Mark Latham Commodity Equity Intelligence Service
Friday 24th April 2015
Background stories on www.commodityintelligence.comNews and views:MacroOil and Gas
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- China's March natural gas pipeline imports rise 41.3% on year to 2.73 Bcm
- U.S. Shale Fracklog Triples
- Argentina's YPF sells $1.5 bln of bonds, tripling sale
- Cairn India posts loss of Rs 241cr vs Rs 1350cr profit QoQ
- Eagle Ford Production Up Slightly in March
- Saudi Arabia caps crude supply to Asian refiners as demand surges
- Half of the US fracking industry could be gone after this year
- Freeport-McMoRan Reports Loss on Hit From Oil Assets
- Rowan takes Aramco rate cuts
- Betting on oil price recovery, Statoil snips where rivals slash
- Patterson-UTI, Helmerich & Payne gain on demand for hi-tech rigs
- Spot LNG price sees gain for first time in 6 months
- Eni CEO: first Mozambique LNG shipment in 2020
- Weatherford increases job cuts to 10,000
- Petrobras takes $17 bln charge in wake of scandal, promises 'normality'
- Technip Q1 EBITDA up; tweaks 2015 forecasts
- EIA: U.S. production declines inventories up
- InterOil Won’t Exclude Takeover Offers
- Gazprom and YPF will sign agreement to develop Argentina shale
- Oil chiefs explain why U.S. shale boom hasn’t gone global
- Total Sees Deep Offshore, LNG Acquisition Potential as Oil Falls
- Libya's Hariga port reopens after guards end strike - official
- Tillerson: OPEC price discovery.
- Falling US crude production could re-balance world market: EIA chief
- Nabors posts 10.5 pct fall in revenue
- West Face to wage proxy battle against Gran Tierra Energy
- Yamal LNG has contracts to supply 80% of gas to Asia
- U.S. top court allows antitrust claims over natural gas prices
- Petronas FLNG unit to load first cargo in Q1 2016
- Halcon Resources Announces Preliminary First Quarter 2015
- World’s biggest oil trader says crude price can’t drop much more
- Baker Hughes reports quarterly loss on $772 mln charge
- Norway considers support for Statoil project
- Encana Says to Explore Sale of Haynesville Gas Properties
- Indian Govt to bear entire LPG subsidy for FY16
- Legacy Oil + Gas targeted by activist shareholder
- Petrobras nets 2015 financing deals
- EU to charge Russia's Gazprom with market abuse
- UK forces sale of Russian billionaire's North Sea fields
- PDVSA says Venezuela oil exports at 2.4-2.5 million bpd
- Saudi Record Production Promise, Specs Pile In Blackstone Skeptical
- SABIC signs deal to use US shale gas in UK
- Halliburton warns of weakness in N America, international operations
- Re-fracturing an area Schlumberger may share economics
- Anadarko selling Mozambique Gas?
- US Oil and Natural Gas Rig Count Drops by 34 to 954
- Oil slide slashes Q1 profit, not investment plans at Saudi's SABIC
- Saudi Exports From Jodi
- U.S. proposes higher royalty rates for drilling federal land
- Reliance warns on U.S. shale slowdown, refining lifts profit
- India to invest more in Mozambique gas project
- Petrobras reports new Amazon basin discovery
Cat CEO: We won't be this strong for rest of 2015
Caterpillar on Thursday reported earnings and revenue that beat expectations, but CEO Doug Oberhelman warned on CNBC: Don't expect a repeat.
In premarket trading, shares of the heavy equipment maker jumped more than 3 percent. (Get the latest quotes here.)
"We saw construction in the U.S. and North America up. And that's the bright spot we have right now," Oberhelman told CNBC. "It's fairly anemic but it's growing ... kind of quarter by quarter."
He said the U.S. economy was growing "fairly slowly" but steadily, while the rest of the world was struggling. "China is down significantly year over year. Brazil is weak economically. Europe is still kind of flat, but in our case, down year over year."
Caterpillar said it earned $1.72 per share in the quarter. Revenue decreased to $12.7 billion from $13.24 billion a year ago.
Wall Street forecast Caterpillar would deliver quarterly earnings of $1.35 a share on $12.38 billion in revenue, according to a consensus estimate from Thomson Reuters.
On CNBC's "Squawk Box," Oberhelman said he's pleased with the results, but warned: "We will not repeat this quarter the rest of the year because we're aimed at $50 billion in sales [for 2015] ... which is going to be a challenging year."http://www.cnbc.com/id/102611283?utm_source=twitterfeed&utm_medium=twitter
RWE boss sees tougher times ahead
RWE Chief Executive Peter Terium offered little hope for a fast turnaround of Germany's largest power producer, warning that government plans for a coal levy would pose a threat to the company.
GermanRWE boss sees tougher times aheady's utilities have seen their profits and share prices tumble as they grapple with a restructuring of the energy sector that has promoted solar and wind generation at the expense of their gas-fired power stations.
"The crisis is far from over," the 51-year Dutchman told shareholders at the group's annual general meeting on Thursday.
"Times will get even harder."
Terium warned that a coal levy, proposed by Germany's Energy Minister Sigmar Gabriel to lower the country's CO2 emissions, would lead to the immediate closure of the majority of the group's lignite-fired plants.
"These plans would lead, in the short term, to a disorganised, rushed exit from lignite-based electricity production," Terium said.
Lignite is RWE's most important energy source, accounting for about 37 percent of its power generation last year.http://www.reuters.com/article/2015/04/23/rwe-agm-idUSL5N0XK1WG20150423
Anglo American production update, cuts diamond output
Anglo American said it planned to cut diamond production this year in response to lower prices, signalling reduced confidence in a prompt rebound.
Anglo also said its iron ore output rose in the first three months of 2015 thanks toimproved productivity. However, copper production fell because of limited water supplies at its Chilean operations.
Diamond demand has slowed since late 2014 as middlemen who buy rough stones struggle with a stronger dollar and liquidity problems. De Beers, the largest producer of rough diamonds by value, has said it would produce sufficient quantities to match demand.
On Thursday, Anglo reduced its 2015 diamond production forecast to 30 to 32 million carats from 32 to 34 million carats, "in light of current trading conditions."
Nomura analysts forecast each 1 million carat cut in diamond production implies a 1.5 percent drop in Anglo's 2015 earnings per share.
Iron ore output from Anglo's Kumba division rose 7 percent in the first quarter from the same period a year ago to 12.2 million, thanks to some operational improvements at its South African assets.
However, copper output fell 15 percent to 171,800 tonnes due to water supply problems which prompted the company to temporarily shut a processing plant in Chile.
Platinum, a troublesome divisions for Anglo, hit by recurrent labour strike and stubbornly weak prices, saw output rise by 50 percent in the first quarter to 536,000 ounces. Last year's production was heavily affected by industrial action.http://www.reuters.com/article/2015/04/23/anglo-ameri-results-idUSL5N0XK0Z420150423
China Apr flash HSBC PMI contracts to one-yr low
China’s flash HSBC/Markit Purchasing Managers' Index (PMI) contracted at its fastest pace in a year to 49.2 in April, suggesting China’s economic conditions are still deteriorating.
The sharp decline in employment witnessed in March moderated somewhat and export orders rose for the first time in three months.
New orders declined further to a one-year low of 49.2 from March's 49.8, pointing to softer domestic demand.
Meanwhile, declines in input and output prices, which had appeared to moderate in March, showed signs of accelerating again, signaling intensifying deflationary pressures which are a key worry for policymakers.
Weighed down by a cooling property market, industrial overcapacity and local debt, China's economy grew 7.4% in 2014, its slowest expansion in 24 years. Economists expect growth to cool further to 7% in 2015, even with additional stimulus measures.http://en.sxcoal.com/0/117062/DataShow.html
Peoples Daily Changes its Tune
8 Dec 2014 - Communist Party Flagship Newspaper Says Stimulus
Shouldn't Be Used
Dec 14 2014.
MGL: For reform read crackdown and faction fight. BUT now Peoples Daily is changing its tune:
BEIJING, April 22 (Reuters) - Days before Beijing cut bank reserve requirements to boost lending to China's slowing economy, officials in Hebei province met with dozens of banks and steel mills to find financing to revive local industry and tackle chronic environmental problems.
During the meeting with 32 banks and 64 steel mills, which came a month after Premier Li Keqiang voiced support for financing initiatives for the smoggy northern province, 18 banks agreed to lend more than 623 billion yuan ($100 billion) for "technological renovation and industrial transformation" this year, Hebei's industry bureau said.
As China's economy struggles and heavily leveraged banks restrict lending to polluting industries, Beijing is urging targeted capital injections not only to improve the environment, but also to stimulate growth in cutting-edge industries like emissions controls and water treatment.
Economic growth in the first quarter fell to its slowest rate in six years, prompting the People's Bank of China (PBOC) to cut how much banks must keep in reserve by 100 basis points on Sunday, the biggest cut since 2008, in a bid to get banks lending more.
Growth in Hebei slipped to 6.5 percent last year, one of the lowest rates in the country, and Premier Li told the province's delegation to the annual parliament last month that central government should help out with preferential financing policies.
"Hebei is enjoying favourable financing support due to its proximity to the capital and the urgency of cleaning up air pollution," said Chen Bo, economist with the Central University of Finance and Economics.
The Hebei government would not comment for this story but has previously said banks had pledged a further 761.3 billion yuan to help develop the private sector in the province.
The PBOC also cut reserve requirements for the Agricultural Development Bank, a policy lender, by an additional 200 bps.
"This is because of a State Council meeting after the spring festival, which called on ADBC to increase support to the bridge loans for major national water projects," a bank executive said.
WINNERS AND LOSERS
Hebei's steel mills have to comply with tough state pollution standards by the end of the year, but with cash scarce and demand weak, firms are struggling to comply.
Neither the reserves cut nor the financing package is expected to rescue Hebei's worst-performing firms, but it could help favoured enterprises pay for upgrades and cover higher compliance bills.
Hebei said banks would provide 35 billion yuan to help cover the 100 billion yuan cost of renovation at 32 major steel enterprises in the province, and said the entire financing deal would alleviate risks for "enterprises that have a market and are competitive but are temporarily experiencing difficulties".
Though many private steel and cement plants could perish, China hopes its war on smog will benefit hundreds of environmental enterprises.
According to the official People's Daily, a recent action plan to clean polluted water could boost GDP by 5.7 trillion yuan. Firms set to benefit include Sound Environment , Beijing Origin Water Technology and Guangxi Bossco Environmental Protection, whose share price has soared 250 percent since listing in February.
Hebei's financing plan, together with the country's wider commitment to reduce emissions, is also likely to boost firms making equipment to treat industrial emissions, including Fujian Longking and Wuhan Kaidi Electric Power. Soil treatment firms like Dongjiang Environmental also stand to benefit from a clean-up campaign.
But even as Beijing makes more credit available, economists remains sceptical that banks will have the latitude to help out private cleantech firms, with struggling state enterprises still likely to be the biggest beneficiaries of new financing.
"There are banks that still favour big state-owned companies, and new financing mechanisms are required," said Wang Yao, a climate and energy economist from the Central University of Finance and Economics. ($1 = 6.2006 Chinese yuan) (Additional reporting by Kathy Chen, Ruby Lian and the Shanghai newsroom; Editing by Will Waterman)
Read more: http://www.dailymail.co.uk/wires/reuters/article-3049504/Smog-hit-China-aims-environmental-stimulus-growth-wanes.html#ixzz3Y6hCfdGL
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German power sector CO2 emissionsTOP
Rio Tinto releases solid first quarter production performance
Rio Tinto chief executive Sam Walsh said “We continue to drive efficiency in all aspects of our business, which is reflected in our solid production performance during the first quarter. By making best use of our high quality assets, low cost base and operating and commercial capability our aim is to protect our margins in the face of declining prices and maximise returns for shareholders throughout the cycle.”
Global iron ore shipments (100% basis)
Global iron ore production (100% basis)
Hard coking coal
Semi-soft and thermal coal
Titanium dioxide slag
Global iron ore shipments of 72.5 million tonnes (Rio Tinto share 57.3 million tonnes) were nine per cent higher than in the first quarter of 2014. Production of 74.7 million tonnes (Rio Tinto share 59.4 million tonnes) was a 12 per cent increase year on year.
Record first quarter bauxite production was four per cent higher than the first quarter of 2014, primarily due to a strong performance at Weipa.
Aluminium production in the first quarter was in line with the same period of 2014, despite the partial shutdown at Kitimat, which continues to prepare for first hot metal at the modernised smelter by mid-2015.
Mined copper production was 12 per cent higher than the fourth quarter of 2014, driven by higher throughput at Kennecott and Escondida. Lower grades at Kennecott were the primary driver of the nine per cent decline compared with the first quarter of 2014.
During the quarter, the Government of Mongolia and Rio Tinto formally celebrated the major milestone of Oyu Tolgoi shipping one million tonnes of concentrate.
Higher first quarter coal production was primarily driven by improved production rates at Kestrel South following the longwall ramp-up, increased semi-soft production at Mount Thorley and Warkworth and higher thermal production at Hail Creek.
Titanium dioxide production was 17 per cent lower than in the first quarter of 2014 as production continued to be optimised to align with market demand.http://www.riotinto.com/media/media-releases-237_14870.aspx
Beijing to inject $US60bn into two banks
China's central bank was set to inject more than $US60 billion from nation's foreign-exchange reserves into two state policy banks, Caixin magazine reported on Monday.
The local business publication, citing unnamed sources, said the People's Bank of China would inject $US32 billion into the China Development Bank and $US30 billion in the Export-Import Bank of China.
The funds would be from the nation's forex reserves, which are managed by an arm of the central bank and stood at $US3.73 trillion at the end of first quarter, according to the report.
The move would make China's central bank the second largest stakeholder in the China Development Bank and the biggest in the Export-Import Bank, according to Caixin.
Agricultural Development Bank of China, another state policy bank, would receive a fund injection from the Ministry of Finance, the magazine said on its website. It didn't give further details, though it said the plan had been approved by the State Council, China's top government body.
This month, the State Council unveiled a plan to strengthen control over the three banks, emphasising the policy nature of the three banks, in a bid to ensure their lending is more tightly coordinated with Beijing's policies at home and abroad.http://www.businessspectator.com.au/news/2015/4/20/china/beijing-inject-us60bn-two-banks
Is the plastics market picking up here?
Recovered plastic prices
- Natural HDPE bottle prices averaged £386 per tonne in October 2014, up £14 per tonne from the previous month, and down £3 per tonne since October a year ago.
- Coloured PET bottle prices went up by £4 per tonne to £56 per tonne between September and October 2014, £12 per tonne lower than prices in October 2013.
- Mixed polymer bottle prices averaged £91 per tonne in October 2014, broadly in line with prices in September 2014 but down £8 per tonne since October 2013.
- Mixed HDPE bottle prices increased by £8 per tonne to £133 per tonne between September and October 2014, £32 per tonne higher than prices in October 2013.
- Clear PET bottle prices averaged £197 per tonne in October 2014, a decrease of £18 per tonne from September 2014 and £90 per tonne lower than October 2013.
Recovered plastic film prices
- The average price for LDPE film (98:2) in October 2014 was £316 per tonne. This is £4 per tonne less than September 2014 but up £39 per tonne from prices a year ago.
Virgin plastic prices
- Virgin LDPE (extrusion grade) prices fell by £53 per tonne between August and September 2014 to £1,175 per tonne, down £175 per tonne from a year ago.
- Virgin HDPE (blow moulding grade) prices decreased by £52 per tonne between months and averaged £1,104 per tonne in September.
- Virgin PET plastic prices averaged £989 per tonne in September 2014, a decrease of £24 per tonne since August, and a fall of £202 per tonne since a year ago in September. PET plastic prices have fallen much sharper than other virgin plastics over the course of the year.
China looks to boost lending
China's central bank says it will cut the level of funds that commercial banks must hold in reserve by one percentage point, the second such move this year to boost lending.
The move, effective on Monday, comes days after the world's second largest economy reported its worst quarterly growth figure for six years.
In a statement on its website, the People's Bank of China (PBoC) said the cut would "further enhance the ability of financial institutions to support restructuring".
The reduction in the reserve requirement ratio (RRR) - the amount of cash banks must keep on hand - follows a similar move in early February, which was the first across-the-board cut since May 2012.
Gross domestic product growth slowed to 7.0 per cent in the first quarter from 7.3 per cent in the final three months of last year, marking the worst result in six years.
Growth in industrial output and retail sales slowed in March, while the figure for fixed asset investment also weakened in the first three months of the year, raising expectations of more efforts to shore up the economy.http://www.businessspectator.com.au/news/2015/4/20/china/china-looks-boost-lending
Renewable energy surge revives Europe's power trade
Renewable energy surge revives Europe's power trade
The rise of renewable energy is delivering a boost to Europe's declining power market as traders get busy in short term deals to juggle unpredictable supplies of wind and solar.
Exchanges show more trade as suppliers buy and sell power closer to when demand will appear, to meet their delivery obligations, because electricity cannot be stored effectively. New players are also attracted by lower capital requirements and risks.
"As the percentage of renewables generation increases, the need for short-term adjustments will grow, reflecting the limited precision of forecasts for wind and solar generation in comparison to schedules of conventional thermal plants," said Bonn-based independent energy consultant Thomas Niedrig.
"Over the last five years, (spot) volumes jumped by 25 percent, making the spot sector a growth star in difficult times," UK research company Prospex said in a study.
European power trading overall, still led by futures, was declining due to oversupply and the exit of many banks since 2012, it said.
Renewables capacity has increased dramatically in Europe as policymakers push for cleaner energy sources.
German government data shows renewables capacity almost quadrupled from 2003 to 2014 and renewables now account for 26 percent of total electricity generation.
Power market trading developed in the late 1990s, with a focus on forward contracts, driven by the need of generators to hedge future fuel price risks for their 24-hour output over months, quarters and calendar years.
Coal and gas plant operators can no longer plan their output years ahead, as they do not know how many hours they will end up operating in a market they share with rival renewables.
