Mark Latham Commodity Equity Intelligence Service

Thursday 26th November 2015
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    Saudi deputy crown prince says considering subsidy cuts - NYT

    Saudi Arabia may reduce energy and water subsidies for wealthy citizens, impose a value added tax (VAT) and taxes on unhealthy goods like cigarettes and sugary drinks, Deputy Crown Prince Mohammed bin Salman was quoted as saying on Wednesday.

    The world's top oil exporter has previously said it was studying increases in domestic energy prices, the introduction of VAT and the installation of nuclear and solar power.

    Low oil prices and expected deficits in coming years have spurred a new focus on reforms in the conservative Islamic kingdom with the aims of diversifying the economy away from a dependence on crude revenue.

    "The key challenges are our overdependence on oil and the way we prepare and spend our budgets," he said in an interview with the New York Times.

    The newspaper reported that he also said he would privatise and tax mines and undeveloped land, and intended to reduce domestic oil consumption by installing nuclear and solar electricity capacity, without giving further details.

    Mohammed bin Salman, who is also defence minister, heads a supercommittee on the kingdom's economy and development as well as a National Performance Centre that oversees efficiency in all government ministries.

    Under King Abdullah, who died in January, Saudi Arabia privatised big state companies, opened main sectors of the economy to private and foreign investment, joined the World Trade Organisation and reformed labour laws.

    However, economists say the government can do more to strengthen the role of Saudi nationals in the private sector economy, including via education reform, and to make the government more efficient.

    Read more at Reuters
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    Brazil judge says senator may have interfered with Petrobras probe

    Brazilian Supreme Court Justice Teori Zavascki said on Wednesday that Senator Delcidio Amaral had been accused of trying to silence former Petrobras executive Nestor Cervero in a corruption investigation and confirmed he had ordered his arrest.

    Cervero has been sentenced to 12 years in jail for paying a bribe to the speaker of Brazil's lower house of Congress, and his lawyers had been trying to negotiate a plea deal with prosecutors.

    Read more at Reuters
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    Oil and Gas

    The Sun Quotes GS on Oil

    OIL prices could tumble as low as $20 a barrel next year, it was forecast yesterday — raising the prospect of 90p a litre petrol.

    GOLDMAN SACHS believes oil could slump to its lowest level since 2002.

    The investment bank rated the chances of it hitting $20 in 2016 as 15 per cent — a scenario that would have been unthinkable only a year ago, when oil was $100 a barrel.

    Goldman research leader Michele Della Vigna said yesterday: “We think $20 is a possibility — although an unlikely one at this point in time.”

    He said triggering factors would be if “a very warm winter led to excessive build-up of diesel inventories”, and lack of oil storage space.

    He added: “It would be a shock to the system, a temporary one. We cannot find an equilibrium here at $20 a barrel.”

    If the cost did fall that low “the benefit of lower oil prices will certainly come through to the consumer”, he said.

    US crude was $42.57 a barrel yesterday and Brent Crude $45.65.

    Howard Cox, of the FairFuelUK Campaign, believes $20 a barrel would mean 90p at the pumps but it should be lower.

    In 2002, when oil was last that cheap, petrol cost 79p a litre and diesel 75p, but fuel duty has risen by around 10p since then.

    Mr Cox said: “Opportunistic profiteering is now rampant in the supply chain with pricing at retail outlets an opaque secretive process manipulated by colluding businesses to keep prices high.”

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    Iran Sweetens Terms for Oil Investors Ahead of End of Sanctions

    Iran will pitch more than 50 oil and natural gas projects to foreign investors at a two-day conference in Tehran starting Saturday as the Persian Gulf country prepares for the end of sanctions that have stifled development and production of its energy wealth.  

    The government hopes international companies will commit at least $100 billion that Iran says it needs to boost oil-production capacity by more than 1 million barrels a day. Oil Minister Bijan Namdar Zanganeh will introduce at the same event a new type of investor contract offering better incentives than the buy-back agreements Iran offered in the past.

    Iran will offer a framework for new oil deals to be negotiated project by project, rather than a uniform contract draft for all investors, Amir Hossein Zamaninia, deputy minister for commerce & international affairs, said in Tehran on Nov. 21.

    Here are five things to know about this turning point in efforts to revive Iran’s energy industry:

    * The new contract model gives investors a share of the oil they produce and lets them sell it on the global market, Seyed Mehdi Hosseini, chairman of the Oil Ministry’s Oil Contract Restructuring Committee, said last month in Tehran. The more they pump, the more they profit. Conversely, investors will share the burden of a decrease in production.

    Iran’s old buy-back deals paid companies a fixed fee regardless of how much oil they produced and offered them no incentive to exceed output targets. Buy-backs also paid no compensation to companies that spent more than budgeted amounts to develop a field.

