Mark Latham Commodity Equity Intelligence Service

Wednesday 24th May 2017
Background Stories on www.commodityintelligence.com

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    Macro

    3D Graphene: world's lightest material

    Aerogels are some of the lightest solid materials on Earth, containing up to 99.98-percent of air. As part of a research last year, a team of ETH Zurich scientists developed a new type of porous gold foam that is as light as air and, even floats on cappuccino. The world’s lightest material, however, is graphene aerogel, weighing only 160 gm per cubic meter. What is more, researchers have recently found a way to produce the substance easily, via Image title3D printing.
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    China says to 'adjust' prices on major power grid


    China said on Tuesday it would "adjust" power prices on a major grid connecting utilities in the west of the country and consumers in the east as part of ongoing reform in its mammoth energy sector.

    The state planner did not give details on price changes, but said the step would lower power costs for companies.

    The state planner also said on its website that prices would be adjusted on a grid connecting the western Ningxia region to south China's Zhejiang and Hunan provinces, as well as on an intrastate grid in Hainan province.

    The steps come as Beijing's ambition to eventually liberalize the country's power prices meets repeated hurdles.

    Utilities in the Ningxia region have asked the government to temporarily halt the area's new wholesale power trading market as they were selling their power at a discount.

    http://www.reuters.com/article/us-china-pricing-idUSKBN18J08P
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    BHP hires Barclays to divest U.S. shale gas assets: sources


    BHP has hired Barclays to divest its U.S. Fayetteville shale gas assets as the miner seeks to fend off an attack by activist funds, two sources close to the matter said on Tuesday.

    BHP said last month the gas-rich Fayetteville field in Arkansas was under review and that it was "considering all options, including divestment".

    BHP declined to comment and Barclays was not immediately available for a comment.

    The miner had tried to sell the business more than two years ago, but the attempt was shelved in February 2015, when it said it planned to "maximize value" of the assets.

    The revived sale comes as activist investor Elliott Advisors, which has built up a 4.1 percent stake in BHP's London-listed arm, urged for changes to boost shareholder value.

    The sale is expected to draw interest from smaller mining companies already operating in the region, the sources said.

    The Fayetteville assets, which BHP acquired for $4.75 billion in 2011, had a book value of $919 million at the end of 2016, according to the company's annual accounts.

    The miner had to write down the assets by $2.8 billion in 2012 due to lower gas prices.

    Earlier this month, Elliott called for BHP to run an independent review of its petroleum division, valued at more than $20 billion, after asking to spin off the U.S. oil and gas assets.

    BHP has rejected the call by Elliott, which was later joined by Australian boutique manager Tribeca Partners.

    The mining company denied any link between the activists' move and prospects for Fayetteville including divestment, and said the move was instead part of an ongoing review.

    Within the petroleum business, BHP has long made it clear it intends to focus on liquid products in the United States, a more lucrative business than dry gas.

    In February, it agreed to spend $2.2 billion to fund its share of investment for the second phase of the Mad Dog oilfield in the Gulf of Mexico.

    http://www.reuters.com/article/us-bhp-billiton-divestiture-shale-idUSKBN18J1IY
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    Amid regional strains, Qatar says hackers post fake comments by Emir


    Qatar said on Wednesday its state news agency had been hacked, after it reported remarks purportedly by its ruler criticizing aspects of U.S. foreign policy in the wake of U.S. President Donald Trump's visit to Saudi Arabia.

    The comments attributed to Sheikh Tamim bin Hamad al-Thani continued to be carried by media in some other Gulf Arab states, even after Qatar said the report was fake, suggesting renewed strains between Qatar and some of its Gulf Arab neighbors.

    "The Qatar News Agency (QNA) website has been hacked by an unknown entity. A false statement attributed to His Highness has been published," the Gulf Arab state's government communications office said.

    "An ongoing investigation will be put in place to look into this matter. The statement published has no basis whatsoever, and the competent authorities in the State of Qatar will hold all those (involved) accountable."

    Ties between Qatar and other Gulf Arab states suffered an eight-month breach in 2014 over Qatar's alleged support for the Muslim Brotherhood, an Islamist group whose political ideology challenges the principle of dynastic rule.

    Qatar, Saudi Arabia and the United Arab Emirates have used their oil and gas revenues to influence events in other Middle Eastern countries, and rifts between them can alter the political environment in Libya, Egypt, Syria, Iraq and Yemen.

    The hacked report, which said Sheikh Tamim had spoken at a military graduation ceremony, cited him as being critical of renewed tensions with Gulf Arab adversary Iran.

    A government spokesman told Reuters the Emir had attended a graduation ceremony for Qataris doing national service, "however, he did not make any speech or give any statements".

    The incident happened four days after Qatar complained publicly that it was the target of "an orchestrated barrage" of criticism by unknown parties in the run-up to Trump's visit alleging the Gulf state supported terrorist groups in the Middle East.

    Trump met Sheikh Tamim and other Gulf Cooperation Council (GCC) leaders on his trip to Saudi Arabia on Saturday and Sunday, where he renewed his assertion that Iran was a leading state sponsor of terrorism.

    Iran denies the allegation and says Saudi Arabia, the dominant GCC power, supports militant Islamist armed groups such as al Qaeda and Islamic State. Riyadh, in turn, denies that.

    Arguments over the Brotherhood, the most influential Islamist group in the world, were at the heart of a rift among Gulf Arab states that in 2014 saw Saudi Arabia, the UAE and Bahrain withdraw their ambassadors from Doha.

    They only returned after Qatar said it would not allow itself to be used by the Brotherhood for its activities.

    http://www.reuters.com/article/us-qatar-cyber-idUSKBN18K02Z
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    Oil and Gas

    Flotilla Carrying 10 Million Barrels of U.S. Crude Heads to Asia


    Oil tankers carrying around 10 million barrels of U.S. crude are en route to Asia, according to shipping data and trade sources, as U.S. producers take advantage of favourable prices to ship to the region while OPEC ponders further supply cuts next week.

    At least eight tankers are in transit, sources said and the shipping data in Thomson Reuters Eikon showed, with one of them carrying the first ever cargo of Southern Green Canyon crude purchased by Japanese refiner Cosmo Energy. Another contains the first Alaskan North Slope cargo to arrive in Asia in eight months.

    OPEC members meet next week to discuss extending a global supply cut, but the possibility of U.S. supply eating into their market share will be a challenge. While member countries have largely restrained their supply, they have remained intensely focused on keeping market share with Asian refiners. But relatively cheap U.S. crude has buoyed exports to Asia.

    Traders expect that May U.S. crude exports could reach around 1 million barrels per day, with a sizable portion of that going to Asia.

    Last week, U.S. crude exports touched 1.09 million bpd, the third highest on record, according to U.S. government data. If numbers remain elevated, they could surpass the record 1.2 million bpd seen in February.

    “We expect that momentum to continue when (Dakota Access Pipeline) opens and as more Permian production hits Corpus Christi docks,” said Sandy Fielden, director of oil and products research at Morningstar, of the exports.

    U.S. oil production has risen by 10 percent to 9.3 million bpd since mid-2016, according to the Energy Information Administration.

    ATTRACTIVE ARBITRAGE

    Increasing traffic to Asia is possible because of a widening premium for Brent over U.S. crude, which touched a six-week high on Wednesday.

    “Early May spot prices showed both Brent and Dubai trading at around a $3 per barrel premium to Brent and WTI Cushing, which is an open window,” said Fielden.

    Meanwhile, prompt Brent crude’s premium to Dubai, also called the exchange of futures for swap, narrowed to below $1 a barrel last month, hitting 46 cents a barrel on April 27, its tightest since 2010.

