Mark Latham Commodity Equity Intelligence Service

Monday 22nd May 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Rouhani wins landslide in Iran vote


    Current president declared by state media as winner in key election in Opec nation

    Iranians yearning for more freedom at home and less isolation abroad have emphatically re-elected President Hassan Rouhani, throwing down a challenge to the conservative clergy that still holds ultimate sway.

    State television congratulated Rouhani on his victory. The architect of Iran's still-fragile detente with the West, he led with 58.6% of the vote, compared with 39.8% for his main challenger, hardline judge Ebrahim Raisi, according to near-complete results broadcast on Saturday.

    Winds of change waft over Iran

    Although the powers of the elected president are limited by those of unelected Supreme Leader Ayatollah Ali Khamenei who outranks him, the scale of Rouhani's victory gives the pro-reform camp a strong mandate.

    Rouhani's opponent Raisi was a protege of Khamenei, tipped in Iranian media as a potential successor for the 77-year-old supreme leader who has been in power since 1989.

    The re-election is likely to safeguard the nuclear agreement Rouhani's government reached with global powers in 2015, under which most international sanctions have been lifted in return for Iran curbing its nuclear program.

    And it delivers a setback to the Revolutionary Guards, the powerful security force which controls a vast industrial empire in Iran. They had thrown their support behind Raisi to safeguard its interests.

    "I am very happy for Rouhani's win. We won. We did not yield to pressure. We showed them that we still exist," said 37-year-old Mahnaz, a reformist voter reached by telephone in the early hours of Saturday. "I want Rouhani to carry out his promises."

    Nevertheless, Rouhani stills faces the same restrictions on his ability to transform Iran that prevented him from delivering substantial social change in his first term and thwarted reform efforts by one of his predecessors, Mohammad Khatami.

    http://www.upstreamonline.com/live/1264657/rouhani-wins-landslide-in-iran-vote
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    Fed Governor endorses blockchain now?



    On May 9, Evelyn Chen of CNBC reported that bitcoin price surged to a new all-time high due to the announcement of the Federal Reserve Bank president Neel Kashkari. However, quite obviously and evidently, Kashkari’s statement on blockchain did not lead to a bitcoin price surge and have any sort of influence on the market.


    The global bitcoin exchange market is far bigger than most imagine. If the bitcoin-to-altcoin pair is included, the trading volume of the global bitcoin exchange market is $811 million, with Japan leading the market as the largest bitcoin exchange market with nearly 33 percent of the market share and a $120.5 million daily trading volume.

    Over the past few years, banks, financial institutions and the so-called blockchain consortia have allocated the majority of their resources and capital in detaching the term blockchain from bitcoin. Most notably, before the R3 consortia distanced itself from blockchain development, the organization pushed the term distributed ledger technology, an identical technology to the blockchain, with the sole intent of convincing the global finance market that blockchain is different from bitcoin.

    In a way, the development of blockchain is the finance industry’s counter project to bitcoin. By replicating a part of the Bitcoin protocol, banks and financial institutions aim to create a decentralized technology that could be used to reduce their operating costs and optimize existing infrastructures.

    Considering that blockchain and bitcoin are two different technologies, mostly because of the efforts of the finance industry to independently develop bitcoin-inspired banking technology, the Federal Reserve Bank’s announcement that blockchain has more potential than bitcoin couldn’t in any possible way affect bitcoin price positively. If anything, it would have led to a decline in bitcoin price because an established financial institution and powerhouse within the global finance ecosystem  boldly stated that bitcoin’s competing technology has more potential.



    In his statement Kashkari said:

    I think sentiment has shifted in the markets, in the Fed. I would say I think conventional wisdom now is that blockchain and the underlying technology is probably more interesting and has more potential than maybe bitcoin does by itself.”

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    3d printing revs Autodesk.

    Our investment of strategy of using the cloud to drive a new paradigm and look billing industry, as well as manufacturing industry is really paying off. In manufacturing in particular with Fusion and the changes we’re driving and getting industrial additive manufacturing and causes by genetic design, customers are really paying a lot of attention and adopting those ideas from us in a big way. 
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    Trump administration starts countdown to NAFTA talks in mid-August


    The Trump administration on Thursday set the clock ticking toward a mid-August start of renegotiations of the North American Free Trade Agreement with Canada and Mexico to try to win better terms for U.S. workers and manufacturers.

    With a letter to U.S. lawmakers, U.S. Trade Representative Robert Lighthizer said he triggered a 90-day consultation period with Congress, industries and the American public that would allow talks over one of the world's biggest trading blocs to begin by Aug. 16.

    Renegotiation of NAFTA was a key campaign promise of U.S. President Donald Trump, who frequently called the 23-year-old trade pact a "disaster" that has drained U.S. factories and well-paid manufacturing jobs to Mexico.

    Trump has pledged to use the NAFTA talks to shrink goods trade deficits that stood at $63 billion with Mexico and $11 billion with Canada last year, according to U.S. Census Bureau data.

    Lighthizer told reporters NAFTA has been successful for U.S. agriculture, investment services and the energy sector, but not for manufacturing. He added that he hopes to complete negotiations by the end of 2017.

    "As a starting point for negotiations, we should build on what has worked in NAFTA and change and improve what has not," Lighthizer said in a conference call with reporters. "If renegotiations result in a fairer deal for American workers there is value in making the transition to a modernized NAFTA as seamless as possible."

    In his letter to congressional leaders, Lighthizer said NAFTA needs modernization for provisions on digital trade, intellectual property rights, labor and environmental standards, regulatory practices, rules for state-owned enterprises and food safety standards.

    The Obama administration attempted to address many of these deficiencies in the 2015 Trans-Pacific Partnership trade deal, which included Canada and Mexico, but Trump pulled out of TPP in one of his first official acts as president.

    Canada and Mexico both welcomed the U.S. move to launch a NAFTA revamp.

    Mexican Foreign Minister Luis Videgaray, speaking at a news conference with Secretary of State Rex Tillerson in Washington, said the trade pact needed updating after nearly 25 years.

    "The world has changed, we've learned a lot and we can make it better," he said.

    Canadian Foreign Minister Chrystia Freeland said Canada was "steadfastly committed to free trade in the North American region," noting that 9 million U.S. jobs depend on trade and investment with Canada.

    U.S. Chamber of Commerce president Thomas Donohue urged U.S. officials to "do no harm" to businesses that depend on trade with Canada and Mexico and to move quickly on a new trilateral deal.

    As the administration took its first formal step toward NAFTA renegotiations, the U.S. Commerce Department launched an investigation on Thursday into Boeing Co's (BA.N) anti-dumping claims against Canadian rival Bombardier's (BBDb.TO) new CSeries jetliners, drawing a threat from Canada to review a deal to buy Boeing fighter jets.

    Lighthizer's letter (here%20Notification.pdf) is less detailed than a draft sent to lawmakers in March, which listed as objectives tax equality and the ability to reimpose tariffs if Mexican and Canadian imports pose a serious injury threat to U.S. industry.

    Trump late in April had considered a full withdrawal from NAFTA, but was persuaded by senior officials in his administration to pursue negotiations instead. Lighthizer said he did not think a new threat to withdraw from NAFTA would be necessary.

    "As the president has said, we are going to give renegotiation a good strong shot," Lighthizer told reporters, adding that he believed Canada and Mexico would negotiate in good faith.

    He said he hoped to maintain the current trilateral format of NAFTA, but noted that many of NAFTA's problems are bilateral issues that need to be worked out with either Mexico or Canada.

    "Our hope is that we can end up with the structure similar to what we have now. If that should prove to be impossible, then we'll move in a different direction."

    Asked if the NAFTA talks would seek to resolve trade disputes over imports of Canadian softwood lumber or Mexican sugar, Lighthizer said he hoped those issues would be settled before the NAFTA talks begin under separate negotiations being conducted by the U.S. Commerce Department.

    A Canadian source close to the lumber negotiations said it was unlikely an agreement could be reached by mid-August, however.