    * The new contracts will be valid for 20 years, with possible extensions to 25 years. Buy-back agreements were limited to seven years, which wasn’t enough time for companies to make adequate returns on their investments, Total SA Chief Executive Patrick Pouyanne said last month in Abu Dhabi.

    * Investors will be able to negotiate directly for contracts with Iranian authorities and won’t be limited only to bidding. Iran won’t allow them to escape their contractual obligations if sanctions are ever re-imposed on Iran, Hosseini said.

    Companies that explore for oil or gas and come up empty-handed can search for fuel in nearby areas. Under buy-backs, companies had to stick to development plans they agreed to before starting work and were barred from exploring new areas.

    * International investors must team up with local partners that the Iranian government has pre-selected, and they can’t own hydrocarbon deposits. Iran hasn’t yet specified the stakes local companies should hold in joint-ventures that will be formed to develop fields.

    * Iran is preparing to start the bidding process for oil and gas rights by the next Iranian calendar year starting March 21. It plans to sign contracts with companies to develop fields within two years after that, said Hosseini of the Oil Contract Restructuring Committee.

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    Glencore Wades Into Libyan Oil Fight

    The battle for control of Libya’s oil production continues, and the latest wrinkle includes a deal with Swiss mining giant Glencore.

    Glencore secured a deal with Libya’s National Oil Company to buy half of the country’s oil output. Thea deal could allow Libya to find stable buyers for its crude oil, but it could also exacerbate internal conflict within Libya.

    Libya has been in tatters for several years as a civil war divides the country and leaves most governing institutions crippled. Oil production has collapsed from a Qaddafi-era total of 1.6 million barrels per day (mb/d) down to around just 400,000 barrels per day, according to the latest estimates.

    Thus, the deal between the NOC and Glencore is a potentially significant one for the Tripoli government. Glencore will take Libya’s oil and find buyers. The oil will be exported through the eastern Hariga port, which currently exports around 140,000 barrels per day.

    Predictably, the deal with Glencore has raised the ire of the eastern government, which has promised to make efforts to block any Glencore tankers from taking oil from Hariga if they move forward with the deal. The government sent a letter to the Swiss company seeking confirmation on whether or not it had reached a deal with Tripoli, according to Bloomberg.

    The ongoing conflict between the two government factions could prevent substantial increases in oil exports. Indeed, the Glencore deal threatens to escalate tensions.

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    NWE Diesel cargoes revert to discounts on weak demand, ample sopply

    Northwest European diesel is facing increased pressure from lagging demand combined with abundant resupply levels this week. The CIF NWE cargo differential to front-month ICE low sulfur gasoil futures reverted to discounted territory Tuesday, falling to minus 25 cents/mt after having traded at a premium since October 19.

    After weeks of high freight rates and constrained logistics in the barge market, diesel traders have welcomed a much-expected rise in Rhine water levels this week with the hope that improving logistics might help clear some of the overhang in the Amsterdam-Rotterdam-Antwerp hub.

    However, against all expectations, a stronger pull from inland markets has yet to be seen, market sources said.

    "There was a wide anticipation that, when the Rhine normalized, we would see a dislocation of product and 1.5 million mt should shoot up the Rhine but we've seen no reaction," one source said.

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    PetroChina in $2.4 Billion Asset Sale as Parent Target Nears

    PetroChina Co. plans to sell its stake in a pipeline company for as much as 15.5 billion yuan ($2.4 billion) as the nation’s biggest oil and gas producer seeks to meet year-end profit targets and focus on exploration amid a slump in energy prices.

    Beijing-based PetroChina’s board approved a plan to sell a 50 percent stake in Trans-Asia Gas Pipeline Co. to a unit of state-owned China Reform Holdings Corp., according to a statement to the Shanghai stock exchange on Wednesday.

    PetroChina and its parent company, China National Petroleum Corp., are seeking to complete asset sales before the end of the year to help meet government-set annual profit goals, people with knowledge of situation said earlier this week. The government is also looking to spin off oil and gas pipelines from its energy companies into independent businesses as part of a sweeping industry overhaul.

    “Raising cash from the listed company will help the state-owned company meet profit targets,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by phone. “It also allows PetroChina to raise capital to shore up its balance sheet and refocus more on its core upstream business.”

    Efforts to meet the profit goals are complicated by China’s slowest economic growth in more than two decades and a global crude glut that has nearly halved prices over the past year. Oil is poised to spend a fourth month averaging below $50 a barrel, the longest stretch since the global financial crisis.

    Income at PetroChina and its state-owned parent China National Petroleum Corp. has dropped “dramatically” this year, Wang Dongjin, a deputy general manager at CNPC and president of PetroChina, said in a statement on CNPC’s website this month.

