore, which are represented by the Chamber of Mines, were set to sign the agreement with the NUM after final details were ironed out.

    Attached Files
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    China Sept steel products exports hit new high

    China saw its steel products exports hit record high to 11.25 million tonnes in September, rising 32% year on year and up 15.6% from August, showed the customs data on October 13.

    The increase was mainly attributed to the steel producers’ application to customs in advance before the National Day holidays.

    The value of September steel exports stood at $5.68 billion, dropping 9.8% on year but up 10.4% on month. That translated to an average export price of $504.7/t in September, dropping 4.5% from August and down 31.7% year on year.

    Over January-September, the exports of China’s steel products stood at 83.11 million tonnes, a year-on-year decline of 27.2%.

    Total exports value during the same period stood at $48.66 billion, down 4.8% from a year ago.

    China’s steel price continued to drop in September. By end-September, the price of rebar fell 103.1 yuan/t on month to 2,052.4 yuan/t.

    Impacted by the slowing decline of steel price and intensified international anti-dumping acts, the export of steel products may fall slightly but remain at a high level in October.

    The new export order sub-index under the Purchasing Managers Index (PMI) for China’s steel industry dropped 13.8 from August to 40.7 in September, hitting a five-month low, data showed from the China Federation of Logistics and Purchasing (CFLP).

    Meanwhile, China imported 1.01 million tonnes of steel products in September, dropping 25.7% on year and down 1% on month. The value of imports stood at $1.08 billion, dropping 2.8% from August and down 35.5% from a year ago.

    Over January-September, the imported steel products amounted to 9.73 million tonnes, down 11.6% on year. The value totaled $11.2 billion, a decline of 18.7% year on year.

    Attached Files
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    Rio Tinto to pay millions in royalties to mining magnate Rinehart

    Rio Tinto Plc will have to pay more than A$200 million ($144 million) in royalties and court fees after losing an Australian legal battle with iron ore magnate Gina Rinehart.

    The High Court on Wednesday ruled in favour of Rinehart, one of Asia's richest women, and heirs to her father's business partner in their pursuit of royalties from two Rio mines in the Pilbara, Western Australia.

    The royalties were part of a deal made when Rinehart's father, Lang Hancock, and his partner Peter Wright sold the Channar and Eastern Range mines to Rio Tinto in 1970.

    Rio had argued through its subsidiary Mount Bruce Mining Pty Ltd that it was not liable to pay the royalties to Rinehart's Hancock Prospecting Pty Ltd and Wright Prospecting Pty Ltd because the mines were not continually in their possession over the period.

    Lower courts had ruled the payout should be voided due to a lapse in Rio's control of the Channar Mine in the 1970s.

    Wright and Hancock's lawyer Allan Myers told the court during hearings that they were claiming A$200 million in lost royalties.

    Rio was also ordered by the High Court to pay the costs of the court case, which has been running for several years.
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    China Sep coal exports up 67%.

    China’s coal imports, including lignite, thermal and metallurgical coal, fell 16.02% on year to 17.77 million tonnes in September -- the 15th consecutive year-on-year drop, but up 1.6% on month, showed data from the General Administration of Customs (GAC) on October 13.

    The decrease was mainly because buyers preferred domestic coals due to large coal miners’ price cut and discounts under sales pressure.

    The value of September imports stood at $977.6 million, falling 35.65% on year and down 0.32% on month. That translates to an average price of $55.01/t, $16.78 lower than the year prior and down $1.06/t from August.

    The GAC didn’t give a breakdown of the September imports, which could be available late this month.

    Over January-September, the country imported a total 156.36 million tonnes of coal, down 29.83% from a year ago, the GAC said.

    Total value of imports during the same period amounted to $9.63 billion, plunging 44.5% year on year.

    Meanwhile, China exported 730,000 tonnes of coal in September, soaring 65.91% on year and up 37.74% on month.

    The value of the September exports was $63.64 million, increasing 28.01% from a year ago and up 43.3% from August. That translates to an average price of $87.18/t, falling $25.82 on year but up $3.39/t on month.

    Over January-September, China exported a total 4.02 million tonnes of coal, a year-on-year decline of 7.89%, with total value falling 27% on year to $394.6 million.

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    Shanxi Coking Coal cuts Oct prices 20-50 yuan/t

    Shanxi Coking Coal Group Co. Ltd, China’s largest metallurgical coal producer, has cut its offer price by 20-50 yuan/t ($3.15-$7.90/t) for some products to several strategic customers, effective from October 1.