Exchanges, competing with brokerages and trading houses for business, have been particularly inventive in devising short-term contracts partly because their digital platforms can be easily adapted to offering new contracts for short periods, traders say.
A number of big trading houses already active in EPEX Spot's short term market, among them Geneva's Vitol SA, Noble Clean Fuels Ltd. and Total Gas & Power, signed up for it in 2015, it said.http://www.reuters.com/article/2015/04/17/europe-power-trading-idUSL5N0XD4AM20150417
Oil and Gas
China's March natural gas pipeline imports rise 41.3% on year to 2.73 Bcm
China imported 1.98 million mt of natural gas via pipeline in March, 41.3% higher than the same month last year, detailed data from the General Administration of Customs showed Thursday.
The customs department reports natural gas trade data in metric tons, similar to LNG imports. March's pipeline imports equate to about 2.73 Bcm.
The increase was largely due to a 26.3% increase in inflows from Turkmenistan to 1.57 million mt.
China National Petroleum Corp. is responsible for importing gas from Turkmenistan's state-owned Turkmengas under a long-term deal expected to hit 65 Bcm/year by 2020.
CNPC also imports gas from Myanmar into China's southern Yunnan province and surrounding areas.
Taking into account LNG imports in March of 1.35 million mt, China's total gas imports were 3.3 million mt, a 15.5% jump year on year.
Discounting pipeline gas exports to Hong Kong and Macau, which amounted to 180 million cu m, and adding domestic production of 11.15 Bcm, China's apparent gas demand in March totaled 15.55 Bcm, rising 5.4% from the same month last year.
Over the first quarter of 2015, China's total gas imports were 11.81 million mt, comprising 6.7 million mt of pipeline gas and 5.1 million mt of LNG.http://en.chinamining.com.cn/News/2015-04-24/1429837179d71974.html
U.S. Shale Fracklog Triples
Think the U.S. is awash in crude now? Thank the fracklog that it’s not worse.
Drillers in oil and gas fields from Texas to Pennsylvania have yet to turn on the spigots at 4,731 wells they’ve drilled, keeping 322,000 barrels a day underground, a Bloomberg Intelligence analysis shows. That’s almost as much as OPEC member Libya has been pumping this year.
The number of wells waiting to be hydraulically fractured, known as the fracklog, has tripled in the past year as companies delay work in order to avoid pumping more oil while prices are low. It’s kept crude off the market with storage tanks the fullest since 1930. The fracklog may slow a recovery as firms quickly finish wells at the first sign of higher prices.http://www.bloomberg.com/news/articles/2015-04-23/u-s-shale-fracklog-triples-as-drillers-keep-oil-out-of-market-i8u004xl
Argentina's YPF sells $1.5 bln of bonds, tripling sale
Argentina's state energy company YPF said it had sold $1.5 billion of new 10-year bonds at 8.5 percent on Thursday, raising its planned issuance from $500 million on the back of strong demand.
Reuters' IFR reported the issue had been launched earlier in the day at 8.625 percent, down from price talk of 8.75 percent.
"There was a lot of demand, about $4 billion, which is why the company decided to widen the offer," a local market source, who asked not to be named, told Reuters.
YPF needs to raise cash to invest in its vast but barely tapped Vaca Muerta shale oil and gas formation in order to reverse Argentina's energy sector trade deficit that is pressuring foreign reserves.
"It's an energy company which is not that indebted that is offering paper with a coupon that is high compared with the rest of the world," said Christian Reos, an analyst at Buenos Aires-based brokerage Allaria Ledesma.
In February YPF sold $500 million of bonds, a third less than it had offered, as many bids were for higher yields than it would accept.
Since then investor sentiment has improved as the October presidential election draws closer. The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose government's sweeping currency and trade controls are cited by economists as factors weighing on the economy.http://www.reuters.com/article/2015/04/23/argentina-ypf-bond-idUSL1N0XK1XN20150423
Cairn India posts loss of Rs 241cr vs Rs 1350cr profit QoQ
Cairn India posted a fourth-quarter loss of Rs 241 crore on revenues of Rs 2,677 crore, compared to a profit of Rs 1,350 crore on revenues of Rs 3504 crore in the third quarter.
At the EBITDA level, the company notched up profit of Rs 727 crore in Q4 (versus Rs 2,113 crore), the company informed exchanges today. The company incurred higher operating expense (Rs 345 crore) arising out of higher well maintenance cost. It also incurred higher exploration cost write-off as well as forex loss due to rupee appreciation. "Profit after tax (excluding exceptional items) for Q4 FY15 was Rs 193 crores.
Exceptional item in Q4 FY15 pertained to impairment loss of Sri Lanka amounting to Rs 505 crore (gross of tax) leading to a negative profit after tax for the quarter of Rs 241 crore," the company said. For the full fiscal year 2014-15, Cairn had profit of Rs 6,541 crore on revenues of Rs 14,646 crore.
“Restructuring the organization to align with an SBU structure in the early part of the year geared up the organization to capture value along each line of business. This helped us to respond to the current oil price slump better than most of our global peers," Cairn India CMD Mayank Ashar said. "Our strong functional excellence, coupled with the restructuring, enabled us to focus on the core MBA fields and provided us the operational flexibility to reduce operating as well as capital cost and curtail projects to ensure shareholder value accretion.
Detailed work is ongoing to allow us to respond faster to a V-shaped recovery in oil prices," he added. The Cairn India Board recommended a final dividend of Rs 4 per equity share, entailing an outflow of approximately Rs 900 crore including dividend distribution tax.
Read more at: http://www.moneycontrol.com/news/results/cairn-india-posts-lossrs-241cr-vs-rs-1350cr-profit-qoq_1366115.html?utm_source=ref_article
Eagle Ford Production Up Slightly in March
Oil production in the Eagle Ford increased 28 percent from the same month last year, averaging 1.6 million barrel a day in March.
These findings are from Platt’s Bentek Energy, who also reported that there an increase in production of 17,000 barrels per day for the combined shale formations in North Dakota and Texas in March versus February. This slight increase of 1% may signal a slowdown in the record production that has led to an oil surplus. Platt’s daily price assessment shows the value of oil out of the Eagle Ford is up 25% since mid-March due to an average price for the year is $53.30 barrels per day.
Sami Yahya, Bentek energy analyst said that “Producers the Eagle Ford are still maintaining their production levels by high-grading their acreage and pushing for better efficiencies. The current average economic return for the two basins is 17%. However, the downside risk is that some producers may elect to increase their number of drilled-but-uncompleted wells in the near term—until they figure out their cash flow status—which will further flatten or bring down production levels.”http://eaglefordshale.com/news/eagle-ford-production-up-slightly/
Saudi Arabia caps crude supply to Asian refiners as demand surges
Saudi Arabia has imposed limits on supply volumes since March for Asian buyers who have been flocking to the kingdom for more oil after it cut official selling prices to record lows, several industry sources said this week.
While the cuts to OSPs have had the desired effect of driving up demand for Saudi oil, the move suggests the kingdom may have underestimated Asia's appetite.
Alongside the volume restrictions that came into force last month, the kingdom has also boosted production to over 10 million barrels/day since March as it strives to meet demand.
Refiners in China, Japan, Taiwan and Thailand said they were not able to maximize purchases from Saudi Arabia because of restrictions on the use of flexible operational tolerance that is typical in term contracts, while some said they had to absorb slightly lower volumes within the negative tolerance limits.
Traders said the restrictions were likely limited to particular grades including Arab Heavy and Arab Extra Light as demand for these rose in recent weeks on the back of strong fuel oil and naphtha cracks.
Supplies of Arab Light were seen to be normal, traders said.
The tightening began in March when demand for Saudi oil surged on record low OSPs. Saudi's March OSP differentials for Arab Extra Light and Arab Light were the lowest since at least 1989, according to Platts data, while Arab Medium was priced at its lowest level since mid-2008. By March, a steep contango market structure in Dubai crude was already driving up demand from companies looking to store oil in the hopes of selling it later at a higher price.
"In January, everyone wanted to take a position because of the contango, March-loading spot was tight and if they considered price, Saudi looked cheap," said a second trader with another North Asian refiner.http://www.platts.com/latest-news/oil/singapore/saudi-arabia-caps-crude-supply-to-asian-refiners-27342289?hootpostid=053081dad597799e03dc4ed87d7eac62
Half of the US fracking industry could be gone after this year
One oil executive thinks half of all fracking companies will be out of business or sold by the end of this year, according to Bloomberg.
Rob Fulks, the pressure pumping marketing director at Weatherford International, told Bloomberg that a reduction in spending has put much of the US fracking industry at risk.
Fulks told Bloomberg that of the 41 fracking companies in the US, half will be dead or sold by the end of the year.
Weatherford operates the 5th-largest fracking operation in the US, Bloomberg notes.
Read more: http://uk.businessinsider.com/us-fracking-industry-decline-2015-2015-4?r=US#ixzz3Y8qmFnXV
Freeport-McMoRan Reports Loss on Hit From Oil Assets
Freeport-McMoRan Inc. swung to first-quarter loss as the company was hit by another big write-down of its oil-and-gas assets, while its mining business also was hit by weak commodity prices.
Freeport-McMoRan in January said it had slashed its capital budget for the year and is searching for outside funding for its oil-and-gas business as the mining company looks to shield itself from plummeting commodity prices.
Phoenix-based Freeport, one of the world’s largest copper producers, expanded into oil and gas with 2013 acquisitions of energy explorers McMoRan Exploration and Plains Exploration Production. Recent drops in oil and copper prices have pressured the company.
Overall, Freeport-McMoRan reported a loss of $2.48 billion, compared with a year-earlier profit of $500 million. On a per-share basis, which reflects preferred dividend impacts, the company recorded a loss of $2.38, compared with a year-earlier loss of 49 cents.
Excluding asset write-downs and other items, the per-share loss was six cents. Revenue decreased 17% to $4.15 billion.
Analysts polled by Thomson Reuters expected per-share loss of seven cents and revenue of $4.06 billion.http://www.wsj.com/articles/freeport-mcmoran-reports-loss-on-hit-from-oil-assets-1429794035
Rowan takes Aramco rate cuts
Saudi Aramco has secured further rig rate reductions, with US owner Rowan seeing a plethora of units switched onto lower rates.
Four jack-ups are now to come off their current dayrate to a lower rate for a whole year from 1 April, when they will go back on the previous rate.
The four are: the Hank Boswell (dropping from $180,000 to $163,000); the Bob Keller (dropping from $178,000 to $120,000); the Scooter Yeargain (going from $180,000 to $163,000); and the Bob Palmer (sinking from $235,000 to $198,000).
The jack-up Gilbert Row, which Aramco has on charter until the end of the year, is to drop from $122,000 to $106,000 for the remainder of the term.
The Saudi giant has, however, extended its contract with the jack-up Charles Rowan to now end in June instead of April.
The jack-ups Cecil Provine and Rowan Gorilla III have also had very minor extensions, but not from Aramco.
Earlier this month, Aramco secured rate cuts on seven Ensco jack-ups for a portion of their contract periods.http://www.upstreamonline.com/live/1397901/rowan-takes-aramco-rate-cuts?utm_source=twitterfeed&utm_medium=twitter
Betting on oil price recovery, Statoil snips where rivals slash
Norway's Statoil is cutting investments less than any other oil major this year, positioning for a crude price recovery but taking a risk should the slump be protracted.
By continuing to spend on projects that won't start making returns for a up to a decade, the state-controlled energy giant hopes to sidestep the kind of boom-to-bust cycle often seen in the oil sector. Crude oil prices halved last year.
"We as an industry tend to have a permanent bipolar disorder. We are either euphoric or depressed," Statoil Chief Economist Eirik Waerness said.
"Maybe this time it will be slightly different and this will allow us to look through the cycle."
The strategy reflects Norway's tradition of long-term thinking and also some pressure to maintain work from the country's powerful regulator.
But is not without risks. If crude prices recover quickly, Statoil will be better positioned to resume growth, but a long period of cheap oil could increase debt and hurt its credit rating, and force the company to slash dividends.
According to industry-wide budgets finalised this month, Statoil plans to cut spending by 8 percent this year while rivals slash by an average of more than 20 percent. Its spending on exploration will fall just 9 percent, even though an offshore discovery won't produce oil for eight to 10 years.
In Tanzania, Statoil recently took over a well stake from ExxonMobil and drilled alone when its partner declined to go ahead with the project.
It is also continuing expensive Canadian and Gulf of Mexico exploration programmes and has just started construction on the Arctic Asta Hansteen field, a low-margin deepwater gas project that also requires a 480 kilometre pipeline.
"Oil firms know they have an obligation towards the Norwegian people to be allowed to reap and harvest the resource on the continental shelf," oil minister Tord Lien said. "There are obligations toward owning licences."
Unlike other nations, Norway gives away licences for free and provides big subsidies for exploration and development. Companies in return commit to certain spending and pay the world's highest oil tax at 78 percent once production starts.http://www.reuters.com/article/2015/04/23/statoil-investments-idUSL5N0XJ3G720150423
Patterson-UTI, Helmerich & Payne gain on demand for hi-tech rigs
Oil drilling contractors Patterson-UTI Energy Inc and Helmerich & Payne Inc reported higher-than-expected quarterly profits as demand for their hi-tech rigs remained resilient despite the slump in crude prices.
Demand for new, faster rigs continues to be strong as they help oil and gas companies cut costs and operate more efficiently.
The strong demand has helped Patterson-UTI and Helmerich & Payne offset a drop in drilling activities due to a near 45 percent fall in crude prices since June last year.
Excluding one-time items, Patterson-UTI earned 6 cents per share in the first quarter, above the average analyst estimate of 3 cents, according to Thomson Reuters I/B/E/S.
Helmerich & Payne reported adjusted profit of 96 cents per share in the second quarter, beating average estimate of 79 cents.
However, both companies said they expected their rig counts to fall in the current quarter.
Helmerich & Payne forecast contracted land rigs to fall to 165 rigs in the current quarter from 179 at the end of March.
Patterson-UTI said it expects the number of rigs to fall to 101 in the current quarter from 165 in the first quarter.
Helmerich & Payne, which recorded gains of about $47 million due to early termination of contracts, said operating revenue fell marginally to $883.1 million.
Patterson-UTI, which gained $15.8 million from early termination of drilling contracts, said revenue fell 3 percent to $657.7 million.http://www.reuters.com/article/2015/04/23/patterson-uti-results-idUSL4N0XK45Q20150423
Spot LNG price sees gain for first time in 6 months
For the first time since November 2014, the prices of spot liquified natural gas (LNG) have seen a northward movement. Despite a steep year-on-year decline, the average Japan Korea Marker (JKM) — the benchmark price assessment for spot physical cargoes — for May showed an increase of 1.4% at $7.380/mBtu against $7.279 in April, show data from Platts.
This spells good news for PSU gas marketing and trading company GAIL (India), which is reeling under pressure as it imports most LNG through long-term contracts that are costlier than spot and finding no buyers. As few northeast Asian buyers remained by the end of the assessment period, the focus shifted to India, where importers were seeking prompt cargoes for May delivery. This provided support to prices in the country, with India becoming the premium market in the last few days of the trading month.
“Spot LNG demand for India does look strong heading into the summer. There has been more activity from GAIL, Petronet and GSPC for summer cargoes, possibly due to supply from Yemen being cut off. The more expensive LNG from Qatar delivered on long-term contracts has been cut down,” said Max Gostelow, Platts pricing analyst for Asia LNG.
Year-on-year demand from India looks stable, say analysts. Over the first quarter in 2014, total imported volumes were 3.07 million tonne, while Indian buyers imported only 3.01 million tonne in 2015. The LNG offtake from West Asia is significantly lower at 2.4 million tonne during January-March period compared with 2.78 million tonne in the same perid last year.
“The main reason for this is the lower Qatari (the more expensive long-term contract prices) volumes this year. Qatar sent 2.71 million tonne during January-March 2014 against 2.05 million tonne in the same months this year,” said Gostelow.
GAIL’s contracts to purchase 5.8 million tonne per annum (mtpa) of Henry Hub linked gas and the selling that in India starting 2018-19 was expected to provide large operating leverage and earnings growth to the company. However, in the current scenario where spot purchases are cheaper, GAIL’s expected upside is at risk, say analysts. Industry watchers feel while GAIL may be able to divert cargoes closer to the US (lower shipping costs), there is a risk GAIL may be forced to pay unutilised take-or-pay charges on LNG capacity.http://www.financialexpress.com/article/markets/commodities/spot-lng-price-sees-gain-for-first-time-in-6-months/66029/
Eni CEO: first Mozambique LNG shipment in 2020
Italian energy giant Eni expects to ship first liquefied natural gas cargo from Mozambique in 2020.
The company aims to take an FID for the LNG export project in Mozambique, which includes a 2,5 Mtpa floating LNG unit in the Rovuma Basin, in 2015, Eni’s CEO Claudio Descalzi said at IHS CERAWeek in Houston on Wednesday.
According to Descalzi, Eni is close to signing commercial agreements to sell 2,5 million tonnes of LNG from the floating plant. The FLNG is the first stage of the project, which will be followed by two onshore trains.
The price of Mozambique LNG would fit well into European gas markets when Italian company Eni ships its first cargo in 2020, Claudio Descalzi, CEO of Eni, said in a keynote address Wednesday at IHS CERAWeek.
Europe has been using only 25% of its LNG import and regasification capacity because it has been relying more on lower-priced pipeline gas and coal.
Mozambique LNG would be priced correctly to fit European markets because the gas exploration and production costs there are very low.
US LNG prices would fit better into the Asian markets, he said, leaving Europe open to supply from Mozambique.
“Mozambique gas is good for development because the upstream side is not too expensive,” he said.
It takes only three to four weeks to drill a well in Mozambique, and production can be increased quickly, which makes Mozambique gas very competitive, Descalzi pointed out.
Mozambique gas could also be shipped to Europe. The company’s gas finds in Mozambique could cover Italy’s total needs for the fuel for 30 years, he concluded.http://www.lngworldnews.com/eni-ceo-first-mozambique-lng-shipment-in-2020/
Weatherford increases job cuts to 10,000
Weatherford International says it plans to bump up its job cuts to 10,000, about 18 percent of its workforce, with most of its layoffs stemming from the battered North American oil service sector.