    That spread has been tightening since OPEC agreed to production cuts in November, making U.S. cargoes more competitive. An extension to OPEC cuts may further benefit U.S. producers and exporters.

    The Sydney Spirit, a Bahamas-flagged Suezmax tanker chartered by P66, is delivering Alaskan North Slope (ANS) crude to Asia, according to two sources and Reuters vessel tracking data. Half of the crude onboard the vessel is unsold, one of the sources said.

    Vessel tracking data available via the Eikon system lists the ship as “for orders,” which indicates there may not be a buyer for at least some of the crude. The ship is currently on its way to Asia.

    Meanwhile, Japanese refiner Cosmo Energy loaded the Aframax vessel Almi Star with around 300,000 barrels of Southern Green Canyon crude and Domestic Sweet Blend (DSW) outside of Houston, before picking up an additional 300,000 barrels of Maya crude at Dos Bocas, Mexico, two sources familiar with the matter said.

    That ship will move through the Panama Canal, and then transfer crude to a larger Suezmax vessel loaded with 400,000 barrels of Mexican Maya crude for a voyage to Asia, the sources said.

    P66 did not reply to an e-mail seeking comment, while Cosmo Energy declined to comment. All sources declined to be identified.

    The Montesperanza, a Suezmax, is headed to Singapore after loading at the Galveston Offshore Lightering Area. The ship is controlled by French energy firm Total SA, and the crude on it is expected to go to Japan, two sources said.

    Eikon data also shows 4 supertankers, so-called very large crude carriers (VLCCs) that are too big to pass through the Panama or Suez canals, carrying U.S. crude via the Atlantic and Indian Oceans to Singapore and China.

    https://www.oilandgas360.com/flotilla-carrying-10-million-barrels-u-s-crude-heads-asia/

    Attached Files
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    Oil Pipeline Attack Breaks Months Of Truce In Nigeria

    Oil Pipeline Attack Breaks Months Of Truce In Nigeria

    Just as Nigeria’s government and militants in the restive Niger Delta have managed to reach a kind of fragile truce with talks, amnesty funding, and incentives, a pipeline close to the Warri oil hub was attacked by suspected rebels in what was the first sabotage against the country’s oil facilities in months.

    Militants attacked on Saturday a pipeline operated by the Nigerian Gas Company Limited, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Nigeria Gas Company spokesman Violin Antaih told AFP on Tuesday.

    “It has been confirmed, even by the community people, that it was a third-party sabotage,” Antaih told AFP.

    According to the Nigerian army, the military is aware of the incident, which is now being investigated.

    Dolapo Oni, an energy analyst at Ecobank, commented for AFP that the attack was a “worrying” sign at a time when Nigeria is struggling to lift oil production and exit a recession.

    “This is probably a statement of intent, saying, ‘look, we can come back’. It looks like a warning signal,” according to the analyst.

    While it may have been meant as a warning signal, the signal is worrying for Nigeria’s crude oil production, which has been gradually recovering in recent months after the attacks on oil infrastructure subsided.

    Nigeria’s production had dropped from 1.95 million bpd in 2015 to 1.44 million bpd at the height of the attacks last summer. After the number of attacks on oil facilities diminished, the country is planning to lift crude oil production to 2.2 million barrels daily after completing repair work on the Forcados pipeline.

    Earlier this month, Nigeria increased the budget for its amnesty program for militants from the Niger Delta almost threefold, to US$175 million (55 billion naira), in a bid to solidify the peace process in the oil-rich delta.

    The country also plans to include illegal refineries in the Niger Delta in a new government initiative to group refiners into the so-called ‘modular refineries’ consortium concept, aimed at dissuading perpetrators from attacking oil infrastructure.

    http://oilprice.com/Latest-Energy-News/World-News/Oil-Pipeline-Attack-Breaks-Months-Of-Truce-In-Nigeria.html
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    Libya And Nigeria May Be Asked To Cut Production, Says Iraqi Oil Minister


    Even Libya and Nigeria could be asked to cut production at the Organization of Petroleum Exporting Countries’ (OPEC) meeting in Vienna on the 25th, when the bloc is expected to review the terms of the November agreement to cut production by 1.2 million barrels per day, according to the Iraqi oil minister.

    When the nations last discussed the deal, Libyan output remained seriously curtailed due to several years of post-Gaddafi infighting, earning the North African country an exemption from the quotas that bound the rest of the block’s members.

    Similarly, militant groups in the Niger Delta attacked Nigeria oil facilities to the point that production fell to roughly half of its former levels at times.

    But both countries have recovered significantly from the chronic domestic strife. Libya’s newfound stability has allowed output to recently touch 800,000 barrels per day – compared to just 365,000 bpd in October. Nigerian production is also recovering from the attacks as Lagos’ officials meet with residents of the Niger Delta to discuss infrastructure improvement and revenue sharing opportunities.

    These developments pushed Iraqi oil minister Jabar al-Luaibi to suggest at a press conference in Baghdad that the two African nations could also be expected to cut output as part of the deal’s extension, expected to last until March 2018. With Nigeria and Libya onboard, the cuts could be raised to 1.8 million bpd, the minister added.

    But Nigeria still expects that its exemption will continue for at least six months, according to oil minister Ibe Kachikwu.

    “The indications that I have so far is that there is a willingness to extending [the exemption],” he told reporters in Houston. “I expect we will get OPEC exemption but one year from now will it be renewed? I am not too sure.”

    Libya also has plans to raise output to 1.32 million bpd by the end of the year, up from an earlier target of 1.1 million bpd.

    http://oilprice.com/Latest-Energy-News/World-News/Libya-And-Nigeria-May-Be-Asked-To-Cut-Production-Says-Iraqi-Oil-Minister.html

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    Rosneft cuts oil output with an eye to ramping up again


    Russia's Rosneft is ready to resume full oil output quickly once OPEC-led cuts end as the country's top producer has focused its own cuts on newer fields, its chief executive has said.

    Those cuts run until June 30, though oil ministers from OPEC and non-OPEC countries meeting in Vienna this week are expected to agree to extend a deal that has seen 22 countries reduce global output by 1.8 million barrels per day (bpd) since January 1.

    "Restrictions (under the OPEC deal) are mainly applied to greenfields," Rosneft Chief Executive Igor Sechin told reporters last week, referring to newer oil fields.

    "We will maintain mature fields as they are and won't cut production there," he said. "Our priority will be maintaining mature fields."

    Mature fields require the pumping of gas or liquid to increase crude flows and once that is halted, it takes time to restore the pressure. That is less of an issue at new fields, where the flow rate is usually higher.

    STRUCTURE OF CUTS

    Rosneft, the world's top listed oil company by output, accounts for around 40 percent of Russia's crude production.

    It has targeted its cuts at its Tagul, Suzun and Vankor fields in the so-called Vankor cluster which is relatively new, among other sites, according to a source familiar with the matter who did not want to be identified.

    The cuts did not touch mature units such as Yuganskneftegaz, Rosneft's largest, the source said.

    A company quarterly report in May showed that production fell at nearly all of Rosneft's fields, both mature and newer, compared to the fourth quarter of 2016.

    However, the source said that in the case of mature fields such as Yugansk, production was affected by unusually cold weather, not deliberate steps to lower output.

    "As part of the (OPEC and non-OPEC) deal, Rosneft has cut its production at new projects, while the company's strategy is aimed at development of mature fields," Rosneft said in emailed comments to Reuters.

    "This allows for boosting the efficiency of brownfields development, increase production at West Siberia fields and to raise greenfields' output in the shortest time once the pricing environment improves."

