Mark Latham Commodity Equity Intelligence Service

Friday 18th September 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Oil and Gas







    Macro

    The price of cement in China has collapsed ... and that is not good


    If China's economy is growing at 7% or more per year, why has the price of cement there dropped by 25% in the last two years?

    You can't build anything permanent without cement. It's a great indicator of how the underlying, real economy is actually doing: If people are buying a lot of cement then it means they have the cash to build large, new, permanent objects. Houses, roads, bridges and cities. If building and construction are on the decline then the price of cement should fall.

    This is what Chinese cement looks like right now, according to from Macquarie's Chief China Economist, Larry Hu:  



    https://trove.com/a/The-price-of-cement-in-China-has-collapsed-and-that-is-not-good.lsH8m?utm_campaign=hosted&utm_medium=twitter&ts=1442547180&utm_source=sns&nocrawl=1
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    Former Sinopec executive to be prosecuted for graft


    A former general manager of Chinese energy giant Sinopec Group has been expelled from the Communist Party and will be prosecuted for crimes, including bribery and abuse of power, the party's anti-corruption watchdog said on Friday.

    Wang Tianpu, an oil industry veteran, was put under investigation in April.

    In a brief statement, the watchdog said that Wang accepted gifts, abused his position for the benefit of his relatives, spent public money on banquets, took bribes and engaged in extortion.

    Sinopec Group is the parent of Sinopec Corp, Asia's largest oil refiner.

    "Wang Tianpu was a senior leadership cadre in the party, and he severely broke discipline," the watchdog, the Central Commission for Discipline Inspection, said.

    His case has been handed over to the legal authorities, it added, meaning he will face prosecution.

    The company said it was fully behind the decision.

    "We support the decision of the party centre and have zero tolerance for corruption," a Sinopec media official told Reuters.

    It was not possible to reach Wang for comment and not clear if he had a lawyer.

    Chinese President Xi Jinping has warned that corruption threatens the party's survival and his three-year anti-graft campaign has brought down scores of senior officials in the party, the government, the military and state-owned enterprises.

    China is stepping up inspections this year at conglomerates owned by the central government as part of its anti-graft efforts.

    http://www.reuters.com/article/2015/09/18/china-corruption-sinopec-corp-idUSL4N11O1KA20150918
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    Last bid to kill Iran nuclear deal blocked in U.S. Senate


    U.S. Senate Democrats blocked legislation meant to kill the Iran nuclear deal for a third time on Thursday, securing a major diplomatic victory for President Barack Obama.

    By a vote of 56-42, the Republican-majority Senate fell short of the 60 votes needed in the 100-member chamber to advance the legislation as all but four of Obama's fellow Democrats backed the nuclear pact announced in July.

    With no more Senate votes planned this week, the result ensured that Congress will not pass before a midnight deadline a resolution of disapproval that would have crippled the agreement by eliminating Obama's ability to waive many U.S. sanctions.

    http://www.reuters.com/article/2015/09/17/iran-nuclear-congress-idUSL1N11N1LY20150917
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    Vedanta Hires Former Anglo American CEO Carroll as Adviser


    Vedanta Resources Plc, the Indian metals and oil producer controlled by billionaire Anil Agarwal, hired Anglo American Plc’s former Chief Executive Officer Cynthia Carroll as an adviser.

    Carroll, 58, who was CEO of Anglo from 2007 to 2013, will chair the company’s Vedanta Resources Holdings Ltd. unit and advise the group’s chairman Agarwal on “corporate development and significant value creation opportunities,” it said in a statement Wednesday.

    “Having known Cynthia for many years, I look forward to collaborating with her and leveraging her valuable industry expertise,” Vedanta CEO Tom Albanese, who headed the world’s second-biggest mining company Rio Tinto Group at the same time Carroll was running Anglo, said in the statement.

    Carroll and Albanese presided over two of the world’s most prominent miners during the global financial crisis that sparked a rout in commodities before a subsequent rally that led both to undertake major acquisitions. Carroll quit Anglo after the company lost about $14 billion in value during her tenure and suffered cost blowouts and delays at an $8.8 billion iron-ore project in Brazil.

    http://www.bloomberg.com/news/articles/2015-09-16/vedanta-hires-former-anglo-american-ceo-carroll-as-adviser
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    India govt shortlisted 13 gas projects for subsidy support


    As part of its plan to provide relief to the stranded gas-fuelled power generation capacity in the country, the government shortlisted 13 projects with an installed capacity of 8,262.08 MW for receiving subsidy.

    Under the strategy aimed at providing relief to project lenders, 13.5 million metric standard cu. m per day of LNG will be imported and cash-strapped state power distribution companies financially supported to buy electricity from them.

    The projects were shortlisted after they participated in the so-called reverse e-bidding process for supply of power to distribution companies that was conducted by state-owned MSTC Limited.

    The power ministry said in a late evening statement that “The government is delighted to announce the revival of 13 stranded gas-based power generation plants with an installed capacity of 8,262.08MW which have successfully bid through a transparent and competitive reverse e-auction process. These plants will generate 11.03 billion units of electricity, which will be supplied at or below INR 4.70 per unit to the purchaser discoms during1 October 2015 to 31 March 2016. This will involve government support of Rs.1,590.09 crore from the Power System Development Fund.”

    Of India’s gas-fuelled capacity of 24,150 MW, projects totalling 14,305 MW at an investment of INR 60,000 crore have no domestic gas supply and are considered stranded. Also, the balance 9,845MW at an investment of INR 40,000 crore is working at a low plant load factor, a measure of average capacity utilization, due to limited domestic gas supply.

    The statement added that “The present reverse e-auction for stranded gas-based plants is the second phase of auctions conducted under scheme for utilization of stranded gas-based generation capacity. Compared to the first phase, the second phase has offered increased gas to more plants at a higher PLF.”

    This comes in the backdrop of the National Democratic Alliance government’s promise of 24-hour power supply to all households in a country chronically short of power. Around 280 million Indians lack access to electricity in a country where per capita electricity consumption is one-fourth the world’s average.

    Earlier, a total of 15 projects of developers such as NTPC Limited, Gujarat State Electricity Corp. Limited, Torrent Power Limited, CLP India Pvt. Limited, GVK Industries Limited, Lanco Kondapalli, GMR Energy Limited and Ratnagiri Gas and Power Private Limited were shortlisted for receiving this subsidy as part of the bailout for plants operating at low PLF.

    Power plants seldom use costly imported LNG since the electricity produced would cost much more than that from a domestic coal-fuelled plant or a domestic gas-fired plant, and there would be no takers for such expensive power. The PSDF will help cushion the impact of this tariff increase on the distribution utilities. The bailout plan, approved by the cabinet committee on economic affairs, will help generate 79 billion units of electricity valued at around INR 42,000 crore.

    With a gas consumption of 51 billion cubic metres, India is the world’s 15th largest consumer and the fourth largest LNG importer by sourcing 18 billion cubic meter of LNG.

    http://steelguru.com/gas-oil/india-govt-shortlisted-13-gas-projects-for-subsidy-support/434654#tag

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    FedEx misses on earnings and cuts its outlook

    FedEx misses on earnings and cuts its outlook

    FedEx released its first-quarter financial results on Wednesday morning, and while earnings rose year-over-year, they missed analysts' expectations.

    The company also lowered its forecast for earnings in the fiscal 2016 year.

    The global freight giant reported $2.42 in adjusted earnings per share, versus the consensus estimate among analysts of $2.45, according to Bloomberg. Revenues during the quarter totaled $12.3 billion, and $12.26 billion was expected.

    On Tuesday, the company announced that it is hiking shipping rates4.9% across the board for a second straight year.

    The stock is down 11% year-to-date. It was unchanged just ahead of the earnings release.

    http://uk.businessinsider.com/fedex-q1-earnings-2015-9?r=US&IR=T
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    UK Energy consumption collapsing?

    Charts of electricity consumption:
    Image titleNow this data includes the utility renewables, but may exclude retail renewables. 
    Image titleCoal falling like a stone.
    Image titleGas does not look good either. 

    Attached Files
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    'Golden age of gas' *ends*

    Add cheap coal to the challenges keeping the golden age of liquefied natural gas far from reality.

    Coal is gaining market share in the European Union while the role of natural gas in the region has shrunk in the past year, Christopher Jones, a director for energy with the European Commission, said at a conference in Tokyo Wednesday. Buyers are in no hurry to commit to purchases, according to Qatar, the
    world’s biggest exporter of the supercooled fuel.

         “Cheap coal and increasing competitiveness of renewables are squeezing gas in many markets,” Fatih Birol, executive director of the Paris-based International Energy Agency, said during a speech in Tokyo. “For many, this means the golden age of gas remains more of a dream than reality.”

         Japan’s return to nuclear power after the 2011 Fukushima disaster and less expensive alternatives are undermining demand that prompted the IEA to envision a golden age four years ago. LNG producers are forecast to add 50 million metric tons of new capacity next year, the largest single annual increase in
    history and equivalent to a fifth of current global demand, according to Sanford C. Bernstein & Co.

         LNG shipped to northeast Asia has tumbled to $7.10 per million British thermal units, more than 60 percent below a record $19.70 in February 2014, according to New York-based Energy Intelligence Group. A glut will cap LNG prices for years, according to Citigroup Inc.

     ‘Grave Mistake’

         The bulk of the new supply is coming from Australia, where companies including ConocoPhillips, Royal Dutch Shell Plc and Inpex Corp., counting on Asia’s consumption, are spending more than $150 billion on ventures due to start in the next two years.

         “The energy industry assumed that Asian consumers would take any amount of LNG at any price because Asia is the center of global demand growth,” Birol said. “But this assumption was a grave mistake.”
     
       Meanwhile, coal is gaining ground. Use of the fuel in the Netherlands rose to a record in the first five months of the year, according to industry consultant Energy Aspects Ltd. In Denmark, the Liberal government is set to reverse ambitious CO2 emission targets introduced by the previous administration, and also drop plans to phase out coal-fired power plants and become fossil-fuel free by 2050.

         Oil and gas prices that have fallen sharply over the past year are disrupting global supply-chain patterns and dynamics, Qatar Energy and Industry Minister Mohammed Al Sada said at the conference in Tokyo Wednesday. Clauses in long-term LNG contracts that restrict the destination of cargoes to specific buyers or countries should be scrapped, Jae Do Moon, vice minister of Trade, Industry and Energy for South Korea, said at the event.



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    Glencore raises $2.5 billion in share placement


    Mining and trading group Glencore said on Wednesday it has raised $2.5 billion through a share placement as part of its plans to cut debt built up through years of rapid expansion.

    The London-listed company has been under pressure to cut its net debt of almost $30 billion after a slump in prices of its key products, copper and coal. It announced plans last week to cut debt by a third by the end of 2016.

    Glencore said on Tuesday that it planned to place up to 1.31 billion new shares, representing 9.99 percent of its share capital.

    The sale was priced at 125 pence a share, the company said on Wednesday, representing a 2.4 percent discount to the stock's closing price of 128.05 pence on Tuesday.

    Glencore directors and employees have taken up 22 percent of the new shares as the company's executives try to shore up market confidence in the business.

    Glencore will also sell assets and cut capital spending in a bid to lower the debt.

    The strategy, which includes plans to shut down some copper mines to support flagging prices, had briefly triggered a rally in Glencore's stock, but concerns of further falls in commodity prices continue to weigh on the shares.

    http://www.reuters.com/article/2015/09/16/glencore-secondaryissues-idUSL5N11M0JI20150916
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    Traders Fear Second China State Entity Default


    China National Erzhong Group Co. may miss an interest payment later this monthafter one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market.

    As Bloomberg details, uncertainty over the payment comes as deflation risks, overcapacity and spiraling corporate debt cloud the outlook for China’s economy, forecast to expand at the slowest pace since 1990 this year.

    China National Erzhong is a wholly owned subsidiary of state-owned China National Machinery Industry Corp.,according to a China International Capital Corp. report in April.

    Today’s statement doesn’t say whether China National Erzhong will be able to pay the interest if the court rejects the creditor’s request. The statement also said there is some uncertainty over whether the court will accept the restructuring request, and said China National Erzhong is trying to raise money to pay the interest.

    Yields on the 2017 bonds have risen to 28.801 percent from 26.846 percent at the start of the year, ChinaBond prices show.

    The smelting-equipment maker might not be able to pay a coupon that’s due Sept. 28 on its 1 billion yuan ($157 million) of 5.65 percent 2017 notes if a local court accepts the creditor’s restructuring application before that date, according to a statement posted on Chinamoney.com.cn. China National Erzhong, based in China’s western Sichuan province, issued the five-year securities in 2012 at par and the debentures are currently trading at 67.72 percent of that.

    “Because Erzhong is a state-owned company, if it defaults it may arouse investors’ concern about companies’ credit risks,” said Qu Qing, a bond analyst at Huachuang Securities Co. in Beijing.

    http://www.zerohedge.com/news/2015-09-15/asiapac-quiet-too-quiet-aussie-leading-index-plunges-pboc-devalues-yuan-chinas-80000

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    China Aug power consumption up 1.9pct on year


    China’s power consumption stood at 512.4 TWh in August, edging up 1.9% year on year and up 8.5% month on month, showed data from the National Energy Administration (NEA) on September 15.

    Power consumption by the residential segment was 73.2 TWh, rising 2% from the year prior and up 19.22% from July.

    For the non-residential segment, the primary industries – mainly the agricultural sector – used 13.3 TWh of electricity in August, rising 2.3% on year and up 2.3% on month.

    The secondary industries – mainly the industrial sector – consumed 354.3 TWh of electricity, increasing 0.7% on year but down 2.9% from July.

    The industrial sector specifically, consumed 347.9 TWh of electricity in August, rising 0.8% from the year before but down 3.1% from July, with the heavy industry accounting for 82.1% or 285.5 TWh, increasing 0.3% year on year but down 4.3% on month.

    Power consumption by tertiary industries – mainly the services sector – reached 71.5 TWh in August, increasing 7.8% year on year and 11% higher from the month prior.

    Over January-August, China consumed a total 3,678 TWh of electricity, up 1% from the same period last year, the NEA said.

    Power consumption by the residential segment amounted to 489 TWh during the same period, gaining 4.3% from the previous year.

    Under the non-residential segment, the primary industries used 70.4 TWh of electricity, up 2.3% year on year; the secondary industries used 2,643 TWh of power, dipping 0.7% year on year, with the industrial sector at 2,597 TWh, down 0.7%; while the tertiary industries consumed 475.6 TWh, up 7.5%.

    Meanwhile, the average utilization of power generating units across the country dropped 7.2% year on year to 2,658 hours over January-August this year.

    Hydropower plants logged average utilization of 2,274 hours during the same period, dropping 1.1% from the previous year; while thermal power plants logged average utilization of 2,925 hours, falling 7.9% from a year ago.

    China added 60.7 GW of power generating capacity from January to August, including 7.9 GW of new hydropower capacity and 30.82 GW of new thermal power capacity.

    http://en.sxcoal.com/0/131456/DataShow.html

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    Beijing to impose fee on emitters to curb pollution - Xinhua


    Manufacturers of furniture, petrochemicals, automobiles and electronics in Beijing will start paying fees in October for emitting volatile organic compounds (VOCs), a source of air pollution, the Xinhua state news agency said on Tuesday.

    Pollution has triggered increasing unease in China, where smog blankets many major cities, including Beijing, home to 21 million people.

    The polluters will be charged 10 yuan ($1.57) per kg of discharged gas if their VOC emissions do not exceed 50 percent of the city's limit, Xinhua said, citing Wang Chunlin, director of pollution prevention and control with Beijing Municipal Environmental Protection Bureau.

    Entities whose emissions are higher than half of the limit but do not exceed the standards will be charged 20 yuan per kg. Polluters whose VOCs emissions pass the limits will pay 40 yuan per kg.

    The fees are higher than the treatment cost for polluters, so it "will stimulate polluters to adopt cleaner methods", Xinhua quoted Wang as saying.

    The government has launched a war on pollution, vowing to abandon a decades-oldeconomic model of growth at all costs that has damaged the water, air and soil.

    Vehicle emissions, the use of solvents, storage and transport of gasoline may generate VOCs, which can form hazardous, breathable particles known as PM2.5 following chemical reactions in the atmosphere, Xinhua said.

    PM 2.5, which refers to particles smaller than 2.5 micrometers in diameter, leads to hazardous smog that is a major cause of asthma and respiratory diseases, experts say.

    Lung cancer rates are rising in Beijing, say health officials, with the capital ranked among the world's most polluted cities.

    http://www.reuters.com/article/2015/09/15/china-pollution-idUSL4N11L46J20150915
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    Moody’s downgrades Teck’s rating to below investment grade


    Risk management firm Moody's Investors Service on Monday became the first major ratings agency to downgrade Canadian diversified miner Teck Resources’ investment rating to below investment grade, or junk. 

    Citing expected prolonged commodity price weakness and big capital spending projects, Moody's VP and senior credit officer Darren Kirk stated that these items would keep the Vancouver-based company’s leverage well in excess of typical investment grade thresholds through at least 2017. 

    Moody's had downgraded Teck’s senior unsecured rating to Ba1 from Baa3 and assigned the company a Ba1 corporate family rating (CFR), an Ba1-PD probability of default rating and a SGL-2 speculative grade liquidity rating. Teck's ratings outlook remained negative, Moody’s advised. 

    Teck's Ba1 CFR was driven by its significant financial leverage and material free cash-flow consumption, offset by the diversity and scale of its business, low geopolitical risks, average cost position and good liquidity. Exposure to commodity price volatility, production and development risks, and meaningful capital expenditure (capex) requirements also constrained the rating. 

    Moody's expected Teck's adjusted debt versus earnings before interest, taxes, depreciation and amortisation (Ebitda) to increase to above 5.5x through 2016, incorporating a 1.32 US dollar:Canadian dollar exchange rate and base commodity price assumptions of $95/t for benchmark metallurgical coal, $2.35/lb for copper and $0.80/lb for zinc. 

    Moody's forecast steady, albeit modest improvement in these commodity prices beyond 2016, which should enable Teck's cash flows to strengthen in 2017. 

    The company's significant spending for its 20% stake in the C$13.5-billion Fort Hills oil sands project, in Alberta’s Athabasca region, 90 km north of Fort McMurray and controlled by its partner Suncor, came at a time when commodity prices were weak. 

    Teck's cash consumption was expected to be about C$1.5-billion in 2016 and C$1-billion in 2017. “Absent asset sales or other inorganic actions taken by management, this will further drive up debt levels and limit material improvement in Teck's adjusted debt/Ebitda,” Moody’s explained.

    http://www.miningweekly.com/article/moodys-downgrades-tecks-rating-to-below-investment-grade-2015-09-14
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    Australia to get new PM as Abbott loses out to rival Turnbull


    Australia will get its fifth prime minister in eight years after the ruling Liberal Party on Monday voted out Tony Abbott in favour of longtime rival Malcolm Turnbull following months of speculation and crumbling support from voters.

    Turnbull, a multi-millionaire former banker and tech entrepreneur, won a secret party room vote by 54 to 44, Liberal Party whip Scott Buchholz told reporters after the meeting in Canberra.

    Foreign Minister Julie Bishop was elected deputy leader of the party which, with junior coalition partner the National Party, won a landslide election in 2013.

    Since then, the popularity of the government and Abbott in particular has suffered from a series of perceived policy missteps, destabilising infighting and leaks.

    The opposition Labour Party has consistently led opinion polls, while Turnbull has been consistently viewed as preferred prime minister.

    http://www.cnbc.com/2015/09/14/australias-prime-ministers-leadership-to-be-challenged.html?utm_source=twitterfeed&utm_medium=twitter
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    Karnataka to ban export of power by private sector power firms


    Economic Times reported that Karnataka will issue a notification on Monday banning private sector power generating companies from exporting power to outside entities under the short-term open access deal.

    These firms will be asked to supply power to the state's own distribution utilities. The proposed ban will hit private players like JSW, BMM Ispat, Agarwal Sponge & Energy, etc, who will have to divert STOA power to the state grid.

    However, the long and medium term open access deals signed by these firms to outside consumers will go on as usual. Energy minister Mr DK Shivakumar cleared a proposal to impose restrictions on power sales in view of the unprecedented power crisis in Karnataka, and laid his hands on every bit of possible power source. Karnataka requires about 185 MUs of power a day, while the availability has dropped to 135 MUs.

    Mr Shivakumar said that "I have already signed the file, and we are going to notify this tomorrow." His move is expected to fetch about 300 MW of power. The minister is exercising powers under Section 11 of The Electricity Act, 2003, which empowers the state to issue directions to private generating firms to ‘operate’ their station the way the government desires under extraordinary circumstances.

    There are also about 23 sugar mills that co-generate and export power to outside consumers and they will have to now close the tap to outsiders. The energy minister said their idea is to buy power at INR 5.08 a unit from them, but the final tariff is subject to the state power regulator's decision.

    Mr Shivakumar said that "We have also invited bids for 400 MW, and are requesting the Centre to give us about 1,500 MW from the Centre's unallocated share." The 400 MW is being sought for supply during night hours, but power experts are sceptical about getting this in view of the transmission bottlenecks. The Centre conceding to Karnataka's request is also doubtful, though Mr Shivakumar is pushing hard for it.

    The availability of power from hydel sources has crashed to 10 million units a day from what was 40 MUs a day this time last year. KPTCL engineers say they are drawing less power from hydel units to save whatever little power left for summer. In Bengaluru and surrounding districts, distribution utility Bescom has imposed long hours of load shedding to tide over the 3,000 MW of power shortage the state is battling against.

    Poor inflow into the three major hydel reservoirs of Linganamakki, Supa and Mani coupled with breakdown of generating units at Raichur and Bellary thermal power stations have aggravated the power crisis which experts believe is unlikely to end soon.
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    China under the spotlight.

    Image title
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    China exporting diesel in size.

    China’s diesel exports may surge to a record in the coming months as refinery output increases while domestic demand growth for the fuel slows.

    The nation’s diesel shipments might have risen to a record last month, topping the previous high in June of 670,000 tons, and may climb to 1 million tons a month in the fourth quarter, according to ICIS China, a Shanghai-based commodity researcher. China is scheduled to release August diesel export data next week.

    Refiners processed 44.34 million metric tons of crude in August, up 6.5 percent from a year earlier, data from the Beijing-based National Bureau of Statistics showed Sunday. That’s about 10.48 million barrels a day and 1.8 percent higher than July as production increased to satisfy growing demand for gasoline.

    “Diesel exports will continue to rise amid a supply glut created by high oil processing to meet robust gasoline demand,” Lin Jiaxin, an analyst with ICIS China, said by phone from Guangzhou. “The public holiday breaks early this month and in October will boost traveling and demand for gasoline, while diesel use will remain very weak.”Image title

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    Modi to meet utilities to fix electricity debt mess


    Indian Prime Minister Narendra Modi is set to meet bosses of loss-making electricity utilities on Monday to debate a rescue package for a sector whose vast debts weigh on the banking system and undermine promises to provide power for all.

    The government has identified $66 billion of troubled debt held by state-run utilities as a major obstacle to efforts to speed up growth in Asia's third-largest economy, hurting both credit growth and industrial performance.

    Modi earned praise for fixing the power sector in Gujarat state when he was chief minister. A national solution would burnish his reputation after a series of setbacks to his agenda of economic reform in recent months.

    The pressure to act is rising as a three-year financial restructuring package introduced in 2012 comes to an end, with the utilities still selling power to consumers at below the cost of production and ignoring rampant theft.

