Mark Latham Commodity Equity Intelligence Service

Wednesday 21st June 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Saudi Arabia's Mohammed bin Salman elevated to Crown Prince: SPA


    Saudi Arabia's Deputy Crown Prince Mohammed bin Salman was promoted to crown prince on Wednesday, replacing his cousin in a sudden announcement that confirms King Salman's 31-year-old son as next ruler of the kingdom.

    Saudi Crown Prince Mohammed bin Nayef has been relieved of his post and replaced by Mohammed bin Salman who becomes deputy prime minister and retains his defense and other portfolios, a royal decree issued by the Saudi state agency said SPA.

    Although Mohammed bin Salman's promotion was expected among close circles it came as a surprise at a time the kingdom is facing escalating tensions with Qatar and Iran and is locked in an air war in Yemen.

    Prince Mohammed bin Nayef, for years the kingdom's counter-terrorism chief who put down an al Qaeda campaign of bombings in 2003-06, is relieved of all positions, the decree said.

    Even as deputy crown prince, Mohammed bin Salman has been responsible for running Saudi Arabia's war in Yemen, dictating an energy policy with global implications and spearheading plans for the kingdom to build an economic future after oil.

    Al Arabiya television reported that the promotion of the prince was approved by the kingdom's Allegiance Council, and that the king had called for a public pledging of loyalty to Mohammed bin Salman on Wednesday evening in Mecca.

    That the royal succession in the world's top oil exporter is closely scrutinized only makes the rapidity of Mohammed bin Salman's rise to power, and the speed with which his better known cousins were brushed aside, more astonishing.

    The surprise announcement follows 2-1/2 years of already major changes in Saudi Arabia, which stunned allies in 2015 by launching an air war in Yemen, cutting back on lavish subsidies and proposing in 2016 the partial privatization of state oil company Aramco.

    Last year Mohammed bin Salman, or "MBS" as he is widely known, announced sweeping changes aimed, as he put it, at ending the kingdom's "addiction" to oil, part of his campaign to tackle systemic challenges that the kingdom has previously failed to address.

    Until his father Salman bin Abdulaziz Al Saud became Saudi Arabia's seventh king in January 2015, few people outside the kingdom had ever heard of Prince Mohammed, seen more than two years on as the power behind its throne.

    Regarded warily by some Saudis and by many foreigners as an unknown quantity in the Middle East's traditional status quo power, Prince Mohammed has over the past year set about building his profile with interviews in some Western media.

    For many Saudis those changes have become inextricable from the person of Prince Mohammed, whose photographs adorns walls, car windows and advertising hoardings across the country and who has assumed a startling array of powers.

    He is Defence Minister, a role that in Saudi Arabia gives its incumbent command of one of the world's biggest arms budgets and makes him ultimately responsible for Saudi Arabia's unprecedented military adventure in Yemen.

    He also heads the Council for Economic and Development Affairs (CEDA), a group of cabinet ministers who meet weekly and which oversees all elements of policy that touch on the economy or social issues like education, health and housing.

    Prince Mohammed chairs the supreme board of Aramco, making him the first member of the ruling family to directly oversee the state oil company, long regarded as the preserve of commoner technocrats.

    But perhaps most importantly, he also holds the critical position of gatekeeper to his father, King Salman, who in Saudi Arabia's absolute monarchy retains the final say in any major decision of state.

    Outside Saudi Arabia, that rapid advance and the sudden changes to longstanding policies on regional affairs, energy and its economy have prompted unease, adding an unpredictable edge to a kingdom that allies long regarded as a known quantity.

    Inside, they have prompted admiration among many younger Saudis who regard his ascent as evidence that their generation is taking a central place in running a country whose patriarchal traditions have for decades made power the province of the old.

    http://www.reuters.com/article/us-saudi-succession-son-idUSKBN19C0AN

    Hearing all Saudi officials traveling have been called back to kingdom immediately to swear allegiance to new Crown Prince MbS.

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    Saudi Arabia extends Islamic Eid al-Fitr holiday by a week - SPA



    Saudi Arabia has extended this year's Islamic Eid al-Fitr holiday by one week, state news agency SPA announced on Wednesday.

    The announcement came as part of royal decrees which replaced Crown Prince Mohammed bin Nayef with Mohammed bin Salman, previously deputy crown prince.

    Government employees are usually given a ten-day break during Eid. The holiday season is expected to start on Sunday.

    http://www.reuters.com/article/saudi-succession-eid-idUSL8N1JI0IS
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    European Energy Trading Firms to Test Blockchain Technology



    A trial of blockchain-based peer-to-peer trading will be undertaken this year in the European wholesale energy market.

    Swedish power company Vattenfall on June 7 said that its Business Area Markets unit has joined 22 other European energy trading firms to conduct the trial.

    “Blockchain is widely seen as one of the most interesting and disruptive technologies for the coming years, with Bitcoin as the best-known example of a cryptocurrency based on this technology,” Christian Tobias, solution architect at BA Markets, said in a statement. “With blockchain, one party can tradepass a good such as money, securely to another party without a third-party intermediary involved, such as a bank.”

    Vattenfall said that participants of the trial intend to attempt live trading later in the year using the blockchain-based system — a first in the world for wholesale energy products.

    “On average, we enter into 1,400 deals per day across all energy commodities and markets,” Kilian Leykam, Manager Business Development Trading, Vattenfall, said. “Each deal causes transaction costs and has to be processed in our trading, reporting and controlling systems. Once we are able to apply blockchain technology in energy markets, we will be able to operate more efficiently and at lower transaction costs.”

    Vattenfall said that, by lowering transaction costs, blockchain technology will also enable the trading of small-scale decentralized production and consumption — for example private homes with solar panels.

    http://www.renewableenergyworld.com/articles/2017/06/european-energy-trading-firms-to-test-blockchain-technology.html?utm_content=buffer2deb1&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    U.S. Gulf Coast braces for Tropical Storm Cindy



    Communities and oil refining and production facilities from Texas to Florida braced on Tuesday for potential disruptions as Tropical Storm Cindy strengthened over the U.S. Gulf of Mexico, threatening to bring flash floods across parts of the northern Gulf Coast.

    Cindy was located about 230 miles (365 km) south of Morgan City, Louisiana late Tuesday with maximum sustained winds of 60 miles (95 km) per hour, the National Hurricane Center said.

    The storm was moving toward the northwest near seven miles (11 km) per hour, and this motion was expected to continue through Wednesday.

    On the forecast track, the center of Cindy will approach the coast of southwest Louisiana and southeast Texas late Wednesday, and move inland over southeastern Texas on Thursday, the Miami-based weather forecaster said.

    A Tropical Storm Warning is in effect for San Luis Pass, Texas to the Alabama-Florida border, Metropolitan New Orleans and Lake Pontchartrain.

    "The winds aren't looking to get much stronger than they are now," but some areas east of Houston and toward Florida could see as much as 12 inches of rain, said Stephen Strum, vice president of extended forecast services at Weather Decision Technologies in Tulsa, Oklahoma.

    "It's moving fairly slow, so it's going to produce rain for a long time," he added.

    Heavy rains and wind could disrupt oil supplies at the massive refining and production centers along the U.S. Gulf Coast, which could drive up prices for consumers. The Louisiana Offshore Oil Port (LOOP), the largest privately owned crude storage terminal in the United States, suspended vessel offloading operations ahead of the storm, but said it expected no interruptions to deliveries from its hub in Clovelly, Louisiana.

    Royal Dutch Shell said it suspended some offshore well operations but production was so far unaffected. Anadarko Petroleum said it had evacuated non-essential staff from its Gulf of Mexico facilities.

    Exxon Mobil Corp, Phillips 66, and Motiva Enterprises said the storm had not affected their refining operations.

    Cindy was expected to produce six to nine inches (15-23 cm) of rain with isolated maximum amounts of 12 inches over southeastern Louisiana, southern Mississippi, southern Alabama, and the Florida Panhandle through Thursday, the NHC said.

    Alabama Governor Kay Ivey declared a state of emergency. Officials in Houston, New Orleans and other cities along the Gulf Coast said they were monitoring developments. Florida Governor Rick Scott warned residents in the northwest part of his state to stay alert for flooding and heavy rain.

    The storm could cause a surge of one to three feet along the coast and possibly spawn tornados from southern Louisiana to the Florida Panhandle, the NHC said.

    The Gulf of Mexico is home to about 17 percent of U.S. crude output and 5 percent of dry natural gas output, according to the U.S. Energy Information Administration. More than 45 percent of the nation's refining capacity is along the U.S. Gulf Coast, also home to 51 percent of total U.S. natural gas processing capability.

    Crude oil prices for physical delivery along the U.S. Gulf Coast were relatively stable, but cash gasoline prices rose as traders expected heavy rains and possible flooding to hit refineries in the region.