The move increased its payroll reductions from the 8,000 jobs the oil field service company announced it would cut earlier this year. Weatherford expects to save the $640 million annually from its cuts. It also plans to shut down or consolidate 60 facilities this year, it said in its first-quarter earnings release Wednesday.
“North America will remain very challenged,” Weatherford CEO Bernard Duroc-Danner said in a written statement. “Our approach is to treat this down cycle as an opportunity to become a much leaner, more efficient and streamlined organization.”
The world’s No. 4 oil field services firm, based in Switzerland but with main offices in Houston, posted a net loss of $118 million in the first quarter, or a loss of 15 cents a share, compared with a loss of $41 million, or 5 cents a share, in the same period last year. Its revenues fell from $3.6 billion to $2.8 billion.
With Weatherford’s cuts, layoffs at the the world’s four largest oil field service firms now total 49,500. Weatherford said it will continue to weigh whether it needs to make for cuts in coming months. It had 56,000 employees at the end of last year, according to regulatory filingshttp://fuelfix.com/blog/2015/04/22/weatherford-increases-job-cuts-to-10000/
Petrobras takes $17 bln charge in wake of scandal, promises 'normality'
Brazilian state-run oil company Petrobras reported its biggest-ever loss on Wednesday, the result of a 50.8-billion-real ($16.8 billion) write-down in the wake of a massive corruption scandal.
The 2014 full-year net loss of 21.6 billion reais, which exceeds the company's total accumulated profit for nearly four years, comes as new Chief Executive Aldemir Bendine seeks to restore investor confidence. A widening international probe of contract fixing, bribery and political kickbacks at the company, formally called Petroleo Brasileiro SA, led to lengthy delays in publishing the results.
Of the write-downs, 6.19 billion reais, or about 12 percent, were directly related to the corruption probe, Petrobras said. It said the rest was "impairment" resulting from poor planing, declining oil prices, unrealized refinery project goals and excess costs such as over-priced goods purchased under tough national content rules.
"From here on in, Petrobras guarantees a return to normality in its relationship with investors, shareholders and creditors in Brazil and abroad," Bendine, who took over as CEO in early February, said at a press conference announcing the delayed financial results.
The write-down is one of Petrobras' first concrete steps to restore access to capital markets since the scandal forced the delay of audited financial statements in November. The company's financial difficulties have led to debt downgrades by major ratings agencies.
Even so, Petrobras has already said it will be forced to cut investment aimed at developing offshore oil discoveries that are the among the world's largest in four decades. Those discoveries had led investors to drive the company's market value up to nearly $300 billion in 2008 and helped sell $70 billion of new stock in 2010. Petrobras is worth only $56 billion today.
While the write-down helps shine a light on one of the company's darkest moments, challenges remain for the company and Brazil as whole.
Petrobras, whose annual investment is frequently double the government discretionary infrastructure budget, said on Wednesday that it would cut 2015 capital spending to $29 billion, 34 percent below the planned average for each of the next five years. Bendine said it would cut spending by another 13 percent to $25 billion in 2016 and unveil a new strategic plan in 30 days.
The company reported a fourth-quarter net loss of 26.6 billion reais. Earnings before interest, tax, depreciation and amortization - a measure of the company's ability to generate cash from operations - were 20.1 billion reais.
Petrobras also released audited third-quarter financial statements on Wednesday, revising net income to a loss of 5.3 billion reais on net revenue, or total sales minus sales taxes, of 88.4 billion reais.
The risk of default was removed by Wednesday's financial release.
"The audited results are likely to improve overall expectations and reduce the risk of further downgrade from credit rating agencies for the time being," Joao Castro Neves, Latin America director for the Eurasia Group in Washington said in a note.http://www.reuters.com/article/2015/04/23/brazil-petrobras-results-idUSL1N0XJ3C720150423
Technip Q1 EBITDA up; tweaks 2015 forecasts
French oil services provider Technip reported a 34.9 percent rise in first-quarter adjusted core profits on Thursday and tweaked its forecasts for 2015 as its subsea division was seen outperforming and its onshore/offshore unit lagging.
The Paris-based group said it was now expecting adjusted operating profit from recurring activities in offshore/onshore around the bottom of a previously indicated range of 250 million-290 million euros in 2015.
In its subsea division however, it now expects the adjusted operating profit around the top of a 810-840 million euro range for this year.
Technip said its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 243.7 million euros ($260.81 million) in the first quarter, giving an EBITDA margin of 8.5 percent, up from 7.3 percent a year ago.
Reported revenue rose 16.8 percent to 2.883 billion euros and underlying net profit rose 60.7 percent to 108 million euros.
Analysts had expected on average 2.59 billion euros in sales and a net profit of 123 million euros, according to a Thomson Reuters I/B/E/S consensus.
Capital spending cuts by oil companies following the more than 50 percent drop in crude prices have made life harder for oil equipment and service suppliers worldwide.http://www.reuters.com/article/2015/04/23/technip-results-idUSL5N0XK08D20150423
EIA: U.S. production declines inventories up
The EIA said on Wednesday that U.S. production declined by 18,000 barrels per day (bpd) last week, a fall of 0.19 percent.
"It's another decline in production and the market is certainly anxiously awaiting more of those, at least people who are on the long side," said Dominick Chirichella, senior partner at New York's Energy Management Institute.
U.S. crude stocks, however, rose by 5.3 million barrels last week, higher than the 2.9-million-barrel build expected by analysts in a Reuters survey, to a record 489 million barrels.
Stocks at the key delivery point of Cushing, Oklahoma rose by 789,000 barrels, the EIA said. Energy markets intelligence firm Genscape said tanks at Cushing were nearly 80 percent full.
John Kilduff a partner at New York's Again Capital, also pointed to a draw in gasoline stocks supporting prices.
"Gasoline demand continues to be strong, as well, with the 9.0 million bpd implied demand approaching summer-like levels," he said.
"Prices will likely key off of the supportive aspects of the report more than incredible amount of crude oil inventories."http://www.reuters.com/article/2015/04/22/markets-oil-idUSL4N0XJ1FD20150422
InterOil Won’t Exclude Takeover Offers
InterOil Corp., the independent oil-and-gas company working with France’s Total SA to explore one of Asia’s largest undeveloped gas fields, isn’t ruling out a possible takeover if the price is right, a senior InterOil executive said.
“You never say never,” said Isikeli Taureka, InterOil’s executive vice president in an interview on the sidelines of a natural-gas conference in Beijing. “If anybody comes along and offers a price and it’s the right price, then you’ve got to take it back to the shareholders to make that decision.”
His comments came as an upheaval in global gas markets threatens to spawn a new industry consolidation.
Industry analysts have said InterOil’s resource base in Papua New Guinea could make it a potentially attractive target for deals-hungry energy companies eager to capitalize on a drop in oil-and-gas prices that has left many firms reeling. For example, Credit Suisse has described InterOil as an “obvious choice” as a target for Australia’sWoodside Petroleum Ltd. InterOil has a market capitalization of around $2.46 billion.http://www.wsj.com/articles/interoil-wont-exclude-takeover-offers-1429697471
Gazprom and YPF will sign agreement to develop Argentina shale
YPF CEO Galuccio in Moscow to sign a contract on joint exploitation of the rich Vaca Muerta shale oil and gas fields
YPF and Russia's powerful Gazprom International are expected to conclude a Memorandum of Understanding (MOU) during Galuccio’s visit to Moscow.
The large shale oil and gas deposit in western Argentina's Vaca Muerta was discovered in 2011 and is estimated to hold one of the world's largest reserves of shale-based hydrocarbons. However the development of the reserves needs huge financial investments which Argentina currently lacks as the country is absent from world financial markets.
The contract is part of the bilateral agenda to be addressed by visiting Argentine president Cristina Fernandez on Thursday, when she meets with Vladimir Putin.http://en.mercopress.com/2015/04/22/gazprom-and-ypf-will-sign-agreement-to-develop-argentina-shale-oil-and-gas-deposits
Oil chiefs explain why U.S. shale boom hasn’t gone global
Has billionaire oil man Harold Hamm ever been tempted to take the U.S. shale revolution abroad and expand his oil empire from North Dakota to the rest of the world?
“I have not,” Hamm told a gathering of energy executives Tuesday.
The question had come from Daniel Yergin, vice chairman of IHS. Hamm, CEO of Continental Resources, one of the biggest oil producers in the Bakken Shale, was one of three oil-company chief executives speaking from the stage during a panel at the IHS CERAWeek energy conference at the Hilton Americas-Houston.
So why haven’t U.S. shale producers tried to tap into shale formations overseas? The best shale rock can only be found in volatile countries with unstable political regimes – in North Africa, the Middle East and Russia. In many regions outside the U.S., there’s no private mineral ownership, a factor that has driven the U.S. shale boom for the last six years, said Scott Sheffield, CEO of Pioneer Natural Resources, one of the biggest oil producers in the Permian Basin in West Texas.
“The cost to do business is two to three times,” he said. “It’s not going to work in today’s prices at all.”
Few countries have met a reasonable criteria to make shale a viable resource, said John Hess, CEO of oil producer Hess Corp. Hess said a nation needs five key shale “enablers” that producers can find in the United States and Canada – the right geology, private mineral rights to give local land owners an incentive to let drilling rigs on their property, infrastructure capable of supporting thousands of trucks moving rig equipment, a pragmatic tax system and a pragmatic regulatory system.
Said Yergin: “How many countries meet all five criteria?”
“Not too many that we’ve found yet,” Hess said, though he noted Argentina is moving ahead with plans to exploit shale rock. “They’re at the start of the journey that the US was 10 years ago.”http://fuelfix.com/blog/2015/04/22/ceraweek-oil-chiefs-explain-why-u-s-shale-boom-hasnt-gone-global/
Total Sees Deep Offshore, LNG Acquisition Potential as Oil Falls
Total SA said it may take advantage of the slump in crude to make acquisitions that build on the strengths of Europe’s third-biggest oil company in deepwater offshore fields and liquefied natural gas.
“When we are in a low price environment, it’s natural and not surprising that big oil companies are opportunistic,” Yves-Louis Darricarrere, president of upstream at Total, said at the CIS O&G conference in Paris on Wednesday. “We are second to none on deep offshore and LNG and we have a clear strategy to keep and reinforce these strong points.”
Total has developed deep offshore fields in Angola and has LNG projects in Australia and Papua New Guinea.
“If there are good opportunities Total could act,” CEO Patrick Pouyanne said April 16. “We have a financial situation that means that in today’s environment of cheap money we could do everything. The question is whether we would.”
Total wants to raise $5 billion through asset disposals this year, and is targeting a total of $10 billion through 2017. Former CEO Christophe de Margerie began a wave of sales that saw Total divest pipelines, producing fields and refinery stakes. So far, there haven’t been any major acquisitions.
“It’s a bit early for me,” Pouyanne said last week. “The opportunities will really come if oil prices remain low over a longer period. Then you will see real opportunities for major companies like Total.”
Total is sticking to a forecast for production growth of 8 percent this year as eight projects start, Darricarrere said. The company is “putting pressure” on spending including on exploration and lowering the break-even point for projects partly through cost-cutting in response to lower crude prices, he said.
The French company has said it will become more selective in drilling exploration wells after years of expanding its budget failed to result in major finds.http://www.bloomberg.com/news/articles/2015-04-22/total-sees-deep-offshore-lng-acquisition-potential-as-oil-falls
Libya's Hariga port reopens after guards end strike - official
Libya's eastern port of Hariga reopened on Wednesday after security guards ended a strike over salary payments, and a tanker has started lifting about 700,000 barrels of crude, an oil official said.
The guards had staged the strike on Tuesday, the latest in a series of such walkouts.
"The port management persuaded the guards to end the strike," the official said, asking not to be named.
OPEC producer Libya has managed to boost output to almost 600,000 barrels per day (bpd) by reopening two western fields and keeping eastern ports open despite militant attacks and fighting between factions allied to two rival governments.
But the oil sector is facing uncertainty. The internationally recognised government based in the east has unveiled plans to sell oil via a new state firm, bypassing the established entity in the capital Tripoli.http://www.reuters.com/article/2015/04/22/libya-oil-idUSL5N0XJ31C20150422
Tillerson: OPEC price discovery.
OPEC’s refusal to curb output in response to the collapse in crude prices is an attempt to find the most economic price for oil, not an attack on U.S. shale drillers, said Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.
The Organization of Petroleum Exporting Countries is engaged in “a classic price-discovery exercise” after the revolution in shale-oil production turned global crude markets topsy turvy, Tillerson said during the IHS CERAWeek conference in Houston on Tuesday.
The 10-month, 48-percent cascade in U.S. oil prices has crushed stock prices, eroded drilling budgets and cost tens of thousands of workers their jobs.
“I don’t take the view that they are in any way trying to threaten other suppliers,” Tillerson said. “I think they’re really kind of on a classic price-discovery exercise, which is important for all of us as investors to know.”
Its “price discovery” is OPEC’s effort to find the highest price at which it will no longer have to compete with supplies from higher cost producers.
Falling US crude production could re-balance world market: EIA chief
Declining US crude production, already being seen in three of the country's four major shale basins, could cause a major shift in global supply and demand fundamentals, causing a significant increase in prices at some point this year, the head of the US Energy Information Administration said Tuesday at an IHS CERAWeek panel.
For the first time since EIA began tracking rig productivity, EIA data showed this month that production is expected to fall from April to May in the Eagle Ford, Bakken and the Niobrara, EIA Administrator Adam Sieminski said. While production is still growing in the Permian, the fourth major basin, it appears to be "plateauing," he said.
While multiple factors, including a return of Iranian and Libyan crude to the world market, could also influence prices, a decline in US production might have the most significant impact, Sieminski said.
"Flat crude oil production in the US between 2015 and 2016 would be a huge, huge difference between the growth that was occurring in 2012, 2013 and 2014," he said. "Ultimately, that drop is going to help rebalance supply and demand on a global basis."http://www.platts.com/latest-news/oil/washington/cera-2015-falling-us-crude-production-could-rebalance-21327398
Nabors posts 10.5 pct fall in revenue
Contract driller Nabors Industries Ltd's quarterly revenue fell 10.5 percent, hurt by slower drilling activity in North America, and the company said it had cut its workforce by more than 18 percent since the end of 2014.
Revenue from Nabors' drilling operations in the United States - the company's biggest market - fell 17 percent in the first quarter from the previous quarter with oil producers slashing budgets to combat a slide in crude oil prices.
The company reported revenue of $1.42 billion in the quarter ended March 31, compared with the analysts' average estimate of $1.34 billion, according to Thomson Reuters I/B/E/S.
While revenue from Nabors' international drilling business rose 3 percent from the previous quarter, the company forecast a 10 percent drop in international rig counts through the year.
The company said this would start hurting results later in the year, but added that it expected full-year revenue from its international business to rise.
Nabors, whose completion & production unit is merging with C&J Energy Services Ltd, also forecast lower second-quarter results due to weak drilling activity, but did not provide more details.
The company said on Tuesday it had cut its workforce by 41 percent in its U.S. drilling operations and 26 percent in Canada. It had about 29,000 employees as of Dec. 31, 2014.http://www.reuters.com/article/2015/04/21/nabors-results-idUSL4N0XI65O20150421
West Face to wage proxy battle against Gran Tierra Energy
Canadian activist firm West Face Capital Inc on Tuesday launched a proxy battle against Gran Tierra Energy and outlined plans to put up a slate of six nominees for the energy firm's board, saying that its current four-member board has failed investors.
West Face, whose managed funds control roughly 9.8 percent of Gran Tierra's shares, said the current board has overseen a failed high-risk, high-cost exploration strategy in Peru, Argentina and Brazil that has led to the destruction of more than half the company's market value since the start of 2011.
The activist firm plans to nominate six candidates for election to Gran Tierra's board at its annual meeting on June 24.
A representative for the Calgary-based energy company was not immediately reachable for comment.
West Face, which wants Gran Tierra to shift its strategic focus to its core properties in Colombia, also pitched oil and gas executive Gary Guidry to take over as chief executive, a role left empty since Dana Coffield was ousted in February.
Guidry is the former CEO of Caracal Energy Inc, which was bought out by Glencore last year. Four of West Face's other five board nominees are former Caracal directors.
Gran Tierra's current board is headed by executive chairman Jeffrey Scott, who manages company operations along with interim president Duncan Nightingale.http://www.reuters.com/article/2015/04/21/gran-tierra-westface-idUSL1N0XI27U20150421
Yamal LNG has contracts to supply 80% of gas to Asia
Yamal LNG will mainly supply gas to customers in Asia, CEO Yevgeny Kot told journalists.
Yamal LNG already has contracts for about 95% of the LNG it will produce (approximately 15.5 million tonnes). Contracts with customers in Asia cover about 80% (roughly 13.5 million tonnes), the company said in materials.
Yamal LNG also has a contract to supply 2.5 million tonnes of LNG a year to Spain's Gas Natural Fenosa.
U.S. top court allows antitrust claims over natural gas prices
The U.S. Supreme Court on Tuesday ruled that a federal law governing the natural gas market does not shield energy companies from state antitrust claims made over the western U.S. energy crisis between 2000 and 2002.
The ruling, on a 7-2 vote, was a loss for several energy companies, including American Electric Power Company Inc, Dynegy Inc and ONEOK Inc, which were accused of manipulating published price indexes that led to a spike in gas prices. The resulting energy crisis included rolling blackouts in California.
As a result of the ruling, the case can now proceed in lower courts, although the decision made it clear there could still be some conflicts between state and federal law that could require further litigation.
The plaintiffs are industrial and commercial users of natural gas, including engine maker Briggs & Stratton Corp and Bombardier Inc's Learjet Inc.
After the energy crisis, they filed multiple lawsuits against various energy companies, accusing them of violating state antitrust laws. The cases were consolidated before a federal judge in Nevada.
The energy companies asked the Supreme Court to rule that state antitrust law claims were trumped by a federal law called the Natural Gas Act. The law grants the Federal Energy Regulatory Commission (FERC) authority to regulate certain aspects of the natural gas market including wholesale prices.