    Lighthizer said he will seek public comment on the NAFTA process and intends to publish negotiating objectives on or about July 16.

    http://www.reuters.com/article/us-usa-trade-nafta-idUSKCN18E28O

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    From Hair Oil to Cement, India Revamps Taxes: Winners and Losers



    The wait is over: India has cleared the way for the biggest tax reform since independence in 1947.

    The main beneficiaries of the new goods and services tax, due to be rolled out on July 1, include steelmakers and some consumer goods, though personal care items including sanitary ware will be taxed at the top rate, along with appliances such as air conditioners.

    Here’s a look at the winners and losers:

    Fast-Moving Consumer Goods

    The sector is a clear winner. Consumer staples including milk, fruits and vegetables, grain and cereals have been exempted. Sugar, tea, coffee and edible oil will be taxed the lowest rate of 5 percent. Companies that may gain include Hindustan Unilever, Nestle India and Dabur India.

    Personal-care items to be taxed at 28 percent, save for hair oil, soaps and toothpaste, which will attract an 18 percent levy. This would impact Colgate-Palmolive India, Godrej Consumer Products, Marico and Gillette India.
    Smokers be warned: cigarettes will attract a tax of 5 percent on top of the peak GST rate of 28 percent. ITC, Godfrey Phillips and VST may pass on the higher costs.

    Automakers

    A visitor poses for a photograph in a Mercedes Benz C-Class vehicle, during the 12th Auto Expo in Noida, India.

    Here the impact is likely to be marginal. Vehicles already attract different levies, which add up to 28 percent -- the peak GST rate fixed for the sector. Gains derived from a unified tax system may still be passed on to consumers, analysts say. Maruti Suzuki India, Tata Motors and Mahindra and Mahindra could benefit.

    Consumer Durables

    Appliances such as air-conditioners, refrigerators and washing machines will attract the peak rate, which is slightly higher than the existing tax slab. Companies may increase prices to preserve margins, Nirmal Bang Equities said in a note. Whirlpool of India, Voltas and Havells India could be impacted.

    Metals, Cement

    A reduction in tax on coal and metal ore to 5 percent will cut input costs for steelmakers, benefiting companies including JSW Steel, Vedanta, Tata Steel and Hindalco Industries.

    Cement makers including ACC and UltraTech Cement may increase prices to offset the impact of the peak rate, though a lower tax on coal is expected to cushion the blow.

    Renewable Energy

    A 5 percent tax rate on equipment like solar panels and wind turbines may help keep a lid on project costs for developers such as Inox Wind and Suzlon Energy.

    https://www.bloomberg.com/news/articles/2017-05-19/from-hair-oil-to-cement-india-revamps-taxes-winners-and-losers

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    POSCO seeks end-June LNG cargo via tender -trade sources


    South Korea's POSCO is seeking a liquefied natural gas (LNG) cargo for delivery on June 26 to 30 via tender, trade sources with knowledge of the tender said on Friday.

    The tender will close on May 22, the sources added.

    http://www.reuters.com/article/southkorea-lng-tender-idUSL4N1IL2QK
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    Chemical groups Huntsman, Clariant set to announce merger: sources


    Hunstman Corp  and Clariant AG are set to announce their merger on Monday, creating a chemical manufacturer with a market value of more than $14 billion, people familiar with the matter said on Sunday.

    The deal would combine Clariant, a Muttenz, Switzerland-based maker of aircraft de-icing fluids, pesticide ingredients and plastic coloring, with Woodlands, Texas-based Huntsman, whose chemicals are used in paint, clothing and construction.

    The agreement comes after Reuters reported last March that Clariant and Huntsman previously ended merger talks because of disagreements over who would play the lead role.

    In an attempt to structure a merger of equals, the two companies have now agreed that Huntsman Chief Executive Peter Huntsman will become CEO of the combined company, while Clariant CEO Hariolf Kottmann will become chairman, the sources said.

    The combined company will be headquartered in Switzerland, though its operational center will be in Woodlands, Texas, one of the sources added.

    The sources asked not to be identified because the negotiations are confidential. A Huntsman spokesman declined to comment, while Clariant did not immediately respond to a request for comment.

    The Wall Street Journal, which first reported on the deal on Sunday citing sources, said that Clariant shareholders stood to own about 52 percent of the combined company following the merger, with Huntsman shareholders owning the remainder.

    Clariant was under pressure from investors to find a merger partner that could help it cut costs and revive growth as part of a bigger structure, Reuters reported in March. Being part of a larger group could also help it negotiate lower costs of supplies.

    Kottmann has spent several years restructuring Clariant. He divested underperforming businesses including textile and paper chemicals in 2012 and placed more responsibility with lower level managers for faster decision-making.

    In mid-2015 he started carving out Clariant's plastics and coatings business into a separately managed but wholly-owned entity.

    But with fewer opportunities left to fine-tune the business internally, investor pressure had been growing on management to identify a growth strategy for Clariant, which was formed in the mid 1990s from parts of Switzerland's Sandoz and Germany's Hoechst.

    Huntsman was founded in 1970 by Peter Huntsman's father, Jon. One of Huntsman's other sons is Jon Huntsman, the former governor of Utah and former U.S. ambassador to Singapore and China. He was reported in March to be U.S. President Donald Trump's pick for ambassador to Russia.

    http://www.reuters.com/article/us-clariant-m-a-hunstman-idUSKBN18H14B
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    Dutch considering law to protect companies from foreign takeover


    The Netherlands government on Saturday said it is considering a law that would give Dutch publicly listed companies a one-year period of "thinking time" during which they could freely reject any approach by a foreign buyer.

    The announcement by Economic Affairs Minister Henk Kamp comes amid a surge in nationalist and protectionist sentiment in the Netherlands.

    It also comes as U.S. paint-maker PPG Industries (PPG.N) seeks to buy Dutch based rival Akzo Nobel (AKZO.AS) with a 26.3 billion euro ($29.47 billion) offer that is widely backed by the company's foreign shareholder base but opposed by the company's Dutch-controlled board.

    Kamp has said a takeover of Akzo Nobel is not in the Dutch national interest.

    The idea of a one-year cool-down period when a foreign company tries to buy a Dutch one has enjoyed backing from several prominent Dutch business leaders, notably former Shell CEO Jeroen van der Veer, and from a range of political parties on the right and left.

    There is also a backlash among several academics and thinkers who ridicule the idea and say it risks trashing the country's reputation as a place to do business.

    Kamp said the government is still investigating whether such a law is feasible and will consult with "experts and those involved."

    If the law is enacted it is unlikely it would effect the Akzo Nobel case. A court is due on Monday to hear complaints from Akzo shareholders who are seeking the removal of Chairman Antony Burgmans.

    PPG must decide by June 1 whether it will file formal bidding papers -- along with proof it can finance a bid -- to Dutch regulators.

    It argues Akzo's reluctance to enter talks on a merger is hypocritical, given that the multinational company itself grew by foreign takeovers, notably of Sweden's Nobel and Britain's ICI. Of the company's 46,000 employees, only 5,000 are Dutch, and of its shareholders, 93 percent are foreign.

    Akzo argues that PPG's takeover would lead to job losses, that its own corporate values are more focused on sustainability, and that it has a better corporate plan to sell its chemicals division and issue more dividends to shareholders.

    Akzo CEO Ton Buechner has also advanced the argument that keeping multinationals headquartered in the Netherlands is vital to the country's economic ecosystem, as they provide a disproportionate amount of investment in research and development.

    http://www.reuters.com/article/us-netherlands-m-a-protectionism-idUSKCN18G0BU
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    Saudi Aramco CEO says to sign $50 billion of deals with U.S. companies


    National oil giant Saudi Aramco expects to sign $50 billion of deals with U.S. companies on Saturday, part of a drive to diversify the kingdom's economy beyond oil exports, Aramco's chief executive Amin Nasser said.

    Nasser was speaking to reporters at a conference of scores of senior U.S. and Saudi business executives, coinciding with the visit of U.S. President Donald Trump to Riyadh.

    He said 16 agreements with 11 companies would be signed, including memorandums of understanding for joint ventures. Officials said earlier that many of the agreements would flesh out previously announced plans.