    Prompt U.S. Gulf Coast conventional gasoline firmed to trade as little as 2 cents per gallon under the RBOB futures contract, its strongest in four months.

    WeatherBell Analytics LLC forecast 11 to 13 named tropical storms in the 2017 Atlantic Hurricane Season, according to a May outlook.

    The Atlantic hurricane season runs from June 1 through Nov. 30, and has an annual average of 9.6 named storms, 5.9 hurricanes and 2.3 intense hurricanes.

    Southeast of the Gulf of Mexico, a second tropical storm, Bret has been downgraded into a tropical wave.

    http://www.reuters.com/article/us-storm-cindy-nhc-idUSKBN19B2OB
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    Shenhua, Guodian close to announce merger plan



    China's largest coal producer and the country's leading power generator are close to unveiling a merger plan, as listed units of the two announced suspension of trading for "unprecedented" asset transactions, China Daily reported on June 20.

    The merger between Shenhua Group and China Guodian Corporation is expected to create a mega-sized energy giant, with a combined asset of 1.73 trillion yuan ($254 billion).

    Shares will remain suspended for trading until July 4, the coal producer's listed unit China Shenhua Energy Co., Ltd and the power generator's GD Power Development Co., Ltd said in a filing to Shanghai Stock Exchange on June 19.

    The two energy giants have been reported to be in merger talk since earlier this month. Shares jumped on the news on June 5, before the both halted trading.

    The deal is still under planning process, pending regulatory approval and such "significant matter without precedent" contains uncertainty, the filing noted.

    The merger plan comes as China is looking to reform its state-owned enterprises (SOEs), among which energy sector is at center to steer away from the old growth model.

    A merger of the energy giants would see the creation of a bigger and more competitive SOE in the global market, said Zhou Dadi, a senior researcher at the China Energy Research Society.

    The move also comes as the country has vowed to further slash overcapacity and improve efficiencies among industrial giants.

    The past three years have seen a string of SOE consolidations, including a merger of the country's two largest train makers, one between both Fortune 500 companies China Metallurgical Group and China Minmetals Corporation, between China Ocean Shipping Group and China Shipping  Company, and between Wuhan Iron and Steel and Shanghai-based Baosteel.

    http://www.sxcoal.com/news/4557592/info/en
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    Cal-ISO issues statewide conservation alert on heat wave



    The California Independent System Operator issued a statewide flex alert Tuesday calling for voluntary electricity conservation with above-normal temperatures expected to push demand to the highest level in years.

    The alert asks consumers to conserve electricity from 2-9 pm Tuesday and Wednesday, when cooling demand is at peak use.

    "During times of high temperatures, demand on the power grid can be strained, as air conditioner use increases," according to the Cal-ISO alert.

    Peakload in the ISO is forecast to reach 47,850 MW Tuesday, up more than 16% day on day. If reached, that would be the highest level since at least 2010, according to recorded data. Cal-ISO's all-time peak is 50.3 GW reached July 24, 2006.

    The SP15 on-peak 15-minute market for Tuesday delivery was trading between $150/MWh and $220/MWh on ICE Tuesday morning, up from $60/MWh on Monday.

    Cal-ISO peakload was expected to ease to 45,325 MW Wednesday, 43,750 MW Thursday and 40,150 MW Friday.

    SP15 on-peak day-ahead climbed $21.50 to the upper $70s/MWh on ICE for Wednesday delivery as Palo Verde on-peak day-ahead shot up $65.50 to the low $120s/MWh; both are at their highest level since February 2014.

    Power prices are following higher spot gas. SoCal city-gates jumped 34.9 cents to around $4.149/MMBtu for Wednesday delivery, the highest since December 2014.

    High temperatures in Phoenix were forecast to reach 119 Tuesday and 118 Wednesday, while high temperatures in Sacramento were expected at 104 Tuesday, 106 Wednesday and 108 Thursday, according to CustomWeather.

    An excessive heat warning is in effect for much of the Southwest and California through Friday with temperatures expected as high as 127 for Death Valley, California, according to the National Weather Service.

    On Sunday, the ISO also issued a restricted maintenance operations notice for Monday through Thursday in anticipation of high loads and temperatures across the entire Cal-ISO grid. Market participants are urged to delay any unnecessary maintenance that could harm operations of the electricity grid.

    https://www.platts.com/latest-news/electric-power/houston/cal-iso-issues-statewide-conservation-alert-on-21096582
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    The Russians Do It Again: Democrats Get Crushed In Georgia Election Despite 7x Spending Advantage



    After months of Democrats boasting that Georgia's special election in the 6th district would be a startling referendum on Trump's agenda, they just got served up another stunning defeat, as most networks have now called the race for Republican Karen Handel.  In fact, rather than losing ground since Trump moved into the White House, Republicans actually performed better.

    Republicans did BETTER in June of 2017 than in November

    Democrats lost traction, not gained!

    Of course, making Handel's win even sweeter for Republicans is the fact that Democrats outspent them by a margin of 7-to-1, with Ossoff dropping a staggering ~$22 million versus only $3 million for Handel....which is kind of reminiscent of how things played our for Hillary...oops.

    Meanwhile, as The Mercury News pointed out earlier this morning, this race has been by far the costliest in the history of Congressional races with Ossoff raising over $23 million.  Ironically, he received nearly 9x more donations from California than from Georgia, a testament to how this special election has morphed into a national contest for Democrats.

    http://www.zerohedge.com/news/2017-06-20/live-updates-georgias-special-election
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    Oil and Gas

    France's Total to go ahead with major Iran gas project: CEO



    Total will go ahead with development of a giant Iranian gas field this summer, its CEO told Reuters, in the first major western energy investment in the country since Tehran signed an international nuclear deal.

    Chief Executive Patrick Pouyanne said the French group would make an initial $1 billion investment after the United States extended sanctions relief for Iran under the 2015 agreement.

    Washington has warned that it could cancel the sanctions waivers if it believes Tehran is not curbing its nuclear program in line with the deal with world powers.

    "It is worth taking the risk at $1 billion because it opens a huge market. We are perfectly conscious of some risks. We have taken into account (sanctions) snap-backs, we have to take into account regulation changes," Pouyanne said in an interview.

    The offshore field was first developed in the 1990s, and Total was one of the biggest investors in Iran until the international sanctions were imposed in 2006 over suspicions that Tehran was trying to develop nuclear arms.

    Total has decided to return and develop phase 11 of the South Pars project in the Gulf, which will cost up to $5 billion, at a time when President Hassan Rouhani has faced criticism at home over a lack of economic revival following the easing of sanctions under the nuclear deal.

    Though one of the world's largest oil and gas producers, most major international giants including Royal Dutch Shell and BP have so far shown limited appetite to invest in Iran, due to uncertainty over contract terms and a sharp drop in global oil prices.

    U.S. President Donald Trump's hard line on Iran has further cooled the investment climate, even though his administration extended the wide sanctions relief last month.

    "The U.S. waivers have been renewed and they will be renewed every six to eight months. We have to live with some uncertainty," said Pouyanne.

    Total holds a 50.1 interest in the South Pars project along with state-owned China National Petroleum Corporation, with 30 percent, and Iran's Petropars with a 19.9 percent, he said.

    The French group has also made a number of significant investments in recent years in Abu Dhabi, Qatar and Brazil as Pouyanne sees the three-year downturn in the global energy market as an opportunity to clinch deals for cheap resources to secure strong growth.

    "REAL IMPROVEMENT"

    Total aims to achieve returns of above 15 percent on every new project it is enters into around the world. That includes South Pars, where terms discussed with the Iranian government would be significantly better than in the pre-sanctions period, Pouyanne said.

    Investors have complained that previous Iranian contracts allowed foreign companies little profit. Total worked on phases 2-3 of South Pars in the 1990s.

    The new Iranian Petroleum Contract (IPC) differs from its predecessor by offering the operator remuneration based on production rather than a simple percentage of the development costs, Pouyanne said.

    It also extends over a period of 20 years rather than seven or eight. "The IPC is a real improvement," he said. "We will not go to Iran if there is not a reward which is commensurate."

    With U.S. sanctions still in place prohibiting trading with Iran in dollars, Total will finance the project in euros from its own resources.

    Gas from South Pars will supply only the fast-growing domestic Iranian market and none will be exported, Pouyanne said. Total will be paid not in cash but in condensate, a very light crude oil which is a by-product of gas production.

    South Pars is part of a giant gas reservoir that straddles the territorial waters of Iran and Qatar, where Total is also a major player in gas production as well as in oil and refining.

    Tehran has indicated that the development of the project will not be hit by Qatar's diplomatic isolation due to a dispute with Saudi Arabia and some of its Gulf Arab allies.