In an October 2012 ruling, the 9th U.S. Circuit Court of Appeals agreed with the plaintiffs and found that Congress did not intend to extend FERC's jurisdiction to retail transactions.
In an opinion written by Justice Stephen Breyer, the high court on Tuesday held that state antitrust law claims are not superseded by the federal law.http://www.reuters.com/article/2015/04/21/usa-court-antitrust-idUSL1N0XI0Y120150421
Petronas FLNG unit to load first cargo in Q1 2016
Petronas floating liquefied natural gas unit to be completed by March 2016, is expected to deliver its first LNG cargo in the first quarter of 2016.
According to the Petronas Vice President and Venture Director LNG projects Abdullah Karim, the project is expected to deliver its first cargo in the first quarter of next year and the supplies will be used for domestic consumption, Reuters reports.
Despite the drop in oil prices, Abdullah Karim said that the project remains viable for Petronas.
Although challenging, with the rise of oil prices to $70 a barrel, the Senior Vice President of Petronas’Technology and Engineering unit Colin Wong expects the company to get an internal rate of return in double digits.
Regarding the cost-efficiency of the project in relation to the land-based LNG facilities, Abdullah Karim said that over its lifespan of 20-25 years, the PFLNG1 would save the company about $500 million.http://www.lngworldnews.com/petronas-flng-unit-to-load-first-cargo-in-q1-2016/
Halcon Resources Announces Preliminary First Quarter 2015
Preliminary First Quarter 2015 Production Results
Halcon expects to report production for the three months ended March 31, 2015 of 42,500 -- 43,500 barrels of oil equivalent per day (Boe/d). First quarter production is estimated to be ~81% oil, ~8% NGLs and ~11% natural gas.
The Company estimates that it will record a non-cash pre-tax full cost ceiling impairment charge of $450 - $650 million in the first quarter of 2015.
Halcon expects the following modifications to be made to its senior secured revolving credit facility, subject to the satisfaction of certain terms and conditions:
Removal of the interest coverage ratio covenant with the institution of a total secured leverage ratio covenant of 2.75x
Reduction of the borrowing base to $900 million from $1.05 billion
The Company is also seeking to extend the maturity of its senior secured revolving credit facility to August 1, 2019; however, there is no assurance that the extension will be available to Halcon on acceptable terms.
Operational Update. Details:http://finance.yahoo.com/news/halcon-resources-announces-preliminary-first-112800180.html
World’s biggest oil trader says crude price can’t drop much more
Vitol Group, the world’s biggest independent oil trader, said the cost of finding and pumping crude will prevent prices from dropping much lower than where they are now for prolonged periods.
Oil prices will range from $50 a barrel to $70 a barrel in the second half of this year, Ian Taylor, the firm’s chief executive officer, said in an interview at the FT Commodities Global Summit in Lausanne, Switzerland on Tuesday. They’re unlikely to trade below $50 for extended periods because of exploration and production costs, he said. Brent, the global benchmark, traded at about $63 at 9:39 a.m. in on the ICE Futures Europe exchange London.
“U.S. production growth is beginning to slow down and demand is looking quite good for the year, so the combination of all of that means that probably price, if anything, moves up a little bit,” Taylor said.
Oil prices collapsed almost 50 percent last year as OPEC kept pumping at about 30 million barrels a day, insisting producers outside the 12-nation group must help tackle a surplus. U.S. oil production rose to 9.4 million barrels in March, the highest in Energy Information Administration data starting in 1983.http://fuelfix.com/blog/2015/04/21/worlds-biggest-oil-trader-says-crude-price-cant-drop-much-more/?utm_source=twitterfeed&utm_medium=twitter
Baker Hughes reports quarterly loss on $772 mln charge
Oilfield services provider Baker Hughes Inc, which is in the process of being acquired by Halliburton Co for $35 billion, posted a quarterly loss compared with a year-earlier profit as it recorded a $772 million charge related to restructuring and other items.
Baker Hughes said it would cut 10,500 jobs, or 17 percent of its global workforce, up from 7,000 it said it would cut earlier. The company also said it had closed and consolidated about 140 facilities worldwide, besides idling and writing off excess assets and inventory.
The company reported a net loss attributable it of $589 million, or $1.35 per share, in the first quarter ended March 31, compared with a profit of $328 million, or 74 cents per share, a year earlier.
Revenue fell 19.8 pct to $4.59 billion.
The Houston firm expects the downturn to continue in the second quarter and will make more cuts if needed, said Martin Craighead, CEO of Baker Hughes, in a written statement.
“As day rates for drilling rigs have fallen sharply, so has the demand for high technology products,” he said. Baker Hughes estimates 20 percent of the wells recently drilled in the United States have not been through completion stages – processes used to gear a well up for production. Prices for oil equipment have fallen as a supply glut builds, he said.http://www.reuters.com/article/2015/04/21/baker-hughes-results-idUSL4N0XD53N20150421
Norway considers support for Statoil project
Norway will ask European competition authorities whether it can provide state support to energy firm Statoil to bring oil and gas to the shore from its Johan Castberg field in the Arctic, the oil minister said on Tuesday.
Statoil initially favoured piping the oil to an onshore loading terminal, but deemed it too expensive and said pumping it onto tankers at sea might be a more viable option.
"Bringing it to the shore ensures the best resource management and the greatestbenefits to the Finnmark county, so that the Norwegian people get the most out of it," oil minister Tord Lien told an oil conference.
"We must look at what manoeuvring room we have to bring the oil and gas to the shore."
Though not a member of the European Union, Norway has extensive economic ties with the bloc as a member of the European Economic Area and accepts EU competition law.
The onshore terminal would create jobs in an area with relatively low employment and also create capacity that could be utilised by future finds in the Barents Sea, an under-explored area where Norway hopes for more discoveries.
Castberg, with up to 600 million barrels of oil equivalents, is one of Statoil's most expensive projects and has been delayed several times as the firm tries to reduce costs.
Analysts estimate that even with offshore loading, costs could be close to $80 per barrel, well above the current $63 per barrel oil price.
Lien said Castberg would be eventually built, even though Statoil has delayed the project three times since 2013.http://www.reuters.com/article/2015/04/21/norway-statoil-subsidies-idUSL5N0XI2PM20150421
Encana Says to Explore Sale of Haynesville Gas Properties
Encana Corp. is seeking buyers for its natural gas properties in Louisiana as it focuses on drilling for oil and other liquids in Texas and Canada, people with knowledge of the matter said.
Citigroup Inc. is soliciting offers for Encana’s Haynesville Shale basin acreage, valued at as much as $1 billion, said the people, who asked not to be identified because the information is private. The bank has begun reaching out to private-equity firms, energy explorers and other potential buyers, the people said.
- See more at: http://www.rigzone.com/news/oil_gas/a/138196/Encana_Says_to_Explore_Sale_of_Haynesville_Gas_Properties?rss=true#sthash.PcbjPRsK.dpuf
Indian Govt to bear entire LPG subsidy for FY16
In a strong push to upstream oil companies, the government has decided to bear the entire domestic cooking gas subsidy in 2015-16, report Siddhartha P Saikia & Prasanta Sahu in New Delhi. The upstream players would, however, have to bear a part of the kerosene subsidy, officials in the ministries of petroleum and finance told FE.
Though companies like ONGC, Oil India and Gail India have long asked for removal of the subsidy burden on them, the immediate trigger for the move is to make the atmosphere conducive for the proposed sale of 5% stake in ONGC. Based on average crude oil price of $60/barrel, LPG subsidy for FY16 is estimated at R18,000 crore and assuming crude at $70/barrel, it could be in the vicinity of R25,000 crore.
For kerosene, the under-recovery burden is expected to be around Rs 13,000 crore assuming average crude oil price at $60/barrel and it could go up to Rs 16,500 crore if crude price moves northwards to around $70/barrel. In FY14, the under-recovery on kerosene stood at Rs 30,575 crore while it was Rs 46,458 crore for LPG.
“The government will bear the full cash subsidy on LPG while the under-recovery on kerosene will be shared with upstream companies,” one of the officials said. He said the budget allocation of Rs 30,000 crore (Rs 22,000 crore for LPG and Rs 8,000 crore for kerosene) should be enough to meet fuel subsidy bill in this fiscal.
ONGC, Oil India and GAIL (India) — forked out Rs 42,822 crore for the oil subsidy in FY15. The government paid another Rs 27,409 crore towards compensating OMCs. The subsidy burden on upstream oil companies had increased from Rs 32,000 crore (30% of the total under-recovery) in 2008-09 to Rs 67,021 crore (48% of the total subsidy bill) in FY14.
Finance minister Arun Jaitley in his Union Budget for 2015-16 estimated petroleum subsidy at Rs 30,000 crore, 50.22% less compared with the revised estimate of Rs 60,270.00 crore for 2014-15. The 2015-16 Budget estimated India’s subsidy bill at Rs 2.43 lakh crore, around 9% below the revised estimate of Rs.2.66 lakh crore for 2014-15. The reduction has been aided by the fall in the price of crude oil, the decontrol of diesel and the direct benefit transfer scheme for disbursing LPG subsidy.http://www.financialexpress.com/article/economy/govt-to-bear-entire-lpg-subsidy-for-fy16/64382/
Legacy Oil + Gas targeted by activist shareholder
Intermediate producer Legacy Oil + Gas Inc formed a special committee on Monday to deal with hedge fund FrontFour Capital's move to gain seats on its board, the first major case of shareholder activism in Canada's oil patch since last year's sharp drop in crude prices.
Calgary-based Legacy, which has assets in southern Alberta and light oil operations in the Bakken region of southern Saskatchewan, came under scrutiny last month after legal documents showed it was back-stopping a loan for Chief Executive Officer Trent Yanko.
In a statement, the company confirmed it received notice of Connecticut-based FrontFour's plans to nominate three directors at Legacy's May 26 annual general meeting.
"We have formed a special committee to engage with FrontFour and now that matter is in their hands. I am not in a position to comment on it," Yanko said.
The committee is made up of three independent members of the board, including Jim Bertram, executive chairman of Keyera Corp .
"We are not surprised by the activist approach given Legacy's leveraged balance sheet, discounted trading multiple, and recent issues around corporate governance with respect to a personal loan guarantee for its CEO," said RBC Capital Markets analyst Shailender Randhawa.
Yanko and his wife bought $5.68 million worth of Legacy shares last year through a margin loan from the Bank of Nova Scotia supported by the lending value of stock owned by the couple.
Last year's oil price drop and accompanying slide in Legacy shares triggered a margin call in December. In order to avoid the Yankos' shares being sold off, Legacy's board guaranteed the loan.
Activist investors have been eyeing debt-ridden energy companies as U.S. crude prices tumbled to less than $45 a barrel from more than $100 last year. Most, however, are waiting for volatility to subside.
FrontFour owns 6.8 percent of outstanding Legacy shares. It was co-founded by Zachary George, son of former Suncor Energy Inc CEO and Rick George.
Zachary George is one of FrontFour's three shareholder nominees, along with Martin Ferron, CEO of North American Energy Partners Inc, and Matt Goldfarb, acting CEO of Cline Mining Corp.
FrontFour said last week it was seeking to elect nominees to ensure the Legacy board "acts in a manner consistent with governance best practices and maximizes value for all shareholders."http://www.reuters.com/article/2015/04/20/canada-legacy-activism-idUSL1N0XH2E620150420
Petrobras nets 2015 financing deals
Petrobras nets 2015 financing deals
Petrobras has agreements in place to meet all of its funding requirements for the year, the beleaguered Brazilian giant said.
The state-owned player hatched a number of deals with financial institutions late last week that are set to collectively bring in more than $3 billion, with almost the same amount coming from a platform sale-and-leaseback transaction.
The $3 billion co-operation agreement with Standard Chartered Bank for the sale-and-leaseback of an unspecified number of production platforms has a 10-year period.
Petrobras also closed a deal with Banco do Brasil for 4.5 billion reais ($1.48 billion) in export financing for a six-year period.
A 3 billion reais standby loan facility with Bradesco has a five-year period, the same term as a 2 billion reais standby loan with Caixa Economica Federal.
“These transactions, along with the ones already entered into this year, will meet the company’s 2015 financing requirements,” Petrobras said.
“Petrobras will continue to assess financing opportunities aimed at anticipating some of the requirements for 2016,” it added.
The company also approved a $13.7 billion divestment plan for this year and next.http://www.upstreamonline.com/live/1397531/petrobras-nets-financing-deals?utm_source=twitterfeed&utm_medium=twitter
EU to charge Russia's Gazprom with market abuse
The European Union will launch a legal attack on Russian gas giant Gazprom this week, ramping up tensions with Moscow, when antitrust agents will accuse it of overcharging buyers in eastern Europe, EU sources told Reuters on Monday.
Russia's state-controlled biggest company, a vital supplier of energy to Europe despite frequent political disputes, could receive a full charge sheet from European Competition Commissioner Margrethe Vestager on Wednesday, one source said.
More than two years after Brussels started investigating Gazprom, the move comes just a week after the new EU antitrust chief charged U.S. tech giant Google with abusing its market power after five years of hesitation by her predecessor.
Vestager seems determined to challenge big corporate powers since taking on the internationally powerful post in November, despite past offers of compromise from bothGoogle and Gazprom.
Despite the Danish commissioner's insistence that she would look at only the legal merits of a case that focuses on Gazprom pricing policies, differentiating between different customers, the accusations will do nothing to ease EU frictions with Moscow over Ukrainein which gas supplies have played a major role.
The sources said Vestager was likely to send the charge sheet, known as a statement of objections, to Gazprom once she returns from a trip to the United States, where she arrived within hours after charging Google. Such a document sets out concerns about possible anti-competitive practices.
The Russian behemoth, with annual sales of some $100 billion, supplies about 30 percent of the 28-nation bloc's natural gas. It has been under investigation since September 2012, including for hampering the flow of gas across Europe.http://www.reuters.com/article/2015/04/20/eu-gazprom-antitrust-idUSL5N0XH34A20150420
UK forces sale of Russian billionaire's North Sea fields
Britain's energy minister has decided to force Russian billionaire Mikhail Fridman to sell North Sea gas fields he recently acquired as part of a $5.4 billion takeover deal of DEA, the former oil and gas unit of Germany's RWE.
The decision comes two weeks ahead of a general election in Britain and further sours Britain's relations with Russia in light of Western sanctions over Russia's involvement inUkraine.
"The Secretary of State Ed Davey ... proposes to revoke DEA UK's North Sea petroleum licences unless LetterOne arranges for a further change of control of the DEA UK gas fields in the North Sea," the ministry said in a statement.
LetterOne has up to six months to make a change in ownership, the ministry added.
The company was not immediately available for comment.http://www.reuters.com/article/2015/04/20/britain-fridman-idUSL5N0XH34I20150420
PDVSA says Venezuela oil exports at 2.4-2.5 million bpd
OPEC member Venezuela is currently exporting between 2.4-2.5 million barrels per day from national crude production of around 2.85 million, the head of state oil company PDVSA said.
Venezuela's output figures have often conflicted with international agencies, which estimate lower output due to methodological differences about how to count extra-heavy crude.
"We are producing right now 2.85 (million) of crude ... We have increased in the last four months 40,000 barrels per day. We plan to increase at the end of this year roughly 100,000 or 120,000 barrels per day, most from the Belt," PDVSA president Eulogio Del Pino said.
"We are exporting in the order of 2.4, 2.5 (million)," he added, giving latest data to foreign reporters on a trip to the Orinoco Belt region in recent days.
Total investment in that region, recently renamed the Hugo Chavez Belt in honor of Venezuela's late president and where PDVSA has multiple joint ventures with foreign companies, should reach $15 billion this year, he added.
Much of that would be in drilling, with PDVSA currently connecting new oil wells at a rate of two per day, and aspiring to raise that to three, the PDVSA boss said.
"We need one well per day at least to compensate decline," he said, adding that to speed well construction, contractors needed to move down closer to the Orinoco from the northern coastal region where they are based to save time and transport.
"If we go to 90 wells a month, 3 per day, we will feel very comfortable."http://uk.reuters.com/article/2015/04/20/venezuela-pdvsa-production-idUKL2N0XE1CE20150420
Saudi Record Production Promise, Specs Pile In Blackstone Skeptical
WTI crude prices are falling (back below $55) after Saudi Arabian Oil Minister Ali al-Naimi said production in the world's biggest crude exporter would stay near record peaks around 10 million barrels per day in April.
The investment community remains divided over the future (perhaps more a reflection of time horizons): BofA notes Large Speculators bought crude contracts for the 3rd consecutive week - the longest streak since June 2014; but Blackstone (among other private equity firms) have stayed on the sidelines (despite plenty of cash to put to work) as public markets have exuberantly filled the void so far this year: Oil producers have been able to “raise a lot of debt and, in some cases, equity publicly at values that we wouldn’t touch."
Oil prices have risen over the last few week prompting excitement that the 'slump' is over - but the last 2 days have seen notable selling pressure...
Saudi Oil Minister Ali Al-Naimi noted:
“We will always be happy to supply to our customers with what they want. Now they want 10 million,”
But that hasn't stopped speculators piling in en masse...http://www.zerohedge.com/news/2015-04-20/oil-slips-saudi-record-production-promise-specs-pile-blackstone-skeptical
SABIC signs deal to use US shale gas in UK
Saudi Basic Industries Corp has signed a deal to use shale gas from the United States at its Teesside petrochemical plant in Britain, acting chief executive Yousef Abdullah al-Benyan told Reuters on Sunday.
"In fact we did sign the contract - we have not yet agreed with the supplier to publicly announce it, but we did firm up a contract for gas supply," Benyan said, declining to name the supplier.
He said the timing and other details of the project, which he described as the first use of shale gas exported from the U.S. Gulf in Britain, should be available by next quarter.
"It is going to meet our full demand for the next ten years and is renewable beyond ten years," Benyan said.http://www.naturalgaseurope.com/sabic-to-use-u.s.-shale-gas-at-teeside-plant-23280
Halliburton warns of weakness in N America, international operations
Halliburton Co warned of headwinds in its international operations and pricing pressure for its oilfield services in North America, its largest market, as an extended slump in oil prices continues to force drillers to slash spending.