    Most end users in northern China had received news and confirmation of the price drop, sources said on October 12.

    The miner cut 30 yuan/t for primary coking coal from its flagship Tunlan mine -- with 20-23% VM, less than 10% ash, less than 1% sulfur, and above 75 G-value -- for Taiyuan Iron & Steel Group.

    It also cut prices to similar extent for other coking coals with sulfur levels between 1-2% from mines of Jiexiu, Xinliu and Xinyu.

    However a price cut of 50 yuan/t was applied to Shaqu coal with less than 0.8% sulfur, 20-23% VM, and above 85 G-value.

    Meanwhile, a drop of 30 yuan/t was applied to fat coal from Wangjiahui mine and 20 yuan/t to Zhaocheng mine.

    For 1/3 coking coal, there was a 40-50 yuan/t cut made for Zhujiadian Kelan coals with below 2% sulfur, 31-35% VM, 9-10% ash and 85 G-value.

    Guandi PCI with 13-16% VM, below 10% ash and below 1.1% sulfur fell 30 yuan/t.

    The group also cut 30 yuan/t on Xiaonan and Wangjiahui coal and 20 yuan/t on Zhaocheng coal for Anhui Iron & Steel Group, sources said.
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    China Buys More Iron Ore From Abroad as Steel Exports at Record

    Iron ore imports by China increased to the highest level this year in September to near a record as purchases picked up before a holiday and the biggest miners in Australia and Brazil boosted shipments. Steel exports from the top producer hit an all-time high.

    Inbound iron ore cargoes were 86.12 million tons in September, the highest since December, from 74.1 million tons a month earlier and 84.7 million tons in September 2014, according to customs figures on Tuesday. Purchases totaled 699 million tons in the first nine months, little changed from a year earlier, the data showed. The record for imports was set in December at 86.85 million tons.

    "There was a little bit more activity before the ports shut down for a week or more in October," said Ralph Leszczynski, head of research in Singapore at Banchero Costa & Co., a Genoa-based shipbroker, referring to China's week-long Oct. 1-7 shutdown. "Both in Australia and Brazil, producers have really ramped up their export capacities."

    Steel shipments from China climbed to a record 11.25 million tons in September, 16 percent higher than August, the data showed. Since the start of the year, exports expanded 27 percent to 83.1 million tons compared with the same period in 2014.

    "The steel industry in China is way oversupplied because they built steel-mill capacity like crazy, " Leszczynski said. "They don't know what to do with the steel. They're lucky to find enough demand for this steel."
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    Henan Jan-Sep coal output down 10.5pct on year

    Henan province, one major coal producer in central China, produced 92.76 million tonnes of raw coal over January-September this year, down 10.5% year on year, showed data from the Henan Administration of Coal Mine Safety on October 13.

    During the same period, key mines – owned by the provincial government or branches of central government-owned companies – produced 87.63 million tonnes of raw coal, a drop of 10.8% from the year prior.

    The output from local mines – owned by governments at the prefecture and lower levels and private operators – down 5.6% on year to 5.13 million tonnes.

    The administration didn’t publish the output figures for September.

    Calculations showed output in September stood at 10.24 million tonnes, falling 3.03% on month and down 0.1% on year.

    Output from key mines stood at 9.54 million tonnes or 93.2% of the total in September, down 3.34% from August and down 0.63% year on year; while output from local mines rose 4.55% on year to 690,000 tonnes, unchanged from August.
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    US steel production in Week 41 dips 7.3% YoY - AISI

    US steel production in Week 41 dips 7.3% YoY - AISI

    n the week ending October 10, 2015, domestic raw steel production was 1,705,000 net tons while the capability utilization rate was 71.3 percent. Production was 1,840,000 net tons in the week ending October 10, 2014 while the capability utilization then was 76.5 percent. The current week production represents a 7.3 percent decrease from the same period in the previous year. 

    Production for the week ending October 10, 2015 is down 1.3 percent from the previous week ending October 3, 2015 when production was 1,727,000 net tons and the rate of capability utilization was 72.2 percent.

    Adjusted year-to-date production through October 10, 2015 was 69,524,000 net tons, at a capability utilization rate of 72.5 percent. That is down 8.0 percent from the 75,566,000 net tons during the same period last year, when the capability utilization rate was 77.8 percent.
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    Xinjiang gains permits for a mega coal mine project

    Northwest China’s Xinjiang Uygur Autonomous Region has gained approval from the National Development and Reform Commission (NDRC) on September 21 to kick off the Dananhu coal mine and washing plant project, the provincial NDRC said on its website on October 9.