    Total is also considering a petrochemicals project in Iran which would require external financing from Asian banks, although this remains in less advanced stage, Pouyanne said.

    http://www.reuters.com/article/us-iran-total-idUSKBN19B0G5

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    New pipeline mulled for Blue Energy’s Bowen basin gas project



    Energyinfrastructure group the APA Group has signed a nonbinding memorandum of understanding with ASX-listed Blue Energy to negotiate a gas transportation agreement for Blue Energy’s gas resources in the Bowen basin, in Queensland, to the east coast gas market.

    APA on Tuesday reported that it would work with Blue Energy to explore the development of new pipeline infrastructure and other related mid-stream infrastructurerequired to bring these new gas resources on line.

    “As an energy infrastructure provider, APA has been, and will continue to be, part of the solution of getting more gas into the market to put downward pressure on the price of gas to consumers. We continue to work collaboratively with existing and new customers in providing innovative new gastransportation services, and we are pleased to be working with Blue Energy in their Bowen basin project,” APA MD Mick McCormack said.

    “The interconnected nature of APA’s east coast grid enables potential new producers, such as Blue Energy, to explore opportunities to market their gas."

    Blue Energy currently has around 3 000 PJ of gas resourcesalong with 71 PJ of 2P reserves and 298 PJ of 3P reserves in the Bowen basin, which could be traded between Townsvilleand Hobart using APA’s east coast grid, said Blue Energy MD John Phillips.

    The resource is spread over the Bowen and Comet Ridge’s Galilee projects, and developed independently or symbiotically, these projects would result in the development of about 750 km of greenfield transmission pipeline and compression facilities for a total investment of in the order of A$800-million.

    Phillips added that further negotiations with APA were expected to yield detailed design and preferred route options, along with cost estimates, and could ultimately result in the construction of new pipeline infrastructure.

    “With the successful conclusion of these steps and projectapproval and final investment decision, APA will become builder, owner and operator of the new infrastructure.”

    Any investment will be subject to the satisfaction of a number of conditions, including gas resource certification, gas supply and transportation agreements and final board approvals.

    “APA’s east coast grid is the only one of its kind in the world and enables large and small producers alike to respond to price signals and get more gas supply to markets across the eastern states,” McCormack said.

    “Significant investments like these require incentives to invest and the certainty of the rules around those investments for both the pipeline and customers alike,” he added.

    http://www.miningweekly.com/article/new-pipeline-mulled-for-blue-energys-bowen-basin-gas-project-2017-06-20
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    Schlumberger tells shareholders to reject mini-tender offer



    Schlumberger has recommended that shareholders reject a mini-tender offer by TRC Capital Corporation.

    The Canadian investment firm made an offer to purchase up to 2 million shares of Schlumberger stock for a price of $65.63 per share, which was 4.3% below closing price on 16 June this year – the last trading day before the offer was made.

    The company recommends that shareholders reject the offer as it is below the current market price for the stock.

    The mini-tender is looking to buy less than 5% of Schlumberger’s common stock, which means that avoid the disclosure requirements and procedural protections of the Securities and Exchange Commission (SEC).

    The SEC also cautions that such an offer could be made to catch investors off guard.

    TRC Capital made a similar offer for ExxonMobil shares in March this year, with the offering price 4.42% lower than market value at the time.

    https://www.energyvoice.com/marketinfo/142512/schlumberger-tells-shareholders-reject-mini-tender-offer/
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    India asks Qatar to invest in power plants as condition for LNG deals


    India on Tuesday said it would sign future long-term liquefied natural gas (LNG) purchase deals with Qatar if only Doha agrees to acquire stakes in the South Asian nation's power plants, oil minister Dharmendra Pradhan said.

    India is the latest major LNG buyer to seek concessions from Qatar, the world's biggest LNG exporter, in order to re-sign long-term supply contracts. Amid a global glut of LNG and a slump in prices, other buyers have sought more flexible contracts, including clauses that would allow them to resell gas they do not consume.

    "Yesterday, we have given a firm proposal to Qatar. If they want to have a long-term off-take assurance, there is a window. They can deal with our stranded power plants, from end to end they can give some solution," Pradhan told Reuters on Tuesday.

    India is suffering from natural gas shortages that have required power plants with capacity of as much as 25,000 megawatts to shut down or run as lower rates. Qatar's RasGas is India's biggest LNG supplier.

    "It won't be quid pro quo but mutual interest...They can share the profit of those power plants," said Pradhan, adding New Delhi wants to expand its ties with Doha beyond simply buyer and supplier.

    India wants to gradually move to a gas-based economy and has plans to raise its annual LNG import capacity to 50 million tonnes in the next few years from 21 million tonnes now.

    India is also open to granting stakes to Qatar in local oil and gas companies and LNG terminals, should the Gulf emirate make such a proposal, said Pradhan.

    India's biggest gas importer Petronet LNG annually buys 8.5 million tonnes under a long-term contract. It also buys additional volumes from Qatar under spot deals.

    Prabhat Singh, chief executive of Petronet, said the Gulf nation needed to decide quickly on the Indian proposal. He said India could be a stable outlet for Qatar's LNG.

    http://www.reuters.com/article/us-india-qatar-idUSKBN19B0RZ
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    Singapore LNG in first small-scale reload



    Singapore LNG, the operator of the country’s first liquefied natural gas import terminal, has completed its first small-scale reload at its facility on Jurong Island.

    The gas-up/cool-down and reload operation was carried out from 18-20 June for Shell’s newly built LNG bunkering vessel Cardissa, Singapore LNG said in a statement.

    As previously reported by LNG World News, the 6,500-cbm Cardissa left STX Offshore & Shipbuilding’s yard in South Korea earlier this month and it is on its way to the port of Rotterdam where it is expected to start operations this summer.

    The Cardissa is one of Europe’s first LNG bunkering ships with Shell claiming it is the biggest seagoing vessel of its kind.

    The fueling operation of the bunkering vessel was conducted at Singapore LNG terminal’s secondary jetty, which is originally designed to accommodate LNG vessels from 60,000 cbm to 265,000 cbm in size.

    Singapore LNG said in its statement that compatibility studies were carried out in advance to ensure that the vessel could safely call at the jetty.

    Prior to this, the smallest LNG carrier that had called at the Jurong LNG terminal for unloading or reloading was about 65,000 cbm in size.

    “The successful completion of our first small scale LNG reload operation is significant as it demonstrates the SLNG terminal’s ability to play the role of LNG supply hub for the region,” said John Ng, Chief Executive of Singapore LNG.

    The terminal is able to break LNG cargoes into smaller parcels and facilitate deliveries of small volumes of LNG to other terminals in the region, or as bunker fuel to ships in Singapore LNG’s port.

    “We are already looking ahead to further enhance our capabilities in this area, by exploring possible modifications to our secondary jetty to accommodate LNG vessels as small as 2,000 cbm. This is expected to come onstream in 2019,” said John Ng.

    http://www.lngworldnews.com/singapore-lng-in-first-small-scale-reload/

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    Mexico awards 10 blocks in Round 2.1


    Mexico awarded 10 of 15 shallow-water areas on offer during its second bid round for shallow water acreage, with both global giants and local players participating and Pemex inking two more partnerships.

    Bidding heated up as the day went on during Mexico's second bid round for shallow-water oil and gas acreage, with Eni taking three new offshore blocks and Pemex sewing up two new partnerships with companies with Dea Deutsche Erdoel and Ecopetrol.

    Anglo-Dutch supermajor Shell, after years of interest, also secured its first entry into Mexico, alongside French major Total taking Area 15 in the south-east basin, prospective for wet gas.

    "We are highly satisfied," energy secretary Pedro Joaquin Coldwell told reporters during a press conference afterwards.

    "It’s a very high percentage of blocks, which fills us with satisfaction even when the crude prices aren’t the best."

    Coldwell said the Mexican state sees an investment of up to $8.19 billion over the lives of the contracts, and if carried to fruition up to 170,000 barrels of oil equivalent per day.

    The energy secretary congratulated regulators for crafting contracts that had a “strong Mexican accent” but were still globally competitive, he said.

    Crucially, the terms for this round allowed companies to choose what their own work programmes would be, instead of a pre-determined set of wells and exploration dictated by the government, officials said.

    Companies pledged a total of nine wells over the course of the initial four-year exploratory period, as well as a base work programme that includes both seismic work and surface studies.

    Eni, in a consortium with UK-listed Cairn and start-up Citla, came out on top of a five-way contest for Area 7 in the south-east region of the country. Its offer was for a 75% additional royalty to the state with a two-well work programme.

    The block was one of the most highly contested of the day, and also received offers from groups led by Spain's Repsol, Germany's Dea Deutsche Erdoel, US independent Noble Energy and China's CNOOC.