The company's shares rose 3.8 percent to $48.69 before the bell on Monday after it posted a better-than-expected quarterly profit, helped by higher revenue and operating income from Latin America, the Middle East and Asia.
However, revenue and profit from all other regions fell due to the global slump in oil prices , which have nearly halved since peaking last June.
"Industry prospects will continue to be challenged in the coming quarters," Chief Executive Dave Lesar said in a statement.
Halliburton agreed to buy smaller rival Baker Hughes Inc for $35 billion last November, to better negotiate the slump in oil and resist pressure from oil producers to slash prices.
Excluding one-time items, Halliburton earned 49 cents per share, above the average analyst estimate of 37 cents, according to Thomson Reuters I/B/E/S.
Analysts covering the stock have cut their first-quarter earnings estimate for Halliburton by over a third in the past month.
Revenue fell 4 percent to $7.05 billion, but beat the analysts' average expectation of $6.96 billion.http://www.reuters.com/article/2015/04/20/halliburton-results-idUSL4N0XH3XN20150420
Re-fracturing an area Schlumberger may share economics
The CEO of Schlumberger says his firm is willing to take on riskier contracts that base its pay on how much oil it help producers extract, at a time when competition for oil field work has become red in tooth and claw.
Under such contracts, Schlumberger would absorb the initial labor and technology costs and get paid back based on oil production. Its an arrangement that trades fixed service prices for upside linked to the output of a project. The model, Kibsgaard says, could work well for re-fracturing jobs — second rounds of hydraulic fracturing on an old well that has been fractured before. Hydraulic fracturing is the process of blasting water, chemicals and sand into a well to release oil and gas from shale rock.
The growing re-fracturing business is one that could boost Schlumberger’s bottom line at a time when tumbling oil prices have sent its first-quarter profits down 39 percent and producers are asking for deep price concessions.
“You’re talking billions in revenue opportunities over an extended period of time,” Kibsgaard said, adding that thousands of North American shale oil and gas wells could be ripe for a second wave of fracturing. “But I think the key is we are so confident in our ability to identify the right candidates and execute the work that we are prepared to take significant risk in terms of how we go about doing this work.”
The price concessions that Schlumberger and its rivals have had to make to help oil companies cope with low energy prices have hit the hydraulic fracturing business the hardest. But some of that pressure has been mitigated because oil companies are experimenting with new technologies like Schlumberger’s re-fracturing service, which, for example, doubled production from two wells in South Texas.
Still, Kibsgaard said, re-fracturing isn’t going to be big enough to fix the oil service industry’s biggest problem – a glut in equipment – even when oil prices rise again. He said he doesn’t expect the North American rig count to return to previous high levels seen during the shale oil boom, though it will land somewhere in between that and the lows of today.http://fuelfix.com/blog/2015/04/17/schlumberger-ceo-lays-out-his-plan-to-weather-the-crude-crash/
Anadarko selling Mozambique Gas?
- Anadarko Petroleum (APC -1.4%) is considering selling its multi-billion dollar stake in Mozambique's gas reserves, with Exxon Mobil (XOM -1.5%) and Qatar Petroleum showing interest, Reuters reports.
- APC reportedly could sell up to its full 26.5% stake in Mozambique's offshore Area 1 license in the Rovuma Basin; Area 1 holds more than 75T cf of recoverable gas, enough to meet at least four years of total European gas demand.
- The last Area 1 sale - a 10% stake that went for $2.64B in 2013 to India's ONGC - was seen as overpriced, and oil and gas prices have since plunged, making it difficult to value APC's asset.
- XOM could be the front-runner after Shell dropped out following its planned merger with BG Group, which will give it access to large gas assets in neighboring Tanzania.
US Oil and Natural Gas Rig Count Drops by 34 to 954
Oilfield services company Baker Hughes Inc. says the number of rigs exploring for oil and natural gas in the U.S. declined by 34 this week to 954 amid depressed oil prices.
Houston-based Baker Hughes said Friday 734 rigs were seeking oil and 217 explored for natural gas. Three were listed as miscellaneous. A year ago, 1,831 rigs were active.
Among major oil- and gas-producing states, Texas plummeted by 15 rigs; Oklahoma was down six; North Dakota lost five; Wyoming was down four; and California, Kansas and Pennsylvania each dropped two. Alaska, Arkansas, Ohio and Utah declined by one each.
Louisiana rose by 5 while New Mexico gained two. Colorado and West Virginia were unchanged.
The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999.#http://abcnews.go.com/Business/wireStory/us-oil-natural-gas-rig-count-drops-34-30405178
Oil slide slashes Q1 profit, not investment plans at Saudi's SABIC
Saudi Basic Industries Corp faces heavy pressure on its profits due to cheap oil but will keep investing globally to boost capacity in key areas, its acting chief executive said on Sunday after the company reported a 39 plunge in first-quarter profit.
SABIC, one of the world's largest petrochemicals groups and Saudi Arabia's biggest listed firm, said net profit sank to 3.93 billion riyals ($1.05 billion) in the three months to March 31 from 6.44 billion riyals a year earlier.
Its sales values were slashed by the plunge of oil prices, which has dragged down petrochemical product prices. Revenues in the first quarter shrank 28 percent from a year earlier and 18 percent from the previous quarter to 35.56 billion riyals.
Yousef Abdullah al-Benyan, who took over from longtime CEO Mohamed al-Mady in February, said the fall in oil and petrochemical product prices was "out of control", and that his company was continuing to look at its cost base with a view towards postponing non-vital spending.
But he also insisted SABIC would not cut back investments in strategic projects around the world, because it was looking ahead to an eventual upturn. He said areas of opportunity were chemicals in China, shale gas in North America, economic growth in Africa, and gross domestic product growth of about 4 percent expected in Saudi Arabia this year.
"We always don't change the key strategic projects, because we understand this is a cyclical market. We understand this is not going to stay forever, and we do not want to be left behind when the market bounces - we want to be the first player ready to enjoy the upcycle."
SABIC's first-quarter profit was actually higher than the average forecast of analysts polled by Reuters, who had predicted 3.50 billion riyals.
The company's shares soared their 10 percent daily limit on Sunday after the stock market regulator announced that it would open the bourse to direct foreign investment from June 15. As a top blue chip, SABIC is expected to attract a substantial chunk of the new foreign money.
Saudi Arabia, its state budget hit by low oil prices, has pushed ahead with some controversial economic reforms since King Salman took the throne in January. Some officials have suggested raising subsidised energy prices; a hike in ultra-low domestic prices of natural gas may also become possible at some stage.
Such reforms, if they went ahead, would probably hurt SABIC's bottom line. But Benyan said he did not expect any policy change that would hurt the petrochemical industry, which authorities had always supported.http://www.reuters.com/article/2015/04/19/sabic-results-q-idUSL5N0XG09O20150419
Saudi Exports From JodiTOP
U.S. proposes higher royalty rates for drilling federal land
The U.S. government would get a larger share of oil and gas revenue from federal land under a proposal the Interior Department was due to announce on Friday.
The federal government is entitled to a 12.5 percent share of oil and gas sold from federal land, chiefly in Western states. The stake for offshore drilling is usually set at 18.75 percent.
Friday's move will open a months-long discussion with the energy industry, environmentalists and other stakeholders about how to set future royalty rates for onshore drilling, said a government official briefed on the proposal.http://www.reuters.com/article/2015/04/17/usa-oil-royalties-idUSL2N0XE0V520150417
Reliance warns on U.S. shale slowdown, refining lifts profit
Indian conglomerate Reliance Industries Ltd warned investors to expect slower growth from its U.S. shale assets in the near term as a slump in oil prices prompts spending cuts.
However, the company posted better than expected fourth quarter profits on Friday, led by strong growth in margins at its core refining business.
Reliance, also dogged by falling production at its domestic oil and gas business, said it would focus on cutting costs in its shale operations in light of a "challenged" market outlook.
The prospect of another plunge in crude prices after two months of relative stability has prompted expectations that shale oil producers could go for another round of spending cuts.
Reliance has invested $8.1 billion in three shale joint-ventures in the United States. Shale represents just a fraction of Reliance's overall profit, but is an important part of the firm's upstream business which has struggled at home.
Investments to expand capacity at Reliance's core refining and petrochemicals businesses, however, helped the company post a 8.5 percent rise in consolidated net profit for the quarter ended March 31. Its financial year runs to the end of March.
The company's gross refining margin, or the profit it makes from each barrel of crude oil refined, hit an eight quarter high of $10.1 in the three months, compared with $9.3 in the same period a year earlier.
The refining business at Reliance, which operates the world's largest refinery, accounted for over 70 percent of the company's gross turnover in the year ended March 2015, dwarfing its activities in telecoms, retail and upstream oil and gas.http://finance.yahoo.com/news/reliance-warns-u-shale-slowdown-135104811.html
India to invest more in Mozambique gas project
Three Indian companies, ONGC Videsh, Oil India have already invested $6 billion in a gas block, Rovuma Area 1 in offshore Mozambique, and further $6 billion will be invested in development of the block. This is one of the largest investment of India in any single hydrocarbon asset abroad, the ministry said in a statement.
During the meetings, the two sides discussed all issues related to the existing investment as well as ways to expand the relationship in other areas of oil and gas. It was agreed that there is scope for expanding cooperation in several areas of mutual interest.
Currently ONGC Videsh, Oil India and Bharat Petroleum have a 30% interest in the block and will participate in the development of the proposed LNG project in Mozambique.http://www.lngworldnews.com/india-to-invest-more-in-mozambique-gas-project/
Petrobras reports new Amazon basin discovery
Petrobras reports new Amazon basin discovery
Petrobras has discovered a new oil and gas accumulation in the Amazon basin, Block AM-T-84.
The discovery was made while drilling well 1-BRSA-1293-AM, informally known as Jusante do Anebá. The well reached a total depth of 2,040 m.
Preliminary well tests have confirmed the presence of light oil (API 47°) and gas in arenaceous reservoirs, extending from 1,350 m to 1,900 m deep.
Petrobras is the operator of the concession (60%), in partnership with Petrogal Brasil (40%).
The consortium will proceed with activities to evaluate the oil and gas bearing reservoirs, Petrobras said.http://www.worldoil.com/news/2015/4/17/petrobras-reports-new-amazon-basin-discovery
Solar Costing a Third of Retail Power Emerges in Germany
Germany’s cost of producing solar energy has shrunk to about a third of the price households pay for power after the nation made developers compete for subsidies.
Most bids to build large ground-mounted solar plants in the first solar auction came in at 9 euro cents (9.7 U.S. cents) to 10 euro cents a kilowatt-hour, Deputy Economy Minister Rainer Baake said. German retail consumers are paying on average 29.8 cents a kWh, according to Eurostat.
“The auctions were very well received,” Baake said at an energy conference Thursday in Berlin. The previous “feed-in tariffs were wonderful to introduce the technology. That era is over.” He didn’t say which bids were accepted, and there’s no guarantee all of them will result in projects.
Germany introduced auctions to try to lower the cost of solar installations as it seeks to more than triple the share of its power consumption coming from renewables by the middle of the century. The Bundesnetzagentur regulator received 170 bids for more than the 150 megawatts it offered. It will auction off a further 350 megawatts this year, 400 megawatts next year and 300 megawatts in 2017.
Coal-fired plants still generate power cheaper than solar in Germany, which has less sunshine than Italy and Spain in the south. That didn’t stop the country from jumpstarting a photovoltaic installation boom when it introduced above-market subsidies to developers more than a decade ago.http://www.bloomberg.com/news/articles/2015-04-23/german-solar-costs-fall-to-third-of-rate-consumers-pay-for-power
China could install 20GW of solar this year: Deutsche
Solar installations in China were up about 100% on the first quarter last year, Deutsche Bank says, with the nation now on target for a massive 20GW, Bloomberg reports.
China has a 17.8GW target for solar installations this year, but got ahead of the game with a 5.04GW first quarter.
Deutsche analysts Vishal Shah told Bloomberg the second quarter was looking similarly big, and that the year-end total could reach 20GW, up from its target of 14GW last year, which it roughly achieved.
"It shows positive momentum in the China market and the potential for upside surprise to the government's 17.8-gigawatt installation target for 2015," Shah wrote in the note, adding that he recommended buying Trina shares.
The first quarter is traditionally the slowest in China, and other nations, as developers rest after the late year rush, and Q1 was only expected to see 2-3GW added, the news service said.http://www.businessspectator.com.au/news/2015/4/23/solar-energy/china-could-install-20gw-solar-year-deutsche
VC, PE firms bet big on a rise in China's clean energy
Clean energy investments by venture capital and private equity firms totaled around $1.24 billion in China last year and are set to see substantial growth this year on the back of favorable policies, said a study from PricewaterhouseCoopers.
There were about 96 VC and PE investments made in China's clean energy and technology industry, the global consultancy firms said in the report published on Tuesday. It said the environmental protection industry was the major beneficiary and accounted for more than 50 percent of the total deal amount and investment value.
The clean energy and technology industry mainly includes environmental protection (such as smart power grids, new energy automobiles and water treatment plants), new energy (such as solar and wind power) and new materials.
"The outlook for the clean energy and technology industry remains bright this year and the industry is expected to benefit from a series of environmental protection acts rolled out in 2014 and 2015," said Gavin Chui, leader for energy, utilities and mining industry at PwC China.
"VC and PE investors will certainly increase investments this year. The good investment environment and availability of funds will act as positives for the long-term development of the industry," Chui said.
A water pollution prevention and control action plan was released in April to improve the water quality of major waterways in China by 2020 and achieve overall improvement in water quality control and conservation across the country by 2030.
In December, the Ministry of Finance rolled out 30 projects worth about 180 billion yuan ($29.32 billion) in the clean energy and technology industry to attract private capital, mainly as a public-private partnership.
The PwC report said wind power will see renewed focus this year as outlined during the national energy conference in December. Industries like smart power grids, new energy automobiles are also expected to see fresh momentum.http://en.chinamining.com.cn/News/2015-04-23/1429752638d71953.html
Horizon Energy Systems Announces New 700Wh/kg Fuel Cell for Drones
Singaporean company Horizon Energy Systems (HES) announced a breakthrough on-demand hydrogen generation technology based on a solid fuel system, further improving the flight endurance of small fuel cell electric drones. The unique ability to perform long endurance missions with a low-altitude mini-UAV provides considerable new benefits in border patrol, infrastructure surveillance, exploration, critical asset and environmental monitoring.
“The new AEROPAK-S is the result of years of effort in simplifying what are typically complex systems and making them easy to deploy”
The company will officially unveil the new solid chemical AEROPAK-S at the May 3-7 AUVSI trade show in Atlanta, Georgia (booth 401) along with other innovations.
“The new AEROPAK-S is the result of years of effort in simplifying what are typically complex systems and making them easy to deploy,” said Taras Wankewycz, HES’ Chief Executive Officer. “We have explored a number of feedstock options through the years and our new system trumps them all on performance, safety and scalability in manufacturing.”
The new 700Wh/kg solid fuel AEROPAK-S completely eliminates the need for a complex catalytic reactor, which reduces size, weight and complexity, while offering a self-contained, plug & play fuel cartridge system.http://www.businesswire.com/news/home/20150422005331/en/Horizon-Energy-Systems-Announces-700Whkg-Fuel-Cell#.VTemUNJVhBc
SolarCity launches fund for U.S. commercial solar projects
SolarCity Corp has started a fund that includes an investment from Credit Suisse to finance more than $1 billion in commercial solar energy systems for companies, schools and government organizations in the United States.
The fund is expected to finance more than 300 megawatts of new commercial solar projects over the next two years, SolarCity said in a statement on Wednesday.
SolarCity, the top U.S. residential solar installer by market share, said it finalized the deal with Credit Suisse in February and began funding projects in March.
The fund was created to finance projects that utilize new SolarCity technologies, said the company, which is backed by Tesla Motors Inc founder Elon Musk.
"SolarCity has installed more than 1,800 commercial solar projects in 21 states, and we've barely scratched the surface of the addressable market," Chief Financial Officer Brad Buss said.http://www.reuters.com/article/2015/04/22/solarcity-fund-idUSL4N0XI5M920150422
North Korea, solar panel boom gives power to the people
In a country notorious for a lack of electricity, many North Koreans are taking power into their hands by installing cheap household solar panels to chargemobile phones and light up their homes.
Apartment blocks in Pyongyang and other cities are increasingly adorned with the panels, hung from balconies and windows, according to recent visitors to the isolated country and photographs obtained by Reuters.
"There must be at least a threefold increase in solar panels compared to last year," Simon Cockerell, who visits North Korea regularly as general manager of Beijing-based Koryo Tours, told Reuters from Pyongyang. "Some are domestically made, so that may have driven prices down."
North Korea has long suffered from electricity shortages which plunge large parts of the country into darkness, providing a stark contrast in night-time photos taken from space to prosperous and power-thirsty South Korea.
The soaring sales of cheap and easily-installed solar panels reflect rising demand for electricity in North Korea as incomes rise and people buy electronic goods like mobile phones and the "notel" media player that need regular charging. North Korea, one of the poorest countries in the world, is home to 2.5 million mobile phone users, about 10 percent of the population.
Once reserved for Workers' Party cadres, solar panels and voltage stabilisers are now sold openly both in markets and the hardware section of Pyongyang department stores, where small 20 watt panels cost just under 350,000 won - $44 at the widely-used black market exchange rate where a dollar is about 8,000 won, instead of the official 96 won.
Obtaining accurate data from North Korea is difficult, but roughly 10-15 percent of urban apartments in a series of recent photographs in North Korean cities obtained by Reuters appeared to have small solar panels attached to windows or balconies.
Whether that number translates nationally is unclear, but regular visitors have noted a significant increase in solar panel use across the country in recent months, either in urban areas or in one case in the backyard vegetable plot of a rural house.http://www.reuters.com/article/2015/04/22/northkorea-solar-idUSL4N0XJ1SS20150422
China on track after adding massive 5.04GW of solar in Q1
China has installed 5.04GW of solar in the first quarter, with 4.38GW of utility-scale PV and 660MW of distributed generations, PV-Tech reports, citing figures from China’s National Energy Administration.