    The company appointed Zhao Dong as chief financial officer to replace Yu Yibo, who has resigned, and transferred 3.5 billion yuan of assets to units owned by CNPC, it said in statements to the Hong Kong stock exchange on Wednesday. PetroChina’s board also approved a merger plan of subsidiaries Kunlun Energy Co. and PetroChina Kunlun Gas Co., it said in a separate release to the Shanghai stock exchange.

    Trans-Asia Gas Pipeline builds and operates pipelines that link Central Asian countries to China’s western province of Xinjiang, according to CNPC’s website.

    The pipeline sale is the first major divestment by either company since PetroChina sold a 20 billion yuan pipeline stake to institutional investors in 2013.

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    BG starts commercial ops from QCLNG Train 2

    LNG player BG Group informed that commercial operations began from the second train at its Queensland Curtis LNG plant in Australia.

    QGC, BG Group’s Australian subsidiary, has also assumed control of Train 2 from Bechtel Australia, which built the facility. BG now has full control of both LNG trains and associated facilities at QCLNG, BG said in a statement on Wednesday.

    By mid-2016 the integrated project is expected to reach plateau production, producing enough LNG to load around ten vessels per month combined which is equivalent to exporting around eight million tonnes per year.

    According to BG, since starting production in December 2014, 71 cargoes have been shipped from the liquefied natural gas project on Curtis Osland off Gladstone.

    The partners in Train 2 are BG (97.5%) and Tokyo Gas (2.5%), which is also a foundation customer.
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    Rosneft customer pre-payments ease debt burden

    Russia's biggest oil producer Rosneft revealed that it received pre-payments worth more than 1 trillion roubles ($15.3 billion) under its long-term supply contracts with customers, providing cash that has helped the heavily-indebted group to repay a substantial part of short-term debt.

    Rosneft, which accounts for 40 percent of Russian oil output, sells large volumes of oil and oil products to traders and companies, including BP which owns almost 20 percent in the company.

    Rosneft said adjusted free cash flow was at 177 billion roubles in the third quarter.

    "At this stage, sustainable cash flow generation ensures payment of dividends, decreasing financial leverage and financing the investment program."

    Many big oil companies have cut back on oil production and exploration spending because of the steep drop in oil prices, which have fallen to around $40 from a June 2014 peak of $115.

    Russian oil producers, already squeezed by low oil prices, have also had to cope with a big tax burden because the authorities decided not to cut taxes for the industry which, together with gas, generates half of state budget revenues.

    But Rosneft said in September it expected no big changes to its plans even with oil at around $40 a barrel.

    The state-controlled firm said its net income in the quarter to Sept. 30 fell to 113 billion roubles as the price for the Urals oil blend plunged 20 percent in dollar terms.

    Rosneft, one of the most indebted Russian companies, managed to cut its net debt by 40 percent in the third quarter due to the forward payments by its clients, it said.

    Net debt fell to $24.5 billion in the third quarter when the company repaid $7.9 billion worth of loans.

    It expects to repay $13.7 billion of loans in 2016 and a further $11.3 billion in 2017.

    Read more at Reuters
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    Norway's World Wide Supply says unable to make debt interest payment

    Norwegian offshore supply vessel owner World Wide Supply will not be able to make a scheduled interest payment on its debt on Nov. 27, the shipping firm said on Thursday.

    Companies serving the oil industry are suffering from weak demand as oil companies cut back on investments and exploration to preserve cash following the fall in oil prices.

    World Wide Supply said in its third-quarter report that it had bond debts of $146.7 million at the end of that quarter and has previously said it was in talks with its lenders regarding possible actions.

    The firm, which does not have listed shares, did not specify the size of the missed interest payment.

    Four of the company's six vessels are currently out of work, giving it an average fleet utilisation of just 32.3 percent in October, it said earlier this month.

    Two of its vessels have been laid up in Norway since early September, while two have been out of work since Brazilian oil firm Petrobras terminated contracts around the same time.

    The two remaining vessels are still on contract with Petrobras.

    Read more at Reuters

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    Ophir Energy receives informal takeover interest - Bloomberg

    Oil and gas explorer Ophir Energy Plc has received "informal takeover and merger interest" from companies and investors, Bloomberg reported, citing sources.

    The company is evaluating the proposals but may decide against a deal, Bloomberg reported. 
    Ophir declined to comment.

    Read more at Reuters
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    Developers of Israel's Leviathan field sign preliminary Egypt gas deal

    Natural gas from Israel's vast Leviathan offshore gas field will be pumped to Egypt via an existing subsea pipeline for up to 15 years under a preliminary deal announced by the field's developers on Wednesday.

    Leviathan, which is expected to begin production in 2019 or 2020, will supply Egypt's Dolphinus Holdings with up to 4 billion cubic metres (bcm) of gas a year for 10 to 15 years, the companies said in a statement to the Tel Aviv Stock Exchange.

    Signing a letter of intent, the two sides agreed to negotiate terms for a final deal.