    Eni also took Area 10 in the south-east basin, pledging the maximum additional royalty of 75% and two additional wells. Alongside Citla, it also took Area 14 with an offer of 37.27% additional royalty to the state.

    The event also saw the first-ever tie registered for an area at an open bid event, with Area 9 attracting the identical offers of 75% additional royalty and two additional wells. Ironically the tie came between companies that had partnered on the other blocks: with the tying offers presented by first Eni and the second by Cairn-Citla.

    The area in the end went to the Cairn-Citla group, which offered the winning bonus of $30 million to Eni's $20 million. The tiebreak cash will go to Mexico's treasury.

    Area 6 was also quite competitive, with a consortium of Malaysia's Petronas and Colombia's Ecopetrol came out on top of a four-way contest.

    The high bid was for a 65.19% additional royalty, plus one well, enough to beat out offers from Dea-Pemex, Murphy-Talos and Repsol.

    Meanwhile Mexico's Pemex sewed up its third and fourth partnerships since the energy reforms after bidding jointly with Germany's Dea Deutsche Erdoel for Area 2 in the Tampico-Misantla basin and with Colombia's Ecopetrol for Area 8 in the south-east basins.

    In Area 2, the duo narrowly beat out an offer from Italy's Eni and Russia's Lukoil, offering the winning bid of an additional royalty of 57.92% and a one-well work commitment.

    The terms of the round valued that that offer just a hair ahead of the competing bid, which was for a 55.14% additional royalty and two-well commitment.

    The area covers some 549 square kilometres, with a median prospective resource of 280.4 million barrels of oil equivalent

    Pemex and Ecopetrol did not pledge an additional well on Area 8, but did offer a modest proposal of a 20.1% royalty to the state.

    Pemex is focusing its strategy on partnerships to help bring in new technology and investments following energy reforms. It cemented its first partnerships last December in Round 1, where it won the deep-water Area 3 in the Perdido fold-belt with US supermajor Chevron and Japan's Inpex. It also teamed up with BHP Billiton for a farm-out of the deep-water Trion discovery.

    Other blocks outside of the south-east basin attracted little interest, with Areas 1, 3, 4, and 5 receiving no bids.

    Mexico continued its second bid offering for 15 shallow-water areas in Mexico City on Monday, after a total of 20 individuals and consortia submitted offers earlier in the day.

    A total of 36 individuals and consortia had initially pre-qualified to bid.

    Mexico held its first-ever bid offering for shallow waters, Round 1.1, nearly two years ago in July 2015. Since then, regulators have significantly adjusted the terms involved as the country incorporated lessons leaned from that initial proceeding as well as events for onshore and deep-water acreage.

    With those changes, consultancy Wood MacKenzie forecasted in a note that 10 of the 15 blocks on offer this time will be awarded.

    "A record number of consortia have qualified for this offshore licensing round, which signals strong interest from industry to grow their positions in Mexico," Pablo Medina, senior Latin America research analyst at Wood MacKenzie, said in a note.

     "The combination of offering industry-nominated areas, competitive fiscal terms and companies' eagerness to qualify signals a successful closing in our view." Energy Secretary Pedro Joaquin Coldwell told media outlets last week that regulators hoped to award 35% to 40% of the blocks on offer.

    The areas on offer are located in the Tampico-Misantla, Veracruz and the south-east basins, and are prospective for light oil, heavy oil and wet gas.

    Each of the blocks cover an area of 594 square kilometres, and the average estimate for the combined prospective resource is about 1.58 billion barrels.

    http://www.upstreamonline.com/live/1285788/mexico-awards-10-blocks-in-round-21

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    Britain's largest natural gas storage site to close


    Centrica will cease storage operations at Rough, Britain's largest natural gas storage site, the energy supplier said on Tuesday.

    Centrica Storage Ltd (CSL) said it intends to file applications to permanently end Rough's status as a storage facility but aims to produce all recoverable gas from the field, which is estimated at 183 billion cubic feet (bcf).

    Britain depends on stored gas reserves to help manage winter energy demand spikes and to ensure security of supply.

    More than 30 years old, Rough has suffered repeated outages.

    Concerns about the integrity of wells at the site prompted Centrica in April to put off any further gas injections until at least April 2018.

    http://www.reuters.com/article/us-britain-gas-rough-idUSKBN19B0TT
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    API data show a weekly decline in U.S. crude supply, sources say


    The American Petroleum Institute reported Tuesday a decline of 2.7 million barrels in U.S. crude supplies for the week ended June 16, according to sources. The API data, however, showed a climb of 346,000 barrels in gasoline supplies, while inventories of distillates were up 1.8 million barrels, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a decline of 2 million barrels in crude inventories.

    http://www.marketwatch.com/story/api-data-show-a-weekly-decline-in-us-crude-supply-sources-say-2017-06-20
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    Interior head says public lands can make U.S. a 'dominant' oil power



    Boosting drilling and mining on America's protected federal lands can help the United States become not just independent, but "dominant" as a global energy force, according to Interior Secretary Ryan Zinke, whose agency manages about one-fifth of U.S. territory.

    In an interview with Reuters, Zinke outlined his approach to development and conservation in America's wildest spaces, and discussed how that philosophy was guiding his review of which national monuments created by past presidents should be rescinded or resized to make way for more business.

    "There is a social cost of not having jobs," the former Montana Congressman and Navy Seal said in the interview on Friday. "Energy dominance gives us the ability to supply our allies with energy, as well as to leverage our aggressors, or in some cases our enemies, like Iran," he said.

    Former President Barack Obama, who oversaw a huge increase in domestic energy production during his tenure while strengthening environmental protections, had advocated reducing U.S. dependence on foreign oil.

    Obama had also adopted a policy to factor in a "social cost of carbon" emissions from burning fossil fuels - which scientists believe drive global climate change - in making decisions about regulation and land protection.

    While total U.S. oil production has risen to near records in the past decade, the share produced on federal land has dropped to a fifth in 2015 from more than a third in 2010, according to federal data from the Department of the Interior.

    The administration of President Donald Trump is seeking to sweep away many Obama-era environmental and climate initiatives to bolster the U.S. oil, gas, and coal industries.

    MONUMENT REVIEW

    Zinke is in the midst of reviewing some 27 national monuments created since the 1990s and covering millions of acres of land mostly in Western states, as part of a plan by the Trump administration to expand development of public land.

    Zinke was in New England touring the region's monuments as part of the review.

    At least six of those monuments are believed to hold oil, gas, and coal potential.

    Zinke issued his first major recommendation to President Trump on one of the monuments last week, a reduction in the size of the 1.35 million acre Bears Ears National Monument in Utah created by Obama in his last days in office.

    Zinke told Reuters he is likely to take a similar approach to the other monuments, including the 4,913 square mile Northeast Canyons and Seamounts Marine National Monument off the coast of Massachusetts – which is roughly three times the size of Montana’s Glacier National Park.

    It was created by Obama last September to protect whales and newly discovered coral formations.

    During meetings with New England-based marine scientists, commercial fishermen and National Parks Service employees last week, Zinke argued that the Interior Department now makes around $15.5 billion per year less in revenue from offshore drilling than it did in 2008 due to Obama-era restrictions.

    Last month Zinke signed an executive order to lift some of those restrictions. He told Reuters he wants increased revenue from offshore to be used to finance a backlog of repairs throughout America’s national parks.

    He was also in New England to gather input on the Katahdin Woods and Waters National Monument in Maine. He will later tour more monuments in Western states, and offer recommendations on all the monuments to Trump in August.

    ECONOMY BEFORE ENVIRONMENT

    On the last day of his New England monument tour in Boston, dressed in jeans and a belt with a cowboy style Montana buckle, Zinke met with officials and scientists from the U.S. Fish and Wildlife Service and New England Aquarium, followed by a roundtable discussion with commercial fishermen.

    Zinke argued the recent use of the Antiquities Act by presidents to create national monuments exceeded the intent of its creator President Theodore Roosevelt because they block development on too much land around the specific monument sites.

    Marine scientists gave Zinke a virtual tour of the Canyons monument at the New England Aquarium, and argued there was a need to preserve the area as a "reference point" to measure the impacts of climate change and overfishing.

    Zinke later told Reuters he believed "there are legitimate scientific endeavors and research that are recognized and important (around the site), but there are also recognized livelihoods, fishing jobs that are also important."

    During his tour, Zinke also fielded questions about the Trump administration’s decision to withdraw from the Paris Climate Agreement, a global pact to fight climate change. Zinke defended the administration's decision, calling the agreement a bad deal for the United States.

