Mark Latham Commodity Equity Intelligence Service

Tuesday 30th August 2016
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    "You beleive in a god who plays dice, and I in complete order and sanity"

    However, as the Church and the KGB give way to Google and Facebook, humanism loses its practical advantages. For we are now at the confluence of two scientific tidal waves. On the one hand, biologists are deciphering the mysteries of the human body and, in particular, of the brain and of human feelings. At the same time, computer scientists are giving us unprecedented data-processing power. When you put the two together, you get external systems that can monitor and understand my feelings much better than I can. Once Big Data systems know me better than I know myself, authority will shift from humans to algorithms. Big Data could then empower Big Brother.

    This has already happened in the field of medicine. The most important medical decisions in your life are increasingly based not on your feelings of illness or wellness, or even on the informed predictions of your doctor — but on the calculations of computers who know you better than you know yourself. A recent example of this process is the case of the actress Angelina Jolie. In 2013, Jolie took a genetic test that proved she was carrying a dangerous mutation of the BRCA1 gene. According to statistical databases, women carrying this mutation have an 87 per cent probability of developing breast cancer. Although at the time Jolie did not have cancer, she decided to pre-empt the disease and undergo a double mastectomy. She didn’t feel ill but she wisely decided to listen to the computer algorithms. “You may not feel anything is wrong,” said the algorithms, “but there is a time bomb ticking in your DNA. Do something about it — now!”

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    Indo-Russia Summit expected to fast track mining, hydrocarbon collaboration projects

    The forthcoming Indo-Russia Summit in October is expected to lay down the framework for scaling up bi-lateral engagements in the mining, energy and hydrocarbon sectors, wherein mega marquee investments have already been put on the anvil.

    While the bilateral agreements up for discussion and likely joint declarations are under preparation, back channel diplomatic talks have already decided to focus on increasing Indo-Russia bilateral trade to about $30-billion a year over the next 10 years, up from $10-billion, largely riding on minerals and hydrocarbon investments and trade, an official said.

    It was pointed out that the preponderance of some of recent investment proposals between the two countries was such that the Indo-Russian Summit was brought forward to October even though the yearly event had been scheduled for December.

    The officials added that, with Russian President Vladimir Putin already in Goa in October to attend a meeting ofBrazil, Russia, India, China and South Africa bloc of nations, holding the Indo-Russia Summit straight thereafter was only logical.

    Officials of both countries have already met earlier this month to draw up background papers of the summit and to fast-track Indian investments in Russia. Gas, coal, iron-ore,petrochemicals will be high on the agenda of talks between the Putin and Indian Prime Minister Narendra Modi.

    India’s oil and gas exploration and production major, ONGC Limited, has already planned $5-billion of investments inRussia, with media reports quoting India’s Commerce Minister as saying that total Indian investments in Russia’soil and gas sector could touch $15-billion in the next five years.

    Reflecting this, ONGC Videsh, the overseas arm of ONGC Limited, has already submitted an expression of interest in picking up a 49% equity stake in Russian oil producer’sRosneft Oil Company’s Tagul field in a deal that has been estimated at $1-billion.

    Another Indian E&P company, Oil India Limited, is also in process of raising funds, estimated at $500-million, to part fund the acquisition of stake in Rosneft’s oil and gas fields in east Siberia.

    At a working group meeting of Russian and Indian officials, the Indian side offered joint development of coal mines inRussia. Officials said that both sides have agreed to exchange information and to identify coal projects suitable for joint development.

    It was pointed out that as a fallout of downturn in commodity prices, the Russian coal sector was facing drop in investments and was estimated to be a low of $1-billion at present. Against such a backdrop, since any Indian foray into Russian coal was likely to be spearheaded by government-owned and -operated Coal India Limited, bi-lateral sovereign guarantees worked out at the forthcoming summit will  fast track the coal sector collaborations.
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    Oil and Gas

    OPEC's Barkindo: Oil producers show realisation action needed on output

    The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, May 30, 2016. REUTERS/Heinz-Peter Bader

    OPEC Secretary-General Mohammed Barkindo sees a growing understanding inside and outside the oil producers' group that action is needed to manage crude production in order to support prices, he said in remarks published in London-based newspaper Al-Hayat.

    He told the newspaper: "There is growing realisation within OPEC and outside that producers inside and outside must take more proactive stands in relation to production management in order to complement traditional market forces."

    "We have seen where the approach of non-intervention in prices since 2014 has led," he said in remarks published in Arabic.

    Members of the Organization of the Petroleum Exporting Countries will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria on Sept. 26-28.

    Asked about the possibility of an agreement on freezing production levels, he said: "Nothing is impossible in the current situation, and I know that no country in OPEC is immune to low prices."
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    Iran Sets Condition Under Which It Would Join OPEC Oil Production Freeze

    In the past two weeks, Iran has rejoined the OPEC production freeze headline and jawboning fray, by making bold statements that it would be willing to work with OPEC on the recurring plan other members, mostly Venezuela, have proposed to push prices higher, namely freeze oil production (at a level which is an all time high output for OPEC's largest member, Saudi Arabia, beyond which it can't produce even if it wanted). So earlier today, Iran's oil minister Bijan Zanganeh made the most explicit statement on the topic, when he laid out the conditions under which Iran would be willing to "help other oil producers stabilize the world market."

    It was a simple condition: Iran will cooperate as long as it is excluded from the freeze, or as Reuters put it, Iran will cooperate "so long as fellow OPEC members recognize its right to regain lost market share, the country' oil minister said on Friday."

    In other words, Iran will endorse an OPEC supply freeze as long as it can keep pumping more.