    The price of gas is similar to other contracts and is linked to the cost of Brent oil and includes a floor price, they said.

    "We've worked with Dolphinus before and we expect to reach a final agreement quickly," Yossi Abu, chief executive of Israel's Delek Drilling, told Reuters.

    Development of Leviathan, which holds an estimated 622 bcm of gas, is being led by Texas-based Noble Energy and Delek Group through its units Delek Drilling and Avner Oil and Gas.

    Shares in the Delek companies were up by 1-3 percent in afternoon trade on Wednesday.

    Dolphinus is a company that represents non-governmental, industrial and commercial consumers in Egypt.

    "The Egyptian market is thirsty for gas, both for domestic use and for their export facilities. There is a lot of room for cooperation there," Abu said.

    The gas would pass through an underwater pipeline built nearly a decade ago by East Mediterranean Gas (EMG).

    EMG oversaw an Egypt gas deal that collapsed in 2012 after months of attacks on the pipeline by militants in the country's remote Sinai Peninsula.

    The companies said the new deal, which is still subject to numerous approvals, would not affect negotiations between Leviathan's partners and Britain's BG Group on a potential supply deal to BG's liquefied natural gas plant in Iduku, Egypt.

    The two sides last year signed a preliminary supply deal for 7 bcm a year for 15 years.

    Egypt has said it still wants to import Israeli gas despite Italy's ENI discovering the large Zohr gas field off Egypt's coast in August.

    Earlier this year, Dolphinus agreed a seven-year deal to buy at least $1.2 billion of gas from Israel's Tamar field, near Leviathan.

    "Egypt is becoming a regional hub through cooperation with the Leviathan and Tamar partners, and together with Israel and Cyprus," Abu said.

    A source in Egypt's Petroleum Ministry said that companies wishing to import foreign gas must obtain state approval. It "must achieve a national interest for Egypt and must have added value for the economy", the source said.

    The state, the source added, does not mind allowing private sector companies that wish to import gas for their own use or for a range of industries to use the infrastructure and facilities owned by the state in exchange for a tariff to be agreed.

    Leviathan's $6 billion development was halted when Israel's antitrust regulator ruled that Noble and Delek's control of Israel's gas reserves constituted a monopoly, leading to a dispute with Prime Minister Benjamin Netanyahu.

    The regulator resigned and Economy Minister Aryeh Deri stepped down last month, giving Netanyahu control of the ministry. He is expected to give rapid approval to the deal to develop Leviathan.

    Energy Minister Yuval Steinitz expects Netanyahu to sign a waiver by the end of the year to bypass antitrust concerns.

    Jordan has also agreed to buy gas from Leviathan for 15 years, worth up to $15 billion, though the deal has yet to be finalised.

    Read more at Reuters
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    US oil production shows small weekly decline

                                          Last Week      Week Before  Last Year

    Domestic Production......... 9,165             9,182             9,077
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    Summary of Weekly Petroleum Data for the Week Ending November 20, 2015

     U.S. crude oil refinery inputs averaged 16.4 million barrels per day during the week ending November 20, 2015, 304,000 barrels per day more than the previous week’s average. Refineries operated at 92.0% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.5 million barrels per day.

    Distillate fuel production decreased slightly last week, averaging over 5.0 million barrels per day. U.S. crude oil imports averaged over 7.3 million barrels per day last week, up by 365,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.2 million barrels per day, 0.1% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 459,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 488.2 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 2.5 million barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 1.0 million barrels last week and are in the upper half of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.1 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.5 million barrels per day, down by 1.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.1 million barrels per day, down by 0.2% from the same period last year. Distillate fuel product supplied averaged over 3.9 million barrels per day over the last four weeks, up by 2.1% from the same period last year. Jet fuel product supplied is up 4.1% compared to the same four-week period last year.


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    Canadian Oil Sands in early-stage talks with potential bidders

    Canadian Oil Sands in early-stage talks with potential bidders

    Canadian Oil Sands, which is trying to attract a white knight after a hostile bid from Suncor Energy, needs more time to review its options as more than two dozen parties have expressed an interest in the company, according to a regulatory filing.

    An affidavit submitted to the Alberta Securities Commission by the Royal Bank of Canada, which has been retained by Canadian Oil Sands to lead a review of the company's options, said "four highly credible parties" have already signed confidentiality agreements.

    Following Suncor's hostile C$4.3 billion ($3.23 billion) offer last month, Canadian Oil Sands adopted an extended poison pill to thwart the bid. Suncor is attempting to get the pill quashed and a hearing on the matter is due to take place before the provincial securities regulator on Thursday.

    A source familiar with the matter, who spoke off the record without authorization to discuss the matter publicly, told Reuters that scores of shareholders in Canadian Oil Sands, who together own a sizable stake, have submitted letters to the Alberta Securities Commission supporting the company's request to extend the pill deadline.