    Zinke later told Reuters while the U.S. government should find solutions to adapt to changing climate, jobs are a priority. "If you don’t have an economy you can’t afford to put in the environmental protections you need," he said.

    http://www.reuters.com/article/us-usa-interior-zinke-idUSKBN19A1KG
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    Shale patch deals slow as oil price lingers below $45



    Deals in the shale patch aren’t so hot anymore with oil in the doldrums.

    Mergers and acquisitions among U.S. exploration and production companies fell to less than $15 billion in the second quarter from about $23 billion in the first, according to estimates from Bloomberg Intelligence. The number of deals plunged to the lowest since early 2015. In the previous two years deals had increased, not fallen, in the second quarter from the first.

    Oil has plunged below $45 a barrel over concerns that a U.S. supply glut isn’t abating, and prices for natural gas are down by more than 20 percent for the year. Subdued deals activity is likely to continue as long as uncertainty persists over the outlook for prices, said Vincent Piazza, a senior analyst for U.S. oil and gas at Bloomberg Intelligence.

    "There is a very clouded view on both crude oil and natural gas," Piazza said by phone. "Management teams are taking a more conservative view on M&A activity and that will extend through the end of 2017."

    Almost half of the total value of oil and gas deals in the second quarter comes from a merger announced Monday between EQT Corp. and Rice Energy Inc. for approximately $6.7 billion. That deal was focused on the Appalachian Basin, while most M&A activity since last year had focused mainly on the prolific Permian play straddling West Texas and New Mexico.

    Oil and gas deals had been on the rise since mid-2015 as explorers sought to streamline operations and sell non-strategic assets to remain competitive during the downturn. That need isn’t so pressing now that many large deals were completed.

    "Companies are basically done simplifying their portfolios and combining assets," Brian Youngberg, energy analyst at Edward Jones & Co., said in a telephone interview. "They’re being a little cautious about deploying their capital and are a little scared to take on additional debt or equity."

    http://world.einnews.com/article/387869951/Wqy7oCt_2nsihMRv?lcf=OiXYZCA26nHg2adeYcbUvZ09WNXNvyZeBkkPABku7tQ%3D
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    Encana Touts Improved Permian Type Curves, Adds 700 ‘Premium Return’ Drilling Locations



    Encana Corp. on Tuesday announced that it has increased its type curves in the Permian Basin by 20% and added 700 “premium return” drilling locations to its inventory in the play, a result of the company's "cube" approach to stacked pay development, management said.

    The Calgary-based super independent said its total inventory of premium return locations in the Permian now stands at 3,450, an inventory large enough that the exploration and production (E&P) company only expects to develop less than 30% of it through 2021, the time frame covered by its current five-year plan. The 700 additional locations represent five times what Encana expects to develop in 2017.

    "Through our focus on operational excellence, innovation and quality corporate returns we continue to make Encana more valuable and resilient," CEO Doug Suttles said. "The company's world-class Permian asset comprises thousands of feet of stacked resource. Our cube development is delivering leading well performance and efficiencies. We believe this approach will become the industry standard for stacked pay development."

    Management said Encana's cube approach "targets multiple stacked pay zones from a single location to deliver significant value above ground as well as below ground." The company said the approach has led to drilling and completion cost savings of around $1.2 million per well versus "traditional single well development." The E&P said it expects Permian well costs to remain flat year/year in 2017 on a like-for-like basis.

    "Below ground in the reservoir, cube development maximizes production and resource recovery and minimizes or eliminates risk of value erosion connected with infill drilling and offset hydraulic fracturing interference," management said.

    Encana said tighter well density, precision targeting, advanced completions and longer laterals are all helping to achieve the improved type curves and expanded inventory of premium return locations in the play.

    The company said it started using its advanced completion designs in the Permian during the second quarter after seeing well performance improvements of up to 60% from advanced completions at its Eagle Ford and Montney shale locations.

    Encana launched a five-year growth plan last October that saw the onshore producer shift more of its focus to liquids and oil, with the Permian representing its top target. The company said during a 1Q2017 conference call that it plans to return to growth this year, projecting a 20% year/year production increase from its core assets in 4Q2017.

    Encana has maintained a multi-play development plan centered around the Permian, Eagle Ford Shale and the Montney and Duvernay formations in Western Canada. The E&P recently agreed to sell its natural gas assets in Colorado's Piceance Basin to Denver-based Caerus Oil and Gas LLC for $735 million.

    http://www.naturalgasintel.com/articles/110838-encana-touts-improved-permian-type-curves-adds-700-premium-drilling-locations
     

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    Another machine learning company at work

    China Results Highlight Problem of Global Oil Tracking
    Orbital Insight initially focused on testing its oil tracking product in the United States, then China. The United States is generally accepted as the most transparent in terms of information on oil inventory tanks and offshore tanks, Barclays’ analyst Michael D. Cohen told Rigzone. Other countries such as China take longer to release information, provide data in an opaque format, or are not necessarily trusted by the marketplace.

    The results of examining China’s onshore storage tanks was stunning, Lohn said. Existing estimates said approximately 500 onshore floating roof oil storage tanks existed in China. Instead, Orbital Insight found 2,100.

    “Analysts have long suspected that the oil supply numbers China’s government published underestimated the actual amount in storage,” Lohn said.

    Instead of the 200 to 300 million barrels that the Chinese government has reported, Orbital Insight’s findings put that number in the 500 to 600 million barrel range.

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    Signing bonuses still?

     !!!!!!!$5000 bonus,HIRING FRAC SAND trucks!!!!!!!!!!!!!!!!!!!!!!!!!!!! (Texas) hide this posting


    compensation: percentage of gross revenue.
    employment type: full-time 

    CDL Sand Haul Owner Operators and Fleets--Texas and Oklahoma

    Immediate Openings for CDL Sand Haul Fleets and Owner Operators to Lease on to LKI

    We Are EXTREMELY busy and need owner operators and fleets.

    LKI has numerous customers and not enough trucks to cover the demand. We require 2-year minimum CDL Experience. Safety Certifications are required and thru LKI we can assure you receive the training you need. Come and see what we have to offer CDL Sand Haul Owner Operators and fleets and be part of LKI family. The more You haul the more you Earn in our pnuematic sand haul operation. 

    2017 has started with a BOOM and we need YOU!!!!!!!

    For information please contact 940-577-4218 or 940-433-3123 Ext. #2

    LYNDA KAY OFFERS: 

    * Quarterly Bonus Program of $5000
    * Safety Bonuses.
    * No factoring or administration fee's !
    * 100% of the fuel surcharge is paid to the the owner operator.
    * Our owner Operator's are Paid on time every time.
    * Fuel cards and license plates are available if needed.
    * Trailer's are available for lease if needed.

    OWNER OPERATOR REQUIREMENTS:

    * Your Tractor must have a blower,be well maintained and pass in-house inspection.
    * Class A CDL and pnuematic trailer experience & 2 year CDL driving experience.
    * Ability to handle physical workload.
    * Clean driving record and strong work ethic.
    * MUST be able to speak English.
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    Cenovus to face investors amid rift after share decline


    Cenovus Energy Inc will seek on Tuesday to convince investors of the value of an unpopular acquisition this year amid continuing skepticism from shareholders.

    At an annual investor event in Toronto, Chief Executive Brian Ferguson is expected to unveil plans for asset sales to cut debt assumed for the C$17 billion ($12.9 billion) March purchase of some ConocoPhillips assets in Canada.

    The deal effectively doubled Cenovus' assets, a move the company has said would allow it to utilize economies of scale to lower costs. Cenovus shares have since fallen about 40 percent to just above C$10, wiping out $6.7 billion in the company's market value.

    Two months after the deal is too soon to realize any benefits of the acquisition, and shareholders lack faith in management's ability to deliver, Laura Lau, senior vice president at Toronto-based Brompton Group, said in an interview. Brompton holds 183,800 Cenovus shares.

    "They're not going to give them the benefit of the doubt," Lau said.

    She said the same goes for asset sales. "It's too soon to actually know," she said. "What's probably likely is: 'We've put the package out. These are the packages, and these are the possible bids.'"

    When asked about investors' skepticism, Cenovus spokesman Brett Harris said, "With respect to our conversations with individual investors, that's not something we would discuss publicly."

    Cenovus expects a "fulsome discussion" about the acquired assets and the company's longer-term outlook on Tuesday, Harris said without providing additional details.

    Royal Bank of Canada analyst Greg Pardy said in a note on Monday that questions from investors had increased over the past month, with the most significant being whether Cenovus can achieve its asset-sale target.

    Cenovus has said it wants to raise C$3.6 billion by selling its Pelican Lake and Suffield oil assets and potentially others, including parts of its Deep Basin gas play, newly acquired from ConocoPhillips, which had been unpopular among investors who saw it as unwanted diversification.