    According to energy ministry data, which excludes some Rosneft units, the company's average output in April was down by 116,000 bpd compared to October, the reference month for the deal.

    Russia promised a total cut of 300,000 bpd.

    Rosneft, which produced an average of 4.62 million bpd in January-March, saw output in the first quarter fall by 12.5 million barrels or 2.9 percent from the previous three months.

    LOSING MOMENTUM

    At other Russian oil companies, cuts in production have come primarily from mature fields, industry sources said.

    But they said steps were being taken so that output could be ramped up as quickly as possible.

    Mid-size oil company Russneft, whose shareholders include commodities trader Glencore, has mainly mature fields. It told Reuters in emailed comments that one or two months would be enough to get back to previous production levels.

    A geologist working with a major Russian oil company, who did not want his name or the name of his employer published, said the output cuts were mainly done at high-rate wells where production could be restored in around a month.

    Russian oil companies often drill high-rate wells at mature fields in a bid to maintain or, where possible, increase production.

    "If it wasn't for the restrictions (on global output), we would now not be at October levels... but higher," a high-ranking oil industry executive said. "We have not just simply cut, we are losing the growth momentum."

    Russia ramped up its output to an all-time peak of 11.247 million bpd in October, with output for the month averaging 11.23 million bpd.

    http://www.reuters.com/article/opec-oil-rosneft-oil-idUSL8N1IK759
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    Ecopetrol losing 26,000 b/d of crude due to labour unrest: source



    Colombia's state-controlled Ecopetrol is losing 26,000 b/d of crude production due to civil disturbances that broke out last week that forced it to suspend certain operations at its La Cira Infantas oil field in the mid-Magdalena River region in north-central Colombia.

    A source at the company said Monday the protest marches, road blockades and vandalism have impelled the company to shut down 617 production wells. The situation has worsened since Friday, when the company said the impact from the protests which began last week was the loss of 11,000 b/d.

    In addition, serious environmental impacts were also reported Friday after vandals opened several drill rig valves, causing spills of hundreds of barrels of oil. Blockades of entries to the affected well, Infantas 3119, meant that repair and cleanup crews were unable to enter the encampment and plug the spill.

    Local press reported that demonstrators were cutting down trees to use as blockades to keep Ecopetrol personnel from entering the work installations. Workers attempting to enter the site were being harassed and threatened, according to press reports.

    The lost production at the field located in the El Centro township amounts to about 3.6% of Ecopetrol's 712,000 b/d of oil equivalent that it averaged during the first quarter. Colombia's oil patch has been plagued by similar blockades in recent years, which has been cited by wildcatters as a factor in the sharp reduction in oilfield investment since 2014.

    If the La Cira Infantas shut-in persists, it would be especially impactful because the field is Ecopetrol's only major installation showing year-on-year production growth. Over Q1, crude output grew 17% to 22,500 b/d, and thanks to improved recovery methods production is still trending upward, the company has said.

    All other oil fields owned by Ecopetrol showed year-on-year reductions in output, according to Q1 results published earlier this month, a result in many cases of lower capital expenditures. Lower global oil prices and the high cost of pumping, diluting and transporting Colombia's predominantly heavy crudes have pushed Ecopetrol to shut production at several of its oilfields over the last two years.

    In a statement Friday, Ecopetrol said the blockades and shut-in had affected 1,184 workers and 120 different service contracts.

    The cause of the La Cira Infantes disturbance was attributed by the company to a change in work rules that Ecopetrol and other oil companies have put in force since Colombia's labor ministry last year issued Decree 1668. The law prohibits companies from using or sanctioning illegal third parties for the hiring of oilfield workers.

    In the past, some of those intermediaries have used their power to extort workers for a percentage of their salaries in exchange for giving them jobs. Those entities have also bestowed jobs as a form of political patronage.

    Under the decree issued in October, Ecopetrol and other oil companies must manage the hiring of field personnel in a way that is "direct, transparent and free of charge," the company said.

    Ecopetrol also called on the labor union known by its Spanish initials USO "and other protesters promoting these blockades" to come to the table to negotiate a settlement of the labor dispute.

    "Ecopetrol again overwhelmingly rejects the events of El Centro and upholds the right to work of those associated with the [La Cira Infantas] oil field, as well as the right to free mobility around the township," the company said in its Friday statement.

    It also defended the enforcement of the decree, saying it insured a "more just and efficient relation between labor supply and demand."

    The enforcement of Decree 1668 caused a similar disturbance earlier this month at the Acacias section of the Castilla oil field in eastern Meta province. Blockades and vandalism there forced the shutdown of 92 wells and the loss of 10,000 b/d of crude. The blockades since have been lifted and the Acacias field has returned to production, the Ecopetrol source said Monday.

    https://www.platts.com/latest-news/oil/bogota-colombia/colombias-ecopetrol-losing-26000-bd-of-crude-21803189
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    Energy giant Woodside sets 10-year project hiatus



    AUSTRALIA’S biggest oil and gas producer will hold off on developing major new projects for at least a decade as it leans on existing assets to top up cash reserves.

    Woodside Petroleum says it wants to lift free cash flow to $US4.5 billion ($6 billion) by 2021, then invest in boosting production at ventures such as the massive Browse gas field off the Western Australian coast. Only then will it consider fresh projects, it says.

    Speaking at a briefing for investors yesterday, Woodside chief Peter Coleman said that despite “rising global demand for gas and an anticipated supply shortfall”, the company would not rush into new developments.

    “At a time when large greenfield projects are challenging, Woodside is preparing to capture new value from low-cost brownfield developments,” Mr Coleman said.

    “We see further upside potential from lower capital intensity and quicker-to-market opportunities.”

    Timing will be key for the three-phase, 15-year strategy.

    Woodside aims to boost production 15 per cent by 2020 and maintain its gross profit margins in a range of 40 per cent to 45 per cent.

    That projection hinges on an average price for Brent crude oil of $US65 a barrel.

    From 2022, it will look to fully develop Browse, sending gas to its plant at Karratha, west of Port Hedland, after finally moving on from plans for a floating platform to process liquefied natural gas.

    It will also build a Burrup hub, named after the peninsula at Karratha, where it plans to send gas from its as yet uncommitted Scarborough field.

    Development of long-term ventures such as the greenfield Kitimat LNG project in western Canada and the Sunrise gas project in the Timor Sea will only be considered after this period.

    The three-step strategy will go some way to placating investors. The company’s short-lived $11.6 billion takeover tilt for Papua New Guinea-based oil producer Oil Search in 2015 was widely criticised as opportunistic amid a slide in global oil prices.

    Woodside backed that up with vows of tighter cash controls and a commitment to existing partnerships, including at the Chevron-run Pluto and Wheatstone liquefied natural gas projects, also in the nation’s northwest.

    The Wheatstone project is scheduled to start in August.

    IG chief market strategist Chris Weston said Woodside’s forecasts could find support from the market given oil producing nations intended to extend production cuts into 2018.

    The 13-member Organisation of the Petroleum Exporting Countries cartel along with non-OPEC nations, including Russia, will meet tomorrow in Vienna to ratify a nine-month extension to cuts.

    That could further boost crude prices, which have climbed back above $US54 a barrel this week.

    “Yes, there are reasons why they wouldn’t agree — Nigeria is still increasing production after not being part of the initial accords — but all the right noises are being heard from the major members,” Mr Weston said. “What we’re asking now is how much of the extension is already being built into oil price futures.”