    The prime minister will chair a meeting with finance ministry officials and the head of individual state distribution companies, a top government source and an official in the power ministry told Reuters.

    The government has not made public the contours of the package, but options under discussion include allowing states to take over debts of distribution companies to ease their financial crunch, in return for a renewed clampdown on electricity losses.

    Utilities' weak finances mean they cannot buy in more power or invest in transmission lines that are needed if Modi is to get power flowing to industry and to the 300 million Indians living without electricity.

    India has doubled energy generation capacity in the last decade, helping to more than halve its peak power deficit, but transmission and distribution have remained largely unreformed, leading to regular blackouts across large swathes of the country and debts that threaten the health of the banking system.

    A fifth of India's electricity still goes unpaid for.

    "The poor financial health of the distribution utilities has the potential to make all investments made in the electricity value chain unviable," said Umesh Agrawal, a power expert at PwC.

    "A comprehensive set of measures targeting efficiency improvements as well as setting tariffs to recover costs is required to prevent the situation becoming worse," he said.

    http://www.reuters.com/article/2015/09/14/india-power-utilities-idUSL5N11K09220150914

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    California Democrats in open revolt on new renewable standards.

    But now his party has mutinied. Democrats hold near supermajorities in both legislative chambers with 52 of 80 seats in the Assembly. Yet this week 21 Democratic Assembly members representing middle- and low-income communities—including 11 blacks and Latinos—joined Republicans to kill a bill mandating a cut in state greenhouse gas emissions to 80% below 1990 levels by 2050.

    Democrats also forced Mr. Brown to scrap a measure that would have given the California Air Resources Board plenary authority to reduce statewide oil consumption in vehicles by half by 2030. Imagine the EPA without the accountability. “One of the implications probably would have been higher gas prices,” noted Democratic Assemblyman Jim Cooper. “Who does it impact the most? The middle class and low-income folks.”

    Many Democrats demanded that the legislature get an up-or-down vote on the board’s proposed regulations before they take effect. Yet the Governor and Senate liberals wouldn’t abide constraints on the board’s powers.

    The defeat is all the more striking for the failure of appeals to green moral superiority. Liberal groups targeted Catholic Democrats with ads featuring Pope Francis. Mr. Brown demonized oil companies for selling a “highly destructive” product.

    The most morally destructive product in California these days is green government. Take the 33% renewable electricity mandate. Since 2011 solar energy has increased more than 10-fold while wind has nearly doubled. But during this period electricity rates have jumped 2.18 cents per kilowatt hour—four times the national average. Inland residents and energy-intensive businesses have been walloped the most.

    California’s cap-and-trade program has also hurt manufacturers, power plants and oil refiners, which are required to purchase permits to emit carbon. Between 2011 and 2014, California’s manufacturing employment increased by 2% compared to 6% nationwide, according to the federal Bureau of Labor Statistics.

    Cap and trade has also raised fuel costs, though its effect is hard to isolate from other environmental mandates. The Western States Petroleum Association last year projected that cap and trade would add 16 to 76 cents per gallon to the retail price of gas based on data from the Air Resources Board.

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    China Fixed-Asset Investment Tumbles to Lowest Since 2000


    China’s fixed-asset investment rose at the slowest pace in 15 years and industrial production trailed analyst estimates, raising further question marks over the effectiveness of government efforts to revive growth.

    Investment excluding rural households climbed 10.9 percent in the first eight months, the National Statistics Bureau said Sunday, versus 11.2 percent median projection of economists surveyed by Bloomberg.
    Industrial output rose 6.1 percent in August from a year earlier, missing the 6.5 percent estimate.
    Retail sales rose 10.8 percent in August, beating the projected 10.6 percent gain and July’s 10.5 percent rise.

    “The economy is showing no sign of recovery," said Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong. “From the perspective of monetary policy, the government has done what it can, but demand from the real economy needs to pick up to really make use of that.”

    The weakening economic figures underscore the challenge the government faces in meeting its growth target of 7 percent this year, as exports decline and producer price deflation deepens. Factory shutdowns in Beijing and surrounding provinces before a Sept. 3 military parade in the capital may also have contributed to the weaker-than-forecast output reading.

    "Demand for industrial products from domestic and overseas markets is still on the weak side," Jiang Yuan, senior statistician at NBS, wrote in a statement issued with the report. "Downward pressure on industries is still relatively big."

    http://www.bloomberg.com/news/articles/2015-09-13/china-factory-output-misses-estimates-highlighting-challenges
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    China Aug thermal power output up 3.7pct YoY


    Electricity output from China’s thermal power plants – mainly coal-fired – stood at 377.8 TWh in August, rising 3.7% year on year and up 3.3% month on month, showed data from the National Bureau of Statistics (NBS) on September 13.

    The increase was mainly due to increased residential demand amid hot weather across the country.

    China’s hydropower output fell 11.8% on year and down 4.7% on month to 104.6 TWh in August – the first drop in the wake of the fifth consecutive monthly increase.

    Total electricity output in China stood at 515.5 TWh in August, edging up 1% from a year ago and up 1.3% on month – the fourth consecutive month-on-month increase, the NBS data showed. That equated to daily power output of 16.63 TWh on average, rising 1% on year and up 0.13% from July.

    Over January-August, China produced a total 3,738 TWh of electricity, up 0.5% year on year, with thermal power dropping 2.2% on year to 2,833.7 TWh while hydropower output increasing 5.7% to 639.6 TWh.

    http://en.sxcoal.com/0/131368/DataShow.html
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    U.S. House votes against Iran deal in two symbolic votes


    The U.S. House of Representatives defeated a resolution backing the nuclear agreement with Iran on Friday, in a symbolic vote engineered by congressional Republicans who object to the deal.

    House members voted 269 to 162 against the resolution in a strongly partisan vote, part of an effort by Republicans to underscore their objection to the accord despite a vote on Thursday in the Senate that blocked a Republican-led effort to kill the international pact.

    In a second symbolic vote on Friday, the House voted 247 to 186 to pass legislation that would bar Obama from waiving, suspending or reducing sanctions under the nuclear agreement.

    To become law, that measure would have to be passed in the Senate and then survive a likely veto.

    There are no plans for the Senate to vote on either measure.

    http://www.reuters.com/article/2015/09/11/iran-nuclear-congress-idUSL1N11H1A020150911
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    China Aug commodities output weak as economic slowdown bites


    China's output of key industrial commodities including coal and steel weakened in August, as government measures to cut smog ahead of World War Two commemorations further cut production already lowered by a slowing economy.

    Growth in China's investment and factory output missed forecasts in the month, pointing to a further cooling in the world's second-largest economy that will likely prompt the government to roll out more support measures.

    Production of coal and steel, which has steadily fallen amid weak demand and chronic oversupply, fell further in August after the government mandated the closure of scores of factories to reduce pollution in Beijing ahead of events to mark the end of World War Two that included a massive military parade.

    Qiu Yuecheng, analyst with the steel trading platform Xiben New Line E-Commerce, said demand for some commodities, such as steel, may pick up in the second half of the year after the summer lull, "but with the overall economy facing pretty big downward pressures and funds still tightening, the scale of the recovery will be limited."

    Crude steel output fell 3.5 percent year-on-year to 66.94 million tonnes in August, the second consecutive monthly decline, which also triggered a 6.6 percent drop during the month in the output of coking coal, a key steel-making material.

    Raw coal output, which has been falling as a result of government measures to promote cleaner burning fuels, also dropped 2.6 percent from the same month a year-ago, according to data published by the National Bureau of Statistics on Sunday.

    Coal production is down 4.8 percent for the first eight months, hit by a 2.2 percent decline in thermal power production over the period as grids took on more hydropower.

    Still, the anti-pollution measures failed to boost demand for natural gas, with data from the statistics bureau showing output grew 3 percent over the first eight months of the year, down from 6.9 percent in 2014 and 11.5 percent in 2013.

    Crude oil throughput remained resilient as refiners continued to take advantage of weak global prices. Runs rose 6.5 percent on the year to 10.44 million barrels per day (bpd). Domestic crude oil output stood at 18.17 million tonnes, up 3.6 percent on the year.

    Oil demand rose 5.1 percent from a year earlier to 10.26 million bpd, rising 1.4 percent from July, according to Reuters calculations using preliminary government data.

    In its latest forecast released on Friday, the International Energy Agency said it expected Chinese oil demand to grow 4.1 percent this year, noting that demand has remained "remarkably resilient" amid the economic slowdown.

    http://www.reuters.com/article/2015/09/13/china-economy-output-commodities-idUSL4N11H1R520150913
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    China issues state-firm reform plans, expects results by 2020


    China issued some details on Sunday on plans to reform state-owned enterprises (SOEs), including the introduction of "mixed ownership" by bringing in private investment, and said it expected decisive results by 2020.

    Reform of mammoth state-owned firms is one of China's most pressing tasks as growth slows in the world's second-largest economy.

    The guidelines, jointly issued by the Communist Party's Central Committee and the State Council, China's cabinet, include plans to clean up and integrate some state firms, the official Xinhua news agency said. But it did not give any details of which firms will be merged.

    The government will not use forceful means to push the "mixed ownership", nor it will set a timetable, giving each firm the go-ahead only when conditions are mature, it said.

    State firms will be allowed to bring in "various investors" to help diversify their share ownership, and more state firms will be encouraged to restructure to pave the way for stock listings, Xinhua said.

    Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, it said, adding that steps will be taken to curb corruption during reforms.

    Chinese private companies are seen as more efficient and innovative than state-owned firms, which enjoy easier access to government policy support, subsidies and bank loans.

    The government aims to "cultivate a large number of state-owned backbone enterprises with innovation capability and international competitiveness," Xinhua said, indicating the reforms will not amount to full-scale privatisation.

    The step comes nearly two years after President Xi Jinping called for market forces to play a decisive role in better allocation of resources in the world's second-largest economy.

    China will push firms to merge and sells shares as part of the most far-reaching reforms of its sprawling and inefficient state sector in two decades, according to documents seen by Reuters last week.

    China's state enterprises are dominated by 111 central government-owned conglomerates, which account for about 60 percent of SOE revenue and are overseen by the State-owned Assets Supervision and Administration Commission (SASAC).

    Earlier this year, state media said the number of central government conglomerates could be cut to 40 through mergers.

    http://www.reuters.com/article/2015/09/13/china-economy-reforms-statefirms-idUSL4N11J07X20150913

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    Glencore's "Doomsday" Plan Disappoints As CDS Resumes Rise


    While the US was still sleeping on its Labor Day holiday, the global commodity world was stunned on Monday when Glencore's CEO Ivan Glasenberg - formerly a perpetual optimist in all things commodity - announced a dramatic recapitalization plan, one which would see it not only scramble to raise $10 billion in capital through an equity offering, asset sale and capex cut, but become the first major copper supplier of scale to cut production, thereby defecting from the game theoretical "race to the bottom" equilibrium, and indirectly benefiting its biggest competitors. The reason: prepare for a "doomsday" scenario for commodity prices.

    Glencore's unprecedented action was in direct response to an S&P downgrade warnings from the previous week, which threatened to strip the world's biggest commodity trader of its critical investment grade, BBB rating, which would have dramatic and adverse consequences on the company's trading operations: thing an AIG-like collateral waterfall. The S&P warning is also why last week the company's CDS blew out all the way to 450 bps, the widest since the financial crisis.

    Then, as a result of the capital raise, one which many took for admission the company would aggressively focus on lowering its net leverage to a far more reasonable for the current commodity bear market 2.0x target, Glencore's CDS tumbled by nearly a third in the past 4 days.

    And then, something bad happened: the other rating agency, Moody's, agreed with us when we said that Glencore's deleveraging efforts may fall well short of the market, and put the outlook for Glencore's credit rating of Baa2, just a fraction above junk, on negative watch.

    Why was the news particularly bad? Because Moody's confirmed that Glencore's doomsday scenario may not be "doom" enough.

    As a reminder, the reason why we said back in March 2014 that going long Glencore CDS is the best trade to hedge against a Chinese collapse, is precisely due to Glencore's underappreciated sensitivity to copper prices...


    ... which have since tumbled, and led to the recent surge in not only GLEN CDS but the record drop in its stock price.

    http://www.zerohedge.com/news/2015-09-11/glencores-doomsday-plan-insufficient-cds-resumes-rise-questions-emerge-what-happens-
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    China clears wrecked containers at core area of Tianjin port blast


    Image Source: PAIHS Maritime 360 reported that wrecked containers at the main area of a warehouse explosion in Tianjin port have been cleared out as of 8 September, announced the local government.

    The remaining steel structures, frames, and other debris have been cleared after detection and decontamination, and will be melted down later, said the authorities.

    Meanwhile, all buildings at the core area of the blast were torn down, and nearby pools of polluted water that formed during the blast are being cleaned and shipped out after safe treatment.

    Local officials said that the clean-up work at the Tianjin port blast site is about to finish.

    At present, the port is under normal operation. However, its throughput in August dropped 1.1 million from July, stating at 7.5 million tonne, and its container volume last month plunged 27.9% year on year, showed data released by the port authority.

    As of September 9th, the death toll of the blast rose to 163, when the remains of one of the 11 missing people from the Tianjin warehouse blasts was identified. There are still 10 people missing, including seven firemen and three civilians, and hundreds are still accepting medical treatment in hospitals.

    http://steelguru.com/logistic/china-clears-wrecked-containers-at-core-area-of-tianjin-port-blast/434300#tag
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    Oil and Gas

    European gas supply no longer a risk, demand is key concern


    Security of gas supply is no longer an issue in European markets, and the balance of risk has moved to demand, participants said at the Platts European gas summit in Brussels Thursday.

    "We're long on everything -- we're long gas, we're long storage, we're long flexibility, we have too much of everything," Christopher Delbruck, CEO of E.ON Global Commodities, said.

    "Total storage capacity is above import requirements -- this has no precedent in Europe," GDF Suez's (now Engie) former vice president Jean-Francois Cirelli said. "The main economies are well supplied and will be well supplied."

    But this robust near-term supply picture raises longer-term challenges, E.ON's Delbruck said.

    "The economic sustainability of that solution is not there [given the extent to which prices could fall]."

    Depressed prices would compromise future investment as well as the existence of current supply infrastructure, participants said.

    "Not all storage sites are covering operational costs; storage operators could close facilities to deal with over capacity," Michael Kohl, commercial managing director at RWE Gas Storage, said.

    Martin Bachmann, head of German firm Wintershall's European exploration and production division, said investment in the upstream gas sector was required to "safeguard" security of supply.

    But despite the longer-term supply risks, demand is now the key immediate challenge facing Europe's gas industry, according to Cirelli.

    "There is no security of demand in Europe -- no-one knows where we are going," he said, citing data from French bank Societe Generale showing a 22% fall in annual European gas demand from 2006-2014 driven mainly by lower power sector demand.

    http://www.platts.com/latest-news/natural-gas/london/european-gas-supply-no-longer-a-risk-demand-is-26211997

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    China to double Russia ESPO pipeline imports to 30 mil mt/year in Oct 2017

     
    China will double its pipeline imports of Russian ESPO crude to 30 million mt/year as early as October 2017, after the second Mohe-Daqing pipeline comes on stream, PetroChina Vice President Sun Longde said Wednesday, according to local media.

    He did not say when construction would start.

    The existing 15 million mt/year Mohe-Daqing pipeline in northeastern Heilongjiang province receives Russian ESPO crude from the border Mohe station and sends it to Daqing, started operations in January 2011.

    The pipeline was built to take 15 million mt/year of ESPO crude from Rosneft for 20 years.

    The second ESPO crude pipeline will run parallel to the first.

    Under earlier deals, Russia's state-owned Rosneft agreed to increase ESPO deliveries to China National Petroleum Corp. by 5 million mt/year in 2015 and another 5 million mt/year in 2016.

    But the delivered volume has only increased slightly this year.

    PetroChina has taken a total of around 11.02 million mt from the existing pipeline over January-August, or an average 33,105 b/d, with the yearly volume for 2015 expected to hit 16.48 million mt at the current transmission rate. While well below the 20 million mt/year target, this would be up 5.7% from 15.6 million mt shipped in 2014.

    Rosneft redirected some of the ESPO exports to China via its Kozmino port, the destination of its only export pipeline to Asian markets.

    PetroChina's 20.5 million mt/year Dalian refinery has been receiving seaborne cargoes shipped from Kozmino. The refinery this year will take around 5 million mt/year in seaborne cargoes.

    Dalian refinery also takes ESPO crude shipped via pipeline from Daqing, with the 2015 volume estimated at 3.5 million mt.

    Three other PetroChina refineries are major takers of pipelined ESPO from Daqing: 9 million mt/year Liaoyang Petrochemical in northeastern Liaoning province, the 10 million mt/year Jilin Petrochemical in northeastern Jilin province and the 5 million mt/year Harbin Petrochemical in Heilongjiang province.

    ESPO crude makes up all of Liaoyang Petrochemicals' feedstock and 60%-65% of the Dalian refinery's feedstock.

    Jilin and Harbin refineries process ESPO crudes and domestic onshore crudes such as Daqing.

    http://en.chinamining.com.cn/News/2015-09-18/1442542052d73786.html
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    China fuel oil imports to slow further on reforms


    Chinese imports of fuel oil will drop further this year and next as reforms in the world's No.2 economy allow more independent refineries to ship in crude oil as an alternative feedstock, traders and analysts said.

    China is opening its crude oil imports to buyers outside the state-owned sector, with independent refiners so far getting the go-ahead to use a total of nearly 700,000 barrels per day (bpd) in crude imports, or about 11 percent of total crude shipments into the country.

    With seven refiners already receiving the final greenlight to use imported crude oil and two of them granted licenses to import directly themselves, analysts expect fuel oil to be displaced quickly. Consultancy Energy Aspects said fuel oil demand could fall by 9 percent next year.

    "Straight run fuel oil imports have dropped a lot mainly as teapot refineries are getting import licenses for crude," said a trader with a Chinese state-owned company.

    Small, independent refiners in China, often nicknamed 'teapots', prefer to process crude rather than fuel oil due to better refining economics and larger yields of high-value products such as gasoline and diesel.

    China's appetite for fuel oil, which is also used in shipping, has already been hit hard by a shift to natural gas and the nation's economic slowdown, with the nation flipping into net fuel oil exports in July for the second month since 2006.

    China imported nearly 1.1 million tonnes of fuel oil in July, it's lowest volumes in a year, while its exports nearly doubled from June, customs data showed.

    Demand has also been curbed as the government has raised the fuel consumption tax several times, keen to reduce China's heavy use of energy and natural resources while addressing its severe pollution problems.

    And appetite from shippers in China has also been fading, traders said.

    "Fuel oil demand for shipping is also bad as trade has slowed down a lot," said a Singapore-based bunker fuel supplier.

    "They are also using larger vessels now so this affects prices as well."

    Cash premiums for straight run fuel oil have fallen by at least a third since the start of the year, a Singapore-based trader said.

    Meanwhile, China's imports of bitumen mixture, another type of heavy oil that can easily be blended into fuel oil, have also dropped. Companies had in the last two years switched to importing fuel oil declared as bitumen mixture to avoid paying consumption tax, but slowing demand and a clampdown by the government has curbed those imports, traders said.

    It is now importing about 500,000 to 700,000 tonnes a month of bitumen mixture, compared with 1.5 to 2 million tonnes a month late last year, said a Beijing-based trader.

    http://www.reuters.com/article/2015/09/18/china-fueloil-idUSL4N11M2OR20150918

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    Vertical wells are making a comeback


    It’s no secret that low commodity prices and the supply glut are pushing oil drillers to find cheaper ways to drill.

    According to Oil and Gas Investor, producers are looking to old vertical wells for increased production from shallow play at a lower cost than horizontal drilling. Vertical wells also have a strong cash flow asset. In addition, vertical wells can be put into production within 10 days, compared to horizontal wells that take a month or longer to complete.

    Baker Hughes data shows that the horizontal rig count fell by 2 percent while the vertical rig count rose 20 percent from early June to Sept. 4.

    http://shalegasreporter.com/news/vertical-wells-making-comeback/57584.html
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    Mid-sized European oil firms face tough choices as oil stays low


    Small and medium-sized oil companies, squeezed by the oil price slump, may have to raise expensive new finance, sell assets or seek new investors to plug any funding gaps as banks tighten up on lending.

    Many of these companies have already cut spending and axed thousands of jobs following a more than halving in the oil price to around $50 a barrel since June last year.

    But they may need to do more as revenues fall and the oil price looks set to stay low. Oil's fall last month to its lowest since early 2009 at just above $40 a barrel has dashed hopes in the oil industry for a swift recovery.

    In many cases, banks lend money based on a company's oil and gas reserves base, in what is known as reserve-based lending, so, in theory, the lower the oil price outlook, the smaller the loan or credit line.

    "Banks will be broadly supportive but for some riskier clients and transactions, there may be a gap in financing that didn't exist before and they will have to find alternative financing," one banker, who heads a loan syndicate, said.

    "There is concern that banks will redenominate and reduce existing financing for energy companies. Banks are looking at this now, it's a live issue."

    The companies and their banks sit down twice a year to review finances, which used to be a fairly routine conversation when oil was riding high. Most companies emerged from the April round of talks, known as "redeterminations" relatively unscathed because of expectations of an oil price recovery.

    The current round may be more difficult as banks will have cut their long-term oil price forecasts, according to several bankers and consultants.

    "Managements and boards have had to come to terms in recent weeks with the 'lower for longer' oil price view," Rupert Newall, head of EMEA energy investment banking at BMO Capital Markets, said.

    Exploration and production companies with large project financing needs include Africa-focused Tullow Oil, North Sea producers Lundin Petroleum and Ithaca Energy , according to bankers and analysts.

    Nomura has estimated Tullow Oil's net debt will rise to $4.7 billion by the second half of 2016, when its TEN project off Ghana's coast is planned to start production.

    Tullow's net debt at the end of the first half of 2015 was $3.6 billion.

    Tullow and Ithaca declined to comment. Lundin did not immediately respond to requests for comment.

    In the United States, where some oil companies borrowed heavily to invest in shale, several have run into trouble this year, including Oklahoma-based Samson Resources.

    But Jo Clark, a transaction advisory consultant at EY, said the chances were low of similar problems in Europe.

    There have been a few casualties. Oil producer Afren , for example, decided to go into administration in July when it failed to win support for a refinancing plan.

    Credit rating agency Standard & Poor's on Thursday cut its long-term corporate credit rating on British oilfield services company Expro Holdings Ltd to CCC+ from B-, citing its high leverage and the challenging market conditions in oil and gas.

    http://www.reuters.com/article/2015/09/17/oil-companies-debt-idUSL5N11A2HR20150917
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    Aussie energy company Santos starts shakeup


    While announcing a board shakeup, Australian energy company Santos said Thursday it was vetting interests from other entities eyeing its assets.

    The board at Santos said Chief Executive Officer David Knox will step down once a successor is named after seven years at the helm. Knox will stay on in the interim, though Chairman Peter Coates will take on more responsibilities.

    "We are undertaking a thorough strategic review of all options to restore and maximize shareholder value in the face of the continuing pressures on oil prices, globally," Coates said in a statement.

    Santos in August said net profit for the first half of 2015 at $37 million was 82 percent lower year-on-year. Capital expenditure was down by more than half from the same period in 2014, reflecting the substantial slump in crude oil prices.