    "Most people view they overpaid for the assets, and now two months later, we're sitting with higher interest rates and oil prices that are 10 percent lower," said Len Racioppo, managing director of Toronto-based Coerente Capital Management.

    "They say they want to sell assets, but how do you sell assets and what kind of a price do you get when you bought them at $50-something a barrel, and now we're at $45 a barrel?" Racioppo said.

    Racioppo wrote to the Toronto Stock Exchange's regulator seeking to halt the deal soon after it was announced. He manages more than 500,000 shares on clients' behalf.

    Cenovus spokesman Harris said the company had invited its 100 largest shareholders to Tuesday's event, and Coerente was not among them.

    "We can only have so many people attend the event in person. In fact, we have a waiting list, which is why we’re also webcasting the event," Harris said.

    http://www.reuters.com/article/canada-cenovus-energy-investors-idUSL1N1JD12T

    Canadian oil producer Cenovus Energy said Tuesday its chief executive officer Brian Ferguson will retire in October, but plans to stay as an adviser for another five months as the firm readies to sell up to $5 billion of holdings to pay for ConocoPhillips (NYSE:COP) acquisitions.
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    Alternative Energy

    Wind, solar energy have not harmed U.S. power grid: industry study


    With the Trump administration expected to publish an analysis that could undermine the U.S. wind and solar industries, two renewable energy lobbying groups on Tuesday released their own study saying new energy sources pose no threat to the country's power grid.

    Wind and solar advocates have said the government study's outcome appeared to be pre-determined to favor fossil fuel industries. The new report, commissioned by the American Wind Energy Association and Advanced Energy Economy, says cheap natural gas is behind most of the decline in the numbers of U.S. coal-fired power plants in recent years, not government subsidies that have bolstered the growth of wind and solar power.

    It also said there is no evidence to show that wind and solar energy are threatening the reliability of the electric grid.

    The groups commissioned the report shortly after Energy Secretary Rick Perry in April ordered a 60-day study of the reliability of the grid and said Obama-era policies offering incentives for the deployment of renewable energy had come at the expense of energy sources like coal and nuclear.

    With the 60-day deadline for the DOE study looming this month, AWEA and AEE released their own analysis of the issue performed by economic consulting firm Analysis Group.

    The authors of the analysis found that the rapid growth of renewable energy and related policies were "a distant second to market fundamentals in causing financial pressure" on coal plants without long-term contracts. Market forces such as new, more-efficient efficient natural gas plants, low natural gas prices and flat electricity demand are the biggest contributor to coal plants' inability to compete, the report found.

    The analysis also found that greater diversity of technologies made the system more reliable.

    "There are lots of different technologies that fill different pieces of the reliability puzzle," said Susan Tierney, one of the report's authors. "That led us to believe that there is not a problem on the horizon for reliability."

    The DOE's grid study is expected to be released later this month.

    http://www.reuters.com/article/us-usa-energy-renewables-idUSKBN19B13H
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    Heilongjiang to boost clean energy over next 4 yrs



    Heilongjiang, a major industrial province in northeastern China, will actively promote the development of clean energy to replace coal-fired plants over the next four years, said the local branch of the State Grid Corp.

    The province pledged to substitute electric energy for coal and oil, and increase clean energy's share of the energy mix, the Heilongjiang Electric Power Co., Ltd said in recent press conference.

    By 2020, installed on-grid capacity of clean energy sources would account for 35.7% of the province's total on-grid capacity.

    Installed capacity of clean energies reached 6.79 GW by end-2016, accounting for 24.4% of the province's total.

    Specifically, wind capacity was 5.61 GW or 20.2% of the total, hydro capacity was 1.02 GW or 3.7%, and solar capacity stood at 166 MW or 0.6% of the total.

    http://www.sxcoal.com/news/4557569/info/en

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    EV to go to 70% of market

    Morgan Stanley is betting that electric cars will corner 70pc of the European vehicle market by the middle of century, leading to a drastic upheaval for the power sector and scramble for dominance of lucrative new technologies.

    Global banks in London and New York are no longer debating whether the switch-over will occur. Research reports have shifted to granular analysis over what this means for large swathes of the economy, and who will be the winners and losers as the old edifice crumbles.

    A report this week from Nicholas Ashworth and Carolina Dores at Morgan Stanley says a ratchet effect is underway. It is becoming more costly each year to develop petrol and diesel cars that comply with tightening rules on emissions of CO2 and particulates (NOx), yet the cost of EV batteries keeps falling. The crossover point will arrive in the mid-2020s.

    They expect global EV sales to reach one billion annually by 2050, pulling ahead of internal combustion engines. The switch could take place much faster. A widely-cited report by Tony Seba and James Arbib at RethinkX argues that it will make no sense to manufacture fossil-driven cars, trucks, buses, or tractors within a decade.

    The US pioneer Tesla - already worth more on Wall Street than General Motors or Ford- is targeting annual sales of one million EVs within three years. It is mulling a joint venture in China, already the world’s biggest market for zero-emission cars.

    China has banned petrol motorbikes, leading to a massive switch EV two-wheelers. Some 230m are on the roads. Under the latest draft proposals from the industry ministry, all car companies will have to reach an EV quota of 8pc of sales from next year, 10pc by 2019, and 12pc by 2020.

    Morgan Stanley said it would be “very difficult” for Volkswagen, BMW, and Mercedes to comply with this. They will hit a sales cap in China. This will be a rude shock.

    Whether China’s breakneck drive for EVs lowers CO2 emissions is an open question. This depends on how quickly it cuts reliance on coal plants - down 8pc over the last two years - and shifts to gas, nuclear, and renewables.  

    A typical electric car needs as much power over the course of a year as the average British household

    In Japan, Honda is betting its future on EVs, aiming to raise the sales share to two-thirds by 2030. Ford is launching 13 new EV models over the next three years.

    In Europe, Renault-Nissan is targeting 1.5m EVs sales a year by 2020, and Volvo 1m by 2025; Volkswagen is scrambling to make up lost ground with plans for 2m to 3m annually by 2025.   

    A parallel battle for mastery over electrification is underway among power companies, each eyeing control of ultra-fast charging points in the way that US railroad barons sought to snap up lands in late 19th Century. Even more money will be made from the ‘big data’ networks that underpin EV technology.

    Chargemaster in the UK runs a network of public charging stations called POLAR. ChargePoint in the US offers an ultra-fast unit enabling "hundreds of miles of range in under 15 minutes".

    Morgan Stanley expects up to 3m public charging stations in Europe by 2050, up from 100,000 today. They will be ubiquitous. Smart phones will locate them instantly. 'Range angst’ will rapidly fade.

    Britain’s National Grid has carried out advance planning under its Future Energy Scenario and is eyeing a network of fast-chargers for the motorways. It estimates that there could be almost 6m EVs in Britain by 2030 under a “Gone Green” assumption.

    A string of European firms are jostling to seize the lead in their home markets, with SSE in the UK, Innogy, EON, Iberdrola, Enel, Fortum, EDP, ABB, and Schneider Electric, all pushing ahead with expansion plans.

    They are watching developments closely in Norway. The country is already close to 30pc penetration for EVs, achieved by tax-free status and waivers on toll roads, as well as free parking until 2016.

    Germany’s Bundesrat has voted to ban the sale of new fossil-fuel cars by 2030. This is not binding but it is a straw in the wind. In Italy, EVs are tax-exempt for five years. France offers €6,300 subsidies for EVs.

    Morgan Stanley says electrification will break the existing system over time. Utility companies should have no trouble over the next decade but the extra power required to recharge a European fleet of 150m cars in 2050 would be equivalent to an “another Germany’ springing into being.

    A typical electric car needs as much power over the course of a year as the average British household. It could in theory lead a doubling of peak demand. National Grid thinks this could be limited to 15pc by 2040 with the right technology.

    Nobody knows for sure how much could be achieved by shifting to off-peak hours through smart grids and variable tariffs. Nor do they know whether car batteries themselves will act as a major storage reservoir through ‘vehicle-to-grid’ (V2G) flows to balance fluctuations of wind and solar.

    Everything is up in the air. All we know is that vast sums are at stake and vested interests that fail to adapt in time will be wiped out.

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    Asian renewables targets to be missed, industry divided over default fuel


    Asian renewables targets were likely to be missed, speakers at the International Association for Energy Economics international conference in Singapore said Monday, but they were divided over which fuel would make up the deficit in energy supply.

    Indonesia aims to source 23% of its energy supply from renewables by 2025, but Widhyawan Prawiraatmadja, from the governing board of the Indonesian Institute of Energy Economics, said that it was doubtful. Other developing countries faced similar challenges, he added.

    North Asian countries were also likely to miss their renewables targets, which when set were more aspirational than achievable, Shell's Global Head of LNG Roger Bounds said.