    Iran, OPEC's third-largest producer, boosted output after Western sanctions were lifted in January, and had refused to join OPEC and some non-members in an accord earlier this year to freeze production levels.

    "Iran will cooperate with OPEC to help the oil market recover, but expects others to respect its rights to regain its lost share of the market," Bijan Namdar Zanganeh was quoted as saying by the oil ministry's news agency SHANA.
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    August 27th, 2016 - Iranian Floating Oil Storage Update

    The amount of Iranian oil on floating storage has decreased by

    1.85 M Barrels

    Last summer The Hedy was, inaccurately, rumoured to have left the Gulf. Windward explained at the time why it hadn't left… Now it has.

    The Current Amount Of Oil Stored

    44.8 M Barrels

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    Iraq Agrees With Kurds to Start Talks on Kurdish, Kirkuk Oil

    Iraq’s prime minister agreed with the semi-autonomous Kurdistan Regional Government to start talks about crude output from northern regions that have been bypassing the central government to export oil.

    Prime Minister Haidar Al-Abadi reached an agreement with KRG Premier Nechirvan Barzani during a meeting in Baghdad to start “technical talks” between the federal oil ministry and the KRG Ministry of Natural Resources, according to an e-mailed statement from Al-Abadi’s office. The talks will focus on the production and distribution of crude from the Kurdish region and the adjacent Kirkuk area, it said.

    “Iraq’s prime minister stressed the necessity to boost oil output and for the Kurds to hand over oil exports from Kurdistan and Kirkuk to the federal government,” Saad Al-Hadithi, spokesman for Al-Abadi, said by phone. “In return, the KRG will receive its financial dues.”

    The central government in Baghdad has been locked in a dispute with the KRG since 2014, when the Kurds began selling their oil independently. Iraq has struggled to raise oil exports this year, due partly to its feud with the KRG, and the new agreement could help OPEC’s second-biggest producer boost northern exports, sustaining its recent increase in supply to global markets.

    New Minister

    Iraq’s new oil minister, Jabbar al-Luaibi, fed hopes when he said on Aug. 15, his first day in office, that he saw ways to resolve the dispute between the central government and the Kurds. Both sides could benefit from a deal, not least because both are short of cash after more than two years of battling Islamic State militants and weathering low oil prices.

    Islamic State invaded large swaths of northern Iraq in June 2014, driving out the Iraqi central government’s army. Kurdish forces then took control of nearby Kirkuk oil fields and started shipping crude from the area through their export pipeline network running to Turkey’s port of Ceyhan.

    Al-Abadi and Barzani also agreed on Monday to cooperate on “liberating” the northern city of Mosul from Islamic State fighters, according to the prime minister’s statement.
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    API: US LNG critical to Europe

    API: US LNG critical to Europe

    Following a recent statement from the US Vice President, Joe Bidden, outlining Europe’s need for “diverse sources of natural gas,” the Executive Director for Market Development at the American Petroleum Institute (API), Marty Durbin, has emphasised the benefits that increased US LNG exports would provide to the US’s allies in Europe.

    Mr Durbin said: “Our nation is leading the world in the production of oil and natural gas, even as we lead the world in the reduction of carbon emissions, which are near 20-year lows […] America’s growth in natural gas production means that through LNG exports we can give our allies stability and security in the global natural gas market. America’s shale revolution is growing our economy, spurring environmental improvements and strengthening our own energy security. US LNG will give our allies an opportunity to achieve those some goals.”
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    GLOBAL LNG-Asian prices steady as spot cargo fetches high rate amid glut

    GLOBAL LNG-Asian prices steady as spot cargo fetches high rate amid glut

    Asian spot liquefied natural gas (LNG) prices held steady in the absence of any decisive indicators, with a lone deal being done at a higher-than-expected level in an amply supplied market.

    Prices for October-delivery LNG to Northeast Asia were valued at around $5.50 per million British thermal units, unchanged from last week's levels, traders said.

    A spot deal for an early October-loading Australian North West Shelf (NWS) LNG cargo was done via a sell tender issued by BHP Billiton this week at around $5.40 per million British thermal units on a free-on-board basis.

    Traders said the deal, factoring in freight, would be equivalent to around $5.80 per million British thermal units on a delivered basis to Northeast Asia, but added that prices in the region were below those levels.

    A Singapore-based trader said the buyer bid aggressively for the cargo, likely to "cover a short" in required supplies after buying a Nigerian cargo earlier.

    Supply disruptions in Nigeria have forced traders who usually take West African cargoes to seek alternative sources for replacements.

    Traders also said that the NWS deal was more expensive than expected as a September-loading supply overhang was generally weighing on prices.

    Tenders offering two September-loading Australian Darwin LNG cargoes and a separate tender offering two Trinidad and Tobago LNG cargoes closed this week. Reuters was not able to establish the tender award details.

    However, traders said that they expected these cargoes to be awarded at lower prices than the October-loading NWS deal.

    Given a general supply overhang, Asia-Pacific LNG producers are looking at new means of marketing their cargoes and are exploring multi-year contracts for sales of spot cargoes.

    ExxonMobil Corp's Papua New Guinea LNG project is eyeing such contracts to soak up excess production, co-owner Oil Search said on Tuesday.

    The new contract types come as buyers are reluctant to commit to traditional long-term contracts as a supply glut in the LNG market offers them greater sourcing options and wears down their concerns over supply security.

    Simultaneously, producers are unwilling to market their surplus cargoes on the spot market because of depressed prices.

    Supply and demand fundamentals could, however, be inching towards equilibrium as emerging countries like Egypt and Pakistan import more of the super-cooled fuel.