    "We expect the deals signed today to provide a boost to bilateral trade between both countries," Nasser said, adding that Aramco currently spent $6.5 billion a year on goods and services from U.S. suppliers.

    Among the deals, executives said, were a plan by Jacobs Engineering Group Inc. for a joint venture with Aramco to manage business projects in the kingdom, and a plan by McDermott International to transfer some of its ship fabrication facilities from Dubai to a new shipbuilding complex which Aramco will build within Saudi Arabia.

    Top Saudi economic policy makers, including the finance minister and head of the kingdom's main sovereign wealth fund, described ways in which they planned to attract U.S. capital and technology. Officials said they aimed to prepare new rules covering direct investment by foreign firms within 12 months.

    "We want foreign companies to look at Saudi Arabia as a platform for exports to other markets," Energy Minister Khalid al-Falih told the conference.

    http://www.cnbc.com/2017/05/20/saudi-aramco-ceo-says-to-sign-50-billion-of-deals-with-u-s-companies.html
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    Oil and Gas

    The LNG wars – Will short run marginal costs be the deciding factor?


    It used to be all the rage only a few years ago: What the next big new LNG project would be, and its lifecycle cost. But there is little interest in the cost of building brand new LNG plants anymore. Today, amidst a growing market glut, attention has turned to projects’ survival – and the short term costs to keep existing projects running at all.

    Will prices get so low that LNG plants will even shut down? By 2019, a 24bcm global market oversupply is forecast, and supply will need to be curtailed somewhere. It’s all about short run marginal costs now – or the ongoing cost to keep an LNG plant running over the short term.

    Most conventional LNG projects have very low short run marginal costs, and will continue producing no matter how low prices go. But the costs of unconventional gas fed projects in the US and Queensland are much higher due to ongoing feed gas costs.

    Australia’s seven conventional LNG projects lie very low on the short term cost curve, with most being new, large scale plants of great efficiency.  So they will be generating cashflow and maximising production even under very depressed price levels.

    However, Australia’s three remaining projects in Queensland are different, with high ongoing drilling costs required to maintain production levels. By 2019, while 86% of Queensland LNG production will be from already drilled wells and low cost, the remaining 16% of production is at risk of not being economic to drill. And exports could be further restricted as gas is diverted to the local market which is otherwise short of gas. This reduction in Queensland LNG plant output could account for around a fifth of the 24bcm global LNG overhang forecast for 2019.

    https://www.woodmac.com/blog/the-lng-wars-will-short-run-marginal-costs-be-the-deciding-factor/?utm_source=twitter&utm_medium=social&utm_campaign=sm-upstream-appeablog-la-o&utm_content=o

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    Modi's Oil Champions on Track to Match $16 Billion Spending


    Capex by India’s state-run firms reach 3-year high last year
    Indian Oil to raise capex about 25%, while ONGC holds steady

    India’s state-owned oil companies aim to sustain spending near a three-year high, encouraged by falling oil-services costs and expanding demand.

    The country’s largest oil refiner Indian Oil Corp. will boost domestic spending by a quarter in the year to March 31 and smaller processor Hindustan Petroleum Corp. plans to invest about 17 percent more this year. Oil and Natural Gas Corp., the biggest explorer and top spender, plans to invest as much as last year. The 11 state-owned companies spent more than one trillion rupees ($16 billion) in the year ended March 31, the highest since 2014.

    “Spending by Indian oil companies has further upside over the coming years because of opportunities at home and abroad,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. “Low services costs make spending more attractive now.”

    Investments in oil and gas fields globally are set to drop a third year after falling 24 percent to $450 billion in 2016, according to the International Energy Agency. Oil companies slashed spending, delayed projects and cut staff to cope with the crash in prices that started in 2014. The market is beginning to stabilize amid efforts by the Organization of Petroleum Exporting Countries to trim output.

    Brent crude, which has averaged almost $54 a barrel this year, was trading 0.2 percent higher at $52.59 as of 8:52 a.m. in Singapore.

    The Indian spending boom is being driven by the country’s growing energy appetite and the need to meet Prime Minister Narendra Modi’s goal of reducing dependence on oil imports by 10 percent by 2022. The IEA also expects India to be the fastest-growing oil consumer through 2040.

    ‘No Let Up’

    “There’s no let up on our capital expenditure,” said B. Ashok, chairman of Indian Oil. The company, which is also the nation’s biggest distributor of fuels, plans to spend more than 200 billion rupees ($3.1 billion) this year from 160 billion rupees on growing its local refining and fuel-retailing operations, he said.

    Hindustan Petroleum plans to invest as much as 70 billion rupees on expanding refineries and marketing infrastructure this year, compared with about 60 billion rupees last year, said J. Ramaswamy, director of finance at India’s third-largest fuel retailer.

    One factor behind the higher capital expenditures at Indian refineries is the country’s move to upgrade fuel quality and lower emissions to the equivalent of Euro 6 standards by 2020, said Bhaskar Patel, managing director at Technip India, a unit of TechnipFMC Group.

    Explorers aren’t slowing down either.

    Last year we drilled about 500 wells and this year also we plan to maintain that number,” ONGC Chairman Dinesh Kumar Sarraf said. “While the investment figure would be similar to that of last year, we will be able to do more jobs because cost of services is declining.”

    To be sure, last financial year’s capital expenditure was buoyed by the acquisition of stakes in two Rosneft PJSC blocks in Russia by Indian Oil, ONGC, Oil India and a subsidiary of Bharat Petroleum Corp.

    https://www.bloomberg.com/news/articles/2017-05-18/modi-s-oil-champions-on-track-to-match-16-billion-spending

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    Upstream boost for Indonesia as Total, Inpex eye 39% stake in Mahakam


    Indonesia's efforts to attract foreign upstream investment have yielded some results, with France's Total and Japan's Inpex having notified the government their intention to take a combined 39% operating interest in the new production sharing contract for the offshore Mahakam oil and gas block -- Indonesia's largest.

    The share is lower than the combined 65% both companies had earlier requested to take and the current 50% each of them currently holds under the existing contract due to expire in December 2017, but comes as a relief for the Indonesian upstream oil and gas sector, which has been recently hit by an exit of foreign investors.

    "We are happy that Inpex and Total are still interested in having a share in the Mahakam block," said oil and gas director general with the energy and mines ministry I Gusti Wiratmaja Puja at an interview with S&P Global Platts on the sideline of the Indonesian Petroleum Association conference and exhibition, held in Jakarta May 17-19.

    Both companies are to negotiate the final arrangements with state-owned oil and gas company Pertamina, which has been appointed to take over the block from January 2018 and cooperate with existing operators over the operatorship transition period.

    Pertamina plans to spend $180 million on the block in 2017, a year before the company is allowed to take over, in a bid to maintain Mahakam's production at 1 Bcf/d or higher through 2018 and meet gas contractual commitments, as well as to contribute to Indonesia's wider goal of reducing upstream production decline.

    Total has also requested for an investment credit from the Indonesian government of 17%, and that the oil and gas allocated for the domestic market is priced against international benchmarks, said another official with the ministry, who declined to be named.

    Under the regulation, oil and gas companies operating in Indonesia have to allocate 25% of their production to the domestic market.

    Total E&P Indonesie declined to comment.

    Separately, Pertamina's upstream director Syamsu Alam said on the sidelines of the conference that Pertamina is committed to invest in the block over the transition period, adding it is already preparing the Mahakam block for the drilling of 14 wells in June.

    He also said Pertamina was ready to negotiate with potential bidders.

    "Pertamina is still referring to energy and mines ministry's letter that allows us to sell a 30% participating interest [in the Mahakam block]," Alam said. "We are ready to discuss."

    An initial request by Total and Inpex for a 65% share in the Mahakam block was heard to have been rejected, amid the government's determination to make Pertamina the majority shareholder in the block.

    The notification by Total and Inpex comes as a relief for the Indonesian government, which has seen international companies such as ConocoPhillips, Inpex, Japan's Japex and KrisEnergy recently exiting upstream investments in the country, with US-based Chevron also expressing its interest in selling some of its stakes in oil, gas and geothermal assets.