    The company in July said it was maintaining its production guidance moving forward despite reductions in capital and operating expenditure. During the second quarter, the company produced 14.3 million barrels of oil equivalent, 12 percent higher year-on-year, and posted sales volumes of 15.7 million boe, 4 percent higher year-on-year. Sales revenue, however, fell 19 percent.

    Coates said the company has a portfolio of high-quality assets and shareholder values needs to be protected. Though no short-cuts are on the table, the chairman said all options are on the table.

    "We will be talking with the parties who have approached us to date with interest in various assets and other strategic initiatives and with this announcement there may well be new expressions of interest received," he said.

    The company said it was taking the "appropriate steps" to cut operating costs. For full year 2015, Santos is targeting $180 million on supply chain savings.

    Santos boasts strong operational performance from its liquefied natural gas portfolio, particularly from its LNG project in Papua New Guinea.

    http://www.upi.com/Business_News/Energy-Industry/2015/09/17/Aussie-energy-company-Santos-starts-shakeup/4161442487441/

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    OPEC Sees Crude Rising to $80 by 2020 as Rival Suppliers Falter


    OPEC expects the average price of its crude oil to rise to $80 a barrel by 2020 as supply from non-members grows more slowly than expected.

    Production from nations outside the Organization of Petroleum Exporting Countries will be 58.2 million barrels a day in 2017, 1 million lower than previously forecast, according to an internal research report from the group seen by Bloomberg News. While OPEC expects little stimulus to demand in the medium term as a result of cheaper oil, it estimated that the average price of its crude will increase by about $5 annually to 2020 from $55 this year.

    The impact of current low prices is “most apparent on tight oil, which is more price reactive than other liquids sources,” according to the report. “Supply reductions in U.S. and Canada from 2014-2016 are clearly revealed.”

    The price of oil has tumbled more than 50 percent in the past year, triggering a cutback in drilling in the U.S. and other non-OPEC nations. Crude collapsed as OPEC followed Saudi Arabia’s strategy of defending its share of the global market against shale and other competitors.

    http://www.bloomberg.com/news/articles/2015-09-17/opec-sees-crude-rising-to-80-by-2020-as-rival-suppliers-falter

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    Kuwait says oil market will balance itself, must be patient


    Kuwait's OPEC governor Nawal al-Fuzaia said on Thursday the oil market would balance itself but "we need to be patient", indicating support for the producer group's policy of defending market share despite falling prices.

    Speaking at the Gulf Intelligence Energy Markets Forum in the UAE emirate of Fujairah, Fuzaia said the current imbalance in the market stemmed from several factors and not just an economic slowdown in China.

    "The weakening demand in China, it is a short-term issue. I don't think that it will have an effect on OPEC market share," she said.

    OPEC shifted policy in November 2014 by deciding not to support prices by cutting output, in order to defend market share against U.S. shale oil and other higher-cost supply sources.

    The shift, led by Saudi Arabia and its Gulf allies, has proved controversial within OPEC as oil prices have more than halved from above $100 in June 2014, hurting the economies of less wealthy members such as Venezuela.

    Still, Fuzaia said the Organization of the Petroleum Exporting Countries needed more transparency in data from China to gauge demand.

    "I am not saying we can't trust Chinese numbers but our concern is that it is not the actual demand, it is the calculated demand. It could be the same as actual demand or not," she said.

    Fuzaia said OPEC was looking for stable, sustainable growth in China's economy and demand but that should Chinese demand decline, Kuwaiti crude would go to other markets.

    http://www.reuters.com/article/2015/09/17/kuwait-opec-idUSL5N11N20S20150917

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    Glencore vies with Trafigura, Vitol in thawing LNG market

    Glencore vies with Trafigura, Vitol in thawing LNG market

    Mining and trading giant Glencore is mounting a challenge to Trafigura and Vitol to become the top merchant trader of liquefied natural gas, as a market in which sales are largely frozen into decades-long contracts looks set to thaw.

    Trafigura recently adopted tactics developed from years of trading oil to become the world's top LNG merchant, investing in logistics and storage, while also providing credit and shouldering risk for buyers.

    Glencore, on the other hand, plans to double its global LNG trading team and trade as many as 50 cargoes of the super-chilled fuel over the next year - almost twice what Trafigura traded in its fiscal year to Sept. 30, 2014.

    LNG could soon surpass iron ore as the world's second-biggest traded commodity, with estimates of the market's worth ranging between $90 billion and $150 billion.

    "The opportunity for growth in LNG trading is spectacular," said Glencore's global head of LNG, Gordon Waters, who joined in July after 18 years at BP.

    Trading companies, which industry sources say have so far accounted for less than 10 percent of overall LNG trade, could help trigger a more liquid Asian LNG market, with exchanges from Singapore to Tokyo launching indices and futures contracts in preparation.

    Waters was in a team at BP that took it from selling LNG via long-term contracts to being a key player in spot and short-term trade. "The idea is to do that all over again," he told Reuters.

    Glencore - which has had a limited presence in LNG up to this point - plans to trade some 40 to 50 cargoes on spot or short-term deals over the next year and double the size of its three-trader team based in Singapore, London and Madrid.

    "Come back in 12 months, and I think you'll notice a rapid growth," Waters said.

    Glencore's planned volumes would be just under what some analysts say Trafigura could sell in the year to the end of this month, after the latter sold 1.7 million tonnes of spot LNG, or about 28 cargoes, the previous fiscal year.

    Trafigura declined to provide further details in its volumes and market strategies.

    Vitol says on its website it delivered over 1 million tonnes of LNG worldwide in 2014.

    A Vitol spokeswoman declined to provide more details on its volumes, but said the trading house had been "at it years before anyone else, despite lots of noise in the last couple of years from Trafigura."

    Sudden oversupply and the development of financial derivatives have allowed "new species to emerge in LNG," such as trading houses and banks, including his own, said Jogchum Brinksma, managing director at Citigroup Global Commodities, at this month's World LNG Series in Singapore.

    Other merchants trading LNG include Noble Group and Gunvor.

    http://www.reuters.com/article/2015/09/17/asia-lng-merchants-idUSL4N11N3WH20150917

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    Australian regulator deferring decision on Shell-BG deal


    The Australian Competition and Consumer Commission voiced its concerns over issues on the proposed $70 billion acquisition by Royal Dutch Shell of BG Group.

    ACCC’s Statement of Issues seeks industry views and more information on the competition issues that have arisen in the regulator’s review to date.

    “The ACCC is concerned that, by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland, the proposed acquisition may change Shell’s incentives such that it will prioritise supply to BG’s LNG facilities over competing gas users. As a result, Shell could choose to direct more (and possibly all) of Arrow’s large gas reserves towards meeting BG’s contracts to supply LNG export markets. This would remove some or all of Arrow’s gas from the domestic market,” ACCC Chairman Rod Sims said.

    He added that currently, Arrow has the largest quantity of uncommitted gas reserves in eastern Australia and there are a limited number of other potential suppliers to the domestic market. If the proposed acquisition resulted in less supply of gas to the domestic market, therefore, this could substantially lessen competition to supply domestic gas users and lead to higher domestic prices and more restrictive contractual terms.

    The ACCC  said it has received a large number of submissions from market participants concerned about the competition effects of the proposed acquisition.

    It called for further submissions from the market in response to the Statement of Issues by October 8. As a result, the ACCC’s final decision will be deferred until 12 November 2015.

    http://www.lngworldnews.com/australian-regulator-deferring-decision-on-shell-bg-deal/
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    Saudi Aramco says Amin Nasser appointed as CEO


    Saudi Aramco's Supreme Council has named Amin Nasser as chief executive officer of the state oil company of the world's largest exporter, Aramco said on Thursday.

    Nasser has been acting president and chief executive officer of Saudi Aramco since April, when his predecessor Khalid al-Falih was appointed Aramco's chairman and also health minister of the world's top oil exporter.

    The post of Saudi Aramco chairman had previously been held by Oil Minister Ali al-Naimi, himself a former chief executive of the company. Naimi remains in the ministerial position he has occupied for 20 years.

    A statement by Saudi Aramco said the appointment was made after the company's Supreme Council, which was created in April this year, held its first meeting in Jeddah. The council is chaired by Deputy Crown Prince Mohammed bin Salman.

    Nasser has been serving as senior vice-president for upstream operations at Aramco since 2008, according to his biography posted on Aramco's website. Nasser joined Aramco in 1982 after earning a degree in petroleum engineering.

    The state giant's statement on Thursday did not say who will replace Nasser as senior vice president of upstream.

    The council has endorsed a five-year business plan (2015-2019) for the company, Aramco said without providing details.

    The 10-member Supreme Council of Aramco was formed after King Salman abolished the Supreme Petroleum Council earlier this year.

    Members of the council include Deputy Oil minister, Prince Abdulaziz bin Salman, Oil Minister Ali al-Naimi, Finance Minister Ibrahim al-Assaf, Economy Minister Adel Fakieh, Aramco Chairmain Falih and Fahad al-Mubarak, governor of the Saudi Arabian Monetary Agency, the Saudi central bank.

    A previous list of the council's members had not included Prince Abdulaziz, but it is not known if he has only recently been named to the group.

    http://www.reuters.com/article/2015/09/17/energy-saudi-aramco-idUSL5N11N04L20150917
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    KKR's Samson Resources files for bankruptcy, lenders to take control


    Oil and gas producer Samson Resources Corp filed for Chapter 11 bankruptcy protection on Wednesday to carry out a debt-cutting plan reached with key lenders, who will assume control of the company.

    The company, owned by private-equity firm KKR & Co, listed assets and liabilities of more than $1 billion in its bankruptcy filing. (1.usa.gov/1P10Jca)

    Samson's bankruptcy comes four years after the company agreed to be acquired in a leveraged buyout led by KKR, for $7.2 billion. KKR and its partners on the buyout made a big bet on the future of shale oil and gas, investing $4.15 billion in equity on the deal. The rest was funded with debt.

    Lenders agreed to cut Samson's obligations by swapping the $1 billion they are owed for nearly all of the company's newly issued stock. They will also invest $450 million in Samson.

    The investment by lenders may be further increased, under certain circumstances, by $35 million to improve liquidity, Samson said.

    By filing with the support of the lenders, Samson could be able to implement its restructuring plan in the next few months. The plan must be approved by the U.S. Bankruptcy Court in Wilmington, Delaware.

    The group of lenders includes affiliates of Cerberus Capital Management, Columbia Management, Credit Suisse, Eaton Vance Management, Invesco Ltd, New York Life Insurance Co and Silver Point Capital.

    Samson follows many smaller commodity producers and related services firms into bankruptcy, including Sabine Oil & Gas, Alpha Natural Resources, Hercules Offshore, Quicksilver Resources and Dune Energy. Crude oil prices have fallen more than 50 percent since the middle of 2014, to less than $50 per barrel. Coal and natural gas prices have also dropped sharply.

    As part of its bankruptcy plan, Samson is expected to continue to shed non-core assets that are mostly located in Oklahoma to focus on its best wells in East Texas and North Dakota, according to a plan disclosed prior to its bankruptcy.

    http://www.reuters.com/article/2015/09/17/samsonresources-bankruptcy-idUSL1N11N0BD20150917
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    US Weekly Oil production


                                                Last Week   Week Before   Year Before

    Domestic Production '000....... 9,117             9,135             8,838



    http://ir.eia.gov/wpsr/overview.pdf
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    Summary of Weekly Petroleum Data for the Week Ending September 11


    U.S. crude oil refinery inputs averaged over 16.5 million barrels per day during the week ending September 11, 2015, 403,000 barrels per day more than the previous week’s average. Refineries operated at 93.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.2 million barrels per day. Distillate fuel production increased last week, averaging about 5.1 million barrels per day.

    U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 270,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.4 million barrels per day, 4.3% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 722,000 barrels per day. Distillate fuel imports averaged 66,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.1 million barrels from the previous week. At 455.9 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 increased by 2.8 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 3.1 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.1 million barrels last week and are well above the upper limit of the average range.

    Total commercial petroleum inventories increased by 8.5 million barrels last week. Total products supplied over the last four-week period averaged 19.5 million barrels per day, up by 0.7% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.2 million barrels per day, up by 2.0% from the same period last year. Distillate fuel product supplied averaged 3.6 million barrels per day over the last four weeks, down by 2.8% from the same period last year. Jet fuel product supplied is up 5.6% compared to the same four-week period last year.

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
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    US NatGas boom falters


    Embedded image permalink

    EIA chart showing declining US NatGas production month by month

    The retrenchment in drilling for US oil is threatening to leave a different market short: natural gas.

    “The impacts of oil rig counts extend beyond oil: the outlook for US. natural gas is critically dependent on the outcome of this balancing act in US oil rigs,” said Anthony Yuen, a strategist at Citigroup in New York, in a report to clients Wednesday.

    “If the oil market remains oversupplied and oil-rig counts fall, the decline in associated gas production would leave the market short of gas.”

    Associated gas is the gas that comes out of oil wells along with the crude.

    Supplies of this byproduct from fields including the Bakken formation in North Dakota and the Eagle Ford in Texas may fall by about 1 billion cubic feet a day next year as drillers idle rigs in response to the collapse in oil prices. That’s about 7% of US residential gas demand.

    The US Energy Information Administration has already forecast that shale gas production will drop in October for the fourth straight month, a record streak of declines.

    https://www.energyvoice.com/oilandgas/87945/shales-retreat-threatens-to-leave-us-short-of-natural-gas/

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    ExxonMobil Starts Oil Production at Erha North Phase 2 Project


    Exxon Mobil Corporation announced today that its subsidiary, Esso Exploration and Production Nigeria Limited, has started oil production ahead of schedule at the Erha North Phase 2 project offshore Nigeria.

    The Erha North Phase 2 project is a deepwater subsea development located 60 miles offshore Nigeria in 3,300 feet of water and four miles north of the Erha field, which has been producing since 2006. The Erha North Phase 2 project includes seven wells from three drill centers tied back to the existing Erha North floating production, storage and offloading vessel, reducing additional infrastructure requirements.

    The project is estimated to develop an additional 165 million barrels from the currently producing Erha North field. Peak production from the expansion is currently estimated at 65,000 barrels of oil per day and will increase total Erha North field production to approximately 90,000 barrels per day.

    "Executing successful projects such as Erha North Phase 2 ahead of schedule and under budget results from ExxonMobil's disciplined project management approach and expertise," said Neil W. Duffin, president of ExxonMobil Development Company. "We are able to create additional shareholder value by optimizing existing infrastructure, which reduces capital spending requirements and improves capital efficiency."

    Duffin said the ahead-of-schedule startup was supported by strong performance from Nigerian contractors, which accounted for more than $2 billion of project investment for goods and services, including subsea equipment, facilities and offshore installation.

    "These contracts are bringing direct and indirect benefits to the Nigerian economy through project spending and employment, consistent with project objectives," Duffin said.

    ExxonMobil expects to increase its global production volumes this year by 2 percent to 4.1 million oil-equivalent barrels per day, driven by 7 percent liquids growth. The volume increase is supported by the ramp up of projects completed in 2014 and the expected startup of major developments in 2015.



    Read more: http://www.benzinga.com/pressreleases/15/09/b5842770/exxonmobil-starts-oil-production-at-erha-north-phase-2-project-ahead-of#ixzz3luXEwFzc
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    Gas markets are clamouring for more LNG FSRUs ships


    At a time when commodity producers are writing down billions in asset values and cancelling projects around the world, one niche area of the gas market is booming.

    Hybrid ships, called Floating Storage and Regasification Units, or FSRUs, offer emerging nations from Egypt to Pakistan a cheaper, quicker way to attack power shortages by importing liquefied natural gas. They cost about $300 million to build, or half as much as an onshore import terminal, and are up and running as much as six times faster, sometimes within as little as a year, according to owners Hoegh LNG Holding Ltd. and Excelerate Energy LLC.

    As prices for the fuel slumped 64 percent from last year’s peak, the rout made importing the fuel more popular with new buyers seeking a quicker route to LNG amid soaring power demand. Built at shipyards in South Korea, Hoegh sees as many as 55 such vessels in use within 5 years, from about 20 now and just the one a decade ago.

    “The main driver is speed,” Sveinung Stohle, Hoegh’s chief executive officer, said by telephone from the company’s Oslo office. “Demand for FSRUs follows a drastic reduction in the cost of LNG. We see that this has caused a very strong increase in requests.”

    Hoegh gained 44 percent this year in Oslo trading. By comparison, the 79-member Bloomberg World Mining Index fell 26 percent, led by Glencore Plc’s 57 percent slump as raw materials from coal to copper plunged.

    FSRUs are emerging as the fastest alternative for imports just as nations imposing limits on carbon dioxide emissions turn to gas, which is twice as clean as coal.

    With prices down, “environmentally beneficial natural gas delivered as LNG is becoming competitive with coal” in power generation, said Graham Robjohns, the CEO of Golar LNG Partners LP, in a Aug. 27 earnings call. Hamilton, Bermuda-based Golar LNG has 6 operating FSRUs and two on order. Floating terminals account for 28 percent of the import capacity under construction, according to Bank of America Corp.

    http://fuelfix.com/blog/2015/09/16/gas-markets-are-clamoring-for-more-lng-ships/
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    Are Chesapeake Shopping Utica Dry Gas Assets for $2B?


    Did Chesapeake Energy take Williams to the cleaners? Chesapeake Energy has just cut a deal with Williams to shave 25 cents per Mcf off their natural gas gathering fees in the Utica Shale. In return for the price cut from Williams, Chesapeake agreed to bring more wells online and increase the volume of the gas they send through Williams’ pipes.

    But what’s this? Credible rumours are swirling that Chesapeake, after winning concessions from Williams, is now looking to dump their dry gas (not wet gas) Utica Shale assets in an effort to raise $2 BILLION. Sure looks to us like Chessy just enhanced the value of their assets in the Utica as a way to turn around and sell it…

    http://marcellusdrilling.com/2015/09/credible-rumor-chesapeake-shopping-utica-dry-gas-assets-for-2b/?utm_source=dlvr.it&utm_medium=twitter
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    Brazil's Petrobras output hits all-time high in August


    Brazil's Petroleo Brasileiro SA said on Wednesday that output rose 4.5 percent in August to an all-time high of 2.88 million barrels of oil and equivalent natural gas a day from a year earlier.

    Petrobras, as the state-run company is known, said production surpassed an earlier peak of 2.86 million barrels reached back in December.

    The company, which is trying to overcome a massive corruption scandal, said the increase in production was mainly due to initial operation of the new Cidade de Itaguaí rig at Lula field in Brazil.

    Considering only output in Brazil, Petrobras said it produced 2.69 million barrels of oil and equivalent natural gas a day in August, the highest volume ever for local output.

    http://www.reuters.com/article/2015/09/16/brazil-petrobras-production-idUSL5N11M2GR20150916
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    Shale gas fracking should go ahead in UK - Taskforce


    Image Source: The GuardianThe Guardian reported that fracking for shale gas in the UK should be pursued as an alternative to the use of coal, a taskforce on the controversial technology has concluded, in order to provide a bridge to a low-carbon future.

    According to the chairman of the taskforce, former Labour cabinet minister Mr Lord Smith, but shale gas should not receive public subsidy or tax breaks, and the tax revenues arising from its exploitation should be redeployed to develop renewable energy and other low-carbon innovations.

    He said that “I can’t see any reason why the shale industry needs tax breaks. If the gas is there and is recoverable and that’s still a big ‘if’ the industry can derive revenue from extracting it.”

    He said that “Shale gas is not the answer to climate change. That is a mixture of renewables, nuclear and energy efficiency and other low-carbon sources of energy. But we can’t simply wave a magic wand and say that will happen tomorrow. Shale gas provides a bridge.”

    The Task Force on Shale Gas, which is funded by the UK’s shale gas industry but operates independently, found that climate change targets could still be met even with an increase in the use of gas, which is less carbon-intensive than coal. When technologies known as ‘green completion’ are used, which means stopping the leaks of methane from shale wells, the fuel is no more carbon-intensive than conventional gas, and less so than imports of liquefied natural gas from countries such as Qatar.

    But the report also found that if gas is to be used for another four decades, as envisaged by the group, then much more effort must be put into carbon capture and storage technologies. These have been problematic, as repeated attempts to set up UK pilot projects over the past decade have yet to produce a result. “The government must get a move on,” said Lord Smith. “I don’t think the reason for the slowness lies in problems with the technology. It is a lack of political will.”

    http://steelguru.com/gas-oil/shale-gas-fracking-should-go-ahead-in-uk-taskforce/434652#tag
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    Norway rolls out the barrels


    Norway’s oil production hit 1.56 million barrels per day last month, exceeding an official forecast.

    The output figure was up 4% on the tally a year ago and 4.5% above the prognosis for the month of the Norwegian Petroleum Directorate, even as oil prices have sunk to around $47 a barrel for Brent crude.

    However, overall liquids production of 1.9 million bpd, including oil natural gas liquids and condensate, was down 37,000 bpd, or 2%, on the previous month while total gas sales of 9.7 billion cubic metres were unchanged.

    Dominant state-owned operator is looking to maximise recovery from mature offshore fields such as Gullfaks to fully utilise existing infrastructure.

    http://www.upstreamonline.com/live/1411364/norway-rolls-out-barrels?utm_source=twitterfeed&utm_medium=twitter

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    Energy ministers, businesses gather in Tokyo to discuss LNG market

    Energy ministers, businesses gather in Tokyo to discuss LNG market

    Ministers and business delegates from around 50 countries and regions gathered in Tokyo on Wednesday to discuss further development of the liquefied natural gas market and the latest market trends and challenges.

    The LNG Producer-Consumer Conference has been hosted annually by the Japanese Ministry of Economy, Trade and Industry since 2012. It comes as the government seeks a manageable way to set LNG prices given the recent increase in imports for thermal plants in the absence of nuclear power following the 2011 Fukushima crisis.

    “A market that is flexible and can function better will provide benefits for (both) producing and consuming countries,” Japanese industry minister Yoichi Miyazawa said in a speech.

    Flexibility in deciding prices for LNG will help lower costs in Asia, where it mostly trades at higher prices than in Europe or the United States, under long-term contracts linked to crude oil prices, ministry officials said.

    Miyazawa also underscored the importance of stable procurement of LNG in the event of emergencies such as natural disasters, adding the issue was expected to be one of the agenda items at a Group of Seven energy ministers’ meeting slated for next May in Japan.

    Mohammed Saleh al-Sada, minister of energy and industry in Qatar, and International Energy Agency Executive Director Fatih Birol are among the participants at the fourth LNG conference.

    http://www.japantimes.co.jp/news/2015/09/16/business/energy-ministers-businesses-gather-tokyo-discuss-lng-market/#.VflbltJVhBc
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    Iran to clients - Buy our oil and get joint ventures too

    Iran to clients - Buy our oil and get joint ventures too

    Iran has unveiled details for long-awaited foreign cooperation contracts which it hopes will attract oil buyers and investors to modernise its ageing infrastructure, including offers to take part in joint ventures to extract its huge reserves.

    The United Nations endorsed a deal in July to end years of economic sanctions on the Islamic republic over its nuclear programme, although a removal of those sanctions still requires U.S.-Congressional approval.

    Pre-sanctions agreements between Iran and foreign energy firms offered partners oil and gas revenue payments in return for cash investment in so-called buyback contracts. But foreigners were barred from joint ventures or from extracting themselves, making these contracts unpopular with investors.

    "Iran is going to apply a new version of oil contract model in order to make it more attractive for foreign investors, with similar terms to a PSA (production sharing agreement)," said Shahrouz Abolhosseini, petroleum products pricing manager at National Iranian Oil Company (NIOC), during a business meeting in the South Korean capital on Wednesday.