    Crude prices would likely breach $US60 a barrel if the extension were approved, he said. Investors would then question whether each nation would adhere to those restrictions

    http://www.heraldsun.com.au/business/energy-giant-woodside-sets-10year-project-hiatus/news-story/901d552ec648d8c6f15b5c43534dbded

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    India poised to make first purchase of US oil: official


    India is gearing up to buy its first oil from the United States, as it seeks to diversify its crude buying amid favorable price differentials, a source from India's petroleum ministry told S&P Global Platts late Monday.

    "There will be a consignment of US crude cargoes in the next few months. We are also looking to buy some oil from Canada," said the source, who spoke on condition of anonymity.

    India has bought Canadian crude twice before, buying Hibernia crude earlier this year and a cargo of White Rose in 2013.

    The source added that these flows will be on a short-term contract basis, and if there is a good response he expects purchases of US and Canadian crude to rise in the coming year. He also said that these cargoes will be used by Indian state oil refiners, but would not divulge specific names.

    Indian state refiners are very big buyers of light sweet crude oil, which are largely low in sulfur and yield a generous amount of diesel, jet fuel and gasoline, which are the profit-making products for global refineries.

    The bulk of rising US oil output is tight oil or shale oil which is of this quality, and is very similar to Nigerian crude, of which is India is the largest buyer.

    Trading sources added that as a result it was not very surprising to see India buying US tight oil though freight costs from the US to India are typically not considered economical.

    The past few months have seen Asian refiners spoilt for choice, as new and unusual arbitrages have emerged due to output cuts by OPEC and 11 major non-OPEC producers.

    A number of refiners in China, Japan and South Korea have been importing more light oil and even sour grades from the US as they have become competitive against sour crude imports from the Middle East, where most of the OPEC-led cuts have materialized.

    Chinese independent refiners received 2 million barrels of Mars and Thunderhorse crudes in April, according to market sources.

    In addition, Indian imports of Russian Urals crude have risen this year as the key export grade shows signs of competing with some Middle Eastern sour barrels.

    https://www.platts.com/latest-news/oil/vienna/india-poised-to-make-first-purchase-of-us-oil-27834734

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    LNG going where it is not needed


    Bloomberg are reporting that cargoes from around the world filled with LNG are sailing to Europe just when the region does not really need them.

    Same-day gas in the UK fell the most since October as forecasts for the week showed summer is arriving early, weakening demand. That comes just as LNG vessels that set sail for Europe when prices were higher are set to arrive and supplies from Norway increase after planned maintenance.

    Same-day gas in the UK decreased by as much as 12% to US$4.63 per million British thermal units, the lowest level since 4 October. The contract is trading about 25% below its five-year average for the time of year but more than 20% above last year’s level.

    The Netherlands is set to receive its first LNG cargo from the US in the coming weeks, while Nigerian shipments are reaching France after a pipeline exploded in February, distressing the industry there. Northwest Europe may get 16 tankers total in May, compared with this year’s low of five in February.

    Gas flows from Norway into the UK increased by almost 50% above their 10-day average to almost 90 million m3 a day. Seasonal maintenance works that curbed supply have been completed, with no more planned until 15 June.

    https://www.lngindustry.com/liquid-natural-gas/23052017/lng-going-to-where-it-is-not-needed/
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    DONG Energy sells oil & gas business to Ineos


    Danish energy company DONG Energy has entered into an agreement to divest its upstream oil and gas business to chemicals company Ineos.

    DONG informed on Tuesday that it agreed to divest the entire share capital of DONG E&P A/S to Ineos for an unconditional payment of $1.050 billion (DKK 7 billion) on a cash and debt free basis, a contingent payment of $150 million (DKK 1.0 billion) related to the Fredericia stabilization plant and a contingent payment of up to $100 million (DKK 0.7 billion) subject to the development of the Rosebank field, in the UK North Sea.

    Ineos will, by acquiring DONG E&P A/S, take over decommissioning liabilities of approximately DKK 7 billion. DONG Energy will retain all cash flows until June 30, 2017 (free cash flow was DKK 2.1 billion in Q1, 2017) and retain all hedge contracts related to the oil & gas business (market value was DKK 1.9 billion as at March 31, 2017).

    Earlier this year, Ineos also bought Forties Pipeline System (FPS) business, with assets including the main Forties offshore and onshore pipelines and other associated pipeline interests and facilities, from the UK oil giant BP.

    Henrik Poulsen, CEO of DONG Energy, said: “Since the decision in 2016 to divest our upstream oil and gas business, we’ve actively worked to get the best transaction by selling the business as a whole, getting a good and fair price for it and ensuring the optimal conditions for the long-term development of the oil and gas business. With the agreement with Ineos we’ve obtained just that.”

    “The transaction completes the transformation of DONG Energy into a leading, pure play renewables company,” Henrik Poulsen concluded.

    Danish company said that the transaction is expected to result in a gain on sale of enterprises of approximately DKK 2.5 billion including the contingent payment related to the Fredericia stabilization plant. The gain will be presented as part of net profit from discontinued operations in DONG Energy’s financial statements after closing.

    Of the $1.050 billion unconditional consideration, $250 million (DKK 1.7 billion) will be payable from 2018 to 2020. Closing of the transaction is subject to regulatory and certain other third party approvals and is expected to take place in the third quarter of 2017.

    At closing of the transaction, approximately 440 employees working for DONG Energy Oil & Gas will transfer to employment with the Ineos group.

    J.P. Morgan acted as exclusive financial adviser to DONG Energy in connection with the transaction.

    http://www.offshoreenergytoday.com/dong-energy-sells-oil-gas-business-to-ineos/

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    Oil Prices Rise As API Reports Draws Across The Board


    The American Petroleum Institute (API) reported a draw of 1.5 million barrels in United States crude oil inventories, compared to analyst expectations that markets would see a draw of 2.3 million barrels for the week ending May 19—the second such expectation in two weeks. While 1.5 million barrels is not a huge draw, this week’s crude oil inventory draw was accompanied by across the board draws for gasoline, distillates, and oil at the Cushing, Oklahoma facility as well.

    Gasoline inventories fell by a sizable 3.15 million barrels, according to the API.

    Oil prices have risen this week, from WTI at $48.76 last week to $51.41 this week, at 2:27pm EST on Tuesday. Brent was trading at $54.11 at 2:27pm EST, compared to $51.78 last week. Both benchmarks have gained +$5.00 over the last two weeks.

    Still, oil prices are hanging precariously in the balance, with OPEC pulling the strings on one side, and US inventories and rig count the other. OPEC has made a good showing of managing expectations—struggling to find the balance between 1) promising enough to keep oil from falling to levels we saw two weeks ago and 2) not promising so much that markets are disappointed with a mere follow through, thus leaving space to exceed expectations—the only move left that will lift prices.

    Distillate inventories fell this week by 1.85 million barrels—offsetting almost perfectly the 1.8 million barrel build last week. Inventories at the Cushing, Oklahoma, site fell by 210,000 barrels.

    http://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Rise-As-API-Reports-Draws-Across-The-Board.html
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    Saudi Aramco plans up to $30 bln investment in Motiva by 2023


    Saudi Aramco plans an investment of up to $30 billion in its U.S. subsidiary Motiva Enterprsies LLC, the company said in an announcement on Saturday at a business summit in Saudi Arabia.

    The company said that $12 billion would be the initial investment in a project to expand refining capacity at Motiva's Port Arthur, Texas, refinery and extend Motiva's operations in the petrochemical value chain.

    A likely additional investment of $18 billion is expected into Motiva by 2023, it said.

    http://www.reuters.com/article/motiva-investment-saudi-aramco-idUSL1N1IP28I
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    Reeves County: The Most Rigs in the U.S.