    The project, operated by Hami Coal & Electricity Co., Ltd., has designed capacity of 10 million tonnes per year. It’s the second above-10-million-tonne coal mine project approved by the government during the 12th Five-Year period in the region.

    Dananhu coal mine -- with recoverable coal reserves at 2.94 billion tonnes -- serves as the supporting coal source of the ±800 KV UHV DC power transmission line that starts from Hami to Zhengzhou, Henan. It could serve for 195 years.

    Xinjiang, endowed with abundant coal resources, sees its coal total 1.82 trillion tonnes or 42% of the national volume, ranking the first across the country.

    Attached Files
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    Daqin Sep coal transport down 17.2pct on yr

    Daqin line, China’s major coal-dedicated rail line, transported 31.21 million tonnes of coal in September, a decline of 17.15% from the previous year -- the 13th consecutive year-on-year drop, and down 7.19% from August, said a statement released by Daqin Railway Co., Ltd on September 10.

    In September, Daqin’s daily coal transport averaged 1.04 million tonnes, down 4.59% month on month.

    Over January-September this year, Daqin accomplished a coal transport volume of 305.04 million tonnes, a decline of 10.17% from the year prior. That was 72.63% of Daqin’s transport target for 2015, which was set at 420 million tonnes.

    In 2014, Daqin line accomplished a total transport volume of 450.2 million tonnes, up 1.11% on year, accounting for 27.42% of the total volume across the country in 2014.

    In addition, Houyue line transported 6.9 million tonnes of coal in September, up 0.17 % on year but down 15.34% from August.

    Over January-September, total coal transport of Houyue line stood at 61.19 million tonnes, down 5.4% from a year ago.

    The annual autumn maintenance of Daqin line has started on October 8. However, daily transport volume of Daqin could be caught up in non-maintenance time per day, thus meeting the demand of downstream sectors. The transport volume of Daqin rail line may not fluctuate much in October.
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    Shaanxi shuts 2nd batch of coal mines this yr

    Shaanxi, China’s third largest coal production base, announced in a document on October 9 to close the second batch of coal mines this year, in a move to eliminate backward capacity and improve safety record.

    The province aimed to shut 18 mines with total capacity of some 3 million tonnes per annum, including five in Yulin city, four in Weinan, three in Tongchuan, two in both Yan’an and Ankang, and one in both Xianyang and Baoji, the document said.

    Local governments would be responsible for closure of the 18 coal mines, which must stop operation immediately, it said.

    Shaanxi shut 12 coal mines in the first batch of mines closure in mid-February this year, which are located in Yulin, Xianyang, Ankang and Shangluo cities and with combined capacity of about 5 million tonnes per annum.

    The province produced a total 510.91 million tonnes of raw coal in 2014, up 3.63% from the previous year, showed data from the Shaanxi Provincial Development and Reform Commission.

    The province is estimated to have an annual coal production capacity of 565 million tonnes, according to coal consultant Fenwei Energy Consulting Co., Ltd.

    Attached Files
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    Hebei plans 6 coal-fired power projects this yr

    Northern China’s Hebei province has planned to build six supercritical coal-fired power projects, with combined capacity totaling 4.2 GW, before the end of this year, according to a government scheme recently released by the provincial Development and Reform Commission.

    All of the six power projects, which will provide heat in addition to power generation, will install two generating units each with capacity designed 350 MW. The projects are expected to gain official approval in 2015, start construction in the first quarter of 2016, and come into operation before the heating season in 2017, which usually starts in November.

    In addition, the commission has set multiple coal-fired power projects as alternative projects this year, of which the preliminary work will be encouraged.

    All the projects should adopt energy-saving and environment-friendly heating technology to make maximum use of the heating capacity, it said.

    Coal consumption and pollutant emissions in power generation should meet the state and local requirements, the commission said.
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    X2 said to be last remaining bidder for Rio’s Australian coal mines

    X2 Resources, the private-equity firm founded by former Xstrata Ltd. chief Mick Davis, has emerged as the last remaining bidder for control of two Rio Tinto Group coal mines in Australia, people with knowledge of the matter said.

    X2 is progressing in negotiations with Rio as the other interested parties, including Glencore Plc and New Hope Corp., are no longer in talks to buy the assets in New South Wales state’s Hunter Valley region, according to the people. The mine stakes may fetch more than A$3 billion ($2.2 billion), one of the people said, asking not to be identified because the talks are private.