    The Mahakam block is Indonesia's largest gas block and began production in 1977. It currently produces 1.6 Bcf/d of gas and 63,000 b/d of crude and condensate, with more than 80% of its output supplying the nearby Bontang liquefaction plant and shipped overseas as LNG.

    Total estimates that the Mahakam block contains 2.7-3 Tcf of proven natural gas reserves in 2017. The proven gas reserves are estimated to dwindle to 1.3-1.6 Tcf in 2018 due to natural depletion.

    https://www.platts.com/latest-news/natural-gas/jakarta/upstream-boost-for-indonesia-as-total-inpex-eye-26739916
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    Proxy firm ISS advises vote against Exxon exec pay plan


    Influential proxy adviser Institutional Shareholder Services (ISS) recommended investors break with Exxon Mobil Corp on some closely watched questions due to be voted at the energy company's May 31 annual meeting.

    ISS recommended investors vote "against" the pay of Exxon's top executives, questioning if pay awards are strongly linked to performance, according to a report sent by an ISS spokesman on Thursday evening.

    ISS recommended votes in favor of a shareholder resolution requesting Exxon to provide more information on the impact that climate change regulation could have on its business.

    ISS supported all of Exxon's directors up for election and backed its board recommendations on some other matters.

    But the ISS recommendations against the company on the two high-profile questions show the pressure faced by the energy giant as shareholders mobilize more support on climate issues from big institutional investors.

    Just last week for instance investors at Occidental Petroleum passed a similar measure calling for a report on the impact climate change policies could have on its business, after BlackRock Inc switched sides.

    http://www.reuters.com/article/us-exxon-mobil-climate-investors-idUSKCN18F0A3

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    OPEC panel looking at deepening, extending oil cuts: sources


    An OPEC panel reviewing scenarios for the oil producer group's meeting next week is looking at the option of deepening and extending a deal to reduce crude output, OPEC sources said on Friday, in an attempt to drain inventories and support prices.

    Saudi Arabia and non-OPEC Russia, the world's top two oil producers, have agreed on the need to prolong the current cuts until March 2018, although Saudi Energy Minister Khalid al-Falih said extended curbs would be on the same terms.

    OPEC's national representatives plus officials from its Vienna secretariat met on Wednesday and Thursday. Their panel, the Economic Commission Board (ECB), was due to finish talks on Thursday but they will now end on Friday, OPEC sources said.

    One source said a deeper cut in output was an option depending on estimated growth in supply from non-OPEC producers, mainly U.S. shale oil firms, among other scenarios.

    "We have not agreed on final scenarios," a second source said.

    The OPEC ECB does not set policy. Its meeting precedes the gathering of OPEC and non-OPEC oil ministers on May 25 to decide whether to extend beyond June 30 their deal to reduce output.

    Oil prices were heading on Friday for a second week of gains, trading above $53 a barrel, on growing expectations that producers will agree further steps to support the market when they meet next week.

    The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut production by 1.8 million barrels per day for six months from Jan. 1.

    Oil prices have gained support from reduced output but high inventories and rising supply from producers not participating in the accord have limited the rally, pressing the case for extending the curbs.

    Further details, such as the size of the extra supply cut being mulled by the ECB, were not immediately available.

    In addition to the final part of the ECB meeting, there is also a technical discussion on Friday among OPEC and non-OPEC countries participating in the supply cut. This is not expected to result in any decision.

    "Today's meeting is just informative," an OPEC source said

    http://www.reuters.com/article/us-opec-oil-idUSKCN18F0RL
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    Dominion’s Cove Point LNG project 89 pct done


    Dominion Energy said work on the Cove Point LNG export facility near Lusby, Maryland is 89 percent complete.

    During the month of April, work at the terminal site continued on modifications to the existing plant in the areas of the jetty platforms and tie-in scope.

    At the terminal, work scope continued on foundations, grading, steel erection, equipment placement, piping, tie-in’s, and electrical installation.

    Once it is completed, the liquefaction facility being built at its existing LNG terminal, will have the capacity to produce 5.25 million metric tons of liquefied natural gas per year.

    The production capacity has been fully subscribed with Pacific Summit Energy, a U.S. unit of Sumitomo Corporation, as well as with GAIL Global (USA) LNG, a U.S. unit of the India’s utility GAIL, under 20-year terminal service agreements.

    The project has recently been authorized to introduce fuel gas and commission the power block area at the LNG export facility.

    http://www.lngworldnews.com/dominions-cove-point-lng-project-89-pct-done-gallery/
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    Strong Indian buying drives up FOB Singapore 10 ppm sulfur gasoil premiums



    FOB Singapore 10 ppm sulfur gasoil cash differentials surged Thursday, primarily on the back of strong buying interest in India, opportunistic arbitrage movements and regional refinery turnarounds, market sources said Friday.

    The FOB Singapore 10 ppm cash differential advanced 24 cents/b from Wednesday to a premium of $1.02/b Thursday to Mean of Platts Singapore Gasoil assessments. This was the highest the cash differential has been since January 4, 2016, when it was at a premium of $1.11/b.

    "India has imported a lot lately. The tenders for 50 or 40 ppm requirements draws from the 10 ppm pool," a trader said.

    India's demand for the 10 ppm grade has been robust since the implementation of Bharat Stage IV vehicle emission and fuel standards in April 2017 -- capping sulfur limits for all diesel vehicles in the country at 50 ppm. This is a reduction from the mixed standard of a 150 ppm sulfur limit in some regions and a 50 ppm limit in others, sources said.

    In addition, at this time of the year there is demand to stock up ahead of the monsoon season.

    "Typically when the monsoon season is late, the agricultural sector would need to rely on diesel generators to water the fields. It is hard to predict how the rains will be like," a trader said.

    STRONGER PROMPT EUROPEAN MARKET

    The relatively stronger prompt European market may also see some cargoes move to the West, traders said. The Exchange of Futures for Swaps, while still unfavorable, has been steadily improving from minus 64 cents/b on May 2 to minus $4.53/b at Thursday's Asian close.

    The barge market in the Amsterdam-Rotterdam-Antwerp region has tightened recently as refinery maintenance reduced availability of 10 ppm sulfur diesel, sources said.

    "Players are trying to arbitrage [from AG/India to Europe] with decent freight and better EFS," another trader said.

    Within Asia, supply for 10 ppm was tight due to the maintenance season which ends in June. While some expected the end of the maintenance season to boost supply in the market, others said that reduced run rates at Japan's refineries will curb supply.

    Japan's Ministry of Economy, Trade and Industry unveiled Monday its idea to introduce a third round of refining regulations, under which it would urge refiners to boost utilization of their residual cracking capacities to help them be more competitive over the five fiscal years, starting in 2017-2018 (April-March).

    For the second round of METI's refining regulations, Japanese refiners cut a combined 348,900 b/d of nameplate crude distillation capacity as of March 31. Japan's refining capacity fell to a total of 3.5188 million b/d across 22 refineries as of March 31, down 7.1% from 3.7897 million b/d prior to a nameplate capacity reduction.

    https://www.platts.com/latest-news/oil/singapore/strong-indian-buying-drives-up-fob-singapore-27833061

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    Nigerian oil labour union calls for Exxon Mobil shutdown in Delta


    A Nigerian oil labour union on Friday called for the shutdown of all Exxon Mobil Corp facilities in the Niger Delta, a union representative said.

    Reuters was unable to independently verify whether union members had shut down the company's facilities.

    Oil sources said there had been no impact on production.

    Madubuezi Azubuike, who chairs the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Rivers state, said the call followed the breakdown of talks with the company over sackings and was part of a strike that began last week.

    "We have called for the shutdown of all Mobil facilities across the Delta today," he said.

    The industrial action is in protest at the sacking of 150 workers in December, of which 82 were PENGASSAN members.

    "No resolution has been reached so far. We have had meetings with top management of the union and Mobil executives, but with no avail over issues," Azubuike said.

    An Exxon Mobil spokesman was not immediately available for comment.

    Strikes by Exxon workers in Nigeria at the end of last year did impact output, delaying loadings by weeks.