    Read more at Reuters

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    EXCO Resources to cut capex 59 percent next year

    Dallas oil producer EXCO Resources on Wednesday provided a small glimpse into what cash-strapped U.S. drillers might spend on oil exploration next year, announcing plans to cut its investment budget 59 percent in the first half of 2016.

    EXCO said plans to develop its oil assets “selectively” next year as it uses a more disciplined approach to allocating funds in the oil patch, focusing its efforts in the Haynesville Shale in northern Louisiana and in East Texas. It expects to spend $70 million to drill 18 wells through August, down from its $171 million budget in the same period this year.

    The company said it won’t spend any of its capital on its assets in South Texas or in the Appalachia region, but said it is aiming to get 20 to 35 percent rates of returns from North Louisiana and East Texas.

    Barclays expects North American oil and gas exploration and production spending to come down by $18.9 billion next year, following up on $68.2 billion in capital budget cuts this year.

    EXCO lost $354.5 million in the third quarter largely because it wrote down the value of its oil and gas properties, and its revenues were nearly split in half to $83.5 million from the same time last year. The company’s shares dropped nearly 10 percent, or 13 cents, to $1.21 a share on the New York Stock Exchange.

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    Prominent Energy Law Firm Closing Down – Lack of Business

    It’s always fun to bust on lawyers–everyone’s favorite pass time, right? “How many lawyers does it take to screw in a light bulb?….” All joking aside, we love lawyers here at MDN. Well, most of them, anyway. Some of our best customers (and biggest supporters) are lawyers.

    And we love them right back–because you’re nuts if you sign ANYTHING to do with oil and gas without first running it by a qualified attorney. We’ve always said it, and we always will. You need a good lawyer.

    So it pains us to report that a prominent energy law firm is closing up shop. Burleson LLP, headquartered in Houston, opened an office in Pittsburgh six years ago. Burleson founder and managing partner, Rick Burleson, announced to the firm on Monday that not only is he shutting down the Pittsburgh office, but ALL of the firm’s offices, including HQ in Houston. Why? The slowdown in the oil and gas sector.

    You don’t lose 233,000 jobs over the course of a year in a single industry without major ramifications for other businesses involved in that industry…
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    Alternative Energy

    Yingli Green Energy Announces Preliminary Financial Results for Third Quarter 2015

    Yingli Green Energy Holding Company Limited, one of the world's leading solar panel manufacturers, today announced that it plans to release its unaudited financial results for the quarter ended September 30, 2015, before the U.S. market opens on December 2, 2015.

    Based upon preliminary data, the Company expects that its total net revenues in the third quarter of 2015 were in the range of US$340 million to US$350 million, in line with the management's previous estimation. In addition, the Company estimates that its overall gross margin in the third quarter of 2015 was in the range of 8% to 9%, increased from 6.3% in the second quarter, as a result of increase in average selling price and decrease in unit cost of PV modules. Meanwhile, the Company estimates that its PV module shipments (excluding OEM production for third parties) in the third quarter of 2015 were in the range of 450MW to 460 MW, compared to its previous guidance of 550MW to 580MW. The lower-than-expected shipments were due to a lower-than-expected utilization of production facilities for in-house PV module.

    Further to the Company's announcement on September 8, 2015, the Company expects to recognize a non-cash impairment charge on long lived assets totaling RMB3,694.2 million (US$581.3 million) in the third quarter of 2015, which was mainly due to the lower-than-expected utilization of certain production facilities of the Company in 2015.

    These preliminary, unaudited third quarter results are based on management's preliminary review of operations for the third quarter of 2015 and remain subject to change based on management's ongoing review of the third quarter results.

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    Las Vegas Going Green in Deal to Run City With Only Clean Power

    Las Vegas is going green. The city is planning to run municipal buildings, fire stations, parks, streetlights and other facilities exclusively with clean power, under a deal announced Tuesday with the Berkshire Hathaway Inc.-owned utility NV Energy Inc. The agreement doesn’t cover the famously bright casinos on the Las Vegas Strip.

    The city’s shift is a sign that renewable energy is becoming competitive with electricity generated from fossil fuels. It comes less than a week before an international conference aimed at completing a global pact on reducing greenhouse-gas productions begins in Paris.

    “We will become the first city of our size in the nation to achieve 100 percent renewable energy for city operations,” Las Vegas Mayor Carolyn Goodman said in a statement.

    NV Energy already provides some clean power to Las Vegas, and that will be boosted with energy from a 100 MW solar farm under development in nearby Boulder City. The proposal requires the approval of the Public Utilities Commission of Nevada and the Las Vegas City Council.