    "NIOC ... aims to embark on joint ventures with foreign investors and international companies in the oil and gas industry," he added.

    Also in Seoul, Ali A. Arshi, adviser to the deputy minister for international affairs and commerce at Iran's Ministry of Petroleum, said the main advantage of the new contracts over the previous buybacks would be more contractual flexibility. He did not elaborate.

    Tehran's move is a latest attempt to attract buyers beyond offering outright oil discounts, which have included offers of extended credit and free cost of shipping.

    "What we can expect from Iran is being creative in the sense that when they approach potential clients they will tie the sale of Iranian crude or Iranian (refined) products to future collaboration," said Bijan Khajehpour, managing partner at Atieh International, which advises companies on investing in Iran.

    Khajehpour said there were discussions to favour returning oil buyers with direct investment or joint venture opportunities in Iran.

    http://uk.reuters.com/article/2015/09/16/uk-iran-oil-contracts-idUKKCN0RG15020150916
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    China's Coal bed methane to remain viable in long term

     
    Prospects for the country's natural gas market remain strong in long term, despite the economic slowdown, according to the head of one of China's leading developers of unconventional gas resources.

    Pierce Li is co-CEO and president of AAG Energy Holdings Ltd, an independent producer of coal bed methane, or CBM, which just raised $363 million in a Hong Kong flotation.

    "While domestic demand for natural gas will be affected by the temporary economic slump to an extent, we are confident the Chinese economy will warm up in future," he said.

    Through a series of production-sharing contracts, AAG holds majors shares in two gas concessions in the Qinshui Basin in Shanxi province: 80 percent of the Panzhuang concession (spanning 67.4 square kilometers) and 70 percent of the Mabi concession (898.2 sq km).

    Panzhuang began production in 2007 and is considered the most commercially advanced Sino-foreign-owned CBM asset in China, and remains the only one to have received full development plan approval. At the end of last year its daily output hit a record 1.4 million cubic meters.

    AAG started pilot production of Mabi in the first half of 2010, and in November 2013 received preliminary approval for its first phase of development from the National Development and Reform Commission, with production target of 1 billion cu m per year, starting in 2016.

    An International Energy Agency report on coal mine methane in China, published in 2008, revealed China has seven geographic regions with different concentrations. Shanxi and Shaanxi provinces, and Inner Mongolia autonomous region contain the richest sources, with the Qinshui Basin considered the best single area.

    China has prioritized the development of unconventional energy to reduce its reliance on coal.

    http://en.chinamining.com.cn/News/2015-09-16/1442383135d73747.html
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    White House says does not back U.S. House bill to repeal oil export ban


    The White House said on Tuesday it does not support a bill in the U.S. House of Representatives to repeal the 40-year-old ban on exports of crude oil.

    "This is a policy decision that is made over at the Commerce Department, and for that reason, we wouldn't support legislation like the one that's been put forward by Republicans," White House spokesman Josh Earnest told reporters at a briefing.

    "The administration believes that the American people are better served by making sure that we pursue the kind of approach that also invests in renewable energy," he said.

    The full House is expected to pass the bill to repeal the ban in coming weeks, after a vote on Thursday in the chamber's energy panel.

    Energy interests say the domestic drilling boom could soon choke on a glut of crude if producers are not allowed to ship the oil to consumer countries in Asia and Europe.

    A similar bill faces a tough battle in the Senate, however. Even if all 54 Republicans in the 100-member Senate voted for the bill, they would need support from six Democrats to overcome a procedural roadblock.

    In July, the Senate energy panel passed a bill to lift the ban, but no Democrats voted for it.

    The top Democrat on the panel, Senator Maria Cantwell of Washington state, has said she needs to know more about whether lifting the ban would be good for consumers. Cantwell has also voiced concerns that repealing the ban could increase the number of trains carrying oil through her state.

    http://www.reuters.com/article/2015/09/15/usa-oil-exports-whitehouse-idUSL1N11L1SR20150915
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    EIA: Shale output fell by 350,000 barrels a day since April


    Government analysts say shale oil fields in Texas, Colorado, North Dakota and Ohio are set to decline by 80,000 barrels a day this month, bringing their combined daily output to 5.2 million barrels in October.

    That brings production declines in the U.S. shale plays to 350,000 barrels a day since the shale boom reached its peak in April, according to the Energy Information Administration’s monthly report on shale drilling productivity.

    The oil wells drilled into shale formations have steep natural decline rates because the rock isn’t porous or permeable, making it difficult to squeeze out oil and gas. Shale wells typically give up most of their hydrocarbons in the first year after they’re brought into production.

    These shale production losses have come from the Eagle Ford Shale in South Texas, the Bakken Shale in North Dakota, the Utica Shale in Ohio and the Niobrara in Colorado, Kansas, Nebraska and Wyoming. The only oil-focused shale play that didn’t give up production in October was the Permian Basin in West Texas, which is expected to bring up an additional 23,000 barrels a day by next month.

    The biggest declines since April have come from the Eagle Ford, which has lost 300,000 barrels a day. The Permian has continued to bring production up, adding 88,000 barrels a day since shale production peaked,according to the EIA.

    In the last few days, OPEC and the International Energy Agency put out dueling predictions of how far U.S. oil production will decline over the next year. The Saudi-led Organization of Petroleum Exporting Countries believes U.S. production will still grow next year but only by 50,000 barrels a day, down from its estimate of 400,000 barrels a day this year. And the Paris-based IEA said U.S. production is set to plunge by 400,000 barrels a day next year.

    http://fuelfix.com/blog/2015/09/15/eia-shale-output-fell-by-350000-barrels-a-day-since-april/#30727101=0
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    Moody's revises INPEX CORP's outlook to negative


     "The change of outlook to negative primarily reflects the uncertainties generated by the delay in the start-up of production and cost overruns at the company's Ichthys LNG Project in Australia," says Kailash Chhaya, a Moody's Vice President and lead analyst for INPEX CORPORATION.

    "In addition, Moody's considers that the headroom within the company's current rating has been reduced by weak earnings in the current low oil price environment and the increasing level of liabilities related to Ichthys", adds Chhaya.

    On 11 September 2015, INPEX announced that the start of production at Ichthys will be delayed to the third quarter of 2017, from the expected start date of end-2016. As of June 2015, the project's overall development was approximately 74% complete. But, a detailed review of its schedule prompted the company to revise the start date.

    INPEX also announced that various factors -- including the delayed production start -- will increase by 10% the total project investment, estimated at the time of the final investment decision in January 2012.

    INPEX will also likely increase its borrowings to cushion the impact of low oil prices and to fund the additional costs of the project, which will raise adjusted debt/EBITDA leverage. As of 31 March 2015, INPEX's adjusted debt/EBITDA leverage, calculated after treating its Ichthys-related completion guarantees as debt, stood at 2.6x.

    Ichthys is critical to INPEX's goal of expanding its daily production capacity to an equivalent of 1.0 million barrels per day, 2.5x its current level, in the next 10 years. At its peak capacity, INPEX estimates that Ichthys will supply about 10% of Japan's annual LNG import volume.

    Moody's recognizes INPEX as a government related issuer (GRI), based on direct (19%) and indirect (2%) ownership of approximately 21%, as well as on the government's ownership of a special-class share, or a golden share. When considering the rating of GRIs, Moody's applies a joint default analysis (JDA) composed of four factors: a baseline credit assessment (BCA), the related government's credit quality, its default dependence, and its support probability.

    Moody's has assessed INPEX's BCA as baa1, based on the above mentioned fundamental characteristics. If leverage increases due to the planned investments in the Ichthys and Abadi projects, then the opportunity for a ratings upgrade is limited.

    The credit quality of the Japanese government, as the potential support provider to the issuer, is A1 with a stable rating outlook.

    https://www.moodys.com/research/Moodys-revises-INPEX-CORPs-outlook-to-negative--PR_334522
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    Penn West to sell Mitsue assets for $192.5-million


    Canadian oil producer Penn West Petroleum Ltd said it would sell its assets in Mitsue in Central Alberta for $192.5-million in cash to reduce debt.

    The company said it would have raised $605-million this year by divesting its non-core assets upon the closing of the Mitsue deal.

    Penn West had long-term debt $2.21-billion as of June 30.

    The company lowered its budget and cut jobs this month and said it would only spend cash it earned from operations.

    The company had also cut its 2015 production forecast to 86,000 to 90,000 barrels of oil equivalent per day (boepd) from 90,000 to 100,000 boepd.

    http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/penn-west-to-sell-properties-in-central-alberta-near-mitsue-for-1925-million/article26363857/
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    Eni plans to hold the keys for east Mediterranean gas exports


    Braving all the political risks of the region, Italy's Eni aims to pull together its east Mediterranean gas empire headed by a giant Egypt find, into a major hub to supply Europe.

    State-controlled Eni, the biggest foreign oil and gas major in Africa, wants to use its deep ties with Egypt and Libya to help create the export hub for liquefied natural gas.

    It expects Libyan gas to flow into a hub when conflict abates, hopes to attract other producers seeking an export outlet from Israel and accelerate plans to send Cypriot gas owned by other companies into the facility, likely to be located in Egypt.

    The project would help diversify gas supply to Europe, now dependent on Russia for about a third of its needs, but faces long odds given the region's mix of political disputes, conflict zones and state involvement in energy policy.

    Its scope of tying together a multi-national gas supply network may be unprecedented. Pipelines would need to be built linking the various gas deposits scattered across the region to an LNG plant.

    "The area (Egypt) could restart exporting LNG and, as it's very close to Italy and Spain where LNG import terminals are idle or underused, it's very likely it will come in there," Eni CEO Claudio Descalzi told Italy's parliament last week.

    Descalzi, who has already flown to see heads of state in Egypt and Cyprus where the idea of a gas export hub was discussed, told senators the hub could be established to bring together the resources of Egypt, Cyprus, Israel and at some later point Libya.

    "There's massive potential here for Europe and room for Italy to increase its clout in the area. It's clear there are huge amounts of gas, including off Libya," a person familiar with the matter said.

    Fuel shortages have forced Egypt to idle its two liquefied natural gas (LNG) export plants, which chill gas into liquid form for transport on ships.

    Pooling the region's rich energy resources could spur investment in previously stranded gas fields in Israel and Cyprus, while resuscitating once-bustling LNG export plants like BG's Idku as well as Eni's dormant Damietta in Egypt.

    In Cyprus, Eni itself has not yet discovered any gas deposits but is focused on doing so, the company said last week.

    Still, the firm's bumper gas find in Egyptian waters this month, the biggest ever in the Mediterranean, may help unlock aspects of the problem by providing large new supplies to feed the gas export hub.

    While gas from the newfound Zohr field, holding 30 trillion cubic feet of reserves, will mainly feed domestic Egyptian demand only, a deeper reservoir below it could be a candidate for gas exports.

    "Egypt had a plan to double its LNG export capacity and if the hub grows it could do it," Descalzi told Italy's parliament.

    The CEO said Eni has made big gas discoveries in Libya that have lain dormant for years because they were unable to develop them as conflict raged, seeing Egypt as one export outlet.

    Zohr is also close to Cyprus' offshore block 11 which is licensed to French major Total and the reservoir may extend across the maritime border, creating opportunities for explorers on the Cypriot side.

    Israel and Cyprus already have plans to export gas to Egypt but progress has been slowed by regulatory interference and dragging negotiations.

    Pulling off the hub project will not be easy given the region's tangle of political disputes.

    Turkey opposes any export of Cypriot gas reserves until a long-standing dispute over territory is cleared up and a mechanism for sharing gas profits between the Turkish and Cypriot sides of the island are put in place.

    http://www.reuters.com/article/2015/09/15/eni-mediterranean-gas-idUSL5N11H18O20150915
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    Sunoco holds binding open season for third Mariner East pipeline


    Sunoco Logistic Partners LP is holding a binding open season for a third Mariner East pipeline. The pipeline will deliver Appalachian natural gas liquids (NGL) to Sunoco's Marcus Hook Industrial Complex on the Delaware River south of Philadelphia, USA.

    Sunoco said shippers have expressed interest in expanding Mariner East to provide more NGL takeaway capacity from points in eastern Ohio, western Pennsylvania and West Virginia for delivery to Marcus Hook – a former oil refinery that's being repurposed for NGL storage, processing and distribution to local, domestic and international markets.

    Sunoco launched the current open season on 10 September.

    Sunoco revealed in June that it was considering constructing a third Mariner East pipeline. It would likely follow the 300 mile path of the company's existing Mariner East 1, which runs from Western Pennsylvania to Marcus Hook.

    Sunoco is also moving ahead on acquiring the more than 2500 parcels of land, some by eminent domain, needed to expand its Mariner East II pipeline to carry Marcellus shale gas to Marcus Hook.

    http://www.energyglobal.com/pipelines/contracts-and-tenders/15092015/Sunoco-holds-binding-open-season-for-third-Mariner-East-pipe/

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    Tecnicas and Petrofac Selected to Build $4.7B Saudi Gas Project


    Spain's Tecnicas Reunidas and Britain's Petrofac have been selected for contracts worth as much as $4.7 billion to build the Fadhili gas plant in Saudi Arabia for state oil giant Saudi Aramco, industry sources said on Tuesday.

    "They received notification last week; a letter of intent," said one of the sources, who declined to be identified as the information isn't public.

    Petrofac and Tecnicas declined to comment, while Saudi Aramco said it does not comment on its business plans.

    - See more at: http://www.rigzone.com/news/oil_gas/a/140620/Sources_Tecnicas_and_Petrofac_Selected_to_Build_47B_Saudi_Gas_Project?rss=true#sthash.KrrMQxqU.dpuf

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    ONGC bucks trend to build assets as oil prices ease


    ETPTI reported that global oil majors have slashed spending and cut jobs in response to plunging oil prices but state-owned Oil and Natural Gas Corporation is using the slump to build assets.

    Oil majors including Shell, Total and BP have cut capital spending by at least USD 14 billion this year in response to the plummeting oil price.

    Addressing company shareholders, Mr Dinesh K Sarraf, CMD of ONGC, said that energy industry, particularly the oil and gas sector, was facing challenging times due to the collapse of crude prices.

    He said that oil prices have collapsed from USD 110 per barrel to sub-50 dollars a barrel due to lower growth in demand than expected from China, slow recovery in some of the developed economies and steady build-up of new supplies backed by strong North American output.

    Mr Sarraf said that "While many of the global E&P companies have responded to this situation by cutting down their investments, ONGC takes this as an opportunity to build its assets in this environment of lower costs as well. ONGC remains steadfastly committed to the quest of energy security, a national priority endorsed by none other than our Prime Minister."

    He said that ONGC has stepped up ongoing development efforts to bring new hydrocarbon volumes into the country's energy basket. Important projects have been given the go-ahead for development and more proposals to monetise our reserves are under various stages of finally being approved.

    Having reversed the decline in crude oil production in 2014-15, ONGC is now fully focused on implementing programmes to raise output from ageing and old fields.

    He said that "Every drop counts and ONGC's production track record from its predominantly mature portfolio and commercially prudent and holistic management of producing assets is really remarkable."

    Improved Oil Recovery and Enhanced Oil Recovery projects to maximise production have yielded positive outcomes in 2014 to 2015 over 34% of ONGC's crude production was a result of investments in these projects.

    http://steelguru.com/gas-oil/ongc-bucks-trend-to-build-assets-as-oil-prices-ease/434587#tag
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    China state firm to lease private tanks for oil reserves


    CEFC China Energy has signed a preliminary agreement with an state energy company to provide oil storage for 12.6 million barrels of commercial state crude reserves, two senior sources at the privately held CEFC China said on Tuesday.

    The deal, in which the un-identified state company will lease space enough for about two days of China's crude oil imports, lends some near-term support to global oil prices, which have been weighed down by a persistent supply glut.

    China has been taking advantage of oil prices more than 50 percent lower than their 2014 peak above $115 a barrel to build up reserves, and in April this year imported more crude than the world's No.1 buyer, the United States.

    CEFC China's new tanks, being built in Yangpu port on Hainan island off southern China, will have a total capacity of 17.6 million barrels and are to open at end-2015, several months behind an earlier plan and after a nearby oil terminal is ready for use, the sources said.

    Under the heads of agreement signed for the deal, the state company will lease its portion of the tanks for up to six years, said the CEFC China sources, declining to name the state firm involved.

    A final contract will be signed after the state company receives government approval to lease the storage, they said.

    Just across a road from the CEFC facility is an 8.2-million-barrel crude storage site owned by Vopak - the world's largest independent tank terminal operator - and the State Development Investment Corporation (SDIC).

    Commissioning at the Vopak site started early this month, and Vopak confirmed on Tuesday that one large crude oil cargo has been discharged.

    The CEFC and Vopak facilities are next to a tank farm owned by state refiner Sinopec Corp, and the three have agreed to connect the depots with pipelines to optimise operations, said one CEFC executive.

    The Sinopec farm is also linked with its 160,000 barrel-per-day Hainan refinery.

    China's state reserves are split into two categories: strategic petroleum reserves for which the state builds tanks and pays the full cost of storage and oil, and commercial state reserves whereby the state leases tanks and shares the cost of buying oil with companies.

    Most of the commercial storage tanks along China's coast are nearly full, and the CEFC and Vopak sites could be among the last available for stockbuilding before China's next strategic storage units are ready, storage and trading sources said.

    http://www.reuters.com/article/2015/09/15/china-oil-storage-idUSL4N11L3FC20150915

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    China's NDRC will cut natural gas prices for non-residential users


    China's NDRC will cut natural gas prices for non-residential users by CNY0.5-0.6 per cubic meters, or nearly 20%: MNI...Zerohedge

    @zerohedge
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    Mexico’s finance ministry sets minimum fiscal terms for September auction


    Mexico’s finance ministry has set the minimum fiscal terms companies will be required to meet in order to win development rights in an upcoming oil auction.

    The country is gearing up for the second round of its auctions in its Round One tender after an historic energy overhaul last year.

    The minimum amount of profits required to win development rights varies slightly by contract.

    The minimum value of pre-tax profits for the five offshore extraction contract up for grabs range between 30.2 and 35.9%.

    The National Hydrocarbons Commission, known by its Spanish-language acronym CNH, is the oil regulator that will run the September 30 auction.

    The minimum amount of profits required to win development rights varies slightly by contract.

    At the high end, the second contractual area, which covers the Hokchi field, is set at 35.9 percent. Bids for the fifth contractual area on offer, covering the Mision and Nak fields, will require at least 30.2 percent of pre-tax profits for the government.

    The five production-sharing contracts covering nine oil and gas fields will be awarded by the CNH based on which company or consortium offers the biggest share of pre-tax profits to the government via a weighted formula that also includes an investment commitment.

    The share of profits is 90 percent of the formula, while the investment commitment accounts for the remaining 10 percent.

    However, the newly released terms do not require bidders to offer a additional minimum work program investment, although previously established taxes and royalties will also apply.

    The contracts are for shallow water exploration and production of tracts located along the southern rim of the Gulf of Mexico near the country’s best-producing offshore fields, Ku-Maloob-Zaap and Cantarell.

    https://www.energyvoice.com/oilandgas/87721/mexicos-finance-ministry-sets-minimum-fiscal-terms-for-september-auction/

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    North Dakota may let more oil wells be temporarily idled


    North Dakota's oil regulators said on Monday they may allow more wells to be temporarily abandoned, a step that would permit producers to delay fracking beyond the typical one-year window and prevent even more crude from flooding onto global markets.

    The change would fuel massive savings for oil producers in the state who have amassed a backlog of almost 1,000 wells that have been drilled but not completed with processes needed to get the oil flowing. The delays are designed solely to ride out the roughly 50 percent drop in crude prices since last year.

    Any regulatory change in North Dakota also would assuage market concerns about supply continuing to outstrip demand at a time when Iraq, Saudi Arabia and other OPEC members show little sign of curbing their own output.

    While no decision has been reached, the North Dakota Department of Mineral Resources (DMR) is "leaning toward" sharply increasing the number of requests to temporarily abandon wells, director Lynn Helms told reporters on a conference call.

    "It's just going to be a whole lot better for everyone if we store the oil in the shale formation instead of in Cushing, Oklahoma," Helms said, a reference to the popular crude storage hub near the geographic center of the United States.

    Producers currently have one year to 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.

    The number of North Dakota wells waiting to be completed rose by 70 to 914 in July, and most of them have one-year windows that expire in December, Helms said.

    Any decision to allow a well to be temporarily abandoned would be on a case-by-case basis, he said.

    "It's a delicate balancing act because royalty owners expect to get royalties from those wells," Helms said.

    The one-year window has loomed over corporate budget planning, with many producers hoping to wait as long as possible to bring new wells online.

    For example, EOG Resources Inc, which has one of the largest number of North Dakota wells waiting to be fracked, told investors last week it would spend most of its capital budget in early 2016 on fracking new wells.

    The rule change could abrogate the need for EOG and peers to start fracking come January.

    "This sends a signal to the global markets that the state is not going to force even more oil out there," Helms said.

    http://www.reuters.com/article/2015/09/14/north-dakota-oil-production-idUSL1N11K12220150914

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    North Dakota oil output down only slightly in July


    North Dakota's daily oil production fell less than 1 percent in July, state regulators said on Monday, a drop far less than many feared and one showing the state's Bakken shale formation could continue pumping high volumes of crude for the foreseeable future despite sliding prices.

    The state, the No. 2 U.S. crude producer, had output of 1,201,920 barrels of oil per day (bpd) in July, down from 1,211,328 bpd in June, according to the Department of Mineral Resources, which reports on a two-month lag.

    The slight dip in output came despite a more than 50 percent plunge in crude prices in the past year that has eroded the oil industry's profitability. Indeed, North Dakota's drilling rig count has dropped alongside the price of oil, and is 12 percent below June levels.

    Yet advances in technology and efficiencies have helped the productivity of each drilling rig roughly double in the past year, helping the industry do more with less.

    Highlighting that gain, the number of producing wells in North Dakota hit 12,940 in July, an all-time high.

    Natural gas production rose slightly in the month to about 1,657,138 million cubic feet per day, also an all-time high.

    http://www.reuters.com/article/2015/09/14/north-dakota-oil-production-idUSL1N11K12220150914
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    Petrobras chairman to take leave, to focus on job as Vale CEO


    Murilo Ferreira will take a leave of absence as chairman of state-run oil firm Petrobras, turning his full attention to his job as chief executive of Vale SA as the mining giant grapples with a downturn in the sector.

    Petroleo Brasileiro SA, as the company is formally known, did not give a reason for Ferreira's leave, which it said would last until Nov. 30. A company source told Reuters he had requested time off to focus on Vale as it navigates a slump in iron ore prices and a slowdown in China.

    Ferreira, 62, who has been CEO of Vale since 2011, was appointed chairman of Petrobras in April as it looked to send a market-friendly signal after a giant corruption scandal resulted in billions of dollars in writedowns.

    At the time some mining executives criticized the move, saying Vale was going through a difficult patch and needed the full focus of its CEO. Ferreira shrugged off concerns, saying the double job would only eat into his "leisure time."

    But the world's largest producer of iron ore has continued to struggle. Shares in Vale have lost nearly 40 percent over the past 12 months and touched their lowest in a decade last month.

    Analysts predict the price of iron ore .IO62-CNI=SI, the main ingredient in steel, will stay low for years after falling more than half since last year.