According to the website, the instals take China's cummalative capacity to 33.122GW, and puts it ahead of track for this year's target of 17.8GW.
Financial analyst Mahesh Sanganeria of RBC Capital Markets said the Q1 result was much stronger than expected, and indicated "the likelihood of achieving full year installation target",PV-Tech reports.
Mr Sanganeria said with strong demand also in Japan and the UK, key makers such as JA Solar, Trina Solar and Yingli Green Energy were likely "to meet or beat their respective Q1 shipment targets", the website added.http://www.businessspectator.com.au/news/2015/4/21/solar-energy/china-track-after-adding-massive-504gw-solar-q1
Indonesian Govt to Increase Budget for Renewable Energy Development
Ministry of Energy and Mineral Resources plans to propose allocation for the budget for new and renewable energy amounting to Rp10 trillion for next year.
Currently, budget for the sector only reaches Rp1 trillion.
Previously, President Joko Widodo has given his briefing that the 2016 State Budget must show the ‘change in the way the government sees problems’.
The minister also said that the increased budget would serve as the stimulus to develop and utilize new and renewable energy. The budget, he said, will be used for among others building the market so that the demand increases.
For the record, new and renewable energy will be the future of energy sources for Indonesia.
Therefore, the government pledged to boost diversification of energy from old energy (fossil) into new and renewable energy because so far, development for the infrastructure of renewable energy has not been prioritized in the development of national energy.
Sudirman also ensured that the government is committed to making renewable energy as the main source of energy. According to him, energy diversification is urgent because in the next 10 years, Indonesia is estimated to import oil and gas completely.http://en.tempo.co/read/news/2015/04/19/056658937/Govt-to-Increase-Budget-for-Renewable-Energy-Development
Japan nuclear ruling expected to cool Kyushu Electric's summer LNG demand
Japanese utility Kyushu Electric's late summer LNG demand is expected to be lower than last year after a court on Wednesday rejected a lawsuit attempting to stop the company from restarting its Sendai nuclear reactors, market sources said.
The ruling paves the way for Kyushu Electric to restart its two 890-MW reactors at its Sendai nuclear power plant in Kagoshima prefecture by this summer.
Platts research unit Eclipse Energy expects the restart to replace around 2 GW of capacity currently met by Kyushu Electric's oil-fired power plants but will have no impact on the company's gas-fired plants.
However, market sources said that having nuclear as baseload power would give Kyushu Electric more room to cut down on LNG purchases.
"This will definitely depress their demand for spot cargoes," said a North Asian source, adding that Kyushu Electric has been buying spot cargoes and not committing to long-term contracts because of the uncertainty over nuclear restarts.
Rather than sign additional long-term contracts, Kyushu Electric was heard to have secured four cargoes from Indonesia's Bontang through a strip deal over this summer, at a price in the 12% range of JCC on a FOB basis.
The utility's LNG stocks could also weigh on any additional spot demand.
Kyushu Electric is carrying high LNG inventory following a warmer winter.http://www.platts.com/latest-news/natural-gas/tokyo/japan-nuclear-ruling-expected-to-cool-kyushu-27334190
China gets fresh impetus for nuclear power
Nuclear power plans got a further boost in China after the government gave the final nod for the fifth and sixth units of the Fuqing nuclear power plant in southeastern coastal Fujian province.
This is the second time this year that the government is pressing ahead with the development of nuclear power projects, sending a strong signal that the nuclear sector will see lots of action.
Unit 5 and 6 of Fuqing nuclear power plant are a demonstration project that uses China's flagship nuclear reactor design, the Hualong One, known as the third-generation nuclear technology.
The nuclear industry has struggled for years to receive the necessary regulatory approvals to build new reactors, as China suspended approval for nuclear plants in order to revise its safety standards after the Fukushima disaster in Japan in 2011.
However, it lifted the ban on new nuclear power stations at the end of 2012, and said it would only approve projects proposed for coastal areas within 2015.
The approval is in line with global energy trends and will help optimize the country's energy structure and build a diversified clean energy system.http://en.sxcoal.com/0/116851/DataShow.html
Regulator says Areva nuclear reactor problems could be costly
Regulator says Areva nuclear reactor problems could be costly
Weak spots found in nuclear reactors designed by France's Areva are "very serious" and could prove costly to rectify, the head of France's nuclear regulator told a French newspaper.
Anomalies have been found in the bottom and lid of the reactor vessel which could reduce the resistance of the metal, Pierre-Franck Chevet, head of the ASN regulator, told daily Le Parisien.
"This is a serious, even very serious anomaly as it affects an absolutely crucial reactor component on which no risk of rupture can be taken," Chevet was quoted as saying.
The ASN said last week that Areva had found weak spots in the steel of the European Pressurised Reactor (EPR) it is building for utility EDF in Flamanville, France.
Chevet said that a similar Areva forging technique had been used for five other EPRs either planned or being built.
Two of these are in Taishan, China and another two set for Hinkley Point in England. Components have also been manufactured for one planned for Calvert Cliffs in the U.S. state of Maryland.
Areva was not immediately available to confirm whether the vessels for the Hinkley Point project -- for which a final investment decision has not yet been taken -- had already been manufactured.
Chevet said the installation of the reactor vessel in Flamanville is already largely completed. The vessel has been placed in its concrete base and welded to cooling circuits.
New tests on the vessel will be held in coming months and results are due in October.
Asked what would happen if these were negative, Chevet said: "Either EDF abandons the project or it takes out the vessel and starts building a new one ... this would be a very heavy operation in terms of cost and delay."
The Flamanville reactor is already years behind schedule and billions of euros over budget.
The EPR is a new-generation pressurised water reactor, built to resist the impact of a commercial airline crash. It has been widely criticised as too big and too expensive and Areva has been forced to book billions of euros in provisions due to cost overruns.
China has said it will not load fuel at the Taishan reactors until the reactor vessel issue has been fully resolved.http://www.reuters.com/article/2015/04/17/areva-nuclear-idUSL5N0XE11320150417
Uralkali sets $1.5 bln buyback, changes dividend policy
Russia's Uralkali, the world's largest potash producer, will buy back up to $1.5 billion of its shares until May 22, it said on Friday, after its board changed policy and proposed no dividend payment for 2014.
Uralkali posted a net loss in 2014 due to non-cash write-offs caused by a slide in Russia's rouble currency, hurt by low oil prices and Western sanctions, and announced plans to increase capacity.
Uralkali plans to invest $4.5 billion over five years to boost capacity and maintain its position as the world's largest producer of crop nutrient potash despite production being halted at its Solikamsk-2 mine.
"Taking into account Uralkali's current cash reserves, its expected future cash requirements, available cash flows and other funding resources, we are able to return up to $1.5 billion of cash to security holders," Dmitry Osipov, the company's chief executive, said in a statement.
The board of directors also changed its dividend policy from a previously fixed payment of at least 50 percent of net income. The level of payment will now be determined by the board.
As part of the buyback, Uralkali, part-owned by Russian tycoon and politician Mikhail Prokhorov and by fertiliser firm Uralchem, aims to buy up to 468,750,000, or almost 16 percent of its shares, at a price of $3.20 per share and $16 per Global Depositary Receipthttp://www.reuters.com/article/2015/04/24/uralkali-buyback-idUSL5N0XL0FU20150424
Yara core profit beats forecasts, net income lags
Norwegian fertiliser producer Yara beat quarterly core earnings forecasts on Friday, though net profit missed expectations due to foreign exchange losses and a writedown in Libya.
Yara, the world's biggest nitrate fertiliser maker, said the global outlook for farming profits and various farming incentives continued to support demand, despite lower commodity prices, but high exports from China have pushed commodity nitrogen prices down during the quarter.
Global nitrogen-based fertiliser capacity dropped over the past year because of lost production in Ukraine and Egypt but China, which produces at a relatively high cost, filled that gap and its exports will continue to move prices, Yara said.
"The planned capacity additions outside China over the next years will not fully displace Chinese urea exports, indicating that the latter will continue to be key to global nitrogen pricing also going forward," Yara said in a statement.
Its earnings before interest, taxes, depreciation and amortisation (EBITDA) before one-off items rose to 5.74 billion crowns ($732 million) from 3.83 billion crowns a year ago, beatinganalyst expectations for 5.42 billion crowns. .
But its net profit fell to 729 million crowns from 1.77 billion a year earlier, well short of forecasts for 2.71 billion, as it took a 1.8 billion crown currency loss from the dollar's firming and a 929 million crown writedown on its Libyan business.
Although the strong dollar had a negative impact, a weaker euro and lower gas prices have improved the relative competitiveness of European fertilizer capacity and Yara expects its European energy costs for both the second and third quarters to fall.
The firm previously disclosed the Libyan charge but analyst expectations did not reflect this item.http://www.reuters.com/article/2015/04/24/yara-intl-results-idUSL5N0XL0WT20150424
China grabs stake in Russian potash miner Uralkali
China’s sovereign-wealth fund (CIC) grabbed a 12.5% stake in Russian potash producer Uralkali, the world's biggest producer of the commodity, as it exercised Tuesday an option on a convertible bond it bought last year.
The news come on the heels of a $530 million loan deal the embattled potash miner signed Monday with eight international banks, including Industrial Commercial Bank of China (ICBC) and China Construction Bank.
ING Bank, Societe Generale, Nordea Bank, Commerzbank, IKB and Natixis also took part in yesterday’s deal as lenders.
At the current share price, CIC's stake is worth about $2.03 billion
CIC’s move, reports Dow Jones, represents a bold attempt by China to secure continued supply of the soil nutrient. At the current share price, CIC's stake is worth about $2.03 billion(64.5 billion rubles).
Since last year the fund has been shifting its focus to invest in agriculture and global food supplies, which reflects the priorities of the country’s current leadership.http://www.mining.com/china-grabs-stake-in-russian-potash-miner-uralkali/?utm_source=twitterfeed&utm_medium=twitter
U.S. regulators may recommend testing food for glyphosate residues
U.S. regulators may start testing food products for residues of the world's most widely used herbicide, the Environmental Protection Agency told Reuters on Friday, as public concern rises over possible links to disease.
Glyphosate, the active ingredient in Roundup herbicide, has come under intense scrutiny since a research unit of the World Health Organization reported last month it was classifying glyphosate as "probably carcinogenic to humans."
The herbicide is considered safe by the EPA, as well as many foreign regulatory agencies, including in the European Union.
Still, a number of companies, consumer groups and advocacy organizations have been sampling foods, as well as human urine and breast milk, to try to determine the pervasiveness of glyphosate residues.
Glyphosate is used on corn, soybeans, sugar beets and other crops genetically altered to withstand it. It is also used by farmers growing wheat and other crops. Its use has surged with the advancement of genetically engineered crops.
The U.S. government, which annually tests thousands of foods for pesticide residues, does not test for glyphosate, in part because it has been considered safe.
That could change, the EPA said in a statement Friday.
"Given increased public interest in glyphosate, EPA may recommend sampling for glyphosate in the future," the agency said in an email response to a Reuters inquiry.
Monsanto Co, the maker of Roundup, on April 1 posted a blog seeking to reassure consumers about glyphosate residues, saying trace amounts are safe. It did not immediately respond to a request for comment.http://www.reuters.com/article/2015/04/17/food-agriculture-glyphosate-idUSL2N0XE2MY20150417
Newmont Mining earnings are 50 pct higher in Q1
American gold major Newmont Mining touted $628 million in operating cash flow in its Q1 that it released today. Here are the highlights directly from the company's news release:
Net income: Achieved net income attributable to shareholders from continuing operations of $175 million, or $0.35 per share, compared to $117 million or $0.23 per share the prior year quarter; adjusted net income1 was $229 million, or $0.46 per basic share, compared to $121 million or $0.24 per share the prior year quarter.
Consolidated cash flow: Generated cash from continuing operations of $628 million and free cash flow from continuing operations of $344 million, compared to $183 million and $(52) million the prior year quarter.
Consolidated adjusted EBITDA: Delivered adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $815 million in the first quarter, compared to $493 million in the prior year quarter.
All-in sustaining costs: Gold and copper AISC was $849 per ounce and $1.73 per pound, respectively, compared with $1,034 per ounce and $3.67 per pound, respectively, in the prior year quarter
Newmont's outlook was largely unchanged.
"Total 2015 CAS and AISC are unchanged, but the Company’s revised outlook reflects a three percent reduction in Asia Pacific region costs, offsetting an increase in Africa costs. Boddington and Tanami CAS and AISC outlook for 2015 are lower than previous estimates due primarily to lower Australian dollar exchange rates and oil prices."http://www.mining.com/newmont-mining-earnings-are-50-pct-higher-in-q1/
Alrosa says Q1 output up 6 pct year-on-year
Russian diamond mining company Alrosa said on Tuesday its first-quarter output rose 6 percent year-on-year to 8.4 million carats and revenue from rough diamond sales was set to reach at least $1.1 billion.
Alrosa, the world's top producer by output in carats, also reported that its first-quarter rough diamond prices fell by 3 percent.
However, market conditions are expected to improve thanks to key markets in the United States, China and India, it added in a statement.http://www.reuters.com/article/2015/04/21/russia-alrosa-output-idUSR4N0X603D20150421
Scientists reveal diamond bearing rocks more common than thought
The group also found evidence that suggests orangeites were formed from lava produced by massive volcanic eruptions several tens of millions of years ago.
A team of Australian scientists have unveiled a ground-breaking study that identifies, for the first time, the exact source of diamond-bearing rocks known as orangeites.
The paper reveals that orangeites —until now believed to be common only to South Africa— may be present in much higher abundance worldwide
Published Monday in the April edition of Nature Communications, the paper reveals that orangeites —until now believed to be common only to South Africa— may be present in much higher abundance worldwide, especially in Australia.
Rough on the outside, these rocks contain not only treasured diamonds but also tiny fragments of mantle and crustal rocks. By using highly sophisticated geochemical and isotopic analytical techniques, the scientists were able to link those fragments to the source of the orangeites, deep in the interior of the planet.
“We found strong evidence that orangeites are sourced from MARID (Mica-Amphibole-Rutile-Ilmenite-Diopside) mantle, which up until recently had only been recognised in South Africa," leading author, Professor Fiorentini — from The University of Western Australia — said in a statement. "However, ongoing studies suggest that MARID mantle may occur in other continents, including here in Australia."
The group also found evidence that suggests orangeites were formed from lava produced by massive volcanic eruptions several tens of millions of years ago. Until now, the common beliefwas that diamonds were formed about 990 million years ago.http://www.mining.com/diamond-study-reveals-key-information-about-the-earth/
Nickel Ore Prices to Fall Further on Supply Surplus, SMM Says
Nickel ore prices are expected to continue falling for the foreseeable future, Shanghai Metals Market predicts.
“The price of Philippine nickel ore, especially high-grade ore, will continue falling due to supply glut,” SMM’s nickel analyst said at SMM Nickel Summit.
Nickel ore inventories at China’s major ports are enough for more than half-year’s consumption, the analyst noted at the Summit.
New arrivals of shipments from the Philippines have been reported recently following the end of monsoon season there.
“The downward room of medium-grade ore will be relatively small as the price is nearing costs,” the analyst added.http://www.metal.com/newscontent/72169_nickel-ore-prices-to-fall-further-on-supply-surplus-smm-says
Rusal says may idle 200,000 tonnes of aluminium capacity
Top global aluminium producer United Company Rusal said on Wednesday it was reviewing its aluminium smelting operations and may idle a further 200,000 tonnes of capacity.
Rusal, which has cut capacity by 800,000 tonnes in the past two years, said its first quarter aluminium production came in at 900,000 tonnes, down two percent on the previous quarter, but up two percent on a year ago.
The Hong Kong-listed company said it expected calendar 2015 production to be flat on the previous year.
Deputy CEO Oleg Mukhamedshin said in March that Rusal was considering shuttering some production due to the weak price outlook and a desire to shift production to cleaner energy sources. The company is looking to have almost all of its production using electricity from hydroelectric power plants.
The review follows weak global aluminium prices and a halving in premiums this year in parts of Asia as China has stepped up exports of semi-manufactured products and logjams at London Metal Exchange warehouses have unwound. Premiums are a delivery surcharge paid to obtain metal.
Alcoa said in March it was reviewing 14 percent of its smelting capacity for closure, curtailment or sale.
Rusal also said on Wednesday it would not be restarting any capacity idled in 2013. It has cut capacity in the past two years by shutting down smelters that used electricity from coal-fired power plants and other fuels, it said last month.http://www.reuters.com/article/2015/04/22/united-co-rusal-results-idUSL5N0XJ03120150422
Philex gets Philippine govt clearance for $1.2 bln Silangan mine
Philex Mining Corp has been cleared by the Philippine government to proceed with the development of its $1.2 billion Silangan copper-gold mine, paving the way for production to potentially begin in 2018.
The Silangan mine in Surigao del Norte province in the southern Philippines represents Philex's biggest prospective revenue driver when its Padcal mine in the north closes in about 2020 unless it gets a mine extension.
The Department of Environment and Natural Resources had approved the project's development plan in an order signed April 10, Philex said in a filing to the stock exchange on Tuesday.
Shares in the miner rose as much as 5.3 percent, outperforming the broader market which was down 0.3 percent as of 0345 GMT.
The miner plans to seek loans later this year to finance as much as 70 percent of the project cost estimated at between $1 billion and $1.2 billion, Philex Chairman Manuel Pangilinan said last week.
According to initial estimates, Silangan's resources comprise 5 billion pounds of copper and 9 million ounces of gold - among the biggest in the country.
Unlike other big mining projects in the Philippines, Silangan is not affected by a local moratorium on approvals for new production. But it would be covered by a new tax regime that Congress may legislate on to increase the government's share of mining revenue.
Last month, Philex said an additional 110.9 million tonnes of estimated mineral resources would augment Padcal's mineable inventory, which would allow it to extend mine life beyond 2020.http://www.reuters.com/article/2015/04/21/philippines-philex-mining-idUSL4N0XI1CY20150421
Aluminium premiums in Europe slide by half since peak
Surcharges for physical aluminium in Europe have spiralled down by nearly half, good news for industrial consumers such as beer can makers which had bitterly complained about warehouse backlogs of up to two years for delivery of the metal.