    Pakistan, which is moving towards becoming a key LNG buyer, recently signed a deal to purchase a Floating Storage and Regasification Unit for its second import terminal.
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    China imports less natural gas amid weak consumption

    China's imports of natural gas dropped 0.3 percent year on year in July on the back of slowed domestic consumption, official data have shown.

    The decline came at a time when China's natural gas consumption slowed to 2.3 percent in July from 9.8 percent in the first half of 2016, according to the National Development and Reform Commission.

    Anemic demand also dragged down production, which fell 3.4 percent in July, while it increased 2.9 percent in the first half of 2016.

    China's natural gas consumption grew 3.7 percent in 2015, the lowest pace in nearly a decade.

    The country's economic restructuring contributed to the slowdown as factories were the biggest consumers, according to Yin Haitao, an expert at Shanghai Jiaotong University.

    Some enterprises preferred cheaper oil and coal, he added.

    China is now facing an oversupply of natural gas from a previous undersupply, said industry expert Gu Anzhong.
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    Chevron inks LNG supply deal with ENN

    Chevron signed a binding sales and purchase agreement with ENN LNG Trading Company, for the delivery of liquefied natural gas to China from its portfolio.

    Under the agreement, ENN LNG Trading Company, the unit of ENN Energy, China’s private owner and operator of LNG terminals, will receive up to 0.65 million metric tons of liquefied natural gas per year, for a period of 10 years, Chevron noted in its statement on Monday.

    First delivery is expected to start in 2018 or the first half of 2019.

    The start of the liquefied natural gas supply matches the expected date of the completion of ENN’s Zhoushan LNG receiving terminal currently under construction. It is expected the terminal will be in operation by 2018.

    Chevron added the LNG volumes under the supply deal will be delivered from the company’s global portfolio including the company’s Australian LNG interests at Gorgon, Wheatstone and the North West Shelf.
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    Mega-Frac Well Comparison Shows Why EIA Weeklies Are Way Off

    Mega-Fracs have significantly increased production in all US unconventional plays, but it isn't just initial production affected, more importantly it is decline rates.

    Mega-Fracs (a general term used to describe a completion that creates a massive amount of fracturing near the well bore) are also lowering play breakevens.

    We compared 98 2014 standard completions with 39 2015 Mega-Fracs in NE McKenzie County, and the Mega-Fracs had a 23% increase in one year total oil production.

    Mega-Fracs are have re-written the decline curve for unconventional wells which have thrown off EIA estimates for production declines in the United States.

    Image title

    Northeast McKenzie County has seen significant traffic, even in a low oil price environment. There are many operators working this acreage. This includes EOG Resources (NYSE:EOG), Whiting (NYSE:WLL), SM Energy (NYSE:SM), Statoil (NYSE:STO), Halcon (NYSE:HK), and Oasis (NYSE:OAS). It is one of the best areas in North Dakota, and has favorable economics. NE McKenzie is unique due to middle Bakken and upper Three Forks producing similar excellent results. It is the intermingling of two core plays providing a thick payzone. The middle Bakken core is quite large. It is located in NE McKenzie, SW Mountrail and NW Dunn.

    Image title

    (Source: Continental)

    Continental Resources (NYSE:CLR) provides an illustration of the area of maximum overpressure. Higher pressures mean resource will be pushed up and out of the well bore at a faster rate. This produces better results, as more oil reaches the surface in a shorter period of time. Pressures increase to the center, so some of the best results are seen in NE McKenzie. Keep in mind this is not the only core play. Parshall field rivals this acreage when comparing the middle Bakken. As a general rule, the best completions are used in the core. NE McKenzie has seen a large number of Mega-Fracs. This is a general term used for completions using high intensity measures to create mega, or a much larger numbers of fractures in the shale. This is done through shorter stages, and tight per clusters.

    Attached Files
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    Oil Refining Empire Helps Sinopec Beat Chinese Energy Rivals

    China Petroleum & Chemical Corp., the refining giant known as Sinopec, outshined its domestic state-run rivals in the first half of the year as its fuel-making business helped it weather the worst crude crash in a generation.

    The world’s biggest refiner reported 19.9 billion yuan ($3 billion) in profit for the first half of the year, according to a filing Sunday with the Hong Kong stock exchange. While that’s down 22 percent from the same period in 2015, it’s more than double its net income in the second half of last year, when it posted its weakest earnings since 2002. Shares on Monday closed 0.2 percent lower at HK$5.61, compared with a 0.4 percent decline in the city’s benchmark Hang Seng Index.

    “Sinopec continues to be a defensive play among China’s Big Three oil companies as its huge refining exposure puts it in a good position to benefit from a low crude price environment,” Gordon Kwan, head of Asia oil and gas research at Nomura Holdings Inc. in Hong Kong, said by phone. “Sinopec’s management deserves a lot of credit for maximizing refining incomes while containing crude losses.”

    The company’s rival PetroChina Co., the country’s biggest oil and gas producer, saw net income drop to 531 million yuan in the first half of the year, a 98 percent plunge even after booking a 24.5 billion yuan gain from selling a Central Asian gas pipeline network. Cnooc Ltd., China’s largest offshore explorer, reported a 7.74 billion yuan loss, mainly from a charge on the value of its Canadian oil sands assets.

    Refining Volumes

    A slump in crude prices benefits fuel makers like Sinopec as their supply costs fall, though the company is still vulnerable to the collapse as it’s the country’s third-biggest oil and gas producer. Brent crude, the global benchmark, averaged about $41 a barrel during the first half of the year, down roughly 30 percent from the same period in 2015.

    The company’s refining margin, or the profit from turning crude into fuels, rose nearly 48 percent from same period last year to 514.4 yuan a ton, it said in a separate statement on Sunday.