    Despite being one of the world's lowest-cost producers of the mineral, Vale has found itself in a tight spot as its investments are well above those of Australian rivals BHP Billiton and Rio Tinto. Vale is in the process of building a giant iron ore mine in the Amazon known as S11D. The expansion is the world's largest iron ore project at the moment.

    http://www.reuters.com/article/2015/09/14/petrobras-chairman-idUSL1N11K0Q620150914
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    Lukoil says could sell treasury shares to raise funds


    Lukoil, Russia's No.2 oil producer, may sell its treasury shares to raise money or distribute them among shareholders, Chief Executive Vagit Alekperov was quoted as saying on Monday.

    Earlier this month, Lukoil, where Alekperov and his deputy, Leonid Fedun, are the largest private shareholders, said its Cypriot unit had increased the percentage of shares held by the company in treasury to 16.2 percent from 11.25 percent.

    Alekperov, who held a stake of around 23 percent in Lukoil as of the end of 2014, told the Rossiya-24 TV channel on Monday that the company could use treasury shares to raise money, among other options.

    "The first way is to sell them on the stock market and to raise funds for large-scale projects. The second one -- to distribute among our shareholders," Alekperov was quoted as saying. He added the firm had yet to choose a preferred option.

    http://www.reuters.com/article/2015/09/14/russia-lukoil-treasury-shares-idUSL5N11K34A20150914

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    “There’s just no cash.”


    “There’s just no cash.” That’s the Coles Notes from a senior banker describing the book of oil service loans he manages for one of Alberta’s leading lenders. There’s simply not enough cash flow to support current levels of debt.

    Bankers and borrowers have kicked the can down the road about as far as they can as more oilfield service (OFS) and exploration and production (E&P) companies default on their loans and seek more relief on lending covenants. While a significant oil price increase to lift all the sinking boats will surely come, it won’t happen soon enough. More of the same won’t work.

    Oil industry debt is everyday news. But the discussion is about the symptoms, not the ailment.

    Companies cannot borrow their way out of debt. Equity capital is only available at distressed valuations. Specialized OFS assets will fetch only a fraction of replacement cost—if somebody actually wants them. Although oil and gas reserve valuations are down by half, borrowers are being forced to sell them anyway to repair balance sheets. The last four months of 2015 will be very difficult for any company with meaningful amounts of debt. Same for their lenders, the other signatories to the loan agreement.

    As the banker said, “There’s just no cash.” Here’s what it means.

    The foundation of global credit markets is based upon the borrower’s capability, obligation and commitment to pay the money back. The amount of money anybody can or should borrow is dependent upon free cash. Not forecast cash flow, not earnings before interest, taxes, depreciation, and amortization (EBITDA), not good intentions. Free cash. How much money is available to service debt after all the other bills are paid. This is the key factor behind every credit application, from a car loan or home mortgage to an operating line of credit or senior secured term debt. The more free cash you generate, the more you can borrow. When free cash drops, the opposite is true.

    But what happens when an entire industry can no longer service previous levels of debt?

    ARC Financial produces a weekly chart calculating revenue, spending and upstream cash flow for the entire Canadian E&P sector for the current and preceding 14 years. Selected data has been reproduced below. MNP added 1998, 1999 and 2000 from prior reports. ARC calculates total revenue from all oil and gas produced, then deducts direct lifting and operating costs, taxes and royalties and the administrative cost of running the business. The result is “after-tax cash flow,” which is the free cash available for exploration, development, dividends and, of course, debt servicing.



    Revenue/CashflowGross revenue from production sales is in blue and after-tax cash flow in red. The green line is 2015’s estimated cash flow compared to prior years. The figures are not corrected for inflation.

    http://www.zerohedge.com/news/2015-09-14/theres-just-no-cash-oil-price-increase-will-not-come-fast-enough-save-alberta

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    Iraq targets record Basra oil exports in Oct, adding to global oversupply


    Iraq aims to export a record volume of Basra crude from its southern terminals in October as it ramps up production, adding to a global oil supply glut.

    The oil surplus combined with weakening demand has depressed global crude prices and pitted members of the Organization of the Petroleum Exporting Countries (OPEC) against each other in a battle for market share.

    Iraq, the largest OPEC producer after Saudi Arabia, plans to export 3.68 million barrels per day (bpd) of Basra crude, traders said on Monday, citing a preliminary loading programme.

    The volume, if realised, would beat a previous monthly record of 3.064 million bpd set in July.

    Iraq's decision to split its output into two grades, Basra Heavy and Basra Light, resolved quality issues, enabling the producer to ramp up output, industry sources said.

    However, the country tends to allocate more volumes than it can supply each month to avoid disrupting production as it has limited storage capacity to keep excess oil, one industry source familiar with the matter said.

    Iraq is unlikely to export more than 2.35 million bpd of Basra Light in October while the volume of Basra Heavy would not exceed 850,000 bpd, he said.

    Some of the October cargoes are also expected to be lifted in November instead, according to the source.

    Iraq cut official October selling prices (OSPs) for Basra Light and Heavy by 50 cents and $1.10 a barrel, respectively, from the previous month, but these reductions were unlikely to lift spot differentials given the glut, traders said.

    In October, Basra Light exports could jump by 800,000 bpd to about 2.8 million bpd, traders said, citing a preliminary loading programme.

    The grade has been performing well in the spot market, fetching premiums to its OSP for September-loading cargoes, but the potential jump in supply could depress differentials for cargoes loading in October, traders said.

    For Basra Heavy, exports could drop to about 900,000 bpd in October, according to the loading programme.

    That would be down from a planned 1.017 million bpd for this month, but remain elevated compared with 600,000-650,000 bpd in July and August, traders said.

    Basra Heavy crude sellers are struggling to find buyers for the high export volumes as refiners in Asia want to purchase and process the grade while similar quality Latin American grades can be had at cheaper prices.

    Basra Heavy's discount has dropped to as low as $2 a barrel for cargoes loading in September.

    Basra Heavy's OSP in the months ahead "will have to drop another dollar to compete with Latin American crude" like Colombia's Castilla and Mexico's Maya, a seller said.

    http://www.reuters.com/article/2015/09/14/iraq-crude-exports-idUSL4N11K2UR20150914

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    Azeri SOCAR says oil price fall halves revenue


    Azeri state energy company SOCAR said on Monday it would transfer less money to the state next year as its revenues had halved due lower oil price.

    The former Soviet republic has had to devalue its currency following a sharp decline in the Russian rouble.

    "The decline in the oil price has affected our financial condition. Our revenues fell two times," Rovnag Abdullayev, the company's president, said.

    Abdullayev did not say to what level the company's revenue fell. Oil and gas account for 95 percent of Azeri exports and 75 percent of government revenues.

    The SOCAR president also suggested that next year's state budget should be calculated based on an estimated oil price of $50-$55 per barrel, down from $90 this year.

    The 2015 budget anticipates revenues of 19.4 billion manats ($18.5 billion) based on an estimated oil price of $90 per barrel, down from $100 last year. Brent crude is now trading around $50.

    SOCAR's Vice-President Suleiman Gasymov told Reuters in February that an average oil price of $60 per barrel would reduce the company's revenues by $510 million this year. In March, SOCAR placed $750 million worth of Eurobonds.

    According to SOCAR officials and independent analysts, the production cost of oil for SOCAR is estimated at $15 per barrel, while the oil production cost for BP, which operates some big energy projects in Azerbaijan, is $12 per barrel.

    SOCAR will also ask the central bank for a 1.8 billion manats ($1.7 billion) loan, mainly for building its $16.5 billion oil, gas and petrochemicals processing plant, Abdullayev said.

    Last year, it had delayed the completion of the complex, outside the capital Baku, by four years until 2030 due to a lack of funds.

    "We intend to get 1.8 billion manat worth of credit in the central bank," Abdullayev told reporters.

    He said 1.2 billion manats would be used for modernisation of the oil, gas and petrochemical plant, while the rest was expected to be used for current drilling projects.

    The first stage of the project, intended to replace SOCAR's ageing oil refinery as well as the Garadagh gas processing plant and facilities of chemicals firm Azerikimya, is estimated to be worth $2.1 billion.

    http://www.reuters.com/article/2015/09/14/azerbaijan-oil-idUSL5N11K1HQ20150914

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    OPEC sees higher demand for its oil in 2016 as rival output slows


    OPEC on Monday predicted higher demand for its crude oil next year, sticking to its view that a strategy of letting prices fall will curb supply from the United States and other rival producers.

    The monthly report from the Organization of the Petroleum Exporting Countries, however, trimmed its estimate for 2016 global oil demand growth and predicted a less dramatic slowdown in non-OPEC supply than the International Energy Agency.

    OPEC said it expected demand for its crude next year to average 30.31 million barrels per day (bpd), up 190,000 bpd from last month, despite slower demand growth overall due to a weaker outlook for Latin America and China.

    Oil is trading below $50 a barrel, less than half its level of June 2014. But OPEC has refused to cut output, seeking to recover market share by slowing higher-cost production in the United States and elsewhere that had been encouraged by OPEC's former policy of keeping prices near $100.

    "Despite moderate economic growth, recent data shows better-than-expected oil-demand in the main consuming countries," OPEC said in the report.

    "At the same time, U.S. oil production has shown signs of slowing. This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come."

    OPEC expects supply from non-member countries to increase by 160,000 bpd next year, a downward revision of 110,000 bpd from last month and marking a sizeable slowdown from growth of 880,000 bpd in 2015.

    The 2016 forecast for U.S. tight oil production, also known as shale, was reduced by 100,000 bpd.

    But OPEC did not go as far as the IEA, which in its report on Friday said lower oil prices would force non-OPEC to cut output by the steepest rate in more than two decades next year.

    The producer group also expects the recent strength in oil demand growth to moderate. OPEC trimmed its estimate of 2016 world oil demand growth by 50,000 bpd to 1.29 million bpd.

    http://www.reuters.com/article/2015/09/14/opec-oil-idUSL5N11K1Z320150914

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    Oil Search turns down Woodside's $8 bln takeover plan


    Oil Search Ltd on Monday rebuffed an $8 billion takeover proposal from Australia's biggest energy company Woodside Petroleum Ltd as far too cheap, although it left the door open to higher offers.

    Woodside last week sought exclusive talks with the Papua New Guinea-focused oil and gas producer on a one-for-four share offer, conditional on support from key stakeholders, including the PNG government.

    The rejection is a blow to Woodside, which is chasing low cost liquefied natural gas assets in PNG at a time when the company has little new output due to start this decade and its undeveloped projects face challenges in a world of cheap oil.

    "The proposal from Woodside from every which way we looked at it grossly undervalued Oil Search," Oil Search Chairman Rick Lee told Reuters.

    Oil Search said it was in a strong financial position and highlighted its low-cost operations in PNG, where its output could double in the early 2020s working with giants ExxonMobil Corp and France's Total SA on two liquefied natural gas projects.

    Lee said there were unlikely to be any benefits in putting the two companies together, and the board saw Woodside's plan to create a regional LNG champion conflicting with Oil Search's long history as PNG's national energy champion.

    The company and its partners did not need Woodside's operational or liquefied natural gas marketing expertise, Lee told analysts on a conference call.

    Shareholders found Woodside's proposal unattractive, he added. Oil Search is nearly one-fourth owned by the PNG government and Abu Dhabi's International Petroleum Investment Corp.

    "If any proposals are tabled in the future that reflect compelling value for Oil Search shareholders, we will engage on them," Lee said.

    Woodside declined to comment on whether it was considering another approach.

    "Woodside is surprised and disappointed that the board of Oil Search has rejected the proposal without meeting with Woodside to understand the benefits of the opportunity or to negotiate the terms of a possible merger," it said in a statement to the stock exchange.

    Credit Suisse estimated Woodside would have to pay between A$9 and A$10 a share, or at least A$13 billion ($9.2 billion), to snare Oil Search, well above its A$11.4 billion value on Monday.

    The PNG government last year bought its 9.8 percent stake in Oil Search for A$8.20 a share, so it's unlikely it would sell for less than that.

    "The door's been closed pretty firmly in their face," Credit Suisse analyst Mark Samter said.

    Investors said Woodside shareholders had little to gain from paying a bigger premium and said they doubted Woodside would sweeten its offer.

    "They're seen not to have been frivolous in the past with their bid prices. For that reason, I think they're most likely to walk away from a tie-up with Oil Search," said Simon Mawhinney, chief investment officer at Allan Gray, which owns Woodside shares.

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    LNGL advancing talks over Magnolia LNG remaining capacity


    LNG Limited informed that it has agreed a schedule to conclude pricing negotiations and subsequent signing of the turnkey EPC contract for the Magnolia LNG project with the KBR‐SK joint venture in the fourth quarter 2015.

    KSJV will provide LNGL a fixed‐price on the full 8 mtpa project, as well as a 6 mtpa project, providing certainty of pricing for a six‐month period from the EPC contract’s effective date, the company said in a project update.

    The two firm KSJV prices allow LNGL flexibility in its FID decision to match a firm EPC contract price with the outcome of ongoing liquefaction capacity marketing efforts, without further KSJV negotiations during the six‐month period.

    As part of the EPC contract, the KSJV will fully guarantee the LNG production and fuel gas efficiency of each train at the guaranteed production rate of 206 metric tons/hour (1.7 mtpa equivalent) and fuel gas efficiency of 8%, incorporating the OSMR process design provided by LNGL.

    LNG Limited also revealed in the update that FERC’s draft environmental impact statement comment period for Magnolia LNG project has expired on 8 September.

    One substantive comment was received from the National Marine Fisheries Service recommending the resolution of certain dredging issues in advance of the final EIS. Magnolia LNG is working with FERC, NMFS and the Army Corps of Engineers on this matter and expects to have it resolved promptly, the company said.

    LNG Limited also added that marketing of binding offtake agreements for the remaining 6 mtpa of Magnolia LNG capacity continues with a number of investment‐grade, as well as some non‐investment grade counterparties.

    Certain negotiations (with investment‐grade counterparties) are advanced and progressing through the internal investment decision authorisation processes attendant to each counterparty.

    Each of the offtake negotiations are for initial 20‐year terms, with some taking the form of a liquefaction tolling agreement and some being LNG sale and purchase agreements, LNGL said

    http://www.lngworldnews.com/lngl-advancing-talks-over-magnolia-lng-remaining-capacity/
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    Repsol wins approval from Canadian regulators to export LNG


    Repsol has received approval from Canadian regulators to begin exporting liquefied natural gas (LNG) from its Canaport import facility.

    The National Energy Board of Canada granted a 25-year permit to import as much as 312 billion cubic feet of natural gas per year by pipeline from the US and western Canada.

    It will then be converted to six million metric tons of LNG at a new on-site facility.

    The project is one of four LNG export terminals proposed in Canada aimed at shipping North American natural gas to markets overseas.

    Canada’s energy regulator has acknowledged the deluge of recent applications but also indicated it was unlikely all would survive.

    In its proposal, Repsol downplayed concerns about supply, saying it was “evaluating the prospects of sourcing feed gas supply from Western Canada and/or the United States.”

    But only one pipeline, Spectra’s Maritimes & Northeast (M&NP), currently connects the region with the vast Marcellus shale gas deposit beneath Pennsylvania, Ohio and West Virginia.

    Recent proposals to build pipelines through the US Northeast have met resistance from local environmentalists.

    Canaport was built in 2009 to supply the Canadian and US markets, but the shale boom in the United States has since left it underused.

    https://www.energyvoice.com/oilandgas/87587/repsol-wins-approval-from-canadian-regulators-to-export-lng/
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    Sinopec to shut hotels, ditch cars in graft crackdown


    Chinese state-owned energy giant Sinopec Group will sell off most of its hotels by the end of 2017 and get rid of more than 4,000 company cars as part of efforts to root out corruption and waste, it said on Monday.

    Since President Xi Jinping's appointment in 2013, the government has cracked down on official corruption and extravagance in China, where the flaunting of personal and often illicit wealth and wasteful public spending have led to widespread criticism of the party.

    The big state-owned conglomerates have been a particular focus, and several high-ranking executives or former executives at Sinopec have been investigated or jailed. Sinopec Group is the parent of Sinopec Corp, Asia's largest oil refiner.

    In a statement released by the Communist Party's graft-busting Central Commission for Discipline Inspection, Sinopec said that the latest inspection by anti-corruption teams had been very effective at rooting out problems.

    "It has hit the nail on the head, grasping the essence and crux (of the issue), helping us to find the root of the disease," it said.

    As part of company efforts to rein in spending, all the hotels it runs will be sold off by late 2017, apart from a "small number" that are competitive or are in exploration areas with no other hotels, it said.

    State-owned firms in China tend to be very diversified and often own assets that have nothing to do with their core business.

    The number of cars the company operates will also be slashed by 4,300, it added, a move in line with other government-run organisations and departments.

    The probe found a series of other problems of waste, including a holiday two executives took to Taiwan in 2013 on the company dime, and four people who did not return to China immediately after a board meeting in gambling hub Macau.

    Sinopec is not the only state-owned energy company to have been probed by the graft watchdog.

    In a statement released late on Sunday, China National Offshore Oil Corp, better known as CNOOC, listed the steps it was taking to address the problems inspectors had found there, including promising not to use company money to buy high-end cigarettes and liquor.

    http://www.reuters.com/article/2015/09/14/china-corruption-sinopec-idUSL4N11K1DF20150914
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    Oil Rig Count Down by 10 Last Week


    In the week ended September 11, the number of rigs drilling for oil in the United States totaled 652, compared with 662 in the prior week and 1,592 a year ago. Including 196 other rigs drilling for natural gas, there are a total of 848 working rigs in the country, down by 16 week over week and down 1,083 year over year. The data come from the latest Baker Hughes Inc. (NYSE: BHI) North American Rotary Rig Count.

    Last week marks the second consecutive week with a substantial drop in the rig count.

    The number of rigs drilling for oil in the U.S. is down by 940 year over year and down by 10 week over week. The natural gas rig count fell by six, from 202 to 196. The count for natural gas rigs is down by 142 year over year.



    Read more: Oil Rig Count Down by 10 Last Week; US Production Declining - 24/7 Wall St. http://247wallst.com/energy-economy/2015/09/12/oil-rig-count-down-by-10-last-week-us-production-declining/#ixzz3lgo7UagF
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    INPEX Corp. raises LNG production


    INPEX Corp. has announced it has increased the expected production capacity of the Ichthys LNG Project to 8.9 million tpy, an increase of approximately 6% compared to the initial 8.4 million tpy. Initially, the product was expected to start towards the end of December 2016, but is now expected to begin in 3Q17. It is expected that these two updates will increase the project’s investment by approximately 10%.

    This increase in production capacity is based on the company’s recent evaluation of the latest technological information pertaining to the entire LNG production system.

    “The Ichthys LNG Project is a world-class project with an expected operational life of at least 40 years. All the LNG initially planned to be produced from the project has been sold. Of this, about 70% of the LNG is set to be supplied to Japan, and this is expected to further contribute to the long-term, stable supply of energy to the country and improve Japan’s energy procurement risk management,” said INPEX Corp. President & CEO, Toshiaki Kitamura. “The project is also expected to make a significant contribution to the social and economic development of Australia, one of the world’s foremost producers of energy.”

    http://www.lngindustry.com/liquid-natural-gas/11092015/INPEX-Corp-raises-LNG-production-1272/
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    US oil producers thirsty for cash eye wastewater unit spin-offs

    Some U.S. oil producers are trying to sell parts of their lucrative saltwater disposal businesses in a sign that cheap crude is already forcing cash-starved companies to sell assets so oil can keep flowing.

    Many oil companies rely on outside contractors, which tend to be small, privately-held companies, to inject the briny byproduct of crude production hundreds or thousands feet deep into the earth, well below the water table.

    But for producers which own such facilities, the high-margin business has served as a source of cost savings and steady revenue, factors that also make them appealing to yield-seeking investors in master limited partnerships (MLPs) and private equity funds.

    SandRidge Energy Inc and Oasis Petroleum Inc are two publicly traded oil producers openly marketing their saltwater divisions. SandRidge is planning to raise cash by listing it as an MLP and Oasis is seeking at least a partial sale.

    "The psychology of the market is pretty bad right now," said Andrew Coleman, an energy analyst at Raymond James. "Any sale of these assets gives financial visibility without having to carry the cost of the asset on their books in what could be a rocky next few months."

    Putting even a part of such businesses on the block suggests some energy executives are coming under increasing pressure to part ways with good, albeit non-core, assets to ride out the crude market slump and finance core oil operations.

    The SandRidge and Oasis transactions could bring each company $100 million or more at a time when capital market funding is drying up and cash is tight as crude oil trades at less than half mid-2014 levels, analysts say.

    Other publicly held energy companies with notable saltwater units include Devon Energy Corp, MidStates Petroleum Co and Ferrellgas Partners LP. So far only SandRidge and Oasis have publicly discussed their spin-off plans.

    The U.S. Environmental Protection Agency figures show more than 9.5 million barrels of brine and other liquid byproducts gets pumped into some 28,000 saltwater disposal wells around the country.

    With disposal fees ranging from 25 cents to $1 per barrel, large wastewater operations can generate hundreds of millions of dollars in annual revenues for investors.

    And given that the volumes of water extracted alongside oil tends to increase as wells age, in some cases reaching as much as five barrels for every barrel of crude produced, rates have held steady even as crude prices tumbled and production tapered off

    http://www.reuters.com/article/2015/09/11/usa-oil-water-idUSL1N11G32P20150911
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    Operational constraints limit crude storage at U.S. refineries


    U.S. commercial crude stocks are still close to their highest levels in over 80 years, but operational requirements prevent refineries filling on-site storage facilities to their maximum capacity.

    An increasing proportion of U.S. crude oil stocks is held in off-site tank farms, some owned or leased by refiners themselves, but many owned or leased by marketers and traders.

    According to the Energy Information Administration (EIA), which surveys storage capacity every six months, total crude in storage at the end of March was 475 million barrels, and the country had capacity to store up to 660 million.

    Only 182 million barrels of storage capacity, around 28 percent, was on site at oil refineries. The rest was off site at tank farms or in pipelines, railroad tank cars, barges and oilfield tanks.

    Most of the crude at refineries and tank farms is stored in giant cylindrical tanks with a roof that floats directly on the surface of the oil.

    Storage tanks need to be kept filled to a minimum of around 20 percent to support the roof and operate the pipes and other equipment.

    Adjusted for these tank bottoms, the effective or "working" capacity of refinery storage tanks was 150 million barrels, according to the EIA ("Working and net available shell storage capacity", May 2015).

    But at the end of March, U.S. refineries were storing only 104 million barrels, equivalent to just 69 percent of their maximum working capacity and 57 percent of the total storage volume.

    Refinery storage is subject to various operational constraints that make it hard for refiners to fill tanks to the top.

    Refinery tanks are commonly divided into storage tanks, which receive the crude oil, and charging tanks, which feed crude into the atmospheric distillation units 

    With so many constraints on charging and discharging, minimum residence, unintended mixing of crudes, and continuously feeding distillation units, refineries cannot operate with their storage and charging tanks anywhere near full.

    Refineries are prevented from filling all their tanks to the brim by the need to preserve some flexibility for scheduling changes ("Crude oil scheduling in refinery operations", 2003).

    It is easy to see why U.S. refineries were storing only 104 million barrels at the end of March even though they had working capacity to store 150 million and total capacity of 182 million.

    The amount of crude stored in the United States has been rising since around 2005. But the working storage capacity at U.S. refineries has remained roughly unchanged. Most of the extra capacity has been added at tank farms.

    Tank farm capacity has grown rapidly to meet both the refineries' need for more operational flexibility and heightened demand for medium-term storage from crude marketers and traders.