    Nigerian labour unions have held a number of strikes in the last few months over the dismissal of oil workers.
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    Canada's Permian of the North Roused by Cheap Gas Drilling



    Drilling rigs and roughnecks are hot commodities once again across the Montney shale formation in northern British Columbia and Alberta, and companies like Grimes Well Servicing Ltd. are having a hard time keeping up with demand.

    That’s because the Montney, unlike many parts of Canada’s oil and gas region, is seeing a surge of investment three years after the worst energy slump in decades. During the first four months of 2017, the number of wells drilled jumped 80 percent from a year earlier to 277, according to Calgary-based Grobes Media Inc.’s BOE Report. It’s the most for the period since 2014, when oil prices were twice what they are now and natural gas was 50 percent higher.

    Grimes started noticing a pickup in orders back in November and December -- the start of the winter drilling season -- as more customers put in urgent orders for equipment. Demand hasn’t let up. “By January, it was getting pretty crazy,” Derek Mackey, the company’s accountant, said by telephone from Edmonton. “Some people called saying: Can we get a rig in a couple days?”

    Exploration is roaring back because energy prices stabilized, halting the slide at levels that remain profitable. The slump also left idle equipment, making it cheaper to drill. A new well now costs about C$5 million ($3.7 million), down from C$8 million in 2014, according to Wood Mackenzie Ltd. Seven Generations Energy Ltd. and  ARC Resources Ltd. are among those stepping up exploration in the gas-rich Montney, which may signal more energy investment elsewhere.

    “We call it Canada’s bellwether play,” said Mark Oberstoetter, lead analyst for upstream research at Wood Mackenzie in Calgary. “We have seen reduction in activity in every play, but the Montney has held up better than most.”

    Like Permian

    The deposit straddles the northern border of Alberta and British Columbia. It was dubbed the “ Permian of the North” by Vancouver-based Blackbird Energy Inc. because the Montney has the same layered, stratified geology as the Texas shale formation that has led a resurgence in U.S. oil production. But unlike the Permian, which yields mostly crude, the Montney is rich in gas and associated liquids such as condensate.

    Shale deposits have become popular targets for North American producers as technologies like horizontal drilling and hydraulic fracturing made it cheaper to extract oil and gas trapped in narrow seams deep underground. The techniques led to gushers at old fields in Texas, North Dakota and Pennsylvania.

    That surge in supply helped to make the U.S. the world’s largest oil and gas producer. It also led to a crash in prices. Crude that fetched more than $100 a barrel in 2014 tumbled as low as $26 by early last year. It’s recovered since then, averaging just under $50 for much of the past 12 months, as the Organization of Petroleum Exporting Countries and partners like Russia cut output.

    West Texas Intermediate traded at $49.84 a barrel as of 11 a.m in London on Friday.

    Western Canadian gas also has recovered. After dropping as low as 65 Canadian cents (50 U.S. cents) per million British thermal units last May, the lowest in about 20 years, prices have more than quadrupled to almost C$3, data compiled by Bloomberg show.

    Rising Output

    The Montney contains about 449 trillion cubic feet of marketable natural gas, Canada’s National Energy Board estimated in 2013. That’s about half the total reserves of Qatar, the Persian Gulf country that is the world’s biggest exporter of liquefied natural gas. The Canadian formation also contains 14.5 billion barrels of natural gas liquids and 1.13 billion barrels of oil, according to the NEB report.

    With investment and drilling on the rise, daily gas production at the Montney will jump to 7 billion cubic feet by 2019, compared with 4.9 billion cubic feet now, according to Wood Mackenzie. Condensate, oil and other natural gas liquids will grow to 470,000 barrels a day from 250,000 barrels, as development proceeds in liquids-rich areas of northern British Columbia, Heritage/Tower, Elmworth and Kakwa, the industry researcher said.

    On April 27, the Petroleum Services Association of Canada raised its 2017 well-drilling forecast for the country by 60 percent to 6,680.

    Encana Corp., the largest Montney producer, plans to drill about the same number of wells this year as in 2014, Jay Averill, a spokesman, said in an April 20 email. By 2019, the company expects to double gas output to 1.2 billion cubic feet, with similar gains in production of liquids to more than 70,000 barrels a day.

    http://www.rigzone.com/news/article.asp?hpf=1&a_id=150231&utm_source=GLOBAL_ENG&utm_medium=SM_TW&utm_campaign=FANS

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    U.S. rig count surges to more than 900


    Despite chaotic turns in the oil market in recent weeks, the U.S. oil industry comeback shows no sign yet of slowing down.

    The number of rigs drilling for oil and gas across the nation climbed by 16 in the past week, marking the 18th consecutive weekly increase, Baker Hughes said Friday. The oil field service company’s go-to rig count has reached 901, up from a record low of 404 last May.

    In the past week, drillers dispatched eight oil rigs and eight gas rigs to U.S. fields. They sent four to the Permian Basin in West Texas, bringing the figure there up to 361. Two rigs also began activity in the gas-rich Marcellus Shale in Pennsylvania, where the rig count reached 45.

    The rig count in Texas climbed by eight to 458, up from a low of 173 last May. On Friday, U.S. crude prices climbed above $50 a barrel.

    http://fuelfix.com/blog/2017/05/19/u-s-rig-count-surges-to-more-than-900/
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    More Than Half of All U.S. Oil and Gas Jobs Are In Texas: Dallas Fed



    Dallas Fed tracks breakevens, lowest opex

    The Federal Reserve Bank of Dallas released its Energy Indicators report, outlining the continued recovery of the oil and gas industry.

    Texas is the heart of oil and gas activity, with both the Permian and Eagle Ford driving tremendous amounts of production and activity.

    In total, the oil and gas industry employed about 211,700 people in Texas in March, up 3,500 from February. “Oil and gas extraction” jobs increased slightly to 92,500, while “support activities” rose to 119,200. Historically, employment in “oil and gas extraction” is much more steady than employment in “support activities,” as support activities saw employment drop by about half during the downturn.

    Texas accounts for about 54% of all oil and gas employment in the U.S., as nationwide there are 181,200 people working in “oil and gas extraction” jobs and 208,200 people in “support activities.”

    The current oil price is approximately at breakeven for new wells in the most prominent shale plays, according to the Dallas Fed Energy Survey. The fed asked 62 E&P companies “What WTI oil price does your firm need to profitably drill a new well?” in mid-March this year.

    While results varied widely, here is a breakdown:

    The Midland area of the Permian emerged as the best play, with an average reported breakeven from $46/bbl in Midland to $50/bbl in the central platform.
    Oklahoma is still a factor, as the SCOOP/STACK was close behind with $47/bbl.
    The Eagle Ford showed the most consensus, with all results near the average of $48/bbl.
    Non-shale plays in the U.S. varied widely, with responses ranging from $25/bbl to $100/bbl, but averaged $53/bbl, slightly above current prices.

    OPEX comfortably below oil price

    While oil price seems to be hovering around breakevens for new wells, companies will likely not be forced to shut in production any time soon.

    The fed also asked 60 companies, “What WTI oil price does your firm need to cover operating expenses for existing wells?”

    The Midland basin was again the cheapest play, averaging $24/bbl needed to keep wells online. This cost would be covered even at the lowest oil price seen during the downturn.
    Like the economics of new wells, the SCOOP/STACK was a close second for lowest operating expenses
    Next lowest were the Eagle Ford and other Permian regions.

    Even non-shale plays have OPEX comfortably covered, averaging $38/bbl. Firms active in the Midland, SCOOP/STACK and non-shale each reported OPEX less than $10/bbl, indicating the best spots in the plays may never be forced to shut in.

    https://www.oilandgas360.com/half-u-s-oil-gas-jobs-texas-dallas-fed/
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    Colorado fracking company to be sold to Texas firm for $285 million


    Keane Group Inc., a Houston-based fracking-services company, said Thursday it has a deal to acquire another firm in that business, Denver-based RockPile Energy Services LLC, for $284.5 million.

    “We have always held RockPile in high regard due to their commitment to quality service in the field, their well-maintained assets and facilities, and the talent they have throughout their organization,” said James Stewart, Keane’s chairman and CEO. “We are excited to have the RockPile team join the Keane family and look forward to what we can accomplish together.”