    Sinopec processed 115.9 million tons of crude into fuels during the first half of the year. That’s roughly equal to almost 4.67 million barrels a day, according to Bloomberg calculations. PetroChina refined the equivalent of nearly 2.66 million barrels a day, the company said in its release last week.

    Sinopec will raise refining throughput in the second half of the year to 120 million tons, up 3.5 percent from the first six months, the company said on Sunday.

    China’s oil refiners earlier this year got a boost from a government policy that halts retail fuel price adjustments when oil falls below $40 a barrel, putting a floor under gasoline and diesel prices while crude continued to drop. The rule boosted margins during Sinopec’s first quarter, when net income tripled from a year ago to 6.66 billion yuan.

    China’s state-run oil giants have been slashing spending to weather the downturn, mainly impacting their exploration and production operations. The companies are relying more on overseas crude and natural gas to sustain output as production dwindles at home from aging, high-cost oil fields.

    Sinopec’s crude production in the first half of the year tumbled to 154.2 million barrels, down 11.4 percent from the same period in 2015. Almost the entire drop came from domestic operations, which accounts for more than 80 percent of its crude output. The company forecasts total production will dip in the second half to 147 million barrels, it said Sunday.

    Upstream ‘Disaster’

    “Sinopec delivered better than expected first-half 2016 results as refining margins continued to benefit the group,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said in a note Monday. “Upstream remains a disaster.”

    Sinopec shut some inefficient and aging oilfields that had higher production costs than international crude prices in the first half, Chairman Wang Yupu said at a press briefing on Monday in Hong Kong. The refiner will be able to quickly reopen most of these fields when prices return to a reasonable level, Wang said.

    Natural gas production by Sinopec, which in the first six months rose 10 percent year-on-year to 388.7 billion cubic feet, will increase further to 421.2 billion cubic feet in the second half of the year, the company said.

    Spending Cuts

    PetroChina’s domestic crude output slipped 1.4 percent year-on-year to 470.6 million barrels during the first half. The company said last week that it aims to boost the share of natural gas to half its output by 2020, from about 37 percent now.

    China last month pumped the least amount of crude since October 2011, and production has slipped 5.1 percent in the first seven months of the year, according to data from the National Bureau of Statistics. Natural gas output over the same period is up 3.1 percent.

    Sinopec chopped capital expenditures in the first half of the year by more than 40 percent from the same period in 2015 to 13.5 billion yuan. PetroChina’s fell 17.5 percent to 50.9 billion yuan. Cnooc’s spending for the period dropped 33 percent to 22 billion yuan.

    Sinopec maintained the 100.4 billion yuan capital spending target it set at the beginning of the year as it upgrades refineries and starts exploration projects in the second half, President Dai Houliang said at the same briefing on Monday.

    The refiner also announced a new commercial oil and gas discovery in Xinjiang’s Tarim basin. The field may have oil and gas reserves of 1.7 billion tons, it said in an e-mailed statement. The company is targeting production of 1.5 million tons a year from the field by 2020.
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    Protesters shut down TransCanada pipeline approval hearing

    Canada's National Energy Board has indefinitely postponed hearings in Montreal on TransCanada Corp's proposed Energy East pipeline after protesters on Monday disrupted the first day's session, an agency spokeswoman said.

    Montreal police said three protesters were arrested on obstruction charges, with two of the three also charged with assaulting a police officer.

    Footage posted on Twitter by local media showed protesters at the downtown venue standing, clapping and chanting at the panel.

    "Our first priority at any hearing is always the safety of all participants," NEB spokeswoman Sarah Kiley said in an email. "Once we have determined how we will hear from those intervenors in Montreal who were scheduled to present today and tomorrow, we will share that information."

    Environmental groups opposed to Canadian oil sands development have fought the 1.1 million-barrel-per-day Energy East pipeline, which would carry crude oil from Alberta to Canada's Atlantic coast.

    Opposition has been particularly strong in the mostly French-speaking province of Quebec, which the pipeline would need to cross on its way to the coast. Opponents include Montreal Mayor Denis Coderre, who has cited concerns the route could endanger forest and agricultural land.

    Coderre told reporters on Monday the public needed answers on the number of jobs that would be created from the pipeline and TransCanada's contingency plan in case of a spill.

    Unionized workers hoping to benefit from the construction work estimate the pipeline would create 2,000 jobs over three years in Quebec, where private investment in large projects has been hit by weak commodity prices.

    "Until 2014, there was a shortage of workers," said construction union representative Eric Verdon, who gathered with unemployed members to protest in favor of Energy East. "Now they can't find jobs."

    Calgary-based TransCanada also proposed building the Keystone XL pipeline, which was denied a U.S. presidential permit by Barack Obama last year, and is a frequent target of environmental protesters.

    "We are standing by and ready to respectfully and constructively begin the sessions in Montreal after five such productive sessions in New Brunswick – and we will be ready when the sessions resume," TransCanada said in a statement.

    Energy East has had several setbacks in Quebec. In March, the provincial government filed an injunction against the pipeline to force an environmental review, which TransCanada later agreed to.
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    Platts: Marcellus/Utica Production Nears All-Time High in August

    Platts Analytics is estimating that natural gas output in the combined Marcellus/Utica will average 22.63 billion cubic feet per day (Bcf/d) during August.

    If that bears out, it will an increase of 2% from July and the second highest monthly output EVER for the Marcellus/Utica, second only to February’s all-time high of 22.78 Bcf/d. That is astonishing!