    Some of the tank farms are owned or leased by refiners themselves to give them access to more off-site storage options.

    Others are owned or leased by traders who use them for speculative storage, especially when the futures market is trading in contango.

    At the end of March, tank farms held almost 240 million barrels of crude, more than twice as much as the refineries.

    Tank farm storage is subject to many of the same constraints that affect operations at refineries. Tanks cannot normally receive and send crude at the same time, need to minimise the amount of unintentional mixing, and must generally be kept at least 20 percent full.

    But because one tank farm can hold crude that can be used at a number of refineries, the space can be effectively shared, providing important flexibility at lower cost than on site at a single refinery.

    As U.S. refineries increasingly process a mix of very light domestic shale crudes and heavy imported oils, tank farms are being used to meet the requirement for more blending capacity.

    Refineries tend to hold crude for immediate use because space within the tank farm is at a premium: filling a tank with crude and leaving it idle for weeks or months at a time significantly reduces the refinery's scheduling flexibility.

    Tank farms are more suitable for medium-term storage of crude because they can hold oil for months at a time with no operational penalty.

    http://www.reuters.com/article/2015/09/11/usa-refineries-oilstorage-kemp-idUSL5N11H1PO20150911
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    Oil servicers say "fat trimming" will become new norm


    A slump in oil prices is forcing the oil and gas services industry for the first time in 15 years to trim costs in a way that executives say will create a lasting change away from their usual lavish way of doing business.

    Navigating a new environment in which oil prices have halved in a year and their customers are slashing investments, oil service firms face a rough ride.

    "The industry has been quite lazy in changing because oil prices have been helping us a lot," Samir Brikho, chief executive of oil service engineering company Amec Foster Wheeler , told Reuters.

    "At a time like this, you need to take a look at how you can take out the fat. Once we have done this we will never go back, this will become the new norm."

    The previous oil price plunge in 2008-2009, driven by the global financial crisis, ended too soon to force oil service firms seriously to reassess their cost structures.

    Now, as oil prices have failed to rebound in over a year, oil service companies are depending on running their businesses more efficiently to survive.

    This week's biennial gathering of the offshore oil services sector in Britain's oil capital, Aberdeen, highlighted the extent of cost savings being made.

    British oil service heavyweights including Wood Group and Petrofac, as well as London-headquartered Seadrill , had no presence among the 1,500 exhibitors at the conference.

    "It shows how seriously they take the cost-cutting," said one conference attendee who works in the industry but declined to be identified.

    Britain's oil and gas industry lobby group estimates the sector will reduce costs by 2.1 billion pounds ($3.2 billion) by the end of next year.

    A large part of these savings is related to job cuts. Oil & Gas UK estimates the industry has already shed 65,000 jobs since peak employment at the start of last year. The group expects employment in the sector to drop further in coming months.

    Companies say they are making changes in working practices that mean the sector is less wasteful, such as cooperating better on projects and standardising equipment.

    "It's this transformation that needs to be sustained," said Andy Samuel, chief executive of Britain's newly created oil and gas regulator.

    http://uk.reuters.com/article/2015/09/11/britain-oil-services-idUKL5N11F3X920150911
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    Alternative Energy

    Tesla coming, but consumers may lose as networks, retailers fight over solar and storage


    The arrival of the Tesla battery storage unit, known as the Powerwall, in Australia over the next few months will herald the biggest challenge to Australia’s electricity industry for decades.

    Tesla announced on Thursday that it is fast-tracking the roll-out of its battery storage product, and Australia will be its first market for the 7kWh household units. The first deliveries had not been expected until well into 2017.

    The Tesla Powerwall is not the first, or even the cheapest battery storage maker to enter the Australian market. But it is the most ubiquitous brand, and it threatens to do to incumbent business models what Uber is doing to the taxi industry, and Facebook, Twitter and Amazon did to traditional publishing.

    Tesla is targeting the Australian market first because it is ripe for change. It has high electricity prices, particularly the grid component; excellent sun, lots of rooftop solar (more than 4,400MW on more than 1.4 million homes), and its tariff structure should make it attractive for households and businesses to store their solar output in a box for use in the evening, rather than giving it away for next to nothing to the grid.

    There are a range of predictions on how quickly battery storage will be adopted in Australia. Some suggest that the combination of a solar array and battery storage is already cheaper than grid power in some areas, others suggest it will be another 5 years before the combination is cheap enough to become a mass market.

    But the promised benefits to consumers could be undermined because of a major turf war between the incumbent utilities, whose business models are being threatened by the new technology, and because regulators are being so slow to act.

    Australia’s network operators and electricity retailers say they can see battery storage coming, yet they seem unprepared for the speed of that transition. To protect their outdated business models they are erecting barriers, changing tariff structures by jacking up fixed prices, and in some cases even banning storage and electrical vehicles from the grid.

    Another barrier is the emerging turf war between network operators – the companies who run the poles and wires – and the electricity retailers – the companies who package up and send you the bill – over who can deal with customers.

    http://reneweconomy.com.au/2015/tesla-coming-but-consumers-may-lose-as-networks-retailers-fight-over-solar-and-storage-76619

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    Wind energy could meet 25% of Europe’s electricity demand by 2030.


    That’s according to a new report by the European Wind Energy Association .

    It revealed the continent could install  320GW of wind capacity during the same period.

    The installation of 254GW of onshore capacity and 66GW of offshore installations are also expected to create 334,000 jobs, stated the EWEA.

    Europe currently has a wind capacity of 128.8GW which “can meet more than 10% of power consumption in a normal wind year”, the report said.

    It added forecasts depend on political and regulatory factors including a clear governance structure for EU to reach its green target.

    It aims to generate 27% of energy from renewables in the next 15 years.

    Kristian Ruby, Chief Policy Officer of the EWEA said: “The regulatory framework is a key driver in guaranteeing investor certainty. If policy makers get it right, the wind sector could grow even more. If they don’t, we will fall short to the detriment of investments, employment and climate protection.

    “Three key challenges must be tackled. A renewable energy directive with a strong legal foundation for renewables in the post-2020 space; a reformed power market tailored to renewable energy integration and, finally, a revitalised Emissions Trading System that provides a clear signal to investors by putting a meaningful price on carbon pollution.”

    In the UK the government is scrapping subsidies for onshore wind projects from April 2016.

    Earlier this month it rejected the Navitus Bay offshore wind project.

    http://www.energylivenews.com/2015/09/17/wind-could-meet-25-of-europes-power-needs/
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    China’s largest onshore wind power unit starts operation


    The largest onshore wind power generating unit in China has been put into operation in Zhangjiakou, northern Hebei province recently, media reported.

    Operated by State Grid Jibei Electric Power, the generating unit has an installed capacity of 5 MW, equaling more than three times of the average capacity of wind power units in the country, which is normally at 1.5 MW.

    And the maximum daily wind power generation may top 120 MWh, which could meet power demand from thousands of households, the report said.

    http://en.sxcoal.com/0/131560/DataShow.html
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    ABB commands 50pct share in India’s solar power inverters market


    Clean Technica reported that ABB has massively increased its share in the Indian solar power inverters market over the last few months, giving it an excellent platform to further expand its footprint and take advantage of the huge 96 GW potential market by 2022.

    According to reports, ABB has supplied inverters for 2 GW worth of solar power capacity of the total 4 GW of capacity operational in India.

    The company supplied inverters for 1 GW of capacity in the last 5 months alone. This demand is likely to have been driven by projects allocated under the various state solar power policies.

    ABB has a manufacturing facility in Bengaluru in southern India, from where it supplies the PVS800 model of inverters. The company has a production capacity of 3 GW every year from this facility.

    The PVS800 has now become a trusted model among solar power project developers in India. Being a global brand, ABB attracts orders from Indian as well as international developers.

    The company has supplied inverters to some of the leading solar power projects in the country, including Welspun Energy which operates India’s largest solar project installed by a single developer. It also supplied inverters to the largest canal-top solar power project in the world, located in Gujarat.

    In addition to inverters for solar power projects, ABB also manufactures and supplies solar-powered water pumps that have application in the agricultural sector. The company has supplied around 5,000 solar-powered pumps so far.

    The company management expects even higher growth in the solar power inverters business as the government pushes forwards the ambitious National Solar Mission that targets 100 GW solar power capacity installed by 2022.

    http://steelguru.com/power/abb-commands-50pct-share-in-india-s-solar-power-inverters-market/434764#tag

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    China rare earth demand seen rising 50 pct by 2020 -industry body


    Chinese rare earth demand is likely to soar by more than 50 percent in the next five years, putting pressure on authorities to relax tough production quotas that have spurred illegal mining and rampant smuggling.

    Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry, told a conference in Shanghai that domestic consumption was expected to rise nearly 9 percent this year to 97,700 tonnes, and would end the decade at nearly 150,000 tonnes, up from 90,000 tonnes in 2014.

    With China expected to export at least 30,000 tonnes through official channels this year, the production cap of 105,000 tonnes is unlikely to satisfy total demand, meaning that there are still incentives for illegal producers.

    "It is not very easy to close all illegal mining and it is very easy for illegal miners to steal from the mines. Costs are low, the mines are scattered and some local governments also protect illegal miners," said Chen.

    China's controversial reform plans for the rare earth sector have included strict production and export quotas as well as a nationwide crackdown on illegal mining and processing. Plans to consolidate production in the hands of six state-owned conglomerates are also due to be completed by year-end.

    China said the policies were designed to curb pollution, but overseas critics said its real aim was to dominate strategic downstream sectors like defence and renewable energy. Rare earths are used in a range of products from smartphones to military jet engines and hybrid vehicles.

    While it has now been forced to ditch export quotas following a World Trade Organisation ruling, China has already encouraged overseas consumers to relocate to the country.

    China not only produces around 90 percent of global rare earth supplies, but also consumes about 80 percent, according to industry estimates, and demand is set to continue rising.

    Dudley Kingsnorth, executive director of the Industrial Minerals Company of Australia, said there will be a supply shortfall of 50,000 tonnes this year that is likely to be met by illegal production in China.

    Illegal output and smuggling from China have helped drag global prices to their lowest level since 2011 and put foreign producers like Molycorp in jeopardy.

    "This is the major issue facing the industry today, and unless this is controlled, it will bring catastrophe for a long time," said Kingsnorth.

    http://www.reuters.com/article/2015/09/17/china-rareearths-idUSL4N11N0PB20150917
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    Aqueous Hybrid Ion (AHI™) battery


    Dr. Jay Whitacre’s Technology has the Potential to Transition the World toward a More Sustainable Energy Future

    Jay Whitacre, Ph.D., a Materials Scientist and Professor at Carnegie Mellon University’s College of Engineering, is the recipient of the 2015 $500,000 Lemelson-MIT Prize. Whitacre is the inventor of the Aqueous Hybrid Ion (AHI™) battery, a reliable, environmentally-benign and cost-efficient energy storage system.

    This first-of-its-kind battery, often used in combination with solar and wind energy systems, stores significant amounts of energy at a low cost per joule and allows for around-the-clock consumption. Whitacre’s AHI™ battery, developed using abundant and inexpensive resources including water, sodium and carbon, can help reduce dependence on fossil fuels and make sustainable energy a viable alternative. The company that Whitacre founded, Aquion Energy, has fully scaled manufacturing and commercialized the battery with global distribution channels and installations in many locations including Australia, California, Germany, Hawaii, Malaysia, and the Philippines.

    Whitacre founded Aquion Energy (then known as “44 tech”) in 2008 with support from venture capital firm Kleiner Perkins Caufield & Byers, with the goal of bringing to market a new class of aqueous sodium ion functional battery. The resulting Aquion battery systems help customers increase use of renewables, reduce reliance on diesel, control peak energy costs, provide power stability, bring access to electricity in under-electrified regions, and improve power reliability to areas with unstable grid infrastructure. It is the industry’s first-ever Cradle to Cradle Certified™ battery while offering superior value when compared to other energy storage products on the market.

    http://www.businesswire.com/news/home/20150915005538/en/Inventor-Creates-Mass-Produced-Low-Cost-Eco-Friendly-Battery-Awarded#.Vfgok9JVhBc
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    Navitus Bay wind farm refused permission by government


    A proposed wind farm off the south coast of England has been refused consent by the government.

    Developers behind the Navitus Bay project - for up to 121 turbines off Dorset, Hampshire and the Isle of Wight - say it would have provided electricity for up to 700,000 homes.

    Opponents said it would damage tourism and was too close to protected coasts.

    It is the first time the Department of Energy and Climate Change has refused permission for an offshore project.

    The £3.5bn Navitus Bay plan, developed jointly by Dutch firm Eneco and French giant EDF Energy A, would have had up to 121 8MW turbines at 200m (656ft) high.

    Image copyrightNavitus BayImage captionAn artist's impression shows how the turbines could look 14.6km (9.1 miles) off Swanage

    The Planning Inspectorate spent six months studying the plans, which developers said would contribute £1.6bn to the UK's economy over 25 years.

    MHI Vestas Offshore Wind would have made the 80m-long blades at its factory in Newport on the Isle of Wight - six years after it shut a plant on the island, axing 425 jobs and sparking an 18-day sit-in by workers.

    But all surrounding local authorities, except the Isle of Wight Council, were opposed to the scheme, and campaigners feared it would have a negative impact on the area's tourist industry.

    Bournemouth Borough Council had claimed the turbines, 13.3 miles out to sea from the resort, would detract tourists from visiting, risking almost 5,000 local jobs and cause a total economic loss of £6.3bn.

    http://www.bbc.co.uk/news/uk-england-34220834
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    Uranium

    China begins nationwide nuclear safety checks after Tianjin blast


    China has begun a nationwide safety inspection into all its existing nuclear facilities in the wake of an explosion at a chemical warehouse at the port of Tianjin last month that killed more than 160 people.

    The inspections will last until November and will focus on the manufacturing and utilization of nuclear equipment and technology, equipment used at uranium mines, and nuclear radiation risks, the Ministry of Environmental Protection said in a notice late on Monday.

    China is embarking on a rapid nuclear construction program that aims to raise total capacity to 58 gigawatts (GW) by the end of 2020, up from 23 GW at the end of July, and it also has ambitions to build its new reactor designs overseas.

    Though none of China's existing reactors has experienced any serious accidents, the country's entire nuclear construction program was suspended in 2011 following the Fukushima disaster in Japan. A moratorium on new project approvals until early this year has put the 2020 target in doubt.

    After Fukushima, Beijing promised to adhere to the highest possible "third generation" safety standards in all new projects.

    But one high-profile third-generation project, the world's first Westinghouse-designed AP1000 reactor in eastern coastal Zhejiang province, has been repeatedly delayed as a result of design flaws and tougher safety checks.

    https://trove.com/a/China-begins-nationwide-nuclear-safety-checks-after-Tianjin-blast.nsuIt?utm_campaign=hosted&utm_medium=twitter&ts=1442285463&utm_source=sns&nocrawl=1
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    Agriculture

    PotashCorp CEO: K+S takeover offer increasingly attractive


    Changing market conditions are improving the attractiveness of PotashCorp’s offer for the takeover of K+S, the Canadian miner’s CEO told a Credit Suisse conference yesterday. He anticipates a difficult five years for the potash industry, but suggested that industry overcapacity is not quite as severe as many think.

    The CEO of Canada’s Potash Corp. of Saskatchewan Inc. (PotashCorp), Jochen Tilk, has spoken of the potential benefits of PotashCorp’s takeover offer for Germany-based K+S AG, though he admitted that the European salt and potash producer is not "actively engaged".

    http://www.indmin.com/Article/3489365/PotashCorp-CEO-K+S-takeover-offer-increasingly-attractive.html

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    Praxair acquires industrial-gas assets from Norway’s Yara


    Industrial gases giant Praxair Inc has agreed to buy carbon-dioxide and dry-ice assets from Norwegian fertilizer supplier Yara International SA for EUR 312 million to bulk up its activities serving the food and beverage sector in Europe.
    The companies said on Tuesday that Praxair would pay EUR 218 million for Yara’s carbon-dioxide business and EUR 94 million for the Norwegian company’s 34% stake in Yara Praxair Holding AS, a joint venture established in 2007 that delivers industrial gases and dry ice to the Scandinavian market.

    The acquisition is part of Praxair’s effort to expand in regions where it can gain cost savings as well as enhancing our presence in noncyclical segments such as food and beverage, said Praxair Chairman and Chief Executive Steve Angel. Praxair’s main customers include steelmakers, petrochemicals suppliers and the electronics industry.

    Yara said it was exiting a noncore business.

    Mr Svein Tore Holsether, CEO of Yara, said that “The CO2 business has been an attractive and long-standing part of Yara’s portfolio, but remains a relatively small part of the broader industrial-gas industry, and where Praxair is well positioned to create additional value.”

    http://steelguru.com/gas-oil/praxair-acquires-industrial-gas-assets-from-norway-s-yara/434579#tag
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    Precious Metals

    Kinross Gold cuts 2015 capex and cost forecast, trims output view


    Canadian miner Kinross Gold Corp on Thursday lowered its full-year capital spending and overhead costs forecasts and raised the lower end of its production outlook.

    The company, which has been looking for ways to reduce costs amid sliding metals prices, cut its 2015 capital spending forecast to $650 million from $725 million.

    ""Every region has stepped up and is expected to produce at, or above, its prior guidance range, and below prior cost guidance ranges," Chief Executive Paul Rollinson said in a statement.

    Kinross said it expects overhead expenses to be below its forecast of $205 million and said it is looking to more opportunities to lower such costs further.

    The company said it expects to produce 2.5-2.6 million gold equivalent ounces in 2015, compared with its previous forecast of 2.4-2.6 million gold equivalent ounces.

    Kinross reduced its all-in sustaining cost forecast to a range of $975 to $1,025 per ounce from $1,000 to $1,100.

    Cost of sales is now expected to be $690-$730 per ounce, down from its previous forecast of $720-$780 per ounce.

    Kinross had slid to a loss in the second quarter, in line with market expectations, on the back of a weaker gold price, lower gold sales and the temporary suspension of operations at a mine in Chile.

    At that time, in July, Rollinson said Kinross was again considering cutting jobs at its Tasiast gold mine in Mauritania to lower costs.

    http://www.reuters.com/article/2015/09/17/kinross-outlook-idUSL4N11N5KZ20150917
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    Base Metals

    Intergeo eying Chinese funds for Siberian copper project


    Billionaire Mikhail Prokhorov’s Intergeo MMC Ltd. is turning to China to help develop a $2 billion copper deposit in southern Siberia.

    There’s a “strong possibility” the company, which holds the license to the Ak Sug field in the Tyva region, will get Chinese financing for the project, Intergeo Chief Executive Officer John Lill said by e-mail. It’s working on a loan feasibility study adhering to Chinese standards and may attract at least one equity partner, he said.

    Intergeo retained some mining licenses, including Ak Sug with more than 4.9 million metric tons of copper reserves, when Prokhorov sold his stake in GMK Norilsk Nickel PJSC, Russia’s largest metals producer, in 2008. The company had considered an initial public offering in Canada to fund the development and planned a merger with Vancouver-based producer Mercator Minerals Ltd. to gain a listing before the deal collapsed last year. Russian companies are looking to China for more funding after relations with Europe and the U.S. worsened because of the conflict in Ukraine.

    "Assuming successful financing, we would likely be starting production in around four-and-a-half years,” Lill said. China will probably be the main consumer of copper concentrate produced at Ak Sug, he said.

    Intergeo signed an agreement with China Overseas Engineering Group Co. Ltd. and China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. earlier this month for engineering, procurement and construction at Ak Sug.

    The agreement “is part of a package with the financing and we expect a large Chinese policy bank to join the project," Lill said. "Eximbank has already voiced interest to our partners at NFC,” he said, referring to the Export-Import Bank of China.

    http://steelguru.com/mining/intergeo-eying-chinese-funds-for-siberian-copper-project/434814#tag
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    Rio Tinto plans to expand Mongolia copper mine


    Rio Tinto said it is committed to expanding its Oyu Tolgoi copper mine in Mongolia based on a positive outlook for the metal and confidence that low production costs can buoy profits even as competitors cut output.

    The miner wants to lock in up to $4.2 billion in project financing by November to build more than 200 km of tunnels to access higher-quality ores at the deposit over the next five to seven years, Craig Kinnell, Rio's chief development officer for copper and coal, said during a media tour of the mine this week.

    The expansion should extend the mine's lifespan past 2100 and open up 80 percent of the resources available, making it the world's third-largest mine for copper and gold.

    With new project approvals slowing elsewhere, Kinnell said he was confident demand would hold up, particularly in China.

    "I can't see anything to reconsider given the quality of our resource," he said. "Our commitment is to bring this on as soon as possible".

    Oyu Tolgoi is expected to produce 175,000 to 195,000 tonnes of copper in 2015 and has a key role in Rio Tinto's strategy to ease its dependence on iron ore, but there have been concerns that its expansion is coming at the wrong time.

    "Rio Tinto has to develop the mine as it is a core copper asset to the company," said Yang Changhua, senior analyst at state-backed research firm Antaike in Beijing.

    "But expected additional copper from the Oyu Tolgoi mine would pile pressure on the global copper market, which is not likely to improve strongly in the coming two years," he said.

    However, Kinnell said that while the expansion of Oyu Tolgoi would raise ore production, there were no plans to expand concentrator capacity at the project.

    He added that low production costs meant the project would be a "bedrock" for the firm, and that he remained bullish on the long-term fundamentals for copper.

    While Rio plans to expand operations its four key copper assets - Oyu Tolgoi, Kennecott, Escondida and Grasberg - rival Glencore said it would cut supplies by 400,000 tonnes.

    Rio is also looking for new supplies with plans to get online the Resolution project in the United States and La Granja in Peru, raising concerns that the industry will be hit by the sort of glut now affecting iron ore.

    "The market is aware that supply cuts such as those by Glencore can only lay the basis for a tightening of the market," said Carsten Menke, commodities research analyst at Julius Baer.

    "This is different to 2009, when for example copper demand collapsed because we had a global recession. This time the oversupply in the copper market is due to the expansion of mine production over the last few years."

    http://www.reuters.com/article/2015/09/17/mongolia-rio-tinto-idUSL4N11N26W20150917
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    Chile's copper mines restart


    Chile's Codelco says Andina open-pit mine restarts operations

    Chile's state copper miner Codelco said it has restarted operations on Thursday at its open-pit Andina mine, which lies in the Andes mountains north-east of capital city Santiago, following a massive quake the prior night.

    "Operations in the open-pit mine restarted at 10:00 am local time," Codelco told Reuters.

    http://www.reuters.com/article/2015/09/17/chile-quake-codelco-idUSC0N0Y501G20150917

    Antofagasta says to progressively restart Chile's Los Pelambres ops

    SANTIAGO, SEPT 17

    Antofagasta Plc said it is inspecting the installations of its flagship Los Pelambres copper mine and expects to progressively restart operations in the coming hours after a strong quake Wednesday night in central Chile forced it to suspend activities.

    Antofagasta said that its port infrastructure in the coastal city of Los Vilos was not damaged by the quake and ensuing tsunami waves and that Los Pelambres' tailings dam was also undamaged.

    The company reiterated that none of its workers was injured in the natural disaster.

    http://www.reuters.com/article/2015/09/17/chile-quake-antofagasta-idUSC0N0Y501E20150917
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    Glencore to sell part of its Chile, Peru copper output


    The alleged deals involve Glencore's Collahausi mine in Chile, as well as Antamina and Antapaccay copper mines in Peru.