    Keane is buying the privately-held business from White Deer Energy, a Houston- and New York-based private equity firm. White Deer bought RockPile from Denver-based Triangle Petroleum Corp. last September for an undisclosed amount.

    The Keane deal for RockPile is expected to close July 31, subject to regulatory approval.

    In the cash-and-stock deal, Keane (NYSE: FRAC) is offering White Deer $135 million in cash, about 8.7 million shares of its common stock, and about $26.5 million for capital expenditures for previously ordered hydraulic fracturing machinery, including $9 million in deposits previously paid by RockPile and to be reimbursed by Keane at closing.

    In exchange, it will get all of RockPile’s outstanding shares.

    The amount could be adjusted by as much as $20 million if Keane’s share price goes down.

    Founded in 2011, RockPile provides fracking services primarily in the Bakken and Permian basins, where Keane also operates.

    “We look forward to joining Keane as our companies share common values and commitment to safety, service, technology and operational excellence,” said RockPile CEO Curt Dacar. “This transaction provides both our customers and employees with enhanced opportunities for growth and success.”

    http://www.bizjournals.com/denver/news/2017/05/18/colorado-fracking-company-to-be-sold-to-texas-firm.html
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    Alternative Energy

    Germany approves 807 MW of capacity at onshore wind parks


    Germany approved 807 megawatts (MW) of capacity at onshore wind parks on Friday, saying the price at which it awarded the projects came below expectations in a sign that competition in the industry will lead to lower prices for consumers.

    The projects were approved at an average price requiring a subsidy of 5.71 euro cents per kilowatt hour (kWh) of power, the economy ministry said, representing a price reduction of 20 percent on previous prices.

    The results are keenly watched by turbine manufacturers, project developers and utilities after recent offshore wind park auctions included bids for zero subsidy projects for the middle of next decade as the industry cuts costs.

    This is the first auction for onshore wind under the latest changes to the renewable feed-in tariff law (EEG 2017).

    Rather than guaranteeing a fixed price for 20 years, only those operators that can generate electricity from wind at the lowest cost and passed to consumers via their electricity bills, are given a construction license within a fixed capacity.

    The energy regulator, the Bundesnetzagentur, said 70 projects were picked from 256 bidders with a joint volume of 2,137 MW, including three from utility Innogy.

    President Jochen Homann said there was a "satisfactorily high level of competition" and "a high quality of bidding."

    He also noted that 93 percent of the winners of allocations were citizens' co-operatives, that band together to build turbines and share profits, and were given more favourable terms for execution than big commercial players in order to stimulate acceptance by, and benefits to, local communities.

    Wind energy accounts for over half of Germany's renewable production in its long-term shift away from reliance on fossil fuels, that it wants to have largely in place by mid-century.

    Two further rounds for onshore wind are planned later this year to reach a total capacity volume of 2,500 MW, the annual expansion rate targeted by the government.

    "The sector has to face tougher conditions, that's certain," said Klaus Bader, head of energy at lawyers Norton Rose Fulbright's Munich office, adding either developers' margins, turbine prices, operational or financing costs should come down, or investors would need to accept lower returns.

    http://www.reuters.com/article/us-germany-wind-onshoreauction-idUSKCN18F12M

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    North China Grid wind generation hit new high at 27 GW


    Wind generation of North China Grid Co., Ltd., a state-owned company under the State Grid of China Corp., hit a new record of 27.13 GW at 17:30 (GMT+8) May 12, increasing 16.2% from the last year's highest, said the company recently.

    As of mid-May, the firm's installed wind power capacity amounted to 45.57 GW, growing 13.6% from the year before; while the wind electricity output gained 11.9% year on year to 37.26 TWh, it said.

    http://www.sxcoal.com/news/4556269/info/en
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    Swiss voters embrace shift to renewable energy

    Swiss voters embrace shift to renewable energy

    Swiss voters backed the government's plan to provide billions of dollars in subsidies for renewable energy, ban new nuclear plants and help bail out struggling utilities in a binding referendum on Sunday.

    Provisional final figures showed support at 58.2 percent under the Swiss system of direct democracy, which gives voters final say on major policy issues.

    The Swiss initiative mirrors efforts elsewhere in Europe to reduce dependence on nuclear power, partly sparked by Japan's Fukushima disaster in 2011. Germany aims to phase out nuclear power by 2022, while Austria banned it decades ago.

    "The results shows the population wants a new energy policy and does not want any new nuclear plants," Energy Minister Doris Leuthard said, adding the law would boost domestic renewable energy, cut fossil fuel use and reduce reliance on foreign supplies.

    "The law leads our country into a modern energy future," she told a news conference, adding some parts of the law would take effect in early 2018.

    Debate on the "Energy Strategy 2050" law had focused on what customers and taxpayers will pay for the measures and whether a four-fold rise in solar and wind power by 2035, as envisaged in the law, can deliver reliable supplies.

    Leuthard has said the package would cost the average family 40 francs more a year, based on a higher grid surcharge to fund renewable subsidies.

    Critics said a family of four would pay 3,200 Swiss francs ($3,290) in extra annual costs, while more intermittent wind and solar energy would mean a greater reliance on imported electricity. Switzerland was a net power importer in 2016.

    http://www.reuters.com/article/us-swiss-energy-idUSKBN18H0HM

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    Agriculture

    Still early to adjust U.S. corn yield, but ‘trend’ not same to all -Braun



    Fears of corn planting delays in the United States amid ominous weather forecasts have been in play all spring, making analysts and traders consider that the world’s No. 1 corn crop could fall behind schedule and that yields could falter as a result later this summer.

    However, plantings have been hitting expectations, so that story is less prevalent and national yield outlooks likely remain near average levels. But "normal" corn yields may mean different things to different people.

    U.S. farmers had planted 71 percent of the corn crop through May 14, according to data from the U.S. Department of Agriculture on Monday. This beat the trade guess of 68 percent and stood 1 point ahead of the five-year average, and was a significant gain on the previous week’s 47 percent.

    The weekly numbers were particularly encouraging given that Western Belt states that had been well behind pace all spring due to wet and cold weather made the most progress. Minnesota and South Dakota – together accounting for 16 percent of the country’s corn – planted 49 and 45 percent of their crops, respectively, within the week. (reut.rs/2qSBQNM).

    Despite the concerns with wet and cold weather this spring, U.S. corn plantings as a whole have stuck very close to average levels, though they lag the previous two years. In 2015, farmers had planted 81 percent of the corn by May 14 and the same figure was 73 percent in 2016, though the disparity with 2017 had been larger in previous weeks.

    Regional concerns still exist over cooler weather and excessive moisture, the latter of which has already spurred talk of replanting. When crop development is delayed – especially by a replant – pollination often occurs under warmer, less favorable conditions, which usually lowers yield potential.

    Still, the corn market is not behaving as if it expects 2017 U.S. corn yield to deviate too far from the long-term trend, which is the starting point of the yield conversation each year.

    WHAT IS NORMAL?

    Nothing thus far seems to suggest strongly that U.S. corn yields will be anything other than trend this year. But analysts do not always agree on what fairly represents trend yield because key variables – such as seed technology, field management and farmers' economic decisions, and weather – change over the years.

    USDA is transparent about its long-term trend yield calculation, which for 2017 is 170.7 bushels per acre. Some industry analysts believe the true trend is closer to 167 or 168 bpa while others could justify using 172 bpa.

    Given USDA's harvested area target of 82.4 million acres, the production difference between corn yields of 167 and 172 bpa is 13.761 billion bushels versus 14.173 billion.

    One obvious reason to be cautious in pushing trend corn yield over the 170 mark is that the United States has achieved that feat only twice - in 2014 and 2016 - and only one other year, 2015, came very close (reut.rs/2pXwewX).

    The fact that these three years are at the end of the dataset makes it hard to identify just how "normal" or anomalous they were. But in looking at what transpired in those years, the argument for the 2017 trend to exceed 170 bpa seems pretty solid.

    National corn yield hit a then-record 171 bpa in 2014, but full potential was probably not reached. Slow planting and emergence all spring held the plants back from development, especially in Iowa and Minnesota, where spring and early summer rains were excessive. Yield in 2014 fell notably below trend in those two states, which together account for 27 percent of national production.