    The numbers are catching analysts by surprise, who did not expect an increase in northeast gas volumes, but instead a decrease. Even the venerable U.S. Energy Information Administration (EIA) predicted August numbers for the Marcellus would go down by 26 million cubic feet per day (MMcf/d), but Utica would increase by 5 MMcf/d, for a total net decrease of 21 MMcf/d

    Not according to according to Platts Analytics. Why the increase in August, of all times?…
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    About 11% of US Gulf of Mexico oil output shut-in as storm threatens area: BSEE

    About 11% of US Gulf of Mexico oil production has been shut-in as operators evacuate platforms in the possible path of a tropical depression expected to pass through the Central-Eastern and Eastern Gulf of Mexico, the US Bureau of Safety and Environmental Enforcement (BSEE) said Monday.

    Offshore operator reports submitted to BSEE as of late Monday morning show operators had shut-in a total 168,334 b/d of oil output as they evacuated crews from a total of six production platforms, the agency said in a statement. There is a total of 781 manned platforms in the US Gulf.

    Total Gulf of Mexico production was almost 1.62 million b/d in May, the latest month for which data was available from the Energy Information Administration.

    Tropical Depression 9 is currently off the west coast of Cuba, but the National Hurricane Center expects it to become a tropical storm on Tuesday and veer to the northwest. It is then forecast to head to the northeast and could make landfall in western Florida later in the week, the NHC said. BSEE said shut-in production figures are estimates based on the amount of oil and natural gas the companies plan to produce that day.

    Operators have also shut in about 190,000 Mcf/d of gas output, BSEE said, or 5.51% of total US Gulf gas production.
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    Alternative Energy

    India to invest £1.4bn in biogas projects

    India plans to invest Rs 142 crore (£1.42bn) in biogas projects in 2016/17.

    Piyush Goyal, Minister for Power, Coal, New & Renewable Energy and Mines said the government is promoting the green technology under three schemes.

    National Biogas and Manure Management Programme caters to setting up “family-type” biogas plants for meeting energy needs for cooking in rural and semi-urban areas of the country.

    A target for installing 100,000 biogas plants has been set for the year 2016/17.

    The Biogas Power General Programme aims to install plants with a capacity of 3KW to 250KW and part of the funding will be used for the Waste to Energy Programme which aims to build large plants that can recover energy from urban, industrial and agricultural waste.
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    Britain does not need Hinkley for future energy needs -think tank

    Britain does not need the Hinkley Point C nuclear project and could use a mixture of alternative resources to guarantee its future energy needs at a lower cost, an energy and climate think tank said on Friday.

    Britain stunned the energy industry in July when, at the last minute, it failed to sign off on an 18 billion-pound plan by France's EDF to build two reactors at Hinkley with financial backing from a Chinese state-owned company.

    Prime Minister Theresa May's government said it needed more time to consider the plan after critics said it would endanger Britain's energy security and cost more than was necessary.

    Britain needs to invest in new power stations as all but one of its existing nuclear plants, which produce around a fifth of the country's electricity, are set to close by 2030.

    Coal-fired power plants provided around a quarter of the country's electricity last year, but the government plans to close them by 2025 as a part of efforts to meet climate targets.

    The Energy & Climate Intelligence Unit, a non-profit organisation which provides analysis on British energy and climate change issues, said the country could meet its targets even without the Hinkley project.

    The group said a mixture of established approaches could be used, such as wind farms, gas-fired power stations and cables that connect the UK grid with other countries. Combined with measures to manage demand, Britain could save around 1 billion pounds ($1.32 billion) per year, it said.

    "Our conclusion is that it's not essential," ECIU director Richard Black said. "Using tried and tested technologies, with nothing unproven or futuristic, Britain can meet all its targets and do so at lower cost."

    The report said four big wind farms, in addition to those already being built, could bring as much electricity into the grid as Hinkley would generate, while three additional interconnector cables could also offer the same supply.

    "The scenarios outlined in the ECIU report are not credible alternatives to Hinkley Point C," an spokesman for EDF's British subsidiary EDF Energy said in an email.

    "(Hinkley C's) cost is competitive with other large-scale low carbon technologies. It will generate electricity steadily even on foggy and still winter days across Northern Europe. It will play a crucial role as part of a future, flexible energy system," he said.

    EDF was awarded a minimum electricity price contract by the British government of 92.50 pounds per megawatt hour (MWh), while similar contacts awarded so far for offshore wind production have been for 115-120 pounds/ MWh.

    May's government has indicated it will make a decision on Hinkley in September.
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    Australian cash wheat price falls to multi-year low on abundant supply outlook

    The cash price for Australian wheat fell to a fresh multi-year low of $205/mt FOB Western Australia for Australian Premium White Monday, as an anticipation of record supply for 2016-2017 (October-September) crop pressurized market outlook.

    This is the lowest assessment since S&P Global Platts started assessing APW in November 2015.

    "We have not seen such low pricing since [the] 2008-2009 record harvest [in] the low $200/mt FOB WA," an Australian trader said Monday.

    Australian wheat production in 2016-2017 is expected to rise to a five-year high of 26.5 million mt amid favorable weather and soil conditions, according to estimates by the US Department of Agriculture in August.

    In anticipation of higher wheat production, the main bulk handler in Western Australia, CBH is preparing for 400,000-500,000 mt of temporary storage to cater to an estimated 27 million-30 million mt wheat crop, according to local media.

    Traders pegged possible carryout in Australia for 2016-2017 at 8 million-10 million mt, noting the erosion of market share in Indonesia and other Southeast Asian markets over the last two years due to unwillingness of Australian farmers to sell at the lower international price levels.

    Over the last year, Australian wheat exporters have lost some of their market share in the Middle East and Southeast Asia -- mainly to Russia or Ukraine -- due to uncompetitive prices.