    The city of Las Vegas had a population of almost 614,000, according to a 2014 estimate from the U.S. Census. That’s considerably more than the 50,000 residents who live in Georgetown, Texas, which in March said it would power itself entirely with renewable energy.
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    German battery maker launches scheme to share solar power

    German battery maker Sonnenbatterie has launched a scheme to connect households with solar panels and other consumers, aiming to better distribute surpluses of the renewable energy and help members to become more independent of conventional suppliers.

    The start-up company hopes the scheme, called "sonnenCommunity", will boost demand for its batteries which store solar power, allowing owners to use the clean energy even when weather conditions are not favourable.

    "SonnenCommunity allows all households that want to determine their energy futures themselves the access to affordable and clean electricity," said chief executive Christoph Ostermann at the project's launch on Wednesday.

    The initiative comes at a time when battery technology, long seen as expensive, is approaching a point where ordinary householders can afford it.

    By storing solar power and releasing it on demand, households can avoid having to buy more expensive power off the grid to supplement their production. The batteries could also help solar power households cope with a phasing out of subsidies currently paid when surplus power is sold to public grids.

    Sonnenbatterie has sold 8,500 lithium battery units, saying this makes it the European market leader.

    Germany has around 25,000 batteries in operation that can store solar power - still a small number given there are around 1.5 million solar production units, mostly located on roofs of family homes - but year-on-year sales are growing rapidly.

    U.S. electric vehicle maker Tesla is also looking to enter the market. It plans to start delivering wall-mounted batteries that can store solar power to Germany in early 2016.

    SonnenCommunity takes the storage idea a step further, allowing solar power to be shared among its members.

    Sonnenbatterie said the scheme would initially target the 1.5 million solar power producers who, if they sign up to the community, will receive a battery storage system with a starting price of 3,599 euros ($3,812). But eventually, the offer will also be open to non-producers, it added.

    Read more at Reuters
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    UK scraps 1 bln stg carbon capture technology scheme - govt

    Britain has scrapped plans to spend up to 1 billion pounds to help support projects that capture carbon dioxide emissions and store them underground, the government said on Wednesday.

    "Following the Chancellor's Autumn Statement, HM Government confirms that the 1 billion pound ring-fenced capital budget for the Carbon Capture and Storage (CCS) Competition is no longer available," the government said in a statement to the stock exchange.

    Read more at Reuters
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    Syngenta looking at takeovers, JVs, asset sales

    Syngenta, which fended off a $47 billion takeover approach from Monsanto three months ago, is itself looking at takeovers, joint ventures or asset sales, the Swiss company's chairman told a newspaper on Wednesday.

    "The role that we want is an active one and that is reflected in how we negotiate. Takeovers, joint ventures or partial sales are under consideration," Swiss newspaper Tages-Anzeiger quoted Michel Demare as saying in a joint interview with interim CEO John Ramsay published on Wednesday.

    "I would be surprised if no transaction materialises in the next half year," Demare added.

    There has been a chorus of voices in the industry predicting a sector shake-up since Monsanto walked away from its takeover proposal and Demare has previously said that tie-ups were being discussed intensively.

    Demare has said that the successful company in the future will be one that can combine seeds and crop chemicals as part of an integrated offer.

    Asked about a possible combination with Dupont, interim CEO Ramsay said the products of both groups were very complementary and noted that no company had signed more collaboration agreements with Syngenta over the past few years than DuPont.

    Chairman Demare added that Syngenta was speaking to all players in the industry.

    "We leave no stone unturned."

    He said that any takeover of Syngenta by a rival would depend on Syngenta shareholders getting a fair share of the synergies and an appropriate compensation payment in case the transaction got blocked by regulators was also a must.

    "That wasn't the case with Monsanto."

    Syngenta is the leader in crop chemicals with a 19 percent market share last year, just ahead of German company Bayer's CropScience division with 18 percent.

    Monsanto is the leader in seeds with a 26 percent market share, followed by Dupont Pioneer's 21 percent.

    Read more at Reuters
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    Dow predicts EPA review of herbicide safety resolved soon

    Dow Chemical Co expects environmental safety concerns about its new herbicide Enlist Duo to be resolved, the company said Wednesday, after the government asked a federal appellate court to pull regulatory approvals while the chemical's safety is re-examined.

    The U.S. Environmental Protection Agency (EPA) approved Enlist Duo for sale and use in several U.S. states over a year ago. But the agency has since found its assessment of the product's two active ingredients was incomplete, according to EPA's court documents, filed late Tuesday with the U.S. Court of Appeals for the Ninth Circuit in California.

    Enlist Duo is a new combination herbicide aimed at combating weeds that have become resistant to glyphosate -- a widely-used herbicide in the United States and the active ingredient of Monsanto Co's Roundup product.

    Enlist Duo combines glyphosate with another herbicide, 2,4-D, and is meant for use on corn and soybeans that have been genetically altered to tolerate it.