    NBL, PDCE, REN, WPX and EOG are county’s best producers

    Reeves County, Texas is currently the most active county in the U.S. by rig count, as it lies near the heart of the massively popular Delaware Basin. Capital One released a “deep dive” into this county today, identifying the best producers in the area.

    According to Baker Hughes, there are 58 rigs currently drilling in Reeves County, 6.4% of the total U.S. wells online currently. According to IHS, a total of 130 wells have been drilled in the county since the beginning of January and have at least six months of production data.

    According to Capital One, the top five operators in the basin are:

    Noble Energy (ticker: NBL),
    PDC Energy (ticker: PDCE),
    Resolute Energy (ticker: REN),
    WPX Energy (ticker: WPX) and
    EOG Resources (ticker: EOG).

    This ranking is based on average 6-month cumulative production per 1000’ lateral for all wells drilled in the county since January 1, 2016.

    Importantly, Capital One calculates BOE on a 20:1 basis, rather than the standard 6:1 basis. This is done to examine the economics of these wells rather than the equivalent energy output.

    It is notable that there are not many wells to base this conclusion on. Only 26 wells from five top companies combined meet the criteria for production history. WPX, in particular, has only drilled two wells in Reeves County since the beginning of last year that have at least six months of production data.

    According to IHS, Noble Energy’s Calamity Jane 2101H has had the best six month production of any recent well in Reeves County. This well was brought online in the second quarter of 2016, with a reported maximum IP rate of 2,541 BOEPD. Over the first six months of production Calamity Jane produced about 1,020 BOPD. Noble, Cimarex (ticker: XEC), PDC and Resolute account for the top ten best wells in the basin.

    Long laterals no guarantee of success

    When expressed as BOE/1000’lateral, it seems that longer laterals do not necessarily ensure that a well will be more productive. The 1st, 2nd and 4th best producers in the basin each have average lateral lengths below 6’000. On the other hand, Resolute and EOG, the 3rd and 5th best producers, have the longest average wells in the basin.

    The individual well results reflect this result. The best well in the basin has a 4,859’ lateral. The 7th best well, drilled by PDC, has merely a 1,900’ lateral. This is truly tiny in the age of 10,000’ lateral wells. However, this ranking is only based on 20:1 BOE produced per 1,000’ lateral over the first six months of operation. Companies often turn to longer laterals as a cost saving measure, as it is often cheaper to drill one long well instead of two shorter wells.

    EnerCom posts weekly data comparisons for approximately 200 publicly traded E&P companies. The chart below looks at some of the 35 data points that EnerCom publishes on a weekly basis, specifically for the five Delaware basin operators in the Capital One report.

    https://www.oilandgas360.com/reeves-county-rigs-u-s/
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    Woodmac on Shale costs.

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    Rig contractor to pay up to $100M for big data tech firm


    Helmerich & Payne, the largest U.S. rig contractor, is set to buy a small Dallas firm touting technology that can guide drill bits to oil-soaked rock with cognitive computing.

    The Oklahoma drilling contractor will pay $75 million to purchase Motive Drilling Technologies, but that price tag could include additional payouts of up to $25 million depending on earnings in coming years, the company said Monday.

    It’s the latest deal bringing big data to the oil patch as U.S. shale drillers look to advances in analytics to cut the cost of pumping crude.

    Motive’s technology automatically makes decisions about where to find the most oil-rich rocks, and can cut down on human errors that lead to lost drilling time, according to investment bank Evercore ISI.

    The company’s technology has been used on more than 200 horizontal wells so far, said Motive CEO Todd Benson in a statement.

    Helmerich expects the deal to close in June.

    http://fuelfix.com/blog/2017/05/22/rig-contractor-to-pay-up-to-100m-for-big-data-tech-firm/

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    Carlyle EOG Deal

    New York, NY – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) and EOG Resources, Inc. (NYSE: EOG) have entered into a definitive agreement to fund the development of EOG’s oil and gas assets in Ellis County, Oklahoma. As part of the joint venture, Carlyle Energy Mezzanine Opportunities Fund II L.P. will fund up to $400 million for the development program over four years. After certain performance hurdles are achieved in the program, Carlyle’s working interests will largely revert to EOG.

    The Carlyle Energy Mezzanine Opportunities Group has 20 investment professionals based in New York and Houston and is dedicated to providing growth and refinancing capital to projects and companies in the energy sector through its two funds Carlyle Energy Mezzanine Opportunities Fund, L.P. and Carlyle Energy Mezzanine Opportunities Fund II, L.P., which have combined assets of approximately $4 billion.

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    Alternative Energy

    Shell shareholders reject emissions target proposal


    Royal Dutch Shell shareholders on Tuesday widely rejected a proposal by an environmental activist group demanding the oil major sets and publishes annual targets to reduce carbon emissions.

    As many as 94 percent of Shell shareholders voted against the resolution, preliminary results displayed during the company's annual general meeting in The Hague showed.

    Shell said that binding emissions reduction targets would mean "tying its hands" and weakening the company because it would be forced to reduce production and sales.

    http://www.reuters.com/article/us-shell-agm-idUSKBN18J1N1
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    World’s largest floating solar PV plant connected to grid in China


    The 40MW floating PV power plant relying on Sungrow inverters.
    Sungrow

    The world’s largest floating PV power plant, with the capacity of 40MW is now connected to the grid.

    Chinese PV inverter manufacturer Sungrow announced that a 40MW aquaculture project, the world’s largest floating PV power plant, had been grid connected with its SG2500-MV central inverters in the flooded coal-mining region of Huainan, China.

    The power plant is located on a lake that formed in this coal-rich area as a result of gradual subsidence and floods caused by heavy rains. Its water depth today ranges from to 4 to 10 meters.

    Sungrow’s central inverter SG2500-MV integrates the inverter, transformer and switchgear, as a turnkey station with lower transportation cost due to its 20-foot containerized design.

    In addition, the Chinese manufacturer has also supplied its SunBox PVS-8M/16M-W combiner box, customized for floating power plants, that enables their smooth operation in high humidity and salt spray environments.

    “Introducing cutting-edge technologies to products is what we are always committed to. We continue to offer better products and solutions to customers all over the world,” said Renxian Cao, president of Sungrow.

    http://reneweconomy.com.au/worlds-largest-floating-solar-pv-plant-connected-to-grid-in-china-49396/
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    Agriculture

    As Syngenta deal closes, ChemChina and Sinochem press $120 billion deal: sources


    Chinese state-owned Sinochem and ChemChina are in merger talks to create the world's biggest industrial chemicals firm, to be headed by Sinochem chief Ning Gaoning, four people with knowledge of the negotiations said.

    A deal could be announced by the end of the year, the people said, potentially just months after ChemChina completes its own $43 billion purchase of Switzerland's Syngenta, China's biggest overseas deal to date.

    A consolidation of Sinochem and ChemChina would be worth around $120 billion, one of the people said, topping companies like industrial chemicals giant BASF.

    Talks to create a Chinese chemicals powerhouse were first reported last year, but were dismissed by both companies as rumor.

    Sinochem and China National Chemicals Corp, as ChemChina is officially known, did not immediately respond to requests for comment on Tuesday. A Syngenta spokesperson said the company was not aware of any talks.

    The two companies have accelerated negotiations after regulators last month cleared ChemChina's acquisition of Syngenta, the people said. With the approval also of over 80 percent of Syngenta shareholders bringing completion of that deal nearer, focus has shifted to creating a Chinese powerhouse.

    Beijing sees a Sinochem/ChemChina deal as a blueprint for streamlining and consolidating its sprawling, debt-heavy state-owned enterprises, the people said, leaving fewer, but more powerful, national champions.