    This led to weak sales volume in the first half of the year, and concerns of higher carryover stocks.

    Offers for "new crop" Australian wheat exports were heard in the $203-$204/mt FOB WA range Monday for APW loading in December 2016 or January 2017, with buyers seen in the mid-$190s/mt, traders reported.

    "We shall wait for January pricing from Ukraine or Russia to compare prices," said an Indonesian miller.

    The lower Australian prices could possibly prompt Southeast Asian buyers to increase their procurement of Australian wheat, as the recent increase in freight rates and Black Sea wheat prices might edge out the competitiveness of Black Sea wheat, a Southeast Asian miller commented.
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    Precious Metals

    DRDGold dividend given fivefold uplift

    Dump retreatment company DRDGold Limited on Tuesday announced what totals a five-fold dividend increase for the year to June 30.

    The final dividend of 12 c a share took the total declared dividend for this financial year to 62 c a share, which is more than five times the 10 c a share of last year

    The 25% increase in free cash flow to R308.7-million facilitated the total dividend declaration of close to R261-million as well as the repayment of liabilities.

    Volume throughput increased by 5% but yield was 9% lower, resulting in a 4% drop in gold production to 143 457oz.

    Revenue rose by 16% however, reflecting a 21% increase in the average rand gold price received to R546 142/kg and although cash operating unit costs were up 20%, operating profit was 13% higher at R434.8 million.

    The operating cost margin of 18% and all-in sustaining cost margin of 8% remained virtually unchanged.

    Headline earnings of the Johannesburg- and New York-listedgold company rose 39% to R53.8-million, equating to 28%-higher earnings a share of 12.7 c a share.

    DRDGold CEO Niël Pretorius said the company’s monetary and intellectual investment in plant and process were showing clear and measurable results, reflected in increased throughput and improved extraction efficiency at the company’s Ergo plant on the East Rand.

    “Both are important achievements in helping to address the diminishing grade of our reserves,” he added.

    Pretorius views the progress made in securing additional tailings deposition capacity for the Ergo plant at the Brakpan/Withok Tailings Complex as a major development in leveraging Ergo’s increased throughput capacity in the future.

    With tailings capacity locked in, the company is well placed to optimise its 11.8-million ounce resource and acquire additional resources within the greater Johannesburg area.
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    Russian diamond miner Alrosa's second-quarter sales tumble 21 pct q/q

    Russia's Alrosa, the world's largest producer of rough diamonds, said its second-quarter sales fell 21 percent from the previous three months to 9.6 million carats after a recovery in demand seen early this year faded.

    The company, which with Anglo American's unit De Beers produces about half the world's rough diamonds, reported a second quarter net profit of 40.5 billion roubles ($625 million). That was 61 percent higher than a year ago, helped by the rouble's weakness against the dollar, but was down 19 percent from a record high profit in the first quarter.

    Russia's government sold a 10.9 percent stake in Alrosa in July, raising $813 million and increasing the company's free float to 34 percent. It was the biggest Russian privatisation for almost four years.

    Alrosa's second-quarter revenue tumbled 18 percent from the previous three months to 84.3 billion roubles.

    "Alrosa maintains a conservative outlook on the diamond market and executes permanent costs control," CEO Andrey Zharkov said in the results statement.

    Earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped 13 percent to 51.8 billion roubles.

    "After the sharp recovery observed at the beginning of the year, the seasonal slowdown was broadly expected by the market," Renaissance Capital said in a recent note on Alrosa. Renaissance said it expected gem-quality diamond sales volumes to decline by 13 percent in the third quarter compared with the second quarter.

    Alrosa said its first-half finiancial results were stronger than in the same period a year ago thanks to an increase in diamond sales by 21 percent in carat terms and because of the weaker rouble.

    It also said Russia would scrap a 6.5-percent rough diamonds export duty from Sept. 1 in line with World Trade Organization (WTO) rules.
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    Base Metals

    Canada's Ivanhoe Mines gets unsolicited interest, to hire bankers

    Canadian copper miner Ivanhoe Mines Ltd said on Monday that companies from Asia, Europe, Africa and elsewhere had expressed interest in the company and its projects in recent months.

    Ivanhoe Mines said it would hire an investment bank to seek advice on the unsolicited interest and to advise its board on all available alternatives.

    The miner, which had a market value of about C$1.30 billion (nearly $1 billion) as of Friday's close, did not name the companies or provide any other details on the expressions of interest.

    Ivanhoe Mines said it is giving investors and banking analysts tours of its projects, including of the Kakula Discovery - a high-grade copper discovery in the Democratic Republic of Congo.

    The Kakula Discovery is part of Ivanhoe's Kamoa Copper Project, which is thought to be the world's largest untouched high-grade copper discovery.

    Ivanhoe Mines said in October it expects production at the Kamoa project to begin by the end of 2018.
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    Zhongwang USA to buy aluminium products maker Aleris

    A company logo of China Zhongwang Holdings Limited is displayed at a news conference in Hong Kong April 23, 2009. 

    Aleris Corp, a U.S.-based aluminium rolled products maker, said it would be bought by Zhongwang USA LLC, a division of Zhongwang International Group Ltd, in a $2.33 billion deal.

    Zhongwang International is also the parent of China Zhongwang Holdings Ltd, the world's second-largest producer of aluminium extrusions.

    Zhongwang USA, which is majority-owned by Liu Zhongtian, the founder of China Zhongwang, will pay $1.11 billion in cash and take on Aleris's $1.22 billion in net debt, Aleris said in a statement.

    Aleris supplies fabricated products to the aerospace, construction, automotive and defense industries. It has plants in the United States, Europe and Asia.