    The EPA wants to study the product further after it found that the company's Dow AgroSciences unit claimed the two active ingredients work better together, according to court documents. EPA said its study assumed the components did not have such "synergistic effects."

    "The information suggests that EPA's analysis may have understated the phytotoxicity of the product," the EPA said in the court filing.

    Dow Chemical said it has sent the EPA all of its data to provide further assurances for Enlist Duo. The company did not rule out changes to instructions for use on the existing product label.

    Dow told Reuters on Wednesday it will respond to the EPA's petition by the court's Dec. 7 deadline and expects any questions to be resolved in time for U.S. farmers to use it next season.

    The move by the EPA is tied to a lawsuit filed by U.S. farmer and environmental groups, who are trying to get the regulatory approval of Enlist Duo permanently overturned. The critics claim the EPA had not adequately analyzed the impact of 2,4-D before granting approval.

    This current regulatory issue could create a problem for Dow and its plans to sell off its agribusiness division, at a time when mergers and acquisitions talk is roiling.

    Dow said last month it would "review all options" for its farm chemicals and seeds unit, which has reported falling sales for nearly a year.

    If new federal regulatory approvals for Dow's Enlist Duo are not eventually granted by the EPA, it could negatively impact Dow's EBITDA in 2020, Bernstein analyst Jonas Oxgaard wrote Wednesday, and reduce "the sales price of Dow ag by $2-$3 billion."

    Read more at Reuters

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    Base Metals

    Goldcorp, Teck finish projects blend, create new $3.5 billion mine in Chile

    Canadian mining giants Goldcorp  and Teck Resources  have finished combining their respective El Morro and Relincho projects in Chile.

    The projects, located approximately 40 kilometres apart in Chile’s copper-rich Atacama region, are now part of a 50/50 joint venture momentarily named “Project Corridor,” the Vancouver-based miners said in a joint statement.

    The new copper-gold project, expected to help slash development costs as metal prices have dropped to multiyear lows, will require an initial investment of US$3.5 billion

    The new copper-gold project, expected to help slash development costs as metal prices have dropped to multiyear lows, will require an initial investment of US$3.5 billion, the companiessaid in August. The miners said the combined operation would provide much of the additional funding needed to construct future phases.

    Before joining El Morro and Relincho projects, their estimated costs were $3.9 billion and $4.5 billion respectively.

    On Tuesday, Goldcorp also announced that it had completed the transaction to acquire New Gold's 30% interest in the El Morro for $90 million in cash, along with a 4% gold stream payable on future gold production from the property.

    The two companies estimate that Corridor will have a 32-year lifespan and produce an average of 190,000 tonnes of copper and 315,000 ounces of gold a year, over the first decade.

    Both miners will work on a pre-feasibility study beginning in late 2016, which is expected to be completed by the end of 2017.
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    Newmont says firms eyeing Indonesian assets yet to meet 'sales criteria'

    Newmont Mining Corp said discussions with firms potentially interested in acquiring the US company's Indonesian assets have not met its "sales criteria". 

    The owner of Indonesia's largest listed oil and gas company, Medco Energi Internasional, Arifin Panigoro, was seeking government approval to acquire a 76% stake in Newmont's Indonesian unit, resources minister Rizal Ramli said on Wednesday. Panigoro, who was looking to diversify his investments amid declining oil prices, valued the stake at $2.2-billion, Ramli said. 

    A statement from Ramli's office said Panigoro also planned to develop a 500 000 tonne smelter as part of the plan. "Newmont receives expressions of interest in our assets from time to time, and consistent with our goal to improve our portfolio and balance sheet, we may consider proposals to acquire our assets," said Omar Jabara, the company's spokesman. "To date, no discussions related to our assets in Indonesia have met all of our sales criteria, which include fully committed funding representing fair value," he said, without naming any companies. 

    Newmont, Indonesia's largest copper miner after Freeport-McMoRan's local unit, is forecast by the Indonesian government to produce 500,000 tonnes of copper and gold concentrate this year from its Batu Hijau mine. 

    Medco Energi corporate secretary Imron Gazali said the company had just appointed a new board of directors and was unable to provide a comment on the matter. "The budget and work program for next year is still being discussed by the new board," Gazali said.
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    Steel, Iron Ore and Coal

    Mud from Brazil dam disaster is toxic, UN says, despite mine operator denials

    Mud from a dam that burst at an iron ore mine in Brazil earlier this month, killing 12 people and polluting an important river, is toxic, the United Nations’ human rights agency has said.

    The statement contradicts claims by Samarco, the mine operator at the site of the rupture, that the water and mineral waste contained by the dam are not toxic.

    Citing “new evidence”, the UN’s office of the high commissioner for human rights said in a statement the residue “contained high levels of toxic heavy metals and other toxic chemicals”.

    The agency did not identify the studies that were the basis for the evidence or say who conducted them.