    "This is the priority now for both companies. The message from the top to the managers is very clear: don't be distracted by anything else," one of the people said, adding that the focus on this deal accounted in part for Sinochem recently ditching a plan to invest in Noble Group (NOBG.SI), a loss-making commodity trader.

    POLITICS

    A deal is not yet final, and China's 19th Communist Party Congress later this year leaves room for some political uncertainty.

    The expected retirement of ChemChina chief Ren Jianxin in January may speed up the process, one of the people said, to allow for a handover period.

    Ren, known for bold deals including Syngenta and the purchase of Italian tyremaker Pirelli, has spent over a decade and billions of dollars expanding ChemChina, founding a popular noodle chain along the way. [reut.rs/2qKfkWd]

    He may, though, have irked the authorities with his chutzpah in forging ahead with high-profile deals, another of those with knowledge of the discussions said. Ning, who made a name for himself as head of state-owned food processing group Cofco, is seen as politically well connected.

    "The magnitude of the Syngenta deal means Beijing wants to make sure it's securely managed," said a person from the oil and gas industry.

    While the ambitious Syngenta takeover brought China a portfolio of top-tier chemicals and patent-protected seeds to improve agricultural output, it also leaves ChemChina with hefty debt.

    ChemChina last year arranged $32.9 billion in bridge loans with more than 20 Chinese, European and Asian lenders - giving it a level of gearing that investors and analysts think is too high.

    QUESTIONS AHEAD

    Combining Sinochem and an enlarged ChemChina would put the group among the world leaders across the competitive chemicals, fertilizer and oil industries - a giant overseas and a major challenger domestically to Sinopec (0386.HK) and PetroChina (0857.HK).

    Sinochem is larger than ChemChina, but needs a long-term partner to expand globally market from its roots as an oil and chemical trader.

    Sinochem's growth in its energy business has stagnated, with more competition at home in trading from companies including Unipec and Chinaoil, while its overseas oil and gas assets have struggled amid prolonged weaker oil prices.

    Regulators may yet prove an obstacle.

    During the European Commission approval process for the ChemChina/Syngenta deal, both companies indicated they were not imminently pursuing a deal with Sinochem, a separate source said at the time.

    http://www.reuters.com/article/us-chemchina-m-a-sinochem-idUSKBN18J1HR

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    Top grains traders face tough choice: Partner, merge or wait for bad weather


    Commodity trader Glencore Plc's confirmation on Tuesday that it sought a tie up with grains trader Bunge Ltd likely signals the start of a wave of consolidation and partnering in the industry, as middlemen struggle to make profits amid a massive global food glut.

    Bunge and other top grains traders -- who make money by buying, selling, storing, shipping and trading crops - are struggling to adapt to a world of oversupply.

    Their supply chains have become snagged as farmers cling to their crops amid sour prices. Their margins have thinned as food and feed companies see no urgency to buy, as supplies soar for their key ingredients. New competitors are emerging, as niche firms eat into the space occupied by the grains giants, to produce GMO free, organic or other supplies that appeal to changing consumer tastes.

    Glencore made the first move when it said it approached Bunge, one of the world's top grain trading houses, about a business combination.

    Bunge said it is not engaged in discussions with Glencore.

    The talks between Bunge and Glencore's agricultural unit focused on a North American partnership, not a sale of the entire company, according to people familiar with the matter who requested anonymity to discuss it.

    Whether through partnership or outright consolidation, the grain trading sector is poised to become the latest to face fundamental change in a troubled space. Bankruptcy filings have been rising among U.S. farmers due to low crop prices, and a frenzy of deals are poised to transform the farm chemical and seed business.

    The only other immediate hope to boost traders' results? Bad weather that would damage crops, cut supply and make trading profitable again after the large harvests have driven down prices and subdued volatility essential to earnings.

    "A lot of consolidation comes when you're in tough times and agriculture is certainly in tough times," said Arlan Suderman, chief commodities economist for brokerage INTL FCStone.

    Bunge Chief Executive Officer Soren Schroder said this month that the industry needed mergers and that Bunge could take the lead.

    Bunge and competitor Archer Daniels Midland Co took a beating in the stock market this month over concerns about international trading. The other two major traders, Cargill Inc and Louis Dreyfus Corp, are privately held.

    Investors wiped $2.3 billion from the value of ADM on May 2 when it said massive global grain stocks were making it difficult to turn a profit trading grain globally.

    A day later, Bunge's market capitalization slid $1.2 billion when it reported a sharply lower first-quarter profit.

    On Tuesday, Bunge shares climbed more than 16 percent on word of Glencore's approach.

    "With big volumes, low margins, prices that are very low and more sophisticated farmers with new tools both physical and financial, there are too many players," said an industry source in Buenos Aires, where top traders have operations. "It's unsustainable."

    The big traders have tried to diversify away from commodities into areas with higher margins. Cargill bought fish-feed maker EWOS for 1.35 billion euros in 2015, and ADM acquired food flavorings company Wild Flavors for 2.3 billion euros in 2014.

    Still, ADM CEO Juan Luciano told an investor conference last week that the company may permanently lose a "layer of profitability" in its grain business due to large harvests that have hurt margins.

    An ADM spokesman also told Reuters last week the company's global trade desk suffered a small loss last year, a previously unreported detail of its results.

    REGULATORY HURDLES

    Gertjan van der Geer, senior investment manager at Pictet Asset Management, said he wants to see consolidation involving ADM and Bunge to stabilize earnings. The firm manages ADM and Bunge shares.

    But a merger of any two of the four ABCDs could raise "enormous competition problems" with regulators in the United States, the European Union and emerging markets, said Peter Carstensen, who teaches antitrust at the University of Wisconsin Law School. Deals could instead be targeted at specific geographies or sectors, bankers and analysts said.

    Dreyfus or U.S. grain handler Andersons Inc could be a takeover target, analysts said. This month, Dreyfus told Reuters it was focused on its core business but will eventually consider joint ventures. Andersons declined to comment.

    "For years, we were in this status quo environment where there was nothing to even talk about," said a mergers and acquisition specialist at a major U.S. bank. Now, "if you're sitting in a boardroom somewhere and you're a buyer or a seller, you might poke your head out from under a rock."

    Without deals, the industry is left waiting for a drought that could tighten supplies. But as CHS Inc's new CEO Ray Debertin said on Monday, "the weather cycles are out of our control."

    http://www.reuters.com/article/usa-grains-consolidation-idUSL1N1IP2C2
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    Base Metals

    Global refined copper surplus grows to 150,000 mt for Jan/Feb: ICSG


    The world refined copper balance for the first two months of 2017 indicates a surplus of around 150,000 mt, according to preliminary data released Monday by the International Copper Study group.

    The surplus was mainly due to the decline in Chinese apparent demand, the Lisbon-based research group said in a report. China currently represents 47% of the world copper refined usage.

    Adjusting for changes in unreported Chinese stocks, the global refined balance indicates a surplus of about 255,000 mt for the first two months of 2017.

    ICSG analysts estimated the surplus in January at 50,000 mt.

    World mine production is estimated to have declined by around 2% in the first two months to 3.06 million mt, with concentrate production declining by around 1% and solvent extraction-electrowinning (SX-EW) declining by 5%.

    The decline in world mine production was mainly due to a 10% decline in Chilean mine production, negatively affected by the strike at Escondida mine and lower output from Codelco mine, ICSG analysts said.

    Mine output was also affected by a decline in Canadian and Mongolian concentrate production of 19% and 23%, respectively, mainly due to lower grades in planned mining sequencing, as well as a 10% decline in Indonesian concentrate production due to a temporary ban on concentrate exports that started in January and ended in April.