The unraveling of financing deals at warehouses, together with heavy Chinese exports, has unleashed a glut of aluminium, while demand remains poor.
Premiums paid over the LME cash price were mostly quoted in a range of $250-$290 a tonne for duty-paid material in Rotterdam.
That is a fall from premiums of $370-$390 in early March and about half the levels at a peak of $500 in November 2014.
"It's going down very fast and I don't know where it's going to stop," said one trader, who added that there were some deals with premiums as low as $230.
"If you have a lot of stocks and you want to get rid of them now you have to go down."
The bulk of the estimated 10-12 million tonnes of global aluminium inventories have been locked up in financing deals for the past several years, but a flatter forward curve is making them much less lucrative.
Under the financing deals, investors previously have been able to sell aluminium forward at a healthy profit and store it cheaply until the deals mature, keeping the metal off the market.
"The contango doesn't support the financing deals and so there's no new deals going on," a second trader said.
A contango is when a forward price is higher than a nearby one.
The spread between the cash LME aluminium contract and the 15-month contract has sharply contracted over the past 12 months to $31.75 a tonne from $109.75.
The other driver of lower aluminium premiums have been high levels of Chinese exports.
Preliminary Chinese trade data show exports of unwrought aluminium and aluminium products were 360,000 tonnes in March, down 14 percent from the previous month, but still at relatively strong levels.
If exports continue to decline in April, that could help keep premiums from falling further, said a source at a producer.http://www.reuters.com/article/2015/04/20/aluminium-premiums-europe-idUSL5N0XE38M20150420
BHP Billiton shuts oven at Colombia ferronickel plant, cutting output
BHP Billiton has shut an oven at its Cerro Matoso ferronickel plant in Colombia after equipment damage, cutting output by as much as three quarters, the president of the union representing the plant's workers told Reuters on Friday.
Damage to a crane stopped production of one of two ovens at the world's sixth-largest ferronickel producer on Thursday afternoon, union leader Domingo Hernandez said.
The second oven on site is producing at half its capacity, he said. It was not initially clear whether that was linked to Thursday's incident. "The cables that suspend the container [from the crane]broke, which caused damage to the equipment and as they can't feed the oven without the crane, the oven is out of operation," Hernandez told Reuters, referring to the first oven.
Neither Cerro Matoso, nor parent company BHP Billiton were immediately available to comment. The operation, located in northern Cordoba province, produced over 41 000 t last year.http://www.miningweekly.com/article/bhp-billiton-shuts-oven-at-colombia-ferronickel-plant-cutting-output-2015-04-17
Europe aluminium alloy prices firm further on strong demand
Market prices for 226, Europe's key grade of aluminum alloy, have continued to firm this week as demand remains exceptionally strong.
Buyers have had difficulty in sourcing enough metal during the first half of the year as demand for auto parts from the car industry has risen significantly so far in 2015.
One key German auto producer was estimated to have raised its alloy requirements by 20% between Q1 and Q2, according to 226 producers. While other luxury German car brands are also enjoying strong domestic and export sales this year, boosted by the weaker euro.
Meanwhile, car makers in Italy, Spain, and to a lesser extent France, have seen a huge recovery in production and sales since the end of 2014 and this has also raised demand for alloy in markets that have struggled to recover from the recent recession.http://www.platts.com/latest-news/metals/london/europe-aluminum-alloy-prices-firm-further-on-26067148
Hudbay picks up fourth Manitoba mine
Hudbay Minerals has purchased the idled Snow Lake project in Manitoba, adding to its stable of properties in the Canadian province of Manitoba.
The mine's owner, QMX Gold Corporation announced on Friday it is selling the Snow Lake Project, which includes the Snow Lake mine and processing plant, to Hudbay for US$12.3 million in cash, plus a contingent payment of $5 million. The past-producing mine is currently on care and maintenance, having closed in 2005. It first opened as the Nor-Acme mine in 1949, closed in 1958, and was re-opened as the New Britannia mine in 1995. According to QMX, between 1995 and 2005,6.48 million tons were mined at an average grade 0.132 oz/ton for a total of 858,075 ounces.
The company says it wants to focus on its two properties in Quebec, Lac Pelletier and Lac Herbin, the latter of which produced 610,000 gold ounces.
"I'm very pleased to announce that Hudbay, a well-established Canadian mineral producer, will be acquiring the Snow Lake Project. We remain confident in the historic Snow Lake mine, but this transaction will now permit QMX Gold to move forward and focus on its assets in Quebec," said Brett New, president and CEO of QMX Gold.
The acquisition means that Hudbay Minerals will now have four producing mines in Manitoba, assuming the Snow Lake project is restarted.http://www.mining.com/hudbay-picks-up-fourth-manitoba-mine/
Oz Minerals boosts output at flagship mine, eyes offshore expansion
Australian copper miner OZ Minerals plans to raise production at its only mine while it looks for ways to extend mine life beyond 2018, develop its other South Australian resources or make acquisitions.
Following a strategy review under its new chief executive, Andrew Cole, the company said it may expand into other base metals or gold and look beyond Australia, targeting assets that are being put on the block by other miners.
OZ Minerals said on Monday it plans to produce 110,000-120,000 tonnes of copper at its Prominent Hill mine in 2015, up from 92,615 tonnes last year, at a cost of 80-95 cents a pound as it looks to generate cash.
That followed its strongest quarterly copper production in five years, with output of 31,160 tonnes.
Cole has already cut around A$40 million in costs, by moving the company's headquarters to Adelaide from Melbourne to be closer to its assets, cutting exploration spending and tightening the mine's operations. It has also saved around A$8 million as diesel and power costs have dropped.
The company earlier this year put on hold talks to line up a partner for its undeveloped Carrapateena project in South Australia, and said on Monday it would complete rail and metals processing studies to help make the project more attractive to potential partners.
A pre-feasibility study last year outlined a plan to produce an average of 114,000 tonnes of copper and 117,000 ounces of gold a year at Carrapateena over 24 years, for a project with a net present value of A$1.1 billion.
OZ Minerals, which in February did not pay a final dividend while it was carrying out its strategy review, said it now plans to pay out 20 percent of cash generated as dividends.http://www.reuters.com/article/2015/04/20/oz-minerals-strategy-idUSL4N0XG0SY20150420
Steel, Iron Ore and Coal
China’s Mar coking coal imports hit 29-mth low
China’s coking coal imports fell 21% year on year and down 26% from February to 2.95 million tonnes in March, hitting a 29-month low since October 2012, showed data from the General Administration of Customs showed on April 23.
Imports from top supplier Australia dropped 29% from the previous month but up 7% from a year ago to 1.53 million tonnes in March.
Coking coal imports from Mongolia – China’s second largest supplier -- rose 28.3% year on year but down 13.2% month on month to 919,625 tonnes in March.
Imports from Russia reached 319,017 tonnes in March, down 53.6% from a year ago but up 11% from the previous month.
In the first quarter of the year, China’s coking coal imports decreased 16% on year to 10.92 million tonnes.
Meanwhile, China’s exports of coking coal rose 4% from the previous month and up 3.3% on year to 142,589 tonnes in March, mainly due to China’s export tariff cut to 3% from 10% starting January 1, 2015.
The export volumes included 80,884 tonnes to South Korea, 37,838 tonnes to Iran, and 18,380 tonnes to Japan.http://en.sxcoal.com/0/117103/DataShow.html
Only 1 pct of firms in China's Hebei met 2014 emission standards - Greenpeace
Only 1 percent of firms in China's top steelmaking province of Hebei met state emission standards in 2014, environmental group Greenpeace said on Friday, underscoring the challenges facing industrial regions as the government's war on smog intensifies.
In a review of official emissions data submitted last year by major coal-fired power, steel and cement producers in Hebei, Greenpeace said just two of the 183 monitored firms managed to meet standards.
"While we welcome how transparently the government is reporting this data, it does paint a bleak picture of what the reality is on the ground," said Zhang Kai, climate and energy campaigner at Greenpeace East Asia.
Hebei, which surrounds the capital, Beijing, produces nearly 200 million tonnes of steel a year, more than the whole of the European Union. Last year it was home to seven of China's 10 most polluted cities, according to official air quality data.
The province said in an action plan published this month that it would cut hazardous airborne particles known as PM2.5 by 25 percent from 2013 levels by 2017. Cities closer to Beijing, including the major steel-producing city of Tangshan, faced an even higher target of 33 percent.
Hebei has promised to cut coal consumption by 40 million tonnes over the 2014-2017 period and steel capacity by 60 million tonnes.
It has also said that all steel mills in the province would be forced to install the equipment required to comply with state emission standards by the end of this year, and it has arranged $100 billion in financing from banks to help firms pay for upgrades.
Growth in Hebei slipped to 6.5 percent last year, among the lowest in the country, and it has long urged Beijing for more support. Last month Premier Li Keqiang said the state should offer it preferential financing policies.
"Hebei was given preferential treatment to clean up its air because of its proximity to the capital," said Yang Shuying, a researcher with the Policy Research Centre for the Environment and Economy, an environment ministry think tank.
Yang said Hebei had been granted 4 billion yuan ($645 million) from the central government budget in 2014 to help clean up heavily polluted industries.
"We still need to see how the local authority is spending the budget," she said.
Greenpeace also examined data from 168 companies in coastal Jiangsu province in the east, a major manufacturing hub, and found that only four met emissions standards last year.
"We believe that if current emissions are not improved soon, Jiangsu will find it very difficult to meet its 20 percent emissions reduction target by 2017, and Hebei will also struggle to shake off its reputation for being a heavily polluted province," Greenpeace's Zhang said.http://www.reuters.com/article/2015/04/24/china-environment-hebei-idUSL4N0XL1UO20150424
Peabody posts bigger-than-expected loss
Coal miner Peabody Energy Corp reported a bigger-than-expected loss due to lower prices and declining Chinese demand.
Shares of the company, which also forecast a bigger-than-expected loss for the current quarter, fell as much as 6.4 percent to a near 13-year low of $4.56 in early trading.
Peabody said on Thursday it expects a second-quarter adjusted loss of 59-49 cents per share. Analysts on average were expecting a loss of 35 cents per share, according to Thomson Reuters I/B/E/S.
The company, which sells both higher-margin metallurgical or steel-making coal and power-generation coal, cut its 2015 U.S. sales forecast to 180-190 million tons from 190-200 million tons. The United States accounts for nearly 60 percent of the company's total revenue.
Peabody and its rivals have been hurt by weak demand for thermal coal as utilities switch to cheap and abundantly available natural gas. Sluggish demand from Europe and Asia, especially China, has also weighed on metallurgical or steel-making coal prices.
Peabody's smaller rival, Arch Coal Inc, on Tuesday reported a bigger-than-expected quarterly loss and cut its full-year production forecast.
Net loss attributable to Peabody's common stockholders widened to $176.6 million, or 65 cents per share, in the first quarter, from $48.5 million, or 18 cents per share, a year earlier.
The company said the results included an impact of $103.8 million related to currency and fuel hedging.
Peabody said sales from its Australian operations, which contributes nearly 40 percent to its total revenue, fell 7 percent to 8.8 million tons.
On an adjusted basis, the company's loss was 39 cents per share, bigger than analysts' average estimate of 32 cents.
Revenue fell 5.5 percent to $1.54 billion, below the average analyst estimate of $1.61 billion.http://www.reuters.com/article/2015/04/23/peabody-energy-results-idUSL4N0XK4WE20150423
Steelmaker Outokumpu cuts Americas sales outlook, shares plunge
Shares in Outokumpu tumbled on Thursday after the stainless steel manufacturer cut its sales forecast for its Americas operation because of exports from Asia and weak demand from distributors.
The Finnish company cut its 2015 volume outlook for the Coil Americas business to 540,000 tonnes from 620,000 tonnes, sending the shares down 9.8 percent by 1012 GMT.
Shares in the company had risen sharply last month after Reuters broke the news on European anti-dumping duties on stainless imports from China and Taiwan.
However, Outokumpu said it has been hit by increasing steel imports from Asia into the Americas while demand from regional distributors has been weak because of high stock levels and low nickel prices.
Inderes Equity Research said that growing Asian exports to America were a reflection of the EU duties.
"The producers of stainless steel do not seem to be able to overcome the problem of global overcapacity", its analysts said on Twitter.
Outokumpu also said that first-quarter underlying operating profit would be higher than the same period last year. The company publishes full results on April 29.http://www.reuters.com/article/2015/04/23/outokumpu-results-idUSL5N0XK1XD20150423
Weak Russian rouble pushes Severstal's Q1 margin to record high
Russian steelmaker Severstal reported on Thursday its highest core earnings margin in the first quarter of 2015, helped by a weakened rouble which lowered costs and increased profitability.
Severstal, Russia's second largest steel producer, and other exporters have benefited from a 50-percent decline in the rouble against the dollar since mid-2014, as their costs fell in dollar terms.
Severstal said its margin on earnings before interest, taxes, depreciation and amortisation (EBITDA), a measure of a company's operating profitability, reached 38.5 percent - the highest level in its history as a public company.
The company reported net profits of $343 million, slightly dampened by foreign exchange losses but up from a net loss of $795 million in the previous quarter, when its bottom line was hit by write-offs.
Revenue fell 18.5 percent quarter-on-quarter to $1.5 billion, the company said in a statement. EBITDA also slipped to $590 million, down 2 percent.
Despite Russia's flagging economy, hit by a collapse in global oil prices and Western sanctions over the Ukraine crisis,
Severstal said steel demand was better than expected this year.
"Although visibility remains limited, we are seeing resilience in domestic steel demand," said Alexey Mordashov, the company's chief executive and main owner.
Severstal said on Wednesday its board had recommended a dividend payout of 12.81 roubles ($0.24) roubles per share for the first quarter of 2015.http://www.reuters.com/article/2015/04/23/russia-severstal-idUSL5N0XK15720150423
BHP Billiton ups iron ore production forecasts
BHP Billiton is not sitting on the sidelines as the prices of commodities languish.
The Anglo Australian miner increased its forecast for the amount of iron ore it would produce this year on Wednesday, despite a 54 per cent fall in the price of the commodity over the past twelve months.
BHP Billiton now projects that it will produce 225m tonnes of iron ore in its fiscal 2015 year, which runs to the end of June. That guidance represents a 13 per cent rise in production in the current year from the prior 12 months, and is 5m tonnes above its previous expectations.
The company also increased its forecasts for Western Australian iron ore production to 250m tonnes, two per cent higher than earlier guidance. BHP added that further growth in capacity could lift that figure to 270m tonnes without extra investments in its plants.
Andrew Mackenzie, the BHP chief executive, said:
Our focus remains on producing at the lowest possible cost with Western Australia iron ore unit costs now below $20 per tonne as we continue to improve productivity.
BHP produced 59m tonnes of iron ore in the quarter to the end of March, a fifth higher than the prior year's quarter. Production of petroleum commodities rose 1 per cent from a year earlier to 61.5m barrels of oil equivalent, while copper output climbed 11 per cent to 460m tonnes.http://www.ft.com/fastft/311572/bhp-billiton-ups-iron-ore-production-forecasts
Fortescue pays up to get $2.3 bln bond over the line
Australian miner Fortescue Metals Group has refinanced $2.3 billion of its debt pile on a third attempt, but was forced to pay a higher yield amid investor concerns about the state of the iron ore market.
Fortescue sold senior secured notes in New York at a 10.25 percent yield on Wednesday, a far richer price than the 8.5 percent the company offered just a month ago but which was pulled after it failed to tempt investors.
"They should have priced when they could have issued at 9 percent," one leveragedfinance banker told IFR, a Thomson Reuters publication. "Now they are out with a smaller deal at much wider levels."
Fortescue chief executive Nev Power said on Thursday the funds would be used to repay the company's 2017 and 2018 debt in full, refinance part of its 2019 debt and bolster its balance sheet.
The decision to pay up to refinance, which Power described as a "great outcome", comes just a week after chief financial officer, Stephen Pearce, said the company was totally comfortable with its decision to scrap the March bond sale.
Fortescue also provided additional security to back the bond, including mining tenements, according to Fitch Ratings. Fitch has a BBB- rating on the bond, one notch higher than the company's BB+ rating due to the quality of the collateral.
This time around, the company stuck to just a bond after last month cancelling plans for a $4.9 billion loan extension that ran alongside the initial bond offering. Credit Suisse led those failed deals with JP Morgan, but missed out on a role this time round.http://www.reuters.com/article/2015/04/23/fortescue-bonds-idUSL4N0XK01C20150423
Vale hits new iron ore production record
Vale, the world’s largest iron ore producer, continued to flood the market in the first quarter of the year, logging record production volumes despite a current supply glut that has sent prices for the commodity plummeting.
The Brazilian miner produced 77.4 million tonnes of iron ore in the period, up 4.5% from a year earlier.
The Brazilian miner produced 77.4 million tonnes of iron ore in the period, up 4.5% from a year earlier. The figure includes 2.9 million tons of ore Vale acquired from third parties, a move that suggests the company is willing to deal with a short-term price pain in order to recover market share after from Australian competitors.
The announcement came just a few hours after BHP Billiton (ASX:BHP), the world’s third iron ore miner, said it would slow its expansion plansbecause of weak prices.
Vale’s record quarterly iron ore output was due, in part, to the results from the newly opened N4WS mine, in the company’s Carajas complex. The operation kicked off mining activities in December and contributed to an 18% rise in the overall Carajas output for the quarter, the company said.http://www.mining.com/vale-hits-new-iron-production-record/?utm_source=twitterfeed&utm_medium=twitter
China's Q1 iron ore imports from Australia up 22.2 pct on year
China's iron ore imports from Australia rose 22.2 percent to 144.4 million tonnes in the first quarter from a year earlier, customs data showed on Wednesday, as major producers ramped up production and increase shipments.
Top miners Rio Tinto and BHP Billiton have boosted output, focusing on slashing costs to make returns and carve out market share as falling prices squeeze higher-cost miners.