    The idea that yield potential was not maximized might have also applied to last year’s all-time high 174.6 bpa yield. Warmer-than-normal nighttime temperatures have historically penalized corn yields by a few bushels per acre, and 2016’s overnight lows were consistently among the highest in several years during the key summer months.

    However, rainfall was abundant across the Corn Belt last summer and likely offset some of the possible warm-weather yield losses. But had temperatures been closer to "ideal," would yield have pushed even higher last year, and how high? This is an important thought to keep in mind because with a 174.6 bpa endpoint, it is not entirely clear where we go from here.

    Although the story linking 2017 planting progress to possible yield losses is near or past its expiry with corn traders, the yield debate will still press on through the summer with other factors in focus and the disparity in baseline yield might be central to that discussion.

    PROBLEM AREAS

    National corn planting pace may be on schedule, but that does not mean things are rosy everywhere.

    Rounds of heavy rainfall battered No. 2 producer Illinois, Missouri, and Indiana a couple of weeks ago. Replanting is now probable in many affected areas, and this will shift corn’s schedule back a few weeks, increasing yield sensitivity.

    Corn in Illinois, which grows 15 percent of the country’s crop, is in the worst initial condition in more than a decade with just 42 percent rated good or excellent. Ratings are highly subject to change early on as only 47 percent of the state’s crop had emerged as of May 14, but they certainly heighten yield risk for now.

    Corn ratings in No. 10 Missouri are 49 percent good-to-excellent against 74 percent one year ago. None of the other major corn states are reporting conditions yet, and national-level ratings will likely be available in USDA’s May 30 crop progress report.

    The Western Belt states ended April notably behind average planting pace while the Eastern Belt had jumped ahead. Now it seems as if they have swapped places, as corn planting in No. 5 Indiana and No. 8 Ohio has practically stalled out since then over cold and wet weather

    The forecast through the end of May calls for mostly cooler-than-average temperatures to dominate the Midwest, as daily averages will frequently approach 15 degrees Fahrenheit below normal. Overall rainfall totals may moderately exceed average levels across the Corn Belt in the next two weeks, though heavier totals up to 4 inches (102 mm) are expected through this weekend in parts of northwest Missouri and eastern Kansas .

    The cooler weather will certainly slow corn emergence and development, especially in areas already wet or expected to become wet in the coming weeks. But the forecast is not necessarily detrimental to yields just yet as cooler weather is not uncommon in May and there will still be time for the crop to play catch-up pending June weather.

    This is where market participants cannot ignore the emergence progress, which often gets placed on the back burner in favor of plantings. National emergence stood at 31 percent as of May 14, behind both the five-year average of 36 percent and last year’s 41 percent.

    This means the 2017 corn crop will likely be pollinating and filling grain at a different point in the season than in 2016, and this is a key consideration when evaluating possible yield outcomes.

    http://www.reuters.com/article/us-usa-corn-braun-idUSKCN18F04I
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    Steel, Iron Ore and Coal

    Coal plants failed in Queensland heatwave on day of record demand


    Are Australia’s coal and gas generators fit for purpose to power Australia through next summer’s heatwaves? The evidence of last summer suggests they cannot be relied upon, with a new report showing how coal plants melted in the heat in Queensland on a day of record demand.

    The Australian Energy Regulator has documented yet another occasion when fossil fuel generators failed to perform in the midst of a heatwave, raising questions about the ability of the country’s ageing coal fleet to meet demand in future heatwaves.

    A new report from the AER looks at the soaring electricity prices on February 12, 2017, when high temperatures across the state caused record demand despite the day being a Sunday, when most business and much manufacturing was closed.

    The principal reason, the AER notes, was the sudden withdrawal of more than 790MW of coal and gas capacity – all due to technical faults related to the heat.

    The plants’ absence nearly created a shortfall of supply, with emergency back-up called on as the 5-minute price soared to more than $13,000/MWh on 11 occasions between 4.35pm and 7.05pm, to meet surging demand that tipped at a record 9,369MW.

    The AER report on the events of February 12 is the latest of a string of reports noting how coal and gas plants have failed, or lost capacity due to problems in the heat.

    Just a few days earlier, on February 10 in NSW, the loss of 1,000MW of coal capacity and the sudden failure of another 1,200MW of gas generation nearly tipped the state into widespread blackouts.

    Just four days before that, on February 6, a total of 3,000MW of coal and gas capacity was lost in NSW and Queensland, mostly due to heat related faults. And on March 3, the sudden failure of the two major gas generators almost caused another system black in South Australia.

    On these occasions, authorities said that renewable energy was to thank for keeping the lights on. Other analysis has pointed out that rooftop solar has saved significant amounts in wholesale electricity costs, with one report putting the savings in NSW during the heatwave at nearly $1 billion.

    That’s ironic, because much of the mainstream media attention around the risk of blackouts and soaring prices has centred around the role of wind and solar – but it is the performance of the coal and gas generators that is making grid operators nervous.

    Queensland is a case in point. It does not, as yet, have any large-scale wind energy apart from an old 12MW wind farm; and has only one large-scale solar plant, a recently built 20MW facility at Barcaldine. Much more – some 2,000MW – is in the pipeline, but for the moment the grid relies on its coal and gas plants for supply, and its high levels of rooftop solar.

    http://reneweconomy.com.au/coal-plants-failed-in-queensland-heatwave-on-day-of-record-demand-85223/
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    Taiyuan coal-fired boilers clean-out battle kicks off


    Capital city Taiyuan of northern China's Shanxi province pledged to dismantle 638 coal-burned boilers within a limit time, announced the municipal government in a statement recently.

    The city will ban all coal-fired boilers with capacity of 20 t/h and below in the urban districts as well as three counties around.

    Of all the involved boilers in total capacity of 2,810 t/h, 489 are heating boilers totaling t/h, while boilers running for all year round reached 149, with gross capacity of 630 t/h.

    By June 30, all coal-fired boilers should be removed and alternative clean energy need to be used before end-October.

    Upon completion of the demolition work, Taiyuan can cut emission of 8,000 tonnes sulfur dioxide, 7,600 tonnes nitrogen oxide and 5,000 tonnes dust.

    http://www.sxcoal.com/news/4556295/info/en
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    Glencore to sell share in coal terminal, Tahmoor mine


    Global commodities trader Glencore has hired Standard Chartered to sell its stake in the Port Kembla coal terminal and its Tahmoor coking coalmine near Wollongong, the Australian reported on May 19, citing the company.

    It comes as prospective suitors start lining up for Rio Tinto's $2 billion worth of coking coalmines, with Whitehaven Coal said to be gunning hard for the assets.

    Glencore is offering its Tahmoor underground mine in NSW, which produces 2 million tonnes of coking coal annually.

    Glencore is also selling its stake in the Port Kembla coal terminal, 72km south of Sydney, which services two of the nation's richest coal reserves, the southern and western coalfields of NSW, exporting coal globally.

    The terminal is equally owned by six miners, including Glencore, South32, Centennial Coal, Wollongong Coal, Tahmoor Coal and Peabody Energy, while South32 manages the terminal on behalf of the consortium.

    Some analysts expect the Port of Kembla and Tahmoor assets to sell for hundreds of millions of dollars.

    Glencore's mining portfolio in Australia has grown steadily following its acquisition of Xstrata in 2013. It has $US129 billion worth of assets globally.

    But while the Swiss trader has typically been considered an acquirer of assets, it has experienced its fair share of pain in recent years linked to the decline of the mining boom and in 2016 sold its Hunter Valley rail assets to Genesee and Wyoming for just over $1 billion.

    The rebound in the coal price in recent months could relieve pressure on Glencore to sell assets in the immediate term and place it back on the acquisition trail.

    Meanwhile, it appears investment banking advisers are now pushing to secure an advisory role with a bidder for Rio Tinto's coalmining sale.

    Rio is selling its Kestrel mine, 40km northeast of Emerald in central Queensland, and its Hail Creek Mine, 120km southwest of Mackay in central Queensland.