    However, overall decline was partially offset by an 18% and 15% rise in Mexican (concentrate and SX-EW) and Peruvian (concentrate) output, respectively, both countries benefiting from new and expanded capacity that was not yet fully available in the same period of last year, the ICSG said.

    On a regional basis, production rose by 5% in Europe, including Russia, and 10% in Oceania, while declining by 4% in the Americas and 6% in Africa, and remaining essentially unchanged in Asia, according to ICSG data.

    World refined production is estimated to have remained essentially unchanged in the first two months of 2017 at 3.75 million mt, with primary production (electrolytic and electrowinning) declining by 3% and secondary production (from scrap) increasing by 11%.

    "Increased availability of scrap allowed world secondary refined production to increase, notably in China," ICSG analysts said. "The main contributor to growth in world refined production was China (up 4%), followed by Mexico (14%) where expanded SX-EW capacity contributed to refined production growth."

    But overall growth was partially offset by a 16% decline in Chile, the second world leading refined copper producer, where both primary electrolytic refined production and electrowinning production declined, the ICSG said.

    Production also declined in the third- and fourth-leading refined copper producers, namely, Japan (in electrolytic production from concentrates) and in the US (mainly in electrowinning output).

    On a regional basis, refined output is estimated to have increased in Asia (3%), in Africa (2%) and in Europe, including Russia (1.5%) while declining in the Americas (11%) and in Oceania (5%).

    World apparent refined usage is estimated to have declined by around 3% in the first two months of 2017 to 3.6 million mt.

    "Preliminary data indicates that although world ex-China usage might have grown by around 2.5%, growth was more than offset by a 9.5% decline in Chinese apparent demand," according to the ICSG.

    "Chinese apparent demand, excluding changes in unreported stocks, declined by 9.5% because although refined copper production increase by 4%, net imports of refined copper declined by 29%."

    On a regional basis, usage is estimated to have increased by 1.5% in Europe while declining by 1% in the Americas and 5% in Asia. When excluding China, Asia usage increased by 6%, the ICSG said.

    https://www.platts.com/latest-news/metals/washington/global-refined-copper-surplus-grows-to-150000-21803227

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    Report blasts Antofagasta’s Minera Los Pelambres


    An 18-pages long report released today by the London Mining Networkslams Antofagasta Minerals’ 60%-owned Los Pelambres copper mine, located in the central-northern of Chile in Coquimbo Region.

    In a move that comes just a couple of days prior to Antofagasta’s (LON:ANTO) annual general meeting in London, the document titled In the Valley of the Shadow of Death? A Report on Antofagasta Plc, Minera Los Pelambres and Los Caimanes, highlights allegations of corruption, environmental damage and water depletion caused by the project’s waste tailings dam.

    According to the report, the El Mauro tailings dam, with a capacity of 1,700 million tonnes of mine waste, is the biggest in Latin America, surpassing Brazilian Samarco dam by 100 times. The magnitude of the dam, the dossier reads, is a cause of concern for both environmental groups and local residents, who think a similar the disaster to that that took place at Samarco in 2015 could happen in their own community.

    Samarco’s breach was linked to small earthquakes and El Mauro’s facility not only is located in a highly seismic region, but it is also expected to grow in size as part of the Los Pelambres’ plans to expand production. “People living in the village of Caimanes would be expected to evacuate their homes within ten minutes of a breach at Antofagasta’s El Mauro dam,” the report states.

    Los Pelambres has published a government-approved emergency plan, however, “residents’ attempts to access this plan using the Transparency Law have not been attended to,” today’s report adds.

    Community concerns have resulted in a series of actions that date back to 2006 and that have delayed the company’s idea of building two new grinding mills and a desalination plant.

    http://www.mining.com/report-blasts-antofagastas-minera-los-pelambres/
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    China's April copper imports fall 41 percent on tighter credit, regulation


    China's imports of refined copper in April slid by 41 percent from a year ago, trade data showed on Tuesday, as traders found their buying power crimped by tighter access to credit.

    Refined copper imports fell to 202,645 tonnes last month, the lowest since February, and were down by 18 percent from March's levels.

    For the January to April period, China's refined copper imports have slumped by 31 percent from last year, partly after China raised short-term interest rates and banks became more reluctant to lend, traders and analysts said.

    "In general, metals traders have been suffering from rising financing costs, fierce competition and a slowing economy," said JP Morgan in a report.

    "While Chinese banks have anecdotally been maintaining existing credit lines for metals-based companies, it has become increasingly hard to get approval for new lines of credit."

    China has raised short-term interest rates after its top leadership identified the containment of financial risks and asset bubbles as a top priority this year.

    China continued to import more copper scrap, with imports in the first four months of the year up 18 percent, after a surge in prices late last year encouraged a flood of scrap metal back into the market.

    Copper concentrate imports also continued to grow in April, up 7.7 percent from a year ago and in line with the year's trend. A small decline in Chilean output, after a strike earlier this year, was more than offset by a nearly 60 percent jump in imports from Peru.

    China's exports of refined copper fell in April from the same month year earlier, but at nearly 125,000 tonnes are up 65 percent year to date.

    http://www.reuters.com/article/us-china-economy-trade-copper-idUSKBN18J0X6
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    BHP applies to dig new nickel mines in Western Australia


    BHP Billiton is seeking environmental approval to dig two new mines to extend the life of its Nickel West unit in the state of Western Australia, which is facing a shortfall in ore supply.

    Nickel West, which produces about 5 percent of the world's nickel metal, has lodged an application with the Environmental Protection Authority of Western Australia to clear 842 hectares (2,080 acres) for two open pit mines, according to the authority's website.

    BHP has earmarked about $2 million per month during 2016 and 2017 for making improvements at Nickel West.

    Nickel West gets much of the concentrated ore it uses to feed its 100,000 tonnes-per-year Kalgoorlie nickel smelter from its nearby Mount Keith mines and has also contracted with other miners operating in the region for additional feed.

    "At the current rate of production, the resource supporting Mount Keith will need to be sustained from other ore sources at some stage over the next five years," BHP said in a statement emailed to Reuters on Wednesday.

    "Securing environmental approval for the proposed Mount Keith Satellite Project will help to ensure Nickel West has a strong future and will continue to make a significant economic contribution," the company said.

    Nickel prices have fallen nearly 70 percent in the past six years due to a global supply glut.

    BHP booked a $1.25 billion after-tax impairment on Nickel West in 2013. A year later, following an unsuccessful sales process, BHP took Nickel West off the auction block.

    http://www.reuters.com/article/us-bhp-billiton-nickel-idUSKBN18K0CM
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    China's rising aluminium exports add fuel to the trade fire


    China exported 380,000 tonnes of aluminium in semi-abricated form in April.

    It was the highest monthly total since November 2015 and brings the year-to-date tally to 1.33 million tonnes, up two percent on the same period of 2016. That may not sound like a lot of extra metal.

    But any increase risks fanning the flames of the trade tensions around China's impact on the rest of the aluminium world.

    The United States has taken the lead in pushing back against growing Chinese dominance.

    The Obama administration initiated a formal complaint with the World Trade Organization and the successor Trump administration has followed up with a Section 232(b) investigation into the national security implications of global aluminium flows.

    Some sharp shifts in product mix are emerging which may mean a bigger impact on the global supply chain than suggested by the headline figures.

    PRODUCTION UP, EXPORTS UP

    Chinese policy makers are targeting their giant aluminium sector for supply-side reform this year.

    A national audit will weed out those that have failed to tick all the legal boxes, while those in the region surrounding Beijing will be forced to cut production by at least 30 percent over the next winter heating season starting November.