The soaring shipments to China at a time when the country's steel demand is slowing has meant iron ore prices .IO62-CNI=SI have more than halved to around $50 a tonne in the past 12 months.
Amid this slump BHP Billiton said it will slow down its expansion plans by delaying an Australian port project that would have boosted output by 20 million tonnes, but Rio Tinto still plans to ship 350 million tonnes of ore in 2015.
Imports from Australia jumped 26.6 percent to 51.55 million tonnes in March from a year ago, data from the General Administration of Customs showed.
Total imports by China rose 2.4 percent to 227.1 million tonnes in the first quarter from the same period of last year.
China's imports of iron ore from Brazil, its second-largest supplier after Australia, inched up 0.6 percent to 41.8 million tonnes in the first quarter from a year ago. Shipments in March dropped 2.5 percent to 14.48 million tonnes.http://www.reuters.com/article/2015/04/22/china-trade-ironore-idUSL4N0XJ30V20150422
Heilongjiang Longmay Group to close eight coking mines
Heilongjiang Longmay Mining Holding Group Co. Ltd., or Longmay Group, the biggest met coal miner in northeast China, will close eight of itscoking coal mines, sources said.
The company will release implementation plan for production halt before April 25, and by May 15 all operations will be stopped completely.
The mines are to be closed because of poor production margins amid bleak sales and also because most of them had reached the end of their mining life cycle. The mines affected are: Lishu, Ronghua, Qidao, Nanshan, Zhenxin, Shuangyang, Taoshan and Xintie.
Some sources said the closures would have minimal impact on the market, as these mine closures only involve small volume and most are of slightly inferior quality.
However, other sources said this may lend some hope for the seaborne met coal market.
Should these mines remain shut, Northeast China mills would be desperate to get some Australian and Russian semi-hard cargoes, said one Beijing-based trader.
Another supplier of foreign coals said that he had already received some buying interest for foreign semi-hard and semi-soft coals from the region. But he was not sure whether this was a direct result of
the mine closures or just routine spot interest.
Longmay's products are mostly consumed within the Northeast China belt and hence it need not have a direct impact on other regions in the country, another market source said, while adding the "drastic" move may at least be indicative of terrible market conditions.
The company has a total production capacity of around 52-54 million tonnes of raw coal, of which most of the production is focused on hard coking coal, one-third coking coal, fat coal and gas coal. The Heilongjiang-based producer owns 42 mines and 16 washing plants.http://en.sxcoal.com/0/117017/DataShow.html
China key steel mills daily output up 5pct in early-April
Daily crude steel output of key Chinese steel producers increased 5.05% from ten days ago to 1.695 million tonnes over April 1-10, showed data from the China Iron and Steel Association (CISA).
The increase was mainly resulted from improved production enthusiasm from steel mills as profit gained amid dropping pig iron prices.
By the end of the second week of April, total stocks of five key steel products across the nation stood at 14.65 million tonnes, down 8.3% from the beginning of March, the fifth consecutive weekly decline, indicating a weak market in the future.
Over April 6-12, the price of steel products dropped 1.1% on month, according to data from the Ministry of Commerce.
The CISA didn’t give an estimate on China’s total daily output during the same period.
Meanwhile, the CISA members produced 1.67 million tonnes of pig iron on average each day during the same period, up 4.56% from the previous ten days.http://en.sxcoal.com/0/117013/DataShow.html
BHP blinks as iron ore prices fall, delays output boost
BHP Billiton is slowing down its expansion plans in iron ore, the first big miner to pull back as a global supply glut sends ore prices tumbling.
The world no. 3 producer said on Wednesday it would delay a an Australian port project that would have boosted output by 20 million tonnes, taking total output to 290 million tonnes a year by mid-2017.
While the drop in output represents only a tiny amount compared with seaborne trade of around 1.3 billion tonnes, analysts said it was significant given BHP's position as a leading producer.
"It is probably more a symbolic posturing position by BHP, but it also likely signals the bottom of the iron ore market, given this action is being taken by one of the lowest cost producers," said Mark Pervan, head of commodities for ANZ Bank.
However, the big-tonnage miners have so far ignored calls to curtail expansions to help prices recover, and analysts did not expect Rio to follow BHP's lead.
Small adjustments in supply were also unlikely to have much impact on prices that have tumbled to around $50 a tonne from almost $200 four years ago, analysts said.
"Demand is the saviour," said Joel Crane, a commodities analyst at Morgan Stanley.
"The sort of tonnes we're talking about are drops in the ocean. If you're going to see a sustained stabilisation in the iron ore price, you're going to need a demand pick-up."
"I don't believe Rio will go down the same path, given they are much more reliant on iron ore for revenue than BHP. Rio has made it clear it is committed to its next expansion to 350 million tonnes," said David Lennox, mining analyst with Fat Prophets.http://www.reuters.com/article/2015/04/22/bhp-australia-iron-idUSL4N0XI6G820150422
Teck earnings down, cuts dividend as coal slumps
Teck Resources, the second-largest exporter of seaborne coal used in steelmaking, cut its dividend for the first time since the world financial crisis amid slumping prices for the commodity.
The biannual payout will drop 67% to 15 Canadian cents (12 US cents) a share, the Vancouver-based company said Tuesday. That’s the first reduction since Teck discontinued its dividend in November 2008.
Coal is Teck’s biggest business, accounting for 39% of its revenue last year. The quarterly benchmark price for metallurgical coal has fallen to a seven-year low amid slowing Chinese demand and a global supply glut that’s set to continue.
Teck also reported Tuesday that first-quarter profit excluding one-time items was 11 Canadian cents a share, Teck said in a statement. That lagged the 15-cent average of 25 analysts’ estimates compiled by Bloomberg.
Net income slipped to C$68 million, or 12 cents a share, from C$69 million, or 12 cents, a year earlier, Teck said. Sales fell 2.9% to C$2.02 billion, trailing the C$2.12 billion average estimate.
Teck also mines copper, whose price has declined in the last two years and fell 3.4 percent this year through yesterday in New York. Fitch Ratings last week downgraded the company’s credit rating to BBB- from BBB, citing weaker coal and copper prices.
The dividend cut announced today will save Teck about C$346 million a year, or almost the equivalent of the company’s annual debt interest payments, Alex Terentiew, a Toronto-based analyst at Raymond James Financial, said in a note to clients.
As of April 20, the company had C$1.4 billion of cash and $3 billion available under a revolving credit facility, which matures in 2019, the company said.
The cash balance is “consistent with our goal of finishing the year with at least C$1 billion of cash at existing debt levels,” Teck said.
Lower coal and copper prices have coincided with Teck’s commitment to fund it’s 20% interest in the Fort Hills oil-sands project now under construction in northern Alberta.
The C$13.5 billion Fort Hills project is 41% owned by Calgary-based Suncor Energy, which is developing and operating the energy project, with Total SA holding 39%. Start-up is expected in 2017.http://www.mineweb.com/companies/teck-cuts-dividend-for-first-time-since-2008-as-coal-slumps/#.VTZl1vRiah0.twitter
Arch Coal reports bigger-than-expected loss, cuts production forecast
U.S. miner Arch Coal Inc reported a bigger-than-expected quarterly loss and cut its full-year production forecast for both power-generating and steel-making coal.
The company said on Tuesday that it now expects thermal coal production of 120-130 million tons, down from the 124-136 million tons it forecast in February.
Arch also cut its production forecast for metallurgical, or steel-making, coal to 6.0-6.8 million tons from 6.3-7.0 million tons.
The company, which mines coal in various regions in the United States such as Powder River Basin, Appalachia, Colorado and Illinois, said average sales price fell to $19.18 per ton in the first quarter from $20.09, a year earlier.
Coal miners have been under pressure as power utilities switch to cheaper natural gas and big consumers such as China reduce imports.
Prices of natural gas futures are down 11.6 percent this year to Monday's close.
The company's net loss narrowed to $113.2 million, or 53 cents per share, in the quarter ended March 31, from $124.1 million, or 59 cents per share, a year earlier.
On an adjusted basis, the company lost 54 cents per share, above analysts' average expectation of 48 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 8 percent to $677 million, missing the average analyst estimate of $720.3 million.http://www.reuters.com/article/2015/04/21/arch-coal-results-idUSL4N0XI4JB20150421
POSCO Q1 profit up 20 pct, low iron ore costs outweigh weaker steel
South Korean steelmaker POSCO said on Tuesday its quarterly operating profit rose 20 percent, beating estimates, as lower iron ore input costs more than offset the impact of weaker steel prices.
POSCO, the world's sixth-biggest steelmaker, said operating profit in the January to March quarter was 622 billion won ($574 million) on a parent-only basis, above a consensus forecast of 602 billion won compiled by Thomson Reuters I/B/E/S. The closely watched parent-only measure refers to earnings from steel business, and excludes profit from affiliates.
That compared with 518 billion won in operating profit in the same period a year earlier, and 632 billion won in the October-December quarter.
In a regulatory filing, POSCO said revenue fell 8 percent in the quarter to 6.79 trillion won.
Prices of iron ore, a key ingredient in steelmaking, slid in the first quarter amid a supply glut and soft Chinese demand. Benchmark prices have dropped nearly 30 percent this year, hitting their lowest levels since at least October 2008, and POSCO said on Tuesday it expects iron ore prices to remain weak in the second quarter.
That has softened the blow of lower demand from steel from China, as the economy of world's top steel consumer grew at its slowest annual pace in six years at the start of 2015. The global steel business has also been hit by chronic overcapacity, capping price rises of the alloy sold for the automobile, shipbuilding, construction and home appliance sectors.
POSCO said on Tuesday it expects China steel price falls to decrease going forward.http://in.reuters.com/article/2015/04/21/posco-results-idINKBN0NC0JC20150421
Steel demand in China forecast to decline through 2016
China's government is battling a property slump, excess capacity and capital outflows. Bloomberg
Steel demand in China will shrink this year and next to extend the first annual contraction since 1995 as economic growth in the world's biggest producer slows, according to the World Steel Association.
China's steel use will drop 0.5 per cent to 707.2 million metric tons in 2015 and fall to 703.7 million tons next year, the group said in a statement. In 2014, demand declined 3.3 per cent to 710.8 million tons, according to the Brussels-based body, whose members account for 85 per cent of global output.
China's government is battling a property slump, excess capacity and capital outflows, with the economy expanding last year at the slowest pace since 1990. To shore up the expansion, the central bank relaxed rules on home purchasing, cut interest rates and reduced the amount of cash banks must set aside as reserves. Asia's largest economy, which accounts for about half of global steel output, is the largest iron ore buyer.
"Steel demand in 2014 saw negative growth for the first time since 1995 due to the government's rebalancing efforts that had a major impact on the real-estate market," the association said in its short-range outlook on Monday. "In the medium term, no strong rebound is expected."
Global use will rise 0.5 per cent to 1.54 billion tons this year and a further 1.4 per cent to 1.57 billion tons next year, the association said. The group's projections refer to so-called apparent steel use, which reflects deliveries to the market from local producers as well as importers.http://en.chinamining.com.cn/News/2015-04-21/1429581468d71912.html
Shandong Iron and Steel gets full control of African mine
State-owned Shandong Iron and Steel Group Co Ltd said on Monday that it has acquired the remaining 75 percent stake it does not own in a mining project in western Africa's Sierra Leone.
Shandong Steel had earlier acquired a 25 percent stake in the project, Tonkolili Iron Ore mine, for about $1.5 billion in 2011.
With the completion of the stake purchase from the loss-making African Minerals Ltd, Shandong Steel also owns the associated infrastructure company African Port and Railway Services.
It, however, did not release the financial details of the acquisition.
Considering the significant debts of the project, the deal value should not be that big, said Wei Zengmin, an analyst at Shanghai-based domestic industry information consultancy Mysteel.
According to public information, AML had $167 million of unpaid debts by the end of November 2014.http://en.chinamining.com.cn/Investment/2015-04-21/1429583364d71918.html
China Shenhua Mar coal output down 16% on year
China Shenhua Energy Co., Ltd, the listed subsidiary of state-owned coal giant Shenhua Group, produced 23.1 million tonnes of commercial coal in March, down 16% year on year -- the seventh consecutive year-on-year decline, the company said late April 20.
It represented an increase of 12.7% from February, as the miner put its coal mines into normal production after the Lunar New Year holidays.
However, coal sales of the group continued to decrease on the back of sluggish demand from end users. Sales in March dropped 36% on year and down 14.5% on month to 25.4 million tonnes, the seventh consecutive year-on-year decline.
In the first quarter, Shenhua produced a total 69.3 million tonnes of coal, down 13.3% year on year; while total sales during the same period dropped 33.5% on year to 72.8 million tonnes.
Despite sliding market demand, Shenhua kept its prices steady in March, pegging the benchmark 5,500 Kcal/kg NAR thermal coal steady at 490 yuan/t after discounts, 11.6% higher than the mainstream spot price of 439 yuan/t by end-March.
In March, China Shenhua sold 11.6 million tonnes of coal via northern Chinese ports, down 41.7% year on year and down 23.7% from the month before. Of this, coal shipped from Shenhua’s exclusive-use Huanghua port stood at 6 million tonnes or 51.7% of the total, down 42.9% on year and down 23.1% on month.
In the first quarter, the company sold 33.8 million tonnes of coal via northern Chinese ports, down 36.6% year on year. Of this, coal shipped from Huanghua port stood at 17 million tonnes or 46.4% of the total, down 41.2% year on year.
It didn’t import any coal during the same period, while total exports reached 0.3 million tonnes, down 50% on year, with March exports at 0.1 million tonnes, unchanged from the previous month.
Meanwhile, China Shenhua generated 16.1 TWh of electricity in March, down 15.3% year on year but up 39.8% from February, while total power output over January-March decreased 7.6% year on year to 47.65 TWh.
Shenhua’s March power sales stood at 15.03 TWh, down 15.1% year on year but up 40.7% month on month. Total power sales in the first quarter decreased 7.6% year on year to 44.4 TWh.http://en.sxcoal.com/0/116969/DataShow.html
Rio Tinto Q1 iron ore output misses forecasts
Rio Tinto on Tuesday missed first quarter analyst forecasts for iron ore shipments due to bad weather and transport delays, but maintained its full year production target in a bearish sign for prices already at 10-year lows.
The world's no. 2 producer after Vale increased production 12 percent in the first quarter from a year earlier, to 74.7 million tonnes, according to the company's latest operations report.
That was roughly in line with a forecast from UBS but around 8 million tonnes below other analysts' forecasts.
Iron ore shipments rose 9 percent to 72.5 million tonnes, still less than it mined, following a cyclone and a train derailment that blocked access to the company's Dampier port in Australia, the company said.
But Rio stuck to its forecast to increase annual shipments to around 350 million tonnes in 2015, implying shipments will have to average around 92 million tonnes over the next three quarters, and said it would use inventory to meet its targets.
"They will draw down on stocks, which means cheaper costs and larger output," said James Wilson, an analyst with Morgans Financial.
Iron ore prices have slumped after low cost mega miners Vale, Rio and fellow Australian BHP Billiton ramped up output just as demand growth in China began to slow.
China's crude steel output in March fell 1.2 percent from a year ago to 69.48 million tonnes as softening demand and tough environmental checks led mills to cut output.
Steelmakers have warned that production could come under further pressure and more domestic producers could go under.
"It's all becoming more about Chinese demand and where that ends up," said Paul Phillips, a partner at Perennial Growth Management.
The Anglo-Australian miner has been cutting costs to protect its margins in the face of declining prices for iron ore, which accounts for about 90 percent of overall earnings.
Rio Tinto's average cash cost of iron ore production was $19.50 a tonne in 2014, and is forecast at about $17 a tonne this year. Iron ore delivered to China currently fetches around $50 a tonne .IO62-CNI=SI, down from a high above $190 a tonne four years ago.https://mail.google.com/mail/?shva=1#label/Saved?compose=14cda84d860fed82
Maules Creek drives Whitehaven output
The continuing ramp-up of the Maules Creek coal mine, in New South Wales, has assisted in coal miner Whitehaven Coal reporting a 160% increase in run-of-mine (RoM) production during the March quarter. The New South Wales-focused company on Friday announced that RoM production for the three months to March had reached 4.7-million tonnes of coal, up from the 1.8-million tonnes reported in the previous corresponding period.
Saleable coal production increased by 85% on the previous comparable period, to 4.1-million tonnes. Whitehaven pointed out that its Narrabri mine established another quarterly RoM production record, with the mine producing 2.18-million tonnes of RoM coal, and 1.79-million tonnes of saleable coal.
Production from the Tarrawonga mine remained stable, with 534 000 t of RoM coal produced and 465 000 t of saleable coal, while the Rocglen mine produced 207 t of RoM coal and 235 t of saleable coal. The Werris Creek operation also performed strongly during the quarter, with RoM production up by 28%, to 661 000 t and saleable coal production up 10% to 662 000 t.
Meanwhile, construction of the Maules Creek operation was about 93% complete, and Whitehaven said on Friday that the project was likely to be declared commercial from the beginning of July this year. Pre-commercial RoM coal production from the Maules Creek mine reached 1.11-million tonnes during the quarter, while saleable coal production reached 986 000 t. This was compared with the RoM and saleable production of 94 000 t and 54 000 t, respectively, produced during the December quarter of 2014.
Whitehaven on Friday reported that coal sales for the quarter increased by 64% on the previous corresponding period, to 3.7-million tonnes, establishing a new quarterly record.http://www.miningweekly.com/article/maules-creek-drives-whitehaven-output-2015-04-17
Coal tariff cut could force mining firms to slash prices up to RMB60 per ton
Chinese authorities' decision to cut power tariffs by RMB0.02 ($0.003) per kilowatt hour to reflect falling coal prices this month could force miners to cut their prices by as much as RMB60 (US$9.68) per ton, South China Morning Post reported, citing a statement from Jiang Zhimin, vice president of the China National Coal Association.
"There will be no change to the short-term business environment for coal, and it could even continue to decline in 2015," Jiang said told an industry meeting in comments published on the association's website.http://en.chinamining.com.cn/News/2015-04-20/1429513424d71908.html
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