    Rio Chief Executive Officer Sam Walsh has sold $4.5 billion of less-profitable assets since January 2013, reducing its coal portfolio amid falling prices in order to focus on larger iron ore and copper operations. Any deal would be the first purchase for Davis’s X2 fund since he raised several billion dollars from investors to pursue mining acquisitions.

    New Hope, which agreed last month to buy Rio’s 40 percent stake in the Bengalla coal venture in Australia for $606 million, isn’t pursuing the other mines Rio is selling in the country, according to the people. Glencore, which lost as much as $14 billion in market value last month, is also no longer active in the Rio process as its focus has shifted away from acquisitions, the people said.

    Hunter Valley

    Rio could reach an agreement on the sale of the two mine stakes as early as year’s end, according to one person. Rio is still open to offers and it’s possible other suitors may yet emerge, another person said. Representatives for X2, Rio, New Hope and Glencore declined to comment.

    The two Rio mines–Hunter Valley Operations and Mount Thorley Warkworth–are near assets owned by Glencore. Hunter Valley Operations, which is part-owned by Japan’s Mitsubishi Corp., produced more than 11 million metric tons of thermal coal in 2013 and 2.6 million tons of semi-soft coking coal, according to Rio’s website.

    Mount Thorley produced more than 2.3 million tons of thermal coaland 1.8 million tons of semi-soft coking coal that year, while Warkworth had more than 6.9 million tons of thermal coal output and more than 1.2 million tons of semi-soft coking coal.
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    China steel company to reorganize as new investor found

    The largest private iron and steel enterprise in north China will begin restructuring following bankruptcy, local authorities said on Thursday.

    According to Yuncheng City government in Shanxi Province, Haixin Iron and Steel Group, which has filed for bankruptcy, will receive 3.7 billion yuan (about 582 million U.S.dollars) from a new investor to settle its debts.

    Production at Haixin was suspended in March 2014 due to overcapacity, a stagnant market, as well as tightened credit and management issues. The company filed for bankruptcy in November.

    According to a plan approved by the local court, Jianlong Heavy Industry Group will take over Haixin after paying no less than 3.7 billion yuan to settle Haixin's debts.

    Haixin will change its name to Shanxi Jianlong Steel Holdings Ltd.

    Jianlong Group, established in 1999, is mainly engaged in resource exploitation, iron and steel production, shipping, shipbuilding and electrical machinery.
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    Russia Jan-Sep coal exports down 2.2pct on yr

    Russia saw its coal exports fall 2.2% year on year to 113 million tonnes over January-September, the Ministry of Energy statistics said.

    In September, coal exports of the country climbed 3.3% to 12.9 million tonnes, data showed.

    Coal production in September increased by 6.2% to 32.18 million tonnes; coal sales during the same month reached 29.91 million tonnes.
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    China's Hebei Iron & Steel Group eyes investment in Serbia's steel mill -PM

    China's Hebei Iron & Steel Group is considering a strategic partnership in Serbia's only steel plant and an investment of at least 300 million euros, Serbian Prime Minister Aleksandar Vucic said on Friday.

    The loss-making Zelezara Smederevo plant, which has two furnaces, has been swallowing $120 million a year in subsidies since 2012, when Serbia's government bought it back from U.S. Steel for $1 to avert its closure and save more than 5,000 jobs.

    The government is looking to sell the plant or find a strategic partner for it, and offload other heavily subsidised state-run firms, as a condition of its 1.2 billion euro precautionary three-year loan deal with the International Monetary Fund.

    "They (Hebei Iron & Steel) are interested, as they say, to give at least 300 million euros ($340 mln) in investments, into a galvanization factory," Vucic said in a live TV broadcast from a ceremony in the central Serbian town of Smederevo to mark the resumption of production at the plant's second furnace. "People in Serbia should know this," he said.

    After a sale to U.S. steel firm Esmark collapsed in March, Serbia appointed the Netherlands-registered HPK Engineering BV to run the plant and make it profitable until its privatisation.

    The plant on Friday restarted its second furnace, shut down since 2011, with a monthly capacity of 75,000 tonnes, to boost both output and prospects for a sale.

    Earlier this week, Vucic told reporters that a "major Chinese company" was eyeing Zelezara Smederevo.

    In August, Serbia's state RTS TV reported that a delegation form Hebei Iron & Steel Group had visited the plant four times in July to analyse its operations.

    Vucic also said that the plant would now generate $400 million in revenues over the next year.

    "I cannot conceal my joy, I've said before, there will be fireworks when we find a strategic partner for the Zelezara and it will happen," Vucic said.
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