    Environmental urgency to tackle what is a massive user of coal-fired power is overlaid with diplomatic urgency to preempt a trade showdown.

    Uncertainty over future production in China, which produces more than half the world's aluminium, is the single most important reason why the London metal price is up 14.5 percent this year, outstripping all the other major industrial metals.

    But all that lies ahead and right now, it seems, China's aluminium production machine is cranking back up again.

    The best that can be said is that production is definitely trending higher. And so too are exports of semi-manufactured products ("semis").

    The superficially modest rise in exports so far this year is masking a dramatic change in the sort of product that is leaving the country.

    Exports of bars, rods and profiles (international trade code 7604) have slumped by 34 percent, or 132,000 tonnes, in the first four months of the year.

    Exports of plate, sheet and strip (code 7606), by contrast, have risen by 20 percent, or 105,000 tonnes. Those of foil are up by 14 percent, or 47,000 tonnes.

    CAPACITY PROBLEM

    There should be no doubting Beijing's zeal when it comes to reforming its aluminium sector.

    It will result in closures, the only question is how much. On that subject the debate rages hot around the aluminium market.

    But unless Beijing can work out how to stem the rising tide of "semis" into the world market, there will be no relief from the multiple trade pressures.

    Its problem is that it has spent years micro-managing its aluminium sector down the value-added product chain.

    This is a system now designed to produce aluminium and convert that metal into "semis". The more aluminium produced, the more "semis" produced and the greater the overspill of surplus into world markets.

    http://www.reuters.com/article/china-aluminium-ahome-idUSL8N1IP4EO

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    Steel, Iron Ore and Coal

    Shanghai Jan-Apr coal imports up 57.2pct on year


    Imports of coal including lignite through Shanghai Customs stood at 5.78 million tonnes over January-April, surging 57.2% from the preceding year, showed data from Shanghai customs.

    Total value of the imports was 3.05 billion yuan ($442.7 million), an increase of 190% year on year. That translated to an average price of 527.4 yuan/t, jumping 87% from the year prior, data showed.

    Coal imports in the first four months were all done as general trade. In April, coal imports through Shanghai Customs stood at 1.33 million tonnes, falling 20.3% month on month but increasing 130% year on year.

    The average price in the month dropped 21.8% from March but rose 140% from the year-ago level to 534.2 yuan/t.

    Shanghai's coal imports from Association of Southeast Asian Nations (ASEAN) reached 3.59 million tonnes, increasing 36% year on year, accounting for 62.2% of Shanghai customs' total coal imports.

    Of this, 3.46 million tonnes of coal was from Indonesia, while the rest 129,000 tonnes from Philippines.

    Coal imports from Australia jumped 72% from the year-ago level to 1.05 million tonnes during the same period, while imports from Russia increased 10.8 times as against the year-ago level to 874,000 tonnes.

    State-owned enterprises imported 3.18 million tonnes of coal over January-April, up 54.5% from the year prior, accounting for 55.1% of the total, while private enterprises' coal imports rose 19.3% year on year to 1.86 million tonnes,or 32.2% of Shanghai customs' total coal imports.

    Besides, foreign-invested enterprises imported 735,000 tonnes of coal during the same period, up 13.4 times compared with last year.

    Over January-April, its lignite import stood at 3.06 million tonnes or 62.3% of its total imports, up 36.3% from the year-ago level. The average import price surged 58.8% year on year to 321.6 yuan/t.

    Coking coal imports were 932,000 tonnes during the period, up 5.4% from the previous year. That translated to an average price of 1,359 yuan/t, rising 160% year on year.

    Imports of other bituminous coal stood at 977,000 tonnes, up 6.6 times from a year ago, with an average price increasing 74.4% on the year to 517.9 yuan/t, data showed.

    http://www.sxcoal.com/news/4556395/info/en

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    India to auction CIL supply to import-coal based power plants


    The Indian government may auction domestic coal supply to imported coal-based power plants, the Economic Times reported, citing guidelines issued on May 22.

    The coal supply policy to power sector approved by the government last week provides for replacing imported coal with Coal India supply.

    The imported coal based power plants will have to pass on the cost benefits to consumers and no hike in tariff can be claimed by them, the report said.

    The Ministry of Coal in consultation with Ministry of Power may formulate a detailed methodology of a transparent bidding process for allocating coal linkages to IPPs, having PPAs based on imported coal, with full pass through of cost saving to consumers, the guidelines of Scheme for Harnessing and Allocating Koyla Transparently in India (Shakti) said, noting this will subject to the availability of coal and the condition that such supply does not adversely impact the availability of coal for plants based on domestic coal.

    "Further, the successful bidder would not be allowed to claim any upward revision in the tariff on account of such coal linkages," it said.

    http://www.sxcoal.com/news/4556437/info/en
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    China coal imports from Russia, Australia rise in April


    Chinese coal imports from Australia and Russia jumped in April, as the world's top buyer of the commodity rushed to find alternative supplies following its ban on North Korean imports.

    China's coal imports from Australia jumped 44.6% in April from a year earlier to 8.3 million tonnes, the highest since August 2016, showed data from the General Administration of Customs on May 23.

    Russian arrivals last month almost doubled from a year earlier to 2.53 million tonnes, the greatest since May 2014, the customs said.

    "The jump in Australia shipments reflects strong appetite from utilities to fill in stock after Lunar New Year. Orders for April arrivals were made two months ahead in February, which was a high-demand and low-stock season," said Zhang Xiaojin, coal analyst at Everbright Futures.

    North Korea shipped zero coal for a second straight month, the customs data showed. A year ago, China imported 1.53 million tonnes of coal from the country.

    Neighboring China is North Korea's biggest trade partner and the source of much of its badly needed foreign currency.

    Chinese coal imports from Canada were 800,818 tonnes last month, up 66% from last year, the data showed.

    Mongolian shipments gained 80% to 3.57 million tonnes, while Indonesian imports climbed 15% from a year ago to 3.60 million tonnes.

    http://www.sxcoal.com/news/4556452/info/en

    Attached Files
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    World steel output jumps 5 percent in April


    Global output of steel, a gauge of economic health, jumped 5 percent in April, extending a surge seen in the first quarter, industry data showed on Tuesday.

    The data pointed to a rebound in demand but also prompted concerns about oversupply.

    Producers in the world's second largest industry after oil churned out 142 million tons of crude steel in April versus 135 million tons a year ago, according to the World Steel Association (Worldsteel).

    Output in China, which accounts for half of global steel production and a quarter of global steel exports, rose 4.9 percent to 72.8 million tons, said Worldsteel, whose members jointly account for 85 percent of global steel production.

    "The data (does) indicate steel demand is improving globally after the downturn, but in Europe we've seen price sentiment weaken quite a lot, in the U.S. its a bit mixed and our contacts are expecting Chinese demand to soften, so there is potential for supply to start outweighing demand," said Jeremy Platt, analyst at UK-based steel consultancy MEPS.

    In January-March global steel production rose 5.7 percent from a year earlier.

    Platt said that while steel prices could fall as a result of rising production, they will not sink near the 12-year lows hit in December 2015.

    Still, industry participants are nervous given the troubles Chinese authorities are having in trimming down bloated, smokestack industries like steel, as output continues to surge despite moves to cut back excess capacity.

    China, which accounts for nearly half the 760 million tons of spare global capacity, is well on its way to meeting a target to slash 50 million tons of capacity this year, on top of the 65 million tons cut last year.

    But many of the plants closed last year were already idled, hence the limited impact of the closures on steel production.

    http://www.reuters.com/article/us-steel-output-global-idUSKBN18J21F
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