    The company has been owned by Oaktree Capital Management LP since it emerged from bankruptcy in 2010.

    The deal is expected to close in the first quarter of 2017.
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    Rio Tinto offers Q4 aluminium at $82/mt plus LME CIF Japan

    Rio Tinto Japan has offered Japanese aluminium buyers a fourth-quarter contract premium of $82/mt plus London Metal Exchange cash CIF Japan, down 10% from the Q3 premium of $90-$93/mt, Japanese buyers said Tuesday.

    The producer said in an email to Japanese trading houses and consumers late Monday that it saw $82/mt plus LME cash CIF Japan as the market premium level for Q4 shipments.

    If buyers agree, the $82/mt quarterly contract premium would be the lowest in over 7 years, since $75-$78/mt plus LME cash CIF Japan for Q3 2009. The Q4 premiums are down from Q3 but the downside is limited due to lower stocks in Japan, European spot premiums stabilizing from the previous downfall and Asian demand recovery, Rio Tinto Japan said in the email, according to one Japanese buyer.

    Two Japanese buyers said they would not accept the offer premium of $82/mt.

    "I am seeing less than $80/mt, as there is pressure on traders to sell to end-users at $60/mt," said one Japanese trader.

    Two other producers, South32 and Alcoa, which are also negotiating Q4 premiums with Japanese buyers, have yet to announce offers, the buyers said.
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    Steel, Iron Ore and Coal

    Coke prices in Hebei increase a total 320 yuan/t since July

    Major coke firms in Hebei made the eighth price hike since July on August 26, with price rises totaling 320 yuan/t, thanks to strong restocking demand from steel mills and consistently tight supply of coke.

    They offered quasi Grade I met coke at 1170-1180 yuan/t or so, on ex-works basis, and believed the price was acceptable for downstream users, as profit margin of steel products still remained relatively high.

    Steel makers in Hebei reported low coke inventories, though efforts had been made to replenish stocks. "Buyers had to snap up coke amid the shortfall of supply, which, however, still can't meet the climbing demand," said a Tangshan-based steel mill source.

    Coke prices in Hebei will probably further increase in the short run, if coking coal prices still have room to go upwards. Yet a sharp rise is not very likely, as demand from steel mills may shrink following the faster steps of slashing steel-making capacity in the second half of this year.

    By August 25, Fenwei assessed the delivered price of Grade I met coke in Tangshan at 1,130 yuan/t with 17% VAT, up 30 yuan/t on week.

    Coke market in Shandong province reported good sales and tight supply. Steel makers in the province enjoyed profit of 300-500 yuan/t on the whole, or even more than 700 yuan/t, which encouraged production and thus called for lager supply of coke.

    Coking plants generally run full capacity to meet swelling demand, yet it still can't keep up with the growth of demand from mills.

    Coke prices in Shandong are expected to further climb, given the robust demand from steel mills and insufficient supply of coke.

    By August 25, Fenwei assessed the delivered price of Grade II met coke in Rizhao at 1,060 yuan/t, stable on week.
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    China's coal industry Jan-Jul profit stands at 14.6 bln yuan

    China's coal mining and washing industry profits dropped 19% from last year to 14.6 billion yuan ($2.18 billion) over January-July, a slower decline compared with the slump of 38.5% over January-June, according to data released by the National Bureau of Statistics (NBS) on August 27.

    During the same period, the coal mining and washing industry realized revenue of 1.2 trillion yuan, dropping 11.9% from a year ago, data showed.

    Total profit of the country's entire mining industry declined 77% on year to 37.2 billion yuan overt January-July.

    Meanwhile, profit in ferrous and non-ferrous metal mining industry fell 14.5% and up 2.6% on year to 19.58 billion and 24.08 billion yuan, respectively.

    The profit of the power and heat generation industry dropped 4.5 % from the year prior to 226.71 billion yuan.
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    Shenhua lifts 2016 coal sales target to 355 mln T

    China Shenhua Energy Co., Ltd, the listed arm of coal giant Shenhua Group, lifted its coal sales target for 2016 to 355 million tonnes from the previous 340 million tonnes, said Zhang Yuzhuo, president of the company.

    It also lifted revenue target to 156 billion yuan ($23.37 billion) this year, and boosted capital expenditure to 27.5 billion yuan from 20 billion yuan in March this year, of which 20.75 billion yuan or 75.5% will be put into the investment in coal-fired power projects, said Zhang.

    "We will vigorously promote power business this year, and push ahead with new projects that reach their expected return rates, for not only the projects' own return, but its profit contribution to our mining, rail and port operations. " he noted.

    In 2015, 88.4 million tonnes or 24% of the company's coal was consumed by its coal-fired power plants, data showed.

    The bullish move came at a time when China is experiencing excess power capacity as its economy slows. Many coal-fired power producers are facing decreasing profitability for years, coupled with rising competition from alternative energy such as hydropower, nuclear and wind energy.

    China Shenhua is just one of them. Its net profit slid 18.6% on year to 9.83 billion yuan ($1.48 billion) in the first half of the year, and the operating revenue reduced 12.5% on year to 78.72 billion yuan over the same period, announced the company in its half-year report released on August 10.

    Over January-June, output of commercial coal edged up 0.2% on year to 139.7 million tonnes, while sales rose 4.8% on year to 186.3 million tonnes, which was due to the rebounding demand from steel mills, more efforts in selling outsourced coal and the increased installed capacity of power units.

    The company's electricity generation and sales stood at 111.01 TWh and 103.9 TWh over the same period.

    "Yet coal prices will gradually come back to a reasonable level after spiking for months, as most of the closed mines were small mines while large mines under construction will release more capacity in the future, " Zhang Yuzhuo added.