    Fereidun Fesharaki, chairman of consultants FGE, agreed, saying that neither Japan nor South Korea were likely to meet their targets.

    The implication is that a higher share of energy will be provided by other sources, compared with government forecasts, owing to the shortfall in renewables output. Fesharaki said that LNG would be the default fuel as neither coal nor oil would be acceptable, owing to the higher levels of emissions.

    For LNG to become the default option, it needs to play an explicit role as part of a credible long-term energy policy, but this was not the case in many countries, Bounds said. In North Asia as well as in some Southeast and South Asian countries, coal was the default fuel, he added.

    BP's latest Statistical Review of World Energy, released in June, showed that coal consumption by Indonesia, Bangladesh, Malaysia, Pakistan and the Philippines soared between 15% and 23% year on year in 2016, even as gas demand that was strong earlier, slowed down.

    China's coal consumption, however, fell 1.6% year on year, while gas demand rose by 7.7%. In India, demand for both commodities grew, but gas demand at 9.2% year-on-year growth outpaced coal consumption that rose 3.6% year on year.

    https://www.platts.com/latest-news/coal/singapore/asian-renewables-targets-to-be-missed-industry-26755443
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    Agriculture

    APW wheat rises 4% on week to 1-year high of $221/mt FOB Australia on drought concerns



    The spot price of Australian Premium White wheat, with minimum 10.5% protein, rose about 4% week on week to $221/mt FOB Australia on Monday, the highest level in a year, buoyed by global drought concerns, according to S&P Global Platts data.

    The last time the price was assessed higher was on June 20, 2016, at $225/mt FOB Australia.

    "We have not seen rain for the past one month, and if the weather outlook is according to the forecast by the Bureau of Meteorology, the new crop will have problems germinating," a Western Australia-based seller said.

    The offer price of APW shot up to $225-$230/mt FOB Kwinana on Monday from $220-$222/mt late last week, given continued dryness and the cascading effect from a rally in US wheat futures over the past week.

    Sellers offering from other ports, including South Australia and the Victoria, Melbourne, area were also heard moving up offers Monday, to around $220-$222/mt FOB from $215-220/mt a week ago.

    Similarly, buyers in Southeast Asia were seeing offers on a CNF Indonesia basis up by $10/mt or higher from a week ago, for September shipments. Offers rose to $250/mt CNF Indonesia on Monday from $239/mt CNF a week ago.

    The front-month wheat futures contract on the Chicago Mercantile Exchange jumped nearly 8% week on week to close at 467 cents/bushel on Monday, bolstered by dryness in the US and worries over new crop production and quality.

    Also, the export price is less competitive given a stronger Australian dollar, which closed at $0.7614 on Monday, or was up more than 1% week on week.

    "I am not surprised, because if you are short, you have little choice," said an Indonesian buyer, referring to Monday's firmer asking levels by sellers.

    Meanwhile, some buyers expect APW prices to become rangebound, as further uptrend could be capped by limited buyers in the coming two weeks.

    Indonesia, the world's second largest wheat importer will be away late June for a one week holiday due to the Eid-al-Fitr celebrations. Additionally, a few major end-users have secured wheat volume adequately until September, while some were expecting new crop from the Black Sea to exert pressure on the export value of Australian wheat.

    Although Black Sea wheat prices have risen over the past few weeks, as unfavorable weather delayed harvest and possibly production volume, it is still much more attractive as a substitute for lower protein wheat at a discount of more than $40/mt to APW, buyers pointed out.

    "It's a weather driven market, only short buyers have to pay such a high premium for Australian wheat," said a major Southeast Asian miller that was sidelined for the past two weeks.

    https://www.platts.com/latest-news/agriculture/singapore/apw-wheat-rises-4-on-week-to-1-year-high-of-221mt-27847476
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    Base Metals

    Copper production growth to accelerate to 2021



    Global copper production growth will be supported by key markets with low operating costs and strong project pipelines in the next four years, according to research firm BMI’s copper outlook report, released Monday.

    Global copper mine production, supported by markets and low operating costs, is forecast to increase by an average yearly rate of 4.1% between 2017 and 2021, as many major projects come on line.

    “In terms of volume, we expect global copper output to climb from 20-million tonnes in 2017 to 23.7-million tonnes by 2021,” said BMI in a statement.

    However, the research firm noted that a few developments will pose considerable risks to the copper mine outlook for 2017, namely labour unrest in Latin America and Freeport McMoRan's negotiations with the Indonesian government to resume copper exports from the Grasberg mine, which could result in lower-than-expected output.

    The Democratic Republic of Congo’s (DRC’s) copperproduction will return to solid production growth in 2017, supported by continued investment in high-grade reserves, the report says.

    “The DRC will regain global copper ore market share of 5% by 2021, after falling to 4.7% in 2016.”

    Chile, meanwhile, is expected to remain the leading global copper producer by a wide margin, though the nation’s copper sector will face ongoing challenges, declining ore grades, freshwater shortages and labour unrest.

    “Chile will account for a gradually declining share of the global total, from 27.2% in 2017 to
    24.7% in 2021,” said BMI.

    “We forecast Chile to produce 5.4-million tonnes of copper in 2017, down slightly from 5.5-million tonnes the previous year, and to return to gradual production growth thereafter,” the statement said.

    BMI further noted that China's copper sector will post steady production growth as miners contend with declining ore grades and a slow copper price recovery.

    “We forecast China's copper production, which accounts for 9% of global output, to increase from 1.8-million tonnes in 2017 to two-million tonnes by 2021.”

    Peru's copper sector, meanwhile, continues to post strong production growth as projects in the country come on line. Its total output exceeded two-million tons in 2016, thereby overtaking China as the world’s second-largest copperproducer.

    “Peru's copper production will increase from 2.6-million tonnes in 2017 to 3.7-million tonnes by 2021, averaging 10.2% yearly growth.”

    BMI added that competitively low operating costs and high-grade reserves will underpin Peru’s copper production as copper prices remain subdued by historical standards.

    US copper production will increase from 1.4-million tonnes this year to 1.6-million tonnes in 2021.

    “Environmental deregulation under US President Donald Trump will encourage project development in the coppersector,” the report said.

    http://www.miningweekly.com/article/copper-production-growth-to-accelerate-to-2021-2017-06-19
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    Constellium sees aluminium comeback in planes with new mixes



    All-metal planes are a thing of the past, but evolving aluminium-based materials remain in the race with composites to supply the next generation of jets, according to aluminium maker Constellium.

    The growing use of carbon composites in aircraft has eroded aluminium's dominance as the material of choice for planemakers.

    This has left aerospace demand for aluminium trailing behind booming use of the metal in the car industry, where aluminium supplied by the likes of Arconic, Aleris International and Constellium has played the challenger to steel.

    Constellium projects aluminium demand from aerospace will grow by an average 2 percent over the next five years, about half of what it has seen historically.

    That compares with the 10-20 percent annual growth rate it anticipates from the car sector in the coming years.

    The group is "not hoping for" a return to all-aluminium plane bodies, after composites established their role, but sees much to play for as planemakers study options for jets that will take to the skies in the 2030s, Chief Executive Officer Jean-Marc Germain said.

    "I think like everything in life there is a moment of excitement about composites, justifiably so, but sometimes the pendulum will swing as well," he said in an interview coinciding with the Paris Airshow.

    Composites have clearly shown their attractiveness in wing strength. But design setbacks in some parts of the plane have already let aluminium claw back share in recent jet programmes, Germain said, declining to give specific details.

    The tried-and-tested qualities of aluminium have been talked up by metal suppliers as planemakers focus on meeting tight delivery schedules and ambitious production targets.

    But aluminium is not just a fallback option, according to Germain, who said developments in lighter alloys and combining of different materials would keep metals in the running as planemakers draw up new designs.

    At Constellium's research centre in Voreppe, located in what was the heartland of the French aluminium industry in the Alps, test projects range from combining fine layers of metal and glass fibre, to gluing aluminium parts together with resin to dispense with rivets that weigh more.

    Lighter alloys have already earned Constellium and its peers market share on recent jet programmes by narrowing the weight gap with lightweight composites. But they also cost more, eroding aluminium's price advantage over composites, while plastic materials continue to benefit from innovations.

    A new single-aisle airliner produced by Russia's United Aircraft Corporation boasts composite wings made using a cheaper manufacturing process that could help open up the middle of the jet market to composite-driven designs.

    http://www.reuters.com/article/airshow-paris-constellium-idUSL8N1JG3HN

    Mike Delaney, general manager of airplane developments at Boeing Commercial Airplanes confirmed for the first time publicly that the proposed new aircraft would have a composite fuselage, a key decision likely to boost suppliers such as Boeing's sole composites contractor Toray of Japan.

    http://www.reuters.com/article/airshow-paris-boeing-jet-idUSL8N1JH3J0

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    China alumina prices face further pressure as smelter cuts start



    Chinese alumina prices are facing further downward pressure in the near term as more smelter cuts are now anticipated, following leading producer Hongqiao Group’s 250,000 mt/year cutback effected Tuesday, multiple market participants said.