    Mining and commodities giant Glencore is said to be in talks with five companies to sell portions of the future production of three of its copper mines in Chile and Peru.

    According to Global Mining Observer, the firms involved in the negotiations are Franco-Nevada Corp, Silver Wheaton, Royal Gold Inc. and two other unnamed miners.

    The alleged deals involve Glencore's Collahausi mine in Chile, as well as Antamina and Antapaccay copper mines in Peru.

    The alleged deals involve Glencore's Collahausi mine in Chile, as well as Antamina and Antapaccay copper mines in Peru.

    The potential agreements, known as streaming transactions, are a kind of alternative financing in the mining industry, in which a firm such as Silver Wheaton or Franco-Nevada provides funds upfront to a miner in exchange for the sale of a fixed amount of future production at a discounted price.

    Collahuasi, one of the world's largest copper mines, produced around 470,000 tonnes of copper last year, or about 8% of Chile's total output.

    In the first half of 2015, production at the mine — a joint project of Glencore, Anglo American (LON:ANGLO) and several Japanese firms — fell 10% compared to the previous year, impacted by maintenance at a processing mill and other factors.

    Antamina mine, located in Peru’s central Ancash state, is the country’s top copper producer by output, and it also yields zinc, lead, and silver.

    http://www.mining.com/glencore-to-sell-part-of-its-chile-peru-copper-output/
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    Hindalco Industries to go through testing time - Mr Kumar Mangalam Birla


    Business Standard reported that chairman Mr Kumar Mangalam Birla told shareholders at the company's 56th annual general that Hindalco Industries would see its domestic aluminium business go through testing times in the short term as recent ramp-up of projects would impact its performance in the coming months,.

    He said “High interest outgo and depreciation is expected keep the company's performance under pressure.”

    He also said “In the coming years, focus will continue to be on operational excellence and increasing productivity of new assets.”

    The chairman also informed the shareholders that the company has refinanced its loan to get a longer tenure of 10 years, thus giving it additional repayment time.


    The country’s largest aluminium producer has fully ramped up its Mahan aluminium smelter facility, in Madhya Pradesh, and about 55 per cent of ramp up has taken place at Aditya smelter, in Odisha.

    http://steelguru.com/metal/indian-aluminium-business-to-go-through-testing-time-mr-kumar-mangalam-birla/434703#tag
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    China push into solar, wind power to heat up global copper markets


    As China's slowdown hits demand for metals in traditional sectors such as housing and heavy industry, copper is being offered a lifeline: massive plans to expand solar and wind power in the world's second-biggest economy.

    Beijing's push into renewables as it looks to tackle the pollution that has choked its cities is set to be a vital new source of demand for copper, which as the world's most conductive base metal is used in cables for solar panels and parts for wind turbines.

    Reuters calculations based on government and industry projections for the growth of cleaner energy in China suggest that demand from the sector could boost global copper consumption by around 2 million tonnes, or about 2 percent, over the rest of the decade.

    The extra appetite from China, the world's largest metals consumer, is part of a trend also rippling across other regions as governments target greener technologies to combat pollution and climate change, an issue that is centre stage ahead of U.N. environmental talks in Paris in December.

    "The current developments in China in solar and wind are the highest in the world. Since it's policy driven, the plans made by government are generally achieved or exceeded year-on-year," said Mayur Karmarkar, team leader for sustainable energy in Asia at the International Copper Association (ICA).

    "The numbers are astonishing," he said, referring to estimates on expansion in China's renewable sector.

    Amid growing public disquiet about smog and the environment, China has declared a war on pollution, vowing to abandon a decades-old growth-at-all-costs economic model that has spoilt much of its water, skies and soil.

    That is expected to get a shot in the arm with new targets likely to be announced as part of the country's latest five-year plan on economic growth, which will be discussed at a meeting of the ruling Communist Party in October.

    "Chinese renewable energy is a potential new source of copper demand that I think is being overlooked by the market at the moment, especially if people are going to take the renewable targets seriously," said a Singapore-based source at a global copper miner. He declined to be identified as he was not authorised to speak with media.

    Due to its high conductivity, copper cuts power loss in transmission and is typically used far more heavily in generating so-called green electricity than in traditional thermal plants.

    China's installed solar energy capacity is set to soar to 200 gigawatts (GW) by 2020 from around 36 GW in 2015, according to projections from China's Renewable Energy Industry Association. Minerals consultancy CRU estimates 6,000 tonnes of copper is used per GW of capacity.

    Wind power is projected to reach 250 GW by 2020, according to industry estimates. About 3,850 tonnes of copper is used per GW of wind capacity, according to an average of industry estimates compiled by Reuters.

    These, alongside a steady increase in demand from China's electric vehicle sector of around 200,000 tonnes over the next five years, account for more than 2 million tonnes of copper, compared with current forecasts on total copper consumption over the period of about 105 million tonnes.

    The ICA's Karmarkar noted that falling costs for green technology would help accelerate its uptake in China and beyond.

    Renewable energy growth will also help stoke the roll out of energy grids connecting power hubs with cities, including transformers that use copper.

    Growing appetite from China's renewable energy sector comes as the chief executive of copper and coal at Australian mining giant Rio Tinto last week said that markets for the metal could flip into a structural shortage within two to three years as broad demand from power stations makes it the first commodity to come out of a glut.

    http://www.reuters.com/article/2015/09/16/copper-demand-china-renewables-idUSL5N11F0BW20150916
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    Codelco, Antofagasta halt copper mines in Chile after quake


    Codelco and Antofagasta PLC suspended operations at two major copper mines in Chile, the world's top producer of the metal, after a powerful earthquake struck off the coast on Wednesday, threatening over 600,000 tonnes of annual capacity.

    Copper prices on the London Metal Exchange rose to two-month highs in early Asian trading as worries about supply disruptions offset lingering concerns over demand from China, the world's No. 1 consumer, amid copper's longest rout in years.

    State copper miner Codelco halted open-pit operations at its large Andina mine and evacuated workers at its smaller Las Ventanas refining and smelting division, as well as at the two northern ports of Mejillones and Barquito, as a precautionary measure. Andina produced 232,000 tonnes of copper last year.

    Antofagasta said it had temporarily closed its flagship Los Pelambres mine, which produced over 400,000 tonnes of copper in 2014, and would wait until daybreak to assess the damage. There were no initial reports of damage to personnel or equipment.

    Other producers in the region Anglo American PLC and BHP Billiton, said they were unscathed after the magnitude 8.3 earthquake hit off the coast, shaking buildings in the capital city of Santiago and generating a tsunami warning for Chile and Peru.

    The quake is the latest natural catastrophe to roil mining in the resource-rich South American nation, which accounts for a third of global copper output.

    Heavy rains caused flooding and shut many mines in the north of the country in April.

    Codelco has also been hit by repeated strikes by contract workers this year. Last week, it was forced to temporarily halt the concentrator at its massive Chuquicamata mine for security reasons after workers tried to take over the unit.

    Analysts previously estimated that between about 1 million and 1.5 million tonnes of annualized global mine supply has been lost due to flooding, droughts, power shortages and low ore grades from Chile to Zambia this year. That is about 5 percent of global annual consumption.

    "Anything that has potential to restrict supply will have more of an effect on the price when things pick up," said Jonathan Barratt, chief investment officer at Sydney's Ayers Alliance.

    A planned expansion at Andina is one of the key pillars of Codelco's plan to boost production as ore grades decline at its older mines.

    Antofagasta's Los Pelambres has been affected by water shortages and local protesters who have blocked mine access.

    http://www.reuters.com/article/2015/09/17/chile-quake-codelco-idUSL1N11N01520150917
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    Sandfire Resources and Talisman hit massive sulphides


    Image Source: smartimagehq.comSandfire Resources NL has used a reverse circulation step-out hole to intersect mineralisation along strike on either side of TLRC0004. The reason why TLRC0004 is so important to the drilling program, is that it has previously delivered: 18 metres at 5.7% coper and 2.4g/t gold from 107 metres.

    This news could mean that extensions have been discovered, which has the potential to significantly increase the size of the mineralisation discovered to date. Step-out hole TLRC0008 delivered: 2 metres of massive sulphides from 90 metres; and 11 metres of massive sulphides from 111 metres. Step-out hole TLRC0009 delivered: 8 metres of massive sulphides from 133 metres; and 1 metre of massive sulphides from 158 metres.

    Samples are currently under assay. Drilling is ongoing.

    Sandfire is earning a 70% interest in the Talisman Mining’s Doolgunna Project, which forms part of its Greater Doolgunna Project. This comprises a 1,700 square kilometre package of contiguous tenements surrounding the DeGrussa Copper Mine.

    http://steelguru.com/mining/sandfire-resources-and-talisman-hit-massive-sulphides/434635#tag
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    Petcoke: the ticking time bomb at the heart of aluminium

    Petcoke: the ticking time bomb at the heart of aluminium

    Bauxite, the key metallic input, is a commonly occurring mineral and one that can be easily scooped out of the ground without the need for "hard rock" mining.

    That abundance of supply has been proven by Indonesia's ban on exports of bauxite to China. Chinese smelters have wasted no time simply switching sources, particularly to Malaysia, a country with virtually no bauxite sector until one was needed.

    Smelters, meanwhile, are capital intensive to build and costly to shut down. Electricity, the second most important input for making aluminium, acts as a brake on industry's responsiveness to low prices because so many smelters have locked themselves into long-term supply contracts.

    But might that all change in a couple of years time? Might the aluminium production sector, currently swamped with excess output, face its own supply chain challenge?

    Yes, according to a new study by three consultants, AZ China, Cascade Resources and Turner Mason and Co.("Anode coke outlook to 2025")

    Readers may well recognise the first of those names. AZ China is a respected specialist on all things concerning the Chinese aluminium sector.

    But maybe not the second two, because they specialise in carbon products and petrochemicals respectively.

    And this is a study on the availability of the third, often forgotten, input into the aluminium production process, carbon anodes.

    The aluminium production process requires up to half a tonne of carbon for every tonne of metal produced.

    Specifically petroleum coke (petcoke), a by-product of the oil refining process. And specifically anode-grade petcoke, commonly defined as that with a sulphur content of less than three percent.

    There are two dominant suppliers of anode coke to the world's smelters, the United States and China.

    Output in both is declining.

    In the U.S. this is largely a function of the increasing use of shale oils, which "reduce either the quality or quantity of petcoke produced, or both," the study argues.

    A similar trend has been evolving in China, reflecting changes in oil refining technology.

    In both cases what is an essential ingredient in the process of making aluminium is nothing more than a low-value by-product for oil refiners.

    The study examines every other possible supply source but concludes that supply will be insufficient to meet smelter demand from around 2017.

    "The argument that 'you can get the coke if you are prepared to pay enough' is not a sustainable position," the study's authors write, concluding that "at some point, there simply will not be enough coke on a global basis."

    http://www.reuters.com/article/2015/09/16/aluminium-production-ahome-idUSL5N11M1V020150916
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    Citigroup joins copper price bulls


    In New York trade on Tuesday copper for delivery in December turned positive ticking higher to $2.4280 per pound or around $5,350 a tonne.

    Last Friday the price reached a near 8-week high following a torrid week of trading that saw the price rise nearly 6%. The red metal has recovered strongly from six-year lows struck late August, but remains down some 13% year to date after a 16% fall in 2014.

    The latest rally was inspired by the announcement ofsteep production cuts by Glencore, the world's number four producer of the metal.

    Glencore's move followed news that US-based Freeport-McMoRan (NYSE:FCX) which vies with Codelco as the world number one copper miner in terms of output, is cutting in half output at is El Abra mine in Chile and idling two US mines.

    For its part Chile's state-owned Codelco has vowed to "cut costs to the bone" and delayed several expansion projects including going underground at Chuquicamata and pushing back expansion of the Andina complex by two years.

    Around two-thirds of capex at major producers and 28% of total costs are dollar-denominated reducing the positive impact of weak local currencies on cash costs

    An new research note by Citigroup predicts production cuts and mine disruptions will send the market back into deficit in 2016. So far in 2015 over 1.5 million tonnes were lost due to labour action and the weather including floods in the Atacama desert in Chile, lack of rain in Zambia and Indonesia where Freeport predicted lower output at its giant Grasberg mine due to the El Nino weather effect.

    According to Bloomberg Citigroup analysts are predicting mine output this year will total 18.9 million tonnes leading to small primary surplus. But the market will return to a deficit of 284,000 tonnes next year and stay in deficit – albeit a shrinking one – through 2019. The investment banks sees copper trading above $5,700 by the fourth quarter.

    That compares to an expansions of 1.3% expected by Citigroup for next year. The bank also says to "reach consensus expectations of 3 percent to 4 percent annualized growth this year would imply an 'unrealistic acceleration' to as much as 9 percent for the second half of 2015."

    Another factor that should support prices is falling grades and dirty concentrate   at the world's largest mines. The proportion of deleterious elements such as arsenic, antimony and bismuth have crept up relative to copper concentrate grades over the past decade as result of a greater proportion of low grade – high tonnage operations.

    Citigroup also analyzed the impact of weaker local currencies and found that the savings from the strong dollar for producers in Latin America, Africa and Asia are less than expected. Around two-thirds of capex at major global producers and 28% of total costs are dollar-denominated reducing the positive impact of weak local currencies on cash costs.

    Last week a new report by Capital Economics made an even more bullish case for copper mainly because the London-based independent research house believes mine supply will only grow by an anaemic 1.7% this year before contracting next year.

    http://www.mining.com/citigroup-joins-copper-price-bulls/
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    CNMC says followed the law in closing Zambian copper mine


    China's CNMC Luanshya Copper Mines followed Zambian law when it closed the Baluba mine and sent more than 1,600 workers on forced leave due to plunging prices and energy shortages, the company said on Monday.

    CNMC Luanshya Copper Mines spokesman Mr Sydney Chileya said in a statement “As a law abiding corporate citizen, we have always followed the Zambian laws and it did not plan to make employees redundant. Those placed on forced leave would receive a monthly allowance and other entitlements such as medical cover.”

    Mr Chileya said the entire Luanshya Mine would have collapsed within three months if the company had not suspended production at Baluba.

    Zambia had threatened to revoke Luanshya's mining licence if the company did not reinstate workers.

    The Mine Workers' Union of Zambia (MUZ) said on Saturday it would challenge the decision, which it alleged was made without consulting labour unions.

    http://steelguru.com/metal/cnmc-says-followed-the-law-in-closing-zambian-copper-mine/434544#tag

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    Ford F-150 2016 model parts to be made of Alcoa's Micromill aluminium


    Ford Motor Co will begin in the fourth quarter to use multiple components in its high-selling F-150 pickup model made from an advanced Alcoa Inc aluminium alloy that is tough enough to replace steel parts yet significantly lighter, both companies said on Monday.

    The two corporations also announced a joint development agreement to collaborate on using next-generation aluminium produced through Alcoa's new "Micromill" process in other vehicles.

    The deal with the automaker is a high-profile first for Alcoa's Micromill - Ford's F-Series pickup trucks have been the best-selling model in the United States since 1982. The full-size pickup truck is a key profit generator for the No. 2 U.S. automaker.

    Automakers have turned to lighter aluminium alloys instead of high-strength steel, which is far heavier, to build more fuel-efficient vehicles that still meet safety standards.

    Last year, Ford rolled out its 2015 F-150 with an aluminium alloy body that made it 700 pounds (320 kg)lighter than earlier models, boosting fuel efficiency.

    "The fact that is one of the crown jewels of the company shows our faith in the (Micromill) technology," Ford chief technology officer Raj Nair told Reuters.

    The first components using the new aluminium alloy will appear in the 2016 year model F-150, including for the tailgate and the bed of the pickup truck, adding to the vehicle's towing and hauling capabilities, Nair said. Micromill will be used to make more parts in more Ford vehicle platforms in years to come.

    The alloy is part of New York-based Alcoa's strategy of investing in more advanced aerospace and automotive products while selling off some of its more traditional yet costly smelting facilities. The metals firm is in talks with eight other automakers on using Micromill technology.

    Unveiled by Alcoa in December, Micromill produces high-strength aluminium alloy that goes from molten metal to cooled, coiled metal in 20 minutes versus the 20 days it takes to roll conventional aluminium.

    The alloy is 30 percent stronger that regular aluminium and 40 percent more formable, meaning it can be shaped into more intricate forms, including inside car door panels or fenders.

    In a separate announcement, Alcoa said it had agreed to license intellectual property associated with Micromill's alloys and process technology to Italy's Danieli Group.

    Alcoa will also grant Danieli exclusive rights to sell Micromill equipment for a limited period, targeting potential customers in Europe, South America and Southeast Asia.

    http://www.reuters.com/article/2015/09/14/ford-alcoa-aluminium-idUSL1N11K1XZ20150914
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    Alcoa to cut remaining capacity at Suriname refinery


    Alcoa Inc said it would cut remaining capacity at its Suralco alumina refinery in Suriname and take a related restructuring charge of $65 million-$75 million.

    The company said it would curtail 887,000 metric tons in refining capacity by Nov. 30.

    Alcoa said in March it would evaluate 2.8 million metric tons of refining capacity for possible curtailment or divestiture.

    On a per share basis, the company expects a charge of $0.05-$0.06 per share in the second half of 2015, half of which it will record in the third quarter.

    http://www.reuters.com/article/2015/09/14/alcoa-capacity-idUSL4N11K45420150914
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    Steel, Iron Ore and Coal

    BHP sees Australian coal above the bottom end of the cost curve


    Diversified major BHP Billiton has called for greater productivity in the Australian coal sector, as prospects of a price rise in the near future remained dim. 

    Speaking in Brisbane, BHP coal president Mike Henry pointed out that prices for metallurgical coal had fallen by a further 25% to 30% since the start of 2015, while the price for thermal coal fell another 10% to 15%. “There are no signs of things getting better in the medium term.” 

    He noted that despite Australia’s natural endowment of coal resources, the local sector was facing stiff competition from Russia, Canada and China, who were equally as focused on achieving increased output at lower prices. “They have been expanding production, increasing productivity and lowering costs. In some instances, they are achieving mine-site cash costs of $10/t to $20/t less than Australia. 

    Some of the differential has been driven by things we don’t control; like currency movements or geological endowment. But at the end of the day, all that matters is whether we are able to improve productivity sufficiently to secure ourselves at the low end of the cost curve.” 

    Henry said that as miners, the industry had to look to itself to drive the technical and commercial excellence that would ensure that it fully and safely realised the potential of installed capacity. “The financial sustainability of the Australian coal industry is wholly dependent on our ability to materially improve and sustain levels of productivity to stay one step ahead of our global competition. 

    Through working with our employees to achieve this, within a supportive industrial relations system, we’ll be able to create and protect jobs in the industry.”

    http://www.miningweekly.com/article/bhp-calls-for-closer-cooperation-in-oz-coal-fields-2015-09-18
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    Shanxi coking coal miners cut prices amid flat demand


    Shanxi’s coking coal miners have started to cut prices in a bid to incentivize demand from coke and steel producers as downstream markets continued to worsen since entering September.

    Miners at Liulin, Luliang City have cut prices by 20-30 yuan/t from the start of September, with mainstream ex-washplant price at 590-610 yuan/t for primary coking coals. Some end users noted a 30 yuan/t cut for low-sulphur primary coking coal, which was orally promised by Luliang-based big miners but yet not finalized.

    Linfen’s low-sulphur coking coal price also dropped 20-30 yuan/t, with mainstream ex-washplant price for materials with 9.5% ash, 0.4% sulphur and G value of 85 at 595-610 yuan/t.

    Changzhi-based miners cut low-sulphur primary coking coal prices to 575-590 yuan/t, and reduced 20 yuan/t for high-sulphur lean coal -- one type of coking coal blend – to 410 yuan/t, both ex-washplant basis.

    Meanwhile, Changzhi-based large miners cut prices of blended coal by 20 yuan/t and washed coal 10 yuan/t, with price of lean coal with 10.5% ash and 13-14 G value at 425-480 yuan/t.

    Market sources said washing plants at Changzhi and Linfen were running 20-40% capacity due to low prices.

    Downstream coking plants may continue to press down coking coal prices to reduce losses, as coke prices were on a downward trend. Shenhua Group’s 20 yuan/t cut for its Grade II met. coke on September 15 may lead to another round of price drop, sources said.

    http://en.sxcoal.com/0/131571/DataShow.html

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    China Aug coal transport down 16.5pct on year


    China’s rail coal transport fell 16.5% on year and down 1.6% on month to 162.4 million tonnes in August, posting the ninth consecutive year-on-year decline, showed the latest data from the China Coal Transport and Distribution Association.

    Over January-August, China transported a total 1.35 billion tonnes of coal through railways, down 11.8% from a year ago, data showed.

    Of this, 922.7 million tonnes or 68.4% of the total was railed to power plants, down 12% year on year, with August haulage sliding 12.9% on year and down 1.8% from July to 113.4 million tonnes.

    Coal-dedicated Daqin line transported 33.63 million tonnes of coal in August, falling 11.8% on year and down 2.2% from July. Total haulage between January and August dropped 9.3% from the year prior to 273.8 million tonnes.

    http://en.sxcoal.com/0/131564/DataShow.html

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    Baosteel cut Oct prices by 100-200 yuan/t


    Baoshan Iron and Steel Co., Ltd. (Baosteel), China’s largest listed steel maker, cut its major products prices for October delivery by 100-200 yuan/t from the month before, after maintaining prices stable in September, said the company on September 14.

    The company kept prices of cold-rolled products unchanged from September, but offered a 100 yuan/t discount for orders in advance.

    Industrial insiders said the drop was mainly due to Baosteel’s anticipation for further price decline and flat orders amid persisting weak demand from end users.

    Analysts said China’s domestic steel market would continue to be gloomy in the short run, as demand may stay weak after entering into the slack winter season.

    http://en.sxcoal.com/0/131536/DataShow.html

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    China’s Coal Consumption 14% Higher Than Previously Thought


    Everyone knew China needed a lot of coal as its economy hummed along in recent years. Now the world is finding out just how much.

    A newly released analysis of Chinese government data by the U.S. Energy Information Administration found over the past decade-plus, China consumed as much as 14% more coal on an energy-content basis than previously reported. Its domestic coal production meanwhile was as much as 7% higher between 2000 and 2013.

    Chimneys belonging to a coal-fired power plant near residential houses in Shijiazhuang. Reuters

    The U.S. government’s global energy-data keeper based the new analysis on preliminary data from China’s government that showed a large upward revision in annual total energy consumption in China, measured in tons of standard coal equivalent, a common industry and government metric.

    In practical terms, the new analysis means that during a period of speedy growth, China consumed as much as hundreds of millions more metric tons of coal than previously understood.

    The EIA’s analysis also supports those who say China’s coal consumption has peaked, at least for the time being. It estimates China’s coal consumption dropped 2% last year. Rampant air-pollution levels that are a source of public discontent in China helped force the Chinese government to slightly shift its energy mix away from coal in recent years. Alternative sources of energy production—from solar to natural gas—are growing in use, but coal’s huge consumption base means any significant changes will be gradual and could take decades.

    The upward revisions are also a reminder of just how unreliable Chinese government data can be – a fact that makes project planning a vastly difficult task for commodity producers and other businesses that sell to China. Concern over China’s economy has played a big part in driving a bust in commodity prices, which contributed to impairment losses industrywide.

    http://blogs.wsj.com/chinarealtime/2015/09/17/chinas-coal-consumption-14-higher-than-previously-thought/
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    China Aug coal imports from Dalrymple Bay plunge 49.7pct on mth


    China’s coal imports from Australia's Dalrymple Bay terminal stood at 583,000 tonnes in August, plunging 49.7% from 1.16 million tonnes in July, operator DBCT Management said in a report on September 14.