    Among those expected to line up for a Kestrel and Hail Creek acquisition are private equity firm Apollo, Xcoal, BHP with its joint venture partner Mitsubishi, Glencore and Coronado Coal.

    http://www.sxcoal.com/news/4556320/info/en
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    Steinmetz said to skip $1.2bn Vale hearing, risking loss



    billionaire Beny Steinmetz’s mining company may be asked to pay as much as $1.2-billion to former partner Vale after choosing not to attend an arbitration hearing in London in a dispute over one of the world’s richest mineral assets, two people with knowledge of the case said.

    The decision by Steinmetz’s BSG Resources to back out of hearings earlier this year will probably cost him the case, the people said, asking not to be identified as the matter is confidential. BSGR felt it wouldn’t be “treated fairly,” according to a letter sent by its lawyers Mishcon De Reya to Vale’s legal representatives dated January 31 and seen by Bloomberg News.

    An unfavorable ruling would be the latest setback for the 61-year-old Steinmetz, who’s facing a string of corruption investigations around the world resulting from his failed investment in the giant Simandou iron ore deposit in Guinea. Yet, Vale would still face years of legal battles to enforce any award from the case.

    The Brazilian mining giant filed its claim at the private arbitration court in 2014 after Guinea stripped its joint venture with BSGR of its rights to Simandou following a government probe that found licenses were obtained through corruption. It’s seeking the award to cover an upfront payment to BSGR and money it invested in the West African nation.

    SEIZURE NOTICES

    BSGR is confident it will prevail in the dispute, a company spokeperson said. The company is unable to comment further given the confidentiality rules of the London Court of International Arbitration, he said. Vale didn’t respond to a request for comment.

    A call and email to Mishcon de Reya partner James Libson weren’t returned, while the LCIA has a policy of not commenting on any proceedings.

    Hearings at the court had been set down for February 20 to 24 and April 3 to 7, according to the lawyers’ letter. Vale appeared at the initial hearing with witnesses it would call on, according to one of the people.

    The court could hand down its ruling on the award later this year, the people said. If it does rule in Vale’s favor due to Steinmetz’s absence, the Brazilian company’s lawyers will seek to enforce the judgment, requiring court-approved asset-seizure notices, the people said.

    IMPOVERISHED NATION
    In that situation, Vale would likely have to begin the complicated process of having the judgment enforced by courts around the world. Tracing and seizing assets from a litigant who refuses to accept legal rulings is notoriously difficult and time-consuming, especially when those assets are held offshore.

    Steinmetz’s sprawling business empire stretches from New York to Europe and Africa, and includes mining and real-estate assets.

    Vale acquired a 51% interest in the Simandou project from BSGR in 2010 in a deal worth $2.5-billion that established a mining joint venture in Guinea known as VBG. The Brazilian company paid $500-million upfront with the remaining $2-billion to be paid in installments. Those future payments were never triggered. Vale invested about $700-million in another iron-ore project in Guinea, Zagota, and also lost those rights.

    The Vale-BSGR venture had planned a $10-billion project at Simandou that would have transformed the economy of one of the world’s most impoverished nations and delivered windfall profits for the developers at a time of record prices for the steelmaking ingredient.

    The project has been a magnet over the past three decades for some of the world’s biggest mining companies including Rio Tinto Group and Aluminum Corp of China, as well as a host of prominent advisers like George Soros and Tony Blair.

    ALLEGATIONS DENIED

    BSGR’s involvement in Guinea started to sour in 2012 when the government started a review of how the company won its license to Simandou. A year later the US Department of Justice started a grand jury investigation into potential violations of the Foreign Corrupt Practices Act.

    Steinmetz was arrested in Israel last year on suspicion that bribes were paid to help BSGR obtain its stake in the Simandou project. Steinmetz hasn’t been charged by Israeli prosecutors though his Israeli and French passports were confiscated. He’s been questioned by authorities in Switzerland.

    Steinmetz has consistently denied paying bribes or committing any other wrongdoing. He has said that the investigations stem from a conspiracy to deprive his company of its rights to Simandou. Last month, he sued Soros for $10-billion claiming the fellow-billionaire had helped orchestrate the conspiracy against him.

    Earlier this month, the former Mines Minister of Guinea Mahmoud Thiam, a co-defendant with Steinmetz’s BSGR in a failed case brought by Rio Tinto concerning the rights to Simandou, was convicted by a New York court of laundering $8.5-million in bribes. The payments came from China International Fund to win exclusive rights to mineral licenses in Guinea.

    A trial in a second arbitration case involving BSGR is due to start in Paris next week. BSGR filed with the International Centre for Settlement of Investment Disputes against Guinea in 2014, arguing that the company’s rights to Simandou were confiscated illegally “through a deeply flawed process based on unreliable and untested evidence.”

    Steinmetz is scheduled to appear via video-link from Israel at the trial next week.

    http://www.miningweekly.com/article/steinmetz-said-to-skip-12bn-vale-hearing-risking-loss-2017-05-19
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    China steel hits nine-week peak amid crackdown, lifts iron ore


    Chinese steel futures jumped nearly 6 percent on Monday to their highest since March, stretching last week's gains on concerns over limited supply as Beijing keeps up a campaign to clamp down on polluting producers.

    Tangshan city in Hebei province, China's biggest steelmaking region, earlier this month kicked off efforts to suspend and fine mills that fail to meet emission standards.

    The campaign began on May 9 and will run through the end of the month.

    Prices of billet, a semi-finished steel product, picked up steam last week as independent rolling mills who make these into finished products such as rebar, snapped up billet and the price increase spread to other steel products.

    "I think some of the rolling mills have brought forward their purchases thinking supply may be at risk," said Richard Lu, analyst at CRU consultancy in Beijing.

    The most-active rebar on the Shanghai Futures Exchange climbed as much as 5.7 percent to 3,366 yuan ($489) per ton, the highest since March 20. The construction steel product was up 5.3 percent at 3,355 yuan by 0228 GMT.

    But Lu said he was skeptical that price gains would be sustained unless demand strengthens.

    "We don't think these environmental inspections will have significant impact unless the government can give a very clear order on production cuts and not just controlling emission levels."

    "I believe a lot of these plants have already installed the necessary facilities to limit pollution," said Lu.

    As steel prices picked up pace, so did raw material iron ore.

    The most-traded iron ore on the Dalian Commodity Exchange rose as far as 501 yuan a ton, its highest since May 4, and was last up 4.4 percent at 495 yuan.

    Iron ore for delivery to China's Qingdao port rose 1.8 percent to $62.69 a ton on Friday, its strongest level since May 4, according to Metal Bulletin.

    The spot benchmark climbed 2.1 percent last week, its second such increase in nine weeks.

    http://www.reuters.com/article/us-asia-ironore-idUSKBN18I062
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    China to close only offshore coal mine amid capacity cuts


    China will close its only offshore coal mine in October, which has been in operation for more than 30 years, as the government toughens its efforts to phase out excess production capacity.

    The Beizao Coal Mine, owned by the Shandong Energy Longkou Mining Group in eastern Shandong province, is located about five kilometers from the coast of Longkou city. Its mine shaft reaches 350 meters underwater.

    Li Gongjian, the mine's manager, on May 19 confirmed the closure, adding that it is part of a national move to phase out sub-standard production capacity. Sea mining is not efficient as it has a cost three times higher than mining on land.

    He said the sea mine, which covers an area of 18 square km, has produced up to 8 million tonnes of raw coal.

    The sea mine, with proven reserves of 1.29 billion tonnes of coal, made China the fifth country to boast offshore exploitation technology.

    Li said the mine opened at a time when the country was energy thirsty, and the group's coal deposits on land were not sufficient to cope with growing market demand.

    The mine shaft was not easy to reach. Miners had to take an elevator down 180 meters and a 20-minute tramcar ride to reach the mine face.

    The mine's closure will force 1,580 workers to become laid-off. The company has offered them other positions.

    Li said that although the mine will be closed, the company will keep and document the offshore mining technology and experience, as sea mining requires sophisticated safety systems, such as technology to prevent flooding.

    http://www.sxcoal.com/news/4556345/info/en
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