    A Hongqiao official confirmed to S&P Global Platts on Tuesday of the cuts, and did not rule out further cuts moving forward.

    The current cutback by Hongqiao was considered relatively small in quantity compared with the company’s 7-8 million mt/year run rate, and China’s overall capacity of around 44 million mt/year in 2017, sources said.

    “But it will likely have an impact on the overall market, as Hongqiao is the top producer, and this will motivate other provincial governments to step up on planned cuts in their regions, like in Xinjiang,” a Xinjiang smelter source said.

    “Everyone has been eying us as the leading producer and waiting for us to cut … now that we’ve cut, others will likely follow,” an official from Hongqiao said.

    The Xinjiang local government has also issued a notice earlier this week informing of another fresh round of inspections in Xinjiang in a bid to support central government’s supply-side reforms.

    There was no specific detail in the notice on how these inspections will be carried out, but multiple Xinjiang smelter sources said this reflected the authorities’ “serious stance on ensuring the cuts take place.”

    On Tuesday, major Xinjiang producer East Hope also told S&P Global Platts that it aims to start cutting back smelting capacity at the end of June, in compliance with the government’s move this year for supply-side reforms.

    Talks of the cuts have supported domestic aluminum prices as a result, but will continue to add pressure to alumina prices, which have already been seeing a downtrend in the past week following refinery restarts in Shanxi after earlier scheduled turnarounds in May.

    EX-WORKS SHANXI ALUMINA PRICES DRIFT AT YUAN 2,630/MT

    On Tuesday, the Platts China ex-works Shanxi daily spot alumina assessment stood rangebound at Yuan 2,630/mt ($386/mt) full cash terms, unchanged from Monday, though down Yuan 20/mt on the week.

    The current price, however, remained Yuan 260/mt higher from last month, as prices had rallied earlier due to the Shanxi refineries’ turnarounds.

    The bid-ask spread for spot alumina continued mostly at Yuan 2,600-2,650/mt cash on Tuesday, but market expectation were that tradeable levels would range at Yuan 2,500-2,600/mt cash in the near term.

    “It’s hard to say how much further prices will fall, there’s a lot of anticipation of smelter cuts in the second half of the year,” a South China smelter source said.

    “It all depends on how the smelter cuts pan out … if Hongqiao will cut more and if East Hope actually cut as planned, and if others follow. We’ll have to wait and see,” he added.

    A Shanxi refiner reported selling 70,000 mt of spot alumina to a Northwest China smelter at around Yuan 2,650/mt cash to 30% credit terms, but the trade was unconfirmed on Tuesday.

    The front-month aluminium contract on the Shanghai Futures Exchange closed at Yuan 13,920/mt on Tuesday, up from Yuan 13,580/mt last week, but down from Yuan 13,965/mt a month ago.

    http://www.hellenicshippingnews.com/china-alumina-prices-face-further-pressure-as-smelter-cuts-start/

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    Steel, Iron Ore and Coal

    India assures domestic coal supplies for steel, cement companies - details



    India's Coal Ministry has offered assured domestic coal supplies to companies outside of their power generation industry as another step towards zero coal imports, Mining Weekly reported on June 17.

    Under the new framework, coal consuming companies in the steel, cement and fertiliser sectors would receive coal supplies from Coal India Limited (CIL) to the extent of 50% of their import requirements. CIL will designate specific mines from which such supplies would be made, a government official said.

    He said this was in line with a similar decision taken last month in the case of private thermal power producers or independent power producers (IPPs) who have also been assured domestic coal supplies to achieve zero imports during the current fiscal year.

    Government owned and operated power companies led by NTPC have already stopped importing coal for their power plants, he added.

    India produces sufficient volumes of coal to enable the assured supply to power generation companies, as well as the steel, cement and fertiliser industries.

    According to government data, Indian thermal coal imports during 2016-17 has been pegged at 149.84 million tonnes, against 164.78 million tonnes in the previous fiscal year.

    Imports of coking coal was estimated at 41.94 million tonnes during 2016-17 against 44.74 million tonnes in 2015-16.

    During May, India's coal imports has provisionally been estimated at 18.5 million tonnes, down about 6% over the same period last year.

    Total coal imports by power companies during 2016-17 have been estimated at 65 million tonnes, down 19% year on year, while of 84.84 million tonnes of imported coal were used by companies in the steel, cement and fertiliser sectors.

    At least two analysts have pointed out that with the Indian government pushing for greater use of natural gas, the offtake of coal by non-power companies would ease in the medium term.

    The analysts said that India's New Steel Policy envisaged the promotion of natural gas-based steelmaking facilities across the country as an alternative to reduce the operation of blast furnaces dependent on imported coking coal.

    The national steel policy also envisages that coal-based direct reduced iron (DRI) steel producers shift to using natural gas.

    But to enable these small and medium DRI units to do so in a cost effective way, natural gas would have to be made available to them at a cheaper rate so that the shift is not just from high cost imported coal to high cost imported liquefied natural gas, said the analysts.

    It is understood that the country's Petroleum and Natural Gas Ministry was currently engaged in exploring the option of extending the "pooled price mechanism" for natural gas to steel producers. Fertiliser companies already benefit from this mechanism.

    http://www.sxcoal.com/news/4557529/info/en

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    Rio Tinto recommends Yancoal coal offer over Glencore



    Rio Tinto on Tuesday said it was sticking to a recommendation of China-backed Yancoal as the preferred buyer of its Coal & Allied division in Australia, rejecting a counter-offer from Glencore .

    Miner-trader Glencore earlier this month said it had offered $2.55 billion cash for coal mines owned by Rio Tinto, outbidding a previous offer from Yancoal.

    Rio said in a statement it had reviewed additional information, including confirmation of Yancoal's funding plans, confirmation from Yancoal concerning regulatory approvals and improved terms.

    "We believe Yancoal's offer to purchase our thermal coal assets for $2.45 billion offers the best value and greater transaction certainty for shareholders," Rio Tinto Chief Executive J-S Jacques said in a statement.

    "The sale of Coal & Allied will create outstanding value for shareholders and is consistent with our strategy of simplifying our portfolio to ensure the most effective use of our capital."

    Rio Tinto said Yancoal had agreed to accelerate deferred payments and pay a coal price-linked royalty. It said the offer could be completed in a more timely manner than Glencore's bid of $2.55 billion, plus a royalty.

    Rio said Glencore had not secured clearance from various jurisdictions, including the Australian, Chinese, South Korean and Taiwanese authorities.

    Rio Tinto general meetings have been convened for June 27 and 29 for Australian and British shareholders to vote on the proposed deal, which Rio said it expected to be completed in the third quarter of the year.

    http://www.reuters.com/article/rio-tinto-divestiture-glencore-idUSL8N1JC3BL
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    Watching Teck.

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    Blurry demand outlook drags China steel off three-week high



    Chinese steel futures slipped on Tuesday after a four-day rise, reflecting concerns over slower demand in the world’s top consumer as rains curb construction activity in many parts of the country.

    “We’re entering the rainy season which is expected to last for 1-1/2 months, so seasonal demand for steel would slow from now on,” said a Shanghai-based trader, citing rains in China’s eastern and southern areas.

    The most-active rebar on the Shanghai Futures Exchange closed 0.9 percent lower at 3,109 yuan ($455) a tonne. The construction steel product peaked at 3,185 yuan on Monday, its strongest since May 31.

    Signs of some slowdown in China’s property market may also weigh on steel demand, with the increase in home prices moderating in first- and second-tier cities in May, showing the impact of government measures to keep the market from overheating.

    Weaker steel prices weighed on raw material iron ore, with the most-traded iron ore on the Dalian Commodity Exchange easing 0.7 percent to 430.50 yuan a tonne.

    “Iron ore supply is still high compared with demand,” the trader said.

    Stocks of imported iron ore at Chinese ports stood at 138.95 million tonnes on Friday, according to data tracked by SteelHome. The week before, the stockpiles reached 140.05 million tonnes, the highest ever on SteelHome’s records that date back to 2004.

    Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB rose 1 percent to $56.30 a tonne on Monday, according to Metal Bulletin, in line with firmer futures in the previous session.

    http://www.hellenicshippingnews.com/blurry-demand-outlook-drags-china-steel-off-three-week-high/
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    Hebei's private steel mills Jan-April profit surge nearly 50 pct



    Hebei's private steel mills Jan-April profit surge nearly 50 pct

    http://en.sxcoal.com/
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