    Samarco, which is jointly owned by the Anglo-Australian companyBHP Billiton and Brazil’s Vale, said it was taking every measure possible to provide emergency assistance to those affected by the dam break and to reduce the social and economic impacts of the disaster.

    Samarco said in a statement that both pre- and post-disaster tests show the mud released in the dam burst, a mixture of water, iron oxides and silica or quartz known as tailings, presented no danger to human health and did not contain water contaminants.

    While iron and manganese levels in the mud are above normal, Samarco said, they were below dangerous levels.

    BHP Billiton said on Thursday that the waste was chemically stable and would not change its composition in water.

    Biologists have been shocked by the impact of the burst dam, which Brazil’s government has called the country’s worst-ever environmental disaster.

    The mud has killed thousands of fish as it flows through the Rio Doce, the river which connects the mineral-rich state of Minas Gerais with Espirito Santo on the Atlantic coast.

    The 60 million cubic meters of mine waste, equivalent to 25,000 Olympic swimming pools, cut off drinking water for a quarter of a million people. The dense orange sediment has now reached the ocean.

    The UN statement criticized the response of the companies and the Brazilian government as “insufficient,” saying: “The government and companies should be doing everything within their power to prevent further harm.”

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    Vale to slash iron ore output target, but opening world’s largest mine in 2016

    S11D, also known as Serra Sul, will expansion Vale’s mining activity in the Carajás Mountains of Northern Brazil, adding 90 million tonnes to the miner's annual capacity. (Image courtesy of Vale SA)

    Brazil’s Vale (NYSE:VALE), the world's biggest iron ore producer, is likely to slash its iron ore output target for the year even further than what it has already hinted following the Samarco disaster, according to BTG Pactual, the largest independent investment bank in Latin America.

    In a note to investor Wednesday, the bank said the miner would target a 355 million tonnes output for 2015, significantly less than the 376 million tonnes the company had previously forecast, Noticias de Mineracao reports (in Portuguese).

    Earlier this month the miner had warned that the deadly collapse of a tailings dam at Samarco, the iron ore company it owns 50-50 with BHP Billiton, would impact production at two nearby mines. Vale's Fabrica Nova and Timbopeba mines output, said the company in a statement, would be reduced by 3 million tonnes in 2015 and by 9 million tonnes in 2016.

    The Rio de Janeiro-based company has announced that S11D, the world’s largest iron ore project, is 60% completed

    The miner, battling to increase margins, will soon have a new major source of iron ore output as the Rio de Janeiro-based company has announced that S11D, the world’s largest iron ore project, is 60% completed, SteelOrbisreports.

    The company expects the venture, which includes a mine, plant, and railway and port logistics, to start production in the second half of 2016.

    S11D, also known as Serra Sul, is part of Vale's massive Carajás complex and will add another 90 million tonnes to the miner's capacity, pushing it over 400 million tonnes per year. Last month the company announced record third quarter shipments of 88 million tonnes despite idling 13 million tonnes worth of high cost operations.

    The miner has been able to reduce cash costs to just $12.70 per tonne (it's in the high teens at Rio Tinto and BHP) and that S11D could push costs below $10 a tonne, thanks largely to the weak real which is down more than a third in value against the US currency over the past year.

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    China key steel mills daily output up 2.8pct in early-Nov

    China's key steel mills saw their average daily crude steel output post a 2.84% ten-day rise to 1.69 million tonnes in early November, according to the latest data from the China Iron and Steel Association (CISA).

    The increase was mainly due to the slightly improved profitability of steel mills amid falling iron ore and billet prices as well as the production resumption after the steel mills’ routine maintenance.

    Stocks in key steel mills stood at 15.03 million tonnes by November 10, up 1.51% from October 31 and up 1 % from the month before.

    As of November 13, social stocks of steel products across the country fell 3.49% from end-October to 9.3 million tonnes, a drop of 38.9% from the peak this year, signaling a continuous low expectation in steel market.

    In addition, key steel mills’ daily output of pig iron reached 1.66 million tonnes during the same period, up 2.47% from the past ten days.

    Domestic prices of six major steel products all witnessed ten-day declines in mid-November, with rebar price averaging 1,976.4 yuan/t, down 2.1% from ten days ago, showed data from the National Bureau of Statistics (NBS).

    That compared with a slight rebound of 0.1% in early-November.

    It was mainly impacted by further shrinking demand amid persisting sleety and foggy weather in northern China, which drove more steel mills with outdated capacity to withdraw from the market.

    In mid-November, Tangshan Songting Iron & Steel Co., Ltd. declared to stop production, involving annual capacity of 5 million tonnes. So far, Tangshan has seen as much as 14.97 million tonnes capacity withdrew from the market.

    Crude steel output may still maintain the decline trend in late November, given the slack demand and unfavorable weather, analysts said.

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