    China’s total import over January-August from the coal terminal stood at 7.9 million tonnes, said the terminal shipping data.

    Japan’s coal imports from Dalrymple Bay terminal in August was 1.67 million tonnes, up from 1.32 million tonnes in July.

    South Korean coal buyers booked 952,000 tonnes of coal exports from shippers at the Dalrymple Bay coal terminal for August, and slightly less than July's volume of 1.1 million tonnes.

    Japan has been the leading export destination for coal shipments from the coal terminal at Dalrymple Bay this year to date at 9.7 million tonnes, and South Korea and China each tie for second place at 7.9 million tonnes for the eight-month period, said the terminal shipping data.

    Coal shipments from the Dalrymple Bay coal terminal in the Australian state of Queensland increased 10.6% month on month to 6.27 million tonnes in August, up 10.6% from 5.67 million tonnes in July, data showed.

    For the eight-month period ended August, Dalrymple Bay coal terminal has shipped 47.2 million tonnes of coal exports compared with 44.6 million tonnes for the corresponding period in 2014.

    http://en.sxcoal.com/0/131495/DataShow.html

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    Unions reject revised coal sector wage offer, mediation continues


    South African unions in the coal sector have rejected revised wage offers in pay talks, officials said on Tuesday. "All the unions have rejected the offer and the commissioners are still trying to mediate," said Peter Bailey, who is representing the National Union of Mineworkers (NUM), the biggest of the four unions, in the talks. 

    Workers want pay increases of up to 15% and the NUM is seeking a 50% rise for its lowest paid workers, who make R6 000 ($445) a month in basic pay. The Chamber of Mines, which represents Glencore, Anglo American Coal and Exxaro, raised its offer for lower-paid miners last week to between 6% and 7%, depending on the mine and category of worker, from a previous offer of 5.5% to 6.5%. 

    More highly skilled and higher-paid workers were offered raises of 4.5% to 5%. The talks come at a time when producers are closing some shafts in the wake of lower coal prices and, if mediation fails, it could set the stage for potential strikes.

    http://www.miningweekly.com/article/unions-reject-revised-coal-sector-wage-offer-mediation-continues-2015-09-15
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    POSCO to settle CRGO electrical steel case with Nippon Steel


    wikimediaHani.co.kr reported that POSCO is set to pay 300 billion won (US$254 million) in compensation to Japan‘s Nippon Steel for business secrecy and patent violations in connection with technology for grain-oriented electrical steel (GOES). POSCO would also be required to pay royalties when exporting electrical steel and engage in consultation before making decisions on regional export quantities.

    In exchange, Nippon Steel is to withdraw suits that it has filed in South Korea, Japan, and the US.

    Some company insiders told Hankyoreh on Septemebr 13 that POSCO is planning to ink the deal with Nippon Steel shortly, with details to be announced around the long Chuseok harvest holiday later this month.

    Nippon Steel first filed suit with Tokyo District Court for business secrecy and patent infringement in April 2012, alleging that POSCO had acquired GOES manufacturing technology by hiring its former employees as advisers. It also filed a similar suit with the US District Court for New Jersey demanding the equivalent of around one trillion won (US$847 million) in damages.

    POSCO countered in July 2012 with an absence of liability case in Daegu District Court. It also requested patent invalidation trials with the US Patent Office in September 2012 and the South Korean Intellectual Property Trial and Appeal Board in April 2013, which are still ongoing. But the company appears to have decided it would be better to strike a deal than to continue the legal battle,

    http://steelguru.com/steel/posco-to-settle-crgo-electrical-steel-case-with-nippon-steel-report/434605#tag

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    China says steel export limits won't solve trade tensions


    Using anti-dumping measures to restrict Chinese steel exports will not provide a lasting solution to growing trade tensions in the sector, which is suffering from overcapacity on a global scale, China's commerce ministry said on Wednesday.

    With domestic demand weakening, the Chinese steel sector has seen the foreign market as a lifeline, with historically low prices allowing them to boost exports by as much as 26.5 percent in the first eight months of this year.

    Chronic overcapacity has helped drive Chinese steel prices to their lowest level in decades, and European steel body Eurofer has accused Chinese producers of selling at prices that do not fully cover their costs.

    But Shen Danyang, spokesman for the Ministry of Commerce, told reporters that there were no grounds to believe that Chinese steel was being dumped on overseas markets.

    "Blindly determining any case involving China as dumping is unfounded and unjustified," he said, noting that the costs of Chinese steel reflected the collapse in global iron ore prices.

    "Overcapacity is the common problem faced by the global steel industry during its restructuring process, but simply imposing limits just isn't the channel or method that will fundamentally solve the problems," he added.

    The China Iron and Steel Association (CISA) has warned that the industry's growing reliance on exports might not be sustainable because of growing trade friction, and urged its members to refrain from selling overseas at below cost.

    http://www.reuters.com/article/2015/09/16/china-steel-trade-idUSL4N11M1WT20150916
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    Carmakers curb China output as sales growth stalls


    Volkswagen and other major carmakers have begun reining in Chinese output, wages and other costs, industry sources told Reuters, as executives at the Frankfurt auto show put a brave face on a sharp slowdown in the world's biggest vehicle market.

    The German car giant's Chinese joint venture, FAW-VW, is cancelling staff bonuses and cutting shifts at its plants near Changchun, northeastern China, people with knowledge of the matter said. The bonuses being scrapped typically account for more than half of the assembly-line workers' take-home pay.

    Volkswagen's (VOWG_p.DE) high-end Audi brand also said it had cut output at its Chinese plants, trimming the working week to five days from seven in response to lower demand for models such as the A6 saloon.

    And German rival BMW (BMWG.DE) said on Tuesday it had reduced output of its locally produced 3 and 5 series models. "We reacted relatively fast," Chief Financial OfficerFriedrich Eichiner told journalists. "We are not stockpiling."

    Car sales in China, until recently the profit engine for automakers around the world, have been hit by a cooling economy and a plunging stock market. Demand was flat in the first eight months of the year and could drop in 2015 for the first time since the market took off in the late 1990s.

    http://www.reuters.com/article/2015/09/15/us-autoshow-frankfurt-china-idUSKCN0RF0PC20150915?utm_campaign=Contact+SNS+For+More+Referrer&utm_medium=twitter&utm_source=snsanalytics
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    Mongolia’s Tavan Tolgoi coal mine deal likely to stall, again


    Southern Mongolia’s Tavan Tolgoi coal mine, one of the world’s largest undeveloped coal deposits–estimated to contain reserves in excess of 6 billion tonnes of high-quality coking coal used for steelmaking, has stalled digging again recently.

    The likelihood of Mongolia’s parliament approving the $4 billion deal between the government and a consortium of companies–the Mongolian Mining Corp, China’s Shenhua Energy and Japan’s Sumitomo Corp to develop the mine, had fallen dramatically, said Mendsaikhan Enkhsaikhan, one of Mongolia’s lead negotiators on the deal.

    In addition, China’s economic tumult throw the mine’s near-future into question. Coal accounts for over 35% of Mongolia’s exports and China is the destination of 89% of all Mongolian exports.

    The deal might violate Mongolian laws, said Zandaakhuu Enkhbold, the speaker of parliament. Shortly after, the government agreed that the deal would need to be approved by the legislature.

    In the first half of 2015, Mongolia earned $353.9 million from coal exports, a 30% decrease from the same period in 2014. The volume of coal exported also fell 22%. The reasons for the decline were the Chinese economy as well as new regulations in Mongolia making it “compulsory to carry coal by heavy transport road.”

    http://en.sxcoal.com/0/131447/DataShow.html
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    China coal chemical industry faces oversupply risk


    China’s coal chemical industry faced oversupply risk with an influx of investment into this sector, said Li Shousheng, president of the China Petroleum and Chemical Industry Federation (CPCIF) during a meeting on September 10.

    More and more coal producers are turning to downstream industries of power and coal chemical amid a supply glut of the traditional fossil fuel.

    China’s coal chemical products are mainly coal-to-methane, coal-to-olefin and coal-to-glycol, said Li, adding that homogeneity of these products are becoming serious. “If we don’t improve the differentiation and advancement of these products, they may be caught in vicious competition within the industry”, said Li.

    A total 53 coal-to-olefin projects have been kicked off the preliminary work or been planned in China, with combined capacity totaling 33 million tonnes per annum, showed incomplete statistics from the CPCIF.

    Besides, 7 coal-to-oil and 19 coal-to-glycol projects have been planned or under construction across the country, with annual capacity at 13.9 million and 4.7 million tonnes, respectively. 18 coal-to-gas projects were planned or under construction, with total annual capacity at 74 billion cubic meters.

    The completion of all these projects would consume 429 million tonnes of coal, and the output of coal-to-olefin would far exceed domestic demand, said Li.

    http://en.sxcoal.com/news.aspx

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    China's five year plan sees 50% drop in growth rates.


    China planned to cut coal consumption share from the present 66% to 60% or less in total energy consumption by 2020, one senior official with the National Development and Reform Commission (NDRC) said on September 11.

    China’s energy demand is forecasted to grow at an average annual rate of 3.3% during the 13th Five-Year Plan period over 2016-2020.

    Total domestic energy consumption is expected to some 4.8 billion tonnes of standard coal equivalent in 2020, and coal consumption will total some 3.9 billion tonnes in 2020.

    China's energy consumption has witnessed an average 7.9% annual growth over the past 14 years. Coal is still dominant in the country’s energy mix, comprising about 66% of its total energy consumption. Some 4.26 billion tonnes of standard coal equivalent were used in 2014, according to the National Energy Administration (NEA) figures.

    Non-coal-fired power generating units could satisfy all new power demand of the country after 2020. Besides, coal consumption may realize negative growth at major air-polluted areas, and clean utilization of coal will be further promoted.

    Meanwhile, China’s natural gas consumption is planned to reach 350 billion cubic meters in 2020.

    China would also see its non-fossil energy consumption accounts for 15% of the total primary energy consumption by 2020.

    http://en.sxcoal.com/0/131442/DataShow.html

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    Canada imposes anti dumping duty on Russian and Indian steel plates


    Image Source: wordpressUnian reported that Canada has imposed anti-dumping duties on Russian and Indian steel in an attempt to protect domestic producers from competition from the states with weakened currency, according to Canada Border Services Agency. Temporary duty imposed on the hot rolled carbon steel plates and HSLA (high strength light alloy) steel plates.

    Canada has introduced a fee of 239.4% on steel plates from Russia, but for Severstal company, the customs duty will amount to only 50.9%.With regard to the Indian producers, Canada has introduced a fee of 240.8%.

    Fees apply to products that have been reported to the Canadian customs after September 8.

    The final decision on the results of Canada’s investigation is expected to be taken at the beginning of next year.

    The complaint was originally filed by Essar Steel Algoma, the Canadian arm of Essar Steel. The complaint was filed in April this year seeking import duty on carbon and high-strength low-alloy steel plates, mostly of 5-10 mm thickness.

    Essar Steel Algoma has said “In our complaint, we identified 58 subsidy programmes, which we feel have provided actionable benefits to Indian plate producers and are therefore countervailable under Canadian law.”

    http://steelguru.com/steel/canada-imposes-anti-dumping-duty-on-russian-and-indian-steel-plates/434527#tag
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    Steel rebar futures at SHFE dips on demand worries in China


    Image Source: southernstructuralsteelReuters reported that Shanghai steel futures dropped 1 percent on Monday on worries over lean seasonal demand. The most traded rebar for January delivery on the Shanghai Futures Exchange was down 1 percent at CNY 1,937 a tonne by 0254 GMT, after touching a low of CNY 1,928

    Chinese spot steel prices slipped over the weekend, traders said, indicating slack demand at a time when consumption of the building material typically picks up along with construction activity after the summer hiatus. A trader said “I still believe there will be some increase in demand this month and October. I just don't know how strong demand will be and if it will be enough to support prices.”

    Billet sold in China's key Tangshan area dropped 10 yuan to 1,750 yuan per tonne over the weekend.

    http://steelguru.com/steel/steel-rebar-futures-at-shfe-dips-on-demand-worries-in-china/434529#tag
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    Tokyo Steel cuts product prices for October, first cut in 11 months


    Tokyo Steel Manufacturing Co , Japan's top electric arc furnace steelmaker, said on Tuesday it will cut the price of products for delivery in October by 5,000 yen to 13,000 yen ($42-$108) a tonne due to a rise in cheap imports and slack domestic demand.

    The move marks its first price reduction in 11 months.

    The company's pricing strategy is closely watched by Asian rivals such as Posco, Hyundai Steel Co and Baosteel, which export to Japan.

    Prices for Tokyo Steel's main product, H-shaped beams, which are used in construction, will fall by 7,000 yen, or 9 percent, to 70,000 yen ($582) per tonne in October.

    "The price cut is to reflect the current spot market in Japan which has been pressured by slow demand in construction due to delayed projects and high inventories of steel sheets," Tokyo Steel's Managing Director Kiyoshi Imamura told reporters.

    "In addition, steelmakers overseas including in China, South Korea and Taiwan are stepping up their efforts to sell products at a discount to Japanese users. That weighs on the prices here," he added.

    Imamura said he expected construction demand to improve later this year, and hoped to signal to buyers through a single large price cut that steel prices were bottoming out.

    http://www.reuters.com/article/2015/09/15/tokyo-steel-prices-idUSL4N11L1S820150915

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    India imposes 20 pct duty on some foreign steel products as imports surge


    India imposed a 20 percent import tax on some steel products with immediate effect on Monday, Finance Minister Arun Jaitley said, as the government investigates a threat to domestic companies from rising imports from China, Japan, South Korea and Russia.

    "Notification is being issued imposing a provisional safeguard duty effective from today on hot-rolled flat products of non-alloy and other alloy steel in coils of a width of 600 mm or more at the rate of 20 per cent ad-valorem for a period of 200 days," the finance ministry said in a statement.

    The products subject to the new tax together accounted for more than half of the 5.5 million tonnes of steel imported in the last fiscal year into India, the only major market that is expanding at a time when top consumer and exporter China is slowing.

    Indian steel companies, struggling to compete due to higher borrowing and raw material costs, have in recent months successfully lobbied to get duties on some products raised to 12.5 percent and quality checks strengthened.

    But those duties did not apply to Japan and South Korea, countries with which India has free-trade agreements, prompting the companies to seek a safeguard duty that applies to all.

    An Indian steel company executive, who declined to be named, said the so-called safeguard duty would not completely halt imports of the products but would prevent foreign suppliers from "predatory pricing" when local production is rising.

    Acting on a complaint lodged jointly by Steel Authority of India (SAIL), JSW Steel and Essar Steel , the Directorate General of Safeguards said last week any delay in implementing the duty would cause such damage to the local industry that it would be "difficult to repair".

    http://www.reuters.com/article/2015/09/14/india-steel-duty-idUSL4N11K3HR20150914

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    China Aug coke output down 6.6pct on year


    China produced 37.35 million tonnes of coke in May, falling 6.6% from a year ago and down 0.9% from July, showed data from the National Bureau of Statistics (NBS) on September 13.

    That was the seventh straight yearly decline, mainly due to low operation rates of coking plants amid weak demand and the environmental protection pressure.

    Over January-August, total coke output of China reached 301.47 million tonnes, down 4.2% year on year, the NBS data showed.

    http://en.sxcoal.com/0/131391/DataShow.html

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    CEA identifies old power plants to be replaced by super critical units


    Image Source: Top NewsBusiness Standard reported that power projects with total generation capacity of 36,000 MW, which are more than 25 years old, need to be replaced in a phased manner. The Central Electricity Authority, which recently held a comprehensive review with states, suggested that utilities need to explore possible options to utilise existing land and other facilities in most effective manner in view of land being scare.

    CEA has said that replacement of old units by new super critical units is being encouraged by the Centre and the necessary guidelines have been issued for automatic transfer of coal linkage from old and inefficient units.

    CEA has brought to the states' notice that the Centre has proposed capacity addition of 84,600 MW during 13th plan through super critical units. The retirement, renovation and replacement of old units by super critical units will also contributed towards proposed capacity addition.

    Sources in the know said that “Some of the old generation plants have plant load factor ranging between as low as 1% and 14%. States have been asked to soon submit plant-wise plan for retirement, replacement, renovation of such old plants. CEA will hold its next meeting in the third week of September to finalise the action plan.”

    CEA believes that replacement of sub critical old and inefficient thermal units by super critical units will enable effective utilisation of already available scarce resources like land, water and coal.

    Some of the states including Maharashtra, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Tamil Nadu have already expedited the replacement process including terms of reference for the environment clearance obtained from the Union ministry of environment and forests.

    http://steelguru.com/power/cea-identifies-old-power-plants-to-be-replaced-by-super-critical-units/434478#tag
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    Adaro Energy to lower coal output next year


    The Jakarta Post reported that Jakarta-listed coal miner PT Adaro Energy will likely cut down production at its mining site next year following ongoing decline in the commodity’s price.

    Mr Garibaldi Thohir, Adaro president director, said that his company was looking at output in the range of 52 million to 54 million tons next year, which would be up to 7 percent lower compared to this year’s target of between 54 million to 56 million tons. The main driver of the cut is the low price.

    Mr Garibaldi said that “We sell most of our coal under long term contracts and only a few we offer on the spot market. We will reduce the amount [of coal offered] on the spot market.”

    Coal miners worldwide have been reporting weak trade following the plunge in oil prices, which has been mainly caused by weakening global demand while other energy sources, particularly the shale gas and oil, are on the rise.

    Indonesia, a major thermal local exporter, set its coal price reference (HBA) for 6,322 kcal/kal coal at a new low level of USD 58.21 per ton for September, which is already 8.8 percent lower compared to a reference price of USD 63.84 per ton set in January. The September price is around 54 percent lowered compared to the all-time-high HBA price of USD 127.05 per ton set in February 2011.

    Adaro reported it sold its coal at a 13 percent lower average selling price during the first half of the year compared to the price in the same period last year. In terms of volume, the company sold 26.6 million tons of coal during the January to June period, or 6 percent lower compared to the same period last year.

    Following the continuing decline in prices, Adaro also recently adjusted its production target for this year to between 54 million and 56 million tons per year from an initial plan of between 56 million to 58 million tons.

    He said that “The company’s coal output for this year has already been fully contracted.”

    http://steelguru.com/coal/adaro-energy-to-lower-coal-output-next-year/434490#tag
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    China Jan-Aug coal industry FAI down 14.4pct


    China’s fixed-asset investment (FAI) in coal mining and washing industry stood at 256 billion yuan ($41.8 billion) over January-August, down 14.4% year on year, showed data from the National Bureau of Statistics (NBS) on September 13.

    The decrease is faster than a 13.4% drop over January-July this year.

    Private investment in the sector contributed 144.2 billion yuan of the total, falling 12% from the previous year, compared to a 9.4% decline over January-July.

    Meanwhile, fixed-asset investment in all mining industries across the country posted a year-on-year drop of 7.6% to 800.4 billion yuan over January-August. Of this, private investment in mining industries contributed 456.4 billion yuan during the same period, falling 9.5%.

    The NBS data showed a total 92.2 billion yuan was spent on fixed assets in ferrous mining industry during the same period, down 17.3% from the previous year; while investment in oil and natural gas industry fell 1.1% on year to 192.3 billion yuan.

    The fixed-asset investment in non-ferrous mining industry witnessed a year-on-year decline of 2.3% to 98 billion yuan during the same period, data showed.

    http://en.sxcoal.com/0/131364/DataShow.html
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    Japan’s power utilities burns record coal flouting minister's call


    Image Source: LC NewsBloomberg reported that Japan’s regional power utilities burned the most coal on record in August, flouting calls from the nation’s environmental minister to rein in use to control greenhouse gas emissions.

    The nation’s 10 power utilities used 5.82 million tonne of coal in August, the Federation of Electric Power Cos. reported Friday. That’s the most in monthly usage since the group started compiling data in April 1972. While total power generation and purchases fell 0.9 percent, liquefied natural gas use slid to the least in August in 5 years and fuel oil to its lowest level for the month in 6 years.

    Japan’s environment minister said last month that he won’t support a new coal power station planned for central Japan as part of a push by the ministry to control greenhouse gas emissions. Coal consumption increased 19 percent between 2010 and 2014, largely due to the March 2011 Fukushima disaster, which led to the shuttering of the nation’s nuclear plants for safety checks.

    Mr Ali Izadi-Najafabadi, a Tokyo-based analyst with Bloomberg New Energy Finance, said that “Coal is still the cheapest fuel source. There is more coal plant capacity available this year than last year in Japan.”

    By year’s end it will cost on average of about JPY 4 per kilowatt hour to operate a coal-fired plant, compared to JPY 9.6 for a gas-fired facility, according to data compiled by BNEF. Thermal coal at the port of Newcastle in Australia, the fuel’s biggest export harbor, closed at USD 59.48 a tonne September 4th, according to prices from Globalcoal. That’s near the lowest since May 2007.

    Mr Izadi-Najafabadi said that natural gas is typically used more in Japan during winter and summer when greater demand fluctuation occurs because gas-fired facilities can more quickly boost and lower production.

    http://steelguru.com/power/japan-s-power-utilities-burns-record-coal-flouting-minister-s-call/434425#tag

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    Xinjiang H1 outbound electricity surge 125pct on yr to 14.6 TWh


    The outbound electricity transmission from northwest China’s Xinjiang Uygur Autonomous Region surge 125% on year to 14.6 TWh over January-June this year, the latest official data showed.

    That was equivalent to some 4.84 million tonnes of standard coal.

    In 2014, Xinjiang transmitted 17.5 TWh of electricity outside of the province in China, rising 167.9% from the year prior.

    As projected in the “13th Five-Year Plan”, multiple power transmission networks are to be constructed by 2020, with investment totaling 201.9 billion yuan ($33 billion).

    Xinjiang will construct five DC and three AC outbound transmission lines, including ±1,100 KV Zhundong-Chengdu and Zhundong-eastern China lines, ±800 KV DC Hami-Chongqing line, ±600 KV Ili-Pakistan line and ±750 KV Ruoqiang-Qinghai line.

    The ±800 KV Hami-Zhengzhou DC transmission line and a quadruple-circuit 750 KV AC transmission line to northwest China have been put into operation.

    By then, Xinjiang will realize electricity transmission capacity over 300 TWh per annum, equaling transporting 100 million tonnes of raw coal.

    http://en.sxcoal.com/0/131255/DataShow.html
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    China’s 1st 1-Mtpa-plus CTO project commences operation


    China’s first one-million-tonne-per-annum-plus coal-to-oil project was put into operation in Yulin city, a major coal production base in northwestern Shannxi province, local media reported.

    Total investment of the project was 16.4 billion yuan ($2.56 billion). It is designed to produce 1.15 million tonnes of oil products at consumption of 5 million tonnes of coal each year.

    The project, operated by Shaanxi New Energy Chemical Co., Ltd., will be able to produce 5 million tonnes of oil products during the 13th Five-Year Plan ended in 2020.

    The project adopted domestic technology developed by Yanzhou Coal Mining Co., Ltd. – one major Chinese coal producer based in Shandong.

    It only consumes 3.441 tonnes of standard coal and 2.68 tonnes of water to produce one tonne of oil products, with 98.26% of the water recycled.

    http://en.sxcoal.com/0/131254/DataShow.html
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