    China Shenhua's coal imports are expected to reach 230 million tonnes this year, compared with 200 million tonnes last year, said Zhang.

    "The company will reduce coal exports, given the sliding production of domestic coal industry," said Han Jianguo, CEO of China Shenhua, adding that the move is likely to further stimulate coal imports as climbing prices tempt more overseas countries to sell coal to China.
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    Samarco dam failed due to poor drainage and design: investigation

    The deadly collapse of a tailings dam last November at the Samarco mine, owned by Vale SA and BHP Billiton, was caused by drainage and design flaws, a report into Brazil's worst-ever environmental disaster showed on Monday.

    The 76-page report commissioned by the companies responsible for the spill, which killed 19 people, attributed the dam burst to a chain of events dating back to 2009, but did not assign blame or highlight specific errors in corporate or regulatory practice.

    Norbert Morgenstern, a geotechnical engineering professor who headed the investigation, repeatedly told reporters he could not answer their questions when quizzed on whether there was negligence or malpractice on the part of the companies involved.

    A separate police investigation has accused Samarco of willful misconduct, saying the company ignored clear signs the dam was at risk of collapsing. Samarco denies any wrongdoing.

    BHP Billiton's chief commercial officer, Dean Dalla Valle, said cost-cutting since 2012 was "absolutely not" a factor and there was no evidence anyone had prioritized production over safety.

    "We have no reason to believe that anyone at BHP had any information that indicated that the dam was in danger of collapsing," Dalla Valle told reporters in Australia on a conference call from Belo Horizonte.

    The report stressed that a change in the dam's design between 2011 and 2012 led to less efficient water drainage that saturated sand in the dam and resulted in liquefaction.

    Liquefaction is a process whereby a solid material such as sand loses strength and stiffness and behaves more like a liquid. It is a common cause for the collapse of dams holding mining waste, known as tailings, because the walls of these dams are mostly built with dried tailings which consist of a mixture of sand and clay-like mud.

    "There was a fundamental change in the design concept whereby more widespread saturation was allowed and accepted," the report said, adding "this increase in the extent of saturation introduced the potential for sand liquefaction."

    Liquefaction was triggered by increased weight on the tailings as the height of the dam was raised, reaching 100 meters (109 yards) at the time of collapse.

    This weight pushed the clay-like mud in the dam outwards "like toothpaste from a tube," resulting in a loosening of the sand which had more space to spread and ultimately caused it to flow like a liquid and cause the dam's wall to collapse.

    A small earthquake on the day of the dam burst may also have "accelerated" the failure, the report said.

    Carlos Eduardo Pinto, a prosecutor in the case against Samarco, said much of what was in the report had already been shown in the police investigation.

    "Samarco has long claimed it performs good practice but the report did not demonstrate this," Pinto told Reuters. "Quite the opposite, it showed the companyaltered the project in a way that would not have been permitted."

    BHP Billiton said it had learned from the tragedy. It had already reviewed 10 of its biggest tailings dams and said they were stable, but was taking steps to improve risk management.

    The disaster has already cost BHP Billiton $2.2 billion, including a total write-off of its investment in Samarco, due to uncertainty over when the mine will reopen, and funds for its share of agreed compensation and damages.

    BHP and Vale's shares, mauled last November after the dam disaster, were unharmed by the release of the report. Vale's shares rose 2.4 percent on Monday and BHP's shares rose 1 percent in early trading on Tuesday.
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    China's HeSteel breathes life into old steel factory in Serbia

    As Chinese steel giant HeSteel increases production at the Smederevo Steel Mill in Serbia, its 5,000 workers are feeling more confident of the future and believe their families will improve their living standards once the factory starts working at full capacity.

    As blast furnaces melt ore into liquid iron, these are cast at the steel shop into blocks and later hot and cold rolled to get the final product. New Chinese managers witness how hard-working employees complete their tasks with diligence and precision, respecting strict procedures and orders of their superiors.

    For most of these 5,000 people coming from the city of Smederevo or nearby towns, production of steel has become a family tradition, while working at the factory is the only way of living they can imagine. Here, some 60 km south-east of the capital Belgrade where HeSteel bought the factory, men and steel became one over the course of history.

    There is even one popular joke in the city that if a group of people stay together, even if only two of them work in the steel mill, topics will only be the mill. And the same goes for local families.

    For them, it's not just personal feelings they attach to the factory, it is a common sense of belonging and hope the factory bears for the city of Smederevo and even Serbia.

    One month after HeSteel took over the factory by paying the amount of 46 million euros (51.39 million US dollars) to the Serbian government on July 2, sales of the factory's products -- cold and hot rolled steel -- increased monthly from 81,000 tons of steel in June 2016 to 102,000 in July this year.

    Both managers and workers rejoice that the expected sales in August are estimated at 126,000 tons. Workers will finally feel "safe" and relieved as long as production continues to increase.

    The goal of HeSteel is to reach annual output of 1.8 million tons in 2017 and 2 million tons in 2018, and workers hope that this might mean a chance to earn more money and contribute to their home budget.

    Wang Lianxi, general director of Legal, HR and general affairs committee at HeSteel Serbia Iron & Steel, told Xinhua that the Belt and Road initiative provided HeSteel with a precious opportunity.

    "In response to the Initiative, HeSteel came to Serbia to acquire Smederevo Steel Mill, using its experience and techniques accumulated over years in China and trying to build a base of manufacturing industry in Europe," he said.

    Quoting the president of Chinese HeSteel Group Yu Yong, he said the aim will be to help the factory to regain its vitality and turn Smederevo into one of the most competitive steel mills in Europe.
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